GAO

United States General Accounting Office

Report to Congressional Requesters

August 1999 SPACE STATION

Russian Commitment 

and Cost Control 

Problems

GAO/NSIAD-99-175

Page 1 GAO/NSIAD-99-175 Space Station

United States General Accounting Office

Washington, D.C. 20548

National Security and

International Affairs Division

B-280328 Letter

August 17, 1999

The Honorable John McCain

Chairman, Committee on Commerce, Science and Transportation

United States Senate

The Honorable Bill Frist

Chairman, Subcommittee on Science, Technology and Space

Committee on Commerce, Science and Transportation

United States Senate

The National Aeronautics and Space Administration (NASA) faces many 

challenges in developing and building the International Space Station (ISS). 

These challenges, such as Russian difficulty in completing its components 

on schedule due to insufficient funding and continuing U.S. prime 

contractor cost increases, have translated into schedule delays and higher 

program cost estimates to complete development. As requested, we 

reviewed the status of Russian involvement in the ISS program. We also 

examined the prime contractor’s progress in implementing cost control 

measures and NASA’s efforts to oversee the program’s nonprime activity. 

Specifically, we (1) assessed NASA’s progress in developing contingency 

plans to mitigate the possibility of Russian nonperformance and the loss or 

delay of other critical components, (2) identified NASA’s efforts to ensure 

that Russian quality assurance processes meet the station’s safety 

requirements, and (3) determined the effectiveness of cost control efforts 

regarding the prime contract and nonprime activities.

Results in Brief As an ISS partner, Russia agreed to provide equipment, such as the Service 

Module, Progress vehicles to reboost the station, dry cargo, and related 

launch services throughout the station’s life.1

 However, Russia’s funding 

problems have delayed delivery of the Service Module—the first major 

Russian-funded component—and raised questions about its ability to 

support the station during and after assembly. NASA is implementing a 

1

The Service Module is the primary Russian station contribution and early living quarters. It will 

provide life support system functions to all early elements. In addition, it is to provide station flight 

control and propulsion. Although many of its systems will be supplemented or replaced by later 

components, it will always remain the structural and functional center of the Russian segment. 

Letr
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multi-faceted contingency plan to mitigate the risk of further delay of the 

Service Module and the possibility that the Russians will not provide 

Progress vehicles for reboosting the station. The first step of this plan 

includes the development of the U.S.-built Interim Control Module and 

modifications to the Russian-built and U.S.-financed Functional Cargo 

Block (Zarya). In the second step, NASA is developing its own permanent 

reboosting capability. NASA’s plan also includes payments to the Russian 

Space Agency to complete near-term work on the Service Module, and 

Progress and Soyuz space vehicles. While the ultimate cost of its plan is 

uncertain at this time, NASA currently estimates that the cost to protect 

against Russian nonperformance will be about $1.2 billion. Although NASA 

has a contingency plan to mitigate Russian nonperformance, it does not 

have an approved overall contingency plan to address issues such as late 

delivery or loss of critical hardware. The agency acknowledges that the 

lack of such a plan is a program risk item. According to program officials, 

the higher priority risk items will ultimately be costed, and the final 

contingency plan should be approved later this year.

NASA is satisfied that Russian quality assurance standards are acceptable. 

However, the Service Module’s inability to meet debris protection 

requirements is a potential safety issue. The module will require 

improvements after it is launched to meet this requirement. Based on the 

module’s current launch date, it will be about 3 1⁄2 years after launch before 

improvements can be completed. In addition, NASA and the Russian Space 

Agency will have to work together to address other safety issues such as 

improving fire protection and reducing noise levels.

Despite efforts to control cost growth, pressures on the program’s budget 

continue to mount. NASA’s cost estimates assume assembly completion in 

2004. However, the agency acknowledges the difficulty in maintaining that 

schedule. If the schedule is not met, total program costs for the U.S. 

segment of the station will increase further. The prime contract has had 

significant cost overruns and schedule delays. The prime contractor’s 

estimate of overrun at completion has been increased several times and 

currently stands at $986 million. At the same time, the costs of the 

nonprime portion of the program—activities related to science facilities 

and ground and vehicle operations—are also increasing, due largely to 

added scope and schedule slippage. In 1994, the nonprime component of 

the program’s development budget was $8.5 billion; today, it is over 

$12.4 billion. The agency has begun to subject the nonprime area to 

increased scrutiny. Also, recognizing the inadequacy of the current risk 

database, the Program Risk Assessment Board was directed to scrutinize 

Letr
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all existing risks for cost impacts. These actions could potentially improve 

the agency’s ability to manage future cost growth.

