    Space Acquisitions: DOD Needs a Departmentwide Strategy for
    Pursuing Low-Cost, Responsive Tactical Space Capabilities
    (14-MAR-06, GAO-06-449).

    For more than two decades, the Department of Defense (DOD) has
    invested heavily in space assets to provide the warfighter with
    mission-critical information. Despite these investments, DOD
    commanders have reported shortfalls in space capabilities. To
    provide tactical capabilities to the warfighter sooner, DOD
    recently began developing TacSats--a series of small satellites
    intended to be built within a limited time frame and budget--and
    pursuing options for small, low-cost vehicles for launching small
    satellites. GAO was asked to (1) examine the outcomes to date of
    DOD's TacSat and small, low-cost launch vehicle efforts, (2)
    identify the challenges in pursuing these efforts, and (3)
    determine whether experiences with these efforts could inform
    DOD's major space system acquisitions.
    -------------------------Indexing Terms-------------------------
    REPORTNUM:   GAO-06-449
        ACCNO:   A48940
      TITLE:     Space Acquisitions: DOD Needs a Departmentwide Strategy
    for Pursuing Low-Cost, Responsive Tactical Space Capabilities
         DATE:   03/14/2006
      SUBJECT:   Aerospace research
    	     Defense capabilities
    	     Defense procurement
    	     Laboratories
    	     Military research and development
    	     Program evaluation
    	     Satellites
    	     Strategic planning
    	     C-17 Aircraft
    	     TacSats

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    GAO-06-449

         * TacSat 1's Development Approach Enabled Successful Delivery
         * DOD Is Working on Developing Future TacSats and Low-Cost Lau
         * DOD Has Yet to Provide a Low-Cost, Small Launch Vehicle
         * Procurement of TacSats by DOD's Acquisition Community May Be
         * Short-Term Funding for Upcoming TacSats Uncertain
         * Lack of DOD-wide Strategy and Loss of Leadership
         * Order by Mail or Phone

    Report to the Chairman, Subcommittee on Strategic Forces, Committee on
    Armed Services, House of Representatives

    United States Government Accountability Office

    GAO

    March 2006

    SPACE ACQUISITIONS

    DOD Needs a Departmentwide Strategy for Pursuing Low-Cost, Responsive
    Tactical Space Capabilities

    GAO-06-449

    Contents

    Letter 1

    Results in Brief 2
    Background 3
    DOD Successfully Delivered First TacSat through Managing Requirements and
    Is Moving Forward with Additional Efforts 6
    DOD Faces Several Challenges in Pursuing Responsive Tactical Capabilities
    for Warfighters 12
    Experiences with TacSats May Inform Major Space System Acquisitions and
    Lead to Long-Term Benefits 17
    Conclusions 20
    Recommendation for Executive Action 21
    Agency Comments 21
    Appendix I Scope and Methodology 22
    Appendix II Comments from the Department of Defense 23

    Tables

    Table 1: Development Cost and Schedule Estimates and Target Launch Dates
    for TacSats 2, 3, and 4, as of March 2006 9
    Table 2: DOD Current Planning Efforts 16

    Figures

    Figure 1: Overview of TacSat Experiments 5
    Figure 2: TacSat 1 Ready for Vibration Testing at Naval Research
    Laboratory 7
    Figure 3: Capability Selection Process for TacSats 3 and 4 10

    Abbreviations

    ARES Affordable Responsive Spacelift

    DARPA Defense Advanced Research Projects Agency

    DOD Department of Defense

    OFT Office of Force Transformation

    ORS Operationally Responsive Space

    This is a work of the U.S. government and is not subject to copyright
    protection in the United States. It may be reproduced and distributed in
    its entirety without further permission from GAO. However, because this
    work may contain copyrighted images or other material, permission from the
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    separately.

    United States Government Accountability Office

    Washington, DC 20548

    March 14, 2006

    The Honorable Terry Everett Chairman Subcommittee on Strategic Forces
    Committee on Armed Services House of Representatives

    Dear Mr. Chairman:

    Department of Defense (DOD) satellites and other space-related assets
    provide intelligence, surveillance, reconnaissance, missile warning,
    navigation, and other information critical to conducting military
    operations. DOD's space network is expected to play an increasingly
    important role in military operations. According to DOD, approximately 70
    percent of weapons used in Operation Iraqi Freedom were precision-
    guided-mostly through global positioning satellites. Yet in each major
    conflict over the past decade, senior military commanders reported
    shortfalls in space capabilities, such as those intended to provide
    imagery data.

    To address such shortfalls and provide tactical capabilities to the
    warfighter sooner, DOD recently began building a series of small
    satellites, referred to as TacSats, within the science and technology
    environment-an environment that lends itself to demonstrating technologies
    within a relatively short time frame and small budget. Although small
    satellites offer less performance than large satellites in areas like
    resolution, operational control, and power, the TacSats are expected to
    quickly provide the warfighter with the information needed to conduct
    operations in theater. DOD is also developing a small, low-cost launch
    vehicle that could be used to launch small satellites like the TacSats.

    Given the potential these efforts may offer in changing the way DOD does
    business, you asked us to (1) examine the outcomes to date from the TacSat
    experiments as well as from efforts to develop small, low-cost launch
    vehicles, (2) identify the challenges in pursuing TacSats and the launch
    vehicles, and (3) determine whether DOD's experiences with TacSats and
    small, low-cost launch vehicles could inform major space system
    acquisitions.

    To conduct our work, we interviewed DOD officials in the Office of Force
    Transformation, Air Force Space Command, Space and Missile Systems Center,
    the Air Force and Navy research labs, and in other cognizant offices, and
    analyzed documents obtained from these officials. We also interviewed
    industry representatives involved in developing large space systems and
    small commercial launch vehicles. We analyzed a number of GAO and DOD
    studies that discuss acquisition problems and associated challenges,
    including our work on best practices in weapon system development that we
    have conducted over the past decade. We conducted our review from June
    2005 to March 2006 in accordance with generally accepted government
    auditing standards. For more on our scope and methodology, see appendix I.

