Missile Defense: Additional Knowledge Needed in Developing System
for Intercepting Long-Range Missiles (21-AUG-03, GAO-03-600).
A number of countries hostile to the United States and its allies
have or will soon have missiles capable of delivering nuclear,
biological, or chemical weapons. To counter this threat, the
Department of Defense's (DOD's) Missile Defense Agency (MDA) is
developing a system to defeat ballistic missiles. MDA expects to
spend $50 billion over the next 5 years to develop and field this
system. A significant portion of these funds will be invested in
the Ground-based Midcourse Defense (GMD) element. To field
elements as soon as practicable, MDA has adopted an acquisition
strategy whereby capabilities are upgraded as new technologies
become available and is implementing it in 2-year blocks. Given
the risks inherent to this strategy, GAO was asked to determine
when MDA plans to demonstrate the maturity of technologies
critical to the performance of GMD's Block 2004 capability and to
identify the estimated costs to develop and field the GMD element
and any significant risks with the estimate.
-------------------------Indexing Terms-------------------------
REPORTNUM: GAO-03-600
ACCNO: A08177
TITLE: Missile Defense: Additional Knowledge Needed in
Developing System for Intercepting Long-Range Missiles
DATE: 08/21/2003
SUBJECT: Ballistic missiles
Cost analysis
Defense capabilities
Operational testing
Weapons research and development
Weapons systems
DOD Ground-based Midcourse Defense
Element
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GAO-03-600
Report to the Ranking Minority Member, Subcommittee on Financial
Management, the Budget, and International Security, Committee on
Governmental Affairs, U. S. Senate
United States General Accounting Office
GAO
August 2003 MISSILE DEFENSE Additional Knowledge Needed in Developing
System for Intercepting Long- Range Missiles
GAO- 03- 600
GMD is a sophisticated weapon system being developed to protect the United
States against limited attacks by long- range ballistic missiles. It
consists of a collection of radars and a weapon component* a three- stage
booster and exoatmospheric kill vehicle* integrated by a centralized
control system that formulates battle plans and directs the operation of
GMD components. Successful performance of these components is dependent on
10 critical technologies.
MDA expects to demonstrate the maturity of most of these technologies
before fielding the GMD element, which is scheduled to begin in September
2004. However, the agency has accepted higher cost and schedule risks by
beginning integration of the element*s components before these
technologies have matured. So far, MDA has matured two critical GMD
technologies. If development and testing progress as planned, MDA expects
to demonstrate the maturity of five other technologies by the second
quarter of fiscal year 2004.
The radar technologies are the least mature. MDA intends to demonstrate
the maturity of an upgraded early warning radar in California in the first
quarter of fiscal year 2005 and a sea- based radar in the Pacific Ocean in
the fourth quarter of that year. Although MDA does not plan to demonstrate
the maturity of the technology of the early warning radar in Alaska, which
will serve as the primary fire control radar, through its own integrated
flight tests, it may be able to do so through the anticipated launch of
foreign test missiles.
MDA estimates that it will spend about $21.8 billion between 1997 and 2009
to develop the GMD element. This estimate includes $7. 8 billion to
develop and field the GMD Block 2004 capability. For example, the funds
will be used to install interceptors at two sites, upgrade existing radars
and testing infrastructure, and develop the sea- based X- band radar. We
found that MDA has incurred a greater risk of cost growth because for more
than a year the agency was not able to rely fully on data from its primary
tool for monitoring
whether the GMD contractor has been performing work within cost and on
schedule. In February 2002, MDA modified the prime contract to reflect an
increased scope of work for developing GMD. It was not until July 2003
that the agency completed a review to ensure that the data was fully
reliable. A number of countries hostile to the United States and its
allies have or will soon have missiles capable
of delivering nuclear, biological, or chemical weapons. To counter this
threat, the Department of Defense*s (DOD*s) Missile Defense Agency (MDA)
is developing a system to
defeat ballistic missiles. MDA expects to spend $50 billion over the next
5 years to develop and field this system. A significant portion of these
funds will be
invested in the Ground- based Midcourse Defense (GMD) element. To field
elements as soon
as practicable, MDA has adopted an acquisition strategy whereby
capabilities are upgraded as new technologies become available and is
implementing it in 2- year blocks.
Given the risks inherent to this strategy, GAO was asked to determine when
MDA plans to demonstrate the maturity of technologies critical to the
performance of GMD*s Block 2004 capability and to identify the estimated
costs to develop and field the GMD element and any significant risks with
the estimate.
GAO is recommending DOD (1) explore options to demonstrate effectiveness
of the Cobra Dane radar and (2) establish procedures to help ensure data
are reliable from MDA*s monitoring system.
DOD concurred with GAO*s first recommendation and partially concurred with
GAO*s second.
www. gao. gov/ cgi- bin/ getrpt? GAO- 03- 600. To view the full product,
including the scope and methodology, click on the link above. For more
information, contact Robert E. Levin at (202) 512- 4841 or levinr@ gao.
gov. Highlights of GAO- 03- 600, a report to the
Ranking Minority Member, Subcommittee on Financial Management, the Budget,
and International Security, Committee on Governmental Affairs, U. S.
Senate
August 2003
MISSILE DEFENSE
Additional Knowledge Needed in Developing System for Intercepting Long-
Range Missiles
Page i GAO- 03- 600 Missile Defense Letter 1 Results in Brief 3 Background
4 MDA Expects to Demonstrate the Maturity of Most GMD
Technologies before September 2004 8 MDA Has Risked Cost Growth Because It
Could Not Fully Rely on Data from Its System for Monitoring Contractor
Performance 18 Conclusions 24 Recommendations for Executive Action 25
Agency Comments and Our Evaluation 25 Appendix I Scope and Methodology 28
Appendix II Comments from the Department of Defense 29
Appendix III Technology Readiness Level Assessment Matrix 32
Appendix IV Importance of Earned Value Management 35
Appendix V GAO Contact and Staff Acknowledgments 40
Tables
Table 1: Technology Readiness Levels of GMD Critical Technologies 11 Table
2: Estimated Cost to Develop and Field GMD 19 Table 3: 32 Criteria for
Earned Value Management Systems 35 Contents
Page ii GAO- 03- 600 Missile Defense Figures
Figure 1: Components of GMD 6 Figure 2: Notional GMD Concept of Operations
7 Figure 3: Tasks GMD Plans to Accomplish for the GMD Block 2004 Project
19 Abbreviations
BMDO Ballistic Missile Defense Organization CPR Cost Performance Report
DCMA Defense Contract Management Agency EVM Earned Value Management GMD
Ground- based Midcourse Defense IBR integrated baseline review IFT
integrated flight test
MDA Missile Defense Agency NMD National Missile Defense TRL technology
readiness level
This is a work of the U. S. government and is not subject to copyright
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separately.
Page 1 GAO- 03- 600 Missile Defense
August 21, 2003 The Honorable Daniel K. Akaka Ranking Minority Member
Subcommittee on Financial Management,
the Budget, and International Security Committee on Governmental Affairs
United States Senate
Dear Senator Akaka: Hostile states, including those that sponsor
terrorism, are investing significant resources to develop and deploy
ballistic missiles of increasing range and sophistication that could be
used against the United States, our deployed forces, and our allies. At
least 25 countries now have, or are in
the process of acquiring, missiles capable of delivering nuclear,
biological, or chemical weapons. To counter this threat, the President of
the United States in December 2002, directed the Department of Defense
(DOD) to begin fielding a ballistic missile defense system in 2004.
The Missile Defense Agency (MDA) within DOD is responsible for developing
this system, including the Ground- based Midcourse Defense (GMD) element,
1 which is being developed to protect the United States against long-
range ballistic missiles. MDA is also building an integrated testing
infrastructure* or *test bed** with the newly designated GMD element as
its centerpiece. MDA expects to spend nearly $50 billion in research and
development funds between fiscal years 2004 and 2009 to develop and field
a ballistic missile defense system. A significant percentage of the $50
billion will be invested in the GMD element.
GMD is a sophisticated weapon system that will rely on state- of- the- art
technologies that have been under development for a number of years. GMD
will use space- based sensors to provide early warning of missile
launches; ground- based radars to identify and refine the tracks of
threatening warheads and associated objects; ground- based interceptors
1 In January 2002, the Secretary of Defense created the Missile Defense
Agency and consolidated all ballistic missile defense programs under the
new agency. Former missile defense acquisition programs are now referred
to as elements of a single ballistic missile defense system.
United States General Accounting Office Washington, DC 20548
Page 2 GAO- 03- 600 Missile Defense
(each consisting of a three- stage booster and exoatmospheric kill
vehicle) to destroy warheads; and a centralized control system that
formulates battle plans and directs the operation of GMD components for
carrying out the missile defense mission.
