COMMERCIALIZING LANDSAT AND THE WEATHER SATELLITES

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP05T02051R000200380001-7
• Release Decision: RIFPUB
• Original Classification: K
• Document Page Count: 5
• Document Creation Date: December 22, 2016
• Document Release Date: November 7, 2011
• Sequence Number: 1
• Content Type: MISC

Declassified and Approved For Release 2011/11/07: CIA-RDP05TO2051 R000200380001-7
Couinne ci.a zhn, L ndsat and the
either Sate tee ~ ~r ( 1
James F. Donaghy
Mr. Donagny it a senior evaluator with the
Resources. Community and Ecorc;rnic Deveow
merit Division He io'n.?d (Ao) In 19ri8 and
worked rat the Gnnn'at Govornmert Division
He has a B A degree in economics from
Manhattan CoGegn, a J D born Catholic Uni.
versity, and is n CPA in Maryland He is a
mernber of thr? American Institute of Certified
Public Accountants
On March 1, 1984, a Delta rocket
rose from the Vandenburg Air Force
Western Test Range In California.
Several hundred spectators applauded
and cheered as the rocket poured a
white vapor trail skyward. Among the
spectators was a team from GAO who,
for more than a year, followed events
surrounding the launch.
The rocket carried the lael govern-
ment-owned civ:lian land remote sen-
sing satellite, called Landsl,, The satel.
lite senses the differences in visible,
ultraviolet, and infrared light waves
reflected by the earth's surface and
sends the data back to eArth, This data,
when processed Into photopraphlc im?
ages and comp;ter tapes, is used for
crop estimates, mineral Rtlploration,
mapmaking, and many other purposes,
In March 1983, the President an.
Frank V. Subaluskv
Mr Subaluskv is a group director in t,,c
Resources. Community and Economic Deveh7cl
ment Division tie joined GAO in 1958 and is
currently in Charge of the Office's work at the
National Oceanic and Atmospheric Admrnistra?
Iron He has a B S degree in accounting torn
Pennsylvania State University A CPA in
Virginia. Mr Subaiusky is a member of the
American Institute of Certified Public Accoun.
tints and a national director of the National
Association of Accountants '
Because Landsat had not been eco-
nomically self-sustaining since its in-
ception as a research. instrument in
1972, the proposal was made to com-
mercialize the weather satellites,
which would provide a subsidy to at.
tract private entrepreneurs. The
weather satellites appeared to be a
more lucrative commercial venture
because of an assured market, speci.
fically the fRderat government, The Na.
tional Weather Service, the primary
user, has depended on the satellite
data for more than 20 years to detect
and issue warnings about hurricanes,
tornadoes, and other severe storms, to
?r,,, ,`,r? Q" Q" ,P' 7 ~'; 1',rn4 ,.,.. ni.. n.1r'r?O
]Pr ag'kemn?,t5 Kitt' the U";t'-n S'. r?', r(+
o:. lip then to vav a $',00 U00 ann,,,t tee a"a
a fee lot each Land'a'vroduct d'str.buted
I)untcl J. Scmtck
N? SCnuca is an hvd';dtft in he Resources.
Community and Ecorw.mc Development Div..
5K>n Ha joined GAt,I ir, 19': and has worked
fr;,r the Los Angeles Pegional Office He to.
cmithd a B A in por'tcal science from
Weslnuncter Coifege' at" an M P A from
American University 4N w a mer,iber of the
Aca,lamy of PoM?car %4r a ti. the American
Solely lot Pub-it 1f_Ljn.Stfajjoft., &f-.d file
Evaluation Resear'.?, c?fit.
pounced his Ipr?l..'. ~ to transfer the
civil operatics:. ;r'y remote 'sensing
satellite a.i ire rvaather satellites to
IN private s c or. Tne federal govern.
ment had spent Ar,out $1 billion build-
Ing and laut-ch.19 the satellites and
developing it ground system. The ad-
ministration oelrr ved the private Sector
could dcvRlop a market for Landsat
better than the National Oceanic and
Atmospheric Administration (NOAH).
In fiscal yet,r 1963. the federal govern.
rnent sold abut $7 million worth of
data from its drstribufren center, while
operating costs were more than $22
million.' It a private operator could
enhanctt the ma'x~t. It would offset
costa and help . atron retain its in.
ternaUunat IC,,,. in ? technology France
and other not ins #.are about to enter
through corr. nOiClit firms.
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gather environmental data: to provide
daily weather forecasts; and for re-
search. Other utters included, forexam-
ple, the Department of Defense, the
Department of Agriculture, the news
media, airlines, farmers, and foreign
nations.
