Theater High Altitude Area Defense. So, with the threat rapidly expanding and our upper-tier programs experiencing development setbacks, we have devised an approach that will challenge us to field an upper-tier system as early as possible in order to meet the threat. As part of this approach, we will continue to fly THAAD. Our next flight test is in a few weeks. Following this, we plan to conduct four more flight tests this year. The cost-sharing agreement we have worked out with the prime contractor requires that the program achieve three flight test intercepts by the end of this year. The three intercepts are required for the missile and system to demonstrate sufficient design maturity to proceed into the next phase of development. The costsharing agreement provides that the contractor shall be responsible for up to $75 million of negative cost incentives should these intercepts not occur.

It is important to note that the rest of the THAAD system has performed remarkably well during all flight tests. We have successfully demonstrated the THAAD ground-based radar, the launcher, and the battle management, command, control and communications system. Overall, the THAAD system has performed well, but the critical element – the interceptor - still needs to demonstrate its technical maturity. The Department has made the right decision by continuing to fly the THAAD interceptor. We must get the missile into the critical "end game” and learn from that vital test experience. I am absolutely confident that if the THAAD team can shake out all the various “bugs in the system,” THAAD will successfully intercept its target later this spring.

I would like to note that Lockheed Martin's senior leadership has demonstrated to me that it is fully committed to the success of the THAAD program and that it has devoted the resources necessary to ensure success. I believe the cost-sharing plan that we have agreed to is a clear indication of the contractor's commitment to the success of the program. I continue to meet frequently with their leadership and remain very impressed with the quality of the people they have working on this program. They clearly have put the "A plus” team on the program. In light of this and the considerable progress I have observed over the last year, I am confident that the program will successfully engage its target during the next flight test.

If the next flight test, however, should fail to fully meet its objectives and successfully engage and intercept the target, I hope the Congress will recognize that this remains a program in the demonstration/validation phase. This is the phase when we want to learn from our mistakes and failures. This is the phase when we can still fix the system and have it properly aligned for acquisition. I confess that no one is more frustrated with our progress to date than me, but we need to be patient and to work the "bugs out of the system." THAAD is a critical element of our family of systems. We need to successfully develop, demonstrate and field a ground-based upper-tier system.

Navy Theater Wide. The Department is following the Congress' recommendation that we allocate the full funding required to make Navy Theater Wide an acquisition program. In fiscal year 2000, we will request $329.768 million for Navy Theater Wide. Over FY1999 - 2001, we will increase Navy Theater Wide funding by about $500 million, including funds added by Congress. This increased level of funding will allow the Navy Theater Wide system to conduct ground and flight tests to demonstrate its capabilities. The Navy Theater Wide AEGIS-LEAP

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Intercept Program now in progress is a series of progressively more challenging flight tests culminating in a demonstration of the Navy's ability to hit a ballistic missile target above the atmosphere. A Control Test Vehicle flight test is planned for the fourth quarter of this fiscal year to test the flight characteristics of the SM-3 missile. Following this, we plan to fly seven Flight Test Round shots - one per quarter - through the third quarter of fiscal year 2001. The last five flight tests will attempt to intercept their targets. The first intercept flight test will now take place in fiscal year 2000.

In acquisition programs, we have seen how competition has encouraged technological progress, reduced system costs and provided the Department with more than one program option to address a threat. My hope is that this competitive approach to the upper-tier strategy will also provide a positive incentive for both the THAAD and Navy Theater Wide teams to succeed.

Personally, I want both programs to successfully demonstrate their readiness to be fielded. Both THAAD and Navy Theater Wide will play vital roles in protecting our forward deployed forces, friends and allies against the existing and emerging theater-class missile threat. We need both THAAD and Navy Theater Wide in our TAMD family of systems architecture.

Medium Extended Air Defense System. As a result of resource constraints, especially in the years when we intend to field our core TAMD systems and develop and deploy NMD, the Department recognized that it could not afford to proceed with the Design and Development phase of the MEADS program as originally planned. We made this decision even though there remains a valid military requirement for maneuver force protection and a compelling case for armaments cooperation with our allies.

