oversight

Air Force Budget: Potential Reductions to the Strategic Missile Systems Budget

Published by the Government Accountability Office on 1990-12-07.

Below is a raw (and likely hideous) rendition of the original report. (PDF)

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I GAO


                                                AIR FORCE BUDGET
                                                Potential Reductions to
                                                the Strategic Missile
                                                Systems Budget


                                                              allllllMlll
                                                                142785
                                                                      ll
      United States
GAO   General Accounting Office
      Washington, D.C. 20648

      National Security and
      International Affairs Division

      R-241923

      December 7,199O

      The Honorable Daniel K. Inouye
      Chairman, Subcommittee on Defense
      Committee on Appropriations
      United States Senate

      The Honorable John P. Murtha
      Chairman, Subcommittee on Defense
      Committee on Appropriations
      House of Representatives

       As requested, we reviewed the Air Force’s funding requirements for
       fiscal years 1989, 1990, and 1991 for the Peacekeeper Rail Garrison,
       Minuteman, Peacekeeper missile, and Advanced Cruise Missile weapon
       systems and the Rapid Execution and Combat Targeting program to
       identify areas for potential budget reductions. We provided the results
       of our analysis to your offices during briefings in July and August 1990,
       prior to the time the Senate and House conferees reached agreement on
       the fiscal year 1991 defense budget. Accordingly, this report does not
       address actual amounts appropriated for these programs in the Defense
      ‘Department Appropriations Act for fiscal year 1991. The information
       we provided is summarized below and discussed in detail in appendix I.

      We identified potential budget reductions totaling about $2.138 billion-
      about $1.8 billion requested in fiscal year 1991, $322.5 million appropri-
      ated in fiscal year 1990, and $39.8 million appropriated in fiscal year
      1989, These potential reductions result from our suggestions to delay
      the production decisions for the Peacekeeper Rail Garrison and Rapid
      Execution and Combat Targeting programs and from our analysis of
      current contract information and revised program requirements and
      estimates. Table 1 shows the potential reductions for each program.




      Page 1                                      GAO/NSIAD-9166BR   Air Force Budget
                                           B-241923




Table 1: Summary of Potential Budget
Reductions to Air Force Strategic Mhbile   Dollars in millions
Systems                                                                                           Fiscal year
                                           Program                                       1991           1990       1989               Total
                                           Peacekeeper ______._~.
                                                         Rail Garrison                 $1,616.3       $207.4          $0           $1,823.7
                                           Minuteman II                                    49.7         46.0           0               95.7
                                                                                                                    34.0               93.7
                                           Peacekeeper
                                           --            missile
                                                    ____-___      .---- -~-~-.--~~ _.~_____. 0          59.7
                                           Advanced  Cruise   Missile                      15.3          9.4        5.8                 30.5
                                           REACTa---...--_-       ..-_ -..-- ...---_~~--_ g4,,
                                                                                                           0          0                 94.1
                                           Total                                     $1,775.4         $322.5      $39.8            $2,137.7
                                           aRapid Execution and Combat Targeting.

                                           We did not obtain agency comments on this report. However, we dis-
                                           cussed its contents with officials from the Office of the Secretary of
                                           Defense and the Department of the Air Force and incorporated their
                                           comments where appropriate. Our scope and methodology are described
                                           in appendix II.

                                           We are sending copies of this report to appropriate congressional com-
                                           mittees; the Secretaries of Defense and the Air Force; the Director,
                                           Office of Management and Budget; and other interested parties.

                                           This report was prepared under the direction of Nancy R. Kingsbury,
                                           Director, Air Force Issues, who may be reached on (202) 275-4268 if you
                                           or your staff’have any questions concerning this report. Other major
                                           contributors to this report are listed in appendix III.




