DOCUMENT RESUME 00091 - [A0751048] Comparison of the Pershing II Program with the Acquisition Flan Recommended by the Commisrion on Government Procurement. B-182956; PSAD-77-51. January 24, 1977. 15 pp. + appendices (9 pp.). Report to the Congress; by Elmer B. Staats, Comptroller General. Issue Area: Federal Procurement of Goods and Services (1900). Contact: Procurement and Systems Acquisition Di., Budget Frnction: National Defense: Departrent of Defense - Procdrement & Contracts (057); National Defense: weapon systems (058). Organization Concerned: Department of Defense. Congressional Relevance: Congress; House Committee on Armed Services; Senate Committee or Armee Services. Authority: ORB Circular A-109. The Commission on Government Procurement recommended a new plan for acquiring major weapons systssms and other major systems which has become the basis for a revised policy in procurement for all executJ.ve agencies. The Department of Defense suggested tsat the Pershing II program came close to the recommended procedures. Findings/Conclusions: The Pershing II program is not similar to the Commission's plan and is charActeristiv of the acquisition process the Cowmission wae trying to reform. Army efforts to find a solution to the need the Pershing II is addressing have a'ways been directed toward a surface-to-surface missile. Also, the Armyes effcrts to define and explore the Pershing II concept began without the Secretary of Defense involvement that the Commission envisioned. Under the Commission's plan, different technological approaches would have been solicited from industry, and industry would have explored selected alternatives before a specific system was selected. Recommendations: Executive agencies have to understand that under the new acquisition process mission area deficiencies must be determined and stated independently of any specific system solution. Effort allowed under the technology base requires redefinition so that solutions to mission needs result from competition between alternative solutions. Industry must be giveu greater flexibility to propose a wide range of alternative solutions to mission area deficiencies in responding to Government requests. (Author/SC) o1 REPORT TO THE CONGRESS BY THE COMPTROLLER GENERAL ? 'i~sOF THE UNITED STATES Comparison Of The Pershing II Program With The Acquisition Plan Recommended By The Commission On Government Procurement Department of Defense The Commission on Government Procure- ment recommended a new plan for acquiring major weapons systems and other major systems which has become the basis for a re- vised policy in procurement for all executive agencies. GAO has compared the Pershing II program with the Commission's plan and has con- cluded that it is not similar to the plan and is characteristic of the acquisition process the Commission was trying to reform. PSAD-77-51 JL 24i, i 17 COMPFO LLER GENERAL OF THE UNITED rAT= WAUHINGTON. D.C. WA B-182956 To the President of the Senate and the Spea;ker of the House of Representatives This report on the Pershing II program is one of three reports on our review to determine how closely recent Depart- ment of Defense acquisition programs parallel the major system acquisition plan the Commission on Government Procurement recommended. We made this review at the request of Senator Lawton Chiles, Chairman, Subcommittee on Federal Spending Practices, Efficiency, and Open Government, Senate Committee on Gov- ernment Operations. As agreed with the Senator's office, we asked the Department of Defense to suggest systems for our review, which came closest to the Commission's plan. The NAVSTAR Global Positioning System and the Shipboard Intermediate Range Combat System are covered in separate reports. Of the three programs, only the Shipboard Inter- mediate Range Combat System had any significant similarity to the beginning steps of the Commission's plan. We made our review pursuant to the Budget and Account- ing Act, 1921 (31 U.S.C. 53), and the Accounting and Auditing Act of 1950 (31 U.S.C. 67). Copies of this report are being sent to the Director, Office of Management and Budget, and the Secretary of Defense. Comptroller General of the United States Contents DIGEST i CHAPTER 1 INTRODUCTION 1 Scope of review 2 2 COMMISSION ON GOVERNMENT PROCUREMENT 3 3 THE PERSHING !I PROGRAM 6 4 COMPARISON OF THE PERSHING II EVOLUTION WITH THE COMMISSION'S RECOMMENDATIONS 7 Starting and coordinating nrograms 7 Congressional review of needs and goals 9 Technology base 10 Creating new systems 11 Congressional review of system exploration 13 Reinstating meaningful competition 14 APPENDIX I Evolution of the Pershing II program 16 II Principal Department of Defense offi- cials responsible for administering activities discussed in this report 24 ABBREVIATIONS ASARC Army Systems Acquisition Review Council DCP development concept paper DOD Department of Defense DSARC Defense Systems Acquisition Review Council GAO General Accounting Office NATO North Atlantic Treaty Organization OSD Office of the Secretary of Defense ROC required operational capability COMPTROLLER GENERAL'S COMPARISON OF THE PERSHING II REPORT TO THE CONGRESS PROGRAM WITH THE ACrQrISITON PLAN RECOMMENDED BY THE COMMISSION ON GOVERNMENT PROCUREMENT Department of Defense DIGEST In December 1972 the Commission on Government Procurement recommended a new plan for acquiring major systems. The Commision's r-commendations were the basis for an April 5, 1976, Office of Management and BuLget circular on major system acquisitions; it prescribed policy for all executive branch agencies. GAO was asked to compare the beginning steps in the acquisition proqess of some recent major systems with the Commissicn's plan. (See p. 1.) Because Department of Defense officials had indicated that the Commission's intent had been accomplished either formally or informally in some Defense programs, GAO asked Defense to suggest programs which came closest to the recommended procedures. One suggested program was the Pershing II, a surface-to-surface missile system with nuclear warheads having a program cost estimate of about $1 billion. Its selection, however, was apparently based on the program's compliance with revised Army acquisition regulations rather than on its similarity to the Commission's plan. The Pershing ;' Program is not similar to the Commission's plan and is characteristic of the acquisition process the Commission was trying to reform. (See p. 7.) Army efforts to find a solution to the need the Pershing II is addressing have always been directed toward a surface-to-surface missile. Also, the Army's efforts to define snd explore the Pershing II concept began without the Secre- PSAD-77-51 TIeht. Upon removal, the report cover ade should be noted hereon. tary of Defense involvement that the Commission envisioned. (See pp. 8 and 9.) Under the Commission's plan, the Secretary of Defense would have the Army's perception of the mission need reconciled with overall agency resources. The