Project  3040213 
25  November  198  3 
R  E  PO  RT 
REVIEW  OF  THE  SPACE  BASED  SPACE 
SURVEILLANCE  SYSTEM--AN  FY  1984 
•  MAJOR  SYSTEM  NEW  START 
■jiiU  -»ii'--^i 
AIR  FORCE  AUDIT  AGENC 
V
DEPARTMENT  OF  THE  AIR  FORCE 
HCADQUAfrreRS  air  force  auoit  aocncy 
NORTON  AIR  FORCE  BASE.  CALIFORNIA  02*09 
Project  3040213 
TO  THE  SECRETARY  OF  THE  AIR  FORCE 
AND  THE  CHIEF  OF  STAFF 
This  report  summarizes  our  evaluation  of  the  Air  Force's 
planning  and  preparation  for  the  Space  Based  Space  Surveil- 
lance (SBSS)  system  as  a  fiscal  year  (FY)  1984  major  system 
new  start  within  the  Defense  Systems  Acquisition  Review 
Council  (DSARC)  process.  This  evaluation,  accomplished  in 
response  to  a  September  1982  request  from  the  Deputy 
Secretary  of  Defense,  was  part  of  a  DOD-wide  review  of  DSARC 
programs.  The  audit  focused  primarily  on  the  adequacy  of 
documentation,  validity  of  requirements,  and  Air  Force  com- 
pliance with  DOD  and  Office  of  Management  and  Budget  (0MB) 
guidance,  including  the  Deputy  Secretary's  initiatives  for 
improving  the  acquisition  process. 
Our  revi 
mentat  io 
FY  1984 
includin 
improvin 
although 
cant  cor 
was  not 
by  the  .*■ 
randum  v- 
cept:  and 
ew  disclosed  that  the  Air  Force's  planning  and  docu- 
n  to  support  the  SBSS  as  a  major  system  new  start  for 
were  generally  consistent  with  DOD  and  0MB  guidance, 
q    the  Deputy  Secretary  of  Defense's  initiatives  for 
the  acquisition  process.   However,  we  noted  that 
the  program  acquisition  strategy  contained  signifi- 
jarrency  and  technological  risks,  a  DSARC  I  review 
planned.   Additionally,  the  funding  levels  requested 
■r  Force  in  the  FYs  1985-89  Program  Objective  Merao- 
-.-.  re  not  consistent  with  the  SBSS  system  design  con- 
. acquisition  strategy  as  of  July  L983. 
Air  Staff  officials  agreed  with  the  audit  results  and  planned 
cor'e:t   '■  actions  are  responsi-ye  to  the^  recommend  at  ions 
.  H.  STOLAROW 
The  Auditor  General
AIR  FORCE  AUDIT  AGENCY 
Project  3040213 
REVIEW  OF  THE  SPACE  BASED  SPACE 
SURVEILLANCE  SYSTEM — AN  FY  1984 
MAJOR  SYSTEM  NEW  START 
25  November  1983 
Directorate  of  Acquisition  and  Logistics  Systems 
Wright-Patterson  AFB,  Ohio
.''3- 
/:.*  Project  3040213 
■".<■* 
REVIEW  OP  THE  SPACE^BASED  SPACE 
SURVEILLANCE  SYSTEM—AN  FY  1984 
MAJOR  SYSTEM  NEW,  START 
C  O .  N  T  E  NT  S 
Page 
Executive  Summary  1 
TAB  A     Program  Acquisition  Strategy  5 
TAB  3      Cost  Estimating  and  Funding  11 
APPENDIX 
I  Locations  Audited/Reports  Issued  14 
II  Distribution  L5 
III  Deputy  Secretary  of  Defense  Letter,  16 
3  September  1982
Project  3040213 
EXECUTIVE  SUMMARY 
REVIEW  OP  THE  SPACE  BASED  SPACE 
SURVEILLANCE  PROGRAM — AN  FY  1984 
MAJOR  SYSTEM  NEW  START 
INTRODUCTION 
The  Space  Based  Space  Surveillance  (SBSS)  system  was  origi- 
nally conceived  as  a  system  development  based  on  the  technol- 
ogy demonstrated  by  the  Space  Infrared  Sensor  (SIRE)  pro- 
gram. The  SIRE  technology  was  intended  to  demonstrate  the 
capabilities  of  a  long  wavelength  infrared  surveillance  sys- 
tem, using  infrared  signatures  to  detect  and  track  objects  in 
space.  On  7  May  1982,  the  Air  Force,  based  on  SIRE's  limited 
operational  utility  for  its  significant  cost,  directed  the 
Air  Force  Systems  Command  (AFSC)  to  terminate  '  the  SIRE  pro- 
gram and  proceed  with  preliminary  design  and  development  of  a 
prototype"  SBSS  satellite  based  on  long  wavelength  infared 
technology-  experience  gained  from  SIRE.  Detailed  require- 
ments for  space  surveillance,  which  were  being  developed  at 
the  time  by  an  Air  Force-wide  Space  Surveillance  Architecture 
Study  chaired  by  the  Space  Command  (SPACECOM),  were  subse- 
quently reviewed  and  approved  by  the  Air  Staff.  The  SBSS 
program  is  being  managed  by  the  Space  Defense  Systems  Program 
Office  at  AFSC's  Space  Divsicn. 
