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United States Government Accountability Office: 
GAO: 
Report to Congressional Committees: 

April 2014: 

Missile Defense: 

Mixed Progress in Achieving Acquisition Goals and Improving 
Accountability: 

GAO-14-351: 

GAO Highlights: 

Highlights of GAO-14-351, a report to congressional committees. 

Why GAO Did This Study: 

Since 2002, MDA has spent approximately $98 billion and has requested 
$38 billion more through fiscal year 2018 to develop, test, and field 
a system to defend against enemy ballistic missiles. The BMDS is 
comprised of a command and control system, sensors that identify 
incoming threats, and intercepting missiles. GAO is mandated by law to 
assess the extent to which MDA has achieved its acquisition goals and 
objectives, as reported to Congress through its acquisition baselines, 
and to report on other issues as appropriate. This report examines the 
agency's progress and any challenges in fiscal year 2013 associated 
with (1) developing, flight testing, and producing individual systems, 
which MDA refers to as BMDS elements; and (2) reporting resource and 
schedule baselines that support oversight. To support this effort, GAO 
examined MDA's acquisition and test reports, analyzed two of MDA's 
acquisition baselines—-resource and schedule-—to discern progress, and 
interviewed a wide range of DOD and contractor officials. 

What GAO Found: 

In fiscal year 2013, the Missile Defense Agency (MDA) made mixed 
progress in achieving its acquisition goals to develop, test, and 
produce elements of the Ballistic Missile Defense System (BMDS). For 
the first time, MDA conducted an operational flight test that involved 
warfighters from several combatant commands using multiple BMDS 
elements simultaneously. The agency also successfully conducted 
several developmental flight tests that demonstrated key capabilities 
and modifications made to resolve prior production issues. However, 
the Aegis BMD and Ground-based Midcourse Defense (GMD) continued to 
experience testing and development challenges. 

* Aegis BMD-—while the program successfully conducted three intercept 
flight tests with the Standard Missile (SM)-3 Block IB missile in 
support of a full production decision planned for fiscal year 2015, a 
missile failed during one of these tests. Although the cause of 
failure is not known, the program plans to move forward with missile 
production in 2014. The program is also determining whether a key 
component that is common with the already fielded SM-3 Block IA 
missile will need to be redesigned. 

* GMD—-although the program successfully conducted a non-intercept 
flight test of its upgraded interceptor, the program is nearing a 
seven year delay in completing its first successful intercept. Until 
this upgraded interceptor is demonstrated in an intercept test, 
expected to be conducted in the third quarter of fiscal year 2014, 
manufacturing and deliveries remain on hold. In July 2013, the GMD 
program also failed a flight test of its fielded interceptor. This 
flight test was designed to assess the fielded interceptor under more 
challenging conditions and to confirm design changes to resolve prior 
issues. MDA has not yet made a decision on how to proceed since the 
cause of failure has not been determined. 

MDA has improved the clarity of its resource and schedule baselines 
since it first submitted them to Congress in 2010. However, issues 
with the content and presentation of these baselines continue to limit 
the usefulness of the information available to decision makers for 
oversight. First, as the agency is still in the process of improving 
the quality and comprehensiveness of the cost estimates that support 
its resource baselines, for the fourth year, GAO has found that MDA's 
cost estimates are unreliable. For example, MDA's 2013 cost estimates 
still do not include operations and support costs for military 
services which may significantly understate total costs. Congress has 
recently required MDA to include these costs in future acquisition 
baselines which may improve transparency. Second, MDA's schedule 
baselines are presented in a way that makes it difficult to assess 
progress. Specifically, MDA's 2013 schedule baselines include numerous 
events but provide very little information about them, making it 
difficult to understand what the events are and why they are 
important. Additionally, the 2013 schedule baselines do not compare 
the current event dates with previously reported dates, so decision 
makers cannot easily assess how the program is performing over time. 
Until MDA improves the quality and comprehensiveness of its cost 
estimates and the content of its schedule information, its baselines 
will not be useful for decision makers to gauge progress. 

What GAO Recommends: 

GAO recommends (1) any changes to the SM-3 Block IB be flight tested 
before DOD approves full production; (2) retest the fielded GMD 
interceptor to demonstrate performance; and (3) improve the content of 
its schedule baselines. DOD partially concurred with the first, non-
concurred with the second, and concurred with the third, stating that 
the production and testing decisions will be made using the proper DOD 
processes. GAO believes both recommendations are valid as discussed in 
this report. 

View [hyperlink, http://www.gao.gov/products/GAO-14-351]. For more 
information, contact Cristina Chaplain at (202) 512-4841 or 
chaplainc@gao.gov. 

[End of section] 

Contents: 

Letter: 

Background: 

BMDS Flight Tests Successfully Executed, but Development Challenges 
Continue: 

MDA Made Its Resource and Schedule Baselines Clearer, but Further 
Actions Needed to Enhance Their Use for Oversight: 

Conclusions: 

Recommendations for Executive Action: 

Agency Comments and Our Evaluation: 

Appendix I: Objectives, Scope, and Methodology: 

Appendix II: Comments from the Department of Defense: 

Appendix III: GAO Contact and Staff Acknowledgments: 

Tables: 

Table 1: Missile Defense Agency (MDA) Acquisition Baselines: 

Table 2: Missile Defense Agency (MDA) Acquisition Life Cycle Phases 
for the Ballistic Missile Defense System (BMDS): 

Table 3: Description of Selected Ballistic Missile Defense System 
(BMDS) Elements and Programs: 

Table 4: Selected Ballistic Missile Defense System Acquisition 
Progress and Challenges: 

Table 5: Most Recent Flight Tests of Second Generation Aegis Ballistic 
Missile Defense (BMD) and Standard Missile (SM)-3 Block IB: 

Table 6: Critical Ground-based Midcourse Defense (GMD) Flight Tests: 

Figure: 

Figure 1: Typical Engagement Scenario of the Ballistic Missile Defense 
System Defending Against an Intercontinental Ballistic Missile: 

Abbreviations: 

Aegis BMD: Aegis Ballistic Missile Defense: 

AN/TPY-2: Army Navy/Transportable Radar Surveillance and Control Model 
2: 

BARB: MDS Accountability Report: 

BMDS: Ballistic Missile Defense System: 

BMD: Ballistic Missile Defense: 

C2BMC: Command, Control, Battle Management, and Communications: 

CE-I: Capability Enhancement-I: 

CE-II: Capability Enhancement-II: 

CTV-01: Controlled Test Vehicle-01: 

DOD: Department of Defense: 

eMRBM: Extended Medium-Range Ballistic Missile: 

FTG: Flight Test GMD: 

FTO: Flight Test Operational: 

FTM: Flight Test Standard Missile: 

GMD: Ground-based Midcourse Defense: 

MDA: Missile Defense Agency: 

SM-3: Standard Missile-3: 

THAAD: Terminal High Altitude Area Defense: 

[End of section] 

United States Government Accountability Office: 
GAO:
441 G St. N.W. 
Washington, DC 20548: 

April 1, 2014: 

Congressional Committees: 

For over half a century, the Department of Defense (DOD) has been 
funding efforts to develop a system to detect, track, and defeat enemy 
ballistic missiles. The current system--the Ballistic Missile Defense 
System (BMDS)--includes a diverse collection of land-, sea-, and space-
based assets located around the globe. Since 2002, the Missile Defense 
Agency (MDA)--the agency charged with developing an integrated BMDS--
has spent over $98 billion to develop and deploy this highly complex 
group of systems and has requested an additional $38 billion for 
fiscal years 2014 through 2018 to continue its efforts. For over a 
decade, we have reported on MDA's progress and challenges in 
developing and fielding BMDS capabilities as well as transparency, 
accountability, and oversight issues.[Footnote 1] 

Since 2002, we have been mandated to prepare annual assessments of 
MDA's progress toward its acquisition goals.[Footnote 2] To date, we 
have delivered reviews of MDA's progress covering fiscal years 2003 
through 2012 and are currently mandated to issue our final report in 
2016. The National Defense Authorization Act for Fiscal Year 2012 
mandated that we report our assessment of the extent to which MDA has 
achieved its stated acquisition goals and objectives, as reported 
through its acquisition baselines, and also to include any other 
findings and recommendations on MDA acquisition programs and 
accountability as appropriate.[Footnote 3] This report provides our 
assessment of MDA's acquisition progress in fiscal year 2013. 
Specifically, it highlights MDA's progress and any challenges 
associated with (1) developing, flight testing, and producing 
individual systems, which MDA refers to as BMDS elements; and (2) 
reporting resource and schedule baselines that support oversight. 

To assess MDA's progress and any challenges with developing, testing, 
and producing the BMDS, we examined the acquisition accomplishments of 
several missile defense elements and MDA's targets program.[Footnote 
4] We reviewed key management documents including Program Execution 
Reviews and Baseline Execution Reviews, which detail program 
accomplishments and areas of concern, and interviewed program element 
officials. We also examined MDA's master test plan and flight test 
reports, and discussed the BMDS testing and results with the BMDS 
Operational Test Agency; DOD's Office of the Director, Operational 
Test and Evaluation; and DOD's Office of Developmental Test and 
Evaluation. We also visited several contractor facilities that were 
working on programs covered in our review. 

To assess the progress as well as any remaining challenges MDA faces 
in reporting resource and schedule baselines that support oversight, 
we examined the baselines presented in the BMDS Accountability Reports 
(BAR) for fiscal years 2010 through 2013. To be consistent with last 
year, we focused our assessment on the resource and schedule baselines 
as they continue to be the only reported baselines that separately 
explain when current estimates have deviated to a certain extent from 
the baselines set in prior BARs and have measurable goals, such as 
cost estimates and dates of program events. We interviewed officials 
in MDA's Operations Directorate to discuss their progress in adopting 
best practices in cost estimating based on our Cost Guide.[Footnote 5] 
We also met with officials from MDA's Acquisition Directorate to 
discuss significant internal and external events and decisions that 
occurred in fiscal year 2013, such as sequestration, that affected the 
agency's overall acquisition of the BMDS, as well as how the agency 
establishes and manages its acquisition baselines.[Footnote 6] We 
examined MDA's statutory reporting requirements and interviewed 
officials within MDA's general counsel's office. In addition, we 
reviewed DOD policy and guidance to discern how other major defense 
acquisition programs are required to report baselines and measure 
program progress. 

In addition to this assessment, the National Defense Authorization Act 
for Fiscal Year 2013 mandated GAO to provide separate assessments on 
several other missile defense related issues. Specifically, GAO was 
required to provide briefings on our views and to submit reports as 
soon as practicable to the congressional defense committees our 
assessments of DOD reports on (1) a comprehensive evaluation of 
alternatives for the Precision Tracking Space System and its 
conformance with GAO best practices for analyses of alternatives; (2) 
the Ground-based Midcourse Defense system's test plan; (3) the status 
and progress of regional missile defense programs, including the 
adequacy of MDA's existing and planned efforts to deploy a U.S. 
missile defense in Europe; and (4) the status of efforts to improve 
the homeland defense capability of the United States.[Footnote 7] 
Because this additional mandated work covers the details on many BMDS 
elements, we do not include appendixes on each of the individual 
elements as we have done in prior reports under this mandate. For more 
details on our scope and methodology, see appendix I. 

We conducted this performance audit from April 2013 to April 2014 in 
accordance with generally accepted government auditing standards. 
Those standards require that we plan and perform the audit to obtain 
sufficient, appropriate evidence to provide a reasonable basis for our 
findings and conclusions based on our audit objectives. We believe 
that the evidence obtained provides a reasonable basis for our 
findings and conclusions based on our audit objectives. 

Background: 

Ballistic missiles have different ranges--short, medium, intermediate, 
and intercontinental--as well as different speeds, sizes, and 
performance characteristics. Short-range ballistic missiles have a 
range of less than 621 miles; medium-range ballistic missiles have a 
range from 621 to 1,864 miles; intermediate-range ballistic missiles 
have a range from 1,864 to 3,418 miles; and intercontinental ballistic 
missiles have a range greater than 3,418 miles. As a result, MDA is 
developing a variety of systems that, when integrated, provide 
multiple opportunities to destroy ballistic missiles in flight for the 
strategic defense of the United States and regional defense of its 
deployed forces and allies. The BMDS includes space-based sensors; 
ground-and sea-based radars; ground-and sea-based interceptor 
missiles; and a command and control system that provides communication 
links to the sensors and interceptor missiles. Once a ballistic 
missile has been launched, these sensors and interceptors track and 
engage the threat missile during its flight as shown in figure 1. 

Figure 1: Typical Engagement Scenario of the Ballistic Missile Defense 
System Defending Against an Intercontinental Ballistic Missile: 

[Refer to PDF for image: illustration] 

1. A threat missile is launch against an area defended by the U.S. 
Threat missile releases its warhead and decoys. 

2. Infrared sensors aboard early-warning satellites, such as the Air 
Force's Space Based Infrared System, detect the launch and alert the 
command system (not pictured). 

3. The command system directs one or more radars to track the various 
objects released from the missile to identify the warhead from among 
spent rocket motors, debris, and any decoys. [Forward-based radar] 

4. Relying on the trajectory data provided by the radars, an 
interceptor-–consisting of a kill vehicle mounted atop a booster-–is 
launched to attempt to destroy the threat. 

