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DoD News Briefing

Thursday, July 9, 1998 - 2:00 p.m. (EDT)
Lieutenant General Lester Lyles, USAF
Lieutenant General Lester Lyles, Briefing Viewgraphs [284k PDF]

Mr. Bacon: Good afternoon. Thank you for coming.

General Lyles, the Director of the Ballistic Missile Defense Office and Major General Franklin are here to talk about the work on THAAD and other programs. It's on the record. They'll take a reasonable number of questions after it's over.

General Lyles: Good afternoon.

First let me do a disclaimer, if I could. Contrary to the published reports in one medium yesterday that I was going to come here to announce a restructure of the THAAD program, that was grossly in error. There was never an intent to do that at all.

Instead, we've recognized for some time that since the 12 May last test of the THAAD missile when we had another intercept failure, that we have had a dearth of information that we've provided to the media. So I wanted to take the opportunity, along with Major General Pete Franklin from the Army, to come up here and fill you in on the blanks, if you will; tell you what has been happening with the THAAD program, tell you where we are in resolving the problems, and then obviously opening the floor for any questions that you might have.

What I'd like to do is to give you an update on the THAAD failure and the THAAD program, to include the analysis of the last flight, the flight test number eight where we had the difficulties; our discussions with our contractor team; the failure analysis activity and discussions with the contractor team; and our approach for the next flight and where we see ourselves going in the future.

Let me just start, if you will, with sort of a reacquaintance of the THAAD program. Some of you out there we don't deal with on a daily basis, so you may not be as familiar with the THAAD program.

As you know, the acronym stands for Theater High Altitude Area Defense. The THAAD system consists of an interceptor missile, its radar, a launcher, and a battle management command and control element. The entire system is designed to destroy enemy ballistic missiles, and THAAD is intended to be deployed overseas to protect our troops, our friends and allies, against the type of more advanced ballistic missiles our enemies could use against our deployed forces or against our allies in the future.

Let me just start by saying, and I want to emphasize, both for me as the Director of the Ballistic Missile Defense Organization, and I think I speak for the United States Army, the Army and BMDO remain fully committed to the THAAD program.

The THAAD is a critical element of our family of systems approach for theater ballistic missile defense. It is one of the key elements of this family of systems approach, along with the upgrades we're making to the Patriot program, Patriot Advanced Capability 3 or PAC-3; the Navy lower tier system, the counterpart to the PAC-3 for the Navy element. Navy Area Defense is the title we give to that. The upper tier system for the naval component or Navy theater wide; and of course, THAAD. In the future, that family of systems architecture will include programs, we hope, like the airborne laser and perhaps the Medium Extended Air Defense System, or MEADS.

Our TMD architecture is multi-tiered, as you can tell from the comments I just described. It's multi-tiered or multi-layered. It has an upper tier component that gives a broad coverage defense; has a lower tier capability for providing point defense. The THAAD system specifically will provide an effective defense against a longer range theater class missile threat -- the type we see proliferating around the world today, and I don't need to go into details with this audience as to some of the kinds of things and indicators we've seen around the world. THAAD will allow us to intercept those kinds of ballistic missiles at higher altitudes and longer ranges than we can currently achieve. This is very critically important when we're talking about the possibility of dealing with warheads that may have weapons of mass destruction on top of them, be they chemical, biological, or God forbid, nuclear.

When linked in the family of systems architecture with PAC-3, the Navy area system or Navy upper tier, THAAD provides a critical, multi-tiered defense that significantly improves the effectiveness of the overall theater missile defense architecture.

Let me reiterate again, we're fully committed to making sure that the THAAD program is successful; to proving out the missile and the entire system as part of our development aspect; and to proceed into the next phase of the program so we can begin fielding the system as quickly as we possibly can.

I thought it might be very helpful just to illustrate with the tests that we've done for the THAAD program. We've conducted eight tests, this was flight test number eight that we conducted on the 12th of May. The chart that you see up there is a matrix that sort of illustrates the kinds of success or lack of success we've had in the program to date.

The real bottom line of all of this is that most of the THAAD system, the overall system, when you consider both the missile, the radar, the battle management command and control, the launcher, most of the system has worked extremely well. We've had great success with the radar, great success with the battle management command and control, great success with the launcher. All of those parts of the total system have worked very, very well. The part that's probably the most critical, however, the part that we're very concerned about, is the missile, and that's the one we've had difficulty with.

