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June 1, 2006: 

The Honorable Jeff Sessions: 
Chairman: 
The Honorable Bill Nelson: 
Ranking Minority Member: 
Subcommittee on Strategic Forces: 
Committee on Armed Services: 
United States Senate: 

Subject: Defense Acquisitions: Space System Acquisition Risks and Keys 
to Addressing Them: 

On April 6, 2006, we testified before the subcommittee on the 
Department of Defense's (DOD) space acquisitions. In fiscal year 2007, 
DOD expects to spend nearly $7 billion to acquire space-based 
capabilities to support current military and other government 
operations as well as to enable DOD to transform the way it collects 
and disseminates information, gathers data on its adversaries, and 
attacks targets. Despite its growing investment in space, however, 
DOD's space system acquisitions have experienced problems over the past 
several decades that have driven up costs by hundreds of millions, even 
billions, of dollars; stretched schedules by years; and increased 
performance risks. In some cases, capabilities have not been delivered 
to the warfighter after decades of development. 

Within this context, you requested that we provide additional comments 
regarding the need for better program management, space acquisition 
policy, and DOD's Space Radar and Transformational Satellite 
Communications System acquisitions. Your specific questions and our 
answers are discussed below. 

Question: What are the top obstacles to achieving program success from 
the point of view of program managers? 

As part of a 2005 review[Footnote 1] on program management best 
practices, we surveyed DOD's major weapon program managers, including 
some managing space programs, who cited the following as "top" 
obstacles to achieving successful outcomes in an open ended question: 

 funding instability (about 36 percent), 

 requirements instability (13 percent), 

 staffing problems (8 percent), 

 excessive oversight (7 percent), and: 

 inexperienced leadership (7 percent). 

Although the majority of respondents to our survey believed that the 
initial baselines of their programs were reasonable, a significant 
group, about 24 percent, responded that their program parameters were 
not reasonable at the start, and 45 program managers responded that 
their program had been rebaselined one or more times for cost and 
schedule increases. In addition, 18 percent said one or more key 
technologies fell below best practice standards for maturity. 

Our reviews of space programs are consistent with these views--we have 
found technologies to be immature at program start for major space 
programs. Further, in delving deeper into the root causes behind these 
problems, we have found that competition for funding has incentivized 
programs to produce optimistic cost and schedule estimates, over 
promise on capability, suppress bad news, and forsake the opportunity 
to identify potentially better alternatives. In addition, because DOD 
starts more weapons programs than it can afford, it invariably finds 
itself in the position of having to shift funds to sustain programs-- 
often to the point of undermining well-performing programs to pay for 
poorly performing ones. We also have 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 
(time, money technology, people, etc.) and time constraints, and it 
allows new requirements to be added well into the acquisition phase, a 
course of action that can further stretch technology challenges. This 
is encouraged by the funding process, as acquisition programs tend to 
attract the majority of research, development, test, and evaluation 
(RDT&E) dollars. Many officials working within the space community 
agreed that these were key underlying causes of acquisition problems 
during a review we conducted last year.[Footnote 2] In addition, 
officials we spoke with also cited pressures resulting from having a 
diverse array of officials and organizations involved with the space 
acquisition process, tensions between the science and technology (S&T) 
and acquisition communities as to who is better suited to translate 
technology concepts into reality, pressures resulting from short 
tenures among staff critical to achieving acquisition success, and 
difficulties in overseeing contractors. 

Question: Do you believe that the Air Force is addressing these 
obstacles? 

The Air Force has recently taken steps to put is Transformational 
Satellite Communications System (TSAT) program on a more executable 
track by reducing its expectations in the level of sophistication for 
the first two satellites so that it can meet its schedule goals. It is 
also holding off entering product development of the first increment 
until critical technologies are proven. If the Air Force adheres to 
this commitment for TSAT and applies it to Space Radar, as it has also 
informally committed to do, then it would be addressing some of the 
obstacles noted above. For example, it would reduce the risk of funding 
instability since cost estimates would be more realistic. In addition, 
the Air Force has committed to estimating cost and funding new 
acquisitions to an 80-percent confidence level, strengthening systems 
engineering, and strengthening the acquisition workforce. And for some 
specific programs, the Air Force has applied additional mechanisms to 
regulate requirements. These actions could also remove obstacles, if 
effectively implemented. 

