National Missile Defense: Risk and Funding Implications for the
Space-Based Infrared Low Component (Letter Report, 02/25/97,
GAO/NSIAD-97-16).

GAO reviewed the Department of Defense's (DOD) Space-Based Infrared
System (SBIRS)-low program to determine the effects of changing the
deployment date from fiscal year (FY) 2006, the original schedule, to FY
2002, 2003, 2004, or 2005.

GAO found that: (1) its assessment of four deployment options, FY 2002,
FY 2003, FY 2004, and FY 2005, that would accelerate the SBIRS-low
program from DOD's originally planned FY 2006 schedule shows some
potential differences in risk and variations in funding requirements;
(2) the FY 2002 and 2003 options would result in higher program risk
because of the high degree of concurrent activities between the planned
first year of the flight demonstration and the development and
fabrication of SBIRS-low satellites; (3) in addition, although program
officials stated that total life cycle costs would not be affected, a
substantial amount of additional funding would be required during fiscal
years 1997 through 2002 because of compressing the SBIRS-development,
fabrication, and deployment schedule; (4) if SBIRS-low deployment were
scheduled for FY 2004, the first year of flight demonstration and
SBIRS-low engineering and manufacturing development would be sequential,
rather than concurrent, allowing time to assess the demonstration
results before making a milestone decision on satellite development and
fabrication; (5) this schedule would make program risks similar to the
FY 2006 schedule, which DOD considers to be low; (6) however,
considerable additional funds during fiscal years 1998 through 2003
would be required because of program schedule compression; (7) under the
FY 2005 option, flight demonstration and SBIRS-low development and
fabrication would also be sequential, rather than concurrent; (8) this
schedule would also make program risk similar to the FY 2006 schedule;
(9) funding requirements during fiscal years 1998 through 2003, however,
would be less than those for DOD's original schedule for a FY 2006
deployment; (10) DOD and Air Force representatives initially informed
GAO that fewer funds would be required because of planning for a more
efficient production schedule; (11) in commenting on GAO's draft report,
however, DOD stated that fewer funds were required because of a
different satellite configuration and a lower inflation rate; (12) the
widely divergent results associated with these four deployment options
are directly linked to how soon SBRIS-low can and should be scheduled to
support national and theater ballistic missile defenses; and (13) how
Congress and DOD resolve differing views on deployment dates will
determine how much program risk may be taken and what the funding requi*

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

 REPORTNUM:  NSIAD-97-16
     TITLE:  National Missile Defense: Risk and Funding Implications for 
             the Space-Based Infrared Low Component
      DATE:  02/25/97
   SUBJECT:  Air defense systems
             Concurrency
             Future budget projections
             Research and development costs
             Military cost control
             Defense appropriations
             Military satellites
             Life cycle costs
             Testing
IDENTIFIER:  DOD Space-Based Infrared System
             DOD Future Years Defense Program
             Defense Support Program
             
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Cover
================================================================ COVER


Report to Congressional Committees

February 1997

NATIONAL MISSILE DEFENSE - RISK
AND FUNDING IMPLICATIONS FOR THE
SPACE-BASED INFRARED LOW COMPONENT

GAO/NSIAD-97-16

National Missile Defense

(707130)


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

  DOD - Department of Defense
  DSP - Defense Support Program
  EMD - engineering and manufacturing development
  SBIRS - Space-Based Infrared System

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


B-272654

February 25, 1997

Congressional Committees

In 1995, the Department of Defense (DOD) made plans for the space and
missile tracking system--the low satellite component of the
Space-Based Infrared System (SBIRS)--to be deployed in fiscal year
2006.  In February 1996, the Congress directed the Secretary of
Defense to restructure the SBIRS program and deploy the first space
and missile tracking system (hereafter referred to as SBIRS-low)
satellite in fiscal
year 2002.\1 The Congress also appropriated $264 million above DOD's
fiscal year 1996 and 1997 budget requests to support this deployment
acceleration.  The purpose was to ensure that the space and missile
tracking system provided support to national and theater ballistic
missile defenses sooner, rather than later. 

DOD has not implemented this congressional directive to accelerate
SBIRS-low deployment to fiscal year 2002.  It stated that such
acceleration was not possible because technical, funding, and
management problems had delayed the scheduled launch of two
demonstration satellites, the results of which were necessary before
deciding to initiate the fabrication of operational SBIRS-low
satellites.  However, DOD is planning on accelerating deployment to
fiscal year 2004 and has directed the Air Force to prepare cost
estimates and program plans to support such deployment. 

