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Testimony before the Subcommittee on Strategic Forces, Senate Committee 
on Armed Services: 

United States Government Accountability Office: 

GAO: 

For Release on Delivery Expected at 2:30 p.m. EDT: 

Thursday, April 19, 2007: 

Space Acquisitions: 

Actions Needed to Expand and Sustain Use of Best Practices: 

Statement of Cristina T. Chaplain, Director: 
Acquisition and Sourcing Management Team: 

GAO-07-730T: 

GAO Highlights: 

Highlights of GAO-07-730T, a testimony before the Subcommittee on 
Strategic Forces, Senate Committee on Armed Services 

Why GAO Did This Study: 

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. DOD has recognized the need to change its approach 
to developing space systems and is attempting to instill best practices 
in new efforts. GAO was asked to testify on its findings on space 
acquisitions problems and steps needed to sustain and expand the use of 
best practices. In preparing this testimony, GAO relied on its detailed 
reviews of space programs as well as cross-cutting work on cost 
estimating and best practices. 

GAO does not make recommendations in this testimony. However, GAO has 
made recommendations on steps DOD can take to ensure better outcomes 
for its space acquisitions programs. These include developing an 
overall investment strategy for acquisition programs, addressing human 
capital and other shortfalls in capacity, and revising policies 
supporting space to incorporate best practices. 

What GAO Found: 

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. 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 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, or less, capability. 

GAO’s reviews of space acquisitions this year found that some ongoing 
programs—for example, the Advanced Extremely High Frequency satellite 
program and the Wideband Global SATCOM program—have been able to work 
through the bulk of technical problems they were facing and are on 
track to meet revised targets, albeit at higher costs and with delayed 
capability. Others, however, including the Space-Based Infrared System 
High program, the Global Positioning System IIF, and the National Polar-
orbiting Operational Environmental Satellite System, continue to face 
setbacks and further risks. 

In recognizing the need to reform space acquisitions, DOD has taken 
steps to instill best practices in two new major space efforts—the 
Transformational Satellite Communications System (TSAT) and the Space 
Radar program—which are expected to be among the most complex and 
costly space programs ever. For these programs, DOD has taken steps to 
separate technology discovery from acquisition, establish an 
incremental path toward meeting user needs, obtain agreements on 
requirements before program start, and use quantifiable data and 
demonstrable knowledge to make decisions to move to next phases. If 
these actions can be sustained, DOD will greatly reduce technical 
risks, although not completely. There is still significant inherent 
risk associated with integrating critical technologies on board the 
satellites and with developing the software needed to achieve the 
capabilities of the satellites. 

Moreover, sustaining these reforms on these two programs and expanding 
them to others will not be easy. Like all weapons programs, space 
programs continue to face funding pressures that have encouraged too 
much optimism. DOD has not prioritized its programs for funding even 
though its investment for all major space acquisitions is expected to 
increase about 46 percent in the next 3 years. It is likely to continue 
to face cost overruns on problematic programs, and it wants to 
undertake other major new efforts in addition to Space Radar and TSAT. 
In addition, new programs are being undertaken as DOD is addressing 
shortfalls in critical technical, business, and program management 
skills. In other words, DOD may not be able to obtain the right skills 
and experience to manage all of the new efforts. 

[Hyperlink, http://www.gao.gov/cgi-bin/getrpt?GAO-07-730T]. 

To view the full product, including the scope and methodology, click on 
the link above. For more information, contact Cristina Chaplain at 
(202) 512-4841 or chaplainc@gao.gov. 

[End of section] 

Mr. Chairman and Members of the Subcommittee: 

I am pleased to be here today to discuss the Department of Defense's 
(DOD) space acquisitions. Each year, DOD spends billions 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 adversaries, and 
attacks targets. In fiscal year 2008 alone, DOD expects to spend over 
$22 billion dollars to develop and procure satellites and other space 
systems, including nearly $10 billion on selected major space 
systems.[Footnote 1] 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. 

In view of these problems, the Air Force, DOD's primary space system 
acquirer, has been attempting to instill best practices in two newer 
space programs--Space Radar and the Transformational Satellite 
Communications System (TSAT). These steps can help better position the 
two programs for success, but they will not work without adhering to 
commitments to delay milestone decisions if there are still gaps 
between requirements and resources, and to use more robust tools to 
analyze risks, costs, and schedule. Moreover, other space programs--new 
and old--are still facing setbacks, reflecting problems in technology 
development or design, problems in managing contractors, and more 
broadly, funding shifts needed to sustain the larger space portfolio. 
Such setbacks--common among all weapons acquisitions--continue to 
hamper the Air Force's ability to provide resources and support needed 
to deliver capabilities within cost, schedule, and performance targets. 
My testimony today will highlight our findings on space acquisitions as 
well as actions needed to address persistent acquisition problems and 
to build on best practice approaches being adopted in Space Radar and 
TSAT. 

Space Acquisitions Continue to Face Cost and Schedule Increases: 

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 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, or less, capability. Some programs have 
been able to work through the bulk of technical problems they were 
facing and are on track to meet revised targets, albeit at higher costs 
and with delayed deliveries. Others, however, continue to face 
setbacks. 

The following chart compares original cost estimates and current cost 
estimates for the broader portfolio of major space acquisitions for 
fiscal years 2007 through 2012. The wider the gap between original and 
current estimates, the fewer dollars DOD has available to invest in new 
programs. 

Figure 1: Comparison between Original Cost Estimates and Current Cost 
Estimates for Selected Major Space Acquisition Programs[A] for Fiscal 
Years 2007 through 2012: 

[See PDF for image] 

Source: GAO analysis of DOD data. 

[A] Includes: Advanced Extremely High Frequency (AEHF) satellites, 
Evolved Expendable Launch Vehicle (EELV), Global Broadcast Service 
(GBS), Global Positioning System II (GPS) , Mobile User Objective 
System (MUOS), National Polar-orbiting Operational Environmental 
Satellite System (NPOESS), Space Based Infrared System (SBIRS)High, and 
Wideband Global SATCOM (WGS). 

