United States General Accounting Office 

GAO Report to the Subcommittee on 

Strategic Forces, Committee on Armed 

Services, U.S. Senate 

October 2003 DEFENSE 

ACQUISITIONS 

Despite Restructuring, 

SBIRS High Program 

Remains at Risk of 

Cost and Schedule 

Overruns 

GAO-04-48

Highlights of GAO-04-48, a report to 


the Subcommittee on Strategic Forces, 


Committee on Armed Services, 


U.S. Senate 


In 1996, the Department of Defense 

(DOD) initiated the Space-Based 

Infrared System (SBIRS) to provide 

greater long-range ballistic missile 

detection capabilities than its 

current system. The initial SBIRS 

architecture included “High” and 

“Low” orbiting space-based 

components and ground processing 

segments. 

SBIRS has been technically 

challenging, and in October 2001, 

SBIRS Low was transferred from 

the Air Force to the Missile 

Defense Agency. The Air Force 

expected to field SBIRS High by 

2004, but numerous problems have 

led to schedule overruns. In the fall 

of 2001, DOD identified potential 

cost growth of $2 billion. 

To determine the causes of the 

significant cost growth, DOD 

convened an Independent Review 

Team. In August 2002, the 

Air Force restructured the program 

to address the findings of the 

team’s assessment. Our report 

(1) describes the key elements of 

the restructured program and (2) 

identifies problems and potential 

risks still facing the program. 

GAO is recommending that DOD 

convene a task force to assess the 

restructured program with an 

emphasis on providing concrete 

guidance for the program to 

address its underlying problems. 

DOD agrees that another review of 

the program is warranted. 

www.gao.gov/cgi-bin/getrpt?GAO-04-48. 

To view the full product, including the scope 

and methodology, click on the link above. 

For more information, contact Robert Levin at 

(202) 512-4841 or levinr@gao.gov. 

October 2003 

DEFENSE ACQUISITIONS 

Despite Restructuring, SBIRS High 

Program Remains at Risk of Cost and 

Schedule Overruns 

In an effort to get the SBIRS High program on track, the most recent 

program restructuring provided contractor incentives and oversight 

measures, as recommended by the Independent Review Team. Under the 

current contract, the prime contractor’s award fees are now tied to the 

incremental delivery of specific system capabilities. DOD also modified the 

contract to prescribe tighter management controls, improve reporting of 

contractor information, and add formal review processes by DOD 

management. This increased oversight is intended, in part, to minimize 

further changes in requirements and improve management of software 

development, both of which have been particularly problematic. The 

restructuring also added funding and other resources to the program and 

extended the scheduled delivery of certain components. At the time of the 

restructuring, the Air Force believed the modified contract established an 

executable schedule, a realistic set of requirements, and adequate funding. 

However, the restructuring did not fully address some long-standing 

problems identified by the Independent Review Team. As a result, the 

program continues to be at substantial risk of cost and schedule increases. 

Key among the problems is the program’s history of moving forward without 

sufficient knowledge to ensure that the product design is stable and meets 

performance requirements and that adequate resources are available. For 

example, a year before the restructuring, the program passed its critical 

design review with only 50 percent of its design drawings completed, 

compared to 90 percent as recommended by best practices. Consequently, 

several design modifications were necessary, including 39 to the first of two 

infrared sensors to reduce excessive noise created by electromagnetic 

interference—a threat to the host satellite’s functionality—delaying delivery 

of the sensor by 10 months or more. Software development underlies most 

of the top 10 program risks, according to the contractor and the SBIRS High 

Program Office. For example, testing of the first infrared sensor revealed 

several deficiencies in the flight software involving the sensor’s ability to 

maintain earth coverage and track missiles while orbiting the earth. Program 

officials stated that they are coordinating the delivery of the first sensor with 

the delivery of the host satellite to mitigate any schedule impacts, but they 

agreed that these delays put the remaining SBIRS High schedule at risk. 

Illustration of geosynchronous earth-orbiting satellite 
Contents 


Letter 

Results in Brief 


Background


Restructured Program Focused on Contract Management and 


Program Oversight 

Restructuring Did Not Address Long-Standing Problems That Put 

the Program at Risk 

Conclusions 

Recommendations for Executive Action 

Agency Comments 

Scope and Methodology 

1 

2 

4 

9 

13 

22 

22 

23 

24 

Appendix I Comments from the Department of Defense 

Appendix II SBIRS High Performance in Mission Areas 

Appendix III Key Events in the SBIRS High Program 

Appendix IV GAO Contacts and Staff Acknowledgments 

Tables 

Table 1: Nunn-McCurdy Criteria and DOD’s Supporting Information 

for SBIRS High Certification, May 2002 8 

Table 2: Effectivities and Their Utilities in Relation to SBIRS 

High Launch/Delivery Dates 10 

Figure 

Figure 1: Space-Based Infrared System Description 5 

Page i GAO-04-48 Defense Acquisitions 

26 

29 

30 

32 
Abbreviations 

CMMI Capability Maturity Model Integration 


DCMA Defense Contract Management Agency 


DOD Department of Defense 


DSP Defense Support Program 


EMI electromagnetic interference 


EVMS Earned Value Management System


GEO geosynchronous earth orbit 


HEO highly elliptical orbit 


IRT Independent Review Team 


ITW/AA integrated tactical warning/attack assessment 


LEO low earth orbit 


M3P multimission mobile processor 


MCS mission control station 


ORD operational requirements document 


OSD Office of the Secretary of Defense 


SBIRS Space-Based Infrared System


TES theater event system


TSPR Total Systems Performance Responsibility 


USD (AT&L) Under Secretary of Defense for Acquisition, Technology, 


and Logistics 

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. 

Page ii GAO-04-48 Defense Acquisitions 
United States General Accounting Office 

Washington, DC 20548 

October 31, 2003 


The Honorable Wayne Allard 


Chairman 


The Honorable Bill Nelson 


Ranking Minority Member 


Subcommittee on Strategic Forces 


Committee on Armed Services 


United States Senate 


Since the early 1980s, the Department of Defense (DOD) has initiated 


several long-range ballistic missile detection programs aimed at providing 


greater capabilities than the Defense Support Program (DSP), the 


currently operating strategic-surveillance and early warning satellite 


system.1

 In 1996, DOD initiated the most recent of these efforts: the Space-


Based Infrared System (SBIRS). SBIRS has proven to be a technically


challenging program, intended to combine all military infrared surveillance 


requirements into a single, integrated system, or “system of systems,” to 


provide accurate and timely warning and tracking of a ballistic missile 


attack. The initial SBIRS architecture included “High” and “Low” orbiting 


space-based components2

 and ground processing segments. In October 


2001, the Low component was transferred from the Air Force to the 


Missile Defense Agency and in 2002 was renamed the Space Tracking and 


Surveillance System.3

 The Air Force continues to develop SBIRS High and


its related ground segment—now one of DOD’s highest priority space 


programs—as an upgrade and eventual replacement for DSP. 


Originally, SBIRS High was expected to be fielded between 1999 and 2004,


under a research and development contract with an estimated value of 


$1.8 billion. However, since the program began, it has encountered a 


1

 The detection programs DOD initiated were the Advanced Warning System (early 1980s); 

the Boost Surveillance and Tracking System (late 1980s); the Follow-On Early Warning 

System (early 1990s); and the Alert, Locate, and Report Missiles System (mid-1990s). 

