Acquisition of National Security Space Programs

1.0 EXECUTIVE SUMMARY

The Undersecretary of Defense (Acquisition, Technology, and Logistics) and the
Secretary of the Air Force cosponsored the Joint Defense Science Board (DSB)/Air
Force Science Advisory Board (AFSAB) Task Force on the Acquisition of National
Security Space Programs and directed the task force to

• Recommend improvements to the acquisition of space programs from initiation to deployment;
• Assess the nation’s dependency on space;
• Characterize problems by looking at underlying causes and systemic issues such as cost growth and schedule delays that impact all space programs; and
• Analyze the Space-Based Infrared System (SBIRS), Future Imaging Architecture (FIA), and Evolved Expendable Launch Vehicle (EELV).

Over the course of its deliberations, the task force met with responsible
representatives of acquisition- and operation-oriented government organizations, visited
national security space contractors, and reviewed a broad spectrum of space programs
and issues. The panel also interviewed senior government and industry officials, both
active and retired. The scope of the study included both classified and unclassified space
acquisition activities.

The task force conducted meetings during the latter part of 2002 and evaluated
issues that have developed over years of acquisition activity. In so doing, we observed
many positive steps already being taken to try to correct deficiencies in the space
acquisition process. We did not attempt to investigate or evaluate initiatives that were
already underway.

Download full report (pdf)

Download full report (pdf)

1.1 Key Findings

During the 1990s, several changes occurred in the national security space environment:

• Declining acquisition budgets,
• Acquisition reform with significant unintended consequences,
• Increased acceptance of risk,
• Unrealized growth of a commercial space market,
• Increased dependence on space by an expanding user base,
• Consolidation of the space industrial base.

All of this took place in the face of changing national security needs as the Department
of Defense (DoD) transitioned from the structured cold war environment to the more
global and unpredictable threat environment we see today. The following list
summarizes the task force’s key findings:

• U.S. national security is critically dependent upon space capabilities and that dependence will continue to grow. Pressing requirements exist to monitor activities and events throughout the world, transfer massive quantities of data, and project force on a global scale. As a nation, we require robust space assets to meet these requirements effectively. We rely on the current generation of operational space systems to support national security needs on a daily basis. While nonspace systems clearly contribute major capabilities that help meet national security needs, we see no viable alternative to the unique capabilities that space systems provide.
• The task force found five basic reasons for the significant cost growth and schedule delays in national security space programs. Any of these will have a significant negative effect on the success of a program. And, when taken in combination, as this task force found in assessing recent space acquisition programs, these factors have a devastating effect on program success.
1. Cost has replaced mission success as the primary driver in managing space development programs, from initial formulation through execution. Space is unforgiving; thousands of good decisions can be undone by a single engineering flaw or workmanship error, and these flaws and errors can result in catastrophe. Mission success in the space program has historically been based upon unrelenting emphasis on quality. The change of emphasis from mission success to cost has resulted in excessive technical and schedule risk as well as a failure to make responsible investments to enhance quality and ensure mission success. We clearly recognize the importance of cost, but we can achieve our cost performance goals only by managing quality and doing it right the first time.
2. Unrealistic estimates lead to unrealistic budgets and unexecutable programs. The space acquisition system is strongly biased to produce unrealistically low cost estimates throughout the process. During program formulation, advocacy tends to dominate and a strong motivation exists to minimize program cost estimates. Independent cost estimates and government program assessments have proven ineffective in countering this tendency. Proposals from competing contractors typically reflect the minimum program content and a “price to win.” Analysis of recent space competitions found that the incumbent contractor loses more than 90 percent of the time. An incoming competitor is not “burdened” by the actual cost of an ongoing program, and thus can be far more optimistic. In many cases, program budgets are then reduced to match the winning proposal’s unrealistically low estimate. The task force found that most programs at the time of contract initiation had a predictable cost growth of 50 to 100 percent. The unrealistically low projections of program cost and lack of provisions for management reserve seriously distort management decisions and program content, increase risks to mission success, and virtually guarantee program delays.
3. Undisciplined definition and uncontrolled growth in system requirements increase cost and schedule delays. As space-based support has become more critical to our national security, the number of users has grown significantly. As a result, requirements proliferate. In many cases, these requirements involve multiple systems and require a “system of systems” approach to properly resolve and allocate the user needs. The space acquisition system lacks a disciplined management process able to approve and control requirements in the face of these trends. Clear tradeoffs among cost, schedule, risk, and requirements are not well supported by rigorous system engineering, budget, and management processes. During program initiation, this results in larger requirement sets and a growth in the number and scope of key performance parameters. During program implementation, ineffective control of requirements changes leads to cost growth and program instability.
4. Government capabilities to lead and manage the space acquisition process have seriously eroded. This erosion can be traced back, in part, to actions taken in the acquisition reform environment of the 1990s. For example, system responsibility was ceded to industry under the Total System Performance Responsibility (TSPR) policy. This policy marginalized the government program management role and replaced traditional government “oversight” with “insight.” The authority of program managers and other working-level acquisition officials subsequently eroded to the point where it reduced their ability to succeed on development programs. The task force finds this to be particularly important because the program manager is the single individual (along with the program management staff) who can make a challenging space program succeed. This requires strong authority and accountability to be vested in the program manager. Accountability and management effectiveness for major multiyear programs are diluted because the tenure of many program managers is less than 2 years.

