$35B Missile Defense Misses Bullet With Bullet

In tunnels under Fort Greely, Alaska, workers wearing hazmat suits and respirators are fighting to keep America safe from missile attack.

They are battling mold in corridors leading to six underground silos that house rockets for shooting down enemy warheads. The mold and leaking pipes mean the installation must be replaced this year as part of a $1.16 billion fix for the national missile defense shield, senior defense officials told Congress.

No one knows whether the $35 billion program would work. It has never been tested under conditions simulating a real attack by an intercontinental ballistic missile deploying sophisticated decoys and countermeasures. The system has flunked 7 of 15 more limited trials, yet remains exempted from normal Pentagon oversight and so far has been spared the cuts Congress is demanding in other areas of federal spending.

“Our missile defense program is an expensive, ineffective defense against an implausible threat,” says Steven Weinberg, a University of Texas professor who won the 1979 Nobel Prize in physics. He was one of 50 Nobel laureates to sign a 2001 letter to Congress voicing skepticism about “hitting a bullet with a bullet” outside of laboratory conditions.

The financial costs and technical shortcomings of America’s missile shield demonstrate how unproven multibillion-dollar defense programs get budget support in the face of shifting military threats and developmental setbacks. Two decades after the Soviet Union’s collapse eliminated the enemy that inspired it, missile defense is getting more money in a time of federal belt-tightening and military spending reductions.

Spending Increase

Before Congress voted to cut $2.4 trillion from government expenses over the next decade, lawmakers budgeted a 1.2 percent increase, to $8.6 billion, for all missile defense programs in fiscal 2012. That would raise total costs to about $150 billion, or roughly the inflation-adjusted amount poured into the Apollo program sending men to the moon in the 1960s and 1970s.

As one of the Pentagon’s biggest acquisition programs, the Missile Defense Agency got $141.1 billion out of the $149.8 billion requested from Congress over 27 years for all of its programs, according to data compiled by Bloomberg. Lawmakers have been reluctant to challenge spending because the program generates jobs and neither party wants to appear soft on defense, says Gordon Adams, a professor at American University in Washington.

Accountability ‘Elusive’

The Pentagon has made “accountability and transparency elusive” by exempting the missile agency from standard acquisition regulations, including requirements for independent cost estimates, according to Cristina Chaplain, an investigator for the Government Accountability Office, the congressional watchdog agency.

It is a program with “an undefined destination at an unknown cost,” Chaplain said in testimony before the Senate Armed Services Committee in April.

The Senate panel “is deeply concerned” about the missile shield, said Chairman Carl Levin, a Michigan Democrat, in written remarks in June. “It should be the highest priority of MDA to ensure that it fully understands and corrects the problem,” referring to two test failures in 2010.

Among the most vehement budget hawks in Congress, members of the Tea Party caucus, there is a reluctance to discuss spending on individual programs, including missile defense. Senator Jim DeMint, the South Carolina Republican who founded the Senate Tea Party caucus, said there is waste in the Pentagon budget and declined to comment on specific weapons. So did Representatives Allen West, Republican of Florida, and Vicky Hartzler, Republican of Missouri, both members of the Armed Services Committee.

‘War Propaganda’

Representative Ron Paul, a Texas Republican known for his calls for limited government, said that while he isn’t an expert on the missile program, defense spending should be cut and the rationale behind missile defense should be re-evaluated.

“It’s all war hysteria, war propaganda,” Paul said in a phone interview. With the Cold War impetus gone, proponents of missile defense point to North Korea and Iran as threats. “The North Koreans are not going to be a threat to us,” he said. “The Iranians aren’t going to attack us.”

As part of the debt accord signed by President Barack Obama yesterday, the Pentagon’s budget over the next decade may be reduced by $325 billion starting in fiscal year 2012. An additional $500 billion of defense spending may be cut if Congress can’t find $1.5 trillion in overall deficit savings by late November, according to the administration.

