Flawed missile defense system generated $2 billion in bonuses for Boeing

WASHINGTON DC – From 2002 through early 2015, the Pentagon conducted 11 flight tests of the nation’s homeland missile defense system. In the carefully scripted exercises, interceptors of the Ground-based Midcourse Defense system (GMD) were launched from underground silos to pursue mock enemy warheads high above the Pacific. The interceptors failed to destroy their targets in six of the 11 tests — a record that has prompted independent experts to conclude the system cannot be relied on to foil a nuclear strike by North Korea or Iran.

Yet over that same timespan, Boeing Co., the Pentagon’s prime contractor for GMD, collected nearly $2 billion in performance bonuses for a job well-done. The Pentagon paid Boeing more than $21 billion total for managing the system during that period. The Times obtained details about the payments through a lawsuit it filed against the Defense Department under the Freedom of Information Act. A spokesman for the Missile Defense Agency, Chris Johnson, said the payments “complied with all appropriate acquisition regulations.”

A Times investigation also found that the criteria for the yearly bonuses were changed at some point to de-emphasize the importance of test results that demonstrate the system’s ability to intercept and destroy incoming warheads. Early on, Boeing’s contract specified that bonuses would be based primarily on “hit to kill success” in flight tests. In later years, the words “hit to kill” were removed in favor of more generally phrased benchmarks.

L. David Montague, co-chair of a National Academy of Sciences panel that documented shortcomings with GMD, called the $2 billion in bonuses “mind-boggling,” given the system’s performance. Montague, a former president of missile systems for Lockheed Corp., said the bonuses suggest that the Missile Defense Agency is a “rogue organization” in need of strict supervision.

The GMD system is intended to thwart a “limited” nuclear strike by a non-superpower. In a February 2016 report, the Government Accountability Office, a nonpartisan investigative arm of Congress, said the system’s performance in tests has been “insufficient to demonstrate that an operationally useful defense capability exists.”

The test failures are particularly unsettling given that the exercises are meticulously orchestrated. Personnel operating the GMD system know ahead of time approximately when the targets will be launched and from where, as well their expected speed and trajectory — information they would not have in an actual attack.

Given the system’s weaknesses, multiple interceptors would have to be launched for each incoming enemy warhead to assure a hit to kill, according to current and former officials familiar with the missile agency’s projections. As a result, the system’s arsenal of 30 operational interceptors — four at Vandenberg AFB, Calif., and 26 at Ft. Greely, Alaska — could be quickly depleted by an attack with multiple missiles.

Boeing holds two contracts to manage GMD. Under their terms, the company is reimbursed for its direct costs in overseeing the system and for some of its indirect costs, such as executive salaries and other overhead. The bonuses come on top of that.

In 2010, the MDA granted Boeing a contract extension worth more than $1 billion. The Defense Department’s inspector general later raised questions about the extension — including bonus payments — saying that agency officials lost an opportunity to save millions of dollars by failing to wait for an audit they had requested. The inspector general concluded that, if agency officials had waited to see the audit, they “could have negotiated a significantly lower contract value and saved the government millions of dollars in reduced fees” — a reference to bonuses, which are based on the total contract value.

The MDA and its lead contractors have sought to put a positive spin on the system’s performance. After a flight test on Jan. 28, 2016, the agency and several contractors, including Boeing, issued news releases declaring the test a success. In fact, a thruster, which helps steer the kill vehicle, stopped working during the exercise, causing the kill vehicle to fly far off its intended course. None of the press releases acknowledged the malfunction — nor did the MDA’s director, Vice Adm. James D. Syring, in three subsequent appearances before congressional panels.

– edited from the Los Angeles Times, Sept. 2, 2016
PeaceMeal, May/June 2017

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