For decades, space acquisition programs have been encountering large cost increases and schedule delays. As a result, DOD has been unable to deliver capabilities as promised. This past year alone, for example, costs have continued to climb on the Space Based Infrared System High (SBIRS- High) program—triggering another Nunn-McCurdy review and certification of the program and pushing DOD’s investment in this critical missile warning system to over $9.9 billion, from the initial $3.9 billion estimate made 9 years ago. At the same time, programs focused on developing new communications satellites are facing cost increases and schedule delays, the National Polar-orbiting Operational Environmental Satellite System has been restructured and is facing cost increases and schedule delays, and unit cost increases for launch vehicles have now increased by 81 percent since 2002 due to erroneous assumptions about the commercial launch market upon which the program’s business case was based. Taken together, these problems have had a dramatic impact on DOD’s overall space portfolio. DOD has had to shift scarce resources to poorly performing programs and has pushed off starting a new version of the Global Positioning System (forcing costs to increase for the current version under development). Cost increases have also kept DOD from investing more in science and technology efforts that support space. We reported recently, for example, that funding for testing of space technologies has declined in recent years. It is also important to note that, for some programs, DOD is spending considerable sums of money—in addition to what was planned or long after it had originally anticipated— thus posing additional pressures on its overall investment portfolio. DOD originally planned to complete expenditures for SBIRS-High in fiscal year 2006, for example, but currently it plans to spend about $3.4 billion in fiscal years 2007 through 2013. At the same time DOD is facing these problems, it is attempting to undertake new efforts—including the Transformational Satellite Communications System (TSAT) program and Space Radar program— which are expected to be among the most expensive and complex ever, and which DOD is heavily relying on in its efforts to fundamentally 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. Figure 1 shows the percent increase in total cost from the initial estimate to its most recent, for current major space system acquisitions. Systems that have incurred particularly significant cost increases include the SBIRS-High and the Global Broadcasting System. In addition, relatively newer programs such as the Evolved Expendable Launch Vehicle (EELV), Advanced Extremely High Frequency (AEHF) satellite and the Wideband Gapfiller communication satellites have also been experiencing cost increases. In general, the longer a system has been in development, the greater the amount of its cost growth. In addition, nearly all of the programs have also experienced significant schedule delays as well. As figure 2 illustrates, there is a vast difference between DOD’s budgeting plans and the reality of the cost of its space systems. Over the next 10 years, space systems, each year, on average, will cost DOD in excess of $1.5 billion more than it had originally planned. Moreover, the sum of the percentage cost increases represents an additional $20 billion over the combined lives of the programs above. This means there is $1.5 billion less that DOD has to spend on other priorities annually and tens of billions less available for DOD’s overall weapons portfolio over time. It is not clear how DOD’s budget will accommodate these additional costs. In Table 1 below, we highlight recent findings from our reports. As the table notes, many programs are still addressing past mistakes in acquisition approaches and contractor oversight as well as technical, design, and manufacturing problems. We have analyzed the range of space-based acquisitions over the last several years to identify the common and causal factors for these poor acquisition outcomes. Overall, we have found that DOD has been unable to match resources (technology, time, and money) to requirements before beginning individual programs, setting the stage for technical and other problems, which lead to cost and schedule increases. Moreover, on a broader scale, DOD starts more programs than it can afford, creating a set of incentives and pressures that invariably have negative effects on individual programs and the larger investment portfolio. Match Between Resources and Requirements Seldom Achieved at the Our past work has shown that space programs have typically not achieved a match between requirements and resources at program start. In other words, the programs did not have the level of knowledge needed to assure that they could be completed within expected cost and schedule estimates. Requirements for what the satellite needed to do and how well it must perform are not adequately defined at the beginning of a program or are changed significantly once the program has begun. Technologies are not mature enough to be included in product development. Cost estimates are unreliable—largely because requirements have not been fully defined and because programs start with many unknowns about technologies. There are a range of other resource gaps that DOD faces when it begins new space acquisitions. For example, we have reported on deficiencies within the space acquisition workforce, contracting strategies that support acquisitions, contractor