The majority of major acquisition programs in DOD’s space portfolio have experienced problems during the past two decades that have driven up cost and schedules and increased technical risks. Several programs have been restructured by DOD in the face of delays and cost growth. At times, cost growth has come close to or exceeded 100 percent, causing DOD to nearly double its investment in the face of technical and other problems without realizing a better return on investment. Along with the increases, many programs are experiencing significant schedule delays—as much as 6 years—postponing delivery of promised capabilities to the warfighter. Outcomes have been so disappointing in some cases that DOD has had to go back to the drawing board to consider new ways to achieve the same, or less, capability. Some programs have been able to work through the bulk of technical problems they were facing and are on track to meet revised targets, albeit at higher costs and with delayed deliveries. Others, however, continue to face setbacks. The following chart compares original cost estimates and current cost estimates for the broader portfolio of major space acquisitions for fiscal years 2007 through 2012. The wider the gap between original and current estimates, the fewer dollars DOD has available to invest in new programs. The next two figures reflect differences in unit costs and total costs for satellites from the time the programs officially began to their most recent cost estimate. As the second figure notes, 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 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. Likewise, the Space Based Infrared System (SBIRS) High missile detection program deferred capabilities, such as mobile data processors for the Air Force and the Army and a fully compliant backup mission control facility, and it pushed off a decision to procure the third and fourth satellites, which will not meet SBIRS High requirements for coverage. Despite such measures, unit costs for both programs are still considerably higher than originally promised. In addition to SBIRS High and NPOESS, the programs featured in the figures include the Advanced Extremely High Frequency (AEHF) satellites, the Wideband Global SATCOM (WGS) and the Mobile User Objective System (MUOS), which are all communications satellites, and the Global Positioning System (GPS) II. The next chart highlights the additional estimated months needed to complete programs. 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 this reason, DOD began an alternative infrared system effort, known as the Alternative Infrared Satellite System (AIRSS), to run in parallel with the SBIRS High program. Some programs, such as AEHF and WGS, have worked through the bulk of technical and other problems that were causing large schedule increases and cost delays. For example, the AEHF program, which has been in the final stages of development for almost 3 years, resolved issues related to its cryptographic equipment and is on track to meet a revised date for first launch. The WGS program completed rework on improperly installed fasteners, and contractors have redesigned computers to rectify data transmission errors. The program expects a first launch in June 2007. As noted in our figures, the MUOS program, which began more recently than AEHF and WGS, is generally meeting its targets, though it has yet to enter into the more difficult stages of satellite production, integration and test. By contrast, the SBIRS High program still faces considerable risks. Recent GAO work for this subcommittee, for example, shows that the program is diverging from cost and schedule targets just months after rebaselining due to problems related to assembly, integration, and testing and that the contractor’s estimates for addressing these issues are overly optimistic. Defense Contract Management Agency reports also show that software development efforts are behind schedule—by as much as 32 percent. In addition, the contractor has already spent about 28 percent, or $66 million, of its management reserve from April 2006 to November 2006. This reserve is designed to last until 2012, but at the current rate, is likely to be depleted by May 2008. If this trend continues, $500 million in additional reserve will be needed. As noted earlier, DOD initiated an alternative effort—AIRSS—to ensure it would have continued capabilities. However, we have questions as to whether AIRSS is being pursued as a “plan B” program, as originally envisioned. Rather than seek to maintain continuity of operations, the program is focused on advancing capabilities because program managers believe there are no viable alternatives. We also found that there was disagreement among DOD stakeholders as to whether there were alternatives or not, and there was concern that the AIRSS schedule may be too compressed. Our analysis also found that there was a high degree of concurrency in the program’s schedule, which may be limiting DOD’s ability to gain knowledge from planned demonstrations and increased the potential for costly rework further in the program. The GPS Block IIF program is also at a high risk of cost increases and schedule delays. Since our last annual assessment of the GPS Block IIF program, the program has revised its acquisition program baseline to account for cost increases and schedule delays, and requested an additional $151 million to cover these costs. The number of IIF satellites to be procured was reduced from 19 to 12. Further, the launch date of the first IIF satellite continues to slip. The original baseline showed an initial launch availability date of December 2006, but DOD’s current baseline shows July 2009—a slip of about 2.5 years. The program also learned that the contractor’s earned value management reporting system was not accurately reporting cost and schedule performance data. A DOD report also recently found that development of user equipment has not been synchronized with the development of satellites and control system, increasing the risk of substantial delays in realistic operational testing and fielding of capabilities. GPS is taking measures to address these problems. For example, this year, it did not award its contractor $21.4 million in award fees. In December 2005, GAO recommended that DOD improve its use of award fees for all weapon system contracts by specifically tying them to acquisition outcomes. A review of a sample of programs, including SBIRS High, found that this was generally not done. The NPOESS program is also still at risk of more cost increases and schedule delays. In June 2006, DOD certified the NPOESS program to Congress, and with agreement from its program partners, DOD restructured the program. Now the NPOESS program acquisition costs are estimated to be about $11.5 billion—an increase of about $3 billion over the prior cost estimate. Before the contract was awarded, in 2002, the life cycle cost for the program was estimated to be $6.5 billion over the 24-year period from the inception of the program in 1995 through 2018. The delivery of the first two NPOESS satellites has been delayed by roughly 4 and 5 years, and as noted earlier, the number of satellites to be produced has been reduced from six to four. In addition, the number of instruments was reduced from 13 (10 sensors and 3 subsystems) to 9 instruments (7 sensors and 2 subsystems), and 4 of the remaining sensors will have fewer capabilities. The NPOESS program will incorporate any number of the deleted instruments if additional funding is provided from outside the NPOESS program. The program restructure will result in reduced satellite data collection coverage, requiring dependence on a European weather satellite for coverage during midmorning hours. Although the program has reduced the number of satellites it will produce, the cost per satellite is more than 150 percent above the original approved program baseline. The NPOESS program is now updating the cost, schedule, performance baselines and acquisition strategy, and coordinating the changes with the three agencies. The program expects these documents to be approved later this year. While work is continuing on key sensors, the program still faces potential problems in their development. The Space Based Space Surveillance System (SBSS) system—not featured on the charts above because it is not yet a formal acquisition program— is also encountering problems. The SBSS system is to replace an aging sensor on an orbiting research and development satellite and improve the timeliness of data on objects in geosynchronous orbit. As currently planned, the initial block will consist of a single satellite and associated command, control, communications, and computer equipment. Subsequent SBSS efforts will focus on building a larger constellation of satellites to provide worldwide space surveillance of smaller objects in shorter timelines. In late 2005, an independent review team found that the program’s baseline was not executable; that the assembly, integration, and test plan was risky; and that the requirements were overstated. The SBSS program was restructured in early 2006 due to cost growth and schedule delays. The restructuring increased funding and schedule margin; streamlined the assembly, integration, and test plan; and relaxed requirements. The launch of the initial satellite was delayed to April 2009—a delay of about 18 months. Cost growth due to the restructure is about $130 million over initial estimates. Last, additional cost increases are expected for the Evolved Expendable Launch Vehicle (EELV) program, but for reasons that are different than the ones being experienced on the satellite programs. In recent years, program cost has risen 79 percent, with a cost per unit increase of 135 percent. A chief reason for cost increases is a decline in the commercial launch market upon which the program’s business case was based. Cost increases are also a result of additional program scope, including mission assurance, assured access to space, and earned value management systems reporting.