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Last year, the Congress passed the Missile Defense Act of 1991. The act calls for the deployment of defenses--as soon as possible~to protect the United States from attacks by a limited number of long-range ballistic missiles, and to protect U.S. troops and allies from attacks by missiles of less-than-intercontinental range. The act does not, however, specify the size and nature of the defenses that should be deployed. Nor does it specify when a full system of defenses should be in place. The Administration has modified its plans for strategic defenses to respond to the act. But critics have other ideas about what types of defenses are appropriate, when they should be deployed, and how much should be spent on the Strategic Defense Initiative.

This Congressional Budget Office (CBO) paper analyzes the costs of the Administration's plan for strategic defenses and the costs of alternative approaches. All of the alternatives would provide for eventual deployment of defenses but, at least through 1997, would cost less than the Administration's approach. The paper was requested by four members of the House Committee on Armed Services: the Chairman of the Committee; the Chairman of the Subcommittee on Research and Development; the Chairman of the Subcommittee on Seapower and Strategic and Critical Materials; and the Chairman of the Panel on Department of Energy Defense Nuclear Facilities. In keeping with CBO's mandate to provide objective and nonpartisan analyses, the paper makes no recommendations.

The paper was prepared by David Mosher and Raymond Hall. David Mosher wrote the paper and developed and analyzed the alternatives under the supervision of Robert Hale and R. William Thomas. Raymond Hall performed the cost analysis and reviewed the text under the supervision of Michael Miller. Ivan Eland provided a thorough overall review. Roger M. Williams edited the paper, and Judith Cromwell prepared the paper for publication.
 

Robert D. Reischauer
Director
May 1992
 
 

SUMMARY

BACKGROUND

• Missile Defense Act of 1991
• Components of Defensive Systems

THE ADMINISTRATION'S PLAN

• Description of Planned System
• Program Elements of the Administration's SDI Budget
• Costs of the Administration's Plan

MOTIVATION FOR THE ALTERNATIVES

ALTERNATIVE I: GRAND FORKS BY 1997, FULL GPALS AFTER 2005, AND SELECTED RESEARCH CUTS

• Funding Unchanged for Those Systems Deployed at Grand Forks
• GSTS Added to Grand Forks Deployment
• Funding Reduced for Other GPALS Systems
• Funding Reduced for Research and Engineering Efforts
• Implications of Costing Assumptions
• Savings Under Alternative I
• Potential Additional Savings from Alternative I
• Rationale for Alternative I

ALTERNATIVE II: GRAND FORKS BY 2000, FULL GPALS AFTER 2005, AND LARGER RESEARCH CUTS

• Savings Under Alternative II
• Rationale for Alternative II

ALTERNATIVE III: GRAND FORKS BY 2003, FULL OPALS AFTER 2005, AND LARGEST RESEARCH CUTS

• Savings Under Alternative III
• Rationale for Alternative III

OTHER ALTERNATIVES

CAVEATS TO THE COST ESTIMATES

• Uncertainties in Near-Term Cost Estimates
• Uncertainties Regarding Total Costs

APPENDIX
 

TABLES
S-1.	Description of Alternative Defense Systems
S-2.	Costs and Savings of Alternative Defense Systems Through 1997
1.	Interceptors and Sensors Under the Administration's Plan and Alternatives
2.	Acquisition Costs of the Administration's SDI Program Through 1997
3.	Funding by Category in the Limited Defense System Element for the Administration's Plan
4.	Potential Additional Savings from Alternative I
A-1.	Detailed Costs of the Administration's Plan by Program Element Through 1997
A-2.	Relative Costs of the Alternatives by Program Element Through 1997
A-3.	Detailed Costs of Alternative I by Program Element Through 1997
A-4.	Detailed Costs of Alternative II by Program Element Through 1997
A-5.	Detailed Costs of Alternative III by Program Element Through 1997
BOX
1.	Components of the Administration's GPALS System

 

SUMMARY

In the Missile Defense Act of 1991, the Congress declared a new policy goal: the nation should strive to deploy defenses to protect itself against attacks by a limited number of ballistic missiles. The act represented the first time since the inception of the Strategic Defense Initiative (SDI) in 1983 that the Congress has explicitly supported the Administration's aim of deploying a system of missile defenses in the United States.

Defenses against ballistic missiles would consist of three components: sensors, based on the ground or in space, to detect incoming missiles; interceptors, also based on the ground or in space, to intercept and destroy the missiles or their warheads; and a command system to coordinate all activities.

The Missile Defense Act directed the Administration to begin deploying by 1996--or as soon as technically feasible--a limited defense that would comply with the Anti-Ballistic Missile (ABM) Treaty. The act envisions the subsequent deployment of more capable defenses, if needed, that could include additional sites as well as space-based sensors; those defenses would require that the United States renegotiate or withdraw from the ABM treaty.

The Missile Defense Act also declared that, by the mid-1990s, the nation should deploy defenses to provide protection from ballistic missile attacks directed against U.S. troops operating in overseas theaters and against U.S. allies. This system of theater missile defenses (TMDs) would defend against missiles of less-than-intercontinental range (such as the SCUDs used by Iraq).

Although the Congress has asked the Administration to report formally on its blueprint to implement the Missile Defense Act in June of this year, Administration officials have already discussed the broad outlines of the new plan (see Summary Table 1). This Congressional Budget Office (CBO) paper relies on those discussions and other preliminary information to analyze the costs of the Administration's new SDI program and various alternatives to it. The information is needed now because some Congressional action on the SDI budget will take place before the June report is submitted.
 

