NASA IG Criticizes Additional Commercial Crew Payment to Boeing

Boeing’s CST-100 Starliner’s four launch abort engines and several orbital maneuvering and attitude control thrusters ignite in the company’s Pad Abort Test, pushing the spacecraft away from the test stand with a combined 160,000 pounds of thrust, from Launch Complex 32 on White Sands Missile Range in New Mexico. Credits: NASA

by Douglas Messier
Managing Editor

NASA has agreed to pay Boeing $287.2 million above its firm-fixed price contract to transport astronauts to the International Space Station (ISS) on operational flights of the Starlink spacecraft, according to a new audit of the Commercial Crew Program (CCP) by the space agency’s Office of Inspector General (IG). [Full Report]

The payment was made “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,” the report stated.

“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,” the audit added.

Although it acknowledged the benefit of hindsight and the pressure NASA was under to keep to schedule, the audit called the additional payment “unnecessary.” The gap could have been addressed by purchasing more Soyuz seats.

“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 at the lower fixed prices. Additionally, 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.

The audit estimated that a Boeing Starliner flight to the space station with four astronauts aboard would cost approximately $90 million per seat or $360 million. SpaceX will be able to carry the same crew to ISS for an estimated cost of $55 million per seat or $220 million.

NASA OIG estimated the approximate average cost per seat assuming four astronauts per spacecraft and using publicly available information. The methodology used here is the same as footnote 6 of this report. The CCtCap contract also has a certification requirement for each spacecraft to be able carry 100 kilograms of cargo per mission to the Station.

NASA and the other ISS partners have been dependent upon Russia Soyuz for transportation to the station since the space shuttle program ended in July 2011.

Credit: NASA IG

The audit found the increasing cost to NASA has been exacerbated by delays by Boeing and SpaceX, which were originally scheduled to fly in 2017.

“Since 2006, NASA has purchased 70 seats worth approximately $3.9 billion, including 5 seats purchased through Boeing for $373.5 million. Overall, NASA paid an average cost per seat of $55.4 million for the 70 completed and planned missions from 2006 through 2020 with prices ranging from approximately $21.3 million to $86 million for each round trip.

“After 2017 when the CCP contractors were initially scheduled to begin crewed missions, NASA has used or contracted for 12 additional Soyuz seats at a cost of approximately $1 billion, or an average of $79.7 million per seat. Figure 1 details the average cost per seat per year NASA utilized or will utilize the seat.”

SpaceX conducted an automated flight test of Crew Dragon to ISS earlier this year. The company is planning an in-flight abort test using a modified Falcon 9 booster, which could occur next month. A flight test to the station with crew will be conducted next year.

Boeing is planning its first Starliner flight test to the space station on Dec. 17. A test with crew will follow next year. That mission is scheduled for a long-term stay of multiple months aboard the station.

NASA and officials from both companies have expressed guarded optimism about flying crewed tests in the first three months of 2020. However, a source familiar with both programs who requested anonymity has told Parabolic Arc that he expects both crewed flight tests to occur in the second quarter of 2020, i.e., between April and June.

The IG report estimates that final vehicle certification for both Crew Dragon and Starliner, which is schedule to happen after crewed flight tests, “will likely be delayed at least until summer 2020.”

In the meantime, the audit warned that NASA might have to reduce its crew complement aboard ISS to one astronaut starting in spring 2020. The space agency addressed that issue by assigning Chris Cassidy to a Soyuz flight. The decision involved delaying a flight by a Japanese astronaut.

The report also warned NASA about cutting corners in the development of the two vehicles.

“In order to optimize development timelines, NASA continues to accept deferrals or changes to components and capabilities originally planned to be demonstrated on each contractor’s uncrewed test flights,” the audit said. “Taken together, these factors may elevate the risk of a significant system failure or add further delays to the start of commercial crewed flights to the ISS.”

The audit made the five recommendations to NASA, all of which the space agency accepted and agreed to implement.

(1) revise current schedules and establish realistic timetables for the remaining reviews and flights occurring before final certification and missions to the ISS;

(2) correct identified safety-critical technical issues before the crewed test flights to ensure sufficient safety margins exist;

(3) initiate internal processes and coordinate with congressional and other stakeholders to obtain an extension of the legal waiver to pay Russia for Soyuz seats;

(4) complete a contingency plan for delayed CCP delivery by working with Roscosmos to determine the feasibility, efficiency, or necessity of (a) purchasing a Soyuz seat, (b) extending Soyuz docking times beyond 200 days, and (c) accelerating the launch of future Soyuz missions; and

(5) continue to ensure the purchase of future commercial space services complies with government contracting regulations, including (a) adhering to fixed-pricing in contracts, (b) coordinating CCP and ISS Program acquisition plans, (c) utilizing existing contract language to apply equitable adjustments through negotiations for schedule changes, and (d) providing equal opportunities to both contractors to compete for additional capabilities or significant changes in contract scope and pricing tables.