To meet the technical challenge of developing both the integrated system
and the GMD element, MDA has adopted a *capabilities- based* acquisition
strategy and is implementing it in 2- year development blocks. This
approach is designed to field elements as soon as practicable and to
improve the effectiveness of fielded elements by upgrading their
capability as new technologies become available or as the threat warrants.
Block 2004 will be the first block fielded, followed by Blocks 2006 and
2008. Although GMD*s Block 2004 capability is expected to be fielded
beginning in September 2004, MDA plans to upgrade that capability through
the end of 2005. 2 Because development and fielding of GMD involves
substantial technical
challenges and a major investment, you asked us to review technical and
cost issues related to the GMD element. Specifically, we determined when
MDA plans to demonstrate the maturity 3 of technologies critical to the
performance of GMD*s Block 2004 capability. We also identified the
estimated costs to develop and field the GMD element and any significant
risks associated with the estimate.
Our scope and methodology are included in appendix I. Although we assessed
the maturity of specific GMD critical technologies, the scope of this
review did not include an evaluation of MDA*s test plans for demonstrating
GMD*s ability to operate as a system overall. Our detailed assessment of
GMD system- level testing is included in a classified report that we
issued in June 2003 to other congressional requesters.
2 The intended performance of the Block 2004 capability is described in a
classified annex to this report. 3 Technological maturity for starting
product development or systems integration is
achieved when prototype hardware with the desired form, fit, and function
has been proven in a realistic operational environment. See U. S. General
Accounting Office,
Best Practices: Better Management of Technology Development Can Improve
Weapon System Outcomes, GAO/ NSIAD- 99- 162 (Washington, D. C.: July
1999).
Page 3 GAO- 03- 600 Missile Defense
MDA expects to demonstrate the maturity of most of the ten technologies
critical to GMD*s initial performance before fielding of the element
begins in September 2004. However, the agency has accepted a higher risk
of cost growth and schedule slips by beginning the integration of the
element*s components before these technologies have been demonstrated. So
far, MDA has matured two critical GMD technologies* the infrared sensors
of the kill vehicle 4 and the fire control software of the battle
management component. 5 But if development and testing progress as
planned, MDA expects to demonstrate the maturity of five others* resident
in the kill vehicle, interceptor boosters, and the battle management
component* by the second quarter of fiscal year 2004. MDA intends to
demonstrate the maturity of an upgraded early warning radar* located at
Beale Air Force Base, California* in the first quarter of fiscal year 2005
and a sea- based Xband radar, located in the Pacific Ocean, in the fourth
quarter of that year. MDA does not plan to demonstrate through its own
integrated flight tests the maturity of a technology resident in the Cobra
Dane radar located in Alaska, which will serve as the element*s primary
radar when GMD is first fielded. Agency officials told us that they may be
able to test the radar through the anticipated launch of foreign test
missiles. However, it is not clear that testing Cobra Dane in this manner
will provide all of the information that a dedicated test provides because
MDA will not control the configuration of the target or the flight
environment.
MDA estimates that it will spend about $21.8 billion between 1997 and 2009
to develop the GMD element. This estimate includes $7.8 billion to develop
and field the GMD Block 2004 capability and to develop the GMD portion of
the test bed between 2002 and 2005. For example, the funds will be used to
install interceptors at Fort Greely, Alaska, and Vandenberg Air Force
Base, California; upgrade existing radars and the test bed infrastructure;
and develop the sea- based X- band radar.
MDA has incurred a greater risk of cost growth because for more than a
year the agency was not able to rely fully on the data from its primary
tool for monitoring whether the GMD contractor was performing work within
cost and on schedule* the prime contractor*s Earned Value Management
4 The kill vehicle is the weapon component of the GMD element that
attempts to detect and destroy threat warheads through *hit- to- kill*
impacts. 5 The battle management component is the integrating and
controlling component of the
GMD element. The fire control software plans engagements and tasks GMD
components to execute a missile defense mission. Results in Brief
Page 4 GAO- 03- 600 Missile Defense
(EVM) system. 6 In February 2002, MDA modified GMD*s contract to bring it
into line with the agency*s new capabilities- based acquisition strategy.
It took several months to establish an interim cost baseline 7 against
which to
measure the contractor*s performance and 13 months to complete revisions
to the baseline. Also, MDA and the contractor did not complete a review
until July 2003 to ensure that the revised baseline was accurate and that
contractor personnel were correctly using it to measure performance. This
review was of particular importance because an earlier review revealed
significant deficiencies in the contractor*s development and use of the
initial contract baseline. Until this review was completed, MDA did not
know for sure whether it could rely fully on the data from its EVM system
to recognize and correct potential problems in time to prevent significant
cost increases and schedule delays.
We are making recommendations that MDA (1) consider adding a test of the
effectiveness of the radar in Alaska; and (2) ensure that procedures are
in place that will increase MDA*s confidence in data from its EVM system.
DOD concurred with our first recommendation and partially concurred with
the second. In commenting on the draft report, DOD stated that the
feasibility of these procedures will be determined and that a portion of
the work is already being accomplished.
The concept of using a missile to destroy another missile (hit- to- kill)
has been explored since the mid- 1950*s, but it was not until 1984 that
the first such intercept achieved its objective. Between the mid- 1980*s
and late- 1990*s the United States conducted a number of experiments
designed to demonstrate that it was possible to hit one missile with
another. In 1997, the Ballistic Missile Defense Organization (BMDO)
established the National Missile Defense (NMD) Joint Program Office. The
program office was directed to demonstrate by 1999 a system that could
protect the United States from attacks of intercontinental ballistic
missiles and to be in a position to deploy the system if the threat
warranted by 2003. The
6 The EVM system is a management tool widely used by DOD to compare the
value of contractor*s work performed to the work*s actual cost. The tool
measures the contractor*s actual progress against its expected progress
and enables the government and contractor to estimate the program*s
remaining cost. 7 An interim baseline is often established by the
contractor when the government has authorized work, but the requirements
and terms of the work have not yet been negotiated. Until negotiations are
completed, the contractor develops a baseline using proposed cost that has
been divided among work packages with associated budgets and schedule.
Background
Page 5 GAO- 03- 600 Missile Defense
initial system consisted of space- and ground- based sensors, early
warning radars, interceptors, and battle management functions.
The program underwent additional changes as the new decade began. In
September 2000, the President decided to defer deployment of the NMD
system, but development of the system continued with the goal of being
ready to deploy the system when directed. This action was followed in 2001
by BMDO*s redirection of the prime contractor*s efforts from developing
and deploying an NMD system to developing an integrated test bed with the
newly designated GMD system as its centerpiece. The Secretary of Defense,
in January 2002, renamed BMDO as MDA and consolidated all ballistic
missile defense programs under the new agency. Former missile defense
acquisition programs became elements of a single
ballistic missile defense system. These changes were followed in December
2002, by the President*s directive to begin fielding in 2004 a ballistic
missile defense system, which included components of the GMD element
already under development. The GMD element is intended to protect the
United States against longrange
ballistic missiles in the midcourse phase of their flight. This is the
point outside the atmosphere where the motors that boost an enemy missile
into space have stopped burning and the deployed warhead follows a
predictable path toward its target. Compared to the boost and terminal
phases, this stage of flight offers the largest window of opportunity for
interception and allows the GMD element a longer time to track and engage
a target.
As illustrated in figure 1, GMD will rely on a broad array of components
to track and intercept missiles. Figure 2 provides a notional concept of
how these components will operate once they are fully integrated into the
GMD element.
Page 6 GAO- 03- 600 Missile Defense
Figure 1: Components of GMD
Page 7 GAO- 03- 600 Missile Defense
Figure 2: Notional GMD Concept of Operations
Note: The concept of operations assumes weapons release authority has been
previously granted by the President of the United States or the Secretary
of Defense. Missile flight times may be too brief to ask for permission to
launch interceptors and engage the enemy.
Page 8 GAO- 03- 600 Missile Defense
MDA is gaining the knowledge it needs to have confidence that technologies
critical to the GMD Block 2004 capability will work as intended. Two of
the ten technologies essential to the Block 2004 capability have already
been incorporated into actual prototype hardware and have been
demonstrated to function as expected in an operational environment. 8
Other technologies are reaching this level of maturity. If development and
testing proceed as planned, MDA will demonstrate the maturity of five
additional technologies by the second quarter of fiscal year 2004 and two
critical radar technologies during fiscal year 2005. MDA believes that its
best opportunity to demonstrate the maturity of the tenth technology,
technology critical to GMD*s primary radar, may come through the
anticipated flight tests of foreign missiles.