                                    Results in Brief

    DOD delivered the first TacSat satellite in 12 months and for less than
    $10 million.1 A number of elements enabled this achievement. First, the
    Office of Force Transformation, as TacSat 1's sponsor, effectively managed
    the satellite's requirements by reaching consensus on requirements early
    in the development process and keeping them stable. Second, DOD
    incorporated existing technologies and adapted them for new uses in space,
    significantly reducing the likelihood of encountering unforeseen problems
    that could result in costly design changes. Third, DOD built the satellite
    within the science and technology environment, enabling scientists at
    DOD's service labs to address problems quickly, inexpensively, and
    innovatively. Finally, DOD leadership provided a motivating vision, prompt
    funding, and high-level support throughout the experiment-a key factor in
    positioning new development efforts for success. DOD has made progress
    toward developing three additional TacSats-expected to be launched in May
    2007, summer 2007, and April 2008-and is working toward developing a
    low-cost launch vehicle.

    While DOD delivered the first TacSat on time and within its overall
    budget, the department faces several challenges in providing tactical
    capabilities to the warfighter sooner. First, while DOD is working to
    demonstrate a low-cost small launch vehicle to quickly put the tactical
    satellites into orbit, it has yet to deliver such a vehicle. As a result,
    TacSat 1 has not been launched. Second, the procurement of tactical
    capabilities in the future could be hindered if collaboration between the
    science and technology and acquisition communities is limited and the
    acquisition community expands requirements after program start-as has been
    the case in the past. Third, it may be difficult to secure continued
    science and technology funding for future TacSat experiments since they
    currently are not part of an acquisition program. Finally, DOD lacks a
    departmentwide strategy and leadership for implementing efforts in this
    area. Because key advocates of the experiments have left DOD, it is
    unclear how well the experiments will be supported in the future.

    1In addition to the $10 million, available surplus hardware valued at $5
    million was used to build the satellite.

    DOD's experiences with TacSats thus far may inform major space system
    acquisitions, and some DOD officials and industry representatives believe
    there are potential long-term benefits. The approach to developing TacSats
    reflects best practices-managing requirements to match available
    resources, using relatively mature technologies, and keeping additional
    technology development separate from product development-that larger space
    system programs could emulate to achieve quicker delivery of more robust
    systems that meet program objectives with less risk. In addition,
    according to some DOD officials, the TacSats could provide an avenue for
    incremental capabilities as well as a venue for large space system
    acquisitions to prove out technologies in the space environment- something
    DOD has avoided because of the high cost of conducting such experiments.
    These officials also believe that giving space professionals the
    opportunity to manage small-scale projects like TacSats may better prepare
    them for managing larger, more complex space system acquisitions in the
    future. Finally, these officials noted that building small-scale satellite
    systems and launch vehicles could create opportunities for small,
    innovative companies to compete for DOD contracts and thereby broaden the
    space industrial base.

    To help ensure low-cost tactical capabilities continue to be developed and
    delivered to the warfighter quickly, we are recommending that DOD assign
    accountability for developing and implementing a departmentwide strategy
    for pursuing low-cost, responsive tactical capabilities-both satellite and
    launch-for the warfighter, and identify corresponding funding. In written
    comments on a draft of this report, DOD concurred with our findings and
    recommendation (DOD's letter is reprinted in app. II).

                                       Background

    The TacSat experiments and efforts to develop small, low-cost launch
    vehicles are part of a larger DOD initiative: Operationally Responsive
    Space (ORS). In general, ORS was created by DOD's Office of Force
    Transformation (OFT) in response to the Secretary of Defense's instruction
    to create a new business model for developing and employing space systems.
    Under ORS, DOD aims to rapidly deliver to the warfighter low-cost,
    short-term joint tactical capabilities defined by field
    commanders-capabilities that would complement and augment national space
    capabilities, not replace them.2 ORS would also serve as a test bed for
    the larger space program by providing a clear path for science and
    technology investments, enhancing institutional and individual knowledge,
    and providing increased access to space for testing critical research and
    development payloads. ORS is a considerable departure from the approach
    DOD has used over the past two decades to acquire the larger space systems
    that currently dominate its space portfolio. These global multipurpose
    systems, which have been designed for longer life and increased
    reliability, require years to develop and a significant investment of
    resources.3 The slow generational turnover-currently 15 to 25 years-does
    not allow for a planned rate of replacement for information technology
    hardware and software. In addition, the data captured through DOD's larger
    space systems generally go through many levels of analysis before being
    relayed to the warfighter in theater.

    The TacSat experiments aim to quickly provide the warfighter with a
    capability that meets an identified need within available resources-time,
    funding, and technology. Limiting the TacSats' scope allows DOD to trade
    off reliability and performance for speed, responsiveness, convenience,
    and customization. Once each TacSat satellite is launched, DOD plans to
    test its level of utility to the warfighter in theater. If military
    utility is established, according to a DOD official, DOD will assess the
    acquisition plan required to procure and launch numerous TacSats-forming
    constellations-to provide wider coverage over a specific theater. As a
    result, each satellite's capability does not need to be as complex as that
    of DOD's larger satellites and does not carry with it the heightened
    consequence of failure as if each satellite alone were providing total
    coverage. DOD currently has four TacSat experiments in different stages of
    development (see figure 1).

    2Smaller satellites would become a node within a tiered network of sensors
    that would include larger space systems, unmanned aircraft, and air and
    surface assets.

    3In fiscal year 2006, DOD plans to spend almost $20 billion to develop and
    procure major satellites and other space-related systems.

    Figure 1: Overview of TacSat Experiments

    According to Naval Research Laboratory officials, TacSat 2's delay is
    primarily the result of overestimating the maturity of its main payload-an
    off-the-shelf imager that was being refurbished for space use. Officials
    also noted that the contracting process, which took longer than expected,
    used multiple and varied contracts awarded under standard federal and
    defense acquisition regulations.

