Space Acquisitions:

DOD Needs More Guidance on Decisions to Store Satellites

GAO-15-97R: Published: Dec 9, 2014. Publicly Released: Dec 9, 2014.

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What GAO Found

Currently, the Department of Defense’s (DOD) general approach is to launch satellites as soon as they are built. Program offices handle storage on a case-by-case basis based on mission needs and production and launch schedules. Over the last 5 years, DOD generally decided to use storage when satellites on orbit were lasting longer than expected and thereby pushed out the originally planned launch dates for the newer satellites.  However, satellite storage is now more often considered earlier while the acquisition strategy is developed. As programs use block buys to efficiently procure more than one satellite at a time to support a constellation, the satellites’ production is spread out over multiple years in a continuous production line that necessitates storage as satellites are produced earlier than needed for launch. As a result, planned storage is now beginning to be considered or included in production contracts at the time of award. However, no specific DOD or service acquisition policies exist regarding how and when to contract for satellite storage. Regardless of the approach taken, the Federal Acquisition Regulation requires that contracting officers must have sufficient information to determine that proposed costs are fair and reasonable.

According to officials from the eight satellite programs that stored or plan to store satellites, DOD spent over $130 million for satellite storage over the last 5 years and is expected to spend over $206 million over the next 5 years.. Among the programs, the total costs for storing individual satellites ranged from $40,000 to an expected $120 million. Individual satellite storage costs vary across and within programs based on several factors, including the expertise and number of staff needed to monitor and maintain the satellite, types and frequency of testing needed while in storage, and the length of time stored. According to program officials, the majority of the storage costs are comprised of labor costs for personnel to perform maintenance and testing and then prepare the satellite for launch. However, satellite program offices were not able to provide storage cost data at a detailed level—such as the number of personnel and costs for each type of storage activity—since they are not collected at that level. A detailed breakdown of storage costs could provide insights into the cost variations experienced across programs and an identification of the cost drivers that could provide contracting officers an advantage in negotiations to potentially obtain better storage rates.

Storage generally has had a minimal impact on a satellite’s operational lifetime, according to DOD officials and the limited number of studies available regarding the effects. Satellites stored on the ground face risks, such as batteries being partially depleted and lubricants settling in rotating wheel assemblies. According to department officials, DOD mitigates these risks when satellites are stored on the ground by performing maintenance and testing activities to ensure the satellite stays ready for launch. When stored on orbit—launched but not brought on-line for operations—the most significant risk is the harsh space environment.

According to officials from the National Aeronautics and Space Administration (NASA), National Oceanic and Atmospheric Administration (NOAA), and National Reconnaissance Office (NRO), their satellites are generally built and launched immediately. NOAA acquires some weather satellites in block buys and generally stores them on orbit to enable NOAA to immediately respond to a capability gap caused by an on orbit satellite failure. In contrast, NRO stores some satellites on the ground as part of the planned production of multiple satellites.

Why GAO Did This Study

Most of DOD’s current, major satellite acquisition programs are in the later stages of acquisition, with the initial satellites having been designed, produced, and launched into orbit while additional satellites of the same design are being produced. Several of the satellites now being produced will be placed in storage before being launched—either in facilities on the ground or on orbit in space. Recent challenges, including a fiscal climate of reduced funds, have led DOD to consider efforts that could significantly change the way it acquires satellites, which may also impact how and when it stores satellites. As DOD considers such changes, it is important that DOD has sufficient insight into the acquisition costs— including storage of satellites—to minimize the government’s risk of paying contractors more than necessary.

GAO was mandated to assess the costs, risks, and benefits of storage of satellites. This report addresses the following: (1) How does storage factor into DOD’s satellite acquisition programs and strategies, including those for reconstituting satellites? (2)  What satellite storage costs has DOD identified for the last 5 years and what costs does it expect during the next 5 years? (3) What steps has DOD taken to assess the effects of satellite storage on operational lifetimes and the associated risks and benefits of storage? and (4) How do other agencies—NASA, NOAA, and NRO—use satellite storage?

What GAO Recommends

To ensure that satellites storage is fully considered at the beginning of the acquisition process for all satellite programs and sufficient detailed cost data is maintained, we recommend that the Secretary of Defense provide guidance regarding when and how to use storage in the acquisition process, and establish mechanisms so that more detailed data is maintained for use in evaluating the reasonableness of contractors’ storage cost proposals and informing DOD’s oversight of satellite acquisitions.  DOD concurred with our recommendation.

For more information, contact Cristina T. Chaplain at 202-512-4841 or chaplainc@gao.gov.

Recommendation for Executive Action

  1. Status: Open

    Comments: In its response to the report, DOD concurred with the recommendation and noted that it is important to develop guidance regarding the use of satellite storage in the acquisition process. In addition, DOD agreed that it is important to establish mechanisms such that more detailed data is available to evaluate storage cost proposals and inform the oversight of satellite acquisitions. In its January 2015 60-day letter, DOD said its position had not changed. As of August 2015, no action had yet been taken by the Department.

    Recommendation: To ensure that satellites storage is fully considered at the beginning of the acquisition process for all satellite programs and sufficient detailed cost data are maintained, the Secretary of Defense should provide guidance regarding when and how to use storage in the acquisition process, and establish mechanisms so that more detailed data are maintained for use in evaluating the reasonableness of contractors' storage cost proposals and for informing DOD's oversight of satellite acquisitions.

    Agency Affected: Department of Defense

 

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