5. The interceptor boosts toward a predicted intercept point and 
releases its kill vehicle. 

6. The kill vehicle steers itself to collide with the missile's 
warhead, destroying the threat above the atmosphere. 

Source: GAO analysis of MDA data. 

[End of figure] 

MDA's Flexible Acquisition Approach: 

When MDA was established in 2002, the Secretary of Defense granted it 
exceptional flexibility to set requirements and manage the acquisition 
of the BMDS in order to meet a presidential directive to deliver an 
initial defensive capability against ballistic missiles in 2004. This 
flexibility allows MDA to develop BMDS elements outside of DOD's 
standard acquisition process until they are mature enough to be handed 
over to a military service for production and deployment.[Footnote 8] 
Because the BMDS's entrance into DOD's acquisition process is 
deferred, certain laws and policies that generally require major 
defense acquisition programs to take certain steps at certain phases 
in the DOD acquisition process do not yet apply to MDA. For example, 
before a major defense acquisition program begins the product 
development phase, it must document key performance, cost, and 
schedule goals in an acquisition baseline that has been approved by a 
higher-level DOD official.[Footnote 9] This acquisition baseline is 
used to measure a program's performance as it progresses. 
Specifically, as implemented by DOD, major defense acquisition 
programs' baselines provide decision makers with key goals such as the 
program's total cost for an increment of work, key dates associated 
with acquiring a capability, and the weapon's intended performance. 
Additionally, once a baseline has been approved, DOD's major defense 
acquisition programs are required to measure performance against their 
baseline and report certain changes to Congress. For instance, they 
are required to report certain increases in unit cost (cost divided by 
the quantity produced) measured from the original and the current 
program baseline.[Footnote 10] 

While this flexibility allows MDA latitude to manage the BMDS and 
enable it to rapidly develop and field new systems, we have previously 
reported that the agency has used this flexibility to employ 
acquisition strategies with high levels of concurrency (that is, 
overlapping activities such as testing and production), which 
increases the risk for performance shortfalls, costly retrofits, and 
test problems.[Footnote 11] We have also reported that this 
flexibility has hampered oversight and accountability.[Footnote 12] 
According to MDA officials, MDA has taken some steps to identify and 
track concurrency in their programs. 

Congress has taken steps to improve the transparency and 
accountability of BMDS development efforts. For example, in the 
National Defense Authorization Act for Fiscal Year 2008, Congress 
required MDA to establish cost, schedule, and performance baselines 
for certain BMDS elements.[Footnote 13] MDA first reported baselines 
for several BMDS elements to Congress in its June 2010 BAR and has 
continued to report baselines annually. Table 1 describes the six 
acquisition baselines MDA established and reports in its BAR for 
individual BMDS elements or major portions of such elements.[Footnote 
14] 

Table 1: Missile Defense Agency (MDA) Acquisition Baselines: 

Baseline: Resource; 
Description: Reports costs for all the major categories of a program's 
life cycle including research and development, procurement, military 
construction, operations and support, and disposal costs. Also 
includes unit costs, which are usually reported in two ways: (1) 
average procurement unit cost--the average cost to produce one unit, 
and (2) program acquisition unit cost--the average cost to develop and 
produce one unit.[A]. 

Baseline: Schedule; 
Description: Reports a time line of key development milestones and 
tasks such as important acquisition decisions, significant increases 
in performance knowledge, and product deliveries. 

Baseline: Test; 
Description: Reports a schedule of major flight and ground tests, as 
well as key model and simulations events. 

Baseline: Operational capacity; 
Description: Reports information on the fielding plans, capabilities 
and limitations, and supporting activities for delivering operational 
capabilities. 

Baseline: Technical; 
Description: Reports a list of capability needs derived from the 
warfighters' prioritized capabilities, as well as current and future 
capabilities. The list describes the functionality of the program and 
identifies the knowledge a program must meet to proceed. 

Baseline: Contract; 
Description: Reports a time line for a set of contracts designed to 
deliver integrated ballistic missile defense system capabilities from 
request for proposals through proposal receipt, completion of 
negotiations, contract award, and contract execution. 

Source: GAO analysis of MDA's 2013 Ballistic Missile Defense System 
Accountability Report. 

[A] 10 U.S.C. § 2432 defines, with respect to a major defense 
acquisition program, procurement unit cost as the amount equal to (1) 
the total of all funds programmed to be available for obligation for 
procurement for the program divided by (2) the number of fully 
configured end items to be procured. Program acquisition unit cost is 
defined as the amount equal to (1) the total cost for development and 
procurement of, and system-specific military construction for, the 
acquisition program divided by (2) the number of fully configured end 
items to be produced for the acquisition program. 

[End of table] 

Most recently, the National Defense Authorization Act for Fiscal Year 
2012 amended MDA's baseline reporting requirements.[Footnote 15] 
Specifically, the law currently requires MDA to report to the 
congressional defense committees certain changes or variances in the 
current baselines from the baselines presented in the prior year's 
report and from when the baselines were initially established. 
Additionally, the act allows MDA to revise an initial baseline, which 
the agency refers to as a "revised initial baseline." 

In 2010, MDA also established an acquisition process that continues to 
guide the development of the BMDS. Table 2 identifies the five life 
cycle phases of MDA's acquisition process. 

Table 2: Missile Defense Agency (MDA) Acquisition Life Cycle Phases 
for the Ballistic Missile Defense System (BMDS): 

Materiel solutions analysis: An analysis period to develop potential 
alternative solutions; 
Technology development: For developing and maturing technology 
solutions for a capability shortfall; 
Product development: To further develop the potential BMDS component 
to refine and mature the design and manufacturing issues; 
Initial production: Used primarily to provide an initial base for 
production and provide articles for continued testing; 
Production[A]: For producing final operational end items to satisfy 
Warfighter-capability requirements. 

Source: MDA Instruction 5013.02-INS (data); GAO (presentation). 

[A] According to MDA policy, transition to fielding and therefore, 
sustainment and support, occurs during the production phase. 

[End of table] 

The agency has documented the key knowledge that is needed prior to 
the technology development, product development, initial production, 
and production phases. For example, prior to entering initial 
production, an element must demonstrate that its design and 
manufacturing processes are stable, planned quantities are affordable, 
and developmental and operational test results show that the user's 
needs will be met. In general, developmental testing is aimed at 
determining whether the system design will satisfy the desired 
capabilities, while operational testing is aimed at determining 
whether the system is effective, survivable, and suitable in the hands 
of the user under realistic conditions. Additionally, according to DOD 
policy, programs entering initial production or production require 
approval from DOD's Under Secretary of Defense for Acquisition, 
Technology, and Logistics. 

Description of BMDS Elements: 

Table 3 describes the BMDS elements and programs assessed in this 
report and their current MDA acquisition phase. 

Table 3: Description of Selected Ballistic Missile Defense System 
(BMDS) Elements and Programs: 

BMDS element/program: Aegis Ballistic Missile Defense (BMD) with 
Standard Missile-3 (SM-3) Block IB and Aegis BMD second generation 
weapon system software; 
Description and key components: Aegis BMD is a sea-based system 
developed to defend against short-, medium-, and intermediate-range 
ballistic missiles in the middle part of their flight. MDA is 
developing several versions of missiles and associated ship-based 
software and processors.[A] The SM-3 Block IB features additional 
capabilities over the previous SM-3 version to identify, discriminate, 
and track objects during flight. The Aegis BMD second generation 
software also provides increased capabilities with its ability to more 
accurately locate, discriminate, and track more sophisticated threat 
objects as well as uplink that data to the SM-3 Block IB interceptor 
faster than the previous software version. All sea-based Aegis BMD 
systems also include a shipboard radar and command and control systems; 
MDA acquisition phase and operational status: Initial production: 
Plans to be operational in 2014 and available for regional defense in 
Europe and other regions in 2015. 

BMDS element/program: Aegis Modernized Weapon System Software; 
Description and key components: Developed jointly with the Navy, the 
Aegis modernized weapon system software provides increased capability 
over the Aegis BMD second generation weapon system software. MDA is 
currently developing two versions: the first version integrates the 
Aegis BMD second generation weapon system software with Aegis ship 
anti-air defense capabilities, while the second version contains a 
capability upgrade to improve on the types and the numbers of 
ballistic missiles the system can engage; 
MDA acquisition phase and operational status: Product development: 
MDA plans to install the software on a total of 13 ships to support 
regional defenses in Europe and other regions by fiscal year 2018. 

BMDS element/program: Aegis Ashore; 
Description and key components: A land-based, or ashore, version of 
Aegis BMD initially using SM-3 Block IB missiles and the capability 
upgrade version of the Aegis modernized weapon system software, with 
plans to use various versions of SM-3 missiles and Aegis BMD weapon 
system software as they become available. Key components include SM-3 
missiles, a vertical launch system, an enclosure that houses a radar 
and command and control system, and Aegis BMD weapon system software. 
MDA is currently planning to construct three Aegis Ashore sites: one 
test site in Hawaii and two for the defense of Europe; 
MDA acquisition phase and operational status: Product development: 
MDA completed the installation at the Hawaii test site and plans to 
begin flight testing the system in the middle of calendar year 2014 
through the middle of 2015. MDA plans to deliver the first operational 
site in Romania in the end of 2015 and the second site in Poland in 
the end of 2018 to support the defense of Europe. 

BMDS element/program: Army; 
Navy/Transportable Radar Surveillance and Control Model 2 (AN/TPY-
2)[B]; 
Description and key components: The AN/TPY-2 is a transportable X-band 
high resolution radar that is capable of tracking ballistic missiles 
of all ranges. AN/TPY-2 can be used in two modes: in the forward-based 
mode it is used to support Aegis BMD and Ground-based Midcourse 
Defense or in the terminal mode used with Terminal High Altitude Area 
Defense; 
MDA acquisition phase and operational status: Production: 
MDA has delivered nine AN/TPY-2 radars--five for use in forward-based 
mode and four for use in terminal mode--worldwide to support regional 
defenses. Forward-based radars were conditionally accepted by the Army 
with full acceptance expected by June 2016. MDA plans to procure and 
deliver three additional radars for use in terminal mode. 

BMDS element/program: Command, Control, Battle Management, and 
Communications (C2BMC); 
Description and key components: C2BMC is a globally deployed system 
that links and integrates individual missile defense elements. It also 
allows users to plan ballistic missile defense operations, see the 
battle develop, and manage networked sensors. MDA has released several 
versions of the software, known as spirals, which continue to improve 
on the C2BMC's ability to manage information among the BMDS elements. 
The system also includes hardware such as workstations, servers, and 
network equipment; 
MDA acquisition phase and operational status: Product development: 
The latest spiral, known as Spiral 6.4, has been operational since 
2011. The next spiral, known as Spiral 8.2, is in product development 
with plans to be installed in fiscal year 2017. 

BMDS element/program: Ground-based Midcourse Defense (GMD) System; 
Description and key components: The GMD program is a ground-based 
defense system designed to defend the United States against a limited 
intermediate and intercontinental ballistic missile attack in the 
middle part of their flight. Key components include a ground-based 
interceptor consisting of a booster with a kill vehicle on top, as 
well as a communication system and a fire control capability. The kill 
vehicle uses on-board sensors and divert capabilities to steer itself 
into the threat missile to destroy it. There are currently two 
versions of the kill vehicle: the initial design known as the 
Capability Enhancement-I (CE-I) and the upgraded design known as the 
Capability Enhancement-II (CE-II); 
MDA acquisition phase and operational status: Product development: 
CE-I interceptors are fielded for the defense of the United States and 
are located at Fort Greely, Alaska and Vandenberg Air Force Base, 
California. CE-II interceptors are in development and have not yet 
been demonstrated to work as intended through flight testing although 
13 have been delivered. 

BMDS element/program: Targets and Countermeasures; 
Description and key components: MDA develops and manufactures highly 
complex targets that represent realistic threat scenarios during BMDS 
flight tests to aid other BMDS elements' developmental efforts. MDA 
develops and manufactures a variety of targets including short-, 
medium-, intermediate-, and eventually intercontinental ranges; 
MDA acquisition phase and operational status: Product development: 
Because targets are developed to support other BMDS elements, they are 
not operationally fielded. 

BMDS element/program: Terminal High Altitude Area Defense (THAAD); 
Description and key components: THAAD is a mobile, ground-based 
missile defense system designed to defend against short-and medium-
range ballistic missiles in the late-middle and end of their flight. 
THAAD is organized as a battery, which includes interceptors, 
launchers, an AN/TPY-2 radar, a fire control and communications 
system, and other support equipment. MDA is also developing a system 
upgrade, known as THAAD 2.0, to provide an expanded defense against 
short-to-medium range threats and increase integration with other BMDS 
elements; 
MDA acquisition phase and operational status: Production: First two 
THAAD batteries were conditionally accepted by the Army with full 
acceptance expected by the end of fiscal year 2017. MDA plans to 
deliver the ground equipment for a total of six batteries by the end 
of fiscal year 2017 and an inventory of interceptors to fully load six 
batteries by fiscal year 2020. THAAD 2.0 is in product development 
with plans to be operational in fiscal year 2019. 

Source: GAO analysis of MDA data. 

[A] Other Aegis BMD SM-3 interceptor versions include the SM-3 Block 
IA, SM-3 Block IIA, and SM-3 Block IIB. We did not assess the SM-3 
Block IA because it has been in production since 2005 and is currently 
operational for regional defense in Europe as well as other regions. 
We also did not assess the SM-3 Block IIA because it is in the 
technology development phase and therefore does not have cost, 
schedule, or performance baselines. Lastly, we did not assess the SM-3 
Block IIB program because DOD canceled the program in March 2013. 