                                           Frank C. Conahan
                                           Assistant Comptroller General




                                           Page 2                                                    GAO/NSIADQl-f36BR     Air Force Budget
Page 3   GAO/NSIAD4186BB   Air Force Budget
contents


Letter
Appendix I                                                                                           6
Potential Budget         Peacekeeper Rail Garrison
                         Minuteman II
                                                                                                     6
                                                                                                     7
Reductions and           Peacekeeper Missile                                                         9
Recissionsto Air Force   Advanced Cruise Missile                                                     9
                         Rapid Execution and Combat Targeting                                       10
Strategic Missile
Systems
Appendix II                                                                                         12
Scopeand
Methodology
Appendix III                                                                                        13
Major Contributors to
This Report
Tables                   Table 1: Summary of Potential Budget Reductions to Air                       2
                             Force Strategic Missile Systems
                         Table 1.1: Potential Budget Reductions and Recissions to                     6
                             Peacekeeper Rail Garrison
                         Table 1.2: Potential Budget Reductions and Recissions to                     7
                             Minuteman II




                         Abbreviations
                         IMU       Inertial Measurement Unit
                         REACT     Rapid Execution and Combat Targeting


                         Page 4                                     GAO/NSIAD-9146BR   Air Force Budget




                                               ,
Y




    Page 5   GAO/NSIAD-9166BR   Air Force Budget
Appendix    I

Potential Budget Reductionsand Recissionsto
Air Force StrategicMissile Systems

                                         We identified total potential budget reductions and recissions of about
                                         $2.138 billion in the Air Force’s procurement, operations and mainte-
                                         nance, and military construction appropriation accounts for its strategic
                                         missile systems: $1,775.4 million in the fiscal year 199 1 budget request
                                         and $322.5 million and $39.8 million in appropriated funds for fiscal
                                         years 1990 and 1989, respectively.


                                         The Rail Garrison concept involves placing a force of 50 Peacekeeper
PeacekeeperRail                          missiles, which will be kept in continuous strategic alert, on 25 trains,
Garrison                                 each carrying two missiles. The trains would be parked inside train alert
                                         shelters in secure garrisons at U.S. Air Force bases. In the event of
                                         national need, the missiles would move onto the nation’s railroad net-
                                         work. If necessary, the missiles could be promptly launched from within
                                         the train alert shelters.


Results of Analysis                      We identified potential reductions of $1,823.7 million for this system:
                                         $1,616.3 million requested in fiscal year 1991 and $207.4 million appro-
                                         priated in fiscal year 1990 (see table 1.1). These reductions relate to
                                         implementing our prior recommendation, which resulted from the lack
                                         of operational test and evaluation of the completed system.

Table 1.1: Potential Budget Reductions
and Recl8rionr to Peacekeeper Rail       Dollars in millions
Garriron                                                                                                   Fiscal year
                                         Program activity
                                                  -~-                                                     1991         1990
                                         Advanced procurement (3020 Appropriation)                   $133.9            $102.6
                                         Procurement (3020 Appropriation)                            1,055.l                 0
                                         Initial spares (3020 Appropriation)                           158.7                 0
                                         Military construction (3300 Appropriation)                    268.6             104.8
                                         Total                                                     $1.616.3            $207.4


                                         According to the Air Force’s acquisition milestones, no operational test
                                         and evaluation of the complete Rail Garrison weapon system will have
                                         been conducted at the time the initial production decision is scheduled to
                                         be made in February 199 1. Also, current program office plans indicate
                                         that the majority of missile launch cars will be purchased in connection
                                         with the initial production decision rather than at the final full-rate pro-
                                         duction decision, as intended by Department of Defense directives.




                                         Puge 6                                       GAO/NSIAD-91-66BR      Air Force Budget
                                         Appendix I
                                         Potential Budget Reductions   and Recissions
                                         to Air Force Strategic Mb&e    Systems




                                         In December 1989, we recommended’ that the Secretary of Defense
                                         delay the initial production decision until the Air Force has conducted
                                         some operational test and evaluation of the complete weapon system.
                                         Later, during congressional testimony, we suggested2 that funds appro-
                                         priated in fiscal year 1990 for advanced procurement and military con-
                                         struction should be rescinded pending completion of some operational
                                         test and evaluation.


                                         The current Minuteman force structure consists of 450 single-warhead
Minuteman II                             Minuteman II missiles and 500 three-warhead Minuteman III missiles
                                         deployed in underground silos at various U.S. Air Force bases. In sub-
                                         mitting the Department of Defense fiscal year 1991 budget request, the
                                         Secretary of Defense announced that an outcome of ongoing Strategic
                                         Arms Reduction Talks could be the retirement of the Minuteman II
                                         force.


Results of Analysis                      We identified potential reductions of $95.7 for this system: $49.7 million
                                         requested in fiscal year 1991 and $46 million appropriated in fiscal year
                                         1990 (see table 1.2). The potential reductions are based primarily on
                                         funding adjustments made by the Minuteman System Program pffice in
                                         anticipation of the Minuteman II force’s retirement.

