oversight

Space Launch: Cost Increases and Schedule Delays in the Air Force's Titan IV Program

Published by the Government Accountability Office on 1990-05-03.

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

i
National Security and
International Affairs Division

B-225026

May 3,199O

The Honorable John P. Murtha
Chairman, Subcommittee on Defense
Committee on Appropriations
House of Representatives

Dear Mr. Chairman:

This report, prepared at your request, discusses the Air Force’s Titan IV program’s
evolution, cost and schedule estimates, and contract status.

We are sending copies of this report to the Secretaries of Defense and the Air Force; the
Director, Office of Management and Budget; and other interested parties,

Please contact me at (202) 275-4268 if you or your staff have any questions concerning this
report. Other major contributors to this report are listed in appendix IV.

Sincerely yours,




Nancy R. Kingsbury
Director
Air Force Issues
Executive Summary


                   The Titan IV launch vehicle will launch some of the nation’s highest pri-
Purpose            ority space systems, including a ballistic missile attack early warning
                   system, a military communication satellite system, and various classi-
                   fied systems. The scope and cost of the program to research, develop,
                   procure, and launch the Titan IV vehicles have changed dramatically
                   over the last 5 years. The Chairman, Subcommittee on Defense, House
                   Committee on Appropriations, requested that GAO report on the Titan IV
                   program’s evolution, cost and schedule estimates, and contract status.


                   In 1984 the Department of Defense called for a launch system that
Background         would complement the space shuttle and better ensure access to space
                   for certain national security payloads. In 1985 the Air Force contracted
                   with Martin Marietta Corporation for 10 launch vehicles, later called
                   Titan IVs. The Titan IV program has evolved from a short-term program
                   to acquire and launch 10 vehicles at a cost of $2 billion to an ongoing
                   program to acquire 55 and launch 41 vehicles through the mid-1990s at
                   an estimated cost of $15 billion. After 1995 the Air Force plans to
                   acquire and launch about 10 vehicles per year. The Air Force reported
                   that the first Titan IV launch on June 14, 1989, was successful.


                   The Titan IV program’s cost estimate through fiscal year 1995 increased
Results in Brief   from $12.7 billion in March 1988 to $14.6 billion in October 1989. The
                   Air Force will fund $8.3 billion of the $14.6 billion, and other Titan IV
                   users will fund the remainder.

                   As of July 1989, the total price of the contract for 23 vehicles was over
                   $5.5 billion, including contractor profits, fees, and incentives of over
                   $675 million. In December 1989, 18 vehicles were added to the contract,
                   which increased its total price to almost $7.4 billion, including up to
                   $930 million in contractor profits, fees, and incentives.

                   The Air Force delayed 6 of the 10 Titan IV launches planned for fiscal
                   years 1989 and 1990. Further delays may occur because the Air Force
                   will not have vehicles available for four launches planned during fiscal
                   years 1990 and 1991.




                   Page 2                                       GAO/NSIAD-90-113   Titan IV Program
                           Executive   Summary




Principal Findings

Program Cost Increases     Between March 1988 and October 1989, the program office estimate for
                           the Titan IV increased by $1.9 billion. The March 1988 estimate included
                           the cost to research, develop, procure, and launch 48 Titan IVs, The
                           October 1989 estimate included the cost to research, develop, and pro-
                           cure 7 additional Titan IVs, for a total of 55, but launch 7 fewer, for a
                           total of 41.

                           The Air Force and other, non-Department of Defense users of the
                           Titan IV launch vehicle fund the program. Of the 55 vehicles planned to
                           be acquired through fiscal year 1995, 21 are to be used by the Air Force.
                           The Air Force will pay an average of about 115 percent more for each
                           vehicle and about 155 percent more for each launch than the Titan IV’s
                           other users primarily because it will fund most of the Titan IV’s
                           research and development and launch facilities.


Contract Price Increases   Between December 1987 and July 1989, the contract for 23 vehicles
                           increased by about. $1 billion to $5.5 billion. By December 1989 the con-
                           tract price increased $1.9 billion, and the number of vehicles grew to 41.
                           If options for 8 additional vehicles are exercised, the contract price for
                           49 vehicles would be about $7.8 billion. In addition, as of July 1989, the
                           Air Force estimated it would have to add about $2.3 billion to the con-
                           tract for modifications not yet included in the contract.

                           The cost overrun on the Titan IV contract was $209 million as of July
                           1989. According to Air Force officials, the overrun was primarily due to
                           production problems and the underestimation of engineering work. As
                           of July 1989, the Air Force estimated the overrun at contract completion
                           would be about $298 million.


Schedule Delays            Six of the 10 Titan IV launches planned in 1988 for fiscal years 1989
                           and 1990 were postponed because of launch site preparation delays and
                           payload reschedulings. Also, 4 of the 10 launches scheduled as of Octo-
                           ber 1989 for fiscal years 1990 and 1991 may be delayed because only 6
                           vehicles are to be delivered during that period. In addition, the comple-
                           tion dates for 3 Titan IV launch facilities have slipped up to 20 months,
                           to the early to mid-1990s.



                           Page 3                                       GAO/NSIAD-SO-113   Titan IV Program
                   Executive   Summary




                   GAO   is not making recommendations in this report.
Recommendations

                   GAO did not request written agency comments on this report. However,
Agency Comrnents   GAO discussed a draft of this report with Department of Defense and Air
                   Force officials and incorporated their comments where appropriate.




                                                                                                     II




                   Page 4                                      GAO/NSIAD-90-113   Titan IV Program
Page 6             Pmgmm/I
         GAO/NMAlMO-113
               Titan
                  TV
                        j
Contents


Executive Summary                                                                                       2

Chapter 1                                                                                           8
Introduction          Objectives, Scope, and Methodology                                           10

Chapter 2                                                                                          11
Cost Estimates Have   Total Program Estimate Increases                                             11
                      Funding by the Air Force and Other Users                                     12
Increased             Launch Facility Estimates Increase                                           13

Chapter 3                                                                                          15
Contract Price Has    Contract Structure                                                           15
                      Contract Price for Up to 23 Vehicles                                         18
Increased             Price for the Follow-on Buy                                                  19
                      Contract Modifications Contribute to Increases                               20
                      Cost Overruns and Schedule Variances                                         23

Chapter 4                                                                                          26
Launch Schedules      Launches Have Slipped                                                        26
                      Initial Launch Capability Dates Have Slipped                                 26
Have Been Delayed     Launch Facility Capability Dates Have Slipped                                27
                      Additional Launch Delays May Occur                                           28

Appendixes            Appendix I: Performance Capabilities of Various                              30
                          Titan IV Configurations
                      Appendix II: Performance Capabilities of Various                             31
                          Titan IV Configurations With the Solid Rocket Motor
                          Upgrade
                      Appendix III: Selected Acquisition Report Cost Estimates                     32
                          for the Titan IV Program
                      Appendix IV: Major Contributors to This Report                               33

Tables                Table 2.1: Cost Estimates Through Fiscal Year 1995                           11
                      Table 2.2: Cost Estimates for Launch Facilities                              13
                      Table 3.1: Majar Subcontractors                                              16
                      Table 3.2: Examples of Vehicle Hardware Costs                                17
                      Table 3.3: Changes in Selected Elements of the Contract                      18
                          for 10 and 23 Vehicles



                      Page 6                                      GAO/NSLAD-90-113   Titan IV Program
          Contents




          Table 3.4: Selected Contract Modifications With                               20
              High-Dollar Value
          Table 3.5: Changes to the Solid Rocket Motor I.Jpgrade                        21
              Cost Estimate Through Fiscal Year 1995
          Table 4.1: Slippages in Initial Launch Capability Dates                       26
          Table 4.2: Slippages in Launch Facility Capability Dates                      27
          Table III. 1: Selected Acquisition Report Cost Estimates                      32

Figure    Figure 1.1: Titan IV Being Launched                                               9   .




