The past decade has been troubling for defense space acquisitions. Despite years of significant investment, most of the DOD large space acquisition programs 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. Unit costs for one of the most troubled programs, the Space Based Infrared System (SBIRS), for instance, have climbed about 231 percent to over $3 billion per satellite. Moreover, the first satellite was launched about 9 years later than predicted. Similarly, by the end of fiscal year 2010, the U.S. government had spent 16 years and over $5 billion to develop the National Polar-orbiting Operational Environmental Satellite System (NPOESS), but had not launched a single satellite. In February 2010, citing the program’s cost overruns, schedule delays, and management problems, the White House announced that the NPOESS tri-agency structure would be eliminated and the program would be restructured by splitting procurements and responsibilities. Other programs, such as the Transformational Satellite Communications System, were canceled several years earlier because they were found to be too highly ambitious and not affordable at a time when the DOD was struggling to address critical acquisition problems elsewhere in the space portfolio. In 2011, we testified that though problems still existed on many programs, DOD was beginning to make progress by finally launching satellites that These included the Missile Defense had been lagging behind schedule.Agency’s (MDA) Space Tracking and Surveillance System (STSS), the Air Force’s first Global Positioning System (GPS) IIF satellite and the first Advanced Extremely High Frequency (AEHF) satellite although AEHF had not yet reached its final planned orbit at the time we testified because of an anomaly with the satellite’s propulsion system. At the same time, however, several programs still in development were at risk of cost and schedule growth, such as the Joint Space Operations Center Mission System (JMS). Progress has continued since we testified last year. For instance: DOD launched the second GPS IIF satellite in July 2011, and the third is scheduled to launch in September 2012. DOD launched the first of the Navy’s Mobile User Objective System (MUOS) satellites in February 2012, and the second is scheduled for launch in July 2013. The first of six SBIRS geosynchronous earth orbit (GEO) satellites The successfully launched in May 2011, after a roughly 9 year delay. second SBIRS satellite is planned for delivery in spring 2012 and may launch late this year or early 2013. The Evolved Expendable Launch Vehicle (EELV) program continues to successfully launch DOD and National Aeronautics and Space Administration (NASA) satellites, and is planning 11 launches in 2012. The first AEHF satellite reached its intended orbit after having experienced propulsion trouble after launch. The second AEHF satellite is scheduled to launch in April 2012. While these launches represent solid progress, there have been some drawbacks to the programs that have launched their first satellites. For instance, the second GPS IIF satellite experienced technical problems that could possibly shorten the satellite’s operational lifetime. Also, though a MUOS satellite has been launched, the DOD estimates that over 90 percent of the first satellite’s on-orbit capabilities will likely be initially underutilized because of delays in development of the compatible Joint Tactical Radio System (JTRS) terminals. Moreover, other acquisition programs are experiencing cost and schedule growth, though not to the extent yet as those experienced in the last decades. For instance, The GPS III program is currently experiencing cost growth and the contractor is behind schedule. In November 2011, the contractor’s estimated cost at completion for the development and production of the first two satellites was over $1.4 billion or 18 percent greater than originally estimated; the program office estimated the cost to be about $1.6 billion. The GPS III program has cited multiple reasons for the projected cost increases including reductions in the program’s production rate; test equipment delays; and inefficiencies in the development of both the navigation and communication payload and satellite bus. The contractor is also behind in completing some tasks on schedule, but the program does not expect these delays to affect the launch of the first satellite. Though the first SBIRS satellite has launched, and the second is close to delivery, program officials are predicting a 1-year delay on production of the 3rd and 4th GEO satellites due in part to technical challenges, parts obsolescence and test failures. Along with the production delay, program officials are predicting a $438 million cost overrun for the 3rd and 4th GEO satellites. The Defense Weather Satellite System (DWSS), which was the Air Force’s follow-on to the restructured NPOESS, was terminated in fiscal year 2012. The restructuring of NPOESS and the subsequent cancellation of DWSS have resulted in a potential capability gap for weather and environmental monitoring. Table 1 describes the status of the space programs we have been tracking in more detail. Even though DOD