into the existing infrastructure.2 In addition, the procurement cost of interceptors includes the production of the total quantity committed for the inventory to achieve full operational capability (FOC).

Sustainment costs are the costs of the routine efforts to operate and maintain the system over a nominal 20-yr lifetime. Depending on the expected service life of the assets, sustainment costs can include the modification, upgrades, and/or replacement costs of procuring new systems as needed.

Following development and during the sustainment phase and for the purposes of maintaining the necessary operational proficiency, readiness, and training; sustainment costs include costs for conducting engagement exercises and missile tests, which in turn include the costs of procuring test interceptors, target missiles, parts, and so on; and the sustaining engineering costs for performing the tests, assessing the missile’s performance, diagnosing potential success and root causes of failure events as part of the overall integrated system test plans toward achieving the system’s overall operational readiness and training required.3

RELATIONSHIP OF LIFE-CYCLE COST ESTIMATES TO MDA BUDGET

For the purposes of this study, LCC are separated into development, production, and sustainment costs to enable assessing relative costs across system options for improving missile defense. It should be pointed out that through the DOD FY 2011 President’s Budget (PB), submitted to Congress in February 2010, funding for MDA included funding for production (manufacturing) and sustainment operations, all under the single budget category of RDT&E. However, MDA’s most recent budget justification materials for the FY 2012 PB submitted to Congress in February 2011, separated out what were formerly RDT&E program funds into procurement, military construction (MILCON), and the operations and maintenance (O&M) program element funds.

The basis for estimates of 20-yr sustainment costs for the MDA systems and

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2To account for this cost for ground-based interceptor systems similar to the ground-based missile defense (GMD) boost-phase intercept (BPI) systems, the committee applied a factor of 40 percent to account for costs of integrating the interceptor system and subsystems into the existing infrastructure. The integration activities are assumed to include assembly, installation, and integration at the ground-based interceptor launch site comparable to the silos and other infrastructure and the missile fields at Fort Greely, Alaska (FGA). This factor of 40 percent agrees with previous CBO reports on missile defense.

3Consistent with previous CBO reports, the committee assumed that the additional number of test interceptors that need to be procured is based on one test conducted every 2 years over the 20-yr lifetime of the system. The test plan is assumed to have two purposes: (1) testing out the performance of the current system baseline design of the interceptors, which includes any improvements to the booster stages as well as to the KV propulsion and IR seeker or divert systems, and (2), from an event-driven perspective, demonstrating the capability of intercepting target missiles in scenarios mirroring threats from potential adversaries.



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