DoD Notifies Congress of Higher SBIRS Cost

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Continued cost growth on the U.S. Defense Department’s next generation of missile warning satellites has triggered a formal notification to Congress and an internal review that could lead to a scaled-back program, according to U.S. Air Force officials.

A congressionally mandated recertification of the Space Based Infrared System (SBIRS) High also may be required, and program termination, though unlikely, is a possible outcome.

In a letter delivered March 11 to congressional leaders and members of the defense and intelligence committees, Acting Air Force Secretary Peter B. Teets said the cost of the third through fifth SBIRS satellites is expected to rise by at least 15 percent, and possibly 25 percent.

Under a law known informally as the Nunn-McCurdy provision, the Defense Department is required to notify Congress when costs on a major program rise by 15 percent. Cost growth of 25 percent triggers a so-called Nunn-McCurdy review in which the procuring service must justify the program’s continuation on national security grounds and present a plan for getting things back on track.

The SBIRS program has had three Nunn-McCurdy breaches since 2002. In 2004, the Air Force notified lawmakers that delays associated with developmental problems on the first SBIRS sensor had driven up the total program cost by 15 percent. In 2002, SBIRS High crossed the 25 percent cost-growth threshold, forcing the Air Force to recertify the program, which was allowed to continue with stricter oversight.

The SBIRS High program includes four dedicated satellites in geosynchronous orbit, one spare , two infrared sensors riding on classified satellites in highly elliptical orbits and ground equipment. The satellites are being built by Lockheed Martin Space Systems of Sunnyvale, Calif.; Northrop Grumman Electronic Systems of Baltimore is the contractor for the main infrared sensors.

The program originally was expected to cost about $2 billion, but the Air Force’s estimate as of late 2004 had grown to $9.9 billion.

The latest bout of cost growth appears to be related to a program restructuring undertaken due to problems with the first SBIRS sensor, which will fly aboard a classified satellite operating in a highly elliptical orbit, sources said. That sensor was finally delivered in August, but the attention focused on fixing the problem drew resources from other parts of the program, including construction of the dedicated satellites.

In his letter to Congress, Teets said he does not have a high degree of confidence in the latest cost figures he has seen for the SBIRS High program. He said he has ordered a program review by a team that includes accounting experts from the National Reconnaissance Office, Air Force and Office of the Secretary of Defense.

In addition to nailing down the likely cost of the SBIRS satellites, the team will explore options for the program’s future, Teets wrote in the letter, a copy of which was provided to Space News.

Those options may include cutting the SBIRS procurement down to three or four satellites and holding a competition for a follow-on missile warning system , according to Maj. Gen. Craig Cooning, director of space acquisition in the Office of the Undersecretary of the Air Force.

The Air Force also has been studying scaling back SBIRS High’s capabilities at the behest of Deputy Defense Secretary Paul Wolfowitz, who in December imposed budget cuts across a broad swath of Pentagon programs. One option under consideration as part of that exercise is eliminating a sensor on the geosynchronous SBIRS satellites that is intended to stare at areas of interest for long periods of time. The so-called staring sensor is intended to significantly improve the military’s ability to predict the impact point of ballistic missiles.

But in a March 11 interview, Cooning said the cost savings from eliminating the staring sensor probably would not likely be worth the lost capability.

Despite the latest Nunn-McCurdy breach , SBIRS High appears to be in good shape, Cooning said. The first SBIRS sensor is finished and delivered, and work on the second, also bound for elliptical orbit, is going well, he noted.