CT-18-002
CT-18-002
CT-18-002
The Office of Inspector General (OIG) is committed to providing independent, aggressive, and objective
oversight of NASA programs and projects, and we welcome this opportunity to discuss the Agency’s
challenges in meeting project cost, schedule, and performance goals.
Throughout its 60-year history, NASA has been at the forefront of aeronautics, science, and space
exploration, responsible for numerous scientific discoveries and technological innovations. However,
many of NASA’s largest projects cost significantly more to complete and take much longer to launch
than originally planned. Finding ways to better manage its projects – many of which are one-of-a-kind
and first-of-their-kind – remains an ongoing challenge for the Agency.
Over the past 8 years, our office has examined NASA’s successes and failures in project management on
two levels: first, by examining the historic challenges the Agency faces in meeting cost, schedule, and
performance objectives and the processes it has developed to address these shortcomings. Second, by
assessing the effectiveness of NASA’s use of these project management tools through dozens of audits
of discrete projects, including development of science satellites such as the Surface Water and Ocean
Topography (SWOT) mission, rover missions to Mars, construction of rocket test facilities, human space
flight vehicles such as the Space Launch System (SLS) rocket and Orion crew capsule, and aeronautics
research to integrate unmanned aerial vehicles in the national airspace. My testimony today is informed
by the findings and recommendations of these OIG reports.
Unfortunately, in addition to their scientific accomplishments these projects and many others at NASA
share another less positive trait – significant cost and schedule overruns. For example, in 1977 NASA
estimated that it would complete development of Hubble by 1983 at a total cost of $200 million;
however, the telescope was not completed until 2 years later at a cost of approximately $1.2 billion.
And even when launched, a flaw in its mirror required multiple repair and servicing missions that, while
successful, added billions of dollars to the project’s overall cost. MSL also launched 2 years behind
schedule with development costs that increased 83 percent from $969 million to $1.77 billion. In 2009,
NASA estimated JWST would cost $2.6 billion to develop and launch in 2014; however, its price tag now
exceeds $8 billion and its launch date has slipped to approximately May 2020.
Our office’s foundational examination of NASA’s project management challenges identified four factors
that present the greatest challenges to successful project outcomes: NASA’s culture of optimism,
Culture of Optimism. Exemplified by the Agency’s greatest achievement – landing humans on the moon
and safely returning them to Earth – NASA’s ability to overcome technological and scientific obstacles to
accomplish a given objective has become part of the Agency’s culture and has helped foster a belief that
NASA can accomplish anything. Indeed, it was this “can-do attitude” that enabled NASA to bring the
ailing Apollo 13 safely back to Earth, find a way to fix Hubble’s flawed mirror in orbit, and land the
Curiosity rover on Mars using a supersonic parachute/sky crane combination. However, our past work
has found that this outlook causes NASA to view the success of projects primarily in technical rather
than cost and schedule terms. More specifically, NASA’s at times overly optimistic culture contributes to
development of unrealistic plans and performance baselines, particularly with respect to its largest
programs and projects. Subsequent technological success – at a significantly greater cost than originally
estimated – reaffirms a mindset that project costs and adherence to schedule are secondary
considerations to achieving operational success. In fact, many people we interviewed raised the
“Hubble Psychology” – an expectation among Agency personnel that projects that fail to meet initial
cost and schedule goals will receive additional funding and subsequent scientific and technological
success will overshadow budgetary and schedule problems.
Our work over the past 8 years has identified three related ways excessive optimism can create cost and
schedule challenges:
3. an expectation that additional funding will be made available if a project runs “short.”
In addition, NASA project managers are often overly optimistic about the effort required to mature
critical technologies and frequently underestimate the cost and schedule reserves needed to address
known and unknown risks, optimistically assuming that most risks will not materialize. However, when
they do they result in significant cost, schedule, and performance problems.
