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Kill-Vehicle Contract Awarded Without Full Review, GAO Says
The General Accounting Office (GAO) reported January 27 that the contract for a key element of the Pentagon’s strategic missile defense system was not awarded on technical or cost considerations, but because one of the two companies competing for the project wrongly obtained and used secret information from its rival.
In late 1998, Raytheon Co. was chosen to build an exoatmospheric kill vehicle (EKV)—a light-weight device launched into space atop a rocket to locate and collide with an enemy warhead. Although a division of Boeing Co. had an alternative EKV program underway, GAO found that “no formal criteria were used to evaluate the two systems, and there was no formal technical comparison or analysis used by the decisionmaker to select the EKV.”
Tasked with conducting studies and investigations for Congress, GAO determined that Raytheon won the EKV contract because of concerns that a fair competition could not be held since Boeing employees had acquired and then “surreptitiously” used a Raytheon software testing document. “The anticipated evaluation of the competing EKV systems was never made,” GAO reported.
The Raytheon EKV is now part of the proposed missile defense system that the Bush administration plans to start deploying next year. (See ACT, January/February 2003.)
Allegations that Raytheon won the contract by default have been made for years, but GAO is the first government body to confirm them officially.
In April 1998, the Ballistic Missile Defense Organization (BMDO), now the Missile Defense Agency, named Boeing the lead company in charge of managing the ground-based missile defense program, meaning that Boeing was put in charge of awarding contracts for various elements of the system, including the EKV. At the time, a division of Boeing had been working on an EKV design for roughly eight years and was competing with Raytheon for the EKV contract. Boeing assured Raytheon that a fair EKV competition would be held.
But at the end of July 1998, a Boeing official found the Raytheon software testing document in a conference room of Boeing’s EKV team. Boeing notified Raytheon of the discovery and then spent the next few months trying to reassure Raytheon that a fair EKV selection could still take place. Raytheon remained unconvinced.
With Raytheon unmoved by Boeing assurances and growing concern that an EKV decision had to be made sooner rather than later in order for a system to be tested in time for a scheduled June 2000 presidential deployment decision, Boeing gave Raytheon the EKV contract. BMDO agreed with the Boeing move.
Both Boeing and BMDO, according to GAO, believed either EKV was advanced enough to select for future flight-testing. A top Boeing official, however, told GAO that some concern existed that the Boeing EKV effort was falling behind schedule.
GAO was unable to find any document setting out a formal decision to abandon a competition between the two companies, both of which had received roughly $400 million from the Pentagon to develop their separate EKVs up to that point.
To guard against the possibility of being left without an option if the Raytheon EKV performed poorly in testing, Boeing and BMDO decided to keep funding a Boeing backup effort at approximately $4 million per month until after the system’s fourth flight test, which occurred in January 2000.
The U.S. government decided against prosecuting or punishing Boeing, which fired three employees and suspended another for their actions, and last summer it dropped efforts to recover some financial compensation. Boeing remains in charge of developing the ground-based missile defense system.
Representative Howard Berman (D-CA), who commissioned the GAO report, stated February 7, “This study revealed a horribly flawed process and some inexplicable conduct by missile defense officials and contractors, both in pursuing the most effective system and in protecting U.S. taxpayers.”
In light of the GAO findings, Berman also questioned the validity of recent Pentagon efforts to reduce congressional reporting requirements on missile defense programs. “This report demonstrates the real dangers associated with such a trend,” Berman warned.