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Commercialization

OIG Questions Whether NASA Accepted too much Financial Risk with Orbital Contract

By Marc Boucher
NASA Watch
June 13, 2013
Filed under

Final Report – IG-13-016 – NASA’s Management of Commercial Orbital Transportation Services and ISS Commercial Resupply Contracts, NASA OIG
“The OIG review found that despite an almost 3-year delay in development, SpaceX completed its demonstration flights and two resupply missions to the ISS. Although each experienced some anomalies, none was serious enough to substantially impact the missions.”
“Similar to SpaceX, Orbital has experienced delays in its development program and these delays in turn caused substantial delays to the planned flight schedule for the company’s resupply missions to the Station. However, until recently NASA did not adjust its payment schedule to Orbital in light of these delays.”

… In order to reduce financial risks to the Agency, the OIG recommended that NASA ensure that contracts with the commercial cargo providers are updated to reflect the lead times required to meet any revised launch dates. Specifically, if launch dates slip further NASA should adjust the contracts to ensure that its payments to the companies reflect this revised schedule. NASA concurred with the OIG’s recommendation.

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3 responses to “OIG Questions Whether NASA Accepted too much Financial Risk with Orbital Contract”

  1. Steve Whitfield says:
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    This makes sense in an ideal world, but has to be done with a little bit of leniency and patience in the real world, otherwise there might be contract revisions going on every month, tying up people who have program work to do and further delaying the program. Perhaps contract reviews should be (if they’re not already) actual program line items timed relative to major milestones and/or fiscal quarters, so that everyone can be prepared for them instead of having them come as surprises.

  2. Andrew_M_Swallow says:
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    On a milestone based system payments are automatically delayed if the contractor is late. The contractor can not (honestly) invoice NASA for the milestone until the milestone is met.

    Delivery to the ISS are obvious milestones although supplying mission planning document could also be milestones.

    If NASA wanted to connect the COTS development SAA with the main delivery contract (CRS) a $1 milestone for finishing COTS could have been included in CRS. Something to think about for future projects.

  3. Saturn1300 says:
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    In fact, the OIG found that despite the delayed launch schedule, NASA is on track to pay Orbital up to 70 percent of the funds associated with the company’s first six ISS resupply missions. Good grief! I thought they only paid for COTS. NASA has already paid for most of the CRS missions! Talk about sweetheart deals. I hope Orbital has enough money to pay for these missions when they are done, or will NASA have to give them more money? NASA agrees and they will do it again I say. Bad managers or NASA thinks they can do anything they want? Bolden said he might have to renegotiate the contract. A little hard after it has already been paid for.
    They get Draws just like home General contractors. Isn’t private enterprise wonderful, so much better than government.