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NASA's Response to Orbital's October 2014 Launch Failure: Impacts on Commercial Resupply of the International Space Station

Status Report From: NASA Office of Inspector General
Posted: Thursday, September 17, 2015

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Full report

WHY WE PERFORMED THIS REVIEW

On October 28, 2014, the third in a series of NASA-contracted resupply missions to the International Space Station (ISS or Station) by Orbital Sciences Corporation (Orbital) failed during lift-off, causing the vehicle to crash near the launch pad and destroying the company's Antares rocket and Cygnus spacecraft as well as all cargo aboard.1 The Virginia Commercial Space Flight Authority's (VCSFA) launch pad and supporting facilities at NASA's Wallops Flight Facility (Wallops) on Virginia's Eastern Shore also sustained damage. In the aftermath of the failure, Orbital suspended its cargo resupply missions until completion of an investigation and acceptance by NASA of the company's Return to Flight Plan.

NASA's $1.9 billion Commercial Resupply Services (CRS-1) contract with Orbital required the company to transport 18.6 metric tons of supplies and equipment (upmass) to the Station over eight flights by the end of 2016. Orbital's Return to Flight Plan approved by NASA in January 2015 calls for the company to deliver its remaining 13 metric tons to the ISS by flying four rather than the five flights planned under the original schedule. Two of these flights will use another company's rocket, the Atlas V, while the remaining flights will use a revamped model of Orbital's Antares rocket.

We examined NASA's response to Orbital's October 2014 launch failure and its impacts on commercial resupply of the ISS. As part of this review, we assessed the technical and operational risks of Orbital's Return to Flight Plan, NASA's efforts to reduce the financial risk associated with its contract with Orbital, the progress of repairs at Wallops, and the procedure for investigating the cause of the failure.

WHAT WE FOUND

Orbital's Return to Flight Plan contains technical and operational risks and may be difficult to execute as designed and on the timetable proposed. First, although the Atlas V has a strong flight record and is a suitable rocket for Orbital missions, the company will be integrating its Cygnus capsule with the Atlas rocket for the first time. Second, Orbital must accelerate development of its modified Antares launch system, refitting it with new engines for two planned launches in 2016. This tight schedule does not include a test flight for the modified system and provides limited opportunities for qualification and certification testing. Third, although NASA has increased monitoring of Orbital's milestone plan and RD-181 engine testing for the modified Antares, the Agency has not conducted detailed technical assessments of the modified system and the associated qualification testing results.

Finally, we believe Orbital's plan to drop one of its scheduled resupply flights may disadvantage NASA by decreasing the Agency's flexibility in choosing the type and size of cargo the company transports to the ISS. In addition, although NASA will not pay Orbital more than the fixed price of $1.9 billion agreed to for the original eight flights, the Agency did not take advantage of provisions in the contract that could have reduced its costs by up to $84 million. Specifically, when flight schedules slipped such that Orbital was making multiple flights in a year, NASA did not invoke a contract provision allowing for an adjustment to the mission pricing worth as much as $21 million, but NASA's Response to Orbital's October 2014 Launch Failure: Impacts on Commercial Resupply of the International Space Station

September 17, 2015 IG-15-023 (A-15-006-00)instead received other nonmonetary considerations with an assessed value of only $2 million. Agency officials contend that invoking this provision may have reopened negotiations on pricing and potentially given Orbital the opportunity to press for higher prices, which could have resulted in the Agency ultimately paying more. However, negotiations and modifications to the contract were already underway as a result of the schedule delays, and we believe it would have been in NASA's interest to at least broach the issue with Orbital. Further, when calculating the cost to NASA for the remaining four flights, Orbital did not use the per-kilogram pricing in the original contract and instead divided the price for the cancelled eighth mission by its contractual upmass requirement to arrive at a revised price per-kilogram.

By accepting this pricing structure, NASA committed to paying $65 million more for these missions than the Agency would have paid if the original pricing had been used. While Orbital offered NASA some consideration in exchange for the adjustments made in its Return to Flight Plan, we question the value of these services. In addition, NASA recently took actions that will limit its ability to slow milestone payments caused by schedule delays for future cargo resupply missions, effectively increasing the Agency's financial risk for its follow-on commercial resupply contract.

Further, the Space Act Agreement between NASA and VCSFA specified that VCSFA was required to obtain insurance at no cost to NASA to cover claims for liability and damage to NASA property, have insurance for its own property, and waive all claims against the Government for any damage arising under the Agreement. However, although NASA officials stated that VCSFA intended to self-insure for damages resulting from launch operations, it is not clear from correspondence between VCSFA and NASA that this issue was understood or agreed upon by both parties. As a result, $5 million of NASA funds intended for other space operations projects were used to help fund the repairs. Finally, although Orbital's Accident Investigation Board satisfies the requirements of the company's Federal Aviation Administration license and the CRS-1 contract, the company's investigation lacks the level of independence required of NASA Mishap Investigation Boards.

WHAT WE RECOMMENDED

In order to reduce schedule, performance, and financial risks in NASA's CRS-1 contract and any similar future contracts, we made several recommendations, including that the Associate Administrator for Human Exploration and Operations complete a detailed technical assessment of Orbital's revamped Antares rocket; use available contractual provisions to ensure the best value to the Government when making equitable adjustments due to a contractor's deficiency; ensure mission pricing and payment are continually updated; and continue to incorporate lessons learned during CRS-1 into follow-on contracts and during the evaluation of return to flight plans. Further, in order to protect the United States against claims for damages caused by commercial spaceflight operations, we recommended the NASA General Counsel establish procedures to ensure that insurance policies adhere to agreement requirements and provide adequate financial liability and damage coverage. Finally, to address concerns regarding the independence of accident investigation boards, we recommended the Associate Administrator for Human Exploration and Operations consider whether relevant contract provisions should be revised to more closely align with NASA Mishap Investigation Board procedures.

In response to a draft of our report, the Associate Administrator concurred with six of seven recommendations and described corrective actions the Agency has or will take. Our recommendation about protecting NASA against claims for damages remains unresolved.

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