DOD and NASA build costly, complex systems that serve a variety of national security and science, technology, and space exploration missions. Within DOD, the Air Force’s Space and Missile Systems Center is responsible for acquiring most of DOD’s space systems; however, the Navy is also acquiring a replacement satellite communication system. MDA, also within DOD, is responsible for developing, testing, and fielding an integrated, layered ballistic missile defense system (BMDS) to defend against all ranges of enemy ballistic missiles in all phases of flight. The major projects that NASA undertakes range from highly complex and sophisticated space transportation vehicles, to robotic probes, to satellites equipped with advanced sensors to study the Earth. Requirements for government space systems can be more demanding than those of the commercial satellite and consumer electronics industry. For instance, DOD typically has more demanding standards for radiation-hardened parts, such as microelectronics, which are designed and fabricated with the specific goal of enduring the harshest space radiation environments, including nuclear events. Companies typically need to create separate production lines and in some cases special facilities. In the overall electronics market, military and NASA business is considered a niche market. Moreover, over time, government space and missile systems have increased in complexity, partly as a result of advances in commercially driven electronics technology and subsequent obsolescence of mature high-reliability parts. Systems are using more and increasingly complex parts, requiring more stringent design verification and qualification practices. In addition, acquiring qualified parts from a limited supplier base has become more difficult as suppliers focus on commercial markets at the expense of the government space market—which requires stricter controls and proven reliability. Further, because DOD and NASA’s space systems cannot usually be repaired once they are deployed, an exacting attention to parts quality is required to ensure that they can operate continuously and reliably for years at a time through the harsh environmental conditions of space. Similarly, ballistic missiles that travel through space after their boost phase to reach their intended targets are important for national security and also require reliable and dependable parts. These requirements drive designs that depend on reliable parts, materials and processes that have passed CDRs, been fully tested, and demonstrated long life and tolerance to the harsh environmental conditions of space. There have been dramatic shifts in how parts for space and missile defense systems have been acquired and overseen. For about three decades, until the 1990s, government space and missile development based its quality requirements on a military standard known as MIL-Q- 9858A. This standard required contractors to establish a quality program with documented procedures and processes that are subject to approval by government representatives throughout all areas of contract performance. Quality is theoretically ensured by requiring both the contractor and the government to monitor and inspect products. MIL-Q- 9858A and other standards—collectively known as military specifications—were used by DOD and NASA to specify the manufacturing processes, materials, and testing needed to ensure that parts would meet quality and reliability standards needed to perform in and through space. In the 1990s, concerns about cost and the need to introduce more innovation brought about acquisition reform efforts that loosened a complex and often rigid acquisition process and shifted key decision-making responsibility—including management and oversight for parts, materials, and processes—to contractors. This period, however, was marked by continued problematic acquisitions that ultimately resulted in sharp increases in cost, schedule, and quality problems. For DOD, acquisition reform for space systems was referred to as Total System Performance Responsibility (TSPR). Under TSPR, program managers’ oversight was reduced and key decision-making responsibilities were shifted onto the contractor. In May 2003, a report of the Defense Science Board/Air Force Scientific Advisory Board Joint Task Force stated that the TSPR policy marginalized the government program management role and replaced traditional government “oversight” with “insight.” In 2006, a retired senior official responsible for testing in DOD stated that “TSPR relieved development contractors of many reporting requirements, including cost and technical progress, and built a firewall around the contractor, preventing government sponsors from properly overseeing expenditure of taxpayer dollars.” We found that TSPR reduced government oversight and led to major reductions in various government capabilities, including cost-estimating and systems-engineering staff. MDA chose to pursue the Lead Systems Integrator (LSI) approach as part of its acquisition reform effort. The LSI approach used a single contractor responsible for developing and integrating a system of systems within a given budget and schedule. We found in 2007 that a proposal to use an LSI approach on any new program should be seen as a risk at the outset, not because it is conceptually flawed, but because it indicates that the government may be pursuing a solution that it does not have the capacity to manage. Within NASA, a similar approach called “faster, better, cheaper” was intended to help reduce mission costs, improve efficiency, and increase scientific results by conducting more and smaller missions in less time. The approach was intended to stimulate innovative