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entitled 'Space Station: Actions Under Way to Manage Cost, but 
Significant Challenges Remain' which was released on July 17, 2002. 

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United States General Accounting Office: 

Report to Congressional Committees: 

July 2002: 

Space Station: 

Actions Under Way to Manage Cost, but Significant Challenges Remain: 




Results in Brief: 


Reasons for Cost Increases and Mechanisms That Should Have Alerted NASA 

Mechanisms to Address Cost Growth Were Not Utilized or Were Ignored: 

Impacts on Space Station’s Utility: 

Reforms Are Under Way or Planned: 

Challenges Ahead: 


Agency Comments: 

Scope and Methodology: 


Appendix I: Comments from the National Aeronautics and Space 

Appendix II: Prior GAO Reports and Testimonies Related to the 
International Space Station Program: 

Appendix III: Staff Acknowledgments: 


Table 1: Major Events Leading to Identification of Cost Growth: 

Table 2: Allocation of Research Time Based on a Three-Member Crew: 


Figure 1: International Space Station On-Orbit: 


DOD: Department of Defense: 

GAO: General Accounting Office: 

NASA: National Aeronautics and Space Administration: 

OMB: Office of Management and Budget: 

[End of section] 

United States General Accounting Office: 
Washington, D.C. 20548: 

July 17, 2002: 

The Honorable Ernest F. Hollings: 
The Honorable John McCain: 
Ranking Minority Member: 
Committee on Commerce, Science, and Transportation: 
United States Senate: 

The Honorable Sherwood L. Boehlert: 
The Honorable Ralph M. Hall: 
Ranking Minority Member: 
Committee on Science: 
House of Representatives: 

The National Aeronautics and Space Administration (NASA) has reportedly
spent about $20 billion for developing and operating the International
Space Station, but faces many challenges in completing the development 
of a station that will meet program objectives. The estimated cost to 
develop the space station has increased by about $13 billion since 1995 
while the schedule has slipped about 4 years. Most recently, the agency 
revealed that the estimated cost to complete assembly had increased by 
about $5 billion—from about $25 billion to about $30 billion. This 
reported cost-growth estimate might not be reliable, however, because 
NASA does not have good cost-accounting systems or practices. [Footnote 

The estimated cost growth is having a profound effect on the utility of 
the space station—namely, through substantial cutbacks in construction, 
the number of crewmembers, and scientific research. Moreover, the 
severity of these reductions has raised concerns among NASA’s 
international partners and the scientific community about the viability 
of the program. In view of the concerns surrounding the cost growth, 
you asked that we (1) identify the reasons for the cost increase and 
analyze the mechanisms that should have alerted NASA to the cost 
increase and the need for mitigation plans, (2) assess the impact of 
the cost growth on the utility of the U.S. science program, (3) 
identify the corrective actions planned by NASA, and (4) provide any 
preliminary observations on the feasibility and status of NASA's 
actions to mitigate the problem. 

Results in Brief: 

Much of the cost growth stemmed from the inadequate definition of
requirements, changes in the content of the program, schedule delays 
that caused the late delivery of the station’s elements, and inadequate 
program oversight. A recent study by the International Space Station 
Management and Cost Evaluation Task Force concluded that NASA’s program 
plan for executing the fiscal year 2002 through fiscal 2006 budget was 
not credible because of weaknesses in the program's cost-estimating 
processes. The task force pointed out that these problems occurred 
because NASA had not instituted or had ignored many of the program’s 
control and contract oversight mechanisms that should have alerted the 
agency to the growing cost problem and the need for mitigating actions. 
For example, NASA did not prepare a life-cycle cost estimate for the 
station and thus did not use those costs to manage the program. Another 
contributing factor was NASA’s focus on staying within annual budgets 
instead of managing total costs. According to the cost analysis team 
that supported the task force, this was perhaps the single greatest 
factor in the program’s cost growth. 

The cost growth has severely affected the space station, primarily in 
terms of the scope and capability of the station for conducting 
scientific research. As a part of the restructuring, for example, 
further work and funding for the habitation module and crew return 
vehicle have been deferred, thus requiring the on-orbit crew to be 
reduced from seven to three members. This will limit the crewmember 
hours that can be devoted to research. For example, astronauts will 
have limited time to be used as subjects in research on the effects of 
space flight on humans. Additionally, NASA has cut back on the number 
of facilities available for research from 27 to 20. This will eliminate 
certain experiments, such as those relating to biotechnology. NASA's 
international partners and the research communities are not satisfied 
with these and other reductions in capabilities. 

NASA is instituting a number of management and cost-estimating reforms.
As a result, we are not making any recommendations in this report.
Specifically, the agency is preparing a life-cycle cost estimate, 
developing a program management plan, and reprioritizing the science 
program. It intends to reflect the results of these reforms in its 
budget submission for fiscal year 2004. These measures should help to 
put NASA on a better footing for controlling costs and improving 
management oversight. 

