This anti-nuke missile system failed to hit target in half of its tests. So how did Boeing earn $2 billion in ‘performance’ bonuses?

Given the system’s weaknesses, four or five interceptors would have to be launched for each incoming enemy warhead, according to current and former officials familiar with the missile agency’s projections

PUBLISHED : Sunday, 04 September, 2016, 2:40pm
UPDATED : Sunday, 04 September, 2016, 9:43pm

From 2002 through early last year, the Pentagon conducted 11 flight tests of the nation’s homeland missile defence system.

In the carefully scripted exercises, interceptors of the Ground-based Midcourse Defence system, or GMD, were launched from underground silos to pursue mock enemy warheads high above the Pacific.

The interceptors failed to destroy their targets in six of the 11 tests — a record that has prompted independent experts to conclude the system cannot be relied on to foil a nuclear strike by North Korea or Iran.

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Yet over that same time span, Boeing Co., the Pentagon’s prime contractor for GMD, collected nearly $2 billion in performance bonuses for a job well done.

The Pentagon paid Boeing more than $21 billion total for managing the system during that period.

A Los Angeles Times investigation also found that the criteria for the yearly bonuses were changed at some point to de-emphasise the importance of test results that demonstrate the system’s ability to intercept and destroy incoming warheads.

Early on, Boeing’s contract specified that bonuses would be based primarily on “hit to kill success” in flight tests. In later years, the words “hit to kill” were removed in favour of more generally phrased benchmarks, contract documents show.

L. David Montague, co-chair of a National Academy of Sciences panel that documented shortcomings with GMD, called the $2 billion in bonuses “mind-boggling,” given the system’s performance.

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Montague, a former president of missile systems for Lockheed Corp., said the bonuses suggest that the Missile Defence Agency, the arm of the Pentagon that oversees GMD, is a “rogue organisation” in need of strict supervision.

The cumulative total of bonuses paid to Boeing has not been made public before. The Times obtained details about the payments through a lawsuit it filed against the Defence Department under the Freedom of Information Act.

The newspaper also reviewed Boeing-related contract documents obtained independently of the lawsuit.

A spokesman for the missile agency, Chris Johnson, said that despite the GMD system’s record in flight tests, Boeing had “earned” its bonuses “based on the criteria specified in the contract.” He said the payments “complied with all appropriate acquisition regulations.”

“These types of contracts allow regular and consistent evaluation by the government, and fees are paid only when companies meet clearly defined targets,” Johnson said in an emailed statement.

A spokesman for Boeing, Dexter Henson, referred questions about the bonuses to the missile agency while defending the company’s work on GMD.

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Boeing “has met contractual requirements and a variety of incentives across a wide range of program objectives,” Henson said.

“As the lead contractor, we have partnered with the Missile Defence Agency in the development and operation of the only homeland defence system that can defeat long range missile attacks,” he said.

The GMD system, which became operational in 2004, is intended to thwart a “limited” nuclear strike by a non-superpower. It has cost taxpayers more than $40 billion to date.

In the event of an attack, interceptors at Vandenberg Air Force Base in California, and Fort Greely, Alaska, would burst from their silos and begin a fiery ascent toward the upper atmosphere.

The interceptors are multistage rockets, each with a 5-foot-long “kill vehicle” at its tip. The kill vehicle is designed to separate from its rocket in space, fly independently at 4 miles per second and crash into an enemy warhead.

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GMD’s roots go back to the Clinton administration, when concern began to mount over the spread of ballistic missile technology. In 2002, President George W. Bush ordered “an initial set of missile defence capabilities” to be put in place within two years.

To accelerate deployment, then-Defence Secretary Donald Rumsfeld exempted the missile agency from the Pentagon’s standard procurement rules and testing standards.

The Pentagon’s own Operational Test and Evaluation office has documented serious deficiencies in the system. So have other government agencies and independent experts.

In a report in February, the Government Accountability Office, a non-partisan investigative arm of Congress, said the system’s performance in tests has been “insufficient to demonstrate that an operationally useful defence capability exists.”

The test failures are unsettling given that the exercises are meticulously orchestrated. Personnel operating the GMD system know ahead of time approximately when the targets will be launched and from where, as well their expected speed and trajectory — information they would not have in an actual attack.

Given the system’s weaknesses, four or five interceptors would have to be launched for each incoming enemy warhead, according to current and former officials familiar with the missile agency’s projections.

As a result, the system’s arsenal of 30 operational interceptors — four at Vandenberg and 26 at Fort Greely — could be quickly depleted by an attack with multiple missiles.

A study by three physicists with expertise in missile defence, released in July by the Union of Concerned Scientists, concluded that “the GMD system is simply unable to protect the US public.”

Boeing holds two contracts to manage GMD. Under their terms, the company is reimbursed for its direct costs in overseeing the system and for some of its indirect costs, such as executive salaries and other overhead.

The bonuses come on top of that and can account for all or a significant part of a contractor’s profit.

Asked for an explanation, Johnson, the agency spokesman, said:

“In recent contract terms, the words ‘hit-to-kill’ have been changed to support the more detailed documented objectives of each respective flight test. For intercept flight tests conducted under the current design and sustainment contract, a successful intercept remains a key performance objective.”

The missile agency and its lead contractors have sought to put a positive spin on the system’s performance. This year, after a flight test on January 28, the agency and several contractors, including Boeing, issued news releases declaring the test a success.

In fact, as the Times reported July 6, a thruster stopped working during the exercise, causing the kill vehicle to fly far off its intended course.

The thrusters, which help steer the kill vehicle, have a history of performance problems. In the January 28 exercise, a kill vehicle equipped with a new thruster model was supposed to make a close fly-by of a target.

None of the press releases acknowledged the malfunction — nor did the missile agency’s director, Vice Admiaral James Syring, in three subsequent appearances before congressional panels.

Neither Syring nor the contractors have said publicly why they stayed silent.

Whatever their rationale, by characterising the test as a success, the agency and the contractors may have bolstered the prospects for performance bonuses, according to missile defence specialists.