2

 The High component has elements in highly elliptical orbit and geosynchronous earth 

orbit; the Low component has elements in low earth orbit. 

3

 U.S. General Accounting Office, Missile Defense: Alternate Approaches to Space 

Tracking and Surveillance System Need to Be Considered, GAO-03-597 (Washington, D.C.: 

May 23, 2003). 

Page 1 GAO-04-48 Defense Acquisitions 
number of problems, including immature technologies and changing 

requirements, that have resulted in cost and schedule overruns. In the fall 

of 2001, DOD identified cost growth of at least $2 billion, which, because it 

exceeded a statutory threshold, triggered a Nunn-McCurdy review and 

certification of the program as required by law.4 

To determine the underlying causes of the significant cost growth, DOD 

convened an Independent Review Team (IRT), and in August 2002, the 

Air Force restructured the program to address the findings of the IRT 

assessment. Currently, the amount under contract for the SBIRS High 

program is $4.4 billion. Concerned that cost, schedule, and performance 

problems may persist, you asked us to (1) describe the key elements of the 

restructured program and (2) identify problems and potential risks still 

facing the program. 

Results in Brief 
 In an effort to get the SBIRS High program on track, the most recent 

program restructuring provided additional resources, contractor 

incentives, and oversight measures. DOD modified its contract with 

Lockheed Martin Space Systems Company,5

 the prime contractor, to 

prescribe tighter management controls, improve reporting of contractor 

information, and add formal review processes by DOD management. This 

increased oversight is intended, in part, to minimize further changes in 

requirements and improve management of software development, both of 

which have been particularly problematic in the development of SBIRS 

High. Additionally, Lockheed Martin’s award fees have been tied to the 

incremental delivery of specific system capabilities. At the time of the 

restructuring, the Air Force believed the contract, as modified, established 

an executable schedule, a realistic set of requirements, and adequate 

funding to address the underlying factors that led to the cost growth and 

Nunn-McCurdy review. 

While the restructuring implemented a number of needed management 

changes, it did not fully address some long-standing problems in the 

development of SBIRS High identified by the IRT. As a result, the program 

continues to be at substantial risk of cost and schedule increases. Key 

among the problems is the program’s history of moving forward with 

system development before requirements are set and sufficient knowledge 

4

 10 U.S.C. § 2433. 


5

 An operating unit of the Lockheed Martin Corporation. 


Page 2 GAO-04-48 Defense Acquisitions 
is gained. For example, a year before the restructuring, the program 

passed its critical design review with only 50 percent of its design 

drawings completed, compared to 90 percent as recommended by the best 

practices that we have found characterize successful programs. 

Consequently, several design modifications have been necessary, including 

39 modifications to the first of two infrared sensors to reduce excessive 

noise created by electromagnetic interference—a threat to the host 

satellite’s functionality—delaying delivery of the sensor by 10 months. 

Software development also remains problematic. For example, Defense 

Contract Management Agency (DCMA) officials report that testing of the 

first infrared sensor in May 2003 revealed several deficiencies in the flight 

software involving the sensor’s ability to maintain earth coverage and 

track missiles while orbiting the earth. According to the contractor and 

SBIRS High Program Office, software development underlies most of the 

top 10 program risks. Moreover, delays in the development of the first 

sensor have had a cascading effect. For example, the continuing design 

and software development work on the first sensor is now competing for 

staff and other resources that were scheduled to be used for follow-on 

developmental tasks. Program officials stated that they are coordinating 

the delivery of the first sensor with the delivery of the host satellite to 

mitigate any schedule impacts, but they agreed that these delays put the 

remaining SBIRS High schedule at risk. 

We are recommending that DOD reassess the SBIRS High program with 

the aim of making the best decisions for proceeding with the procurement 

of a system that meets this nation’s need for strategic surveillance and 

early warning satellite data. DOD agrees that a thorough review of the 

SBIRS High program is warranted but would like the flexibility to consider 

other approaches before making a final decision on assigning 

responsibilities for conducting a review. (DOD’s comments are reprinted 

in app. I.) We agreed and modified our recommendations accordingly. 

Page 3 GAO-04-48 Defense Acquisitions 
Background 


SBIRS High Program 

Description 

SBIRS High is designed to contribute to four defense mission areas: 

missile warning, missile defense, technical intelligence, and battle-space 

characterization. (See app. II for a description of the program’s 

contribution to each.) SBIRS High is intended to replace the DSP satellite 

constellation, which has provided early missile warning information for 

more than 30 years, and to provide better and more timely data to the 

Unified Combatant Commanders, U.S. deployed forces, U.S. military 

strategists, and U.S. allies. 

As currently planned, SBIRS High will be comprised of four satellites in 

geosynchronous earth orbit (GEO), two infrared sensors that are to be 

placed on separate host satellites in highly elliptical orbit (HEO)6

—known 

as “HEO sensors”—and a ground segment for mission processing and 

control. These elements are illustrated in figure 1. The Air Force plans to 

acquire a fifth GEO satellite to serve as a spare that would be launched 

when needed. 

6

 A GEO satellite’s revolution is synchronized with the earth’s rotation giving it a seemingly 

stationary position above a fixed point on the equator. At an altitude of about 22,300 miles 

above the equator, three or four strategically spaced satellites can view the entire globe 

with the exception of the polar regions. HEO satellites, which linger over a designated area 

of the earth, can provide polar coverage. 

Page 4 GAO-04-48 Defense Acquisitions 
Figure 1: Space-Based Infrared System Description 

a

 Once a product decision is made, the operational constellation will consist of 20 plus satellites for 

continuous coverage. 

SBIRS High is intended to provide taskable sensors with improved 

sensitivity and revisit rate allowing them to see dimmer objects and 

provide more accurate estimates of missile launch and impact point than 

the sensors in the existing satellite constellation. SBIRS High sensors are 

also expected to view particular areas of interest and to revisit multiple 

areas of interest as directed by ground controllers. In addition to covering 

the shortwave infrared spectrum like their predecessor, SBIRS High 

Page 5 GAO-04-48 Defense Acquisitions 
sensors are also expected to cover midwave infrared bands and see-to-theground bands7

 allowing them to perform a broad set of missions. 

SBIRS High is being developed in two increments. Increment 1, which 

achieved initial operational capability in December 2001, consolidated 

DSP and Attack and Launch Early Reporting to Theater ground stations 

into a single mission control station, which is currently operating using 

DSP data. Through spiral development,8

 Increment 2 (now in the systems 

design and development phase) will develop the HEO sensors and first 

two GEO satellites and will upgrade Increment 1 hardware and software to 

operate and process data from the HEO and GEO elements. The remaining 

three GEO satellites are to be procured at some future date. 

Past Problems Since the SBIRS program’s inception in 1996, it has been burdened by 

immature technologies, unclear requirements, unstable funding, 

underestimated software complexity, and other problems that have 

resulted in mounting cost overruns and delays. In addition, the program 

has been restructured several times. Most notably, in 1998, the SBIRS High 

Program Office had to restructure the program around an Air Force 

directive to delay the GEO satellite launches by 2 years in order to fund 

other DOD priorities. This contributed to program instability since the 

contractor had to stop and restart activities and devise interim solutions 

that would not otherwise have been required. In early 2001, there were 

growing cost and schedule variances and a related decrease in contractor 

management reserve funding. Primary drivers of these problems were 

technical issues with the HEO sensors and associated test failures. 