The Department proposes using about $150 million over the next three fiscal years to demonstrate critical technologies - such as a fire control radar and mobile launcher - we need to satisfy the MEADS requirement. This restructured MEADS program allows us to explore less costly program options by leveraging developments in existing missile defense development programs, such as PAC-3. This approach will hopefully enable us to continue cooperation with our allies in this important mission area. As we solidify our approach with our allies, we intend to capitalize on the concurrent Air Directed Surface-to-Air Missile proof-of-principle activity as well.

Earlier this month, on Dr. Gansler's behalf, I met with our German and Italian partners to discuss the future of MEADS. I must report that they were concerned about the commitment of the United States to this program. However, they recognized the resource constraints we faced in missile defense and support our overall approach. They would, however, like for the Department and Congress to express our commitment to following the three year technology demonstration with an affordable restructured program to field a MEADS system. Quite frankly, they are concerned that the Congress will not support the program in fiscal year 2000. I know that both the Secretary and Deputy Secretary are looking to Dr. Gansler and me to work with the four defense committees to secure a stable future for our MEADS technology development program. I realize that especially in a tight budget environment $48.5 million is a very substantial amount of money. I hope to work with the Committee and the other three defense committees to lay out

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how we intend to proceed with this program, demonstrate that we have clear end-products for our investments, and also outline how our German and Italian partners will play in this cooperative

venture.

Joint TAMD Programs.

Several research, development, test and evaluation efforts - which effectively support multiple theater air and missile defense system development program requirements – are managed and funded under the Joint TAMD program. Joint TAMD requirements and supporting tasks include development of target missiles, collection and analysis of target signature and discrimination measurements, and funding of CINC-level planning and participation in wargaming exercises that maximize the consideration of theater air and missile defense requirements and systems capabilities.

BMDO funds the development of the Extended Air Defense Testbed (EADTB), an object-based simulation and analytic tool which supports architecture analysis and system performance, and supports the theater air and missile defense community through distributed interactive simulation (DIS) connectivity. An important element of Joint TAMD is the TAMD Critical Measurements Program (TCMP), which provides tactical ballistic missile target signature and related discrimination data. Collected data from recent test flights will be used to characterize potential countermeasures and to develop and test algorithms designed to mitigate their effects. Programs that are expected to directly benefit from EADTB and TCMP include all theater air and missile defense MDAPs and the U.S. Air Force Space-based Infrared System (SBIRS). The Joint TAMD program element includes a requested $195.7 million in fiscal year 2000.

Family of Systems Engineering and Integration.

Each member of the family of systems will contribute what it sees to a common picture of what is occurring in the battlespace, and then based on that picture, the warfighter will launch the most effective and efficient missile defense response. All theater air and missile defense systems must be capable of joint or autonomous operations. For example, based on cueing from a space-based sensor and target detection and tracking by the THAAD ground-based radar, a Navy Theater Wide interceptor could be launched to counter a ballistic missile threat. This system will be demonstrated through a series of systems integration tests. We are currently planning such an integration test for fiscal year 2002. That test will fly targets that realistically simulate medium-range ballistic missiles against both the PAC-3 and Navy Area systems. Our intent is to calibrate how well our lower-tier systems can protect their defended areas against these longer-range targets. Our fiscal year 2000 budget request for FOS E&I is $141.821 million.

Theater Missile Defense Challenges. Mr. Chairman, missile defense is one of the most technically challenging projects the Department has ever undertaken. The urgency to develop and deploy a highly effective TAMD system grows directly out of our experience in the Gulf War. We recall that the largest single loss of U.S. servicemen was the result of the SCUD missile attack on our barracks in Dharan. And we see how the threat is growing in both numbers

and capabilities. The Gulf War experience and emerging threat drove us to make TAMD a schedule-driven effort that has stressed the Department's most technically challenging projects.

Missile defense requires the integration of many new technologies into a system that must perform in a very dynamic threat and operating environment. For instance, TAMD systems must operate largely inside the atmosphere at very fast speeds against targets that are traveling several kilometers per second. TAMD systems, such as THAAD and PAC-3, use hit-to-kill technologies and must literally “hit a bullet with a bullet." This is a technical and engineering challenge - but it can be done.

