NASA audit reveals delays, cost overruns for Orion spacecraft
NASA’s Orion spacecraft, being developed in Houston, is on track to be roughly $1.4 billion over budget and two years behind schedule when it launches astronauts for the first time in 2023, according to a report released Thursday by NASA’s Office of Inspector General.
The OIG criticized NASA for paying performance bonuses to prime contractor Lockheed Martin despite the cost overruns and delays, and it also faulted the agency for not tracking all costs associated with the Orion Program.
Such issues — and NASA’s transparency in addressing them — were highlighted in Thursday’s audit, which provided a glimpse into a capsule nearly 15 years (and many presidential priority changes) in the making.
“The changing requirements associated with these programmatic directives — from docking with the International Space Station (ISS) to rendezvousing with an asteroid and most recently to return to the surface of the moon by 2024 — have created significant challenges for the program,” the report said.
Between 2015 and 2019, these challenges included valve design, display units and flight software that contributed to $900 million in cost growth. An additional $520 million, bringing the total to roughly $1.4 billion, is expected through 2023 for work that includes the spacecraft’s life support and propulsion systems, among other things.
But that’s just the latest chapter for a saga that began in 2006 when Lockheed Martin received a contract to lead spacecraft development for NASA’s Constellation Program, a previous moon mission.
After this program was canceled in 2010, Orion became a “multi-purpose crew vehicle” and was then assigned to an as
teroid redirect mission. President Donald Trump’s administration has now proclaimed it will take humans back to the moon in 2024.
To meet this aggressive timeline, NASA is planning an uncrewed Orion launch atop the Space Launch System rocket in November 2021. The vehicles could then launch crew members in 2023 and land astronauts on the moon in 2024.
But that first launch without crew members, called Artemis I, is more than three years behind schedule. The 2023 launch, Artemis II, is two years behind schedule.
“Additional delays are likely as both Orion and (Space Launch System) complete development efforts,” the report said. “… Meanwhile, Orion is proceeding with production of crew capsules for future Artemis missions before completing key development activities, increasing the risk of additional cost growth and schedule delays as issues are discovered late in the development effort, potentially requiring costly rework.”
Ultimately, the OIG estimates, the Orion Program will cost $29.5 billion from its start in 2006 through the production of at least eight spacecraft through fiscal year 2030. But that is more than double the $12.2 billion life cycle cost reported by the Orion Program as of March 2020, which the OIG called a “tailored approach.” The audit said this approach, approved by the agency’s leadership, has hindered transparency.
That’s because NASA’s Agency Baseline Commitments, used to help track progress against cost and schedule assumptions, are usually based on all life cycle costs. But the Orion Program has tailored its commitment to only include costs related to Artemis I and Artemis II and a schedule based on the proposed Artemis II launch date.
“This tailored approach meant that cost increases or schedule delays not directly attributable to Artemis I and II activities would not be tracked or reported to Congress and (Office of Management and Budget)” through the Agency Baseline Commitment process, the report said.
The Orion Program’s total life cycle cost is missing $17.5 billion, according to the OIG, including $6.3 billion from when the spacecraft was part of the Constellation Program.
NASA responds
In a letter responding to the report, signed by both the agency’s head of human spaceflight and its head of procurement, NASA said it’s committed to improving cost and schedule performance while increasing trust and transparency.
Constellation costs, however, are not included in Orion’s life cycle cost because Constellation was a different program. NASA said Constellation costs are public record.
“All Orion costs are included in the annual budget process,” the NASA letter said. “In addition to this and other standard reporting processes, the Orion Program will report all projected life-cycle costs in its regular status reporting.”
The audit acknowledged that it may not be practicable to include sunk costs under the Constellation program, but it emphasized that a complete and comprehensive cost picture helps Congress and other stakeholders make strategic decisions on future human exploration priorities.
The report also noted that NASA has been “overly generous” with award fees provided to Lockheed Martin. Award fees are based on a set period of performance or are paid when a contractor completes key milestones such as test flights.
And despite the Orion Program’s cost increases and schedule delays, Lockheed Martin received $740.9 million in award fees between 2006 and January 2020. The OIG attributed this to award fees being subjective and relying on imprecise and outdated criteria.
“Adjectival ratings — such as ‘Excellent’ — given to the contractor often do not accurately reflect performance shortfalls,” the report said. “At a minimum, we question $27.8 million in fees awarded from September 2006 to April 2015.”
In a statement, a Lockheed Martin spokesman said the company is “committed to our contributions to the Orion program with NASA and are continually working to reduce cost and schedule on this first-of-a-kind spacecraft.”
In NASA’s response to the audit, the agency said it has issued award fee guidance within the last year but that it would provide additional guidance to contracting officers.
The OIG did note that the Orion Program has undertaken a series of development, production and infrastructure initiatives aimed at reducing or controlling costs. These include modifications to the contract, award fee restrictions, new software development and cost data tracking initiatives, spacecraft component reuse and updated facilities.
“While we view these initiatives as positive steps,” the report said, “most are in the early stages and the extent to which these initiatives will appreciably decrease Orion’s costs is unclear.”