Polar-Orbiting Operational Environmental Satellites: Technical Problems, Cost Increases, and Schedule Delays Trigger Need for Difficult Trade-off Decisions
Published: 2005-11-16T00:00:00

Fast Facts:

Highlights:
section_title: Why GAO Did This Study
paragraphs: Polar-orbiting environmental satellites provide data and imagery that are used by weather forecasters, climatologists, and the military to map and monitor changes in weather, climate, the oceans, and the environment. Our nation's current operational polar-orbiting environmental satellite program is a complex infrastructure that includes two satellite systems, supporting ground stations, and four central data processing centers. In the future, the National Polar-orbiting Operational Environmental Satellite System (NPOESS) is to combine the two current systems into a single, state-of-the-art environment-monitoring satellite system. This new satellite system is considered critical to the United States' ability to maintain the continuity of data required for weather forecasting and global climate monitoring through the year 2020. GAO was asked to discuss the NPOESS program's schedule, cost, trends, and risks, and to describe plans and implications for moving the program forward.
section_title: What GAO Found
paragraphs: The NPOESS program has experienced continued schedule delays, cost increases, and technical challenges over the last several years. The schedule for the launch of the first satellite has been delayed by at least 17 months (until September 2010 at the earliest), and this delay could result in a gap in satellite coverage of at least 3 years if the last satellite in the prior series fails on launch. Program life cycle cost estimates have grown from $6.5 billion in 2002 to $8.1 billion in 2004 and are still growing. While the program is currently reassessing its life cycle cost estimates, our analysis of contractor trends as of September 2005 shows a likely $1.4 billion contract cost overrun--bringing the life cycle cost estimate to about $9.7 billion. Technical risks in developing key sensors continue, and could lead to further cost increases and schedule delays. As a result of expected program cost growth, the Executive Committee responsible for the program is evaluating options for moving the program forward--and new cost estimates for those options. Key options under consideration in August 2005 included removing a key sensor from the first satellite, delaying launches of the first two satellites, and not launching a preliminary risk-reduction satellite. All of these options impact the program's cost, schedules, and the system users who rely on satellite data to develop critical weather products and forecasts--although the full extent of that impact is not clear. Further, last week GAO was informed that there are nine new options now under consideration, and that they are likely to impact costs, schedules, and system users. Until a decision is made, the program remains without a plan for moving forward. Further, there are opportunity costs in not making a decision--some options are lost and others may become more difficult. Given the history of large cost increases and the factors that could further affect NPOESS costs and schedules, continued oversight, strong leadership, and timely decision making are more critical than ever.

section_title: Letter
paragraphs: We appreciate the opportunity to participate in today’s hearing to discuss  our work on the planned National Polar-orbiting Operational  Environmental Satellite System (NPOESS) program. NPOESS is expected  to be a state-of-the-art environment-monitoring satellite system that will  replace two existing polar-orbiting environment satellite systems. Polar- orbiting satellites provide data and imagery that are used by weather  forecasters, climatologist, and the military to map and monitor changes in  weather, climate, the oceans, and the environment. The NPOESS program  is considered critical to the United States’ ability to maintain the  continuity of data required for weather forecasting and global climate  monitoring through the year 2020. At your request, we will discuss the  NPOESS program’s schedule, cost, trends, and risks, and describe plans  and implications for moving the program forward.
This statement builds on other work we have done on environmental  satellite programs over the last several years. As agreed with your staff  members, we plan to continue our oversight of this program. An overview  of the approach we used to perform this work—our objectives, scope, and  methodology, is provided in appendix I.
subsections: section_title: Background
paragraphs: Since the 1960s, the United States has operated two separate operational  polar-orbiting meteorological satellite systems: the Polar-orbiting  Operational Environmental Satellites (POES), managed by the National  Oceanic and Atmospheric Administration (NOAA) and the Defense  Meteorological Satellite Program (DMSP), managed by the Department of  Defense (DOD). The satellites obtain environmental data that are  processed to provide graphical weather images and specialized weather  products and are the predominant input to numerical weather prediction  models. These images, products, and models are all used by weather  forecasters, the military, and the public. Polar satellites also provide data  used to monitor environmental phenomena, such as ozone depletion and  drought conditions, as well as data sets that are used by researchers for a  variety of studies, such as climate monitoring.