Airborne Laser

Besides the main shield of interceptor rockets, missile defense funds have gone into developing a missile-destroying, airplane-carried laser. That cost more than $5 billion and took 14 years, with no current operational mission, according to the GAO. The Obama administration canceled a mobile system, the Kinetic Energy Interceptor, in 2009 after concluding the time and cost to develop it would roughly double to at least 12 years and $8.9 billion.

At the same time, the agency has developed systems to protect U.S. troops and allies from missiles on the battlefield. The Army fielded Patriot anti-aircraft and anti-missile batteries during both Gulf wars. The Navy’s ship-based Aegis system shot down an errant U.S. spy satellite in 2008.

Compared with the national missile shield’s 53 percent success rate, the Aegis program for intermediate threats has hit 22 of 25 test targets since 2002. In May, the Army also began taking delivery of a truck-mounted system known as THAAD, for Terminal High Altitude Area Defense, for regional threats. Restructured in 2000 after six straight test failures, THAAD has recorded seven consecutive successes since 2006.

Plan for Fixes

Lieutenant General Patrick O’Reilly, the missile agency’s director, outlined plans for fixing the national missile shield in congressional testimony this year, and the agency says mold hasn’t compromised the Alaskan operations. Officials of Raytheon Co. (RTN), maker of the “kill vehicle” sitting atop the interceptor rockets, say test failures help them improve their product.

While O’Reilly, 55, declined to be interviewed for this story, Bloomberg spoke with about 80 former Pentagon officials, military officers, weapons testers, defense contractors, lawmakers and congressional staffers. Bloomberg also reviewed thousands of pages of documents, including budget records, independent research and reports by the GAO and by Pentagon weapons evaluators.

No ‘Realistic’ Tests

The system “has demonstrated a limited capability against a simple threat” and has yet to engage in “operationally realistic” tests, J. Michael Gilmore, the department’s top weapons tester, told Congress last year.

Former President Ronald Reagan made missile defense a national priority with his 1983 call for what became known as a “Star Wars” shield. In December 2002, former President George W. Bush injected renewed urgency into the project, citing the Sept. 11 terror attacks and “the threats of the 21st century.”

The Bush administration exempted the newly created Missile Defense Agency from the Pentagon’s standard regulations concerning procurement, and announced a goal of deploying a national umbrella within two years. The undertaking’s subsequent failures reflect unnecessary haste and waste, says Levin, the Senate Armed Services panel chairman.

‘You Will Pay’

“If speed is your hallmark instead of quality, you will pay for it, and you will pay for it through the nose,” said Levin, 77, a six-term senator, in an interview at his office in Washington. “The threat we have now is either a distant threat or is not a realistic threat,” he said. To dissuade Iran from posing a missile threat, the U.S. must collaborate with Russia on defense systems, Levin said.

North Korea lacks missiles with enough range to reach the U.S., said Mike McConnell, the former director of national intelligence, in an interview. Iran would need substantial foreign assistance to strike America, according to U.S. intelligence estimates.

“What country is suicidal enough to launch a weapon of mass destruction on a long-range missile, when it leaves a trail of where it came from?” says retired Army Lieutenant General Robert Gard, the chairman of the Washington-based Center for Arms Control and Non-Proliferation.

The program’s very existence creates uncertainty for potential enemies, says a former National Security Agency official who requested anonymity because he wasn’t authorized to discuss the matter. The investment of a few billion dollars deters potentially trillions of dollars in damage and untold numbers of human casualties, he said.

Biggest Contracts

Companies with the biggest missile defense contracts over the past decade are Boeing Co. (BA), at $19.45 billion; Lockheed Martin Corp. (LMT), $5.75 billion; Raytheon, $4.94 billion; and Northrop Grumman Corp. (NOC), $3.69 billion, according to data compiled by Bloomberg.

