Space Acquisitions: Some Programs Have Overcome Past Problems, but Challenges and Uncertainty Remain for the Future
Released: 2015-04-29T00:00:00

Letter

Background

Over the last decade, DOD space system acquisitions have been characterized by the long-standing problem of program costs increasing significantly from original cost estimates. While some programs have overcome problems with development, and actions have been taken to better position programs for success, the large cost growth of space systems continues to affect the department. As shown in figure 1, as of December 2014, current annual estimated costs for selected major space system acquisition programs have overrun and are projected to exceed original annual estimates by a cumulative $16.7 billion—186 percent— over fiscal years 2014 through 2019. The cost increases that DOD is dealing with today are partly the result of management and oversight problems, many of which DOD experienced before 2010. Other reasons for cost increases include quantity increases and extensions for some programs, such as the Evolved Expendable Launch Vehicle (EELV) program.

The gap between original and current cost estimates represents money the department did not plan to spend on the programs, and thus could not invest in other efforts. Gaps between original and current estimates over the 6-year period are slightly larger for some years. For example, the gaps in 2016 and 2017 are in large part driven by significant annual cost increases for the EELV program. Specifically, original annual estimates for EELV were over $900 million and $600 million for 2016 and 2017, respectively, but grew to over $2 billion for each year in the current annual estimates. EELV cost increases are due primarily to an increase in the number of expected launch services by 60 and an extension of the program for 10 more years, in addition to increases in the cost of acquiring launch services, which have recently been stemmed. Three programs—Global Broadcast Service, Space Based Infrared System (SBIRS), and Wideband Global SATCOM—did not estimate any annual costs for fiscal years 2014 through 2019 originally, but current cumulative estimates for these programs over that time frame total about $4 billion, driven by cost growth and quantity increases. The overall declining investment in fiscal year 2019 is in part the result of programs that have planned lower out-year funding as they approach the end of production or operational capability. However, this decline is mitigated by plans to invest nearly $2.5 billion in launch services in 2019, and will be further mitigated by new programs, which are still in the early stages of planning and development. These new programs are not included in this figure because they have not yet established official cost baselines.

Our prior body of work has identified a number of causes of acquisition problems in DOD programs. In the past, DOD tended to start more weapon programs than was affordable, creating competition for funding that focused on advocacy at the expense of realism and sound management. In addition, DOD tended to start space system acquisition programs before it had the assurance that the pursued capabilities could be achieved within available resources and time constraints. There is no way to accurately estimate how long it takes to design, develop, and build a satellite system when key technologies planned for that system are still in the relatively early stages of discovery and invention. Finally, 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’s past inclination to make large, complex satellites that perform multiple missions has stretched technology challenges beyond current capabilities, in some cases.

To address the problems identified, we have recommended that DOD take a number of actions. Broadly, 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 about moving to next acquisition 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 system acquisition programs. DOD has generally concurred with our recommendations and has undertaken a number of actions to establish a better foundation for acquisition success. For example, we reported in the past that, among other actions, DOD created a new office within the Office of the Undersecretary of Defense for Acquisition, Technology and Logistics to focus attention on oversight for space programs and it eliminated offices considered to perform duplicative oversight functions. We have also reported that the department took actions to strengthen cost estimating and to reinstitute stricter standards for quality.

Current Status and Cost of Space System Acquisitions

Most of DOD’s major space programs are in the mature phases of acquisition and are now producing and launching satellites. Cost and schedule growth—a significant problem for these programs in past years—is not currently as prevalent, though still a problem for some programs. Table 1 describes the status of the space system acquisitions we have been tracking in detail.

Several of DOD’s space system acquisitions have largely overcome challenges—such as matching resources to requirements, facilitating competition, and parts quality issues—and are in the process of producing and launching satellites. Other programs, however, continue to experience challenges, both in technology development and the optimal timing of system component deliveries, meaning delivery of ground, space, and end user assets may not be synchronized. When satellites are placed on orbit without corresponding ground systems and limited user equipment in place, their capability is effectively wasted, as a portion of their limited lifespan is spent without being fully utilized. This has been a significant problem for DOD given the high cost to develop satellites, systemic delays in delivering ground and user components, and the importance of maintaining continuity of service. Problems we have identified with the development of satellites, ground systems, and user components are highlighted below.

