Investment Analysis

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GO OR NO GO? INVESTMENT ANALYSIS OF THE KINETIC
ENERGY INTERCEPTOR (KEI) AND ALTERNATIVES
Mr. John SeatonMs. Sherry HarrisMissile
Defense Agency (MDA), Program Integration
Deputate, Investment Analysis Directorate
(PIV) SCEA Conference, 15-18 June 2004
2
AGENDA

• Purpose
• Missile Defense Agency (MDA) Overview
• Investment Analysis (PIV) Directorate Objectives
  and Mission
• Kinetic Energy Interceptor (KEI) Overview
• KEI Investment Analysis Study
• Study Background
• Investment Analysis Approach
• Utility Analysis Structure and Process
• Identification of Alternatives
• Analytical Structure
• Data Collection
• Study Results
• Cost / Utility Analysis / Risk / Benefit/Cost /
  Sensitivity Implications
• Study Outcome / Lessons Learned

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PURPOSE

• To Explain The Approach, Analysis And Results Of
  The Investment Analysis Of The Kinetic Energy
  Interceptor (KEI) as One of the Factors For a Go
  / No Go Acquisition Decision

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MISSILE DEFENSE AGENCY OVERVIEW
MDA Mission Statement- Develop and Field an
Integrated BMDS Capable of Providing a Layered
Defense for the Homeland, Deployed Forces,
Friends, and Allies Against Ballistic Missiles of
All Ranges in All Phases of Flight.
Ballistic Missile Defense System (BMDS)

• The BMDS is A System-wide Architecture
  Consisting of Individual Elements
• Multiple Sensors
• Complementary Interceptors (Layering)
• A Command Control, Battle Management, And
  Communications (C2BMC) Network That Integrates
  the Elements

Element
Acq
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INVESTMENT ANALYSIS (PIV) DIRECTORATEOBJECTIVES
AND MISSION

• Primary Objective Is to Provide Management With
  the Insight to Make Judgments on the Direction of
  Future Ballistic Missile Defense Systems Based on
  System Capability, Cost, and Risk
• Assist in the Preparation of MDA Budget
  Activities
• Support System Definition Studies
• Conduct Investment Assessments of MDA Study
  Alternatives

Our Mission Is to Provide the Business Case
Insights for MDA Investment Decisions
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KINETIC ENERGY INTERCEPTOR (KEI)OVERVIEW

• Element within the BMDS Designed To Destroy
  Long-range Ballistic Missiles During The Boost
  Phase Of Flight
• Expected to be Operationally Available in the
  2010 Timeframe
• Uses Mobile Land-based Launchers and C2BMC
• It May Evolve Into A Sea and/or Space-based
  Capability
• One Of Only Two Elements In The BMDS That Will
  Defend Against Ballistic Missiles In The Boost
  Phase (Airborne Laser)
• The Only Boost Phase Defense Using Existing
  Hit-to-kill Technology
• MDA Expects To Invest 7.9B From FY 2004-2009 In
  Development Of KEI Element

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KEI STUDY BACKGROUND

• Directed to Perform a Study Whether to Proceed
  From Concept Design Into the Development and Test
  Phase for the Kinetic Energy Interceptor (KEI)

Comparative BMDS Effectiveness With And Without
KEI
BMDS Comparative Investment Analysis Examining
Relative Costs and Return on Investment for KEI
The Investment Analysis Study Team Examined
System Effectiveness, Viability, Cost and Risk
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KEI INVESTMENT ANALYSISSTUDY TERMS OF REFERENCE
(TOR)

• Developed a KEI Study Terms of Reference
• Defined Agency-wide Study Team Members and
  Responsibilities
• Identified Overarching IPT which Consisted of MDA
  Senior Leadership to Regularly Monitor Progress
  of Study
• Provided a Study Schedule
• Outlined the Multi-Attribute Utility Approach
• Approved and Signed by MDA Leadership

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KEI INVESTMENT ANALYSISUTILITY ANALYSIS
STRUCTURE AND PROCESS
Analyze Assess the Alternatives
Define Study Alternatives

• Display the Results
• Utility Drivers
• Sensitivity
• Return on Investment
• Importance of Cost
• Impact on Schedule

Develop Analytical Structure

• Identify the Critical Measures
• Construct a Decision Structure
• Weight the Importance of Each Measure
• Establish Definitions for Scoring

Calculate the Utility of Each Alternative
Gather the Data

• Cost the Alternatives
• Develop Performance Data
• Develop Viability Data
• Assemble SMEs for Qualitative Metrics
• Use Formal Facilitated Meeting to Assess Each
  Alternative

