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OCX Delayed Again as Development Jumps to $6 Billion

July 31, 2017

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The development cost for the new GPS ground system has jumped to $6 billion and the schedule has slipped another nine months due to "realized program technical risks" and the need to refresh out-of-date hardware and software, according to the U.S. Air Force.

Raytheon is the prime contractor for the Next Generation Operational Control System, or OCX, which is now expected to be ready in April 2022. The program — as of June 2017 — was more than five years behind schedule and, at $5.5 billion, 53 percent over its development budget according to the Government Accountability Office.

The new numbers are the result of an in-depth review conducted after the program experienced a critical Nunn-McCurdy breach last year. Such a breach, which can lead to cancellation, requires a detailed examination of the budget and program and then a reset or rebaselining.

The new baseline adds nine months and puts the total estimated cost at $6 billion for research testing development and evaluation (RDT&E) and $2.43 billion for operations and support over the program's lifetime.

The OCX contract was originally valued at slightly more than $1.5 billion, including some years of sustainment options, when it was awarded to Raytheon in 2010.

The program has been working under a 24-month extension since October 2016 with detailed, high-level reviews every quarter. It was understood at the time, however, that the schedule could slip further to the right.

"The increased schedule was due in part to realized program technical risks, and includes hardware and software obsolescence refreshes," said Air Force spokesperson Capt. AnnMarie Annicelli, in an emailed statement.

Raytheon said changes in the schedule reflect, at least in part, a boost in the margin on the program's delivery dates — though that additional 6 months was added in March 2017 and does not reflect later program developments or decisions including those of the Defense Acquisition Board (DAB).

"In March 2017, the (U.S. Air Force) updated the 24 month contract to add an additional 6 months of margin," the company said in an emailed statement. "We cannot speak to the (Air Force's) pre-decisional updated baseline that may be a result of the (June) 20 DAB."

The total schedule change as of July 31 is nine months, said Annicelli, including the six months from March.

OCX has been the target of a great deal criticism and is often held up as an example of why fundamental changes are needed in the way the Air Force manages its space programs.

After news broke of the most recent OCX cost increase and schedule slip — and of a delay in another program, the Family of Advanced Beyond Line of Sight Terminals (FAB-T) — the chairman of the Strategic Forces Subcommittee of the House Armed Services Committee issued a joint statement with his ranking member about the need for changing the way the Air Force manages its space acquisitions.

"Recent news that GPS OCX has blown through the latest schedule and cost estimates and that FAB-T will now be delayed another year casts greater urgency on the debate on space," said Reps. Mike Rogers, R-Alabama, and Jim Cooper, D-Tennessee. 

The Air Force considers OCX to be essential because of the cyber protections that are being built in. The new system is also necessary for taking full advantage of all the capabilities of the new GPS III satellites.

“It’s a critical system. It would be very disruptive to stop where we are and start all over,” Frank Kendall, undersecretary of defense for acquisition, technology and logistics told Defense News in July 2016.

The program is funded for the remainder of fiscal years 2017 and 2018 but will need more resources budgeted thereafter said Annicelli. 

"The OCX program has been a troubled program from the beginning," she said. "We are placing a lot of pressure on the contractor, and expect Raytheon to do the job they are contracted to perform." 

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