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THAAD Testing - System Development and Demonstration

After the missile intercepted the target in the 10th and 11th flight tests, the initial version of the missile was judged successful and the program entered engineering and manufacturing development in June 2000. However, this phase will run longer than planned - over 7 years - with a commensurate delay in fielding the final missile system. The program transitioned to the product development phase of acquisition, in which program activities shifted from technology development and demonstration to missile redesign and engineering. "Product development" is referred to by DOD as the "System Development and Demonstration" phase of acquisition and formerly as "Engineering and Manufacturing Development."

In August 2003, there was a series of explosions at a motor supplier in California, in San Jose. It was the chemical systems division of Pratt & Whitney. Unfortunately that supplier handled all of THAAD's motors. And in recovery from that, in requalifying another supplier, and moving out of that facility, had a impact on the program and began to delay its return to flight test.

During fiscal year 2005 overall, the prime contractor was under budget and ahead of schedule. However, the contractor's favorable cost and schedule performance eroded somewhat during the second half of fiscal year 2004. The declining performance was largely driven by issues in missile development. Specifically, two explosions at a subcontractor's propellant mixing facility resulted in the need to find a new vendor.

During fiscal year 2005, the THAAD program accomplished several key activities in preparation for flight tests, but flight tests began later in the block than planned. Program officials successfully integrated software upgrades into the launcher and radar and completed missile qualification tests that lead to flight readiness certification.

By 2005 program officials assessed all of THAAD's critical technologies as mature. These technologies are included in four major components: the command, control, and battle management component; the interceptor; the launcher; and the radar. After experiencing early test failures, program officials made changes in the execution of the THAAD program that allowed it to make progress in maturing critical technologies. Officials placed more emphasis on risk reduction efforts, including adopting technology readiness levels to assess technological maturity.

Although the THAAD program has implemented many procedures to reduce program risk, by 2005 it continued to encounter some problems. For example, the program experienced a major workmanship problem in a shelter subsystem within the command, control, and battle management component. In addition, an explosion at the Pratt & Whitney propellant mix facility caused the program to seek an alternate source. The program office's risk assessment states "source replacements have the potential for delaying booster delivery during the flight test program and into production."

In 2005 MDA officials were examining whether one THAAD component can be deployed early. Officials are assessing whether a THAAD-like radar can serve as a forward-deployed radar for the Ballistic Missile Defense System. Development, customization, and testing of the radar under another MDA program had begun in an effort to provide this capability within the next 2 years.

By 2005 THAAD's basic design was nearing completion, with approximately 91 percent of the expected engineering drawings released for the basic design that was expected to provide the initial capability. However, the THAAD Program Office reported a decrease in the percentage of drawings released in 2005 (91 percent) compared to the percentage reported in 2004 (100 percent). In 2003, the program reported that it had released all of the expected 9,852 drawings. However, as the design matured, the program office recognized that 11,221 engineering drawings would be required and that it had released only 10,221 of those drawings. The number of drawings increased as information was gained from testing, the design of experimental items was completed, existing drawings were revised, and as new subcomponents were needed to replace obsolete ones. The program office successfully conducted a design review in December 2003. However, if problems are identified during flight testing, the number of drawings may increase as the design matures during Block 2006. By 2007 THAAD's basic design was nearing completion with approximately 93 percent of the 13,010 drawings expected to be available at the start of production. The number of drawings increased from the approximately 9,850 reported in 2006 primarily due to design changes that testing identified as being needed.

In March 2006, MDA removed THAAD from Block 2006. MDA expects to field a limited THAAD capability during Block 2008. According to MDA, this action better aligned resources and fielding plans. During fiscal year 2006, the THAAD contractor expended more money and time than budgeted to accomplish planned work. During fiscal year 2006, the contractor incurred a negative cost variance of $87.9 million, which boosted the cumulative negative cost variance to $104.2 million. Similarly, the contractor did not complete $37.9 million of work scheduled for fiscal year 2006 on time. However, because the contractor completed prior years' work ahead of schedule, the cumulative negative schedule variance was $28 million. Based on fiscal year performance, GAO estimated that at completion the contract could exceed its budgeted cost by between $134.7 million and $320.2 million. The THAAD prime contractor's negative cost variance for the fiscal year can be attributed to the increased cost of missile manufacturing, re-designs, and rework, as well as launcher hardware design, integration difficulties, and software problems. However, the contractor was performing well in regard to the radar portion of the contract, which is offsetting a portion of the negative cost variance.

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