Cutting down lifecycle costs for agencies operating ships, aircraft, satellites

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Agencies that operate ships, aircraft, satellites and other things that move always face a tough fact. Lifecycle costs of these assets often far exceed the initial buying price. But lifecycle costs can be predicted and kept under control. My next guest shows, you can even cut lifecycle costs far below what you originally thought. Director of the Joint Polar Satellite System, or JPSS, at the National Oceanic and Atmospheric Administration, Greg Mandt joined Federal Drive with Tom Temin to discuss.

Interview transcript:

Tom Temin: Mr. Mandt, good to have you on.

Greg Mandt: Good morning. Good to be with you.

Tom Temin: And you were recently cited by Congress, and that’s a rare thing, for cutting $700 million dollars out of this program. First of all, tell us about JPSS in general, what it is and what it does for NOAA and for the nation.

Greg Mandt: JPSS is a, we call it a polar orbiting weather satellites, so it flies over the north and south pole 14 times, it goes around Earth 40 times a day. And that basically flies over the same place every day, so it’s repeatable and it measures temperature and water in the atmosphere. And that is critical information that feeds our numerical models on the ground from which they produce all of our forecasts. So it’s really the key satellite that provides the basic information for making all of our weather forecasts. So it’s a pretty vital national asset important to the nation. It’s a good program to run because a lot of times you will have some people like it, some people don’t. It’s really a program that’s got great bipartisan support, as well as popular support. Touches the lives of every American, I say every day.

Tom Temin: Sure. And there’s more than one of them right so that they’re on like different age cycles so that you always have one ready to go, correct?

Greg Mandt: Yes. We work sort of in requirement space, so I’m given dollars to meet certain technical requirements and scheduled performance. And on orbit, I have to maintain, I can’t ever have a break in service as you can imagine, you have to have that data for the models. I have a requirement to actually have a primary on orbit and then a backup. So actually I’m flying two at all times to ensure one, we separate them by like half an orbit so that you get new data between the two different satellites.

Tom Temin: Sure. And just a quick question on the orbit, if it’s going around the two poles, how does it get the information on the sides of the Earth? Does it spiral around?

Greg Mandt: Think of an orbit is just going around. Right, that doesn’t change. So it’s a circle going around, and then the Earth is spinning underneath it. So the width of the scan is a few thousand kilometers. And as the Earth spins, each rotation of the satellite moves the Earth over 3000 kilometers so that in a day’s time it’s sort of like thinking of apple peeler or going around and peeling the surface of the Earth. Basically the Earth is spinning underneath you so that you’re getting the Earth twice a day for each satellite.

Tom Temin: Got it. You’ve answered a question I’ve had for years. And when you operate a system like this, aside from the buying the satellite and launching it, what are the lifecycle costs that go into it, and how long is its life cycle?

Greg Mandt: The total program that I’m responsible for includes two that are on orbit, one that we’re just finishing up, and then two more in production. So the lifecycle is that whole activity. So clearly, the spacecraft cost a good chunk and all the instruments. The biggest costs are them, the instruments so that the satellite itself becomes the big piece. It’s very expensive to get it up into space, so the launch vehicles is another big chunk. When you fly these out, ll of these projecting will fly out to about 2038, and one of the great challenges is continue to estimate what are the costs of a ground system and people to operate it out through 2038. So you take your costs and spread them out, that turns into a couple billion dollars, it’s a lot of money for such a long time, because it’s also paying to produce all the products and process all the data, so it’s a lot of computer costs. And IT security is a big cost. And that’s been a increasing cost, obviously, to keep all the data secure. So those are big chunks. Then the we have a government program office, it’s a combined NOAA and NASA activity. So there’s a lot of labor over that long period of time that’s managing all these billions of dollars with a contract. We also put a fair amount, a few tens of millions every year into science to improve the utilization of better algorithms. So those are the fundamental pieces of it. So projecting way out there I found in the past those costs with how you operate it and can you mean those costs is one of the big challenges.

Tom Temin: How were you able to reduce the future lifecycle costs? Sounds like the easiest one to attack might be labor and personnel.

