A long-standing problem in DOD space acquisitions is that program and unit costs tend to go up significantly from initial cost estimates, while in some cases, the capability that was to be produced goes down. Figures 1 and 2 reflect differences in total program and unit costs for satellites from the time the programs officially began to their most recent cost estimates. As figure 1 shows, in several cases, DOD has had to cut back on quantity and capability in the face of escalating costs. For example, two satellites and four instruments were deleted from the National Polar-orbiting Operational Environmental Satellite System (NPOESS) and four sensors are expected to have fewer capabilities. This will reduce some planned capabilities for NPOESS as well as planned coverage. The figures below reflect the total program costs developed in fiscal year 2009. (Last year, we also compared original cost estimates to current cost estimates for the broader portfolio of major space acquisitions for fiscal years 2008 through 2013. However, we were unable to perform this analysis this year because, for most of its major weapon system programs, DOD in fiscal year 2009 did not issue complete Selected Acquisition Reports, which contain updated yearly program funding estimates needed to conduct the analysis.) Several space acquisition programs are years behind schedule. Figure 3 highlights the additional estimated months needed for programs to deliver initial operational capabilities (IOC). These additional months represent time not anticipated at the programs’ start dates. Generally, the further schedules slip, the more DOD is at risk of not sustaining current capabilities. For example, according to Air Force officials, they have requested information from the space community on how best to address a potential gap in missile warning capabilities. DOD has made progress on several of its high-risk space programs and is expecting significant advances in capability as a result. In 2009, DOD launched the third Wideband Global SATCOM (WGS) satellite, broadening communications capability available to warfighters—and a fourth WGS satellite is slated for launch in 2011. DOD also launched two Global Positioning System (GPS) IIR-M satellites, although one has still not been declared operational because of radio signal transmission problems. Lastly, DOD supported the launch of a pair of Space Tracking and Surveillance System satellites, designed to test the tracking of ballistic missiles in support of missile defense early missile warning missions— these suffered many delays as well. The Evolved Expendable Launch Vehicle (EELV) program had its 31st consecutive successful operational launch last week. Moreover, though it has had long-standing difficulties on nearly every space acquisition program, DOD now finds itself in a position to possibly launch the first new satellite from four different major space acquisition programs over the next 12 months that are expected to significantly contribute to missions and capabilities. These include the Global Positioning System (GPS) IIF satellites, the Advanced Extremely High Frequency (AEHF) communications satellites, and the Space Based Space Surveillance (SBSS) satellite—all of which struggled for years with cost and schedule growth, technical or design problems, as well as oversight and management weaknesses. Table 1 further describes the status of these efforts. One program that appears to be overcoming remaining technical problems, but for which we are still uncertain whether it can meet its current launch date, is the Space Based Infrared System (SBIRS) satellite program. The first of four geosynchronous earth-orbiting (GEO) satellites (two sensors have already been launched on a highly elliptical orbit) is expected to launch in December 2010 and is expected to continue the missile warning mission with sensors that are more capable than the satellites currently on orbit. Total cost for the SBIRS program is currently estimated at over $13.6 billion for four GEO satellites (and two sensors that have already been delivered and are operational), representing an increase of about $9.2 billion over the program’s original cost, which included five GEO satellites. The most recent program estimate developed in 2008 set December 2009 as the launch goal for the first GEO satellite, but program officials indicate that the first GEO launch will be delayed at least another year, bringing the total delay to approximately 8 years. The reasons for the delay include poor government oversight of the contractor, technical complexities, and rework. The program continues to struggle with flight software development, and during testing last year, officials discovered hardware defects on the first GEO satellite, though the program reports that they have been resolved. The launches of subsequent GEO satellites have also slipped as a result of flight software design issues. Program officials indicate that they again intend to re-baseline the program to more realistic cost and schedule estimates by mid- to late-2010. Because of the problems on SBIRS, DOD began a follow-on system effort, now known as Third Generation Infrared Surveillance (3GIRS), to run in parallel with the SBIRS program. For fiscal year 2011, DOD plans to cancel the 3GIRS effort, but also plans to provide funds under the SBIRS program for one of the 3GIRS infrared demonstrations nearing completion. While DOD is having success in readying some satellites for launch, other space acquisition programs face challenges that could further increase cost and delay targeted delivery dates. The programs that may be susceptible to cost and schedule challenges include NPOESS, Mobile User Objective System (MUOS), and GPS IIIA. Delays in both the NPOESS and MUOS programs have resulted in critical potential capability gaps for military and other government users. The GPS IIIA program was planned with an eye toward avoiding problems that plagued the GPS IIF program, but the schedule leaves little room for potential problems and there is a risk that