U.S. To Spend $800M To Terminate MEADS Program

Over the next three years, the U.S. government plans to spend more than $800 million on a missile defense “proof of concept” that Army Secretary John McHugh has little confidence will even work. Speaking before the House Armed Services Committee on March 2, McHugh explained to lawmakers that the Pentagon’s course of action for the Medium Extended Air Defense System (MEADS) was necessary given the substantial termination fees associated with it. “The $800 million proof of concept, we’re not convinced is viable,” McHugh said. But DoD had to decide how to most wisely terminate the program and get the most out of it, McHugh said. “If we withdrew this year, there are substantial withdrawal fees that the United States would have to bear and pay into the program,” McHugh said. On Feb. 14, the Pentagon announced the United States could no longer afford to purchase and field the trinational MEADS system. Managed by NATO, MEADS is being developed for the United States, Italy and Germany. Lockheed Martin leads MEADS International, the industry team developing the system for the three countries. In making its decision, the Pentagon considered terminating the program immediately. However, “terminating the program now, just after successful completion of the MEADS Critical Design Review, would force the nations to devote significant funding to contractor termination costs instead of using this funding to bring MEADS development to a viable level of maturity,” the Pentagon said in a Feb. 14 announcement. With the remaining funding, the Pentagon proposed a “proof of concept” effort “that will provide a meaningful capability for Germany and Italy and a possible future option for the United States.” DoD decided to continue the design-and-development phase under the current memorandum of understanding (MoU) through 2014. To complete this work, the United States will pay roughly $804 million between 2011 and 2013. Rep. Duncan Hunter, R-Calif., wanted to know why the United States would spend so much money on something it has decided it doesn’t need.

It is a complex program that involves other countries, Gen. George Casey, chief of staff of the Army, said. And there were cancellation fees to be considered, he said, echoing McHugh, who did not give any details on what it would cost to cancel MEADS now. 21

“The U.S. decision is about continuing to work with our MEADS partners to enable maximum benefit from remaining funding, in which case there would be no MoU termination costs,” Pentagon spokeswoman Cheryl Irwin said in an e-mail. “Should the partners mutually decide to end the program before the fulfillment of the MoU, all would be subject to contract termination costs. The U.S. would be responsible for additional MoU costs in the event of a unilateral U.S. withdrawal; such costs would be subject to negotiation and would not be as high as $1 billion.” Trent Frank, R-Ariz., expressed concerns about the Pentagon’s decision and wanted to know what would fill the gap left by not continuing with MEADS beyond 2014. McHugh said the Pentagon believed existing missile defense systems, including those in the Navy, would be able to address the threats. “This was not an easy decision and it was not a hasty decision,” McHugh said. “Frankly, it was underperforming. You mentioned that it was close to completion – we’re not so sure that’s true.” According to the Pentagon, the U.S. government has already spent $1.5 billion on MEADS. The program is funded 58 percent by the United States, 25 percent by Germany and 17 percent by Italy.

Source: Kate Brannen Defense News

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