Missile Defense: The Warfighter and Decision Makers Would Benefit from Better Communication about the System's Capabilities and Limitations

Since 2002, MDA has been developing a Ballistic Missile Defense System that can identify and intercept enemy threats. MDA has received approximately $132 billion and is planning to spend an additional $47.8 billion through fiscal year 2022 to continue its efforts.

The National Defense Authorization Act for Fiscal Year 2012 included a provision that GAO annually assess and report on the extent to which MDA has achieved its acquisition goals and objectives. This report addresses (1) the progress MDA made in achieving fiscal year 2017 goals; (2) the extent to which MDA uses contracting vehicles known as undefinitized contract actions; and (3) the extent to which models provide credible information about the system's operational performance. To do this work, GAO reviewed planned fiscal year 2017 baselines and other documentation and assessed them against baseline reviews and GAO's acquisition best practices guides. In addition, GAO interviewed relevant officials.

In fiscal year 2017, the Missile Defense Agency (MDA) made mixed progress in achieving its delivery and testing goals.

MDA continued to deliver assets to the military services. However, system-level integrated capabilities, such as some discrimination and integrated cyber defense improvements, were delayed and delivered with performance limitations.

Several programs achieved notable firsts, including the first intercept of an Intercontinental Ballistic Missile. However, one program experienced a failure, and other tests were delayed or deleted.

Moreover, GAO found challenges in MDA's processes for communicating the extent and limitations of integrated capabilities when they are delivered. As a result, warfighters do not have full insight into the capabilities MDA delivers.

GAO found that the average length of the undefinitized period and the not-to-exceed price of MDA's undefinitized contract actions, which authorize contractors to begin work before an agreement on terms, specifications, or price have been agreed upon, have increased over the past 5 years. While MDA policy permits use of undefinitized contracts on a limited basis, GAO and others have found that they can place unnecessary cost risks on the government.

MDA does not completely assess BMDS performance using traditional flight tests. Instead, MDA relies on models, some of which produce data with limited credibility. According to Department of Defense and MDA policy, models used to operationally assess weapons systems must be accredited to ensure they reflect the real-world system. In addition, using unaccredited models increases the risk that test results could be distorted, and leaves decision makers without key information on how the system will perform. While MDA has taken steps to improve its models, it has used many models in system operational ground tests that were not certified for that use (see figure). Additionally, MDA does not communicate model limitations to some decision makers.

Percentage of Accredited Models Used in Operational Assessments of Ballistic Missile Defense System Capability Deliveries, 2015 through 2017

GAO is making six recommendations to, among other things, improve the way MDA communicates capability deliveries; better report information about MDA's use of undefinitized contract actions; and address the challenges MDA has encountered with certifying its test models and communicating limitations of those models. DOD partially concurred with the first recommendation and concurred with the other five. GAO continues to believe the recommendations are valid as discussed in the report.

Since 2002, the Missile Defense Agency (MDA) has received  approximately $131.8 billion to develop, integrate, and deliver the Ballistic  Missile Defense System (BMDS). For fiscal year 2017, MDA requested  $8.2 billion to continue its missile defense efforts and is planning to spend  an additional $47.8 billion through fiscal year 2022 to continue to develop  the system to detect, track, and defeat enemy ballistic missiles. To date,  we have issued 14 reports covering MDA’s annual progress and made  recommendations to address challenges in developing and fielding BMDS  capabilities, as well as other transparency, accountability, and oversight  issues. While MDA has taken steps to implement some of our  recommendations, going forward, it will continue to face important  challenges as it works to develop, integrate, and deliver capability,  increase transparency, and strengthen its investment decisions.

Various National Defense Authorization Acts since 2002 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, included 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, and include any other findings and  recommendations on MDA’s acquisition programs and accountability, as  appropriate.

This year, our 15th annual report addresses: (1) the progress MDA and  its missile defense elements made in achieving fiscal year 2017 delivery  and testing goals; (2) the extent to which MDA uses undefinitized contract  actions and any cost or schedule risks these contracts may have; and (3)  the extent to which missile defense models and simulations used in  testing provide decision makers with credible information about  operational performance of the BMDS. In addition, later this summer, we  plan to issue a separate classified report on the extent to which MDA has  processes in place to integrate intelligence community threat  assessments into its acquisitions.

We focused our assessment on MDA’s progress towards achieving its  delivery and testing goals, including its process for reporting on and  delivering integrated capabilities. To evaluate asset delivery and testing  goals, we reviewed MDA’s planned baselines as expressed in the BMDS  Accountability Report for fiscal year 2017, approved February 29, 2016,  as well as the Integrated Master Test Plan and its mid-year update. We  assessed these plans against previous years’ plans as well as those for  2018, as they became available. We compared these plans to the  agency’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 Office of the  Deputy Assistant Secretary of Defense for Developmental Test and  Evaluation as well as officials from U.S. Northern Command and the Joint  Functional Component Command for Integrated Missile Defense. We  also provided detailed questionnaires to the 10 MDA programs included  in the BMDS Accountability Report on these programs’ accomplishments  as well as challenges encountered during the course of fiscal year 2017.  To assess MDA’s process for delivering integrated capabilities, we  reviewed MDA’s directives and instructions, interviewed relevant program  officials, and compared this information to management documents and  processes that declare new BMDS capabilities ready for operational  acceptance by one of the combatant commands.

To assess the contracting practices used to achieve the planned fiscal  year 2017 goals, we focused on MDA’s use of contract vehicles where  contract terms, specifications, or price are not agreed upon before work is  begun, known as “undefinitized contract actions.” To evaluate MDA’s use  of undefinitized contract actions, we included questions about their use in  our questionnaires and reviewed regulations regarding these actions as  found in the Defense Federal Acquisition Regulation Supplement  (DFARS) and an MDA instruction on acquisition management. We  reviewed management documentation authorizing the use of specific  undefinitized contract actions since 2013, as well as MDA contracting  data regarding the value, timing, and terms of these actions for the same  period. We also interviewed MDA contracting officials to discuss the  factors that influence the decision to use undefinitized contract actions  and the practices they employ to protect the government’s interests in the  use of these actions.

To evaluate the extent to which missile defense models and simulations  used in ground testing provide decision makers with credible information  about operational performance of the BMDS, we reviewed modeling and  simulation planning and assessment documentation. In addition, we  reviewed operational ground test results including the BMDS Operational  Test Agency’s (BMDS OTA) and MDA’s Modeling and Simulation  accreditation reports to determine the accreditation status and the  limitations. We reviewed MDA and DOD’s instructions and guidance  documents regarding how models are properly verified, validated, and  accredited and used in operational assessments. Specifically, we  evaluated DOD Instruction 5000.61 regarding modeling and simulation  verification, validation, and accreditation; MDA Instruction 8315.04 on  BMDS Modeling and Simulation Management; the BMDS OTA Modeling  and Simulation Accreditation Plan; and DOT&E’s recent memos on  modeling and simulation verification, validation, and accreditation. We  also conducted interviews with relevant officials in MDA, Office of the  Secretary of Defense Testing Evaluators, the BMDS OTA, and experts in  the modeling and simulation field.

We conducted this performance audit from May 2017 to May 2018 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. Specifically,  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 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 MDA’s flexibilities, 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 provided more detailed requirements 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 us. However, not all  of our recommendations have been fully implemented.

MDA’s Process for Delivering Capabilities

Because MDA is not a military service, it does not abide by the same  policies that the services use for delivering capabilities. Instead, a  process exists whereby MDA declares an asset or capability ready for  delivery for potential operational use. During this process, MDA  communicates the capabilities and limitations of its delivery, and provides  evidence supporting these assertions. 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.

Typically, MDA makes capability deliveries through approved changes to  its Operational Capacity Baseline (OCB). Proposed changes to the  baseline are coordinated with the warfighter, including the affected  combatant commands. Subsequently, the combatant commands assess  these element capabilities to determine whether to accept them. This  process is used for the vast majority of deliveries, including relatively  minor ones such as software patches and updates.

In recent years, MDA has declared major capabilities ready for delivery  through a process that culminates in the issuance of a Technical  Capability Declaration (TCD). According to MDA officials, the primary  purpose of a TCD is to allow MDA’s senior management to manage the  delivery of integrated, BMDS-level capabilities that require more than one  element to function; however, TCDs have also been issued in response to  mandates from the President.

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 Department of Defense Federal  Acquisition Regulation Supplement (DFARS). 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. The amount of funds obligated should be consistent with the  contractor’s requirements for the undefinitized period. Figure 1 shows the  expected time frame and amount the government should spend within a  specified period.

Models and Simulations Used in Operational Testing of the BMDS

The BMDS is a system of systems that cannot be completely assessed  using intercept flight tests that are operationally representative because of  the system’s scope and complexity and safety constraints. Consequently,  MDA, independent DOD testing organizations, and the warfighter must  rely heavily on representations of the integrated BMDS called models and  simulations in ground testing, rather than live tests, to test the operational  performance of the whole BMDS against attacks with more threats  represented. In ground testing, each BMDS element is represented by a  model and connected to a computer framework. During ground test  execution, a model of threat ballistic missiles is applied to the framework  and stimulates the modeled representations of BMDS elements to react.  The resulting simulation models a BMDS engagement. Figure 1 illustrates  the BMDS ground test sequence.

To ensure that BMDS models and simulations accurately represent the  real-world operational BMDS capabilities and that the limitations of the  model are understood, they are verified, validated, and accredited. The  verification, validation, and accreditation process is designed to identify  and gather evidence needed to certify that the model and its associated  data used in ground testing are acceptable for operational testing. No  model is completely representative of the real world so the verification,  validation, and accreditation process is used to assess the extent to  which it reflects the operational performance of the BMDS in the real  world, and how any modeling deficiencies impacted ground test results.  Any modeling limitations identified in the verification, validation, and  accreditation process restrict the extent to which ground test data can be  used for BMDS assessment. For example, limitations in modeled sensor  tracking of the threat restrict the extent to which tracking data can be  relied on for interpreting operational real-world performance. Figure 2  illustrates the verification, validation, and accreditation process.

The BMDS Operational Test Agency (OTA) is responsible for analyzing  the verification and validation data for the models used in operational  BMDS tests and provides accreditation recommendations to the  Commanding General, Army Test and Evaluation Command, an  independent accreditation authority for operational testing. In this role, the  BMDS OTA develops accreditation criteria and assesses if the model can  be used for operational assessments against these criteria. The BMDS  OTA is also responsible for analyzing the extent to which the threat  model, once it is applied to the ground testing framework, can be traced  back to the threat model that MDA developed and the intelligence  community’s description of the threat.

MDA Made Some Progress, but Did Not Meet Many of Its Acquisition Goals, and Has Inconsistently Applied Its Capability Delivery Processes

In fiscal year 2017, MDA made some progress delivering assets,  including BMDS-level capabilities and conducting tests. However, MDA  did not meet many of its goals as expressed in the Ballistic Missile  Defense System Accountability Report for fiscal year 2017, its integrated  master test plan, and master integration plan. Specifically, MDA  continued to deliver interceptors for three elements and successfully  conducted its first test against an intercontinental ballistic missile target.  In addition, MDA announced the delivery of one package of integrated  BMDS-level capabilities through a technical capability declaration (TCD),  which had been delayed from the previous year, and planned to complete  the delivery of another set of capabilities by March 2018. MDA, however,  did not complete its goals for delivering assets, specifically for the THAAD  interceptors or conducting planned testing for Aegis BMD. We also  identified several deficiencies in MDA’s processes for communicating  progress in delivering integrated capabilities.

MDA Achieved Mixed Results in Delivering Assets and BMDS-Level Capabilities, Adhering to the Planned Test Schedule

MDA made progress delivering assets against its backlogs from fiscal  year 2016, while its test program achieved several notable milestones.  MDA also delivered several new integrated capabilities, though not  always on time and often with reduced content compared to what was  planned to be delivered. In addition, not all deliveries and testing  objectives were met, and MDA made a number of changes, additions,  and deletions to its test and capability delivery schedule during the year.

Elements: While BMDS elements made progress delivering assets,  including some that were delayed from fiscal year 2016, MDA did not  meet all of its asset delivery goals as planned. For a summary of MDA’s  major asset deliveries for fiscal year 2017, see table 2 below.

Both the Aegis Standard Missile-3 (SM-3) Block IB and Ground-based  Midcourse Defense (GMD) programs succeeded in achieving their asset  delivery goals for the fiscal year, although both included acceptance of  assets delayed from prior fiscal years. Specifically, due to quality issues  and design problems discovered during testing, production on the Aegis  SM-3 Block IB interceptor was temporarily halted in fiscal year 2016, and  as a result MDA fell short of its deliveries for that year by 15 interceptors.  To make up for this, MDA rolled over an additional 15 interceptor  deliveries into fiscal year 2017, for a total delivery of 55 interceptors. In  addition, MDA achieved its goal of delivering 44 ground-based  interceptors by the end of calendar year 2017. However, some  programs that achieved their milestones continued to employ high-risk  approaches to acquisition, which we have recommended MDA reduce in  previous reports. In addition, MDA maintains an ambitious schedule for key programs, such as for GMD’s Redesigned Kill Vehicle program. For  more information regarding specific programs, see appendixes II through  X.