However, as we testified, such actions should be accompanied by an 
investment strategy for space, and ultimately DOD's entire weapons 
portfolio, to separate wants from needs and to alleviate long-standing 
pressures associated with competition within DOD to win funding. DOD 
could also instill the best practices it is now embracing into its 
space acquisition policy. In addition, we have recommended that DOD, as 
a whole, take steps to hold people and programs accountable when best 
practices are not pursued. This will require DOD to empower program 
managers to make decisions related to funding, staffing, and moving 
into subsequent phases and to match program manager tenure with 
delivery of a product. It may also require DOD to tailor career paths 
and performance management systems to provide incentives for longer 
tenures. By embracing a model that incorporates all these elements, DOD 
can achieve better outcomes for its space programs. By not doing so, 
there will still be incentives and allowances to overpromise 
capability, underestimate cost and schedule, and to start programs 
prematurely, which, in turn, can eventually undo other improvement 
efforts. 

Question: DOD starts more space and weapons programs than it can 
afford, which, according to GAO, "pressures programs to underestimate 
costs and over promise capabilities." Can you provide a few examples of 
this problem in space programs and [say] if and how the problem is 
being addressed? 

Actual costs for nearly every major space acquisition we review each 
year as part of our annual weapon system assessment have greatly 
exceeded earlier estimates--a clear indication that programs 
consistently underestimate costs. For example, the Space Based Infrared 
System (SBIRS)-High cost estimate climbed from about $4 billion as of 
October 1996 to over $10 billion in September 2005, and costs are 
expected to increase further. Estimated costs for the Evolved 
Expendable Launch Vehicle (EELV) program have climbed from about $15 
billion in October 1998 to $27 billion in August 2005 with 43 fewer 
launches to be purchased than anticipated. Estimated costs for the 
Advanced Extremely High Frequency Satellite program (AEHF) increased 
from $5.6 billion as of October 2001 to $6.2 billion as of August 2005, 
with quantities decreasing from five to three satellites. Estimated 
costs for the National Polar-orbiting Operational Environmental 
Satellite System (NPOESS) grew from $5.9 billion in August 2002 to 
nearly $8 billion in September 2005. Our past reports have also 
identified cases where programs have overpromised capabilities. For 
example, the Space Based Infrared System (SBIRS)-Low program started 
under the assumption that the satellites would be able to detect and 
track multiple objects and differentiate a threatening warhead from 
decoys, even though that technology challenge was exceedingly high. In 
fact, the program was never able to achieve this capability. It was 
eventually shut down in the face of cost and schedule overruns that 
came with addressing technology challenges. The SBIRS-High program 
began with the assumption that there would be four satellites in 
geosynchronous orbit, but more than 10 years later, DOD plans to reduce 
the number of satellites it will procure and still does not have the 
assurance it needs that the missile detection capability can be 
achieved in time to replace the existing detection system. In addition, 
DOD has initiated efforts to develop a parallel competing capability 
with the SBIRS-High program. Similarly, the NPOESS program is now 
considering dropping some of its planned capability because of 
technology and design-related challenges. 

