Defense Acquisitions
Improvements Needed in Space Systems Acquisition Policy to Optimize Growing Investment in Space Gao ID: GAO-04-253T November 18, 2003The Department of Defense is spending nearly $18 billion annually to develop, acquire, and operate satellites and other spacerelated systems. The majority of satellite programs that GAO has reviewed over the past 2 decades experienced problems that increased costs, delayed schedules, and increased performance risk. In some cases, capabilities have not been delivered to the warfighter after decades of development. DOD has recently implemented a new acquisition policy, which sets the stage for decision making on individual space programs. GAO was asked to testify on its assessment of the new policy.
Similar to all weapon system programs, we have found that the problems being experienced on space programs are largely rooted in a failure to match the customer's needs with the developer's resources--technical knowledge, timing, and funding--when starting product development. In other words, commitments were made to satellite launch dates, cost estimates, and delivering certain capabilities without knowing whether technologies being pursued could really work as intended. Time and costs were consistently underestimated. DOD has recognized this problem and recently revised its acquisition policy for non-space systems to ensure that requirements can be matched to resources at the time a product development starts. The space community, however, in its newly issued policy for space systems, has taken another approach. As currently written, and from our discussions with DOD officials about how it will be implemented, the policy will not result in the most important decision, to separate technology development from product development to ensure that a match is made between needs and resources. Instead, it allows major investment commitments to be made with unknowns about technology readiness, requirements, and funding. By not changing its current practice, DOD will likely perpetuate problems within individual programs that require more time and money to address than anticipated. More important, over the long run, the extra investment required to address these problems will likely prevent DOD from pursuing more advanced capabilities and from making effective tradeoff decisions between space and other weapon system programs.
GAO-04-253T, Defense Acquisitions: Improvements Needed in Space Systems Acquisition Policy to Optimize Growing Investment in Space
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Testimony:
Before the Subcommittee on Strategic Forces, Committee on Armed
Services, U.S. Senate:
United States General Accounting Office:
GAO:
For Release on Delivery Expected at 2:00 p.m. EST:
Tuesday, November 18, 2003:
DEFENSE ACQUISITIONS:
Improvements Needed in Space Systems Acquisition Policy to Optimize
Growing Investment in Space:
Statement of Robert E. Levin, Director Acquisition and Sourcing
Management:
GAO-04-253T:
GAO Highlights:
Highlights of GAO-04-253T, a report to Subcommittee on Strategic
Forces, Committee on Armed Services, U.S. Senate
Why GAO Did This Study:
The Department of Defense is spending nearly $18 billion annually to
develop, acquire, and operate satellites and other space-related
systems. The majority of satellite programs that GAO has reviewed over
the past 2 decades experienced problems that increased costs, delayed
schedules, and increased performance risk. In some cases, capabilities
have not been delivered to the warfighter after decades of
development.
DOD has recently implemented a new acquisition policy, which sets the
stage for decision making on individual space programs. GAO was asked
to testify on its assessment of the new policy.
What GAO Found:
Similar to all weapon system programs, we have found that the problems
being experienced on space programs are largely rooted in a failure to
match the customer‘s needs with the developer‘s resources”technical
knowledge, timing, and funding”when starting product development. In
other words, commitments were made to satellite launch dates, cost
estimates, and delivering certain capabilities without knowing whether
technologies being pursued could really work as intended. Time and
costs were consistently underestimated. DOD has recognized this
problem and recently revised its acquisition policy for non-space
systems to ensure that requirements can be matched to resources at the
time a product development starts. The space community, however, in
its newly issued policy for space systems, has taken another
approach.
As currently written, and from our discussions with DOD officials
about how it will be implemented, the policy will not result in the
most important decision, to separate technology development from
product development to ensure that a match is made between needs and
resources. Instead, it allows major investment commitments to be made
with unknowns about technology readiness, requirements, and funding.
By not changing its current practice, DOD will likely perpetuate
problems within individual programs that require more time and money
to address than anticipated. More important, over the long run, the
extra investment required to address these problems will likely
prevent DOD from pursuing more advanced capabilities and from making
effective tradeoff decisions between space and other weapon system
programs.