         Abbreviations

         DOD         Department of Defense
         GAO         General Accounting Office


         Page 7                                      GAO/NSIALI-90-113   Titan IV Program
Chapter 1

Introduction


               In 1984 the Department of Defense (DOD) called for a launch system that
               would complement the space shuttle and better ensure access to space
               for certain national security payloads. In February 1985 the Air Force
               contracted with Martin Marietta Corporation for 10 expendable launch
               vehicles’ and planned to launch 2 each year from 1989 through 1993
               from a single launch facility at the Cape Canaveral Air Force Station,
               Florida. The Air Force subsequently named the vehicle the Titan IV.

               The Titan IV consists of a 11B-foot, 2-stage liquid propellant core vehi-
               cle; 3 liquid-fueled rocket engines; 2 solid rocket motors; payload cover-
               ings of 5 different lengths; and an upper stage,’ if necessary. Titan IVs
               have various configurations. A Titan IV with a Centaur upper stage will
               launch lO,OOO-pound class payloads to geosynchronous” or 12-hour
               orbits, a Titan 11’ with an inertial upper stage will launch 5,000-pound
               class payloads to geosynchronous orbit or 40,000-pound class payloads
               to low earth orbit, and a Titan IV without an upper stage will launch
               30,000-pound class payloads to low earth orbit. The Air Force’s esti-
               mates of how well each configuration can perform are shown in ap-
               pendix I.

               Starting in fiscal year 1992, the Air Force plans to use an upgraded solid
               rocket motor on the Titan IV. The requirements and estimated capabili-
               ties for the configurations using the upgraded motor are shown in
               appendix II.

               The Titan IV will be used to launch some of the nation’s highest priority
               space systems, such as a ballistic missile attack early warning system,
               the Milstar military communication satellite system, the ballistic missile
               Boost Surveillance and Tracking System, and various classified systems.
               On June 14, 1989. the Air Force launched the first Titan IV from Cape
               Canaveral. The Air Force reported that the launch was successful.
               Figure 1.1 shows a Titan IV being launched.




               ’ An expendabk launch chicle is a disposable, unpllotcd     launcher.


               ‘An upper stage provides prtrpulsinn to cm-ry a payload from a lower to a higher orbit around earth.

               %I geosynchronous orblt, a satvliitr orbits the earth   but maintains the same relative position to it,



               Page 8                                                             GAO/NSlAD-90-113    Titan Iv Program
                                      Chapter 1
                                      Introduction




Figure 1.I: Titan IV Being Launched




                                      Source DOD


                                      In 1986, after the space shuttle Challenger accident, the Air Force added
                                      13 Titan IVs to the original contract, for a total of 23. The Air Force also
                                      planned to add two Titan IV launch facilities-one      modified and one
                                      new-at Vandenberg Air Force Base, California.




                                      Page 9                                        GAO/NSIAD-90-113   Titan IV Progmun
                         Chapter 1
                         Introduction




                         In September 1987 the Air Force requested additional Titan IVs because
                         the National Aeronautics and Space Administration delayed the space
                         shuttle’s first flight after the Challenger accident and reduced the future
                         maximum number of planned shuttle flights per year from 16 to 14. The
                         Air Force also planned another Cape Canaveral launch facility, bringing
                         the total planned number of launch facilities to four. In December 1989
                         the Air Force added 18 vehicles, with options for up to 8 more, to the
                         current contract.

                         The Air Force plans to acquire 55 and launch 41 Titan IVs through fiscal
                         year 1995. After that time the Air Force plans to acquire and launch
                         about 10 Titan IVs per year. For example, through fiscal year 1997 the
                         Air Force plans to have acquired 78 and launched 60 Titan IVs, assum-
                         ing that 4 operational launch facilities are available.


                         The Chairman, Subcommittee on Defense, House Committee on Appro-
Objectives, Scope, and   priations, requested that we report on the Titan IV program’s evolution,
Methodology              cost and schedule estimates, and the contract status. We did our work at
                         the Air Force Systems Command Space Systems Division, El Segundo,
                         California, and Air Force Headquarters and the Office of the Secretary
                         of Defense, Washington, D.C. We obtained and analyzed DOD, Air Force,
                         and contractor documents and studies; cost and schedule estimates;
                         budget data; and the Titan IV contract. We also interviewed DOD and Air
                         Force personnel responsible for the Titan IV program.

                         We performed our review from November 1988 to December 1989 in
                         accordance with generally accepted government auditing standards. As
                         requested, we did not obtain written agency comments on a draft of this
                         report. However, we discussed a draft of this report with DOD and Air
                         Force officials and incorporated their comments where appropriate.




                         Page 10                                      GAO/NSIAIMC-113   Titan IV Program
Chapter 2

Cost Estimates Have Increased


                                    From March 19881 to October 1989 the program office’s estimate of the
                                    Titan IV program’s cost through fiscal year 1995 increased by $1.9 bil-
                                    lion, from $12.7 billion to $14.6 billion, This increase is expected to buy
                                    seven more vehicles but seven fewer launches than in March 1988. The
                                    estimate also includes the cost of Titan IV launch facilities. As of June
                                    1989, three of the facilities were estimated to cost over $741 million, an
                                    increased of about 61 percent since early 198H.

                                    The Titan IV program is funded by the Air Force and by other, non-DOD
                                    users of the program. The Air Force pays for most of the research and
                                    development and other costs, such as launch facilities and services. Con-
                                    sequently, the Air Force will pay about 115 percent more per vehicle
                                    and about 155 percent more per launch than other Titan IV users.


                                    As of October 1989, the program office planned to acquire 55 and
Total Program                       launch 41 vehicles through fiscal year 1995 at an estimated cost of
Estimate Increases                  $14.6 billion. This estimate is 15.1 percent higher than the March 1988
                                    estimate of $12.7 billion to acquire and launch 48 vehicles. The $ I .9 bil-
                                    lion increase will buy seven additional vehicles, but seven fewer will be
                                    launched. Table 2.1 details these changes.

Table 2.1: Cost Estimates Through
Fiscal Year 1995                    Dollars in millions                                                 __.     ____
                                                                             Mar. 1988         Oct. 1989                  Change
                                    Funding by the Air Force                  estimate         estimate                Amount   Percent
                                    Research, development,
                                       test, and evaluation               ua39.6             _-.-_$2,653.7              $8141           44.3
                                    Missile
                                    _. ~-~~  procurement                    3,305.8                3,962 2               676.4 -20.5
                                    Other procurement                           00                    47.9 __             47.9               a
                                                                                                      -~          -.__
                                    Military constndion
                                              ~     __     ~~~.~ ~-~ ~__ _.   482 0                  264.0b            -218.0------   -45.2
                                                                                                                          .~ ___    ___-
                                    Operations and maintenance  -~  ~-  .__ 1.534.0                1,365.5-..          -1685 __- -11 0
                                    Subtotal                                  $7,161.4__        $8,313.3
                                                                                               __    --           ~__$1,151.9
                                                                                                                ____~   ~____-       -..- 16.1
                                    FundIng by other users                       5,510.o          6,2753                  765.3          139
                                    Total                                    $12,671.4            ---
                                                                                               $14,588.6--        1,9x            .---__ 15.1
                                    Note: The estimates do not Include the cost of the inertial upper stage, which is provided as govern-
                                    ment-furnlshed property under the Titan IV contract.
                                    “This percent change IS not shown because the base year 1s zero

                                    bThls amount does not Include most of the estimated cost of launch facilltles, which are included jn
                                    other elements of the cost estimate




                                    ‘These estimates were presented in our report, DOD Acquisition Programs: Status of Selected Systems
                                    (GAO/NSIAD-88-160, June 30, 1988).



                                    Page 11                                                         GAO/NSL4D!Ml-113 Titan Iv Program
                          Chapter 2
                          Cost Estimates   Have Increased




                          Program office estimates differ from those in the Selected Acquisition
                          RepoK Information on how Titan IV costs are reported in the Selected
                          Acquisition Report is in appendix III.



