Space Acquisitions
Government and Industry Partners Face Substantial Challenges in Developing New DOD Space Systems Gao ID: GAO-09-648T April 30, 2009Despite a growing investment in space, the majority of large-scale acquisition programs in the Department of Defense's (DOD) space portfolio have experienced problems during the past two decades that have driven up cost and schedules and increased technical risks. The cost resulting from acquisition problems along with the ambitious nature of space programs have resulted in cancellations of programs that were expected to require investments of tens of billions of dollars. Along with the cost increases, many programs are experiencing significant schedule delays--as much as 7 years--resulting in potential capability gaps in areas such as positioning, navigation, and timing; missile warning; and weather monitoring. This testimony focuses on (3) the condition of space acquisitions, (1) causal factors, (2) observations on the space industrial base, and (4) recommendations for better positioning programs and industry for success. In preparing this testimony, GAO relied on its body of work in space and other programs, including previously issued GAO reports on assessments of individual space programs, common problems affecting space system acquisitions, and DOD's acquisition policies.
Estimated costs for major space acquisition programs have increased by about $10.9 billion from initial estimates for fiscal years 2008 through 2013. As seen in the figure below, in several cases, DOD has had to cut back on quantity and capability in the face of escalating costs. Several causes behind the cost growth and related problems consistently stand out. First, DOD starts more weapon programs than it can afford, creating a competition for funding that encourages, among other things, low cost estimating and optimistic scheduling. Second, DOD has tended to start its space programs before it has the assurance that the capabilities it is pursuing can be achieved within available resources. GAO and others have identified a number of pressures associated with the contractors that develop space systems for the government that have hampered the acquisition process, including ambitious requirements, the impact of industry consolidation, and shortages of technical expertise in the workforce. Although DOD has taken a number of actions to address the problems on which GAO has reported, additional leadership and support are still needed to ensure that reforms that DOD has begun will take hold.
GAO-09-648T, Space Acquisitions: Government and Industry Partners Face Substantial Challenges in Developing New DOD Space Systems
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Testimony:
Before the Subcommittee on Strategic Forces, Committee on Armed
Services, House of Representatives:
United States Government Accountability Office:
GAO:
For Release on Delivery:
Expected at 1:00 p.m. EDT:
Thursday, April 30, 2009:
Space Acquisitions:
Government and Industry Partners Face Substantial Challenges in
Developing New DOD Space Systems:
Statement of Cristina Chaplain, Director:
Acquisition and Sourcing Management:
GAO-09-648T:
GAO Highlights:
Highlights of GAO-09-648T, a testimony before the Subcommittee on
Strategic Forces, Committee on Armed Services, House of
Representatives.
Why GAO Did This Study:
Despite a growing investment in space, the majority of large-scale
acquisition programs in the Department of Defense‘s (DOD) space
portfolio have experienced problems during the past two decades that
have driven up cost and schedules and increased technical risks. The
cost resulting from acquisition problems along with the ambitious
nature of space programs have resulted in cancellations of programs
that were expected to require investments of tens of billions of
dollars. Along with the cost increases, many programs are experiencing
significant schedule delays”as much as 7 years”resulting in potential
capability gaps in areas such as positioning, navigation, and timing;
missile warning; and weather monitoring.
This testimony focuses on:
* the condition of space acquisitions,
* causal factors,
* observations on the space industrial base, and;
* recommendations for better positioning programs and industry for
success.
In preparing this testimony, GAO relied on its body of work in space
and other programs, including previously issued GAO reports on
assessments of individual space programs, common problems affecting
space system acquisitions, and DOD‘s acquisition policies.
What GAO Found:
Estimated costs for major space acquisition programs have increased by
about $10.9 billion from initial estimates for fiscal years 2008
through 2013. As seen in the figure below, in several cases, DOD has
had to cut back on quantity and capability in the face of escalating
costs.
Figure: Total Cost Differences from Program Start to Most Recent
Estimates:
[Refer to PDF for image: vertical bar graph]
Fiscal year 2009 dollars in millions.
Program and start date: SBIRS, 1996;
Initial estimate: $4,427;
Most recent estimate: $12,210 (one fewer satellite and deferred
requirement).
Program and start date: GPS II, 2000;
Initial estimate: $6,005;
Most recent estimate: $7,154.
Program and start date: WGS, 2000;
Initial estimate: $1,152;
Most recent estimate: $2,073 (two additional satellites).
