GAO: Missile Defense in Europe May Cost More than Expected

As the Obama administration continues to review plans for the proposed U.S. missile defense system in Europe, a new report from the Government Accountability Office (GAO) casts doubt on official cost estimates prepared in 2008.

When the Bush administration first unveiled its European proposal, it estimated that the system’s five-year cost would total more than $4 billion: $837 million for military construction; $612 million for operations and support; and $2.6 billion for development, testing, and procurement.

After analyzing design data, however, the Army Corps of Engineers told the Missile Defense Agency (MDA) that it needed to increase the military construction estimate from $837 billion to nearly $1.2 billion. In other words, MDA low-balled the cost estimate by more than 30 percent ($360 million).

But military construction might not be the only underestimated cost. According to GAO, the operations and support funding estimate of $612 million fails to reflect several expected costs. For instance, the estimate does not include funds that may be required for facilities support, housing costs, and administration. The Army, Air Force, and MDA also have not yet agreed on how operations and support costs will be handled over the system’s entire life cycle or who will pay for those costs.

Because of these incomplete and unresolved issues, future operations and support costs for the European site “could reach billions of dollars,” GAO concludes.

Low-balling expected costs is nothing new for the Pentagon. Defense contractors and DOD bureaucrats know that by keeping initial cost estimates low, they increase the odds of winning political buy-in and receiving seed money. Once a program is funded, of course, it becomes harder to terminate because the executive branch and Congress myopically calculate future budgets based on the previous year’s funding, not on any fundamental reevaluation of need. Government officials become reluctant to cancel a program (and thereby forfeit sunk costs) after years of investment, so many federal procurement projects continue to chug along despite scandalous cost growth and unforgivable test failures.

If the GAO is correct and the missile defense system in Europe will significantly exceed its $4 billion cost estimate, the Obama administration faces an even more difficult decision about whether or not to deploy it. With its strategic and technical justifications controversial from the beginning, the European system cannot afford to be seen as yet another sinkhole for taxpayer dollars. If that becomes the perception, already reticent political support in the United States will further evaporate.