oversight

Ballistic Missile Defense: Improvements Needed in THAAD Acquisition Planning

Published by the Government Accountability Office on 1997-09-12.

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

                   United States General Accounting Office

GAO                Report to the Secretary of Defense




September 1997
                   BALLISTIC MISSILE
                   DEFENSE
                   Improvements Needed
                   In THAAD Acquisition
                   Planning




GAO/NSIAD-97-188
             United States
GAO          General Accounting Office
             Washington, D.C. 20548

             National Security and
             International Affairs Division

             B-274599

             September 12, 1997

             The Honorable William S. Cohen
             The Secretary of Defense

             Dear Mr. Secretary:

             We reviewed the Theater High Altitude Area Defense (THAAD) program to
             determine whether (1) planned testing would demonstrate operational
             effectiveness1 before a significant number of units are produced for
             deployment and (2) missile target resources are adequate to support
             testing plans. We are addressing this report to you at this time because of
             the ongoing Department of Defense (DOD) evaluation of the THAAD program
             and schedule following a succession of test intercept failures.


             The $17.9 billion THAAD is a ground-based weapon system being developed
Background   by the Ballistic Missile Defense Organization (BMDO) and the Army to
             defeat theater ballistic missiles. It supports 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) interceptors,
             (3) the radar system, and (4) the battle management/command, control,
             communication, computer, and intelligence (BM/C4I) system. The launcher
             is to provide rapid reload of interceptors. Each interceptor is to consist 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, called “hit-to-kill.” The radar is
             being designed to support the full range of surveillance, target tracking,
             and fire control functions and provide a communications link with THAAD
             interceptors in flight. The BM/C4I system is 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.
             Figure 1 shows THAAD as the upper tier in a two-tier theater missile defense
             architecture.




             1
              DOD defines “operational effectiveness” as the overall degree of mission accomplishment of a system
             when used by representative personnel in the environment planned or expected for operational
             employment of the system considering organization, doctrine, tactics, survivability, vulnerability, and
             threat.



             Page 1                                                          GAO/NSIAD-97-188 THAAD Testing
                                          B-274599




Figure 1: THAAD System



                                                                                                                  Threat
                                                                                                                 detection
                   External
                   sensors

                                                                                                                         Track




                                                                                                                   Missile
                                                                                                       1st         commit
                                                                                                    intercept
                                                                                                   opportunity
                         Radar

                                                                                          Kill
   BMC4I                                                                              assessment
                                                                            2nd
                           THAAD system                                  Intercept
                                                                        opportunity

                                                                           Kill
                                                                       assessment
                                                             3rd
                                                          Intercept
                                                         opportunity

    Launchers



                                          Patriot
                                          system




                                          Source: GAO.




                                          The THAAD program has undergone two major revisions. One revision
                                          delayed fielding from fiscal year 2002 until 2006 and was the result of DOD
                                          reducing planned funding by about $2 billion during the fiscal year 1997
                                          budget process. The delay increased total system cost from $16.8 billion to
                                          $17.9 billion, or by $1.1 billion. The other revision accompanied DOD’s
                                          fiscal year 1998 budget request and involved accelerating fielding to fiscal
                                          year 2004 by adding a total of $722 million for fiscal years 1998 through
                                          2003.




                                          Page 2                                                        GAO/NSIAD-97-188 THAAD Testing
                   B-274599




                   To date, the Army has conducted four THAAD intercept tests. All four
                   attempts failed. After the system failed the fourth attempt to intercept its
                   target in March 1997, the Director, BMDO, established two independent
                   teams to assess program requirements. One team was to determine if the
                   system design can meet warfighter needs; and the other team was to
                   evaluate the interceptor design and quality assurance. According to a
                   THAAD project office representative, the teams’ results are to be used to
                   revise the THAAD acquisition plan.


