Is the Missile Defense Agency shooting blind on contracts?

WASHINGTON ― The U.S. Missile Defense Agency needs to work on its communication skills, according to a new report from a government watchdog.

The Government Accountability Office’s annual review of the MDA’s acquisition goals and development objectives determined that although the agency continues to deliver valuable assets to war fighters, the use of unaccredited modeling programs and highly flexible contract tools obscures the true capabilities and costs defense systems.

Tasked with the development of the ballistic missile defense system, or BMDS, in 2002 ― a layered defense system that integrates terrestrial and celestial sensors, ground- and sea-based shooters, and command-and-control units ― MDA is relied on to contract, develop and test a variety of missile defense technologies.

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Castigated by critics for overspending and under-delivering, the report identified a problem with MDA’s flexibility in its contracting authorities. The agency’s use of “undefinitized contract actions” ― or contracts negotiated with a not-to-exceed value when development of a requirement is needed on short notice ― has increased over the past five years.

Moreover, the not-to-exceed values and time taken to “definitize” contracts have also increased, creating more risk for the government. According to the report, the average time it takes to definitize these contracts has increased nearly eightfold, from 78 days in 2013 to more than 600 days 2016.

Factoring in increasing not-to-exceed values and longer definitization periods, the GAO determined that “MDA may be initiating contractor work with incomplete knowledge of the requirements or costs involved.”

For example, MDA entered into a not-to-exceed undefinitized contract for the Redesigned Kill Vehicle worth $1.088 billion in May 2017. As the report explains:

In addition to spending concerns, MDA’s use of unaccredited modeling and simulation tools raises questions about the credibility of delivered capabilities and BMDS performance. Due to testing limitations ― MDA cannot conduct enough tests of all BMDS system elements to completely assess operational performance ― the agency relies on models to inform war-fighter tactics, techniques and procedures.

Modeling provides valuable information about system effectiveness to war fighters, Defense Department decision-makers and Congress that is used to determine the limitations and capabilities of various system elements, as well as funding priorities.

However, only a fraction of MDA models are properly accredited, meaning the programs may suffer from unknown modeling errors that obscure performance results. Thirty percent of MDA models for Enhanced Homeland Defense, 23 percent for European Phased Adaptive Approach Phase 2 elements and 14 percent for Discrimination Improvements for Homeland Defense have received accreditation, according to GAO.

The lack of accreditation raises concerns that system performance is less reliable than testing records suggest.

This is not a new problem for MDA. According to BMDS operational testing officials, since 2009 the agency has never completely provided necessary data and has missed subsequent deadlines to accredit models.

The agency also proceeded to operationally test and deliver capabilities like Aegis Ashore for the European Phase Adaptive Approach Phase 2 even though key models were unaccredited.

Despite these criticisms, MDA reached several milestones in 2017. In May, the agency successfully intercepted an intercontinental ballistic missile target in a test for the first time. Additionally, the agency completed the delivery of seven more ground-based interceptors to missile fields in Fort Greely, Alaska, in November, bringing the total number of ground-based interceptors to 44.

In light of the increasing threat from U.S. near-peers like Russia and China, as well as so-called rogue states like North Korea and Iran, Congress voted to increase MDA’s budget by $3.3 billion in March, bringing the agency’s total appropriated funding to $11.5 billion for fiscal 2018.

The MDA submitted a $9.9 billion budget request for FY19.

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