Our work over the years has found that making a decision to begin system
integration of a capability before the maturity of all critical
technologies have been demonstrated increases the program*s cost,
schedule, and performance risks. Because the President directed DOD to
begin fielding a ballistic missile defense system in 2004, MDA began GMD
system integration with technologies whose maturity has not been
demonstrated. As a result, there is a greater likelihood that critical
technologies will not work as intended in planned flight tests. If this
occurs, MDA may have to spend additional funds in an attempt to identify
and correct problems by
September 2004 or accept a less capable system. 9 Successful developers
follow *knowledge- based acquisition* practices to get quality products to
the customer as quickly and cost effectively as possible. As a part of
meeting this goal, developers focus their technology programs on maturing
technologies that have the realistic potential for being incorporated into
the product under consideration. Accordingly, successful developers spend
time to mature technology in a technology setting, where costs are
typically not as great, and they do not move forward with product
development* the initiation of a program to fully
8 An operational environment is a real- world environment (e. g., flight
demonstration) that addresses all of the operational requirements and
specifications demanded of the final product. 9 U. S. General Accounting
Office, Missile Defense: Knowledge- Based Practices Being
Adopted, but Risks Remain, GAO- 03- 441 (Washington, D. C.: Apr. 30,
2003). This report presents our analysis of MDA*s new approach for
developing missile defense technology. MDA Expects to
Demonstrate the Maturity of Most GMD Technologies before September 2004
Importance of Maturing Technology
Page 9 GAO- 03- 600 Missile Defense
design, integrate, and demonstrate a product for production* until
essential technologies are sufficiently mature.
An analytical tool* which has been used by DOD and the National
Aeronautics and Space Administration, called technology readiness levels
(TRLs), 10 *can assess the maturity level of technology as well as the
risk
that technology poses if it is included in a product*s development. The
nine readiness levels are associated with progressing levels of
technological maturity and demonstrated performance relative to a
particular
application* starting with paper studies of applied scientific principles
(TRL 1) and ending with a technology that has been *flight proven* on an
actual system through successful mission operations (TRL 9). Additional
details on TRLs are shown in appendix III. TRLs provide a gauge of how
much knowledge the program office has on the progress or status of a
particular technology and are based on two principal factors: (1) the
fidelity of demonstration hardware, including design maturity and level of
functionality achieved; and (2) the extent and realism of the environment
in which the technology has been demonstrated.
MDA recognizes the value of beginning system integration with mature
technology and of using TRLs to assess the maturity of technology proposed
for a block configuration. In particular, MDA prefers to include new
technology in a block configuration only if the technology has reached a
TRL 7; that is, only if prototype hardware with the desired form, fit, and
function has been proved in an operational environment. However; MDA
retains the flexibility to include less mature technology in a block
configuration if that technology offers a significant benefit in
performance
and the risk of retaining it is acceptable and properly managed. Through
technical discussions with the GMD joint program office and its prime
contractor, we identified ten critical GMD technologies and jointly
assessed the readiness level of each. The critical technologies are
resident in the exoatmospheric kill vehicle, the boosters, the battle
management, command, and control component, and in the element*s
10 U. S. General Accounting Office, Best Practices: Better Management of
Technology Development Can Improve Weapon System Outcomes, GAO/ NSIAD- 99-
162 (Washington, D. C.: July 1999). Readiness Levels of GMD
Element Technologies
Page 10 GAO- 03- 600 Missile Defense
radars. In 7 of 10 cases, we agreed with the program office and the GMD
prime contractor on the maturity level of the element*s critical
technologies. The differences in the remaining three cases, as discussed
in detail below, were primarily due to interpretation of TRL definitions.
The program office and its contractor rated the two booster technologies
and one radar technology at higher readiness levels than, in our opinion,
MDA had demonstrated.
Most critical GMD technologies are currently at TRLs 5 and 6. At TRL 5,
the technology*s development is nearing completion, but it has not been
applied or fitted for the intended product. At this point, the technology
has been incorporated into a high- fidelity breadboard 11 that has been
tested in a laboratory or relevant environment 12 . Although this
demonstrates the functionality of the technology to some extent, the
hardware is not necessarily of the form and fit (configuration) that would
be integrated into the final product. A new application of existing
technology is usually assessed at a TRL 5, because the technology has not
been demonstrated in the relevant environment for the new application. TRL
6 begins the true *fitting* or application of the technology to the
intended product. To reach this level, technology must be a part of a
representative prototype that is very close to the form, fit, and function
of that needed for the intended
product. Reaching a TRL 6 requires a major step in a technology*s
demonstrated readiness, that is, the prototype must be tested in a
highfidelity laboratory environment or demonstrated in a restricted but
relevant environment.
Two of the ten GMD technologies were assessed at a TRL 7, the level that
successful developers insist upon before initiating product development.
To reach this level, a pre- production prototype of the technology must be
demonstrated to its expected functionality in an operational environment.
If development and testing proceed as planned by MDA, we judge that most
of the technologies (7 of 10) will be at a TRL 7 after the completion
11 A breadboard is a collection of integrated components that provide a
representation of a system/ subsystem that can be used to determine
concept feasibility and to develop technical data. A breadboard is
typically configured for laboratory use to demonstrate the technical
principals of immediate interest. 12 A relevant environment is defined as
a testing environment that simulates key aspects of the operational
environment.
Page 11 GAO- 03- 600 Missile Defense
of integrated flight test (IFT)- 14, 13 which is scheduled for the second
quarter of fiscal year 2004. Table 1 summarizes our assessment of the TRL
for each critical technology as of June 2003 and the date at which MDA
anticipates each technology will reach TRL 7. A detailed discussion of
each critical technology follows.
Table 1: Technology Readiness Levels of GMD Critical Technologies Critical
technology TRL (as of June 2003) Anticipated event/ date for achieving TRL
7 a Exoatmospheric kill vehicle Infrared seeker 7 Achieved
On- board discrimination 6 IFT- 14 (2nd quarter FY04) Guidance,
navigation, and control subsystem 6 IFT- 14 (2nd quarter FY04) Boosters
BV+ 6 IFT- 13A (1st quarter FY04)
OSC Lite 6 IFT- 13B (1st quarter FY04) Battle management command, control,
and communications Fire control software 7 Achieved
In- flight interceptor communications system 6 IFT- 14 (2nd quarter FY04)
Radars Cobra Dane radar 5 Unknown
Beale upgraded early warning radar 5 Radar certification flight (1st
quarter FY05) Sea- based X- band radar 5 IFT- 18 (4th quarter FY05)
Source: GAO analysis of GMD data.
Note: Information provided in the table* the configuration of flight test
events and associated date* is as of June 2003 and is subject to change. a
Assumes technology development and demonstrations will have been
successful.
13 Integrated flight tests of the GMD element are real- world
demonstrations of system performance during which an interceptor is
launched to engage and intercept a mock warhead above the atmosphere.
Page 12 GAO- 03- 600 Missile Defense
The exoatmospheric kill vehicle is the weapon component of the GMD
interceptor that attempts to detect and destroy the threat reentry vehicle
through a hit- to- kill impact. The prime contractor identified three
critical
technologies pertaining to the operation of the exoatmospheric kill
vehicle. They include the following:
Infrared seeker, which is the *eyes* of the kill vehicle. The seeker is
designed to support kill vehicle functions like tracking and target
discrimination. The primary subcomponents of the seeker are the infrared
sensors, a telescope, and the cryostat that cools down the sensors. On-
board discrimination, which is needed to identify the true warhead
from among decoys and associated objects. Discrimination is a critical
function of the hit- to- kill mission that requires the successful
execution of a sequence of functions, including target detection, target
tracking, and the estimation of object features. As such, successful
operation of the infrared seeker is a prerequisite for discrimination.
Guidance, navigation, and control subsystem, which is a combination
of hardware and software that enables the kill vehicle to track its
position and velocity in space and to physically steer itself into the
designated target.
All three kill vehicle technologies have been demonstrated to some extent
in actual integrated flight tests on near- production- representative kill
vehicles. The infrared seeker has reached a TRL 7, because a configuration
very much like that to be fielded has been demonstrated in previous
integrated flight tests, and only minor design upgrades are planned to
reach the Block 2004 configuration. The remaining two kill vehicle
technologies are at a TRL 6, because their functionality is being upgraded
and the technologies have yet to be incorporated into the kill vehicle and
demonstrated in an operational environment. The on- board discrimination
technology has not yet reached TRL 7 because MDA has not tested a
*knowledge database* that is expected to increase the kill vehicle*s
discrimination capability. The purpose of the database is to enable the
kill vehicle to distinguish characteristics of threatening from non
threatening objects. MDA expects to test the database for the first time
in IFT- 14.
As a software- intensive technology, on- board discrimination performance
under all flight conditions can only be evaluated through ground testing,
but flight- testing is needed to validate the software*s operation in a
real world environment. The discrimination capability that will be tested
in
IFT- 14 is expected to be fielded as part of the Block 2004 capability.
Exoatmospheric Kill
Vehicle Technologies
Page 13 GAO- 03- 600 Missile Defense
Therefore, IFT- 14 should demonstrate the technology*s maturity if the
test shows that the kill vehicle achieves its discrimination objective. 14
Similarly, the guidance, navigation, and control technology will also
increase to a TRL 7 if the technology achieves its objectives in IFT- 14.