[End of figure] 

The next two figures reflect differences in unit costs and total costs 
for satellites from the time the programs officially began to their 
most recent cost estimate. As the second figure notes, in several 
cases, DOD has had to cut back on quantity and capability in the face 
of escalating costs. For example, two satellites and four instruments 
were deleted from National Polar-orbiting Operational Environmental 
Satellite System (NPOESS) and four sensors are expected to have fewer 
capabilities. This will reduce some planned capabilities for NPOESS as 
well as planned coverage. Likewise, the Space Based Infrared System 
(SBIRS) High missile detection program deferred capabilities, such as 
mobile data processors for the Air Force and the Army and a fully 
compliant backup mission control facility, and it pushed off a decision 
to procure the third and fourth satellites, which will not meet SBIRS 
High requirements for coverage. Despite such measures, unit costs for 
both programs are still considerably higher than originally promised. 
In addition to SBIRS High and NPOESS, the programs featured in the 
figures include the Advanced Extremely High Frequency (AEHF) 
satellites, the Wideband Global SATCOM (WGS) and the Mobile User 
Objective System (MUOS), which are all communications satellites, and 
the Global Positioning System (GPS) II. 

Figure 2: Differences in Unit Life Cycle Cost from Key Decision Point 
(KDP) B (Program Start) and Most Recent Estimate: 

[See PDF for image] 

Source: GAO analysis of DOD data. 

[End of figure] 

Figure 3: Differences in Total Program Costs from Key Decision Point 
(KDP) B and Most Recent Estimate: 

[See PDF for image] 

Source: GAO analysis of DOD data. 

[End of figure] 

The next chart highlights the additional estimated months needed to 
complete programs. These additional months represent time not 
anticipated at the programs' start dates. Generally, the further 
schedules slip, the more DOD is at risk of not sustaining current 
capabilities. For this reason, DOD began an alternative infrared system 
effort, known as the Alternative Infrared Satellite System (AIRSS), to 
run in parallel with the SBIRS High program. 

Figure 4: Additional Months Needed since Program Start: 

[See PDF for image] 

Source: GAO analysis of DOD data. 

[End of figure] 

Some programs, such as AEHF and WGS, have worked through the bulk of 
technical and other problems that were causing large schedule increases 
and cost delays. For example, the AEHF program, which has been in the 
final stages of development for almost 3 years, resolved issues related 
to its cryptographic equipment and is on track to meet a revised date 
for first launch. The WGS program completed rework on improperly 
installed fasteners, and contractors have redesigned computers to 
rectify data transmission errors. The program expects a first launch in 
June 2007. As noted in our figures, the MUOS program, which began more 
recently than AEHF and WGS, is generally meeting its targets, though it 
has yet to enter into the more difficult stages of satellite 
production, integration and test. 

By contrast, the SBIRS High program still faces considerable risks. 
Recent GAO work for this subcommittee, for example, shows that the 
program is diverging from cost and schedule targets just months after 
rebaselining due to problems related to assembly, integration, and 
testing and that the contractor's estimates for addressing these issues 
are overly optimistic. Defense Contract Management Agency reports also 
show that software development efforts are behind schedule--by as much 
as 32 percent. In addition, the contractor has already spent about 28 
percent, or $66 million, of its management reserve from April 2006 to 
November 2006. This reserve is designed to last until 2012, but at the 
current rate, is likely to be depleted by May 2008. If this trend 
continues, $500 million in additional reserve will be needed. As noted 
earlier, DOD initiated an alternative effort--AIRSS--to ensure it would 
have continued capabilities. However, we have questions as to whether 
AIRSS is being pursued as a "plan B" program, as originally envisioned. 
Rather than seek to maintain continuity of operations, the program is 
focused on advancing capabilities because program managers believe 
there are no viable alternatives. We also found that there was 
disagreement among DOD stakeholders as to whether there were 
alternatives or not, and there was concern that the AIRSS schedule may 
be too compressed. Our analysis also found that there was a high degree 
of concurrency in the program's schedule, which may be limiting DOD's 
ability to gain knowledge from planned demonstrations and increased the 
potential for costly rework further in the program. 

The GPS Block IIF program is also at a high risk of cost increases and 
schedule delays. Since our last annual assessment of the GPS Block IIF 
program, the program has revised its acquisition program baseline to 
account for cost increases and schedule delays, and requested an 
additional $151 million to cover these costs. The number of IIF 
satellites to be procured was reduced from 19 to 12. Further, the 
launch date of the first IIF satellite continues to slip. The original 
baseline showed an initial launch availability date of December 2006, 
but DOD's current baseline shows July 2009--a slip of about 2.5 years. 
The program also learned that the contractor's earned value management 
reporting system was not accurately reporting cost and schedule 
performance data. A DOD report also recently found that development of 
user equipment has not been synchronized with the development of 
satellites and control system, increasing the risk of substantial 
delays in realistic operational testing and fielding of capabilities. 
GPS is taking measures to address these problems. For example, this 
year, it did not award its contractor $21.4 million in award fees. In 
December 2005, GAO recommended that DOD improve its use of award fees 
for all weapon system contracts by specifically tying them to 
acquisition outcomes. A review of a sample of programs, including SBIRS 
High, found that this was generally not done. 

The NPOESS program is also still at risk of more cost increases and 
schedule delays. In June 2006, DOD certified the NPOESS program to 
Congress, and with agreement from its program partners, DOD 
restructured the program. Now the NPOESS program acquisition costs are 
estimated to be about $11.5 billion--an increase of about $3 billion 
over the prior cost estimate. Before the contract was awarded, in 2002, 
the life cycle cost for the program was estimated to be $6.5 billion 
over the 24-year period from the inception of the program in 1995 
through 2018. The delivery of the first two NPOESS satellites has been 
delayed by roughly 4 and 5 years, and as noted earlier, the number of 
satellites to be produced has been reduced from six to four. In 
addition, the number of instruments was reduced from 13 (10 sensors and 
3 subsystems) to 9 instruments (7 sensors and 2 subsystems), and 4 of 
the remaining sensors will have fewer capabilities. The NPOESS program 
will incorporate any number of the deleted instruments if additional 
funding is provided from outside the NPOESS program. The program 
restructure will result in reduced satellite data collection coverage, 
requiring dependence on a European weather satellite for coverage 
during midmorning hours. Although the program has reduced the number of 
satellites it will produce, the cost per satellite is more than 150 
percent above the original approved program baseline. The NPOESS 
program is now updating the cost, schedule, performance baselines and 
acquisition strategy, and coordinating the changes with the three 
agencies. The program expects these documents to be approved later this 
year. While work is continuing on key sensors, the program still faces 
potential problems in their development. 

