Cost Control Problems
T-NSIAD-98-54: Published: Nov 5, 1997. Publicly Released: Nov 5, 1997.
GAO discussed the cost control problems of the National Aeronautics and Space Administration's (NASA) Space Station Program focusing on: (1) cost growth under the prime contract; (2) the impact on NASA of the Russians' performance problems; and (3) the need to review the program and consider funding limitations.
GAO noted that: (1) it had previously reported on the deteriorating cost and schedule performance of the space station's prime contractor, Boeing Defense and Space Group, and identified an emerging risk to the program--the indications of problems in the Russian government's ability to meet its commitment to furnish a Service Module providing the station with power, control, and habitation capability; (2) since then, the prime contract deterioration has continued and the Service Module delay has cost NASA at least several hundreds of millions of dollars, with the potential for costing considerably more should the Russians falter again; (3) cost growth is especially worrisome because the rate of cost deterioration has increased; (4) Boeing has more than doubled its estimate of the total cost growth at contract completion from $278 million to $600 million, and NASA has increased its total cost growth estimate to $817 million; (5) both NASA and Boeing recognize the seriousness of the cost growth issue and have taken actions to address it; (6) the Russian's delay in providing the Service Module has already increased NASA's cost by over $300 million; (7) the program's cost could increase further by as much as several billions of dollars or more, depending on the severity of Russia's shortfall and the response to that shortfall by NASA and its other international partners; (8) NASA officials believe that the December 1998 launch date for the Service Module can still be met; (9) the space station program's financial reserves have dwindled; (10) NASA has periodically adjusted the program's pace and content to comply with an administratively imposed funding cap and to replenish the program's financial reserves; and (11) some of NASA's actions have made the value of the cap as a funding control mechanism questionable.