Report to the Chairman, 

Subcommittee on Defense, 

Committee on Appropriations, 

House of Representatives 

United States General Accounting Office 

GAO 

September 2003 DEFENSE 

ACQUISITIONS 

Improvements Needed 

in Space Systems 

Acquisition 

Management Policy 

GAO-03-1073 
DOD’s new space acquisition policy may help provide more consistent and 

robust information on technologies, requirements, and costs. For example, 

the policy employs a new independent cost estimating process, independent 

program reviews performed by space experts not connected with the 

program, and more rigorous analyses of alternatives, requirements, and 

system interdependencies. This information may help decision-makers 

assess whether gaps exist between expectations and what the program 

can deliver. 

However, the benefits that can be derived from these tools will be limited 

since the new policy does not alter DOD’s practice of committing major 

investments before knowing what resources will be required to deliver 

promised capability. Instead, the policy encourages development of leading 

edge technology within product development, that is, at the same time 

the program manager is designing the system and undertaking other 

product development activities. As our work has repeatedly shown, 

such concurrency increases the risk that significant problems will be 

discovered as the system is integrated and built, when it is more costly and 

time-consuming to fix them. Moreover, when even one technology does not 

mature as expected, the entire program can be thrown off course since time 

and cost for invention cannot be reliably estimated. DOD’s new acquisition 

policy for its other weapon systems recognizes these risks and consequently 

requires technology and product development to be done separately. 

Overview of Key Decision Points 

Note: According to DOD officials, while technology development is expected to ramp down during 

phase B, in some instances technology development could even continue after key decision point C 

or critical design review. Thus, technology development is depicted in a lighter shade after decision 

point C. 

The Department of Defense is 

spending nearly $18 billion 

annually to develop, acquire, 

and operate satellites and other 

space-related systems. The 

majority of satellite programs that 

GAO has reviewed over the past 2 

decades experienced increased 

costs and delayed schedules. 

DOD has recently implemented a 

new acquisition management 

policy, which sets the stage for 

decision making on individual 

space programs. GAO was asked to 

assess the new policy. 

GAO is recommending that DOD 

modify its policy to separate 

technology development from 

product development and ensure 

decisions to start programs are 

based on sound criteria. DOD 

disagreed with our 

recommendations principally 

because it believes that 

implementing them will slow down 

acquisitions, increase risks, and 

prevent DOD from taking 

advantage of cutting edge 

technology. Our past reviews of 

best practices, however, have 

shown that risk and time are 

reduced and capability is increased 

when programs begin with 

knowledge that technologies can 

work as intended. DOD’s policy for 

other weapon systems incorporates 

this view. 

www.gao.gov/cgi-bin/getrpt?GAO-03-1073.

To view the full product, including the scope 

and methodology, click on the link above. 

For more information, contact Katherine 

Schinasi at (202) 512-4841. 

Highlights of GAO-03-1073, a report to the 

Chairman, Subcommittee on Defense, 

Committee on Appropriations, House of 

Representatives 

September 2003

DEFENSE ACQUISITIONS 

Improvements Needed in Space Systems 

Acquisition Management Policy 
Page i GAO-03-1073 Space Acquisition Policy 

Letter 1

Results in Brief 1

Background 2

Gap between Resources and Requirements Has Undermined 

Space Acquisitions 6

Space Policy May Help Increase Insight into Gaps between 

Requirements and Resources 10

New Space Policy Does Not Call for a Match between Resources 

and Requirements at Program Start 13

Conclusions 16

Recommendations for Executive Action 17

Agency Comments and Our Evaluation 17

Appendix I The Department of Defense’s Current and 

Planned Satellite Systems 20 

Appendix II Technology Readiness Levels and Their 

Definitions 21 

Appendix III Comments From the Department of Defense 22 

Related GAO Products 29 

Table 

Table 1: Decision-Making Characteristics 5

Figures 

Figure 1: Overview of Key Decision Points 4

Figure 2: DOD Will Be Making Commitments before Obtaining 

Critical Knowledge for Space Systems 15

Contents 
Page ii GAO-03-1073 Space Acquisition Policy 

Abbreviations 

AEHF Advanced Extremely High Frequency 

CAIG Cost Analysis Improvement Group 

DAB Defense Acquisition Board 

DOD Department of Defense 

DSAB Defense Space Acquisition Board 

EELV Evolved Expendable Launch Vehicle 

GPS Global Positioning System 

IPA Independent Program Assessment 

IPT Integrated Product Team 

KDP key decision point 

MUOS Mobile Users Objective System 

NPOESS National Polar-orbiting Operational Environmental Satellite 

System 

NRO National Reconnaissance Office 

SBIRS Space-Based Infrared System 

SBR Space-Based Radar 

STSS Space Tracking and Surveillance System 

TRL Technology Readiness Level 

TSAT Transformational Communications Satellite 

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Page 1 GAO-03-1073 Space Acquisition Policy 

September 15, 2003 

The Honorable Jerry Lewis 

Chairman, Subcommittee on Defense 

Committee on Appropriations 

House of Representatives 

Dear Mr. Chairman: 

The Department of Defense (DOD) is spending more than $18 billion 

annually to develop, acquire, and operate satellites and other space-related 

systems. Moreover, DOD is on the threshold of investing in several new 

major satellite acquisition programs. These programs are intended to help 

transform how information is collected on capabilities and intentions of 

potential adversaries as well as how military forces communicate and 

navigate and attack targets. We reported to you in June 2003 that the 

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

experienced problems during acquisition that significantly increased costs 

and delayed schedules, often to the point where programs needed to be 

restructured by DOD. 

DOD has recently implemented a new acquisition management policy 

for space systems, which sets the stage for making decisions on 

individual space programs. As you requested, we assessed the new 

policy—specifically whether it will enable DOD to match requirements 

(that is, what the system needs to do and how well it needs to perform) to 

resources (time, money, and technical knowledge) at the onset of product 

development. Our work shows that achieving this match is the most 

critical determinant for successful outcomes of acquisitions. 

DOD’s new space acquisition policy may help provide more consistent 

and robust information on technologies, requirements, and costs. 

