oversight

Space Acquisitions: DOD Faces Challenges in Fully Realizing Benefits of Satellite Acquisition Improvements

Published by the Government Accountability Office on 2012-03-21.

Below is a raw (and likely hideous) rendition of the original report. (PDF)

                            United States Government Accountability Office

GAO                         Testimony
                            Before the Subcommittee on Strategic
                            Forces, Committee on Armed Services,
                            U.S. Senate

                            SPACE ACQUISITIONS
For Release on Delivery
Expected at 2:30 p.m. EDT
Wednesday, March 21, 2012



                            DOD Faces Challenges in
                            Fully Realizing Benefits of
                            Satellite Acquisition
                            Improvements
                            Statement of Cristina T. Chaplain, Director
                            Acquisition and Sourcing Management




GAO-12-563T
                                                 March 21, 2012

                                                 SPACE ACQUISITIONS
                                                 DOD Faces Challenges in Fully Realizing Benefits of
                                                 Satellite Acquisition Improvements
Highlights of GAO-12-563T, a testimony
before the Subcommittee on Strategic Forces,
Committee on Armed Services, U.S. Senate




Why GAO Did This Study                           What GAO Found
                                                 Last year, GAO testified that though acquisition problems still existed in many space
Each year, the DOD spends billions on            programs, the Department of Defense (DOD) was beginning to launch satellites that
large space acquisition programs,                had long been lagging behind schedule and it had taken positive actions to instill
which have in the past experienced               better practices and more focused leadership for space. Progress has continued.
cost and schedule overruns and                   Over the past year, DOD launched the first Navy Mobile User Objective System
increased technical risk. At present,            (MUOS) satellite; the first, after a nine-year delay, of six Space Based Infrared
though, the worst of these problems              System (SBIRS) geosynchronous earth orbit (GEO) satellites; and the first Advanced
may be over, and programs long                   Extremely High Frequency (AEHF) satellite—all of which will bring important
troubled are finally being launched.             capability to the warfighter. While these launches represent solid progress, there
Challenges persist, but they are less            have also been some drawbacks. For instance, the second Global Positioning
significant than they were. With today’s         System (GPS) IIF satellite experienced technical problems that could shorten its
fiscal constraints, however, DOD must            operational lifetime. The cost of the first two GPS III satellites is at least18 percent
find ways to keep its new major space            higher than first estimated, up to $1.6 billion today. A 1-year delay is expected by
acquisitions on track, as operating in           SBIRS program officials on production of the 3rd and 4th GEO satellites along with a
space is expensive and DOD is still              $438 million cost overrun. And, a termination of the Defense Weather Satellite
replenishing legacy programs like                System (DWSS) may result in a capability gap. Moreover, even though problems
missile warning, protected                       have been overcome, DOD must still contend with the effects of its previous
communications, and environmental                difficulties on its investment portfolio.
monitoring. Significant barriers exist to
ensuring such investments are                    Recent GAO reviews highlight other difficulties facing DOD space programs. GAO’s
optimized.                                       review of a new acquisition strategy for the Evolved Expendable Launch Vehicle
                                                 program, for instance, identified a need for more knowledge about the industrial base
To address the progress DOD has                  as well as cost and pricing in order to optimize a sizable investment in launch
made this year, this testimony will              vehicles. GAO’s review of parts quality problems in major DOD, Missile Defense
focus on (1) the current status of space         Agency, and National Aeronautics and Space Administration (NASA) programs
system acquisitions; (2) results of              illustrated that acquisition reforms need to be buttressed with closer attention to the
GAO’s space-related reviews this past            quality of piece parts as issues have vexed most major programs. GAO, however,
year; (3) actions taken to address DOD           credited the agencies with instituting collaborative efforts to address supplier quality.
space acquisition problems; and (4)
remaining challenges that stand in the           Though it still faces an array of challenges, DOD continues to work to ensure its
way of DOD fully realizing the benefits          space programs are more executable and produce a better return on investment. For
of satellite acquisition improvements.           example, DOD intends to follow incremental or evolutionary acquisition processes
This testimony is based on previously            and it has acted to streamline management and oversight of the national security
issued GAO products as well as                   space enterprise. The agency has taken steps toward reforming the defense
analysis of DOD funding estimates.               acquisition system to help its programs to meet planned cost and schedule
                                                 objectives. Because DOD intends to address the root causes of problems, it will take
GAO does not make recommendations                time to determine if these actions are successful or need further actions on how best
in this testimony. However, in previous          to lead, organize, and support space activities.
reports GAO has generally
recommended that DOD adopt best                  Moreover, there are significant barriers to ensuring investments are optimized.
practices for developing space                   These include fragmented leadership, the rising cost of launch, uncertainty about the
systems such as separating                       future for technology advancements, and disconnects between the fielding of
technology development from product              satellites with user equipment and ground systems needed to take advantage of
development. DOD is in the process of            expensive new capabilities. Addressing all of these challenges are needed to
implementing such practices.                     maintain space superiority in an era of fiscal austerity, but their resolution also
                                                 requires the participation and cooperation of all the military services, the intelligence
                                                 community, and agencies such as NASA and the National Oceanic and Atmospheric
                                                 Administration.
View GAO-12-563T. For more information,
contact Cristina Chaplain at (202) 512-4841 or
chaplainc@gao.gov.

                                                                                             United States Government Accountability Office
Chairman Nelson, Ranking Member Sessions, and Members of the
Subcommittee:

I am pleased to be here today to discuss the Department of Defense’s
(DOD) space acquisitions. Each year, billions of dollars are spent by DOD
to acquire space-based capabilities that support military and other
government operations—such as intelligence, reconnaissance and
surveillance, and homeland security— and to enable transformation of the
way DOD collects and disseminates information. The worst of DOD’s
space acquisition problems may be behind the department, as programs
long plagued by serious cost and schedule overruns are finally being
launched. Though acquisition challenges persist, they are not as
widespread and significant as they were several years ago, and to its
credit, DOD has taken an array of actions to reduce risks. The challenge
DOD now faces is how best to keep its major space systems acquisitions
on track in light of fiscal constraints. Operating in space is expensive and
DOD is still in the process of replenishing legacy capabilities, such as
missile warning, protected communications, and environmental
monitoring. While upgrading existing satellite constellations amid
declining budgets is a daunting challenge, there are significant barriers to
ensuring investments are optimized, including fragmented leadership, the
rising cost of launch, uncertainty about the future for technology
advancements, and disconnects between the fielding of satellites with
user equipment and ground systems needed to take advantage of
expensive new capabilities. In addition to discussing the progress DOD
has made this year, my testimony will focus on these challenges as they
stand in the way of DOD fully realizing the benefits of satellite acquisition
improvements.

The objectives of this testimony are to address (1) the current status of
space system acquisitions, (2) the results of GAO’s space-related reviews
this past year, (3) actions being taken to address DOD space acquisition
problems, and (4) remaining challenges. In preparing this testimony, we
relied on previous GAO reports on (1) space programs and (2) weapon
system acquisition best practices as well as ongoing work on satellite
control networks. 1 We also relied on work performed in support of our
annual weapons system assessments, and analyzed DOD funding
estimates to assess cost increases and investment trends for selected



1
    See GAO related reports at the end of this statement.




Page 1                                                            GAO-12-563T
             major space system acquisition programs. We obtained updates on
             improvement actions from the Office of the Secretary of Defense and Air
             Force. We also analyzed recent funding estimates for space programs.
             More information on our scope and methodology is available in the issued
             reports. The work that supports this statement was performed in
             accordance with generally accepted government auditing standards.
             Those standards require that we plan and perform the audit to obtain
             sufficient, appropriate evidence to provide a reasonable basis for our
             findings and conclusions based on our audit objectives. We believe that
             the evidence obtained provides a reasonable basis for our findings and
             conclusions based on our audit objectives.