The Space Based Space Surveillance System (SBSS) system--not featured 
on the charts above because it is not yet a formal acquisition program-
-is also encountering problems. The SBSS system is to replace an aging 
sensor on an orbiting research and development satellite and improve 
the timeliness of data on objects in geosynchronous orbit. As currently 
planned, the initial block will consist of a single satellite and 
associated command, control, communications, and computer equipment. 
Subsequent SBSS efforts will focus on building a larger constellation 
of satellites to provide worldwide space surveillance of smaller 
objects in shorter timelines. In late 2005, an independent review team 
found that the program's baseline was not executable; that the 
assembly, integration, and test plan was risky; and that the 
requirements were overstated. The SBSS program was restructured in 
early 2006 due to cost growth and schedule delays. The restructuring 
increased funding and schedule margin; streamlined the assembly, 
integration, and test plan; and relaxed requirements. The launch of the 
initial satellite was delayed to April 2009--a delay of about 18 
months. Cost growth due to the restructure is about $130 million over 
initial estimates. 

Last, additional cost increases are expected for the Evolved Expendable 
Launch Vehicle (EELV) program, but for reasons that are different than 
the ones being experienced on the satellite programs. In recent years, 
program cost has risen 79 percent, with a cost per unit increase of 135 
percent. A chief reason for cost increases is a decline in the 
commercial launch market upon which the program's business case was 
based. Cost increases are also a result of additional program scope, 
including mission assurance, assured access to space, and earned value 
management systems reporting. In addition, satellite vehicle weight 
growth and satellite launch delays have contributed to cost increases. 
In December 2006, Boeing and Lockheed Martin initiated a joint venture 
(United Launch Alliance, or ULA) that will combine the production, 
engineering, test, and launch operations associated with U.S. 
government launches of Boeing Delta and Lockheed Martin Atlas rockets. 
Though the EELV program office expects long-term savings to be achieved 
through this arrangement, the cost per launch under a recently 
negotiated Buy III acquisition strategy will be higher than under Buy 
I. According to the Air Force, this is because the contractors will 
incur additional costs to allow the government to perform the necessary 
oversight not required under Buy I. (Exact estimates of the new cost 
per launch have not been finalized by the program office yet.) Under 
the new strategy, EELV will be transitioning from a fixed-price 
arrangement, where launches were essentially procured as a service, to 
a combination of a cost-plus and fixed-price contracts. The arrangement 
will allow the government to exercise more oversight and to incentivize 
contractors through the use of award fees. But to realize these 
benefits, the Air Force will need to ensure it has resources (skills, 
expertise, and tools) to begin accumulating and analyzing detailed 
cost, schedule, performance, design, and technical data. In addition, 
it will be important to assess progress in achieving longer-term 
savings envisioned under ULA as well as to ensure that the combined 
assets of the contractors are adequately protected. 

Underlying Reasons for Cost and Schedule Growth: 

Our past work has identified a number of causes behind the cost growth 
and related problems, but several consistently stand out. First, on a 
broad scale, DOD starts more weapon programs than it can afford, 
creating a competition for funding that encourages low cost estimating, 
optimistic scheduling, overpromising, suppressing of 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 is forced to continually shift funds to 
and from programs--particularly as programs experience problems that 
require additional time and money to address. Such shifts, in turn, 
have had costly, reverberating effects. 

Figure 5 illustrates the negative cycle of incentives that come when 
programs compete for funding. Table 1 highlights specific areas where 
we found the original cost estimates of programs to be optimistic in 
their assumptions. 

Figure 5: Pressures Associated when Too Many Programs Are Competing for 
Funding: 

[See PDF for image] 

Source: GAO. 

[End of figure] 

Table 1: Areas where Space Programs Were Too Optimistic in Their Cost 
Estimate Assumptions: 

Optimistic assumptions: Industrial base would remain constant and 
available; 
Space programs affected: AEHF: [Empty]; 
Space programs affected: EELV: X; 
Space programs affected: GPS IIF: X; 
Space programs affected: NPOESS: X; 
Space programs affected: SBIRS: X; 
Space programs affected: WGS: X. 

Optimistic assumptions: Technology would be mature enough when needed; 
Space programs affected: AEHF: X; 
Space programs affected: EELV: [Empty]; 
Space programs affected: GPS IIF: X; 
Space programs affected: NPOESS: X; 
Space programs affected: SBIRS: X; 
Space programs affected: WGS: X. 

Optimistic assumptions: Acquisition reform efforts (implemented via 
Total System Performance Responsibility policy) would reduce cost and 
schedule; 
Space programs affected: AEHF: [Empty]; 
Space programs affected: EELV: X; 
Space programs affected: GPS IIF: X; 
Space programs affected: NPOESS: X; 
Space programs affected: SBIRS: X; 
Space programs affected: WGS: [Empty]. 

Optimistic assumptions: Savings would occur from experience on heritage 
systems; 
Space programs affected: AEHF: X; 
Space programs affected: EELV: [Empty]; 
Space programs affected: GPS IIF: [Empty]; 
Space programs affected: NPOESS: X; 
Space programs affected: SBIRS: X; 
Space programs affected: WGS: X. 

Optimistic assumptions: No weight growth would occur; 
Space programs affected: AEHF: X; 
Space programs affected: EELV: [Empty]; 
Space programs affected: GPS IIF: [Empty]; 
Space programs affected: NPOESS: X; 
Space programs affected: SBIRS: X; 
Space programs affected: WGS: X. 

Optimistic assumptions: Funding stream would be stable; 
Space programs affected: AEHF: X; 
Space programs affected: EELV: [Empty]; 
Space programs affected: GPS IIF: X; 
Space programs affected: NPOESS: X; 
Space programs affected: SBIRS: X; 
Space programs affected: WGS: [Empty]. 

Optimistic assumptions: An aggressive schedule could be met; 
Space programs affected: AEHF: X; 
Space programs affected: EELV: [Empty]; 
Space programs affected: GPS IIF: [Empty]; 
Space programs affected: NPOESS: X; 
Space programs affected: SBIRS: X; 
Space programs affected: WGS: X. 

Optimistic assumptions: No growth in requirements; 
Space programs affected: AEHF: X; 
Space programs affected: EELV: [Empty]; 
Space programs affected: GPS IIF: X; 
Space programs affected: NPOESS: [Empty]; 
Space programs affected: SBIRS: X; 
Space programs affected: WGS: [Empty]. 

Source: GAO analysis. 