But there are significant challenges to the implementation of such 
reforms. First, the preparation of the life-cycle cost estimate may be 
difficult because NASA's financial management system has proven 
inadequate for tracking space station costs. Although NASA plans to use 
a tested methodology and trained estimators, the agency will also have 
to develop accurate, detailed cost data to serve as input to the 
methodology and a means of comparing the resulting estimates with 
actual costs when realized. Second, many tasks and studies being 
undertaken, such as those on long-term operating costs, will not be 
completed until September 2002, leaving NASA with just a small window 
of opportunity to incorporate its results into the budget for fiscal 
year 2004. Third, NASA has not yet reached an agreement with its 
international partners on an acceptable on-orbit configuration, the 
sharing of research facilities, and the sharing of cost. It is 
exceedingly important for NASA to overcome these challenges. 
Congressional and agency decision makers cannot assess the full impact 
of the science program’s restructuring and make decisions with regard 
to the direction of the space station program until NASA develops a 
credible, reprioritized research plan for the core complete station and 
defines the desired final configuration of the on-orbit station. 
Moreover, NASA will remain at risk of losing the support of the 
program's international partners unless it can come to agreement with 
them on what the station's capabilities will be in light of the 
reprioritized science program. In its comments on a draft of this 
report, NASA stated that the report represents the issues and actions 
taken to address the cost growth. NASA’s response is included as 
appendix I. 


NASA and its international partners (Canada, Europe, Japan, and Russia)
are building the space station as a permanently orbiting laboratory to
conduct materials and life sciences research and earth observations and 
to provide for commercial utilization and related uses under nearly 
weightless conditions. Each partner is providing hardware and 
crewmembers and each is expected to share operating costs and use of 
the station. The program’s highest-priority goals are to (1) maintain a 
permanent human presence in space, (2) conduct world-class research in 
space, and (3) enhance international cooperation and U.S. leadership 
through international development and operations of the space station. 

The technical achievements of the station program have been exceptional.
Assembly of the space station began in November 1998 with the launch of
the U.S.-funded, Russian-built Zarya module, followed by the launch of 
the U.S. Unity module in December 1998. The station’s occupancy began in
October 2000 with the launch of the Expedition I crew. Since then, four
other three-person crews have occupied the station while assembly
continues. In addition, the crews have been conducting hands-on 
scientific research. Figure 1 shows the International Space Station on-

Figure 1: International Space Station On-Orbit: 

[See PDF for image] 

This figure is a photograph of the International Space Station. 

Source: NASA. 

[End of figure] 

Since its inception in 1984, the space station has undergone a number of
redesigns and has been mired by cost growth and schedule slips. In 
January 2001, NASA announced that an additional $4 billion in funding 
over the next 5 years would be required to complete the station’s 
assembly and fund its operation. By May 2001 the estimated cost growth 
had increased to $4.8 billion. In response to the announcement, the 
administration directed NASA to take a number of actions, including 
terminating the propulsion module, deferring the habitation module, 
deferring the crew return vehicle, and reducing funding for scientific 
research to stay within the President’s budget projections. 

The President’s fiscal year 2002 budget blueprint and budget request 
for the space station [Footnote 2] lay out a strategy for containing 
cost growth that ensures the completion of the U.S. core station and 
deploys the elements of the program’s international partners. To 
achieve this strategy, NASA was required to construct a plan of action 
that addressed institutional and program reforms to establish processes 
for executing the baseline program. 

In July 2001, the NASA Administrator appointed the International Space
Station Management and Cost Evaluation Task Force to conduct an
independent external review and assessment of the station’s cost, 
budget, and management. The Administrator also asked the task force to 
provide recommendations that could provide maximum benefit to the U.S.
taxpayers and the international partners within the President’s budget
request. The task force reported its findings to the NASA Advisory 
Council in November 2001. [Footnote 3] 

In response to the task force’s recommendations, NASA is undertaking a
number of initiatives to restore credibility to the station program. In
addition, the Office of Management and Budget (OMB), with input from
NASA, is developing criteria that are to be used for measuring progress
toward achieving a credible program. 

OMB has imposed a 2-year “probation” period on NASA to provide time to
reestablish the space station program’s credibility. Activities that 
are to take place during this period include establishing a technical 
baseline and a life-cycle cost estimate for the remainder of the 
program, prioritizing the core complete science program, and reaching 
an agreement with the international partners on the station’s final 
configuration and capabilities. NASA is working toward completing these 
activities by September 2002 in order to include results in its budget 
request for fiscal year 2004. 

Over the past 8 years, we have performed a body of work that highlighted
the space station program’s cost growth and weaknesses in cost control. 
In addition, we have pointed out weaknesses in the agency’s financial
management system as well as inadequate contract management oversight.
Appendix II lists prior GAO reports and testimonies related to the space
station program. 