We recommend that the NASA Administrator direct the station program 

manager to finalize the overall ISS contingency plan before the Service 

Module is launched.

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 assembly of the station. (See fig. 1.)
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Figure 1: Artist’s Conception of Fully Assembled ISS in Orbit

Source: Johnson Space Center.

In December 1998, NASA accomplished an important and significant step 

in its construction of the ISS: coupling the first two elements—Zarya and 

Node 1 (Unity). (See fig. 2.)
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Figure 2: Zarya and Unity in Orbit 

Source: Johnson Space Center.

In May 1998, we reported that the program’s development costs had 

increased from $17.4 billion to $21.9 billion.2

 We cited a schedule slippage 

of 18 months—June 2002 to December 2003—for completion of assembly 

as contributing significantly to the increase. We also identified delays in the 

manufacture of the Service Module as contributing to the schedule 

slippage, as well as prime contractor cost overruns. NASA now estimates 

that development costs will range from $24 billion to $26 billion, depending 

on the station’s completion date. The agency attributes this increase to 

further schedule slippage and Russian manufacturing delays.

2

International Space Station: U.S. Life-Cycle Funding Requirements (GAO/NSIAD-98-147, May 22, 1998).
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NASA Contingency 

Planning Focuses on 

Russian Concerns

Because of Russia’s continuing funding problems, NASA developed a 

multifaceted contingency plan to mitigate the risk of further delay of the 

Service Module and the possibility that the Russians cannot provide a 

reboost capability. Payments to Russia for the completion of the Service 

Module have also been made. Although NASA has a strategy to deal with 

Russian nonperformance, it has not completed an overall contingency plan 

to address a broader range of potential problems.

Russian Nonperformance 

Contingency Plan Has 

Multiple Steps

Beginning in late 1995, NASA became increasingly concerned about 

Russia’s ability to meet its space station commitments. The greatest 

concern at the time was that the Service Module (see fig. 3) would be 

delayed due to shortfalls in Russian funding. Later, those delays were 

acknowledged, and the scheduled delivery of the Service Module slipped 

by 8 months. Subsequently, Russia’s continued funding problems caused 

additional slippage.

NASA responded by developing a plan to address Russian nonperformance. 

The first step, which has been under way since early 1997, is designed to 

protect against further Service Module delays and includes the 

development of the U.S.-built Interim Control Module and modifications to 

the Russian-built and U.S.-financed Zarya. According to NASA, the cost to 

implement this step will be about $261 million.
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Figure 3: Service Module

Source: Johnson Space Center.

The second step includes developing a U.S. capability to provide 

permanent reboost and attitude control. Russia is responsible for providing 

Progress vehicles, dry cargo, and related launch services throughout the 

station’s life. Because of Russia’s continuing funding problems, NASA 

began focusing on the development of a U.S. capability to provide similar 

functions, such as a propulsion module, shuttle and docking module 

modifications, and the purchase of logistics carriers and services at an 

estimated cost of about $730 million. The propulsion module is the most 

expensive component of the new hardware. While there has been some
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uncertainty regarding the cost of this component, NASA currently 

estimates that it could cost about $540 million. The agency estimates that 

the other components—shuttle modifications to permit reboosting of the 

station and logistics carriers designed to safely transport dry cargo on the 

shuttle—will cost about $90 million and $100 million, respectively.

