Geostationary Operational Environmental Satellites: Further Actions Needed to Effectively Manage Risks
Published: 2007-10-23T00:00:00

Fast Facts:

Highlights:
section_title: Why GAO Did This Study
paragraphs: The National Oceanic and Atmospheric Administration (NOAA), with the aid of the National Aeronautics and Space Administration (NASA), plans to procure the next generation of geostationary operational environmental satellites, called the Geostationary Operational Environmental Satellites-R series (GOES-R). This new series is considered critical to the United States' ability to maintain the continuity of data required for weather forecasting through the year 2028. GAO was asked to summarize its report on the GOES-R series. This report (1) assesses the status and revised plans for the GOES-R procurement and (2) evaluates whether NOAA is adequately mitigating key technical and programmatic risks facing the program. To conduct this review, GAO analyzed contractor and program data and interviewed officials from NOAA and NASA.
section_title: What GAO Found
paragraphs: NOAA has made progress in planning its GOES-R procurement--which is estimated to cost $7 billion and scheduled to have the first satellite ready for launch in 2014--but cost and schedules are likely to grow. Specifically, the agency completed preliminary design studies of GOES-R and recently decided to separate the space and ground elements of the program into two separate development contracts. However, this change in strategy has delayed a planned September 2007 decision to proceed with the acquisition. Further, independent estimates are higher than the program's current cost estimate and convey a low level of confidence in the program's schedule. Independent studies show that the estimated program could cost about $2 billion more, and the first satellite launch could be delayed by 2 years. As NOAA works to reconcile the independent estimate with its own program office estimate, costs are likely to grow and schedules are likely to be delayed. To address cost, schedule, and technical risks, the GOES-R program has established a risk management program and has taken steps to mitigate selected risks. For example, as of July 2007, the program office identified the lack of an integrated master schedule to be its highest priority risk and established plans to bring this risk to closure. However, more remains to be done to fully address risks. Specifically, the program has multiple risk watchlists that are not always consistent and key risks are missing from the watchlists, including risks associated with unfilled executive positions, limitations in NOAA's insight into NASA's deliverables, and insufficient funds for unexpected costs--called management reserves. As a result, the GOES-R program is at risk that problems will not be identified or mitigated in a timely manner and could lead to program cost overruns and schedule delays.

section_title: Letter
paragraphs: We appreciate the opportunity to participate in today’s hearing on the  planned Geostationary Operational Environmental Satellites-R series  (GOES-R) program. The GOES-R series is to replace the current series of  satellites, which will likely begin to reach the end of their useful lives in  approximately 2014. This new series is expected to mark the first major  technological advance in GOES instrumentation since 1994. It is also  considered critical to the United States’ ability to maintain the continuity  of data required for weather forecasting through the year 2028.
As requested, our testimony summarizes the report we issued today on the  GOES-R program. Specifically, we (1) assessed the status and revised  plans for the GOES-R procurement and (2) evaluated whether the National  Oceanic and Atmospheric Administration (NOAA) is adequately mitigating  key technical and programmatic risks facing the GOES-R program. In  preparing for this testimony, we relied on our work supporting the  accompanying report. That report contains a detailed overview of our  scope and methodology. All of the work on which this testimony is based  was performed in accordance with generally accepted government  auditing standards.
subsections: section_title: Background
paragraphs: Since the 1960s, geostationary and polar-orbiting environmental satellites  have been used by the United States to provide meteorological data for  weather observation, research, and forecasting. NOAA’s National  Environmental Satellite Data and Information Service (NESDIS) is  responsible for managing the civilian geostationary and polar-orbiting  satellite systems as two separate programs, called GOES and the Polar  Operational Environmental Satellites, respectively.
Unlike polar-orbiting satellites, which constantly circle the earth in a  relatively low polar orbit, geostationary satellites can maintain a constant  view of the earth from a high orbit of about 22,300 miles in space. NOAA  operates GOES as a two-satellite system that is primarily focused on the  United States. These satellites are uniquely positioned to provide timely  environmental data to meteorologists and their audiences on the earth’s  atmosphere, its surface, cloud cover, and the space environment. They  also observe the development of hazardous weather, such as hurricanes  and severe thunderstorms, and track their movement and intensity to  reduce or avoid major losses of property and life. Furthermore, the  satellites’ ability to provide broad, continuously updated coverage of  atmospheric conditions over land and oceans is important to NOAA’s  weather forecasting operations.
