September budgeting surprises: Scarcity or surplus?

September 14, 2016  - By

Halloween may occur in October for the civil and commercial population, but for the U.S. government (USG) all the craziness of the spooky season starts in earnest in September. The end of the USG’s fiscal year (FY) ends the last day of September, and Oct. 1 is a whole new ballgame from a monetary and budgeting perspective.

All the machinations begin: balancing budgets, ensuring monies have been fully allocated and spent, determining surplus funds and figuring out what programs need additional year-end funds.

Certainly the process begins far in advance of September, but the last 30 days of the FY are historically a circus. Anyone who has ever been through it, especially as a budgeteer or program director, knows the anguish and anxious moments involved. If you think this all sounds a bit more dramatic than necessary for simple funding and budgeting issues, then think again.

Budgeteers inside and outside the USG (prime contractors and small companies as well) are all vying for what is known as fallout money. These are funds that “fall out” because a program has failed to meet timelines, specifications or certifications; funds that fall out because a program came in early and under budget (a rarity); or funds that fall out just because of over-confidence in flying hours or lack of equipment availability. Regardless of the reason, the fact is that fallout funds at the end of the FY have significant impacts on all USG programs.

For example, as a PM or program manager, if your program is doing well and maybe even ahead of schedule, and the customer is chomping at the bit to put your hardware or software in place, then you might be allocated additional fallout funds as a sign of confidence and support from the government. This is what Program of Record (POR) PMs love to see happen, because it means there is faith in their program and in their ability to manage it and bring it home; this can include promotions and more responsibility on the horizon.

Conversely, if your program is in trouble, over budget and behind schedule, and the USG lacks faith in your ability to complete the POM (Program Objective Memorandum), then your funds may well be cannibalized to support other programs. This is something no PM likes to see happen. It is a downer for the USG, the POR and the career of the PM. Yes, for PMs, every September is a report card, and the grades are rarely ambiguous or subtle.

Of course, the organization that allocates and authorizes USG funding at the beginning of the FY, better known as the U.S. Congress, plays a role here as well; many take a vacation or flee to the hinterlands during this time of bureaucratic chaos and get out of town. For 2016 and the 114th Congress, the Senate is in session just 14 days of the month and the House of Representatives convenes for about 10 days on average.

As the former Legislative Director (LD) for Air Force Space Command (AFSPC), I actually had the honor to serve as the first LD for AFSPC. This worried me a great deal until I discovered that, fortunately, while a few congressional members were in recess or at home backslapping and politicking with constituents, the congressional staffs remained in D.C. and were hard at work. This is important because, during the craziness and bargaining of September fallouts, critical decisions are often made that determine the future of PORs and many smaller but critical efforts by small businesses as well. If you are a government contractor, small or large, prime or sub, September is not a time to take a vacation or lay on the beach, rather you need to be an active player in the fall flurry of hyperactivity.

This year Senator John McCain from Arizona and the SECDEF (Secretary of Defense) the honorable Ash Carter both have plans and are pushing for new acquisition strategies as well as separate schemes to revamp Department of Defense (DoD) Command and Control systems. Unfortunately, neither plan has a support system for small businesses.

Space Systems

SpaceX launch of an OrbComm satellite in December 2015. (Photo: Space X)

SpaceX launch of an OrbComm satellite in December 2015. (Photo: SpaceX)

For space programs this coming year, obviously current and future launch activities are at the forefront. Congress must decide to either fund Russian engine procurement or say no to future Russian engine purchases, determine whether the United Launch Alliance (ULA) is a survivor and competitor, and decide where SpaceX plays in the whole scenario now that they have thrown a monkey wrench into the mix by experiencing another Falcon 9 failure on Sept. 9 after so many successes.

Interestingly, SpaceX actions in the main seem to be the right decisions. They are at the forefront of commercial launch and recovery technology, and other than Blue Origin, they are the only company recovering the initial stages of their launch vehicles for reuse. Of course that reuse can only occur if the launch is successful in the first place.

While SpaceX certainly cannot afford more launch failures, the conundrum concerning the latest Falcon 9 catastrophe is that it was not actually a launch failure; rather, it was an accident that occurred on the launch pad. Who knows? Future investigations, performed primarily by SpaceX and the FAA, may show SpaceX was not at fault.

The fueling explosion could easily have been caused by a ruptured refueling hose, a stray spark or ungrounded support equipment, we just don’t know. It is entirely too early to rush to judgment and blame it all on SpaceX. We should and, indeed, must take a wait and see attitude.

However, just so you know for comparison, ULA has performed more than 100 successful launches without a single failure. Many of those used the infamous Russian RD-180 engine as a core. So, to say that launch is a topic of national and Congressional concern during the September chaos is putting it mildly.

SV 01 in testing at Lockheed Martin's Denver facility. (Photo: LMCO)

SV 01 in testing at Lockheed Martin’s Denver facility. (Photo: LMCO)

According to my sources, an omitted qualification test of a tiny capacitor in the GPS III payload will move the GPS III program’s availability for launch (AFL) from August to December 2016. My sources and my experience as a space operator tell me the qualification test — which over-stresses the capacitor’s integrity to survive multiple mission lives — is really not an issue. The satellite should be delivered before the end of the year, well ahead of the Air Force’s planned first GPS III launch date of March 2018.

My experience also tells me that it is much more likely that, rather than a tiny capacitor issue, the launch schedule for the first GPS III will be affected by the as-yet-unresolved SpaceX explosion on the launchpad at Cape Canaveral; the damage to the launchpad and nearby facilities; the launch slips due to the ripple effect of the subsequent accident investigations, along with new safety and fueling procedures that may need to be implemented and tested; the rescheduling of other missions, handled in the military by the USAF Current Launch Schedule Review Board or CLSRB; and the lack of an available MEO (Medium Earth Orbit)-capable launch vehicle.

