United States General Accounting Office

GAO Report to Congressional Requesters

May 1998 INTERNATIONAL

SPACE STATION

U.S. Life-Cycle Funding

Requirements

GAO/NSIAD-98-147

GAO United States

General Accounting Office

Washington, D.C. 20548

National Security and

International Affairs Division

B-279653 

May 22, 1998

The Honorable John McCain

Chairman, Committee on Commerce,

 Science and Transportation

United States Senate

The Honorable William H. Frist

Chairman, Subcommittee on Science,

 Technology and Space

Committee on Commerce, Science and Transportation

United States Senate

As requested, we reviewed issues associated with the National

Aeronautics and Space Administration’s (NASA) International Space Station

program. As agreed with your office, this report (1) provides an estimate

of the station’s development, assembly, and operations costs and

compares this estimate with the estimate in our June 1995 report;1

(2) identifies program uncertainties that may affect those costs;2

(3) discusses potential debris tracking costs; (4) discusses the status of

program reserves; and (5) describes recent actions to measure prime

contractor performance based on rebaselined information.

Background NASA and its international partners—Japan, Canada, the European Space

Agency, and Russia—are building the space station as a permanently

orbiting laboratory to conduct materials and life sciences research, earth

observation and commercial utilization, and related uses under nearly

weightless conditions. Each partner is providing station hardware and

crew members and is expected to share operating costs and use of the

station. The NASA space station program manager is responsible for the

cost, schedule, and technical performance of the total program. The

Boeing Corporation, the prime contractor, is responsible for development,

integration, and on-orbit performance of the station. By the end of 1997,

the United States and its partners had produced well over 358,000 pounds

of space flight hardware, of which the prime contractor was responsible

for about 260,000 pounds. According to NASA, by the end of 1998, virtually

1

Space Station: Estimated Total U.S. Funding Requirements (GAO/NSIAD-95-163, June 12, 1995).

2

Space Station: Cost Control Problems Continue to Worsen (GAO/T-NSIAD-97-177, June 18, 1997),

Space Station: Cost Control Problems Are Worsening (GAO/NSIAD-97-213, Sept. 16, 1997), Space

Station: Deteriorating Cost and Schedule Performance Under the Prime Contract

(GAO/T-NSIAD-97-262, Sept. 18, 1997), and Space Station: Cost Control Problems

(GAO/T-NSIAD-98-54, Nov. 5, 1997).

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all flight hardware for the first six flights will have been delivered to

Russian or American launch sites.

In June 1995, we reported that the U.S. funds required to design, launch,

and operate the space station would be about $94 billion—over $48 billion

to complete assembly and almost $46 billion to operate and conduct

research. That total included $17.4 billion for station development

activities, $13 billion for operations, and $50.5 billion for shuttle launch

support during assembly and operations. Our report also noted that the

program’s funding reserves were limited and that the launch and assembly

schedule would be difficult to achieve.

Results in Brief Life-cycle cost is the sum total of direct, indirect, recurring, and

nonrecurring cost of a system over its entire life through disposal. Overall,

the estimated U.S. cost to develop, assemble, and operate the space

station is about $96 billion, an increase of almost $2 billion over our last

estimate made in 1995.3

 Development costs represent the largest

increase—more than 20 percent. The development increase is attributable

to schedule slippages, prime contract growth, additional crew return

vehicle costs, and the effects of delays in delivery of the Russian-made

Service Module. Overall 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 estimation that the

average cost per flight throughout the station era will be dramatically

lower than was estimated in 1995.

A number of potential program changes could significantly increase the

updated cost estimate. They include the potential for additional schedule

slippage and the need for shuttle launches to test and deliver the crew

return vehicle. A detailed analysis of cost and schedule projections by a

third party cites many of the same program changes we identified and

suggests that significant cost increases and schedule slippages are likely.

At the current estimated spending rate, the program would incur

additional costs of more than $100 million for every month of schedule

slippage.

In addition, NASA may have to incur costs related to protecting the station

from space debris. In August 1997, the agency updated its overall space

debris tracking requirement. The new requirement, as it relates to

3

All dollar estimates in this report have been adjusted for inflation. The updated cost estimates are

based on an assembly complete date of December 2003, followed by a 10-year operations period.

