United States Government Accountability Office

GAO Testimony before the Subcommittee on 

Strategic Forces, Senate Committee on 

Armed Services

SPACE ACQUISITIONS

Improvements Needed in 

Space Systems Acquisitions 

and Keys to Achieving 

Them 

Statement of Cristina T. Chaplain 

Acting Director, Acquisition and Sourcing 

Management Team 

For Release on Delivery

Expected at 3:30 p.m. EDT

Thursday, April 6, 2006

 

GAO-06-626T 
What GAO Found

United States Government Accountability Office

Why GAO Did This Study

Highlights

Accountability Integrity Reliability

April 6, 2006

SPACE ACQUISITIONS

Improvements Needed in Space Systems 

Highlights of GAO-06-626T, a testimony Acquisitions and Keys to Achieving Them 

before the Subcommittee on Strategic 

Forces, Senate Committee on Armed 

Services

DOD’s space system acquisitions 

have experienced problems over

the past several decades that have

driven up costs by hundreds of 

millions, even billions of dollars, 

stretched schedules by years, and 

increased performance risks. GAO 

was asked to testify on its findings 

on space acquisition problems and 

steps needed to improve outcomes.

What GAO Recommends

GAO does not make 

recommendations in this 

testimony. However, GAO testified 

that there are steps DOD can take

to ensure better outcomes for its 

space acquisitions programs. They 

include developing an overall

investment strategy for space

acquisition programs; revising 

policies supporting space to 

incorporate best practices; and

addressing human capital and other

shortfalls in capacity. 

DOD’s space acquisition programs continue to face substantial cost and 

schedule overruns. At times, cost growth has come close to or exceeded 

100-percent, causing DOD to nearly double its investment in face of 

technical and other problems without realizing a better return on its 

investment. Along with the cost increases, many programs are experiencing

significant schedule delays—as much as 6 years—postponing delivery of 

promised capabilities to the warfighter. Outcomes have been so

disappointing in some cases that DOD has had to go back to the drawing 

board to consider new ways to achieve the same capability. 

These problems are having a dramatic effect on DOD’s space investment 

portfolio. Over the next 5 years, there will be about $12 billion less dollars

available for new systems as well as for the discovery of promising new 

technologies because of cost growth. And while DOD is pushing to start 

new, highly ambitious programs such as the Transformational Satellite and 

Space Radar, broader analyses of the nation’s fiscal future indicate that 

spending for weapon systems may need to be reduced, rather than 

increased, to address growing deficits.

GAO has identified a number of causes behind these problems, but several

stand out. First, DOD starts more space and weapons programs than it can 

afford, which pressures programs to under estimate costs and over promise 

capabilities. Second, DOD starts its space programs too early, that is, before 

it is sure the capabilities it is pursuing can be achieved within available

resources and time constraints. DOD has also allowed new requirements to 

be added well into the acquisition phase. 

DOD has appointed a new leadership to oversee space acquisitions who have

committed to adopting practices GAO has recommended for improving 

outcomes. These include delegating the maturation of technologies to the 

S&T community; adopting an evolutionary development approach in which 

new systems would be developed in a series of discrete increments, or 

blocks; fund S&T appropriately so that significant technology breakthroughs 

can be continually pursued; and improving collaboration on requirements. 

Adopting best practices for space acquisitions will not be an easy 

undertaking. DOD, as a whole, still operates in an environment that 

encourages competition for funding, and thus, behaviors that have been 

detrimental to meeting cost and schedule goals. Moreover, the changes 

being proposed will require significant shifts in thinking about how space 

systems should be developed and changes in incentives. By establishing 

investment priorities, embedding best practices in policy, and addressing

capacity shortfalls, DOD can mitigate these challenges and better position 

programs for success. 

www.gao.gov/cgi-bin/getrpt?GAO-06-626T.

To view the full product, including the scope 

and methodology, click on the link above. 

For more information, contact Cristina T. 

Chaplain at (202) 512-4841 or 

chaplainc@gao.gov. 
 Improvements in Space Systems Acquisitions

Mr. Chairman and Members of the Subcommittee: 

I am pleased to be here today to discuss the Department of Defense’s 

(DOD) space acquisitions. Each year, DOD spends billions to acquire 

space-based capabilities to support current military and other government

operations as well as to enable DOD to transform the way it collects and 

disseminates information, gathers data on its adversaries, and attacks 

targets. In fiscal year 2007 alone, DOD expects to spend almost $20 billion 

dollars to develop and procure satellites and other space systems, 

including nearly $7 billion on the major space systems.1

 Despite its 

growing investment in space, however, DOD’s space system acquisitions 

have experienced problems over the past several decades that have driven 

up costs by hundreds of millions, even billions of dollars, stretched 

schedules by years, and increased performance risks. In some cases, 

capabilities have not been delivered to the warfighter after decades of 

development. 

As a result of these problems, DOD is now contending with important 

trade-off decisions such as whether to continue investing in long 

beleaguered efforts or undertake more promising alternatives. At the same 

time, leadership now recognizes the need to substantially change DOD’s 

current space acquisition approach and the value of adopting practices 

that will lay a better foundation for program execution. Within this 

context, I will discuss our findings on space acquisition problems, recent 

steps DOD has taken in an effort to address these problems, and the 

changes that still need to occur if DOD is to break the cycle of acquisition

problems. 