Other MDA elements missed asset delivery milestones. The Command,  Control, Battle Management, and Communications (C2BMC) software  spiral (or version) 8.2-1 was previously due to be delivered in October  2017, but was delayed again from its new date of December 2017 to  second quarter of 2018. This spiral will play an important role in several  tests of integrated capabilities, such as FTM-29, which was executed in  January 2018. The Terminal High Altitude Area Defense (THAAD)  program’s delivery of interceptor Lot 6 was scheduled to be delivered by  the end of June 2017, but has since been delayed to the second quarter  of 2018. THAAD officials stated this delay was due to a component  production issue as well as the addition of 12 additional interceptors to  the fiscal year 2017 procurement.

Additionally, the Army and MDA have reached an impasse regarding the  transfer of the THAAD program from MDA to the Army. MDA and the  Army have been directed by the Deputy Secretary of Defense to develop  a memorandum of agreement that would guide the transfer of the THAAD  and AN/TPY-2 programs to the Army, and the National Defense  Authorization Act for fiscal year 2018 requires the Secretary of Defense to  transfer the acquisition authority of all missile defense programs that have  received full-rate production authority, which includes THAAD, to the  military departments not later than the date the President’s fiscal year  2021 budget is submitted. The Army, however, has identified a $10.1  billion requirements gap, and the Secretary of the Army issued a memo  that he would non-concur with the transfer of the THAAD program in its  current state. There is currently no plan or timeline to resolve the issue.  We will continue to follow this issue in our future work.

Finally, additional delays to the construction of the Aegis Ashore facility in  Poland resulted in significant schedule compression, reducing the time  allotted for installation and checkout activities from 16.5 months to 9.5  months. MDA initially maintained that the site would be delivered on  schedule, but early in fiscal year 2018 the agency announced that the site  would not be delivered until at least December 2019.

Integrated BMDS Capability Increments: MDA also encountered  challenges delivering packages of integrated capabilities, which it refers  to as “increments.” Increment deliveries signify delivery of integrated  BMDS-level capabilities, which are designed to significantly improve  effectiveness and efficiency of the BMDS over its constituent elements  working independently. MDA planned to deliver two increments in 2017,  but both were delayed, and some constituent capabilities were removed  and are planned to be delivered in future increments. For instance, MDA  was late in delivering Increment 3, known as “Discrimination  Improvements for Homeland Defense – Near Term.” We previously  reported on schedule slips to this increment from its initial September  2016 delivery date to December 2016. However, program  documentation indicates that MDA encountered further challenges in  fiscal year 2017 that required an additional delay to March 2017.  According to MDA officials, this most recent delay was driven by  additional time needed to analyze testing results. However, we found that  GMD had experienced development delays for some software upgrades  leading up to assessment and integration activities.

Moreover, MDA’s Increment 4, known as “Enhanced Homeland Defense,”  was not completed in December 2017 as planned, because a C2BMC  and a key GMD upgrade initially planned to support four BMDS-level  capabilities intended for this increment would not be available until the  second quarter of fiscal year 2018. MDA officials told us that they will rely  on the current GMD software version, which lacks some key  improvements, until this upgrade is delivered. Additionally, MDA  significantly reduced the content of its BMDS cyberdefense capability  planned for Increment 4. MDA documentation originally planned to deliver  this capability with 10 elements and, prior to testing, the BMDS OTA  declared four elements to be priorities. Of these four, MDA has conducted  the assessment for only three. The remaining BMDS elements will deliver  cyberdefense capabilities in future increment deliveries.

MDA’s plans for delivery of future capabilities continue to be volatile. For  example, plans for Increment 6 in fiscal year 2021, which will include  delivering a new radar and kill vehicle for GMD, now require its  capabilities to be broken up into three sub-increments delivered across  several years, some as late as 2023, with multiple new capabilities added  and several others deferred to Increment 7. Many of these delays  continue to postpone achievement of BMDS integration, needed to  improve performance against realistic attacks with multiple ballistic  missiles.

Most recently, MDA again delayed a capability designed to improve  automated coordination between regional BMD shooters—that is, Aegis  BMD, THAAD, and Patriot. While initially planned for delivery in 2015 with  Increment 2, in fiscal year 2017, the capability was further delayed, from  2020 to 2023. In addition, a further integration capability that would  centralize and automate command decisions across the BMDS will not be  available until December 2025. See figure 3 for more information on how  capabilities have been delayed within and across increments.

Testing: MDA successfully completed most of its planned tests in fiscal  year 2017 and achieved several notable milestones, though MDA  continued to add, alter, delete, or delay parts of its test schedule  throughout the year. Within the elements included in this report, MDA had  nine tests in its fiscal year 2017 test plan, of which it conducted six as  planned. MDA also added three additional tests to its plan over the  course of the year. A summary of these tests can be found in table 3.

Many of these tests are notable firsts for MDA, though others indicate  continuing challenges.

FTG-15 was a success, in which a Ground-Based Interceptor with a  Configuration-2 booster and a CE-II Block I Exo-atmospheric Kill  Vehicle intercepted for the first time an intercontinental ballistic missile  with threat representative characteristics. In addition, this was the first  use of the new booster avionics and upgrades to the software. The  success of this test was necessary to deliver Increment 4’s  requirements for Enhanced Homeland Defense. However,  Department of Defense operational testing officials stated that the  complexity and objectives of the test had been scaled back from what  MDA originally planned.

SFTM-01 was a success, in which an Aegis BMD SM-3 Block IIA  missile intercepted a medium-range ballistic missile target. This was  the first intercept test for the Aegis BMD SM-3 Block IIA.

SFTM-02 was a failure, as the Aegis BMD SM-3 Block IIA interceptor  failed to intercept its medium-range ballistic missile target. MDA  officials stated that the interceptor acted “as designed” during the test,  and the Navy is considering whether changes to its tactics,  techniques, and procedures may be warranted. MDA officials  maintained that this developmental test existed in part for risk- reduction ahead of fiscal year 2018’s FTM-29, in which the Aegis  BMD SM-3 Block IIA would have to intercept an intermediate-range  ballistic missile for the first time. Despite the failure, MDA has chosen  not to reschedule and has instead re-assigned SFTM-02’s objectives  to FTM-29.

FTT-18 was a success, in which a THAAD battery intercepted an  intermediate-range ballistic missile target. This test was originally  planned for several years ago, as part of the 2015 delivery of  Increment 2, and has been delayed in part due to issues with range  availability. This is the first demonstration of THAAD against an  intermediate-range ballistic missile target despite a THAAD battery  having been delivered to Guam for this mission in 2013.

FET-01, previously known as FTT-15, was a success, demonstrating  THAAD’s ability to intercept a target in the endo-atmospheric stage of  flight. MDA re-classified the test a “Flight Experiment” midway through  fiscal year 2017 to reflect its more observational and experimental  nature. The test objectives for FET-01 have changed several times,  and while the final iteration of test objectives did not include intercept  as an objective, an intercept against a medium-range ballistic missile  target was achieved nonetheless.

MDA’s Process for Managing the Delivery of BMDS-Level Capabilities Is Not Applied Consistently and Has Unclear Requirements

When MDA declares a capability ready for delivery to warfighters, it  communicates the capabilities and limitations of the delivered asset. This  information is critical for allowing warfighters to make informed decisions  about whether to accept the capability, how to prepare for its deployment,  and how to plan for its use. Typically this process occurs through the  Operational Capacity Baseline (OCB) change process, which is  structured around the delivery of new capabilities to individual elements.  Alternately, as noted above, when MDA declares a key integrated,  BMDS-level capability ready for delivery, it does so through a process  which culminates in the issuance of a Technical Capability Declaration  (TCD). The TCD is a memorandum signed by the Director, MDA and is  usually reserved for significant new capabilities such as:  those mandated by the President; or delivery of integrated BMDS-level capabilities that require more than  one element to function.

This last category of capabilities is especially important as, according  MDA’s charter, the BMDS is intended to be an integrated and  interoperable system. Integration is important in order to counter the  larger-scale and more complex attacks that are likely to occur during a  conflict. We have reported since 2014 that MDA has taken steps to  improve the management and reporting of integrated capabilities, and to  increase the level of BMDS integration. While MDA has recently made  some progress in the area of integrated capabilities, the majority of  MDA’s capability deliveries continue to be made at the element level.  Until recently, MDA has done little to document the requirements and  process for issuing a TCD, resulting in an inconsistent and, at times, ad- hoc process.

We found inconsistencies in MDA’s decisions regarding which integrated,  BMDS-level capabilities MDA would deliver through a TCD, and which it  would not. For example, since 2015, the agency planned to deliver 14  integrated, BMDS-level capabilities, but delivered only 7 through the TCD  process. According to MDA’s prior capability delivery documents, several  of these excluded capabilities were intended to be part of the formal TCD  delivery during the planning stage, but were dropped at some later point.  According to MDA officials, those deliveries were made when all their  constituent elements were delivered via the OCB process.

MDA officials acknowledged that distinctions between requirements for  element-level deliveries and BMDS-level capabilities were not readily  apparent in their policy and took steps in fiscal year 2017 to do so. MDA  issued a memorandum on Technical Capability Declaration Planning and  Definitions in June 2017 to help distinguish element-level OCB deliveries  and deliveries of integrated BMDS capabilities that would occur via TCD.  This document established several definitions and requirements such as  assigning responsibilities, establishing lines of authority, and defining  some requirements that are not found in the other guidance document  that MDA uses to govern TCD. The June 2017 memorandum also  identified which capabilities through 2023 that MDA will deliver via a TCD,  and identified some ways to add a new capability to the list of those  receiving a TCD.

While MDA’s new policy represents a substantial improvement in the  management of the TCD process, it does not address several important  problems with the TCD process. Specifically, although MDA has identified  capabilities that it plans to deliver using a TCD, it does not identify any  criteria or reasoning that guided this determination. It also does not  explain the criteria MDA will apply to future capabilities under  consideration for a TCD, leaving open the possibility of the same  inconsistent application MDA has used in the past. Moreover, the  capabilities it identified for a TCD are only a subset of all planned  integrated, BMDS-level capabilities. Consequently, only some integrated  capabilities are currently planned to be delivered to the warfighter with  comprehensive information about their performance and limitations at the  BMDS level. Unless MDA requires that all integrated capabilities are  delivered via the TCD process, as the BMDS becomes more integrated,  military services and other decision makers will have reduced insight into  the capabilities and limitations of the BMDS as a whole.

MDA’s June 2017 policy also establishes some processes governing the  requirements for, and development of, test plans in support of a TCD, but  it does not address some of the most problematic aspects of this process  to date. Specifically, the new policy requires convening an Assessment  Requirements Review board to develop a baseline for a planned TCD,  determine what capabilities will be included, and identify what test plans  will be necessary to generate the “body of evidence” that MDA will  provide in support of the TCD’s assertions regarding capabilities and  limitations.

However, we found that Assessment Requirements Reviews can be held  shortly before the planned delivery date—which affords no opportunity to  build the test plan around the requirements identified in the review. MDA  held Assessment Requirement Reviews in preparation for two of the  previous three TCDs. The timing of these reviews in relation to the date of  the TCD’s issuance suggests that they had little influence on MDA’s  actual test plans. MDA officials stated that an Assessment Requirement  Review is ideally held 18 months to 2 years prior to the issuance of the  related TCD. However, we found that, for recently issued TCDs, the  reviews were held much closer to the beginning of testing and the  planned TCD delivery. For example, for the TCD issued in December  2017 that delivered 44 ground-based interceptors, MDA held this review  less than 8 weeks in advance. Figure 4 depicts the timeline of the  Assessment Requirements Review as compared to the start of testing for  the TCD and the TCD delivery date.

Because these reviews identify requirements that must be tested, the  Assessment Requirements Review would ideally inform MDA’s test plans  so that each component of the integrated capability could be adequately  tested by the planned delivery date. But because the policy does not give  exact requirements, process, and key milestones necessary to issue a  TCD, MDA is able to hold an Assessment Requirements Review that  merely acknowledges the results of tests already completed.

These practices are consistent with our prior findings on MDA, which  identified a lack of a management framework for delivering integrated  capabilities, and showed that the lack of this framework resulted in  concurrency, fragmentation of development activities, and delays for  some originally planned capabilities. According to DOD’s guidance on  acquisition and testing, a program’s test and evaluation strategy should  begin with a review of requirements so that management can devise a  test and evaluation strategy that generates the knowledge necessary to  inform the acquisition and operational decisions of a program. Holding the  Assessment Requirement Review so close to the planned delivery date  affords no opportunity to build the test plan around the requirements  identified in the review, and instead only ratifies the results of a test plan  that was not necessarily developed with these requirements in mind.