                   The current THAAD program review and evaluation provides DOD with the
Results in Brief   opportunity to (1) reduce risk and minimize the number of initial
                   quantities of unproven system hardware by reexamining the schedule for
                   operational testing and production and (2) ensure that realistic targets will
                   be used for testing. The last approved THAAD acquisition plan calls for
                   significant production of deployment hardware almost 2 years before
                   beginning independent operational testing to assess the system’s
                   operational effectiveness. The Army maintains that it needs to buy a
                   number of THAAD systems during low-rate initial production to “ramp-up”
                   to the full rate of production. Delaying production until after completing
                   sufficient testing that provides assurance that key performance
                   requirements can be met reduces the risk of buying unproven systems and
                   facilitates production of proven systems at more efficient rates.

                   A suitable target for testing the THAAD system against longer range missiles
                   does not exist, and funds have not been requested for target development
                   and production. Without a longer range test target to represent the more
                   formidable, higher velocity missiles that THAAD could face, the system’s
                   operational effectiveness will remain in doubt and DOD will not have
                   reasonable assurance that it could rely on THAAD in an actual conflict.




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                                        B-274599




                                        BMDO’s  current schedule calling for award of the low-rate initial production
Acquiring Significant                   contract almost 2 years before the start of operational testing and
Quantities of                           evaluation increases the risk associated with the THAAD program. The
Hardware Before Key                     Director, BMDO, acknowledged that the initial THAAD schedule was high risk
                                        and contributed to THAAD development problems. In May 1997, he stated
Performance                             that THAAD’s aggressive schedule led to problems probably traceable to
Requirements Are                        “hurry up.” The THAAD Project Manager informed us that both the
                                        contractor and the project office were overly optimistic regarding the test
Tested in an                            schedule. In addition, he pointed out that, in hindsight, additional
Operational                             component testing could have prevented some test flight failures. Prior to
Environment                             the last test flight, the number of test flights planned as the basis for
                                        entering the engineering and manufacturing development phase was
Increases Risk                          reduced from 20 to 9 flights partly to stay on schedule. DOD established
                                        three successful intercepts as the criterion for THAAD entering the
                                        engineering and manufacturing development phase. Figure 2 shows the
                                        most current approved THAAD schedule for operational testing and
                                        production of units for deployment. The figure shows that contract award
                                        of the low-rate initial production contract will precede the start of
                                        operational testing and evaluation by almost 2 years.


Figure 2: Last Approved Schedule of THAAD Operational Testing and Production




                                        Source: GAO.




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B-274599




In light of recent test failures, the THAAD program is being revised. While
BMDO and DOD have not yet approved a revision to the THAAD acquisition
plan and schedule, a proposed plan currently being discussed within the
Army, BMDO, and DOD would equip the first unit in fiscal year 2006.
However, that proposed plan still calls for significant low-rate initial
production before operational testing.

According to 10 U.S.C. 2400, low-rate initial production is the minimum
quantity needed to (1) provide weapons for operational test and
evaluation, (2) establish an initial production base for the weapon, and
(3) permit an orderly increase in production before full-rate production
begins.

With regard to the need for weapons used in operational test and
evaluation, THAAD equipment produced during low-rate initial production is
currently intended for deployment to operational units rather than for use
in operational test and evaluation. The low-rate initial production contract
was scheduled for award almost 2 years before beginning operational
testing to assess operational effectiveness. During low-rate initial
production, the Army plans to produce significantly more than the amount
of THAAD system components needed to equip the first deployed unit
(battery). For example, the first deployed unit is to consist of 9 launchers,
72 interceptors, 1 radar, and 3 BM/C4I systems. But the plan calls for
production under the low-rate initial production contract of 32 launchers,
253 interceptors, and 3 radars. Of the 253 interceptors, 234 are planned for
deployment and 19 are planned for production verification and reliability
testing. The 234 interceptors are more than three times the number needed
to equip the first fielded unit and would represent about 20 percent of the
total 1,178 interceptors planned for full deployment.