To mitigate the risk of Russian nonperformance in the near term, the 

second step of the plan also includes transfer payments to the Russian 

Space Agency to complete near-term work on the Service Module and 

Progress and Soyuz space vehicles. A $60-million payment was made in 

1998, for which the United States will receive 4,000 hours of crew time, 

previously allocated to Russia, to conduct U.S.-directed research. The 

United States will also receive storage space in the Russian segment of the 

station. According to program officials, the cost of research time on the Mir 

space station was the basis for the negotiation.3

NASA is monitoring the flow of funds resulting from the transfer. In 

October 1998, officials began reviewing Russian contracts related to the 

Service Module and launch vehicles to confirm that purchase orders were 

in place. In November 1998, NASA officials began reviewing Russian 

disbursement documentation to determine the amount of transferred funds 

that had been released to suppliers. NASA officials said they found no 

evidence to date of U.S. funds being used for purposes other than those 

covered in the terms of the transfer. We did not independently verify 

NASA’s finding.

NASA also plans to provide $100 million to the Russian Space Agency in 

1999 in return for goods and services. The two agencies have compiled a 

list of goods and services that could be provided in return for the additional 

payments. That list includes the potential purchase of a Soyuz crew return 

vehicle, a space station virtual reality trainer, and Russian hardware 

mockups.

NASA has placed conditions on any fund transfers beyond those already 

made. In testimony given before the House Science Committee on 

February 24, 1999, the NASA Administrator stated that no decision will be 

made regarding further transfers without assessments of progress in the 

3

For the purposes of the funding transfer negotiation, NASA applied a rate of approximately 

$11, 000 per hour for crew research time. This was based on the 1994 negotiated rate for research time 

on the Mir space station. 
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following three areas: (1) Service Module launch schedule, (2) the future 

disposition of the Mir space station, and (3) status of other Russian 

hardware and launch vehicle commitments. According to NASA, it is 

extremely difficult for Russia to support launch commitments to both Mir 

and ISS. Russia’s unwillingness to deorbit Mir on schedule would be viewed 

as a severe threat to maintaining its support of ISS.

While the ultimate cost of the contingency plan to address Russian 

nonperformance regarding their current commitments is uncertain at this 

time, NASA estimates that it will be about $1.2 billion.

To help pay some of the costs of Russian contingency requirements, the 

program transferred $110 million from the space station research budget 

with the expectation that the funds would be replaced in the out-years. 

According to program officials, recent assembly sequence delays made it 

possible to delay planned research expenditures to later in the 

development program. However, according to NASA, station research 

programs will be impacted as a consequence. Preliminary assessments 

show that it may be necessary to delay the number of flight research 

investigators assigned to station work and defer some research activities.

Overall Contingency Plan 

Not Yet Approved

While NASA has a plan to deal with Russian nonperformance, it does not 

yet have an approved overall contingency plan to address development 

issues involving all partners. NASA has identified the lack of an overall 

contingency plan as a program risk item. In response, a station program 

plan to address issues such as late delivery or loss of critical hardware has 

been drafted, but the potential cost of all contingencies has not been 

estimated.

The absence of cost estimates has already caused some uncertainty. For 

example, NASA’s recent decision to develop a U.S. capability to reboost the 

station requires that it develop a propulsion module. NASA initially relied 

on a contractor quote to estimate the cost of this capability, but 

subsequently refined its propulsion module requirement, resulting in a 

much higher cost estimate. Some of this uncertainty could have been 

avoided had the cost of the contingencies been estimated.
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NASA’s Office of the Inspector General recently issued a report on space 

station program contingency planning.4

 It cited similar concerns, 

concluding that, in the absence of a completed plan, “NASA cannot fully 

reduce [space station] risks through advance planning and the 

establishment of response plans.” The report also concluded that “. . . 

without estimated costs, [NASA], the Administration, and the Congress 

cannot adequately assess the feasibility of proposed responses or 

determine budgetary impact.” In response, NASA agreed that cost 

information is needed, but stated that it should be maintained separately 

from the contingency plan because of its sensitivity.

According to program officials, the higher priority items included in the 

overall contingency plan will ultimately be costed, and the final plan should 

be approved later this year.

NASA Is Satisfied With 

Russian Segment 

Quality Standards but 

Design Improvements 

Are Needed

NASA is satisfied that Russian quality assurance processes are acceptable. 

However, NASA and the Russian Space Agency will need to continue 

working together to improve Russian hardware to protect against orbital 

debris and address other potential safety issues.