To provide continuous satellite coverage, NOAA acquires several  geostationary satellites at a time as part of a series and launches new  satellites every few years (see table 1).
Three satellites—GOES-11, GOES-12, and GOES-13—are currently in orbit.  Both GOES-11 and GOES-12 are operational satellites, while GOES-13 is in  an on-orbit storage mode. It is a backup for the other two satellites should  they experience any degradation in service. The others in the series,  GOES-O and GOES-P, are planned for launch over the next few years.  NOAA is also planning the next generation of satellites, known as the  GOES-R series, which are planned for launch beginning in 2014.
subsections: section_title: GOES-R Program—An Overview
paragraphs: NOAA plans for the GOES-R program to improve on the technology of  prior series, in terms of both system and instrument improvements, to  fulfill more demanding user requirements and to provide more rapid  information updates. Table 2 highlights key system-related improvements  GOES-R is expected to make to the geostationary satellite program.
In addition to the system improvements, the instruments on the GOES-R  series are expected to significantly increase the clarity and precision of the  observed environmental data. NOAA originally planned to acquire six  different types of instruments. Furthermore, two of these instruments— the Advanced Baseline Imager and the Hyperspectral Environmental  Suite—were considered to be the most critical because they would  provide data for key weather products. Table 3 summarizes the originally  planned instruments and their expected capabilities.
More recently, however, NOAA reduced the scope of the GOES-R program  because of expectations of higher costs. In May 2006, the program office  projected that total costs, which were originally estimated to be $6.2  billion, could reach $11.4 billion. We reported that this led NOAA to reduce  the scope and technical complexity of the baseline program. Specifically,  in September 2006, NOAA reduced the minimum number of satellites from  four to two, cancelled plans for developing the Hyperspectral  Environmental Suite, and estimated the revised program would cost $7  billion. Table 4 provides a summary of the timeline and scope of these key  changes.
section_title: GOES-R Program Office Structure
paragraphs: NOAA is solely responsible for GOES-R program funding and overall  mission success. However, since it relies on NASA’s acquisition  experience and technical expertise to help ensure the success of its  programs, NOAA implemented an integrated program management  structure with NASA for the GOES-R program. Within the program office,  there are two project offices that manage key components of the GOES-R  system. These are called the flight and operations project offices. The  flight project office oversees the spacecraft, instruments, and launch  services. The operations project office oversees the ground elements and  on-orbit operations of the satellites. The project manager for the flight  project office and the deputy project manager for operations project office  are designated to be filled with NASA personnel. Additionally, NOAA has  located the program office at NASA’s Goddard Space Flight Center.
section_title: Planned GOES-R Acquisition Strategy
paragraphs: NOAA’s acquisition strategy was to award contracts for the preliminary  design of the GOES-R system to several vendors who would subsequently  compete for the contract to be the single prime contractor responsible for  overall system development and production. As such, in October 2005,  NOAA awarded contracts for the preliminary design of the overall GOES-R  system to three vendors.
In addition, to reduce the risks associated with developing technically  advanced instruments, NASA awarded contracts for the preliminary  designs for five of the originally planned instruments. NASA expected to  subsequently award development contracts for these instruments and to  eventually turn them over to the prime contractor responsible for the  overall GOES-R program.
section_title: GOES-R Preliminary Design Studies Are Completed, but Key Program Changes Have Been Made and Cost and Schedule Estimates Are Likely to Grow
paragraphs: NOAA has completed preliminary design studies of its GOES-R  procurement. In addition, the agency recently decided to separate the  space and ground elements of the program into two separate contracts to  be managed by NASA and NOAA, respectively. However, this change has  delayed a key decision to proceed with the acquisition, which was planned  for September 2007. Further, independent estimates are higher than the  program’s current $7 billion cost estimate and convey a low level of  confidence in the program’s schedule for launching the first satellite by  2014. As NOAA works to reconcile the independent estimate with its own  program office estimate, costs are likely to grow and schedules are likely  to be delayed.
subsections: section_title: Progress Has Been Made on GOES-R Procurement Activities
paragraphs: NOAA and NASA have made progress on GOES-R. The program office has  completed preliminary design studies of the overall GOES-R system and  has initiated development work on most of the planned instruments.  Specifically, the NOAA-issued contracts for the preliminary design of the  overall GOES-R system to three vendors have ended, and the designs have  been completed.