             The past decade has been troubling for defense space acquisitions.
Background   Despite years of significant investment, most of the DOD large space
             acquisition programs collectively experienced billions of dollars in cost
             increases, stretched schedules, and increased technical risks. Significant
             schedule delays of as much as 9 years have resulted in potential
             capability gaps in missile warning, military communications, and weather
             monitoring. Unit costs for one of the most troubled programs, the Space
             Based Infrared System (SBIRS), for instance, have climbed about 231
             percent to over $3 billion per satellite. Moreover, the first satellite was
             launched about 9 years later than predicted. Similarly, by the end of fiscal
             year 2010, the U.S. government had spent 16 years and over $5 billion to
             develop the National Polar-orbiting Operational Environmental Satellite
             System (NPOESS), but had not launched a single satellite. In February
             2010, citing the program’s cost overruns, schedule delays, and
             management problems, the White House announced that the NPOESS
             tri-agency structure would be eliminated and the program would be
             restructured by splitting procurements and responsibilities. Other
             programs, such as the Transformational Satellite Communications
             System, were canceled several years earlier because they were found to
             be too highly ambitious and not affordable at a time when the DOD was
             struggling to address critical acquisition problems elsewhere in the space
             portfolio.




             Page 2                                                           GAO-12-563T
                        In 2011, we testified that though problems still existed on many programs,
The Current Status of   DOD was beginning to make progress by finally launching satellites that
Space System            had been lagging behind schedule. 2 These included the Missile Defense
Acquisitions            Agency’s (MDA) Space Tracking and Surveillance System (STSS), the
                        Air Force’s first Global Positioning System (GPS) IIF satellite and the first
                        Advanced Extremely High Frequency (AEHF) satellite although AEHF
                        had not yet reached its final planned orbit at the time we testified because
                        of an anomaly with the satellite’s propulsion system. At the same time,
                        however, several programs still in development were at risk of cost and
                        schedule growth, such as the Joint Space Operations Center Mission
                        System (JMS).

                        Progress has continued since we testified last year. For instance:

                        •     DOD launched the second GPS IIF satellite in July 2011, and the third
                              is scheduled to launch in September 2012.
                        •     DOD launched the first of the Navy’s Mobile User Objective System
                              (MUOS) satellites in February 2012, and the second is scheduled for
                              launch in July 2013.
                        •     The first of six SBIRS geosynchronous earth orbit (GEO) satellites
                              successfully launched in May 2011, after a roughly 9 year delay. 3 The
                              second SBIRS satellite is planned for delivery in spring 2012 and may
                              launch late this year or early 2013.
                        •     The Evolved Expendable Launch Vehicle (EELV) program continues
                              to successfully launch DOD and National Aeronautics and Space
                              Administration (NASA) satellites, and is planning 11 launches in 2012.
                        •     The first AEHF satellite reached its intended orbit after having
                              experienced propulsion trouble after launch. The second AEHF
                              satellite is scheduled to launch in April 2012.

                        While these launches represent solid progress, there have been some
                        drawbacks to the programs that have launched their first satellites. For
                        instance, the second GPS IIF satellite experienced technical problems
                        that could possibly shorten the satellite’s operational lifetime. Also, though
                        a MUOS satellite has been launched, the DOD estimates that over 90
                        percent of the first satellite’s on-orbit capabilities will likely be initially


                        2
                          GAO, Space Acquisitions: DOD Delivering New Generations of Satellites, but Space
                        System Acquisition Challenges Remain, GAO-11-590T (Washington, D.C.: May 11, 2011).
                        3
                            Two highly elliptical orbit sensors have already been launched.




                        Page 3                                                                 GAO-12-563T
underutilized because of delays in development of the compatible Joint
Tactical Radio System (JTRS) terminals.

Moreover, other acquisition programs are experiencing cost and schedule
growth, though not to the extent yet as those experienced in the last
decades. For instance,

•   The GPS III program is currently experiencing cost growth and the
    contractor is behind schedule. In November 2011, the contractor’s
    estimated cost at completion for the development and production of
    the first two satellites was over $1.4 billion or 18 percent greater than
    originally estimated; the program office estimated the cost to be about
    $1.6 billion. The GPS III program has cited multiple reasons for the
    projected cost increases including reductions in the program’s
    production rate; test equipment delays; and inefficiencies in the
    development of both the navigation and communication payload and
    satellite bus. The contractor is also behind in completing some tasks
    on schedule, but the program does not expect these delays to affect
    the launch of the first satellite.
•   Though the first SBIRS satellite has launched, and the second is
    close to delivery, program officials are predicting a 1-year delay on
    production of the 3rd and 4th GEO satellites due in part to technical
    challenges, parts obsolescence and test failures. Along with the
    production delay, program officials are predicting a $438 million cost
    overrun for the 3rd and 4th GEO satellites.
•   The Defense Weather Satellite System (DWSS), which was the Air
    Force’s follow-on to the restructured NPOESS, was terminated in
    fiscal year 2012. The restructuring of NPOESS and the subsequent
    cancellation of DWSS have resulted in a potential capability gap for
    weather and environmental monitoring.

Table 1 describes the status of the space programs we have been
tracking in more detail.




Page 4                                                            GAO-12-563T
Table 1: Status of Major Space Acquisition Efforts

Programs still susceptible to cost and schedule overruns
GPS IIF                                 The second Global Positioning System (GPS) IIF satellite, designed to upgrade timing and
(positioning, navigation, and timing)   navigation accuracy and add a new signal for civilian use, launched on July 16, 2011, and the
                                        third is expected to launch in September of 2012. Approximately one month after they were
                                        enabled, the second IIF satellite’s Cesium clock—one of three atomic frequency standard
                                        clocks onboard that provide GPS accuracy through redundancy—failed. An investigation
                                        identified design and manufacturing issues, and the GPS Directorate is exploring options,
                                        including replacing the Cesium clocks already installed on the remaining IIF satellites, 3
                                        through 7. The cost and schedule impacts are as yet undetermined. According to the GPS
                                        directorate, the cost of the GPS IIF program, as of April 2011, was at $2.6 billion—more than
                                        triple the original cost estimate of $729 million. The IIF satellites’ development challenges were
                                        mostly responsible for the 4 1/2-year delay in the launch of the first GPS IIF satellite to May
                                        2010.
AEHF                                    On August 14, 2010, the Air Force launched the first of six planned Advanced Extremely High
(communications)                        Frequency (AEHF) satellites (AEHF-1) to replenish the existing Milstar system with increased
                                        strategic and tactical capabilities for warfighters. Employing a novel combination of chemical
                                        and electric propulsion in a two-phase orbit raising procedure, AEHF-1 was expected to reach
                                        its operational orbit in about three months. However, an anomaly with one of the spacecraft’s
                                        three propulsion systems delayed the arrival on orbit by about 13 months. The anomaly was
                                        detected when the spacecraft’s Liquid Apogee Engine (LAE)—a bi-propellant system designed
                                        to provide the thrust for the spacecraft’s initial orbit transfer maneuvers—faltered and was
                                        declared unusable. No longer able to use the more powerful LAE for the first phase of orbit
                                        raising as intended, the program office in conjunction with the contractor and user community,
                                        decided to achieve the intended orbit using AEHF-1’s two remaining, less powerful propulsion
                                        systems. The alternate propulsion was engaged and the spacecraft’s rate of ascent was
                                        calculated to conserve fuel and maintain its original 14-year operational life expectancy.
                                        AEHF-1 reached its intended orbit in late October 2011, and began undergoing what is
                                        expected to be about 100 days of testing. The problem with AEHF-1 was not identified on
                                        either AEHF-2, which has been delivered and is on schedule for an April 27, 2012 launch, or
                                        AEHF-3, which is currently in storage and expected to launch in the fall of 2013. The fourth
                                        satellite is under contract and scheduled to be available for launch in 2017. Plans to procure
                                        the last two AEHF satellites—tentatively expected to be available for launch in 2018 and
                                        2019— were announced following the 2009 cancellation of the Transformational Satellite
                                        Communications System—the planned follow-on to AEHF.
MUOS                                    The first Mobile User Objective System (MUOS) communications satellite was launched on
(communications)                        February 24, 2012, and is expected to begin on-orbit operations in May 2012—26 months later
                                        than planned at development start. While the delivery of the MUOS satellite’s ultra-high
                                        frequency (UHF) communication capabilities is predicted to help address the potential
                                        capability gap caused by the unexpected failure of two legacy satellites, there is a risk the
                                        satellite’s on-orbit capabilities will initially be significantly underutilized. Over 90 percent of
                                        MUOS’s planned capability—including increases in the amount of data that can be transmitted
                                        and the ability to transmit both voice and data—is enabled by compatible Joint Tactical Radio
                                        System (JTRS) terminals and by a new waveform. Operational testing of the JTRS terminals
                                        has been delayed until February 2014, leading the government to form an independent review
                                        team to assess potential options for completing development of the MUOS waveform.
                                        Following a 2009 Navy-initiated review, the program developed new cost and schedule
                                        baselines. However, the MUOS acquisition program baseline has been under revision since
                                        December 2009, and has not yet been approved.




