ISS Management and Cost Evaluation Task Force Report: Findings and Recommendations

Report by the International Space Station (ISS) Management and Cost Evaluation (IMCE) Task Force to the NASA Advisory Council, November 1, 2001

2.0 Specific Findings

In performing an independent external review and assessment of cost, budget, and
management of the ISS, the IMCE Task Force (Appendix C) has made the following
specific findings:

The ISS Program, while taking a conservative approach and making safety paramount,
has achieved excellent progress in integration of diverse international technologies.

Assembly of the ISS began in November 1998 with the launch of the Russian Zarya
module. To date there have been 21 missions, including assembly and
logistics/utilization. All have been successful, with no major anomalies. Having
completed the ISS phase that has enabled early research, a three-person permanent crew
has been established and the keystone elements of three of the five international partners
have been successfully deployed. The assembly, integration, and operation of the
complex systems have been conducted with extraordinary success, proving the
competency of the design and the technical team. The ISS has been assembled, outfitted
with tons of equipment and supplies for the health and safety of future crews, and initial
research is underway. Twenty kilowatts of renewable electric power is being produced,
more than ever generated in space. The elements that will comprise the 300 foot ISS truss
structure are being readied for launch in 2002 and early 2003. The risk in design and
development of the vehicle has been largely retired.

NASA has not accomplished a rigorous ISS cost estimate. The program lacks the
necessary skills and tools to perform the level of financial management needed for
successful completion within budget.

NASA cannot rationalize the cost estimating variances in the FY02 budget formulation
process by merely suggesting that it is largely due to the complexity of the program. The
underestimation of remaining development and operations costs, along with the
continued escalation of cost estimates even into the IMCE review period, is a clear
indication of inadequate methodology, tools, and controls. There is no common guideline
for the generation of estimates across the program. There are multiple budgeting
techniques and multiple reporting techniques. NASA ISS support and ISS contractors
estimate and report in a myriad of methods. Financial forecasting and strategic planning
suffer from insufficient “forward” analysis and planning due to division of financial
authority and responsibility, lack of experienced financial personnel and modern tools,
diverse and often incompatible accounting systems, and uneven and non-standard cost
reporting capabilities.

The cost to achieve comparable expectations at assembly complete has grown from an
estimate of $17.4B to over $30B. Much of this cost growth is a consequence of
underestimating cost and a schedule erosion of 4+ years.

Much of the cost growth is attributable to clearly delineable areas such as: inadequate
initial requirements definition, added content, late element delivery, development
problems leading to cost variance, inadequate understanding of international integration
requirements, and increased institutional charges on the program. In addition, imposition
of annual budget caps forced the program to an inefficient spend profile and reinforced
the management’s focus on meeting annual budgets rather than on total cost
management.

A cost of $8.3B (FY02-06) is not credible for the core complete baseline without radical
reform.

The Task Force unanimously concluded that the current program plan is not credible.
Task Force concerns included management and program control deficiencies as well as
overly optimistic cost avoidance initiatives. Additionally, the Task Force thought the
remaining development and integration risk, including research facilities, is
underestimated and the level of unencumbered program reserves is inadequate.

The NASA/Office of Management and Budget (OMB) agreement for the FY02 budget
(FY02-06) was $8.3B, including a NASA management challenge (shortfall) of $484M
and unencumbered reserves of $750M. During the review, new cost increases totaling
$366M were identified. Additional, but uncosted, concerns were identified in the area of
contractor rates, International Partner cost implications stemming from scaling back the
baseline to the U.S. core configuration, the risk of research development activities, and
inadequate Preplanned Product Improvement funding. Offsets in the amount of $440M
from within the program were identified. The major portion of these offsets came from
projected program staff reductions in operations and sustaining engineering.
Approximately $1B of potential additional savings from within OSF were later identified
by NASA. These estimates result from both a shuttle flight rate revision and the on- going
Strategic Resources Re view (SRR)/institutional savings effort. Part of the projected
savings come from reducing civil service staffing across OSF. Successful completion of
the core complete program is dependent on increased funding flexibility and savings
within the program and other OSF activities, as well as management reform and a
credible program roadmap. The latter two issues are discussed elsewhere in this report.

The Task Force expressed concern with respect to the required budget flexibility ,
including validity of the original $8.3B cost estimate and the probability of achieving all
the projected savings. There was consensus however, that given the other steps
recommended in this report, there is a reasonable chance of successfully executing the
core program.

The management focus is on technical excellence and crew safety with emphasis on
near- term schedules, rather than total program costs.

Human Space Flight programs have historically been focused on protecting crew safety;
this is particularly true during the crucial launch phase when issues must be acted upon in
an instant. A large percentage of employees working on the ISS program have gained
their skills and experiences on the Shuttle and earlier manned programs. There are many
indications this experience base and culture have been transferred to the ISS program. As
an example, a substantial sustaining engineering function has been established separate
from the operations structure.

