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United States Government Accountability Office: 
GAO: 

Report to the Ranking Member, Committee on Homeland Security and 
Governmental Affairs, U.S. Senate: 

May 2014: 

NASA: 

Actions Needed to Improve Transparency and Assess Long-Term 
Affordability of Human Exploration Programs: 

GAO-14-385: 

GAO Highlights: 

Highlights of GAO-14-385, a report to the Ranking Member, Committee on 
Homeland Security and Governmental Affairs, U.S. Senate. 

Why GAO Did This Study: 

NASA is undertaking a trio of closely-related programs to continue 
human space exploration beyond low-Earth orbit: the SLS vehicle; the 
Orion capsule, which will launch atop the SLS and carry astronauts; 
and the supporting ground systems. As a whole, the efforts represent 
NASA's largest exploration investment over the next decade, 
potentially as much as $22 billion, to demonstrate initial 
capabilities. Beyond 2021, NASA plans to incrementally develop 
progressively more-capable SLS launch vehicles complemented by Orion 
capsules and ground systems. 

GAO was asked to assess the costs of NASA's human exploration program. 
This report examines the scope of NASA's preliminary cost estimates 
for the three programs. To conduct this work, GAO reviewed NASA 
information on cost estimates for the three programs, discussed the 
estimates with NASA officials, and assessed the estimates against best 
practices criteria in GAO's cost estimating guidebook as well as 
NASA's own requirements and guidance. 

What GAO Found: 

The scope of the National Aeronautics and Space Administration's 
(NASA) preliminary cost estimates for the Space Launch System (SLS), 
Orion Multi-Purpose Crew Vehicle (Orion), and associated ground 
systems encompasses only the programs' initial capabilities and does 
not include the long-term, life cycle costs associated with the 
programs or significant prior costs: 

* The SLS estimate is based on the funding required to develop and 
operate the initial 70-metric ton variant through first flight in 2017 
but not the costs for its second flight in 2021. NASA is now incurring 
some costs related to the second flight, but it is not currently 
tracking those costs for life cycle cost estimating purposes. 
Furthermore, the estimate does not include costs to incrementally 
design, develop, and produce future 105- and 130-metric ton SLS 
variants which NASA expects to use for decades. NASA is now funding 
concept development and analysis related to these capabilities. 

* The Orion estimate does not include costs for production, 
operations, or sustainment of additional crew capsules, despite plans 
to use and possibly enhance this capsule after 2021. It also does not 
include $4.7 billion in prior costs incurred during the approximately 
4 years when Orion was being developed as part of NASA's now-defunct 
Constellation program. 

* The ground systems estimate excludes costs to develop or operate the 
ground systems infrastructure beyond 2017, although NASA intends to 
modify ground architecture to accommodate all SLS variants.
NASA expects to use this same limited scope of work to establish the 
programs' baseline cost estimates in 2014. According to NASA, the 
agency is developing a tailored definition for the programs' life 
cycle cost estimates as allowed by NASA requirements. Agency officials 
stated that NASA chose its approach in part due to uncertainties about 
the programs' end dates and missions beyond 2021. 

GAO recognizes that defining life cycle costs can be difficult when 
uncertainties exist, and that best practices for cost estimating look 
favorably on evolutionary development. Even so, best practices expect 
that a high-quality cost estimate will account for program 
uncertainties, forecast a minimum and maximum range for all life cycle 
costs, and clearly define the characteristics of each increment of 
capability so that a rigorous life cycle cost estimate can be 
developed. According to these practices as well as NASA's requirements 
and guidance, life cycle cost estimates should encompass all past, 
present, and future costs for a program, including costs for 
operations, support, and disposal. The limited scope that the agency 
has chosen for constructing preliminary and baseline cost estimates, 
however, means that the estimates are unlikely to serve as a way to 
measure progress and track cost growth over the life of the programs. 
For example, cost growth on the current SLS variant could be masked as 
the addition of scope associated with work for future variants, and 
the baseline estimate would no longer be applicable. Insight into 
program costs helps decision makers understand the long-term 
affordability of programs-—a key goal of the National Space 
Transportation Policy—-and helps NASA assess management of its 
portfolio to achieve increasing capabilities as directed in the NASA 
Authorization Act of 2010. 

What GAO Recommends: 

NASA should establish separate cost baselines that address the life 
cycle of each SLS increment, as well as for any evolved Orion or 
ground systems capability, among other actions to enable assessment of 
affordability and enhance oversight. 

In commenting on a draft of this report, NASA partially concurred with 
GAO's recommendations, citing that actions taken to structure the 
programs and track costs met their intent. However, GAO believes 
NASA's responses do not fully address the issues raised in this report. 

View [hyperlink, http://www.gao.gov/products/GAO-14-385]. For more 
information, contact Cristina Chaplain at (202) 512-4841 or 
chaplainc@gao.gov. 

[End of section] 

Contents: 

Letter: 

Background: 

Limited Scope of Exploration Program Estimates Does Not Capture Life 
Cycle Costs: 

Conclusions: 

Recommendations for Executive Action: 

Agency Comments and Our Evaluation: 

Appendix I: Comments from the National Aeronautics and Space 
Administration: 

Appendix II: GAO Contact and Staff Acknowledgments: 

Table: 

Table 1: Scope of the SLS, Orion, and GSDO Preliminary Cost Estimates: 

Figure: 

Figure 1: SLS, Orion, and GSDO Capabilities: 

[End of section] 

United States Government Accountability Office: 
GAO:
441 G St. N.W. 
Washington, DC 20548: 

May 8, 2014: 

The Honorable Tom Coburn, M.D. 
Ranking Member: 
Committee on Homeland Security and Governmental Affairs: 
United States Senate: 

Dear Senator Coburn: 

The National Aeronautics and Space Administration's (NASA) Human 
Exploration and Operations Mission Directorate (HEO) is undertaking a 
trio of closely-related programs to continue human space exploration 
beyond low-Earth orbit. These programs include the Space Launch System 
(SLS) vehicle to launch astronauts and carry cargo into space, the 
Orion Multi-Purpose Crew Vehicle (Orion) capsule that will launch atop 
the SLS and carry the astronauts, and the Ground Systems Development 
and Operations (GSDO) to support such activities as assembly, test, 
and launch of the SLS and Orion. As a whole, the efforts represent 
NASA's largest exploration investment over the next decade and may 
cost as much as $22 billion to demonstrate initial capabilities that 
encompass the first SLS flight in 2017, the ground systems for that 
effort, and the first two Orion flights in 2017 and 2021. 

