Geostationary Operational Environmental Satellites: Additional	 
Action Needed to Incorporate Lessons Learned from Other Satellite
Programs (29-SEP-06, GAO-06-1129T).				 
                                                                 
The National Oceanic and Atmospheric Administration (NOAA) plans 
to procure the next generation of geostationary operational	 
environmental satellites, called the Geostationary Operational	 
Environmental Satellites-R series (GOES-R). This new series is	 
considered critical to the United States' ability to maintain the
continuity of data required for weather forecasting through the  
year 2028. GAO was asked to summarize and update its report	 
previously issued to the Subcommittee on Environment, Technology,
and Standards--Geostationary Operational Environmental		 
Satellites: Steps Remain in Incorporating Lessons Learned from	 
Other Satellite Programs, GAO-06-993 (Washington, D.C.: Sept. 6, 
2006). This report (1) determines the status of and plans for the
GOES-R series procurement, and (2) identifies and evaluates the  
actions that the program management team is taking to ensure that
past problems experienced in procuring other satellite programs  
are not repeated.						 
-------------------------Indexing Terms------------------------- 
REPORTNUM:   GAO-06-1129T					        
    ACCNO:   A61605						        
  TITLE:     Geostationary Operational Environmental Satellites:      
Additional Action Needed to Incorporate Lessons Learned from	 
Other Satellite Programs					 
     DATE:   09/29/2006 
  SUBJECT:   Contract administration				 
	     Cost overruns					 
	     Earth resources satellites 			 
	     Geosynchronous satellites				 
	     Lessons learned					 
	     Procurement planning				 
	     Program evaluation 				 
	     Program management 				 
	     Satellites 					 
	     Weather forecasting				 
	     NOAA Geostationary Operational			 
	     Environmental Satellite				 
                                                                 

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GAO-06-1129T

     

     * Results in Brief
     * Background
          * GOES-R Program-An Overview
               * GOES-R Program Office Structure
          * Satellite Programs Often Experience Technical Problems, Cost
     * GOES-R Procurement Activities Are Under Way, but System Requ
          * Recent NOAA Decision on the Direction and Scope of the GOES-
     * The GOES-R Program Office Has Taken Steps to Address Past Le
          * Efforts to Improve Reliability of Cost and Schedule Estimate
          * Preliminary Studies Are Under Way, but Steps Remain in Deter
          * Efforts to Strengthen Government and Contractor Management a
          * NOAA Has Established a Senior Executive Committee to Perform
     * Implementation of GAO Recommendations Should Improve NOAA's
     * PDF6-Ordering Information.pdf
          * Order by Mail or Phone

Mr. Chairman and Members of the Committee:

We appreciate the opportunity to participate in today's hearing on the
planned Geostationary Operational Environmental Satellites-R (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 2012. 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 and updates a report we previously
issued to your subcommittee that (1) determines the status of and plans
for the GOES-R series procurement, and (2) identifies and evaluates the
actions that the program management team is taking to ensure that past
problems experienced in procuring other satellite programs are not
repeated.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 the work on which this
testimony is based was performed in accordance with generally accepted
government auditing standards.

                                Results in Brief

The National Oceanic and Atmospheric Administration (NOAA) is nearing the
end of the preliminary design phase of its GOES-R system, which was
initially estimated to cost $6.2 billion and scheduled to have the first
satellite ready for launch in 2012. At the time of our review, NOAA had
issued contracts for the preliminary design of the overall GOES-R system
to three vendors and expected to award a contract to one of these vendors
in August 2007 to develop the satellites. In addition, to reduce the risks
associated with developing new instruments, NOAA issued contracts for the
early development of two instruments and for the preliminary designs of
three other instruments. The agency plans to turn these instrument
contracts over to the vendor that is awarded the contract for the overall
GOES-R program. However, recent analyses of the GOES-R program cost-which
in May 2006 the program office estimated could reach $11.4 billion-have
led the agency to consider reducing the scope of requirements for the
satellite series. At the time of our review, NOAA officials estimated that
a decision on the future scope and direction of the program could be made
by the end of September 2006. Since then, NOAA officials told us that the
agency has made a decision to reduce the scope and complexity of the
GOES-R program by reducing the number of satellites and canceling a
technically complex instrument.

1GAO, Geostationary Operational Environmental Satellites: Steps Remain in
Incorporating Lessons Learned from Other Satellite Programs, GAO-06-993
(Washington, D.C.: Sept. 6, 2006).

NOAA has taken steps to implement lessons learned from past satellite
programs, but more remains to be done. Prior satellite programs-including
a prior GOES series, a polar-orbiting environmental satellite series, and
various military satellite programs-often experience technical challenges,
cost overruns, and schedule delays. Key lessons from these programs
include the need to (1) establish realistic cost and schedule estimates,
(2) ensure sufficient technical readiness of the system's components prior
to key decisions, (3) provide sufficient management at government and
contractor levels, and (4) perform adequate senior executive oversight to
ensure mission success. NOAA has established plans to address these
lessons by conducting independent cost estimates, performing preliminary
studies of key technologies, placing resident government offices at key
contractor locations, and establishing a senior executive oversight
committee. However, many steps remain to fully address these lessons.
Specifically, NOAA has not yet developed a process to evaluate and
reconcile the independent and government cost estimates. In addition, NOAA
has not yet determined how it will ensure that a sufficient level of
technical maturity will be achieved in time for an upcoming decision
milestone, nor has it determined the appropriate level of resources it
needs to adequately track and oversee the program using earned value
management.2 Until it completes these activities, NOAA faces an increased
risk that the GOES-R program will repeat the increased cost, schedule
delays, and performance shortfalls that have plagued past procurements.

