[House Hearing, 110 Congress]
[From the U.S. Government Publishing Office]


 
                       GAO'S REPORT ON THE STATUS
                        OF NOAA'S GEOSTATIONARY
                       WEATHER SATELLITE PROGRAM

=======================================================================

                                HEARING

                               BEFORE THE

                       SUBCOMMITTEE ON ENERGY AND
                              ENVIRONMENT

                  COMMITTEE ON SCIENCE AND TECHNOLOGY
                        HOUSE OF REPRESENTATIVES

                       ONE HUNDRED TENTH CONGRESS

                             FIRST SESSION

                               __________

                            OCTOBER 23, 2007

                               __________

                           Serial No. 110-66

                               __________

     Printed for the use of the Committee on Science and Technology


     Available via the World Wide Web: http://www.science.house.gov

                                 ______


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                  COMMITTEE ON SCIENCE AND TECHNOLOGY

                 HON. BART GORDON, Tennessee, Chairman
JERRY F. COSTELLO, Illinois          RALPH M. HALL, Texas
EDDIE BERNICE JOHNSON, Texas         F. JAMES SENSENBRENNER JR., 
LYNN C. WOOLSEY, California              Wisconsin
MARK UDALL, Colorado                 LAMAR S. SMITH, Texas
DAVID WU, Oregon                     DANA ROHRABACHER, California
BRIAN BAIRD, Washington              ROSCOE G. BARTLETT, Maryland
BRAD MILLER, North Carolina          VERNON J. EHLERS, Michigan
DANIEL LIPINSKI, Illinois            FRANK D. LUCAS, Oklahoma
NICK LAMPSON, Texas                  JUDY BIGGERT, Illinois
GABRIELLE GIFFORDS, Arizona          W. TODD AKIN, Missouri
JERRY MCNERNEY, California           JO BONNER, Alabama
LAURA RICHARDSON, California         TOM FEENEY, Florida
PAUL KANJORSKI, Pennsylvania         RANDY NEUGEBAUER, Texas
DARLENE HOOLEY, Oregon               BOB INGLIS, South Carolina
STEVEN R. ROTHMAN, New Jersey        DAVID G. REICHERT, Washington
JIM MATHESON, Utah                   MICHAEL T. MCCAUL, Texas
MIKE ROSS, Arkansas                  MARIO DIAZ-BALART, Florida
BEN CHANDLER, Kentucky               PHIL GINGREY, Georgia
RUSS CARNAHAN, Missouri              BRIAN P. BILBRAY, California
CHARLIE MELANCON, Louisiana          ADRIAN SMITH, Nebraska
BARON P. HILL, Indiana               PAUL C. BROUN, Georgia
HARRY E. MITCHELL, Arizona
CHARLES A. WILSON, Ohio
                                 ------                                

                 Subcommittee on Energy and Environment

                   HON. NICK LAMPSON, Texas, Chairman
JERRY F. COSTELLO, Illinois          BOB INGLIS, South Carolina
LYNN C. WOOLSEY, California          ROSCOE G. BARTLETT, Maryland
DANIEL LIPINSKI, Illinois            JUDY BIGGERT, Illinois
GABRIELLE GIFFORDS, Arizona          W. TODD AKIN, Missouri
JERRY MCNERNEY, California           RANDY NEUGEBAUER, Texas
MARK UDALL, Colorado                 MICHAEL T. MCCAUL, Texas
BRIAN BAIRD, Washington              MARIO DIAZ-BALART, Florida
PAUL KANJORSKI, Pennsylvania             
BART GORDON, Tennessee               RALPH M. HALL, Texas
                  JEAN FRUCI Democratic Staff Director
            CHRIS KING Democratic Professional Staff Member
            JAMES PAUL Democratic Professional Staff Member
         SHIMERE WILLIAMS Democratic Professional Staff Member
          TARA ROTHSCHILD Republican Professional Staff Member
                    STACEY STEEP Research Assistant


                            C O N T E N T S

                            October 23, 2007

                                                                   Page
Witness List.....................................................     2

Hearing Charter..................................................     3

                           Opening Statements

Statement by Representative Nick Lampson, Chairman, Subcommittee 
  on Energy and Environment, Committee on Science and Technology, 
  U.S. House of Representatives..................................     8
    Written Statement............................................     9

Statement by Representative Bob Inglis, Ranking Minority Member, 
  Subcommittee on Energy and Environment, Committee on Science 
  and Technology, U.S. House of Representatives..................    10
    Written Statement............................................    10

Prepared Statement by Representative Jerry F. Costello, Member, 
  Subcommittee on Energy and Environment, Committee on Science 
  and Technology, U.S. House of Representatives..................    11

                               Witnesses:

Mr. David A. Powner, Director, Information Technology Management 
  Issues, Government Accountability Office
    Oral Statement...............................................    11
    Written Statement............................................    13
    Biography....................................................    24

Ms. Mary Ellen Kicza, Assistant Administrator for Satellite and 
  Information Services, National Environmental Satellite, Data, 
  and Information Service, National Oceanic and Atmospheric 
  Administration (NOAA), U.S. Department of Commerce
    Oral Statement...............................................    24
    Written Statement............................................    27
    Biography....................................................    31

Discussion
  GOES Program Costs.............................................    32
  GOES Completion Dates..........................................    34
  GOES-R Procurement.............................................    35
  Investing in New Satellites Technologies vs. Reopening Existing 
    Satellites...................................................    36
  Managing GOES and NPOESS Costs.................................    36
  GAO Recommendations............................................    37
  GOES Acquisition Strategy......................................    37
  Contractor Performance.........................................    39
  Recent Congressional Actions...................................    40

              Appendix: Additional Material for the Record

Agreement, NOAA/NASA Support of the GOES-R Program...............    44

GOES-R Independent Review Team, Key Decision Point (KDP) C/D, 
  Preliminary Readiness Assessment, 25 & 26 June 2007............    54

GOES-R Management Control Plan (MCP), Version 1, December 4, 2007    95


 GAO'S REPORT ON THE STATUS OF NOAA'S GEOSTATIONARY WEATHER SATELLITE 
                                PROGRAM

                              ----------                              


                       TUESDAY, OCTOBER 23, 2007

                  House of Representatives,
            Subcommittee on Energy and Environment,
                       Committee on Science and Technology,
                                                    Washington, DC.

    The Subcommittee met, pursuant to call, at 2:08 p.m., in 
Room 2318 of the Rayburn House Office Building, Hon. Nick 
Lampson [Chairman of the Subcommittee] presiding.


                            hearing charter

                 SUBCOMMITTEE ON ENERGY AND ENVIRONMENT

                  COMMITTEE ON SCIENCE AND TECHNOLOGY

                     U.S. HOUSE OF REPRESENTATIVES

                       GAO's Report on the Status

                        of NOAA's Geostationary

                       Weather Satellite Program

                       tuesday, october 23, 2007
                          2:00 p.m.-4:00 p.m.
                   2318 rayburn house office building

Purpose

    The Subcommittee on Energy and Environment meets on October 23, 
2007 to continue oversight on the next-generation Geostationary 
Operational Environmental Satellite (GOES) program. The Government 
Accountability Office has been continuing its evaluation of progress 
made by the National Oceanic and Atmospheric Administration at the 
request of the Subcommittee, and will release their new report.

Witnesses

Mr. David Powner, Director, Information Technology Management Issues, 
Government Accountability Office

    Mr. Powner is the head of the GAO team that has supported the 
Subcommittee's oversight of NOAA's major satellite programs for the 
past five years. GAO will discuss the findings and recommendations on 
NOAA's management of the GOES-R satellite program in the report it will 
release at the hearing.

Ms. Mary Ellen Kicza, Assistant Administrator for Satellite and 
Information Services, NOAA

    Ms. Kicza leads the National Environmental Satellite, Data and 
Information Systems (NESDIS) at NOAA, which operates both the 
geostationary and polar constellations of weather satellites. Formerly 
NASA's Associate Deputy Administrator for Systems Integration, she was 
hired by NOAA to bolster efforts to improve satellite program 
management in the wake of the severe problems suffered by the National 
Polar-Orbiting Operational Environmental Satellite (NPOESS) program. 
Ms. Kicza now has the responsibility for execution of the GOES program 
to be discussed today, and will provide NOAA's response to the GAO 
report.

Background

Watching the Western Hemisphere
    GOES satellites orbit 22,300 miles above the Earth's equator, an 
altitude where their orbital velocity matches the speed of Earth's 
rotation. As a result, these satellites maintain the same relative 
position over a particular point on the planet, and can look down to 
take pictures of weather patterns over the entire Western Hemisphere. A 
prototype satellite was launched in 1974; the first GOES satellite went 
into orbit in 1975. Today, normal practice has two GOES satellites in 
orbit simultaneously, with one focused on each of the U.S. coasts 
(GOES-11 and GOES-12). A third (GOES-13) is also kept in space as a 
spare to assure uninterrupted coverage.
    These satellites are NOAA's primary sources for images and other 
data that support the National Weather Service units forecasting severe 
weather. The Severe Storm Center uses GOES to track tornadoes, 
hailstorms and other weather events threatening life and property over 
land. For the Hurricane Center, GOES can allow them to see developing 
storms in the areas of the oceans where there are no other 
observational sensors. Nightly weather reports at the Nation's local 
weather stations regularly bring GOES pictures into homes across 
America. GOES would probably be the one satellite NOAA's forecasters 
would vote to save if they were allowed to keep only one.

Keeping the Orbital Slots Full
    The current GOES-R development program is the third major 
procurement for GOES satellites since NOAA assumed responsibility for 
funding its own geostationary operational satellites in 1982. In the 
previous instances, NOAA purchased five GOES-Next satellites in the 
period from 1985-2001, and then contracted for four GOES-N satellites 
for the years 1998-2001. The first GOES-N model launched in May 2006 to 
be the on-orbit spare\1\ while GOES-O and GOES-P have been completed 
and are in storage for later launches. NOAA in 2002 decided not to 
complete the GOES-Q satellite because the existing satellites were 
exceeding their expected lifetimes by significant margins.
---------------------------------------------------------------------------
    \1\ While on the ground, GOES satellites have a letter designation 
based on the order in which they were built. After launch, checkout and 
acceptance testing in orbit, it is changed to a number. Therefore, 
GOES-N is now identified as GOES-13.
---------------------------------------------------------------------------
    The GOES-R program was to represent the first major upgrade to the 
satellite sensors since GOES-8 went into orbit in 1994. As originally 
planned, NOAA would buy four satellites and intended to spend $6.2 
billion for the life cycle period 2007-2020. Launch of the first 
satellite was expected in 2012. As it had with the NPOESS program, NOAA 
issued instrument contracts with the intent to later transfer them to 
the contractor that would win the prime contract for the overall 
satellite system. NOAA also intended to take on the overall 
responsibility for procurement of the entire satellite system, 
including the spacecraft, instruments, ground systems and integration. 
NOAA told GAO that this management structure would ``. . .streamline 
oversight and fiduciary responsibilities. . .'' \2\ in the program and 
overcome barriers that NOAA believed ``. . .limited the agency's 
insight and management involvement in the procurement of major elements 
of the system.'' \3\
---------------------------------------------------------------------------
    \2\ Statement of David Powner before the Subcommittee on Energy and 
Environment, September 29, 2006; p. 9.
    \3\ Supra., p. 8.
---------------------------------------------------------------------------
    By the time the Committee met for GAO's first report on the GOES-R 
program last September, some significant changes had been made. NOAA 
Administrator Lautenbacher informed Members that the cost estimate for 
the original program had risen to $11.4 billion. As a result, the 
agency reduced the number of satellites to be purchased by half, to 
two. The second major instrument, the Hyperspectral Environmental 
Suite, was removed because the technical challenge was deemed too 
great. Finally, first launch availability would now be December 2014. 
With these changes, the program's new life cycle (2003-2028) cost 
estimate reflected in the President's FY 2008 budget request, was $6.96 
billion.
    Responding to recommendations from an Independent Review Team (IRT) 
chaired by former Lockheed Martin President Tom Young, NOAA also 
determined in March that the GOES-R program should not follow the same 
acquisition strategy as NPOESS. Rather than a single prime contractor, 
there would be a contract for space systems managed for NOAA by NASA's 
Goddard Space Flight Center and a separate contract for those system 
elements on the ground to be managed by NOAA. The IRT argued that this 
would allow NOAA to benefit from the expertise in both agencies. 
Instruments for the spacecraft would be acquired by NASA and supplied 
as government-furnished equipment to the satellite contractor. NASA 
should take on the responsibility for system integration. GOES-R was 
the first program to be taken on by a new Program Management Council at 
NOAA, where senior agency managers from NOAA would review progress on a 
monthly basis. Space elements will also undergo review by management 
councils at Goddard Space Flight Center.
GAO's Progress Report

I. Does NOAA buy GOES-R?

    GAO's first finding is that the change in acquisition strategy has 
delayed NOAA's decision to move forward on the acquisition of GOES-R, 
originally planned for last month. This would have the effect of 
stalling the competitions for both program segments (the space segment 
contract was expected to be releases in May 2008, followed by the 
ground system contract in August 2008). According to a briefing for 
Committee staff on September 21, the Independent Review Team reported 
to NOAA that they believed the ground system segment definition was 
some 6-12 months behind the point it needed to be to permit the agency 
to seek bidders. NOAA now has a tiger team at work to satisfy the IRT 
concerns. The agency hopes to be able to minimize the differences in 
schedule between the two system elements.
    With the effort NOAA has devoted to the GOES-R program, it is 
highly unlikely that a decision would be made not to go forward at this 
point. However, it is a reasonable question to ask whether the increase 
in capability offered by the proposed program justifies the significant 
increase in cost per satellite. Originally the GOES-N series of 
satellites was to incorporate new capabilities beyond those provided by 
GOES I-M. Instead, they proved to be quite similar in capability to 
their predecessors. What would be the cost to NOAA of a decision not to 
pursue GOES-R in favor of continued purchases of the existing GOES 
design? How difficult would it be to carry out that decision?

II. What Will GOES-R Cost?

    Cost estimating is the bane of large, complex programs at federal 
agencies, particularly when technical boundaries are being challenged. 
GAO reports that the cost estimates prepared by the program office and 
by an independent team differed by some $2.4 billion--while the program 
office continued to cost the program at $6.9 billion, the independent 
team concluded that the program as currently designed would cost $9.3 
billion. Both estimates are reported at the 80 percent confidence level 
(i.e., there is an 80 percent chance that if all of the assumptions in 
the cost models prove accurate, then the program will ultimately cost 
the amount calculated by the respective models).
    GAO concluded, after reviewing the materials provided by NOAA, that 
the $6.9 billion estimate is likely to rise. NOAA vigorously challenges 
GAO's conclusion. The agency questions GAO's evaluation of the 
inflation assumptions used in both estimates, and notes that as the 
agency has worked to reconcile the different estimates, the independent 
team's estimate in this area now uses DOD-standard inflation 
assumptions and is now $600 million above the program office estimate. 
NOAA stated in its response to GAO that ``[t]he most conservative 
estimates at the 80 percent confidence intervals bring the [program 
office estimate] within 12 percent of the ICE [independent cost 
estimate], or $1.032 billion below the ICE [$9.3 billion].'' If NOAA's 
statement is accepted as accurate, this indicates that the reconciled 
cost estimate to be submitted in the FY 2009 President's budget request 
it will be somewhere in the vicinity of $8 billion-$1 billion over the 
current estimate.
    GAO also reports that the independent cost estimating team is 
skeptical of the December 2014 launch availability for GOES-R. They 
believe there is an even chance that GOES-R would be ready for launch 
in October 2015, and an 80 percent chance that March 2017 will be the 
date. Again, NOAA responds that there is only an 11-month difference 
between the program's December 2014 date and the independent estimators 
accept this as reasonable. GAO believes that the date should be 
compared to the later March 2017 date, which represents the 80 percent 
confidence level.

