Missile Defense: THAAD Restructure Addresses Problems But Limits Early
Capability (Letter Report, 06/30/1999, GAO/NSIAD-99-142).
Studies done by the military and independent sources cited the following
problems in the Theater High Altitude Area Defense (THAAD) Program:
First, the program's compressed flight-test schedule did not allow for
adequate ground testing, and officials could not spot problems before
flight tests. The schedule also left too little time for preflight
testing, postflight analysis, and corrective measures. Second, the
requirement that an early prototype system be deployed quickly has
diverted attention from the normal interceptor development process and
resulted in interceptors that were not equipped with sufficient
instruments to provide optimum test data. Third, quality assurance
received too little emphasis and resources during component production,
resulting in unreliable components. Fourth, the contract to develop the
interceptor was a cost-plus-fixed-fee contract, which placed all of the
financial risk on the government and did not hold the contractor
accountable for less than optimum performance. The restructure program
addresses each of these four underlying problems. However, the
reliability of current flight-test interceptors remains a concern
because most components were produced when the contractor's quality
assurance system was inadequate. Test failures caused primarily by
manufacturing defects rather than advanced technology problems have
prevented the Army from demonstrating that THAAD can reliably intercept
targets in all required regions. The restructuring of the THAAD program
raised the issue of what the purpose of the User Operational Evaluation
System battalion at Fort Bliss should now be. Whether all or only part
of the battalion would warrant deployment for contingency operations
would depend on the capabilities it could provide to warfighters and the
priority of the need for one or more of those capabilities. However,
there would be little basis for making a deployment determination
because the Defense Department does not plan to conduct an operational
assessment of the User Operational Evaluation System.
--------------------------- Indexing Terms -----------------------------
REPORTNUM: NSIAD-99-142
TITLE: Missile Defense: THAAD Restructure Addresses Problems But
Limits Early Capability
DATE: 06/30/1999
SUBJECT: Ballistic missiles
Air defense systems
Defense contingency planning
Cost plus fixed fee contracts
Defense capabilities
Operational testing
Department of Defense contractors
Weapons systems
IDENTIFIER: THAADS User Operational Evaluation System
THAADS
SDI Theater High Altitude Area Defense System
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United States General Accounting Office GAO Report
to the Chairman, Subcommittee on Defense, Committee on
Appropriations, House of Representatives June 1999
MISSILE DEFENSE THAAD Restructure Addresses Problems But Limits
Early Capability GAO/NSIAD-99-142 United States General Accounting
Office
National Security and Washington, D.C. 20548
Letter International
Affairs Division B-280755
Letter June 30, 1999 The Honorable Jerry Lewis Chairman,
Subcommittee on Defense Committee on Appropriations House of
Representatives Dear Mr. Chairman: The Ballistic Missile Defense
Organization and the Army are developing the $15.4 billion Theater
High Altitude Area Defense (THAAD) system to defeat theater
ballistic missiles. Because of the Subcommittee's concerns about
repeated test failures and the Department of Defense's (DOD)
restructuring of the program, the former Chairman of the
Subcommittee requested that we review the status of the THAAD
program. Specifically, we (1) identified the underlying problems
in the program that led to the test failures, (2) assessed whether
program restructuring efforts address these underlying problems,
and (3) determined how this restructuring will affect THAAD's User
Operational Evaluation System.1 Results in Brief
Studies conducted by both DOD and independent sources identified
the following underlying problems in the THAAD program: * The
program's compressed flight-test schedule did not allow for
adequate ground testing, and as a result officials could not
detect problems prior to flight tests. The schedule also left
insufficient time for preflight testing, postflight analysis, and
corrective actions. * The requirement to be able to quickly deploy
an early prototype system diverted the contractor and government
project management's attention away from the normal interceptor
development process and resulted in interceptors that were not
equipped with sufficient instruments to provide optimum test data.
* Quality assurance received insufficient emphasis and resources
during the time of component production, resulting in unreliable
components. 1Initially, the THAAD program included plans for an
early prototype system, called the User Operational Evaluation
System, that could be used in a national emergency. Letter
Page 1 GAO/NSIAD-99-142
THAAD Program Restructure B-280755 * The contract for developing
the interceptor was a cost-plus-fixed-fee contract, a contract
type that placed all of the program's financial risk on the
government and did not include provisions that could be used to
hold the contractor accountable for less than optimum performance.