Page 2 GAO/NSIAD-98-147 Space Station Funding
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supporting the space station, includes the ability to track and catalog

objects as small as 1 centimeter. Cost estimates for achieving the

improved tracking capability range into the billions of dollars. Since

ensuring the safety of all space missions is a NASA-wide, if not national,

responsibility, those potential costs are institutional in nature and should

not be reflected in the station program’s life-cycle estimate.

The adequacy of the space station program’s funding reserves has been a

concern of ours and still is. The program has used, or identified potential

uses for, a significant portion of its available reserves, with almost 6 years

left before the last assembly flight is scheduled to be launched. The

current reserve amount could be affected by additional schedule slips,

contract disputes, manufacturing problems, or the possible need for

additional testing.

In October 1997, NASA granted approval to Boeing to begin tracking cost

and schedule performance using a new performance measurement

baseline. The purpose of the change was to incorporate updated program

schedules to reflect the most achievable recovery plans. For reporting

purposes, the change had the effect of resetting cost and schedule

variances to zero. The original baseline shows that the February 1998 cost

variance would have been about $50 million higher than the $398 million

Boeing reported prior to the change. While NASA approved the new

baseline for reporting purposes, it continues to use Boeing’s estimate of

overrun at completion—$600 million—as the basis for calculating the

contractor’s incentive award fee.

U.S. Funding

Requirements for the

Space Station

Since June 1995, total space station cost estimates have increased from

$93.9 billion to $95.6 billion (see table 1). In particular, the development

cost estimate has increased by more than 20 percent, in-house personnel

requirements have increased dramatically, and eight shuttle flights have

been added to the development program. However, the shuttle support

cost, as of April 1998, is less than that of June 1995 because NASA is

projecting a significant reduction in the average cost per flight.

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Table 1: Estimated Space Station Costs

Current dollars in billions

Cost category

June 1995

estimate

April 1998

estimate

U.S. requirements through assembly completea

Contract and in-house costs from 1985 through 1993 $11.2 $11.2

Development cost from 1994 to assembly complete 17.4 21.9b

Station-related requirements

In-house personnel 0.9 2.2c

Principal investigators 0.3 0.2d

Shuttle performance enhancements 0.3 0.2

Russian contract 0.4 n/ae

Shuttle launch support 17.8 17.7

Subtotal 48.2 53.4

U.S. requirements after assembly complete

Operations/utilization 13.0 13.0

Principal investigators Unavailable 0.7

In-house personnel Unavailable 2.9f

Shuttle launch support 32.7 25.6

Station decommissioningg Unavailable Unavailable

Total $93.9 $95.6

Note: Totals may not add due to rounding.

aWe define assembly complete as December 2003, when the last assemly flight is currently

scheduled.

bIncludes station development, operations, and research activities through December 2003. Also

includes funding reserves and costs associated with the crew return vehicle and U.S. missions to

the Russian space station Mir. Costs associated with activities from October through

December 2003 are prorated, based on the fiscal year 2004 budget planning estimate.

cEstimate was derived by dividing total personnel cost by the number of full-time equivalents

(FTE). We then multiplied that result by the number of space station program FTEs. Our current

estimate includes an allocation of all research and program management costs to the station

program.

dNASA is continuously adjusting its plans for research as the availability of space station

resources are better defined. NASA plans to increase its number of principal investigations

consistent with resources available for space station utilization through assembly complete. For

the operations period, the estimate assumes a flat or only slightly declining budget in the

out-years.

eU.S. costs associated with the Russian Space Agency contract are included in the development

estimate.

f

Our estimate was derived by using the cost associated with station program FTEs in fiscal

year 2003 and escalating that figure by 3 percent a year for 10 years.

gNASA plans to attach a propulsion vehicle to the station and perform a controlled deorbit into the

ocean. The U.S. share of the ultimate disposal cost will depend on the propulsion vehicle chosen.

Page 4 GAO/NSIAD-98-147 Space Station Funding
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The higher development costs—$21.9 billion versus $17.4 billion—are

attributable to schedule delays, additional prime contractor effort not

covered by funding reserves, additional crew return vehicle costs, and

costs incurred as a result of delays in the Russian-made Service Module. In

June 1995, NASA expected to complete assembly in June 2002. Partially due

to delays in the Russian program, the last flight in the assembly sequence

is now scheduled for December 2003, a delay of 18 months that has

increased development costs by more than $2 billion. Also, NASA has

undertaken activities such as developing the Interim Control Module to

mitigate delays in the delivery of the Service Module. These activities are

estimated by NASA to cost more than $200 million. It should be noted that

our estimate includes the cost of the Russian Space Agency contract,

which NASA does not include in its portrayal of station development

funding needs.

