Missile Defense: Delivery Delays Provide Opportunity for Increased Testing to Better Understand Capability

For over half a century, the Department of Defense (DOD) has funded efforts to defend the United States from ballistic missile attacks. From 2002 to 2017, MDA has received about $142 billion and has requested 46.7 billion through fiscal year 2023 to develop the BMDS. The BMDS consists of diverse and highly complex land-, sea-, and space-based systems and assets located across the globe, including planned sites in Romania and Poland to protect United States forces and allies in Europe.

The National Defense Authorization Act for Fiscal Year 2012, as amended, included a provision that GAO annually assess and report on MDA's progress. Among other objectives, this report addresses for fiscal year 2018 (1) the progress MDA made in achieving delivery and testing goals and (2) the extent to which MDA made progress in developing and delivering integrated regional BMDS capabilities. GAO reviewed the planned fiscal year 2018 baselines and other program documentation and assessed them against program and baseline reviews and GAO's acquisition best practices guides, and interviewed officials from relevant agencies.

In fiscal year 2018, the Missile Defense Agency (MDA) made progress toward achieving its delivery and testing goals for some of the individual systems—known as elements—that combine and integrate to create the Ballistic Missile Defense System (BMDS). MDA is also making progress testing for integrated capabilities, which are achieved by combining BMDS elements. However, MDA did not meet its planned goals. The figure below shows MDA's progress delivering assets and conducting tests against its fiscal year 2018 plans.

MDA delivered a significant integrated capability for defending the United States, meeting a goal set by the Secretary of Defense in March 2013 to increase the inventory of ground-based interceptors by December 2017.

Other on-time deliveries included software upgrades and additional assets. However, developmental challenges and testing failures contributed to MDA being unable to deliver all assets as planned.

MDA completed four of eight flight tests. MDA successfully conducted testing to support a production decision; however, it was unable to complete its annual test plan due to failures, cancellations, and delays.

MDA has delayed the delivery of the BMDS's European Phased Adaptive Approach (EPAA) Phase 3—which is intended to protect allies from Iranian threats—until 2020. Construction contractor issues at the planned Aegis Ashore site in Poland drove the delay. At the same time, testing for EPAA Phase 3 against planned threats has been substantially reduced and other vital testing has been deferred until after delivery. MDA officials consider EPAA testing for Phase 3 delivery complete. However, DOD guidance and acquisition best practices stress the importance of testing to understand the extent of capabilities and how to deploy them. The 18-month delay to EPAA Phase 3 provides MDA an opportunity to conduct additional testing and collect more performance data. This testing could provide the warfighter with more information and confidence in the system's ability to protect our allies against expected ballistic missile threats.

GAO is recommending that MDA use the schedule margin afforded by the European Phased Adaptive Approach Phase 3 delay to conduct testing necessary to more thoroughly assess, prior to delivery, the capabilities and limitations of Phase 3 against the expected missile threat. DOD partially concurred with our recommendation. GAO continues to believe the recommendation is valid.

For over half a century, the Department of Defense (DOD) has been  funding efforts to develop, field, and maintain a system to detect, track,  and defeat enemy ballistic missiles—this system is known as the Ballistic  Missile Defense System (BMDS). The BMDS includes a diverse collection  of land-, sea-, and space-based systems and assets located across the  globe. From 2002 to 2017, the Missile Defense Agency (MDA)—the  agency charged with developing and integrating the BMDS—has received  approximately $142 billion. MDA requested $7.9 billion in fiscal year 2018  and an additional $46.7 billion through fiscal year 2023 to continue  development, production of additional assets and capabilities, and  maintenance of fielded assets. However, in December 2017, Congress  passed and the President signed into law additional appropriations  totaling approximately $2 billion for missile defeat and defense  enhancements that DOD used to expand and accelerate several MDA  programs.

Since 2002, various National Defense Authorization Acts have included  provisions for us to prepare annual assessments of MDA’s progress  toward meeting its acquisition goals. Specifically, the National Defense  Authorization Act for Fiscal Year 2012, as amended, includes a provision  for us to report annually on the extent to which MDA has achieved its  acquisition goals and objectives, as reported in its acquisition baselines in  the BMDS Accountability Report (BAR), and include any other findings  and recommendations on MDA’s acquisition programs and accountability,  as appropriate.

For 15 years, we have reported on MDA’s progress and challenges in  developing and fielding BMDS capabilities as well as other transparency,  accountability, and oversight issues. This year, our 16th annual report  addresses, for fiscal year 2018: (1) the progress MDA and its missile  defense programs made in achieving delivery and testing goals; (2) how  MDA responded to budget changes; and (3) the extent to which MDA  made progress in developing and delivering integrated regional BMDS  capabilities. In addition, appendixes I-VIII contains more detailed  information on BMDS elements assessed in the report and their fiscal  year 2018 activities. We plan to issue a separate report later in 2019 on  the extent to which MDA made progress in developing capabilities to  address the emerging threats on the Korean Peninsula.

We focused our assessment on MDA’s progress towards achieving its  delivery and testing goals. To evaluate asset delivery and testing goals,  we reviewed MDA’s planned baselines as expressed in the BMDS  Accountability Report, approved June 15, 2017, as well as the Integrated  Master Test plan. We compared these plans against MDA’s actual  delivery and testing achievements recorded in agency documents and  through interviews with agency officials, contractors, and relevant officials  in the Department of Defense’s (DOD) Office of the Director of  Operational Test and Evaluation (DOT&E) and the BMDS Operational  Test Agency as well as officials from U.S. Northern Command and the  Joint Functional Component Command for Integrated Missile Defense.  We also provided detailed questionnaires on the fiscal year 2018  progress and challenges to the 9 MDA programs included in this report.  We assessed the agency’s performance in view of GAO’s work on best  practices for knowledge-based defense acquisition, Department of  Defense Acquisition Regulations, and the Defense Federal Acquisition  Regulation Supplement (DFARS).

To review changes MDA made in response to budget changes from a  supplemental appropriation in fiscal year 2018, we reviewed budget  submissions and legislative language. We compared these revised plans,  once enacted, to MDA’s existing baselines, and included questions about  revised schedules and contracting strategies in our questionnaires  submitted to MDA programs. We also interviewed MDA contracting  officials and reviewed documentation relating to MDA’s use of contract  actions for which contract terms, specifications, or price are not agreed  upon before work is begun, known as “undefinitized contract actions” in  programs affected by mid-year appropriations.

To determine what progress MDA achieved in developing and delivering  capabilities and assets to support an integrated BMDS, we reviewed and  analyzed relevant policies and guidance, including the Defense  Acquisition Guidebook and the BMDS Warfighter Capability Acceptance  guidance, and asset delivery goals baselined in the March 2017 BAR.  Additionally, we reviewed available system engineering and integration  planning documents—including prior years’ Master Integration Plans—as  well as program management and testing documentation. To discuss the  progress of developing an integrated capability and the delivery of assets,  we met with officials from MDA’s Directorate for Engineering, MDA’s  Directorate for Testing, individual element program offices, as well as  DOD’s independent testers the United States Northern Command and the  Joint Functional Component Command for Integrated Missile Defense. In  addition, we interviewed officials from United State Forces Korea.

We conducted this performance audit from June 2018 to June 2019 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.

MDA is responsible for developing a number of systems, known as  elements, with the purpose of defending against ballistic missile attacks.  MDA’s mission is to combine these elements into an integrated system- of-systems, known as the Ballistic Missile Defense System. The goal of  the BMDS is to combine the abilities of two or more elements to achieve  objectives that would not have been possible for any individual element.  These emergent abilities are known as integrated capabilities or BMDS- level capabilities. Table 1 provides a list and description of elements  included in our review.

MDA’s Acquisition Flexibilities and Steps to Improve Traceability and Oversight

When MDA was established in 2002, it was granted exceptional  flexibilities to set requirements and manage the acquisition of the  BMDS—developed as a single program—that allow MDA to expedite the  fielding of assets and integrated ballistic missile defense capabilities.  These flexibilities allow MDA to diverge from DOD’s traditional acquisition  life cycle and defer the application of certain acquisition policies and laws  designed to facilitate oversight and accountability until a mature capability  is ready to be handed over to a military service for production and  operation. Some of the laws and policies include such things as: obtaining the approval of a higher-level acquisition executive before  making changes to an approved baseline,  reporting certain increases in unit cost measured from the original or  current baseline, obtaining an independent life-cycle cost estimate prior to beginning  system development and/or production and deployment, and   regularly providing detailed program status information to Congress,  including specific costs, in Selected Acquisition Reports.

In response to concerns related to oversight, Congress and DOD have  taken a number of actions. For example, Congress enacted legislation in  2008 requiring MDA to establish cost, schedule, and performance  baselines—starting points against which to measure progress—for each  element that has entered the equivalent of system development or is  being produced or acquired for operational fielding. MDA reported its  newly established baselines to Congress for the first time in its June 2010  BMDS Accountability Report. Since that time, Congress has required  more details for the content of these baselines. Additionally, to enhance  oversight of the information provided in the BMDS Accountability Report,  MDA continues to incorporate suggestions and recommendations from  GAO. However, not all of our recommendations have been fully  implemented. For example, in April 2013, we recommended that MDA  stabilize its acquisition baselines so that meaningful comparisons can be  made over time to support oversight. MDA stated that the information  presented in the BAR is sufficient; however, we continue to find that the  lack of stable baselines makes comparison difficult and in some  instances, impossible.

MDA’s Process for Delivering Capabilities

MDA develops capabilities and then delivers them to the military services.  Using this process, MDA declares an asset or capability ready for delivery  for potential operational use while communicating the capabilities and  limitations of the asset. Representatives from the receiving military  service or combatant command then have the ability to assess this  evidence and decide whether to accept the new capability. Because the  military services conduct minimal missile defense testing of their own, this  process is one of the only ways to convey vital performance information.  The accuracy of this information is especially important as it informs  training materials, doctrine, and deployment decisions and provides  evidence supporting these assertions.

MDA supports its assertions of capabilities with evidence from three  sources: models and simulations, ground testing, and flight testing.  Ground tests and models and simulations permit more flexibility in  scheduling and design, but both are dependent on logistically more  difficult flight tests to provide real-world performance data. As a result, MDA’s ability to organize, conduct, and evaluate flight tests is one of the  most important factors in whether MDA is able to adhere to its schedule  and declare an asset or capability ready for delivery.

Though MDA has flexibilities in managing the acquisition process, it must  follow the same contracting regulations that apply to DOD, including the  Federal Acquisition Regulation and the Defense Federal Acquisition  Regulation Supplement (DFARS). For this report, we reviewed MDA’s  use of a particular type of contract action that authorizes a contractor to  begin work before contract terms, specifications, or price have been  agreed upon. These “undefinitized contract actions” are permitted by the  DFARS, with certain limitations. Undefinitized contract actions are  generally used when negotiation of a definitive contract action is not  possible in sufficient time to meet the government’s requirements and the  government’s interest demands that the contractor be given a binding  commitment so that contract performance can begin immediately. Under  the DFARS, undefinitized contract actions must include a specific “not-to- exceed” price. Once the action’s terms, specifications, and price have  been agreed upon or determined, a process known as definitization, the  contract action converts to a “definitive” contract.

Under the DFARS, undefinitized contract actions must contain  definitization schedules that provide for definitization by the earlier of (1)  180 days after issuance or (2) the date on which the amount of funds  obligated under the action is more than 50 percent of the not-to-exceed  price. Once the government has received a qualifying proposal from the  contractor, however, the government can extend the undefinitized period  another 180 days. Similarly, the government may obligate up to 75  percent of the not-to-exceed price, if the contractor submits the qualifying  proposal before 50 percent of the not-to-exceed price has been  obligated.

MDA’s Regional Efforts in Europe and Korea

DOD’s regional Ballistic Missile Defense (BMD) effort consists of a  number of specific weapon systems or elements that compose the BMD  system as a whole. According to DOD, various versions of these weapon  systems are being deployed in Europe, Korea and other regions. The  European effort known as the European Phased Adaptive Approach  (EPAA) integrates the upgrades to Aegis BMD Weapon System, Aegis  BMD interceptors, C2BMC and sensors, and was originally planned for  delivery in four phases. Additionally, each phase is designed to rely on  increasingly capable missiles, sensors, command and control, and  integration to defend Europe against increasingly longer range ballistic  missiles.

DOD delivered the first phase, for short- and medium-range defense of  Europe, in December 2011, and delivered the second phase for medium- range missiles in December 2015. Its efforts for both of these phases  were also characterized by schedule delays, technical challenges that led  to reductions in the scope of capability delivered, as well as testing  reductions, which reduced confidence in capabilities that had been  delivered. According to its capability plans, the purpose of EPAA Phase  3 is to provide a “robust Intermediate-Range Ballistic Missile (IRBM)  defense.” Figure 1 depicts the weapon systems that DOD deployed in  support of the European Phased Adaptive Approach capability.

