Defense

May 23, 2012

Ballistic missile defense system sheds ‘science project’ label

Since its inception under the Reagan administration, the U.S. missile defense set up had been characterized by research, development, test & evaluation spending.

Over time, the former ‘Star Wars’ system has become a three-pronged program comprising of Aegis-based systems, Patriot-based systems, and a system based on the existing ballistic missile defense system.

Analysis from Frost & Sullivan, U.S. DOD Missile Defense, finds that the market earned revenues of $9.45 billion in 2010 and estimates this to drop to $8.44 billion in 2016.

The market is expected to recover by 2020.

The BMDS, originally an experimental initiative, has now matured into a much more cooperative venture that includes the Army, Navy and Missile Defense Agency. In a far cry from its earlier days, spending on RDT&E is progressively reducing to the benefit of procurement.

“Most new RDT&E projects are focused on initial fielding and follow-on upgrades,” said Frost & Sullivan analyst Wayne Plucker. “Many of the more expensive RDT&E projects have been shelved in favor of ‘tweaks’ to existing systems such as Aegis and Patriot.”

Missile manufacturers have made inroads into the missile defense market space, on the strength of their technologies, relegating research to the background.

Despite the enthusiasm for procurement in DOD the unfavorable economic climate and consequent budget cuts will have a telling impact on procurement. The decision to determine the programs that will be funded will depend on perceived need and assumed risk. As the dissolution of the Soviet Union reduced the threat of ballistic missiles, the U.S. DOD is reluctant to spend on ballistic missile defense.

“Procurement is now focused on improved ‘kill packages’, radar modifications, and improved missiles,” said Plucker. “In general, the market is moving closer to a sustainment model, but true sustainment can be achieved only after the next six to seven years.”




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