Army's exploration of alternative solutions would have begun orly after the Secretary's approval of a statement of needs and goals independent of a specific system solution. (See p. 8.) Pershing II is being developed as a modular improvement to the Pershing Ia under a sole- source contract with the Pershing contractor. Under the Commission's plan, different tech- nological approaches would have been solic- ittd from industry, and industry would have explored selected alternatives before a specific system was selected. (See p. 12.) Single-system development would be permitted as an exception under the Commission's plan if the needs were sufficiently urgent or required such a massive system that competitive development would not be possible. Ever in this instance, however, specific Secretary of Defense approval would be required. GAO be- lieves the program would not meet the Commis- sion's criteria for single-system development because the low funding levels in the program's early years do not suggest the urgency described by the Commission or a sufficiently large funding requirement to rule out competitive development. (See p. 13.) It should be noted that some events in the beginning steps of the Pershing II evo- lution occurred before the Commission's report, and the Pershing II evolution was generally consistent with then-existing Army and Department of Defense reaulations. (See p. 7.) GAO presented the results of its review of the three programs during August 24, 1976, hearings before the Subcommittee on Federal Spending Practices, Efficiency, and Open ii Government. GAO observed that implementp- tion of the Commission's plan as outlined in the Office of Management and Budget cir- cular will require improvements in several areas: -- Executive agencies have to understand that under the new acguisition process mission area deficiencies must be determined and stated independently of ants specific sys- tem solution. This will enable agency heads and the Congress to make decisions based on a clear understanding of the mis- sion deficiency and need for new systems. -- Effort allowed under the technology base requires redefinition so that solutions to mission needs are not dictated by in- house efforts but result from competition between alternative solutions. -- Industry must be given greater flexibility to propose a wide range of alternative solutions to mission area deficiencies in responding to Government reguests. Office of the Secretary of Defense and Army officials agreed generally with the report. Comments of these officials have been in- corporated. Tear Sheet i il CHAPTER 1 INTRODUCTION Major system acquisitions account for a large part of Federal expenditures. We reported 1/ in February 1976 that major Federal acquisitions 2/ in process as of June 2n, '975, would cost about $404 billion at completion. About $.20 billion is for Department of Defense (DOD) acquisitions, excluding the Army Corps of Engineers. In December 197a, after about 2-1/2 years of study, the Commission on Governnent Procurement issued its report con- taining 149 recommendations for improving Federal procurement. Twelve recommendations were on major system acquisitions. The Office of Federal Procurement Policy, Office of Manage- ment and Budget, issued Circular No. A-109, "Major System Acquisiticns," on April 5, 1976. it prescribed policy for all executive branch agencies based on the Commission's reccm- mendations. During July 1975 hearings on major system acquisition reform, the Chairman, Subcommittee on Federal Spending Prac- tices, Efficiency and Open Government, Senate Committee on Government Operations, asked us to undertaKe a special study of the "very beginning steps" in the requirements process for some current programs. He asked that we compare the evolu- tion of these programs with the Commission's recommendations. DOD officials had indicated in congressional hearings that the intent of the Commission's plan had been implemented either formally or informally in some DOD acquisitions. Therefore, with agreement from the Senator's office, we asked the Deputy Secretary of Defense to sugqesc acquisitions which were managed in a way that most nearly buuresponded to the procedures the Commission recommended. The Office of Lhe Secretary of Defense (OSD) asked each service to suggest systems to be reviewed. The systems selected were (1) the Army's Pershing II missile system, (2) the Navy's Shipboard Intermediate Range Combat System, and 1/ "Firancial Status of Major Ac3uisitions, June 30, 1975," PSAD-76-72, dated February 27, 1976. 2/ For civil agencies, acquisitions over $25 million were considered major. For the Department of Defense, programs with research, develort,ent, test, and evaluation costs over $50 million or production costs over $200 million were considered major. 1 (3) the NAVSTAR Global Positioning System which has a joint service program office with the Air Force as the executive service. The Shipboard Intermediate Range Combat System and the NAVSTAR program are subjects of separate repoLts. We presented the results of our review of the three programs during August 24, 1976, hearings before Ntte Subcom- mittee on Federal Spending Practices, Efficiency, and Open Government. de observed that implementation of the Commis- sion's plan, as outlined in the Office of Management and Budget circular, will require improvements in several areas: -- Executive agencies have to understaid that under the new acquisition process mission area deficiencies must be determined and stated independently of any specific system solution. This will enable agency heads and the Congress to make decisions based on a clear understanding of the mission deficiency and need for new systems. -- Effort allowed under the tecnnology base requires redefinition so that solutions to mission needs are not dictated by in-house efforts but result from com- petition between alternative solutions. -- Industry must be given greater flexibility to propose a wide range of alternative solutions to mission area deficiencies in responding to Government requests. SCOPE OF REVIEW Our review covered only the Commission's first six recom- mendations. To determine the evolution of the selected pro- grams, we conferred with officials of OSD, military department headquarters, program offices, and selected contractors. We reviewed available correspondence; reports; briefing charts; contracting documents; and planning, programing, and budgeting system documents. We did not evaluate the conclusions reached or decisions made in the programs' evolution. Rather, we compared the programs with the major system acquisition plan envisioned by the Commission and the Office of Management and Budget circu- lar on major system acquisitions. Formal comments were not obtained from DOD on this re- port. However, OD and Army officials reviewed the report and generally agreed with its findings and conclusions. Comments of these officials have been incorporated. 