GAO-04-778R Evolved Expendable Launch Vehicle

United States General Accounting Office

Washington, DC 20548 

June 24, 2004 

The Honorable Wayne Allard 

Chairman 

The Honorable Bill Nelson 

Ranking Minority Member 

Subcommittee on Strategic Forces 

Committee on Armed Services 

United States Senate 

Subject: Defense Space Activities: Continuation of Evolved Expendable Launch 

Vehicle Program’s Progress to Date Subject to Some Uncertainty

The U.S. space policy states that access to and use of space is critical to preserving 

peace and protecting U.S. national security and also benefits the country’s civil and 

commercial interests. Air Force guidance explains further that access to space 

requires the ability to launch critical space assets, when needed, by a mix of space 

launch systems from standard launch pads at major support facilities. This is to 

ensure that a launch failure or other catastrophic event does not prevent mission 

success. These critical space assets, or satellites, are used for a wide range of 

government activities such as communications, navigation, and ballistic missile 

warning. The Evolved Expendable Launch Vehicle (EELV) program, consisting of 

both Atlas V and Delta IV launch vehicles, was established as the strategic launch 

system to meet the nation’s critical space mission needs and correspond with U.S. 

policy that requires U.S. government satellites to be launched on U.S. manufactured 

launch vehicles. The program was implemented in 1995 to support and sustain 

assured access to space with more affordable launch vehicles, provided by two 

contract launch providers, that replaced the past, or “heritage,” systems such as the 

Delta II, Atlas II, Titan II, and Titan IV. 

Specifically, the EELV program’s overarching objective called for the development of 

a national expendable launch capability for assured access to space that would 

reduce the overall recurring cost of launch by at least 25 percent to 50 percent while 

maintaining or improving the reliability and capability levels over those of the 

heritage systems. The Air Force further identified four EELV system capabilities 

referred to as key performance parameters—mass to orbit,1

 vehicle design reliability, 

 

1

 Mass to orbit is the requirement to lift a certain amount of payload to a specific orbit. 
2 GAO-04-778R Evolved Expendable Launch Vehicle

standard launch pads, and standard vehicle interfaces2—considered essential for 

mission success. In its instruction on mission needs and operational requirements 

guidance and procedures, the Air Force states that key performance parameters are 

so significant that failure to meet their minimum values could be cause for program 

reevaluation or termination. 

The current EELV acquisition strategy addresses and reinforces the program’s 

objective and system capabilities by encouraging contractor investment in launch 

vehicle development and promoting competition over the life of the program in an 

expected robust commercial marketplace. However, this commercial market never 

materialized. Furthermore, the availability of federal funding may affect future 

program strategy and condition. For instance, GAO has stated that the U.S. 

government’s long-term financial condition presents enormous challenges to the 

nation. This condition is likely to affect a broad range of federal programs. 

This letter responds to your February 25, 2004, request. As agreed with your offices, 

our objective was to determine the extent to which the implementation of the 

Department of Defense’s (DOD) EELV program has achieved assured access to space 

and projected program cost savings. On April 6, 2004, we provided your offices with 

a briefing on our observations regarding the EELV program’s achievements. As 

requested, we are transmitting the briefing (encl. I) in this letter. 

In conducting our work, we reviewed laws, presidential directives, and DOD and Air 

Force policy documents on assured access to space, as well as pertinent EELV 

program reports and related material, to determine the EELV program’s progress in 

achieving program mission objectives and cost goals. We interviewed responsible 

DOD, Air Force, and other government officials from, among others, the EELV 

System Program Office; Office of the Secretary of Defense; and the Cost Analysis 

Improvement Group. We also interviewed Air Force officials at offices of the 

Secretary of the Air Force, Air Force Operational Test and Evaluation Center, and Air 

Force Space Command and responsible space access officials at the National 

Aeronautics and Space Administration. Furthermore, we inspected the Delta IV 

launch site at Vandenberg Air Force Base, California, and toured the Atlas V 

production facility in Denver, Colorado. Additionally, we received briefings by both 

launch providers. We discussed relevant information with appropriate officials to 

assess its validity and determined that the data were sufficiently reliable to answer 

our objective. Our review was conducted from April 2003 to May 2004 in accordance 

with generally accepted government auditing standards. 