    DOD is also using the TacSat experiments as a means for developing "bus"
    standards-the platform that provides power, attitude, temperature control,
    and other support to the satellite in space. Currently, DOD's satellite
    buses are custom-made for each space system. According to DOD officials,
    establishing bus standards with modular or common components would
    facilitate building satellites-both small and large-more quickly and at a
    lower cost.

    To achieve one of the TacSat experiments' goals-getting new capabilities
    to the warfighter sooner-DOD must secure a small, low-cost launch vehicle
    that is available on demand. Instead of waiting months or years to carry
    out a launch, DOD is looking to small launch vehicles that could be
    launched in days, if not hours, and whose cost would better match the
    small budgets of experiments. A 2003 Air Force study determined that DOD's
    current class of launchers-the Evolved Expendable Launch Vehicle-would not
    be able to satisfy these requirements.

      DOD Successfully Delivered First TacSat through Managing Requirements and Is
                         Moving Forward with Additional Efforts

    DOD delivered the TacSat 1 satellite within cost and schedule targets. To
    develop the first TacSat, DOD effectively managed requirements, employed
    mature technologies, and built the satellite in the science and technology
    environment, all under the guidance of a leader who provided a clear
    vision and prompt funding for the project. DOD is also moving forward with
    developing additional TacSats; bus standards; and a small, low-cost launch
    vehicle available on demand.

    TacSat 1's Development Approach Enabled Successful Delivery

    In May 2004, 12 months after TacSat 1 development began, the Naval
    Research Laboratory delivered the satellite to OFT at a cost of about $9.3
    million, thereby meeting its targets to develop the satellite within 1
    year and an estimated budget of $8.5 million to $10 million. 4 Once TacSat
    1 is placed into orbit, it is expected to provide capabilities that will
    allow a tactical commander to directly task the satellite and receive data
    over DOD's Secure Internet Protocol Router-a need identified by the
    warfighter.

    4In addition to the $10 million, available surplus hardware valued at $5
    million was used to build the satellite.

    Figure 2: TacSat 1 Ready for Vibration Testing at Naval Research
    Laboratory

    Before TacSat 1's development began, OFT and the Naval Research Laboratory
    worked together to reach consensus on known warfighter requirements that
    would match the cost, schedule, and performance objectives for the
    satellite. Our past work has found that when requirements are matched with
    resources, goals can be met within estimated schedule and budget. To
    inform the requirements selection process, the Naval Research Laboratory
    used an informal systems engineering approach to assess relevant
    technologies and determine which could meet TacSat 1 mission objectives
    within budget and schedule. Once TacSat 1's requirements were set, OFT did
    not change them. To meet its mission objectives, OFT sought a capability
    that would be "good enough" for the warfighter, given available
    resources-rather than attempting to provide a significant leap in
    capability. OFT and the Naval Research Laboratory agreed to limit TacSat
    1's operational life span to 1 year, which allowed the laboratory to build
    the satellite with lower radiation protection levels, less fuel capacity,
    and fewer backups than would have been necessary for a satellite designed
    to last 6 years or longer.

    The use of existing technologies for the satellite and the bus also helped
    to keep TacSat 1 on schedule and within cost. For example, hardware from
    unmanned aerial vehicles and other aircraft were modified for space flight
    to protect them in the space environment, and bus components were
    purchased from a satellite communications company. Using items on hand at
    the Naval Research Laboratory-such as the space ground link system
    transponder and select bus electronics-resulted in a savings of about $5
    million. Using and modifying existing technologies provided the laboratory
    better knowledge about the systems than if it had tried to develop the
    technologies from scratch. According to a laboratory official, the TacSat
    1 experiment also achieved efficiencies by using the same software to test
    the satellite in the laboratory and fly the satellite.

    Developing the TacSat within the science and technology environment also
    helped the experiment meet its goals. As we have stressed in our reports
    on systems development, the science and technology environment is more
    forgiving and less costly than the acquisition environment. For example,
    when engineers encountered a blown electronics part during TacSat 1's full
    system testing, they were able to dismantle the satellite, identify the
    source of the problem, replace the damaged part, and rebuild the
    satellite-all within 2 weeks of the initial failure. According to the
    laboratory official, this problem would have taken months to repair in a
    major space acquisition program simply because there would have been
    stricter quality control measures, more people involved, and thus more
    sign-offs required at each step. Moreover, the contracting mechanism in
    place at the Naval Research Laboratory allows the laboratory to respond
    quickly to DOD requests. Specifically, the center used several existing
    engineering and technical support contracts that are competed, generally,
    at 5-year intervals, rather than competing a specific contract for TacSat
    1.

    According to a number of DOD officials, the ultimate success of the TacSat
    1 procurement was largely the result of the former OFT director, who

               o  provided the original impetus and obtained support for the
               experiment from high levels within DOD and the Congress;

               o  negotiated a customized mission assurance agreement with Air
               Force leaders to launch TacSat 1 from Vandenberg Air Force Base at
               a cost that was affordable given the experiment's budget;

               o  empowered TacSat 1's project manager at the Naval Research
               Laboratory to make appropriate trade-off decisions to deliver the
               satellite on time and within cost; and

               o  helped OFT staff develop an efficient work relationship with
               the Naval Research Laboratory team and provided the laboratory
               with prompt decisions.

    DOD Is Working on Developing Future TacSats and Low-Cost Launch Vehicles

    DOD is currently working on developing three additional TacSat
    experiments-along with bus standards-and a low-cost, on-demand launch
    vehicle. These efforts are generally in the early stages. DOD expects to
    launch TacSat 2-which began as an Air Force science and technology
    experiment and was altered to improve upon TacSat 1's capability-in May
    2007. TacSat 3, which will experiment with imaging sensors, is in the
    development phase. TacSat 4, which will experiment with friendly forces
    tracking and data communication services, is in the design phase. Table 1
    shows the development cost and schedule estimates and the target launch
    date for each satellite.

