NASA Overpaid Boeing Again and Did Not Let SpaceX Offer a Lower Cost Solution

Office of Inspector General audit of NASA reports that SpaceX was not given an opportunity to bid on the crew transportation gap. The Office of Inspector General determined that NASA did not need to pay Boeing. The contracts already require SpaceX and Boeing to be capable of making two crew flights per year.

NASA spends between $3 and $4 billion annually to operate the ISS, including payments for transportation of crew and cargo. Since the end of the Space Shuttle Program in 2011, the Russian Soyuz vehicle has served as the sole means of transporting astronauts to and from the ISS.

Boeing and SpaceX each face significant safety and technical challenges with parachutes, propulsion, and launch abort systems that need to be resolved prior to receiving NASA authorization to transport crew to the ISS. The complexity of these issues has already caused at least a 2-year delay in both contractors’ development, testing, and qualification schedules and may further delay certification of the launch vehicles by an additional year. Consequently, given the amount, magnitude, and unknown nature of the technical challenges remaining with each contractor’s certification activities, CCP will continue to be challenged to establish realistic launch dates. Furthermore, final vehicle certification for both contractors will likely be delayed at least until summer 2020 based on the number of ISS and CCP certification requirements that remain to be verified and validated.

While awaiting the start of commercial crew flights, NASA will likely experience a reduction in the number of USOS crew aboard the ISS from three to one beginning in spring 2020 given schedule delays in the development of Boeing and SpaceX space flight systems coupled with a reduction in the frequency of Soyuz flights. Options for addressing this potential crew reduction are limited but include purchasing additional Soyuz seats and extending the missions of USOS crewmembers. However, these options may not be viable given the 3-year lead time required to manufacture a Soyuz vehicle; expiration of a waiver that permitted NASA to make payments to the Russian government; and astronaut health constraints. A reduction in the number of crew aboard the USOS to a single astronaut would limit crew tasks primarily to operations and maintenance, leaving little time for scientific research and technology demonstrations needed to advance NASA’s future human space exploration goals.

In our examination of the CCP contracts, we found that NASA agreed to pay an additional $287.2 million above Boeing’s fixed prices to mitigate a perceived 18-month gap in ISS flights anticipated in 2019 for the company’s third through sixth crewed missions and to ensure the company continued as a second commercial crew provider. For these four missions, NASA essentially paid Boeing higher prices to address a schedule slippage caused by Boeing’s 13-month delay in completing the ISS Design Certification Review milestone and due to Boeing seeking higher prices than those specified in its fixed price contract. In our judgment, the additional compensation was unnecessary given that the risk of a gap between Boeing’s second and third crewed missions was minimal when the Agency conducted its analysis in 2016.

Furthermore, any presumed gap in commercial crew flights could have been addressed by the ISS Program’s purchase of additional Soyuz seats. Nonetheless, we acknowledge the benefit of hindsight and appreciate the pressures faced by NASA managers at the time to keep the program on schedule to the extent possible. However, even with that understanding and using CCP’s own schedule analysis, we found NASA could have saved $144 million by paying a premium only for missions three and four to cover the perceived gap while buying missions five and six later.

NASA started the payment on the third mission 1 year earlier than needed and therefore did not use $43 million of the lead time flexibility purchased. Accordingly, we question $187 million of these price increases as unnecessary costs. Finally, given that NASA’s objective was to address a potential crew transportation gap, we found that SpaceX was not provided an opportunity to propose a solution even though the company previously offered shorter production lead times than Boeing.

Both NASA and Boeing said the $287.2 million price increase for crew missions three though six was partially justified based on Boeing providing the capability to fly up to two missions per year through 2024. However, based on both the original contract and CCP requirements, we determined Boeing’s proposal to fly up to two missions per year did not justify higher pricing because such a mission cadence was already a contract requirement. Under the terms of its original CCtCap contract, Boeing and SpaceX are required to be capable of two flights per year through 2024.

The Inspector General recommends negotiating with the Russian Space agence, use existing contract language to apply equitable adjustments through negotiations for schedule changes, and providing equal opportunities to both contractors (Boeing and SpaceX) to compete for additional capabilities or significant changes in contract scope and pricing tables.

SOURCES- NASA, Twitter, Office of Inspector General
Written By Brian Wang,

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