DOD is Making Progress in Adopting Best Practices for the	 
Transformational Satellite Communications System and Space Radar 
but Still Faces Challenges (02-AUG-07, GAO-07-1029R).		 
                                                                 
The Department of Defense (DOD) is working to achieve information
superiority over adversaries and share information seamlessly	 
among disparate weapons systems. Two programs envisioned as a	 
part of this effort are Transformational Satellite Communications
System (TSAT) and Space Radar. TSAT is designed to provide rapid 
worldwide secure communications with air and space		 
systems--including Space Radar--through radio frequency and laser
communications links. Space Radar is expected to provide global  
all-weather intelligence, surveillance, and reconnaissance,	 
particularly in denied areas, for military, national		 
intelligence, and civil users. Both TSAT and Space Radar will	 
require major software development efforts and employ a 	 
significant number of experienced staff. TSAT and Space Radar	 
development efforts are expected to be among the most costly	 
space systems ever developed by DOD. In 2004, TSAT was estimated 
to have a total life cycle cost of about $16 billion, of which	 
$2.0 billion will have been spent at the end of fiscal year 2007.
Space Radar is estimated to have a total life cycle cost from $20
billion to $25 billion, and the program has spent about 	 
approximately $464.5 million. TSAT expects to begin product	 
development in fiscal year 2008, and launch the first satellite  
in the first quarter of fiscal year 2016. Space Radar expects to 
begin product development in fiscal year 2009 and launch the	 
first satellite in third quarter of fiscal year 2016. The systems
are also expected to be among the most complex ever developed,	 
largely because of the challenges associated with integrating	 
critical technologies within the satellites and networking the	 
satellites to other platforms. Congress requested that GAO assess
DOD's progress in adopting best practice as both of these	 
programs proceed toward product development. We presented our	 
findings on TSAT and Space Radar in briefings to Congressional	 
staffs in March 2007. This letter summarizes our findings,	 
conclusions, and recommendations.				 
-------------------------Indexing Terms------------------------- 
REPORTNUM:   GAO-07-1029R					        
    ACCNO:   A73852						        
  TITLE:     DOD is Making Progress in Adopting Best Practices for the
Transformational Satellite Communications System and Space Radar 
but Still Faces Challenges					 
     DATE:   08/02/2007 
  SUBJECT:   Aerospace research 				 
	     Communication satellites				 
	     Communication systems				 
	     Defense procurement				 
	     Planning programming budgeting			 
	     Procurement planning				 
	     Program evaluation 				 
	     Radar equipment					 
	     Research programs					 
	     Strategic planning 				 
	     Technology 					 
	     Research and development				 
	     Cost estimates					 
	     DOD Space Radar Program				 
	     DOD Transformational Satellite			 
	     Communications System Program			 
                                                                 

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GAO-07-1029R

   

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Washington, DC 20548

August 2, 2007

The Honorable Bill Nelson
Chairman
The Honorable Jeff Sessions
Ranking Member
Subcommittee on Strategic Forces
Committee on Armed Services
United States Senate

The Honorable Ellen Tauscher
Chairwoman
The Honorable Terry Everett
Ranking Member
Subcommittee on Strategic Forces
Committee on Armed Services
House of Representatives

The Honorable Silvestre Reyes
House of Representatives

Subject: DOD is Making Progress in Adopting Best Practices for the
Transformational Satellite Communications System and Space Radar but Still
Faces Challenges

The Department of Defense (DOD) is working to achieve information
superiority over adversaries and share information seamlessly among
disparate weapons systems. Two programs envisioned as a part of this
effort are Transformational Satellite Communications System (TSAT) and
Space Radar. TSAT is designed to provide rapid worldwide secure
communications with air and space systems--including Space Radar--through
radio frequency and laser communications links. Space Radar is expected to
provide global all-weather intelligence, surveillance, and reconnaissance,
particularly in denied areas, for military, national intelligence, and
civil users. Both TSAT and Space Radar will require major software
development efforts and employ a significant number of experienced staff.

TSAT and Space Radar development efforts are expected to be among the most
costly space systems ever developed by DOD. In 2004, TSAT was estimated to
have a total life cycle cost of about $16 billion, of which $2.0 billion
will have been spent at the end of fiscal year 2007. Space Radar is
estimated to have a total life cycle cost from $20 billion to $25 billion,
and the program has spent about approximately $464.5 million. TSAT expects
to begin product development in fiscal year 2008, and launch the first
satellite in the first quarter of fiscal year 2016. Space Radar expects to
begin product development in fiscal year 2009 and launch the first
satellite in third quarter of fiscal year 2016. The systems are also
expected to be among the most complex ever developed, largely because of
the challenges associated with integrating critical technologies within
the satellites and networking the satellites to other platforms.

You requested that we assess DOD's progress in adopting best practice as
both of these programs proceed toward product development. We presented
our findings on TSAT and Space Radar in briefings to your staffs in March
2007. This letter summarizes our findings, conclusions, and
recommendations. Copies of the briefings are enclosed.

