The United States plans to end its participation in the tri-national Medium Extended Air Defense System at the end of the design and development (D&D) phase, Defense Department officials said.
DoD will let the program “run out…so we don’t incur any termination liability” Under Secretary of Defense Comptroller/CFO) Robert Hale said recently at the DoD fiscal year 2012 budget briefing.
The United States has decided that the best course of action is to continue the D&D phase by providing funds up to the agreed Memorandum of Understanding (MoU) cost ceiling of the equivalent of $4 billion in 2004 dollars.
The prime contractor for the program is MEADS International, a multinational joint venture headquartered in Orlando, Fla. Major subcontractors and joint venture partners are MBDA in Italy, LFK in Germany and Lockheed Martin [LMT] in the United States.
The United States proposes focusing the remaining activities to implement a ‘proof of concept’ effort with the remaining MoU funds that will provide a meaningful capability for Germany and Italy and a possible future option for the United States, DoD documents said.
This re-focused proof of concept D&D program would end by 2014, consistent with the MoU expiration date and cost ceiling.
“We believe implementation of a proof of concept D&D program, using the remaining D&D MoU funds contributed by the three nations, is the best option for all MEADS partners,” the documents said.
For one reason, also cited by Hale, funding MEADS up to the existing MoU cost ceiling enables all partners to harvest technology from large investment to date: The NATO MEADS Management Agency ()NAMEADSMA) is already developing an implementation plan for a D&D proof of concept effort that will use the remaining D&D MOU funding in 2011-13– approximately $804 million for the U.S. share–to complete prototypes, demonstrate and document the capabilities of the major system elements and complete limited system integration. This work would place the D&D program on stable footing should Germany and Italy wish to continue a MEADS development and production effort after the current MoU funding is expended. The same options would be available to the United States if its air defense plans should change.
Terminating the program now, just after successful completion of the MEADS Critical Design Review, would force the nations to devote significant funding to contractor termination costs instead of using this funding to bring MEADS development to a viable level of maturity.
The DoD document said the United States cannot afford to purchase MEADS and make required upgrades to Patriot concurrently over the next two decades: “The current NAMEADSMA program office estimate to complete the D&D program, which would extend into 2017 would, as noted above, require at least $974 million of additional U.S. investment during FY12-17. This is on top of the approximately $804 million already programmed for MEADS, which, in turn, is on top of the $1.5 billion the U.S. has funded to date for D&D. The U.S. cannot afford this additional R&D funding. Moreover, we estimate an additional $800 million would be required to complete U.S.-unique national certification, test and evaluation requirements, and integration of MEADS elements in the U.S. air and missile defense systems-of-systems if MEADS were fielded.”
Further, due to the substantial delays in the development of MEADS, the U.S. Army would not be able to purchase MEADS to replace Patriot as early as originally planned.
Consequently, the costs of completing MEADS development and procuring MEADS to eventually replace Patriot would also require a significant concurrent investment in Patriot sustainment and modernization over the next two decades. Together, these costs are unaffordable in the current DoD budget environment.
The United States can achieve some of the capabilities that MEADS provides using existing assets, it said.