Concerning the other two purposes of low-rate initial
production—establishing an initial production base and permitting an
orderly increase in production before full-rate production begins—we
believe that starting production of significant quantities of an unproven
system 2 years before beginning operational testing increases risk. If the
production line prove-out and ramp-up were delayed until after the
completion of sufficient independent testing in an operational
environment, initial quantities of unproven systems would be reduced and
additional funding would become available to buy the proven systems at
more efficient rates. As we previously reported, DOD often budgets
available funding for unnecessary increases in low-rate production
quantities of unproven weapons whose designs are not yet stabilized with



Page 5                                          GAO/NSIAD-97-188 THAAD Testing
                      B-274599




                      the result that it is unable to buy proven weapons at originally planned full
                      rates because of insufficient funds.2

                      The Army’s latest approved THAAD acquisition plan calls for initial fielding
                      in fiscal year 2004. Under this schedule, a contract is to be awarded early
                      in the engineering and manufacturing development phase to produce
                      components for operational testing and later a $1.2-billion low-rate initial
                      production contract for production of system components for deployment.
                      In prior reports, we pointed out that an aggressive schedule is also the
                      basis for the Army’s current plans to procure prototype interceptors well
                      before it knows whether the interceptors will be operationally effective.3


                      According to a representative from the Office of the Director, Operational
Longer Range Target   Test and Evaluation, several flight tests against targets having a range of
Requirement Is Not    more than 2,000 kilometers will be required during developmental and
Funded                operational testing to validate THAAD’s operational effectiveness against
                      longer range missiles. Because the velocity of attacking missiles increases
                      with range, longer range targets represent a more formidable threat than
                      shorter range targets. In addition, the longer range targets generally
                      represent attacking missiles having a different flight trajectory than
                      shorter range targets. Seven longer range THAAD flight tests are being
                      planned by the Army Space and Strategic Defense Command’s Targets
                      Office with an eighth target as a spare.

                      A suitable longer range target does not exist. The Storm and Hera targets
                      used in THAAD testing, to date, have only a maximum range of about
                      750 and 1,100 kilometers, respectively, rather than the roughly
                      2,000 kilometers needed. According to the Targets Office Product
                      Manager, numerous studies were conducted between 1992 and 1997 to
                      determine the best options for longer range theater missile defense
                      targets. The options studied included land/sea-launched and
                      air-launched/dropped targets. According to Army officials, however, the
                      use of longer range target options and target launching platforms is limited
                      by the 1991 Strategic Arms Reduction Talks and 1987 Intermediate Range

                      2
                       Weapons Acquisition: Better Use of Limited DOD Acquisition Funding Would Reduce Costs
                      (GAO/NSIAD-97-23, Feb. 13, 1997).
                      3
                       We have previously expressed our concerns regarding the Army’s plan to commit over $200 million
                      for producing prototype interceptors, called User Operational Evaluation System (UOES) interceptors,
                      to provide an early deployable capability before testing that would provide some assurance of the
                      system’s effectiveness. DOD has indicated that it still plans to commit funds to UOES interceptor
                      production on very limited testing—one successful intercept. See Ballistic Missile Defense: Issues
                      Concerning Acquisition of THAAD Prototype Systems (GAO/NSIAD-96-136, July 9, 1996) and Ballistic
                      Missile Defense: Prototype THAAD System (GAO/NSIAD-97-70R, Jan. 6, 1997).



                      Page 6                                                        GAO/NSIAD-97-188 THAAD Testing
                  B-274599




                  Nuclear Forces Treaties. This makes selection of a longer range target
                  more difficult. As of June 1997, BMDO had not selected a specific longer
                  range target solution.

