Polar-Orbiting Environmental Satellites: Information on Program Cost and Schedule Changes
Released: 2004-09-30T00:00:00

Letter

Background

Since the 1960s, the United States has operated two separate operational polar-orbiting meteorological satellite systems: POES, managed by NESDIS of NOAA and DMSP, managed by 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. Today, 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 2008 and 2011, respectively.

Each of the polar satellites carries a suite of sensors designed to detect environmental data that is 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 the four processing centers— NESDIS, the Air Force Weather Agency, 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, academia, and many are operated by DOD. 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.

NPOESS Overview

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. To manage this program, DOD, NOAA, and 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, as well as 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 coordinated by the Integrated Program Office and 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 11 environmental systems and 2 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 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 presents the planned instruments and the state of technology on each.

In addition, the NPOESS Preparatory Project (NPP), which is being developed as a major risk reduction initiative, is a planned demonstration satellite to be launched in 2006, several years before the first NPOESS satellite launch in 2009. It is scheduled 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 one other 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.

NPOESS Acquisition Strategy

When the NPOESS development contract was awarded, program office 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.

Key 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.

These schedules were 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 DMSP satellite. In late 2002, DOD shifted the expected launch date for the final DMSP satellite from 2009 to 2010. As a result, DOD reduced funding for NPOESS by about $65 million between fiscal years 2004 and 2007. According to NPOESS program officials, because NOAA is required to provide no more funding than 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.

NPOESS Costs Have Increased, and Schedules Have Been Delayed

The program office has increased the NPOESS life cycle cost estimate by $1.2 billion, from $6.9 to $8.1 billion, and delayed key milestones— including the expected availability of the first NPOESS satellite, which was delayed by 20 months. The cost increases reflect changes to the NPOESS contract as well as increased program management funds. The contract changes include 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. The schedule delays were the result of stretching out the development schedule to accommodate the change in the NPOESS funding stream. In addition, the delayed launch dates of the NPOESS satellites have extended the maintenance and operation of the satellite system from 2018 to 2020.

When we testified on the NPOESS program in July 2003, we reported that the program office was working to develop a new cost and schedule baseline due to a change in the NPOESS funding stream. The program office completed its efforts to revise the NPOESS cost and schedule baseline in December 2003.

As a result of the revised baseline, the program office increased the NPOESS cost estimate by $638 million, from $6.9 to $7.5 billion. The program office attributed the $638 million cost increase to extending the development schedule to accommodate the changing funding stream, increased sensor costs, and additional funds needed for mitigating risks. The program office has since increased funds for non-contract costs and management reserves, which raised its estimate by an additional $562 million to bring the NPOESS life cycle cost estimate to $8.1 billion. According to program officials, non-contract costs included oversight expenses for the prime contract and sensor subcontracts. Management reserves, which are a part of the total program budget and should be used to fund undefined but anticipated work, are expected to last through 2020. Table 2 shows a breakdown of the cost increases resulting from the revised plan.

Recently, program officials reported that a new life cycle cost estimate would be developed by the contractor and program office. The program office expects to brief its executive oversight committee on the results of its cost estimate analysis by December 2004. The new cost estimate will be used to help develop the NPOESS fiscal year 2007 budget request. Officials reported that the new estimate is necessary in order to ensure that the program will be adequately funded through its life.

In addition to increasing the cost estimate, the program office has delayed key milestones, including the expected availability of the first satellite, which was delayed by 20 months. The program office attributed the schedule delays to stretching out the development schedule to accommodate the changing funding stream. Table 3 shows program schedule changes for key milestones.

A result of the program office extension of several critical milestone schedules is that less slack is built into the schedules for managing development and production issues. For example, the first NPOESS satellite was originally scheduled to be available for launch by March 2008 and to launch by April 2009. This enabled the program office to have 13 months to resolve any potential problems with the satellite before its expected launch. Currently, the first NPOESS satellite is scheduled to be available for launch by November 2009 and to launch the same month. This will allow the program office less than one month to resolve any problems. The program office has little room for error, and should something go wrong in development or production, the program office would have to delay the launch further.

NPOESS Could Experience Further Cost and Schedule Increases

NPOESS costs and schedules could continue to increase in the future. The contractor’s continued slippage of expected cost and schedule targets indicates that the NPOESS contract will most likely be overrun by $500 million at contract completion in September 2011. Program risks, particularly with the development of critical sensors to be demonstrated on the NPP satellite, could also increase costs and delay schedules for NPOESS.