DOD originally estimated SBIRS-low life-cycle costs at $9.3 billion,
which was part of a total estimated life-cycle cost of $22.6 billion
for the SBIRS program during fiscal years 1995 through 2020.  In
October 1996, however, the Air Force revised SBIRS program costs and
informed us that these estimates had decreased to $7.8 billion and
$17.5 billion for fiscal years 1997 through 2020, respectively.  Of
the approximate $5-billion total decrease, the Air Force attributed
(1) $2.5 billion to using a lower inflation index and to excluding
fiscal year 1995 and 1996 program costs and (2) $2.5 billion to plans
for using fewer SBIRS-low satellites and different launch vehicles
and to acquisition reform and commercial practices.  In commenting on
our draft report, DOD stated that as of December 1996, SBIRS-low
program costs had decreased an additional $800 million, from $7.8
billion to $7 billion for fiscal years 1997 through 2020.  However,
DOD did not provide a reason for this reduction. 

We reviewed the SBIRS-low program to determine the effects of
changing the deployment date from fiscal year 2006 (the original
schedule) to fiscal year 2002, 2003, 2004, or 2005.  To do this, we
relied on available Air Force data--some of which was in draft form
and none of which, according to DOD, was verified by the Office of
the Secretary of Defense.  We performed this review under our basic
legislative responsibilities and are addressing this report to you
because the matters discussed fall within your Committees'
jurisdiction. 


--------------------
\1 See the National Defense Authorization Act for Fiscal Year 1996
(P.L.  104-106, Feb.  10, 1996). 


   RESULTS IN BRIEF
------------------------------------------------------------ Letter :1

Our assessment of four deployment options--fiscal years 2002, 2003,
2004, and 2005--that would accelerate the SBIRS-low program from
DOD's originally planned fiscal year 2006 schedule shows some
potential differences in risk and variations in funding requirements
(see table 1).  Our assessment was based on data prepared by the Air
Force at various times between June 1995 and November 1996 using
various assumptions. 



                                Table 1
                
                 Program Risks and Funding Variances in
                SBIRS-Low Deployment Options Compared to
                 the Original Fiscal Year 2006 Schedule

Deployment options in   Program risk            Estimated funding
fiscal year             assessment comparison   variances
----------------------  ----------------------  ----------------------
2002                    Higher risk due to      Additional $2.1
                        concurrent program      billion during fiscal
                        activities              years 1997 through
                                                2002

2003                    Higher risk due to      Additional $2.6
                        concurrent program      billion during fiscal
                        activities              years 1997 through
                                                2002

2004                    Similar risk due to     Additional $509
                        sequential program      million during fiscal
                        activities              years 1998 through
                                                2003

2005                    Similar risk due to     Up to $500 million
                        sequential program      less during fiscal
                        activities              years 1998 through
                                                2003
----------------------------------------------------------------------
The fiscal year 2002 and 2003 options would result in higher program
risk because of the high degree of concurrent activities between the
planned first year of the flight demonstration and the development
and fabrication of SBIRS-low satellites.  In addition, although
program officials stated that total life-cycle costs would not be
affected, a substantial amount of additional funding would be
required during fiscal years 1997 through 2002 because of compressing
the SBIRS-low development, fabrication, and deployment schedule.  In
commenting on our draft report, DOD stated that the higher costs of
the fiscal year 2003 option was due to differences in technical
configuration.  DOD has not included these additional funding needs
in its future years defense program; thus, the source of such funds
would need to be identified.\2

If SBIRS-low deployment were scheduled for fiscal year 2004, the
first year of the flight demonstration and SBIRS-low engineering and
manufacturing development would be sequential, rather than
concurrent, allowing time to assess the demonstration results before
making a milestone decision on satellite development and fabrication. 
This schedule would make program risk similar to the fiscal year 2006
schedule, which DOD considers to be low.  However, considerable
additional funds during fiscal years 1998 through 2003 would be
required because of program schedule compression.  Upon completing
our field work, these additional funding needs had not been included
in DOD's future years defense program.  However, in commenting on our
draft report, DOD stated that recent budgetary actions in December
1996 had identified and programmed the additional funding in the
fiscal year 1998 future years defense program. 

Under the fiscal year 2005 option, flight demonstration and SBIRS-low
development and fabrication would also be sequential, rather than
concurrent.  This schedule would also make program risk similar to
the fiscal year 2006 schedule.  Funding requirements during fiscal
years 1998 through 2003, however, would be less than those for DOD's
original schedule for a fiscal year 2006 deployment.  DOD and Air
Force representatives initially informed us that fewer funds would be
required because of planning for a more efficient production
schedule.  In commenting on our draft report, however, DOD stated
that fewer funds were required because of a different satellite
configuration and a lower inflation rate. 