the ground system needed to operate the satellites will not be ready when the first satellite is launched. Table 2 describes the status of these efforts in more detail. This past year we also assessed the levels at which DOD’s satellites, ground control, and user terminals were synchronized to provide maximum benefit to the warfighter. Most space systems consist of satellites, ground control systems, and user terminals, though some space systems only require ground control systems to provide capability to users. Ground control systems are generally used to (1) download and process data from satellite sensors and disseminate this information to warfighters and other users and (2) maintain the health and status of the satellites, including steering the satellites and ensuring that they stay in assigned orbits. User terminals, typically procured by the military services and managed separately from associated satellites and ground control systems, can range from equipment hosted on backpacks to terminals mounted on Humvees, airborne assets, or ships. Terminals can be used to help the warfighter determine longitude, latitude, and altitude via GPS satellites, or securely communicate with others via AEHF satellites. Some user terminals are not solely dedicated to delivering capability from a specific satellite system. For example, the Joint Tactical Radio System is the primary user terminal associated with the MUOS program, but the system is also designed to be the next generation of tactical radios, allowing extensive ground-to-ground communication as well. Overall, we found the alignment of space system components proved to be challenging to DOD. Specifically, we found that for six of DOD’s eight major space system acquisitions, DOD has not been able to align delivery of satellites with ground control systems, user terminals, or both. Of the eight major space system acquisitions, five systems’ ground control system efforts are optimally aligned to deliver capability with their companion satellites, while three are not. For the five space systems requiring user terminals, none was aligned. In some cases, capability gaps of 4 or more years have resulted from delays in the fielding of ground control systems or user terminals. When space system acquisitions are not aligned, satellite capability is available but underutilized, though in some cases, work- around efforts can help compensate for the loss or delay of capability. Moreover, when ground systems, user terminals, or both are not aligned with satellites, there are significant limitations in the extent to which the system as a whole can be independently tested and verified. Another risk facing DOD space programs for the next few years is the potential for increased demand for certain launch vehicles. DOD is positioned to launch a handful of satellites across missions over the next 2 years that were originally scheduled for launch years ago. Until recently, DOD had four launch pads on the East Coast from which to launch military satellites. In 2009, DOD launched the final two GPS IIR-M satellites using the Delta II launch vehicle, thereby discontinuing its use of the Delta II line and its associated launch infrastructure. DOD now plans to launch most of its remaining satellites using one of DOD’s EELV types— Atlas V or Delta IV—from one of two East Coast launch pads. At the same time, the National Aeronautics and Space Administration (NASA) plans to use the Delta II to launch at least three major missions before that launch vehicle is retired. In addition, NASA is already manifesting other major missions on the Atlas V. Given the expected increased demand for launches—many of which are considered high priority—and the tempo of launches DOD has achieved with EELV, it appears that the launch manifest is crowded. As a result, if programs still struggling with technical, design, or production issues miss their launch dates, the consequences could be significant, as it may take many months to secure new dates. Some of DOD’s satellites are dual integrated, which means they can be launched on either type of EELV. The Air Force deserves credit for designing the satellites this way because it offers more flexibility in terms of launch vehicle usage, but there are also cost and schedule implications associated with rescheduling from one EELV type to the other. Moreover, DOD can request its launch provider to speed up the transition time between launches, although this would also increase costs. Nevertheless, Air Force officials stated that they were confident that the higher launch rates could be achieved, especially if a particular satellite’s priority increased. According to Air Force officials, they have already begun to implement means to address these issues. DOD has been working to ensure that its space programs are more executable and produce a better return on investment. Many of the actions it is taking address root causes of problems, though it will take time to determine whether these actions are successful and they need to be complemented by decisions on how best to lead, organize, and support space activities. Our past work has identified a number of causes behind the cost growth and related problems, but several consistently stand out. First, on a broad scale, DOD starts more weapon programs than it can afford, creating a competition for funding that encourages low cost estimating, optimistic scheduling, overpromising, suppressing bad news, and for space programs, forsaking the opportunity to identify and assess potentially more executable alternatives. Second, DOD has tended to start its space programs too early, that is, before it has the assurance that the capabilities it is pursuing can be achieved within available resources and time constraints. This tendency is caused largely by the funding process, since acquisition programs attract more dollars than efforts concentrating solely on proving technologies. Nevertheless, when DOD chooses to extend technology invention into acquisition, programs experience technical problems that require