Space Acquisitions: DOD Delivering New Generations of Satellites, but Space System Acquisition Challenges Remain
Published: 2011-05-11T00:00:00

Fast Facts:

Highlights:
section_title: Why GAO Did This Study
paragraphs: Despite decades of significant investment, most of the Department of Defense's (DOD) large space acquisition programs have collectively experienced billions of dollars in cost increases, stretched schedules, and increased technical risks. Significant schedule delays of as much as 9 years have resulted in potential capability gaps in missile warning, military communications, and weather monitoring. These problems persist, with other space acquisition programs still facing challenges in meeting their targets and aligning the delivery of assets with appropriate ground and user systems. To address cost increases, DOD reduced the number of satellites it would buy, reduced satellite capabilities, or terminated major space system acquisitions. Broad actions have also been taken to prevent their occurrence in new programs, including better management of the acquisition process and oversight of its contractors and resolution of technical and other obstacles to DOD's ability to deliver capability. This testimony will focus on the (1) status of space system acquisitions, (2) results of GAO's space-related reviews over the past year and the challenges they signify, (3) efforts DOD has taken to address causes of problems and increase credibility and success in its space system acquisitions as well as efforts currently underway, and (4) what remains to be done.
section_title: What GAO Found
paragraphs: Over the past two decades, DOD has had difficulties with nearly every space acquisition program, with years of cost and schedule growth, technical and design problems, and oversight and management weaknesses. However, to its credit, DOD continues to make progress on several of its programs--such as the Space Based Infrared System High and Advanced Extremely High Frequency programs--and is expecting to deliver significant advances in capability as a result. But other programs continue to be susceptible to cost and schedule challenges. For example, the Global Positioning System (GPS) IIIA program's total cost has increased by about 10 percent over its original estimate, and delays in the Mobile User Objective System continue the risk of a capability gap in ultra high frequency satellite communications. In 2010, GAO assessed DOD's efforts to (1) upgrade and sustain GPS capabilities and (2) commercialize or incorporate into its space acquisition program the space technologies developed by small businesses. These reviews underscore the varied challenges that still face the DOD space community as it seeks to complete problematic legacy efforts and deliver modernized capabilities--for instance, the need for more focused coordination and leadership for space activities--and highlight the substantial barriers and challenges that small businesses must overcome to gain entry into the government space arena. DOD continues to work to ensure that its space programs are more executable and produce a better return on investment. Many of the actions it has been taking address root causes of problems, though it will take time to determine whether these actions are successful. For example, DOD is working to ensure that critical technologies are matured before large-scale acquisition programs begin and requirements are defined early in the process and are stable throughout. Additionally, DOD and the Air Force are working to streamline management and oversight of the national security space enterprise. While DOD actions to date have been good, more changes to processes, policies, and support may be needed--along with sustained leadership and attention--to help ensure that these reforms can take hold, including addressing the diffuse leadership for space programs. While some changes to the leadership structure have recently been made and others are being studied, it is too early to tell how effective they will be in streamlining management and oversight of space system acquisitions. Finally, while space system acquisition workforce capacity is essential if new weapon programs are to be successful, DOD continues to face gaps in technical and programmatic expertise for space.

section_title: Letter
paragraphs: I am pleased to be here today to discuss the Department of Defense’s  (DOD) space acquisitions. Each year, DOD spends billions of dollars to  acquire space-based capabilities to support current military and other  government operations, as well as to enable DOD to transform the way it  collects and disseminates information. Despite the significant investment  in space, the majority of large-scale acquisition programs in DOD’s space  portfolio have experienced problems during the past two decades that  have driven up costs by hundreds of millions and even billions of dollars,  stretched schedules by years, and increased technical risks. To address the  cost increases, DOD altered its acquisitions by reducing the number of  satellites it intended to buy, reducing the capabilities of the satellites, or  terminating major space system acquisitions. Moreover, along with the  cost increases, many space acquisitions have experienced significant  schedule delays—of as much as 9 years—resulting in potential capability  gaps in areas such as missile warning, military communications, and  weather monitoring. These problems persist; however, the Air Force and  the Office of the Secretary of Defense have taken a wide range of actions  to prevent them from occurring in new programs.