Flight-test failures have been caused primarily by manufacturing
defects rather than problems with advanced technology. These
failures have prevented the Army from demonstrating that it can
reliably employ the "hit-to-kill" technology critical to THAAD's
success.2 The restructured program addresses each of the program's
four underlying problems. It * lengthens the flight-test schedule
and increases ground testing; * removes the requirement for the
deployable, early prototype interceptors; * increases the
contractor's quality emphasis, including its commitment,
leadership, and quality assurance staffing; and * modifies the
cost-plus-fixed-fee contract to provide performance-based
incentives and penalties and introduces a degree of competition
into the program. Despite these changes, the reliability of the
remaining flight-test interceptors remains a concern because most
components were produced when the contractor's quality assurance
system was inadequate. The program restructuring puts into
question the need to retain a fully staffed User Operational
Evaluation System battalion. The battalion will have little or no
capability to intercept ballistic missiles because interceptors
will not be available for the prototype system unless interceptors
intended for tests are diverted to the battalion. According to the
Army Training and Doctrine Command's system manager for THAAD, the
THAAD radar could be used for predicting the launch and impact
points of enemy missiles, but no requirement exists for THAAD to
perform that mission and no independent assessment of the
prototype radar's capabilities is planned. The User Operational
Evaluation System battalion provides input to system designers,
but according to the THAAD project 2"Hit-to-kill" technology
allows an interceptor to destroy an attacking missile by colliding
with it. Letter Page 2
GAO/NSIAD-99-142 THAAD Program Restructure B-280755 manager, this
input could be provided with significantly fewer soldiers than the
295 currently authorized. We provide recommendations in this
report for the Secretary of Defense concerning (1) the need for
and capabilities of the User Operational Evaluation System and (2)
the minimum essential military personnel and equipment required to
fulfill the defined mission. Background When operational,
THAAD will support the national objective of protecting U.S. and
allied deployed forces, population centers, and industrial
facilities from theater missile attacks. The THAAD system consists
of four major components: (1) truck-mounted launchers; (2)
interceptor missiles; (3) a radar; and (4) the battle
management/command, control, communications, computers, and
intelligence system. The launcher is intended to provide rapid
reloading of interceptors. Each interceptor consists of a single-
stage booster and a kill vehicle that is designed to autonomously
home on an enemy missile during the last phase of interceptor
flight and destroy the missile by colliding with it, a concept
called "hit-to-kill." The radar is designed to support the full
range of surveillance, target tracking, and fire control functions
and to provide a communications link with THAAD interceptors in
flight. The battle management/command, control, communications,
computers, and intelligence system is designed to manage and
integrate all THAAD components and link the THAAD system to other
missile defense systems to support an interoperable theater
missile defense architecture. THAAD is currently in the program
definition and risk reduction phase.3 Through March 1999, the
system had failed in the first six attempts to intercept a target.