III. Tracking Risk

    GAO discussed the current types of risks being tracked by the GOES 
program office and the managers of the space and ground segment. There 
are no high-risk (where something that could seriously disrupt the 
program is judged to have a high probability of happening) issues 
currently identified, and NOAA has already addressed some, such as 
solidifying the program requirements document.
    GAO noted that the risk analysis for the ground segment identified 
``. . .schedule interdependencies between the flight and operations 
projects offices as a medium criticality risk, but that neither the 
flight project office or the program identified this risk even though 
it is relevant to both.'' GAO recommended that NOAA maintain a program-
level list of risk; NOAA has agreed and has made this a responsibility 
of the systems integration division. The Program Director will also 
provide monthly updates to the NOAA Program Management Council on the 
full risk list.
    GAO also recommended adding three other risks to the new 
consolidated list. The first involved vacancies in key management 
positions. The System Program Director (SPD) is currently operating in 
an acting role (although she has extensive experience with GOES-R as a 
result of her position as Deputy Assistant Administrator for Systems in 
NESDIS). The Deputy System Program Director position is also filled in 
an acting role. The new Assistant SPD went on duty on September 4. NOAA 
is currently running a competition for the Program Director and will 
begin a new one for the Deputy position (no acceptable candidate was 
selected after the first competition). The need for stable, long-term 
expertise in leadership positions for programs like GOES-R is often 
cited as a lesson learned from previous program failures.
    In its report, GAO notes that the Advanced Baseline Imager (ABI), 
the most critical sensor aboard GOES-R, is operating with only a one 
percent management reserve held by the contractor. This is, of course, 
far too low; reserves for instrument development normally are no lower 
than 20 percent. NOAA responds that the GOES-R program will maintain 
reserves in both of the project offices and at the program level. 
Instrument contractors will draw reserves from the overall reserve 
maintained by the Flight Project and, if necessary, from the Program 
Office. The acting Program Director believes this plan requires 
extensive and continuing oversight by the Flight Project Manager in 
order to avoid depleting that reserve, and to allow NOAA to keep 
control of the reserve. GAO noted that the ABI has already suffered 
from technical and cost challenges that have led to one re-baselining 
and call on the Project Office reserve. The Project Office reserve 
dropped to 15 percent in July, although NOAA indicated in its comments 
that it has been increased to 20 percent. GAO estimates that the ABI 
program has some 40 percent of its work remaining and believes that the 
impact it has had on the existing reserve, even before GOES-R enters 
the development and production phase, indicates trouble in the future.
    Finally, GAO and NOAA disagree about the level of insight NOAA has 
into NASA's management of the program's space segment. In July 1991, 
reviewing the development of the GOES-Next satellites (what became the 
I-M satellites currently in service), GAO reported to the Committee 
that the project was in serious trouble. Among the reasons was that 
NOAA did not require NASA to conduct appropriate engineering analyses 
before development of the satellites began (due to fiscal constraints 
and pressure to make the new satellites available for launch). Senior 
officials in the National Weather Service also said that NESDIS and 
NASA did not tell them that the solution to the instrument-pointing 
accuracy requirements would be very complex and difficult to 
accomplish. One of the reasons NOAA originally intended to serve as the 
program integrator was to overcome such communication problems.
    GAO believes that the interagency agreement NOAA and NASA reached 
to govern the GOES-R program does not give NOAA--which is responsible 
for funding and executing the program--enough knowledge of contractor 
performance in the space segment managed by NASA. While NOAA receives 
contractor cost data from NASA, GAO questions if it is sufficient for 
NOAA to raise questions about its validity only with NASA. NOAA's 
response argues that with NOAA persons working in the Flight Project 
office at Goddard Space Flight Center, there will be extensive day-to-
day oversight. The Program Office and Flight Project office will 
interact regularly. Further, NOAA personnel will participate in the 
NASA technical reviews during the program even before the monthly 
Program Management Council review at NOAA Headquarters. This is a risk 
that involves the differing cultures of the two agencies and will be 
reduced as NOAA assigns personnel with the appropriate technical 
expertise and experience to its positions in the GOES-R management 
structure.

The Sounder of Tomorrow
    As noted earlier, one of the major changes to the GOES-R program 
was the decision to eliminate the Hyperspectral Environmental Suite 
(HES). This instrument was intended to enhance the ability to look down 
through the atmosphere to determine the temperature and moisture levels 
at various altitudes. Such data are critical inputs to forecasting 
models used by the National Weather Service. In the case of hurricane 
forecasting, the sensor is being designed to provide more refined 
measurements of winds surrounding the core of hurricanes to identify 
steering winds and better predict the storm's path. HES was also 
intended to improve our capability to monitor the waters of the 
continental shelf and coastal areas. NOAA states that it will be 
possible to use the Advanced Baseline Imager, combined with data from 
weather balloons and other sensors, to obtain results equivalent to 
that produced by the sounder now aboard the existing GOES satellites to 
meet the agency's needs when GOES-R becomes operational.
    The recent National Research Council Earth Science Decadal Survey 
recommended that ``. . .NOAA develop a strategy to restore the 
previously planned capability to make high temporal- and vertical-
resolution measurements of temperature and water vapor from 
geosynchronous orbit.'' \4\ At the time, NOAA had three contracts to 
identify ways to reduce risk in the HES instrument outstanding, and the 
Survey members suggested extending them to seek some option for 
providing improved sounding capability on GOES-R. While NOAA ultimately 
decided to allow the contracts to expire, the contractors involved have 
stated to Committee staff that sufficient insight has been gained to 
demonstrate an improved sounder aboard GOES-R. Although it would not be 
capable of meeting the original requirements for HES, it would 
represent a marked improvement over the existing sounder. However, in 
April, Administrator Lautenbacher announced there would be no new 
geostationary capability until at least GOES-T. Ms. Kicza stated at the 
time that alternatives for a future sounder would be explored.\5\
---------------------------------------------------------------------------
    \4\ National Research Council. Earth Science and Applications from 
Space: National Imperatives for the Next Decade and Beyond. National 
Academies Press, 2007; p. 2-11.
    \5\ Iannotta, Ben. ``Temperature and Humidity Sounder Will Not Fly 
on GOES-R.'' Space News, April 16, 2007; p. 10.
---------------------------------------------------------------------------
    NOAA has now canceled a major instrument on each of its next-
generation satellite systems after investing significant resources (the 
Conical Microwave Imaging Sounder on NPOESS being the other), thereby 
reducing the chance for improved performance over existing satellites. 
In both cases, the agency said that the instruments proved too 
challenging. It emerged later, however, that in both cases it was the 
pursuit of a particular measurement (ocean color for HES and soil 
moisture for CMIS) that proved to be the bottleneck. NOAA's process for 
developing requirements and managing the trade-offs invariably required 
when operating on technology's leading edge proves the perceptiveness 
of Voltaire's observation that ``the best is the enemy of the good.'' 
One of the key issues for the Committee is to examine how we can 
improve the process for developing and acquiring advanced technologies 
for environmental monitoring and weather forecasting while maintaining 
cost control over the development and acquisition of satellite systems.
    Chairman Lampson. This hearing will come to order. I wish 
you a good afternoon. The Subcommittee on Energy and 
Environment meets today for a report on the Geostationary 
Operational Environmental Satellite or GOES Program. Satellites 
which have been serving America since 1975, watch over the 
whole Western Hemisphere from their positions 22,300 miles 
about the Earth. They send back the pictures that your local 
weather reporter shows you every night. Those satellites 
provide the dramatic pictures of hurricanes that we all see 
when these storms are churning toward the coast. They enable 
forecasters to alert us that severe weather is on the way. It 
is the weather satellite no one wants to be without, especially 
those of us who represent the coastal areas.
    Designing and flying satellites is a difficult business, 
and even with years of experience there are always frustrations 
in bringing new ones into service. In the early 1990s, the 
General Accounting Office told Congress that the generation of 
GOES satellites then in development was in serious trouble. The 
instruments were behind schedule, the program cost had more 
than doubled, and it still was not clear when the satellites 
would be launched. At least today we are not in the position of 
having the last GOES satellite in orbit with its fuel tanks 
almost empty.
    Last year, NOAA Administrator Lautenbacher told us that the 
GOES Program cost estimates had almost doubled, and in order to 
bring them back within the agency's limited budget, he was 
cutting the number of satellites in half and eliminating one of 
the major instruments. An independent review team took issue 
with NOAA's intent to manage the GOES Program by itself, 
questioning whether there were enough people in the agency who 
know how to handle satellite design and development. The Earth 
Science Decadal Survey issued earlier this year by the National 
Research Council urged NOAA to find a way to recover the 
capability represented by the eliminated sensor. Our GAO team 
recommended a full-scale review of the Advanced Baseline 
Imager, the primary sensor, and bolstering the agency's 
management capability.
    NOAA has been responding to all this advice, as Mr. Kicza 
will explain in her testimony. The agency decided that it did 
not or that it did have to ask NASA for help and has given its 
sister agency the responsibility to manager those elements of 
the GOES Program that will fly in space. It will apply its own 
special expertise to the grand side of the program. It has 
brought over NASA staff to supplement its own program and 
project managers. It completed the review of the Advanced 
Baseline Imager. Today it is at the point where the decision 
has to be made to buy GOES-R. That makes it a good time to see 
where we are.
    Mr. Powner from GAO has some important messages to bring 
out in his statement. It appears that the program cost estimate 
will be around $8 billion by the time we receive the 
President's budget request this year. This is some $1 billion 
more than the estimate Admiral Lautenbacher gave us last year. 
That is not a good trend. It concerns me to find out that we 
are operating with both an acting program director and an 
acting deputy program director, and that NOAA's first attempt 
to fill the deputy's slot couldn't find someone for the job. 
There appears to be strong disagreement between our witnesses 
about the relationship between NOAA and NASA in terms of 
managing the space segment of the GOES Program. I trust Ms. 
Kicza will discuss that with us.
    The Chair of NOAA's Independent Review Team, Tom Young, 
knows from his own experience and many reviews of what went 
wrong in other satellite programs, where to look to figure out 
how well a project like GOES is progressing. He has told us 
that the opportunity to get GOES right is there.
    So I hope today's hearing will keep GOES moving in the 
right direction. I thank you for being here, and I recognize 
the Ranking Member, Mr. Inglis, for his opening remarks.
    [The prepared statement of Chairman Lampson follows:]

              Prepared Statement of Chairman Nick Lampson

    Good afternoon. The Subcommittee on Energy and Environment meets 
today for a report on the Geostationary Operational Environmental 
Satellite, or GOES, program. These satellites, which have been serving 
America since 1975, watch over the whole Western Hemisphere from their 
positions 22,300 miles above Earth. They send back the pictures that 
your local weather reporter shows you every night. GOES satellites 
provide the dramatic pictures of hurricanes that we all see when these 
storms are churning toward the coast. They enable forecasters to alert 
us that severe weather is on the way. It's the weather satellite no one 
wants to be without, especially those of us who represent coastal 
areas.
    Designing and flying satellites is a difficult business, and even 
with years of experience there are always frustrations in bringing new 
ones into service. In the early 1990s, the General Accounting Office 
told Congress that the generation of GOES satellites then in 
development was in serious trouble. The instruments were behind 
schedule, the program cost had more than doubled, and it still was not 
clear when the satellites would be launched. At least today we are not 
in the position of having the last GOES satellite in orbit with its 
fuel tanks almost empty.
    Last year, NOAA Administrator Lautenbacher told us that the GOES 
program cost estimates had almost doubled, and in order to bring them 
back within the agency's limited budget he was cutting the number of 
satellites in half and eliminating one of the major instruments. An 
independent review team took issue with NOAA's intent to manage the 
GOES program by itself, questioning whether there were enough people in 
the agency who know how to handle satellite design and development. The 
Earth Science Decadal Survey issued earlier this year by the National 
Research Council urged NOAA to find a way to recover the capability 
represented by the eliminated sensor. Our GAO team recommended a full-
scale review of the Advanced Baseline Imager (the primary sensor) and 
bolstering the agency's management capability.
    NOAA has been responding to all this advice, as Ms. Kicza will 
explain in her testimony. The agency decided that it did have to ask 
NASA for help and has given its sister agency the responsibility to 
manage those elements of the GOES program that will fly in space. It 
will apply its own special expertise to the ground side of the program. 
It has brought over NASA staff to supplement its own program and 
project managers. It completed the review of the Advanced Baseline 
Imager. Today, it is at the point where the decision has to be made to 
buy GOES-R. That makes it a good time to see where we are.
    Mr. Powner from GAO has some important messages to bring out in his 
statement. It appears that the program cost estimate will be around $8 
billion by the time we receive the President's budget request this 
year. This is some $1 billion more than the estimate Admiral 
Lautenbacher gave us last year. That is not a good trend. It concerns 
me to find out that we are operating with both an acting Program 
Director and an acting Deputy Program Director--and that NOAA's first 
attempt to fill the Deputy's slot couldn't find someone for the job. 
There appears to be strong disagreement between our witnesses about the 
relationship between NASA and NOAA in terms of managing the space 
segment of the GOES program. I trust Ms. Kicza to discuss that with us.
    The Chair of NOAA's Independent Review Team, Tom Young, knows from 
his own experience--and many reviews of what went wrong in other 
satellite programs--where to look to figure out how well a project like 
GOES is progressing. He has told us that the opportunity to get GOES 
right is there. I hope today's hearing will keep GOES moving in the 
right direction.
    Thank you, and I recognize the Ranking Member, Mr. Inglis, for his 
opening remarks.