Reasons for Cost Increases and Mechanisms That Should Have Alerted NASA 

According to NASA officials, as a consequence of the inadequate 
definition of requirements, changes in program content, schedule 
delays, and inadequate program oversight, the estimated development 
cost of the space station has grown by about $13 billion since 1995 of 
which about $5 billion is attributable to growth since the fiscal year 
2001 estimate. However, the agency could not associate specific amounts 
of the estimated growth with the reasons cited. The program did not 
utilize available cost control tools to monitor and contain the growth 
and ignored NASA’s guidance in many cases. In addition, because of its 
focus on managing annual budgets, NASA failed to heed indicators of 
future cost growth that contributed to the uncertainty regarding the 
ultimate cost of the space station. 

Reasons for Cost Growth: 

One of the major reasons for the cost growth was NASA’s inadequate
definition of requirements. For example, NASA originally estimated that
500,000 source-lines-of-code of space flight software would be required 
for the station’s operations. However, that estimate has now tripled to 
1.5 million lines of code. In addition, NASA assumed that it could rely 
on computer simulations as opposed to rigorous ground testing to 
integrate the hardware and software of the various elements. However, 
program schedule slips permitted additional ground testing, which 
discovered significant integration problems that escaped notice during 
the computer simulations. As a result, the program established a more 
rigorous multi-element integrated testing program. 

Changes in program content also contributed to the cost growth. A
significant item of cost was introduced to the program in 1997 through 
the addition of the requirement for a crew return vehicle. NASA had 
planned to use two Russian Soyuz vehicles, each with a maximum capacity 
of three crewmembers, attached to the station for emergency crew return 
after achieving permanent six-person crew capability. However, NASA 
later determined that the Soyuz vehicle did not meet the requirements 
necessary to return an ill or injured crewmember. Thus, the program was 
modified to require a U.S.-built crew rescue capability for returning 
seven crewmembers at an estimated total cost of about $1.5 billion. 
Also, because of Russian funding problems that delayed the service 
module’s launch, NASA took on an additional development effort in 
fiscal year 1997 to guard against Russian nonperformance. The actions 
became collectively known as Russian Program Assurance and included an 
interim control module and a U.S. propulsion module in the event the 
Russians could not supply the service module and propellant logistics 
flights. By February 2001, Russian Program Assurance had added $1.3 
billion in total estimated cost through fiscal year 2006. 

Schedule delays increased costs because, at a minimum, fixed costs such
as salaries, contractor overhead, and sustaining engineering continued 
for a longer period than planned. When the space station was redesigned 
in 1993, NASA established May 1997 as the launch date for the first 
element and June 2002 as the assembly’s completion date. However, the 
first element was not launched until November 1998. By August 2000, the
assembly complete date had slipped to April 2006—a total slip of 46
months. On the basis of NASA’s projected spending rate, the program
incurred an additional cost of about $100 million for every month of
schedule slippage. 

The magnitude of the cost growth began to surface in the spring of 2000
during program operating plan reviews in preparation of the fiscal year
2002 budget request. Following the program operating plan reviews, the
program manager ordered a detailed assessment of costs to more
specifically determine funding requirements through fiscal year 2006. 

Table 1 shows some of the major events leading up to the identification 
of the space station’s cost growth. The table illustrates that the 
program office did not have a credible cost-estimating capability, as 
the cost estimate changed and grew as the office continued to uncover 
additional growth areas. 

Table 1: Major Events Leading to Identification of Cost Growth: 

Date: May 25, 2000; 
Event: Program operating plan’s review results for fiscal year 2002 show
$3.7 billion of potential areas of cost growth and/or new content in 
budget rollup; 
Reported to: Johnson Space Center Director and Associate Administrator 
for Space Flight (NASA headquarters). 

Date: July 13, 2000; 
Event: For fiscal year 2002-2006, Office of Space Flight recommends 
$365 million over President’s budget for space station for fiscal year 
Reported to: NASA Capital Investment Council. 

Date: July 18, 2000; 
Event: OMB is advised that the space station’s budget can accommodate 
fiscal year 2000 requirements, but that fiscal year 2001 would be 
“tight” and fiscal year 2002 would see a shortfall against current 
Reported to: OMB. 

Date: Oct. 20, 2000; 
Event: Post-program operating plan cost review indicates program has a
$3 billion-plus funding shortfall through fiscal year 2006; 
Reported to: NASA headquarters. 

Nov. 9, 2000; 
Event: NASA advises OMB of potential shortfall of $2 billion-plus for
fiscal year 2002 budget; 
Reported to: OMB. 

Date: Nov. 27, 2000; 
Event: Assessment estimate of $2.2 billion-$2.4 billion provided to
Reported to: OMB. 

