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Testimony: 

Before the Strategic Forces Subcommittee, Committee on Armed Services, 
House of Representatives: 

United States Government Accountability Office: 
GAO: 

For Release on Delivery: 
Expected at 9:00 a.m. EDT:
Thursday, March 26, 2009: 

Defense Management: 

Key Challenges Should be Addressed When Considering Changes to Missile 
Defense Agency's Roles and Missions: 

Statement of John H. Pendleton, Director: 
Defense Capabilities and Management: 

GAO-09-466T: 

GAO Highlights: 

Highlights of GAO-09-466T, a testimony before the Subcommittee on 
Strategic Forces, Committee on Armed Services, House of 
Representatives. 

Why GAO Did This Study: 

To more quickly field ballistic missile defenses, the Missile Defense 
Agency (MDA) has been exempted from traditional Department of Defense 
(DOD) requirements development, acquisition, and oversight processes 
since its creation in 2002. Instead, MDA has unique roles and missions 
to develop and field weapon systems that address a variety of ballistic 
missile threats. To date, MDA has spent about $56 billion and plans to 
spend about $50 billion more through 2013 to develop an integrated 
Ballistic Missile Defense System. The system consists of a layered 
network of capabilities that includes defensive components such as 
sensors, radars, interceptors, and command and control. In reviews of 
DOD’s approach to acquire, operate, and maintain ballistic missile 
defense systems, GAO has previously reported on several challenges that 
have stemmed from the broad flexibilities provided to MDA. 

This testimony summarizes the challenges facing DOD in acquiring and 
operating its ballistic missile defense systems and describes DOD’s 
efforts to improve transparency and accountability. This statement is 
based primarily on previously issued GAO reports and testimonies. GAO 
also reviewed documents and interviewed key officials to update past 
work and identify DOD and MDA efforts to address previous 
recommendations. 

What GAO Found: 

While MDA’s exemption from traditional DOD processes allowed it to 
quickly develop and field an initial ballistic missile defense 
capability, this approach has led to several challenges. DOD now has an 
opportunity to better balance the flexibility inherent in MDA’s unique 
roles with the need for effective management and oversight of ballistic 
missile defense programs. Furthermore, the start of a new 
administration and the appointment of a new MDA Director offer DOD the 
chance to more fully address the challenges identified in GAO’s prior 
work. These include the following: 

* Incorporating Combatant Command Priorities: While DOD established a 
process in 2005 to address the combatant commands’ needs for ballistic 
missile defense capabilities, GAO reported in 2008 that the process was 
evolving and had yet to overcome key limitations to its effectiveness, 
including the need for more effective methodologies to clearly identify 
and prioritize the combatant commands’ needs. Additionally, when 
developing ballistic missile defenses, MDA lacked a departmentwide 
perspective on which of the commands’ needs were most significant. 

* Establishing Adequate Baselines to Measure Progress: MDA’s flexible 
acquisition approach has limited the ability for DOD and congressional 
decision makers to measure MDA’s progress on cost, schedule, and 
testing. Specifically, as GAO reported in March 2009, MDA’s baselines 
have been inadequate to measure progress and hold MDA accountable. 
However, GAO also reported that new MDA initiatives to improve 
baselines could help improve acquisition accountability. 

* Planning for Long-Term Operations and Support: DOD has taken initial 
steps to plan for ballistic missile defense support, but efforts to 
date are incomplete as difficulties in transitioning responsibilities 
from MDA to the services have complicated long-term planning. 
Additionally, although operation and support costs are typically 70 
percent of a weapon system’s life cycle costs, DOD has not required 
that full cost estimates for ballistic missile defense operations and 
support be developed and validated, and DOD’s 6-year spending plan does 
not fully reflect these costs. 

DOD has recently taken some steps to improve transparency and 
accountability of ballistic missile defense programs, such as the 
creation of a Missile Defense Executive Board to provide top level 
oversight and a life cycle management process that established 
defensewide funding accounts. Although these are positive steps, they 
do not yet provide comprehensive information for acquisition oversight; 
and have not yet clearly defined the roles and responsibilities of MDA 
and the services, including how the defensewide account will be used to 
fund the ballistic missile defense program over the long term. As DOD 
seeks to improve transparency and accountability, sustained top 
leadership will be needed to build upon this recent progress. 

View [hyperlink, http://www.gao.gov/products/GAO-09-466T] or key 
components. For more information, contact John H. Pendleton at (202) 
512-3489 or pendletonj@gao.gov. 

[End of section] 

Madam Chairman and Members of the Subcommittee: 

I am pleased to be here today to discuss the challenges facing the 
Department of Defense (DOD) regarding its process for acquiring, 
developing, and fielding ballistic missile defenses. Funded at $8 
billion to nearly $10 billion per year, the effort to develop and field 
ballistic missile defenses is the largest research and development 
program in DOD. Since its creation in 2002, the Missile Defense Agency 
(MDA) has expended almost $56 billion to develop and field an initial 
ballistic missile defense capability, and plans to spend about $50 
billion more through 2013, while being exempt from traditional DOD 
requirements development, acquisition, and oversight processes. This 
exemption provided MDA with flexibility to quickly develop and deliver 
an initial capability to defend the United States, deployed U.S. 
forces, friends, and allies from the threats posed by ballistic 
missiles. However, the new administration and Congress are now 
reconsidering the approach with which DOD acquires, operates, and 
maintains ballistic missile defense weapon systems. Such 
reconsiderations are occurring against the backdrop of other efforts to 
more broadly reform DOD's traditional acquisition processes. 