The  objective  of  the  SBSS  program  is  to  develop  and  procure  a 
satellite  system  capable  of  rapidly  detecting  and  tracking 
objects  in  space,  including  new  foreign  launches.  Using 
longwave  infrared  technology,  the  system  will  provide 
improved  capabilities  over  existing  systems  by  continuously 
monitoring  space  objects  both  at  low  and  high  altitudes.  As 
a  result,  it  will  provide  the  National  Command  Authorities 
and  user  commands  with  information  necessary  to  monitor  all 
space  activities,  protect  U.S.  and  Allied  space  assets 
against  attacks,  and  negate  hostile  space  capabilities  during 
time  of  war. 
The  Program  Office  currently  plans  to  release  requests  for 
proposal  for  the  concept  exploration  phase  in  November  1983 
and  award  contracts  in  early  calendar  year  1984.  As  of  July 
1983,  the  concept  exploration  phase,  which  could  "  include 
limited  demonstration  and  validation,  was  expected  to  extend 
from  fiscal  years  (FY)  1984  through  1986,  followed  immedi- 
ately by  a  Defense  Systems  Acquisition  Review  Council  (DSARC) 
Milestone  II  review  and  full-scale  development  from  FYs  1987 
through  1990.  Full  production  was  expected  to  begin  in  FY 
1989.   A  preliminary  '  life  cycle  cost  estimate  for  the  SBSS
Project  3040213 
system,  prepared  in  July.  1983  by  a  support  contractor  (Aero- 
space Corporation),  totalled  about  $20.5  billion  (then-year 
dollars).  This  estimate,  however,  had  just  been  prepared  at 
the  completion  of  "our  audit,  and,  therefore,  had  not  been 
thoroughly  reviewed  or  approved  by  the  Program  Office.1 
PURPOSE  AND  SCOPE 
On  3  September  1982,  the  Deputy  Secretary  of  Defense 
requested  :rthe  Department  of  Defense  (DOD)  Office  of  the 
Inspector  General  to  review  selected  programs  which  were  pro- 
posed as  major  system,  new  starts  for  FY  1984  (Appendix  III). 
Aa';part.':.of:  this  overall  review,  the  DOD  Office  of  the 
Inspector  -General  requested  the  Air  , Force  Audit  Agency  to 
review  the  SBSS  program.  The  overall  objective  of  the  audit 
was  to  assess  the  Air  Force's  planning  for  the  SBSS  system  as 
an  FY  1984  major  system  new  start  within  the  DSARC  process. 
Specifically,  we  determined  whether: 
—   Documentation  supporting  the  SBSS  as  an  FY  1984  major 
system  new  start  met  the  requirements  of  selected 
Deputy  Secretary  of  Defense  acquisition  initiatives" 
and  complied'  with  Of f ice- of  Management  and  Budget 
(OMB)  and  DOD  directives.^''.   - 
.•  - —  Mission  requirements  'were  based*,  on:;  .a  mission  area- 
analysis.  
•'■■'•-■'-;'"■ 
—   Adequate  use  of  competition  was  planned  in  each  phase 
of  the  acquisition. 