                          hardware costs of their launch vehicles. Cost sharing between the Air
Force and Other Users     F orce and the other users is negotiable for all other program costs3 The
                          Air Force’s cost per vehicle and launch, as of October 1989, are 114.5
                          and 154.5 percent higher, respectively, than for other users primarily
                          because the Air Force pays for most of the Titan IV’s research and
                          development. The Air Force will also fund at least $542 million of other
                          users’ Cape Canaveral launch services costs and will provide more fund-
                          ing than other users for the solid rocket motor upgrade and launch
                          facilities.

                          Of the 55 vehicles planned to be acquired through fiscal year 1995, the
                          Air Force will fund 21 and the other users will fund 34. On a per vehicle
                          basis, the other users will pay $184.6 million and the Air Force will pay
                          $395.9 million, or 114.5 percent more. On a per launch basis, the other
                          users will pay $207.2 million and the Air Force will pay $527.4 million,
                          or 154.5 percent more. Program officials said these unit cost differences
                          are primarily the result of the Air Force paying most of the research,
                          development, test, and evaluation costs and the Centaur upper stage’s
                          cost being spread over more vehicles and launches for the other users
                          than for the Air Force. Specific examples contributing to the Air Force’s
                          higher unit costs include the following.

                        9 The Air Force will fund all Cape Canaveral launch services, and the
                          other users will fund all Vandenberg launch services, The Air Force does
                          not plan any Titan IV launches from Vandenberg, but the other users
                          plan 16 Titan IV launches through fiscal year 1995 from Cape Canav-
                          eral. Therefore, the Air Force will fund the other users’ launch services
                          at Cape Canaveral at an estimated cost of $542 million to $562 million.
                        . A program official said the Air Force and other users will pay the same
                          solid rocket motor upgrade procurement cost, but the Air Force will
                          fund over half of the upgraded motor’s nonhardware costs while using

                          ‘The Selected Acquisition Report is a summary status reprt on major defense acquisition programs.
                          It reflects a program manager’s current “best estimate” of key performance, schedule, and cost goals;
                          compares the estimates with baseline parameters; and explains any variances.

                          3DOD and Air Force officials stated that this arrangement is typical for programs such as the
                          Titan IV.



                          Page 12                                                      GAO/NSIAB90-113       Titan IV Program
                                           Chapter 2
                                           Cost Estimates   Have Increased




                                           9 of the first 25 sets.” The other users will pay over half of the research
                                           and development costs for the upgraded motor, and the Air Force will
                                           pay other related costs, such as a new Cape Canaveral solid rocket
                                           motor assembly facility.
                                       l   The Air Force is funding the Titan IV launch facility modifications at
                                           Cape Canaveral, although 16 of the 30 launches scheduled there
                                           through fiscal year 1995 are for other users. The other users are funding
                                           modifications at one of the Vandenberg facilities, and the Air Force will
                                           fund the other Vandenberg facility. However, no Air Force launches are
                                           planned at Vandenberg through fiscal year 2000. A program official said
                                           the Air Force is paying for the second launch facility at Vandenberg
                                           because of its overall responsibility to provide space launch capability.


                                           The Air Force’s June 1989 cost estimate for three of the four Titan IV
Launch Facility                            launch facilities is $741.1 million, an increase of about $280 million, or
Estimates Increase                         61 percent, over the January 1988 estimate of $461 million. The changes
                                           in each facility’s cost estimate are shown in table 2.2.

Table 2.2: Cost Estimates for Launch
Facilities                                 Dollars in mullions
                                           Space
                                           launch                                      Jan. 1988        June 1989                  Increase
                                           complex       Location                       estimate
                                                                                           ~..-.         estimate              Amount     Percent
                                           40            Cape Canaveral                    $135.0a
                                                                                        ~..~..-              $310.0b
                                                                                                              -                - $175.0
                                                                                                                                     ~~         129.6
                                           41            Cape Canaveral                     157.0      ..-    195
                                                                                                                _~~9b~~      ~     38 9          24 8
                                           4E            Vandenberg                         169.0        -    235
                                                                                                                ~~2”               66 2          39.1
                                           Total                                            461.0             741.1               280.1         60.8
                                           “As of 1987

                                           “These estimates do not In&de fundlng for a new assembly facility for the upgraded motor at Cape
                                           Canaveral, which is estimated to cost $147 5 mIllion.

                                           ‘This estimate is as of May 1989 and Includes $10 2 mullion for modiflcatlons   requtred to accommodate
                                           the upgraded motor


                                           The estimate for modifying space launch complex 40 increased by $175
                                           million: $100 million to add capability t.o launch the Titan IV with the
                                           Centaur upper stage, $50 million to meet requirements that were
                                           unknown in January 1988, and $25 million to cover increases in the esti-
                                           mated cost of existing requirements. The Air Force has modified space
                                           launch complex 41 for the Titan IV with the inertial upper stage and
                                           plans to continue modifying it for the Titan IV with the Centaur upper

                                           “4 set consists of two motors



                                           Page 13                                                           GAO/NSIADYO-113       Titan IV Program
Chapter 2
Cost Estimates   Have Increased




plans to continue modifying it for the Titan IV with the Centaur upper
stage and the Titan IV without an upper stage. The estimated cost to
modify the complex completely has increased because some of its facili-
ties and systems were in worse condition than anticipated. The esti-
mated modifications cost for space launch complex 4E increased because
a remote control center was added, changes to accommodate the
upgraded solid rocket motor were needed, and the estimated cost of
existing requirements increased.

Four contractors have been developing concepts for the second Vanden-
berg Titan IV facility since August 1988. In December 1988 the Air
Force expanded the contractors’ scope of work to include concepts and
cost estimates for converting space launch complex 6, the mothballed
space shuttle launch facility,5 to a Titan IV facility. However, in Septem-
ber 1989, the Secretary of the Air Force decided to build a new launch
facility. According to a Vandenberg official, the Air Force Council and
Defense Science/Board recommended a new facility because it would
allow greater long-range adaptability to different vehicles and operating
scenarios than a converted facility+ Also, DOD could expect a better long-
range return on investment in a new, rather than a converted, facility.

In the fiscal year 1990 authorization act for DOD, the Congress prohib-
ited any funding for a new facility and placed certain funding restric-
tions on the second Vandenberg facility regarding the conversion of
space launch complex 6. During our previous review, DOD officials told
us that, as of April 1988, the estimated cost of converting space launch
complex 6 to a Titan IV facility was $441 million.

Air Force officials said they have not decided whether the second Van-
denberg facility will use the “integrate on pad” system or the “integrate,
transfer, and launch” system. With the former system, one vehicle at a
time is built and processed on the pad and then launched. With the lat-
ter system, a vehicle is built and processed at various locations and
transferred to the pad for launch. This system provides a higher launch
rate, but it costs more. Although near-term mission forecasts do not indi-
cate a launch rate requiring integrate, transfer, and launch capability,
sites and access routes are to be preserved for such a system if launch
rates increase sufficiently to warrant its use.



“For more information on this facility, see our report, Space Shuttle: The Future of the Vandenberg
kdunch Site Needs to Be Dctcrmined (GAO/NSIAD-88-158, Aug. 3,1988).



Page 14                                                      GAO/NSIAD-90-113      Titan IV Program
Chapter 3

Contract Price Has Increased


                     In February 1985 the Air Force signed a $5 million contract with Martin
                     Marietta to define a concept for a new launch vehicle. In June 1985 10
                     vehicles were added to the contract, which increased the contract’s tar-
                     get price’ to almost $2.1 billion. Through early December 1987, the con-
                     tract for 10 vehicles increased to about $2.2 billion. At that time the Air
                     Force added 13 vehicles to the contract, increasing its target price to
                     over $4.1 billion and the number of vehicles to 23. By July 1989 the
                     target price of the contract for 23 vehicles had grown to about $5.1 bil-
                     lion, and the total contract price2 was over $5.5 billion.