The majority of satellite programs we have reviewed over the past 2 

decades experienced problems during their acquisition that drove up costs 

and schedules and increased technical risks. Several programs were 

restructured by DOD in the face of delays and cost growth. At times, cost 

growth has come close to or exceeded 100-percent, causing DOD to nearly 

double its investment in face of technical and other problems without 

realizing a better return on its investment. Along with the cost increases, 

many programs are experiencing significant schedule delays—as much as 

6 years—postponing delivery of promised capabilities to the warfighter. 

Space Acquisition 

Problems Persist 

 1

Estimates of fiscal year 2007 spending are based on DOD's Fiscal Year 2006 Future Year 

Defense Program (FYDP) plan. The fiscal year 2007 FYDP plan was not available to us at 

the time of this testimony. 

Page 1 GAO-06-626T
 Improvements in Space Systems Acquisitions

Outcomes have been so disappointing in some cases that DOD has had to

go back to the drawing board to consider new ways to achieve the same 

capability. It is in such a position today, with its Space-based Infrared 

System (SBIRS) High program and possibly its National Polar-orbiting 

Operational Environmental Satellite System (NPOESS) program, both of 

which have been mired in expanding cost and schedule setbacks. 

More specifically, DOD’s investment in SBIRS High, a critical missile 

warning system, has been pushed to over $10.5 billion from the initial 

$4.1 billion estimate made over 9 years earlier. This 160-percent increase 

in estimated costs triggered a fourth Nunn-McCurdy2

 breach 

(see 10 U.S.C. 2433), requiring a review by the Secretary of Defense and a

report to Congress, and resulted in the program being restructured for a 

third time, in late 2005. With costs and timelines spiraling out of control, 

DOD reduced the number of satellites it plans to procure—pushing the 

average per unit procurement cost up to 224-percent above 2002 baseline

costs—and is now pursuing an alternative to SBIRS High while it 

continues with the scaled back program. 

Initial cost and schedule estimates for NPOESS—a new satellite 

constellation intended to replace existing weather and environmental 

monitoring satellites—have also proven unreliable. NPOESS is managed 

by a tri-agency Integrated Program Office consisting of DOD, the National 

Oceanic and Atmospheric Administration, and National Aeronautics and 

Space Administration. In January 2006, the program reported a NunnMcCurdy unit cost breach, at the 25-percent threshold, due to continuing 

technical problems, including problems with the development of key 

sensors. Specifically, in early 2005, DOD learned that a subcontractor 

could not meet cost and schedule targets due to significant technical 

issues on an imaging sensor known as the visible/infrared imager 

radiometer suite (VIIRS) sensor—including problems with the 

cryoradiator, excessive vibration of sensor parts, and errors in the sensor’s 

solar calibration. These technical problems were further complicated by

subcontractor management problems. To address these issues, DOD 

provided additional funds for VIIRS, capped development funding for 

 2

10 U.S.C. § 2433. This oversight mechanism originated with an amendment to the 

Department of Defense Authorization Act, 1982. It was made permanent in the following 

year’s authorization act and has been amended several times. Generally, the law requires 

DOD to review programs and report to Congress whenever cost growth reaches specified 

thresholds. The statute is commonly known as the Nunn-McCurdy amendment based on

the names of the sponsors of the original legislation. 

Page 2 GAO-06-626T
 Improvements in Space Systems Acquisitions

other critical technologies, and revised its schedule to keep the program 

moving forward. We also reported that based on our own analysis of 

contractor trends, the program will most likely overrun costs by 

$1.4 billion.3

 Given the challenges currently facing the program, the 

scheduled first launch date slipped 17 months to September 2010. 

Another recent example of problems is evident in the Advanced Extremely 

High Frequency (AEHF) program. We reported in the past that this 

program experienced cost increases due to requirements changes, 

inadequate contract strategies, and funding shortfalls. We also reported 

that DOD had to cut back its planned purchase of satellites from five to 

three as a result. The outcome has been an 84-percent unit cost increase—

each AEHF satellite is now estimated to cost about $2.1 billion. More 

recently, we reported that scheduling delays and the late delivery of 

cryptographic equipment have culminated into nearly a 3-year delay in the 

launch of the first satellite and that the program still faces schedule risk 

due to the continued concurrent development of two critical path items 

managed and developed outside the program. 

Acquisition problems have not been limited to the development of homegrown systems. DOD’s purchase of an ostensible commercial satellite for 

the use of communications, the Wideband Gapfiller Satellite (WGS), is 

experiencing about a 70-percent cost growth, due in part to the problems a 

subcontractor was experiencing in assembling the satellites. Improperly 

installed fasteners on the satellites’ subcomponents have resulted in 

rework on the first satellite and extensive inspections of all three satellites 

currently being fabricated. The cost for WGS has increased about 

$746.3 million but DOD estimates that about $276.2 million of this amount 

is largely due to cost growth associated with a production gap between 

satellites three and four. The launch of the first satellite has now been 

delayed for over 3 years and is currently scheduled for June 2007. The 

delay will increase program costs and add at least 22 months to the time it

takes to obtain an initial operational capability from the system. 