In June 1999, THAAD successfully intercepted its target during the
seventh intercept flight test. DOD plans to continue THAAD testing
and make a decision in the second quarter of 2000 on whether to
proceed into the next acquisition phase-engineering and
manufacturing development. A low rate initial production decision
for the system is planned for the third quarter of 2005, and
initial fielding is currently scheduled for the third quarter of
2007. DOD's budget submission for fiscal year 2000 requests $611.6
million for the program. Primarily because restructuring extended
THAAD's development schedule by 21 months, the 3DOD's acquisition
phases are (1) concept exploration, (2) program definition and
risk reduction, (3) engineering and manufacturing development, and
(4) production. Page 3
GAO/NSIAD-99-142 THAAD Program Restructure B-280755 program's
estimated acquisition cost increased to $15.4 billion, an increase
of $1.3 billion over the December 1997 estimate. Through April
1999, DOD spent about $3.3 billion on the THAAD program. The Army
established a THAAD User Operational Evaluation System battalion
at Fort Bliss, Texas, in 1995. The User Operational Evaluation
System-an early prototype version of the final THAAD system-was
intended to (1) allow military users to influence the THAAD system
design, (2) permit an early operational assessment of the system's
capabilities, and (3) provide a system that could be deployed in a
national emergency. The initial plan called for the prototype
system to have 40 interceptors; 4 launchers; 2 radars; 2 battle
management/command, control, communications, computers, and
intelligence units; and associated support equipment. Except for
the interceptors, these components were acquired and delivered to
the THAAD battalion under the existing program definition and risk
reduction contract at little or no additional cost. Under the
initial plan, the 40 interceptors were to be produced after the
first successful intercept test at an estimated cost of $225
million. Underlying Reasons for Several quality assurance audits
and other independent reviews have Past Intercept Failures
highlighted problem areas in the THAAD program. In our review of
these studies, we identified four underlying reasons for the
program's difficulties. First, a compressed flight-test schedule
and inadequate ground testing delayed the program and failed to
detect problems prior to flight tests. Second, the requirement for
a high priority but high risk User Operational Evaluation System
capability using an early prototype interceptor design diverted
the attention of the contractor and government project management
and limited the ability to more fully test the interceptor. Third,
an inadequate quality assurance system failed to detect defective
components. Fourth, the cost-plus-fixed-fee contract did not
include provisions to hold the contractor fully accountable or
provide the government with the ability to directly influence the
contractor's efforts. Early flight-test failures have prevented
the Army from determining whether it can reliably employ the "hit-
to-kill" technology essential to THAAD's success. Page 4
GAO/NSIAD-99-142 THAAD Program Restructure B-280755 Compressed
Flight-Test According to Army officials, DOD accepted an
ambitious flight-test Schedule and Inadequate schedule with a
reduced emphasis on ground testing because of the urgent Ground
Testing need for improved missile defenses. Several
studies identified this schedule as a source of the program's
problems. In September 1994, for example, an independent
contractor reported that the program's initial schedule- which
allowed only 30 days between each of the last seven flight tests-
did not permit adequate time for failure analysis, corrective
actions, and retest.4 In July 1996, another independent panel
reported that insufficient time to perform ground testing between
flights represented an unacceptable technical risk.5 Also,
according to this panel, problems discovered in one flight test
were not fully understood before conducting the next test and the
number of problems being experienced may have indicated a process
breakdown caused by schedule pressures. According to DOD's
Director of Operational Test and Evaluation, testing through March
1997 emphasized schedule over success. The aggressive flight-test
schedule proved to be overly ambitious; technical problems
encountered during testing resulted in program delays. In its
February 1998 report, the Panel on Reducing Risk in Ballistic
Missile Defense Flight Test Programs labeled THAAD's aggressive
schedule and insufficient attention to flight-test failures a
"rush to failure."6 This group, which had been chartered to study
risk in the flight testing of Ballistic Missile Defense
Organization programs, pointed out that THAAD's flight tests were
conducted without complete component qualification and ground
testing. THAAD program officials agree that the initial schedule
was overly optimistic. The contractor's chief engineer for the
THAAD program told us that if the schedule had allowed for better
ground testing of the interceptor, at least some of the problems
that caused flight-test failures would have been caught. The
Army's initial plans allowed only 1 month between flight tests. In
hindsight, according to the program manager, additional time to
test components might have prevented some flight-test failures.
4THAAD Independent Program Assessment, Final Report, Garber
International Associates, Inc., September 30, 1994. 5Final Report,
THAAD Independent Review Panel, July 29, 1996. 6Report of the
Panel on Reducing Risk in Ballistic Missile Defense Flight Test
Programs , Institute for Defense Analyses, February 27, 1998.
Page 5 GAO/NSIAD-99-142
THAAD Program Restructure B-280755 User Operational Evaluation
The User Operational Evaluation System was intended, in part, to
provide System Requirement an interim defense
capability that could be used until the final system was Diverted
Attention and ready. However, the planning and
implementation of the User Operational Limited Ability to Test
Evaluation System diverted THAAD program management to some extent
from its primary task of developing the interceptor and resulted
in an Interceptor interceptor designed more
for deployment than for testing. According to the Panel on
Reducing Risk in Ballistic Missile Defense Flight Test Programs,
the requirement for an early prototype system capability led
program management to focus some of its attention on operational
issues (such as training soldiers) rather than concentrating
solely on developing and testing the interceptors. The User
Operational Evaluation System requirement essentially demanded an
operational capability before the interceptor was fully designed.