large amounts of time and money to fix. Moreover, there is no way to accurately estimate how long it would take to design, develop, and build a satellite system when critical technologies planned for that system are still in relatively early stages of discovery and invention. Third, programs have historically attempted to satisfy all requirements in a single step, regardless of the design challenge or the maturity of the technologies necessary to achieve the full capability. DOD has preferred to make fewer but heavier, larger, and more complex satellites that perform a multitude of missions rather than larger constellations of smaller, less complex satellites that gradually increase in sophistication. This has stretched technology challenges beyond current capabilities in some cases and vastly increased the complexities related to software. Programs also seek to maximize capability on individual satellites because it is expensive to launch. In addition, problematic implementation of an acquisition strategy in the 1990s, known as Total System Performance Responsibility, for space systems resulted in problems on a number of programs because it was implemented in a manner that enabled requirements creep and poor contractor performance—the effects of which space programs are still addressing. We have also reported on shortfalls in resources for testing new technologies, which coupled with less expertise and fewer contractors available to lead development efforts, have magnified the challenge of developing complex and intricate space systems. Our work—which is largely based on best practices in the commercial sector—has recommended numerous actions that can be taken to address the problems we identified. Generally, we have recommended that DOD separate technology discovery from acquisition, follow an incremental path toward meeting user needs, match resources and requirements at program start, and use quantifiable data and demonstrable knowledge to make decisions to move to next phases. We have also identified practices related to cost estimating, program manager tenure, quality assurance, technology transition, and an array of other aspects of acquisition program management that could benefit space programs. These practices are detailed in appendix I. DOD is implementing an array of actions to reform how weapons and space systems are acquired. For space in particular, DOD is working to ensure critical technologies are matured before large-scale acquisition programs begin; requirements are defined early in the process and are stable throughout; and that system design remains stable, according to the Director of Space and Intelligence under DOD’s Office of the Secretary of Defense for Acquisition, Technology and Logistics. DOD also intends to follow incremental or evolutionary acquisition processes versus pursuing significant leaps in capabilities involving technology risk. The Director of Space and Intelligence also told us that DOD is revisiting the use of military standards in its acquisitions and providing more program and contractor oversight. The approach described to us by the Director of Space and Intelligence mirrors best practices identified in our reports. Moreover, some actions—described in the table below—have already been taken to ensure acquisitions are more knowledge-based. Congress has also acted on a broader scale through the Weapon Systems Acquisition Reform Act, which was signed into law on May 22, 2009. The goal of this new statute is to improve acquisition outcomes in DOD, with specific emphasis on major defense acquisition programs (MDAP) and major automated information systems. According to the President of the United States this legislation is designed to limit cost overruns before they spiral out of control and will strengthen oversight and accountability by appointing officials who will be charged with closely monitoring the weapons systems being purchased to ensure that costs are controlled. DOD states in its 2010 Quadrennial Defense Review that the law also will substantially improve the oversight of major weapons acquisition programs, while helping to put MDAPs on a sound footing from the outset by addressing program shortcomings in the early phases of the acquisition process. DOD also states that it is undertaking a far-reaching set of reforms to achieve these goals and to improve how DOD acquires and fields critical capabilities for current and future wars and conflicts. The actions that the Air Force and Office of the Secretary of Defense have been taking to address acquisition problems are good steps. However, there are still more significant changes to processes, policies, and support needed to ensure that reforms can take hold. Recent studies and reviews examining the leadership, organization, and management of national security space have all found that there is no single authority responsible below the President and that authorities and responsibilities are spread across the department. In fact, the national security space enterprise comprises a wide range of government and nongovernment organizations responsible for providing and operating space-based capabilities serving both military and intelligence needs. In 2008, for example, a congressionally chartered commission (known as the Allard Commission) reported that responsibilities for military space and intelligence programs were scattered across the staffs of DOD organizations and the intelligence community and that it appeared that “no one is in charge” of national security space. The same year, the House Permanent Select Committee on Intelligence reported similar concerns, focusing specifically on difficulties in bringing together decisions that would involve both the Director of National Intelligence and the Secretary of Defense. Prior studies, including those conducted by the Defense Science Board and the Commission to Assess United States National Security Space Management and Organization (Space Commission), have identified similar problems, both for space as a whole and for specific programs. While