The widely divergent results associated with these four deployment
options are directly linked to how soon SBIRS-low can and should be
scheduled to support national and theater ballistic missile defenses. 
Although DOD is currently planning on a fiscal year 2004 SBIRS-low
deployment, the Congress has not rescinded the requirement in the
National Defense Authorization Act for Fiscal Year 1996 to accelerate
deployment to fiscal year 2002.  How the Congress and DOD resolve
these differing views on deployment dates will determine how much
program risk may be taken and what the funding requirements would be. 

We have reported on numerous occasions about the risks associated
with program concurrency and of initiating production without
adequate testing.  The SBIRS-low fiscal year 2002 and 2003 options
are analogous situations whereby a planned decision to fabricate
satellites would be made before the results of a critical flight
demonstration are available. 

At this point in time, however, the Congress does not have complete
and consistent information on the program risks and the need for
additional funding associated with the various options to accelerate
SBIRS-low deployment.  The Air Force's data on these options were
prepared at different times using different assumptions, and the Air
Force recently established a new SBIRS program baseline using revised
life-cycle costs. 

Appendix I contains the details of our assessment. 


--------------------
\2 Planned program execution is dependent on stable funding. 
Ensuring that sufficient resources are included in DOD's future years
defense program is essential for program stability. 


   AGENCY COMMENTS AND OUR
   EVALUATION
------------------------------------------------------------ Letter :2

In commenting on a draft of this report, DOD stated that the report
describes many of the issues and problems that have affected the
program in the past year and that as recently as December 1996, the
Air Force and DOD made some key decisions to focus development and
stabilize funding.  DOD indicated that, to provide budgetary and
technical discipline, the program has been upgraded to a major
defense acquisition program and a Defense Acquisition Board review
has been scheduled for the spring of 1997.  DOD also noted that it
had added funding to enhance the program definition/risk reduction
phase of the program and had established a fiscal year 2004
deployment date to best balance technical risk and available funding. 

According to DOD, the Congress has accepted these actions as being in
conformance with its objectives and will be provided additional
information following the Defense Acquisition Board review.  Given
these developments, DOD believes that the dialogue on various
deployment options has been successfully concluded and disagrees with
our recommendation that it provide additional information on the
fiscal year 2002, 2003, 2004, and 2005 deployment options. 

Despite DOD's apparent plans to deploy SBIRS-low in fiscal year 2004,
the Congress has not changed the requirement in the National Defense
Authorization Act for Fiscal Year 1996 for deployment in fiscal year
2002.  In addition, DOD officials could not provide documentation
supporting their claim of "broad congressional support" for the
fiscal year 2004 deployment.  DOD stated that (1) it had struggled
with identifying deployment costs and technical risk for a variety of
different satellite options and deployment dates, (2) the different
technical assumptions and costing methodologies used for the various
deployment options had caused confusion and uncertainty in the
Congress, and (3) our report accurately identified these problems. 
Also, DOD representatives have informed us that the current SBIRS-low
cost estimate, a portion of which is included in the fiscal year 1998
future years defense program, could change pending the results of an
independent cost analysis. 

In view of these facts, we reaffirm our recommendation that DOD fully
inform the Congress about the feasibility and effects of accelerating
SBIRS-low deployment for the fiscal year 2002, 2003, 2004, and 2005
deployment options. 

DOD's comments also provided suggestions to improve the technical
accuracy and clarity of the report and we have incorporated them in
the text where appropriate.  DOD's comments are reprinted in their
entirety in appendix II. 


   RECOMMENDATION
------------------------------------------------------------ Letter :3

To fully inform the Congress about the feasibility and effects of
accelerating SBIRS-low, we recommend that the Secretary of Defense
provide the congressional defense committees with complete,
consistent, and current information that discusses program risk,
revised program costs, and any additional funding needs and sources
for the fiscal year 2002, 2003, 2004, and 2005 deployment options. 


   MATTERS FOR CONGRESSIONAL
   CONSIDERATION
------------------------------------------------------------ Letter :4

The Congress may wish to consider the costs and risks of DOD's plans
to deploy the first SBIRS-low satellite in fiscal year 2004, relative
to the statutory requirement in the National Defense Authorization
Act for Fiscal Year 1996 to deploy the first satellite in fiscal year
2002 and revise the requirement as necessary. 