Lastly, many project managers admitted to an expectation that projects that fail to meet initial cost and
schedule goals, especially the larger projects, will receive additional funding and that subsequent
scientific and technological success will overshadow budgetary and schedule problems. Past examples
of this phenomena include Hubble, while current examples include JWST, the Orion crew capsule, and
the SLS rocket. Although a few projects in NASA’s recent past were cancelled because of poor cost and
schedule performance, a “too big to fail” mentality pervades Agency thinking when it comes to NASA’s
larger and most important missions. While understandable given the heavy investment of Agency
resources, these cost overruns can result in delays to other NASA missions as funding is reprioritized.
Underestimating Technical Complexity. The technical complexity inherent in NASA projects remains a
major challenge to achieving cost and schedule goals, with project managers attempting to predict the
amount of time and money needed to develop one-of-a-kind, first-of-their-kind technologies,
instruments, and spacecraft. NASA historically has underestimated the level of effort needed to
1 NASA OIG, “NASA’s Challenges to Meeting Cost, Schedule, and Performance Goals” (IG-12-021, September 27, 2012). For this
review, we interviewed 85 individuals including the NASA Administrator, Deputy Administrator, Associate Administrators,
Center Directors, project managers, project staff, former NASA Administrators and staff, and external parties.
Our work has shown that NASA can take several actions to mitigate this challenge. First, projects need
to mature critical technologies early in the project life cycle, preferably before establishing their baseline
cost and schedule. Establishing the level of effort needed to incorporate the technology in an
operational system reduces risk and provides greater transparency at the project’s “buy-in” point for
decision makers.2 Second, the amount and availability of reserves needs to be commensurate with a
project’s technical risk to cover expenses associated with work managers did not plan for at the
beginning of the project but almost inevitably will need due to the complexities inherent in developing
space flight projects. Lastly, managers need to control project scope and requirements “creep” that can
occur when engineers, scientists, or other advocates suggest functionalities greater than the
instrument’s original requirements to increase its technical capabilities.
Funding Instability. Funding instability includes situations in which a project receives less money than
planned or when funds are disbursed on a schedule different than planned. Such instability results from
congressional or Agency-directed actions and can require deferring critical tasks to later phases of
development or de-scoping or discontinuing lower priority tasks to keep project costs within a revised
budget profile, leading to cost increases and schedule delays. To this point, since 1959 NASA has
received its annual appropriation at the start of a fiscal year only seven times, often resulting in weeks-
or months-long continuing resolutions (CR) that generally set funding at the prior year’s level. The
current fiscal year is a striking illustration of this phenomena: five CRs were required before NASA (and
the rest of the Federal Government) received its annual appropriation – at the half-year mark.
Development and Retention of Experienced Project Managers. We also identified a number of issues
related to developing project managers’ experience that could affect NASA’s ability to manage its
projects effectively in the future. First, most project managers and senior officials we spoke with said
that experience and on-the-job training were keys to a project manager’s ability to manage cost,
schedule, and performance goals. In that regard, managers described NASA’s small projects as
invaluable for developing management skills and learning the key elements of project management,
including making appropriate trade-offs among cost, schedule, and performance goals when necessary.
To that end, they said it was vital that NASA maintain a balanced portfolio that continues to provide
these learning opportunities.
Interviewees also expressed concern about a lack of in-house development opportunities, with some
expressing the view that as NASA has increasingly relied on contractors to support project development,
the Agency’s in-house capabilities have declined. Moreover, they expressed concern that because NASA
contracts the majority of its hardware and software development efforts to private industry, Agency
engineers spend most of their time overseeing contractor efforts rather than building spaceflight
components, thereby limiting opportunities for NASA engineers to gain practical “hands-on” experience.
Finally, interviewees raised concerns that NASA will not be able to attract and retain recent graduates or
experienced engineers seeking opportunities to design and build spaceflight systems. Instead, these
2 In an address to the American Astronautical Society Goddard Symposium in March 2008, former NASA Administrator
Michael Griffin described the problem this way: “[T]here have been many instances where proponents of individual missions
have downplayed the technical difficulty and risk of their individual mission, or grossly underestimated the cost and effort
involved to solve the problems, in order to gain ‘new start’ funds for [a] particular project. Everyone knows that, once
started, any given mission is nearly impossible to cancel, so the goal becomes that of getting started, no matter what has to
be said or done to accomplish it.”