MDA’s Use of Undefinitized Contract Actions Poses Cost and Schedule Risks to the Government

Undefinitized contract actions are authorized when the negotiation of a  definitive contract is not possible in sufficient time to meet the  government’s requirements and government interests demand that the  contractor be given a binding commitment so that contract performance  can begin immediately, and are subject to certain limitations. Our analysis  of MDA contracting from fiscal year 2013 to fiscal year 2017 shows that  the combined not-to-exceed price of all undefinitized contract actions  entered in a given year, and the average time it takes to definitize  undefinitized contract actions, have increased. GAO has reported that  while this type of contract action may be necessary under certain  circumstances, it is considered risky in part because the government may  incur unnecessary costs if requirements change before the contract is  definitized. Though MDA reports on its contracting activities in its annual  BMDS Accountability Report, its reporting on details unique to  undefinitized contract actions is often inconsistent or even absent.

MDA’s Acquisition Management Instruction 5013.02-INS states that  undefinitized contract actions will be used only on “an extremely limited  basis” and only when negotiating contract terms before the contractor  begins work is not feasible, such as when delay “would adversely impact  mission accomplishment.” Our prior work, as well as that of the DOD  inspector general, has found that this type of contract action is considered  risky in part because the government may incur unnecessary costs if  requirements change before the contract is definitized. Under  undefinitized contract actions, substantial funds may be obligated before  essential questions of contract scope and system design have been  settled.

Over the past 5 years, the average length of the undefinitized period and  not-to-exceed price for MDA’s undefinitized contract actions have  increased. Since 2013, MDA has entered into 11 undefinitized contract  actions as shown in table 4.

MDA’s use of undefinitized contract actions has fluctuated between one  and five instances per year. The combined not-to-exceed price of all such  contract actions entered into each year has increased, however, from  $2.5 million in fiscal year 2013 to $1.4 billion in fiscal year 2017 as shown  in figure 5. The average time to definitize these contract actions has  steadily increased as well, from 78 days in fiscal year 2013, to over 600  days in fiscal year 2016 (see figure 6). Two undefinitized contracts were  awarded in fiscal year 2017 and both exceeded 180 days without  definitization.

The value of MDA’s undefinitized contract actions entered into in a given  year, as measured by their combined not-to-exceed prices, has risen  significantly. The length of the undefinitized period has also risen on  average. Together, these figures show that MDA may be initiating  contractor work with incomplete knowledge of the requirements or costs  involved.

With regard to the increasing duration of the undefinitized period, MDA  contracting officials told us that when they do not achieve definitization  within 180 days, it is often because the contractor’s proposal is not  adequately supported by a sound estimate, and negotiation past 180  days is necessary to achieve a fair and reasonable price. They added  that the task of making this determination is made more complicated by  the highly developmental nature of the work that MDA often conducts. For  example, the 2015 undefinitized contract action for Aegis BMD SM-3  Block IIA test interceptors remained undefinitized for 629 days. According  to MDA officials, this delay was due in part to the difficulty of accurately  estimating costs on a highly developmental project.

MDA officials reported having to develop a substantial knowledge base  and consult closely with other DOD entities that would have insight into  the costs of similar projects, after the undefinitized contract action was  entered into. Using an undefinitized contract action in this case, however,  was not without risk to the government. MDA made major financial  commitments to a program before it fully understood the requirements or  the costs.

To mitigate the risks related to these contract actions, MDA’s Instruction  requires all undefinitized contract actions to be supported by a  determination and findings that articulates the requirement to begin  performance prior to a negotiated agreement, the not-to-exceed price and  the definitization schedule. The DFARS and MDA instruction require all  undefinitized contract actions to be approved by the Director, MDA. MDA  officials told us that they interpret the MDA Instruction to require that the  Director, MDA, sign determination and findings documents in support of  undefinitized contract actions. In addition, MDA contracting officials stated  that to further mitigate the risks related to undefinitized contract actions,  they, as a matter of practice, strive to obligate only the minimum amount  of funding necessary to achieve definitization. Officials indicated that  doing so limits the cost risk for the government, and forces programs to  think carefully about what work needs to be done prior to definitization  and its likely costs.

While the Director, MDA is required to sign the determination and findings  document, in one instance, this document specifically authorized the  program to amend the requirements and not-to-exceed price without  further formal approval from the Director, MDA. This specific undefinitized  contract action was the largest MDA has entered into since fiscal year  2013. MDA entered into the undefinitized contract action in May 2017,  authorizing the design, development, and initial production of the GMD  program’s Redesigned Kill Vehicle (RKV), with a not-to-exceed price of  $1.088 billion.

This undefinitized contract action will allow MDA to continue with the RKV  program despite significant cost, schedule, and performance risks, some  of which the determination and findings document for the RKV  undefinitized contract action acknowledged. When MDA released its  acquisition strategy for the RKV in 2015, it predicted the phase covered  by this contract action would cost approximately $800 million, covering  initial testing and production of up to eight RKVs for initial fielding.  Officials stated that the current contract action, with a not-to-exceed price  of $1.088 billion, is for only four interceptors, although since it is  undefinitized, that is subject to change. If the RKV program definitizes this  contract action according to its schedule in May 2018, after 12 months,  this will result in the definitization of the contract action with less than a  year remaining before the program’s critical design review. In other  words, the government will have agreed on contract terms, including  costs, after much of the design work and related costs have been  incurred. As of February 2018, MDA reports obligating $324 million, or 30  percent of the not-to-exceed price, to this undefinitized contract action.  This is in excess of the $244 million planned for the undefinitized period  at the time of award.

As part of MDA’s annual BMDS Accountability Report, MDA reports on its  planned performance and schedule for the coming fiscal year across  several baselines, one of which is dedicated to contracting performance.  MDA provides these baselines in response to statutory requirements. By  establishing these baselines and then reporting any deviations in cost,  schedule, or performance as a program proceeds, the BMDS  Accountability Report provides information for oversight by identifying  areas of program risk and their causes to decision makers. Baselines also  help ensure that the full financial commitment is considered before  embarking on major development efforts.

These reports contain some information on undefinitized contracts.  However, the information is often inconsistently presented and distributed  throughout the report. Information specific to undefinitized contract  actions is often absent, such as the following:  the definitization schedule (that is, the expected time frame for  finalizing contract terms);  the amount of funds obligated to the action for the undefinitized  period; or any changes to the above that have occurred since award of the  action.

As a result, decision makers in Congress have limited insight into how  MDA is handling the risks that come with undefinitized contract actions, or  how the programs enacting these contracts are performing. For example,  these reports do not typically disclose how much has been obligated  under an undefinitized contract action, or if this amount has increased  since the contract was awarded. They do not report if the not-to-exceed  value has been revised, or if the current definitization schedule adheres to  the schedule determined at the time of award.

Despite Steps Taken to Improve BMDS Modeling Capabilities, Modeling Challenges Limit the Credibility and Accuracy of BMDS Performance Data

Despite taking steps to improve the realism of the models it uses for  ground testing, MDA continues to face challenges with its models. As a  result, decision makers lack key information about BMDS performance,  which could lead to miscalculations about how best to employ the BMDS  and where to focus future capability development and investment.  Specifically, MDA continues to encounter challenges with ensuring that its  models and simulations are accredited for operational testing when they  are used to test BMDS capabilities, resulting in uncertain performance  outcomes in assessments supporting BMDS deliveries. Additionally,  accreditation status and modeling limitations for these assessments are  not communicated to most decision makers in Congress and some in the  DOD and executive branch, limiting their insight into the data limitations  underlying their decisions to make investments in and employ the BMDS.  Finally, MDA’s assessment of the resources needed to validate and  accredit its current models does not match requested funding for this  effort.

MDA Has Taken Steps to Improve Its Modeling Capabilities, but Most Delivered BMDS Capabilities Were Tested Using Unaccredited Models

Since MDA cannot conduct enough system-level flight testing of the entire  BMDS to completely assess BMDS performance, BMDS decision makers  within MDA, DOD, Congress, and the executive branch use information  from model-based ground tests to evaluate the operational effectiveness  of the BMDS. The results from these model-based operational tests  inform many acquisition and operational decisions, including: capability  delivery, asset fielding, and interceptor inventory. Model-based testing  also informs the warfighter’s tactics, techniques, and procedures to  maximize BMDS effectiveness such as how many interceptors they will  fire at a threat; and the capability gap analysis, the basis for warfighter  requests for new capabilities. Recognizing the importance of models and  simulations, MDA has taken steps to improve its ability to provide realistic  modeled representations of the integrated BMDS necessary to assess  operational performance. For instance:  In 2009, MDA adjusted its test baseline, known as the Integrated  Master Test Plan, and refocused its testing on collecting data needed  for model development and accreditation.

In 2016, MDA developed an update to a framework that is used to  integrate the modeled representations of BMDS elements for  assessments, and in 2017 continued an effort to develop digital end- to-end models and simulations to increase modeling capabilities and  to expand the scope of BMDS assessments in the future.

In 2017, MDA increased its collaboration with BMDS OTA to prioritize  modeling needs and to address them.

Despite these steps, MDA continues to deliver assets and capabilities  using models that have not been accredited. In April 2016 and May 2017,  we found that MDA had delivered EPAA Phase 2 capabilities in  December 2015 using models that have not been accredited to support  the delivery. MDA continued this practice by delivering two sets of  BMDS-level capabilities since 2015, relying on operational tests  conducted with models that were not accredited for use in such an  assessment. The next delivery, expected at the end of the second quarter  of fiscal year 2018, has also been tested using mostly unaccredited  models.

Relying on models that are not accredited for operational assessment  increases the risk that modeling errors are not discovered, and a single  undetected modeling error can distort the assessment results for the  entire BMDS. DOD’s acquisition instruction requires that models and  simulations used in operational assessments be verified, validated, and  accredited. Although, as noted above, MDA is generally exempt from  DOD acquisition policies, its own modeling and simulation policy requires  that models and simulations used in operational assessments be verified,  validated, and accredited for that use. Moreover, experts at DOD, MDA,  and other institutions we interviewed agree that models should be  verified, validated, and accredited to ensure that decisions based on  models are informed by the correct data, and that the limitations of that  data are understood. Additionally, according to DOD officials, defense  acquisition programs that follow DOD acquisition regulations verify,  validate, and accredit their models before operational assessments.

However, our analysis indicates that the accreditation of many MDA  models for operational assessment is, in most cases, not completed in  time to support testing. In fact, many of them are not complete even after  a capability has been delivered. Additionally, BMDS OTA officials said  that models that are not accredited before delivery are not generally  accredited later on. Figure 7 shows the percentage of accredited models  that were used in the operational assessment of each BMDS capability  delivery in 2015 through 2017.

BMDS models are not accredited for operational assessment in large part  for three reasons: (1) MDA does not provide sufficient evidence to the  BMDS OTA for accreditation, (2) some models do not accurately  represent BMDS performance in the real world, and (3) the threat model  used to stimulate the test cannot be traced to the original intelligence  community assessment. These challenges affect assessments across the  entire BMDS engagement, from detection and processing of the threat to  the intercept. While modeling uncertainty in any one of these areas  affects uncertainty for the BMDS as a whole, factored together this  uncertainty is magnified.

Lack of Data: In some cases, MDA did not provide the BMDS OTA data  needed to accredit the models used in operational ground testing, even  though it is a signatory to the BMDS OTA’s accreditation plan. This plan  identifies the data needed to achieve accreditation and directs that these  data should be provided at least 60 days prior to official operational  ground testing. MDA officials noted that the BMDS OTA recently  changed its data requirements for accreditation and that they were unable  to meet the new requirements in time to inform the capability deliveries  shown above. However, we have found that MDA has encountered  similar challenges since 2009. In fact, according to BMDS OTA officials,  MDA has never completely provided the needed data on time and often  missed numerous subsequent deadlines. In many cases, MDA failed to  deliver the required data even after it tested and delivered its capabilities,  and in some instances the data MDA provided did not meet the BMDS  OTA’s requirements. As we have previously reported, disruptions to  MDA’s testing program—such as flight test failures and delays—reduce  the amount of real-world data that is available to accredit models. We  also found that MDA proceeded with model-based ground tests and  capability deliveries without leveraging the knowledge it planned to obtain  from these tests. For example, in 2016 and 2017, we found that MDA  delivered the European Phased Adaptive Approach Phase 2, even  though key models, such as the model for Aegis Ashore, were  unaccredited. Additionally, in other instances, MDA lacks technical data and other model information that is needed for accreditation, especially  for models representing older systems.

In 2017, as noted above, MDA and the BMDS OTA increased their  collaboration to improve model accreditation status and, in 2017, co- developed a list of prioritized modeling deficiencies. Additionally, MDA is  making progress in gathering and providing model data for operational  assessment accreditation. MDA officials reported that based on this  increasing collaboration, they expect that more models will be accredited  in 2018. It is unlikely, however, that all models will achieve accreditation  prior to the upcoming December 2018 delivery of the European Phased  Adaptive Approach Phase 3.