This resulted in interceptors built for wartime use rather than
equipped with sufficient instruments to provide optimum test data.
According to the panel's report, because of the requirement for a
User Operational Evaluation System, the program used parallel
testing to save time rather than best practices, such as a
sequential find-and-fix approach. The panel recommended
eliminating the requirement for deployable prototype interceptors
because acquiring such an early operational capability was
inconsistent with the complexity of the task of developing the
THAAD system. THAAD program management agreed that the requirement
for a User Operational Evaluation System was a distraction and
reduced its ability to test the interceptor. The contractor's
THAAD chief engineer told us that because of the requirement, the
developmental interceptors were designed with fewer ways to test
components and subsystems on the ground and the ground tests were
made more difficult because test points were less accessible. The
THAAD project manager also acknowledged that planning for User
Operational Evaluation System interceptors had been a distraction
to his team. Inadequate Quality Inadequate quality
assurance allowed problems to go undetected, and test Assurance
analyses show that those problems caused most, if not all, of
THAAD's six failures to intercept a target. According to DOD's
Director of Operational Test and Evaluation, for example, quality
control deficiencies in the manufacturing of the interceptors were
a major factor in all but one of the Page 6
GAO/NSIAD-99-142 THAAD Program Restructure B-280755 first five
flight-test failures.7 Some of the failures were caused by debris
that was allowed to get into components during the manufacturing
process. A better quality assurance system could have prevented or
caught these problems. Although the government identified
inadequacies in the contractor's quality assurance system, the
contractor did not make improvements in a timely manner. As early
as February 1994, the Army's first quality assurance audit of the
THAAD contractor cited 11 areas in which the contractor did not
comply with the quality assurance provisions of the contract.
These included findings that the contractor had not performed
internal audits or followed approved procedures. In addition, the
audit team reported that the approved reliability program had not
been fully implemented. The auditors noted that these deficiencies
could result in flight-test failures, test program delays, and
lower hardware reliability. Over 2 years later, in August 1996,
another quality assurance audit showed that problems had not been
resolved. That audit report cited quality system weaknesses,
including a lack of quality assurance resources, and an inadequate
system for reporting problems and related corrections. Between
contract award in September 1992 and July 1995, the contractor
reduced the number of staff performing quality assurance functions
by two thirds. The audit report recommended a rededication and
commitment by contractor management to the concept of quality.
According to some analyses, the contractor's management was not
sufficiently committed to the program and did not provide the
leadership to correct the problems and ensure the program's
success. For example, following the 1996 quality assurance audit,
the THAAD project manager expressed concerns about the
contractor's leadership and management. He wrote that (1) the
failure reporting and corrective action system was neither timely
nor effective, (2) acceptance test plans and procedures were not
defined, and (3) both the quality and quantity of quality
assurance personnel were insufficient. The project manager
concluded that the contractor's approach to quality assurance was
not working and that a basic change in the contractor's management
philosophy was required. The contractor responded with a detailed
resolution plan in September 1996, but flight-test failures caused
by quality problems continued. In May 1998, following the fifth
intercept failure, the government's contracting officer 7According
to DOD's Director of Operational Test and Evaluation, a software
processing error caused the other test failure. Page 7
GAO/NSIAD-99-142 THAAD Program Restructure B-280755 notified the
contractor that its failure to achieve an intercept was
endangering the contract. Subsequent agreements between the Army
and the contractor addressing project office concerns were
incorporated into the restructured THAAD program. Inappropriate
Contract Type THAAD's cost-plus-fixed-fee type contract placed
all of the program's financial risk on the government and, short
of terminating the contract, did not include provisions that could
be used to hold the contractor accountable for less than optimum
performance. According to the May 1992 THAAD acquisition strategy
report, a fixed-fee contract was used because of the potential for
cost increases. The THAAD project manager told us that, at the
time of the development contract award, the risks of schedule
slips and cost increases were considered high, reducing the
likelihood that a contractor would accept an incentive fee
arrangement. No incentive on technical performance was believed to
be necessary because technical risks were considered to be low.