    Mr. Inglis. Thank you, Mr. Chairman. Thank you for holding 
this hearing on the Geostationary Operational Environmental 
Satellites-R Series. This hearing continues close oversight of 
this vital weather satellite program, oversight that started in 
the last Congress.
    Last September the Government Accountability Office came 
before the Science Committee to report on the status of GOES-R 
series procurement. GAO also made recommendations on how to 
proceed so as to avoid any further cost overruns while ensuring 
that technological development stays on schedule.
    More than a year later we are meeting again with witnesses 
from GAO and NOAA to discuss the status of the GOES-R Program. 
However, there are disagreements this time around about GAO's 
assessment of where program development stands.
    I look forward to hearing if and why NOAA disagrees with 
GAO's assessment that the project costs will be nearly two 
billion more than last year's outlook, and why the satellites 
may not be ready for launch until as late as 2017.
    I am particularly concerned that possible launch delays 
will result in discontinuity of valuable forecasting data, the 
kind of data that the Chairman was just referencing. If GOES-R 
fails to launch until 2017, and doesn't come online until 2019, 
will NASA, NOAA, and weather forecasters lose access to the 
information they need to accurately predict and observe storms?
    Those of us responsible for this program, Congress, NOAA, 
and NASA, cannot lightly allow delays and cost overruns. GOES-R 
toady is a $6.9 billion program for two satellites. That is a 
lot of taxpayer money. We expect that investment to provide a 
series of weather satellites that are launched on time and 
provide data to ensure the most accurate possible weather 
forecasting and modeling.
    I look forward to hearing from our witnesses today and 
yield back the balance of my time, Mr. Chairman.
    [The prepared statement of Mr. Inglis follows:]

            Prepared Statement of Representative Bob Inglis

    Good afternoon. Thank you, Chairman Lampson, for holding this 
hearing about the Geostationary Operational Environmental Satellites-R 
series (GOES-R). This hearing continues close oversight of this vital 
weather satellite program, oversight that started under Republican 
leadership of this committee.
    Last September, the Government Accountability Office came before 
the Science Committee to report on the status of the GOES-R series 
procurement. GAO also made recommendations on how to proceed so as to 
avoid any further cost overruns while ensuring that technological 
development stays on schedule.
    More than one year later, we are meeting again with witnesses from 
GAO and the National Oceanic and Atmospheric Administration to discuss 
the status of the GOES-R program. However, there are disagreements this 
time around about GAO's assessment of where program development stands. 
I look forward to hearing if and why NOAA disagrees with GAO's 
assessment that the project costs will be nearly $2 billion more than 
last year's outlook, and why the satellites may not be ready for launch 
until as late as 2017.
    I'm particularly concerned that possible launch delays will result 
in discontinuity of valuable forecasting data. If GOES-R fails to 
launch until 2017, and doesn't come online until 2019, will NASA, NOAA, 
and weather forecasters lose access to the information they need to 
accurately predict and observe storms?
    Those of us responsible for this program, Congress, NOAA, and NASA, 
cannot lightly risk delays and cost overruns. GOES-R today is a $6.9 
billion program for two satellites. That is a lot of taxpayer money. We 
expect that investment to provide a series of weather satellites that 
are launched on time and provide data to ensure the most accurate 
possible weather forecasting and modeling.
    I look forward to hearing from our witnesses today and yield back 
the balance of my time.

    Chairman Lampson. Thank you, Mr. Inglis. I ask unanimous 
consent that all additional opening statements submitted by 
Subcommittee Members may be included in the record. Without 
objection, so ordered.
    [The prepared statement of Mr. Costello follows:]

         Prepared Statement of Representative Jerry F. Costello

    Mr. Chairman, I appreciate the Subcommittee revisiting the issue of 
how the development of the GOES-R satellite system is progressing. This 
is an important subject given the dependence we have on geostationary 
weather satellites for weather forecasting. The American public has 
grown very accustomed to up-to-the-minute weather information, 
particularly regarding hurricanes and other severe storms. Given the 
loss of life and property that are at stake in these situations, 
maintaining a robust program is essential. As we know, satellite 
development is extremely complex, but is critical to the ongoing 
performance of the GOES series.
    The new GAO report to be released today expresses some continued 
concerns about the GOES-R program, particularly surrounding the cost 
estimate and the interaction between NOAA and NASA. It also indicates 
that some progress has been made, and I look forward to hearing more 
details from Ms. Kicza about how NOAA is working to improve the overall 
performance of its satellite delivery.
    Mr. Chairman, oversight of federal spending is one of our most 
basic responsibilities. As I have said before, it becomes even more 
important in an era of reduced budgets. I again commend you for holding 
today's hearing and appreciate the time and expertise of our witnesses.


    Chairman Lampson. It is my pleasure today to introduce our 
witnesses. Mr. David Powner, who is the Director of Information 
Technology Management Issues at the Government Accountability 
Office. He is the head of the GAO team that has supported the 
Subcommittee's oversight of NOAA's major satellite programs for 
the last five years.
    And Ms. Mary Ellen Kicza is the Assistant Administrator for 
our Satellite and Information Services and leads the National 
Environmental Satellite Data and Information Systems, NESDIS, 
at NOAA, which operates both the geostationary and polar 
constitutions of weather satellites.
    We welcome both of you.
    You will each have five minutes for your spoken testimony. 
Your written testimony will be included in the record for the 
hearing, and when you both have completed your testimony, we 
will begin with questions. Each Member will have five minutes 
to question the panel, and we will get to that in a few 
minutes.
    Mr. Powner, we will begin with you, please.

    STATEMENT OF MR. DAVID A. POWNER, DIRECTOR, INFORMATION 
 TECHNOLOGY MANAGEMENT ISSUES, GOVERNMENT ACCOUNTABILITY OFFICE

    Mr. Powner. Chairman Lampson, Ranking Member Inglis, and 
Members of the Subcommittee. We appreciate the opportunity to 
testify this afternoon on our GOES-R report completed at your 
request. Your early oversight, Mr. Chairman, has been essential 
to ensure that NOAA is effectively planning for this critical 
satellite acquisition.
    Today, as requested, I will provide an update on the GOES-R 
current cost and schedule estimate, our assessment of whether 
NOAA is adequately addressing key technical and programmatic 
risks, and recommendations going forward.
    Last September when we testified before you, Mr. Chairman, 
we discussed GOES as a fourth satellite program costing over $6 
billion in the cost and scope uncertainties. Specifically, the 
cost was approaching $12 billion double the original estimate.
    Since that time the program dropped a complex sensor, 
decreased the number of satellites from four to two, and 
revised its lifecycle cost estimate to $7 billion with the 
launch of the first satellite in 2014. As the program 
approaches critical contract award dates next year, the program 
cost estimates are growing, and schedules are being extended. 
Independent studies estimate that the two satellite program 
will cost about $2 billion more than the current $7 billion 
program, and the first satellite is to be delayed two years.
    The reasons for the differences between the independent 
estimate and NOAA's estimate include differences in government 
costs, the space and ground segments, and different assumptions 
regarding inflation. No one commenting on our draft report told 
us that the revised estimate is likely to go up $1 billion and 
have about a year delay.
    However, this revised estimate is not expected to be 
released until February of next year with the President's 2009 
budget. Two points regarding the cost estimate. First, most 
satellite programs overrun even the most conservative 
independent cost estimate, and second, we remain concerned that 
an estimate is being developed more based on how acceptable it 
is in the next budget cycle rather than whether it is a true 
reflection of what the program will cost.
    Turning to risks, NOAA has established a solid risk 
management program. Specifically, it has identified key risks 
and put in place mitigation plans. For example, key risks 
include the lack of an integrated master schedule and technical 
risks associated with Advanced Baseline Imagery (ABI) sensor.
    However, we found several areas for improvement. We found 
inconsistencies among GOES-R's different risk lists. For 
example, the ground segment identified interdependencies among 
the space and ground segments as a key risk but the space nor 
the overall program identified this.
    We, therefore, recommended that NOAA use a program-wide 
list that is reconciled with other risk activities. NOAA 
acknowledged that this is needed and now has an updated 
program-wide risk list.
    We also found that several important key risks were not 
being acknowledged and made recommendations that NOAA 
acknowledge these risks, develop mitigation plans, and report 
the status of these key risks to senior executives. These risks 
include key leadership positions that need to be filled, NOAA's 
limited insight into NASA's deliverables, and the early 
depletion of management reserves, expanding on each of these. 
Two senior GOES-R Program positions, the system program 
director and the deputy director, are currently filled by 
personnel in acting capacities. NOAA's working aggressively to 
fill these positions.
    In prior GOES acquisitions an issue with NOAA's limit was 
NOAA's limited insight into the portions of the procurement 
managed by NASA. During our review we heard that this continues 
to be an issue. In particular, when it comes to NOAA's ability 
to review key costs and schedule information for the space 
segment that NASA is responsible for.
    NOAA disagreed with our assessment recommendation in this 
area and has reported an unparalleled level of transparency 
between the two agencies. Given the past problems NOAA has 
experienced obtaining insights into NASA's contracts, we 
believe that NOAA should acknowledge this risk and manage it 
appropriately.
    We also remain concerned about the early depletion of 
management reserves at the early stage of this acquisition. 
NOAA has downplayed the risk, stating that their overall 
program reserve is consistent with best practices. We, however, 
believe that this should be managed aggressively since it is 
likely to result in increased program costs.
    In summary, Mr. Chairman, NOAA is positioning itself to 
more effectively manage the GOES-R acquisitions. However, 
moving forward a realistic cost and schedule estimate is 
needed, as is even more aggressive risk management.
    This concludes my statement. Thank you for your oversight 
of this important satellite acquisition.
    [The prepared statement of Mr. Powner follows:]

                 Prepared Statement of David A. Powner

Mr. Chairman and Members of the Subcommittee:

    We appreciate the opportunity to participate in today's hearing on 
the planned Geostationary Operational Environmental Satellites-R series 
(GOES-R) program. The GOES-R series is to replace the current series of 
satellites, which will likely begin to reach the end of their useful 
lives in approximately 2014. This new series is expected to mark the 
first major technological advance in GOES instrumentation since 1994. 
It is also considered critical to the United States' ability to 
maintain the continuity of data required for weather forecasting 
through the year 2028.
    As requested, our testimony summarizes the report we issued today 
on the GOES-R program. Specifically, we (1) assessed the status and 
revised plans for the GOES-R procurement and (2) evaluated whether the 
National Oceanic and Atmospheric Administration (NOAA) is adequately 
mitigating key technical and programmatic risks facing the GOES-R 
program.\1\ In preparing for this testimony, we relied on our work 
supporting the accompanying report. That report contains a detailed 
overview of our scope and methodology. All of the work on which this 
testimony is based was performed in accordance with generally accepted 
government auditing standards.
---------------------------------------------------------------------------
    \1\ GAO, Geastationary Operational Environmental Satellites: 
Progress Has Been Made, But Improvements Are Needed to Effectively 
Manage Risks, GAO-08-18 (Washington, D.C.: Oct. 23, 2007).
---------------------------------------------------------------------------

Results in Brief

    NOAA has made progress on its GOES-R procurement--which is 
estimated to cost $7 billion and scheduled to have the first satellite 
ready for launch in 2014--but costs and schedules are likely to grow.
    Specifically, NOAA completed preliminary design studies of its 
GOES-R acquisition and planned to make a decision to proceed to 
development and production in September 2007. In addition, the agency 
recently decided to separate the space and ground elements of the 
program into two separate contracts to be managed by the National 
Aeronautics and Space Administration (NASA) and NOAA, respectively. 
However, this change in the GOES-R acquisition strategy has delayed the 
decision to proceed with the acquisition. Further, independent 
estimates are higher than the program's current cost estimate and 
convey a low level of confidence in the program's schedule. Independent 
studies show that the estimated program could cost about $2 billion 
more, and the first satellite launch could be delayed by two years. As 
NOAA works to reconcile the independent estimate with its own program 
office estimate, costs are likely to grow and schedules are likely to 
be delayed. However, NOAA officials stated that while their 
reconciliation process is still ongoing, the revised cost estimate will 
likely be $1 billion more than the current $7 billion and the first 
satellite launch will likely be delayed one year from 2014, rather than 
two years.
    To address cost, schedule, and technical risks, the GOES-R program 
has established a risk management program and has taken steps to 
identify and mitigate selected risks. For example, as of July 2007, the 
program office identified the lack of an integrated master schedule as 
its highest priority risk. It also identified other risks including 
technical challenges affecting the development of a critical instrument 
and the development of requirements between the space and ground 
segments. The program has also established plans for bringing these 
risks to closure. However, more remains to be done to fully address 
risks. Specifically, the program has multiple risk watch lists that are 
not always consistent. Further, key risks are missing from the risks 
lists, including risks associated with unfilled executive positions, 
limitations in NOAA's insight into NASA's deliverables, and 
insufficient funds for unexpected costs (called management reserve). As 
a result, the program is at risk that problems will not be identified 
or mitigated in a timely manner and could lead to program cost overruns 
and schedule delays.
    To improve NOAA's ability to effectively manage the GOES-R 
procurement, in our report being released today, we are making 
recommendations to ensure that the GOES-R program office manages, 
mitigates, and reports on risks using a more comprehensive program-
level risk list. In written comments, the Secretary of Commerce agreed 
with our recommendations to use a program level risk list and to add 
selected risks to its list, but disagreed that NOAA has insufficient 
insight into NASA's contracts. The Secretary cited an unparalleled 
transparency between the two agencies. However, NOAA has not 
demonstrated that it has validated NASA's contractor performance and we 
remain concerned that NOAA lacks the capability to oversee this 
important aspect of the program. Given the past problems NOAA had in 
obtaining insight into NASA's contracts and the importance of this 
interagency relationship to the success of the GOES-R program, we 
believe that this issue should be managed and monitored as a risk.

Background

    Since the 1960s, geostationary and polar-orbiting environmental 
satellites have been used by the United States to provide 
meteorological data for weather observation, research, and forecasting. 
NOAA's National Environmental Satellite Data and Information Service 
(NESDIS) is responsible for managing the civilian geostationary and 
polar-orbiting satellite systems as two separate programs, called GOES 
and the Polar Operational Environmental Satellites, respectively.
    Unlike polar-orbiting satellites, which constantly circle the Earth 
in a relatively low polar orbit, geostationary satellites can maintain 
a constant view of the Earth from a high orbit of about 22,300 miles in 
space. NOAA operates GOES as a two-satellite system that is primarily 
focused on the United States. These satellites are uniquely positioned 
to provide timely environmental data to meteorologists and their 
audiences on the Earth's atmosphere, its surface, cloud cover, and the 
space environment. They also observe the development of hazardous 
weather, such as hurricanes and severe thunderstorms, and track their 
movement and intensity to reduce or avoid major losses of property and 
life. Furthermore, the satellites' ability to provide broad, 
continuously updated coverage of atmospheric conditions over land and 
oceans is important to NOAA's weather forecasting operations.
    To provide continuous satellite coverage, NOAA acquires several 
geostationary satellites at a time as part of a series and launches new 
satellites every few years (see Table 1).



    Three satellites--GOES-11, GOES-12, and GOES-13--are currently in 
orbit. Both GOES-11 and GOES-12 are operational satellites, while GOES-
13 is in an on-orbit storage mode. It is a backup for the other two 
satellites should they experience any degradation in service. The 
others in the series, GOES-O and GOES-P, are planned for launch over 
the next few years. NOAA is also planning the next generation of 
satellites, known as the GOES-R series, which are planned for launch 
beginning in 2014.

GOES-R Program--An Overview

    NOAA plans for the GOES-R program to improve on the technology of 
prior series, in terms of both system and instrument improvements, to 
fulfill more demanding user requirements and to provide more rapid 
information updates. Table 2 highlights key system-related improvements 
GOES-R is expected to make to the geostationary satellite program.