has finally overcome some technical and production difficulties and begun to launch high risk satellites such as SBIRS and AEHF, the department is still contending with the effects of their significant cost growth on its investment portfolio. Figure 1 compares original cost estimates to current cost estimates for the broader portfolio of major space acquisitions for fiscal years 2011 through 2016. A long-standing problem in DOD space acquisitions is that program and unit costs tend to go up significantly from initial cost estimates, and the gap between original and current estimates shows that DOD has fewer dollars available to invest in new programs or add to existing ones. In fact, estimated costs for the major space acquisition programs have increased by about $11.6 billion—321 percent—from initial estimates for fiscal years 2011 through 2016.investment in the later years is the result of mature programs that have planned lower out-year funding, cancellation of a major space acquisition It should also be noted that the declining program and several development efforts, and the exclusion of several major space acquisition efforts for which total cost data were unavailable. These include the Space Fence, Space Based Space Surveillance, and the Defense Weather Satellite effort. Over the past year, we have reported on of the need for sound and sufficient information for the new DOD acquisition strategy for the EELV program; parts quality problems in major DOD, MDA, and NASA programs; and greater content and coordination in the space Science and Technology (S&T) strategy. We are also conducting a review of satellite operations and have briefed Defense authorization and appropriations committees on our findings. These reviews, discussed further below, highlight both the successes and challenges that have faced the DOD space community as it has completed or sought to complete problematic legacy efforts and deliver modernized capabilities. DOD’s EELV program serves a vital mission of placing critical national security and civilian satellites into their required orbits. It is also on the brink of major changes. In 2009, the Air Force and the National Reconnaissance Office (NRO) determined that the current approach for acquiring EELV launch vehicles was likely not the best business model and decided that a new acquisition strategy needed to be developed. This strategy favors committing the government to a longer span of purchases and to more certainty in the number of vehicles acquired to help stabilize the industrial base. Such a change is significant as the DOD and the NRO plan to spend about $15 billion to acquire launch services from fiscal year 2013 to 2017 and commercial companies other than the current provider, United Launch Alliance, would like to become launch service providers to the government. We were asked to review and assess whether DOD has the knowledge it needs to develop the new strategy, which has subsequently been released, and to identify issues that could benefit future launch acquisitions. We found that DOD lacked critical knowledge needed to develop a new acquisition strategy. For example, program officials, recent launch studies, and the prime contractor all cited a diminishing launch industrial base as a risk to the mission success of the program, but DOD analysis supporting this condition was minimal. Moreover, under the new acquisition strategy, contracting officials may have difficulty assessing fair and reasonable prices given limited availability of contractor and subcontractor cost or pricing data. Since the United Launch Alliance joint venture formed in 2006, financial and business systems needed to get insight into costs have been lacking. There was also considerable uncertainty about costs associated with mission assurance activities, even though there have been concerns about whether such activities are excessive. Moreover, we found that if the acquisition strategy commits the Air Force and the NRO to buy eight common booster cores per year for a five year period, which was anticipated at the time of our review, DOD may face an oversupply of vehicles. In addition to these findings, we have reported prior concerns about oversight for the EELV program, such as (1) a prior decision to designate the program as in the sustainment phase rather than in the development phase essentially lifted the need for oversight reporting on costs and major changes and (2) the DOD had not updated a life cycle cost estimate for the program despite significant changes being made to it. Pub. L. No. 112-81, §§ 838 & 839 (2011). and additional findings or recommendations, as appropriate. The Air Force has taken actions to expand its knowledge about EELV since our 2011 audit work was completed and we look forward to assessing this progress. Quality is paramount to the success of U.S. space and missile defense programs due to 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 experienced difficulties with quality workmanship and parts. Less visible problems have led to unnecessary repair, scrap, rework, and stoppage; long delays; and millions of dollars in cost growth. In some instances, entire missions have been