WASHINGTON — The U.S. Senate will consider a defense bill this week that would prohibit the Air Force from spending $393 million next year on a next-generation ground system to control GPS satellites until Defense Secretary Ash Carter makes the case the program should not be cancelled.
The review is known as Nunn-McCurdy certification, a cost-control measure triggered by overruns, which the Senate Armed Services Committee believes the Pentagon has been purposefully avoiding.
“With contract cost growth of more than 250 percent of the program’s original business case, persistent unresolved technical issues, and a schedule that appears unachievable, the committee believes that the Department and the Air Force need to conduct the reviews necessary to determine the best path forward and provide Congress with the assurances necessary to warrant program continuation,” report language accompanying the SASC’s version of the National Defense Authorization Act for 2017 said.
The committee marked up its version of the NDAA May 12, voting 23-3 to send the bill to the full Senate for a vote.
SASC believes the Pentagon’s acquisition office has delayed setting a new baseline, one that determines how much the Operational Control Segment (OCX) program will cost, in order to avoid triggering a Nunn-McCurdy breach. By taking such action, the Pentagon is therefore “artificially” postponing that process, the committee said.
U.S. law calls for the Pentagon to notify Congress within 225 days – or sooner in many cases – of a cost breach.
“While the committee believes the Defense Department would not take actions to impede transparency and oversight, the committee does not support efforts to artificially prevent Nunn-McCurdy reviews, which, in this case, the Department appears to have done by delaying the release of the Air Force’s cost position,” the report said.
A “significant” Nqnn-McCurdy breach can occur when a per unit cost increases 15 percent or more over the current baseline estimate or 30 percent more than the original baseline estimate. A “critical” breach occurs when the per-unit cost increases 25 percent or more over the current baseline or 50 percent over the original baselines. Under critical breaches, a program is presumed to be cancelled unless the Secretary of Defense certifies the program.
Such reviews also can lead to restructuring of the development program and require new approvals before moving forward. Top Pentagon and Raytheon officials have been meeting quarterly to discuss the OCX program.
According to an acquisition report released by the Defense Department in March, OCX’s program costs have increased about 22 percent from about $3.4 billion in 2012 to at least $4.2 billion this year. But those numbers are expected to rise.
The program has faced continuing technical difficulties and the delays have been a sore point for Air Force leaders, who say that because of the lag they will be unable to immediately leverage the full capabilities of the GPS 3 satellites, which include better accuracy and higher-power signals.
Raytheon is the program’s prime contractor.
OCX is expected to offer improved information assurance and cyberprotection while automating various GPS 3 satellite operating functions. The full OCX program, which encompassed two blocks, and includes further modernization, is not expected to be completed sooner than 2021. In the meantime, the program has been described by Air Force leaders as the most troubled development effort in the Defense Department.
Sen. John McCain (R-Ariz.), the SASC chairman, has criticized OCX as well. In October 2015, he included the program in his “America’s Most Wasted: Indefensible” report, calling the cost overruns “simply unacceptable.”
“The committee is strongly concerned with the current state of the GPS–OCX program,” report language accompanying the NDAA bill said.
A Nqnn-Mccurdy review can require the Defense Department to prove that a struggling program is vital to national security and that no other more affordable alternatives exist; that cost estimates are reasonable and that efforts have been made to control costs.
In a separate provision, the SASC’s authorization bill also requires the Defense Secretary to ask an unspecified federally funded research lab to study the Air Force’s acquisition strategy on OCX, including a contingency plan and possible termination strategy.
The draft bill was announced just day before the Air Force said it would strengthen its contingency pans for OCX.
In February, the Air Force awarded Lockheed Martin a $96 million contract modification to adapt the existing ground system to serve as a stopgap measure if necessary.
On May 13, the Air Force posted a request for information to the Federal Business Opportunities web site looking for prime contractors who could handle another capability: the tasking and monitoring of the GPS satellites’ M-code, a military GPS signal that is more powerful and harder to jam.
The requirements for M-code are part of what is referred to as the Block 1 set of requirements for the OCX program. The request for information asks industry to provide a “bridge capability” from the existing GPS ground system, known as the Architecture Evolution Program, until Block 1 is operational.
Bill Sullivan, Raytheon’s OCX program manager, said in a May 19 email, the Air Force request is looking for “an interim capability only and does not replace the full M-code capabilities of OCX.”
The Air Force repeatedly has warned it would consider other options to work with the GPS 3 satellites until more of the Raytheon system is ready.
The Air Force said in the May 13 request that it envisions a $32 million, 24-month contract that would run through 2019. Responses are due by May 31.
