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CAGW Releases Report on Medium Extended Air Defense System

Dépèche transmise le 26 mars 2012 par Business Wire

CAGW Releases Report on Medium Extended Air Defense System

CAGW Releases Report on Medium Extended Air Defense System

WASHINGTON--(BUSINESS WIRE)--Today, Citizens Against Government Waste (CAGW) released a report recommending the multi-lateral cancellation of the Department of Defense’s (DOD) Medium Extended Air Defense System (MEADS). MEADS was created in 1995 to replace aging missile defense systems in the U.S., Germany, and Italy but the program has been plagued with cost overruns of nearly $2 billion and is 10 years behind schedule. It is a joint venture composed of Lockheed Martin; LFKLenkflugköerpersysteme; and MBDA,which is owned by BAE Systems, the European Aeronautic Defense and Space Company, and Finmeccanica. The initial proposed cost for the design and development phases of the program was $3.4 billion, but it quickly encountered several delays and cost overruns. Although the U.S. has already spent $1.9 billion on the initial design and development phase, the program still requires an additional $2.8 billion just to complete this stage of the project.

“Although diplomatic and contractual concerns need to be taken into consideration, the best course of action would be for the allies to collectively cancel the program.”

A March 2011 Congressional Budget Office (CBO) report recommended terminating MEADS in favor of continuing production of the Patriot Missile Program, urging American officials to harvest MEADS technologies and use them to upgrade the Patriot system. The Government Accountability Office’s (GAO) annual report on DOD weapons programs in March, 2011 noted problems with the program as well, including that it “is at risk of not meeting several technical performance measures….” The Army has also stated its desire to cancel MEADS, but the Pentagon has been reluctant to scrap it because of the high termination fees associated with unilateral withdrawal from the project.

The President’s FY 2012 budget funded a “proof of concept” through FY 2013, capping the cost at $804 million, and requested $406.6 million of that amount for FY 2012. In the end, MEADS received $390 million – or $16.6 million less than the administration’s request. The FY 2013 DOD budget request for MEADS is $400.9 million.

In October, 2011, German policymakers agreed to joint termination of MEADS. Should Italy follow suit, the termination costs to be paid to partners would cease to exist (although termination costs to the contractors might still apply). If the unofficial estimate of unilateral termination costs of between $800 million and $1 billion is accurate, this exceeds the $790.9 million the administration intends to spend over FYs 2012 and 2013. CAGW recommends that the GAO undertake a study to determine the costs associated with various options, including the precise cost of a unilateral withdrawal from the contract and the termination fees owed to contractors.

“The U.S. should explore all options before determining the most sensible way to recover as much value as possible from MEADS, an enormously expensive project that has provided only limited value,” said CAGW President Tom Schatz. “Although diplomatic and contractual concerns need to be taken into consideration, the best course of action would be for the allies to collectively cancel the program.”

Citizens Against Government Waste is a nonpartisan, nonprofit organization dedicated to eliminating waste, fraud, mismanagement and abuse in government.

Business Wire

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