In addition, after completing preliminary designs on five of the originally  planned instruments, NASA awarded development contracts for three of  them. Further, the most critical of these instruments—the Advanced  Baseline Imager—has completed a major development milestone. In  February 2007, it passed a critical design review gate and NASA approved  the contractor to begin production of a prototype model.
section_title: NOAA Revised its Acquisition Strategy
paragraphs: NOAA recently made a number of key changes in how it plans to acquire  the GOES-R system. Originally, NOAA planned to award and manage a  single prime contract for the acquisition and operation of the integrated  system. However, an independent review team assessed the program and  found that this approach was risky. It recommended that NOAA split the  acquisition effort into two separate contracts for the space and ground  segments and have NASA manage the space segment. The independent  review team concluded that there was less risk in continuing with this  approach than there would be if NOAA took on a new and expanded role.
In March 2007, Commerce approved NOAA’s decision to implement these  recommendations. The agency revised its acquisition strategy to include  two separate contracts—the space segment and the ground segment. The  two contracts are expected to be awarded in May 2008 and August 2008,  respectively. The space segment is to be managed by a NASA-led flight  project office. As such, NASA is to be responsible for awarding and  managing the space segment contract, delivering the flight-ready  instruments to the space segment contractor for integration onto the  satellites, and overseeing the systems engineering and integration. NOAA  is to be responsible for the ground segment contract, which is to be  managed by the NOAA-led operations project office.
The revised acquisition strategy has delayed NOAA’s plans to complete a  key decision milestone on whether to proceed with GOES-R development  and production in September 2007. Once this decision is made, the final  requests for proposals on the system segments are to be released. The  agency could not provide a timeframe for when this key decision  milestone would take place.
section_title: GOES-R Cost Estimates Are Likely to Grow and Schedule Estimates Are Likely to Slip
paragraphs: NOAA’s current estimate that the life cycle cost of the GOES-R program  would be $7 billion is likely to grow, and its estimate that the first satellite  would be launched in December 2014 is likely to slip. Consistent with best  practices in cost estimating, in May 2007, NOAA had two different cost  estimates completed for the current GOES-R program—one by its program  office and one by an independent cost estimating firm. The program office  estimated with 80 percent confidence that the program would cost $6.9  billion. The independent estimating firm estimated with 80 percent  confidence that the program would cost $9.3 billion.
A comparison of the two cost models shows that the independent  estimator has about a 20 percent level of confidence that the program can  be completed for $6.9 billion. Further, the independent estimator  concluded that the program office estimate significantly understated the  risk of cost overruns. Other major differences between the two estimates  are contained in government costs and in the space and ground segments.  In commenting on a draft of the accompanying report, NOAA officials  noted that one of the differences between the estimates is the inflation  rate. The independent estimator assumed a higher inflation rate than the  rate that NOAA and NASA typically use. NOAA officials noted that if the  independent estimate was adjusted to NOAA’s inflation rate, the program’s  cost estimate—with 80 percent confidence—would be $8.7 billion.  However, we believe that the value of an independent estimate is that it  does not necessarily use the same assumptions as the program office. By  offering alternative assumptions, the independent estimate provides  valuable information for government officials to consider when revising  program cost estimates.
Program officials are reconciling the two different cost estimates and plan  to establish a new program cost estimate to be released in conjunction  with the President’s fiscal year 2009 budget in February 2008. Program  officials were unable to provide us information on the reconciled estimate  until it is released. Nonetheless, the revised cost estimate will likely be $1  billion more than the current $7 billion.