development and application of technology, streamline policies and practices, and energize and challenge a workforce to successfully undertake new missions in an era of diminishing resources. We found that while NASA had many successes, failures of two Mars probes revealed limits to this approach, particularly in terms of NASA’s ability to learn from past mistakes. As DOD and NASA moved from military specifications and standards, so did suppliers. According to an Aerospace Corporation study, both prime contractors and the government space market lost insight and traceability into parts as suppliers moved from having to meet military specifications and standards to an environment where the prime contractor would ensure that the process used by the supplier would yield a quality part. During this time, downsizing and tight budgets also eroded core skills, giving the government less insight, with fewer people to track problems and less oversight into manufacturing details. As DOD and NASA experienced considerable cost, schedule, and performance problems with major systems in the late 1990s and early 2000s, independent government-sponsored reviews concluded that the government ceded too much control to contractors during acquisition reform. As a result, in the mid-to late 2000s, DOD and NASA reached broad consensus that the government needed to return to a lifecycle mission assurance approach aimed at ensuring mission success. For example, MDA issued its Mission Assurance Provisions (MAP) for acquisition of mission and safety critical hardware and software in October 2006. The MAP is to assist in improving MDA’s acquisition activities through the effective application of critical best practices for quality safety and mission assurance. In December 2008, DOD updated its acquisition process which includes government involvement in the full range of requirements, design, manufacture, test, operations, and readiness reviews. Also in the last decade, DOD and NASA have developed policies and procedures aimed at preventing parts quality problems. For example, policies at each agency set standards to require the contractor to establish control plans related to parts, materials, and processes. Policies at the Air Force, MDA, and the NASA component we reviewed also establish minimum quality and reliability requirements for electronic parts—such as capacitors, resistors, connectors, fuses, and filters—and set standards to require the contractor to select materials and processes to ensure that the parts will perform as intended in the environment where they will function, considering the effects of, for example, static electricity, extreme temperature fluctuations, solar radiation, and corrosion. In addition, DOD and NASA have developed plans and policies related to counterfeit parts control that set standards to require contractors to take certain steps to prevent and detect counterfeit parts and materials. Table 1 identifies the major policies related to parts quality at DOD and NASA. Government policies generally require various activities related to the selection and testing of parts, materials, and processes. It is the prime contractor’s responsibility to determine how the requirements will be managed and implemented, including the selection and management of subcontractors and suppliers. In addition, it is the government’s responsibility to provide sufficient oversight to ensure that parts quality controls and procedures are in place and rigorously followed. Finally, DOD and NASA have quality and mission assurance personnel staff on their programs to conduct on-site audits at contractor facilities. Table 2 illustrates the typical roles of the government and the prime contractor in ensuring parts quality. DOD and NASA also have their own oversight activities that contribute to system quality. DOD has on-site quality specialists within the Defense Contract Management Agency and the military services, MDA has its Mission Assurance program, and NASA has its Quality Assurance program. Each activity aims to identify quality problems and ensure the on-time, on- cost delivery of quality products to the government through oversight of manufacturing and through supplier management activities, selected manufacturing activities, and final product inspections prior to acceptance. Likewise, prime contractors employ quality assurance specialists and engineers to assess the quality and reliability of both the parts they receive from suppliers and the overall weapon system. In addition, DOD and NASA have access to one or more of the following databases used to report deficient parts: the Product Data Reporting and Evaluation Program (PDREP), the Joint Deficiency Reporting System (JDRS), and the Government Industry Data Exchange Program (GIDEP). Through these systems, the government and industry participants share information on deficient parts. Parts quality problems reported by each program affected all 21 programs we reviewed at DOD and NASA and in some cases contributed to significant cost overruns, schedule delays, and reduced system reliability and availability. In most cases, problems were associated with electronics parts, versus mechanical parts or materials. Moreover, in several cases, parts problems were discovered late in the development cycle and, as such, tended to have more significant cost and schedule consequences. Table 3 identifies the cost and schedule effects of parts quality problems for the 21 programs we reviewed. The costs in this table are the cumulative costs of all the parts quality problems that the programs identified as most significant as of August 2010 and do not necessarily reflect cost increases to the program’s total costs.