Space Acquisitions
Major Space Programs Still at Risk for Cost and Schedule Increases Gao ID: GAO-08-552T March 4, 2008Each year, the Department of Defense (DOD) spends billions of dollars to acquire space-based capabilities to support current military and other government operations as well as to enable DOD to transform the way it collects and disseminates information, gathers data on adversaries, and attacks targets. In fiscal year 2009 alone, DOD expects to spend over $10 billion to develop and procure satellites and other space systems. At the same time, however, DOD's space system 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 warfighter after decades of development. This testimony relies on the extensive body of work GAO has produced reviewing DOD space acquisitions. It comments on the persistent problems affecting space acquisitions, the actions DOD has been taking to address these problems, and what remains to be done.
The majority of major acquisition programs in DOD's space portfolio have experienced problems during the past two decades that have driven up cost and schedules and increased technical risks. At times, cost growth has come close to or exceeded 100 percent, causing DOD to nearly double its investment in the face of technical and other problems without realizing a better return. Along with the increases, many programs are experiencing significant schedule delays--as much as 7 years--postponing delivery of promised capabilities to the warfighter. Outcomes have been so disappointing in some cases that DOD has had to go back to the drawing board to consider new ways to achieve the same, or less, capability. Our past work has identified a number of causes behind the cost growth and related problems. These include: optimistic cost and schedule estimating; the tendency to start programs with too many unknowns about technology; inadequate contracting strategies; contract and program management weaknesses; the loss of technical expertise; capability gaps in the industrial base; tensions between labs that develop technologies for the future and acquisition programs; divergent needs in users of space systems; and diffuse leadership. DOD has taken a number of actions to address the problems that GAO has reported on. These include initiatives at the department level that will affect all major weapons programs, as well as changes in course within specific Air Force programs. Most notable, the Air Force has sustained its commitment to reduce technology risks in programs and acted to restructure new programs so that its space portfolio can be more affordable. These actions are a step in the right direction and will be effective, particularly if they are complemented by more accurate cost estimating; continued prioritization of investments; actions to address capacity shortfalls, such as low-cost launch and shortages of staff in program offices; and changes to acquisition policies to reflect the best practices the Air Force is committing to.
GAO-08-552T, Space Acquisitions: Major Space Programs Still at Risk for Cost and Schedule Increases
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Testimony:
Before the Subcommittee on Strategic Forces, Committee on Armed
Services, U.S. Senate:
United States Government Accountability Office:
GAO:
For Release on Delivery Expected at 2:30 p.m. EST:
Tuesday, March 4, 2008:
Space Acquisitions:
Major Space Programs Still at Risk for Cost and Schedule Increases:
Statement of Cristina T. Chaplain, Director:
Acquisition and Sourcing Management:
GAO-08-552T:
GAO Highlights:
Highlights of GAO-08-552T, a testimony before the Subcommittee on
Strategic Forces, Committee on Armed Services, U.S. Senate.
Why GAO Did This Study:
Each year, the Department of Defense (DOD) spends billions of dollars
to acquire space-based capabilities to support current military and
other government operations as well as to enable DOD to transform the
way it collects and disseminates information, gathers data on
adversaries, and attacks targets. In fiscal year 2009 alone, DOD
expects to spend over $10 billion to develop and procure satellites and
other space systems.
At the same time, however, DOD‘s space system 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 warfighter after decades of
development.
This testimony relies on the extensive body of work GAO has produced
reviewing DOD space acquisitions. It comments on the persistent
problems affecting space acquisitions, the actions DOD has been taking
to address these problems, and what remains to be done.
What GAO Found:
The majority of major acquisition programs in DOD‘s space portfolio
have experienced problems during the past two decades that have driven
up cost and schedules and increased technical risks. At times, cost
growth has come close to or exceeded 100 percent, causing DOD to nearly
double its investment in the face of technical and other problems
without realizing a better return. Along with the increases, many
programs are experiencing significant schedule delays”as much as 7
years”postponing delivery of promised capabilities to the warfighter.
Outcomes have been so disappointing in some cases that DOD has had to
go back to the drawing board to consider new ways to achieve the same,
or less, capability.
