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.