Why This Area Is Important

U.S. government satellite systems are a critical component of our nation’s economy and the health and safety of its citizens. For example, we reported in September 2010 that the Department of Defense’s (DOD) Global Positioning System (GPS) is a vital part of the infrastructure that supports major sectors including telecommunications, power distribution, banking, transportation, agriculture, and emergency services.[1] In addition, we have repeatedly reported that environmental satellite data gathered by the National Oceanic and Atmospheric Administration (NOAA) and the National Aeronautics and Space Administration (NASA), as well as some DOD satellites, play a crucial role in our nation’s ability to forecast the weather, predict the path and intensity of hurricanes, develop and manage water reservoirs, estimate food crop production, and predict the potential for solar activities to affect the power grid.[2] In addition, the Federal Aviation Administration (FAA) and the U.S. Coast Guard are responsible for aircraft navigation and landing systems and maritime safety and law enforcement, respectively, and have used satellite-based sensors[3] to improve their performance in these areas.

These satellite systems can cost the government billions of dollars each year. For example, in recent years, more than $25 billion a year has been appropriated to agencies for developing space systems.[4] Moreover, these systems are put in orbit by rockets that can cost from $80 million to $200 million per launch. DOD, in particular, plans to spend about $19 billion[5] for launch services from fiscal years 2013 through 2017 for its Evolved Expendable Launch Vehicle—and total estimated program costs through 2030 approach $70 billion.[6]

The President’s National Space Policy issued in 2010 calls on federal departments and agencies to actively explore the use of inventive, nontraditional arrangements for acquiring commercial space products and services, including measures such as developing public-private partnerships,[7] hosting government capabilities on commercial spacecraft, and purchasing scientific or operational data products from commercial satellite operators in support of government missions.[8] In addition, DOD’s Quadrennial Defense Review in 2010 called for the department to leverage commercial expertise and partnerships to better ensure the resiliency of space systems.[9]

According to the Department of Commerce’s Office of Space Commercialization, placing a government payload on a commercial satellite could cost a fraction of the amount of building, launching, and operating an entire satellite.[10] For example, the Australian government recently contracted for a hosted payload for military communications from a commercial satellite operator, which Australia estimates will save them over $150 million over the 15-year life of the contract compared with the cost of acquiring their own satellite or leasing the capability.[11]

What GAO Found

As federal agencies and program managers strive to achieve their agency’s missions and goals and provide accountability for their operations, the administration has directed that the agencies should seek to identify opportunities and implement approaches that could reduce the cost of government operations in order to help maintain effective and efficient stewardship of public resources.[1] Government agencies seeking to save money and gain access to space can take advantage of several nontraditional approaches, including hosted payload arrangements where government instruments are placed on commercial satellites, and ride sharing arrangements where multiple satellites share the same launch vehicle. While selected space-based programs may not be able to use nontraditional approaches due to specific security or mission requirements, other programs could achieve benefits from doing so. Several federal agencies, including DOD, NASA, FAA, NOAA, and the U.S. Coast Guard, are actively using or beginning to look at these approaches in order to save costs. Specifically:

• DOD has two ongoing hosted payload pilot missions and has taken preliminary steps to develop a follow-on effort.[2] DOD estimated that the Commercially Hosted Infrared Payload Flight Demonstration Program answered the majority of the government’s technical questions through its commercial partnership, while saving it over $200 million over a dedicated technical demonstration mission. In addition, DOD is investigating ride sharing to launch GPS satellites beginning in fiscal year 2017, which could save well over $60 million per launch.

• NASA has two hosted payload technology-demonstration efforts under way. The agency has also collected information on potential ride sharing opportunities and available hosts for hosted payloads through requests for information to satellite operators. Because these initiatives are relatively new or planned, NASA does not yet have information on potential cost savings; the agency intends to obtain more information on the potential for cost savings through its requests for information, requests for proposals, and demonstrations.

• FAA’s Wide Area Augmentation System involves two satellite-based sensors carried on commercial satellites. This hosted payload arrangement was designed to improve the accuracy of GPS signals for aircraft navigation and landing. FAA conducted a lease versus buy analysis at the beginning of the program and found that a lease would be more cost-effective than the purchase of a satellite, saving $260 million over the 21 year life cycle.

• NOAA has performed studies of cost sharing opportunities, including through ride sharing and hosted payloads, but has not yet committed to such options. One potential opportunity is the total and spectral solar irradiance sensor, which NOAA intends to launch on a standalone satellite, called a free flyer. The agency is considering use of a launch vehicle with sufficient space to add the free flyer as a secondary payload. Because the agency has not finalized its plans, it did not provide information on any expected cost savings from using a ride sharing arrangement.

