Issues Concerning the Department of Defense's Global Positioning System as It Enters Production

In response to a congressional request, GAO conducted a study of the Department of Defense's (DOD) Global Positioning System (GPS), a space-based radio navigation system being developed by the Air Force. GAO examined the reasonableness of the multiyear procurement strategy proposed for the space segment of the system, determined the status of the system's design and likely operational capabilities, and inquired about the user segment of the program and plans to phase out certain existing navigation systems.

A study of the multiyear procurement strategy for GPS disclosed that estimated procurement costs were uncertain and the associated savings, relative to the annual procurement strategy, were overstated. The current cost estimate for the spacecraft is based on budgetary estimates rather than on firm contractor price proposals. GAO stated that there are indications that the prime contractor will propose a higher cost than estimated. In addition, the savings which DOD projected are likely to be less than reported because planned outlays were not discounted using the present value analysis method. As the space segment of GPS enters production, technical and programmatic risks remain that could affect the stability of spacecraft design and the achievement of final operational capability by the target date. System design changes are being considered that could add considerable cost to the program if fully implemented. It is also questionable whether a sufficient number of satellites will be on-orbit by that time. DOD expects that a large portion of GPS costs will be offset by phasing out certain existing navigation systems and by charging fees to non-DOD users. The planned phase-out of existing systems is optimistic and whether an estimated annual cost avoidance of $153.5 million will result from it is questionable. GAO has found that the number of user sets which would be installed by the target date is less than one-third the number estimated by the Air Force. Further, GAO found that the potential revenue from non-DOD users of GPS is uncertain.