What GAO Recommends:
GAO did not make recommendations in its testimony. However, it
reiterated a previous recommendation that DOD modify its policy to
separate technology development from product development. DOD
disagreed with our earlier recommendation because it believes that the
modification would slow down acquisitions, increase risks, and keep
DOD from taking advantage of cutting edge technology. Our past work,
however, has consistently shown that time and risk are reduced and
capability is increased when programs begin with knowledge that
technologies can work as intended.
www.gao.gov/cgi-bin/getrpt?GAO-04-253T.
To view the full product, including the scope and methodology, click
on the link above. For more information, contact Katherine Schinasi or
Bob Levin at (202) 512-4841 or schinasik@gao.gov or levinr@gao.gov.
[End of section]
Mr. Chairman and Members of the Subcommittee:
I am pleased to be here today to discuss the Department of Defense's
(DOD) new space acquisition policy. This policy will be critical as DOD
strives to optimize its investment in space--which currently stands at
more than $18 billion[Footnote 1] annually, and is expected to grow
considerably over the next decade. DOD's space acquisitions have
experienced problems over the past several decades that have driven up
costs by hundreds of millions, even billions of dollars, stretched
schedules by years, and increased performance risks. In some cases,
capabilities have not been delivered to the war fighter after decades
of development.
Similar to all weapon system programs, we have found that the problems
being experienced on space programs are largely rooted in a failure to
match the customer's needs with the developer's resources--technical
knowledge, timing, and funding--when starting product development.
While DOD's new policy for space acquisitions may help to illuminate
gaps between needs and resources, it will not help DOD to close this
gap. More specifically, the policy allows programs to continue to
develop technologies after starting product development, which not only
means that costs and schedule will be more difficult to estimate, but
that there will be more risk that DOD will encounter technical problems
that could disrupt design and production and require more time and
money to address than anticipated. More important, over the long run,
the extra investment required to address these problems may likely
prevent DOD from pursuing more advanced technologies and from making
effective tradeoff decisions between space and other weapon system
programs.
By contrast, DOD is taking steps to better position its other
acquisition programs for success. Its revised acquisition policy for
non-space systems separates technology development and product
development.
The Importance of DOD's Space Systems is Growing:
DOD's current space network is comprised of constellations of
satellites, ground-based systems, and associated terminals and
receivers. Among other things, these assets are used to perform
intelligence, surveillance, and reconnaissance functions; perform
missile warning; provide communication services to DOD and other
government users; provide weather and environmental data; and provide
positioning and precise timing data to U.S. forces as well as national
security, civil, and commercial users.
All of these systems are playing an increasingly important role in
military operations. According to DOD officials, for example, in
Operation Iraqi Freedom, approximately 70 percent of weapons were
precision-guided, most of those using Global Positioning System (GPS)
capabilities. Weather satellites enabled war fighters to not only
prepare for, but also take advantage of blinding sandstorms.
Communication and intelligence satellites were also heavily used to
plan and carry out attacks and to assess post-strike damage. Some of
DOD's satellite systems--such as GPS--have also grown into
international use for civil and military applications and commercial
and personal uses. Moreover, the demand for space-based capabilities is
outpacing DOD's current capacity. For example, even though DOD has
augmented its own satellite communications capacity with commercial
satellites, in each major conflict of this past decade, senior military
commanders reported shortfalls in capacity, particularly for rapid
transmission of large data files, such as those created by imagery
sensors.
DOD is looking to space to play an even more pivotal role in future
military operations. As such, it is developing several families of new,
expensive, and technically challenging satellites, which are expected
to require dramatically increased investments over the next decade. For
example, DOD is building new satellites that will use laser optics to
transport information over long distances in much larger quantities
than radio waves. The system, known as the Transformational Satellite,
or TSAT, is to be the cornerstone of DOD's future communications
architecture. Many space, air, land, and sea-based systems will depend
on TSAT to receive and transmit large amounts of data to each other as
DOD moves toward a more "network centric" war-fighting approach. DOD is
also building a new space-based radar (SBR) system, which is to employ
synthetic aperture radar[Footnote 2] and other advanced technologies to
enable DOD to have 24-hour coverage over a large portion of the Earth
on a continuous basis and allow military forces a "deep-look" into
denied areas of interest, on a non-intrusive basis without risk to
personnel or resources. SBR itself is expected to generate large
amounts of imagery data, and it will rely on TSAT to deliver this data
to war fighters.