    Table 1: Development Cost and Schedule Estimates and Target Launch Dates
    for TacSats 2, 3, and 4, as of March 2006

                Development cost estimate Development completion Target launch
    TacSat 2               $39 million              29 months      May 2007
    TacSat 3               $40 million              18 months   Summer 2007
    TacSat 4               $41 million              24 months    April 2008

    Source: Naval Research Laboratory and Air Force Research Laboratory.

    With TacSat 3, the Air Force began to formalize the process for evaluating
    and selecting potential capabilities for the TacSats, leveraging the
    experiences from the first two TacSats. The selection process, which
    currently takes 3 to 4 months, includes a presentation of capability gaps
    and shortfalls from the combatant commands and each branch of the
    military, and analyses of the suitability, feasibility, and
    transferability of the capabilities deemed the highest priority. According
    to DOD officials, this process allows the science and technology community
    to obtain early buy-in from the warfighter, thereby increasing the
    likelihood that requirements will remain stable and the satellite will
    have military utility. Obtaining warfighter involvement in this way
    represents a new approach for the TacSat series. See figure 3 for a more
    complete description of this evolving process.

    Figure 3: Capability Selection Process for TacSats 3 and 4

    The Air Force has also begun to create plans for procuring TacSats for the
    warfighter should they prove to have military utility. The Air Force has
    developed a vision of creating TacSat reserves that could be deployed on
    demand, plans to establish a program office within its Space and Missile
    Systems Center, and plans to begin acquiring operational versions of
    successful TacSat concepts in 2010.

    DOD is also working to develop bus standards. Establishing bus standards
    would allow DOD to create a "plug and play" approach to building
    satellites-similar to the way personal computers are built. The service
    research labs, under the sponsorship of OFT, and the Space and Missile
    Systems Center are in the process of developing small bus standards, each
    using a different approach. The service labs expect to test some
    standardized components on the TacSat 3 bus, and system standards by
    prototyping a TacSat 4 bus. The Space and Missile Systems Center is also
    proposing to develop three standardized bus models for different-weight
    satellites, one of which may be suitable for a TacSat. The service labs
    expect to transition bus standards to the Space and Missile Systems Center
    in fiscal year 2008, at which time the center will select a final version
    for procurement for future TacSats.

    Both DOD and private industry are working to develop small, low-cost,
    on-demand launch vehicles. DOD's Defense Advanced Research Projects Agency
    (DARPA), along with the Air Force, established FALCON, a joint technology
    development program to accelerate efforts to develop a launch vehicle that
    meets these objectives. Through FALCON, DARPA expects to develop a vehicle
    that can send 1,000 pounds to low-earth orbit for less than $5 million
    with an operational cost basis of 20 flights per year for 10 years. FALCON
    is expected to flight-test hypersonic technologies and be capable of
    launching small satellites such as TacSats. DARPA is currently pursuing
    two candidates for its FALCON launch vehicle-AirLaunch, a company that
    expects to launch rockets that have been ejected from the back of a C-17
    cargo airplane, and SpaceX, whose two-stage launch vehicle will include
    the second U.S.-made rocket booster engine to be developed and flown in
    more than 25 years, according to the company's founder.5 DARPA could
    transition the AirLaunch concept to the Air Force after its demonstration
    launch in 2008. TacSat 1 is contracted to launch for about $7 million on
    SpaceX's vehicle. In addition, in 2005, the Air Force began pursuing a
    hybrid launch vehicle to support tactically and conventionally deployed
    satellites. The project is known as Affordable Responsive Spacelift, or
    ARES, and the Air Force has obtained internal approval to build a
    small-scale demonstrator that would carry satellites about two to five
    times larger than TacSats.

    5Space Exploration Technologies (SpaceX).

     DOD Faces Several Challenges in Pursuing Responsive Tactical Capabilities for
                                      Warfighters

    DOD has several challenges to overcome in pursuing a responsive tactical
    capability for the warfighter. Although DOD and others are working to
    develop small, low-cost launch vehicles for placing satellites like the
    TacSats into space, such a vehicle has yet to be developed, and TacSat 1
    has waited nearly 2 years since its completion to be launched.
    Transferring knowledge from the science and technology community to the
    acquisition community is also a concern, given that these two communities
    have not collaborated well in the past. Further, it may be difficult to
    secure funding for future TacSat science and technology projects since DOD
    allocates the majority of its research and development money to
    acquisition programs. Finally, there is no departmentwide vision or
    strategy for implementing this new capability, and the recent loss of
    leadership makes it uncertain to what extent efforts to develop low-cost,
    responsive tactical capabilities such as TacSats will continue to be
    pursued.

    DOD Has Yet to Provide a Low-Cost, Small Launch Vehicle

    While DOD has delivered TacSat 1 on time and within budget, the satellite
    is not yet operational because it lacks a reliable low-cost-under $10
    million-small launch vehicle to place it in orbit. TacSat 1's original
    launch date was in 2004 on the SpaceX's first flight of its low-cost small
    launch vehicle. However, because of technical difficulties with the launch
    vehicle and launch facility scheduling conflicts, the TacSat 1 launch has
    been delayed 2 years and more than $2 million has been added to the total
    mission costs. 6 SpaceX now plans to use a different small satellite for
    its first launch.

    Placing satellites in orbit at a low cost has been a formidable task for
    DOD for more than two decades because of elusive economies of scale. There
    is a strong causal relationship between satellite capabilities and launch
    lift. As capabilities and operational life are added, satellites tend to
    become heavier, requiring a launch vehicle that can carry a heavier
    payload. With longer-lived satellites, fewer launches are needed, making
    per unit launch costs high. In addition, the high cost of a large launch
    vehicle can only be justified with an expensive, long-living multimission
    satellite. Ultimately, the high cost of producing a complex satellite has
    created a low tolerance for risk in launching the satellite and a "one
    shot to get it right" mentality.