To improve NOAA's ability to effectively manage the GOES-R procurement, in
our accompanying report,3 we made recommendations to the Secretary of
Commerce to direct its NOAA Program Management Council to establish a
process for objectively evaluating and reconciling the government and
independent life cycle cost estimates once the program requirements are
finalized; to establish a team of system engineering experts to perform a
comprehensive review of the Advanced Baseline Imager instrument to
determine the level of technical maturity achieved on the instrument
before moving the instrument into production; and to seek assistance in
determining the appropriate levels of resources needed at the program
office to adequately track and oversee the contractor's earned value
management data. In written comments, the Department of Commerce agreed
with our recommendations and provided information on its plans to
implement our recommendations.

                                   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.

2Earned value management is a method that compares the value of work
accomplished during a given period with that of the work expected in that
period.

3GAO-06-993.

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 (see fig. 1). 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.

Figure 1: Approximate GOES Geographic Coverage

To provide continuous satellite coverage, NOAA acquires several satellites
at a time as part of a series and launches new satellites every few years
(see table 1).

Table 1: Summary of the Procurement History of GOES

Series name    Procurement durationa Satellites          
Original GOESb 1970-1987             1, 2, 3, 4, 5, 6, 7 
GOES I-M       1985-2001             8, 9, 10, 11, 12    
GOES-N         1998-2011             13, O, P, Qc        
GOES-R         2007-2020             R, S, T, U          

Source: GAO analysis of NOAA data.

aDuration includes time from contract award to final satellite launch.

bThe procurement of these satellites consisted of four separate contracts
for (1) two early prototype satellites and GOES-1, (2) GOES-2 and -3, (3)
GOES-4 through -6, and (4) GOES-G (failed on launch) and GOES-7.

cNOAA decided not to exercise the option for this satellite.

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.4 NOAA is also planning a future generation of satellites, known as
the GOES-R series, which are planned for launch beginning in 2012.

Each of the operational geostationary satellites continuously transmits
raw environmental data to NOAA ground stations. The data are processed at
these ground stations and transmitted back to the satellite for broadcast
to primary weather services both in the United States and around the
world, including the global research community. Raw and processed data are
also distributed to users via ground stations through other communication
channels, such as dedicated private communication lines and the Internet.
Figure 2  depicts a generic data relay pattern from the geostationary
satellites to the ground stations and commercial terminals.

4Satellites in a series are identified by letters of the alphabet when
they are on the ground and by numbers once they are in orbit.

Figure 2: Generic GOES Data Relay Pattern

GOES-R Program-An Overview

NOAA is planning for the GOES-R program to improve on the technology of
prior GOES series, in terms of both system and instrument improvements.
The system improvements are expected 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.

Table 2: Summary of Key GOES-R System Improvements

Key feature                                    GOES-N (current) GOES-R     
Total products                                 41               ~152       
Downlink rate of raw data collected by         2.6 Mbps         132 Mbps   
instruments (from satellite to ground                           
stations)                                                       
Broadcast rate of processed GOES data (from    2.1 Mbps         17-24 Mbps 
satellite to users)                                             
Raw data storage (the length of time that raw  0 days           30 days    
data will be stored at ground stations)                         

Source: GAO analysis of NOAA data.

The instruments on the GOES-R series are expected to increase the clarity
and precision of the observed environmental data. NOAA plans to acquire
five different types of instruments. The program office considered two of
the instruments-the Advanced Baseline Imager and the Hyperspectral
Environmental Suite-to be most critical because they would provide data
for key weather products. 5 Table 3 summarizes the originally planned
instruments and their expected capabilities.

5After our report was issued on September 6, 2006, NOAA officials told us
that the agency has decided to cancel its plans for the development of the
Hyperspectral Environmental Suite but expects to explore options that will
ensure continuity of data provided by the current GOES series.

Table 3: Expected GOES-R Series Instruments, as of June 2006

Planned instrument       Description                                       
Advanced Baseline Imager Expected to provide variable area imagery and     
                            radiometric information of the earth's surface,   
                            atmosphere, and cloud cover. Key features include 
                                                                              
                               o  monitoring and tracking severe weather,     
                               o  providing images of clouds to support       
                               forecasts, and                                 
                               o  providing higher resolution, faster         
                               coverage, and broader coverage simultaneously. 
Hyperspectral            Expected to provide information about the earth's 
Environmental Suite      surface to aid in the prediction of weather and   
                            climate monitoring. Key features include          
                                                                              
                               o  providing atmospheric moisture and          
                               temperature profiles to support forecasts and  
                               climate monitoring,                            
                               o  monitoring coastal regions for ecosystem    
                               health, water quality, coastal erosion, and    
                               harmful algal blooms, and                      
                               o  providing higher resolution and faster      
                               coverage.                                      
Space Environmental      Expected to provide information on space weather  
In-Situ Suite            to aid in the prediction of particle              
                            precipitation, which causes disturbance and       
                            disruption of radio communications and navigation 
                            systems. Key features include                     
                                                                              