The five intercept failures we've had on the THAAD missile have all been from different failure mechanisms -- five different failure mechanisms, to be exact. They've not been in the same components, they've not been in the same phase of the program or part of the program. They've been five random, if I can use their terminology, five different separate failure modes. This causes us a lot of concern and that's what we've been trying to address since we've been trying to solve the problems.

Let me tell you a little bit about flight test number eight and what we're doing to try to recover from it, and it's the failure analysis activity.

BMDO and the Army conducted flight test number eight on the 12th of May. As you're all aware, obviously we experienced a major technical difficulty right after launch, within a couple of seconds after launch out of the launcher. The missile ended up going into a loop. Part of that was pre-programmed, but it never came out of that loop, and ended up sort of self-destructing because of the way it's designed. It never achieved the altitudes and accelerations it was intended to achieve during this test, so it has a built-in self-destruction mechanism and that's what eventually caused the self-destruction at White Sands Missile Range.

BMDO, the Army, and the contractor - the entire contractor team -- are conducting a very thorough failure analysis. While this analysis is currently ongoing, underway, we believe right now that the most likely cause of the failure was a component failure, a short circuit to be exact, in the thrust vector control mechanism for the THAAD missile. Both we and the contractor -- the contractor and the government -- have agreed to the failure analysis plan, this detailed plan that's currently underway. It is basically a methodical approach to review all of the available data associated not only with this particular test and this particular missile, but all the previous tests one more time to make sure we understand if there's any connectivity between the different things, and to conduct a full and thorough fault tree analysis to look for the root causes of the things that have caused our problems.

I fully expect that our team of experts -- both the contractor and government experts -- will be able to identify that root cause and define areas requiring corrective actions within the next few weeks. They've been working this since obviously, literally seconds after the 12th of May failure, and I expect to receive personally the final report and the results of that failure analysis later this month. As soon as we've completed all specs of that analysis I plan to either personally, or we will have somebody in the Army or BMDO, prepared to share that information with you.

All of you are also, I think, familiar with the fact that we issued shortly after the failure something we call a cure notice to the prime contractor, to Lockheed Martin. For those not familiar with it, a cure notice is a contractual arrangement. It's a statement of dissatisfaction with the performance under a contract. It's a notification to a contractor that we expect him to execute the remedies and define the remedies to solve a specific problem. In this case we issued the cure notice to Lockheed Martin shortly after the flight test number eight failure, and we have subsequently received their initial response to that cure notice. Their initial plans for how to resolve the problem, their plans for what we do next within the program.

We have that response. We've looked at it in some detail, but we are in what we call negotiations with Lockheed Martin to refine the specifics associated with the cure notice response. Some aspects of it we liked, some aspects of it we thought needed to be better defined.

To give you just a quick overview of some parts of the cure notice, Lockheed Martin presented somewhat of a new organizational structure for managing the rest of the THAAD program. They specifically identified a key individual who I happen to know from other programs in the space realm of development activities in the Department of Defense, a specific individual, a troubleshooter that they are bringing in or have brought in to specifically work the test program aspect of the THAAD program. That troubleshooter will work along with the rest of the THAAD management team to execute the rest of the program, but he will focus specifically on getting successfully through the rest of the test aspects of the program.

They've identified five review teams, detailed, independent review teams, who are looking at every aspect they can of this missile, the rest of the program, the previous failures, the processes that Lockheed Martin has for quality control, reliability control, manufacturing, testing, etc. These independent review teams include experts not just from the Lockheed Martin Division in Sunnyvale, California where the THAAD program is run, but throughout the entire Lockheed Martin corporate structure, and particularly from their astronautics department or division in Denver where most of their space programs are run.

By the way, this troubleshooter I mentioned earlier also came from the astronautics division.

They brought in experts from down at Cape Canaveral, specifically one individual who has led all of their flight test activities, success activities for all their space programs down at Cape Canaveral. The specific individual was also the leader of the NASA and shuttle launch activities down at the Cape in the past years. Somebody with an excellent track record.

In addition to those five review teams that are looking at the various aspects of the program, we are negotiating, as I hinted earlier, at arrangements towards something that's somewhat unique -- a cost sharing aspect for the program. In this case we're asking the contractor, and they have volunteered, a willingness to support some aspects of the costs associated with the THAAD missile tests if we continue to have failures. This cost sharing arrangement is somewhat unique. We're in the process of negotiating the details right now with Lockheed Martin. I am not prepared today to talk about specific dollar amounts, etc., except to tell you it is significant -- a major, major commitment of support and commitment to the program on the part of Lockheed Martin, and we are again working the specific details, and we'll be prepared to talk to you more about that in subsequent weeks or days.