Comparison of Quality 

Assurance Standards

Agency officials explained that Russian procedures are governed by 

contract in the case of Zarya and by bilateral protocols, agreements, and 

plans in the case of Russian-funded hardware. In early 1994, NASA 

undertook an assessment of Russian quality standards. Over a 2-year 

period, it reviewed over 265 standards and documents and concluded that 

the key standards used by Russia were acceptable. Also, when the 

U.S.-financed Zarya was being built in Russia, tools were available to 

NASA’s prime contractor to assess Russian quality, including technical 

surveys, test assessments, and on-site witnessing of tests.

4

Audit Report: Space Station Contingency Planning for International Partners (IG-99-009; Mar. 9, 1999).
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Safety Improvements Will 

Require Ongoing 

U.S./Russian Commitment

Based on the current schedule, the Service Module will be launched in 

November 1999. This component will be necessary to begin station 

habitation on a permanent basis. However, it will be necessary for NASA 

and the Russian Space Agency to work together both before and after its 

assembly to address and mitigate a number of safety risks associated with 

the Service Module, including risks related to potential debris impacts and 

work environment issues.

Impact of Inadequate Orbital 

Debris Protection 

NASA defines the space station’s requirement to withstand orbital debris 

impacts in terms of the likelihood of not being penetrated.5

 When Russia 

entered the program as a full partner, it assumed responsibility for a 

significant amount of hardware. At that time, space station partners agreed 

to an 81-percent probability of not being penetrated by orbital debris, for 

the 10-year period beginning on the initial station launch. Subsequently, the 

requirement was reduced to 76 percent, in part, because of configuration 

changes that increased the station’s surface area and assembly sequence 

revisions. When the current performance of Russian-funded hardware is 

included, the station does not meet this requirement.

NASA and the Russian Space Agency are working on strategies to improve 

Russian components’ debris protection performance. This includes adding 

shielding to hardware components on orbit, studying penetration effects, 

and developing repair techniques and procedures. The most pressing issue 

is protecting the Russian-funded Service Module from debris. Under the 

current schedule, it will be launched about 3 1⁄2 years before needed 

protective shielding is installed.

In addition, some Service Module design characteristics could increase its 

vulnerability in the event of a debris impact. For example:

• The module was not certified to operate in a depressurized 

environment, and its capability to function in that environment cannot 

be assured. According to NASA, depressurization could occur after 

impact with orbital debris, requiring the crew’s evacuation and loss of 

station control functions. This risk can be minimized if Russia identifies, 

redesigns, and replaces the Service Module components that would not 

5

 The chance of debris colliding with a spacecraft relates directly to the size and orbital lifetime of the 

spacecraft. NASA calculates overall capability to withstand debris impacts by determining the product 

of the capabilities of the individual components. For example, when Russia entered the program, the 

resulting overall capability of the combined U.S. and Russian segments was 81 percent (0.9 times 0.9). 
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operate in a depressurized environment. In the interim, NASA believes 

the risk of flight control loss will be mitigated when U.S. guidance, 

navigation, and control software is installed on a later assembly flight. 

Under the current schedule, that backup capability will not be available 

until more than 1 year after the Service Module is deployed. Thus, the 

full resolution of this issue will require ongoing NASA and Russian 

Space Agency cooperation.

• The Service Module’s windows do not have the same protection against 

debris as the windows on other station components and are not 

designed to be replaceable on orbit. The windows in the Russian module 

have two layers while the U.S.-designed windows will have four layers.6

The additional layers are to provide protection against debris on the 

outside of the window and scratches caused by working inside the 

station. Under existing plans, if a window in the Service Module is 

damaged, it will have to be covered with a metal shield. 

According to NASA officials, these Service Module issues are largely the 

result of (1) differing manufacturing philosophies, (2) the fact that the 

Russian hardware is based on designs applied to the Mir station, and 

(3) the Russian position that its lengthy Mir experience demonstrates the 

robustness of its design characteristics. However, the ISS will be 

significantly larger than Mir and will therefore be more exposed to orbital 

debris; the ISS will have about eight times more total surface area than the 

Mir station.

Under the current plan, NASA will grant a waiver at the time of the Service 

Module launch and the debris protection deficiency will be corrected on 

orbit. NASA believes it is appropriate to maintain the Service Module’s 

launch schedule because (1) the module adds capabilities that would 

otherwise be unavailable and (2) the risk is acceptable. NASA’s analysis 

shows that the estimated probability of a Service Module debris 

penetration prior to the planned augmentation is less than 10 percent. Also, 

due to the relatively small surface area of the windows, NASA believes the 

likelihood of a problem caused by a window puncture is very small.

