The majority of satellite programs we have reviewed over the past 2 decades experienced problems during their acquisition that drove up costs and schedules and increased technical risks. Several programs were 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 face of technical and other problems without realizing a better return on its investment. Along with the cost 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 capability. It is in such a position today, with its Space-based Infrared System (SBIRS) High program and possibly its National Polar-orbiting Operational Environmental Satellite System (NPOESS) program, both of which have been mired in expanding cost and schedule setbacks. More specifically, DOD’s investment in SBIRS High, a critical missile warning system, has been pushed to over $10.5 billion from the initial $4.1 billion estimate made over 9 years earlier. This 160-percent increase in estimated costs triggered a fourth Nunn-McCurdy breach (see 10 U.S.C. 2433), requiring a review by the Secretary of Defense and a report to Congress, and resulted in the program being restructured for a third time, in late 2005. With costs and timelines spiraling out of control, DOD reduced the number of satellites it plans to procure—pushing the average per unit procurement cost up to 224-percent above 2002 baseline costs—and is now pursuing an alternative to SBIRS High while it continues with the scaled back program. Initial cost and schedule estimates for NPOESS—a new satellite constellation intended to replace existing weather and environmental monitoring satellites—have also proven unreliable. NPOESS is managed by a tri-agency Integrated Program Office consisting of DOD, the National Oceanic and Atmospheric Administration, and National Aeronautics and Space Administration. In January 2006, the program reported a Nunn- McCurdy unit cost breach, at the 25-percent threshold, due to continuing technical problems, including problems with the development of key sensors. Specifically, in early 2005, DOD learned that a subcontractor could not meet cost and schedule targets due to significant technical issues on an imaging sensor known as the visible/infrared imager radiometer suite (VIIRS) sensor—including problems with the cryoradiator, excessive vibration of sensor parts, and errors in the sensor’s solar calibration. These technical problems were further complicated by subcontractor management problems. To address these issues, DOD provided additional funds for VIIRS, capped development funding for other critical technologies, and revised its schedule to keep the program moving forward. We also reported that based on our own analysis of contractor trends, the program will most likely overrun costs by $1.4 billion. Given the challenges currently facing the program, the scheduled first launch date slipped 17 months to September 2010. Another recent example of problems is evident in the Advanced Extremely High Frequency (AEHF) program. We reported in the past that this program experienced cost increases due to requirements changes, inadequate contract strategies, and funding shortfalls. We also reported that DOD had to cut back its planned purchase of satellites from five to three as a result. The outcome has been an 84-percent unit cost increase— each AEHF satellite is now estimated to cost about $2.1 billion. More recently, we reported that scheduling delays and the late delivery of cryptographic equipment have culminated into nearly a 3-year delay in the launch of the first satellite and that the program still faces schedule risk due to the continued concurrent development of two critical path items managed and developed outside the program. Acquisition problems have not been limited to the development of home- grown systems. DOD’s purchase of an ostensible commercial satellite for the use of communications, the Wideband Gapfiller Satellite (WGS), is experiencing about a 70-percent cost growth, due in part to the problems a subcontractor was experiencing in assembling the satellites. Improperly installed fasteners on the satellites’ subcomponents have resulted in rework on the first satellite and extensive inspections of all three satellites currently being fabricated. The cost for WGS has increased about $746.3 million but DOD estimates that about $276.2 million of this amount is largely due to cost growth associated with a production gap between satellites three and four. The launch of the first satellite has now been delayed for over 3 years and is currently scheduled for June 2007. The delay will increase program costs and add at least 22 months to the time it takes to obtain an initial operational capability from the system. Figure 1 shows that, overall for fiscal years 2006 through 2011, estimated costs for DOD’s major space acquisition programs have increased a total of about $12.2 billion—or nearly 44-percent in total—above initial estimates. Figure 2 breaks out this trend among key major space acquisitions. As both figures illustrate, cost increases have had a dramatic impact on DOD’s overall space portfolio. To cover the added costs of poorly performing programs, DOD has shifted scarce resources away from other programs, creating a cascade of cost and schedule inefficiencies. For example, to fund other space programs, DOD has had to push off the start of a new version of the Global Positioning System (GPS), which has forced costs to increase for the current version under development. Meanwhile, DOD is also contending with cost increases within its Evolved Expendable Launch Vehicle (EELV) program. These are largely due to misjudgments about the extent to which DOD could rely on commercial demand to leverage its investment. Nevertheless, the resulting $12.6 billion increase has added pressures to make tradeoffs. At the same time that DOD is juggling resources on existing programs, it is undertaking two new efforts—the Transformational Satellite Communications System (TSAT) program and Space Radar program— which are expected to be among the most ambitious, expensive, and complex space systems ever. Moreover, DOD is relying heavily on their planned capabilities to fundamentally enable DOD to transform how military operations are conducted. In fact, many other weapon systems will be interfaced with these satellites and highly dependent on them for their own success. Together, these systems have been preliminarily estimated to cost about $40 billion. While DOD is planning to undertake the new systems, broader analyses of the nation’s fiscal future indicate that spending for weapon systems may need to be reduced, rather than increased, to address growing deficits. Our reviews have identified a number of causes behind the problems just described, but several consistently stand out. First, on a broad scale, DOD starts more weapon programs than it can afford, creating a competition for funding which encourages low cost estimating, optimistic scheduling, over promising, suppressing bad news, and for space programs, forsaking the opportunity to identify and assess potentially better alternatives. Programs focus on advocacy at the expense of realism and sound management. Invariably, with too many programs in its portfolio, DOD and even Congress are forced to continually shift funds to and from programs— often undermining well-performing programs to pay for poorly performing ones. Second, DOD starts its space programs too early, that is, before it has 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 out technologies. Nevertheless, when DOD chooses to extend technology invention into acquisition, programs experience technical problems that have reverberating effects and require large amounts of time and money to fix. When programs have a large number of interdependencies, even minor “glitches” can cause disruptions. A companion problem for all weapon systems is that DOD allows new requirements to be added well into the acquisition phase. Many times, these significantly stretch the technology challenges (and consequently, budgets) the program is already facing. This was particularly evident in SBIRS High up until 2004. While experiences would caution DOD not to pile on new requirements, customers often demand them fearing there may not be another chance to get new capabilities since programs can take a decade or longer to complete. Third, space programs have historically attempted to satisfy all requirements in a single step, regardless of the design challenge or the maturity of the technologies to achieve the full capability. Increasingly, DOD has preferred to make fewer, but heavier, larger, and complex “Battlestar Galactica-like” 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 the capability of many potential contractors and vastly increased the complexities related to software—a problem that affected SBIRS High and AEHF, for example. Our reviews have identified additional factors that contribute to space acquisition problems, though less directly affecting cost and schedule problems we have reported on. For example, consolidations within defense supplier base for space programs have made it more difficult for DOD to incorporate competition into acquisition strategies. Since 1985, there were at least ten fully competent prime contractors competing for the large programs and a number that could compete for subcontracts. Arguably today, there are only two contractors that could handle DOD’s most complex space programs. DOD has exacerbated this problem by not seeking opportunities to restructure its acquisitions to maximize competition, particularly for the small suppliers who have a high potential to introduce novel solutions and innovations into space acquisitions. In the 1990s, DOD also structured contracts in a way that reduced oversight and shifted key decisionmaking responsibility onto contractors.