National Space Issues: Observations on Defense Space Programs and
Activities (Letter Report, 08/16/94, GAO/NSIAD-94-253).

GAO did a broad review of Defense Department (DOD) space programs and
activities, including organization, launch vehicles, launch facilities,
satellites, and ground control functions.  GAO found that space
acquisition management remains fragmented at DOD, which plans to
outspend the National Aeronautics and Space Administration (NASA) on
space programs during the next five years.  DOD has earmarked about $70
billion for military and intelligence space programs versus NASA's $65
billion for space missions.  Meanwhile, despite the government's
repeated failure to acquire a new space launch system, the
administration's latest draft report on national space transportation
policy skirts the need for high-level White House oversight.

--------------------------- Indexing Terms -----------------------------

 REPORTNUM:  NSIAD-94-253
     TITLE:  National Space Issues: Observations on Defense Space 
             Programs and Activities
      DATE:  08/16/94
   SUBJECT:  Military satellites
             Defense contingency planning
             Warning systems
             Interagency relations
             Defense cost control
             Cost effectiveness analysis
             Defense communications operations
             Defense procurement
             Aerospace industry
             Defense budgets
IDENTIFIER:  MILSTAR
             National Launch System
             DOD Bottom-Up Review
             Army Space Applications Demonstration and Exploitation 
             Program
             Desert Storm
             Titan Missile
             Delta Missile
             Atlas Missile
             DOD Advanced Launch System
             DOD Tactical Space System
             National Performance Review
             Defense Support Program
             Alert, Locate, and Report Missiles System
             Follow-On Early Warning System
             SDI Boost Surveillance and Tracking System
             BSTS
             ALARM
             Military Strategic and Tactical Relay Satellite 
             Communications System
             Strategic Defense Initiative Program
             
**************************************************************************
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Cover
================================================================ COVER


Report to the Chairman, Subcommittee on Defense, Committee on
Appropriations, House of Representatives

August 1994

NATIONAL SPACE ISSUES -
OBSERVATIONS ON DEFENSE SPACE
PROGRAMS AND ACTIVITIES

GAO/NSIAD-94-253

National Space Issues


Abbreviations
=============================================================== ABBREV

  ALARM - Alert, Locate, and Report Missiles
  DOD - Department of Defense
  DSP - Defense Support Program
  FEWS - Follow-on Early Warning System
  NASA - National Aeronautics and Space Administration
  NOAA - National Oceanic and Atmospheric Administration

Letter
=============================================================== LETTER


B-297974

August 16, 1994

The Honorable John P.  Murtha
Chairman, Subcommittee on Defense
Committee on Appropriations
House of Representatives

Dear Mr.  Chairman: 

On September 17, 1993, you requested that we perform a broad review
of Department of Defense (DOD) space programs and activities,
including organization, launch vehicles, launch facilities,
satellites, and ground control functions.  As requested by your
Subcommittee staff, we provided interim briefings.  This report
documents the information provided in our most recent presentation to
your staff on July 28, 1994 (see apps.).  We also briefed other
congressional staff and representatives from DOD, National
Aeronautics and Space Administration (NASA), National Oceanic and
Atmospheric Administration (NOAA), and Department of Transportation. 
This report does not make recommendations, but contains a number of
observations about current issues. 


   BACKGROUND
------------------------------------------------------------ Letter :1

DOD plans to spend about $70 billion during the next 5 years on
military and intelligence space programs and activities.  This
represents 5.7 percent of DOD's total planned military budgets during
this period.  By comparison, NASA plans to spend about $65 billion on
the space portion of its mission during the next 5 years.  In
addition to intelligence, over 75 percent of DOD's military space
dollars are planned for communications, surveillance, launch
vehicles, launch facilities, and satellite control.  The remaining
amounts are planned for navigation, meteorology, supporting research
and development, and general support.  (See app.  I.)


   RESULTS IN BRIEF
------------------------------------------------------------ Letter :2

Since 1989, despite numerous attempts, the government has been unable
to acquire a new space launch system.  Considering this experience,
the administration's current draft policy on national space
transportation strategy does not identify a means for implementing
strong management at a high level within the Executive Office of the
President.  Such a means appears essential to address launch
requirements for the national security, civil, and commercial space
sectors; ensure interagency coordination, cooperation, and
elimination of duplication; and maintain program and funding
stability while meeting the government's affordability challenge. 
(See app.  II.)

Within DOD, space acquisition management responsibilities are
fragmented among several organizations.  Although a major portion of
the military space budget is controlled by the Air Force, such
predominance does not appear to be in the best interest of DOD's
diverse set of space users.  Decisions on space acquisitions may be
better served by more central organizational management within the
Office of the Secretary of Defense and by separate space
appropriations that would include both the military and intelligence
sectors.  An integrated satellite control network and a consolidated
space education and training program are additional steps that could
be taken to exercise greater discipline within DOD's space mission. 
(See apps.  III and IV.)

DOD lacks an adequate and validated set of requirements for a future
launch system.  Therefore, initiating major investments in, or
evolving to, an improved launch capability would be premature until a
quantifiable set of requirements are established.  In addition, DOD's
space launch infrastructure lacks central management, and although
some infrastructure improvements are necessary, major investments
would not be prudent unless they are compatible with any improved
launch system that DOD may select.  (See apps.  V and VI.)

Our observations on the commercial space launch industry and three
satellite efforts--convergence of military and civil meteorological
satellites, early warning satellite replacement, and the Milstar
program--are discussed in appendixes VII and VIII. 


   SCOPE AND METHODOLOGY
------------------------------------------------------------ Letter :3

Our scope of work encompassed the four U.S.  space sectors--military,
intelligence, civil, and commercial--with the primary emphasis on
matters associated with national security.  It included a review of
national and DOD space policies; DOD space organizations and
missions; plans, programs, and budgets associated with launch
vehicles, launch infrastructure, satellites, and satellite control;
and space-related issues in the commercial sector. 

We analyzed budget information; program and system requirements;
acquisition, modernization, and funding plans; agency and program
directives; and supporting reports, studies, and briefings.  We
discussed space topics with representatives of the Executive Office
of the President; Office of the Secretary of Defense; Joint Staff;
Departments of the Air Force, Army, and Navy; and U.S.  Space, Air
Force Space, Naval Space, and Army Space Commands.  We also
interviewed NASA, NOAA, the Department of Transportation, and
selected contractor representatives. 

As requested, we did not obtain written agency comments.  However,
based on our briefing to agency representatives, we intend to obtain
their comments and will provide them and our evaluation to your
staff.  Since we are continuing to review the issues contained in
this report, we will also consider any agency comments in our ongoing
work.  We performed our review from September 1993 through July 1994
in accordance with generally accepted government auditing standards. 


---------------------------------------------------------- Letter :3.1

We are sending copies of this report to the Chairmen, House Armed
Services Committee, Senate Subcommittee on Defense Appropriations,
and Senate Armed Services Committee; the Secretary of Defense; the
Director, Office of Management and Budget; and other interested
congressional committees.  We will also make copies available to
others upon request. 