Regarding schedule, NOAA’s current plan to launch the first GOES-R  series satellite in December 2014 could be delayed. This schedule was  driven by a requirement that the satellites be available to back up the last  remaining GOES satellites (GOES-O and GOES-P) should anything go  wrong during the planned launches of these satellites (see table 5).  However, as part of its cost estimate, the independent estimator  performed a schedule risk analysis. The independent estimator determined  that there was less than a 50 percent chance that the first satellite would  be ready for launch by December 2014 and that a later date would be more  realistic. The estimator determined that it had 50 percent confidence that  the first satellite would launch by October 2015 and 80 percent confidence  that the satellite would launch by March 2017. A delay of this magnitude  could affect the continuity of GOES data should the agency experience  problems with the predecessor satellites.
section_title: NOAA is Taking Steps to Address Key Risks, but More Remains to Be Done
paragraphs: To address cost, schedule, and technical risks, the GOES-R program  established a risk management program and has taken steps to identify  and mitigate selected risks. However, more remains to be done to fully  address a comprehensive set of risks. Specifically, the program has  multiple risk watchlists and they are not always consistent. Further, key  risks are missing from the risks lists, including risks associated with  unfilled executive positions, limitations in NOAA’s insight into NASA’s  deliverables, and insufficient funding for unexpected costs (called  management reserve) on a critical sensor. As a result, the GOES-R  program is at increased risk that problems will not be identified or  mitigated in a timely manner and that they could lead to program cost  overruns and schedule delays.
subsections: section_title: GOES-R Has a Risk Management Program and Is Taking Measures to Address Selected Risks
paragraphs: The GOES-R program office established a risk management program and  is tracking and mitigating selected risks. Risk management is a leading  management practice that is widely recognized as a key component of a  sound system development approach. An effective risk management  approach typically includes identifying, prioritizing, and mitigating risks,  and escalating key risks to the attention of senior management.
In accordance with leading management practices, the GOES-R program  identifies risks, assigns a severity rating to risks, tracks these risks in a  database, plans response strategies for each risk in the database, and  reviews and evaluates these risks during monthly program risk  management board meetings. Programwide and project-specific risks are  managed by different offices. The program office identifies and tracks  programwide risks—those that affect the overall GOES-R program.  NASA’s flight project office and NOAA’s operations project office manage  risks affecting their respective aspects of the program. Further, the  program office briefs senior executives on top program and project risks  on a monthly basis.
section_title: GOES-R Program Office Identified and Is Working to Mitigate Programwide Risks
paragraphs: As of July 2007, the program office identified three program risks affecting  the overall GOES-R program. These risks include the development of the  integrated master schedule, the ability to secure authorization to use a key  frequency band to meet the space-to-ground communication data link  requirements for the GOES-R system, and the final approval of the   GOES-R mission requirements from the NOAA Deputy Undersecretary.
NOAA is working to mitigate and close program risks that it is tracking.  For example, the program office recently closed the risk associated with  GOES-R requirements because it had sufficiently defined and obtained  approval of these requirements. As another example, the program office  considers the lack of an integrated master schedule to be its highest  priority risk. Program officials reported that completion of the integrated  master schedule is driven by the completion of the intermediate schedules  for the ground segment and the space-to-ground interdependencies. Key  program staff members, including a resident scheduler, meet on a weekly  basis to resolve outstanding design issues and hone these schedules.  Program officials reported that the intermediate schedules are near  completion and that they plan to have the integrated master schedule  completed in Fall 2007. They expect to remove this issue from the risk  watchlist at that time.
subsections: section_title: NASA Identified Flight Segment Risks and Is Working to Mitigate Them
paragraphs: As of July 2007, the NASA flight project office identified four risks  affecting instrument development, all of which are classified as medium  risk. The top three risks pertain to the advanced imaging instrument,  ABI—including issues on timely and quality subcontractor delivery of a  critical part, stray light negatively impacting the performance of the  optical system, and meeting specified performance requirements on image  navigation and registration. The fourth priority risk pertains to the  improvement of subcontractor quality assurance on a key sensor for the  Space Environmental In-Situ Suite.
