* Interceptor failed to separate from rocket
* Test failure blamed on "unusual anomaly"
* Officials vow to crack down on quality problems
By Andrea Shalal-Esa
WASHINGTON, July 17 (Reuters) - U.S. defense officials affirmed their commitment to a $1 billion expansion of a Boeing Co ground-based missile defense system despite a test failure this month, but called for more regular testing to get a grip on nagging quality control issues.
James Miller, undersecretary of defense for policy, and Missile Defense Agency Director Vice Admiral James Syring, on Wednesday underscored the importance of the missile defense program, citing the escalating threat posed by advances in missile development by North Korea and Iran.
Miller told an event sponsored by the Air Force Association that the July 5 failure of the only U.S. defense against long-range ballistic missiles, the third consecutive intercept test failure, was surprising and involved an "unusual anomaly."
He confirmed that the interceptor, which is built by Raytheon Co, failed to separate from the third stage of the rocket, but gave no further details. It is designed to hit and destroy the target warhead outside the Earth's atmosphere.
Reuters last week reported an industry source familiar with the probe said a faulty battery may have prevented the interceptor's separation from the rocket.
Republican lawmakers have seized on the test failure to argue against reductions in spending on missile defense by the Obama administration. While the failure has sharpened concerns about the program voiced over the years by Democrats.
Senator Richard Durbin, the Illinois Democrat who heads the defense appropriations subcommittee, told a hearing that the U.S. government had spent about $150 billion on missile defense systems since the 1980s, and lawmakers wanted to see successful tests before agreeing to an expansion.
"What troubles me is this is a system that still hasn't been proven to be able to protect America," Durbin said.
Miller said he believed the failure to separate was "something that ought to be relatively easily resolvable" and he remained confident in the overall missile defense system.
He said the Pentagon still planned to add 14 ground-based interceptors, or GBIs, to the 30 interceptors already in place in Alaska and California by fiscal 2017, and was keeping its options open to add more.
Miller said he favored more frequent testing "both as a matter of good acquisition and maintenance practice, and as a demonstration that these systems work."
But he chafed at suggestions by Republicans that funding cuts had contributed to the recent test failure, telling Reuters after his speech, that the Missile Defense Agency had determined the pace of testing.
The previous test to intercept a dummy warhead was in 2008, although other non-intercept tests have been done since then.
Miller said he would like to see both the CE-I interceptor involved in the failed July test and a newer CE-II interceptor, which has suffered two test failures of its own, tested again with the next 12 months, and preferably sooner.
Syring, the missile defense agency's director, told the Senate panel an extensive review was underway to find out why the test failed and that better quality control was a top priority.
He vowed to conduct more regular testing and accelerate upgrades of the CE-II interceptor, or to redesign and upgrade the current CE-I interceptor, depending on the outcome.
"Regardless of the path we embark on, we will aggressively attack any substantiated quality control problems coming out of the failure review board that need to be corrected through the program," Syring said in testimony prepared for the hearing.
"In light of the last three (ground-based mid-course defense) failures, I recognize that quality and reliability in our GBIs must be our top concern," he said.
The Pentagon's latest budget request proposed two flight tests in fiscal 2014, each at an estimated cost of around $214 million. Syring declined to rule out the need for additional funding as a result of the failed intercept test.
He said the next test of the CE-II interceptor was planned for March, and officials were deciding whether to re-test the CE-I interceptor involved in the recent test failure first.
But he sought to assure Durbin and other lawmakers that the Pentagon was committed to "flying before we buy any more" and would not buy more interceptors until more tests were done.
The Pentagon has been upgrading its oldest interceptors that were fielded in the early 2000s, and Syring said the failed test earlier this month involved one of the upgraded rockets.
Durbin quizzed Syring about the reports that half of the 30 interceptors now in use included obsolete parts, while a third not operational because of a known design flaw.
Syring declined to be specific, but said the military had "a number" of interceptors available.
In fiscal 2015, he said the Pentagon would begin testing the system against longer-range missiles, with eight long-range intercept tests scheduled in the following five years.