Page 1 GAO-05-570R Space System Acquisitions 

June 23, 2005 

The Honorable C.W. Bill Young 

Chairman, Subcommittee on Defense 

Committee on Appropriations 

House of Representatives 

Subject: Defense Acquisitions: Incentives and Pressures That Drive 

Problems Affecting Satellite and Related Acquisitions

Dear Mr. Chairman: 

In fiscal year 2006, the Department of Defense (DOD) expects to spend 

more than $23 billion to develop, acquire, and operate satellites and other 

space-related systems. These systems are becoming increasingly critical to 

every facet of military operations as well as the U.S. economy and 

homeland security. Satellite systems collect information on the 

capabilities and intentions of potential adversaries. They enable U.S. 

military forces to be warned of missile attacks and to communicate and 

navigate while avoiding hostile actions. They provide information that 

allows forces to precisely attack targets in ways that minimize collateral 

damage and loss of life. DOD’s satellites also enable global 

communications; television broadcasts; weather forecasting; disaster 

planning; navigation of ships, planes, trucks, and cars; and synchronization 

of computers, communications, and electric power grids. 

DOD’s introduction of these desirable capabilities over time has not come 

without difficulties. Space system acquisitions have experienced problems 

over the past several decades that have driven up costs by hundreds of 

millions, even billions of dollars, stretched schedules by years, and 

increased performance risks. In some cases, capabilities have not been 

delivered to the warfighter after decades of development. As a result of 

these problems, DOD is now contending with important trade-off 

decisions, such as the following. 

• Whether to keep striving to build its Space-Based Infrared System 

(SBIRS) High as intended or cut back on capabilities. This system is 

intended to replace and upgrade an older generation of missile-warning 

satellites, but its cost has already more than doubled and continues to 

increase, and its schedule has stretched for years. 

Washington, DC 20548 
Page 2 GAO-05-570R Space System Acquisitions 

• Whether and how much to employ lower orbiting satellites equipped 

with similar capabilities to facilitate missile defense activities. DOD 

had spent two decades on this effort without launching a single 

satellite. Cost and schedule problems forced DOD to rebaseline the 

program several times. Overall affordability of missile defense has 

driven DOD to assess whether to continue with this particular effort as 

well as pursue development of a newer generation of missile-tracking 

satellites. 

• Whether to limit the acquisition of new communication satellites, 

known as the Advanced Extremely High Frequency (AEHF) satellites, 

in favor of developing a newer generation of laser-linked satellites, 

known as the Transformational Satellite Communications System 

(TSAT). The AEHF program is running over cost and schedule, but it 

incorporates more mature technologies. TSAT promises dramatically 

greater bandwidth and processing capabilities and is considered 

integral to DOD’s efforts to network all of its weapon systems, but 

there is much less certainty as to how much the system will cost or 

when it can be delivered because critical technologies are not mature. 

• Whether to pursue incremental increases in capability for the Global 

Positioning System or embark on a more expensive program that 

would offer more dramatic capability advances. 

Two years ago, we issued a report to your subcommittee that analyzed 

reports we had previously issued on satellite and other space-related 

programs over the past two decades as well as other studies. Our 2003 

report identified common problems affecting those acquisitions. 1

Generally, the problems we identified were common to DOD weapons 

acquisitions and were recognized within DOD and the space community. 

In February 2005, you requested that we identify underlying incentives and 

pressures that drive the problems we had identified earlier. You also asked 

that we complete our fieldwork by April 2005 to support the 

subcommittee’s decisions on DOD’s appropriations. 

To respond to your request, we analyzed a wide body of GAO, DOD, and 

industry studies (see enc. III) that discuss acquisition problems and 

underlying incentives and pressures, including our work on best practices 

in weapon system development that we have conducted over the past 

 1

GAO, Military Space Operations: Common Problems and Their Effects on Satellite and 

Related Acquisitions, GAO-03-825R (Washington, D.C.: June 2, 2003). 
Page 3 GAO-05-570R Space System Acquisitions 

decade, our individual reviews of space system acquisitions and 

crosscutting problems, DOD’s independent study of problems affecting 

SBIRS High, past DOD studies of crosscutting problems with space system 

acquisitions, and a more recent DOD joint task force study on the 

acquisition of national security space programs. We also conducted 

interviews with more than 40 individuals (see enc. IV)—including 

experienced space acquisition program managers and program executive 

officials within Air Force Space Command and its Space and Missile 

Systems Center, officials responsible for science and technology (S&T) 

activities that support space, former and current officials within the Office 

of the Secretary of Defense who have specific responsibility for space 

oversight or more general weapon system acquisition policy and oversight, 

and individuals representing various aspects of industry. We conducted 

our review from February 2005 to April 2005 in accordance with generally 

accepted government auditing standards. 

The officials we spoke with for this review cited a set of incentives and 

pressures underlying the space acquisition problems that are largely 

reflective of a lack of an overall investment strategy and a corresponding 

tendency to set start dates for programs before a sound business case for 

them has been established. Specifically, they told us that DOD starts more 

programs than it can afford and rarely prioritizes them for funding 

purposes. Such an approach has cascading effects—from creating negative 

behaviors associated with competing for funds, to increasing technology 

challenges, to creating unanticipated and disruptive funding shifts, to 

stretching out schedules in order to accommodate the whole portfolio of 

space programs. Our previous reports have found these pressures are 

long-standing and common to weapon acquisitions, not just space systems. 