Acquisition  strategy  met  the  requirements  of  OMB  and 
DOD  major  system  acquisition  guidance. 
Budget/cost  estimates  were  realistic  and  accurately 
represented  the  program. 
1  As  of  the  date  of  this,  report,  revisions  to  both  the  SBSS 
-acquisition  schedule  and  cost  estimate  were 
. under  considera- 
tion. The  revised  acquisition  schedule  would  extend  full- 
scale  development  through  FY  1994,  and  begin  production  in  FY 
1993.  A  revised  cost  estimate  of  $6.7  billion  (FY  1983  dol- 
lars) had  been  prepared.  However,  it  was  not  fully  docu- 
mented and  had  not  been  formally  approved  by  the  Proarara 
Office.
Project  3040213 
—  Integration  of  the  DOD  Planning,  Programming  and 
Budgeting  System  (PPBS)  and  the  DSARC  process  was 
planned. 
Audit  field  work  was  accomplished  at  HQ  USAF,  HQ  Space  Com- 
mand, HQ  Strategic  Air  Command,  HQ  AFSC  and  its  Space  Divi- 
sion (Appendix  I).  It  included  an  examination  of  the  proce- 
dures and  selected  documentation  pertinent  to  the  audit 
objectives  and  originating  during  the  period  January  1979 
through  July  1983.  Army  and  Navy  positions  relative  to 
selected  program  issues  were  obtained  from  the  DOD  Office  of 
the  Inspector  General.  The  audit,  which  was  accomplished  in 
accordance  with  generally  accepted  Government  auditing  stand- 
ards, started  in  March  1983.  A  draft  of  this  report  was  pro- 
vided to  management  in  August  1983. 
OVERALL  EVALUATION 
The  Air  Force's  planning  process  and  documentation  to  support 
the  SBSS  as  a  major  new  program  for  FY  1984  were  generally 
consistent  with  the  Deputy  Secretary  of  Defense  Initiatives 
on  Improving  the  Acquisition  Process  and  DOD  and  0MB  guid- 
ance. The  using  command  (Space  Command)  had  conducted  a  mis- 
sion area  analysis  to  determine  requirements,  and  the  Space 
Defense  Systems  Program  Office  had  planned  for  adequate  use 
of  competition.  However,  even  though  the  Program  Office  had 
devised  an  acquisition  strategy  which  contained  significant 
concurrency  and  technological  risk,  this  strategy  excluded  a 
DSARC  Milestone  I  review.  In  addition,  the  Air  Force's  FY 
1985-89  Program  Objective  Memorandum  couLd-be  understated  by 
about  £l  billion  because  it  did  not  reflect  the  current  SBSS 
design  concept  or  acquisition  strategy  (as  of  July  1983). 
These  factors,  unless  corrected,  may  prevent  the  successful 
integration  of  the  PPBS  and  DSARC  processes  and  may  cause 
schedule  slips  and  cost  increases. 
ISSUES  DISCUSSED  IN  THIS  REPORT 
PROGRAM  ACQUISITION  STRATEGY. 
The  SBSS  program  acquisition  strategy  included  technolog- 
ical risks  and  a  highly  concurrent,  success-oriented 
schedule  that  could  result  in  schedule  slips  and  cost 
increases.   Further,  the  program  was  not  scheduled  for  a
Project  3040213 
DSARC  I  review  and  did  not  have  cost,  schedule  and  per- 
formance thresholds  against  which  the  program's  success 
could  be  measured  at  DSARC  II.   (Page  5) 
COST  ESTIMATING  AND  FUNDING. 
Sufficient  funds  may  not  be  available  to  ensure  SBSS  pro- 
gram stability  and  progress  because  the  funding  requested 
in  the  Air  Force  FY  1985-89  Program  Objective  Memorandum 
was  not  consistent  with  the  July  1983  SBSS  system  concept 
or  acquisition  strategy.   (Page  11) 
EVALUATION  OF  MANAGEMENT  COMMENTS 
Management  comments  and  actions  are  responsive  to  the  issues 
and  recommendations  discussed  in  this  report.