Table 1.2: Potential Budget Reductions   -
and Recissions to Minuteman II           Dollars in millions
                                                                                                                       Fiscal year
                                         Program activity                                                            1991          1990
                                         Replacement equipment (3020 Appropriation)                                  $6.4              $16.7
                                         Replenishment spares (3020 Appropriation)                                   26.4                15.7
                                         Depot repairs and modifications (3400 Appropriation)                        16.9                13.6
                                         Total                                                                     $49.7               $46.0


ReplacementEquipment                     Program office documents show that $50.7 million of the total amount
                                         appropriated for Air Force missile procurement in fiscal year 1990 was
                                         for Minuteman replacement equipment. For fiscal year 1991, the Air
                                         Force requested $2 1.2 million for this equipment.


                                         ‘ICBM Modernization: Hail Garrison Production Decision and Launch Car Acquisition Should be
                                         Delayed (GAO/NSIAB-90-19,December 7,198Q).
                                         2Department of Defense: Improving Management to Meet the Challenges of the 1990s (GAO/T-
                                               -.90 -157, July 25, 1990).



                                         Page 7                                                   GAO/NSIAD-9186BR      Air Force Budget
                                 Appendix I
                                 Potential Budget Reductions aud Recissions
                                 to Air Force Strategic Missile Systems




                                 The program office provided us with updated estimates of funding
                                 requirements as of April 1990 for fiscal years 1990 and 1991. Those
                                 estimates were $34 million for fiscal year 1990 and $14.8 million for
                                 fiscal year 1991. These revised requirements resulted in an excess over
                                 program needs of $16.7 million in appropriated funds and $6.4 million in
                                 requested funds for fiscal years 1990 and 1991, respectively. Program
                                 officials agreed with our calculation and stated the potential retirement
                                 of Minuteman II has reduced the need for replacement equipment
                                 funding.

Replenishment Spares             Program documents show that $85.3 million of the total amount appro-
                                 priated for Air Force missile procurement in fiscal year 1990 was for
                                 Minuteman replenishment spares. The program office provided us with
                                 updated fiscal year 1990 funding requirements as of April 1990. We
                                 compared updated fiscal year 1990 funding requirements of $69.6 mil-
                                 lion with the amount appropriated and identified an excess of $16.7 mil-
                                 lion. Program officials agreed with our calculation and stated that these
                                 funds exceed program needs due to cancellations and modifications of
                                 some Minuteman II life-extension programs.

                                 Beginning in fiscal year 1991, the Air Force will implement a new con-
                                 cept of management for replenishment spares, which will transfer
                                 funding responsibility from this central procurement account to the Air
                                 Force stock fund. We identified potential reductions of $26.4 million in
                                 the amount requested for fiscal year 1991 from this stock fund. These
                                 excess funds resulted from the cancellation of three Minuteman II life-
                                 extension programs: $15.9 million for Minuteman II Stage III motor
                                 replacement, $10.1 million for Stage I nozzle replacement, and $0.4 mil-
                                 lion for Stage I propellant replacement. According to Air Force officials,
                                 funding for these programs still remains in the stock fund.

Depot Repairsand Modifications   The Air Force had planned to begin a program to refurbish the Min-
                                 uteman II Stage I propulsion motor beginning in fiscal year 1990. Pro-
                                 gram officials informed us that $13.6 million in appropriated funds had
                                 been budgeted for this refurbishment in fiscal year 1990, but funds are
                                 no longer needed since the Air Force decided to cancel the program in
                                 anticipation of the retirement of the Minuteman II force. The program
                                 office provided us with updated fiscal year 1991 funding requirements,
                                 which were $16.9 million less than the amount requested: $10.5 million
                                 due to the cancellation of the Stage I propulsion motor refurbishment
                                 program and $6.4 million due to other miscellaneous reductions. Pro-
                                 gram officials stated that the fiscal year 1990 and 1991 amounts are
                                 excess and available for reduction.


                                 Page 9                                       GAO/NSIADgl-tMBR   Air Force Budget
                      ApwuUx    I
                      Potential Budget Reductions and Recissions
                      to Air Force Strategic Missile Systems




                      The Peacekeeper missile is a four stage intercontinental ballistic missile,
PeacekeeperMissile    which has been designed to deliver 10 reentry vehicles to independent
                      targets at ranges usually greater than 5,000 miles. The mission of the
                      Peacekeeper weapon system is to enhance the deterrent posture of U.S.
                      strategic forces. Should deterrence fail, the Peacekeeper missile must be
                      able to effectively attack the full spectrum of designated targets with
                      nuclear weapons.