Risks Associated With the 

Working Environment

NASA and the Russian Space Agency are also working to reduce risks 

associated with the working environment in the Service Module. These 

initiatives include modifications to the Solid Fuel Oxygen Generator to 

reduce the risk of an on-board fire and improved acoustics to reduce noise 

6

All station partners except Russia will use U.S.-designed windows.
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levels and the risk of hearing loss. These issues surfaced during the 

Mir-Shuttle program.7

The Russian Solid Fuel Oxygen Generator will be used as a backup method 

to generate oxygen for the space station and will be located in the Service 

Module. While in use on the Mir space station, it caught fire, resulting in a 

near catastrophic event in February 1997. A Russian investigation 

identified several possible causes, the most likely of which was a 

misaligned or damaged igniter. NASA and the Russian Space Agency have 

agreed to some changes to help contain the spread of fire in the ISS. 

However, a redesign to reduce the likelihood of a fire will have to be 

incorporated on orbit. This issue continues to be a major topic in technical 

interchange meetings between NASA and the Russian Space Agency.

In addition, during the Mir-Shuttle program, NASA became aware of the 

fact that some Russian cosmonauts had permanent hearing loss due to 

Mir’s interior noise. U.S. astronauts visiting Mir also complained about the 

noise. The ISS program, in order to prevent these problems experienced on 

Mir, instituted noise level requirements for the Russian and U.S. on-orbit 

segments. Noise levels in the Service Module exceed station requirements 

and, without mitigating measures, could cause some short- or long-term 

hearing loss in crew members. NASA and the Russian contractor have 

jointly developed an acoustic mitigation plan to reduce noise levels, but 

cannot fully implement the plan until after the Service Module is launched.

Prime Contract and 

Nonprime Activity 

Costs Continue to 

Increase

Difficulties in maintaining cost and schedule performance under the prime 

contract have prompted substantial contractor and program office 

attention. There are now indications of problems in the nonprime portion 

of the program, which includes activities related to science facilities, 

ground and vehicle operations, and launch processing. This is difficult 

because nonprime activity comprises more than 50 percent of total 

estimated development costs and about 70 percent of remaining 

development costs. The program has increased its oversight of nonprime 

activity and, according to officials, is attempting to incorporate a system to 

improve its ability to track performance trends. In addition, the program 

7

To prepare for the ISS assembly, NASA and the Russian Space Agency undertook a cooperative effort 

involving the space shuttle and the Mir space station. During the Mir-Shuttle program, seven U.S. 

astronauts visited Mir between 1995 and 1998 to conduct experiments and gain operational experience 

on long-duration missions.
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recently addressed deficiencies in its centralized risk management 

database to better focus on cost issues in both the prime and nonprime 

areas.

Prime Contract Cost 

Growth 

On a number of occasions in the past several years, we have reported and 

testified on the cost and schedule status of the prime contract.8

 We have 

pointed out that cost growth began almost immediately after the contract 

was awarded and that it posed an ongoing challenge to program managers 

from a budgetary standpoint. We noted that the program had penalized the 

prime contractor in terms of both award and incentive fee largely because 

of problems in controlling and reporting costs.

Cost variances were eventually reflected in the prime contractor’s estimate 

of overrun at completion, although its reluctance to do so in a timely 

fashion was criticized by NASA program managers. At about the time of 

our last cost control report in September 1997, the contractor undertook a 

number of initiatives designed to help reverse the trend of ever increasing 

cost growth.

Cost control initiatives implemented by the prime contractor included 

organizational restructuring and staff reductions. The organizational 

changes involved consolidating subcontractor activities and streamlining 

the managerial oversight of the program’s three geographic manufacturing 

bases. The staff reduction initiative involved establishing target personnel 

levels based on the achievement of hardware delivery milestones.

