Space Based Infrared System High Program and its Alternative	 
(12-SEP-07, GAO-07-1088R).					 
                                                                 
The U.S. relies on infrared satellites to provide early warning  
of enemy missile launches and protect the nation, its military	 
forces, and allies. In 1996, the Department of Defense (DOD)	 
initiated the Space Based Infrared System (SBIRS) program to	 
replace the nation's current missile detection system and provide
expanded capabilities to support intelligence, surveillance, and 
reconnaissance missions. DOD expected to field SBIRS by 2004 at a
cost of about $4.2 billion. However, over the past 11 years,	 
SBIRS has proven to be technically challenging and substantially 
more costly. In an effort to stem cost increases and schedule	 
delays, DOD has restructured the program multiple times,	 
including revising program goals. SBIRS is now estimated to cost 
over $10.4 billion, and the first satellite launch is expected in
2008. Because of continuing problems with SBIRS, DOD began a	 
parallel alternative effort in 2006 known as the Alternative	 
Infrared Satellite System (AIRSS), to compete with SBIRS and	 
ensure that the nation's missile-warning and defense capabilities
are sustained, or possibly provide a follow-on capability to	 
SBIRS. Congress requested that GAO assess both SBIRS and AIRSS.  
As agreed with your office, with respect to SBIRS, we focused on 
the extent to which DOD is prepared to deliver the first two	 
SBIRS satellites within revised cost, schedule, and performance  
goals. With respect to AIRSS, we examined the adequacy of DOD's  
decision to proceed with AIRSS as an alternative to SBIRS as well
as whether DOD is attaining the knowledge it needs to position	 
the program for success.					 
-------------------------Indexing Terms------------------------- 
REPORTNUM:   GAO-07-1088R					        
    ACCNO:   A76150						        
  TITLE:     Space Based Infrared System High Program and its	      
Alternative							 
     DATE:   09/12/2007 
  SUBJECT:   Cost analysis					 
	     Defense capabilities				 
	     Military research and development			 
	     Missile warning systems				 
	     Program evaluation 				 
	     Research and development costs			 
	     Research program management			 
	     Satellites 					 
	     Schedule slippages 				 
	     Strategic planning 				 
	     Systems evaluation 				 
	     Warning systems					 
	     Program goals or objectives			 
	     DOD Alternative Infrared Satellite 		 
	     System						 
                                                                 
	     DOD Space-Based Infrared Satellite 		 
	     Program						 
                                                                 

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GAO-07-1088R

   

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Washington, DC 20548

September 12, 2007

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

The Honorable Ellen O. 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: Space Based Infrared System High Program and its Alternative

The U.S. relies on infrared satellites to provide early warning of enemy
missile launches and protect the nation, its military forces, and allies.
In 1996, the Department of Defense (DOD) initiated the Space Based
Infrared System (SBIRS) program to replace the nation's current missile
detection system and provide expanded capabilities to support
intelligence, surveillance, and reconnaissance missions. DOD expected to
field SBIRS by 2004 at a cost of about $4.2 billion. However, over the
past 11 years, SBIRS has proven to be technically challenging and
substantially more costly. In an effort to stem cost increases and
schedule delays, DOD has restructured the program multiple times,
including revising program goals.^1 SBIRS is now estimated to cost over
$10.4 billion, and the first satellite launch is expected in 2008. Because
of continuing problems with SBIRS, DOD began a parallel alternative effort
in 2006 known as the Alternative Infrared Satellite System (AIRSS), to
compete with SBIRS and ensure that the nation's missile-warning and
defense capabilities are sustained, or possibly provide a follow-on
capability to SBIRS.

You requested that we assess both SBIRS and AIRSS. As agreed with your
office, with respect to SBIRS, we focused on the extent to which DOD is
prepared to deliver the first two SBIRS satellites within revised cost,
schedule, and performance goals. With respect to AIRSS, we examined the
adequacy of DOD's decision to proceed with AIRSS as an alternative to
SBIRS as well as whether DOD is attaining the knowledge it needs to
position the program for success. To address these objectives, we reviewed
schedule and funding information and performed our own analysis of cost
and schedule projections using the contractor's 2006 cost performance
report data. We also examined the resources committed and planned as well
as users' needs for the competing effort. We presented our preliminary
findings on SBIRS and AIRSS in briefings to your staffs in March 2007.
This letter transmits the information provided in that briefing. We
conducted our work between August 2006 and March 2007 in accordance with
generally accepted government auditing standards. A copy of the briefing
is enclosed.

^1 DOD restructured the program, to include setting new cost and schedule
goals, in 2002, 2004, and 2005.

