NASA Inspector General Blames Rocket Engine Contract Mismanagement for Artemis Moon Program’s Problems

NASA’s Artemis Moon program is six years behind schedule and at least $6 billion over budget due to the space agency’s mismanagement of rocket engine contracts.

That’s according to the findings of a new report released May 25 by NASA’s Office of the Inspector General (OIG), which investigates NASA programs to prevent waste and fraud. The OIG audited NASA’s contracts procuring powerful RS-25 rocket engines and boosters for the Space Launch System (SLS) rocket, which finally flew its first test flight in November after four years of delays.

That flight also propelled an uncrewed Orion spacecraft on a course to the Moon and back in the first mission of the Artemis program, which aims to return humans to the lunar surface by 2025 and establish a long-term presence there by 2028. The SLS is a keystone of the Artemis program architecture.

But the Artemis program comes with a steep cost. So far, the program has cost an estimated $93 billion in total from its origins in 2012 through fiscal year 2025, 26 percent ($23.8 billion) of which is due to the SLS rocket. And the whole project could have been further along by now if not for mismanagement, per the OIG report — Congress originally instructed NASA to launch the first SLS flight by 2016.

If $93 billion seems like a lot to pay for a program that’s six years late, that’s because it is a lot, argues Laura Forczyk, a space industry consultant and founder of the firm Astralytical.

But “I wouldn’t say this is particularly surprising,” she told SpaceRef. “There have been reports coming out for years now about how delayed everything is, including these RS-25 engines and how much their costs overrun.”

NASA management has agreed to implement a set of OIG recommendations to lower costs going and improve efficiency forward, but ultimately, Forczyk suggested that accountability lies in who controls the purse strings — not NASA or the OIG, but Congress.

The SLS is a super-heavy lift rocket capable of sending 27 tons of payload to the Moon in its current configuration (later Artemis missions will utilize more powerful variants). To get that mass off the ground, SLS requires two solid-fuel rocket boosters and four RS-25 liquid hydrogen- and liquid oxygen-burning engines per launch.

That configuration may seem reminiscent of the Space Shuttle, which would make sense because the SLS uses shuttle technology: The RS-25 engines are the same as those used for the shuttle, and the shuttle’s leftover steel casings were used in the solid rocket boosters. Of course, both components have since been updated: NASA contracted Aerojet Rocketdyne to upgrade the engines, while Northrop Grumman made modifications to the steel casings.

“The idea was by refurbishing the space shuttle main engines that it would cost less than designing and building brand new engines,” Forczyk said. “That did not end up being the case.” 

So far, Aerojet Rocketdyne has only completed five of the 16 RS-25 engine adaptations contracted by NASA, and the unexpected technical difficulties also increased the costs of the booster rocket development, per the OIG’s Artemis audit. Engine and booster adaptations and production were supposed to cost NASA about $7 billion over 14 years, according to the report, but will now cost $13.1, at a minimum, over 25 years.

NASA bore those increased costs because of the kind of contract it signed with the two companies. NASA entered into cost-plus (rather than fixed-cost) contracts with Northrop Grumman and Aerojet Rocketdyne. In a fixed-cost contract, a bidder agrees to deliver the goods at a set price and eat any costs beyond that amount.

“Whereas with the cost-plus, the government pays the additional cost overruns,” Forczyk explained. “It’s really meant for cutting-edge technology where they don’t have a good estimation from the start as to what the total cost is going to be.”

NASA’s recently announced a $3.4 billion fixed-cost contract with Blue Origin to build a lunar lander vehicle for the Artemis V mission, and NASA’s $4.2 billion Commercial Crew contract with Boeing to build the Strainer spacecraft for flights to and from the ISS is also fixed-price, a fact that may cause Boeing serious headaches as the Starliner program languishes due to technical problems that caused additional delays as recently as June 1.

In order to wrangle the Artemis program back on track, the OIG issued eight recommendations to NASA management. The first is to try and shift the Aerojet Rocketdyne contract to produce 18 new RS-25 engines to fixed-price terms. The report also recommends NASA:

2. Identify procurement needs and resources available to address staff shortages at NASA Marshall Space Flight Center.
3. Ensure Marshall officials comply with best practices for establishing and maintaining internal controls related to REAs, fiscal law, and appropriate internal and external engagement.
4. Ensure appropriate separation of program and procurement actions and compliance with federal requirements for use of letter contracts, proper definitization, overpayments, and duplicative payments of award fees for modified scope and contracts.
5. Update RS-25 production per engine cost estimates to include investments in production restart.
6. Review and update [the rocket booster production and operations contract] scope of work and technical requirements needed to complete the respective periods of performance.
7. Review [the rocket booster production and operations contract] definitization to ensure proper liquidation of funds paid under the letter contract.
8. Develop a separate non-fee bearing contract line item for completion of the 11 unfinished heritage RS-25 adaptation engines.

NASA management ‘concurred with Recommendations 1, 2, 3, 6, and 7, and partially concurred with Recommendations 4, 5, and 8,” the OIG wrote in the report, “and therefore the recommendations are resolved and will be closed upon completion and verification of the proposed corrective actions.”

But just how serious NASA is about making serious changes to the SLS program remains to be seen. Forczyk pointed out that SLS contracting is set up to spread federal funding around to districts important to supporting members of Congress, not to produce a rocket in the most efficient way possible. And as long as those members of Congress support Artemis and SLS, there’s little incentive to change — and the OIG report likely won’t make much difference to Artemis.

“This is business as usual. This will not be seen by Congress as justification to change the program at this point,” Froczyk told SpaceRef. “It could be used as justification to change the program at a later point if SLS falls out of favor, but at this point, it’s still so politically popular that this is just going to be accepted as fact.”