Program and start date: AEHF, 2001;
Initial estimate: $6,153;
Most recent estimate: $10,304 (one fewer satellite).
Program and start date: NPOESS, 2002;
Initial estimate: $6,455;
Most recent estimate: $10,913 (fewer key sensors and two fewer
satellites).
Program and start date: MUOS, 2004;
Initial estimate: $6,492;
Most recent estimate: $6,411.
Program and start date: GPS IIIA, 2008;
Initial estimate: $3,807;
Most recent estimate: $3,807.
Source: GAO analysis of DOD data.
Legend: SBIRS = Space Based Infrared System, GPS = Global Positioning
System, WGS = Wideband Global SATCOM, AEHF = Advanced Extremely High
Frequency, NPOESS = National Polar-orbiting Operational Environmental
Satellite System, and MUOS = Mobile User Objective System.
[End of figure]
Several causes behind the cost growth and related problems consistently
stand out. First, DOD starts more weapon programs than it can afford,
creating a competition for funding that encourages, among other things,
low cost estimating and optimistic scheduling. Second, DOD has tended
to start its space programs before it has the assurance that the
capabilities it is pursuing can be achieved within available resources.
GAO and others have identified a number of pressures associated with
the contractors that develop space systems for the government that have
hampered the acquisition process, including ambitious requirements, the
impact of industry consolidation, and shortages of technical expertise
in the workforce. Although DOD has taken a number of actions to address
the problems on which GAO has reported, additional leadership and
support are still needed to ensure that reforms that DOD has begun will
take hold.
View [hyperlink, http://www.gao.gov/products/GAO-09-648T] or key
components. For more information, contact Cristina Chaplain at (202)
512-4841 or chaplainc@gao.gov.
[End of section]
Madam Chairman and Members of the Subcommittee:
I am pleased to be here today to discuss the Department of Defense's
(DOD) space acquisitions and the space industrial base. The topic of
today's hearing is critically important. Despite a growing investment
in space, the majority of large-scale 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.
The cost resulting from acquisition problems along with the ambitious
nature of space programs have resulted in cancellations of programs
that were expected to require investments of tens of billions of
dollars, including the recently proposed cancellation of the
Transformational Satellite Communications System (TSAT). Moreover,
along with the cost increases, many programs are experiencing
significant schedule delays--as much as 7 years--resulting in potential
capability gaps in areas such as positioning, navigation, and timing;
missile warning; and weather monitoring.
My testimony today will focus on the condition of space acquisitions,
causal factors, observations on the space industrial base, and
recommendations for better positioning programs and industry for
success. Many of these have been echoed by the Allard Commission,
[Footnote 1] which studied space issues in response to a requirement in
the John Warner National Defense Authorization Act for Fiscal Year
2007, and by a study by the House Permanent Select Committee on
Intelligence (HPSCI),[Footnote 2] among other groups. The two studies
also highlighted concerns about diffuse leadership for military and
intelligence space efforts, declining numbers of space engineering and
technical professionals, and weaknesses in the space industrial base.
Members of the Allard Commission were unanimous in their conviction
that without significant improvements in the leadership and management
of national security space programs, U.S. space preeminence will erode
"to the extent that space ceases to provide a competitive national
security advantage." The HPSCI reached very similar conclusions, adding
that "a once robust partnership between the U.S. government and the
American space industry has been weakened by years of demanding space
programs, the exponential complexity of technology, and an inattention
to acquisition discipline."
Space Acquisition Problems Persist:
Figure 1 compares original cost estimates and current cost estimates
for the broader portfolio of major space acquisitions for fiscal years
2008 through 2013. The wider the gap between original and current
estimates, the fewer dollars DOD has available to invest in new
programs. As shown in the figure, estimated costs for the major space
acquisition programs have increased by about $10.9 billion from initial
estimates for fiscal years 2008 through 2013. The declining investment
in the later years is the result of the Evolved Expendable Launch
Vehicle (EELV) program no longer being considered a major acquisition
program and the cancellation and proposed cancellation of two
development efforts which would have significantly increased DOD's
major space acquisition investment.
Figure 1: Comparison between Original Cost Estimates and Current Cost
Estimates for Selected Major Space Acquisition Programs for Fiscal
Years 2008 through 2013 (Fiscal year 2009 dollars in millions):
[Refer to PDF for image: multiple line graph]
Fiscal year: 2008;
Original cost estimate: $2,832.97;
Current cost estimate: $4,089.27.