    In addition to the system improvements, the instruments on the 
GOES-R series are expected to significantly increase the clarity and 
precision of the observed environmental data. NOAA originally planned 
to acquire six different types of instruments. Furthermore, two of 
these instruments--the Advanced Baseline Imager and the Hyperspectral 
Environmental Suite--were considered to be the most critical because 
they would provide data for key weather products. Table 3 summarizes 
the originally planned instruments and their expected capabilities.



    More recently, however, NOAA reduced the scope of the GOES-R 
program because of expectations of higher costs. In May 2006, the 
program office projected that total costs, which were originally 
estimated to be $6.2 billion, could reach $11.4 billion. We reported 
that this led NOAA to reduce the scope and technical complexity of the 
baseline program.\2\ Specifically, in September 2006, NOAA reduced the 
minimum number of satellites from four to two, canceled plans for 
developing the Hyperspectral Environmental Suite, and estimated the 
revised program would cost $7 billion. Table 4 provides a summary of 
the timeline and scope of these key changes.
---------------------------------------------------------------------------
    \2\ GAO, Geostationary Operational Environmental Satellites: 
Additional Action Needed to Incorporate Lessons Learned from Other 
Satellite Programs, GAO-06-1129T (Washington, D.C.: Sept. 29, 2006) and 
Geostationary Operational Environmental Satellites: Steps Remain in 
Incorporating Lessons Learned from Other Satellite Programs, GAO-06-993 
(Washington, D.C.: Sept. 6, 2006).



GOES-R Program Office Structure

    NOAA is solely responsible for GOES-R program funding and overall 
mission success. However, since it relies on NASA's acquisition 
experience and technical expertise to help ensure the success of its 
programs, NOAA implemented an integrated program management structure 
with NASA for the GOES-R program. Within the program office, there are 
two project offices that manage key components of the GOES-R system. 
These are called the flight and operations project offices. The flight 
project office oversees the spacecraft, instruments, and launch 
services. The operations project office oversees the ground elements 
and on-orbit operations of the satellites. The project manager for the 
flight project office and the deputy project manager for operations 
project office are designated to be filled with NASA personnel. 
Additionally, NOAA has located the program office at NASA's Goddard 
Space Flight Center.

Planned GOES-R Acquisition Strategy

    NOAA's acquisition strategy was to award contracts for the 
preliminary design of the GOES-R system to several vendors who would 
subsequently compete for the contract to be the single prime contractor 
responsible for overall system development and production. As such, in 
October 2005, NOAA awarded contracts for the preliminary design of the 
overall GOES-R system to three vendors.\3\
---------------------------------------------------------------------------
    \3\ These were called Program Definition and Risk Reduction 
contracts.
---------------------------------------------------------------------------
    In addition, to reduce the risks associated with developing 
technically advanced instruments, NASA awarded contracts for the 
preliminary designs for five of the originally planned instruments. 
NASA expected to subsequently award development contracts for these 
instruments and to eventually turn them over to the prime contractor 
responsible for the overall GOES-R program.

GOES-R Preliminary Design Studies Are Completed, But Key Program 
                    Changes Have Been Made and Cost and Schedule 
                    Estimates Are Likely to Grow

    NOAA has completed preliminary design studies of its GOES-R 
procurement. In addition, the agency recently decided to separate the 
space and ground elements of the program into two separate contracts to 
be managed by NASA and NOAA, respectively. However, this change has 
delayed a key decision to proceed with the acquisition, which was 
planned for September 2007. Further, independent estimates are higher 
than the program's current $7 billion cost estimate and convey a low 
level of confidence in the program's schedule for launching the first 
satellite by 2014. As NOAA works to reconcile the independent estimate 
with its own program office estimate, costs are likely to grow and 
schedules are likely to be delayed.

Progress Has Been Made on GOES-R Procurement Activities
    NOAA and NASA have made progress on GOES-R. The program office has 
completed preliminary design studies of the overall GOES-R system and 
has initiated development work on most of the planned instruments. 
Specifically, the NOAA-issued contracts for the preliminary design of 
the overall GOES-R system to three vendors have ended, and the designs 
have been completed.
    In addition, after completing preliminary designs on five of the 
originally planned instruments, NASA awarded development contracts for 
three of them.\4\ Further, the most critical of these instruments--the 
Advanced Baseline Imager--has completed a major development milestone. 
In February 2007, it passed a critical design review gate and NASA 
approved the contractor to begin production of a prototype model.
---------------------------------------------------------------------------
    \4\ NASA has not yet issued a development contract for the 
Geostationary Lightning Mapper. This contract is expected to be awarded 
at the end of October 2007.

NOAA Revised Its Acquisition Strategy
    NOAA recently made a number of key changes in how it plans to 
acquire the GOES-R system. Originally, NOAA planned to award and manage 
a single prime contract for the acquisition and operation of the 
integrated system. However, an independent review team assessed the 
program and found that this approach was risky.\5\ It recommended that 
NOAA split the acquisition effort into two separate contracts for the 
space and ground segments and have NASA manage the space segment. The 
independent review team concluded that there was less risk in 
continuing with this approach than there would be if NOAA took on a new 
and expanded role.
---------------------------------------------------------------------------
    \5\ This independent review team, comprised of former senior 
industry and government space acquisition experts, was hired by NOAA to 
assess the adequacy of the GOES-R program's management approach, 
acquisition strategy, and resource availability, among other things.
---------------------------------------------------------------------------
    In March 2007, Commerce approved NOAA's decision to implement these 
recommendations. The agency revised its acquisition strategy to include 
two separate contracts--the space segment and the ground segment. The 
two contracts are expected to be awarded in May 2008 and August 2008, 
respectively. The space segment is to be managed by a NASA-led flight 
project office. As such, NASA is to be responsible for awarding and 
managing the space segment contract, delivering the flight-ready 
instruments to the space segment contractor for integration onto the 
satellites, and overseeing the systems engineering and integration. 
NOAA is to be responsible for the ground segment contract, which is to 
be managed by the NOAA-led operations project office.
    The revised acquisition strategy has delayed NOAA's plans to 
complete a key decision milestone on whether to proceed with GOES-R 
development and production in September 2007. Once this decision is 
made, the final requests for proposals on the system segments are to be 
released. The agency could not provide a timeframe for when this key 
decision milestone would take place.

GOES-R Cost Estimates Are Likely to Grow and Schedule Estimates Are 
                    Likely to Slip

    NOAA's current estimate that the life cycle cost of the GOES-R 
program would be $7 billion is likely to grow, and its estimate that 
the first satellite would be launched in December 2014 is likely to 
slip. Consistent with best practices in cost estimating, in May 2007, 
NOAA had two different cost estimates completed for the current GOES-R 
program--one by its program office and one by an independent cost 
estimating firm. The program office estimated with 80 percent 
confidence that the program would cost $6.9 billion. The independent 
estimating firm estimated with 80 percent confidence that the program 
would cost $9.3 billion.
    A comparison of the two cost models shows that the independent 
estimator has about a 20 percent level of confidence that the program 
can be completed for $6.9 billion. Further, the independent estimator 
concluded that the program office estimate significantly understated 
the risk of cost overruns. Other major differences between the two 
estimates are contained in government costs and in the space and ground 
segments. In commenting on a draft of the accompanying report, NOAA 
officials noted that one of the differences between the estimates is 
the inflation rate. The independent estimator assumed a higher 
inflation rate than the rate that NOAA and NASA typically use. NOAA 
officials noted that if the independent estimate was adjusted to NOAA's 
inflation rate, the program's cost estimate--with 80 percent 
confidence--would be $8.7 billion. However, we believe that the value 
of an independent estimate is that it does not necessarily use the same 
assumptions as the program office. By offering alternative assumptions, 
the independent estimate provides valuable information for government 
officials to consider when revising program cost estimates.
    Program officials are reconciling the two different cost estimates 
and plan to establish a new program cost estimate to be released in 
conjunction with the President's fiscal year 2009 budget in February 
2008. Program officials were unable to provide us information on the 
reconciled estimate until it is released. Nonetheless, the revised cost 
estimate will likely be $1 billion more than the current $7 billion.
    Regarding schedule, NOAA's current plan to launch the first GOES-R 
series satellite in December 2014 could be delayed. This schedule was 
driven by a requirement that the satellites be available to back up the 
last remaining GOES satellites (GOES-O and GOES-P) should anything go 
wrong during the planned launches of these satellites (see Table 5). 
However, as part of its cost estimate, the independent estimator 
performed a schedule risk analysis. The independent estimator 
determined that there was less than a 50 percent chance that the first 
satellite would be ready for launch by December 2014 and that a later 
date would be more realistic. The estimator determined that it had 50 
percent confidence that the first satellite would launch by October 
2015 and 80 percent confidence that the satellite would launch by March 
2017. A delay of this magnitude could affect the continuity of GOES 
data should the agency experience problems with the predecessor 
satellites.



NOAA Is Taking Steps to Address Key Risks, But More Remains to Be Done

    To address cost, schedule, and technical risks, the GOES-R program 
established a risk management program and has taken steps to identify 
and mitigate selected risks. However, more remains to be done to fully 
address a comprehensive set of risks. Specifically, the program has 
multiple risk watch lists and they are not always consistent. Further, 
key risks are missing from the risks lists, including risks associated 
with unfilled executive positions, limitations in NOAA's insight into 
NASA's deliverables, and insufficient funding for unexpected costs 
(called management reserve) on a critical sensor. As a result, the 
GOES-R program is at increased risk that problems will not be 
identified or mitigated in a timely manner and that they could lead to 
program cost overruns and schedule delays.

GOES-R Has a Risk Management Program and Is Taking Measures to Address 
        Selected Risks
    The GOES-R program office established a risk management program and 
is tracking and mitigating selected risks. Risk management is a leading 
management practice that is widely recognized as a key component of a 
sound system development approach. An effective risk management 
approach typically includes identifying, prioritizing, and mitigating 
risks, and escalating key risks to the attention of senior management.
    In accordance with leading management practices, the GOES-R program 
identifies risks, assigns a severity rating to risks, tracks these 
risks in a database, plans response strategies for each risk in the 
database, and reviews and evaluates these risks during monthly program 
risk management board meetings. Program-wide and project-specific risks 
are managed by different offices. The program office identifies and 
tracks program-wide risks--those that affect the overall GOES-R 
program. NASA's flight project office and NOAA's operations project 
office manage risks affecting their respective aspects of the 
program.\6\ Further, the program office briefs senior executives on top 
program and project risks on a monthly basis.
---------------------------------------------------------------------------
    \6\ NASA's GOES-R flight project office is responsible for the 
spacecraft, instruments, and launch services. NOAA's GOES-R operations 
project office is responsible for the ground elements and on-orbit 
operations of the satellites.
---------------------------------------------------------------------------

GOES-R Program Office Identified and Is Working to Mitigate Program-
                    wide Risks

    As of July 2007, the program office identified three program risks 
affecting the overall GOES-R program. These risks include the 
development of the integrated master schedule, the ability to secure 
authorization to use a key frequency band to meet the space-to-ground 
communication data link requirements for the GOES-R system, and the 
final approval of the GOES-R mission requirements from the NOAA Deputy 
Under Secretary.
    NOAA is working to mitigate and close program risks that it is 
tracking. For example, the program office recently closed the risk 
associated with GOES-R requirements because it had sufficiently defined 
and obtained approval of these requirements. As another example, the 
program office considers the lack of an integrated master schedule to 
be its highest priority risk. Program officials reported that 
completion of the integrated master schedule is driven by the 
completion of the intermediate schedules for the ground segment and the 
space-to-ground inter-dependencies. Key program staff members, 
including a resident scheduler, meet on a weekly basis to resolve 
outstanding design issues and hone these schedules. Program officials 
reported that the intermediate schedules are near completion and that 
they plan to have the integrated master schedule completed in Fall 
2007. They expect to remove this issue from the risk watch list at that 
time.

NASA Identified Flight Segment Risks and Is Working to Mitigate Them
    As of July 2007, the NASA flight project office identified four 
risks affecting instrument development, all of which are classified as 
medium risk. The top three risks pertain to the advanced imaging 
instrument, ABI--including issues on timely and quality subcontractor 
delivery of a critical part, stray light negatively impacting the 
performance of the optical system, and meeting specified performance 
requirements on image navigation and registration. The fourth priority 
risk pertains to the improvement of subcontractor quality assurance on 
a key sensor for the Space Environmental In-Situ Suite.
    NASA is working to mitigate the flight segment risks that it is 
tracking. For example, the ABI contractor, among other things, plans to 
complete a key simulation review before the end of the year (called the 
structural thermal optical performance analysis) to evaluate whether 
the instrument can meet its expected performance parameters for image 
navigation and registration. NASA also recently conducted a vendor 
facility assessment of the Space Environmental In-Situ Suite 
subcontractor to determine whether adequate quality assurance 
improvements had been made to be compliant with contract requirements. 
These actions are expected to help mitigate the risk.

NOAA Identified Risks in its Operations Segment and Is Working to 
        Mitigate Them
    As of July 2007, the NOAA operations project office identified five 
risks impacting the management and development of the ground system and 
operations, including one that is identified as a medium risk. These 
risks include, among other things, inadequate definition of flight and 
operations project inter-dependencies, algorithm development 
responsibilities, and the adequate definition of coordination 
requirements between the space and ground segments to ensure that the 
two requests for proposals are consistent.
    NOAA is working to mitigate the ground system and operations risks 
that it is tracking. For example, for the highest priority risk 
regarding schedule inter-dependencies, key staff from both the flight 
and operations projects meet weekly in order to identify and 
synchronize project schedules. The project office expects to close this 
risk in Fall 2007.

Multiple Watch Lists Are Not Consistent, Making It Difficult to 
                    Prioritize and Manage Risks

    While GOES-R has implemented a risk management process, its 
multiple risk watch lists are not consistent in areas where there are 
inter-dependencies between the lists, which makes it difficult to 
effectively prioritize and manage risks at the appropriate 
organizational levels. Sound risk management practices call for having 
a consistent prioritization approach and for significant problems to be 
elevated from the component level to the program level. This is because 
an issue affecting a critical component could have severe programmatic 
implications and should be identified, tracked, and overseen at the 
program level. In addition, program executives should be briefed 
regularly on the status of key risks.
    However, on the GOES-R program, the risks identified on the 
multiple risk lists are inconsistent in areas where there are inter-
dependencies between the lists. These inter-dependencies include 
situations where a risk is raised by one project office and affects the 
other project office, but is not identified by the other project office 
or elevated to the program level risk list. They also include 
situations where a risk identified by a project office has program-wide 
implications, but is not elevated to the program level risk list. For 
example, the operations project office identified schedule inter-
dependencies between the flight and operations project offices as a 
medium criticality risk, but neither the flight project office nor the 
program identified this risk even though it is relevant to both. As 
another example, the operations project office identified the ground 
procurement schedule as a major issue in its briefing to senior 
management, but this risk was not identified on its own or on the 
program-wide risk lists.
    In addition, while the three offices brief senior management about 
their key risks on a monthly basis, selected risks may not be 
accurately depicted in these briefings because of the inconsistencies 
among the risk watch lists. For example, both the flight and operations 
project offices identified technical development issues as minor to 
moderate risk areas, but the program office did not identify this item 
as a risk and, when it briefed senior management, it noted that 
technical development was in good shape. Figure 1 depicts examples of 
inconsistencies among risk lists and briefings to senior management.
    The lack of consistency in managing risks in areas where there are 
inter-dependencies makes it difficult to ensure that all identified 
risks are appropriately prioritized and managed. This situation hampers 
the program office's ability to identify and mitigate risks early on 
and to anticipate and manage the impact of risks on other areas of the 
program.



