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Speech given by Senator Wayne Allard September 23, 2005

National Defense Industiral Association

Speech given by Senator Wayne Allard September 23, 2005

Space Policy & Architecture Symposium

Good morning. It is a pleasure to be here. I thank the National Defense Industrial Association for hosting this important symposium and for giving me an opportunity to speak to you today.

As the Chairman of the Space Power Caucus, I have worked closely with my colleagues in the Senate to create a meaningful dialogue on space policy and programs. NDIA has been a key partner in this effort. Without NDIA's support, my job would be much more difficult.

Let me turn to the topic of this conference, "Space Challenges." After the end of the Cold War, the range of threats facing our nation seemed limited and discernible.

We could plan, prepare, and if necessary pre-empt a potential threat. However, the terrorist attack on September 11 and more recently Hurricane Katrina have demonstrated that our knowledge is limited and that our nation is vulnerable to man-made and natural disasters.

The value of space was again demonstrated during the Katrina relief effort. Without space, it may have taken weeks to fully respond to the crisis.

For example, the Air Force's Defense Meteorological Program satellites' revealed to emergency management agencies those communities that lacked electrical power. Commercial remote sensing companies provided high resolution satellite imagery to relief organizations, which helped determine the extent of the damage in specific areas. And, our GPS system helped our response units navigate areas devoid of landmarks or signs of previous existence.

Disasters like Katrina have helped us to appreciate space as a critical enabler. However, I still do not believe we have fully recognized just how important space is to our country.

Four years ago, the U.S. Commission on National Security Space found that the United States was more dependent upon space than any other nation. Yet, we often to take space for granted.

But if you look closely you will see that most of our commercial sector now depends upon space assets.

And, our military looks to space so much that it would be difficult for our forces to operate without the unique capabilities -- such as communications and navigation -- space provides. The Space Commission identified several scenarios where our dominance in space could be significantly diminished. A potential terrorist attack, another war in the Middle East, or tensions over Taiwan headed the Commission's list of worries. While I share many of the concerns expressed by the Space Commission, I would suggest to you today that a new, more ominous threat has arisen.

As I see it, our nation's dominance in space is being challenged not so much from outside this country but from within. In many respects, we have become our own worst enemy.

Over the last decade, we have done everything possible to sabotage our space supremacy. And, we have done this in every area of government at every possible turn. Our warfighters, program managers, contractors, and yes, even Congress are responsible, and all are guilty of ignoring the warning signs.

Our nation has no rival when it comes to building world-class satellite systems. We have an extremely talented industrial base, outstanding research laboratories, and brilliant engineers. Most of our satellite systems operate years beyond their life expectancy and out-perform even our own high expectations.

The problem, ladies and gentlemen, is not the operation of the satellite. Once it gets to space, our satellites rarely disappoint. Rather, our greatest challenge lies in the development and building of the satellite.

As you all know, many national security acquisition programs continue to experience significant technical problems, schedule delays, and cost growth. The Defense Science Board concluded that cost had replaced mission success; unrealistic estimates led to unrealistic budgets; and inadequate requirements definition led to the introduction of new requirements late in the development cycle.

The problems identified by the Defense Science Board were only the start. Witnesses from the Government Accountability Office testified that most original baselines for many space programs perhaps the most important point in the acquisition process -- are flawed from the very beginning. Cost, schedule, and performance estimates used for the baseline in almost every space program have been made with highly inaccurate, or at best, incomplete information.

Some would suggest that the best way to fix this problem is to hire better program managers and system engineers. I certainly agree that the absence of trained and experienced space professionals has hindered the government's ability to manage these programs.

However, as the DSB and GAO have discovered, the deck is already stacked against a program manager before he or she starts working on the program. While the lack of talent is hurting our space programs, it is the space acquisition process itself that is bringing our space programs to a grinding halt.

This is occurring for multiple reasons.

First, the Department of Defense is launching acquisition programs before fully knowing whether the planned technologies can achieve the system requirements. All too often the necessary investments in technology development and systems engineering have not been made, nor has the technical risk for a program been fully understood.

According to GAO, the primary reason why this happens is because it is easier for a program manager to secure money within the Department by including the technology development and system engineering within an acquisition program. This problem is so serious that, according to the GAO, 80 percent of research and development funding is being allocated to acquisition programs, not science and technology budget activities.

You might ask, "What is so harmful about including research and development activities within an acquisition program"? The danger is that it introduces an enormous degree of uncertainty into the acquisition program.

In most cases, the schedule for a space acquisition program is entirely dependent upon how fast the technology can be developed. As the element of uncertainty rises, both cost and schedule are put at greater risk. Too many times baselines for satellite programs are blown because the maturity of a particular technology has not progressed to the level necessary.

Another way the process is hindering our space acquisition programs is the manner in which contractors are winning bids to develop and build these satellites. Space program contractors are submitting bids at the lowest possible credible price. In the highly competitive space business, where there are few contracts and ten- to fifteen-year acquisition timetables, contractors are fighting tooth and nail over every contract.