[B] Details on the acquisition progress of MDA's other sensors such as 
the Sea-based X-band and Cobra Dane radars are not included in this 
report because they have transitioned to sustainment, and therefore, 
MDA did not report acquisition baselines for these elements in the 
2013 BAR. We also did not assess the Upgraded Early Warning Radars 
because this was the first year that MDA reported acquisition 
baselines for this element in the BAR and therefore we could not make 
comparisons to past years. 

[End of table] 

Missile Defense Acquisition Changes in Fiscal Year 2013: 

In March 2013, in response to a growing threat from Iran and North 
Korea, the Secretary of Defense announced steps that affected the 
acquisition of the BMDS including: 

* deploying 14 additional ground-based interceptors in Fort Greely, 
Alaska by 2017; 

* deploying a second AN/TPY-2 radar to Japan; and: 

* shifting the resources from development of the Aegis BMD SM-3 Block 
IIB interceptor, which was planned to be deployed after 2020 to defend 
against intercontinental ballistic missiles, to fund the additional 
ground-based interceptors, as well as develop advanced technology to 
improve the performance of current and future versions of BMDS 
interceptors. 

In 2013, DOD canceled the Aegis BMD SM-3 Block IIB and the Precision 
Tracking Space System citing concerns with the programs' high-risk 
acquisition strategies and technical challenges that GAO has 
previously raised. We have previously reported that MDA did not 
consider a broad range of alternatives or fully assess program or 
technical risks before committing to either program.[Footnote 16] 

In addition, MDA altered its fiscal year 2013 acquisition plan to 
offset a funding reduction of $568 million (6.8 percent) in its total 
available budget for fiscal year 2013. For example, in consultation 
with key stakeholders such as the Operational Test Agency and DOD's 
Office of the Director, Operational Test and Evaluation, MDA revised 
its test plan by combining, delaying, and deleting tests to cut costs. 
MDA also delayed some development activities for various elements into 
fiscal year 2014 and beyond. 

BMDS Flight Tests Successfully Executed, but Development Challenges 
Continue: 

In fiscal year 2013, MDA successfully executed several flight tests 
that demonstrated key BMDS capabilities and modifications made to 
resolve prior development issues, but continued to experience failures 
and delays resulting in less testing and production than planned. For 
the first time in September 2013, the Aegis BMD and Terminal High 
Altitude Area Defense (THAAD) programs participated in an operational 
flight test that resulted in a near simultaneous engagement. 
Additionally, the Aegis BMD program also successfully conducted flight 
tests with the SM-3 Block IB missile. However, according to officials 
from the DOD's Office of the Director, Operational Testing and 
Evaluation, Aegis BMD experienced a SM-3 Block IB missile failure that 
is currently being investigated and could result in a modification to 
a component that is common between the Aegis BMD SM-3 Block IA and IB. 
Lastly, GMD also successfully conducted a non-intercept test of its 
upgraded interceptor that is currently in development, but experienced 
an intercept test failure of the fielded interceptor, the cause of 
which is still unknown. Further details on the operational test are 
provided after table 4. In addition, because ongoing testing and 
development challenges increase the potential to affect the production 
of the SM-3 Block IB missile as well as delaying understanding of the 
capabilities and limitations of GMD's fielded interceptor, we also 
provide additional details for these programs after the table. 

Table 4 presents a summary of key accomplishments and challenges for 
BMDS elements and programs that are in the BAR. 

Table 4: Selected Ballistic Missile Defense System Acquisition 
Progress and Challenges: 

BMDS element/program: Aegis Ballistic Missile Defense (BMD) with 
Standard Missile-3 (SM-3) Block IB and Aegis BMD second generation 
weapon system software; 
Progress: 
* Conducted three flight tests, all of which achieved target 
intercept, in support of a full production decision in fiscal year 
2015; 
* Awarded contracts for 33 SM-3 Block IB missiles; 
* Began installation of Aegis BMD second generation weapons system on 
two additional ships. After they are completed there will be six ships 
in that configuration; 
* Delivered 10 SM-3 Block IB research, development, test and 
evaluation missiles; 
Challenges: 
* SM-3 Block IB interceptor failed in flight during one of the three 
flight tests. The failure occurred during a salvo test, where two 
interceptors were launched against a single target. A failure review 
is ongoing to determine the root cause of the failure and may result 
in design changes to a component common to the SM-3 Block IA. Effects 
on production remain unclear. 

BMDS element/program: Aegis Modernized Weapon System Software; 
Progress: 
* Completed installation on the first ship and initiated installation 
on two additional ships; 
* Completed a review of the capability upgrade design to assess its 
readiness to proceed with demonstration and testing; 
Challenges: 
* Seventeen-month delay in associated development efforts by the Navy 
increased MDA program cost. To offset this increase, MDA reduced its 
engineering support which could affect its ability to resolve 
development challenges if significant issues arise prior to delivery; 
* Discovery of software defects continues to outpace the program's 
ability to fix them; fixes may have to be implemented after software 
is delivered. 

BMDS element/program: Aegis Ashore; 
Progress: 
* Finished assembly of the first operational Aegis Ashore facility at 
the construction site in New Jersey, fully powered on the combat 
system for the first time, and validated the Aegis Ashore facility 
design; 
* Completed installation at the Hawaii test site; 
* Initiated construction of the facility in Romania; 
Challenges: 
* MDA plans to complete development of the first operational facility 
and award a contract to begin the second before flight testing 
demonstrates that the facility works with the Aegis modernized weapon 
system software and interceptors as intended; 
* Flight test delays and cancellations, as well as challenges with 
development of the Aegis modernized weapon system software increase 
the risk of discovering performance issues that may require fixes 
after operational deployment. 

BMDS element/program: Army; 
Navy/Transportable Radar Surveillance and Control Model 2 (AN/TPY-2); 
Progress: 
* Participated in the first operational system-level flight test of 
the BMDS in both forward-based and terminal modes in September 2013; 
* Delivered two terminal mode radars; 
* Initiated the deployment of a second forward-based radar to Japan as 
directed by the Secretary of Defense in March 2013; 
* Achieved agreement with the Army for operation and sustainment cost 
sharing responsibilities; 
* Increased the total number of radars procured from 11 to 12 and 
awarded a contract for the additional radar in December 2013; 
Challenges: 
* No significant challenges with the production and delivery schedule 
of radars 8-11 to support THAAD; 
* According to DOD's Director, Operational Testing and Evaluation 
assessment, during the conduct of a BMDS operational test, the power 
unit for the radar experienced anomalous behavior. 

BMDS element/program: Command, Control, Battle Management, and 
Communications (C2BMC); 
Progress: 
* Initiated delivery of two sets of software modifications and fixes 
to the fielded Spiral 6.4; 
* Demonstrated some capability of Spiral 8.2; 
* Participated in the first operational flight test of the BMDS 
controlling the forward-based AN/TPY-2 and cueing Aegis BMD and THAAD; 
Challenges: 
* Delays in development of Spiral 8.2 require a retrofit to Spiral 6.4 
to maintain an early warning capability for GMD; 
* MDA identified additional software modifications for Spiral 6.4 that 
are needed by fiscal year 2015. However, MDA has yet to define some of 
them, increasing the risk that it will not meet this date. 

BMDS element/program: Ground-based Midcourse Defense (GMD) System; 
Progress: 
* Successfully achieved all planned objectives for a Capability 
Enhancement (CE)-II non-intercept flight test, Control Test Vehicle 
(CTV)-01, in January 2013, in support of Flight Test Ground (FTG)-06b; 
* Began refurbishment of Missile Field 1 and continued emplacing 
interceptors in Missile Field 2 at Fort Greely, Alaska; 
* Completed the Fort Greely, Alaska Power Plant, the back-up power 
source for the Missile Defense Complex mission essential equipment; 
Challenges: 
* GMD failed to achieve an intercept using the CE-I kill vehicle 
during FTG-07 in July 2013. A failure investigation is ongoing and, 
according to program officials, is expected to be completed in the 
second quarter of fiscal year 2014; 
* MDA faces significant management, development, and production 
challenges as it must concurrently: (1) determine the root cause of 
the FTG-07 failure; 
(2) successfully execute the demonstration of the CE-II redesign; 
(3) restart CE-II production to meet fielding obligations; 
and (4) potentially retrofit already delivered CE-II interceptors; 
* GMD's ongoing testing issues in conjunction with the program's 
concurrent acquisition practices increase the risk that any new 
development or production issues will cause major disruptions to the 
program. 

BMDS element/program: Targets and Countermeasures; 
Progress: 
* Launched 10 targets, including the first flight for its extended 
medium-range ballistic missile (eMRBM) during the first operational 
system-level flight test in September 2013; 
Challenges: 
* According to independent testing officials, the expected number of 
targets to support the first operational test campaign were not 
available resulting in less data gathered; 
* MDA adjusted its annual flight test plan by deleting two tests, 
delaying six tests, and modifying the targets used in two tests to 
reduce target costs. 

BMDS element/program: Terminal High Altitude Area Defense (THAAD); 
Progress: 
* Successfully conducted two complex intercept tests against medium-
range targets; 
* First battery deployed to Guam in April 2013; 
* Began training of the third battery in June 2013; 
* Received approval for production of the sixth battery in October 
2012; 
Challenges: 
* According to DOD's Director, Operational Test and Evaluation, some 
THAAD components did not meet reliability requirements. Their average 
time between failures and needed repairs is inconsistent and/or 
inadequate. 

Source: GAO analysis of DOD documents and interviews with DOD 
officials. 

[End of table] 

First System-level Operational Test of the BMDS: 

After more than 11 years of development of the BMDS, MDA conducted the 
first system-level operational missile defense flight test called 
Flight Test Operational-01 (FTO-01) in September 2013. During the 
test, warfighters from several combatant commands employed multiple 
missile defense systems including Aegis BMD and THAAD to demonstrate 
the regional capabilities of U.S. missile defense. This is a 
significant achievement because it is the first operational test that 
involved multiple elements working simultaneously. To conduct this 
test, MDA invested in range assets and conducted other activities to 
ensure it could test multiple elements at once. For example, MDA 
conducted its first integrated system-level flight test, known as 
Flight Test Integrated-01, in October 2012 as a risk-reduction 
exercise for the operational test.[Footnote 17] During FTO-01, MDA 
launched two nearly simultaneous threat-representative medium-range 
ballistic missile targets including its air-launched extended-medium 
range ballistic missile (eMRBM) target for the first time.[Footnote 
18] This test was delayed for approximately one year in part because 
of development problems associated with the eMRBM target. MDA also had 
to make some adjustments to the FTO-01 test plan because of fiscal 
year 2013 sequestration. Although MDA preserved its primary objective 
to demonstrate the interoperability of BMDS elements, it reduced the 
number of targets included in the test from five to two and removed 
participation of more mature elements such as the Patriot Advance 
Capability-3. 

The BMDS elements successfully engaged the targets during the test, 
but according to independent testing officials, full system 
integration was not achieved. Specifically, according to the DOD's 
Director, Operational Test and Evaluation, the Aegis ship successfully 
intercepted one of the targets with a SM-3 Block IA and THAAD 
successfully intercepted a medium-range target for the second time. In 
addition, as a planned demonstration of its layered defense, THAAD 
launched a second interceptor at the target intercepted by the Aegis 
ship as a contingency in event the SM-3 Block IA did not achieve an 
intercept. However, DOD's Director, Operational Test and Evaluation, 
also found that the test failed to achieve full integration between 
all systems due to challenges with system networks, limitations in 
elements' ability to work together and component failures. For 
example, the test uncovered several issues with communication networks 
that are needed for interoperability between all elements. 
Interoperability is important because it can improve the missile 
defense effectiveness and enhance individual systems performance 
beyond operating alone. 

Aegis BMD SM-3 Block IB: 

The Aegis BMD SM-3 Block IB program largely overcame previous 
development challenges and successfully intercepted all targets in its 
last three flight tests as shown in table 5. These tests are required 
for a full production decision--the last key production authorization 
by the Under Secretary of Defense, Acquisition, Technology, and 
Logistics that would allow MDA to produce the remaining 415 
interceptors. However, a missile failure of the second interceptor 
launched during the September 2013 test could increase production risk 
if design changes are needed. 

Table 5: Most Recent Flight Tests of Second Generation Aegis Ballistic 
Missile Defense (BMD) and Standard Missile (SM)-3 Block IB: 

Test name: Flight Test Standard Missile (FTM)-19; 
Test date: May 2013; 
Test overview: 
* Demonstrated the discrimination capabilities of the ship's weapons 
system and the interceptor against a complex short-range ballistic 
missile target; 
* Also demonstrated modifications made to the Aegis BMD second 
generation weapon system in response to the failure of a SM-3 Block IB 
flight test in September 2011; 
* Conducted following more than a 15-month delay; 
Outcome: 
* SM-3 Block IB successfully intercepted the target. 

