Huge Cost Overrun for AEHF

In another sign that the military’s beleaguered space acquisition program lies broken and is not really back on track, the Pentagon issued a Nunn-McCurdy warning to Congress on Friday, warning that costs of the Advanced Extremely High Frequency (AEHF) communications satellite program had soared more than 25 percent over the official cost estimate.

“I think Congress is very concerned” that space acquisition has not clambered back from the multiple disasters of the last five years, said a source who keeps close watch on the program.

“It’s a critical breach. It exceeds 25 percent,” one Pentagon official said Monday. The other source, who keeps close watch on the program, said that it was very difficult to tell exactly how much the cost overrun amounts to because there has been cost growth in the first three of the four Lockheed Martin satellites, as well as in the fourth satellite Congress ordered the military to build, worried about a communications gap caused by of the slow progress of the Transformational Satellite program.

The increase appears to stretch somewhere between $400 million and $500 million, and may be substantially more. Three main problems seem to afflict the program. First, the military screwed up in estimating how long it would take for actually building the satellite.

“We thought integration was going to take 10 months and it normally takes 36 months. Guess how long it really took — 22 months. If we had just gone with the historical model we would have the right schedule and budget,” said the Pentagon official. However, the second source said the delay was closer to 36 months.

On top of all that, the fourth satellite is going to be much more expensive than initially estimated. The original estimate, according to the Pentagon was $700 million to $800 million. “The fact is it will cost us a whole lot more than that,” the official said. I remember estimates of $1.2 billion as long as 18 months ago, but that’s another story.

Part of the problem is that, as the official said, “the production line is very cold and there is are big gaps in the workforce that will be expensive to fill.”

The Pentagon held its first meeting Monday to begin the legally mandated process of recertifying that AEHF is really needed and worth paying the higher price tag for. Then the military also has to effectively reorganize the program. Those efforts will not just look at AEHF 1–4 but will include a rigorous look “at the whole military satellite communications portfolio” including T-Sat and the WGS satellite program, according to the Pentagon official.

Congress will have to scramble to come up with more money and will not be very happy doing it.