During all these negotiations I think it's important to point out, as indicated by this cost share arrangement and other things they have done, that Lockheed Martin's senior management, from the corporate headquarters here in Bethesda to their leadership of the program out at Sunnyvale, California and every other aspect of the corporate structure of Lockheed have expressed and shown complete and absolute commitment to making sure the THAAD program is going to be successful.

I'll give you one indication of that that I think is again, somewhat unusual and unprecedented, but a sign of very strong commitment. As part of bringing an independent people to help them analyze and figure out what caused the problems and where we need to go from here, Lockheed Martin has reached out to other corporations, other companies, that have missile experience. Specifically, in this case, the Raytheon Corporation.

As you may know, with mergers and other things and throughout our country over the last years or so, Raytheon Corporation, Raytheon, Hughes, and TI (Texas Instruments), for that matter, probably have more tactical missile experience than any other corporation in the United States. Lockheed Martin is now reaching out to Raytheon, their missile people, to help them to identify the failures, identify what the problems are, relook at the design, and help make sure that we can make this program a success. I think that's a very positive step forward, and again shows the commitment on the part of the contractor, Lockheed Martin, to make this program a success.

Let me talk about the next step ahead, if I could. Flight test number nine. We're looking forward to proceeding with the program. Originally we had stated right after the flight test failure on the 12th of May that we were possibly looking at a next test, flight test number nine, in August of this year. This summer. After looking at where we are in the failure analysis and looking at some of the questions that still need to be answered, I don't think we're going to be able to make this summer. We are looking for the fall timeframe, however, as a good point by which we might be ready to execute the next test.

We want to complete all the failure analysis first to make sure we understand any corrective actions that might be necessary. The bottom line is we're going to fly when we are ready to fly, but right now I think that might be sometime later this fall, or later this calendar year, the fall timeframe.

I'd like to caution, however, one thing particularly for those who saw the actions that took place between flight test number seven, the failure we had last year, and flight test number eight that we just tried to execute successfully and obviously did not do so. We do not anticipate a lengthy delay in this particular case. There were some 14 or 15 months between flight test number seven and flight test number eight. We think we understand through the last failure analysis we did and the things we're looking at in this particular case, that we should be able to return to fly in relatively short order -- certainly nothing like the kinds of delays that we experienced before.

Through the government independent reviews that took place the last time, the reviews of these five teams that Lockheed Martin has, we think we are fairly comfortable with the design of the missile. Engineering, and putting together everything, making it work together in terms of quality, reliability, and consistency is probably the key focus area, and that's the kind of thing that we hope to be able to resolve very, very quickly.

Let me close if I could, and then I'll open the floor for any questions. Again, I reiterate that most of the elements of the THAAD system, the total system, have worked extremely well and given us great, great confidence in not only their design but their ability to support not just the THAAD program, but potentially other aspects of our missile defense architecture. This includes, again, the radar, the launcher, the battle management command and control. However, we're not naive, obviously. We realize that the heart of the THAAD is the bullet. That's the thing that really makes missile defense a success and what missile defense is all about. And we're committed to making that THAAD missile work.

I might, just in closing, you might imagine that with the anomalies we've experienced on the THAAD program, the schedule delays, etc., we are obviously within the Department of Defense looking at ways that we may have to restructure the program. I said earlier that I wasn't going to announce a restructure. I will obviously tell you that we are evaluating options for how we might have to revise the program. Those revisions, those sort of fact of life changes, if you will, are because of the schedule slips. They also are part of the overall review that we are taking here within the Department of Defense to look at all of our missile defense programs, not just THAAD, in terms of budget realities. We not only want to have programs that are effective and can complete the mission, but also that are affordable, so we're looking at the entire family, and will be doing so as part of the overall budget review deliberations that are taking place this summer.

Our bottom line, however, for THAAD and what we're looking at if we do have to make any restructure, is to make sure whatever we do reduces the technological risk associated with the program where there may still be some, and preparing us better to enter into the next phase of the program. But more importantly, to minimize any slip we may have to the fielding date, because we desperately need to have this capability to support our warfighters.

With that, I appreciate your patience and I'll open the floor for any questions you might have.

Q: Thank you, General.

