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Highlights

The Department of Defense (DOD) and the National Reconnaissance Office (NRO) plan to spend about $15 billion for launch services from fiscal year 2013 to fiscal year 2017 through DOD's Evolved Expendable Launch Vehicle (EELV) program. The program launches satellites for military, intelligence, civil, and commercial customers. In 2009, DOD and the NRO decided the program's business model needed improvement, and initiated studies to determine the best approach. The studies addressed potential business models, cost reductions, and the nation's assured access to space. Given expected changes to the EELV acquisition strategy, GAO was asked to (1) determine whether DOD has the knowledge it needs to develop a new EELV acquisition strategy, and (2) identify issues that could benefit future launch acquisitions. To address these questions, GAO reviewed launch studies, a supplier survey, and interviewed DOD and other officials.

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Recommendations

Recommendations for Executive Action

Agency Affected Recommendation Status
Department of Defense To gain a better understanding of the condition of the U.S. space launch industrial base, facilitate fair and reasonable launch contract negotiations, ensure consistent grounds for evaluating launch providers, and identify the best path forward for U.S. space launch operations and technology development, the Secretary of Defense should conduct an independent assessment of the health of the U.S. launch industrial base, paying special attention to engine manufacturers.
Closed - Implemented
In September 2011, GAO issued a report highlighting critical knowledge gaps in DOD's development of a new acquisition strategy for its Evolved Expendable Launch Vehicle (EELV) program. To provide DOD with a better understanding of the condition of U.S. launch industrial base, the stability of which was a stated goal of DOD's new strategy, GAO recommended that the Secretary of Defense conduct an independent assessment of the health of the U.S. launch industrial base, paying special attention to engine manufacturers. Since GAO's report, DOD has completed or obtained independent cost estimates for two engines, completed a study of the liquid rocket engine industrial base, and begun efforts to develop a national rocket propulsion strategy with the National Aeronautics and Space Administration. DOD is also participating in an in-depth assessment of the space sector industrial base. These efforts will afford DOD a better understanding of the health of the U.S. space launch industrial base, enabling DOD to make informed decisions regarding its acquisition of launch vehicles.
Department of Defense To gain a better understanding of the condition of the U.S. space launch industrial base, facilitate fair and reasonable launch contract negotiations, ensure consistent grounds for evaluating launch providers, and identify the best path forward for U.S. space launch operations and technology development, the Secretary of Defense should reassess the block buy contract length given the additional knowledge DOD is gaining as it finalizes its new acquisition strategy.
Closed - Implemented
DOD reassessed the terms of the block buy using the additional information they collected. In November 2012, the Under Secretary of Defense issued an Acquisition Decision Memorandum authorizing the Air Force to negotiate with the current launch vehicle provider (the United Launch Alliance) to procure up to 36 launch vehicle booster cores over the period of 2013-2017, with an additional 14 cores to be made available for certified competitors to the incumbent provider. According to the Office of the Assistant Secretary of the Air Force for Acquisition, Program Executive Office for Space Launch, the decision to reassess the duration and quantity of the Air Force's block buy of launch vehicles was prompted by the results of GAO's 2011-2012 review of the Air Force's acquisition strategy development effort.
Department of Defense To gain a better understanding of the condition of the U.S. space launch industrial base, facilitate fair and reasonable launch contract negotiations, ensure consistent grounds for evaluating launch providers, and identify the best path forward for U.S. space launch operations and technology development, the Secretary of Defense should work closely with NASA to ensure DOD has sufficient knowledge of NASA heavy-lift program decisions--given the potential bearing those decisions could have on EELV engine prices--to facilitate DOD's ability to negotiate EELV launch contract prices that maximize the government's investment.
Closed - Implemented
In September 2011, GAO issued a report highlighting critical knowledge gaps in DOD's development of a new acquisition strategy for its Evolved Expendable Launch Vehicle (EELV) program. To ensure the government's investment would be maximized under DOD's new launch contracts, GAO recommended that DOD work closely with NASA to ensure DOD was informed of NASA heavy-lift program decisions given the potential bearing those decisions could have had on EELV engine prices. Since GAO's report last September, DOD has worked with NASA to keep apprised of Space Launch System (SLS) heavy-lift decisions that could have bearing on EELV contract negotiations, leverage knowledge across agencies, and coordinate some limited technology development, all of which will better position DOD to negotiate upcoming launch contracts in the government's best interests.
Department of Defense To gain a better understanding of the condition of the U.S. space launch industrial base, facilitate fair and reasonable launch contract negotiations, ensure consistent grounds for evaluating launch providers, and identify the best path forward for U.S. space launch operations and technology development, the Secretary of Defense should refrain from waiving FAR requirements for contractor and subcontractor certified cost and pricing data as DOD finalizes its new EELV acquisition strategy.