Note: This table was developed as part of a larger review on DOD's 
space cost-estimating function. Information was derived from 
discussions with program and contractor officials and GAO analysis. In 
some cases, programs may have ultimately experienced problems related 
to one of the categories, but we did not have evidence to show that the 
original assumptions were optimistic.[Footnote 2] 

[End of table] 

Second, as we have previously testified and reported, DOD has tended to 
start its programs too early, that is before it has the 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 technologies. Nevertheless, 
when DOD chooses to extend technology invention into acquisition, 
programs experience technical problems that require large amounts of 
time and money to fix. Moreover, when the approach is followed, cost 
estimators are not well positioned to develop accurate cost estimates 
because there are too many unknowns. Put more simply, there is no way 
to estimate how long it would take to design, develop, and build a 
satellite system when critical technologies planned for that system are 
still in relatively early stages of discovery and invention. 

A companion problem for space systems is that programs have 
historically attempted to satisfy all requirements in a single step, 
regardless of the design challenge or the maturity of the technologies 
necessary to achieve the full capability. Increasingly, DOD has 
preferred to make fewer but heavier, larger, and more complex 
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 current capabilities in some cases and vastly increased the 
complexities related to software--a problem that affected SBIRS High 
and AEHF, for example. 

In addition, several of the space programs discussed above began in the 
late 1990s, when DOD structured contracts in a way that reduced 
government oversight and shifted key decision-making responsibility 
onto contractors. This approach--known as Total System Performance 
Responsibility, or TSPR--was intended to facilitate acquisition reform 
and enable DOD to streamline a cumbersome acquisition process and 
leverage innovation and management expertise from the private sector. 
However, DOD later found that this approach magnified problems related 
to requirements creep and poor contractor performance. In addition, 
under TSPR, the government decided not to obtain certain cost data, a 
decision that resulted in the government having even less oversight of 
the programs and limited information from which to manage the programs. 
Further, the reduction in government oversight and involvement led to 
major reductions in various government capabilities, including cost- 
estimating and systems-engineering staff. The loss of cost-estimating 
and systems-engineering staff in turn led to a lack of technical data 
needed to develop sound cost estimates. 

DOD Is Implementing Best Practices on Two New Efforts: 

Over the past decade, GAO has examined successful organizations in the 
commercial sector to identify best practices that can be applied to 
space and weapon system acquisitions. This work has identified a number 
of practices, which we have recommended that DOD adopt. 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. DOD is making efforts to instill these practices on two 
programs reviewed this year: the Transformational Satellite 
Communications System and the Space Radar program. Specifically: 

˛ Successful organizations we have studied ensure that technologies are 
mature, that is, proven to work as intended before program start. Both 
TSAT and Space Radar are attempting to do this. According to their 
plans, critical technologies should reach at least a Technology 
Readiness Level (TRL) 6 by program start, meaning the technologies have 
been tested in a relevant environment. This stands in sharp contrast to 
previous programs, which have started with immature technologies, such 
as SBIRS and NPOESS, and it reflects the implementation of a "back to 
basics" policy advocated this past year by the Under Secretary of the 
Air Force. If these programs adhere to the TRL 6 criteria, they will 
greatly reduce the risk of encountering costly technical delays, though 
not completely. There are still significant inherent risks associated 
with integrating critical technologies and with developing the software 
needed to realize the benefits of the technologies. Moreover, the best 
practice programs we have studied strive for a TRL 7, where the 
technology has been tested in an operational environment, that is, 
space. 

˛ Successful organizations defer more ambitious technology efforts to 
corporate research departments (equivalent to science and technology 
(S&T) organizations in DOD) until they are ready to be added to future 
increments. Both programs have deferred more ambitious technology 
development efforts to the science and technology environment. TSAT, 
for example, deferred the wide-field of view multi-access laser 
communication technology, and is contributing about $16.7 million for 
"off-line" maturation of this technology that could be inserted into 
future increments. It has laid out incremental advances in other 
capabilities over two increments. Space Radar has deferred lithium-ion 
batteries, more efficient solar cells, and onboard processing for its 
first increment, and like TSAT, is contributing toward their 
development by S&T organizations. At this time, Space Radar has not 
defined details of an increment beyond the first one. 

˛ Successful organizations extensively research and define requirements 
before program start to ensure that they are achievable, given 
available resources, and that they do not define requirements after 
starting programs. Both programs have also employed systems engineers 
to help determine achievability of requirements. The TSAT program has 
reached agreement on requirements with its users--primarily in terms of 
what will be included in the first several blocks of the program and 
what will not be included. The Space Radar program has instituted 
several processes designed to achieve consensus on requirements across 
a range of diverse users. It still needs to formalize agreements 
related to these processes and also identify key performance 
parameters. This is important because Space Radar is to be shared by 
the military and intelligence communities--each with different specific 
needs for the system and very specific roles and responsibilities with 
regard to the data being produced by Space Radar and its users. It has 
been reported recently that conflicts in roles and responsibilities 
have arisen on dissemination of data being produced by a small tactical 
satellite (TacSat 2) recently launched by DOD for use by military 
commanders. 

It remains to be seen whether TSAT and Space Radar will take additional 
steps that successful organizations take to position programs for 
success. For example: 

˛ The organizations we have studied do not go ahead with program start 
milestone decisions if there are still gaps between requirements and 
resources. TSAT and Space Radar have indicated that they intend to do 
the same, but there are external pressures on both programs to provide 
needed capabilities. 

˛ The organizations we have studied hold program managers accountable 
for their estimates and require program managers to stay with a project 
to its end. We have made recommendations to DOD to instill similar 
practices departmentwide, but these have yet to be implemented. 
Further, there are still incentives in place to keep program managers' 
tenures relatively short. Promotions, for example, often depend on 
having varied management experience rather than sustained 
responsibility for one program. 

˛ The organizations we studied have developed common templates and 
tools to support data gathering and analysis and maintain databases of 
historical costs, schedule, quality, test, and performance data. Cost 
estimates themselves are continually monitored and regularly updated 
through a series of gates or milestone decisions that demand programs 
assess readiness and remaining risk within key sectors of the program 
as well as overall cost and schedules. We saw indications that TSAT and 
Space Radar were using more robust tools to analyze risks, costs, and 
schedule than programs have done in the past. However, it remains to be 
seen how these practices will be reflected in official cost estimates. 
In the past, we have found space program estimates were simply too 
optimistic and that independent estimates produced by DOD's Cost 
Analysis Improvement Group were not being used. DOD agreed with our 
findings and asserted it was taking actions to address them. 