Our past work has identified a number of causes behind the cost growth
and related problems. These include: optimistic cost and schedule
estimating; the tendency to start programs with too many unknowns about
technology; inadequate contracting strategies; contract and program
management weaknesses; the loss of technical expertise; capability gaps
in the industrial base; tensions between labs that develop technologies
for the future and acquisition programs; divergent needs in users of
space systems; and diffuse leadership.
DOD has taken a number of actions to address the problems that GAO has
reported on. These include initiatives at the department level that
will affect all major weapons programs, as well as changes in course
within specific Air Force programs. Most notable, the Air Force has
sustained its commitment to reduce technology risks in programs and
acted to restructure new programs so that its space portfolio can be
more affordable. These actions are a step in the right direction and
will be effective, particularly if they are complemented by more
accurate cost estimating; continued prioritization of investments;
actions to address capacity shortfalls, such as low-cost launch and
shortages of staff in program offices; and changes to acquisition
policies to reflect the best practices the Air Force is committing to.
To view the full product, including the scope and methodology, click on
[hyperlink, http://www.GAO-08-552T]. For more information, contact
Cristina Chaplain at (202) 512-4841 or chaplainc@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) space acquisitions. Each year, DOD spends billions of dollars to
acquire space-based capabilities to support current military and other
government operations as well as to enable DOD to transform the way it
collects and disseminates information, gathers data on adversaries, and
attacks targets. In fiscal year 2009 alone, DOD expects to spend over
$10 billion to strengthen space-based capabilities and $7.6 billion of
this amount is targeted for selected major space acquisition efforts.
At the same time, however, DOD's space system 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 warfighter after decades of
development. Today, we are here to comment on what problems affecting
space acquisitions still persist, what actions DOD has been taking to
address these problems and what remains to be done. In general, we
found this year that space programs that have been troubled in recent
years still face problems that are driving up costs and schedule. At
the same time, senior leadership has remained committed to reducing
technology risks and ensuring newer programs are more affordable.
Investment prioritizing, realistic cost estimating, policy changes, and
other actions we identify can help this commitment take further hold.
Space Acquisition Problems Persist:
The majority of major acquisition programs in DOD's space portfolio
have experienced problems during the past two decades that have driven
up cost and schedules and increased technical risks. Several programs
have been restructured by DOD in the face of delays and cost growth. At
times, cost growth has come close to or exceeded 100 percent, causing
DOD to nearly double its investment in the face of technical and other
problems without realizing a better return on investment. Along with
the increases, many programs are experiencing significant schedule
delays--as much as 7 years--postponing delivery of promised
capabilities to the warfighter. Outcomes have been so disappointing in
some cases that DOD has had to go back to the drawing board to consider
new ways to achieve the same, or less, capability.
As figures 1 and 2 below indicate, five programs that were begun in the
late 1990s / early 2000s to replenish aging constellations of
satellites have incurred substantial cost growth and schedule delays,
including the (1) the Advanced Extremely High Frequency (AEHF)
communications satellite program, (2) the National Polar-orbiting
Operational Environmental Satellite System (NPOESS), which DOD is
jointly developing with the National Oceanic and Atmospheric
Administration, (3) the Space Based Infrared System (SBIRS), which
detects missile launches, (4) the Wideband Global SATCOM (WGS), another
communications satellite, and (5) the Global Positioning System (GPS)
IIF program. Last year we reported that AEHF and WGS had worked through
the bulk of their technical problems. Since our testimony, the first
WGS satellite was launched, but the AEHF program experienced technical
problems with hardware components that have pushed back its first
launch date by 6 months. Also, this year, as described below, we found
that NPOESS and SBIRS still face very high risks, even after recent
acquisition replanning efforts. Further, GPS IIF has experienced
additional technical problems.
* SBIRS continues to face cost and schedule setbacks. Software problems
have recently delayed the first satellite launch by about a year, which
will likely increase the program's overall delay to roughly 7 years.
Correcting the problems may necessitate hardware and software changes
that could, according to the Air Force, also drive cost increases up to
$1 billion, which would be in addition to the $6 billion cost growth
already incurred. Management-reserves expenditure continues at an
unsustainable rate. Program officials acknowledge that management
reserves set aside to fix unexpected problems will likely be depleted
in early 2009, even though the reserves were intended to last through
2012. Given the complexity of the SBIRS satellites, it is possible that
further design flaws may be discovered, leading to more cost and
schedule increases. If management reserves are depleted and not
replenished, the program will likely experience further cost and
schedule problems.