2 CHAPTER 2 COMMISSION ON GOVERNMENT PROCUREMENT The Commission on Government Procurement's recommenda- tions on major system acquisitions called for: -- Establishing a common plan for conducting and control- ling all acquisition programs. The plan should high- light the key decisions for all involved organizations: the Congress, agency heads, agency components, and the private sector. -- Defining each organization's role so it can exercise proper responsibility and control over acquisition pro- grams. -- Providing the Congress and agency heads with the infor- mation needed to make key program decisions and commit- ments. The plan forms a structure applicable to programs of all agencies. The recommendations were not designed to be selec- tively applied to the acquisition process but, rather, to be used together to improve the entire acquisition process. Specific actions called for in the early stages of the process were: -- Agency components (such as the Army, Navy, and Air Force) would submit their perceptions of mission deficiencies to their agency head (such as the Secretary of Defense). -- The agency head would reconcile a perceived need with overall agency mission capabilities and, if there was agreement that a need existed, would (1) set initial cost, time, and capability goals and (2) direct one or more agency components to respond to the need. -- An agency component would establish a program office and solicit proposals from industry for conceptual solutions to the stated need. -- Industry would respond to the solicitation with pro- posed syste.ms. -- The agency budget request and the congressional authori- zations for front-end research and development would be by mission purpose rather than by individual items. 3 -- The agency head would allocate ful'ds to agency com- ponents for the proposed systems. -- The agency component would fund selected systems using annual fixed-level funding alternative ing their progress each year. after review- -- Industry would explore 1/ the selected systems within the established funding goals. -- The agency components would choose systems for com- petitive demonstration on the basis of this explora- tion. -- The agency head would specifically approve the com- petitive demonstration As an exception, agency head approval if the agency component determined would be required it should concentrate development resources on a single system. The following chart from the Commission's the interaction of the Congress, agency report shows nents, and the private sector in the heads, agency compo- acquisition plan. recommended major system 1/ As used by the Commission, "exploring consists of the study, design, and alternative systems" development effort occurring between agency head direction for a component to respond to a need statement and the selection of systems for competitive demonstration. 4 ILO ~ ~ CM ~~Ij~~~~~3~ I - 5 IL 0 0~~~~~~~~~~~~ 0 i *1 0~~~~~, I-~~~~~~~~~~~~>UI- z = I- 3~~~~~~I. IL.Z U ~~2 - z -J0. - a I *~~~~~~~.-J- U ~ ~ ~ w ~~ 'n~ ZZ - L IL IL ~~~~ ~ ~~~~laO U W S -J ~~~~~~~2~~W2 JZ w~~~~~~~~~~~~~~~~~~~~~ -- IL m I M 0I-~~~~~~~~~~~~~~~~~~~I Ul~~~~~~~~~~~~~~ SI I 4 >n~~~~~z ~ ' U > w UZIL~~~~~u mw - *~~ ~ ~ ~~~r 0. 0 0 at cr u a~~~~~~~~~~~ a ZA us J .9 C~~~~~ CHAPTER 3 THE PERSHING II PROGRAM The original Pershing system is a mobile, surface-to- surface ballistic missile system with nuclear warheads and a selective range. The system was deployed in Europe in 1963 to provide a medium-range nuclear capability to support the Field Army. A 1964 Office of the Secretary of Defense study concluded that Pershing was better suited than another option 1/ for the theater quick-reaction alert mission. 2/ This study resulted in Pershing being assigned the quick-reaction alert mission ar' the Pershing Ia being developed to make the system more suitable for that mission. Pershing Ia was deployed in 1969. Changes co the basic system included the modernization of ground support equipment and more launchers per battalion. The system has three alternate warheads and slightly better accuracy than the original Pershing system. The Pershing II system, now in advanced development, is to be a modular improvement to the Pershing Ia. The improve- ments involve replacing the warhead and guidance and control section with new nuclear warheads and a terminally guided reentry vehicle. Pershing II will have the same range but a radar area correlation terminal guidance system 3/, now being developed, will provide greater accuracy. Several war- heads are being considered for the system. The program cost estimate is $1 billion. In June 1978 the Defense Systems Acquisition Review Council (DSARC) II is scheduled to consider whether the system should enter engineering development. Appendix I is a detailed presentation of the evolution of the Pershing II program. 1/ Specific data on the second option is classified. 2/ Quick-reaction alert refers to the capability to attack preassigned, high-threat, -ime-sensitive, fixed targets immediately. 3/ Before launch, a reference scene of the target area is inserted into the reentry vehicle. During the powered portion of the missile flight and immediately after re- entry, an jnertial navigation system is used for guidance correction, After reentry, the onboard radar begins to scan the target area, comparing each "picture" with the previously inserted reference scene, leading to appropriate guidance corrections. 6 CHAPTER 4 COMPARISON OF THE PERSHING II EVOLUTION WITH THE COMMISSION'S RECOMMENDATIONS On the basis of our comparison of the evolution of the Pershing II with the Commission's first six recommendations, we believe that the program is not similar to the Commission's plan and that it is characteristic of the acquisition process the Commission was trying to reform. It should be noted, howeverr that (1) most events in the front end of the Pershing II evolution occurred before the Commission's December 1972 report and (2) the Pershing II evolution was generally con- sistent with then-existing Army and Department of Defense regulations. The following sections present our comparision. STARTING AND COORDINATING PROGRAMS "Recommendation 1. Start new system acqui otion pro- grams with agency head statements of needs and goals that have been reconciled with overall agency capa- bilities and resources. (a) State program needs and goals independently of any system product. Use long-term projections of mission capabilities and deficiencies prepared and coordinated by agcncy component(s) to set program goals that specify: (1) Total mission costs within which new systems should be bought and used. (2! The level of mission capability to be achieved above that of projected inventories and exist- ing systems. (3) The time period in which the new capability is to be achieved. (b) Assign responsibility for responding to statements of needs and goals to agency components in such a way that either: (1) A single agency component is responsible for developing system