endangered. As a result, we assessed the extent to which such problems affect related programs, their causes, and what initiatives have been undertaken in response. We found that parts quality problems had affected all 21 programs we reviewed, in some cases contributing to significant cost overruns and schedule delays associated with electronic versus mechanical parts or materials. We also found that if quality problems were discovered late in the development cycle they had more significant cost and schedule consequences: in one such case, an additional cost of at least $250 million and a 2-year launch delay. We found several causes of these problems: poor workmanship, undocumented and untested manufacturing processes, poor control of those processes and materials and failure to prevent contamination, poor part design, design complexity, and an inattention to manufacturing risks. Ineffective supplier management also resulted in concerns about whether subcontractors and contractors met program requirements. Recognition of these difficulties has spurred agencies to adopt new policies, but they were still in early stages of implementation at the time of our review. Post-policy programs are not yet mature enough for parts problems to be apparent. To address current and future problems, agencies and industry have begun to collect and share information, develop testing guidance and criteria, manage subcontractors, and mitigate problems, although their impact has yet to be determined. In any event, significant barriers hinder such efforts, including broader acquisition management problems, workforce gaps, diffuse leadership in the national security space community, the government’s decreasing influence on the electronics parts market, and an increase in counterfeited parts. Our reports over the past decade have made recommendations for addressing these broader barriers, such as stabilizing requirements before beginning product development, separating technology development from product development, and strengthening leadership. The DOD is in the process of adopting these recommendations. Because space agencies and the Missile Defense Agency were undertaking additional actions to address parts quality problems and they had recently established a broad range of coordination mechanisms, we recommended that the community undertake periodic assessments of progress being made to address parts quality problems. The agencies generally agreed with our recommendation. The National Defense Authorization Act for Fiscal Year 2010 required DOD and the Director of National Intelligence (DNI) to jointly develop a space S&T strategy and it required us to assess the strategy submitted in April 2011. We reported that a strong foundation in space S&T should help DOD and the intelligence community address the most challenging national security problems, reduce risk in major acquisition programs, maintain technological superiority over adversaries, maintain a healthy industrial base and mitigate vulnerabilities in space systems. We found that the strategy largely met the requirements of the authorization act, but it was not a rigorous, comprehensive strategic plan. Instead, it embraced the status quo without laying out a path for assuring effective and efficient progress. For instance, the strategy identified goals, but did not prioritize them. The strategy described existing reviews used to assess progress in space S&T but did not identify new metrics or performance measures to be used to assess achievement of the strategy’s newly established goals. Nor did the strategy address fundamental challenges facing the S&T community, such as human capital shortages, growing fiscal pressures, and the difficulty in transitioning space S&T to acquisition programs. We identified some strategic planning best practices such as identifying required human capital and required funding; prioritizing initiatives; and establishing ways to measure progress and processes for revising goals in the future. Additionally, we found that organizations involved in developing the strategy were active in creating its long- and short-term goals, but their participation in other of its aspects was more limited. DOD and DNI officials did not believe they were required to do more than they did, and also did not include other agencies active in space S&T that were not included by law in the strategy. We recommended that DOD enhance its next version of the strategy by developing a detailed implementation plan for achieving goals, addressing funding prioritization and other challenges, and enhancing coordination with other agencies involved in space technology development. DOD concurred with these recommendations. The Air Force and Navy operate separate satellite control networks within DOD through multiple operations centers, enabling their satellites to perform missions from launch to on-orbit operations and eventually through deactivation. Other federal government agencies, such as the NASA and the National Oceanic and Atmospheric Administration (NOAA), and commercial companies also operate satellites using various networks and operations centers. Combined, these networks assist