The increased in-house personnel costs during development—$2.2 billion

versus $0.9 billion—are attributable to a longer development program,

higher estimated personnel levels, and a more inclusive estimating

methodology. Our June 1995 estimate was based on a development

program scheduled to end in June 2002 while our current estimate

includes an additional 18 months of effort. In addition, our prior estimate

was based on an average of 1,285 civil service staff annually. NASA’s budget

now estimates that about 2,000 staff per year will be needed during

development. The increased staffing levels are attributable largely to the

inclusion of science and crew return vehicle personnel into the station

budget, which in most cases were previously covered under the Science,

Aeronautics and Technology budgets. Finally, our current estimate is

based on an allocation of all research and program management costs to

the station program, while the previous estimate did not include all

components of that budget line.

Regarding shuttle support, our 1995 estimate was based on 35 flights

during development and 50 during operations. However, NASA now

estimates 43 flights during development, including 2 additional flights to

the Russian space station Mir, 1 flight to test the crew return vehicle, and

flights required by changes to the assembly sequence. NASA continues to

estimate that 50 flights will be needed during operations. However, NASA’s

estimate of average cost per flight is now lower, resulting in a shuttle

launch support cost of $17.7 billion during assembly, essentially the same

cost as estimated in 1995, despite the increased number of flights. During

operations, the estimated cost for shuttle support is now significantly

less—$25.6 billion versus $32.7 billion—based on the same number of

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flights. NASA’s estimated reduction in the average cost per flight is based on

its expectation that program efficiencies and other cost savings will be

achieved and sustained throughout the operating life of the space station.

If that expectation is not realized, the cost for shuttle support will

increase.

Potential Added

Program Costs

A number of potential program changes could significantly increase the

current estimate. First, the development costs shown in table 1 would

increase if the assembly complete milestone slips beyond December 2003.

Second, it is likely that the program will ultimately require more shuttle

flights than are included in our analysis. Finally, NASA is now considering

modifying space shuttle Columbia to permit its use for some station

missions. A recent independent assessment by NASA’s Cost Assessment and

Validation Task Force suggests that the program’s schedule will likely

experience further delays and require additional funding.4

Schedule Changes We believe NASA and its partners face a formidable challenge in meeting

the launch schedules necessary to complete assembly. Those schedules

depend on the launch capacity in the United States and Russia and the

program’s ability to meet all manufacturing, testing, and software and

hardware integration deadlines.

Through December 2003, over 90 launches by NASA and its international

partners will be needed for assembly, science utilization, resupply, and

crew return vehicle purposes. During this period, NASA’s shuttles are

currently scheduled to be flown up to 9 times a year for both station and

nonstation needs, and Russia will have to average 9 to 10 launches a year

to accommodate its station commitment. While these rates have been

achieved in the past, a January 1998 NASA study of personnel reductions at

Kennedy Space Center concluded that, without additional processing

efficiencies, the required shuttle flight rate may not be supportable.5

 If

NASA is unable to maintain the planned flight rate, the station assembly

schedule could experience further slippage. Also, recent Russian annual

4

Our work and that of the independent assessment team was performed in the same time frame. Our

work focused on aggregating the various components of space station life-cycle cost, based on NASA’s

current budget projections. The assessment team focused on evaluating the program in terms of

potential cost and schedule growth primarily for the program’s development portion. Report of the

Cost Assessment and Validation Task Force on the International Space Station, April 21, 1998.

5

Assessment of the Space Flight Operations Contract/United Space Alliance Risk Management Process

for Determining Proposed Staff Reductions, January 16, 1998.

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flight rates to support the Mir space station have been significantly lower

than the required rate to support space station assembly.

The assembly schedule also assumes that further critical manufacturing

delays will not occur. According to NASA’s Aerospace Safety Advisory

Panel’s 1997 annual report, the program’s schedule is at risk due to

software, hardware, and testing issues.6

 The report states, in part, that the

“. . . software development schedule is almost impossibly tight. If

something else does not cause a further delay in (station) deployment,

software development may very well do so.” Further, the report pointed

out that the crew return vehicle development schedule is “extremely

optimistic,” noting that any delays in the availability of the vehicle could

constrain station operations. In addition, the panel stated that, while

integrated testing is a “very positive step for safety,” there is no room in

the current schedule for required changes that may be discovered during

this testing.