Closed - Implemented
In September 2011, GAO issued a report highlighting critical knowledge gaps in DOD's development of a new acquisition strategy for its Evolved Expendable Launch Vehicle (EELV) program. Specifically, the lack of prime- and sub-contractor cost or pricing data was limiting DOD's ability to negotiate fair and reasonable contracts. GAO recommended DOD refrain from waiving requirements for certified cost or pricing data as it finalized development of its new EELV acquisition strategy. In a March 2012 report to the Congress, DOD indicated it does not intend to waive requirements for certified cost or pricing data for the EELV program. Additionally, according to DOD officials, a government cost assessment team is obtaining some previously unavailable subcontractor cost or pricing data, and DOD intends to delay new EELV contract awards until it can sufficiently analyze the data. Obtaining and analyzing this data will position DOD to make informed decisions as it negotiate new launch contracts.
Department of Defense To gain a better understanding of the condition of the U.S. space launch industrial base, facilitate fair and reasonable launch contract negotiations, ensure consistent grounds for evaluating launch providers, and identify the best path forward for U.S. space launch operations and technology development, the Secretary of Defense should ensure launch mission assurance activities are sufficient and not excessive, and identify ways to incentivize the prime contractor to implement efficiencies without affecting mission success as DOD develops a new contracting structure for the EELV program.
Closed - Implemented
DOD restructured the EELV Launch Capability contract from a cost-plus award fee-, to a cost-plus incentive fee contract, to incentivize ULA to find efficiencies and reduce costs while maintaining mission assurance. This change affords ULA flexibility in determining the areas in which efficiencies can be gained without being overly prescriptive. Additionally, Air Force officials recently conducted a comprehensive evaluation of missions in the launch manifest with an eye toward reducing redundant steps in the independent launch verification matrix. Air Force officials said that while the verification activities for each mission have always been tailored on a case-by-case basis at the start of a launch vehicle acquisition, the current missions in the launch manifest represent a unique opportunity to revisit the matrix and identify potential efficiencies because the current launch manifest contains more second-, and third-flight missions, or re-flights, than it has in decades. The "re-flight era," as some officials called it, presented Air Force officials with an opportunity to revisit the activities typically undertaken prior to a first-flight launch, and effect the suspension of redundancies.
Department of Defense To gain a better understanding of the condition of the U.S. space launch industrial base, facilitate fair and reasonable launch contract negotiations, ensure consistent grounds for evaluating launch providers, and identify the best path forward for U.S. space launch operations and technology development, the Secretary of Defense should examine how broader launch issues, such as greater coordination across federal agencies, can be factored into future launch acquisitions to increase efficiencies and cost savings.
Closed - Implemented
In September 2011, GAO issued a report on DOD's new acquisition strategy for its Evolved Expendable Launch Vehicle (EELV) program that also highlighted opportunities for increased coordination and efficiency among federal government agencies using launch services. Specifically, GAO recommended DOD examine how launch issues, such as increased coordination among federal agencies, could influence future acquisitions to generate cost savings and efficiencies. Two areas GAO highlighted were increased coordination of federal agency launch acquisitions and launch technology development. Since GAO's report, significant formal and ad hoc coordination has taken place across the DOD, the National Aeronautics and Space Administration (NASA) and the National Reconnaissance Office (NRO), in areas such as new launch provider certification and launch technology development. DOD finalized a certification guide for new launch providers in October 2011 following collaboration with NASA and NRO. Officials at DOD, NASA and NRO are meeting regularly to discuss launch vehicle design, technology development, and the space industrial base, and DOD and NASA are collaborating on engine technology research and development. Identifying opportunities to coordinate launch acquisitions and technology development could yield launch cost efficiencies and maximize the government's overall investment in launch services.
Department of Defense To gain a better understanding of the condition of the U.S. space launch industrial base, facilitate fair and reasonable launch contract negotiations, ensure consistent grounds for evaluating launch providers, and identify the best path forward for U.S. space launch operations and technology development, the Secretary of Defense should develop a science and technology plan for improving and evolving launch technologies. This plan should link to the broader space science and technology plans mandated by the 2010 National Defense and NASA Authorization Acts.
Closed - Not Implemented
DOD so far has taken no action to develop a science and technology plan for improving launch technologies that links to the broader space science and technology plans mandated by the 2010 National Defense and NASA Authorization Acts.

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