As we have previously reported, MDA encountered numerous challenges  in an effort to meet its original EPAA goals and we have made several  recommendations to improve MDA’s management of its integrated  capability efforts, including EPAA, to reduce risk for individual elements  and to improve testing practices overall. For instance:  In January 2011, we recommended that DOD develop life-cycle cost  estimates and establish an integrated schedule for EPAA. DOD  partially concurred and concurred, respectively, to the  recommendations. An independent life cycle cost estimate was  prepared, however an integrated schedule that produced sufficient  detail was never completed.

In April 2012, we recommended that DOD assess the extent to which  the dates announced by the President in 2009 are contributing to  concurrency and recommend schedule adjustments where significant  benefits can be obtained. DOD did concur with this recommendation,  however never included a specific assessment of the extent to which  capability delivery dates for the European Phased Adaptive Approach  announced by the president in 2009 were contributing to concurrency;  instead, it asserts that BMDS technology development is  fundamentally driven by completion of technical milestones, not  schedule declarations.

In May 2017, we recommended that MDA address deficiencies in its  testing scheduling policy to better align it with best practices for  scheduling. DOD did not concur with this recommendation.   Consequently, the department continues to allow MDA to schedule  and plan its test program without risk analyses, or assigning  resources to each test. Unless the department takes action to address  these challenges, the department should continue to expect MDA to  fall further behind in its test program.

In fiscal year 2018, MDA focused additional regional capability efforts on  the Korean Peninsula. This new effort was requested by the United  States Forces Korea in December 2017 to counter North Korean ballistic  missiles. Capabilities for the Korean effort are currently planned for  delivery between February 2018 and April 2021, and are based on  element-level upgrades as well as integration enhancements between  THAAD and Patriot.

MDA Made Progress Delivering Capabilities and Assets and Conducting Tests but Fell Short of Its 2018 Goals

MDA Delivered Several Important Capabilities According to Its Planned Baseline, but Did Not Meet Most of Its Asset Delivery Goals

In December 2017, MDA achieved a significant asset delivery milestone,  completing the deployment of 44 operational ground-based interceptors  (GBI). In deploying these interceptors, MDA also fulfilled a goal set by the  Secretary of Defense in March 2013 to increase the inventory of GMD  interceptors from 30 to 44 by the end of December 2017. Although MDA  achieved this goal, it did not deliver two of the four GBIs planned for fiscal  year 2018. One of the GBIs is intended for use in an upcoming flight test  that was delayed to fiscal year 2019. The other delayed GBI delivery was  the result of the boost vehicle contractor mishandling the booster avionics  module—a critical component that houses the flight computer and  navigation systems. The contractor is working on replacing the  component but the rework has delayed delivery of the final GBI to fiscal  year 2020.

Other on-time capability deliveries included the release of new software  versions for several major BMDS elements, including C2BMC (Spiral 8.2- 3), BOA 6.1, THAAD (THAAD 3.0), AN/TPY-2 (CX 3.0), and GMD (GS  7A). Another expected software release was Aegis Weapon System (BL  9.2), but that was delayed to at least March 2019 to accommodate  verification and validation of models and simulations and to accompany  the delivery of the Aegis BMD SM-3 Block IIA. In terms of asset  deliveries, specifically interceptors used to counter enemy missiles, MDA  successfully delivered all 53 THAAD interceptors specified in the baseline  for fiscal year 2018, as well as an additional five interceptors the delivery  of which had been delayed from the previous year. For a summary of  MDA’s asset delivery status for fiscal year 2018, see table 2.

Although MDA made a number of deliveries, including all planned THAAD  interceptors, it did not meet its fiscal year 2018 asset delivery goals due  to a variety of factors. The Aegis BMD SM-3 Block IB program, which  received full production authority early in fiscal year 2018 after years of  delays, delivered 12 of 36 planned interceptors in fiscal year 2018. This  shortfall was due to the discovery of a parts quality issue that  necessitated suspending deliveries until MDA could complete an  investigation of the issue’s impact on the interceptor’s performance. In  addition, the Aegis BMD SM-3 Block IIA program delivered one of four  planned test interceptors due to a flight test failure early in the year  suspending further deliveries pending completion of a failure review  board.

Moreover, according to MDA officials, construction contractor  performance issues will result in the Aegis Ashore Missile Defense  System Complex—Poland not being delivered until at least 18 months  after the planned December 2018 date. As discussed later in this report,  this facility is central to MDA’s plans for the EPAA Phase 3, such that a  delay in the completion of this facility resulted in a delay in the planned  EPAA Phase 3 delivery to the warfighter.

MDA Conducted Seven of Eleven Flight Tests Planned for Fiscal Year 2018, One of Which Failed

MDA conducted seven fiscal year 2018 flight tests as planned, and during  one of those seven the interceptor failed. According to MDA’s Integrated  Master Test Plan, MDA scheduled eleven flight tests of the systems  included in our review. MDA’s ability to adhere to its flight test schedule  for fiscal year 2018 was hampered by several issues, including technical  challenges, test failures requiring new tests to be inserted into the  schedule, and range and target availability. Of the four tests not  conducted, MDA delayed two to future fiscal years, and deleted two, with  their objectives planned to be mostly fulfilled by separate events. Table 3  highlights MDA’s fiscal year 2018 flight tests.

MDA also added several test events to its schedule over the course of  fiscal year 2018. They are listed below in table 4.

The two most significant flight tests scheduled for fiscal year 2018 were  delayed into fiscal year 2019. Specifically, FTG-11, GMD’s first salvo test  (launching multiple interceptors at a single target), was delayed until the  second quarter of fiscal year 2019 to accommodate other BMDS testing  priorities while GMD fixed software issues uncovered during pre-test  planning. In addition, FTO-03 Event 1, a test designed to assess the  Aegis BMD SM-3 Block IIA capability against an IRBM was to be the first  (and only) operational test of the EPAA Phase 3 architecture before MDA  delivered the capability. This test was delayed to accommodate the  demand for range and test assets following the insertion of a new test into  the schedule.

Mid-Year Budget Changes Significantly Affected MDA’s Future-Year Plans

Fiscal year 2018 legislation expanded and accelerated several MDA  programs. In December 2017, Congress passed and the President signed  into law the Department of Defense Missile Defeat and Defense  Enhancements Appropriations Act, 2018 (MDDE), which increased  missile defense appropriations. The MDDE provided approximately $2  billion in appropriations for missile defense. MDDE provided funds in  support of plans that would expand and accelerate several missile  defense programs beyond the agency’s previous baselines. According to  MDA, the administration directed the Secretary of Defense to develop  options for accelerating missile defense capabilities in response to North  Korea flight testing a new intercontinental ballistic missile in July 2017.  According to MDA, it collaborated with Office of the Secretary of Defense  and the Joint Chiefs of Staff to identify programs and capabilities that  could be accelerated and delivered within the current Future Years  Defense Plan and directly address the North Korean missile threat. DOD  then took those options back to the administration to finalize the MDDE  plan, which was subsequently presented to Congress. These plans most  significantly affected the GMD program and the Aegis BMD SM-3 Block  IIA.

Under the plans and with the funds provided by MDDE, the GMD program  will increase its inventory from 44 GBIs to 64 GBIs by 2023. Each of  these new interceptors will be equipped with the Redesigned Kill Vehicle  (RKV), accelerating the latter program’s schedule by approximately one  year.

MDA also intends to use $451 million from MDDE to procure 16 additional  Aegis BMD SM-3 Block IIA interceptors. The Aegis BMD SM-3 Block IIA  program was still in development at the time, and these funds  represented the first time Congress appropriated procurement funds, and  not research and development, for the program.

Programs Accelerated and Expanded by the Fiscal Year 2018 Missile Defeat and Defense Enhancement Amendments Subsequently Experienced Challenges

The RKV program, in part to support the accelerated schedule, adopted a  new program schedule that required concurrency in some areas. As we  previously reported, the original RKV strategy avoided concurrency by  aligning production decisions with flight testing. However, to  accommodate the newly accelerated schedule, the program began  procuring some components before completing qualification testing.  Under this new plan, qualification testing would only be completed around  the same time as the planned first flight test.

MDA’s contracting plans for the RKV have been closely aligned to the test  schedule, to the point that MDA will have more than half of its planned  RKV buy under contract before conducting a successful intercept test.  The program planned to award a production contract for Lot 1 and the  long-lead materials contract for Lot 2 following a major design review, but  before the first flight test. Following the first flight test (CTV-03+) in first  quarter fiscal year 2020, the program planned to award a production  contract for Lot 2 and long-lead materials for Lot 3. Upon completion of  the first intercept test (FTG-17) in the first quarter of fiscal year 2021, the  program planned to award the production contract for the final planned  lot, Lot 3.

Through the course of fiscal year 2018, the RKV program has been  unable to meet its cost and schedule milestones. Specifically, the prime  contractor has reported accumulating negative cost and schedule  variances with no signs of arresting these trends. The contractor also  reported inefficiencies stemming from bringing large numbers of new staff  onto the project, as well as requiring more personnel for the project than they originally anticipated. According to MDA, as fiscal year 2018  progressed, the program discovered that some components would not  meet performance requirements. MDA therefore postponed the critical  design review from fiscal year 2018 to fiscal year 2021. Moreover, MDA  no longer plans to achieve its goal of fielding 64 interceptors by 2023. In  addition, MDA anticipates RKV’s total cost has increased by nearly $600  million as a result of the design issues. See appendix VI for information  on RKV and the GMD program.

The Aegis BMD SM-3 Block IIA schedule planned for an initial production  decision in fiscal year 2018, but one month after the MDDE’s enactment,  the program experienced its second consecutive failure in a significant  flight test—FTM-29—that introduced significant uncertainty into the Aegis  BMD SM-3 Block IIA’s schedule. In an effort to maintain the program’s  schedule, the Undersecretary of Defense for Acquisition and Sustainment  in an Acquisition Decision Memorandum provided selective authorization  to use procurement funds. The memorandum placed a cap on how much  the program could spend, and had a list of approved “pacing items”  (which excluded parts still under investigation for the test failure) on which  the funds could be spent. Under the terms of the memorandum, MDA  would have to meet a series of requirements to lift these limitations, such  as completion of the failure review board and implementation and  demonstration of corrective actions. MDA operated under these  limitations for the remainder of the fiscal year.

MDA Relied on Undefinitized Contract Actions to Achieve Its Acquisition Goals

MDA used undefinitized contract actions (UCA) in fiscal year 2018,  particularly in programs receiving MDDE appropriations. In May 2018, we  found that MDA’s use of UCAs in recent years had increased in both total  not-to-exceed value and in the length of the undefinitized period. While  MDA improved its performance in timely definitization of these contract  actions in fiscal year 2018, the total not-to-exceed value of the  undefinitized contract actions MDA initiated in 2018 far exceeded  previous years we reviewed.

UCAs allow work to begin on a program before the government and  contractor have agreed to all contract terms, such as price or scope. MDA  states that undefinitized contract actions are necessary, particularly in the  case of programs accelerated by the MDDE appropriation, because they  allow work to begin immediately. Coming to agreement on all terms  before beginning work would have added months to program schedules  that, MDA stated, could not accommodate such a delay. Undefinitized  contract actions are permitted under the Defense Federal Acquisition  Regulation Supplement, but we have found in the past that the use of  these contracts can pose particular risks for the government.

Examples of recent UCAs follow:  In October 2017, MDA issued a sole source undefinitized contract  action for $60 million (according to DOD and MDA, the value was later  increased to $88 million) for the purposes of transitioning the Aegis  BMD SM-3 Block IIA program from development to production. This  work will improve the manufacturing readiness of the contractor’s  production facilities, with the goal of eventually supporting a  production rate of two interceptors per month.

According to MDA officials, definitizing this contract action proved  difficult. The contractor’s initial cost and fee position were substantially  higher than MDA’s and independent government estimates, even after  those estimates were revised upwards when they were found not to  include costs specific to the Aegis BMD SM-3 Block IIA. MDA initially  planned for a definitization in April 2018. By that time, all terms had  been agreed to except for the contractor’s fee. According to MDA  officials, the parties deadlocked until August 2018, when, with the  authorization of the Director, MDA, contracting officials “unilaterally  definitized” the contract. MDA officials told us that when a unilateral  definitization occurs, the government essentially imposes its terms on  a “take-it-or-leave-it” basis, effectively halting negotiations. According  to MDA officials, in this case, the contractor acceded to the  government’s terms and continued work on the project. When asked  about possible consequences to this action, MDA officials stated that  it is possible for contractors in this situation to seek administrative  relief, but in this case, they stated such an appeal would be unlikely to  succeed, and believed the contractor would be unlikely to pursue it. It  is also possible, officials said, that the contractor would either be  reluctant or refuse to accept an undefinitized contract action from  MDA in the future.

In fiscal year 2017, MDA issued a sole source undefinitized contract  action for the design and initial production of the RKV. This contract  had a not-to-exceed value of $1.1 billion. MDA issued the contract  with an estimated definitization date of May 14, 2018. Despite the  issues encountered by the RKV program described above, MDA  reported that it definitized this contract action on schedule in May  2018, for the same price as the original not-to-exceed value, $1.1  billion.

