U.S. LAUNCH 

ENTERPRISE

Acquisition Best Practices 

Can Benefit Future Efforts

Statement of Cristina Chaplain, Director, 

Acquisition and Sourcing Management

Testimony before the Committee on 

Commerce, Science, and 

Transportation and Subcommittee on 

Strategic Forces, Committee on Armed 

Services, U.S. Senate

For Release on Delivery 

Expected at 9:30 a.m. ET

Wednesday, July 16, 2014

GAO-14-776T

United States Government Accountability Office
Page 1 GAO-14-776T 

Chairmen Rockefeller and Udall, Ranking Members Thune and Sessions, 

and members of the Committee and Subcommittee:

Thank you for inviting me to testify on the current and future state of the 

U.S. launch enterprise. As you know, the EELV program is the primary 

provider of launch vehicles for U.S. military and intelligence satellites. 

Today I will discuss (1) highlights of GAO’s past work on EELV, and (2) 

how acquisition best practices would benefit future engine development 

efforts. In general, our past work has highlighted a need for stronger 

management and oversight for EELV as well as more knowledge about 

pricing, costs and the industrial base for the block buy. DOD and 

Congress have implemented many positive actions to address our 

recommendations. For future efforts, adopting best practices early could 

help stem cost and schedule growth and other problems. 

My testimony is based on the body of work we have performed on the 

EELV program and acquisition best practices in recent years and related 

reports issued from September 2008 to March 2014. In this body of work 

we interviewed DOD and industry officials, conducted contract reviews, 

assessed knowledge of the industrial base, and analyzed program 

acquisition strategies, among other things. Our prior reports each include 

a detailed description of our scope and methodology. All work on which 

this testimony is based was performed 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.

The Department of Defense (DOD) expects to spend about $9.5 billion 

over the next five years acquiring launch hardware and services through 

the program, during which time it will also be working to certify new 

launch providers. This investment represents a significant amount of what 

the entire U.S. Government expects to spend on launch activities—

including new development, acquisition of launch hardware and services, 

and operations and maintenance of launch ranges—for the same period.

The United Launch Alliance (ULA) is currently the sole provider of launch 

services through the EELV program. However, DOD, the National 

Aeronautics and Space Administration (NASA), and the National 

Reconnaissance Office (NRO) are working to certify new launch providers 

who can compete with ULA for launch contracts.
Page 2 GAO-14-776T 

Because of the importance of the national security space launch 

enterprise, we have been asked to look at many aspects of the EELV 

program over the last 10 years. Our work has examined management 

and oversight for EELV, as well as the “block buy” acquisition approach.

The block buy approach, finalized in December 2013, commits the 

department to an acquisition that spans 5 years, in contrast with the prior 

practice of acquiring launch vehicles one or two at a time, with the aim of 

stabilizing the launch industrial base and enabling the government to 

achieve savings. Additionally, we have assessed the status of the launch 

vehicle certification process for new entrants. DOD and Congress have 

taken numerous actions to address our prior recommendations which 

have resulted in financial and oversight benefits. Highlights of our work 

over the years follow.

We reported that when DOD moved the EELV program from the research 

and development phase to the sustainment phase in the previous year, 

DOD eliminated various reporting requirements that would have provided 

useful oversight to program officials and Congress.1

 1 GAO, Space Acquisitions: Uncertainties in the Evolved Expendable Launch Vehicle 

Program Pose Management and Oversight Challenges, 

For example, the 

EELV program was no longer required to produce data that could have 

shed light on the effects the joint venture between Lockheed Martin and 

Boeing companies (later known as ULA) was having on the program, 

programmatic cost increases and causes, and other technical 

vulnerabilities that existed within the program. Furthermore, because the 

program was now in the sustainment phase, a new independent life-cycle 

cost estimate was not required for the program; as a result, DOD would 

not be able to rely on its estimate for making long-term investment 

planning decisions. According to DOD officials, the life-cycle cost 

estimate for the program at the time was not realistic. Our 

recommendations to strengthen oversight reporting gained attention in 

2011 following concerns about rising program cost estimates and at that 

time, Congress required the Secretary of Defense to redesignate the 

EELV program as a major defense acquisition program, thereby removing 

it from the sustainment phase and reinstating previous reporting 

requirements. DOD also developed a new program cost estimate, which 

allows for greater oversight of the program for both Congress and DOD.