capabilities, as well as funding available for testing of space technologies. Nevertheless, unstable requirements and immature technologies are the most significant contributors to cost and schedule increases, and not just for space acquisitions but all DOD weapons acquisitions. We also have reported on cross-cutting factors that make it more difficult for DOD to achieve a match between resources and requirements for space acquisitions. First, space systems may suffer from more requirements pressures than other weapon systems because there is usually a very broad constituency—contractors, military services, civilian users, administrations, and Congress—behind each satellite program. This creates challenges in making tough tradeoff decisions. The Global Positioning System, for example, not only serves military users but also serves civilians, supports various key economic sectors such as transportation and communications, and is used by allies. As a result, when starting these new systems, space program managers can expect to be inundated with competing demands—not just among military users— but also among civilian and industry users. Second, space acquisition programs have historically attempted to satisfy all requirements in a single step, regardless of the design challenge or the maturity of technologies to achieve the full capability. There is a variety of reasons for this, including a desire to include the most advanced technologies onboard satellites, particularly in view of the length of time it takes to develop space systems. However, this approach invariably increases the technology challenges facing programs, and thus, the risk that costly problems will be encountered. Third, there is a tendency among space system acquisition programs to take on technology development that should occur within the science and technology (S&T) environment. Reasons for this include the greater ability to secure funding for costly technology development within an acquisition program versus a science and technology program, a belief among the acquisition community that labs in charge of developing space technologies do not adequately understand their needs, as well as communication gaps between the S&T and acquisition communities. Nevertheless, our work has continually shown that allowing technology development to carry over into product development increases the risk that significant problems will be discovered late in development. Addressing such problems may require more time, money, and effort to fix because they may require more extensive retrofitting and redesign as well as testing. Moreover, when there are many unknowns about critical technologies, a program cannot reliably estimate what resources will be needed to complete a program—leaving DOD and the Congress in a position of committing to large investments without knowing how much they will truly cost or how long it will actually take for capabilities to be delivered. There is a widespread belief among DOD and other officials involved with space programs that DOD starts more programs than it can afford in the long run, forcing programs to underestimate costs and over-promise capability and creating a host of negative incentives and pressures. Specifically, officials we have spoken with cited the following. Because programs are funded annually and priorities have not been established, competition for funding continues over time, forcing programs to view success as the ability to secure the next installment rather than the end goal of delivering capabilities when and as promised. Concurrently, when faced with lower budgets, senior executives within the Office of the Secretary of Defense and the Air Force would rather make across-the-board cuts to all space programs than hard decisions as to which ones to keep and which ones to cancel or cut back. Having to continually “sell” a program creates incentives to suppress bad news about a program’s status and avoid activities that uncover bad news. When combined with the high cost of launching demonstrators into space, the competition for funding often encourages programs to avoid testing technologies in space before acquisition programs are started. Our previous reports have found that these pressures are long-standing and common to weapon acquisitions, not just space acquisitions. The competition within DOD to win funding and get approval to start a new program is intense, creating strong incentives to make a weapon system stand out from existing or alternative systems. Moreover, overall DOD funding constraints put a high priority on appearing affordable, making it important for program sponsors to provide cost estimates that will fit within the funding constraints. Instead of forcing trade-offs, challenging performance requirements—when coupled with other constraints, such as cost or the weight of the satellite—can drive product developers to pursue exotic solutions and technologies that, in theory, can do it all. Our work has shown that fundamental changes are necessary to stem cost and schedule increases and enable DOD to field new capabilities more efficiently and effectively. The following actions, in particular, would assure that DOD can match resources to requirements before its starts new programs and that it has an investment strategy in place that would prevent it from starting more programs than it can afford. Specifically, to better match resources to requirements, DOD should do the following. Implement processes and policies that stabilize requirements.