The project director for this work is Homer H.  Thomson.  If you or
your staff have any questions concerning this report, please contact
me or Mr.  Thomson at (202) 512-4841.  Other major contributors to
this report are listed in appendix IX. 

Sincerely yours,

Thomas J.  Schulz
Associate Director, Systems
 Development and Production Issues


BUDGET OVERVIEW
=========================================================== Appendix I

The Department of Defense (DOD) plans to spend about $70.7 billion on
military and intelligence space programs and activities during the
next
5 years.  Annually, the space budgets range from $13.5 billion in
fiscal year 1995 to $15 billion in fiscal year 1999--a planned
11-percent increase.  Relative to DOD's total military budgets, the
annual space budgets are expected to represent an increasing
share--from 5.4 percent to 5.9 percent as shown in table I.1. 



                          Table I.1
           
               DOD's Military and Space Budgets
                    (dollars in billions)


DOD budgets             1995    1996    1997    1998    1999
--------------------  ------  ------  ------  ------  ------
Total                 $252.2  $243.4  $240.2  $246.7  $253.0
Space                  $13.5   $13.9   $13.9   $14.4   $15.0
Space as a percent       5.4     5.7     5.8     5.8     5.9
 of total
------------------------------------------------------------
For comparison purposes, the National Aeronautics and Space
Administration (NASA) plans to spend about $65.5 billion during the
next
5 years on the space portion of its mission--$5.2 billion less than
DOD.  NASA's annual budgets are divided between space and aeronautics
as shown in table I.2. 



                          Table I.2
           
              NASA Budgets (dollars in billions)


NASA budgets            1995    1996    1997    1998    1999
--------------------  ------  ------  ------  ------  ------
Space                  $13.0   $13.1   $13.1   $13.1   $13.2
Aeronautics              1.3     1.3     1.4     1.5     1.4
============================================================
Total                  $14.3   $14.4   $14.5   $14.6   $14.6
------------------------------------------------------------
During the next 5 years, DOD has allocated about 71 percent of its
military (excluding intelligence) space dollars to the investment
accounts (research, development, test and evaluation--38 percent;
procurement--32 percent; and military construction--1 percent).  The
remaining approximate 29 percent is allocated to the operations and
support accounts (operations and maintenance--22 percent and military
personnel--7 percent).  The ratio of investment to operations and
support is about 2.5 to 1. 

During the next 5 years, DOD plans to spend about 77 percent of its
military (excluding intelligence) space dollars on communications,
surveillance, launch vehicles, and ground support (launch facilities
and satellite control).  Other functional categories, including
supporting research and development, navigation, meteorology, and
general support account for the remaining approximate 23 percent. 


NATIONAL POLICY AND MANAGEMENT
========================================================== Appendix II

In 1992, Vice President Quayle asked the National Space Council to
review U.S.  national space policies in light of the (1) end of the
Cold War, (2) decline in defense spending and aerospace industry
cutbacks, (3) impact of the federal budget deficits, (4) revolution
in space-related technologies, and (5) recognition that space has
become a critical element in America's war-fighting capability. 

The policy review resulted in three studies ending with the "Fink"
report on the future of the U.S.  space industrial base, the
"Aldridge" report on the future of the U.S.  space launch capability,
and the "Wilkening" report on a post-Cold War assessment of U.S. 
space policy.  The Wilkening report stated that the four U.S.  space
sectors--military, intelligence, civil, and commercial--each have
their own institutional culture that encourages overlap and
discourages cooperation.  Two major conclusions from these studies
dealt with the need for (1) fundamental changes in the way government
space activities are organized and managed and (2) a new,
cost-effective space launch capability. 

In a January 1993 final report to President Bush on the U.S.  space
program, the Vice President made a series of space policy
recommendations to assist the Clinton administration.  Two of the
recommendations involved the need (1) for strong White House focus to
implement organizational changes to encourage greater cooperation and
synergism and less duplication among government space activities and
(2) to phase over to a new launch capability by about the turn of the
century when the next generation of several satellite systems will be
ready for launch. 

In April 1994, the Office of Science and Technology Policy, within
the Executive Office of the President, published a draft national
space transportation strategy directive intended to (1) supersede
several existing directives and (2) establish national policy,
guidelines, and implementing actions for the conduct of the national
space transportation programs.  The general guidelines called for (1)
maintaining the existing mixed fleet of expendable launch vehicles
and the space shuttle as the primary means of space transportation at
least through the end of the decade and (2) DOD and NASA to plan for
the transition of space programs to future launch systems in a manner
that would ensure continuity of mission capability and accommodate
transition costs. 

The draft policy did not (1) address organizational changes to
encourage cooperation and reduce duplication among government space
activities or (2) provide a basis for addressing known governmentwide
funding issues associated with future launch vehicle programs. 
Instead, it directed DOD and NASA to cooperate, in pursuit of their
individual responsibilities, to take advantage of the unique skills
of each agency.  DOD was to be the "lead agency for improvement and
evolution of the current U.S.  expendable launch fleet." NASA was to
be the "lead agency for advanced technology development and
demonstration to prove the technologies required for next generation
reusable launch systems."

The draft policy does not address how the administration expects to
provide effective management oversight for future space
transportation evolution and development.  This is critical because
of the government's prior poor experience in this area.  The Bush
administration policy directed DOD and NASA to undertake the joint
development of a new space launch system to meet civil and national
security needs.  However, this approach has essentially been judged a
failure.  Some references to this fact are as follows: 

     "The conferees are frustrated by the failure of the
     administration and Congress to come to grips with the future
     course of space launch systems .  .  .  NASA does not appear to
     be able to afford to pay half the cost of the NLS (National
     Launch System) and DOD cannot afford to pay more than half .  . 
     .  At the same time, study after study within the administration
     concludes that current U.S.  space launch systems and practices
     are archaic and non-competitive, which could have adverse
     economic and military consequences in the future."\1

     ".  .  .  joint programs have proven difficult to implement and
     have often become a source of conflict among agencies. 
     Differing agency priorities have often resulted in budget
     mismatches.  Another factor complicating joint programs is the
     need for support from several different congressional
     committees, each of which with its own priorities."\2

     "The conferees agree that the Administration must focus scarce
     resources to achieve any success at all .  .  .  overall, NASA
     and the Department of Defense have demonstrated a remarkable
     inability to work together.  Across the government, a
     debilitating culture favors complexity, fragility, and
     accommodation to unique payload demands.  To date, neither the
     government nor industry has attempted to approach space launch
     as they do cargo transport by truck, rail, ships, or aircraft. 
     In these areas, standardization, rugged design, performance
     margins, low cost, and responsiveness are of overriding
     importance."\3

     ".  .  .  NASA, together with the Defense Department and the
     aerospace industry, had spent nearly a decade defining and
     advocating a new launch vehicle program (which culminated in the
     proposed National Launch System), without being able to reach
     consensus with the Congress that it should be developed."\4

     "While past and evolving national policy has included specific
     direction on modernizing the Nation's space launch capability,
     little progress has been made due in large part to widely
     differing views and interests in this area and the inability to
     maintain consensus within the Executive Branch .  .  .  The most
     fundamental driver of space launch capability is a set of space
     launch requirements, yet there are widely differing views and
     definitions of these throughout the four space sectors .  .  . 
     While the civil and defense space programs are clearly separate
     and distinct, space launch is an area of common interest and
     interdependence that needs interagency coordination."\5


--------------------
\1 National Defense Authorization Act for Fiscal Year 1993,
Conference Report 102-966, October 1, 1992, p.  617. 

