SLS Project Coming Up $400 Million Short 132
schwit1 writes: A GAO report finds that the Space Launch System is over budget and NASA will need an additional $400 million to complete its first orbital launch in 2017. From the article: "NASA isn't meeting its own requirements for matching cost and schedule resources with the congressional requirement to launch the first SLS in December 2017. NASA usually uses a calculation it calls the 'joint cost and schedule confidence level' to decide the odds a program will come in on time and on budget. 'NASA policy usually requires a 70 percent confidence level for a program to proceed with final design and fabrication,' the GAO report says, and the SLS is not at that level. The report adds that government programs that can't match requirements to resources 'are at increased risk of cost and schedule growth.'
In other words, the GAO says SLS is at risk of costing more than the current estimate of $12 billion to reach the first launch or taking longer to get there. Similar cost and schedule problems – although of a larger magnitude – led President Obama to cancel SLS's predecessor rocket system called Constellation shortly after taking office." The current $12 billion estimate is for the program's cost to achieve one unmanned launch. That's four times what it is costing NASA to get SpaceX, Boeing, and Sierra Nevada to build their three spaceships, all scheduled for their first manned launches before 2017.
In other words, the GAO says SLS is at risk of costing more than the current estimate of $12 billion to reach the first launch or taking longer to get there. Similar cost and schedule problems – although of a larger magnitude – led President Obama to cancel SLS's predecessor rocket system called Constellation shortly after taking office." The current $12 billion estimate is for the program's cost to achieve one unmanned launch. That's four times what it is costing NASA to get SpaceX, Boeing, and Sierra Nevada to build their three spaceships, all scheduled for their first manned launches before 2017.
Comment removed (Score:1, Interesting)
Kill SLS (Score:2, Interesting)
I'm one of the biggest spaceflight enthusiasts you'll find, and I've been saying for years: kill SLS. We'll get more results by using 20% of the money to expand SpaceX contracts, and applying the other 80% toward deficit reduction.
Musk isn't in it for the money; he enjoys the engineering challenges, and bringing launch costs down by one or more orders of magnitude is one of those challenges. (Yes I realize the irony; despite not being in it for the money, he has become quite wealthy.)
fixed price vs cost plus award (Score:4, Interesting)
I've been on both sides of this transaction: working for a vendor selling to the government and working for the government buying stuff.
The government CAN go out to bid on a fixed price (binding) basis as you propose. The problem is that any sensible contractor will raise the price above their expected costs to cover the inevitable risks that something goes wrong, or their estimates were wrong. This is particularly so when doing something that has literally never been done before.
So the government buyer has a choice: high fixed price or lower cost based price. With cost based contracts, the contractor gets a fixed fee (cost plus percentage of cost government contracts are illegal). As the cost goes up, the contractor's percentage profit drops, but at least they're not losing money if something goes wrong. The government almost always has the right to cancel at their convenience, too, if things are really going bad rapidly. On pretty much every job, there's a continual computation and reporting (in both directions) of the "termination liability", or what it costs to stop work today, pack everything up, and move on. (Such computations became VERY important during the government shutdown fiasco last fall).
Since the folks in government want to get the best bang for the buck, they tend to like "cost plus award" contracts.. odds are, it will come in lower than they would have paid for fixed price, because government contracting (for technology) has a fairly hefty risk premium. Yeah, if you're buying case lots of toilet paper, or carloads of gravel, fixed price is probably a better strategy on both sides. The contract negotiator on the govt side isn't going to allow profit on a fixed price contract that is more than 10%. (Yes, indeed, even with fixed price, you can't just charge any old price.. you have to justify it after the bid is accepted, and they can and do negotiate, if only because there are inevitably differences between exactly what you proposed to do and what the government wants)
Note well, too, that you probably don't know how much SpaceX thought they were going to spend to develop Falcons and what they actually spent. They're not publically traded, nor do they publish that level of detail. For all you know, SpaceX thought $100M and spent $300M, and Elon's coming up with the difference out of his pocket (or out of payments against future operations).