The inertial measurement unit, an important component of the guidance,
navigation, and control subsystem that enables the kill vehicle to track
its position and velocity, has not yet been tested in the severe
environments (e. g., vibrations and accelerations) induced by the
operational booster. This will be first attempted when one of the new
operational boosters is used in IFT- 14. In addition to testing the
inertial measurement unit, IFT- 14 will also test the upgraded divert
hardware (used to actively steer the kill vehicle to its target) that is
expected to be part of the Block 2004 configuration. The integrated
booster stack is the part of the GMD interceptor that is
composed of rocket motors needed to deliver and deploy the kill vehicle
into a desired intercept trajectory. For all flight tests to date, a two-
stage surrogate booster called the payload launch vehicle has been used.
In July 1998, the GMD prime contractor began developing a new three- stage
booster for the GMD program, known as the *Boost Vehicle*, from commercial
off- the- shelf components. However, the contractor
encountered difficulty. By the time the booster was flight tested in
August 2001, it was already about 18 months behind schedule. The first
booster flight test met its objectives, but the second booster tested
drifted off course and had to be destroyed 30 seconds after launch.
Subsequently, MDA altered its strategy for acquiring a new booster for the
interceptor. Instead of relying on a single contractor, MDA authorized the
GMD prime contractor to develop a second source for the booster by
awarding a subcontract to another contractor. If development of the
boosters proceeds as planned, both boosters will be part of the Block 2004
capability. One booster is known as BV+ and the other as *OSC Lite.*
The prime contractor ultimately transferred development of the boost
vehicle to a subcontractor who is currently developing a variant* known as
*BV+** for the GMD element. The program office and GMD
14 See classified annex for further details. Booster Technologies
The BV+ Booster
Page 14 GAO- 03- 600 Missile Defense
contractor rated the BV+ at a TRL 7. The prime contractor reasoned that
the extent of the legacy program and its one successful flight test should
allow for this rating. However, given the limited testing to date, we
assessed the BV+ booster currently at a TRL 6; that is, the technology has
been demonstrated in a restricted flight environment using hardware close
in form, fit, and function to that which will be fielded in 2004. We
believe the contractor*s assessment is too high at this time, because the
step from TRL 6 to TRL 7 is significant in terms of the fidelity of the
demonstration environment. However, the first test of a full configuration
BV+ booster
will occur with IFT- 13A, which is scheduled for the first quarter of
fiscal year 2004. In our opinion, the BV+ booster will reach TRL 7 at this
time if the booster works as planned.
The second booster under development is referred to as *OSC Lite*. This
booster, which is essentially the Taurus Lite missile that carries
satellites into low- earth orbit, will be reconfigured for the GMD
element. Despite the fact that the booster was recently tested under
restricted flight conditions, GMD*s prime contractor believes that the
legacy development of the Taurus Lite missile is sufficient to prove that
the OSC Lite has reached TRL 7. However, in our opinion, because the test
was conducted with hardware configured as it was in the Taurus missile,
not as it will be configured for GMD*s Block 2004, the booster*s maturity
level is comparable to that of the BV+. The first flight test of a full
configuration OSC Lite booster is scheduled for IFT- 13B in the first
quarter of fiscal year 2004. We believe that if the booster performs as
intended in this test, it will reach TRL 7. The battle management
component is the integrating and controlling
component of the GMD element. Prime contractor officials identified and
assessed the following sub- components as critical technologies:
GMD fire control software, which analyzes the threat, plans engagements,
and tasks components of the GMD element to execute a mission. In- flight
interceptor communications system, which enables the GMD
fire control component to communicate with the exoatmospheric kill vehicle
while in flight.
The two battle management technologies have been demonstrated to some
extent in actual integrated flight tests, and both are near their Block
2004 design. We determined that the GMD fire control software has
currently achieved a TRL 7 and the in- flight interceptor communications
system has reached a TRL 6. Prime contractor officials concur with our
assessment. The *OSC Lite* Booster
Battle Management Command, Control, and Communications Technologies
Page 15 GAO- 03- 600 Missile Defense
The fire control software is nearing expected functionality and prior
software builds have been demonstrated in GMD flight tests. Only minor
design changes will be made to address interfacing issues (linking the
fire control component with other GMD components) before the software
reaches the operational configuration of Block 2004. As a software-
intensive technology, the performance of the fire control software
throughout the entire *flight envelope* can only be evaluated through
ground testing. Ground testing is well underway at both the Joint National
Integration Center at Schriever Air Force Base, Colorado, and at
the prime contractor*s integration laboratory in Huntsville, Alabama. The
second technology associated with the battle management component is the
in- flight interceptor communications system. Even though the pointing
accuracy and communications capability of this technology were
demonstrated in previous flight tests, the operational hardware to be
fielded by 2004 is expected to operate at a different uplink frequency
than the legacy hardware used in these past flight tests. 15 Accordingly,
we
assessed the in- flight interceptor communications system at a TRL 6. The
first integrated flight test to include an operational- like build of this
technology is IFT- 14, and if the technology meets its objectives in this
flight test, TRL 7 would be achieved. The GMD contractor initially
identified the sea- based X- band radar as
the only radar- related critical technology. Since its initial assessment
in September 2002, the contractor has now agreed with us that the Beale
upgraded early warning radar and the Cobra Dane radar are also critical
technologies of the GMD element. The contractor and the GMD program office
assessed the Beale and Cobra Dane radars at a TRL 5, because the
technology, especially mission software, is still under development and
has not yet been demonstrated in a relevant flight environment. 16 The
contractor assessed the sea- based X- band radar at a TRL 6. As discussed
below, we agree with their assessment of the Beale and Cobra Dane radars
but rated the sea- based X- band radar as a TRL 5. 15 See classified annex
for further details.
16 The hardware of the Beale and Cobra Dane radars is mature since both
are currently in operation for other missions, namely, integrated tactical
warning and technical intelligence, respectively. Adding the ballistic
missile defense mission to these radars requires primarily software-
related development and testing. Radar Technologies
Page 16 GAO- 03- 600 Missile Defense
The early warning radar at Beale Air Force Base has participated in
integrated flight tests in a missile- defense role using legacy hardware
and developmental software. Design and development of operational builds
of the software are progressing, but such builds have only been tested in
a simulated environment. Therefore, we assessed the Beale radar
technology at a TRL 5* an assessment driven by software considerations.
The conversion of the early warning radar at Beale to an upgraded early
warning radar, which consists of minor hardware and significant software
upgrades, is planned for completion sometime during the middle of fiscal
year 2004. After this time, the Beale radar can take part in flight-
testing in its upgraded configuration. MDA currently plans to demonstrate
the upgraded Beale technology in a non intercept flight test, known as a
radar certification flight, 17 in the first quarter of fiscal year 2005.
The Beale radar will be demonstrated at a TRL 7 if the objectives of this
flight test
are achieved. The Cobra Dane radar is currently being used in a
surveillance mode to collect data on selected intercontinental ballistic
missile test launches out of Russia and does not require real- time data
processing and communications capabilities. To achieve a defensive
capability by September 2004, the Cobra Dane radar is being upgraded to
perform both of these tasks. This upgrade, which requires a number of
software
modifications, is designed to enable Cobra Dane to detect and track enemy
targets much as the Beale upgraded early warning radar does. Although the
hardware component of the Cobra Dane radar is mature and will undergo only
minor updating, Cobra Dane*s mission software is being revised for this
application. The revision includes reuse of existing software and
development of new software so that the Cobra Dane radar can be integrated
into the GMD architecture.
Upgrades to the Cobra Dane radar are due to be completed at the beginning
of 2004. After the software is developed and ground tested, the radar can
reach a TRL 6, but it is uncertain when the radar will reach a TRL 7.
Because of other funding and scheduling priorities, MDA has no plans
through fiscal year 2007 for using this radar in integrated flight tests;
such tests would require air- or sea- launched targets that are not
currently part of the test program. Unless the current test program is
modified, the only opportunities for demonstrating Cobra Dane in an
operational environment would come from flight tests of foreign missiles.
MDA
17 Ground testing of interim software builds to be mounted on the Beale
radar is ongoing.
Page 17 GAO- 03- 600 Missile Defense
officials anticipate that such opportunities will occur. However, it is
not clear that testing Cobra Dane in this manner will provide all of the
information that a dedicated test provides because MDA will not control
the configuration of the target or the flight environment.
