Since the 1960s, geostationary and polar-orbiting environmental satellites have been used by the United States to provide meteorological data for weather observation, research, and forecasting. NOAA’s National Environmental Satellite Data and Information Service (NESDIS) is responsible for managing the civilian geostationary and polar-orbiting satellite systems as two separate programs, called GOES and the Polar Operational Environmental Satellites, respectively. Unlike polar-orbiting satellites, which constantly circle the earth in a relatively low polar orbit, geostationary satellites can maintain a constant view of the earth from a high orbit of about 22,300 miles in space. NOAA operates GOES as a two-satellite system that is primarily focused on the United States. These satellites are uniquely positioned to provide timely environmental data to meteorologists and their audiences on the earth’s atmosphere, its surface, cloud cover, and the space environment. They also observe the development of hazardous weather, such as hurricanes and severe thunderstorms, and track their movement and intensity to reduce or avoid major losses of property and life. Furthermore, the satellites’ ability to provide broad, continuously updated coverage of atmospheric conditions over land and oceans is important to NOAA’s weather forecasting operations. To provide continuous satellite coverage, NOAA acquires several geostationary satellites at a time as part of a series and launches new satellites every few years (see table 1). Three satellites—GOES-11, GOES-12, and GOES-13—are currently in orbit. Both GOES-11 and GOES-12 are operational satellites, while GOES-13 is in an on-orbit storage mode. It is a backup for the other two satellites should they experience any degradation in service. The others in the series, GOES-O and GOES-P, are planned for launch over the next few years. NOAA is also planning the next generation of satellites, known as the GOES-R series, which are planned for launch beginning in 2014. NOAA plans for the GOES-R program to improve on the technology of prior series, in terms of both system and instrument improvements, to fulfill more demanding user requirements and to provide more rapid information updates. Table 2 highlights key system-related improvements GOES-R is expected to make to the geostationary satellite program. In addition to the system improvements, the instruments on the GOES-R series are expected to significantly increase the clarity and precision of the observed environmental data. NOAA originally planned to acquire six different types of instruments. Furthermore, two of these instruments— the Advanced Baseline Imager and the Hyperspectral Environmental Suite—were considered to be the most critical because they would provide data for key weather products. Table 3 summarizes the originally planned instruments and their expected capabilities. More recently, however, NOAA reduced the scope of the GOES-R program because of expectations of higher costs. In May 2006, the program office projected that total costs, which were originally estimated to be $6.2 billion, could reach $11.4 billion. We reported that this led NOAA to reduce the scope and technical complexity of the baseline program. Specifically, in September 2006, NOAA reduced the minimum number of satellites from four to two, cancelled plans for developing the Hyperspectral Environmental Suite, and estimated the revised program would cost $7 billion. Table 4 provides a summary of the timeline and scope of these key changes. NOAA is solely responsible for GOES-R program funding and overall mission success. However, since it relies on NASA’s acquisition experience and technical expertise to help ensure the success of its programs, NOAA implemented an integrated program management structure with NASA for the GOES-R program. Within the program office, there are two project offices that manage key components of the GOES-R system. These are called the flight and operations project offices. The flight project office oversees the spacecraft, instruments, and launch services. The operations project office oversees the ground elements and on-orbit operations of the satellites. The project manager for the flight project office and the deputy project manager for operations project office are designated to be filled with NASA personnel. Additionally, NOAA has located the program office at NASA’s Goddard Space Flight Center. NOAA’s acquisition strategy was to award contracts for the preliminary design of the GOES-R system to several vendors who would subsequently compete for the contract to be the single prime contractor responsible for overall system development and production. As such, in October 2005, NOAA awarded contracts for the preliminary design of the overall GOES-R system to three vendors. In addition, to reduce the risks associated with developing technically advanced instruments, NASA awarded contracts for the preliminary designs for five of the originally planned instruments. NASA expected to subsequently award development contracts for these instruments and to eventually turn them over to the prime contractor responsible for the overall GOES-R program. NOAA has completed preliminary design studies of its GOES-R procurement. In addition, the agency recently