these studies have made recommendations for strengthening leadership for space acquisitions, no major changes to the leadership structure have been made in recent years. In fact, an executive agent position within the Air Force that was designated in 2001 in response to a Space Commission recommendation to provide leadership has not been filled since the last executive resigned in 2007. Diffuse leadership has a direct impact on the space acquisition process, primarily because it makes it difficult to hold any one person or organization accountable for balancing needs against wants, for resolving conflicts among the many organizations involved with space, and for ensuring that resources are dedicated where they need to be dedicated. Many of the cost and schedule problems we identified for the GPS IIF program, for instance, were tied in part to diffuse leadership and organizational stovepipes, particularly with respect to DOD’s ability to coordinate delivery of space, ground, and user assets. In fact, DOD is now facing a situation where satellites with advances in capability will be residing for years in space without users being able to take full advantage of them because investments and planning for ground, user, and space components were not well-coordinated. Congressional and DOD studies have also called for changes in the national security space organizational structure to remove cultural barriers to coordinating development efforts and to better incorporate analytical and technical support from an organization that is augmented with military and intelligence community expertise. Finally, studies have identified insufficient numbers of experienced space acquisition personnel and inadequate continuity of personnel in project management positions as problems needing to be addressed in the space community. Our own studies have identified gaps in key technical positions, which we believed increased acquisition risks. For instance, in a 2008 review of the EELV program, we found that personnel shortages at the EELV program office occurred particularly in highly specialized areas, such as avionics and launch vehicle groups. These engineers work on issues such as reviewing components responsible for navigation and control of the rocket. Moreover, only half the government jobs in some key areas were projected to be filled. These and other shortages in the EELV program office heightened concerns about DOD’s ability to effectively manage the program using a contracting strategy for EELV that required greater government attention to the contractor’s technical, cost, and schedule performance information. In a recent discussion with GAO, the Director of Space and Intelligence under DOD’s Office of the Secretary of Defense for Acquisition, Technology and Logistics stated that the primary obstacle to implementing reforms in space is the lack of “bench strength,” primarily technical and systems engineering expertise. In conclusion, DOD space is at a critical juncture. After more than a decade of acquisition difficulties, which have created potential gaps in capability, diminished DOD’s ability to invest in new space systems, and lessened DOD’s credibility to deliver high-performing systems within budget and on time, DOD is finally positioned to launch new generations of satellites that promise vast enhancements in capability. Moreover, recent program cancellations have alleviated competition for funding and may have allowed DOD to focus on fixing problems and implementing reforms rather than taking on new, complex, and potentially higher-risk efforts. But these changes raise new questions. Specifically, when can investments in new programs be made? How can reforms really take hold when leadership is diffuse? How can reforms take hold when there are still organizational barriers that prevent effective coordination? And lastly, how can acquisitions be successful if the right technical and programmatic expertise is not in place? Clearly, there are many challenges ahead for space. We look forward to working with the DOD to help ensure that these and other questions are addressed. Mr. Chairman, this concludes my prepared statement. I would be happy to answer any questions you or 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 Pubic Affairs may be found on the last page of this statement. Individuals who made key contributions to this statement include Art Gallegos, Assistant Director; Greg Campbell; Rich Horiuchi; Alyssa Weir; and Peter Zwanzig. Prioritize investments so that projects can be fully funded and it is clear where projects stand in relation to the overall portfolio. Follow an evolutionary path toward meeting mission needs rather than attempting to satisfy all needs in a single step. Match requirements to resources—that is, time, money, technology, and people—before undertaking a new development effort. Research and define requirements before programs are started and limit changes after they are started. Ensure that cost estimates are complete, accurate, and updated regularly. Commit to fully fund projects before they begin. Ensure that critical technologies are proven to work as intended before programs are started. Assign more ambitious technology development efforts to research departments until they are ready to be added to future generations (increments) of a product. Use systems engineering to close gaps between resources and requirements before launching the development process. Use quantifiable data and demonstrable knowledge to make go/no-go decisions, covering critical facets of the program such as cost, schedule, technology readiness, design readiness, production readiness, and relationships with suppliers. Do not allow development to proceed until certain thresholds are met—for example, a high proportion of engineering drawings completed or production processes under statistical control. Empower program managers to make decisions on the direction of the program and to resolve problems and implement solutions. Hold program managers accountable for their choices. Require