• The U.S. Coast Guard explored the use of a satellite-based receiver for its Automatic Identification System.[3] This hosted payload effort was designed to improve identifying and tracking ships at sea. While the original sensor failed in 2009, the capability exists on other satellites from the company that hosted the original payload, and the government now purchases these data.

Moreover, NASA and the Air Force are working to collect and develop the types of information needed to facilitate more widespread government use of commercially hosted payloads and commercial ride sharing in the future. Specifically, NASA recently issued requests for information on potential hosts for hosted payloads in the low earth and geostationary orbits, including the weight and power available for potential secondary payloads, and also issued a request for information about potential commercial ride sharing. According to a NASA official, this information is intended to go into databases available to potential sensor developers. In addition, Air Force officials at its newly formed Hosted Payload Office told us that they are in the process of developing an acquisition strategy, with input from NASA, to facilitate the use of commercially hosted payloads as an alternative path to space from the typical government-owned satellite. As part of the strategy, a contract for an indefinite quantity of satellite services for a fixed period of time will be developed, which all government agencies will be able to use. They currently expect to complete this initial effort and hold meetings with commercial companies to discuss the strategy in the spring of 2013. Further, Air Force officials noted that they are developing a plan to allow for better decision making on hosted payload solutions.

In addition to government efforts, the satellite industry has embraced the idea of hosting government payloads on commercial satellites. In 2011, a group of satellite operators and manufacturers formed a satellite industry alliance to increase awareness of the benefits of hosted government payloads on commercial satellites as well as to facilitate communication between satellite companies and potential users. The alliance includes many U.S. and foreign satellite operators and manufacturers.[4] Further, a commercial satellite operator reported that given approximately 3 years notice, all but one of their most recently launched geostationary satellites could have accommodated an additional payload. The one satellite that could not host additional payloads was already hosting a foreign government payload. The officials also stated that the company plans to launch approximately 20 satellites into geostationary orbit over the next decade and most of them could be built to accommodate a government payload.

While ride sharing and hosted payloads clearly hold promise for providing lower-cost access to space in the future, there are also a variety of technical, cultural, logistical, and legal and policy challenges. Specifically:

• Technical Challenges: Ensuring compatibility between sensors and host satellites could be a challenge when undertaking hosted payloads because of the variable interfaces on different companies’ satellites. NOAA and NASA officials noted that the absence of standardized technical interfaces among the various companies present a challenge to potential government payload developers. To try to get insight on this issue, NASA officials stated that they had collected information on current interface parameters of potential commercial providers as part of their announcement of opportunities for the Earth Venture program.[5] Further, not all commercial satellites may have sufficient power, or available space, for a hosted payload. In addition, finding hosted payload or ride share opportunities for certain orbits (such as polar orbits[6]) could be difficult due to a lack of available commercial satellite launches in this orbital path or commercial providers could reposition the satellite once in orbit, which could impact an agency’s mission.

• Cultural Challenges: Government agencies that have traditionally managed their own space missions face cultural challenges in using hosted payload arrangements and GAO has previously found that the DOD space community is highly risk averse to adopting technologies from commercial providers that are new to DOD.[7] In addition, agency officials expressed concerns about using a commercial host for their payloads, noting that they would lose some control over their missions. DOD and NOAA officials noted that their security and mission assurance requirements and processes may make integrating hosted payloads on commercial satellites more complicated to manage. Further, agency officials expressed concerns about scheduling launches and noted that commercial providers may not be flexible about changing launch dates if the instruments or satellites experience delays.

• Logistical Challenges: There are logistical challenges in scheduling and funding hosted payload arrangements. The timeline associated with developing many sensors is much longer than that of commercial satellites, potentially creating difficulties in scheduling and funding hosted payload and ride sharing arrangements. NASA officials noted that the development of a government sensor would need to be under way well in advance before a decision would be made to pursue a commercial hosted payload arrangement. DOD officials also noted that their budget and planning process requires commitments to funding up to 2 years in advance of actually receiving those funds—which does not align well with commercial timelines. In addition, federal law generally prohibits agencies from paying in advance for a future service or from obligating future appropriations.[8]

• Legal and Policy Challenges: Federal law and policy have limited the government’s access to some hosted payload and ride sharing options. Specifically, under federal statute, the federal government is required to acquire space transportation services from U.S. commercial providers unless exempted. In addition, the U.S. Space Transportation Policy authorized by the President in 2004 states that government payloads shall be launched on space launch vehicles manufactured in the United States, regardless of whether the payload is on a commercial or government satellite, unless otherwise exempted.[9] According to both NASA and the commercial Hosted Payload Alliance, U.S. companies often rely on foreign launch vehicles to reach space. For instance, in the example noted previously in which a commercial company plans to launch multiple satellites over the next 15 years, company officials noted that they plan to rely on foreign companies’ launch vehicles because of limitations in U.S. companies’ launch capacity and the cost of these launches.[10] The U.S. Space Transportation Policy is currently undergoing revision, but no date has been announced for when the revised policy will be finalized.