Actions Needed to Sustain Commitment to Improvements: 

The Air Force's continued efforts to instill best practices on Space 
Radar and TSAT are good first steps toward addressing acquisition 
problems in the space portfolio. They represent significant shifts in 
thinking about how space systems should be developed as well as 
commitment from senior leadership. But sustaining these reforms will 
not be easy. The programs are not immune to funding pressures that have 
encouraged too much optimism. They are also being undertaken as DOD is 
addressing shortfalls in critical technical, business, and program 
management skills. Further, processes and policies key to sustainment 
and broader use of best practices have not been changed to further 
reflect the kinds of changes taking place on Space Radar and TSAT. 

First, new programs still must compete for limited funding. As DOD 
seeks to fund Space Radar and TSAT, it will be (1) undertaking other 
new, costly efforts, including GPS III, SBSS, and AIRSS; (2) addressing 
cost overruns associated with programs like SBIRS High and GPS; and (3) 
facing increased pressures to increase investments in assets designed 
to protect space systems. In total, these efforts will increase DOD's 
investment for all major space acquisitions from $6.31 billion to $9.22 
billion, or about 46 percent over the next 3 years. More may be needed 
if technical, software, and other problems on current programs worsen. 
At the same time, investment needs for other weapon systems are also on 
the rise, while long-term budget forecasts indicate that considerably 
fewer dollars will be available for discretionary spending in coming 
years rather than more. 

In prior reports, we have stated that as long as too many programs 
compete for too few dollars in DOD, programs will be incentivized to 
produce optimistic estimates and suppress bad news. They will view 
success as securing the next installment of funds versus delivering 
capability within cost and schedule goals. We have recommended that DOD 
guide its decisions to start space and other weapons acquisition 
programs with an overall investment strategy that would identify 
priorities for funding so that space systems that are expected to play 
a critical role in transformation, such as Space Radar and TSAT, could 
be prioritized along with other legacy and transformational systems. 

Let me take a moment to illustrate why an investment strategy is 
critical. We have reported in the past that DOD and the Air Force have 
waited too long to establish priorities or make trade-off decisions. We 
have also reported that frequent funding shifts have hurt programs that 
were performing well or further damaged troubled programs. We have also 
reported cases where DOD and the Air Force have walked away from 
opportunities to save costs in lot buys or leverage knowledge already 
gained in legacy programs in favor of starting new programs that 
promise much more advanced capability but have little knowledge to back 
up that promise. Today, DOD is on track to cut short the AEHF program 
in order to pursue TSAT. It has stated it may also do the same for 
SBIRS to pursue AIRSS. In both cases, DOD would be forgoing savings 
that it had already negotiated for lot buys and in effect, paying 
significantly more for nonrecurring engineering. While these decisions 
have the potential to enable DOD to obtain advanced capability sooner 
(provided best practices are followed on the new programs), they should 
have been made much earlier and more strategically in order to stem 
investment losses. 

DOD's own reports recognize that investment planning needs to be 
instilled in weapon acquisitions. A February 2007 report, in response 
to a requirement in the John Warner National Defense Authorization Act 
for Fiscal Year 2007, outlines steps that DOD is taking to better 
prioritize and fund programs.[Footnote 3] The initiatives include (1) 
establishing a new concept decision review to provide decision makers 
with an early opportunity to evaluate trade-offs among alternative 
approaches to meeting a capability need, (2) testing portfolio 
management approaches in selected capability areas to facilitate more 
strategic choices about how to allocate resources across programs, and 
(3) capital budgeting as a potential means to stabilize program 
funding. While these developments are promising, we recently reported 
that such initiatives do not fundamentally change DOD's existing 
service-centric framework for making weapon system investment 
decisions.[Footnote 4] Moreover, it will take some time to determine 
their success in enabling more effective funding prioritization. 

Second, space programs are facing capacity shortfalls. These include 
shortages of staff with science and engineering backgrounds as well as 
staff with program management and cost estimating experience. During 
our review this year, the TSAT program cited shortages of space 
acquisition personnel as a key challenge that increases risk for the 
program. Due to broader Air Force cuts in workforce, the program did 
not expect to be able to fill technical positions needed to accompany 
plans to ramp up spending. During our review of DOD's space cost 
estimating function, Air Force space cost estimating organizations and 
program offices said that they believed their cost-estimating resources 
were inadequate to do a good job of accurately predicting costs. 
Because of the decline in in-house cost-estimating resources, space 
program offices and Air Force cost-estimating organizations are now 
more dependent on support contractors. At 11 of 13 program offices we 
informally surveyed, contractors accounted for 64 percent of cost- 
estimating personnel. This reliance raised questions from the cost- 
estimating community about whether numbers and qualifications of 
government personnel were sufficient to provide oversight of and 
insight into contractor cost estimates. In addition to technical and 
cost estimating skills, DOD and GAO studies have also pointed to 
capacity shortfalls in program management. According to DOD's Young 
Panel report, government capabilities to lead and manage the space 
acquisition process have seriously eroded, in part because of actions 
taken in the acquisition reform environment of the 1990s. During our 
2005 review of program management, we surveyed DOD's major weapon 
system program managers and interviewed program executive officers, who 
similarly pointed to critical skill shortages in program management, 
systems engineering, and software development. The Air Force and DOD 
recognize these shortfalls and are taking actions to address them, but 
these will take time to implement. It is important that in the interim, 
the Air Force identify and take steps to grow or retain skill sets that 
should be organic, such as highly specialized knowledge of certain 
military space technologies. During both our cost estimating and space 
system reviews, program officials noted that it can take several years 
for new technical staff to build knowledge and skills unique to 
military space. 

Our past work has also pointed to capacity shortfalls that go beyond 
workforce. For example, in 2006, we reported that cost estimation data 
and databases are incomplete, insufficient, and outdated. And in our 
testimony last year, we pointed to limited opportunities and funding 
for space technologies, and the lack of low-cost launch vehicles. It is 
our understanding that the Air Force and DOD are working to address all 
of these shortfalls. Budget plans show, for example, an increase of 
nearly $11 million in funding for the space test program beginning in 
2009--about 23 percent. 