As figure 1 shows, the costs of these and other new efforts will
increase DOD's annual space investment significantly. For example,
based on the 2003 President's budget, acquisition costs for new
satellite programs and launch services in the next 4 years are expected
to grow by 115 percent--from $3.5 billion to about $7.5 billion. Costs
beyond that period are as yet unknown. While DOD's budget documents
show a decrease in 2009 for these systems to $6.4 billion--they do not
include procurement costs for some of the largest programs, including
TSAT, GPS III, SBR, Space Tracking and Surveillance System (STSS), and
Space-Based Surveillance System (SBSS), which DOD will begin fielding
beginning 2011. Nor do these numbers reflect the totality of DOD's
investment in space. For example, ground stations and user equipment
all require significant investment and that investment will likely
increase as the new programs mature.
Figure 1: DOD's Investment in New Programs through 2009:
[See PDF for image]
[End of figure]
Table 1 identifies specific programs factored into our analysis of
upcoming investments. It also shows that DOD will be fielding many of
the new programs within just a few years of each other.
Table 1: Satellites and Launch Services Currently Being Developed and
Planned:
Program: Evolved Expendable Launch Vehicle (EELV); Description:
Acquisition of commercial launch services from two competitive families
of launch vehicles; Status: Development; Year DOD plans to start
launching satellites or services: 2002.
Program: Wideband Gapfiller Satellite (WGS); Description: Satellites
based almost exclusively on commercial parts being developed by the Air
Force to provide interim communications support; Status: Production;
Year DOD plans to start launching satellites or services: 2004.
Program: Space Based Infrared System (SBIRS)-High; Description:
Ballistic missile detection system being developed by the Air Force to
replace its legacy detection system; Status: Development; Year DOD
plans to start launching satellites or services: 2006.
Program: Advanced Extremely High Frequency (AEHF) Communications
Satellite; Description: Communications satellite system being
developed by the Air Force to replace legacy protected communications
satellites; Status: Development; Year DOD plans to start launching
satellites or services: 2006.
Program: Space Tracking and Surveillance System (STSS) Block 2006;
Description: Two satellites that were developed under the SBIRS-Low
program that are going to be used as technology demonstrators in 2006-
2007 missile defense tests to assess whether missiles can be
effectively tracked from space; Status: Development; Year DOD plans to
start launching satellites or services: 2007.
Program: National Polar-orbiting Operational Environmental Satellite
System (NPOESS); Description: Weather satellites being developed by the
National Oceanic and Atmospheric Administration, the National
Aeronautics and Space Administration, and DOD to replace those in use
by the agencies; Status: Development; Year DOD plans to start launching
satellites or services: 2009.
Program: Mobile User Objective System (MUOS); Description: Navy effort
to develop a family of unprotected, narrow-band satellites that can
support mobile and fixed-site users worldwide; Status: Concept; Year
DOD plans to start launching satellites or services: 2009.
Program: Space Tracking and Surveillance System (STSS) Block 2010;
Description: A new constellation of ballistic missile detection and
tracking satellites being developed by the Missile Defense Agency;
Status: Pre Concept; Year DOD plans to start launching satellites or
services: 2011.
Program: Transformational Satellite (TSAT); Description:
Communications satellites being developed by the Air Force to employ
advanced technologies in support of DOD's future communications
architecture; Status: Concept. Expected to enter development late
2003.; Year DOD plans to start launching satellites or services: 2011.
Program: Space Based Surveillance System (SBSS); Description: A
constellation of satellites to be developed that can detect, track, and
characterize man-made objects in space; Status: Pre Concept; Year DOD
plans to start launching satellites or services: 2011.
Program: Space Based Radar System (SBR); Description: Reconnaissance
satellites being developed by the Air Force to provide 24-hour global
coverage; Status: Concept; Year DOD plans to start launching satellites
or services: 2012.