Current Shortfalls in Cost and Schedule Targets Could Require Additional Funds to Meet Launch Deadlines

To be effective, project managers need information on project deliverables and on a contractor’s progress in meeting those deliverables. One method that can help project managers track 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 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 was experiencing negative variances before the revised plan was implemented in December 2003, and continued to deteriorate after the implementation of the revised plan. Figure 4 shows the 15-month cumulative cost variance for the NPOESS contract. From March 2003 to November 2003, the contractor exceeded its cost target by $16.1 million, which is about 4.5 percent of the contractor’s budget for that time period. From December 2003 to May 2004, the contractor exceeded its cost target by $33.6 million, or about 5.7 percent of the contractor’s budget. The contractor has incurred a total cost overrun of about $55 million with NPOESS development less than 20 percent complete. This information is useful because trends tend to continue and can be difficult to reverse. Studies have shown that, once programs are 15 percent complete, the performance indicators are indicative of the final outcome.

Our analysis also indicates that the program is showing a negative schedule variance. Figure 5 shows the 15-month cumulative schedule variance of NPOESS. From March 2003 to November 2003, the contractor recovered almost $11 million worth of planned work in the schedule. Program officials reported that within this time period, the program office ordered the contractor to stop some work until the new baseline was established. This work stoppage contributed to schedule degradation between March 2003 and August 2003. In September 2003, the program office implemented portions of the revised plan, which resulted in an improvement in schedule performance. The revised plan alleviated some of the cumulative schedule overrun by delaying the deadline for first unit availability by 20 months. However, based on our analysis, the cumulative schedule variance indicates slippage in the new schedule. Since December 2003, the contractor has been unable to complete approximately $19.7 million worth of scheduled work. The current inability to meet contract schedule performance could be a predictor of future rising costs, as more spending is often necessary to resolve schedule overruns.

According to program office documents, cost and schedule overruns that occurred before December 2003 were caused by planning activities related to the revised plan, as well as by technical issues related to the development of the critical sensors and the spacecraft communications software. Since the completion of the revised plan, the program’s ability to meet the new performance goals continues to be hampered by technical issues with the design complexity, testing, and integration, among other things, of the critical sensors. These technical issues could cause further cost and schedule shortfalls.

Based on contractor performance from December 2003 to May 2004, we estimate that the current NPOESS contract—which ends in September 2011 and is worth approximately $3.4 billion—will overrun its budget by between $372 million and $891 million. Our projection of the most likely cost overrun will be about $534 million, or about 16 percent of the contract. The contractor, in contrast, estimates about a $130 million overrun at completion of the NPOESS contract.

Risks Could Further Affect NPOESS Cost and Schedule

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 21 program risks, including 14 medium to medium-high risks. Some of these risks include the development of three critical sensors (the visible/infrared imager radiometer suite (VIIRS), the cross-track infrared sounder (CrIS), and the conical-scanned microwave imager/sounder (CMIS)) and the integrated data processing system; the uncertainty that algorithms will meet system performance requirements; and the effort to obtain a security certification and accreditation. Figure 6 includes the 21 program risks and their assigned levels of risk.

Managing the risks associated with the development of VIIRS and CrIS, the integrated data processing system, and algorithm performance is of particular importance because these are to be demonstrated on the NPP satellite currently scheduled for launch in October 2006. Any delay in the NPP launch date could affect the overall NPOESS program because the success of the program depends on the lessons learned in data processing and system integration from the NPP satellite.

At present, the program office considers the three critical sensors—VIIRS, CMIS, and CrIS—to be key program risks because of technical challenges that each is facing. VIIRS’s most severe technical issue, relating to flight- quality integrated circuits, was recently resolved; however, the program office continues to consider the schedule for the VIIRS sensor acquisition to be high risk. The prime contractor’s analysis of the current schedule indicated that the present schedule is unlikely to be achieved, considering the technical risks, the optimistically planned integration and test phase, and the limited slack in the schedule at this stage of the program. VIIRS is experiencing ongoing technical issues on major subcontracts related to the motors, rotating telescope, and power supply. As a result of the numerous ongoing issues—many of which affect system performance—significantly more modeling, budget allocation work, and performance reviews have been required than were originally planned. 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 and CrIS sensor acquisitions are experiencing schedule overruns that may threaten their respective expected delivery dates. CMIS technical challenges include unplanned redesigns for receiver and antenna components, system reliability issues, and thermal issues. A significant amount of CrIS’s developmental progress has been impeded by efforts to address a signal processor redesign, vibration issues in an optical instrument, and the late subcontract deliveries of some parts.

To the program office’s credit, it is aware of these risks and is using its risk management plans to help mitigate them. We plan to further evaluate the risk mitigation strategies of the Integrated Program Office in a follow-on review.