In February 1997, the prime contractor reported a peak staffing level of 

7,040 equivalent personnel. In March 1999, the prime contractor reported a 

level of 4,396 personnel, a 38-percent drop. However, NASA has cited 

problems with the current skill mix. For example, according to NASA, the 

lack of adequate skills has adversely affected both assembly and 

qualification testing schedules. NASA identifies the retention of critical 

8

Space Station: Cost Control Difficulties Continue (GAO/NSIAD-96-135, July 17, 1996); Space Station: 

Cost Control Difficulties Continue (GAO/T-NSIAD-96-210, July 24, 1996); 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); Space Station: 

Cost Control Problems (GAO/T-NSIAD-98-54, Nov. 5, 1997); and Space Station: Status of Russian 

Involvement and Cost Control Efforts (GAO/T-NSIAD-99-117, Apr. 29, 1999).
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skills, such as software engineers, as a top program risk that is worsening 

over time.

Despite the implementation of cost control initiatives, the prime contract 

continues to have monthly cost and schedule variances. In June 1998, the 

estimate of overrun at completion was $783 million; by March 1999, it had 

increased to $986 million.9

 The new estimate exceeds the program’s 

current budget for prime contract overrun by about $140 million, which 

means funding reserves will be needed to cover the difference. According 

to the prime contractor, most of the latest growth in the estimate was 

attributable to additional overhead costs, software and hardware 

development problems, and the need to increase its funding reserves. 

Figure 4 shows the trend of estimated cost overruns for the prime contract 

portion of the development program and NASA’s budget for overruns.

Figure 4: Estimates of Prime Contract Overruns at Completion

Shortly after the prime contractor announced its March 1999 overrun 

estimate, NASA’s Administrator requested that the agency’s Office of the 

Inspector General evaluate prime contract performance management. In a 

letter dated April 8, 1999, NASA’s Assistant Inspector General for Auditing 

9

The prime contractor first reported the overrun increase in a March 1999 quarterly review. It was 

formally reported to NASA in April 1999 in a monthly Performance Measurement System Report.

Dollars in millions

0

200

400

600

800

1000

1200

Dec-95

Mar-96

Jun-96

Sept-96

Dec-96

Mar-97

Jun-97

Sept-97

Dec-97

Mar-98

Jun-98

Sept-98

Dec-98

Mar-99

Jun-99

Boeing NASA
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announced a review to include assessments of the timeliness of the prime 

contractor’s reports to NASA management and the reasonableness of 

overhead rates applied. The Inspector General plans to issue the report by 

late August 1999.

Increased Oversight of 

Nonprime Activities

Since 1995, the prime contract effort has received considerable attention 

and oversight from program managers. Recently, the agency has begun to 

subject the nonprime area to increased scrutiny, and problem areas are 

being identified. 

In 1994, the nonprime component of the program’s development budget 

was $8.5 billion. By early 1999, it had increased to over $12.4 billion.10

According to NASA officials, much of that increase is attributable to 

schedule slippage. In addition, the program has increased in scope. For 

example, since 1994, the program has added $1.2 billion to address the 

consequences of Russian fiscal problems.

NASA has undertaken a number of initiatives to improve its oversight of 

nonprime activity. The initiatives include requiring periodic evaluations and 

increasing visibility through high-level reviews. In October 1998, station 

officials held a formal review of activities funded outside the prime 

contract. This review was held at the program level and involved 

representatives from nonprime activities. Subsequent reviews were 

elevated to the Johnson Space Center Director level, an indication of the 

attention now being given to this area.

More recently, the program has undertaken an initiative designed to 

provide nonprime status in a format that will permit improved tracking of 

performance trends. The station’s nonprime area is comprised of hundreds 

of individual activities. The program’s strategy is to establish integrated 

cost and schedule baselines, which will permit assessments of actual work 

performed measured against the budget. Program managers believe such a 

system, if successful, would enable them to quantify cost and schedule 

variances in nonprime problem areas. The establishment of valid baselines 

is fundamental to this approach. As of May 1999, the baselines had not been 

completed.

10For comparison purposes, both estimates include research costs. In 1994, the research budget was 

managed separately from the station development budget. 
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Based on available information to date, the program has identified and is 

currently assessing a number of nonprime activities in which cost, 

schedule, or technical problems are possible. These areas include research, 

operations, and vehicle facilities. Nonprime activities now account for a 

larger portion of the station’s development budget than the prime 

contractor’s activities, meaning that the budgetary impact of unforeseen 

cost growth could be significant. NASA considers the resolution of 

nonprime issues a top concern.