Program: Global Positioning System (GPS) III; Description: New version
of GPS being developed to add advanced jam resistant capabilities and
provide higher quality and more secure navigational capabilities.;
Status: Concept; Year DOD plans to start launching satellites or
services: 2012.
[End of table]
Grounding Decisions in Knowledge is Vital for DOD's Space Investment:
For the past 6 years, we have been examining ways DOD can get better
outcomes from its investment in weapon systems, drawing on lessons
learned from the best, mostly commercial, product development
efforts.[Footnote 3] Our work has shown that leading commercial firms
expect that their managers will deliver high quality products on time
and within budgets. Doing otherwise could result in losing a customer
in the short term and losing the company in the long term. Thus, these
firms have adopted practices that put their individual programs in a
good position to succeed in meeting these expectations on individual
products. Collectively, these practices ensure that a high level of
knowledge exists about critical facets of the product at key junctures
and is used to make decisions to deliver capability as promised. We
have assessed DOD's space acquisition policy as well as its revised
acquisition policy for other weapon systems against these practices.
Our reviews have shown that there are three critical junctures at which
firms must have knowledge to make large investment decisions. First,
before a product development is started, a match must be made between
the customers' needs and the available resources--technical and
engineering knowledge, time, and funding. Second, a product's design
must demonstrate its ability to meet performance requirements and be
stable about midway through development. Third, the developer must show
that the product can be manufactured within cost, schedule, and quality
targets and is demonstrated to be reliable before production begins. If
the knowledge attained at each juncture does not confirm the business
case on which the acquisition was originally justified, the program
does not go forward. These precepts hold for technically complex, high
volume programs as well as low volume programs such as satellites.
In applying the knowledge-based approach, the most-leveraged investment
point is the first: matching the customer's needs with the developer's
resources. The timing of this match sets the stage for the eventual
outcome--desirable or problematic. The match is ultimately achieved in
every development program, but in successful development programs, it
occurs before product development begins. When the needs and resources
match is not made before product development, realistic cost and
schedule projections become extremely difficult to make. Moreover,
technical problems can disrupt design and production efforts. Thus,
leading firms make an important distinction between technology
development and product development. Technologies that are not ready
continue to be developed in the technology base--they are not included
in a product development.
With technologically achievable requirements and commitment of
sufficient resources to complete the development, programs are better
able to deliver products at cost and on schedule. When knowledge lags,
risks are introduced into the acquisition process that can result in
cost overruns, schedule delays, and inconsistent product performance.
As we recently testified,[Footnote 4] such problems, in turn, can
reduce the buying power of the defense dollar, delay capabilities for
the war fighter, and force unplanned--and possibly unnecessary--trade-
offs in desired acquisition quantities and an adverse ripple effort
among other weapon programs or defense needs. Moreover, as DOD moves
more toward a system-of-systems approach--where systems are being
designed to be highly interdependent and interoperable--it is
exceedingly important that each individual program stay on track.
Decisions on Space Programs Have Not Been Sufficiently Grounded in
Knowledge:
Our past work[Footnote 5] has shown that space programs have not
typically achieved a match between needs and resources before starting
product development. Instead, product development was often started
based on a rigid set of requirements and a hope that technology would
develop on a schedule. At times, even more requirements were added
after the program began. When technology did not perform as planned,
adding resources in terms of time and money became the primary option
for solving problems, since customer expectations about the products'
performance already became hardened.
For example, after starting its Advanced Extremely High Frequency
(AEHF) communications satellite program, DOD substantially and
frequently changed requirements. In addition, after the launch failure
of one of DOD's legacy communications satellites, DOD decided to
accelerate its plans to build AEHF satellites. The contractors
proposed, and DOD accepted, a high risk schedule that turned out to be
overly optimistic and highly compressed, leaving little room for error
and depending on a precise chain of events taking place at certain
times. Moreover, at the time DOD decided to accelerate the program, it
did not have funding needed to support the activities and manpower
needed to design and build the satellites quicker. The effects of DOD's
inability to match needs to resources were significant. Total program
cost estimates produced by the Air Force reflected an increase from
$4.4 billion in January 1999 to $5.6 billion in June 2001--a difference
of 26 percent. Although considered necessary, many changes to
requirements were substantial, leading to cost increases of hundreds of
millions of dollars because they required major design modifications.
