as a sort of a last date. We can move that back in based upon an earlier decision, say, in 2000 instead of 2001 and still attempt, perhaps, to make the 2003 date. These are the uncertainties associated with the program based upon the technical demonstrations that we have planned. Next slide. [The Charts referred to can be found in the Appendix beginning on page 121.] And the last topic is the space-based portion of it, the SBIRS portion of it. Just to give you an idea, because I am sure we will have more discussion today about SBIRS, there are really three pieces to the SBIRS program. There is the geosynchronous Earth orbit. This is the one that is replacing the current satellites that we have, the Defense Satellite Program (DSP) satellites, the early warning satellites. It will give more accuracy than those satellites. The problem-and I will point this out when I talk about our SBIRS decision-is that we have five more of these still left to be launched, and so we have the capability, and the General Accounting Office (GAO) has pointed out you should probably try to use those and all logic in trying to make a decision on SBIRS was heavily influenced by the fact that we have the capability to actually cover the next few years with the current DSP satellites rather than necessarily moving into SBIRS High here. In the highly elliptical orbit, there are two satellites that are planned: those we would keep on the current delivery schedule, the 2002 schedule, as contrasted to these that we are proposing to move out by two years, the High satellites, and then we have the SBIRS Low which is a more complex, more sophisticated, more difficult, I should say, program which is intended to help us a great deal with the sophisticated threats for the discrimination that will be required against those sophisticated threats in the future. It will also help us, again, in the future for some of the long-range theater systems, and those are the three systems I am going to cover in the next slide on the last of these overviews. [The Charts referred to can be found in the Appendix beginning on page 121.] As the Chairman mentioned, we have made adjustments to the SBIRS in terms of both the High and the Low Program in the submittal that we just made. In the SBIRS High, as we said, it was moved from 2002 to 2004. One of the primary reasons, as I mentioned, was that we have the existing five satellites for the DSP inventory and that we can still meet the TMD need dates when we use the 2004 given the 2005 time period that we were talking about. It is important to point out here that the difference between the current DSP systems and the SBIRS High when it is deployed relative to these simple threats that we are talking about, the earlier threats against the Nation, the difference is only a couple of percent in terms of the impact that it has and the effectiveness because of the accuracy improvements that it results in. It does, as I said, support the theater missile defense early date of 2007 which is kind of when we are talking about for either the Navy Upper-Tier or the THAAD Program. The Joint Chiefs of Staff(JCS) have agreed that the 2004 deployment gives them the adequate war fighting for prediction purposes that they need, and so we then face what the Chairman pointed out what is clearly an economic impact as well. We were able, by making the decision to move it from 2002 to 2004 using the DSP satellites, to be able to save a significant amount of money in the 1999-2000 time period in the $400 million range. On the SBIRS Low, here we had two experiments going on that were literally experiments, not prototypes. Mr. WELDON. Dr. Gansler, can I go back to that one point? I think it is important. You are saying that by slipping the program to two years, you save additional money? Secretary GANSLER. No, we save-I am sorry, I didn't say-we save money in these two years, but we actually increase the cost of the program as all programs typically have, if you stretch them out, you put dollars into the outyears. Mr. WELDON. What was that increased cost that it would be? Secretary GANSLER. It probably would be let me point out two things: one is that during this last year time period, the SBIRS High Program without changing the schedule grew significantly in cost, and that was of great concern to us, and we now have a special investigation under way, sort of a special independent cost review team, actually headed by former Lieutenant General Casey. They are actually looking in detail at that, because we are very concerned about that. In addition to that, by slipping out the program, then you also added dollars. We are now trying to determine the magnitude of which of these two are the real cause. I mean, honestly I know that slipping out a program is bound to increase the dollars. On the other hand, there is a time value of money as well that you would have to trade off. What really concerned me was the very large cost increase whether we did it in 2002 or in 2004 on this program, and that is what we were facing. But, clearly, this is not a savings. The actual dollars for the program will go up as a result of that stretchout. On the SBIRS Low case, what we had was two programs that also were experiments