In November 2001, the Assistant Secretary of the Air Force (Acquisition) 

and the Executive Vice President of Lockheed Martin Space Systems 

Company formed the IRT—comprised of various specialists in acquisition, 

7

 Midwave infrared bands provide the below-the-horizon launch phase and missile tracking. 

See-to-the-ground bands provide below-the-horizon tracking of slow or static dim targets 

below 6.2 miles. 

8

 Spiral development is an iterative process for developing defined capabilities within each 

increment (that is, a desired capability is identified, but the end-state requirements are not 

known at program initiation). This process provides the opportunity for interaction among 

the user, tester, and developer. The requirements are refined through experimentation and 

risk management; there is continuous feedback, and the user is provided the best possible 

capability within the increment. The requirements for future increments depend on 

feedback from users and technology maturation. Each increment may include a number 

of spirals. 

Page 6 GAO-04-48 Defense Acquisitions 
operations, engineering, and business management from industry and the 

federal government—to conduct a comprehensive, independent review of 

the SBIRS High program. In February 2002, the IRT issued a candid and 

critical report identifying three primary causes that led to the significant 

cost growth: 

• 	 The program was too immature to enter the system design and 

development phase. Program activation was based on faulty and overly 

optimistic assumptions about software reuse and productivity levels, the 

benefits of commercial practices, management stability, and the level of 

understanding of requirements. 

• 	 The complexity of developing engineering solutions to meet system 

requirements was not well understood by program and contracting 

officials. The systems integration effort was significantly underestimated 

in terms of complexity and the associated impacts. In addition, the 

requirements refinement process was ad hoc, creating uncertainty on the 

status of program priorities and affecting cost and schedule. 

• 	 Breakdown in execution and management. Overly optimistic assumptions 

and unclear requirements eventually overwhelmed government and 

contractor management. The 2-year delay of the GEO satellite launches, 

which occurred in 1998, contributed to management instability and was a 

factor in the Program Office and the contractor having to spend 25 of the 

first 60 months of the contract on replanning activities. 

The IRT also made a number of recommendations to address these 

problems. These included establishing accurate baselines for cost, 

schedule, and technology; revising the contract fee structure; and 

redefining Program Office and contractor management roles and 

responsibilities. 

Nunn-McCurdy Breach 

and Certification 

A preliminary effort to capture a realistic estimate of total program costs 

conducted in the fall of 2001 suggested potential cost growth in excess of 

$2 billion, or a 70-percent program acquisition unit cost increase. A major 

defense acquisition program that incurs a unit cost growth of at least 

25 percent in the acquisition program baseline triggers a statutory 

requirement that the Secretary of Defense9

 certify to the Congress that 

four criteria have been met in order to continue the program—a process 

9

 The Secretary of Defense delegated this responsibility to the Under Secretary of Defense 

for Acquisition, Technology, and Logistics. 

Page 7 GAO-04-48 Defense Acquisitions 
known as Nunn-McCurdy.10 See table 1 for a list of the criteria and the 

information DOD used to support certification for the SBIRS 

High program. 

Table 1: Nunn-McCurdy Criteria and DOD’s Supporting Information for SBIRS High 

Certification, May 2002 

Criteria DOD supporting information 

System is essential to U.S. Strategic Command is required to maintain space and 

national security. missile warning/defense resources and to provide the 

President and military leaders with missile warning and 

defense information; the Joint Requirements Oversight 

Council revalidated the SBIRS Operational Requirements 

Document in January 2002; SBIRS High is needed to 

replace DSP. 

There are no alternatives Many alternatives were reviewed but none could provide 

that will provide equal or equal or greater military capability at the same cost as 

greater military capability SBIRS High. Additionally, all alternatives had greater 

at less cost. technical and schedule risk. 

New cost estimates are 

reasonable. 

Cost estimates from various entities, including Lockheed 

Martin, the SBIRS High Program Office, and the Air Force 

Cost Analysis Agency, were close and the engineering 

manufacturing development estimate was mature, had high 

fidelity, and appeared reasonable. 

Program management is The contractor has established an effective organization and 

adequate to manage and 

control costs. 

instituted positive changes. 

Source: U.S. Air Force. 

Based on the information submitted to the Under Secretary of Defense for 

Acquisition, Technology, and Logistics (USD (AT&L)), the SBIRS High 

program was officially certified on May 2, 2002, with the contingencies 

that the Air Force fully fund the program to the cost estimate developed by 

the Office of the Secretary of Defense (OSD) and to reestablish a baseline 

to OSD’s schedule for the GEO satellites. USD (AT&L) also directed that a 

revised acquisition strategy and program baseline be approved by the end 

of August 2002. These revisions and the new contract with Lockheed 

10 10 U.S.C. § 2433. This unit cost reporting mechanism, which also applies to procurement 

unit cost for procurement programs, originated with the Nunn-McCurdy Amendment to the 

Department of Defense Authorization Act, 1982. The amendment, as revised, was made 

permanent law in the following year’s authorization act. Known as Nunn-McCurdy 

“breaches,” program unit cost increases of 15 percent or more trigger a requirement for 

detailed reporting to Congress about the program. Increases of 25 percent or more also 

trigger the requirement for Secretary of Defense certification. 

Page 8 GAO-04-48 Defense Acquisitions 
Martin Space Systems Company represent the most recent program 

restructuring. (App. III provides a chronology of key events in the 

development of SBIRS High.) 

Restructured Program 

Focused on Contract 

Management and 

Program Oversight 

In August 2002, the SBIRS High program was restructured to address a 

number of the problems that led to the Nunn-McCurdy breach. In 

implementing changes, the Air Force relied heavily on the findings and 

recommendations of the IRT. The restructuring increased program 

oversight and provided additional resources as well as incentives intended 

to improve contractor performance. 

As part of the program’s recertification after the Nunn-McCurdy breach, 

USD (AT&L) directed the Air Force to reestablish a baseline for the 

program’s cost and schedule estimates. The value of the restructured 

development contract increased by $2 billion to $4.4 billion. The first GEO 

satellite (GEO 1) launch was replanned from September 2004 to October 

2006 and the GEO 2 launch from September 2005 to October 2007. The 

procurement start of GEO satellites 3 through 5 was replanned from fiscal 

year 2004 to fiscal year 2006. The SBIRS High budget for fiscal years 2006 

and 2007 has identified funding for GEO satellites 3 through 5 totaling 

$1.3 billion—these satellites are not yet on contract. In addition to 

increased funding, the restructuring added 656 staff to the program— 

including increased staff for software development—bringing the total 

number of personnel to 2,305 by June 2003. 

Under the restructuring, DOD’s contract with Lockheed Martin 

was modified from a cost-plus-award fee structure to a cost-plusaward-and-incentive fee structure. The objective of this change was to 

encourage timely delivery of accepted capabilities by providing the 

incentive of the full potential profit or fee for the contractor. At the time of 

the restructuring, the Air Force believed the modified contract established 

an executable schedule, a realistic set of requirements, and adequate 

funding, and addressed the underlying factors that led to the NunnMcCurdy breach. 

Page 9 GAO-04-48 Defense Acquisitions 
The restructured contract was planned around 10 “effectivities”— 

milestones at which an incremental system capability is delivered by the 

developer and accepted by the operator as shown in table 2. Delivery of 

these effectivities is tied to the contractor’s award and incentive fees. 

Lockheed Martin met the first effectivity and was awarded 100 percent of 

its fee (about $1.4 million). 

