Page 1 GAO-06-817R Exploration Cost and Schedule 

United States Government Accountability Office

Washington, DC 20548 

July 17, 2006 

The Honorable Sherwood Boehlert 

Chairman 

The Honorable Bart Gordon 

Ranking Minority Member 

Committee on Science 

House of Representatives 

Subject: NASA: Long-Term Commitment to and Investment in Space Exploration 

Program Requires More Knowledge

The National Aeronautics and Space Administration (NASA) plans to spend nearly 

$230 billion over the next two decades implementing the Vision for Space 

Exploration. In January 2006, NASA publicly released its Exploration Systems 

Architecture Study (ESAS), which is an effort to identify the best architecture and 

strategy to implement the President’s 2004 Vision for Space Exploration (Vision).1

The cost estimate for implementing the ESAS through fiscal year 2011 exceeds $31 

billion. The estimate through fiscal year 2018 is over $122 billion, and the estimate 

through fiscal year 2025 is nearly $230 billion.2

 These estimates include the 

architecture, robotic precursor missions, supporting technologies, and funding 

needed to service the International Space Station (ISS).3

 NASA plans to implement 

this architecture through a “go as you can afford to pay” approach, wherein 

lower-priority efforts would be deferred, descoped, or discontinued to allow NASA to 

stay within its available budget profile. This approach assumes NASA’s budget will 

increase moderately to keep pace with inflation. Given the long-term fiscal 

imbalances that will challenge the entire federal government now and in the future, it 

would be prudent for NASA to establish a program that reduces the risk that 

significant additional funding, beyond moderate increases for inflation, will be 

required to execute the program.4

 Government leaders will have to make difficult 

 

1

 The ESAS architecture supports the development of a new Crew Exploration Vehicle (CEV), Crew 

Launch Vehicle (CLV), a Cargo Launch Vehicle (CaLV), and other supporting systems. The architecture 

also calls for various Research and Technology (R&T) and Robotic Lunar Exploration Program (RLEP) 

projects. 

2

 All cost estimates related to the Vision are reported as inflated (“real year”) dollars. 3

 NASA’s cost estimate through 2011—$31.2 billion—included the costs of the R&T and RLEP projects 

needed to support the architecture. Its estimate for the first lunar landing—$104 billion—did not 

include $18 billion in funding for R&T and RLEP projects. To ensure consistency, the estimates for 

2018 and 2025 are presented with R&T and RLEP funding included. 

4

 GAO, 21st Century Challenges: Reexamining the Base of the Federal Government, GAO-05-325SP 

(Washington, D.C.: Feb. 2005); 21st Century: Addressing Long-Term Fiscal Challenges Must Include 

a Reexamination of Mandatory Spending, GAO-06-456T (Washington, D.C.: Feb. 15, 2006); and 
decisions to resolve such challenges, and the debate over the potential cost and the 

federal government’s role in implementing the Vision are emblematic of the 

challenges the nation will need to resolve in the years ahead. 

Because of the significance of this investment, competing demands on the federal 

discretionary budget, and the importance of the success of NASA’s exploration 

program to the future of U.S. human spaceflight, you requested that we assess (1) the 

extent to which NASA has identified the architecture and costs necessary to 

implement the Vision, (2) whether NASA’s exploration architecture cost estimates fit 

within the agency’s projected available budgets, and (3) the risks associated with 

NASA’s acquisition strategy for the CEV project. 

We presented our preliminary findings to your staff in May 2006. Because of your 

committee’s interest in how NASA is implementing the Vision for Space Exploration, 

we are enclosing the full briefing that supported that May presentation with this 

report (see encl. II), along with a summary of our findings and conclusions. We are 

recommending that the NASA Administrator modify the current CEV acquisition 

strategy to ensure that the agency does not commit itself, and in turn the federal 

government, to a long-term contractual obligation prior to establishing a sound 

business case at the project’s preliminary design review. In written comments, NASA 

nonconcurred with our recommendation and stated that it has the appropriate level 

of knowledge to proceed with its current acquisition strategy. As a result of its 

nonconcurrence, we are including as a matter for congressional consideration that 

the Congress should consider restricting NASA’s appropriations and obligations for 

the CEV project to only the amount of funding necessary to successfully complete the 

project’s preliminary design review.

Background 

The Vision includes plans to explore the moon, Mars, and beyond.5

 The first step in 

implementing the Vision is to retire the space shuttle after completing assembly of 

the ISS by the end of the decade. NASA currently plans to retire the space shuttle in 

2010, creating a potential gap in U.S. human spaceflight of up to 4 years before 

development of the CEV and the CLV is complete. Congress has voiced concern over 

the United States not having continuous access to space, and NASA has made it a 

priority to minimize the gap by accelerating the CEV project to have it in service as 

close to 2010 as possible. NASA’s Exploration Systems Mission Directorate’s (ESMD) 

Constellation program is responsible for the development of both the CEV and the 

CLV. NASA awarded concept development contracts for the CEV project to both 

Lockheed Martin and Northrop Grumman in July 2005 and plans to award a contract 

for design, development, production and sustainment in September 2006. That 

contract could extend through 2019. For the CLV, NASA plans to award a sole-source 

 Highlights of a GAO Forum: The Long-Term Fiscal Challenge, GAO-05-282SP (Washington, D.C.: Feb.

1, 2005). 5

The Vision includes a return to the moon that is intended ultimately to enable future exploration of 

Mars and other destinations. To accomplish this, NASA initially plans to (1) complete its work on the

International Space Station by 2010, fulfilling its commitment to 15 international partner countries; (2) 

begin developing a new manned exploration vehicle to replace the space shuttle; and (3) return to the 

moon no later than 2020 in preparation for future, more ambitious missions. 

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contract for the first stage of the CLV to ATK-Thiokol, the manufacturer of the 

Shuttle’s Reusable Solid Rocket Motor, in October 2006. Also, the agency plans to 

award Pratt & Whitney Rocketdyne, the developer of the Space Shuttle Main Engine 

(SSME) and J-2 engines, a sole-source contract for development of the J-2X engine in 

November 2006. These contractors are currently planning their respective efforts 

under interim contract arrangements. NASA has started in-house preliminary design 

work on the CLV upper stage structures and avionics and plans to begin awarding 

competitive contracts for production of these items in May 2007. 

Despite many successes in the exploration of space, such as landing the Pathfinder 

and Exploration Rovers on Mars, the loss of life, unsuccessful missions, and 

unforeseen cost overruns have recently increased the level of concern over the 

benefits of such exploration, particularly with regard to human spaceflight activities. 

NASA has had difficulty bringing a number of projects to completion, including 

several efforts to build a second generation of reusable human spaceflight vehicle to 

replace the space shuttle. NASA has attempted several expensive endeavors such as 

the National Aero-Space Plane, the X-33 and X-34, and the Space Launch Initiative, 

among others. While these endeavors have helped to advance scientific and technical 

knowledge, none have completed their objective of fielding a new reusable space 

vehicle. We estimate that these unsuccessful development efforts have cost 

approximately $4.8 billion since the 1980s. The high cost of these unsuccessful efforts 

and the potential costs of implementing the Vision make it important that NASA 

achieve success in its new exploration program. 