Cost of the Administration's Plan

For 1993, the Administration has requested $5.4 billion to begin implementing its new plan for SDI. Based on preliminary data, CBO's analysis suggests that in the years between 1994 and 1997, SDI funding under the Administration's new plan could average about $8 billion a year (see Summary Table 2). (All costs in this paper are expressed in constant 1993 dollars of budget authority.)
 

According to testimony by the Director of the Strategic Defense Initiative Organization (SDIO)--the agency that manages the SDI program--the new plan envisions deploying a single-site defense at Grand Forks, North Dakota, by late 1997. Grand Forks would constitute the initial site in a larger system of defenses. That system, including additional interceptor sites and space-based sensors, would be deployed around the year 2000. Space-based interceptors would be added a few years later. The Administration also would deploy theater missile defenses; some elements would be deployed in the mid-1990s, others closer to the turn of the century. This larger system of defenses, including the TMDs, was labeled Global Protection Against Limited Strikes (GPALS) by the SDIO last year. Throughout this paper, the term GPALS is used to describe the larger system of defenses in the Administration's new plan.

Costs of the Administration's plan and the alternatives all include funds for theater defenses as well as for defenses to protect the nation against longer-range missiles. Costs shown are for the entire SDI budget and not just the cost of a Grand Forks or GPALS defense. The Administration does not identify the portion of the budget that is allocated to those two systems. Indeed, many activities support both, so they would be difficult to separate. In addition, the total SDI budget includes funds for research on follow-on systems that might not be part of either system.

Costs in the paper include only funds for research, development, and procurement. Costs to operate and support deployed defenses are not addressed, although they would be relatively small through 1997.

Costs of Alternatives Through 1997

In a period of declining defense budgets, it may be difficult to provide enough funding to carry out the Administration's new plan for SDI. Some critics also maintain that it is not necessary to deploy defenses quickly.

To illustrate the costs of different approaches to SDI, CBO analyzed three alternatives. The alternatives differ in how quickly deployments are accomplished and, in some cases, in the nature of the systems that are deployed. They also vary the amount of funding that is provided for research. All three provide less money for the "Brilliant Pebbles" system of space-based interceptors and the "Brilliant Eyes" system of space-based sensors. All the alternatives also assume that defenses against theater missiles are funded at levels the Administration proposes.

The first alternative would establish a defense at Grand Forks in 1997, as the Administration plans. In order to enhance the capability of that site, this alternative would deploy an additional system of sensors--the Ground-Based Surveillance and Tracking System (GSTS). In addition, Alternative I would delay deployment of the remaining components of the GPALS system--except theater defenses--until after 2005. Finally, Alternative I would make selected cuts in research funding related to follow-on systems and other activities (see Summary Table 1).

Under Alternative I, the SDI budget in 1993 could amount to $5 billion, a $500 million reduction from the Administration's plan (see Summary Table 2). From 1994 through 1997, based on preliminary data, CBO estimates suggest that budgets would average $6.6 billion a year, a reduction of about $1.4 billion compared with the Administration's plan.

Alternative II would delay a defense at Grand Forks until the year 2000 and would deploy much of the rest of GPALS after 2005. Reductions in expenditures for selected research activities would be larger than under Alternative I. Under this approach, SDI funding could be reduced to $4.2 billion in 1993, a savings of $1.3 billion relative to the Administration's plan. CBO estimates that budgets from 1994 through 1997 would average about $5.1 billion a year, roughly $3 billion less than under the Administration's plan.

Alternative III would delay the installation at Grand Forks still further -to the year 2003~and defer all subsequent GPALS deployments except theater defenses beyond 2005. This alternative would also eliminate all funding for Brilliant Pebbles and, among the alternatives presented in this paper, would make the largest cuts in research funding.

CBO estimates that Alternative III could reduce SDI funding to $3.3 billion in 1993, a savings of $2.1 billion compared with the Administration's plan. SDI budgets from 1994 through 1997 would average $4.2 billion a year under Alternative III, a savings of almost $4 billion.

Additional reductions--amounting to several hundred million dollars a year and perhaps substantially more--might be possible under the alternatives if the Congress decides to focus SDI efforts primarily on theater missile defenses and the 1997 deployment at Grand Forks and to place less emphasis on the subsequent deployments required for the full GPALS. With such an emphasis, additional reductions could be made in funding for systems that are not to be deployed at Grand Forks (such as Brilliant Pebbles or Brilliant Eyes). Cuts could also be made in funding for certain engineering and support activities. Finally, cuts could be made in research aimed at developing follow-on systems that would be part of successors to GPALS. Although they would save money during the development and deployment of the Grand Forks system, these various cuts would delay deployment of the full GPALS, could increase its development costs, and might entail other risks.

Total Cost of the Alternatives

Compared with the Administration's plan, the alternatives would reduce costs through 1997, but the effect of the alternatives on the total cost to deploy the Grand Forks defense and the full GPALS system is less clear. On the one hand, total cost could remain below the level planned by the Administration if delays under the alternatives allowed more time for development and so avoided the need for expensive modifications sometimes required in systems that are deployed quickly. On the other hand, total costs under the alternatives could well be higher than the cost under the Administration's plan because slowing down a program often leads to inefficiencies that increase with the length of the delay. At a minimum, a substantial amount of the money that is saved through 1997 under the alternatives would eventually have to be spent if the Grand Forks defense and the full GPALS system are to be deployed.

Limitations of Results

The data CBO uses in this paper reflect the Administration's current estimates of costs. CBO's estimates do not attempt to account for cost increases that might occur during development of a technically challenging project such as missile defense. The estimates also rely on a number of rules of thumb. These approximations should provide rough but reasonable guides to future costs.

There are also other possible approaches to SDI that are not examined in this paper. They include options that would reduce costs further by forgoing deployment and confining SDI efforts to research. Still other options would increase costs by deploying larger and more capable defenses than GPALS would provide.

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