    Over the past 10 years, DOD and industry have attempted to develop a
    low-cost launch vehicle. Three launch vehicles in DOD's inventory-the
    Pegasus, Taurus, and, to some extent, the Minotaur-were designed to
    provide space users with a low-cost means of quickly launching small
    payloads into low-earth orbit. 7 DOD expected that relatively high launch
    rates, from both commercial and government use, would keep costs down, but
    the market for these launch vehicles did not materialize. For example,
    since its introduction in 1990, Pegasus has launched only 36 times, an
    average of 3 launches per year; Taurus has been launched only 7 times
    since it was introduced in 1994. The average cost of these launch vehicles
    is $16 million to $33 million. To provide another avenue for launching
    small satellites, the Air Force has proposed refurbishing part of its
    fleet of decommissioned intercontinental ballistic missiles-450 of which
    have been dismantled. The cost of retrofitting the missiles and preparing
    them for launch is about $18 million to $23 million. However, one Air
    Force official questioned whether these vehicles are too large for current
    TacSats.

    6Mission costs include spacecraft, launch, equipment, ground station
    preparation, and 1 year of flight operations.

    Some new developers in the space industry are cautiously optimistic about
    the small satellite market. For example, SpaceX signed seven contracts to
    launch various small satellites, including TacSat 1. Despite this
    optimism, SpaceX's first launch of its new vehicle has yet to occur-in
    part because it lacks a suitable launch facility. The launch facilities
    located in the United States cannot readily accommodate quick-response
    vehicles. Vandenberg Air Force Base-one of two major launch sites in the
    United States-has lengthy and detailed scheduling processes and strict
    safety measures for preparing for and executing a launch, making it
    difficult to launch a small satellite within a tight time frame and at a
    low cost.8 SpaceX's launch of TacSat 1 at Vandenberg was put on hold
    because of the potential risks it posed to a billion-dollar satellite that
    was waiting to be launched from a nearby pad. In addition, the Air Force
    licensed the use of another nearby pad at Vandenberg to a contractor for
    larger-scale launches. Given the proximity of the launch pads, SpaceX's
    insurance premium increased 10-fold, from about $50,000 to as much as
    $500,000, which added $2.3 million to TacSat 1's total mission costs.
    Because of these delays, SpaceX decided to carry a different experimental
    satellite on its first launch and to use a launch facility on Kwajalein
    Atoll, in the Pacific Ocean.9 The potential effect of changes-such as
    increased premiums or the need to transport satellites to distant
    locations-on efforts to keep costs low and deliver capabilities to the
    warfighter sooner is unknown.

    7Pegasus, Taurus, and Minotaur launch vehicles are built by Orbital
    Sciences Corporation.

    8The other launch facility, Cape Canaveral Air Force Station, is currently
    not expected to be used for TacSats launches.

    9The tentative launch window for the first flight of SpaceX's launch
    vehicle is March 20 through 25, 2006.

    The Air Force is beginning to examine ways to better accommodate a new
    generation of quick-response vehicles. For example, Air Force officials
    are examining the feasibility of establishing a location on Vandenberg
    specifically for these vehicles that is separate from the larger launch
    vehicle pads. Officials are also assessing the suitability of other
    locations, such as Kodiak Island, for quickly launching small satellites.

    Procurement of TacSats by DOD's Acquisition Community May Be Hindered by Limited
    Transfer of Knowledge and Requirements Instability

    To achieve a low-cost, on-demand tactical capability for the warfighter,
    the TacSat experiments will need to be transitioned into the acquisition
    community. We have previously reported that DOD's acquisition community
    has been challenged to maximize the amount of knowledge transferred from
    the science and technology community, and that DOD's science and
    technology and acquisition organizations need to work more effectively
    together to achieve desired outcomes. Many of the space programs we
    reviewed over the past several decades have incurred unanticipated cost
    and schedule increases because they began without knowing whether
    technologies could work as intended and invariably found themselves
    addressing technical problems in a more costly environment.10 Although DOD
    recently developed a space science and technology strategy to better
    ensure that labs' space technology efforts transition to the acquisition
    community, the acquisition community continues to question whether labs
    adequately understand acquisition needs in terms of capabilities and time
    frames. As a result, the acquisition community would rather use its own
    contractors to maintain control over technology development.

    According to DOD officials, action has been taken to improve the level of
    collaboration and coordination on the TacSat experiments. Officials from
    DOD laboratories involved in TacSats and acquisition communities agree
    that they are working better together on the experiments than they have on
    past space efforts. However, in pursuing a low-cost, on-demand tactical
    capability, the science and technology and acquisition communities have
    moved forward on somewhat separate tracks, and it is unclear to what
    extent the work and knowledge gained by the labs will be leveraged when
    the TacSat experiments are transferred to the acquisition community. For
    example, the Air Force and Navy labs are working to develop bus standards
    for the TacSat experiments that are scheduled to be transitioned to the
    Space and Missile Systems Center, the Air Force's acquisition arm, in
    fiscal year 2008. Yet, the Space and Missile Systems Center, working with
    the Aerospace Corporation, has proposed three different options for
    standardizing the bus. While two of the options are generally larger-and
    are intended for larger space assets-one of the proposed designs may be
    suitable for TacSats, although it will likely be costlier than a
    lab-generated counterpart.

    10GAO, Technology Development: New DOD Space Science and Technology
    Strategy Provides Basis for Optimizing Investments, but Future Versions
    Need to Be More Robust, GAO-05-155 (Washington D.C.: Jan. 28, 2005).