My remarks will discuss several key challenges that DOD has yet to 
overcome as it has acquired ballistic missile defense capabilities 
outside traditional DOD requirements and acquisition processes. 
Specifically, my statement will address challenges in incorporating 
combatant command priorities, providing information needed for 
acquisition accountability, and planning for long-term operations and 
support, as well as describing the department's efforts to date to 
establish greater oversight. My statement is based primarily on 
findings and recommendations from our previously issued reports and 
testimonies in these areas. We also interviewed DOD and MDA officials 
and reviewed documents to update our past work and identify DOD and MDA 
efforts to address our previous recommendations. A selected list of our 
previously issued reports and testimonies on these issues is provided 
at the end of this statement. We conducted our work 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: 

MDA's mission is to develop an integrated and layered Ballistic Missile 
Defense System to defend the United States, its deployed forces, 
friends, and allies against ballistic missile attacks. This mission 
requires complex coordination and the integration of many and varied 
defensive components--space-based sensors; ground-and sea-based 
surveillance and tracking radars; advanced ground-and sea-based 
interceptors; and battle management, command, control, and 
communications. Prior to MDA's establishment in 2002, the services, 
along with the support and coordination of the Ballistic Missile 
Defense Organization, separately managed the development and 
acquisition of ballistic missile defense weapon systems as major 
defense acquisition programs.[Footnote 1] 

In 2002, the President established ballistic missile defense as a 
national priority and directed DOD to proceed with plans to develop and 
put in place an initial capability beginning in 2004. To expedite the 
delivery of an operationally capable Ballistic Missile Defense System, 
in 2002 the Secretary of Defense re-chartered the Ballistic Missile 
Defense Organization as MDA and directed MDA to manage all ballistic 
missile defense systems then under development and transferred those 
systems controlled by the military services to the agency.[Footnote 2] 
The systems transferred from the services and the new systems whose 
development MDA initiates are all considered to be "elements" of the 
Ballistic Missile Defense System.[Footnote 3] The Secretary also 
directed MDA to manage the Ballistic Missile Defense System as an 
evolutionary program, and to develop and field increasingly effective 
ballistic missile defense capabilities. To do so, he directed that 
systems developed by MDA would not be subject to DOD's traditional 
joint requirements determination and acquisition processes until a 
mature ballistic missile defense capability had been developed and was 
ready to be handed over to a military service for production and 
operation.[Footnote 4] 

MDA's mission is to develop and field ballistic missile defenses 
against threats posed by adversaries from all regions, at all ranges, 
and in all phases of flight. At the direction of the Secretary of 
Defense and in order to meet a presidential directive, the MDA began 
fielding in 2004 a limited capability to defend the United States 
against long-range ballistic missile attacks. This Ground-based 
Midcourse Defense system, which is intended to protect the U.S. 
homeland against incoming long-range ballistic missiles launched from 
Northeast Asia and the Middle East, was first made operational in 2006. 
MDA has added to this limited capability since it was first fielded by 
upgrading additional Air Force early warning radars, developing and 
fielding land-and sea-based radars, and fielding an initial capability 
for command and control, battle management, and communications. 
Additionally, to provide sea-based defenses against regional threats 
for deployed U.S. forces, friends, and allies, MDA has upgraded 
software and radar systems on 18 Aegis destroyers and cruisers, and 
delivered interceptors for use on these vessels, to defend against 
short-and medium-range threats. Early in the next decade, MDA plans to 
field an additional radar in the Czech Republic and ground-based 
interceptors in Poland to defend Europe and North America from 
ballistic missile threats originating in the Middle East. Over the long 
term, MDA also is developing interceptor payloads that would be capable 
of defeating more advanced threats--such as the use of multiple 
warheads or decoys--and "boost-phase" capabilities to enable DOD to 
shoot down ballistic missiles shortly after liftoff. 

To incorporate the views of the combatant commands--which is critical 
in determining and prioritizing needed capabilities--the President made 
the U.S. Strategic Command responsible in 2003 for advocating for 
desirable missile defense characteristics and capabilities on behalf of 
all combatant commands to MDA. To fulfill this responsibility, U.S. 
Strategic Command and the MDA created the Warfighter Involvement 
Process in 2005. A key output of this process is the Prioritized 
Capabilities List, which is intended to specify how the combatant 
commands collectively prioritize the full range of capabilities needed 
to perform ballistic missile defense missions. 

To operate and support ballistic missile defense elements over the long 
term, DOD plans to transition the responsibility for supporting 
ballistic missile defense elements from MDA to the services. 
Transitioning involves designating lead military service 
responsibilities for providing personnel, force protection, operations 
and support, and for developing doctrine, organization, and facilities 
requirements for its respective element. The transition process may 
culminate in a transfer--which is the reassignment of the MDA program 
office responsibilities to the lead service. 

Oversight of MDA is executed by the Under Secretary of Defense for 
Acquisition, Technology, and Logistics. Because MDA is not subject to 
DOD's traditional joint requirements determination and acquisition 
processes, DOD developed alternative oversight mechanisms. For example, 
in 2007 the Deputy Secretary of Defense established the Missile Defense 
Executive Board,[Footnote 5] which is to provide the Under Secretary of 
Defense for Acquisition, Technology, and Logistics, or Deputy Secretary 
of Defense, as necessary, with a recommended ballistic missile defense 
strategic program plan and feasible funding strategy for approval. In 
September 2008, the Deputy Secretary of Defense also established a life 
cycle management process for the Ballistic Missile Defense System. The 
Deputy Secretary of Defense directed the Board to use the process to 
oversee the annual preparation of a required capabilities portfolio and 
develop a program plan to meet the requirements with Research, 
Development, Test, and Evaluation; procurement; operations and 
maintenance; and military construction in defensewide accounts. 