Risk Management Database 

Inadequacies

One mechanism that can help managers deal with cost risks is a thorough 

risk management plan. Ideally, such a plan forces managers to identify and 

cost out all major program risks and then develop remedies for risk areas.

We found that the station program’s centralized database of potential risk 

areas did not capture all risk items or quantify the impacts of cost-driving 

risk items it did capture. For example, the current database, while 

identifying retention of critical skills as a major program risk, does not 

identify the potential cost impact of losing key personnel. Regarding 

nonprime risk, the database included government-furnished equipment 

integration as a major risk item, but did not provide cost impact 

information. As a result, the database fails to give program managers 

sufficient insight and early warning into many emerging problem areas. 

Recognizing the inadequacy of the current database, the Program Risk 

Assessment Board was directed to scrutinize all existing risks for cost 

impacts, emphasizing the importance of early identification of risk.

NASA Planning Document 

and the Administration’s 

Budget Submittal Reference 

Importance of ISS Issues

In January 1999, we reported on major performance and management 

issues facing NASA, as part of a series of similar reports covering 20 federal 

agencies.11 At that time, we identified space station cost control as one of 

NASA’s foremost challenges. In March 1999, NASA identified specific space 

station program objectives for fiscal year 2000 in its fiscal year 2000 

Performance Plan.12 These include deploying the U.S. Lab, completing 

11Major Management Challenges and Program Risks: National Aeronautics and Space Administration

(GAO/OGC-99-18, Jan. 1999).

12As required by the Government Performance and Results Act of 1993, NASA issued its annual 

Performance Plan, titled NASA Fiscal Year 2000 Performance Plan, in March 1999. Along with other 

requirements, the act requires agencies of the federal government to prepare an annual performance 

plan to describe (1) the agency’s performance goals and measures, (2) the strategies and resources to 

achieve these goals, and (3) procedures to verify and validate reported performance.
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preparations for initial research capability, and conducting operations with 

a three-person crew.

The Administration has recognized the challenge of building the space 

station. The management risk associated with building the space station is 

identified in the President’s fiscal year 2000 budget submittal as 1 of the top 

24 government management challenges.

Conclusions NASA and its partners have successfully begun ISS assembly, a noteworthy 

achievement. However, many of the program’s greatest challenges lie 

ahead. NASA’s most immediate challenge is to protect against Russian 

nonperformance. To do so, it is implementing a contingency plan that 

provides financial assistance to the Russian Space Agency and develops 

additional U.S. hardware. The total cost of the plan is estimated at about 

$1.2 billion.

In addition, resolving potential safety issues involving the Service Module 

will require cooperation between NASA and the Russian Space Agency. 

These issues include fortifying the module to protect it from orbital debris 

impacts, ensuring continuing operations should it become depressurized, 

reducing the risk of an on-board fire, and lowering noise levels. Most of 

these improvements will be made after the Service Module is on orbit. 

Based on the current schedule, this will require several years to complete.

At the same time, the cost of completing the U.S. segment continues to rise. 

The current estimated overrun under the prime contract is $986 million. 

NASA has now begun to refine and improve its mechanisms for identifying 

and mitigating costs risks in the program. In addition, the agency is 

undertaking initiatives to improve its oversight of nonprime activities, 

which are now estimated to total $12.4 billion. These actions could 

potentially improve the agency’s ability to manage future cost growth.

The space station program recognizes the need to adopt an overall 

contingency plan to identify and cost out the impacts from potential loss or 

delay of critical components. However, as of June 1999, its plan was still 

being drafted, even though the first two station components had already 

been assembled in orbit. Under the current schedule, several major 

components will be added within the next year, including the Service 

Module and the U.S. Lab. We believe completion of such a plan is critical if 

potential disruptions and related cost increases are to be minimized.
B-280328

Page 19 GAO/NSIAD-99-175 Space Station

Recommendation To minimize the potential of further schedule disruptions and related cost 

increases, we recommend that the NASA Administrator direct the station 

program manager to finalize the overall ISS contingency plan before the 

Service Module is launched. 

