Access to Space:

Issues Associated With DOD's Evolved Expendable Launch Vehicle Program

NSIAD-97-130: Published: Jun 24, 1997. Publicly Released: Jun 24, 1997.

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Pursuant to a congressional request, GAO reviewed the Department of Defense's (DOD) progress in acquiring the Evolved Expendable Launch Vehicle (EELV), focusing on: (1) factors associated with program cost, schedule, and performance; and (2) selected aspects of EELV's relationship to the commercial launch vehicle market.

GAO noted that: (1) reducing the cost of launching satellites into orbit is the paramount objective of the EELV program; (2) however, DOD faces many program risks in making the transition to EELV that could increase costs, cause schedule delays, and possibly jeopardize some satellite schedules and missions; (3) EELV development is less than 25 percent complete, and DOD has about 1 year to address these risks before proceeding into engineering and manufacturing development which is scheduled for June 1998; (4) with several billion dollars at stake, risk mitigation efforts are essential; (5) cost risk is inherent in the current acquisition plan because EELV production could be initiated from 1 to 2 years before the first system development test flight; (6) pursuing such a strategy could result in costly modifications to the production vehicles because historically, most launch systems have had several failures during their early flight period; (7) also, existing satellite programs expect to incur at least $117 million in added costs as a result of the transition to EELV, and these costs are not included in the Office of Secretary of Defense or Air Force cost estimates for the EELV program; (8) there are schedule risks that could seriously affect the EELV program; (9) as currently planned, DOD will purchase the last of its existing expendable launch vehicles before the first EELV system development test flight is scheduled to occur; (10) an unsuccessful test flight, coupled with the expiration of existing vehicle contracts, could create a void in the government's launch capability; (11) DOD has not developed contingency plans to address this potential risk to national security and civil satellite schedules and missions; (12) however, it did indicate that commercial launch vehicles could be used for an emergency procurement in the event of an EELV failure or schedule delay; (13) the Air Force has identified the meeting of launch facility preparation schedules as a significant program risk; (14) in addition, there are technical issues that raise concerns about potential EELV performance; (15) the Air Force has identified vehicle propulsion, systems integration, and software as technical risk areas; (16) the commercial application of EELV poses a unique situation for the government; (17) the space industry expects a large international market for commercial satellites, particularly communication satellites, and therefore for launch vehicles; and (18) as a result, the winning EELV contractor will enjoy an enhanced competitive position in the international launch vehicle market from DOD's investment in EELV.

Recommendations for Executive Action

  1. Status: Closed - Implemented

    Comments: In November 1997, DOD revised its acquisition approach to: (1) solicit two contractors to share in development costs, instead of one being fully funded by the government; (2) use an acquisition instrument called an "other transaction" for development, instead of a contract; and (3) acquire launch services, instead of production vehicles.

    Recommendation: Considering the cost and schedule issues associated with the EELV program, the Secretary of Defense should either: (1) revise the program strategy, by decoupling the planned concurrent engineering and manufacturing development decision and initial production authorization, to take advantage of the most current program risk assessment information available prior to obligating procurement funds planned for fiscal year 2000; or (2) review the initial production authorization prior to obligating any procurement funds, if that authorization is made concurrently with the engineering and manufacturing development decision.

    Agency Affected: Department of Defense

  2. Status: Closed - Not Implemented

    Comments: In November 1997, DOD revised its acquisition approach to: (1) solicit two contractors to share in development costs, instead of one being fully funded by the government; (2) use an acquisition instrument called an "other transaction" for development, instead of a contract; and (3) acquire launch services, instead of production vehicles.

    Recommendation: Considering the cost and schedule issues associated with the EELV program, the Secretary of Defense should develop contingency plans to: (1) meet national security and civil satellite launch schedules when the existing launch vehicle production contracts expire; and (2) address the potential for delay in the availability of launch facilities.

    Agency Affected: Department of Defense

  3. Status: Closed - Implemented

    Comments: In November 1997, instead of planning to pay one contractor $1.5 billion to develop the EELV system, DOD approved a revised acquisition approach whereby two contractors would share in the cost of EELV development. As a result, in October 1998, the Air Force entered into an "other transactions" agreement with the two contractors, fixing DOD's share to an amount not to exceed $1 billion--$500 million for each contractor. The contractors were to pay the remaining development costs. GAO subsequently determined that the $205 million that was needed to acquire two additional launch vehicles with procurement funds would reduce the planned $500 million cost avoidance to DOD. Thus, the net cost avoidance was expected to be $295 million.

    Recommendation: In view of the expected compensating benefits to the winning EELV contractor to enhance its competitive position in the international commercial launch vehicle market, the Secretary of Defense should devise a mechanism, such as a cost-sharing contract and/or a recoupment arrangement for commercial launch vehicle sales, to help reduce the government's investment in EELV and see that the mechanism is included in the Air Force's request-for-proposal for the EMD acquisition phase of the EELV program.

    Agency Affected: Department of Defense

 

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