                  In testimony on May 15, 1997, before the Subcommittee on Military
                  Research and Development, House Committee on National Security, the
                  Under Secretary of Defense for Acquisition and Technology acknowledged
                  that targets built for lower tier systems simulate the short-range threat but
                  do not provide the greater range targets that are needed for upper tier
                  theater missile defense systems such as THAAD. The Under Secretary noted
                  that BMDO had recently completed a study of long-range target alternatives
                  to determine the best treaty compliant, cost effective, and flexible
                  solution. The study recommended an air-launched target that would
                  support testing of both Army and Navy upper tier theater missile defense
                  systems. The Under Secretary stated that BMDO would examine the
                  technical and programmatic feasibility of the air-launched concept in 1997.

                  The Acting Director, BMDO Test and Evaluation Directorate, has advised us
                  that longer range targets for THAAD are now a pressing need. While the
                  specific target concept has not been defined, the Acting Director stated
                  that about $55 million would be required to develop the target between
                  fiscal years 1999 and 2001. Production of eight longer range THAAD targets
                  is estimated to cost another $56 million to $72 million. BMDO expects to
                  develop a more precise estimate in late fiscal year 1997. However, funding
                  to develop and produce a longer range target for the system is not
                  currently contained in DOD’s future years funding plan for fiscal years 1999
                  through 2003.


                  The current THAAD program review and evaluation provides DOD with an
Conclusions and   opportunity to (1) reduce risk in the acquisition program and minimize the
Recommendations   number of initial quantities of unproven systems by reexamining the
                  schedules for operational testing and production and (2) ensure that
                  realistic targets will be used for testing. We recommend that you direct
                  BMDO to delay low-rate initial production of the THAAD system until after the
                  Director, Operational Test and Evaluation, has certified, based on
                  sufficient independent testing in an operational environment, that the
                  system can meet its key performance requirements.

                  We also recommend that you include in DOD’s fiscal year 1999 budget
                  submission, the estimated funds needed to implement a treaty compliant,




                  Page 7                                         GAO/NSIAD-97-188 THAAD Testing
                     B-274599




                     longer range missile target program consistent with THAAD’s revised test
                     schedule.


                     In commenting on a draft of this report, the Director, Strategic and
Agency Comments      Tactical Systems, Office of the Under Secretary of Defense (Acquisition
and Our Evaluation   and Technology), disagreed with our recommendation concerning the
                     delay of low-rate initial production until after certification of THAAD’s
                     operational effectiveness. He partially concurred with our
                     recommendation that the fiscal year 1999 budget submission should
                     include funding for targets that is consistent with the THAAD revised
                     schedule. He cited Title 10 of the United States Code, which describes
                     low-rate initial production of a new system as the minimum quantity
                     necessary to: (1) provide production-configured or representative articles
                     for operational tests, (2) establish an initial production base for the
                     system, and (3) permit an orderly increase in the production rate of the
                     system. However, he also stated that THAAD low-rate initial production is
                     not planned to provide representative articles for operational
                     tests—although such an option still exists.

                     The Director’s response does not address our main point. We recognize
                     that the existing low-rate initial production legislation does not include
                     specific standards on when and how programs should begin low-rate
                     initial production, or on the type and amount of testing to be done before
                     low-rate initial production begins. Instead, the thrust of our
                     recommendation is that delaying production of system components
                     intended for deployment until enough realistic testing information is
                     secured would reduce risk and minimize the procurement of unproven
                     equipment. As discussed in the report, current plans provide for producing
                     about 20 percent of the THAAD interceptors during low-rate production. If
                     DOD buys unproven weapons during low-rate initial production at
                     minimum rates—the rate needed to complete initial operational test and
                     evaluation and prove the production line—more funds would be available
                     to buy proven weapons in full-rate production at more efficient rates and
                     at lower costs. Implementing our recommendation could also reduce the
                     number of THAAD systems that may have to be modified based on the
                     results of operational testing and evaluation thus allowing full-rate
                     production of more THAAD systems with demonstrated performance.

