Production of the Air Force’s first two GPS III satellite system is “not even close” to a Nunn-McCurdy Act cost breach despite Government Accountability Office testimony that the program has increased 18 percent more than originally estimated, according to the service’s space chief.
Air Force Space Command chief Gen. William Shelton said yesterday during a Defense Writers Group breakfast in Washington that despite testimony that the program is three percent above the “significant” 15 percent cost threshold that requires congressional notification, it’s not as simple as hard numbers.
“So I understand from, maybe, a bean counter perspective, that it may look like an increase,” Shelton said. “But I don’t see it that way. It’s still a development program and again there are changes made along the way by the government that will represent maybe an increase in price.”
GPS III is being developed by Lockheed Martin [LMT].
In testimony Wednesday before the Senate Armed Services strategic forces subcommittee, the GAO said in November 2011, the contractor’s estimated cost at completion for the development and production of the first two satellites was over $1.4 billion–or 18 percent greater than originally estimated. GAO said the program office estimated the cost to be about $1.6 billion.
The Nunn-McCurdy Act requires the Pentagon to notify Congress whenever a major acquisition program experiences cost overruns that exceed certain thresholds. A “significant” breach is when a program increases 15 percent or more over the current baseline estimate. A “critical” breach occurs when program acquisition or the procurement unit cost increases 25 percent or more over the current baseline estimate or 50 percent or more over the original baseline estimate.
Shelton said, despite the reported figures, he believes the program is coming along just fine.
“We’re on schedule, on target with that program,” he said. “There is no question in my mind that that program is going extremely well.”
The first GPS III satellite is expected to be ready for launch in May 2014.