For example, the policy employs a new independent cost estimating 

process, independent program reviews performed by space experts not 

connected with the program, and more rigorous analyses of alternatives, 

requirements, and system interdependencies. This information may help 

decision-makers assess whether gaps exist between expectations and 

what the program can deliver. 

United States General Accounting Office

Washington, DC 20548 

Results in Brief 
Page 2 GAO-03-1073 Space Acquisition Policy 

However, the benefits that can be derived from these tools will be limited 

since the new policy does not alter DOD’s practice of committing major 

investments before knowing what resources will be required to deliver 

promised capability. Instead, the policy encourages development of 

leading edge technology within product development, that is, at the same 

time the program manager is designing the system and undertaking other 

product development activities. As our work has repeatedly shown, 

such concurrency increases the risk that significant problems will be 

discovered as the system is integrated and built, when it is more costly 

and time-consuming to fix them. Moreover, when even one technology 

does not mature as expected, the entire program can be thrown off course 

since time and cost for invention cannot be reliably estimated. DOD’s new 

acquisition policy for its other weapon systems recognizes these risks 

and consequently requires technology and product development to be 

done separately. 

We are making recommendations to DOD to modify its policy to separate 

technology development from product development and ensure decisions 

to start programs are based on sound criteria. DOD disagreed with our 

recommendations principally because it believes that implementing them 

will slow down acquisitions, increase risks, and prevent DOD from taking 

advantage of cutting edge technology. Our past reviews of best practices, 

however, have shown that risk and time are reduced and capability is 

increased when programs begin with knowledge that technologies can 

work as intended. DOD’s policy for other weapon systems incorporates 

this view. 

DOD’s current space network is comprised of constellations of satellites, 

ground-based systems, and associated terminals and receivers. Among 

other things, these assets are used to perform intelligence, surveillance, 

and reconnaissance functions; perform missile warning; provide 

communication services to DOD and other government users; provide 

weather and environmental data; and provide positioning and precise 

timing data to U.S. forces as well as national security, civil, and 

commercial users. 

Background 
Page 3 GAO-03-1073 Space Acquisition Policy 

DOD is now implementing a new acquisition management policy tailored 

to its space systems.1

 It expects to finalize the policy this fiscal year. The 

policy is similar to the one used by the National Reconnaissance Office 

(NRO). The policy is different from a new acquisition management policy 

DOD is implementing for most other weapons-related acquisitions in 

several respects. 

• Key decisions, including the decision to start product development and 

to start building and testing a satellite, will be made earlier in the 

development process. According to DOD, this is because satellites 

incur most of their costs during the early phases of development. 

• The decision to build and produce a satellite will be made at the same 

time instead of sequentially. According to DOD, this is because satellites 

are produced in very small numbers as compared to other acquisitions. 

Figure 1 provides an overview of differences in key decision points. 

 1

 Other DOD weapons-related acquisitions (e.g., aircraft, ships, and tanks) fall under DOD’s 

new 5000 Series. Missile defense systems, such as the Space Tracking and Surveillance 

System, fall under a process designed and managed by the Missile Defense Agency. 
Page 4 GAO-03-1073 Space Acquisition Policy 

Figure 1: Overview of Key Decision Points 

Note: According to DOD officials, while technology development is expected to ramp down during 

phase B, in some instances technology development could even continue after key decision point C 

or critical design review. Thus, technology development is depicted in a lighter shade after decision 

point C. 

The new space acquisition policy is also different than DOD’s policy for 

other weapon systems in terms of decision-making support. For example, 

the new policy has created an advisory board distinct from the DOD’s 

Defense Acquisition Board (DAB). The Defense Space Acquisition Board 

(DSAB), comprised of senior-level DOD officials and mission partners, 

will advise the Under Secretary of the Air Force, as the milestone decision 

authority, on whether significant investments should move forward in the 

development process. Also, temporary Independent Program Assessment 

teams (IPA) will be used to conduct an intensive review before key 

decisions are made. Under DOD’s process for other weapon systems, 

standing Integrated Product Teams (IPT) are used to help programs 
Page 5 GAO-03-1073 Space Acquisition Policy 

conduct key analyses as well as to advise the DAB. Table 1 provides more 

details on these differences. 

Table 1: Decision-Making Characteristics 

DOD Weapons Acquisitions Space Acquisitions 

Milestone Decision Authority Milestone Decision Authority 

Under Secretary of Defense for Acquisition, Technology and 

Logistics (USD AT&L) makes decision on whether program 

should proceed into next phase. 

Under Secretary of the Air Force makes decision on whether 

program should proceed into next phase. 

Advisory Board Advisory Board 

Defense Acquisition Board (DAB) 

Composed of 

Vice Chairman, Joint Chiefs of Staff (Co-chairman of DAB) 

Under Secretary of Defense-Comptroller 

Under Secretary of Defense-Policy 

Under Secretary of Defense-Personnel and Readiness 

Assistant Secretary of Defense for Networks and Information 

Integration 

Service secretaries 

Director of Operational Test and Evaluation 

Additional advisors as invited 

Defense Space Acquisition Board (DSAB) 

Composed of 

Vice Chairman, Joint Chiefs of Staff (Co-chairman of DSAB) 

Under Secretary of the Air Force staff 

Executive Service offices 

Mission partners (National Reconnaissance Office, National 

Aeronautics and Space Administration, U.S. Strategic Command, 

Department of Transportation) 

Stakeholders (Office of the Secretary of Defense, Joint Chiefs 

Staff, Office of Management and Budget) 

Users (e.g., combatant commands, military services, and 

intelligence community) 

Director of Operational Test and Evaluation 

Additional advisors as invited 

Integrated Product Team Independent Program Assessment Team 

Help programs prepare for DAB review and provide decisionmaking support. 

Two teams (overarching and working level), permanently 

assigned to certain weapon systems. 

Comprised of different functional experts, e.g., engineering, 

manufacturing, purchasing, and finance. Teams review various 

types of weapon systems, so they will not necessarily include 

space experts. 

Teams meet with programs once every few months. Because 

teams are dedicated to several programs, they cannot do 

intensive drill downs. Time taken to help programs prepare for 

review may take as long as 18 months. 

Perform “drill down” reviews of programs before decisions on 

whether to move programs forward are made. 

Temporary team 

Comprised of space experts 

Review is done in 8 weeks (or more, if required) on-site working 

full-time with program officials. 

