Smarter Air Force Space Acquisition

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The following was adapted from remarks prepared for the 27th National Space Symposium in Colorado Springs, Colo.

Rest assured I expect space to remain a core mission for the U.S. Air Force. But in space as much as any area, we absolutely must continue to improve our acquisition processes to make them more efficient, drive down our costs and convince the larger Air Force and Department of Defense (DoD) community that the cost of national security space is justified given many other warfighter priorities.

As noted in the National Military Strategy, enabling the space domain is “critical” to our military operations. The National Space Policy and the National Security Space Strategy both highlight the strategic advantages afforded to the United States through assured access to space and our space capabilities, and stress that we must maintain our leading edge. If we don’t, we risk leaving capability gaps that will increase our vulnerability across all operational domains.

As we develop our space investment strategy, the National Space Policy and the National Security Space Strategy both highlight the increasingly congested, contested and competitive nature of the space domain. Air Force Gen. Robert Kehler, commander of U.S. Strategic Command, spoke about the congested nature of space and what we’re doing in space situational awareness to mitigate it. Gregory Schulte, deputy assistant secretary of defense for space policy, talked about what we’re doing with our international partners to develop norms of behavior to respond to the contested nature of space. And you have heard about what the Air Force and the DoD are doing now — and plan to do in the years to come — to operate our space systems and equip our space forces in the competitive space environment. It’s a real challenge.

One fundamental step the Air Force is taking to address the congested, contested and competitive space environment is to enhance those critical military space capabilities that directly support our warfighters and benefit our nation’s economy, national security, international relationships, scientific discovery and quality of life. The major areas where we are investing include: satellite communications; advanced missile warning systems; global positioning, navigation and timing; accurate, time-sensitive weather data capabilities; and enhanced space situational awareness.

I will note that these efforts — to which we are committed — must be undertaken in a brutal fiscal environment.

To this end, the Air Force is determined to acquire the right capabilities, in the right time frame, and at the right cost. In today’s constrained fiscal environment, we will put taxpayer dollars where they’re most needed, and we will work aggressively to maximize the return on our investments.

Reducing costs and improving our acquisition processes are certainly not a simple challenge. But the way we’ve been acquiring space capabilities — on a one-at-a-time or just-in-time basis, often following production breaks and requirements changes — reduces our buying power and weakens industrial base stability, ultimately making it harder for us to implement our policy objectives.

To remedy this, we’re developing specific acquisition strategies that we believe will result in cost savings and a more effective and efficient space acquisition approach. Let me highlight two of the more high-profile efforts we have in the works.

One of these strategies is what we call Evolutionary Acquisition for Space Efficiency, or EASE. Our current procurement practices have led to increased costs due to production line breaks, parts obsolescence and inefficient use of labor. These challenges have prompted multiple calls from Congress for smarter acquisition. So this year we are working with Congress to combat the inefficiency and disruption caused by the status quo approach to procuring satellites.

EASE is designed to drive down costs, improve space industrial base stability and allow for investments in technology that will lower risk for future programs. It has four basic tenets: block buys of satellites; stable research and development investment; fixed price contracting; and full funding over multiple years through advance appropriations.

The first tenet — block buys of satellites — will allow us to purchase economic order quantities of critical parts, run production lines more efficiently, and reduce nonrecurring engineering costs. The resulting savings can be reinvested in research and development to further improve the performance and lower the cost of follow-on systems. This reinvestment — what we call the Capability and Affordability Insertion Program, or CAIP — is an essential component of EASE. Together, these first two tenets will provide much-needed stability and predictability for a fragile space industrial base.

The third tenet — fixed price contracts — works well for satellite programs that have moved beyond the development phase, which is where most of the cost and schedule risk resides.

At the same time, the costs of these and other space systems are such that the Air Force, the DoD and the Office of Management and Budget have concluded that the fourth fundamental tenet of EASE must be full funding through advance appropriations. In the budget environment we are in, we simply can’t afford multibillion-dollar spikes every few years. This approach spreads acquisition costs across multiple years, while still applying the principles of full funding.