The five failures that you showed on the chart each had a different, separate cause. Have the causes of those five failures and the last one all been cured, those problems have been alleviated so no failure has duplicated itself, so there's a forward progress then in the refining of this missile. Is that correct?

General Lyles: That is correct with the exception, obviously, of the last one. Since we're still doing the failure analysis we haven't made the exact correction or taken the corrective action for the last failure. But for the other four, those specific mechanisms were resolved.

We, as part of that, and one of the things I think is very important over the last year, we've introduced some additional testing methodologies so we can make sure that those types of things will not occur, from the four that were prior to this one. So we have done that.

But you've illustrated something that others may also have questions about, part of the complexity of the problem. If we had had a failure mechanism that continued to repeat itself in one element, it's sometimes easier to get to the root cause, make corrective action, redesign, etc., when you have that kind of scenario. When you have a random failure -- and I realize nothing is ever random -- but a failure that mechanizes itself in different methods each time, it makes it a little bit more difficult to get to the root cause of everything, but that's what we're trying to do.

Q: As far as Raytheon's contribution, I know there was talk over the last couple of weeks and months about bringing in another contractor. Will they be given subcontractor status on the program or is this just bringing in...

General Lyles: No, let me clarify that. Raytheon is already a subcontractor on the THAAD program. Raytheon is the corporation that designs and builds the radar. But that is a different segment of the Raytheon Corporation. The thing I alluded to earlier was asking the missile sector of Raytheon to help work with Lockheed Martin, not as a subcontractor or anything like that, but as a consultant, advisor, to make sure the design and the design approach and the failure of things we're looking at is sound.

Q: How much money have you spent on THAAD so far and how much more money are you willing to spend before you decide maybe it's not the way to go?

General Lyles: We've spent about, overall for the program, from the time it began to date, about $3.2 billion on the program. The answer to the latter question is one that is depending on how well we can get through the recent problems and get through success for the program. We want to be able to get into the intercept regime where we can actually make sure that this mechanism for missile defense really works, upper tier, using hit to kill lethality, and then execute that successfully so we can get into procurement.

I'm not prepared to answer how much more we're willing to spend. Obviously affordability is a major concern on all of our programs in the Department of Defense, so we're trying to drive the costs down for the future while at the same time solve these particular problems.

Q: But you haven't reached the point where you think of throwing good money after bad.

General Lyles: I don't think so, and I say that cautiously. I don't think so because we're making progress, particularly as you saw from that matrix, the successes we've had on the program. And I am confident that we can solve the problem with the missile so we can get to a capability that's needed to support our warfighters.

Q: What kind of restructuring of the program are you considering? And it's $3.2 billion since the program began when?

General Lyles: The program began shortly after, in earnest, as a THAAD program, shortly after Desert Storm. I'll have to get back to you or get somebody to clarify the specific date for that. If you don't mind, we'll come back to you on that.

Q: And the question of what you're considering as possible...

General Lyles: We're obviously looking at how many more tests do we need to do, how many tests do we need to have to proceed to the next phase of the program, when those tests should occur, should we focus those tests for different mechanisms or to address different questions or technologies than what we had originally planned, what the bottom line will be in the end in terms of an end date for fielding the system. Those are the kinds of things that we're examining.

Q: I just wondered if you would give us your best estimate, maybe it's a best guess, of when THAAD would be ready for the troops. And given that date of your best estimate or best guess, what do you see as the enemy threat at that time?

General Lyles: The original or current plan, I should say, for the THAAD program, is to have a capability by FY06. The first unit equiped is by 2006. That's the current program.

I hesitate on giving you any other date for that because that's the kind of thing we're looking at in terms of our restructure. Even with the failure that we had, the most recent failure, if we can get back on track, solve the problems, we can still execute what's necessary to go to the next phase of the program, and what is necessary is three intercept successes in a row... Excuse me, not in a row. Three out of five intercept successes to proceed to the next phase of the program.

We still can do that and maintain that schedule, although it's very, very problematic as to whether or not that can all occur in the right time. So I don't want to tell you that we've slipped past those things yet.

Q: ...full confidence that you can take the employment date of 2006, where is your confidence level right now that you will make 2006 as the date when you'll be able to deploy THAAD with the troops?

General Lyles: My mother told me not to be a betting man, so I hate to give you odds like that because it puts me in the betting regime. But I'm confident we'll be able to get a capability to support the troops, and we're trying to make that as close to the original fielding date as we possibly can.