Modeling Deficiencies: Another reason that some models are not  accredited for operational use is that certain models contain deficiencies,  such as optimistic representations of BMDS performance and simplistic  representations of BMDS environments. In these cases, while MDA  initially supplied BMDS OTA with the relevant data, the model’s  performance failed to meet the criteria for accreditation. Subsequently,  MDA did not provide supporting rationale to explain these failures, or to  explain how the modeling issues skewed the overall performance results.  For example, in 2016, the BMDS OTA compared modeled sensor  tracking data used in recent ground tests to real-world sensor tracking  data and found that the models representing some radars performed  better than the real-world radar. These modeling deficiencies can affect  other BMDS elements that rely on sensor data and can artificially inflate  BMDS performance. In one case, Aegis BMD’s launch-on-remote  capabilities were over-estimated. As a result, the BMDS OTA could not  accredit the models, and thus verify that ground test results that support  Aegis’s launch-on-remote capability and other tested capabilities are  credible and reliable. MDA is working to address this issue and it is too  early to assess progress.

Additionally, some models used in operational assessments are overly  simplistic. For example, modeled representations of the battle scene in  moments after intercept do not display the resulting complex scene that is  caused by the large quantity of missile and interceptor debris. This  deficiency limits insight into how the BMDS will perform during realistic  ballistic missile attacks that could require follow-on interceptors to be  launched, and how the BMDS will determine that the incoming threats  have been destroyed. According to BMDS OTA and MDA officials, MDA’s  efforts to develop digital models can help in this area, by providing more  processing power and great scalability for engagement complexity;  however, the capability is not expected to be mature until 2021 or later.

Threat Models Cannot Be Traced Back to Underlying Threat  Assessments: The value of ground test-generated data is dependent on  the quality of the threat model that stimulates the test. However, the  BMDS OTA has never been able to accredit threat models before  operational testing, and in some cases, after testing. As is the case with  other models, in some cases, the BMDS OTA does not receive data  needed to accredit the models from MDA in a timely manner. Additionally,  the BMDS OTA cannot trace the threat model used in ground testing to  the threat model that MDA developed based on the intelligence  community’s threat assessment. For example, according to BMDS OTA  officials, during a past ground test event, a model representing a BMDS  element rejected the intended threat model and instead ran its own  internal threat model. As a result, the test did not reflect real world  conditions where the entire BMDS would be exposed to the same threat  stimulus.

BMDS OTA officials said that MDA’s ground test architecture is not  designed to generate the data needed to confirm that all elements are  reacting to the same model during ground testing, meaning that  unbeknownst to testers, other BMDS elements could also reject the  approved threat model during testing. These deficiencies introduce  ambiguity into the test results including the extent to which the BMDS  operated as an integrated system of systems against a common threat  set. BMDS OTA officials said that MDA is currently working on a  pathfinder activity to help understand and rectify the traceability issue.

Information about the Accreditation Status and Limitations of Models Used in Operational Assessments Is Not Communicated to Decision Makers

Although the warfighter and other decision makers inside DOD,  Congress, and the executive branch rely on models to provide information  about BMDS effectiveness, MDA’s capability delivery documentation  does not include information about the quality of modeling data.  Specifically, MDA’s TCD memos and OCB change packages, which  describe technical capabilities delivered to the warfighter and their  limitations, do not discuss the extent to which the models used to assess  the new capability are verified, validated, and accredited for assessment,  or how ground test results were affected by model limitations. As a result,  decision makers do not have complete information about the validity of  the capability assertions in these documents and how much confidence  should be placed in reported BMDS performance.

According to Standards for Internal Control in the Federal Government,  decision makers need access to reliable and timely information to make  operational decisions. Additionally, according to DOT&E guidance, in  cases where models and simulations cannot be validated and accredited,  any modeling results should be caveated with a clear explanation of  which areas of performance assessment could be affected by the lack of  accreditation. Lack of such information could lead to miscalculations  about how best to employ the BMDS or uninformed decisions about  where to focus future capability development and investment. While the  BMDS OTA has recently begun to brief some combatant commands on  how modeling limitations impact the warfighters’ understanding of  delivered capabilities, these briefings are not readily available to other  stakeholders and decision makers, such as cognizant congressional  committees or others in DOD and the executive branch. In its report  accompanying a bill for the National Defense Authorization Act for Fiscal  Year 2017, the House Armed Services Committee requested that MDA  brief the House and Senate Armed Services Committees on the  accreditation status of models used in testing indicating that  congressional decision makers benefit from such information. Including  information about model accreditation and limitations in TCD and OCB  packages would ensure decision makers in DOD, Congress, and the  executive branch have the same necessary information to inform their  decisions.

Funding Decisions May Delay Some Modeling Capability Development

Moving forward, the Director, MDA will have to make difficult decisions on  balancing funding priorities, including the need to adequately fund the  validation and accreditation of models. MDA has started to make  progress validating and accrediting existing models using DOT&E and  OTA recommended criteria. However, MDA’s assessment of the  resources needed to validate and accredit its current models and  simulations does not match funding levels it requested for this effort. MDA  determined that it needs an additional $99 million for fiscal years 2017- 2022 to accredit BMDS models and simulations. MDA requested $395.7  million from 2017-2022 to meet modeling and simulation needs. Figure 8  shows MDA’s fiscal year 2018 funding request for model development  and the additional funding, over the 5 year period, that would be required  to verify, validate, and accredit its models.

Additionally, funding is not requested for the verification, validation, and  accreditation of some models used in BMDS assessments because MDA  officials said that they do not have written agreements with the military  services that operate these elements defining funding and technical  requirements for this purpose. Specifically, while the Army and the Air  Force develop and accredit models to support their missions for the  Patriot, the Space-based Infrared System, and the BMDS communication  systems, these models have to be modified to accurately represent their  BMDS roles for BMDS operational assessments. While MDA does fund  the development of the Space-based Infrared System and BMDS  communication models for use in BMDS assessment, it does not fund the  verification, validation, and accreditation of these models or the Patriot  model. Additionally, MDA officials report that it currently has no written  agreements with the Army or the Air Force to define funding and technical  requirements for these models for BMDS assessment.

Because these requirements are not formally agreed upon and  communicated between MDA and the Services, the verification,  validation, and accreditation of these models is often unfunded, further  complicating MDA’s and the BMDS OTA’s verification, validation, and  accreditation analyses. Standards for Internal Control in the Federal  Government states that organizations should assign responsibility and  delegate authority to achieve their objectives. Additionally, in our prior  work we found that all acquisitions efforts should have well defined roles  and responsibilities for all stakeholders. Although MDA and the BMDS  OTA were able to accredit the Space-based Infrared System and BMDS  communications models in 2017, future upgrades to these BMDS  elements will require verification, validation, and accreditation to ensure  that they continue to accurately reflect the real-world system.

Moreover, DOD and Congress have instructed the transfer of missile  defense programs that have received full-rate production authority, which  would include THAAD and Aegis BMD, to the military services for  operations, which may increase the scope of this issue. Even though  these systems will no longer be under MDA management, they will still be  part of the BMDS and, like the Space-based Infrared System and Patriot,  will require model updates to reflect changes to the tactical systems.  However, as noted above, there are currently no agreements between  MDA and the services to fund these modeling requirements, increasing  the risk that model upgrades will not be implemented, thus preventing  their verification, validation and accreditation for operational testing. If  MDA and the services do not agree to the technical and funding  requirements for models of elements used in BMDS testing but operated  by the services before the elements are transferred, disagreements will  likely continue to impede the verification, validation, and accreditation of  those models, decreasing confidence in test results and understanding of  how the real-world BMDS will operate.

MDA continues to make mixed progress in delivering assets and  integrated capabilities. Moreover, its processes for communicating the  extent and limitations of these capabilities can be improved. While MDA  met several significant milestones in fiscal year 2017, MDA failed to  deliver either of its two most recent packages of integrated capabilities on  time, and its plans for future capabilities, even in the near term, continue  to be characterized by a high degree of fluidity. MDA has recently taken  steps to document in policy its processes for communicating the extent  and limitations of deliveries of integrated capabilities. However, these  policies still do not clearly specify the exact requirements, process, and  key milestones needed to complete some capability deliveries. Moreover,  they do not require that all integrated BMDS capabilities are delivered  using a process that describes their performance and limitations at the  level of the BMDS, rather than at the element level, increasing the risk of  delivered capabilities not being communicated properly to their end users:  the warfighter.

In addition, while no contracting strategy can be completely risk-free,  trends in the not-to-exceed prices and duration of MDA’s undefinitized  contract actions indicate a troubling pattern. Making major commitments  to large developmental programs before important questions of scope  and price have been determined exposes the government to increasing  amounts of risk. MDA’s inconsistent and incomplete reporting on its use  of undefinitized contract actions makes it even more difficult for Congress  and decision makers to exercise oversight and track these risks.

Finally, deficiencies and limitations in the models used to support  operational testing of the BMDS, including the lack of accreditation,  provides decision makers with some flawed information about BMDS  performance. Because flight tests cannot provide complete information on  BMDS performance, it is important that ground tests can be relied upon to  provide accurate and representative data. This flawed information could  lead to miscalculations about how best to employ the BMDS and  uninformed decisions about where to focus future capability development  and investment. If steps are not taken to improve BMDS models and to  communicate their status and limitations clearly to decision makers, there  is a risk that the BMDS will not perform as expected when needed to  defend the United States at home, its regional allies, and deployed forces.

We are making the following six recommendations to the Under Secretary  of Defense for Research and Engineering:  The Under Secretary of Defense for Research and Engineering should  ensure that the Director, MDA, takes the following actions:  The Director, MDA should revise MDA policies to require that all  integrated capabilities—capabilities that require integration of two or more  elements—be included in a Technical Capability Declaration.  (Recommendation 1)

The Director, MDA should clarify, in written policy, the exact  requirements, process, and key milestones necessary to issue a  Technical Capability Declaration, including a requirement that the  Assessment Requirements Review be held in such a time frame that it  can provide meaningful input to MDA’s test plans. (Recommendation 2)

The Director, MDA should include information on current undefinitized  contract actions in the BMDS Accountability Report, including the not-to- exceed price, the definitization schedule, the amount of funds obligated  for the undefinitized period, and any changes since the contract action  was entered into. (Recommendation 3)

The Director, MDA should ensure that models used for operational tests  are validated and accredited for such assessments. To help achieve this,  MDA should provide the BMDS Operational Test Agency all evidence  previously agreed to and needed to accredit models before ground testing  events, as specified in the BMDS OTA accreditation plan.  (Recommendation 4)

The Director, MDA should include in capability delivery packages, such  as the Technical Capability Declaration memos and Operational  Capability Baseline change packages, the following:  a.  The verification, validation, and accreditation status of the models  used in operational ground tests; and  b.  Modeling and simulation limitations that affect operational ground  test results. (Recommendation 5)

The Director, MDA and the Secretaries of the Armed Services  responsible for operating BMDS elements should develop written  agreements as soon as feasible for modeling and simulations technical  and funding requirements for any BMDS elements that are service- operated but represented in BMDS performance assessments.  (Recommendation 6)

DOD provided written comments on a draft of this report. DOD’s  comments are reprinted in Appendix I and summarized below. DOD and  MDA also provided technical comments which were incorporated as  appropriate.

In its response, DOD concurred with five out of six of our  recommendations, and partially concurred with one. In addition, DOD  recommends the closure of five recommendations. However, we believe  that it is premature to close out four of the five recommendations until all  of its planned actions are fully implemented. For the remaining  recommendation, we agree with DOD and will undertake the steps to  close out the recommendation.

DOD partially concurred with our first recommendation to revise MDA  policy to require all integrated capabilities—capabilities requiring the  integration of two or more elements— be declared and delivered via the  Technical Capability Declaration (TCD) process. While DOD agreed with  the intent of this recommendation, DOD stated that the Director, MDA will  determine which major integrated capabilities should be delivered via the  TCD process. The Department also noted that the agency developed a  list of such capabilities that it will update annually. These actions are an  improvement over the current process, but they do not meet the full intent  of our recommendation. Specifically, the list of future TCDs that MDA  produced is not inclusive of all future integrated capabilities. In addition,  MDA’s policy does not articulate definitive standards for identifying  capabilities requiring a TCD and leaves this decision to the discretion of  the Director, MDA. As we’ve identified in this report, some capabilities  have been deleted from or added to planned TCDs without explanation.  The new policy leaves open the possibility of continued inconsistent  application of the TCD process. This poses the risk that not all integrated  capabilities will be delivered to warfighters with comprehensive  information about their performance and limitations at the BMDS level.  We continue to believe that in order for the agency to meet the full intent  of our recommendation, it should establish in policy a clear, definitive  standard for which capabilities require a TCD for delivery.

In addition, DOD recommends the closure of the first two  recommendations to (1) revise MDA’s policies to require that all  integrated capabilities be included in a TCD; and (2) clarify the exact  requirements, process, and key milestones necessary to issue a TCD as  it contends that its new Policy Memorandum 90 meets the intent of our  recommendation. This memorandum is dated March 28, 2018 and was  provided to us on May 8, 2018.  As such, we have not had an opportunity  to fully assess the memorandum and the process laid out in it. However,  as noted above, this new Policy Memorandum 90 leaves open the  possibility of continued inconsistent application of the TCD process. This  poses the risk that not all integrated capabilities will be delivered to  warfighters with comprehensive information about their performance and  limitations at the BMDS level. In order for the agency to meet the full  intent of our recommendation, MDA should establish in policy a clear,  definitive standard for which capabilities require a TCD for delivery. In  addition, DOD writes that the same Policy Memorandum 90 satisfies the  second recommendation to clarify the exact requirements, process, and  key milestones necessary to issue a TCD. We believe it necessary to wait  until MDA delivers a TCD in accordance with the new parameters set out  in the memorandum before this recommendation can be closed.