Last, policies that surround space acquisition need to be further 
revised to ensure best practices are instilled and sustained. For 
example, DOD's space acquisition policy does not require that programs 
such as TSAT and Space Radar achieve a TRL 6 or higher for key 
technologies before being formally started (KDP B). Instead, it is 
suggested that TRL 6 be achieved at preliminary decision review (KDP C) 
or soon after. Given that there are many pressures and incentives that 
are driving space and other weapon programs to begin too early and to 
drive for dramatic rather than incremental leaps in capability, DOD 
needs acquisition policies that ensure programs have the knowledge they 
need to make investment decisions and that DOD and Congress have a more 
accurate picture of how long and how much it will take to get the 
capability that is being promised. In addition, although the policy 
requires that independent cost estimates be prepared by bodies outside 
the acquisition chain of command, it does not require that they be 
relied upon to develop program budgets. Officials within the space cost 
estimating community also believed that the policy was unclear in 
defining roles and responsibilities for cost estimators. We continue to 
recommend changes be made to the policy--not only to further ingrain 
the shift in thinking about how space systems should be developed, but 
to ensure that the changes current leaders are trying to make can be 
sustained beyond their tenure. 

In closing, we support efforts to instill best practices on programs 
like Space Radar and TSAT. They are critical to enabling DOD to break 
the cycle of space acquisition problems by matching resources to 
requirements before program start. We encourage DOD to build on this 
momentum by extending a best practice approach to its entire space 
portfolio. For newer efforts, such as AIRSS, this means reexamining 
requirements and alternative means of satisfying those requirements and 
clarifying the true purpose of the program. For current programs, such 
as SBIRS, this means continuing to track risks and dedicating resources 
necessary to mitigate those risks, leveraging management tools such as 
earned value management analyses, and finding ways to incentivize 
contractors to perform well. For the broader portfolio, this means 
ensuring programs have all the right resources to enable success. These 
include adequate levels of funding accompanied by short-and long-term 
investment plans, adequate skills and capabilities, as well as data, 
policy, and processes, accountability and leadership support. 

[End of section] 

Appendix I: Scope and Methodology: 

In preparing for this testimony, we relied on previously issued GAO 
reports on assessments of individual space programs, common problems 
affecting space system acquisitions, and DOD's space acquisition 
policy. We also relied on our best practices studies, which have 
examined pressures and incentives affecting space system acquisition 
programs, the optimal levels of knowledge needed to successfully 
execute programs, and complementary management practices and processes 
that have helped commercial and DOD programs to reduce costs and cycle 
time. In addition, we analyzed DOD's Selected Acquisition Reports to 
assess cost increases and investment trends. We conducted our review 
between March 19 and April 13, 2007 in accordance with generally 
accepted government auditing standards. 

[End of section] 

Appendix II: Contacts and Acknowledgments: 

For in information, please contact Cristina Chaplain at 202-512-4841 or 
chaplainc@gao.gov. Individuals making contributions to this testimony 
include, Art Gallegos, Jeff Barron, Tony Beckham, Noah Bleicher, Greg 
Campbell, Maricela Cherveny, Claire Cyrnak, Jean Harker, and Rich 
Horiuchi. 

[End of section] 

Appendix III: 

Table 2: Highlights of Recent Findings for Current and Planned Space 
Programs: 

Current programs. 

Description: Space Based Infrared System High (SBIRS-High): Ballistic 
missile detection system being developed by the Air Force to replace 
its legacy detection system; Development; Start: October 1996[A]; 
Recent findings: With unit cost increases of more than 315 percent, the 
program has undergone four Nunn-McCurdy reviews. Total program costs 
have increased from $4 billion to more than $10 billion. The launch 
schedule has slipped at least 6 years; the first satellite is currently 
scheduled to launch not earlier than October 2008. Several program 
elements that were problematic before the restructure continue to pose 
risks for the program. SBIRS High faces challenges in software 
development and remains at risk of failing to meet cost and schedule 
goals. The total program cost is still not accounted for, in part 
because of deferred capabilities, and the contractor management reserve 
funds are not sustainable at the current rate of expenditure. In all 
likelihood, management reserve dollars will need to be increased. DOD 
officials recently began efforts to develop a viable competing 
capability in parallel with the SBIRS High program, known as the 
Alternative Infrared Satellite System (AIRSS). AIRSS is being designed 
in part to provide an alternative to the SBIRS GEO 3 satellite. DOD 
awarded contracts to Raytheon and Science Applications International 
Corporation for sensor assembly development for AIRSS. 

Description: Global Broadcast Service (GBS): Part of the overall 
military satellite communication architecture developed by the Air 
Force for one-way transmission of video, imagery, and other high- 
bandwidth information to the warfighter; Development; Start: November 
1997; 
Recent findings: Program funding increased by over $100 million for 
fiscal years 2008 through 2013 as a result of a decision to implement a 
new GBS architecture. The new architecture is to be implemented 
beginning in fiscal year 2008, and will use existing defense programs 
and computing centers to host GBS broadcast content. A revised 
acquisition program baseline is being developed to address the unit 
cost increase. GBS currently uses broadcast payloads on two Ultra- High 
Frequency Follow-on (UFO) satellites and three leased commercial 
satellite transponders, and starting in fiscal year 2008, the 
constellation of five Wideband Global SATCOM (WGS) satellites will also 
carry GBS. 

Description: Evolved Expendable Launch Vehicle (EELV): Acquisition of 
commercial launch services and associated infrastructure from two 
competitive families of launch vehicles; Development; Start: October 
1998; 
Recent findings: The program cost has risen 79 percent, with a cost per 
unit increase of 135 percent, and triggered a Nunn-McCurdy breach. A 
chief reason for cost increases is a decline in the commercial launch 
market upon which the program's business case was based. In December 
2006, Boeing and Lockheed Martin initiated a joint venture (United 
Launch Alliance, or ULA) that will combine the production, engineering, 
test, and launch operations associated with U.S. government launches of 
Boeing Delta and Lockheed Martin Atlas rockets. The EELV program office 
is budgeting for ULA savings (estimated at $150 million per year) that 
are to appear starting in fiscal year 2011. The cost per launch under 
the new Buy III acquisition strategy will likely be higher than under 
Buy I because the contractors will incur additional costs to allow the 
government to perform the necessary oversight not required under Buy I. 
The contractors will incur additional costs due to added program scope 
(mission assurance, assured access to space, and earned value 
management systems reporting) and necessary government oversight not 
required under Buy I. The program office is revising the life cycle 
cost estimate and acquisition program baseline to reflect the 
transition from Milestone II to Milestone III (production) and 
incorporate the Buy III strategy and contract structure. The expected 
completion is summer 2007. 