Q: General, how are we able to prospect that you will bring on a second source for this program, either a leader/follower or some other regime? And will that be by choice or will that be by congressional direction?

General Lyles: I'm not sure exactly what's going to come out from Congress. I think they're going to ask us to consider this and we are, obviously, considering this as one of our potential alternatives, restructuring the program.

I might just caveat something we've also told the Congress, and they understand this. A second source, depending on when you do it on a program, is not necessarily a panacea. We have to look at all the ramifications of doing such a thing, and that's the kind of thing we're examining very closely. The costs for bringing on a second source, the time it takes to bring on a second source, whether or not you have to second source or do a Chinese copy, that is build the same missile to print or to have a competing design. There are lots of questions like that that need to be answered and addressed before we can formally answer that question and get back to Congress. I'm hoping what the Congress will ask us to do is exactly what we are doing, is examine all those alternatives and consider them before we reach a final conclusion.

Q: Congressman Curt Weldon has talked about the possibility of allowing an enhanced Israeli Arrow missile to be able to come in and compete with the Lockheed Martin design, and then be mated, possibly, with the THAAD radar and DMCCC. How do you feel about that?

General Lyles: I don't have any specific comments about that because we have not looked at that sort of architecture and whether it works. Our focus right now working with the Israelis, and I just returned from Israel just a couple of days ago, is to make the Arrow system itself work. There are enough challenges with that, and to make the THAAD system work. We have not examined any hybrid or anything of that nature.

Q: I have a question about the Patriot missile. I don't know if it would be better for you or perhaps General Franklin. But what level... You talked about the upgraded Patriot. How effective, what level of protection does that provide? And is that Patriot PAC-3 deployed anywhere now, and is it very widely deployed?

General Lyles: Let me answer the question, and I want to make sure I'm clear because it may be a little bit confusing to some who don't understand our configurations that we have.

The Patriot that was used in Desert Storm, obviously, had some effectiveness, but we have been embarking on a more robust Patriot system to meet the threat. We have Patriot PAC-2s, Patriot Advanced Capability 2's which are in the field today with something we call a GEM -- Guidance Enhanced Missile. The capabilities provided by that system that is fielded today -- and oh, by the way, was in the Middle East to support anything that may have happened in Iraq earlier this year -- that system can counter today's threat. What we're doing with the PAC-3 is a more advanced system still, with greater capabilities against systems that may have weapons of mass destruction in the warhead, and systems that may have a little bit longer range than today's threat.

But what we have in the field today, the PAC-2 with its guidance enhanced missile, can counter today's threat. We've actually proven that, by the way, in flight tests last year. I think some people were aware of that.

Q: Is that a hit to kill?

General Lyles: That is not hit to kill. It's a blast- frag warhead. Hit to kill is the mechanism of lethality we will be building in for the first time with the PAC-3.

Q: General Lyles, about the second source issue. It seems that to Lockheed it's pretty apparent that a second source is necessary. According to what you just said, that's what they're doing. They're going out to Raytheon, they're asking Raytheon to come in and help them fix the problem.

General Lyles: That's not the true definition of second source. Second source actually gets off and does a design and builds something. In the case that I just described, what Lockheed Martin is doing is asking another corporation for advice and some consultancy, if you will. That is not a second source at all.

Q: Basically the same design, though, if it's management concerns which... The management concerns. So there's nothing to bar you from bringing in another company to build the same design but build it properly.

General Lyles: I'm not sure that we can say that it's been management processes. What we're focusing on -- quality, reliability, all the other systems engineering processes. Those aren't management concerns, per se. They do get down to the heart of engineering -- systems engineering, systems integration. That's the kind of thing that we're focusing on. In addition to verifying that the design is a sound one.

Q: So you're saying if there were a second source, it would be a different design, they would not rebuild the Lockheed design.

General Lyles: I don't know. Again, as I answered earlier, that's the kind of thing we're looking at very closely as part of our response not only internally, but response to Congress in making sure we consider that but answer all the tough questions. We have not decided that yet.

Q: How much money is Raytheon getting from Lockheed to do this?

General Lyles: Gracious, I don't know the answer to that, in all honesty. And I don't know if it's anything. I think it's advice, if you will, and consultance, to help them take a look at it. We can get you a better answer to that when we get through our negotiations with Lockheed. I honestly do not know.

Q: Two questions. One, the failure mechanism. Was this sloppy quality control? Or what? What's emerging? And two, this negotiation that's ongoing, are we talking about tweaking around the edges here, or is this solid negotiating that could fall apart in the next week or two or three?