 

2

 Common launch vehicle interfaces such as mechanical and electrical connections, ground support 

equipment, services, and environmental conditioning provide the flexibility to change the launch 

vehicle in case there’s a major problem requiring extended repair. 
3 GAO-04-778R Evolved Expendable Launch Vehicle

Summary 

While the EELV program achieved success in meeting its assured access to space and 

cost-saving objective, the program continues to face various risks and cost increases 

that could jeopardize this objective. Since August 2002, the EELV has been launched 

successfully six times using two contract launch providers, and the EELV System 

Program Office projected 25 to 50 percent in cost savings over previous launch 

systems initially through July 2003 and recently in May 2004. Furthermore, three out 

of four of the Air Force’s key performance parameters have been met, which 

contributed to initial program success. While the fourth parameter, the standard 

vehicle interface, has not yet been fully met for both launch providers’ vehicles, 

progress has been made in achieving solutions. However, vehicle mission reliability, 

which is the ability to complete the entire mission successfully (i.e., from launch to 

satellite replacement), has not been fully demonstrated. Several more launches need 

to take place before vehicle mission reliability can be assured. Furthermore, program 

risks, such as a potential single point of failure involving one upper stage engine used 

by both launch providers, present, at this time, some uncertainty about continuing to 

achieve the assured access to space part of the EELV’s program objective and present 

cost implications. 

Program costs have increased over the approved 2002 program baseline estimate of 

$18.8 billion, resulting from the failure of the commercial market to materialize, 

additional access to space and mission assurance initiatives, and several other factors 

such as incorrect inflation assumptions and satellite weight growth. Specifically, the 

EELV System Program Office reported about $13.3 billion in program cost increases 

over the life of the program, as reflected in previous DOD acquisition reports. These 

cost increases impact the cost-savings goal, although the significance of that impact 

cannot be determined until the Air Force submits a revised program cost baseline. 

Furthermore, these cost increases triggered a requirement3 requiring the Secretary of 

Defense to certify that the EELV Program is critical to national security and that 

revised program cost estimates are reasonable. The certification process was 

completed on April 26, 2004, after the Secretary of Defense’s certification group 

identified a potential cost increase of up to $13.2 billion. This figure differs from the 

$13.3 billion previously reported by the EELV System Program Office because it 

includes some overlapping costs addressed in prior DOD acquisition reports and 

additional unrecognized costs such as the launch providers’ infrastructure costs that 

will be incurred in fiscal year 2005. The System Program Office disagrees with the 

addition of some of these previously unrecognized costs in the recently certified 

program baseline cost estimate and is working with the certification group to adjust 

the baseline by the end of June 2004. Despite this disagreement, the System Program 

Office, in May 2004, estimated launch cost savings of 51.4 percent over the heritage 

systems. The System Program Office is also in the process of modifying the existing 

acquisition strategy to better achieve EELV program objectives. The government, 

 

3

 10 U.S.C. § 2433 commonly referred to as the “Nunn-McCurdy Act” requires notification of Congress 

when major acquisition programs exceed specific cost thresholds. 
4 GAO-04-778R Evolved Expendable Launch Vehicle

however, will continue to pay a significant share of costs until a commercial market 

emerges and the cost burden shifts to others requiring launch services. 

Background

In mid-1994, the Air Force conducted a study to address the deficiencies and the 

rising costs of space launch. While considering options, the Air Force determined 

that continued production, operation, and maintenance of existing launch vehicle 

systems were not cost-effective. Increasing expenses associated with these launch 

vehicle systems and their extensive infrastructure along with outdated technologies, 

designs, and manufacturing techniques generated the need for a more capable, 

affordable, and flexible launch vehicle system. Later that year, a plan was selected to 

improve, modernize, and evolve existing expendable launch vehicles that served as 

the genesis of the EELV program. By May 1995, the Air Force initiated a new 

acquisition strategy to obtain launch services using the EELV system. While the Air 

Force’s initial acquisition strategy was to select one contractor for final development 

and production, in November 1997 it approved a revised acquisition strategy designed 

to maintain the ongoing competition between the two previous pre-engineering phase 

contractors. The revised strategy was based on forecasts that growth in the 

commercial space launch services market would support more than one contract 

launch provider. 

The EELV Program Acquisition Strategy was structured to break new ground in the 

area of military and commercial integration of the space-related defense industrial 

base with the commercial industrial base. This strategy forged a partnership between 

the government and industry to gain affordable and assured access to space by 

• promoting competition for launch services over the life of the program; 

• encouraging contractor investment and innovation for launch vehicle 

development; 

• procuring launch services that include the vehicle, the liftoff, and flight to orbit 

under one contract instead of procuring launch vehicles and launch operations 

under two or more separate contracts; 

• leveraging the benefits of a robust commercial marketplace; and 

• providing the government with free and open access to contractor 

performance data. 

