Defense Acquisitions:

Incentives and Pressures That Drive Problems Affecting Satellite and Related Acquisitions

GAO-05-570R: Published: Jun 23, 2005. Publicly Released: Jun 23, 2005.

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In fiscal year 2006, the Department of Defense (DOD) expects to spend more than $23 billion to develop, acquire, and operate satellites and other space-related systems. These systems are becoming increasingly critical to every facet of military operations as well as the U.S. economy and homeland security. Satellite systems collect information on the capabilities and intentions of potential adversaries. They enable U.S. military forces to be warned of missile attacks and to communicate and navigate while avoiding hostile actions. They provide information that allows forces to precisely attack targets in ways that minimize collateral damage and loss of life. DOD's satellites also enable global communications; television broadcasts; weather forecasting; disaster planning; navigation of ships, planes, trucks, and cars; and synchronization of computers, communications, and electric power grids. DOD's introduction of these desirable capabilities over time has not come without difficulties. 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. As a result of these problems, DOD is now contending with important trade-off decisions, such as the following. Whether to keep striving to build its Space-Based Infrared System (SBIRS) High as intended or cut back on capabilities. This system is intended to replace and upgrade an older generation of missile-warning satellites, but its cost has already more than doubled and continues to increase, and its schedule has stretched for years. Whether and how much to employ lower orbiting satellites equipped with similar capabilities to facilitate missile defense activities. DOD had spent two decades on this effort without launching a single satellite. Cost and schedule problems forced DOD to rebaseline the program several times. Overall affordability of missile defense has driven DOD to assess whether to continue with this particular effort as well as pursue development of a newer generation of missile-tracking satellites. Whether to limit the acquisition of new communication satellites, known as the Advanced Extremely High Frequency (AEHF) satellites, in favor of developing a newer generation of laser-linked satellites, known as the Transformational Satellite Communications System (TSAT). The AEHF program is running over cost and schedule, but it incorporates more mature technologies. TSAT promises dramatically greater bandwidth and processing capabilities and is considered integral to DOD's efforts to network all of its weapon systems, but there is much less certainty as to how much the system will cost or when it can be delivered because critical technologies are not mature. Whether to pursue incremental increases in capability for the Global Positioning System or embark on a more expensive program that would offer more dramatic capability advances. Two years ago, we issued a report to Congress that analyzed reports we had previously issued on satellite and other space-related programs over the past two decades as well as other studies. Our 2003 report identified common problems affecting those acquisitions. Generally, the problems we identified were common to DOD weapons acquisitions and were recognized within DOD and the space community. In February 2005, Congress requested that we identify underlying incentives and pressures that drive the problems we had identified earlier. Congress also asked that we complete our fieldwork by April 2005 to support the subcommittee's decisions on DOD's appropriations.

The officials we spoke with for this review cited a set of incentives and pressures underlying the space acquisition problems that are largely reflective of a lack of an overall investment strategy and a corresponding tendency to set start dates for programs before a sound business case for them has been established. Specifically, they told us that DOD starts more programs than it can afford and rarely prioritizes them for funding purposes. Such an approach has cascading effects--from creating negative behaviors associated with competing for funds, to increasing technology challenges, to creating unanticipated and disruptive funding shifts, to stretching out schedules in order to accommodate the whole portfolio of space programs. Our previous reports have found these pressures are long-standing and common to weapon acquisitions, not just space systems. In addition, officials we spoke with also cited pressures resulting from having a diverse array of officials and organizations involved with the acquisition process, tensions between the 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.

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