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GAO Says Airborne Laser Costs Up Markedly

By | April 7, 2008

      Placing Limits On MDA Funding Flexibility Mulled

      While the Government Accountability Office (GAO) told members of Congress that costs of the Airborne Laser (ABL) missile defense system jumped from $1 billion to $5 billion, that occurred in early days of developing the airborne shield, with costs stable and schedules met in recent years.

      Lt. Gen. Henry "Trey" Obering III, director of the Missile Defense Agency (MDA), said that it is true that ABL costs soared, if you go all the way back to 2001 and look at a cost estimate then and compare it with current cost estimates.

      But since then, ABL outlays have been "well within their [expected limits] for the last several years," Obering said. He spoke with Space & Missile Defense Report after a hearing of the Senate Armed Services Committee strategic forces subcommittee.

      Paul Francis, GAO director of acquisition and sourcing management, also told subcommittee lawmakers that the ABL program slipped from an expected five-year development schedule to 13 years.

      But again, Obering noted that ABL has met its "knowledge points" schedule mileposts for the past two-and-a-half years.

      ABL has involved ground-breaking technology development, taking a 747-400 jumbo jet from The Boeing Co. [BA], the prime contractor, and installing in it a Northrop Grumman Corp. [NOC] high-energy laser and a Lockheed Martin Corp. [LMT] beam control/fire control to aim the laser at an enemy missile.

      The laser will lash out at the speed of light to blister a hole in the side of an enemy missile in its most vulnerable "boost" phase of flight, just after liftoff from a pad or silo. That occurs early in the missile trajectory, while the enemy weapon is emitting a hot and easily-tracked flaming exhaust, before the missile has a chance to spew out multiple warheads, decoys or confusing chaff. Also, the laser will fry the missile electronics.

      And attaining a boost-phase kill on a missile launched from an enemy nation means that any nuclear, chemical or biological material in the warhead falls down on that nation.

      Sen. Bill Nelson (D-Fla.), the subcommittee chairman, asked about the quintupling of the cost over this decade.

      Actually, while going far back several years may yield a 500 percent cost increase from an initial estimate, in the last couple of years the cost has risen just 5 percent.

      The senators heard that costs for many missile defense programs rose by a combined $1 billion. If one looks at the multi-layered ballistic missile defense shield that the United States is erecting, however, some cost increases actually have stemmed from increasing the scope of some programs, not just from cost overruns, Obering explained.

      That was borne out separately in a statement from Marion Blakey, president and CEO of the Aerospace Industries Association. She noted that costs rise vastly more on defense acquisition programs where requirements are changed, as opposed to those where a contractor just builds what the contractor expected to build in bidding for the contract.

      She pointed to a GAO report that a review of 72 acquisition programs showed their costs rose by an average 26 percent.

      But, Blakey noted, according to the report, "unstable program requirements, frequent program manager turnover, reliance on contractors to perform acquisition functions and difficulty managing software development are contributing to this trend."

      She pointed especially to the military changing requirements for defense hardware as a reason that programs incur cost increases.

      "Sixty-three percent of the programs GAO reviewed had requirement changes after system development began," Blakey noted.

      "These programs had cost increases of 72 percent versus 11 percent on programs where requirements did not change."

      And there are other factors at work as well. "Cost growth on large, high risk development programs occurs because competition drives cost optimism at the outset," she observed. "Moreover, not all technical complexities are predictable and requirements changes during long developments encourage cost growth."

      Ultimately, however, most programs produced finished products that work as intended, aiding warfighters, Blakey concluded, adding that "U.S. weapon systems are the best in the world."

      She pledged that defense contractors will work with the Department of Defense on its moves to control cost increases.

      MDA has special budget flexibility to help it move rapidly to erect a multi-layered ballistic missile defense shield, before rogue nations such as Iran and North Korea field intercontinental ballistic missiles that could strike the United States.

      Putting Fiscal Limits On MDA

      During the subcommittee hearing, the full Senate Armed Services Committee chairman, Sen. Carl Levin (D-Mich.), entered the room and asked questions as to whether MDA could be placed under strict budget controls that limit use of funds at other defense agencies.

      Levin asked a witness, John Young, the chief Pentagon weapons buyer, whether current law gives Young authority to control and oversee MDA spending the way Young can govern outlays at other defense agencies. In legislation years ago, Congress gave MDA flexibility in how it handles its finances, to help speed development of a multi-layered shield against enemy ballistic missiles targeting U.S. cities.

      Young replied that even with that law, he has the power to exercise more control over MDA finances, but "we’re not exercising" that power now.

      However, Young said that "we’re taking the first steps" toward increasing controls on MDA outlays.

      "Get back to us" in Congress "with any recommendations to change" controls on MDA funding, Levin told him.

      At another point, Obering noted that program flexibility on various factors such as "knowledge points" technology progress mileposts has been vital to MDA, and that without that flexibility some missile defense systems now developed and ready for use wouldn’t exist.

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