With Congress’ approval, our first effort to implement EASE will be in the Advanced Extremely High Frequency (AEHF) program, beginning in fiscal 2012. We contemplate a similar approach for the Space Based Infrared System, beginning in fiscal 2013. If this approach demonstrates the results we’re expecting, we plan to expand its use to even more programs and suppliers of satellites.

We don’t believe that EASE is going to fix all the problems we’ve experienced in our acquisition processes. But it’s a concept based on feedback we have been receiving for several years on our acquisition of space systems, and it’s based on common sense principles. Bottom line, we simply cannot continue with the status quo, and we think this new approach is a prudent direction to go in procuring space capabilities.

In tandem with this effort, we’re pursuing a robust examination of contractor costs and making aggressive efforts to achieve cost reductions. We have a superb service acquisition executive in Dave Van Buren who is leading a rigorous review of the AEHF program. His findings on what AEHF capabilities should cost will put the Air Force in a position to get a better deal for the taxpayer. Our premise is that in exchange for the stability and commitment afforded to the industrial base by the EASE approach, our industry partners need to help us find ways to achieve savings.

With Congress’ support, we are confident that the combination of the major elements of EASE, in tandem with the “should cost” review, will help the Air Force achieve considerable savings in the acquisition of some of our most critical space assets.

Another area where the Air Force has devoted significant effort to developing a more efficient, cost-effective acquisition strategy is space launch. Along with our National Reconnaissance Office (NRO) partners, we deliver assured access to space through the Evolved Expendable Launch Vehicle (EELV) program. EELV provides the nation’s medium and heavy launch capability with two families of launch vehicles, Atlas 5 and Delta 4. It has delivered a 100 percent launch success rate — 39 in a row. Of course, this success wouldn’t have been possible without the hard work, skill and professionalism of our fantastic operators and acquisition professionals, who have been getting it right now for over a decade.

Unfortunately, at the same time, the operational success of EELV has in recent years been accompanied by substantially increasing costs. To control this — similar to what we’re doing with the AEHF program — we are aggressively scrutinizing EELV acquisition using an internal “should cost” review, as well as a blue ribbon external review. Our “should cost” review produced 84 cost-saving recommendations for the near- and mid-term, for example; the Air Force Space and Missile Systems Center is already working to implement these recommendations, which promise significant savings, while Air Force acquisition leaders continue to dig deeper into the current cost structure.

Several studies have independently recommended an acquisition strategy that procures a minimum eight cores per year. Consistent with our commitment to deliver assured access to space, we have partnered with the NRO to ensure that level of baseline annual production. The NRO will buy three per year, and the DoD will buy five per year, with the Navy picking up one core in each of fiscal 2012 and 2013. Thereafter, the Air Force has pledged to buy five EELVs per year for the remainder of the Future Years Defense Program. This will have the effect of lowering the cost per booster and contributing to a more stable market for our industrial base.

In addition to taking these steps, the Air Force also recently signed an agreement with the NRO and NASA designed to ensure a consistent position on opportunities, certification and requirements for potential new entrants to space launch. We expect to release new entrant criteria by late this summer, and we expect to allow new entrants to compete for near-term launch missions.

All of the space programs we are developing, investing in and sustaining are designed to support the National Security Space Strategy and National Space Policy by leveraging emerging opportunities to strengthen the United States’ national security space posture while maintaining and enhancing the advantages gained from space capabilities.

Thank you to our partners in the companies represented here and with the other government agencies involved in national security space. With your help, the Air Force is at the leading edge of space, delivering and operating the world’s most advanced space capabilities. We’re doing so in the context of new space policy guidance, and we are doing so mindful of the urgent need to deliver excellence in space and in space acquisition. We appreciate your cooperation and look forward to working with you.

 

Erin Conaton is undersecretary of the U.S. Air Force.