In addition, officials we spoke with also cited pressures resulting from 

having a diverse array of officials and organizations involved with the 

acquisition process, tensions between the S&T and acquisition 

communities as to who is better suited to translate technology concepts 

into reality, pressures resulting from short tenures among staff critical to 

achieving acquisition success, and difficulties in overseeing contractors. 

We are not making recommendations in this report because it was not 

within the scope of our work to determine the actions needed to redirect 

the complex set of incentives and pressures affecting space programs. 

However, as we point out, our previous reports have already made 

recommendations—some of which have been implemented—that we 

believe would enable DOD to put space acquisition and other weapons 

programs on a sounder footing. In commenting on our report, DOD 

Results in Brief 
Page 4 GAO-05-570R Space System Acquisitions 

pointed out that it has recently taken steps such as improving 

requirements setting for all weapons systems and ensuring that decisions 

to start space acquisition programs are based on adequate knowledge. 

Where appropriate in this report, we also identify and present our views 

on solutions being discussed and implemented within DOD. 

The majority of satellite acquisition programs that DOD has pursued over 

the past several decades cost more than expected and took longer to 

develop and launch than planned. In our 2003 report, we tied these results 

to four problems. 

1. Requirements for what the satellite needed to do and how well it must 

perform were not adequately defined at the beginning of a program or 

were changed significantly once the program had begun. 

2. Investment practices were weak. For example, potentially more costeffective approaches were not examined and cost estimates were 

optimistic. 

3. Acquisition strategies were poorly executed. For example, competition 

was reduced in order to get a program started quickly, or DOD did not 

adequately oversee contractors. 

4. Technologies were not mature enough to be included in product 

development. 

We also reported that several factors contributed to these problems. First, 

DOD often set dates for delivering capabilities on the basis of optimism 

rather than the knowledge that critical technologies would work as 

intended by those dates. As a result, activities essential to understanding 

and containing costs, maximizing competition among contractors, and 

testing technologies were compressed or not done. Second, a diverse array 

of organizations with competing interests have been involved in overall 

satellite development—from the individual military services to testing 

organizations, contractors, civilian agencies, and, in some cases, 

international partners. This created challenges in making tough trade-off 

decisions. Third, space acquisition programs have historically attempted to 

satisfy all requirements in a single step, regardless of the design challenge 

or the immaturity of technologies to achieve the full capability. This 

approach made it difficult to match requirements to available resources (in 

terms of time, money, and technology). We also reported that other factors 

created challenges for the satellite acquisition programs we reviewed. 

Background 
Page 5 GAO-05-570R Space System Acquisitions 

These include a shrinking industrial base, a declining space workforce, 

difficulties associated with testing satellites in a realistic environment, as 

well as challenges associated with launching satellites. 

DOD’s own reviews have identified similar problems as our review and 

expanded on factors that helped drive those problems. Most recently, DOD 

conducted a Defense Science Board/Air Force Scientific Advisory Board 

Joint Task Force study in 2003 (known as the Young Panel report) to 

assess the acquisition of national security space programs and develop a 

road map for reform. The Young Panel found that over time, “cost has 

replaced mission success” as the primary driver in managing acquisitions, 

resulting in excessive technical and schedule risk. Specifically, the Young 

Panel reported that program managers face far less scrutiny on program 

technical performance than they do on executing against the cost baseline. 

The Young Panel said there are a number of reasons this is so 

detrimental—the primary ones being that space is unforgiving, thousands 

of good decisions can be undone by a single engineering flaw or 

workmanship error, and these flaws and errors can result in catastrophe. 

The best way to avoid such problems is an unrelenting emphasis on 

quality. The Young Panel noted that in the past, space programs had 

embraced this approach. Our own reports have shown that space 

programs have not done a good job at executing against their cost 

baselines. For example, costs for one of DOD’s most important programs, 

SBIRS High, have more than doubled, and they continue to grow. Our 

studies have also found that cost increases within DOD’s space programs 

are often attributable to the fact that programs were started without 

sufficient knowledge as to what resources would be needed to achieve 

success. The Young Panel similarly recognized that the best cost 

performance is achieved when there is an emphasis on mission success, 

which means taking steps to reduce technical and schedule risk and 

making investments that enhance quality. 

The Young Panel also found that unrealistic cost estimates had led to 

unrealistic budgets and unexecutable programs. Specifically, the panel 

found that the space acquisition system is strongly biased to produce 

unrealistically low cost estimates throughout the process. During program 

formulation, advocacy tends to dominate and a strong motivation exists to 

minimize program cost estimates. Moreover, proposals from competing 

contractors typically reflected the minimum program content and a “price 

to win.” Our own studies as well as other DOD studies have found that 

unrealistic estimates are common among all weapon systems, not just 

space systems, and that low estimates help ensure that the program will 

win support over competing programs and be funded. 
Page 6 GAO-05-570R Space System Acquisitions 

Like our study, the Young Panel also found that undisciplined definition of 

and uncontrolled growth in requirements contributed to cost growth and 

schedule delays and that flawed acquisition strategies did so as well. In 

particular, the Young Panel, as well as a preceding review of SBIRS High, 

found that the adoption of a Total System Performance Responsibility 

policy in the 1990s—which lessened the government program management 

role in favor of a stronger industry role—essentially eroded the 

government’s ability to effectively manage and oversee space programs 

and placed too much responsibility on industry to define requirements and 

make tradeoff decisions. Over time, this shift as well as other wellintended reforms resulted in declines in critical capabilities within the 

government space workforce, particularly for systems engineering. 