Under the cost-plus-fixed-fee arrangement, the government agreed
to reimburse all of the contractor's allowable costs and pay a
fixed fee. Because the contractor's fee was fixed at the
beginning, it was not tied to accomplishment of cost, schedule,
and performance objectives. In November 1993, the Army Audit
Agency cited THAAD as an example of an acquisition that did not
use the proper contract type and did not provide appropriate
incentives.8 The audit pointed out that the Army structured
contracts for the THAAD system's radar and interceptor
differently. Although both components were in the program
definition and risk reduction phase, the radar contract included
both award and incentive fees, while the interceptor contract did
not make use of incentives. The audit agency's report concluded
that the approach taken in regard to the THAAD interceptor
contract did not comply with sound contracting principles because
it did not tie financial incentives to cost, schedule, and
performance goals. The THAAD project office expressed concern that
the contractor was not taking the lead in identifying and fixing
problems. The purpose of including 8Research and Development
Contracting, U.S. Army Audit Agency Report No. 94-700, November
20, 1993. Page 8 GAO/NSIAD-
99-142 THAAD Program Restructure B-280755 incentives and/or
penalty provisions is to provide a means of motivating the
contractor to proactively identify and fix problems. Award fee
contracts, for example, provide the government more control in
terms of directly influencing the contractor's efforts. Army Has
Not To date, THAAD test failures have been
caused primarily by manufacturing Demonstrated Reliability of
defects rather than advanced technology problems. For example, a
short in THAAD Hit-to-Kill an electrical circuit
caused one failure. Other failures resulted because Technology
debris was allowed to contaminate components such as infrared
seeker parts during the manufacturing process. Despite the flight-
test failures, independent reviews have concluded that the
interceptor design should be capable of accomplishing its mission.
However, according to the independent Panel on Reducing Risk in
Ballistic Missile Defense Flight Test Programs, DOD initially
underestimated the difficulty of performing "hit-to-kill"
intercepts. Only 8 of the 24 hit-to-kill intercept attempts
conducted since the early 1980s in various missile defense
programs have been successful. Although the Army demonstrated
THAAD's ability to hit another missile in June 1999, it has not
shown that this technology can be reliably employed under all
necessary conditions. For example, THAAD is required to intercept
targets both inside and outside the atmosphere and under a variety
of conditions, such as when targets employ countermeasures. The
June 1999 intercept was in the higher regions of the atmosphere
and the target did not use countermeasures. Future tests are
planned for intercepts lower in the atmosphere and outside the
atmosphere. Each region presents unique challenges; for instance,
it may be more difficult for THAAD to distinguish between
attacking warheads and debris and other objects during intercept
attempts outside the atmosphere. Restructured Program After the
fifth successive test failure in May 1998, DOD restructured the
Addresses Underlying THAAD program. The restructured program
addresses each of the four underlying problems. However, because
most interceptor components Problems, but
were produced before DOD restructured the program, their
reliability Reliability Remains a remains a concern
for future tests. Concern Page 9
GAO/NSIAD-99-142 THAAD Program Restructure B-280755 Restructured
Program THAAD's compressed flight-test schedule and inadequate
ground testing Addresses Underlying were addressed by
extending the schedule for the current phase of flight Problems
testing and adding ground tests. The THAAD project office allowed
about 10 months between the fifth intercept failure in May 1998
and the sixth attempt in March 1999 in order to retest and
recertify components. In addition, more extensive interceptor
ground testing was implemented at the assembly facility prior to
shipment to the test range and at the test range just prior to
flight testing. Following these actions, THAAD failed its sixth
intercept attempt in March 1999, but it successfully intercepted
the target in its seventh attempt in June 1999. The remaining
three flights of the current test phase are scheduled through
December 1999 using the re- tested components. If two of the three
intercept attempts are successful, THAAD will enter the
engineering and manufacturing development acquisition phase; in
this phase, flight tests are scheduled about 3 months apart to
allow sufficient time for preflight testing, postflight analysis,
and corrective actions. Under the restructured program, the Army
no longer plans to produce THAAD User Operational Evaluation
System interceptors. As indicated previously, the requirement for
these interceptors distracted contractor and government program
management from its primary tasks of developing and testing the
interceptor and resulted in a less testable design. Removing the
requirement should eliminate this distraction, but because the
design of the interceptor currently being flight-tested is little
changed, limits remain on the ability to test it. THAAD's
restructuring also improved the quality assurance program. In
September 1996, prior to the restructuring, the contractor issued
a detailed plan to resolve concerns about its quality assurance
program. That plan called for improvements such as (1)
implementing a system for auditing and evaluating the
effectiveness and performance of quality assurance contractual
requirements, (2) dedicating personnel to support failure
reporting analysis and corrective actions, and (3) performing all
component acceptance procedures with trained quality assurance
representatives. Under restructuring, the contractor reorganized
and added a Vice President for THAAD Flight Testing, who,
according to the THAAD project manager, has provided the
leadership and commitment that was lacking. In April 1999, this
official became responsible for the contractor's entire THAAD
program. In addition, as shown in figure 1, the contractor has
significantly increased the quality assurance staffing levels.