My testimony today will focus on the (1) the status of space system  acquisitions, (2) results of our space-related reviews over the past year and  the challenges they signify, (3) the efforts DOD has taken to address  causes of problems and increase credibility and success in its space  system acquisitions as well as efforts currently under way, and (4) what  remains to be done. Notably, DOD has acknowledged the acquisition  problems of the past and recognizes the need for better management of  the acquisition process and oversight of its contractors. More important,  several high-risk space programs appear to have finally resolved technical  and other obstacles and have started to or are close to beginning to deliver  capability. However, other space acquisition programs—including the  Global Positioning System (GPS) IIIA and Mobile User Objective System  (MUOS)—continue to face challenges in meeting their cost and schedule  targets and aligning the delivery of space assets with the ground and user  systems needed to support and take advantage of new capability.  Moreover, it may take years for acquisition improvements to take root and  produce benefits that will enable DOD to realize a better return on its  investment in space. Importantly, DOD has taken steps to decide how to  best organize, lead, and support space activities. But more may be needed  in light of the wide range of stakeholders and past issues with diffuse  leadership.
The work that supports this statement was performed in accordance with  generally accepted government auditing standards. Those standards  require that we plan and perform the audit to obtain sufficient, appropriate  evidence to provide a reasonable basis for our findings and conclusions  based on our audit objectives. We believe that the evidence obtained  provides a reasonable basis for our findings and conclusions based on our  audit objectives. Additional details on our scope and methodology are  provided in appendix II.
subsections: section_title: Status of Space Acquisitions: Challenges Persist
paragraphs: A long-standing problem in DOD space acquisitions is that program and  unit costs tend to go up significantly from initial cost estimates, while in  some cases the capability that was to be delivered goes down. Figure 1  compares original cost estimates and current cost estimates for the  broader portfolio of major space acquisitions for fiscal years 2010 through  2015. The wider the gap between original and current estimates, the fewer  dollars DOD has available to invest in new programs. As shown in the  figure, cumulative estimated costs for the major space acquisition  programs have increased by about $13.9 billion from initial estimates for  fiscal years 2010 through 2015, almost a 286 percent increase. The  declining investment in the later years is the result of mature programs  that have planned lower out-year funding, cancellation of several  development efforts, and the exclusion of space acquisition efforts for  which total cost data were unavailable (such as new investments).
When space system investments other than established acquisition  programs of record—such as the Defense Weather Satellite System  (DWSS) and Space Fence programs—are also considered, DOD’s space  acquisition investments remain significant through fiscal year 2016, as  shown in figure 2. Although estimated costs for selected space acquisition  programs decrease 21 percent between fiscal years 2010 and 2015, they  start to increase in fiscal year 2016. And, according to current DOD  estimates, costs for two programs— Advanced Extremely High Frequency  (AEHF) and Space Based Infrared System (SBIRS) High—are expected to  significantly increase in fiscal years 2017 and 2018. The costs are  associated with the procurement of additional blocks of satellites and are  not included in the figure because they have not yet been reported or  quantified.
Figures 3 and 4 reflect differences in total program and unit costs for  satellites from the time the programs officially began to their most recent  cost estimates. As figure 4 shows, in several cases, DOD has increased the  number of satellites. The figures reflect total program cost estimates  developed in fiscal year 2010.
Several space acquisition programs are years behind schedule. Figure 5  highlights the additional estimated months needed for programs to launch  their first satellites. These additional months represent time not  anticipated at the programs’ start dates. Generally, the further schedules  slip, the more DOD is at risk of not sustaining current capabilities. For  example, delays in launching the first MUOS satellite have placed DOD’s  ultra high frequency communications capabilities at risk of falling below  the required availability level.
subsections: section_title: Some Acquisition Programs Appear to Have Overcome Problems, but Other Programs Still Susceptible to Cost and Schedule Overruns
paragraphs: DOD had long-standing difficulties on nearly every space acquisition  program, struggling for years with cost and schedule growth, technical or  design problems, as well as oversight and management weaknesses.  However, to its credit, it continues to make progress on several of its high- risk space programs, and is expecting to deliver significant advances in  capability as a result. The Missile Defense Agency’s (MDA) Space Tracking  and Surveillance System (STSS) demonstration satellites were launched in  September 2009. Additionally, DOD launched its first GPS IIF satellite in  May 2010 and plans to launch the second IIF satellite in June 2011—later  than planned, partially because of system-level problems identified during  testing. It also launched the first AEHF satellite in August 2010—although  it has not yet reached its final planned orbit because of an anomaly with  the satellite’s propulsion system—and launched the Space Based Space  Surveillance (SBSS) Block 10 satellite in September 2010. DOD is  scheduled to launch a fourth Wideband Global SATCOM (WGS) satellite  broadening communications capability available to warfighters—in late  2011, and a fifth WGS satellite in early 2012. The Evolved Expendable  Launch Vehicle (EELV) program had its 41st consecutive successful  operational launch in May of this year.
