154. Memorandum From the Director of the Office of Management and Budget (McIntyre) to President Carter1
SUBJECT
- MX Costs
In connection with your upcoming decision on MX, I want to inform you of our latest efforts to understand the cost implications of the program now recommended by Harold Brown. Harold estimates that this system will cost $33 billion to acquire (constant 1980 dollars), about $8 billion more than the vertical multiple protective silo system originally proposed by the Air Force. The currently proposed system is more costly because of features that provide increased security against attack (rapid shuffle, dash) and increased verifiability (openable horizontal shelters).
OMB staff has been working closely with DOD and the Air Force for some weeks, including a cost analysis session with the project office in California. In our judgment the DOD $33 billion estimate is probably understated by about $8 billion for the following reasons:
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- Based on historical data, we believe the baseline system cost is overly optimistic, and should be increased by about $5 billion. Our judgment here derives in great part from the massive road and shelter construction involved. Given the unprecedented magnitude of this major construction, these added costs are likely to happen even if the program is tightly managed. The cost growth could be much worse otherwise.
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- Modifications to the baseline system that are now under active consideration would add another $3–4 billion. These modifications include deployment of mass simulators to preserve location uncertainty, development of a larger reentry vehicle to fully exploit the throw-weight capacity of the MX missile, command and control improvements, and improved road surfacing needed for rapid dash. In my opinion, some if not all of the modifications will be recommended to you eventually.
Over and above our OMB estimate of $41 billion for the presently configured system, it is also likely that a larger system will be needed to counter an expanded threat. If the Soviets build to the MIRV limit allowed by SALT II, the currently planned MX system would become very vulnerable (almost all the MX missiles could be destroyed). To [Page 699] expand this system to meet the threat would require another $7–8 billion, primarily for constructing additional shelters and the connecting roads.
Harold Brown estimates that Soviet costs to increase the threat to MX would be approximately 25% higher than ours to respond, but this is very little cost leverage. My staff estimates that it may well be cheaper for the Soviets to build an additional 10 RV missile than for us to build the additional shelters needed to maintain planned survivability. If the Soviets exceed SALT II limits, we may have to expand the system even more.
Most optimistically, MX will cost $33–41 billion over the next decade. The proposed horizontal shelter system with its improved security and verifiability features is about as expensive as trench basing, although environmentally more acceptable. Funding for the system is planned to exceed $2 billion in FY 1982 and to be in the $6–9 billion range (constant 1980 dollars) annually in the 1983–86 period. Even at funding levels that allow 3% real growth in defense spending, MX alone will take about half of the total real increase through 1984. This means that unless defense totals are increased beyond current plans, important conventional force modernization (particularly shipbuilding) and readiness improvements will be curtailed. Another choice is to slip the MX program schedule. This is likely to occur anyway, since the currently planned 1986 deployment rate is very optimistic. Such a slip could lessen 1983–85 funding requirements but would probably further add to total system costs.
Recommendation. While the additional security and verification features of the proposed system may be necessary, defense should pursue R&D on a less costly alternative. In particular, we should let further study determine whether dash and rapid shuffle features are really necessary or whether a system with simple transporters and smaller shelters would be acceptable. Even if these additional features are deemed necessary, DOD should design the system so that the basic capabilities could be built first, with dash and other features added later (beyond 1986) if appropriate. Given the difficult overall defense budget choices mentioned above, this “building block” approach provides maximum flexibility in the early 80’s for you to allocate adequate funds to our most pressing DOD requirements.
- Source: Carter Library, National Security Affairs, Brzezinski Material, Subject File, Box 43, Missiles: 8–9/79. Secret.↩