                               o  measuring magnetic fields and charged       
                               particles,                                     
                               o  providing improved heavy ion detection,     
                               adding low energy electrons and protons, and   
                               o  enabling early warnings for satellite and   
                               power grid operation, telecom services,        
                               astronauts, and airlines.                      
Solar Imaging Suite      Expected to provide coverage of the entire        
                            dynamic range of solar X-ray features, from       
                            coronal holes to X-class flares, as well as       
                            estimate the measure of temperature and           
                            emissions. Key features include                   
                                                                              
                               o  providing images of the sun and measuring   
                               solar output to monitor solar storms and       
                               o  providing improved imager capability.       
Geostationary Lightning  Expected to continuously monitor lightning        
Mapper                   activity over the United States and provide a     
                            more complete dataset than previously possible.   
                            Key features include                              
                                                                              
                               o  detecting lightning strikes as an indicator 
                               of severe storms and                           
                               o  providing a new capability to GOES that     
                               only previously existed on polar satellites.   

Source: GAO analysis of NOAA data.

  GOES-R Program Office Structure

The program management structure for the GOES-R program differs from past
GOES programs. Prior to the GOES-R series, NOAA was responsible for
program funding, procurement of the ground elements, and on-orbit
operation of the satellites, while NASA was responsible for the
procurement of the spacecraft, instruments, and launch services. NOAA
officials stated that this approach limited the agency's insight and
management involvement in the procurement of major elements of the system.

Alternatively, under the GOES-R management structure, NOAA has
responsibility for the procurement and operation of the overall
system-including spacecraft, instruments, and launch services. NASA is
responsible for the procurement of the individual instruments until they
are transferred to the overall GOES-R system contractor for completion and
integration onto the spacecraft. Additionally, to take advantage of NASA's
acquisition experience and technical expertise, NOAA located the GOES-R
program office at NASA's Goddard Space Flight Center. It also designated
key program management positions to be filled with NASA personnel. These
positions include the deputy system program director role for advanced
instrument and technology infusion, the project manager for the flight
portion of the system, and the deputy project manager for the ground and
operations portion of the system. NOAA officials explained that they
changed the management structure for the GOES-R program in order to
streamline oversight and fiduciary responsibilities, but that they still
plan to rely on NASA's expertise in space system acquisitions.

Satellite Programs Often Experience Technical Problems, Cost Overruns, and
Schedule Delays

Satellite programs are often technically complex and risky undertakings,
and as a result, they often experience technical problems, cost overruns,
and schedule delays. We and others have reported on a historical pattern
of repeated missteps in the procurement of major satellite systems,
including the National Polar-orbiting Operational Environmental Satellite
System (NPOESS), the GOES I-M series, the Space Based Infrared System High
Program (SBIRS-High), and the Advanced Extremely High Frequency Satellite
System (AEHF).6 Table 4 lists key problems experienced with these
programs.

6GAO, Defense Acquisitions: Space System Acquisition Risks and Keys to
Addressing Them, GAO-06-776R (Washington, D.C.: June 1, 2006);
Polar-orbiting Operational Environmental Satellites: Cost Increases
Trigger Review and Place Program's Direction on Hold, GAO-06-573T
(Washington, D.C.: Mar. 30, 2006); Polar-orbiting Operational
Environmental Satellites: Technical Problems, Cost Increases, and Schedule
Delays Trigger Need for Difficult Trade-off Decisions, GAO-06-249T
(Washington, D.C.: Nov. 16, 2005); Polar-orbiting Environmental
Satellites: Information on Program Cost and Schedule Changes, GAO-04-1054
(Washington, D.C.: Sept. 30, 2004); Defense Acquisitions: Despite
Restructuring, SBIRS High Program Remains at Risk of Cost and Schedule
Overruns, GAO-04-48 (Washington, D.C.: Oct. 31, 2003); Military Space
Operations: Common Problems and Their Effects on Satellite and Related
Acquisitions, GAO-03-825R (Washington, D.C.: June 2, 2003); Defense
Acquisitions: Assessments of Major Weapon Programs, GAO-03-476
(Washington, D.C.: May 15, 2003); Weather Satellites: Action Needed to
Resolve Status of the U.S. Geostationary Satellite Program,
GAO/NSIAD-91-252 (Washington, D.C.: July 24, 1991). Defense Science
Board/Air Force Scientific Advisory Board Joint Task Force, Report on the
Acquisition of National Security Space Programs (May 2003).

Table 4: Key Problems Experienced on Selected Major Space Systems

Problem                                    NPOESS GOES I-M SBIRS-High AEHF 
Insufficient technical readiness prior to                             
critical decision points                                              
Inadequate preliminary studies prior to      X       X         X      
the decision to award a development                                   
contract                                                              
Insufficient technical maturity prior to     X       X         X       X   
the decision to move to production                                    
Unrealistic cost and schedule estimates                               
Optimistic assumptions including:                                     
      o  savings from heritage systems          X       X         X      
      o  readiness of technology maturity       X       X         X       X   
      o  constant and available industrial                        X      
      base                                                               
      o  no weight growth                       X                 X       X   
      o  no requirements growth                                           X   
      o  savings from lot buys versus                             X      
      single-unit purchase                                               
      o  overly aggressive schedule             X       X         X       X   
Poor program and contractor management                                
Quality and subcontractor issues             X       X         X       X   
Inadequate systems engineering               X       X         X       X   
capabilities                                                          
Inadequate earned value management           X                 X       X   
capabilities                                                          
Insufficient management reserve              X                         X   
Ineffective contract award fee structure     X       X         X      
Poor senior executive level oversight                                 
Infrequent meetings                          X                        
Inability to make timely decisions           X                        
Other                                                                 
Unstable funding stream                      X                 X       X   
Unstable requirements                                          X       X   

Source: GAO analysis of NOAA and DOD data.