MDA issued several undefinitized contract actions in 2018. For  example, in April 2018, MDA issued a sole source undefinitized  contract action for the production of Aegis BMD SM-3 Block IIA  “pacing items”, with a not-to-exceed value of $387 million. The  Undersecretary of Defense for Acquisition and Sustainment issued a  memorandum stating the circumstances under which MDA could  obligate additional procurement, defense wide funds. MDA officials  stated that “pacing items” were those items whose lead times were  not long enough to qualify for long-lead procurement, but which were  still substantial enough (more than 2 years) to cause delays if their  production waited until the successful completion of operational  testing. These officials also explained that the pacing items excluded  any components which were still under investigation for the failure of  FTM-29. Before that test’s failure and the ensuing involvement of the  Undersecretary, MDA planned for a not-to-exceed value of $672  million. MDA initially planned for a definitization date of December  2018, but it has since been delayed.

MDA issued its largest undefinitized contract action for the fiscal year  (as measured by its not-to-exceed value of $6.56 billion) in January  2018. For the past several years, the GMD program planned to  transition away from its all-inclusive contract to a structure involving  three new contracts: one for systems engineering, integration, and  testing; one for ground systems readiness, operations, and support;  and one for all-up round interceptors. This Development, Operations  and Sustainment, and Production approach would have been a  significant undertaking. It would have required that MDA take control  of the technical baseline for the entire program. MDA also believed  that this strategy would provide for enhanced competition and  reduced organizational conflicts of interest.

With the MDDE appropriation and associated program acceleration, the  Director, MDA decided that managing the transition to this new  contracting strategy, in addition to fielding 20 new ground-based  interceptors was too risky. Thus, MDA issued an undefinitized contract  action that provided a six-year extension to the main development and  sustainment contract for GMD. The contract action has a not-to-exceed  value of $6.56 billion, a value higher than that for all undefinitized contract  actions issued by MDA in the previous 5 years combined. MDA was able  to definitize most elements of this contract in March 2019. Figure 2  illustrates MDA’s increasing use of undefinitized contracts as measured  by the sum of their not-to-exceed values.

MDA Completed Some Key Milestones for Integrated Regional BMDS Capabilities, but Key Aspects of Its European Effort Have Been Deferred and Testing De-scoped

In fiscal year 2018, MDA delivered regional capabilities to counter threats  from North Korea, but did not meet all of its 2018 goals for its effort in  Europe to counter intermediate-range ballistic missile (IRBM) threats from  Iran, known as the European Phased Adaptive Approach (EPAA) Phase  3. Specifically, the agency delivered planned upgrades and additional  assets for the Korean Peninsula—an effort it began in 2017. However, the  delivery of the third and final phase of the EPAA has been delayed by 18  months. Despite this delay, testing intended to demonstrate EPAA Phase  3 capability has been significantly reduced and de-scoped or deferred  past the new delivery date, which reduces the warfighter’s insight on the  system’s capabilities and limitations.

MDA Met Its Fiscal Year 2018 Goals for Capabilities in the Korean Peninsula

MDA delivered upgrades on time to the Korean Peninsula in February  and September 2018. Notably, the upgrades provided initial integration  between THAAD and Patriot—key elements of the effort in Korea— improving THAAD and Patriot’s ability to coordinate during engagements.  MDA also delivered element-level upgrades for THAAD, including  additional interceptors, as well as a new software release that expanded  THAAD’s ability to counter new threats and improved its performance in  the presence of debris. These upgrades were assessed in an April 2018  flight test that demonstrated interoperability between THAAD and Patriot  by exchanging Link-16 messages over tactical data links while tracking a  missile target, and an April 2018 BMDS-level ground tests that provided  further performance data for these upgrades in a simulated environment.  MDA plans to deliver additional capabilities for the Korean Peninsula in  the future. We currently have ongoing work related to these areas. Details  will be included in a future report.

European Phased Adaptive Approach Capability against Intermediate-Range Threats Has Been Delayed

MDA’s effort to deliver the third and last phase of the EPAA has been  delayed from December 2018 to May 2020. MDA planned to deliver the  EPAA Phase 3, for defense against IRBM threats, at the end of calendar  year 2018, but construction delays for Aegis Ashore, the linchpin of  Phase 3, delayed its completion by 18 months.

In fiscal year 2018, the delay for EPAA Phase 3 was caused by  challenges at the construction site for Aegis Ashore in Poland. According  to MDA officials, delays to the Aegis Ashore were primarily driven by  military construction contractor performance issues. As these delays  continued to accumulate, MDA initially planned to make up for them by  increasing concurrency between the construction phase and the  installation and checkout phases of the project, and concurrently working  at the sites in Romania and in Poland. As we previously reported, these  increasing levels of concurrency posed a growing risk for the program  and its ability to achieve its target delivery date. In March 2018, MDA  officials recognized that plans for Aegis Ashore had become untenable,  and the project’s schedule would have to be extended. This plan required  the development of a new delivery schedule for EPAA Phase 3 resulting  in delivery in May 2020.

Despite the Delays, Delivery of EPAA Phase 3 Will Occur with Less Robust Testing than Originally Planned

MDA experienced testing disruptions throughout the EPAA Phase 3  development, including delays and failures, but overcame some of them  in fiscal year 2018. The consequence of the testing disruptions is that  EPAA Phase 3 will be delivered to the warfighter with less data than  planned about performance against planned threats. According to DOD’s  acquisition guidance and the BMDS Warfighter Capability Acceptance  document, testing is fundamental to ensuring that DOD acquire a system  that works, and to provide data necessary to characterize the system’s  effectiveness in operational settings. Thus, the warfighter relies on testing  to understand the system’s capabilities and limitations and therefore how  to fight with what MDA has built.

As we previously found, EPAA Phase 3 testing disruptions started in  2016, when MDA delayed the first and second intercept flight tests of the  Aegis BMD SM-3 Block IIA, the interceptor planned for fielding in EPAA  Phase 3. Although this test was successfully conducted in February  2017, testing difficulties continued when it failed the second intercept  flight test.

MDA continued to experience challenges with testing necessary to  demonstrate the EPAA Phase 3 capability in fiscal year 2018, which  resulted in less robust testing. Specifically, as we discussed earlier in this  report, the interceptor failed its first intercept test, FTM-29, against an  intermediate range target, EPAA Phase 3’s intended threat. Following a  failure investigation, and developmental work, MDA rectified the Aegis  BMD SM-3 Block IIA design flaws and successfully demonstrated them  against a medium-range ballistic missile target in October 2018, during  FTM-45. MDA decided to use a medium range target in this test and  concluded that it was sufficient to assess Aegis BMD SM-3 Block IIA  fixes. However, according to MDA documentation, the test against a  medium range target does not provide the same challenges as an  intermediate range target. In December 2018, it successfully  demonstrated for the first time an intercept of an IRBM during a test  called FTI-03, previously called FTO-03 Event 1. While this test was  successful, its scope was reduced from an attempt against a raid of two  targets to instead a single intercept, in part, due to a test range safety  asset malfunction. With these flight tests, according to MDA officials, it  completed its flight testing requirements for EPAA Phase 3 delivery and  that adding additional tests would be disruptive to their overall test plan.

Our analysis indicates that flight testing to demonstrate EPAA Phase 3  performance against IRBMs—the goal of Phase 3—has been reduced by  80 percent and even with the added 18-month delay, MDA no longer  plans to conduct a flight test against a raid prior to delivery in fiscal year  2020. Figure 3 shows both the original and current plans for  demonstrating EPAA Phase 3 performance through flight testing.

Figure 3 above shows that the original plan included five IRBM intercepts  across three tests, including tests to assess capability against small raids  requiring simultaneous intercepts of multiple missiles—a likely tactic in a  real-world attack— prior to delivery of EPAA Phase 3. However, as figure  3 also depicts, the current plan reduces the number of intercept tests  against an IRBM and does not include a flight test against a raid until after  EPAA Phase 3 capability is declared. Although the delivery has been  delayed 18 months, in part due to the delay in construction at the Aegis  Ashore site in Poland, the current plan significantly reduces the amount of  data needed to support the EPAA Phase 3 capability and limitation  assertions. As we previously reported, test and evaluation activities are  an integral part of developing and producing weapon systems, as they  provide knowledge of a system’s capabilities and limitations as it matures  and is eventually delivered for use by the warfighter. Consequently, the 18-month delay provides an opportunity to add in additional tests and an ability to provide further data to the warfighter or to make any design changes discovered during testing. As we previously reported, delivering capability before testing is complete has led to performance unknowns and increases the likelihood of cost increases if future testing discovers any design flaws.

MDA made further progress in fiscal year 2018 in its mission to defend  the United States and its allies from enemy ballistic missiles, including  achieving a significant integrated capability milestone for defending the  United States. However, MDA did not meet all of its goals for the fiscal  year. Specifically, not all programs delivered all planned assets in fiscal  year 2018 and shortfalls were attributed to developmental delays and  testing challenges. The acceleration of several programs following a  budget increase in December 2017 introduced concurrency, which  indicates a familiar risk: accounting for insufficient margin in an effort to  meet schedule-driven milestones, rather than pursuing a knowledge- based approach. Construction delays related to another integrated  capability, EPAA Phase 3, may, in fact, present an opportunity to build  more knowledge in that area. EPAA Phase 3 intends to provide a robust  defense against IRBM and raids of multiple targets, but tests to  demonstrate that capability have been reduced from five to one with the  test against the raid scenario not occurring before the capability is  delivered. Our prior work has shown that proceeding with limited test data  can result in late, and costly, discovery of performance problems. More  thorough assessment of the capabilities and limitations of the system  could mitigate that risk by building a more solid base of knowledge.

We are making one recommendation to MDA:  The Director, MDA, should utilize additional schedule margin afforded by  the EPAA Phase 3 delay to conduct additional testing necessary to  thoroughly assess the capabilities and limitations of Phase 3 against  IRBMs and a raid scenario prior to delivery. (Recommendation 1)

We provided a draft of this report to DOD for comment. DOD’s comments  are reproduced in appendix IX. DOD and MDA also provided technical  comments, which were incorporated as appropriate.

In its comments, DOD partially concurred with our recommendation to  utilize additional schedule margin afforded by the 18-month delay to the  EPAA Phase 3 delivery to conduct additional testing necessary to  thoroughly assess the capabilities and limitations against IRBMs and a  raid scenario prior to delivery. DOD stated that all EPAA Phase 3 BMDS  functions requiring a flight test environment were already successfully  demonstrated and MDA has addressed the intent of our recommendation  by adding ground tests to further assess EPAA Phase 3 capabilities.  However, in order for the agency to meet the full intent of our  recommendation, additional flight testing to demonstrate capability  against EPAA Phase 3 threats is necessary.

Flight testing against IRBM threats and raid scenarios could provide  additional confidence in modeled performance, even for aspects of the  model that have the achieved accreditation threshold. Our finding is  supported by MDA’s own assessment of testing needed for EPAA Phase  3, which originally included five IRBM intercepts and two raid flight tests.  These testing requirements were reduced even after EPAA Phase 3 flight  test failures and delays. Specifically, our analysis indicates that flight  testing to demonstrate EPAA Phase 3 performance against an IRBM has  been reduced 80 percent. Moreover, MDA will not conduct a flight test  against a raid—a likely tactic in a real-world attack—prior to delivery.

As we identified in this report, MDA experienced testing disruptions  throughout the EPAA Phase 3 development, which resulted in significant  data collection reductions, especially regarding performance against  planned threats. According to the Director, Operational Test and  Evaluation (DOT&E), these testing challenges, in large part, precluded  MDA from testing Aegis BMD against some expected threat types,  ranges, and raid sizes. Consequently, the use of models and simulations- based ground tests to supplement such significant reduction in real-world  data collections could be problematic. Specifically, we have previously  reported that some of MDA’s models and simulations used in its ground  tests do not provide realistic representation of the BMDS, the  environments it encounters, or the modeled threats. This year, we found  that as a result of testing perturbations, certain aspects of Aegis BMD 5.1  will not be validated until after EPAA Phase 3 delivery. Relying on  unaccredited models increases chances for modeling errors, and a single  undetected modeling error can distort the results for the entire  assessment.

Lastly, DOD stated that the demands on the test program due to the  evolutionary nature of the BMDS acquisition leave no margin (cost or  schedule) for adding additional flight tests. While we agree that adding a  flight test requires additional costs and coordination, the reductions to  EPAA Phase 3 testing constitute a significant reduction in performance  data and decreases warfighter’s knowledge base about how best to  deploy a system under operationally realistic conditions, such as raids.  We continue to believe the 18-month delay affords the schedule to  conduct additional flight testing.

We are sending copies of this report to the appropriate congressional  committees, the Acting Secretary of Defense, the Undersecretary of  Defense for Research and Engineering, and to the Director, MDA. In  addition, the report is available at no charge on the GAO website at  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 X.

Appendix I: Aegis Ballistic Missile Defense (BMD) Weapons System

Key findings for Fiscal Year 2018  Aegis Ballistic Missile Defense (BMD) demonstrated integration with allies. Aegis BMD 5.1 demonstrated increased capability, but testing disruptions delayed its delivery to March 2019 and deferred raid assessment to 2020.

