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Defense Acquisitions: Incentives and Pressures That Drive Problems Affecting Satellite and Related Acquisitions. GAO-05-570R

Status Report From: Government Accountability Office
Posted: Friday, June 24, 2005

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June 23, 2005

The Honorable C.W. Bill Young
Chairman, Subcommittee on Defense
Committee on Appropriations
House of Representatives

Subject: Defense Acquisitions: Incentives and Pressures That Drive Problems Affecting Satellite and Related Acquisitions

Dear Mr. Chairman:

In fiscal year 2006, the Department of Defense (DOD) expects to spend more than $23 billion to develop, acquire, and operate satellites and other space-related systems. These systems are becoming increasingly critical to every facet of military operations as well as the U.S. economy and homeland security. Satellite systems collect information on the capabilities and intentions of potential adversaries. They enable U.S. military forces to be warned of missile attacks and to communicate and navigate while avoiding hostile actions. They provide information that allows forces to precisely attack targets in ways that minimize collateral damage and loss of life. DOD's satellites also enable global communications; television broadcasts; weather forecasting; disaster planning; navigation of ships, planes, trucks, and cars; and synchronization of computers, communications, and electric power grids.

DOD's introduction of these desirable capabilities over time has not come without difficulties. Space system acquisitions have experienced problems over the past several decades that have driven up costs by hundreds of millions, even billions of dollars, stretched schedules by years, and increased performance risks. In some cases, capabilities have not been delivered to the warfighter after decades of development. As a result of these problems, DOD is now contending with important trade-off decisions, such as the following.

  • Whether to keep striving to build its Space-Based Infrared System (SBIRS) High as intended or cut back on capabilities. This system is intended to replace and upgrade an older generation of missile-warning satellites, but its cost has already more than doubled and continues to increase, and its schedule has stretched for years.
  • Whether and how much to employ lower orbiting satellites equipped with similar capabilities to facilitate missile defense activities. DOD had spent two decades on this effort without launching a single satellite. Cost and schedule problems forced DOD to rebaseline the program several times. Overall affordability of missile defense has driven DOD to assess whether to continue with this particular effort as well as pursue development of a newer generation of missile-tracking satellites.
  • Whether to limit the acquisition of new communication satellites, known as the Advanced Extremely High Frequency (AEHF) satellites, in favor of developing a newer generation of laser-linked satellites, known as the Transformational Satellite Communications System (TSAT). The AEHF program is running over cost and schedule, but it incorporates more mature technologies. TSAT promises dramatically greater bandwidth and processing capabilities and is considered integral to DOD's efforts to network all of its weapon systems, but there is much less certainty as to how much the system will cost or when it can be delivered because critical technologies are not mature.
  • Whether to pursue incremental increases in capability for the Global Positioning System or embark on a more expensive program that would offer more dramatic capability advances.

Two years ago, we issued a report to your subcommittee that analyzed reports we had previously issued on satellite and other space-related programs over the past two decades as well as other studies. Our 2003 report identified common problems affecting those acquisitions. 1 Generally, the problems we identified were common to DOD weapons acquisitions and were recognized within DOD and the space community. In February 2005, you requested that we identify underlying incentives and pressures that drive the problems we had identified earlier. You also asked that we complete our fieldwork by April 2005 to support the subcommittee's decisions on DOD's appropriations.

To respond to your request, we analyzed a wide body of GAO, DOD, and industry studies (see enc. III) that discuss acquisition problems and underlying incentives and pressures, including our work on best practices in weapon system development that we have conducted over the past decade, our individual reviews of space system acquisitions and crosscutting problems, DOD's independent study of problems affecting SBIRS High, past DOD studies of crosscutting problems with space system acquisitions, and a more recent DOD joint task force study on the acquisition of national security space programs. We also conducted interviews with more than 40 individuals (see enc. IV)—including experienced space acquisition program managers and program executive officials within Air Force Space Command and its Space and Missile Systems Center, officials responsible for science and technology (S&T) activities that support space, former and current officials within the Office of the Secretary of Defense who have specific responsibility for space oversight or more general weapon system acquisition policy and oversight, and individuals representing various aspects of industry. We conducted our review from February 2005 to April 2005 in accordance with generally accepted government auditing standards.

1GAO, Military Space Operations: Common Problems and Their Effects on Satellite and Related Acquisitions, GAO-03-825R (Washington, D.C.: June 2, 2003).

Results in Brief

The officials we spoke with for this review cited a set of incentives and pressures underlying the space acquisition problems that are largely reflective of a lack of an overall investment strategy and a corresponding tendency to set start dates for programs before a sound business case for them has been established. Specifically, they told us that DOD starts more programs than it can afford and rarely prioritizes them for funding purposes. Such an approach has cascading effects—from creating negative behaviors associated with competing for funds, to increasing technology challenges, to creating unanticipated and disruptive funding shifts, to stretching out schedules in order to accommodate the whole portfolio of space programs. Our previous reports have found these pressures are long-standing and common to weapon acquisitions, not just space systems. In addition, officials we spoke with also cited pressures resulting from having a diverse array of officials and organizations involved with the acquisition process, tensions between the S&T and acquisition communities as to who is better suited to translate technology concepts into reality, pressures resulting from short tenures among staff critical to achieving acquisition success, and difficulties in overseeing contractors.

We are not making recommendations in this report because it was not within the scope of our work to determine the actions needed to redirect the complex set of incentives and pressures affecting space programs. However, as we point out, our previous reports have already made recommendations—some of which have been implemented—that we believe would enable DOD to put space acquisition and other weapons programs on a sounder footing. In commenting on our report, DOD pointed out that it has recently taken steps such as improving requirements setting for all weapons systems and ensuring that decisions to start space acquisition programs are based on adequate knowledge. Where appropriate in this report, we also identify and present our views on solutions being discussed and implemented within DOD.

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