The target missile carried no decoys or other countermeasures.
The episode begins with an important test where all of the technical systems work but the interceptor system misses the target missile--by 137 miles.
Together these measures made the target missile appear 2.1 times its normal size to the sensors aboard the interceptor, the report found.
The launching came about 17 minutes after the target missile was sent up from a military installation in Kodiak, Alaska.
Arrow 3 can be launched into an area of space before it is known where the target missile is going.
This technology allows for a smaller warhead to destroy the target missile.
General Fox said an explosive charge had also been placed on the target missile.
The drill had to be aborted, however, when the target missile malfunctioned shortly after launch.
The target missile was launched from a mobile launch platform off the coast of California, within the Point Mugu test range.
One of the officials said a beacon had been installed on the target missile to help guide the interceptor missile to it.