GAO has designated NASA's management of acquisitions as a high-risk 
area for more than two decades in view of persistent cost growth and 
schedule slippage in the majority of its major projects. Last year we 
reported that the agency had made progress in reducing risk on smaller-
scale, less complex projects after years of struggling with poor cost 
estimation, weak oversight, and risk underestimation. We also 
reported, however, that demonstrating that this progress can be 
translated to larger, more complex projects, such as SLS and Orion, 
will be especially important in an era of constrained budgets and 
competing priorities.[Footnote 1] Establishing an exploration program 
that will be affordable and sustainable for the long-term is also a 
key goal of the 2013 National Space Transportation Policy.[Footnote 2] 

In light of these issues, you requested that we review the costs of 
NASA's exploration programs. Thus, we examined the agency's 
preliminary cost estimates for the SLS, Orion, and GSDO programs. 
Specifically, we identified the scope of the cost estimates and 
assessed whether that scope provided transparency into costs and 
enabled assessment of long-term affordability. This report provides 
the results of our review. In other on-going work, we are performing a 
more in-depth assessment addressing the credibility and reliability of 
NASA's cost estimate for SLS. 

To conduct this work, we reviewed NASA's preliminary cost estimates 
for the SLS, Orion, and associated ground systems programs and 
information related to the baseline cost estimates for the programs in 
order to determine the scope of the estimates. We assessed the 
estimates' scope against best practices criteria outlined in GAO's 
cost estimating guidebook.[Footnote 3] We also discussed the estimates 
with NASA officials, including the rationale for the estimates' scope 
and exclusions to that scope. We did not asses the reliability of the 
SLS, Orion, and GSDO cost estimates. 

We conducted this performance audit from March 2014 through May 2014 
in accordance with generally accepted government auditing standards. 
Those standards require that we plan and perform the audit to obtain 
sufficient, appropriate evidence to provide a reasonable basis for our 
findings and conclusions based on our audit objectives. We believe 
that the evidence obtained provides a reasonable basis for our 
findings and conclusions based on our objectives. 

Background: 

The National Aeronautics and Space Administration Authorization Act of 
2010 directed NASA to develop a Space Launch System as a follow-on to 
the Space Shuttle and as a key component in expanding human presence 
beyond low-earth orbit. The Act also directed NASA to continue 
development of a multi-purpose crew vehicle for use with that 
system.[Footnote 4] To that end, NASA plans to incrementally develop 
three progressively-larger SLS launch vehicle capabilities--70-, 105- 
and 130-metric ton (MT) variants--complemented by the Orion and 
supporting ground systems. Figure 1 below illustrates NASA's planned 
capabilities for the SLS, Orion, and some of the related GSDO efforts. 

Figure 1: SLS, Orion, and GSDO Capabilities: 

[Refer to PDF for image: illustration] 

Ground Systems Development & Operations (GSDO): 
Crawler Transporter; 
Launch Pad; 
Vehicle Assembly Building; 
Mobile Launcher. 

Space Launch System (SLS) and Orion Multi-Purpose Crew Vehicle: 

2017: 
Orion and SLS - 70 metric tons (MT) (Uncrewed variant) Block I. 

2021: 
Orion and SLS - 70MT (Crewed variant) Block I. 

Beyond 2021: 
Orion and SLS - 105MT (Crewed variant) Block IA[A]; 
Orion and SLS - 105MT (Crewed variant) Block IB[A]; 
SLS - 130MT (Cargo variant) Block II[A]. 

Source: NASA (data and images). 

[A] NASA plans for SLS Block IA to utilize advanced boosters, Block IB 
an exploration upper stage, and Block II the advanced boosters and 
exploration upper stage. The agency has not yet determined whether it 
will first develop the Block IA or Block IB variant. 

[End of figure] 

These capabilities follow the agency's previous attempt to develop a 
next-generation human spaceflight system, the Constellation program, 
which was canceled in 2010 when the program's budget proved inadequate 
to resolve technical challenges. The first version of the SLS being 
developed is a 70-metric ton launch vehicle known as Block I. NASA 
expects to conduct two test flights of the Block I vehicle--the first 
in 2017 and the second in 2021. The vehicle is scheduled to fly some 
700,000 kilometers beyond the moon during the first test flight, known 
as Exploration Mission-1 (EM-1), and to fly a second mission, known as 
Exploration Mission-2 (EM-2), to test additional aspects of its 
performance. After 2021, NASA intends to build 105-and 130-metric ton 
launch vehicles, known respectively as Block IA/B and Block II, which 
it expects to use as the backbone of manned spaceflight for decades. 
NASA anticipates that these launch vehicles will require the 
development of new systems to achieve the agency's goals for carrying 
greater amounts of cargo and traveling farther into space. The agency 
has not yet selected specific missions for the increased capabilities 
to be provided by Block IA/B and Block II but, in keeping with the 
language contained in the 2010 Authorization Act, anticipates using 
the vehicles for such deep-space destinations as near-Earth asteroids 
and Mars. 