Unlike geostationary satellites, which maintain a fixed position above the  earth, polar-orbiting satellites constantly circle the earth in an almost  north-south orbit, providing global coverage of conditions that affect the  weather and climate. Each satellite makes about 14 orbits a day. As the  earth rotates beneath it, each satellite views the entire earth’s surface  twice a day. Currently, there are two operational POES satellites and two  operational DMSP satellites that are positioned so that they can observe  the earth in early morning, mid morning, and early afternoon polar orbits.  Together, they ensure that, for any region of the earth, the data provided  to users are generally no more than 6 hours old. Figure 1 illustrates the  current operational polar satellite configuration. Besides the four  operational satellites, six older satellites are in orbit that still collect some  data and are available to provide some limited backup to the operational  satellites should they degrade or fail. In the future, both NOAA and DOD  plan to continue to launch additional POES and DMSP satellites every few  years, with final launches scheduled for 2007 and 2011, respectively.
Each of the polar satellites carries a suite of sensors designed to detect  environmental data that are either reflected or emitted from the earth, the  atmosphere, and space. The satellites store these data and then transmit  them to NOAA and Air Force ground stations when the satellites pass  overhead. The ground stations then relay the data via communications  satellites to the appropriate meteorological centers for processing. The  satellites also broadcast a subset of these data in real time to tactical  receivers all over the world.
Under a shared processing agreement among four satellite data processing  centers—NOAA’s National Environmental Satellite Data and Information  Service (NESDIS), the Air Force Weather Agency, the Navy’s Fleet  Numerical Meteorology and Oceanography Center, and the Naval  Oceanographic Office—different centers are responsible for producing  and distributing, via a shared network, different environmental data sets,  specialized weather and oceanographic products, and weather prediction  model outputs. Each of the four processing centers is also responsible for  distributing the data to its respective users. For the DOD centers, the users  include regional meteorology and oceanography centers, as well as  meteorology and oceanography staff on military bases. NESDIS forwards  the data to NOAA’s National Weather Service for distribution and use by  government and commercial forecasters. The processing centers also use  the Internet to distribute data to the general public. NESDIS is responsible  for the long-term archiving of data and derived products from POES and  DMSP.
In addition to the infrastructure supporting satellite data processing noted  above, properly equipped field terminals that are within a direct line of  sight of the satellites can receive real-time data directly from the polar- orbiting satellites. There are an estimated 150 such field terminals  operated by U.S. and foreign governments and academia. Field terminals  can be taken into areas with little or no data communications  infrastructure—such as on a battlefield or a ship—and enable the receipt  of weather data directly from the polar-orbiting satellites. These terminals  have their own software and processing capability to decode and display a  subset of the satellite data to the user. Figure 2 depicts a generic data relay  pattern from the polar-orbiting satellites to the data processing centers  and field terminals.
subsections: section_title: NPOESS Overview
paragraphs: Given the expectation that combining the POES and DMSP programs  would reduce duplication and result in sizable cost savings, a May 1994  Presidential Decision Directive required NOAA and DOD to converge the  two satellite programs into a single satellite program capable of satisfying  both civilian and military requirements. The converged program, NPOESS,  is considered critical to the United States’ ability to maintain the  continuity of data required for weather forecasting and global climate  monitoring through the year 2020. To manage this program, DOD, NOAA,  and the National Aeronautics and Space Administration (NASA) formed a  tri-agency Integrated Program Office, located within NOAA.
Within the program office, each agency has the lead on certain activities.  NOAA has overall program management responsibility for the converged  system and for satellite operations; DOD has the lead on the acquisition;  and NASA has primary responsibility for facilitating the development and  incorporation of new technologies into the converged system. NOAA and  DOD share the costs of funding NPOESS, while NASA funds specific  technology projects and studies. Figure 3 depicts the organizations  comprising the Integrated Program Office and lists their responsibilities.
