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GPS III Budget Slashed as Air Force Shifts Money to Fix Delayed OCX

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February 15, 2016

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With a stopgap fix under contract and a bump-up in next year's budget request on the table the Air Force appears intent on sticking with its plan to continue work on a new GPS ground system despite dismay over repeated delays.  

The White House has asked for $393.3 million for the Next Generation Operational Control System (OCX) for fiscal year 2017 (FY17). Though that number is a 12 percent increase over the $350.2 million approved for FY16, it is effectively a placeholder and may grow.

Air Force officials are in the process of updating the OCX budget to reflect the full implications of a two-year delay acknowledged officially in December.  Although the program has been struggling for several years, a December 4 “deep dive” review of the program before Under Secretary of Defense for Acquisition, Technology, and Logistics Frank Kendall determined another 24-month slip would occur in the schedule. Inside GNSS reported at the time that delivery for the program could slide to 2023.

The delay meant that the then-current service cost estimate for the program, approved in December "in support of the review," needed to be revised according to an Air Force statement. Given that it was not possible, however, to have the new number available in time to incorporate it into the President's budget for its February 9 release, officials put in their best guess with the understanding that adjustments may be needed down the line.

"We didn’t have a firm service cost position at that time that we submitted that budget," said Maj. Gen. Roger Teague, the director of Space Programs within the Office of the Assistant Secretary for Acquisition, "but we knew that there would be an upper, and so we went ahead and added that to the ’17 budget with plans to readjust that based on what the final service cost position would turn out to be, and as it was refined and, ultimately, approved."

Although subject to change, the total cost for the OCX program listed in the White House budget request is now projected to be $4.81 billion. In 2010 Raytheon won the baseline OCX competition with a 73-month contract totaling slightly more than $1.5 billion, including options.

The new cost number will be presented to Kendall at the next “deep dive” review March 9 in Aurora, Colorado, at the Raytheon facility there.

"We will review the service cost position and program cost estimate, and be able to baseline all of that and then move the program forward based on those results," Teague told reporters during a February 11 briefing.

Just in Case
Meanwhile, with the program's schedule shifting to the right, the Air Force decided at the end of last year to buy a little insurance against the consequences of the delay.

On December 4 the GPS Directorate awarded a $96 million contract modification to Lockheed Martin Space Systems to provide Global Positioning System (GPS) III Contingency Operations services (COps). Lockheed will "modify the current GPS control segment to operate all GPS III satellites that are launched prior to the transition" to OCX as well as GPS III satellite vehicle simulation modules, a GPS simulator, and updates to the GPS Positional Training Emulator. The work is to be completed by December 31, 2019.

Money to help cover the OCX delay is coming out of the planned budget for the GPS III satellite program, according to the Pentagon's Chief Financial Officer Mike McCord.

Late delivery of OCX Block 1 "puts GPS constellation sustainment at risk since the current control segment cannot operate GPS III satellites," the Pentagon wrote in its budget request. Under the COps contract, Lockheed will modify the current control segment to operate GPS III satellites' PNT and the Nuclear Detonation (NUDET) Detection System (NDS) until OCX Block 1 is delivered.

The budget documents described how the Air Force plans to put $7.7 million into buying commercial equipment to maintain the GPS Architecture Evolution Plan (AEP) and Launch Anomaly Resolution and Disposal Operations (LADO) systems, which comprise the current ground control architecture. The money will buy equipment for the Operational Control System (OCS) ground sites including the Master Control Station, Alternate Master Control Station, four ground antennas, six monitor control stations, contractor lab facility, and a telecommunications simulator test set.

The description of the need for a contract modification underscores just how important it is to get the new OCX ground system up and running.  

"OCS is part of the control segment and requires modifications to replace high failure rate parts and preclude system operational degradation," wrote the Pentagon. "Without these mods, aging and obsolete equipment will excessively degrade, ultimately resulting in system failure. System failure or even partial system failure will cause a loss of operational availability and the transmission of inaccurate navigation data to worldwide users, resulting in potential loss of life and/or operational equipment, including multi-million dollar satellites. OCS is required to operate until the Next Generation Operational Control System (OCX) transitions to operations."

Impact on GPS III Program
The Air Force will "re-phase the GPS III space vehicle procurement profile," the Pentagon CFO McCord wrote, pushing procurement of space vehicle 11 (SV 11), the first of the spacecraft that might be included in a GPS III contract recompete, from FY17 to FY18.

As a result the total request for GPS III for FY17 plummeted from $199.2 million in 2016 to just $34.1 million in FY17. The request for GPS III development monies also dropped from $180.9 million for FY16 to $141.9 for the coming year.

It's not all belt-tightening, however. DoD nearly doubled its request for developing user equipment from $142.3 million for FY16 to $278.2 million for FY17.

The budget request goes to support the Military GPS User Equipment (MGUE) program. The goal is to accelerate platform integration of “M-code” capability, which provides stronger signaling and data authentication capability.

Interestingly, one of the goals of the ongoing phase of the GPS III recompete is to mature a payload with a new  "regional M-Code capability that is consistent with the GPS Enterprise Analysis of Alternatives (AOA)." Submissions from would-contractors for this part of the program, called the Production Readiness Feasibility Assessment, are due February 23.  The assessment is phase 1 of the re-compete process.

At last week’s briefing, Teague said that the purpose of this step "is just to understand what capabilities are, the variant capabilities, that are in industry today — to understand how feasible would a production competition be and then, from there, we'll reaffirm our acquisition strategy going forward."

Both Teague and the budget documents made clear that the final decision to seek bids to build up to 22 GPS III satellites has not been made,

Teague said the decision to proceed or not should be made in about a year. If they do proceed they "would contend to move forward through 2017 with a follow-on RFP [request for proposals] among those production bidders for a production award starting in 2018."

A little wiggle room may be built into that schedule. According to the solicitation for the Production Readiness Feasibility Assessment, those chosen have 26 months for the basic contract with two options of 6-months each, for a total possible period of performance of 38 months.

The Air Force has not decided if a recompeted contract would entail a winner-take-all award, Teague said, nor has a been made regarding how much they plan to spend.

Although the budget indicates GPS III procurement monies totaling nearly $3 billion for GPS III procurement for FY18–FY21, it is too soon, Teague said, to have a handle on a real number.  

It’s "too early to say with regard to how much we’ll be spending," said Teague. "I mean, there’s budget laid in. We need to go through these initial steps to be able to make that final determination as to what the program’s going to look like."

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