Our past work has shown that developing a sound business case, based on matching 

requirements to available and reasonably expected resources before committing to a 

new product development effort, reduces risk and increases the likelihood of 

successful outcomes.6

 At the heart of a business case is a knowledge-based approach 

to product development that is a best practice among leading commercial firms and 

successful government system developers. For a program to increase its chances of 

delivering a successful product, high levels of knowledge should be demonstrated 

before managers make significant program commitments. In essence, knowledge 

supplants risk over time. This building of knowledge can be described as three levels 

that should be attained over the course of the program: 

(1) At program start, the customer’s needs should match the developer’s 

available resources in terms of availability of mature technologies, time, 

human capital, and funding. 

(2) Midway through development, the product’s design should be stable and 

demonstrate that it is capable of meeting performance requirements. 

6

 Examples of our best practices reports include GAO, Best Practices: Using a Knowledge-Based 

Approach to Improve Weapon Acquisition, GAO-04-386SP (Washington, DC.: Jan. 2004); Space 

Acquisitions: Committing Prematurely to the Transformational Satellite Program Elevates Risks 

for Poor Cost, Schedule, and Performance Outcomes, GAO-04-71R (Washington, D.C.: Dec. 4, 2003); 

Best Practices: Capturing Design and Manufacturing Knowledge Early Improves Acquisition 

Outcomes, GAO-02-701 (Washington, D.C.: Jul. 15, 2002); and Best Practices: Better Matching of Needs 

and Resources Will Lead to Better Weapon System Outcomes, GAO-01-288 (Washington, DC.: Mar. 8, 

2001).
(3) By the time of the production decision, the product must be shown to be 

producible within cost, schedule, and quality targets, and have 

demonstrated its reliability. 

Our work has shown that programs that have not attained the level of knowledge 

needed to support a sound business case have been plagued by cost overruns, 

schedule delays, decreased capability, and overall poor performance. With regard to 

NASA, we have reported that in some cases the agency’s failure to define 

requirements adequately and develop realistic cost estimates—two key elements of a 

business case—resulted in projects costing more, taking longer, and achieving less 

than originally planned. 

Summary 

Although NASA is continuing to refine its exploration architecture cost estimates, the 

agency cannot at this time provide a firm estimate of what it will take to implement 

the architecture. The absence of firm cost estimates is mainly due to the fact that the 

program is in the early stages of its life cycle. According to NASA cost-estimating 

guidance, early life cycle phase estimates are generally based upon parametric 

models, which use data from projects with similar attributes to predict cost because 

there are usually many unknowns and actual cost or performance data are not 

available. NASA preliminarily identified the resources needed to implement the 

architecture as outlined in the architecture study primarily through the use of such 

models. NASA conducted a cost risk analysis of its preliminary estimates through 

fiscal year 2011. On the basis of this analysis and through the addition of 

programmatic reserves (20 percent on all development and 10 percent on all 

production costs), NASA is 65 percent confident that the actual cost of the program 

will either meet or be less than its estimate of $31.2 billion through fiscal year 2011. 

For the cost estimates for beyond 2011, when most of the cost risk for implementing 

the architecture will be realized, NASA has not applied a confidence level distinction. 

Since NASA released its preliminary estimates, the agency has continued to make 

architecture changes. For example, following the issuance of the architecture study, 

NASA conducted several analysis cycles during which various aspects of the 

architecture have evolved, such as the diameter of the CEV, the engine used to 

support the upper stage of the CLV, and the size of the Reusable Solid Rocket Booster 

on the CLV. While these changes, and others, are appropriate for this phase of the 

program, when concepts are still being developed, they leave the agency in the 

position of being unable to firmly identify program requirements and needed 

resources, which can also be expected at this phase of the program. According to 

NASA officials, once they receive more detailed contractor inputs, the agency will be 

able to produce higher-fidelity estimates of program cost. NASA plans to commit to a 

firm cost estimate at the preliminary design review (PDR) in 2008, when the 

program’s requirements, design, and schedule will all be baselined. 

NASA will be challenged to implement the architecture recommended in the study 

within its projected budget. Whether using the architecture study estimates of funds 

available or NASA’s Fiscal Year 2007 Budget Submission for ESMD that was based on 

the architecture study cost estimates, there are years when NASA does not have 

sufficient funding to implement the architecture. Some yearly shortfalls exceed $1 

billion, while in other years the funding available exceeds needed resources. NASA 

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Page 5 GAO-06-817R Exploration Cost and Schedule 

maintains that the architecture could be implemented within the projected available 

budgets through fiscal year 2011 when funding is considered cumulatively. In 

addition, NASA preliminarily projects multibillion-dollar shortfalls for ESMD in all 

fiscal years from 2014 to 2020, with an overall deficit through 2025 of over $18 billion. 

In the short term, NASA is attempting to address this problem within the 

Constellation program by redirecting funds to that program from other ESMD 

activities to provide a significant surplus for fiscal years 2006 and 2007 to cover 

projected shortfalls beginning in fiscal year 2009. In addition, the Constellation 

program has requested more funds than required for its projects in several early years 

to cover shortfalls in later years. For example, the Exploration Communication and 

Navigation Systems project within the Constellation program plans to roll over $56.2 

million from the fiscal year 2007 budget to make up for budget shortfalls in fiscal 

years 2008, 2009, and 2010. NASA officials stated the identified budget phasing 

problem could worsen given that changes made to the exploration architecture 

following issuance of the study will likely add to the near-term development costs, 

where the funding is already constrained. In addition, NASA’s estimates beyond 2010 

are based upon a surplus of well over $1 billion in fiscal year 2011 due to the 

retirement of the space shuttle fleet in 2010. However, NASA officials said the costs 

for retiring the space shuttle and transitioning to the new program are not fully 

understood, and thus the expected surplus could be less than anticipated. 

NASA’s current acquisition strategy for the CEV places the project at risk of 

significant cost overruns, schedule delays, and performance shortfalls because it 

commits the government to a long-term product development effort before 

establishing a sound business case. NASA plans to award a contract for the design, 

development, production, and sustainment of the CEV in September 2006—before it 

has developed key elements of a sound business case, including well-defined 

requirements, a preliminary design, mature technology, and firm cost estimates. The 

period of performance for the contract scheduled for award in September 2006 will 

extend through at least 2014, with the possibility of extending through 2019. This 

contract will comprise all design, development, and test and evaluation activities, 

including production of ground and flight test articles and at least four operational 

CEVs. Although NASA is committing to a long-term contract, it will not have the 

elements of a sound business case in place until the project level PDR in fiscal year 

2008. Awarding a contract for design, development, production, and sustainment of 

the project as NASA has planned places the CEV project at increased risk of cost 

growth, schedule delays, and performance shortfalls. At PDR, NASA will likely (a) 

have the increased knowledge necessary to develop a sound business case that 

includes high-fidelity, engineering-based estimates of life cycle cost for the CEV 

project, (b) be in a better position to commit the government to a long-term effort, 

and (c) have more certainty in advising Congress on required resources. 