DOD has been taking actions to improve cost estimating and we are in 
the process of assessing these actions. As mentioned above, for 
example, it has committed to estimating cost and funding new 
acquisitions to an 80-percent confidence level. In addition, the Air 
Force is requiring the use of independent cost estimates--rather than 
estimates produced by a program office or a contractor. It is also 
committed to strengthening its cost-estimating capabilities--in terms 
of people, methodologies, and tools. In regard to the issue of 
overpromising capability, the Air Force has deferred pursuing some of 
its more ambitious capabilities on its TSAT program, so that the 
program can be better positioned to meet its schedule. We do not know 
at this point whether it will be doing the same for its new Space Radar 
program. As we underscored in our testimony, it is important that these 
and other individual actions be made within a framework of broader, 
systemic improvements to DOD's overall acquisition process, the 
acquisition workforce, and an overall investment strategy. 

Question: The second problem is that DOD "starts its space programs too 
early, that is, before it is sure that the capabilities it is pursuing 
can be achieved within available resources and time constraints." Can 
you provide a few examples of this problem in space programs and 
[indicate] if and how the problem is being addressed? 

Many of our annual reviews of major space acquisitions show that 
programs have started with relatively low levels of technology 
maturity--meaning DOD does not have assurance that the technologies can 
work as intended. This includes, AEHF, NPOESS, SBIRS-High, and SBIRS- 
Low--now known as the Space Tracking and Surveillance System. 
Exceptions include the Navy's Mobile User Objective System, or MUOS 
(though the program later added two additional technologies that did 
not meet best practices standards for maturity) and the Global 
Positioning System Block IIF. At times, we have found that key sensors 
to be included in new satellites were not fully tested, or even 
prototyped, before being included in a program. In other cases, 
technologies used to support the health of the overall satellite, such 
as cooling systems, were immature. And in other cases, software needs 
were vastly underestimated. In the case of AEHF, technical resources to 
support security needs were underestimated. 

Many programs we have studied felt the need to start the acquisition 
process before such needs were better understood because acquisition 
programs tend to attract more funding than science and technology 
efforts. In addition, in the case of 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. While this is partly attributable to a desire to speed 
delivery of capability, it has perversely slowed down programs, since 
programs were at increased risk of facing costly and disruptive 
technical and design problems. 

As noted previously, DOD has committed to delay the development of one 
new major space program--TSAT--until technology needs are better 
understood. It has also committed to deliver new space-based 
capabilities in an incremental fashion so that acquisition efforts can 
be more executable and the science and technology base can be more 
engaged in major space programs. It has not taken such action yet on 
other new programs, notably Space Radar, though it has informally 
committed to. In addition, DOD's space acquisition policy still allows 
major acquisitions to begin without demonstrating that technology can 
work as intended. 

Question: A third issue is that DOD has "allowed new requirements to be 
added well into the acquisition phase." I would also add that sometimes 
the original requirements may be unrealistic or unaffordable and that 
this may be part of the problem. Can you provide a few examples of the 
requirements problem in space programs and [indicate] if and how the 
problem is being addressed? 

Our past reports have pointed to requirements setting problems in the 
AEHF, NPOESS, and SBIRS-High programs. In the case of SBIRS-High, we 
pointed to problems related to not adequately defining requirements up 
front. These were further detailed in subsequent DOD studies, including 
those by the SBIRS-High Independent Review Team and the Defense Science 
Board. Both noted that the acquisition approach the Air Force was 
following, known as Total System Performance Responsibility, placed too 
much responsibility on the part of the contractor to negotiate 
requirements, and that the process eventually broke down. In the case 
of NPOESS, we reported in the early phases of the program that the Air 
Force and the National Oceanic and Atmospheric Administration had 
difficulty resolving diverging requirements. In the case of AEHF, we 
reported that DOD substantially and frequently altered requirements and 
design in the early phases of the program. While considered necessary, 
some changes increased costs by hundreds of millions of dollars and 
caused scheduling delays on a program that DOD was trying to accelerate 
in order to address a potential capability gap. DOD has since rejected 
the acquisition approaches that led to requirements-setting problems on 
both SBIRS-High and AEHF. It has also instituted control mechanisms to 
regulate requirements on SBIRS-High. In our testimony, we noted that 
DOD could take further steps to strengthen requirements setting by 
implementing processes and policies, as needed, which stabilize 
requirements for acquisitions, like NPOESS, that are being shared with 
other agencies. 