program managers to stay with a project to its end. Hold suppliers accountable to deliver high-quality parts for their products through such activities as regular supplier audits and performance evaluations of quality and delivery, among other things. Encourage program managers to share bad news, and encourage collaboration and communication. In preparing this testimony, we relied on our body of work in space programs, including previously issued GAO reports on assessments of individual space programs, common problems affecting space system acquisitions, and the Department of Defense’s (DOD) acquisition policies. We relied on our best practices studies, which comment on the persistent problems affecting space acquisitions, the actions DOD has been taking to address these problems, and what remains to be done, as well as Air Force documents addressing these problems and actions. We also relied on work performed in support of our annual weapons system assessments, and analyzed DOD funding estimates to assess cost increases and investment trends for selected major space acquisition programs. The GAO work used in preparing this statement was conducted in accordance with generally accepted government auditing standards. Those standards require that we plan and perform the audit to obtain sufficient, appropriate evidence to provide a reasonable basis for our findings and conclusions based on our audit objectives. We believe that the evidence obtained provides a reasonable basis for our findings and conclusions based on our audit objectives. 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Summary: The majority of large-scale acquisition programs in the Department of Defense's (DOD) space portfolio have experienced problems during the past two decades that have driven up costs by billions of dollars, stretched schedules by years, and increased technical risks. To address the cost increases, DOD altered its acquisitions by reducing the number of satellites it intended to buy, reducing the capabilities of the satellites, or terminating major space systems acquisitions. Moreover, along with the cost increases, many space acquisitions are experiencing significant schedule delays--as much as 8 years--resulting in potential capability gaps in areas such as missile warning, military communications, and weather monitoring. This testimony focuses on (1) the status of space acquisitions, (2) causal factors of acquisition problems, and (3) efforts underway to improve acquisitions. In preparing this testimony, GAO relied on its body of work, including GAO reports on best practices, assessments of individual space programs, common problems affecting space system acquisitions, and the DOD's acquisition policies. We have made numerous recommendations to the DOD in the past on matters relating to overall best practices as well as on individual space program acquisitions. DOD often concurred with our findings and recommendations and has efforts underway to adopt best practices. A long-standing problem in DOD space acquisitions is that program and unit costs tend to go up significantly from initial cost estimates, while in some cases, the capability that was to be produced declines. This problem persists. However, DOD has made progress on several of its high-risk space programs and is expecting to launch new generations of satellites across various missions over the next 12 months that should significantly advance some capabilities, particularly protected communications and space surveillance. While DOD is having success in readying some satellites for launch, other space acquisition programs currently in development face challenges that could further increase costs and delay targeted delivery dates. Another risk facing DOD space programs over the next few years is the potential for launch delays because of changes being made in the launch sector and an increase in the demand for certain DOD launch vehicles. Our past work has identified a number of causes for the cost growth and related problems, but several consistently stand out. First, on a broad scale, DOD starts more weapon programs than it can afford, creating a competition for funding that encourages low cost estimating, optimistic scheduling, overpromising, suppressing bad news, and, for space programs, forsaking the opportunity to identify and assess potentially more executable alternatives. Second, DOD has tended to start its space programs too early, that is, before it has the assurance that the capabilities it is pursuing can be achieved within available resources and time constraints. This tendency is caused largely by the funding process, since acquisition programs attract more dollars than efforts concentrating solely on proving technologies. Third, programs have historically attempted to satisfy all requirements in a single step, regardless of the design challenge or the maturity of the technologies necessary to achieve the full capability. DOD has been working to ensure that its space programs are more executable and produce a better return on investment. Some actions DOD and others have adopted or are pursuing include: the Acquisition Improvement Plan, which lists five initiatives for improving how the Air Force obtains new capabilities; changes in cost estimating that are in line with earlier GAO recommendations; and the Weapon Systems Acquisition Reform Act, which was signed into law in May 2009. However, there are still significant changes to processes, policies, and support needed to ensure reforms can take hold. Recent studies and reviews that have examined national security space have all found that diffuse leadership has a direct impact on the space acquisition process, primarily because it makes it difficult to hold any one person or organization accountable, and there is no single authority to resolve conflicts among the many organizations involved in space programs. Moreover, DOD continues to face gaps in critical technical and program expertise for space. Until both issues are resolved, commitment to reforms may not be sustainable.