Table 2: Effectivities and Their Utilities in Relation to SBIRS High Launch/Delivery Dates 

Effectivity Event Milestone date Operational and military utility 

Interim mission control station (MCS) Oct. 2002 (completed) Provides an interim catastrophic 

backup-1 system certification peacetime backup capability for the 

Increment 1 MCS at another location. 

HEO 1 delivery Feb. 2003 (delayed) 

Integrated training suite Sept. 2003 (completed) 	 Provides the ability to train the 

integrated SBIRS High missions; 

provides better-trained crew members, 

crew coordination, and utilization of 

training resources. 

HEO 2 delivery Jan. 2004 (delayed) 

HEO message certification Nov. 2004 (delayed to Apr. 2005) 	 Provides an interim test center for 

HEO launch and early on-orbit testing 

operations; would signify interim 

operations of the HEO sensor; missile 

warning and missile tracking 

information would be reported to MCS; 

both real time and off-line technical 

intelligence data gathering would be 

performed. 

DSP multimission mobile processor Apr. 2005 Improves maintainability and 

(M3P) theater event system (TES) supportability; sustains theater 

certification performance. 

GEO 1 launch Oct. 2006 

GEO message certification Aug. 2007 	 Provides an interim test center for 

GEO launch and early on-orbit testing 

operations; GEO scanner-only monotrack event data released to MCS; 

increases capabilities to better meet 

the technical intelligence mission. 

GEO 2 launch Oct. 2007 

Page 10 GAO-04-48 Defense Acquisitions 

1 

2 

3 

4 

5 
Effectivity Event Milestone date Operational and military utility 

6 GEO Air Force M3P Oct. 2008 Fuses available DSP, HEO sensor, 

survivable/endurable integrated and GEO satellite infrared data to 

tactical warning/attack assessment detect events and generate reports; 

(ITW/AA) system certification improves Increment 2 detection, 

reporting, and accuracy of missile 

events (where M3Ps are deployed) 

and battle-space characterization 

capability. 

GEO 3 launch Jan. 2009 (rescheduled to Sept. 2010) 

Interim MCS backup-2 multisatellite Jan. 2009 First opportunity at a fixed site to 

system certification provide multisatellite fusion capability 

for DSP, HEO, and GEO; improves 

tactical parameters, such as location 

of launch point, impact area, and state 

vector accuracy. 

MCS-2 system certification Oct. 2009 	 Fully integrates MCS operations; 

improves accuracy and detection of 

events for war-fighting operations. 

GEO 4 launch Jan. 2010 (rescheduled to Sept. 2011) 

GEO Army M3P survivable/endurable Apr. 2010 Improves detection and reporting of 

ITWW/AA system and TES infrared events; fuses DSP, HEO, and 

certification 	 GEO track data relayed from MCS and 

the interim backup; improves tactical 

parameters from in-theater assets, 

such as launch point, impact area, and 

state vector accuracy. 

Increment 2 complete Apr. 2010 	 Concludes the Increment 2 

development and deployment of the 

SBIRS High full constellation; 

additional follow-on GEO satellites 

provide multitheater/worldwide 

coverage. 

Source: U.S. Air Force. 

The restructured contract also prescribed tighter management controls, 

improved reporting of contractor information, and added formal review 

processes. For example, the modified contract removed Total Systems 

Performance Responsibility (TSPR)11 from the contractor, transferring 

more oversight back to the government because, according to the IRT, 

this concept was not properly understood or implemented within the 

11 TSPR is a contract condition that obligates the prime contractor to assume total 

responsibility for the integration of an entire weapon system. This is to ensure that the 

government receives an integrated system that meets the performance requirements as 

defined in the system specifications. 

Page 11 GAO-04-48 Defense Acquisitions 

7 

8 

9 

10 
SBIRS High program. This was evidenced by the numerous instances 


where the contractor was asked by program participants to accomplish 


work under TSPR guidelines without going through the appropriate 


management processes. In addition, since requirements were not 


prioritized or well-defined below the Operational Requirements Document 


(ORD) level, the contractor’s refinement of requirements was ad hoc, 


creating uncertainty on the status of program priorities and impacting cost 


and schedule. 


The restructuring also modified the program’s use of DOD’s Earned Value 


Management System (EVMS).12 Specifically, Lockheed Martin and its 


subcontractors standardized EVMS procedures in an effort to provide 


more accurate and up-to-date reporting on the status of the program. In 


addition, an EVMS oversight team was established to focus on process 


improvements, and Lockheed Martin and its subcontractors developed a 


surveillance plan to review the EVMS data. The contractor is now 


monitoring EVMS data more closely through monthly meetings and 


reviews of specific cost accounts. Changes to the reporting of EMVS data 


also help identify risks more effectively. 


The contractor and SBIRS High Program Office have also increased 


oversight and established a more formal risk management process within 


the restructuring. For example, the prime contractor placed three vice


presidents in charge of the program as program director, deputy for 


ground segment development, and deputy for systems integration. In 


addition, the Air Force established a program management board 


consisting of high-level Air Force officials to prevent uncontrolled changes 


in the SBIRS High program. Risks are now monitored and reported during 


weekly risk management meetings. On a monthly basis, these risks are 


also discussed with government and contractor senior management. 


Finally, program officials reported that Lockheed Martin has employed 


a more structured software development process that focuses on 


building the software in increments, thereby helping to spread out risks. 


A vice president is now overseeing the ground segment development, 


including software development. Further, Lockheed Martin has 


reorganized the ground software development group under its 


Management and Data Systems, which is known for its software expertise. 


12 EVMS is a tool used by the program manager to monitor the technical, schedule, and cost 

parameters of the contract. 

Page 12 GAO-04-48 Defense Acquisitions 
This component of Lockheed Martin achieved a Capability Maturity Model 

Integration (CMMI) level 5—the highest rating—for its software 

management and procedures.13 The ground software group does not have a 

formal CMMI rating—Lockheed Martin Management and Data Systems 

was brought in to help improve this group’s processes. 

Restructuring 


Did Not Address 


Long-Standing 


Problems That Put the 


Program at Risk 


While the new oversight processes under the restructured program 

should help managers identify and address problems as they arise, the 

restructuring does not fully account for earlier program decisions made 

without sufficient systems engineering and design knowledge. As a result, 

the program continues to experience problems and risks related to 

changing requirements, design instability, and software development 

concerns. In particular, design problems have delayed the delivery of the 

first HEO sensor (HEO 1). Because development of the GEO satellites and 

possible additional HEO sensors are tied to the completion of HEO 1, the 

schedules for the subsequent components could slip, continuing to put the 

program at significant risk of cost and schedule overruns. 

Requirements 

Modifications Continue 

As we reported in June 2003, the majority of DOD satellite programs that 

GAO has reviewed over the past 2 decades, including SBIRS, have cost 

more than expected and have taken longer to develop and launch than 

planned because performance requirements were not adequately defined 

at the beginning of the program or were changed significantly once the 

program had already begun.14 The numerous changes to the SBIRS High 

requirements contributed to the cost and schedule overruns early in the 

program. Although a more defined requirements management process is 

now in place, changes to both the operational requirements and the 

contract are being proposed that could impact the program’s cost 

and schedule. 