In September 2010, we found that the Global Positioning System (GPS) III satellite program took a number of steps to avoid past problems with GPS satellite acquisitions, such as adopting higher quality standards and better managing requirements. However, in our more recent work from March 2015, we found that the first GPS III satellite launch is facing a significant delay due to problems with the development of its navigation payload. The payload has now been delivered, but the first launch has been delayed 28 months. The program office reports that early testing of a satellite prototype helped identify problems sooner, but a complete GPS III satellite has yet to be tested. As a result, additional issues could emerge. Though the program had taken steps to include in its initial cost and schedule estimates the impacts of addressing problems in development, it is now rebaselining those estimates—expected to be completed in July 2015—as a result of this delay and associated increased costs. The first satellite design will not be fully tested until May 2015 at the earliest; meanwhile, an additional 7 satellites are in various stages of production and DOD has authorized an additional 2 satellites to be acquired. Additional delays or problems discovered during tests of the first satellite could require rework to the remaining satellites in production—carrying the risk of further cost growth.

In our ongoing work, we are finding that the GPS Next Generation Operational Control System (OCX), the next ground system for GPS, has experienced significant schedule delays and cost growth, and is still encountering technical challenges. The program awarded a development contract in February 2010, nearly 3 years before the formal decision to begin system development, when requirements are to be matched with resources. The contract was awarded early in order to save money during the competitive phase, but the contractor encountered problems completing software engineering and implementing cybersecurity requirements, among other things, which led to a higher-than-expected level of defects in the software, and ultimately to significant rework and code growth. Significant work and risk remain in the development of key upgrades, which are expected to be delivered about 4 years later than planned. This means some satellite capability will likely go unutilized for several years while the capability of the ground system catches up to the functionality of the satellites. Further, as of April 2015, contract costs have more than doubled over initial estimates, from $886 million in February 2010 to $1.98 billion, and DOD has delayed initial OCX capability from 2015 to 2019. The Office of the Director, Operational Test and Evaluation has stated that the delays to OCX pose risks to DOD’s ability to sustain the operational GPS constellation, since DOD may require use of the GPS III satellites before OCX is available to control them. We are examining OCX in greater detail, as mandated by this committee, and expect to report on the results of our review in July 2015.

Through our ongoing work, we are finding that DOD, building on a troubled, lengthy 9-year effort to mature military-code (M-code) receiver technology, initiated the Military GPS User Equipment (MGUE) program in 2012 to develop M-code receiver cards for the military services’ respective ground, air, and sea weapon systems. In 2014, the Office of the Under Secretary of Defense for Acquisition, Technology and Logistics directed the Air Force to accelerate MGUE development and fielding, as guided by a 2011 statutory requirement instructing DOD to procure only M-code capable equipment after fiscal year 2017. To that end, DOD expects to complete developmental testing and operational assembly by July 2016 and provide technical support to inform the military services’ MGUE production decisions. However, MGUE integration and performance risks will not be fully known until the military services can complete individual operational tests on their respective test platforms. The completion of the first of those tests is scheduled for September 2017, and the last in September 2019. We are reviewing these and other issues within the MGUE program as part of our ongoing work, and plan to report to your committee on the program in July 2015.

In March 2015, we reported that the Family of Advanced Beyond Line- of-Sight Terminals (FAB-T) program, which is to deliver user terminals for the AEHF satellite system and is a vital component of nuclear command and control operations, is nearing the end of development and anticipates entering production in late fiscal year 2015. In 2012, following 10 years of continued cost and schedule growth developing FAB-T, DOD competed and awarded a contract to develop a new design for the program. At the time of our last review, the low-rate production decision was expected in September 2014, but due to delays in completing hardware qualification and system level testing, among other things, the decision is now expected almost a year later, in August 2015.

The SBIRS ground system, which provides command and control and data processing support, continues to experience development delays. The delayed delivery of the initial block of the ground system—intended to facilitate processing of integrated data from legacy Defense Support Program satellites, SBIRS GEO satellites, and SBIRS sensors in highly elliptical orbit—means complete and usable data from a critical sensor will not be available until June 2016, based on DOD’s December 2014 Selected Acquisition Report, over 5 years after the first SBIRS GEO satellite was launched. The SBIRS system will not be fully operational until 2018, when the final block of the SBIRS ground system—which adds processing capability to mobile ground terminals—is expected to be completed.