                     In December 1989 the Air Force added 18 vehicles to the contract, which
                     increased the total contract price to almost $7.4 billion and the number
                     of vehicles to 41. The Air Force also included an option for up to eight
                     additional vehicles. If the options are exercised, the total contract price
                     would be about $7.8 billion, including contractor and subcontractor
                     profits, fees, and incentives of up to about $1.2 billion. However, the
                     contract does not yet include some significant costs related primarily to
                     payload integration and solid rocket motors.

                     The Air Force projects a $298 million cost overrun at contract cornpIe-
                     tion. As of July 1989, the overrun was $209 million. Also, $128 million
                     of planned work had not been completed as scheduled. Both the cost
                     overrun and the schedule slippage are primarily due to contractor and
                     major subcontractor problems, according to the Air Force.


                     Martin Marietta Astronautics Group, Denver, Colorado, is the prime con-
Contract Structure   tractor responsible for producing the Titan IV’s first and second stages
                     and for providing overall systems engineering and integration, payload
                     integration, and launch services. Eight major subcontractors are respon-
                     sible for producing certain Titan IV components, as shown in table 3.1.
                     Under a separate contract, Boeing Aerospace Company, Seattle, Wash-
                     ington, produces inertial upper stages, which are provided as govern-
                     ment-furnished property under the Titan IV contract.




                     ’ Target price consists of a target cost and a target profit

                     ‘Total contract price incIudes the target price plus the cost of three items financed differently under
                     the contract, as described later in this chapter, and all fees and mission SWC~SS  incentives available to
                     the contractor and subcontractors.



                     Page 15                                                         GAO/NSIAD90-113TitanLVPro@am
                                  Chapter 3
                                  Contract Price Has Increased




Table 3.1: Major Subcontractors
                                  Dollars in millions
                                                                                     --PPm.-Subcontradt                          Estimated
                                  Subcontractor                      Component produced                 pricea                    unit cost
                                                                  -.
                                  General Dynamics Space      Centaur upper stage                                 $951 a              $52.0b
                                    Systems, San Diego,
                                    California
                                  Hercules Aerospace,         Solid rocket motor upgrade                              713.8                52.3c
                                    Magna, Utah’ ~~~          -~
                                  United Technologies         Solid rocket motor                                      665.5                41.6
                                    Chemical Systems
                                    Division, San Jose,
                                    California          - -..
                                  McDonnell Doualas           Pavload faIrin<                                         340.3                14.8d
                                    Astronautics tompany,        ’
                                    Huntington Beach,
                                    California                                         ._                                ^.^^~
                                  Aerojet TechSystems         Liquid rocket engine                                    281.8                12.3”
                                    Company, Sacramento,
                                    California                                            ~~~I-._
                                                                                                .                                    ---
                                  General Motors Delco        Inertial guidance                                        924                  4.0
                                    Svstems Operations.          components
                                    Gileta, California
                                  Cincinnati Electronic       Command receivers                                         9.5                 04
                                    Co;rration,     Cincinnati,

                                  Spacecraft, Inc., Huntsville,       Instrumentation                                   72                  0.3
                                    Alabama

                                  aAs of May 1989
                                  ‘Actual contract cost

                                  CThls estimate IS for a set of two engmes as of October 1989 and includes the amortization of the
                                  subcontractor’s research and development investment of about $5 million per set, according lo DOD
                                  and Air Force officials.

                                  dThe estimate IS the average cost for five different size payload falrings

                                  eThls estimate IS for a set of three engines


                                  The first 23 vehicles under the contract consisted of 10 Titan IVs with
                                  the Centaur upper stage, 8 Titan IVs with no upper stage, 4 Titan IVs
                                  with the inertial upper stage, and 1 Titan IV whose configuration was to
                                  be determined. The actual cost of each Titan IV vehicle varies depending
                                  primarily on its configuration, as shown in table 3.2.




                                  Page 16                                                           GAO/NSIAIMO-113      Titan IV Program
-
                                          Chapter 3
                                          Contract Price Has Increased




Table 3.2: Examples of Vehicle Hardware
costs                                     Dollars In millions
                                          --
                                          Configuration and vehicle number                                                        Amount
                                          _-____-_---------.---
                                          Titan IV with no upper_._stage ~(no.                                                      $71.9    n
                                                                            -- 11)      .-- __.__.    ~.- --       -   -.-    -   -~
                                          Titan IV with Centaur upper    stage  (no. --3)                                            128.9
                                                                 --
                                          Titan IV with upgraded solid rocket motors and Centaur upper stage
                                             (no. 7)                                                                                139.3


                                          The Titan IV contract is primarily based on a target price consisting of
                                          both a target cost and a target profit However, t,he financing of three
                                          it.ems under the contract is arranged differently. The first item is associ-
                                          ated with the Industrial Modernization Incentives Program, a DOD initia-
                                          tive to improve the national defense industrial base and encourage
                                          government contractors to improve their production processes. Under
                                          the first phase of this effort, Martin Marietta studied its manufacturing
                                          process at a cost of $1.2 million, which it shared equally with the Air
                                          Force. Martin Marietta will use the study results to identify specific
                                          projects that warrant further study. If the Air Foree agrees, the Air
                                          Force will fund the studies’ cost. If Martin Marietta suggests a way of
                                          improving a production process, and the Air Force approves the sugges-
                                          tion, Martin Marietta will fund the improvement’s implementation and
                                          share any savings with the Air Force according to a preestablished
                                          formula.

                                          The second item involves payload integration, which is the process of
                                          integrating the satellite onto the upper stage or Titan IV vehicle. A
                                          Titan IV contracting official said that when the Air Force awarded the
                                          Titan IV contract, payload integration costs were uncertain and not
                                          included in the contract. The Air Force subsequently added some
                                          payload integration to the contract under an arrangement that the Air
                                          Force Systems Command believed would cause Martin Marietta to
                                          respond more quickly to Air Force changes. The Air Force plans to add
                                          the remaining payload integration under an incentive arrangement so
                                          that the Air Force can base its fee payment on the contractor’s
                                          performance.

                                          The third item involves the hydrostatic test fixture, an Air Force-owned
                                          facility used to test t.he Titan IV fuel tanks. The facility is currently
                                          unusable, and the Air Force will pay Martin Marietta to repair it for an
                                          estimated cost of $3 million. Martin Marietta will not earn a profit or
                                          fee.




                                          Page 17                                               GAO/NSlAD-SO-113       Titan IV Program
                                           Chapter 3
                                           Contract Price Has Increased




                                           As the Titan IV contract grew during its first 4 years to 23 vehicles, its
Contract Price for Up                      target profit increased about 13 percent faster that its target cost
to 23 Vehicles                             because, according to Air Force officials, Martin Marietta’s financial risk
                                           increased as a result of adding 13 vehicles to the contract and for other
                                           reasons, such as the program expanding from a vehicle with one config-
                                           uration launched from one site to a vehicle with multiple configurations
                                           launched from various sites, Table 3.3 shows various target cost, profit,
                                           and price changes as the contract grew from 10 to 23 vehicles.


Table 3.3: Changes in Selected Elements of the Contract for 10 and 23 Vehicles
Dollars   in millions
                                                                                                                                        Percent
                                Contract for 10 vehicles                             Contract for 23 vehicles                      change from
                                June         Dec.     Percent                         Dec.         July    Percent                 June 1985 to
                                 1985        1987     change                          1987        i 989    change                     July i 989
Target    cost                $1.9065    $1,976 4           37                    $3,755.1      $4,609 0          227                        141.8
Target    proftt                 189.3      1969            40                       391.6         482.5          23.2                       154.9
Target    price                2,095 8    2,173 3           3.7                    4,146.7       5,091.5          22.8                       142.9
Celhnq    price                2,287.8    2,371.5           3.7                    4,506.O       5,512.7          22.3                       141.0


                                            Target profit was 10.5 percent of target cost as of July 1989, and the
                                            ceiling price was 119.6 percent of target Cost.” In addition to the $482.5
                                            million target profit, Martin Marietta would earn fixed fees of $8.6 mil-
                                            lion. Furthermore, the contract provided for up to $18.4 million in
                                            award fees and $165.8 million in mission success incentives for the con-
                                            tractor, for a total of up to $675.3 million in profits, fees, and incentives,
                                            or 14.3 percent of cost. The contract also included up to $139.5 million
                                            for subcontractor incentives, making the total contract price over $5.5
                                            billion as of *July 1989.