DOD has recognized that problems with its space acquisitions need to be 

addressed, and it has taken a range of actions, including shifting away 

from Total System Performance Responsibility to stronger government 

management and oversight of space programs, strengthening cost 

estimating capabilities, adding independent oversight reviews to the 

decision-making process, and adding discipline to requirements setting. 

However, our recent reports and testimonies have recommended that 

DOD also focus on ensuring that acquisition programs not begin until 

adequate knowledge has been accumulated on critical technologies and 

suggested that DOD still needs to guide its overall space portfolio with an 

investment strategy that makes high-level trade-offs before beginning 

programs. Moreover, our reports on all weapon system acquisitions have 

continually pointed out a need to recognize and find ways to address the 

underlying incentives and pressures that drive acquisition problems. 

Without doing so, the impact of changes in policies or processes will 

continue to be limited. 

The officials we spoke with for this review cited a set of incentives and 

pressures underlying the space acquisition problems that are largely 

reflective of a lack of an overall investment strategy and priority setting 

and a corresponding tendency to set start dates for programs before a 

sound business case for them has been established. In addition, officials 

we spoke with also cited pressures resulting from having a diverse set of 

individuals and organizations involved with the acquisition process, 

tensions between the S&T and acquisition communities as to who is better 

suited to translate technology concepts into reality, pressures resulting 

from short tenures among staff key to achieving acquisition success, and 

difficulties in overseeing contractors. Our own reviews have identified 

Incentives and 

Pressures that Drive 

Space System 

Acquisition Problems 
Page 7 GAO-05-570R Space System Acquisitions 

similar incentives and pressures and found them common among weapon 

system acquisitions. 

Many of the officials we spoke with identified pressures and incentives 

that are rooted in the widely held belief that DOD starts more space 

programs than it can afford and rarely prioritizes programs for funding 

purposes before or after starting them. Such an approach has cascading 

effects—from creating negative behaviors associated with competing for 

funds, to increasing technology challenges, to creating unanticipated and 

disruptive funding shifts, to stretching out schedules in order to 

accommodate the whole portfolio of space programs. Figure 1 highlights 

the cycle of pressures when DOD initiates too many programs with too 

little funding. 

Figure 1: Overview of Pressures Resulting from Beginning More Programs than 

DOD Can Afford in the Long Run 

Specifically, officials told us the following. 

• DOD starts more programs than it can afford over the long run, forcing 

programs to underestimate costs and overpromise capability. This was 

attributed to both the Office of the Secretary of Defense and the Air 

Force. The September 11, 2001, terror attacks on the United States 

Too Many Programs 

Competing for Funding 
Page 8 GAO-05-570R Space System Acquisitions 

spurred DOD to attempt to pursue even more satellite programs, 

believing that there was now a greater need for persistent surveillance 

and more robust communication and networking capabilities. 

• When faced with a lower budget, senior executives within Office of the 

Secretary of Defense and the Air Force would rather make across-theboard cuts to all space programs than hard decisions as to which ones 

to keep and which ones to cancel or cut back. 

• Because programs are funded annually and priorities have not been 

established, competition for funding continues over time, forcing 

programs to view success as the ability to secure the next installment 

rather than the end goal of delivering capabilities when and as 

promised. 

• More often than not, DOD seeks substantial leaps in capability versus 

incremental leaps. While this approach helps a program to gain 

support, it substantially increases the technical challenge and the level 

of unknowns about a program at the time it is started. 

• Having to continually “sell” a program also creates incentives to 

suppress bad news about the program’s status and avoid activities that 

uncover bad news. 

• Launching demonstrators in space is a good way to reduce risks and 

learn about technologies before starting a new acquisition program. 

But because of the high cost of testing technologies in space and the 

overall competition for funding, programs are incentivized not to 

pursue this approach. At the same time, resources outside acquisition 

programs devoted to testing in an operational environment are 

declining. 

• DOD faces resource shortages beyond funding because it starts more 

programs than it can afford. Principally, it does not have a sufficient 

workforce to support space acquisitions or experienced program 

managers to guide them. 

Our previous reports have found that these pressures are long-standing 

and common to weapon acquisitions, not just space acquisitions. The 

competition within DOD to win funding and get approval to start a new 

program is intense, creating strong incentives to make a weapon system 

stand out from existing or alternative systems. If the system does not 

stand out or prevail over alternatives, the program could be terminated. 

Moreover, overall DOD funding constraints put a high priority on 
Page 9 GAO-05-570R Space System Acquisitions 

affordability, making it important for program sponsors to provide cost 

estimates that will fit within the funding constraints. Instead of forcing 

trade-offs, challenging performance requirements—when coupled with 

other constraints, such as cost or the weight of the satellite—can drive 

product developers to pursue exotic solutions and technologies that, in 

theory, can do it all. 