If DOD does not provide the Congress with complete, consistent, and
current information on program risks, revised program costs, and any
additional funding needs and sources for the fiscal year 2002, 2003,
2004, and 2005 deployment options for use in making its decision, the
Congress may wish to require that DOD provide it. 


   SCOPE AND METHODOLOGY
------------------------------------------------------------ Letter :5

The scope of our review involved the SBIRS-low component of the SBIRS
program and included an examination of program risks and changes in
funding requirements for various SBIRS-low deployment options.  The
information for the options was developed by the Air Force at
different times between June 1995 and October 1996 for different
purposes to assess the feasibility of deploying SBIRS-low in fiscal
years 2002, 2003, 2004, and 2005.  Because the Air Force did not use
the same assumptions to assess these options, a consistent comparison
of changes in funding requirements was not possible.  For example,
the options included different satellite configurations and launch
vehicles.  According to DOD, these different assessments led to
disparities in cost and technical estimates.  Although we requested
estimated funding requirements for each option year that used the
same assumptions, the SBIRS program director stated that such a
comparison was no longer meaningful because the Air Force was
preparing for a fiscal year 2004 deployment option decision.  Despite
this lack of consistency, we believe that comparing this information
with the fiscal year 2006 deployment schedule provides some
indication of the funding and program risk differences. 

We performed our work primarily at the Air Force Space and Missile
Systems Center and Aerospace Corporation in Los Angeles, California,
and the U.S.  and Air Force Space Commands in Colorado Springs,
Colorado.  We reviewed program requirements and briefings,
acquisition and test plans, budgetary information, management
reports, and internal memoranda. 

In addition, we held discussions with representatives and obtained
documentation from the Office of the Deputy Under Secretary of
Defense for Space, the Air Force's Office of the Assistant Secretary
for Acquisition, and the Ballistic Missile Defense Organization in
Washington, D.C., and the Air Force's Phillips Laboratory in
Albuquerque, New Mexico.  We also held discussions with and obtained
documents from representatives of the TRW Space and Electronics Group
and Hughes Aircraft Company, which is the contracting team that is
developing and fabricating two flight demonstration satellites. 

We performed our work from October 1995 through September 1996 in
accordance with generally accepted government auditing standards. 



---------------------------------------------------------- Letter :5.1

We are sending copies of this report to the Secretaries of Defense,
the Air Force, the Army, and the Navy; the Director of the Ballistic
Missile Defense Organization; and the Director of the Office of
Management and Budget.  We will make copies available to others upon
request. 

This report was prepared under the direction of Thomas J.  Brew,
Associate Director, Defense Acquisitions Issues, who may be reached
on (202) 512-4841 if you or your staff have any questions concerning
information in this report.  Major contributors to this report are
listed in appendix III. 

Louis J.  Rodrigues
Director, Defense Acquisitions Issues

List of Congressional Committees

The Honorable Strom Thurmond
Chairman
The Honorable Carl Levin
Ranking Minority Member
Committee on Armed Services
United States Senate

The Honorable Ted Stevens
Chairman
The Honorable Daniel Inouye
Ranking Minority Member
Subcommittee on Defense
Committee on Appropriations
United States Senate

The Honorable Floyd D.  Spence
Chairman
The Honorable Ronald V.  Dellums
Ranking Minority Member
Committee on National Security
House of Representatives

The Honorable C.W.  Bill Young
Chairman
The Honorable John P.  Murtha
Ranking Minority Member
Subcommittee on National Security
Committee on Appropriations
House of Representatives


PROGRAM PLANS, CONGRESSIONAL
DIRECTION, AND DEPLOYMENT OPTIONS
=========================================================== Appendix I

The Department of Defense's (DOD) Defense Support Program (DSP)--a
strategic surveillance and early warning satellite system with an
infrared capability to detect long-range ballistic missile
launches--has been operational for about 25 years.  Since the early
1980s, DOD's efforts to replace DSP with more modern capability have
been unsuccessful because of immature technology, high cost, and
affordability issues.  These aborted efforts have included the
Advanced Warning System; the Boost Surveillance and Tracking System;
the Follow-on Early Warning System; and the Alert, Locate, and Report
Missiles system. 

DSP's capabilities in theater situations became increasingly
important during the 1991 Persian Gulf War with the launching of SCUD
missiles by Iraq.  However, more timely and accurate information was
needed on these short-range ballistic missile launches.  The Air
Force subsequently made changes in DSP data processing to achieve an
enhanced capability--a system known as Attack and Launch Early
Reporting to Theater--without modifying the DSP satellite sensors. 
However, DOD concluded that expanding theater warning requirements
necessitated new sensor technology, and it began planning for an
improved infrared satellite sensor capability that would support both
strategic and theater operations. 