Implementing the Vision over the coming decades will require hundreds of billions of 

dollars and a sustained commitment from multiple Administrations and Congresses 

over the length of the program. The realistic identification of the resources needed to 

achieve the agency’s short-term goals would provide support for such a sustained 

commitment over the long term. With a range of federal commitments binding the 

fiscal future of the United States, competition for resources within the federal 

government will only increase over the next several decades. Consequently, it is 
incumbent upon NASA to ensure that it is wisely investing its existing resources. As 

NASA begins to implement the Vision with several key acquisition decisions planned 

to occur this fall, it will be essential that the agency ensure that the investment 

decisions it is making are sound and are based upon high levels of knowledge. NASA 

should make the prudent decision now to ensure that it has attained the appropriate 

level of knowledge to support a sound business case before it commits to the project. 

However, under the current acquisition strategy for CEV, key knowledge—including 

well-defined requirements, a preliminary design, mature technology, and firm cost 

estimates—will not be known until over a year after the expected contract award 

date. Nevertheless, NASA plans to commit the government to a long-term contract. 

This approach increases the risk that the project will encounter significant cost 

overruns, schedule delays, and decreased capability. Given the nation’s fiscal 

challenges and those that exist within NASA, the availability of significant additional 

resources to address such issues, should they occur, is unlikely. With the impending 

decisions pertaining to the CEV, NASA has the opportunity to establish a firm 

foundation for the entire Constellation program by ensuring that the appropriate level 

of knowledge is available before proceeding with its acquisition strategy and 

committing the government to a long-term design, development, and production 

effort. 

Recommendation for Executive Action 

Because of the importance of the CEV project to NASA’s overall implementation of 

the Vision, NASA should focus on ensuring that its acquisition approach for the CEV 

project does not place the government at risk by committing to a long-term design 

and development effort without the knowledge needed to make wise investment 

decisions. We therefore recommend that the NASA Administrator modify the current 

CEV acquisition strategy to ensure that the agency does not commit itself, and in turn 

the federal government, to a long-term contractual obligation prior to demonstrating, 

through the establishment of a sound business case at the project’s preliminary 

design review, that the project is affordable and executable. 

Matter for Congressional Consideration 

Based on its response to our report, it appears that NASA plans to proceed with its 

acquisition strategy for the CEV and award a long-term contract for the project,

although it continues to lack sufficient knowledge and a sound business case for 

doing so. Congress is currently being asked to approve NASA’s fiscal year 2007 

funding request and will be asked to approve fiscal year 2008 and perhaps the fiscal 

year 2009 funding requests for the CEV project before NASA has demonstrated such 

knowledge and has provided evidence, based on that knowledge, that the project will 

be executable within existing and expected resources. In light of the fact that NASA 

plans to award the contract for the CEV in September 2006, Congress should consider 

restricting annual appropriations and limiting NASA’s obligations for the CEV project 

to only the amount of funding necessary to support activities needed to successfully 

complete the project’s preliminary design review. 

Agency Comments and Our Evaluation 

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In written comments on a draft of this report (see encl. I), NASA nonconcurred with 

our recommendation that it modify the current CEV acquisition strategy to ensure 

that the agency does not commit itself, and in turn the federal government, to a longterm contractual commitment prior to establishing a sound business case at the 

project’s preliminary design review. NASA stated that it has the appropriate level of 

knowledge to proceed with its acquisition plan to “down select” to a single Crew 

Exploration Vehicle prime contractor in September 2006. NASA added that it is 

maximizing competition by soliciting from industry a development, production, and 

management approach with an emphasis on life cycle cost. In the area of technology 

maturity, NASA stated that it has a plan and process in place to address the Thermal 

Protection and Landing subsystems technology risks through in-house development 

work and collaboration with the prime contractor. NASA also noted that during its 

design, development, and test and evaluation effort, the agency will be using an enditem award fee, which would make all award fees subject to a final evaluation to 

determine how well the product met requirements, including cost and schedule. 

The CEV acquisition strategy is not knowledge-based in that it calls for maturing 

technologies, designing systems, and preparing for initial production concurrently—

an approach that our work has shown carries the increased risk of cost and schedule 

overruns and decreased technical capability. Therefore, we disagree with NASA’s 

statement that it has the appropriate level of knowledge to proceed with its current 

acquisition strategy and award a long-term contract for the project prior to obtaining 

sufficient knowledge. Specifically: 

• In its response, NASA suggests that there would be no benefit in retaining two 

prime contractors for the CEV project through the preliminary design review 

and that the best return on its investment would be gained by down-selecting 

to one contractor and awarding the contract in September 2006. Contrary to 

NASA’s response, addressing our recommendation would not preclude the 

agency from down-selecting to one contractor. The thrust of our 

recommendation is that NASA should lessen the government’s obligation to 

the project at such an early stage when realistic cost estimates have yet to be 

established and requirements are not fully defined, and therefore limit the 

scope of the contract to activities needed to successfully complete the 

preliminary design review. At that point the project should have in place a 

sound business case for proceeding and hence be in a better position to justify 

continued investment. Implementation of the recommendation could be 

accomplished through various means, including by retaining two contractors 

through the preliminary design review and awarding a contract at that time or 

by down-selecting as planned in September 2006 and limiting the scope of the 

contract as described above. 

• NASA’s suggestion that it is maximizing competition by soliciting from 

industry its development, production, and management approach and that it 

will receive firm competitive prices from industry for completion of 

development and demonstration of two vehicles has little basis. First, while 

the current structure will allow for competition in the short term, the benefits 

of such competition will be short-lived. Without well-defined requirements, 
mature technologies, an approved preliminary design, and realistic cost 

estimates, NASA has insufficient information to ensure that it is obtaining firm

competitive prices for the work conducted for the entirety of Schedule A—

especially for activities beyond the project’s preliminary design review. 

Because NASA continues to refine the project’s requirements, as demonstrated 

by the numerous changes to the exploration architecture as discussed in our 

report, it cannot provide a firm estimate of project cost. Without such 

information, it will likely be difficult for NASA to establish realistic “not-toexceed” prices for Schedule B activities. Under the current strategy, NASA will 

not have high-fidelity, engineering-based estimates of life cycle costs for the 

CEV until the preliminary design review. As outlined in this report, projects 

with cost estimates based on early, evolving designs and top-level 

requirements are at increased risk of cost growth relative to estimates based 

on mature designs and detailed requirements—which could be achieved at the 

preliminary design review. According to NASA, it plans to obtain this and 

further knowledge about program cost, schedule, and risk elements following 

the contract award and in conjunction with the contractor. In the absence of 

such information, it is not clear how NASA can substantiate its statement that 

it has the knowledge necessary to commit to activities beyond the project’s 

preliminary design review. Further, it cannot provide Congress with assurance 

of the appropriateness of requested funding for the project. 

• NASA stated that its current acquisition strategy for the CEV minimizes the 

government’s obligation during development by dividing the CEV contract into 

three separate schedules. All three schedules, however, will be awarded in 

September 2006 as part of one contract. Although NASA plans to include 

language in the negotiated CEV contract to state that the minimum quantity 

under Schedule B will not be applicable until that schedule’s period of 

performance begins in 2009—a step that would lessen the government’s 

obligation during production—it will continue to be responsible for all 

Schedule A activities at the time of contract award. These activities include all 

design, development, and test and evaluation activities, as well as the 

production of two operational vehicles. Contractually obligating the 

government to even these Schedule A activities, before it has established a 

sound business case to support such a commitment, is not in line with our 

knowledge-based approach and is ultimately not in the best interest of the 

government. 