Moreover, in weapon acquisitions, optimistic cost estimates are 

encouraged because they help gain program approval and attract 

budgetary resources. The consequences of cost growth are not directly felt 

by an individual program because they are “accommodated” through 

delivery delays and quantity changes and by spreading the cost impact 

across many programs. 

We have also reported that the practice of breaching cost and schedule 

objectives to meet difficult requirements would not persist without a 

customer’s cooperation. Unlike commercial customers, DOD customers 

tend to be tolerant of cost overruns and delays in order to get a highperformance weapon system. Traditionally, customers have been willing 

to wait long periods of time for a capability. They would rather wait for the 

most desirable system to be developed than accept a less capable system, 

thinking that they may not get the opportunity to acquire a new or 

modified system in the future. 

Our recent reports on space and other weapon systems have suggested 

that having a departmentwide investment strategy for weapon systems or 

even space systems would help reduce these pressures. Critical 

components of such a strategy would include identifying overall 

capabilities and how to achieve them, that is, what role space will play 

versus other air-, sea-, and land-based assets; identifying priorities for 

funding; and implementing mechanisms that would enforce the strategy. 

DOD has made revisions to its requirements-setting and budgeting 

processes to strengthen investment planning. However, it is unclear as to 

how these changes will be implemented over time and whether they can 

serve as a foundation for directing S&T and acquisition investments. 

To help close knowledge gaps at the onset of programs and shorten 

development time, DOD has adopted an evolutionary development 

approach—that is, pursuing incremental increases in capability versus 

significant leaps. Our examinations of best practices have found that this 

approach can decrease time and cost for development because it closes 

gaps in unknowns. Many of the officials we spoke with believe that 

evolutionary development could be achieved in space by developing 
Page 10 GAO-05-570R Space System Acquisitions 

constellations of larger numbers of smaller, more affordable satellites 

instead of constellations of a few, very large and heavy, complex satellites 

(commonly referred to as “Battlestar Galacticas” in the space community). 

In addition to reducing cost and time associated with longer, more 

challenging programs, this approach could help keep the space industrial 

base more productive. Complementary alternatives include developing 

common rather than unique satellite components, cheaper and more 

responsive launch systems, as well as systems that enable DOD to modify 

and fix satellites in orbit. DOD is pursuing a range of S&T efforts along 

these lines. However, DOD’s executive agent for space recently testified 

that these approaches are not technically suitable for some of the 

capabilities DOD is now pursuing, such as Space Radar (formerly the 

Space-Based Radar program) and TSAT. We will be undertaking a review 

to further assess the potential that these approaches offer for producing 

better outcomes as well as potential barriers to integrating them into the 

acquisition process. 

Another solution that has been advocated by the Young Panel and many of 

the officials we spoke with as a way of addressing gaps between resources 

and requirements is management reserves. The Young Panel 

recommended using reserves only to execute the approved program 

baseline and not for new requirements. The officials we spoke with also 

said that management reserves may not be needed as much as they 

currently are if programs do a better job of matching resources to 

requirements before they begin. In addition, several officials noted that 

broader investment strategies should be in place so that DOD can afford 

management reserves. 

The officials we spoke with widely agreed that the diverse array of 

officials and organizations involved with a space program make it even 

more difficult to pare back and control requirements. As officials we 

spoke with pointed out, space systems may suffer from more requirements 

pressures because there is usually a very broad constituency behind each 

satellite program. The Global Positioning System, for example, not only 

serves military users; it also serves civilians, supports various key 

economic sectors such as transportation and communications, and is used 

by allies. The National Polar-Orbiting Operational Environmental Satellite 

System currently under development will serve military weather 

forecasters as well as civilian forecasters and a broad community of 

scientists studying environmental issues. The Space Radar system is 

expected to play a major role in transforming military as well as 

intelligence-collecting operations and other critical governmental 

Diverse Array of Officials 

and Organizations 

Involved with Space 

Systems Add Pressure to 

Requirements Setting 
Page 11 GAO-05-570R Space System Acquisitions 

functions, such as homeland security. As a result, when starting these new 

systems, space program managers can expect to be inundated with 

competing demands—not just among military users—but also among 

civilian and industry users. 

Our prior reports have identified related pressures with all weapon 

systems. More than 30 organizations within the requirements community 

may have a hand in determining a weapon system’s performance 

requirements before a contractor with systems engineering expertise can 

identify the gaps between the requirements and available resources. This 

process means the “doability” of the requirements is often not known with 

certainty until well into product development or until a significant 

percentage of funds planned to develop the system has been invested. By 

this point in time, customers’ expectations have been set, making it 

difficult to change requirements if gaps between requirements and 

available resources are found. 

In the past, DOD has not implemented effective mechanisms to help 

mitigate these pressures. In fact, as DOD’s own studies have shown that 

these pressures were exacerbated when DOD pursued its Total System 

Performance Responsibility approach because it turned over 

responsibilities related to requirements definition to contractors who had 

less understanding and ability to negotiate requirements, leaving program 

managers in the position of having to continually address requirements 

growth without additional resources. Moreover, the Young Panel observed 

that space program managers have not had the authority needed to make 

trade-offs between requirements and control requirements growth. The 

panel recommended giving program managers this authority, accompanied 

by greater accountability for requirements. 