NASA is working to mitigate the flight segment risks that it is tracking. For  example, the ABI contractor, among other things, plans to complete a key  simulation review before the end of the year (called the structural thermal  optical performance analysis) to evaluate whether the instrument can  meet its expected performance parameters for image navigation and  registration. NASA also recently conducted a vendor facility assessment of  the Space Environmental In-Situ Suite subcontractor to determine  whether adequate quality assurance improvements had been made to be  compliant with contract requirements. These actions are expected to help  mitigate the risk.
section_title: NOAA Identified Risks in its Operations Segment and Is Working to Mitigate Them
paragraphs: As of July 2007, the NOAA operations project office identified five risks  impacting the management and development of the ground system and  operations, including one that is identified as a medium risk. These risks  include, among other things, inadequate definition of flight and operations  project interdependencies, algorithm development responsibilities, and  the adequate definition of coordination requirements between the space  and ground segments to ensure that the two requests for proposals are  consistent.
NOAA is working to mitigate the ground system and operations risks that  it is tracking. For example, for the highest priority risk regarding schedule  interdependencies, key staff from both the flight and operations projects  meet weekly in order to identify and synchronize project schedules. The  project office expects to close this risk in Fall 2007.
section_title: Multiple Watchlists Are Not Consistent, Making it Difficult to Prioritize and Manage Risks
paragraphs: While GOES-R has implemented a risk management process, its multiple  risk watchlists are not consistent in areas where there are  interdependencies between the lists, which makes it difficult to effectively  prioritize and manage risks at the appropriate organizational levels. Sound  risk management practices call for having a consistent prioritization  approach and for significant problems to be elevated from the component  level to the program level. This is because an issue affecting a critical  component could have severe programmatic implications and should be  identified, tracked, and overseen at the program level. In addition,  program executives should be briefed regularly on the status of key risks.
However, on the GOES-R program, the risks identified on the multiple risk  lists are inconsistent in areas where there are interdependencies between  the lists. These interdependencies include situations where a risk is raised  by one project office and affects the other project office, but is not  identified by the other project office or elevated to the program level risk  list. They also include situations where a risk identified by a project office  has programwide implications, but is not elevated to the program level  risk list. For example, the operations project office identified schedule  interdependencies between the flight and operations project offices as a  medium criticality risk, but neither the flight project office nor the  program identified this risk even though it is relevant to both. As another  example, the operations project office identified the ground procurement  schedule as a major issue in its briefing to senior management, but this  risk was not identified on its own or on the programwide risk lists.
In addition, while the three offices brief senior management about their  key risks on a monthly basis, selected risks may not be accurately  depicted in these briefings because of the inconsistencies among the risk  watchlists. For example, both the flight and operations project offices  identified technical development issues as minor to moderate risk areas,  but the program office did not identify this item as a risk and, when it  briefed senior management, it noted that technical development was in  good shape. Figure 1 depicts examples of inconsistencies among risk lists  and briefings to senior management.
The lack of consistency in managing risks in areas where there are  interdependencies makes it difficult to ensure that all identified risks are  appropriately prioritized and managed. This situation hampers the  program office’s ability to identify and mitigate risks early on and to  anticipate and manage the impact of risks on other areas of the program.
section_title: Important GOES-R Management Risks Are Missing from the Program Watchlist
paragraphs: To be effective, a risk management program should have a comprehensive  list of risks. However, several key risks that impact the GOES-R  procurement and merit agency attention are not identified in the  program’s risk lists. These risks include (1) key leadership positions that  need to be filled, (2) NOAA’s limited insight into NASA’s deliverables, and  (3) insufficient management reserves (held by the program and a key  instrument contractor). At the conclusion of our review for the  accompanying report, program officials stated that they are aware of these  issues and are working to monitor them or address them, as warranted.  Nevertheless, until these and other programwide risks are identified and  addressed as part of a comprehensive risk management program, there is  increased likelihood that issues will be overlooked that could affect the  acquisition of the GOES-R system.