We have also reported on programs that took on unrealistic or 
potentially unaffordable requirements. The SBIRS-Low program's pursuit 
of discrimination capability is an older example of such a program. 
More recently, we have pointed to affordability and feasibility issues 
related to Space Radar and the TSAT programs, which together, have been 
preliminarily estimated to cost about $40 billion. Specifically, we 
have stated that DOD was planning to start these acquisitions even when 
many of their critical technologies were still immature, and it was 
pursuing a highly ambitious path in terms of the technology push. Given 
that these systems were among the most complex programs ever undertaken 
for space, they were being counted on to enable wider DOD 
transformation efforts, and DOD was already contending with highly 
problematic space efforts, we believed that DOD could not afford to 
pursue such risky approaches for TSAT and Space Radar. As noted 
earlier, DOD has taken steps to ensure it is pursuing realistic 
requirements for TSAT, and it has informally committed to do the same 
for Space Radar. 

Question: Is there a clear definition of each Technology Readiness 
Level (TRL) that all of you agree on (GAO and DOD) and that exists in 
writing and that clearly applies to space programs? 

The National Aeronautics and Space Administration (NASA) developed the 
original ranking and definitions of technology maturity levels. GAO and 
DOD agree on the TRL definitions--in its reports, GAO continues to 
reference the TRL scale for assessing critical technologies from DOD's 
Interim Defense Acquisition Guidebook (app 6, dated October 30, 2002). 
However, for space system acquisitions, GAO and DOD have disagreements 
on what the TRLs should be at major decision points. According to our 
work on best practices, product development should be initiated after 
critical technologies have been incorporated into a system prototype 
and tested in an operational environment--meaning the cold-radiated 
vacuum of space. Our prior reports have recognized that space systems 
are uniquely difficult to test in a true operational environment. 
However, DOD has found ways to test sensors and other critical 
technologies on experimental satellites. Nonetheless, DOD continues to 
stand up formal space system acquisitions too early--before critical 
technologies have been tested in operational or relevant environments-
-that is, before DOD has assurance that the capabilities it is pursuing 
can be achieved. This causes DOD to extend technology invention to its 
acquisitions, which have reverberating effects and require large 
amounts of time and money to fix. In these cases, DOD points to its 
National Security Space Acquisition Policy, which allows it to take 
such an approach--unlike DOD's acquisition policy for non-space 
acquisitions, where TRL 7 (testing in an operational environment) is 
preferred before product development is initiated (TRL 6 is required). 
As long as GAO continues to base its reviews of space programs on best 
practices and DOD continues to use the wide leeway afforded in its 
space acquisition policy regarding critical technologies and their 
maturity levels to initiate product development, GAO and DOD will 
continue to have disagreements in this area. 

Question: What is the difference between TRL 6 and 7 and what is the 
advantage or disadvantage of being at level 6 or 7 at the [Critical] 
Design Review? 

The main difference between TRL 6 and 7 is the testing environment. For 
TRL 6, the testing environment would be a laboratory or a simulated 
operational environment, and for TRL 7, the testing environment would 
be an operational environment--meaning in space. According to GAO's 
work on best practices, achieving a high level of technology maturity 
at program start is an important indicator of whether available 
resources in terms of knowledge, time, money and capacity match the 
customer's requirements. In addition, the key measure for a successful 
critical design review (CDR) is when 90-percent of the design drawings 
have been submitted to manufacturing. When space programs reach CDR and 
TRLs are below 6, it is unlikely that a high percentage of design 
drawings would have been released to manufacturing, thereby increasing 
program risk at this juncture. Another key point to remember is that 
CDR is the point at which programs begin ordering long-lead parts to 
build the first few satellites. This investment in hardware is at risk 
if the technologies do not prove out to work as intended. Achieving TRL 
6 or 7 by CDR is a matter of risk--if the critical technologies in 
question are supremely important and have no space-based heritage, then 
it is warranted to test the technologies in space before proceeding 
through CDR. For TSAT, some critical technologies have a heritage of 
being tested or operated in space, and they are all slated to be at TRL 
6 at the time of CDR--an approach that GAO did not fault. 