An important problem cited in our reports about space system acquisition 

programs is the tendency to take on technology development that should 

occur within the S&T environment. Our reports have stressed that the S&T 

environment is more forgiving and less costly than the acquisition 

environment, which is focused on delivery. This is because events such as 

test failures, new discoveries, and time spent in attaining knowledge are 

considered normal in the S&T environment rather than negative. Further, 

when acquisition programs take on technology development, estimates for 

cost, schedule, and performance are formally approved without the benefit 

of knowing that technologies will work as intended. 

Developing Technologies 

within the S&T 

Environment versus the 

Acquisition Environment 
Page 12 GAO-05-570R Space System Acquisitions 

Officials we spoke with for this review and previous reviews cited a 

number of reasons that program managers and senior leaders choose to 

have acquisition programs take on technology development activities that 

should occur within the S&T environment. 

• The lengthy development period required for space systems puts 

pressure on program managers to continually develop technologies. 

There is a fear that if these technologies do not reach maturity during 

this time frame, they will be outdated by the time the satellites are 

ready to be launched. 

• Once a program has formally begun, it is easier to secure current and 

future years’ funding. 

• Satellites tend to last longer than expected, and they cannot be 

retrieved for upgrades, putting more pressure on programs to push for 

attaining as much technological capability as possible within the 

acquisition program. 

• The acquisition community does not believe that labs in charge of 

developing space technologies adequately understand its needs—in 

terms of capabilities and time frames—and would rather pursue its 

own goals. 

• Program managers also believe that they would have more control over 

technology development if it was conducted by contractors who 

answered to them rather than to DOD labs. 

• DOD has not had an effective strategy for steering activities within the 

S&T community to ensure that they will eventually fit in with 

acquisition needs. (Note: DOD has recently developed a space S&T 

strategy. We reported on this effort in January 2005.) 

Our previous reports have found that many of these views tend to work 

against, rather than for, DOD’s ability to achieve timely technology 

advances. When acquisition programs seek to translate advanced concepts 

into reality, they invariably run into problems that require time and money 

to fix. The effects of these problems are often revealed in a later stage of 

development, where they have reverberating effects on other aspects of 

the acquisition program and often require reworking design. For example, 

early technological problems as well as more recent system integration 

issues have severely affected the SBIRS High program, among others. 
Page 13 GAO-05-570R Space System Acquisitions 

We also previously found that DOD’s new space acquisition policy 

increased acquisition risks by allowing programs to begin without having 

technologies demonstrated in an operational or simulated environment or 

even begun with technologies in even lower stages of maturity. 

Many officials believed this policy was necessary because of the unique 

aspects of space acquisition programs, that is, their long length, their 

complexity, and the high cost of operational testing associated with space 

systems. As we have reported in the past, however, DOD has found ways 

to test sensors and other critical technologies on experimental satellites in 

the past, and it has built and launched technology demonstrator satellites 

before starting acquisition programs. Moreover, as noted earlier, the length 

of space and other weapon system development can be reduced by 

pursuing evolutionary development. This approach does not prevent DOD 

from concurrently seeking technological advances, but such activity 

should occur outside an acquisition program, rather than inside, to 

minimize disruptions. Last, officials within the Office of the Secretary of 

Defense did not believe that space programs warranted a separate 

approach than other weapon systems. They noted that ships, for example, 

have unique aspects but still fall under the same acquisition policy as other 

weapon systems, which encourages programs to test technologies in an 

operational environment before starting. They also noted that having 

allowed space programs to follow a separate acquisition process has 

effectively reduced direct oversight from the Office of the Secretary of 

Defense. 

DOD has recently revised its space acquisition policy, in part to encourage 

programs to attain more knowledge about technologies before starting. It 

has also taken steps to strengthen its commitment to fully fund space 

programs. However, the revised policy still allows space acquisition 

programs to begin before demonstrating technologies in an operational or 

simulated environment. 

Short tenures for top leadership and program managers within the Air 

Force and the Office of the Secretary of Defense have lessened the sense 

of accountability for acquisition problems and further encouraged a shortterm view of success, according to officials we interviewed. Turnover 

makes it difficult for upper-level managers to establish effective working 

relationships with program managers, resulting in less trust when 

divulging problems. 

Short Tenures and 

Workforce Deficiencies 

May Disrupt Programs as 

Well as DOD’s Overall 

Ability to Implement 

Reform 
Page 14 GAO-05-570R Space System Acquisitions 

These concerns have been echoed in prior GAO and DOD reports. DOD 

has taken action over the past decade to lengthen the tenure of program 

managers. However, the Young Panel reported that the average tenure of a 

space program manager is just 2 years and recommended that tenures be 

extended to a minimum of 4 years to minimize disruption to programs. 

Even with this extension, it is likely that programs, which typically last 

longer than 4 years, will continue to experience turnover in program 

management. Many current programs, including SBIRS High, the Space 

Tracking and Surveillance System, Global Positioning System II 

modernization effort, and AEHF, were started in the mid- to late 1990s. We 

have also reported in the past that the short tenures typical of program 

managers make it difficult for them to change the system of incentives 

because other participants can wait out reforms they oppose. Moreover, 

DOD acquisition executives do not necessarily stay in their positions long 

enough to develop the needed long-term perspective or to effectively 

change traditional incentives. 