Fiscal year: 2009;
Original cost estimate: $2,617.25;
Current cost estimate: $4,782.13.
Fiscal year: 2010;
Original cost estimate: $1,888.13;
Current cost estimate: $5,069.85.
Fiscal year: 2011;
Original cost estimate: $1,728.98;
Current cost estimate: $3,514.5.
Fiscal year: 2012;
Original cost estimate: $1,499.27;
Current cost estimate: $2,847.83.
Fiscal year: 2013;
Original cost estimate: $831.67;
Current cost estimate: $2,074.85.
Source: GAO analysis of DOD data.
Note: The acquisition programs include Advanced Extremely High
Frequency, Global Broadcast Service, Global Positioning System II,
Global Positioning System IIIA, Mobile User Objective System, National
Polar-orbiting Operational Environmental Satellite System, Space Based
Infrared System, and Wideband Global SATCOM.
[End of figure]
Figures 2 and 3 reflect differences in total life-cycle costs and unit
costs for satellites from the time the programs officially began to
their most recent cost estimate. As figure 3 notes, in several cases,
DOD has had to cut back on quantity and capability in the face of
escalating costs. For example, two satellites and four instruments were
deleted from National Polar-orbiting Operational Environmental
Satellite System (NPOESS) and four sensors are expected to have fewer
capabilities. This will reduce some planned capabilities for NPOESS as
well as planned coverage.
Figure 2: Differences in Total Life-Cycle Program Costs from Program
Start and Most Recent Estimates (Fiscal year 2009 dollars in millions):
[Refer to PDF for image: vertical bar graph]
Program and start date: SBIRS, 1996;
Initial estimate: $4,427;
Most recent estimate: $12,210 (one fewer satellite and deferred
requirement).
Program and start date: GPS II, 2000;
Initial estimate: $6,005;
Most recent estimate: $7,154.
Program and start date: WGS, 2000;
Initial estimate: $1,152;
Most recent estimate: $2,073 (two additional satellites).
Program and start date: AEHF, 2001;
Initial estimate: $6,153;
Most recent estimate: $10,304 (one fewer satellite).
Program and start date: NPOESS, 2002;
Initial estimate: $6,455;
Most recent estimate: $10,913 (fewer key sensors and two fewer
satellites).
Program and start date: MUOS, 2004;
Initial estimate: $6,492;
Most recent estimate: $6,411.
Program and start date: GPS IIIA, 2008;
Initial estimate: $3,807;
Most recent estimate: $3,807.
Source: GAO analysis of DOD data.
Legend: SBIRS = Space Based Infrared System, GPS = Global Positioning
System, WGS = Wideband Global SATCOM, AEHF = Advanced Extremely High
Frequency, NPOESS = National Polar-orbiting Operational Environmental
Satellite System, and MUOS = Mobile User Objective System.
[End of figure]
Figure 3: Differences in Unit Costs from Program Start to Most Recent
Estimates (Fiscal year 2009 dollars in millions):
[Refer to PDF for image: vertical bar graph]
Program and start date: SBIRS, 1996;
Initial unit cost: $885;
Most recent unit cost: $3,052.
Program and start date: GPS, II 2000;
Initial unit cost: $182;
Most recent unit cost: $217.
Program and start date: WGS, 2000;
Initial unit cost: $384;
Most recent unit cost: $415.
Program and start date: AEHF, 2001;
Initial unit cost: $1,231;
Most recent unit cost: $2,576.
Program and start date: NPOESS, 2002;
Initial unit cost: $1,076;
Most recent unit cost: $2,728.
Program and start date: MUOS, 2004;
Initial unit cost: $1,082;
Most recent unit cost: $1,069.
Program and start date: GPS IIIA, 2008;
Initial unit cost: $476;
Most recent unit cost: $476.
Source: GAO analysis of DOD data.
Legend: SBIRS = Space Based Infrared System, GPS = Global Positioning
System, WGS = Wideband Global SATCOM, AEHF = Advanced Extremely High
Frequency, NPOESS = National Polar-orbiting Operational Environmental
Satellite System, and MUOS = Mobile User Objective System.
