Prime Contract Changes
NSIAD-00-103R: Published: May 11, 2000. Publicly Released: May 31, 2000.
Pursuant to a congressional request, GAO provided information on the National Aeronautics and Space Administration's (NASA) space station program's prime contract changes during fiscal years 1998 and 1999, focusing on: (1) the number of changes made to the original contract, how many added capability or revised initial designs, and the total estimated cost of the changes; (2) the number of changes that either added capability or revised initial designs and for which work began before NASA and the contractor agreed on a cost estimate and their total estimated cost; (3) the difference between the proposed and final negotiated costs of changes for which work began before NASA and the contractor agreed on a cost; and (4) instances in which NASA spent funds for space station enhancements that were not called for in the original contract's baseline design and are not currently included in NASA's space station program budget.
GAO noted that: (1) in fiscal years 1998 and 1999, NASA authorized 593 changes to the space station prime contract for a total estimated cost of $897.7 million; (2) of these, 280 changes added capability or revised initial designs; (3) changes that added capabilities were made to increase the station's operational performance, especially in meeting research needs; (4) revisions of initial designs included changes to correct operability deficiencies, correct design deficiencies, and reduce cost, schedule, and technical risks; (5) the total estimated cost of changes made to add capabilities and revise initial designs was $368.1 million; (6) NASA officials can authorize work to begin on a contract change before NASA and the contractor agree on a final estimated cost and fee; (7) these are referred to as undefinitized contract actions; (8) GAO found that in fiscal years 1998 and 1999 undefinitized contract changes accounted for more than one-half of all authorized changes, and 98 percent of their cost; (9) NASA continued to use undefinitized changes for the large majority of change costs on the space station prime contract; (10) NASA officials said that because the space station program is complex and is nearing completion of the design, development, test, and evaluation stage of the program, NASA expects many urgent changes in the future; (11) NASA officials explained that they began work on undefinitized changes to avoid delaying the space station program schedule, modify ongoing work, or reduce the cost of a change by taking advantage of other ongoing work; (12) as of September 30, 1999, NASA and the Boeing Corporation had reached agreement on costs for 156 of the 187 changes for which work had begun before a final estimated cost was negotiated; (13) 5 of NASA's highest-cost undefinitized changes involved contractor-proposed costs of about $69.0 million; (14) NASA had completed negotiations for three of the changes; (15) in two of the cases, negotiated costs were approximately 20 percent lower than the contractor's proposal; (16) in the third case, a reduction of $220.9 million was made to the prime contract by the deletion of the space station Habitation module; (17) NASA identified four activities costing about $19.4 million that will provide enhancements to the space station that were not included in the original contract or in NASA's space station program budget; and (18) although these activities are being implemented outside the space station program, their results will provide enhancements to the space station.