Results of Analysis   We identified potential Peacekeeper missile procurement budget (3020
                      Appropriation) reductions of $93.7 million: $34 million in fiscal year
                      1989 appropriations and $59.7 million in fiscal year 1990 appropria-
                      tions. These potential reductions resulted from the procurement of
                      Peacekeeper Inertial Measurement Units (IMUS) for less than expected
                      amounts.

                      In December 1989, the program office approved the fiscal years 1989
                      and 1990 production buys of IMUS for the Peacekeeper missile’s guidance
                      and control systems. It set aside (committed) fiscal year 1989 funds in
                      the amount of $67.1 million for 12 IMUS and fiscal year 1990 funds in the
                      amount of $106,6 million for 17 IMus.

                      An IMU procurement contract for both fiscal years was awarded to
                      Rockwell International Corporation on March 5, 1990. The amount of
                      the contract (target price and warranty provisions) was $33.1 million
                      for fiscal year 1989 and $46.9 million for fiscal year 1990. The differ-
                      ences between the amounts committed and the amounts obligated for
                      the IMU procurements are excess and could be rescinded.

                      Program office officials agreed with our calculations but did not agree
                      that the reductions should be made because they planned to use the sav-
                      ings for other unfunded contingencies and requirements.


                      The Advanced Cruise Missile began in 1982 as a highly classified, pre-
Advanced Cruise       sidentially directed program. It is being developed by the Air Force to
Missile               enhance the long-term effectiveness of the bomber leg of the strategic
                      triad with a capability of defeating projected Soviet defenses through
                      the 1990s. As of May 1990, the Air Force planned to buy 1,461 missiles,

                      Since 1986, this missile program has encountered setbacks and delays
                      due to test failures, production problems, and other program changes.
                      For example, as of May 1990, production was being delayed because of


                      Page 9                                       GAO/NSIAD-914WBR   Air Force Budget
                      Appendix I
                      Potential Budget J&eductiona and Recbeions
                      to Atr Force Strategic Mhile  Systema




                      fuel leak problems. Air Force officials said production could not resume
                      until the fuel leak problems are resolved.


Results of Analysis   We identified potential reductions of $30.6 million in the initial spares
                      account (3020 Appropriation): $16.3 million requested in fiscal year
                      1991 and $9.4 million and $6.8 million appropriated in fiscal years 1990
                      and 1989, respectively. These potential reductions are based on the Air
                      Force not adjusting its initial spares budget request.

                      Due to delays and slippages in the Advanced Cruise Missile program’s
                      delivery schedules, the Air Force has requested and received more ini-
                      tial spares funds than required. However, the Air Force has not adjusted
                      the missile’s initial spares budget request to recognize that (1) $13.2 mil-
                      lion of missile procurement funds was used to buy initial spares, (2) $6.8
                      million in excess quantities is on order, and (3) $5.8 million of fiscal year
                       1989 funds reprogrammed from other programs and $9.4 million of
                      fiscal year 1990 funds remain unobligated. As a result, until the pro-
                      gram resumes production and the Air Force can justify a need for addi-
                      tional spares funds, funding for the initial spares could be reduced by
                      $15.3 million in the fiscal year 1991 budget request and by $16.2 million
                      in rescissions to appropriated funds for fiscal years 1990 and 1989.


                      The Rapid Execution and Combat Targeting (REACT) program is a Class V
Rapid Execution and   modification3 designed to modernize the 100 launch control centers used
Combat Targeting      for the Minuteman and Peacekeeper intercontinental ballistic missile
                      weapon systems. The program consists of two elements-a weapon
                      system control element and a higher authority communication and rapid
                      message processing element. Under the weapon system control element,
                      launch control center consoles and processors will be replaced and work-
                      stations will be restructured to increase the efficiency of launch control
                      center operations. The higher authority communication and rapid mes-
                      sage processing element will reduce, through automation, the time it
                      takes launch control center crew members to process emergency action
                      messages from the National Command Authorities, which are currently
                      processed manually by crew members.