Test name: FTM-21; 
Test date: September 2013; 
Test overview: 
* First salvo test of SM-3 Block IB where two interceptors were 
launched against a single short-range ballistic missile target; 
* Further assessed the discrimination capabilities of the Aegis BMD 
second generation weapon system and the SM-3 Block IB; 
* MDA considers this test a success because the first missile 
intercepted the target, but according to officials from DOD's Office 
of the Director, Operational Test and Evaluation, the second 
interceptor failed in flight; 
* Conducted following more than 6-month delay; 
Outcome: 
* First SM-3 Block IB successfully intercepted the target; 
* Second SM-3 Block IB failed in flight. 

Test name: FTM-22; 
Test date: October 2013; 
Test overview: 
* Demonstrated the capability of the Aegis BMD second generation 
weapon system to engage medium-range targets with the SM-3 Block IB 
interceptor; 
* Marked the end of initial operational flight testing and evaluation 
of the system; 
* Conducted following more than a 12-month delay; 
Outcome: 
* SM-3 Block IB successfully intercepted the target. 

Source: GAO analysis of Missile Defense Agency and Director, 
Operational Test and Evaluation data. 

[End of table] 

As we found in April 2013, the SM-3 Block IB production line has been 
repeatedly disrupted since 2011 due to flight test anomalies caused by 
malfunctions in two separate sections of the third-stage rocket motor, 
and development challenges with the throttlable divert and attitude 
control system--components that maneuver the interceptor in its later 
stages of flight.[Footnote 19] These challenges delayed the SM-3 Block 
IB full production authorization by more than two years to fiscal year 
2015. Largely resolving these previous challenges, in fiscal year 2013 
the program received permission to procure 33 additional initial 
production missiles. Although MDA initially planned to award a 
contract for 29 SM-3 Block IB missiles in fiscal year 2013, it bought 
four additional missiles in August 2013 to recover an earlier 
reduction. That reduction occurred to provide funds to resolve 
technical and production issues. Based on successful intercepts of the 
last three flight tests, the program also received permission to buy 
52 more interceptors in fiscal year 2014. 

Despite the three successful intercepts, the effect of the missile 
failure in September 2013 on the upcoming full production decision 
remains unclear. Before the program enters into full production, MDA's 
acquisition management instruction requires it to demonstrate to the 
Under Secretary of Defense, Acquisition, Technology, and Logistics 
that there are no significant risks to production and that the planned 
production quantities are affordable and fully funded. The permission 
to enter full production is also based on independent assessments of 
the weapon's effectiveness and suitability by the DOD's Director, 
Operational Test and Evaluation and the Navy's Commander Operational 
Test & Evaluation Force. Although the failure investigation is 
ongoing, preliminary results indicate that the failure occurred in the 
third-stage rocket motor, a component common to the SM-3 Block IA, 
which is nearing the end of its production. Different issues with that 
same component have contributed to previous SM-3 Block IB schedule 
delays and production disruptions. While the precise cause of the 
September 2013 failure is under review, MDA documentation indicates 
that it could potentially result in design changes to the third-stage 
rocket motor and changes to manufacturing processes. Additionally, 
retrofits may be required for SM-3 Block IB and SM-3 Block IA 
interceptors that were already produced. If design changes are 
necessary, program documentation indicates that they will not be 
flight tested until the fourth quarter of fiscal year 2015, just prior 
to the planned deployment of the SM-3 Block IB to support the regional 
defense of Europe and 6 months after its planned full production 
decision. Consequently, until the program thoroughly understands the 
extent of needed modifications, if any, and their effects on 
performance as demonstrated though testing, its production strategy is 
at risk of cost growth and schedule delays. MDA has experienced these 
consequences in other elements when it pursued design changes 
concurrently with production. 

GMD: 

Although the GMD program made progress in resolving a prior CE-II 
intercept failure, test failures and development challenges continue 
to disrupt the program and increase the cost to demonstrate the new CE-
II. The GMD program first attempted to demonstrate the CE-II 
interceptor in January 2010 but subsequently experienced a number of 
setbacks in both the CE-II and the fielded CE-I, as seen in table 6 
below. 

Table 6: Critical Ground-based Midcourse Defense (GMD) Flight Tests: 

Test name: Flight Test Ground (FTG)-06; 
Test date: January 2010; 
Test overview: 
* First intercept attempt with Capability Enhancement (CE)-II to prove 
the interceptor design works as intended; 
* Intended to demonstrate an intercept of a longer range target in 
more challenging conditions; 
* Was first planned to occur in first quarter fiscal year 2008 but was 
delayed to January 2010 due to developmental challenges and target 
availability; 
* Failed to intercept because of a quality control issue and 
consequently the CE-II's design and performance capabilities were not 
demonstrated as planned. However, the quality control issue has since 
been resolved. 

Test name: FTG-06a; 
Test date: December 2010; 
Test overview: 
* Re-test of FTG-06 using CE-II with similar objectives; 
* Failed to intercept because of guidance system component failure and 
consequently the CE-II's design and performance capabilities were not 
demonstrated as planned; 
* The Missile Defense Agency (MDA) halted CE-II production until the 
failure cause was identified and corrected.[A] 

Test name: Controlled Test Vehicle (CTV)-01; 
Test date: January 2013; 
Test overview: 
* Non-intercept, diagnostic flight test of the CE-II to demonstrate 
performance of a redesigned guidance system component; 
* Successfully achieved all test objectives; 
* Additional ground testing revealed further corrective actions were 
needed. 

Test name: FTG-07; 
Test date: July 2013; 
Test overview: 
* First CE-I intercept attempt in almost 5 years; 
* Similar test capability performance objectives as FTG-06 but with a 
CE-I; 
* Also intended to demonstrate the efficacy of CE-I upgrades 
implemented over the last 5 years, including software changes to 
enhance performance; 
* Failed to intercept, although all of the other BMDS elements in the 
flight test performed as planned and the interceptor was launched; 
* Failure review is ongoing with expected completion, according to 
program officials, by the second quarter of fiscal year 2014. 

Test name: FTG-06b; 
Test date: Projected third quarter fiscal year 2014; 
Test overview: 
* Re-test of FTG-06/FTG-06a using a CE-II with similar objectives; 
* Intended to demonstrate the successful mitigation to the FTG-06a 
failure cause; 
* Experienced approximately 2 years of delays to conduct the test; 
* Successful intercept needed to resume CE-II production; 
* The program is pursuing another design effort to address performance 
concerns and serve as an alternative plan if the mitigation to be 
demonstrated in FTG-06b is unsuccessful. 

Source: GAO analysis of MDA data. 

Note: For more information, see GAO-14-350R. 

[A] MDA halted all assembly, integration, manufacture, and 
refurbishment of CE-II kill vehicles until the CE-II mitigation is 
successfully demonstrated in flight testing, including an intercept 
flight test. 

[End of table] 

Developing a mitigation to the FTG-06a failure has proven more 
difficult than initially expected. The program initially planned to 
conduct FTG-06b in the third quarter of fiscal year 2012 but the test 
has since been delayed to at least the third quarter of fiscal year 
2014 because of challenges resolving test failures. For example, while 
initial results from CTV-01 indicated the redesigned guidance system 
component could be used to resolve the problem that caused the FTG-06a 
failure, subsequent ground testing revealed that only one-third of 
those produced could be used in future interceptor production or 
flight tests because the component's performance was uncertain. The 
program mitigated the issue by implementing software and hardware 
modifications and delivered the redesigned component for kill vehicle 
integration in October 2013. However, according to MDA, the program 
experienced further delays in the FTG-06b test while it implemented 
changes based on assessments from the ongoing FTG-07 failure review. 
Consequently, confirmation that the CE-II design works as intended has 
been delayed by nearly seven years and costs have increased by over $1 
billion because of the CE-II development challenges and test failures. 

In July 2013, MDA conducted the FTG-07 developmental test to 
understand the performance of the fielded CE-I against a longer range 
target in more challenging conditions and assess the performance of 
upgrades. This interceptor was fielded before completing developmental 
testing, leading MDA to undertake retrofit efforts and upgrades to fix 
issues identified during testing. According to acquisition best 
practices, developmental testing should be complete before beginning 
production and fielding in order to, among other reasons, avoid the 
need for retrofits and upgrades to fix issues discovered during 
testing. The test failed, delaying understanding of the capabilities 
and limitations of upgrades to the fielded CE-I. Shortly after the 
test failure, the Director, MDA stated a failure review was initiated 
to not only identify the root cause of the failure, but also provide a 
comprehensive review of potential CE-I failures and identify any 
correlations with the CE-II. Since then, according to program 
officials, MDA has identified a kill vehicle component common to both 
interceptors that could be associated with the FTG-07 failure. 
However, it remains unclear what, if any, design changes, retrofits, 
or other corrective actions to the CE-I or CE-II are necessary since 
the failure review is not complete. According to MDA officials, they 
have not determined if they will re-conduct the flight test. If the CE-
I is not flight tested again, the warfighter will not have a full 
understanding of the capabilities and limitations of the upgrades to 
the CE-I interceptor, the original purpose of the FTG-07 test. 

Overall, GMD's ongoing testing issues in conjunction with concurrent 
acquisition practices have caused--and will likely continue to cause--
major disruptions to the program. We previously found that, in 2004, 
MDA committed to a highly concurrent development, production, and 
fielding strategy for the CE-II interceptor and began delivering 
interceptors in 2008.[Footnote 20] Because MDA moved forward with CE-I 
and CE-II interceptor production before completing its flight testing 
program, test failures have exacerbated disruptions to the program. 
For example, because the program has delivered approximately three-
fourths of the interceptors for fielding, the program faces difficult 
and costly decisions on how it will implement corrections from prior 
test failures. Also, the program has had to add tests that were 
previously not planned and delay tests that are necessary to 
understand the system's capabilities and limitations. As a result of 
these development challenges, the GMD program will likely continue to 
experience delays, disruptions, and cost growth. 

MDA Made Its Resource and Schedule Baselines Clearer, but Further 
Actions Needed to Enhance Their Use for Oversight: 

MDA has taken some steps to improve the clarity of its resource and 
schedule baselines, but issues with the content and presentation of 
these baselines continue to limit the usefulness of the information 
available to decision makers for oversight of BMDS development 
efforts. Since 2011, we have found deficiencies in the quality of the 
cost estimates that underpin MDA's resource baselines and reported on 
the efforts MDA has undertaken to improve those estimates. In 2013, we 
found the agency made little progress addressing the underlying 
quality issues with those cost estimates that we raised. As a result, 
this is the fourth year we have found that the cost estimates that 
support MDA's resource baselines are not sufficiently reliable to 
support oversight. However, according to MDA officials, the agency is 
taking steps to improve the quality of its cost estimates to support 
the resource baselines it plans to report in its 2014 BAR. Assessing 
MDA's progress in achieving its schedule goals is also difficult 
because MDA's schedule baselines are not presented in a way that 
allows decision makers to understand or easily monitor progress. Until 
MDA improves the quality and comprehensiveness of its cost estimates 
and the clarity of its schedule information, its baselines may not be 
useful for decision makers. 

MDA Made Limited Improvements to Its Resource and Schedule Baselines: 

In its 2013 BAR, MDA continued to make useful changes to its reported 
resource and schedule baselines. We found in March 2011 that MDA's 
schedule and resource baselines had several shortcomings that limited 
their usefulness for oversight, such as not explaining variances or 
significant changes in the baselines.[Footnote 21] Additionally, we 
found in April 2013 that, in its 2012 BAR, MDA only reported annual 
progress by comparing its current estimates for unit cost and 
scheduled activities against the prior year's estimate and adjusted 
the content of the baselines from year to year in such a way that they 
were no longer comparable.[Footnote 22] As a result, MDA's baselines 
were not useful for tracking longer term progress or for holding the 
agency accountable. 

MDA took some action to improve the completeness and clarity of the 
BAR baselines by: 

* identifying the date of the initial baseline and, if applicable, the 
date when the initial baseline was most recently revised for each 
element or major portion of an element reported in the BAR; 

* explaining most of the significant cost and schedule changes from 
the current baseline estimates against both the estimates reported in 
the prior year's BAR and the latest initial baseline; and: 

* making the baselines easier to read by removing cluttered formatting 
such as strikethroughs and highlights that made some of the events 
listed in past BARs unreadable.[Footnote 23] 

MDA's 2013 Resource Baselines Remain Unreliable: 

Since MDA first reported baselines in June 2010, we have found that 
the underlying information supporting its resource baselines does not 
meet the GAO best practice standards for high-quality cost 
estimates.[Footnote 24] MDA's resource baselines reported in its 2013 
BAR remain unreliable because the agency is still in the process of 
improving the quality of the cost estimates that support its 
baselines. We asked to review the cost estimates that support the 
resource baselines reported in the 2013 BAR, but MDA officials stated 
that the agency had not fully implemented its cost estimating handbook 
and that the cost estimates were not ready for our review. According 
to officials, MDA is still performing reviews of past cost estimates 
to bring them up to the agency's new standards and plans to complete 
these efforts to support the cost estimates reported in its 2014 BAR. 
In addition, according to officials from DOD's Office of the Director 
for Cost Assessment and Program Evaluation, they did not perform an 
independent cost estimate for any of the cost estimates supporting the 
resource baselines reported in the 2013 BAR.[Footnote 25] We have 
found that completing these steps could further improve the quality of 
MDA's cost estimates.[Footnote 26] 

Side bar: 

GAO-11-372: 
In March 2011, we assessed MDA's life-cycle cost estimates using the 
GAO Cost Estimating and Assessment Guide, which is based on best 
practices in cost estimating and identifies key criteria for 
establishing high-quality cost estimates. Our review found that the 
estimates we assessed were not comprehensive, lacked documentation, 
were not completely accurate, or were not sufficiently credible. We 
recommended that MDA (1) take steps to ensure its cost estimates are 
high quality, reliable cost estimates that are documented to 
facilitate external review and (2) obtain independent cost estimates 
for each baseline. 