Results in Brief

DOD is making efforts to instill best practices on TSAT and Space Radar.
These practices, as GAO has identified over the past decade, are to
separate technology discovery from acquisition, follow an incremental path
toward meeting user needs, match resources and requirements at program
start, and use quantifiable data to make decisions to move to next phases.
Collectively, these practices ensure a high level of knowledge is achieved
at key junctures in development and that a program does not go forward
unless a strong business case on which the program was originally
justified continues to hold true.

However, sustaining these efforts could prove challenging. Specifically:

           o Successful organizations we have studied ensure that
           technologies are mature, that is, proven to work as intended
           before program start. In the past DOD has chosen to extend
           technology invention into the acquisition process, and as a
           result, programs have experienced technical problems that require
           large amounts of time and money to fix. By contrast, best practice
           organizations mature technologies to the point of being tested in
           a relevant or operational environment before committing to an
           acquisition program.

           TSAT and Space Radar have made progress in the maturation of
           technologies, but challenges remain. In a June 2007 update, DOD
           determined that six of the seven critical technologies for TSAT
           are at a technology readiness level (TRL) 6 (meaning the
           technology has been tested in a relevant environment), and the
           program expects to have the remaining technology at a TRL 6 prior
           to the preliminary design phase. Space Radar expects to have
           almost all critical technologies mature to a TRL 6 by program
           start in June 2009. However, the program currently has five
           critical technologies assessed to be TRL 3 to TRL 4. This
           signifies that DOD will need to gain significant knowledge on
           these technologies to gain sufficient insight into costs and
           schedule to be well positioned for success by program start. In
           addition, the program office acknowledges that some of the seven
           technology risks it has rated as high, including risks related to
           spectrum, software, and integration with space radar users, will
           not be fully mitigated prior to program start.

           o Successful organizations defer more ambitious technology efforts
           to corporate research departments (equivalent to the science and
           technology [S&T] organization in DOD) until they are ready to be
           added to future increments. Our best practice work has shown that
           a technology development environment is more forgiving and less
           costly than a delivery-oriented acquisition program environment.
           Events such as test failures, new discoveries, and time spent
           attaining knowledge are considered normal in this environment.

           Both programs have deferred more ambitious technology development
           efforts to the science and technology environment. TSAT, for
           example, deferred the inclusion of the wide-field of view
           multi-access communication technology to reduce risk on the
           program, and is currently contributing about $16.7 million for
           "off-line" maturation of this technology until opportunities arise
           for including it as part of future increments. In addition, it
           also eliminated multi-access laser communications^1 capabilities
           from consideration for future increments at this time due to the
           immaturity level of the technology. Space Radar has deferred
           lithium-ion batteries, more efficient solar cells, and onboard
           processing for its first increment, and like TSAT, is contributing
           toward their development by S&T organizations. At this time, Space
           Radar has not defined details of an increment beyond the first
           one.

           o Successful organizations extensively research and define
           requirements before program start to ensure that they are
           achievable, given available resources, and that they do not define
           requirements after starting programs. In successful programs,
           negotiations and trade-offs occur before product development is
           started to ensure that a match exists between customer
           expectations and developer resources.

           Both programs have also strived to employ best practices to help
           identify and determine achievability of requirements. In 2006, the
           TSAT program was restructured into an incremental approach to
           control risk and increase confidence in the program schedule,
           putting agreements in place between development partners that
           organize capabilities into blocks based on technological maturity.
           For example, TSAT has reached agreements with groups representing
           the needs of users and warfighters that addresses which
           requirements will be included in the first and second blocks of
           the program. Space Radar has also developed an approach to obtain
           agreement and collaboration among users on program requirements.
           In an effort to facilitate communication and reach agreement over
           requirements between program partners within DOD and the
           Intelligence Community (IC), Space Radar has proactively
           introduced a variety of working groups that provide the program
           with a consolidated senior group of participants to validate,
           coordinate and integrate Space Radar requirements and concepts of
           operations throughout project development. Nevertheless, the Space
           Radar development effort has not yet had to fully define program
           requirements, including key performance parameters. Until all
           requirements are defined, vetted, and validated, the program
           office could still face challenges in closing potential gaps
           between requirements and resources.