 GOES-R Procurement Activities Are Under Way, but System Requirements and Cost
                             Estimates Are Changing

At the time of our review, NOAA was nearing the end of the preliminary
design phase on its GOES-R program and planned to award a contract for the
system's development in August 2007. However, because of concerns with
potential cost growth, NOAA's plans for the GOES-R procurement are
changing. To date, NOAA has issued contracts for the preliminary design of
the overall GOES-R system to three vendors and expects to award a contract
to one of these vendors to develop the system. In addition, to reduce the
risks associated with developing new instruments, NASA has issued
contracts for the early development of two instruments and for the
preliminary designs of three other instruments.7 The agency plans to award
these contracts and then turn them over to the contractor responsible for
the overall GOES-R program. However, this approach is under review and
NOAA may wait until the instruments are fully developed before turning
them over to the system contractor. Table 5 provides a summary of the
status of contracts for the GOES-R program.

Table 5: Status of GOES-R Program Contracts, as of September 6, 2006

                             Date contract was  Planned date contract will be 
Contract item            awarded for design        awarded for development 
Instruments                                 
Advanced Baseline Imager           May 2001        September 2004 (actual) 
Space Environmental           December 2004                    August 2006 
In-Situ Suite                                                              
                                                                     (actual) 
Solar Imaging Suite          September 2004                 September 2006 
Hyperspectral                     June 2004                      June 2007 
Environmental Suite                         
Geostationary Lightning       February 2006                    August 2007 
Mapper                                      
GOES-R System                               
Acquisition and                October 2005                    August 2007 
Operations                                  

Source: NOAA.

According to program documentation provided to the Office of Management
and Budget in 2005, the official life cycle cost estimate for GOES-R was
approximately $6.2 billion (see table 6). However, program officials
reported that this estimate was over 2 years old and under review.

7The development contract for the Space Environmental In-Situ Suite
instrument was issued after we completed our review.

Table 6: GOES-R Program Life Cycle Cost Estimate, as of June 2006

Major cost category       Dollars in millions 
System level                             $533 
Space segment                           2,494 
Ground segments                           729 
Launch segment                            686 
Operations and support                  1,147 
Government program office                 637 
Total                                  $6,226 

Source: NOAA.

At the time of our review, NOAA was planning to launch the first GOES-R
series satellite in September 2012.8 The development of the schedule for
launching the satellites 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. Table 7 provides a summary of the planned launch schedule for
the originally planned GOES-R series.

Table 7: GOES-R Program Schedule, as of September 6, 2006

Milestone                               Planned date 
GOES-O launcha                            April 2008 
GOES-P launcha                         October 2009b 
GOES-R satellite available for launch September 2012 
GOES-S satellite available for launch     April 2014 
GOES-T satellite available for launch   October 2015 
GOES-U satellite available for launch     April 2017 
End of operations and maintenance               2028 

Source: NOAA.

aGOES-O and GOES-P are not part of the GOES-R series program. Their launch
dates are provided because of their relevance to the GOES-R series
satellite schedules.

bBecause GOES satellites have been operating longer than expected, NOAA is
considering moving the planned launch of the GOES-P satellite to July
2011.

8After our report was issued on September 6, 2006, NOAA officials told us
that the planned launch schedule was being delayed. The expected launch of
the first GOES-R series satellite is now planned for December 2014.

However, NOAA's plans for the GOES-R procurement are changing because of
concerns with potential cost growth. Given its experiences with cost
growth on the NPOESS acquisition, NOAA asked program officials to
recalculate the total cost of the estimated $6.2 billion GOES-R program.
In May 2006, program officials estimated that the life cycle cost could
reach $11.4 billion. The agency then requested that the program identify
options for reducing the scope of requirements for the satellite series.
Program officials reported that there were over 10 viable options under
consideration, including options for removing one or more of the planned
instruments. The program office also reevaluated its planned acquisition
schedule based on the potential program options. Specifically, program
officials stated that if there was a decision to make a major change in
system requirements, they would likely extend the preliminary design
phase, delay the decision to proceed into the development and production
phase, and delay the contract award date. At the time of our review, NOAA
officials estimated that a decision on the future scope and direction of
the program could be made by the end of September 2006.

Recent NOAA Decision on the Direction and Scope of the GOES-R Program

In mid-September 2006, NOAA officials reported that a decision on the
future scope and direction of GOES-R had been made-and involved a
reduction in the number of satellites and in planned program capabilities,
a revised life cycle cost estimate, and the delay of key programmatic
milestones. Specifically, NOAA reduced the minimum number of satellites to
two. In addition, plans for developing the Hyperspectral Environmental
Suite-which was once considered a critical instrument by the agency-were
cancelled. Instead, the program office is exploring options that will
ensure continuity of sounding data currently provided by the current GOES
series.9 NOAA officials reported that the cost of the restructured program
is not known, but some anticipate it will be close to the original program
estimate of $6.2 billion. The contract award for the GOES-R system has
been pushed out to May 2008. Finally, the planned launch date of the first
satellite in the GOES-R series has been delayed until December 2014.