Project  3040213 
TAB  A 
PROGRAM  ACQUISITION  STRATEGY 
BACKGROUND 
1.   Acquisition  Cycle, 
The  process  of  acquiring  a  major 
weapon  system  Ts  normally  divided  into  four  phases.  These 
are: 
—  Concept  .Exploration.  The  exploration  of  various  con- 
cept alternatives  to  determine  how  best  to  solve  a 
deficiency  which  has  been  identified  in  a  mission 
area  analysis.  At  the  completion  of  this  phase ,  a 
Defense  Systems  Acquisition  Review  Council  (DSARC) 
performs  a  Milestone  I  review  to  determine  whether 
the  program  should  proceed  to  the  next  phase. 
—  Demonstration  and  Validation.  The  development,  fab- 
rication, and  testing  o?  prototypes  to  prove  the 
validity  of  the  selected  concepts.  Upon  completion, 
a  DSARC  II  review  is  made  to  determine  whether  the 
program  should  proceed. 
—  Full-Scale  Development.  The  conduct  of  detailed  sys- 
tem engineering,  operational  test  and  evaluation,  and 
production  and  logistics  planning. 
—  Production.  Fabrication,  assembly,  and  deployment  of 
the  system. 
DSARC  I  approval  for  the  system  to  proceed  to  the  next  acqui- 
sition phase  includes  the  formal  endorsement  of  cost,  sched- 
ule, and  performance  thresholds  in  a  system  concept  paper. 
These  thresholds  are  used  at  DSARC  II  to  measure  the  pro- 
gram's performance  and  are  again  formally  established  in  a 
decision  coordinating  paper. 
2.  Program  Concurrency.  Department  of  Defense  (DOD)  Direc- 
tive  5000.1,  Major  System  Acquisitions,  dated  29  March  1982, 
allows  the  Services  to  tailor  acquisition  strategies  to  fit 
each  program  to  minimize  acquisition  time  and  cost,  consist- 
ent with  the  need  and  technical  risk  involved.  Consequently, 
strategies  such  as  lead  time  reductions  through  concurrency, 
experimental  prototyping  of  critical  .components,  and  combin- 
ing or  omitting  phases  may  be  appropriate  to  reduce  acquisi- 
tion time  and  cost.   However,  when  these1  alternatives  are
Project  3040213 
TAB  A 
considered,  it  is  imperative  that  clear  'Service  and/or  DOD 
guidance  is  given  to  ensure  that  program  direction  is  logi- 
cal, appropriate  and  commensurate  with  the  risk* 
DISCUSSION 
3.   Technology  Risk  and  Schedule  Concurrency.   Even  though 
the  Space  Based  Space  Surveillance  (SBSS)  program  acquisition 
strategy  (as  of  July  1983)  included  technological  risks  and  a 
highly  concurrent,   success-oriented   schedule,   it  was   not 
scheduled  for  review  at  DSARC  I.   Instead,  Air  Force  Systems 
Command  (AFSC)  and  Deputy  Chief  of  Staff /Research,  Develop- 
ment and  Acquisition  (HQ  USAF/RD)  officials  planned  to  brief 
the  program  to  the  Under  Secretary  of  Defense  (Research  and 
Engineering).   Although  these  officials  believed  this,  brief- 
ing would  provide  sufficient  visibility  for  the  SBSS  program, 
it  is  our  opinion  that,  without  a  DSARC  I  review,  the  program 
acquisition   strategy  will   not  have   a   formal,   high-level 
review  and  will  not  have  formally  established  cost,  schedule, 
and  performance  thresholds  against  which  its  success  can  be 
measured  at  DSARC  II. 
a.  Technology  Risks.  Technologies  for  the  four  key  com- 
ponents of  the  SBSS  system  (cryogenic  cooler,  focal  plane/ 
optics,  and  signal  processor)  were  in  development,  and  there- 
fore, had  not  been  fully  proven  or  demonstrated.  The  Program 
Office  had  designated  the  development  and  demonstration  of 
the  cryogenic  coolers  and  focal  planes  as  high  risks,  but  Air 
Force  management  generally  believed  these  technologies  would 
be  developed  by  the  DSARC  Milestone  II  scheduled  in  FY  1986. 
