NASA OIG: Surprise, Surprise: Orion Is Behind Schedule, Over Cost, And Lacks Transparency

NASA OIG: NASA's Management of the Orion Multi-Purpose Crew Vehicle Program

"We found that NASA's exclusion of more than $17 billion in Orion‐related costs has hindered the overall transparency of the vehicle's complete costs. Both federal law and NASA policy call for a Life Cycle Cost estimate for all major science and space programs costing more than $250 million, and for the Agency Baseline Commitment (ABC) to be based on all formulation and development costs. The Orion Program received approval from the NASA Associate Administrator to deviate from those requirements, resulting in exclusion of $17.5 billion in Orion‐related costs from fiscal year (FY) 2006 to FY 2030 due to the Agency's tailored approach to program management and cost reporting. Although these exclusions have been approved, the tailoring of these cost reporting requirements significantly limits visibility into the total amount spent on development and production efforts.

We also found that Orion has continued to experience cost increases and schedule delays. Since the cost and schedule baseline was set in 2015, the program has experienced over $900 million in cost growth through 2019, a figure expected to rise to at least $1.4 billion through 2023. At the same time, the program's schedule for Artemis I has slipped more than 3 years, while the schedule for Artemis II has slipped 2 years. Additional delays are likely as both Orion and SLS complete development efforts for Artemis I in the next 16 months and prepare for Artemis II. 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.

Further, NASA's award fee practices have hindered the program's control of contract costs. Given the Orion Program's significant cost increases and schedule delays, we found that NASA has been overly generous with award fees provided to Lockheed. From contract inception in 2006 through January 2020, Lockheed received $740.9 million in award fees. We attribute these overly generous award fees to the subjective nature of award fee evaluations coupled with nebulous and dated criteria used by the program. The result, for both the Orion Program and frequently other NASA programs, is that adjectival ratings such as "Excellent" given to the contractor often do not accurately reflect performance shortfalls. At a minimum, we question $27.8 million in fees awarded to Lockheed from September 2006 to April 2015. In addition, we found the continued use of the "Award Fee for End-Item Contracts" clause can serve as a disincentive to contractor performance because of the second opportunity to collect unearned fees once the end-item (in this case, the Orion capsule) is delivered."

NASA OIG: NASA's Management of the Orion Multi-Purpose Crew Vehicle Program (2016)

"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. ... 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.""

- Lockheed Martin's Bad Orion Marketing Hype, earlier post
- Lockheed Martin's Flawed Comparison Between Orion and Dragon, earlier post
- NASA Orion Buying Spree Makes Texas Happy Again, earlier post

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This page contains a single entry by Keith Cowing published on July 16, 2020 10:35 AM.

COVID-19 Cases Soar in Florida, Texas, and California But NASA Status Remains Unchanged was the previous entry in this blog.

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