alternatives when the mission need is clearly the responsi- bility of one component; or 7 (2) Competition between agency components is formally recognized with each offering alternative system solutions when the mission responsibilities overlap." The Commission envisioned that an agency component, such as a military service, would submit long-term projections of mission capabilities and deficiencies to the agency head for review. The agency he.d would then have these projections reconciled with overall agency resources and capabilities. bcw major system acquisition programs could start in accor- dance with the first recommendation if the agency head agreed that a deficiency existed. This agreement was to include a statement of needs and goals which did not call for a specific solution and was to occur before identification and explora- tion of specific system alternatives. In accordance with the then-existing major acquisition development process, the Army defined the Pershing II concept as its solution to the stated mission deficiency before Office of the Secretary of Defense approval was formally given to the acquisition program. North Atlantic Treaty Organization (NATO) and OSD documents in 1970-72 dealt with the general need Pershing II is addressing (such as improved accuracy, lower collateral damage, and an earth penetrating warhead), but these statements did not constitute Secretary of Defense approval of a new system acauisition program or cortain the specific mission capability and cost and schedule goals called for by recommendation 1. Also, Army effort beginning in 1970 focused on a surface- to-surface missile solution to the mission need rather than considering different technological approaches. Identi ifyin the need The need the Pershing II is addressing resulted from a 1967 NATO change in tactical nuclear weapons strategy. The development concept paper (DCP) following DSARC I (see p. 22), states that arguments against Pershing II precluded a complete endorsement at tnat time. Arguments for the system, however, were considered sufficient to justify an advanced develop- ment program as an option for future force modernizations. These issues will be considered at DSARC II before entering full-scale developmient. Selecting a spcific system solution The Commission stated that current DOD policy delegates the responsibility for deciding needs and goals to each mili- tary service. The services define needs and goals in terms 8 of specific hardware instead of the mission. The result been pressure to stick to a single-system approach withouthas adequately considering alternatives. This policy was reflected in the Pershing II evolution. A 1970 unsolicited proposal from the Pershing prime contrac- tor was to design and fabricate a radar area correlation guid- ance system and to flight test the system using the Pershing Ia. In February 1971 the Pershing project manager confirmed with the major U.S. commanders in Europe, where Pershing Ia is deployed, that Pershing needed improved accuracy and reduced nuclear yield. The project mpnager prepared the Pershing Alternatives Plan, which described and recommended methods improve the Pershing system's capabilities. Subsequent Armyto contracts with the Pershing prime contractor were for a radar area correlation terminal guidance system. The Secretary of Defense was not involved in the P II evolution as he would be under the Commission's plan rshing in terms of reconciling perceived needs agairst overall ayency resources before developinrg ahe system concept and assigning responsibility for pursuing the new capability. A step was made in this direction, however, much later, when the Army's Deputy Cnhief of Staff of Operations insisted on an Air Force review of the Army's draft DCP. He said that he would not support a recommendation to forward the DCP to OSD unless it was referred to the Air Force to resolve the need for the system on a mission-area basis. This occurred, however, before approval of advanced development for the Pershing just II. The Commission opposed allowing agency components to make early selection of a specific system solution because it felt the needs and goals perceived by the agency compo- rent would be shaped by the component's views of missions and priorities and would not necessarily coincide with the views of other components or the agency head. According the Commission, results could be destructive interagency to rivalry, overlaps in mission capabilities, and the use of old technology weapons rather than exploring the benefits and costs of new technologies. CONGRESSIONAL REVIEW OF NEEDS AND GOALS "Recommendation 2. Begin congressional budget proceed- ings with an annual review by the appropriate committees of agency missions, capabilities, deficiencies, and the needs and goals for new acquisition programs as a basis for reviewing agency budgets." 9 Past DOD budget requests, including requests for fund- ing the effort leading to the Pershing II program, have not been presented under a mission-area format. 1/ The 1974 Congressional Budget Act requires that starting with tie fiscal year 1979 budget request, the President's budget will contain descriptive information in terms of national needs, agency missions, and basic programs. Funding for the initial Army effort leading to the approved Pershing II program was Inder a radar arep corre- lation project in the terminal homing systems program element in the fiscal year 1972-75 budget.. The Pershing II program element did not appear until the fiscal year 1975 budget re- quest. Congressional review of the budget requests was on a line-item basis rather than as part of a mission-area review. The Commission stated that the Congress cannot effec- tively review expenditures and the allocation of national resources without clearly understanding the needs and goals for new programs. It continued that the needs and goals for a pr)gram are presented to the Congress when a single system is proposed, with cost, schedule, and performance estimates often predicated on insufficient re:search and development. At this point, the cost tc meet a mission need is largely determined by the cost of the new system, not the worth of the new mission capability compared to other alternatives. The Congress should have an early opportunity to (1) understand and debate an agency's mission needs and goals for new acquisitions and (2) discuss the relationship of proposed mission capabilities to current national policy and the al- location of resources in accordance with national priorities. TECHNOLOGY BASE "Recommendation 3. Support the general fields of knowl- edge that are related to an agency's assigned responsi- bilities by funding private sector sources and Government in-house technical centers to do: (a) Basic and applied research. (b) Proof of concept work. 1/ We are currently :eviewing research and development budget formulation to compare actual budget formulation for selected projects in various executi-e agencies with the Commission's recommiendations affecting budget formulation. lWe hope to report 3n this review in January 1977. Persh- ing II is one of the programs being reviewed. 