This acquisition strategy permitted the government to obtain launch services that 

placed a satellite in the proper orbit at a fixed price instead of having to buy launch 

vehicles on a cost reimbursement basis while paying for launch pad operations, 

maintenance, repairs, and improvements. 

Despite the initial promise of the EELV Program Acquisition Strategy, the expected 

robust commercial market for space activities never materialized. Furthermore, 

future federal funding may affect the program’s acquisition strategy and condition. 

GAO has recently stated that the U.S. government’s long-term financial condition and 

fiscal outlook present enormous challenges to the nation and to the role of the 

federal government. The growing long-term fiscal imbalance will continue to 
5 GAO-04-778R Evolved Expendable Launch Vehicle

constrain the federal budget in future years. These constraints will, in turn, affect 

DOD investments in the EELV program. 

Progress Made in Achieving Assured Access to Space and Cost Savings 

Objective, but Program Risks Present Some Uncertainty for Continued 

Access to Space 

 

The EELV System Program Office has made progress in implementing DOD’s assured 

access to space program objective through early successful launches and cost savings 

over heritage systems. While three of four performance parameters have been met, 

certain elements of the remaining performance parameter are currently unrealized. 

Nevertheless, progress is being made to meet them. However, program risks present 

some uncertainty in continuing to achieve the access to space objective. 

Progress Was Made in Achieving EELV Program’s Objective

The EELV System Program Office and two launch providers, working together, have 

met the assured access to space objective by completing six consecutive successful 

missions (two government missions and four commercial missions) between August 

2002 and August 2003. According to a December 2002 Air Force Test and Evaluation 

Center Operational Assessment report, the EELV system is a significant improvement 

over the heritage launch systems it replaces. For example, the report stated that the 

level of standardization implemented under EELV would reduce costs and launch 

schedule delays and allow for contingencies that the heritage systems could never 

provide. Further, according to the EELV System Program Office, launch services 

acquired under the current government contract met projected program cost savings 

of 25 percent to 50 percent—projected at 50.8 percent in July 2003 and at 51.4 percent 

in May 2004—over heritage launch systems. We were unable to verify the statements 

or projections. 

This early success is based, in part, on the program structure, management initiatives, 

and initial favorable launch service costs. For example, in order to monitor risk, 

System Program Office Integrated Product Teams, comprised of government and 

industry representatives, were established with the responsibility to address issues 

before they become serious matters of concern. The EELV System Program Office 

and launch providers also maintain open lines of communication, interacting on a 

daily basis to gauge program progress, resolve issues, and monitor performance. 

Further, the government benefited from “Initial Launch Services” contracts that 

reflected substantially lower launch services prices to the government that were 

submitted in anticipation of a robust commercial marketplace. This, in turn, was to 

allow the launch providers to spread substantial fixed costs among all of the 

participants in the market. 
6 GAO-04-778R Evolved Expendable Launch Vehicle

While Progress Continues on the Remaining Performance Parameter, Risks Present 

Some Uncertainty for Future Mission Success

According to the EELV System Program Office, the EELV systems have met three of 

four performance parameters that the Air Force considers essential for mission 

success. The EELV Atlas V and Delta IV systems have not met elements within the 

fourth parameter—standard vehicle interface. Furthermore vehicle mission 

reliability, which is the ability to complete the entire mission from launch to 

placement of the satellite in orbit, has not been fully demonstrated. With regard to 

the parameter’s elements, both families of launch vehicles (i.e., the Delta IV and Atlas 

V systems) have vibration problems that exceed the vehicles’ established 

performance parameters. The vibrations, caused by the separation of the nose-cone 

from the Delta IV launch vehicle, and the noise, generated from the Atlas V solid-fuel 

rocket engines during initial launch, exceed acceptable performance parameters. 

The EELV System Program Office and its launch providers are currently working on 

solutions to these problems. Regarding the Delta IV vehicle, a design solution is being 

pursued, and a modification is being tested for the Atlas V vehicle. With regard to 

vehicle mission reliability, according to DOD and Air Force test and evaluation and 

Space Command program officials, determination of the EELV systems’ mission 

reliability is typically demonstrated by 10 to 30 successful launches within the same 

family, class, and configuration of launch vehicles (e.g., a Delta IV medium launch 

vehicle with two strap-on solid rocket engines). Thus, several more launches need to 

take place before vehicle mission reliability can be fully demonstrated. 

