Based on the information submitted to the Under Secretary of Defense for  Acquisition, Technology, and Logistics (USD (AT&L)), the SBIRS High  program was officially certified on May 2, 2002, with the contingencies  that the Air Force fully fund the program to the cost estimate developed by  the Office of the Secretary of Defense (OSD) and to reestablish a baseline  to OSD’s schedule for the GEO satellites. The value of the restructured  development contract increased by $2 billion to $4.4 billion. At the time of  the restructuring, the Air Force believed the modified contract established  an executable schedule, a realistic set of requirements, and adequate  funding, and addressed the underlying factors that led to the Nunn- McCurdy breach. Delivery of  these effectivities is tied to the contractor’s award and incentive fees. The restructured contract also prescribed tighter management controls,  improved reporting of contractor information, and added formal review  processes. The restructuring also modified the program’s use of DOD’s Earned Value  Management System (EVMS). In particular, design problems have delayed the delivery of the  first HEO sensor (HEO 1). As a result, the committee  directed the Air Force to develop a plan to reduce the production gap in  the SBIRS High program from 2 years to 1. However, at the SBIRS High  critical design review—1 year before the restructuring—only 50 percent of  design drawings were complete, compared to 90 percent as recommended  by best practices. As a part of  the restructuring, the delivery of this sensor to the host satellite was  delayed from its original date in February 2002 to February 2003. For example, the design to control the sensor’s  electromagnetic interference (EMI) was inadequate. Since the critical design review in August 2001, the Air Force also  determined that two late design changes to the GEO satellites were  necessary to improve the program’s chances of success. Despite the restructuring, the  contractor and Program Office continue to report that software  development underlies most of the top 10 program risks. One deficiency involved the HEO sensor’s  ability to maintain earth coverage and track missiles while orbiting the  earth. Program officials stated that they are coordinating the delivery of HEO 1  and the host satellite to mitigate any schedule impacts, but they agreed  that these delays put the remaining SBIRS High schedule at risk. Conclusions

DOD has invested billions of dollars in an effort to develop a system that  will provide greater long-range detection capabilities than DSP, its current  missile tracking system. Such a review should include determining whether the
SBIRS High development schedule is executable within current cost and  schedule estimates in light of the recent HEO 1 delays and other risks  (such as software development), program design is stable and sufficient to meet performance requirements, contractor’s software development procedures and practices have reached  at least a CMMI level 3 in relation to the Software Engineering Institute’s  standards, appropriate management mechanisms are in place to achieve intended pending requirements changes should be funded. To determine the problems and potential risks relating to cost, schedule,  and performance that are still facing the SBIRS High program, we  reviewed technical reports and program briefings and held discussions  with program and contractor officials regarding ongoing challenges. SBIRS Low is transferred to Missile Defense Agency.
Why GAO Did This Study

In 1996, the Department of Defense (DOD) initiated the Space-Based Infrared System (SBIRS) to provide greater long-range ballistic missile detection capabilities than its current system. The initial SBIRS architecture included "High" and "Low" orbiting space-based components and ground processing segments. SBIRS has been technically challenging, and in October 2001, SBIRS Low was transferred from the Air Force to the Missile Defense Agency. The Air Force expected to field SBIRS High by 2004, but numerous problems have led to schedule overruns. In the fall of 2001, DOD identified potential cost growth of $2 billion. To determine the causes of the significant cost growth, DOD convened an Independent Review Team. In August 2002, the Air Force restructured the program to address the findings of the team's assessment. Our report (1) describes the key elements of the restructured program and (2) identifies problems and potential risks still facing the program.

What GAO Found

In an effort to get the SBIRS High program on track, the most recent program restructuring provided contractor incentives and oversight measures, as recommended by the Independent Review Team. Under the current contract, the prime contractor's award fees are now tied to the incremental delivery of specific system capabilities. DOD also modified the contract to prescribe tighter management controls, improve reporting of contractor information, and add formal review processes by DOD management. This increased oversight is intended, in part, to minimize further changes in requirements and improve management of software development, both of which have been particularly problematic. The restructuring also added funding and other resources to the program and extended the scheduled delivery of certain components. At the time of the restructuring, the Air Force believed the modified contract established an executable schedule, a realistic set of requirements, and adequate funding. However, the restructuring did not fully address some long-standing problems identified by the Independent Review Team. As a result, the program continues to be at substantial risk of cost and schedule increases. Key among the problems is the program's history of moving forward without sufficient knowledge to ensure that the product design is stable and meets performance requirements and that adequate resources are available. For example, a year before the restructuring, the program passed its critical design review with only 50 percent of its design drawings completed, compared to 90 percent as recommended by best practices. Consequently, several design modifications were necessary, including 39 to the first of two infrared sensors to reduce excessive noise created by electromagnetic interference--a threat to the host satellite's functionality--delaying delivery of the sensor by 10 months or more. Software development underlies most of the top 10 program risks, according to the contractor and the SBIRS High Program Office. For example, testing of the first infrared sensor revealed several deficiencies in the flight software involving the sensor's ability to maintain earth coverage and track missiles while orbiting the earth. Program officials stated that they are coordinating the delivery of the first sensor with the delivery of the host satellite to mitigate any schedule impacts, but they agreed that these delays put the remaining SBIRS High schedule at risk.