Chicago-based Boeing’s missile-contract revenue is about the same as the biggest jetliner transaction in history, its sale this year of 200 aircraft to China for $19 billion. The company manages the missile shield program, formally known as the Ground-Based Midcourse Defense program, or GMD. Boeing is competing with Lockheed for a new management contract that may be worth $10 billion over the next decade.

As the GMD is designed, U.S. satellites would identify the hot plume of an enemy missile within seconds of launch, alert radar installations and relay tracking data to kill vehicles ready to intercept the incoming warhead about 200 miles (322 kilometers) in space.

Length of Broomstick

Raytheon’s kill vehicle is a $30 million, 120-pound (54- kilogram) spacecraft about the length of a broomstick. It looks like a telescope mounted on a pack of propane gas cylinders and is supposed to be able to pick out a target from decoys and debris and smash into it while flying at a combined closing speed of 6.2 miles a second. It has no explosive -- the collision alone would do the damage.

Two of the unsuccessful test flights were tied directly to failures of the kill vehicle, according to Pentagon investigators.

In 1998, a competition between Boeing and Waltham, Massachusetts-based Raytheon to design the kill vehicle collapsed. A federal official inadvertently left technical documentation related to Raytheon’s design at a Boeing office, and Boeing employees made photocopies before returning the material, according to former Air Force Lieutenant General Ron Kadish, who became the missile defense chief in June 1999.

Boeing Disqualified

Boeing was disqualified from competing for the spacecraft, Kadish said in an interview. He is now a senior vice president for government consultant Booz Allen Hamilton in McLean, Virginia.

Development and testing of the Raytheon spacecraft began just as a panel of civilians and retired officers, led by retired Air Force General Larry Welch, criticized “the agency’s ‘very aggressive schedules’” that had led other programs to “poor design, test planning and preflight testing deficiencies; poor fabrication; poor management; and lack of rigorous government oversight.” The Welch report warned against a “rush to failure.”

In 1999, President Bill Clinton’s administration decided under pressure from a Republican-led Congress to plow ahead. The agency and its contractors complied.

“We were under a lot of schedule pressure to get into flight test and demonstrate an intercept,” said John Peller, a former executive of Boeing who managed the GMD program, including the kill vehicle, until August 2000. “That was one of the primary requirements of the program at the time: Get out of the laboratory and into flight.”

`Everything Memorized'

Early versions of the kill vehicle raised concerns about production quality, says retired Air Force General John “Pete” Piotrowski, a former commander-in-chief of the North American Aerospace Defense Command in Colorado.

On a visit in early 2000 to a Raytheon factory in Tucson, Arizona, Piotrowski says, he watched a worker pull kill-vehicle parts from a bin in a monthlong assembly procedure. Piotrowski says he asked the worker how he remembered where he was in the elaborate process.

“I’ve got everything memorized,” he says the worker replied.

Piotrowski reported his doubts to the Pentagon that one man could remember every step in such a complex process, he said in an interview. A craftsman-like approach was appropriate for the initial low production rate, said Taylor Lawrence, president of Raytheon’s Missile Systems business, in an interview.

The system failed two flight tests in 2000, the first when the kill vehicle’s infrared sensor cooling malfunctioned and the second when the spacecraft and rocket booster didn’t separate, according to Pentagon-ordered post-flight investigations.

`Quality' Not Spoken

“When we started the fast deployment of this program, ‘quality’ was a word that was not even spoken. There was no quality,” says William Sowder, Boeing’s chief tester on the GMD program until he retired in 2001. “There was not enough attention paid to component testing like missile testing and radar testing and command-and-control testing.”

After four successful trials between July 2001 and October 2002, the missile agency cited quality-control problems in a flight failure Dec. 11, 2002. The agency reported that the kill vehicle and its booster hadn’t separated again.

Bears, Moose

Six days later, Bush set his deadline for fielding a national missile defense by the end of 2004. Workers began drilling 80-foot (24-meter) holes at Fort Greely, a World War II-era airfield that was slated for closure.

