NASA Must Reconsider Operations Pricing Policy To Compensate for Cost Growth on the Space Transportation System

GAO reviewed the National Aeronautics and Space Administration (NASA) pricing policy and operating cost for the Space Transportation System (STS) to determine the overall effect that STS cost increases would have on future NASA budget requests and on its other research and development.

GAO found that, based on estimated future costs, NASA established a 3-year, $18 million fixed price for commercial, foreign, and other U.S. agencies' launches and a 6-year, $12.2 million fixed price for the Department of Defense (DOD) launches. The price is to be adjusted annually to recover total operations costs. The projected average costs to fly a space shuttle mission have increased 73 percent. NASA must fund the full cost of its flights and the difference between the actual cost per flight and the reimbursements received from users, until the price charged to them becomes more than the actual costs and provides funds to the government. It is currently estimated that NASA could pay 80 percent of the shuttle operations costs while flying 36 percent of the flights. A minimum of 62 percent of the NASA flights included in the flight traffic model will require more than the standard launch services. These services increase the price of a shuttle launch and affect future budgets. NASA established an underestimated user fee, which is charged to foreign and commercial users, to recover a fair share of the government's capital invested in the orbiter fleet and in equipment and facilities. The user fee is only charged to commercial and foreign users that did not participate in STS development. The NASA budget must bear a major portion of these costs. GAO believes that DOD and other government agencies should bear a greater share of the operational costs of the shuttle's early years.

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.

Director: Donald E. Day Team: General Accounting Office: Mission Analysis and Systems Acquisition Division Phone: (202) 275-3468