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NASA OIG SLS Audit: Poor Management By Boeing – Send More Money

By Keith Cowing
October 10, 2018
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NASA OIG SLS Audit: Poor Management By Boeing – Send More Money

OIG Audit: NASA’s Management of the Space Launch System Stages Contract, OIG
“At its current rate, we project Boeing will expend at least $8.9 billion through 2021–double the amount initially planned–while delivery of the first Core Stage has slipped 2 1/2 years from June 2017 to December 2019 and may slip further. Between June 2014 and August 2018, Boeing spent over $600 million more than planned on developing Core Stages 1 and 2, and NASA officials have confirmed that in FY 2018 alone Boeing expended $226 million more than planned. Cost increases and schedule delays of Core Stage development can be traced largely to management, technical, and infrastructure issues driven by Boeing’s poor performance. For example, Boeing officials have consistently underestimated the scope of the work to be performed and thus the size and skills of the workforce required. In addition, development of command and control hardware and software necessary for Core Stage testing is 2 years behind schedule, while equipment-related mishaps and an extreme weather event contributed to cost and schedule delays. Individually, each of these issues may have caused only minor cost and schedule problems, but taken as a whole they have resulted in a 2 1/2-year slip to the SLS Core Stage delivery schedule and approximately $4 billion in cost increases for development of the first two Core Stages. Furthermore, Boeing’s cost and schedule challenges are likely to worsen given that the SLS has yet to undergo its “Green Run Test”–a major milestone that integrates and tests the Core Stage components.
Based on Boeing’s current expenditure rate, NASA will need to increase the contract value by approximately $800 million to complete the first Core Stage for delivery to the Kennedy Space Center in December 2019. If the EM-1 launch takes place in June 2020, more than $400 million–for a total of $1.2 billion–would need to be added to the contract. This amount would only ensure delivery of Core Stage 1 and would not include the billions more required to complete work on Core Stage 2 and the EUS. Consequently, in light of the Project’s development delays, we have concluded NASA will be unable to meet its EM-1 launch window currently scheduled between December 2019 and June 2020.
We found that several poor contract management practices by NASA contributed to the SLS Program’s cost and schedule overruns. …”

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