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Report to the Subcommittee on Strategic Forces, Committee on Armed 
Services, U.S. Senate:

United States General Accounting Office:

GAO:

October 2003:

Defense Acquisitions:

Despite Restructuring, SBIRS High Program Remains at Risk of Cost and 
Schedule Overruns:

GAO-04-48:

GAO Highlights:

Highlights of GAO-04-48, a report to the Subcommittee on Strategic 
Forces, Committee on Armed Services, U.S. Senate 

Why GAO Did This Study:

In 1996, the Department of Defense (DOD) initiated the Space-Based 
Infrared System (SBIRS) to provide greater long-range ballistic 
missile detection capabilities than its current system. The initial 
SBIRS architecture included “High” and “Low” orbiting space-based 
components and ground processing segments.

SBIRS has been technically challenging, and in October 2001, SBIRS Low 
was transferred from the Air Force to the Missile Defense Agency. The 
Air Force expected to field SBIRS High by 2004, but numerous problems 
have led to schedule overruns. In the fall of 2001, DOD identified 
potential cost growth of $2 billion.

To determine the causes of the significant cost growth, DOD convened 
an Independent Review Team. In August 2002, the Air Force restructured 
the program to address the findings of the team’s assessment. Our 
report (1) describes the key elements of the restructured program and 
(2) identifies problems and potential risks still facing the program.


What GAO Found:

In an effort to get the SBIRS High program on track, the most recent 
program restructuring provided contractor incentives and oversight 
measures, as recommended by the Independent Review Team. Under the 
current contract, the prime contractor’s award fees are now tied to 
the incremental delivery of specific system capabilities. DOD also 
modified the contract to prescribe tighter management controls, 
improve reporting of contractor information, and add formal review 
processes by DOD management. This increased oversight is intended, in 
part, to minimize further changes in requirements and improve 
management of software development, both of which have been 
particularly problematic. The restructuring also added funding and 
other resources to the program and extended the scheduled delivery of 
certain components. At the time of the restructuring, the Air Force 
believed the modified contract established an executable schedule, a 
realistic set of requirements, and adequate funding.

However, the restructuring did not fully address some long-standing 
problems identified by the Independent Review Team. As a result, the 
program continues to be at substantial risk of cost and schedule 
increases. Key among the problems is the program’s history of moving 
forward without sufficient knowledge to ensure that the product design 
is stable and meets performance requirements and that adequate 
resources are available. For example, a year before the restructuring, 
the program passed its critical design review with only 50 percent of 
its design drawings completed, compared to 90 percent as recommended 
by best practices. Consequently, several design modifications were 
necessary, including 39 to the first of two infrared sensors to reduce 
excessive noise created by electromagnetic interference—a threat to 
the host satellite’s functionality—delaying delivery of the sensor by 
10 months or more. Software development underlies most of the top 10 
program risks, according to the contractor and the SBIRS High Program 
Office. For example, testing of the first infrared sensor revealed 
several deficiencies in the flight software involving the sensor’s 
ability to maintain earth coverage and track missiles while orbiting 
the earth. Program officials stated that they are coordinating the 
delivery of the first sensor with the delivery of the host satellite 
to mitigate any schedule impacts, but they agreed that these delays 
put the remaining SBIRS High schedule at risk.

What GAO Recommends:

GAO is recommending that DOD convene a task force to assess the 
restructured program with an emphasis on providing concrete guidance 
for the program to address its underlying problems. DOD agrees that 
another review of the program is warranted.

www.gao.gov/cgi-bin/getrpt?GAO-04-48.

To view the full product, including the scope and methodology, click 
on the link above. For more information, contact Robert Levin at (202) 
512-4841 or levinr@gao.gov.

[End of section]

Contents:

Letter:

Results in Brief:

Background:

Restructured Program Focused on Contract Management and Program 
Oversight:

Restructuring Did Not Address Long-Standing Problems That Put the 
Program at Risk:

Conclusions:

Recommendations for Executive Action:

Agency Comments:

Scope and Methodology:

Appendix I: Comments from the Department of Defense:

Appendix II: SBIRS High Performance in Mission Areas:

Appendix III: Key Events in the SBIRS High Program:

Appendix IV: GAO Contacts and Staff Acknowledgments:

Tables:

Table 1: Nunn-McCurdy Criteria and DOD's Supporting Information for 
SBIRS High Certification, May 2002:

Table 2: Effectivities and Their Utilities in Relation to SBIRS 
High Launch/Delivery Dates:

Figure:

Figure 1: Space-Based Infrared System Description:

Abbreviations:

CMMI: Capability Maturity Model Integration:

DCMA: Defense Contract Management Agency:

DOD: Department of Defense:

DSP: Defense Support Program:

EMI: electromagnetic interference:

EVMS: Earned Value Management System:

GEO: geosynchronous earth orbit:

HEO: highly elliptical orbit:

IRT: Independent Review Team:

ITW/AA: integrated tactical warning/attack assessment:

LEO: low earth orbit:

M3P: multimission mobile processor:

MCS: mission control station:

ORD: operational requirements document:

OSD: Office of the Secretary of Defense:

SBIRS: Space-Based Infrared System:

TES: theater event system:

TSPR: Total Systems Performance Responsibility:

USD (AT&L): Under Secretary of Defense for Acquisition, Technology, and 
Logistics:

United States General Accounting Office:

Washington, DC 20548:

October 31, 2003:

The Honorable Wayne Allard: 
Chairman: 
The Honorable Bill Nelson: 
Ranking Minority Member: 
Subcommittee on Strategic Forces: 
Committee on Armed Services: 
United States Senate:

Since the early 1980s, the Department of Defense (DOD) has initiated 
several long-range ballistic missile detection programs aimed at 
providing greater capabilities than the Defense Support Program (DSP), 
the currently operating strategic-surveillance and early warning 
satellite system.[Footnote 1] In 1996, DOD initiated the most recent of 
these efforts: the Space-Based Infrared System (SBIRS). SBIRS has 
proven to be a technically challenging program, intended to combine all 
military infrared surveillance requirements into a single, integrated 
system, or "system of systems," to provide accurate and timely warning 
and tracking of a ballistic missile attack. The initial SBIRS 
architecture included "High" and "Low" orbiting space-based 
components[Footnote 2] and ground processing segments. In October 2001, 
the Low component was transferred from the Air Force to the Missile 
Defense Agency and in 2002 was renamed the Space Tracking and 
Surveillance System.[Footnote 3] The Air Force continues to develop 
SBIRS High and its related ground segment--now one of DOD's highest 
priority space programs--as an upgrade and eventual replacement for 
DSP.

Originally, SBIRS High was expected to be fielded between 1999 and 
2004, under a research and development contract with an estimated value 
of $1.8 billion. However, since the program began, it has encountered a 
number of problems, including immature technologies and changing 
requirements, that have resulted in cost and schedule overruns. In the 
fall of 2001, DOD identified cost growth of at least $2 billion, which, 
because it exceeded a statutory threshold, triggered a Nunn-McCurdy 
review and certification of the program as required by law.[Footnote 4]

To determine the underlying causes of the significant cost growth, DOD 
convened an Independent Review Team (IRT), and in August 2002, the 
Air Force restructured the program to address the findings of the IRT 
assessment. Currently, the amount under contract for the SBIRS High 
program is $4.4 billion. Concerned that cost, schedule, and performance 
problems may persist, you asked us to (1) describe the key elements of 
the restructured program and (2) identify problems and potential risks 
still facing the program.