Delays in the development program would increase costs because, at a

minimum, fixed costs such as salaries, contractor overhead, and sustaining

engineering would continue for a longer period than planned. Assuming

NASA would continue to spend at the rate assumed in its current estimate

for fiscal year 2003, the program would incur additional costs of more than

$100 million for every month of schedule slippage.

Additional Flights The program could require more shuttle flights than are baselined in our

estimate. For example, the baseline does not include additional flights that

may be needed for crew return vehicle testing and launches and some

resupply flights. While some of these possibilities are subject to program

changes that have not been adopted, it appears that the costs associated

with launching the crew return vehicle are not included. Depending on the

ultimate life expectancy of that vehicle, two additional flights could be

needed. On the basis of NASA’s estimate of average cost per flight for the

shuttle, this could add about $1 billion to the total estimate. According to

NASA, sustaining engineering costs associated with the crew return vehicle

will have to be absorbed by the program’s operations budget.

Also, NASA is reviewing alternatives for making Columbia capable of

supporting the station. A modified Columbia could be used as a backup (in

6

Annual Report for 1997, Aerospace Safety Advisory Panel, February 1998.

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the event one of the other orbiters is out of service) or as a delivery

vehicle for cargo.7

Additions Suggested by

Independent Assessment

Between November 1997 and April 1998, an independent cost assessment

and validation team examined the program’s past and projected

performance and made quantitative determinations regarding the potential

for additional cost and schedule growth. Reflecting many of the same

areas we identified, the team cited complex assembly requirements and

potential schedule problems associated with remaining hardware and

software development and concluded that the program could require an

additional $130 million to $250 million in annual funding. The team also

indicated that the program could experience 1 to 3 years of schedule

growth beyond the currently anticipated completion date of

December 2003.

Potential Debris

Tracking Costs

The estimate we derived in 1995 and our latest estimate include those

costs related to the space station’s development, assembly, and

operations. They do not include potential costs that may be incurred to

satisfy NASA’s space debris tracking requirement.

Due to its large size and long operational lifetime, the space station will

face a risk of being struck by orbital debris. NASA plans to provide shielding

against smaller objects and maneuver the station to avoid collisions with

large objects.

The National Space Policy requires NASA to ensure the safety of all space

flight missions involving the space station and shuttle, including

protection against the threat of collisions from orbiting space debris.

However, NASA has no surveillance capability and must rely on the

Department of Defense (DOD) to perform this function.

As mentioned previously, NASA updated its overall requirement for space

debris tracking as it relates to supporting the space station, to include the

ability to track and catalog objects as small as 1 centimeter. NASA

recognized that such a capability could require sensor facility upgrades

and the addition of new sensors to DOD’s surveillance network. However,

DOD maintains that the upgrade is not feasible within current budget

7

According to NASA, due to high structural weight the orbiter Columbia cannot be used for station

assembly flights, but, as modified, it could be used for logistics flights.

Page 8 GAO/NSIAD-98-147 Space Station Funding
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constraints.8 A NASA study suggested that developing a system to satisfy

NASA’s needs could cost about $1 billion. A DOD study suggested that the

cost of a space-based system satisfying all DOD and NASA needs could

exceed $5 billion and noted that the cost to maintain a system that

provides 24-hour a day tracking of 1-centimeter-sized space debris could

be “prohibitively expensive.”

More recently, the Senate Committee on Armed Services, in its report on

the National Defense Authorization Act for Fiscal Year 1998, directed the

Secretary of the Air Force to undertake a design study for a 1-centimeter

debris tracking system. The study was to be coordinated with a number of

national laboratories. The resulting report, which was transmitted to

congressional committees on April 2, 1998, identified three possible

designs that range in estimated cost from about $400 million to $2.5 billion.

The sources of funding for the system are undetermined at this time. Also,

while the more stringent requirement is related to the space station, all

other space activities would benefit from the ability to track

1-centimeter-sized debris. Since debris tracking is a NASA-wide

requirement, and the agency relies on DOD to provide the service, the two

agencies will have to work together to determine how to provide the

capability.

Status of Funding

Reserves

We have previously expressed our concern with the adequacy of space

station financial reserves.9

 We continue to be concerned. The program has

used, or identified specific uses for a significant portion of its available

reserves, with almost 6 years left before the last assembly flight is

scheduled to be launched.

