Defense Space Activities:

Continuation of Evolved Expendable Launch Vehicle Program's Progress to Date Subject to Some Uncertainty

GAO-04-778R: Published: Jun 24, 2004. Publicly Released: Jun 24, 2004.

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The U.S. space policy states that access to and use of space is critical to preserving peace and protecting U.S. national security and also benefits the country's civil and commercial interests. Air Force guidance explains further that access to space requires the ability to launch critical space assets, when needed, by a mix of space launch systems from standard launch pads at major support facilities. This is to ensure that a launch failure or other catastrophic event does not prevent mission success. These critical space assets, or satellites, are used for a wide range of government activities such as communications, navigation, and ballistic missile warning. The Evolved Expendable Launch Vehicle (EELV) program, consisting of both Atlas V and Delta IV launch vehicles, was established as the strategic launch system to meet the nation's critical space mission needs and correspond with U.S. policy that requires U.S. government satellites to be launched on U.S. manufactured launch vehicles. Specifically, the EELV program's overarching objective called for the development of a national expendable launch capability for assured access to space that would reduce the overall recurring cost of launch by at least 25 percent to 50 percent while maintaining or improving the reliability and capability levels over those of the heritage systems. In its instruction on mission needs and operational requirements guidance and procedures, the Air Force states that key performance parameters are so significant that failure to meet their minimum values could be cause for program reevaluation or termination. The current EELV acquisition strategy addresses and reinforces the program's objective and system capabilities by encouraging contractor investment in launch vehicle development and promoting competition over the life of the program in an expected robust commercial marketplace. However, this commercial market never materialized. Furthermore, the availability of federal funding may affect future program strategy and condition. This letter responds to a request by the Subcommittee on Strategic Forces, Senate Committee on Armed Services. Our objective was to determine the extent to which the implementation of the Department of Defense's (DOD) EELV program has achieved assured access to space and projected program cost savings.

While the EELV program achieved success in meeting its assured access to space and cost-saving objective, the program continues to face various risks and cost increases that could jeopardize this objective. Since August 2002, the EELV has been launched successfully six times using two contract launch providers, and the EELV System Program Office projected 25 to 50 percent in cost savings over previous launch systems initially through July 2003 and recently in May 2004. Furthermore, three out of four of the Air Force's key performance parameters have been met, which contributed to initial program success. While the fourth parameter, the standard vehicle interface, has not yet been fully met for both launch providers' vehicles, progress has been made in achieving solutions. However, vehicle mission reliability has not been fully demonstrated. Several more launches need to take place before vehicle mission reliability can be assured. Furthermore, program risks, such as a potential single point of failure involving one upper stage engine used by both launch providers, present, at this time, some uncertainty about continuing to achieve the assured access to space part of the EELV's program objective and present cost implications. Program costs have increased over the approved 2002 program baseline estimate of $18.8 billion, resulting from the failure of the commercial market to materialize, additional access to space and mission assurance initiatives, and several other factors such as incorrect inflation assumptions and satellite weight growth. Furthermore, these cost increases triggered a requirement3 requiring the Secretary of Defense to certify that the EELV Program is critical to national security and that revised program cost estimates are reasonable. The certification process was completed on April 26, 2004, after the Secretary of Defense's certification group identified a potential cost increase of up to $13.2 billion. This figure differs from the $13.3 billion previously reported by the EELV System Program Office because it includes some overlapping costs addressed in prior DOD acquisition reports and additional unrecognized costs such as the launch providers' infrastructure costs that will be incurred in fiscal year 2005. The System Program Office disagrees with the addition of some of these previously unrecognized costs in the recently certified program baseline cost estimate and is working with the certification group to adjust the baseline by the end of June 2004. Despite this disagreement, the System Program Office, in May 2004, estimated launch cost savings of 51.4 percent over the heritage systems. The System Program Office is also in the process of modifying the existing acquisition strategy to better achieve EELV program objectives. The government, however, will continue to pay a significant share of costs until a commercial market emerges and the cost burden shifts to others requiring launch services.

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