Results in Brief:

In an effort to get the SBIRS High program on track, the most recent 
program restructuring provided additional resources, contractor 
incentives, and oversight measures. DOD modified its contract with 
Lockheed Martin Space Systems Company,[Footnote 5] the prime 
contractor, to prescribe tighter management controls, improve reporting 
of contractor information, and add formal review processes by DOD 
management. This increased oversight is intended, in part, to minimize 
further changes in requirements and improve management of software 
development, both of which have been particularly problematic in the 
development of SBIRS High. Additionally, Lockheed Martin's award fees 
have been tied to the incremental delivery of specific system 
capabilities. At the time of the restructuring, the Air Force believed 
the contract, as modified, established an executable schedule, a 
realistic set of requirements, and adequate funding to address the 
underlying factors that led to the cost growth and Nunn-McCurdy review.

While the restructuring implemented a number of needed management 
changes, it did not fully address some long-standing problems in the 
development of SBIRS High identified by the IRT. As a result, the 
program continues to be at substantial risk of cost and schedule 
increases. Key among the problems is the program's history of moving 
forward with system development before requirements are set and 
sufficient knowledge is gained. For example, a year before the 
restructuring, the program passed its critical design review with only 
50 percent of its design drawings completed, compared to 90 percent as 
recommended by the best practices that we have found characterize 
successful programs. Consequently, several design modifications have 
been necessary, including 39 modifications to the first of two infrared 
sensors to reduce excessive noise created by electromagnetic 
interference--a threat to the host satellite's functionality--delaying 
delivery of the sensor by 10 months. Software development also remains 
problematic. For example, Defense Contract Management Agency (DCMA) 
officials report that testing of the first infrared sensor in May 2003 
revealed several deficiencies in the flight software involving the 
sensor's ability to maintain earth coverage and track missiles while 
orbiting the earth. According to the contractor and SBIRS High Program 
Office, software development underlies most of the top 10 program 
risks. Moreover, delays in the development of the first sensor have had 
a cascading effect. For example, the continuing design and software 
development work on the first sensor is now competing for staff and 
other resources that were scheduled to be used for follow-on 
developmental tasks. Program officials stated that they are 
coordinating the delivery of the first sensor with the delivery of the 
host satellite to mitigate any schedule impacts, but they agreed that 
these delays put the remaining SBIRS High schedule at risk.

We are recommending that DOD reassess the SBIRS High program with the 
aim of making the best decisions for proceeding with the procurement of 
a system that meets this nation's need for strategic surveillance and 
early warning satellite data. DOD agrees that a thorough review of the 
SBIRS High program is warranted but would like the flexibility to 
consider other approaches before making a final decision on assigning 
responsibilities for conducting a review. (DOD's comments are reprinted 
in app. I.) We agreed and modified our recommendations accordingly.

Background:

SBIRS High Program Description:

SBIRS High is designed to contribute to four defense mission areas: 
missile warning, missile defense, technical intelligence, and battle-
space characterization. (See app. II for a description of the program's 
contribution to each.) SBIRS High is intended to replace the DSP 
satellite constellation, which has provided early missile warning 
information for more than 30 years, and to provide better and more 
timely data to the Unified Combatant Commanders, U.S. deployed forces, 
U.S. military strategists, and U.S. allies.

As currently planned, SBIRS High will be comprised of four satellites 
in geosynchronous earth orbit (GEO), two infrared sensors that are to 
be placed on separate host satellites in highly elliptical orbit 
(HEO)[Footnote 6]--known as "HEO sensors"--and a ground segment for 
mission processing and control. These elements are illustrated in 
figure 1. The Air Force plans to acquire a fifth GEO satellite to serve 
as a spare that would be launched when needed.

Figure 1: Space-Based Infrared System Description:

[See PDF for image]

[A] Once a product decision is made, the operational constellation will 
consist of 20 plus satellites for continuous coverage.

[End of figure]

SBIRS High is intended to provide taskable sensors with improved 
sensitivity and revisit rate allowing them to see dimmer objects and 
provide more accurate estimates of missile launch and impact point than 
the sensors in the existing satellite constellation. SBIRS High sensors 
are also expected to view particular areas of interest and to revisit 
multiple areas of interest as directed by ground controllers. In 
addition to covering the shortwave infrared spectrum like their 
predecessor, SBIRS High sensors are also expected to cover midwave 
infrared bands and see-to-the-ground bands[Footnote 7] allowing them to 
perform a broad set of missions.

SBIRS High is being developed in two increments. Increment 1, which 
achieved initial operational capability in December 2001, consolidated 
DSP and Attack and Launch Early Reporting to Theater ground stations 
into a single mission control station, which is currently operating 
using DSP data. Through spiral development,[Footnote 8] Increment 2 
(now in the systems design and development phase) will develop the HEO 
sensors and first two GEO satellites and will upgrade Increment 1 
hardware and software to operate and process data from the HEO and GEO 
elements. The remaining three GEO satellites are to be procured at some 
future date.

Past Problems:

Since the SBIRS program's inception in 1996, it has been burdened by 
immature technologies, unclear requirements, unstable funding, 
underestimated software complexity, and other problems that have 
resulted in mounting cost overruns and delays. In addition, the program 
has been restructured several times. Most notably, in 1998, the SBIRS 
High Program Office had to restructure the program around an Air Force 
directive to delay the GEO satellite launches by 2 years in order to 
fund other DOD priorities. This contributed to program instability 
since the contractor had to stop and restart activities and devise 
interim solutions that would not otherwise have been required. In early 
2001, there were growing cost and schedule variances and a related 
decrease in contractor management reserve funding. Primary drivers of 
these problems were technical issues with the HEO sensors and 
associated test failures.

In November 2001, the Assistant Secretary of the Air Force 
(Acquisition) and the Executive Vice President of Lockheed Martin Space 
Systems Company formed the IRT--comprised of various specialists in 
acquisition, operations, engineering, and business management from 
industry and the federal government--to conduct a comprehensive, 
independent review of the SBIRS High program. In February 2002, the IRT 
issued a candid and critical report identifying three primary causes 
that led to the significant cost growth:

* The program was too immature to enter the system design and 
development phase. Program activation was based on faulty and overly 
optimistic assumptions about software reuse and productivity levels, 
the benefits of commercial practices, management stability, and the 
level of understanding of requirements.

* The complexity of developing engineering solutions to meet system 
requirements was not well understood by program and contracting 
officials. The systems integration effort was significantly 
underestimated in terms of complexity and the associated impacts. In 
addition, the requirements refinement process was ad hoc, creating 
uncertainty on the status of program priorities and affecting cost and 
schedule.

* Breakdown in execution and management. Overly optimistic assumptions 
and unclear requirements eventually overwhelmed government and 
contractor management. The 2-year delay of the GEO satellite launches, 
which occurred in 1998, contributed to management instability and was a 
factor in the Program Office and the contractor having to spend 25 of 
the first 60 months of the contract on replanning activities.

The IRT also made a number of recommendations to address these 
problems. These included establishing accurate baselines for cost, 
schedule, and technology; revising the contract fee structure; and 
redefining Program Office and contractor management roles and 
responsibilities.

Nunn-McCurdy Breach and Certification:

A preliminary effort to capture a realistic estimate of total program 
costs conducted in the fall of 2001 suggested potential cost growth in 
excess of $2 billion, or a 70-percent program acquisition unit cost 
increase. A major defense acquisition program that incurs a unit cost 
growth of at least 25 percent in the acquisition program baseline 
triggers a statutory requirement that the Secretary of Defense[Footnote 
9] certify to the Congress that four criteria have been met in order to 
continue the program--a process known as Nunn-McCurdy.[Footnote 10] See 
table 1 for a list of the criteria and the information DOD used to 
support certification for the SBIRS High program.