Date: Dec. 15, 2000; 
Event: NASA presents to OMB a cost estimate that is $2.7 billion over
the fiscal year 2001 budget. NASA commits to complete a “bottom up” 
review by the end of January 2001; 
Reported to: OMB. 

Date: Dec. 28, 2000; 
Event: NASA briefs White House Transition Team and advises the team 
that the space station’s cost increase could range from $2.5 billion-
$5.0 billion through fiscal year 2006; 
Reported to: White House Transition Team. 

Date: Jan. 18-19, 2001; 
Event: NASA’s headquarters alerts House and Senate Authorization and 
Appropriation staffs that cost increase could range from $2.5 billion-
$3.0 billion; 
Reported to: House and Senate staffs. 

Date: Feb. 1, 2001; 
Event: NASA reports to OMB that bottom-up review shows cost growth is 
$4.0 billion; 
Reported to: OMB. 

Date: Mar. 5, 2001; 
Event: NASA’s headquarters briefs House and Senate staffs on results of 
bottom-up assessment indicating the growth could be as high as $4.0 
Reported to: House and Senate staffs. 

Date: Nov. 7, 2001; 
Event: OMB Deputy Director testifies before the House Science Committee 
that, in May 2001, NASA informed OMB that the cost growth number had 
grown an additional $800 million to $4.8 billion; 
Reported to: House Science Committee. 

[End of table] 

Mechanisms to Address Cost Growth Were Not Utilized or Were Ignored: 

NASA has controls in place that should have alerted management to the
growing cost problem and the need for mitigating action. These include
guidance requiring cost management on a project, and cost and risk
modeling capabilities. However, the management and cost evaluation task
force and the supporting studies found that NASA did not utilize or 
ignored many cost control mechanisms because of its focus on fiscal 
year budget management rather than on total program cost management. 

NASA guidance requires that life-cycle cost be estimated, assessed, and
controlled throughout a program’s life cycle. [Footnote 4] The 
estimates are to be prepared to support major program reviews and the 
development of budget submissions. A handbook instructs cost estimators 
in selecting a cost model for use in the estimating process and on the 
proper documentation of the results of the cost analysis. 

NASA has considerable cost-modeling capability, including several cost
models and information related to the type of costing situations for 
which they would be appropriate. A study performed by the Rand 
Corporation for the Office of Science and Technology Policy, which 
supported the management and cost evaluation task force, noted that 
NASA has “very good” cost and risk modeling capabilities. [Footnote 5] 
However, the study found that the in-house capabilities were not well 
integrated into the program’s planning and management. Because of its 
short-term budget focus, the program had been reluctant to integrate 
cost estimation and control practices sufficiently robust to yield 
confidence in its budget estimates. 

The management and cost evaluation task force found that the final space
station’s cost estimate at completion had not been a management 
criterion within NASA. According to the task force, because of NASA’s 
focus on executing the program within annual budgets, total cost and 
schedule became variables. To stay within the annual budget limits, the 
program’s basic content slipped, and total program cost grew. In 
addition, the cost analysis team that supported the task force cited 
NASA’s culture of managing the program to its annual budgets as perhaps 
the single greatest factor in the program’s cost growth. 

The management and cost evaluation task force made recommendations 
aimed at restoring cost credibility to the program. Some of those 
recommendations mirror requirements already contained in NASA guidance, 
as follows: 

* Develop a life-cycle technical baseline to use as the basis for a 
formal cost estimate. 

* Develop a full space station cost estimate using the Department of
Defense’s (DOD) cost assessment approach, including the use of a cost-
analysis requirements document to document the assumptions and
results of the cost analysis. 

* Prepare an integrated program management plan delineating the work
to be accomplished, the work breakdown structure, [Footnote 6] required 
resources, and schedules. 

Impacts on Space Station’s Utility: 

In an effort to mitigate the effects of the large cost growth, NASA 
reduced planned funding for space station research by about $1 billion 
for fiscal years 2002 through 2006. The mitigation actions resulted in 
significant and perhaps long-term reductions in the scope and 
capability of the station for conducting scientific research. NASA 
proposed major changes in the station’s design for fiscal year 2001 
that resulted in fewer on-orbit scientific facilities, and less 
research, and limited the crew available for conducting research. The 
research communities, international partners, and recent studies have 
raised concerns about the viability of the space station’s science 

Baseline Science Program Restructure: 

The restructured science program will provide fewer facilities needed 
for conducting scientific research on board the space station. The 
station’s baseline for fiscal year 2001 supported a crew of six to 
seven astronauts and provided for the outfitting of 27 U.S. research 
facilities and experiment modules for research in a range of science 
disciplines. Following the announced cost growth, NASA’s Office of 
Biological and Physical Research, Office of Space Flight, and the space 
station’s Payloads Office at the Johnson Space Center initiated a 
program restructuring activity to align the research program with the 
on-orbit capabilities and resources available. This activity slowed 
down selected fiscal year 2001 expenditures to better match the 
availability of resources for fiscal year 2002 and optimized the 
scientific utilization of the reduced on-orbit capability. The 
reduction of content to the revised baseline was not reconciled against 
standing agreements with the program’s international partners. 

