New ICBM Interceptor to Cost $18 Billion

June 2021
By Kingston Reif and Shannon Bugos

A new U.S. interceptor intended to counter limited intercontinental ballistic missile (ICBM) strikes from North Korea or Iran could cost nearly $18 billion over its lifetime, according to the Defense Department’s independent cost assessment office. The new estimate comes amid continued questions about the future of the U.S. homeland missile defense mission and is at least 36 percent more than the Missile Defense Agency (MDA) had suggested. 

The Pentagon said in April that the Cost Assessment and Program Evaluation (CAPE) office estimates the cost of the Next Generation Interceptor (NGI) at $17.7 billion. That figure represents $13.1 billion for up-front costs, including the purchase of 10 developmental interceptors; $2.3 billion for 21 operational interceptors; and $2.3 billion for operations and support costs over the life of the interceptors. 

The average cost to develop and purchase the 31 interceptors amounts to $498 million per interceptor, according to the CAPE office. The cost to purchase the 21 operational interceptors is $111 million per interceptor. 

The Pentagon in March awarded two research and development contracts for the interceptor to Lockheed Martin and Northrop Grumman. (See ACT, April 2021.) The CAPE estimate “reflects the system development acquisition plan to carry two NGI contractor teams through Critical Design Review…at which point the [MDA] will down-select to a single vendor to proceed with the remaining development, testing, and production efforts,” Pentagon spokesperson Christopher Sherwood told Inside Defense in an April 27 statement. 

The NGI emerged after the Pentagon in 2019 cancelled the program to design an upgraded kill vehicle, the Redesigned Kill Vehicle (RKV), for the already existing interceptors that are part of the Ground-Based Midcourse Defense (GMD) system. (See ACT, October 2019.) The MDA planned to deploy the RKV beginning in 2021 atop 20 new interceptors in Alaska to augment the existing fleet of 44 interceptors there and in California. The RKV was also intended to replace the aging kill vehicles atop the current fleet.

The agency spent a total of $1.2 billion on RKV development at the time the program was cancelled, according to a 2019 Government Accountability Office (GAO) report. 

The Defense Department hopes to begin fielding the NGI in fiscal year 2028 in silos at Fort Greely, Alaska. The department is not currently planning to replace the existing 44 interceptors, which have been plagued by development problems and testing failures, with the NGI but rather to supplement them with 20 of the new interceptors to bring the fleet total to 64 interceptors. 

Independent assessments put the cost to purchase the newest versions of the existing ground-based interceptors at $90–100 million per missile. The CAPE estimate of the NGI cost is higher than the MDA estimate of $11.3 billion for the program, the GAO said in an April 28 report.

The high price tag to acquire the NGI has raised concerns from some members of Congress. Sen. Elizabeth Warren (D-Mass.), citing the shortcomings of the existing 44 interceptors and current plans to field just 21 NGIs, said at a Senate Armed Services Committee hearing on May 12 that “[i]t’s not at all clear to me that spending billions of dollars on additional interceptors is the right call.” 

The Pentagon is planning to extend the life of the existing ground-based interceptors pending the deployment of the NGI in 2028. MDA Director Adm. Jon Hill said on May 12 that the life extension effort will increase the reliability of the interceptors “to kind of bridge that gap between when we’ll actually deploy the first NGI.”

Meanwhile, the April GAO report highlighted roadblocks to the Pentagon’s plans as of the end of the Trump administration for a new layered homeland missile defense approach that would augment the GMD system with the Aegis system, specifically the Standard Missile-3 (SM-3) Block IIA interceptor, and the Terminal High Altitude Area Defense (THAAD) system, which is designed to defeat short- and intermediate-range missiles.

The GAO found that the GMD system’s fire control and engagement planning currently “does not take into account any other interceptor systems” and that managing engagement among multiple interceptor systems requires a “more cohesive integration with overall battle planning” than exists at this time. The agency also found that the existing ground-based interceptor has “hardware constraints that limit communication opportunities with ground systems while in flight.”

The GAO said “more development work is needed for the [Aegis] SM-3 Block IIA to support a layered homeland defense capability” and that this effort “could introduce considerable cost, schedule, and performance uncertainty to a program that has just entered initial production.”

The Pentagon in November 2020 conducted a successful first intercept test of the Aegis SM-3 Block IIA against an ICBM target. (See ACT, December 2020.) “This was not an operational test, however, and it was executed under highly favorable conditions,” the GAO noted.  

Furthermore, the GAO said that “there are a number of significant upgrades and steps to address obsolescence that would be needed to enhance THAAD’s performance and make it capable of performing” as part of the layered homeland defense.

The MDA requested $274 million in fiscal year 2021 to adapt the Aegis missile defense system and the THAAD system, to provide an additional layer of defense against limited ICBMs threats. But Congress poured cold water on the proposal and provided $49 million only for limited concept studies, a decrease of $225 million from the budget request. (See ACT, January/February 2021.)