As shown  in the figure, estimated costs for the major space acquisition programs  have increased by about $10.9 billion from initial estimates for fiscal years  2008 through 2013. The declining investment in the later years is the result  of the Evolved Expendable Launch Vehicle (EELV) program no longer  being considered a major acquisition program and the cancellation and  proposed cancellation of two development efforts which would have  significantly increased DOD’s major space acquisition investment. As figure 3 notes, in several cases, DOD has had to  cut back on quantity and capability in the face of escalating costs. There are also concerns about potential gaps in missile warning  and weather monitoring capabilities because of delays in SBIRS and  NPOESS. Underlying Reasons for Cost and Schedule Growth

Our past work has identified a number of causes behind the cost growth  and related problems, but several consistently stand out. First, on a broad  scale, DOD starts more weapon programs than it can afford, creating a  competition for funding that encourages low cost estimating, optimistic  scheduling, overpromising, suppressing bad news, and, for space  programs, forsaking the opportunity to identify and assess potentially  more executable alternatives. Second, DOD has tended to start its space programs too early, that is,  before it has the assurance that the capabilities it is pursuing can be  achieved within available resources and time constraints. Observations on the Space Industrial Base

We have not performed a comprehensive review of the space industrial  base, but our prior work has identified a number of pressures associated  with contractors that develop space systems for the government that have  hampered the acquisition process. DOD has taken a number of actions to address  the problems on which we have reported. Although these  actions are a step in the right direction, additional leadership and support  are still needed to ensure that reforms that DOD has begun will take hold. Appendix I: Scope and Methodology

In preparing this testimony, we relied on our body of work in space  programs, including previously issued GAO reports on assessments of  individual space programs, common problems affecting space system  acquisitions, and the Department of Defense’s (DOD) acquisition policies.
Why GAO Did This Study

Despite a growing investment in space, the majority of large-scale acquisition programs in the Department of Defense's (DOD) space portfolio have experienced problems during the past two decades that have driven up cost and schedules and increased technical risks. The cost resulting from acquisition problems along with the ambitious nature of space programs have resulted in cancellations of programs that were expected to require investments of tens of billions of dollars. Along with the cost increases, many programs are experiencing significant schedule delays--as much as 7 years--resulting in potential capability gaps in areas such as positioning, navigation, and timing; missile warning; and weather monitoring. This testimony focuses on (3) the condition of space acquisitions, (1) causal factors, (2) observations on the space industrial base, and (4) recommendations for better positioning programs and industry for success. In preparing this testimony, GAO relied on its body of work in space and other programs, including previously issued GAO reports on assessments of individual space programs, common problems affecting space system acquisitions, and DOD's acquisition policies.

What GAO Found

Estimated costs for major space acquisition programs have increased by about $10.9 billion from initial estimates for fiscal years 2008 through 2013. As seen in the figure below, in several cases, DOD has had to cut back on quantity and capability in the face of escalating costs. Several causes behind the cost growth and related problems consistently stand out. First, DOD starts more weapon programs than it can afford, creating a competition for funding that encourages, among other things, low cost estimating and optimistic scheduling. Second, DOD has tended to start its space programs before it has the assurance that the capabilities it is pursuing can be achieved within available resources. GAO and others have identified a number of pressures associated with the contractors that develop space systems for the government that have hampered the acquisition process, including ambitious requirements, the impact of industry consolidation, and shortages of technical expertise in the workforce. Although DOD has taken a number of actions to address the problems on which GAO has reported, additional leadership and support are still needed to ensure that reforms that DOD has begun will take hold.