and also were growing in both cost and particularly what was bothering us there was the schedule. We have very significant stretchouts and cost growth in those. We had learned a great deal from them, and we felt that the right thing to do was to not give up too much in the program to take the dollars from those two that we canceled and move those dollars into the actual engineering program and double, more than double, actually, the engineering program for the SBIRS Low effort. So, what we are doing is trying to maintain the SBIRS Low to the extent we can, moving it from 2004 to 2006 by maintaining the major portion of the program, and we will fold in all of the engineering efforts that would have come from those high cost, late demonstrations and put those into the engineering effort itself. The launch date of 2006 that we end up with on the SBIRS Low is we think now much more realistic given the complexity of that effort, but it is also consistent with the need for the more sophisticated targets. So, we can go back again in more detail on the SBIRS Low as well. Next slide. [The Charts referred to can be found in the Appendix beginning on page 121.] And so by way of summary, I think it really is important to point out what I just went through which was an overview of the overall program. It is intended to address both the existing and the emerging missile threats, and it is trying to balance those two things that causes us to have all of the efforts that are covered here. We are trying to do this with an effective architecture that combines many of the capabilities of the various pieces of these systems, and we are trying to do it with the earliest possible deployment while minimizing the risks. That is the earliest possible deployment for both theater systems and for the national systems. So, that is a very brief overview of a very complex program that we have underway. [The prepared statement of Secretary Gansler can be found in the Appendix on page 66.] Mr. WELDON. Thank you, Dr. Gansler. We have never doubted the DOD commitment to missile defense. I guess our concerns are whether or not from the top down you are getting the same level of-and that is not a question I am asking you to respond to, obviously-but I think that has been our concern. General Lyles, before we start, we have about 12 minutes. We can start now and then interrupt you when we go vote or we can— would you rather start now? General LYLES. My remarks are relatively brief, Mr. Chairman. I can probably get through them very quickly, and then we can take the break if that is appropriate. Mr. WELDON. Great, fine. STATEMENT OF LT. GEN. LESTER L. LYLES, USAF, DIRECTOR, BALLISTIC MISSILE DEFENSE ORGANIZATION, DEPARTMENT OF DEFENSE General LYLES. Mr. Chairman, as always, it is my pleasure to appear before this committee, in part, because of the very spirited and enlightening and very important discussions we have, but also because of the strong support that we get from this committee and certainly you as the chairman. I would also like to submit my statements for the record, but I have brief comments that I would like to run through. Let me mention, Mr. Chairman, Members of the committee, that one of our major challenges-we have many major challenges as we try to make missile defense a reality. Dr. Gansler touched on the engineering and the technical challenges we are facing, and in spite of the problems we have had in maintaining our flight test schedules and in accomplishing actual intercepts, I am absolutely confident that we have both the government and industry committed together to take the correct actions to ensure success in all of our programs. As an example, in an independent assessment of the risks association with our TMD and NMD Programs, General Larry Welch, the President of IDA, characterized our test strategies as a rush to failure. The embodiment of those symptoms was clearly evidenced in our THAAD program as an example. Since General Welch's report, we have examined all of our programs, and we have added more rigorous hardware and software testing, more simulations, more ground tests, more hardware-inthe-loop testing, and more actual flight tests. These tests were accomplished not to stretch out the programs or prolong the development of our systems but, on the contrary, to maintain and hopefully reduce the schedules by reducing the risk and increasing the chance for success. The PAC-3 secret characterization flight, which we hope to accomplish tomorrow morning at White Sands Missile Range, is an example of such an additional test. It was added to characterize the algorithms and the sensitivity of the new seeker for the PAC-3 Program before we start our series of planned intercepts leading to an initial production decision. Another example, in the THAAD program, the THAAD program office and Lockheed Martin, our prime contractor, have conducted a very rigorous set of analyses of ground tests, of subsystem tests, qual tests, and pedigree assessments over the last year to identify and actually to weed out all of the quality control problems that have plagued us to date, all of this before we renew our intercept testing in late March or early April. And, as you know, Members of the