                                           The $18.4 million award fee is based on management effectiveness and
                                           technical and schedule performance in achieving initial launch capabil-
                                           ity. The Air Force may award up to $5.5 million each at the completion
                                           of initial launch capability for the Titan IV with the inertial upper stage
                                           and the Titan IV without an upper stage and up to $7.4 million at the
                                           completion of initial Iaunch capability for the Titan IV with the Centaur
                                           upper stage. The Air Force declared that initial launch capability for the
                                           Titan IV with the inertial upper stage was achieved in February 1989,
                                           even though the first launch did not take place until mid-June 1989, and


                                           “An Air Farce Systems Division Titan IV contracting official said target profit is generally 10 percent
                                           of target cost and the ceiling price is generally 120 percent of target cost.



                                           Page 18                                                         GAO,‘NSIADS@l13      Titan IV Program
                Chapter 3
                Contract Price Has Increased




                awarded $3.85 million, or 70 percent of the $5.5 million, to Martin Mari-
                etta, According to a program official, the Air Force determined that the
                launch delays from October 1988 to June 1989 were not totally Martin
                Marietta’s fault. Program officials said any award fees not awarded will
                be available for Titan IV unfunded requirements.

                The $165.8 million mission success incentive represents about $7.2 mil-
                lion for each of 23 successful launches. On the other hand, each failure
                caused by Martin Marietta will result in a $45.3 million reduction in the
                combined target profit/mission success incentive pool, with target profit
                reduced first. If the Air Force determines that the contractor did not
                cause the failure, no mission success incentive is paid and no penalty is
                assessed. Instead, the mission success incentive will carry over to the
                next launch. If that launch is successful, Martin Marietta will earn two
                incentive fees. If no other launches are scheduled before the end of the
                contract, Martin Marietta will receive the incentive.


                On December 1, 1989, the Air Force added 18 vehicles and launches to
Price for the   the Titan IV contract at a target price of about $1.6 billion, with options
Follow-on Buy   for up to 8 more vehicles. The target price includes a $163 million profit.
                In addition, the contractor can earn $81 million in award fees and incen-
                tives, and subcontractors can earn about $18 million in incentives. These
                amounts do not include target prices, fees, or incentives associated with
                10 sets of solid rocket motors or upgraded motors needed for the 18
                vehicles4 the 8 optional vehicles, or payload integration,

                With the addition of the 18 vehicles, the total contract price has grown
                from over $5.5 billion under the contract for 23 vehicles as of July 1989
                to almost $7.4 billion under the contract for 41 vehicles, including up to
                $930 million in contractor profits, fees, and incentives and $157 million
                in incentives for subcontractors, If options for all eight vehicles are
                exercised, the total contract price would be about $7.8 billion, including
                contractor profits, fees, and incentives of up to $992 million and incen-
                tives for subcontractors of over $164 million.

                There are requirements for all 18 vehicles and 2 of the 8 optional vehi-
                cles. The remaining six optional vehicles may be used to cover additional


                “As discussed later in this chapter, there will be 8 sets of motors remaining from the contract for 23
                vehicles. The Air Force plans to use them with the follow-on buy vehicles. Thus, only 10 more sets
                will be needed. These motor sets currently have a not-to-exceed value of $907 million, including $75
                million for award fees and mission success incentives.



                Page 19                                                        GAO/NSIAIWO-113      Titan IV Program
                                           Chapter 3
                                           Ckmtract Price Has Increased




                                           requirements that have not yet been identified. The two optional vehi-
                                           cles that have requirements were included in the contract as optional
                                           vehicles because they are not needed until after 1995.

                                           On the basis of experience gained under the contract, the Air Force con-
                                           siders the follow-on buy’s cost and schedule risks to be moderate and all
                                           other risks to be low. However, to prepare for the negotiation of the
                                           follow-on buy, the Air Force did a “should cost” review of Martin Mari-
                                           etta and its major subcontractors. This detailed assessment of materials,
                                           processes, management, and organizational effectiveness identified
                                           problems, including the existence of outdated technology that precluded
                                           the use of more cost-effective methods. According to a program official,
                                           the Air Force has made the production schedule an award fee criterion
                                           and has incorporated the Industrial Modernization Incentives Program
                                           into the Titan IV contract to encourage the contractor further to
                                           improve its production processes and save money.


                                           As of July 1989, the Air Force had issued 283 contract modifications,
Contract Modifications                     194 of which did not affect the contract’s price. Two of the remaining 89
Contribute to                              modifications, valued at $4.1 billion, were for the 23 vehicles. The
Increases                                  remaining 87 modifications increased the contract price by about $1, 1
                                           billion. The five modifications shown in table 3.4 accounted for 77 per-
                                           cent of that increase.

Table 3.4: Selected Contract
Modifications With High-Dollar Value       Dollars in mllllons
                                           Reason for modification                                                                           ~     .-~Amount
                                           Solid rocket motor upgrade .--                                                                              $698.2
                                           MoblIe service tower improvements at space launch -.    complex
                                                                                                     -~~ ~4E                      ~~      .-._..   ~~    73.7
                                                                                                                                                          ~_
                                           Inertial upper stage and payload Integration/  launch
                                                                                           -       support
                                                                                                   ~-                                                    46.6
                                           Payload integration for the Titan IV with no upper stage                                                       33.7
                                           Other payload Integration                                                                                      23.1
                                                                               -~~     .-     ~__~    - ~~~ ~~                      __.
                                           Total                                                                                                       $875.3



                                           In addition, the Air Force and other users plan to add the following mod-
                                           ifications valued at about $2.3 billion to the contract through fiscal year
                                           1995:

                                       l   $847 million for payload integration,:

                                           “A Titan IV contracting           official said the Air Force did not initially include payload integration in the
                                           cOntratT   because   its   Cost    was unrertdin,   since the specific payload  designs were unknown.



                                           Page 20                                                                  GAO/NSIAD-90-113       Titan IV Program
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                                             Chapter    3
                                             Contract Price Has Increased




                                         l   $452.9 million for solid rocket motor upgrade modifications,” and
                                         l   $968.6 million ($574.6 million from the Air Force and $394 million from
                                             other users) for various other modifications.


Solid Rocket Motor                           In early 1988 the Air Force decided to upgrade the Titan IV’s solid
                                             rocket motor because two payloads needed additional lift capability and
Upgrade                                      the upgraded motor would be more reliable and use newer technology.
                                             In July 1988 Martin Marietta contracted with Hercules Aerospace for
                                             the first 15 sets of the upgraded solid rocket motor. This led to the con-
                                             tract modification with the largest dollar value not involving an increase
                                             in the number of vehicles. The changes from March 1988 to October
                                             1989 to the cost estimate through fiscal year 1995 for upgraded motor
                                             sets are shown in table 3.5.