For the third recommendation to include information on current  undefinitized contract actions in the BMDS Accountability Report, DOD  states that the BMDS Accountability Report for 2018, approved by the  Director, MDA on March 9, 2018 provides the information necessary for  closure. We concur with this assessment will take the necessary steps to  close this recommendation.

In responding to our fourth recommendation requiring the Director, MDA  to ensure that models used for operational tests are validated and  accredited for such assessments,  DOD states that MDA is actively  working with the BMDS Operational Test Agency (BMDS OTA) to resolve  any issues associated with, and the reporting of, modeling limitations.  However, as we found in this report, according to BMDS OTA officials,  MDA has never completely provided the needed data on time and often  missed numerous subsequent deadlines to support the validation and  verification of its models from BMDS OTA. Consequently, we believe it is  premature to close out the fourth recommendation, but we will continue to  track MDA’s progress and timeliness in providing the evidence previously  agreed to and needed to accredit models before ground testing events.

In responding to our fifth recommendation to include the verification,  validation and accreditation status used in operational ground tests in  capability delivery packages, such as TCDs and Operational Capability  Baseline change packets, DOD states that MDA has made significant  progress over the last year in achieving the BMDS OTA accreditation of  MDA’s models and simulations. In addition, it states that the addition of  MDA policy will ensure the verification, validation and accreditation status  of each model will be discussed and assessed by the Operational  Capability Baseline Working Group for each capability delivery package.  We agree that MDA has made significant progress over the last year,  however, we believe it premature to close out the recommendation until  BMDS OTA can ensure that the status of the models used, as stated in  our recommendation, are included in subsequent capability delivery  packages such as the Technical Capability Declaration memos and  Operational Capability Baseline change packages.

We are sending copies of this report to the appropriate congressional  committees, the 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 XI.

Appendix I: Comments from the Department of Defense

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

Aegis Ballistic Missile Defense is the naval component of the Missile  Defense Agency’s (MDA) Ballistic Missile Defense System. It consists of  the Aegis Ballistic Missile Defense Weapon System (AWS), including a  radar and Standard Missile-3 (SM-3) interceptors.

MDA is developing the Aegis BMD weapons system in versions called  spirals that expand on preceding capabilities. Deliveries of the spirals are  planned to support MDA’s capabilities for Regional and Homeland  defense. Specifically, MDA delivered Aegis BMD 5.0 Capability Upgrade  (5.0CU) in fiscal year 2016 for the European Phase Adaptive Approach  (EPAA) Phase 2, but had not verified its full capability before delivery. In  fiscal year 2017, the program delivered Aegis BMD 4.1 on ships with  legacy hardware in order to provide similar ballistic missile defense  capabilities to those of Aegis BMD 5.0 CU. MDA plans to deliver  additional upgrades for such ships in 2019 and 2023. Additionally, the  program is developing Aegis BMD 5.1 with upgrades for EPAA Phase 3,  planned for December 2018. The Aegis BMD program also plans to  deliver additional upgrades in 2023, called Aegis BMD 6.0, capitalizing on  Navy’s upgrades to the Aegis radar. For specifics on Aegis Ashore and  the Aegis BMD SM-3 interceptors, see appendixes III, IV and V,  respectively. Table 5 provides key fiscal year 2017 AWS program facts.

Aegis BMD resolved some prior challenges and delivered capabilities initially planned for delivery with European Phased Adaptive Approach Phase 2

MDA resolved software challenges and testing delays for Aegis BMD 5.0  CU and delivered Aegis BMD 4.1, expanding the number of ships with  EPAA Phase 2 missile defense capabilities. While MDA delivered initial  Aegis BMD capabilities for EPAA Phase 2 with AWS 4.0.2 prior to the  December 2015 Technical Capability Delivery (TCD), planned capabilities  would not be available until the subsequent versions—Aegis BMD 5.0CU  and 4.1—completed development and fielding. However, both  encountered technical challenges and schedule slips, as well as testing  delays. In fiscal year 2017, MDA continued work on Aegis BMD 5.0 CU  and 4.1 and overcame some of these challenges. Specifically:

Aegis BMD 5.0 CU: MDA completed Aegis BMD 5.0 CU certification  late in fiscal year 2017, resolving prior technical challenges and  testing delays. Specifically, MDA implemented fixes to significant  defects that were in the software at the time of initial delivery.  Additionally, in December 2016 and August 2017, MDA flight tested  fleet and ship self-defense capability against medium-range ballistic  missiles in terminal phase of flight –a capability initially planned for  December 2015.

Aegis BMD 4.1: MDA also delivered Aegis BMD 4.1 in August 2017,  after multiple schedule slips. While initially scheduled for delivery in  support of the EPAA Phase 2 TCD, the spiral was first delayed to the  middle of fiscal year 2016 due to technical and cost challenges.  Subsequently, activities for Aegis BMD 4.1 were suspended in 2016  to reassess the program and delivery was delayed to September  2019, to align it with a related Navy effort. In fiscal year 2017, MDA  resumed activities for Aegis BMD 4.1, and certified the delivery of  ballistic missile defense capabilities in August 2017. These ballistic  missile defense capabilities are currently being integrated with the  Navy’s larger Aegis combat system, into a single computer program  called Aegis Baseline 5.4, which is still scheduled for delivery in  September 2019.

MDA mitigated key Aegis BMD Weapons System challenges for EPAA Phase 3, but they will not be verified until 2018

According to MDA’s program management documentation, Aegis BMD  5.1 is on track for delivery in support of EPAA Phase 3 in December  2018, as the program overcame or reduced key risks. For example,  despite a lack of schedule margin, the program met a key software  development milestone in June 2017, and delivered it for system-level  ground tests, which will assess integrated BMDS capabilities for EPAA  Phase 3. It also met all objectives in a fiscal year 2017 flight test.

Additionally, the program reduced the ongoing programmatic risk to Aegis  BMD 5.1 that could affect its interoperability with other elements.   However, testing to demonstrate the risk has been resolved is not yet  complete. According to the Aegis BMD program management  documentation, upgrades to the Aegis communication management  system, which are managed by the Navy, lag behind MDA’s Aegis BMD  5.1 development schedule. The lag in development could result in  integration challenges between these upgrades, and could impact Aegis  integration with other BMD elements, including the capability to intercept  threats entirely on tracks from forward based radars – called Engage on  Remote. In fiscal year 2017, MDA and the Navy took steps to mitigate  this risk. However, MDA has yet to demonstrate the fixes in a flight test.  Moreover, MDA documentation indicates that if issues are discovered,  they could impact the Aegis BMD 5.1 mission and could result in  interoperability restrictions against Aegis BMD 5.1. Lastly, Engage on  Remote could also be affected if development challenges with C2BMC,  which forwards threat track data from forward based sensors to Aegis  BMD, are not mitigated. For more information on the C2BMC element,  see Appendix VI.

Aegis BMD is developing additional capabilities for deployment in 2023 and beyond, leveraging Navy’s Aegis upgrades

In fiscal year 2017, MDA continued to develop Aegis BMD capabilities  that are expected to be deployed in 2023. Specifically, MDA continued  developing and maturing capabilities for an effort it started at the end of  fiscal year 2016 called Aegis BMD 6.0. Aegis BMD 6.0 is planned to  provide capabilities against more threat types, larger raids, better  discrimination, and improved communication with its interceptors.  Additionally, it takes advantage of 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. While it is early in development, MDA has begun  identifying knowledge gaps that could diminish planned capabilities and  took initial steps to address disconnects between Navy’s effort and its  own. According to program management documentation, MDA plans to  develop an Aegis BMD 6.0 acquisition baseline late in fiscal year 2018.  The acquisition baseline is expected to detail Aegis BMD 6.0 planned  capabilities, its schedule, and cost.

MDA is also planning additional upgrades to Aegis BMD 4.1, called Aegis  BMD 4.2. Specifically, MDA plans to collaborate with the Navy to  integrate and field refurbished and upgraded SPY-1 Antennas onto  legacy ships. This modification improves radar sensitivity resulting in  improved tracking capabilities and is planned for delivery in fiscal year  2023. MDA plans to begin developing and maturing technologies for this  upgrade in fiscal year 2019, and baseline the effort at the end of fiscal  year 2020.

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.

DOD deployed 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 2, and is currently constructing a second site in  Poland for delivery in 2018 as part of EPAA Phase 3. Both operational  sites are intended to provide additional coverage for the defense of  Europe.

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 Aegis BMD 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. For further details on  the Aegis Weapon System and Aegis BMD interceptors, see appendixes  II, IV, and V. Table 6 provides key fiscal year 2017 Aegis Ashore program  facts.

The Aegis Ashore facility in Poland became increasingly reliant on concurrency to meet its schedule, but construction issues eventually forced a delay of at least one year

Construction of the Aegis Ashore site in Poland has not overcome an  initial delay that was largely due to contractor performance issues. MDA  and the Army Corps of Engineers, which manages military construction at  the site, took a number of measures to mitigate or reverse these delays,  including working to modify the Army Corps of Engineers’ contract to  permit joint occupancy of the site for a longer duration, and for the  contractor to provide more granular project data to the Army Corps of  Engineers. Also, the contractor has moved key personnel on site, and  added a second shift. Program officials stated that they have withheld  some award fees from the contractor over these issues. Program  documentation states the contractor continues to be late in submitting  documentation needed to move forward. If this and other issues are not  corrected, it will increase the risk of further schedule slips.

To make up for these delays, MDA introduced increasing levels of  concurrency into its schedule, and shortened key phases of the delivery  process. MDA has reduced the time allotted for Installation and Checkout  activities from 16.5 months to 6.5 months. These activities would occur  concurrently with the final phases of construction at the site. For example,  installation of the deckhouse at the Poland site was scheduled for the end  of the fourth quarter, fiscal year 2017, but was delayed to the end of the  first quarter, fiscal year 2018. Despite this, installation and checkout  activities still began in the fourth quarter of fiscal year 2017. The Navy’s  systems testing procedures, which are needed prior to operational  acceptance of the site, will have occurred mostly concurrently with the  final stages of MDA’s construction and installation work on the site. MDA  maintained through all of fiscal year 2017 that the site would be ready for  delivery in December 2018 as scheduled. Program documentation noted  that further program concurrency presented risks not only to the Aegis  Ashore program, but to multiple elements relying on timely delivery of the  site, up to and including the scheduled EPAA Phase 3 declaration. Early  in fiscal year 2018, MDA announced that construction of the Poland site  would not be completed until at least December 2019.

The Poland and Romania sites both experienced unforeseen program challenges

Both Aegis Ashore sites in Europe have faced continuing challenges in  several areas. For example, attrition problems have complicated efforts to  keep the Poland site’s construction on schedule. These problems led to  several persistent vacancies in important positions during the fiscal year.  At one point in fiscal year 2017, the program lacked a full-time onsite  program manager or dedicated government safety engineer, as well as  other important positions. These roles had been, up to that point, filled by  deputies in an acting capacity or were divided among others. MDA  officials have also pointed to morale problems at the Poland site, where  conditions for sailors are relatively austere.

The Romania site has required more post-delivery support from MDA  than was originally planned, largely due to quality and design issues in  several areas. This post-construction wrap-up work was accounted for in  MDA’s plans, but was originally planned to be complete by late fiscal year  2016. However, MDA has continued to provide warranty-like support in  areas such as water supply, seismic-activity certification, and compatible  electrical systems. Program officials stated that many of these issues  arose from having to adapt Aegis systems to Romanian infrastructure,  which in some cases proved to be a more complicated task than  expected. Despite the issues encountered, the Romania site has  remained operational throughout all of this work.

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

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

Recent technical and production problems have continually delayed a  decision to authorize full production of the Aegis BMD SM-3 Block IB due  to reliability concerns. Since fiscal year 2015, Aegis BMD SM-3 Block IB  production has been delayed by several technical issues. In response to  a GAO recommendation, program officials in 2015 delayed the decision  to enter full-rate production until they could implement further testing and  design changes. In fiscal year 2016, two failures during testing forced a  suspension of interceptor deliveries, causing the program to miss its  delivery target for the year. Table 7 provides key fiscal year 2017 Aegis  BMD SM-3 Block IB program facts.

The Aegis BMD SM-3 Block IB program made progress against its delivery backlog from the previous year, and mitigated some technical risks, though others remain

The Aegis BMD SM-3 Block IB experienced two failures in fiscal year  2016, the investigation of which forced a temporary suspension of  interceptor deliveries. As a result, MDA delivered only 33 interceptors out  of a planned 47 for the year. MDA added the remaining interceptors to its  planned delivery for fiscal year 2017, resulting in a target of 54  interceptors. The program successfully delivered 55 interceptors over the  course of the year, and thus made up for the existing backlog.

