Space Acquisitions
DOD Faces Substantial Challenges in Developing New Space Systems Gao ID: GAO-09-705T May 20, 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 has 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--at least 7 years--resulting in potential capability gaps in areas such as positioning, navigation, and timing; missile warning; and weather monitoring. This testimony focuses on (1) the condition of space acquisitions, (2) causal factors, and (3) 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. 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 competition for funding that, in part, encourages 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 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-09-705T, Space Acquisitions: DOD Faces Substantial Challenges in Developing New Space Systems
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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 2:00 p.m. EDT:
Wednesday, May 20, 2009:
Space Acquisitions:
DOD Faces Substantial Challenges in Developing New Space Systems:
Statement of Cristina T. Chaplain, Director: Acquisition and Sourcing
Management:
GAO-09-705T:
GAO Highlights:
Highlights of GAO-09-705T, a testimony before the Subcommittee on
Strategic Forces, Committee on Armed Services, U.S. Senate.
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 has 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”at least 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, 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 (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 less satellite and deferred
requirements).
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 less 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 competition for funding that, in part, encourages 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 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-09-705T] or key
components. For more information, contact Cristina T. Chaplain, 202-512-
4841, 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. 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
has 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--at least 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, and recommendations for better positioning programs 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
highlighted concerns about diffuse leadership for military and
intelligence space efforts and declining numbers of space engineering
and technical professionals. 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."
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's no longer being considered a major acquisition
program and the cancellation and proposed cancellation of two
development efforts that 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: $2832;
Current cost estimate: $4089.
Fiscal year: 2009;
Original cost estimate: $2617;
Current cost estimate: $4782.
Fiscal year: 2010;
Original cost estimate: $1888;
Current cost estimate: $5069.
Fiscal year: 2011;
Original cost estimate: $1728;
Current cost estimate: $3514.
Fiscal year: 2012;
Original cost estimate: $1499;
Current cost estimate: $2847.
Fiscal year: 2013;
Original cost estimate: $831;
Current cost estimate: $2074.
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 and unit costs
for satellites from the time the programs officially began to their
most recent cost estimate. As figure 2 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 less satellite and deferred
requirements).
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 less 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, now known as Third Generation
Infrared Surveillance, 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 at
least 7 years behind its original delivery of the first satellite.
Program and start date: GPS II, 2000;
Initial estimate: 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;
Initial estimate: 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 in April. 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) communications 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's cost
increases, the program has been able to remain within its baseline
program cost estimate.
* The first Global Positioning System (GPS) IIF satellite is now
expected to be delayed almost 3 years from its original launch 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 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's cost,
which included 5 geosynchronous earth orbit (GEO) satellites. The first
GEO satellite has been delayed at least 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, it
is currently assessing the satellite launch schedule and expects to
have a new plan in place by June 2009. Subsequent GEO satellites have
also slipped as a result of flight software design issues.
* The NPOESS program has experienced problems with replenishing the
current constellation of aging weather 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 trade-offs 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
a program's 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 the program's
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 EELV, 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.
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's 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 could benefit space programs. 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]
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, use military standards for satellite quality, conduct multiple
design reviews, exercise more government oversight and interaction with
the contractor and spend more time at the contractor's site, and use 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 its flight
software system. Correspondingly, DOD's Office of the Under Secretary
of Defense for Acquisition, Technology, and Logistics is asking space
programs to take specific measures to better hold contractors
accountable through linking award and incentive fees to program
milestones. DOD interim space guidance also asks space programs to make
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 March, 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 various measures, including
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 encourages, but it is not being implemented
consistently in weapon programs. In April, the House Committee on Armed
Services introduced 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. Both bills are moving forward in the
Senate and House.
The actions that the Air Force and Office of the Secretary of Defense
have been taking to address acquisition problems are good steps.
However, there are still more significant changes to processes,
policies, and support needed to ensure reforms can take hold. With
requirements, resource allocation, and acquisition processes led by
different organizations, it is difficult to hold any one person or
organization accountable for saying no to a proposed program or for
ensuring that the department's portfolio of programs is balanced. This
makes it difficult for DOD to achieve a balanced mix of weapon systems
that are affordable and feasible. For example, diffused leadership has
been problematic with the GPS program in terms of DOD's ability to
synchronize delivery of space, ground, and user assets. GPS has a
separate budget, management, oversight, and leadership structures for
the space, ground, and user equipment segments. Several recent studies
have also 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
4] 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 of 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 requires 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 while promising that they will not miss their schedule
goals. The GPS IIIA program, for example, is asking the contractor to
develop a larger satellite bus to accommodate the future GPS increments
and to increase the power of a new military signal by a factor of ten,
but 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 program. This foundation offers the
best course to deliver on time, but meeting 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. 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.
Mr. 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 Acknowledgements:
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; Maria
Durant; Arturo Holguin; Laura Holliday; Rich Horiuchi; Karen Sloan;
Alyssa Weir; 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] 10 U.S.C. § 2433 establishes the requirement for unit cost reports.
If certain unit cost thresholds are exceeded (known as Nunn-McCurdy
breaches), DOD is required to report to Congress and, in certain
circumstances, if DOD determines that specific criteria are met,
certify the program to Congress.
[4] 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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