   CURRENT DSP REPLACEMENT PLANS
--------------------------------------------------------- Appendix I:1

In 1994, DOD initiated a study\1 to consolidate various infrared
space requirements.  Based on the study results, it selected the
Space-Based Infrared System (SBIRS) to replace DSP.  SBIRS is
expected to use more sophisticated infrared technologies, which are
intended to enhance the detection and tracking of strategic and
theater ballistic missile launches and provide critical data for
national and theater missile defense systems, than DSP. 

The SBIRS architecture consists of space and ground processing
segments.  The space segment contains both high and low orbit
components.  The high component is to consist of four satellites
operating in geosynchronous earth orbit and sensors on two host
satellites operating in a highly elliptical orbit.\2 In commenting on
our draft report, DOD officials stated that for planning purposes the
SBIRS-low component consists of 24 operational satellites in low
earth orbit.  However, the SBIRS-low constellation could consist of
more or less satellites depending on the results of contractor cost
and performance studies. 

The ground processing segment is to consist of a mission control
station in the United States, a communication system, and two
overseas ground stations.  The Air Force plans to develop the ground
segment in three increments.  Increment I is to consolidate the
existing DSP ground processing operations.  During increment II, the
Air Force plans to integrate the high component satellites' data
processing with the consolidated DSP operations.  Increment III is to
incorporate the functions and equipment necessary to support
SBIRS-low when it is deployed. 

DOD decided to deploy the high orbit component beginning in fiscal
year 2002 because of (1) an urgent need to replace DSP, primarily for
theater missile defense purposes; (2) the low program risk associated
with technology, infrastructure, and schedule; and (3) the system's
ability to meet key performance parameters.  DOD determined that
SBIRS-low could be deployed in fiscal year 2006 and planned to make a
deployment decision in fiscal year 2000 after key technologies and
operating concepts were validated on two demonstration satellites
scheduled for launch in fiscal year 1999.  DOD's rationale for
deploying SBIRS-low at a later date was because (1) the national
missile defense mission for SBIRS, which only this component could
satisfy, was not a key requirement and (2) the risk associated with
antiballistic missile treaty issues, technology, cost, schedule, and
operational complexity was high. 


--------------------
\1 Referred to as the Office of the Secretary of Defense Space-Based
Warning Summer Study. 

\2 A satellite in a geosynchronous orbit has a circular period of
revolution that is equal to the period of the earth's rotation about
its axis, or 24 hours.  A satellite in a highly elliptical orbit
spends most of its time over a designated area of the earth, known as
apogee dwell. 


   CONGRESSIONAL EMPHASIS ON EARLY
   SBIRS-LOW DEPLOYMENT
--------------------------------------------------------- Appendix I:2

The National Defense Authorization Act for Fiscal Year 1996 required
the Secretary of Defense to accelerate the space and missile tacking
system (now called SBIRS-low) deployment of the first satellite to
fiscal year 2002.  The purpose was to ensure that SBIRS-low provided
support to national and theater ballistic missile defenses sooner,
rather than later.  To help achieve this objective, the Congress
appropriated an additional $135 million above DOD's fiscal year 1996
budget request. 

During deliberations on DOD's fiscal year 1997 budget request, the
Congress reiterated its desire that SBIRS-low deployment be
accelerated, and it appropriated $129 million above DOD's budget
request to do so.  The Congress also expressed disappointment with
DOD for not (1) responding in a timely manner to the fiscal year 1996
statutory requirement and (2) obligating all of the fiscal year 1996
SBIRS-low funds as directed.\3

In responding to the congressional direction, the Under Secretary of
Defense for Acquisition and Technology wrote, in a July 24, 1996,
letter to congressional committees, that accelerated deployment of
SBIRS-low beginning in fiscal year 2002 was not possible because
technical, funding, and management problems had delayed the scheduled
launch of the two demonstration satellites from the first quarter to
the third quarter of fiscal year 1999.  According to Air Force
officials, this delay prevented basing a milestone decision to enter
the engineering and manufacturing development (EMD) phase of the
SBIRS-low acquisition process, scheduled for the first quarter of
fiscal year 2000, on the results of the planned flight demonstration. 

