Government Brief: GAO Calls for Better DoD Strategy for Space Acquisitions

ASK OCE — January 12, 2007 — Vol. 2, Issue 1

The Department of Defense needs to do a better job of estimating initial costs for its space acquisitions program, according to a November 2006 report by the Government Accountability Office (GAO).

GAO found that costs for DoD space acquisitions over the past several decades have consistently been underestimated — sometimes by billions of dollars. The report singled out two programs for attention: the Space Based Infrared System High program which was originally estimated at $4 billion and ballooned to over $10 billion, and the National Polar-orbiting Operational Environmental Satellite System (NPOESS), the cost of which has grown from $6 billion at program start to over $11 billion.GAO said that on the whole, increased cost were not caused by poor cost estimating, but rather the tendency to undertake programs before knowing whether the available resources were adequate to realize project goals. They found that the pressure to secure funding was a prime driver of spiraling costs.

GAO also found that unrealistic program office cost estimates exacerbated space acquisition problems. Specifically, with baseline budgets set at unrealistically low amounts, DoD has had to resort to continually shifting funds to and from programs, and such shifts have had costly and far-reaching negative effects.

GAO spoke to a number of cost-estimating and program officials who articulated significant institutional pressures to produce low estimates in order to win support for funding. Further, within space system acquisitions, cost-estimating officials believe that their roles and responsibilities are not clear and the cost-estimating function is fragmented. Cost-estimating resources have atrophied over the years because of previous downsizing of the workforce, making resources such as staff and data inadequate.

As a result, the Air Force has been more dependent on support contractors for the estimating function.

GAO made three specific recommendations. First, DoD should increase accountability and transparency of decisions in space programs and require officials involved acquisition decisions to document and justify the reasons for their choice.

Second, in order to ensure that investment decisions for space programs are knowledge-based, it should instill processes and tools necessary to ensure lessons learned are incorporated into future estimates.

Third, DoD should optimize analysis and collaboration within the space cost-estimating community, clearly articulate the roles and responsibilities of the various cost-estimating organizations, and ensure that space system cost estimators are organized so that the Department can gain the most from their knowledge and expertise.