Source: GAO. 

DOD is already applying this new process to major satellite programs, 

including the Space-Based Infrared System (High) (SBIRS-High), the 

Transformational Communications Satellite (TSAT), the Advanced 

Extremely High Frequency (AEHF) system, the Mobile User Objective 

System (MUOS), the Global Positioning System (GPS), the National 
Page 6 GAO-03-1073 Space Acquisition Policy 

Polar-orbiting Operational Environmental Satellite System (NPOESS), 

and the Space-Based Radar (SBR) system. (See app. I for a further 

description of DOD’s current and planned systems.) SBR is the first system 

to receive approval for the first key decision point—key decision point 

(KDP) A—which begins a study phase. Other systems will come in at a 

later decision point—KDP B, which starts the acquisition program, or 

KDP C, which starts the process of building, testing, and launching the 

satellite. Some space-related systems, such as user equipment, are 

produced in mass numbers. They will be overseen under a process that is 

more similar to the DOD-wide acquisition process. 

The majority of satellite programs we have reviewed over the past 

2 decades experienced problems during acquisition that drove up costs 

and schedules and increased technical risks. Several programs were 

restructured by DOD in the face of delays and cost growth. We have found 

that these problems, which are common among many weapon systems, 

are largely rooted in a failure to match the customer’s needs with the 

developer’s resources—technical knowledge, timing, and funding—when 

starting product development. In other words, commitments were made to 

satellite launch dates and achieving certain capabilities without knowing 

whether technologies being pursued could really work as intended. Time 

and costs were consistently underestimated. 

Leading commercial firms expect that their program managers will deliver 

high quality products on time and within budgets. Doing otherwise could 

result in losing a customer in the short term and losing the company in 

the long term. Thus, these firms have adopted practices that put their 

individual program managers in a good position to succeed in meeting 

these expectations on individual products. Collectively, these practices 

ensure that a high level of knowledge exists about critical facets of the 

product at key junctures during its development and is used to deliver 

capability as promised. While DOD is different from the commercial 

world in terms of its need to push for cutting edge technology to maintain 

military superiority, its policies for major weapon systems recognize that 

maturing technology outside of product development allows needed 

stability in executing budgets and allows capability to be delivered to the 

warfighter sooner. 

Our reviews have shown that there are three critical junctures at 

which firms must have knowledge to make large investment decisions. 

First, before product development is started, a match must be made 

Gap between 

Resources and 

Requirements 

Has Undermined 

Space Acquisitions 

Achieving a Match 

between Resources and 

Requirements Is Essential 

to Success 
Page 7 GAO-03-1073 Space Acquisition Policy 

between the customer’s needs and the available resources—technical 

and engineering knowledge, time, and funding. Second, a product’s 

design must demonstrate its ability to meet performance requirements 

and be stable about midway through development. Third, the 

developer must show that the product can be manufactured within cost, 

schedule, and quality targets and is demonstrated to be reliable before 

production begins. 

The process is building block in nature as the attainment of each 

successive knowledge point builds on the proceeding one. While the 

knowledge itself builds continuously without clear lines of demarcation, 

the attainment of knowledge points is sequential. In other words, 

production maturity cannot be attained if the design is not mature, and 

design maturity cannot be attained if the key technologies are not mature. 

In applying the knowledge-based approach, the most leveraged decision 

point of the three junctures is matching the customer’s needs with the 

developer’s resources. This initial decision sets the stage for the eventual 

outcome—desirable or problematic. The match is ultimately achieved in 

every development program, but in successful development programs, it 

occurs before product development. In successful programs, negotiations 

and trade-offs occur before product development is started to ensure that 

a match exists between customer expectations and developer resources. 

Technologies that are not mature continue to be developed in the 

technology base (for example, a research laboratory). With achievable 

requirements and commitment of sufficient investment to complete the 

development, programs are better able to deliver products at cost and 

on schedule.2

Our past work has shown that space programs have not typically achieved 

a match between requirements and resources before starting product 

development. Product development was often started based on a rigid 

set of requirements that proved to be unachievable within a reasonable 

development time frame. At times, even more requirements were added 

after the program began. When problems arose, adding resources in terms 

of time and money became the primary option for solving problems, since 

 2

 Our best practice reviews are identified in the Related GAO Products at the end of this 

report. 

In DOD, Match between 

Resources and 

Requirements Is Seldom 

Achieved at Start of 

Product Development 
Page 8 GAO-03-1073 Space Acquisition Policy 

customer expectations about the product’s performance had already 

become hardened. For example: 

• After starting its AEHF satellite program, DOD substantially and frequently 

changed requirements. In addition, after the failure of one of DOD’s legacy 

communications satellites, DOD decided to accelerate its plans to build 

AEHF satellites. The contractors proposed, and DOD accepted, a high risk 

schedule that turned out to be overly optimistic and highly compressed, 

leaving little room for error and depending on a chain of events taking 

place at certain times. Moreover, at the time DOD decided to accelerate 

the program, it did not have funding needed to support the activities and 

manpower needed to design and build the satellites quicker. The effects of 

DOD’s inability to match requirements to resources were significant. Cost 

estimates produced by the Air Force reflected an increase from $4.4 billion 

in January 1999 to $5.6 billion in June 2001—a difference of 26 percent. 

Although considered necessary, many changes to requirements were 

substantial, leading to cost increases of hundreds of millions of dollars 

because they required major design modifications. Also, schedule delays 

occurred when some events did not occur on time, and additional delays 

occurred when the program faced funding gaps. Scheduling delays 

eventually culminated into a 2-year delay in the launch of the first satellite. 

We also reported that there are still technical and production risks that 

need to be overcome in the AEHF program, such as a less-than-mature 

satellite antenna system and complications associated with the production 

of the system’s information security system. 

• The SBIRS-High3 contract for engineering, manufacturing and 

development amounted to $2.4 billion. In the fall of 2001, DOD identified 

cost growth of $2 billion or more, triggering a mandatory program review 

and recertification under 10 U.S.C. section 2433. Currently, SBIRS-High is 

under contract for $4.4 billion. We reported that when DOD’s SBIRS-High 

satellite program began in 1994, none of its critical technologies were 

mature. Moreover, according to a DOD-chartered independent review 

team, the complexity, schedule, and resources required to develop 

SBIRS-High, in hindsight, were misunderstood when the program began. 