Officials we spoke with frequently cited other workforce-related 

deficiencies that put pressure on program managers and acquisition 

executives. For example, there are not enough experienced program 

managers to run space programs and or enough experts in software 

engineering—a consequence of starting more programs than DOD can 

afford and effectively manage. Earlier policies of having industry assume 

more responsibility also contributed to this dearth of expertise within 

DOD. As a result, DOD has increasingly relied on outside experts to help 

manage programs. At the same time, a limited number of these outside 

experts are available to provide technical support to DOD’s various space 

programs. 

Officials we spoke with pointed out a number of pressures associated with 

contractors who develop space systems for the government—mostly 

having to do with the level of oversight and insight program managers 

have with their contractors as well as pressures among contractors to 

produce low-cost estimates while bidding on contracts. Specific concerns 

mentioned include the following. 

• Nonincumbent contractors are often able to submit a lower price than 

the incumbent because they can be optimistic without being challenged 

by DOD. These optimistic estimates enable them to win new contracts. 

At the same time, however, nonincumbents are not necessarily the best 

organizations to carry out the development program, particularly 

Industry-Related Pressures 
Page 15 GAO-05-570R Space System Acquisitions 

because they do not have the technical and management experience 

associated with the legacy system being replaced. 

• Industry has been consolidated to a point where there may be only one 

company that can develop a needed component for a satellite system. 

This has enabled contractors to hold some programs hostage. 

• Program managers are often not equipped to understand what is 

behind a contractor’s proposal, particularly because contractors are 

not likely to disclose technical risks and highlight other negative 

aspects. 

• Industry puts pressure on programs to have contractors develop 

critical technologies within an acquisition environment versus having 

the labs do it. When labs build technologies, the government allows the 

contractors that work on the system that would ultimately use the 

technologies to scrap them in favor of employing their own methods 

and expertise. 

• Program managers are not always experienced enough to stand up to 

contractors when development is being mismanaged. Program 

managers also may not understand the best ways to incentivize 

contractors and gain insight into their performance. 

• Contractors are facing workforce pressures similar to those 

experienced by the government, that is, not enough technical expertise 

to develop highly complex space systems. (Our recent report on space 

S&T echoed this concern as well, pointing out that several 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.) 

• Some space programs are facing pressures related to funding and 

technology development because of an expectation widely held in the 

1990s that the commercial space market would experience a boom. At 

the time, DOD decreased funding for some capabilities, principally 

space launch, assuming the market could pay for a portion of research 

and development and that economies of scale would result. It also 

relied on the commercial sector to develop knowledge about 

production of satellites that eventually were purchased as part of the 

Wideband Gapfiller Satellite program. However, when anticipated 

commercial orders using the same technologies did not pan out, the 

government experienced unanticipated schedule delays. 
Page 16 GAO-05-570R Space System Acquisitions 

By delving into the underlying incentives and pressures that cause space 

system acquisitions to go awry, DOD will be better equipped to take the 

steps needed to attain successful outcomes. The comments of the 40-plus 

experts interviewed for this report reinforce our past findings that those 

steps should include the development of an overall investment strategy 

that prioritizes funding and the establishment of a sound business case 

before starting an acquisition program. 

In written comments on our draft report (see enc. I), DOD presented its 

views in two primary areas. First, in responding to our conclusion that 

problems in space acquisitions are largely reflective of a lack of an 

investment strategy for space programs, DOD commented that it is 

implementing a new requirements process—known as the Joint 

Capabilities Integration and Development System (JCIDS)—designed to 

ensure that each new military program is aligned with current and future 

joint needs. We have acknowledged in our past work that the 

implementation of JCIDS is a positive step toward realizing a DOD-wide 

investment strategy for weapon systems. In using this new process to 

achieve better outcomes, DOD will need to systematically prioritize its 

weapon system programs against funding plans and consistently perform 

rigorous analysis of alternatives that weigh the costs and benefits of 

achieving each desired capability via a space platform versus an air, land, 

or sea platform. Until DOD’s strategic weapon system plans for the future 

are better linked to DOD’s budget, these programs will continue to 

experience funding shortfalls, the shifting of funding from program to 

program, and accompanying schedule delays. 

Second, DOD commented on our conclusion that problems in space 

acquisitions are also a result of DOD’s tendency to begin these programs 

before establishing a sound business case. DOD pointed out that criteria in 

its new space acquisition policy, which was updated on December 27, 

2004, are designed to ensure a program’s readiness to proceed into the 

development phase (or “program start”). We recognize that the new policy 

should increase knowledge about space programs before investment 

decisions are made but remain concerned that DOD will start acquisition 

programs and commit to cost, schedule, and performance baselines before 

it has established a sound business case—which we have found to be a 

match between requirements and resources (time, money, and mature 

technologies). 

DOD also provided a set of comments that it termed “corrections to errors 

in fact.” In enclosure II, we respond to this set of comments; changes made 

Conclusion 

Agency Comments 

and Our Evaluation 
Page 17 GAO-05-570R Space System Acquisitions 

to the draft report and areas of disagreement between us and DOD are 

highlighted. 

We are sending copies of this report to the Secretaries of Defense and the 

Air Force and interested congressional committees. We will make copies 

available to others on request. In addition, the report will be available on 

the GAO Web site at http://www.gao.gov. 