MDA re-planned schedules for some future Aegis capabilities due to funding challenges.

Aegis Ballistic Missile Defense is the naval component of the Missile  Defense Agency’s (MDA) Ballistic Missile Defense System. It consists of  the Aegis combat system, including a radar, and Standard Missile-3 (SM- 3) interceptors. MDA is developing the Aegis BMD in versions called spirals that expand on preceding capabilities. Since 2015, MDA has been delivering Aegis BMD spirals that are integrated with capabilities developed by the Navy. These jointly developed Aegis Weapons System Baselines (AWS BL) allow for Integrated Air and Missile Defense (IAMD) where ballistic missiles and air threats (i.e., cruise missiles) can be engaged at the same time. Table 5 identifies Aegis BMD spirals, associated integrated Aegis Weapons System Baselines and key capabilities, and their delivery date.

The first suite of integrated ballistic missile defense and anti-air warfare  (AAW) capabilities was delivered with AWS Baseline 9.C1/B1, which  included an overhaul of Aegis computing architecture. However, in order  to expand the number ships with IAMD, MDA also began a program to  integrate Aegis BMD 5.0 CU capabilities with the legacy AWS  architecture. While initially scheduled for delivery in 2015, Aegis BMD 4.1  was delayed multiple times, and finally in 2017 the delivery was split into  two phases. The first interim phase was completed in 2017, but did not  provide integration between BMD and AAW capabilities. The second  phase will integrate BMD and AAW, and is currently planned for delivery  in 2020. Additional upgrades capitalizing on Navy’s improvements to the  AWS Baseline 5.4 computing architecture are planned for delivery in  2023.

The program is also developing Aegis BMD 5.1 with capabilities to  support the final phase of European Phased Adaptive Approach. This  spiral is designed to control the new Standard Missile-3 Block IIA and to  intercept intermediate-range ballistic missiles. It also includes the Engage  on Remote (EOR) capability, where Aegis BMD intercepts a threat before  it is visible to its own radar, based entirely on tracks from a forward-based  sensor. Aegis BMD 5.1 is integrated with AWS Baseline 9.C2/B2.  Additionally, MDA and the Navy are developing AWS Baseline 10.0,  which will capitalize on the Navy’s effort to replace the Aegis SPY-1 radar  with a more capable SPY-6, and to overhaul the entire Aegis combat  system. AWS Baseline 10.0 includes Aegis BMD 6.0 capabilities, which is  planned to counter more threat types, larger raids, better discrimination,  and improved communication with its interceptors. AWS Baseline 10.0 is  planned for delivery in 2023. For specifics on Aegis Ashore and the Aegis  SM-3 interceptors, see appendixes II, III and IV, respectively. Table 6  provides key fiscal year 2018 AWS program facts.

Aegis BMD demonstrated integration with allies

In fiscal year 2018, MDA demonstrated the ability of Aegis BMD to  engage some simple and complex threats as well as integration with  European and Asia-Pacific allies for new and legacy spirals. As table 5  above shows, Aegis BMD participated in a number of flight tests and  exercises, which provided additional information about its capabilities and  interoperability with allies in two regions, where MDA is currently focusing  its regional integrated capability efforts. For example:

Formidable Shield-17 demonstrated the ability of Aegis BMD 4.0.3,  which was delivered in fiscal year 2015, to interoperate with North  Atlantic Treaty Organization partners using communication  architectures during cruise missile and ballistic missile engagements,  and to use remote data provided by NATO partners to conduct remote  engagements.

Pacific Dragon demonstrated interoperability between U.S. Aegis  BMD assets, Japanese destroyers, and Republic of Korea naval  assets.

JFTM-05 Event 2 demonstrated coordination between U.S. and  Japanese destroyers using communications architecture to conduct  ballistic missile engagements.

Aegis BMD 5.1 demonstrated increased capability, but testing disruptions delayed its delivery to March 2019 and deferred raid assessment to 2020

MDA demonstrated some aspects of Aegis BMD EOR, as well as the  ability of Aegis BMD 5.1 to engage a medium range and an intermediate  range ballistic threat, but testing disruptions delayed data available to  inform capabilities and limitations of the Aegis BMD 5.1, contributing to a  3-month delivery delay. MDA encountered challenges during tests for  Aegis BMD 5.1, which resulted in a reduction of flight tests and delays in  collecting data needed to accredit models for a system-level assessment.  Specifically, during the conduct of FTM-29, Aegis BMD partially  demonstrated EOR capability, lacking full demonstration because the  weapon system did not exercise all aspects of communication in the later  stages of the engagement due to an Aegis BMD SM-3 Block IIA  malfunction. MDA decided not to retest FTM-29 and adjusted its test  plan to only demonstrate the fixes to the SM-3 Block IIA in a new test  called FTM-45, deferring a full EOR assessment by about a year to the  subsequent test named FTI-03.

This reduction in flight tests affected MDA’s ability to collect data for  model verification which in turn, delayed the delivery of Aegis BMD 5.1. A  model is a representation of an actual system that involves computer  simulations and is used to predict how the system might perform or  survive under various conditions. MDA, as well as independent DOD  testing organizations, and the warfighter rely heavily on models to test  operational performance that cannot be completely assessed using  intercept flight tests because of the system’s scope and complexity and  safety constraints. Flight tests, however, provide important information  about real-world performance that is used to verify models. In order to  ensure that key aspects of Aegis BMD 5.1 performance are well  understood at delivery, MDA delayed the spiral from December 2018 to  March 2019. This was done in part to allow for analysis from FTM-45  (conducted in October 2018) and FTI-03 (conducted in December 2018).  According to the BMDS Operational Test Agency, data from these tests  provided key information about Aegis BMD EOR performance— a key  capability for Aegis BMD 5.1—that was used to verify its models, which  were used to more thoroughly assess the extent of that capability.

While EOR data will support Aegis BMD 5.1 delivery, another key aspect  of its performance will not be verified until late in fiscal year 2020.  Specifically, MDA planned to assess Aegis BMD 5.1 raid performance for  the first time in December 2018, but the test was de-scoped to a single  intercept due, in part, to a test range safety asset malfunction. The next  planned raid assessment is scheduled for the fourth quarter of fiscal year  2020, well after Aegis BMD 5.1 delivery.

According to the Director, Operational Test and Evaluation (DOT&E)  these testing challenges, in large part, precluded MDA from testing Aegis  BMD against some expected threat types, ranges and raid sizes. While  some of them were outside of MDA’s control, others stem from decisions  about its test plan. For instance, MDA’s inability to assess Aegis BMD 5.1  against an IRBM raid resulted from the malfunction of test range safety  assets; however, according to DOT&E, FTM-29 failure is an example of  insufficient development testing that should have discovered the SM-3  Block IIA issue prior to the flight test. DOT&E officials told us that they are  currently working with MDA to ensure sufficient developmental testing is  scheduled and conducted prior to undertaking operational tests.

Funding challenges contributed to the delay for certain Aegis BMD capabilities

In fiscal year 2018, funding challenges contributed to the delay of MDA  and the Navy’s effort to develop integrated AWS Baseline 5.4 and AWS  Baseline 10.0. According to MDA program documentation, the delays  resulted from funding reductions in fiscal year 2018. However, while AWS  Baseline 5.4—which includes BMD 4.1—was delayed entirely from 2019  to 2020, AWS Baseline 10.0 – which includes BMD 6.0—delayed  completion of some technical content, but its delivery timeframe did not  change. Specifically:  Integrated AWS Baseline 5.4 was originally planned to be completed  in September 2019, but MDA and the Navy delayed its certification to  March 2020. While MDA delivered Aegis BMD 4.1 capabilities in  fiscal year 2017, subsequent efforts focused on integrating the  ballistic missile defense with the remaining suite of AWS Baseline 5.4  capabilities. According to MDA, the delay to this effort was driven by a  $14 million funding reduction to the Navy’s Program Executive Office  Integrated Warfare System, which is jointly funding this baseline. As a  result of the reduction, MDA received $16 million from the Navy,  rather than $32 million it was expecting, to continue work on Baseline  5.4. According to Aegis BMD program officials, to mitigate the nine  month delay, MDA renegotiated the associated contract, but it is  anticipating approximately $1.5 million increase in fiscal year 2019  and approximately $4 million to fiscal year 2020 costs.

MDA and the Navy re-planned AWS Baseline 10.0, after a funding  reduction of $31.45 million against BMD 6.0. According to Aegis BMD  program documentation, the BMD 6.0 development efforts stopped  between January 2018 and May 2018. Program officials indicated that  MDA renegotiated the associated contract to reflect the reduced  funding, but the stop work and consequent restart incurred additional  costs. Specifically, the program estimated that the disruption resulted  in cost growth of approximately $51 million across the development  timeline between fiscal year 2019 and 2024.

Key findings for Fiscal Year 2018  According to Missile Defense Agency officials, deficiencies in the performance of the military construction contractor resulted in a significant delay and increased cost for the Aegis Ashore facility in Poland. The program continues to make progress despite challenges at both the Poland and Romania sites.

Aegis Ashore is a land-based, or ashore, version of the ship-based Aegis  Ballistic Missile Defense (BMD). Aegis Ashore is designed to track and  intercept ballistic missiles in the middle of their flight using Aegis BMD  Standard Missile-3 (SM-3) interceptors. Key components include a  vertical launching system, interceptors, and an enclosure, called a  deckhouse, that contains the SPY-1 radar and command and control  system.

Aegis Ashore will share many components with the sea-based Aegis  BMD and will use future versions of the Aegis weapon system currently in  development, including the SM-3 Block IIA interceptor. The Missile  Defense Agency (MDA) plans to equip Aegis Ashore with a modified  version of the Aegis weapon system software that will share many  components with the sea-based Aegis BMD. DOD constructed an Aegis  Ashore test facility in Hawaii in April 2014. The test facility has been used  to flight test Aegis Ashore, and in some cases, Aegis BMD SM-3  interceptors. MDA deployed its first operational site in Romania in fiscal  year 2016 as part of the European Phased Adaptive Approach (EPAA)  Phase II. A second site in Poland was scheduled for delivery in 2018 as  part of EPAA Phase III. Both operational sites are intended to provide  additional coverage for the defense of Europe.

The Poland site experienced construction delays over several years until  March 2018, when MDA determined with stakeholders that the site would  not be complete in time for the EPAA Phase III deadline. MDA has since  established a new schedule baseline which delays the delivery of the site  by 18 months, to May 2020.

For further details on the Aegis Weapon System and Aegis BMD  interceptors, see appendixes I, III and IV. Table 7 provides key fiscal year  2018 Aegis Ashore program facts.

According to Missile Defense Agency officials, deficiencies in the performance of the military construction contractor resulted in a significant delay and an increased cost for the Aegis Ashore facility in Poland

According to MDA officials, construction of the Aegis Ashore site in  Poland has failed to meet schedule milestones from the start of the  contract. According to officials, prior to this year, MDA and the Army  Corps of Engineers, which manages military construction at the site, have  undertaken a number of measures to mitigate or reverse these delays,  including modifying contracts to permit joint occupancy of the site,  modifying the main contract to provide more granular project data to the  Army Corps of Engineers, moving key personnel on site, and adding a  second shift. Program officials stated that they also withheld some award  fees from the contractor as a result of these delays. Despite these efforts,  MDA has found the contractor’s performance is still particularly poor in  the areas of construction management, identification, procurement, timely  delivery of important materials, and timely hiring of staff with appropriate  skills.

To make up for these delays, MDA introduced increasing levels of  concurrency into its schedule, and shortened key phases of the delivery  process. Activities such as Installation and Checkout were shortened from  16.5 months to 6.5 months, and would occur concurrently with the final  phases of construction at the site. As recently as last year, GAO reported  that additional delays or concurrency at the site would threaten the  scheduled delivery date.

Through the first quarter of fiscal year 2018, the contractor’s performance  did not improve. According to program officials, in December 2017, MDA participated in a meeting with the Army Corps of Engineers, the Navy,  and other government stakeholders, and concluded that the schedule for  delivery had become untenable and schedule recovery was not possible.  MDA later concluded that the site would not be ready for delivery until  May 2020, a delay of 18 months.

The costs of this delay will be significant. Following the determination of  the new delivery date, MDA developed a new project schedule that,  officials stated, incorporated historical data from the Romania site,  independent outside analysis, trends in the contractor’s performance over  time, and the resources that would be required at each stage of the  schedule. MDA estimated that the additional efforts by MDA, the Army  Corps of Engineers, and the Navy to mitigate the delay and provide  assistance through the completion of the project totaled at least $90  million. According to program officials, the construction contract provides  for significant liquidated damages, with the current daily assessment in  excess of $125,000.

The program continues to make progress despite facing challenges at both the Romania and Poland sites

MDA continues to oversee work at the Aegis Ashore site in Romania,  despite the Navy’s acceptance of the site for operational use. MDA  continues work on a variety of remaining items such as seismic  hardening, shielding electrical infrastructure against high-energy electro- magnetic pulses, and cooling systems. In the case of cooling systems,  the work is the result of the system failing to perform to specifications.  MDA has yet to assess the full cost, schedule, and performance impacts  of the necessary repairs and modifications, but MDA reported that none  of the above issues had any impact on the Romania sites operational  availability or performance.