The sea- based X- band radar is being built as part of the Block 2004
capability and scheduled for completion in 2005. It will be built from
demonstrated technologies* a sea- based platform and the prototype X- band
radar currently being used in the GMD test program. Prime contractor
officials told us that they consider the risk associated with the
construction and checkout of the radar as primarily a programmatic, rather
than technical risk, and believe that the sea- based X- band radar has
reached a TRL 6. The contractor also stated that the initial operational
build of the radar software is developed and currently being tested at the
contractor*s integration laboratory. We assessed the sea- based X- band
radar as a TRL 5 because the radar has not yet been built and because
constructing a radar from an existing design and placing it on a sea-
based platform is a new application of existing technology. For example,
severe wind and sea conditions may affect the radar*s functionality*
conditions that cannot be replicated in a laboratory. As a result,
developers cannot be sure that the sea- based X- band radar will work as
intended until it is
demonstrated in this new environment. However, both we and the contractor
agree that the maturity level of the sea- based X- band radar will
increase to a TRL 7 if it achieves its test objectives in IFT- 18
(scheduled for the fourth quarter of fiscal year 2005).
Page 18 GAO- 03- 600 Missile Defense
From the program*s inception in 1997 18 through 2009, MDA expects to spend
about $21.8 billion to develop the GMD element. About $7.8 billion of the
estimated cost will be needed between 2002 and 2005 to develop and field
the Block 2004 GMD capability and to develop the GMD portion
of the test bed. 19 However, MDA has incurred a greater risk of cost
increases because for more than a year MDA was not sure that it could rely
fully upon data from the prime contractor*s Earned Value Management (EVM)
system, 20 which provides program managers and others with early warning
of problems that could cause cost and schedule growth.
Before the restructuring of the GMD program in 2002, about $6.2 billion
was spent (between 1997 and 2001) to develop a ground- based defense
capability. MDA estimates it will need an additional $7.8 billion between
2002 and 2005 to, among other tasks, install interceptors at Fort Greely,
Alaska, and at Vandenberg Air Force Base, California; upgrade existing
radars and test bed infrastructure; and develop the sea- based X- band
radar that will be added in the fourth quarter of fiscal year 2005. In
addition, MDA will invest an additional $7.8 billion between fiscal year
2004 and 2009 to continue efforts begun under Block 2004, such as
enhancing capability and expanding the test bed. Table 2, below, provides
details on the funding requirements by block and by fiscal year, and
figure 3 provides examples of specific Block 2004 tasks.
18 We calculated program cost from 1997 forward because the National
Missile Defense program was established at that time. 19 The cost to
develop and field the initial GMD capability and the ballistic missile
defense test bed is funded in MDA*s budget within the Defense Wide
Research, Development, Test and Evaluation appropriation. MDA is not
requesting any procurement, military
construction, or military personnel funds for this effort. 20 The EVM
system is a management tool widely used by DOD to compare the value of
contractor*s work performed to the work*s actual cost. The tool measures
the contractor*s actual progress against its expected progress and enables
the government and contractor to estimate the program*s remaining cost.
MDA Has Risked
Cost Growth Because It Could Not Fully Rely on Data from Its System for
Monitoring Contractor Performance
GMD Development Costs
Page 19 GAO- 03- 600 Missile Defense
Table 2: Estimated Cost to Develop and Field GMD
Then- year dollars in billions Fiscal years 1997- 2001 2002 2003 2004 2005
2006 2007 2008 2009 Subtotal
Sunk Cost 6.2 6.2 GMD Initial Capability and Block 2004 Test Bed 3.1 2. 6
1.2 .9 7.8
GMD Block 2006 1.6 1.8 1.4 1. 2 6.0 GMD Block 2008 .9 .9 1.8
Total 6.2 3.1 2. 6 2.8 2.7 1.4 1. 2 .9 .9 21.8
Source: Ballistic Missile Defense Budget, Midcourse Defense Segment,
February 2003. Figure 3: Tasks GMD Plans to Accomplish for the GMD Block
2004 Project
Page 20 GAO- 03- 600 Missile Defense
MDA did not include the following costs is its Block 2004 estimate: The
cost to recruit, hire, and train military personnel to operate the initial
defensive capability and provide site security at various locations, which
MDA estimates to be an additional $13.4 million (half in fiscal year 2003
and half in 2004 each), will be needed to operate GMD and provide physical
security. Additional costs to cover these personnel throughout the life of
the program beginning in 2005 and beyond were also omitted. The cost to
maintain equipment and facilities was not included. Systems engineering
and national team costs* which benefit all elements, including GMD and
cannot be divided among the elements* were not
included in MDA*s budget. Because a significant portion of MDA*s Block
2004 GMD cost estimate is the cost of work being performed by the
element*s prime contractor, MDA*s ability to closely monitor its
contractor*s performance is critical to controlling costs. The tool that
MDA, and many DOD entities, have chosen for this purpose is the EVM
system. This system uses contractor reported
data to provide program managers and others with timely information on a
contractor*s ability to perform work within estimated cost and schedule.
It does so by examining variances reported in contractor cost performance
reports between the actual cost and time of performing work tasks and the
budgeted or estimated cost and time. While this tool can provide
insightful information to managers, MDA*s use of it has been hampered by
several
factors. Principally, although major contract modifications were made in
February 2002, it took until July 2003 for MDA to complete a review to
confirm the reliability of data from the EVM system. An earlier review of
a similar nature revealed significant deficiencies in the contractor*s
formulation and collection of EVM data. Until a new review was completed,
MDA could not be sure about its ability to rely fully upon this data to
identify potential problems in time to prevent significant cost
growth and schedule delays. An accurate, valid, and current performance
management baseline is needed to perform useful analyses using EVM. The
baseline identifies and defines work tasks, designates and assigns
organizational responsibility for each task, schedules the work task in
accordance with established targets, and allocates budget to the scheduled
work. According to DOD MDA*s Insight into
Potential Cost Growth Was Limited by the Agency*s Inability to Rely Fully
on Data from Earned Value Management System
Baseline Revised over 13- Month Period
Page 21 GAO- 03- 600 Missile Defense
guidance, 21 a performance management baseline should be in place as early
as possible after the contractor is authorized to proceed. Although the
guidance does not define how quickly the contractor should establish a
baseline, experts generally agree that it should be in place, on average,
within 3 months after a contract is awarded or modified.
About a year before the Secretary of Defense directed MDA to adopt an
evolutionary acquisition strategy, the agency awarded a new contract for
the development of a National Missile Defense system. In February 2002,
MDA modified this contract to redirect the contractor*s efforts. Instead
of developing a missile defense system that met all of the requirements of
the war fighter, as the initial contract required, the modification
directed the contractor to develop the first GMD increment, or block,
which was to be a ballistic missile test bed with GMD as its centerpiece.
Following the contract*s modification, the contractor in June 2002
established an interim baseline. This baseline was developed by adding
budgets for near- term new work to the original baseline. Because the cost
of the work being added to the baseline had not yet been negotiated, the
contractor based the budgets on the cost proposed to MDA, as directed by
DOD guidelines. The contractor implemented the baseline almost within the
3- month time frame recommended by experts. In the time between the
modification and the development of the interim baseline, MDA authorized
the contractor to begin work and spend a specified amount of money, and
MDA paid the contractor about $390 million during this period.
An option that MDA could have used to help validate the interim baseline
was to have the Defense Contract Management Agency (DCMA) 22 verify
contractor work packages and track the movement of funds between the
unpriced work account and the baseline. However, neither MDA nor DCMA
initiated these actions. In its technical comments on a draft of this
report, DOD pointed out that during the negotiation process, MDA reviews
prime and subcontractor proposal data that include engineering labor
hours, material, and cost estimates. DOD further noted that these
estimates eventually form a basis for the work packages that make up the
data for the performance management baseline. We agree that these costs
21 Department of Defense, Earned Value Management Implementation Guide
(Washington, D. C.: Dec. 1996, as revised, p. 10). 22 DCMA is the agency
that DOD has given responsibility for validating contractors* Earned Value
data.
Page 22 GAO- 03- 600 Missile Defense
will eventually be associated with the work packages that make up the
baseline. However, a joint contractor and MDA review of the initial GMD
baseline concluded that even though these costs were otherwise fair and
reasonable, some work packages that the contractor developed for the
original contract*s baseline did not correctly reflect the work directed
by MDA. An independent review of work packages included in the interim
baseline would have increased the likelihood that the work packages were
being properly developed and that their budget and schedule were
appropriate. The contractor completed all revisions to the baseline for
the prime
contractor and all five subcontractors by March 2003, 3 months after
negotiating the cost of the modification and 13 months after authorizing
the work to begin. The contracting officer explained that it took until
December 2002 to negotiate the 2002 contract change because the additional
work was extremely complex, and, as a result, the modification needed to
be vetted through many subcontractors that support the prime.
The DOD guidance states that an integrated baseline review (IBR) is to be
conducted within 6 months of award of a new contract or major change to an
existing contract. 23 The review verifies the technical content of the
baseline. It also ensures that contractor personnel understand and have
been adequately trained to collect EVM data. The review also verifies the
accuracy of the related budget and schedules, ensures that risks have been
properly identified, assesses the contractor*s ability to implement
properly
EVM, and determines if the work identified by the contractor meets the
program*s objectives. The government*s program manager and technical staff
carry out this review with their contractor counterparts.