10 (c) Exploratory subsystem development. Restrict subsystem development to less than fully designed hardware until identified as part of a system candidate to meet a specific operational need." The Commission sought to make an agency's technology base better serve new programs by (1) controlling how far projects are taken within the base and (2) giving the base greater access in offering new system alternatives. The recommendation is Affected to-ward the total technology base efforts of an executive agency. It is related to the budget reform of recommendations 2 and 5 in that the Commission felt a separate appropriation category should be established for technology base effort. We did not review the DOD technology base. We believe, however, that under the Commission's plan, effort in the radar area correlation contracts leading to the OSD-approved program would have been made after an OSD decision to start a new system acquisition effort (recommendation 1). A January 1972 contract with .,e Pershing prime con- tractor was for (1) advanced development of the radar area correlation guidance system and (2) demonstration through captive flight tests on a helicopter that the guidance system could achieve the required Pershing II accuracy under static conditions. This effort was aimed at improving the accuracy of the Pershing but was not identified as part of a major acquisition effort even though the Army had approved the Pershing Alternatives Plan in October 1971. The Pershing II program did not appear as a line item until the fiscal year 1975 budget request. CREATING NEW SYSTEMS "Recommendations 4. Create alternative system candidates by: (a) Soliciting industry proposals for new systems with a statement of the need (mission deficiency); time, cost, and capability goals; and operating constraints cf the responsible agency and compo- nent(s), with each contractor free to propose system technical approach, subsystems, and main design features. (b) Soliciting system proposals from smaller firms that do not own production facilities if they have: 11 (1) Personnel experienced in major development and production activities. (2) Contingent plans for later use of required equipment and facilities. (c) Sponsoring, for agency funding, the most promis- ing system candidates selected by agency compo- nent heads from a review of those proposed, using a team of experts from inside and outside the agency component development organization." The Army has been expioLin- e single-system solution to the stated mission need. This o-ration began with fund- ing of the Pershing prime conr . or's 1970 unsolicited proposal to study the use of rbaar area correlation terminal guidance on the Pershing Ia. The Army did not solicit irJustry proposals to create alternative system candidates. 1/ After the Pershing II con- cept had been defined, the Army-Missile Command in 1971 and the Pershing II Special Task Force in 1973 identified and evaluated alternative system candidates. They recommended Pershing II as the alternative with the best technical ap- proach. The Pershing II missile system is now being developed as a modular improvement to the Pershing la by the Pershing development contractor. Consequently, rather than several alternatives being explored, a single solution is being devel- oped under sole-source contracts. Within the Commission's plan, on the other hand, commit- ment to system concept, technical approach, and design would be delayed and alternative system candidates would be explored as relatively inexpensive insurance against the possibility that a premature choice would later prove to be a poor and costly one. The Commission's report states that the combined pressures of (1) limited resources to explore alternatives and (2) the requirement that the military services defend a system before large-scale resources are committed induce the services to focus prematurely on one technical approach. Military services advocate specific methods and approaches to meet their responsibilities on the basis of past operational experience. For :ample, the Air Force solution to the need being addressed by Pershing II might be based on weapons Dcelivered by aircraft. 1/ Alternative system candidates, an defined by the Commis- sion would have different design approaches, thereby pro- viding different performance features, effectiveness levels, and costs of acquisition and ownership. 12 Single-system development in a major system acauis'tion would be permitted as an exception to the Commission's plan when --urgent needs could not be met if time were taken to explore alternative systems or -- needs and goals would require major systems so phys- ically and financially massive that no one contractor (or team of contractors) would be able to marshal, consolidate, and manage all the necessary talents and resources to compete. Even in these instances, however, specific Secretary of Defense approval would be required. Considering the nature of the Pershing II program, including the lack of agreement on the need for the system (see p. 22), we believe it would not meet the Commission's criteria for single-system development. The low funding levels in the program's early years do not suggest the urgency described by the Commission or a sufficiently large funding requirement to rule out com- petitive development. CONGRESSIONAL REVIEW OF SYSTEM EXPLORATION "Recommendation 5. Finance the exploration of alternative systems by: (a) Proposing agency development budgets according to mission need to support the exploration of alter- native system candidates. ;b) Authorizing and appropriating funds by agency mission area in accordance witn review of agency mission needs and goals for new acquisition programs. (c) Allocating agency development funds to components by mission need to support the most promising system candidates. Monitor components' exploration alternatives at the agency head level through cf annual budget and approval reviews using updated mission needs and goals." The Commission stated that "Congress has difficulty overseeing the growina expendi- tures for agencies' R&D [research and development] budgets; its intensified demands for information and justification leaves Congress burdened with detailed reviews that obscure the overall pattern." The Commission added that the Congress could better understand where research and development money is spent if it reviewed, 13 authorized, and appropriated funds for exploring candidate systems according to mission. This approach would segregate funds for (1) maintaining the technology base, (2) exploring alternative solutions to mission needs, and (3) developing the selected systems. Funds to explore alternative solutions would group together all development projects associated with the alternatives to meet each agency