Joint Cost and Schedule Confidence Level (JCL). Beginning in 2006, NASA incorporated progressively
more sophisticated cost and schedule estimating techniques into Agency policy, culminating in 2009
with formal adoption of a JCL requirement for projects with life-cycle costs greater than $250 million. A
JCL analysis, completed during the final portion of the project’s formulation phase and required as part
of the Agency’s decision to move the project into the implementation phase, calculates the likelihood a
project will achieve its objectives within budget and on time. A properly executed JCL not only provides
a percentage likelihood the project will be developed at a particular cost and on a particular schedule,
but also identifies associated cost and schedule reserves needed to back-up the plan. Unless senior
management approves an exception, projects are funded at a minimum of the 50 percent confidence
level (the Management Agreement) and budgeted at the 70 percent confidence level (the Agency
Baseline Commitment or external commitment) – the difference between the two figures being the
reserves.
The JCL process uses software models that combine cost, schedule, risk, and uncertainty to evaluate
how expected threats and unexpected events may affect a project’s cost and schedule and help
managers’ assess whether a project has an executable plan moving forward. To generate this data,
project managers develop comprehensive project plans, inputs, and priorities that integrate costs,
schedules, risks, and uncertainties. NASA officials believe gathering this data encourages better
communication among project personnel; improves cost, schedule, risk, and uncertainty analyses; and
fosters an understanding of how different project elements impact one another.
However, as we wrote in a September 2015 report, the JCL is not a one-stop solution for ending cost
overruns and schedule delays.3 Rather, we found the process was unevenly applied across various
projects and has inherent limitations in that it does not fully address the issue of predicting
“unknown/unknowns” or other root causes of NASA’s project management challenges such as funding
instability and underestimation of technical complexity. Moreover, we found that while success when
using this process relies on the expertise of risk managers, cost estimators, and schedulers, NASA had a
shortage of people with this experience. Furthermore, although NASA policy requires JCL calculations to
include consideration of all risks whether or not funded by the project, we found that NASA routinely
leaves out risks “external” to the project such as involvement of international partners and risks
associated with selection and timely delivery of launch vehicles. While NASA has embraced JCL and
implemented it across its space flight project portfolio, applying lessons learned from successful projects
and enhancing training on its use will increase its value as a project management tool.
Contracting. NASA has multiple contracting mechanisms available for acquiring goods and services,
including fixed-price and cost-reimbursement contracts. In a fixed-price contract, the contractor agrees
to deliver a product or service at a price not to exceed an agreed-upon amount. Fixed-price contracts
are generally used when costs and risks can be clearly defined – for example, when purchasing
commercially available items such as laptop computers. In contrast, under cost-reimbursement
3 NASA OIG, “Audit of NASA’s Joint Cost and Schedule Confidence Level Process” (IG-15-024, September 29, 2015).
Contracts may also include incentives in which a predetermined amount of money is set aside for the
contractor to earn above the contract’s base price based on performance. Properly structured and
executed, incentive contracts can reduce the risk of cost overruns, delays, and performance failures by
providing a well-performing contractor the opportunity to earn additional money.
NASA has also used its “other transactions” authority provided by the National Aeronautics and Space
Act of 1958 for large-scale development projects, most significantly to encourage development of
commercial cargo and crew delivery capabilities to resupply the International Space Station (ISS or
Station).4 Under these Space Act Agreements, NASA agrees to provide funding, goods, services,
facilities, or equipment that the partner uses to accomplish stated objectives. In return, the partner
may advance technologies that support NASA’s mission, share information, or reimburse NASA for the
support provided. With respect to the development of commercial cargo and crew services, contractors
were required to commit significant amounts of their own funds while NASA paid the companies when
they met predetermined milestones. While providing financial benefits to the Agency, the use of funded
Space Act Agreements decreases the level of NASA oversight and control compared to traditional
procurement contracts.