Results in Brief

Over 12 months after its restructuring, SBIRS still faces challenges in
meeting cost, schedule, and performance goals--particularly relating to
the development of spacecraft and ground system software. At the time of
our review, for example, spacecraft software development efforts were
behind schedule by as much as 32 percent. Moreover, management
reserves--designed to cover unanticipated work--were being depleted at a
much higher rate than anticipated. In addition, DOD has not adequately
justified its decision to proceed with AIRSS, and there is disagreement
within the department on the purpose and scope of the program. DOD has
also not adequately positioned the program for success. For example, a
demonstration satellite is not being planned in a way that would maximize
DOD's ability to incorporate knowledge gained into the AIRSS program.
Based on these findings, we recommend that DOD reexamine the AIRSS
program. DOD concurred with our findings and recommendation.

Background

DOD initiated the SBIRS program to meet all military infrared surveillance
requirements through a single, integrated system and to provide better and
timelier data to the Unified Combatant Commanders, U.S. deployed forces,
U.S. military strategists, and U.S. allies. SBIRS is to replace the
existing infrared system, the Defense Support Program (DSP), which has
provided early missile warning information since the 1970s. The SBIRS
program was originally conceived as having high- and low-orbiting
space-based components and a ground segment for mission data processing
and control to improve current capabilities. However, in 2001, the SBIRS
Low component was transferred from the Air Force to the Missile Defense
Agency and renamed the Space Tracking and Surveillance System. The Air
Force continued developing SBIRS High (herein referred to as "SBIRS"). It,
along with its associated ground segment, is one of DOD's highest priority
space programs. Originally, SBIRS consisted of four satellites in
geosynchronous earth orbit (GEO), two infrared sensors placed on separate
host satellites in highly elliptical orbit (HEO)--known as "HEO
sensors"--and a ground segment for mission-data processing and control.
The Air Force also had planned to acquire a fifth GEO satellite to serve
as a spare that would be launched when needed.

Since its inception, SBIRS has been burdened by immature technologies,
unclear requirements, unstable funding, underestimated software
complexity, poor oversight, and other problems that have resulted in
billions of dollars in cost overruns and years in schedule delays. These
problems have been documented in GAO reports as well as independent teams
chartered by DOD.^2 In addition, the program has been restructured several
times to account for cost and schedule problems. The Office of the Under
Secretary of Defense for Acquisition, Technology, and Logistics (USD
(AT&L)) directed the Air Force to begin parallel efforts to develop a
viable competing capability for SBIRS, referred to as AIRSS. USD (AT&L)
identified three overall objectives for AIRSS:

^2 GAO, Defense Acquisitions: Despite Restructuring, SBIRS High Program
Remains at Risk of Cost and Schedule Overruns, [9]GAO-04-48 (Washington,
D.C.: Oct. 31, 2003) and GAO, Defense Acquisitions: Assessments of
Selected Major Weapon Programs, [10]GAO-07-406SP (Washington, D.C.: Mar.
30, 2007). Report of the Defense Science Board/Air Force Scientific
Advisory Board Joint Task Force on Acquisition of National Security Space
Programs, (May 2003) (also referred to as the "Young Panel report") and
the July 2004 update to this report. Space-Based Infrared System
Independent Review Team, Final Report, February 2002.

           o motivate successful execution of the SBIRS program by initiating
           a viable competing capability;
           o pursue an alternative approach, with acceptable technical risk
           that offers DSP-like missile warning capability to ensure current
           capabilities are sustained, if SBIRS GEO falters; and
           o develop a next-generation SBIRS system to meet worldwide
           surveillance requirements by initiating efforts for technology
           risk reduction, system definition, and evaluation of alternative
           sensor architectures.

In 2006, the Air Force completed studies that provided recommendations for
technology development, a road map for inserting those technologies,
options for future infrared systems that offer the potential to improve
the performance and reduce the cost of SBIRS, and an acquisition strategy
for AIRSS. In 2006, program officials awarded contracts that aim to
advance key technologies and capabilities. USD (AT&L) directed the Air
Force to have the first AIRSS satellite available for launch no later than
May 2015. The Air Force has budgeted over $3.3 billion for AIRSS, from
fiscal year 2007 through 2013.