subsections: section_title: Key GOES-R Leadership Positions Need to be Filled
paragraphs: The two senior GOES-R program positions—the system program director  and deputy system program director—are currently filled by NASA and  NOAA personnel in an acting capacity until they can be permanently filled  by NOAA. In addition, the acting system program director is not able to  work full time in this role because she is also on a special assignment as  the NESDIS Deputy Assistant Administrator for Systems. NOAA reported  that it plans to fill the deputy system program director role in the near  future, but noted that it could take more than 6 months to fill the system  program director role. Given the approach of the development phase of  the GOES-R acquisition and the competing priorities of the acting system  program director, it is especially important that these key leadership  positions be filled quickly. At the conclusion of our review, agency  officials stated that they are aware of this issue and are working to fill the  positions, but they did not believe the issue warranted inclusion on the  program level risk watch list. However, without the senior level attention  inherent in a sound risk management program, it is not clear that NOAA is  sufficiently focused on the importance of establishing knowledgeable and  committed program executives, or in moving quickly to fill these critical  positions.
section_title: NOAA’s Insight into NASA’s Program Elements Is Limited
paragraphs: NOAA’s March 2007 decision to adopt an acquisition management  approach similar to prior GOES procurements could make the agency  vulnerable to repeating some of the problems experienced in the past. In  particular, our work on the GOES I-M series found that NOAA did not have  the ability to make quick decisions on problems because portions of the  procurement were managed by NASA. In fact, NOAA officials originally  intended to depart from this approach as a lesson they learned from the  GOES I-M acquisition, because it limited the agency’s insight and  management involvement in the procurement of major elements of the  system.
The established NOAA/NASA interagency agreements require NASA to  submit monthly contractor cost performance reports to NOAA and to alert  NOAA should cost and schedule performance drop below certain  thresholds. NASA is currently submitting the required reports and has  alerted NOAA on major cost and schedule changes. However, these  interagency agreements do not contain provisions that enable NOAA to  ensure that the data and reports are reliable and that they accurately  depict contractor performance. To do so would entail NOAA having the  ability and means to question and validate data, such as by having direct  access to the contractor.
NASA and NOAA officials reported that the two agencies are working  together with an unparalleled level of transparency and noted that NOAA  program staff have access to contractor data and can bring any questions  with the data to the relevant NASA staff. However, they acknowledged  that this process is not documented and were not able to demonstrate that  NOAA staff had questioned contract data and that NASA had facilitated  obtaining answers to the questions. By not identifying and mitigating this  risk on its program risk list, NOAA increases the likelihood that the GOES- R program will repeat the management and contractor shortfalls that  plagued past GOES procurements.
section_title: Recent Changes on a Key Instrument Have Reduced Program Management Reserve Funds and Limited Contractor Reserve Funds Leave GOES-R Vulnerable to Future Cost Increases
paragraphs: A recent modification to the critical ABI instrument contract increased its  cost, thereby reducing the amount of management reserve funds held by  the program office for unexpected expenses. In September 2006, we  reported that ABI was experiencing technical challenges, that were  resulting in cost and schedule overruns. Since then, the contractor  continued missing cost and schedule targets—a trend that continued until  February 2007. At that time, NASA modified the contract to implement a  revised baseline cost and schedule. The added cost of this modification  was funded using management reserve funds held by the GOES-R program  office. As a result, the amount of reserve held by the program office  dropped below 25 percent—a level that NOAA reported it intended to  establish as a lesson learned from other satellite acquisitions. As of July  2007, the program’s reserve level was at about 15 percent. Program  officials stated that their revised goal is to maintain between 10 and 15  percent in reserve at the program level. While maintaining a 10 to 15  percent management reserve is on par with other major satellite  acquisitions, the depletion of management reserves this early in the GOES- R acquisition raises concerns that there will be insufficient reserves during  the challenging development, integration, and testing phases to come.
In addition, the contractor for the ABI instrument has a very low level of  reserve funding for unexpected costs, which means that any unexpected  problems will likely lead to cost growth on the overall GOES-R program.  As of May 2007, the contractor was holding less than 1 percent of funding  in reserve to cover unexpected costs associated with the 40 percent of  work left to be completed. As such, there is a risk that the new baseline  could fail due to inadequate reserves to finish the program. This would  likely have a diminishing effect on the reserve held by the GOES-R flight  project and the program office to cover the costs of a second revised  baseline plan. Our prior work on system acquisitions has shown  inadequate reserves to be an indicator of poor management performance  that could lead to cost overruns. Considering that GOES-R has not yet  entered the development and production phases, it will be critical for  NOAA’s senior executive management to aggressively manage this risk. By  not identifying, mitigating, and tracking this risk in a programwide risk list,  the GOES-R program runs an increased risk that unanticipated issues on  the ABI instrument will lead to programwide cost overruns and schedule  delays.
