Official Projections of NMD Costs Rise by Billions

May 2000

By Wade Boese

With President Bill Clinton scheduled to decide later this year on whether to deploy a limited national missile defense (NMD) system, government estimates released in April show that costs for deploying the proposed defense could total nearly three to five times the amount commonly reported by the Pentagon. The Defense Department publicly announced cost estimates covering the first phase of a limited defense over a 35-year period, while the Congressional Budget Office (CBO) calculated total costs for an expanded defense through 2015.

After months of providing only the $12.7 billion figure budgeted for NMD deployment from 1999 to 2005, a Pentagon spokesman told reporters April 4 that life-cycle costs of the system from 1991 to 2026 for 100 interceptors at a single site will total $30.2 billion. If inflation is taken into account, the estimate rises to $36 billion.

Shortly thereafter, on April 25, the non-partisan CBO estimated the 100-interceptor system would total $29.5 billion through 2015 and that operating costs would subsequently run about $600 million annually. Deploying a second site with 125 interceptors and adding SBIRS-low satellites, to be used in tracking incoming warheads, as well as in discriminating between warheads and decoys, would push projected costs to nearly $60 billion by 2015.

Answering why the Pentagon estimate was half that of the CBO total, Pentagon spokesman Ken Bacon on April 25 described the comparison as one between "apples and golden apples." The Pentagon did not calculate costs for a second site or include costs associated with the satellite system. A spokesman for the Ballistic Missile Defense Organization, which oversees U.S. missile defense programs, explained that the Pentagon estimate did not account for the satellite system because it will be deployed regardless of whether an NMD is deployed.

CBO assumed the system will require 82 additional interceptors (beyond the 100 to be deployed) for testing and spares, whereas the administration assumed only 47 will be needed. In addition, CBO assumed that after initial deployment, 30 operational tests would be needed over the system's first five years, rather than the 10 tests that are planned.

In reviewing similar missile development programs, CBO also found that, on average, actual costs exceeded projections made at this stage in program development by about 20 percent, and made a similar assumption for the NMD program. Using construction costs of the early 1970s Safeguard missile defense site, which is no longer operational, as a base, CBO also estimated that construction costs for the necessary facilities in Alaska will be more than $1 billion higher than administration calculations.

Echoing other reviews of the NMD program, CBO cautioned that having concurrent development and production schedules could cause "significant problems." Noting that a procurement decision on the interceptors is scheduled for 2003, CBO observed that moving the decision back to 2006 would allow program managers to have "information from significantly more developmental test flights."

CBO also observed that NMD program managers have decided on a third path for dealing with flight-test failures. Rather than replacing subsystems that may have caused a failure or fixing the problem and flying the exact same test mission again, NMD managers—after the last intercept attempt missed the target on January 18—have opted to proceed with their planned flight-test schedule but to pay increased attention to quality control. While reserving judgment on this decision, CBO noted other missile programs have historically used one of the first two approaches.

The next NMD developmental flight test, the third intercept attempt of a planned 19, is scheduled for June 26. Shortly after the upcoming test, the Pentagon will make its recommendation to the president on whether to deploy the system.