Senator complains about “cost increases” in NASA’s fixed price contracts

SLS needs more money, Sen. Shelby says, while deriding commercial efforts.

As part of the annual US budget process, the NASA administrator meets with the appropriations subcommittees in the Senate and House to discuss the president's budget request. Under the new president, NASA doesn't yet have an administrator, so acting administrator Robert Lightfoot is making the rounds. On Thursday morning he met with the Senate's Subcommittee on Commerce, Justice, Science, and Related Agencies.

Senator Richard Shelby (R-Ala.) chairs this committee, which writes the budget for NASA and therefore wields extraordinary power over the nation's civil space activities. During Thursday's hearing, Shelby renewed his longstanding concerns about the space agency's commercial crew program—the NASA-funded efforts by Boeing and SpaceX to develop capsules and rockets to carry US astronauts to the International Space Station.

The agency had hoped for an operational capability by the end of 2017, but now that is likely to slip into early or mid-2019. Shelby asked about rising costs and delays. "What assurance can you give this committee that there will be no more cost increases or delays?" Shelby said, querying Lightfoot. "Can you do that?"

To his credit, Lightfoot, a former director of Marshall, gently corrected Shelby. "I think it's a fixed price contract; I don't expect any more cost increases," he said. "There may be delays, though, just with the sheer nature of what they're trying to do, and what we're trying to accomplish."

The key phrase here is "fixed price" contract. Unless it changes the design requirements, NASA won't pay Boeing or SpaceX more for commercial crew, because the contracts are "fixed." The companies therefore have a strong incentive to deliver a finished product as soon as possible.

Cost-plus

By contrast, NASA has a traditional cost-plus contract with Boeing to build the core stage of the Space Launch System rocket and with other heritage contractors for the engines and solid-rocket boosters. This means that if there are delays, NASA simply pays additional costs to the aerospace companies. And there have been delays. When Congress wrote the 2010 NASA Authorization Act, it called for an "operational" rocket by the end of 2016. Now, an uncrewed test flight launch of the SLS rocket has been delayed at least three years, to 2019. With a budget that now exceeds $2 billion annually, those delays have therefore cost NASA about $6 billion.

Nevertheless, on Thursday Shelby argued that the SLS rocket needs more money, not less, from the administration in the fiscal year 2018 budget. This is consistent with his past beliefs, as Shelby strongly supports the rocket being designed and tested in his home state at Marshall Space Flight Center. For example, in fiscal year 2017, the Senate budget increased funding by $840 million for the SLS rocket, a substantial 60-percent bump above the president's request.

The fact that both SpaceX and Blue Origin have made significant strides toward lowering launch costs in the last year has not changed his position. As at the outset of the hearing, Sen. Shelby scorned those who believe NASA should move to fixed price contracts for transportation in space—that is, buy rockets and spacecraft directly from commercial providers.

"There’s growing sentiment that NASA should change the way it does business," he said, "that it should be a buyer of commercial transportation services." But that's not Sen. Shelby's sentiment: "While risk is inherent in anything NASA chooses to undertake, there's no replacement for proper analysis and reasonable precaution when lives and resources of the nation are at stake."

In other words, NASA alone can do deep space.