Defense Contract Management Command representatives told us that,
in their view, the contractor's current quality assurance staffing
is sufficient. Page 10 GAO/NSIAD-99-
142 THAAD Program Restructure B-280755 Figure 1: Contractor
Staffing Levels Dedicated to THAAD Quality Assurance Staffing
levels 50 40 30 20 10 0 Start July-95 July-96
July-97 Jan.-98 Source: THAAD Project Office. The
restructuring also added financial incentives to the development
contract and introduced a degree of competition into the program,
which may provide even more incentive for a successful program. As
part of the THAAD restructuring, the Army and the contractor
signed a contract modification in July 1998 that provides cost-
plus-incentive-fee and award- fee elements to the original cost-
plus-fixed-fee contract. The incentive provisions require the
contractor to absorb up to $75 million of development costs based
on flight-test results. The contractor incurred the first $15
million penalty following the failed intercept attempt on March
29, 1999. Under the remaining incentive-fee provisions, the
contractor would also absorb (1) $20 million if two intercepts
have not occurred by July 16, 1999;9 (2) $20 million more if three
intercepts have not occurred by October 16, 1999; and (3) yet
another $20 million if three intercepts have not occurred by
January 16, 2000. However, if the contractor incurs initial
penalties followed by successful intercepts, some of the penalties
could be reimbursed. The contractor can be reimbursed up to $35
million for three successful intercepts by January 16, 2000. In
addition, the contractor could be awarded up to an additional $20
million in reimbursement based on the contracting officer's
subjective determination of the contractor's cost performance.
9One of the two intercepts was successfully conducted on June 10,
1999. Page 11 GAO/NSIAD-99-
142 THAAD Program Restructure B-280755 DOD also introduced a
degree of competition into the restructured program. DOD has
proposed that THAAD and the Navy's Theater Wide system10 compete
for funding beginning in fiscal year 2002.11 In December 2000, the
Ballistic Missile Defense Organization plans to review the two
programs in terms of cost, schedule, performance, and risk. It
then plans to select one of the systems for enhanced funding in
order to field that system by fiscal year 2007. The other program
would continue in development, but at a slower pace. Regardless of
which is chosen, the Army would continue development of the THAAD
radar and battle management/command, control, communications,
computers, and intelligence system for use in the overall theater
air and missile defense mission. Reliability Remains a The
reliability of the interceptors that are planned for use during
the Concern current phase of flight-testing is
an ongoing concern because most components were produced under
inadequate quality assurance conditions. With the exception of the
seeker (the component that locates and tracks the target and
provides that information to the interceptor's computer), all
components and subsystems were produced by 1996, before quality
assurance improvements were made. After the fifth failed intercept
attempt in May 1998, all existing interceptor components were
subjected to reevaluation and/or retesting. However, according to
DOD's Director of Operational Test and Evaluation, retesting is
not a substitute for initial production under adequate quality
assurance processes. The Director also observed that hardware for
the remaining THAAD interceptors was built several years ago, and
only minor changes or upgrades can be made to this existing
hardware.12According to the Director, until new hardware is built
that incorporates improved manufacturing, quality assurance, and
test processes, there is no reason to expect any significant
improvement in the THAAD interceptor's 10The sea-based Navy
Theater Wide system is being designed to complement THAAD and help
protect U.S. and allied forces against medium- to long-range
theater ballistic missiles. 11The Senate's version of the fiscal
year 2000 Defense Authorization Act (Senate bill 1059, section
221) if enacted into law would effectively bar this planned
competition by requiring that the Secretary of Defense establish
an acquisition strategy that bases funding and schedule decisions
on the performance of each system independent of the other system.