While progress regarding all performance parameters has been made, several 

program risks present some uncertainty in achieving continued assured access to 

space. First, both launch providers use a variant of the RL-10 engine for the EELV’s 

upper-stage that is a potential single point of failure for the system. While the RL-10 

engine has a proven reliability record, if a launch failure occurred and were attributed 

to the engine, neither launch provider would be able to launch its vehicle until an 

investigation was completed. The Air Force has funded a study to evaluate the 

engine’s critical components, producibility, and viability. Second, even though the 

Atlas V launch contractor has 13 RD-180 launch vehicle engines in its U.S. inventory, 

continued engine availability remains uncertain because the engine is produced 

solely in Russia. To address this issue, that contractor plans to build a co-production 

facility in the United States. However, the operation of a U.S. co-production facility is 

not scheduled until 2008; and the first mission-ready, co-produced U.S. RD-180 

engines may not occur until 2012, which is over halfway through the EELV program 

life. If the RD-180 U.S. co-production facility is not completed, U.S. dependence on 

the Russian-made engine will be prolonged. And third, the risk of not having an 

operational West Coast launch pad for the Atlas V vehicle leaves only the Delta IV 

family of vehicles capable of launching from both coasts. Although the Atlas V 

contractor has begun building a West Coast launch pad, it is not scheduled to be 

operational until May 2005 with the first Atlas V launch occurring in October 2005. 

While the EELV System Program Office is working to mitigate these risks, assured 

access to space is subject to some uncertainty. Mitigating these risks to avoid the 
7 GAO-04-778R Evolved Expendable Launch Vehicle

possibility of mission failure will have an impact on cost, as discussed in the 

following section. 

EELV Program Costs Have Significantly Increased, Potentially Impacting 

Cost Savings and Prompting a Revised Acquisition Strategy and Contract 

Approach 

Increased program costs resulting, in part, from future infrastructure, launch, and 

other costs could impact the EELV program’s cost savings objective. However, the 

specific impact has not yet been determined. This increase in costs was caused, in 

part, by the failure of the commercial market for launches to materialize. EELV 

launch providers claimed that this market failure negatively affected their financial 

condition, prompting the need for a revised Air Force acquisition strategy and 

contract approach to assure access to space with two viable launch providers. 

Program and Launch Costs Have Increased for Several Reasons, Potentially 

Impacting Cost Savings

Program and launch costs increased by about $13.3 billion over the approved 2002 

baseline estimate of $18.8 billion for several reasons, as reflected in DOD’s December 

2003 Selected Acquisition Report and other program documentation. First, program 

initiatives to mitigate the risk of a launch failure and increase mission success and 

safety required additional funding. The EELV System Program Office considered 

these initiatives critical to improve launch vehicle system reliability and support 

assured access to space. Next, several other factors such as launch reallocations, 

contract modifications, satellite weight growth, and inflation contributed to cost 

growth. Furthermore, the commercial market failed to materialize as expected, 

significantly raising costs to the launch providers under the launch services contracts 

and eventually causing them to renegotiate, with the government paying a larger 

portion of the fixed costs. The EELV System Program Office reported the cost of 

these initiatives and other factors as follows: 

• Assured access to space and safety initiatives costing $538.8 million through 

fiscal year 2009. 

• Mission assurance initiatives for fiscal years 2010 through 2020 costing $527 

million. 

• Reallocation of seven launches from one contractor to the second for 

Procurement Integrity Act4

 violations and Air Force support for the second 

West Coast launch pad totaling $227 million. 

• Satellite weight growth that required the use of larger and more expensive 

launch vehicles costing $1.335 billion. 

 

4

 41 U.S.C. § 423. The Procurement Integrity Act restricts the disclosing and obtaining of contractor bid 

or proposal information. 
8 GAO-04-778R Evolved Expendable Launch Vehicle

• Incorrect inflation assumptions of $2.821 billion. 

• Price increases on the second and all subsequent launch services contract 

awards costing $7.807 billion due to the lack of a commercial market. 

According to the EELV System Program Office, the next contract for up to 20 

launches is anticipated to be completed in the summer of 2004 but might be delayed 

until Procurement Integrity Act sanctions against one launch contractor are lifted. 

The government may procure individual launches on an “as needed” basis until the 

sanctions are lifted and a new contract takes effect. 

Because of these realized and expected cost increases, the EELV Program Office 

anticipated a breach of the 25 percent cost increase threshold established by title 10 

United States Code section 2433, or the Nunn-McCurdy Act.5 As a result of the 

anticipated breach, the Office of the Secretary of Defense certified that 

• this acquisition program is essential to the national security; 

• there are no alternatives to this program that will provide equal or greater 

military capability at less cost; 

• the new estimates of the program acquisition unit cost or procurement unit 

cost are reasonable; and 

• the management structure for this program is adequate to manage and control 

total program acquisition unit cost or procurement unit cost. 