* In July 2007, the NPOESS program finalized its restructure in
response to a Nunn-McCurdy (10 U.S.C. § 2433) program acquisition unit
breach of the critical cost growth threshold. The restructure included
about an additional $4.1 billion, or about a 49 percent, life-cycle
cost increase for fewer satellites to be acquired, delays in satellite
launches, and deletions or replacements of satellite sensors. The
restructure also included removing 7 of the original 14 critical
technologies from the program. Furthermore, 3 of the remaining
technologies remain immature and the program continues to experience
development problems, increasing risks of further problems. At this
point, the program has seen a 153 percent unit cost increase.
* The GPS IIF program has faced technical challenges in completing
development and production, causing another schedule delay in the
launch of the first IIF satellite--over a 2-year slip from the original
launch date of December 2006 to February 2009. Moreover, the program
continues to face cost increases due to these technical problems.
Specifically, the program has requested over $100 million for fiscal
years 2008 and 2009 to cover the estimated cost overruns to complete
production of the first three space vehicles. In addition, program
officials are concerned that additional funds may be needed to complete
this program if additional delays are incurred--the program has already
spent $1.2 billion to date, which represents about 77-percent of the
total cost originally estimated for the program. (Note: The chart below
reflects a larger cost because it includes estimates for the GPS IIR,
IIR-M, and IIF blocks of the GPS program.)
Figure 1: Differences in Total Program Costs from Program Start and
Most Recent Estimates:
This figure is a combination bar graph showing the differences in total
program costs from program start and most recent estimates. One bar
represents the initial estimate, and the other bar represents the most
recent estimate.
[See PDF for image]
Source: GAO analysis of DOD data.
Note: MUOS is the Mobile User Objective System.
[End of figure]
Figure 2: Additional Months Needed since Program Start:
This figure is a bar graph showing a additional months needed since
program start.
[See PDF for image]
Source: GAO analysis of DOD data.
[End of figure]
Not all of DOD's space programs are facing the problems being
experienced by GPS, NPOESS, and SBIRS. For example, the Navy's Mobile
User Objective System (MUOS), another communications satellite program,
is meeting cost and schedule goals. Further, as discussed later in this
testimony, newer Air Force acquisition efforts such as the
Transformational Satellite Communications System (TSAT) and Space Radar
have been taking actions to ensure they can meet their cost and
schedule goals, though their funding has been reduced in light of
overall affordability of space acquisitions. These two efforts were
highly complex and ambitious and were predicted to be the most
expensive military satellite developments ever.
In addition, in December 2005, the Air Force was directed to begin
efforts to develop competing capability in parallel with the SBIRS
program; this effort was previously known as the Alternative Infrared
Satellite System (AIRSS). We reported in September 2007 that DOD had
not positioned the AIRSS effort for success. DOD agreed, and revised
the effort's development strategy to reflect best practices. The effort
has a new name, the Third Generation Infrared Surveillance (Third Gen),
and is now a follow on to the SBIRS program. The first sensor
prototypes are expected later this month.
Lastly, our annual weapons system assessment this year will be
reporting on challenges faced by the Evolved Expendable Launch Vehicle
(EELV) program, as the two providers--Boeing and Lockheed Martin--
undertake a joint venture that will provide U.S. government launches of
medium-to heavy-lift rockets. The consolidation of production,
engineering, test, and launch operations under the joint venture,
called the United Launch Alliance or ULA, is expected to yield cost
savings in the future, but when and how much remains unknown. ULA
expects the consolidation to be nearly complete by the end of 2010, but
there are preliminary indications that some elements of the
consolidation are falling behind schedule.
Furthermore, the Air Force revised its acquisition and contracting
strategy for EELV in 2005, which among other things increased program
office oversight responsibilities. The change in contracting strategy
created new data analysis activities for the program and expanded the
types of expertise needed by the program office to utilize the new
information provided by contractors. Despite its increased
responsibilities, the program office is experiencing staff reductions
and expects staffing vacancies to continue in the near term. The
current military staff lacks some of the technical expertise needed to
fully analyze contractor performance data now being collected under the
new contracting strategy.
Causes of Acquisition Problems in Space Programs:
Our work has identified a variety of reasons for this cost growth, most
notably that weapons programs are incentivized to produce and use
optimistic cost and schedule estimates in order to successfully compete
for funding. We have also found that DOD starts its space programs too
early, that is, before it has assurance that the capabilities it is
pursuing can be achieved within available resources and time
constraints.