Figure 1 shows that, overall for fiscal years 2006 through 2011, estimated 

costs for DOD’s major space acquisition programs have increased a total 

of about $12.2 billion—or nearly 44-percent in total—above initial 

 3

GAO, Defense Acquisitions: Assessment of Selected Major Weapon Programs, 

GAO-06-391 (Washington, D.C.: March 31, 2006). 

Page 3 GAO-06-626T
 Improvements in Space Systems Acquisitions

estimates. Figure 2 breaks out this trend among key major space 

acquisitions.

Figure 1: Comparison between Original Cost Estimates and Current Cost Estimates 

for Major Space Acquisition Programsa for Fiscal Years 2006 through 2011 

0

2

4

6

8

10

2006 2007 2008 2009 2010 2011

In billions in fy 2006 dollars

Source: GAO analysis of DOD data.

Fiscal year

Initial cost estimate

Most resent cost estimate

a

Includes: AEHF, Evolved Expendable Launch Vehicle, Global Broadcast Service, Global Positioning 

System II, Mobile User Objective System, NPOESS, SBIRS High, TSAT, and WGS.

Page 4 GAO-06-626T
 Improvements in Space Systems Acquisitions

Figure 2: Cost Growth in Selected Current Space Programs in Base Year Dollars 

0

5

10

15

20

25

30

SBIRS-High EELV GPS II WGS AEHF NPOESS

Dollars in billion

Space systems 

Source: GAO analysis of DOD data.

160%

81%

20%

70%

10% 34%

Current cost increase estimate

Initial estimate

Notes: Original AEHF cost was for five satellites; the latest estimate for AEHF is for three satellites. 

SBIRS High data is through the latest Selected Acquisition Report, dated September 2005. 

As both figures illustrate, cost increases have had a dramatic impact on 

DOD’s overall space portfolio. To cover the added costs of poorly 

performing programs, DOD has shifted scarce resources away from other 

programs, creating a cascade of cost and schedule inefficiencies. For 

example, to fund other space programs, DOD has had to push off the start 

of a new version of the Global Positioning System (GPS), which has forced 

costs to increase for the current version under development. Meanwhile, 

DOD is also contending with cost increases within its Evolved Expendable 

Launch Vehicle (EELV) program. These are largely due to misjudgments 

about the extent to which DOD could rely on commercial demand to 

leverage its investment. Nevertheless, the resulting $12.6 billion increase 

has added pressures to make tradeoffs. 

At the same time that DOD is juggling resources on existing programs, it is 

undertaking two new efforts—the Transformational Satellite 

Communications System (TSAT) program and Space Radar program—

which are expected to be among the most ambitious, expensive, and

Page 5 GAO-06-626T
 Improvements in Space Systems Acquisitions

complex space systems ever. Moreover, DOD is relying heavily on their 

planned capabilities to fundamentally enable DOD to transform how 

military operations are conducted. In fact, many other weapon systems 

will be interfaced with these satellites and highly dependent on them for 

their own success. Together, these systems have been preliminarily 

estimated to cost about $40 billion. While DOD is planning to undertake 

the new systems, broader analyses of the nation’s fiscal future indicate

that spending for weapon systems may need to be reduced, rather than 

increased, to address growing deficits. 

Our reviews have identified a number of causes behind the problems just 

described, but several consistently stand out. First, on a broad scale, DOD 

starts more weapon programs than it can afford, creating a competition for 

funding which encourages low cost estimating, optimistic scheduling, over 

promising, suppressing bad news, and for space programs, forsaking the 

opportunity to identify and assess potentially better alternatives. Programs 

focus on advocacy at the expense of realism and sound management. 

Invariably, with too many programs in its portfolio, DOD and even 

Congress are forced to continually shift funds to and from programs—

often undermining well-performing programs to pay for poorly 

performing ones. 

Underlying Causes of 

Acquisition Problems 

Second, DOD starts its space programs too early, that is, before it has 

assurance that the capabilities it is pursuing can be achieved within 

available resources and time constraints. This tendency is caused largely 

by the funding process, since acquisition programs attract more dollars 

than efforts concentrating solely on proving out technologies. 

Nevertheless, when DOD chooses to extend technology invention into 

acquisition, programs experience technical problems that have

reverberating effects and require large amounts of time and money to fix.

When programs have a large number of interdependencies, even minor 

“glitches” can cause disruptions. 

A companion problem for all weapon systems is that DOD allows new 

requirements to be added well into the acquisition phase. Many times, 

these significantly stretch the technology challenges (and consequently, 

budgets) the program is already facing. This was particularly evident in

SBIRS High up until 2004. While experiences would caution DOD not to 

pile on new requirements, customers often demand them fearing there 

may not be another chance to get new capabilities since programs can 

take a decade or longer to complete.

Page 6 GAO-06-626T
 Improvements in Space Systems Acquisitions

Third, space programs have historically attempted to satisfy all 

requirements in a single step, regardless of the design challenge or the 

maturity of the technologies to achieve the full capability. Increasingly, 

DOD has preferred to make fewer, but heavier, larger, and complex 

“Battlestar Galactica-like” 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 the capability of many potential contractors and vastly 

increased the complexities related to software—a problem that affected

SBIRS High and AEHF, for example.

Our reviews have identified additional factors that contribute to space 

acquisition problems, though less directly affecting cost and schedule 

problems we have reported on. For example, consolidations within 

defense supplier base for space programs have made it more difficult for 

DOD to incorporate competition into acquisition strategies. Since 1985,

there were at least ten fully competent prime contractors competing for 

the large programs and a number that could compete for subcontracts. 