                                             Page 5                                                                           GAO-12-563T
GPS III                                 GPS is a constellation of multiple generations of GPS satellites that provide global position,
(positioning, navigation, and timing)   navigation and timing capability to both military and civil users worldwide. In 2008 the GPS
                                        directorate established a program to develop the next generation of GPS satellites named
                                        GPS III. GPS III satellites are designed to have the capabilities found on GPS IIF satellites
                                        plus increases in jam resistance, accuracy, and design life; a new civil signal compatible with
                                        the European Galileo system; and a satellite bus capable of supporting future satellite
                                        capability additions. The GPS III program is to use an acquisition strategy designed to reduce
                                        risk and to avoid or correct problems that plagued the GPS IIF program and caused a more
                                        than 4 year delay in the launch of the first IIF satellite. The GPS III program plans to maintain
                                        stable requirements; have rigorous contractor oversight; and employ a structured systems
                                        engineering approach which includes features such as trade studies, advanced component
                                        development and prototype, and incremental delivery of mature technologies. One of the
                                        program’s risk reduction efforts includes research on dual launch initiatives to support two
                                        satellites launching on one launch vehicle. The GPS program office attributes current cost
                                        growth issues to reductions in the program’s production rate, test equipment delays, and
                                        inefficiencies in the development of both the navigation and communication payload and
                                        satellite bus. The program office and contractor have estimated the cost to complete the
                                        development and production of the first two GPS III satellites at $1.6 billion and $1.4 billion
                                        respectively, which is 18 percent or more than originally estimated. The first GPS III satellite is
                                        expected to be ready for launch in May of 2014.
Development initiatives getting under way
JMS                                     Space Situational Awareness (SSA)—the knowledge and characterization of space objects
(space situational awareness)           and the environment on which space operations depend—is increasingly important to the
                                        protection of U.S. space forces from space weather effects, space debris, and attack. The
                                        Joint Space Operations Center Mission System (JMS) program is a key component of SSA
                                        and one of two major upcoming acquisition efforts (the other is Space Fence) expected to fill
                                        the growing need to replace SSA capability from fragmented legacy systems and to provide
                                        new, advanced SSA capability. The JMS program is designed to replace the Space Defense
                                        Operations Center (SPADOC) currently in use but nearing the end of its operational lifetime,
                                        and provide mission services to support and enable the command and control of space forces.
                                        In early 2011, the Office of the Under Secretary of Defense for Acquisition, Technology and
                                        Logistics commissioned an independent program assessment of the JMS program which, at
                                        that time, had plans to use immature technologies and to deliver key capabilities in a single,
                                        large increment, versus smaller and more manageable increments. In May 2011, in response
                                        to concerns raised by the assessment, the Air Force announced the transfer of JMS to the
                                        management group responsible for most of the service’s space-related acquisition and the
                                        implementation of a new tailored incremental information technology acquisition approach.
                                        According to officials at the new JMS program office, the revised approach is modeled on
                                        tenets from DOD’s 2007 Defense Acquisition Transformation Report to Congress and includes
                                        plans to maximize the use of commercial-off-the-shelf and government-off-the-shelf solutions,
                                        to leverage investment in existing government prototypes and industry applications, and to
                                        utilize personnel from other services or federal labs who have expertise in relevant
                                        technologies and systems.




                                             Page 6                                                                            GAO-12-563T
Space Fence                     Space Fence is being designed as a system of geographically dispersed ground-based
(space situational awareness)   radars. It is intended to replace and expand coverage currently provided by the aging Space
                                Surveillance System by using higher radio frequencies that will allow it to detect and track
                                smaller Earth-orbiting objects. Like JMS, Space Fence is a key program to help meet the
                                nation’s SSA mission and represents the current largest investment in SSA at an estimated
                                cost of about $3 billion to complete. Space Fence program officials have stated that Space
                                Fence will be one of the largest phased array radars ever built. The size of the radar is
                                expected to provide significant power for the transmission and reception of data but may also
                                pose increased risk related to the affordable integration of technology components. To
                                mitigate this risk, the Space Fence acquisition strategy includes maintaining competition
                                through technology development and having two firms under contract doing parallel prototype
                                development. This process allows program officials to evaluate contractor’s designs and
                                associated costs while moving Space Fence’s four critical technologies and backup
                                technologies toward maturity, before the program enters system development which is
                                scheduled for later this year with the award of a single contract. Though earlier plans called for
                                the first Space Fence site to achieve initial operational capability in 2015, estimates show that
                                at current funding levels, this capability will not occur before 2017.
PTSS                            The Precision Tracking Space System (PTSS) is being developed as an operational
(ballistic missile defense)     component of the Missile Defense Agency’s (MDA) Ballistic Missile Defense System and,
                                according to MDA, delays in fielding a PTSS constellation in fiscal year 2018 would
                                significantly affect the implementation of the Phased Adaptive Approach (PAA) to defend
                                Europe and the United States against regional ballistic missile attacks. We have on-going
                                MDA work and have initial concerns regarding schedule optimism, concurrency, and potential
                                cost estimates. We plan to issue a report on the results of our review in April 2012.
SBSS                            On February 23, 2011, the Space Based Space Surveillance (SBSS) satellite began full
(space situational awareness)   operational duty. The satellite was launched in September 2010, to provide a follow-on
                                capability to the Midcourse Space Experiment / Space Based Visible sensor satellite, which
                                ended its mission in July 2008. According to program and contracting officials, SBSS’ 24-hour,
                                all-weather, all-geography capability provides an increase in space situational awareness—the
                                ability to search, detect, and track objects in space—by a factor of three compared to ground
                                based tools. Air Force stated that the timing of the SBSS launch and the magnitude of initial
                                cost estimates for the proposed SBSS follow-on led to the decision not to include funding for
                                this effort in their fiscal year 2012 budget request. In fiscal year 2013 the Air Force plans to
                                initiate acquisition strategy plans for the SBSS follow-on, including preparing for the
                                competitive award of a fixed price contract meeting or exceeding SBSS Block 10
                                requirements.




                                     Page 7                                                                          GAO-12-563T
NPOESS/DWSS/ WSF                   The National Polar-orbiting Operational Environmental Satellite System (NPOESS) was
(climate and weather monitoring)   planned to be a state-of-the-art, environment-monitoring satellite system that would replace
                                   two existing polar-orbiting environmental satellite systems—one managed by the Department
                                   of Commerce’s National Oceanic and Atmospheric Administration (NOAA) and the other by
                                   the Department of Defense (DOD)/U.S. Air Force. The NPOESS program was jointly managed
                                   by NOAA, DOD/ Air Force, and the National Aeronautics and Space Administration (NASA),
                                   and considered critical to the nation’s weather forecasting and climate monitoring needs
                                   through the year 2026. In February 2010, the White House’s Office of Science and
                                   Technology Policy restructured the NPOESS program to address continuing cost, schedule,
                                   management, and technical challenges. Furthermore, DOD/Air Force and NOAA/NASA were
                                   directed to plan and acquire their own replacement satellite systems. The Air Force initiated
                                   preliminary efforts on the Defense Weather Satellite System (DWSS) as its next-generation
                                   polar-orbiting environmental satellite system with primary earth coverage in the early morning.
                                   To reduce development risks and lower acquisition costs, the Air Force planned to leverage
                                   the billions of dollars invested in the NPOESS program. Furthermore, to ensure continued
                                   coverage, the Air Force had planned to have DWSS satellites available for launch in 2018 and
                                   2021. However, in fiscal year 2012, DWSS was terminated per Congressional direction, and
                                   DOD/Air Force budgeted for a new program called the Weather Satellite Follow-on (WSF).
                                   Planned program activities include a requirements analysis and an analysis of alternatives.
                                   Until the DOD/Air Force transitions from its current Defense Meteorological Satellite Program
                                   (DMSP) satellites to a follow-on system, DOD/Air Force plans to continue utilizing the
                                   remaining DMSP satellites to meet its weather requirements.
                                       Source: GAO analysis of DOD data and previous GAO reports.