Important GOES-R Management Risks Are Missing From the Program Watch 
                    List

    To be effective, a risk management program should have a 
comprehensive list of risks. However, several key risks that impact the 
GOES-R procurement and merit agency attention are not identified in the 
program's risk lists. These risks include (1) key leadership positions 
that need to be filled, (2) NOAA's limited insight into NASA's 
deliverables, and (3) insufficient management reserves (held by the 
program and a key instrument contractor). At the conclusion of our 
review for the accompanying report, program officials stated that they 
are aware of these issues and are working to monitor them or address 
them, as warranted. Nevertheless, until these and other program-wide 
risks are identified and addressed as part of a comprehensive risk 
management program, there is increased likelihood that issues will be 
overlooked that could affect the acquisition of the GOES-R system.

Key GOES-R Leadership Positions Need to Be Filled
    The two senior GOES-R program positions--the system program 
director and deputy system program director--are currently filled by 
NASA and NOAA personnel in an acting capacity until they can be 
permanently filled by NOAA. In addition, the acting system program 
director is not able to work full time in this role because she is also 
on a special assignment as the NESDIS Deputy Assistant Administrator 
for Systems. NOAA reported that it plans to fill the deputy system 
program director role in the near future, but noted that it could take 
more than six months to fill the system program director role. Given 
the approach of the development phase of the GOES-R acquisition and the 
competing priorities of the acting system program director, it is 
especially important that these key leadership positions be filled 
quickly. At the conclusion of our review, agency officials stated that 
they are aware of this issue and are working to fill the positions, but 
they did not believe the issue warranted inclusion on the program level 
risk watch list. However, without the senior level attention inherent 
in a sound risk management program, it is not clear that NOAA is 
sufficiently focused on the importance of establishing knowledgeable 
and committed program executives, or in moving quickly to fill these 
critical positions.

NOAA's Insight into NASA's Program Elements Is Limited
    NOAA's March 2007 decision to adopt an acquisition management 
approach similar to prior GOES procurements could make the agency 
vulnerable to repeating some of the problems experienced in the past. 
In particular, our work on the GOES I-M series found that NOAA did not 
have the ability to make quick decisions on problems because portions 
of the procurement were managed by NASA.\7\ In fact, NOAA officials 
originally intended to depart from this approach as a lesson they 
learned from the GOES I-M acquisition, because it limited the agency's 
insight and management involvement in the procurement of major elements 
of the system.
---------------------------------------------------------------------------
    \7\ GAO-06-993.
---------------------------------------------------------------------------
    The established NOAA/NASA interagency agreements require NASA to 
submit monthly contractor cost performance reports to NOAA and to alert 
NOAA should cost and schedule performance drop below certain 
thresholds. NASA is currently submitting the required reports and has 
alerted NOAA on major cost and schedule changes. However, these 
interagency agreements do not contain provisions that enable NOAA to 
ensure that the data and reports are reliable and that they accurately 
depict contractor performance. To do so would entail NOAA having the 
ability and means to question and validate data, such as by having 
direct access to the contractor.
    NASA and NOAA officials reported that the two agencies are working 
together with an unparalleled level of transparency and noted that NOAA 
program staff have access to contractor data and can bring any 
questions with the data to the relevant NASA staff. However, they 
acknowledged that this process is not documented and were not able to 
demonstrate that NOAA staff had questioned contract data and that NASA 
had facilitated obtaining answers to the questions. By not identifying 
and mitigating this risk on its program risk list, NOAA increases the 
likelihood that the GOES- program will repeat the management and 
contractor shortfalls that plagued past GOES procurements.

Recent Changes on a Key Instrument Have Reduced Program Management 
        Reserve Funds and Limited Contractor Reserve Funds Leave GOES-R 
        Vulnerable to Future Cost Increases
    A recent modification to the critical ABI instrument contract 
increased its cost, thereby reducing the amount of management reserve 
funds held by the program office for unexpected expenses. In September 
2006, we reported that ABI was experiencing technical challenges, that 
were resulting in cost and schedule overruns. Since then, the 
contractor continued missing cost and schedule targets--a trend that 
continued until February 2007. At that time, NASA modified the contract 
to implement a revised baseline cost and schedule. The added cost of 
this modification was funded using management reserve funds held by the 
GOES-R program office.\8\ As a result, the amount of reserve held by 
the program office dropped below 25 percent--a level that NOAA reported 
it intended to establish as a lesson learned from other satellite 
acquisitions. As of July 2007, the program's reserve level was at about 
15 percent. Program officials stated that their revised goal is to 
maintain between 10 and 15 percent in reserve at the program level. 
While maintaining a 10 to 15 percent management reserve is on par with 
other major satellite acquisitions, the depletion of management 
reserves this early in the GOES-R acquisition raises concerns that 
there will be insufficient reserves during the challenging development, 
integration, and testing phases to come.
---------------------------------------------------------------------------
    \8\ This reserve is intended to cover expected costs above those 
projected by the contractor and unexpected costs in solving problems 
during a system development program.
---------------------------------------------------------------------------
    In addition, the contractor for the ABI instrument has a very low 
level of reserve funding for unexpected costs, which means that any 
unexpected problems will likely lead to cost growth on the overall 
GOES-R program. As of May 2007, the contractor was holding less than 
one percent of funding in reserve to cover unexpected costs associated 
with the 40 percent of work left to be completed. As such, there is a 
risk that the new baseline could fail due to inadequate reserves to 
finish the program. This would likely have a diminishing effect on the 
reserve held by the GOES-R flight project and the program office to 
cover the costs of a second revised baseline plan. Our prior work on 
system acquisitions has shown inadequate reserves to be an indicator of 
poor management performance that could lead to cost overruns.\9\ 
Considering that GOES-R has not yet entered the development and 
production phases, it will be critical for NOAA's senior executive 
management to aggressively manage this risk. By not identifying, 
mitigating, and tracking this risk in a program-wide risk list, the 
GOES-R program runs an increased risk that unanticipated issues on the 
ABI instrument will lead to program-wide cost overruns and schedule 
delays.
---------------------------------------------------------------------------
    \9\ GAO-06-993.

Implementation of GAO Recommendations Should Improve NOAA's Ability to 
                    Effectively Manage the GOES-R Procurement

    To improve NOAA's ability to effectively manage the procurement of 
the GOES-R system, we recommended in our accompanying report\10\ that 
the Secretary of Commerce direct the Undersecretary of Commerce for 
Oceans and Atmosphere to take the following two actions:
---------------------------------------------------------------------------
    \10\ G110-08-18.

          Ensure that the GOES-R program office manages, 
        mitigates, and reports on risks using a program-level risk list 
        that is reconciled with and includes risks from its flight and 
        operations project offices that could impact the overall 
---------------------------------------------------------------------------
        program.

          Include the following risks on the program-wide risk 
        list, develop plans to mitigate them, and report to senior 
        executives on progress in mitigating them:

                  unfilled or temporary GOES-R program 
                leadership positions,

                  insufficient program insight on NASA contract 
                performance, and

                  insufficient management reserve on the 
                critical Advanced Baseline Imager instrument and at the 
                GOES-R program level.

    In written comments, Commerce agreed with our recommendations to 
use a program level risk list and to add selected risks to its list. 
The department reported that NOAA has established a consolidated 
program-wide risk list that is to be used to evaluate risks during 
monthly internal and external reviews. Further, NOAA acknowledges the 
risks associated with having unfilled leadership positions and 
insufficient management reserves and is working to mitigate these 
risks. However, the department disagreed with our recommendation to 
manage and mitigate the risk that NOAA has insufficient insight into 
NASA's contracts. The department cited an unparalleled level of 
transparency between the two agencies and listed multiple regular 
meetings that the two agencies hold to ensure close coordination. While 
an improved working relationship between the two agencies is critical, 
NOAA has not provided any evidence that it has been able to effectively 
question and validate data on NASA's contractor performance. Given the 
past problems that NOAA has experienced in obtaining insight into 
NASA's contracts and the importance of this interagency relationship to 
the success of the GOES-R program, we believe that this issue should be 
managed and monitored as a risk.
    NOAA also requested that we acknowledge its effort to reconcile its 
program estimate with the independent estimate and reflect a 20 percent 
possibility that the program could cost $1 billion more than the 
current estimate of $7 billion, rather than $2 billion more. We 
acknowledge this in our report; however, the reconciliation effort is 
not complete and NOAA did not provide us with a reconciled estimate.
    In summary, although NOAA has made progress in the GOES-R 
procurement, changes in the GOES-R acquisition strategy could lead to 
cost overruns and schedule delays if not managed effectively. Over the 
last year, NOAA has completed preliminary design studies of its GOES-R 
system and decided to separate the space and ground elements of the 
program into two contracts and have NASA oversee the system integration 
effort. Current program plans call for a two-satellite program--
estimated to cost about $7 billion--with launch of the first satellite 
in December 2014. However, independent studies show that the program's 
cost could increase by about $2 billion and that the first launch could 
be delayed by at least two years.
    NOAA has taken steps to identify and address key risks but more 
could be done to effectively manage risks from a program-wide 
perspective. In particular, the program has multiple risk watch lists 
that are not consistent in areas where there are inter-dependencies and 
key risks have not been elevated for program-wide attention. Also, 
several risks that warrant NOAA's attention have not been placed on any 
watch list. Specifically, the top two leadership positions are only 
temporarily filled; NOAA does not have the ability and means to obtain 
insight into NASA contracts in order to validate contractor performance 
data; and insufficient management reserves to handle unexpected 
problems on a critical instrument and at the program level are likely 
to affect overall program costs when any unexpected problems arise. 
Until NOAA manages and addresses a comprehensive set of program risks, 
the agency's ability to effectively manage the GOES-R acquisition will 
be significantly weakened and could lead to substantial program 
overruns and delays.
    Mr. Chairman, this concludes my statement. I would be happy to 
answer any questions that you or Members of the Subcommittee may have 
at this time.

                     Biography for David A. Powner

Experience

    Twenty years' experience in information technology issues in both 
public and private sectors.

Education

Business Administration, University of Denver

Senior Executive Fellows Program, Harvard University, John F. Kennedy 
        School of Government

    Dave is currently responsible for a large segment of GAO's 
information technology (IT) work, including systems development, IT 
investment management, health IT, and cyber critical infrastructure 
protection reviews.
    In the private sector, Dave has held several executive-level 
positions in the telecommunications industry, including overseeing IT 
and financial internal audits, and software development associated with 
digital subscriber lines (DSL).
    At GAO, Dave has led teams reviewing major IT modernization efforts 
at Cheyenne Mountain Air Force Station, the National Weather Service, 
the Federal Aviation Administration, and the Internal Revenue Service. 
These reviews covered many information technology areas including 
software development maturity, information security, and enterprise 
architecture.

    Chairman Lampson. Thank you, Mr. Powner.
    Ms. Kicza.

STATEMENT OF MS. MARY ELLEN KICZA, ASSISTANT ADMINISTRATOR FOR 
  SATELLITE AND INFORMATION SERVICES, NATIONAL ENVIRONMENTAL 
SATELLITE, DATA, AND INFORMATION SERVICE, NATIONAL OCEANIC AND 
 ATMOSPHERIC ADMINISTRATION (NOAA), U.S. DEPARTMENT OF COMMERCE

    Ms. Kicza. Mr. Chairman and Members of the Subcommittee, I 
am Mary Kicza, Assistant Administrator for the National 
Environmental Satellite, Data, and Information Service within 
the National Oceanic and Atmospheric Administration. Today we 
are here to talk about NOAA's next generation geostationary 
satellite program, GOES-R.
    As you said, GOES spacecraft are critical to hurricane and 
other severe weather forecasting because they are constantly 
taking images and collecting data above the United States. We 
have two geostationary satellites operating in space; one over 
the east coast and one over the west coast. We do maintain a 
spare satellite in orbit in case of any problems with the 
operational satellites. We just launched GOES-N, our current 
on-orbit spare, and we are finishing building two satellites, O 
and P, which will launch, provide data until GOES-R is launched 
in 2014.
    We are in the final design phase of GOES-R. We plan to 
release requests for proposals in early 2008, and to award 
contracts for building the new satellites and ground systems by 
the end of 2008. GOES-R remains on track for a 2014 launch to 
maintain continuity for the GOES-N series.
    My written testimony details significant changes we have 
made to strengthen our management of the GOES-R Program. We 
maintain overall program management responsibility with NOAA 
for GOES-R. NASA manages the flight project, which includes 
building and integrating the instruments and the spacecraft and 
procuring the launch vehicle. NOAA manages the ground system 
project, which includes all ground stations and algorithm 
development.
    These changes place the government in a direct oversight 
role for each of the key elements of the GOES-R Program; the 
spacecraft, the instruments, and the supporting ground systems. 
We have instituted specific matrix and milestones to ensure 
problems are quickly identified and fixed. We continue to have 
outside independent experts look at our program, and we will 
make changes as necessary.
    NOAA continues to value the insight and reviews by GAO, and 
I would like to respond to the recommendations in the recent 
GAO report. As David said, recommendation number one relates to 
assuring that risks highlighted in one area are examined for 
their potential program-wide implications. NOAA agreed with 
this recommendation, and it has already begun to implement a 
consolidated risk list that the GOES-R system program director 
regularly reviews. The NOAA Program Management Council is 
briefed monthly on the top risks and the strategies for 
resolving and closing these risks.
    Recommendation number two directs that NOAA add the 
following risks to the program-wide risk list. These include 
unfilled or temporary GOES-R Program leadership positions, 
insufficient program insight on NASA contract performance, and 
insufficient management reserve on the critical advanced 
baseline imagery instrument, and at the GOES-R Program level.
    NOAA agrees with highlighting the risks associated with 
filling the leadership positions. The GAO in their draft report 
had highlighted three vacancies as being of concern. One has 
been filled. The remaining two are in the final decision 
stages. The status of filling key vacancies is tracked on a 
weekly basis at the staff level and formally reviewed on a 
monthly basis at NOAA's Program Management Council meeting.
    The GOES-R Program is currently being led full-time by Ms. 
Abigail Harper. She is my Deputy Assistant Administrator for 
Systems Acquisitions. Ms. Harper is highly qualified with 
multiple years experience in satellite systems acquisitions and 
in satellite systems safety and mission assurance.
    Meanwhile, NOAA has expedited its search for the GOES-R 
Systems Program Director. I have completed all of the 
interviews of the highly-qualified candidates and will be 
forwarding my selection to Vice Admiral Lautenbacher within the 
week.
    We do not fully understand GAO's concern with respect to 
NOAA's insight into NASA's performance. We do have 
unprecedented insight into NASA contract performance. Our GOES-
R Program is co-located at NASA Goddard with the flight project 
and the ground project. Our program interacts with the projects 
on a daily basis.
    Additionally, we have a comprehensive management control 
plan which clearly outlines roles, responsibilities, 
authorities, and reporting requirements.
    Regarding the recommendation highlighting the reserve 
posture as a risk, NOAA believes there are sufficient reserves 
on the Advanced Baseline Imagery instrument and at the program 
level. When the GAO had reviewed the program earlier this year, 
the program had not yet allocated the management reserves to 
the project level. We were holding it at the program level. 
This may have led to an incorrect interpretation by the GAO as 
to the reserve posture. The program does maintain a budget that 
reflects at least a 25 percent management reserve. Today, the 
GOES-R Program maintains reserve at both the program level and 
the project level, and we believe that these reserves are 
sufficient to manage risks.
    We also have concerns about GAO cost and schedule 
assertions. We have worked hard to reconcile the independent 
estimate with the program estimate. Early in the cost 
estimation efforts the two estimates did diverge in several 
areas due to differing assumptions. As a part of the 
reconciliation process, the program estimate has, in fact, 
increased, and the independent estimate has decreased. The 
estimates are now within 12 percent of each other.
    The independent estimator has indicated that the program 
estimate represents a reasonable cost estimate at this stage of 
the development. The updated cost estimate is, in fact, 
informing our 2009 budget process.
    Additionally, the independent estimator has also indicated 
that the two schedules are essentially in agreement with each 
other within the capability of current modeling, schedule 
estimating models to predict.
    In concluding, I want to take the opportunity to thank Mr. 
Powner for the recommendations offered. We are taking 
appropriate action to respond to the concerns, and I do 
appreciate the Committee's continued interest in NOAA's 
satellite programs. We are strengthening our management of 
these programs. We do have a fully-functioning, operational 
satellite with backup systems in place, and we are pleased to 
be working on the next generation GOES-R.
    At this point I will be happy to answer any questions you 
have.
    [The prepared statement of Ms. Kicza follows:]
                 Prepared Statement of Mary Ellen Kicza