We have also tied acquisition problems in space to inadequate
contracting strategies; contract and program management weaknesses; the
loss of technical expertise; capability gaps in the industrial base;
tensions between labs that develop technologies for the future and
current acquisition programs; divergent needs in users of space
systems; diffuse leadership; and other issues that have been well
documented in DOD and GAO studies.
Figure 3: Key Underlying Problems:
This figure is a chart showing key underlying problems. Broken
acquisitions is positioned in the middle, with problems branching from
the middle in a circular formation.
Technology immature;
Software needs poorly understood;
Requirements unstable;
Funding unstable;
Inadequate contracting strategy;
Inadequate contractor oversight;
Alternatives not considered;
Optimistic cost & schedule estimates.
[See PDF for image]
Source: GAO.
[End of figure]
Many of these underlying issues affect the broader weapons portfolio as
well, though we have reported that space programs are particularly
affected by the wide disparity of users, who include DOD, the
intelligence community, other federal agencies, and in some cases,
other countries and U.S. business and citizens. Moreover, problematic
implementation of an acquisition strategy in the 1990s, known as Total
System Performance Responsibility, for space systems resulted in losses
of technical expertise and weaknesses in contracting strategies that
space programs are still dealing with the effects of.
Actions Needed to Address Space and Weapon Acquisition Problems:
Over the past decade, we have identified best practices that DOD space
programs can benefit from. DOD has taken a number of actions to address
the problems that we have reported on. These include initiatives at the
department level that will affect its major weapons programs, as well
as changes in course within specific Air Force programs. Although these
actions are a step in the right direction, additional leadership and
support are still needed to ensure that reforms that DOD has begun will
take hold.
Our work--which is largely based on best practices in the commercial
sector--has recommended numerous actions that can be taken to address
the problems we identified. Generally, we have recommended that DOD
separate technology discovery from acquisition, follow an incremental
path toward meeting user needs, match resources and requirements at
program start, and use quantifiable data and demonstrable knowledge to
make decisions to move to next phases. We have also identified
practices related to cost estimating, program manager tenure, quality
assurance, technology transition, and an array of other aspects of
acquisition program management that space programs could benefit from.
Table 1 highlights these practices; appendix II provides more detail.
Table 1: Highlights of Commercial Best Practices Identified in GAO
Reports That Space Programs Can Benefit From:
Before Undertaking New Programs.
* Prioritize investments so that projects can be fully funded and it is
clear where projects stand in relation to the overall portfolio.
* Follow an evolutionary path toward meeting market needs rather than
attempting to satisfy all needs in a single step.
* Match requirements to resources--that is time, money, technology, and
people--before undertaking a new development effort.
* Research and define requirements before programs are started and
limit changes after they are started.
* Ensure cost estimates are complete, accurate, and updated regularly.
* Commit to fully fund projects before they begin.
* Ensure critical technologies are proven to work as intended before
programs are started.
* Assign more ambitious technology development efforts to research
departments until they are ready to be added to future generations
(increments) of a product.
* Use systems engineering to close gaps between resources and
requirements before launching the development process.
During Program Development.
* Use quantifiable data and demonstrable knowledge to make go/no-go
decisions, covering critical facets of the program such as cost,
schedule, technology readiness, design readiness, production readiness,
and relationships with suppliers.
* Do not allow development to proceed until certain thresholds are met-
-for example, a high proportion of engineering drawings completed or
production processes under statistical control.
* Empower program managers to make decisions on the direction of the
program and to resolve problems and implement solutions.
* Hold program managers accountable for their choices.
* Require program managers to stay with a project to its end.
* Hold suppliers accountable to deliver high-quality parts for their
product through such activities as regular supplier audits and
performance evaluations of quality and delivery, among other things.
* Encourage program managers to share bad news, and encourage
collaboration and communication.
Source: GAO.
[End of table]
Constructive Actions Are Being Taken:
DOD is attempting to implement some of these practices for its major
weapons programs. For example, we recently reported that DOD released a
strategy to enhance the role of program managers in carrying out its
major weapon system acquisitions. As part of this strategy, DOD
established a policy that requires formal agreements among program
managers, their acquisition executives, and the user community intended
to set forth common program goals. In addition, DOD plans a variety of
actions to enhance development opportunities, provide more incentives,
and arrange knowledge-sharing opportunities for its program managers.