\2 A Post Cold War Assessment of U.S.  Space Policy, Vice President's
Space Policy Advisory Board, December 1992, p.  23. 

\3 National Defense Authorization Act for Fiscal Year 1994,
Conference Report 103-357, November 10, 1993, p.  602. 

\4 NASA's Access to Space Study, November 21, 1993, p.  1. 

\5 Space Launch Modernization Plan (referred to as the "Moorman
report") Executive Summary, Department of Defense, April 1994, pp. 
3, 27, and 29. 


   OBSERVATIONS
-------------------------------------------------------- Appendix II:1

The Clinton administration's draft space transportation policy does
not identify a mechanism to implement strong management at a high
level within the Executive Office of the President.  Past experience
indicates that such a mechanism is essential so that the executive
branch and the various congressional committees responsible for space
launch can better cooperate in making cost-effective decisions on the
future of national space transportation. 

Specifically, there appears to be a need for the policy to address
(1) military, intelligence, civil, and commercial space launch
requirements to achieve greater standardization across these sectors;
(2) a process for centralizing oversight and decision-making to
ensure interagency coordination and cooperation and elimination of
duplication; and (3) a funding mechanism to maintain program
stability and meet the government's affordability challenge. 


DOD ORGANIZATION AND MANAGEMENT
========================================================= Appendix III

In 1993, the Air Force reported that multiple space acquisition
organizations--Air Force, Army, Navy, Ballistic Missile Defense
Organization, Advanced Research Projects Agency, and National
Reconnaissance Office--have resulted in (1) fragmented
responsibilities; (2) duplicate facilities, staffs, and
infrastructures; (3) deficiencies in achieving economies of scale,
optimizing existing capabilities, and focusing on validated
operational requirements; and (4) less effective forces because
several organizations are developing space hardware that are not
interoperable, thus complicating joint military operations. 

DOD's space programs and activities are primarily concentrated within
the Air Force.  For example, in fiscal year 1993, the Air Force
controlled 73 percent of the military space budget.  For fiscal year
1995, its control increased to 80 percent, and by fiscal year 1999,
its control is projected to increase to 84 percent.  In descending
order, the Army, the Navy, and the Ballistic Missile Defense Office
have the next largest space budgets.  The Advanced Research Project
Agency and the Defense Information Systems Agency have the smallest
space budgets. 

From an operational perspective, the Air Force Space Command has
about 95 percent of the personnel to perform DOD space operations, as
shown in table III.1. 



                         Table III.1
           
                Number of DOD Space Personnel


                            Military    Civilian       Total
------------------------  ----------  ----------  ----------
U.S. Space Command               443         128         571
Air Force Space               12,303      16,111      28,414
 Command\a
Naval Space Command              249         245         494
Army Space Command               401          89         490
============================================================
Total                         13,396      16,573      29,969
------------------------------------------------------------
\a In addition, approximately 10,400 military and 1,300 civilian
personnel are assigned to support the U.S.  Strategic Command's
Minuteman and Peacekeeper programs. 

Despite this Air Force predominance, DOD space systems primarily
provide capabilities to a wide variety of users for joint military
operations and national purposes.  For example, DOD's total military
satellite communication requirements for 1997 (measured in millions
of bits per second of throughput) are divided by users as shown in
table III.2. 



                         Table III.2
           
              Percentage of DOD's 1997 Military
           Satellite Communication Requirements by
                       User Categories

                                                      Percen
                                                           t
----------------------------------------------------  ------
National authorities and commanders in chief              50
DOD agencies                                              31
Military services                                         12
Non-DOD agencies                                           7
============================================================
Total                                                    100
------------------------------------------------------------
In October 1992, the House and Senate conference committee report on
the fiscal year 1993 defense authorization bill (p.  569) noted that
the declining defense budget would inevitably increase pressure to
constrain or reduce spending on space programs.  As a result, they
directed the Secretary of Defense to develop a comprehensive
acquisition strategy for developing, fielding, and operating DOD
space programs.  The strategy was (1) to be aimed at reducing costs
and increasing efficiencies and (2) to address policy, requirements,
programs, and funding.  A report on the strategy was due in April
1993, but was indefinitely delayed due to DOD's Bottom-Up Review of
major defense programs, which was completed in October 1993.  Since
April 1994, disagreement within DOD has prevented the completion of
the acquisition strategy report. 

In 1993, the House Appropriations Committee's report accompanying the
fiscal year 1994 defense appropriations bill noted a lack of a
coherent management structure associated with national security space
programs.  It directed the Secretary of Defense to provide a detailed
5-year plan for implementing organization and management changes in
the areas of acquisitions, appropriation accounting, operational and
war-fighting responsibilities, and requirements and policy.  The plan
was to be completed by February 1994, but was delayed due to the
complexity of the changes and its relationship to two ongoing
efforts--the space launch modernization study and the Commission on
Roles and Missions study.  A DOD representative expected the
organization and management plan to be completed in August 1994. 

Several ideas have come to our attention on how to better manage
space acquisition programs.  They are summarized as follows: 

  An Air Force approach is to place acquisition responsibility
     entirely with the Air Force. 

  A U.S.  Space Command approach is to place acquisition
     responsibility within the Air Force, but through joint program
     offices. 

  A suggestion surfaced within the Navy is to create a space system
     procurement executive office within the Office of the Secretary
     of Defense, supported by each service. 

  A suggestion surfaced within the Air Force is to create a space
     corps within the Air Force to separately acquire and operate
     space systems. 

  An alternative possibly being considered within the Office of the
     Secretary of Defense is to create a defense space agency to
     acquire and manage space systems. 


   OBSERVATIONS
------------------------------------------------------- Appendix III:1

The effects of organizational fragmentation can be a waste of
resources as well as detrimental to the effectiveness of joint
war-fighting forces.  Because of the size of DOD's annual space
budgets--in excess of $13 billion and over 5 percent of DOD's total
military budgets--consolidating selected space functions and
centralizing management may be warranted. 

The Air Force controls about 80 percent of the military space budget,
which competes on an annual basis with other Air Force requirements,
including aircraft and missiles.  Such single service predominance
does not appear to be in the best interest of the diverse set of
space users because these users' needs could be detrimentally
effected by Air Force budget decisions. 

There are opportunities to address these matters through ongoing
studies to (1) develop a comprehensive space acquisition strategy
aimed at reducing costs and increasing efficiencies, as directed by
the committee of conference for the fiscal year 1993 defense
authorization bill; (2) provide a plan for implementing space
organization and management changes, as directed by the House
Appropriations Committee in its report accompanying the fiscal year
1994 defense appropriations bill; and (3) review roles, missions, and
functions of the armed forces, as required in sections 951-960 of the
National Defense Authorization Act for Fiscal Year 1994. 