One program that appears to have recently overcome remaining technical  problems is the SBIRS High satellite program. The first of six  geosynchronous earth-orbiting (GEO) satellites (two highly elliptical orbit  sensors have already been launched) was launched in May 2011 and is  expected to continue the missile warning mission with sensors that are  more capable than the satellites currently on orbit. Total cost for the  SBIRS High program is currently estimated at over $18 billion for six GEO  satellites, representing a program unit cost of over $3 billion, about 233  percent more than the original unit cost estimate. Additionally, the launch  of the first GEO satellite represents a delay of approximately 9 years. The  reasons for the delay include poor government oversight of the contractor,  unanticipated technical complexities, and rework. The program office is  working to rebaseline the SBIRS High contract cost and schedule  estimates for the sixth time. Because of the problems on SBIRS High, in  2007, DOD began a follow-on system effort, which was known as Third  Generation Infrared Surveillance (3GIRS), to run in parallel with the  SBIRS High program. DOD canceled the 3GIRS effort in fiscal year 2011,  but plans to continue providing funds under the SBIRS High program for  one of the 3GIRS infrared demonstrations.
While DOD is having success in readying some satellites for launch, other  space acquisition programs face challenges that could further increase  cost and delay delivery targets. The programs that may be susceptible to  cost and schedule challenges include MUOS and the GPS IIIA program.  Delays in the MUOS program have resulted in critical potential capability  gaps for military and other government users. The GPS IIIA program was  planned with an eye toward avoiding problems that plagued the GPS IIF  program and it incorporated many of the best practices recommended by  GAO, but the schedule leaves little room for potential problems and there  is a risk that the ground system needed to operate the satellites will not be  ready when the first satellite is launched. Additionally, the National Polar- orbiting Operational Environmental Satellite System (NPOESS) was  restructured as a result of poor program performance and cost overruns,  which caused schedule delays. These delays have resulted in a potential  capability gap for weather and environmental monitoring. Furthermore,  new space system acquisition efforts getting underway—including the Air  Force’s Joint Space Operations Center Mission System (JMS) and Space  Fence, and MDA’s Precision Tracking and Surveillance System (PTSS)— face potential development challenges and risks, but it is too early to tell  how significant they may be to meeting cost, schedule, and performance  goals.
Table 1 describes the status of these efforts in more detail.
section_title: Results of GAO Space-Related Reviews over the Past Year
paragraphs: Over the past year, we have completed reviews of sustaining and  upgrading GPS capabilities and commercializing space technologies under  the Small Business Innovation Research program (SBIR), and we have  ongoing reviews of (1) DOD space situational awareness (SSA) acquisition  efforts, (2) parts quality for DOD, MDA, and the National Aeronautics and  Space Administration (NASA), and (3) a new acquisition strategy being  developed for the EELV program. These reviews, discussed further below,  underscore the varied challenges that still face the DOD space community  as it seeks to complete problematic legacy efforts and deliver modernized  capabilities. Our reviews of GPS and space situational awareness, for  instance, have highlighted the need for more focused coordination and  leadership for space activities that touch a wide range of government,  international, and industry stakeholders; while our review of the SBIR  program highlighted the substantial barriers and challenges small business  must overcome to gain entry into the government space arena.
GPS. We found that the GPS IIIA schedule remains ambitious and  could be affected by risks such as the program’s dependence on a  ground system that will not be completed until after the first IIIA  launch. We found that the GPS constellation availability had improved,  but in the longer term, a delay in the launch of the GPS IIIA satellites  could still reduce the size of the constellation to fewer than 24  operational satellites—the number that the U.S. government commits  to—which might not meet the needs of some GPS users. We also found  that the multiyear delays in the development of GPS ground control  systems were extensive. Although the Air Force had taken steps to  enable quicker procurement of military GPS user equipment, there  were significant challenges to its implementation. This has had a  significant impact on DOD as all three GPS segments—space, ground  control, and user equipment—must be in place to take advantage of  new capabilities. Additionally, we found that DOD had taken some  steps to better coordinate all GPS segments, including laying out  criteria and establishing visibility over a spectrum of procurement  efforts, but it did not go as far as we recommended in 2009 in terms of  establishing a single authority responsible for ensuring that all GPS  segments are synchronized to the maximum extent practicable. Such  an authority is warranted given the extent of delays, problems with  synchronizing all GPS segments, and importance of new capabilities to  military operations. As a result, we reiterated the need to implement  our prior recommendation.