Iterate As Necessary
Key Insights and Conclusions

• Effectiveness
• Viability
• Utility
• Return on Investment

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KEI INVESTMENT ANALYSIS IDENTIFICATION OF STUDY
ALTERNATIVES

• Five Alternatives (BMDS Level) Representing
  Different Investment
• Strategy Alternatives Were Defined for Long-Term
  Technical
• Objectives and Goals Compliance
• Alternative 1
• Evolve and Increase Numbers of Current Systems
  (without KEI)
• Alternative 2
• Evolve and Increase Numbers of Current Systems
  and Add Limited KEI Capability (Boost Phase Only)
• Alternative 3
• Develop Increased KEI Capability Compared to
  Alternative 2 (Midcourse and Boost)
• Alternative 4
• Develop a Different KEI Capability than
  Alternative 3 (Midcourse Phase Only)
• Alternative 5
• Develop Space Based KEI Capability

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KEI INVESTMENT ANALYSIS ANALYTICAL
STRUCTURE(METRICS, WEIGHTS AND DECISION TREE)

• Identify Distinguishable Metrics and Coinciding
  Decision Tree
• Establish Relative Importance (Weights) of Each
  Metric
• Establish Definitions and Mappings to Govern
  Scoring Methods for the Tree
• Assess Each Alternative Against Each Metric in
  Tree

PES
Boost Midcourse Terminal
Effectiveness
LAD
HDIDoFADoDF
Overall Utility
RSBP
HDIHDADoFADoDF
DA
InternalInternationalOther US Elements
Viability
Compatibility
AdaptableGrowable
Flexibility
RedundantSurvivable (Attack)Survivable (Natural)
Robustness

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KEI INVESTMENT ANALYSIS DATA COLLECTION

• Gathered Data for 3 Fixed Points in Time (2012,
  2016, 2020)
• that were Selected to Show Incremental Changes In
  the
• Alternatives
• Cost
• Risk
• Effectiveness
• Quantitative Evaluation of System Performance
• System Viability
• Qualitative Measure of System Capability Gathered
  With the Help of SMEs Using Group Facilitation

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RESULTS COST ASSUMPTIONS

• Used MDA Total Obligation Authority (TOA) as a
  Guide for Developing Acquisition Timetables
• Costs budgeted before FY05 were considered sunk
• RD was for existing programs only, no mods or
  upgrades, unless specified otherwise
• O S Costs were ROMs
• Fielding and OS costs were not considered
  against top MDA budget

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RESULTS UTILITY ANALYSIS (NOTIONAL DATA)
By Displaying Effectiveness and System Viability
Data in a Utility Analysis Format We Were Able to
Identify Major Contributors to Utility
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RESULTS RISK(NOTIONAL DATA)

• Evaluations were made on each alternative to
  achieve the architectures at the prescribed time
  frames
• Results presented described the implied risks by
  alternative over time
• More established programs resulted in lower risks
  and programs at lower Technology Readiness Levels
  were higher risk

• Alternative 5 has greatest risk but greatest
  Uncertainty
• Alternatives 1 and 4 were scored as least risky
  consistently

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RESULTS BENEFIT/COST ANALYSIS(NOTIONAL DATA)

• Benefit/Cost Ratio Calculations
• By Dividing the Utility of Each Alternative by
  Their Respective Costs, We Were Able to Gain
  Insights on Achieved Effectiveness vs. Cost from
  a Benefit/Cost Perspective

• Majority of the Utility was Gained Early and the
  Costs of Adding More Quantities Failed to Add A
  Proportional Amount of Utility Consistently Over
  the Alternatives
• Alternatives 3 And 4 Gained Cost Efficiency From
  Commonality Of the KEI Components

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RESULTS SENSITIVITY ANALYSIS (NOTIONAL DATA)

• Performed Sensitivity Analysis by Varying
  Weighting Factors to Gain Insight on the Impacts
  of Chosen Weights and Preferences

Alternatives 3 And 4 Are Clearly Effectiveness
Driven As Reflected By Their Marginally
Increasing Utility Values As A Result Of
Increasing Effectiveness Weight
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STUDY OUTCOME / LESSONS LEARNED

• Study Was One of the Factors Contributing to the
  Decision to Award the KEI Contract
• Lessons Learned
• Study Terms of Reference (TOR) Valuable
• Laid Out Process
• Defined Roles and Responsibilities
• Single Lead Important
• Many Stakeholders with Vested Interested and
  Differing Viewpoints
• Stick to Schedules and Deadlines
• Study Team Dependent on Inputs from Many
  Different Groups
• Domino Effect
• Senior Leadership Involvement is Key!
• Regular Oversight Kept Team Focused on What Was
  Important to End Users of the Information

GO!
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Back-ups
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STUDY GROUND RULES AND ASSUMPTIONS