Table 1: Nunn-McCurdy Criteria and DOD's Supporting Information for 
SBIRS High Certification, May 2002:

Criteria: System is essential to national security.; DOD supporting 
information: U.S. Strategic Command is required to maintain space and 
missile warning/defense resources and to provide the President and 
military leaders with missile warning and defense information; the 
Joint Requirements Oversight Council revalidated the SBIRS Operational 
Requirements Document in January 2002; SBIRS High is needed to replace 
DSP.

Criteria: There are no alternatives that will provide equal or greater 
military capability at less cost.; DOD supporting information: Many 
alternatives were reviewed but none could provide equal or greater 
military capability at the same cost as SBIRS High. Additionally, all 
alternatives had greater technical and schedule risk.

Criteria: New cost estimates are reasonable.; DOD supporting 
information: Cost estimates from various entities, including Lockheed 
Martin, the SBIRS High Program Office, and the Air Force Cost Analysis 
Agency, were close and the engineering manufacturing development 
estimate was mature, had high fidelity, and appeared reasonable.

Criteria: Program management is adequate to manage and control costs.; 
DOD supporting information: The contractor has established an effective 
organization and instituted positive changes.

[End of table]

Source: U.S. Air Force.

Based on the information submitted to the Under Secretary of Defense 
for Acquisition, Technology, and Logistics (USD (AT&L)), the SBIRS High 
program was officially certified on May 2, 2002, with the contingencies 
that the Air Force fully fund the program to the cost estimate 
developed by the Office of the Secretary of Defense (OSD) and to 
reestablish a baseline to OSD's schedule for the GEO satellites. USD 
(AT&L) also directed that a revised acquisition strategy and program 
baseline be approved by the end of August 2002. These revisions and the 
new contract with Lockheed Martin Space Systems Company represent the 
most recent program restructuring. (App. III provides a chronology of 
key events in the development of SBIRS High.):

Restructured Program Focused on Contract Management and Program 
Oversight:

In August 2002, the SBIRS High program was restructured to address a 
number of the problems that led to the Nunn-McCurdy breach. In 
implementing changes, the Air Force relied heavily on the findings and 
recommendations of the IRT. The restructuring increased program 
oversight and provided additional resources as well as incentives 
intended to improve contractor performance.

As part of the program's recertification after the Nunn-McCurdy breach, 
USD (AT&L) directed the Air Force to reestablish a baseline for the 
program's cost and schedule estimates. The value of the restructured 
development contract increased by $2 billion to $4.4 billion. The first 
GEO satellite (GEO 1) launch was replanned from September 2004 to 
October 2006 and the GEO 2 launch from September 2005 to October 2007. 
The procurement start of GEO satellites 3 through 5 was replanned from 
fiscal year 2004 to fiscal year 2006. The SBIRS High budget for fiscal 
years 2006 and 2007 has identified funding for GEO satellites 3 through 
5 totaling $1.3 billion--these satellites are not yet on contract. In 
addition to increased funding, the restructuring added 656 staff to the 
program--including increased staff for software development--bringing 
the total number of personnel to 2,305 by June 2003.

Under the restructuring, DOD's contract with Lockheed Martin 
was modified from a cost-plus-award fee structure to a cost-plus-
award-and-incentive fee structure. The objective of this change was to 
encourage timely delivery of accepted capabilities by providing the 
incentive of the full potential profit or fee for the contractor. At 
the time of the restructuring, the Air Force believed the modified 
contract established an executable schedule, a realistic set of 
requirements, and adequate funding, and addressed the underlying 
factors that led to the Nunn-McCurdy breach.

The restructured contract was planned around 10 "effectivities"--
milestones at which an incremental system capability is delivered by 
the developer and accepted by the operator as shown in table 2. 
Delivery of these effectivities is tied to the contractor's award and 
incentive fees. Lockheed Martin met the first effectivity and was 
awarded 100 percent of its fee (about $1.4 million).

Table 2: Effectivities and Their Utilities in Relation to SBIRS 
High Launch/Delivery Dates:

Effectivity: 1; Event: Interim mission control station (MCS) backup-1 
system certification; Milestone date: Oct. 2002 (completed); 
Operational and military utility: Provides an interim catastrophic 
peacetime backup capability for the Increment 1 MCS at another 
location.

Event: HEO 1 delivery; Milestone date: Feb. 
2003 (delayed); Operational and military utility: 
[Empty].

Effectivity: 2; Event: Integrated training suite; Milestone date: Sept. 
2003 (completed); Operational and military utility: Provides the 
ability to train the integrated SBIRS High missions; provides better-
trained crew members, crew coordination, and utilization of training 
resources.

Event: HEO 2 delivery; Milestone date: Jan. 
2004 (delayed); Operational and military utility: 
[Empty].

Effectivity: 3; Event: HEO message certification; Milestone date: Nov. 
2004 (delayed to Apr. 2005); Operational and military utility: Provides 
an interim test center for HEO launch and early on-orbit testing 
operations; would signify interim operations of the HEO sensor; missile 
warning and missile tracking information would be reported to MCS; both 
real time and off-line technical intelligence data gathering would be 
performed.

Effectivity: 4; Event: DSP multimission mobile processor (M3P) theater 
event system (TES) certification; Milestone date: Apr. 2005; 
Operational and military utility: Improves maintainability and 
supportability; sustains theater performance.

Event: GEO 1 launch; Milestone date: Oct. 
2006; Operational and military utility: [Empty].

Effectivity: 5; Event: GEO message certification; Milestone date: Aug. 
2007; Operational and military utility: Provides an interim test center 
for GEO launch and early on-orbit testing operations; GEO scanner-only 
mono-track event data released to MCS; increases capabilities to better 
meet the technical intelligence mission.

Event: GEO 2 launch; Milestone date: Oct. 
2007; Operational and military utility: [Empty].

Effectivity: 6; Event: GEO Air Force M3P survivable/endurable 
integrated tactical warning/attack assessment (ITW/AA) system 
certification; Milestone date: Oct. 2008; Operational and military 
utility: Fuses available DSP, HEO sensor, and GEO satellite infrared 
data to detect events and generate reports; improves Increment 2 
detection, reporting, and accuracy of missile events (where M3Ps are 
deployed) and battle-space characterization capability.

Event: GEO 3 launch; Milestone date: Jan. 
2009 (rescheduled to Sept. 2010); Operational and military utility: 
[Empty].

Effectivity: 7; Event: Interim MCS backup-2 multisatellite system 
certification; Milestone date: Jan. 2009; Operational and military 
utility: First opportunity at a fixed site to provide multisatellite 
fusion capability for DSP, HEO, and GEO; improves tactical parameters, 
such as location of launch point, impact area, and state vector 
accuracy.

Effectivity: 8; Event: MCS-2 system certification; Milestone date: Oct. 
2009; Operational and military utility: Fully integrates MCS 
operations; improves accuracy and detection of events for war-fighting 
operations.

Event: GEO 4 launch; Milestone date: Jan. 
2010 (rescheduled to Sept. 2011); Operational and military utility: 
[Empty].

Effectivity: 9; Event: GEO Army M3P survivable/endurable ITWW/AA system 
and TES certification; Milestone date: Apr. 2010; Operational and 
military utility: Improves detection and reporting of infrared events; 
fuses DSP, HEO, and GEO track data relayed from MCS and the interim 
backup; improves tactical parameters from in-theater assets, such as 
launch point, impact area, and state vector accuracy.

Effectivity: 10; Event: Increment 2 complete; Milestone date: Apr. 
2010; Operational and military utility: Concludes the Increment 2 
development and deployment of the SBIRS High full constellation; 
additional follow-on GEO satellites provide multitheater/worldwide 
coverage.

Source: U.S. Air Force.