Conclusions

The next generation polar-orbiting environmental satellite program, NPOESS, recently underwent a replanning effort that increased the NPOESS cost estimate by $1.2 billion, from $6.9 to $8.1 billion and delayed key milestones, including the expected availability of the first satellite by 20 months.

Other factors could further affect the revised cost and schedule estimates. Specifically, the current shortfalls in performance targets indicate that the NPOESS contract will most likely be overrun by $500 million at completion in September 2011 and program risks could contribute to additional cost and schedule slips. The program office is planning to develop new cost estimates but has not yet determined the impact of these risks.

Given the history of large cost increases and the factors that could further affect NPOESS costs and schedules, continued oversight is more critical than ever. Accordingly, we plan to continue our review of this program.

Agency Comments

We provided a draft of this report to the Secretary of Commerce, Secretary of Defense, and the Administrator of NASA for review and comment. The departments generally agreed with the report and provided written and oral technical corrections, which have been incorporated as appropriate.

NOAA, Integrated Program Office, DOD officials, including the System Program Director of the NPOESS Integrated Program Office and the Assistant for Environmental Monitoring from the Office of the Assistant Secretary of Defense, noted that changes in funding levels, triggered after the contract was awarded, were the primary reason for rebaselining the program’s costs and schedules. These funding level changes caused them to delay the development of the NPOESS system and led them to renegotiate the NPOESS contract. We revised our report to clarify the factors leading up to revising the baseline.

Additionally, NOAA officials commented that the Integrated Program Office continues to aggressively manage the NPOESS program to ensure it is completed within cost, schedule, and performance. In regard to our estimate that the contract will overrun by at least $500 million, NOAA officials reported that the agency will manage the contract to ensure that any cost overrun is identified and addressed. To this end, NOAA has asked the contractor to develop a new life cycle cost estimate.

NOAA and DOD officials also noted that in August 2004, the President directed the Departments of Defense, the Interior, Commerce, and NASA to place a LANDSAT-like imagery capability on the NPOESS platform. This new capability will 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 lifespans. Officials expect that this new sensor will be funded separately and will not affect the NPOESS program’s cost or schedule. Accordingly, while this recent event is important to the NPOESS program, it does not change the results of our report.

We are sending copies of this report to the Secretary of Commerce, the Secretary of Defense, and the Administrator of NASA. In addition, copies will be available at no charge on the GAO Web site at http://www.gao.gov. Should you have any questions about this report, please contact me at (202) 512-9286 or Colleen Phillips, Assistant Director, at (202) 512-6326. We can also be reached by e-mail at pownerd@gao.gov and phillipsc@gao.gov, respectively. Other key contributors to this report included Carol Cha, Barbara Collier, John Dale, Neil Doherty, Karen Richey, and Eric Winter.

Objectives, Scope, and Methodology

Our objectives were to (1) identify any cost or schedule changes as a result of the revised baseline and determine what contributed to these changes and (2) identify factors that could affect the program baseline in the future. To accomplish these objectives, we focused our review on the Integrated Program Office, the organization responsible for the overall National Polar- orbiting Operational Environmental Satellite System (NPOESS) program.

To identify any cost or schedule changes as a result of the revised baseline, we reviewed the new NPOESS cost and schedule baseline and compared it to the old acquisition baseline, as reported in our July 2003 testimony. To determine the factors that contributed to the cost and schedule changes in the new baseline, we reviewed program office plans and management reports. We also interviewed IPO officials to discuss these contributing factors.

To identify factors that could affect the program baseline in the future, we assessed the prime contractor’s performance related to cost and schedule. To make these assessments, we applied earned value analysis techniques to data captured in contractor cost performance reports. We compared the cost of work completed with the budgeted costs for scheduled work for a 15-month period, from March 2003 to May 2004, 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. We reviewed these cost reports and program risk management documents and interviewed program officials to determine the key risks that negatively affect NPOESS’s ability to maintain the current schedule and cost estimates. We reviewed independent cost estimates performed by the Air Force Cost Analysis Agency and compared them with the program office cost estimates in order to determine possible areas for cost growth. To assess the potential effect of the NOAA-N Prime satellite incident on the current program baseline, we reviewed documentation related to the POES accident and alternatives for moving forward and interviewed officials from the National Aeronautics and Space Administration (NASA) and NOAA’s National Environmental Satellite, Data, and Information Service.

We obtained comments on a draft of this report from officials at the Department of Defense (DOD), NOAA, and NASA, and incorporated these comments as appropriate.

We performed our work at the Integrated Program Office, DOD, NASA, and NOAA in the Washington, D.C., metropolitan area between November 2003 and August 2004 in accordance with generally accepted government auditing standards.

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