And, of course, you need a ground control system (which I go into more below).

Position, navigation and timing (PNT) programs

Concerning PNT, Congress is debating when to award Lockheed Martin GPS III satellites 9 and 10, which by the way, will not carry an NDS (Nuclear Detonation Detection System) payload, a first for GPS space vehicles (SV) since the first NDS was launched on the sixth Block I SV on April 26, 1980. At the time, the NDS payload was known by the ungainly moniker IONDS, or the Integrated Operational Nuclear Detonation Detection System.

The new, redesigned NDS payload is simply not ready for prime time, and hence LMCO will delete that portion of the payload from GPS III SVs 9 and 10. So, although the GPS III family of GPS vehicles will be as similar as possible, in fact the last two, currently scheduled (which we hear may be awarded to LMCO this month), will be radically different in some respects, and in others be exactly the same.

This leads us to the question concerning exactly when the real competition for GPS III SV 11+ will truly get underway. Right now, the competition is in the formative and PowerPoint stages for some competitors, although a couple have bent hardware and are writing some software support programs. The USG has awarded each team, including LMCO, a few million dollars to keep them interested and to defray early non-recurring costs, but the competition has yet to truly heat up. Might some year-end fallout money be made available for the competitors? We shall have to wait and see.


OCX, the future ground control segment of GPS, is so far over budget and schedule that the end-point is not even visible on the event horizon. Most pundits put the completion date, if it is continued as the POR, at 2023 and beyond, seven years late and $3.5 billion over budget.

Certainly no fallout funds can cover such a Nunn-McCurdy breach, but fallout funds might become available for alternative courses of action (COA). There’s a thought to keep USG budgeteers and small company CEOs and CFOs awake at night.

What might the future hold? Large primes not withstanding, small businesses are a major player in all major USG programs. Karen Mills, former head of the Small Business Administration (SBA), wrote in the Harvard Business Review recently, “Half the people who work in this country [USA] either own or are employed by businesses with fewer than 500 employees.”

At the same time, the Wall Street Journal (WSJ) reports that SBA statistics show these same small companies produce 46 percent of private economic output and 33 percent of the value of U.S. exports. Even so (paraphrasing the report), the [USG] is sometimes guilty of not paying sufficient attention to small firms. Is it time for the USG to look at proven small-company capabilities where OCX is concerned?

Just a thought, whose time may well be long overdue. As Nitin Nohria, dean of the Harvard Business School, wrote in the Wall Street Journal, “I do hope that the question of how to create policies that support small companies gets more attention during the coming debates and the final few weeks of this presidential campaign.”

Research and development (R&D)

We could go on and on considering PNT or GPS military user equipment (MUE), the advantages of GNSS considerations and the R&D being conducted at AFRL (USAF Research Laboratories) and the other service labs where PNT is concerned. (Read my In defense of PNT: Multi-GNSS to the rescue, May 11, 2016, Defense PNT column)

Of course, let’s not forget DARPA (Defense Advanced Research Projects Agency). As experienced PMs know, you neglect DARPA at your program’s peril. DARPA waxes and wanes on the publicity scale, but they are always on the cutting edge where R&D is concerned. Many of our nation’s most noted scientific accomplishments began life as DARPA hard projects, way too many to mention. DARPA, like all R&D laboratories, have their hands out and are just hoping for and are ready to commit any fallout monies that become available in scary September.

If you are wondering why no one in Washington, D.C., is returning your calls and emails, or why they seem distracted or preoccupied when you are able to connect, just blame it on the most chaotic month of the USG budget year, September. It’s feast or famine, or you could say, early trick or treat.


Prevailing health issues prevent me from traveling to ION GNSS+ 2016, which takes place Sept. 12-16, at the Oregon Convention Center in Portland, Oregon. ION bills this event as “the world’s largest technical meeting and showcase of GNSS technology, products and services. This year’s conference brings together international leaders in GNSS and related positioning, navigation and timing fields to present new research, introduce new technologies, discuss current policy, demonstrate products and exchange ideas.”

This is a great event, which I normally look forward to every year. Not to worry, GPS World is well represented by editors, writers and contributors. Be sure and stop by the GPS World booth — chat, pick-up a magazine while you’re there, and subscribe to the free print and/or digital editions.

Until next time, happy navigating and remember: GPS is brought to you free of charge by the United States Air Force.

This is posted in Defense, Opinions

About the Author: Don Jewell

Don Jewell served 30 years in the United States Air Force, as an aviator and a space subject-matter expert. Don’s involvement with GPS and other critical space systems began with their inception, either as a test system evaluator or user. He served two command assignments at Schriever AFB, the home of GPS, and retired as Deputy Chief Scientist for Air Force Space Command. Don also served as a Politico Military Affairs Officer during the Reagan administration, working with 32 foreign embassies and serving as a Foreign Disclosure Officer making critical export control decisions concerning sophisticated military hardware and software. After retiring from the USAF, Don served seven years as the senior space marketer and subject-matter expert for two of the largest government contractors dealing in space software and hardware. Don currently serves on two independent GPS review teams he helped found, and on three independent assessment teams at the Institute for Defense Analyses, dealing with critical issues for the U.S. government. Don has served on numerous Air Force and Defense Scientific Advisory Boards. He writes and speaks extensively on technical issues concerning the U.S. government. Don earned his Bachelor’s degree and MBA; the Ph.D. is in progress.