[End of table]

The restructured contract also prescribed tighter management controls, 
improved reporting of contractor information, and added formal review 
processes. For example, the modified contract removed Total Systems 
Performance Responsibility (TSPR)[Footnote 11] from the contractor, 
transferring more oversight back to the government because, according 
to the IRT, this concept was not properly understood or implemented 
within the SBIRS High program. This was evidenced by the numerous 
instances where the contractor was asked by program participants to 
accomplish work under TSPR guidelines without going through the 
appropriate management processes. In addition, since requirements were 
not prioritized or well-defined below the Operational Requirements 
Document (ORD) level, the contractor's refinement of requirements was 
ad hoc, creating uncertainty on the status of program priorities and 
impacting cost and schedule.

The restructuring also modified the program's use of DOD's Earned Value 
Management System (EVMS).[Footnote 12] Specifically, Lockheed Martin 
and its subcontractors standardized EVMS procedures in an effort to 
provide more accurate and up-to-date reporting on the status of the 
program. In addition, an EVMS oversight team was established to focus 
on process improvements, and Lockheed Martin and its subcontractors 
developed a surveillance plan to review the EVMS data. The contractor 
is now monitoring EVMS data more closely through monthly meetings and 
reviews of specific cost accounts. Changes to the reporting of EMVS 
data also help identify risks more effectively.

The contractor and SBIRS High Program Office have also increased 
oversight and established a more formal risk management process within 
the restructuring. For example, the prime contractor placed three vice 
presidents in charge of the program as program director, deputy for 
ground segment development, and deputy for systems integration. In 
addition, the Air Force established a program management board 
consisting of high-level Air Force officials to prevent uncontrolled 
changes in the SBIRS High program. Risks are now monitored and reported 
during weekly risk management meetings. On a monthly basis, these risks 
are also discussed with government and contractor senior management.

Finally, program officials reported that Lockheed Martin has employed 
a more structured software development process that focuses on 
building the software in increments, thereby helping to spread out 
risks. A vice president is now overseeing the ground segment 
development, including software development. Further, Lockheed Martin 
has reorganized the ground software development group under its 
Management and Data Systems, which is known for its software expertise. 
This component of Lockheed Martin achieved a Capability Maturity Model 
Integration (CMMI) level 5--the highest rating--for its software 
management and procedures.[Footnote 13] The ground software group does 
not have a formal CMMI rating--Lockheed Martin Management and Data 
Systems was brought in to help improve this group's processes.

Restructuring Did Not Address Long-Standing Problems That Put the 
Program at Risk:

While the new oversight processes under the restructured program 
should help managers identify and address problems as they arise, the 
restructuring does not fully account for earlier program decisions made 
without sufficient systems engineering and design knowledge. As a 
result, the program continues to experience problems and risks related 
to changing requirements, design instability, and software development 
concerns. In particular, design problems have delayed the delivery of 
the first HEO sensor (HEO 1). Because development of the GEO satellites 
and possible additional HEO sensors are tied to the completion of HEO 
1, the schedules for the subsequent components could slip, continuing 
to put the program at significant risk of cost and schedule overruns.

Requirements Modifications Continue:

As we reported in June 2003, the majority of DOD satellite programs 
that GAO has reviewed over the past 2 decades, including SBIRS, have 
cost more than expected and have taken longer to develop and launch 
than planned because performance requirements were not adequately 
defined at the beginning of the program or were changed significantly 
once the program had already begun.[Footnote 14] The numerous changes 
to the SBIRS High requirements contributed to the cost and schedule 
overruns early in the program. Although a more defined requirements 
management process is now in place, changes to both the operational 
requirements and the contract are being proposed that could impact the 
program's cost and schedule.

Before the restructuring, a total of 94 requirements changes were made 
to the SBIRS High program--16 of which were added after the 
critical design review in August 2001.[Footnote 15] The effect that 
these changes may continue to have on the program was not addressed in 
the August 2002 restructuring efforts. Since restructuring, an Air 
Force program management board--which was established to oversee 
requirements changes and help ensure appropriate use of funds--has 
approved 34 actions that will require contract modifications. If 
funded, these changes, identified as "urgent and compelling,"[Footnote 
16] would total $203.8 million and come from the Program Manager's 
discretionary funds (also known as management reserve) or be paid by 
the user who needs the new capability. The majority of these dollars 
would be used to cover the following four changes:

* earlier implementation of HEO mission processing in the mission 
control station at an estimated cost of $15 million,

* full implementation of the mission management component of HEO for 
the technical intelligence community at an estimated cost of 
$33 million,

* implementation and fielding of an operational mission control station 
backup to meet Increment 1 ITW/AA requirements in fiscal year 2006 at 
an estimated cost of $97 million, and:

* the Army's implementation of a capability for DSP M3Ps to receive and 
process HEO tracking data at an estimated cost of $27 million.

In addition to these pending changes, the Air Force is considering 
acquiring a third and possibly a fourth HEO sensor and accelerating the 
procurement schedule for GEO satellites 3 through 5.[Footnote 17] If 
procured together, the estimated cost (including integration and 
testing) is $283 million for the third HEO sensor and $238 million for 
the fourth HEO sensor. The funding for these sensors has yet to be 
determined. The potential acceleration of the acquisition of GEO 
satellites 3 through 5 is similarly placing added pressures on the 
program. Plans to accelerate the acquisition of these GEO satellites is 
in response to a recent concern by the Senate Armed Services 
Committee[Footnote 18] that an Air Force decision to delay the 
acquisition of satellites 3 through 5 would create a 3-year gap between 
the launch of the second and third satellites. As a result, the 
committee directed the Air Force to develop a plan to reduce the 
production gap in the SBIRS High program from 2 years to 1. The 
committee also directed the Air Force to assess the program's 
technical, schedule, and cost risks associated with a 2-year delay, 
compare the operational risk of a 1-year delay with a 2-year delay, and 
describe steps to mitigate the impact of a 1-year production gap.

In April 2002, a group comprised of DOD subject matter experts reviewed 
the SBIRS High requirements and concluded that four operational 
requirements will not fully be met by the current design under certain 
scenarios. While these requirements are only 4 of 140, they are 
important to the system's overall missile defense and warning 
capability:

* threat typing--the ability to identify a certain type of missile 
launched under certain scenarios;

* impact point prediction--the ability to predict where a particularly 
stressing theater-class missile will hit the earth;

* theater state vector velocity--the ability to track the path of a 
particularly stressing theater-class missile; and:

* strategic raid count--the ability to count and discriminate the 
number of true incoming missiles for a certain scenario.

Program officials said that these four requirements were poorly 
written, defined, or described in the ORD and that efforts are underway 
to rewrite, seek waivers, or clarify them and negotiate deviations with 
users.

Design and System Integration Continue to Be Unstable:

Achieving a stable design before entering product demonstration is 
critical to maintaining cost and schedule goals.[Footnote 19] However, 
at the SBIRS High critical design review--1 year before the 
restructuring--only 50 percent of design drawings were complete, 
compared to 90 percent as recommended by best practices.[Footnote 20] 
In addition, the IRT report found that the program did not invest 
enough time and resources in basic systems engineering analysis. 
Despite these problems, the program passed the critical design review. 
As a result, persistent problems with and changes to the design--
especially of HEO 1--continue to impact the program's cost and 
schedule.

