Cost Control Problems Continue to Worsen
T-NSIAD-97-177: Published: Jun 18, 1997. Publicly Released: Jun 18, 1997.
GAO discussed its current work on the International Space Station program, focusing on an update of information reported in July 1996 on the: (1) status of the program's financial reserves; and (2) prime contract's cost and schedule variances and estimates at completion.
GAO noted that: (1) in GAO's report and subsequent testimony before the Senate Subcommittee on Science, Technology, and Space in 1996, GAO pointed out the deterioration in the prime contractor's cost and schedule performance and noted that the station's near-term funding included only limited financial reserves; (2) GAO also identified what was, at that time, an emerging risk to the program, which were indications of problems in the Russian government's ability to meet its commitment to furnish a Service Module providing power, control, and habitation capability for the International Space Station; (3) GAO concluded that, if program costs continued to increase, threats to financial reserves worsened, and the Russian government failed to meet its commitment in a timely manner, the National Aeronautics and Space Administration (NASA) would either have to exceed its funding limitation to cope with the increased costs or defer or rephase activities, which could delay the space station's schedule and would likely increase its overall cost; (4) since GAO's report and testimony in 1996, the risks to the space station's cost and schedule have in fact increased; (5) the Russian government has not been able to meet its financial responsibilities to the International Space Station, resulting in a currently projected 8-month delay in launching the Service Module; (6) cost control problems under the station prime contract have also steadily worsened; (7) since April 1996, the cost overrun has more than tripled to $291 million and the estimated cost to get the contact back on schedule has increased by almost 50 percent to $129 million; (8) the station's financial reserves have also deteriorated significantly; (9) NASA has taken several steps to avoid exceeding its annual and assembly completion funding limitation and to replenish its financial reserves; (10) such efforts have included transferring work to others, rephasing or deferring work, redefining the "assembly completion" milestone, and keeping additional funding outside the capped portion of the program; (11) in addition to the adverse cost and schedule impacts of the Service Module delay recently announced by NASA, considerable further cost and schedule problems could occur if the Russian government continues to be unable to fulfill its partnership commitment to the International Space Station; (12) if further problems do materialize, GAO believes a congressional review of the entire program would be needed; and (13) such a review should focus on obtaining congressional and administration agreement on the future scope and cost level for a station program that merits continued U.S. government support.