To provide a basis for this certification, the Office of the Secretary of Defense 

initiated an examination by the Cost Analysis Improvement Group, an independent 

DOD audit group responsible for estimating and verifying costs, to review and 

validate program costs. Based on the Cost Analysis Improvement Group’s 

examination, the Office of the Secretary of Defense’s certification was completed on 

April 26, 2004. This group reported additional cost increases built into the revised 

program cost baseline based on 137 operational missions instead of the previous 181 

manifested missions. The Cost Analysis Improvement Group’s revised estimates 

included about $13.2 billion in potential costs consisting of the following:6

• Annual fixed infrastructure costs to fund the EELV launch complex, supplier 

readiness, production facilities, a government mission director, and mission 

assurance. Mission assurance costs occurring in fiscal years 2010 through 

2020 will be incorporated into annual fixed infrastructure costs under a new 

acquisition strategy and contracting approach. 

• Fiscal year 2005 infrastructure costs to be recovered by the launch providers 

during fiscal years 2006 through 2009. 

• RD-180 engine co-production development costs billed to the government 

during fiscal years 2006 through 2015. 

• Launch providers’ recovery of losses incurred on the first and second launch 

services contracts to be recouped during fiscal years 2006 through 2009. 

 

5

 10 U.S.C. § 2433. 

6

 Individual costs are excluded from the estimates because some of those costs are proprietary. 
9 GAO-04-778R Evolved Expendable Launch Vehicle

Some of these costs had not been included in previous EELV DOD reports. 

Conversely, annual fixed infrastructure costs contain some mission assurance cost 

amounts (e.g., video instrumentation for selected flights) that were previously 

included in these reports. 

The EELV System Program Office, however, disagrees with the Cost Analysis 

Improvement Group about including costs of the Atlas V RD-180 engine coproduction development, recovery of launch providers’ financial losses from previous 

launch agreements, and fiscal year 2005 infrastructure cost recovery in the revised 

EELV program cost estimate. The EELV System Program Office’s position is that the 

Atlas V RD-180 engine co-production development costs, launch service losses, and 

fiscal year 2005 infrastructure costs should be borne by the launch providers. While 

the Office of the Secretary of Defense certified the program for continuation based on 

the Cost Analysis Improvement Group’s cost estimate, it directed the Air Force and 

the Cost Group to update their estimates. The Air Force is to submit a revised 

program cost baseline within 60 days of the April 26, 2004, certification. Until the 

revised program cost baseline is established, the specific impact of program cost 

increases on program cost savings cannot be determined. Nevertheless, using its 

own estimate, the EELV System Program Office in May 2004 projected life-cycle 

program cost saving of 51.4 percent over the heritage systems. 

Acquisition Strategy Will Be Revised to Restructure Contracting Provisions

According to the two launch providers, they have incurred substantial financial losses 

as a result of the failure of commercial launch market to materialize, leading them to 

work with the EELV System Program Office to modify the acquisition strategy and 

contract approach. They are considering changing from a “fee for service” firm fixed 

price contract to an approach that will use a combination of fixed price contracts for 

actual launch services and cost reimbursement/fixed price contracts to pay for 

contractors’ fixed costs. Under this new approach, the EELV System Program Office 

will pay for infrastructure upkeep previously absorbed by the launch provider. 

Other key features of this revised acquisition strategy include 

• maintaining mission success as the number one priority and providing launch 

providers with incentives to achieve this goal; 

• encouraging the launch providers to innovate and increase launch market 

business; and 

• maintaining an affordable program with balanced production of launch 

vehicles given limited competition. 

According to the launch providers, changes in the acquisition strategy and contract 

approach are necessary for each provider to avoid a repetition of their financial 

losses. They believe this contract approach may sustain their technical and financial 

viability. Furthermore, the Under Secretary of the Air Force stated in recent 

congressional hearings that it was important for the Air Force to develop a strategy 
10 GAO-04-778R Evolved Expendable Launch Vehicle

that “does not cause either provider to go into a death spiral of trying to be 

competitive or face extinction.” 

Conclusions 

Having a strategic launch capability, as cited in U.S. space policy, is critical to the 

nation. However, program risks and significant cost increases create some 

uncertainty about the continued achievement of assured access to space. Because a 

robust commercial space launch market may not materialize for some time, the 

government might be burdened with a larger share of launch providers’ fixed costs. 

In addition, continued escalation of EELV program costs, in a fiscally constrained 

environment with intense funding competition, is likely to raise more concerns about 

the program’s strategy, execution, funding, and risk mitigation initiatives. As we have 

noted, key decisions or program changes resulting from the recently completed 

certification from the Office of the Secretary of Defense, the Air Force’s revised 

program cost baseline due in June 2004, and expected revisions to the launch 

acquisition strategy and contract approach will affect the EELV program’s strategy 

and funding. They could also negatively impact mission success if such decisions and 

changes are not carefully conceived and applied. 