[End of figure]
Figure 4 highlights the additional estimated months needed to complete
programs. These additional months represent time not anticipated at the
programs' start dates. Generally, the further schedules slip, the more
DOD is at risk of not sustaining current capabilities. For this reason,
DOD began a follow-on system effort, known as the Third Generation
Infrared Satellite to run in parallel with the Space Based Infrared
System (SBIRS) program.
Figure 4: Differences in Total Number of Months to Initial Operational
Capability (IOC) from Program Start and Most Recent Estimates:
[Refer to PDF for image: vertical bar graph]
Program and start date: SBIRS, 1996;
Initial estimate: 86 months;
Most recent estimate: System IOC no longer defined, but program is
roughly 7 years behind its original delivery of the first satellite.
Program and start date: GPS II, 2000;
Not applicable because of program not estimating an IOC date, but
program is almost 3 years behind its original schedule for launch of
the first Block IIF satellite.
Program and start date: WGS, 2000;
Initial estimate: 49 months;
Most recent estimate: 98 months.
Program and start date: AEHF, 2001;
Initial estimate: 82 months;
Most recent estimate: 141 months.
Program and start date: NPOESS, 2002;
Initial estimate: 107 months;
Most recent estimate: 128 months.
Program and start date: MUOS, 2004;
Initial estimate: 66 months;
Most recent estimate: 77 months.
Program and start date: GPS IIIA, 2008;
Not applicable because of the program not estimating an IOC date.
Source: GAO analysis of DOD data.
Legend: SBIRS = Space Based Infrared System, GPS = Global Positioning
System, WGS = Wideband Global SATCOM, AEHF = Advanced Extremely High
Frequency, NPOESS = National Polar-orbiting Operational Environmental
Satellite System, and MUOS = Mobile User Objective System.
[End of figure]
This fiscal year, DOD launched the second Wideband Global SATCOM (WGS)
satellite. WGS had previously been experiencing technical and other
problems, including improperly installed fasteners and data
transmission errors. When DOD finally resolved these issues, it
significantly advanced capability available to warfighters.
Additionally, the EELV program had its 23rd consecutive successful
operational launch earlier this month. However, other major space
programs have had setbacks. For example:
* In September 2008, the Air Force reported a Nunn-McCurdy unit cost
breach of the critical cost growth threshold[Footnote 3] for the
Advanced Extremely High Frequency (AEHF) satellite because of cost
growth brought on by technical issues, schedule delays, and increased
costs for the procurement of a fourth AEHF satellite. The launch of the
first satellite has slipped further by almost 2 years from November
2008 to as late as September 2010. Further, the program office
estimates that the fourth AEHF satellite could cost more than twice the
third satellite because some components that are no longer manufactured
will have to be replaced and production will have to be restarted after
a 4-year gap. Because of these delays, initial operational capability
has slipped 3 years--from 2010 to 2013.
* The Mobile User Objective System (MUOS) communications satellite
estimates an 11-month delay--from March 2010 to February 2011--in the
delivery of on-orbit capability from the first satellite. Further,
contractor costs for the space segment have increased about 48 percent
because of the additional labor required to address issues related to
satellite design complexity, satellite weight, and satellite component
test anomalies and associated rework. Despite the contractor cost
increases, the program has been able to remain within its baseline
program cost estimate.
* The Global Positioning System (GPS) IIF satellite is now expected to
be delayed almost 3 years from its original date to November 2009.
Also, the cost of GPS IIF is now expected to be about $1.6 billion--
about $870 million over the original cost estimate of $729 million.
(This approximately 119 percent cost increase is not that noticeable in
figures 2 and 3 because the GPS II modernization program includes the
development and procurement of 33 satellites, only 12 of which are IIF
satellites.) The Air Force has had difficulty in the past building GPS
satellites within cost and schedule goals because of significant
technical problems, which still threaten its delivery schedule and
because of challenges it faced with a different contractor for the IIF
program, which did not possess the same expertise as the previous GPS
contractor. Further, while the Air Force is structuring the new GPS
IIIA program to prevent mistakes made on the IIF program, the Air Force
is aiming to deploy the GPS IIIA satellites 3 years faster than the IIF
satellites. We believe the IIIA schedule is optimistic given the
program's late start, past trends in space acquisitions, and challenges
facing the new contractor.