Acquisition Challenges                 Even though DOD has finally overcome some technical and production
Have Reverberating                     difficulties and begun to launch high risk satellites such as SBIRS and
Effects on Investment                  AEHF, the department is still contending with the effects of their
                                       significant cost growth on its investment portfolio. Figure 1 compares
Portfolio                              original cost estimates to current cost estimates for the broader portfolio
                                       of major space acquisitions for fiscal years 2011 through 2016.




                                       Page 8                                                                         GAO-12-563T
Figure 1: Comparison between Original Cost Estimates and Current Cost Estimates
for Selected Major Space Acquisition Programs for Fiscal Years 2011 through 2016




Note: Includes Advanced Extremely High Frequency, Global Broadcast System, Global Positioning
System II and III, Mobile User Objective System, Space Based Infrared System, and Wideband
Global SATCOM. This chart does not include the Evolved Expendable Launch Vehicle, and planned
new space acquisition efforts—such as Joint Space Operations Center Mission System, Space
Based Space Surveillance Follow-on, the Weather Satellite Follow-on, or Space Fence—for which
total cost data were unavailable.


A long-standing problem in DOD space acquisitions is that program and
unit costs tend to go up significantly from initial cost estimates, and the
gap between original and current estimates shows that DOD has fewer
dollars available to invest in new programs or add to existing ones. In
fact, estimated costs for the major space acquisition programs have
increased by about $11.6 billion—321 percent—from initial estimates for
fiscal years 2011 through 2016. 4 It should also be noted that the declining
investment in the later years is the result of mature programs that have
planned lower out-year funding, cancellation of a major space acquisition



4
    Costs adjusted for inflation.




Page 9                                                                           GAO-12-563T
                             program and several development efforts, and the exclusion of several
                             major space acquisition efforts for which total cost data were unavailable.
                             These include the Space Fence, Space Based Space Surveillance, and
                             the Defense Weather Satellite effort.


                             Over the past year, we have reported on of the need for sound and
GAO Space-Related            sufficient information for the new DOD acquisition strategy for the EELV
Reviews over the Past        program; parts quality problems in major DOD, MDA, and NASA
                             programs; and greater content and coordination in the space Science and
Year                         Technology (S&T) strategy. We are also conducting a review of satellite
                             operations and have briefed Defense authorization and appropriations
                             committees on our findings. These reviews, discussed further below,
                             highlight both the successes and challenges that have faced the DOD
                             space community as it has completed or sought to complete problematic
                             legacy efforts and deliver modernized capabilities.


Evolved Expendable           DOD’s EELV program serves a vital mission of placing critical national
Launch Vehicle Acquisition   security and civilian satellites into their required orbits. It is also on the
Strategy                     brink of major changes. In 2009, the Air Force and the National
                             Reconnaissance Office (NRO) determined that the current approach for
                             acquiring EELV launch vehicles was likely not the best business model
                             and decided that a new acquisition strategy needed to be developed. This
                             strategy favors committing the government to a longer span of purchases
                             and to more certainty in the number of vehicles acquired to help stabilize
                             the industrial base. Such a change is significant as the DOD and the NRO
                             plan to spend about $15 billion to acquire launch services from fiscal year
                             2013 to 2017 and commercial companies other than the current provider,
                             United Launch Alliance, would like to become launch service providers to
                             the government. We were asked to review and assess whether DOD has
                             the knowledge it needs to develop the new strategy, which has
                             subsequently been released, and to identify issues that could benefit
                             future launch acquisitions.

                             We found that DOD lacked critical knowledge needed to develop a new
                             acquisition strategy. 5 For example, program officials, recent launch


                             5
                               GAO, Evolved Expendable Launch Vehicle: DOD Needs to Ensure New Acquisition
                             Strategy Is Based on Sufficient Information, GAO-11-641 (Washington, D.C.: Sep 15,
                             2011).




                             Page 10                                                                   GAO-12-563T
studies, and the prime contractor all cited a diminishing launch industrial
base as a risk to the mission success of the program, but DOD analysis
supporting this condition was minimal. Moreover, under the new
acquisition strategy, contracting officials may have difficulty assessing fair
and reasonable prices given limited availability of contractor and
subcontractor cost or pricing data. Since the United Launch Alliance joint
venture formed in 2006, financial and business systems needed to get
insight into costs have been lacking. There was also considerable
uncertainty about costs associated with mission assurance activities,
even though there have been concerns about whether such activities are
excessive. Moreover, we found that if the acquisition strategy commits the
Air Force and the NRO to buy eight common booster cores per year for a
five year period, which was anticipated at the time of our review, DOD
may face an oversupply of vehicles. In addition to these findings, we have
reported prior concerns about oversight for the EELV program, such as
(1) a prior decision to designate the program as in the sustainment phase
rather than in the development phase essentially lifted the need for
oversight reporting on costs and major changes and (2) the DOD had not
updated a life cycle cost estimate for the program despite significant
changes being made to it. 6

Among other actions, we recommended that DOD conduct an
independent assessment of the health of the U.S. launch industrial base;
reassess the block buy contract length given the additional knowledge
DOD is gaining; not waive Federal Acquisition Regulations requirements
for contractor and subcontractor certified cost and pricing data as DOD
finalizes its strategy; and ensure launch mission assurance activities be
sufficient and not excessive. The Congress reinforced these and other
GAO recommendations in the National Defense Authorization Act of 2012
by requiring that DOD redesignate the program as a major defense
acquisition program (which would require the submission of certain kinds
of data annually) and provide to Congressional defense committees a
description of how its acquisition strategy will address the
recommendations of our EELV report issued in 2011. 7 The Act also
requires us to submit an assessment of the information DOD provides,



6
 GAO, Space Acquisitions: Uncertainties in the Evolved Expendable Launch Vehicle
Program Pose Management and Oversight Challenges, GAO-08-1039 (Washington, D.C.:
Sep 26, 2008).
7
    Pub. L. No. 112-81, §§ 838 & 839 (2011).




Page 11                                                              GAO-12-563T
                         and additional findings or recommendations, as appropriate. The Air
                         Force has taken actions to expand its knowledge about EELV since our
                         2011 audit work was completed and we look forward to assessing this
                         progress.


Parts Quality for DOD,   Quality is paramount to the success of U.S. space and missile defense
MDA, and NASA            programs due to their complexity, the environment they operate in, and
                         the high degree of accuracy and precision needed for their operations.
                         Yet in recent years, many programs have experienced difficulties with
                         quality workmanship and parts. Less visible problems have led to
                         unnecessary repair, scrap, rework, and stoppage; long delays; and
                         millions of dollars in cost growth. In some instances, entire missions have
                         been endangered. As a result, we assessed the extent to which such
                         problems affect related programs, their causes, and what initiatives have
                         been undertaken in response.

                         We found that parts quality problems had affected all 21 programs we
                         reviewed, in some cases contributing to significant cost overruns and
                         schedule delays associated with electronic versus mechanical parts or
                         materials. 8 We also found that if quality problems were discovered late in
                         the development cycle they had more significant cost and schedule
                         consequences: in one such case, an additional cost of at least $250
                         million and a 2-year launch delay. We found several causes of these
                         problems: poor workmanship, undocumented and untested manufacturing
                         processes, poor control of those processes and materials and failure to
                         prevent contamination, poor part design, design complexity, and an
                         inattention to manufacturing risks. Ineffective supplier management also
                         resulted in concerns about whether subcontractors and contractors met
                         program requirements.

                         Recognition of these difficulties has spurred agencies to adopt new
                         policies, but they were still in early stages of implementation at the time of
                         our review. Post-policy programs are not yet mature enough for parts
                         problems to be apparent. To address current and future problems,
                         agencies and industry have begun to collect and share information,
                         develop testing guidance and criteria, manage subcontractors, and


                         8
                           GAO, Space and Missile Defense Acquisitions: Periodic Assessment Needed to Correct
                         Parts Quality Problems in Major Programs, GAO-11-404 (Washington, D.C.: Jun 24,
                         2011).




                         Page 12                                                                 GAO-12-563T
                     mitigate problems, although their impact has yet to be determined. In any
                     event, significant barriers hinder such efforts, including broader
                     acquisition management problems, workforce gaps, diffuse leadership in
                     the national security space community, the government’s decreasing
                     influence on the electronics parts market, and an increase in
                     counterfeited parts. Our reports over the past decade have made
                     recommendations for addressing these broader barriers, such as
                     stabilizing requirements before beginning product development,
                     separating technology development from product development, and
                     strengthening leadership. The DOD is in the process of adopting these
                     recommendations. Because space agencies and the Missile Defense
                     Agency were undertaking additional actions to address parts quality
                     problems and they had recently established a broad range of coordination
                     mechanisms, we recommended that the community undertake periodic
                     assessments of progress being made to address parts quality problems.
                     The agencies generally agreed with our recommendation.