 3

 In the mid-1990s, SBIRS was established as a “systems of systems” approach with two 

components, SBIRS-High and SBIRS-Low, that were managed by the Air Force. In 2000, 

SBIRS-Low was shifted back from the Air Force to the Ballistic Missile Defense 

Organization, which is now the Missile Defense Agency. In 2002, SBIRS-Low was renamed 

Space Tracking and Surveillance System (STSS). While STSS is focused primarily on 

supporting the missile defense mission, SBIRS-High is focused on missile warning, missile 

defense, technical intelligence, and battlespace characterization and is managed by the 

Air Force. 
Page 9 GAO-03-1073 Space Acquisition Policy 

This led to an immature understanding of how requirements translated 

into detailed engineering solutions. Even though the program was 

restructured by DOD, the independent review team noted that SBIRS-High 

still faced significant risks. 

• DOD has initiated several programs and spent several billion dollars over 

the past 2 decades to develop low-orbiting satellites that can track ballistic 

missiles throughout their flight. However, it has not launched a single 

satellite to perform this capability. We have reported4

 that a primary 

problem affecting these programs was that DOD and the Air Force did not 

relax rigid requirements to more closely match technical capabilities that 

were achievable. Program baselines were based on artificial time and/or 

money constraints. Over time, it became apparent that the lack of 

knowledge of program challenges had led to overly optimistic schedules 

and budgets that were funded at less than what was needed. Attempts to 

stay on schedule by approving critical milestones without meeting 

program criteria resulted in higher costs and more slips in technology 

development efforts. For example, our 1997 and 2001 reviews of DOD’s 

$1.7 billion SBIRS-Low program showed that the program would enter 

into the product development phase with critical technologies that were 

immature and with optimistic deployment schedules. Some of these 

technologies were so critical that SBIRS-Low would not be able to perform 

its mission if they were not available when needed. DOD eventually 

restructured the SBIRS-Low program because of the cost and scheduling 

problems, and it put the equipment it had partially built into storage. In 

view of the program’s mismatch between expectations and what it 

could achieve, the Congress directed DOD to restructure the program 

(now known as the Space Tracking and Surveillance System or STSS) as a 

research and development effort. 

We recently reported5

 on crosscutting factors that make it more difficult 

for DOD to achieve a match between resources and requirements for 

space acquisitions. In particular, space programs often involve a diverse 

array of organizations with competing interests involved in overall 

satellite development—from the individual military services, to testing 

 4

 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). 

5

 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 10 GAO-03-1073 Space Acquisition Policy 

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

international partners and industry. This creates challenges in making 

tough tradeoff decisions. 

In addition, like other weapon programs, space acquisition programs 

have historically attempted to satisfy all requirements in a single step, 

regardless of the design challenge or the maturity of technologies to 

achieve the full capability. This approach has made it more difficult to 

match requirements to available resources. 

DOD’s new space acquisition oversight process may help increase insight 

into gaps between requirements and resources. In particular, tools being 

adopted, such as technology readiness assessments, alternatives analyses, 

and independent cost estimates, may help provide more consistent and 

robust information on technologies, requirements, and costs. However, the 

value of these tools depends largely on whether or not the knowledge is 

used to make decisions. According to DOD officials, similar tools are also 

being adopted by other weapon system programs. 

First, DOD is requiring that all space programs conduct technology 

maturity assessments before key oversight decisions to assess the 

maturity level of technology. One tool used by many weapon systems is 

known as Technology Readiness Levels (TRL). The tool associates 

different TRLs with different levels of demonstrated performance, ranging 

from paper studies to proven performance on the intended product. The 

value of using a tool based on demonstrated performance is that it can 

presage the likely consequences of incorporating a technology at a given 

level of maturity into a product development, enabling decision-makers to 

make informed choices. The tool is even more valuable if it is commonly 

used. Our previous reviews have found the use of TRLs to be a best 

practice.6

 (App. II describes TRL levels.) 

Second, DOD is requiring space programs to more rigorously assess 

alternatives, consider how their systems will operate in the context of 

larger families of systems, and think through operational, technical, and 

system requirements before programs are started. For example, programs 

 6

 U.S. General Accounting Office, Best Practices: Better Management of 

Technology Development Can Improve Weapon System Outcomes, GAO/NSIAD-99-162

(Washington, D.C.: July 30, 1999). 

Space Policy May 

Help Increase Insight 

into Gaps between 

Requirements 

and Resources 
Page 11 GAO-03-1073 Space Acquisition Policy 

will be required to develop an architecture that specifies the structure of 

system components, their relationships, and the principles and guidelines 

governing their design and evolution over time. 

It is important for DOD to increase attention to requirements earlier in the 

acquisition process and force DOD to think through whether there are 

more cost-effective alternatives to pursue. A recent DOD study7

 found that 

understanding of requirements often occurs too late to affordably change 

the system and, more specifically, that space programs do not always 

understand how systems fit in with other systems with which they need 

to interact and that often a lack of mutual understanding of requirements 

exists between the government and contractors. The SBIRS independent 

review team also found a need across space programs for more rigorous 

up front development of requirements. In addition, in previous reviews, 

we found that space programs often do not examine potentially more 

cost-effective approaches. In 2001, for example, we reported8

 that 

DOD’s SBIRS-Low program was not adequately analyzing alternatives to 

SBIRS-Low that could satisfy critical missile defense requirements, such as 

Navy ship-based radar capability. At the time, other studies supported the 

possibility that other types of sensors could be used to track missiles in 

the midcourse of their flight and to cue interceptors. 

Third, the new policy seeks to improve the accuracy of cost estimates by 

establishing an independent cost estimating process in partnership with 

DOD’s Cost Analysis Improvement Group (CAIG) and by adopting 

methodologies and tools used by the NRO. To ensure timely cost analyses, 

the CAIG will augment its own staff with cost estimating personnel drawn 

from across the entire national security space cost estimating community, 

including cost estimating teams belonging to the intelligence communities, 

the Air Force, NRO, the Army, and the Navy. The policy also calls on 

programs to produce performance metrics that compare estimated to 

actual costs. The policy allows programs to request assistance from the 

CAIG for purposes other than DSAB reviews. However, there is no point in 

the process that requires DOD to commit to fully fund a space program. 