In the case of the Poland site, MDA sought to secure the permission of  the Polish government to operate the facility’s SPY-1 radar in the 3.1 to  3.5 GHz radio frequency spectrum. This section of the spectrum is  important to the full functioning of the Aegis Ashore system, but portions  of it have been allocated for commercial use in Poland. MDA was able to  de-conflict the operations of its radar with other systems on these  frequencies, and in March 2018 secured the approval of the Polish  government to operate the SPY-1 radar across the full range of  frequencies.

Appendix III: Aegis Ballistic Missile Defense (BMD) Standard Missile-3 (SM-3) Block IB

Key findings for Fiscal Year 2018  The Aegis Ballistic Missile Defense (BMD) Standard Missile-3 Block IB program received authorization for full production this year and performed successful intercepts in flight tests. Discovery of a parts quality issue partway through the year forced the program to suspend deliveries and thus miss most of its delivery target for fiscal year 2018.

The Aegis Standard Missile-3 (SM-3) Block IB is a ship- and shore-based  missile defense interceptor designed to intercept short- to intermediate- range ballistic missiles during the middle stage of their flight. The SM-3  interceptor has multiple versions in development or production: the SM-3  Blocks IA, IB, and IIA. Compared to the SM-3 Block IA, the Block IB  features an enhanced seeker for improved target discrimination, better  engagement coordination capabilities, an improved throttleable divert and  attitude control system for adjusting its course, and increased range. The  SM-3 Block IB interceptor is linked with Aegis Ballistic Missile Defense  (BMD) Weapons System, and Aegis Ashore. For additional information  about the Aegis Weapon Systems, see Appendix I and for Aegis Ashore,  see Appendix II.

Since fiscal year 2015, Aegis BMD SM-3 Block IB production has been  delayed by several technical issues. Program officials, in 2015, delayed  the decision to enter full-rate production until they could implement further  testing and design changes, a decision consistent with a GAO  recommendation at the time. In fiscal year 2016, two failures during  testing forced a suspension of interceptor deliveries, though the program  made up for this backlog in fiscal year 2017. Table 8 provides key fiscal  year 2018 Aegis BMD SM-3 Block IB program facts.

The Aegis BMD SM-3 Block IB program received authorization for full production this year and performed several successful intercepts in flight tests

In February 2017, the Undersecretary of Defense for Acquisition,  Technology, and Logistics issued an Acquisition Decision Memorandum  requesting an additional flight test for the Aegis BMD SM-3 Block IB  before authorizing a full production decision, as well as several  independent supporting analyses. The memorandum issued these  requirements in support of a planned full production decision in the first  quarter of fiscal year 2018. As we previously reported, MDA has delayed  full production multiple times over the life of the Aegis BMD SM-3 Block  IB which was initially scheduled for fourth quarter, fiscal year 2012.

MDA completed the requested intercept test, known as FS-17-4 in  October 2017. The test was undertaken as part of NATO’s Formidable  Shield naval exercises. In this test, an Arleigh Burke-class destroyer in  the northern Atlantic fired an Aegis BMD SM-3 Block IB Threat Upgrade  at an MRBM target and successfully intercepted it. With this result, the  interceptor was approved for full production. In September 2018, MDA  participated in JFTM-05 Event 2, a joint flight test with the Japanese navy,  in which a Japanese ship successfully fired an Aegis BMD SM-3 Block IB  Threat Upgrade interceptor at a simple separating short-range ballistic  missile. MDA participated in and supported the engagement.

Upon full production authorization, MDA sought to pursue a multi-year  procurement with the prime contractor for 204 interceptors through 2023.  While MDA requested and the 2019 National Defense Authorization Act  and the Defense Appropriations Act, 2019 authorized this procurement,  the program did not receive the funding to support the request. Program  officials state that they are still evaluating the impacts on their plan. MDA  estimates the procurement will have a projected price of $2.021 billion.

Discovery of a parts quality issue partway through the year forced the program to suspend deliveries and thus miss most of its delivery target for fiscal year 2018

During routine component testing, MDA discovered an issue with the  Aegis BMD SM-3 Block IB’s throttleable divert and attitude control system  (TDACS) resulting in delays of interceptors in fiscal year 2018. According  to program officials, MDA employs a “manufacturing surveillance unit”  whose purpose is to pro-actively assess component performance and  quality at various stages of unit production. Program officials stated that  the unit discovered, in January 2018, that one of several thrusters on the  TDACS did not perform to specification. In response to this finding, MDA  suspended deliveries of the interceptor until it could determine the impact  of the deficiency on the interceptor’s performance.

According to program officials, MDA contracted with the Applied Physics  Laboratory to act as an independent technical authority for the  investigation, which took approximately six months. Once concluded, the  investigation found that the performance of the component, while below  the defined specification, did not endanger the overall operation of the  system. The component’s performance was accommodated within the  margin the government and contractor built into the overall design, and  was acceptable as built as a result. The investigation reached this  conclusion in August 2018. MDA closely monitored the function of the  component in JFTM-05, during which the system performed nominally.

Program officials reported that the prime contractor has experienced  similar issues defining and communicating important specifications to  subcontractors at various levels of its supply chain. Similarly, the  contractor has also had difficulty ensuring that all subcontracted  components meet defined specifications. Program officials stated that  they continue to take measures to mitigate these issues, including using  the manufacturing surveillance team.

Appendix IV: Aegis Ballistic Missile Defense (BMD) Standard Missile - 3 (SM-3) Block IIA

Key findings for Fiscal Year 2018  A mid-year funding increase accelerated the program's schedule and increased the number of interceptors. The Aegis Ballistic Missile Defense (BMD) Standard Missile - 3 (SM-3) Block IIA experienced a test failure, leading to significant changes to the test plan.

The latest development in the Aegis BMD Standard Missile – 3 (SM-3)  family, the Aegis BMD SM-3 Block IIA interceptor provides increased  speed, more sensitive seeker technology, and a more advanced kinetic  warhead as compared to previous versions of the Aegis BMD  interceptors. It is expected to defend against short-, medium-, and  intermediate-range ballistic missiles, and will have significantly increased  range compared to earlier Aegis BMD SM-3 models. Additionally, most of  the Aegis BMD SM-3 Block IIA components will differ from other standard  missile versions and therefore require new technology being developed  specifically for them. For additional information on the Aegis BMD SM-3  Block IB interceptor, see appendix III.

Initiated in 2006 as a cooperative development program with Japan, the  Aegis BMD SM-3 Block IIA program is an essential component of the  European Phased Adaptive Approach (EPAA) Phase 3 architecture,  particularly its ability to defend against longer-range threats. According to  program officials, the Aegis BMD SM-3 Block IIA interceptor’s range  exceeds that of its native radar, thus, the only way to make full use of its  extended range is by relying on remote sensor data. For additional  information on Aegis Weapon Systems, see Appendix I. Table 9 provides  key fiscal year 2018 Aegis BMD SM-3 Block IIA program facts.

A mid-year funding increase accelerated the program’s schedule and increased the number of interceptors

In December 2017, Congress passed and the President signed the  “Department of Defense Missile Defeat and Defense Enhancements  Appropriations Act, 2018”, as part of a larger continuing resolution which  significantly increased missile defense appropriations. According to  program officials, the impetus for seeking these additional appropriations  was increased levels of missile development and testing activity from  North Korea. MDA intends to use $451 million in procurement funds for  the purchase of 16 additional Aegis BMD SM-3 Block IIA interceptors.  These were the first procurement funds the program had received. The  program had yet to receive an initial production authorization, so all  previous manufacturing activity occurred using research and development  funds.

To this point, however, the Aegis BMD SM-3 Block IIA interceptor had  succeeded in only one of its two intercept flight tests, and its ability to  engage a longer-range target using remote sensor data, known as  “engage on remote”, had yet to be tested.

The following month, in January 2018, the interceptor failed an important  intercept test, causing significant disruption to the program’s schedule which is discussed below. The Undersecretary of Defense for Acquisition  and Sustainment subsequently released an acquisition decision  memorandum which laid out near-term limitations on the use of  procurement funds for the Aegis BMD SM-3 Block IIA, as well as  providing for a series of steps MDA needed to take in order to obligate the  remaining funds. These measures included the completion of an  independent cost estimate, independent technical risk assessment, the  successful completion of a replacement flight test, and the successful  completion of the planned operational flight test scheduled for the first  quarter of fiscal year 2019.

Until MDA could meet these requirements, the Undersecretary authorized  MDA to obligate only $162 million for the purchase of a limited subset of  “pacing items.” According to program officials, “pacing items” are those  with longer lead times for production, but which fall short of the threshold  for long-lead procurement. Program officials also stated that the list of  pacing items was restricted to components not implicated in the recent  test failure.

Program officials stated that they expected the Undersecretary to certify  that these requirements had been met in the third quarter of fiscal year  2019.

The Aegis BMD SM-3 Block IIA experienced a test failure, leading to significant changes to the test plan

In January 2018, MDA conducted flight test FTM-29. In this test, the  Aegis Ashore facility in Hawaii fired an Aegis BMD SM-3 Block IIA  interceptor at an intermediate-range ballistic missile (IRBM), using remote  sensor data, for the first time. After the interceptor launched, its third- stage rocket motor (TSRM) failed to ignite. As a result, the interceptor had  inadequate thrust to complete the engagement and failed its objective to  intercept the target. As a result of this test failure, MDA faced two  challenges: first, identifying and remedying the source of the failure  through a failure review board, and second, adjusting the program’s  schedule to provide opportunities to confirm these mitigations.

MDA and the government of Japan convened a failure review board  (FRB) to investigate the causes of the test failure. The board’s  conclusions found that the TSRM failed to ignite due to a combination of a  faulty arm-fire device (AFD), which initiates the TSRM’s firing, and  incorrect programming of the TSRM ignition sequence. In the case of the  Aegis BMD SM-3 Block IIA, the AFD contains two linear “chains” of  explosive pellets, which then ignite the rocket motor. MDA documents  state that the AFD’s manufacturer expects a missile to ignite both chains  simultaneously to ensure the highest degree of reliability.

The FRB found that the Aegis BMD SM-3 Block IIA’s programming did  not fire the AFD’s two chains simultaneously, but one after the other, or  “sequentially”. When fired in this manner, quality issues with the AFD that  would not have any material impact in a simultaneous firing can cause the  AFD to malfunction when firing one after the other. The FRB concluded  that the most likely cause of the AFD’s failure was a missing explosive  charge in the first explosive chain. When this chain ignited, it fizzled and  failed to ignite the TSRM. The fizzle was powerful enough to disrupt the  functioning of the second explosive chain, however, which subsequently  failed to ignite the TSRM as well.

To correct for this error, MDA has changed the programming of the Aegis  BMD SM-3 Block IIA to fire the AFD simultaneously. MDA has also  instituted new quality measures at the assembly line for the AFD. These  measures include additional quality assurance checks to ensure that all  explosive pellets are present in both chains, as well as the use of X-ray- like scanners which can look inside a completed AFD to confirm the  presence of all of the explosive pellets.

Having identified the source of the failure, MDA had to choose what form  any new test would take, and how it would impact the remaining  schedule, in particular the first operational test of the Aegis BMD SM-3  Block IIA, which also happened to be the first operational test of the  European Phased Adaptive Approach (EPAA) Phase III, and the only  such test scheduled before MDA declared it ready for delivery. This test,  then known as FTO-03 Event 1 (and subsequently re-named FTI-03) was  scheduled for the first quarter of fiscal year 2019.

One option was for MDA to schedule a scaled-back test, known as FTM- 45, of an Aegis BMD SM-3 Block IIA against a medium-range target.  MDA stated that though FTM-29 failed, analysis of sensor data and  missile telemetry indicated that the Engage on Remote capability would  have succeeded had the interceptor reached the target. Therefore, FTM- 45 could be an “organic” engagement, using only the radar co-located  with the interceptor. FTM-45 would need only to test that the mitigations identified by the FRB worked, as well as testing the final phases of the  interceptor’s operations which had been interrupted in FTM-29. MDA had  a medium-range ballistic missile (MRBM) target it could repurpose for this  test, which would limit testing disruptions by not further delaying FTO-03  E1/FTI-03. FTM-45 was MDA’s preferred course of action  FTM-45 lacked the support of several external, Department of Defense  stakeholders, such as the Deputy Assistant Secretary of Defense for  Developmental Test and Evaluation, Joint Functional Component  Command Integrated Missile Defense, and Office of the Director,  Operational Test and Evaluation. These offices asserted that a complete  re-test of FTM-29, known as FTM-29a, provided the most risk reduction in  advance of FTO-03 / FTI-03. .

MDA opted not to pursue FTM-29a, and cited several reasons. MDA  acknowledged the differences between intermediate-range and medium- range engagements, but determined that the actual differences between  FTM-45 and FTM-29a were within acceptable margins. FTM-29a would  also prove more expensive and more logistically difficult. MDA concluded  that FTM-45 met the requirements for risk reduction at the least disruption  to the program’s schedule.