Small Business Innovation Research (SBIR). In response to a  request from this subcommittee, we found that while DOD is working  to commercialize space-related technologies under its SBIR program by  transitioning these technologies into acquisition programs or the  commercial sector, it has limited insight into the program’s  effectiveness. Specifically, DOD has invested about 11 percent of its  fiscal years 2005–2009 research and development funds through its  SBIR program to address space-related technology needs. Additionally,  DOD is soliciting more space-related research proposals from small  businesses. Further, DOD has implemented a variety of programs and  initiatives to increase the commercialization of SBIR technologies and  has identified instances where it has transitioned space-related  technologies into acquisition programs or the commercial sector.  However, DOD lacks complete commercialization data to determine  the effectiveness of the program in transitioning space-related  technologies into acquisition programs or the commercial sector. Of  the nearly 500 space-related contracts awarded in fiscal years 2005  through 2009, DOD officials could not, for various reasons, identify the  total number of technologies that transitioned into acquisition  programs or the commercial sector. Further, there are challenges to  executing the SBIR program that DOD officials acknowledge and are  planning to address, such as the lack of overarching guidance for  managing the DOD SBIR program.
Under this review, most stakeholders we spoke with—DOD, prime  contractors, and small business officials—generally agreed that small  businesses participating in the DOD SBIR program face difficulties  transitioning their space-related technologies into acquisition programs  or the commercial sector. Although we did not assess the validity of the  concerns cited, stakeholders we spoke with identified challenges  inherent to developing space technologies; challenges because of the  SBIR program’s administration, timing, and funding issues; and other  challenges related to participating in the DOD space system  acquisitions environment. For example, some small-business officials  said that working in the space community is challenging because the  technologies often require more expensive materials and testing than  other technologies. They also mentioned that delayed contract awards  and slow contract disbursements have caused financial hardships.  Additionally, several small businesses cited concerns with safeguarding  their intellectual property.
Space Situational Awareness (SSA). We have found that while  DOD has significantly increased its investment and planned investment  in SSA acquisition efforts in recent years to address growing SSA  capability shortfalls, most efforts designed to meet these shortfalls  have struggled with cost, schedule, and performance challenges and  are rooted in systemic problems that most space system acquisition  programs have encountered over the past decade. Consequently, in the  past 5 fiscal years, DOD has not delivered significant new SSA  capabilities as originally expected. Capabilities that were delivered  served to sustain or modernize existing systems versus closing  capability gaps. To its credit, last fall the Air Force launched a space- based sensor that is expected to appreciably enhance SSA. However,  two critical acquisition efforts that are scheduled to begin development  within the next 2 years—Space Fence and JMS—face development  challenges and risks, such as the use of immature technologies and  planning to deliver all capabilities in a single, large increment versus  smaller and more manageable increments. It is essential that these  acquisitions are placed on a solid footing at the start of development to  help ensure that their capabilities are delivered to the warfighter as and  when promised. DOD plans to begin delivering other new capabilities  in the coming 5 years, but it is too early to determine the extent to  which these additions will address capability shortfalls.
We have also found that there are significant inherent challenges to  executing and overseeing the SSA mission, largely because of the sheer  number of governmentwide organizations and assets involved in the  mission. This finding is similar to what we have reported from other  space system acquisition reviews over the years. Additionally, while the  recently issued National Space Policy assigns SSA responsibility to the  Secretary of Defense, the Secretary does not necessarily have the  corresponding authority to execute this responsibility. However,  actions, such as development of a national SSA architecture, are being  taken that could help facilitate management and oversight  governmentwide. The National Space Policy, which recognizes the  importance of SSA, directs other positive steps, such as the  determination of roles, missions, and responsibilities to manage  national security space capabilities and the development of options for  new measures for improving SSA capabilities. Furthermore, the  recently issued National Security Space Strategy could help guide the  implementation of the new space policy. We expect our report based  on this review to be issued in June 2011.
Parts quality for DOD, MDA, and NASA. Quality is paramount to  the success of DOD space systems because of their complexity, the  environment they operate in, and the high degree of accuracy and  precision needed for their operations. Yet in recent years, many  programs have encountered difficulties with quality workmanship and  parts. For example, DOD’s AEHF protected communications satellite  has yet to reach its intended orbit because of a blockage in a propellant  line. Also, MDA’s STSS program experienced a 15-month delay in the  launch of demonstration satellites because of a faulty manufacturing  process of a ground-to-spacecraft communication system part.  Furthermore, NASA’s Mars Science Laboratory program experienced a  1-year delay in the development of the descent and cruise stage  propulsion systems because of a welding process error. We plan to  issue a report on the results of a review that focuses specifically on  parts quality issues in June 2011. We are examining the extent to which  parts quality problems are affecting DOD, MDA, and NASA space and  missile defense programs; the causes of these problems; and initiatives  to detect and prevent parts quality problems.