Agency Comments 

We requested official comments from DOD. The department’s Office of Networks 

and Information Integration reviewed a draft of this letter and elected not to provide 

written or oral comments. 

- - - - - - 

We will send copies of this letter to appropriate congressional committees; the 

Secretary of Defense; the Secretary of the Air Force; and the Director, Evolved 

Expendable Launch Vehicle Program. In addition, the letter will be available at no 

charge on our Web site at http://www.gao.gov. If you have any questions, please 

contact me at 202-512-6020. James Bancroft, Aisha Cabrer, Jane Hunt, Kenneth 

Patton, and George Vindigni were major contributors to this letter. 

Raymond J. Decker 

Director, Defense Capabilities 

 and Management 

Enclosure 
Enclosure I Enclosure I 

11 GAO-04-778R Evolved Expendable Launch Vehicle

Briefing for 

Committee on Armed Services,

Subcommittee on Strategic Forces

U.S. Senate

DEFENSE SPACE ACTIVITIES:

Continuation of Evolved Expendable Launch 

Vehicle Program’s Progress to Date Subject to 

Some Uncertainty
Enclosure I Enclosure I 

12 GAO-04-778R Evolved Expendable Launch Vehicle

2

Outline

• Objective

• Scope and Methodology

• Summary

• Background

• Program Has Been Successful, but Risks Present Some 

Uncertainty

• Program Cost Increases Have Been Significant, Potentially 

Impacting Overall Cost Savings

• Conclusions

• Appendix: Detailed Support Slides
Enclosure I Enclosure I 

13 GAO-04-778R Evolved Expendable Launch Vehicle

3

Objective

• To determine the extent to which the implementation of 

DOD’s Evolved Expendable Launch Vehicle (EELV) program 

achieved assured access to space and projected program 

cost savings of at least 25 percent to 50 percent over past 

launch systems.
Enclosure I Enclosure I 

14 GAO-04-778R Evolved Expendable Launch Vehicle

4

Scope and Methodology

• Reviewed laws, presidential directives, and Department of 

Defense (DOD) and Air Force policy and related documents 

on space launch.

• Conducted interviews with appropriate officials in DOD, Air 

Force, National Aeronautics and Space Administration, and 

launch providers.

• Visited Delta IV launch site at Vandenberg Air Force Base, 

California, and toured the Atlas V production facility in 

Denver, Colorado.

• Data were validated and sufficiently reliable to answer our 

objective.
Enclosure I Enclosure I 

15 GAO-04-778R Evolved Expendable Launch Vehicle

5

Summary

• Progress made toward assured access to space and cost-savings 

objective.

• Three successful Delta IV and three successful Atlas V launches.

• EELV System Program Office projected a 25 to 50 percent cost saving over previous launch systems under the current acquisition 

strategy.

• Three of four vehicle performance parameters have been met with progress made on the fourth.

• Several risk issues present some uncertainty.

• Program cost increases will be significant.

• Potential costs identified by DOD cost group.

• Specific impact on cost savings currently unknown.

• Acquisition strategy being revised to restructure contract.
Enclosure I Enclosure I 

16 GAO-04-778R Evolved Expendable Launch Vehicle

6

Background

• U.S. Space Policy - Access to and use of space is critical to 

preserving peace and protecting U.S. national security 

including civil and commercial interests.

• Assured Access to Space - The ability to launch critical 

satellites when needed and ensure that launch failures, other 

catastrophes, or events do not prevent mission success.

Source: Lockheed Martin ©
Enclosure I Enclosure I 

17 GAO-04-778R Evolved Expendable Launch Vehicle

7

Background

• EELV Program – Implemented in 1995 to meet specific 

objectives including:

• Affordable assured access to space. 

• Reliable and flexible national launch capability.

• Reduce launch costs by 25 percent to 50 percent over 

past (“heritage”) systems.

EELV 

Atlas V

Source: Lockheed Martin © and Boeing ©

EELV

Delta IV
Enclosure I Enclosure I 

18 GAO-04-778R Evolved Expendable Launch Vehicle

8

Background

• Key Performance Parameters – Capabilities and 

characteristics essential for mission accomplishment. Failure 

to meet minimum values could be cause for program 

reevaluation or termination per Air Force Instruction 10-601.