Arguably today, there are only two contractors that could handle DOD’s 

most complex space programs. DOD has exacerbated this problem by not 

seeking opportunities to restructure its acquisitions to maximize 

competition, particularly for the small suppliers who have a high potential

to introduce novel solutions and innovations into space acquisitions. In the 

1990s, DOD also structured contracts in a way that reduced oversight and 

shifted key decisionmaking responsibility onto contractors. DOD later 

found that this approach—known as Total System Performance 

Responsibility, or TSPR—magnified problems related to requirements 

creep and poor contractor performance. 

Another factor contributing to problems is the diverse array of officials 

and organizations involved with a space program, which has made it even 

more difficult to pare back and control requirements. The Space Radar 

system, for example, is expected to play a major role in transforming 

military as well as intelligence-collecting operations and other critical 

governmental functions, such as homeland security. As a result, its 

constituency includes combatant commanders, all of the military services, 

intelligence agencies, and the Department of Homeland Security. The 

Global Positioning System not only serves the military, it provides critical 

services to civilian users, the transportation sector, the information 

technology sector, among many other industries. 

In addition, short tenures for top leadership and program managers within 

the Air Force and the Office of the Secretary of Defense has lessened the

Page 7 GAO-06-626T
 Improvements in Space Systems Acquisitions

sense of accountability for acquisition problems and further encouraged a 

short-term view of success, according to officials we have interviewed. 

Though still in a pre-acquisition phase, TSAT and Space Radar have 

already had one program director each. The SBIRS High program, 

meanwhile, has seen at least three program directors. At the highest levels

of leadership, for many years, DOD did not invest responsibilities for its 

space activities in any one individual—leaving no one in charge of 

establishing an integrated vision for space or of mediating between 

competing demands. In 1994, it established such a position within the 

Office of the Secretary of Defense, but dissolved this position in 1998. In 

2002, DOD established a space leadership position within the Under 

Secretary position in the Air Force, combined it with the directorship of 

the National Reconnaissance Office in order to better integrate DOD and 

intelligence space activities, and allowed the Under Secretary to have 

milestone decision authority for major space systems acquisitions. After 

the first Under Secretary of the Air Force in charge of space retired in 

2005, DOD split these responsibilities and temporarily reclaimed milestone 

decision authority for all major space programs. Changes in leadership and 

reorganizations are common across DOD, but again, they make it more 

difficult to enforce accountability and maintain the right levels of support 

for acquisition programs. 

Lastly, there are capacity shortfalls that have constrained DOD’s ability to 

optimize and oversee its space programs. These include: shortages in the

pipeline of scientists and engineers, shortages of experts in systems and 

software engineering, and uneven levels of experience among program 

managers. Contractors are also facing workforce pressures similar to 

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

expertise to develop complex space systems. In addition, we have 

reported that there is a lack of low-cost launch opportunities, which are 

needed to increase the level of experimental testing in space.

DOD has recently expressed a commitment to improve its approach to 

space acquisitions and embrace many of the recommendations we have 

made in the past. 

Our previous recommendations have been focused on providing a sound 

foundation for program execution. Namely, we have recommended that

DOD separate technology discovery from acquisition, follow an 

incremental path toward meeting user needs, match resources and 

requirements at program start, and use quantifiable data and

demonstratable knowledge to make decisions to move to next phases. In 

DOD Has Expressed 

Its Commitment to 

Improve Its Approach 

to Space Acquisitions 

Page 8 GAO-06-626T
 Improvements in Space Systems Acquisitions

addition, we have called on DOD to develop an overall investment strategy 

for space in order to help DOD rebalance its investments in space 

acquisition programs as it continues to contend with cost increases from 

its programs. 

These recommendations are based on a body of work that we have 

undertaken over the last several years that examines weapon acquisition 

issues from a perspective that draws upon lessons learned from best 

product development practices. Leading commercial firms expect that 

their program managers will deliver high-quality products on time and 

within budget. Doing otherwise could result in the customer walking 

away. Thus, those firms have created an environment and adopted 

practices that put their program managers in a good position to succeed in

meeting these expectations. Collectively, these practices comprise a 

process that is anchored in knowledge. It is a process in which technology 

development and product development are treated differently and 

managed separately. The process of developing technology culminates in 

discovery—the gathering of knowledge—and must, by its nature, allow 

room for unexpected results and delays. Leading firms do not ask their 

program or product managers to develop technology. Rather, they give 

responsibility for maturing technologies to science and technology 

organizations. The process of developing a product culminates in delivery 

and, therefore, gives great weight to design and production. The firms 

demand—and receive—specific knowledge about a new product before 

production begins. A program does not go forward unless a strong 

business case on which the program was originally justified continues to 

hold true. 

While the practices we have recommended represent commonly accepted

sound business practices, until recently, they have not been accepted by 

DOD’s space acquisition community for large space acquisitions. By 

contrast, these practices were implemented for the development of a 

small, experimental satellite, intended for direct use by a combatant 

command, (known as TacSat 1). We recently reported that by including

only mature technologies and limiting new requirements, DOD was able to 

develop the satellite for less than $10 million (including surplus hardware 

valued at $5 million) and within 12 months. 

