Status Report

AIP FYI Number 124: Congress Examines NASA’s CEV Acquisition Strategy

By SpaceRef Editor
October 17, 2006
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The American Institute of Physics Bulletin of Science Policy News

A September 28 House Science Committee oversight hearing on development of NASA’s Crew Exploration Vehicle (CEV) demonstrated that the space agency and the Government Accountability Office (GAO) do not see eye-to-eye on the least risky and most cost- effective way to develop the vehicle. The CEV, now named “Orion,” is part of President Bush’s Vision for Space Exploration and is intended as a replacement for the space shuttle.

As reported in FYI #103 (, the GAO issued a July 2006 report noting that NASA’s outyear budget projections show major shortfalls for the exploration program in some future years. GAO also contended that, in its acquisition strategy for the CEV, NASA was planning to commit the government to a long-term contract without sufficient knowledge of program requirements, design and cost, a move that the report said “places the project at risk of significant cost overruns, schedule delays and performance shortfalls.” NASA did not entirely concur with this assessment, and at the end of August it awarded a long-term contract for CEV development and testing to Lockheed Martin Corporation. However, based on discussions with GAO, it modified its prior acquisition plan by making the production and sustainment of operational vehicles optional to the contract. GAO has also made previous recommendations regarding establishing criteria for key decision points; NASA has agreed to implement those recommendations but has not yet fully done so.

Noting that this would likely be his last hearing on NASA, retiring Science Committee Chairman Sherwood Boehlert (R-NY) remarked that the purpose of the hearing was not to “rehash” the contract award, but to determine what additional steps NASA should be taking and how Congress should conduct oversight in order to ensure the project’s success. Both he and Ranking Minority Member Bart Gordon (D-TN) stated that they did not want the exploration program to damage NASA’s other activities. Rep. Mark Udall (D-CO), Ranking Member of the Space and Aeronautics Subcommittee, spoke for all members present when he said, “all of us want NASA’s CEV program to succeed.”

“It’s time for NASA to put down the viewgraphs and get its hands dirty,” declared Scott Horowitz, NASA Associate Administrator for the Exploration Systems Mission Directorate. He said the agency took GAO’s concerns “quite seriously,” and that their management approach now incorporated GAO’s recommendations by making the longest-term aspects of the CEV contract optional “to preserve flexibility.” NASA’s decision to use mainly proven, off-the- shelf technologies, he added, increased its knowledge base and would help to eliminate project risk.

Allen Li, Director of Acquisition and Sourcing Management at GAO, highlighted four concerns GAO has expressed about the CEV project: NASA does not have enough information at this time to have awarded a long-term contract; NASA’s budget projections show substantial funding shortfalls for the exploration program in many years; NASA’s acquisition strategy for the CEV still contains too much risk, even after modifications based on GAO’s recommendations; and NASA has agreed, but not yet acted, to implement additional GAO suggestions to put in place reviews and progress-measurement criteria at crucial project decision points. Li found NASA’s modifications to the CEV acquisition strategy “a step in the right direction,” but concluded that NASA “would be well-served by fully implementing our recommendations.”

To the question of how Congress should exercise its oversight responsibilities, Li pointed out that the 2005 NASA Authorization Act gave Congress additional oversight tools it did not have before. Horowitz concurred, noting that the agency now must provide mandatory cost and progress reports to Congress on a timely basis, and he promised to “go above and beyond” with regular communications and visits to congressional offices.

Remarking that NASA seemed very confident of its ability to complete the CEV on time and on budget, Gordon asked if the agency would consider a formal cost cap; Horowitz said he was already operating under a cost cap by being required to make the project fit within NASA’s budget projections. If the costs escalated, Gordon asked, from where would NASA find additional money? “Everything has to come out of my exploration budget,” Horowitz responded, and if costs grew out of control, the only thing that could slip was the schedule, which he said would result in increased costs in the long run. He also cautioned that unstable appropriations from Congress would be “guaranteed to drive costs higher.”

One of GAO’s suggestions, Gordon continued, was that Congress consider limiting funding for the CEV to only those activities necessary for successful completion of the preliminary design review, expected in the summer of 2008. Horowitz argued that short-funding the CEV in the near term “will guarantee to delay” the project and ultimately make it more expensive, but Li countered that there should be no connection between the funding of separate phases of acquisition. If NASA chooses to rush into long-term commitments with insufficient information, he warned, it would be a case of “pay me now or pay me later.” Having additional knowledge, he said, had the potential to reduce costs in future years. “I think past history has shown,” he said, that “if you don’t have that knowledge, it will come bak to bite you later.”

While Horowitz professed to a great deal of confidence that, based on using known technologies, NASA would meet its time and budget constraints, Li warned that “the big challenge is going to be integration” of components that have not necessarily been used together before, as well as reducing component size.

Rep. Dana Rohrabacher (R-CA) applauded NASA for choosing to use proven technologies, but wanted to hear that the agency was reducing other, lower-priority programs in order to take on the exploration challenge. Rep. Vern Ehlers (R-MI) disagreed, saying the funding constraints were due to Congress’s “wanting more than it’s willing to pay for.” Pointing to NASA’s cuts to aeronautics research at what he said was a crucial time for revamping the air-traffic control system, and reductions to small robotic missions, he criticized Congress for “having a bigger wish list than their pocketbook.”

Audrey T. Leath
Media and Government Relations Division
The American Institute of Physics
(301) 209-3094

SpaceRef staff editor.