General Lyles: It's solid negotiation. We're not talking about something that could fall apart. We're talking about negotiating the arrangements in this cure notice response from Lockheed Martin, and specifically the aspect that has to do with the cost sharing. I think we're pretty good, on sound grounds, relative to the kinds of things we think they are offering and what we would like to see. We're leaving up to the contracting experts to figure out and negotiate the specific details.

Q: You've left the thing in general, you're dealing with...

General Lyles: We've left the concept of having a cost sharing arrangement, and we think that's a good thing not only to show commitment on the part of the contractor, but also it takes some of the onus off of -- not responsibility off of the government, but it shows that if something happens in the future in terms of failures, that the contractor is stepping up with his money to help defray some of the costs associated with this development.

Q: Is it the fault of sloppy workmanship or what?

General Lyles: We don't know. Again, that's part of the root cause analysis that we're undergoing to try to find out exactly what happened. We know it was a short circuit. I think any one of you know, just from everyday things we have around the household, you can have things like short circuits that aren't necessarily the result of sloppy quality or something of that nature. But again, we're looking at those kinds of things.

Q: Is the report accurate that the cost sharing would involve fines about $100,000 a day if there's a test failure?

General Lyles: I don't know where that number came from. We've talked about many kinds of different numbers relative to how to account or bookkeep this cost sharing arrangement. That's not a completely accurate statement.

Q: What about the figure of $15 million per test up to $75 million total? Is that accurate?

General Lyles: Those are the kind of things that we're looking at, but I do not want to talk about specific details until we've had a chance to finish the negotiations with Lockheed Martin.

Q: What is the total cost of these tests?

General Lyles: The total cost of each test to the government is a significant amount, and that's a broad statement. Let me get back to you with a correct number.

Q: Let me follow up on this whole business of cost sharing for one second. Even though you don't have the final numbers yet, philosophically, and you don't know the cost, but philosophically what do you think is the government's responsibility to pay for, and what would be the contractor's responsibility? Because you've talked a lot in the past about systems engineering and design. So what would the government... What's your view on what the government would be liable to pay for, and why shouldn't the contractor pay the whole load since they haven't managed to fulfill...

General Lyles: The general principle that we're looking at in this cost sharing arrangement -- and again, this is part of our negotiation -- is that the government should still pay for government costs. I should not expect to have the contractor pay for the program office in Huntsville, where my people are involved in the THAAD program, or to pay the government costs for the range activity at White Sands Missile Range. But there are, obviously, contractor costs -- particularly the team of people at Sunnyvale. Those are the kinds of things we're negotiating with them, that if we have subsequent failures, we want them to pay a significant amount for the contractor's share of the program.

Q: Is it your feeling... How much of it is your feeling that the contractor should pay for the failure of this program so far?

General Lyles: The negotiation that we have, the current cost sharing arrangements looking at the future. We have not talked about going back and getting any funding back for the failures we've had to date. We're talking about subsequent...

Q: Understood. But this future, because it has failed so far... Do you think the contractor should pay for the future because...

General Lyles: In terms of the flight test activity, that's what we're negotiating in this cost share arrangement, and that's all we've talked about in the flight tests that are yet to come for the program.

Q: Regardless of whether the tests are successes or failures, or only if they're failures?

General Lyles: Only if they're failures. That's the sort of bottom line.

Q: Sir, can you give a status update, please, on the MEADS program? And as a followup to that, your foreign partners have expressed a lot of concern about the U.S. commitment to the program. Could you please address that.

General Lyles: MEADS, as I stated earlier at the very beginning, MEADS in terms of capability. I'll hold off on talking about the program per se. Having a maneuvering air defense system to go with the maneuver forces for our warfighters is a vital part of the architecture that we need for missile defense. MEADS is obviously the program we are currently embarked upon with the Germans and the Italians to try to make that a reality.

The issue we have is trying to, one, define the program, but also trying to figure out how to fit it within our overall missile defense budget. Where we are right now is in the process of looking at the alternatives, looking at the cost plans for the program, and defining all that, and vetting that as part of our budget reviews for all of our missile defense programs this summer. It is one of the things we're looking at and trying to determine how we can fit it into our overall budget this summer.