Description: Global Positioning System (GPS) Modernization: A space- 
based radio-positioning system that nominally consists of a 24- 
satellite constellation providing navigation and timing data to 
military and civilian users worldwide; Development; Start: February 
2000; 
Recent findings: Total costs of the GPS II modernization program have 
increased by over 20 percent, largely due to adding requirements after 
the contract award and using a contracting approach that gave the 
contractor for the IIF satellites and control system full 
responsibility for the life cycle of the program and allowed parallel 
development and production efforts. The program requested approximately 
$151 million in funds to be reprogrammed this year and did not award 
the contractor $21.4 million in 2006 available award fees. The first 
IIF satellite available for launch date has slipped about 2.5 years. 
The original program baseline had the available for launch date of 
December 2006, but DOD's recent approval of a revised baseline now 
shows July 2009 as the latest available date. That baseline also calls 
for the procurement of only 12 IIF satellites, rather than the planned 
19. The reduced number of IIF satellites and a possible increase in 
reprogrammed funding will increase unit cost. 

Description: Wideband Global SATCOM (WGS): Previously known as Wideband 
Gapfiller Satellites and originally conceived to augment the near-term 
bandwidth gap in warfighter communications needs. The Air Force is 
considering a three-block approach for fielding WGS, which is to 
provide high data-rate military satellite communication services. Block 
1 includes the first three satellites; Development; Start: November 
2000; 
Recent findings: Total program costs have increased by more than 80 
percent--increasing from $1.10 billion in late 2000 to $2.01 billion in 
2005 and reflect the purchase of two additional satellites. In October 
2006, the Air Force awarded a $1.07 billion fixed price incentive fee 
with firm target contract to Boeing Satellite Systems for developing 
the Block 2 WGS satellites, or satellites 4 and 5, with an unfunded 
option for WGS 6. Satellites 4 and 5 will have enhanced capacity for 
supporting airborne intelligence, surveillance, and reconnaissance 
users and will complete the currently planned WGS constellation. The 
program has made progress in integrating and testing the first 
satellite. For example, rework on improperly installed fasteners is 
complete, and the contractor redesigned computers to correct data 
transmission errors. The program office conducted low-level signal 
testing associated with satellite launch and completed interoperability 
testing on the first satellite, in preparation for a June 2007 launch. 

Description: Advanced Extremely High Frequency (AEHF): Communications 
satellite system being developed by the Air Force to replace its legacy 
protected communications satellites; Development; Start: September 
2001; 
Recent findings: Unit cost has increased by 78 percent. In 2004, the 
program experienced cost increases of more than 15 percent, which 
required a Nunn-McCurdy notification to Congress. The program was 
restructured in 2004 when key cryptographic equipment was not delivered 
to the payload contractor in time to meet the launch schedule. Although 
the AEHF program has overcome hurdles that plagued the program through 
development, it still has to complete first-time integration and 
testing of a very complex satellite. The program expects to conduct 
thermal vacuum testing in the fall of 2007. Current plans are to meet 
full operational capability with three AEHF satellites and the first 
Transformational Satellite Communication System (TSAT) satellite. 

Description: Space Tracking and Surveillance System (STSS): Two 
satellites to be launched in 2007 as technology demonstrations for 
missile defense tests to assess whether missiles can be effectively 
tracked from space; Development; Start: Restructured April 2002; 
Recent findings: Total program costs have increased by 35 percent due 
to the addition of funds for designing and developing the program's 
operational constellation. As of 2006, total program cost is estimated 
at almost $4.7 billion. The initial increment of this program, which 
started in 2002, is composed of two demonstration satellites that were 
built under the previous Space Based Infrared System-Low (SBIRS-Low) 
program. SBIRS-Low had incurred cost increases and schedule delays and 
other problems that were so severe, DOD abandoned the effort. The 
program office completed thermal vacuum testing on the first 
demonstration satellite's space vehicle. Test results show performance 
of the integrated space vehicle within specifications. However, the 
STSS program has experienced quality issues at the payload 
subcontractor, and technical difficulties encountered by the prime 
contractor during payload integration and testing contributed to STSS's 
unfavorable cost and schedule variances of $163.7 million and $104.4 
million respectively. A portion of the unfavorable cost and schedule 
variance is related to work that does not contribute to the 
demonstration satellite effort. The program office expects to launch 
both satellites in 2007. The Missile Defense Agency (MDA) plans to 
initiate an effort to build the next generation of satellites, and the 
program office intends to award a contract for the follow-on 
constellation in the fall. If the contract is awarded in the fall, the 
follow-on satellites are to be launched in 2016 or 2017, resulting in a 
potential coverage gap of 5 to 6 years. 

Description: National Polar-orbiting Operational Environmental 
Satellite System (NPOESS): Weather and environmental monitoring 
satellites being developed by the National Oceanic and Atmospheric 
Administration, the National Aeronautics and Space Administration, and 
DOD to replace those in use by the agencies; Development; Start: August 
2002; 
Recent findings: Unit costs increased by about 34 percent, triggering a 
Nunn-McCurdy review in January 2006. The revised program acquisition 
cost estimate is about $11.5 billion despite the reduction of total 
satellites. As part of the mandatory certification process, the program 
was restructured and will only include the development of four 
satellites, down from six, and the deletion of a critical sensor. 
However, the program now includes the development of a competition for 
a new replacement sensor that will coincide with the second 
developmental satellite. The launch of the first satellite has been 
delayed by at least 45 months from contract award, and is now planned 
for early 2013. 

Description: Mobile User Objective System (MUOS): Navy effort to 
develop a family of unprotected, narrow-band satellites that can 
support mobile and fixed-site users worldwide; Development; Start: 
September 2004; 
Recent findings: In June 2004, DOD delayed the first MUOS satellite 
launch by 1 year to fiscal year 2010 due to a delay in awarding the 
development contract and to mitigate schedule risk. MUOS development 
has become time-critical due to the failures of two UHF Follow-On 
satellites, one in June 2005 and another in September 2006. In June 
2008, narrow-band communications capabilities are expected to drop 
below those required and may remain degraded until the first MUOS 
satellite is available for operations in March 2010. According to the 
program manager, accelerating the MUOS schedule is not an option 
because of the production, integration and test activities that must 
take place prior to launch. DOD is examining options for addressing a 
communications capability gap. Additionally, development problems 
encountered under the Joint Tactical Radio System (JTRS) program have 
resulted in deferrals of requirements and the increased risk of 
underutilization of MUOS capabilities until MUOS- compliant JTRS 
terminals are fielded. According to the program office, MUOS must 
maintain its schedule each spacecraft will help mitigate the UFO 
availability gap until JTRS terminals are fielded. 

Planned programs. 