The budget content for fiscal years 2002 and 2003 for the core-complete
station provides for the outfitting of 20 research facilities, known as
“racks,” leaving about one fourth of the previously planned racks and 
their utilization unfunded. Some research disciplines were severely 
affected by the fiscal year 2002 reduction. For example, significant 
experiments planned to conduct research on materials such as metals, 
alloys, glasses, and ceramics, and in biotechnology were canceled. 

In addition to less hardware for research, there are constraints to
utilization of the science facilities principally because the station’s 
crew size will be reduced from a planned seven to three. This will 
limit the crewmember hours that can be devoted to research. For example,
astronauts will have limited time to be used as subjects in research on 
the effects of space flight on humans. According to NASA officials, crew
research hours will be a major limiting factor on the number and
complexity of experiments after the arrival of the international partner
modules in 2004-2005, particularly constraining research that requires 
the crew’s interaction. NASA officials stated that some crew 
interaction is required for nearly all space station investigations. 
These activities include testing, monitoring, sampling, instrument 
readings, completing questionnaires, and recording results. NASA 
currently estimates that a minimum of 2.5 crewmembers will be required 
for maintaining the station, exclusive of their science-related duties 
during assembly. 

NASA had planned that crew time for scientific research would be 100 +
hours per week, but the crewmember reduction would limit time to a 
minimum of 20 hours per week. The 20-hour minimum threshold was 
established by the space station program manager but has not been met.
Table 2 shows NASA’s calculation of how the 20 research hours per week
would be allocated among the station partners. NASA is looking at ways 
to mitigate the impact of this reduction. 

Table 2: Allocation of Research Time Based on a Three-Member Crew: 

Partner: Russia; 
Time allocation (percent): 38.3; 
Available hours per week: 7.7. 

Partner: United States; 
Time allocation (percent): 38.3; 
Available hours per week: 7.7. 

Partner: Japan; 
Time allocation (percent): 12.8; 
Available hours per week: 2.6. 

Partner: Europe; 
Time allocation (percent): 8.3; 
Available hours per week: 1.7. 

Partner: Canada; 
Time allocation (percent): 2.3; 
Available hours per week: 0.5. 

[End of table] 

In addition to the funding-driven research cuts cited above, the United
States would receive less research capability from an existing major 
barter arrangement with the Japanese. In return for NASA’s launch of the
Japanese Experiment Module, Japan is providing the centrifuge
accommodation module and centrifuge rotor, which are essential for
conducting controlled biological experiments. As a result of technical 
risk and cost issues associated with the proposed design, NASA accepted 
a Japanese Space Agency request to reduce the number of science habitats
supported from eight to four. 

Concerns Over Science Restructure: 

The research communities and international partners are not satisfied 
with reductions in the space station’s capabilities. In the fall of 
2000, Congress directed the National Research Council and the National 
Academy of Public Administration to organize a joint study of the 
status of microgravity research [Footnote 7] in the life and physical 
sciences as it relates to the station. In a late 2001 report, the team 
concluded that the viability of the overall science program in 
microgravity would be seriously jeopardized if the space station’s 
capabilities were reduced below fiscal year 2001 levels and there were 
no annual microgravity research dedicated shuttle flights. The study 
found that the U.S. scientific community is ready now to use the space
station but that this readiness cannot be sustained if (1) proposed
reductions in the scientific capabilities occur, (2) slippage continues 
in both the development and science utilization schedules for the space
station, or (3) uncertainties continue in funding for science 
facilities and flight experiments on the space station. The study 
observed that readiness is beginning to deteriorate and that it will 
continue to erode with further delays in the completion of the space 
station. NASA officials stated that the station’s international 
partners have major concerns regarding the uncertainty that NASA will 
meet its international commitments for the habitation function and crew 
rescue capability. According to NASA, the partners have stated that a 
station configuration that provides for only three crewmembers is 
unacceptable. NASA plans to develop an optional space station 
configuration and hopefully obtain appropriate U.S. and partner 
concurrence by November/December 2002. 

Several recent studies and NASA’s actions highlight concerns regarding 
the space station’s science program. The November 2001 report of the
management and cost evaluation task force found that the U.S. core
complete configuration as an end-state would not achieve the unique
research potential of the space station. A December 2001 NASA
Independent Implementation Review found that budget reductions, crew
hour limitations, and the realization of other resource constraints 
have all significantly reduced the anticipated space station research 
content in terms of quality and quantity. For example, there are fewer 
flight investigations and tests, and some science disciplines cannot 
achieve planned program goals. In addition, the scientific community 
and the international partners have raised concerns. The research 
reductions, if not mitigated, may jeopardize the scientific 
community/partner’s capacity for conducting high value research. 