Completing an IBR of the new baseline has been of particular importance
because the July 2001 IBR for the initial contract identified more than
300 deficiencies in the contractor*s formulation and execution of the
baseline. For example, the contractor had not defined a critical path for
the overall effort, many tasks did not have sufficient milestones that
would allow the contractor to objectively measure performance, and
contractor personnel who were responsible for reporting earned value were
making mistakes in measuring actual performance against the baseline.
23 Earned Value Management Implementation Guide, pp. 34 and 36. Baseline
Review Completed in
July 2003
Page 23 GAO- 03- 600 Missile Defense
MDA began a review in March 2003 of the contractor*s new baseline, which
reflected the contract modification,. Completing this IBR took until July
2003 because of the complexity of the program and the many subcontractors
that were involved. Although the review team found fewer problems with the
contractor*s formulation and execution of the new baseline, problems were
identified. For example, the IBR showed that in some cases the baseline
did not reflect the new statement of work. Also,
both the prime contractor and subcontractors improperly allocated budget
to activities that indirectly affect a work product (known as level of
effort activities) when they could have associated these activities with a
discrete end product. Because of the way these activities are accounted
for, this designation could mask true cost variances.
Before the IBR was underway, DCMA recognized another problem with the
contractor*s EVM reports. In its December 2002 cost performance report,
the contractor reported that it expected no cost overrun at contract
completion. This implied that the program was not experiencing any
problems that could result in significant cost or schedule growth.
However, DCMA stated that October 2002 was the second month in a row that
the contractor had used management reserve funds to offset a significant
negative cost variance. 24 DCMA emphasized that this is not the intended
purpose of management reserves. (Management reserves are a part of the
total project budget intended to be used to fund work
anticipated but not currently defined.) DCMA officials told us that while
this is not a prohibited practice most programs wait until their work is
almost completed, that is 80 to 90 percent complete, before making a
judgment that the management reserve would not be needed for additional
undefined work and could be applied to unfavorable contract cost
variances.
24 Defense Contract Management Agency, Ground- Based Midcourse Defense
Monthly Assessment Report Contract No. HQ0006- 01- C- 0001 for Missile
Defense Agency (Seal Beach, Calif.: Dec. 2002, p. 10). DCMA reported that
cost performance reports were giving ** a misleading feeling that
everything in the program is OK. For the 2nd month in a row, [the prime
contractor] has covered up a significant Variance- at- Completion (-$
107,800K) * by taking money out of Management Reserve (MR). This is not
the intended purpose of
using MR funds. [The prime contractor] is reporting a $0 Variance- At-
Completion [VAC] by subtracting $107,800K from MR to reduce VAC to $0.
Based on prior performance to date, this could be an indication of a trend
for growth of the EAC [estimate- at- completion].* Management Reserve
Used to Offset Expected Cost Overruns at Contract Completion
Page 24 GAO- 03- 600 Missile Defense
Because of the President*s direction to begin fielding a ballistic missile
defense system in 2004, the MDA took a higher risk approach by beginning
GMD system integration before knowing whether its critical technologies
were mature. If development and testing progress as planned, however, MDA
expects to have demonstrated the maturity of 7 of the 10 critical GMD
technologies before the element is initially fielded in September 2004 and
2 others during fiscal year 2005. If technologies do not achieve their
objectives during testing, MDA may have to spend additional funds in an
attempt to identify and correct problems by September 2004 or accept a
less capable system.
Because of other funding and scheduling priorities, MDA does not plan to
demonstrate through integrated flight tests whether the Cobra Dane radar*s
software can process and communicate data on the location of enemy
missiles in *real time.* Although tests using sea- or air- launched
targets before September 2004 would provide otherwise unavailable
information on the software*s performance, we recognize those tests would
be costly and funds have not been allocated for that purpose. We also
recognize that the most cost efficient means of testing the Cobra Dane
radar is through launches involving foreign test missiles. However, we
believe it would be useful for MDA to consider whether the increased
confidence provided by a planned test event outweighs other uses for those
funds.
MDA is investing a significant amount of money to achieve an operational
capability during the first block of GMD*s development, and the agency
expects to continue investing in the element*s improvement over the next
several years. Because MDA is also developing other elements and must
balance its investment in each, it needs an accurate GMD cost estimate. If
it is used as intended, the EVM system can be an effective means of
monitoring one of GMD*s largest costs, the cost of having a contractor
develop the GMD system. It is understandable that the dynamic changes in
MDA*s acquisition strategy led to major contract modifications, which
made it more difficult for the contractor to establish a stable baseline.
However, in this environment, it is even more important that MDA find ways
to ensure the integrity of the interim baselines and to quickly determine
that revised baselines can be fully relied on to identify potential
problems before they significantly affect the program*s cost. Conclusions
Page 25 GAO- 03- 600 Missile Defense
To increase its confidence that the Ground- based Midcourse Defense
element fielded in 2004 will operate as intended, we recommend that the
Secretary of Defense direct the Director, Missile Defense Agency, to
explore its options for demonstrating the upgraded Cobra Dane radar in its
new ballistic missile defense role in a real- world environment before
September 2004. To improve MDA*s oversight of the GMD element and to
provide the Congress with the best available information for overseeing
the program, we recommend that the Secretary of Defense direct the
Director, Missile Defense Agency, to:
ensure that when a contractor is authorized to begin new work before a
price is negotiated that DCMA validate the performance measurement
baseline to the extent possible by (1) tracking the movement of budget
from the authorized, unpriced work account into the baseline, (2) verify
that the work packages accurately reflect the new work directed, and (3)
report the results of this effort to MDA; and strive to initiate and
complete an integrated baseline review (IBR) of any
major contract modifications within 6 months. DOD*s comments on our draft
report are reprinted in appendix II. DOD concurred with our first
recommendation. DOD stated that MDA is exploring its options for
demonstrating, prior to 2004, the upgraded Cobra Dane radar in a real-
world environment. However, DOD noted that because it takes considerable
time to develop and produce targets and to
conduct safety and environmental assessments, completing a Cobra Dane
radar test before September 2004 would be very challenging. DOD concluded
that *targets of opportunity* (flight tests of foreign missiles) and
ground testing may provide the best means to demonstrate the radar*s
maturity in the near term.
DOD partially concurred with our second recommendation. In responding to
the first part of recommendation two, DOD stated that MDA and the DCMA
will jointly determine the feasibility of tracking the budget for
authorized, unpriced work into the baseline and will concurrently assess
work package data while establishing the formal performance measurement
baseline. DOD also stated that a selected portion of this work is already
being accomplished by DCMA. We continue to believe in the feasibility of
our recommendation. DCMA officials told us that they
could monitor the movement of budget into the baseline and verify the work
packages associated with the budget. In addition, the guidelines
Recommendations for
Executive Action Agency Comments and Our Evaluation
Page 26 GAO- 03- 600 Missile Defense
state that surveillance may be accomplished through sampling of internal
and external data. We believe that if DCMA sampled the data as it is
transferred into the baseline, the implementation of this recommendation
should not be burdensome.
In responding to the second part of recommendation two, DOD stated that
MDA will continue to adhere to current DOD policy by starting an IBR of
any major contract modification within 6 months. MDA correctly pointed
out that DOD*s Interim Defense Acquisition Guidebook only requires a
review be initiated within 6 months (180 days) after a contract is awarded
or a major modification is issued. However, DOD*s Earned Value Management
Implementation Guide states that such a review is conducted within 6
months. Similar language is found in the applicable clause from the GMD
contract, 25 which states that such reviews shall be
scheduled as early as practicable and should be conducted within 180
calendar days after the incorporation of major modifications. While we
understand the difficulty of conducting reviews within 180 days when the
contract is complex and many subcontractors are involved, we believe that
it is important for the government to complete an IBR as soon as
possible to ensure accurate measurement of progress toward the program*s
cost, schedule, and performance goals.
DOD also provided technical comments to this report, which we considered
and implemented as appropriate. In its technical comments, for example,
DOD expressed particular concern that our draft report language asserting
MDA*s inability to rely on the EVM system was unsupported and misleading.
DOD also stated that its prime contractor*s EVM system is reliable. It
stated, for example, that MDA has reviewed, and continues to review on a
monthly basis, the contractor*s cost performance reports and that the
prime contractor*s EVM system and accounting systems have been fully
certified and validated by DCMA. We modified our report to better
recognize MDA*s ability to use and trust the EVM system. However, we still
believe that MDA would benefit from taking additional measures to increase
its confidence in the accuracy of its interim baselines. Also, when the
revised baseline is in place, a review of its
formulation and execution is necessary before MDA can confidently and
fully rely on data from the EVM system. 25 Defense Federal Acquisition
Regulation Supplement clause 252.234- 7001, EVM System (March 1998).