In January 1995, the space station program had more than $3 billion in

financial reserves to cover development contingencies. In March 1998, the

financial reserves available to the program were down to about

$2.1 billion, and NASA had identified over $1 billion in potential funding

requirements against those reserves. In the past, reserves have been used

to fund additional requirements, overruns, and other authorized changes.

Some of the potential funding needs include those related to NASA’s

8

Space Surveillance: DOD and NASA Need Consolidated Requirements and a Coordinated Plan

(GAO/NSIAD-98-42, Dec. 1, 1997).

9

Financial reserves are used to fund unexpected contingencies, such as cost growth, schedule delays,

or changes in project objectives or scope.

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decision to add a third node to the station’s design and unforeseen costs

associated with the development of an Interim Control Module.

We recognize that NASA identifies adequacy of reserves as one of the

highest current program risks. We also note that the current reserve status

could be affected by additional schedule slips, contract disputes,

manufacturing problems, or the need for additional testing.

Inadequate reserves hinder program managers’ ability to cope with

unanticipated problems. If a problem could not be covered by available

reserves, program managers could be faced with deferring or rephasing

other activities, thus possibly delaying the space station’s development

schedule or increasing future costs.

New Baseline to

Measure Cost and

Schedule

Performance

In the summer of 1997, after many months of estimating that the total cost

growth at the completion of the contract would not exceed $278 million,

Boeing more than doubled its estimate—to $600 million. Through

September 1997, $398 million in cost growth had already accumulated.

On September 30, 1997, Boeing formally asked NASA to consider

rebaselining the program using a more “meaningful program baseline

against which performance measurements (could) be taken.” In

October 1997, NASA granted approval to Boeing to begin tracking cost and

schedule performance using a new performance measurement baseline.

The revised baseline permitted Boeing to reset its budgeted cost of work

scheduled and performed equal to the actual cost of work performed as of

September 1997.10 According to Boeing, this change provides the program

with the most accurate cost information and incorporates updated

program schedules to reflect the most achievable recovery plans. For

reporting purposes, the change had the effect of resetting cost and

schedule variances to zero.

We asked the program officials to provide us with an analysis depicting a

crosswalk back to the original baseline. That analysis shows that, as of

February 1998, the total variance was $448 million. Of that amount, about

$50 million was incurred in the first 5 months of fiscal year 1998. While

NASA approved the new baseline for reporting purposes, it continues to use

10At the end of September 1997, prior to resetting the baseline, Boeing reported a cost variance of

$398 million and a schedule variance of $139 million.

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Boeing’s estimate of overrun at completion—$600 million—as the basis for

calculating the contractor’s incentive award fee.

NASA’s estimate of total cost growth at completion, which had been in

general accord with Boeing’s $600 million estimate, has been increased to

$817 million, and is the basis for its fiscal year 1999 budget request. This

higher estimate is based on its assessment of trends and its belief that

Boeing’s cost control strategy will not be fully successful.

Conclusions Since our last cost estimate was completed in June 1995, U.S. life-cycle

funding requirements for building and operating the International Space

Station have increased—from $93.9 billion to $95.6 billion. Many of the

reasons for this increase were not foreseen by NASA in 1995. Reasons

include schedule delays by Russia and prime contractor difficulties.

In light of our analysis and that by an independent team, additional costs

could materialize. Potential program changes, such as additional schedule

slippage and more shuttle flights, could increase our latest cost estimate.

Also, NASA’s updated requirement for tracking space debris may require

DOD to upgrade its surveillance network. NASA’s potential share of this cost

has not yet been determined.

When the station is fully assembled, funding requirements for operational

activities, such as shuttle launches, the crew return vehicle, principal

investigator work, and in-house personnel support, will need to be fully

defined. During the station’s projected 10-year utilization period, U.S.

funding requirements are estimated to total over $42 billion, or about an

average of $4.2 billion per year. Therefore, station-related funding needs

will continue be a major portion of NASA’s future budgets.

Agency Comments

and Our Evaluation

In commenting on a draft of this report, NASA raised three major concerns:

(1) our use of average cost per flight to estimate shuttle launch support

costs, (2) the inclusion of certain program costs in the station

development estimate, and (3) the inclusion of references to the

requirement for improved orbital debris tracking capability. NASA also

provided a number of technical and clarifying comments, which have been

incorporated where appropriate.