GAO-08-1039 (Washington, DC: 

Sept. 26, 2008).

Highlights of GAO’s 

Work on EELV

2008
Page 3 GAO-14-776T 

We reported that the block buy acquisition approach may be based on 

incomplete information and although DOD was still gathering data as it 

finalized the new acquisition strategy, some critical knowledge gaps 

remained.2 Specifically, DOD analysis on the health of the U.S. launch 

industrial base was minimal, and officials continued to rely on contractor 

data and analyses in lieu of conducting independent analyses. 

Additionally, some subcontractor data needed to negotiate fair and 

reasonable prices were lacking, according to Defense Contract Audit 

Agency reports, and some data requirements were waived in 2007 in 

exchange for lower prices. DOD also had little insight into the sufficiency 

or excess of mission assurance activities, which comprise the many steps 

taken by the government and contractors to ensure launch success. 

Though the level and cost of mission and quality assurance employed 

today is sometimes criticized as excessive, it has also resulted in more 

than 80 consecutive successful launches. We also reported that the 

expected block buy may commit the government to buy more booster 

cores than it needs, and could result in a surplus of hardware requiring 

storage and potentially rework if stored for extended periods.3

We reported that broader issues existed as well, regarding the U.S. 

Government’s acquisition of, and future planning for, launch services—

issues which we recommended be addressed, given that they could 

reduce launch costs and assure future launch requirements are met. For 

example, we recommended that federal agencies—like the Air Force, 

NRO, and NASA—more closely coordinate their acquisitions of launch 

services. Planning was also needed for technology development focused 

on the next generation of launch technologies, particularly with respect to 

engines, for which the United States remains partially reliant on foreign 

suppliers. Congress responded to our work by legislating that DOD 

explain how it would address the deficiencies we found.

Further, 

while DOD was gaining insight into the rise in some engine prices, 

expected at that time to increase dramatically, it was unclear how the 

knowledge DOD was gaining would inform the expected acquisition 

approach or subsequent negotiations.

 2 GAO, Evolved Expendable Launch Vehicle: DOD Needs to Ensure New Acquisition

Strategy Is Based on Sufficient Information, GAO-11-641 (Washington, D.C.: Sept. 15, 

2011).

3 The booster core is the main body of a launch vehicle.

2011
Page 4 GAO-14-776T 

We reported that DOD had numerous efforts underway to address the 

knowledge gaps and data deficiencies identified in our 2011 report.4 Of 

the seven recommendations we made to the Secretary of Defense, two 

had been completely addressed, four were partially addressed and one 

had no action taken. That recommendation was aimed at bolstering 

planning for the next generation of launch technologies. Since GAO’s 

2011 report, DOD had completed or obtained independent cost estimates 

for two EELV engines and completed a study of the liquid rocket engine 

industrial base. Officials from DOD, NASA, and the NRO initiated several 

assessments to obtain needed information, and worked closely to finalize 

new launch provider certification criteria for national security space 

launches. Conversely, we reported that more action was needed to 

ensure that launch mission assurance activities were not excessive, to 

identify opportunities to leverage the government’s buying power through 

increased efficiencies in launch acquisitions, and to strategically address 

longer-term technology investments.

We reported on the status of DOD’s efforts to certify new entrants for 

EELV acquisitions.5

 4 GAO, Evolved Expendable Launch Vehicle: DOD Is Addressing Knowledge Gaps in Its 

New Acquisition Strategy,

While potential new entrants stated that they were 

generally satisfied with the Air Force’s efforts to implement the process, 

they identified several challenges to certification, as well as perceived 

advantages afforded to the incumbent launch provider, ULA. For 

example, new entrants stated that they faced difficulty in securing enough 

launch opportunities to become certified. During our review, the Under 

Secretary of Defense for Acquisition, Technology, and Logistics directed 

the Air Force to make available up to 14 launches for competition to new 

entrants, provided they demonstrate the required number of successful 

launches and provide the associated data in time to compete.

