Betty Sapp, the director of the National Reconnaissance Office, said her agency had purchased launches from rocket maker SpaceX. Credit: David Aleman

WASHINGTON – One of the U.S. National Reconnaissance Office’s major acquisition programs is at risk of not meeting schedule or performance goals, the director of the agency said Sept. 8.

Speaking here at the Intelligence and National Security Summit, Betty Sapp, the director of the NRO, which builds the country’s spy satellites, said one of the agency’s 17 programs was “in the yellow,” but that she expected it “to deliver soon.”

In acquisition parlance, yellow generally means a program faces moderate risk of not meeting its goals.

Sapp’s comments come one day after James Clapper, the director of national intelligence, told the same audience that the NRO is responsible for 17 of the intelligence community’s 27 major acquisition programs. “For the most part,” Clapper said, those programs are meeting performance and schedule goals, but he acknowledged “there are certain exceptions.”

Neither Clapper nor Sapp offered further explanation.

Because the NRO’s budgets are classified, little information is publically available about individual programs and their adherence to budgets or development schedules. In June 2015, Sapp presented a slide that suggested 11 of 12 unnamed programs were on budget, with one exceeding costs by about 6 percent.

During a panel discussion Sept. 8, Rep. Adam Schiff (D-Calif.), the ranking member of the House intelligence committee, said the U.S. government’s spy satellites, often referred to as the “overhead architecture,” are “enormously effective and enormously costly.” But the satellites also represent the U.S. intelligence community’s most significant acquisition risk, he said.

“The greatest risk for a massive investment that goes unrealized is in the area of overhead architecture and the area of cyber,” Schiff said. “Those are among the most important oversight responsibilities for our committee because we invest massive amounts of money and if you make that investment imprudently, you launch something that is of limited utilization or doesn’t work … you’ve invested billions. This is an area that is keenly deserving of the most vigorous scrutiny, which we try to give it, and it’s of enormous consequence.”

The NRO and Congress regularly clash over the appropriate level of oversight.

In its draft of the National Defense Authorization Act for fiscal year 2017, the Senate Armed Services Committee asked the Defense Department’s Comptroller General to begin annual assessments of each NRO program that receives funding from the military intelligence program or is supported by Defense Department personnel. The report would examine the cost, performance and schedule of each program.

In its version of the NDAA, the House asked the Comptroller General to review space acquisition efforts, but it explicitly excluded the NRO. The bill is in conference negotiations now.

In 2014, the House Permanent Select Committee on Intelligence released a report that said the NRO is buying intelligence satellites at a faster rate than necessary and could save billions of dollars in the next decade by scaling back orders.

Meanwhile, Rep. Devin Nunes (R-Calif.), the chairman of the House intelligence committee, said launch remains one of the intelligence community’s largest costs and a subject the committee routinely studies.

“We need competition,” he said.

Last month, the Air Force said it plans to award United Launch Alliance a sole-source contract to build and launch two Delta 4 Heavy rockets for the NRO between 2020 and 2023, according to an Aug. 4 announcement. SpaceX, whose Falcon Heavy rocket has been widely thought to compete with the Delta 4 Heavy to lift the heaviest satellites to orbit, agreed with the Air Force’s approach and cited the missions’ “very specific technical requirements.”

The second of the two contracts is the first the first sole-source award outside of ULA’s $11 billion block buy deal with the Air Force, sources said. That contract, which was awarded in 2013, includes production of 36 new Atlas 5 and Delta 4 rocket cores and launch services for vehicles ordered as long ago as 1998.

The Air Force did not announce a contract value, but ULA previously has said a Delta 4 Heavy rocket costs about $350 million, suggesting the contract could be worth roughly $700 million.

Mike Gruss covers military space issues, including the U.S. Air Force and Missile Defense Agency, for SpaceNews. He is a graduate of Miami University in Oxford, Ohio.