                     Although the Director points out that an early operational assessment is
                     planned prior to the commitment to low-rate initial funding, it is our view
                     that such an assessment will not provide sufficient realistic and



                     Page 8                                         GAO/NSIAD-97-188 THAAD Testing
              B-274599




              independent testing information. The Staff Assistant to DOD’s Director,
              Operational Test and Evaluation—the organization which is responsible
              for certifying that a new weapon system is operationally
              effective—confirmed that early operational assessments were never
              intended to, and do not, provide a basis for assuring operational
              effectiveness. He stated that early operational assessments are only
              interim assessments of equipment that indicate a system’s progress and
              problems. Thus, we continue to believe that our recommendation to delay
              the low-rate initial production is valid. Our recommendation has been
              clarified to reflect the basis of DOD’s certification as being the completion
              of sufficient independent testing in an operational environment.

              We agree with the Director’s statement that the statute and regulations
              envision that low-rate production will begin before completion of initial
              operational test and evaluation. We are not recommending that all initial
              operational test and evaluation be completed before beginning low-rate
              initial production. We recommend only that sufficient independent testing
              be conducted in an operational environment to show that the system can
              meet its key performance requirements. This is an appropriate criterion
              for systems being produced for deployment.

              Concerning our second recommendation, the Director stated that BMDO’s
              long-range target strategy is to pursue an air-launched target platform that
              will demonstrate its capability in fiscal year 2001, earlier than THAAD’s
              planned test requirement; but that BMDO is examining other options to
              meet its target needs. He stated that BMDO is reviewing funding shortfalls
              for inclusion in the fiscal year 1999 budget submission as we
              recommended.

              DOD’s    comments are reprinted in appendix I.


              We performed our work at the Office of the Secretary of Defense and
Scope and     Headquarters, BMDO, in Washington, D.C.; the Office of the Director,
Methodology   Operational Test and Evaluation, Alexandria, Virginia; the U.S. Army Air
              Defense Artillery School at Fort Bliss, Texas; the White Sands Missile
              Range, New Mexico; and the THAAD Project Office and the U.S. Army Space
              and Strategic Defense Command in Huntsville, Alabama. At these
              locations, we interviewed responsible agency officials and analyzed
              pertinent acquisition and testing documents.




              Page 9                                           GAO/NSIAD-97-188 THAAD Testing
B-274599




We conducted our work from July 1996 to September 1997 in accordance
with generally accepted government auditing standards.


As you know, the head of a federal agency is required by 31 U.S.C. 720 to
submit a written statement of actions taken on our recommendations to
the Senate Committee on Governmental Affairs and the House Committee
on Government Reform and Oversight not later than 60 days after the date
of this report. A written statement also must be submitted to the Senate
and House Committees on Appropriations with the agency’s first request
for appropriations made more than 60 days after the date of the report.

We are sending copies of this report to appropriate congressional
committees; the Director of BMDO; and the Secretaries of the Army, the
Navy, and the Air Force. We will also make copies available to others on
request.

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 II.

Sincerely yours,




Allen Li
Associate Director, Defense Acquisitions Issues




Page 10                                        GAO/NSIAD-97-188 THAAD Testing
Page 11   GAO/NSIAD-97-188 THAAD Testing
Appendix I

Comments From the Department of Defense


Note 1: We incorporated
DOD’s technical
comments as appropriate.




                           Page 12   GAO/NSIAD-97-188 THAAD Testing
Appendix I
Comments From the Department of Defense




Page 13                                   GAO/NSIAD-97-188 THAAD Testing
Appendix I
Comments From the Department of Defense




Page 14                                   GAO/NSIAD-97-188 THAAD Testing
Appendix II

Major Contributors to This Report


                        Tom Schulz
National Security and   Lee Edwards
International Affairs   Stan Lipscomb
Division, Washington,   Leon Gill
                        Tom Gordon
D.C.




(707191)                Page 15         GAO/NSIAD-97-188 THAAD Testing
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