Space S&T Strategy   The National Defense Authorization Act for Fiscal Year 2010 required
                     DOD and the Director of National Intelligence (DNI) to jointly develop a
                     space S&T strategy and it required us to assess the strategy submitted in
                     April 2011. 9 We reported that a strong foundation in space S&T should
                     help DOD and the intelligence community address the most challenging
                     national security problems, reduce risk in major acquisition programs,
                     maintain technological superiority over adversaries, maintain a healthy
                     industrial base and mitigate vulnerabilities in space systems. 10

                     We found that the strategy largely met the requirements of the
                     authorization act, but it was not a rigorous, comprehensive strategic plan.
                     Instead, it embraced the status quo without laying out a path for assuring
                     effective and efficient progress. For instance, the strategy identified goals,
                     but did not prioritize them. The strategy described existing reviews used
                     to assess progress in space S&T but did not identify new metrics or
                     performance measures to be used to assess achievement of the
                     strategy’s newly established goals. Nor did the strategy address
                     fundamental challenges facing the S&T community, such as human


                     9
                         Pub. L. No. 111-84, § 911(b) (2009).
                     10
                        GAO, Space Research: Content and Coordination of Space Science and Technology
                     Strategy Need to Be More Robust, GAO-11-722 (Washington, D.C.: Jul 19, 2011).




                     Page 13                                                                GAO-12-563T
                           capital shortages, growing fiscal pressures, and the difficulty in
                           transitioning space S&T to acquisition programs. We identified some
                           strategic planning best practices such as identifying required human
                           capital and required funding; prioritizing initiatives; and establishing ways
                           to measure progress and processes for revising goals in the future.
                           Additionally, we found that organizations involved in developing the
                           strategy were active in creating its long- and short-term goals, but their
                           participation in other of its aspects was more limited. DOD and DNI
                           officials did not believe they were required to do more than they did, and
                           also did not include other agencies active in space S&T that were not
                           included by law in the strategy. We recommended that DOD enhance its
                           next version of the strategy by developing a detailed implementation plan
                           for achieving goals, addressing funding prioritization and other
                           challenges, and enhancing coordination with other agencies involved in
                           space technology development. DOD concurred with these
                           recommendations.


DOD Satellite Operations   The Air Force and Navy operate separate satellite control networks within
                           DOD through multiple operations centers, enabling their satellites to
                           perform missions from launch to on-orbit operations and eventually
                           through deactivation. Other federal government agencies, such as the
                           NASA and the National Oceanic and Atmospheric Administration (NOAA),
                           and commercial companies also operate satellites using various networks
                           and operations centers. Combined, these networks assist the nation’s
                           communications, missile warning, navigation, meteorological,
                           environmental, and scientific satellites or missions.

                           DOD has efforts underway to modernize various satellite operations
                           centers using proprietary and interoperable network architectures using
                           standard protocols. For example, since 2006, the Air Force has operated
                           a multi-mission operations center that uses a standard interface and
                           telemetry, tracking, and commanding system which allows expedited
                           transition of research satellites to operational satellites. In addition, in
                           2000, the Naval Research Laboratory initiated a web-based service
                           concept designed to optimize software code reuse and allow faster
                           delivery of mission capabilities, which could lower mission development
                           costs and facilitate system maintenance. Considering the long-standing
                           need to replace the Air Force’s aging and costly satellite control
                           capabilities, and the importance associated with satellite operations, it is
                           important that DOD not miss an opportunity to improve satellite
                           operations and create greater efficiencies by leveraging commercial
                           practices and other satellite networks and associated infrastructure.


                           Page 14                                                            GAO-12-563T
                        In ongoing work, we assessed DOD’s satellite operations capabilities,
                        specifically modernization efforts, compare DOD satellite operations
                        concepts with those in other government entities and commercial
                        industry; and, identify practices that could improve DOD satellite
                        operations, consistent with mission requirements. We identified several
                        challenges associated with DOD’s modernization efforts. For example,
                        DOD’s ability to plan and implement upgrades may be limited by current
                        budget uncertainties and plans to reallocate a portion of DOD’s spectrum
                        may affect its satellite operations. In addition, we found indications that
                        the potential for unnecessary overlap and fragmentation still exists within
                        satellite operations and associated infrastructure, including potential
                        duplication of facilities and hardware. For instance, there are multiple,
                        completely separate government satellite control networks that exist that
                        depend on DOD’s Air Force satellite control network, including military
                        and civil networks, but none are interoperable. Finally, we have thus far
                        found that although research and development in government satellite
                        operations has led to the use of practices that, according to agency
                        officials, have improved efficiency, there are other commercial practices
                        that could provide further improvements to DOD’s satellite network. For
                        example, increased automation of routine satellite telemetry, tracking, and
                        commanding functions could increase satellite operations efficiencies. We
                        expect to issue our report based on this review later this fall.


                        Though our reports over the year indicate there is more room for
Actions Being Taken     improvement, DOD continues to work to ensure that its space programs
to Address Space        are more executable and produce a better return on investment. Many of
                        the actions it has been taking are intended to address root causes of
Acquisition Problems    problems, though it will take time to determine whether these actions are
                        successful and they need to be complemented by decisions on how best
                        to lead, organize, and support space activities.


Causes of Acquisition   Our past work has identified a number of causes of acquisition problems,
Problems                but several consistently stand out. At a higher level, DOD has tended to
                        start more weapon programs than is affordable, creating a competition for
                        funding that focuses on advocacy at the expense of realism and sound
                        management. DOD has also tended to start its space programs before it
                        has the assurance that the capabilities it is pursuing can be achieved
                        within available resources and time constraints. There is no way to
                        accurately estimate how long it would take to design, develop, and build a
                        satellite system when critical technologies planned for that system are still
                        in relatively early stages of discovery and invention. Finally, programs


                        Page 15                                                           GAO-12-563T
have historically attempted to satisfy all requirements in a single step,
regardless of the design challenges or the maturity of the technologies
necessary to achieve the full capability. DOD’s preference to make larger,
complex satellites that perform a multitude of missions has stretched
technology challenges beyond current capabilities in some cases. Figure
2 illustrates the negative influences that can cause programs to fail.

Figure 2: Negative Influences that Can Cause Programs to Fail




Our work has recommended numerous actions that can be taken to
address the problems we identified. Generally, we have recommended
that DOD separate technology discovery from acquisition, follow an
incremental path toward meeting user needs, match resources and
requirements at program start, and use quantifiable data and
demonstrable knowledge to make decisions to move to next phases. We
have also identified practices related to cost estimating, program


Page 16                                                         GAO-12-563T
                           manager tenure, quality assurance, technology transition, and an array of
                           other aspects of acquisition program management that could benefit
                           space programs. 11 DOD has generally concurred with our
                           recommendations, and, as described below, has undertaken an array of
                           actions to establish a better foundation for acquisition success.


Actions to Improve Space   As we reported last year, DOD has implemented or has been
and Weapon Systems         implementing a number of actions to reform how space and weapon
Acquisitions               systems are acquired, both through its own initiatives as well as those
                           required by statute. Among other actions, DOD intends to follow
                           incremental or evolutionary acquisition processes for space programs
                           versus pursuing significant leaps in capabilities involving technology risk,
                           and has done so with the only new satellite program undertaken by the
                           Air Force in recent years—GPS III and more recently with Joint Space
                           Operations Center Mission System, which supports space situational
                           awareness activities. DOD and the Air Force are also working to
                           streamline management and oversight of the national security space
                           enterprise. For example, all Air Force space system acquisition
                           responsibility has been assigned to the office responsible for all other Air
                           Force acquisition efforts, and options for streamlining the many space
                           committees, boards, and councils is under ongoing review. These and
                           other actions being taken that could improve space system acquisition
                           outcomes, that we have not assessed, are described in table 2.




                           11
                              GAO, Space Acquisitions: DOD Poised to Enhance Space Capabilities but, Persistent
                           Challenges Remain in Developing Space Systems, GAO-10-447T (Washington, D.C.:
                           March 10, 2010).