Space Based Infrared System

Although the Air Force has acted to reduce risks in the SBIRS program and
has had some recent successes, the program still faces risk of not
delivering promised capabilities within its revised goals. To reduce risk,
the SBIRS program cut back on quantity and capability in the face of
escalating costs. It deferred capabilities, such as mobile data processors
for the Air Force and the Army and a fully compliant backup mission
control facility, and it pushed off a decision to procure the third and
fourth satellites. The Air Force also concurrently initiated AIRSS as a
secondary means of achieving the same capability. However, about 11 months
after the most recent SBIRS program's restructuring, a November 2006
assessment report by the Defense Contract Management Agency (DCMA) showed
that some efforts within the program were experiencing significant cost
increases and schedule overruns and that the outlook is worsening.
Furthermore, the program is rapidly spending its management
reserves--funds set aside to address unexpected problems.

DCMA projected additional cost increases in some areas, including
satellite sensor and software development as well as satellite
integration, test, and assembly. Our analysis of data from the
contractor's cost performance reports shows that some of these areas have
been particularly problematic and are still exceeding cost and schedule
goals, even after the program's recent restructuring. For example, we
estimate that the cost of the satellite's pointing and control assembly
will increase about $25 million by the time its fabrication is complete.
Although the program has put into place strategies for deferring work that
can be completed at a later time--thereby reducing cost and schedule
risks--some work cannot be deferred. For example, some software
development activities for the satellite's pointing and control assembly
can be completed at a later date. However, all of the software related to
the satellite's flight system must be completed before launch. In
addition, DCMA program assessment reports through November 2006 indicated
that efforts to develop software are significantly behind schedule. In
particular, efforts to develop software for the spacecraft lagged behind
schedule--by as much as 32 percent. Furthermore, due to the growing amount
of rework resulting from unresolved software discrepancies, DCMA estimated
that further schedule slips in software delivery are likely to occur.
During our review, program officials acknowledged that some of the
problems identified by DCMA were still an issue.

In addition, the contractor's management reserve, which is supposed to
last through 2012, has decreased from about $232 million to $166 million
(about 28 percent) within a span of about 7 months, indicating that
unexpected problems continue to emerge. For example, additional
development and testing for spacecraft software and issues with the
satellite sensors have necessitated additional expenditures. Our analysis
shows that if this expenditure rate continues, an additional $500 million,
or more, will be required through September 2012. In addition, the program
has deferred needed capabilities to meet cost and schedule goals, but the
costs associated with these capabilities are not part of the program's
total cost estimate. The cost associated with fully fielding these
capabilities is estimated to be about $491 million.

Alternative Infrared Satellite System

In reviewing DOD's decision to pursue AIRSS, we found that USD (AT&L)
established objectives for the program that were incompatible given the
time frame and budget to complete the work under each objective. One was
to solely ensure current missile-warning and defense capabilities are
sustained, and the other was to develop the next generation of
missile-warning and defense systems. The first would require DOD to pursue
a low-risk technology path in order to deliver capability quickly. The
second would require DOD to advance technologies and/or design and, thus,
budget more time for knowledge building in advance of an acquisition
program. In other words, one objective served as an insurance policy for
SBIRS; the other was a major effort to advance the way DOD detects missile
launches.

Subsequently, USD (AT&L) never clarified what was wanted from the program,
and the Air Force, in turn, set out to develop advanced capabilities.
Moreover, we found that there was disagreement within OSD as to whether
the approach being pursued for AIRSS was the only and/or best option
available to the Air Force. For example, DOD's Cost Analysis Improvement
Group as well as Program Analysis and Evaluation staffs expressed concern
that the focus on developing technology would hinder delivery of an AIRSS
satellite available for launch in 2015. During our review, it also became
evident that AIRSS could not realistically serve as a back-up to SBIRS
because the proposed satellite delivery schedule is very aggressive for
meeting the 2015 launch availability date, according to AIRSS program
officials.

In addition, in its effort to pursue advanced capability, the Air Force
has not positioned the AIRSS program for success. First, in our opinion,
not enough time is budgeted for developing and launching the first
satellite. At the direction of USD (AT&L), the Air Force set 2015 as the
launch date for the first satellite. Our assessment found the period
planned between "preliminary design"review and "critical design" review
for AIRSS is shorter than for most other major space programs.^3
Specifically, the program is allowing only 12 months from preliminary to
critical design review, and 4 years from critical design review to
satellite delivery. By contrast, the SBIRS High program took 44 months
from preliminary design review to critical design review. Two newer
programs, Space Radar and Transformational Satellite Communications System
(TSAT), have planned for 16 and 27 months respectively. AIRSS Program
officials acknowledged that the current time frame is very optimistic.