mission need. Specific advantages listed for this approach were (1) reduced pressure to make premature commitments to a particular system to gain funding approval, (2) greater executive branch flexibility to explore alternative systems and to cope with uncertain systems, and (3) more effective congressional review of major system acquisition programs. Previous comments under recommendation 2 apply to this section also. Budget requests, authorizations, and appro- priations have not been made by mission area. Efforts leading to the Pershing II programn have been financed according to current appropriation procedures. Funds for the program have been requested in the advanced development section of the Army's research and development budget for missiles and related equipment. In fiscal years 1972-75, funds were requested under radar area correlation. For fiscal years 1975-77, funds have been requested under Pershing II. Both program elements were submitted and reviewed on a line-item rather than a mission-area basis. REINSTATING MEANINGFUL COMPETITION "Recommendation 6. Maintain competition between contrac- tors exploring alternative systems by: (a) Limiting commitments to each contractor to annual fixed-level awards, subject to annual review of their technical progress by the sponsoring agency component. (b) Assigning agency representatives with relevant operational experience to advise competing contrac- tr-s as necessary in developing performance and other requirements for each candidate system as tests and tradeoffs are made. (c) Concentrating activities of agency development organizations, Government laboratories, and technical management staffs during the private sector competition on monitoring and evaluating 14 contractor development efforts, and participating in those tests critical to determining whether the system candidate should be continued." As stated earlier, alternative system solutions to the stated mission need are not being explored; the Army is pursu- ing a single-system solution. Th- Commission stated that effective competition in system acquisition is often precluded when the Government makes early design decisions on the best approach. The Commission believed that important benefits could result from allowing competitors to be independently responsible for the evaluation of their systems by: -- Reinstating a competitive challenge to industry to use a wider span of technologies for simpler, less expensive system solutions. -- Creating incentives that encourage economy and austerity in development because, unlike in sole-source situations, competitors can be motivated to achieve austerity in system design and system design activities. -- Restoring the integrity of contracts, with each contrac- tor fully responsible for designing the system contained in its proposal. Ultimately, system demonstration should determine the success or failure of a contrac- tor's approach and there should be a sound banis for negotiating a production contract. This wider latitude for contractors to propose and explore system alternatives would, according to the Commission, be balanced by technical competition among them. 15 APPENDIX I APPENDIX I EVOLUTION OF THE PEPSHING II PROGRAM The Pershing II concept, including the need for the sys- tem and the technology to be incorporated into the system, evolved in the late 1960s and early 1970s. The need being addressed by Pershing II resulted in 1967 from a North At- lantic Treaty Organization change in tactical nuclear weapons strategy to that of having the capability for a flexible re- sponse to an attack. The nature of the change is classified and is excluded from this report. The Pershing II system, directed toward resolving the need, evolved from several studies and actions beginning shortly after NATO approved the strategy of flexible response. In February 1969 the Office of the Secretary of Defense's Ad~vl-;ed Research Projects Agency awarded a 6-month, $150,000 contract to the Pershing Ia prime contractor to study alter- native weapon systems that could be operational during the next decade and beyond to perform certain missions. The re- sulting September 1969 report concluded that a tactical inter- diction missile appeared to be more practical and cost effec- tive than other options considered. The conceptual tactical interdiction :issile identified in this study would, in its mobile concept, operate much like the Pershing and would include a radar area correlation ter- minal guidance system to provide accuracy comparable to Pershing II's. The study recommended that the radar area correlation terminal guidance system be demonstrated as soon as possible. Accordingly, in February 1970 the contractor submitted an unsolicited proposal to the Army Missile Command for a radar area correlation terminal guidance development program. The program was to establish the feasibility and operational effectiveness of a terminally guided reentry vehicle system for potential use in a Pershing Ia-type mission. The pro- posed development program was to consist of conceptual studies, design and fabrication of a radar area correlation terminal guidance system, and flight testing of the guidance system using modified Pershing Ia missiles. Generally, this is the type of development being carried out in the Pershinc II program. A February 1971i Army study stated that improved accuracy for Pershing, coupled with a low-yield, earth-penetrating 16 APPENDIX I APPENDIX I nuclear warhead, would offer a major tactical advantage in Europe. The study said that these potential characteristics of Pershing suggest that it might be no longer used for mass destruction and instead be considered for selective use against operating bases for fighters and bombers. Also in February 1971, the Pershing project manager con- firmed with the major U.S. commanders in Europe where Pershing Ia is deployed that the Pershing improvements were needed. Subsemrently, the Pershing project office, along with U.S. Army Europe, and the U.S. Army Combat Development Command (now part of the Training Doctrine Command), prepared the Pershing Alternatives Plan, which described and recommended methods to achieve the improved capabilities. INITIATING THE PERSHING II PROGRAM Several actions during 1971 led to the conceptual Persh- ing II program. These included the (1) fiscal year 1972 budget request for $5.5 million for advanced development of radar area correlation guidance, (2) initial contract award for radar area correlation in May 1971, (3) completion of the Pershing Alternatives Plan in July 1971, and (4) official Army approval of the Pershing II program conceptual phase in October 1971 based on recommendations contained in the alter- natives plan. Budget request for radar area correIatToneTFforb The radar area correlation effort leading to Pershing II first appeared in the fiscal year 1972 budget reauest to the Congress as a project entitled radar area correlation under the terminal heming systems program