9The Hyperspectral Environmental Suite was intended to be the successor to
the sounder instrument onboard the current GOES series. The sounder
measures radiated energy at different depths (altitudes) and also records
surface and cloud-top temperatures and ozone distribution.

 The GOES-R Program Office Has Taken Steps to Address Past Lessons Learned, but
                           Significant Actions Remain

NOAA has taken steps to apply lessons learned from problems encountered on
other satellite programs to the GOES-R procurement. Key lessons include
(1) establishing realistic cost and schedule estimates, (2) ensuring
sufficient technical readiness of the system's components prior to key
decisions, (3) providing sufficient management at government and
contractor levels, and (4) performing adequate senior executive oversight
to ensure mission success. NOAA has established plans designed to mitigate
the problems faced in past acquisitions; however, many activities remain
to fully address these lessons. Until it completes these activities, NOAA
faces an increased risk that the GOES-R program will repeat the increased
cost, schedule delays, and performance shortfalls that have plagued past
procurements.

Efforts to Improve Reliability of Cost and Schedule Estimates are Under Way, but
Key Steps Remain in Reconciling Cost Estimates

We and others have reported that space system acquisitions are strongly
biased to produce unrealistically low cost and schedule estimates in the
acquisition process.10 Our past work on military space acquisitions has
indicated that during program formulation, the competition to win funding
is intense and has led program sponsors to minimize their program cost
estimates. NOAA programs face similar unrealistic estimates. For example,
the total development cost of the GOES I-M acquisition was over three
times greater than planned, escalating from $640 million to $2 billion.
Additionally, the delivery of the first satellite was delayed by 5 years.

10GAO, Space Acquisitions: Stronger Development Practices and Investment
Planning Needed to Address Continuing Problems, GAO-05-891T (Washington,
D.C.: July 12, 2005). Defense Science Board/Air Force Scientific Advisory
Board Joint Task Force, Report on the Acquisition of National Security
Space Programs (May 2003).

NOAA has several efforts under way to improve the reliability of its cost
and schedule estimates for the GOES-R program. NOAA's Chief Financial
Officer has contracted with a cost-estimating firm to complete an
independent cost estimate, while the GOES-R program office has hired a
support contractor to assist with its internal program cost estimating.
The program office is re-assessing its estimates based on preliminary
information from the three vendors contracted to develop preliminary
designs for the overall GOES-R system. Once the program office and
independent cost estimates are completed, program officials intend to
compare them and to develop a revised programmatic cost estimate that will
be used in its decision on whether to proceed into system development and
production. In addition, NOAA has planned for an independent review
team-consisting of former senior industry and government space acquisition
experts-to provide an assessment of the program office and independent
cost estimates for this decision milestone. To improve its schedule
reliability, the program office is currently conducting a schedule risk
analysis in order to estimate the amount of adequate reserve funds and
schedule margin needed to deal with unexpected problems and setbacks.
Finally, the NOAA Observing System Council11 submitted a prioritized list
of GOES-R system requirements to the Commerce Undersecretary for approval.
This list is expected to allow the program office to act quickly in
deleting lower priority requirements in the event of severe technical
challenges or shifting funding streams.

While NOAA acknowledges the need to establish realistic cost and schedule
estimates, several hurdles remain. As discussed earlier, the agency was
considering-during the time of our review-reducing the requirements for
the GOES-R program to mitigate the increased cost estimates for the
program. Prior to this decision, the agency's efforts to establish
realistic cost estimates could not be fully effective in addressing this
lesson. In addition, NOAA suspended the work being performed by its
independent cost estimator. Now that the program scope and direction is
being further defined, it will be important for the agency to restart this
work. Further, the agency has not yet developed a process to evaluate and
reconcile the independent and program office cost estimates once final
program decisions are made. Without this process, the agency may lack the
objectivity necessary to counter the optimism of program sponsors and is
more likely to move forward with an unreliable estimate. Until it
completes this activity, NOAA faces an increased risk that the GOES-R
program will repeat the cost increases and schedule delays that have
plagued past procurements.

11NOAA's Observing System Council is the principal advisory council for
NOAA's earth observation and data management activities. It includes
members from each NOAA line office, other relevant councils, and program
offices. The Assistant Administrator for Satellite and Information
Services and the Assistant Administrator for Weather Services serve as the
co-chairs of the council.

Preliminary Studies Are Under Way, but Steps Remain in Determining Components'
Technical Maturity

Space programs often experience unforeseen technical problems in the
development of critical components as a result of having insufficient
knowledge of the components and their supporting technologies prior to key
decision points. One key decision point is when an agency decides on
whether the component is sufficiently ready to proceed from a preliminary
study phase into a development phase; this decision point results in the
award of the development contract. Another key decision point occurs
during the development phase when an agency decides whether the component
is ready to proceed from design into production (also called the critical
design review). Without sufficient technical readiness at these
milestones, agencies could proceed into development contracts on
components that are not well understood and enter into the production
phase of development with technologies that are not yet mature.