EELV acquisition strategy. DOD spends billions of dollars on launch  services and infrastructure through two families of commercially  owned and operated vehicles under the EELV program. This  investment allows the nation to launch its national security satellites  that provide the military and intelligence community with advanced  space-based capabilities. DOD is preparing to embark on a new  acquisition strategy for the EELV program. Given the costs and  importance of space launch activities, it is vital that this strategy  maximize cost efficiencies while still maintaining a high degree of  mission assurance and a healthy industrial base. We are currently  reviewing activities leading up to the strategy and plan to issue a report  on the results of this review in June 2011. In particular, we are  examining whether DOD has the knowledge it needs to develop a new  EELV acquisition strategy and the extent to which there are important  factors that could affect launch acquisitions.
section_title: DOD Has Taken and Is Taking Actions to Address Space and Weapon Acquisition Problems
paragraphs: DOD continues to work to ensure that its space programs are more  executable and produce a better return on investment. Many of the actions  it has been taking address root causes of problems, though it will take time  to determine whether these actions are successful and they need to be  complemented by decisions on how best to lead, organize, and support  space activities.
subsections: section_title: Causes of Acquisition Problems and Best Practices for Avoiding Them
paragraphs: Our past work has identified a number of causes of the cost growth and  related problems, but several consistently stand out. First, on a broad  scale, DOD has tended to start more weapon programs than it can afford,  creating a competition for funding that encourages low cost estimating,  optimistic scheduling, overpromising, suppressing bad news, and for space  programs, forsaking the opportunity to identify and assess potentially  more executable alternatives. Programs focus on advocacy at the expense  of realism and sound management. Invariably, with too many programs in  its portfolio, DOD is forced to continually shift funds to and from  programs—particularly as programs experience problems that require  additional time and money to address. Such shifts, in turn, have had costly,  reverberating effects.
Second, DOD has tended to start its space programs too early, that is,  before it has the assurance that the capabilities it is pursuing can be  achieved within available resources and time constraints. This tendency is  caused largely by the funding process, since acquisition programs attract  more dollars than efforts concentrating solely on proving technologies.  Nevertheless, when DOD chooses to extend technology invention into  acquisition, programs experience technical problems that require large  amounts of time and money to fix. Moreover, when this approach is  followed, cost estimators are not well positioned to develop accurate cost  estimates because there are too many unknowns. Put more simply, there is  no way to accurately estimate how long it would take to design, develop,  and build a satellite system when critical technologies planned for that  system are still in relatively early stages of discovery and invention.
Third, programs have historically attempted to satisfy all requirements in a  single step, regardless of the design challenges or the maturity of the  technologies necessary to achieve the full capability. DOD has preferred to  make fewer but heavier, larger, and more complex satellites that perform a  multitude of missions rather than larger constellations of smaller, less  complex satellites that gradually increase in sophistication. This has  stretched technology challenges beyond current capabilities in some cases  and vastly increased the complexities related to software. Programs also  seek to maximize capability on individual satellites because it is expensive  to launch them. Figure 6 illustrates the various factors that can break  acquisitions.
Many of these underlying issues affect the broader weapons portfolio as  well, though we have reported that space programs are particularly  affected by the wide disparity of users, including DOD, the intelligence  community, other federal agencies, and in some cases, other countries,  U.S. businesses, and citizens. Moreover, problematic implementation of an  acquisition strategy in the 1990s, known as Total System Performance  Responsibility, for space systems resulted in problems on a number of  programs because it was implemented in a manner that enabled  requirements creep and poor contractor performance—the effects of  which space programs are finally overcoming. We have also reported on  shortfalls in resources for testing new technologies, which, coupled with  less expertise and fewer contractors available to lead development efforts,  have magnified the challenge of developing complex and intricate space  systems.
Our work—which is largely based on best practices in the commercial  sector—has recommended numerous actions that can be taken to address  the problems we identified. Generally, we have recommended that DOD  separate technology discovery from acquisition, follow an incremental  path toward meeting user needs, match resources and requirements at  program start, and use quantifiable data and demonstrable knowledge to  make decisions to move to next phases. We have also identified practices  related to cost estimating, program manager tenure, quality assurance,  technology transition, and an array of other aspects of acquisition program  management that could benefit space programs. These practices are  highlighted in appendix I.
section_title: Actions to Improve Space and Weapon System Acquisitions
paragraphs: Over the past several years, DOD has implemented or has been  implementing a number of actions to reform how space and weapon  systems are acquired, both through its own initiatives as well as those  required by statute. Additionally, DOD is evaluating and proposing new  actions to increase space system acquisition efficiency and effectiveness.  Because many of these actions are relatively new, or not yet fully  implemented, it is too early to tell whether they will be effective or  effectively implemented.