NASA believes that marginal cost, rather than average cost per flight, is a

more accurate estimate of shuttle launch support costs. NASA defines

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marginal cost per flight as those costs incurred or avoided as a result of

adding or deleting one flight to or from the shuttle manifest in a given

fiscal year. Marginal cost does not include any fixed costs that NASA says

are required to maintain the capability to launch the shuttle a specific

number of times during a given year. Average cost per flight as defined by

NASA is the total cost to operate the space shuttle on a recurring and

sustained basis for a given fiscal year divided by the number of flights

planned for that year. Its calculation of average cost per flight captures

most costs in the shuttle operations budget line, as well as prorations of

civil service personnel, space communications network costs, and

recurring costs for shuttle improvements. We believe our use of average

cost per flight is appropriate because more than 70 percent of shuttle

flights during fiscal years 1999 through 2003 will be devoted to the space

station.

NASA expressed concern with our inclusion of certain costs in the

development estimate, particularly the Russian Space Agency contract

cost. We chose to include all costs that we believe directly support station

development and construction activities to more completely portray that

portion of the life-cycle cost estimate. However, we revised the report to

recognize the way NASA treats those costs.

NASA also expressed concern that our discussion of the costs associated

with orbital debris tracking could be misunderstood. We believe our

discussion is clear. We agree that debris tracking costs should not be

considered part of the space station’s life-cycle cost estimate, and benefits

would accrue to programs other than the space station. However, it is a

potential cost that is related to space station support because the

requirement to track and catalog 1-centimeter-sized debris was established

to support the station. As stated in the report, since debris tracking is a

NASA-wide responsibility and the agency relies on DOD to provide the

service, the two agencies will have to work together to achieve the

improved capability.

We provide additional details on NASA’s comments in appendix I.

Scope and

Methodology

To estimate station costs, identify program uncertainties, examine

program reserves, and assess the prime contractor’s cost and schedule

reporting system, we reviewed NASA’s program planning and budgeting

documents, internal cost reports, independent program assessments, and

contracts relating to space station development. We interviewed NASA

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officials in the Space Station Program Office, the Space Shuttle Program

Office, the Office of Human Space Flight, the Office of Life and

Microgravity Sciences and Applications, the Office of the Comptroller, and

the X-38 development program. We also met with officials from NASA’s

space station Cost Assessment and Validation Task Force to discuss the

scope and results of their work, and the National Research Council to

discuss ongoing work related to station disposal. To examine potential

impacts of satisfying NASA’s debris tracking requirement, we discussed a

recent Air Force study with cognizant officials and reviewed previous

debris tracking studies.

We used NASA budget data to depict certain costs and to derive other costs.

We used cost reports and independent assessments to test the reliability of

NASA’s estimates and to identify cost risks to the program. We did not,

however, attempt to independently validate NASA’s budget data.

We performed our work from December 1997 to April 1998 in accordance

with generally accepted government auditing standards.

Unless you publicly announce its contents earlier, we plan no further

distribution of this report until 15 days from its issue date. At that time, we

will send copies to appropriate congressional committees, the NASA

Administrator, and the Director of the Office of Management and Budget.

We will also make copies available to others on request.

Please contact me at (202) 512-4841 if you or your staff have any questions

about this report. Major contributors to this report are listed in 

appendix II.

Allen Li

Associate Director,

Defense Acquisitions Issues

Page 13 GAO/NSIAD-98-147 Space Station Funding
Contents

Letter 1

Appendix I 

Comments From the

National Aeronautics

and Space

Administration

16

Appendix II 

Major Contributors to

This Report

33

Table Table 1: Estimated Space Station Costs 4

Abbreviations

DOD Department of Defense

NASA National Aeronautics and Space Administration

Page 14 GAO/NSIAD-98-147 Space Station Funding
Page 15 GAO/NSIAD-98-147 Space Station Funding
Appendix I 

Comments From the National Aeronautics

and Space Administration

See comment 1.

See comment 6.

See comment 8.

Page 16 GAO/NSIAD-98-147 Space Station Funding
Appendix I 

Comments From the National Aeronautics

and Space Administration

See comment 1.

See comment 2.

See page 2.

See comment 3.

See page 4.

Page 17 GAO/NSIAD-98-147 Space Station Funding
Appendix I 

Comments From the National Aeronautics

and Space Administration

See comment 4.

Now on p. 1.