The HEO 1 sensor is the first major deliverable for Increment 2 and the 
only near-term deliverable to measure the program's progress. As a part 
of the restructuring, the delivery of this sensor to the host satellite 
was delayed from its original date in February 2002 to February 2003. 
At that time, program officials were confident of meeting the new 
delivery date. However, significant deficiencies were revealed during 
systems tests in November 2002 making it apparent that the February 
2003 date would not be met, and delivery was postponed another 2 
months. At this writing, the first HEO sensor has yet to be delivered. 
In May 2003, the Program Director reported that the delays were due to 
a series of design deficiencies. For example, the design to control the 
sensor's electromagnetic interference (EMI) was inadequate.[Footnote 
21] Specifically, Lockheed Martin identified 148 offending EMI 
frequencies that exceeded the tolerances established by the host 
satellite. These excessive frequencies could interfere with the 
operations of the host satellite and jeopardize its mission. Thirty-
nine design modifications to the HEO sensor were made, which eliminated 
80 percent of these noise conditions. However, the final EMI test, 
completed in early July 2003, identified seven remaining EMI 
frequencies that were not within tolerance--two of which appear to be 
attributable to the HEO sensor. Since the problems cannot be resolved 
and there is no expected impact on performance, the Program Director 
requested waivers for the offending frequencies to allow the sensor to 
be integrated onto the host satellite. According to a program official, 
the waivers have been approved and the first HEO sensor is now expected 
to be delivered on December 6, 2003, provided no additional testing is 
needed.

The Program Director reported that the HEO 1 design problems were 
attributable to weaknesses in earlier program management processes. 
Under these processes, the program tried to achieve efficiencies by 
cutting back on detailed design analyses and component testing. The 
exact costs associated with these weaknesses are unclear. Our 
independent estimate--using data from the contractor's June 2003 cost 
performance report--indicates that the development of HEO 1 will 
overrun the contract amount at completion by about $25 million to 
$54 million, and that additional costs associated with HEO 2 rework 
would be between $20 million and $80 million.[Footnote 22] The Program 
Office is currently assessing estimates of total cost impact.

Since the critical design review in August 2001, the Air Force also 
determined that two late design changes to the GEO satellites were 
necessary to improve the program's chances of success. In January 2003, 
the Air Force directed the contractor to replace the 80 ampere-hour 
battery with a 100 ampere-hour battery to improve the satellites' 
operational reliability. Program officials estimate that the new 
battery will cost about $15 million, but the June 2003 cost performance 
report shows that the contractor is having difficulty assessing and 
establishing specifications for the battery, which has resulted in 
schedule delays and could result in even greater costs. The second 
design change to the GEO satellites is to resolve a power deficiency by 
modifying the solar cell panel. The expected cost of this change has 
not yet been determined.

In April 2002, 4 months before the restructuring, a report prepared by 
subject matter experts determined that while there were no significant 
technical barriers to eventually meeting the key requirements for SBIRS 
High, technology integration was a high risk owing to insufficient 
time. In restructuring the program, the Air Force implemented earlier 
integration and testing activities to mitigate this risk. However, we 
found that these mitigation measures may not be sufficient to avoid 
delays. For example, as of June 2003, the contractor has completed 
about 58 percent of the GEO sensor integration, assembly, test and 
checkout work, but it is still behind schedule with about $2 million of 
the planned work not yet accomplished.

Software Development Is Still High Risk:

The development of software for the HEO sensors and GEO satellites 
(known as "flight" software) and the ground facility was a major factor 
that led to the Nunn-McCurdy breach. Despite the restructuring, the 
contractor and Program Office continue to report that software 
development underlies most of the top 10 program risks. Flight and 
ground software have already experienced difficulties, delaying 
delivery and putting program accomplishments at further risk.

Most of the software for SBIRS High is for the ground stations to 
operate and command the satellites, process and display missile warning 
data, and perform mission management functions. Additional flight 
software is being developed for the HEO sensors and GEO satellites to 
control the infrared sensors and optical telescope and to process 
infrared data onboard the satellite.[Footnote 23] Another set of 
software elements will be used to test and simulate the performance of 
the SBIRS High system before it is put into operation. According to 
Lockheed Martin officials, the risks associated with the development of 
these software elements would be minimal because the majority of the 
software would be reused and modified.[Footnote 24]

However, the risk associated with software development and reuse in 
Increment 1 was underestimated, which led to significant delays and 
cost overruns. This problem was not fully addressed by the 
restructuring and the time needed to develop the software continues to 
be underestimated. For example, in the current phase (Increment 2), 
delivery of the HEO flight software has been delayed because software 
item qualification testing--which was completed in May 2003 after a 3-
month delay--revealed three deficiencies. One deficiency involved the 
HEO sensor's ability to maintain earth coverage and track missiles 
while orbiting the earth. Delivery of the HEO ground software has also 
been delayed, and according to a program official, did not meet a 
revised delivery date of August 2003 because several ground software 
issues must still be resolved. While the problems encountered with the 
development of the flight and ground software have only resulted in 
delays of a few months, the delays signal weaknesses that could put the 
program at further risk of cost and schedule overruns.

The remaining computer memory margin on the onboard satellites is also 
a concern. The SBIRS High program requirements mandate that the memory 
margin be at least 50 percent. This is to ensure there is sufficient 
remaining memory to accommodate future software code growth. However, 
inefficient coding for onboard satellite operations has resulted in an 
estimated current memory margin of 35 percent. Since rewriting the code 
would be too costly to the program, Lockheed Martin is requesting a 
waiver from this requirement to allow the 35-percent margin.

According to DCMA officials, the HEO software delays are the result of 
an overly aggressive software development schedule and a lack of 
management's understanding of the complexity of the software task. 
A program official stated the contractor's software productivity and 
efficiency metrics have recently begun to reflect a negative trend in 
the program due to the delays in software development and increases in 
software defects. These officials stated that the program suffered from 
a lack of skilled computer personnel with infrared space systems 
knowledge. After the August 2002 restructuring, DCMA officials stated 
that Lockheed Martin committed more personnel and approved overtime 
when necessary to achieve schedules and has been cooperative in making 
changes recommended by DCMA and the SBIRS High Program Office. Although 
these actions should improve the schedule status, they will have a 
negative cost impact because of the additional resources that will need 
to be committed to recover and meet the program's future schedule.

HEO Delays Affect the Total SBIRS High Program:

Delays in the development and delivery of the HEO 1 sensor will likely 
have long-term consequences for the remainder of the program. According 
to DOD officials, until tasks leading to HEO message certification are 
complete, the program will not have "turned the corner" to achieving 
its objectives. However, some schedule milestones for these tasks have 
begun to slip due to problems in developing the HEO 1 sensor. As a 
result, the HEO message certification milestone, scheduled for November 
2004, will slip 5 months or more.

Program officials stated that they are coordinating the delivery of 
HEO 1 and the host satellite to mitigate any schedule impacts, but they 
agreed that these delays put the remaining SBIRS High schedule at risk. 
For example, the continuing HEO 1 sensor and software work is now 
competing for staff and other resources dedicated to HEO 2 and GEO 
tasks. As a result, the HEO 2 sensor and the first GEO satellite are 
unlikely to maintain their current development and launch schedules 
already revised under the restructuring. Program officials now estimate 
the HEO 2 sensor delivery will be delayed from February 2004 to June 
2004--or as much as a year later--to implement more in-depth 
modifications to correct EMI problems, as recommended by a technical 
review team. According to program officials, the development schedule 
for the first GEO satellite has sufficient margin--approximately 300 
days--to avoid delays in the first GEO launch. However, delivery and 
integration of the GEO flight software--a high-risk effort--did not 
begin in August 2003 as scheduled. While DCMA officials report that 
they are monitoring Lockheed Martin's progress to maintain the software 
development schedule, any delays will affect the entire GEO schedule 
and could jeopardize the delivery and launch of the first GEO 
satellite.

In an attempt to avoid delays, the program has compressed schedules and 
implemented work-around plans. However, in compressing original 
schedules, the program creates other risks because the time allotted to 
test and analyze the software and to train personnel to operate the 
SBIRS High ground processing system has been significantly reduced. In 
addition, work-around plans to overcome delays, even if feasible, would 
be difficult and costly to accomplish. At the same time, valuable on-
orbit information of the HEO sensor's performance may not be available 
in a timely manner for the GEO development efforts. Since HEO and GEO 
have common components, including the infrared sensor subsystem, HEO 
on-orbit data would improve the knowledge base for GEO development.

