Congressional auditors raise red flags on EELV costs, national security launch industrial base

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GAO: Cost of Air Force 20-program portfolio grew by $32.6 billion, almost all of which occurred in the past five years and is attributable to the EELV program.

WASHINGTON — In its annual assessment of the Pentagon’s $1.66 trillion portfolio of 86 major weapon acquisition programs, the Government Accountability Office warned that costs for national security space launches are rising and raised concerns about the Air Force’s ability to keep multiple suppliers in the EELV program, short for Evolved Expendable Launch Vehicle.

GAO released the 16th iteration of the weapons assessment report April 25. “This significant financial investment demands keen oversight and continued implementation of key legislative and policy reforms,” U.S. Comptroller General Gene Dodaro wrote in the introduction to the report.

Only 20 of the Air Force’s 40 current and future major defense acquisition programs were evaluated in this report. Analysts compared these programs’ first full estimates of cost and schedule with their current estimates. The cost of the 20-program portfolio grew by $32.6 billion, almost all of which occurred in the past five years and is attributable to the EELV program.

According to GAO estimates in fiscal year 2018 dollars, development costs for EELV over two decades soared 130 percent, procurement costs ballooned 209 percent, and unit costs 222 percent.

Currently, United Launch Alliance and SpaceX are the only certified providers of launch services. Twelve of ULA’s launch vehicles have achieved design stability, and four have reached both design stability and production readiness, the report said. SpaceX’s Falcon 9 v1.1 has met both design stability and production readiness, but did not satisfy Air Force national security space reliability or performance requirements, according to the program office. A new variant — the Falcon 9 upgrade that SpaceX intends to use going forward for EELV competitions — first flew in December 2015 and was certified for EELV launches in January 2016.

New vehicles or variants that introduce changes to the original design, said the report, “can pose increased cost and schedule risks until they are proven through multiple successful flights.”

The report sets off alarms about the long-term future of EELV as the Air Force moves to secure all-domestic launch providers. Congress directed the Air Force to replace ULA’s Atlas 5, which uses the Russian RD-180 engine for propulsion, with a domestic alternative. The Air Force awarded agreements in early 2016 for rocket propulsion system development. According to the program office, the awardees are on track for propulsion systems to be qualified and ready for production by 2019 to support the program’s requirement for assured access to space.

In October 2017, the EELV program office released a Launch Service Agreement request for proposals and by summer 2018 plans to award at least three other transaction agreements to develop launch vehicle prototypes capable of meeting national security requirements.

In 2019, the Air Force plans to award contracts to two of the launch providers for a combined total of approximately 25 launches to occur from 2022 through 2026.

“Implementing a strategy to support multiple providers may prove challenging as the program stated that it expects demand for national security launches to decline from about eight per year to five per year from 2022 to 2026,” the report said. “Providers will have to rely more heavily on conducting civil government and commercial launches, which have historically been difficult to predict.”

GAO noted the Air Force recently released a request for information to gather detailed data from potential launch providers on the number of launches they require to close their business cases.

The Air Force, regardless, may face challenges in supporting additional launches of its heaviest satellites because of parts obsolescence issues and the challenges for commercial-based systems to meet national security space reliability and performance requirements, GAO auditors cautioned.

The Air Force intends to procure three Delta 4 heavy-launch vehicles to support near- term national security launch requirements. ULA has enough launch vehicle components to support these missions, but if additional needs come up and other, new launch vehicles are not available as planned or projected, some new Delta 4 heavy components will have to be designed and manufactured to replace those that suppliers no longer manufacture, the report said. “The use of such components could involve substantial testing, certification, and additional cost.”

Other space programs analyzed by GAO:

FAB-T terminals. Unit costs are down 4 percent but the schedule is way behind. There are five configurations of FAB-T terminals, designed to communicate through the Advanced Extremely High Frequency network of satellites. The prime contractor is Raytheon. Delays continue in the development of the final two configurations— new antenna ground transportable and new antenna airborne terminals. The Air Force had expected to declare FAB-T operational by December 2019. However, in April 2017 the program reported a breach of schedule. Depending on how long delays continue, the first launched AEHF satellite might be nearing the end of its projected 14-year operational lifetime by the time FAB-T is available. All six AEHF satellites are expected to be on-orbit before FAB-T is operational.

GPS 3. This is a new generation of satellites made by Lockheed Martin to supplement and eventually replace the GPS satellites currently in use. Development costs are up 20 percent and procurement costs up 52 percent since 2008. Lockheed Martin delivered the first satellite to the Air Force for storage in February 2017. The Air Force did not declare the satellite available for launch until September 2017 due to an Air Force investigation into the satellite’s propulsion subsystem. Future deliveries are likely to be late due to problems with a subcontractor’s ability to produce and deliver satellite navigation payload components. The Defense Contract Management Agency is projecting an average delay of 22 months for satellites 2 through 10. The planned launch of the first GPS 3 satellite has shifted from March 2018 to late 2018 due to an Air Force decision to launch the satellite on a SpaceX Falcon 9 rocket instead of a ULA Delta 4 rocket.

Military GPS user equipment. The MGUE program plans to develop GPS receivers compatible with the military’s next-generation GPS signal. The modernized receiver cards will improve resistance to threats, such as jamming. GAO says the full cost and schedule for implementing military- code receiver cards across DoD remains unknown. The Air Force said it has increased funding for receiver cards in its fiscal year 2019 budget.

Next Generation Operational Control System. The OCX program is a software development effort by Raytheon to replace the existing GPS ground control system. Development costs are up 52 percent since 2012. After many schedule delays, a new organization and management is in place. OCX software will be delivered in blocks that each provide upgrades as they become available. GAO says the program “does not anticipate proving some of its anticipated productivity gains and earlier discovery and corrections of defects until the end of fiscal year 2018.” The Air Force accepted Block 0 in October 2017.

Space Fence Ground-Based Radar. The Air Force’s Space Fence Increment 1 program is developing a large, ground-based radar to detect and track objects in low and medium Earth orbit and provide this information to a space surveillance network. The Air Force awarded a development and production contract for the first radar site in June 2014 to Lockheed Martin. Development costs came down 5 percent. It is 99 percent complete. Air Force officials are in discussions with Australian officials to support a survey of the proposed Increment 2 site, although the Air Force has not yet formally committed to Increment 2.