However,  the  Deputy  Assistant  Secretary  of  the  Air  Force 
(Space  Plans  and  Policy)  in  a  27  April  1983  memorandum,  MSBSS 
Information,"  stated: 
I  strongly  support  the  need  for  a  Space  Based  Space 
Surveillance  (SBSS)  system.  I  am  concerned,  how- 
ever, that  wit^h  the  present  program  we  may  find  our- 
selves, once  again,  in  the  position  of  trying  to- 
develop  the  needed  technology  at  the  same  time  we 
are  proceeding  with  contractor  selection  for  system 
development.
Project  3040213 
TAB  A 
Because  of  these  concerns,  the  Deputy  Assistant  Secretary 
held  a  thorough  review  of  the  SBSS.  program  in  March  1983  and 
concluded  that  the-  program  may  be  overly  success-oriented. 
He  cautioned  that  the  Air  Force,  should  not  commit  to  full- 
scale  development  or  overspend  on  concept  definition  until 
the  required  technology  is  available.  If  the  technology  is 
not  satisfactorily  .  developed  and  demonstrated,  production 
components  arid  subsystems  may  require  modification,  the 
schedule  may  be  extended,  and  acquisition  costs  may  increase. 
b.  Schedule  Concurrency.  The  SBSS  program  acquisition 
strategy  fas  of  July  1983)  contained  a  highly  concurrent, 
success-oriented  schedule  (see  Schedule  A-l).  As  a  result, 
any  technical  or  other  problems  that  occur  during  development 
may  cause  schedule  slips  and  cost  increases.   Specifically: 
(1)  Technology  Development  and  Concept  Exploration 
Are  Concurrent.  The  concept  exploration  phase 
(which 
included  limited  demonstration  and  validation)  and  technology 
development  were  to  be  accomplished  concurrently.  The  Pro- 
gram Office  proposed  to  accomplish  concept  exploration  in  two 
phases.  In  Phase  IA,  projected  to  cover  FYs  1984-85,  at 
least  two  sensor  development  and  two  spacecraft  development 
contracts  were  to  be  awarded.  In  Phase  IB,  projected  for  FY 
1986,  the  best  sensor  and  spacecraft  contractors  were  to  be 
identified  and  allowed  to  further  develop  and  integrate  their 
concepts  and  designs  preparatory  to  the  DSARC  II  review. 
Because  technology  and  concept  exploration  are  being  devel- 
oped concurrently,  delays  in  technology  development  could 
translate  into  delays  in  the  concept  exploration  phase  and 
ultimately  result  in  program  cost  increases. 
(2 )  DSARC  Milestone  I  Review  and  Demonstration  and 
Validation  Phase  are  Omitted.  Full-scale  development  was  to 
begin  immediately  after  the  concept  exploration  phase  without 
the  benefit  of  an  in-depth  demonstration  and  validation  pro- 
gram approved  by  a  formal  DSARC  Milestone  I  review.  Program 
management  officials  did  not  plan  to  have  a  DSARC  I  review 
because  they  believed  the  program  had  been  given  sufficient 
visibility.  For  example,  the  results  of  the  1982  Space  Sur- 
veillance Architecture  Study  (which  was  the  basis  for  recom- 
mending the  SBSS  system)  had  been  briefed  to  numerous  Air 
Force  and  some  DOD  officials,  including  the  Commander 
HQ  AFSC,  Secretary  of  the  Air  Force,  Joint  Chiefs  of  Staff, 
and  the  Principal  Deputy  Under  Secretary  of  Defense  (Research 
and  Engineering).  However,  five  of  the  seven  permanent  mem- 
bers of  the  DSARC  had  not  been  briefed  on- the  status  of  the
Project  3040213 
TAB  A 
program  or  given  the  opportunity  to  comment  on  its  direc- 
tion. Further,  DOD  Directive  5000.1  states*  "The  Milestone 
I  decision  shall  establish  thresholds  and  objectives  to  be 
met  and  reviewed  at  the  next  milestone,  the  acquisition 
strategy  for  the  recommended  concepts. . .and  a  dollar  thres- 
hold that  cannot  be  exceeded  to  carry  the  program  through  the 
next  milestone.1*  Without  a  DSARC  I  review,  distinct  cost  and 
performance  thresholds  and  objectives  would  not  be  estab- 
lished to  provide  a  basis  on  which  the  success-  of  the  program 
can  be  measured  and  resources  committed  for  full-scale  devel- 
opment and  production  at  the  Milestone  II  DSARC. 