 7

 Booz Allen Hamilton, “Space Systems Development Growth Analysis,” Los Angeles, CA, 

August 2, 2002. 

8

 U.S. General Accounting Office, Defense Acquisitions: Space-Based Infrared 

System-Low At Risk of Missing Initial Deployment Date, GAO-01-6 (Washington, D.C.: 

February 28, 2001). 
Page 12 GAO-03-1073 Space Acquisition Policy 

Improving reliability of cost estimates is critical. Several of our studies—

such as ones on GPS, Evolved Expendable Launch Vehicle (EELV), and 

AEHF—have called attention to problems with estimating system costs, 

such as errors, omissions, and conflicting assumptions. For example, in 

1980 we reported that the cost to acquire and maintain GPS satellites 

through 2000 increased from $1.7 billion to $8.6 billion due largely to 

estimates not previously included for replenishment of satellites, launches, 

and user equipment. Moreover, recent DOD studies found initial cost 

estimates for the AEHF program as well as SBIRS-High did not accurately 

capture program content and risk and were based on optimistic 

assumptions. We also reported that costs would be better estimated if 

DOD required more knowledge before starting a program. Without 

knowing that technologies can work as intended, for example, programs 

cannot reliably estimate costs and schedules. 

Another tool that could be useful in gaining insight into whether programs 

are positioned for success is the IPA team. IPA teams are to be drawn 

from experts who are not directly affiliated with the program. They are 

to spend about 8 weeks on-site working full-time with program officials 

to study the program, particularly by assessing the acquisition strategy, 

contracting information, cost analyses, system engineering, and 

requirements. After this study, they are to conclude their work with 

recommendations to the DSAB on whether or not to allow the program 

to proceed, typically using the traditional “red,” “yellow,” and “green” 

assessment colors to indicate whether the program has satisfied key 

criteria in areas such as requirements setting, cost estimates, and risk 

reduction. The Under Secretary of the Air Force, however, makes the 

decision on whether to allow the program to proceed. 

IPA team studies already performed have called attention to risks faced by 

the GPS III, NPOESS, and SBR programs. The NPOESS study, for example, 

noted that risk mitigation plans needed to be strengthened and that 

independent cost estimates needed to include the winning contractor’s 

negotiated contract. The SBR study found that the program needed to 

better define how the system would operate in the context of DOD’s 

transformational communications architecture and work with key 

intelligence systems, such as the planned Distributed Common Ground 

Station. Both reviews recommended that the programs move forward 

(NPOESS into the build phase and SBR into the study phase) on the 

condition that these programs address areas of concern. 

An IPA team studying GPS III found the program was too optimistic 

in estimating resources that would be needed. For example, the study 
Page 13 GAO-03-1073 Space Acquisition Policy 

noted that the program budget was not sufficient to support the 

program plan by several hundred million dollars. The team also pointed 

out that the system’s architecture and acquisition strategy were not 

sufficiently defined. 

DOD’s new acquisition management policy for space systems does not 

alter DOD’s practice of committing major investments before knowing 

what resources will be required to deliver promised capability. Instead, the 

policy allows programs to continue to mature technologies while they 

are designing the system and undertaking other product development 

activities. While space systems are different than other weapon systems in 

terms of how they are developed and tested, it is still necessary to mature 

technology before starting product development and match resources to 

requirements in order to prevent cost increases and schedule delays. 

We previously recommended that DOD should not allow technologies to 

enter into a weapon system’s product development until they are 

assessed at a TRL 7, meaning that a prototype has been demonstrated in 

an operational environment.9

 According to DOD officials, the new space 

acquisition policy does not set TRL criteria for deciding what the threshold 

for being mature should be. However, DOD officials stated that 

technologies may well enter into product development at a TRL 5, 

meaning basic components have only been tested in a laboratory, or an 

even lower level of maturity. This means that programs will design the 

system and conduct other program activities at the same time they build 

representative models of key technologies and test them in an 

environment that simulates the conditions of space. In essence, DOD will 

be concurrently building knowledge about technology and design—an 

approach with a problematic history. 

As shown in figure 2, the knowledge building approach for space stands in 

sharp contrast to that followed by successful programs and the approach 

recommended by DOD’s new acquisition policy for weapon systems. 

Successful programs will not commit to undertaking product development 

unless they have high confidence that they have achieved a match between 

what the customer wants and what the program can deliver. Technologies 

 9

 U.S. General Accounting Office, Best Practices: Better Management of 

Technology Development Can Improve Weapon System Outcomes, GAO/NSIAD-99-162

(Washington, D.C.: July 30, 1999). 

New Space Policy 

Does Not Call for 

a Match between 

Resources and 

Requirements at 

Program Start 
Page 14 GAO-03-1073 Space Acquisition Policy 

that are not mature continue to be developed in an environment that is 

focused solely on technology development. This puts programs in a better 

position to succeed because they can focus on design, system integration, 

and manufacturing. 

By contrast, allowing technology development to carry over into 

product development increases the risk that significant problems will be 

discovered late in development. Addressing such problems may require 

more time, money, and effort to fix because they may require more 

extensive retrofitting and redesign as well as retesting. The approach also 

makes it more difficult for programs to demonstrate the same level of 

design stability since technology and design activities will be done 

concurrently. Further, the consequences of problems experienced during 

development will be much greater for space programs since the design 

review occurs at the same time as the commitment to build and deliver the 

first product to a customer. 
Page 15 GAO-03-1073 Space Acquisition Policy 

Figure 2: DOD Will Be Making Commitments before Obtaining Critical Knowledge for Space Systems 

Space acquisition officials we spoke with acknowledged the added 

risks that come when programs concurrently develop technologies 

and design the system. However, they maintain that concurrent 

technology and product development is necessary for space acquisitions 

for several reasons. 

• First, while some testing on satellites can be done on the ground in 

thermovac or other environmental simulation chambers and some systems 

can also be tested via aircraft, the only way to test satellites in a true 

operational space environment is to build one or more demonstrator 

satellites and launch them into orbit. Launching demonstrators is costly 

and time consuming. 

