Acquisition Czar Orders ‘Deep Dive’ into Raytheon’s Restructured OCX Contract

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WASHINGTON – The U.S. Defense Department’s acquisition czar has asked the Air Force for more information about a recently renegotiated contract with Raytheon Co. for building the ground system that will control the service’s next-generation GPS satellites.

The projected price tag for the ground system, known as the Operational Control System, or OCX, has nearly doubled since Raytheon was awarded the contract in 2010.

“[The program] had a cost increase and I want to go understand it and I want to make sure we’re doing the right thing,” Frank Kendall, the undersecretary of defense for acquisition, technology and logistics, said Dec. 5 at a Women in Aerospace luncheon here, according to a transcript. “I think there’s been some execution issues as well as some requirements stability issues.”

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Frank Kendall. Credit: DoD

Maureen Schumann, a Pentagon spokeswoman, told SpaceNews Dec. 10 via email that Kendall has asked the Air Force to prepare an Acquisition Decision Memorandum, or ADM, explaining the changes to Raytheon’s contract.

“Mr. Kendall signed an ADM [request] last week directing a deep dive of the OCX program in January,” Schumann wrote. “There was a cost increase and he wants to go understand it.”

Raytheon Intelligence, Information and Services of Dulles, Virginia, was awarded an $886 million contract in 2010 to design the ground system that will control the Air Force’s still-in-development GPS 3 satellites and provide better cyberprotection and information assurance than the current GPS ground system. The OCX system is being designed to automate various functions, which is especially important to the Air Force as it considers scaling back its corps of satellite operators.

Raytheon has struggled with the program, but the resulting delays have been somewhat masked by the fact that the satellites themselves are two years behind schedule. The Air Force and Raytheon began renegotiating the OCX contract in 2012. Because the GPS 3 satellites are running late, the Air Force was able to eliminate some OCX requirements, including backward compatibility with some of the older GPS satellites that will be out of service by the time the new control system is up and running, Pentagon documents indicate.

Raytheon executives told SpaceNews in August that the contract had been restructured with some elements of the program postponed nearly two years. The restructured contract, which includes additional requirements and new timelines for several elements of the program, is worth about $1.6 billion, the Air Force confirmed. About $700 million of that figure is due to cost overruns, the Air Force said.

“The revised contract reflects the complexity of implementing the DOD’s most rigorous cyber requirements coupled with improvements to our systems engineering and software development approach,” Matt Gilligan, the Raytheon program manager for OCX, said in a Dec. 11 email.

In August, Raytheon officials acknowledged that completing the information-assurance element of the software, a key requirement, has taken longer than expected.
That message was echoed by Gen. John Hyten, commander of Air Force Space Command, at a breakfast here Dec. 5. Hyten described OCX as the one space program “still having challenges” and “stuck in the early phases.”

“Raytheon’s going to have to deliver,” he said. “There’s a lot of risk in the program right now.”

In hindsight, he said, the Air Force may have put an unrealistic set of information-assurance requirements on the company.

“To be honest, that’s part our fault and part Raytheon’s fault,” he said. “We made the requirements so difficult because they have to build a network that has 35 external interfaces that are unhackable. That’s a very, very difficult problem. We put all the requirements on them.”