In disagreeing with our recommendations, DOD asserted its desire to push 

programs to advance technologies as far as possible. Other reasons that 

space officials have given for extending technology development into 

acquisition include the greater ability to secure funding for costly 

technology development within an acquisition program versus a science 

Page 9 GAO-06-626T
 Improvements in Space Systems Acquisitions

and technology program, a belief among the acquisition community that 

labs in charge of developing space technologies do not understand their 

needs, as well as communication gaps between the science and technology 

(S&T) and acquisition communities. 

Moreover, while DOD officials told us they were pursuing evolutionary 

development for space systems, we found that they were beginning 

programs by challenging programs managers to achieve significant leaps 

in capability with the intention of abandoning those efforts later in the 

development cycle should too many problems be encountered. This is not 

a true evolutionary approach, as it leaves DOD facing increased technical 

challenges at the beginning of a program and thus, increased risks, and it 

raises the expectations on the part of stakeholders who may be unwilling 

to accept less capability later on. Two of the systems we were most 

concerned about in this respect were and TSAT and Space Radar —they 

were already expected to cost about $40 billion. DOD was planning to start 

these acquisitions even when many of their critical technologies were still 

immature and it was pursuing a highly ambitious path in terms of the 

technology push. Given that these systems were among the most complex 

programs ever undertaken for space, they were being counted on to 

enable wider DOD transformation efforts, and DOD was already 

contending with highly problematic space efforts, we believed DOD could 

not afford to pursue such risky approaches for TSAT and Space Radar. 

Since we last testified before this subcommittee in July 2005, DOD has 

appointed a new Under Secretary of the Air Force to be in charge of space 

acquisitions, who, in turn, has embraced adopting best practices, or, as he 

terms it, “going back to the basics.” Specifically, the Under Secretary has 

expressed a desire to 

• Delegate the maturation of technologies—to the point of being tested 

in a relevant environment or operational environment, if appropriate—

to the S&T community. 

• Adopt an evolutionary development approach in which new systems 

would be developed in a series of increments, or blocks. Any desired 

technology that is not expected to be matured in time to start a new 

block would be assigned to a later block. Each block would have a 

discrete beginning and end point. 

• Fund S&T appropriately so that significant technology breakthroughs 

can be continually pursued. 

Page 10 GAO-06-626T
 Improvements in Space Systems Acquisitions

• Improve collaboration on requirements—consulting with warfighters 

on the content of each new block. 

In addition, the Under Secretary is focused on estimating cost and funding 

new acquisitions to an 80-percent confidence level; strengthening systems 

engineering and strengthening the acquisition workforce. 

Aspects of this approach have recently been incorporated in to DOD’s 

TSAT program. For the first block, satellites 1 and 2, the Air Force has 

reduced its expectations in the level of sophistication of these satellites to

increase the confidence in the schedule for launching the first satellite in 

2014. Higher performing levels of the technologies to support laser 

communications and an Internet-like processor router will be pushed off 

to a subsequent block, along with the multi-access laser 

communications—a more robust laser capable of transmitting vast 

amounts of data within seconds. Program officials have also stated that 

the TSAT program will not enter into product development, that is, formal 

acquisition, until its critical technologies are proven. 

These are good steps when looking at TSAT as an individual program. It is 

important, however, that the Air Force ensure warfighters accept lower 

capability and that it makes sense to pursue the current approach versus 

the alternative of buying more AEHF or WGS satellites. 

DOD’s desire to adopt best practices for space acquisition is a positive and

necessary first step toward reform. However, these changes will not be 

easy to undertake. They require significant shifts in thinking about how 

space systems should be developed; changes in incentives and 

perceptions; as well as further policy and process changes. Moreover, they

will need to be made within a larger acquisition environment that still 

encourages a competition for funding and consequently pressures 

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

rather than the end goal of delivering capabilities when and as promised. 

In addition, DOD’s space leaders will be challenged to sustain a 

commitment to adopting best practices, given the myriad of missions and 

programs that compete for the attention of DOD’s leadership and 

resources, frequent turnover in leadership positions, and potential 

resistance from the many diverse organizations involved with space 

acquisitions.

Keys to Realizing 

DOD’s New Goals for 

Space Acquisitions 

There are steps, however, that DOD can take to substantially mitigate 

these challenges. 

Page 11 GAO-06-626T
 Improvements in Space Systems Acquisitions

• First, DOD can guide its decisions to start space acquisition programs 

with an overall investment strategy. More specifically, DOD could 

identify overall capabilities and how to achieve them, that is, what role 

space will play versus other air-, sea-, and land-based assets; identify 

priorities for funding space acquisitions; and implement mechanisms 

that would enforce the strategy and measure progress. Optimally, DOD 

would do this for its entire weapon system investment portfolio so that 

space systems that are expected to play a critical role in transformation 

could be prioritized along with other legacy and transformational 

systems and so that DOD could reduce pressures associated with 

competition for funding. But in the absence of a departmentwide 

strategy, DOD could reexamine and prioritize its space portfolio with 

an eye toward balancing investments between legacy programs and 

new programs as well as between S&T programs and acquisition 

programs. In addition, DOD could prioritize S&T investments. This is 

particularly important since DOD is undertaking a range of initiatives—

collectively known as operationally responsive space (ORS)—designed 

to facilitate evolutionary development, more testing of technologies 

before acquisition, and ultimately enable DOD to deliver space-based 

capabilities to the warfighter much faster and quicker. While ORS 

investments hold great potential, there are other S&T projects 

competing for the same resources, including those focused on

discovering and developing technologies and materials that could 

greatly enhance future capabilities, reduce costs, and maintain U.S. 

superiority in space. 

