Finally, MDA does not plan to demonstrate the  operation of the critical GMD radar, called Cobra Dane, in flight tests  before fielding IDO. While MDA is increasing  the operational realism of its developmental flight tests—e.g., the Aegis  Ballistic Missile Defense element employed an operational crew during its  December 2003 intercept attempt—tests completed to date are highly  scripted. Cost Assessment: Prime Contractor Fiscal Year 2003 Performance Mixed

We used contractor Cost Performance Reports to assess the prime  contractors’ progress toward MDA’s cost and schedule goals during fiscal  year 2003. Observations on the Usefulness of MDA Program Goals for Conducting Oversight

MDA revised its program goals in February 2004 to reflect that the first  BMDS block—Block 2004—will cost $1.12 billion more but consist of fewer  fielded components than originally planned. Despite these revisions, we  observed shortcomings in how MDA defines its goals. Specifically, the  goals do not provide a reliable and complete baseline for accountability  purposes and investment decision making because they can vary year to  year, do not include life-cycle costs, and are based on assumptions about  performance not explicitly stated. Programs that have not  begun the SDD phase are not required to report life-cycle cost estimates,  including all costs for procurement, military construction, and operations  and maintenance, in the Selected Acquisition Report. However, critical assumptions used in establishing these goals—such as  the type and number of decoys—are not clearly explained. Recommendations for Executive Action

To provide increased confidence that a fielded block of the BMDS will  perform as intended when placed in the hands of the warfighter and that  further investments to improve the BMDS through block upgrades are  warranted, we recommend that the Secretary of Defense take the following  three actions:  direct the Director, MDA, to prepare for independent, operationally  realistic testing and evaluation for each BMDS block configuration  being fielded and appoint an independent operational test agent to plan  and conduct those tests;  assign DOT&E responsibility for approving such test plans; and  direct DOT&E to report its evaluation of the results of such tests to the  Secretary and the congressional defense committees. Initial fielding of an intercept capability. For example, four of six key test events were  either deferred indefinitely or delayed over a year. Schedule: Site preparation, including construction of missile silos and  facilities at Fort Greely, Alaska, and Vandenberg Air Force Base, California,  is on schedule. As a result, MDA has a  limited opportunity to characterize GMD’s performance before initial  fielding. Ground-based Midcourse Defense

	Background: Element Description

The Ground-based Midcourse Defense (GMD) program expects to deliver  an operational capability in the 2004-2005 time frame as an interoperable  element of the Ballistic Missile Defense System (BMDS). However, the December  2002 directive by the President to begin fielding a missile defense system in  2004 affected the program’s Block 2004 direction. However, delays in the  development and delivery of the GMD interceptor—particularly due to one  of its two boosters—caused intercept attempts leading up to IDO to slip 10  months or more. Progress Assessment: Cost

DOD budgeted about $12.8 billion during fiscal years 2004 through 2009 for  research, development, and fielding of the GMD element. Block 2004 activities, scheduled for fiscal years 2004 and 2005, which  are budgeted at $2.20 billion. For example, the cost of flight tests conducted during Block  2004 was accounted for in the Block 2006 budget. Work in this area was initiated in fiscal  year 2003 under the Kinetic Energy Boost program as part of MDA’s Boost  Defense Segment. Software development  activities also have been completed. However, it is too early to state with  confidence whether the element will or will not be ready for integration into  the Ballistic Missile Defense System during this time. Fiscal Year 2002 Assessment

The National Defense Authorization Act for Fiscal Year 2003 directed the  Department of Defense (DOD) to establish cost, schedule, testing, and  performance goals for its ballistic missile defense programs for the years  covered by the Future Years Defense Plan. In the act, Congress also  directed us to assess the extent to which the Missile Defense Agency  (MDA) achieved these goals each in fiscal years 2002 and 2003.
Why GAO Did This Study

The Department of Defense (DOD) has treated ballistic missile defense as a priority since the mid-1980s and has invested tens of billions of dollars to research and develop such capabilities. In 2002 two key events transformed DOD's approach in this area: (1) the Secretary of Defense consolidated existing missile defense elements into a single acquisition program and placed them under the management of the Missile Defense Agency (MDA) and (2) the President directed MDA to begin fielding an initial configuration, or block, of missile defense capabilities in 2004. MDA estimates it will need $53 billion between fiscal years 2004 and 2009 to continue the development, fielding, and evolution of ballistic missile defenses. To fulfill a congressional mandate, GAO assessed the extent to which MDA achieved program goals in fiscal year 2003. While conducting this review, GAO also observed shortcomings in how MDA defines its goals.

What GAO Found

MDA accomplished many activities in fiscal year 2003--such as software development, ground and flight testing, and the construction of facilities at Fort Greely, Alaska--leading up to the fielding of the initial block of the Ballistic Missile Defense System. During this time, however, MDA experienced schedule delays and testing setbacks, resulting in the fielding of fewer components than planned in the 2004-2005 time frame. For example, delays in interceptor development and delivery have caused flight tests (intercept attempts) of the Ground-based Midcourse Defense (GMD) element to slip over 10 months. In flight tests conducted during fiscal year 2003, MDA achieved a 50 percent success rate in intercepting target missiles. While MDA is increasing the operational realism of its developmental flight tests--e.g., employing an operational crew during its late 2003 ship-based intercept attempt--the GMD element has not been tested under unscripted, operationally realistic conditions. Therefore, MDA faces the challenge of demonstrating whether the capabilities being fielded, consisting primarily of the GMD element, will perform as intended when the system becomes operational in 2004. Finally, MDA's cost performance during fiscal year 2003 was mixed. The prime contractors of four system elements completed work at or near budgeted costs during this time, but prime contractors for two system elements overran budgeted costs by a total of about $380 million. GAO found that program goals do not serve as a reliable and complete baseline for accountability purposes and investment decision making because they can vary year to year, do not include all costs, and are based on assumptions about performance not explicitly stated. For example, between its budget requests for fiscal years 2004 and 2005, MDA revised its estimated cost for the first fielded block of missile defense capability. This first block is costing $1.12 billion more and consists of fewer fielded components than that planned a year earlier. In addition, MDA's acquisition reports for Congress do not include life-cycle costs, which normally provide explicit estimates for inventory procurement, military construction, operations, and maintenance. Finally, MDA does not explain some critical assumptions-- such as an enemy's type and number of decoys--underlying its performance goals. As a result, decision makers in DOD and Congress do not have a full understanding of the overall cost of developing and fielding the Ballistic Missile Defense System and what the system's true capabilities will be.