NASA’s Office of Inspector General (OIG) issued a stern assessment today of the management of the Space Launch System (SLS) program by NASA and SLS prime contractor Boeing. The OIG concludes that Boeing will spend twice what was planned through 2021 for building two core stages and an upper stage while delivery of the first core stage has slipped 2.5 years already and may be further delayed. It concludes NASA will be “unable” to launch the first SLS by June 2020, the end of its current projected launch window. Poor performance by Boeing and program management by NASA are blamed. The report makes seven recommendations to NASA; the agency concurred with six of them.

Congress directed NASA to build SLS in the 2010 NASA Authorization Act. The move came after the Obama Administration cancelled the Constellation program to return humans to the Moon by 2020 and eventually to Mars, which was underway during the George W. Bush Administration. NASA was building a big new rocket for Constellation — Ares V. That was cancelled and replaced by SLS to support a long-term goal sending humans to Mars with unspecified intermediate destinations.

The law directs that SLS must be able to lift 130 metric tons (MT) into low Earth orbit (LEO), similar to the Apollo-era Saturn V.

Initially, however, NASA is focused on a 70 MT version. It will grow to 105 MT and eventually to 130 MT over many years.

The initial version, Block 1, is comprised of a large central core, with two side-mounted solid rocket boosters (SRBs), and an Interim Cryogenic Propulsion Stage (ICPS). Boeing is the prime contractor for SLS and is building the core stage and ICPS. Northop Grumman Innovation Systems (formerly Orbital ATK) is building the SRBs, which are based on those used for the space shuttle program. The ICPS upper stage is based on the Boeing-built second stage of a Delta IV rocket. Boeing is also developing a more capable Exploration Upper Stage (EUS) to replace ICPS and improve performance to 105 MT.

The core stage uses four Aerojet Rocketdyne RS-25 engines, the same engines that were used for the space shuttle. In fact, 16 engines left over from the shuttle program will be used for the initial SLS launches. Although the RS-25s are reusable, and were reused in the shuttle program, they will not be in the SLS program. The SLS is not designed to be reusable at all. Each launch requires a new core stage, two SRBs, an upper stage and associated engines.

The first launch of the Block 1 SLS, designated Exploration Mission-1 (EM-1), will send an unoccupied Orion spacecraft to the vicinity of the Moon and back. The launch date has slipped repeatedly. A year ago, NASA announced the most recent slip, from November 2018 to no earlier than December 2019 and perhaps June 2020. In a Human Exploration Roadmap submitted to Congress last month, the date is listed just as “2020.” EM-2 will be the first to launch an Orion with a crew. NASA’s official launch date for EM-2 as reported to Congress is 2023, although for several years NASA officials often used 2021 as an “internal” target date. Last month’s roadmap shows it as June 2022 reflecting a NASA decision to launch it with the less capable ICPS instead of waiting for the EUS.

The maze of SLS contracts is expertly described in the OIG report and summarized in this graphic (ATK Launch Systems is now part of Northrop Grumman).

The OIG report focuses on the “Boeing Stages” contract in the top line of the table that provides $6.2 billion for development and production of two core stages and one EUS. Specifically, it details cost growth in the two major Contract Line Item Numbers (CLINs), CLIN 9 and CLIN 12, and especially CLIN 9. That $4.3 billion line item is for development and production of two core stages plus EUS.

Today’s OIG report concludes that Boeing will spend $8.9 billion through 2021 on that alone — “double the amount initially planned” — while delivery has slipped by 2.5 years “and may slip further.”

OIG attributes the cost overruns and delays to “management, technical, and infrastructure issues driven by Boeing’s poor performance.”

If NASA wants to meet the June 2020 launch date for EM-1, the report estimates an additional $1.2 billion will be needed just to get the first core stage delivered. That does not include “the billions more required to complete work on Core Stage 2 and the EUS.”

“Consequently, in light of the Project’s development delays, we have concluded NASA will be unable to meet its EM-1 launch window…”

The report also warns that a key milestone, the “Green Run Test” that involves fueling the core stage with its four RS-25 engines, firing the engines for the full duration of flight, and controlling and monitoring its performance, cannot take place at NASA’s Stennis Space Center at least until May 2019 because of Boeing delays in developing the command and control hardware and software.

The report lists a number of areas where NASA’s contract management procedures are insufficient. For example, NASA does not have visibility into Boeing’s costs because the expenditures for the first two core stages and the EUS “are co-mingled into the same contract line item number.” The OIG also said it “found flaws in NASA’s evaluation of Boeing’s performance, resulting in NASA inflating the contractor’s scores and leading to overly generous award fees.” SLS is managed by NASA’s Marshall Space Flight Center (MSFC) and its Office of Procurement is singled out for criticism.

The OIG does give NASA credit for already taking steps to address these issues. Indeed, in NASA’s response to the report, published as an appendix, NASA said it “recognized the opportunity” to improve its management processes before the OIG audit. As one example, the agency says that the MSFC “contracting officer in question had their warrant revoked and was removed from the Procurement Office in November 2017 and will be removed from the SLS program.”

The OIG made seven recommendations. NASA concurred with six of them. They include developing an action plan to fix the problems; directing Boeing to use realistic schedule assumptions and appropriate cost estimates in its Earned Value Management System; getting an independent government estimate to confirm the remaining costs; renegotiating the Boeing contract and, among other things, separating the two core stages and the EUS into individual, trackable line items; reviewing all SLS contracts overseen by MSFC’s Office of Procurement; and implementing changes to the acquisition strategy for the core stages after Core Stage 2 so they are fixed price instead of cost-plus.

The one recommendation with which NASA does not agree is to reinstitute adjectival ratings (unsatisfactory, satisfactory, good, very good, or excellent) for Boeing’s performance in monitoring the contract. NASA says that adjectival ratings are permitted, but not required by MSFC policy and “[r]igor in substantiating strengths and weaknesses … ensures accurate contractor performance reporting.”

The OIG expressed bewilderment at NASA’s non-concurrence on this issue especially since it found that NASA’s performance ratings for Boeing were “highly inflated over at least 5 years and failed to meet NASA criteria and that the [Contracting Officer Representative’s] ratings were improperly influenced by Senior SLS Program officials. It is unclear why NASA would not want the benefit of the technical monitors’ adjectival ratings … as these monitors are specifically appointed to evaluate Boeing’s performance.”