Computation of Number of Patriot PAC-3 Interceptors Needed Is Flawed GAO/NSIAD-95-45
Ballistic Missile Defense: Computation of Number of Patriot PAC-3
Interceptors Needed Is Flawed (Letter Report, 03/17/95, GAO/NSIAD-95-45).

Pursuant to a congressional request, GAO reviewed the Ballistic Missile
Defense Organization's (BMDO) planned production of 1,200 Patriot
Advanced Capability-Three (PAC-3) interceptors, focusing on the: (1)
determination of the number of interceptors needed; and (2)
affordability of the interceptors.

GAO found that: (1) the actual number of PAC-3 interceptors needed is
uncertain; (2) the Department of Defense (DOD) used inaccurate
assumptions and made mathematical errors in its affordability analysis;
(3) if the estimated quantity is greater than 1,200 PAC-3 interceptors,
the program could be underfunded by between $700 million and $3.4
billion; and (4) to avoid spending on programs which may require more
funding than is available, DOD must determine the number of interceptors
needed and adjust its program within budget constraints.

--------------------------- Indexing Terms -----------------------------

     TITLE:  Ballistic Missile Defense: Computation of Number of Patriot 
             PAC-3 Interceptors Needed Is Flawed
      DATE:  03/17/95
   SUBJECT:  Ballistic missiles
             Fighter aircraft
             Missile warheads
             Advanced weapons systems
             Defense procurement
             Military budgets
             Cost analysis
             Air defense systems
             Desert Storm
             SDI Theater High Altitude Area Defense System
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================================================================ COVER

Report to Congressional Requesters

March 1995



Patriot PAC-3

=============================================================== ABBREV

  BMDO - Ballistic Missile Defense Organization
  PAC-1 - Patriot Advanced Capability-1
  PAC-2 - Patriot Advanced Capability-2
  PAC-3 - Patriot Advanced Capability-3
  TMD - theater missile defense
  THAAD - Theater High Altitude Area Defense
  GEM - Guidance Enhancement Missile
  DOD - Department of Defense
  MRC - major regional conflicts
  FYDP - Future Years Defense Program
  COEA - cost operational effectiveness analysis

=============================================================== LETTER


March 17, 1995

The Honorable Floyd D.  Spence
The Honorable Ronald V.  Dellums
Ranking Minority Member
Committee on National Security
House of Representatives

At your request, we reviewed the Ballistic Missile Defense
Organization's (BMDO) planned production of 1,200 Patriot Advanced
Capability-Three (PAC-3) interceptors.  Our specific objectives were
to assess (1) how the number of interceptors needed was determined
and (2) whether the issue of affordability was adequately resolved. 

------------------------------------------------------------ Letter :1

The theater missile defense (TMD) mission is to protect U.S.  forces
deployed overseas and U.S.  allies and friends from theater ballistic
missile\1 attacks.  According to BMDO, an improved defense capability
is urgently needed because of the increasing proliferation of theater
ballistic missile weapon systems and technology to countries with the
potential to threaten U.S.  and allied theaters of operations.  BMDO
has established as its top priority a ╣core program║ of improvements
for TMD consisting of the Theater High Altitude Area Defense (THAAD),
seabased lower tier, and PAC-3. 

During the past decade, there have been a series of upgrades to give
the Patriot, which was originally designed to destroy aircraft, a
capability against theater ballistic missiles.  In July 1988, Patriot
was modified to give it an initial ballistic missile defense
capability, called PAC-1.  During Operation Desert Storm in 1991, a
new version of the Patriot interceptor, called PAC-2, was deployed to
defend against Iraqi Scud missiles.  The Army also began the Guidance
Enhancement Missile (GEM) program to make interim engineering
improvements to the Patriot interceptor.  Army plans call for 345 GEM
interceptors, with initial delivery scheduled in 1995. 