decided to separate the space and ground elements of the program into two separate contracts to be managed by NASA and NOAA, respectively. However, this change has delayed a key decision to proceed with the acquisition, which was planned for September 2007. Further, independent estimates are higher than the program’s current $7 billion cost estimate and convey a low level of confidence in the program’s schedule for launching the first satellite by 2014. As NOAA works to reconcile the independent estimate with its own program office estimate, costs are likely to grow and schedules are likely to be delayed. NOAA and NASA have made progress on GOES-R. The program office has completed preliminary design studies of the overall GOES-R system and has initiated development work on most of the planned instruments. Specifically, the NOAA-issued contracts for the preliminary design of the overall GOES-R system to three vendors have ended, and the designs have been completed. In addition, after completing preliminary designs on five of the originally planned instruments, NASA awarded development contracts for three of them. Further, the most critical of these instruments—the Advanced Baseline Imager—has completed a major development milestone. In February 2007, it passed a critical design review gate and NASA approved the contractor to begin production of a prototype model. NOAA recently made a number of key changes in how it plans to acquire the GOES-R system. Originally, NOAA planned to award and manage a single prime contract for the acquisition and operation of the integrated system. However, an independent review team assessed the program and found that this approach was risky. It recommended that NOAA split the acquisition effort into two separate contracts for the space and ground segments and have NASA manage the space segment. The independent review team concluded that there was less risk in continuing with this approach than there would be if NOAA took on a new and expanded role. In March 2007, Commerce approved NOAA’s decision to implement these recommendations. The agency revised its acquisition strategy to include two separate contracts—the space segment and the ground segment. The two contracts are expected to be awarded in May 2008 and August 2008, respectively. The space segment is to be managed by a NASA-led flight project office. As such, NASA is to be responsible for awarding and managing the space segment contract, delivering the flight-ready instruments to the space segment contractor for integration onto the satellites, and overseeing the systems engineering and integration. NOAA is to be responsible for the ground segment contract, which is to be managed by the NOAA-led operations project office. The revised acquisition strategy has delayed NOAA’s plans to complete a key decision milestone on whether to proceed with GOES-R development and production in September 2007. Once this decision is made, the final requests for proposals on the system segments are to be released. The agency could not provide a timeframe for when this key decision milestone would take place. NOAA’s current estimate that the life cycle cost of the GOES-R program would be $7 billion is likely to grow, and its estimate that the first satellite would be launched in December 2014 is likely to slip. Consistent with best practices in cost estimating, in May 2007, NOAA had two different cost estimates completed for the current GOES-R program—one by its program office and one by an independent cost estimating firm. The program office estimated with 80 percent confidence that the program would cost $6.9 billion. The independent estimating firm estimated with 80 percent confidence that the program would cost $9.3 billion. A comparison of the two cost models shows that the independent estimator has about a 20 percent level of confidence that the program can be completed for $6.9 billion. Further, the independent estimator concluded that the program office estimate significantly understated the risk of cost overruns. Other major differences between the two estimates are contained in government costs and in the space and ground segments. In commenting on a draft of the accompanying report, NOAA officials noted that one of the differences between the estimates is the inflation rate. The independent estimator assumed a higher inflation rate than the rate that NOAA and NASA typically use. NOAA officials noted that if the independent estimate was adjusted to NOAA’s inflation rate, the program’s cost estimate—with 80 percent confidence—would be $8.7 billion. However, we believe that the value of an independent estimate is that it does not necessarily use the same assumptions as the program office. By offering alternative assumptions, the independent estimate provides valuable information for government officials to consider when revising program cost estimates. Program officials are reconciling the two different cost estimates and plan to establish a new program cost estimate to be released in conjunction with the President’s fiscal year 2009 budget in February 2008. Program officials were unable to provide us information on the reconciled estimate until it is released. Nonetheless, the revised cost estimate will likely be $1 billion more than the current $7 billion.