In concert with SLS, NASA expects to evolve the Orion and ground 
systems. The agency plans an un-crewed Orion capsule to fly atop the 
SLS during EM-1 in 2017, a crewed capsule during EM-2 in 2021, and 
ultimately, at a date to be determined, a crewed capsule with 
capability for such missions as a Mars landing. NASA is also modifying 
the existing ground systems so that they can support the SLS Block I 
variant and eventually accommodate the Block IA/B and Block II launch 
vehicles as well as enhanced versions of the Orion crew capsule. For 
example, NASA plans to add movable floors to the vehicle assembly 
building at Kennedy Space Center so that the three launch vehicle 
variants can be more easily prepared for flight as the SLS capability 
evolves. 

NASA established the preliminary cost estimates for the initial 
capabilities of the SLS, Orion, and associated GSDO as each of these 
programs entered the preliminary design and technology completion 
phase of development, known as key decision point B (KDP-B).[Footnote 
5] At KDP-B, programs use a probability-based analysis to develop a 
range of preliminary cost and schedule estimates which are used to 
inform the budget planning for the programs. This phase culminates in 
a review at key decision point C (KDP-C), known as program 
confirmation, where cost and schedule baselines with point estimates 
are established and documented in the agency baseline commitment. 
[Footnote 6] After this review, programs are considered to be in the 
implementation phase of development, and program progress is 
subsequently measured against these baselines.[Footnote 7] NASA plans 
to hold the program confirmation review for SLS in spring 2014 and 
expects to conduct the KDP-C review for GSDO in May 2014 and Orion in 
December 2014. Because the life cycle costs of these programs are 
expected to exceed $250 million, NASA is required to report the 
programs' baseline estimates to Congress once the programs are 
approved to move into implementation.[Footnote 8] The agency provides 
this information through its annual budget submission. NASA also uses 
the annual budget submission to inform Congress about the preliminary 
cost ranges for projects proceeding into formulation. 

Limited Scope of Exploration Program Estimates Does Not Capture Life 
Cycle Costs: 

NASA's preliminary cost estimates for the SLS, Orion, and associated 
GSDO programs do not provide a complete picture of the costs required 
to develop and operate the programs through the entire course of their 
respective life cycles. These preliminary estimates include the 
funding required for the scope of work related to initial 
capabilities--that is, development and operations through 2017 for the 
SLS launch vehicle and ground systems and through 2021 for the Orion. 
NASA also expects to use this same limited scope of work to develop 
the SLS, Orion, and GSDO baseline cost estimates. Moreover, NASA's 
estimates do not capture the cost of the second flight of the 70-
metric ton vehicle during EM-2, the costs of development work that 
will be necessary to fly the increased 105-and 130-metric ton SLS 
capabilities, and the costs associated with legacy hardware that will 
be used for the Orion program. In contrast, best practices for cost 
estimation call for "cradle to grave" life cycle cost estimates in 
order to help assess a program's long-term affordability. 

Cost for Initial SLS, Orion, and GSDO Capabilities Totals up to $22 
Billion: 

NASA's preliminary cost estimates for the three programs' initial 
capabilities total a low-to-high cost range of approximately $19 to 
$22 billion. Table 1 below depicts the scope, including content and 
schedule, of the SLS, Orion, and GSDO initial capabilities' 
preliminary cost estimates. As the SLS, Orion, and GSDO programs move 
from formulation into implementation phases, NASA plans to use the 
same content and scope for calculating the programs' respective 
baseline cost estimates. 

Table 1: Scope of the SLS, Orion, and GSDO Preliminary Cost Estimates: 

Capability: Space Launch System (SLS); 
Time Frame: Flight in December 2017; 
Associated Flight: Exploration Mission-1 (EM-1); 
Content: 
* Design, develop, and build 70-metric ton launch vehicle; 
* Establish manufacturing facilities for that vehicle; 
* Conduct uncrewed first exploration flight in 2017; 
* Perform 3 months of post-flight data analysis; 
Preliminary Cost Estimate: (Fiscal Years 2012-2018): 
Minimum: $7.7 billion; 
Maximum: $8.6 billion; 
Anticipated Date for Baseline Cost Estimate: May 2014. 

Capability: Ground Systems Development and Operations (GSDO); 
Time Frame: Flight in December 2017; 
Associated Flight: EM-1; 
Content: 
* Develop the ground systems infrastructure for assembly, test, launch, 
and recovery associated with EM-1; 
* Perform 3 months of post-flight Orion recovery and operations; 
Preliminary Cost Estimate: (Fiscal Years 
2012-2018): 
Minimum: $2.8 billion; 
Maximum: $3.1 billion; 
Anticipated Date for Baseline Cost Estimate: May 2014. 

Capability: Orion Multi-Purpose Crew Vehicle (Orion); 
Time Frame: Flights in December 2017 and August 2021; 
Associated Flight: EM-1 and EM-2; 
Content: 
* Development, manufacturing, and operations for the un-crewed Orion 
flight on SLS in 2017 and crewed Orion flight on SLS in 2021; 
* Perform 3 months of post-flight data analysis; 
Preliminary Cost Estimate: (Fiscal Years 2012-2018): 
Minimum: $8.5 billion; 
Maximum: $10.3 billion; 
Anticipated Date for Baseline Cost Estimate: December 2014. 

Total Estimated Costs: 
Preliminary Cost Estimate: (Fiscal Years 2012-2018): 
Minimum: $19.0 billion; 
Maximum: $22.0 billion. 

Source: GAO analysis of NASA documentation. 