Increased cost is also a risk. Although the contractor forecasts that 
the contract will be within cost at completion, significant cost 
overruns are likely. In analyzing data from the contractor's cost 
performance reports from February 2003 through June 2003, we found that 
the cumulative cost overrun increased by more than 800 percent, from 
approximately $3 million to approximately $31.7 million, due to the 
significant overtime worked over a number of months. Moreover, as the 
program works to accomplish the almost $40 million worth of planned 
work that is behind schedule, the negative cumulative cost variance of 
approximately $31.7 million will continue to grow. Specifically, we 
predict that at contract completion, the program will have a cost 
overrun ranging from roughly $80 million to $432 million. DCMA 
similarly predicts significant cost overruns--officials reported an 
estimated overrun ranging from $34 million to $210 million at 
completion and gave an overall assessment of "red"[Footnote 25] for the 
SBIRS High earned value management status.

Finally, as the program works to remedy problems--particularly those 
associated with the HEO sensors--management reserves are diminishing. 
For fiscal year 2003, reserves have been depleted, and Air Force and 
program officials are concerned that fiscal year 2004 reserves are 
insufficient to address contingencies. As a result, some planned 
development tasks may be delayed to fiscal year 2005.

The Program Director stated that the program is applying lessons 
learned from HEO 1 to the HEO 2 sensor, the first GEO satellite, and 
other parts of the program. The knowledge gained from correcting 
problems on HEO 1 will be necessary if the Air Force decides to procure 
additional HEO sensors and accelerate procurement of the third, fourth, 
and fifth GEO satellites. The Program Office is also assessing the 
overall program impacts from the HEO 1 delay but has yet to complete 
the analysis.

Conclusions:

DOD has invested billions of dollars in an effort to develop a system 
that will provide greater long-range detection capabilities than DSP, 
its current missile tracking system. Yet more than a year after the 
most recent restructuring, the SBIRS High program continues to 
experience problems that have existed since its inception: cost 
overruns, schedule delays, and performance limitations. While the Air 
Force has taken a number of actions as recommended by the IRT to 
improve program oversight, it has become increasingly evident that the 
underlying factors that led to the Nunn-McCurdy breach--particularly 
the lack of critical knowledge--continue to cause problems, and 
additional cost and schedule slips beyond the revised acquisition 
program baseline appear inevitable. Without sufficient knowledge to 
ensure that the product design is stable and meets performance 
requirements and that adequate resources are available, there is no 
assurance that technical problems--such as those experienced with the 
HEO 1 sensor--will not surface on other major program components once 
they go through systems integration and testing. Moreover, the 
inability of the Air Force and its contractor to deliver HEO 1 as 
scheduled has put into question whether the restructuring has provided 
the right mechanisms to achieve program objectives. If the Air Force 
continues to add new requirements and program content while prolonging 
efforts to resolve requirements that cannot be met, the program will 
remain at risk of not achieving within schedule its intended purpose--
to provide an early warning and tracking system superior to that of 
DSP.

Recommendations for Executive Action:

Given the considerable investment yet to come, the Congress and the 
Secretary of Defense would benefit from an assessment of whether the 
Program Office and contractor are doing everything necessary and 
feasible to achieve program objectives and to minimize future cost and 
schedule growth and address the underlying factors that are causing 
these problems. Therefore, we recommend that the Secretary of Defense 
reconvene the IRT or similar independent task force with substantial 
program knowledge to provide an assessment of the restructured program 
and concrete guidance for addressing the program's underlying problems. 
Such a review should include determining whether the:

* SBIRS High development schedule is executable within current cost and 
schedule estimates in light of the recent HEO 1 delays and other risks 
(such as software development),

* program design is stable and sufficient to meet performance 
requirements,

* contractor's software development procedures and practices have 
reached at least a CMMI level 3[Footnote 26] in relation to the 
Software Engineering Institute's standards,

* appropriate management mechanisms are in place to achieve intended 
program objectives, and:

* pending requirements changes should be funded.

We further recommend that the Secretary of Defense put in place a 
mechanism for ensuring that the knowledge gained from the assessment is 
used to determine whether further programmatic changes are needed to 
strengthen oversight, adjust current cost and schedule estimates, 
modify contract mechanisms, and address requirements changes.

Agency Comments:

In commenting on a draft of this report, DOD agreed that another 
thorough review of the SBIRS High program is warranted, and that the 
results of this review should be used to bring about needed program 
changes. However, DOD only partially agreed with our recommendations 
because it would like the option to consider other approaches for 
assigning responsibility for conducting a review. Given the complexity 
of this program, we agree that the Secretary of Defense should have 
this flexibility. We have modified our recommendations accordingly. DOD 
also provided technical comments, which we have incorporated as 
appropriate. DOD's written comments--provided by the Deputy Under 
Secretary of Defense for Policy, Requirements, and Resources within the 
Office of the Under Secretary of Defense for Intelligence--are 
reprinted in appendix I.

Scope and Methodology:

To identify the key elements of the restructured SBIRS High program, we 
reviewed the program's operational requirements document, acquisition 
program baseline, single acquisition management plan, cost analysis 
requirements description, technical reports, and status documents; the 
restructured contract with Lockheed Martin Space Systems Company; and 
Nunn-McCurdy certification documents. We discussed the restructured 
program with representatives from the SBIRS High Program Office, Space 
and Missile Systems Center, Los Angeles Air Force Base, El Segundo, 
California; Secretary of the Air Force, Space Force Enhancement, 
Washington, D.C.; Office of the Assistant Secretary of Defense, 
Networks and Information Integration, Washington, D.C.; Office of the 
Secretary of Defense, Director of Program Analysis and Evaluation, 
Washington, D.C.; Lockheed Martin Space Systems Company, Missile and 
Space Operations, Sunnyvale, California; and Lockheed Martin Management 
and Data Systems, Boulder, Colorado. We also discussed requirements and 
mission needs with officials from Air Force Space Command and U.S. 
Strategic Command (West), Peterson Air Force Base, Colorado Springs, 
Colorado and Air Force Headquarters, Directorate of Operational 
Capability Requirements, Space Capability, Arlington, Virginia.

To determine the problems and potential risks relating to cost, 
schedule, and performance that are still facing the SBIRS High program, 
we reviewed technical reports and program briefings and held 
discussions with program and contractor officials regarding ongoing 
challenges. To gain an understanding of these challenges, we reviewed 
monthly acquisition reports, Air Force Space Command's urgent and 
compelling needs lists, the contractor's top program risks lists, and 
recent congressional language concerning delivery schedules. To 
determine the program's ability to meet cost and schedule projections, 
we examined schedule and funding information for developing hardware 
and software. We compared information from the SBIRS High Program 
Office to other independent reports including those from the IRT, a 
commissioned technology review, and DCMA. We also reviewed the report 
from the Baseline Update-1, a formal program review, and other program 
assessment reports. In addition, we performed our own analysis of cost 
and schedule projections using Lockheed Martin's 2003 cost performance 
report data. We discussed all of these issues with representatives from 
the SBIRS High Program Office; Lockheed Martin Space Systems Company, 
Missile and Space Operations; Lockheed Martin Management and Data 
Systems; Office of the Secretary of Defense, Director of Operational 
Test and Evaluation, Alexandria, Virginia; and the Defense Contract 
Management Agency, Sunnyvale, California.

We performed our work from October 2002 through September 2003 in 
accordance with generally accepted government auditing standards.