An overall approach would be to combine all military space system
acquisitions under a separate appropriation, managed by a single
organization within the Office of the Secretary of Defense that is
headed by a civilian and supported by the military services. 
Consideration should also be given to merging requirements and
program management functions of the National Reconnaissance Office
into this single organization to ensure adequate support to the joint
war-fighting forces. 


OTHER DOD MANAGEMENT ISSUES
========================================================== Appendix IV


   SATELLITE CONTROL
-------------------------------------------------------- Appendix IV:1

The Air Force Space Command manages about 90 satellites through its
satellite control network at two primary locations--Falcon Air Force
Base, Colorado, and Onizuka Air Force Base, California.  The Naval
Space Command manages about 19 satellites through its satellite
control network at Point Mugu, California.  The Naval Research
Laboratory also manages satellites through its satellite control
network at Blossom Point Test Facility in Maryland. 

The Air Force Space Command has stated that its satellite control
network (1) is manually intensive, requiring a large number of highly
skilled personnel, and is therefore costly to operate and (2) uses a
centralized computer system that is limited in data processing
capacity and lacks standardization and interoperability among several
satellite systems.  The Air Force plans incremental upgrades to the
network during the next
10 years, but has neither a detailed cost estimate for the upgrades
nor an architecture on which to base its upgrades.  A newly designed
advance satellite control system could be an alternative, but a
formal cost estimate is also lacking.  Further study is essential in
this area because the Air Force plans to spend over $3 billion during
the next 5 years to operate, maintain, sustain, and upgrade the
satellite control network. 

The Naval Space Command's satellite control network is a more modern
design than the Air Force network.  However, its use will decline by
1997 because the navigational satellites (called Transit) it controls
are scheduled to be phased out, and only one satellite (called Geosat
Follow-on) is scheduled to be added in the near future.  However,
according to a Navy official, the Navy plans to upgrade its network
to control those Navy satellites that are currently being controlled
by the Air Force.  This upgrade will allow the Navy to use Air Force
satellite control assets, such as antennas. 

The Naval Research Laboratory's satellite control network is also a
more modern design than the Air Force network.  For example, (1)
operators do not need to be as highly skilled to perform satellite
control, due to a simplified user interface; (2) the number of
simultaneous satellite contacts is not constrained by the network's
design; and (3) satellite commands are automated, thereby limiting
the need for manual real-time control of the satellite and reducing
the chance for introducing errors. 

A January 1994 U.S.  Space Command report recommended merging Air
Force and Navy satellite bus operations into a common satellite
control network to achieve improvements in efficiency and
effectiveness.  The Command is now studying the sharing of satellite
control assets between the Air Force and the Navy.  However, the
primary focus of ongoing Air Force plans to upgrade its network does
not address consolidation.  In addition, the Command is performing a
more detailed study to identify near-term savings and determine how
the military services and other agencies, such as the National
Reconnaissance Office, NASA, and the National Oceanic and Atmospheric
Administration (NOAA), involved in satellite control, can work
together.  The results of this detailed study are expected during the
summer of 1994. 


   OBSERVATIONS
-------------------------------------------------------- Appendix IV:2

DOD should be able to achieve greater satellite control efficiencies
by moving toward an integrated satellite control network.  In doing
so, the U.S.  Space Command needs joint requirements, a system
architecture, an implementation plan, and a cost and operational
effectiveness analysis of plausible alternatives that would include
the existing Navy designs.  The Air Force should cease its upgrade
plans until the U.S.  Space Command has completed these efforts and
then be guided by the results.  We have recommended in our briefings
to House and Senate Armed Services Committees and Defense
Appropriations Subcommittees that $48 million requested by the Air
Force in fiscal year 1995 for satellite control upgrades be denied. 


   EDUCATION AND TRAINING
-------------------------------------------------------- Appendix IV:3

According to the Air Force, space support was largely provided on an
ad hoc basis during Operations Desert Shield and Desert Storm, with
no single organization assigned the responsibility to provide space
expertise to the theater commander.  Although it was the primary
operator of space systems, the Air Force stated that in many
instances, direct communication to the United States was required to
obtain the needed support, resulting in multiple requests for similar
information that produced conflicts and prioritization difficulties. 
The Air Force recommended better structures and mechanisms for
providing space support to joint forces. 

DOD expects joint military operations to be the primary means of
organizing a response to future regional conflicts.  In February
1993, the Chairman of the Joint Chiefs of Staff stated that the new
post-Cold War national military strategy required that U.S.  forces
be trained to operate jointly, not just for occasional exercises, but
as a way of life.  This meant that military leaders must have
knowledge of the capabilities and limitations of land, sea, air,
space, and special operations.  As a result, the U.S.  Atlantic
Command was assigned the responsibility for joint training, force
packaging, and facilitating deployment of U.S.-based forces to
support all unified commands.  Based on the growing importance of
space capabilities to the national military strategy, the Joint
Chiefs of Staff assigned the U.S.  Space Command the responsibility
for drafting joint doctrine for military space operations. 

Space education and training is performed in a disjointed manner.  It
is performed by the individual space commands and is not guided by a
common curricula or by approved joint doctrine and procedures,
although these are in development.  For example, the Army has had a
Space Applications Demonstration and Exploitation Program since 1987. 
The purpose is to demonstrate and exploit new technologies for making
space information available to Army components.  The Navy established
Space Contact Teams (now known as Space Support Teams) in 1991 after
Operation Desert Storm.  The purpose is to provide 1- to-2-hour
briefings to Navy personnel on space systems capabilities and
limitations prior to a training cruise or deployment.  In 1993, the
Air Force established Forward Space Support Teams to provide
training, guidance, and support to Air Force components primarily
during exercises and a Space Warfare Center to provide analysis and
simulation capabilities using the computer and network facilities at
the National Test Facility.  Also in 1993, the U.S.  Space Command
established Theater Support Teams to address lessons learned from
Desert Storm.  These teams provide training, guidance, and support to
other commanders primarily during joint exercises and as requested. 


   OBSERVATIONS
-------------------------------------------------------- Appendix IV:4

There is potential for consolidating space education and training if
the U.S.  Space Command were to develop core curricula on space
applications, drawing on the strengths of the service space
components' programs.  The curricula should be based on the space
support needs of war-fighting forces.  Considering that military
space systems are primarily used for joint purposes, the curricula
should be coordinated with, and could be incorporated into, the U.S. 
Atlantic Command's joint task force training. 


LAUNCH VEHICLES
=========================================================== Appendix V

Based on DOD's existing vehicle contracts, as of early July 1994, the
industrial base will remain active at least through this decade. 
Specific information on Titan II, Delta II, Atlas II (medium-lift
vehicles), and Titan IV (heavy lift vehicle) is shown in table V.1. 
In addition, up to six Atlas IIs are scheduled for procurement in
fiscal year 1995 for a classified user, and a follow-on Titan IV
procurement is expected in fiscal year 1997. 