Also, schedule delays occurred when some events did not occur on time,
and additional delays occurred when the program faced funding gaps.
Scheduling delays eventually culminated into a 2-year delay in the
launch of the first satellite. We also reported that there were still
technical and production risks that need to be overcome in the AEHF
program, such as a less-than-mature satellite antenna system and
complications associated with the production of the system's
information security system.
Another example can be found with DOD's Space-Based Infrared System
(SBIRS)-High program, which is focused on building high-orbiting
satellites that can detect ballistic missile launches. Over time, costs
have more than doubled for this program. Originally, total development
costs for SBIRS-High were estimated at $1.8 billion. In the fall of
2001, DOD identified potential cost growth of $2 billion or more,
triggering a mandatory review and recertification under 10 U.S.C.
section 2433.[Footnote 6] Currently, the Air Force estimates research
and development costs for SBIRS-High to be $4.4 billion. We reported
that when DOD's SBIRS-High satellite program began in 1994, none of its
critical technologies were mature. Moreover, according to a DOD-
chartered independent review team, the complexity, schedule, and
resources needed to develop SBIRS-High, in hindsight, were
misunderstood when the program began. This led to an immature
understanding of how requirements translated into detailed engineering
solutions. We recently reported[Footnote 7] to this subcommittee that
while the SBIRS restructuring implemented a number of needed management
changes, the program continues to experience problems and risks related
to changing requirements, design instability, and software development
concerns. We concluded that if the Air Force continues to add new
requirements and program content while prolonging efforts to resolve
requirements that cannot be met, the program will remain at risk of not
achieving, within schedule, its intended purposes--to provide an early
warning and tracking system superior to that of its current ballistic
missile detection system.
DOD has also initiated several programs and spent several billion
dollars over the past 2 decades to develop low-orbiting satellites that
can track ballistic missiles throughout their flight. However, it has
not launched a single satellite to perform this capability. We have
reported[Footnote 8] that a primary problem affecting these particular
programs was that DOD and the Air Force did not relax rigid
requirements to more closely match technical capabilities that were
achievable. Program baselines were based on artificial time and/or
money constraints. Over time, it became apparent that the lack of
knowledge of program challenges had led to overly optimistic schedules
and budgets that were funded at less than what was needed. Attempts to
stay on schedule by approving critical milestones without meeting
program criteria resulted in higher costs and more slips in technology
development efforts. For example, our 1997 and 2001 reviews of DOD's
$1.7 billion SBIRS-Low program (which was originally a part of the
SBIRS-High program) showed that the program would enter into the
product development phase with critical technologies that were immature
and with optimistic deployment schedules. Some of these technologies
were so critical that SBIRS-Low would not be able to perform its
mission if they were not available when needed. DOD eventually
restructured the SBIRS-Low program because of the cost and scheduling
problems, and it put the equipment it had partially built into storage.
In view of the program's mismatch between expectations and what it
could achieve, the Congress directed DOD to restructure the program
(now under the responsibility of the Missile Defense Agency) as a
research and development effort.
New Space Policy Allows Programs to Go Forward with Key Unknowns:
DOD's new space acquisition policy may help increase insight into gaps
between needs and resources, but it does not require programs to close
this gap before starting product development. In other words, the new
policy does not alter DOD's practice of committing major investments
before knowing what resources will be required to deliver promised
capability.
There are tools being adopted under the new policy that can enable DOD
to better predict risks and estimate costs. Similar tools are also
being adopted by other weapon system programs. For example:
* DOD is requiring that all space programs conduct technology maturity
assessments before key oversight decisions to assess the maturity level
of technology.
* DOD is requiring space programs to more rigorously assess
alternatives, consider how their systems will operate in the context of
larger families of systems, and think through operational, technical,
and system requirements before programs are started.