Introduction

    Mr. Chairman and Members of the Subcommittee, I am Mary E. Kicza, 
Assistant Administrator of the National Environmental Satellite, Data, 
and Information Service (NESDIS). NESDIS is part of the National 
Oceanic and Atmospheric Administration (NOAA), within the Department of 
Commerce (DOC). I appreciate the opportunity to discuss with you today 
NOAA's environmental satellite programs and to highlight their 
importance to our hurricane and other severe weather forecasting and 
warning capabilities. NOAA has made significant progress in the 
development of the next generation Geostationary Operational 
Environmental Satellites-R Series (GOES-R) program since the September 
29, 2006 hearing.
    NOAA's satellite acquisitions are complex and difficult development 
efforts. I will be the first to acknowledge that NOAA does not have a 
strong track record with regard to recent satellite acquisition 
development efforts. We appreciate the Government Accountability 
Office's (GAO's) recognition that, in the GOES-R acquisition, 
``progress has been made.'' NOAA is working hard to prevent schedule 
and budget problems from occurring in our satellite programs. We have 
implemented several changes to strengthen the review, cost estimating 
and program control processes within our satellite development programs 
in response to lessons learned from programs including the National 
Polar-orbiting Operational Environmental Satellite Systems (NPOESS) and 
from the recommendations of outside reviewers, such as the GAO.
    We value the GAO's reviews of GOES-R. In fact, GAO's 
recommendations place emphasis on some areas where NOAA is already 
proactively engaged: obtaining an independent cost estimate and 
reconciling differences with the program cost estimates; assuring that 
we are paying proper attention to managing risk; and putting in place 
protocols similar to those used by the National Aeronautics and Space 
Administration (NASA) for milestone decision points for satellite 
acquisition programs. We thank the GAO for its recommendations and look 
forward to its continued review of the program.

What are Geostationary Satellites?

    NOAA has operated geostationary operational environmental 
satellites (GOES) since the 1970s. These satellites are located more 
than 22,000 miles above the equator and provide near continuous images 
and data on atmospheric, oceanic, and climatic conditions over the 
continental United States and Hawaii. These satellites are best known 
for creating the hurricane pictures you see on television, but they 
also provide the data to help forecast the weather and are critical to 
detecting and tracking severe weather. Advances in hurricane prediction 
depend not only on improved observations such as those from satellites, 
but also on improved data assimilation, computer models, and continued 
research to better understand the inner workings of hurricanes.
    We operate two geostationary satellites, one over the east coast 
and the other over the west coast. To protect against a loss of 
satellite coverage, we maintain a spare satellite in space that can be 
repositioned and brought out of storage in a matter of hours to take 
the place of a failed satellite. Given the importance of these 
satellites, continuity of operations remains our highest priority.

What is GOES-R?

    Individual GOES satellites have a letter designation through their 
development until they are launched, placed in orbit, and have 
completed a rigorous checkout procedure. They are then given numeric 
designations for their operational lifetimes. The operational 
satellites in space now, GOES-11 and GOES-12, are the last two 
satellites of the GOES I-M series. The next series of geostationary 
satellites is called GOES-N, and this series consists of the same 
instruments as the GOES I-M series. The first of the GOES-N series 
satellites was launched in May 2006 and is currently serving as the on-
orbit spare. The final two satellites from this series--GOES-O and 
GOES-P--are already built and will be launched over the next several 
years. We are still in the preliminary design phase of development for 
the next generation of GOES satellites, called GOES-R, which will 
ensure uninterrupted satellite data continuity when the GOES-N series 
ends. Current assessments indicate that GOES-R must be launched at the 
end of 2014 to provide continuous geostationary data. The GOES-R series 
will include advancement beyond the GOES-N series, particularly in 
instrument capability. GOES-R will provide forecasters and scientists 
with a new suite of greatly improved instruments. These new instruments 
will enhance our current capability to track and monitor severe weather 
on Earth with greatly improved imagery and scan rates. Solar 
environmental monitoring instruments will provide a significant advance 
for space weather forecasting.
    We have committed, during the preliminary design phase of GOES-R, 
to thoroughly examine the program to confirm its readiness to proceed 
into the acquisition phase. This has involved changing the management 
and acquisition strategy, implementing regular senior NOAA and NASA 
reviews of the program, and subjecting the program to independent 
review and cost estimates. These efforts are yielding valuable results 
by identifying areas that require additional attention and providing 
the appropriate resources to address those areas. We believe we are on 
a sound track going forward.

Status of GOES-R

    During 2006 and 2007, NOAA and NASA conducted a top-to-bottom 
review of the program with input from an Independent Review Team of 
senior satellite acquisition experts, the user community, and reports 
from the three preliminary design contractors. These efforts led to a 
revision of our plans to ensure we have a program that maintains data 
continuity, allows for technical advances, and is affordable. 
Specifically, we had to acknowledge that to actually build our concept 
for GOES-R would be much more expensive than we first thought. As a 
result, we made the decision not to award a contract to build the 
Hyperspectral Environmental Suite given its risk and technological 
challenges. In addition we made a decision in March 2007 to change the 
program management structure to take advantage of the unique 
organizational expertise of NOAA and NASA. NASA has a long history of 
managing successful satellite acquisitions, while NOAA has a long 
history of developing successful ground systems for operational weather 
satellites. This change incorporated important lessons learned from 
other major systems acquisitions projects. Key elements of the new 
management strategy are:

          NOAA has overall program responsibility and total 
        program funding.

          NASA manages development of spacecraft and 
        instruments, and provides launch services.

          NOAA manages development of ground systems and 
        operates the system on orbit.

          NASA leads government systems engineering, 
        integration activity and mission assurance.

          For each of the GOES-R program projects (ground, 
        flight, and integration) NOAA and NASA partner closely, with 
        NOAA staff providing direct support (i.e., as deputy program 
        managers) to NASA-led elements, and vice versa.

    We also changed our acquisition strategy to align with the new 
management strategy by replacing the single, prime contract approach 
with two primary contracts, one for the space segment and one for the 
ground segment. The combination of the new management and acquisition 
strategy will reduce program risk and maximize our potential for 
fielding a high performing satellite system on schedule and within 
budget. To document this management change and other major aspects of 
the program, NOAA and NASA signed a Memorandum of Understanding in June 
2007 and will shortly implement detailed operating procedures 
documented in the GOES-R Management Control Plan (MCP). The MCP, 
patterned after a NASA Program Plan, will implement the current NOAA/
NASA program management practices and guide responsibilities of NOAA 
and NASA for the GOES-R Program.
    NOAA has benefited from the 2005 decision to create a jointly 
staffed NOAA/NASA program office at the Goddard Space Flight Center. 
Prior to 2005, NASA conducted all of GOES acquisition activities for 
NOAA, and NOAA maintained a small liaison staff at the Goddard Space 
Flight Center. Collocation of NOAA and NASA program personnel at the 
Center facilitates communication between the flight and ground 
projects, permits effective joint program systems engineering and 
integration, and encourages a collaborative NOAA/NASA team environment. 
NOAA and NASA personnel work side-by-side. The overall GOES-R program 
management team has access to the satellite acquisition expertise and 
experience in place at Goddard Space Flight Center, including 
engineering and program management reviews of GOES-R.

Status of Spacecraft and Ground System Acquisition

    To prepare for the 2008 spacecraft source selection, a joint NOAA/
NASA team is reviewing industry responses to a draft Request for 
Proposals (RFP) received in mid-September. The spacecraft project has 
successfully concluded the review which allows the Request for 
Proposals to go forward. We are now in the process of finalizing the 
RFP. At present, four instruments are currently in the implementation 
phase, one (the geostationary lightning mapper) is nearing 
implementation and the sixth (the magnetometer) will be procured as 
part of the spacecraft acquisition. Instruments will be delivered to 
the spacecraft contractor as government-furnished equipment for 
integration on the spacecraft. Appendix 1 provides a list of the 
instruments and their status.
    The ground project is nearing completion of the reviews necessary 
to allow the project to go out for proposal. We anticipate a draft RFP 
for the ground segment will be released in January 2008. NOAA and NASA 
are working towards releasing the final spacecraft and ground RFPs in 
early 2008. NASA and NOAA will release the final spacecraft and ground 
RFPs following appropriate NASA and NOAA/DOC reviews and approvals.
    Since the GAO issued its report in September 2006, the Independent 
Review Team has met twice to provide recommendations to NOAA concerning 
program readiness for the acquisition phase. The GAO's most recent 
report indicates that, while NOAA and NASA are taking the right steps 
to put together a sound GOES-R Program, there is still work to be done 
before proceeding into the acquisition phase, especially in the ground 
system. Identifying and addressing issues before the acquisition phase 
begins is a key lesson learned from the NPOESS program. Once we begin 
the acquisition phase and the contracts are in place, the workforce 
engaged in implementing the program ramps up sharply. Fixing problems 
during the acquisition phase is more costly given the larger workforce 
involved. That is why it is so important to take the time to identify 
and address the problems during the program definition phase. We want 
to enter the acquisition phase with a program that will succeed with 
all risks appropriately identified and tracked.

Status of the Cost Estimate

    NOAA has hired outside experts to develop the program cost 
estimates. This cost estimating team works for the GOES-R program 
office and is developing the Program Office Estimate. In addition, we 
have hired an independent team to examine the Program Office Estimate. 
This independent team works for the NOAA Chief Financial Officer and 
has provided an Independent Cost Estimate. The Independent Cost 
Estimate group and the GOES-R Program are actively working to clarify 
assumptions and understand the differences in the cost estimates 
developed through their review.

The GAO Report

    GAO has provided regular reviews of our GOES-R Series acquisition 
for many years and we appreciate the perspective that the GAO 
professionals provide. We have met with GAO and provided information 
and feedback on its most recent report. I will summarize this 
information for you today.
    I am pleased that the GAO report recognizes we have taken steps to 
apply the lessons learned from other satellite programs to the 
procurement of GOES-R. I understand we have more work to do to improve 
the overall management of these complex and high risk programs, and the 
joint NOAA/NASA team is fully committed to making further improvements.
    Specifically, the GAO provided two recommendations related to 
program-wide risk:

21Recommendation number one: Ensure that the GOES-R Program Office 
manages, mitigates and reports on risks using a program-level risk list 
that is reconciled with and includes risks from both flight and 
operations project offices that could impact the overall program.

    NOAA agrees with the recommendation and has directed the GOES-R 
Program Office to maintain a consolidated program-wide risk list and 
use this list in internal and external reviews of the program. The 
GOES-R risk management process includes regular review of project risks 
by the program and selective elevation of project risks at the program 
level for mitigation and management. The System Engineering and 
Integration Division of the GOES-R Program is responsible for 
maintaining the program risk list which is reviewed at least monthly by 
the GOES-R System Program Director. The GOES-R System Program Director 
briefs the NOAA Program Management Council monthly on the top risks and 
the strategies for resolving and closing them.

Recommendation number two: Include the following risks on the program-
wide risk list, develop plans to mitigate them and report to senior 
executives on progress in mitigating them:

        -  Unfilled or temporary GOES-R program leadership positions,

        -  Insufficient program insight on NASA contract performance, 
        and

        -  Insufficient management reserve on the critical Advanced 
        Baseline Imager instrument and at the GOES-R program level.

    NOAA agrees with the need to track the leadership positions and has 
a structured process in place to do so. The status of the filling these 
vacancies is reviewed at the monthly Program Management Council 
meetings. On an acting basis, the GOES-R program is being led by two 
highly qualified individuals with multiple years experience in 
satellite and major systems acquisitions. NOAA has requested that the 
NOAA Workforce Management Office expedite a nationwide advertisement 
and search for a permanent GOES-R System Program Director.
    NOAA realizes that to have the necessary insight into NASA contract 
performance it is not simply sufficient to have co-located and 
intermingled staff. That is why NOAA and NASA are drafting a 
comprehensive Management Control Plan that will establish the framework 
for Program and Project performance. NOAA will assure that the 
finalized Plan provides NOAA a sufficient degree of insight and 
guidance to meet NOAA's responsibility for mission success.
    Finally, NOAA does not agree with the assertion that there are 
insufficient reserves on the Advanced Baseline Imager instrument and at 
the GOES-R program level. It is important to note that the funding 
level used by GAO as the baseline for this evaluation is not the same 
amount that NOAA actually budgeted for this instrument. NOAA budgeted 
more funding than the contract amount, and withheld the difference as a 
management reserve at the GOES-R program level, rather than in the 
specific instrument budgets. While at the time of the GAO review in 
March through August, the GOES-R Program had not allocated this 
management reserve to the projects, the reserve funding has now been 
allocated and is sufficient to manage the anticipated program risk. The 
GOES-R Program currently maintains reserves at the Program level and at 
the Flight and Ground Project levels. The System Program Director holds 
the project managers responsible for managing their projects and 
reserves. The current level of management reserve for the Advanced 
Baseline Imager at the program and project levels are sufficient.
    While not a recommendation, GAO has asserted the following in the 
body of the report: ``. . . independent estimates are higher than the 
program's current cost estimate and convey a low level of confidence in 
the program's schedule. Independent studies show that the estimated 
program could cost about $2 billion more, and the first satellite 
launch could be delayed by two years.''
    NOAA strongly disagrees with this statement and is currently 
working with the program and independent cost estimators to resolve the 
differences. It is critical that this assertion be put into its proper 
context. Early in the cost estimation effort, the program office and 
independent estimates were divergent in several areas due to differing 
assumptions, which is not uncommon for programs of the magnitude of 
GOES-R. Accurate comparison of the two cost estimates requires an 
assessment of each estimate's ground rules and assumptions. Resolution 
of issues related to instrument design complexity, software scope, and 
inflation factors can have huge effects on revised estimates. As work 
with the independent estimator has progressed, we have resolved 
numerous differences in ground rules and assumptions and have seen the 
two cost estimates begin to converge. We expect to achieve even closer 
convergence as we continue to resolve the remaining differences in 
assumptions.
    As with the two cost estimates, the reconciliation efforts 
associated with the schedule estimates have identified some key 
assumption differences that should result in some convergence in the 
schedule estimates. However, it should be noted that the two schedules 
essentially agree with each other (within the capability of current 
schedule estimating models to predict).