• Mass to orbit

• Vehicle design reliability

• Standard launch pads

• Standard vehicle interfaces

• Vehicle Mission Reliability – The ability to complete the 

spacelift mission from launch to placement of the satellite 

payload in orbit at a success rate that can support the 

government’s satellite needs.
Enclosure I Enclosure I 

19 GAO-04-778R Evolved Expendable Launch Vehicle

9

Background

• EELV Acquisition Strategy – currently structured to gain 

affordable and assured access to space.

• Create partnership between government and industry;

• Encourage contractor investment and innovation;

• Promote competition for launch services—two providers;

• Procure launch services under one contract instead of 

launch vehicle and operations under separate contracts;

• Provide government free and open access to contractor 

performance data; and

• Leverage benefits of commercial market.
Enclosure I Enclosure I 

20 GAO-04-778R Evolved Expendable Launch Vehicle

10

Background

• Nunn-McCurdy Provision – Requires notification to Congress 

when major acquisition program exceeds specific cost 

thresholds.

• EELV must meet Nunn-McCurdy provision.

• Requires DOD certify for continuation of a program 

exceeding 25 percent unplanned growth.

• Procurement Integrity Act – Restricts the disclosing and 

obtaining of contractor bid or proposal information.
Enclosure I Enclosure I 

21 GAO-04-778R Evolved Expendable Launch Vehicle

11

Progress Toward Access-to-Space and 

Cost-Savings Objective

• 6 consecutive successful missions—2 government and 4 

commercial launches—since Aug. 2002 with 2 providers.

Eutelsat W5

Delta IV

20 Nov 02

Eutelsat Hotbird 6

Atlas V

21 Aug 02

DSCS A3

Delta IV

10 Mar 03

Hellas Sat

Atlas V

13 May 03

Rainbow 1

Atlas V

17 Jul 03

DSCS B6

Delta IV

29 Aug 03

Government 

launch

Government 

launch

Source: Lockheed Martin © and Boeing ©
Enclosure I Enclosure I 

22 GAO-04-778R Evolved Expendable Launch Vehicle

12

Progress Toward Access-to-Space and 

Cost-Savings Objective

• A December 2002 Air Force Operational Test and Evaluation 

Center assessment concluded that EELV systems are a 

significant improvement over heritage launch vehicles.

• EELV recurring launch cost-savings projection in July 2003 of 

50.8 percent based on initial launch services contracts. 

Contract pricing anticipated a robust commercial market.
Enclosure I Enclosure I 

23 GAO-04-778R Evolved Expendable Launch Vehicle

13

Progress Toward Access-to-Space and 

Cost-Savings Objective

• Success attributed to:

• Contracts contained costs favorable to government in 

anticipation of a robust commercial market;

• Government and launch providers share risk-monitoring 

responsibility; and

• Open lines of communications between government and 

launch providers.
Enclosure I Enclosure I 

24 GAO-04-778R Evolved Expendable Launch Vehicle

14

Continued Progress on Remaining 

Performance Parameter

• Three of four key performance parameters have been met, 

according to EELV program. 

• Elements of the standard vehicle interface parameter have 

not been fully met, but progress is being made.

• Vibration issue with Delta IV nose-cone separation. 

Design solution is being pursued.

• Vibration issue with Atlas V engine noise. Modification is 

being tested.

• Vehicle mission reliability.

• Progress made. However, several more launches are 

needed to fully demonstrate vehicle mission reliability.
Enclosure I Enclosure I 

25 GAO-04-778R Evolved Expendable Launch Vehicle

15

Several Risks Present Some Uncertainty

• RL-10 upper stage engine 

• While proven reliable, potential single point of failure for 

both families of launch vehicles.

• Studies are being funded to evaluate the engine’s critical 

components, producibility, and viability.

Source: Boeing © RL-10 Engine (B-2 Variant)
Enclosure I Enclosure I 

26 GAO-04-778R Evolved Expendable Launch Vehicle

1

Several Risks Present Some Uncertainty

• RD-180 engine for Atlas V launch vehicle.

• Russian produced and tested; 13 in U.S. inventory.

• Potential loss of single source of engines.

• Co-production in U.S. of a mission-ready engine 

may not occur until 2012.

Source: Lockheed Martin © RD-180 Engine
Enclosure I Enclosure I 

27 GAO-04-778R Evolved Expendable Launch Vehicle

17

Several Risks Present Some Uncertainty

• Only one launch provider can launch from both coasts.

• Additional launch pad needed on the West Coast.

• West coast pad for Atlas V to be ready by May 2005.