The strongest objections to the sale
were focused on the weather satellites.
Some satellite experts said the federal
government was the main user, and the
private satellite operators would
charge exorbitant amounts for hurri-
cane warnings and warnings of other
life-threatening storms. Foreign na-
tioas objected to the ppsaibility of Pay-
ing for satellite weather data. For more
than 100 years, weather data had been
exchanged freely among all nations.
U.S. satellite data was used all over the
world, particularly by Canada and
many Western European allies, plus
developing nations that had few
sources of weather data.
In return for U.S. weather satellite
data, the United States received
ground and serial observations from
other nations around the world. This In-
formation, vital to U.S. military and
commercial Interests worldwide, was
exchangeC through the United Nations
World Meteorological Organization's
telecommunications system. Some na-
tions said if the United States or Its
satellite' operator charged them for
weather satellite data, they would be
forced to charge the United States and
the rest of the world for their weather
observations. Several weather experts
suggested that a collapse of the free
exchange of weather data would hurt
the United States more than any other
nation, since it used the most data.
Within a few months of the a -
nounced sale. the Department of State
had approved a position ensuring free
weather satellite data to all nations. In
effect, the U.S. government would buy
the data from a private operator and
provide it freely to federal t'3ers, the
public, and other nations.
GAO'. Rule - A Non-
lr%ditjonwl Approach
Almost a year before the President's
announcement to commercialize Land-
sa!, GAO. at congressional request,
began examining issues related to the
weather satellites and Landsat. Since
that time. GAO's response to six con-
gressional requests has run the gamut
of traditional services: briefing com-
mittee staffs. testifying, issuing three
reports providing questions for hear.
ings, ar:t' commenting on legislation.'
However, to achieve these goals,
some less traditional approaches were
used. They included GAO's participa-
tion In an ad hoc legislative group.
GAO's leadership in a seminar at an in-
ternational conference, and rapid but
extensive visits to three continents to
learn about international uses and con.
cerns surrounding the satellites.
Early In GAO's examination of Land.
sat, the Subcommittee on Space
Science and Applicailons, House Com-
mittee on Science and Technology,
formed an ad hoc group to formulate
issues and obtain inh,matlon on the ad-
ministration's evotvino sataflite sale.
The Landsat Liaison 3roup was com-
posed of congressic ,s' staffs, the Of-
fice of Technology I itevertent (OTA).
the Congressional &soorch Service
(CRS), the Natio? . r Ar:ademy o:
Sciences, and GAO. Ad:.lhlstration of.
ficials briefed the grwrp r'1 several oc-
casions. The forum also allowed GAO
to raise additional issues with the Con-
gress and to comment on legislation
as it was being developed. The
meetings also provided GAO an addi-
tional opportunity to meet with CRS
and OTA staff. GAO and Its sister
agencies. kept In touch every few
weeks to share views and to keep each
other Informed. For example. when
GAO and OTA were called to testify
before the House Government Opera-
tions Committee, staffs of both offices
met to compare their statements prior
to the hearing.
?In May 1961, several congressional cam-
m4tee$ requested GAO to review the problems
reated to the technical failure of several
weather satellites. This review is ongoing.
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tlon for policy and technical issues
was GAO's establishment of a seminar
at an International satellite Con-
ference. GAO solicited opinions on the
sale from a broad range of satellite ex.
perts at the 17th International Svmpo.
slum on Remote Sensing of the ,nvi.
ronment, Ann Arbor, Michigan. 19t13.
About 83 symposium participants joined
the discussions to. voice their initial
reactions to the sale of Landsat. The
symposium also provided GAO an op?
portunity to meet Informally with
foreign Landsat sa>esilite conferences,
which gave us personal contacts and
Information on the sale of the satet?
lites and some technical background
on how the satellitee operate. During
two of the conferences, we observed
the successful launch of a weather
satellite from Cape Canaveral, Florida,
and the Landsat launch, mentioned
earlier, from Vandenburg Air Force
Bass.
To obtain in-depth comments on
foreign uses. of Landsat and the
weather Satellites and opinions on the
Sale, three GAO staff members each
' overed different nations on three con-
tinents to discuss the sale with the
leaders of foreign space agencies and
weather services. In 2 weeks, we held
discussions in 11 nations: Argentina,
Barbados, Brazil. France, Germany, In-
dia, Italy, Japan. Peru. Thailand, and
the United Kingdom. We also r.*t with
representatives of the World Meteoro-
logical Organization, Geneva, Switzer-
lano.