Key Management Challenges Have Not Been Fully Addressed: 

MDA's exemption from traditional DOD processes allowed it the 
flexibility to quickly develop and field an initial ballistic missile 
defense capability; however, we have previously reported that DOD's 
implementation of this approach has resulted in several management 
challenges that have not been fully addressed. These challenges include 
immature processes for incorporating combatant command priorities, 
inadequate baselines to measure progress, and incomplete planning for 
long-term operations and support. With the start of a new 
administration and the appointment of a new MDA Director, DOD now has 
an opportunity to better balance the flexibility inherent in MDA's 
unique roles and missions with the need for effective management and 
oversight of ballistic missile defense programs, and to more fully 
address the challenges that affect its ability to plan and resource 
ballistic missile defenses. 

Warfighter Involvement Process Has Helped MDA Address Some Combatant 
Command Capability Needs, but the Process Faces Limitations: 

DOD has taken some steps to address combatant command capability needs 
through the Warfighter Involvement Process, but this process faces key 
limitations to its effectiveness. For example, based on combatant 
command inputs received through the Warfighter Involvement Process, MDA 
initiated new programs in fiscal year 2008 to develop and deploy sea- 
based defenses against short-range missiles. However, when the 
Secretary of Defense created MDA in 2002, the agency initially lacked a 
mechanism for obtaining and considering the combatant commands' 
priorities as it developed ballistic missile defenses. The lack of such 
a mechanism made it difficult for MDA and the combatant commands to be 
sure that MDA was addressing the commands' highest priority capability 
needs. 

Although U.S. Strategic Command and MDA established the Warfighter 
Involvement Process in 2005, we reported in July 2008 that this process 
is still evolving and had not yet yielded a clear and effective 
approach for MDA to follow when making investment decisions.[Footnote 
6] Our report identified several shortcomings that inhibited the 
process' effectiveness. For example: 

* U.S. Strategic Command's and MDA's roles and responsibilities for 
implementing the process were not fully documented, which left the 
combatant commands without an agreed-upon method for influencing MDA 
investments and for holding MDA accountable. U.S. Strategic Command has 
since issued guidance that documents how the process operates, but this 
guidance is not binding on MDA and will require updating as the process 
evolves. As of March 2009 MDA had drafted but not yet issued similar 
guidance. As a result, the combatant commands continue to lack both 
transparency into the agency's decision-making process and assurance 
that MDA will implement the process in a manner that addresses their 
needs. 

* The process has not yet resulted in effective methodologies for the 
combatant commands to clearly identify and consistently prioritize 
their capability needs. For example, in preparing the 2007 Prioritized 
Capabilities List--intended to give combatant commanders input into 
development priorities--combatant commands used differing criteria for 
assessing capabilities, and not all commands clearly distinguished 
among their top priorities. As a result, the list did not provide MDA 
with clear information about how to best address the combatant 
commands' needs. DOD agreed with our recommendation that U.S. Strategic 
Command improve the methodologies for identifying and prioritizing 
capabilities, but has not yet completed the 2009 Prioritized 
Capabilities List. 

* Senior civilian DOD leadership has not been involved in the 
Warfighter Involvement Process to adjudicate potential differences 
among the combatant commands' priorities and provide perspective on how 
to invest resources against priorities as the leadership would under 
traditional DOD processes. Lacking such senior-level involvement, MDA 
has not benefited from receiving a broader perspective on which of the 
commands' needs is the most significant. To address this shortcoming, 
we recommended that senior civilian leadership review the commands' 
priorities before they are sent to MDA. DOD partially agreed with our 
recommendation, but it did not clearly identify the steps it would take 
to implement the recommendation. 

A congressionally mandated independent review, released in August 2008, 
[Footnote 7] of MDA's roles, missions, and structure also identified 
the need to improve the Warfighter Involvement Process. Although the 
independent review found that the Warfighter Involvement Process 
provided a potential mechanism for the combatant commands to influence 
Ballistic Missile Defense System developments, the review made several 
recommendations to make the process more effective. In particular, as 
our July 2008 report recommended, the independent review recommended 
that DOD improve the methodologies used to develop and prioritize the 
combatant commands' capability needs so that the Prioritized 
Capabilities List provides more adequate guidance to MDA. 

Since our July 2008 report was issued, U.S. Strategic Command has 
responded to our recommendation that the combatant commands compare 
their priorities with MDA's long-term funding plans and provide an 
assessment--called the Capability Assessment Report--to MDA. U.S. 
Strategic Command expects the first assessment to be completed by the 
end of April 2009. The assessment represents the combatant commands' 
official assessment of MDA's response to the 2007 Prioritized 
Capabilities List, and is also intended to provide a basis for MDA to 
make capability trade-offs and programmatic adjustments to ensure 
acquisition of the warfighters' desired capabilities. U.S. Strategic 
Command provided MDA with a preliminary overview of the assessment in 
June 2008 so that MDA and the Missile Defense Executive Board could use 
the information during the formulation of the fiscal year 2010 budget. 
However, until the MDA's fiscal year 2010 budget is presented to 
Congress, we are unable to assess the extent to which the agency's 
investments are reflective of the commands' priorities. 

MDA's Approach Limits Decision Makers' Ability to Measure Progress on 
Cost, Schedule, and Testing, but New Initiatives Could Improve 
Acquisition Accountability: 

MDA's approach to establishing baselines has limited the ability for 
DOD and congressional decision makers to measure MDA's progress on 
cost, schedule, and testing; however, new DOD initiatives could help 
improve acquisition accountability. Baselines are starting points that 
are used to measure progress on cost, schedule, and testing. Tracking 
progress against a baseline can signal when a program is diverting from 
its planned budget and schedule. Overall, the Ballistic Missile Defense 
System does not have baselines that are useful for oversight. 
Specifically, cost baselines have not been established, test baselines 
remain relatively unstable, and production and fielding are outpacing 
testing and modeling. 