Additionally, new entrants considered some Air Force requirements to be 

overly restrictive; for example, new entrants must be able to launch a 

minimum of 20,000 pounds to low earth orbit from specific Air Force 

launch sites (versus facilities the new entrants currently use.) The Air 

Force stated that 20,000 pounds represents the low end of current EELV 

lift requirements, and that alternate launch sites are not equipped to 

GAO-12-822 (Washington, DC: July 26, 2012). 

5 GAO, Launch Services New Entrant Certification Guide, GAO-13-317R (Washington, 

DC: Feb. 7, 2013).

2012

2013
Page 5 GAO-14-776T 

support DOD’s national security space launches. Further, new entrants 

noted that the incumbent provider receives ongoing infrastructure and 

development funding from the government, an advantage not afforded to 

the new entrants, and that historical criteria for competition in the EELV 

program were more lenient. The Air Force acknowledged that criteria for 

competition are different, and reflective of the differences in the current 

acquisition environment.

We reported and testified that DOD’s new contract with ULA (sometimes 

referred to as the “block buy”) represented a significant effort on the part 

of DOD to negotiate better launch prices through its improved knowledge 

of contractor costs, and that DOD officials expected the new contract to 

realize significant savings, primarily through stable unit pricing for all 

launch vehicles.6 At the time of our review, DOD was leading the broader 

competition for up to 14 launches, expected to begin in fiscal year 2015.

In advance of the upcoming competition, DOD was considering several 

approaches to how it would require competitive proposals to be 

structured. Our report did not recommend an approach. However, we 

identified the pros and cons of two different ends of the spectrum of 

choices, one being a commercial-like approach and the other being 

similar to the current approach (a combination of cost-plus and fixed price 

contracts). If DOD required offers be structured similar to the way DOD 

currently contracts with ULA, there could be benefits to DOD and ULA as 

both are familiar with this approach, but potential burdens to new 

entrants, which would have to change current business practices. 

Alternatively, if DOD implemented a commercial approach to the 

proposals, new entrants would potentially benefit from being able to 

maintain their current efficient business practices, but DOD could lose 

insight into contractor cost or pricing, as this type of data is not typically 

required by the Federal Acquisition Regulation under a commercial item 

acquisition. DOD could also require a combination of elements from each 

of these approaches, or develop new contract requirements for this 

competition.

 6 GAO, The Air Force’s Evolved Expendable Launch Vehicle Competitive Procurement,

GAO-14-377R (Washington, D.C.: Mar, 4, 2014) and GAO, Evolved Expendable Launch 

Vehicle: Introducing Competition into National Security Space Launch Acquisitions, 

GAO-14-259T (Washington, D.C.: Mar. 5, 2014). 

2014
Page 6 GAO-14-776T 

ULA’s Atlas 5 launch vehicle uses the RD-180 engine produced by the 

Russian company NPO Energomash. DOD and Congress are currently 

weighing the need to reduce U.S. reliance on rocket engines produced in 

Russia and the costs and benefits to produce a similar engine 

domestically. The RD-180 engine has performed extremely well for some 

of the nation’s most sensitive national security satellites, such as those 

used for missile warning and protected communications. Moreover, the 

manufacture process of the RD-180 is one that cannot be easily 

replicated. In addition, the most effective way to design a launch 

capability is to design all components in coordination to optimize 

capabilities needed to meet mission requirements. In other words, 

replacing the RD-180 could require the development of a new launch 

vehicle and potentially new launch infrastructure.

Space launch vehicle development efforts are high risk from technical, 

programmatic, and oversight perspectives. The technical risk is inherent.

For a variety of reasons, including the environment in which they must 

operate, a vehicle’s technologies and design are complex and there is 

little to no room for error in the fabrication and integration process.