    In addition, our past work has shown that DOD's space programs-as well as
    other large DOD programs-have been unable to adequately define
    requirements and keep them stable, and seldom achieve a match between
    resources and requirements at the start of the acquisition. One factor
    that contributes to poorly defined and unstable requirements is that space
    acquisition programs have historically attempted to achieve full
    capability in a single step and serve a broad base of users, regardless of
    the design challenge or the maturity of technologies. Given this track
    record, some DOD officials expressed concern over Space and Missile
    Systems Center's ability to adopt the TacSat approach of delivering
    capabilities that are good enough to meet a warfighter need within cost
    and schedule constraints. Air Force officials identified the center's
    organizational culture of risk avoidance and the acquisition process as
    two of the most significant barriers to developing and deploying space
    systems quickly.

    Short-Term Funding for Upcoming TacSats Uncertain

    TacSats 1 and 2 have been fully funded within DOD, and TacSats 3 and 4
    were recently funded. However, funding is uncertain for TacSats beyond 3
    and 4. While the Congress added funding to DOD's 2006 budget to support
    TacSat efforts, such as developing bus standards, DOD did not request such
    funding. According to a DOD official, there would not be an effort to
    develop bus standards if funding had not come from the Congress.

    Historically, DOD's research and development budget has been heavily
    weighted to system acquisitions-80 percent of this funding goes to weapon
    system programs, compared with 20 percent going to science and technology.
    In addition, science and technology funding is spread over thousands of
    projects, while funding for weapon system programs is spread over
    considerably fewer, larger programs. This funding distribution can
    encourage financing technology development in an acquisition program.
    However, as we have previously reported, developing technologies within an
    acquisition program typically leads to cost and schedule increases-further
    robbing the science and technology community and other acquisition
    programs of investment dollars.

    Lack of DOD-wide Strategy and Loss of Leadership

    DOD currently has no departmentwide strategy for providing a responsive
    tactical capability for the warfighter. Without such a strategy, it is
    unknown whether and to what degree there may be gaps or overlaps in
    efforts. DOD efforts to develop low-cost satellite and launch capabilities
    are moving forward under multiple offices at different levels (see table
    2).

    Table 2: DOD Current Planning Efforts

    DOD organization                   Planning action
    National Security Space Office        o  Developing a responsive space
    (primarily aligned with the           investment architecture and road map
    Secretary of the Air Force as
    Executive Agent for Space)
    U.S. Strategic Command (primarily     o  Developing a joint capabilities
    aligned with the Secretary of         document
    Defense via the Joint Chiefs of
    Staff)
    Air Force Space Command (primarily    o  Developing four initial
    aligned with U.S. Strategic           capabilities documents
    Command)                              o  Planning for establishment of an
                                             acquisition office
                                             o  Developing Enabling Concept
                                             Document
    Space and Missile Systems Center      o  Planning for establishment of an
    (primarily aligned with Air Force     acquisition office
    Space Command)                        o  Planning for establishment of an
                                             office that coordinates the
                                             transition of experiments to
                                             acquisition programs

    Source: DOD.

    Since these efforts are occurring simultaneously, it is unclear how and if
    they will be used to inform one another. Moreover, there are different
    visions for the roles of low-cost, responsive satellites and launch
    vehicles in DOD's overall space portfolio. For example, one Air Force
    official stated his office is looking for direction from the Congress on
    how to move forward rather than from somewhere within DOD. Further, when
    interviewed, other Air Force officials were not in agreement over how the
    Air Force's vision for using TacSats fits in with OFT's proposed use of
    this capability for DOD.

    In addition to the lack of a DOD-wide strategy, the recent departure of
    key personnel may have created a gap in leadership, making it uncertain to
    what extent efforts to develop tactical capabilities such as TacSats will
    be pursued. As we reported in November 2005, program success hinges on
    whether leaders can make strategic investment decisions and provide
    programs with the direction or vision for realizing goals and alternative
    ways of meeting those goals.11

    One official involved in developing the overall architecture described the
    pursuit of these capabilities as a "grassroots effort," underscoring the
    importance of having enthusiastic individuals involved in moving it
    forward. According to a number of DOD officials, the former OFT director
    was widely respected within and outside the agency and served as a
    catalyst for transformation across DOD, and was credited with championing
    and pursuing innovative concepts that could sustain and broaden military
    advantage. With the departure of the OFT director and other key advocates
    of the TacSat concept, service lab officials told us they are concerned
    about the fate of the TacSat experiments. DOD officials we spoke with
    acknowledged that there is no agreement on who should ultimately be
    responsible for deciding the direction of the TacSat experiments and other
    efforts to develop low-cost responsive tactical capabilities for the
    warfighter.

    Experiences with TacSats May Inform Major Space System Acquisitions and Lead to
                                   Long-Term Benefits

    DOD's experiences developing a tactical capability for the warfighter
    through TacSats may be used to inform the way major space systems are
    acquired. Specifically, DOD's process for developing TacSat 1 reflects
    best practices that larger space system programs could employ to achieve
    better acquisition outcomes. In addition, some DOD officials believe that
    these efforts-focusing on delivering capabilities to the warfighter
    through TacSats and small, low-cost launch vehicles-could lead to
    long-term benefits, including providing opportunities for major space
    systems to test new technologies, enhancing the skills of DOD's space
    workforce, and broadening the space industrial base.

    11GAO, Best Practices: Better Support of Weapon System Program Managers
    Needed to Improve Outcomes, GAO-06-110 (Washington, D.C.: Nov. 30, 2005).

