	Background

DOD initiated the EELV program in 1995 to develop a new generation of  launch vehicles. The EELV program— designed to provide assured,  affordable access to space for government satellites—consists of two  families of commercially owned and operated launch vehicles, the Atlas V  and Delta IV launch vehicles. In May 2005, Boeing and Lockheed Martin announced plans to create a  joint venture that would combine the production, engineering, test, and  launch operations associated with U.S. government launches of Boeing’s  Delta and Lockheed Martin’s Atlas rockets. DOD Faces Numerous Uncertainties in the EELV Program and ULA Transition

DOD faces numerous uncertainties in the EELV program and ULA  transition related to the reliability of the launch vehicles, the amount of  work remaining in the ULA transition, and program budget decisions  based on premature data. Third, DOD does not know whether its EELV program budget is  sufficient to manage the program over the next 5 years because the Air  Force accounted for anticipated savings from the ULA transition in the  program budget, even though savings estimates were based on  preliminary data. This is significant because the number of  times a configuration has been successfully launched can be an indicator  of a configuration’s design and production process reliability, according to  an Aerospace Corporation study of EELV launch risk. ULA estimates that consolidation of launch  infrastructure and operations under the ULA joint venture from fiscal  years 2008 through 2012 will cost about $205 million, and it plans to  recover much of this expense from the government. DOD Has Made Strides to Effectively Oversee and Manage the EELV Program but Challenges Exist in These Areas

In recent years, DOD has taken steps to effectively oversee and manage  the EELV program by closely monitoring the ULA transition and changing  its strategy for acquiring launch services. In addition, a new independent life-cycle cost estimate was not required  for the program when it transitioned into the sustainment phase. As a  result, OSD will not be able to rely on an updated life-cycle cost estimate  for making long-term investment planning decisions. According to DOD  officials, the latest life-cycle cost estimate for the program is not realistic,  due in part to an optimistic launch vehicle production rate. DOD Expanded Its Program Management Responsibilities

As part of its effort to increase its oversight and gain program knowledge,  in 2005 the Under Secretary of the Air Force expanded the program  office’s management responsibilities when he approved a new acquisition  strategy for the EELV program. Currently, the program office has approximately 211  military and civilian personnel, as well as over 290 contractor staff. Program officials cautioned that although Aerospace Corporation  personnel have assisted with technical tasks the program office can not  complete due to the staff shortage, the program can not rely on  contractors to perform inherently governmental functions. Recommendations for Executive Action

To improve DOD’s ability to effectively oversee and manage the EELV  program, we recommend that the Secretary of Defense direct the Under  Secretary of Defense for Acquisition, Technology and Logistics to  require the program to continue to provide OSD, and Congress as  appropriate, with updates of program cost and status information using  criteria that apply to major research and development and procurement  programs; and    direct the Director of the Cost Analysis Improvement Group to conduct an  independent life-cycle cost estimate of the EELV program once the ULA  joint venture transition is completed, and periodically update the estimate  to account for significant program changes. Scope and Methodology

To determine what uncertainties the Department of Defense (DOD) faces  in the Evolved Expendable Launch Vehicle (EELV) program and United  Launch Alliance (ULA) transition and to assess how DOD is positioned to  manage and oversee the EELV program, we reviewed and analyzed  documents from and interviewed officials in Washington, D.C., at the  Office of the Undersecretary of Defense for Acquisition, Technology and  Logistics; Office of the Director, Program Analysis and Evaluation; Office  of the Secretary of Defense, Cost Analysis Improvement Group;  Congressional Budget Office; and Federal Trade Commission.
Why GAO Did This Study

The Department of Defense (DOD) plans to spend over $27 billion acquiring launch services through the Evolved Expendable Launch Vehicle (EELV) program over the next 12 years. The EELV program uses two families of commercially owned and operated vehicles to launch satellites. Partly because the commercial space market did not develop as expected, the EELV program has undergone significant changes. These include: adoption of a new acquisition strategy in 2005 that sought to ensure the viability of the two EELV launch vehicle providers, Boeing and Lockheed Martin; the subsequent decision by those two companies to form a joint venture called the United Launch Alliance (ULA); and a 10-year increase in the life of the program. In light of these changes, GAO was asked to (1) determine what uncertainties DOD faces in the EELV program and in the transition to ULA, and (2) assess how DOD is positioned to manage and oversee the effort. To accomplish this, GAO reviewed a wide variety of DOD documents and interviewed DOD and program officials.

What GAO Found

The EELV program currently faces uncertainties in the reliability of the vehicles used to launch military and other government spacecraft as well as its budget for future years and in the merger of its two principal suppliers. Taken together, these unknowns require careful monitoring and oversight to ensure a fairly long track record of launch successes can continue. Though the program has had 21 successful operational launches, no single configuration from either family of launch vehicles has been launched enough times to demonstrate production process reliability. The ULA transition may also influence the demonstration of vehicle reliability because ULA plans to relocate production activities and may alter manufacturing processes. The consolidation of Boeing and Lockheed into ULA--a massive undertaking that seeks to combine two distinct corporate cultures, and consolidate launch infrastructure and business operations from five locations across the country to two--poses a variety of other cost, schedule, and performance uncertainties and risks. DOD does not know whether its EELV program budget is sufficient to manage the program in the short term because the Air Force reduced the EELV program budget to incorporate anticipated savings from the ULA transition, even though savings estimates were based on preliminary data. DOD has taken steps to position itself to effectively oversee and manage the ULA transition and EELV program but still faces significant challenges in these areas. More specifically, DOD has established a well-defined process for how the ULA transition will be overseen and established mechanisms that allow the diverse agencies involved to coordinate the analysis and raise critical issues to senior leaders. However, when DOD moved the EELV program from the research and development phases in 2007 to the sustainment phase, DOD eliminated requirements on the program to produce data that would illuminate what impacts the transition is having on the program, what cost increases are occurring and why, and what other programmatic and technical vulnerabilities exist and how they are being addressed. Furthermore, a new independent life-cycle cost estimate was not required for the program when it moved to the sustainment phase; as a result, DOD will not be able to rely on this estimate for making long-term investment planning decisions. According to DOD officials, the latest life-cycle cost estimate for the program is not realistic. In addition, as part of its effort to increase its oversight and gain program knowledge, in 2005 the Under Secretary of the Air Force expanded the program office's management responsibilities when he approved a new acquisition strategy for the EELV program. At the same time, program officials stated that they do not have the government staff necessary to perform what they consider to be inherently governmental functions related to the expansion of oversight.