Reforms Are Under Way or Planned: 

NASA has several institutional and program reforms under way to respond
to the management and cost evaluation task force’s recommendations and
to bring cost-estimating credibility to the space station program.
Specifically, the agency is preparing a life-cycle cost estimate, 
developing a plan to strengthen program management and controls, and 
reprioritizing the station’s science program. NASA is attempting to 
complete many of these tasks by September 2002 to influence its fiscal 
year 2004 budget submission. 

Cost-Estimating and Program Management Reforms: 

In July 2001, NASA developed a plan that described the actions that the
agency believed were required to respond to the President’s budget 
blueprint requirements, defined conditions for closing the actions, and
provided for OMB to monitor NASA’s progress in implementing the 
reforms. The plan called for measures to improve cost-management and 
cost-estimating accuracy, such as metrics designed to alert management 
to pending problems, including an early warning system for potential 
cost growth, and the establishment of a cost-estimating capability to 
take advantage of the latest estimating and management tools and 

To strengthen the cost-estimating and control function, the program 
office is also establishing a management information system and hiring 
cost estimators. An interim management information system will be used
initially, and the permanent system is to be available by March 2003 
during the implementation of a key component of the Integrated Financial
Management Program at the Johnson Space Center. The program office has
the authority to hire 10 estimators, which it plans to use to establish 
a cost-estimating capability in the station’s program office. NASA is 
in the process of preparing its life-cycle cost estimate using the DOD 
cost assessment approach and plans to have it completed in early August 
2002. An independent team headed by a DOD Cost Analysis Improvement 
Group official will prepare an independent cost estimate, also 
scheduled for completion in August 2002. The in-house and independent 
cost estimates will then be reconciled. 

The program office is also developing a plan to strengthen program
management and controls. According to NASA officials, cost, schedule, 
and technical reviews will be implemented to provide the program manager
with an early warning of potential problems, such as cost growth and
budget overruns. The program will also develop risk analysis tools and
improve risk system and cost integration. 

Science Program Reprioritizing: 

NASA is also taking steps to reprioritize the science to be performed 
on the space station. In consultation with the White House Office of 
Science and Technology Policy and OMB, NASA has assembled an ad-hoc 
external advisory committee to assist the agency in prioritizing its 
entire research program, including both station-based research as well 
as nonstation-based research. Consistent with recommendations from the 
management and cost evaluation task force, NASA is attempting to place 
the highest priority on investigations requiring access to the space 
environment. The scientific community will have representation on the 
ad-hoc committee and will therefore be involved in helping to 
reestablish science objectives and improving scientific productivity. 

The research advisory committee’s charter is to evaluate and validate 
high-priority science and technology research that will maximize the 
research returns within the available resources. It plans to (1) assess 
the degree to which key research objectives can or should be addressed 
by the space station, (2) identify and assess how options among the key 
research objectives would change if the station remains at the U.S. 
core-complete configuration or evolves with additional funding, and (3) 
recommend modification or addition to the Office of Biological and 
Physical Research’s goals and objectives. In addition, the advisory 
committee will also identify and recommend criteria that can be used to 
implement specific research activities and programs on the basis of 
priorities. According to a NASA official, the agency plans to report 
the advisory committee’s findings to OMB in August 2002. The report is 
to include the prioritized research program and the roadmap to getting 
there. NASA’s goal is to reflect the science research priorities in its 
fiscal year 2004 budget submission. 

Challenges Ahead: 

Successfully completing these initiatives is vitally important, since 
they are integral to providing Congress and agency decision makers with 
the information they need to make decisions on the future of the space 
station. But there are significant challenges facing NASA in completing 

NASA’s milestones provide for almost no slippage. Specifically, the
preparation of a reliable life-cycle cost estimate may be difficult 
because NASA currently lacks a modern integrated financial management 
system to track and maintain data needed for estimating and controlling 
costs. Such a system was not available when NASA prepared the $4.8 
billion cost growth estimate and thus the accuracy of that estimate is 
questionable. The NASA Administrator has established the integrated 
financial management program as one of his top priorities. The 
successful implementation of the first major component, the core 
financial system, by June 2003 is critical to the agency’s ability to 
control costs. In addition, many tasks and studies being undertaken 
will not be completed until September 2002, leaving NASA with a very 
short time frame to incorporate its results into the 2004 budget. These 
include NASA’s study and independent validation of lifecycle costs, its 
assessment of long-and short-term options for increasing the station’s 
crew complement, and its assessment of how research can be maximized 
with limited deliveries of samples and equipment. (Deliveries would be 
limited because NASA plans to reduce space shuttle flights from seven 
to four per year.) 