Within this strategy, the department also acknowledged that any actions
taken to improve accountability must be based on a foundation from
which program managers can launch and manage programs toward greater
performance, and must include an overarching strategy and decision-
making processes that prioritize programs based on a match between
customer needs and available resources. DOD highlighted several
initiatives that, if adopted and implemented properly, could provide
such a foundation. Some of these include establishing an early decision
gate to review proposed programs at the concept stage, testing
portfolio management approaches in selected capability areas and using
capital budgeting accounts for programs in development.
Additionally, as we reported previously, the Air Force adopted a "back
to basics" approach for space designed to reduce technology risk and
ensure programs were more executable. Specifically, for its TSAT and
Space Radar acquisition efforts, the Air Force committed to delaying
product development until critical technologies could be demonstrated
to work in a relevant environment. This stood in sharp contrast to
previous programs, started with immature technologies, such as NPOESS
and SBIRS.
The Air Force also committed to deferring more ambitious technology
efforts associated with these efforts to science and technology
organizations until they are ready to be added to future increments.
TSAT, for example, deferred the wide-field of view multi-access laser
communication technology, and contributed about $16.7 million for "off-
line" maturation of this technology that could be inserted into future
increments. It laid out incremental advances in other capabilities over
two increments. Space Radar has deferred lithium-ion batteries, more
efficient solar cells, and onboard processing for its first increment,
and like TSAT, contributed toward their development by space and
technology organizations. Further, both efforts have used systems
engineers to help determine achievability of requirements.
In our experience, the Navy has tended to follow good acquisition
practices for its space programs, especially in relation to keeping
technology risks out of programs. The Navy's Mobile User Objective
System (MUOS) is an example. Specifically, the MUOS acquisition effort
began development with almost all of its critical technologies mature.
Additionally, about 95 percent of design drawings had been completed at
the critical design review milestone in March 2007. Since MUOS's
development start in September 2004, the program has been meeting its
overall cost and schedule goals, with the first satellite expected to
become operational in March 2010.
Furthermore, the Air Force, U.S. Strategic Command, and other key
organizations have made progress in implementing the Operationally
Responsive Space (ORS) initiative. This initiative encompasses several
separate endeavors with a goal to provide short-term tactical
capabilities as well as identifying and implementing long-term
technology and design solutions to reduce the cost and time of
developing and delivering simpler satellites in greater numbers. ORS
provides DOD with an opportunity to work outside the typical
acquisition channels to more quickly and less expensively deliver these
capabilities. In performing a review of ORS for this committee, we
found that DOD has made progress in putting a program management
structure in place for ORS as well as executing ORS-related research
and development efforts, which include development of low-cost small
satellites, common design techniques, and common interfaces.
Other parts of DOD are also moving towards space programs with less
risk and that have a greater chance of being more successful. The
Missile Defense Agency's Space Tracking and Surveillance System (STSS)
program office is seeking an operational constellation that would be
easier to produce than originally envisioned for the constellation. The
new development approach for the constellation would involve no
technology breakthroughs or scientific discovery, and the program
office wants to scale the system design so that it will only require
only a 5-to 6-year build cycle.
DOD has also pushed back the decisions to start the TSAT and Space
Radar acquisitions so it could reformulate their acquisition schedules
and approaches to make them more affordable within DOD's overall space
portfolio. For example, TSAT is currently being assessed by the Office
of the Secretary of Defense (OSD) to better ensure that proposed future
funding levels for TSAT are affordable in the near term. In the
meantime, the program office is continuing to fund risk-reduction
efforts between two separate contractors to further reduce overall risk
in TSAT. Similarly, the Space Radar program office told us that it is
adjusting its acquisition approach to better balance affordability
through incremental evolution of the Space Radar capability. In both of
these cases, DOD will likely be better positioned with acquisition
programs that are more affordable and executable in terms of meeting
cost, schedule, and performance goals.
Additional Actions Needed:
The actions that the Air Force and OSD have been taking to address
acquisition problems are good first steps. The back to basics policy
and ORS, in particular, represent significant shifts in thinking about
how space systems should be developed as well as commitment from senior
leadership. But, there are still more, significant changes to
processes, policies, and support needed to ensure reforms can take
hold.