[End of table] 

NASA's Estimates Do Not Include Life Cycle Costs: 

NASA's preliminary cost estimates for SLS, Orion, and GSDO provide no 
information about the longer-term, life cycle costs of developing, 
manufacturing, and operating the launch vehicle, crew capsule, and 
ground systems: 

* The SLS estimate does not cover the cost to build the second 70-
metric ton vehicle and conduct EM-2 in 2021 with that vehicle. NASA is 
already incurring costs for EM-2 because it is funding some EM-2 
development in concert with EM-1 efforts, such as work on the solid 
rocket boosters and core stage that are expected to help power the 70-
metric ton SLS. NASA officials indicated at one point in our review 
that they did not expect to begin formally tracking EM-2 costs until 
after the SLS design's maturity was assessed at a critical design 
review scheduled for 2015; however, the agency stated in technical 
comments to this report that it is tracking those costs for budget 
purposes and plans to begin formally reporting them once SLS reaches 
the project confirmation phase. Additionally, the SLS estimate does 
not address the potential for costs NASA would incur to produce, 
operate, and sustain flights of the 70-MT Block I capability beyond 
2021. NASA officials stated that there are currently no plans to fly 
that vehicle beyond 2021, but that the agency could reassess its 
decision if a specific mission arises for the vehicle. 

* The SLS estimate also does not include costs to design, develop, 
build, and produce the 105-or 130-metric ton Block IA/B and Block II 
SLS variants that NASA intends to use well into the future. NASA 
indicated that these variants will require new systems development 
efforts--including advanced boosters and a new upper stage to meet the 
greater performance requirements associated with larger payloads as 
well as travel to Mars or other deep-space locations. NASA has started 
funding concept development, trades, and analyses related to these new 
designs, such as assessing the use of lightweight materials to 
construct the upper stage and selective laser melting to produce 
system components. In addition, NASA anticipates a re-start of the 
production line for the RS-25 engine that it plans to use to power the 
Block IA/B and Block II vehicles. Currently, the agency has enough 
residual RS-25 liquid-fuel engines from the Space Shuttle program to 
launch the SLS for up to 4 flights. NASA expects to need more of the 
engines beyond that, but it has not yet finalized acquisition plans to 
manufacture them. According to agency officials, re-starting the 
production line would entail at least 3 years, whereas development of 
a new engine would require a minimum of 8 years. 

* The Orion estimate does not address costs for production, 
operations, or sustainment of additional crew capsules after 2021 nor 
does it address prior costs incurred when Orion was being developed as 
part of the now-defunct Constellation program. NASA initiated the crew 
capsule's development in 2006 as part of the Constellation program. 
During approximately 4 years that the capsule's development occurred 
under Constellation, the agency spent about $4.7 billion for the 
capsule's design and development. When Constellation was canceled in 
2010 and the work transitioned to the current Orion program, however, 
NASA excluded the Constellation-related costs from Orion's current 
preliminary cost estimate of $8.5 to $10.3 billion through 2021. 

* The GSDO estimate does not address the costs to develop or operate 
SLS ground systems infrastructure beyond EM-1 in 2017, although NASA 
intends to modify ground architecture to accommodate all SLS variants. 

NASA officials have indicated that the road ahead involves many 
decisions about the programs beyond 2021, including how development 
will proceed, what missions will be performed, when the programs will 
end, and how each effort will be managed. They noted that the agency 
is using a capability-based approach to SLS, Orion, and the associated 
GSDO development, in which system capability grows over time. They 
indicated that the programs' preliminary cost estimates are for 
attainment of capabilities rather than the full cost of the programs, 
and that it is difficult to define life cycle costs because the 
programs' intended long-term uses and life spans have not been fully 
determined. According to NASA, the agency is developing a tailored 
definition for life cycle cost estimating that is allowed by NASA 
requirements. Because the missions drive the number and types of 
vehicles, crew capsules, and ground systems that would be required, as 
missions are defined, NASA officials said they would be in a better 
position to estimate the programs' life cycle costs. The officials 
stated that NASA is looking ahead to future costs as much as possible, 
and NASA indicated in technical comments to this report that the SLS 
program plans to begin formally reporting costs for the launch 
vehicle's EM-2 after the program's anticipated confirmation in spring 
2014. 

We recognize that defining life cycle costs can be difficult when 
uncertainties exist. However, in contrast to NASA's tailored approach, 
both widely-accepted best practices for cost estimation and the 
agency's own requirements support the need for full life cycle cost 
estimates. Even when uncertainties exist, best practices maintain that 
a high-quality cost estimate takes into account those uncertainties 
while forecasting the minimum and maximum range of all life cycle 
costs. The best practices, developed by the GAO in concert with the 
public and private sector cost estimating communities, call for 
"cradle to grave" life cycle cost estimates and maintain that life 
cycle cost estimates should provide an exhaustive, structured 
accounting of all resources and associated cost elements required to 
develop, produce, deploy, and sustain a particular program. This 
entails identification of all pertinent cost elements, from initial 
concept through operations, support, and disposal. Likewise, NASA's 
program management requirements direct that programs develop a 
preliminary full life cycle cost estimate. In accordance with the 
agency's guidance regarding life cycle costs, such an estimate would 
encompass total costs from the formulation through the implementation 
phase, including design, development, mission operations, support, and 
disposal activities. 

According to best practices, because life cycle estimates encompass 
all possible costs, they provide a wealth of information about how 
much programs are expected to cost over time. Life cycle cost 
estimates, including a range for preliminary costs as directed by NASA 
requirements for programs in the formulation phase, enhance decision 
making, especially in early planning and concept formulation of 
acquisition. High-quality cost estimates, as noted by best practices, 
can support budgetary decisions, key decision points, milestone 
reviews, and investment decisions. For example, a preliminary life 
cycle cost estimate provides the basis of the financial investment 
that the agency is committing the government to, while a baseline life 
cycle cost estimate forms the basis for measuring cost growth over 
time. Because NASA expects to continue with a limited scope for the 
SLS, Orion, and baseline estimates, however, cost growth over time 
within the programs will be difficult to identify and could be masked 
as growth in the SLS capability if the most current cost estimate did 
not contain the same content as the baseline estimate. 