MDA has not yet established cost baselines that are useful to hold the 
agency accountable for how it expends resources, but has indicated that 
it is taking steps to do so. Baselined total costs and unit costs are 
fundamental markers most programs use to measure performance. However, 
MDA's unique roles and missions exempted the agency from a requirement 
to establish baselines for total or unit costs.[Footnote 8] As a 
result, in March 2009 we reported for the sixth consecutive year that 
we were unable to assess MDA's actual costs against baseline costs. 
[Footnote 9] However, in response to recommendations in our March 2009 
report, MDA agreed to provide total cost baselines for its block 
structure, which describes the agency's approach to acquiring and 
delivering new increments of ballistic missile defense capabilities to 
the services and combatant commands for operational use. While Block 1 
capabilities (to defend the United States from a limited, long-range 
North Korean attack) will not be baselined, MDA has agreed to submit 
cost baselines for Block 2 capabilities (to defend U.S. forces and 
allies from short-to medium-range threats in one theater) and portions 
of Block 3 capabilities (to expand the defense of the United States to 
include limited threats from Iran) as part of its submission to the 
President's fiscal year 2010 budget, expected in Spring 2009. MDA also 
stated that it will submit total cost baselines for the rest of Block 3 
and all of Block 5 capabilities (to expand the defense of U.S. forces 
and allies) by the spring of 2010.[Footnote 10] 

MDA also has made some progress with developing a schedule baseline for 
its blocks and their associated capabilities, but has faced challenges 
in meeting this baseline. MDA identifies its schedule baseline as the 
fiscal year dates for early, partial, and full capability deliveries of 
hardware and functionality for a block; as a result, schedule changes 
and their effects on the Ballistic Missile Defense System's development 
can be determined by comparing the changes with the original schedule. 
However, by trying to conform to the schedule baseline, production and 
fielding decisions have outpaced testing and modeling. Specifically, 
MDA determines the capability levels of individual elements through a 
formal declaration process that is based on a combination of models, 
simulations, and ground tests that are all anchored to flight test 
data. However, flight test cancellations and delays have resulted in 
MDA revising and reducing the basis it uses to declare when missile 
defense capabilities can be considered for operational use. As a 
result, recent fielding decisions have been made with a more limited 
understanding of system effectiveness than planned. 

MDA's testing baselines also have not been effective for oversight, but 
a new MDA initiative to review its testing program could lead to 
improvements. In our March 2009 report, we found that MDA's officially 
approved test baseline, the Integrated Master Test Plan, changes 
frequently, often because MDA has changed the substance of a test, the 
timing of a test, or added new tests to the baseline. For example, 
based on its September 2006 plan, MDA had expected the Ground-based 
Midcourse Defense element to conduct seven interceptor flight tests 
from the start of fiscal year 2007 through the first quarter of 2009. 
However, MDA was only able to conduct two of these flight tests. As a 
result of these frequent changes, we concluded that MDA's test baseline 
is therefore not effective for oversight. Recognizing the challenges to 
the testing program, in February 2009, the Director, MDA testified 
before this Subcommittee that the agency is undertaking a review of its 
program. This review, according to MDA, will identify critical 
variables that have not been proven to date, determine what test 
scenarios are needed to collect the relevant test data, and develop an 
affordable and prioritized schedule of flight and ground tests. If 
MDA's review accomplishes its intended goals, then it could both 
improve oversight and help close the gaps that exist between testing, 
modeling, and simulation. 

In our March 2009 report, we made several recommendations to MDA that 
would improve its preparation of cost, schedule, and testing baselines, 
which are needed to help decision makers in DOD and Congress to 
exercise oversight of MDA's acquisition approach. For example, in the 
area of cost we recommended that MDA complete total cost baselines 
before requesting additional funding for Blocks 2 and 3. Regarding 
schedule baselines, we recommended that MDA synchronize the 
development, manufacturing, and fielding schedules of Ballistic Missile 
Defense System assets with the testing and validation schedules to 
ensure that items are not fielded before their performance has been 
validated through testing. In the testing area, we recommended that MDA 
reassess its flight tests scheduled for the end of fiscal year 2009 to 
ensure that they can be reasonably conducted. DOD generally concurred 
with all 11 of our recommendations. 

Planning for Long-Term Operations and Support Is Underway, But Efforts 
Are Incomplete: 

DOD has taken some initial steps to plan for long-term operations and 
support of ballistic missile defense operations, but planning efforts 
to date are incomplete because of difficulties in transitioning 
responsibilities from MDA to the services and in establishing operation 
and support cost estimates. Our prior work has shown that clear roles 
and responsibilities can improve outcomes by identifying who is 
accountable for various activities. However, in September 2008, 
[Footnote 11] we reported that DOD had not identified clear roles and 
responsibilities among MDA and the services for long-term support 
planning. 