First, while DOD pilot initiatives related to portfolio management are
targeted at addressing funding pressures, there has not been a real
commitment to prioritizing investments across DOD. For the past several
years, we have emphasized that DOD starts more space and weapon
programs than it can afford, creating a competition for funding that
encourages low cost estimating, optimistic scheduling, overpromising,
suppressing of bad news, and, for space programs, forsaking the
opportunity to identify and assess potentially better alternatives.
Programs focus on advocacy at the expense of realism and sound
management. Invariably, with too many programs in its portfolio, DOD is
forced to continually shift funds to and from programs--particularly as
programs experience problems that require additional time and money to
address. Such shifts, in turn, have had costly, reverberating effects.
This year, significant cuts were made to several major space programs
including TSAT, Space Radar, and STSS largely in light of the
realization that new, expensive programs were not affordable at a time
when DOD was attempting to upgrade other capabilities and still
contending with problematic programs like SBIRS. In the case of TSAT,
resulting delays in capability could have a dramatic effect on other
new programs, such as the Army's Future Combat System, which were
counting on TSAT-like capabilities to enhance their performance.
Second, as we have testified before, space programs are facing capacity
shortfalls. These include shortages of staff with science and
engineering backgrounds as well as staff with program-management and
cost-estimating experience. Several of our reviews of major space
programs have cited shortages of personnel as a key challenge that
increases risk for the program, specifically in technical areas. In
addition, during our review of DOD's space cost estimating function,
Air Force space cost-estimating organizations and program offices said
that they believed their cost-estimating resources were inadequate to
do a good job of accurately predicting costs. Because of the decline in
in-house cost-estimating resources, space program offices and Air Force
cost-estimating organizations are now more dependent on support
contractors. We recognize that there are actions being taken to
strengthen the space acquisition workforce, but we have not yet seen
the condition get much better at the individual program office level.
Our past work has also pointed to capacity shortfalls that go beyond
workforce. For example, in 2006, we reported that cost-estimation data
and databases are incomplete, insufficient, and outdated. And in
previous testimonies, we pointed to limited opportunities and funding
for space technologies, and the lack of low-cost launch vehicles. The
ORS initiative is designed to help alleviate shortfalls in launch and
testing resources, but one concern raised in interviews with launch
providers was that there was still not enough investment being directed
toward low-cost launch.
Furthermore, policies that surround space acquisition need to be
further revised to ensure best practices are instilled and sustained.
For example, DOD's space acquisition policy does not require that
acquisition efforts such as TSAT and Space Radar achieve a technology
readiness level (TRL) 6 (that is, testing in a relevant environment) or
higher for key technologies before being formally started--key decision
point B (KDP B). Instead, the policy suggests that TRL 6 be achieved
later--at preliminary decision review (KDP C) or soon after. In fact,
the back to basics approach that was adopted by the Air Force has not
been incorporated into DOD's space acquisition policy. Given that there
are many pressures and incentives that are driving space and other
weapon programs to begin too early and to drive for dramatic rather
than incremental leaps in capability, DOD needs acquisition policies
that ensure programs have the knowledge they need to make investment
decisions and that DOD and Congress have a more accurate picture of how
long and how much it will take to get the capability that is being
promised. In addition, although the policy requires that independent
cost estimates be prepared by bodies outside the acquisition chain of
command, it does not require that they be relied upon to develop
program budgets. Officials within the space cost-estimating community
also believed that the policy was unclear in defining roles and
responsibilities for cost estimators. We continue to recommend changes
be made to the policy--not only to further ingrain the shift in
thinking about how space systems should be developed, but to ensure
that the changes current leaders are trying to make can be extended
beyond their tenure.
Last, while DOD is planning many new practices that will provide
program managers with more incentives, support and stability, the
overall environment within which program managers perform their work is
very difficult to change simply with policy initiatives. Policies
similar to the one DOD issued in 2007 to increase accountability of
program managers have existed for some time, but according to DOD and
Air Force officials, they have not always been practiced. For example,
while DOD policy provides for program managers of major defense
acquisition programs to serve as close to a 4-year tenure as
practicable,[Footnote 1] many serve for only 2 years. One example is
the SBIRS program, which has had six program managers in 12 years. In
fact, our work has shown that rather than lengthy assignment periods
between key milestones as suggested by best practices, many of the
programs we have reviewed had multiple program managers within the same
milestone.