Regardless of approach, our work has highlighted multiple examples of contracting costs, benefits, and
challenges at NASA. Since 2011, we have issued eight reports examining acquisition strategies used by
NASA for commercial cargo and crew transportation services to access the ISS. While NASA’s costs to
develop these services using Space Act Agreements are generally perceived as significantly less than if
the Agency had used traditional contracting mechanisms, cargo services still were not provided until
3 years later than planned and crew services have yet to be demonstrated and are 3 years beyond initial
expectations. Furthermore, several of our reports identify specific issues in NASA’s commercial cargo
contracts where it could save money by modifying contract terms and agreements.
Likewise, a November 2013 OIG report examined NASA’s use of award-fee incentive contracts and
questioned its methodology for motivating and incentivizing contractors’ performance.5 In particular,
we found that overly complex award-fee formulas and a contract clause designed to hold contractors
accountable for the quality of the final product that disregards interim performance evaluations have
diminished the effectiveness of the Agency’s award-fee contracts. For example, if JWST produces the
science expected after its eventual launch, the Agency has the ability under the contract to award the
contractor all of the award fees it could have earned over the past 15 years – even though NASA
previously denied payment of some of those fees due to poor contractor performance.
Finally, a May 2017 report detailed how fixed-price contract costs increased on NASA’s construction of
two test stands at Marshall Space Flight Center that will be used to test SLS components.6 Because the
stand designs were based on preliminary specifications from the SLS program, the requirements and
capabilities needed were not fully understood when the construction contract was awarded.
As NASA increasingly relies on the private sector to leverage its capacity, innovation, and
competitiveness, the Agency must ensure that the contracting mechanisms it chooses are best suited to
maximize its significant investments.
Partnerships. Partnerships, both domestic and international, are playing an increasingly important role
in NASA’s programs and projects. These collaborations can reduce NASA’s required investment through
sharing of capabilities, expertise, and scientific research while cultivating positive working relations
among nations. As NASA missions become more complex and costly, it will be difficult for the Agency to
achieve its ambitious goals at current funding levels without leveraging such partnerships, particularly
for human exploration beyond low Earth orbit.
While NASA currently manages more than 750 international agreements with 125 different countries, it
faces challenges in maintaining or expanding its use of such partnerships. For example, a May 2016 OIG
audit found NASA sometimes experienced difficulty gaining agreement approval from the Department
of State, as well as overcoming cumbersome U.S. export control regulations, restrictions on NASA
employees’ attendance at international conferences, and geopolitical realities that limit expansion of
such partnerships, particularly with the Russian and Chinese space agencies.7
That said, international partnerships come with their own challenges. For example, in September 2016
we reported on likely launch schedule delays for Orion due to the European Space Agency’s late delivery
of the European Service Module needed for Exploration Mission 1.8 More recently, our work in January
of this year noted that the SWOT mission is dependent on about $400 million in instruments and other
contributions from the French and Canadian space agencies – contributions critical to mission success.9
Unfortunately, the French contribution is late and has forced project management to delay completion
of a major life-cycle review that could potentially impact the launch schedule.
Looking toward the future, NASA hopes to leverage the emerging commercial spaceflight industry by
forming public-private partnerships to further its space exploration and science research goals,
particularly with respect to operation of the Station. According to NASA, such public-private
partnerships will enable it to share the financial risk with private industry to better leverage
Government investments.
Conclusion
NASA should rightly be proud of its six decades of significant achievements exploring space, helping
understand the Earth and other planets’ evolution and environment, and conducting fundamental
research in aeronautics. However, consistently managing the Agency’s largest science and space
exploration projects to meet cost, schedule, and performance goals remains elusive.
7 NASA OIG, “NASA’s International Partnerships: Capabilities, Benefits, and Challenges” (IG-16-020, May 5, 2016).
8 NASA OIG, “NASA’s Management of the Orion Multi-Purpose Crew Vehicle Program” (IG-16-029, September 6, 2016).
9 NASA OIG, “NASA’s Surface Water and Ocean Topography Mission” (IG-18-011, January 17, 2018).
In our judgment, meeting these challenges can only be accomplished through a “unity of effort” that
includes strong, consistent, and sustained leadership by the President, Congress, and NASA
management. Articulating a clear, unified, and sustaining vision for the Agency and providing the
necessary resources to execute that vision is critical to ensuring that project managers are best
positioned to complete projects within cost and on schedule.