Houston Chronicle

NASA audit reveals delays, cost overruns for Orion spacecraft

- By Andrea Leinfelder STAFF WRITER

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.”

 ?? NASA / Marvin Smith, Alcyon Technical Services ?? Changing mission priorities over the years and other issues have put NASA’s Orion spacecraft two years behind schedule and some $1.4 billion over budget, an audit finds.
NASA / Marvin Smith, Alcyon Technical Services Changing mission priorities over the years and other issues have put NASA’s Orion spacecraft two years behind schedule and some $1.4 billion over budget, an audit finds.

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