Before the restructuring, a total of 94 requirements changes were made to 

the SBIRS High program—16 of which were added after the critical design 

13 The CMMI rating standards, developed by the Software Engineering Institute at Carnegie 

Mellon University, range from 1 through 5. A CMMI rating of 1, called “performed,” means 

that company’s process is unpredictable, poorly controlled, and reactive. A CMMI rating of 

5 indicates that the company’s process is at the “optimizing” level, which focuses on 

continuous process improvement. 

14 U.S. General Accounting Office, Military Space Operations: Common Problems and 

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

June 2, 2003). 

Page 13 GAO-04-48 Defense Acquisitions 
review in August 2001.

15 The effect that these changes may continue to 

have on the program was not addressed in the August 2002 restructuring 

efforts. Since restructuring, an Air Force program management board— 

which was established to oversee requirements changes and help ensure 

appropriate use of funds—has approved 34 actions that will require 

contract modifications. If funded, these changes, identified as “urgent and 

compelling,”16 would total $203.8 million and come from the Program 

Manager’s discretionary funds (also known as management reserve) or be 

paid by the user who needs the new capability. The majority of these 

dollars would be used to cover the following four changes 

• 	 earlier implementation of HEO mission processing in the mission control 

station at an estimated cost of $15 million, 

• 	 full implementation of the mission management component of HEO for the 

technical intelligence community at an estimated cost of $33 million, 

• 	 implementation and fielding of an operational mission control station 

backup to meet Increment 1 ITW/AA requirements in fiscal year 2006 at an 

estimated cost of $97 million, and 

• 	 the Army’s implementation of a capability for DSP M3Ps to receive and 

process HEO tracking data at an estimated cost of $27 million. 

In addition to these pending changes, the Air Force is considering 

acquiring a third and possibly a fourth HEO sensor and accelerating the 

procurement schedule for GEO satellites 3 through 5.17 If procured 

together, the estimated cost (including integration and testing) is 

$283 million for the third HEO sensor and $238 million for the fourth HEO 

sensor. The funding for these sensors has yet to be determined. The 

potential acceleration of the acquisition of GEO satellites 3 through 5 is 

similarly placing added pressures on the program. Plans to accelerate the 

acquisition of these GEO satellites is in response to a recent concern by 

15 While the requirements in the SBIRS High ORD have not changed, the contractor has 

needed clarifications and refinements to understand what certain requirements entailed. 

According to Air Force officials, most of the changes earlier in the program can be 

attributed to weaknesses in earlier program management processes under the TSPR model 

of program management. 

16 Under the current restructuring, proposed program changes must be designated as 

“urgent and compelling”—that is, extremely important to mission needs and requiring 

near-term action to meet the need on time. 

17 The acquisition of additional HEO sensors comes as a result of delays with the Space 

Tracking and Surveillance System. See GAO-03-597. 

Page 14 GAO-04-48 Defense Acquisitions 
the Senate Armed Services Committee18 that an Air Force decision to delay 

the acquisition of satellites 3 through 5 would create a 3-year gap between 

the launch of the second and third satellites. As a result, the committee 

directed the Air Force to develop a plan to reduce the production gap in 

the SBIRS High program from 2 years to 1. The committee also directed 

the Air Force to assess the program’s technical, schedule, and cost risks 

associated with a 2-year delay, compare the operational risk of a 1-year 

delay with a 2-year delay, and describe steps to mitigate the impact of a 

1-year production gap. 

In April 2002, a group comprised of DOD subject matter experts reviewed 

the SBIRS High requirements and concluded that four operational 

requirements will not fully be met by the current design under certain 

scenarios. While these requirements are only 4 of 140, they are important 

to the system’s overall missile defense and warning capability: 

• 	 threat typing—the ability to identify a certain type of missile launched 

under certain scenarios; 

• 	 impact point prediction—the ability to predict where a particularly 

stressing theater-class missile will hit the earth; 

• 	 theater state vector velocity—the ability to track the path of a particularly 

stressing theater-class missile; and 

• 	 strategic raid count—the ability to count and discriminate the number of 

true incoming missiles for a certain scenario. 

Program officials said that these four requirements were poorly written, 

defined, or described in the ORD and that efforts are underway to rewrite, 

seek waivers, or clarify them and negotiate deviations with users. 

Design and System 

Integration Continue 

to Be Unstable 

Achieving a stable design before entering product demonstration is critical 

to maintaining cost and schedule goals.19 However, at the SBIRS High 

critical design review—1 year before the restructuring—only 50 percent of 

18According to the Senate Armed Services Committee, a delay in acquiring GEO satellites 3 

through 5 would (1) increase costs because production lines will have to close and reopen 

and subcontractors will have to be requalified, (2) increase technical risk due to a loss of 

key personnel and subcontractor base, and (3) increase operational risk due to the age of 

the current satellite constellation. See Senate Report 108-46 accompanying S. 1050, 

National Defense Authorization Act for Fiscal Year 2004, at 244-245 (May 13, 2003). 

19 U.S. General Accounting Office, Best Practices: Capturing Design and Manufacturing 


Knowledge Early Improves Acquisition Outcomes, GAO-02-701 (Washington, D.C.:


July 15, 2002). 


Page 15 GAO-04-48 Defense Acquisitions 
design drawings were complete, compared to 90 percent as recommended 

by best practices.20 In addition, the IRT report found that the program did 

not invest enough time and resources in basic systems engineering 

analysis. Despite these problems, the program passed the critical design 

review. As a result, persistent problems with and changes to the design— 

especially of HEO 1—continue to impact the program’s cost and schedule. 

The HEO 1 sensor is the first major deliverable for Increment 2 and the 

only near-term deliverable to measure the program’s progress. As a part of 

the restructuring, the delivery of this sensor to the host satellite was 

delayed from its original date in February 2002 to February 2003. At that 

time, program officials were confident of meeting the new delivery date. 

However, significant deficiencies were revealed during systems tests in 

November 2002 making it apparent that the February 2003 date would not 

be met, and delivery was postponed another 2 months. At this writing, the 

first HEO sensor has yet to be delivered. In May 2003, the Program 

Director reported that the delays were due to a series of design 

deficiencies. For example, the design to control the sensor’s 

electromagnetic interference (EMI) was inadequate.21 Specifically, 

Lockheed Martin identified 148 offending EMI frequencies that exceeded 

the tolerances established by the host satellite. These excessive 

frequencies could interfere with the operations of the host satellite and 

jeopardize its mission. Thirty-nine design modifications to the HEO sensor 

were made, which eliminated 80 percent of these noise conditions. 

However, the final EMI test, completed in early July 2003, identified seven 

remaining EMI frequencies that were not within tolerance—two of 

which appear to be attributable to the HEO sensor. Since the problems 

cannot be resolved and there is no expected impact on performance, the 

Program Director requested waivers for the offending frequencies to allow 

the sensor to be integrated onto the host satellite. According to a program 

official, the waivers have been approved and the first HEO sensor is now 

20 GAO reviews of best practices have found that successful commercial firms require a 

high level of knowledge at key junctures during a product’s development and use this 

knowledge to make informed investment decisions. These firms place more importance on 

capturing specific technology, design, and manufacturing knowledge than on meeting 

milestones. Moreover, these firms identify and use specific criteria to ensure that the 

program has sufficient knowledge to move forward. For example, the release of 90 percent 

or more of the engineering drawings indicates that the product design is stable and meets 

performance requirements. 

21 Two other design problems encountered were associated with the outer tiles of the 

spacecraft and the Common Gyro Reference Assembly. 