    Our past work has shown that commercial best practices-such as managing
    requirements, using mature technologies, and developing technology within
    the science and technology community-contribute to successful development
    outcomes. TacSat 1 confirms that applying these practices can enable
    projects to meet cost and schedule targets. While TacSat 1, as a small
    experimental satellite with only a few requirements, is much less complex
    than a major space system, we have reported that commercial best practices
    are applicable to major space system acquisitions and recommended that DOD
    implement them for such acquisitions. Despite our recommendation, DOD's
    major space system acquisitions have yet to consistently apply these best
    practices.

               o  Manage requirements. DOD's major space acquisition programs
               have typically not achieved a match between requirements and
               resources (technology, time, and money) at program start.
               Historically, these programs have attempted to satisfy all
               requirements in a single step, regardless of the design challenge
               or the maturity of technologies needed to achieve the full
               capability. As a result, these programs' requirements have tended
               to be unstable-that is, requirements were changed, added, or
               both-which has led to the programs not meeting their performance,
               cost, and schedule objectives. We have found that when resources
               and requirements are matched before individual programs are
               started, programs are more likely to meet their objectives. One
               way to achieve this is through an evolutionary development
               approach, that is, pursue incremental increases in capability
               versus significant leaps.

               o  Use mature technologies. DOD's major space acquisition programs
               typically begin product development before critical technologies
               are sufficiently matured, forcing the program to mature
               technologies after product development has begun. Our reviews of
               DOD and commercial technology development cases indicate that
               demonstrating a high level of maturity before new technologies are
               incorporated into product development puts those programs in a
               better position to succeed.

               o  Develop technology within the science and technology
               environment. DOD's space acquisition programs tend to take on
               technology development concurrently with product development,
               increasing the risk that significant problems will be discovered
               late in development and that more time, money, and effort will be
               needed to fix these problems. Our reviews have shown that
               developing technologies separate from product development greatly
               minimizes this risk.

    DOD officials and industry representatives we spoke with also noted that
    some long-term benefits could result from focusing on delivering
    capabilities to the warfighter quickly.

               o  First, small, low-cost, responsive satellites like the TacSats
               could augment major space systems-provided there is a means to
               launch the satellites. Because TacSats do not require significant
               investment and are not critical to multiple missions, the
               consequence of failure of a TacSat is low. In contrast, major
               space systems typically are large, complex, and multimission, and
               take many years to build and deliver. If a major space satellite
               fails, there are significant cost and schedule consequences.
               Ultimately, the already long wait time for the warfighter to
               receive improved capabilities is extended.

               o  Second, developing small, low-cost launch vehicles could
               provide an avenue for testing new technologies in space. According
               to DOD officials, less than 20 percent of DOD's space research and
               development payloads make it into space, even while relying
               heavily on the National Aeronautics and Space Administration's
               Space Shuttle, which was most recently grounded for 2  1/2 years.
               We recently reported that DOD's Space Test Program, which is
               designed to help the science and technology community find
               opportunities to test in space relatively cost-effectively, has
               only been able to launch an average of seven experiments annually
               in the past 4 years.12 According to industry representatives and
               DOD officials, efforts to develop a small, low-cost launch vehicle
               could improve the acquisition process because testing technologies
               in an operational environment could lower the risk for program
               managers by providing mature technologies that could be integrated
               into their acquisition programs.

               o  Third, giving space professionals the opportunity to manage
               small-scale projects like TacSats from start to finish may better
               prepare them for managing larger, more complex space system
               acquisitions in the future. According to Navy and Air Force lab
               officials, managing the TacSat experiments has provided hands-on
               experience with the experiment from start to finish, unlike the
               experience provided to program managers of large systems at the
               Air Force Space and Missile Systems Center.

               o  Finally, building low-cost, responsive satellites and launch
               vehicles could create opportunities for small, innovative
               companies to compete for DOD contracts and thereby increase
               competition and broaden the space industrial base. In April 2005,
               over 50 small companies sent representatives to the Third
               Responsive Space Conference, an effort hosted by a small private
               launch company. An industry representative stated that a number of
               small companies are excited about developing TacSats and small,
               low-cost launch vehicles and the potential to garner future DOD
               contracts, but he cautioned that it would be important to maintain
               a steady flow of work in order to keep staff employed and preserve
               in-house knowledge. Other industry representatives told Air Force
               officials that they are receiving mixed signals from the
               government regarding its commitment to these efforts-there has
               been a lot of talk about them, but relatively little funding. In
               addition, another industry representative stated that requirements
               must be contained; otherwise, costs will increase and eventually
               squeeze small companies back out of the business.

    12 GAO-05-155 .

                                      Conclusions

    For more than two decades, DOD has invested heavily in space assets to
    provide the warfighter with critical information needed to successfully
    conduct military operations. Despite this investment, DOD has been
    challenged to deliver its major space acquisitions quickly and within
    estimated costs. TacSat 1-an experimental satellite-has shown that by
    matching user requirements with available resources, using mature
    technologies, and developing technologies separate from product
    development, new tactical capabilities can be delivered quickly and at a
    low cost. By establishing a capabilities selection process, the TacSat
    initiative has also helped to ensure that future TacSats will address
    high-priority warfighter needs. At the same time, the TacSats may
    demonstrate an alternative approach to delivering capabilities sooner-that
    is, using an incremental approach to providing capabilities, rather than
    attempting to achieve the quantum leap in capability often pursued by
    large space systems, which leads to late deliveries, cost increases, and a
    high consequence of failure. By not optimizing its investment in TacSat
    and small launch efforts, DOD may fail to capitalize on a valuable
    opportunity to improve its delivery of space capabilities. As long as
    disparate entities within DOD continue moving forward without a coherent
    vision and sustained leadership for delivering tactical capabilities, DOD
    will be challenged to integrate these efforts into its broader national
    security strategy.

                          Recommendation for Executive Action

    To help ensure that low-cost tactical capabilities continue to be
    developed and are delivered to the warfighter quickly, we recommend that
    the Secretary of Defense assign accountability for developing and
    implementing a departmentwide strategy for pursuing low-cost, responsive
    tactical capabilities-both satellite and launch-for the warfighter, and
    identify corresponding funding.

                                    Agency Comments

    We provided a draft of this report to DOD for review and comment. DOD
    concurred with our recommendation and provided technical comments, which
    we incorporated where appropriate. DOD's letter is reprinted as appendix
    II.

    We plan to provide copies of this report to the Secretary of Defense, the
    Secretary of the Air Force, and interested congressional committees. We
    will make copies available to others upon request. In addition, the report
    will be available on the GAO Web site at http://www.gao.gov .