For space in particular, DOD is working to ensure that critical  technologies are matured before large-scale acquisition programs begin,  requirements are defined early in the process and are stable throughout,  and system design remains stable. DOD also intends to follow incremental  or evolutionary acquisition processes versus pursuing significant leaps in  capabilities involving technology risk and has done so with the only new  major satellite program undertaken by the Air Force in recent years—GPS  IIIA. DOD is also providing more program and contractor oversight and  putting in place military standards and specifications in its acquisitions.  Additionally, DOD and the Air Force are working to streamline  management and oversight of the national security space enterprise. For  example, all Air Force space system acquisition responsibility has been  aligned to the office that has been responsible for all other Air Force  acquisition efforts, and the Defense Space Council—created last year—is  reviewing, as one of its first agenda items, options for streamlining the  many committees, boards, and councils involved in space issues. These  and other actions that have been taken or are being taken that could  improve space system acquisition outcomes are described in table 2.
At the DOD-wide level, and as we reported last year, Congress and DOD  have recently taken major steps toward reforming the defense acquisition  system in ways that may increase the likelihood that weapon programs  will succeed in meeting planned cost and schedule objectives. In  particular, new DOD policy and legislative provisions place greater  emphasis on front-end planning and establishing sound business cases for  starting programs. For example, the provisions require programs to invest  more time and resources to refine concepts through practices such as  early systems engineering, strengthen cost estimating, develop  technologies, build prototypes, hold early milestone reviews, and develop  preliminary designs before starting system development. These provisions  are intended to enable programs to refine a weapon system concept and  make cost, schedule, and performance trade-offs before significant  commitments are made. In addition, DOD policy requires establishment of  configuration steering boards that meet annually to review program  requirements changes as well as to make recommendations on proposed  descoping options that could reduce program costs or moderate  requirements. Fundamentally, these provisions should help (1) programs  replace risk with knowledge and (2) set up more executable programs.  Key DOD and legislative provisions compared with factors we identified in  programs that have been successful in meeting cost and schedule  baselines are summarized in table 3.
Furthermore, the Ike Skelton National Defense Authorization Act for  Fiscal Year 2011, signed into law on January 7, 2011, contains further  direction aimed at improving acquisition outcomes, including, among  other things, a requirement for the Secretary of Defense to issue guidance  on the use of manufacturing readiness levels (including specific levels that  should be achieved at key milestones and decision points), elevating the  role of combatant commanders in DOD’s requirements-setting process,  and provisions for improving the acquisition workforce.
While it is too soon to determine if Congress’s and DOD’s reform efforts  will improve weapon program outcomes, DOD has taken steps to  implement the provisions. For example, in December 2009, the department  issued a new implementation policy, which identifies roles and  responsibilities and institutionalizes many of the requirements of the  Weapon Systems Acquisition Reform Act of 2009. DOD has also filled  several key leadership positions created by the legislation, including the  Directors for Cost Assessment and Program Evaluation, Developmental  Test and Evaluation, Systems Engineering, and Performance Assessments  and Root Cause Analyses. To increase oversight, the department  embarked on a 5-year effort to increase the size of the acquisition  workforce by up to 20,000 personnel by 2015. Furthermore, the  department began applying the acquisition reform provisions to some new  programs currently in the planning pipeline. For example, many of the pre- Milestone B programs we reviewed this year as part of our annual  assessment of selected weapon programs planned to conduct preliminary  design reviews before going to Milestone B, although fewer are taking  other actions, such as developing prototypes, that could improve their  chances of success. With respect to space system acquisitions, particularly  GPS III—DOD’s newest major space system acquisition—has embraced  the knowledge-based concepts behind our previous recommendations as a  means of preventing large cost overruns and schedule delays.