Page 16 GAO-04-48 Defense Acquisitions 
expected to be delivered on December 6, 2003, provided no additional 

testing is needed. 

The Program Director reported that the HEO 1 design problems were 

attributable to weaknesses in earlier program management processes. 

Under these processes, the program tried to achieve efficiencies by 

cutting back on detailed design analyses and component testing. The 

exact costs associated with these weaknesses are unclear. Our 

independent estimate—using data from the contractor’s June 2003 cost 

performance report—indicates that the development of HEO 1 will 

overrun the contract amount at completion by about $25 million to 

$54 million, and that additional costs associated with HEO 2 rework would 

be between $20 million and $80 million.22 The Program Office is currently 

assessing estimates of total cost impact. 

Since the critical design review in August 2001, the Air Force also 

determined that two late design changes to the GEO satellites were 

necessary to improve the program’s chances of success. In January 2003, 

the Air Force directed the contractor to replace the 80 ampere-hour 

battery with a 100 ampere-hour battery to improve the satellites’ 

operational reliability. Program officials estimate that the new battery will 

cost about $15 million, but the June 2003 cost performance report shows 

that the contractor is having difficulty assessing and establishing 

specifications for the battery, which has resulted in schedule delays and 

could result in even greater costs. The second design change to the GEO 

satellites is to resolve a power deficiency by modifying the solar cell panel. 

The expected cost of this change has not yet been determined. 

In April 2002, 4 months before the restructuring, a report prepared by 

subject matter experts determined that while there were no significant 

technical barriers to eventually meeting the key requirements for SBIRS 

High, technology integration was a high risk owing to insufficient time. In 

restructuring the program, the Air Force implemented earlier integration 

and testing activities to mitigate this risk. However, we found that these 

mitigation measures may not be sufficient to avoid delays. For example, as 

of June 2003, the contractor has completed about 58 percent of the GEO 

22 Our analysis was based on the earned value statistics from the latest available cost 

performance report. The upper bound of the estimate is a worst case scenario cost based 

on the contractor’s cost performance for that month. 

Page 17 GAO-04-48 Defense Acquisitions 
sensor integration, assembly, test and checkout work, but it is still behind 

schedule with about $2 million of the planned work not yet accomplished. 

Software Development Is 

Still High Risk 

The development of software for the HEO sensors and GEO satellites 

(known as “flight” software) and the ground facility was a major factor 

that led to the Nunn-McCurdy breach. Despite the restructuring, the 

contractor and Program Office continue to report that software 

development underlies most of the top 10 program risks. Flight and 

ground software have already experienced difficulties, delaying delivery 

and putting program accomplishments at further risk. 

Most of the software for SBIRS High is for the ground stations to operate 

and command the satellites, process and display missile warning data, and 

perform mission management functions. Additional flight software is being 

developed for the HEO sensors and GEO satellites to control the infrared 

sensors and optical telescope and to process infrared data onboard the 

satellite.23 Another set of software elements will be used to test and 

simulate the performance of the SBIRS High system before it is put into 

operation. According to Lockheed Martin officials, the risks associated 

with the development of these software elements would be minimal 

because the majority of the software would be reused and modified. 24 

However, the risk associated with software development and reuse in 

Increment 1 was underestimated, which led to significant delays and cost 

overruns. This problem was not fully addressed by the restructuring and 

the time needed to develop the software continues to be underestimated. 

For example, in the current phase (Increment 2), delivery of the HEO 

flight software has been delayed because software item qualification 

testing—which was completed in May 2003 after a 3-month delay— 

revealed three deficiencies. One deficiency involved the HEO sensor’s 

ability to maintain earth coverage and track missiles while orbiting the 

earth. Delivery of the HEO ground software has also been delayed, and 

according to a program official, did not meet a revised delivery date of 

August 2003 because several ground software issues must still be resolved. 

While the problems encountered with the development of the flight and 

23 Signal processing software is responsible for collecting and formatting infrared digital 

data which will be transmitted and further processed at the ground station. 

24 Software reuse involves previously developed software that is to be integrated with other 

new, modified or other reuse software. 

Page 18 GAO-04-48 Defense Acquisitions 
ground software have only resulted in delays of a few months, the delays 

signal weaknesses that could put the program at further risk of cost and 

schedule overruns. 

The remaining computer memory margin on the onboard satellites is also 

a concern. The SBIRS High program requirements mandate that the 

memory margin be at least 50 percent. This is to ensure there is sufficient 

remaining memory to accommodate future software code growth. 

However, inefficient coding for onboard satellite operations has resulted 

in an estimated current memory margin of 35 percent. Since rewriting the 

code would be too costly to the program, Lockheed Martin is requesting a 

waiver from this requirement to allow the 35-percent margin. 

According to DCMA officials, the HEO software delays are the result of 

an overly aggressive software development schedule and a lack of 

management’s understanding of the complexity of the software task. 

A program official stated the contractor’s software productivity and 

efficiency metrics have recently begun to reflect a negative trend in the 

program due to the delays in software development and increases in 

software defects. These officials stated that the program suffered from 

a lack of skilled computer personnel with infrared space systems 

knowledge. After the August 2002 restructuring, DCMA officials stated that 

Lockheed Martin committed more personnel and approved overtime when 

necessary to achieve schedules and has been cooperative in making 

changes recommended by DCMA and the SBIRS High Program Office. 

Although these actions should improve the schedule status, they will have 

a negative cost impact because of the additional resources that will need 

to be committed to recover and meet the program’s future schedule. 

HEO Delays Affect the 

Total SBIRS High Program 

Delays in the development and delivery of the HEO 1 sensor will likely 

have long-term consequences for the remainder of the program. According 

to DOD officials, until tasks leading to HEO message certification are 

complete, the program will not have “turned the corner” to achieving its 

objectives. However, some schedule milestones for these tasks have begun 

to slip due to problems in developing the HEO 1 sensor. As a result, the 

HEO message certification milestone, scheduled for November 2004, will 

slip 5 months or more. 

Program officials stated that they are coordinating the delivery of HEO 1 

and the host satellite to mitigate any schedule impacts, but they agreed 

that these delays put the remaining SBIRS High schedule at risk. For 

example, the continuing HEO 1 sensor and software work is now 

Page 19 GAO-04-48 Defense Acquisitions 
competing for staff and other resources dedicated to HEO 2 and GEO 

tasks. As a result, the HEO 2 sensor and the first GEO satellite are unlikely 

to maintain their current development and launch schedules already 

revised under the restructuring. Program officials now estimate the HEO 2 

sensor delivery will be delayed from February 2004 to June 2004—or as 

much as a year later—to implement more in-depth modifications to 

correct EMI problems, as recommended by a technical review team. 

According to program officials, the development schedule for the first 

GEO satellite has sufficient margin—approximately 300 days—to avoid 

delays in the first GEO launch. However, delivery and integration of the 

GEO flight software—a high-risk effort—did not begin in August 2003 as 

scheduled. While DCMA officials report that they are monitoring Lockheed 

Martin’s progress to maintain the software development schedule, any 

delays will affect the entire GEO schedule and could jeopardize the 

delivery and launch of the first GEO satellite. 