Lastly, NASA has not yet reached agreements with its international 
partners on an acceptable on-orbit configuration as well as how 
research facilities and costs should be shared. Such agreements are 
important not only to reach a decision on the end-state of the space 
station but also to strengthen support of the program’s international 


NASA is at a critical juncture with the space station program. Because 
of the cost growth, the program is essentially unable to carry out the 
full intent of its original objectives. This has raised concerns from 
NASA’s international partners. To begin working through this dilemma, 
NASA must first develop a credible budget for the core-complete 
station, define a station configuration that will be acceptable to the 
international partners, and obtain OMB’s approval. This is a difficult 
endeavor in itself, since NASA is facing a highly compressed schedule 
and does not have an integrated system for estimating and controlling 
costs. The agency is attempting to use the latest estimating and 
management tools and techniques but needs accurate, detailed cost data 
and the ability to compare resulting estimates with actual costs. If 
NASA cannot succeed with a viable budget for fiscal year 2004, it will 
jeopardize the opportunity for Congress and the administration to 
regain confidence in the program. 

If NASA does succeed with the fiscal year 2004 budget, it still faces
considerable challenges with the space station program. In the short 
run, it must successfully work with its international partners to 
decide how to best use the resources that remain available to the 
program. This is a significant challenge because it involves 
prioritizing research programs for which partners already have a vested 
interest. Moreover, in the long run, NASA must find ways to make sure 
that the restructured program stays on track. This not only means 
making sure that the root causes of problems that have plagued the 
program are sufficiently addressed, but that any schedule slippage or 
cost growth is immediately addressed and that oversight mechanisms 
already in place are vigilantly adhered to. 

Agency Comments: 

In written comments on a draft of this report, NASA’s Associate Deputy
Administrator for Institutions said that the report represents the 
issues and actions taken to address cost growth. He also stated that 
other external reviews are scheduled for September 2002 and that 
continued evaluations by GAO would be appreciated. 

Scope and Methodology: 

To determine the reasons for the cost growth, we evaluated previous
internal and independent analyses of the space station’s cost growth. We
also interviewed NASA officials regarding cost estimates and the process
by which cost information is studied and communicated throughout NASA.
To assess program oversight mechanisms, we reviewed NASA’s policies and
procedures governing program management. We also interviewed 
procurement and program management officials to identify specific tools
used in the program’s oversight and assessed the extent to which the
program relies on contractor inputs to perform its internal cost 

To assess the impacts of cost reduction proposals on the space station’s
utility, we evaluated the minutes from Space Station Utilization 
Advisory Subcommittee meetings, along with internal and external 
studies on the effects of cost reduction proposals on station research 
activities. In addition, we reviewed a report by the National Research 
Council related to the research capabilities of the space station. We 
also interviewed cognizant program officials and officials within the 
research community. 

To accomplish our work, we visited NASA headquarters, Washington, D.C;
Johnson Space Center, Texas; and Marshall Space Flight Center, Alabama.
We also coordinated our work with independent and NASA-internal teams
performing space station program reviews. 

We conducted our work from June 2001 through April 2002 in accordance
with generally accepted government standards. 

Unless you publicly announce its contents earlier, we plan no further
distribution of this report until 30 days from its issue date. At that 
time, we will send copies to the NASA Administrator; the Director, 
Office of Management and Budget; and other interested parties. We will 
also make copies available to others on request. In addition, the 
report will be available at no charge on the GAO Web site at 

Please contact me at (202) 512-4841 if you or your staffs have any 
questions about this report. Major contributors to this report are 
listed in appendix III. 

Sincerely yours, 

Singed by: 

Allen Li: 
Acquisition and Sourcing Management Team: 

[End of section] 

Appendix I: Comments from the National Aeronautics and Space 

National Aeronautics and Space Administration: 
Office of the Administrator: 
Washington, DC 20546-0001: 

June 21, 2002: 

Mr. Allen Li: 
Acquisition and Sourcing Management: 
General Accounting Office: 
Washington, DC 20548: 

Dear Mr. Li: 

This letter is in response to your correspondence dated May 16, 2002, 
forwarding your draft report on actions underway to manage cost growth 
of the International Space Station (ISS) (GAO Code 120076). The report 
provided for review represents the issues and actions taken to address 
cost growth. Given the broad set of management and financial actions 
taken to restore confidence in the ISS Program, and the absence of 
additional recommendations in the draft report, I hope it is your 
impression that we are seriously and aggressively addressing our 

Initial evaluation of ISS performance against recommendations provided 
by the ISS Management and Cost Evaluation Task Force and NASA Advisory 
Council, will be scheduled for September 2002. As NASA considers 
external audit and advisory groups essential to our success, continued 
evaluation by the GAO and any future recommendations will be 
appreciated as we proceed ahead to complete this tremendous laboratory 
in space. 