The Task Force believes this approach is not necessary and it is possible to “dual- use”
engineer-operators to reduce overall cost. Since the ISS is a crewed vehicle, many of the
anomalies can be stabilized by the crew and addressed with technical expertise on the
ground that is “on-call” and not “on-tap.” While this may reduce ISS availability
somewhat, it could substantially reduce required manpower. As the Shuttle-Mir Program
has proven, a space station has much different attributes that would allow for lower
staffing levels. While the currently planned ISS staffing levels will enable continued high
levels of response, the Task Force considers them to be unnecessary.

The Program is being managed as an ” institution” rather than as a program with
specific purpose, focused goals and objectives, and defined milestones.

The institutional needs of the Centers are driving the Program, rather than the Program
requirements being served by the Centers. The impact of institutional management is
clearly indicated in the overall staffing levels of the program. The institution, not the
program, controls the majority of these resources and timely destaffing is significantly
hindered. At this phase of the ISS program, deleting more hardware saves very little
money since the bulk of the expenditures are in the “people” category.

The financial focus is on fiscal year budget management rather than on total Program
cost management.

At the time the Space Station was redesigned in 1994, annual budget caps of $2.1B were
levied on the program as a means to control costs. In general, such caps establishing level
annual funding on a major program are counterproductive to controlling total program
cost. Total cost and schedule became variables as NASA’s focus became one of
executing the program within the annual budgets. Additional funding was requested and
provided for the Russian Program Assurance and Crew Return Vehicle (CRV) efforts. To
stay within the annual budget caps, basic program content slipped and the total program
cost grew. The final ISS cost estimate at completion has not been a management criterion
within NASA.

Lack of a defined program baseline has created confusion and inefficiencies.

The President’s FY02 Budget Blueprint and the subsequent NASA/OMB agreement
relative to the “U.S. Core” program allow for NASA to maintain critical skills necessary
to build additional content. At the start of the IMCE review, it appeared the ISS Program
was still assuming the “Program Manager’s” Recommended Program ($8.3B + $2.5B)
was the baseline and that the core complete program was an option. The research support
element of the ISS is still being implemented according to the original program and has
been unable to take action in FY01 to terminate certain research activities. The scientific
community is confused and considers the reduction to a three-person crew, from the
seven-person crew baseline, to have a significant adverse impact on science. The
International Partners believe the U.S. cannot unilaterally change the previously existing
baseline assembly sequence.

Current research support funding represents a 40-percent reduction in buying power
from that originally planned.

When the Space Station Program was redesigned in 1993, the research support budget of
$3.8B through assembly complete was programmed for research facilities and for
recurring utilization. Between 1993 and 2001, the ISS Program experienced major delays,
which resulted in slippage of the program schedule. As deviations in the program
schedule occurred, the research support budget was realigned to keep synchronicity with
the program. Consequently, the funding was taken out of the near-term years and was
reinstated in the out years. During this process, the design, development, and fabrication
of the research facilities were being delayed and experienced a cost inefficiency. This
inefficienc y in combination with 4.5 years of inflation and $0.4B funding for Mir has
reduced the buying power of research funds by 40 percent. The total budget of $3.8B has
not changed appreciably, but has been spread over a 13-year period for less capability.
Discounting for the above factors (40 percent), the buying power of the current budget
($1.6B budget through FY02 Ð FY06) is approximately $2.3B.

The Office of Biological and Physical Research (OBPR) is not well coordinated with
the Office of Space Flight (OSF) or the program office for policy and strategic
planning. The scientific community representation is not at an effective level in the
program office structure.

The transfer of research support budget responsibility to OBPR underscores the need for
increased and continuing coordination with OSF. Some progress had been made through
the inclusion of OBPR in the OSF management council. The recommendation for a
realignment of the program office reporting chain, addressed later in the report, would
alleviate this issue. Additionally, the recommendation to establish a Deputy for Science
in the program office reverts to an earlier structure and will provide appropriate visibility
for the science community.

A centrifuge is mandatory to accomplish meaningful biological research. Availability
as late as FY08 is unacceptable.

The centrifuge facility is essential for performing the most promising ISS “world class”
biological research. It is critical for fundamental space biology and for the foundation of
biomedical research because it provides the control needed for the interpretation of
experimental results. This Task Force (and other science groups) has said that this type of
research cannot be done without a centrifuge and adequate crew time. The centrifuge is
now being constructed by the National Space Development Agency of Japan (NASDA)
as part of a barter agreement. Because of budget and technical issues the centrifuge
delivery has been delayed until Calendar Year (CY) 08.

There are opportunities to maximize scientific research on the core station with modest
cost impact.

The crew time available with a permanent crew of three persons can be effectively
doubled by extending sortie mission crew time aboard the ISS. This can be accomplished by overlapping planned Soyuz exchange periods so that the visiting crew is aboard ISS
for a period of 30 days every 5 months. Using existing Extended Duration Orbiter (EDO)
capability could allow for Shuttle docked time of up to 14 days. The increased research
benefit derives primarily from offloading ISS maintenance tasks to the visiting Shuttle
crew. However, there will be significant microgravity constraints due to the Shuttle being
docked to the station, as well as crew transfer and maintenance operations.