           o Successful organizations ensure other resources--primarily
           funding, time, and people -- can also be matched to requirements
           before program start. Funding: Both programs face long-term
           challenges for funding. As DOD seeks to fund Space Radar and TSAT,
           it will be (1) undertaking other new, costly efforts, including
           the Global Positioning System III, the Space Based Surveillance
           System, and the Alternative Infrared Satellite System; (2)
           addressing cost overruns associated with legacy programs; and (3)
           facing increased pressures to ramp up investments in assets
           designed to protect space systems. In total, these efforts will
           increase DOD's investment for all major space acquisitions from
           $6.31 billion to $9.22 billion, or about 46 percent over the next
           3 years. More may be needed if technical, software, and other
           problems on current programs worsen. At the same time, investment
           needs for other weapon systems are also on the rise, while
           long-term budget forecasts indicate that considerably fewer
           dollars will be available for discretionary spending in coming
           years rather than more. Funding for Space Radar is further
           complicated by the lack of long-term funding agreements beyond
           fiscal year 2013, adding uncertainty to DOD's and the intelligence
           community's ability to afford expensive programs such as Space
           Radar. To its credit, Space Radar has worked to establish a key
           funding agreement between DOD and the intelligence community that
           addresses short-term cost sharing responsibilities. In prior
           reports, we have stated that as long as too many programs compete
           for too few dollars in DOD, programs will be incentivized to
           produce optimistic estimates and suppress bad news. They will view
           success as securing the next installment of funds versus
           delivering capability within cost and schedule goals. We have
           recommended that DOD guide its decisions to start space and other
           weapons acquisition programs with an overall investment strategy
           that would identify priorities for funding so that space systems
           that are expected to play a critical role in transformation, such
           as Space Radar and TSAT, could be priorities along with other
           legacy and transformational systems. To date, this has not been
           done for space or for DOD's broader weapons portfolio.

^1 Multi-access laser communications technology is to provide simultaneous
communications for a number of optical users at very high data rates.

           Schedule: Schedules for both programs may also be optimistic. The
           TSAT program may have underestimated the time for design,
           integration, and production activities. For example, TSAT embarked
           on a major software development effort in January 2006 that would
           build the overall network architecture and provide network
           management capabilities for TSAT and Advanced Extremely High
           Frequency satellites, but DOD's Program Analysis & Evaluation
           office has expressed concern about the overall complexity of the
           program and the ability of the contractors to write enough
           software code in one year as is necessary for the program to
           proceed effectively.  In addition, the Space Radar schedule is
           shorter between program start and initial launch capability than
           what DOD has achieved for other complex satellite systems. The
           Space Radar acquisition timeframe from program start to initial
           launch capability is 86 months, which our analysis shows is
           shorter than what DOD has achieved or estimated for other complex
           satellite systems.

           Workforce: TSAT also faces further challenges in meeting workforce
           personnel requirements to manage and oversee the program in the
           future, such as the impact from future Air Force workforce
           reductions of 40,000 active duty personnel--positions that the Air
           Force may not be able to fill with civilians due to budgetary
           constraints.

Conclusion

Continued efforts by the programs to instill best practices on TSAT and
Space Radar are good steps toward addressing acquisition problems,
representing significant shifts in thinking about how space systems should
be developed. While these steps can help better position these programs
for success, they will not work without adhering to commitments to delay
milestone decisions or make trade-offs if there are still gaps between
requirements and resources. DOD space program and senior officials
recognize this and have expressed a commitment to delay program milestones
in order to provide the time needed to match resources to requirements, if
necessary. However, DOD has not addressed funding pressures that have
encouraged premature program starts and too much optimism for past
satellite development efforts.

Recommendation for Executive Action

To ensure that TSAT and Space Radar do not succumb to funding pressures
within DOD, we recommend that the Secretary of Defense direct the Under
Secretary of the Air Force to identify potential gaps between requirements
and resources before approving the start of product development and, if
necessary, adjust requirements and resources to increase the likelihood of
achieving program cost, schedule, and performance goals.

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

Scope and Methodology

To assess DOD's progress in adopting best practices as both of these
programs proceed toward product development, we obtained and analyzed
pertinent documents from the program offices at the Air Force Space and
Missile Systems Center at Los Angeles Air Force Base, California. We
reviewed budget documents, risk management plans, and risk handling plans
as well as requirements documentation for both TSAT and Space Radar. We
also reviewed acquisition strategies, program office and prime contractor
schedules, and technology development plans for both programs.

To accomplish our work, we conducted interviews with cognizant and
responsible program officials at Space and Missile Systems Center in El
Segundo, California, and with Department of Defense officials in
Arlington, Virginia. We also met with Air Force Space Command officials at
Peterson Air Force Base, Colorado, as well as the Space Radar Integrated
Program Office in Chantilly, Virginia. We also visited contractor
facilities in California, Colorado, and Maryland.

We conducted our work from July 2006 to March 2007 in accordance with
generally accepted government auditing standards.

                                   - - - - -

We will send copies of the letter to Department of Defense and interested
congressional committees. We will also make copies available to others
upon request.

Should you or your staff have any questions on matters discussed in this
report, please contact me at (202) 512-4841 or [7][email protected]
contact points for our Offices of Congressional Relations and Public
Affairs may be found on the last page of this report. Principal
contributors to this report were Art Gallegos, Assistant Director; Josie
Sigl; Ann Hobson; Arturo Holguin; Jeff Barron; Rich Horiuchi; Maria
Durant; Jackie Wade; Tony Beckham; and Hai Tran.

Cristina Chaplain
Director
Acquisition and Sourcing Management

Enclosure I: Comments from the Department of Defense

Enclosure II: Space Radar Briefing Slides

Enclosure III: Transformational Satellite Communications System (TSAT)

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