As a result, according to the Defense Science Board, most contractors submit bids that have a 20 percent chance of meeting the original baseline for the program.

So what does this mean to a $5 billion space acquisition program? According to Thomas Young, the former chairman of the Defense Science Board, the contractor bids are so far off that when a government program manager walks in the door on the first day to work his or her $5 billion program he or she is already guaranteed a $2 and-a-half billion cost overrun -- $2 and a half billion dollars!

Further complicating the situation is the fact that the program manager won't discover the inadequacy of the program's baseline until the program is halfway complete -- when the integration testing starts.

A third reason are the numerous demands being placed on our space programs by the warfighter. Some of these requirements are legitimate needs. Others are desires that only serve to provide marginal or niche capability.

There has been a profound absence of discipline when it comes to requirements definition and requirements implementation. The warfighters do not seem to understand the impact that adding new requirements has on cost and schedule. Adding new requirements after a certain point is a sure-fire way to ensure a program's cost and schedule will explode beyond its original baseline.

It is important to acknowledge that the Air Force is trying to fix these problems. I applaud General Lance Lord, for example, for taking the lead in crafting the Air Force's space cadre development strategy. I believe this effort is critical and will pay significant dividends in the future. I also support the excellent work done by former-UnderSecretary of the Air Force Peter Teets in developing the Air Force's new space acquisition guidelines. Yet while these efforts are notable, they are not enough.

The Air Force continues to resort to re-base lining many of its space acquisition programs, often due to Nunn-McCurdy breaches, in order to complete them. Some space programs now are projected to cost more than twice their original baseline. According to the Congressional Budget Office, the Air Force budget for space programs is projected to grow by 40 percent next year and double by 2011. This is not because of new programs, but to pay for those already in the pipeline and have been delayed or experienced significant cost increases.

I'll be honest with you today: We in Congress are tired of the frequent cost increases and schedule delays.

We have heard all the excuses and they are no longer good enough. In many respects, the Air Force and its contractors have lost all credibility with Congress when it comes to space acquisition programs. My colleagues and I are no longer surprised by additional cost increases or notices of further schedule delays. Nor do some in Congress give much credence to the Air Force's proposals to fix these programs.

The Congress's lack of confidence in Air Force space acquisition management has resulted in enormous reductions in funding for space programs. For example, the House of Representatives cut $400 million from the Transformational Satellite program and another $125 million for the Space Radar program.

That is a net loss of over a half billion dollars from the Air Force's space budget next year. Unfortunately, you can expect similar cuts in the Senate as well.

The key question that you should be asking is: Can the Air Force get its space programs back on the right path? I note that General Hamel, Commander of the Space and Missile Center, will be leading a panel on this very issue later this morning. I have a couple of recommendations for you to consider as you discuss this issue.

First, we must slow down our newer space acquisition programs until we get a better trained, more experienced space cadre in place.

We need people who understand the complexities of our space programs and who can make decisions that are in the best interests of our national security. We also need to invest the time to conduct realistic independent cost estimates and perform multiple examinations of the technology being used in the program. We need to slow down, learn from our mistakes, and make sure we are not repeating the same mistakes over and over again.

Second, the Air Force must limit the amount of research and development that is conducted in its space acquisition programs. More money needs to be spent on basic science and technology so that the technical barriers for incorporating advanced technologies in acquisition programs are reduced.

Acquisition programs should not be incubators for unproven technology. We need to better differentiate between the building of a satellite and the development of the technology necessary for the satellite.

Third, the Air Force must prove that it can effectively manage a space acquisition program from start to finish under the program's original baseline. The Air Force needs a successful space acquisition program that it can point to as an example program.

The Air Force also needs to prove once again that its space program budget requests are justified and that the service will not be asking for more money to pay for unexpected costs increases except for the most unusual and infrequent situations. Until its credibility is restored in Congress, you can expect the Air Force to face a struggle in its effort to get its programs off the ground and into orbit.

Fourth, once we rebuild some of the confidence that has been lost between the Air Force and Congress, and only then do I believe we should start considering a mechanism for providing a reserve fund. Since unexpected costs and schedule delays do occur, it is only prudent to provide program managers with a reserve fund they can use to deal with an emergency problem. This should not be a slush fund. Nor should it be a special account to add more capability. If it is created, there must be close management and even closer oversight of this fund.

I strongly believe the continued mis-management of our space acquisition programs is a far greater threat to our space dominance than any external threat. Our space assets have provided a critical transformational capability for warfighters and remain a key component of our national intelligence network. We cannot afford to remain on the current path. Too much is at stake.

The good news though is that the Air Force can fix this. This problem is not insurmountable. Indeed, under UnderSecretary Ron Sega's leadership, I am confidant this situation can be turned around and that significant progress can be made toward this goal.

Thank you for the opportunity to speak to you today. I appreciate NDIA's willingness to tackle the tough issues facing our nation. We need to overcome these challenges, and together, I know we can.

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