12Fiscal Year 1998 Annual Report, Director, Operational Test and
Evaluation, February 1999. Page 12
GAO/NSIAD-99-142 THAAD Program Restructure B-280755 performance.
After extensive review, however, DOD decided to continue the
current test program. THAAD failed its sixth intercept attempt in
March 1999 because of an unreliable component, but it successfully
intercepted the target during its seventh attempt in June 1999.
The restructured program also provides for redesigning the
interceptor with a view toward producing 20 interceptors for
testing early in the engineering and manufacturing development
phase. Restructured Program Because the restructured THAAD
program does not include prototype Significantly Alters
interceptors intended for early deployment, the THAAD User
Operational Evaluation System battalion will have little or no
capability for intercepting User Operational enemy
theater ballistic missiles. The restructured program includes a
plan Evaluation System to produce 20 redesigned
interceptors, called "risk reduction/contingency" Concept and
interceptors, but unlike the 40 interceptors initially planned for
the User Operational Evaluation System, all 20 of these
interceptors are planned for Capabilities
testing in THAAD's next development phase. The risk reduction/
contingency interceptors will (1) be designed to incorporate
lessons learned from the current development phase, (2) have
improved test instrumentation, and (3) consist of all new hardware
to improve reliability and performance. Under the restructured
THAAD program, the first of these interceptors would be delivered
in 2003. In addition to an interim system that could be deployed
to intercept theater ballistic missiles, the User Operational
Evaluation System was originally intended to (1) allow military
users to influence the system design and (2) permit an early
operational assessment of the system's capabilities. The THAAD
battalion has provided feedback to influence the system's design,
but according to the THAAD project manager, the battalion could
accomplish this objective with significantly fewer soldiers than
the 295 currently authorized. Restructuring the THAAD program
removed the requirement for an early operational assessment of the
User Operational Evaluation System. The Army Training and Doctrine
Command's system manager for THAAD has identified two potential
military capabilities of the User Operational Evaluation System
that might be of value to U. S. warfighters. First, risk
reduction/contingency program interceptors planned for testing
could be diverted to the User Operational Evaluation System
battalion if military operations commence. However, the first of
the risk reduction/contingency interceptors will not be available
until 2003. Because most, if not all, risk reduction/contingency
interceptors will be consumed soon after delivery Page 13
GAO/NSIAD-99-142 THAAD Program Restructure B-280755 by ground- and
flight-testing, few, if any, of them would be available for
contingency deployment. Up to 18 months could be needed to produce
additional interceptors in excess of the 20 currently planned. The
second use postulated for the THAAD battalion is to use the THAAD
radars to predict the launch and impact point of enemy missiles.
However, DOD has not established a formal requirement for the
THAAD radars to perform launch and impact point predictions. Also,
DOD does not plan an independent assessment of the radar's
operational capabilities for this mission. Both a formal
requirement and an assessment of capabilities would be needed for
a decision to deploy the User Operational Evaluation System radars
because a wartime commander would have to use five or six C-5
aircraft that might be needed for other purposes.13 Conclusions
The restructured program addresses each of the THAAD program's
four underlying problems. However, the reliability of current
flight-test interceptors remains a concern because most components
were produced when the contractor's quality assurance system was
inadequate. Test failures caused primarily by manufacturing
defects, rather than advanced technology problems, have prevented
the Army from demonstrating that THAAD can reliably intercept
targets in all required regions. The restructuring of the THAAD
program raises the issue of what the purpose of the User
Operational Evaluation System battalion at Fort Bliss should now
be. Whether all or only part of the battalion would warrant
deployment for contingency operations would depend on the
capabilities it could provide to warfighters and the priority of
the need for one or more of those capabilities. However, there
would be little basis for making a deployment determination
because DOD does not plan to conduct an operational assessment of
the User Operational Evaluation System. Recommendations We
recommend that the Secretary of Defense determine and define
which, if any, potential capabilities of the restructured THAAD
User Operational Evaluation System are needed by the warfighter
community. If warranted by that determination, we further
recommend that the Secretary (1) direct 13The Army estimates that
25 C-5, 37 C-17, or 67 C-141 fights would be needed to deploy the
entire battalion, including launchers and missiles. Page 14
GAO/NSIAD-99-142 THAAD Program Restructure B-280755 that an
independent operational assessment of the needed THAAD User
Operational Evaluation System capabilities be conducted and (2)
require the Army to determine the minimum essential military
personnel and equipment required to fulfill the defined mission.