In an attempt to avoid delays, the program has compressed schedules and 

implemented work-around plans. However, in compressing original 

schedules, the program creates other risks because the time allotted to 

test and analyze the software and to train personnel to operate the SBIRS 

High ground processing system has been significantly reduced. In addition, 

work-around plans to overcome delays, even if feasible, would be difficult 

and costly to accomplish. At the same time, valuable on-orbit information 

of the HEO sensor’s performance may not be available in a timely manner 

for the GEO development efforts. Since HEO and GEO have common 

components, including the infrared sensor subsystem, HEO on-orbit data 

would improve the knowledge base for GEO development. 

Increased cost is also a risk. Although the contractor forecasts that the 

contract will be within cost at completion, significant cost overruns are 

likely. In analyzing data from the contractor’s cost performance reports 

from February 2003 through June 2003, we found that the cumulative 

cost overrun increased by more than 800 percent, from approximately 

$3 million to approximately $31.7 million, due to the significant overtime 

worked over a number of months. Moreover, as the program works to 

accomplish the almost $40 million worth of planned work that is behind 

schedule, the negative cumulative cost variance of approximately 

$31.7 million will continue to grow. Specifically, we predict that at 

contract completion, the program will have a cost overrun ranging from 

roughly $80 million to $432 million. DCMA similarly predicts significant 

Page 20 GAO-04-48 Defense Acquisitions 
cost overruns—officials reported an estimated overrun ranging from 

$34 million to $210 million at completion and gave an overall assessment 

of “red”25 for the SBIRS High earned value management status. 

Finally, as the program works to remedy problems—particularly those 

associated with the HEO sensors—management reserves are diminishing. 

For fiscal year 2003, reserves have been depleted, and Air Force and 

program officials are concerned that fiscal year 2004 reserves are 

insufficient to address contingencies. As a result, some planned 

development tasks may be delayed to fiscal year 2005. 

The Program Director stated that the program is applying lessons learned 

from HEO 1 to the HEO 2 sensor, the first GEO satellite, and other parts of 

the program. The knowledge gained from correcting problems on HEO 1 

will be necessary if the Air Force decides to procure additional HEO 

sensors and accelerate procurement of the third, fourth, and fifth GEO 

satellites. The Program Office is also assessing the overall program 

impacts from the HEO 1 delay but has yet to complete the analysis. 

25 A “red” rating is issued for any current negative cost or schedule variance that is greater 

than 10 percent. 

Page 21 GAO-04-48 Defense Acquisitions 
Conclusions 

Recommendations for 

Executive Action 

DOD has invested billions of dollars in an effort to develop a system that 

will provide greater long-range detection capabilities than DSP, its current 

missile tracking system. Yet more than a year after the most recent 

restructuring, the SBIRS High program continues to experience problems 

that have existed since its inception: cost overruns, schedule delays, and 

performance limitations. While the Air Force has taken a number of 

actions as recommended by the IRT to improve program oversight, it 

has become increasingly evident that the underlying factors that led to 

the Nunn-McCurdy breach—particularly the lack of critical knowledge— 

continue to cause problems, and additional cost and schedule slips beyond 

the revised acquisition program baseline appear inevitable. Without 

sufficient knowledge to ensure that the product design is stable and meets 

performance requirements and that adequate resources are available, 

there is no assurance that technical problems—such as those experienced 

with the HEO 1 sensor—will not surface on other major program 

components once they go through systems integration and testing. 

Moreover, the inability of the Air Force and its contractor to deliver HEO 1 

as scheduled has put into question whether the restructuring has provided 

the right mechanisms to achieve program objectives. If the Air Force 

continues to add new requirements and program content while prolonging 

efforts to resolve requirements that cannot be met, the program will 

remain at risk of not achieving within schedule its intended purpose—to 

provide an early warning and tracking system superior to that of DSP. 

Given the considerable investment yet to come, the Congress and the 

Secretary of Defense would benefit from an assessment of whether the 

Program Office and contractor are doing everything necessary and 

feasible to achieve program objectives and to minimize future cost and 

schedule growth and address the underlying factors that are causing these 

problems. Therefore, we recommend that the Secretary of Defense 

reconvene the IRT or similar independent task force with substantial 

program knowledge to provide an assessment of the restructured program 

and concrete guidance for addressing the program’s underlying problems. 

Such a review should include determining whether the 

• 	 SBIRS High development schedule is executable within current cost and 

schedule estimates in light of the recent HEO 1 delays and other risks 

(such as software development), 

• program design is stable and sufficient to meet performance requirements, 

Page 22 GAO-04-48 Defense Acquisitions 
• 	 contractor’s software development procedures and practices have reached 

at least a CMMI level 326 in relation to the Software Engineering Institute’s 

standards, 

• 	 appropriate management mechanisms are in place to achieve intended 

program objectives, and 

• pending requirements changes should be funded. 

We further recommend that the Secretary of Defense put in place a 

mechanism for ensuring that the knowledge gained from the assessment is 

used to determine whether further programmatic changes are needed to 

strengthen oversight, adjust current cost and schedule estimates, modify 

contract mechanisms, and address requirements changes. 

Agency Comments 
 In commenting on a draft of this report, DOD agreed that another 

thorough review of the SBIRS High program is warranted, and that the 

results of this review should be used to bring about needed program 

changes. However, DOD only partially agreed with our recommendations 

because it would like the option to consider other approaches for 

assigning responsibility for conducting a review. Given the complexity of 

this program, we agree that the Secretary of Defense should have this 

flexibility. We have modified our recommendations accordingly. DOD also 

provided technical comments, which we have incorporated as appropriate. 

DOD’s written comments—provided by the Deputy Under Secretary of 

Defense for Policy, Requirements, and Resources within the Office of the 

Under Secretary of Defense for Intelligence—are reprinted in appendix I. 

26 A CMMI 3, called “defined,” means the company’s process is characterized for the 

organization and is defined. 

Page 23 GAO-04-48 Defense Acquisitions 
Scope and 

Methodology 

To identify the key elements of the restructured SBIRS High program, we 

reviewed the program’s operational requirements document, acquisition 

program baseline, single acquisition management plan, cost analysis 

requirements description, technical reports, and status documents; the 

restructured contract with Lockheed Martin Space Systems Company; and 

Nunn-McCurdy certification documents. We discussed the restructured 

program with representatives from the SBIRS High Program Office, Space 

and Missile Systems Center, Los Angeles Air Force Base, El Segundo, 

California; Secretary of the Air Force, Space Force Enhancement, 

Washington, D.C.; Office of the Assistant Secretary of Defense, Networks 

and Information Integration, Washington, D.C.; Office of the Secretary of 

Defense, Director of Program Analysis and Evaluation, Washington, D.C.; 

Lockheed Martin Space Systems Company, Missile and Space Operations, 

Sunnyvale, California; and Lockheed Martin Management and Data 

Systems, Boulder, Colorado. We also discussed requirements and mission 

needs with officials from Air Force Space Command and U.S. Strategic 

Command (West), Peterson Air Force Base, Colorado Springs, Colorado 

and Air Force Headquarters, Directorate of Operational Capability 

Requirements, Space Capability, Arlington, Virginia. 

To determine the problems and potential risks relating to cost, schedule, 

and performance that are still facing the SBIRS High program, we 

reviewed technical reports and program briefings and held discussions 

with program and contractor officials regarding ongoing challenges. To 

gain an understanding of these challenges, we reviewed monthly 

acquisition reports, Air Force Space Command’s urgent and compelling 

needs lists, the contractor’s top program risks lists, and recent 

congressional language concerning delivery schedules. To determine the 

program’s ability to meet cost and schedule projections, we examined 

schedule and funding information for developing hardware and software. 