   Widespread shortfalls exist in the experience level of government acquisition managers, with too many inexperienced personnel and too few seasoned professionals. This problem was many years in the making and will require many years to correct. The lack of dedicated career field management for space and acquisition personnel has exacerbated this situation. In the interim, special measures are required to mitigate this failure.

   Policies and practices inherent in acquisition reform inordinately devalued the systems acquisition engineering workforce. As a result, today’s government systems engineering capabilities are not adequate to support the assessment of requirements, conduct trade studies, develop architectures, define programs, oversee contractor engineering, and assess risk. With growing emphasis on effects-based capabilities and cross-system integration, systems engineering becomes even more important and interim corrective action must be considered.

   The government acquisition environment has encouraged excessive optimism and a “can do” spirit. Program managers have accepted programs with inadequate resources and excessive levels of risk. In some cases, they have avoided reporting negative indicators and major problems and have been discouraged from reporting problems and concerns to higher levels for timely corrective action.

5. Industry has failed to implement proven practices on some programs. Successful development of space programs requires strong leadership and rigorous management processes both in industry and in government. Government actions, contract provisions, and fee structures can cause industry to lose focus and can even penalize sound program implementation practices. It is of paramount importance that industry leadership assures that these programs are implemented utilizing proven management and engineering practices. The task force found instances in SBIRS and FIA where this leadership was deficient.
• The space industrial base is adequate to support current programs, although
  there are long-term concerns. Nearly every mission area in national security
  space is in transition, with development of an entirely new satellite system or a
  major block upgrade. Other major space system developments are in the
  formulation stage. These factors have led to concerns that the industrial base may
  not be adequate to support the required range of activities. The task force found
  that prime contractors have an adequate workforce to handle the current and nearterm
  planned programs, and excess production capacity exists. Today, turnover of
  skilled work force is low and sufficient new hires are available. Second- and
  third-tier contractors are having problems, primarily due to low demand for the
  components they produce. In some circumstances, domestic capabilities required
  to support national security space are at risk. This will require proactive
  government involvement for a small number of selected cases. On balance, the
  industry can support current and near-term planned programs.

  Commercial space activity has not developed to the degree anticipated,
  and the expected national security benefits from commercial space have not
  materialized. The government must recognize this reality in planning and
  budgeting national security space programs.

  In the far term, there are significant concerns. The aerospace industry is
  characterized by an aging workforce, with a significant portion of this force
  eligible for retirement currently or in the near future. Developing, acquiring, and
  retaining top-level engineers and managers for national security space will be a
  continuing challenge, particularly since a significant fraction of the engineering
  graduates of our universities are foreign students.

1.2 Recommendations

The task force found significant, systemic problems in the acquisition of national
security space systems that require immediate attention, both to correct current
deficiencies and to prevent these deficiencies in future programs. The panel recommends
the following immediate actions:

1. The Under Secretary of the Air Force/Director National Reconnaissance Office
(USecAF/DNRO) should establish mission success as the guiding principle in all
space systems acquisition. This requires incorporation of the principle in policy
statements, leadership actions, and contractual provisions and incentives.

2. The SecDef should establish the same authority for the USecAF for DoD space
programs as the DNRO has for implementing the National ReconnaissanceProgram (NRP) budget.

3. To ensure realistic budgets and cost estimates, the USecAF/DNRO should

• Direct that space acquisition programs be budgeted to a most probable (80/20) cost, with a 20-25 percent management reserve for development programs included within this cost; also direct that reserves are not to be used for new requirements;
• Direct that source selections evaluate contractor cost credibility and use the estimate as a measure of their technical understanding;
• Conduct more effective independent cost estimates and program assessments and incorporate the results into the program budget and plan; and
• Implement independent senior advisory reviews at critical acquisition milestones with experienced, respected outsiders.