As noted in best practices for cost estimating, the quality of a 
program's cost estimate is also key to determining its affordability, 
that is, the degree to which a program's funding requirements fit 
within an agency's overall portfolio plan. However, NASA's preliminary 
cost estimates do not address the affordability of increased 
capabilities because they exclude the life cycle costs associated with 
the SLS Block IA/B and Block II launch vehicles that the agency 
intends to use well into the future. According to agency officials at 
the time of our review, NASA has not yet decided whether it will 
manage the Block IA/B and Block II development efforts as individual 
programs and, if so, what the programs' scope would be. Best practices 
for cost estimating look favorably on the incremental development 
approach NASA has chosen for SLS, and they also state that programs 
following such an approach should clearly define the characteristics 
of each increment of capability so that a rigorous life cycle cost 
estimate can be developed. In addition, we have previously concluded 
that it is prudent for an agency to manage increasing capabilities of 
an existing program on par with the investments yet to come and in a 
way that is beneficial for oversight. For example, we have recommended 
that agencies developing weapon systems in increments consider 
establishing each increment of increased capability with its own cost 
and schedule baseline.[Footnote 9] According to cost estimating best 
practices, dividing programs into smaller pieces makes management and 
testing easier and helps avoid unrealistic cost estimates, resulting 
in more realistic long-range investment funding and more effective 
resource allocation. These are important considerations given that 
NASA is likely to spend billions of dollars beyond its initial 
investment of up to $22 billion to develop the increased capabilities. 
Development of human-rated liquid-fueled engines, for example, has 
been among the most difficult, time-intensive, and costly parts of 
launch vehicle development. As a case in point, NASA spent about 8 
years and $1.5 billion to develop a human-rated engine known as J-2X 
for use on Ares launch vehicles within the agency's now-defunct 
Constellation program. 

NASA has faced issues with affordability of its manned space flight 
investments and other major projects in the past, and those 
affordability issues have sometimes contributed to a program's 
cancellation. For example, NASA originally envisioned that the Space 
Shuttle would fly up to 100 times per vehicle at a cost of $7.7 
million per launch.[Footnote 10] In reality, the Shuttle flew 135 
times in total over a period of 30 years at a cost that was about $3.5 
billion per year around the 2008 timeframe. Amid concerns that 
included the Shuttle's costs and safety, the program ended. NASA then 
focused on building human spaceflight alternatives that included 
Constellation. In 2010, Constellation was canceled because, as noted 
by NASA's Administrator, the program could not return astronauts to 
the moon at an affordable cost and would require far more funding to 
make the agency's approach viable.[Footnote 11] In a recent example 
noted in the agency's 2015 presidential budget request, NASA may place 
in storage the Stratospheric Observatory for Infrared Astronomy, an 
airborne observatory for studying astronomical objects and phenomena, 
after spending some 23 years and more than $1 billion to develop the 
project. The agency cited high operating costs, estimated at some $1.8 
billion over the project's planned life, as a factor in its 
considerations. 

Conclusions: 

The SLS, Orion, and GSDO programs NASA has established to fulfill its 
mandate of providing the capability for transporting humans to space 
are well underway. These programs represent a significant investment 
for the country--as much as $22 billion for initial capabilities and 
potentially billions more to field increased capabilities over time as 
envisioned in the 2010 NASA Authorization Act. Given the goals that 
have been outlined for NASA as part of the National Space 
Transportation Policy, the success of these programs is to be measured 
not only by the capability that is achieved but also by NASA's ability 
to achieve them within a reasonable timeframe and cost to the U.S. 
taxpayer. As such, establishing these programs with both near-term and 
long-term affordability in mind is key. The limited scope that NASA 
has chosen to use as the basis for formulating the programs' cost 
baselines, however, does not provide the transparency necessary to 
assess long-term affordability and will hamper oversight by those 
tasked with assessing whether the agency is progressing in a cost-
effective and affordable manner. If the SLS, Orion, and GSDO baseline 
cost estimates cannot be compared to current costs, the baseline 
estimates lose their usefulness because they no longer serve as a 
means to hold NASA accountable for cost growth and program progress. 
Furthermore, if NASA does not clearly delineate costs for operations 
and sustainment of the initial capabilities or separate cost and 
schedule baselines for upcoming capabilities, then it will be 
difficult to assess program affordability and for the Congress to make 
informed, long-term budgetary decisions. Estimates that use all 
available information to establish a potential range of costs for the 
full scope of these upcoming capabilities can help inform such 
decisions. 

Recommendations for Executive Action: 

To provide the Congress with the necessary insight into program 
affordability, ensure its ability to effectively monitor total program 
costs and execution, and to facilitate investment decisions, we 
recommend that NASA's Administrator direct the Human Exploration and 
Operations Mission Directorate take the following 3 actions: 

* Establish a separate cost and schedule baseline for work required to 
support the SLS Block I EM-2 and report this information to the 
Congress through NASA's annual budget submission. If NASA decides to 
fly the SLS Block I beyond EM-2, establish separate life cycle cost 
and schedule baseline estimates for those efforts, to include funding 
for operations and sustainment, and report this information annually 
to Congress via the agency's budget submission. 

* Because NASA intends to use the increased capabilities of the SLS, 
Orion, and GSDO efforts well into the future and has chosen to 
estimate costs associated with achieving the capabilities, establish 
separate cost and schedule baselines for each additional capability 
that encompass all life cycle costs, to include operations and 
sustainment. When NASA cannot fully specify costs due to lack of well-
defined missions or flight manifests, forecast a cost estimate range--
including life cycle costs--having minimum and maximum boundaries. 
These baselines or ranges should be reported to Congress annually via 
the agency's budget submission. 

* Because a significant amount of the original Orion development work 
occurred under the Constellation program, include those costs in the 
baseline cost estimate for the Orion program. 