Managing the development process is complex for reasons that go well 

beyond technology and design. For instance, at the strategic level, 

because launch vehicle programs can span many years and be very 

costly, programs often face difficulties securing and sustaining funding 

commitments and support. At the program level, if the lines of 

communication between engineers, managers, and senior leaders are not 

clear, risks that pose significant threats could go unrecognized and 

unmitigated. If there are pressures to deliver a capability within a short 

period of time, programs may be incentivized to overlap development and 

production activities or delete tests, which could result in late discovery of 

significant technical problems that require more money and ultimately 

much more time to address. For these reasons, it is imperative that any 

future development effort adopt disciplined practices and lessons learned 

from past programs. I would like to highlight a few practices that would 

especially benefit a launch vehicle development effort.

First, decisions on what type of new program to pursue should be made 

with a government-wide and long-term perspective. Our prior work has 

shown that defense and civilian government agencies together expect to 

require significant funding, nearly $44 billion in then-year dollars (that 

factor in anticipated future inflation), for launch-related activities from 

Best Practices Would 

Benefit Future Engine 

Development Efforts
Page 7 GAO-14-776T 

fiscal years 2014 through 2018.7 At the same time, our past work has 

found that launch acquisitions and activities have not been well 

coordinated, though DOD and NASA have since made improvements.8

Second, requirements and resources (for example, time, money, and 

people) need to be matched at program start. This is the first of three key 

knowledge points we have identified as best practices. In the past, we 

have found that recent launch programs, such as NASA’s Constellation 

program and Commercial Crew Program, have not had sufficient funding 

to match demanding requirements.

Concerns have also been raised in various studies about the lack of 

strategic planning and investment for future launch technologies. Further, 

the industry is at a crossroads. For example, the government has a 

decreased requirement for solid rocket motors, yet for strategic reasons 

some amount of capability needs to be sustained and exercised. The 

emergence of Space Exploration Technologies, Corp. (SpaceX) and other 

vendors that can potentially compete for launch acquisitions is another 

trend that benefits from coordination and planning that takes a 

government-wide perspective. The bottom line is that any new launch 

vehicle effort is likely to have effects that reach beyond DOD and the 

EELV program and should be carefully considered in a long-term, 

government-wide context.

9

 7 GAO, Defense and Civilian Agencies Request Significant Funding for Launch-Related 

Activities, 

Funding gaps can cause programs to 

delay or delete important activities and thereby increase risks and can 

limit the extent to which competition can be sustained. Realistic cost 

estimates and assessments of technical risk are particularly important at 

program start. Space programs have historically been optimistic in 

estimating costs (although recently DOD and NASA have been making 

strides to produce more realistic estimates). The commitment to more 

realistic, higher confidence cost estimates would be a great benefit to any 

new launch vehicle development program and enable Congress to ensure 

GAO-13-802R (Washington, D.C.: Sept. 9, 2013). 

8 GAO, 2012 Annual Report: Opportunities to Reduce Duplication, Overlap and 

Fragmentation, Achieve Savings, and Enhance Revenue, GAO-12-342SP (Washington, 

D.C.: Feb. 28, 2012). 

9 GAO, NASA: Constellation Program Cost and Schedule Will Remain Uncertain Until a 

Sound Business Case Is Established, GAO-09-844 (Washington, D.C.: Aug., 26, 2009) 

and GAO, NASA: Actions Needed to Improve Transparency and Assess Long-Term 

Affordability of Human Exploration Programs, GAO-14-385 (Washington, D.C.: May 8, 

2014).
Page 8 GAO-14-776T 

its commitment is based on sound knowledge. We have also found that 

imposing overly ambitious deadlines can cause an array of problems. For 

instance, they may force programs to overlap design activities with testing 

and production.10 The many setbacks experienced by the Missile Defense 

Agency’s ground-based midcourse defense system, for example, are 

rooted in schedule pressures that drove concurrent development.11

Third, the program itself should adopt knowledge-based practices during 

execution. The program should also 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.

