MEADS is yet another attempt by NATO to blend the discordant requirements and programs of its member states into a single weapons requirement. The emphasis of the program appears to be to spread the work burden in order to cut costs due to the general decline in defense budgets. The US had estimated that the Corps SAM would cost about $2 billion to develop, and hopes that the MEADS effort will cut its development costs in half. This has proven to be illusory due to the long delays in the program, and current estimates put the US development share at over $2.6 billion for the SDD phase alone after having already spent $488.2 million in the risk reduction phase.
Teal Group is skeptical of the potential of this effort given the nearly uniform failure of similar missile programs in the past. The US Army is currently funding MEADS as well as Patriot upgrades, and a ground-launched AMRAAM. While MEADS makes sense as a smaller, more mobile, repackaged and modernized Patriot, it would be a bit more convincing if the army would rationalize its air defense efforts. This is all the more important due to inroads in funding likely from continued operational costs associated with the war in Iraq, and the declining threat of air attack against deployed US forces. When was the last time the US Army endured a serious attack by enemy aircraft? MEADS would be attractive if it could offer a significant improvement in cruise missile defense in conjunction with the JLENS effort, yet the missile selected for the role is a high-energy, low-maneuverability design optimized for high altitude engagement against the ballistic missile threat.
The Army has reorganized the program again over the past two years, now moving towards an incremental absorption of MEADS into a broader Patriot upgrade, an approach that the Army would have preferred earlier had it not been for the European partners. Since Corps SAM started in 1989, a 2018 IOC would make this a three-decade program. The Army attempted to pull out of MEADS in early 2010, fully recognizing the procurement costs that it will face in a few years after SDD is complete. The Pentagon continues to push for the program, and a compromise might be to kick the program back over to the "purple" funding line of the MDA and out of the Army budget lines.
The program's future has been especially vulnerable due to the need to spread the cost to Europe. This will be a continuing threat to the program since hiccups between the US, German, and Italian budgets could slow if not totally de-rail the program.
Germany is the more vigorous supporter of the program but its commitment is far from assured. If Germany's role in MEADS in wobbly, Italy's is even more worrisome. Italy's participation to date has not suffered from the sort of delays encountered with Germany, but there are already rumblings of a further trim of Italian costs from 17% to 15%, and the Italian requirement has been trimmed from 12 systems to 6-9. Equally troubling is Italy's past track record on air defense programs of this sort. Italy was allegedly to purchase Patriot, an event which never occurred. Then Italy joined France on the SAMP/T effort. If Italy is seriously committed to SAMP/T, why in the world is it investing in MEADS?
The partners have attempted to address these budgetary problems by stretching the program out a bit and trimming the development costs. But recent cuts have led the European share of the procurement phase to fall probably to half of what it was a few years ago, from about 36 fire units to maybe 14.
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