The Mobile User Objective System (MUOS) program also faces challenges that prevent full use of its satellite capabilities. Issues related to the development of the MUOS waveform—meant to provide increased communications capabilities beyond those offered by the legacy system—have caused delays in the use of radios being developed by the Army as the first operational terminals to incorporate the waveform, as we reported in March 2015. Use of over 90 percent of MUOS’ planned capability is dependent on resolving problems with integrating the waveform, terminals, and ground systems. The MUOS program extended testing to fix software and reliability issues with the waveform integration and now plans to complete operational testing by November 2015—a 17-month delay from the initial schedule estimate. As a result, the Army’s plans to field its MUOS-compatible radios have now slipped from 2014 to 2016, roughly four years since the first MUOS satellite launched.

DOD Faces Challenges and Uncertainty for Addressing Future Space-Based Mission Needs

Fiscal constraints and growing threats to space systems have led DOD to consider alternatives for acquiring and launching space-based capabilities. These include disaggregating—or breaking up—large satellites into multiple, smaller satellites or payloads, and introducing competition into the acquisition of launch services. For some mission areas, such as space-based environmental (or weather) monitoring, protected satellite communications, and overhead persistent infrared sensing, decisions on the way forward, including satellite architectures, have not yet been made. For others, such as national security space launch, plans have been decided, but implementation poses new challenges. As DOD moves forward with changes to the acquisition approaches for these mission areas, some with the potential to set off cascading effects, strong leadership across DOD’s space programs will be critical.

In 2014, we examined DOD’s efforts to explore disaggregation as a potential means to provide space-based capabilities in an increasingly constrained budget environment and a threatened space environment. We found that the effects of disaggregation are largely unknown, and that, at the time of our review, DOD had not comprehensively assessed the wide range of potential benefits and limitations in key areas, such as affordability, capability, and resilience. Consequently, we recommended DOD conduct a comprehensive examination of disaggregation, develop common measures for resilience, and expand demonstration efforts to assess its feasibility, before making decisions on whether to disaggregate its space systems. DOD generally agreed with our recommendations.

One way DOD is assessing disaggregation is through various analyses of alternatives (AOA), or reviews that compare the operational effectiveness, suitability, and life cycle cost of solutions to satisfy capability needs. DOD has completed one AOA for the weather monitoring mission area and is working to complete others for protected satellite communications and overhead persistent infrared sensing. These AOAs have the potential to dramatically shift DOD’s approach to providing capabilities, affecting not only satellite design, but also ground systems, networks, user equipment, and the industrial base. To allow enough time to institute potential changes in contracting and development approaches, and maintain continuity of service, DOD is faced with making decisions over the next several years about the way forward. Details about the AOAs, including when acquisition decisions need to be made for follow-on systems, are depicted in table 2.

The longer DOD takes to complete the AOAs and come to a consensus on how to proceed, the more its range of choices will be constrained. Completing an AOA is the first in a series of important steps to providing future capabilities. In addition, an approach must be selected—whether it is a disaggregated architecture, an evolved version of an existing system, or some other variation—funding must be programmed, and technology development and acquisition strategies must be developed. If decisions are not timely, DOD may be forced to continue with existing approaches for its next systems, effectively continuing with legacy systems. While doing so may offer benefits, such as lower likelihood of unexpected cost and schedule problems, there are also risks associated with technology obsolescence and likely continued risks to missions because of the threats satellites on orbit face today.

To date, DOD has not positioned itself to implement significant changes into follow-on systems. For example, in a January 2014 assessment of a DOD report on overhead persistent infrared technology, we noted that although the need for a SBIRS follow-on AOA was determined in 2008, it was not pursued until early 2014, at which time DOD began planning efforts for the AOA study. Additionally, we reported in April 2015 that DOD’s minimal investment in planning for technology insertion on SBIRS GEO satellites 5 and 6 limited the options available to upgrade technologies on these satellites. At present, DOD is planning to address technology obsolescence issues rather than upgrade the onboard technologies. Additionally, we concluded in April 2015 that the current lack of direction in the program’s path forward could make it difficult to develop a technology insertion plan before the next system is needed. DOD concurred with our recommendation to establish a technology insertion plan that identifies specific needs, technologies, and insertion points, to ensure planning efforts are clearly aligned with the follow-on system and that past problems are not repeated. In the case of the weather monitoring mission area, DOD has passed the point where it could consider new designs or approaches for certain capabilities. At least one capability has an immediate need, requiring DOD to choose among existing approaches.