In our September 2008 report we recommended that DOD establish a 
process for long-term support planning that adheres to key principles 
for life cycle management. This includes establishing timelines for 
planning that must be completed before each element is fielded, 
involving services in support and transition planning and deciding when 
support responsibilities will be transitioned to the services, 
specifying roles and responsibilities for MDA and the services for life 
cycle management, and identifying who is accountable for ensuring these 
actions are accomplished. Since our September 2008 report was issued, 
DOD has made some progress in planning for transition of some ballistic 
missile defense elements. For example, in January 2009 MDA and the Army 
agreed on the overarching terms and conditions for the transition and 
transfer of elements from MDA to the Army, including Ground-based 
Midcourse Defense, Terminal High Altitude Area Defense, and the AN/TPY- 
2 Forward-based Radar. However, the agreement neither identifies when 
these elements are expected to transfer to the Army, nor addresses the 
specific details on how operations and support costs will be funded 
following the transfer. Until DOD establishes a transition and transfer 
process that adheres to key principles for life cycle management, DOD 
will be unable to ensure that individual elements will be sustained in 
the long term, and DOD's long-term support planning will continue to 
face challenges. 

Moreover, DOD has established limited operation and support cost 
estimates for ballistic missile defense elements, and the estimates 
that have been developed are not transparent to DOD senior leadership 
and congressional decision makers. DOD has not required that full cost 
estimates for ballistic missile defense operations and support be 
developed, validated, and reviewed. As a result, the Future Years 
Defense Plan--DOD's 6-year spending plan--does not fully reflect these 
costs. Prior GAO work has shown that operations and support costs are 
typically 70 percent of a weapon's life cycle costs.[Footnote 12] 
Specifically, our work found that DOD has not addressed ballistic 
missile defense operation and support costs in the following three 
ways: 

* First, in our September 2008 report, we found that MDA and the 
services have jointly developed and agreed on cost estimates for only 
two of the seven elements we examined.[Footnote 13] Joint cost 
estimates for the other five elements are not yet complete and are 
likely to change over time, perhaps significantly, because MDA and the 
services are still determining key assumptions, such as how support 
will be provided--by contractor, the service, or a combination of the 
two--and where some elements may be fielded and operated. These 
determinations will affect military construction and operation and 
support costs, such as maintenance, base operating support, and 
facilities. 

* Second, in September 2008 we found that DOD did not plan to 
independently verify the operation and support cost estimates for all 
the ballistic missile defense elements we reviewed. Independently 
validated cost estimates are especially important to formulating budget 
submissions because, historically, cost estimates created by weapon 
system program offices are lower than those that are created 
independently. In January 2009, MDA and the Army agreed in principle 
that full, independently verified life cycle cost estimates may be 
among the criteria for transferring elements to the Army. However, as 
of February 2009, DOD had not developed plans to prepare these 
estimates. Table 1 shows whether, as of February 2009, the joint 
operation and support cost estimates have been completed, whether the 
cost estimates have been independently verified, and the status of the 
joint estimates. 

* Third, we reported in September 2008 that decision makers' visibility 
of ballistic missile defense operation and support costs was further 
hindered because MDA and the services had agreed only on which 
organization is responsible for funding operation and support costs 
after fiscal year 2013 for two of the seven elements we reviewed--Aegis 
Ballistic Missile Defense and Upgraded Early Warning Radar. It is still 
unclear how DOD intends to fund long-term operations and support costs. 
Although the MDA and Navy agreed in January 2009 on how to fund 
operation and support costs for the Sea-Based X-Band Radar through 
2013, the agreement does not specify whether these costs will be funded 
through the defensewide fund or through a transfer of MDA's 
appropriated funds to the Navy after that time. Additionally, in 
February 2009 Army and Air Force officials told us that the services 
had not reached agreements with MDA about how to fund operation and 
support costs beyond 2013 for four of the seven elements we reviewed. 
As a result of these limitations, DOD and the services would face 
unknown financial obligations for supporting ballistic missile defense 
fielding plans and that most of these costs would not be reflected in 
DOD's future years' spending plan for fiscal years 2010 through 2015. 

Table 1: Status of Joint Cost Estimates and Plans for Independent 
Verification of Operation and Support Cost Estimates for Selected 
Ballistic Missile Defense Elements as of February 2009: 

Element: Aegis Ballistic Missile Defense; 
Status of joint operation and support cost estimate: Completed--MDA and 
the Navy agreed on the operation and support costs through a Memorandum 
of Agreement; 
Status of independent verification of the cost estimate by the Cost 
Analysis Improvement Group: Completed. 

Element: Ground-based Midcourse Defense; 
Status of joint operation and support cost estimate: In Process--Joint 
MDA/Army estimate has not been reviewed and approved by the Army Cost 
Review Board; 
Status of independent verification of the cost estimate by the Cost 
Analysis Improvement Group: No independent estimate. 

Element: Terminal High Altitude Area Defense; 
Status of joint operation and support cost estimate: In Process--Joint 
MDA/Army estimate has not been reviewed and approved by the Army Cost 
Review Board; 
Status of independent verification of the cost estimate by the Cost 
Analysis Improvement Group: No independent estimate. 

Element: AN/TPY-2 (Forward-based); 
Status of joint operation and support cost estimate: In Process--Joint 
MDA/Army estimate has not been reviewed and approved by the Army Cost 
Review Board; 
Status of independent verification of the cost estimate by the Cost 
Analysis Improvement Group: No independent estimate. 

Element: Sea-Based X-Band Radar; 
Status of joint operation and support cost estimate: In Process--Joint 
MDA/Navy estimate is expected to be completed by March 31, 2009; 
Status of independent verification of the cost estimate by the Cost 
Analysis Improvement Group: No independent estimate. 

Element: Upgraded Early Warning Radar; 
Status of joint operation and support cost estimate: Completed--MDA and 
the Air Force jointly agreed on cost estimates through the transition 
plan; 
Status of independent verification of the cost estimate by the Cost 
Analysis Improvement Group: No independent estimate. 