the nation’s communications, missile warning, navigation, meteorological, environmental, and scientific satellites or missions. DOD has efforts underway to modernize various satellite operations centers using proprietary and interoperable network architectures using standard protocols. For example, since 2006, the Air Force has operated a multi-mission operations center that uses a standard interface and telemetry, tracking, and commanding system which allows expedited transition of research satellites to operational satellites. In addition, in 2000, the Naval Research Laboratory initiated a web-based service concept designed to optimize software code reuse and allow faster delivery of mission capabilities, which could lower mission development costs and facilitate system maintenance. Considering the long-standing need to replace the Air Force’s aging and costly satellite control capabilities, and the importance associated with satellite operations, it is important that DOD not miss an opportunity to improve satellite operations and create greater efficiencies by leveraging commercial practices and other satellite networks and associated infrastructure. In ongoing work, we assessed DOD’s satellite operations capabilities, specifically modernization efforts, compare DOD satellite operations concepts with those in other government entities and commercial industry; and, identify practices that could improve DOD satellite operations, consistent with mission requirements. We identified several challenges associated with DOD’s modernization efforts. For example, DOD’s ability to plan and implement upgrades may be limited by current budget uncertainties and plans to reallocate a portion of DOD’s spectrum may affect its satellite operations. In addition, we found indications that the potential for unnecessary overlap and fragmentation still exists within satellite operations and associated infrastructure, including potential duplication of facilities and hardware. For instance, there are multiple, completely separate government satellite control networks that exist that depend on DOD’s Air Force satellite control network, including military and civil networks, but none are interoperable. Finally, we have thus far found that although research and development in government satellite operations has led to the use of practices that, according to agency officials, have improved efficiency, there are other commercial practices that could provide further improvements to DOD’s satellite network. For example, increased automation of routine satellite telemetry, tracking, and commanding functions could increase satellite operations efficiencies. We expect to issue our report based on this review later this fall. Though our reports over the year indicate there is more room for improvement, 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 are intended to 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. Our past work has identified a number of causes of acquisition problems, but several consistently stand out. At a higher level, DOD has tended to start more weapon programs than is affordable, creating a competition for funding that focuses on advocacy at the expense of realism and sound management. DOD has also tended to start its space programs before it has the assurance that the capabilities it is pursuing can be achieved within available resources and time constraints. 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. 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 preference to make larger, complex satellites that perform a multitude of missions has stretched technology challenges beyond current capabilities in some cases. Figure 2 illustrates the negative influences that can cause programs to fail. Our work 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. DOD has generally concurred with our recommendations, and, as described below, has undertaken an array of actions to establish a better foundation for acquisition success. As we reported last year, 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. Among other actions, DOD intends to follow incremental or evolutionary acquisition processes for space programs versus pursuing significant leaps in capabilities involving technology risk, and has done so with the only new satellite program undertaken by the Air Force in recent years—GPS III and more recently with Joint Space Operations Center Mission System, which supports space situational awareness activities. DOD and the Air Force are also working to streamline management and oversight of the national security space enterprise. For example, all Air Force space system acquisition responsibility has been assigned to the office responsible for all other Air Force acquisition efforts, and options for streamlining the many space committees, boards, and councils is under ongoing review. These and other actions being taken that could improve space system acquisition outcomes, that we have not assessed, are described in table 2. Congress and DOD have 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, 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 early systems engineering, strengthening cost estimating, developing technologies, building prototypes, holding early milestone reviews, and developing preliminary designs before starting system development.