The PAC-3 system upgrade--including improved ground radars,
launchers, and battle management hardware and sortware and new
interceptors--is a $4.8 billion,\2 17-year program that will begin
being fielded in 1998.  The PAC-3 program is expected to increase (1)
the defended area and (2) the kill potential against higher
performance missiles and chemical and biological warheads. 
Interceptor production is scheduled to begin in 1997 and end in 2004,
at a total cost of $2.3 billion and expected cost of $1.5 million for
each interceptor.  While earlier Patriot interceptors destroyed
missiles through explosions, PAC-3 is designed to collide with them. 
The basic Patriot unit--the minimum configuration that can carry out
an engagement--is the battery, and the Army has 54 of them.  As
figure 1 shows, a Patriot battery normally includes (1) a fire
control radar set, (2) an antenna mast group, (3) an engagement
control station, (4) an electrical power plant, and (5) eight

   Figure 1:  Typical Patriot
   Battery for Defending a Target

   (See figure in printed

The Army plans to modify three of the eight launchers in each Patriot
battery so that they are capable of firing either PAC-3 or earlier
Patriot interceptors.  Each modified launcher can fire up to 16 PAC-3
interceptors without reloading.  All launchers can fire earlier
versions of Patriot interceptors, but only four of those interceptors
can be loaded on each launcher. 

\1 Theater ballistic missiles have shorter ranges than strategic
ballistic missiles and are expected to be used in major regional
conflicts, such as Operation Desert Storm. 

\2 All costs in this report are in then-year dollars.  The estimated
costs for the engineering and manufacturing development and
production phases are $3.9 billion for fiscal years 1994 through

---------------------------------------------------------- Letter :1.1

Current policy is that the Department of Defense (DOD) must be
capable of winning two nearly simultaneous major regional conflicts
(MRC) anywhere in the world.  Guidance for determining DOD's
capabilities states that, for planning purposes, one MRC in Northeast
Asia and another in Southwest Asia should be assumed, each with a
duration of 60 to 120 days.  Current DOD planning calls for
replenishment of ammunition stocks only after hostilities have ended. 
Therefore, the number of PAC-3 interceptors on hand at the outbreak
of hostilities takes on special significance. 

------------------------------------------------------------ Letter :2

Following a recent review of the PAC-3 program, DOD approved a
procurement program that would buy 1,200 PAC-3 interceptors. 
However, the actual number of PAC-3 interceptors DOD needs to buy is
uncertain.  The analysis that DOD's affordability assessment group
had at the time it developed its recommendation to buy 1,200
interceptors and the analysis that the Army made supporting a
requirement for 2,200 both contain inaccurate data and invalid
assumptions.  Adjusting for some of the problems with DOD's analysis
could increase its calculation of PAC-3 interceptors needed to about
3,442.  Adjusting for the problems we noted with the Army's analysis
could reduce its calculation of PAC-3 interceptors needed to 1,670. 
DOD prepared a subsequent analysis that it believes supported the
1,200 number.  We have evaluated the subsequent analysis and found
that it used many of the same inaccurate assumptions and contained
simple mathematical errors that the analysis used by the
affordability assessment group did not have. 

If the corrected estimated quantity that is needed is higher than
1,200, then BMDO may not have adequately budgeted for the program. 
The $4.8 billion program could be underfunded between $700 million
and $3.4 billion.  To avoid spending on other lower priority programs
that may ultimately require more funding than can be expected to be
available, it is important that DOD accurately determine the number
of interceptors needed and adjust its program within overall
ballistic missile defense budget constraints. 

------------------------------------------------------------ Letter :3

In its mid-1994 review, DOD approved the PAC-3 engineering and
manufacturing development phase and the planned production of 1,200
PAC-3 interceptors.  A DOD-appointed affordability assessment group
concluded, based on its threat-based analysis of requirements, that
1,200 interceptors would provide moderate confidence of supporting
two MRCs.  Our review indicated that the group's analysis did not
adequately determine the number of interceptors needed because it
relied on erroneous assumptions about kills by non-PAC-3
interceptors, which reduced the need for PAC-3 interceptors, and it
assumed a perfect or near-perfect match between enemy missiles and
PAC-3 interceptors, which is not likely to happen.  Adding PAC-3
interceptors in DOD's analysis to overcome optimistic assumptions
concerning non-PAC-3 interceptors and the effect of the enemy
tailoring its attack would increase the number needed to about 3,442. 
In contrast, Army officials believe that 2,200 interceptors are
needed.  However, the Army's force-structure based analysis may
support a requirement for only 1,670 because it calls for 530
interceptors that may not be needed to meet DOD's two-MRC policy. 