[End of side bar] 

Side bar: 

GAO-13-432: 
In April 2013, we recommended that the Secretary of Defense direct the 
MDA Director to include in its resource baseline cost estimates all 
life cycle costs, specifically the operations and support costs, from 
the military services in order to provide decision makers with the 
full costs of ballistic missile defense systems. 

[End of side bar] 

Additionally, MDA has made little progress improving the 
comprehensiveness of the cost estimates that support its resource 
baselines. Similar to past years, the cost estimates reported in the 
2013 BAR also do not include the operation and support costs funded by 
the individual military services, which we concluded in April 2013 may 
result in significantly understated life cycle costs for some BMDS 
elements. In response to our April 2013 recommendation, DOD agreed 
that decision makers should have insight into the full life cycle 
costs of DOD programs, but the department stated that the BAR should 
only include content for which MDA is responsible. Because MDA already 
reports the estimated acquisition costs and some of the operation and 
support costs for the acquisitions in the annual BAR, we concluded 
that annual document to be the most appropriate way to report the full 
costs to Congress. Additionally, we concluded that good budgeting 
requires that the full costs of a project be considered when making 
decisions to provide resources and, therefore, both DOD and Congress 
would benefit from a comprehensive understanding of the full costs of 
MDA's acquisition programs. Until MDA's resource baselines are based 
on reliable information and are comprehensive, they will not be useful 
for decision makers to understand progress or make well-informed 
investment decisions. 

In the National Defense Authorization Act for Fiscal Year 2014, 
Congress took steps to address concerns over MDA's cost estimates by 
requiring MDA to report to the congressional defense committees on its 
efforts to improve the quality of the cost estimates included in its 
acquisition baselines.[Footnote 27] For example, the act requires MDA 
to report on a description of and schedule for planned actions to 
improve its cost estimates, as well as an assessment of how the 
planned improvements align with GAO's cost estimating best practices. 
We are also required to provide our views on the content of MDA's 
report. Additionally, the act requires that the life cycle cost 
estimate included in the agency's acquisition baselines include a 
description of the operations and support functions and costs for 
which the military services are responsible, in addition to the costs 
borne by MDA. 

MDA's Schedule Baseline Reporting Makes Assessing Progress Difficult: 

MDA's schedule baselines are presented in a way that makes it 
difficult for decision makers to understand a program's planned 
activities and therefore hold programs accountable for their 
performance. According to GAO's Schedule Assessment Guide, a reliable 
program schedule includes all activities required to complete a 
project, but the schedule should not be too detailed to interfere with 
its use.[Footnote 28] For example, presenting decision makers with a 
high-level summary of the schedule is a best practice because 
schedules that include too many milestones or have too much detail 
make it difficult to manage progress. Additionally, the activities 
included on the schedule should have descriptive names that clearly 
communicate the work required. MDA's 2013 BAR schedule baselines 
include numerous events but provide very little information about 
them, making it difficult to understand what the events are and why 
they are important. For example, the milestones identifying 
significant increases in performance for C2BMC Spiral 8.2 are numbered 
with no description of the capabilities they represent. Additionally, 
several of the events reported for Aegis modernized weapon system 
software are titled with abbreviations that are not explained in the 
BAR. 

In addition, MDA does not present any comparisons of event dates with 
previously reported dates. In contrast, DOD's major defense 
acquisition programs report a comparison of current schedule estimates 
against their original and current schedule goals. According to GAO's 
Schedule Assessment Guide, comparing the current schedule to the 
baseline schedule to track deviations from the plan provides decision 
makers valuable insight into program risk and can help identify where 
corrective action may be needed.[Footnote 29] While removing the 
formatting that identified changes in prior BARs made the schedule 
baselines easier to read, doing so removed the ability for decision 
makers to see if the planned dates for events had changed. As a 
result, decision makers must consult past versions of the BAR to 
identify any changes in the planned schedule for a specific event, 
which can be difficult or impossible in some cases. For example, we 
found in April 2013 that we were unable to compare the current 
estimated dates for the activities presented in the Aegis Ashore 
schedule baseline to the dates baselined in the 2010 BAR because 
activities were split into multiple events, renamed, eliminated, or 
moved to several other Aegis BMD schedule baselines.[Footnote 30] 
During the course of our audit we raised this issue with MDA and, 
according to agency officials, MDA is open to considering alternative 
formats for presenting the schedule baseline in future version of the 
BARs. Until MDA improves the content of its schedule baselines, 
decision makers will not be able to assess how a program is performing 
over time. 

Conclusions: 

During fiscal year 2013, MDA was able to make some significant 
acquisition progress, including the first operational system-level 
flight test involving multiple BMDS elements, but it continued to 
experience difficulties achieving its goals for testing. This has 
resulted in delaying progress on individual elements, delaying 
understanding of the overall performance of the BMDS, and fielding 
assets before all testing is complete. The most significant 
acquisition effects have been experienced on the Aegis BMD SM-3 Block 
IB and GMD program where testing and development challenges have led 
to failure investigations and increased the risk of continued cost 
growth and schedule delays. Both programs conducted flight tests and 
made progress in resolving design flaws in 2013, but still have 
further development, testing, and production issues to address. For 
Aegis BMD SM-3 Block IB, the failure of its interceptor in a September 
2013 flight test means that a key component may need to be redesigned 
and that change confirmed to work in additional flight testing. For 
GMD, the failure of the deployed CE-I interceptor in a July 2013 
flight test compounds its challenge because the program did not gain 
the expected understanding of the effectiveness of software upgrades 
planned for the operational fleet and now must determine the cause of 
the failure. As a result, for both programs, to the extent that 
software or hardware changes are necessary to resolve the cause of 
these failures, new flight tests will likely be needed to demonstrate 
both the effectiveness of any resolutions and, for GMD, understand the 
performance of the software upgrades that were the original purpose of 
the test. 

Additionally, for over a decade, we have reported that MDA provides 
Congress with only limited insight into the acquisition progress for 
individual programs. While MDA has taken steps to improve the clarity 
of the baselines it reports to Congress, the agency's cost and 
schedule reporting still lacks the quality, completeness, and clarity 
necessary to track actual cost or schedule growth over time. 
Specifically, the agency has not addressed all of the critical gaps in 
the quality of its underlying cost estimates used to develop its 
resource baselines that we have identified over the years. Until 
corrective actions are implemented and substantial improvements are 
made to MDA's cost estimates, its reported resource baselines will not 
be useful for decision makers to hold MDA accountable for its 
performance or make informed decisions on how best to allocate limited 
resources. Congress recently amended the requirements for the cost 
estimates MDA must report in its baselines, which may enhance the 
transparency into MDA's cost estimating processes. As a result, we do 
not make any new recommendations regarding cost at this time. However, 
additional actions can be taken in the schedule baselines to improve 
the ability of decision makers to understand what program events are 
most critical and identify whether the dates for those critical events 
have changed. Until improvements are made, the schedule baselines will 
not be a useful tool for providing oversight of the BMDS. 

Recommendations for Executive Action: 

We recommend that the Secretary of Defense take the following three 
actions to strengthen MDA's acquisitions and help support oversight. 

1. To the extent that MDA determines hardware or software 
modifications are required to address the September 2013 Aegis BMD SM-
3 Block IB failure, we recommend that the Secretary of Defense direct, 

a) the Director of the MDA to verify the changes work as intended 
through subsequent flight testing, and: 

b) the Under Secretary of Defense, Acquisitions, Technology, and 
Logistics to delay the decision to approve the program's full 
production until such testing demonstrates that the redesigned missile 
is effective and suitable. 

2. To demonstrate the CE-I's effectiveness against a longer range 
target in more challenging conditions and to confirm the design 
changes implemented to improve performance, as well as any changes 
needed to resolve the July 2013 CE-I flight test failure work as 
intended, we recommend that the Secretary of Defense direct MDA's 
Director to conduct a flight test of the CE-I interceptor once the 
cause of the failure has been determined and any mitigations have been 
developed. 

3. To improve the content of the schedule baselines it reports to 
Congress for monitoring program performance, we recommend that the 
Secretary of Defense direct MDA's Director to take the following 
actions as MDA implements other improvements required by the Congress: 

a) Focus the information included in the schedule baselines to 
highlight critical events. 

b) For each event included in the schedule baseline, provide a 
description of the event explaining what it entails and why it is 
important. 

c) Present the schedule baseline in a format that allows decision 
makers to identify any changes made from the current estimated date to 
the date reported in not only the prior year's BAR but also to the 
date established in the initial baseline. 

Agency Comments and Our Evaluation: 

DOD provided written comments on a draft of this report. These 
comments are reprinted in appendix II. DOD also provided technical 
comments, which were incorporated as appropriate. 

DOD partially concurred with our first recommendation, non-concurred 
with our second recommendation and concurred with our third 
recommendation. The department partially concurred with our first 
recommendation to flight test any modifications that may be required 
to the Aegis BMD SM-3 Block IB as a result of September 2013 failure, 
before the Under Secretary of Defense, Acquisitions, Technology, and 
Logistics approves full production. In its comments, DOD acknowledged 
that if modifications are required they will be tested, but added that 
the type of testing--flight or ground testing--will depend on the 
magnitude of such modifications. The department also believes that the 
component currently tied to the failure, has a successful testing 
history and thus expects to meet the reliability requirement needed 
for the full production decision in fiscal year 2015. However, there 
have now been three flight test anomalies associated with this 
component over the last three years. According to Aegis BMD officials, 
they are considering design changes for this component. Since the 
fiscal year 2015 full production decision is the commitment by the 
Under Secretary of Defense, Acquisitions, Technology, and Logistics to 
produce several hundred missiles, this decision should be supported by 
an assessment of the final product under operational mission 
conditions to ensure that it is effective and suitable. As such, we 
maintain our recommendation that before the program is approved for 
full production, flight testing should demonstrate that any 
modifications work as intended. 

DOD did not concur with our second recommendation to complete the 
original purpose of the July 2013 CE-I flight test once the cause of 
that failure has been determined and any mitigations have been 
developed. In its response, DOD stated that the decision to flight 
test a CE-I interceptor will be made by the Director, MDA, based on 
the judgment of stakeholders from the Office of the Secretary of 
Defense and combatant commands on the need to perform a test. The DOD 
response focused almost exclusively on the steps it is taking to 
identify the cause of the July 2013 failure and mitigate it and did 
not address the main part of our recommendation--determining the 
effectiveness of the CE-I under more challenging conditions and 
confirming that design changes previously made improve performance. 
These were the objectives of FTG-07. In our view, resolving these 
performance questions remains important. Since the FTG-07 failure 
review is still ongoing, we cannot assess whether DOD should conduct a 
CE-I test for the sole purpose of demonstrating corrective actions, to 
the extent any are needed, to address the cause of the failure. While 
we acknowledge that DOD must balance several competing GMD priorities, 
including which flight tests to conduct, and conducting another CE-I 
flight test may not be feasible in the immediate future, we also 
maintain that demonstrating CE-I intercept capabilities should 
continue to be a priority for DOD since the CE-I interceptor 
constitutes a multi-billion dollar investment by DOD and serves as the 
primary defense of the United States homeland against enemy ballistic 
missile attacks. 

In addition to responding to our recommendations, the department's 
letter raised additional concerns about our draft report. First, DOD 
disagreed with our statement that because the BMDS entrance into DOD's 
acquisition process is deferred, it is exempt from certain acquisition 
laws and policies that generally provide oversight of major defense 
acquisition programs. DOD stated that MDA is not exempt from 
acquisition-related laws because, while it is not captured by several 
statutes, Congress has provided legislation specific to MDA to ensure 
oversight and accountability. We clarified the language in our report 
to remove the term exempt. However, because of the acquisition 
flexibility it has been granted, MDA is not yet required to apply 
certain laws and policies to the BMDS. We have found that while the 
flexibility allows MDA latitude to manage the BMDS and to rapidly 
develop and field new systems, we have also found that this 
flexibility has hampered oversight and accountability. Our report 
recognizes the actions Congress has taken to improve the transparency 
and accountability of the BMDS development efforts through legislation 
specific to MDA, particularly to require MDA to report baselines to 
Congress. However, there are a number of requirements that are 
triggered by phases of the DOD acquisition process that are important 
to sound acquisition management. For example, we have previously found 
that MDA is not yet required to conduct an analysis of alternatives to 
compare potential solutions and determine the most cost effective 
weapon system to acquire nor is MDA yet required to obtain an 
independent cost estimate prior to beginning product development. 