MDA conducted FTM-45 in October 2018 and FTI-03 in December 2018.  Initial reports indicate both were successful.

Appendix V: Command, Control, Battle Management, and Communications (C2BMC)

Appendix V: Command, Control, Battle Management, and Communications (C2BMC)

MDA re-planned schedules for some future Aegis capabilities due to funding challenges. MDA delivered Spiral 8.2-1 providing significant performance and cyber improvements, but some fixes were required after fielding.

MDA mitigated prior challenges with Spiral 8.2-3 and demonstrated capability upgrades. Uncertainty in Ballistic Missile Defense System-level requirements could disrupt Spiral 8.2-5 schedule.

C2BMC is a global system of hardware—workstations, servers, and  network equipment—and software that integrates all missile defense  elements of the Ballistic Missile Defense System (BMDS). Specifically, it  allows users to plan operations, see the battle develop, and manage  BMDS sensors. As the integrator, C2BMC enables the defense of a larger  area than the individual BMDS elements operating independently and  against more missiles simultaneously, thereby conserving interceptor  inventory. C2BMC is fielded at U.S. Strategic Command, U.S. Northern  Command, U.S. European Command, U.S. Indo-Pacific Command and  U.S. Central Command.

MDA is developing C2BMC in spirals, or software and hardware upgrades  that build upon prior capabilities to improve various aspects of the  integrated BMDS performance. The spiral delivered in fiscal year 2018  includes BMDS Overhead Persistent Infrared Architecture (BOA) — a  system within the C2BMC enterprise. BOA receives spaced-based sensor  information on boosting and midcourse ballistic objects and feeds that  data to C2BMC for use in cueing BMDS sensors and weapon systems,  and for situational awareness. The agency completed fielding and  transition to operations of Spiral 8.2-1 with BOA 5.1 to U.S. Northern  Command and U.S. Indo-Pacific Command in January 2018, and Spiral  8.2-3 with BOA 6.1 to U.S. European Command and U.S. Central  Command in December 2018. Spiral 8.2-3 will replace Spiral 8.2-1 at the  U.S. Northern Command and U.S. Indo-Pacific Command in the third  quarter of Fiscal Year 2019. Table 10 provides an overview of C2BMC  Spiral upgrades, planned fielding timeframes and associated capabilities,  and Table 11 provides key fiscal year 2018 C2BMC program facts.

MDA delivered Spiral 8.2-1 providing significant performance and cyber improvements, but some fixes were required after fielding

In January 2018, C2BMC completed fielding and transition to operations  of Spiral 8.2-1 providing a significant overhaul of the BMDS command  and control hardware infrastructure. Spiral 8.2-1, replaced the legacy  Spiral 6.4, at the U.S. Northern Command and U.S Indo-Pacific  Command. Spiral 8.2-1 improves sensor coverage, ballistic missile track  management, and cyber security, optimizing raid size tracking capability  and capability for processing new threats to support the defense of United  States. Further details on these capabilities follow:

Spiral 8.2-1 delivery includes the BOA 5.1, which provides  improvements in early missile launch detection, allowing more time for  all subsequent BMDS actions. It cues land-based sensors allowing  them to acquire threats sooner, allowing them longer time to track and  thus improving engagement probability.

Spiral 8.2-1 expands the capability for processing of threat tracks,  called System Track, from a single sensor—the Army/Navy  Transportable Radar Surveillance-2 (A/N TPY-2) —to include  additional sensors for homeland defense and BOA. This allows for  additional data sources about threat characteristics that C2BMC  subsequently provides to other BMDS elements.

The delivery of Spiral 8.2-1 also improves cybersecurity. Spiral 8.2-1  replaced Spiral 6.4, which, as we found in May 2018, had cyber  vulnerabilities that, if exploited, could have degraded mission  capabilities like BMD planning, radar control, track reporting, and  situational awareness.

Lastly, the program also delivered additional upgrades, to specifically  augment BMDS capabilities for the Korean Peninsula. These  upgrades were delivered in December 2017 and June 2018, to  provide improvements in communication between THAAD and Patriot,  and improved cybersecurity in that region.

MDA demonstrated Spiral 8.2-1 upgrades in Ground Test-07a and  Ground Test-18 Sprint 1. Table 11 above provides an unclassified  overview of C2BMC testing completed in support of fiscal year 2018  deliveries.

While MDA delivered these upgrades and overcame development  challenges, some fixes had to be implemented after deployment.  Specifically, as we found in May 2018, MDA identified performance risks  for Spiral 8.2-1 that could have affected interoperability with other  elements and threat tracking and delayed the delivery to address these  challenges. According to MDA’s fiscal year 2018 program management  documentation, the program implemented the necessary mitigations to  address these challenges; however fixes were also needed to be  implemented after the Spiral was delivered. Moreover, the post- deployment fixes required diversion of resources from the subsequent  Spiral 8.2-3, delaying demonstration of a certain aspect of that effort.

MDA mitigated prior challenges with Spiral 8.2- 3, and demonstrated capability upgrades

In fiscal year 2018, MDA completed most of its development effort for its  next spiral named Spiral 8.2-3. In addition, MDA completed a test,  demonstrating new capabilities and mitigations to earlier development  challenges. As we found in May 2018, in fiscal year 2017, the program  was tracking two element level risks to C2BMC capability needed for  EPAA Phase 3 called Engage on Remote. Specifically, program  documentation indicated that processing of data about threat missile flight  paths, known as threat tracks, had issues that could reduce the likelihood  of the successful engagements utilizing Aegis BMD in Engage on Remote  scenarios. C2BMC has faced similar challenges with threat tracking  capabilities for prior spirals, which required delaying certain aspects of  integration with Aegis BMD until fixes were implemented.

While the program was addressing the aforementioned performance risks  in fiscal year 2018, it encountered additional challenges. First, it needed  to divert some resources from Spiral 8.2-3 to implement fixes to Spiral  8.2-1 that were needed after it was deployed. Second, the program  needed to divert additional resources to meet a new Warfighter request  for geographic redundancy. Specifically, while the original concept was to  have 8.2-3 for Central and European Command at the same location,  MDA met the Warfighter request by installing the spiral at different  locations so that losing one location would not result in the loss of all  capability for the Warfighter. Finally, once a key mitigation was  completed, the program encountered delays in availability of laboratories  needed to assess it. As result, MDA decided to test the mitigation during  the GT-07b campaign, along with other Spiral 8.2-3 capabilities. While  assessing mitigations for the first time in a large scale campaign is risky –  should the mitigation be insufficient or have underseen downstream  effects – initial results from GT-07b campaign indicate they were  successful. The test demonstrated successful collaboration between  Spiral 8.2-3 and Aegis BMD in support the Engage on Remote, as well as  other capabilities. Table 11 provides additional information on capabilities  demonstrated during GT-07b.

Uncertainty in Ballistic Missile Defense System- level requirements could disrupt Spiral 8.2-5 schedule

While C2BMC program has identified element level requirements for  Spiral 8.2-5, requirements for BMDS-level capabilities associated with this  spiral are still under development. This Spiral is intended to integrate the  Long Range Discriminating Radar (LRDR) and provide additional BMDS- level planning, track processing, and battle management capabilities, in  the fiscal year 2021 timeframe, and its acquisition baselines are expected  to be included for the first time in the upcoming BMDS Accountability  Report. However, according to the November 2018 program execution  review, emerging BMDS-level requirements may delay efforts to complete  the development of the spiral in time to support LRDR functionality in  2021. Program documentation also indicates that some BMDS  capabilities as well as future C2BMC spirals could be at risk of deferral,  including the subsequent Spiral 8.2-7.

Appendix VI: Ground-based Midcourse Defense (GMD)

Appendix VI: Ground-based Midcourse Defense (GMD)

MDA continues to increase GMD capacity and reliability.

GMD issues uncovered during salvo test planning demonstrate the value of rigorous and frequent testing.

MDA recently uncovered major design concerns with the Redesigned Kill Vehicle.

GMD is a missile defense interceptor system designed to defend the  United States against a limited intermediate and intercontinental ballistic  missile attack from rogue states, such as North Korea and Iran. To  counter such threats to the homeland, GMD, in conjunction with a  network of ground-, sea-, and space-based sensors, launches  interceptors from missile fields based in Fort Greely, Alaska and  Vandenberg Air Force Base, California. After launching from in-ground  silos, the interceptor boosts towards the incoming enemy missile and  releases an Exoatmospheric Kill Vehicle to find and destroy the threat.  GMD also has ground support and fire control capabilities that the  warfighter uses to operate the system. Table 12 provides key fiscal year  2018 GMD program facts.

MDA fielded three new upgraded interceptors in early fiscal year 2018,  meeting its directive from the Secretary of Defense to increase the total  number of fielded interceptors to 44 by the end of 2017. The new  interceptors are equipped with an upgraded version of the kill vehicle,  called the Capability Enhancement (CE)-II Block I, and boost vehicle,  called the Configuration 2. MDA completed production and fielded eight of  these new interceptors after successfully conducting its first intercept  flight test of the upgraded interceptor in May 2017.

Although the program encountered some production challenges with the  C2 boost vehicle, such as multiple components initially failing qualification  testing, the issues were not significant enough to prevent the program  from meeting its December 2017 fielding goal. The upgraded interceptors  were designed to be more reliable than their predecessors and their  addition to the fleet is intended to improve overall system reliability, as the  older interceptors have a greater risk of experiencing in-flight reliability  failures. Table 13 below describes the current fleet of 44 fielded  interceptors and plans to field an additional 20 interceptors equipped with  the Redesigned Kill Vehicle (RKV) and modified Configuration 2 boost  vehicle. MDA also successfully completed two ground tests in fiscal year  2018 to provide performance assessment data; develop interceptor shot  doctrine and tactics, techniques, and procedures; and assess recent  performance upgrades to GMD’s fire control software.

In addition to adding more CE-II Block I interceptors, in fiscal year 2018,  MDA accelerated RKV development and initiated plans to increase the  total number of fielded interceptors to 64 by the end of 2023 in response  to a North Korean missile threat escalation in 2017. In November 2017,  DOD requested $2 billion for what it called the Missile Defeat and  Defense Enhancements, $774 million of which was designated for GMD  to: (a) build a new 20-silo missile field at Fort Greely, Alaska; (b) procure  long-lead components for four additional interceptors; (c) continue  booster development; (d) accelerate RKV development; and (e) add a  target to an initial non-intercept RKV flight test. MDA subsequently issued  an undefinitized contract action in the form of a sole-source contract  modification to Boeing in January 2018 to extend the current GMD  development and sustainment contract. The contract modification was  awarded with a total maximum value not to exceed $6.565 billion for  efforts pertaining to the Missile Defeat and Defense Enhancements and  extended the current contract’s period of performance 2023. In March  2019, MDA definitized $4.141 billion of the contract to build the new  missile field, among other items, but deferred the production of 20  additional interceptors. According to MDA, this contract modification  brings the total cumulative value of the GMD development and  sustainment contract, including options, to $10.8 billion.

MDA conducted its first salvo flight test of the GMD system, called Flight  Test Ground-based Interceptor (FTG)-11 on March 25, 2019 after nearly  three decades of GMD development. GMD demonstrated a salvo  intercept by firing a CE-II Block I-equipped interceptor followed by a CE- II-equipped interceptor. The leading interceptor destroyed the target  representing an intercontinental ballistic missile equipped with  countermeasures designed to complicate missile defense operations.  With the target reentry vehicle destroyed, the trailing interceptor struck  one of the remaining objects, as it was designed to do. Demonstrating a  salvo capability is particularly important because, during a ballistic missile  attack, the warfighter intends to launch a number of interceptors to  increase the probability of successfully intercepting the incoming  missile(s).

FTG-11 was further delayed from the end of fiscal year 2018 to mid-fiscal  year 2019 to accommodate other BMDS testing priorities while GMD fixed  software issues uncovered during pre-test planning. MDA initially planned  to conduct the salvo test in fiscal year 2006 but subsequent test failures,  developmental challenges, and fielding priorities delayed the salvo test to  fiscal year 2018. Figure 4 below provides an overview of the multiple  times MDA has delayed the salvo test over the years. By mid-2017, GMD  began experiencing delays developing a software upgrade that is  intended to provide the kill vehicle with the functionality needed for FTG- 11. Around that same time, MDA also realized that its BMDS-level  integrated test schedule could not be executed as planned due to a lack  of test range and asset availability. According to a May 2018 report MDA  submitted to Congress, the agency delayed FTG-11 from the fourth  quarter of fiscal year 2018 to the second quarter of fiscal year 2019 to de- conflict the integrated test schedule. Around the time MDA submitted the  report to Congress, the GMD program also uncovered performance  concerns with the kill vehicle software upgrade that further delayed the  software’s completion. As such, the delay to FTG-11 to accommodate  other BMDS testing priorities also afforded MDA the time necessary to  complete the software improvements and pre-test planning.

