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Says we must find ways to reduce spending without endangering our national security

(Washington, D.C.) – U.S. Senator Jeanne Shaheen (D-NH) wrote a letter to Defense Secretary Robert Gates urging the Department not to spend $804 million over the next two years developing an underperforming, over-budget air defense system that the U.S. no longer intends to purchase.

“To successfully maintain our military edge, preserve our readiness, enhance our defense capabilities, and lead in a dangerous 21st century environment, we need to ensure that every defense dollar is spent effectively and efficiently,” said Shaheen, chair of the Senate Committee on Foreign Relations Subcommittee on European Affairs. “This project serves as proof that there are effective options for reducing our spending on defense without endangering our national security. We shouldn’t be funding an air defense system that we don’t intend to use.”

The Defense Department has requested $804 million in funding in order to further develop the Medium Extended Air Defense System (MEADS) over the next two years, despite determining earlier this year that the system is not cost effective. MEADS, which provides unproven and minimal capability over current U.S. assets, has had a history of technical and management problems and has persistently been over-budget and delayed.  Shaheen applauded the Defense Department’s decision to cancel procurement of the MEADS System, which will save the U.S. taxpayer billions of dollars over the course of the next decade.   

However, though the U.S. has decided not to purchase the final completed MEADS system, the Defense Department still plans to spend $804 million over the next two years to continue to develop the program, citing concerns over costs associated with ending the program.  MEADS is a NATO-managed, joint program with Germany and Italy conceived in the mid-1990’s, which was originally slated to begin production in 2007.  Due to scheduling delays, cost overruns and management challenges, final production had been delayed until no earlier than 2018. 

Citing the program’s severe under-performance and over-budget delays, Shaheen is urging the Department to work with our allies in Germany and Italy to renegotiate the terms of the program and decrease the U.S. burden of any costs associated with the termination of this problem program.

The text of the letter is below:

The Honorable Robert M. Gates

Secretary of Defense

1000 Defense Pentagon

Washington, DC 20301-1000 

Dear Secretary Gates,

I write to urge the Department of Defense to negotiate a multilateral termination agreement with the Governments of Germany and Italy to cancel funding for the ongoing development of the Medium Extended Air Defense System (MEADS).  At a time of severe budget constraints, the United States simply cannot afford to continue supporting an underperforming, over-budget program like MEADS, that provides minimal benefit to the warfighter and that the U.S. military has no intention of purchasing.  

In February, I wrote you to commend the Department for its decision to cancel the planned procurement of the MEADS system.  As you have said, “It is imperative for [DoD] to eliminate wasteful, excessive, and unneeded spending.  Indeed, to do everything we can to make every defense dollar count.”  This decision will save the taxpayer billions of dollars. 

As you know, however, the Department plans to continue funding the development phase of the MEADS program through Fiscal Year 2013.  This will cost the United States nearly $804 million over the next two years on a system we have no intention of buying.  As Army Secretary John McHugh suggested, “The history of this program has been one…where milestones that were set out and determined were rarely reached.”  The United States should not continue to spend hundreds of millions of dollars on a failing program that provides little tangible benefit to the taxpayer.      

The MEADS decision fact sheet released by the Department suggests that the U.S. must continue the development and design phase in order to allow for the implementation of a 'proof of concept’ effort that will provide “a meaningful capability for German and Italy and a possible future option for the U.S.”  However, as Secretary McHugh detailed in his March 2nd testimony, he is “not convinced” the ‘proof of concept’ is viable.  In addition, since the MEADS decision was made, Germany, too, has decided that it will not support the final procurement of the MEADS system.

Department of Defense officials have voiced concerns over termination costs associated with canceling the development and design phase of this program.  It is my understanding that those termination cost obligations are derived from a 2004 Memorandum of Understanding (MOU) signed by the U.S., Germany and Italy which commits the three partners to a total cost floor of $4 billion.  The U.S. share of that burden would require the Department to spend the final $804 million over the next two years. 

I would like to briefly address the concerns over termination costs.  First of all, it is legally questionable whether the U.S. Congress is obligated to provide funding for this program and whether this MOU is enforceable.  In addition, there is nothing prohibiting the U.S. and its two international partners from renegotiating and agreeing to a multilateral termination of the program which reduces termination costs for all parties involved.  If a multilateral termination cannot be agreed to, there is nothing to prohibit the U.S. from renegotiating the terms of the MOU to reduce the remaining obligation for the U.S. and our transatlantic partners. 

I urge the Department of Defense to pursue all available options in order to secure a practical and efficient termination agreement for the U.S. and our partners.  Spending an additional $804 million on a program we have no interest in procuring does not make sense in the current economic climate.  

As the Chair of the Senate Committee on Foreign Relations Subcommittee on European Affairs, I am committed to maintaining a robust transatlantic relationship.  However, I also believe that joint funding of unnecessary and underperforming programs actually undermines public confidence and could potentially limit opportunities for future cooperative efforts. 

I strongly support your efforts to find additional efficiencies in the Department of Defense and to put our military and defense programs on a stable and sustainable long-term financial future.  To successfully maintain our military edge, preserve our readiness, enhance our defense capabilities, and lead in a dangerous 21st century environment, we need to ensure that every defense dollar is spent effectively and efficiently.

Thank you for your consideration and your continued service to our nation.  



Jeanne Shaheen

United States Senator