S enior U.S. government officials had ample warning of development problems on a new generation of civil-military weather satellites, but failed to act soon enough to prevent things from spiraling out of control, according to an internal audit report by the U.S. Commerce Department.

Johnnie Frazier, the Commerce Department’s inspector general, told the House Science Committee during a May 11 hearing that top officials at the National Oceanic and Atmospheric Administration (NOAA) failed to challenge the optimistic projections of the satellite program’s manager , and should have done so aggressively. NOAA is a branch of the Commerce Department.

Frazier’s office prepared the scathing report, titled “Poor Management Oversight and Ineffective Incentives Leave NPOESS Program Well Over Budget and Behind Schedule.” Released the day of the hearing, the report elicited outrage among members of the committee , with at least one questioning whether the National Polar-orbiting Operational Environmental Satellite System (NPOESS) — now being restructured — will ever get back on track under NOAA’s current leadership.

“If there were a ‘how not to manage government’ list of bestsellers, this report would vie for first position on that list,” said Rep. Sherwood Boehlert (R-N.Y.), chairman of the House Science Committee.

NOAA Administrator Conrad Lautenbacher said he and other senior agency officials did all they could to challenge the projections from the NPOESS program office. He said he was briefed regularly on the issues, but acknowledged that additional formal meetings should be conducted in the future.

The NPOESS program is jointly funded by NOAA and the U.S. Air Force, and is intended to replace separate polar-orbiting fleets traditionally operated by the agencies . The satellites are being developed by Northrop Grumman Space Technology of Redondo Beach, Calif.

Rep. Bart Gordon ( Tenn.) the Science Committee’s ranking Democrat , noted that a Pentagon study completed in late December indicates that the cost of the six NPOESS satellites could rise from the original estimate of $6.8 billion to $13.8 billion.

Lautenbacher said the program associated with the $13.8 billion figure is “not executable,” and pointed out that NPOESS is being restructured.

The Pentagon began reviewing NPOESS in January when the effort surpassed the 25-percent cost-growth threshold that by law requires the military to justify a program’s continuation based on its importance to national security, the lack of viable alternatives, and evidence that its problems are being brought under control.

The Science Committee held a hearing on the NPOESS problems in November, and Boehlert said the May 11 hearing was unlikely to be “the last chapter in this sorry saga.”

Lautenbacher declined to speculate on the changes that might be in store for NPOESS following the review, which is expected to wrap up in June . He said that if some of the advanced capabilities envisioned for NPOESS are left off the initial satellites, they will be brought back in later in the program.

Alternatives under review could cost between $8 billion to roughly $13 billion, depending on how many satellites are launched and the capability of those satellites, according to an administration official.

The NPOESS cost growth has been attributed in large part to problems with one of its main sensors, the Visible Infrared Imager Radiometer Suite developed by Raytheon Space and Airborne Systems of El Segundo, Calif. The instrument is intended to provide imagery, sea-surface temperature readings and ocean color measurements.

Lautenbacher said he is confident that work on the sensor is on track, and noted that a prototype version recently entered thermal vacuum testing. The prototype hardware recently passed a test of its cooling system and its ability to withstand vibration during launch, according to a Raytheon news release issued May 9.

The sensor problems were compounded by mismanagement, the inspector general’s report said.

According to the report, monthly status reports to the NPOESS Executive Committee began describing the sensor problems in “explicit detail” in December 2002. These reports were prepared by the interagency program office responsible for executing NPOESS.

But then-NPOESS program manager John Cunningham argued up until March 2005 that the problem could be solved with no schedule impact by using cash reserves set aside for the effort. Cunningham resigned in August 2005.

The Executive Committee, which includes Lautenbacher and senior Air Force and NASA officials, met infrequently — twice between May 2003 and December 2004 — and did not start meeting more regularly until Cunningham conceded that an NPOESS launch delay was likely, according to the report.

“Unfortunately, by then it was too late to turn the program around,” said the report. The Executive Committee’s “long-term inattention had, in effect, postponed critical evaluations and decisions needed to re-plan the program’s faltering elements and contain cost and schedule overruns.”

Frazier further noted both in the report and in his testimony that the problems had little impact on the award fees paid to Northrop Grumman. He said the program manager meted out those fees — an arrangement that is unusual in government contracting because award fees are often viewed as a measure of how well a program is being run.

Northrop Grumman thus far has earned about 84 percent of its NPOESS award fees , which Frazier said added “insult to injury” in light of the cost growth. Frazier also charged that NPOESS milestones often were pushed back to give Northrop Grumman another chance to earn award fees , a practice which he termed inappropriate.

Boehlert told Lautenbacher that he found the award fee figure “mind-boggling” given the cost overruns and schedule delays with NPOESS . “I just can’t comprehend that,” he said.

Lautenbacher agreed that the award fees were excessive, and said the issue would be addressed as part of the NPOESS restructuring.

The Executive Committee also intends to establish a Pentagon-based program executive officer above the NPOESS program manager to provide additional oversight, Lautenbacher said. The idea is to bring in a more-independent perspective , he said.

Gordon nonetheless expressed skepticism that the program could get back on track under NOAA’s current leadership . “If these folks couldn’t figure out that you’re supposed to meet reasonably often and have outside reviews, this to me is not a matter of a systems breakdown — it’s a personnel breakdown,” Gordon said.

Gordon also expressed concern that the Pentagon might ignore NOAA’s needs and choose to walk away from the NPOESS program .

In a May 11 letter to U.S. President George W. Bush, Gordon asked the White House to “engage” the NPOESS review and get the point across that civilian forecasting needs are related directly to national security. The letter was released after the hearing.

“The costs in business losses and property damage of a severe degradation in our five- to seven-day weather forecasts could easily run into tens of billions of dollars,” Gordon wrote. “Our transportation, agriculture and energy industries, among others, would all be adversely impacted by this situation.”

Lautenbacher said he other NOAA and NASA officials are directly involved in the NPOESS review and believe their needs are getting sufficient attention.

Rep. Dana Rohrabacher (R-Calif.) labeled the NPOESS program a “catastrophe” and called the cost growth “ironic” given that the satellites were conceived as part of an effort to reduce duplicative work in government.

Rohrabacher expressed frustration that money that will go to cover NPOESS cost overruns is needed for other cash-starved causes such as education, diabetes research, and body armor for U.S. troops.