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GAO-14-377R 1 (2014-03-04)

handle is hein.gao/gaobaahqx0001 and id is 1 raw text is: cAO U.S. GOVERNMENT ACCOUNTABILITY OFFICE 441 G St. N.W. Washington, DC 20548 March 4, 2014 The Honorable Carl Levin Chairman The Honorable John McCain Ranking Member Permanent Subcommittee on Investigations Committee on Homeland Security and Governmental Affairs United States Senate The Air Force's Evolved Expendable Launch Vehicle Competitive Procurement This report formally transmits the briefing slides we provided on January 28, 2014, in response to your request to examine issues related to the Department of Defense's (DOD) efforts to introduce competition into Evolved Expendable Launch Vehicle (EELV) acquisitions. The EELV program is the primary provider of launch vehicles and services for U.S. military and intelligence satellites. EELVs are also used to launch civilian and commercial satellites. The most recent independent cost estimate projects the program will cost about $70 billion through 2030.1 From 2006 to 2013, the program acquired launch services from a single provider-the United Launch Alliance (ULA)-using a two-contract structure, but had little insight into EELV launch costs. In December 2013, DOD signed a contract modification with ULA, committing the government to buy 35 launch vehicle booster cores over a five-year period, and the associated capability to launch them.2 The contract modification also covers all activities previously funded by the two- contract structure, and represents significant effort on the part of DOD to negotiate better launch prices through its improved knowledge of contractor costs. In addition to the 35 cores DOD is committed to buy from ULA between fiscal years 2013 and 2017, DOD has set aside up to 14 launches for competition among all certified launch vehicle providers.3 DOD is currently developing a methodology for comparing launch proposals for the competition, which is expected to begin in fiscal year 2015. This report addresses the following: (1) What insight did DOD have into launch costs under past EELV contracts? (2) How do recent changes to EELV contracts affect accounting for costs? (3) How is DOD compensated for costs when ULA sells launches to other customers? and (4) What are the implications if DOD requires competitors to submit offers using the same structure it currently uses with ULA or a commercial approach? 1 The Office of the Secretary of Defense, Cost Assessment and Program Evaluation conducted an independent cost estimate based on the EELV programmatic forecast dated June 2012. 2 The booster core is the main body of a launch vehicle. In the EELV program, common booster cores are used to build all of the Atlas V and Delta IV launch vehicles. Medium and intermediate launch vehicles use one core each, while the Delta IV Heavy launch vehicle requires three. 3 Launch providers can become certified by following the steps outlined in the 2011 Air Force Launch Services New Entrant Certification Guide. GAO-14-377R Space Launch Competition Page 1

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