Our prior reports have recognized that space systems are uniquely difficult 

to test in a true operational environment. However, DOD has found ways 

to test sensors and other critical technologies on experimental satellites 

and it has built and launched technology demonstrator satellites. 
Page 16 GAO-03-1073 Space Acquisition Policy 

• Second, in view of the length of time it takes to develop space systems, 

DOD asserts that it will not be able to ensure that satellites, when 

launched, will have the most advanced technologies, unless program 

managers are continually developing technologies. DOD officials have 

stated that they would reduce the added risks of their approach by not 

allowing programs to start if too many technologies were deemed to be 

immature or by deferring certain capabilities if it turned out that 

technologies did not test well. 

We agree that continuing to develop leading edge technology is important 

for all system capabilities, not just space systems. However, history has 

shown and we have repeatedly reported that conducting technology 

development within a product environment consistently delays the 

delivery of capability to the user, robs other programs of necessary funds 

through unanticipated cost overruns, and consequently, can result in 

money wasted and fewer units produced than originally stated as 

necessary. A technology development environment is more forgiving 

and less costly than a delivery-oriented acquisition program environment. 

Events such as test “failures,” new discoveries, and time spent in attaining 

knowledge are considered normal in this environment. Further, 

judgments of technology maturity have proven to be insufficient as the 

basis for accurate estimates of program risks relative to cost, schedule, 

and capability. 

• Finally, because operation and support costs make up a smaller portion 

of total costs for satellites than other weapon programs, DOD asserts 

that earlier insight and decisions are needed on space programs. 

We agree that early insight into programs is important, as we have 

reported that over 80 percent of the cost of a weapon system program 

is determined by requirements set at the beginning. However, moving 

decisions to an earlier point in the product development process without 

additional knowledge may actually increase the risk of promising more 

than can be delivered and at higher costs. 

The growing importance of space systems to military and civil operations 

requires DOD to develop cutting edge technologies and achieve timely 

delivery of capability. DOD’s new space acquisition policy does not 

position space programs to do either. By allowing major investment 

commitments to continue to be made with unknowns about technology 

readiness, requirements, and funding, programs will likely continue to 

experience problems that require more time and money to address than 

Conclusions 
Page 17 GAO-03-1073 Space Acquisition Policy 

anticipated. Over the long run, the extra investment required to address 

these problems may well prevent DOD from pursuing more advanced 

capabilities. By contrast, DOD is taking steps to better position other 

weapon systems for success. By separating technology development and 

product development, the policy will help to align customer expectations 

with resources, and therefore minimize problems that could hurt the 

program in its design and production phases. 

In finalizing DOD’s new space acquisition management policy, we 

recommend that the Secretary of the Air Force, who is DOD’s executive 

agent for space, modify the policy to ensure that customer expectations 

can be matched to resources before starting product development 

(phase B). Specifically, we recommend that the Secretary separate 

technology development from product development. To ensure that this is 

done, we also recommend that the Secretary set a minimum threshold of 

maturity for allowing technologies into a program. As noted in our report, 

we previously recommended that DOD should not allow technologies to 

enter into a weapon system’s product development until they are 

assessed at a TRL 7, meaning that a prototype has been demonstrated in 

an operational environment.10

In commenting on a draft of this report, the Assistant Secretary of Defense 

for Networks and Information Integration disagreed with our finding that 

the new space policy perpetuates risks for space programs since it does 

not separate technology development from product development. DOD 

disagreed with our recommendations as well, citing its need to keep up 

with the fast-paced development of advanced technologies for space 

systems and a requirement in its draft policy for technology readiness 

assessments to be conducted at appropriate milestones. 

In fact, it is DOD’s long-standing and continuous inability to bring the 

benefits of technology to the warfighter in a timely manner that underlies 

the report’s findings and recommendations. In our reviews of numerous 

DOD programs, including many satellite developments, it has been clear 

that committing to major investments in design, engineering, and 

 10 U.S. General Accounting Office, Best Practices: Better Management of 

Technology Development Can Improve Weapon System Outcomes, GAO/NSIAD-99-162

(Washington, D.C.: July 30, 1999). 

Recommendations for 

Executive Action 

Agency Comments 

and Our Evaluation 
Page 18 GAO-03-1073 Space Acquisition Policy 

manufacturing capacity without knowing a technology is mature and what 

resources are needed to ensure that the technology can be incorporated 

into a weapon system has consistently resulted in more money, time, and 

talent spent than either was promised, planned for, or necessary. The 

impact of such mistakes in individual programs has also had a damaging 

effect on military capability as other programs are taxed to meet 

unplanned cost increases and production units are often cut because unit 

costs increase and funds run out. 

Although each DOD program differs in its characteristics, GAO’s work 

with successful product developers in DOD and the commercial sector has 

found that the process of developing leading edge technology and 

products that have more capability than their predecessors does not differ. 

In fact, successful product developments are marked by adherence to a 

disciplined process that collects metrics and establishes and uses common 

and consistent criteria for decision-making. We have found that 

companies that adopt these best practices often do so out of necessity, 

when their existence is threatened. While the Air Force has taken some 

promising steps in drafting the policy to address DOD’s poor record of 

developing satellites within cost and schedule targets and with promised 

performance, it will miss an opportunity to dramatically improve 

outcomes if it does not adopt similar practices. Therefore, we have not 

changed our recommendation. 

DOD’s detailed comments and our responses are provided in appendix III. 

In conducting our review, we analyzed DOD’s new interim acquisition 

management policy for space. Because of the limited time of our review, 

we focused on the question of whether the policy will enable DOD to 

match requirements to resources at the onset of product development, 

which our work has shown to be the most critical determinant for 

successful outcomes of acquisitions. We compared the new space policy 

to DOD’s new acquisition policy for other weapon systems as well as our 

past reviews of the best practices of commercial and military acquisitions. 