Question: The Transformational Communications Satellite program, though 
still very early in the process, appears to have begun to adopt some of 
the recommendations of the GAO as well as the Young Panel and is 
focusing on technology maturity. Integration of the satellite appears 
to be the next difficult step for the TSAT program. What plans are in 
place to ensure successful integration? 

The TSAT program is taking several steps to ensure its integration 
efforts are successful. First, according to program officials, the plan 
is to demonstrate critical technologies at TRL 6 when key integration 
tests are conducted in fiscal year 2007. Second, the program plans to 
use the results of its first round of integration tests to refine the 
testing to be conducted during a second round of more comprehensive 
integration testing. Third, the program is conducting a series of 
independent tests to verify results of contractor testing as it 
incrementally builds toward the two main integration tests facing the 
program--tests of the Next Generation Processor Router and Optical 
Standards Validation Suite. The program office plans to have knowledge 
on how these two major subcomponents work to reduce risk by uncovering 
technical problems before awarding the space segment contract for the 
design and assembly of the satellites. Finally, the TSAT program also 
plans to assess the results of the main integration tests before making 
a decision to enter the production development phase. 

Question: What actions would you recommend to the programs managers to 
ensure successful integration? 

According to GAO's prior work on best practices, leading firms ensure 
that (1) the right validation events--tests, simulations, and other 
means for demonstrating product maturity--occur at the right times, (2) 
each validation event produces quality results, and (3) the knowledge 
gained from an event is used to improve the product. Fully disclosing 
the results of tests (from low-level brass board tests to the main 
integration tests) and documenting the actions taken to address 
shortcomings further validates product knowledge. It is imperative that 
problems are fully addressed before rushing efforts to begin the next 
round of testing. It is also important that program managers use the 
test and evaluation parameters originally established, and any changes 
should be fully disclosed along with the reasons for doing so. Finally, 
the program manager needs assurance that all testing that has been done 
is reflective of the capabilities that the program is trying to 
deliver. Rigorous and sophisticated testing early and often will 
uncover problems when they are relatively easy and inexpensive to fix. 
Waiting too long to fully stress and test components will put the 
program in a risky position. 

In preparing answers to your questions, we relied on our prior work on 
DOD's space acquisition policy, best practices in weapon system 
acquisitions, and our reviews of specific space acquisitions as well as 
DOD studies. In addition, for specific space systems development and 
cost growth, we relied on our annual assessment of selected major 
weapon programs. Because we relied on previously issued work, we did 
not obtain comments from DOD on a draft of this letter. We conducted 
our work from April 2006 through May 2006 in accordance with generally 
accepted government auditing standards. 

We are sending copies of this letter to the Secretaries of Defense and 
the Air Force and interested congressional committees. We will also 
make copies available to others upon request. In addition, the report 
will be available at no charge on the GAO web site at [Hyperlink, 
http://www.gao.gov]. 

If you or your staff have any questions concerning these comments, 
please contact me at (202) 512-4841. 

Sincerely yours, 

Signed by: 

Cristina Chaplain: 
Acting Director: 
Acquisition and Sourcing Management: 

cc: 

(120561): 

FOOTNOTES 

[1] GAO, Best Practices: Better Support of Weapon System Program 
Managers Needed to Improve Outcomes, GAO-06-110 (Washington, D.C.: Nov. 
30, 2005). 

[2] GAO, Defense Acquisitions: Incentives and Pressures That Drive 
Problems Affecting Satellite and Related Acquisitions, GAO-05-570R 
(Washington, D.C.: June 23, 2005). 

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