In 1997, NOAA began preliminary studies on technologies that could be used
on the GOES-R instruments. These studies target existing technologies and
assessed how they could be expanded for GOES-R. The program office is also
conducting detailed trade-off studies on the integrated system to improve
its ability to make decisions that balance performance, affordability,
risk, and schedule. For instance, the program office is analyzing the
potential architectures for the GOES-R constellation of satellites-the
quantity and configuration of satellites, including how the instruments
will be distributed over these satellites. These studies are expected to
allow for a more mature definition of the system specifications.

NOAA has also developed plans to have an independent review team assess
project status on an annual basis once the overall system contract has
been awarded. In particular, this team will review technical,
programmatic, and management areas; identify any outstanding risks; and
recommend corrective actions. This measure is designed to ensure that
sufficient technical readiness has been reached prior to the critical
design review milestone. The program office's ongoing studies and plans
are expected to provide greater insight into the technical requirements
for key system components and to mitigate the risk of unforeseen problems
in later acquisition phases.

However, the progress currently being made on a key instrument currently
under development-the Advanced Baseline Imager-has experienced technical
problems and could be an indication of more problems to come in the
future. These problems relate to, among other things, the design
complexity of the instrument's detectors and electronics. As a result, the
contractor is experiencing negative cost and schedule performance trends.
As of May 2006, the contractor incurred a total cost overrun of almost $6
million with the instrument's development only 28 percent complete. In
addition, from June 2005 to May 2006, it was unable to complete
approximately $3.3 million worth of work. Unless risk mitigation actions
are aggressively pursued to reverse these trends, we project the cost
overrun at completion to be about $23 million.

While NOAA expects to make a decision on whether to move the instrument
into production (a milestone called the critical design review) in January
2007, the contractor's current performance raises questions as to whether
the instrument designs will be sufficiently mature by that time. Further,
the agency does not have a process to validate the level of technical
maturity achieved on this instrument or to determine whether the
contractor has implemented sound management and process engineering to
ensure that the appropriate level of technical readiness can be achieved
prior to the decision milestone. Until it does so, NOAA risks making a
poor decision based on inaccurate or insufficient information-which could
lead to unforeseen technical problems in the development of this
instrument.

Efforts to Strengthen Government and Contractor Management are Under Way, but
Significant Work on Program Controls Remain

In the past, we have reported on poor performance in the management of
satellite acquisitions.12 The key drivers of poor management included
inadequate systems engineering and earned value management13 capabilities,
unsuitable allocation of contract award fees, inadequate levels of
management reserve, and inefficient decision-making and reporting
structure within the program office.

NOAA has taken numerous steps to restructure its management approach on
the GOES-R procurement in an effort to improve performance and to avoid
past mistakes. These steps include:

           o  The program office revised its staffing profile to provide for
           government staff to be located on-site at prime contractor and key
           subcontractor locations.
           o  The program office plans to increase the number of resident
           systems engineers from 31 to 54 to provide adequate government
           oversight of the contractor's system engineering, including
           verification and validation of engineering designs at key decision
           points (such as the critical design review milestone).
           o  The program office has better defined the role and
           responsibilities of the program scientist, the individual who is
           expected to maintain an independent voice with regard to
           scientific matters and advise the program manager on related
           technical issues and risks.
           o  The program office also intends to add three resident
           specialists in earned value management to monitor contractor cost
           and schedule performance.
           o  NOAA has work under way to develop the GOES-R contract award
           fee structure and the award fee review board that is consistent
           with our recent findings, the Commerce Inspector General's
           findings, and other best practices, such as designating a
           non-program executive as the fee-determining official to ensure
           objectivity in the allocation of award fees.
           o  NOAA and NASA have implemented a more integrated management
           approach that is designed to draw on NASA's expertise in satellite
           acquisitions and increase NOAA's involvement on all major
           components of the acquisition.
           o  The program office reported that it intended to establish a
           management reserve of 25 percent consistent with the
           recommendations of the Defense Science Board Report on Acquisition
           of National Security Space Programs.14

12GAO-06-573T, GAO-06-249T, GAO/NSIAD-91-252, Defense Acquisitions: DOD
Has Paid Billions in Award and Incentive Fees Regardless of Acquisition
Outcomes, GAO-06-66 (Washington, D.C.: Dec. 19, 2005), and Weather
Satellites: Cost Growth and Development Delays Jeopardize U.S. Forecasting
Ability, GAO/NSIAD-89-169 (Washington, D.C.: June 30, 1989).

13Earned value management is a method, used by DOD for several decades, to
track a contractor's progress in meeting project deliverables. It compares
the value of work accomplished during a given period with that of the work
expected in that period. Differences from expectations are measured in
both cost and schedule variances.

While these steps should provide more robust government oversight and
independent analysis capabilities, more work remains to be done to fully
address this lesson. Specifically, the program office has not determined
the appropriate level of resources it needs to adequately track and
oversee the program and the planned addition of three earned value
management specialists may not be enough as acquisition activities
increase. By contrast, after its recent problems and in response to the
independent review team findings, NPOESS program officials plan to add 10
program staff dedicated to earned value, cost, and schedule analysis. An
insufficient level of established capabilities in earned value management
places the GOES-R program office at risk of making poor decisions based on
inaccurate and potentially misleading information. Finally, while NOAA
officials believe that assuming sole responsibility for the acquisition of
GOES-R will improve their ability to manage the program effectively, this
change also elevates NOAA's risk for mission success. Specifically, NOAA
is taking on its first major system acquisition and an increased risk due
to its lack of experience. Until it fully addresses the lesson of ensuring
an appropriate level of resources to oversee its contractor, NOAA faces an
increased risk that the GOES-R program will repeat the management and
contractor performance shortfalls that have plagued past procurements.