( 3 )  Long-Lead  Procurement  Is  Concurrent  With  Full- 
Scale  Development.  The  Air  Force  planned  to  begin  procure- 
ment of  long-lead  production  items  near  the  beginning  of 
full-scale  development.  In  addition,  full  production  was 
scheduled  to  begin  about  1  year  before  completion  of  full- 
scale  development.  As  a  result,  the  production  systems  could 
closely  resemble  the  prototype  system  and  may  not  be  able  to 
fully  benefit  from  the  testing  to  be  accomplished  during  the 
full-scale  development  phase. 
4.  Recommendation  1.  HQ  USAF/RD,  in  coordination  with 
fiQ  AFSC  and  the  Space  Defense  Systems  Program  Office  should 
request  a  DSARC  Milestone  I  review  be  made  at  the  end  of 
Phase  IA  of  the  concept  exploration  phase  or  request  the 
Defense  Acquisition  Executive  to  convene  a  Program  Review  to 
ensure  that  the  SBSS  acquisition  strategy,  including  the  con- 
currency and  technological  risk,  is  approved  by  the  Office  of 
the  Secretary  of  Defense. 
5.  Management  Comments.  "Concur.  A  Defease  Acquisition 
Executive  convened  Program  Review  will  be  requested.  This 
review  should  occur  after  System  Design  Review  (SDR)  of  the 
concept  definition  study.  The  SDR  is  currently  scheduled  for 
December  1985..  Therefore,  the  Program  Review  should  occur  no 
later  than  February  1986." 
•  * 
6.  Recommendation  2.  HQ  USAF/RD,  in  coordination  with 
HQ  AFSC  and  the  Space  Defense  Systems  Program  Office  should 
establish  clear  cost,  schedule,  and  perfornance  thresholds 
and  goals  which  can  be  evaluated  by  the  DSARC  Milestone  II 
review  prior  to  approving  the  program  for  full-scale  develop- 
ment and  production.  These  thresholds  and  goals  should  be 
established  in  an  approved  system  concept  paper  during  prep- 
arations for  the  DSARC  Milestone  I  review  or  Program  Review 
recommended  above.
Project  3040213 
TAB  A 
7.  Management  Comments.  "Concur.  Clear  cost,  schedule,  and 
performance  thresholds  will  be  available  by  the  Defense 
Acquisition  Executive  convened  Program  Review  discussed  above 
(no  later  than  February  1986)." 
8.  Evaluation  of  Management  Comments.  Management  comments 
and  actions  planned  are  responsive  to  the  issues  and  recom- 
mendations discussed  in  this  tab.
Ql  Q2  Q3  04  Ql  Q2  Q3  Q4  Ql  Q2  Q3  04  Ql  Q2  Q3  04  Ql  Q2  Q3  Q4  Ql  Q2  Q3  Q4  Ql  02  Q3  04 
:  CONCEPT  EXPLORATION 
TECHNOLOGY  -DEVELOPMENT 
:  :DSARC  II 
:  FULL-SCALE  DEVELOPMENT 
jLONG-LEAD  PROCUREMENT 
jBLOCK  I  PRODUCTION 
Note:  This  schedule  reflects  the  acquisition  plan  as  of  July  1983.  However,  as  of  the  date  of  this  report,  a 
revised  acquisition  strategy  was  under  consideration  which  would  extend  full-scale  development  through  FY  1994 
and  begin  production  in  FY  1993. 
? 
FY  1984 
FY  1985 
FY  1986 
SBSS  PROGRAM  SCHEDULE 
FY  1987        FY  1988 
FY  1989 
FY  1990 
o 
it* 
o 
M 
M
Project  3040213 
TAB  B 
COST  ESTIMATING  AND  FUNDING 
BACKGROUND 
1.  Cost  Estimating  Guidance «  DOD  Directive  5000.1,  Major 
System  Acquisitions,  and  the  Deputy  Secretary  of  Defense  Ini- 
tiatives on  Improving  the  Acquisition  Process  both  3tress  the 
need  for  realistic  budget/cost  estimating  and  adequate  fund- 
ing.  Because  a  system's  estimated  cost  affects  its  afford- 
.  ability  when  compared  to  overall  Air  Force  and  DOD  budget 
priorities,  cost  is  a  primary  factor  considered  by  the 
Defense  Systems  Acquisition  Review  Council  (DSARC)  when 
determining  whether  a  system  should  proceed  to  the  next 
acquisition  phase. 
