Report Urges Revamping Defense, Intelligence Space Acquisition, Assails Sole-Source Contracts

Better Relations Needed Between Military-Intelligence Agencies And Commercial Satellite Data Firms

“The United States is losing its preeminence in space,” a report to Congress warned, while adding that procurement policymakers might do well to shift away from awarding military space contracts on a sole-source basis.

Pentagon and national intelligence acquisition officials “should examine the possible overuse of sole source contracting and its impact on the industrial base,” according to the report by the House Permanent Select Committee on Intelligence tactical and intelligence subcommittee.

In finding that other nations are surging ahead in space capabilities while the United States space capability stagnates or deteriorates, the report explained that military and intelligence leaders must take steps to avoid being left behind.

One recommendation is that Congress should avoid erratic funding swings in appropriations for space research and development programs.

Some damage already has occurred, according to the report.

“A once robust partnership between the U.S. government and the American space industry has been weakened by years of demanding space programs, the exponential complexity of technology, and an inattention to acquisition discipline,” the report cautioned.

In the 1950s and 60s, the United States was stellar, a clear leader in space. But now, “American dominance in space is diminishing,” the report asserted.

One reason that the U.S. space presence is drifting is that there is no roadmap, no overall plan laying out where Americans are today and what they must accomplish to remain in a dominant position, the report explained.

“The perceived failure of the Intelligence Community and Department of Defense (DOD) to develop an integrated overhead roadmap or architectural plan for the intelligence mission in space is the [principal] motivation for this study,” the report continued.

“Recent organizational changes and inter-departmental agreements involving the Office of the Director of National Intelligence (ODNI), the Department of Defense (DOD), and the National Reconnaissance Office (NRO) have highlighted the question of leadership of space acquisition programs.”

The report sounded a warning, pointing to “the narrowing gap between U.S. capabilities and emerging space powers such as Russia, India, and China.”

This is no time for the United States to be second best, the report stressed, with burgeoning threats confronting the country.

In recent years, China has shown it can take down U.S. satellites at will, at least those in low Earth orbit, by employing ground-based interceptor missiles. China also can disable U.S. military satellites with ground-based lasers.

As well, China has intercontinental ballistic missiles, both ground-based and on submarines, and it has an ambitious space program (this is one of only three nations with the hardware to put its own taikonauts into orbit), able to perform spacewalks that will be useful when it puts a space station in orbit. And China plans a manned mission to the moon by 2020, in addition to the moon orbiter it recently sent to examine the lunar surface.

North Korea has developed nuclear weapons, and is developing intercontinental ballistic missiles (ICBMs).

Iran is producing nuclear materials that Western observers fear will be used to construct nuclear weapons, and Iran is obtaining ever-longer-range missiles, with plans for a space program involving technology similar to that required for ICBMs.

These and other threats, in addition to the risks posed by terrorists across the globe, cause concern among some military analysts, a concern also expressed in the report.

“Space continues to play an increasingly important role in supporting the national security interests of the United States,” the report found. “As the number and types of national security threats increase, the nation must continue to deliver space capabilities that provide policy-makers and the war fighter with the information they need.”

This is a time for major decisions to be made, the report asserted.

“The next few years are a defining moment for the United States,” it noted. “Experts in both industry and the executive branch were unanimous in their view that the United States is at an important crossroads with respect to its space architecture and that decisive action is required to chart a successful course to preeminence in space.”

The report sorted major concerns into five key areas:

  • There is no intelligent, overarching master plan for military and intelligence space programs, one that would ensure meeting current and future national security priorities, and the needs of the armed forces and intelligence community. The Director of National Intelligence Mike McConnell (DNI) and Secretary of Defense Robert Gates (SecDef) must develop such a plan, and not dither, because “current trends with respect to the space constellation [of military and intelligence satellites] indicate that it will soon be incapable of satisfying the national security needs.”
  • While coordination between military and intelligence programs is good, having two leaders providing funding for any program can mean inordinate delays. So have a joint plan, but try to avoid joint funding of programs that can double red tape, and clearly define authorities as to just who is running a program, the report advises.
  • Another problem is that “research and development (R&D) receives inconsistent funding despite the link between many failed acquisition programs and insufficient upfront R&D investment. Research investments must be treated as a national security priority. Programs need to clearly define what needs to be accomplished in the R&D, pre- acquisition, and development phases in order to have a successful satellite program.”
  • There must be improved relations between the government, such as the military and intelligence communities, and commercial data providers, such as private firms operating space imagery satellites that photograph areas on Earth. Expectations of the commercial data providers are inconsistent and ambiguous. Intelligence agencies and the Pentagon must “define more clearly their expectations surrounding the use of commercial services and develop the systems needed to more easily access and deliver data to government customers.”
  • Controls on exports of sensitive U.S. defense technology may be too restrictive, and should be reviewed, because they may be harming the U.S. space industry. The report said the International Traffic in Arms Regulations and other statutes and regulations “that restrict space commerce [should be reviewed] to ensure that the effort to protect U.S. national security interests does not unnecessarily hinder the success of U.S. industry.”