                          Table V.1
           
              Launch Vehicles Still On Contract

                                   Number of
                              vehicles to be  Year of launch
                                 procured on        for last
                                    existing        procured
Vehicle                            contracts         vehicle
----------------------------  --------------  --------------
Titan II                                 7\a            2000
Delta II                                  30            2002
Atlas II                                   5            2000
Titan IV                                  32            2004
------------------------------------------------------------
\a Two additional Titan IIs are not currently assigned to any
particular satellite, thus, the launch dates of these satellites
could extend beyond 2000. 

Source:  DOD's existing vehicle contracts (as of July 1994). 

According to the April 1994 Moorman report, the expendable launch
vehicle industry grew during times of increasing requirements and
budgets.  The report stated that today, fewer satellites, with longer
lives, perform more work, which has resulted in decreased launch
rates and excess launch vehicle production and processing capacity. 
The accompanying negative effect is low, inefficient production rates
that raise unit costs.  In addition, a contributing factor to high
vehicle costs is the frequent perturbations in launch schedules.  For
example, Atlas II and Titan IV program schedules have been stretched
out 3 and 9 years, respectively.  According to a Titan IV program
representative, the program's stretched schedule increased
development and procurement cost estimates by about $8.5 billion in
then-year dollars. 

During the past several years, the government's attempts to develop
an improved launch vehicle has been based on deficiencies in existing
vehicles that various reports have identified.  For example, as
reported by the Defense Science Board, the near-term goal of the
Advanced Launch System program, which began in fiscal year 1987, was
to improve the expendable launch vehicle family to reduce cost,
increase reliability, and improve responsiveness.\1

In addition, DOD's October 1993 report on the Bottom-Up Review stated
that (1) U.S.  military space launch capabilities are characterized
by high cost and serious operational limitations and (2) performance
and flexibility of launch operations is inadequate and system
responsiveness in crises or emergencies is limited.  Finally, the
April 1994 Moorman report stated that the current launch systems are
not built to be responsive, are not as reliable as they should be,
and do not have the desired operability characteristics. 

DOD has upgraded its existing vehicles and plans to continue the
effort as set forth in the 1993 Bottom-Up Review.  This decision is
to maintain the current launch fleet and employ an austere
life-extension program by making only the most necessary
improvements.  According to DOD, this approach was selected primarily
because it was the least expensive option in the near term.  However,
the approach (1) fails to satisfy the flexibility requirement or meet
improved reliability goals and (2) offers little potential for
reducing the high operating costs of the existing systems.  In
addition, the Air Force plans to begin acquiring another medium-lift
vehicle in fiscal year 1995 that could be evolved into a heavy-lift
vehicle. 

The results of two DOD studies issued within 6 months of each
other--the October 1993 Bottom-Up Review and the April 1994 Moorman
report--indicate that DOD is faced with a predicament.  A sizeable
investment is required in the near term to reduce costs in the long
term, but the needed near-term funding is not considered affordable. 
Thus, the desired long-term cost reduction may not be possible.  The
options contained in these studies are summarized in table V.2, which
compares and contrasts the assessment results associated with
critical decision-making elements. 



                                    Table V.2
                     
                       Options and Critical Decision-Making
                      Elements in Two DOD Studies on Launch
                               Vehicle Improvements

                Is it                           Will it
                affordable in                   improve         What is the
                future year     Can it reduce   proposed        cost, schedule,
                defense         life-cycle      launch          and technical
Options         program?        costs?          capabilities?   risk?
--------------  --------------  --------------  --------------  ----------------
Sustain         Yes             No              No              Low
vehicle fleet
(Bottom-Up
Review 1A
and Moorman
plan 1)

Evolve          Maybe           Yes             Some            Low to medium
existing
vehicle
into a family
of vehicles
(Moorman plan
2)

Develop new     No              Yes             Yes             Low to medium
expendable
vehicle
(Bottom-Up
Review 2 and
Moorman
plan 3)

Develop new     No              Yes             Yes             Medium to high
reusable
vehicle
(Bottom-Up
Review 2 and 3
and
Moorman plan
4)
--------------------------------------------------------------------------------
DOD stated in its Bottom-Up Review report that there are two types of
space launch requirements:  (1) performance--the ability to deliver a
satellite reliably to a specific orbit and (2) operational
flexibility--the capability to perform rapid and adaptive payload
integration, servicing, substitution, and launch.  Despite this
statement, DOD does not currently have an approved or validated set
of requirements.  In support of DOD's Bottom-Up Review, the Institute
for Defense Analyses discussed nine different launch system
"attributes" in a May 1993 paper.  Some of these attributes were
based on the validated Advanced Launch System and Tactical Space
System mission needs statements of 1988 and 1990, respectively. 
However, the Institute observed that (1) regardless of validity,
currently identified military requirements are not sufficiently
specified to drive development of alternative launch strategies and
(2) additional analyses or statements of requirements with a greater
degree of specification and quantification are needed.  The Air Force
Space Command has drafted a Mission Need Statement, identifying
needed spacelift capabilities for the future, but the statement has
not been validated. 

The Moorman report found that (1) the most fundamental driver of
space launch capability is requirements and (2) views differ widely
within the space community on how to define and characterize
spacelift requirements.  The report stated that (1) traditionally,
definition has focused on mission models and fundamental performance
parameters and (2) no forum or mechanism has been available to
coordinate intersector launch requirements, which has hampered the
executive branch's ability to articulate needs and sustain support
for spacelift modernization.  The report concluded that a new method
was needed to investigate requirements.  With the use of a different
methodology, the study group developed a preliminary set of
requirements representing the "wants" of all the space sectors.  The
report recommended institutionalizing a process to gain and sustain
space community agreement on requirements. 

DOD, NASA, and commercial companies generally agree that Russian
launch vehicles and processes represent an untapped resource that
could be beneficial to the United States.  For example, the Moorman
report stated that Russia possesses highly effective space launch
systems and technologies that may provide attractive alternatives to
domestic systems or technologies.  The Russians have developed new
launch vehicles; the Proton and Zenit medium-lift vehicles and the
Energia heavy-lift vehicle are the latest.  Russian engine technology
is of particular interest to the United States because of efficiency,
reliability, and an ability to vary the thrust.  The Moorman report
found that a detailed understanding of such technology could
potentially lead to reduced cost for modernization.  Although this
technology sounds promising, it should be noted that the U.S. 
industrial technology base could be negatively affected by
introducing Russian systems. 

The administration's draft policy on national space transportation
strategy addresses the use of foreign launch systems and hardware. 
Although the policy prohibits the government from purchasing space
launch services from foreign providers, with some exceptions, it does
not inhibit the use of foreign components or technologies in
upgrading or developing launch systems, except as required by
national security, foreign policy, public safety, or law.  The policy
also states that the government will seek to take advantage of
foreign technologies. 


--------------------
\1 National Space Launch Strategy, Defense Science Board Summer
Study, March 1990, p.  14. 


   OBSERVATIONS
--------------------------------------------------------- Appendix V:1

The U.S.  industrial base should be available to support development
of an improved launch vehicle because existing launch vehicle
contracts continue into the next decade.  In addition, DOD plans to
continue with some upgrades to the existing vehicle fleet.  Despite
these efforts, DOD does not have an adequate and validated set of
requirements for a future launch system.  Because the most
fundamental driver of space launch capability is requirements,
initiating major investments in, or evolving to, an improved
capability would be premature until a quantifiable set of
requirements are established. 

