Space Acquisitions:

Uncertainties in the Evolved Expendable Launch Vehicle Program Pose Management and Oversight Challenges

GAO-08-1039: Published: Sep 26, 2008. Publicly Released: Sep 26, 2008.

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The Department of Defense (DOD) plans to spend over $27 billion acquiring launch services through the Evolved Expendable Launch Vehicle (EELV) program over the next 12 years. The EELV program uses two families of commercially owned and operated vehicles to launch satellites. Partly because the commercial space market did not develop as expected, the EELV program has undergone significant changes. These include: adoption of a new acquisition strategy in 2005 that sought to ensure the viability of the two EELV launch vehicle providers, Boeing and Lockheed Martin; the subsequent decision by those two companies to form a joint venture called the United Launch Alliance (ULA); and a 10-year increase in the life of the program. In light of these changes, GAO was asked to (1) determine what uncertainties DOD faces in the EELV program and in the transition to ULA, and (2) assess how DOD is positioned to manage and oversee the effort. To accomplish this, GAO reviewed a wide variety of DOD documents and interviewed DOD and program officials.

The EELV program currently faces uncertainties in the reliability of the vehicles used to launch military and other government spacecraft as well as its budget for future years and in the merger of its two principal suppliers. Taken together, these unknowns require careful monitoring and oversight to ensure a fairly long track record of launch successes can continue. Though the program has had 21 successful operational launches, no single configuration from either family of launch vehicles has been launched enough times to demonstrate production process reliability. The ULA transition may also influence the demonstration of vehicle reliability because ULA plans to relocate production activities and may alter manufacturing processes. The consolidation of Boeing and Lockheed into ULA--a massive undertaking that seeks to combine two distinct corporate cultures, and consolidate launch infrastructure and business operations from five locations across the country to two--poses a variety of other cost, schedule, and performance uncertainties and risks. DOD does not know whether its EELV program budget is sufficient to manage the program in the short term because the Air Force reduced the EELV program budget to incorporate anticipated savings from the ULA transition, even though savings estimates were based on preliminary data. DOD has taken steps to position itself to effectively oversee and manage the ULA transition and EELV program but still faces significant challenges in these areas. More specifically, DOD has established a well-defined process for how the ULA transition will be overseen and established mechanisms that allow the diverse agencies involved to coordinate the analysis and raise critical issues to senior leaders. However, when DOD moved the EELV program from the research and development phases in 2007 to the sustainment phase, DOD eliminated requirements on the program to produce data that would illuminate what impacts the transition is having on the program, what cost increases are occurring and why, and what other programmatic and technical vulnerabilities exist and how they are being addressed. Furthermore, a new independent life-cycle cost estimate was not required for the program when it moved to the sustainment phase; as a result, DOD will not be able to rely on this estimate for making long-term investment planning decisions. According to DOD officials, the latest life-cycle cost estimate for the program is not realistic. In addition, as part of its effort to increase its oversight and gain program knowledge, in 2005 the Under Secretary of the Air Force expanded the program office's management responsibilities when he approved a new acquisition strategy for the EELV program. At the same time, program officials stated that they do not have the government staff necessary to perform what they consider to be inherently governmental functions related to the expansion of oversight.

Status Legend:

More Info
  • Review Pending-GAO has not yet assessed implementation status.
  • Open-Actions to satisfy the intent of the recommendation have not been taken or are being planned, or actions that partially satisfy the intent of the recommendation have been taken.
  • Closed-implemented-Actions that satisfy the intent of the recommendation have been taken.
  • Closed-not implemented-While the intent of the recommendation has not been satisfied, time or circumstances have rendered the recommendation invalid.
    • Review Pending
    • Open
    • Closed - implemented
    • Closed - not implemented

    Recommendations for Executive Action

    Recommendation: To improve DOD's ability to effectively oversee and manage the EELV program, the Secretary of Defense should direct the Under Secretary of Defense for Acquisition, Technology and Logistics to require the program to continue to provide OSD, and Congress as appropriate, with updates of program cost and status information using criteria that apply to major research and development and procurement programs.

    Agency Affected: Department of Defense

    Status: Closed - Implemented

    Comments: DOD agreed with the recommendation and initiated steps to implement it. More recently, Senate Armed Services Committee staff used GAO's report to develop legislative direction contained in the National Defense Authorization Act for Fiscal Year 2012 (Section 838, P. L. No. 112-81) for DOD to either re-designate the EELV program as a major defense acquisition program, or to provide reports required of major defense acquisition programs, including cost, schedule, and performance reports to Congress (known as Selected Acquisition Reports), and quarterly cost and status reports to the Under Secretary of Defense for Acquisition, Technology, and Logistics. In March 2012, DOD re-designated the EELV program as a major defense acquisition program and has begun providing or is planning to provide the required cost and status reports, which should improve DOD's and Congress' abilities to effectively oversee the EELV program.

    Recommendation: To improve DOD's ability to effectively oversee and manage the EELV program, the Secretary of Defense should direct the Under Secretary of Defense for Acquisition, Technology and Logistics to direct the Director of the Cost Analysis Improvement Group to conduct an independent life-cycle cost estimate of the EELV program once the ULA joint venture transition is completed, and periodically update the estimate to account for significant program changes.

    Agency Affected: Department of Defense

    Status: Closed - Implemented

    Comments: In providing comments on this report, DOD concurred with this recommendation. According to a senior official of the Office of the Director of Cost Assessment and Program Evaluation (CAPE, which took over the functions of the Cost Analysis Improvement Group), this recommendation has been implemented. Specifically, CAPE conducted an independent life-cycle cost estimate of the EELV program in the Spring of 2010. The official added that the CAPE has been evaluating proposed changes to the EELV program, such as launch vehicle procurement strategy options.

    Recommendation: The Secretary of Defense should direct the Secretary of the Air Force to assess the EELV program's staffing needs, including those that are inherently governmental, to confirm whether shortages exist, and if they do, develop a plan for addressing them.

    Agency Affected: Department of Defense

    Status: Closed - Not Implemented

    Comments: In providing comments on this report, DOD concurred with this recommendation but has not taken actions necessary to implement it. According to DOD, the manning of the EELV program and the Air Force Space and Missile Systems Center (SMC) remains below authorized levels and there are no additional resources in SMC at this time to address the government manning shortfall issue. DOD stated the Air Force will continue to focus its resources on the most mission-critical tasks and will seek additional manning if and when it becomes available. According to the EELV program office, SMC-assigned military strength levels are significantly lower than authorized. It further stated that these levels have been reduced from various assignment cycles, resulting in vacant positions never getting filled.

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