    If you or your staff have any questions concerning this report, please
    contact me at (202) 512-4841. Contact points for our Offices of
    Congressional Relations and Public Affairs may be found on the last page
    of this report. Key contributors to the report are Arthur Gallegos,
    Maricela Cherveny, Jean Harker, Leslie Kaas Pollock, Noah B. Bleicher, and
    Karen Sloan.

    Sincerely yours,

    Michael J. Sullivan Director, Acquisition and Sourcing Management

    Appendix I: Scope and Methodology Appendix I: Scope and Methodology

    To assess the outcomes to date from the TacSat experiments and efforts to
    develop small, low-cost launch vehicles, we interviewed Department of
    Defense (DOD) officials in the Office of Force Transformation, Washington,
    D.C.; Air Force Space Command, Peterson Air Force Base, Colorado; Space
    and Missile Systems Center, Los Angeles Air Force Base, California; Air
    Force Research Laboratory, Kirtland Air Force Base, New Mexico, and
    Wright-Patterson Air Force Base, Ohio; U.S. Naval Research Laboratory,
    Washington, D.C.; and the Defense Advanced Research Projects Agency,
    Virginia, via written questions and responses. We also analyzed documents
    obtained from these officials. In addition, we interviewed industry
    representatives involved in developing large space systems and small
    commercial launch vehicles.

    To understand the challenges to DOD's efforts and to determine whether
    DOD's experiences with TacSats and small, low-cost launch vehicles could
    inform major space system acquisitions, we analyzed a wide body of GAO and
    DOD studies that discuss acquisition problems and associated challenges,
    including our work on best practices in weapon system development that we
    have conducted over the past decade. In addition to having discussions
    with officials at the Office of Force Transformation, the Air Force Space
    Command, the Space and Missile Systems Center, and the Air Force and Navy
    research labs, we spoke with officials from the National Security Space
    Office, Virginia, and the Force Structure, Resources, and Assessment
    Directorate of the Joint Chiefs of Staff, Washington, D.C. We conducted
    our review from June 2005 to March 2006 in accordance with generally
    accepted government auditing standards.

    Appendix II: Comments from the Department of Defense Appendix II: Comments
    from the Department of Defense

    (120457)

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    www.gao.gov/cgi-bin/getrpt? GAO-06-449 .

    To view the full product, including the scope

    and methodology, click on the link above.

    For more information, contact Michael J. Sullivan at (202) 512-4841 or
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    Highlights of GAO-06-449 , a report to the Subcommittee on Strategic
    Forces, Committee on Armed Services, House of Representatives

    March 2006

    SPACE ACQUISITIONS

    DOD Needs a Departmentwide Strategy for Pursuing Low-Cost, Responsive
    Tactical Space Capabilities

    For more than two decades, the Department of Defense (DOD) has invested
    heavily in space assets to provide the warfighter with mission-critical
    information. Despite these investments, DOD commanders have reported
    shortfalls in space capabilities.

    To provide tactical capabilities to the warfighter sooner, DOD recently
    began developing TacSats-a series of small satellites intended to be built
    within a limited time frame and budget-and pursuing options for small,
    low-cost vehicles for launching small satellites.

    GAO was asked to (1) examine the outcomes to date of DOD's TacSat and
    small, low-cost launch vehicle efforts, (2) identify the challenges in
    pursuing these efforts, and (3) determine whether experiences with these
    efforts could inform DOD's major space system acquisitions.

    What GAO Recommends

    GAO is recommending that DOD assign accountability for developing and
    implementing a departmentwide strategy for pursuing low-cost tactical
    capabilities-both satellite and launch vehicles-and identify corresponding
    funding. In commenting on the report, DOD agreed with the recommendation.

    Through effective management of requirements and technologies and strong
    leadership, DOD was able to deliver the first TacSat satellite in 12
    months and for less than $10 million. The Office of Force Transformation,
    TacSat 1's sponsor, set requirements early in the satellite's development
    process and kept them stable. DOD modified existing technologies for use
    in space, significantly reducing the likelihood of encountering unforeseen
    problems that could result in costly design changes. The satellite was
    also built within DOD's science and technology environment, which enabled
    service laboratory scientists to address problems quickly, inexpensively,
    and innovatively. The vision and support provided by leadership were also
    key to achieving the successful delivery of TacSat 1. DOD has also made
    progress in developing three additional TacSats and is working toward
    developing a low-cost launch vehicle available on demand.

    Despite this achievement, DOD faces several challenges in providing
    tactical capabilities to the warfighter sooner. First, DOD has yet to
    develop a low-cost, small launch vehicle available to quickly put tactical
    satellites, including TacSat 1, into orbit. Second, limited collaboration
    between the science and technology and the acquisition communities-as well
    as the acquisition community's tendency to expand requirements after
    program start-could impede efforts to quickly procure tactical
    capabilities. Securing funding for future TacSat experiments may also
    prove difficult because they are not part of an acquisition program.
    Finally, DOD lacks a departmentwide strategy for implementing these
    efforts, and because key advocates of the experiments have left DOD, it is
    unclear how well they will be supported in the future.

    Regardless of these challenges, DOD's experiences with the TacSat
    experiments thus far could inform its major space system acquisitions.
    DOD's approach to developing the TacSats-matching requirements to
    available resources, using proven technologies, and separating technology
    development from product development-reflects best commercial practices
    that lead to quicker delivery with less risk. According to some DOD
    officials, the TacSats and small, low-cost launch vehicles-once they are
    developed-could also provide an avenue for large space system acquisitions
    to prove out technologies in the space environment, something DOD has
    avoided because of the high cost of launching such experiments. These
    officials also believe that giving space professionals the opportunity to
    manage small-scale projects like TacSats may better prepare them for
    managing larger, more complex space system acquisitions. Finally, these
    officials noted that building small-scale satellite systems and launch
    vehicles could create opportunities for small, innovative companies to
    compete for DOD contracts and thereby broaden the space industrial base.
    *** End of document. ***