Page 27 GAO- 03- 600 Missile Defense
We conducted our review from December 2001 through August 2003 in
accordance with generally accepted government auditing standards. As
arranged with your staff, unless you publicly announce its contents
earlier, we plan no further distribution of this report until 30 days from
its issue date. At that time, we plan to provide copies of this report to
interested congressional committees, the Secretary of Defense, and the
Director, Missile Defense Agency. We will make copies available to others
upon request. In addition, the report will be available at no charge on
the GAO Web site at http:// www. gao. gov/.
If you or your staff have any questions concerning this report, please
contact me on (202) 512- 4841. Major contributors to this report are
listed in appendix V.
Sincerely yours, Robert E. Levin Director Acquisition and Sourcing
Management
Appendix I: Scope and Methodology Page 28 GAO- 03- 600 Missile Defense
To determine when MDA plans to demonstrate the maturity of technologies
critical to the performance of GMD*s Block 2004 capability, we reviewed
their critical technologies using technology readiness levels (TRLs)
developed by the National Aeronautics and Space Administration
and used by DOD. We did so by asking contractor officials at the Boeing
System Engineering and Integration Office in Arlington, Virginia, to
identify the most critical technologies and to assess the level of
maturity of each technology using definitions developed by the National
Aeronautics and Space Administration. We reviewed these assessments along
with program documents, such as the results of recent flight tests and
discussed the results with contractor and agency officials in order to
reach a consensus, where appropriate, on the readiness level for each
technology and identify the reasons for any disagreements.
In reviewing the agency*s current cost estimate to develop the first block
of the GMD element and its test bed, we reviewed and analyzed budget
backup documents, cost documents, and selected acquisition reports for the
GMD program extending over a period of several years. We also met with
program officials responsible for managing the development and fielding of
the GMD Block 2004 capability. For example, we met with officials from the
GMD Joint Program Office in Arlington, Virginia, and Huntsville, Alabama;
and the Office of the Deputy Assistant for Program Integration at the MDA,
Arlington, Virginia.
To determine whether there were any significant risks associated with the
estimate, we met with agency officials responsible for determining the
cost of the GMD element to find out if there were costs that were omitted,
but should have been included, in the estimate. We also analyzed data from
cost performance reports that the GMD contractor developed for the MDA. We
reviewed data from the GMD element and contracting officials and conducted
interviews to discuss the data. Although we did not independently verify
the accuracy of the cost performance reports we received from MDA, the
data were assessed independently by DCMA. Appendix I: Scope and
Methodology
Appendix II: Comments from the Department of Defense
Page 29 GAO- 03- 600 Missile Defense
Appendix II: Comments from the Department of Defense
Appendix II: Comments from the Department of Defense
Page 30 GAO- 03- 600 Missile Defense
Appendix II: Comments from the Department of Defense
Page 31 GAO- 03- 600 Missile Defense
Appendix III: Technology Readiness Level Assessment Matrix
Page 32 GAO- 03- 600 Missile Defense
Technology readiness level (TRL) Description Hardware /software
Demonstration environment
1. Basic principles observed and reported. Lowest level of technology
readiness. Scientific research begins to be translated into applied
research and development. Examples might include paper studies of a
technology*s basic properties.
None (paper studies and analysis) None
2. Technology concept and/ or application formulated. Invention begins.
Once
basic principles are observed, practical applications can be invented. The
application is speculative, and there is no proof or detailed analysis to
support the assumption. Examples are still limited to paper studies. None
(paper studies and
analysis) None 3. Analytical and experimental critical
function and/ or characteristic proof of concept.
Active research and development is initiated. This includes analytical
studies and laboratory
studies to physically validate analytical predictions of separate elements
of the technology. Examples include components that are not yet integrated
or representative. Analytical studies and
demonstration of nonscale individual components (pieces of subsystem).
Lab 4. Component and/ or breadboard.
Validation in laboratory environment.
Basic technological components are integrated to establish that the pieces
will work together. This is relatively *low fidelity* compared to the
eventual system. Examples include integration of *ad hoc* hardware in a
laboratory.
Low fidelity breadboard. Integration of nonscale components to show
pieces will work together. Not fully functional or form or fit but
representative of technically feasible approach suitable for flight
articles.
Lab
Appendix III: Technology Readiness Level Assessment Matrix
Appendix III: Technology Readiness Level Assessment Matrix
Page 33 GAO- 03- 600 Missile Defense
Technology readiness level (TRL) Description Hardware /software
Demonstration environment
5. Component and/ or breadboard validation in relevant environment.
Fidelity of breadboard
technology increases significantly. The basic technological components are
integrated with reasonably realistic supporting elements so that the
technology can be tested in a simulated environment. Examples include
*high fidelity* laboratory integration of components.
High fidelity breadboard. Functionally equivalent but not necessarily form
and/ or fit (size, weight, materials, etc). Should be approaching
appropriate
scale. May include integration of several components with reasonably
realistic support elements/ subsystems to demonstrate functionality.
Lab demonstrating functionality but not form and fit. May include
flightdemonstrating breadboard in surrogate aircraft.
Technology ready for detailed design studies.
6. System/ subsystem model or prototype demonstration in a relevant
environment.
Representative model or prototype system, which is well beyond the
breadboard tested for TRL 5, is tested in a relevant environment.
Represents a major step up in a technology*s
demonstrated readiness. Examples include testing a prototype in a high
fidelity laboratory environment or in simulated operational environment.
Prototype. Should be very close to form, fit, and function. Probably
includes the integration of many new components and realistic supporting
elements/ subsystems if needed to demonstrate full functionality of the
subsystem.
High- fidelity lab demonstration or limited/ restricted flight
demonstration for a relevant environment.
Integration of technology is well defined.
7. System prototype demonstration in an operational environment. Prototype
near or at
planned operational system. Represents a major step up from TRL 6,
requiring the demonstration of an actual system prototype in an
operational environment, such as in an aircraft, on a vehicle or in
space. Examples include testing the prototype in a test bed aircraft.
Prototype. Should be form, fit and function integrated with other key
supporting elements/ subsystems to demonstrate full functionality of
subsystem.
Flight demonstration in representative operational environment such as
flying test bed or demonstrator aircraft.
Technology is well substantiated with test data.
8. Actual system completed and *flight qualified* through test and
demonstration. Technology has been
proven to work in its final form and under expected conditions. In almost
all cases, this TRL represents the end of true system development.
Examples include developmental test and evaluation of the system in its
intended weapon system to determine if it meets design specifications.
Flight- qualified hardware Developmental test and evaluation
in the actual system application
Appendix III: Technology Readiness Level Assessment Matrix
Page 34 GAO- 03- 600 Missile Defense
Technology readiness level (TRL) Description Hardware /software
Demonstration environment
9. Actual system *flight proven* through successful mission operations.
Actual application of the technology in its final form and under mission
conditions, such as those encountered in operational test and evaluation.
In almost all cases, this is the end of the last *bug fixing* aspects of
true system development. Examples include using the system under
operational mission conditions.
Actual system in final form Operational test and evaluation in operational
mission conditions Source: GAO and its analysis of National Aeronautics
and Space Administration data.
Note: GAO information based on U. S. General Accounting Office, Missile
Defense: Knowledge- Based Decision Making Needed to Reduce Risks in
Developing Airborne Laser, GAO- 02- 631 (Washington, D. C.: June 2002).
Appendix IV: Importance of Earned Value Management
Page 35 GAO- 03- 600 Missile Defense
Pulling together essential cost, schedule, and technical information in a
meaningful, coherent fashion is always a challenge for any program.
Without this information, management of the program will be fragmented,
presenting a distorted view of program status. For several decades, DOD
has compared the value of work performed to the work*s actual cost. This
measurement is referred to as Earned Value Management (EVM). Earned value
goes beyond the two- dimensional approach of comparing budgeted costs to
actuals. It attempts to compare the value of work accomplished during a
given period with the work scheduled for that period. By using the value
of completed work as a basis for estimating the cost and time needed to
complete the program, the earned value concept should alert
program managers to potential problems early in the program. In 1996, in
response to acquisition reform initiatives, DOD reemphasized the
importance of earned value in program management and adopted 32 criteria
for evaluating the quality of management systems. These 32 criteria are
organized into 5 basic categories: organization, planning and budgeting,
accounting considerations, analysis and management reports, and revisions
and data maintenance. The 32 criteria are listed in table 1. In general
terms, the criteria require contractors to (1) define the contractual
scope of work using a work breakdown structure; (2) identify
organizational responsibility for the work; (3) integrate internal
management subsystems; (4) schedule and budget authorized work; (5)
measure the progress of work based on objective indicators; (6) collect
the cost of labor and materials associated with the work performed;
(7) analyze any variances from planned cost and schedules; (8) forecast
costs at contract completion; and (9) control changes.