The discussions placed GAO staff In
an unusual role as goodwill ambessa-
doss. Many of the officials were pleased
that the U.S. government had sent too-
Cm's ?.v" rrr.uwa env 5Wgrit ineir opinions
and briefed them on the latest status
of the sale. At the end of the trips. GAO
was uniquely qualified with foreign
opinions on the sale, In September
1983, a few weeks after the trips. GAO
Staff testified on this subject before
the House Government Operations
Committee.
This Delta rocket being launched is similiar
to the one used to carry the Landsat satellites
into space. (Courtesy of the National Asru.
nautics and Spacer Administration)
to
What tither Cearatries Said
GAO testimony indicated several
foreign policy bereftts to Landsat.
Among the 10 foreign Landsat-receiving
ground stations existing in 1983.9 had
only Wen in existence since 1979. so
they oelieved they were recovelrng the
Investment they n :d made largely in
computer hardw-re? softwar.t and
t:ained personne,. When they built
ground stations, they expected the
United States would keep Landsat
satslllte operating at least through
the 1990's. In some developing nations.
Landsat was at the forefront of their
space programs, and It was a means of
learning more about the countries'
natural resources. In addition, the U.S.
policy of providing the data equally to
any nation seeking it created goodw!tl
and diminished suspicions that a super.
power. using technology, could exploit
the resources of these countries. Land-
sat was also a visible sign of U.S.
leadership In research and devel;.p-
menL
For foreign users, commercializa-
tion of the satellite left them with am.
bivalence about the continuity and
equal distribution of data. Other users'
concerns were also discussed in our
briefings and reports to the Congress.
Nonfederal and f aderal users of Land-
sat were concerned that commerciali-
zation could increase costs. Although
the federal government planned to buy
weather satellite data and distribute it
freely to users, acne were uneonvinceil
that price Increases or diminished .;sr-
vice would never occur in future vars.
)jawing Ahead
Based in part on our briefl-1fs, the
Congress enacted t'-;5slatlr * pro.
hibiting the Immedistll Oslo of the
weather satellites. QAO issuer' s
report to the Subcommittee or Space
Sciertce and Applications, House
mi:tee on Science and Technulogy, on
the costs and uses of the sr't.%ilites; a
report to the Subcommittee on Legisla-
tion and Ndt`onat Security, douse
Committee on r.:%,'mment Operations,
and three Senators on tl,e effects on
users of commercializing the satel?
life': and a classified report on the na?
tionat security es,;ectr of the sam .3
GAr) commenter in ,irtifts. of tegl3la-
tion on remote s'nain j satellite :tom-
mercialization, Thz legislatinn, which
passed in June 1".i4, set gt,idellres for
commercialization including the fol?
lowing a;aati:
? the federal fovernment a financial
P80 -90 for a comme?clal operator,
? continuity if data for foreign
ground stations
i Costs and USPs of Remote Sens,no
Safe*'rs iGA(VKkI)a3 111 Mar 4 1983). "El
1!ctsOn UcPrt of Comte Prc,aat,nq Landsat and
the Wea'ner Sateu,a.s, iGAOlRCEta 8493. Feb
24.19841 Natrcwnal r.e ?ir,ty inow.at,cns M Con.
me'ca,r,nq Landsi, end Wea:nsrSale' tee"
iGAOC RCE0 84.1_ r 1, 19H41
See Satellites, pg. 42
} . . Mom Took ire"
r / n f Another tool for gathering In}orma?
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A weather satellite Image of Hurricane Allen over the Gulf of Mexico In August 1980. (Photo courtesy of the National Oceanographic and
AN a pharic Administration)
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WIC
Evaawflons Pro Ide Sa Same Faverave
hart No ConCNrelve EHdenee On TM El-
Nets Expected For TM $pecie/ Sap.
P100001#1 Prop am for Wonini. In.
tents, said Ch ldren. PEMD444, IS$4.
An evaluation synthesis for the WIC
program.
Consolidated, Contd from pg. 17
with the Arthur Andersen p:,blicatiors
you mentioned earlier, issued in 1915.
Mr. Bowsher reportedly was involved
with preparing that report. I think
there's no question that the effort to
establish an auditabla, consolidated
financial statement will continue at
least through this Comptrolle' Cenerat's
term, probably beyond.
Smith Voters and politiciena Pre
another source of support for sustain.
Ing CFS effort. One of their primary
concerns is the. size of pension and
social security liabilities, and anything
that will successfully help these two
groups get a handle on how big these
liabilities are--how they relate to the
whole-should get sustained support.
Fiske'. Now, what about the second
element for a successful management
improvement effort-a coherent and
generally accepted doctrine? The re.