The performance issues MDA uncovered in pre-test planning for FTG-11  demonstrate the value of rigorous and frequent GMD testing. Congress  and DOD have recognized the need for rigorous, operationally realistic  GMD testing, including conducting a salvo test.  Congress also passed  legislation and the president signed into law a requirement for an annual  GMD flight test, subject to several exceptions. However, GMD has  historically averaged less than 1 test per year whereas Aegis Ballistic  Missile Defense (BMD) Standard Missile (SM)-3 averaged over 2.5 tests  per year (see figure 5 below). Moreover, GMD’s prior tests achieved less  than 50 percent operational realism whereas Aegis BMD SM-3 averaged  over 70 percent, according to Director for Operational Test and  Evaluation assessments. The warfighter relies on testing to understand  GMD’s capabilities and limitations. Without this knowledge, the warfighter  lacks the information to operate GMD effectively and efficiently.

MDA recently uncovered major design concerns with the Redesigned Kill Vehicle

Although MDA attempted to accelerate RKV development as part of the  Missile Defeat and Defense Enhancements, the program accepted too  much risk and has since experienced development challenges that set  the program back likely by over two years and increased the program’s  cost by nearly $600 million, according to the agency. In response to  advancements in the North Korean missile threat, MDA accelerated RKV  development by concurrently performing development and production and  reducing the number of necessary flight tests to produce and field new  RKV-equipped interceptors. Moreover, the RKV had already experienced  development delays prior to the acceleration and was operating with no  schedule margin for any further delays as it approached a critical design  review in October 2018. The program subsequently encountered design,  systems engineering, quality assurance, and manufacturing issues, which  resulted in the program postponing the critical design review.

The most significant development issue that emerged in 2018 pertained  to RKV’s performance and its planned use of commercial off-the-shelf  hardware and re-use of Aegis SM-3 Block IIA components. In multiple  previous reports, we raised concerns regarding MDA’s use of these  components as well as RKV’s aggressive development schedule. In our  May 2017 report, we also recommended that DOD perform a  comprehensive review of the RKV. Although such a review could have  potentially provided DOD with a better understanding of RKV’s technical  and schedule risks, DOD indicated in its response that the  comprehensive review we recommended was unnecessary and therefore  did not perform the review. Even though some of these risks have since  manifested, we continue to believe an independent, thorough vetting of  RKV’s acquisition risks is necessary, as we previously recommended.

Although RKV continued to carry significant acquisition risks, MDA  implemented a recovery plan that attempted to minimize the addition of  further risks by opting to prioritize controlling technical risks over  preserving the 2023 fielding goal via an aggressive schedule. At the time  of our review, the program projected that it would conduct a critical design  review for RKV in early fiscal year 2021 followed by a non-intercept flight  test in fiscal year 2022, an intercept test in fiscal year 2023, and  deployment starting a few months later. The extended design period  provided the program additional time to source or design new  components before moving forward with testing and production.  Production decision gates also remained aligned to the critical design  review and subsequent flight tests. The recovery plan also placed greater  emphasis on addressing technical risks rather than fielding deadlines to  determine RKV’s path forward. Our prior work has shown that stabilizing  system design before making major production commitments and relying  on knowledge rather than deadlines to make acquisition decisions at key  milestones are best practices of successful product developers. MDA’S  Deputy Director stated during a March 2019 press briefing that “the best  thing to do was to go back and assess that  design and take the  time to do it right.” The Deputy Director also acknowledged that it would  have been the wrong step to do “what the Missile Defense Agency did  years ago, which is to go ahead and produce what we’ve got and then  deal with reliability issues in the fleet and erode the confidence of the  warfighter.”

On May 24, 2019, MDA directed the GMD prime contractor, Boeing, to  stop all work for the RKV. This action occurred a few days before the  issuance of our report and, as such, we were not able to assess the  effects and incorporate this information into our report.

Appendix VII: Targets and Countermeasures

Key findings for Fiscal Year 2018  Targets program met some of its fiscal year 2018 goals. Target availability will be a risk for the Missile Defense Agency's aggressive test schedule through 2021.

Medium Range Ballistic Missile T1/T2 target's continued cost growth and schedule delays have led to limited testing.

The Missile Defense Agency’s (MDA) Targets and Countermeasures  program (hereafter referred to as Targets program) procures missiles to  serve as targets during the developmental and operational testing of  independent or integrated ballistic missile defense system (BMDS)  elements. Specifically, this program supplies MDA with short-, medium-,  intermediate-, and intercontinental-range targets to test, verify, and  validate the BMDS elements’ performance in threat relevant  environments. As targets are solely test assets, they are not  operationally fielded.

The number of targets that the program supplies vary based on each  element’s requirements and testing schedule. While some targets have  been used for years, others have been recently added or are now being  developed to more closely represent current and future threats. The  quality and availability of these targets is instrumental to the execution of  MDA’s flight test schedule. Table 14 provides information on the Targets  program’s performance in fiscal year 2018.

Targets program met some of its fiscal year 2018 goals

The Targets program delivered four of eight targets as planned for fiscal  year 2018, and delayed the remaining targets based on test schedule  requirements and developmental complexities. One target, the  intercontinental-range ballistic missile, was delayed 9 months, from the  third quarter of fiscal year 2018 to the first quarter of fiscal year 2019, to  align with changes to the test schedule for the Ground-based Midcourse  Defense (GMD) program. The GMD program discovered some software  issues with its system during pre-test planning that had to be resolved  prior to moving forward with flight test FTG-11, which will use the  intercontinental-range ballistic missile. According to Targets program  officials, the Targets program requested that the contractor delay the  delivery of the intercontinental-range ballistic missile to avoid dealing with  sensitive aspects of the target, such as fueling, that would necessitate  special storage of the target. The two intermediate-range ballistic missiles  for the BMDS-level operational test FTO-03 E1 were delayed from the  second quarter of fiscal year 2018 to the first quarter of fiscal year 2019 to  accommodate a new test for the Aegis Ballistic Missile Defense (BMD)  Standard Missile-3 Block IIA program following the failure of one of its  interceptors during flight test FTM-29. MDA’s decision to conduct a new  test—FTM 45—to ensure the cause of failure had been resolved created  test range and asset availability issues that necessitated delaying the  BMDS-level operational test FTO-03 E1, and the targets for the test, to a  later point in time. The one medium-range ballistic missile for flight test  FTM-31 was delayed due to developmental complexities and test range  availability.

The Targets program flew a total of six targets in fiscal year 2018 to  support MDA’s flight test schedule, including four short-range, one  medium-range, and one intermediate-range, all of which performed  nominally. The risk of a target malfunction or failure was lower in fiscal  year 2018 than it has been in previous years, because all of the targets  had flown in flight tests previously (i.e., none of the targets were new).  However, the Targets program is currently planning to fly two new  medium-range targets in fiscal year 2019, and the flight tests with these  targets either precede or are adjacent to other important tests in MDA’  test plan. We have previously reported that, new, untested targets  introduce higher risk for malfunction or failure that can mean costly and  time-consuming retests. Accordingly, we recommended that MDA add a  non-intercept flight test for each new target type to verify its performance  and reduce risks for future flight tests. MDA has not implemented this  recommendation and has continued to use new targets during flight tests.

The Targets program conducted one of two critical design reviews in  fiscal year 2018. A critical design review assesses the final design of a  target to ensure that it can proceed into production and testing and can  meet its stated performance requirements within cost, schedule, and risk.  The Targets program conducted a critical design review for the medium- range ballistic missile type 3 configuration two (MRBM T3c2) target in the  third quarter of fiscal year 2018. The MRBM T3c2 is a new target that  Targets program officials said involves minimal design because it  leverages flight-proven hardware and a significant amount of heritage  software from the intermediate- and intercontinental-range targets  currently in production. However, the Targets program plans to conduct  another critical design review for the MRBM T3c2 target in the first  quarter of fiscal year 2019 due to the addition of hit detection software  which will enable real-time feedback on the target’s impact points. The  Targets program did not complete the critical design review for the short- range ballistic missile type four G (SRBM T4-G) in the third quarter of  fiscal year 2018, after it had been delayed a year, from the third quarter of  fiscal year 2017. The Targets program subsequently delayed the critical  design review for the SRBM T4-G target another year, to the third quarter  of fiscal year 2019. According to the Targets program, the delay in the  critical design review for the SRBM T4-G is due to some technical  challenges associated with developing the target and the contractor’s  limited staffing and workload.

Target availability will be a risk for MDA’s aggressive test schedule through 2021

The Targets program may face challenges providing some targets to  support MDA’s test schedule due the aggressiveness and volatility of the  test schedule. We have previously found that MDA’s test schedule is  aggressive, in that it includes too many tests and little to no margin  between tests to ensure executability. Thus, when setbacks occur, such  as target or system malfunctions, the margin between tests erodes. MDA  relieves pressure in its test schedule by delaying and canceling tests  instead of including sufficient schedule margin to ensure executability, as  we previously recommended. When the schedule slips for one test, there  are often reverberating impacts to other tests. Consequently, MDA’s test  plan has continued to be volatile, with frequent delays, cancellations and  other changes, which make it challenging for the Targets program to  manage all of the resources and schedules for its various targets to  ensure successful, on-time availability and execution. When targets are  not available for testing as planned, the tests either receive substitute  targets which can mean trade-offs in the performance aspects  demonstrated during the test or the test is delayed, which prolongs the  demonstration of systems for the warfighter.

One way that the Targets program has tried to ensure the availability of  targets for MDA’s aggressive test schedule is through the use of  concurrency—overlap between development, testing, and production—for  some targets. We have previously reported that some concurrency is  understandable, but committing to production before development and  testing is complete is a high-risk strategy that often results in performance  shortfalls, unexpected cost increases, schedule delays, and test  problems. The Targets program is using concurrency for the MRBM  T3c2 target. According to the Targets program, it is using concurrency for  the MRBM T3c2 target due to the urgent need to support essential testing  within MDA’s test schedule. The first flight test with the MRBM T3c2  target is FTM-31, which is scheduled for the fourth quarter of fiscal year  2019. Qualification testing and production are ongoing and scheduled to be completed in April 2019 (third quarter of fiscal year 2019). The target  must be delivered in advance of the planned test date to complete final  preparations for transport to the test site. Thus, the Targets program has  very little to no time to resolve any issues prior to delivering it for FTM-31,  as shown in figure 6. According to the Targets program, late completion  of qualification testing or failures that result in major redesigns may delay  FTM-31, as well as significantly impact the cost and schedule for this  target.

Another way that the Targets program tries to ensure availability of  targets for MDA’s aggressive test schedule is to maintain aggressive  delivery schedules for some targets. For example, the Targets program  has an aggressive delivery schedule for its intermediate- and  intercontinental-range targets through fiscal year 2021. According to the  contractor for the intermediate- and intercontinental-range targets, there  are specific time-spacing requirements that the contractor needs in order  to produce and configure targets for a test in relation to the production  and configuration of targets for other tests. The contractor said that these  specific time-spacing requirements are needed due to limitations with the  testing, storage, movement, and transport of these targets. Specifically,  we observed that the facility where these targets go through final  assembly prior to use in a flight test can currently hold two fully  assembled intermediate-range targets and the component for one  intercontinental-range target which is assembled at the launch site due to  its size.

As shown in figure 7, almost all of the tests through fiscal year 2021 are  at risk of the target not being available as planned. One of the most  severe risks to target availability is in fiscal year 2020 when an  intermediate-range target is scheduled for a test in the third quarter,  followed by a test using dual (i.e., two) intermediate-range targets in the  following quarter. According the contractor’s specific time-spacing  requirements, it needs five months, but the approximate amount of time  between these tests is three months. According to the Defense Contract  Management Agency (DCMA), if MDA includes multiple intermediate- and  intercontinental-range missions in the test plan within close proximity  without accounting for the contractor’s specific time-spacing  requirements, it will be, at best, very challenging for the contractor, and at  worst, unachievable.

MRBM T1/T2 target’s continued cost growth and schedule delays have led to limited testing

The Targets program has a target—the medium-range ballistic missile  type one/type two (MRBM T1/T2)—that continues to have cost growth  and schedule delays, which we have previously reported. However, this  target’s costs have continued to be unstable, and despite changes and  rebaselines, the contractor has been unable to meet projections. Figure  8 below shows the cost growth from 2014 through 2018. In 2017, the  Targets program conducted a review of the MRBM T1/T2 target to  address significant cost growth and set new projections. Again, in 2018,  the Targets program and the contractor planned to conduct another  review to address additional cost growth since the prior year’s rebaseline.  Despite relatively steady periods of performance following a rebaseline,  DCMA officials believe that this contractor will continue to have cost  growth. The DCMA established that some of the root causes for the cost  growth are incomplete contract requirements and program requirements  changes. Additionally, MDA and DCMA officials have acknowledged that  the contractor did not adequately account for the costs associated with  this target at the outset. How much cost growth there will be moving  forward is unknown.