Program acquisition plans call for the procurement and launch of six  NPOESS satellites over the life of the program, as well as the integration of  13 instruments, consisting of 10 environmental sensors and 3 subsystems.  Together, the sensors are to receive and transmit data on atmospheric,  cloud cover, environmental, climate, oceanographic, and solar-geophysical  observations. The subsystems are to support nonenvironmental search  and rescue efforts, sensor survivability, and environmental data collection  activities. According to the program office, 7 of the 13 planned NPOESS  instruments involve new technology development, whereas 6 others are  based on existing technologies. In addition, the program office considers 4  of the sensors involving new technologies critical, because they provide  data for key weather products; these sensors are shown in bold in table 1,  which lists the planned instruments and the state of technology on each.
In addition to the sensors and subsystems listed above, in August 2004, the  President directed NASA and the Departments of Defense, the Interior,  and Commerce to place a LANDSAT-like imagery capability on the  NPOESS platform. This new capability is to collect imagery data of the  earth’s surface similar to the current LANDSAT series of satellites, which  are managed by the Department of Interior’s U.S. Geological Survey and  are reaching the end of their respective lifespans. One instrument was  launched in 1984 and is now long past its 3-year design life; the newer  satellite is not fully operational. LANDSAT is an important tool in  environmental monitoring efforts, including land cover change, vegetation  mapping, and wildfire effects. The decision to add a LANDSAT-like sensor  to the NPOESS platform is currently being revisited by the President’s  Office of Science and Technology Policy and the Office of Management  and Budget.
In addition, the NPOESS Preparatory Project (NPP), which is being  developed as a major risk reduction and climate data continuity initiative,  is a planned demonstration satellite to be launched several years before  the first NPOESS satellite is to be launched. It is planned to host three of  the four critical NPOESS sensors (the visible/infrared imager radiometer  suite, the cross-track infrared sounder, and the advanced technology  microwave sounder), as well as a noncritical sensor (the ozone  mapper/profiler suite). NPP will provide the program office and the  processing centers an early opportunity to work with the sensors, ground  control, and data processing systems. Specifically, this satellite is expected  to demonstrate the validity of about half of the NPOESS environmental  data records and about 93 percent of its data processing load.
section_title: NPOESS Acquisition Strategy
paragraphs: NPOESS is a major system acquisition that consists of three key phases:  the concept and technology development phase, which lasted from  roughly 1995 to early 1997; the program definition and risk reduction  phase which began in early 1997 and ended in August 2002; and the  engineering and manufacturing development and production phase, which  began with the award of the development and production contract in  August 2002 and will continue through the end of the program. Before the  contract was awarded in 2002, the life cycle cost estimate for the program  was estimated to be $6.5 billion over the 24-year period from the inception  of the program in 1995 through 2018. Shortly after the contract was  awarded, the life cycle cost estimate grew to $7 billion.
When the NPOESS development contract was awarded, program officials  identified an anticipated schedule and funding stream for the program.  The schedule for launching the satellites was driven by a requirement that  the satellites be available to back up the final POES and DMSP satellites  should anything go wrong during the planned launches of these satellites.  In general, program officials anticipate that roughly 1 out of every 10  satellites will fail either during launch or during early operations after  launch.
Early program milestones included (1) launching NPP by May 2006,  (2) having the first NPOESS satellite available to back up the final POES  satellite launch in March 2008, and (3) having the second NPOESS satellite  available to back up the final DMSP satellite launch in October 2009. If the  NPOESS satellites were not needed to back up the final predecessor  satellites, their anticipated launch dates would have been April 2009 and  June 2011, respectively.
In 2003, we reported that these schedules were subsequently changed as a  result of changes in the NPOESS funding stream. A DOD program official  reported that between 2001 and 2002 the agency experienced delays in  launching a DMSP satellite, causing delays in the expected launch dates of  another satellite. In late 2002, DOD shifted the expected launch date for  the final satellite from 2009 to 2010. As a result, the department reduced  funding for NPOESS by about $65 million between fiscal years 2004 and  2007. According to program officials, because NOAA is required to provide  the same level of funding that DOD provides, this change triggered a  corresponding reduction in funding by NOAA for those years. As a result  of the reduced funding, program officials were forced to make difficult  decisions about what to focus on first. The program office decided to keep  NPP as close to its original schedule as possible, because of its importance  to the eventual NPOESS development, and to shift some of the NPOESS  deliverables to later years. This shift affected the NPOESS deployment  schedule. To plan for this shift, the program office developed a new  program cost and schedule baseline.