Atlas V East Coast 

Launch Site, Space 

Launch Complex 41, 

Cape Canaveral Air 

Force Station, Florida

Source: Lockheed Martin © Source: Boeing ©

Atlas V West Coast 

Fixed Launch 

Platform 

Construction, Space 

Launch Complex 3E, 

Vandenberg Air Force 

Base, California

Delta IV West Coast 

Launch Site, Space 

Launch Complex 6, 

Vandenberg Air Force 

Base, California

Delta IV East Coast 

Launch Site, Space 

Launch Complex 37, 

Cape Canaveral Air 

Force Station, Florida
Enclosure I Enclosure I 

28 GAO-04-778R Evolved Expendable Launch Vehicle

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Significant EELV Program Cost 

Increases Reported

• Costs reported as of Dec. 2003 increased by about $13.3 billion over the approved baseline estimate of $18.8 billion due to

• Assured access to space mission and safety initiatives costing $538.8 million through fiscal year 2009.

• Mission assurance initiatives for fiscal years 2010 through 2020 costing $527 million.

• Reallocation of seven launches due to sanctions and Air 

Force support of second West Coast launch pad totaling 

$227 million.

• Satellite weight growth costing $1.335 billion.

• Incorrect inflation assumptions of $2.821 billion.

• Price increases on second and subsequent launch services awards costing $7.807 billion due to the lack of the 

commercial market.
Enclosure I Enclosure I 

29 GAO-04-778R Evolved Expendable Launch Vehicle

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Potential Cost Increases Reported by 

DOD Cost Group 

• The Air Force on January 15, 2004, reported an anticipated 

breach of the 25 percent threshold of the Nunn-McCurdy 

provision.

• Office of the Secretary of Defense certified the program’s 

national security need, cost estimate, management structure, 

and lack of alternatives on April 26, 2004.

• DOD’s Cost Analysis Improvement Group examined the 

program and provided revised cost estimates.
Enclosure I Enclosure I 

30 GAO-04-778R Evolved Expendable Launch Vehicle

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Potential Cost Increases Reported by 

DOD Cost Group

• Cost Analysis Improvement Group estimated about $13.2 

billion in potential costs (specific costs are excluded because 

they are proprietary and certain amounts may overlap with 

previously reported costs of $13.3 billion):

• Annual fixed infrastructure cost to fund EELV launch 

complex, supplier readiness, production facilities, a 

government mission director, and mission assurance.

• Fiscal year 2005 infrastructure costs incurred by launch 

providers.

• RD-180 co-production development cost.

• Launch providers’ recovery of losses incurred on the first 

and second launch services contracts.
Enclosure I Enclosure I 

31 GAO-04-778R Evolved Expendable Launch Vehicle

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Potential Cost Increases Reported by 

DOD Cost Group

• Air Force and Cost Analysis Improvement Group disagree on 

including fiscal year 2005 infrastructure cost recovery, RD180 co-production development cost, and recovery of launch 

providers’ financial losses.

• DOD directed the Air Force and the Cost Group to update 

their estimates and the Air Force to submit a revised program 

cost baseline within 60 days of the April 26, 2004, 

certification.

• Specific impact on cost savings will be determined after new 

cost baseline is established. 
Enclosure I Enclosure I 

32 GAO-04-778R Evolved Expendable Launch Vehicle

1

Revised Acquisition Strategy Prompted

• The EELV Program Office exploring new strategy to: 

• Maintain mission success as top priority.

• Encourage launch providers innovation to promote new 

commercial business.

• Maintain program affordability in light of limited 

competition.

• Avoid launch providers’ stated continued financial losses.
Enclosure I Enclosure I 

33 GAO-04-778R Evolved Expendable Launch Vehicle

23

Conclusions

• Program risks present some uncertainty in continuing to 

achieve assured access to space objective.

• Commercial market has not materialized.

• Future government budgets will be constrained.

• Decisions involving cost, program management, and revised 

acquisition strategy, if not carefully considered, could 

negatively impact program.
Enclosure I Enclosure I 

34 GAO-04-778R Evolved Expendable Launch Vehicle

24

APPENDIX 

Detailed Support Slides
Enclosure I Enclosure I 

35 GAO-04-778R Evolved Expendable Launch Vehicle

25

Heritage Launch Vehicles

Delta II Atlas II Titan II Titan II Titan IV

Source: Lockheed Martin © and Boeing ©
Enclosure I Enclosure I 

36 GAO-04-778R Evolved Expendable Launch Vehicle

26

Components of Atlas V Medium Launch 

Vehicle

Source: Lockheed Martin ©
Enclosure I Enclosure I 

37 GAO-04-778R Evolved Expendable Launch Vehicle

27

Components of Delta IV Medium Launch 

Vehicle

Source: Boeing ©

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