Table 3.5: Changes to the Solid Rocket
Motor Upgrade Cost Estimate Through          Dollars in millions
Fiscal Year 1995                                            _--            ~-~ ..- ~ - --.-----.-                --_-----                       -.
                                                                                                       Mar. 1988          Oct. 1989                  Percent
                                             -__-----                          -~ -.-------                  - ~~~----_.- estimate
                                                                                                        estimate                                     change
                                             Research, development, test, and
                                                evaluation                                                         a          $367.5
                                             Missile
                                             --       procurement
                                                          - - - -... ~ ~~~-~                            $1,760.0              1,407.z
                                             Aerospace ground equipment,
                                                integration, facility modification, and
                                                tooling                                                    270.0 ___-.-            154.9
                                             Solid motor assembly facllltles, railroad
                                                tracks, and nondestructive testing                         1530 --~.-             -._111 0 _-         --
                                             Centaur redesign and production                                36.0                   0.0
                                             Subtotal
                                             -.-                     --         ~~~~-    --_-.--~-~~     2,219.0              2,040.7
                                                                                                                          -~__~-                       -8.0
                                             Credit         --                                             ,~-- w-
                                                                                                          1.258                    no
                                                                                                                                   -.-
                                              -.___-             -        --     -~ --“-
                                             TotalC                                                      $961 .Q            $2,040.7                   112.4
                                             aThis amount was Included in mlsslle procurement Subsequently the Congress dwected that research,
                                             development, test, and evaluation funds be separated from missile procurement funds
                                             bThls amount included $259 million for 7 solid rocket motor sets onginally ordered but later canceled
                                             and $999 mllllon for 27 soltd rocket motor sets budgeted far but not ordered

                                             ‘The March 1988 estimate IS for 40 sets of motors; the October 1989 estimate    IS   for 39.


                                             The initial contract with United Technologies Chemical Systems Division
                                             was for 23 sets of the original solid rocket motor. After contracting for
                                             the upgraded motor, the number of Chemical System Division’s solid
                                             rocket motor sets was reduced from 23 to 16. Thus, the Air Force will
                                             have a total of 31 solid rocket motor sets-16 solid rocket motors and


                                             “This estimate does not include folhw-on buy hardware



                                             Page 21                                                          GAO/NSIAD4JO-113         Titan W Progmn
                    Chapter 3
                    Contract Price. Has Increased




                     15 upgraded motors- available for the first 23 vehicles under contract.
                    A program official said the Air Force has assigned both the original and
                    the upgraded solid rocket motors to 8 of the 23 vehicles as insurance
                    against development and production delays for the upgraded motor.

                    The Air Force planned to use all 16 solid rocket motor sets on the first
                    23 vehicles and to begin using the upgraded motor in fiscal year 1992.
                    However, a program official said that because of the March 1989 explo-
                    sion at the Hercules Aerospace plant, which delayed testing of the
                    upgraded motor by about 5 months, and because some scheduled pay-
                    loads will not require the additional capability of the upgraded motor,
                    the Air Force studied the costs and benefits of developing a second
                    source of solid rocket motors. Among the options studied was the contin-
                    ued use of the original solid rocket motor.

                    In August 1989 the Air Force developed an acquisition strategy for con-
                    tinuing the production of components for the original solid rocket motor
                    with an option to build motors from these components at a later date. In
                    September 1989 production was authorized for components of seven
                    solid rocket motor sets at a cost of $70 million. The Air Force still had
                    $32 million available from the seven sets originally ordered but can-
                    ccled. Therefore, the Air Force will need $38 million in fiscal year 1990
                    to fully fund the component production, which will take 12 t,o 18 months
                    to complete. Thus, the decision on assembling the motors will be delayed
                    until fiscal year 199 1.


Untimely Contract   Air Force regulations require the Air Force to definitize contract modifi-
Modifications       cations within 180 days after they are issued or before the contractor
                    completes 40 percent of the work. In March 1988 the program office
                    identified a need to definitize contract modifications on time, noting that
                    the contractor’s proposals were late and its cost estimates were inade-
                    quate. About 1 year later the Air Force Audit Agency issued a report on
                    29 Titan IV contract modifications, valued at $669 million, that had not
                    been definitized. Of these, 21 modifications, valued at $584 million, had
                    not met the regulations. The agency reported that the delays resulted
                    from Martin Marietta not submitting proposals on time and Air Force
                    Space Systems Division contracting personnel not adequately monitoring
                    Martin Marietta’s compliance. As of July 1989, 14 modifications, valued
                    at $131 million,’ still had not been definitized. A program official said


                    ‘Of this amount, 634.1 million had been negotiated but had not yet been inch&d in the contract.



                    Page 22                                                     GAO/NSLAD90-113       Titan IV Program
                     Chapter 3
                     Ckmtract Price Has Increased




                     the delays were due to the long turnaround time in the Air Force Space
                     Systems Division contracting office.

                     The program office reported that by September 1989 the contractor had
                     significantly improved in submitting its proposals on time, but its cost
                     estimates still remained a problem. The program office also reported
                     that the number of Titan IV contracting personnel would be increased
                     from 10 to 21.


                     As of July 1989, Martin Marietta had a cost overrun of $209 million.
Cost Overruns and    According to the Air Force, the overrun was primarily caused by Martin
Schedule Variances   Marietta’s problems in producing the core vehicle and its underestima-
                     tion of engineering work, United Technologies Chemical Systems Divi-
                     sion’s fabrication and delivery problems on the solid rocket motors,
                     McDonnell Douglas’ nose cone test failure and payload fairing delays,
                     and Hercules Aerospace’s problems with t,he upgraded solid rocket
                     motor. Other causes of the overrun included more work than anticipated
                     and technical problems in preparing the first Titan IV. Program officials
                     said that most cost problems occur during the early stages of a pro-
                     gram’s research and development, which is what happened with the
                     Titan IV program. They said Martin Marietta should recover from some
                     of the problems during the production phase.

                     According to program officials, Martin Marietta underestimated the
                     work involved to bring all the components together from various sub-
                     contractors and assemble the Titan IV vehicles. In addition, Martin Mari-
                     etta experienced manufacturing schedule delays partly due to late
                     deliveries from General Motors Delco Systems, McDonnell Douglas, and
                     United Technologies Chemical Systems Division.

                     A program official said Chemical Systems Division has had fabrication
                     problems with the solid rocket motors and is late in delivering parts for
                     the second Titan IV and avionics for the solid rocket motors on the sec-
                     ond through fourth vehicles. McDonnell Douglas experienced a nose
                     cone test failure, which a program official said led to further design
                     work and a &month delay in the test schedule. In addition, at Martin
                     Marietta’s direction, McDonnell Douglas performed additional work on
                     the first 66-foot payload fairing, delaying its delivery approximately 90
                     days.

                     According to a program official, Hercules Aerospace was overly optimis-
                     tic in estimating its upgraded motor development program and has


                     Page 23                                     GAO/NSLAD-90-113   Titan IV Program
                             Chapter 3
                             Contract Price Has Increased




                            experienced difficulties coordinating the efforts of its subcontractors to
                             meet the production   schedule. The official said Hercules Aerospace did
                            not provide its subcontractors with adequate requirements, so the sub-
                            contractors built and delivered inappropriate parts. Hercules Aerospace
                            also had to redesign the upgraded motor case after it was tested and
                            found to be weaker than required. Furthermore, in March 1989 an acci-
                            dental explosion occurred at Hercules Aerospace’s production facility.
                            This delayed testing about 5 months, according to a program official. In
                            June 1989 the Air Force approved Hercules’ plan to recover from its
                            earlier setbacks and establish a more realistic schedule.


Estimated Cost Overrun at   The Air Force estimated that the cost overrun at contract completion
                            will be about $298 million, whereas the Air Force Plant Representative
Contract Completion         Office at Martin Marietta estimated about a $207 million overrun at con-
                            tract completion. In contrast, Martin Marietta’s estimate of the overrun
                            at contract completion was about $169 million. These estimated over-
                            runs do not include about $88 million of management reserves* available
                            as of July 1989. Martin Marietta’s estimate was the lowest because,
                            according to a program official, the contractor has a plan to reduce the
                            cumulative overrun by contract completion.

                            A program official believes that the cost overrun at contract completion
                            will be about 5 percent, a proportion he believes indicates extraordina-
                            rily good performance on a contract of this size, technical scope, and
                            with the number of program changes it has had in its first 5 years. The
                            Air Force will pay 90 percent, and the contractor 10 percent,” of any
                            cost overrun at contract completion, up to the contract ceiling price. The
                            contractor will have to absorb all costs beyond the ceiling price.