---------------------------------------------------------- Letter :3.1

The affordability assessment group recommended that 1,200 PAC-3
interceptors be produced.  However, the threat-based analysis it used
to develop that recommendation contained inaccurate data and
questionable assumptions concerning (1) the contribution of the THAAD
system in destroying missiles, (2) the planned capabilities of
earlier versions of the Patriot to kill missiles outside the required
area called a keepout zone, and (3) the maximum likely attack size
against defended targets.  Substituting PAC-3 interceptors for the
questionable contributions of the THAAD and earlier versions of the
Patriot in DOD's analysis increases the number of PAC-3 interceptors
needed to about 3,085.  Factoring in the effect of the enemy
tailoring its attack size further increases this number to 3,442. 

First, DOD's computation uses assumptions for the THAAD system that
are beyond its planned capabilities.  The analysis credits THAAD with
killing 225 missiles that have a maximum range too short for THAAD to
kill.  In addition, not all Patriot batteries will be deployed with
THAAD.  In a Joint Chiefs of Staff study in December 1993, only 33
percent of the Patriot batteries are deployed with a THAAD battery. 
Substituting PAC-3 interceptors in DOD's analysis to destroy these
225 missiles and using the analysis' firing doctrine result in an
increase in the estimated requirement of about 616 interceptors. 

Second, DOD's computation assumes that earlier versions of the
Patriot interceptors will have capabilities beyond those planned for
them.  The analysis assumes that they can kill 463 missiles outside
the required area called a keepout zone.  However, none of the
earlier interceptors will have the capability to do this, even those
with the GEM upgrade.  According to Army data, the interceptors do
not meet the PAC-3 requirement of making the kills outside the
required keepout zone.  Moreover, they are not as effective as the
PAC-3 against chemical and biological warheads, which was one of the
reasons for developing PAC-3.  To destroy the 463 missiles the study
credited the earlier versions of the Patriot interceptors with
destroying, about 1,269 additional PAC-3 interceptors would be

Third, DOD's analysis supporting 1,200 interceptors assumed a perfect
or near-perfect match of PAC-3 and enemy missiles at each target
location without regard to the enemy's ability to tailor its attack. 
For example, if there are 10 targets to defend and the enemy has 100
missiles for attacking these targets, such an analysis would show a
need for only 100 interceptors to defend these 10 targets.  Implicit
in this analysis is the assumption that the enemy would choose to
evenly distribute its missiles among the 10 targets.  However, the
enemy may choose to tailor its attack and shoot 15 missiles at some
targets and 5 at others.  If all 10 targets are to be protected, then
the Army might decide 15 interceptors are needed to defend each
target, which would require 150 interceptors.  Therefore, DOD's
threat-based methodology should take into account the maximum likely
attack size against each defended area.  Using the same factor that
DOD used in another analysis for what it calls maldistribution, DOD
would need another 357 PAC-3 interceptors. 

---------------------------------------------------------- Letter :3.2

The Army's Director of Requirements, Office of the Deputy Chief of
Staff for Operations and Plans, told the Strategic Systems
Committee\3 that the Army had determined that 2,200 PAC-3
interceptors were required.  While never used in BMDO planning or
budgeting, the Army established 2,200 as the number of interceptors
needed to (1) fight two MRCs (1,728 interceptors), (2) fight one
lesser regional conflict (172 interceptors), and (3) accomplish
various test objectives (300 interceptors).  The 1,728 interceptors
the Army says it needs to fight two MRCs is based on fully equipping
2 launchers with 16 interceptors each, in all 54 tactical batteries. 