We plan to provide copies of this report to the Secretary of Defense, 
the Secretary of the Air Force, and interested congressional 
committees. We will make copies available to others upon request. In 
addition, the report will be available at no charge on the GAO Web site 
at http://www.gao.gov.

If you or your staff have any questions concerning this report please 
contact me at (202) 512-4841 or John Oppenheim at (202) 512-3111. 
Key contributors to this report are listed in appendix IV.

R. E. Levin 

Director, Acquisition and Sourcing Management:

Signed by R. E. Levin: 

[End of section]

Appendix I: Comments from the Department of Defense:

Note: Page numbers in the draft report may differ from those in this 
report.

OFFICE OF THE UNDER SECRETARY OF DEFENSE 5000 DEFENSE PENTAGON 
WASHINGTON, DC 20301-5000:

October 7, 2003:

INTELLIGENCE:

Mr. Robert E. Levin:

Director, Acquisition and Sourcing Management U.S. General Accounting 
Office:

441 G Street, N.W. Washington DC 20548:

Dear Mr. Levin:

This is the Department of Defense (DoD) response to the GAO report, 
DEFENSE ACQUISITIONS: Despite Program Restructuring, SBIRS High Remains 
at Risk of Cost and Schedule Overruns, dated September 4, 2003 (GAO 
Code 120177/GAO-04-48).

The Secretary of Defense will take under advisement the GAO 
recommendation that he direct an independent task force to conduct a 
review of the program, either by the Secretary of the Air Force as GAO 
recommends or through some other mechanism.

Detailed comments on the recommendations and the report are enclosed. 
If you have any additional questions, my point of contact for this 
report is Mr. Kevin Meiners, (703) 607-0455.

Signed by: 

Letitia A. Long:

Deputy Under Secretary of Defense (Policy, Requirements & Resources):

Enclosure:

OSD Comments:

cc: USD(AT&L) USD(C) ASD(NII):

DDR&E GC, DoD DOT&E USecAF D, PA&E JCS/J8:

GAO DRAFT REPORT - DATED SEPTEMBER 4, 2003 GAO CODE 120177/GAO-04-48:

"DEFENSE ACQUISITIONS: Despite Program Restructuring, SBIRS High 
Remains at Risk of Cost and Schedule Overruns":

OSD COMMENTS TO THE RECOMMENDATIONS:

RECOMMENDATION 1: The GAO recommended that the Secretary of Defense 
direct the Secretary of the Air Force to reconvene the IRT or similar 
independent task force with substantial program knowledge to provide an 
assessment of the restructured program and concrete guidance for 
addressing the program's underlying problems. Such a review should 
include determining whether the:

* SBIRS High development schedule is executable within current cost and 
schedule estimates in light of the recent HEO 1 delays and other risks 
(such as software development);

* program design is stable and sufficient to meet performance 
requirements; 

* contractor's software development procedures and 
practices have reached at least a CMMI level 3 in relation to the 
Software Engineering Institute's standards;

* the right management mechanisms are in place to achieve intended 
program objectives; and:

* pending requirements changes should be funded. (p. 23/GAO Draft 
Report):

RECOMMENDATION 2: The GAO recommended that the Secretary of Defense 
direct the Secretary of the Air Force to put in place a mechanism for 
ensuring that the knowledge gained from the assessment is used to 
determine whether further programmatic changes are needed to strengthen 
oversight, adjust current cost and schedule estimates, modify contract 
mechanisms, and address requirements changes. (p. 23/GAO Draft Report):

OSD RESPONSE TO BOTH RECOMMENDATIONS: Partially Concurs. The department 
agrees that a thorough review of the SBIRS program is warranted, and 
agrees that a comprehensive program assessment will be conducted. The 
department also agrees that the results of the review will be used to 
determine what programmatic changes are needed and to implement these 
changes. Rather than following the specific recommendation to have the 
Secretary of the Air Force reconvene an independent task force, the 
Secretary of Defense will consider other approaches before a final 
decision is made on assigning responsibilities for conducting the 
review.

[End of section]

Appendix II: SBIRS High Performance in Mission Areas:

* Missile Warning: SBIRS High is expected to provide reliable, 
unambiguous,[Footnote 27] timely, and accurate missile warning 
information to the President of the United States, the Secretary of 
Defense, Unified Combatant Commanders, and other users. This mission 
includes both global and theater requirements to provide strategic and 
theater ballistic missile warning in support of passive defense and 
force posturing.

* Missile Defense: SBIRS High is expected to provide reliable, 
accurate, and timely information to defensive systems. This mission 
includes both strategic and theater functional requirements to enable 
active missile defense and attack operations against hostile forces.

* Technical Intelligence: SBIRS High is expected to provide reliable, 
accurate, and timely infrared target signature and threat performance 
data to warfighters, the intelligence community, weapon system 
developers, and other users. This data may be used for target 
classification and identification templates and algorithm development 
for SBIRS High operational missions. SBIRS High also monitors 
activities and provides information to policy makers and other users on 
observed military tactics, new foreign technology development, arms 
control compliance, and proliferation activities.

* Battle-space Characterization: SBIRS High provides reliable, 
accurate, and timely data to enhance situational awareness, non-
ballistic missile threat warning, decision support, battle damage 
assessment and intelligence information (for land, sea, air, and space) 
for the Unified Combatant Commanders, Joint Task Force Commanders, and 
other users. Battle-space characterization applies the SBIRS High 
product to the immediate need of the warfighters.

[End of section]

Appendix III: Key Events in the SBIRS High Program:

Date: 1994; September; Key events: * OSD issues the Space-Based Warning 
Summer Study.

November; Key events: Date1995: * SBIRS is named an Air Force 
lead program for acquisition reform.

Date: 1995; January; Key events: * U.S. Space Command SBIRS Capstone 
Requirements Document is validated by the Joint Requirements Oversight 
Council.

Date: February; Key events: Date: * SBIRS Single Acquisition Management 
Plan is approved.

August; Key events: Date1996: * Air Force awards two pre-
engineering and manufacturing development contracts to Hughes and 
Lockheed Martin teams.

Date: 1996; April; Key events: * Changes to the SBIRS Capstone 
Requirements Document are validated by the Joint Requirements Oversight 
Council.

Date: September; Key events: Date: * SBIRS System Threat Assessment 
Report is validated.

Date: October; Key events: Date: * SBIRS is authorized to proceed to 
milestone II.

Date1997: November; Key events: Date1997: * Air Force awards one 
engineering and manufacturing development contract to Lockheed Martin.

Date: 1997; January; Key events: * Construction begins on the Mission 
Control Station at Buckley Air Force Base, Colorado.

December; Key events: Date1998: * SBIRS High preliminary 
design review is held.

Date: 1998; July; Key events: * SBIRS System Threat Assessment Report 
is revalidated.

December; Key events: Date1999: * DOD removes $150 million 
from the SBIRS High program to fund other DOD priorities and directs 
the delay of the GEO launches by 2 years.

Date: 1999; May; Key events: * Based on the DOD directive, a joint 
estimate team reviews the program to determine an attainable and 
affordable program restructure.

Date: 2000; June; Key events: * SBIRS System Threat Assessment Report 
is revalidated.

Date: 2001; August; Key events: * SBIRS critical design review is 
held.

Date: October: December; Key events: Date: October: * SBIRS ground 
Increment 1 is certified.

Key events: Date: * Secretary of the Air Force notifies Congress of the 
Nunn-McCurdy breach.

October; Key events: Date2002: * SBIRS Low is transferred to 
Missile Defense Agency.

Date: 2002; January; Key events: * SBIRS ORD is revalidated by the 
Joint Requirements Oversight Council for the Nunn-McCurdy review.

Date: February; Key events: Date: * IRT report is issued identifying 
the underlying causes for the cost growth that led to the Nunn-McCurdy 
breach.