• NASA’s investment in identifying and maturing the Thermal Protection and 

Landing Subsystems is a step in the right direction to ensure that these 

technologies are mature and available when needed. NASA has no guarantee, 

however, that these critical technologies will be mature by the time of the 

project’s preliminary design review—the point at which our work has shown 

that technologies should be mature in order to decrease the risk of cost and 

schedule growth. NASA’s proposed commitment to the project for activities 

beyond the preliminary design review before retiring these technology risks 

increases the likelihood that the project will experience schedule delays and 

cost overruns. 

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• NASA maintains that program risks have been marginalized and that the 

agency will utilize incentives, including end-item award fees, to ensure 

contractor performance. NASA suggests that the incentives it plans to use in 

the form of end-item award fees will be a powerful tool for meeting cost 

schedule, technical, and quality goals. The use of these tools, however, does 

not compensate for proceeding with a risky acquisition, nor do they lessen 

NASA’s responsibility to implement an executable program from the start. For 

them to function as intended, NASA needs to address the more fundamental 

issues related to its acquisition strategy, including its lack of a sound business 

case for the CEV project. 

• Finally, the use of cost-reimbursable contracting, while appropriate for early 

development and design efforts, places most of the cost risk for the project on 

the government. Given the nature of this effort, it is likely that the project will 

change significantly as it moves forward. Therefore, any scope changes or 

schedule slips could translate into additional contract cost for NASA. Such 

cost impacts could be minimized if NASA limited its contractual obligation to 

those activities needed to achieve a successful preliminary design review, as 

we recommended. In addition, limiting the scope of the CEV contract would 

allow both NASA and Congress to assess the project’s progress at the 

preliminary design review and to decide if continued investment in the project 

is prudent and in the best interest of the government. 

It is important to note that Congress will continue to be asked to make funding 

commitments in advance of CEV project events that would demonstrate that the 

project has the knowledge necessary to support a sound business case. Specifically, 

NASA’s funding request for fiscal years 2007 and 2008 are scheduled to be approved 

before the CEV holds its preliminary design review. Since the preliminary design 

review is currently scheduled for March 2008, this may also be the case for fiscal year 

2009. Congress should safeguard against a situation in which contractual and budget 

decisions could hinder its ability to tie further investments in the CEV project to 

demonstrated progress at the preliminary design review. As such, we have included a 

matter for congressional consideration. 

 

We also received technical comments from NASA, which have been addressed in the 

report, as appropriate. 

Scope and Methodology 

To assess the extent to which NASA has identified the architecture and costs 

necessary to implement the Vision and whether NASA’s exploration architecture cost 

estimates fit within the agency’s projected available budgets, we reviewed and 

analyzed NASA’s Exploration Systems Architecture Study, fiscal year 2007 budget 

request, ground rules and assumptions provided from the Constellation program to 

project level management estimators to perform the bottom up review, guidance for 

use in preparing the fiscal year 2008 budget request, NASA cost-estimating guidance 

in the NASA Cost Estimating Handbook, and congressional hearings and testimonies 
pertaining to NASA and the Vision. We also conducted interviews with NASA 

headquarters officials from the Cost Analysis Division, the Exploration Systems 

Mission Directorate, and Constellation program officials, Constellation program and 

CEV project officials at Johnson Space Center; CLV project officials at Marshall 

Space Flight Center; and cost analysts from the Kennedy Space Center. During these 

interviews, we discussed the methodologies used in preparing the ESAS and 

subsequent cost estimates, architecture changes after the ESAS and the trades being 

considered, budgeting issues, and procurement strategies and activities. 

To assess the risks associated with NASA’s acquisition strategy for the CEV project, 

we reviewed and analyzed CEV project documentation, including draft project plans, 

draft requirements documents, technology development plans, documentation 

included in the contract request for proposals, and past NASA human spaceflight 

acquisition programs. We compared NASA's plans for the CEV with criteria contained 

in GAO best practices work on systems acquisition. We also conducted interviews 

with NASA headquarters officials from the Exploration Systems Mission Directorate 

and Constellation Systems officials, Constellation program and CEV project officials 

at Johnson Space Center, and CLV project officials at Marshall Space Flight Center. 

We conducted our work from January 2006 to May 2006 in accordance with generally 

accepted government auditing standards. 

As agreed with your offices, unless you announce its contents earlier, we will not 

distribute this report further until 10 days from its date. At that time, we will send 

copies of the report to NASA’s Administrator and interested congressional 

committees. We will also make copies available to others upon request. In addition, 

the report will be available at no charge on GAO's Web site at http://www.gao.gov. 

Should you or your staff have any questions on matters discussed in this report, 

please contact me at (202) 512-4841 or lia@gao.gov. Contact points for our Offices of 

Congressional Relations and Public Affairs may be found on the last page of this 

report. Principal contributors to this report were James L. Morrison, Assistant 

Director; Rick Cederholm; Shelby S. Oakley; Guisseli Reyes; Sylvia Schatz; and 

John S. Warren, Jr. 

Allen Li 

Director 

Acquisition and Sourcing Management 

Enclosures 

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Enclosure I 

Comments from the National Aeronautics and Space Administration
Enclosure I 

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Enclosure I 
Enclosure II 

Briefing for Congressional Staff May 2006

In January 2006, the National

Aeronautics and Space

Administration (NASA) publicly

released its Exploration Systems

Architecture Study (ESAS), which 

aimed to identify the best 

architecture and strategy to

implement the President’s 2004

Vision for Space Exploration 

(Vision). The ESAS architecture 

supports development of a new

Crew Exploration Vehicle (CEV), 

Crew Launch Vehicle (CLV), Cargo

Launch Vehicle (CaLV), and other 

supporting systems, which are part

of NASA’s Exploration Systems 

Mission Directorate’s (ESMD) 

Constellation program. The 

architecture also calls for various 

Research and Technology (R&T) 

and Robotic Lunar Exploration 

Program (RLEP) projects.

The cost estimate for implementing

the ESAS through fiscal year 2011 

exceeds $31 billion. The estimate

through fiscal year 2018 is $122

billion and the estimate through 

fiscal year 2025 is nearly $230

billion. These estimates include the 

architecture, robotic precursor 

missions, supporting technologies, 

and funding needed to service the 

International Space Station (ISS).

Because of the significance of this 

investment, competing demands on

the federal discretionary budget, 

and the importance of the success

of NASA’s exploration program to 

the future of U.S. human

spaceflight, we assessed (1) the 

extent to which NASA has

identified the architecture and 

costs necessary to implement the 

Vision, (2) whether NASA’s 

exploration architecture cost

estimates fit within the agency’s

projected budgets, and (3) the risks 

associated with NASA’s acquisition

strategy for the CEV. 