However, for two reasons, accepting the Army's analysis could result
in more interceptors than are actually needed.  First, current
guidance does not require planning for lesser regional conflicts. 
Second, according to a Joint Chiefs' December 1993 study, the number
of Patriot batteries needed to fight two MRCs, in concert with other
theater air defense systems, is only 45.  This suggests that the Army
might have more Patriot batteries than it needs.  If so, it would
need only 1,440 interceptors to equip 45 batteries plus 230 for
testing, for a total of 1,670, not 2,200. 

We also noted that while the Army plans to maintain 54 batteries in
active status and equipped with PAC-3 interceptors, it currently
staffs only 44.  It plans to have the National Guard staff an
additional four batteries in the near future. 

\3 The Strategic Systems Committee coordinated the review of the
PAC-3 systems for the Defense Acquisition Board.  Formal Defense
Acquisition Board reviews are preceded by months of staff review and
coordination to identify issues to be presented to Defense
Acquisition Board members. 

------------------------------------------------------------ Letter :4

Due to the Cost Analysis Improvement Group's unexpectedly high cost
estimate for the PAC-3 program, the Defense Acquisition Board was
faced with a serious affordability problem that it had to resolve
before it could approve the engineering and manufacturing development
phase of the program.  DOD regulations require a determination that
adequate resources to support the program have been, or are committed
to be, programmed before approving a system's entry into engineering
and manufacturing development.  DOD believes it solved this problem
by establishing the number of interceptors at 1,200.  However, if an
accurate analysis indicates a need for hundreds more, then the $4.8
billion PAC-3 program could be underfunded between $700 million and
$3.4 billion. 

---------------------------------------------------------- Letter :4.1

To avoid spending money on programs that may require more funding
than can be expected to be available, DOD requires a determination,
when approving a system for engineering and manufacturing
development, that "adequate resources .  .  .  to support the program
have been, or are committed to be, programmed." Specifically, the
regulations provide that "a program shall not be approved to enter
the next acquisition phase unless sufficient resources .  .  .  are
or will be programmed to support projected development, testing,
production, fielding, and support requirements." According to an
official from the Office of the Under Secretary of Defense
(Acquisition and Technology), the word "programmed" means budgeted in
DOD's Future Years Defense Program (FYDP).  The FYDP that was current
at the time of the decision covered fiscal years 1995 through 2000. 

---------------------------------------------------------- Letter :4.2

BMDO had originally allocated funding for the PAC-3 program using
1,500 interceptors as a planning factor.  This number was not based
on a requirements analysis.  In preparation for DOD's review,
however, a cost estimate was developed that showed BMDO had not
allocated enough money to buy 1,500 interceptors.  Consequently,
DOD's Strategic Systems Committee established an affordability
assessment group to develop recommendations for resolving the

That group recommended reducing the number of interceptors to
partially close the affordability gap and shifting funding for the
balance.  It concluded that 1,200 interceptors would provide moderate
confidence that two MRCs could be supported.  The Strategic Systems
Committee recommended approval of this acquisition quantity.  The
affordability assessment group determined that this quantity would
require $694 million more than BMDO had previously allocated for
fiscal years 2001 and beyond.  To cover the shortfall, BMDO agreed to
transfer money from other BMDO programs.  In July 1994, the Under
Secretary of Defense (Acquisition and Technology) approved PAC-3
entering engineering and manufacturing development with the reduced
quantity of 1,200 interceptors planned for production. 

---------------------------------------------------------- Letter :4.3

If the correct quantity is higher than 1,200, then BMDO must increase
PAC-3 production funding at some point.  The $4.8 billion program
could be underfunded between $700 million and $3.4 billion.  To avoid
spending on programs that may ultimately require more funding than
can be expected to be available, it is important that DOD accurately
determine the number of interceptors needed and adjust its budget to
provide funding for them within overall ballistic missile defense
budget constraints. 