Signed by: 

Michael D. Christensen: 
Associate Deputy Administrator for Institutions: 

[End of section] 

Appendix II: Prior GAO Reports and Testimonies Related to the 
International Space Station Program: 

NASA: Compliance With Cost Limits Cannot Be Verified. GAO-02-504R.
Washington, D.C.: Apr. 10, 2002. 

NASA: Leadership and Systems Needed to Effect Financial Management
Improvements. GAO-02-551T. Washington, D.C.: Mar. 20, 2002. 

NASA: International Space Station and Shuttle Support Cost Limits.
GAO-01-100R. Washington, D.C.: Aug. 31, 2001. 

Space Station: Inadequate Planning and Design Led to Propulsion Module 
Project Failure. GAO-01-633. Washington, D.C.: June 20, 2001. 

Space Station: Russian-Built Zarya and Service Module Compliance With
Safety Requirements. GAO/NSIAD-00-96R. Washington, D.C.: Apr. 28, 2000. 

Space Station: Russian Compliance with Safety Requirements. GAO/TNSIAD-
00-128. Washington, D.C.: Mar. 16, 2000. 

Space Station: Russian Commitment and Cost Control Problems. GAO/NSIAD-
99-175. Washington, D.C.: Aug. 17, 1999. 

Space Station: Cost to Operate After Assembly Is Uncertain. GAO/NSIAD-
99-177. Washington, D.C.: Aug. 6, 1999. 

Space Station: Status of Russian Involvement and Cost Control Efforts.
GAO/T-NSIAD-99-117. Washington, D.C.: Apr. 29, 1999. 

Space Station: U.S. Life-Cycle Funding Requirements. GAO/T-NSIAD-98-
212. Washington, D.C.: June 24, 1998. 

International Space Station: U.S. Life-Cycle Funding Requirements.
GAO/NSIAD-98-147. Washington, D.C.: May 22, 1998. 

Space Station: Cost Control Problems. GAO/T-NSIAD-98-54. Washington,
D.C.: Nov. 5, 1997. 

Space Station: Deteriorating Cost and Schedule Performance Under the
Prime Contract. GAO/T-NSIAD-97-262. Washington, D.C.: Sept. 18, 1997. 

Space Station: Cost Control Problems Are Worsening. GAO/NSIAD-97-213.
Washington, D.C.: Sept. 16, 1997. 

NASA: Major Management Challenges. GAO/T-NSIAD-97-178. Washington, 
D.C.: July 24, 1997. 

Space Station: Cost Control Problems Continue to Worsen. GAO/T-NSIAD-
97-177. Washington, D.C.: June 18, 1997. 

Space Station: Cost Control Difficulties Continue. GAO/T-NSIAD-96-210.
Washington, D.C.: July 24, 1996. 

Space Station: Cost Control Difficulties Continue. GAO/NSIAD-96-135.
Washington, D.C.: July 17, 1996. 

Space Station: Estimated Total U.S. Funding Requirements. GAO/NSIAD-
95-163. Washington, D.C.: June 12, 1995. 

Space Station: Update on the Impact of the Expanded Russian Role.
GAO/NSIAD-94-248. Washington, D.C.: July 29, 1994. 

Space Station: Impact of the Expanded Russian Role on Funding and 
Research. GAO/NSIAD-94-220. Washington, D.C.: June 21, 1994. 

[End of section] 

Appendix III: Staff Acknowledgments: 

Jerry Herley, James Beard, Fred Felder, Erin Baker, Cristina Chaplain,
Belinda LaValle, and John Gilchrist made key contributions to this 

[End of section] 


[1] In response to a legislative mandate, we recently reported that 
NASA’s systems could not provide the data necessary for us to verify 
amounts obligated for the International Space Station. NASA’s 
independent auditor reported similar problems while attempting to verify
costs for the space station that were reported in the agency’s fiscal 
year 2001 financial statements. 

[2] See The President’s Budget Blueprint: A Blueprint for New 
Beginnings, a Responsible Budget for America’s Priorities (Feb. 2001). 

[3] See Report by the International Space Station Management and Cost 
Evaluation Task Force (Nov. 1, 2001). 

[4] NASA Policy Directive 7120.4B, Program/Project Management and NASA 
Procedures and Guidelines 7120.5A, NASA Program and Project Management 
Processes and Requirements. 

[5] See RAND Perspectives on ISS Budget Issues (Jan. 23, 2002). 

[6] A work breakdown structure is a method of organizing a program into 
logical subdivisions at lower and lower levels of detail. 

[7] Research that is concerned with the effects of reduced gravity on 
physical, chemical, and biological phenomena. 

[End of section] 

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