Additionally, the Office of the Secretary of Defense and the Air Force are  proposing new acquisition strategies for satellites and launch vehicles:  In June of last year, and as part of the Secretary of Defense’s Efficiencies  Initiative, the Under Secretary of Defense for Acquisition, Technology and  Logistics began an effort to restore affordability and productivity in  defense spending. Major thrusts of this effort include targeting  affordability and controlling cost growth, incentivizing productivity and  innovation in industry, promoting real competition, improving tradecraft  in services acquisition, and reducing nonproductive processes and  bureaucracy. As part of this effort, the Office of the Secretary of Defense  and the Air Force are proposing a new acquisition strategy for procuring  satellites, called the Evolutionary Acquisition for Space Efficiency (EASE),  to be implemented starting in fiscal year 2012. Primary elements of this  strategy include block buys of two or more satellites (economic order  quantities) using a multiyear procurement construct, use of fixed-price  contracting, stable research and development investment, evolutionary  development, and stable requirements. According to DOD, EASE is  intended to help stabilize funding, staffing, and subtier suppliers; help  ensure mission continuity; reduce the impacts associated with  obsolescence and production breaks; and increase long-term affordability  with cost savings of over 10 percent. DOD anticipates first applying the  EASE strategy to procuring two AEHF satellites beginning in fiscal year  2012, followed by procurement of two SBIRS High satellites beginning in  fiscal year 2013. According to the Air Force, it will consider applying the  EASE strategy—once it is proven—to other space programs, such as GPS  III. We have not yet conducted a review of the EASE strategy to assess the  potential benefits, challenges, and risks of its implementation. Questions  about this approach would include the following:   What are the major risks incurred by the government in utilizing the  EASE acquisition strategy?
What level of risks (known unknowns and unknown unknowns) is  being assumed in the estimates of savings to be accrued from the  EASE strategy?
How are evolutionary upgrades to capabilities to be pursued under  EASE?
How does the EASE acquisition strategy reconcile with the current  federal and DOD acquisition policy, acquisition and financial  management regulations, and law?
The Air Force is developing a new acquisition strategy for its EELV  program. Primarily, under the new strategy, the Air Force and National  Reconnaissance Office are expected to initiate block buys of eight first  stage booster cores—four for each EELV family, Atlas V and Delta IV—per  year over 5 years to help stabilize the industrial base, maintain mission  assurance, and avoid cost increases. As mentioned earlier, we have  initiated a review of the development of the new strategy and plan to issue  a report on our findings in June 2011. Given concerns raised through  recent studies about visibility into costs and the industrial base supporting  EELV, it is important that this strategy be supported with reliable and  accurate data.
section_title: Additional Actions Leadership, Organization, and Support May Still Be Needed
paragraphs: The actions that the Office of the Secretary of Defense and the Air Force  have been taking to address acquisition problems listed in tables 2 and 3  are good steps. However, more changes to processes, policies, and support  may be needed—along with sustained leadership and attention—to help  ensure that these reforms can take hold, including addressing the diffuse  leadership for space programs. Diffuse leadership has had a direct impact  on the space system acquisition process, primarily because it has made it  difficult to hold any one person or organization accountable for balancing  needs against wants, for resolving conflicts among the many organizations  involved with space, and for ensuring that resources are dedicated where  they need to be dedicated. This has hampered DOD’s ability to synchronize  delivery of space, ground, and user assets for space programs. For  instance, many of the cost and schedule problems we identified on the  GPS program were tied in part to diffuse leadership and organizational  stovepipes throughout DOD, particularly with respect to DOD’s ability  coordinate delivery of space, ground, and user assets. Additionally, we  have recently reported that DOD faces a situation where satellites with  advances in capability will be residing for years in space without users  being able to take full advantage of them because investments and  planning for ground, user, and space components were not well  coordinated. Specifically, we found that the primary cause for user  terminals not being well synchronized with their associated space systems  is that user terminal development programs are typically managed by  different military acquisition organizations than those managing the  satellites and ground control systems.
Recent studies and reviews examining the leadership, organization, and  management of national security space have found that there is no single  authority responsible below the President and that authorities and  responsibilities are spread across the department. In fact, the national  security space enterprise comprises a wide range of government and  nongovernment organizations responsible for providing and operating  space-based capabilities serving both military and intelligence needs.
While some changes to the leadership structure have recently been  made—including revalidating the role of the Secretary of the Air Force as  the DOD Executive Agent for Space, disestablishing the Office of the  Assistant Secretary of Defense for Networks and Information Integration  and the National Security Space Office, and aligning Air Force space  system acquisition responsibility into a single Air Force acquisition  office—and others are being studied, it is too early to tell how effective  these changes will be in streamlining management and oversight of space  system acquisitions. Additionally, while the recently issued National  Space Policy assigns responsibilities for governmentwide space  capabilities, such as those for SSA, it does not necessarily assign the  corresponding authority to execute the responsibilities.