* Total program cost for the SBIRS program is estimated around $12.2
billion, an increase of $7.5 billion over the original program cost,
which included 5 geosynchronous earth orbit (GEO) satellites. The first
GEO satellite has been delayed roughly 7 years in part because of poor
oversight, technical complexities, and rework. Although the program
office set December 2009 as the new launch goal for the satellite, a
recent assessment by the Defense Contract Management Agency anticipates
an August 2010 launch date, adding an additional 8 months to the
previous launch estimate. Subsequent GEO satellites have also slipped
as a result of the flight software design issues.
* The NPOESS program has experienced problems with replenishing its
aging constellation of satellites and was restructured in July 2007 in
response to a Nunn-McCurdy unit cost breach of the critical cost growth
threshold. The program was originally estimated to cost about $6.5
billion for six satellites from 1995 through 2018. The restructured
program called for reducing the number of satellites from six to four
and included an overall increase in program costs, delays in satellite
launches, and deletions or replacements of satellite sensors. Although
the number of satellites has been reduced, total costs have increased
by almost 108 percent since program start. Specifically, the current
estimated life cycle cost of the restructured program is now about
$13.5 billion for four satellites through 2026. This amount is higher
than what is reflected in figure 2 as it represents the most recent GAO
estimate as opposed to the DOD estimates used in the figure. We
reported last year that poor workmanship and testing delays caused an 8-
month slip in the delivery of a complex imaging sensor. This late
delivery caused a delay in the expected launch date of a demonstration
satellite, moving it from late September 2009 to early January 2011.
This year it is also becoming more apparent that space acquisition
problems are leading to potential gaps in the delivery of critical
capabilities. For example, DOD faces a potential gap in protected
military communications caused by delays in the AEHF program and the
proposed cancellation of the TSAT program, which itself posed risks in
schedule delays because of TSAT's complexity and funding cuts designed
to ensure technology objectives were achievable. DOD faces a potential
gap in ultra high frequency (UHF) communications capability caused by
the unexpected failures of two satellites already in orbit and the
delays resulting from the MUOS program. DOD also faces potential gaps
or decreases in positioning, navigation and timing capabilities because
of late delivery of the GPS IIF satellites and the late start of the
GPS IIIA program. There are also concerns about potential gaps in
missile warning and weather monitoring capabilities because of delays
in SBIRS and NPOESS.
Addressing gaps in any one of these areas is not a simple matter. While
there may be opportunities to build less complex "gap filler"
satellites, for example, these still require time and money that may
not be readily available because of commitments to the longer-term
programs. There may also be opportunities to continue production of
"older" generation satellites, but such efforts also require time and
money that may not be readily available and may face other challenges
such as restarting production lines and addressing issues related to
obsolete parts and materials. Further, satellites on orbit can be made
to last longer by turning power off at certain points in time, but this
may also present unacceptable tradeoffs in capability.
Underlying Reasons for Cost and Schedule Growth:
Our past work has identified a number of causes behind the cost growth
and related problems, but several consistently stand out. First, on a
broad scale, DOD starts more weapon programs than it can afford,
creating a competition for funding that encourages low cost estimating,
optimistic scheduling, overpromising, suppressing bad news, and, for
space programs, forsaking the opportunity to identify and assess
potentially more executable 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.
Second, DOD has tended to start its space programs too early, that is,
before it has the assurance that the capabilities it is pursuing can be
achieved within available resources and time constraints. This tendency
is caused largely by the funding process, since acquisition programs
attract more dollars than efforts concentrating solely on proving
technologies. Nevertheless, when DOD chooses to extend technology
invention into acquisition, programs experience technical problems that
require large amounts of time and money to fix. Moreover, when this
approach is followed, cost estimators are not well positioned to
develop accurate cost estimates because there are too many unknowns.
Put more simply, there is no way to accurately estimate how long it
would take to design, develop, and build a satellite system when
critical technologies planned for that system are still in relatively
early stages of discovery and invention.
While our work has consistently found that maturing technologies before
program start is a critical enabler of success, it is important to keep
in mind that this is not the only solution. Both the TSAT and the Space
Radar development efforts, for example, were seeking to mature critical
technologies before program start, but they faced other risks related
to the systems' complexity, affordability, and other development
challenges. Ultimately, Space Radar was canceled and DOD has proposed
the cancellation of TSAT. Last year, we cited the MUOS program's
attempts to mature critical technologies before program start as a best
practice, but the program has since encountered technical problems
related to design issues and test anomalies.