* The new policy seeks to improve the accuracy of cost estimates by
establishing an independent cost estimating process in partnership with
DOD's Cost Analysis Improvement Group (CAIG) and by adopting
methodologies and tools used by the National Reconnaissance Office. To
ensure timely cost analyses, the CAIG will augment its own staff with
cost estimating personnel drawn from across the entire national
security space cost estimating community.
Moreover, to facilitate faster decision-making on programs, the policy
also calls for independent program assessments to be performed on space
programs nearing key decision points. The teams performing these
assessments are to be drawn from experts who are not directly
affiliated with the program, and they are to spend about 8 weeks
studying the program, particularly the acquisition strategy,
contracting information, cost analyses, system engineering, and
requirements. After this study, the team is to conclude its work with
recommendations to the Under Secretary of the Air Force, as DOD's
milestone decision authority for all DOD major defense acquisition
programs for space, on whether or not to allow the program to proceed,
typically using the traditional "red," "yellow", and "green" assessment
colors to indicate whether the program has satisfied key criteria in
areas such as requirements setting, cost estimates, and risk reduction.
The benefits that can be derived from tools called for by the space
acquisition policy, however, will be limited since the policy allows
programs to continue to develop technologies while they are designing
the system and undertaking other product development activities. As
illustrated below, this is a very different and important departure
from DOD's acquisition policy for other weapon systems.
Figure 2: Key Decision Points for DOD's Acquisition Policies for Weapon
Systems and Space Systems:
[See PDF for image]
Note: According to DOD officials, while technology development is
expected to ramp down during phase B, in some instances technology
development could even continue after key decision point C or critical
design review. Thus, technology development is depicted in a lighter
shade after decision point C.
[End of figure]
As we reported[Footnote 9] last week, the revised acquisition policy
for non-space systems establishes mature technologies--that is,
technologies demonstrated in a relevant environment--as critical before
entering product development. By encouraging programs to do so, the
policy puts programs in a better position to deliver capability to the
war fighter in a timely fashion and within funding estimates because
program managers can focus on the design, system integration, and
manufacturing tasks needed to produce a product. By contrast, the space
acquisition policy increases the risk that significant problems will be
discovered late in development because programs are expected to go into
development with many unknowns about technology. In fact, DOD officials
stated that technologies may well enter product development at a stage
where basic components have only been tested in a laboratory, or an
even lower level of maturity. This means that programs will still be
grappling with the shapes and sizes of individual components while they
are also trying to design the overall system and conduct other program
activities. In essence, DOD will be concurrently building knowledge
about technology and design--an approach with a problematic history
that results in a cycle of changes, defects, and delays. Further, the
consequences of problems experienced during development will be much
greater for space programs since, under the new space acquisition
policy, critical design review occurs at the same time as the
commitment to build and deliver the first product to a customer. It is
thus possible that the design review will signify a greater commitment
on a satellite program at the same time less knowledge will be
available to make that commitment.
An upcoming decision by DOD on the new TSAT program represents the
potential risks posed by the new space acquisition policy. The $12
billion program is scheduled to start product development in December
2003, meaning that the Air Force will formally commit to this
investment and, as required by law,[Footnote 10] set goals on cost,
schedule and performance. However, at present, TSAT's critical
technologies are underdeveloped, leaving the Air Force without the
knowledge needed to build an effective business case for going forward
with this massive investment. In fact, most of the technologies for
TSAT are at a stage where most of the work performed so far has been
based on analytical studies and a few laboratory tests or, at best,
some key components have been wired and integrated and have been
demonstrated to work together in a laboratory environment. The program
does not know yet whether TSAT's key technologies can effectively work,
let alone work together in the harsh space environment for which they
are intended. Yet the space acquisition policy allows the Air Force to
move the program forward and to set cost, schedule, and performance
goals in the face of these unknowns. Moreover, the Air Force has scaled
back its AEHF program, whose technologies are more mature, to help pay
for TSAT's development. Making tradeoff decisions between alternative
investments is difficult at best. Yet doing so without a solid
knowledge basis only compounds the risk of failures. Our work on
program after program has demonstrated that DOD's optimism has rarely
been justified.