The program tracked two technical risks during fiscal year 2017, one of  which it succeeded in removing, and another which will not be  implemented into the production process until the third quarter of fiscal  year 2018. According to MDA officials, the program successfully  managed the transition of the production of the system’s Throttleable  Divert and Attitude Control System to a new facility without experiencing  significant delays or quality issues. In the other case, a component that  was implicated in a previous test failure is currently undergoing a  redesign. Program officials stated that they plan to have the new design  certified by the second quarter of fiscal year 2018, and incorporated into  the production line by the end of the third quarter.

As we reported last year, problems testing a redesigned third-stage  rocket motor on the Aegis BMD SM-3 Block IB forced the program to  postpone its planned full production decision until the second quarter of  fiscal year 2017, and successive delays have ensued. Though the tests  validating the redesign were successful, the Undersecretary of Defense  for Acquisition, Technology, and Logistics issued an Acquisition Decision  Memorandum in February 2017 requesting an additional flight test in  fiscal year 2017 as well as supporting analyses from the Director,  Operational Test and Evaluation and the office of Cost Assessment and  Program Evaluation. The memorandum issued these requirements in  support of a planned full production decision in the first quarter of fiscal  year 2018. Full-rate production for the Aegis BMD SM-3 Block IB was  initially scheduled for fourth quarter, fiscal year 2012.

MDA had one Aegis BMD SM-3 IB flight test scheduled for fiscal year  2017 at that time (FTM-24), and added another (FTM-26) in response to  the Acquisition Decision Memorandum’s requirement, but neither were  held as scheduled. MDA delayed FTM-24 to fiscal year 2020, in order to  first analyze the new target missile’s performance to ensure it would work  within the parameters of the test. While FTM-24’s delay was due to its  very specific test design, its timing in fiscal year 2017 would have  afforded additional information about the reliability of the interceptor that  will not now be available before the full production decision. MDA deleted  FTM-26 several months after adding it, and moved its objectives to  coincide with NATO’s Formidable Shield – 17 naval exercises which took  place in early fiscal year 2018 (wherein the system did achieve a  successful intercept). As a result of the delay in conducting a test for  production-readiness, the program is currently planning on a production  decision in second quarter, fiscal year 2018.

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

The Aegis Ballistic Missile Defense (BMD) Standard Missile-3 (SM-3)  interceptor has multiple versions in development or production: the Aegis  BMD SM-3 Blocks IA, IB, and IIA. The latest version, the Aegis BMD SM- 3 Block IIA interceptor, provides increased speed and range, more  sensitive seeker technology, and an advanced kinetic warhead than  previous versions. It is expected to defend against short-, medium-, and  intermediate-range ballistic missiles. Additionally, most of the Aegis BMD  SM-3 Block IIA components will differ from other the prior versions, and  therefore requires new technology to be developed specifically for it. For  additional information on the Aegis BMD SM-3 Block IB interceptor, see  appendix IV.

Initiated in 2006 as a cooperative development program with Japan, the  Aegis BMD SM-3 Block IIA program was added as a capability to support  the European Phased Adaptive Approach (EPAA) Phase 3 architecture to  defend against longer-range threats. The Aegis BMD SM-3 Block IIA  interceptor is planned to be fielded with Aegis Weapons System 5.1. For  additional information on Aegis Weapons System, see appendix II. Table  8 provides key fiscal year 2017 Aegis BMD SM-3 Block IIA program facts.

The Aegis BMD SM-3 Block IIA program has experienced mixed results in testing performance and problems with program execution, with consequences for cost and schedule

The first intercept flight test using the Aegis BMD SM-3 Block IIA  interceptor, SFTM-01, was conducted in February 2017. It was originally  scheduled for fiscal year 2016, but was delayed to evaluate technical  issues discovered during previous tests. During this test, the Aegis BMD  SM-3 Block IIA interceptor successfully engaged a medium-range ballistic  missile (MRBM) target. The next intercept flight test, SFTM-02, occurred  4 months later, in June 2017. However, the interceptor failed to reach its  MRBM target during this test. MDA convened a failure review board to  identify the cause of the failure, and concluded that the failure was not  attributable to a fault in the design or performance of the interceptor itself.  The Navy is currently considering changes to its tactics, techniques, and  procedures to address the findings from the failure review board. Two  prior non-intercept tests using the Aegis BMD SM-3 Block IIA interceptor,  although considered successful, showed potential design issues with the  missile’s guidance system, which steers the interceptor to the target.  Consequently, the program decided to develop a replacement  component. The redesigned component passed initial acceptance testing  and the program plans to employ it during FTM-29, which is scheduled for  the second quarter of fiscal year 2018.

The program continues to experience unit cost growth due to several  factors, including decreases in the total amount being procured and  increases in shipping costs. According to MDA officials, shipping costs  grew because MDA underestimated the cost to ship missile components  manufactured in Japan to the US on US-flagged ships. MDA officials  stated that they did not adequately account for these costs when  establishing the original baseline cost. Since 2014 the program’s unit cost  has increased by almost 60 percent, from $24 million in fiscal year 2014  to $39 million in fiscal year 2017. Program officials stated that they do not  expect either of these issues to lead to further cost growth in the future.

Further delays or technical challenges within the Aegis BMD SM-3 Block IIA program could impact the EPAA Phase 3 declaration

The Aegis BMD SM-3 Block IIA program has limited schedule margin to  address any issues prior to operational testing to meet the EPAA Phase 3  declaration by the first quarter of fiscal year 2019. For the EPAA Phase 3  declaration, the Aegis BMD SM-3 Block IIA interceptor must demonstrate  the ability to intercept an intermediate-range ballistic missile (IRBM) target  using remote sensor data. The program has one flight test, FTM-29, prior  to its operational flight test. This test was originally scheduled for the first  quarter of fiscal year 2018, but was delayed to the second quarter, and  the launch site for the test was moved to the land-based Aegis Ashore  facility in Hawaii. Adapting the Aegis BMD SM-3 Block IIA interceptor for  a land-based test delayed this test further, from the first quarter to the  second quarter of fiscal year 2018. Despite these delays, the dates for the  operational test of the Aegis BMD SM-3 Block IIA—FTO-03 E1—and the  EPAA Phase 3 declaration remain unchanged: the third quarter of fiscal  year 2018 and first quarter of fiscal year 2019, respectively. That leaves  the program approximately 3 to 5 months to resolve any issues  discovered during FTM-29, prior to the operational test, which is needed  to support the EPAA Phase 3 declaration. In addition, FTM-29 will be the  Aegis BMD SM-3 Block IIA interceptor’s first test against an IRBM, first  test of its ability to engage a target using remote sensor data, and the first  test with to incorporate the new missile guidance system component  incorporated. As a result of the complex test environment and limited time  between tests, any significant failure during FTM-29 could lead to a delay  in the EPAA Phase 3 declaration.

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

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

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 potentially conserving  interceptor inventory. MDA is developing C2BMC in spirals, or software  and hardware upgrades designed to improve various aspects of the  integrated BMDS performance. MDA fielded Spiral 6.4 in 2011 and plans  to complete the fielding of Spiral 8.2-1 by March 2018. The program is  working on efforts for additional capabilities in the future. Table 9 provides  an overview of C2BMC spiral development and table 10 provides key  fiscal year 2017 C2BMC program facts.

C2BMC Spiral 6.4 supported delivery of discrimination upgrades but cyber vulnerabilities continue to place the BMDS at risk

At the beginning of 2017, MDA completed the Spiral 6.4 assessment,  which was designed to enable capabilities for Increment 3, Near Term  Discrimination Improvements for Homeland Defense. The spiral  performed nominally during testing, providing discrimination tasking from  a forward-positioned radar for long-range threats, multiple-radar  discrimination tasking of a threat, and several fixes related to sequencing  and timing of messages. These tests provided performance data, which  informed MDA’s Technical Capability Delivery for Increment 3 in March  2017.

Despite this success, however, the spiral continues to have cyber  vulnerabilities that place the BMDS operations in certain geographic  areas at risk. For example, Spiral 6.4 has been in use since 2011, and its  operating system (Windows XP) as well as other supporting software  products will remain in the field well past their end of life cycle and  support by vendors. According to program documentation, upgrading  these systems before they are replaced by subsequent spirals is cost  prohibitive, but program documentation does not indicate the cost. While  MDA is in the process of fielding Spiral 8.2-1 to replace Spiral 6.4 in the  Strategic, Northern and Pacific Commands by March 2018, Spiral 6.4 will  remain operational at the European and Central Commands until the  delivery of Spiral 8.2-3 in early fiscal year 2019. According to fiscal year  2017 MDA program reviews, the likelihood that critical cyber  vulnerabilities are discovered is low for the remaining two years, and,  according to MDA, no fielded system has been exploited to date.  However, known vulnerabilities have been exploited in lab experiments.  Moreover, MDA program documentation from fiscal year 2017  acknowledges that new security deficiencies could still be discovered,  and if those or known deficiencies are exploited, mission capabilities like  BMD planning, radar control, track reporting, and situational awareness  may be significantly degraded. MDA collaborated with Combatant  Commands to monitor and minimize the risks.

MDA Continued its Development of C2BMC Spiral 8.2-1 and expects its fielding in Fiscal Year 2018

In fiscal year 2017, MDA mitigated developmental risks necessary to  complete the development and testing of C2BMC Spiral 8.2-1 in fiscal  year 2018. Spiral 8.2-1—planned to support Enhanced Homeland  Defense capabilities—was initially planned for delivery by December  2017, but, according to MDA officials, the delivery was delayed to allow  additional time for assessment of results from BMD system-level ground  test campaign called Ground Test (GT)-07a. Prior to GT-07a, the program  identified risks that could affect interoperability with other elements and  threat tracking, but, according to recent program documentation, MDA  implemented fixes to many of them before the testing began. At the time  of our assessment, MDA’s analysis was ongoing. However, MDA plans to  complete its fielding by March 2018.

Spiral 8.2-3 continues to face technical challenges and cost increases

MDA has begun testing Spiral 8.2-3, which is planned for fielding  throughout fiscal year 2019, but it continues to face technical challenges  and cost risk. This spiral is to replace Spiral 8.2-1 at the Strategic,  Northern and Pacific Command, and Spiral 6.4 at European and Central  Commands. According to MDA, the spiral is designed to enable a five-fold  increase in the size of area that can be defended by the BMDS, and is an  integral part of EPAA Phase 3. However, the program continues to track a  prior risk and identified a new risk to an element level C2BMC capability  needed for EPAA Phase 3 called Engage on Remote. Specifically,  program documentation indicates that processing of data about threat  missile flight paths, known as threat tracks, has issues that could reduce  the likelihood of the successful engagements utilizing Aegis Ballistic  Missile Defense in Engage on Remote scenarios. C2BMC has faced  similar challenges with threat tracking capabilities for prior spirals, which  required delays certain aspects of integration with Aegis BMD until fixes  were implemented. MDA is implementing fixes to these issues in Spiral  8.2-3, which once fielded should resolve these integration issues, but it  still needs to assess them in the ongoing test campaign for EPAA Phase  3.

Since 2016, MDA Spiral 8.2-3 costs have increased by about 20 percent,  from $68 million to $82 million. According to MDA documentation, the  increase is due to several factors, including higher than expected costs  for architecture and system engineering, as well as testing and integration  requirements, and additional requirements for cybersecurity, which  increased algorithm complexity required for Engage on Remote. MDA  officials stated that some of the cost increases for cybersecurity were  driven by DOD-wide cyber requirements, implemented in March 2014.  Further cost increases, according to MDA, were driven by a warfighter  request for geographic redundancy. While the original concept for 8.2-3  had the suites for Central and European Command at each location, MDA  met the warfighter request by installing the suites at different locations so  that losing a single node would not result in the loss of all capability for  the warfighter. According to the C2BMC program, implementation of this  requirement cost about $6.4 million.

MDA identified requirements for Spiral 8.2-5, but it is already facing potential technical, as well as schedule and cost challenges

MDA identified element requirements for Spiral 8.2-5, which is planned for  delivery in fiscal year 2021. This Spiral will integrate the Long Range  Discriminating Radar and provide additional BMDS-level planning, track  processing, and battle management capabilities. While MDA currently  plans to hold the Preliminary Design Review by March 2018 and may  report its acquisition baseline for the first time in the subsequent BMDS  Accountability Report, program management documentation has already  identified two specific challenges:

Program documentation indicates that the Northern Command has  concerns about performance issues associated with threat track  processing, called System Track, for GMD engagements. While this is  a key C2BMC function, track processing has been a challenge for  other spirals supporting prior and upcoming regional and homeland  defense capabilities. MDA is currently working with stakeholders to  address this issue.

The program also identified disconnects between LRDR, GMD and  C2BMC, which are driving up element development and test costs,  and delayed some capabilities initially planned to be delivered along  with the LRDR. MDA developed a mitigation plan and established a  working group to coordinate with stakeholders to address these  issues.

