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Satellite Acquisitions: Agencies May Recover a Limited Portion of Contract Value When Satellites Fail

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United States Government Accountability Office Washington United States

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Acquiring and fielding satellites are high stakes endeavors. Each year, DOD, NASA, and NOAA spend billions of dollars acquiring satellites. Unlike with other major acquisitions, such as ships or aircraft, an agency can only determine the quality of a satellite after it is launched. That means any defects that occur may be impossible to repair, and in space, a single failure can be catastrophic for a missions success. As a result, contractor performance is critical to a programs success, and contract incentives can be particularly important in aligning government and contractor interests--both in achieving mission success and ensuring responsible financial management. This report addresses 1 the types of contracts DOD, NASA, and NOAA use to develop satellites, 2 how selected programs structure on-orbit incentives, and 3 what recourse, if any, the government has in the event of satellite failure or underperformance. To conduct this work, GAO analyzed contract obligations data and documentation for 19 current satellite programs reviewed policies and guidance regarding contact types and incentives selected 12 case studies to determine incentive structures and recourse options and interviewed program and contracting officials at each agency, as well as commercial representatives and industry experts. GAO is not making any recommendations in this report.

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Technical Report

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01 Jan 0001, 01 Jan 0001, Report to Congressional Addressees.



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Approved For Public Release;

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