Although DOD desires to improve and evolve the existing expendable
launch vehicle fleet, it has not established an approach for
acquiring and evaluating Russian launch vehicle components and
technologies to incorporate into future designs.  Considering the
potential cost and performance benefits associated with the use of
such items, it appears that the administration's final space policy
would require development of a consistent approach for DOD and civil
agencies. 


LAUNCH INFRASTRUCTURE
========================================================== Appendix VI

In 1992, based on the 1991 National Space Policy Directive 4 entitled
National Space Launch Strategy, the Deputy Secretary of Defense
approved the Secretary of the Air Force's long-term investment plan
for improvements to the existing space launch infrastructure.  The
plan consisted of four elements--launch ranges, facilities, bases,
and vehicles--and three priority categories--maintaining current
operations, increasing reliability and efficiency, and product
improvements.  According to the plan, the ranges element, consisting
of communications and other equipment for safe launch operations,
required fixes because of old technology and designs, resulting in
obsolescence and supportability and reliability problems.  The
facilities element, consisting of the launch pads and other
facilities to store, process, assemble, and test vehicles and
payloads, required constant maintenance because they are located in
high corrosion areas.  The bases element, consisting of real property
and equipment that directly supported launch activities such as
roads, water and sewer, electrical power, and air cargo handling
facilities, was in need of repair because of natural decay and
technical obsolescence.  The vehicles element, involving Titan II,
Delta II, Atlas II, and Titan IV and related upper stages, were of
concern because of the lack of system confidence, lengthened
processing times, and decreased flexibility to meet short notice
launch demands.  As a result, the required investment was estimated
to cost about $2.5 billion through fiscal year 2004; however, $1.1
billion (over 40 percent) was unfunded. 

DOD's fiscal year 1994 budget request reflected the requirements in
its investment plan.  In July 1993, the House Armed Services
Committee directed the Secretary of the Air Force to submit a report
on space launch facilities infrastructure that reflected changing
requirements and budget reductions.  In addition, in September 1993,
the House Appropriations Committee directed DOD to provide a plan to
modernize and manage DOD's space infrastructure, including launch
facilities and range and tracking stations.  In April 1994, the Air
Force submitted an updated plan to Congress.  The estimated cost
through fiscal year 2004 was about $1.4 billion--$1.1 billion less
than the 1992 estimate.  However, this updated plan did not fully
disclose the Air Force's intentions because our discussions with Air
Force representatives indicated that there was no significant
reduction in the scope of work.  We were informed that some of the
originally planned activities were delayed to later years, no
unfunded items were reported as they were in the 1992 plan, and the
vehicle element was totally eliminated as part of the plan.  A
summary of the cost differences between the 1992 and 1994 space
investment plans for the four infrastructure elements is shown in
table VI.1. 



                          Table VI.1
           
               Estimated Costs of Space Launch
            Investment Infrastructure (dollars in
                          millions)

                                            1992
                                            plan   1994 plan
----------------------------------------  ------  ----------
Ranges                                    $1,270        $975
Facilities                                   407         137
Bases                                        316         318
Vehicles                                     486           0
============================================================
Total                                     $2,479      $1,430
------------------------------------------------------------
The space launch infrastructure investment plans appear to lack a
central program management focus for controlling projects and costs
and measuring progress.  In addition, there was no indication that
such a plan would be maintained on a recurring basis or that it would
require a periodic assessment relative to established goals.  For
example, the 1992 plan stated that some support facilities had
deficiencies so severe that they were in imminent danger of failing
and could have caused an unacceptable impact to operations.  However,
the 1994 report did not show the status of these, or other,
deficiencies, which could have detrimentally affected operations or
caused economic loss.  Instead, the plans consist of a series of
individual projects managed by a combination of individual system
program offices under the Air Force Materiel Command and other
offices under the Air Force Space Command. 

This is similar to other criticism of fragmented management in the
space launch area.  For example, a December 1993 study by the Air
Force Space Command alluded to confusion within the space community
concerning organizational roles and responsibilities.  It stated that
the Materiel Command's program offices award the spacelift contracts
and exercise authority over research and development mission
launches, the Space Command is the launch deployment authority for
DOD operational missions, and the national community has launch
deployment authority over vehicles that carry its payloads.  The
study stated that too many organizations, with their own specific
agendas, are going in separate directions and that no one
organization has the entire "big picture."


   OBSERVATIONS
-------------------------------------------------------- Appendix VI:1

There are indications that (1) significantly greater investment is
required in space launch infrastructure than the most recent report
to Congress disclosed and (2) the planned infrastructure investment
lacks central management oversight and reporting mechanisms in
establishing and monitoring requirements, determining needed
resources and annual spending priorities, and measuring the progress
of the investment.  Infrastructure investments should be compatible
with any improved launch system that DOD chooses.  Decisions on such
matters would likely be more effectively made by more central and
less fragmented management. 


COMMERCIAL SECTOR
========================================================= Appendix VII

The U.S.  government is concerned about the commercial launch
industry losing market share because the result may be higher overall
launch costs.  A European company called Arianespace is considered
the major competitor to the U.S.  launch industry and, according to
the Wilkening Report, launches 60 percent of all commercial space
launches.  Arianespace's success has been attributed primarily to the
inability of the U.S.  industry to compete because of outdated launch
systems that are expensive and inefficient.  The government says a
new launch vehicle is needed for the United States to regain its
competitiveness and to keep overall launch costs down.  The 1992
Aldridge report said: 

     ".  .  .  a decision by the Administration or the Congress not
     to fund a new, reliable, low-cost operational space launch
     capability is a de facto policy decision to forgo U.S. 
     competition in the international space launch marketplace, a
     mandate that the U.S.  government will continue to pay higher
     prices than necessary to meet future government launch
     requirements .  .  ."

Although the United States no longer dominates the commercial launch
market, the absolute number of commercial satellites being launched
by the United States is about the same as it was before Arianespace
began operations in the early 1980s.  Specifically, from 1977 to
1979, prior to Arianespace, the U.S.  launch industry averaged eight
commercial satellites per year.  During the ensuing 6-year period
after Arianespace began operations, 1980-85, the United States
averaged almost nine commercial satellites per year.  Following the
failure of several U.S.  launches, including the Challenger in 1986,
the number of U.S.  commercial launches decreased significantly for
about 4 years and Arianespace's share of the international launch
market increased significantly.  By 1990, however, the United States
had nearly regained its previous commercial launch rate and will
average about eight per year through 1994.  Table VII.1 compares U.S. 
and Arianespace commercial satellite launches and shows the number of
U.S.  government satellite launches.  It also shows the loss of
nearly all European commercial satellites to Arianespace beginning in
1980.  These losses are as likely to be due as much to political
reasons as economic reasons. 