Agency Comments and Our Evaluation: 

NASA provided written comments on a draft of this report. These 
comments are reprinted in Appendix I. 

In responding to a draft of our report, NASA partially concurred with 
our three recommendations, citing among other reasons that actions 
already in place at the time of our review such as establishing SLS, 
Orion, GSDO as separate programs and a block upgrade approach for SLS-
-and actions it plans to take to track costs--met the intent of our 
recommendations. In most cases, the actions that NASA plans to take do 
not fully address the issues we raised in this report. We continue to 
believe that our recommendations are valid and should be fully 
addressed as discussed below. NASA also provided technical comments 
which we incorporated as appropriate. 

NASA partially concurred with our first recommendation to establish a 
separate cost and schedule baseline for work required to support the 
SLS Block I EM-2, report this information to the Congress through 
NASA's annual budget submission, and establish separate life cycle 
cost and schedule baseline estimates for EM-2 if NASA decides to fly 
Block I beyond EM-2. NASA also partially concurred with our second 
recommendation to establish separate cost and schedule baselines that 
encompass life cycle costs, including operations and sustainment, for 
each additional SLS, Orion, and GSDO capability and to report cost 
estimates for the capabilities annually via the agency budget 
submission until key requirements are defined and baselines can be 
established. In its response, NASA stated that it had established 
separate programs for SLS, Orion, and GSDO and adopted a block upgrade 
approach for SLS. This approach, NASA stated, is in concert with best 
practices and NASA policy. In addition, NASA indicated that it will 
establish cost and schedule estimates for initial demonstration of the 
three programs as they enter respective implementation phases and will 
begin reporting development, operations, and sustainment costs for SLS 
Block I and subsequent variants starting in fiscal year 2016 via its 
annual budget submission to Congress. Finally, the agency stated that 
it intends to conduct design reviews for upgraded SLS elements, 
including the upper stage and booster, and set up cost commitments 
similar to what it has done for Block I capability as part of that 
design review process, but that it does not intend to establish life 
cycle estimates for SLS through the end of the program because flight 
rates, mission destinations and other strategic parameters are yet 
unknown. 

As discussed in the report, best practices for cost estimating 
recognize that NASA's evolutionary development approach for SLS, 
Orion, and GSDO helps reduce risk and provide capabilities more 
quickly. Given NASA's planned long-term use of the SLS, Orion, and 
GSDO, its block upgrade approach and intention to conduct design 
reviews for each of the planned upgrades will provide some 
understanding of the development work and resources required. For 
example, such reviews are typically expected to yield information 
about technical progress against requirements. While NASA's prior 
establishment of SLS, Orion, and GSDO as separate programs lends some 
insight into expected costs and schedule at the broader program level, 
it does not meet the intent of our first two recommendations because 
cost and schedule identified at that level is unlikely to provide the 
detail necessary to monitor the progress of each block against a 
baseline. Furthermore, it is unclear from NASA's response whether the 
cost commitments the agency plans within the design review process 
will serve the same purpose as establishing a cost baseline for each 
respective upgrade. 

Additionally, NASA's planned approach for reporting costs associated 
with EM-2 and subsequent variants of SLS via its annual budget 
submission only partially meets the intent of our first two 
recommendations. Providing cost information at an early phase when 
baseline estimates have yet to be established is helpful to ensure 
costs associated with EM-1 and EM-2 are not conflated and funding 
requirements for future flights of the Block I SLS and future variants 
are somewhat understood. Reporting the costs via the budget process 
alone, however, will not provide information about potential costs 
over the long-term because budget requests neither offer all the same 
information as life cycle cost estimates nor serve the same purpose. 
Plainly, progress cannot be assessed without a baseline that serves as 
a means to compare current costs against expected costs. An agency's 
budget submission reflects its current annual fiscal needs and 
anticipated short-term needs up through an additional 4-year period 
for a particular program, is subject to change based on fiscal 
negotiation, and is not necessarily linked to an established baseline 
that indicates how much the agency expects to invest to develop, 
operate, and sustain a capability over the long-term. Conversely, life 
cycle cost estimates establish a full accounting of all program costs 
for planning, procurement, operations and maintenance, and disposal 
and provide a long-term means to measure progress over a program's 
life span. As NASA establishes parameters for the additional flights 
of the first SLS capability and upgraded capabilities, including 
flight rates, mission destinations, and other requirements, it will be 
well-poised to move from reporting costs in budget submissions to 
establishing baseline cost and schedule estimates for each capability 
and reporting progress against these respective baselines. Therefore, 
we continue to believe that NASA should baseline costs for EM-2 and 
each future variant of SLS and report progress against those 
established baselines. 

NASA makes no specific mention of how it plans to account for future 
work associated with Orion and GSDO. We believe it is important to 
treat Orion and GSDO with the same significance as SLS because this 
trio of programs is expected to work in concert now and in the future 
to achieve NASA's goals for human space exploration. Reporting Orion 
and GSDO development, operations, and sustainment costs in the annual 
budget request, as NASA plans for SLS, would be a logical first step. 
Just as with SLS, however, it will be important for NASA to establish 
and report progress against baseline costs and schedules for each 
block of Orion and GSDO efforts as flight rates, missions, and other 
strategic parameters are defined because doing so will help the agency 
more effectively manage not only each program but its human 
exploration portfolio as a whole. 

NASA partially concurred with our third recommendation to include the 
costs of Orion development work under the Constellation program as 
part of the baseline cost estimate for the Orion program. Agency 
officials stated that they agree those costs should be tracked and 
disclosed, but that the current Orion program has a new concept of 
operations, requirements, and budget plan than that under the 
Constellation effort. 