If you or your staff have any questions concerning this report, please 

contact me at (202) 512-4841. Other staff making key contributions to this 

report include Cristina Chaplain, Maricela Cherveny, Lily Chin, Art 

Gallegos, Jean Harker, John Krump, and Nancy Rothlisberger. 

Sincerely yours, 

Robert E. Levin, Director 

Acquisition and Sourcing Management 
Enclosure I: Comments from the Department 

of Defense 

Page 18 GAO-05-570R Space System Acquisitions 

Enclosure I: Comments from the Department 

of Defense 
Enclosure I: Comments from the Department 

of Defense 

Page 19 GAO-05-570R Space System Acquisitions 
Enclosure I: Comments from the Department 

of Defense 

Page 20 GAO-05-570R Space System Acquisitions 
Enclosure I: Comments from the Department 

of Defense 

Page 21 GAO-05-570R Space System Acquisitions 
Enclosure I: Comments from the Department 

of Defense 

Page 22 GAO-05-570R Space System Acquisitions 
Enclosure II: Department of Defense 

Comments and GAO’s Responses 

Page 23 GAO-05-570R Space System Acquisitions 

1. The Department of Defense (DOD) stated that we failed to acknowledge that the 

SBIRS High system, as currently planned, would serve to replace the Defense 

Support Program and improve on the capabilities it provides. 

GAO’s Response: We have changed the text in this report to reflect that SBIRS 

High is intended to also upgrade existing capabilities. 

2. DOD stated that it is operating its Defense Support Program satellites longer than 

expected because they are “fortuitously living longer than expected.” 

GAO’s Response: Although DOD’s original plan was to begin launching SBIRS 

High satellites in 2002 regardless of the health or longevity of the Defense Support 

Program satellites, we revised this point to concentrate on the acquisition of 

SBIRS High. 

3. DOD stated that our draft report implies that unlike the rest of DOD, the space 

community has not adopted the evolutionary development approach—that is, 

pursuing incremental increases in capability versus significant leaps. 

GAO’s Response: While the space acquisition policy has a section on Evolutionary 

Acquisition, the Air Force continues to pursue significant leaps in technology 

within its acquisition programs. For example, DOD plans to migrate from the 

Advance Extremely High Frequency (AEHF) satellites with radio frequency 

crosslinks capable of transmitting data at 60 megabits per second to the 

Transformational Satellite Communication System (TSAT) with laser crosslinks 

capable of supporting 20,000 megabits per second. 

4. DOD commented that technology discovery has not affected the development of 

SBIRS High. 

GAO’s Response: Although we agree that currently the major problems on SBIRS 

High are related to system integration, earlier in the program, there were technical 

development problems related to the sensors and satellites. We revised the text to 

show that system integration issues have also affected the development of SBIRS 

High. 

5. DOD stated that it is committed to testing technology in a relevant environment 

no later than key decision point C. DOD added that regarding maturity, the 

program office is required to conduct technology readiness assessments. Finally, 

DOD stated that the integrated program summary’s detailed risk management 

section addresses technical maturity. 

Enclosure II: Department of Defense 

Comments and GAO’s Responses 
Enclosure II: Department of Defense 

Comments and GAO’s Responses 

Page 24 GAO-05-570R Space System Acquisitions 

GAO’s Response: We note that the recently revised space acquisition policy added 

processes to assess the maturity of critical technologies and provided that “where 

feasible, critical technology should complete testing in a relevant environment 

during Phase B.” The policy also states that technology that has not been tested in 

a relevant environment should be moved to the next increment. However, the 

policy still allows programs to continue to mature technology while they are 

designing the system and undertaking other product development activities during 

Phase B. Our work on best practices shows that successful acquisition programs 

do not start product development unless a match between requirements and the 

resources (time, technology, and money) can be made, and technologies should 

be matured in an environment that is focused on technology development. Under 

the DOD space acquisition policy, programs are allowed to enter Phase B with 

technologies that are immature. 

6. Regarding our citing some unique aspects of space acquisition programs, DOD 

mentioned low quantities produced, continual development during the acquisition 

cycle, long operational life, infeasibility of conducting operational testing, and 

inability to repair once on orbit. 

GAO’s Response: The three unique aspects of space acquisition programs cited in 

our report were those given by interviewed officials. Concerning the DODmentioned criteria, our work has found that technology development is best 

conducted before product development rather than continually throughout the 

acquisition cycle. Also, low quantities produced and long operational life are 

aspects shared by many non-space weapon systems. In addition, we have reported 

that although operational testing is expensive, it is feasible. 

7. DOD took issue with a comment that the separate space acquisition process has 

effectively blocked out oversight from the Office of the Secretary of Defense 

(OSD). DOD clarified that its space policy is one of inclusiveness and identified 

the various organizational participants in the space acquisition process. 

GAO’s Response: We note that DOD is taking issue with comments we obtained 

from officials within OSD. Because this information is opinion and is qualified as 

such in this report, there are no errors to correct. The space acquisition policy 

does provide for OSD stakeholders on the Defense Space Acquisition Board. 