                           Table 1
              Computation of Range of Potential
             Underfunding For PAC-3 Interceptors

                    (Dollars in billions)

                   Adjusted quantity    Increase  Underfunde
                   of interceptors    over 1,200  d amount\a
-----------------  -----------------  ----------  ----------
Army               1,670                     470        $0.7
DOD                3,442                   2,242        $3.4
\a Total is based on expected cost of $1.5 million in then-year
dollars for each interceptor. 

Because ballistic missile budgets are constrained, solving this
problem may entail curtailing other BMDO programs.  PAC-3 is part of
a core program of three systems:  PAC-3, THAAD, and a seabased lower
tier.  BMDO maintains that this core program is its number one
priority.  In its October 1993 Bottom-Up Review report, DOD endorsed
$18 billion for ballistic missile activities for fiscal years 1995
through 1999, including $9 billion for the three systems in the core
program, saying that this represented a $21 billion reduction from
the previous administration's defense program.  Subsequent budget
decisions were reported to reduce the $18 billion by an additional $1
billion.  The administration's request for ballistic missile defense
for fiscal year 1996 is $2.9 billion. 

------------------------------------------------------------ Letter :5

In order to preclude expenditures on other lower priority programs
that may ultimately be unaffordable if funds need to be shifted to
PAC-3, the Secretary of Defense should direct the Director of BMDO to
provide both an accurate estimate of the number of PAC-3 interceptors
required and a plan that resolves any resulting affordability

------------------------------------------------------------ Letter :6

DOD provided written comments on a draft of this report.  The
complete text of DOD's comments is in appendix I.  DOD agreed with
much of the information in our report; and in response to our
recommendation, DOD said it was reassessing PAC-3 requirements as
part of an ongoing analysis scheduled for completion in late 1995. 
DOD said that if it is subsequently determined that more than 1,200
interceptors are needed, then it may have to reconsider funding
priorities in the post-2000 time frame and extend planned production. 

DOD disagreed with the details in our report in two principal areas. 
First, it said that a subsequent analysis (1) corrected for the
shortcomings of the analysis discussed in our report and (2)
supported the 1,200 procurement objective.  However, we found that
the subsequent analysis also used inaccurate data and invalid
assumptions, and it contained mathematical errors that if corrected
result in a need for only 910 PAC-3 interceptors.  Although we had
analyzed it in October 1994, after a DOD official had given us a
copy, we did not focus our report on it for two reasons--it was not
an accurate computation of requirements and the affordability
assessment group used the analysis we did discuss. 

Second, DOD said that its acquisition procedures require only that
funds be programmed through the period covered by the current FYDP
before a weapon system can proceed into the next acquisition phase. 
If it determines that more than 1,200 interceptors are needed, DOD
said that it would consider extending the planned production, which
would be outside the FYDP.  We note, however, that BMDO's approach to
resolving the original affordability problem raised by DOD's
Strategic Systems Committee was an adjustment to BMDO's 2001-2004
program plan, which was outside of the 1995-2000 FYDP.  The Strategic
Systems Committee listed as an open action item the affordability
problem of who would pay for the 1,200 interceptors.  The problem was
resolved before the Defense Acquisition Board met when BMDO agreed to
make adjustments to other programs to make available sufficient

Figure 2 illustrates the issue raised by an extension of production
as envisioned in DOD's comments.  It shows that the currently planned
production of 1,200 PAC-3 interceptors would be completed in fiscal
year 2004.  Thus, if the Cost and Operational Effectiveness Analysis
(COEA) shows that any additional interceptors are needed, production
would begin in fiscal year 2005.  If the correct number turns out to
be as high as the highest adjustment for flaws we detected (3,442),
then production would not be completed until fiscal year 2013
assuming that DOD continues the annual production rate of 250. 