Why GAO Did This Study 

Briefing 

NASA: Long-Term Commitment to and 

Investment in Space Exploration Program 

Requires More Knowledge 

Summary

Although NASA is continuing to refine its exploration architecture cost estimates,

the agency cannot at this time provide a firm estimate of what it will take to 

implement the architecture. The absence of firm cost estimates is mainly due to the 

fact that the program is in its early stages. NASA preliminarily identified the resources

needed to implement the architecture as outlined in the ESAS. However, since that

time, NASA has continued to make architecture changes. For example, following the 

issuance of the ESAS, NASA undertook several analysis cycles in which various

aspects of the architecture have evolved, such as the diameter of the CEV, the engine

used to support the upper stage of the CLV, and the size of the Reusable Solid Rocket

Booster on the CLV. These changes, and others, are appropriate for this phase of the 

program, when concepts are being developed, but leave NASA in the position of being 

unable to firmly identify program requirements and needed resources. NASA plans to 

commit to a firm cost estimate at the preliminary design review (PDR) in 2008, when

the programs’ requirements, design, and schedule will all be baselined. 

NASA will be challenged to implement the ESAS architecture with its projected 

budget. Whether using the ESAS estimates of funds available or NASA’s fiscal year 

2007 budget submission that was based upon the ESAS estimates, there are years 

when NASA does not have sufficient funding to implement the architecture. Some

yearly shortfalls exceed $1 billion, while in other years the funding available exceeds 

needed resources. NASA maintains that the architecture could be implemented within

its projected available budgets through fiscal year 2011 when funding is considered 

cumulatively. In the short term, NASA has redirected funds to the Constellation

program from other ESMD activities to provide a significant surplus for fiscal years 

2006 and 2007 to cover projected shortfalls for the program beginning in fiscal year 

2009. The identified budget phasing problem in ESAS could worsen, given that 

changes to the architecture following the ESAS will likely add to the near term 

development costs, where funding is already constrained. In addition, NASA 

anticipates a significant surplus in fiscal year 2011 because of the retirement of the 

space shuttle fleet in 2010. However, the transition costs are not fully understood.

NASA’s acquisition strategy for the CEV places the project at risk of cost overruns, 

schedule delays, and performance shortfalls because it commits the government to a 

long-term product development effort before establishing a sound business case. 

NASA plans to award a contract for design, development, production, and sustainment

of the CEV in September 2006—before it has developed well-defined requirements, a 

preliminary design, mature technology, and firm cost estimates. This information is

not expected until the project-level PDR in fiscal year 2008. At that point, NASA will 

likely (a) have the increased knowledge necessary to develop a sound business case 

that includes high-fidelity, engineering-based estimates of life cycle cost for the CEV 

project, (b) be in a better position to commit the government to a long-term effort, 

and (c) have more certainty in advising Congress on required resources. 

Briefing Structure

Background page 2 

Findings 

Firm Cost Estimates Cannot Be Developed at This Time page 3 

Expected Budget Challenges Architecture Implementation page 5 

Lack of Sound Business Case Puts CEV Acquisition at Risk page 7

Appendix 

Scope and Methodology and Contributors page 9 
Enclosure II 

Briefing for Congressional Staff Page 2

NASA awarded concept

development contracts to both

Lockheed Martin and Northrop

Grumman for the CEV project in

July 2005. NASA plans to downselect to one contractor and award 

a contract for development,

production, and sustainment of the 

CEV in September 2006. That

contract could extend through 2019. 

NASA plans to award a sole-source 

contract for the first stage of the 

CLV to ATK-Thiokol, the 

manufacturer of the Shuttle’s 

Reusable Solid Rocket Motor, in

October 2006. Also, the agency

plans to award Pratt & Whitney

Rocketdyne, the developer of the 

Space Shuttle Main Engine (SSME) 

and J-2 engines, a sole-source 

contract for development of the J2X engine in November 2006. These 

contractors are currently planning

their respective efforts under 

interim contract arrangements.

NASA has started in-house 

preliminary design work on the CLV 

upper stage structures and avionics 

and plans to begin awarding 

competitive contracts for 

production of these items in May 

2007. 

Exploration Contracts 

Background 

Implementing the Vision 

NASA plans to bring the 

President’s Vision to reality over

the next several decades by

• conducting exploration

activities in low-Earth orbit; for

example, flying the space shuttle 

to complete assembly of the ISS;

• exploring beyond low-Earth 

orbit; for example, establishing 

sustained exploration of the moon

and Mars; 

• developing transportation that 

supports exploration; for 

example, building crew

exploration vehicles; and 

• pursuing opportunities for 

international and commercial

participation. 

Original Exploration Systems Architecture Study Overview 

The ESAS outlined the recommended architecture and strategy for implementation

of the Vision. The primary vehicles and elements of the architecture include the CEV, 

the CLV, the CaLV that includes the Earth Departure Stage (EDS), and the Lunar

Surface Access Module (LSAM). The diagram below outlines a launch mission for 

crew and cargo, utilizing rendezvous locations in low-Earth and low-lunar orbits. 

The original ESAS architecture is described below. Changes made to the 

architecture since the release of ESAS are described in later sections. 

CEV: The CEV is a reusable, Apollo-derived cone-shaped capsule launched atop the

CLV. The CEV consists of a Command Module (CM), a Service Module (SM), and a 

Launch Abort System (LAS). The CEV is sized at 5.5 meter diameters for lunar polar 

missions carrying a crew of four, and is also reconfigurable to accommodate up to 

six crew members for missions to ISS. The vehicle uses a Low Impact Docking 

System (LIDS) for ISS and lunar missions. The vehicle is reusable for up to 10 

missions and will land on land with a water landing as a backup. The SM utilizes a

pressure-fed liquid oxygen (LOX)/methane propulsion system. 

CLV: The CLV consists of a shuttle-derived four-segment Reusable Solid Rocket 

Booster (RSRB) first stage and a newly designed upper stage with one modified, and 

now expendable, SSME. It will launch 25 metric tons to low-Earth orbit and serve as 

the long-term crew launch capability for the United States. 

CaLV: The CaLV will use a heritage shuttle external tank-derived LOX/liquid hydrogen

core stage propelled by five redesigned SSMEs. Attached to this core stage are two 

newly developed five-segment RSRBs, allowing over 100 metric tons to be launched to

low-Earth orbit. The upper stage, which also serves as the EDS, uses an external tankderived LOX/liquid hydrogen system and will employ two Saturn-derived J-2 engines. 

LSAM: The LSAM is an expendable two-stage module launched atop the CaLV. The

descent stage will utilize a LOX/liquid hydrogen propulsion system while the ascent 

stage will use a pressure-fed LOX-methane propulsion system. A crew cabin will be

located on the ascent stage and will have an airlock to allow docking with the CEV. 

The LSAM will be able to land at any location on the lunar surface and will house a

four-member crew for up to 7 days. 
Enclosure II 

Briefing for Congressional Staff Page 3

Cost 

Estimating 

NASA’s Cost Estimating Handbook

outlines cost-estimating processes in

relation to acquisition life cycle 

phases. 

• In Pre-Phase A, there are many

unknowns. At this point, the most 

effective cost-estimating approach

is a parametric or analogous 

methodology, i.e., data from

projects with similar attributes is 

used to predict the cost. 

• In Phase A, conceptual designs are 

better defined and a better 

understanding of the system

requirements and technical risks 

exists. But, parametric or

analogous cost-estimating 

techniques are still used, because

detailed data may still be

unavailable. 

• In Phase B, system designs are 

defined below the subsystem level. 