Element: European Midcourse Radar; 
Status of joint operation and support cost estimate: In process--The 
Air Force and MDA began to develop a joint estimate for the European 
radar in August 2008; 
Status of independent verification of the cost estimate by the Cost 
Analysis Improvement Group: In process. 

Source: GAO summary of DOD information. 

Note: Our sample selection did not include Patriot Advanced Capability- 
3, which transferred to the Army in 2003, and the Cobra Dane Radar 
Upgrade, which was transferred to the Air Force in January 2009. See 
GAO, Missile Defense: Actions Needed to Improve Planning and Cost 
Estimates for Long-Term Support of Ballistic Missile Defense, 
[hyperlink, http://www.gao.gov/products/GAO-08-1068] (Washington, D.C.: 
Sept. 25, 2008), for a more detailed discussion of our scope and 
methodology for identifying the elements covered in our review. 

[End of table] 

To address these cost transparency challenges, we recommended that DOD 
establish a requirement to estimate ballistic missile defense operation 
and support costs, including detailing when credible estimates are to 
be developed, updated, and reviewed, and requiring periodic independent 
validation of operation and support costs for each element. In its 
response to our recommendations, DOD stated that it has established a 
new ballistic missile defense life cycle management process to oversee 
the annual preparation of a required capabilities portfolio and a 
program plan to meet those requirements through defensewide accounts. 
This process is intended in part to provide decision makers with clear, 
credible, and transparent cost information. 

DOD Is Taking Actions to Establish Greater Oversight, but Obstacles 
Remain: 

DOD has recently taken some steps to improve oversight of the 
development of the Ballistic Missile Defense System, such as the 
creation of both the Missile Defense Executive Board and its life cycle 
management process, but obstacles remain. For example, DOD's actions do 
not yet provide comprehensive information for acquisition oversight; 
and have not yet clearly defined the roles and responsibilities of MDA 
and the services, including how defensewide accounts will be used to 
fund the ballistic missile defense program over the long term. 
Additionally, as DOD seeks to improve transparency and accountability, 
sustained top leadership will be needed to build upon this recent 
progress. 

Establishment of a new Missile Defense Executive Board in 2007 has been 
a step forward in improving transparency and accountability. The board 
is chartered to review and make recommendations on MDA's acquisition 
strategy, plans, and funding. One step the board has taken to improve 
transparency and accountability was its adoption of its life cycle 
management process, a process designed to clarify the ballistic missile 
defense roles of MDA, the services, combatant commands, and Office of 
the Secretary of Defense. Additionally, the Under Secretary of Defense 
for Acquisition, Technology, and Logistics has directed MDA to take 
actions based on Missile Defense Executive Board recommendations. For 
example, the Under Secretary directed MDA to incorporate into its 
budget proposal the interceptor inventory recommended by a Joint Staff 
study and endorsed by the Missile Defense Executive Board. 

Although the establishment of the Missile Defense Executive Board 
represents progress, this new board does not yet provide comprehensive 
acquisition oversight of the ballistic missile defense program. As we 
reported in March 2009,[Footnote 14] the Under Secretary of Defense for 
Acquisition, Technology, and Logistics plans to hold program reviews 
for several Ballistic Missile Defense System elements to further 
increase acquisition oversight of the Ballistic Missile Defense System. 
According to DOD officials, these reviews are designed to provide 
comprehensive information that will be used as the basis for Missile 
Defense Executive Board recommendations for the Ballistic Missile 
Defense System business case and baseline process--a process which, 
according to these officials, is similar to the traditional Defense 
Acquisition Board process for reviewing other major acquisition 
programs. However, it is unclear whether the information provided to 
the Missile Defense Executive Board will be comparable to that produced 
for other major acquisition program reviews, as most of the information 
appears to be derived or presented by MDA as opposed to independent 
sources as required for traditional major defense acquisition programs. 
[Footnote 15] 

Additionally, the Missile Defense Executive Board's life cycle 
management process is intended to facilitate more detailed agreements 
between MDA and the services to clearly establish their respective 
roles and responsibilities; however, these efforts are still in their 
early stages. For example, although MDA is developing memorandums of 
agreement with the services, the annexes that would lay out the 
specific responsibilities for such things as planning, programming, 
budgeting, execution, and life cycle management for each ballistic 
missile defense element have yet to be completed. Further, the annexes 
are expected to provide details about the how the services and MDA will 
work more closely together to manage the elements through joint program 
offices. The MDA Director told us that these new program offices would 
provide the services greater influence in the design of ballistic 
missile defenses. We have previously reported that early involvement by 
the services is important, because weapons design influences long-term 
operations, support, and costs--responsibilities likely borne by the 
services, not MDA. 

A potential area of concern between MDA and services could be centered 
around how DOD will use the defensewide accounts established in the 
life cycle management process to fund the ballistic missile defense 
program over the long term. The defensewide accounts are intended to 
pay for ballistic missile defense costs other than those already agreed 
to be paid by the services, including research and development, 
procurement, and operations and support costs. In September 2008, 
[Footnote 16] we reported that the Missile Defense Executive Board's 
life cycle management process lacked concrete details for 
implementation and was not well defined. In theory, the defensewide 
accounts would allow all costs to be clearly identified and would 
alleviate the pressure on the services' budgets to fund operation and 
support for ballistic missile defense programs. However, MDA and the 
services have not yet determined the amount and duration of funding for 
the individual ballistic missile defense elements that will come from 
the defensewide accounts. 