2.  Program  Stability  and  Deputy  Secretary  of  Defense  Initia- 
tives^ DOD  Directive  5000.1  states,  "Reasonable  stability  in 
acquisition  programs  is  necessary  to  carry  out  effective, 
efficient,  and  timely  acquisitions."  To  achieve  stability, 
che  Services  are  required  to  estimate  and  budget  realistic- 
ally and  fund  adequately.  In  addition,  the  following 
30  April  1981  Deputy  Secretary  of  Defense  '  initiatives  apply 
directly  to  accurate  budget/cost  estimating  and  adequate 
funding: 
—  Initiative  number  6  requires  the  Services  to  budget  to 
most  likely  costs. 
—  Initiative  number  29  calls  for  DOD  to  integrate  the 
Planning,  Programming  and  Budgeting  System  and  the  DSARC 
process  by  requiring  the  Services  to  assure  the  DSARC  that 
sufficient  funding  can  be  committed  and  is  included  in  the 
Five  Year  Defense  Program  (FYDP)  to  carry  out  the  proposed 
program. 
DISCUSSION 
3.  Budget  Adjustments  are  Required.  Sufficient  funds,  in 
both  amount  and  type,  may  not  be  available  to  ensure  SBSS 
program  stability  and  progress.  The  $800  million  (then-year 
dollars)  requested  in  the  USAF  FY  1985-89  Program  Objective 
Memorandum  (POM)  may  be  as  much  as  $1  billion  (then-year
Project  3040213 
TAB  B 
dollars)  short  of  the .  funding  required  to  support  the  SBSS 
system  concept  envisioned  as  of  July  1933.  Additionally,  the 
POM  did  not  include  long-lead  procurement  (appropriation 
3020)  funds  required  by  the  SBSS  acquisition  strategy.  As  a 
result,  the  Air  Force  may  not  be  able  to  assure  the  DSARC 
that  sufficient  funding  can  be  committed  and  is  included  in 
the  PYDP  to  carry  out  the  proposed  program  as  required  by  the 
Deputy  Secretary  of  Defense's  initiative  number  29. 
a.  Original  Versus  Current  SBSS  System  Concept.  The  FY 
1985-89  POM  did  not  reflect  funding  required  to  support  the 
current  (July  1983)  concept  of  the  SBSS  system. 
(1)  The  system  concept  was  based  on  the  findings  of 
the  1982  Air  Force  Space  Surveillance  Architecture  Study  and 
subsequent  analyses  conducted  by  HQ  Space  Command  and  Space 
Division.  The  funding  requested  in  the  POM,  on  the  other 
hand,  was  based  on  a  concept  developed  by  a  contractual 
(Science  Application  Inc.)  study  conducted  from  1979-81. 
(2)  The  1982  Air  Force  Space  Surveillance  Architec- 
ture Study  and  its  follow-on  efforts  were  accomplished  to 
identify  and  develop  a  fully  operational  space  surveillance 
system  in  the  near  term.  The  1979-81  contractual  study,  how- 
ever, was  performed  primarily  to  demonstrate  the  capability 
of  the  longwave  infrared  technology  for  the  Space  Infrared 
Sensor  Program  and  to  develop  a  SBSS  baseline  system  concept 
to  meet  the  mission  performance  objectives.  This  original 
concept  called  for  a  system  with  significantly  less  endur- 
ability,  survivability  and  operational  capability  than 
envisioned  in  the  SBSS  concept  as  of  July  1983.  Because  of 
the  significant  differences  between  these  design  concepts, 
the  Program  Office  directed  its  support  contractor  (Aerospace 
Corporation)  to  develop  a  new  cost  estimate  in  the  spring  of 
1983  to  more  accurately  reflect  the  cost  of  the  SBSS  system. 