Third, programs have historically attempted to satisfy all requirements
in a single step, regardless of the design challenge or the maturity of
the technologies necessary to achieve the full capability. DOD has
preferred to make fewer but heavier, larger, and more complex
satellites that perform a multitude of missions rather than larger
constellations of smaller, less complex satellites that gradually
increase in sophistication. This has stretched technology challenges
beyond current capabilities in some cases and vastly increased the
complexities related to software. Programs also seek to maximize
capability because it is expensive to launch satellites. A launch using
a medium-or intermediate-lift evolved expendable launch vehicle, for
example, would cost roughly $65 million.
Fourth, several of today's high-risk space programs began in the late
1990s, when DOD structured contracts in a way that reduced government
oversight and shifted key decision-making responsibility onto
contractors. This approach--known as Total System Performance
Responsibility, or TSPR--was intended to facilitate acquisition reform
and enable DOD to streamline its acquisition process and leverage
innovation and management expertise from the private sector.
Specifically, TSPR gave a contractor total responsibility for the
integration of an entire weapon system and for meeting DOD's
requirements. However, because this reform made the contractor
responsible for day-to-day program management, DOD did not require
formal deliverable documents--such as earned value management reports-
-to assess the status and performance of the contractor. The resulting
erosion of DOD's capability to lead and manage the space acquisition
process magnified problems related to requirements creep and poor
contractor performance. Further, the reduction in government oversight
and involvement led to major reductions in various government
capabilities, including cost-estimating and systems-engineering staff.
The loss of cost-estimating and systems-engineering staff in turn led
to a lack of technical data needed to develop sound cost estimates.
Observations on the Space Industrial Base:
We have not performed a comprehensive review of the space industrial
base, but our prior work has identified a number of pressures
associated with contractors that develop space systems for the
government that have hampered the acquisition process. Many of these
have been echoed in other studies conducted by DOD and congressionally
chartered commissions.
We and others have reported that industry--including both prime
contractors and subcontractors--has been consolidated to a point where
there may be only one company that can develop a needed capability or a
specific component for a satellite system[Footnote 4]. In the view of
DOD and industry officials we have interviewed, this condition has
enabled contractors to hold some programs hostage and has made it
difficult to inject competition into space programs. We also have
identified cases where space programs experienced unanticipated
problems resulting from consolidations in the supplier base. For
example, contractors took cost-cutting measures that reduced the
quality of parts. In the case of GPS IIF, contractors lost key
technical personnel as they consolidated development and manufacturing
facilities, causing inefficiencies in the program.
In addition, space contractors are facing workforce pressures similar
to those experienced by the government, that is, there is not enough
technical expertise to develop highly complex space systems. A number
of studies have found that both industry and the U.S. government face
substantial shortages of scientists and engineers and that recruitment
of new personnel is difficult because the space industry is one of many
sectors competing for the limited number of trained scientists and
engineers. Security clearance requirements make competing for talented
personnel even more difficult for military and intelligence space
programs as opposed to civil space programs.
In a 2006 review of space cost estimating, we also found that the
government has made erroneous assumptions about the space industrial
base when it started the programs that are experiencing the most
challenges today.[Footnote 5] In a review for this subcommittee, for
instance, we found that the original contracting concept for the EELV
program was for the Air Force to piggyback on the anticipated launch
demand of the commercial sector. Furthermore, the Air Force assumed
that it would benefit financially from competition among commercial
vendors. However, the commercial demand never materialized, and the
government decided to bear the cost burden of maintaining the
industrial base in order to maintain launch capability, and assumed
savings from competition were never realized.
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 on which we have reported. 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.
Table 1: Actions Needed to Address Space and Weapon Acquisition
Problems:
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 mission 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 that cost estimates are complete, accurate, and updated
regularly.
* Commit to fully fund projects before they begin.
* Ensure that 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
products 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]
Several of these practices could also benefit the space industrial
base. For instance, applying an evolutionary approach to development
would likely provide a steadier pipeline of government orders and thus
enable suppliers to maintain their expertise and production lines. More
realistic cost estimating and full funding would reduce funding
instability, which could reduce fits and starts that create planning
difficulties for suppliers. Longer tenure and more authority for
program managers would provide more continuity in relationships between
the government and its suppliers.