While DOD has recently been taking positive steps to improve 
transparency and accountability for ballistic missile defense programs, 
long-term success will require sustained involvement by top DOD 
leadership. Leadership and oversight of missile defense has been 
sporadic in the past. DOD had a senior-level group, called the Missile 
Defense Support Group, dedicated to the oversight of MDA since the 
agency's founding that met many times initially; however, it did not 
meet after June 2005. This leadership vacuum was not filled until the 
Missile Defense Executive Board was established 2 years later. The 
Missile Defense Executive Board has a more robust charter than its 
predecessor, and an additional strength of the board is that its chair, 
the Under Secretary of Defense for Acquisition, Technology, and 
Logistics, used it as his primary oversight tool over the last year. 

In sum, whether or not DOD continues to manage missile defense outside 
its customary acquisition processes, the management challenges we have 
found in our work will need to be addressed. Sustained DOD leadership 
will be required to ensure that the needs of combatant commands are 
considered, that acquisition is adequately managed and overseen, and 
that planning occurs for the long-term operations and support of these 
multi-billion dollar systems. 

Madam Chairman and Members of the Subcommittee, this concludes my 
prepared remarks. I would be happy to answer any questions you or other 
Members of the Subcommittee may have. 

GAO Contact and Staff Acknowledgments: 

John H. Pendleton, (202) 512-3489, pendletonj@gao.gov: 

In addition to the contact named above, Marie A. Mak, Assistant 
Director; David Best; Renee S. Brown; Tara Copp Connolly; Nicolaas C. 
Cornelisse; Kasea L. Hamar; Ronald La Due Lake; Jennifer E. Neer; Kevin 
L. O'Neill, Analyst in Charge; and Karen D. Thornton made key 
contributions to this report. 

[End of section] 

Related GAO Products: 

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.: 
March 13, 2009. 

Defense Acquisitions: Charting a Course for Improved Missile Defense 
Testing. [hyperlink, http://www.gao.gov/products/GAO-09-403T]. 
Washington, D.C.: February 25, 2009. 

Defense Acquisitions: Sound Business Case Needed to Implement Missile 
Defense Agency's Targets Program. [hyperlink, 
http://www.gao.gov/products/GAO-08-1113]. Washington, D.C.: September 
26, 2008. 

Missile Defense: Actions Needed to Improve Planning and Cost Estimates 
for Long-Term Support of Ballistic Missile Defense. [hyperlink, 
http://www.gao.gov/products/GAO-08-1068]. Washington, D.C.: September 
25, 2008. 

Ballistic Missile Defense: Actions Needed to Improve the Process for 
Identifying and Addressing Combatant Command Priorities. [hyperlink, 
http://www.gao.gov/products/GAO-08-740]. Washington, D.C.: July 31, 
2008. 

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.: March 14, 
2008. 

Missile Defense: Actions Needed to Improve Information for Supporting 
Future Key Decisions for Boost and Ascent Phase Element. [hyperlink, 
http://www.gao.gov/products/GAO-07-430]. Washington, D.C.: April 17, 
2007. 

Defense Acquisitions: Missile Defense Acquisition Strategy Generates 
Results, but Delivers Less at a Higher Cost. [hyperlink, 
http://www.gao.gov/products/GAO-07-387]. Washington, D.C.: March 15, 
2007. 

Defense Management: Actions Needed to Improve Operational Planning and 
Visibility of Costs for Ballistic Missile Defense. [hyperlink, 
http://www.gao.gov/products/GAO-06-473]. Washington, D.C.: May 31, 
2006. 

Defense Acquisitions: Missile Defense Agency Fields Initial Capability 
but Falls Short of Original Goal. [hyperlink, 
http://www.gao.gov/products/GAO-06-327]. Washington, D.C.: March 15, 
2006. 

Defense Acquisitions: Actions Needed to Ensure Adequate Funding for 
Operation and Sustainment of the Ballistic Missile Defense System. 
[hyperlink, http://www.gao.gov/products/GAO-05-817]. Washington, D.C.: 
September 6, 2005. 

Defense Acquisitions: Status of Ballistic Missile Defense Program in 
2004. [hyperlink, http://www.gao.gov/products/GAO-05-243]. Washington, 
D.C.: March 31, 2005. 

Missile Defense: Actions Are Needed to Enhance Testing and 
Accountability. [hyperlink, http://www.gao.gov/products/GAO-04-409]. 
Washington, D.C.: April 23, 2004. 

Missile Defense: Actions Being Taken to Address Testing 
Recommendations, but Updated Assessment Needed. [hyperlink, 
http://www.gao.gov/products/GAO-04-254]. Washington, D.C.: February 26, 
2004. 

Missile Defense: Additional Knowledge Needed in Developing System for 
Intercepting Long-Range Missiles. [hyperlink, 
http://www.gao.gov/products/GAO-03-600]. Washington, D.C.: August 21, 
2003. 

Missile Defense: Alternate Approaches to Space Tracking and 
Surveillance System Need to Be Considered. [hyperlink, 
http://www.gao.gov/products/GAO-03-597]. Washington, D.C.: May 23, 
2003. 

Missile Defense: Knowledge-Based Practices Are Being Adopted, but Risks 
Remain. [hyperlink, http://www.gao.gov/products/GAO-03-441]. 
Washington, D.C.: April 30, 2003. 

Missile Defense: Knowledge-Based Decision Making Needed to Reduce Risks 
in Developing Airborne Laser. [hyperlink, 
http://www.gao.gov/products/GAO-02-631]. Washington, D.C.: July 12, 
2002. 

Missile Defense: Review of Results and Limitations of an Early National 
Missile Defense Flight Test. [hyperlink, 
http://www.gao.gov/products/GAO-02-124]. Washington, D.C.: February 28, 
2002. 