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. While DOD has taken steps to implement the provisions, it is too soon to determine if Congress’s and DOD’s reform efforts will improve weapon program outcomes. For example, in June 2011 we reported on the Joint Requirements Oversight Council’s (JROC) efforts to ensure trade-offs among cost, schedule, and performance objectives, as directed by the Weapon Systems Acquisition Reform Act .not always consider tradeoffs or influence tradeoff decisions, military services did not consistently provide high quality resource estimates to the JROC, and JROC did not consistently prioritize requirements and capability gaps. We recommended that the JROC establish a mechanism to review analysis of alternatives results earlier in the acquisition process, require higher quality resource estimates from requirements sponsors, prioritize requirements across proposed programs, and address potential redundancies during requirements reviews. The Joint Staff partially concurred with our recommendations and generally agreed with their intent, but differed with us on how to implement them. The actions that the Office of the Secretary of Defense and the Air Force have been taking to address acquisition problems are good steps. But there are still significant barriers to ensuring investments are optimized, including fragmented leadership, the high cost of launch, uncertainty about the future for technology advancements, and disconnects between the fielding of satellites with user equipment and ground systems needed to take advantage of expensive new capabilities. In particular: Leadership. In past years, we have reported that a major challenge to leadership is that the community’s authorities and responsibilities are spread across the department, and there is no single authority responsible for these programs below the President. Both the DOD and Air Force have taken a number of steps to streamline and clarify leadership for space. Time will tell whether these steps will help resolve issues such as a difficulty holding 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. The department is still struggling with disconnects between programs that need to be linked together, such as a satellite program and its user equipment program. And at a higher level, we have reported that it still appears as if agencies involved in space acquisitions do not coordinate to the extent that they can in such areas as launch acquisitions and space S&T planning. Launch costs. A factor influencing how space programs are designed is the price of launch, which can range anywhere from around $100 million to well over $200 million. With prices being so high, programs often seek to maximize the “real estate” on board a satellite by including more capabilities than can sometimes be handled by a single program or within the time period desired for the program. Moreover, the Air Force recently developed a new launch acquisition strategy designed in part to contain launch prices, but given remaining knowledge gaps, achieving this outcome is uncertain. At the same time, potential new providers promise lower costs for launch, but none of them have been certified to launch the larger national security satellites, and it is uncertain whether their prices can stay low as they work to meet standards and expectations set by government agencies. The dilemma of high launch costs, in our view, makes it more important for the Air Force to gain insight into costs and pricing behind its new strategy and to have a complete understanding of the industrial base and related vulnerabilities as well as mission assurance activities and related costs. It would also behoove agencies to work together, not only to bring in new entrants which they are now doing, but in setting a future course for launch. S&T planning, for example, has been cited as a weak area for launch, even though investments in new propulsion and vehicle concepts have the potential to evolve capabilities and lower costs. S&T and related investments. Recent proposed funding cuts have raised questions about how future technology advancements will be achieved in space. The Space Test Program (STP) was targeted for termination in the fiscal year 2013 budget. STP was created in 1965 to serve as an integrator to provide launch opportunities for experimental satellites. This program enabled new technologies to get on orbit, and pave the way in an affordable manner for new space capabilities. STP has spawned many current and valuable space programs, most notably GPS. With the cancelation of this program, the Secretary of the Air Force has stated that the organizations that develop these new space technologies, including academic institutions, government laboratories, and others, will be required to shoulder the burden of launch costs, estimated at around $50 million per year. DOD has also proposed cancellation of the Operationally Responsive Space (ORS) program. ORS was intended to provide short-term and low-cost tactical capabilities