                           Page 17                                                                  GAO-12-563T
Table 2: Actions Being Taken That Could Benefit Space System Acquisition Outcomes

Category           Actions
National policy    •   In June 2010, the President of the United States issued the new National Space Policy which establishes
                       overarching national policy for the conduct of U.S. space activities. The policy states that the Secretary of
                       Defense and the Director of National Intelligence are responsible for developing, acquiring, and operating
                       space systems and networks to support U.S. national security and enable defense and intelligence
                       operations. The policy helps to clarify the Secretary of Defense’s roles and responsibilities for coordinating
                       space system acquisitions that span DOD and federal agencies, such as those for space situational
                       awareness.
                   •   In January 2011, the Secretary of Defense and the Director of National Intelligence issued the National
                       Security Space Strategy to build on the National Space Policy and help inform planning, programming,
                       acquisition, operations, and analysis.
Acquisitions       •   We expressed concern over DOD’s tailored national security space acquisition policy—initially issued in
                       2003—primarily because it did not alter DOD’s practice of committing to major investments before knowing
                       what resources will be required to deliver promised capability. Instead, the policy encouraged development
                       of leading-edge technology within product development, that is, at the same time the program manager is
                       designing the system and undertaking other product development activities. In 2009, DOD eliminated the
                       space acquisition policy and moved the acquisition of space systems under DOD’s updated acquisition
                       guidance for defense acquisition programs (DOD Instruction 5000.02). In October 2010, the Under
                       Secretary of Defense for Acquisition, Technology and Logistics issued a new space acquisition policy to be
                       incorporated into that instruction that introduces specific management and oversight processes for acquiring
                       major space systems, including retaining the requirement for independent program assessments to be
                       conducted prior to major acquisition milestones.
Management and     •   In June 2008, the Undersecretary of Defense for Acquisition, Technology and Logistics created the Space
oversight              and Intelligence Capabilities Office (SIO) to oversee all major DOD space and intelligence related
                       acquisitions, including space-based communications programs, space control activities, space launch
                       ranges, and all related ground systems. The SIO is to develop and recommend policies, investment
                       strategies, and programs that improve, streamline, and strengthen DOD component space and intelligence
                       related system acquisition, organization, technology and development activities.
                   •   In May 2009, Air Force leadership signed the Acquisition Improvement Plan which lists five initiatives for
                                                                                a
                       improving how the Air Force obtains new capabilities. One of these initiatives relates to establishing clear
                       lines of authority and accountability within acquisition organizations. In August 2010, the Secretary of the Air
                       Force transferred space system acquisition responsibility from the Under Secretary of the Air Force to the
                       Assistant Secretary of the Air Force for Acquisition, thereby assigning all Air Force acquisition responsibility
                       to one office. As part of this realignment, the Program Executive Officer for Space, who previously reported
                       to the Undersecretary of the Air Force, now reports to the Assistant Secretary of the Air Force for
                       Acquisition.
                   •   In August 2010, the Secretary of Defense announced the elimination of the Office of the Assistant Secretary
                       of Defense for Networks and Information Integration (ASD/NII) as part of a broader effort to eliminate
                                                                                                             b
                       organizations that perform duplicative functions or that have outlived their purpose. The elimination of this
                       organization may help to reduce the problems associated with the wide range of stakeholders within DOD
                       responsible for overseeing the development of space-based capabilities.
                   •   In November 2010, the Deputy Secretary of Defense authorized the disestablishment of the National
                                                         c
                       Security Space Office (NSSO). The elimination of this office may also help to streamline national security
                       space system acquisition management and oversight. Furthermore, the Deputy Secretary of Defense
                       revalidated the Secretary of the Air Force as DOD Executive Agent for Space and directed the creation of a
                       Defense Space Council (DSC)—chaired by the DOD Executive Agent for Space and with representatives
                       from across DOD—to inform, coordinate, and resolve space issues for DOD. According to DOD, the council
                       will be looking at streamlining the many defense and national security space committees, boards, and
                       councils by reviewing more than 15 space-related organizations and making recommendations on their
                       cancellation, consolidation, dissolution, or realignment under the DSC.




                                          Page 18                                                                         GAO-12-563T
Category             Actions
Program              •   The Space and Missile Systems Center—the Air Force’s primary organization responsible for acquiring
management               space systems—resurrected a program management assistance group in 2007 to help mitigate program
assistance               management, system integration, and program control deficiencies within specific ongoing programs. This
                         group assists and supplements wing commanders and program offices in fixing common problems, raising
                         core competencies, and providing a consistent culture that sweeps across programs. According to the, at
                         the time, Global Positioning System (GPS) Directorate Commander, this group was an integral part of the
                         overall process providing application-oriented training, templates, analyses, and assessments vital to the
                         GPS IIIA baseline review. According to a senior program management assistance group official, the group
                         has provided assistance to other major programs, including GPS ground control segment (OCX), Space
                         Based Infrared System (SBIRS), and Space Based Space Surveillance (SBSS).
Workforce            •   Another initiative in the Air Force Acquisition Improvement Plan is to revitalize the acquisition workforce by,
                         among other things, increasing the number of authorized positions and providing for additional hiring,
                         examining the proper mix of military and civilian personnel, and establishing training and experience
                         objectives as part of the career paths for each acquisition specialty and increasing the availability of
                         specialized training. As we reported in 2010, the Air Force was continuing efforts to bring space operators
                         and space system acquirers together through the Advanced Space Operations School and the National
                         Security Space Institute. The Air Force anticipated that this higher-level education would be integral to
                         preparing space leaders with the best acquisition know-how.
Cost estimating      •   The Air Force took actions to strengthen cost estimating. For example, we recommended that the Secretary
                         of the Air Force ensure that cost estimates are updated as major events occur within a program that could
                         have a material impact on cost, and that the roles and responsibilities of the various Air Force cost-
                                                                          d
                         estimating organizations be clearly articulated. An Air Force policy directive now requires that cost
                         estimates for major programs be updated annually, and lays out roles and responsibilities for Air Force cost-
                         estimating organizations. Additionally, the Joint Space Cost Council—formed in 2007 with membership
                         across industry and military and civil government agencies—is actively working to improve cost credibility
                         and realism in estimates, budgets, schedules, data, proposals, and program execution. For example, one
                         initiative has developed a standard work breakdown structure that is being vetted through industry and
                         government.
Military standards   •   Over the last several years, the Air Force Space and Missile Systems Center has taken action aimed at
                         preventing parts quality problems by issuing policy relating to specifications and standards. According to
                         officials, it is requiring the GPS III program development contractor to meet these specifications and
                         standards.
                     •   In February 2011, the Air Force’s Space and Missile Systems Center, Missile Defense Agency, NASA, and
                         the National Reconnaissance Office signed a memorandum of understanding (MOU) in February 2011 to
                         encourage additional interagency cooperation in order to strengthen mission assurance practices. The MOU
                         calls on the agencies to develop and share lessons learned and best practices to ensure mission success
                         through a framework of collaborative mission assurance. Objectives include developing core mission
                         assurance practices and tools; clear and executable mission assurance plans; a robust mission assurance
                         infrastructure and guidelines for tailoring specifications and standards for parts, materials, and processes;
                         and, establishing standard contractual language to ensure consistent specification of core standards and
                         deliverables.
                                            Source: GAO analysis of DOD data and previous GAO reports.
                                            a
                                              The Secretary of the Air Force and Chief of Staff of the Air Force issued the Air Force Acquisition
                                            Improvement Plan to recapture acquisition excellence by rebuilding an Air Force acquisition culture
                                            that delivers products and services as promised—on time, within budget, and in compliance with all
                                            laws, policies, and regulations. The plan consists of five initiatives: (1) revitalize the Air Force
                                            acquisition workforce, (2) improve the requirements generation process, (3) instill budget and
                                            financial discipline, (4) improve major Air Force systems source selections, and (5) establish clear
                                            lines of authority and accountability within acquisition organizations
                                            b
                                             The ASD/NII’s responsibilities included serving as the principal staff assistant on non-intelligence
                                            space matters; information technology, including National Security Systems; information resource
                                            management; and sensitive information integration. The ASD/NII also served as the principal staff
                                            assistant for issues such as command and control and net-centric capabilities.