Agency Comments and In commenting on a draft of this report, DOD
concurred with our Our Evaluation recommendations.
DOD said that the Army is currently assessing how the User
Operational Evaluation System's capabilities can help meet near-
term warfighting requirements. According to DOD, this review might
change the battalion's force structure because interceptor
missiles for test or possible deployment will not be available
until fiscal year 2003. Until then, THAAD's potential contribution
will be limited to enhancing surveillance and launch and ground
impact point predictions and to providing data to other missile
defense systems. The Army is working to determine the minimum
number of military personnel and equipment needed to support the
User Operational Evaluation System until interceptors are
available. DOD also said that it will conduct an early operational
assessment of the User Operational Evaluation System's
capabilities before beginning THAAD engineering and manufacturing
development in fiscal year 2000. DOD also provided additional
technical comments and suggested changes, which we incorporated.
DOD's comments are included in appendix I. Scope and
To identify underlying reasons for the program's difficulties, we
reviewed Methodology pertinent government and
contractor documentation, including contract files, audit reports,
schedules, briefings, cost reports, integrated product team
minutes, and contractor resolution plans and training plans. We
also reviewed independent studies and discussed the studies'
findings with knowledgeable officials. We compared the results of
our review to the findings of the independent studies. To assess
the latest plans for restructuring the program and the impact of
the restructuring on problems identified earlier, we reviewed
revised program plans, integrated product team meeting minutes,
and other planning documents. We also discussed elements of the
restructured program with THAAD program officials, contractor
representatives, representatives of the Army's user element, and
independent test officials. Page 15
GAO/NSIAD-99-142 THAAD Program Restructure B-280755 To determine
the impact of changes on the THAAD User Operational Evaluation
System, we interviewed appropriate government and contractor
officials (including user representatives) and reviewed pertinent
contractor documents and government planning documents. We
analyzed how the changes would affect the project office and
potential users. In Washington, D.C., we interviewed
representatives from the Office of the Secretary of Defense; Joint
Staff; Office of the Director, Operational, Test, and Evaluation,
Ballistic Missile Defense Organization; and the Office of the
Army's Deputy Chief of Staff for Operations. We also interviewed
representatives from THAAD Battalion and Air Defense Artillery
School, Fort Bliss, Texas; Raytheon Corporation and THAAD
Battalion, White Sands Missile Range, New Mexico; Lockheed Martin
Missiles and Space and Defense Contract Management Command,
Sunnyvale, California; and THAAD project office and U.S. Army
Space and Missile Defense Command, Huntsville, Alabama. We
conducted our work from August 1998 to June 1999 in accordance
with generally accepted government auditing standards. At the end
of our review, we updated our work to reflect the successful
intercept test on June 10, 1999. 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
the Honorable William Cohen, Secretary of Defense; the Honorable
Lewis Caldera, Secretary of the Army; Lieutenant General Lester
Lyles, Director, Ballistic Missile Defense Organization; the
Honorable Jacob Lew, Director, Office of Management and Budget;
and key committees of the Congress. We will make copies available
to others upon request. Page 16
GAO/NSIAD-99-142 THAAD Program Restructure B-280755 If you or your
staff have questions concerning this report, please contact me at
(202) 512-4841. The major contributors to this report were Lee
Edwards, Stan Lipscomb, and Tom Gordon. Sincerely yours, Allen Li
Associate Director, Defense Acquisitions Issues Page 17
GAO/NSIAD-99-142 THAAD Program Restructure Appendix I Comments
From the Department of Defense Appendix I Page 18
GAO/NSIAD-99-142 THAAD Program Restructure Appendix I Comments
From the Department of Defense Now on pp. 3 and 14. Now on pp. 3
and 14. (707376) Letter Page 19
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