Finally, adequate workforce capacity is essential for the front-end  planning activities now required by acquisition reform initiatives for new  weapon programs to be successful. However, studies have identified  insufficient numbers of experienced space system acquisition personnel  and inadequate continuity of personnel in project management positions  as problems needing to be addressed in the space community. For  example, a recent Secretary of the Air Force-directed Broad Area Review  of space launch noted that while the Air Force Space and Missile Systems  Center workforce had decreased by about 25 percent in the period from  1992 to 2010, the number of acquisition programs had increased by about  41 percent in the same time period. Additionally, our own studies have  identified gaps in key technical positions, which we believed increased  acquisition risks. For instance, in a 2008 review of the EELV program, we  found that personnel shortages in the EELV program office occurred  particularly in highly specialized areas. According to the EELV program  office and Broad Area Review, this challenge persists.
section_title: Concluding Remarks
paragraphs: DOD is working to position itself to improve its space system acquisitions.  After more than a decade of acquisition difficulties—which have created  potential gaps in capability, diminished DOD’s ability to invest in new  space systems, and lessened DOD’s credibility to deliver high-performing  systems within budget and on time—DOD is starting to launch new  generations of satellites that promise vast enhancements in capability. In 1  year, DOD has or expects to have launched newer generations of  navigation, communications, SSA, and missile warning satellites.  Moreover, given the nation’s fiscal challenges, DOD’s focus on fixing  problems and implementing reforms rather than taking on new, complex,  and potentially higher-risk efforts is promising. However, challenges to  keeping space system acquisitions on track remain, including pursuing  evolutionary acquisitions over revolutionary ones, managing requirements,  providing effective coordination across the diverse organizations  interested in space-based capabilities, and ensuring that technical and  programmatic expertise are in place to support acquisitions. DOD’s newest  major space system acquisition efforts, such as GPS IIIA, DWSS, JMS,  Space Fence, and the follow-on to the SBSS will be key tests of how well  DOD’s reforms and reorganizations have positioned it to manage these  challenges. We look forward to working with DOD to help ensure that  these and other challenges are addressed.
Chairman Nelson, Ranking Member Sessions, this completes my prepared  statement. I would be happy to respond to any questions you or other  Members of the Subcommittee may have at this time.
section_title: Contacts and Acknowledgments
paragraphs: For further information about this statement, please contact Cristina  Chaplain at (202) 512-4841 or chaplainc@gao.gov. Contact points for our  Offices of Congressional Relations and Pubic Affairs may be found on the  last page of this statement. Individuals who made key contributions to this  statement include Art Gallegos, Assistant Director; Kristine Hassinger;  Arturo Holguín; Rich Horiuchi; Roxanna Sun; and Bob Swierczek.
section_title: Appendix I: Actions Needed to Address Space and Weapon Acquisition Problems
paragraphs: Prioritize investments so that projects can be fully funded and it is clear where projects stand in relation to the overall portfolio.
Follow an evolutionary path toward meeting mission needs rather than attempting to satisfy all needs in a single step.
Match requirements to resources—that is, time, money, technology, and people—before undertaking a new development effort.
Research and define requirements before programs are started and limit changes after they are started.
Ensure that cost estimates are complete, accurate, and updated regularly.
Commit to fully fund projects before they begin.
Ensure that critical technologies are proven to work as intended before programs are started.
Assign more ambitious technology development efforts to research departments until they are ready to be added to future generations  (increments) of a product.
Use systems engineering to close gaps between resources and requirements before launching the development process.
Use quantifiable data and demonstrable knowledge to make go/no-go decisions, covering critical facets of the program such as cost,  schedule, technology readiness, design readiness, production readiness, and relationships with suppliers.
Do not allow development to proceed until certain thresholds are met—for example, a high proportion of engineering drawings  completed or production processes under statistical control.
Empower program managers to make decisions on the direction of the program and to resolve problems and implement solutions.
Hold program managers accountable for their choices.
Require program managers to stay with a project to its end.
Hold suppliers accountable to deliver high-quality parts for their products through such activities as regular supplier audits and  performance evaluations of quality and delivery, among other things.
Encourage program managers to share bad news, and encourage collaboration and communication.
In preparing this testimony, we relied on our body of work in space  programs, including previously issued GAO reports on assessments of  individual space programs, common problems affecting space system  acquisitions, and the Department of Defense’s (DOD) acquisition policies.  We relied on our best practices studies, which comment on the persistent  problems affecting space system acquisitions, the actions DOD has been  taking to address these problems, and what remains to be done, as well as  Office of the Secretary of Defense and Air Force documents addressing  these problems and actions. We also relied on work performed in support  of our annual weapons system assessments, and analyzed DOD funding  estimates to assess cost increases and investment trends for selected  major space system acquisition programs. The GAO work used in  preparing this statement was conducted in accordance with generally  accepted government auditing standards. Those standards require that we  plan and perform the audit to obtain sufficient, appropriate evidence to  provide a reasonable basis for our findings and conclusions based on our  audit objectives. We believe that the evidence obtained provides a  reasonable basis for our findings and conclusions based on our audit  objectives.
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