[Satellite News 06-02-09] Lockheed Martin won a $1.5 billion contract to build the third Space Based Infrared Systems Geosynchronous Earth Orbit (SBIRS-GEO) satellite after three years of testing and development despite several complaints by the U.S. Government Accountability Office (GAO) over the program’s procurement process.
    The cost-plus, fixed fee basis contract, announced May 29 by the U.S. Air Force, also includes the modification of related ground systems to handle the operations of three payloads simultaneously. Of the total contract amount, $1.1 billion has already been obligated to Lockheed Martin.
    Throughout SBIRS’ testing and development phase, the GAO has been critical of the program’s cost overruns and single-sourced contract bidding. The Lockheed Martin SBIRS team has won every milestone award in the process with virtually no competition, as its team includes Northrop Grumman and even rival Boeing Co. on the SBIRS-low program, as subcontractors.
    The GAO said the SBIRS program, along with several other military acquisitions in procurement phase, highlights the fact that the defense supply sector is dwindling. In an October report, “Department of Defense: A Department-wide Framework to Identify and Report Gaps in the Defense Supplier Base is Needed,” GAO chairman John Tierney warned that the continued practice of sole-sourced procurement could lead to supply gaps.
    “While [U.S. Department of Defense] recently established criteria for identifying supplier-base characteristics that could be problem indicators   such as sole-source suppliers and obsolete or emerging technologies   these criteria have primarily been applied to the missile and space sectors and have not been used to guide the identification and monitoring of supplier-base concerns for all sectors department-wide,” said Tierney.
    Sometimes a contract must be given on a sole-source basis because there is only one supplier left in the field, Tierney added.
    According to the GAO, the Pentagon is not tracking areas where suppliers may be disappearing, with the exception of keeping tabs on problems with suppliers needed for missile defense programs, in the report prepared for the U.S. House oversight and government reform committee national security and foreign affairs subcommittee.
    The Pentagon discovers supplier shortage problems on an ad hoc basis, without a formal reporting requirement, the report stated. Some 16 out of 20 defense programs surveyed suffered supplier shortages. The report recommended that DOD fully apply criteria to identify and monitor supplier-base concerns and create reporting requirements for when to elevate concerns about gaps.
    In April, the GAO also criticized the SBIRS program for contributing to a combined total of $296 billion in U.S. military program cost overruns. The report, “Defense Acquisitions: Assessments of Selected Weapon Programs,” asserted that recent SBIRS High program assessments by the U.S. Defense Contract Management Agency indicated cost and schedule variances over $133 million at completion, more than five times what the GAO assessed in 2007.
    The GAO added that the program’s software overall is considered “high risk, due in part to the need for redesign,” the report said.
    Lockheed Martin has yet to release a statement on its SBIRS win and could not be reached for comment.