realigned the Medium Extended Air Defense System (MEADS) program on March 31,

2003 to the Army.

The Arrow Weapon System, developed jointly by the United States and Israel to counter short- to medium-range ballistic missiles, is operational at two sites in Israel and interoperable with U.S. missile defense elements. We worked with Israel to deploy its first two Arrow batteries, and are currently assisting that country to procure a third battery.

The Arrow System Improvement Program, a spiral development upgrade of the current operational system, includes technical cooperation to improve the performance of the Arrow system and test it at a U.S. test range. The first flight test was conducted successfully on January 5, 2003. We continue to support additional Arrow flight-testing to assess technology developments and overall system performance and to collect data and conduct annual hardware-in-the-loop exercises with Israel to enhance

interoperability.

Block 2006

Block 2006 work continues to improve existing capabilities and provide new sensors and interceptors for integration with fielded elements. Our focus will be on evolving and integrating the capability to achieve a more synergistic and layered BMD system. We will continue rigorous system and element flight-test demonstration and

validation efforts and use wargames to help develop concepts of operation and

operational procedures.

sensors. We also plan to complete the upgrade of the Thule EWR should we get approval

from Denmark.

Aegis BMD flight missions will incorporate remote engagements of targets as well as demonstrations against intermediate-range ballistic missile (IRBM) targets. We will continue development of Aegis BMD sensor discrimination capability. Prototype BMD signal processors will be tested aboard Aegis ships with SPY-1 radar modifications. SM-3 missile deliveries will begin in 2004. Our plans are to build an inventory of up to thirtyfive SM-3 interceptors by the end of 2006. Also, if directed, we would prepare to field up to twenty additional SM-3 interceptors in 2007. We will proceed with our cooperative BMD research with Japan to enhance the SM-3. We have two joint flight tests of the advanced nosecone planned in the FY 2005-2006 timeframe, and we will continue to look at possibilities for co-development.

Terminal Elements. The THAAD interceptor begins in the third quarter FY 2006

a series of five flight tests that are scheduled to conclude in first quarter FY 2008. We will improve THAAD's exo-atmospheric and endo-atmospheric endgame discrimination capability against increasingly complex targets.

Sensors. Current plans call for a new forward-based radar in late 2006 for positioning close to the threat at sea or on land. Enhanced forward-based sensor capabilities and improved sensor netting will enable the BMD system to handle threats posing a more difficult discrimination challenge and provide a launch-on-remote capability. A midcourse radar will be added as part of our layered approach. Additional

radar configurations will be procured as necessary to satisfy Block 2006 objectives.

Current plans are to launch two low-earth orbit satellites in FY 2007 to validate space-based sensor concepts for target acquisition, tracking, and discrimination and to provide a space node for the Test Bed. STSS will improve in subsequent blocks to provide data fusion, radar/sensor cueing over-the-horizon, and interceptor handover and fire control. Production alternatives will be evaluated at least annually based upon element performance and integrated BMD system performance.

Block 2008

Block 2008 represents a major step in BMD system evolution. We plan to complete multiple layers of weapons and sensors, based on fixed and mobile platforms, to counter a range of ballistic missiles. This block will include C2BM components that enable integrated control of all system assets throughout the battlespace. Primary development projects include adding boost phase weapons to the Test Bed, integrating space sensor platforms, and fusing multi-sensor discrimination products. We will integrate capabilitybased targets and payload suites (to include new and more complex countermeasures) into our system testing to demonstrate effectiveness against evolving threats.

We are requesting $572 million in FY 2004 to support RDT&E for Block 2008.

Our estimated expenditure for Block 2008 activities across the FYDP is $16.3 billion (see Table 3).

Boost Elements. ABL will integrate new technologies to improve performance

and lethality and enhance operational suitability. We will continue development of promising technologies for insertion into Block 2008 and beyond and design and develop a system-level ground-test facility for ABL. We plan to test a second ABL aircraft in the Test Bed during Block 2008.

Plans also are to develop and integrate a mobile ground-based boost phase hit-to-kill capability into the Test Bed for flight-test demonstration. We will initiate a space-based test bed development to determine the feasibility of intercepting missiles from space. Initial on-orbit testing would commence with three to five satellites in Block 2008.

Midcourse Elements. We will conduct up to three GMD flight-tests annually to demonstrate advanced engineering and pre-planned equipment improvements for the boosters, interceptors, early warning and fire control radars, and C2BM and communications software builds. We plan to enhance the Aegis Weapons System