Space:

NASA Must Reconsider Operations Pricing Policy To Compensate for Cost Growth on the Space Transportation System

MASAD-82-15: Published: Feb 23, 1982. Publicly Released: Feb 23, 1982.

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GAO reviewed the National Aeronautics and Space Administration (NASA) pricing policy and operating cost for the Space Transportation System (STS) to determine the overall effect that STS cost increases would have on future NASA budget requests and on its other research and development.

GAO found that, based on estimated future costs, NASA established a 3-year, $18 million fixed price for commercial, foreign, and other U.S. agencies' launches and a 6-year, $12.2 million fixed price for the Department of Defense (DOD) launches. The price is to be adjusted annually to recover total operations costs. The projected average costs to fly a space shuttle mission have increased 73 percent. NASA must fund the full cost of its flights and the difference between the actual cost per flight and the reimbursements received from users, until the price charged to them becomes more than the actual costs and provides funds to the government. It is currently estimated that NASA could pay 80 percent of the shuttle operations costs while flying 36 percent of the flights. A minimum of 62 percent of the NASA flights included in the flight traffic model will require more than the standard launch services. These services increase the price of a shuttle launch and affect future budgets. NASA established an underestimated user fee, which is charged to foreign and commercial users, to recover a fair share of the government's capital invested in the orbiter fleet and in equipment and facilities. The user fee is only charged to commercial and foreign users that did not participate in STS development. The NASA budget must bear a major portion of these costs. GAO believes that DOD and other government agencies should bear a greater share of the operational costs of the shuttle's early years.

Status Legend:

More Info
  • Review Pending-GAO has not yet assessed implementation status.
  • Open-Actions to satisfy the intent of the recommendation have not been taken or are being planned, or actions that partially satisfy the intent of the recommendation have been taken.
  • Closed-implemented-Actions that satisfy the intent of the recommendation have been taken.
  • Closed-not implemented-While the intent of the recommendation has not been satisfied, time or circumstances have rendered the recommendation invalid.
    • Review Pending
    • Open
    • Closed - implemented
    • Closed - not implemented

    Recommendations for Executive Action

    Recommendation: The Administrator, NASA, should direct that the agency's annual budget presentations to Congress show the NASA subsidies by user class; that is, the Department of Defense, civil U.S. Government agencies, and nongovernment users.

    Agency Affected: National Aeronautics and Space Administration

    Status: Closed - Not Implemented

    Comments: Congress reviewed the NASA-revised STS pricing policy and gave its approval. Congress did not pursue the recommendation with NASA, therefore, GAO no longer believes it should pursue this recommendation.

    Recommendation: The Administrator, NASA, should reconsider its use fee policy. Alternatives that could be considered are: (1) charge DOD and other government users the current use fee charged to commercial and foreign users; (2) update the current use fee to reflect all appropriate facilities and equipment costs and a more realistic orbiter flight rate, and charge the updated fee to commercial and foreign users where legally binding agreements have not been signed; and (3) update the use fee as above and charge it to all users, including DOD and other government users.

    Agency Affected: National Aeronautics and Space Administration

    Status: Closed - Not Implemented

    Comments: The NASA-revised STS pricing policy was reviewed and approved by Congress and the Office of Management and Budget (OMB). GAO no longer believes the recommendations should be pursued.

    Recommendation: The Administrator, NASA, should reconsider the STS pricing policy. Alternatives that could be considered are: (1) void the current pricing policy as it pertains to DOD and other agencies, and establish a price more in line with the cost to NASA to launch a shuttle flight; (2) void the pricing policy as it pertains to all users and establish a price more in line with the cost to NASA to launch a shuttle flight except for those launches that have legally binding agreements; and (3) ensure that the soon to be established phase II prices adequately recoup the previous losses and fully recognize the potential cost increases during the early years of operation.

    Agency Affected: National Aeronautics and Space Administration

    Status: Closed - Not Implemented

    Comments: The NASA-revised STS pricing policy was reviewed and approved by Congress and OMB. GAO no longer believes the recommendations should be pursued.

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