Figure 2:  Schedule of Patriot PAC-3 Initial Production
and Potential Additional Production

According to BMDO, PAC-3 is urgently needed to counter the increasing
threat posed by theater ballistic missiles.  BMDO has assigned PAC-3
and the other TMD core programs its top priority.  The Congress has
also recognized the urgent need for fielding improved TMD systems. 
The fiscal year 1994 House Armed Services Committee report said that
theater missile defense should receive priority over other programs
and that priority should be given to those systems that can be
deployed sooner over those that cannot be deployed until later. 
Finally, DOD indicated that the COEA currently being conducted will
provide an accurate estimate of the number of PAC-3 interceptors
required.  However, if additional quantities are needed, DOD said it
may have to extend planned production, delaying procurement of the
total number of PAC-3 interceptors to as late as 2013. 

------------------------------------------------------------ Letter :7

In light of the deficiencies in the analyses that supported the
determination of the PAC-3 production requirements, the Congress may
wish to direct the Secretary of Defense to provide a valid estimate
of the number of PAC-3 interceptors required and when he plans to
produce them. 

------------------------------------------------------------ Letter :8

We examined (1) cost estimates developed by the PAC-3 product office,
the Army Space and Strategic Defense Command, the Department of the
Army, and DOD; and (2) Army and DOD analyses of requirements for
PAC-3 interceptors.  In Washington, D.C., we met with officials from
the DOD, BMDO, and Department of the Army.  In Huntsville, Alabama,
we met with representatives from the PAC-3 product office and the
Space and Strategic Defense Command. 

We performed our work between December 1993 and February 1995 in
accordance with generally accepted government auditing standards. 

---------------------------------------------------------- Letter :8.1

We plan no further distribution of this report until 15 days after
its issue date, unless you publicly announce its contents earlier. 
At that time, we will send copies to the appropriate congressional
committees; the Secretaries of Defense and the Army; and the
Directors, Ballistic Missile Defense Organization and Office of
Management and Budget.  We will also make copies available to

If you or your staff have any questions concerning this report,
please contact me at (202) 512-4841.  The major contributors to this
report are listed in appendix II. 

Brad Hathaway
Associate Director, Systems
 Development and Production Issues

(See figure in printed edition.)Appendix I
============================================================== Letter 

See p.  9. 

See pp.  9-10. 

(See figure in printed edition.)

(See figure in printed edition.)

Now on pp.  1-4. 

See comment 1. 

(See figure in printed edition.)

See comment 1. 

(See figure in printed edition.)

Now on pp.  5-6. 

See comment 2. 

See comment 3. 

(See figure in printed edition.)

See comment 4. 

See comment 5. 

See comment 6. 

(See figure in printed edition.)

See comment 7. 

See pp.  6-7. 

See comment 8. 

(See figure in printed edition.)

Now on pp.  7-9. 

(See figure in printed edition.)

See pp.  9-11. 

See p.  9. 

The following are GAO's comments on DOD's letter dated January 12,

------------------------------------------------------------ Letter :9

1.  The wording on pages 1 and 2 was clarified in line with DOD's

2.  During the course of our audit, the affordability assessment
group assured us we were reviewing the analysis that it had used to
recommend the 1,200 requirement.  In October 1994, a representative
in the Office of the Secretary of Defense gave us a subsequent
version of the analysis, which DOD now calls the "final results."
Although we did not focus our report on DOD's "final results"
assessment, we did analyze it to see if it provided proper support
for DOD's 1,200 PAC-3 procurement objective.  It did not.  As
discussed in comments 3 through 5 below, the "final results" also
assumed allocation of enemy missiles to earlier versions of the
Patriot (PAC-2 and GEM), which results in less effective protection
of our forces.  In addition, the "final results" contained several
mathematical errors.  Correcting for these errors and ignoring
potentially offsetting faulty assumptions used in the analysis
concerning the contribution of other systems supports a procurement
objective of only 910 PAC-3 interceptors, not 1,200.  Therefore, our
conclusion that DOD needs to make an accurate calculation of PAC-3
requirements is still correct, and DOD has said it is currently
conducting a Cost and Operational Effectiveness Analysis that will do

3.  DOD is correct that the "final results" analysis used THAAD's
interceptors only against longer range theater ballistic missiles
that THAAD can intercept.  Although this corrected one problem, DOD's
solution increased another problem because it assumed that the
shorter range theater ballistic missiles would be killed by PAC-2s
and GEMs.  We discuss this problem further in our comment 5. 