At this point, estimating

methodologies evolve to more 

detailed parametric or engineering

buildup estimates supported by

technical experts. By the end of

Phase B, specific data are available 

to prepare a full life cycle cost

estimate. 

• In Phases C and D, cost estimates 

are refined to include actual data. 

At this point, the preferred cost

methodology is an engineering 

buildup based on the lowest level 

of detail available, including

overhead, labor, and material

costs. 

Cost-Estimating Process Firm Cost Estimates Cannot Be Developed at This Time 

NASA’s cost estimates for implementing its exploration architecture are

preliminary—a fact that NASA has acknowledged since the ESAS was publicly 

released. As part of the ESAS effort, NASA laid out the cost estimates for

implementing the recommended architecture. Because the ESAS effort was an early 

life cycle activity, Pre-Phase A, the majority of the individual estimates were based 

upon parametric models, with little actual data. 

The ESAS process evaluated the cost of various alternative exploration architectures 

based upon high-level program requirements. The recommended architecture costs 

totaled 

• over $31 billion dollars through fiscal year 2011, 

• over $122 billion through fiscal year 2018, and 

• close to $230 billion through fiscal year 2025.

1

 

NASA conducted a cost risk analysis of the estimates through fiscal year 2011. This

analysis provided a 65 percent confidence level for the estimate (i.e., NASA is 65

percent certain that the actual cost of the program will either meet or be less than

the estimate). To obtain this level of confidence in the estimates, NASA included

programmatic reserves—20 percent on all development and 10 percent on all 

production costs. NASA only conducted the risk analysis through the first flight date

of the CEV at the time of ESAS—2011—leaving the estimates through 2018 and 2025, 

when most of the cost risk for implementing the architecture will be realized, with 

no confidence level distinction. According to NASA officials, the cost risk analysis

lacked quality because of the evolving nature of the requirements for the 

architecture and the compressed time frames with which they had to conduct the 

analysis. According to NASA officials, once they receive more detailed contractor

inputs, the agency will be able to produce higher-fidelity estimates of program cost. 

NASA has stated that it would not commit to a cost estimate for implementing the

exploration architecture until the Constellation program’s PDR, which will occur in 

late fiscal year 2008. At that time, the requirements, design, schedule, and cost will 

all be baselined. 

NASA refined the architecture several times since ESAS. As a result of these

changes, the costs associated with the architecture have also changed. As part of the 

fiscal year 2007 budget formulation process, NASA made two major changes to plans 

laid out in the ESAS. First, the requirement for use of a LOX/methane engine on the 

CEV service module—a high-risk development—was removed, and the approach for 

meeting the propulsion requirement was left to the discretion of the contractor. 

Second, the first flight of the CEV was delayed until no later than 2014. 

1

NASA’s cost estimate through 2011—$31 billion— included the costs of the R&T and RLEP projects 

needed to support the architecture. Its estimate for the first lunar landing—$104 billion—did not include 

$18 billion in funding for R&T and RLEP projects. To ensure consistency, the estimates for 2018 and 2025 

are presented with R&T and RLEP funding included. The estimates include $20 billion to service the ISS.

NASA’s Life Cycle for Flight Systems and Ground Support Projects through Phase D
Enclosure II 

Briefing for Congressional Staff Page 4

Cost 

Estimating 

Historically, NASA has shown that 

it lacks a clear understanding of 

how much its programs will cost

and how long they will take to 

achieve their objectives. NASA’s 

cost estimates have often been

unreasonable when committing to

programs because of several

factors, including inadequate

requirements definition; changes

in program content; and

inadequate processes to establish 

priorities, quantify risks, and 

make informed investment 

decisions. GAO has reported on

these issues for several years in 

both its high-risk series and in 

specific reviews of programs 

where NASA failed to apply

discipline to its cost estimates to

ensure those estimates were 

reasonable. For example, in 2002,

GAO reported that since 1995, 

estimates for completion of the 

ISS had increased by $13 billion 

and the scheduled completion 

date had slipped 4 years. Also, in 

2004, GAO conducted a review of

27 other NASA programs and

reported that the initial baseline

estimates for over half of those 

programs were understated. 

Costs for NASA programs have 

historically been greater, on 

average, than initial estimates 

anticipated. A 2004 Congressional 

Budget Office (CBO) examination 

of 72 NASA programs spanning 

the past 30 years found that costs 

of NASA programs have 

increased, on average, 45 percent 

from initial budget estimates. 

Cost Estimate Issues Firm Cost Estimates Cannot Be Developed at This Time, cont’d 

Subsequent to the submission of NASA’s fiscal year 2007 budget, the Constellation

program conducted an internal bottom-up review (BUR) of program costs. The 

goal of the BUR was to identify the funding it would take to “get the job done,” 

which, according to the BUR guidance, means conducting the first flight of the

CEV to the ISS by 2012 and first lunar mission by 2017. This review attempted to 

determine the cost impact of several major changes that were made to the 

architecture. These changes included a reduction in CEV diameter from 5.5 to 5 

meters, use of a five-segment RSRB and a Saturn-derived J-2x engine on the upper 

stage of the CLV, deletion of the unpressurized cargo CEV, the addition of an ISS 

docking system (Androgynous Peripheral Attachment System), and the inclusion 

of a Ka Band for High Definition Television on the CEV. Some of these 

architecture changes may help lessen technology development risks in the future

program due to the planned commonality between the CLV and CaLV launch

systems. While the results of this review were an attempt to provide more fidelity 

to the Constellation program’s cost estimates, given the continued lack of a firm

program baseline for requirements, design, and schedule, along with a continued 

lack of input from contractors, it is unlikely that the program had the level of detail 

available to support a true estimate of total costs this early in the program life 

cycle.

ESMD is conducting a follow-on review to the Constellation program’s BUR as 

NASA enters its fiscal year 2008 budget formulation cycle. As part of this latest 

review, NASA has continued to evaluate changes to the program architecture and

schedule, such as the use of the RS-68 engine on the CaLV and the delay of the first 

lunar mission to either fiscal year 2019 or fiscal year 2020. 

The continued evolution of the exploration architecture serves to highlight the 

preliminary nature of architecture itself and its associated cost estimates. 

Although NASA is continuing to refine its cost estimates for implementing the 

architecture to provide a more reliable estimate of cost, history suggests that 

program costs could increase significantly over estimates. In 2004, CBO reported 

that fulfilling the Vision could require the addition of billions of dollars to NASA’s 

estimates of cost or extending the schedule for the first lunar landing by several 

years. Applying NASA’s average cost growth figure of 45 percent to the ESAS cost

estimates, assuming NASA business as usual, would result in an increase of almost

$14 billion over the $31 billion it estimates it will need through 2011. With a

significant increase in NASA budgets unlikely, given the current national fiscal

imbalance, this level of cost growth could result in an unsustainable long-term 

exploration program.
Enclosure II 

Briefing for Congressional Staff Page 5

Funding 

Shortfalls 

The NASA Administrator recently

testified that the agency is facing

challenges to ensuring adequate

funding for the priorities of the 

President and Congress within

available budgetary resources. He

stated that NASA has adopted a 

“go as you can afford to pay” 

approach to funding its

exploration missions. This 

approach assumes NASA’s top

line budget will grow at the 

moderate rate identified in the

President’s fiscal year 2007 budget 

request. 