Conclusions:
In conclusion, senior leaders managing DOD's space portfolio are
clearly working in a challenging environment. There are pressures to
deliver new, transformational capabilities, but problematic older
satellite programs continue to cost more than expected, constrain
investment dollars, pose risks of capability caps, and thus require
more time and attention from senior leaders than well-performing
efforts. To best mitigate these circumstances and put future programs
on a better path, DOD needs to continue with the actions it has begun
undertaken. However, these measures should be complemented by realistic
estimating of what it will take to complete space programs,
prioritizing programs for investment, and strengthening DOD acquisition
policy for space. At the same time, DOD should ensure its ORS program
is well-supported and focused on alleviating capability gaps as well as
developing longer-term solutions for space programs. Taken together,
such actions, with the support of Congress, should help senior leaders
negotiate acquisitions in a challenging environment and ensure their
commitments to reform can be sustained into the next administration.
[End of section]
Mr. Chairman, this concludes my statement. I will be happy to answer
any questions that you have.
[End of section]
Appendix I: Scope and Methodology:
In preparing this testimony, we relied on our body of work in space
programs, including previously issued GAO reports on assessments of
individual space programs, common problems affecting space system
acquisitions, and the Department of Defense's (DOD) space acquisition
policy. We relied on our best practices studies, which comment on the
persistent problems affecting space acquisitions, the actions DOD has
been taking to address these problems, and what remains to be done. We
also relied on work performed in support of our 2008 annual weapons
system assessment. The individual reviews were conducted in accordance
with generally accepted government auditing standards. We conducted
this performance audit from February 26 to March 4, 2008, in accordance
with generally accepted government auditing standards. Those standards
require that we plan and perform the audit to obtain sufficient,
appropriate evidence to provide a reasonable basis for our findings and
conclusions based on our audit objectives. We believe that the evidence
obtained provides a reasonable basis for our findings and conclusions
based on our audit objectives.
[End of section]
Appendix II Commercial Best Practices Identified in GAO Reports from
Which Space Programs Can Benefit:
Table 2:
Practices That Can Reduce Acquisition Risk: Prioritizing investments;
Practices That Can Reduce Acquisition Risk: Because there are more
product ideas than there is funding to pursue them, successful
organizations we have studied ensure that decisions to start new
product developments fit within an investment strategy. The investment
strategy determines project priority as well as providing a basis for
trade-off decisions against competing projects. Program managers find
their company's use of investment strategies helpful because it gives
them confidence that their project has commitment from their
organization and from their top leaders and managers, and clearly
identifies where their project stands within the company's overall
investment portfolio and funding priorities.
Practices That Can Reduce Acquisition Risk: Evolutionary development;
Practices That Can Reduce Acquisition Risk: Organizations we have
studied generally follow an evolutionary path toward meeting market
needs rather than attempting to satisfy all needs in a single step. In
effect, the companies evolve products, continuously improving their
performance as new technologies and methods allow. These evolutionary
improvements to products eventually result in full desired capability,
but in multiple steps, delivering enhanced capability to the customer
more quickly through a series of interim products. The approach permits
program managers to focus more on design and manufacturing with a
limited array of new content and technologies in a program.
Practices That Can Reduce Acquisition Risk: Matching resources to
requirements; Practices That Can Reduce Acquisition Risk: The
organizations we have studied are able to achieve their overall
investment goals by matching requirements to resources--that is time,
money, technology, and people--before undertaking a new development
effort. Any gaps that existed are relatively small, and it is the
program manager's job to quickly close them as development begins.
Practices That Can Reduce Acquisition Risk: Defined requirements;
Practices That Can Reduce Acquisition Risk: As part of the effort to
build a business case, requirements are researched and defined before
programs start to ensure that they are achievable given available
resources.
Practices That Can Reduce Acquisition Risk: Cost estimating; Practices
That Can Reduce Acquisition Risk: Successful organizations ensure cost
estimates are complete and accurate. They hold program managers
accountable for their estimates. They also develop common templates and
tools to support data gathering and analysis and maintain databases of
historical cost, schedule, quality, test, and performance data. Cost
estimates themselves are continually monitored and regularly updated
through a series of numerous gates or milestone decisions that demand
programs assess readiness and remaining risk within key sectors of the
program as well as overall cost and schedule issues.
