Orion Budget is Cut 20 Per Cent with 600 Jobs Eliminated and Progress Slowed

By ken_kremer
June 14, 2010
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Orion Budget is Cut 20 Per Cent with 600 Jobs Eliminated and Progress Slowed

Ken Kremer for NASA Watch

Lockheed Martin and other contractors working on NASA’s endangered Constellation program now have no choice but to delay or halt forward progress on major aspects of the ‘Return to the Moon’ program and that will quickly cause numerous jobs cuts rippling across the US.

These actions are a direct result of new budget and contract guidance from NASA Administrator Charles Bolden with regard to contract termination liabilities for Project Constellation if the project is cancelled. This could effectively kill the moon program as desired by the Obama Administration, despite a Congressional legislative ban on changing or cancelling Constellation without the agreement of Congress.

“The impact of termination liability on the contract has necessitated a 20 percent reduction across the program within Lockheed Martin as well as our subcontractors and suppliers”, says Cleon Lacefield, Lockheed Martin vice president and Orion program manager. Lacefield told me that “Orion procurements are being reduced to allow work to continue within the budget limitations and about 600 positions among the Lockheed Martin and subcontractor workforce are being moved off of the program to adjust staffing needs.”

These cutbacks come directly on the heels of Lockheed Martin just completing the structural framework of the first Lunar Orion test capsule at NASA’s Michoud Assembly Facility in New Orleans as reported in my illustrated Orion feature story on June 7 here.

Bolden outlined the job and budget issues in stark terms in a June 9 memo to the chairs of the key Congressional committees that have NASA oversight.

The issue is who is liable to pay for the costs of terminating NASA contracts; NASA or the contractors. Bolden states that according to the “Anti-Deficiency Act” the contractors must now set aside funds to cover the termination liability costs in case the contract is cancelled.

NASA estimates the termination liability costs this year to be almost $1 Billion and must be accounted for before the end of the fiscal year in September 2010.

“The overall Constellation program is confronting a total estimated shortfall of $991 million for continued program effort for the balance of the year, compared with the revised FY 2010 plan,” wrote Bolden. “Given this estimated shortfall, the Constellation program cannot continue all of its planned FY 2010 program activities within the resources available. Contractor workforce reductions [are] estimated at 30-60 percent of the current population, or 2,500-5,000, for the balance of the year.” In February 2010, President Obama decided to terminate NASA’s Constellation program to return US astronauts to the moon as part of his 2011 budget proposal to Congress and radically alter the future course of NASA’s human spaceflight program. Obama proposes that commercial providers should instead take over the task of ferrying astronauts to low Earth orbit using privately developed “space taxis”.

Project Constellation comprises the Orion manned capsule, the Ares 1 and 5 booster rockets and the Altair Lunar Lander. In the intervening months there has been strenuous criticism of Obama’s proposals from many members of Congress, Industry and Academia. Commercial space providers like SpaceX and their proponents have applauded Obamas directives.

NASA public affairs spokesman Bob Jacobs told me, “NASA has released nearly all fiscal year 2010 funds to Constellation contractors but certain contractors were not accounting for potential termination costs within the amounts allotted.”

“The program replanning for the remainder of the fiscal year is necessary to meet our legal requirements.”

“Most of the Constellation contracts are cost-reimbursement contracts, which require a Limitation of Funds clause to ensure work is performed within the limits of the funding allotted to the contract. It is the contractor’s responsibility to manage its costs and obligations, not the government. If the contractors choose not to set aside funds to cover termination liability costs, they do so at their own risk.”

“We’ll be working with the contractors to slow the pace of work and set priorities in order to comply with the statutory direction and not authorize expenditures exceeding our current authorization,” Jacobs concluded.

Lacefield told me that “Lockheed is working closely with NASA on this issue. NASA has not yet finalized its guidance regarding how to properly address potential termination liability.” Regarding the job outlook, Lacefield said, “We are working diligently to find other job opportunities for Orion employees within Lockheed Martin. We anticipate that some layoffs may be unavoidable.”

“The impact to specific sites is being assessed and includes a number of locations where work on Orion is being conducted, such as Arizona, California, Colorado, Connecticut, Florida, Louisiana, Maryland, Texas, Utah and other states,” Lacefield explained. Sub-contractors working in other states like New York and elsewhere are also likely to be affected.

“While we have had to reduce procurements and adjust staffing to work within the newly imposed budget restrictions caused by the impact of termination liability on the contract, we continue to meet important milestones.”

“These milestones include the successful flight test of Orion’s launch abort system, completion of the Phase 1 Safety Review that formally acknowledges Orion meets all of NASA’s requirements for a human-rated space flight vehicle, and the final weld on the initial Orion spacecraft that will be used for ground-based tests in flight-like environments prior to flight testing,” added Lacefield. Watch for my follow up reports

Look here for my earlier story and photos on the status of the initial Orion spacecraft.

Look here for a 360 degree panorama of the Orion test capsule.

Lunar Orion Ground Test Article (GTA) was just welded together in a key milestone towards testing in flight like environments. Lockheed Martin team constructed the capsule at NASA’s Michoud Assembly Facility in New Orleans, LA. Crew hatch at right. Green primer provides corrosion resistance. Credit: Ken Kremer

Orion GTA Crew hatch (covered) and tunnel close-up. Will US astronauts enter the hatch and float through the crew tunnel at top to enter the ISS or embark on missions to the Moon, Asteroids and Beyond ? Stay Tuned. Credit: Ken Kremer