to warfighters. The ORS program’s long-term goals were to reduce the cost of space development by fostering low cost launch methods as well as common design and interface methods. Average spending by the ORS program was about $100 million per year from fiscal years 2007- through 2011. While there are still investments available for the Air Force Research Laboratory and other organizations involved in S&T, as we mentioned earlier, planning for these investments has not been robust or very strategic. Another potential challenge to future space capability innovations is the Efficient Space Procurement (ESP) initiative, formerly known as the Evolutionary Acquisition for Space Efficiency (EASE). ESP is intended as a way to reduce costs for DOD space programs while improving acquisition outcomes by buying satellites in “block buys” instead of individually, accruing cost savings which are to be reinvested into a modernization program to evolve capabilities for future increments of that satellite program. At this time, it is unclear how this approach will ensure there will still be a focus on making significant leaps in technology or what the next generation of space systems will look like and be able to come into fruition. Disconnects between fielding satellites, ground systems, and user equipment. DOD faces challenges in synchronizing capabilities offered by new satellite programs with the ground control stations that are necessary for receiving and processing information from the new space systems, and in some cases, the user terminals that deliver this information to users. When space, ground and user segments are not synchronized, there is the potential for wasted on-orbit capability and delays in the ability of users to take advantage of new systems. As long as this condition exists, the improvements being made to acquisition practices on the satellite side will be minimized. A few examples are highlighted below in table 3. After more than a decade of serious acquisition difficulties, DOD is starting to launch new generations of satellites that promise vast enhancements in capability. Moreover, given the nation’s fiscal challenges, DOD’s focus on streamlining leadership, fixing problems, and implementing reforms is promising. But there are still significant barriers to achieve acquisition success that need to be addressed to maintain space superiority in an era of fiscal austerity. All of the barriers— leadership fragmentation, launch costs, S&T planning, and disconnects between space and ground assets—require action from the Air Force and the Office of the Secretary of Defense as well as the participation and cooperation of all the military services, the intelligence community, and other agencies such as NASA and NOAA. Moreover, though successful launches are being experienced, problems within ongoing development efforts such as GPS III, indicate that space acquisitions are still at risk of significant cost and schedule problems, and attention to reforms must be sustained. Chairman Nelson, Ranking Member Sessions, 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. 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 Art Gallegos, Assistant Director; Maricela Cherveny; Laura Hook; Angela Pleasants; Roxanna Sun; Bob Swierczek; and Alyssa Weir. 2012 Annual Report: Opportunities to Reduce Duplication, Overlap and Fragmentation, Achieve Savings, and Enhance Revenue, GAO-12-342SP (Washington, D.C.: February 28, 2012). Evolved Expendable Launch Vehicle: DOD Needs to Ensure New Acquisition Strategy Is Based on Sufficient Information, GAO-11-641 (Washington, D.C.: September 15, 2011). Space Research: Content and Coordination of Space Science and Technology Strategy Need to Be More Robust, GAO-11-722 (Washington, D.C.: July 19, 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). DOD Weapons Systems: Missed Trade-off Opportunities During Requirements Reviews, GAO-11-502 (Washington, D.C.: June 16, 2011). Space Acquisitions: DOD Delivering New Generations of Satellites, but Space System Acquisition Challenges Remain, GAO-11-590T (Washington, D.C.: May 11, 2011). Defense Acquisitions: Challenges in Aligning Space System Components, GAO-10-55 (Washington, D.C.: October 29, 2009). Global Positioning System: Challenges in Sustaining and Upgrading Capabilities Persist. GAO-10-636. (Washington, D.C.: September 15, 2010). Polar-Orbiting Environmental Satellites: Agencies Must Act Quickly to Address Risks That Jeopardize the Continuity of Weather and Climate Data. GAO-10-558. (Washington, D.C.: May 27, 2010). Defense Acquisitions: Strong Leadership Is Key to Planning and Executing Stable Weapon Programs, GAO-10-522 (Washington, D.C.: May 6, 2010). Space Acquisitions: DOD Poised to Enhance Space Capabilities but, Persistent Challenges Remain in Developing Space Systems, GAO-10-447T (Washington, D.C.: March 10, 2010). Space Acquisitions: Government and Industry Partners Face Substantial Challenges in Developing New DOD Space Systems. GAO-09-648T. (Washington, D.C.: April 30, 2009). Space Acquisitions: Uncertainties in the Evolved Expendable Launch Vehicle Program Pose Management and Oversight Challenges. GAO-08-1039. (Washington, D.C.: September 26, 2008). Defense Space Activities: National Security Space Strategy Needed to Guide Future DOD Space Efforts. GAO-08-431R. (Washington, D.C.: March 27, 2008). 