element. This program element was included in the advanced development section of the Army's research and development budget reauest for mis- siles and related equipment. Initial radar area correlation contract In May 1971 the Army Missile Command awarded the initial contract for preliminary design efforts on a guidance system which is now part of the Pershing II concept. The contract was awarded on a sole-source basis to the Pershing prime con- tractor for $500,000. The contractor was to establish the de- sign requirements for and the preliminary design of the radar area correlation guidance system to demonstrate the performance of a terminally guided ballistic missile. The contractor was selected on a sole-source basis because (1) it designed and 17 APPENDIX I APPENDIX I developed the Pershing missile system, (2) the contract required system-oriented personnel with intimate knowledge of the Pershing system, and (3) the Goernment had already paid the high starting and learning costs included in this procurement. Comrletion of the Pershing Alternatives Plan In July 1D71 the Pershing project office completed the alternatives plan. The plan was to determine -- whether requirements would exist in the 1980s for such a system, -- how well other existing systems could fill the require- ments, -- how well Pershing could fill the requirements, and -- whether modular improvements to Pershing would be economical. The plan concluded that (1) requirements exist for a Pershing-type system, (2) the Pershing has characteristics similar to those needed to fill the requirements, and (3) modular improvements to Pershing could greatly increase system and cost effectiveness. The plan recommended that: -- The radar area correlation program be continued as a Pershing advanced development program. -- A terminally guided reentry vehicle (using the Pershing la first and second stages) be developed and procured after the successful demonstration of the radar area correlation terminal guidance. -- An earth-penetrating nuclear warhead and appropriate conventional munitions be developed for the terminally guided reentry vehicle. Improving the i;iertial guidance system components was identified as a way to increase Pershing accuracy but was not recommended since such improvements could not provide accuracy as great as the radar area correlation terminal guidance sys- tem. 18 APPENDIX I APPENDIX I A Epoval of the Persh ing II r_g9ra In October 1971 the Army approved the requirements for a system with the capabilities of Pershing II by approving the Pershing Alternatives Plan. The Army then requested thie Missile Command to prepare a system development plan and a draft development concept paper for Pershing II and to co- ordinate the development of nuclear warheads for Pershing II with the Atomic Energy Commission and the Army Combat Develop- ment Command. In addition, the Combat Development Command was requested to forward a materiel need statement for Pershing II to Army for approval not later than December 1971. After Army approval, the Missile Command extended the $500,000 radar area correlation design contract through December 1971 for an addi- tional $100,000 to initiate the hardware proqram. The Pershing II-type improvements approved by Army were also included in Department of Defense guidance documents dated December 1971 and February 1972. These documents stated that (1) an earth-penetrating warhead was required and could be carried on a modified Pershing system and (2) tactical nuclear weapons should be developed to improve accuracy and reduce collateral effects. DEVELOPMENT EFFORT AFTER PROGRAM APPROVAL DOD's fiscal year 1973 budget request was presented to the Congress in early 1972. The Army reauested $6 million for radar area correlation effort in the terminal homing systems program element of the advanced development section of the Army's research and development budget for missiles and related equipment. In January 1972 the Army Missile Command awarded a 2- year, $10.5 million sole-source contract to the Pershing prime contractor for (1) advanced development of the radar area cor- relation guidance system and (2) a baseline definition for advanced development of the reentry vehicle. This contract was to demonstrate through captive flight tests on a helicopter that the guidance system could achieve the required Pershing II accuracy under static conditions. In April 1972 the Combat Development Command submitted the Pershing II draft materiel need statement reauested by Army, and the Missile Command submitted the Pershing II system development plan. In May 1972 the increasing Army activity related to Pershing II prompted a request from DOD's Deputy 19 APPENDIX I APPENDIX I Director of Defense Research and Engineering for the Army to prepare a DCP. The DCP is used for DOD's Defense Systems Acquisition Review Council review and the later Secretary of Defense decision to begin or continue a system development program. In January and February 1973 OSD documents provided addi- tional guidance for developing tactical nuclear weapons. These documents identified needed improvements but did not identify the specific level of capability needed above existing systems. The documents also identified planned Pershing improvements. CHANGE IN THE ARMY'S ACQUISITION PROCESS In July 1972 the Army established new guidelines for major systems acquisition. These guidelines called for establishing a required operational capability (ROC) need statement as the first step in system development. After ROC acproval, an all- Army special task force would be created to investigate alter- native system designs and to recommend an approach to fulfill the _1,'em need. The spe-ial task force would prepare: --. concept formulation package (consisting of a trade- off determination, trade-off analysis, best technical approach, and cost/operational effectiveness analysis). -- A development plan. -- A draft DCP for consideration by the Army Systems Acquisition Review Council (ASARC). The Army selected Pershing II as the first major program that would be developed and procured using the new system ac- quisition guidelines. Accordingly, the Army restructured the Pershing II draft materiel need statement into a ROC need statement. In October 1972 the Army approved the ROC and es- tablished a special task force to investigate alternative sys- tem designs. The Pershing II Special Task Force convened in January 1973 and prepared its final report in April. The task force director was a former commander of the 56th Field ArtilleLy Brigade, U.S. Army, Europe, and the deputy director was the Pershing project manager. The task force was composed of 19 Army personnel representing (1) the Materiel Command (includ- ing the Missile Command and the Pershing project office), (2) the Combat Development Command, (3) the Continental Army Command, (4) U.S. Army, Europe, and (5) Department of the Army staff. The task force, as required by the new system acquisition guidelines, made