We have other substantial programmatic challenges as well. For instance, we must develop and test TAMD systems and demonstrate they are highly interoperable - to ensure that the whole architecture is greater than the sum of its parts. And finally, we must ensure these systems are affordable - because we want to maximize the inventory we can buy for the warfighter. Despite our recent program and cost setbacks, I believe we are up to these challenges.

We must continue to press on with these TAMD systems because the threat is there and it is growing. I pledge to keep the pressure on our Government and industry team to deliver highly effective and affordable defenses as soon as possible. For the sake of our servicemen and women, we cannot afford to fail.

National Missile Defense.

As Dr. Gansler just discussed, the Department has dedicated the funds necessary to develop and deploy NMD should we decide to do so. We have worked to ensure that our NMD development program was properly funded. But until now, we had not budgeted funds to support a possible NMD deployment that could protect us against a limited missile attack. In fiscal year 2000, we are requesting $836.555 million for NMD. In addition, we propose to use for NMD roughly $600 million from last year's $1 billion emergency supplemental appropriation. Between fiscal years 1999 through 2005, we intend to allocate $10.504 billion (in then year dollars) for the NMD program.

The Secretary's January 20, 1999, announcement acknowledged and affirmed the missile threat is emerging. In addition, he announced the dedication of an additional $6.6 billion for NMD during fiscal years 1999 through 2005. He also noted that the Administration had begun a dialogue with Russia about the development related to our NMD program and ABM Treaty. Finally, he recognized that the program was now structured to work toward a key requirement – developing and demonstrating the technological readiness of our system.

I will defer to Lieutenant General Martin, USAF to discuss the U.S. Air Force's Spacebased Infrared System (SBIRS) program decisions. However, both SBIRS High and Low will be critical elements of the NMD system.

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Our challenge during the next few years is to make sure all NMD elements work together as an integrated system and that it can do exactly what the mission tells us we need to do. Success on the critical tests and execution of the element schedules, which constitute the NMD program, will provide the answer to the question: are we technically ready to deploy a capability?

I would like to lay out for the Committee the time line of programmatic decisions we will seek between now and 2005. I will also review our plans to develop and test the NMD system elements and to demonstrate the effectiveness of the integrated NMD system.

NMD Decision Time Line. In order to be able to deploy a ground-based NMD system by 2005, we have developed a detailed plan of program activities to ensure success. The proposed changes to the NMD program I will address today will ensure that we fully develop, test and demonstrate the system elements in an integrated fashion before we begin to deploy. This will significantly reduce the program risk associated with our previous 3 plus 3 program approach.

We still plan to conduct a Deployment Readiness Review in June 2000. This review will take place at the defense acquisition executive level – with full participation from all key Department of Defense stakeholders. It will not constitute the actual decision to deploy the NMD system. It will assess whether or not the technical progress has been made which would allow the Administration to decide whether or not we should commit to deployment. At this time, we will also assess the threat, the affordability of the system, and the potential impact on treaty and strategic arms reduction negotiations. If a decision is made to deploy, we will seek commitment to several key elements of the program. First, we would seek approval of the recommended NMD site – either in North Dakota or Alaska. Similarly, we would seek approval to award the construction contract and start construction at the selected NMD site. And finally, we would seek a decision on whether to pursue deployment sooner than the proposed deployment of 2005 if it is both warranted and technologically possible.

In fiscal year 2001, we would conduct a Defense Acquisition Board review to assess the status of the program. Based on program performance, we would seek approval to initiate upgrades to the current early warning radars; begin building the X-band ground-based radar and start integrating the battle management, command, control and communications into the Cheyenne Mountain complex.

In fiscal year 2003, we would conduct a second Defense Acquisition Board review to seek approval to build and deploy the weapon system - the ground based interceptor. At this point, we would seek authorization to procure 61 GBI missiles - this would include deployment interceptors, spares and test rounds. Based on this schedule, if the program proceeds as we anticipate, we would deploy in late 2005.

In order to meet this schedule, we plan to conduct a series of 19 more flight tests between now and 2005 to demonstrate the technical maturity of the system. As the Committee is aware, in June 1997 and January 1998, we conducted two very successful seeker “fly by” tests which allowed us to demonstrate key elements of the kill vehicle – namely the "eyes" that will allow the weapon to move into the end game, discriminate the warhead from decoys and intercept the