After this new baseline was completed in 2004, we reported that the  program office increased the NPOESS cost estimate from about $7 billion  to $8.1 billion, and delayed key milestones, including the planned launch  of the first NPOESS satellite—which was delayed by 7 months. The cost  increases reflected changes to the NPOESS contract as well as increased  program management funds. According to the program office, contract  changes included extension of the development schedule, increased  sensor costs, and additional funds needed for mitigating risks. Increased  program management funds were added for non-contract costs and  management reserves.
We also noted that other factors could further affect the revised cost and  schedule estimates. Specifically, the contractor was not meeting expected  cost and schedule targets of the new baseline because of technical issues  in the development of key sensors. Based on its performance through May  2004, we estimated that the contractor would most likely overrun its  contract at completion in September 2011 by $500 million. In addition, we  reported that risks associated with the development of the critical sensors,  integrated data processing system, and algorithms, among other things,  could contribute to further cost increases and schedule slips.
section_title: NPOESS Schedules, Costs, and Trends Continue to Worsen
paragraphs: Over the past year, NPOESS cost increases and schedule delays have  demonstrated worsening trends. NPOESS has continued to experience  problems in the development of a key sensor, resulting in schedule delays  and anticipated cost increases. Further, contractor data show that costs  and schedules are likely to continue to increase in the future. Our trend  analysis shows that the contractor will most likely overrun costs by $1.4  billion, resulting in a life cycle cost of about $9.7 billion, unless critical  changes are made. Program risks, particularly with the development of  critical sensors, could further increase NPOESS costs and delay schedules.  Management problems at multiple levels—subcontractor, contractor,  program office, and executive leadership—have contributed to these cost  and schedule issues.
subsections: section_title: NPOESS Sensor Problems Triggered Schedule Delays and Cost Increases
paragraphs: NPOESS has continued to experience problems in the development of a  key sensor, resulting in schedule delays and anticipated cost increases. In  early 2005, the program office learned that a subcontractor could not meet  cost and schedule due to significant technical issues on the visible/infrared  imager radiometer suite (VIIRS) sensor—including problems with the  cryoradiator, excessive vibration of sensor parts, and errors in the  sensor’s solar calibration. These technical problems were further  complicated by inadequate process engineering and management  oversight by the VIIRS subcontractor. To address these issues, the  program office provided additional funds for VIIRS, capped development  funding for the conical-scanned microwave imager/sounder (CMIS) and  the ozone mapper/profiler suite sensors, and revised its schedule in order  to keep the program moving forward.
By the summer of 2005, the program office reported that significant  technical issues had been resolved—but they had a significant impact on  the overall NPOESS program. Regarding NPOESS schedule, the program  office anticipated at least a 10-month delay in the launch of the first  satellite (totaling at least a 17-month delay from the time the contract was  awarded) and a 6-month delay in the launch of the second satellite. A  summary of recent schedule changes is shown in table 2. The effect of  these delays is evident in the widening gap between when the last POES  satellite is expected to launch and when the first NPOESS satellite could  be available if needed as a backup. This is significant because if the last  POES satellite fails on launch, it will be at least 3 years before the first  NPOESS satellite could be launched. During that time, critical weather and  environmental observations would be unavailable—and military and  civilian weather products and forecasts would be significantly degraded.
As for NPOESS costs, program officials reported that the VIIRS  development problems caused the program to overrun its budget, and that  they need to reassess options for funding the program. They did not  provide an updated cost estimate, noting that new cost estimates are  under development. A summary of recent program cost growth is shown  in table 3.
section_title: Trends in Contractor Data Show Continued Cost and Schedule Overruns; Overall Costs Projected to Grow
paragraphs: In addition to the overall program office cost and schedule estimates, it is  valuable to assess contractor data to monitor the contractor’s progress in  meeting deliverables since contractor costs comprise a substantial portion  of the overall program costs. NPOESS contractor data show a pattern of  cost and schedule overruns—and a most likely contract cost growth of  about $1.4 billion.