Second, DOD stated that it disagreed with our assessment that MDA's 
cost estimates are not sufficiently reliable to support oversight, 
suggesting that the report be revised to include more of MDA's efforts 
to improve the quality of its cost estimates. Since 2011, we have 
found that there are issues with the cost estimates and baseline 
reporting, including incomplete cost estimates due to the exclusion of 
military service operation and support costs as well as instability in 
the content of the baselines, which makes assessing progress difficult 
or impossible. While the draft report was being reviewed by DOD, we 
met with MDA officials who discussed more of their efforts to improve 
their cost estimates; however, we were not provided sufficient 
information to change our determination. We did clarify the report to 
better reflect the efforts they have undertaken. DOD stated in its 
response that MDA has included previously unreported costs in the 
baselines it provides to Congress, which we have previously found is 
an improvement to the amount of information reported to Congress, but 
which does not demonstrate that the quality of the cost estimates 
themselves have improved. DOD stated in its response that it has 
provided joint operation and support costs documentation for two 
programs reported in the 2013 BAR. However, we did not assess the 
joint operation and support costs because they were not included in 
the 2013 resource baselines reported to Congress. DOD also stated in 
its response that it received an assessment from us on cost estimate 
documentation for a third program. We did not perform a formal 
assessment of the third program because it was canceled and not 
included in the 2013 BAR. In order to assist MDA in improving its cost 
estimates, we did informally assess the third program's cost estimate, 
but reached no conclusion as to its quality. However, we noted several 
issues in that informal review. For example, we concluded that because 
MDA did not provide a cost model to support the estimate we were 
unable to check the cost estimate for accuracy. Finally, DOD stated in 
its response that MDA has published and implemented a cost estimating 
handbook. We have previously found that fully implementing that 
handbook could improve the quality of MDA's cost estimates. However, 
during this review, we specifically asked to review the cost estimate 
documentation supporting MDA's fiscal year 2013 BAR baselines in order 
to assess its progress in implementing that handbook. An MDA senior 
cost official told us that the agency was working to fill in 
documentation gaps on existing cost estimates and that the estimates 
were not ready for us to review. In the course of our work, we 
concluded and informed MDA that the cost estimating process defined in 
that handbook has not been applied to any systems that are currently 
baselined or part of the BMDS. Until MDA is able to provide us with 
documentation that supports the actual baselines reported to Congress 
so we can independently assess the quality of the cost estimates, we 
have no basis to change our assessment. 

Third, DOD disputed that MDA has not obtained independent cost 
estimates from DOD's Office of the Director of Cost Assessment and 
Program Evaluation for any of the elements GAO reviewed since 2010. In 
response, we clarified the language in the report so that it 
specifically refers to the lack of independent cost estimates 
completed for any of the resource baselines reported to Congress in 
the 2013 BAR. We also clarified in the report that DOD's Office of the 
Director of Cost Assessment and Program Evaluation has assessed other 
BMDS costs. DOD was unable to provide us with documentation of 
independent cost estimates completed for MDA's BAR baselines, 
therefore, we have no basis to change our determination. 

Lastly, DOD identified 35 "technical and factual errors" in its 
technical comments. However, upon review we found that 29 were not 
technical or factual errors, but rather different conclusions, errors 
in DOD's comments, or required additional substantiation that was not 
provided. We determined that 6 were actual technical or factual errors 
and therefore made the appropriate changes in those circumstances. 

We are sending copies of this report to the Secretary of Defense and 
to the Director, MDA. In addition, the report is available at no 
charge on the GAO website at [hyperlink, http://www.gao.gov]. 

If you or your staff have any questions about this report, please 
contact me at (202) 512-4841 or chaplainc@gao.gov. Contact points for 
our Offices of Congressional Relations and Public Affairs may be found 
on the last page of this report. GAO staff who made key contributions 
to this report are listed in appendix III. 

Signed by: 

Cristina Chaplain: 
Director, Acquisition and Sourcing Management: 

List of Committees: 

The Honorable Carl Levin: 
Chairman: 
The Honorable James Inhofe: 
Ranking Member: 
Committee on Armed Services: 
United States Senate: 

The Honorable Richard Durbin: 
Chairman: 
The Honorable Thad Cochran: 
Ranking Member: 
Subcommittee on Defense: 
Committee on Appropriations: 
United States Senate: 

The Honorable Howard McKeon: 
Chairman: 
The Honorable Adam Smith: 
Ranking Member: 
Committee on Armed Services: 
House of Representatives: 

The Honorable Rodney Frelinghuysen: 
Chairman: 
The Honorable Pete Visclosky: 
Ranking Member: 
Subcommittee on Defense: 
Committee on Appropriations: 
House of Representatives: 

[End of section] 

Appendix I: Objectives, Scope, and Methodology: 

To assess the Missile Defense Agency's (MDA) progress and any 
challenges associated with developing, testing, and producing the 
ballistic missile defense system (BMDS) during fiscal year 2013, we 
examined the acquisition accomplishments of several missile defense 
elements and MDA's targets program. Specifically, we reviewed the 
Aegis Ballistic Missile Defense (Aegis BMD) with Standard Missile-3 
(SM-3) Block IB; Aegis Ashore; Aegis Modernized Weapon System 
Software; Army/Navy Transportable Radar Surveillance and Control Model 
2 (AN/TPY-2); Command, Control, Battle Management, and Communications 
(C2BMC); Ground-based Midcourse Defense (GMD) System; Targets and 
Countermeasures; and Terminal High Altitude Area Defense (THAAD) 
elements because, as reported in the 2013 BMDS Accountability Report 
(BAR), these elements or programs have entered MDA's product 
development, initial production, or production acquisition phase, but 
are not yet mature enough to be transferred to a military service and 
enter the formal DOD acquisition cycle for full-rate production and 
deployment.[Footnote 31] We reviewed key management documents for 
fiscal year 2013 including Program and Baseline Execution Reviews, 
which detailed program accomplishments and areas of concerns, and 
interviewed program element officials. We also examined MDA's master 
test plan and flight test reports, and discussed the element-and BMDS-
level test programs and test results with the BMDS Operational Test 
Agency and the Department of Defense's (DOD) Office of the Director, 
Operational Test and Evaluation and office of Developmental Test and 
Evaluation. In addition, we also met with officials from MDA's 
functional directorates including the Engineering Directorate to 
discuss the agency's process for delivering and integrating BMDS 
capabilities as well as the Directorates for Acquisition and 
Operations to discuss significant internal and external events and 
decisions that occurred in fiscal year 2013, such as sequestration, 
that affected the agency's overall acquisition of the BMDS. 

To assess the progress made as well as any remaining challenges MDA 
faces in reporting resource and schedule baselines that support 
oversight, we examined MDA's reported baselines in the 2010, 2011, 
2012, and 2013 BARs.[Footnote 32] To be consistent with last year, we 
focused our assessment on the resource and schedule baselines as they 
continue to be the only reported baselines that have measurable goals, 
such as cost estimates and dates of program events, and separately 
explain when current estimates have deviated to a certain extent from 
the baselines set in prior BARs. We also examined the National Defense 
Authorization Act for Fiscal Year 2012, which required MDA to 
establish and maintain baselines for program elements or major 
portions of such program elements and outlined the information to be 
included in MDA's baselines, as well as interviewed officials within 
MDA's general counsel's office.[Footnote 33] We also interviewed 
officials in MDA's Acquisitions Directorate about how the agency 
establishes and manages its acquisition baselines and met with MDA 
officials in the Operations Directorate to discuss their progress in 
adopting best practices in cost estimating based on our Cost 
Guide.[Footnote 34] We also reviewed findings and recommendations from 
several of our past reports to see if MDA had made progress in 
improving the completeness, clarity, and stability of its reported 
resource and schedule baselines.[Footnote 35] In addition, we examined 
DOD acquisition policy such as the Interim DOD Instruction 5000.02 
issued in November 2013 and the Defense Acquisition University's 
Defense Acquisition Guidebook to discern how other major defense 
acquisition programs are required to report baselines and measure 
program progress. We also reviewed GAO's cost and schedule guides, 
which outline best practices for establishing and managing program 
cost and schedule estimates.[Footnote 36] 

To gauge the extent to which MDA reported changes or variances in the 
current baselines from the baselines presented in the prior year's BAR 
and from when the baselines were initially established, we compared 
the 2013 BAR resource and schedule baselines for each BMDS element in 
our review to the baselines presented in the 2012 and 2010 BARs. In 
order to compare unit costs calculated in different years, there were 
instances where it was necessary to convert prior cost estimates to 
match the base year of the estimates presented in the 2013 BAR. 
[Footnote 37] We performed these conversions using indexes published 
by the Office of the Secretary of Defense (Comptroller) in the 
National Defense Budget Estimates, commonly referred to as the "Green 
Book." 

The National Defense Authorization Act for Fiscal Year 2013 directed 
GAO to provide separate assessments on several other missile defense 
related issues. Specifically, GAO was required to provide briefings on 
our views and to submit reports as soon as practicable to the 
congressional defense committees our assessments of DOD reports on (1) 
a comprehensive evaluation of alternatives for the Precision Tracking 
Space System and its conformance with GAO best practices for analyses 
of alternatives; (2) the Ground-based Midcourse Defense system's test 
plan; (3) the status and progress of regional missile defense 
programs, including the adequacy of MDA's existing and planned efforts 
to deploy a U.S. missile defense in Europe; and (4) the status of 
efforts to improve the homeland defense capability of the United 
States.[Footnote 38] Because this additional mandated work covers the 
details on many BMDS elements, we do not include appendixes on each of 
the individual elements as we have done in prior reports under this 
mandate. 

Our work was performed at MDA locations including its headquarters in 
Fort Belvoir, Virginia and various program offices in Dahlgren, 
Virginia and Huntsville, Alabama. In Fort Belvoir, we met with 
officials from MDA's Acquisition and Operations Directorates. In 
Dahlgren, we spoke with officials from the Aegis BMD SM-3 Block IB, 
Aegis Ashore, and Aegis Modernized Weapon System Software program 
offices. In Huntsville, we interviewed program officials for BMDS 
Sensors, C2BMC, GMD, and THAAD as well as officials in MDA's 
Acquisition and Cost Directorates. 

We also visited several contractor facilities that were working on 
programs covered in our review. These facilities were located in 
Huntsville and Courtland, Alabama as well as Tucson and Chandler, 
Arizona. In Huntsville, we discussed the manufacturing of the Aegis 
BMD SM-3 Block IB interceptor with Raytheon officials and met with 
GMD's prime contractor, Boeing, to discuss progress in resolving 
development challenges and their plans to deliver additional 
interceptors. In Courtland, we met with officials from Lockheed Martin 
to discuss the production of the extended medium-range ballistic 
missile target, which was used in flight test operational 01 on 
September 10, 2013. In Tucson and Chandler, Arizona, we met with GMD's 
subcontractors Raytheon and Orbital to discuss their progress in 
resolving development challenges with the interceptor, flight testing, 
and future development efforts. We also interviewed officials from 
various testing agencies located in Arlington, Virginia and 
Huntsville, Alabama. In Arlington, we met with officials from DOD's 
Director, Operational Test and Evaluation, as well as DOD's Director 
of Developmental Test and Evaluation, to discuss MDA's test plans and 
results from recent tests. Lastly, in Huntsville, we spoke with 
officials from the BMDS Operational Test Agency to discuss MDA's 
performance assessment. 

We conducted this performance audit from April 2013 to April 2014 in 
accordance with generally accepted government auditing standards. 
Those standards require that we plan and perform the audit to obtain 
sufficient, appropriate evidence to provide a reasonable basis for our 
findings and conclusions based on our audit objectives. We believe 
that the evidence obtained provides a reasonable basis for our 
findings and conclusions based on our audit objectives. 

[End of section] 

Appendix II: Comments from the Department of Defense: 

Assistant Secretary of Defense: 
Acquisition: 
3015 Defense Pentagon: 
Washington, DC 20301-3015: 

March 24, 2014: 

Ms. Cristina Chaplain: 
Director, Acquisition and Sourcing Management: 
U.S. Government Accountability Office: 
441 G Street, N.W. 
Washington, DC 20548: 

Dear Ms. Chaplain: 

This is the Department of Defense (DoD) response to the GAO Draft 
Report, "Missile Defense: Mixed Progress in Achieving Acquisition 
Goals and Improving Accountability" (GAO 14-351) dated February 20, 
2014 (GAO Code 121138). 

The Department partially concurs with GAO Recommendation 1 regarding 
addressing September 2013 AEGIS BMD SM-3 Block IB failure. The 
Department non-concurs with GAO Recommendation 2 regarding testing of 
CE-I interceptors. The Department concurs with Recommendation 3 
regarding improving the content of schedule baselines reported to 
Congress. The rationale for our position is included in the enclosure. 
I submitted separately a list of technical and factual errors for your 
consideration. 

The Department also has significant concerns with comments in GAO's 
Draft Report in the following areas: 

Compliance with DoD Acquisition Process and Certain Laws: GAO states 
that because the Ballistic Missile Defense System (BMDS) entrance into 
DoD's acquisition process is deferred, the MDA is exempt from certain 
acquisition laws and policies that generally provide oversight to 
major defense acquisition programs within DoD. 

While it is true the BMDS is deferred from entering the DoD's 
acquisition processes in accordance with DoDD 5134.09, the BMDS must 
be managed consistent with the principles of DoDD 5000.01 and DoDI 
5000.02. Although a February 2010 SECDEF Ballistic Missile Defense 
Report validated there is no reason for the MDA to be brought into the 
full DoD 5000 process, the MDA is not exempt from acquisition-related 
laws. The BMDS is not captured by several statutes, but Congress 
provided legislation specific to MDA to ensure oversight and 
accountability of the BMDS. 