                                            Page 19                                                                                   GAO-12-563T
c
 As part of this direction, the Deputy Secretary of Defense authorized the establishment of a jointly
manned space office to restructure and replace the NSSO. The NSSO supported the Secretary of the
Air Force who, as the DOD Executive Agent for Space, was responsible for developing, coordinating,
and integrating plans and programs for space systems and the acquisition of DOD space major
defense acquisition programs, and was responsible for executing the space major defense acquisition
programs, when delegated that authority by the Under Secretary of Defense for Acquisition,
Technology and Logistics. The specific roles and responsibilities of the DOD Executive Agent for
Space are defined in Department of Defense Directive 5101.2, DOD Executive Agent for Space (June
3, 2003).
d
 GAO, Space Acquisitions: DOD Needs to Take More Action to Address Unrealistic Initial Cost
Estimates of Space Systems, GAO-07-96 (Washington, D.C.: Nov. 17, 2006).


Congress and DOD have taken major steps toward reforming the defense
acquisition system in ways that may increase the likelihood that weapon
programs will succeed in meeting planned cost and schedule objectives. 12
In particular, DOD policy and legislative provisions place greater
emphasis on front-end planning and establishing sound business cases
for starting programs. For example, the provisions require programs to
invest more time and resources to refine concepts through early systems
engineering, strengthening cost estimating, developing technologies,
building prototypes, holding early milestone reviews, and developing
preliminary designs before starting system development. 13 These
provisions are intended to enable programs to refine a weapon system
concept and make cost, schedule, and performance trade-offs before
significant commitments are made. In addition, DOD policy requires
establishment of configuration steering boards that meet annually to
review program requirements changes as well as to make
recommendations on proposed descoping options that could reduce
program costs or moderate requirements. Fundamentally, these
provisions should help (1) programs replace risk with knowledge and (2)
set up more executable programs.

While DOD has taken steps to implement the provisions, it is too soon to
determine if Congress’s and DOD’s reform efforts will improve weapon
program outcomes. For example, in June 2011 we reported on the Joint
Requirements Oversight Council’s (JROC) efforts to ensure trade-offs
among cost, schedule, and performance objectives, as directed by the




12
  GAO, Defense Acquisitions: Strong Leadership Is Key to Planning and Executing
Stable Weapon Programs, GAO-10-522 (Washington, D.C.: May 6, 2010).
13
   Weapon Systems Acquisition Reform Act of 2009 (WSARA), Pub. L. No. 111-23; DOD
Instruction 5000.02, Operation of the Defense Acquisition System (2008).




Page 20                                                                               GAO-12-563T
                       Weapon Systems Acquisition Reform Act . 14 We found that the JROC did
                       not always consider tradeoffs or influence tradeoff decisions, military
                       services did not consistently provide high quality resource estimates to
                       the JROC, and JROC did not consistently prioritize requirements and
                       capability gaps. We recommended that the JROC establish a mechanism
                       to review analysis of alternatives results earlier in the acquisition process,
                       require higher quality resource estimates from requirements sponsors,
                       prioritize requirements across proposed programs, and address potential
                       redundancies during requirements reviews. The Joint Staff partially
                       concurred with our recommendations and generally agreed with their
                       intent, but differed with us on how to implement them.


                       The actions that the Office of the Secretary of Defense and the Air Force
Remaining Challenges   have been taking to address acquisition problems are good steps. But
                       there are still significant barriers to ensuring investments are optimized,
                       including fragmented leadership, the high cost of launch, uncertainty
                       about the future for technology advancements, and disconnects between
                       the fielding of satellites with user equipment and ground systems needed
                       to take advantage of expensive new capabilities. In particular:

                       •    Leadership. In past years, we have reported that a major challenge to
                            leadership is that the community’s authorities and responsibilities are
                            spread across the department, and there is no single authority
                            responsible for these programs below the President. Both the DOD
                            and Air Force have taken a number of steps to streamline and clarify
                            leadership for space. Time will tell whether these steps will help
                            resolve issues such as a difficulty holding any one person or
                            organization accountable for balancing needs against wants, for
                            resolving conflicts among the many organizations involved with space,
                            and for ensuring that resources are dedicated where they need to be
                            dedicated. The department is still struggling with disconnects between
                            programs that need to be linked together, such as a satellite program
                            and its user equipment program. And at a higher level, we have
                            reported that it still appears as if agencies involved in space




                       14
                         GAO, DOD Weapons Systems: Missed Trade-off Opportunities During Requirements
                       Reviews, GAO-11-502 (Washington, D.C.: June 16, 2011).




                       Page 21                                                              GAO-12-563T
     acquisitions do not coordinate to the extent that they can in such
     areas as launch acquisitions and space S&T planning. 15
•    Launch costs. A factor influencing how space programs are designed
     is the price of launch, which can range anywhere from around $100
     million to well over $200 million. With prices being so high, programs
     often seek to maximize the “real estate” on board a satellite by
     including more capabilities than can sometimes be handled by a
     single program or within the time period desired for the program.
     Moreover, the Air Force recently developed a new launch acquisition
     strategy designed in part to contain launch prices, but given remaining
     knowledge gaps, achieving this outcome is uncertain. At the same
     time, potential new providers promise lower costs for launch, but none
     of them have been certified to launch the larger national security
     satellites, and it is uncertain whether their prices can stay low as they
     work to meet standards and expectations set by government
     agencies. The dilemma of high launch costs, in our view, makes it
     more important for the Air Force to gain insight into costs and pricing
     behind its new strategy and to have a complete understanding of the
     industrial base and related vulnerabilities as well as mission
     assurance activities and related costs. It would also behoove
     agencies to work together, not only to bring in new entrants which
     they are now doing, but in setting a future course for launch. S&T
     planning, for example, has been cited as a weak area for launch, even
     though investments in new propulsion and vehicle concepts have the
     potential to evolve capabilities and lower costs.
•    S&T and related investments. Recent proposed funding cuts have
     raised questions about how future technology advancements will be
     achieved in space. The Space Test Program (STP) was targeted for
     termination in the fiscal year 2013 budget. STP was created in 1965
     to serve as an integrator to provide launch opportunities for
     experimental satellites. This program enabled new technologies to get
     on orbit, and pave the way in an affordable manner for new space
     capabilities. STP has spawned many current and valuable space
     programs, most notably GPS. With the cancelation of this program,
     the Secretary of the Air Force has stated that the organizations that
     develop these new space technologies, including academic
     institutions, government laboratories, and others, will be required to
     shoulder the burden of launch costs, estimated at around $50 million


15
  GAO, 2012 Annual Report: Opportunities to Reduce Duplication, Overlap and
Fragmentation, Achieve Savings, and Enhance Revenue, GAO-12-342SP
(Washington, D.C.: Feb.28, 2012).




Page 22                                                            GAO-12-563T
     per year. DOD has also proposed cancellation of the Operationally
     Responsive Space (ORS) program. ORS was intended to provide
     short-term and low-cost tactical capabilities to warfighters. The ORS
     program’s long-term goals were to reduce the cost of space
     development by fostering low cost launch methods as well as
     common design and interface methods. Average spending by the
     ORS program was about $100 million per year from fiscal years 2007-
     through 2011. While there are still investments available for the Air
     Force Research Laboratory and other organizations involved in S&T,
     as we mentioned earlier, planning for these investments has not been
     robust or very strategic. Another potential challenge to future space
     capability innovations is the Efficient Space Procurement (ESP)
     initiative, formerly known as the Evolutionary Acquisition for Space
     Efficiency (EASE). ESP is intended as a way to reduce costs for DOD
     space programs while improving acquisition outcomes by buying
     satellites in “block buys” instead of individually, accruing cost savings
     which are to be reinvested into a modernization program to evolve
     capabilities for future increments of that satellite program. At this time,
     it is unclear how this approach will ensure there will still be a focus on
     making significant leaps in technology or what the next generation of
     space systems will look like and be able to come into fruition.
•    Disconnects between fielding satellites, ground systems, and user
     equipment. DOD faces challenges in synchronizing capabilities
     offered by new satellite programs with the ground control stations that
     are necessary for receiving and processing information from the new
     space systems, and in some cases, the user terminals that deliver this
     information to users. 16 When space, ground and user segments are
     not synchronized, there is the potential for wasted on-orbit capability
     and delays in the ability of users to take advantage of new systems.
     As long as this condition exists, the improvements being made to
     acquisition practices on the satellite side will be minimized. A few
     examples are highlighted below in table 3.