14Defense Science Board/Air Force Scientific Advisory Board Joint Task
Force, Report on the Acquisition of National Security Space Programs (May
2003).

NOAA Has Established a Senior Executive Committee to Perform Oversight Role

We and others have reported on NOAA's significant deficiencies in its
senior executive oversight of NPOESS.15 The lack of timely decisions and
regular involvement of senior executive management was a critical factor
in the program's rapid cost and schedule growth.

NOAA formed its program management council in response to the lack of
adequate senior executive oversight on NPOESS. In particular, this council
is expected to provide regular reviews and assessments of selected NOAA
programs and projects-the first of which is the GOES-R program. The
council is headed by the NOAA Deputy Undersecretary and includes senior
officials from Commerce and NASA. The council is expected to hold meetings
to discuss GOES-R program status on a monthly basis and to approve the
program's entry into subsequent acquisition phases at key decision
milestones-including contract award and critical design reviews, among
others. Since its establishment in January 2006, the council has met
regularly and has established a mechanism for tracking action items to
closure.

The establishment of the NOAA Program Management Council is a positive
action that should support the agency's senior-level governance of the
GOES-R program. In moving forward, it is important that this council
continue to meet on a regular basis and exercise diligence in questioning
the data presented to it and making difficult decisions. In particular, it
will be essential that the results of all preliminary studies and
independent assessments on technical maturity of the system and its
components be reviewed by this council so that an informed decision can be
made about the level of technical complexity it is taking on when
proceeding past these key decision milestones. In light of the recent
uncertainty regarding the future scope and cost of the GOES-R program, the
council's governance will be critical in making those difficult decisions
in a timely manner.

15GAO-06-573T; Department of Commerce Office of Inspector General, Poor
Management Oversight and Ineffective Incentives Leave NPOESS Program Well
Over Budget and Behind Schedule, OIG-17794-6-0001 (May 8, 2006).

Implementation of GAO Recommendations Should Improve NOAA's Efforts to Implement
                                Lessons Learned

To improve NOAA's ability to effectively manage the GOES-R procurement, in
our accompanying report,16 we recommended that the Secretary direct its
NOAA Program Management Council to take the following three actions:

           o  Once the scope of the program has been finalized, establish a
           process for objectively evaluating and reconciling the government
           and independent life cycle cost estimates.
           o  Perform a comprehensive review of the Advanced Baseline Imager,
           using system engineering experts, to determine the level of
           technical maturity achieved on the instrument, to assess whether
           the contractor has implemented sound management and process
           engineering, and to assert that the technology is sufficiently
           mature before moving the instrument into production.
           o  Seek assistance from an independent review team to determine
           the appropriate level of resources needed at the program office to
           adequately track and oversee the contractor's earned value
           management. Among other things, the program office should be able
           to perform a comprehensive integrated baseline review after system
           development contract award, provide surveillance of contractor
           earned value management systems, and perform project scheduling
           analyses and cost estimates.

16GAO-06-993.

In written comments, Commerce agreed with our recommendations and provided
information on its plans to implement our recommendations. In particular,
Commerce intends to establish a process for evaluating and reconciling the
various cost estimates and to analyze this process and the results with an
independent review team comprised of recognized satellite acquisition
experts. The agency is also planning to have this independent review team
provide assessments of the Advanced Baseline Imager's technical maturity
and the adequacy of the program management's staffing plans.

In summary, the procurement of the next series of geostationary
environmental satellites-called the GOES-R series-is at a critical
juncture. Recent concerns about the potential for cost growth on the
GOES-R procurement have led the agency to reduce the scope of requirements
for the satellite series. According to NOAA officials, the current plans
call for acquiring 2 satellites and moving away from a technically complex
new instrument in favor of existing technologies. While reducing the
technical complexity of the system prior to contract award and defining an
affordable program are sound business practices, it will be important for
NOAA to balance these actions with the agencies' long term need for
improving geostationary satellites over time.

While NOAA is positioning itself to improve the acquisition of this system
by incorporating the lessons learned from other satellite procurements
including the need to establish realistic cost estimates, ensure
sufficient government and contractor management, and obtain effective
executive oversight, further steps remain to fully address selected
lessons and thereby mitigate program risks. Specifically, NOAA has not yet
developed a process to evaluate and reconcile the independent and
government cost estimates. In addition, NOAA has not yet determined how it
will ensure that a sufficient level of technical maturity will be achieved
in time for an upcoming decision milestone or determined the appropriate
level of resources it needs to adequately track and oversee the program
using earned value management. Moreover, problems that are frequently
experienced on major satellite acquisitions, including insufficient
technical maturity, overly aggressive schedules, inadequate systems
engineering capabilities, and insufficient management reserve will need to
be closely monitored throughout this critical acquisition's life cycle. To
NOAA's credit, it has begun to develop plans for implementing our
recommendations. These plans include, among other things, establishing a
process to evaluate and reconcile the various cost estimates and obtaining
assessments from an independent review team on the technical maturity of a
key instrument in development and the adequacy of the program management's
staffing plans. However, until it addresses these lessons, NOAA faces an
increased risk that the GOES-R program will  repeat the increased cost,
schedule delays, and performance shortfalls that have plagued past
procurements.