4.  According to the Joint Chiefs' study, only 33 percent of the
Patriot batteries may be deployed with a THAAD battery.  DOD said its
final results fully accounted for that deployment strategy.  We
believe that it may have partially accounted for this problem. 
Proper consideration of the maldistribution problem would correct any
remaining problem.  (See comment 6.)

5.  We questioned using PAC-2s and GEMs in lieu of PAC-3s to attack
certain short-range theater ballistic missiles because their lesser
capability would not meet the operational requirements established
for PAC-3.  The "final results" analysis also used PAC-2s and GEMs in
lieu of PAC-3s.  DOD justified buying PAC-3 because GEM interceptors
were not good enough.  DOD said that although the PAC-2 and GEM
interceptors cannot enforce the same defensive zone as the PAC-3
interceptor, operational commanders will use them to destroy tactical
ballistic missiles against which they have a high probability of
kill.  DOD also said that the flexibility of the Patriot system
permits the operational commander to use PAC-3 interceptors if
intelligence information or other considerations would warrant their
use.  The ability of operational commanders to allocate resources
during a battle as they believe best is not relevant to the question
of using PAC-2 and GEM to reduce PAC-3 requirements.  Using
interceptors with less capability than PAC-3 simply lowers the degree
of protection provided. 

6.  DOD said that in the "final results" analysis it had added a
factor equal to about 20 percent of the procurement objective to
account for not having the right number of PAC-3 interceptors at the
right place at the right time.  We were subsequently told that the 10
percent factor for contingencies in the version used by the
affordability assessment group accounted for several factors,
including maldistribution.  In the "final results" analysis DOD added
another 10 percent for maldistribution, raising the total percentage
to 20 percent to account for all these factors.  Although we
recognize that the tailoring of an attack is a problem that DOD
should address, our draft report did not include a specific
adjustment to DOD's 1,200 procurement objective for this factor
because we had no basis for calculating one.  Using the factor DOD
used in its "final version," we have increased the requirement
calculated in the version used by the affordability assessment group
by another 357 PAC-3 missiles. 

7.  Contrary to DOD' comment, the "final analysis" did use a Navy
lower-tier system to destroy part of the threat, thereby reducing the
missiles PAC-3 must kill. 

8.  Our report raises the issue of whether DOD needs all 54
operational Patriot batteries because a study by the Joint Chiefs of
Staff showed a need for only 45 to meet the two-MRC requirement,
which raises a question about the need for the other 9.  DOD said
that in addition to the 45 batteries needed to fulfill the two-MRC
requirement, it needed 10 more--6 batteries for permanent deployment
in Saudi Arabia and 4 for the Alabama National Guard starting in
1996.  However, the Secretary of Defense's planning guidance states
that peace operations and other small-scale operations "do not impose
requirements for additional forces beyond those needed for two MRCs."

The decision on where to obtain the four batteries needed to equip
the Alabama National Guard has already been made, according to Army
officials.  None of the 54 operational batteries will be transferred
to the Guard.  In addition to the 54 operational batteries that the
Army currently has, it also has another 20 radars, 20 engagement
control stations, and 4 information and coordination centers in
storage that were originally built for Italy but will not be sold to
it.  The Army plans to transfer four of the radars and engagement
control stations and one of the information and coordination centers
to the Guard.  The launchers will come from either operational
readiness floats or from training and testing assets. 

========================================================== Appendix II

-------------------------------------------------------- Appendix II:1

J.  Klein Spencer, Assistant Director

-------------------------------------------------------- Appendix II:2

Bob Crowl, Regional Management Representative
Stan Lipscomb, Evaluator-in-Charge
Leon Gill, Site Senior
Troy Thompson, Staff Member