One method project managers use to track contractor progress on  deliverables is earned value management. This method, used by DOD for  several decades, compares the value of work accomplished during a given  period with that of the work expected in that period. Differences from  expectations are measured in both cost and schedule variances. Cost  variances compare the earned value of the completed work with the actual  cost of the work performed. For example, if a contractor completed $5  million worth of work and the work actually cost $6.7 million, there would  be a –$1.7 million cost variance. Schedule variances are also measured in  dollars, but they compare the earned value of the work completed to the  value of work that was expected to be completed. For example, if a  contractor completed $5 million worth of work at the end of the month,  but was budgeted to complete $10 million worth of work, there would be a  –$5 million schedule variance. Positive variances indicate that activities  are costing less or are completed ahead of schedule. Negative variances  indicate that activities are costing more or are falling behind schedule.  These cost and schedule variances can then be used in estimating the cost  and time needed to complete the program.
Using contractor-provided data, our analysis indicates that NPOESS cost  performance continues to experience negative variances. Figure 4 shows  the 6-month cumulative cost variance for the NPOESS contract. From  March 2005 to September 2005, the contractor exceeded its cost target by  $103.7 million, which is about 9 percent of the contractor’s budget for that  time period. The contractor has incurred a total cost overrun of $253.8  million with NPOESS development only about 36 percent complete. This  information is useful because trends often tend to continue and can be  difficult to reverse unless management attention is focused on key risk  areas and risk mitigation actions are aggressively pursued. Studies have  shown that, once programs are 15 percent complete, the performance  indicators are indicative of the final outcome.
Based on contractor performance from March 2005 to September 2005, we  estimate that the current NPOESS contract will overrun its budget—worth  approximately $3.4 billion—by between $788 million and $2 billion. Our  projection of the most likely cost overrun is about $1.4 billion. The  contractor, in contrast, estimates about a $371 million overrun at  completion of the NPOESS contract. Adding our projected $1.4 billion  overrun to the prior $8.1 billion life cycle cost estimate and the project  office’s estimated need for $225 million in additional management costs  brings the total life cycle cost of the program to about $9.7 billion.
Our analysis also indicates that the contract is showing a negative  schedule variance. Figure 5 shows the 6-month cumulative schedule  variance of NPOESS. From March 2005 to September 2005, the contractor  was unable to complete $27.8 million worth of scheduled work. In  September, the contractor was able to improve its overall schedule  performance because of an unexpectedly large amount of work being  completed on the spacecraft (as opposed to the sensors). It was not a  reflection of an improvement in the contractor’s ability to complete work  on the critical sensors. Specifically, performance on the development of  critical sensors over the past 6 months continued to be poor, which  indicates that schedule performance will likely remain poor in the future.  This is of concern because an inability to meet contract schedule  performance could be a predictor of future rising costs, as more spending  is often necessary to resolve schedule overruns.
section_title: Risks Could Further Affect NPOESS Cost and Schedules
paragraphs: 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, resolving, and monitoring project risks.
Program officials reported that they recognize several risks with the  overall program and critical sensors that, if not mitigated, could further  increase costs and delay the schedule. In accordance with leading  management practices, the program office developed a NPOESS risk  management program that requires assigning a severity rating to risks that  bear particular attention, placing these risks in a database, planning  response strategies for each risk in the database, and reviewing and  evaluating risks in the database during monthly program risk management  board meetings.
The program office identifies risks in two categories: program risks, which  affect the whole NPOESS program and are managed at the program office  level, and segment risks, which affect only individual segments and are  managed at the integrated product team level. The program office has  identified 17 program risks, including 10 medium to medium-high risks.  Some of these risks include the delivery of four sensors (VIIRS, CMIS, the  cross-track infrared sounder and the ozone mapper/profiler suite) and the  integrated data processing system; and the uncertainty that algorithms will  meet system performance requirements. Figure 6 identifies the 17 program  risks and their assigned levels of risk.
Managing the risks associated with the development of VIIRS, the ozone  mapper/profiler suite, the cross-track infrared sounder, the integrated data  processing system, and algorithm performance is of particular importance  because these are to be demonstrated on the NPP satellite that is currently  scheduled for launch in April 2008. The risks with the development of  CMIS are also important because CMIS is one of the four critical sensors  providing data for key weather products.