Earlier, in a July 10, 1996, letter, the Under Secretary requested
that the Defense Science Board assess the viability of accelerating
SBIRS-low deployment.  In September 1996, based on the Board's
findings and recommendations, the Under Secretary directed the Air
Force to (1) prepare for a SBIRS-low deployment decision no later
than April 15, 1997, and (2) develop an acquisition strategy, an
acquisition program baseline, an independent cost assessment, and a
preliminary test plan that would support SBIRS-low deployment in
fiscal year 2004.  The purpose of the planned April decision was to
choose between the fiscal year 2004 option and the fiscal year 2006
original schedule.  Also, in September 1996, the Under Secretary
appeared before a congressional panel, testifying on ballistic
missile defense, and stated that DOD was considering the
affordability of accelerating SBIRS-low deployment to fiscal year
2004.\4 In commenting on our draft report, DOD stated that a fiscal
year 2004 deployment decision was made in December 1996.  However,
the Acquisition Decision Memorandum documenting this decision will
not be finalized until the spring of 1997. 


--------------------
\3 DOD subsequently released all of these funds to the Air Force,
which has until September 30, 1997, to obligate them. 

\4 Testimony before a joint session of the Subcommittee on Military
Research and Development and the Subcommittee on Military Procurement
of the House Committee on National Security, Sept.  27, 1996. 


   FLIGHT DEMONSTRATION SATELLITES
   ARE CRITICAL TO SBIRS-LOW
--------------------------------------------------------- Appendix I:3

The flight demonstration program includes three satellites--one low
altitude demonstration system satellite for competitive development
purposes and two satellites for flight demonstration purposes.  The
low altitude demonstration system satellite is to (1) provide an
alternative to the contractor team that is now fabricating the two
flight demonstration satellites and (2) reduce program and technical
risks. 

The two flight demonstration satellites are to validate the
integration of key technologies and operational concepts that are
critical to national missile defense and other SBIRS missions.  The
Air Force draft test plan calls for launching a single ballistic
missile target to demonstrate the ability of these satellites to
perform this national missile defense function.  Also, the Air Force
intends to participate in Ballistic Missile Defense Organization
tests designed to further demonstrate the ability of the two
satellites to detect and track ballistic missiles.  It plans to use
the results of the demonstration and tests to model and simulate the
full performance capability of a constellation of operational
SBIRS-low satellites. 

In commenting on our draft report, DOD stated that it has approved
additional theater and national missile defense targets for the
flight demonstration program.  In doing so, it programmed $149
million for one theater and one national missile defense target for
the low altitude demonstration system and one theater missile defense
target for the flight demonstration satellites.  According to DOD
officials, these additional missile tests were added to give needed
statistical validity to the test results. 

The results of the planned flight demonstration, prior to the Board's
recommendations, were intended to form the basis for decision-making
regarding SBIRS-low development, fabrication, and deployment--that is
entry into the EMD phase of the acquisition process.  The primary
emphasis is on the ability to detect and track ballistic missiles and
their warheads throughout flight and distinguish between missile
warheads and decoys.  According to program officials, performing this
function autonomously while in orbit is one of the most complex and
technologically challenging operational concepts ever attempted. 
They believe that a national missile defense system with space-based
sensors depends on a successful flight demonstration program.  They
stated that proceeding into the EMD phase prior to demonstrating this
capability would not provide an opportunity to assess lessons
learned, thus introducing unacceptable risk into the program. 

In commenting on our draft report, DOD emphasized that the flight
demonstration program was extended from 1 year to 2 years.  It stated
that the extension was needed to participate in scheduled Ballistic
Missile Defense Organization tests, as well as to fully use the
satellites during their 2- to 3-year life expectancy.  However, DOD
officials stated that information collected during the first year of
the test program is the most critical for making a decision of
whether to enter EMD. 

We have reported on numerous occasions about the risks associated
with program concurrency and of initiating production without
adequate testing.  SBIRS-low could be an analogous situation.  For
example, in 1990, we concluded that although concurrency can be used
to expedite the development and production of weapon systems, rushing
into production (in this case, satellite fabrication) before critical
tests (in this case, flight demonstration) are successfully completed
has resulted in the purchases of systems that do not perform as
intended.  And, in 1994, we reported that programs are often
permitted to begin production with little or no scrutiny, and the
consequences have included procurement of substantial inventories of
unsatisfactory weapons requiring costly modifications to achieve
satisfactory performance, and in some cases, deployment of
substandard systems to combat forces.\5


--------------------
\5 Weapon Systems:  Concurrency in the Acquisition Process
(GAO/T-NSIAD-90-43, May 17, 1990) and Weapons Acquisition:  Low-Rate
Initial Production Used to Buy Weapon Systems Prematurely
(GAO/NSIAD-95-18, Nov.  21, 1994). 