Conclusion

    I appreciate the Committee's continued interest in NOAA's satellite 
programs. It is widely acknowledged that satellites are very 
complicated and difficult systems to design, build, and operate. 
However, their capabilities play a role in NOAA's mission to observe 
and predict the Earth's environment and to provide critical information 
used in protecting life and property.
    We are making significant strides in developing a better process 
for designing and acquiring our satellites. We have fully functioning 
operational satellites with backup systems in place, and we are working 
on the next generation that will provide significant improvements in 
our ability to forecast the weather. I would be happy to answer any 
questions you may have.

Appendix 1

                        GOES-R Instrument Status

  Advanced Baseline Imager (ABI)

        -  Implementation phase

        -  Contractor: ITT Corporation, Fort Wayne, IN

  Space Environmental In-Situ Suite (SEISS)

        -  Implementation phase

        -  Contractor: Assurance Technology Corporation, Carlisle, MA

  Extreme Ultra Violet/X-Ray Irradiance Sensor (EXIS)

        -  Implementation phase

        -  Contractor: Laboratory for Atmospheric and Space Physics, 
        Boulder, CO

  Solar Ultra Violet Imager (SUVI)

        -  Implementation phase

        -  Contractor: Lockheed-Martin Advanced Technology Corp, Palo 
        Alto, CA

  Magnetometer

        -  To be procured as part of spacecraft contract

  Geostationary Lightning Mapper (GLM)

        -  Contract to be awarded Fall 2007

                     Biography for Mary Ellen Kicza
    Mary Ellen Kicza is the Assistant Administrator for Satellite and 
Information Services. Before coming to NOAA, Ms. Kicza served as the 
Associate Deputy Administrator for Systems Integration at NASA. As a 
senior leader within NASA, she was responsible for assuring that 
mission and mission support elements were effectively aligned and 
integrated to execute NASA's vision and mission.
    Over the course of her career, Ms. Kicza has served with 
distinction in a variety of technical, managerial and leadership posts 
in which she has been involved in the development, launch and support 
of satellite systems as well as multi-faceted research and development 
programs. In these roles, she has acquired extensive experience, not 
only in executing scientific and engineering programs but also in 
strategic planning, budget formulation, and workforce and facilities 
planning. In addition, she has significant experience in building and 
maintaining effective relationships with the Office of Management and 
Budget, the Office of Science and Technology Policy, the Defense 
Department, Congress, the aerospace industry and a diverse research 
community.
    Ms. Kicza's accomplishments have won her two SES Meritorious 
Service Awards, NASA's Distinguished Service and Scientific Achievement 
Medals, and numerous other awards. Ms. Kicza began her career as an 
engineer at McClellan Air Force Base in California, developing and 
testing software for Air Force satellite communications systems. In 
1982, Ms. Kicza joined NASA's Kennedy Space Center where she served as 
a lead engineer, participating in the preparation of Atlas Centaur and 
Shuttle Centaur launch vehicles in support of NASA, DOD and NOAA 
satellites.
    Since that time, Ms. Kicza has served as a program manager, as 
Deputy Director of the Solar System Exploration Division, Assistant 
Associate Administrator for Space Science, Associate Center Director 
for Goddard Space Flight Center, and Associate Administrator for 
Biological/Physical Research. In these roles, Ms. Kicza led and managed 
large, complex ground-based and space flight programs, many of which 
are international in scope, in support of U.S. space and earth science 
programs. As the Associate Center Director at Goddard, she managed a 
diverse scientific and engineering community of approximately 3,100 
civil servants and 6,000 contractors. Ms. Kicza received her Bachelor's 
Degree in Electrical and Electronics Engineering from California State 
University, and a Master's Degree in Business Administration from the 
Florida Institute of Technology.

                               Discussion

    Chairman Lampson. Thank you very much, Ms. Kicza. We have a 
vote. I don't know why we have that goofy alarm. Somebody made 
the decision they liked it, I guess.
    We are going to continue to go forward and see how far we 
can get through this. So let me begin with Mr. Powner.

                           GOES Program Costs

    NOAA uses an 80 percent confidence level in its cost 
estimating. My understanding is that leaves a 20 percent chance 
that the quoted cost will be exceeded. So the cost numbers 
reported for GOES represents floors, not ceilings. Right?
    Mr. Powner. Correct. Well, there is a chance that, at an 80 
percent confidence level, there is a 20 percent chance it 
actually could go up or down is really what it says. So it is 
always going up, so correct.
    Chairman Lampson. Does the estimate give a limit to the 
possible program costs?
    Mr. Powner. It does not give a limit. No.
    Chairman Lampson. Ms. Kicza, according to the comments NOAA 
submitted to GAO, the most conservative estimates at the 80 
percent confidence intervals bring the program office estimate 
within 12 percent of the Independent Cost Estimate (ICE) or 
$1.032 billion below the ICE. The ICE is $9.3 billion. This 
implies that the program office estimate is now $8.3 billion. 
This is a billion dollars above NOAA's estimate at last year's 
hearing.
    Can I assume that this will be the cost estimate reported 
in the President's budget estimate in February?
    Ms. Kicza. No, sir. I am not sure how you are working your 
math, but right now our current program office estimate is 
between $7-$8 billion, and that is within the 12 percent of the 
current independent estimate. I believe the independent cost 
estimate numbers came down from what you may have earlier 
quoted.
    Chairman Lampson. Where will we find that additional--last 
year it was seven, and it is going to be----
    Ms. Kicza. We are at $6.9 billion with President's FY 2008, 
budget, and as we had indicated last year we still had to go 
through the Independent Cost Estimate and reconcile. And that 
is, in fact, the process we are going through.
    Chairman Lampson. Okay. So that number is going to be a 
higher number. Will that----
    Ms. Kicza. The number that we are dealing with now is the 
current program office estimate, is higher than the $6.9 
billion. It is between $7-$8 billion, and it is part of our FY 
2009 discussions.
    Chairman Lampson. And that will be in the President's 
budget in February?
    Ms. Kicza. Yes, sir.
    Chairman Lampson. Will NOAA be getting the additional money 
to cover that?
    Ms. Kicza. As I have indicated, we are in dialogue with the 
Administration on what we believe is an appropriate budget for 
the GOES-R Program. I think we have good rationale for 
indicating the need for the additional budget. We are budgeting 
at the 80 percent cost confidence level, and we think that is a 
reasonable approach to take at this stage of the program.
    Chairman Lampson. Mr. Powner, in your experience, which of 
the cost estimates is the most believable and why?
    Mr. Powner. Well, if you look at it from a historical 
perspective and just to clarify this, there is, right now at 
$6.9 billion and the independent cost estimate was at $9.3 
billion. And that is in our report, and you can see allegations 
that NOAA disagrees with that statement. All we were reporting 
was what the independent cost estimators came up with.
    Now, clearly, there is this reconciliation that is going on 
right now. No one has seen that. Okay. So we hear it is between 
$7-$8 billion. We haven't seen that. Historically if you look 
at NPOESS and these other satellite acquisitions, the 
independent cost estimate becomes a reality or typically it is 
exceeded. So hopefully, we are hopeful that NOAA is right, and 
we are at a lower cost, but if you look historically, we are in 
the ballpark of the $9.3 billion with the independent cost 
estimator.
    Chairman Lampson. Do you want to comment?
    Ms. Kicza. Yeah. As I had said earlier, I think we all 
agree that we should be budgeting at the 80 percent cost 
confidence level. That is the right thing to do at this space 
in the game, and we particularly want to get a sound cost 
estimate before we get the major contractors on board. We have 
an 80 percent cost estimate at the program office level. The 
independent cost estimator had an 80 percent cost estimate. The 
reconciliation process is an approach of understanding the 
differences between the two cost estimates, seeing where they 
converge, and then coming forward with what we believe is a 
rational cost estimate to be presenting in the President's 
fiscal year 2009 budget.
    We won't exactly reconcile, but for every area that we 
don't specifically reconcile on, we will have a good reason for 
why we believe our number is the better number.
    Chairman Lampson. Mr. Powner, how should Congress react 
when it receives these differing cost estimates? How do we 
assure that the cost estimating process give us an accurate 
estimate of a likely program cost and not an estimate trying to 
stay within a figure likely to be approved by the OMB?
    Mr. Powner. Well, I think the key is to look at where the 
differences lie and whether the assumptions and rationale on 
those differences makes sense from an oversight perspective. 
Clearly, we don't know exactly where those are at the moment, 
but if you look at like independent cost estimators, whether it 
is GOES or NPOESS, they typically look at historical data. It 
is more heavily influenced by historical data. There is a lot 
of other information internal to the program that only Ms. 
Kicza and her staff has right now that are driving these 
decisions, and I think from an oversight perspective, whether 
it is yourself or GAO helping you with that, we really need to 
look at those assumptions and whether they are reasonable.
    Chairman Lampson. Thanks. Mr. Inglis.
    Mr. Inglis. Ms. Kicza, I guess it is, if I am understanding 
this right, you think that the independent estimate is $7-$8 
billion. Right?
    Ms. Kicza. A program office estimate is between $7-8 
billion, and it represents what the program believes is a sound 
80 percent cost confidence estimate.
    Mr. Inglis. And the independent estimate is?
    Ms. Kicza. The independent estimate will be a little bit 
higher than that, and those areas where there are differences 
we will explain the differences and the rationale for why we 
believe the estimate that we are coming forward with is a 
correct estimate.
    I would like to take the opportunity to also say that we 
are not trying to bring in an estimate that the Administration 
will accept. We are bringing in an estimate that we believe is 
a sound estimate to execute the program successfully.
    Mr. Inglis. And when will, what is the process by which you 
are going to explain those differences? When will that be and 
or can you tell us now what the differences are?
    Ms. Kicza. I can tell you where the key areas of difference 
are. Yes. It is in the amount of maturity of the software, so 
you will see some deltas in the software development area. You 
will see some deltas in the area of instrument development and 
some deltas in the area of systems engineering. In all cases 
the program estimate increased its estimate, and I believe we 
have a sound basis for the numbers that we have identified in 
our estimate.
    Mr. Inglis. And when is that, when do you intend to make 
those explanations available with specificity?
    Ms. Kicza. We can make them available as part of the '09, 
budget process, and we are also having that independently 
looked at by our independent review team.
    Mr. Inglis. Which, I guess, is driving some of the 
Chairman's questions about, it sounds like it is connected to 
the budget process.
    Ms. Kicza. Yes, it is. Absolutely.
    Mr. Inglis. But then that you, I guess that brings up the 
possibility of being fit into the budget process I think is 
the, is at least the theory that the Chairman is pursuing.
    And it is not really reflecting what is happening in the 
program. It reflects rather that the budget exigencies rather 
than the program's natural expenses.
    Ms. Kicza. At this point what we have delivered as a budget 
that we believe is a rational budget at the 80 percent cost 
confidence level, and I have no indication that it would be 
anything other than that.

                         GOES Completion Dates

    Mr. Inglis. How about the time estimate differences? The 
time to completion. What is, the delivery dates. When, what is 
with the discrepancy there? You are thinking that it is going 
to be operational when?
    Ms. Kicza. We plan to have it available for launch for the 
December 2014 timeframe. We have had that looked at both 
internal and external of the program. I think it is a rational 
launch date to proceed to with sufficient schedule reserve.
    What the independent estimator has indicated is that within 
the ability of the current models to predict, the two estimates 
are essentially the same.
    Mr. Inglis. So the independent analysis agrees----
    Ms. Kicza. Right.
    Mr. Inglis.--with your analysis, 2014?
    Ms. Kicza. Within the ability of models to predict. So they 
are saying it could be as much as a year later than what we 
are, but the models are not, they don't have a high enough 
fidelity to be able to discern between those two dates.
    Mr. Inglis. So you are saying 2014. They may be saying 
2015.
    Ms. Kicza. Yes, sir.
    Mr. Inglis. I wonder where I get the 2017 number. Do you 
have any idea?
    Ms. Kicza. It was an earlier point in the independent 
process. So through the reconciliation process we have reduced 
that delta.
    Mr. Powner. Can I clarify that?
    Mr. Inglis. Yeah.
    Mr. Powner. 2014, $6.9 billion, 2014, was the current 
estimate. The independent assessors came up with the $9.3 
billion cost and then about a two-year delay into the 2017 
timeframe. So when we heard back from NOAA on our report, what 
they told us that they anticipated instead of a $2 billion 
overrun and a two-year delay, a $1 billion overrun and a one-
year delay. Now, today we are hearing a 2014, delivery. So we 
are a little confused because the one time we were $2 billion 
more and two out, and then they replied back one billion more 
and only one out instead of two. And today I am hearing 2014. 
So we probably need to get that cleared up.
    But what we have was an original estimate of 2014, in the 
independent assessment and the rest of this is just kind of in 
the fog, Ranking Member Inglis, because we don't see any data 
on that.
    Ms. Kicza. What I will clarify is what we provided back is 
where the independent estimate is coming in versus what I have 
been talking about as the program estimate. The independent 
estimate went from $9.2 billion and two years down within, to a 
one-year beyond where we are estimating. Similarly, both in 
cost and schedule, the independent estimate through the 
reconciliation process has come down, and from our perspective 
the program office estimate in terms of cost has increased in 
part of the reconciliation process.
    Mr. Inglis. Thank you, Mr. Chairman.
    Chairman Lampson. Okay. We have only a couple minutes left 
before our vote. We will have to be in recess until we make 
those votes. There are three, one 15-minute, which is almost 
over, and two fives, so we will be coming back, and we are in 
recess.
    [Recess.]
    Ms. Giffords. [Presiding] Good afternoon. I don't look like 
Nick Lampson, but I am Gabrielle Giffords, and this meeting is 
officially resumed.