Cost Estimates Reliability: GAO states that since 2011 they have found 
deficiencies in the quality of the cost estimates that underpin the 
MDA's resource baselines and the efforts the MDA has undertaken to 
improve those estimates. In 2013, GAO claimed the agency made little
progress addressing underlying quality issues with those cost 
estimates. This is the fourth year GAO has found that the cost 
estimates are not sufficiently reliable to support oversight. 
Additionally, GAO found the MDA has not fully implemented its cost 
estimating handbook because the agency is still performing reviews of 
past cost estimates to bring them up to their new standards and did 
not provide the GAO any revised estimates based on these standards for
the BMDS elements included in their 2013 BAR. 

The Department disagrees with GAO's assessment and recommends this 
language be revised to include MDA's demonstrated efforts to improve 
the quality of its cost estimates. Since 2010, the MDA has greatly 
improved the quality of its cost estimates. Specifically, the MDA has
added GAO recommended information to its baselines including disposal 
costs, sunk costs in the Targets resource plans, and variances to 
Program Acquisition Unit Cost (PAUC) and Average Procurement Unit Cost 
(APUC). MDA has published and implemented, in collaboration with the 
GAO and other Government agencies including NASA, its MDA DO Cost 
Estimating and Analysis Handbook, which uses best practices from the 
Comptroller General of the United States. 

MDA has provided the GAO with documentation for the Joint Cost 
Estimates for Operations and Support cost for the THAAD and the 
AN/TPY -2 programs (both programs in the 2013 BAR). The MDA received a 
GAO assessment of the MDA Precision Tracking Surveillance System 
(PTSS) program cost estimate and its associated documentation developed
under the MDA DO Cost Estimating and Analysis Handbook. The results of 
GAO's review showed that the MDA processes and procedures for 
developing and documenting cost estimates have improved significantly 
since the GAO's assessments outlined in the March 2011 GAO report. For 
the PTSS cost estimate, the MDA received assessments of: Substantially 
Met" for the criteria of "Credibility and Accuracy" and "Partially 
Met" for the criteria of "Comprehensiveness and Well-documented." 

Independent Cost Estimates (ICE): GAO states that MDA has not obtained
independent cost assessments from DOD's Office of the Director for 
Cost Assessment and Program Evaluation (CAPE) for any of the elements 
GAO reviewed since 2010. The Department disagrees with the GAO 
assessment. From September 2009 to August 2013, MDA requested CAPE 
perform eleven independent cost estimates or multi-year procurement 
analyses to support multiple program decisions. Congressional 
authorization committees also requested a review in 2012 for EPAA and 
the FY 2013 NDAA directed CAPE to perform an ICE on the Precision 
Tracking Surveillance System (which MDA had previously requested in 
2011). The MDA received briefings on three cost assessments from the 
CAPE during this period for THAAD (2010), the European Phased Adaptive 
Approach (2012), and the Precision Tracking Surveillance System 
(2013). Although the MDA requested an ICE for the SM-3 Block IB in
2009,2010 and 2013, the CAPE decided they would perform a portfolio 
Aegis BMD ICE. This formal portfolio Aegis BMD ICE has not been 
delivered. It should be noted that while developing the 
Congressionally-requested EPAA ICE, the CAPE completed independent cost
estimates on the AEGIS Weapon System (AWS), AEGIS SM-3 Block IB and 
lIB missiles, and the Aegis Ashore program. All of these estimates 
encompass the main components of what would be the Aegis BMD portfolio 
ICE. 

Aegis BMD SM-3 Block IB: GAO states that despite the last three 
successful intercepts the effect of the missile failure in September 
2013 on the upcoming full production decision remains unclear. 
Consequently, GAO believes that until the program thoroughly 
understands the extent of needed modifications, if any, and their 
effects on performance as demonstrated though testing, any production 
strategy is at risk of cost growth and schedule delays. GAO notes that
the MDA has experienced these consequences with other program elements 
when it pursued design changes concurrently with production. 

MDA agrees that any SM-3 Block IB hardware or software modifications 
made to correct the failure experienced in the second missile during 
FTM-21 (September 2013) must be subject to appropriate testing. 

The full-rate production decision will be vetted through proper DoD 
processes including DOT &E analysis; Program, Acquisition and Budget 
Development Committee assessment; and Missile Defense Executive Board. 
The additional details are noted in Department response to 
Recommendation 1. 

Ground-Based Midcourse Defense (GMD): GAO states that although the GMD
program made progress in resolving a prior Capability Enhancement (CE)-
II intercept failure, test failures and development challenges 
continue to disrupt the program and increase cost to demonstrate the 
new CE-II. GAO notes it remains unclear what, if any, design changes, 
retrofits, or other corrective actions to the CE-I or CE-II are 
necessary since the failure review is not complete. GAO concludes that 
as a result of these development challenges, the GMD program will 
likely continue to experience delays, disruptions, and cost growth. 

The decision to flight test a CE-I interceptor will be made by the 
Director, MDA, based on the judgment of OSD and COCOM stakeholders on 
the need to perform a test. The MDA recommends continuation of the 
current test plan with focus on flight test of improvements to the
CE-II interceptor, versus more testing of a CE-I interceptor. There 
have been three successful CE-I flight tests (all successful 
intercepts) with the FTG-07 configuration. The MDA is developing 
corrective actions to mitigate the failure modes identified by the FTG-
07 Failure Review Board. The additional details are noted in MDA 
response to Recommendation 2. 

BMDS Accountability Report (BAR) Schedule Baselines: GAO states the 
manner in which MDA's schedule baselines are presented makes it 
difficult for decision makers to understand a program's planned 
activities and, therefore, hold programs accountable for their
performance. 

MDA has made changes in the 2014 BAR which will be submitted this 
month. As the BMDS and its program elements mature, the MDA strives to 
stabilize program baselines for its component programs. In 2010, the 
MDA established initial baselines for all the BMDS component programs 
in the product development phase or later and created a formal process 
to maintain configuration control of these baselines. The MDA has 
reported these baselines annually to the Congress in the BAR. The 
additional details are noted in Department's response to 
Recommendation 3. 

We appreciate the opportunity to comment on the draft report. My point 
of contact for this effort is Lt Col Peter Jackson, 703-695-7328, 
peter.e.jackson.mil@mail.mil. 

Sincerely, 

Signed by: 

Katrina McFarland: 

Enclosures: As stated. 

GAO Draft Report Dated February 20, 2014: 
GAO-14-3S1 (GAO Code 121138): 

Missile Defense: Mixed Progress In Achieving Acquisition Goals And 
Improving Accountability" 

Department Of Defense Comments To The GAO Recommendation: 

Recommendation 1: To the extent that MDA determines hardware or software
modifications are required to address the September 2013 Aegis BMD SM-
3 Block IB failure, we recommend that the Secretary of Defense direct, 

a) The Director of the MDA to verify the changes work as intended 
through subsequent flight testing, and, 

b) The Undersecretary of Defense, Acquisition, Technology, & Logistics 
to delay the decision to approve the program's full production until 
such testing demonstrates that the redesigned missile is effective and 
suitable. 

DoD Response: Partially Concur. 

a) The Department agrees that any SM-3 Block IB hardware or software 
modifications made to correct the failure experienced in the second 
missile during FTM-21 (September 2013) must be subject to appropriate 
testing. MDA will verify the efficacy of the SM-3 Block IB, including 
any such modifications, by rigorous testing. Testing methods will 
depend on the type and magnitude of changes to the SM-3 Block IB and 
may include ground and/or flight tests as appropriate. 

b) The full-rate production decision will be vetted through proper DoD 
processes including DOT &E analysis; Program, Acquisition and Budget 
Development Committee assessment; and Missile Defense Executive Board 
review prior to a final approval by the Undersecretary of Defense, 
Acquisition, Technology, & Logistics. The SM-3 Block IB component 
which is under review due to the failure, the Third Stage Rocket Motor 
(TSRM), is common to the SM-3 Block IA and has successfully completed 
20 of 22 flight tests and 24 of 24 ground tests. Based on the TSRM's 
history of success along with the demonstrated reliability of the 
other missile components, MDA assesses that SM-3 Block IB can achieve 
its threshold reliability requirement and remain on schedule for a 
Full Rate Production Decision in FY15. 

Recommendation 2: The GAO recommends that the Secretary of Defense 
direct MDA's Director to conduct a flight test of the CE-I interceptor 
once the cause of the July 2013 CE-I flight test failure has been 
determined and any mitigations have been developed. 

DoD Response: Non-Concur. The decision to flight test a CE-I 
interceptor will be made by the Director, MDA, based on the judgment 
of OSD and COCOM stakeholders on the need to perform a test. 

1) FTG-07 Analysis: The Flight Test Ground Based Interceptor (FTG)-07 
investigation determined two key factors produced the FTG-07 anomaly 
which led to failure of the Exoatmospheric Kill Vehicle (EKV) to 
separate from the boost vehicle: 1) the EKV battery design allows for 
leakage current; and 2) the lack of common system ground/leak paths 
allows for differentials across grounds which can upset electrical 
components. As the most probable root cause was being developed, MDA 
began examining test reports from previously fired EKV batteries of 
like or same configuration as well as began execution of a focused 
battery hot-fire test program. Although the analysis is incomplete, 
data collections to date do not indicate that there is a high 
probability of recurrence of the FTG-07 failure mode. 

2) CE-I Flight Testing: There have been three successful CE-I flight 
tests (all successful intercepts) with a like configuration to FTG-07. 
MDA will assess the future CE-I flight testing plan as part of the 
overall Integrated Master Test Plan. 

3) Short Term Mitigation for CE-I - Software: MDA is developing 
corrective actions to mitigate the FTG-07 failure modes identified by 
the FTG-07 Failure Review Board. In the short term, MDA is pursuing CE-
I EKV software that could enable recovery, in flight, if exposed to
the failure mode. This software is currently being developed and will 
be verified by extensive ground testing. Following development and 
testing, a decision will be made on fielding the software to all CE-I 
EKVs. Ground testing is an effective way to verify preventative software
without requiring a flight test. 

4) Longer Term Mitigation for CE-I - Hardware: MDA is developing 
improvements to the EKV battery as further mitigation to the FTG-07 
failure mode. Following completion of ground test qualification, MDA 
intends to flight test these improvements in FTG-09 (currently scheduled
for FY2015) using a CE-II configured GBI. The CE-I EKV battery design 
is the same as the CEII EKV battery design. 

Recommendation 3a: To improve the content of the schedule baselines it 
reports to Congress for monitoring program performance, GAO recommends 
that the Secretary of Defense direct MDA's Director to focus the 
information included in the schedule baselines to highlight critical 
events. 

Recommendation 3b: To improve the content of the schedule baselines it 
reports to Congress for monitoring program performance, GAO recommends 
that the Secretary of Defense direct MDA's Director to provide a 
description of each event included in the schedule baseline explaining 
what it entails and why it is important. 

Recommendation 3c: To improve the content of the schedule baselines it 
reports to Congress for monitoring program performance, GAO recommends 
that the Secretary of Defense direct MDA's Director to present the 
schedule baseline in a format that allows decision makers to identify 
any changes made from the current estimated date to the date reported 
in not only the prior year's BAR but also to the date established in 
the initial baseline. 

DoD Response: Concur with 3a-3c. The annual BMDS Accountability Report 
(BAR) to Congress presents the baselines MDA uses to manage the 
individual BMDS component programs. These baselines (to include the 
Schedule baselines) provide the critical information, data, and 
milestones MDA manages the programs by as directed by 10 USC 225. The 
baselines do not include detailed background descriptions of the data 
on the baselines. MDA's 2014 BAR (anticipated completion is mid-March 
2014) presents detailed information describing significant changes to 
the baselines. The BAR provides significant changes, for each 
baseline, from the initial or revised initial baseline to the current 
baseline estimate and the significant changes from the 2013 BAR to the 
current baseline estimate. 

In response to GAO's request, in addition to the Schedule baselines 
and the listing of significant changes for each BMDS component 
program, MDA will provide additional background information, beginning 
in the current BAR (2014 BAR), on some key critical events. and
milestones. MDA can provide: the date of the event from initial 
baseline (or revised baseline, as appropriate), the date of the event 
from the prior year's BAR, the date of the event from the current 
baseline estimate, and a short description of the event and why it's 
important. MDA will continue to refine this information for the next 
BAR. 

[End of section] 

Appendix III: GAO Contact and Staff Acknowledgments: 

GAO Contact: 

Cristina Chaplain (202) 512-4841 or chaplainc@gao.gov: 

Acknowledgments: 

In addition to the contact named above, David Best, Assistant 
Director; Aryn Ehlow; Meredith Allen Kimmett; Wiktor Niewiadomski; 
Kenneth E. Patton; John H. Pendleton; Karen Richey; Steven Stern; 
Roxanna Sun, Robert Swierczek; Brian Tittle; Hai V. Tran; and Alyssa 
Weir made key contributions to this report. 