Our work on the second and third knowledge points during execution 

(design stability and production process maturity) has tied the use of such 

metrics to improved outcomes. In addition, the program should place a 

high priority on quality, for example, holding 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. Prior to EELV, DOD experienced a string of 

launch failures in the 1990s due in large part to quality problems.

Even 

if the need for a new engine is determined to be compelling, the 

government is better off allowing adequate time for disciplined 

engineering processes to be followed.

This concludes my statement. I am happy to answer questions related to 

our work on EELV and acquisition best practices.

 10 GAO, Missile Defense: Mixed Progress in Achieving Acquisition Goals and Improving 

Accountability, GAO-14-351 (Washington, D.C.: Apr. 1, 2014). 

11 GAO-14-351. In 2004 we found that the Missile Defense Agency (MDA) committed to a 

highly concurrent development, production, and fielding ground-based midcourse (GMD) 

interceptors. Because MDA moved forward with interceptor production before completing 

its flight testing program, test failures have exacerbated disruptions to the program. For 

example, because the program has delivered approximately three-fourths of the 

interceptors for fielding, the program faced difficult and costly decisions on how it will 

implement corrections from prior test failures. Also, the program has had to add tests that 

were previously not planned and delay tests that are necessary to understand the 

system’s capabilities and limitations. As a result of these development challenges, the 

GMD program will likely continue to experience delays, disruptions, and cost growth. 
Page 9 GAO-14-776T 

For questions about this statement, please contact Cristina Chaplain at 

(202) 512-4841, or at chaplainc@gao.gov. Contact points for our Offices 

of Congressional Relations and Public Affairs may be found on the last 

page of this statement. Individuals making key contributions to this 

testimony were Art Gallegos, Assistant Director; Pete Anderson, Claire 

Buck, Erin Cohen, Laura Hook, and John Krump.

GAO Contact and 

Staff 

Acknowledgments
Related GAO Products

Page 10 GAO-14-776T 

NASA: Actions Needed to Improve Transparency and Assess Long-Term 

Affordability of Human Exploration Programs. GAO-14-385. Washington, 

D.C.: May 8, 2014.

Missile Defense: Mixed Progress in Achieving Acquisition Goals and 

Improving Accountability. GAO-14-351. Washington, D.C.: April 1, 2014.

Evolved Expendable Launch Vehicle: Introducing Competition into 

National Security Space Launch Acquisitions. GAO-14-259T. 

Washington, D.C.: March 5, 2014.

The Air Force’s Evolved Expendable Launch Vehicle Competitive 

Procurement. GAO-14-377R. Washington, D.C.: March 4, 2014.

Defense and Civilian Agencies Request Significant Funding for LaunchRelated Activities. GAO-13-802R. Washington, D.C.: September 9, 2013.

Space: Launch Services New Entrant Certification Guide. GAO-13-317R. 

Washington, D.C.: February 7, 2013.

2012 Annual Report: Opportunities to Reduce Duplication, Overlap and 

Fragmentation, Achieve Savings, and Enhance Revenue. 

GAO-12-342SP. Washington, D.C.: February 28, 2012.

National Aeronautics and Space Administration: Acquisition Approach for 

Commercial Crew Transportation Includes Good Practices, but Faces 

Significant Challenges. GAO-12-282. Washington, D.C.: December 15, 

2011.

Evolved Expendable Launch Vehicle: DOD Needs to Ensure New 

Acquisition Strategy Is Based on Sufficient Information. GAO-11-641. 

Washington, D.C.: September 15, 2011.

NASA: Constellation Program Cost and Schedule Will Remain Uncertain 

Until a Sound Business Case Is Established. GAO-09-844. Washington, 

D.C.: August 26, 2009.

Space Acquisitions: Uncertainties in the Evolved Expendable Launch 

Vehicle Program Pose Management and Oversight Challenges. 

GAO-08-1039. Washington, D.C.: September 26, 2008.

Related GAO Products

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