                            Program officials said they will judge Martin Marietta’s cost perform-
                            ance early in the follow-on buy to determine if systematic problems
                            exist. The Air Force Space Systems Division Commander reported in
                            July 1989 that the Titan IV marginal cost performance was expected to
                            continue after the first launch, but improvements were expected later.
                            Program officials are conducting an in-depth examination of Martin
                            Marietta’s efforts to reduce the cost overrun, and they said they will
                            reduce the award fee if the contractor’s management of cost perform-
                            ance continues to be below standard.

                            ‘Management reserves are funds set aside to cover unforeseen costs that arise under contracts.
                            “The contractor’s sharp of the cost overrun will be in the form of a reduction in the profit payable
                            under the contract.



                            Page 24                                                        GAO/NSIAD90-113       Titan IV Program
                        Chapter 3
                        Contract Price Has Increased




Work Not Completed on   Martin Marietta had planned to complete about 50 percent of the con-
                        tract work by July 1989. It completed about 48 percent by that time,
Schedule                resulting in $128.3 million of planned work not completed. This schedule
                        variance was caused by subcontractor problems and technical difficul-
                        ties while the first Titan IV was being prepared for launch.

                        United Technologies Chemical Systems Division’s casting of solid rocket
                        motors has slowed from 3 to 2 per week due to a lack of storage space
                        for completed segments. Also, the delivery of solid rocket motor avionics
                        components required for the second through fourth Titan IVs will be
                        late, and solid rocket motor segments for the fifth Titan IV launch will
                        be delivered 1 month late.

                        Delays at General Motors Delco Systems Operations are due to produc-
                        tion start-up problems and parts shortages because of late deliveries
                        from its vendors. Also, the 6th inertial guidance unit scheduled for
                        delivery experienced a test failure, and the delivery dates have slipped
                        for the 8th through 10th units.

                        General Dynamics was 4 months behind schedule on delivery of the first
                        Centaur due to welding problems, inadequate planning, parts shortages,
                        and concerns about tooling. It is revising the Centaur delivery dates.

                        Martin Marietta originally built a loo-day margin into the schedule to
                        ensure that it would meet initial launch capability dates; however, this
                        margin has now been used up, and any more schedule problems will
                        delay production schedules. Program officials said the schedule variance
                        will be reduced or eliminated by improving production efficiencies and/
                        or by delaying production milestones.




                        Page 25                                     GAO/NSLADSO-113   Titan IV Program
Chapter 4

Launch SchedulesHave Been Delayed


                                            The Air Force delayed 6 of the 10 launches planned for fiscal years 1989
                                            and 1990. Also, the initial launch capability dates for three vehicle con-
                                            figurations and the launch capability dates for three launch facilities
                                            have slipped. Furthermore, the Air Force may not be able to launch four
                                            payloads planned for fiscal years 1990 and 1991 because launch vehi-
                                            cles will not be available.


                                           Since 1988 the Air Force delayed 6 of the 10 launches planned for fiscal
Launches Have                              years 1989 and 1990. According to program officials, these launches
Slipped                                    were delayed because (1) the initial launch capability date for the
                                           Titan IV with the inertial upper stage was not met because of problems
                                           with space launch complex 41 and the launch vehicle, (2) complexes 40
                                           and 41, after being modified for the Titan IV with the inertial upper
                                           stage, will have to be shut down and modified for the Titan IV with the
                                           Centaur upper stage and the Titan IV with no upper stage, (3) com-
                                           plex 4E modifications were behind schedule because the time needed to
                                           make the modifications was underestimated and a previous launch
                                           occurred later than planned, and (4) some planned payloads were
                                           delayed and rescheduled for a later launch.


                                            The Air Force’s initial launch capability dates for three Titan IV con-
Initial Launch                              figurations have slipped, as shown in table 4.1.
Capability Dates Have
Slipped

Table
__- 4.1: Slippages in Initial Launch Capability Dates
Figures m months
                                                                                        -~1      _ ~.-        .___~~    -__~        --_-.
Configuration and                                    Initial launch capability date as of                    Slippage
  model number           Launch site         Apr. 1987       Mar. 1988       Sept. 1989                  1987-88    1988-89          Total
Centaur upper stage      Cape Canaveral      Feb 1990       May 1990       Apr./June 1991
   (401)                                                                                                       3        11-13      14-16
ItGtlil    upper stage   Cape Canaveral      Oct. 1988      Ott   1988     Feb. 1989
   (402)                                                                             ..-      _ ~~              0
                                                                                                             .~___~         4
                                                                                                                           ___         .--4
No upper stage           Vandenberg          Apr. 1989      Feb. 1990      Apr./June 1990
  (4031404)                                                                                                   in          2-4      12-14


                                           Model 401 initially slipped 3 months because the start of Centaur upper
                                           stage development was delayed due to inadequate funding for fiscal
                                           years 1985 and 1986, according to a program official. Since March 1988
                                           the date slipped another 11 to 13 months because some Titan IV


                                           Page 26                                                   GAO/NSIAD-90-113    Titan IV Program
-
                                          Chapter 4
                                          Launch Schedules         Have Been Delayed




                                          launches were added at space launch complex 41, which delayed the
                                          facility becoming available for modification.

                                          Model 402 slipped 4 months since March 1988 because additional t,ime
                                          was required for testing the spacecraft on the launch pad and for vali-
                                          dating the aerospace ground equipment, The Air Force declared initial
                                          launch capability in February 1989 because all vehicle hardware and
                                          systems were at the facility, which was ready to support launches, and
                                          all engineering testing was complete. The Air Force did not launch the
                                          first Titan IV with the inertial upper stage until June 14, 198,9, because
                                          of schedule conflicts with other launches, as well as weather :ind flight
                                          and ground hardware problems.

                                          Model 403/404 was initially delayed 10 months because its launch is
                                          scheduled after anot.her launch from space launch complex 4E that was
                                          delayed. Since March 1988 it slipped another 2 to 4 months because the
                                          payload program office required that 3 different payloads be integrated
                                          to the vehicle. According to a program official, the payload program
                                          office will inform the Titan IV program office at a later date which of
                                          the 3 payloads it wants launched first.


                                          The launch capability dates for three of the four facilities have slipped,
Launch Facility                           as shown in table 4.2.
Capability Dates Have
Slipped
Table 4.2: Slippages in Launch Facility
Capability Dates                          Space launch                                  Capability dates                                   Slippage
                                          complex                   Feb. 1988                                        Scot. 1989            (months)
                                          40
                                                -      -   -._~-    Sept.~_1990 or Oct. 1991”                Jan
                                                                                                               - to- Mar.1992
                                                                                                                         ~~ ~~                3-18
                                          41-
                                          --        ----            Oct.
                                                                     ~- 1988”
                                                                         ~_ ._ ------                        Apr.toJune 1991'                18-ZOc
                                          Second facility at        Oct. 199dd                               Apr toJune               --     18-20
                                            Vandenberg
                                          ‘Program officials provided two different dates

                                          bAs of January 1988
                                          ‘The AIMForce declared that it was capable of launching the Titan IV with the InertIaI upper stage from
                                          space launch complex 41 as of February 1989 Therefore, the sllppage for that model was 4 months
                                          The 18-20 month slop IS for the Titan IV with the Centaur upper stage The launch capabIlIty date for the
                                          Titan IV with no upper stage IS classifled

                                          “As of July 1988




                                          Page 27                                                        GAO/NStAMO-113        Titan IV Program
                    Chapter 4
                    Launch Schedules   Have Been Delayed




                    Space launch complex 40 was delayed because contract negotiations are
                    taking longer than expected. Complex 41 was delayed for the Titan IV
                    with the Centaur upper stage because some Titan IV launches were
                    added, thus delaying its modification for the Centaur. Also, the modifi-
                    cations for the Centaur have increased significantly in scope. The sec-
                    ond Vandenberg facility was delayed because of deliberations on
                    whether to modify the mothballed space shuttle complex or build a
                    facility. Also,    DOD
                                       and Air Force officials said that 12 months of the
                    delay was due to the Congress not providing any fiscal year 1989 fund-
                    ing. Furthermore, the Air Force did not provide the funding amounts
                    requested for the program for fiscal years 1990 and 1991.


