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 7 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. As figures 1 and 2 below indicate, five programs that were begun in the late 1990s / early 2000s to replenish aging constellations of satellites have incurred substantial cost growth and schedule delays, including the (1) the Advanced Extremely High Frequency (AEHF) communications satellite program, (2) the National Polar-orbiting Operational Environmental Satellite System (NPOESS), which DOD is jointly developing with the National Oceanic and Atmospheric Administration, (3) the Space Based Infrared System (SBIRS), which detects missile launches, (4) the Wideband Global SATCOM (WGS), another communications satellite, and (5) the Global Positioning System (GPS) IIF program. Last year we reported that AEHF and WGS had worked through the bulk of their technical problems. Since our testimony, the first WGS satellite was launched, but the AEHF program experienced technical problems with hardware components that have pushed back its first launch date by 6 months. Also, this year, as described below, we found that NPOESS and SBIRS still face very high risks, even after recent acquisition replanning efforts. Further, GPS IIF has experienced additional technical problems. SBIRS continues to face cost and schedule setbacks. Software problems have recently delayed the first satellite launch by about a year, which will likely increase the program’s overall delay to roughly 7 years. Correcting the problems may necessitate hardware and software changes that could, according to the Air Force, also drive cost increases up to $1 billion, which would be in addition to the $6 billion cost growth already incurred. Management-reserves expenditure continues at an unsustainable rate. Program officials acknowledge that management reserves set aside to fix unexpected problems will likely be depleted in early 2009, even though the reserves were intended to last through 2012. Given the complexity of the SBIRS satellites, it is possible that further design flaws may be discovered, leading to more cost and schedule increases. If management reserves are depleted and not replenished, the program will likely experience further cost and schedule problems. In July 2007, the NPOESS program finalized its restructure in response to a Nunn-McCurdy (10 U.S.C. § 2433) program acquisition unit breach of the critical cost growth threshold. The restructure included about an additional $4.1 billion, or about a 49 percent, life-cycle cost increase for fewer satellites to be acquired, delays in satellite launches, and deletions or replacements of satellite sensors. The restructure also included removing 7 of the original 14 critical technologies from the program. Furthermore, 3 of the remaining technologies remain immature and the program continues to experience development problems, increasing risks of further problems. At this point, the program has seen a 153 percent unit cost increase. The GPS IIF program has faced technical challenges in completing development and production, causing another schedule delay in the launch of the first IIF satellite—over a 2-year slip from the original launch Not all of DOD’s space programs are facing the problems being experienced by GPS, NPOESS, and SBIRS. For example, the Navy’s Mobile User Objective System (MUOS), another communications satellite program, is meeting cost and schedule goals. Further, as discussed later in this testimony, newer Air Force acquisition efforts such as the Transformational Satellite Communications System (TSAT) and Space Radar have been taking actions to ensure they can meet their cost and schedule goals, though their funding has been reduced in light of overall affordability of space acquisitions. These two efforts were highly complex and ambitious and were predicted to be the most expensive military satellite developments ever. In addition, in December 2005, the Air Force was directed to begin efforts to develop competing capability in parallel with the SBIRS program; this effort was previously known as the Alternative Infrared Satellite System (AIRSS). We reported in September 2007 that DOD had not positioned the AIRSS effort for success. DOD agreed, and revised the effort’s development strategy to reflect best practices. The effort has a new name, the Third Generation Infrared Surveillance (Third Gen), and is now a follow on to the SBIRS program. The first sensor prototypes are expected later this month. Lastly, our annual weapons system assessment this year will be reporting on challenges faced by the Evolved Expendable Launch Vehicle (EELV) program, as the two providers—Boeing and Lockheed Martin—undertake a joint venture that will provide U.S. government launches of medium- to heavy-lift rockets. The consolidation of production, engineering, test, and launch operations under the joint venture, called the United Launch Alliance or ULA, is expected to yield cost savings in the future, but when and how much remains unknown. ULA expects the consolidation to be nearly complete by the end of 2010, but there are preliminary indications that some elements of the consolidation are falling behind schedule. Furthermore, the Air Force revised its acquisition and contracting strategy for EELV in 2005, which among other things increased program office oversight responsibilities. The change in contracting strategy created new data analysis activities for the program and expanded the types of expertise needed by the program office to utilize the new information provided by contractors. Despite its increased responsibilities, the program office is experiencing staff reductions and expects staffing vacancies to continue in the near term. The current military staff lacks some of the technical expertise needed to fully analyze contractor performance data now being collected under the new contracting strategy. Our work has identified a variety of reasons for this cost growth, most notably that weapons programs are incentivized to produce and use optimistic cost and schedule estimates in order to successfully compete for funding. We have also found that 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. We have also tied acquisition problems in space to inadequate contracting strategies; contract and program management weaknesses; the loss of technical expertise; capability gaps in the industrial base; tensions between labs that develop technologies for the future and current acquisition programs; divergent needs in users of space systems; diffuse leadership; and other issues that have been well documented in DOD and GAO studies. Many of these underlying issues affect the broader weapons portfolio as well, though we have reported that space programs are particularly affected by the wide disparity of users, who include DOD, the intelligence community, other federal agencies, and in some cases, other countries and U.S. business and citizens. Moreover, problematic implementation of an acquisition strategy in the 1990s, known as Total System Performance Responsibility, for space systems resulted in losses of technical expertise and weaknesses in contracting strategies that space programs are still dealing with the effects of. Over the past decade, we have identified best practices that DOD space programs can benefit from. DOD has taken a number of actions to address the problems that we have reported on. These include initiatives at the department level that will affect its major weapons programs, as well as changes in course within specific Air Force programs. Although these actions are a step in the right direction, additional leadership and support are still needed to ensure that reforms that DOD has begun will take hold. Our work—which is largely based on best practices in the commercial sector—has recommended numerous actions that can be taken to address the problems we identified. Generally, we have recommended that DOD separate technology discovery from acquisition, follow an incremental path toward meeting user needs, match resources and requirements at program start, and use quantifiable data and demonstrable knowledge to make decisions to move to next phases. We have also identified practices related to cost estimating, program manager tenure, quality assurance, technology transition, and an array of other aspects of acquisition program management that space programs could benefit from. Table 1 highlights these practices; appendix II provides more detail. DOD is attempting to implement some of these practices for its major weapons programs. For example, we recently reported that DOD released a strategy to enhance the role of program managers in carrying out its major weapon system acquisitions. As part of this strategy, DOD established a policy that requires formal agreements among program managers, their acquisition executives, and the user community intended to set forth common program goals. In addition, DOD plans a variety of actions to enhance development opportunities, provide more incentives, and arrange knowledge-sharing opportunities for its program managers. Within this strategy, the department also acknowledged that any actions taken to improve accountability must be based on a foundation from which program managers can launch and manage programs toward greater performance, and must include an overarching strategy and decision-making processes that prioritize programs based on a match between customer needs and available resources. DOD highlighted several initiatives that, if adopted and implemented properly, could provide such a foundation. Some of these include establishing an early decision gate to review proposed programs at the concept stage, testing portfolio management approaches in selected capability areas and using capital budgeting accounts for programs in development. Additionally, as we reported previously, the Air Force adopted a “back to basics” approach for space designed to reduce technology risk and ensure programs were more executable.