It is not certain disaggregation is a good approach. To the extent it may offer a viable option for addressing the affordability and resilience challenges that DOD is facing, it is not a simple solution and should be decided on a case-by-case basis. The changes to satellite designs that are being contemplated could have far-reaching effects on requirements, supporting infrastructure, management and oversight of acquisitions, industry, and other areas. DOD is taking good steps by assessing alternatives thoroughly, but, as our work has found, it has not yet resolved underlying challenges to space acquisition that could be exacerbated by disaggregation. For example, disaggregating satellites may require more complex ground systems and user terminals. However, we consistently find ground systems and user equipment programs are plagued by requirements instability, underestimation of technical complexity, and poor contractor oversight. Clearly, these problems, including the misalignment of satellites, ground systems, and user equipment, will pose challenges to successfully implementing a disaggregated approach.

Once decisions are reached for future satellites and launch acquisitions, DOD may still face hurdles in implementing the plan. For example, in 2012, DOD made a commitment to introduce competition into its EELV program—a shift of dramatic proportions from the longstanding status quo of procuring launch services through a sole-source provider. Following this decision, the department, in coordination with the National Aeronautics and Space Administration, the National Reconnaissance Office, and several private space launch companies, has been working to certify new launch providers for national security space launches, but to date, none have met the criteria to become certified, although DOD expects SpaceX to be certified by June 2015. Additionally, the department has faced unexpected complications, such as challenges to its competitive process in the form of a private lawsuit that has been settled, according to DOD officials; a foreign conflict that brought attention to a Russian engine used on one of the sole-source contractor’s launch vehicles; and engine development demands requiring new technological innovation.

Without addressing leadership shortcomings, DOD space programs could continue to face challenges in implementing new approaches. DOD’s culture has generally been resistant to changes in acquisition approaches, as we have reported, and fragmented responsibilities in DOD space programs have made it difficult to implement new processes and coordinate and deliver interdependent systems. Such challenges could, for example, hinder DOD’s efforts to examine options for acquisition efficiencies in military and commercial satellite communications services. Historically, DOD has procured commercial satellite communications services to augment military capacity and became increasingly reliant on these services to support ongoing military operations. DOD is looking for ways to better streamline procurements of these services, but according to DOD officials, it has had difficulty adhering to past policies that required centralized procurement, especially during operations in Iraq and Afghanistan, when efficiency was not a priority. Similarly, DOD has been unable to align the delivery of space system segments in part because budgeting authority for the segments is spread across the military services and DOD lacks a single authority to ensure programs are funded in a manner that aligns their deliveries. As programs continue to face challenges in aligning components, the warfighter cannot take advantage of full system capabilities, and the large investments into these programs are not fully exploited.

DOD has begun implementing efforts to address some leadership challenges more recently. For example, increased use of shared satellite control networks and leading practices within DOD could reduce fragmentation and potential duplication associated with dedicated systems, resulting in millions of dollars in savings annually. In response to our recommendation, DOD has developed a department-wide plan, currently in final coordination, to support the implementation of alternative methods for performing satellite control operations to achieve optimal systems. It has also taken actions to better coordinate and plan space situational awareness activities—efforts to detect, track, and characterize space objects and space-related events—an area where we identified leadership disconnects in a 2011 report. However, in both cases, it is too early to tell whether such efforts will be effective.

In closing, we recognize DOD has made strides in recent years in enhancing its management and oversight of space acquisitions and that sustaining our superiority in space is inherently challenging, both from a technical perspective and a management perspective. Further, to its credit, DOD is looking for ways to provide more avenues for innovation, competition, efficiency, and resilience. This is not easy to do in light of the importance of space programs to military operations, external pressures, and the complicated nature of the national security space enterprise. At the same time, there are persistent problems affecting space programs that need to be addressed if DOD is to be successful in introducing change. Our past recommendations have focused on steps DOD can take to address these problems. While DOD should not refrain from considering new approaches, we continue to believe it should complement these efforts with adequate knowledge about costs, benefits, and alternatives; more focused leadership; and sustained dedication to improving acquisition management, as we previously recommended. Not doing so will likely mean a repeat of DOD’s space system acquisition history characterized by cost growth, inefficient operations, and delayed capabilities to the warfighter. We look forward to continuing to work with the Congress and DOD to improve military space system acquisition efforts and outcomes.