Changes Needed to Optimize DOD's Investment in Space:
The growing importance of space systems to military and civil
operations requires DOD to achieve timely delivery of high quality
capability. New space systems not only need to support important
missions such as missile defense and reconnaissance, they need to help
DOD move toward a more "network centric" warfighting approach. At the
same time, given its desire to transform how military operations are
conducted, DOD must find ways to optimize its overall investment on
weapon systems since the transformation will require DOD to develop new
cutting edge systems while concurrently maintaining and operating
legacy systems--a costly proposition. Recognizing the need to optimize
its investment, DOD has expressed a desire to move toward an "effects-
based" investment approach, where decisions to acquire new systems are
made based on needs and joint interests versus annual budgets and
parochial interests.
Changing the new space acquisition policy to clearly separate
technology development from product development is an essential first
step toward optimizing DOD's space investment and assuring more timely
delivery of capability since it enables a program to align customer
expectations with resources, and therefore minimize problems that could
hurt a program in its design and production phase. Thus, we recommended
that DOD make this change in our recent report on the new space
acquisition policy.[Footnote 11] DOD did not agree with our
recommendation because it believed that it needs to keep up with the
fast-paced development of advanced technologies for space systems, and
that its policy provides the best avenue for doing so. In fact, it is
DOD's long-standing and continuous inability to bring the benefits of
technology to the war fighter in a timely manner that underlies our
concerns about the policy for space acquisitions. In our reviews of
numerous DOD programs, including many satellite developments, it has
been clear that committing to major investments in design, engineering,
and manufacturing capacity without knowing a technology is mature and
what resources are needed to ensure that the technology can be
incorporated into a weapon system has consistently resulted in more
money, time, and talent spent than either was promised, planned for, or
necessary. The impact of such high risk decisions has also had a
damaging effect on military capability as other programs are taxed to
meet unplanned cost increases and product units are often cut because
unit costs increase and funds run out. Moreover, as it moves toward a
more interdependent environment, DOD can simply no longer afford to
misestimate the cost and time to field capabilities--such as TSAT--
since they are needed to support other applications.
Further, policy changes are just a first step toward optimizing DOD's
investment in space and other weapon systems. There are also some
changes that need to be made at a corporate level to foster a
knowledge-based acquisition approach. As we have reported in the past,
DOD needs to remove incentives that drive premature product development
decisions. This means embracing a willingness to invest in technology
development outside a program as well as alleviating pressures to get
new acquisition programs approved and funded on the basis of
requirements that must beat out all other alternatives. Other changes-
-some of which have been recognized by recent DOD studies on space
acquisitions--include:
* Keeping key people in place long enough so that they can affect
decisions and be held accountable. Part of the solution would be to
shorten product development times.
* Providing program offices with the capability needed to craft
acquisition approaches that implement policy and to effectively oversee
the execution of programs by contractors.
* Realigning responsibilities and funding between science and
technology organizations and acquisition organizations to enable the
separation of technology development from product development.
* Bringing discipline to the requirements-setting process by demanding
a match between requirements and resources.
* Designing and implementing test programs that deliver knowledge when
needed, including reliability testing early in design.
Lastly, DOD leadership can use this knowledge-based approach to
effectively rebalance its investment portfolio. For programs whose
original justification was based on assumptions of cost, schedule and
performance that have not been realized, having a consistent set of
standards allows DOD and the Congress to reevaluate alternatives and
make investment decisions across programs that increase the likelihood
that the war fighter will have the best possible mix of capabilities in
a timely fashion.
In conclusion, using an approach for managing weapon system investments
based on knowledge instead of promises can help DOD fully leverage the
value of its investment dollars. At a time when the nation is facing a
large and growing fiscal gap, DOD's $150 billion annual investment in
the acquisition of new weapons is the single largest area of
discretionary spending. While there are differing views on what weapons
DOD should or should not invest in and how much should be invested,
there cannot be any disagreement that within this fiscal environment,
once a consensus has been reached on the level of investment and the
specific weapons to be acquired, we should get those weapons for what
was estimated in the budget. While DOD's revised acquisition policy for
non-space systems puts DOD on a better footing toward this end, DOD's
acquisition policy for space systems does not because it allows
programs to proceed into product development before knowing what their
true costs will be. Therefore, we continue to recommend that DOD modify
its policy to separate technology development from product development
so that needs can be matched with available technology, time, and money
at the start of a new development program.