Cost estimates for the U.S.- funded enhancement options need further development to
assess credibility.

The proposed enhancement options consist of various combinations of habitation, life
support, and crew return capability. There is inadequate current costing information
associated with the non-U.S. components (Enterprise, ASI Hab, and additional Soyuz).
The CRV cost estimate of $1.3B is plausible, with several development and acquisition
assumptions that have yet to be verified. Project interruptions will have cost impact on all
of the elements under consideration.

3.0 Specific Recommendations

Establish the ISS Program Office separate from, but residing at JSC, reporting to a
new Associate Administrator (AA) for the ISS.

The new Associate Administrator’s office would combine the ISS-related functions of
OSF and OBPR and have program oversight responsibility. It is imperative this new
office ensures continuity of program checks and balances in quality and technical
oversight. ISS offices at other supporting Centers would report to the ISS Program
Manager, who would own all ISS personnel.

Consolidate prime and non-prime contracts into a minimum number of resulting
contracts all reporting to the program office.

Currently, there are over 30 contracts supporting the ISS Program. Consolidate these
contracts to achieve a minimum number of resulting contracts, with clearly defined cost
performance reporting requirements.

Develop a life cycle technical baseline and manage the ISS Program to total cost and
schedule as well as fiscal year budgets.

A life cycle technical baseline must be developed that can be used as the basis for a
formal cost estimate. Use the Department of Defense cost assessment approach as a
model and develop a full ISS cost estimate. Develop an Integrated Program Management
Plan delineating the work to be accomplished; the work breakdown structure; the roles
and responsibilities of performing organizations; required resources; schedules; and the
management techniques, tools, and reports to be used in implementing the Program.
Establish a state-of-the-art management information system. Establish a state-of-the-art
planning and control system, including independent cost estimating capability. Finally,
the financial and project control function needs to be strengthened significantly in the ISS
Program office and NASA Headquarters (AA level).

Consider revising the ISS crew rotation period to 6 months and reducing the Space
Shuttle flight rate accordingly. The result would be a delay in U.S. Core complete
assembly sequence by up to 2 months. Target cost savings: $668M,

These recommendations represent one approach to provide a portion of the required
budget flexibility. NASA should continue to refine these estimates and examine other
options.
The first two actions would incorporate a 6- month crew rotation cycle starting in FY03.
This would result in U.S. core complete moving 2 months to April 2004, and reduce Space Shuttle annual flight rate required to support ISS to four a year. The resulting cost
savings (FY02-06) from this change in assembly sequence and Space Shuttle flight rate
reduction would provide an estimated $188M in ISS savings and $480M in Shuttle
savings.

NASA must also move forward to implement cost savings identified in the Fall 2001
Strategic Resources Review and other institutional savings. This includes items such as
facility and lab closures, and civil service staffing reductions needed to realize the
$350M-$450M cost savings target.

Develop a credible program road map starting with core complete and leading to an
end state that achieves expanded research potential. Include gate decisions based on
demonstrated ability to execute the program

The existing U.S. core complete program should not be established as an “end-state”
condition. It presents significant research and Interna tional Partner implications that
could be avoided by implementing a performance- gate approach that would allow
increasing research capability based on realized performance to plan. Metrics for
evaluating performance should be developed in conjunction with the Administration
(OMB). The opportunity to realize the high research potential that many dedicated
employees have worked years to achieve will maintain motivation in achieving the cost
savings necessary to accomplish the core.

The initial performance gate would be to implement changes required to establish
credible/executable ($8.3B + additions from Human Space Flight) Program by June of
2002. During this period, the IMCE recommends providing (within existing budgets) the
minimum funding necessary to keep enhancements viable to return to the fully capable
program with minimum cost impact.

The end state should be defined in terms of the science priorities recommended below.

Establish research priorities. The Task Force is unanimous in that the highest
research priority should be solving problems associated with long-duration human
space flight, including the engineering required for human support mechanisms,

Establish a research plan consistent with the priorities, including a prudent level of
reserves, and compliant with the approved budget.

These are fundamental steps toward maximizing the research benefits of the ISS. The
phased implementation of capability envisioned in the “end state” plan must incorporate
science priorities, research facilities, and utilization as primary considerations. The Task
Force also noted the significance of research in physical and microgravity sciences, and
urged they be strongly considered when establishing priorities.

Provide additional crew time for scientific research through the use of extended
duration shuttle and overlap of Soyuz missions.

The high-priority fundamental biological research necessary to demonstrate feasibility of
future human exploration requires significant ISS crew interaction. Extended Soyuz
sortie missions can be implemented in the near future and coupled with Shuttle EDO
missions can measurably increase crew time to conduct this research.

Create a Deputy Program Manager for Science position in ISS Program Office. Assign
a science community representative with dual responsibility to the Program and OBPR.

The Task Force noted that ISS research objective considerations are not generally given
full representation in programmatic decision forums. The creation of a Deputy Program
Manager for Science will provide increased and coordinated representation of the
scientific communities interest at a high programmatic level.