• Second, DOD could revise policies and processes supporting space as 

needed to adopt the best practices being embraced. For example, 

DOD’s space acquisition policy could be further revised to ensure that 

a true evolutionary approach is being pursued and that blocks, or 

increments, will include only technologies that have been sufficiently 

matured. DOD could also implement processes and policies, as needed, 

that stabilize requirements, particularly for acquisitions that are being 

shared with other stakeholders, such as the intelligence community, 

and that ensure warfighters are bought into capabilities being pursued 

for each new system increment. In recent years, it has instituted 

processes for some individual systems, such as SBIRS High, that could 

serve as a model. 

• Third, DOD could continue to address other capacity shortfalls. These 

include shortages of staff with science and engineering backgrounds; 

shortages of experience within the program manager workforce; 

limited opportunities and funding for testing for space technologies; 

and the lack of low-cost launch vehicles. At the same time, DOD could 

Page 12 GAO-06-626T
 Improvements in Space Systems Acquisitions

continue to work toward strengthening relationships between the S&T 

and acquisition communities and coordination within the S&T

community. The Under Secretary is uniquely positioned to do this given 

his previous position as DOD’s Director of Defense Research and 

Engineering and his participation in previous efforts to develop a 

strategy for space S&T.

• Fourth, we have recommended that DOD take steps departmentwide to 

hold people and programs accountable when best practices are not 

pursued. This will require DOD to empower program managers to 

make decisions related to funding, staffing, and moving into 

subsequent phases and to match program manager tenure with 

development or delivery of a product. It may also require DOD to tailor 

career paths and performance management systems to incentivize 

longer tenures. Until these actions have been taken, space leaders 

could take steps now to ensure space program managers have the right 

levels of experience to execute large programs and have sufficient 

authority so that they can be held accountable. Likewise, DOD’s space 

leaders can take steps to hold its contractors accountable by

structuring contracts so that incentives actually motivate contractors 

to achieve desired acquisition outcomes and withholding award fees 

when those goals are not met. 

In closing, we are encouraged with the acquisition approach being 

embraced by DOD’s space leadership. It can enable DOD to begin to match 

resources to requirements before starting new programs and therefore, 

better position programs for success. Successful implementation, 

however, will hinge on the ability of DOD’s current space leaders to instill 

and sustain commitment to adopting best practices over the short and long

term. In doing so, best practice approaches should be reflected in policy 

and manifested in decisions on individual programs or reform will be 

blunted. They should also be accompanied by an investment strategy for 

space, and ultimately DOD, to separate wants from needs and to alleviate 

long-standing pressures associated with competition within DOD to win 

funding. By embracing a model that incorporates all these elements, DOD 

can achieve better outcomes for its space programs. 

In preparing for this testimony, we relied on previously issued GAO 

reports on assessments of individual space programs, incentives and 

pressures that drive space system acquisition problems, common 

problems affecting space system acquisitions, space science and 

technology strategy, and DOD’s space acquisition policy, as well as our 

reports on best practices for weapon systems development. We also 

Scope and 

Methodology 

Page 13 GAO-06-626T
 Improvements in Space Systems Acquisitions

analyzed DOD’s Selected Acquisition Reports to assess cost increases and 

investment trends. In addition, we met with the Air Force Under Secretary 

to discuss his “back to basics” approach. We conducted our review 

between March 6 and April 3, 2006 in accordance with generally accepted 

government auditing standards. 

For future information, please contact Cristina Chaplain at 202-512-4841 or 

chaplainc@gao.gov. Individuals making contributions to this testimony 

include, Art Gallegos, Robert Ackley, Maricela Cherveny, Sharron Candon,

Jean Harker, Leslie Kaas Pollock, and Karen Sloan.

Contacts and 

Acknowledgments 

Page 14 GAO-06-626T
 Improvements in Space Systems Acquisitions

Table 1 highlights recent findings from our reports on cost and schedule 

overruns for DOD’s current and planned space programs. The table also 

notes that many programs are still addressing past mistakes in acquisition 

approaches and contractor oversight as well as technical, design, and 

manufacturing problems. 

Table 1: Highlights of Recent Findings for Current and Planned Space Programs 

Description Recent Findings

Space Based Infrared System High

(SBIRS High): Ballistic missile warning 

system being developed by the Air Force to 

replace its legacy warning system. 

Development

Start4

- October 1996 

With unit cost increases of more than 315-percent over the 1996 initial estimate, the 

program has undergone four Nunn-McCurdy unit cost breaches. Total program costs 

have increased from about $4 billion to more than $10 billion. The launch schedule 

has slipped over 6 years; the first satellite is currently scheduled to be delivered in

September 2008. DOD officials recently called for initiating planning efforts for the 

development of a new missile warning system, parallel to SBIRS; it is unclear whether 

this program will replace or compete against SBIRS. 

Global Broadcast Service (GBS): Part of 

the overall DOD military satellite 

communication architecture being 

developed by the Air Force for one-way 

transmission of video, imagery and other 

high-bandwidth information to the 

warfighter. 

