	Space Acquisition Problems Persist

The majority of satellite programs we have reviewed over the past 2  decades experienced problems during their acquisition that drove up costs  and schedules and increased technical risks. At times, cost  growth has come close to or exceeded 100-percent, causing DOD to nearly  double its investment in face of technical and other problems without  realizing a better return on its investment. Along with the cost increases,  many programs are experiencing significant schedule delays—as much as  6 years—postponing delivery of promised capabilities to the warfighter. Outcomes have been so disappointing in some cases that DOD has had to  go back to the drawing board to consider new ways to achieve the same  capability. While DOD is planning to undertake  the new systems, broader analyses of the nation’s fiscal future indicate  that spending for weapon systems may need to be reduced, rather than  increased, to address growing deficits. Underlying Causes of Acquisition Problems

Our reviews have identified a number of causes behind the problems just  described, but several consistently stand out. First, on a broad scale, DOD  starts more weapon programs than it can afford, creating a competition for  funding which encourages low cost estimating, optimistic scheduling, over  promising, suppressing bad news, and for space programs, forsaking the  opportunity to identify and assess potentially better alternatives. Second, DOD starts its space programs too early, that is, before it has  assurance that the capabilities it is pursuing can be achieved within  available resources and time constraints. A companion problem for all weapon systems is that DOD allows new  requirements to be added well into the acquisition phase. Since we last testified before this subcommittee in July 2005, DOD has  appointed a new Under Secretary of the Air Force to be in charge of space  acquisitions, who, in turn, has embraced adopting best practices, or, as he  terms it, “going back to the basics.” Specifically, the Under Secretary has  expressed a desire to    Delegate the maturation of technologies—to the point of being tested  in a relevant environment or operational environment, if appropriate— to the S&T community. Adopt an evolutionary development approach in which new systems  would be developed in a series of increments, or blocks. Fund S&T appropriately so that significant technology breakthroughs  can be continually pursued. Keys to Realizing DOD’s New Goals for Space Acquisitions

DOD’s desire to adopt best practices for space acquisition is a positive and  necessary first step toward reform. However, these changes will not be  easy to undertake. They require significant shifts in thinking about how  space systems should be developed; changes in incentives and  perceptions; as well as further policy and process changes. There are steps, however, that DOD can take to substantially mitigate  these challenges. Third, DOD could continue to address other capacity shortfalls. Table 1 highlights recent findings from our reports on cost and schedule  overruns for DOD’s current and planned space programs.
Why GAO Did This Study

DOD's 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. GAO was asked to testify on its findings on space acquisition problems and steps needed to improve outcomes.

What GAO Found

DOD's space acquisition programs continue to face substantial cost and schedule overruns. At times, cost growth has come close to or exceeded 100-percent, causing DOD to nearly double its investment in face of technical and other problems without realizing a better return on its investment. Along with the cost increases, many programs are experiencing significant schedule delays--as much as 6 years--postponing delivery of promised capabilities to the warfighter. Outcomes have been so disappointing in some cases that DOD has had to go back to the drawing board to consider new ways to achieve the same capability. These problems are having a dramatic effect on DOD's space investment portfolio. Over the next 5 years, there will be about $12 billion less dollars available for new systems as well as for the discovery of promising new technologies because of cost growth. And while DOD is pushing to start new, highly ambitious programs such as the Transformational Satellite and Space Radar, broader analyses of the nation's fiscal future indicate that spending for weapon systems may need to be reduced, rather than increased, to address growing deficits. GAO has identified a number of causes behind these problems, but several stand out. First, DOD starts more space and weapons programs than it can afford, which pressures programs to under estimate costs and over promise capabilities. Second, DOD starts its space programs too early, that is, before it is sure the capabilities it is pursuing can be achieved within available resources and time constraints. DOD has also allowed new requirements to be added well into the acquisition phase. DOD has appointed a new leadership to oversee space acquisitions who have committed to adopting practices GAO has recommended for improving outcomes. These include delegating the maturation of technologies to the S&T community; adopting an evolutionary development approach in which new systems would be developed in a series of discrete increments, or blocks; fund S&T appropriately so that significant technology breakthroughs can be continually pursued; and improving collaboration on requirements. Adopting best practices for space acquisitions will not be an easy undertaking. DOD, as a whole, still operates in an environment that encourages competition for funding, and thus, behaviors that have been detrimental to meeting cost and schedule goals. Moreover, the changes being proposed will require significant shifts in thinking about how space systems should be developed and changes in incentives. By establishing investment priorities, embedding best practices in policy, and addressing capacity shortfalls, DOD can mitigate these challenges and better position programs for success.