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

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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 .

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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. ***