4. The USecAF/DNRO should compete space system acquisitions only when
clearly in the best interest of the government (e.g., new mission capability, major
new technology, or poor incumbent performance). When a competition occurs
and a nonincumbent is the winner, the loss of investment in the losing incumbent
must be reflected in the program budget and plan. In addition, provisions must be
made to assure continuity between the legacy system and the new system.

5. SecDef and the Director of Central Intelligence (DCI) should designate senior
leaders in the DoD and intelligence community with authority to lead their
respective requirements processes for national security space systems. The senior
leaders must have the support necessary to assess—technically and fiscally—
proposed requirements and the authority to couple requirements with funding.

6. The USecAF/DNRO should authorize the program manager to control
requirements within the approved baseline. The program manager should
continuously trade and challenge requirements throughout the program life cycle.
Significant requirements changes should require the approval of the senior leaders
for requirements.

7. The Commander, Air Force Space Command, should complete the ongoing effort
to establish a dedicated career field for space operations and acquisition
personnel.

8. The USecAF/DNRO should require that key program management tours be a
minimum of 4 years.

9. The USecAF/DNRO should, through policy and leadership action, clearly define
the responsibility, authority, and accountability for program managers,
recognizing the criticality of program managers to the success of their programs.
In selecting managers, acquisition experience must be a prerequisite.

10. USecAF/DNRO should develop a robust systems engineering capability to
support program initiation and development. Specifically, USecAF/DNRO
should

• Reestablish organic government systems engineering capability by selecting appropriate people from within government, hiring to acquire needed capabilities, and implementing training programs; and
• In the near term, ensure full utilization of the combined capabilities of government, Federally Funded Research and Development Center (FFRDC), and systems engineering and technical assistance (SETA) system engineering resources.

11. The USecAF/DNRO should require program managers to identify and report potential problems early.

• Program managers should establish early warning metrics and report problems up the management chain for timely corrective action.
• Severe and prominent penalties should follow any attempt to suppress problem reporting.

12. The USecAF/DNRO should demand that national security space contractors

• Account for the quality of their program implementation and for mission success,
• Identify proven management and engineering practices and ensure they are being utilized, and
• Account for the early identification and open discussion of problems in their program.

13. Program managers should align contract and fee structure to focus industry
attention on proven management and engineering practices and mission
success.

1.3 Specific Programs

In addition to the general findings and recommendations, the task force examined three
specific programs. The findings and recommendations for each are given below.

1.3.1 SPACE-BASED INFRARED SYSTEM (SBIRS) HIGH

Findings. SBIRS High has been a troubled program that could be considered a case
study for how not to execute a space program. The program has been restructured and
recertified and the task force assessment is that the corrective actions appear positive.
However, the changes in the program are enormous and close monitoring of these
actions will be necessary.

Recommendations. The task force recommends proceeding with the restructured
program. However, the program implementation to date has been during an era of
questionable program practices. The task force recommends a review of past engineering
and test activities to assure acceptable quality of the product. It is critically important
that a competent and complete test program be implemented for SBIRS High. This may

Acquisition of National Security Space Programs
necessitate additional testing to mitigate omissions and embedded problems that would
otherwise manifest themselves as mission critical failures on orbit. While we were
impressed with the current program management, additional experienced managers are
required to execute the program successfully.

1.3.2 FUTURE IMAGERY ARCHITECTURE (FIA)

Findings. The task force found the FIA program under contract at the time of the review
to be significantly underfunded and technically flawed. The task force believes this FIA
program is not executable.

Recommendations. The task force concludes that the FIA deficiencies can be mitigated
sufficiently to permit the program to continue. The program funding must be augmented
to reflect a most probable (80 percent) cost. Significant program and schedule changes
will be required to maximize the probability of mission success. An independent review
should be implemented to assess the adequacy of the restructured program. Finally, the
same recommendation relative to past engineering and test activities cited for SBIRS
High applies to FIA.

1.3.3 EVOLVED EXPENDABLE LAUNCH VEHICLE (EELV)

Findings. National security space is critically dependent upon assured access to space.
Assured access to space at a minimum requires sustaining both contractors until mature
performance has been demonstrated. The task force found that the EELV business plans
for both contractors are not financially viable. Assured access to space should be an
element of national security policy.

Recommendations. The task force recommends that the SecDef initiate actions to
incorporate assured access to space into national security policy. The task force
recommends that the USecAF/DNRO establish a long-term plan for the EELV program.
This plan should (1) address the requirement for U.S. production of the RD-180 engine,
West Coast launch, and dual manifesting; and (2) define the approach to future
contracting, including any potential downselect and associated funding. The government
must take funding actions beginning no later than FY04 to assure that both EELV
programs remain viable.