We compared information from the SBIRS High Program Office to other 

independent reports including those from the IRT, a commissioned 

technology review, and DCMA. We also reviewed the report from the 

Baseline Update-1, a formal program review, and other program 

assessment reports. In addition, we performed our own analysis of cost 

and schedule projections using Lockheed Martin’s 2003 cost performance 

report data. We discussed all of these issues with representatives from the 

SBIRS High Program Office; Lockheed Martin Space Systems Company, 

Missile and Space Operations; Lockheed Martin Management and Data 

Systems; Office of the Secretary of Defense, Director of Operational Test 

and Evaluation, Alexandria, Virginia; and the Defense Contract 

Management Agency, Sunnyvale, California. 

Page 24 GAO-04-48 Defense Acquisitions 
We performed our work from October 2002 through September 2003 in 

accordance with generally accepted government auditing standards. 

We plan to provide copies of this report to the Secretary of Defense, the 


Secretary of the Air Force, and interested congressional committees. We 


will make copies available to others upon request. In addition, the report 


will be available at no charge on the GAO Web site at http://www.gao.gov. 


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


contact me at (202) 512-4841 or John Oppenheim at (202) 512-3111. 


Key contributors to this report are listed in appendix IV. 


R. E. Levin 


Director, Acquisition and Sourcing Management 


Page 25 GAO-04-48 Defense Acquisitions 
Appendix I: Comments from the Department 

of Defense 

Page 26 GAO-04-48 Defense Acquisitions 
Appendix I: Comments from the Department 

of Defense 

Page 27 GAO-04-48 Defense Acquisitions 
Appendix I: Comments from the Department 

of Defense 

Note: Page numbers in 

the draft report may differ 

from those in this report. 

Page 28 GAO-04-48 Defense Acquisitions 
Appendix II: SBIRS High Performance in 

Mission Areas 

• 	 Missile Warning: SBIRS High is expected to provide reliable, 

unambiguous,1

 timely, and accurate missile warning information to the 

President of the United States, the Secretary of Defense, Unified 

Combatant Commanders, and other users. This mission includes both 

global and theater requirements to provide strategic and theater ballistic 

missile warning in support of passive defense and force posturing. 

• 	 Missile Defense: SBIRS High is expected to provide reliable, accurate, and 

timely information to defensive systems. This mission includes both 

strategic and theater functional requirements to enable active missile 

defense and attack operations against hostile forces. 

• 	 Technical Intelligence: SBIRS High is expected to provide reliable, 

accurate, and timely infrared target signature and threat performance data 

to warfighters, the intelligence community, weapon system developers, 

and other users. This data may be used for target classification and 

identification templates and algorithm development for SBIRS High 

operational missions. SBIRS High also monitors activities and provides 

information to policy makers and other users on observed military tactics, 

new foreign technology development, arms control compliance, and 

proliferation activities. 

• 	 Battle-space Characterization: SBIRS High provides reliable, accurate, and 

timely data to enhance situational awareness, non-ballistic missile threat 

warning, decision support, battle damage assessment and intelligence 

information (for land, sea, air, and space) for the Unified Combatant 

Commanders, Joint Task Force Commanders, and other users. Battlespace characterization applies the SBIRS High product to the immediate 

need of the warfighters. 

1

 Unambiguous warning is a valid mission level requirement that, to date, has been 

accomplished primarily through dual phenomenology and human in-the-loop concepts of 

operations. SBIRS will contribute to but will not, by itself, provide unambiguous warning. 

Page 29 GAO-04-48 Defense Acquisitions 
Appendix III: Key Events in the 

SBIRS High Program 

Date Key events 

1994 September • OSD issues the Space-Based Warning Summer Study. 

November • SBIRS is named an Air Force lead program for acquisition reform. 

1995 January • U.S. Space Command SBIRS Capstone Requirements Document is validated by the Joint 

Requirements Oversight Council. 

February • SBIRS Single Acquisition Management Plan is approved. 

August • Air Force awards two pre-engineering and manufacturing development contracts to Hughes and 

Lockheed Martin teams. 

1996 April • Changes to the SBIRS Capstone Requirements Document are validated by the Joint Requirements 

Oversight Council. 

September • SBIRS System Threat Assessment Report is validated. 

October • SBIRS is authorized to proceed to milestone II. 

November • Air Force awards one engineering and manufacturing development contract to Lockheed Martin. 

1997 January • Construction begins on the Mission Control Station at Buckley Air Force Base, Colorado. 

December • SBIRS High preliminary design review is held. 

1998 July • SBIRS System Threat Assessment Report is revalidated. 

December • 	 DOD removes $150 million from the SBIRS High program to fund other DOD priorities and directs 

the delay of the GEO launches by 2 years. 

1999 May • Based on the DOD directive, a joint estimate team reviews the program to determine an attainable 

and affordable program restructure. 

2000 June • SBIRS System Threat Assessment Report is revalidated. 

2001 August • SBIRS critical design review is held. 

December • SBIRS ground Increment 1 is certified. 

• Secretary of the Air Force notifies Congress of the Nunn-McCurdy breach. 

October • SBIRS Low is transferred to Missile Defense Agency. 

2002 January • SBIRS ORD is revalidated by the Joint Requirements Oversight Council for the Nunn-McCurdy 

review. 

February • IRT report is issued identifying the underlying causes for the cost growth that led to the NunnMcCurdy breach. 

May • SBIRS High Acquisition Decision Memorandum is signed, certifying the program after the NunnMcCurdy breach. 

June • Revised SBIRS High Single Acquisition Management Plan is approved. 

• Construction begins on the Mission Control Station Backup at Schriever Air Force Base, Colorado. 

August • Revised SBIRS High contract with Lockheed Martin goes into effect. 

September • SBIRS High Acquisition Program Baseline (restructuring) is approved. 

November • Interim Mission Control Station Backup in Boulder, Colorado, is certified. 

Page 30 GAO-04-48 Defense Acquisitions 
Appendix III: Key Events in the SBIRS High 

Program 

Date Key events 

2003 January • Air Force Space Command identifies need for HEO 3 and possibly HEO 4. 

• DCMA reports HEO 1 schedule slip. 

• Air Force provides USD (AT&L) with SBIRS High program assessment. 

February • 	 Assistant Secretary of Defense for Command, Control, Communications, and Intelligence issues 

memorandum to Air Force calling for another review in November 2003. 

Source: U.S. Air Force. 

Page 31 GAO-04-48 Defense Acquisitions 
Appendix IV: GAO Contacts and Staff 

Acknowledgments 

GAO Contacts 	 Robert Levin (202) 512-4841 

John Oppenheim (202) 512-3111 

Acknowledgments 	 In addition to those listed above, Maricela Cherveny, Steve Martinez, 

Karen A. Richey, Nancy Rothlisberger, Karen M. Sloan, Hai V. Tran, Dale 

M. Yuge, and Randolph S. Zounes made key contributions to this report. 

Page 32 GAO-04-48 Defense Acquisitions (120177) 
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U.S. General Accounting 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: To Report Fraud, 

W Web site: www.gao.gov/fraudnet/fraudnet.htm aste, and Abuse in E-mail: fraudnet@gao.gov 

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

Jeff Nelligan, Managing Director, NelliganJ@gao.gov (202) 512-4800 Public Affairs 	 U.S. General Accounting Office, 441 G Street NW, Room 7149 

Washington, D.C. 20548