DOD is attempting to implement some of these practices for its major
weapon programs. For example, as part of its strategy for enhancing the
roles of program managers in major weapon system acquisitions, the
department has established a policy that requires formal agreements
among program managers, their acquisition executives, and the user
community that set forth common program goals. These agreements are
intended to be binding and to detail the progress a program is expected
to make during the year and the resources the program will be provided
to reach these goals. DOD is also requiring program managers to sign
tenure agreements so that their tenure will correspond to the next
major milestone review closest to 4 years. Over the past few years, DOD
has also been testing portfolio management approaches in selected
capability areas--command and control, net-centric operations,
battlespace awareness, and logistics--to facilitate more strategic
choices for resource allocation across programs.
Within the space community, cost estimators from industry and agencies
involved in space have been working together to improve the accuracy
and quality of their estimates. In addition, on specific programs,
actions have been taken to prevent mistakes made in the past. For
example, on the GPS IIIA program, the Air Force is using an incremental
development approach, where it will gradually meet the needs of its
users; using military standards for satellite quality; conducting
multiple design reviews; exercising more government oversight and
interaction with the contractor and spending more time at the
contractor's site; and using an improved risk management process. On
the SBIRS program, the Air Force acted to strengthen relationships
between the government and the SBIRS contractor team, and to implement
more effective software development practices as it sought to address
problems related to the systems flight software system.
Correspondingly, DOD's Office of the Under Secretary of Defense for
Acquisition, Technology, and Logistics is asking space programs passing
through milestone reviews to take specific measures to better hold
contractors accountable through award and incentive fees, to require
independent technology readiness assessments at particular points in
the acquisition process, and to hold requirements stable.
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 2008, 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.
Legislation introduced in recent years has also focused on improving
space and weapon acquisitions. In February, the Senate Committee on
Armed Services introduced an acquisition reform bill which contains
provisions that could significantly improve DOD's management of space
programs. For instance, the bill focuses on increasing emphasis on
systems engineering and developmental testing, instituting earlier
preliminary design reviews, and strengthening independent cost
estimates and technology readiness assessments. Taken together, these
measures could instill more discipline in the front end of the
acquisition process when it is critical for programs to gain knowledge.
The bill also requires greater involvement by the combatant commands in
determining requirements and requiring greater consultation among the
requirements, budget, and acquisition processes. In addition, several
of the bill's sections, as currently drafted, would require in law what
DOD policy already calls for, but it is not being implemented
consistently in weapon programs. Last week, the House Committee on
Armed Services announced it would be introducing a bill to similarly
reform DOD's system for acquiring weapons by providing for, among other
things, oversight early in product development and for appointment of
independent officials to review acquisition programs. However, we did
not have time to assess the bill for this statement.
The actions that the Air Force and Office of the Secretary of Defense
have been taking to address acquisition problems are good steps. But,
there are still more, significant changes to processes, policies, and
support needed to ensure reforms can take hold. In particular, several
studies have recently concluded that there is a need to strengthen
leadership for military and intelligence space efforts. The Allard
Commission reported that responsibilities for military space and
intelligence programs are scattered across the staffs of the DOD and
the Intelligence Community and that it appears that "no one is in
charge" of national security space. The HPSCI expressed similar
concerns in its report, focusing specifically on difficulties in
bringing together decisions that would involve both the Director of
National Intelligence and the Secretary of Defense. Prior studies,
including those conducted by the Defense Science Board and the
Commission to Assess United States National Security Space Management
and Organization (Space Commission)[Footnote 6] have identified similar
problems, both for space as a whole and for specific programs. While
these studies have made recommendations for strengthening leadership
for space acquisitions, no major changes to the leadership structure
have been made in recent years. In fact, an "executive agent" position
within the Air Force that was designated in 2001 in response to a Space
Commission recommendation to provide leadership has not been filled
since the last executive resigned in 2007.
In addition, more actions may be needed to address shortages of
personnel in program offices for major space programs. We recently
reported that personnel shortages at the EELV program office have
occurred particularly in highly specialized areas, such as avionics and
launch vehicle groups. Program officials stated that 7 of 12 positions
in the engineering branch for the Atlas group were vacant. These
engineers work on issues such as reviewing components responsible for
navigation and control of the rocket. Moreover, only half the
government jobs in some key areas were projected to be filled. These
and other shortages in the EELV program office heightened concerns
about DOD's ability to use a cost-reimbursement contract acquisition
strategy for EELV since that strategy required greater government
attention to the contractor's technical, cost, and schedule performance
information. In previous reviews, we cited personnel shortages at
program offices for TSAT as well as for cost estimators across space.