Under this approach, NASA would

implement its priority missions 

within available resources and 

planned budgets through the

redirection of funding for longerterm and lower-priority R&T 

elements within ESMD. As a 

result, several ESMD R&T 

programs and missions were

discontinued, descoped, or 

deferred. That funding, in turn,

was shifted into the Constellation 

Program to accelerate 

development of the CEV and the 

CLV. 

NASA Funding Approach Expected Budget Challenges Architecture Implementation 

NASA will be challenged to implement the exploration architecture, given the

agency’s expected budget profile. The ESAS effort defined the recommended

architecture and preliminary costs, which NASA contends would allow the 

program to be accomplished within available budgets through 

fiscal year 2011. However, phasing issues still needed to be resolved. On an annual

basis, NASA cannot afford to implement the architecture, although, cumulatively,

for fiscal years 2007-2011, the agency says it has the money available. Beginning

with fiscal year 2014 and for the remainder of the decade, where the anticipated

available budgets were adjusted for inflation, the ESAS cost projections show

yearly multibillion-dollar shortfalls with an overall deficit through 2025 of over $18 

billion. 

The projected ESMD available budget figures used in the ESAS were developed 

well in advance of NASA’s fiscal year 2007 President’s budget submission. 

However, using the updated budget estimates from the fiscal year 2007 budget, the 

phasing issue becomes more pronounced when compared to ESAS estimated costs. 

As shown in the chart below, ESAS estimates could be accommodated within the 

ESMD available budget through fiscal year 2007. From fiscal year 2008 through 

fiscal year 2010, however, NASA anticipates annual budget shortfalls for 

implementing the architecture within ESMD to exceed $1 billion per year. This 

shortfall could be partially offset, at least within the Constellation program, by a 

carryover of approximately $1 billion in both fiscal years 2006 and 2007 as a result 

of funds redirected from R&T activities within ESMD to that program. In addition, 

NASA officials stated the Constellation program has requested more funding than

required for its projects in several years to cover shortfalls in later years. For 

example, the Exploration Communication and Navigation Systems project within

the Constellation program plans to roll over $56.2 million from the fiscal year 2007 

budget to make up for budget shortfalls in fiscal years 2008, 2009, and 2010. 

ESAS Estimated Cost versus ESMD Projected Budget by Fiscal Year
Enclosure II 

Briefing for Congressional Staff Page 6

Funding 

Shortfall

The Vision called for retirement

of the space shuttle fleet by the 

end of this decade and that the 

CEV should be available no later 

than 2014, creating a potential gap 

in human spaceflight of up to 4

years. The NASA Administrator 

has stated that it is a priority of 

the agency to close this gap and 

that the agency has taken steps to

have the CEV in service as close

to 2010 as possible. 

On the basis of lessons learned 

from the period between the end 

of the Apollo Program and the 

first flight of the space shuttle, the 

Administrator outlined several 

reasons why the CEV should not 

be delayed. These reasons include 

the potential for

• stagnation in the aerospace 

industry, 

• loss of critical expertise,

• withering of the industrial 

base, 

• higher overall program 

costs, 

• program schedule delays, 

and 

• loss of leadership in space 

exploration. 

Congress has also voiced its 

concern over the potential gap in

human spaceflight. In the National

Aeronautics and Space

Administration Authorization Act 

of 2005, Congress stated it is the

policy of the United States to have

the capability for human access to 

space on a continuous basis.

Gap in Human Spaceflight Expected Budget Challenges Architecture Implementation, cont’d

NASA’s approach, however, appears to be contrary the agency’s stated “go as you 

can afford to pay” approach to implement priority missions within available 

resources. In addition, the surplus shown in fiscal year 2011 is dependent upon 

dollars becoming available from the retirement of the space shuttle fleet, even

though NASA officials stated the costs associated with retiring the space shuttle

and transitioning to new architecture are not fully understood and the expected 

surplus could be less than anticipated. The shortfall presented by the fiscal year 

2007 budget would not allow NASA to accomplish the stated program objectives 

within available resources over the next 5 years. 

In addition, changes to the architecture implementation schedule have not been

consistent within the Constellation program. As previously stated, NASA moved the

scheduled initial operational capability (IOC) date of the CEV to no later than 2014

during the fiscal year 2007 budget formulation process. This change, along with

modifications to the architecture, allowed NASA’s estimates to meet its overall 

budget profile, despite continued year-to-year budget phasing issues. However,

because of NASA’s focus on minimizing the gap between the retirement of the space 

shuttle and the first flight of the CEV to the ISS, the program continued to attempt 

to meet the earlier IOC date for the CEV through its various analysis cycles. The 

earlier 2012 IOC date was retained as the planning date during the bottom-up review

process, the Phase II request for proposal to the contractors involved CEV 

development, and the recent announcement concerning its intention to purchase 

the J-2x engine for the CLV from Pratt & Whitney Rocketdyne. 

The 2012 date for CEV IOC, in addition to changes the Constellation program made

to the architecture during the BUR process, did not alleviate issues with the shortterm funding profile. According to Constellation program officials, the net result of 

these changes will add more cost to the early years of the program, when funding is 

already constrained and phasing issues persist. Although the results of the BUR will 

not be released, indications from Constellation program officials are that the 

estimated costs of the program are higher than the ESAS estimated costs and

available funding per NASA’s budget profile. 

In the meantime, NASA continues to look for ways to resolve its budget phasing

issues, such as by making additional changes to the exploration architecture. As the 

Constellation program executes its budget formulation process for the fiscal year 

2008 budget cycle, it is currently analyzing options to the current architecture in an 

attempt to reduce development and production costs. For example, NASA recently 

announced that it intends to use five RS-68 engines instead of five SSMEs for the

CaLV core stage, which would also require the CaLV core stage diameter to be

increased to approximately 33 feet to accommodate the additional propellant

needed by the RS-68 engines.
Enclosure II 

Briefing for Congr Briefing for Congression essional al SStaff taffers Page Page 57

CEV 

Project 

Best Practices 

GAO has frequently reported on the 

importance of developing a sound

business case before committing 

resources to a new product 

development effort. The business 

case in its simplest form is 

demonstrated evidence that (1) the 

need for the product is valid and 

that it can best be met with the 

chosen concept, and (2) the chosen

concept can be developed and 

produced using existing and 

reasonably expected resources.

GAO has undertaken a best

practices body of work on how 

leading developers use a 

knowledge-based approach to 

develop products that reduces risks 

and increases the likelihood of 

successful outcomes. This type of

approach is based on the premise of

attaining knowledge about a 

program and the resources 

available before making a 

contractual or financial 

commitment. Knowledge that 

supports a sound business case 

includes well-defined requirements, 

a preliminary design, mature

technology, and realistic cost 

estimates. 

Use of this approach has enabled

leading organizations to deliver

high-quality products on time and 

within budget. Conversely, GAO has 

also reported that major systems

that have not established a sound

business case have been plagued by

cost overruns, schedule delays, 

decreased capability, and overall 

poor performance. NASA’s track

record in developing systems has 

not been good. GAO and others

have reported that NASA has had 

numerous problems with its

programs and projects, including 

underestimating program 

complexity and technology 

maturity, and inadequate review

and systems engineering processes. 