   ASSESSMENT OF SBIRS-LOW
   DEPLOYMENT OPTIONS
--------------------------------------------------------- Appendix I:4

In response to congressional direction to accelerate SBIRS-low
deployment to fiscal year 2002, the Air Force assessed a range of
potential deployment options that included fiscal years 2002, 2003,
2004, and 2005.  The information for these option years was prepared
at different times between June 1995 and October 1996 and did not
always contain the same assumptions.  Although a consistent
comparison with the fiscal year 2006 original deployment schedule of
changes in funding requirements for each option was not made, the
assessments provide some indication of the differences in funding
requirements. 


      FISCAL YEAR 2002 AND 2003
      OPTIONS CREATE HIGHER
      PROGRAM RISK AND SUBSTANTIAL
      ADDITIONAL FUNDING
      REQUIREMENTS
------------------------------------------------------- Appendix I:4.1

If SBIRS-low deployment were accelerated from the originally planned
date of fiscal year 2006 to fiscal year 2002 or 2003, DOD would face
higher program risks and substantial additional funding requirements
in its future years defense program.  Both of these deployment
options are similar because the increased risk would result primarily
from the scheduled concurrent activities between the first year of
the flight demonstration program and the EMD phase. 

Based on the currently planned launch of the two demonstration
satellites in the third quarter of fiscal year 1999, from 4 to 8
months of the scheduled first year of the flight demonstration
program would overlap with the EMD phase.  Thus, a decision on
whether the system should enter the EMD phase could not be based on
an analysis of demonstrated capabilities.  As discussed in the
previous section, DOD officials stated that information obtained
during the first year of the flight test program is the most critical
in deciding whether to enter EMD.  During EMD, the contractor is to
finalize SBIRS-low design, validate selected manufacturing and
production processes, and fabricate and deploy the satellites.  The
decision to enter EMD is important because DOD will be committing
several billion dollars to buy up to 24 or more satellites.  If
flight demonstration reveals that design changes are needed to
achieve satisfactory performance, or if long lead parts for the
SBIRS-low operational satellites became obsolete because their
acquisition was based on an immature system design, program costs
would increase. 

Some program risk could also be expected because the pre-EMD phase
would start from 9 to 12 months prior to launch of the flight
demonstration satellites.  During the pre-EMD phase, SBIRS-low users,
operators, testers, and competing contractors are to refine and
document system requirements, functions, and design concepts.  The
contractors are to also conduct cost and performance trade-offs
between system requirements.  Under this schedule, it would not be
possible for requirements development and system design to be based
on the results of the flight demonstration.  In addition, SBIRS
program officials stated that such concurrent scheduling would likely
create difficulty in processing and assimilating the large amounts of
data that would be expected from the flight demonstration and pre-EMD
acquisition phases.  Because of this highly concurrent schedule, the
Defense Science Board questioned the value of the flight
demonstration effort if the fiscal year 2002 deployment option were
chosen.\6

It stated that under the fiscal year 2002 option the effort should be
terminated, ground testing should be employed instead, and the
SBIRS-low program should be restructured to proceed directly into
pre-EMD in fiscal year 1997. 

Figure I.1 shows the planned acquisition schedules for the flight
demonstration and the pre-EMD and EMD phases for the fiscal year 2002
and 2003 options, as compared to the fiscal year 2006 original
schedule. 

   Figure I.1:  Fiscal Year 2002
   and 2003 Deployment Options
   Compared to Fiscal Year 2006
   Original Schedule

   (See figure in printed
   edition.)

Source:  Air Force briefing charts. 

The fiscal year 2002 and 2003 deployment options contain substantial
increased funding requirements relative to the fiscal year 2006
original schedule.  The Air Force estimated that during fiscal years
1997 through 2002, these two options would require an additional $2.1
billion and $2.6 billion, respectively.  These estimates were
prepared in April 1996 and June 1995, respectively.  The additional
funding (1) would result from compressing the schedule for developing
and fabricating SBIRS-low and incurring associated costs sooner than
originally planned and (2) would be separate from any increased costs
that could occur from the scheduled concurrence, such as flight
demonstration results forcing system design changes or premature
acquisition of long lead parts.  In commenting on our draft report,
DOD stated that (1) the higher cost of the fiscal year 2003 option
was due to differences in technical configuration and (2) both
funding estimates were probably low, considering the level of
development and production concurrency. 