Mr. Chairman, this concludes my statement. I would be happy to answer any
questions that you or members of the committee may have at this time.

If you have any questions on matters discussed in this testimony, please
contact me at (202) 512-9286 or by e-mail at [email protected] . Other key
contributors to this testimony include Carol Cha, Neil Doherty, Nancy
Glover, Kush Malhotra, Colleen Phillips, and Karen Richey.

(310830)

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www.gao.gov/cgi-bin/getrpt? GAO-06-1129T .

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For more information, contact David Powner at (202) 512-9286 or
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Highlights of GAO-06-1129T , a testimony before the Committee on Science,
House of Representatives

September 29, 2006

GEOSTATIONARY OPERATIONAL ENVIRONMENTAL SATELLITES

Additional Action Needed to Incorporate Lessons Learned from Other
Satellite Programs

The National Oceanic and Atmospheric Administration (NOAA) plans to
procure the next generation of geostationary operational environmental
satellites, called the Geostationary Operational Environmental
Satellites-R series (GOES-R). This new series is considered critical to
the United States' ability to maintain the continuity of data required for
weather forecasting through the year 2028.

GAO was asked to summarize and update its report previously issued to the
Subcommittee on Environment, Technology, and Standards-Geostationary
Operational Environmental Satellites: Steps Remain in Incorporating
Lessons Learned from Other Satellite Programs, GAO-06-993 (Washington,
D.C.: Sept. 6, 2006). This report (1) determines the status of and plans
for the GOES-R series procurement, and (2) identifies and evaluates the
actions that the program management team is taking to ensure that past
problems experienced in procuring other satellite programs are not
repeated.

What GAO Recommends

In our report, we make recommendations to the Secretary of Commerce to
improve NOAA's ability to effectively manage the GOES-R procurement. In
written comments, the Department of Commerce agreed with the
recommendations and identified plans for implementing them.

At the time of our review, NOAA was nearing the end of the preliminary
design phase of its GOES-R system-which was estimated to cost $6.2 billion
and scheduled to have the first satellite ready for launch in 2012. It
expected to award a contract in August 2007 to develop this system.
However, recent analyses of the GOES-R program cost-which in May 2006 the
program office estimated could reach $11.4 billion-have led the agency to
consider reducing the scope of requirements for the satellite series.
Since our report was issued, NOAA officials told GAO that the agency has
made a decision to reduce the scope of the program to a minimum of two
satellites and to reduce the complexity of the program by canceling a
technically complex instrument.

NOAA has taken steps to implement lessons learned from past satellite
programs, but more remains to be done. Prior satellite programs-including
a prior GOES series, a polar-orbiting environmental satellite series, and
various military satellite programs-often experienced technical
challenges, cost overruns, and schedule delays. Key lessons from these
programs include the need to (1) establish realistic cost and schedule
estimates, (2) ensure sufficient technical readiness of the system's
components prior to key decisions, (3) provide sufficient management at
government and contractor levels, and (4) perform adequate senior
executive oversight to ensure mission success. NOAA has established plans
to address these lessons by conducting independent cost estimates,
performing preliminary studies of key technologies, placing resident
government offices at key contractor locations, and establishing a senior
executive oversight committee. However, many steps remain to fully address
these lessons (see table). Until it completes these activities, NOAA faces
an increased risk that the GOES-R program will repeat the increased cost,
schedule delays, and performance shortfalls that have plagued past
procurements.

Key Lessons Learned and the Activities Taken or Remaining to Fully Address
Them

Lesson learned            Actions taken or under Actions remaining         
                             way                    
Establish realistic cost     o  Obtaining           o  Ensuring            
and schedule estimates       multiple               objectivity when       
                                independent cost       reconciling            
                                estimates              alternative estimates  
                                o  Conducting risk  
                                analysis of         
                                schedule estimates  
Ensure sufficient            o  Conducted           o  Ensuring sufficient 
technical readiness of       preliminary studies    technical maturity     
the system's components      of key technologies    before proceeding to   
prior to critical            and components         production             
decisions                                        
Provide sufficient           o  Increased           o  Assessing the       
management of contractors    presence at            number of earned value 
and subcontractors           contractor sites       specialists needed     
                                o  Plan to increase    commensurate with      
                                number of system       increased acquisition  
                                engineers              activities             
                                o  Plan to hire     
                                three specialists   
                                in earned value     
Perform effective            o  NOAA's program   
executive-level oversight    management council  
                                meets regularly to  
                                oversee project     

Source: GAO analysis.

United States Government Accountability Office

GAO

Testimony before the Committee on Science, House of Representatives

For Release on Delivery

Expected at 10:00 a.m. EDT Friday, September 29, 2006

GEOSTATIONARY OPERATIONAL ENVIRONMENTAL SATELLITES

Additional Action Needed to Incorporate Lessons Learned from Other
Satellite Programs

Statement of David A. Powner

Director, Information Technology Management Issues

GAO-06-1129T
*** End of document. ***