section_title: Implementation of GAO Recommendations Should Improve NOAA’s Ability to Effectively Manage the GOES-R Procurement
paragraphs: To improve NOAA’s ability to effectively manage the procurement of the  GOES-R system, we recommended in our accompanying report that the  Secretary of Commerce direct the Undersecretary of Commerce for  Oceans and Atmosphere to take the following two actions:    Ensure that the GOES-R program office manages, mitigates, and  reports on risks using a program-level risk list that is reconciled with  and includes risks from its flight and operations project offices that  could impact the overall program.
Include the following risks on the programwide risk list, develop plans  to mitigate them, and report to senior executives on progress in  mitigating them:    unfilled or temporary GOES-R program leadership positions,  insufficient program insight on NASA contract performance, and  insufficient management reserve on the critical Advanced Baseline  Imager instrument and at the GOES-R program level.
In written comments, Commerce agreed with our recommendations to use  a program level risk list and to add selected risks to its list. The  department reported that NOAA has established a consolidated  programwide risk list that is to be used to evaluate risks during monthly  internal and external reviews. Further, NOAA acknowledges the risks  associated with having unfilled leadership positions and insufficient  management reserves and is working to mitigate these risks. However, the  department disagreed with our recommendation to manage and mitigate  the risk that NOAA has insufficient insight into NASA’s contracts. The  department cited an unparalleled level of transparency between the two  agencies and listed multiple regular meetings that the two agencies hold to  ensure close coordination. While an improved working relationship  between the two agencies is critical, NOAA has not provided any evidence  that it has been able to effectively question and validate data on NASA’s  contractor performance. Given the past problems that NOAA has  experienced in obtaining insight into NASA’s contracts and the importance  of this interagency relationship to the success of the GOES-R program, we  believe that this issue should be managed and monitored as a risk.
NOAA also requested that we acknowledge its effort to reconcile its  program estimate with the independent estimate and reflect a 20 percent  possibility that the program could cost $1 billion more than the current  estimate of $7 billion, rather than $2 billion more. We acknowledge this in  our report; however, the reconciliation effort is not complete and NOAA  did not provide us with a reconciled estimate.
In summary, although NOAA has made progress in the GOES-R  procurement, changes in the GOES-R acquisition strategy could lead to  cost overruns and schedule delays if not managed effectively. Over the last  year, NOAA has completed preliminary design studies of its GOES-R  system and decided to separate the space and ground elements of the  program into two contracts and have NASA oversee the system integration  effort. Current program plans call for a two-satellite program—estimated  to cost about $7 billion—with launch of the first satellite in December  2014. However, independent studies show that the program’s cost could  increase by about $2 billion and that the first launch could be delayed by  at least 2 years.
NOAA has taken steps to identify and address key risks but more could be  done to effectively manage risks from a programwide perspective. In  particular, the program has multiple risk watchlists that are not consistent  in areas where there are interdependencies and key risks have not been  elevated for programwide attention. Also, several risks that warrant  NOAA’s attention have not been placed on any watchlist. Specifically, the  top two leadership positions are only temporarily filled; NOAA does not  have the ability and means to obtain insight into NASA contracts in order  to validate contractor performance data; and insufficient management  reserves to handle unexpected problems on a critical instrument and at  the program level are likely to affect overall program costs when any  unexpected problems arise. Until NOAA manages and addresses a  comprehensive set of program risks, the agency’s ability to effectively  manage the GOES-R acquisition will be significantly weakened and could  lead to substantial program overruns and delays.
Mr. Chairman, this concludes my statement. I would be happy to answer  any questions that you or members of the subcommittee may have at this  time.
If you have any questions on matters discussed in this testimony, please  contact me at (202) 512-9286 or by e-mail at pownerd@gao.gov. Other key  contributors to this testimony include Carol Cha, Neil Doherty, Nancy  Glover, Colleen Phillips (Assistant Director), and Teresa Smith.
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