In addition, we discussed this policy with Air Force space acquisition 

officials. We analyzed IPA studies performed under the new policy on 

DOD’s NPOESS, GPS III, and SBR programs. We also analyzed our past 

reviews of space programs as well as DOD studies on the SBIRS-High 

program and on space systems development growth. See Related GAO 

Products at the end of this report for a list of past GAO reports we relied 

on. We conducted our review from June 2003 through August 2003 in 

accordance with generally accepted government auditing standards. 
Page 19 GAO-03-1073 Space Acquisition Policy 

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

the Air Force and interested congressional committees. We will also 

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. Key contributors to this report were 

Cristina Chaplain, Jean Harker, Natalie Britton, and Bradley Terry. 

Sincerely yours, 

Katherine V. Schinasi 

Director, Acquisition and Sourcing Management 
Appendix I: The Department of Defense’s 

Current and Planned Satellite Systems 

Page 20 GAO-03-1073 Space Acquisition Policy 

Function Current Systems Planned Systems 

Missile warning and tracking • Defense Support Program • Space-Based Infrared System (High) 

• Space Tracking and Surveillance System 

Intelligence, Surveillance and 

Reconnaissance 

• National Reconnaissance Office (NRO) 

satellites 

• NRO satellites 

• DOD’s Space-based Radar 

Communications 

Wideband/high capacity systems • Defense Satellite Communications System 

• Global Broadcasting Service 

• Wideband Gapfiller Satellite 

• Advanced Wideband System 

Protected systems 

(antijam, survivable) 

• Milstar • Advanced Extremely High Frequency 

• Advanced Polar System 

Narrowband systems • Ultra High Frequency Follow-On satellite 

communications system 

• Mobile User Objective System 

Navigation, Positioning, Timing • Global Positioning System (GPS) • Next Generation GPS 

Weather/ Environmental • Defense Meteorological Satellite Program • National Polar-orbiting Operational 

Environmental Satellite System 

Source: GAO. 

Appendix I: The Department of Defense’s 

Current and Planned Satellite Systems 
Appendix II: Technology Readiness Levels and 

Their Definitions 

Page 21 GAO-03-1073 Space Acquisition Policy 

Technology readiness level Description 

1. Basic principles observed and reported. Lowest level of technology readiness. Scientific research begins to be 

translated into applied research and development. Examples might include 

paper studies of a technology’s basic properties. 

2. Technology concept and/or application formulated. Invention begins. Once basic principles are observed, practical applications 

can be invented. The application is speculative and there is no proof or 

detailed analysis to support the assumption. Examples are still limited to 

paper studies. 

3. Analytical and experimental critical function and/or 

characteristic proof of concept. 

Active research and development is initiated. This includes analytical studies 

and laboratory studies to physically validate analytical predictions of separate 

elements of the technology. Examples include components that are not yet 

integrated or representative. 

4. Component and/or breadboard validation in 

laboratory environment. 

Basic technological components are integrated to establish that the pieces 

will work together. This is relatively “low fidelity” compared to the eventual 

system. Examples include integration of “ad hoc” hardware in a laboratory. 

5. Component and/or breadboard validation in relevant 

environment. 

Fidelity of breadboard technology increases significantly. The basic 

technological components are integrated with reasonably realistic supporting 

elements so that the technology can be tested in a simulated environment. 

Examples include “high fidelity” laboratory integration of components. 

6. System/subsystem model or prototype 

demonstration in a relevant environment. 

Representative model or prototype system, which is well beyond the 

breadboard tested for technology readiness level (TRL) 5, is tested in a 

relevant environment. Represents a major step up in a technology’s 

demonstrated readiness. Examples include testing a prototype in a high 

fidelity laboratory environment or in simulated operational environment. 

7. System prototype demonstration in an operational 

environment. 

Prototype near or at planned operational system. Represents a major step 

up from TRL 6, requiring the demonstration of an actual system prototype in 

an operational environment, such as in an aircraft, vehicle or space. 

Examples include testing the prototype in a test bed aircraft. 

8. Actual system completed and “flight qualified” 

through test and demonstration. 

Technology has been proven to work in its final form and under expected 

conditions. In almost all cases, this TRL represents the end of true system 

development. Examples include developmental test and evaluation of the 

system in its intended weapon system to determine if it meets design 

specifications. 

9. Actual system “flight proven” through successful 

mission operations. 

Actual application of the technology in its final form and under mission 

conditions, such as those encountered in operational test and evaluation. In 

almost all cases, this is the end of the last “bug fixing” aspects of true system 

development. Examples include using the system under operational mission 

conditions. 

Source: GAO. 

Appendix II: Technology Readiness Levels 

and Their Definitions 
Appendix III: Comments from the Department of Defense 

Page 22 GAO-03-1073 Space Acquisition Policy 

Appendix III: Comments from the 

Department of Defense 

Note: GAO comments 

supplementing those in 

the report text appear at 

the end of this appendix. 
Appendix III: Comments from the Department of Defense 

Page 23 GAO-03-1073 Space Acquisition Policy 

See comment 1. 
Appendix III: Comments from the Department of Defense 

Page 24 GAO-03-1073 Space Acquisition Policy 

See comment 4. 

See comment 3. 

See comment 2. 
Appendix III: Comments from the Department of Defense 

Page 25 GAO-03-1073 Space Acquisition Policy 

See comment 7. 

See comment 6. 

See comment 5. 
Appendix III: Comments from the Department 

of Defense 

Page 26 GAO-03-1073 Space Acquisition Policy 

The following are GAO’s comments on the Department of Defense’s letter 

dated September 5, 2003. 

1. We agree that there are consistencies between the two policies in 

terms of how they enhance the development of requirements. 

However, the policies are very different in terms of their views on 

technology development. DOD’s policy for weapon systems clearly 

requires technologies to be mature (demonstrated in a relevant, 

preferably operational environment) before beginning product 

development. The space policy does not. In fact, DOD officials stated 

that, under the space policy, technologies may well enter product 

development without being demonstrated in a relevant environment. 

This might not occur until DOD is close to making its production 

decision. In our view, this difference will be a detriment to the future 

success of space programs. 

2. DOD contended that our recommendation to set a minimum threshold 

of maturity for allowing technologies into a program ignores 

differences among programs and ignores evolutionary acquisition. We 

disagree with these points. Technology maturity is fundamental to the 

success of all programs and cannot be ignored as part of a satellite’s 

business case. While it is possible to take a gamble on a key 

technology and have it work out in the end, DOD’s experiences show 

that this is an unlikely result. Moreover, this is not an approach that 

successful product developers emulate. In addition, technology 

maturity is essential to successful evolutionary acquisitions. The 

principle of evolutionary development is reaching full capability in 

more doable steps. Technical maturity essentially defines what is 

doable for each increment or block. 

