NASA OIG: Orion Facing Technical, Schedule & Funding Challenges

Lockheed Martin engineers and technicians prepare the Orion pressure vessel for a series of tests inside the proof pressure cell in the Neil Armstrong Operations and Checkout Building at NASA's Kennedy Space Center in Florida. (Credit: NASA/Kim Shiflett)
Lockheed Martin engineers and technicians prepare the Orion pressure vessel for a series of tests inside the proof pressure cell in the Neil Armstrong Operations and Checkout Building at NASA’s Kennedy Space Center in Florida. (Credit: NASA/Kim Shiflett)

NASA’s Management of the Orion Multi-Purpose Crew Vehicle Program

NASA Office of Inspector General
Office of Audits
Report No. IG-16-029
September 6, 2016
[Full Report]

What We Found

The Orion Program has met several key development milestones on the path to its first crewed mission, including a successful test flight in December 2014. However, much work remains, including evaluating options related to the delayed delivery of the European Service Module; continuing mitigation of seven critical risks while operating with a less-than-optimal budget profile for a developmental project; addressing a potential shortfall of $382 million in reserves managed by its prime contractor; and successfully launching and recovering EM-1 after its uncrewed test flight scheduled for September 2018. At the same time, Program officials are working toward an optimistic internal launch date of August 2021 for EM-2 – 20 months earlier than the Agency’s external commitment date of April 2023. While we understand the desire to meet a more aggressive schedule, this approach has led the Program to defer addressing some technical tasks to later in the development cycle, which in turn could negatively affect cost, schedule, and safety.

With respect to Orion’s major outstanding risks, the Program has made progress in developing the launch abort system, crew module, and service module elements of the Orion vehicle, while mitigating 10 of the 18 sampled risks. However, as of July 2016 NASA was still working to further mitigate seven of the risks we reviewed, including changes to the Program’s Test Plan and reuse of hardware on the vehicle that must be resolved prior to the launch of both EM-1 and EM-2.

Over its life, the Orion Program has experienced funding instability, both in terms of overall budget amounts and the erratic timing of receipt of those funds. In past reports, we noted that the most effective budget profile for large and complex space system development programs like Orion is steady funding in the early stages and increased funding during the middle stages of development. In contrast, the Orion Program’s budget profile through at least 2018 was nearly flat and Program officials acknowledged that this funding trajectory increased the risk that costly design changes may be needed in later stages of development when NASA integrates Orion with the SLS and GSDO. In addition, Orion officials noted that the timing of appropriations affected their ability to perform work as planned, with the Program receiving its funding between 4 and 8 months after the start of fiscal years 2012–2016.

We also found prime contractor Lockheed Martin is expending its management reserves at a higher rate than both the Program and the company expected and that, if continued, would deplete its reserve account almost a year before the planned launch of EM-1. Moreover, we found NASA is not monitoring the impact of this possibility on the Orion Program. Although Program officials acknowledged the current depletion rate is high, they believe it unlikely Lockheed will continue to draw at that rate and, if the reserve is depleted before the EM-2 launch, Lockheed could cover the costs or NASA could draw on other Agency funds. In our judgment, Orion Program managers would be better informed by formally addressing Lockheed’s management reserve as a Program cost risk.

Finally, the Program is working toward an internal planned launch date significantly earlier than the Agency’s external commitment date or estimates by an independent review board. We are concerned that such an optimistic approach, given the Program’s flat budget profile, increases the risk that Orion officials will defer certain tasks, which ultimately could delay the Program’s schedule and increase costs.

Recommendations, Management’s Response, and Our Evaluation

To improve the likelihood Orion is developed on cost and schedule and safely operated, we recommended the Associate Administrator for Human Exploration and Operations:

1. Reevaluate whether the Program should continue working toward its internal launch readiness dates for EM-1 and EM-2 or otherwise ensure that doing so does not impose unnecessary cost, schedule, and safety risks to the Program.

2. Require the Orion Program Manager to designate and manage depletion of Lockheed’s reserve as a cost risk to the Program.

3. Require the Orion Program Manager to include activities in the IMS that must be completed before other activities can begin (predecessor activities), as well as activities that cannot begin until other activities are completed (successor activities) as described in the GAO Schedule Assessment Guide.

4. Require the Orion Program Manager to develop procedures for adjusting the IMS outside of the annual scheduling and budget process so that it reflects the progress of mitigation tasks for all Top Program Risks and risks that are not Top Program Risks but have likelihood and consequence scores of 4 or 5.

We provided a draft of this report to NASA management who concurred with our recommendations and described corrective actions the Agency has taken or will take to address them. We consider these actions responsive. Therefore, the recommendations are resolved and will be closed upon verification and completion of the proposed actions.

Management’s full response to our report is reproduced in Appendix D. Their technical comments have also been incorporated, as appropriate.