Q: General Lyles, if you don't know the root cause yet of the last failure, and you have thoroughly scrubbed this program and made changes before this test that you were confident going into this test were necessary, why all this flurry of activity now, again, to relook at the whole thing, to redo the cost sharing arrangement, to restructure Lockheed's team?

General Lyles: That's a fair statement, and let me just sort of reiterate that when we had, certainly, the last test failure, flight test number seven, we embarked on a major, major review, independent government review, of the design, of the pedigree or some of the hardware we have. And just to make sure it's clear, when I say pedigree, we go back and look at all the build papers, design papers, test papers, associated with the various components that are part of the design.

As part of that review between flight test number seven and flight test number eight, we identified some shortcomings, if you will, and the rigors of some of the testing that we did for the various components, the various subsystems, etc. We spent that 14 or 15 months between flight test seven and flight test eight in some respects going back and catching up in terms of testing -- qualification testing, design margin testing, those sorts of things, to make sure we really understand what we have in terms of the design.

We also looked at the processes on the part of the contractor for their quality program, their reliability program. The contractor made some significant changes in their corporate and organizational structure to address those. We also looked at personnel, to make sure we had the right kinds of personnel.

What concerns us, in spite of all those reviews which have given us confidence in the design itself, confidence in the processes that we now have on the part of the contractor, is that for this phase of the program, the hardware we're currently testing is the same hardware we procured four or five years ago. In other words, we're stuck with what we have. We think it's still very important to proceed with the program and to try to get through these tests to understand will hit to kill and missile defense work. Will this concept and the system work.

So we're trying to get through the series of tests with the existing hardware rather than stopping altogether, build new hardware, new components to the new processes and start all over. That is going to be a significant hit if we try to do that. So we're trying to scrub everything again, relook at some of the things we looked at previously, understand what happened this particular time, and try to make sure we have the best capability there so we can proceed through the testing and then get into the next phase of the program where we'll have better hardware.

Q: But why should Lockheed be restructuring again? Why should you be talking to them about cost sharing when you don't even know what went wrong the last time?

General Lyles: Ultimately, even though the government is ultimately responsible, we hired, if you will, Lockheed Martin as our prime contractor to pull all these things together and to help us address all these types of things. Systems engineering, systems integration, successfully getting through testing, having the right kinds of components, etc. So there is culpability on the part of the contractor, as you would expect, a prime contractor. Hence, we want them to have some share in the burden of this as we get through the next part of the test program.

Q: General, if you take all of these programs together, how much are we spending to develop theater missile defenses, and when, realistically, will any of these come to fruition in the sense that there will be an actual, significant upgrade in the ability to defend troops in the field?

General Lyles: Let me just say, even though some people may from a quality standpoint disagree with me, we have significant improvements from Desert Storm today with the PAC-2 GEM. Again, I have to emphasize that because of the tests we've done in the past year where we've actually tested against actual current generation SCUDs and have been very successful. So it's hard for me to say we don't have significant capability compared to Desert Storm.

The real robust capability, the highly effective capability that we know we need, I'm not being naive by my earlier statement, we will have our first generation of those, or the first of the new generation with the PAC-3 within the next year, early in the year 2000 is when we're going to have that capability. We'll have the Navy counterpart, the Navy area, by the end of the year 2000, the early part of 2001. The schedules we're currently working for those two programs.

The upper tier systems which we really need to have for the longer range theater ballistic missile threats and for things that may have weapons of mass destruction warheads on them, again, we're still trying to get to that 2006 date for THAAD. Granted, we have to look at what all this has done to us in terms of schedule. But we're still trying to get as close to that date as possible.

The Navy upper tier program is just now being fleshed out, and our goal is to try to get that as early as we possibly can also.

Q: The price tag for all this?

General Lyles: The price tag, I can't answer that for you right now. I don't have the number off the top of my head, because my portfolio for missile defense includes national missile defense and some other things, and they're all sort of wrapped up together including infrastructure and testing. So I can't give you a good number now, but we can get something back to you for the record, if you like.

Q: As I understood before the last test, the program was structured so that if you had a successful intercept you would go ahead and make a purchase of I think it was 20 or 30, some significant amount. That seemed very unusual compared to other programs, that with one success you'd go and make a major buy? Are you still planning to do that? Or is that one of the things you're restructuring?

General Lyles: The answer is no. It is one of the things we are relooking at. We actually had already decided to do that even before that test, but the answer to the question is no.

Q: Can you tell us how you're restructuring?