                           GOES-R Procurement

    Just following up on the Congressman's questions, this 
question is for Ms. Kicza. Has NOAA yet made a final decision 
to purchase the GOES-R?
    Ms. Kicza. I think it is very important to remember that we 
are still in the formulation phase for GOES-R. This is the time 
when we are trying to settle on the cost, the scope, and the 
schedule. We have not yet made the decision to go out and 
procure those major contracts for ground and space segments. We 
are approaching that decision now.

    Investing in New Satellites Technologies vs. Reopening Existing 
                               Satellites

    Ms. Giffords. Okay. And a pretty basic question. With what 
we know now is it better to invest the limited resources for 
geostationary weather satellites by reopening the line of 
existing satellites, expensive though it may be, or to continue 
with the developing of the new technologies with GOES-R with 
the threat of the constantly rising costs that could possibly 
leave us without those improved capabilities?
    Ms. Kicza. That is a really good question, and in fact, 
when we were going through our series of options that we were 
examining last summer as a part of this effort, we looked at 
whether or not it would be cost effective to look at simply 
duplicating the GOES-N series, which is the current line. And 
what we found is that because of the mission design life for 
that series, you would have to buy three spacecraft, where with 
GOES-R you have to buy two. You would not have the capability, 
but it would be a comparable cost. And it would still require 
the same approach. You would still have to go out with a new 
procurement.
    So we didn't see any schedule benefit, no cost benefit, and 
we would lose the cost we had already sunk into the development 
for GOES-R.

                     Managing GOES and NPOESS Costs

    Ms. Giffords. There is also reality that NOAA is already 
struggling with a second highly-complex satellite program, the 
NPOESS, and the level of resources does not appear to be able 
to meet the real needs of both programs simultaneously. What, 
therefore, is the best course of action to pursue, assuming 
that there is no sudden influx of or increase of funds for 
NOAA?
    Ms. Kicza. Well, right now the NPOESS Program, the Polar 
Orbiting Satellite Series, is a joint program with NOAA and 
DOD. We each share half of the costs of that development, and 
it is fully funded at this point in time. The only area where 
we are working for an updated cost estimate is on GOES-R.
    Both satellite series are needed to support our operational 
weather forecasting capability.
    Ms. Giffords. Let me just get the clarification. So you 
believe that you can accomplish both with the funds that you 
currently have available to you?
    Ms. Kicza. We are increasing the cost estimate for GOES-R, 
and the NPOESS Program is currently fully funded.
    Ms. Giffords. And how much is that increase going to be 
for?
    Ms. Kicza. We have indicated that it is, right now we are 
at $6.9 billion. The increase is between, to bring it up 
between $7-$8 billion.

                          GAO Recommendations

    Ms. Giffords. Mr. Powner, with all the work that you have 
been asked to do in your area, what would you offer some 
recommendations to deal with this conundrum?
    Mr. Powner. A couple key areas that I would like to 
highlight in terms of perhaps where we have had some 
disagreements is on the management reserve. It is early stage 
of this program. I think if you look at the independent review 
team recommendations on GOES, the recommendation is that we 
have a 25 percent management reserve. That was the target.
    When we completed our report, the management reserve had 
decreased for the program now, overall, down to 15 percent. We 
heard today it is now back up to 15 with the renegotiating of 
numbers. It is important that we maintain an adequate 
management reserve, because there is a lot of technical 
complexity involved here, and that really needs to be looked 
at.
    The other thing that we feel strongly about, and we have 
had some disagreements, Ms. Kicza and I have discussed this, is 
the insights into NASA's activities. Historically, that has 
been a problem on these prior GOES satellite acquisitions. We 
have heard this morning, this afternoon that there is 
unparalleled transparency in the two agencies that are working 
together.
    Well, but also when I read Ms. Kicza's statement, I see 
comments in here that there are frameworks being established so 
that we can have the appropriate insight and guidance. We still 
need to work on that and make, keep that on our radar screen to 
make sure we have adequate insights into NASA's activities.
    Ms. Giffords. Mr. Powner, would you recommend more Q GOES 
satellites or go forward with the GOES-R?
    Mr. Powner. That is a very good question. Two things. We 
would need to see two things in order to answer that question. 
One, we would want to know exactly what the cost of GOES-R is 
to be. We hear it is between $7-$8 billion. We hear that an 
independent cost estimator says it could be as high as $9.3 
billion. Historically those independent estimates have come 
true. Resurrecting the prior Q satellite, you know, we hear 
that you have to, we understand you have to start assembly 
lines and the whole bit, but exactly what that would cost, we 
don't have any firm numbers. So you would need that cost, the 
actual cost of GOES-R, and have a true cost benefit analysis to 
determine what is best going forward.
    Ms. Giffords. And when do you think we are going to have 
those numbers by?
    Mr. Powner. Well, what we have heard this afternoon is we 
will not have a current GOES-R estimate until the President's 
budget comes out in the February timeframe. In terms of 
resurrecting the Q option, I don't believe that that is in the 
works right now.
    Ms. Giffords. Congressman Inglis, I am going to turn the 
questions over to you.

                       GOES Acquisition Strategy

    Mr. Inglis. Thank you, Madam Chair. Let us see. Ms. Kicza, 
in your testimony and the testimony of Mr. Powner, you 
mentioned the splitting of the acquisition contract into a 
flight segment and a ground segment. And what was the rationale 
behind splitting the two aspects of the acquisition and 
contract?
    Ms. Kicza. Okay. Over the course of the last year we have 
done a lot of examination, examination of the current 
contracting structures resident with NOAA, examination of 
recent reports, both IG and GAO about the pros and cons of 
different contracting strategies, and we had our own 
independent review team led by Tom Young, who offered 
recommendations. We made the decision to go from a single 
systems prime to split contracts to assure that we had 
government oversight on every key element of the GOES-R System; 
the spacecraft the ground systems, and the instruments.
    We believe, and that is also very consistent with the way 
our primary partner, NASA Goddard, has traditionally done this 
type of acquisition. So the acquisition allows us to benefit 
from each agencies' core competencies. It is consistent with 
our partner's traditional use, and it provides direct 
government oversight on all the key elements.
    All of those we felt were reasonable reasons to proceed 
with a change in the contracting and management strategy.
    Mr. Inglis. And GAO says the splitting of the contracts 
caused delays in the program. Do you find that to be the case?
    Ms. Kicza. We did have some delay as a result, about three 
to six months in terms of extending the current PDRR\1\ 
contract so we could get additional information, and then 
revving up our own capability internally.
---------------------------------------------------------------------------
    \1\ Program Definition and Risk Reduction
---------------------------------------------------------------------------
    So, yes, we did have some delay as a result of that. We 
also uncovered some things that I think we would not have 
otherwise seen and have been able to take action in preparing 
for the major acquisitions.
    Mr. Inglis. Mr. Powner, you have any comment on those 
things?
    Mr. Powner. The only comment is that the short delay 
extending the awarding of those contracts, that probably makes 
sense because those preliminary design reviews and those 
meetings for those key decision points are very critical going 
forward. I think historically when you look at NPOESS a lot of 
times we push decisions through rather quickly instead of 
actually having a real solid design review in the critical 
technical reviews prior. So that delay makes sense.
    Mr. Inglis. Ms. Kicza, Ms. Giffords was just mentioning the 
Q line and the possibility of resurrection, resurrecting that 
line. Is that current technology, or is it outdated technology?
    Ms. Kicza. Let me talk a little bit about that. The 
original series N, O, and P was an N, O, P, Q. We had planned 
for four satellites. In 2003, we made the decision not to 
exercise that option on that procurement and for good reasons. 
We ended up getting a more powerful launch vehicle that allowed 
us to extend the lifetime of the N, O, P spacecraft. That 
option is no longer available to us. We would have to go out 
with a separate procurement. So we would have to go out and 
procure new spacecraft. The instruments aren't there. We would 
have to go build new instruments again, and so we didn't find, 
and we would have to build three spacecraft as opposed to two 
spacecraft, which is what we have got with the 10-year mission 
life on GOES-R.
    We went through that analysis last year as part of the 
decision to go from four to two. We did a wide number of 
options on where we should go and the continuity of the N 
Series was one of the options that we examined.

                         Contractor Performance

    Mr. Inglis. Thank you. I have no further questions.
    Ms. Giffords. Mr. Powner, your report seems to state that 
NOAA can't discuss both the cost and also the schedule data 
directly with contractors on the space segment. Why do you 
think that the GAO considers that such a significant issue?
    Mr. Powner. Well, I think there are processes that are 
currently being established right now so that NOAA does have 
insights into the, what is going on from the NASA component of 
this. That is very important. If you look, for instance, if you 
look, if you compare this to the NPOESS Program where we have 
joint program with NOAA and DOD and the scrubbing of some of 
the cost and schedule data from the contractors, that has 
proven a very effective best practice, even down to the point 
where they scrub that data on a weekly basis, and they get 
ahead of the curve and anticipate problems with both costs and 
schedule.
    Something like that would be a good model to consider with 
the GOES Program.
    Ms. Giffords. Ms. Kicza, did the management documents that 
you described in your testimony give NOAA, the managers, the 
authority to obtain any data they believe is needed to manage 
the GOES-R Program?
    Ms. Kicza. Yes. In fact, the way the program is structured, 
the program office manages the cost data that comes in, and we 
matrix that support into the project. So we have complete 
insight into what is going on with the contracts, who they are 
performing in terms of cost and schedule.
    I agree with David that we really need to keep a close eye 
and a firm handle on insight into how the contractors are 
performing. I believe we have that at his point in time. We 
were talking about it before we started the hearing. We have to 
make sure that we keep our eyes on it. We don't let the, you 
know, let it get out of our sight, because then it should 
become a risk. Right now I personally don't believe it is a 
risk because we do have eyes on it.
    And so that was my rationale for not agreeing. It is not to 
say it is not important to keep a good close eye on how the 
contractors are performing, whether that be on the space 
segment side, which is NASA's, or on the ground segment side, 
which is NOAA's.
    Ms. Giffords. One final question. The disagreement in your 
statements considering management of program reserves, to me 
focuses on how the reserves are distributed, but isn't it 
really a question of whether there will be sufficient reserves 
to carry the program to its conclusion?
    Ms. Kicza, you said that it will, but Mr. Powner says that 
the Advanced Baseline Imager already made a hefty call in 
reserves and still has 40 percent of its work remaining. Should 
this committee be concerned that you will run out of reserves 
as happened with the NPOESS Program?
    Ms. Kicza. As I had indicated in my testimony, right now we 
are developing an estimate or have an estimate which keeps 25 
percent management reserve overall on the program. In fact, 
more than that. We have, at the time that Mr. Powner's team was 
looking at it, they did not see that reserve posture because we 
had not allocated it down to the project. So they saw a small 
amount of reserve on the instrument contract. They saw no 
reserve at the project level.
    Since that time we have allocated reserve. We have 25 
percent on the flight project, 30 percent on the ground 
project. We require the flight project manager to maintain a 
minimum of 20 percent unliened reserve on cost to go, and we 
actually visually check that on a monthly basis at my level. I 
can see where his liens are and whether or not he is keeping 
that threshold that we think is best business practices.
    Ms. Giffords. But is the total reserve left to carry 
through, it is going to be left to carry through to the next 
program?
    Ms. Kicza. No. It is not going to carry through. The reason 
you put reserve on the programs is you expect you will spend it 
by the time you launch. But you always want to have it there 
because you, when you need it, you need to have ready access.
    Ms. Giffords. Okay. But it is going to get us to the launch 
then?
    Ms. Kicza. Yes, absolutely, and beyond. We have reserve 
posture for the operational, operation of those satellites as 
well.
    Ms. Giffords. Okay. Let me just follow up with one last 
question. Does the contractor for the Advanced Baseline Imager 
have any of its own money set aside to reserves?
    Ms. Kicza. The contractor does keep a small reserve, but 
traditionally with the way NASA manages contracts, they tend to 
keep very little reserve in the contract, and they hold it at 
the project level, and then they control the allocation back to 
the contract when it is time to do so.
    Ms. Giffords. Do we know how much of that reserve exists?
    Ms. Kicza. As I said, right now they are at 25 percent, and 
they are expected to keep 20 percent unliened on cost to go, 
and that is being maintained.

                      Recent Congressional Actions

    Mr. Inglis. I have just one more question, Madam Chair, and 
that is, Ms. Kicza, the Senate included language in the CJS 
appropriations bill that would require a Nunn-McCurdy type 
review for NOAA in the event of cost overruns, and the House 
passed similar language in the last Congress, but there is some 
differences between those provisions. And maybe you could tell 
us how those provisions would affect NOAA's ability to manage 
programs like GOES.
    Ms. Kicza. Yes, and actually I appreciate the question. 
First of all, I want to indicate that I appreciate that type of 
Congressional oversight, and I think it is entirely appropriate 
for Congress to hold us accountable to deliver spacecraft on 
cost, on schedule, and within program scope.
    As you noted, the Senate has an amendment out, the House 
has recently passed an amendment relative to NASA. I would like 
to indicate that the Senate amendment does pose some 
difficulties for us.
    First of all, it would propose baselining the program at 
last year's cost estimate. Typically in spacecraft acquisition 
you baseline a program in terms of performance measurements and 
measuring against baseline at the time of PDR.\2\ We are not 
there yet. We are about a year and a half away from that.
---------------------------------------------------------------------------
    \2\ Preliminary Design Review
---------------------------------------------------------------------------
    I fully expect to be baselined and measured against 
baseline. We need to make sure it is the right baseline to be 
measured against.
    The Senate amendment also has a prohibition on spending 
current and prior year funds until the certification process is 
completed. And so they would basically turn off the fund faucet 
while we are certifying, in the event we say we are going to 
have a cost overrun. That would basically halt the program in 
its tracks and prevent us from being able to launch. We are 
concerned about that.
    We have looked at the NASA language. We find that language 
to be more consistent with what we would expect in a satellite 
acquisition system, and as I said, from the get go, we expect 
to be held accountable for delivering a program.
    Mr. Inglis. No further questions.
    Ms. Giffords. Ms. Kicza, would you please submit for the 
record the following documents? The June 15 memorandum of 
understanding between NOAA and NASA for the GOES-R Program, 
also the GOES-R management control plan, and the report 
submitted from the Independent Review Team to NOAA, except the 
January 3, 2007, report that has already been provided?\3\
---------------------------------------------------------------------------
    \3\ These documents appear in the Appendix.
---------------------------------------------------------------------------
    Ms. Kicza. Absolutely.
    Ms. Giffords. In closing, the Subcommittee would like to 
wish fair weather to Captain Garner Yates, who is with us 
today, of the NOAA Commissioned Corps, who is retiring from 
federal service this Friday. Captain Yates has served as NOAA's 
Congressional liaison for satellite issues for a very long 
time, and we know that this has not been an easy job in the 
past few years, but our staff is going to miss you. And we 
thank you for your service to the Federal Government.
    I would also like to thank all of you for appearing before 
the Subcommittee this afternoon. Under the rules of the 
Committee, the record will be held open for two weeks for 
Members to submit additional statements and any additional 
questions they might have for witnesses. If there is no further 
questions, then this meeting is adjourned. Thank you.
    Ms. Kicza. Thank you.
    [Whereupon, at 3:30 p.m., the Subcommittee was adjourned.]
                               Appendix:

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