3. DOD asserted that it is not feasible for space programs to separate 

technology development from product development because it would 

delay delivery of the product and make its technologies obsolete. We 

disagree. Separation of technology development from product 

development has been found to be essential to reducing overall 

development cycle times and delivering new products within estimated 

resources. The DOD policy for other weapons acquisitions is quite 

clear on this as well. In successful programs, the technologies are 

matured, hybrid organizations and agreements between the 

technologists and the product developers are established, and 

preliminary designs are done, thus providing the basis for a match 

between the user's needs and the developer's resources--all before the 

GAO Comments 
Appendix III: Comments from the Department 

of Defense 

Page 27 GAO-03-1073 Space Acquisition Policy 

commitment to product development is made. By maturing 

technologies before committing significant time and money to product 

development and following an evolutionary approach, the product 

development cycle time is reduced, while opportunities for inserting 

new technologies are more frequent. 

4. DOD asserted that satellite programs cannot be demonstrated in an 

operational environment (TRL 7). We disagree. NASA, the creator of 

TRLs, tests some technologies to a TRL 7 if they are mission critical. 

Moreover, while we recognize the difficulties in attaining this level of 

maturity for space systems, the space policy does not even encourage 

programs to demonstrate technologies in a relevant environment 

before committing to a program. In fact, according to DOD officials, 

under the space policy, technologies could enter product development 

with a TRL 5 or even lower. The policy is silent on what the minimum 

threshold for maturity should be, leaving that decision to the milestone 

decision authority. 

5. DOD stated that none of our prior best practices case studies included 

a commercial satellite producer, making the knowledge points 

irrelevant to space systems. This assertion is wrong. In the report that 

first promulgated the knowledge points (GAO/NSIAD-98-56), one of the 

key case studies was Hughes Space and Communications and its 

experience with the HS-702 satellite. We deliberately included Hughes 

because it was a low-volume, high technology producer. Hughes 

insisted on having process control for all key processes and proved 

them either through use on other satellite production or through 

statistical process control techniques. Hughes was also included as 

part of our best practice study on technology development 

(GAO/NSIAD-99-162). 

6. DOD asserted that moving decision points to an earlier point in the 

program reduces risks, rather than increases them as our report states. 

We disagree. The space policy proposes to make commitments to 

product development (including point estimates on cost, schedule, and 

performance) before sufficient knowledge has been achieved and 

requires decision makers to commit first to product development 

without having technology in hand and second to production of the 

first two products without production knowledge in hand. This is the 

traditional DOD approach, which has consistently resulted in 

capability being delivered much later and much more expensively than 

planned. The commitment to product development (and the requisite 
Appendix III: Comments from the Department 

of Defense 

Page 28 GAO-03-1073 Space Acquisition Policy 

estimates) can be done more confidently and the product development 

cycle time can be much shorter only if decisions are knowledge-based. 

7. While officials have told us that the intent of the policy is to complete 

technology development during phase B, they acknowledged that the 

policy does not identify an end point for technology development and 

that, in some cases, it could continue until the point the program is 

ready to begin building the first satellite. 
Related GAO Products 

Page 29 GAO-03-1073 Space Acquisition Policy 

Military Space Operations: Common Problems and Their Effects on 

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

June 2, 2003. 

Polar-Orbiting Environmental Satellites: Project Risks Could Affect 

Weather Data Needed by Civilian and Military Users. GAO-03-987T. 

Washington, D.C.: July 15, 2003. 

Missile Defense: Alternate Approaches to Space Tracking 

and Surveillance System Need to Be Considered. GAO-03-597. 

Washington, D.C.: May 23, 2003. 

Military Space Operations: Planning, Funding, and Acquisition 

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

Washington, D.C.: September 23, 2002. 

Polar-Orbiting Environmental Satellites: Status, Plans, and Future Data 

Management Challenges. GAO-02-684T. Washington, D.C.: July 24, 2002. 

Defense Acquisitions: Space-Based Infrared System-Low at Risk of 

Missing Initial Deployment Date. GAO-01-6. Washington, D.C.: 

February 28, 2001. 

Defense Acquisitions: Assessments of Major Weapon Programs. 

GAO-03-476. Washington, D.C.: May 15, 2003. 

Defense Acquisitions: Matching Resources With Requirements Is Key to 

the Unmanned Combat Air Vehicle Program’s Success. GAO-03-598. 

Washington, D.C.: June 30, 2003. 

Best Practices: Better Acquisition Outcomes Are Possible If DOD Can 

Apply Lessons from F/A-22 Program. GAO-03-645T. Washington, D.C.: 

April 11, 2003. 

Best Practices: Setting Requirements Differently Could Reduce Weapon 

Systems’ Total Ownership Costs. GAO-03-57. Washington, D.C.: 

February 11, 2003. 

Best Practices: Capturing Design and Manufacturing Knowledge 

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

July 15, 2002. 

Related GAO Products 

Space Reports 

Best Practice Reports 
Related GAO Products 

Page 30 GAO-03-1073 Space Acquisition Policy 

Defense Acquisitions: DOD Faces Challenges in Implementing Best 

Practices. GAO-02-469T. Washington, D.C.: February 27, 2002. 

Best Practices: DOD Teaming Practices Not Achieving Potential Results. 

GAO-01-510. Washington, D.C.: April 10, 2001. 

Best Practices: Better Matching of Needs and Resources Will Lead 

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

March 8, 2001. 

Best Practices: A More Constructive Test Approach Is Key to 

Better Weapon System Outcomes. GAO/NSIAD-00-199. Washington, D.C.: 

July 31, 2000. 

Defense Acquisitions: Employing Best Practices Can Shape Better 

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

April 26, 2000. 

Best Practices: Better Management of Technology Development 

Can Improve Weapon System Outcomes. GAO/NSIAD-99-162. 

Washington, D.C.: July 30, 1999. 

Best Practices: Successful Application to Weapons Acquisitions Requires 

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

February 24, 1998. 

(120266) 
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