                                   Table VII.1
                     
                          Numbers of Commercial and U.S.
                          Government Satellite Launches

                                                                              94
Year      77  78  79  80  81  82  83  84  85  86  87  88  89  90  91  92  93  \a
--------  --  --  --  --  --  --  --  --  --  --  --  --  --  --  --  --  --  --
Commercial satellites launched by United Sta Arianespace
--------------------------------------------------------------------------------
================================================================================
Total     12   9   3   2   6  10  10  11  14   1   1   0   2  11   6   8   5  10
 U.S.
 commerc
 ial
U.S.       6   3   1   -   1   -   1   2   -   -   -   -   1   4   3   3   1   -
 launch
 of
 Europea
 n
 satelli
 tes
U.S.       6   6   2   2   5  10   9   9  14   1   1   -   1   7   3   5   4  10
 launch
 of
 others


--------------------------------------------------------------------------------
================================================================================
Total by   0   0   0   2   3   2   3   6   7   5   3  13  10  16  15  13  17  14
 Ariane
Ariane     -   -   -   2   2   2   2   4   3   3   2   6   6   7  10   5   6   3
 launch
 of
 Europea
 n
 satelli
 tes
Ariane     -   -   -   -   1   -   1   2   4   2   1   7   4   9   5   8  11  11
 launch
 of
 others


--------------------------------------------------------------------------------

U.S. government satellites launched
--------------------------------------------------------------------------------
================================================================================
Total     19  30  15  15  13   8  12  18  13  11  12  13  19  25  25  16  16  \b
 gov't
--------------------------------------------------------------------------------
\a Scheduled. 

\b Classified. 

Industry representatives gave various reasons for choosing
Arianespace over U.S.  launchers.  Price was given as an important
consideration, but U.S.  launchers were considered competitive in
this area.  Also, the Moorman report said that U.S.  launch vehicles,
particularly Atlas, are generally price competitive with Arianespace
today.  Other factors, such as the long success rate of the Ariane
vehicle and the aggressive and innovative marketing techniques of
Arianespace have been cited as primary reasons for choosing the
launch company.  One U.S.  manufacturer's representative said his
company chose Arianespace because of its success rate--the European
company had already completed a number of successful launches--and
not price.  He stated that the Delta vehicle was too small for the
intended payload and the Atlas II vehicle was just getting
established when the decision was made.  Marketing techniques that
Arianespace uses, such as charging only for the actual weight of the
satellite instead of the maximum allowable weight, were also cited. 

The potential for additional commercial launches is limited and a new
launch vehicle is not warranted solely for commercial reasons.  A
1994 Commercial Space Transportation Advisory Committee report
estimates that only about 17 commercial payloads per year will be
available from 1993 to 2010 and the Moorman report stated that the
commercial launch market provides little potential for significant
growth or economies.  A U.S.  space launch contractor believes that
the potential commercial market is too small to recoup an investment
in a new launch vehicle in a reasonable period. 

Commercial payloads make up the smaller portion of the total U.S. 
requirement for launch capability.  Government satellites have
accounted for over 60 percent of all satellites launched from U.S. 
facilities for the past 4 years.  Thus, government requirements
should be the driver behind the development of a new launch vehicle. 


   OBSERVATIONS
------------------------------------------------------- Appendix VII:1

The commercial launch industry is price competitive with foreign
launchers and the future commercial launch market appears limited. 
Using requirements of the U.S.  commercial launch industry as
justification for developing a new launch vehicle does not appear to
be warranted.  If, however, a valid set of government requirements
are established, commercial requirements should also be considered to
take advantage of the widest possible user base in reducing costs and
risks and increasing reliability and safety. 


SATELLITES
======================================================== Appendix VIII


   CONVERGENCE OF METEOROLOGICAL
   SATELLITES
------------------------------------------------------ Appendix VIII:1

Since 1972, eight studies have been performed on convergence of DOD
and NOAA polar-orbiting meteorological satellite programs.  Although
unique agency missions and requirements were claimed to have
precluded full program convergence, changing world political
conditions and declining agency budgets have now made reexamination
of satellite convergence a priority.  Last year, this subject was
examined under the Vice President's National Performance Review.  The
review recommended convergence of the two satellite programs based on
estimates of substantial cost savings.  In May 1994, the President
signed a directive endorsing an implementation plan that had been
developed by a tri-agency study team. 

The anticipation of substantial cost savings has been a principal
reason to converge DOD's and NOAA's meteorological satellites.  The
National Performance Review identified up to $300 million in cost
savings through 1999 for the converged program.  However, we were
informed that no firm data exist to support the estimated savings. 
During these periods, substantial research and development funding
will be needed to design new and potentially complex sensors capable
of meeting both civilian and military requirements.  In addition,
both DOD and NOAA are still procuring a large number of existing
satellites that have yet to be deployed, and the first converged
satellite will not be needed until 2004.  Long-term savings are more
likely because the overall constellation size and satellite
replacement rate are expected to be reduced, but there are still
uncertainties associated with these potential savings. 

A single integrated requirements document is critical to the
development of a converged satellite system.  Such a document is
being drafted by a tri-agency team and is to be submitted to the
agencies for comment, with final approval planned for October 1994. 
However, this may be optimistic, given the broad base of internal
customers each agency has and the challenges associated with
reconciling diverse requirements.  The requirements will be reviewed
and validated using a new and untested process. 

Under the convergence implementation plan, an integrated program
office is to be responsible for acquisition, operation, and
management of the converged system.  The plan adopted a multi-agency
funding approach whereby the program office would prepare a single
budget.  However, funding for the converged program will actually be
requested by the individual agencies from several different
congressional authorization and appropriation committees.  As a
result, such joint funding efforts may present significant
challenges, as demonstrated by previous unsuccessful government
efforts to fund joint programs.  A joint funding mechanism that
equitably divides program costs and ensures congressional support
will be essential for program success. 

European participation in the converged program is contingent upon an
agreement (1) to a set of U.S.  requirements that will include the
ability to deny data to adversaries during wartime and (2) to the
maintenance of a backup satellite in the event of a satellite
failure.  In addition, European participation is contingent upon the
U.S.  government's plan for long-term cost savings.  We understand
that the Europeans have recently raised objections to the data denial
requirements, raising concerns that their participation could be more
difficult to achieve than originally anticipated.  Also, European
agreement to a backup satellite for a launch-on-need policy is
uncertain.  Finally, the United States will buy sensors to be
integrated on European satellites, but it would need to maintain a
backup satellite capability in the event that European participation
declines.  Given the need to ensure a backup capability, significant
cost savings are not obvious, and will need to be demonstrated. 

Currently, DOD has nine, and NOAA has six, meteorological satellites
that are either built or are being procured.  This imbalance prevents
an easy synchronization of U.S.  satellite programs.  Assuming that
all issues regarding European participation can be resolved, two
European satellites could provide "pre-convergence" satellites to
facilitate the convergence plan.  This would be in lieu of DOD
transferring two satellites to NOAA or NOAA buying additional
satellites.  Such synchronization is required to achieve the first
converged satellite delivery planned for 2004.  This is based on an
assessment of the projected satellite life expectancies and probable
failure rates of existing meteorological satellites.  Also, based on
historical experience, the tri-agency study team believes that the
development and production of the first converged satellite will take
10 years, and therefore, must begin shortly to meet the 2004 delivery
date. 