See comment 5.

Now on p. 1.

See comment 6.

See comment 7.

Page 18 GAO/NSIAD-98-147 Space Station Funding
Appendix I 

Comments From the National Aeronautics

and Space Administration

See comment 8.

See comment 9.

Page 19 GAO/NSIAD-98-147 Space Station Funding
Appendix I 

Comments From the National Aeronautics

and Space Administration

See comment 10.

See comment 11.

Now on p. 4.

See comment 12.

Now on pp. 4 and 5.

See comment 13.

Page 20 GAO/NSIAD-98-147 Space Station Funding
Appendix I 

Comments From the National Aeronautics

and Space Administration

See comment 14.

Now on p. 4.

See comment 15.

Now on p. 4.

See comment 16.

See comment 17.

Page 21 GAO/NSIAD-98-147 Space Station Funding
Appendix I 

Comments From the National Aeronautics

and Space Administration

See comment 18.

Now on p. 5.

See comment 19.

Now on pp. 5 and 6.

See comment 20.

Now on p. 7.

Page 22 GAO/NSIAD-98-147 Space Station Funding
Appendix I 

Comments From the National Aeronautics

and Space Administration

See comment 21.

Now on p. 6.

See comment 22.

See comment 20.

Now on p. 7.

Page 23 GAO/NSIAD-98-147 Space Station Funding
Appendix I 

Comments From the National Aeronautics

and Space Administration

See comment 24.

Now on p. 8.

See comment 8.

See comment 9.

Page 24 GAO/NSIAD-98-147 Space Station Funding
Appendix I 

Comments From the National Aeronautics

and Space Administration

See comment 27.

See comment 28.

Now on p. 10.

See comment 29.

Now on p. 11.

See comment 30.

Now on p. 6.

Page 25 GAO/NSIAD-98-147 Space Station Funding
Appendix I 

Comments From the National Aeronautics

and Space Administration

See comment 8.

Page 26 GAO/NSIAD-98-147 Space Station Funding
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Comments From the National Aeronautics

and Space Administration

Page 27 GAO/NSIAD-98-147 Space Station Funding
Appendix I 

Comments From the National Aeronautics

and Space Administration

Page 28 GAO/NSIAD-98-147 Space Station Funding
Appendix I 

Comments From the National Aeronautics

and Space Administration

The following are GAO’s comments on the National Aeronautics and Space

Administration’s (NASA) letter dated April 27, 1998.

GAO Comments 1. According to NASA, shuttle support costs for the space station would be

$3.1 billion during development and $5.5 billion during operations if

marginal cost per flight is used to estimate those costs. However, we

believe that it is more appropriate to use average cost per flight to

estimate shuttle support.

NASA defines marginal cost per flight as those costs incurred or avoided as

a result of adding or deleting one flight to or from the shuttle manifest in a

given fiscal year. Marginal cost does not include any fixed costs that NASA

says are required to maintain the capability to launch the shuttle a specific

number of times during a given year. According to NASA officials,

eliminating or adding a single flight in a given year has no effect on these

fixed costs. Marginal cost per flight includes costs of personnel and any

consumable hardware and materials, such as propellant, that can be added

or removed with only temporary adjustment in the flight rate.

NASA defines average cost per flight as the total cost to operate the space

shuttle on a recurring and sustained basis for a given fiscal year divided by

the number of flights planned for that year. Its calculation of average cost

per flight captures most costs in the shuttle operations budget line, as well

as prorations of civil service personnel, space communications network

costs, and recurring costs for shuttle improvements. The calculation does

not include capital-type costs, such as those required to develop the

system, and construct and modify government-owned facilities or

nonrecurring costs associated with system improvements.

During its assembly, station elements will be almost the exclusive payload

on the shuttle, and there is no alternative means of transportation for the

station. Also, during the operations period, the station will be a major user

of the shuttle. Since the station will be the predominant user of the shuttle

for many years, we believe the use of average cost per flight is more

appropriate than the use of marginal cost per flight to estimate shuttle

launch support costs.

2. The time frames for the cost estimates were clearly portrayed in the

life-cycle cost table. We added a footnote in the Results in Brief section to

cite those dates earlier in the report.

Page 29 GAO/NSIAD-98-147 Space Station Funding
Appendix I 

Comments From the National Aeronautics

and Space Administration

3. We changed the heading in the table from “development budget” to

“development cost”. We chose to aggregate all costs related directly to

space station development and construction.

