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Senate Passes Defense Authorization Bill "Fencing Off" Funding for Next-Generation GPS Control System

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June 22, 2016

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The Senate approved defense authorization legislation last week before heading out for weekend campaigning. The measure contains a provision the White House said would further delay completion of the already overdue next-generation GPS control system (OCX) by 6 to 12 months.

Senators passed their version of the National Defense Authorization Act (NDAA) for Fiscal Year (FY) 2017 on June 16, defying the White House, which had said June 7 it would veto the bill.

To support its veto threat the White House issued 21 pages of objections to the legislation — among them opposition to a defense spending increase unmatched by a boost in funding for nondefense programs. The administration was also hostile to limitations imposed by the bill on actions such as closing Guantanamo and to directives the White House described as efforts to "micromanage" the Department of Defense (DoD).

"Reorganizing DoD without careful study and consideration would undermine the Department's ability to continue to carry out its national security functions," the administration said in its statement.

Interestingly, among the restructuring provisions is a proposal to eliminate DoD's Office of the Under Secretary for Acquisition, Technology, and Logistics (USD/AT&L) and replace that position with an Under Secretary of Defense for Research and Engineering. The Obama administration deemed this approach a return to "failed models of the past."

If that change in the Pentagon's organizational chart is sustained as the House and Senate work out differences between their versions of the NDAA — and, of course, if it survives a veto — it could have a significant impact on OCX.

The current USD/AT&L is Frank Kendall, who is deeply involved in efforts to turn around the OCX program. He has been holding “Deep Dive” quarterly reviews since the end of last year and, so far, the program appears to be meeting its goals.

Raytheon, the OCX prime contractor, announced on June 16 that it had passed the Block 1 Electromagnetic Interference Test for the OCX Monitor Station Receiver Element (OMSRE), and the OMSRE also passed its Block 2 hardware Critical Design Review milestone, clearing the way for hardware development.

The next Deep Dive review is set for July, said Air Force spokesperson Capt. Annmarie Annicelli.

Fencing OCX Funding
Both House and Senate lawmakers agreed to authorize the full amount of the funding requested for the GPS program, but the Senate wants a Nunn-McCurdy certification from the Secretary of Defense before that money is obligated or spent.

"The committee is strongly concerned with the current state of the GPS–OCX program," lawmakers wrote in the report accompanying the bill. " This program, which was recently referred to by a senior Air Force leader as the Air Force’s ‘‘number one troubled program,’’ was expected to deliver initial capability by the end of 2016, but is currently not expected to do so for another five to seven years.

The program has also experienced cost growth in excess of 250 percent with continuing overruns expected. The committee is concerned that the Air Force and the AT&L office have artificially restricted the identification of that future cost growth by delaying the re-baselining of the GPS–OCX program and, therefore, “artificially postponed the reviews required with a Nunn-McCurdy certification."

The administration strongly objects to the requirement, which appears to affect the GPS Enterprise Integrator program as well as OCX. The Integrator program supports the delivery testing and implementation of GPS capabilities.

"OCX will provide a cyber-hardened ground control network to operate the current and future GPS satellites. Fencing off FY 2017 OCX funding will result in a stop-work for the development, test, and integration of OCX Block 0 and Block 1, resulting in a 6–12 month slip to the launch and operation of GPS III,” the White House wrote in its critque of the authorization bill. “Additionally, the provision de-funds ongoing efforts to synchronize and modernize the GPS Enterprise, resulting in cost and schedule impacts across the space, mission control/planning, and user segments, and it stops all user equipment testing, preventing the deployment of M-code capable receivers as required in Public Law 111-383, section 913."

It is unclear why it would take 6 to 12 months to complete a certification for the program, which has been under close and continuing review for months. The Air Force was not able to respond to a request for more information on the delay by press time, Annicelli indicated.

Raytheon referred a query on the Senate language to the Air Force.

Consequences
The Senate requirement for a certification suggests lawmakers see OCX's cost increases as constituting a critical breach. A critical breach occurs when the Program Acquisition Unit Cost 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, according to a May 2016 Congressional Research Service (CRS) report.

In the case of a critical breach the Secretary of Defense (SecDef) must conduct a root-cause analysis to determine what caused the cost increases, explained CRS, after which the program must be cancelled unless the SecDef certifies several things including that the program is essential to national security. That certification must be accompanied by the root-cause report and the program must be restructured 
to address the reasons for the increased costs. In addition, the program's prior milestone approval is rescinded, and it would need a new milestone approval before any contract action is taken—"including signing new contracts or exercising options—without approval from the Milestone Decision Authority."

The original OCX baseline budget was $886 million, with option years for sustainment bringing the total potential value to $1.54 billion.

Though project has been re-baselined, and it is not an apples-to-apples comparison, the White House budget request, submitted this February, put the total cost of the OCX portion of the program at $4.8 billion. With the GPS Enterprise Integrator included, the cost tops $5.58 billion. Recent information, however, suggests the OCX portion of the program might top $5.3 billion.

The Air Force is putting backup plans into place in case OCX continues to be delayed, but it still sees OCX as essential to full utilization of the GPS III satellites and the Pentagon's best option.

"As we sit here today," Gen. John Hyten, the 
commander of Air Force Space Command told a House subcommittee in March, "the best answer is for Raytheon, the contractor involved, to deliver that capability in a time-certain manner and give us the capability that we need to make sure that GPS is available for future years and in a cyber secure environment."

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