                      Concept definition of the REACT modification began in fiscal year 1987,
                      full-scale development began in fiscal year 1989, and production is

                      3Class V modifications are those which provide a new or improved operational capability or which
                      remove an existing capability that is no longer required.



                      Page 10                                                   GAO/NSLAD-9186BB       Air Force Budget
                      Appendix I
                      Potential Budget Reductions aud Recissio~
                      to Air Force Strategic Missile Systems




                      scheduled to begin in fiscal year 1991. The Air Force has directed that
                      First Asset Delivery4 be achieved in calendar year 1993. The program
                      office plans to achieve that milestone in April 1993-the first launch
                      control centers to be modified will be for Minuteman III missiles. The
                      last REACT modified launch control centers are for Minuteman II missiles
                      and are scheduled to be turned over to the Strategic Air Command in
                      December 1994.


Results of Analysis   We identified a potential reduction in the Air Force’s fiscal year 1991
                      missile procurement budget request (3020 Appropriation) of $94.1 mil-
                      lion-the amount intended for REACT production and for other REACT-
                      related purposes. This potential reduction exists because it is possible to
                      delay the beginning of REACT production from fiscal year 1991 to fiscal
                      year 1992 and still meet the Air Force’s need to have all 100 launch
                      control centers modified by the mid-1990s.

                       The REACT production could be delayed until fiscal year 1992 without
                      jeopardizing the First Asset Delivery date or the completion date for all
                       Minuteman and Peacekeeper launch control centers because the REACT
                       Program Management Directive allows for a First Asset Delivery date
                       anytime during 1993, rather than specifying April 1993 as scheduled by
                       the program office. The December 1989 program office schedule shows
                       a 25-month period between the first production contract award sched-
                       uled for March 1991 and the First Asset Delivery date of April 1993.
                       Delaying the production award 8 months until November 1991 would
                      still provide 25 months to achieve a First Asset Delivery date in
                       December 1993, which would comply with the Program Management
                       Directive. Another reason is that the program office plans to complete
                       modifying all centers by December 1994-or about 20 months after
                       First Asset Delivery in April 1993. Extending the First Asset Delivery
                       date by 8 months to December 1993 would still allow completion of the
                       REACT modification by about August 1995 and, in our view, meet the Air
                       Force’s stated need to have all centers modified by the mid-1990s.




                      4First Asset Delivery for silo-based systems is defined by the Strategic Air Command as two intcrcon-
                      netted launch control centers and their associated launch facilities in the same squadron.



                      Page 11                                                     GAO/NSLAD-91436BR      Air Force Budget
Appendix II

Scopeand Methodology


              This review is one of a series that examines defense budget issues. We
              reviewed the procurement, operations and maintenance, and military
              construction appropriation accounts for Peacekeeper, Peacekeeper Rail
              Garrison, Minuteman, and Advanced Cruise Missile weapon systems and
              the Rapid Execution and Combat Targeting program.

              In our evaluation of the fiscal year 1991 budget requests and prior year
              appropriations, we (1) reviewed development progress and production
              plans to determine if planned production is warranted, (2) evaluated
              unobligated balances and plans to obligate these balances to determine if
              they are needed, and (3) reviewed those events (i.e., proposals received
              and contracts awarded) that had occurred since the budgets were
              presented to the Congress to determine if assumptions used remain
              valid.

              We performed our work at Air Force Headquarters, Washington, D.C.;
              Ballistic Missile Office, Norton Air Force Base, California; Ogden Air
              Logistics Center, Hill Air Force Base, Utah; and Oklahoma City Air
              Logistics Center, Tinker Air Force Base, Oklahoma. We conducted our
              review from December 1989 to September 1990 in accordance with gen-
              erally accepted government auditing standards.




              Page 12                                    GAO/NSIAD-9166BR   Air Force Budget
Appendix III

Major Contributors to This Report


National Security and   Steven F. Kuhta, Assistant Director
International Affairs   John J. Klotz, Project Advisor
Division,
Washington, D.C.

                        Edward J. Gamino, Senior Evaluator
Office,                 Micheal J. de Castro, Evaluator
                        Lisa R. Cobb, Evaluator
                        Meeta Sharma, Evaluator


Kansas City Regional    Gary L. Nelson, Site Senior
Office                  Bonnie S. Carter, Evaluator
                        Robert W. Jones, Evaluator




(3!3266H)               Page 18                               GAO/NSIAD-9168BR   Air Force Budget
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