Development

Start- November 1997 

Total program costs have increased by 72-percent since the contract was awarded in

1997, largely due to the transition from a legacy system architecture to internet 

protocol, additional production quantities, and operation and maintenance tasks. In 

June 2005, a quarterly exception selected acquisition report was submitted to reflect 

initial operational capability delays of six months or more due to a delayed operational 

test schedule. GBS currently uses broadcast payloads on three Ultra-High Frequency 

Follow-on (UFO) satellites and will use broadcast payloads on up to five Wideband 

Gapfiller Satellites (WGS) satellites when they are launched. 

Evolved Expendable Launch Vehicle

(EELV): Acquisition of commercial launch 

services from two competitive families of 

launch vehicles. 

Development

Start- October 1998 

The program cost has risen over 81-percent, with a cost per unit increase of about 

138-percent and triggered a Nunn-McCurdy breach. A chief reason for cost increases 

is a decline in the commercial launch market upon which the program’s business case

was based. In 2005, the two primary contractors agreed to form a joint venture to 

combine production, engineering, test and launch operations for U.S. government 

launches that is under review by the Federal Trade Commission. 

 4

The National Security Space Acquisition Policy specifies that key decision point B (also 

referred to as Milestone B by the DOD 5000 series or Product Development Start by GAO 

best practice work) is the official program initiation point when programs develop a formal 

Acquisition Program Baseline (APB) and submit Special Acquisition Reports (SAR) to the 

Congress. 

Page 15 GAO-06-626T
 Improvements in Space Systems Acquisitions

Navstar Global Positioning System

(GPS) Modernization: A space-based 

radio-positioning system that nominally 

consists of 24-satellite constellation 

providing navigation and timing data to 

military and civilian users worldwide. 

Development

Start- February 2000 

Total costs of the GPS II modernization program have increased by over 20-percent, 

largely due to DOD’s decision to delay the start of the follow-on GPS III program, 

which will require DOD to buy additional GPS IIF satellites. The first GPS IIR-M 

satellite with the new military code capability was launched in September 2005. A total 

of 18 satellites with this code need to be on orbit to provide initial operational 

capability to the warfighter and this number is expected to be reached in fiscal year 

2011. However, the software for the control system needed to support the operational 

capability of these satellites will not be operational until fiscal year 2012. Thus the 

satellites on orbit with the new military code will not be fully utilized. 

Wideband Gapfiller Satellites (WGS):

Satellites based almost exclusively on 

commercial parts being developed by the 

Air Force to provide interim 

communications support. 

Development

Start- November 2000 

Total program costs increased about 70-percent from $1.06 billion in 2000 to $1.81 

billion in 2005. The program office estimates an increase since last year of about 

$276.2 million for the program, largely due to cost growth resulting from a production 

gap between satellites three and four. Launch of the first satellite has now been 

delayed for over 3 years and is currently scheduled for June 2007. The delay will

increase costs and add at least 22 months to the time it takes to obtain an initial 

operational capability from the system. The contractor continues to experience 

problems assembling the satellites. 

Advanced Extremely High Frequency 

(AEHF): Communications satellite system 

being developed by the Air Force to 

replace its legacy protected 

communications satellites. 

Development

Start- September 2001 

Unit cost has increased by about 84-percent. In 2004, the program experienced cost 

increases of more than 15-percent, which required a Nunn-McCurdy notification to 

Congress. The program was restructured in 2004 when key cryptographic equipment 

was not delivered to the payload contractor in time to meet the launch schedule. 

Current plans are to meet full operational capability with three AEHF satellites and the 

first Transformational Satellite Communication System (TSAT) satellite, but additional 

AEHF satellites may be acquired if there are deployment delays with TSAT. 

Space Tracking and Surveillance 

System (STSS): Two satellites that are 

going to be launched in 2007 as 

technology demonstrations for missile 

defense tests to assess whether missiles 

can be effectively tracked from space. 

Development

Start- Restructured April 2002

Total program costs have increased by about 35-percent due to the addition of funds 

for designing and developing the program’s operational constellation. The initial 

increment of this program, which started in 2002, is composed of two demonstration 

satellites that were built under the previous Space Based Infrared System-Low 

(SBIRS Low) program. SBIRS Low had incurred cost increases and schedule delays 

and other problems that were so severe, DOD abandoned the effort. The STSS 

program has experienced system quality and system engineering problems with the 

payload, however, the program office still expects early delivery and launch of the 

satellites. 

National Polar-orbiting Operational 

Environmental Satellite System 

(NPOESS): Weather and environmental 

monitoring satellites being developed by 

the National Oceanic and Atmospheric 

Administration, the National Aeronautics 

and Space Administration, and DOD to 

replace those in use by the agencies. 

Development

Start- August 2002 

Unit costs increased by about 34-percent, triggering a Nunn-McCurdy review in 

January 2006. The launch of the first satellite has been delayed by at least 17 months 

(until September 2010) and could result in a gap in satellite coverage of at least 3

years. According to program officials, every aspect of the program is being evaluated 

by internal and external groups and several options are being reviewed for technical 

viability and cost effectiveness. The program office noted that any changes resulting 

from this process may produce substantial cost, schedule, and technical performance 

changes, such as removing a key sensor from the first satellite, delaying launches of 

the first two satellites, and not launching a preliminary risk-reduction satellite. 