Practices That Can Reduce Acquisition Risk: Funding; Practices That Can
Reduce Acquisition Risk: Once cost estimates are complete, the
organization commits to fully funding projects before they begin.
Practices That Can Reduce Acquisition Risk: Technologies; Practices
That Can Reduce Acquisition Risk: As part of the effort to build a
business case, critical technologies are matured by the start of a
program, that is, proven to work as intended. More ambitious technology
development efforts are assigned to research departments until they are
ready to be added to future generations (increments) of a product. In
rare instances when less mature technologies are being pursued, the
organization accepts and plans for the additional risk.
Practices That Can Reduce Acquisition Risk: Systems engineering;
Practices That Can Reduce Acquisition Risk: Systems engineering is used
to close gaps between resources and requirements before launching the
development process. As our previous work has shown, requirements
analysis, the first phase of any robust systems engineering regimen, is
a process that enables the product developer to translate customer
wants into specific product features for which requisite technological,
software, engineering, and production capabilities can be identified.
Practices That Can Reduce Acquisition Risk: Knowledge-driven
development decisions; Practices That Can Reduce Acquisition Risk: Once
a new product development begins, program managers and senior leaders
use quantifiable data and demonstrable knowledge to make go/no-go
decisions. These cover critical facets of the program such as cost,
schedule, technology readiness, design readiness, production readiness,
and relationships with suppliers. Development is not allowed to proceed
until certain thresholds are met, for example, a high proportion of
engineering drawings completed or production processes under
statistical control. Program managers themselves place high value on
these requirements, as it ensures they are well positioned to move into
subsequent phases and are less likely to encounter disruptive problems.
Practices That Can Reduce Acquisition Risk: Program manager authority;
Practices That Can Reduce Acquisition Risk: The organizations we have
studied empower program managers to make decisions on the direction of
the program and to resolve problems and implement solutions. The
program managers can make trade-offs among schedule, cost, and
performance features, as long as they stay within the confines of the
original business case. When the business case changes, senior leaders
are brought in for consultation--at this point, they could become
responsible for trade-off decisions.
Practices That Can Reduce Acquisition Risk: Accountability; Practices
That Can Reduce Acquisition Risk: Program managers are held accountable
for their choices. Sometimes this accountability is shared with the
program team or senior leaders, or both. Sometimes, it resides solely
with the program manager on the belief that the company provides the
necessary levels of support. In all cases, the process itself clearly
spells out what the program manager is accountable for--the specific
cost, performance, schedule, and other goals that need to be achieved.
In a recent study, we also noted that successful organizations hold
their suppliers accountable to deliver high-quality parts for their
product through such activities as regular supplier audits and
performance evaluations of quality and delivery, among other things.
Practices That Can Reduce Acquisition Risk: Program manager tenure;
Practices That Can Reduce Acquisition Risk: To further ensure
accountability, program managers are also required to stay with a
project to its end. Sometimes senior leaders are also required to stay.
At the same time, program managers are incentivized to succeed. If they
meet or exceed their goals, they receive substantial bonuses or salary
increases, or both. Awards can also be obtained if the company as a
whole meets larger objectives. In all cases, companies refrain from
removing a program manager in the midst of a program. Instead, they
chose first to assess whether more support is needed in terms of
resources for the program or support and training for the program
manager.
Practices That Can Reduce Acquisition Risk: Other noteworthy practices;
Practices That Can Reduce Acquisition Risk: * Use of common tools and
templates to support data gathering and analysis; * Implementation and
adherence to formal lessons-learned processes; * Senior leaders stay
committed to projects, mentor program managers, instill trust with
their program managers, encourage program managers to share bad news,
and encourage collaboration and communication.
Source: GAO.
[End of table]
[End of section]
Appendix III: Contact and Acknowledgments:
For further information, please contact Cristina Chaplain at 202-512-
4841or chaplainc@gao.gov. Individuals making contributions to this
testimony include Art Gallegos, Greg Campbell, Claire Cyrnak, Anne
Hobson, Rich Horiuchi, Sigrid McGinty, Angela Pleasants, Josie Sigl,
and Alyssa Weir.
[End of section]
Footnotes:
[1] DOD policy provides for the tenure of program managers of major
defense acquisition programs to last until the completion of the major
milestone that occurs closest in time to the date on which the person
has served in the position for 4 years.
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