Department of Defense's Waiver of Competitive Prototyping Requirement for Enhanced Polar System Program

GAO-12-983R: Published: Aug 23, 2012. Publicly Released: Aug 23, 2012.

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Michael J. Sullivan
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What GAO Found

DOD's rationale for waiving WSARA's competitive prototyping requirement for CAPS covered both bases provided in the statute; however, DOD did not provide complete information about the potential benefits of competitive prototyping or support for its conclusion that prototyping would result in schedule delays. In the waiver, DOD found reasonable the Air Force's conclusion that the additional $49 million cost of producing competing prototypes exceeded the negligible expected life-cycle benefits because minimal opportunities exist to increase CAPS technological and design maturity through competitive prototyping. The Air Force's conclusions about CAPS technical and design risk are supported by its market research, but its cost-benefit analysis was incomplete because neither the waiver nor the business case analysis supporting it provided an estimated dollar value for the expected benefits. Further, the Air Force's cost estimate of competitively prototyping CAPS was based on a program office estimate, which has not been independently reviewed by DOD's Office of Cost Assessment and Performance Evaluation. DOD also did not provide support in the waiver for its conclusion that implementing competitive prototyping will delay EPS's initial operational capability and result in DOD being unable to meet critical national security objectives. Finally, the CAPS acquisition strategy anticipates the use of a cost-reimbursement contract for designing and building the system; however it may be difficult for DOD to meet the requirements for justifying the use of a cost-type contract for development, given the low design and development risk described in the waiver.

Why GAO Did This Study

The Weapon Systems Acquisition Reform Act of 2009, as amended (WSARA), requires that the acquisition strategy for each major defense acquisition program provides for competitive prototypes before Milestone B approval--which authorizes entry into system development--unless the Milestone Decision Authority waives the requirement. Competitive prototyping, which involves commercial, government, or academic sources producing early prototypes of weapon systems or critical subsystems, can help Department of Defense (DOD) programs reduce technical risk, refine requirements, validate designs and cost estimates, and evaluate manufacturing processes prior to making major commitments of resources. WSARA states that the Milestone Decision Authority may waive the competitive prototyping requirement only on the basis that (1) the cost of producing competitive prototypes exceeds the expected life-cycle benefits (in constant dollars) of producing such prototypes, including the benefits of improved performance and increased technological and design maturity that may be achieved through competitive prototyping; or (2) but for such a waiver, DOD would be unable to meet critical national security objectives. WSARA also directed us to review and assess DOD's rationale for competitive prototyping waivers.

On June 18, 2012, DOD notified us that it had waived the competitive prototyping requirement for the Control and Planning Segment (CAPS), a subsystem of the Air Force's Enhanced Polar System (EPS). EPS, which consists of two payloads hosted on classified satellites, a gateway to connect user terminals to other communication systems, and a control and planning segment to control the payloads and manage communications, will provide extremely high frequency, jam-resistant, and secure satellite communications to strategic and tactical forces in the polar region. According to DOD, this is the first waiver of WSARA's competitive prototyping requirement since it was enacted in 2009.

In this report, we assess (1) DOD's rationale for waiving the competitive prototyping requirement for CAPS and the analysis used to support it and (2) the acquisition strategy for CAPS in the context of the waiver. To conduct our assessment, we compared the rationale in the waiver to the WSARA requirement to determine the extent to which the waiver is consistent with the statute. In addition, we reviewed the Air Force's business case analysis, which provides the data and assumptions on which the waiver is based, the acquisition strategy, and other relevant documentation. We also submitted written questions to DOD, Air Force, and EPS program officials to clarify information in this documentation, as necessary.

For additional information, contact Michael J. Sullivan at (202) 512-4841 or

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