Pon on management improvement ef.
forts notes that, without a standard or
model of good management, it is dif-
ficult to gain agency acceptance of
any advice or criticism.
;mlth: Accounting standards are
particularly important because of the
need to assure that all financial state-
ments contain comparable informa-
tion. In the private sector, the Financial
Accounting Standards Board (FASB)
established accounting standards.
When these standards are followed,
financial statements are reasonably
reliable and comparable.
Orne: There are already some
established accounting standards for
government accounting. The NCGA
has been working for years doing just
this for state and local governments.
Its successor, the recently established
Governmental Accounting Standards
Board (GASS) is expected to continue
the work.
Smith: The Comptroller General has
stated that he intends to follow as
many of the GASB and FASB standards
as possible, given the federal en-
vironment.
Fisk*: How about the third element
of a successful management improve-
ment effort-attention to career-level
staff implementation?
#!
Omit There is considerable in. government.
tercet In a CFS at the highest levels of He only had one question: "You
GAO and Treasury. However, from talc- mean, they don't do that already?"
o t th i
o o
h
ere
n t
e gavernnwwrw ac-
V
counting field, there doesn't &"-n to
be that much Interest or information at
the lower levels, especially outside
GAO.
Fiske: I've me: a lot of career-level
employees who are at Inset as dissatis.
fled as the ever.ige taxpayer with the
'Sound Financial Reporting in the Public
Sector.
6P.L. 91.734. Budget and Accounting Pro-
cadur.s Act of 1950.
way he government is run. Providing
louver-level
l
emp
oyees with information
can make then a ^ignifkant source of
support and tube i icr making the CFS
concept wrxi-
Smith: :' art of my dissertation re-
search involved communication with
current rn::dt.rs of the prototype CFS.
Government-a,ictor readers tended to
be more skeptical about using a CFS
approach to government financial
reporting.
Fisk*- Government employees are
often skeptical of now Initiatives, be.
Cause they've seen so many now ideas
come and go. However, if the IMtiative
Is Implemented property, and career=
level staff are assigned to It on a sus-
tained basis, I believe It can work
What about the fourth element for
success-a basis in law?
Lou: Isn't the Federal Managers'
Financial Integrity Act (FIA) a start? if
you're going to have auditabie finen-
ciat statements, the first step is to en-
sure that you have a documented s>s-
tem of internal control for which man-
agers are held accountable. `'his is the
goal of the FIA.
Ome: The FIA is a start, but I would
guess that any move to enact addi-
tional laws should be slow. There we
many pieces that must fall Into place
before a good law could be drafted
covering such a complex subject.
Smith: My contacts at Treasury have
Indicated that their agency would pre-
fer not to get locked into a statute
before all the issues and implementa.
tion problems are resolved.
Orne: We may not need additional
statutory authorization. After all.
doesn't the Comptroller General al-
ready have statutory authori:y to
prescribe agency accounting . prin.
ciples and standards??
Fiske: Let's summarize. We agree
that the CFS, backed by a uniform
auditable accounting system,is a good
idea, that it will be difficult to impra
ment, but that it can be done.
And I'd like to close with a story. As I
was working on this article, my 10-year-
old son asked me what I was doing.
First, of course. I had to explain what a
financial statement was. Then, I told
him we were working on developing
such a statement for the federal
Satellites. Contd from pg. 20
? non-discriminatory availability of
data,
? Continuing federal archiving.
research, and development, and
? national security implications.
In the meantime, a source evaluatlo,,
board, chartered by the Secretary of
Commerce, had Issued a request for pro-
posals only for the land remote sensing
system. In June 1984, the Secretary of
Commerce announced that two of seven
bidders had been selected for final
negotiations on a land remote sensing
satellite contract. GAO has received
four congressional requests to review
the contract proposals for compliance
with the recently passed legislation. If
the transfer is completed. perhaps some
GAO staff will be on hand to witness
the first launch of a commercial remote
sensing satellite and the beginning of a
new era of enterprise in space.
Measuring, Cont'd from pg. 25
environment, and in this environment,
this approach no doubt provided a rea?
sonably accurate measure of the gov.
ernment's borrowing cost. However, in
periods of volatile interest rates, and
after considering the actual short-term
nature of Treasury's borrowings, this ap.
proach may need to be reconsidered.
Clearly, some form of adjustable or
variable Interest rate approach could
better account for, measure. and where
appropriate, recover the government's
borrowing cost. Consequently, the
authors would like to invite further
discussion of this issue and the ap-
propriate form (rate basis) that snouid
be used to best carry out an adjust-
able/variable interest rate scheme.
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