                    The Air Force will be short four vehicles-two each in fiscal years 1990
Additional Launch   and 1991-because more payloads have been added to the Titan IV pro-
Delays May Occur    gram. Program officials said the Air Force is considering three options to
                    resolve the shortage: use vehicles from the follow-on buy, increase pro-
                    duction capacity by adding more tooling and work shifts, and/or delay
                    more launches.

                    A program official said the Air Force is considering adding more tooling
                    and/or workshifts at Martin Marietta and/or some of its subcontractors.
                    The Air Force already decided to increase payload fairing production by
                    adding tooling at McDonnell Douglas. However, efforts to increase pro-
                    duction would have no appreciable near-term effect because it takes
                    3-l/2 years to produce and deliver a Titan IV. Therefore, program offi-
                    cials said they will probably delay the launches if the payloads are
                    available on time.




                    Page 28                                     GAO/NSIAD-CM%113 Titan w   Pro@am
                                               i
Page 29   GAO/NSLALWO-113   Titan IV Program   t
                                               i
                                               t
                                               j
Appendix
__.-__I    I

Performance Capabilities of Various Titan IV
Configurations

                Figures in pounds
                                                                                             Estimated capability
                Configuration
                _-__~                   ~~     _    Performance
                                                    ~~- ~~      requirement                  Feb. 1988    Aug. 1989
                Centaur upper stage                 10,000 to geosynchronous
                                                    orbit                                        10,301
                                                                                                  ~     -~      -. 10,313
                                                                                                                      ~~
                Centaur upper stage                 11,500 to 12.hour orbit                                        11,500
                Inertial upper stage                38,784 to 80 by 95 nautical
                       ___    _~--                  mile, 28.6 degree orblt                      38,961”          39,169
                Inertial upper stage                5,250 +/- 90 to
                                                    aeosvnchronous orbit                          5.261             5.250
                Inertial upper stage                5,050 to 5,250 to
                                                    geosynchronous
                                                          -     .-.   orbit
                                                                       __     ~         _~      .- 5,208 ~-     ~~~5,175b
                                                                                                                       ~
                No upper stage                      32,000 to 100 nautical mile,
                                                    90 degree circular orbit                     32,908           32,912
                No upper stage                      c
                No upper stage                      38.764 to 80 by 95 nautical
                                                    mile, 28 6 degree orbit                                       39,169
                “As of December 1987
                “As of September 1989 An InertIaI upper stage program offlclal said that none of the payloads for this
                requirement are expected to weigh mare than 5,175 pounds.
                ‘The requirements and estimated capability for this conflguratlon are classified. However, program affl-
                clals sard they will be able to meet the confIguratIon’s requirements by meeting the preceding conflgur-
                ation’s requirements




               Page 30                                                         GAO/NSlAD-90-113      Titan N Program
Appendix II

Performance Capabilities of Various Titan IV -
Configurations With the Solid Rocket
Motor Upgrade
               Figures in pounds ~- -
               l_-----
                                                                                                                         Estimated
               Configuration                            Performance requirement                                          capability
               Centaur
                -__       upper stage                   12.700 to aeosvnchronous
                                                                   u       s
                                                                                            orbit                                11,500”
               Centaur
               _____-.----upper  stage ~~               14,500 to 12-hour orbit                                                  11,500a
               Inertial upper                                                                                                             h
                         ___ stage
                                                        h
                                   ~ _~-~ .~                                                   ~~ ~    -.-    -~    ~~      .-   --~
               No upper stage                           38,800 to 100 nautical mile,
                                                          90 degree circular orbIt”                                                       d
               --__        ___--          -
               No upper stage                           e                                                                        38,134
                                                                                                                   ----~~
               No upper stage                           48,800 to 80 by 90 nautical mile,
                                                          28 6 degree orblt”                                                              d


               “The estimated capabIlIty of the Centaur upper stage is lImIted to 11,500 pounds because of structural
               IImitations.

               bProgram officials said no reqwement and capabIlity estimates have been developed for this conflgura
               t~on, but they may be developed by the mld~l990s

               ‘These requirements are from the Air Force Program Management Directwe               All other requirements are
               system speclflcations from the users

               “Program officials have not yet estimated the performance       capabIlitIes of these conflgurations.

               The reqwements     are clawfled




               Page 31                                                            GAO/NSIAD-90-113           Titan IV Program
Appendix III

SelectedAcquisition Report Cost Estimates for
the Titm Iv Fvogmn

                                                 The Selected Acquisition Reports from 1985 to 1988 showed that the
                                                 Titan IV program cost estimate increased by $9.7 billion. Most of that
                                                 increase-$7.1 billion-occurred    between the 1987 and 1988 estimates,
                                                 mainly because 34 vehicles, the solid rocket motor upgrade, Vandenberg
                                                 and Cape Canaveral launch facilities, payload integration, and subcon-
                                                 tractor incentives were added to the 1988 estimate. Table III.1 details
                                                 these and other changes.


Table 111.1:Selected Acquisition Report Cost Estimates
Dollars   in millions
                                                                                                                                                Percent
                                                                                                                                                change
                                                                 1985                   1986              1987                 1988         since 1987
Research, development,    test, and evaluation                $641 .I                  $799.3         $1,359.2             $1,987.0                 46.2
Procurement                                                   1,888.l -..             3,315.3          3,559.i              9,994 8           ____-180.8
Military construction                                             0.0                   220.0            215.0                219.5                  2.1
Total’                                                      $2,529.2        -       $4,334.6         $5,133.5            $12,201.3                 137.7
Total cost per vehicle                                         $252.9       ..-.-     $188.5            $223 2---            $214.1
                                                                                                                               .____-               -4.1
                                                                                                                                         ____--
Total cost per launch                                             50 lb                 38.2b             37 9._____            39.F                  4.7
Total cost per vehicle plus launch                             $303                   $226 7            $261 .l
                                                                 .- 0                                                        $253.8
                                                                                                                              ..___I                -2.8
Number of vehicles procured                                         10                    23                23                    57               147.8
                                                 Note: The CDSt estrmates in the 1985 through 1987 reports are through fiscal year 1993; the estimates in
                                                 the 1988 report are through 1995
                                                 ‘According to a program officral, the 1985 through 1987 reports did not include other user funding for
                                                 developing the Tttan IV wrthout an upper stage or for modrfylng space launch complex 4E, whrch was an
                                                 oversrght by the program office. The offictal sard the 1988 report estimates included these costs
                                                 bThese estimates are In fiscal year 1985 dollars.


                                                 Although the total program cost estimates in the reports are accurate,
                                                 the specific amounts reported for the research, development, test, and
                                                 evaluation and procurement appropriations are not, according to pro-
                                                 gram officials, because the reports include funding by other users in the
                                                 procurement appropriation, A program official said the Air Force uses
                                                 this reporting practice to help ensure that the appropriations and
                                                 amounts from other users remain classified. Therefore, the procurement
                                                 estimates are overstated, and the research, development, test, and eval-
                                                 uation estimates are understated.




                                                 Page 32                                                         GAO/NSUD-W-113       Titan IV Program
Appendix IV

Major Contributors to This Report


                        Norman J. Rabkin, Associate Director
National Security and   Frank Degnan, Assistant Director
International Affairs
Division, Washington,
DC.

                        Richard Herrera, Regional Management Representative
Los Angeles Regional    Joseph R. Dewechter, Evaluator-in-Charge
Office                  Paula Mathews, Evaluator




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                                                                       Titan
                                                                          IVProgram
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