   EARLY WARNING SATELLITE
   REPLACEMENT
------------------------------------------------------ Appendix VIII:2

DOD is planning to replace the existing Defense Support Program (DSP)
with the Alert, Locate, and Report Missiles (ALARM) program to
provide early warning and detection of ballistic missiles.  ALARM is
to be designed to provide warning of theater ballistic missile
launches to a greater degree than DSP.  Revised requirements for this
new purpose is essential to initiate program development.  DOD's
efforts to do so may be delayed by the ongoing architecture review of
space-based early warning being led by the Office of the Secretary of
Defense for Command, Control, Communications, and Intelligence.  The
Air Force is planning to have users comment on the desired
performance characteristics of the new system and has tasked the Air
Force Space Command to complete the requirements development by the
end of fiscal year 1994. 

Air Force documents show that ALARM is almost as expensive as the
previous Follow-on Early Warning System (FEWS).  Early life-cycle
cost estimates identified the total cost of ALARM at about $11.3
billion, and that of FEWS at about $11.7 billion.  However, ALARM was
selected following the termination of FEWS because it was deemed to
be significantly cheaper than FEWS in the future years defense
program.  The ALARM yearly funding profile was kept at levels
significantly lower than those for FEWS to make the program
affordable by sacrificing short-term capability.  In this regard, DOD
proposes to build a series of Block I satellites to form the first
ALARM constellation before upgrading the design with additional
capabilities.  We were subsequently informed that DOD used a FEWS
cost model to estimate ALARM life-cycle costs, suggesting that this
could be a reason for the nearly equivalent ALARM costs.  To date, we
have not identified any better ALARM cost estimates, with and without
planned block upgrades. 

The Air Force has stated that ALARM can be accelerated by 2 years
from 2004 to 2002 without significant risks.  However, the additional
costs associated with acceleration may put DOD in a similar
unaffordable position when it rejected the FEWS program.  The program
office has tentatively identified an additional $434 million that
would be needed during fiscal years 1995 through 2001.  More firm
cost data may not be available until the program progresses beyond
the generation of requirements. 

Accelerating ALARM has advantages and possibly a few disadvantages
that should be further analyzed.  Accelerating ALARM could obviate
the need to procure an additional DSP satellite (number 24), its
launcher (Titan IV), and an inertial upper stage.  If DSP satellites
can last for about 6 years, as indicated in a study (by the Everett
Panel) on space-based early warning, DSP 23 would not have to be
launched until 2001 or 2002.  In that case, the first ALARM satellite
may not have to be launched until the year 2002 or 2003, and DOD may
not need DSP 24.  This could save as much as $700 million dollars in
acquisition costs.  However, accelerating the program could create
program risks by (1) shortening the demonstration and validation
phase of the acquisition process by 10 months--from
28 months to 18 months and (2) performing the critical design review
a full year ahead of the original schedule.  Air Force
representatives claim, however, that previous engineering efforts on
earlier programs (the Boost Surveillance and Tracking System, the
Advanced Warning System, and FEWS) provide enough experience to
offset this risk. 

DOD maintains that it has identified a majority of critical
technologies required for capabilities specified for ALARM.  However,
there are areas that require additional funding and continuing
development.  To date, the two most important elements are an
infrared focal plane array and radiation- hardened electronics.  Our
discussion with Air Force representatives reveals that these two
technology development efforts are critical to ALARM.  However,
program officials tell us that funds to develop these technologies
are "frozen." A team of contractors informed us that these
technologies would have to be funded by the government because of the
unique applications.  Two contractors stated that no private sector
funds would be available for the above technologies because there are
no returns on the investment. 


   MILSTAR ACQUISITION AND
   ADVANCED REPLACEMENT
------------------------------------------------------ Appendix VIII:3

During the past 12 years, the Milstar program has gone through a
number of changes.  In 1990, congressional leaders considered
Milstar's cost to be too high and its support for tactical forces
inadequate.  The National Defense Authorization Act for Fiscal Year
1991 directed DOD to either restructure Milstar or develop an
alternative.  DOD chose to restructure the Milstar program and
reduced the number of satellites in the planned constellation to six. 
In October 1992, based on guidance from the conference committee on
the fiscal year 1993 defense authorization bill, DOD further reduced
the constellation size to a total of four satellites. 

In October of 1993, the Bottom-Up Review established a new
acquisition strategy for the Milstar program.  DOD opted to limit the
total acquisition to six satellites--the first two satellites,
referred to as Milstar I, with only a low-data rate capability, and
the next four satellites, referred to as Milstar II, with both low-
and medium-data rate capabilities.  To reduce long-term costs, DOD
plans to replace the Milstar II design with a smaller advanced
satellite design that will use a smaller, less expensive launch
vehicle.  The first launch of the advanced satellite is scheduled for
2006. 

In two recent GAO testimonies,\1 we proposed canceling the fifth and
sixth Milstar satellites (the third and fourth Milstar II), and
accelerating development and launch of an advanced Milstar design to
2003.  This proposal would delay deployment of a complete
constellation of four Milstar II satellites by 2 years, from 2002 to
2004.  We estimated that this proposal could save between $1.4 and
$2.1 billion dollars over the next few years.  We testified that this
proposal offers a logical breaking point for the program.  A contract
has not been awarded for the last 2 Milstars, and the associated
Titan IV launch vehicles for these 2 satellites are not part of the
current contract for 41 vehicles.  Technical experts supporting the
Bottom-Up Review unanimously agreed that a 2003 launch date was
feasible.  Some of these experts even believed a first launch would
be possible as early as 2000, using technology already developed or
under development.  We also said DOD should compare the benefits of
these significant cost savings to the operational risk of delaying
deployment of the full Milstar constellation. 


--------------------
\1 Military Space Programs:  Opportunities to Reduce Missile Warning
and Communication Satellites' Costs (GAO/T-NSIAD-94-108, Feb.  2,
1994) and Military Space Programs:  Comprehensive Analysis Needed and
Cost Savings Available (GAO/T-NSIAD-94-164, Apr.  14, 1994). 


MAJOR CONTRIBUTORS TO THIS REPORT
========================================================== Appendix IX

NATIONAL SECURITY AND
INTERNATIONAL AFFAIRS DIVISION,
WASHINGTON, D.C. 

Rahul Gupta, Deputy Project Manager
Robert R.  Hadley, Senior Evaluator
James P.  Tallon, Evaluator
Lenora R.  Fuller, Senior Evaluator
Steve Martï¿½nez, Senior Evaluator
Charles R.  Climpson, Advisor

ACCOUNTING AND INFORMATION
MANAGEMENT DIVISION, WASHINGTON,
D.C. 

Keith A.  Rhodes, Technical Advisor

DENVER REGIONAL OFFICE

Frederick G.  Day, Deputy Project Manager
Arthur Gallegos, Deputy Project Manager
David A.  Powner, Evaluator

LOS ANGELES REGIONAL OFFICE

Samuel S.  VanWagner, Regional Management Representative
Pierre F.  Crosetto, Deputy Project Manager
Dale M.  Yuge, Deputy Project Manager
Frank Moore, Evaluator
David G.  Hubbell, Evaluator