According to DOD officials, such funding has not been included in the
future years defense program and would therefore require increased
appropriations from the Congress or a reduction of funding for other
DOD or Air Force programs.  The importance of sufficient resources in
DOD's future years defense program is to ensure program stability. 
In fact, DOD regulations require that no acquisition program be
approved to proceed beyond program initiation unless sufficient
resources, including manpower, are programmed in the most recently
approved future years defense program or will be programmed in the
next program objective memorandum, budget estimate submission, or
President's budget. 


--------------------
\6 The Board did not include a fiscal year 2003 option in its report. 


      RISK UNDER FISCAL YEAR 2004
      OPTION IS SIMILAR BUT
      REQUIRES CONSIDERABLE
      ADDITIONAL FUNDING
------------------------------------------------------- Appendix I:4.2

If SBIRS-low deployment were accelerated from the originally planned
date of fiscal year 2006 to fiscal year 2004, the risk of entering
EMD would be similar.  However, DOD would need considerable
additional funding in its future years defense program. 

Figure I.2 shows that under this option the first year of the flight
demonstration would be completed about 4 months before the start of
EMD.  Thus, DOD would have information on the demonstration
satellites' performance to consider in deciding whether the system
should enter the EMD phase.  However, the flight demonstration and
pre-EMD phase would run concurrently, not allowing demonstration
results to influence requirements development and system design. 

In considering this option, the Board concluded that the flight
experiments (demonstration) could proceed in parallel with pre-EMD. 
However, the Board did not provide a reason for this conclusion.  It
stated that although the experiments were extremely beneficial, the
associated on-orbit test plans were inadequate to fully exploit the
demonstration and additional dedicated targets and test time should
be added. 

   Figure I.2:  Fiscal Year 2004
   Deployment Option Compared to
   Fiscal Year 2006 Original
   Schedule

   (See figure in printed
   edition.)

Source:  Air Force briefing charts. 

Similar to the fiscal year 2002 and 2003 options, the fiscal year
2004 option would require additional funding because program
activities would be compressed.  Air Force representatives estimated
in October 1996 that an additional $900 million would be required
during fiscal years 1998 through 2003 for this option.  However, in
commenting on our draft report, DOD stated that a more current budget
estimate revised the additional funding downward to $509 million. 
The reasons given were (1) using a different launch vehicle, (2)
using different inflation assumptions, (3) savings from the
SBIRS-high program, and (4) better cost estimating fidelity.  It also
stated that the funding is included in the fiscal year 1998 future
years defense program. 


      RISK UNDER FISCAL YEAR 2005
      OPTION IS SIMILAR BUT
      REQUIRES LESS FUNDING
------------------------------------------------------- Appendix I:4.3

If SBIRS-low deployment were accelerated from the originally planned
date of fiscal year 2006 to fiscal year 2005, program risk would be
similar.  However, the funding requirements would be less. 

Figure I.3 shows that under this option the first year of the flight
demonstration would be completed about 4 months prior to the start of
EMD.  Thus, DOD would have information on the demonstration
satellites' performance to consider in deciding whether the system
should enter the EMD phase.  Although there is some concurrency
between pre-EMD and flight demonstration under this option, such
concurrency is also present in the fiscal year 2006 original
schedule. 

   Figure I.3:  Fiscal Year 2005
   Deployment Option Compared to
   Fiscal Year 2006 Original
   Schedule

   (See figure in printed
   edition.)

Source:  Air Force briefing charts. 

Air Force officials stated that although there are no technical
constraints precluding a fiscal year 2005 deployment, they initially
preferred the fiscal year 2006 deployment schedule because it allowed
for a slower buildup of funding requirements.  Budget estimates,
which were prepared in May 1996, supporting the fiscal year 2005
deployment option showed that up to $500-million less would be
required for fiscal years 1998 through 2003 than for the original
fiscal year 2006 schedule.  In commenting on our draft report, DOD
officials stated that the reason for the $500-million reduction, even
though it represents acceleration from the fiscal year 2006 schedule,
was due to a different satellite configuration and a lower inflation
rate.  Thus, they stated that it was not an adequate comparison with
the fiscal year 2006 configuration. 




(See figure in printed edition.)APPENDIX II
COMMENTS FROM THE DEPARTMENT OF
DEFENSE
=========================================================== Appendix I



(See figure in printed edition.)



(See figure in printed edition.)



(See figure in printed edition.)



(See figure in printed edition.)



(See figure in printed edition.)



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MAJOR CONTRIBUTORS TO THIS REPORT
========================================================= Appendix III

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

Homer H.  Thomson
James A.  Elgas
Steve Martinez

DENVER OFFICE

Arthur Gallegos
Maricela Camarena


*** End of document. ***