trade-off determinations and trade-off 20 APPENDIX I APPENDIX I analyses to determine the best technical approach to fill the system need for Pershing II. The cost and operational effec- tiveness of the recommended approach was then compared with ether weapon systems which might satisfy the Pershing II ROC characteristics. The task force identified and investigated 20 alternative guidance system approaches and 2 system approaches to fulfill the system need. The system approaches were to (1) develop new missile system or (2) modify the Pershing Ia. Modifica- a tion of the Pershing Ia system was selec'ed because it was much cheaper. Radar area correlation was selected as the guidance proach because it was the most accurate and thus was most ap- likely to minimize civilian collateral damage. In addition, it was considered to have better all-weather capability and distinct tactical operational advantages. The cost and operational effectiveness of this approach was compared with several existing and conceptual surface-to- surface missile systems and aircraft-delivered weapon systems for the selective-release, general-strike, and general-support missions, envisioned for Pershing II. The task force concluded that Pershing II was the best alternative weapon system to meet the broad requirement; of the three missions. PROGRAM APPROVAL BY OSD During 1971 and 1972 the Army and OSD established new system acquisition guidelines, which provided for preparing a DCP for ASARC and DSARC members to review. The ASARC and DSARC meetings provide top-level reviews of a weapon system before the Secretary of Defense decides whether to initiate or continue development of that system. The initial ASARC review for Pershing II was scheduled for May 1973--a month after the task force completed its final report. The ASARC was held in October 1973, however, because of internal differences the Army encountered while coordinat- ing the DCP. Specifically, the Deputy Chief of Staff for ations said that he would not support a recommendation Oper- to for- ward the DCP to DOD unless the DCP was referred to the Air Force to resolve the need for the system on a mission-area basis and to identify trade-offs between Army and Air Force capabilities which introducing the Pershing II would permit. As a result, the Army Chief of Staff referred the Pershing DCP to the Air Force for comment by October 1973. II An Air Staff Ad Hoc Study Group reviewed the Pershing II 21 APPENDIX I APPENDIX I DCP. It agreed with the stated ne' Pershing II is ad- dressing but disagreed that Pershing II was the best ap- proach to satisfy that need. The Pershing II Special Task Force director reviewed the study group's report and pointed out factors used in the Air Force analyses which he felt were incorrect and would. if corrected, result in a conclusion supporting Pershing II. He concluded that Pershing II was needed because of its utility and the flexibility it would provide. The Army DCP was then sent to OSD on November 1. 1973. After the OSD staff review and comment on the DCP. DSARC I was held on January 22, 1974. to consider approval of the Pershing II system for advanced development. As reflected in tha DCP, the DSARC considered five basic issues related to Pershing II: --Are the proposed changes and role of Pershing II con- sistent with DOD policy for theater nuclear forces? -- Should the United States continue to maintain a long- range surface-to-surface missile as part of the theater nuclear forces? -- What is the role of Pershing II and will it have significant potential value to NATO? -- Does Pershing II fill the need better than other alternatives? -- Is the proposed technical approach the best way to fill the need? The DCP presents arguments for and against the proposed changes and role of Pershing II in theater nuclear forces. The arguments precluded a complete endorsement for the de- ployment of the Pershing TI system at that time. However. arguments for the system were considered suificient to jus- tify the initiation of the advanced developm,:it program as an option for future force modernization. On March 7. 1974. the Deputy Secretary of Defense author- ized the Army to proceed with the Pershing II advanced devel- opment program, as it was presented to DSARC. In his program decision. he said the system's technical performance and the requirement for Pershing II in light of emerging nuclear policy 22 APPENDIX I APPENDIX I were major issues to be resolved. Therefore, he said the Army should be prepared at DSARC II, scheduled for June 1978, to show (1) how development and deployment of Pershing IX would implement theater nuclear policy and (2) its need and worth relative to other alternatives. PERSHING II ADVANCED DEVELOPMENT In early 1974 the fiscal year 1975 budget request was presented to the Congress. For the first time Pershing II appeared as a line item or program element in the Army's budget request for advanced development of missiles and related equipment. For fiscal year 1975 the Army reaqucted $12 million to complete its radar area correlation efforts and $11.2 million to begin developing Pershing II. In February 1974, a month after the DSARC review, the Army awarded to the Pershing prime contractor the third sole-source contract associated with the Pershing II program. This contract provides for verification of the guidance system under dynamic conditions and an option for the advanced development of the Pershing II system. This program is to culminate with flight tests of the terminally guided reentry vehicle. The contract, which is st4ll active, is scheduled for completion in January 1978 at a total cost of $68.1 million. The DSARC II review is scheduled for June 1978 to con- sider whether the Pershing II system should enter engineering development. 23 APPENDIX II APPENDIX II PRINCIPAL DEPARTMENT OF DEFENSE OFFICIALS RESPONSIBLE FOR ADMINISTERING ACTIVITIES DISCUSSED IN THIS REPORT Tenure of office Prom 0 SECRETARY OF DEFENSE: Donald H. Rumsfeld Nov. 1975 Present William P. Clements, Jr. (acting) Nov. 1975 Nov. 1975 James R. Schlesinger July 1973 Nov. 1975 William P. Clements, Jr. (acting) May 1973 July 1973 Elliot L. Richardson Jan. 1973 May 1973 Melvin R..Laird Jan. 1969 Jan. 1973 DEPUTY SECRETARIES OF DEFENSE: Robert Ellsworth Dec. 1975 Present William P. Clements, Jr. Jan. 1973 Present Kenneth Rush Feb. 1972 Jan. 1973 Vacant Dec. 1971 Feb. 1972 David Packard Jan. 1969 Dec. 1971 DIRECTOR, DEFENSE RESEARCH AND ENGINEERING: Malcolm R. Currie June 1973 Present John S. Foster, Jr. ct. 1965 June 1973 SECRETARY OF THE ARMY: Martin R. Hoffmann Aug. 1975 Present Howard H. Callaway May 1973 July 1975 Robert F. Froehlke July 1971 May 1973 Stanley R. Resor July 1965 June 1971 24
Comparison of the Pershing II Program with the Acquisition Plan Recommended by the Commission on Government Procurement
Published by the Government Accountability Office on 1977-01-24.
Below is a raw (and likely hideous) rendition of the original report. (PDF)