Appendix VII: Ground-based Midcourse Defense (GMD)

Appendix VII: Ground-based Midcourse  Defense (GMD)

The GMD system is a missile defense interceptor system designed to  defend the United States against a limited intermediate and  intercontinental ballistic missile attack from countries 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 (EKV) to find and destroy the  threat. GMD also has ground support and fire control systems that the  warfighter relies upon to operate the system.  Since the program’s  initiation in 1996, DOD has spent over $45 billion developing, operating,  and maintaining the GMD system, including: fielding ground station  assets and a fleet of 44 interceptors; upgrading, redesigning, refurbishing,  and retrofitting the system;  successfully performing 5 out of 9 intercept  tests and 3 out of 3 non-intercept tests; and developing Multi Object Kill  Vehicle technology.  Three of the intercept tests failed because of  problems with the EKV while one of the tests failed because of a target  failure, which is not associated with the GMD system.

MDA has efforts ongoing to address concerns with the existing fleet of  interceptors and increase protection to the U.S. homeland. In March  2013, the Secretary of Defense directed MDA to increase the number of  fielded GMD interceptors from 30 to 44 by the end of 2017. To achieve  this fielding goal, MDA performed a limited redesign of the CE-II, called  the CE-II Block I, to fix known issues, address obsolescence, and  improve producibility and cost. MDA also performed an extensive  upgrade to the boost vehicle to improve reliability and address  obsolescence issues. Although the CE-II Block I will address some  concerns with the CE-II design, MDA determined a more complete  redesign of the CE-II was needed. MDA subsequently developed an  acquisition strategy and began developing the new kill vehicle, called the  Redesigned Kill Vehicle (RKV). The RKV is intended to be more reliable,  producible, testable, and cost effective. Table 11 provides key fiscal year  2017 GMD program facts.

Fiscal Year 2017 was one of GMD’s most successful years for results achieved

Fiscal year 2017 was a seminal year for the GMD program, as it achieved  a number of major accomplishments. Over the past several years, the  GMD program developed the newest interceptor version equipped with  the CE-II Block I EKV and C2 boost vehicle. The program conducted its  first successful flight test of this interceptor in May 2017 when it  successfully intercepted a target representative of an intercontinental  ballistic missile—another first for the GMD system. MDA proceeded to  produce and field eight of these new interceptors and complete the  refurbishment of Missile Field 1 in Fort Greely, Alaska, enabling the  program to meet its directive from the Secretary of Defense to field 44  interceptors by the end of 2017. The program also fielded a software  upgrade to the fire control segment of the GMD ground station, which  included some improvements for battle management and discrimination.  In addition, the program completed a preliminary design review for the  RKV in March 2017. The program was able to execute all of these  activities while also maintaining 24/7 availability of the system to the  warfighter during a heightened period of North Korean missile testing.

GMD’s cost now exceeds $67 Billion, the fourth highest among DOD’s weapon systems

In total, the GMD program’s total cost has increased to over $67 billion  and that total is likely to continue to increase as MDA defines future  capability increments. In March 2013, we reported the total cost of the  GMD program was estimated to be approximately $41 billion. Since that  time, MDA defined new capability increments that included major GMD  initiatives, such as the RKV and Multi Object Kill Vehicle efforts, which  increased the program’s total cost. GMD is now the fourth most  expensive DOD weapon system among a portfolio of 78 major defense  acquisition programs, totaling approximately $1.5 trillion. As seen in table  12 below, only the F-35 and two naval programs are projected to cost  more than the GMD system, demonstrating the department’s level of  resources committed to defending the U.S. homeland against a long  range ballistic missile attack.

In November 2017, the President submitted to Congress an amendment  to the fiscal year 2018 budget request for DOD to, among other things,  increase current missile defense capacity, expand the sensor network,  and accelerate technology development efforts. According to MDA, the  request for additional funds was in direct response to recent  demonstrations of advanced and accelerated capabilities by North Korea.  MDA’s justification materials for the budget amendment includes an  addition $774 million for GMD to build a new, 20-silo missile field at Fort  Greely, begin procuring four additional interceptors, continue booster  development, accelerate RKV development, and to add a non-intercept  target to an initial RKV flight test. In total, MDA now plans to spend over  $14 billion on GMD over the next six years with 64 total interceptors  fielded by 2023.

New Director, MDA revised the GMD acquisition strategy to keep the current prime contractor in place, reversing plans for MDA to lead system integration

The new direction of the GMD program reflects a decision by the Director,  MDA to set aside a strategy approved in 2016 by the prior Director for the  government to take on the role of system integrator. Since the late 1990s,  Boeing has been the GMD prime contractor, performing the role of  system integrator. In 2011, Boeing competitively won a follow-on GMD  development and sustainment contract that runs through December 2018.  According to MDA, the government serving as the system integrator  provides several benefits, such as eliminating organizational conflicts of  interest issues—where industry tests and delivers assets based on  requirements it wrote—and providing an unbiased assessment of system  performance. However, a subsequent review team identified gaps and  risks with implementing the strategy and the agency determined that  transitioning to the new strategy at a time of heightened threat activity  created unacceptable levels of risk for defending the U.S. homeland. On  January 31, 2018, MDA awarded a sole-source contract modification to  Boeing to extend the current development and sustainment contract. The  contract modification has a total value of $6.56 billion and includes the  accelerated delivery of a new 20-silo missile field, development of a new  boost vehicle and the RKV, procurement of 20 new interceptors, and  ground system upgrades.

MDA faced a difficult choice, as both options included advantages and  disadvantages. Under the prior approved strategy, MDA expected to  achieve cost savings through competition. According to MDA, the sole- sourced labor rates for new development efforts under the recently  modified development and sustainment contract have proven to be  significantly higher than originally planned. In addition, MDA stated that  the contract modification process is also often very lengthy, making it  difficult for the agency to respond to the rapidly changing threat  environment. MDA also stated that the lack of competition makes it  challenging for the government to achieve favorable contract outcomes.  Conversely, the government taking on the role of system integrator would  make it responsible for managing multiple contracts. MDA plans to  implement measures to mitigate some of the current challenges with  extending the development and sustainment contract and ultimately  provide the GMD program with a level of continuity during the current  period of heightened threat activity.

MDA’s plan to accelerate the Redesigned Kill Vehicle effort may instead prolong it

In October 2017, MDA informed the Under Secretary of Defense for  Acquisition, Technology and Logistics (USD(AT&L)) that it had revised  the RKV acquisition plan that was previously established in 2015 and  approved by the USD(AT&L). This revision, in response to the  advancement of the North Korean missile threat, accelerates the RKV’s  development by concurrently performing development and production and  reducing the number of necessary flight tests. MDA removed the  previously-established alignment between flight tests and production  decisions, which enables the program to begin production well before the  system’s design is stabilized. In addition, MDA now plans to contract for  production, on a sole source basis with the current GMD prime contractor,  rather than through a full and open competition. According to MDA, the  acceleration plan does not change the content of the RKV’s development  plan and the program will continue to execute the same engineering  processes including hardware qualifications essential to delivering the  RKV.

However, MDA’s revision of the RKV acquisition plan is more likely to  prolong the effort rather than accelerate it. Our prior best practice work  has shown that finding a balance between resources available (i.e., time  and funding) and needed operational attributes (i.e., reliability and  effectiveness) and obtaining buy-in from across the department is  essential for program success. Although some risk may be necessary,  programs that rely on heightened levels of concurrent development and  production, starting production before stabilizing the design, and other  risky practices greatly increase the likelihood a program will fail to deliver  reliable, effective capabilities in an accelerated manner. The revised RKV  plan no longer includes some of the key best practices, such as alignment  between testing and production decisions included in the 2015 RKV plan.  In addition, MDA has already experienced development delays and was  operating on the threshold schedule of the prior acquisition plan, with no  additional margin for delays. Moreover, MDA did not vet the revised plan  in a similar manner to that of the 2015 RKV acquisition plan, which  Congress required to be subject to approval by the USD(AT&L) and  include rigorous elements for systems engineering, design, integration,  development, testing and evaluation. The revised plan is also  inconsistent with the acquisition best practice to “fly before you buy”, as  MDA will begin production based on the results of design reviews rather  than flight testing.

In May 2017, we recommended that the Secretary of Defense require the  Director of DOD’s Office of Cost Assessment and Program Evaluation  (CAPE) perform a comprehensive review of the RKV acquisition strategy  and provide any recommendations to the Secretary of Defense that the  Director deems necessary and appropriate to obtain CAPE’s concurrence  for the RKV program’s acquisition strategy. DOD did not concur with our  recommendation, stating that CAPE and other organizations had  previously reviewed the strategy prior to USD(AT&L)’s approval. As we  noted in our report, CAPE raised serious concerns about the plan and  expected MDA would encounter development delays. MDA justified the  prior RKV plan, in part, so that it could begin urgently replacing the less  reliable CE-Is as expeditiously as possible, which were fielded between  2004 and 2007. Under the newly accelerated plan, MDA does not plan to  begin replacing the CE-I interceptors until after it has fielded the  additional 20 RKV-equipped GBIs in 2024. However, GBIs only have an  initial service life of 20 years and MDA previously decided not to make  any upgrades to the CE-I because of initial plans to begin replacing them  with RKVs in 2020. We continue to believe that DOD should implement  our recommendation in order to ensure that MDA’s plans for the RKV are  viable and meet the needs of the warfighter.

A family of satellite-, sea-, and land-based radars provides worldwide  sensor coverage to enable the Ballistic Missile Defense System (BMDS)  to effectively detect and track threat missiles through all phases of their  trajectory. Land-based BMDS sensors include the Army/Navy  Transportable Radar Surveillance and Control Mode-2 (AN/TPY-2),  Upgraded Early Warning Radars (UEWR), and the future Long Range  Discrimination Radar (LRDR). Figure 16 below illustrates the locations of  select BMDS sensors world-wide.

AN/TPY-2 is a transportable X-band high resolution radar that is capable  of tracking all classes of ballistic missiles. AN/TPY-2 in the forward-based  mode is capable of detecting and tracking missiles in all stages of flight to  support Aegis BMD and GMD engagements and provides threat missile  data to C2BMC. AN/TPY-2 in the terminal mode can track missiles in the  later stages of flight to support THAAD engagements. Five AN/TPY-2  radars for use in forward-based mode are deployed to support regional  defense: two in U.S. European Command, two in U.S. Pacific Command,  and one in U.S. Central Command. Two AN/TPY-2 radars for use in  terminal mode is also deployed to U.S. Pacific Command.

UEWR are U.S. Air Force early warning radars that are upgraded and  integrated into the BMDS to provide sensor coverage for critical early  warning, tracking, object classification, and cueing data. Upgraded Early  Warning Radars are located in Beale, California; Fylingdales, United  Kingdom; and Thule, Greenland. MDA awarded a contract to upgrade the  early warning radars in Clear, Alaska and at Cape Cod, Massachusetts,  and both of these assets are approaching their operational acceptance for  use in the BMDS. The upgrades to the Clear and Cape Cod Early  Warning Radar sites are joint MDA / Air Force projects. Both  organizations are contributing funding to these sites.

LRDR is being designed as an S-band radar intended to address the  need for persistent, precision tracking and discrimination capability in the  Pacific sensor architecture. MDA anticipates the addition of LRDR will  optimize the employment of the Ground-based Midcourse Defense  (GMD) interceptors and address evolving threats. The radar will be  located at Clear Air Force Station, Alaska with initial operational capability  planned for 2020. Table 13 provides key fiscal year 2017 Sensors  program facts.

AN/TPY-2 Program transitions to a new development phase

To address future requirements and as part of its spiral development  process, AN/TPY-2 transitioned from its Increment 2 software  development phase to its Configuration 3 software development phase.  The transition results in Configuration 3 subsuming all unfinished  Increment 2 content including 44 percent of development costs ($60  million), 31 percent of productions costs ($61 million), 88 percent of  operations and support costs ($2,281 million), and 100 percent of  disposal costs ($30 million). Four Knowledge Points and Technical  Performance Metrics for the program were also carried over from  Increment 2. New capabilities were also added in Configuration 3  including electronic protection and discrimination improvements.

Additionally, the Conditional Materiel Release of software upgrade CX  2.1.0 was delayed from the first quarter of fiscal year 2017 to the first  quarter of fiscal year 2018. To mitigate this delay, MDA executed an  Urgent Software Release for CX 2.1.1 to support the fielding of  Command, Control and Battle Management (C2BMC) S6.4-3 in  December 2016.

UEWR operational acceptances delayed for Beale, Clear, Cape Cod, and Fylingdales Sites

The UEWR is executing a concurrent development approach to improve  UEWR Object Classification (OC), Data Processor/Signal Processor  (DP/SP), and Bias Correction capabilities, and to certify the UEWR Clear  and Cape Cod sites for use in the BMDS. Because of this concurrent  development, a delay in the Beale UEWR’s operational acceptance for  the OC and DP/SP program has had cascading effects on the same  upgrades for the Clear, Cape Cod, and Fylingdales UEWRs in addition to  the BMDS Certification for the Clear UEWR, delaying the use of these  key radar capabilities. These delays are shown in figure 17 below:  The delay in Beale’s Operational Acceptance was due in part to the  following:

The contractor, Raytheon, delivered unacceptable UEWR technical  orders that required rework.

Development and operational testing supporting the operational  acceptance were delayed because the operators required remediation  of all emergency operational maintenance issues found on the  operational UEWRs.

