An immediate challenge for the new MDA director will be addressing low morale within his ranks, caused largely by O'Reilly's management style. A report in May by the Pentagon's inspector general found that O'Reilly “demeaned and belittled employees” and that his “leadership style and actions resulted in the departure of several senior staff members and caused his senior officials to hesitate to speak up and raise issues during meetings with him.”
Industry and government officials agree that O'Reilly is brilliant and grasps the technology needed for missile defense. He also protected the agency from severe funding cuts—as much as 50% of the budget—originally eyed by the Obama White House. But his leadership style has created problems. “O'Reilly thought that he could do it all by himself,” says the analyst.
Others suggest the new director will have to try to restore a culture that allows for two-way discussions between agency management and staff.
Sources list at least five senior technical/management officials who left the MDA during O'Reilly's tenure. Though they have since been replaced, several industry officials note that their departure signifies a loss of institutional knowledge.
The ranks of support contractor workers were trimmed in order to reduce spending, as well. The Missile Defense Agency Engineering Support Service project was implemented to consolidate the technical support work. “MDA once had more than 400 separate support contractor contracts that were compressed into seven program support areas,” say MDA officials. “Contractors must now compete for individual task orders within the program support areas, and this has often resulted in less people being bid on contracts.” Some observers, however, portend a shortfall of smart, technical people that could jeopardize the success of future programs.
“We lost a lot of real, value-added technical talent. What you are left with is lower-cost folks who are just . . . learning the trade,” the analyst says. “If I were to go after O'Reilly on one thing . . . it is not the thing he is typically nailed for. . . . It is his dissemination of the technical and engineering expertise within the MDA.”
At the same time, the agency was upended to comply with the Base Closure and Realignment Commission. The MDA's headquarters have been relocated from the Navy Annex adjacent to the Pentagon to Fort Belvoir, Va., 18 mi. south of the Pentagon. Roughly 2,300 billets have also shifted from Washington to Huntsville, Ala. Though MDA officials say this is “very much a change for the better,” it has caused turbulence, as some employees were not keen on moving to Huntsville. Now the deputy MDA director will be based in Huntsville, while the director's office will remain in Virginia.
O'Reilly is also criticized for implementing a culture of too much risk-aversion, according to industry officials. These sources, who spoke on the condition of anonymity owing to the sensitivity of the subject, say that an extreme concern about risk has kept the Boeing-led Ground-Based Midcourse Defense (GMD) system grounded from testing since December 2010. The agency has not achieved an intercept since December 2008, because of an issue with the preparation of the detection radar in one case and malfunctions with the Raytheon Exoatmospheric Kill Vehicle (EKV) in others. The cause, however, is known and a fix has been devised, according to several industry sources.
“We are burning a lot of money to burn every one of those risks down,” says one industry official. “We have slowed down the pace of testing in search of excellence on the ground.” But the Aegis/SM-3 program has excelled in recent years in part because “they would not strive for perfection” earlier in the test program, the industry source says.