Preliminary  results  indicated  that  the  budget  requests  in  the 
FY  1985-89  POM  could  be  understated  by  about  $1  billion 
(then-year  dollars).2  This  amount,  however,  had  not  been 
thoroughly  reviewed  or  approved  within  the  Air  Force. 
2  As  of  the  date  of  this  report,  the  Program  Office  was  in 
the  process  of  finalizing  a  new  SBSS  cost  estimate  and 
acquisition  strategy.  The  result  of  this  effort  may  impact 
the  funding  shortfall  discussed  in  this  report.
Project  3040213 
TAB  B 
b.  Typs  of  Funding.  The  type  of  funds  requested  in  the 
FY  1985-89  POM  was  not  consistent  with  the  Program  Office 
acquisition  strategy  as  of  July  1983.  The  acquisition  strat- 
egy called  for  long-lead  procurement  actions,  preparatory  to 
Block  I  production,  to  begin  in  FY  1987.  To  do  this,  central 
procurement  (appropriation  3020)  funds  would  be  required  in 
the  FY  1987-89  budget.  However,  the  FY  1985-89  POM  did  not 
include  procurement  funds  for  the  SBSS  program.  The  Program 
Office's  original  budget  request,  submitted  in  September 
1982,  proposed  that  $73.7  million  of  research,  development, 
test  and  engineering  funds  (appropriation  3600)  be  converted 
to  central  procurement  funds  for  long-lead  purchases.  How- 
ever, during  HQ  AFSC  and  USAF  reviews  of  the  budget  submis- 
sion, the  proposal  was  rejected  primarily  because  Air  Force 
management  officials  determined  that  the  amounts  requested 
for  procurement  funds  were  not  sufficiently  accurate  to 
submit  for  DOD  and  Congressional  consideration. 
4.  Recommendation  3.  HQ  USAF/RD,  in  conjunction  with 
HQ  AFSC  and  the  Space  Defense  Systems  Program  Office  should 
require  that  the  current  SBSS  cost  estimate  be  thoroughly 
reviewed  and  approved,  and  the  FY  1986-1990  Air  Force  POM  be 
adjusted  accordingly  to  reflect  the  updated  SBSS  concept, 
including  an  estimate  for  central  procurement  funds. 
5.  Management  Comments .  "Concur.  The  most  recent  SBSS  cost 
estimate (October  1983) ,  representing  a  more  survivable  total 
system  and  a  somewhat  revised  acquisition  strategy  has  been 
included  in  the  FY86-90  POM  by  the  Space  Defense  Systems  Pro- 
gram Office.  The  POM  adjustment  will  be  made  in  FY90  and 
will  not  increase  funding  required  in  FY86-89..  Review  and 
approval  will  be  accomplished  during  the  normal  PPBS  cycle, 
nominally  June  1934." 
6.  Evaluation  of  Management  Comments.  Management's  ongoing 
actions  to  refine  the  program  cost  estimate  and  revise  the 
acquisition  strategies  and  program  schedule  are  responsive  to 
the  issues  and  recommendations  discussed  in  the  tab.  Since 
concept  definition,  acquisition  strategies,  and  cost  esti- 
mates are  subject  to  considerable  change  during  the  early 
stages  of  a  program's  acquisition  cycle,  we  will  continue  to 
monitor  management,  actions  during  the  audit  followup  process.
Project  3040213 
LOCATIONS  AUDITED/ REPORTS  ISSUED^ 
Organization/Location 
Headquarters  United  States  Air  Force 
Comptroller  of  the  Air  Force  (AF/AC) 
ACS,  Intelligence  (AF/lN) 
DCS,  Research,  Development  and 
Acquisition  (AF/RD) 
DCS,  Plans  and  Operations  (AF/XO) 
Air  Force  Systems  Command  (AFSC) 
Headquarters,  AFSC 
Andrews  AFB,  MD 
Space  Division 
Los  Angeles  Air  Station,  CA 
Strategic  Air  Command  (SAC) 
Headquarters,  SAC 
Offutt  AFB,  NE 
Space  Command  (SPACECOM) 
Headquarters,  SPACECOM 
Peterson  AFB,  CO 
No  installaton-level  reports  were  issued 
L4  APPENDIX  I