Agency Comments In commenting on a draft of this report, NASA stated that it was in 

agreement with the content and data in the report, with one exception. 

NASA recommended that, in our discussion of nonprime cost increases, we 

state the reasons for the increases at the beginning of the relevant sections. 

We revised the report language in the results in brief section to make it 

clear that much of the nonprime increase was attributable to added scope 

and schedule slippage. We did not revise the section in the report body 

because we believe that section adequately delineates that added scope 

and schedule slippage were the reasons for much of the nonprime cost 

growth. NASA’s response is reprinted in full in appendix I.

Scope and 

Methodology

To assess the extent to which NASA has studied options to minimize the 

possibility of future Russian nonperformance and the loss or delay of other 

critical components, we reviewed contingency plans to determine the 

scope and evolution of NASA’s efforts. We also reviewed contract 

documentation and protocols to understand the formal governing 

arrangements between NASA and the Russian Space Agency and budget 

information to assess the potential impact on NASA’s funding requirements. 

In addition, we reviewed internal briefings and interviewed officials in the 

Space Station Program Office to gain further insights.

To identify NASA’s efforts to monitor Russian quality assurance, we 

reviewed internal quality assurance records, governing agreements, and 

briefings. To assess the space station’s vulnerability to orbital debris, we 

reviewed performance requirements, risk reports, engineering analyses, 

and independent assessments. For example, we compared the design 

parameters of U.S. and Russian-built windows. We also interviewed 

officials in NASA’s Office of Space and Life Sciences, the station program’s 

Office of Safety and Mission Assurance, and the Space Station Independent 

Assessment Office.

To determine the effectiveness of prime contract and nonprime activity 

cost control efforts, we reviewed contractor cost reports to determine the 

current estimate of cost overrun at contract completion, and budget 
B-280328

Page 20 GAO/NSIAD-99-175 Space Station

information to compare the contractor’s overrun estimate to NASA’s 

current funding profiles. In addition, we reviewed nonprime activity 

technical task agreements and internal assessments to identify the scope of 

the nonprime effort. We also assessed the program office’s efforts to 

monitor and control nonprime cost growth. In addition, we interviewed 

officials with the space station program, the prime contractor, and NASA’s 

Cost Assessment and Validation Task Force to gain their perspectives on 

NASA’s overall cost control efforts.

We conducted our review from June 1998 to May 1999 in accordance with 

generally accepted government auditing standards.

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

distribution of this report until 7 days from its issue date. At that time, we 

will send copies to Senator Ernest Hollings, Ranking Minority Member, 

Senate Committee on Commerce, Science and Transportation; Senator 

John Breaux, Ranking Minority Member, Subcommittee on Science, 

Technology and Space, Senate Committee on Commerce, Science and 

Transportation; the Honorable Daniel Goldin, NASA Administrator; the 

Honorable Jacob Lew, Director, Office of Management and Budget; and 

other interested parties. 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. Other key contributors to this report are acknowledged 

in appendix II

Allen Li

Associate Director,

Defense Acquisitions Issues
Page 21 GAO/NSIAD-99-175 Space Station
Page 22 GAO/NSIAD-99-175 Space Station

Contents

Letter 1

Appendix I

Comments From the 

National Aeronautics 

and Space 

Administration

24

Appendix II

GAO Staff 

Acknowledgments

25

Figures Figure 1: Artist’s Conception of Fully Assembled ISS in Orbit 4

Figure 2: Zarya and Unity in Orbit 5

Figure 3: Service Module 7

Figure 4: Estimates of Prime Contract Overruns at Completion 15

Abbreviations

ISS International Space Station

NASA National Aeronautics and Space Administration
Page 23 GAO/NSIAD-99-175 Space Station
Page 24 GAO/NSIAD-99-175 Space Station

Appendix I

Comments From the National Aeronautics 

and Space Administration ApeInxdi

See p. 19.
Page 25 GAO/NSIAD-99-175 Space Station

Appendix II

GAO Staff Acknowledgments ApIexndi

Acknowledgments Jerry Herley, John Gilchrist, James Beard, Fred Felder, and Marcus 

Ferguson made key contributions to this report

(707357) Lret
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