Long-duration robotic and manned space missions have a number of unique requirements for mission success. These include ultra-high reliability, safety, sustainability and affordability of launch vehicles and spacecraft. These requirements, in turn, are allocated among critical subsystems, such as engines, propellants, structures, software systems, thermal protection, power, avionics, life support, guidance, communication and navigation. In this vein, novel integrated system health management (ISHM) technologies that evolve with the system life-cycle, viz., concept-> design-> development-> production-> operations and training, are essential for meeting the requirements of safe and ultra-reliable, sustainable and affordable launch vehicles and spacecraft. To improve the ISHM process, QSI proposes to emphasize advancement in the two following areas: 1) generation/selection of an optimal sensor suite for the system based on user selected performance requirements and system level constraints, and 2) enhancement of a drill-down diagnosis/next best test capability in terms of algorithms that can be implemented for low power, low memory CPU/hardware that are available for embedded diagnosis using TEAMS-RT. Outcome technologies of the proposed focus are expected to allow an improved ISHM process to systemically trade-off prevention, detection, diagnosis, decision, and response strategies to mitigate the failure effects, as well as enhance FM development process by improved/new capabilities of TEAMS® tool set.