Page 16 GAO-06-626T
 Improvements in Space Systems Acquisitions

Transformational Satellite 

Communications System (TSAT):

Communication satellites being developed 

by the Air Force to employ advanced

technologies in support of DOD’s future 

communication architecture. 

Program Initiation- January 2004 

Total program costs have increased about 3-percent from $15.5 billion in June 2004 

to nearly $16 billion in December 2004, and the initial launch of the first TSAT satellite 

has slipped from 2011 to 2014.The TSAT program is currently being restructured to 

follow an incremental development approach—an approach that is intended to help it 

stay within projected costs and provide capabilities to the war fighter sooner. 

Mobile User Objective System (MUOS):

Navy effort to develop a family of 

unprotected, narrow-band satellites that 

can support mobile and fixed-site users 

worldwide. 

Development

Start- September 2004 

This is a relatively new effort. In June 2004, DOD delayed the first MUOS satellite 

launch by one year to fiscal year 2010 due to a delay in awarding the development 

contract and to mitigate schedule risk. We reported that early procurement of long 

lead items before achieving a stable design for this Navy communications system 

could lead to cost increases and the program’s development schedule remains 

compressed—posing risks should software development or other technical or design 

problems be encountered. 

Planned Programs 

GPS III: Next generation of GPS being 

developed to add advanced jam resistant 

capabilities and provide higher quality and 

more secure navigational capabilities. 

Planned Development Start Date- Third 

quarter of fiscal year 2007 

This is a relatively new effort. Initial plans were to develop these satellites and begin 

launching them in 2012, but DOD has delayed the start of this program so the planned 

first satellite launch date is now 2013. Program officials intend to use an incremental 

development approach for acquiring these satellites. A recent Defense Science Board 

study recommended a 30 satellite, three plane constellation for GPS III instead of the 

current 24 satellite, six plane constellation. The same study also recommended that 

cost and weight be key parameters in the design of the GPS III satellites, and 

specifically recommended measures to limit GPS III weight so that two satellites could 

be launched aboard a medium-class launch vehicle. 

Space Radar (SR): Reconnaissance 

satellites being developed by the Air Force 

to find, identify, track and monitor moving 

or stationary targets under all weather 

conditions. 

Planned Development Start Date -August 

2008

This is a relatively new effort with no reported cost increases or schedule delays. The 

planned cost estimate is about $23 billion. A decision to develop on-orbit 

demonstration satellites to validate technology maturity and cost won’t be made until 

2007. The program is undergoing restructure, including a new Integrated Program 

Office, a new plan for risk reduction activities and revised cost estimates, and an 

acquisition strategy that calls for development of a smaller constellation of high 

performing, more affordable satellites. 

Source: GAO analysis of DOD data and previous GAO reports. 

120541 

Page 17 GAO-06-626T
This is a work of the U.S. government and is not subject to copyright protection in the 

United States. It may be reproduced and distributed in its entirety without further 

permission from GAO. However, because this work may contain copyrighted images or 

other material, permission from the copyright holder may be necessary if you wish to 

reproduce this material separately. 
GAO’s Mission The Government Accountability Office, the audit, evaluation and 

investigative arm of Congress, exists to support Congress in meeting its 

constitutional responsibilities and to help improve the performance and 

accountability of the federal government for the American people. GAO 

examines the use of public funds; evaluates federal programs and policies; 

and provides analyses, recommendations, and other assistance to help

Congress make informed oversight, policy, and funding decisions. GAO’s 

commitment to good government is reflected in its core values of 

accountability, integrity, and reliability. 

The fastest and easiest way to obtain copies of GAO documents at no cost

is through GAO’s Web site (www.gao.gov). Each weekday, GAO posts 

newly released reports, testimony, and correspondence on its Web site. To

have GAO e-mail you a list of newly posted products every afternoon, go 

to www.gao.gov and select “Subscribe to Updates.” 

The first copy of each printed report is free. Additional copies are $2 each. 

A check or money order should be made out to the Superintendent of 

Documents. GAO also accepts VISA and Mastercard. Orders for 100 or 

more copies mailed to a single address are discounted 25 percent. Orders 

should be sent to: 

U.S. Government Accountability Office 

441 G Street NW, Room LM 

Washington, D.C. 20548 

To order by Phone: Voice: (202) 512-6000 

TDD: (202) 512-2537 

Fax: (202) 512-6061 

Contact: 

Web site: www.gao.gov/fraudnet/fraudnet.htm

E-mail: fraudnet@gao.gov

Automated answering system: (800) 424-5454 or (202) 512-7470 

Gloria Jarmon, Managing Director, JarmonG@gao.gov (202) 512-4400 

U.S. Government Accountability Office, 441 G Street NW, Room 7125 

Washington, D.C. 20548 

Paul Anderson, Managing Director, AndersonP1@gao.gov (202) 512-4800

U.S. Government Accountability Office, 441 G Street NW, Room 7149 

Washington, D.C. 20548 

Obtaining Copies of 

GAO Reports and 

Testimony

Order by Mail or Phone 

To Report Fraud,

Waste, and Abuse in 

Federal Programs 

Congressional 

Relations 

Public Affairs 

PRINTED ON RECYCLED PAPER