Table 3: 32 Criteria for Earned Value Management Systems Categories of
Criteria Criteria Organization 1. Define the authorized work elements for
the program. A work breakdown structure, tailored
for effective internal management control, is commonly used in this
process. 2. Identify the program organizational structure, including the
major subcontractors responsible for accomplishing the authorized work,
and define the organizational elements in which work will be planned and
controlled. 3. Provide for the integration of the company*s planning,
scheduling, budgeting, work
authorization, and cost accumulation processes with each other and, as
appropriate, the program work breakdown structure and the program
organizational structure.
4. Identify the company organization or function responsible for
controlling overhead (indirect costs).
5. Provide for integration of the program work breakdown structure and the
program organizational structure in a manner that permits cost and
schedule performance measurement by elements of either or both structures
as needed.
Appendix IV: Importance of Earned Value Management
Appendix IV: Importance of Earned Value Management
Page 36 GAO- 03- 600 Missile Defense
Categories of Criteria Criteria Planning and Budgeting 6. Schedule the
authorized work in a manner that describes the sequence of work and
identifies significant task interdependencies required to meet the
requirements of the program. 7. Identify physical products, milestones,
technical performance goals, or other indicators that will be used to
measure progress.
8. Establish and maintain a time- phased budget baseline, at the control
account level, against which program performance can be measured. Budget
for far- term efforts may be held in higher- level accounts until an
appropriate time for allocation at the control account level. Initial
budgets established for performance measurement will be based on either
internal management goals or the external customer- negotiated target cost
including estimates for authorized but undefinitized work. On government
contracts, if an over target baseline is used for performance measurement
reporting purposes, prior notification must be provided to the customer.
9. Establish budgets for authorized work with identification of
significant cost elements (labor, material, etc.) as needed for internal
management and for control of subcontractors.
10. To the extent it is practical to identify the authorized work in
discrete work packages, establish budgets for this work in terms of
dollars, hours, or other measurable units. Where the entire control
account is not subdivided into work packages, identify the far term effort
in larger planning packages for budget and scheduling purposes.
11. Provide that the sum of all work package budgets plus planning package
budgets within a control account equals the control account budget.
12. Identify and control level of effort activity by time- phased budgets
established for this purpose. Only that effort which is unmeasurable or
for which measurement is impractical may be classified as level of effort.
13. Establish overhead budgets for each significant organizational
component of the company for expenses that will become indirect costs.
Reflect in the program budgets, at the appropriate level, the amounts in
overhead pools that are planned to be allocated to the program as indirect
costs.
14. Identify management reserves and undistributed budget. 15. Provide
that the program target cost goal is reconciled with the sum of all
internal program budgets and management reserves.
Accounting Considerations 16. Record direct costs in a manner consistent
with the budgets in a formal system controlled by the general books of
account.
17. When a work breakdown structure is used, summarize direct costs from
control accounts into the work breakdown structure without allocation of a
single control account to two or more work breakdown structure elements.
18. Summarize direct costs from the control accounts into the contractor*s
organizational elements without allocation of a single control account to
two or more organizational elements.
19. Record all indirect costs which will be allocated to the contract. 20.
Identify unit costs, equivalent units costs, or lot costs when needed.
Accounting Considerations 21. For EVMS, the material accounting system
will provide for: (1) Accurate cost accumulation and assignment of costs
to control accounts in a manner consistent with the budgets using
recognized, acceptable, costing techniques. (2) Cost performance
measurement at the point in time most suitable for the category of
material involved, but no earlier than the time of progress payments or
actual receipt of material. (3) Full accountability of all material
purchased for the program including the residual inventory.
Appendix IV: Importance of Earned Value Management
Page 37 GAO- 03- 600 Missile Defense
Categories of Criteria Criteria Analysis and Management Reports 22. At
least on a monthly basis, generate the following information at the
control account and
other levels as necessary for management control using actual cost data
from, or reconcilable with, the accounting system: (1) Comparison of the
amount of planned budget and the amount of budget earned for work
accomplished. This comparison provides the schedule variance. (2)
Comparison of the amount of the budget earned and the actual (applied
where appropriate)
direct costs for the same work. This comparison provides the cost
variance. 23. Identify, at least monthly, the significant differences
between both planned and actual schedule performance and planned and
actual cost performance, and provide the reasons for the variances in the
detail needed by program management. 24. Identify budgeted and applied (or
actual) indirect costs at the level and frequency needed by management for
effective control, along with the reasons for any significant variances.
25. Summarize the data elements and associated variances through the
program organization
and/ or work breakdown structure to support management needs and any
customer reporting specified in the contract.
26. Implement managerial actions taken as the result of earned value
information. 27. Develop revised estimates of cost at completion based on
performance to date, commitment values for material, and estimates of
future conditions. Compare this information with the performance
measurement baseline to identify variances at completion important to
company management and any applicable customer reporting requirements
including statements of funding requirements.
Revisions and Data Maintenance 28. Incorporate authorized changes in a
timely manner, recording the effects of such changes in budgets and
schedules. In the directed effort prior to negotiation of a change, base
such revisions on the amount estimated and budgeted to the program
organizations.
29. Reconcile current budgets to prior budgets in terms of changes to the
authorized work and internal replanning in the detail needed by management
for effective control.
30. Control retroactive changes to records pertaining to work performed
that would change previously reported amounts for actual costs, earned
value, or budgets. Adjustments should be made only for correction of
errors, routine accounting adjustments, effects of customer or management
directed changes, or to improve the baseline integrity and accuracy of
performance measurement data.
31. Prevent revisions to the program budget except for authorized changes.
32. Document changes to the performance measurement baseline. Source:
Interim Defense Acquisition Guidebook, app. 4.
Note: In the Interim Defense Acquisition Guidebook, DOD states that these
guidelines are reproduced from the American National Standards (ANSI)
Institute/ Electronic Industries Alliance (EIA) EVM System Standard (ANSI/
EIA- 748- 98), Chapter 2 (May 19, 1998).
Appendix IV: Importance of Earned Value Management
Page 38 GAO- 03- 600 Missile Defense
The criteria have become the standard for EVM and have also been adopted
by major US government agencies, industry, and the governments of Canada
and Australia. The full application of EVM system criteria is
appropriate for large cost reimbursable contracts where the government
bears the cost risk. For such contracts, the management discipline
described by the criteria is essential. In addition, data from an EVM
system have been proven to provide objective reports of contract status,
allowing
numerous indices and performance measures to be calculated. These can then
be used to develop accurate estimates of anticipated costs at completion,
providing early warning of impending schedule delays and cost overruns.
The standard format for tracking earned value is through a Cost
Performance Report (CPR). The CPR is a monthly compilation of cost,
schedule and technical data which displays the performance measurement
baseline, any cost and schedule variances from that baseline, the amount
of management reserve used to date, the portion of the contract that is
authorized unpriced work, and the contractor*s latest revised estimate to
complete the program.
As a result, the CPR can be used as an effective management tool because
it provides the program manager with early warning of potential cost and
schedule overruns. Using data from the CPR, a program manager can assess
trends in cost and schedule performance. This information is useful
because trends tend to continue and can be difficult to reverse. Studies
have shown that once programs are 15 percent complete the performance
indicators are indicative of the final outcome. For example, a CPR showing
a negative trend for schedule status would indicate that the program is
behind schedule. By analyzing the CPR, one could determine the cause of
the schedule problem such as delayed flight tests, changes in
requirements, or test problems because the CPR contains a section that
describes the reasons for the negative status. A negative schedule
condition is a cause for concern, because it can be a predictor of later
cost problems since additional spending is often necessary to resolve
problems. For instance, if a program finishes 6 months later than planned,
additional costs will be expended to cover the salaries of personnel and
their overhead beyond what was originally expected. CPR data provides the
basis for independent assessments of a program*s cost and schedule status
and can be used to project final costs at completion in addition to
determining when a program should be completed.
Examining a program*s management reserve is another way that a program can
use a CPR to determine potential issues early on.
Appendix IV: Importance of Earned Value Management
Page 39 GAO- 03- 600 Missile Defense
Management reserves, which are funds that may be used as needed, provide
flexibility to cope with problems or unexpected events. EVM experts agree
that transfers of management reserve should be tracked and reported
because they are often problem indicators. An alarming situation arises if
the CPR shows that the management reserve is being used at a faster pace
than the program is progressing toward completion. For example, a problem
would be indicated if a program has used 80 percent of its management
reserve but only completed 40 percent of its work. A program*s management
reserve should contain at least 10 percent of the cost to complete a
program so that funds will always be available to cover future unexpected
problems that are more likely to surface as the program moves into the
testing and evaluation phase.
Appendix V: GAO Contact and Staff Acknowledgments
Page 40 GAO- 03- 600 Missile Defense
Barbara Haynes (256) 922- 7500 In addition to the individual named above
Yvette Banks, Myra Watts Butler, Cristina Chaplain, Roger Corrado,
Jennifer Echard, Dayna Foster, Matt Lea, Karen Richey, and Randy Zounes
made key contributions to this report. Appendix V: GAO Contact and Staff
Acknowledgments GAO Contact Acknowledgments
(120109)
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