In addition to cost growth, the MRBM T1/T2 target has continued to have  schedule delays due to technical failures, which has led to the decision to  forego some testing as a cost-cutting and time-saving measure. For  example, the contractor’s first flight of this target has been delayed  approximately 5 years beyond the original plan, from third quarter fiscal  year 2014 to fourth quarter fiscal year 2019. The primary reason for this  delay has been an unusually high number of failures during pre-test  qualification testing, according to the DCMA. The DCMA believes that the  test failures are due to the elimination of sub-section testing, which it  understands the program and contractor initiated as a cost-cutting and  time-saving measure. According to DCMA, sub-section testing involves  piecing together different components of the target and then testing that  sub-section before the target is fully assembled. This type of testing can  help the contractor isolate any integration issues between components in  a specific area of the target. However, DCMA said that the contractor is  testing the components and then fully assembling the target. Once fully  assembled, they are conducting testing and experiencing the unusually  high number of failures. When these types of failures occur, according to  DCMA, the contractor conducts root cause analysis to make corrections  and resolve the issue; however, DCMA officials noted that there is no  commonality in the root causes. Thus, the contractor may not understand  what steps to take to resolve the issue and ensure that the target  performs as expected during a flight test.

It is currently unclear how the MRBM T1/T2 target will perform during  upcoming tests, because of the Targets program’s decision to forego  some qualification testing and not confirming the target’s performance  through a non-intercept test, as we have previously recommended.  However, the Targets program stated it considers the MRBM T1/T2  performance a minimal risk because the MRBM T1/T2 is largely based on  a prior target’s design which, according to the program, was successfully  flown twice. The MRBM T1/T2 is currently scheduled to fly in two critical  tests in fiscal year 2019 and 2020. The first is an intercept flight test for  the Terminal High Altitude Area Defense (THAAD) program in the fourth  quarter of fiscal year 2019, which supports the delivery of an urgent  capability to the warfighter. After this first flight test with this target, the  next test with this target is MDA’s third and largest operational flight test  of the BMDS to-date—FTO-03 E2—with five targets flying simultaneously  and, three interacting weapon systems—THAAD, Patriot, and Aegis  BMD. This test is currently scheduled for the fourth quarter of fiscal year  2020. Both of these tests are important and the use of this new target in  these tests increases the risk that the tests will not go as planned and that  retests may be necessary; however, a retest for FTO-03 E2 would be  extremely costly and very difficult to replan.

Appendix VIII: Terminal High Altitude Area Defense (THAAD)

Appendix VIII: Terminal High Altitude Area Defense (THAAD)

Key findings for Fiscal Year 2018  THAAD met most of its fiscal year 2018 delivery and testing goals. THAAD is rebaselining to address Joint Emergent Operational Needs for Korea. THAAD may face challenges meeting its aggressive flight test schedule through 2021.

MDA and Army closer to resolving the impasse regarding the transfer of THAAD.

THAAD is a rapidly-deployable, globally-transportable, ground-based  system able to defend against short-, medium-, and limited intermediate-  range ballistic missile attacks through a threat missile’s middle to end  stages of flight. A THAAD battery is comprised of five major components:  (1) launchers, (2) a fire control unit, (3) communications system, (4) a radar, and (5) interceptors. The current program of record includes a total of seven batteries and 660 interceptors.

THAAD has delivered all seven batteries to the Army for operational use  and plans to continue production through fiscal year 2029 for remaining  items, such as interceptors and software upgrades. The Army has  THAAD batteries deployed in Guam and South Korea. Table 15 provides  key fiscal year 2018 THAAD program facts.

THAAD met its fiscal year 2018 goals for deliveries and flight testing.  THAAD exceeded the number of interceptors it had originally planned to  deliver in fiscal year 2018 because it is recovering from a parts quality  issue. The parts quality issue was with a connector in the interceptor, and  although THAAD stopped interceptor deliveries in order to resolve the  issue, it did not stop interceptor production. Consequently, there was a  stockpile of interceptors just awaiting a redesigned connector in order to  be delivered. We previously reported on this parts quality issue and noted  that interceptor deliveries, with the redesigned connector, resumed in  April 2017 and interceptor production and deliveries have been steady  since. In addition to delivering the interceptors, THAAD delivered the  seventh, and final, battery of equipment. The delivery was later than  previously planned to accommodate the Army’s operational timelines and  a new software upgrade to improve THAAD’s performance against certain  threats and in the presence of debris during the intercept of a threat  missile.

Although THAAD was successful in delivering its planned assets for fiscal  year 2018, it only conducted one of two planned non-intercept tests.  Specifically, FTX-36 was canceled due to target availability from an  external vendor and its objectives were reassigned to FTX-35, which was  successfully conducted in April 2018. FTX-35 supported the material  release of the THAAD 3.0 software (i.e., it is available for use by the  warfighter) and the requirement for interoperability testing.

THAAD is rebaselining to address Joint Emergent Operational Needs for Korea

THAAD is in the process of rebaselining from two separate acquisition  efforts, known as THAAD I and II, to a single acquisition effort, known as  THAAD III, to incorporate changes to address the United States Forces  Korea (USFK) Joint Emergent Operational Needs (JEON). The purpose  of a rebaseline is to update a program’s established plans (i.e., baseline)  due to a change in requirements, costs, or schedule. USFK JEON is a  rapid acquisition effort to field ballistic missile solutions within the next 3  years to improve the defensive posture of Korea. Specifically, the USFK  JEON’s ballistic missile solutions are focused on improving integration  between THAAD and Patriot as shown in figure 9, which could enable the  defense of larger areas and more assets and provide the warfighter  greater flexibility in planning and executing defensive actions.

In fiscal year 2018, THAAD delivered software upgrades that provided the  initial integration between THAAD and Patriot to improve their ability to  coordinate when engaging a threat missile, in support of USFK JEON.  These upgrades were assessed in an April 2018 flight test—FTX-35—that  demonstrated interoperability between THAAD and Patriot by exchanging  messages over tactical data links while tracking a missile target, and an  April 2018 BMDS-level ground test which provided further performance  data in a simulation environment. THAAD currently plans to deliver USFK  JEON upgrades through fiscal year 2021. We currently have ongoing  work related to this and details will be included in future reports.

MDA has nearly tripled THAAD’s flight tests—from three to eight— between fiscal years 2019 and 2021 to support both USFK JEON, an  urgent operational need for the Army, and interoperability testing.   Consequently, the schedule margin between each test has decreased  from more than a year to three to six months. According to our best  practices for scheduling, a practical amount of schedule margin is needed  to account for risks and uncertainties. In addition, schedule margin can  provide time to analyze the results from the preceding test and correct  any identified issues before moving forward with further testing which may  be reliant on the results of the preceding test. We have previously  reported that MDA leaves little to no schedule margin in its flight test  schedule to ensure executability and the test schedule is success- oriented, in that it does not plan for failures which makes it difficult to  absorb test failures when they occur.

In addition to the reduced schedule margin between THAAD’s tests,  some of its tests in this timeframe are higher risk. For example, one test  will be flying a new, untested target which increases the risks for that test,  and another test will be the largest and most complex operational test to- date, flying five targets simultaneously. Therefore, the test schedule is  aggressive, complex, and is at risk of not being completed as planned.  However, THAAD has not identified its flight test schedule as a risk. Also,  THAAD officials and an official from DOD’s Director of Operational Test  and Evaluation have asserted that the flight test schedule is doable, if  everything goes according to plan, and that the biggest risk is fatigue  among the personnel supporting the tests. While THAAD has a generally  successful record for conducting flight tests, its current flight test schedule  includes almost as many flight tests in 3 fiscal years as it did for the prior  9 fiscal years. Figure 10 below details the changes in THAAD’s flight  testing from its previous plan to its current plan.

In addition to the increase in testing and lack of margin between tests,  another risk to THAAD’s flight test schedule is that some tests have not  yet been funded, as shown in figure 10 above. Funding is essential to  enable the planning and execution of each flight test. While THAAD is  tracking the lack of funding for these tests as a risk, there is no mitigation  strategy if all testing to support USFK JEON remains unfunded. If a single  test is not funded or executed, the Army will perform a risk-based  assessment using the available data to decide whether or not to deploy  the capability for use by the warfighter. If THAAD does not conduct the  testing as planned, it will forego the demonstration and confirmation of  capability performance which leaves the warfighter with the decision to  either not use the capability or use it with an increased risk that it may not  perform as intended. THAAD officials noted, however, that the Army’s  decision to deploy a capability is based on multiple sources of data such  as laboratory and ground testing, not just flight testing.

MDA and Army closer to resolving the impasse regarding the transfer of THAAD and the Army Navy/Transportable Radar Surveillance and Control Model-2 (AN/TPY-2)

MDA and the Army are nearing a resolution regarding the transfer of the  THAAD and AN/TPY-2 programs to the Army; however, the resolution will  likely resemble the current arrangement wherein MDA maintains primary  responsibility through production and the Army operates and sustains  them. We previously reported that MDA and the Army were at an impasse  over the transfer of the THAAD and AN/TPY-2 programs because MDA  was willing to transfer them as-is, but the program cannot meet the  Army’s mission requirements and it would take an estimated $10.1 billion  to do so. Table 16 lists the differences between the programs of record  and the Army’s requirements.

When MDA was established in 2002, it was tasked with using existing  and new technologies to rapidly develop weapon systems for the  warfighter, and once mature, the weapon systems were to be handed  over to a military service for production, operation, and sustainment. At  this point, MDA has some weapon systems where production is either  nearing completion or is complete. Consequently, Congress set forth a  requirement in the National Defense Authorization Act for 2018 that MDA  transfer all programs in production to the military services by 2021, which  includes THAAD and AN/TPY-2. As part of this requirement, Congress  requested a status report on MDA’s transfer of programs in production to  military services not later than December 12, 2018. MDA prepared a  report for the Under Secretary of Defense Acquisition and Sustainment  who then requested the deadline be extended to June 2019 to enable  further analysis and development of a viable option. However, according  to program officials, at a March 2018 meeting between MDA and the  Army, the Army stated that it prefers that THAAD and AN/TPY-2 remain  with MDA. According to officials, they discussed transferring the  sustainment only because MDA is best suited to maintain primary  responsibility through production in order to integrate the BMDS and keep  pace with the threat, as well as protect resources through the budgetary  process.

Appendix IX: Comments from the Department of Defense

Appendix X: GAO Contact and Staff Acknowledgments

In addition to the contact named above, LaTonya Miller, Assistant  Director; Matthew Ambrose; Pete Anderson; James Bennett; Jon  Felbinger; Kurt Gurka; Helena Johnson; Joe Kirschbaum; Wiktor  Niewiadomski; Steven Stern; Brian Tittle; Hai V. Tran; and Alyssa Weir  made key contributions to this report.

Missile Defense: Some Progress Delivering Capabilities, but Challenges  with Testing Transparency and Requirements Development Need to Be  Addressed. GAO-17-381. Washington, D.C.: May 2017.

Missile Defense: Opportunities Exist to Reduce Acquisition Risk and  Improve Reporting on System Capabilities. GAO-15-345. Washington,  D.C.: May 2015.

Missile Defense: Mixed Progress in Achieving Acquisition Goals and  Improving Accountability. GAO-14-351. Washington, D.C.: Apr. 2014.

Missile Defense: Opportunity to Refocus on Strengthening Acquisition  Management. GAO-13-432. Washington, D.C.: Apr. 2013.

Missile Defense: Opportunity Exists to Strengthen Acquisitions by  Reducing Concurrency. GAO-12-486. Washington, D.C.: Apr. 2012.

Missile Defense: Actions Needed to Improve Transparency and  Accountability. GAO-11-372. Washington, D.C.: Mar. 2011.

Defense Acquisitions: Missile Defense Transition Provides Opportunity to  Strengthen Acquisition Approach. GAO-10-311. Washington, D.C.: Feb.  2010.

Defense Acquisitions: Production and Fielding of Missile Defense  Components Continue with Less Testing and Validation Than Planned.  GAO-09-338. Washington, D.C.: Mar. 2009.

Defense Acquisitions: Progress Made in Fielding Missile Defense, but  Program is Short of Meeting Goals. GAO-08-448. Washington, D.C.: Mar.  2008.

Defense Acquisitions: Missile Defense Acquisition Strategy Generates  Results but Delivers Less at a Higher Cost. GAO-07-387. Washington,  D.C.: Mar. 2007.

Defense Acquisitions: Missile Defense Agency Fields Initial Capability but  Falls Short of Original Goals. GAO-06-327. Washington, D.C.: Mar. 2006.

Defense Acquisitions: Status of Ballistic Missile Defense Program in  2004. GAO-05-243. Washington, D.C.: Mar. 2005.

Missile Defense: Actions Are Needed to Enhance Testing and  Accountability. GAO-04-409. Washington, D.C.: Apr. 2004.

The Missile Defense Agency has made progress on a system that detects and intercepts missiles. However, it didn't meet its delivery and testing goals.

Several years of construction delays at a site in Poland required the agency to push the system's delivery date to 2020. At this site, the system could protect parts of Europe from missiles launched in the Middle East. Testing has also been reduced or deferred—leaving its end users with less information about how the system will eventually work.

We recommended the Missile Defense Agency use the delay to test the system and ensure it can protect U.S. allies against ballistic missile threats.