Date: May; Key events: Date: * SBIRS High Acquisition Decision 
Memorandum is signed, certifying the program after the Nunn-McCurdy 
breach.

Date: August: June; Key events: Date: August: * Revised SBIRS High 
Single Acquisition Management Plan is approved.

Key events: Date: * Construction begins on the Mission Control Station 
Backup at Schriever Air Force Base, Colorado.

Date: August; Key events: Date: * Revised SBIRS High contract with 
Lockheed Martin goes into effect.

Date: September; Key events: Date: * SBIRS High Acquisition Program 
Baseline (restructuring) is approved.

November; Key events: Date2003: * Interim Mission Control 
Station Backup in Boulder, Colorado, is certified.

Date: 2003; January; Key events: * Air Force Space Command identifies 
need for HEO 3 and possibly HEO 4.

Key events: Date: February: * DCMA reports HEO 1 schedule slip.

Key events: Date: * Air Force provides USD (AT&L) with SBIRS High 
program assessment.

Date* Air Force provides USD (AT&L) with SBIRS High program 
assessment.: February; Key events: DateKey events: * Assistant 
Secretary of Defense for Command, Control, Communications, and 
Intelligence issues memorandum to Air Force calling for another review 
in November 2003.

[End of table]

Source: U.S. Air Force.

[End of section]

Appendix IV: GAO Contacts and Staff Acknowledgments:

GAO Contacts:

Robert Levin (202) 512-4841 John Oppenheim (202) 512-3111:

Acknowledgments:

In addition to those listed above, Maricela Cherveny, Steve Martinez, 
Karen A. Richey, Nancy Rothlisberger, Karen M. Sloan, Hai V. Tran, Dale 
M. Yuge, and Randolph S. Zounes made key contributions to this report.

FOOTNOTES

[1] The detection programs DOD initiated were the Advanced Warning 
System (early 1980s); the Boost Surveillance and Tracking System (late 
1980s); the Follow-On Early Warning System (early 1990s); and the 
Alert, Locate, and Report Missiles System (mid-1990s).

[2] The High component has elements in highly elliptical orbit and 
geosynchronous earth orbit; the Low component has elements in low earth 
orbit.

[3] U.S. General Accounting Office, Missile Defense: Alternate 
Approaches to Space Tracking and Surveillance System Need to Be 
Considered, GAO-03-597 (Washington, D.C.: May 23, 2003).

[4] 10 U.S.C. § 2433.

[5] An operating unit of the Lockheed Martin Corporation.

[6] A GEO satellite's revolution is synchronized with the earth's 
rotation giving it a seemingly stationary position above a fixed point 
on the equator. At an altitude of about 22,300 miles above the equator, 
three or four strategically spaced satellites can view the entire globe 
with the exception of the polar regions. HEO satellites, which linger 
over a designated area of the earth, can provide polar coverage. 

[7] Midwave infrared bands provide the below-the-horizon launch phase 
and missile tracking. See-to-the-ground bands provide below-the-
horizon tracking of slow or static dim targets below 6.2 miles.

[8] Spiral development is an iterative process for developing defined 
capabilities within each increment (that is, a desired capability is 
identified, but the end-state requirements are not known at program 
initiation). This process provides the opportunity for interaction 
among the user, tester, and developer. The requirements are refined 
through experimentation and risk management; there is continuous 
feedback, and the user is provided the best possible capability within 
the increment. The requirements for future increments depend on 
feedback from users and technology maturation. Each increment may 
include a number of spirals.

[9] The Secretary of Defense delegated this responsibility to the Under 
Secretary of Defense for Acquisition, Technology, and Logistics.

[10] 10 U.S.C. § 2433. This unit cost reporting mechanism, which also 
applies to procurement unit cost for procurement programs, originated 
with the Nunn-McCurdy Amendment to the Department of Defense 
Authorization Act, 1982. The amendment, as revised, was made permanent 
law in the following year's authorization act. Known as Nunn-McCurdy 
"breaches," program unit cost increases of 15 percent or more trigger a 
requirement for detailed reporting to Congress about the program. 
Increases of 25 percent or more also trigger the requirement for 
Secretary of Defense certification.

[11] TSPR is a contract condition that obligates the prime contractor 
to assume total responsibility for the integration of an entire weapon 
system. This is to ensure that the government receives an integrated 
system that meets the performance requirements as defined in the system 
specifications.

[12] EVMS is a tool used by the program manager to monitor the 
technical, schedule, and cost parameters of the contract. 

[13] The CMMI rating standards, developed by the Software Engineering 
Institute at Carnegie Mellon University, range from 1 through 5. A CMMI 
rating of 1, called "performed," means that company's process is 
unpredictable, poorly controlled, and reactive. A CMMI rating of 5 
indicates that the company's process is at the "optimizing" level, 
which focuses on continuous process improvement.

[14] U.S. General Accounting Office, Military Space Operations: Common 
Problems and Their Effects on Satellite and Related Acquisitions, GAO-
03-825R (Washington, D.C.: June 2, 2003).

[15] While the requirements in the SBIRS High ORD have not changed, the 
contractor has needed clarifications and refinements to understand what 
certain requirements entailed. According to Air Force officials, most 
of the changes earlier in the program can be attributed to weaknesses 
in earlier program management processes under the TSPR model of program 
management.

[16] Under the current restructuring, proposed program changes must be 
designated as "urgent and compelling"--that is, extremely important to 
mission needs and requiring near-term action to meet the need on time.

[17] The acquisition of additional HEO sensors comes as a result of 
delays with the Space Tracking and Surveillance System. See GAO-03-597.

[18] According to the Senate Armed Services Committee, a delay in 
acquiring GEO satellites 3 through 5 would (1) increase costs because 
production lines will have to close and reopen and subcontractors will 
have to be requalified, (2) increase technical risk due to a loss of 
key personnel and subcontractor base, and (3) increase operational risk 
due to the age of the current satellite constellation. See Senate 
Report 108-46 accompanying S. 1050, National Defense Authorization Act 
for Fiscal Year 2004, at 244-245 (May 13, 2003).

[19] U.S. General Accounting Office, Best Practices: Capturing Design 
and Manufacturing Knowledge Early Improves Acquisition Outcomes, GAO-
02-701 (Washington, D.C.: July 15, 2002).

[20] GAO reviews of best practices have found that successful 
commercial firms require a high level of knowledge at key junctures 
during a product's development and use this knowledge to make informed 
investment decisions. These firms place more importance on capturing 
specific technology, design, and manufacturing knowledge than on 
meeting milestones. Moreover, these firms identify and use specific 
criteria to ensure that the program has sufficient knowledge to move 
forward. For example, the release of 90 percent or more of the 
engineering drawings indicates that the product design is stable and 
meets performance requirements.

[21] Two other design problems encountered were associated with the 
outer tiles of the spacecraft and the Common Gyro Reference Assembly. 

[22] Our analysis was based on the earned value statistics from the 
latest available cost performance report. The upper bound of the 
estimate is a worst case scenario cost based on the contractor's cost 
performance for that month. 

[23] Signal processing software is responsible for collecting and 
formatting infrared digital data which will be transmitted and further 
processed at the ground station. 

[24] Software reuse involves previously developed software that is to 
be integrated with other new, modified or other reuse software. 

[25] A "red" rating is issued for any current negative cost or schedule 
variance that is greater than 10 percent.

[26] A CMMI 3, called "defined," means the company's process is 
characterized for the organization and is defined.

[27] Unambiguous warning is a valid mission level requirement that, to 
date, has been accomplished primarily through dual phenomenology and 
human in-the-loop concepts of operations. SBIRS will contribute to but 
will not, by itself, provide unambiguous warning.

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