The past costs incurred for Orion's development are important because 
they provide visibility into the total cost of developing a crew 
capsule for human space exploration. Exclusion of these costs from 
Orion's current estimate understates how much NASA will invest to put 
humans into space. Although NASA notes that it has changed Orion's 
concept of operations and requirements, the agency nonetheless 
migrated Orion critical technology development efforts from 
Constellation to the SLS program. For example, NASA began efforts to 
develop the coating for Orion's heat shield as part of Constellation, 
and the agency continues that development today in preparation for the 
capsule's launch atop SLS. Therefore, we continue to believe our 
recommendation to include Orion development costs under Constellation 
in the baseline cost estimate for the current Orion program is valid 
and should be fully implemented. 

We are sending this report to NASA's Administrator and to interested 
congressional committees. In addition, the report will be available at 
no charge on GAO's website at [hyperlink, http://www.gao.gov]. 

Should you or your staff have any questions on matters discussed in 
this report, please contact me at (202) 512-4841 or chaplainc@gao.gov. 
Contact points for our Offices of Congressional Relations and Public 
Affairs may be found on the last page of this report. Other key 
contributors to this report are listed in Appendix II. 

Sincerely yours, 

Signed by: 

Cristina T. Chaplain: 
Director: 
Acquisition and Sourcing Management: 

[End of section] 

Appendix I: Comments from the National Aeronautics and Space 
Administration: 

National Aeronautics and Space Administration: 
Headquarters: 
Washington, DC 20546-0001: 

April 29, 2014: 

Reply to attention of: Human Exploration and Operations Mission 
Directorate: 

Ms. Cristina T. Chaplain: 
Director: 
Acquisition Sourcing Management: 
United States Government Accountability Office: 
Washington, DC 20548: 

Dear Ms. Chaplain: 

The National Aeronautics and Space Administration (NASA) appreciates 
the opportunity to review and comment on the Government Accountability 
Office (GAO) draft report entitled, "Actions Needed to Improve 
Transparency and Assess Long-Term Affordability of Human Exploration 
Programs" (GAO-14-385). 

In the draft report, GAO addresses three recommendations to the NASA 
Administrator which are intended to provide Congress with the 
necessary insight into program affordability, ensure its ability to 
effectively monitor total program costs and execution, and to 
facilitate investment decisions. The challenge presented in 
effectively responding to these recommendations is the vague way in 
which the term "life cycle" is used. GAO mentions NASA's progress on
"smaller, less complex projects" and seeks to have NASA "translate to 
larger, more complex projects, such as (Space Launch System) SLS and 
Orion" without clearly articulating the inherent, fundamental 
definitional difference in life cycle. Unlike a satellite project with a
single launch date and established operating design lifetime, SLS and 
Orion are multi-decadal, evolving capabilities that enable many 
individual space missions. In this sense, they are more like space 
infrastructure than discrete mission projects. This accounts for 
NASA's capability development approach and the focus on the cost to 
achieve defined capability blocks along the evolutionary paths of SLS 
and Orion. It is from within this frame of reference that NASA 
responds to GAO's recommendations below. 

GAO recommends that the NASA Administrator direct the Human 
Exploration and Operations Mission Directorate take the following 
actions: 

Recommendation 1: Establish a separate cost and schedule baseline for 
work required to support the SLS Block I Exploration Mission-2 (EM-2) 
and report this information to the Congress through NASA's annual 
budget submission. If NASA decides to fly the SLS Block I beyond EM-2, 
establish separate life cycle cost and schedule baseline estimates for 
those efforts, to include funding for operations and sustainment, and 
report this information annually to Congress via the agency's budget 
submission. 

Management's Response: NASA partially concurs. Per GAO, "According to 
cost estimating best practices, dividing programs into smaller pieces 
makes management and testing easier and helps avoid unrealistic cost 
estimates, resulting in more realistic long-range investment funding
and more effective resource allocation." NASA explicitly defined and 
documented life cycles for the exploration programs (SLS, Orion, and 
Grounds Systems Development and Operations (GSDO)) to a first 
demonstrated capability, consistent with this best practice and NASA 
project and program management policy as prescribed in NASA Policy 
Directive (NPD) 7120.SE. Specifically, NASA is providing cost and 
schedule estimates through the initial demonstration of these initial 
capabilities, as part of the life cycle review process that sets the 
Agency Baseline Commitments for those initial capabilities. 

For SLS, this commitment covers development activity through first 
demonstration of the Block 1 capability on EM-I. The current SLS Life 
Cycle Cost (LCC) only includes the development costs through EM-I, and 
is used to set the commitment for that development capability. The SLS 
LCC associated with the EM-I commitment is a subset of the overall SLS
budget, and NASA will identify the non-EM-I budget within the overall 
SLS budget plan as part of the decision memorandum. Starting with the 
FY 2016 President's budget request for NASA (and consistent with NASA 
practices for all major programs that have entered the implementation 
phase), NASA will also provide the split between production/operations 
and development. The production/operations line will include costs 
associated with EM-2 and subsequent flights, including operation of 
Block I or subsequent variants, based on mission requirements that 
will drive the SLS evolution strategy. NASA maintains that this strategy
(setting a baseline commitment for the initial Block 1 capability; 
tracking development costs to that capability; making separate 
commitments, and tracking development costs, for major evolution 
upgrades beyond Block 1 as described in the response to 
Recommendation 2; and providing a total development and 
production/operations split in the budget request) meets or exceeds 
the intent of the GAO recommendation. 

Recommendation 2: Because NASA intends to use increased capabilities 
of the SLS, Orion and GSDO efforts well into the future and has chosen 
to estimate costs associated with achieving capabilities, establish 
separate cost and schedule baselines for each additional capability 
that encompass all life cycle costs, to include operations and 
sustainment. When NASA cannot fully specify costs due to lack of well-
defined missions or flight manifests, forecast a cost estimate range - 
including life cycle costs - having minimum and maximum boundaries. 
These baselines or ranges should be reported to Congress annually via 
the agency's budget submission. 