Missile Defense: Cost Increases Call for Analysis of How Many New 
Patriot Missiles to Buy. [hyperlink, 
http://www.gao.gov/products/GAO-NSIAD-00-153]. Washington, D.C.: June 
29, 2000. 

Missile Defense: Schedule for Navy Theater Wide Program Should Be 
Revised to Reduce Risk. [hyperlink, 
http://www.gao.gov/products/GAO/NSIAD-00-121]. Washington, D.C.: May 
31, 2000. 

[End of section] 

Footnotes: 

[1] The Ballistic Missile Defense Organization was established in 1993 
to manage and direct DOD ballistic missile defense acquisition programs 
with the services playing major roles in system development. 

[2] When this organization was re-chartered as MDA, its 
responsibilities were reoriented around a concept for a globally 
integrated, layered ballistic missile defense. 

[3] Ballistic missile defense elements include: Ground-based Midcourse 
Defense; Aegis Ballistic Missile Defense; Upgraded Early Warning Radar; 
AN/TPY-2 Forward-based Radar; Cobra Dane Radar Upgrade; Sea-Based X- 
Band Radar; Terminal High-Altitude Area Defense; Command, Control, 
Battle Management, and Communications; European Interceptor Site; 
European Midcourse Radar; and Adjunct Sensor. 

[4] DOD's traditional requirements process is described in Chairman, 
Joint Chiefs of Staff Instruction 3170.01F, Joint Capabilities 
Integration and Development System, May 1, 2007. DOD's traditional 
acquisition process is described in DOD Directive 5000.01, The Defense 
Acquisition System, May 12, 2003, and DOD Instruction 5000.02, 
Operation of the Defense Acquisition System, Dec. 8, 2008. 

[5] The Missile Defense Executive Board is chaired by the Under 
Secretary of Defense for Acquisition, Technology, and Logistics. The 
Board's members are: Director, Defense Research and Engineering, Under 
Secretary of Defense for Policy; Director, Program Analysis and 
Evaluation; Assistant Secretary of the Army for Acquisition, Logistics, 
and Technology; Deputy Under Secretary of Air Force Space Programs; 
Under Secretary of Defense for Intelligence; Commander, U.S. Strategic 
Command; Assistant Secretary of State for International Security and 
Nonproliferation; Director, Operational Test and Evaluation; Vice Chief 
for Naval Operations; Director, Missile Defense Agency; and Vice 
Chairman, Joint Chiefs of Staff. 

[6] GAO, Ballistic Missile Defense: Actions Needed to Improve the 
Process for Identifying and Addressing Combatant Command Priorities, 
[hyperlink, http://www.gao.gov/products/GAO-08-740] (Washington, D.C.: 
July 31, 2008). 

[7] Institute for Defense Analyses, Study on the Mission, Roles, and 
Structure of the Missile Defense Agency (MDA), IDA P-4374 (Alexandria, 
VA: Aug. 2008). 

[8] Section 2435 of Title 10 of the U.S. Code requires a baseline 
description for major defense acquisition programs and generally the 
baseline description must be approved before funds may be obligated to 
the program. The Ballistic Missile Defense System program meets the 
definition of a major defense acquisition program, which is defined at 
10 U.S.C. § 2430; however, the requirement to establish a baseline is 
not triggered until entry into system development and demonstration. 
Under the Secretary of Defense's 2002 program guidance for ballistic 
missile defense, ballistic missile defense system elements do not 
return to standard acquisition processes until they transfer to the 
military services. As of March 2009, only the Patriot Advanced 
Capability-3 and Cobra Dane Radar Upgrade have transferred from MDA to 
the services. 

[9] GAO, 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). 

[10] Block 4 capabilities are to defend allies and deployed forces in 
Europe from limited Iranian long-range threats and to enhance 
protection of the United States. 

[11] GAO, Missile Defense: Actions Needed to Improve Planning and Cost 
Estimates for Long-Term Support of Ballistic Missile Defense, 
[hyperlink, http://www.gao.gov/products/GAO-08-1068] (Washington, D.C.: 
Sept. 25, 2008). 

[12] [hyperlink, http://www.gao.gov/products/GAO-08-1068]. 

[13] The seven elements reviewed were Aegis Ballistic Missile Defense, 
Ground-based Midcourse Defense, Terminal High Altitude Area Defense, 
AN/TPY-2 Forward-based Radar, Sea-Based X-Band Radar, Upgraded Early 
Warning Radar, and European Midcourse Radar. Our criteria for selecting 
elements specified a sample of at least two elements from each of the 
services and that the elements already be fielded or planned for 
fielding between fiscal years 2008 and 2015. For more details about our 
scope, methodology, and selection criteria, see [hyperlink, 
http://www.gao.gov/products/GAO-08-1068]. 

[14] [hyperlink, http://www.gao.gov/products/GAO-09-338]. 

[15] Before a program can enter the system development and 
demonstration phase of the acquisition cycle, statute requires that 
certain information be developed. 10 U.S.C. § 2366b. In 2002, the 
Secretary of Defense deferred the application of some of DOD's 
acquisition processes to the Ballistic Missile Defense System. 
Therefore, MDA has not yet entered System Development and 
Demonstration, which would trigger the statutes requiring the 
development of information that the Defense Acquisition Board uses to 
inform its decisions. Most major defense acquisition programs are also 
required by statute to obtain an independent verification of program 
cost prior to beginning system development and demonstration, and/or 
production and deployment. 10 U.S.C. § 2434. Statute also requires an 
independent verification of a system's suitability for and 
effectiveness on the battlefield before a program can proceed beyond 
low-rate initial production. 10 U.S.C. § 2399. 

[16] [hyperlink, http://www.gao.gov/products/GAO-08-1068]. 

[End of section] 

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