Keith’s note: According to a late Friday blog post NASA said that it “has decided to discontinue the On-orbit Servicing, Assembly, and Manufacturing 1 (OSAM-1) project due to continued technical, cost, and schedule challenges, and a broader community evolution away from refueling unprepared spacecraft, which has led to a lack of a committed partner.” Well, DUH. As if that was not already blatantly obvious. This is what NASA OIG said 6 months ago. “The spacecraft bus and SPIDER contracts are FFP with no incentive or award fee. Therefore, NASA lacks the flexibility to use monetary incentives to recognize and reward contractor performance that exceeds meeting basic contract requirements.” Double DUH. How many years and hundreds of millions did it take before NASA finally yielded to the obvious? That internal NASA review process itself ought be examined by OIG. Just sayin’.
- OSAM-1 cost growth and schedule delays are exacerbated by poor contractor performance and continued technical challenges. After rebaselining its cost and schedule in April 2022, the OSAM-1 project continues to experience cost growth and it now appears the Agency will exceed its current $2.05 billion price tag and the December 2026 launch date commitment to Congress. Development of the servicing payload—the system responsible for rendezvous and refueling Landsat 7—has continued to cost more and take longer than anticipated. Moreover, much of the project’s cost growth and schedule delays can be traced to Maxar’s poor performance on the spacecraft bus and SPIDER contracts with each deliverable approximately 2 years behind schedule. We found the structure of these FFP contracts does not provide NASA adequate flexibility to incentivize Maxar to improve its performance. Consequently, NASA is providing personnel and services to supplement Maxar’s efforts to mitigate contractor performance issues and reduce further impacts to the project’s cost and schedule. Additionally, because NASA continues to pay Landsat 7 operation costs through the on- orbit mission, extended launch delays for OSAM-1 will increase these costs as well.
- Due to Maxar’s poor performance, NASA is providing unplanned labor and services to supplement Maxar’s efforts to develop OSAM-1’s spacecraft bus. Specifically, between January 2022 and May 2023 NASA provided labor, such as assistance with flight software and systems engineering support, valued at approximately $2 million to help reduce impacts to the mission schedule. According to project officials, supplementing Maxar’s efforts was necessary to reduce risk to the overall project schedule. At the same time, Agency project managers have not modified the spacecraft bus contract to decrease its value to account for the supplemental labor provided by NASA. Instead of making the changes to the contract’s SOW with corresponding adjustments to the contract value, the project is tracking the supplemental government-provided labor using an informal document referred to by the project as a “puts and takes” list that describes the supplements to Maxar and their associated dollar values.
- The spacecraft bus and SPIDER contracts are FFP with no incentive or award fee. Therefore, NASA lacks the flexibility to use monetary incentives to recognize and reward contractor performance that exceeds meeting basic contract requirements. For example, the government uses award fees to motivate positive contractor performance, and conversely, these fees are not paid when a contractor’s overall cost, schedule, and technical performance is below satisfactory. In our discussions with senior leadership at Goddard, OSAM-1 Standing Review Board members, and procurement officials, each group agreed that the lack of an incentive or award fee on the contracts has limited NASA’s ability to improve contractor performance. According to the Standing Review Board Chair at the time of the mission’s Critical Design Review, the contract structure lacked the ability to incentivize the contractor’s performance, particularly in cases such as this where the contractor is not profiting from the contract due to its FFP nature and cost and schedule overruns. In our discussions with Maxar officials, they acknowledged that they were no longer profiting from their work on OSAM-1.