Chairman Sessions, Ranking Member Donnelly, this completes my prepared statement. I would be happy to respond to any questions you and Members of the Subcommittee may have at this time.

Contacts and Acknowledgements

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 Public Affairs may be found on the last page of this statement. Individuals who made key contributions to this statement include Rich Horiuchi, Assistant Director; Claire Buck; Maricela Cherveny; Desiree Cunningham; Brenna Guarneros; John Krump; Krista Mantsch; Roxanna Sun; and Bob Swierczek. Key contributors for the previous work on which this testimony is based are listed in the products cited. Key contributors to related ongoing work include Raj Chitikila; Erin Cohen; Tana Davis; Art Gallegos; Jamie Haynes; Laura Hook; and Breanna Trexler.

Related GAO Products

Space Acquisitions: Space Based Infrared System Could Benefit from Technology Insertion Planning. GAO-15-366. Washington, D.C.: April 2, 2015.

Defense Acquisitions: Assessments of Selected Weapon Programs. GAO-15-342SP. Washington, D.C.: March 12, 2015.

DOD Space Systems: Additional Knowledge Would Better Support Decisions about Disaggregating Large Satellites. GAO-15-7. Washington, D.C.: October 31, 2014.

Space Acquisitions: Acquisition Management Continues to Improve but Challenges Persist for Current and Future Programs. GAO-14-382T. Washington, D.C.: March 12, 2014.

U.S. Launch Enterprise: Acquisition Best Practices Can Benefit Future Efforts. GAO-14-776T. Washington, D.C.: July 16, 2014.

The Air Force’s Evolved Expendable Launch Vehicle Competitive Procurement. GAO-14-377R. Washington, D.C.: March 4, 2014. 2014 Annual Report: Additional Opportunities to Reduce Fragmentation, Overlap, and Duplication and Achieve Other Financial Benefits. GAO-14-343SP. Washington, D.C.: April 8, 2014.

Defense Acquisitions: Assessments of Selected Weapon Programs. GAO-14-340SP. Washington, D.C.: March 31, 2014.

Space Acquisitions: Assessment of Overhead Persistent Infrared Technology Report. GAO-14-287R. Washington, D.C.: January 13, 2014.

Evolved Expendable Launch Vehicle: Introducing Competition into National Security Space Launch Acquisitions. GAO-14-259T. Washington, D.C.: March 5, 2014.

Space: Defense and Civilian Agencies Request Significant Funding for Launch-Related Activities. GAO-13-802R. Washington, D.C.: September 9, 2013.

Global Positioning System: A Comprehensive Assessment of Potential Options and Related Costs is Needed. GAO-13-729. Washington, D.C.: September 9, 2013.

Space Acquisitions: DOD Is Overcoming Long-Standing Problems, but Faces Challenges to Ensuring Its Investments are Optimized. GAO-13-508T. Washington, D.C.: April 24, 2013.

Launch Services New Entrant Certification Guide. GAO-13-317R. Washington, D.C.: February 7, 2013.

Satellite Control: Long-Term Planning and Adoption of Commercial Practices Could Improve DOD’s Operations. GAO-13-315. Washington, D.C.: April 18, 2013.

Defense Acquisitions: Assessments of Selected Weapon Programs. GAO-13-294SP. Washington, D.C.: March 28, 2013.

Evolved Expendable Launch Vehicle: DOD Is Addressing Knowledge Gaps in Its New Acquisition Strategy. GAO-12-822. Washington, D.C.: July 26, 2012.

Space Acquisitions: DOD Faces Challenges in Fully Realizing Benefits of Satellite Acquisition Improvements. GAO-12-563T. Washington, D.C.: March 21, 2012.

Space Acquisitions: DOD Delivering New Generations of Satellites, but Space System Acquisition Challenges Remain. GAO-11-590T. Washington, D.C.: May 11, 2011.

Space Acquisitions: Development and Oversight Challenges in Delivering Improved Space Situational Awareness Capabilities. GAO-11-545. Washington, D.C.: May 27, 2011.

Space and Missile Defense Acquisitions: Periodic Assessment Needed to Correct Parts Quality Problems in Major Programs. GAO-11-404. Washington, D.C.: June 24, 2011.

Global Positioning System: Challenges in Sustaining and Upgrading Capabilities Persist. GAO-10-636. Washington, D.C.: September 15, 2010.

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