4. We revised the report to refer to earth observation and commercial

utilization and related uses.

5. We revised the report to read “. . . development, integration, and on-orbit

performance.”

6. We recognize that we have included some costs in our development

total that were not included in 1995, such as the Russian Space Agency

contract and crew return vehicle development costs. In calculating the

percentage increase, we excluded those costs from our total in order to

make a proper comparison. Using NASA’s own figures, the increase is more

than 22 percent—$17.4 billion vs. $21.3 billion.

7. We recognize that the NASA Administrator initiated the idea of

conducting an independent cost review. However, we note that the

Congress specifically requested such an analysis in Conference Report

105-297. The report specified a number of preconditions to the release of

some space station funding. One of those requirements was “a detailed

analysis by a third party of (space station) cost and schedule

projections . . .” For brevity, we have deleted references to this sequence

of events.

8. We agree that debris tracking costs should not be considered part of the

space station’s life-cycle cost estimate. We believe we have made that

clear by (1) excluding any reference to debris tracking from the life-cycle

cost table and (2) stating that debris tracking is a NASA-wide responsibility.

However, we believe it is important to identify this potential cost because

NASA established the requirement to catalog and track objects as small as

1 centimeter, in part, to support the International Space Station, and

funding to achieve that capability is not yet available. As stated in the

report, since debris tracking is a NASA-wide responsibility and the agency

relies on the Department of Defense to provide the service, the two

agencies will have to work together to determine how to move ahead on

this challenge.

9. We do not imply that the program has spent $2 billion of reserves.

However, according to program documentation, the net unencumbered

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Comments From the National Aeronautics

and Space Administration

reserve posture, as of March 1998, was about $1.1 billion. This compared

with a starting point of about $3.1 billion in January 1995.

10. We believe the sentence, as written, accurately reflects the status of

cost variance under the prime contract.

11. We revised our terminology.

12. We changed the life-cycle cost table category to read “development

cost from 1994 to assembly complete” and added language in the report

narrative to recognize NASA’s position. We note that in testimony on

April 23, 1998, the NASA Administrator pointed out the relevance of the

activities under the Russian contract to the development and construction

of the space station.

13. The shuttle was incapable of supporting space station assembly

without incorporating certain enhancements. We believe these

nonrecurring costs are completely relevant to the discussion of space

station life-cycle cost estimates.

14. We changed the footnote to read “U.S. missions to . . . Mir.”

15. We changed the footnote to read “Russian Space Agency contract.”

16. We did not change the order of reasons for contract growth. See

comment 12 for discussion of Russian Space Agency contract.

17. Our estimate of civil service personnel costs includes an allocation of

all elements of the research and program management budget—personnel

and related costs, travel, and research operations support—to the station

program. According to a NASA official, the agency’s estimate only allocates

personnel and related costs to the station program. Since the station

program benefits from all elements of the research and program

management budget, we believe that it is appropriate to allocate all of

those costs to the program.

18. We modified the report to incorporate this suggestion.

19. A crew return vehicle is required for space station operations. The X-38

program is focused on demonstrating a concept for station crew return.

Therefore, we believe those costs are directly related to station

development.

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Comments From the National Aeronautics

and Space Administration

20. We changed the report to reflect NASA’s current plans for modifying

space shuttle Columbia.

21. We modified the report to read “. . . Over 90 launches by NASA and its

international partners.”

22. We disagree. We believe a “delay” in the seven person operational

capability is a constraint to the station program.

23. See comment 20.

24. We revised the report to reflect information in the final Cost

Assessment and Validation Task Force report.

25. See comment 8.

26. See comment 9.

27. We believe report language accurately reflects the rebaselining of the

prime contract performance measurement reporting system.

28. We modified the report to incorporate NASA’s suggestion.

29. We modified the report to incorporate NASA’s suggestion.

30. We identified the independent cost team as NASA’s Cost Assessment

and Validation Task Force earlier in the report.

31. See comment 8.

Page 32 GAO/NSIAD-98-147 Space Station Funding
Appendix II 

Major Contributors to This Report

National Security and

International Affairs

Division, Washington,

D.C.

Jerry Herley

Atlanta Field Office John Gilchrist

James Beard

Fred Felder

Dallas Field Office Vijay Barnabas

(707342) Page 33 GAO/NSIAD-98-147 Space Station Funding
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