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GAO-15-210R 1 (2014-12-12)

handle is hein.gao/gaobaainc0001 and id is 1 raw text is: G A O U.S. GOVERNMENT ACCOUNTABILITY OFFICE 441 G St. N.W. Washington, DC 20548 December 12, 2014 Congressional Committees Missile Defense: Cost Estimating Practices Have Improved, and Continued Evaluation Will Determine Effectiveness Since 2002, the Missile Defense Agency (MDA) has been charged with developing and fielding the Ballistic Missile Defense System (BMDS). This highly complex group of systems is made up of a diverse collection of land-, sea-, and space-based assets, including sensors, interceptors, and battle management located around the globe, with the purpose of detecting, tracking, and defeating enemy ballistic missiles. For over a decade, we have annually reported on MDA's progress and challenges in developing and fielding BMDS capabilities, as well as transparency, accountability, and oversight issues. A list of our reports can be found in the enclosure. The Department of Defense has spent approximately $105 billion since 2002 on MDA's BMDS and plans to spend an additional $37.5 billion from fiscal years 2015 through 2019. However, since we began annual reporting on missile defense in 2004, we have been unable to assess overall progress on cost because the cost information MDA reported over the years has been incomplete, inconsistently reported, or lacked sufficient quality for review. In an effort to establish a means for us to evaluate MDA's cost, we have made a number of recommendations-and Congress has passed a number of laws-that are related to the establishment of baselines for the expected cost of certain elements of the BMDS and to reporting deviations from the baseline as MDA's programs progress. MDA created those baselines in 2010, and in 2011 we found that the cost estimates underlying the baselines were not high-quality, according to best practices contained in the GAO Cost Estimating and Assessment Guide.1 Further, we concluded that cost progress cannot be independently evaluated until MDA establishes baselines that are supported by reliable, high-quality cost estimates. The National Defense Authorization Act for Fiscal Year 2014 mandated that MDA submit a report to the congressional defense committees by December 26, 2014, describing, among other things, the actions it has taken to improve the quality of its cost estimates, the schedule for any remaining actions, and how those actions compare to the best practices and cost- estimation guidelines recommended by GAO.2 In addition, the agency's report must also include GAO's views on its contents. This report includes our assessment of MDA's October 2014 draft report and the extent to which MDA's past and planned actions are in line with GAO best 1GAO, Missile Defense: Actions Needed to Improve Transparency and Accountability, GAO-1 1-372 (Washington, D.C.: Mar. 24, 2011) and GAO Cost Estimating and Assessment Guide: Best Practices for Developing and Managing Capital Program Costs, GAO©09 3SP (Washington, D.C.: March 2009). 2National Defense Authorization Act for Fiscal Year 2014, Pub. L. No. 113-66, § 231 (c) (2013). The cost estimates that are discussed in DOD's report are those cost estimates that support cost baselines presented in MDA's annual baseline report required by 10 U.S.C. § 225. This baseline report, known as MDA's BMDS Accountability Report, presents the current estimate of the BMDS program baselines which include resource (cost) and schedule baselines. GAO-1 5-21 OR Missile Defense Cost Estimates Page 1

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