Description: Alternative Infrared Satellite System (AIRSS): The Air 
Force's AIRSS effort is to provide a missile warning capability while 
also supporting missile defense, battlespace awareness, and technical 
intelligence; Planned development start date: Early third quarter 
fiscal year 2008; 
Recent findings: As a result of the Nunn-McCurdy certification for the 
SBIRS High program, the Under Secretary of Defense for Acquisition, 
Technology, and Logistics directed the DOD Executive Agent for Space to 
plan for a new program for space-based infrared capabilities that will 
pursue an approach with acceptable technical risk and can ensure a 
launch availability date of fiscal year 2015. However, AIRSS is not 
being pursued as a "plan B" for the SBIRS program, as originally 
envisioned. Rather than seeking to maintain continuity of operations, 
the effort is focused on advancing capabilities under highly compressed 
time-frames. There is disagreement within DOD about the likelihood of 
meeting the target delivery date of 2015. Results from the on-orbit 
demonstration satellite will not be ready in time to fully inform the 
development of the first AIRSS satellite, and AIRSS officials plan to 
award system contracts before data from key on-orbit testing is 
completed. The latest cost estimate for the effort through fiscal year 
2013 is over $3.3 billion; there is no full estimate because the system 
is still undefined. 

Description: GPS III: Next generation of GPS satellites and a new 
control system (OCX) is to be acquired using the block approach; 
Planned development start date: First quarter of 2008 for satellites 
and fiscal year 2007 for OCX; 
Recent findings: Initial plans were to develop a new version of GPS 
that would add advanced jam-resistant capabilities and provide higher-
quality and more secure navigation capabilities. However, the first 
block of GPS III satellites will have baseline capabilities, with a 
launch date of 2013 for the first satellite; second and third blocks 
will introduce new capabilities. Ongoing cost increases and schedule 
delays with the control system for the GPS modernized satellites (IIR-M 
and IIF) resulted in reallocating requirements to the OCX. If the first 
GPS III does not launch by 2013, constellation sustainment will be at 
risk. 

Description: Space-Based Space Surveillance (SBSS): Optical sensing 
satellites being developed to search, detect, and track objects in 
Earth orbit; Planned development start date: Second quarter of fiscal 
year 2010; 
Recent findings: The SBSS system is to replace an aging sensor on an 
orbiting research and development satellite and improve the timeliness 
of data on objects in geosynchronous orbit. As currently planned, the 
initial block (Block 10) will consist of a single satellite and 
associated command, control, communications, and computer equipment. 
Subsequent SBSS efforts, referred to as Block 20, will focus on 
building a larger constellation of satellites to provide worldwide 
space surveillance of smaller objects in shorter timelines. In early 
2006, the effort was restructured due to schedule delays and cost 
growth on Block 10 development efforts. The restructuring increased 
funding and schedule margin; streamlined the assembly, integration, and 
test plan; and relaxed requirements. The launch date for the Block 10 
satellite has been delayed about 18 months--to April 2009. Cost has 
increased by about $130 million over initial estimates. 

Description: Space Radar (SR): Satellites being developed to provide 
global, persistent, all-weather, day-and -night, intelligence, 
reconnaissance, and surveillance capabilities; Planned development 
start date: April 2009; 
Recent findings: Program estimates for total funding range from $20 
billion to $25 billion. In November 2006, the program revised its 
critical technologies, and although the technology readiness levels--or 
TRLs--are low (between TRL 3 and TRL 4), the program expects critical 
technologies to be mature when the product development phase begins in 
2009. The program has strived to close knowledge gaps between 
requirements and resources in part by following an iterative approach, 
but key performance parameters are yet to be finalized. Furthermore, 
the program may not have planned enough time for design, integration, 
and production activities. For example, program start to initial launch 
capability for SR is shorter than what DOD has achieved or estimated 
for some other complex satellite systems that have had major replan 
activities. Although there is a cost sharing agreement in the FYDP, a 
long-term cost-share agreement (beyond FYDP) between DOD and the 
intelligence community has not been established, which adds to 
uncertainty about DOD's ability to afford expensive programs such as 
SR. SR has transferred its fiscal year 2008 budget estimate into the 
Defense Reconnaissance Support Activities budget, and it is now 
classified. 

Description: Transformational Satellite Communications System (TSAT): 
Communication satellites being developed by the Air Force to employ 
advanced technologies in support of DOD's future communication 
architecture; Planned development; Start: First quarter fiscal year 
2008; 
Recent findings: The latest cost estimate for TSAT is $17.7 billion 
(adjusted for inflation), and the launch of the first satellite has 
slipped from 2011 to 2015. DOD rescinded approval to begin preliminary 
design activities and restructured the program to follow an incremental 
development approach. Early tests have revealed challenges in laser 
communication and limited analyses of the scalability of TSAT raises 
integration risks. Final test results of Phase II testing will not be 
available until late fiscal year 2007.The program may not have planned 
enough time for networking activities between TSAT and other DOD 
systems, and the schedule for the TSAT Mission Operations System 
software code development may be too optimistic. Even with TSAT and 
other DOD satellites assets, gaps between bandwidth needs and resources 
are expected to continue to grow, requiring continued dependence on 
commercial bandwidth. Program officials said they will need additional 
government personnel to carry out oversight and management functions in 
the long run. 

Source: GAO analysis of DOD data and previous GAO reports. 

[A] The National Security Space Acquisition Policy specifies that key 
decision Point B (also referred to as Milestone B by the DOD 5000 
series or Development Start by GAO best practice work) is the official 
program initiation point when programs submit Selected Acquisition 
Reports (SAR) to Congress and develop a formal Acquisition Program 
Baseline (APB). 

[End of table] 

(120644): 

FOOTNOTES 

[1] Estimates of fiscal year 2008 spending on procurement and research, 
development, test and evaluation, are based on DOD's Fiscal Year 2007 
Future Years Defense Program (FYDP) plan. The fiscal year 2008 FYDP 
plan was not available to us at the time we developed this testimony. 

[2] GAO, Space Acquisitions: DOD Needs to Take More Action to Address 
Unrealistic Initial Cost Estimates of Space Systems, GAO-07-96, 
(Washington, D.C.: Nov. 17, 2006). 

[3] Department of Defense, Defense Acquisition Transformation Report to 
Congress (Washington, D.C., 2007). 

[4] GAO, Best Practices: An Integrated Portfolio Management Approach to 
Weapon System Investments Could Improve DOD's Acquisition Outcomes, GAO-
07-388 (Washington, D.C.: March 30, 2007).

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