Army Colonel Kevin Norgaard, now retired from the military, took over transforming the windswept Alaskan range into a subterranean missile field five miles beyond the end of the Alaskan Highway, near the town of Delta Junction. Charred stumps were a reminder of a forest fire three years before, and guards spoke of listening to bears tear into a moose at the edge of camp, he said in an interview. Clocks counted down the years, months, days, minutes and seconds to the deadline, he said.

The work included pouring more than 35,000 cubic yards of concrete and building 2.5 miles of underground corridors -- or “utilidors” -- to convey water, electricity and fiber-optic cables between base installations and the steel silos, the Army Space Journal, an armed-services publication, reported in 2004.

The job was completed with 27 minutes to spare on Sept. 30, 2004, the last day of the government’s fiscal year, according to a former military official with responsibility for the program who requested anonymity because he now works for a contractor.

It was the first of three missile fields with 26 silos in Alaska and four silos at California’s Vandenberg Air Force Base. The initial field cost $311 million to construct as part of a $6.9 billion investment in operational capability.

Food for Mold

Water pipes in the tunnels were covered with paper-backed insulation that deteriorated and became an incubator for mold as the vessels sweated from condensation, according to a U.S. contractor with direct knowledge of the situation who asked not to be identified because he wasn’t authorized to comment. A lack of ventilation and heat fueled the mold, he said.

“Paper disintegrates in water and is a wonderful food source for mold,” said William Lotz, an insulation consultant and former Owens Corning (OC) Inc. engineer who lives in Acton, Maine. “Somebody clearly didn’t know what they were doing.”

Water pipes in passageways under Fairbanks, 100 miles north of Fort Greely, are 20 years older and have no mold, according to Pat Smith, chief of construction management in the city engineering department. The city’s pipes are insulated with foam, and the steam-heated corridors are ventilated, he said.

Boeing and subcontractors that built the missile field declined to discuss the mold and referred a reporter to the Missile Defense Agency.

Page 128

“No one here has ever seen mold as an issue for operational readiness,” said Richard Lehner, a missile agency spokesman, in an interview. “What you’re concerned about is the ability to respond operationally, and we can.”

Pipes in the newer missile fields have insulation with metallic backing, Lehner said in an e-mail. The underground corridors are now heated and ventilated, according to a government contractor in Alaska who asked not to be identified because of confidentiality provisions set by the missile agency.

The U.S. has divulged little more about the contamination. On page 128 of the fiscal 2011 Defense Authorization is a disclosure that the first field of six silos need to be decommissioned because it “lacks backup power and has significant infrastructure reliability issues.

“These reliability issues include extensive mold contamination in the Missile Field 1 utilidor, requiring personnel to suit up for a hazardous environment; inadequate valve connections in the chilled water system, resulting in leaks of glycol; and dust intrusion,” the document says.

Human Mold Hazard

The human hazard arises from inhaling microscopic mold spores, which can cause lung disease, says Curtis Wright, owner of Anchorage-based Enviro Tech Alaska LLC, a remediation firm. The average spore is three microns in diameter, a 25th the width of a human hair, he said.

In December 2004 and February 2005, there were two more flight-test failures, the first attributed to an incorrect software configuration and the second related to a safety feature, according to post-flight investigations.

A review panel commissioned by Air Force Lieutenant General Henry “Trey” Obering III, the agency head at the time, found that unresolved technical problems had been allowed to roll forward, “bow waving” risk, and that greater contractor accountability was needed, according to a copy of a March 2005 presentation that is public.

Obering temporarily shut down the program until he was assured the problems had been fixed, he said in an interview. The retired general is now a senior vice president overseeing Booz Allen’s aerospace practice.

`The Science Works'

“The science works,” Obering says. “There are issues with quality control, and that’s not unexpected when you are trying to get a capability out the door you don’t have.”

The missile agency describes as successful the last flight test Obering oversaw in December 2008, a month before he retired. The Pentagon weapons assessor’s report that year found that the interceptor and the target missile both malfunctioned, precluding the achievement of all objectives.