Lack of Sound Business Case Puts CEV Acquisition at Risk 

NASA’s acquisition strategy for the CEV places the project at risk of cost overruns, 

schedule delays, and performance shortfalls because it commits the government

to a long-term product development effort before establishing a sound business 

case. In September 2006, NASA plans to award a contract for design, development,

production, and sustainment of the CEV—before it has developed well-defined 

requirements, a preliminary design, mature technology, and firm cost estimates for 

the project. The CEV project might not have all the elements of a sound business 

case in place until the project-level PDR in March 2008. At the completion of the 

PDR, NASA will approve the selected prime contractor’s preliminary design based 

on detailed, validated requirements. Further, CEV project officials indicated that 

the CEV project plans to retire all technology risks by the PDR. At that point, 

NASA will likely have the increased knowledge necessary to develop a sound 

business case that includes high-fidelity, engineering-based estimates of life cycle 

cost for the CEV project. With this business case in hand, NASA would be in a 

better position to commit the government to a long-term design and development 

effort. NASA officials disagree and have stated that it is appropriate for them to

proceed with the contract award because the agency is selecting “a designer, not a

design” for the CEV. In reality, by awarding a contract as planned in September 

2006, NASA is not only committing to an unknown design but to production and 

long-term sustainment of the CEV as well. 

The CEV contract scheduled for award in September 2006 will have three 

schedules. At the time of contract award, NASA will be responsible for fee earned

and the reasonable, allowable, and allocable costs incurred by the contractor in 

the performance of Schedule A and the minimum quantities under Schedules B

and C. 

• Schedule A is for design, development, test and evaluation of the CEV. 

Deliverables under Schedule A include all test articles and two operational 

CEV vehicles—one human-rated variant and one pressurized cargo variant. 

• Schedule B is for production beyond the two operational vehicles delivered 

under Schedule A. The CEV request for proposal states that the “guaranteed

minimum” quantity for Schedule B is “two CEV,” the type of which, according 

to NASA officials, is undetermined. 

• Schedule C is for sustainment in support of operations and in support of

Schedule B activities.

Note: Contract award for all schedules is planned for September 2006. Schedule B and C

performance periods are from 2009 to 2014 with an additional 5-year performance option to 

end in 2019.

CEV Timeline
Enclosure II 

Briefing for Congressional Staff Page 8

Past Development Attempts 

CEV 

Project 

NASA has tried unsuccessfully to 

develop a number of vehicles to 

replace the shuttle over the past

three decades. In the 1980s NASA 

initiated the National Aero-Space

Plane (NASP) to build and test a

manned experimental flight vehicle 

for demonstrating single-stage-toorbit space launch and sustained 

hypersonic cruise capability. NASA 

canceled the program as it was 

experiencing cost overruns, 

schedule delays, and technology

problems. GAO reported that from 

1986 to 1993 NASA spent $398

million for the NASP program. 

In the 1990s, NASA began the X-33

program to develop single-stage-to

orbit technology and the X-34 to

demonstrate reusable two-stage-to -

orbit technologies. According to a 

2006 Congressional Research 

Service report, NASA terminated the 

X-33 and X-34 in March 2001—after

spending over $1.4 billion—because 

the cost to complete them was too 

high relative to the benefits. In 1999, 

GAO reported that technical 

problems and unrealistic cost 

estimates on the X-33 project alone

led to cost overruns of $75 million 

and over a year’s delay.

In 2004, after the announcement of 

the Vision, NASA canceled the 

Space Launch Initiative (SLI)

program, which was to provide both

launch capabilities and an

emergency crew return from the 

ISS. NASA’s Inspector General 

reported that NASA did not verify 

and validate basic requirements for 

its second generation space 

transportation, while GAO reported

that key management controls could 

not be implemented until such

requirements were defined. GAO 

estimates that from 2001 to 2005

NASA provided the SLI program 

with about $3 billion in funding.

Lack of Sound Business Case Puts CEV Acquisition at Risk, cont’d

 

An important step in developing a sound business case is defining requirements. 

The acquisition strategy for the CEV lays out a series of reviews to validate and 

approve CEV requirements. These reviews result in approved system-level 

requirements at the October 2006 System Requirements Review (SRR), and 

approved subsystem-level requirements at the April 2007 System Definition 

Review (SDR) and culminate with validated and approved component-level

requirements at the March 2008 PDR. Under the current CEV strategy, NASA will 

select the winning contractor about 1 month before the system level requirements

are approved at the SRR, over a year and a half before detailed component-level 

requirements are approved at the PDR. 

Another aspect of a sound business case is having mature technologies before 

committing to product development. The CEV’s acquisition strategy is predicated

upon using mature technologies as the basis for system development. However,

contractors will also be given discretion to include immature technologies in 

areas where technology advancement is critical to meeting requirements. NASA 

has independently identified technology risks and implemented advanced 

technology development projects to address risks in the areas of the thermal

shielding needed for reentry and the landing systems needed for ground landings.

CEV project officials also expect that each contractor’s proposal will include 

additional technology development risks. Under the current CEV strategy, NASA 

is awarding a contract for product development and production of the first two 

variants of the CEV before it has resolved these technology development risks.
Enclosure II 

Briefing for Congr Briefing for Congressional Staff PPaage ge 19 0

Contributors 

Appendix

If you have any questions 

concerning this briefing, please

call Allen Li at (202) 512-4841. 

Other key contributors to this 

briefing were James L. Morrison, 

Assistant Director; Rick 

Cederholm; Shelby S. Oakley;

Guisseli Reyes; Sylvia Schatz; and 

John S. Warren, Jr. 

Contributors Scope and Methodology Answer

To assess the extent to which NASA has identified the architecture and costs 

necessary to implement the Vision and whether NASA’s exploration architecture

fits within the agency’s projected available budgets, we reviewed and analyzed

NASA’s Exploration Systems Architecture Study, fiscal year 2007 budget request,

ground rules and assumptions provided from the Constellation program to projectlevel management estimators to perform the BUR, guidance for use in preparing

the fiscal year 2008 budget request, NASA cost-estimating guidance in the NASA

Cost Estimating Handbook, and congressional hearings and testimonies 

pertaining to NASA and the Vision. We also conducted interviews with NASA 

headquarters officials from the Cost Analysis Division, the Exploration Systems

Mission Directorate, and the Constellation Program; Constellation program and 

CEV project officials at Johnson Space Center; CLV project officials at Marshall 

Space Flight Center; and cost analysts from Kennedy Space Center. During these 

interviews, we discussed the methodologies used in preparing the ESAS and 

subsequent cost estimates, architecture changes after ESAS and the trades being 

considered, budgeting issues, and procurement strategies and activities. 

To assess the risks associated with NASA’s acquisition strategy for the CEV 

project, we reviewed and analyzed CEV project documentation, including draft 

project plans, draft requirements documents, technology development plans,

documentation included in the contract request for proposals, and documentation

for past NASA human space flight acquisition programs. We compared NASA's 

plans for the CEV with criteria contained in GAO best practices work on systems 

acquisition. We also conducted interviews with NASA headquarters officials from

the Exploration Systems Mission Directorate, Constellation Program and CEV 

project officials at Johnson Space Center, and CLV project officials at Marshall 

Space Flight Center. 

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