Second, the AIRSS program may be optimistic in its assumptions about
technology risk. The program's schedule shows critical technologies
reaching a high level of maturity at program start, and most are now rated
at a technology readiness level of 5 or higher--meaning that the basic
components have been integrated with reasonably realistic supporting
elements in order that the technology can be tested in a simulated
environment. These readiness levels are comparatively higher than other
satellite programs we have reviewed. However, we found that the program
was still facing considerable technical risk since it is working to build
an infrared telescope with a large viewing capability that has never
before been developed and it is planning to use "cryocoolers" that have
yet to demonstrate low levels of jitter, high efficiency, and long life,
and a sensor chip whose assembly's performance level has yet to be
verified.^4

^3Preliminary design review determines whether preliminary designs are
complete and if the program is prepared to start detailed design and test
procedure development. Critical design review assesses the systems final
design, and according to GAO best practices, at least 90-percent of
engineering drawings should be completed to provide tangible evidence that
the design is stable.

Third, the Air Force's research laboratory officials have stated that
on-orbit testing is the only way to validate the proposed capability for
AIRSS and reduce risk to an acceptable level. To achieve these results,
the Air Force is proposing to launch a small-scale demonstration satellite
in late 2010. However, the results from the on-orbit demonstration
satellite will not be ready in time to fully inform the development of the
first AIRSS satellite. Furthermore, AIRSS officials plan to award
contracts for the first satellite before data from on-orbit testing is
completed. Our analysis shows that if the tests do not go well, DOD will
not have time to return to an approach using lower-risk technology.

Conclusion

SBIRS continues to face risks that endanger DOD's ability to sustain,
replace, and expand its current missile-warning and defense capabilities.
Moreover, the program still has complex and difficult work ahead as it
undertakes efforts to integrate technology. Recognizing these risks, the
Office of the Secretary of Defense made a sound decision in pursuing the
AIRSS program to act as an alternative to the third SBIRS GEO satellite.
However, the program has since diverged from this purpose and opted to
pursue a higher risk effort in order to advance capability. Moreover, the
Air Force has added risk to this effort by compressing the schedule and
limiting the knowledge gained from the demonstration effort. While it is
acceptable in any given portfolio to take some high risks, it is not sound
for all investments to be high risk--particularly when the capability is
as critical to the conduct of military operations as the mission-warning
capability is.

Recommendation

We recommend that the Secretary of Defense direct the Under Secretary of
Defense for Acquisition, Technology, and Logistics to reassess its
investment in AIRSS and alternative ways of reducing the risk posed by the
SBIRS program, to more confidentially assure that current missile-warning
and defense capabilities are sustained.

Agency Comments and Our Evaluation

We provided draft copies of this letter to DOD for review and comment. DOD
concurred with our findings and recommendation. DOD's letter is reprinted
as Enclosure I.

^4"Cryocoolers" are refrigeration devices used to reach cryogenic
temperatures, or very low temperatures (below -238 DEGF, -150 DEGC, or 123
K). Cryogenic refrigeration technology for satellites enables the
performance of onboard infrared sensors to enhance missile detection,
conduct intelligence gathering, and enable space situational awareness.

Scope and Methodology

To determine the SBIRS program's ability to meet cost and schedule
projections, we examined schedule and funding information for developing
hardware and software. We reviewed formal program reviews and DCMA and
contractor-performance reports. In addition, we performed our own analysis
of cost and schedule projections using the contractor's, Lockheed Martin
Space Systems Company, 2006 cost performance-report data. To determine the
potential problems and risks relating to cost, schedule, and performance
that are still facing the SBIRS program, we reviewed technical reports and
program briefings and held discussions with program and contractor
officials regarding ongoing challenges.

To assess efforts in attaining the knowledge DOD needs before the start of
a competing effort, we examined the resources (technology, communications
infrastructure, and funding) committed and planned for the competing
effort as well as the users' needs for the competing system. We considered
DOD's plans for maturing the critical technologies when we obtained
technology-readiness information for each critical technology against
best-practice standards to determine if technologies will be sufficiently
mature when DOD plans to start product development. We also reviewed
risk-management plans and concept-development information.

We will send copies of the correspondence to Department of Defense and
interested congressional committees. We will also make copies available to
others upon request. In addition, the report will be available at no
charge on GAO's Web site at [11]http://www.gao.gov .

Should you or your staff have any questions on matters discussed in this
correspondence, please contact me at (202) 512-4841 or
[12][email protected] . Contact points for our Offices of Congressional
Relations and Public Affairs may be found on the last page of this
correspondence. Principal contributors to this report were Arthur
Gallegos, Assistant Director; Maricela Cherveny; Claire Cyrnak; Jean
Harker; Leslie Pollock; and Greg Campbell.

Sincerely yours,

Cristina Chaplain
Director
Acquisition and Sourcing Management

Enclosure I: Comments from the Department of Defense

Enclosure II: Briefing Slides
(120650)

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