Curbing Costs, Requirements

The report also made several recommendations to help keep the United States preeminent in space. Some of the proposals mention avoiding duplication, screening out proposals that don’t fit in the overall plan, and controling costs.

For example, the DNI and SecDef should develop a common architecture or plan for space imagery, signals, communications and other systems that would support military needs, but also comply with budget constraints. The DNI and SecDef should agree on both the architecture and funding decisions. “Organizations proposing new satellites should demonstrate how their proposals fit into the architecture,” the report stated.

Further, the top procurement people under the DNI and SecDef should be involved here and agree with the strategy, the report stated. For example, that would involve John Young, under secretary of defense for acquisition, technology and logistics.

Until both the DNI and SecDef agree on the overall plan, or architecture, the White House Office of Management and Budget (OMB) should be careful in considering what space programs it recommends funding, the report counseled.

At times, the OMB has frustrated Pentagon leaders, denying funds for programs the military says it requires.

The report also recommends that the White House should review and recommend changes to laws to clarify the DNI role in jointly funded programs, and the OMB should more closely consider what programs it green-lights for funding.

As well, the report warns against requirements creep, where even after a procurement program begins, military or intelligence personnel may seek to add more systems or capabilities to the requirements for a platform.

The report advises policymakers to list requirements in order of priority, with those that are required urgently at the top of the list, and to “consider the impact of programmatic changes on cost and schedule.”

Program managers should be empowered to say “no” to any proposal to change or add to program requirements “if [that proposal] request would unacceptably impact cost, schedule, or system performance,” the report urged.

To further cut costs, procurement “organizations should encourage less complex design solutions,” the report advised. “If more complex technology or designs are needed, program managers should ensure that risk mitigation options are funded and captured in the schedule.”

While research and development funding should be kept stable, and not be cannibalized to support immediate operational functions, the report also urges defining just what technology maturation is needed before acquisition commences.

Once developed, however, new technology should be used immediately, rather than sitting unused on a shelf.

Procurement policymakers should also consider using old technologies that are well-tested, instead of developing new technologies for any given program.

While it would be well to launch a probe of possible overuse of sole-source contracting in the intelligence area, and its impact on the industrial base, a further investigation should explore the possibility of greater use of block buys, the report recommended. “This could mean having one vendor develop many systems, or it could mean having the government play a larger role in acquisition by purchasing bulk parts on one contract and providing the parts as government furnished equipment” going into a finished platform. In all this, Congress should be supplied with information to judge whether this is a wise way to proceed.

On intelligence acquisition programs, some changes may be warranted in the Nunn-McCurdy law, to better measure cost growth. That Nunn-McCurdy law provides that Congress must be notified when a procurement program goes 15 percent or more over its original cost estimate, and the program must be shut down if costs rise 25 percent or more above the original estimate, unless the Pentagon provides certifications, such as that the platform is needed urgently.

To avoid cost overrun problems, intelligence procurement programs should be structured with sufficient margins, cushions that can cover likely overruns.

The report also calls into question the practice of hiring contractors called lead systems integrators to oversee other contractors that actually build hardware.

Perhaps it would be better for the government to hire procurement experts to perform that function, and have those experts serve longer tours of duty on a given program to develop more in-depth knowledge, the report suggests. “Acquisition organizations should embrace acquisition reform that develops and maintains qualified Government acquisition personnel while reducing dependence on systems engineering/technical assistance contractors,” the report advises.

It also urges a review of government restrictions on space-related commerce, and an assessment of how current restrictions

The report also suggests assessing how restrictions on exports of secret or sensitive technologies affect the industrial base, including the key law in this area, the International Traffic in Arms Regulations measure, or ITAR. Any needed changes should be recommended to Congress, the report states.

Finally, the National Geo-spatial Intelligence Agency should strive to ensure that rules restricting commercial remote sensing firms don’t hamper them in competing in international markets, the report stated.