committee, our thorough analysis and thorough things we have done in reviewing the THAAD Program have identified some problems, and those problems have caused some slips in our next intercept attempt, but I know that we are doing the right things to make sure that we are going to have a successful test. I started my remarks by mentioning the challenges we face in making our program successful. I want to let the committee know, though, that one of the largest concerns that I have, in addition to the engineering challenges, is also to make sure that the programs we are working on are affordable. As you, the Members of the committee, know and the Mr. Chairman knows, you have demonstrated especially your very strong support for our missile defense program. You have authorized us funding; you have given us strong support; you have ensured that we have been focused on our particular efforts that we are trying to accomplish. However, we have actually experienced what I consider to be unacceptable cost growth and schedule slips with some of our programs that jeopardize our ability to complete our developments on time and, more importantly, to acquire the quantities of the systems we need to counter the growing threat. As a result of this major problem, we are taking a very tough series of management actions to get costs under control and to start now to reduce the projected procurement costs of our systems so that we can get the quantities in the field that we need. These actions include establishing firm cost-base lines based on the actual experiences that we have seen to date in our developments of our programs. This is something that has not been done at all in any of missile defense programs. We are working very closely with our system contractors to verify, validate, and audit their cost assessments to make sure we know what is real and what is not real, perhaps; to work closely with the system contractors to identify and to implement opportunities to control development costs; to work with the contractors and our government teams to identify and implement initiatives to reduce the procurement costs of our systems in the future; to restructure the acquisition strategies and the contract strategies of our programs to incentivize the contractors to implement cost controls just as much as they emphasize schedule performance in the past, and I think this latter issue is a key reason why we have had so many cost problems in all of our programs to date; and, finally, to look at where we might provide award fees or profits to incentivize the contractors to focus on all three parameters for managing our programs, not just performance but also schedule and, more importantly, the cost. These actions and others are being done and must be done in a teamwork manner with all the contractors and all the government stakeholders involved. Mr. Chairman, I could go on about the actions we are taking and the importance of addressing this very, very significant challenge to our programs. Instead, I look forward to answering any of your questions from you or the other Members and look forward to working with you and the committee to address this particular challenge. Let me close with just one statement from the war fighter and why we are so much focused on this particular initiative. Last fall, one of our war fighting Commander in Chief's (CINCs), General John Tulleli, from Korea, told Secretary Cohen that he needs missile defense today as soon as possible to counter the 600 North Korean theater ballistic missiles that are targeted towards South Korea. Our bottom line is to make sure we can provide him what he needs, and I am confident that we, with our talented government and contractor teams, will provide him very effective missile defense systems, and I am confident that we can provide them on time. My fear, however, is that we will not be able to provide him the quantity he needs unless we can make sure our systems are affordable just as much as they are effective. Mr. Chairman, I would like to close right here, and I look forward to your questions, subsequently. [The prepared statement of General Lyles can be found in the Appendix on page 83.] Mr. BARTLETT [presiding]. Thank you very much. Mr. Weldon, if possible, in the interest of time, we would like to keep the hearing going. So, General Martin. STATEMENT OF LT. GEN. GREGORY S. MARTIN, PRINCIPAL DEPUTY ASSISTANT SECRETARY OF THE AIR FORCE FOR ACQUISITION General MARTIN. Thank you, Mr. Chairman and Members of the subcommittee. Thank you for the opportunity to speak to you today about Air Force programs supporting both theater and national missile defense. We are grateful for your serious interest and concern, and we are also grateful for the support that you have provided and will provide to our programs in the future. Countering the ballistic missile threat is a complex task, and the Air Force is fully engaged with the Ballistic Missile Defense Office and the other Services to achieve both full dimensional protection for our deployed forces and a national missile defense system to protect our Nation. I will briefly review the Air Force's participation in both theater and national missile defense focusing on our recent decisions with |