General Lyles: We're still in the process of doing that. I'm not trying to hedge in that regard, but we just had a meeting, a major review here in the Pentagon the other day, to vet and relook at all the different options of things that we need to do. We still have some questions to answer first, and then get blessing by the authorities, particularly the Defense Acquisition Executive, Dr. Gansler, before we have the full program, restructured program, defined.

Q: So if I understand it, not only are you looking at things if there are subsequent failures so that Lockheed will pick up the charges, but if there is a success it will not be, the coffers do not swing open and...

General Lyles: We had already decided the latter. The two are not necessarily linked together. We were looking at the restructure. There are fact of life things associated with that just because of slippage schedules and budgets, etc.

Q: General, the troubleshooter you have is from Lockheed Martin. The five review teams are manned by Lockheed Martin -- albeit in both cases from their general astronautics office. But given their track record, wouldn't it be better to have a more independent perhaps government involvement in these review teams?

General Lyles: Ordinarily somebody might think that. In some respects you have to understand and be very familiar with the players involved.

One of the things we were a little bit concerned about in the past on the THAAD program is that Lockheed Martin, again who I have great confidence in as a corporation, perhaps did not bring in all of the expertise that was available in this vast and excellent corporation. In the past. In this particular case, they have brought in the best from astronautics, the best from their Vought systems down in Dallas. They brought in the best from their corporate headquarters and the best from their operations down at Cape Canaveral involved in the space program. I particularly feel confident this time that even though they're Lockheed Martin teams, there are government personnel on each one of these teams. We have some of our best people also on these teams. And more importantly, the team leaders are people who I know from personal experience, one of whom was one of my mentors, people who don't care about corporate loyalties. They're going to tell you the straight facts of what the story is, and that's the kind of thing we need to make sure of what the story is, and that's the kind of thing we need to make sure we get a good look at this.

Q: Who's the troubleshooter?

General Lyles: Mr. Ed Squires is the troubleshooter they've brought in from the astronautics division, very successful in literally shifting a whole new corporate product, the Atlas launch vehicle from San Diego, the old General Dynamics, up to the Denver operation without a single flaw, missed beat, missed schedule, or anything like that, and very successful space launches. Also it's the troubleshooter that solved some Tomahawk problems some years in General Dynamics. So we've got, I think, the right personality.

Q: What's your timeframe for looking at these options for a possible restructure? And at any point could you decide we actually don't need a restructure? There will be no restructure, there will be no changes to the program.

General Lyles: That's always an option, to do nothing different if you will, from the status quo. We're looking at all of these things. As I mentioned, we had a major review internal to the building just the other day, and we are scheduled to get answers back to some of the questions that still remain from this review within the next couple of weeks. Then I'm scheduled to get with my boss, with Dr. Gansler, to get concurrence on whatever we may want to do, certainly by the end of the month, and then we'll proceed from there.

Q: Can you state who that review was done by a couple of days ago that you had in the building? What branch or...

General Lyles: We call it an OIPT -- an overarching integrated product team. It was co-chaired by me and Dr. George Schneiter from OSD staff.

Q: The components that you suspect caused this failure in flight test eight, was that specifically tested during that 14 months scrub-down in between seven and eight?

General Lyles: The thrust vector control system was tested successfully. It's built, by the way, not by Lockheed Martin, but by Chemical Systems Division of Pratt & Whitney. We did test that and it's been tested, actually the kind of thing we can test on the platform, the launch platform before it's launched. So we again, don't know exactly what caused that particular short circuit.

Q: With respect to the MEADS program, again, the authorizers and appropriators have stated that they support the MEADS requirements, there are just some concerns that the program is not funded in the out years, and that's a problem with finding money for FY99. With the GAO saying there are no real alternatives, and with the CINC testifying that they need a system that meets that requirements, what is really the problem with finding that money in the POM? And if those determinations aren't made very soon, won't you jeopardize FY99 money to complete the cooperative R&D program?

General Lyles: We have FY99 money for the program. Our challenge is to try to figure out how to fit it into our POM, Program Objective Memorandum, the 2000-2005 budget. The issue is, again, one of affordability. We have several, as many of you have already indicated, we have several very important missile defense programs already on our plate that need to be funded, in addition to what we're trying to do for MEADS. So we're trying to figure out for all of missile defense, how do we get all of these things into the budget? Recognizing that the Department of Defense has many, many other top priorities. This is not the only one. The challenge is how to fit all these things in, and can we do so.

Press: Thank you very much.

General Lyles: Thank you.

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