Greg Mandt: Well, the program has a rather rocky history. So my predecessors dealt with, there was an effort in the late 90s in the early 2000s to have DoD and NOAA jointly procure the satellite since the DoD to has a similar weather satellites on orbit. And after spending about $5 billion, they really hadn’t got very far, so the program was cancelled. And this program sort of pick the pieces up, but it had to use all of the pieces that were left over from the other program. And so building the first two satellites in the series were very, very expensive, much more than other people thought they should ever do, sort of outside of the envelope of historical data for the satellites. And so in a sense, they projected those kind of costs out for all of the satellites. Okay. And in addition, we had an organization where NOAA had a big office overseeing a big NASA office and overseeing the contractors. And that was sort of when the last time the lifecycle was estimated back in 2016. I took over the program in January of 2017 right after they had done that baseline, and one of the big steps I did was I merged the NOAA and NASA program offices into one joint office. So basically took a whole layer of program office out and then started doing some realistic planning in terms of being more efficient on the government team. We did take a big improvement about 37% of that 700 million was due to that government program office staff productions throughout the lifecycle. So that was a big sort of internal efficiency that we did. The bigger cost is the performance that we’re able to get on the second, J2 I’m calling it, the one that we’re getting ready to launch. So the two on orbit were very expensive and they projected those same expenses out for the next three. So the one that we’re just finishing ovet the last few years from all of our contracts have had excellent cost performance, so that our contracts are coming in about within 2% of our estimate. So that’s a very, very, especially in the space business, you’re very happy when you can have contract performance of that quality. So what we are able to do then is look at the third and fourth satellites that are early in production. We’ve already bought all the hardware so the hardware is already in place. And since we got the performance so high on the second one, it gave us confidence then that third and fourth one will most likely see that level of performance on all of our contracts. So normally you would hold about 25% of reserves across the program, so we were able to reduce that based on our expected performance of these contracts.

Tom Temin: And as the director of this program, do you ever worry that say one of the instruments on a satellite will break and you can rely on the second satellite, but still over 20, 30 years, you might need to fix the first one?

Greg Mandt: Yes, continually we do a probabilistic estimate of what life we expect out of that hardware. So we built these to last 10 years on orbit, which is quite a challenge that you could imagine with a radiation and all the hard space weather type of effects that happen to something in outer space. So we build everything with full redundancy, cross strapped, it’s sort of like padding if you want to think of it way, that protects it from a lot of radiation stuff so that you end up with very, very high reliable and redundant systems that have proven over time to withstand the space environment. And what we have found is if we can get it up there, right, when I started this business in the 80s, we lived with about 10 to 15% launch failures. Meaning we had a countdown at not even getting to orbit. I remember one launch ahead in the mid 90s actually shorted out, the too long screw is what I called it, shorted out the whole satellite the second week on orbit. So early life, infant mortality call it, or not getting into orbit, historically we’ve had to plan for that. The launch vehicle industry has really done tremendous things such that now the loss rate going to orbit, you hardly hear of a failure. And so we can plan like 2% probability of failure. So what you do is you accumulate probability failures and then you apply it to the whole system. So that even though that the satellites are built to last 10 years in orbit, we plan on launching about every five years. So there’s a fair amount of conservativism built into that launching planning just to take into consideration those types of failures and some things that could have happen. One of them that we have on orbit, but it’s not like eight years old., they’re powered by solar arrays, and it’s got three panels, and one of them has failed, so we’re down to two thirds power. So that’s just an example. Yeah, there are failures. We also had one of our instruments, one side failed or went to the redundant side. So it shows that all of this extra design work we’ve done does pay off over the long run.

Tom Temin: And it must be nice to get a letter from the House Science Committee, because usually they’re chiding agencies and here they were calling you out for great work and saving all that money.

Greg Mandt: Yeah, we’ve had some pretty rough hearings, certainly through the early 2000s when the predecessor of this program was having its problems. Before this program, I ran the there’s a geostationary weather satellite that we also fly, so I ran that for 10 years. In the early stages of that, there was tremendous cost growth where people were estimating it, and through the 90s and that cost of space just so dramatically that it just went beyond anybody’s ability to predict why the costs were growing so rapidly. And so estimating future costs were even more difficult. And so when you tell Congress what you think it’s going to cost, and then you come back and say, well I’m sorry but I’m $4 billion short — it is not a fun experience. Both parties just jump on you for poor management. So this is a very, very unusual situation and it is nice to really lay that out there and say you’re doing the taxpayer some good and trying to be as cost efficient as you can on these very, very complex but important programs.

Tom Temin: Greg Mandt is, director of the Joint Polar Satellite System at the National Oceanic and Atmospheric Administration. Thanks so much for joining me.

Greg Mandt: Thank you for giving me the opportunity.

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