While increased reliance on contractor employees has helped to address
workforce shortages, it could ultimately create gaps in areas of
expertise that could limit the government's ability to conduct
oversight.
Further, while actions are being undertaken to make more realistic cost
estimates, programs are still producing schedule estimates that are
optimistic and promising that they will not miss their schedule goals.
The GPS IIIA program, for example, began 9 months later than originally
anticipated because of funding delays, but the delivery date remained
the same. The schedule is 3 years shorter than the one achieved so far
on GPS IIF. We recognize that the GPS IIIA program has built a more
solid foundation for success than the IIF, which offers the best course
to deliver on time, but setting an ambitious schedule goal should not
be the Air Force's only measure for mitigating potential capability
gaps. Last year, we also reported that the SBIRS program's revised
schedule estimates for addressing software problems appeared too
optimistic. For example, software experts, independent reviewers, as
well as the government officials we interviewed agreed that the
schedule was aggressive, and the Defense Contract Management Agency has
repeatedly highlighted the schedule as high risk.
Concluding Remarks:
In conclusion, senior leaders managing DOD's space portfolio are
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. Moreover,
military space is at a critical juncture. While there are concerns
about the United States losing its competitive edge in the development
of space technology, there are critical capabilities that are at risk
of falling behind their current level of service. To best mitigate
these circumstances and put future programs on a better path, DOD needs
to focus foremost on sustaining current capabilities and preparing for
potential gaps. In addition, there is still a looming question of how
military and intelligence space activities should be organized and led.
From an acquisition perspective, what is important is that the right
decisions are made on individual programs, the right capability is in
place to manage them, and there is someone to hold accountable when
programs go off track.
Madam Chairman, this concludes my prepared statement. I would be happy
to answer any questions you or members of the subcommittee may have at
this time.
Contacts and Acknowledgments:
For further information about this statement, please contact Cristina
Chaplain at (202) 512-4841 or chaplainc@gao.gov. Contact points for our
Offices of Congressional Relations and Pubic Affairs may be found on
the last page of this statement. Individuals who made key contributions
to this statement include Art Gallegos, Assistant Director; Greg
Campbell; Maria Durant; Arturo Holguin; Laura Holliday; Rich Horiuchi;
Sylvia Schatz; and Peter Zwanzig.
[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) acquisition
policies. 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 2009 annual weapons
system assessment. The individual reviews were conducted 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]
Footnotes:
[1] Institute for Defense Analyses, Leadership, Management, and
Organization for National Security Space: Report to Congress of the
Independent Assessment Panel on the Organization and Management of
National Security Space (Alexandria, VA.: July 2008).
[2] House Permanent Select Committee on Intelligence, Report on
Challenges and Recommendations for United States Overhead Architecture
(Washington, D.C.: October 2008).
[3] The Nunn-McCurdy provision (10 U.S.C. § 2433) currently requires
DOD to take specific actions when a major defense acquisition program's
growth exceeds certain cost thresholds. Some of the key provisions of
the law require, for example, that for major defense acquisition
programs, (1) Congress must be notified when a program has an increase
of at least 15 percent in program acquisition unit cost above the unit
cost in the current baseline estimate and (2) the Secretary of Defense
must certify the program to Congress when the program has unit cost
increases of at least 25 percent of the current baseline estimate or at
least 50 percent of the original baseline estimate. 10 U.S.C. §
2433(a)(4)(5);(d)(3);(e)(4). The current law also includes cost growth
thresholds from the program's original baseline estimate. 10 U.S.C. §
2433(a)(4)(5).
[4] GAO, Defense Acquisitions: Incentives and Pressures That Drive
Problems Affecting Satellite and Related Acquisitions. [hyperlink,
http://www.gao.gov/products/GAO-05-570R] (Washington, D.C.: June 23,
2005).
[5] GAO, Space Acquisitions: DOD Needs to Take More Action to Address
Unrealistic Initial Cost Estimates of Space Systems. [hyperlink,
http://www.gao.gov/products/GAO-07-96] (Washington, D.C.: Nov. 17,
2006).
[6] Department of Defense. Report of the Commission to Assess United
States National Security Space Management and Organization (Washington,
D.C.: Jan. 11, 2001).
[End of section]
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