Mr. Chairman and Members of the Subcommittee, this concludes my
statement. I would be happy to respond to any questions that you or
other members of the Subcommittee may have.
Scope and Methodology:
In preparing for this testimony, we relied on previously issued GAO
reports on DOD's space acquisition policy, common problems affecting
space acquisitions, SBIRS-High and other individual programs, as well
as our reports on best practices for weapon systems development. We
also analyzed DOD's Future Years Defense Program to assess investment
trends. In addition, we reviewed DOD reports on satellite acquisition
problems. We conducted our review between October 29 and November 14,
2003 in accordance with generally accepted government auditing
standards.
Contacts and Acknowledgements:
For future information, please contact Katherine Schinasi or Bob Levin
at (202) 512-4841 or by email at schinasik@gao.gov or levinr@gao.gov
Individuals making key contributions to this testimony include Cristina
Chaplain, Jean Harker, and Art Gallegos.
FOOTNOTES
[1] This includes research, development and testing; procurement; and
operations and maintenance accounts.
[2] Synthetic Aperture Radar (SAR) "synthesizes" an antenna --a very
long antenna --by taking radar samples looking sideways along a flight
path of an aircraft or satellite, taking advantage of the fact that the
ground and objects on the ground are essentially stationary during the
fly-by time. The synthesized radar signals can be used to generate
quality resolution ground imagery.
[3] For example, see U.S. General Accounting Office, Best Practices:
Better Matching of Needs and Resources Will Lead to Better Weapon
System Outcomes, GAO-01-288 (Washington, D.C.: March 8, 2001). Best
Practices: Better Management of Technology Development Can Improve
Weapon System Outcomes, GAO/NSIAD-99-162 (Washington, D.C.: July 30,
1999). Best Practices: Capturing Design and Manufacturing Knowledge
Early Improves Acquisition Outcomes, GAO-02-701 (Washington, D.C.: July
15, 2002).
[4] U.S. General Accounting Office. Best Practices: Better Acquisition
Outcomes Are Possible If DOD Can Apply Lessons from F/A-22 Program,
GAO-03-645T (Washington, D.C.: April 11, 2003).
[5] U.S. General Accounting Office. Military Space Operations: Common
Problems and Their Effects on Satellite and Related Acquisitions,
GAO-03-825R (Washington, D.C.: June 2, 2003).
[6] This unit cost reporting mechanism, which also applies to
procurement unit cost for procurement programs, originated with the
Nunn-McCurdy Amendment to the Department of Defense Authorization Act,
1982. The amendment, as revised, was made permanent law in the
following year's authorization act. Known as Nunn-McCurdy "breaches,"
program unit cost increases of 15 percent or more trigger a requirement
for detailed reporting to Congress about the program. Increases of 25
percent or more also trigger the requirement for Secretary of Defense
certification.
[7] U.S. General Accounting Office. Defense Acquisitions: Despite
Restructuring, SBIRS High Program Remains at Risk of Cost and Schedule
Overruns, GAO-04-48 (Washington, D.C.: October 31, 2003).
[8] U.S. General Accounting Office, Missile Defense: Alternate
Approaches to Space Tracking and Surveillance System Need to Be
Considered, GAO-03-597 (Washington, D.C.: May 23, 2003) and Defense
Acquisitions: Space-Based Infrared System-Low At Risk of Missing
Initial Deployment Date, GAO-01-6 (Washington, D.C.: February 28,
2001).
[9] U.S. General Accounting Office. Defense Acquisitions: DOD's Revised
Policy Emphasizes Best Practices But More Controls Are Needed,
GAO-04-53 (Washington, D.C.: November 10, 2003).
[10] 10 U.S.C. Sections 2220 and 2435.
[11] U.S. General Accounting Office. Defense Acquisitions: Improvements
Needed in Space Systems Acquisition Management Policy, GAO-03-1073
(Washington, D.C.: September 15, 2003).
