NASA OIG Reiterates Issues With SLS/Orion
NASA Office of Inspector General’s Semiannual Report to Congress April 1 – September 30, 2016, NASA OIG
“… 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.
… The size and scope of Kennedy’s Engineering Contract has made managing the Contract particularly challenging. The cost and tasks included in the baseline and task order components are not clearly defined, managers overseeing the Contract may lack appropriate expertise, and cost allocations are not clear. In addition, several tasks Vencore is performing on a cost-reimbursable basis appear more suitable for a fixed-price arrangement.”
Naturally.
Out of curiosity, what’s the rationale for doing these things on a cost-plus basis versus a fixed-price arrangement? NASA isn’t in a position where it can say, “Let’s waste money rather than time”.
I think cost plus contracts were originally motivated by war-time profiteering. There is a long history of contractors overcharging the military, because, in a crisis, the customer had no alternative but to buy. Cost-plus, in theory, allows the government to see the “real” cost and keep the profit margin under control. Somehow that got into federal procurement regulations in general. And, despite its supposed benefits, cost-plus just introduces other problems while still allowing contractors to game the system in different ways.
It’s generally because the task is not fully defined. A fixed-price contract means that either 1) every nut and bolt is known in advance and specified in the contract, or 2) the work is not defined but NASA has only a known amount of money to pay a researcher to do as much as he can with it over a known period.
In this case problems are almost certain to come up that NASA did not anticipate. To add them to a fixed-price contract would require a contract change, which would add more cost than doing it cost plus.
Of course, they could just not issue a contract at all and have civil servants do the work, but that might not work out either.
I’ve been curious about the either/or part of this discussion. Often clients will procurement based on performance specifications, which are short, sweet, and contain a single number down at the bottom.
I suppose this translates to science, but I’m out on a limb here: NASA could contract for, say, a booster with a specified lift capacity and little else. Or it could contract for a given mass to orbit (which is what the whole commercial space thing is about), then just stand back and light it up.
As I read between the lines on this site from people who actually know (rather than me, guessing), apparently NASA so micromanages every damn thing that a contractor does the prices simply skyrocket. No doubt that’s what is driving SLS costs (in addition to grand larceny, one supposes).
Just read Wayne Hale’s blog – a fine American, for sure, but a guy very clear about We Know Best.
Yes, a good fraction of NASA’s inefficiency is micromanaging contracts. To be fair, it isn’t just NASA; other government agencies have the same problem. Also, part of NASA’s problem is an inability to cope with contractor’s mistakes. When a builder takes a couple months longer than planned to put up an office building, people are annoyed but it isn’t the end of anyone’s world. If an instrument builder is two months late delivering hardware for a planetary spacecraft, it could mean missing a launch window, with the resulting costs or risk of cancellation. So NASA managers feel a need to look over the contractors’ shoulders and make sure everything is on track.
One recent fad (earned value accounting) makes the inefficiency worse. That practice involves contractors reporting on how much they spend on every task, and requiring approval to shift money from one task to another. (E.g. not paying to landscape a property, but wanting separate accounting for leveling ground, installing sprinklers, planting, etc.) One result is that contractors lack the freedom to shift resources around. That means they can’t take from an easier-than-expected task to support a task which turned out to be harder than planned.
I’m not sure about that. A fixed-price contract can simply specify the deliverables, and leave the means of production up to the contractor. If unexpected problem come up, that’s the contractor’s problem and comes out of his profits. Of course, that carries the risk of the contractor defaulting.