16
  GAO, Defense Acquisitions: Challenges in Aligning Space System Components,
GAO-10-55 (Washington, D.C.: Oct 29, 2009).




Page 23                                                                GAO-12-563T
Table 3: Examples of significant disconnects between satellites, ground systems, and user equipment acquisitions

SBIRS                           The first Space Based Infrared System (SBIRS) satellite was launched in May 2011 and carries
                                scanning and staring sensors designed to provide early missile warning capabilities. However, DOD
                                will not be able to fully utilize the data collected from the staring sensor because the ground segment
                                software that is to process the sensor’s data is not planned to be fully functional until at least 2018.
                                This means that complete, usable data from the staring sensor will not be available until about 7
                                years after the satellite is on orbit.
GPS Ground System               Modernizations to the Global Positioning System (GPS) have also faced synchronization challenges
                                between the GPS III satellites, which are currently under development, a concurrently developed new
                                ground control system, and new military user equipment that will be able to utilize the capabilities of
                                the new satellites. The new GPS ground control segment (OCX) is being developed to take
                                advantage of the modernized capabilities of the GPS III satellites. OCX is required for full operation
                                of the new GPS satellites, but the contractor does not plan to deliver the first increment of OCX until
                                August 2015—15 months after the first planned GPS III satellite launch. Because of this disconnect,
                                the GPS directorate is funding the development of a separate GPS launch and checkout system that
                                is to provide an earlier command and control capability for the first GPS III satellite, but it unclear at
                                this time when this capability will be delivered. This gap-filler capability will not enable the new
                                capabilities offered by GPS III satellites, such as a jam resistant military signal and three new civil
                                signals, so most of these capabilities will be unused until OCX Block 2 is delivered in 2016.
GPS User Equipment              DOD is planning to field new GPS user equipment on a variety of air-, ground-, and sea-based
                                platforms to utilize the modernized military signal made available by the newer GPS satellites.
                                Although the availability of the new signal on satellites would be operational within the next few
                                years, user equipment is not expected to be fully fielded to the warfighters until many years later,
                                possibly as late as 2025. As a result, the military services’ ability to achieve a joint navigation
                                capability, an essential element of conducting future military operations, as well as benefit from the
                                jam-resistant and stronger new GPS signals may not be fully realized until a decade after the first
                                GPS III launch.
FAB-T                           The Air Force’s Advanced Extremely High Frequency (AEHF) and the Family of Advanced Beyond
                                Line-of-Sight Terminals (FAB-T) programs have experienced a problems with synchronization of
                                various system components which will provide protected communications for nuclear and
                                conventional forces as well as many airborne assets and ground command posts. As one of the
                                primary user terminal programs associated with AEHF, FAB-T has experienced numerous problems
                                and the delivery of terminals is not currently aligned with the AEHF satellite program. Specifically,
                                current estimates show that FAB-T will reach its initial operational capability in 2017, 3 years after
                                AEHF is scheduled to reach its initial operating capability. In the meantime, the Air Force plans to
                                conduct an independent alternative with reduced requirements to mitigate risk.
Joint Space Operations Center Another area where synchronization in system development may pose problems is the Air Force’s
Mission System                Joint Space Operations Center Mission System (JMS) and Space Fence programs. JMS is to
                              process data about space assets gathered by the Space Fence and other Space Situational
                              Awareness (SSA) programs, and will increase DOD’s ability to track objects in space from about
                              10,000 objects with the current system to over 100,000 objects. According to the Space Fence
                              program office, JMS needs to be available when the Space Fence is fielded because the amount of
                              data Space Fence will generate exceeds existing command and control system performance limits.
                              JMS recently underwent a change to its acquisition strategy, dividing the program’s development into
                              two increments to reduce risk and more rapidly deliver needed capabilities. The first Space Fence
                              radar site is scheduled to provide initial operational capability by the end of fiscal year 2017, and to
                              avoid a synchronization problem, JMS needs to be operational by this time.
                                            Source: GAO analysis




                                            Page 24                                                                          GAO-12-563T
                     After more than a decade of serious acquisition difficulties, DOD is
Concluding Remarks   starting to launch new generations of satellites that promise vast
                     enhancements in capability. Moreover, given the nation’s fiscal
                     challenges, DOD’s focus on streamlining leadership, fixing problems, and
                     implementing reforms is promising. But there are still significant barriers
                     to achieve acquisition success that need to be addressed to maintain
                     space superiority in an era of fiscal austerity. All of the barriers—
                     leadership fragmentation, launch costs, S&T planning, and disconnects
                     between space and ground assets—require action from the Air Force and
                     the Office of the Secretary of Defense as well as the participation and
                     cooperation of all the military services, the intelligence community, and
                     other agencies such as NASA and NOAA. Moreover, though successful
                     launches are being experienced, problems within ongoing development
                     efforts such as GPS III, indicate that space acquisitions are still at risk of
                     significant cost and schedule problems, and attention to reforms must be
                     sustained.


                     Chairman Nelson, Ranking Member Sessions, this completes my
                     prepared statement. I would be happy to respond to any questions you
                     and Members of the Subcommittee may have at this time.


                     For further information about this statement, please contact Cristina
Contacts and         Chaplain at (202) 512-4841 or chaplainc@gao.gov. Contact points for our
Acknowledgments      Offices of Congressional Relations and Public Affairs may be found on
                     the last page of this statement. Individuals who made key contributions to
                     this statement include Art Gallegos, Assistant Director; Maricela
                     Cherveny; Laura Hook; Angela Pleasants; Roxanna Sun; Bob Swierczek;
                     and Alyssa Weir.




                     Page 25                                                            GAO-12-563T
Related GAO Products
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             2012 Annual Report: Opportunities to Reduce Duplication, Overlap and
             Fragmentation, Achieve Savings, and Enhance Revenue, GAO-12-342SP
             (Washington, D.C.: February 28, 2012).

             Evolved Expendable Launch Vehicle: DOD Needs to Ensure New
             Acquisition Strategy Is Based on Sufficient Information, GAO-11-641
             (Washington, D.C.: September 15, 2011).

             Space Research: Content and Coordination of Space Science and
             Technology Strategy Need to Be More Robust, GAO-11-722
             (Washington, D.C.: July 19, 2011).

             Space and Missile Defense Acquisitions: Periodic Assessment Needed to
             Correct Parts Quality Problems in Major Programs, GAO-11-404
             (Washington, D.C.: June 24, 2011).

             DOD Weapons Systems: Missed Trade-off Opportunities During
             Requirements Reviews, GAO-11-502 (Washington, D.C.: June 16, 2011).

             Space Acquisitions: DOD Delivering New Generations of Satellites, but
             Space System Acquisition Challenges Remain, GAO-11-590T
             (Washington, D.C.: May 11, 2011).

             Defense Acquisitions: Challenges in Aligning Space System
             Components, GAO-10-55 (Washington, D.C.: October 29, 2009).

             Global Positioning System: Challenges in Sustaining and Upgrading
             Capabilities Persist. GAO-10-636. (Washington, D.C.: September 15,
             2010).

             Polar-Orbiting Environmental Satellites: Agencies Must Act Quickly to
             Address Risks That Jeopardize the Continuity of Weather and Climate
             Data. GAO-10-558. (Washington, D.C.: May 27, 2010).

             Defense Acquisitions: Strong Leadership Is Key to Planning and
             Executing Stable Weapon Programs, GAO-10-522 (Washington, D.C.:
             May 6, 2010).

             Space Acquisitions: DOD Poised to Enhance Space Capabilities but,
             Persistent Challenges Remain in Developing Space Systems,
             GAO-10-447T (Washington, D.C.: March 10, 2010).




             Page 26                                                       GAO-12-563T
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           Space Acquisitions: Government and Industry Partners Face Substantial
           Challenges in Developing New DOD Space Systems. GAO-09-648T.
           (Washington, D.C.: April 30, 2009).

           Space Acquisitions: Uncertainties in the Evolved Expendable Launch
           Vehicle Program Pose Management and Oversight Challenges.
           GAO-08-1039. (Washington, D.C.: September 26, 2008).

           Defense Space Activities: National Security Space Strategy Needed to
           Guide Future DOD Space Efforts. GAO-08-431R. (Washington, D.C.:
           March 27, 2008).




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           Page 27                                                      GAO-12-563T
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