• Long-term Strategic Architecture Constructs are
  TOG Compliant
• Development Focused on All Regions, All Ranges,
  All Phases of Flight
• Cost to MDA will be RDTE Focused (Production and
  OS Costs will be Passed on to Services upon
  Delivery)
• Acquisition Rates Based on Historical and TRL
  Data Tradable dollars are within RDTE only
• Strategic Constructs Build Upon Planned 04/06
  Architectures (Components, Cost Schedule)
• Some Items Were Not Considered in This Study
  (Indistinguishable, Too Far Term, Unknowable)
• Battle Management and Communication Issues
• Adverse Effects
• Testability

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BMDS ELEMENTS

• Aegis Ballistic Missile Defense
• Ship-based element designed to destroy SRBM and
  MRBM during midcourse phase
• Airborne Laser (ABL)
• Air-based element designed to destroy all classes
  of ballistic missiles during boost phase
• Command, Control, Battle Management, and
  Communications (C2BMC)
• Integrating and Controlling element of BMDS
• Ground-based Midcourse Defense (GMD)
• Ground-based element designed to destroy
  long-range ballistic missiles during the
  midcourse phase of flight. Key mission is to
  defend US homeland
• Kinetic Energy Interceptors (KEI)
• Land-based element designed to destroy long-range
  ballistic missiles during the boost and ascent
  phases of flight
• Space Tracking and Surveillance System (STSS)
• Constellation of Satellites for missile warning
  and tracking
• Theatre High Altitude Area Defense (THAAD)
• Ground-based element designed to destroy short
  and medium range ballistic missiles during late
  midcourse and terminal phases of flight.

MDA Overview
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ACQUISITION STRATEGY

• Capabilities-based approach
• Enables a more flexible development process that
  responds quickly to a rapidly changing threat and
  takes advantage of advances in technology
• Block Approach
• Block 2004 - Initial Defensive Capability (IDC)
  is the Foundation of the BMDS and provides
  modest defense of the United States
• 2 year block upgrades building on existing
  capabilities and development in previous blocks
• Over time the block approach will yield a fully
  integrated and layered BMDS, capable of defeating
  ballistic missiles of all ranges and in all
  phases of flights, our Mission.

MDA Overview
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BMDS PERFORMANCE METRICS

• Effectiveness Metrics
• Probability of Engagement Success (PES) - The
  probability that the BMDS hits, damages, and
  kills a booster, bus, or warhead in a ballistic
  missile attack
• Defended Area (DA) - The areas for which the BMDS
  can provide protection
• HD-I - Homeland Defense from ICBMs
• HD-A - Homeland Defense from Asymmetric Ballistic
  Missile Threats
• DoFA - Defense of Friends and Allies from
  Ballistic Missile Threats
• DoDF - Defense of Deployed Forces from Ballistic
  Missile Threats
• Launch Area Denied (LAD) - The area from which an
  enemy cannot attack without being engaged by the
  BMDS
• Raid-Size Breakpoint (RSBP) - Sensitivity of
  Effectiveness Metrics to Raid Size
• Viability Metrics
• Compatibility - Ability to Mix and Match BMDS
  Weapon and Sensor Elements into an Integrated
  System to Satisfy the Commanders Needs
• Flexibility - Ability to Adapt to New, Different
  or Changing Needs and Has the Capability to
  Evolve and Grow
• Robustness - Elements and Components are
  Available to Perform BMDS Functions against a
  Spectrum of Conditions and Threats

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ACRONYMS

• MDA - Missile Defense Agency
• PIV - Program Integration/Investment Analysis
  Division
• KEI - Kinetic Energy Interceptor
• BMDS - Ballistic Missile Defense System
• SRBM Short Range Ballistic Missile
• MRBM Medium Range Ballistic Missile
• LRBM Long Range Ballistic Missile
• ICBM InterContinental Ballistic Missile
• ABL AirBorne Laser
• TOG Technical Objectives and Goals
• TOR Terms of Reference
• C2BMC - Command Control, Battle Management, And
  Communications
• MAU Multi-Attribute Utility

IPT Integrated Product Team PES Probability
of Engagement Success LAD Launch Area
Denied RSBP Raid Size BreakPoint DA Defended
Area HD-I Homeland Defense HD-A Homeland
Defense - Asymmetric DoFA Defense of Friends
and Allies DoDF Defense of Deployed Forces SME
Subject Matter Experts ROI Return on
Investment ROM Rough Order of Magnitude
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KEI INVESTMENT ANALYSISMULTI-ATTRIBUTE UTILITY
THEORY (MAUT)

• Measures Utility
• Standardized Measure of the Relative
  Desirability, or Goodness, of a Given Set of
  Levels For an Alternative
• Converts the Levels for Measures Into a
  Comparable Scale with a Range Defined to go from
  0 to 1 (0 is least preferred level, 1 is most
  preferred level)
• Regardless if Respective Scales are Different
  Units
• Units are Utils
• Criteria Are Weighted to Reflect the Values of
  the Decision Maker

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