At present, the program office considers two critical sensors—VIIRS and  CMIS—to present key program risks because of technical challenges that  each is facing. In addition to the previously reported VIIRS problems, the  sensor continues to experience significant problems dealing with the  technical complexity of the ground support equipment. The testing of  optical and solar diffuser components has also been more challenging than  expected and is taking longer than planned to complete. In addition, the  delivery of components for integration onto the sensor, including the  electronics material from two subcontractors, has been behind schedule  due to technical challenges. Until the current technical issues are resolved,  delays in the VIIRS delivery and integration onto the NPP satellite remain a  potential threat to the expected launch date of the NPP.
The CMIS sensor is experiencing schedule overruns that may threaten its  expected delivery date. Based on the prime contractor’s analysis, late  deliveries of major CMIS subsystems will occur unless the current  schedule is extended. For example, the simulator hardware is already  expected to be delivered late, based on the current contractual  requirement of December 2006. CMIS also continues to experience  technical challenges in the design of the radio frequency receivers, the  structure, and the antenna. In addition, extensive effort has been  expended to resolve system reliability and thermal issues, among other  things. To the program office’s credit, it is aware of these risks and is using  its risk management plans to help mitigate them.
section_title: Current Program Issues Due, In Part, to Problems at Multiple Management Levels
paragraphs: Problems involving multiple levels of management—including  subcontractor, contractor, program office, and executive leadership—have  played a role in bringing the NPOESS program to its current state. As  noted earlier, VIIRS sensor development issues were attributed, in part, to  the subcontractor’s inadequate project management. Specifically, after a  series of technical problems, internal review teams sent by the prime  contractor and the program office found that the VIIRS subcontractor had  deviated from a number of contract, management, and policy directives set  out by the main office and that both management and process engineering  were inadequate. Neither the contractor nor the program office recognized  the underlying problems in time to fix them. After these issues were  identified, the subcontractor’s management team was replaced. Further, in  January 2005, the NPOESS Executive Committee (Excom) called for an  independent review of the VIIRS problems. This independent review,  delivered in August 2005, reported that the program management office  did not have the technical system engineering support it needed to  effectively manage the contractor, among other things. Additionally, the  involvement of NPOESS executive leadership has wavered from frequent  heavy involvement to occasional meetings with few resulting decisions.  Specifically, the Excom has met five times over the last 2 years. Most of  these meetings did not result in major decisions, but rather triggered  further analysis and review. For instance, program officials and the  program’s Tri-agency Steering Commitee identified five options to present  at the executive committee meeting in mid-August 2005 and expected to  receive direction on how to proceed with the project. The Excom did not  select an option. Instead, it requested further analysis of the options by  another independent review team, and an independent cost estimate by  DOD’s Cost Analysis Improvement Group.
Sound management is critical to program success. In our reviews of major  acquisitions throughout the government, we have reported that sound  program management, contractor oversight, risk identification and  escalation, and effective and timely executive level oversight are key  factors determining a project’s ability to be delivered on time, within  budget, and with promised functionality. Given the history of large cost  increases and the factors that could further affect NPOESS costs and  schedules, continued oversight, strong leadership, and timely decision  making are more critical than ever.
section_title: Options for Moving Forward Are under Consideration, but Cost, Schedule, and Impact on Users Are Not Fully Understood
paragraphs: In August 2005, the program office briefed its Executive Committee on the  program’s cost, schedule, and risks. The program office noted that the  budget for the program was no longer executable and offered multiple  alternatives for reconfiguring the program. Specifically, the program office  and contractor developed 26 options during the March to August 2005  timeframe. Of these options, the Tri-agency Steering Committee selected  five options, shown in table 4. All of these options alter the costs,  schedules, and deliverables for the program. While the options’  preliminary life cycle cost estimates range from $8.8 billion to $9.2 billion,  they all involve reductions in functionality and limited probabilities for  meeting schedules within the cited budgets. None of the options presented  discussed the potential for adding funding in the short term to hold off  longer-term life cycle cost increases.