[End of section] 

Footnotes: 

[1] We delivered the following reports for fiscal years 2003 through 
2013: GAO, Missile Defense: Actions Are Needed to Enhance Testing and 
Accountability, [hyperlink, http://www.gao.gov/products/GAO-04-409] 
(Washington, D.C.: Apr. 23, 2004); Defense Acquisitions: Status of 
Ballistic Missile Defense Program in 2004, [hyperlink, 
http://www.gao.gov/products/GAO-05-243] (Washington, D.C.: Mar. 31, 
2005); Defense Acquisitions: Missile Defense Agency Fields Initial 
Capability but Falls Short of Original Goals, [hyperlink, 
http://www.gao.gov/products/GAO-06-327] (Washington, D.C.: Mar. 15, 
2006); Defense Acquisitions: Missile Defense Acquisitions Strategy 
Generates Results but Delivers Less at a Higher Cost, [hyperlink, 
http://www.gao.gov/products/GAO-07-387] (Washington, D.C.: Mar. 15, 
2007); Defense Acquisitions: Progress Made in Fielding Missile 
Defense, but Program Is Short of Meeting Goals, [hyperlink, 
http://www.gao.gov/products/GAO-08-448] (Washington, D.C.: Mar. 14, 
2008); Defense Acquisitions: Production and Fielding of Missile 
Defense Components Continue with Less Testing and Validation Than 
Planned, [hyperlink, http://www.gao.gov/products/GAO-09-338] 
(Washington, D.C.: Mar. 13, 2009); Defense Acquisitions: Missile 
Defense Transition Provides Opportunity to Strengthen Acquisition 
Approach, [hyperlink, http://www.gao.gov/products/GAO-10-311] 
(Washington, D.C.: Feb. 25, 2010); Missile Defense: Actions Needed to 
Improve Transparency and Accountability, [hyperlink, 
http://www.gao.gov/products/GAO-11-372] (Washington, D.C.: Mar. 24, 
2011); Missile Defense: Opportunity Exists to Strengthen Acquisitions 
by Reducing Concurrency, [hyperlink, 
http://www.gao.gov/products/GAO-12-486] (Washington, D.C.: Apr. 20, 
2012); Missile Defense: Opportunity to Refocus on Strengthening 
Acquisition Management, [hyperlink, 
http://www.gao.gov/products/GAO-13-432] (Washington, D.C.: Apr. 26, 
2013). 

[2] National Defense Authorization Act for Fiscal Year 2002, Pub. L. 
No. 107-107, § 232(g) (2001); Ronald W. Reagan National Defense 
Authorization Act for Fiscal Year 2005, Pub. L. No. 108-375, § 233 
(2004); National Defense Authorization Act for Fiscal Year 2006, Pub. 
L. No. 109-163, § 232; John Warner National Defense Authorization Act 
for Fiscal Year 2007, Pub. L. No. 109-364, § 224 (2006); National 
Defense Authorization Act for Fiscal Year 2008, Pub. L. No. 110-181, § 
225; and National Defense Authorization Act for Fiscal Year 2012, Pub. 
L. No. 112-81, § 232 (2011). 

[3] Pub. L. No. 112-81, § 232 (2011). 

[4] Specifically, we reviewed the BMDS elements and targets program 
for which MDA had reported acquisition goals to Congress in its 2013 
BMDS Accountability Report (BAR). Our report does not contain an 
assessment of programs that are not yet mature enough to establish 
acquisition baselines such as the Aegis Ballistic Missile Defense 
Standard Missile-3 Block IIA program. Additionally, we did not assess 
programs that were first introduced in the 2013 BAR including two 
Upgraded Early Warning Radars because we could not make comparisons to 
past years. We also did not assess programs that have been transferred 
to a military service for production, operation, or sustainment such 
as the Patriot Advanced Capability-3 program. MDA is also 
cooperatively developing other systems for the defense of Israel, 
which are not included in the 2013 BAR and therefore not covered in 
this report. 

[5] We previously found that MDA's reported cost estimates did not 
meet GAO's best practices for high-quality estimates and recommended 
that MDA take steps to improve the quality of its estimates. DOD 
agreed with this recommendation and stated that MDA would follow GAO's 
Cost Estimating and Assessment Guide for each program reported in the 
BAR. See [hyperlink, http://www.gao.gov/products/GAO-11-372]. 

[6] Sequestration is generally defined as the cancellation of 
previously enacted budgetary resources, making largely across-the-
board reductions to non-exempt programs, activities, and accounts. In 
March 2013, because of the absence of legislation to reduce the 
federal budget deficit, the President ordered sequestration of 
approximately $80 billion in fiscal year 2013 budgetary resources 
across all non-exempt federal government accounts. 

[7] Pub. L. No. 112-239, § 224(e), 231(e), 229(c), and 228(c). For our 
assessments of DOD's reports, see GAO, Missile Defense: Precision 
Tracking Space System Evaluation of Alternatives, [hyperlink, 
http://www.gao.gov/products/GAO-13-747R] (Washington, D.C.: July 25, 
2013) and Regional Missile Defense: DOD's Report Provided Limited 
Information; Assessment of Acquisition Risks is Optimistic, 
[hyperlink, http://www.gao.gov/products/GAO-14-248R] (Washington, 
D.C.: Mar. 14, 2014). At the time of publication of this report, our 
work on DOD's reports on the Ground-based Midcourse Defense system's 
test plan and homeland defense report is ongoing. 

[8] The BMDS program meets the definition of a major defense 
acquisition program, which is defined in 10 U.S.C. § 2430 and 
implemented by DOD in its acquisition policy. Currently, a major 
defense acquisition program is defined as an acquisition program that 
is not a highly sensitive classified program and is designated as a 
major defense acquisition program or the dollar value for all 
increments of the program is estimated to require an eventual total 
expenditure for research, development, test, and evaluation of more 
that $480 million in fiscal year 2014 constant dollars or, for 
procurement of more than $2.79 billion in fiscal year 2014 constant 
dollars. DOD develops its major defense acquisition programs through 
an acquisition process in which programs move through phases of their 
life cycle including a materiel solution analysis phase, a technology 
maturation and risk reduction phase, an engineering and manufacturing 
development phase, a production and deployment phase, and an 
operations and support phase. See Interim DOD Instruction, 5000.02, 
"Operation of the Defense Acquisition System" (Nov. 25, 2013). 

[9] 10 U.S.C. § 2435 requires an approved program baseline description 
for major defense acquisition programs before the program enters 
system development and demonstration (now known as engineering and 
manufacturing development), production and deployment, and full-rate 
production. 

[10] 10 U.S.C. § 2433, also known as "Nunn-McCurdy." Because MDA is 
not required to prepare a baseline under 10 U.S.C. § 2435, there is no 
basis for determining unit costs under 10 U.S.C. § 2433. 

[11] [hyperlink, http://www.gao.gov/products/GAO-12-486]. 

[12] [hyperlink, http://www.gao.gov/products/GAO-10-311]. 

[13] Pub. L. No. 110-181, § 223(g), repealed by Pub. L. No. 112-81, § 
231(b) (2011). 

[14] MDA's targets program does not have acquisition baselines because 
targets are developed to support other BMDS elements and are not 
operationally fielded. However, MDA does report some cost, schedule, 
and performance information for its targets program in the BAR. 

[15] Pub. L. No. 112-81, § 231(a) (2011) (codified as amended at 10 
U.S.C. § 225) requires MDA to establish and maintain baselines for 
certain elements or major portions of elements prior to the product 
development phase (or its equivalent) and prior to production and 
deployment, and report these to the congressional defense committees 
annually. The congressional defense committees are the Committee on 
Armed Services and the Committee on Appropriations of the Senate; and 
the Committee on Armed Services and the Committee on Appropriations of 
the House of Representatives. 10 U.S.C. § 101(a)(16). 

[16] The Precision Tracking Space System was to be a satellite system 
equipped with infrared sensors to track ballistic missiles through 
their emitted heat. See [hyperlink, 
http://www.gao.gov/products/GAO-13-747R]; Standard Missile-3 Block IIB 
Analysis of Alternatives, [hyperlink, 
http://www.gao.gov/products/GAO-13-382R] (Washington, D.C.: Feb. 11, 
2013); and [hyperlink, http://www.gao.gov/products/GAO-13-432]. 

[17] As we found in April 2013, MDA coordinated multiple combatant 
commands and missile defense elements to intercept four of five 
targets launched during the integrated test. See [hyperlink, 
http://www.gao.gov/products/GAO-13-432]. 

[18] MDA originally planned to use two of its new eMRBM targets for 
the first time during the operational flight test. According to an 
agency official, MDA only used one of its eMRBM targets and the second 
medium-range ballistic missile used in the test was provided from an 
alternate source. 

[19] [hyperlink, http://www.gao.gov/products/GAO-13-432]. 

[20] [hyperlink, http://www.gao.gov/products/GAO-12-486]. 

[21] [hyperlink, http://www.gao.gov/products/GAO-11-372]. 

[22] [hyperlink, http://www.gao.gov/products/GAO-13-432]. 

[23] The 2013 BAR also incorporated changes MDA had previously made to 
improve the completeness and clarity of its resource and schedule 
baselines. For example, we found in April 2013 that, in its 2012 BAR, 
MDA began reporting the full range of life cycle costs borne by MDA; 
defining more clearly what costs are presented in the resource 
baselines and noting when costs were excluded from the estimate; and 
adding a separate delivery table that provides more detailed 
information on deliveries and inventories. See [hyperlink, 
http://www.gao.gov/products/GAO-13-432]. 

[24] GAO, GAO Cost Estimating and Assessment Guide, [hyperlink, 
http://www.gao.gov/products/GAO-09-3SP] (Washington, D.C.: March 2009). 

[25] DOD's Office of the Director of Cost Assessment and Program 
Evaluation provides independent analytic advice to the Secretary of 
Defense on all aspects of the Defense program including the cost-
effectiveness of defense systems by ensuring that the costs of DOD 
programs are accurate and complete. According to officials from DOD's 
Office of Cost Assessment and Program Evaluation, the last independent 
cost estimate they conducted for an active BMDS program was for THAAD 
procurement costs in 2010 but they have continued to support MDA with 
other independent cost assessments since that time. For example, they 
examined some costs for several BMDS elements as a part of their 
fiscal year 2012 review of the costs associated with deploying a U.S. 
missile defense in Europe. Additionally, the officials said they 
started but never completed an independent cost estimate for Aegis BMD 
in support of the SM-3 Block IB full production decision because MDA 
delayed the decision from fiscal year 2012 to 2015. 

[26] [hyperlink, http://www.gao.gov/products/GAO-13-432], [hyperlink, 
http://www.gao.gov/products/GAO-11-372], and [hyperlink, 
http://www.gao.gov/products/GAO-10-311]. 

[27] Pub. L. No. 113-66, § 231. 

[28] GAO, GAO Schedule Assessment Guide, [hyperlink, 
http://www.gao.gov/products/GAO-12-120G] (Washington, D.C.: May 2012). 

[29] [hyperlink, http://www.gao.gov/products/GAO-12-120G]. 

[30] [hyperlink, http://www.gao.gov/products/GAO-13-432]. 

[31] The 2013 BAR also includes acquisition information for 
modernizing and integrating the Upgraded Early Warning Radars in 
Clear, Alaska and Cape Cod, Massachusetts into the BMDS. We did not 
include these elements in our review because this was the first year 
MDA reported these baselines in the BAR and therefore we could not 
make comparisons to past years. 

[32] MDA's acquisition baselines include a resource, schedule, test, 
operational capacity, technical, and contract baselines. 

[33] Pub. L. No. 112-81, § 231(a) (2011), codified at 10 U.S.C. § 225. 

[34] In March 2011, we found that MDA's reported cost estimates did 
not meet GAO's best practices for high-quality estimates and 
recommended that MDA take steps to improve the quality of its 
estimates. DOD agreed with this recommendation and stated that MDA 
would follow the GAO Cost Estimating and Assessment Guide for each 
program reported in the BAR. See GAO, Missile Defense: Actions Needed 
to Improve Transparency and Accountability, [hyperlink, 
http://www.gao.gov/products/GAO-11-372], (Washington, D.C.: Mar. 24, 
2011). 

[35] GAO, Missile Defense: Opportunity to Refocus on Strengthening 
Acquisition Management, [hyperlink, 
http://www.gao.gov/products/GAO-13-432], (Washington, D.C.: Apr. 26, 
2013); Schedule Best Practices Provide Opportunity to Enhance Missile 
Defense Agency Accountability and Program Execution, [hyperlink, 
http://www.gao.gov/products/GAO-12-720R] (Washington, D.C.: July 19, 
2012); and [hyperlink, http://www.gao.gov/products/GAO-11-372]. 

[36] GAO, GAO Cost Estimating and Assessment Guide, [hyperlink, 
http://www.gao.gov/products/GAO-09-3SP] (Washington, D.C.: March 2009) 
and Schedule Assessment Guide: Best Practices for Project Schedules, 
[hyperlink, http://www.gao.gov/products/GAO-12-120G] (Washington, 
D.C.: May 2012). 

[37] By comparing costs presented in the same base year, we were able 
to ensure that cost changes in these dollar amounts were not due to 
inflation. 

[38] Pub. L. No. 112-239, § 224 (e), § 231 (e), § 229 (c), and § 228 
(c). For our assessments of DOD's reports, see GAO, Missile Defense: 
Precision Tracking Space System Evaluation of Alternatives, 
[hyperlink, http://www.gao.gov/products/GAO-13-747R] (Washington, 
D.C.: July 25, 2013) and Regional Missile Defense: DOD's Report 
Provided Limited Information; Assessment of Acquisition Risks is 
Optimistic, [hyperlink, http://www.gao.gov/products/GAO-14-248R] 
(Washington, D.C.: Mar. 14, 2014). At the time of publication of this 
report, our work on DOD's reports on the Ground-based Midcourse 
Defense system's test plan and homeland defense is ongoing. 

[End of section] 

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