A summary of the report follows.

NASA’S Management of Crew Transportation
to the International Space Station
Office of Inspector General
November 14, 2019

Full Report

Results in Brief

Why We Performed This Audit

For more than 20 years, the International Space Station (ISS) has operated as a laboratory, observatory, and factory in low Earth orbit. The ISS is comprised of two connecting segments: the Russian segment is operated by the Roscosmos State Corporation for Space Activities (Roscosmos) and the United States On-Orbit Segment (USOS) is operated by NASA and its international partners at the Canadian Space Agency, European Space Agency, and Japan Aerospace Exploration Agency.

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.

In 2010, NASA initiated agreements with U.S. aerospace companies to develop commercial crew transportation capabilities with the goal of providing safe, reliable, and cost-effective transportation to and from the ISS. As of August 2019, the Commercial Crew Program (CCP) had obligated approximately $5.5 billion out of $8.5 billion awarded for this effort.

However, after 5 years in the current phase of development, the program is several years behind its planned operational date. The two contractors hired by NASA under fixed-price contracts—The Boeing Company (Boeing) and Space Exploration Technologies Corporation (SpaceX)—are working toward their first crewed test flights, but both companies must address a variety of technical and safety issues before NASA certifies them to fly its astronauts.

Boeing and SpaceX are each under contract to provide six operational missions for NASA—Boeing using its Starliner spacecraft and an Atlas V launch vehicle, and SpaceX with its Dragon 2 capsule and Falcon 9 rocket—and are expected to provide ISS access for at least 48 astronauts through 2024. However, until Boeing and SpaceX crewed flights begin, the Soyuz vehicle remains NASA’s only flight option.

Given the expense and importance of NASA’s commercial crew transportation program, our audit examined NASA’s plans and progress for transporting astronauts to the ISS. Specifically, we assessed contractor schedule delays and related safety concerns, NASA’s plans for continuity of transportation to the ISS, and NASA’s pricing and timing strategies for missions using contractor vehicles.

The audit’s scope included both the CCP and ISS programs with a focus on Boeing, SpaceX, and Soyuz space flight systems. To complete this work, we evaluated flight schedules, contracts, and publicly available pricing information; reviewed technical and safety concerns and internal controls; and interviewed NASA, Boeing, and SpaceX personnel. We also reviewed relevant laws, regulations, policies, and prior audit reports.

What We Found

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.

In order to optimize development timelines, NASA continues to accept deferrals or changes to components and capabilities originally planned to be demonstrated on each contractor’s uncrewed test flights. Taken together, these factors may elevate the risk of a significant system failure or add further delays to the start of commercial crewed flights to the ISS.

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 crew members. 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 at the lower fixed prices. Additionally, 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.

What We Recommended

In order to increase the efficiency and effectiveness of CCP, we made five recommendations to NASA’s Acting Associate Administrator for Human Exploration and Operations Mission Directorate:

(1) revise current schedules and establish realistic timetables for the remaining reviews and flights occurring before final certification and missions to the ISS;

(2) correct identified safety-critical technical issues before the crewed test flights to ensure sufficient safety margins exist;

(3) initiate internal processes and coordinate with congressional and other stakeholders to obtain an extension of the legal waiver to pay Russia for Soyuz seats;

(4) complete a contingency plan for delayed CCP delivery by working with Roscosmos to determine the feasibility, efficiency, or necessity of (a) purchasing a Soyuz seat, (b) extending Soyuz docking times beyond 200 days, and (c) accelerating the launch of future Soyuz missions; and

(5) continue to ensure the purchase of future commercial space services complies with government contracting regulations, including (a) adhering to fixed-pricing in contracts, (b) coordinating CCP and ISS Program acquisition plans, (c) utilizing existing contract language to apply equitable adjustments through negotiations for schedule changes, and (d) providing equal opportunities to both contractors to compete for additional capabilities or significant changes in contract scope and pricing tables.

We provided a draft of this report to NASA management who concurred with all of our recommendations. We consider management’s comments responsive and the recommendations will be closed upon completion and verification of the proposed corrective actions.