Space Station

The cost and schedule performance of the international space station have continued to deteriorate: the contract's cost overrun has quadrupled since April 1996 to $355 million, and the estimated cost to get it on schedule has doubled to $135 million. Since GAO's June 1997 testimony (GAO/T-NSIAD-97-177), further cost and schedule problems have surfaced with the space station and NASA acknowledges that the potential for cost growth in the program has increased. More complete estimates of the cost and schedule impacts of ongoing and planned changes to the program should be available later this year. GAO concludes that the program has reached the point at which Congress may wish to review the entire program. Such a review should focus on obtaining congressional and administration agreement on the future scope and cost level for a space station program that merits continued U.S. government support. GAO summarized this report in testimony before Congress; see: Space Station: Deteriorating Cost and Schedule Performance Under the Prime Contract, by Allen Li, Associate Director for Defense Acquisitions Issues, before the Subcommittee on Science, Technology, and Space, Senate Committee on Commerce, Science, and Transportation. GAO/T-NSIAD-97-262, Sept. 18 (four pages).

GAO noted that: (1) in May 1997, NASA revised the space station assembly sequence and schedule to accommodate delays in the production and delivery of the Service Module; (2) this revision occurred after more than a year of speculation regarding Russia's ability to fund its space station manufacturing commitments; (3) to help mitigate the adverse effects of the Russians' performance problems and address the possibility that such problems would continue, NASA developed and began implementing step 1 of a three-step contingency plan; (4) NASA has budgeted an additional $300 million from other NASA activities for the space station program to cover the hardware cost under step 1; (5) NASA will also incur other costs under step 1 that have not yet been estimated; (6) significant additional cost growth could occur in the station program if NASA has to implement steps 2 and 3 of its contingency plan; (7) the cost and schedule performance of the station's prime contractor has continued to steadily worsen; (8) from April 1996 to July 1997, the contract's cost overrun quadrupled to $355 million, and the estimated cost to get the contract back on schedule increased by more than 50 percent to $135 million; (9) so far, NASA and prime contractor efforts have not stopped or significantly reversed the continuing deterioration; (10) the station program's financial reserves have also significantly deteriorated, principally because of program uncertainties and cost overruns; (11) the near-term reserve posture is in particular jeopardy, and the program may require additional funding over and above the remaining reserves before the completion of station assembly; (12) to date, NASA has taken a series of actions to keep the program from exceeding its funding limitations and financial reserves; (13) NASA is accounting for these actions in ways that enable it to report its continuing compliance with the funding limitations; (14) however, to show continuing compliance in some cases, NASA has had to redefine the portion of the program subject to the funding limitations; (15) thus, the value of the current limitations as a funding control mechanism is questionable; (16) since GAO's June 1997 testimony, further cost and schedule problems have materialized and NASA has acknowledged that the potential for cost growth in the program has increased; and (17) GAO believes the program has reached the point where the Congress may wish to review the entire program.

Recommendations

Our recommendations from this work are listed below with a Contact for more information. Status will change from "In process" to "Open," "Closed - implemented," or "Closed - not implemented" based on our follow up work.

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