Space Station

The life-cycle cost is the sum of direct, indirect, recurring, and nonrecurring costs of a system during its entire life through disposal. Overall, the estimated cost to develop, assemble, and operate the space station has reached about $96 billion, an increase of almost $2 billion over GAO's last estimate made in 1995. Development costs represent the largest increase--more than 20 percent. This increase is attributable to schedule slippages, prime contract growth, additional crew return vehicle costs, and the effects of delays in the delivery of the Russian-made Service Module. Overall, the costs would have been significantly higher had there not been an offsetting reduction in shuttle support costs. The reduced shuttle costs have resulted from NASA's estimates that the average cost per flight throughout the station's era will be dramatically lower than had been estimated in 1995.

GAO noted that: (1) based on NASA data and GAO's analysis, it estimated that the U.S. cost to develop, assemble, and operate the space station has increased to almost $96 billion; (2) further, GAO identified a number of program changes that could significantly increase this estimate, such as the potential for additional schedule slippage and the need for shuttle launches to test and deliver the crew return vehicle; (3) as GAO has reported previously, it continues to be concerned about the adequacy of program reserves to deal with changing program needs; (4) over three years ago, the space station program had more than $3 billion in financial reserves to cover development contingencies; (5) in March 1998, with almost 6 years until completion, the net unencumbered financial reserves were down to about $1.1 billion; (6) after GAO completed its work and issued its May 1998 report, NASA and its international partners revised the station assembly sequence again, resulting in further schedule slippage and one additional shuttle flight; and (7) additional costs will be incurred as a result of these changes.