• In addition, there may be issues of liability or adherence to government policy, such as the U.S. Government Orbital Debris Mitigation Standard Practices,[11] that agencies need to consider when determining whether it is cost effective to use hosted payloads or ride sharing.

Actions Needed

Given the significant expense of space programs and the federal government’s fiscal limitations, it is vital that the government manage its space programs and projects as efficiently and effectively as possible. While selected space-based programs may not be able to utilize opportunities for ride sharing and hosted payloads on commercial satellites due to specific security or mission requirements, agencies may be able to leverage these commercial opportunities to achieve significant cost savings. However, in order for the government to achieve this cost savings, there are key challenges that need to be addressed.

Agency cultural barriers and certain technical and logistical challenges will likely only be resolved as agencies work with commercial satellite providers in developing and executing future missions. As they do this, collecting and disseminating lessons learned will be important. This will require effective leadership and commitment from senior officials across government. To help accomplish this, in February 2012, GAO suggested that the Director of the Office of Management and Budget (OMB) work with the National Security Council to assess options for providing strong centralized leadership of the space community in order to set priorities across individual agencies and to address inefficiencies.[1] While OMB agreed that coordinating space activities across the government has been and continues to be a major challenge, it noted that it was concerned that the suggested action would add an extra layer of bureaucracy on top of ongoing coordination efforts, and could cause confusion about roles and authorities among the existing mechanisms. Subsequently, OMB stated that the administration is updating the U.S. Space Transportation Policy, in part to improve interagency coordination and collaboration. However, OMB does not believe any further actions are necessary. Though an update to the policy to improve interagency coordination could be beneficial, such changes do not address GAO’s prior concerns with fragmented leadership and a lack of a single authority in overseeing the acquisition of space programs. As such, GAO maintains that assessing options for providing strong centralized leadership of the space community continues to have merit and should be implemented.

In addition, to better take advantage of nontraditional approaches to save money in satellite programs, Congress may wish to consider the following action:

• authorizing agencies enhanced flexibility to acquire certain satellite services related to hosted payload and ride sharing arrangements, when appropriately planned and justified.

Moreover, although federal statute and the U.S. Space Transportation Policy were intended to support the U.S. industrial base by requiring the government to use U.S. commercial launch services, the policy significantly limits the government’s ability to take advantage of available foreign commercial launch options for hosted payloads because many commercial satellite providers routinely use launch vehicles from other countries. Congress and the Executive Office of the President may wish to consider the following action:

• revisiting the law and the policy to determine whether efforts should be made to provide federal agencies additional flexibility to select space transportation services and launch vehicles from other countries for hosted payloads to encourage cost savings.

While using hosted payloads and ride sharing are likely to reduce government launch costs and savings estimates reported to date are in the hundreds of millions of dollars over the life of the projects, GAO is unable to quantify the potential for further financial benefits because there is too limited a pool of available data. Once the government has collected more data and gained more experience in collaborating with commercial satellite vendors on ride sharing and hosted payloads, actual data on cost savings and cost avoidances should be more readily available.

How GAO Conducted Its Work

The information contained in this analysis is based, in part, on reports listed in the related GAO products section as well as on additional work GAO conducted. To identify potential opportunities for cost savings with federal government satellite programs, GAO reviewed existing government satellite programs and hosted payload efforts, as well as studies that looked at opportunities for government satellite cost savings and efficiency. GAO also reviewed academic and industry publications on existing hosted payload efforts, as well as ways and reasons to potentially increase their use. GAO interviewed agency officials at DOD, FAA, NASA, NOAA, and the U.S. Coast Guard, as well as officials from two commercial satellite companies that were selected based on their overall experience with satellite operations in two different arenas and because they had interest or experience related to hosted payloads. While these officials’ views are not generalizable to all satellite companies, they provided us with useful information on hosted payload operations.

Agency Comments & GAO Contact

GAO provided a draft of this report section to OMB, as well as DOD, FAA, NASA, NOAA, and the U.S. Coast Guard for review and comment. OMB provided technical comments, which were incorporated as appropriate, but did not agree or disagree with our recommended action. DOD, NASA, NOAA, and the U.S. Coast Guard also provided technical comments, which were incorporated as appropriate. FAA responded by e-mail that they had no comments on the report section.

For additional information about this area, contact David A. Powner at (202) 512-9286, or pownerd@gao.gov, or Cristina T. Chaplain at (202) 512-4841, or chaplainc@gao.gov.

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