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Summary: Each year, the DOD spends billions on large space acquisition programs, which have in the past experienced cost and schedule overruns and increased technical risk. At present, though, the worst of these problems may be over, and programs long troubled are finally being launched. Challenges persist, but they are less significant than they were. With todays fiscal constraints, however, DOD must find ways to keep its new major space acquisitions on track, as operating in space is expensive and DOD is still replenishing legacy programs like missile warning, protected communications, and environmental monitoring. Significant barriers exist to ensuring such investments are optimized. To address the progress DOD has made this year, this testimony will focus on (1) the current status of space system acquisitions; (2) results of GAOs space-related reviews this past year; (3) actions taken to address DOD space acquisition problems; and (4) remaining challenges that stand in the way of DOD fully realizing the benefits of satellite acquisition improvements. This testimony is based on previously issued GAO products as well as analysis of DOD funding estimates. GAO does not make recommendations in this testimony. However, in previous reports GAO has generally recommended that DOD adopt best practices for developing space systems such as separating technology development from product development. DOD is in the process of implementing such practices. Last year, GAO testified that though acquisition problems still existed in many space programs, the Department of Defense (DOD) was beginning to launch satellites that had long been lagging behind schedule and it had taken positive actions to instill better practices and more focused leadership for space. Progress has continued. Over the past year, DOD launched the first Navy Mobile User Objective System (MUOS) satellite; the first, after a nine-year delay, of six Space Based Infrared System (SBIRS) geosynchronous earth orbit (GEO) satellites; and the first Advanced Extremely High Frequency (AEHF) satelliteall of which will bring important capability to the warfighter. While these launches represent solid progress, there have also been some drawbacks. For instance, the second Global Positioning System (GPS) IIF satellite experienced technical problems that could shorten its operational lifetime. The cost of the first two GPS III satellites is at least18 percent higher than first estimated, up to $1.6 billion today. A 1-year delay is expected by SBIRS program officials on production of the 3rd and 4th GEO satellites along with a $438 million cost overrun. And, a termination of the Defense Weather Satellite System (DWSS) may result in a capability gap. Moreover, even though problems have been overcome, DOD must still contend with the effects of its previous difficulties on its investment portfolio. Recent GAO reviews highlight other difficulties facing DOD space programs. GAOs review of a new acquisition strategy for the Evolved Expendable Launch Vehicle program, for instance, identified a need for more knowledge about the industrial base as well as cost and pricing in order to optimize a sizable investment in launch vehicles. GAOs review of parts quality problems in major DOD, Missile Defense Agency, and National Aeronautics and Space Administration (NASA) programs illustrated that acquisition reforms need to be buttressed with closer attention to the quality of piece parts as issues have vexed most major programs. GAO, however, credited the agencies with instituting collaborative efforts to address supplier quality. Though it still faces an array of challenges, DOD continues to work to ensure its space programs are more executable and produce a better return on investment. For example, DOD intends to follow incremental or evolutionary acquisition processes and it has acted to streamline management and oversight of the national security space enterprise. The agency has taken steps toward reforming the defense acquisition system to help its programs to meet planned cost and schedule objectives. Because DOD intends to address the root causes of problems, it will take time to determine if these actions are successful or need further actions on how best to lead, organize, and support space activities. Moreover, there are significant barriers to ensuring investments are optimized. These include fragmented leadership, the rising cost of launch, uncertainty about the future for technology advancements, and disconnects between the fielding of satellites with user equipment and ground systems needed to take advantage of expensive new capabilities. Addressing all of these challenges are needed to maintain space superiority in an era of fiscal austerity, but their resolution also requires the participation and cooperation of all the military services, the intelligence community, and agencies such as NASA and the National Oceanic and Atmospheric Administration.