The system, which faces a critical test on Sunday, has failed to
hit a dummy missile in five of eight tests since the Bush
administration rushed to deploy the system in 2004 to counter
growing threats by North Korea. It has not hit a target since 2008.
Another miss could put the brakes on plans by the U.S. Missile
Defense Agency (MDA) to spend billions of dollars to improve the
Boeing-led Ground-based Midcourse Defense system (GMD), and add 14
more interceptors to the 30 already in the ground in Alaska and
U.S. defense officials, lawmakers and outside experts agree the GMD
program - projected to cost $41 billion - must be changed, even if
Sunday's test succeeds.
Under discussion is additional funding for maintaining interceptors
and improving their reliability, more testing of components and the
entire system, and upgrades to improve the system's ability to tell
actual missiles from decoys. There will also be different fee
structures to provide Boeing with incentives for improvements in
quality rather than cost-cutting.
Officials at Boeing, the Pentagon and MDA declined comment on the
contractual changes under discussion.
The program, long a political football for U.S. lawmakers, remains
the only U.S. defense against long-range missiles that could carry
chemical, biological or nuclear warheads.
Supporters say the system is making progress under Navy Vice Admiral
James Syring, who took over in November 2012 from Army Lieutenant
General Patrick O'Reilly.
But the multiple test failures and a harsh review by an independent
group commissioned last year by MDA have spurred a drive to
restructure a seven-year Boeing contract that began in 2011, and the
initial contract it has held since 2001, according to sources
briefed on the review. The aim is beef up the system's quality and
That review has not been released, even to Congress, and details are
being closely held.
'A LOT OF BAD ENGINEEERING'
Led by former military officials, the review blasted MDA's move away
from a rigorous "systems engineering" approach and more frequent
testing that would have boosted reliability and quality, and could
have helped avert last July's test failure, according to the sources
familiar with the situation.
Pentagon acquisition chief Frank Kendall in February said "a lot of
bad engineering" was found while investigating the July test failure
and two previous ones in 2010.
The Senate Armed Services Committee in its fiscal 2015 budget added
$30 million in funding for reliability and maintenance improvements
to the GMD program, saying it was aware that the independent review
had revealed deficits in that area. Congress will finalize the
budget plans later this year.
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One source familiar with the program said he was "shocked" to see
the lack of attention to reliability, risk management and ensuring
precise production practices. He said the contract with Boeing was
structured poorly, providing the company with greater fees for
cutting costs than improving quality and reliability.
Riki Ellison, who heads the non-profit Missile Defense Advocacy
Alliance, said GMD's problems were due to "misguided" decisions
around 2009 to scale back testing, reduce funding and cancel work on
a new kill vehicle, the part of the system that hits an enemy
missile. The moves were part of the Obama administration's early
efforts to reduce tensions with Russia and focus more on regional
defense, he said.
One senior U.S. official said Pentagon leaders are confident that
Syring is taking the steps needed to put the program on track, and
put appropriate incentives in place for Boeing.
The defense and aerospace company, which had already earned over $18
billion on the GMD program since 2001, beat out a combined Lockheed
Martin Corp and Raytheon Co team to continue managing the program
when MDA opened the program to competition in 2011. Boeing is teamed
up with Northrop Grumman Corp on the new contract.
The company is hoping to resume deliveries of replacement
interceptors, which were halted by MDA after a test failure in July
2013. That failure occurred when a Raytheon kill vehicle failed to
separate from the third stage of the rocket and thus missed its
Syring last week told a Senate hearing that MDA had identified the
cause of that failure, and would fix all 30 interceptors before year
end. Deliveries would resume if the test succeeded, he said. He said
Boeing's incentive fees had been docked after the test failures, but
gave no details.
Another test failure would likely put a hold on 14 additional
interceptors the Pentagon plans to order, putting $1.05 billion in
potential orders on the line for Boeing.
(Reporting by Andrea Shalal; Editing by Martin Howell)
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