Management's Response: NASA partially concurs. NASA has addressed this 
issue in part through creating separate programs for SLS, Orlon, and 
GSDO, and having each program's development paced to when a particular 
capability is needed. SLS has gone further and adopted a block upgrade 
approach for SLS to ensure more realistic long-range investment 
planning and more effective resource allocations through the budget 
process. For major vehicle upgrades (including upper stage and 
advanced booster), NASA intends to conduct development design reviews 
on the upgrade element, as well as vehicle-level delta design reviews 
per the NPD 7120.5E process, with appropriate and approved tailoring 
to ensure proper integration between the upgrade element and the 
vehicle. NASA recognizes GAO's findings on block upgrades in previous 
large programs like F-22, and intends to set cost commitments for major
element development as part of the design review process, similar to 
the design review and commitment process and approach NASA has taken 
for the Block 1 capability. 

However, consistent with a capability driven approach that has been 
directed and supported by the Congress, NASA does not intend to carry 
life cycle estimates for the SLS program through an end-of-program 
date because the strategic parameters of such an analysis (flight rates,
mission destinations, architectures, international cooperation, etc.) 
are in the process of being defined. In addition, the agency does not 
concur that "cost growth on the current variant could be masked as the 
addition of scope associated with work for future variants." By 
committing to costs on a block upgrade basis, NASA ensures it is not 
making unrealistic cost estimates based on parameters that are still 
being defined. The scope is very specifically defined for each 
development effort to avoid the potential for a "blended" cost for 
initial and evolved variants. NASA will provide the Congress with full 
insight into the SLS program costs through a combination of the 
development commitments that the Agency will make for EM-I and
subsequent major development upgrades and the SLS annual budget which 
contains a complete accounting of operations and sustainment costs. 

Recommendation 3: Because a significant amount of the original Orion 
development work occurred under the Constellation program, include 
those costs in the baseline cost estimate for the Orion program. 

Management's Response: NASA partially concurs. While we agree that
those heritage costs which the new program fully leverages should be 
tracked and disclosed, NASA does not include them in the life cycle 
definition because NASA defines the start of the Orion Multi-Purpose 
Crew Vehicle (MPCV) Program to be fall 2011, after the 2011 decision
that the Orion design could be used to meet the 2010 Authorization Act 
requirement for a multi-purpose crew vehicle. NASA fully discloses the 
costs of activities prior to the start of the Orion MPCV Program that 
substantially contribute to it. While the Constellation Crew 
Exploration Vehicle heritage design was chosen to be used for MPCV, 
the new requirements, new flight schedule, new concept of operations, 
and new budget plan were part of the reformulation of Orion MPCV as a 
new program. The current program should be managed to the plan under 
which it is being formulated and that a life cycle cost (and life 
cycle cost commitment at KDP-C) should necessarily match the current 
program formulation assumptions. 

Thank you for the opportunity to comment on this draft report. If you 
have any questions or require additional information, please contact 
Michelle Bascoe at (202) 358-1574. 

Sincerely, 

Signed by: 

William H. Gerstenmaier: 
Associate Administrator for Human Exploration and Operations: 

[End of section] 

Appendix II: GAO Contact and Staff Acknowledgments: 

GAO Contact: 

Cristina Chaplain, 202-512-4841 or chaplainc@gao.gov: 

Staff Acknowledgments: 

Key contributors to this report were Shelby S. Oakley, Assistant 
Director; Tana M. Davis; John S. Warren, Jr.; Jennifer Echard; Laura 
Greifner; Roxanna Sun; and Sylvia Schatz. 

[End of section] 

Footnotes: 

[1] GAO, NASA: Assessments of Large-Scale Selected Projects, 
[hyperlink, http://www.gao.gov/products/GAO-13-276SP], (Washington, 
D.C.: May 17, 2013). 

[2] National Space Transportation Policy, November 21, 2013. 

[3] GAO, GAO Cost Estimating and Assessment Guide: Best Practices for 
Developing and Managing Capital Program Costs, [hyperlink, 
http://www.gao.gov/products/GAO-09-3SP], (Washington, D.C.: March 
2009). 

[4] Pub. L. No. 111-267, §§ 302(a), 303(a) (codified at 42 U.S.C. §§ 
18322, 18323). 

[5] KDP-B occurs during a program's formulation phase. The formulation 
phase is the first phase of a NASA program, wherein requirements are 
defined (i.e., what the program is designed to do), schedules and cost 
estimates established, and implementation plans produced. 

[6] NASA defines baseline as the technical performance and content, 
technology application, schedule milestones, and budget (including 
contingency and allowance for program adjustment) that are documented 
in the approved program plans. 

[7] In the implementation phase, a program typically carries out plans 
made in formulation, performs final design and fabrication, tests 
components and system assembly, integrates these components and tests 
how the components work together, and launches on its intended 
mission(s). 

[8] Under the National Aeronautics and Space Administration 
Authorization Act of 2005, Pub. L. No. 109-161, §103; 42 U.S.C. § 
16613(b(f)(4), Congress required NASA to report cost and schedule 
baselines--benchmarks against which changes can be measured--for all 
NASA programs and projects with estimated life cycle costs of at least 
$250 million that have been approved to proceed to implementation. 

[9] GAO, Tactical Aircraft: F-22A Modernization Program Faces Cost, 
Technical, and Sustainment Risks, [hyperlink, 
http://www.gao.gov/products/GAO-12-447], (Washington D.C.: May 2, 
2012). 

[10] NASA, Columbia Accident Investigation Board, Report Volume I, 
August 2003. 

[11] NASA, Statement by Charles Bolden, NASA Administrator, February 
1, 2010, NASA Budget Press Conference. 

[End of section] 

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