Some UEWR software required fixes to address deficiencies.

Other programs were competing for test time on needed equipment.

The delay in operational acceptance will affect the delivery of Bias  Correction for the Clear and Cape Cod UEWRs in addition to the delivery  of and Data Processor/ Signal Processor improvements to support the  missile defense mission of Beale, Clear, Cape Cod, and Fylingdales  UEWRs. It has also delayed the BMDS Certification of the Clear UEWR.  Because the program currently has sufficient schedule margin before the  Cape Cod BMDS Certification, the delays have not yet affected the  missile defense mission for that radar. The program office is working with  Raytheon on a recovery plan to address the Technical Order issues and  other issues that arose from the developmental and operational testing  conducted in July 2017. We have previously reported that concurrent  development increases program risk for cost and schedule delays caused  by redesigns and retrofits needed after testing has occurred.

In fiscal year 2017, MDA made progress towards stabilizing LRDR’s  design, by completing a preliminary design review in March 2017 and a  critical design review in September 2017. The program also began  production of long lead radar electronic components and awarded a  military construction contract for the Mission Control Facility. However,  the program has experienced challenges integrating multiple facilities- related projects, which require synchronization between MDA, the U.S.  Air Force, the U.S. Army Corps of Engineers, and contractors. For  example, in fiscal year 2017, the LRDR program began demolishing a  decommissioned, Cold War-era radar, which sits on the planned LRDR  site at Clear Air Force Station. The program discovered that the radar’s  foundation and surrounding soil contained steel and concrete coated with  polychlorinated biphenyl (PCB), which was a common industrial material  used at the time of the radar’s construction in the late 1950s. PCBs do not  readily break down once in the environment and have been demonstrated  to cause a variety of adverse health effects. In April 2017, the U.S. Army  Corps of Engineers modified its contract for the removal of the PCB- contaminated foundation and soil and plans to complete excavation and  removal by early fiscal year 2018. Demolition is now expected to be  completed in 2019 and the additional costs for these complications are  not covered under the program’s resource baseline.

In June 2017, the LRDR program initiated a power study with the  commercial power supplier for the LRDR radar. The program expects to  complete the study on LRDR’s power demands on the commercial  electrical grid, as well as assess updated U.S. Northern Command  concept of operations to determine the extent, if any, of system  capabilities, limitations, and mitigations. During the LRDR critical design  review, MDA officials stated that U.S. Air Force informed the agency that  it required 24/7 availability of the radar if it is to become operational.  According to MDA officials, the current LRDR design, with its reliance on  commercial power and limited back-up generators, would not provide that  capability. MDA officials stated the program plans to increase the number  of back-up generators, which may increase the military construction costs  and annual operational expense of the radar. A November 2016 study of  LRDR’s power system performed for MDA by a contractor indicated that  agreements with the commercial power provider place limitations on the  warfighter’s ability to operate the radar without consulting the commercial  power provider in advance and that emergency activation of the radar  could result in other commercial power provider customers having their  power supply temporarily switched off if the generators were not brought  online in time.

The LRDR program has also encountered design challenges with the  radar’s circuit card assemblies, as the planned design included the use of  pure tin parts, which are susceptible to corrosion. Lockheed Martin, the  prime contractor for the LRDR program, plans to replace some of the  pure tin parts with parts that have a lead-based finish, as available. The  program does not anticipate there to be enough of these parts available  and estimated that redesigning the pure tin parts would result in an  approximate 9-month delay. For those parts that cannot be readily  replaced, Lockheed Martin plans to use corrosion mitigation techniques,  such as applying conformal coating to the circuit card assemblies and  applying lead solder. Although MDA maintains that these mitigation  techniques will ensure corrosion-free operations, government and  industry studies show that such mitigations reduce, but do not eliminate  the risk, Lockheed Martin is conducting on-site inspections and providing  additional information on the historical use of pure tin parts in similar  systems and anticipates being able to clear the unmitigated, pure tin parts  through the MDA’s Parts, Materials, and Processes control board.

Appendix IX: Targets and Countermeasures

The Missile Defense Agency’s (MDA) Targets and Countermeasures  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 key fiscal year 2017  Targets and Countermeasure program facts.

First successful intercept test using an ICBM was achieved during GMD flight test, FTG-15

Despite challenges MDA has previously experienced using new targets  during intercept flight tests, in fiscal year 2017, the program successfully  flew the first intercontinental ballistic missile (ICBM) range target to  support a critical intercept test for the GMD element. The GMD element  provides the warfighter capability to engage and destroy intermediate-  and intercontinental-range ballistic missile threats for the protection of the  United States. In March 2013, the Secretary of Defense announced plans  to increase the number of deployed GMD interceptors called Ground- based interceptors (GBI) from 30 to 44 by the end of 2017. To do this, a  test—FTG-15—was needed to collect data on the GBI’s new booster  design and demonstrate its performance against a target at the ICBM  threat range before completing this mandated fielding goal. The  successful flight of the ICBM target, the GBI’s performance against the  target, and other information gathered during this test will provide the  warfighter with a better understanding of the GBI’s capabilities and  limitations. For further details on the GMD element, see appendix VII.

Program planning to award contract for additional targets despite cost growth, schedule delays, and unproven performance

The Targets and Countermeasures program is planning to contract for up  to 12 additional medium range ballistic missile (MRBM) T1/T2 targets  despite cost growth, schedule delays, and the lack of demonstrated  performance. In fiscal year 2014, the program competitively awarded the  initial contract for 6 MRBM T1/T2 targets with an option for an additional  12, for a total of 18. According to program officials, the contract was  structured with a fixed price for the target and incentives to ensure  successful execution during testing. However, the contractor has been  underperforming since the award.

First, this target’s costs have continued to significantly increase as some  MDA officials originally warned. One of MDA’s reasons for selecting the  current MRBM T1/T2 contractor was because it offered a lower price.  However, some officials within MDA objected to this award due to the  near certainty that the contractor would overrun costs. Since then, both  MDA and Defense Contract Management Agency (DCMA) officials have  acknowledged that the contractor did not adequately account for the costs  associated with this target. Consequently, this target’s costs have been  volatile, and despite changes and rebaselines, the contractor has been  unable to meet projections. In fiscal year 2017, the program conducted  another review to address significant cost growth and set new projections,  and despite a relatively steady period of performance against these new  projections, DCMA officials believe that this contractor will continue to  have increasing costs. In addition, the first delivery of this target has been  delayed almost five years beyond the original plan primarily due to  contractor performance issues. There was an initial delay because the  contract was awarded later than planned due to an investigation of an  unsubstantiated procurement integrity allegation. However, since then,  contractor performance issues have further delayed the first target  delivery, necessitating several substitute targets for tests in the interim.  Finally, since the program will not fly the first target in a test until the  second quarter of fiscal year 2019, the target’s performance has yet to be  demonstrated. Hence, buying an additional 12 targets without  confirmation of the target’s performance is a significant risk for the  program, as even one failure would delay all future tests with this target,  and ultimately, the entire test program.

Appendix X: Terminal High Altitude Area Defense (THAAD)

Appendix X: Terminal High Altitude Area  Defense (THAAD)

THAAD is a rapidly-deployable ground-based system able to defend  against short-, medium-, and intermediate- range ballistic missile attacks  during the middle and end stages of a missile’s flight. THAAD is  organized as a battery that consists of interceptors, launchers, an Army  Navy / Transportable Surveillance (AN/TPY-2) radar, a fire control and  communications system, and other support equipment. The first two  batteries were originally conditionally accepted by the Army for  operational use. Since then, THAAD received urgent materiel release  approval from the Commanding General of the United States Army  Aviation and Missile Command to enable an earlier delivery of equipment  for THAAD batteries one through six for operational use to meet the  Army’s request to support urgent warfighter needs. The MDA plans to  continue THAAD production through fiscal year 2024, for a total of 7  batteries, 503 interceptors, and 7 radars.

MDA has two THAAD acquisition efforts—THAAD 1.0 and THAAD 2.0.

THAAD 1.0 is for the production of the batteries, interceptors, and  supporting hardware and provides the warfighter with initial integrated  defense against short- and medium-range threats in one region.

THAAD 2.0 is primarily software enhancements that expand THAAD’s  ability to defend against threats in multiple regions and at different  ranges, and adds debris mitigation and other upgrades.

Table 15 provides key fiscal year 2017 THAAD program facts.

THAAD Successfully Completed Two Flight Tests, but Delayed Several Hardware and Software Deliveries, Impacting Warfighter Capabilities

THAAD successfully completed two tests. In FTT-18 (previously  scheduled for fiscal year 2015), THAAD successfully intercepted an  Intermediate Range Ballistic Missile (IRBM)-representative target,  demonstrating THAAD’s capability against IRBM threats. THAAD has  been deployed to Guam since 2013 to defend against IRBM threats, but  this is the first time it has demonstrated that capability in a flight test.  According to program officials, for the second planned flight test originally  named FTT-15, MDA changed the name to Flight Experiment THAAD  (FET)-01 to more accurately reflect the experimental purpose of the test.  However, an intercept was formerly a primary test objective in FTT-15,  but this objective was removed before the test name was changed to  FET-01. In FET-01, although not a primary objective, THAAD did  complete an intercept of a medium-range ballistic missile target with  countermeasures. Despite the intercept, the test revealed significant  operational limitations.

THAAD delayed the delivery of several key hardware and software  deliveries that will impact warfighter capabilities. Figure 20 shows the  delayed hardware and software deliveries.

Appendix X: Terminal High Altitude Area  Defense (THAAD) interceptors due to a production issue that had cascading schedule  effects on interceptor production and delivery.

Parts Quality Issues Were Resolved but Delayed Interceptor Deliveries

In May 2017, we found that THAAD interceptor production was halted due  to a parts quality issue discovered when a connector in the interceptor  failed multiple testing iterations. Upon investigation, the contractor  learned that one of its sub-contractors changed the manufacturing  process on the connector without informing Lockheed Martin. According  to program officials, Lockheed Martin halted interceptor delivery but  continued interceptor production. The connector was redesigned and  incorporated into 20 interceptors, which again failed testing before being  deployed. After a second redesign the connector passed testing and  interceptor delivery resumed in April 2017. As of December 2017, there  were 16 interceptors that had been produced but not yet fitted with the  redesigned connector. Program officials report that the delay should  result in about 2 months of delivery delays of the last interceptor lot  currently under contract.

According to program officials, to prevent similar problems from occurring  again, the government revised the Parts Materials and Processes Control  plan to provide improved guidance and clarity related to parts selection  and change control; added additional criteria to annual audits to enhance  review of supplier parts management, materials, and processes; and  tightened controls on suppliers to report any significant changes.

MDA and Army are at an Impasse Regarding Transfer of THAAD Program to the Army

THAAD, that would be the Army) not later than the date the President’s  fiscal year 2021 budget is submitted. However, in a memo from the  Secretary of the Army, the Army said that it would non-concur with a  transfer of the THAAD program in its current state because it cannot meet  the Army’s global mission requirements.

To meet global mission requirements for the THAAD mission, the Army  requires about $10.1 billion of additional hardware, life-cycle sustainment  funding, and AN/TPY-2 upgrades. MDA is willing to transfer to the Army  the THAAD program of record as is. An official from the Army said that  this impasse has existed before, but that the recent reprioritization of the  THAAD mission contributed to it. For further details on the AN/TPY-2  program, see appendix VIII.

Table 16 below shows the difference between the THAAD program of  record and the Army’s requirements.

MDA’s requirements and warfighter requirements exist and can lead to  situations such as this impasse. Consequently, we recommended that the  Secretary of Defense require MDA to develop a plan to transition  operational requirements analysis currently performed within MDA’s  Achievable Capabilities List to the U.S. Combatant Commanders, with  U.S. Strategic Command as the lead entity and, in the interim, require  MDA to obtain their concurrence of the Achievable Capabilities List prior  to its release. The Department of Defense (DOD) did not agree with our  recommendation. However, as evidenced by the discrepancy between  the Army’s and MDA’s requirements for the THAAD and AN/TPY-2  program, the difference between MDA’s requirements and those of the  warfighter will continue to present substantial problems to DOD in  executing the missile defense mission, and we continue to believe that  our recommendation should be implemented.

Appendix XI: GAO Contact and Staff Acknowledgments

In addition to the contact named above, LaTonya Miller, Assistant  Director; Matthew Ambrose; Kristine Hassinger; Helena Johnson; Joe  Kirschbaum; Wiktor Niewiadomski; Steven Stern; Brian Tittle; Hai V. Tran;  Alyssa Weir; Tonya Woodbury; and Robin Wilson 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. Washington, D.C.: Mar. 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 Acquisitions 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 is developing a system to track and destroy enemy missiles. In our annual review of this system, we found that, as in prior years, MDA has made progress developing, testing, and delivering some parts of this system but did not always complete its goals. For example, while MDA delivered some kinds of missiles to the military as planned, other missiles were delayed.

We also found some of these assets are not delivered with information users need, like limitations about how they operate or how they were tested. Our six recommendations include actions MDA can take to better communicate this and other information.