After a re-engineered Raytheon kill vehicle failed in a test last year, in part because of poor quality control, O’Reilly halted deliveries of new vehicles until they are fixed, he told the Senate Appropriations Committee in May. The experiments, which cost as much as $300 million each, are “obvious cause for concern,” said the committee’s chairman, Senator Daniel Inouye, a Hawaii Democrat, during a budget hearing in May.

Raytheon's `NoDoubt' Brand

Such setbacks are at odds with Raytheon publicity. The company’s systems “provide multilayered protection and NoDoubt Mission Assurance as they locate, discriminate and eliminate ballistic missiles in all phases of flight, from boost to midcourse to terminal,” the company said in an August 2009 advertisement in the Military Space & Missile Forum trade journal. Raytheon, the world’s largest missile maker, also developed the Patriot system and makes the SM-3 missiles for the Navy’s Aegis program. It trademarked the term “NoDoubt.”

William Swanson, the chief executive officer of Raytheon, defends the company’s management of the kill vehicle and says trial failures are a normal part of product development.

$1.16 Billion Fixes

“What happens in today’s world is failures are viewed as a catastrophe, so if a system has a failure, everybody goes, ‘Oh my God, cancel the damn thing,’” Swanson said in an interview at the Paris Air Show in June. “Since I’m an engineer, you understand your system better with failures.”

The $1.16 billion in the Missile Defense Agency’s budget for fiscal 2012 would mothball the mold-contaminated field at Fort Greely and complete a newer field there, including a new power plant. It also contains funds to buy six new rockets, upgrade radar equipment and complete the investigation and recovery from the two failed flight tests last year.

“These contractual mistakes and screwups happen far too often,” Senator Levin said in an interview that addressed the test failures and construction issues in Alaska. “Taxpayers are pissed off and we’re pissed off.”

To contact the reporters on this story: Gopal Ratnam in Washington at gratnam1@bloomberg.net; Elliot Blair Smith in Washington at esmith29@bloomberg.net.

To contact the editors responsible for this story: Robert Blau at rblau1@bloomberg.net; Mark Silva at msilva34@bloomberg.net.

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Photographer: Missile Defense Agency/AP

A Ground-based Interceptor missile is shown before being installed in its silo at Fort Greely, Alaska.

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Photographer: Missile Defense Agency/AP

A Ground-based Interceptor missile is shown before being installed in its silo at Fort Greely, Alaska. Close

A Ground-based Interceptor missile is shown before being installed in its silo at Fort Greely, Alaska.

Source: Missile Defense Agency

Lieutenant General Patrick O'Reilly, director of the Missile Defense Agency, peers inside a silo containing a missile interceptor at Fort Greely, Alaska, U.S., on January 11, 2010. Close

Lieutenant General Patrick O'Reilly, director of the Missile Defense Agency, peers inside a silo containing a missile... Read More

Source: Missile Defense Agency

An interceptor missile is placed into its underground silo in 2004. Since 1999, the system has performed eight successful test flights out of 15 trials, according to the U.S. missile agency. Close

An interceptor missile is placed into its underground silo in 2004. Since 1999, the system has performed eight... Read More

Source: U.S. Army

A member of the Alaska Army National Guard's 49th Missile Defense Battalion watches the northern lights at Fort Greely. Close

A member of the Alaska Army National Guard's 49th Missile Defense Battalion watches the northern lights at Fort Greely.

Source: U.S. Army via Bloomberg

Fort Greely is a former Army Air Corps base established in 1942 as a staging area for aircraft deployed to Russia. Close

Fort Greely is a former Army Air Corps base established in 1942 as a staging area for aircraft deployed to Russia.

Photographer: Mandel Ngan/AFP/Getty Images

Lieutenant General Patrick O'Reilly, director of the Missile Defense Agency. Close

Lieutenant General Patrick O'Reilly, director of the Missile Defense Agency.

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