Project officials anticipated that at its August meeting, the Excom would  decide on an option and provide directions for keeping the project moving.  However, Excom officials requested further analysis and detailed cost  estimates, and they deferred a decision among alternatives until December  2005.
subsections: section_title: New Options Under Consideration Would Affect Cost, Schedule, and System Users; Full Extent Unknown
paragraphs: Last week, we learned that in addition to the five options presented in  August 2005, program executives are considering nine new options. While  we were not provided any details about the nine new options, program  officials informed us that they too will affect NPOESS costs, schedule, and  promised functionality for system users—although their full impact is not  yet clear. Program officials expect the Excom to decide on a limited  number of options on November 22, 2005, and to obtain independent cost  estimates of those options and make a decision to implement one of the  options in December 2005. After a decision is made, the prime contractor  will need time to develop more precise cost estimates and the program  office with need to renegotiate the contract. Until a decision is made, the  program remains without a plan for moving forward. Further, there are  opportunity costs in not making a decision—that is, some options may no  longer be viable, contractors are not working towards a chosen solution,  and other potential options become more difficult to implement  Clearly, timely decisions are needed to allow the program to move forward  and for satellite data users to start planning for any data shortfalls they  may experience. Until a decision is made on how the program is to  proceed, the contractor and program office cannot start to implement the  chosen solution and some decisions, such as the ability to hold schedule  slips to a minimum, become much more difficult.
In summary, NPOESS is a program in crisis. Over the last few years, it has  been troubled by technical problems, cost increases, and schedule delays.  Looking forward, technical challenges persist; costs are likely to grow; and  schedule delays could lead to gaps in satellite coverage. Program officials  and executives are considering various options for dropping functionality  in order to handle cost and schedule increases, but the full impact of these  options is not clear. Moving forward, continued oversight, strong  leadership, and informed and timely decision making are more critical  than ever.
This concludes my statement. I would be pleased to respond to any  questions that you or other members of the Committee may have at this  time.
section_title: Contact and Acknowledgements
paragraphs: If you have any questions regarding this testimony, please contact David  Powner at (202) 512-9286 or by email at pownerd@gao.gov. Individuals  making contributions to this testimony include Carol Cha, Neil Doherty,  Joanne Fiorino, Kathleen S. Lovett, Colleen Phillips, and Karen Richey.
section_title: Appendix I: Objectives, Scope, and Methodology
paragraphs: Our objectives were to (1) discuss the National Polar-orbiting Operational  Environmental Satellite System (NPOESS) program’s schedule, cost,  trends, and risks and (2) describe plans and implications for moving the  program forward. To accomplish these objectives, we focused our review  on the Integrated Program Office, the organization responsible for the  overall NPOESS program. We also met with officials from the Department  of Defense, the National Aeronautics and Space Administration, and  NOAA’s National Weather Service and National Environmental Satellite  Data and Information Service to discuss user needs for the program.
To identify schedule and cost changes, we reviewed program office  contract data, the Executive Committee minutes and briefings, and an  independent review team study, and we interviewed program officials. We  compared changes in NPOESS cost and schedule estimates to prior cost  and schedule estimates as reported in our July 2002 and July 2003  testimonies and in our September 2004 report.
To identify trends that could affect the program baseline in the future, we  assessed the prime contractor’s cost and schedule performance. To make  these assessments, we applied earned value analysis techniques to data  from contractor cost performance reports. We compared the cost of work  completed with the budgeted costs for scheduled work for a 6-month  period, from March to September 2005, to show trends in cost and  schedule performance. We also used data from the reports to estimate the  likely costs at the completion of the prime contract through established  earned value formulas. This resulted in three different values, with the  middle value being the most likely. We used the base contract without  options for our earned value assessments.
To identify risks, we reviewed program risk management documents and  interviewed program officials. Further, we evaluated earned value cost  reports to determine the key risks that negatively affect NPOESS’s ability  to maintain the current schedule and cost estimates.
To assess options and implications for moving the program forward, we  reviewed the five options presented at the Executive Committee briefing  and met with representatives of the National Weather Service and National  Environmental Satellite Data and Information Service to obtain their views  on user’s needs and priorities for satellite data.
NOAA officials generally agreed with the facts presented in this statement  and provided some technical corrections, which we have incorporated. We  performed our work at the Integrated Program Office, DOD, NASA, and  NOAA in the Washington, D.C., metropolitan area, between June 2005 and  November 2005, in accordance with generally accepted government  auditing standards.
This is a work of the U.S. government and is not subject to copyright protection in the  United States. It may be reproduced and distributed in its entirety without further  permission from GAO. However, because this work may contain copyrighted images or  other material, permission from the copyright holder may be necessary if you wish to  reproduce this material separately.