However, it is the Under Secretary of the Air Force who has milestone decision 

authority over space programs, and not the Under Secretary of Defense for 

Acquisition, Technology, and Logistics, who has milestone decision authority for 

other weapon systems. We revised our report to state that the separate space 

acquisition process has effectively reduced rather than blocked direct OSD 

oversight. 
Enclosure II: Department of Defense 

Comments and GAO’s Responses 

Page 25 GAO-05-570R Space System Acquisitions 

8. DOD commented that we had incorrectly identified the Secretary of the Air 

Force’s Space Plans and Policy Division as being interviewed. 

GAO’s Response: We changed that item in enclosure IV to read the “Directorate of 

Space Acquisition.” 
Enclosure III: Related Reports 

Page 26 GAO-05-570R Space System Acquisitions 

Report of the Defense Science Board/Air Force Scientific Advisory Board 

Joint Task Force on Acquisition of National Security Space Programs, 

May 2003 (also referred to as the “Young Panel report”) and the July 2004 

update to this report. 

Space-Based Infrared System Independent Review Team, Final Report, 

February 2002. 

Defense Acquisitions: Assessments of Selected Major Weapon Programs, 

GAO-05-301 (Washington, D.C.: March 31, 2005). 

Technology Development: New DOD Space Science and Technology 

Strategy Provides Basis for Optimizing Investments but Future Versions 

Need to Be More Robust, GAO-05-155 (Washington, D.C.: Jan. 28, 2005). 

Defense Acquisitions: Space-Based Radar Effort Needs Additional 

Knowledge before Starting Development, GAO-04-759 (Washington, D.C.: 

July 23, 2004). 

Defense Acquisitions: Risks Posed by DOD’s New Space Systems 

Acquisition Policy, GAO-04-379R (Washington, D.C.: Jan. 29, 2004). 

Space Acquisitions: Committing Prematurely to the Transformational 

Satellite Program Elevates Risks for Poor Cost, Schedule, and 

Performance Outcomes, GAO-04-71R (Washington, D.C.: Dec. 4, 2003). 

Defense Acquisitions: Improvements Needed in Space Systems 

Acquisition Policy to Optimize Growing Investment in Space, 

GAO-04-253T (Washington, D.C.: Nov. 18, 2003) 

Defense Acquisitions: Despite Restructuring, SBIRS High Program 

Remains at Risk of Cost and Schedule Overruns, GAO-04-48 (Washington, 

D.C.: Oct. 31, 2003). 

Defense Acquisitions: Improvements Needed in Space Systems 

Acquisition Management Policy, GAO-03-1073 (Washington, D.C.: Sept. 

15, 2003). 

Military Space Operations: Common Problems and Their Effects on 

Satellite and Related Acquisitions, GAO-03-825R (Washington, D.C.: June 

2, 2003). 

Enclosure III: Related Reports 

DOD 

GAO 
Enclosure III: Related Reports 

Page 27 GAO-05-570R Space System Acquisitions 

Military Space Operations: Planning, Funding, and Acquisition 

Challenges Facing Efforts to Strengthen Space Control, GAO-02-738

(Washington, D.C.: Sept. 23, 2002). 

Best Practices: Capturing Design and Manufacturing Knowledge Early 

Improves Acquisition Outcomes, GAO-02-701 (Washington, D.C.: July 15, 

2002). 

Defense Acquisitions: DOD Faces Challenges in Implementing Best 

Practices, GAO-02-469T (Washington, D.C.: Feb. 27, 2002). 

Best Practices: Better Matching of Needs and Resources Will Lead to 

Better Weapon System Outcomes, GAO-01-288 (Washington, D.C.: March 

8, 2001). 

Defense Acquisitions: Employing Best Practices Can Shape Better 

Weapon System Decisions, GAO/T-NSIAD-00-137 (Washington, D.C.: April 

26, 2000). 

Best Practices: Better Management of Technology Development Can 

Improve Weapon System Outcomes, GAO/NSIAD-99-162 (Washington, 

D.C.: July 30, 1999). 

Best Practices: Successful Application to Weapon Acquisitions Requires 

Changes in DOD’s Environment, GAO/NSIAD-98-56 (Washington, D.C.: 

Feb. 24, 1998). 

Booz, Allen, Hamilton, Space Systems Development Growth Analysis, 

McLean, Va., October 2002. Other 
Enclosure IV: Officials Interviewed for This 

Review 

Page 28 GAO-05-570R Space System Acquisitions 

Office of the Secretary of Defense 

• Office of the Director, Program Analysis and Evaluation and Cost 

Analysis Improvement Group 

• Office of Force Transformation 

• Under Secretary of Defense for Acquisition, Technology, and Logistics 

• Assistant Secretary of Defense for Networks and Information 

Integration 

Secretary of the Air Force 

• National Security Space Office 

• Office of Science, Technology, and Engineering 

• Directorate of Space Acquisition 

Air Force Space Command 

• Directorate of Requirements 

• Systems Engineering and Integration Office 

• Space and Missile Systems Center 

• Program Executive Office 

• Advanced Extremely High Frequency Program 

• Development and Transformation Directorate 

• Evolved Expendable Launch Vehicle Program 

• NAVSTAR GPS Joint Program 

• Space-Based Infrared Systems Program 

• Space Radar Program 

Missile Defense Agency 

• Space Tracking and Surveillance System Program 

Naval Research Laboratory 

Various industry and former high-ranking Department of Defense officials 

Enclosure IV: Officials Interviewed for This 

Review 

(120402) 
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