United States General Accounting Office

GAO Briefing Report to the Ranking Minority

Member, Subcommittee on Space and

Aeronautics, Committee on Science,

House of Representatives

May 1995 CASSINI MISSION

Estimated Launch

Costs for NASA’s

Mission to Saturn

GAO/NSIAD-95-141BR

GAO United States

General Accounting Office

Washington, D.C. 20548

National Security and

International Affairs Division

B-260888 

May 8, 1995

The Honorable Ralph M. Hall

Ranking Minority Member

Subcommittee on Space and Aeronautics

Committee on Science

House of Representatives

Dear Mr. Hall:

In April 1994, the National Aeronautics and Space Administration (NASA)

estimated that it would cost about $475 million for a Titan IV-Centaur

launch of its Cassini spacecraft. Concerned about the cost, as the

Chairman of the former Subcommittee on Space, House Committee on

Science, Space, and Technology, you requested that we provide

information about the current estimated cost for the Cassini launch and

determine the extent to which cost saving opportunities exist. On April 11,

1995, we briefed your staff on the results of our work. This report contains

the information presented at that briefing.

Background NASA plans to launch its Cassini spacecraft to Saturn in October 1997.

Following a voyage of more than 6 years, the spacecraft will orbit Saturn

for 4 years. Cassini will provide intensive, long-term observations of

Saturn’s atmosphere, rings, magnetic fields, and moons. Cassini’s probe

will be used to analyze the atmosphere of Saturn’s largest moon, Titan.

Cassini, a joint U.S.-European mission, was originally paired with a project

to explore comets and asteroids, the Comet Rendezvous Asteroid Flyby

(CRAF). Cassini was first funded by Congress in fiscal year 1990. Since then,

CRAF was canceled, and Cassini’s original scientific capabilities have been

reduced and its launch schedule extended.1

NASA is responsible for the overall success of the Cassini mission, including

integrating the spacecraft with the launch vehicle and approving the final

launch. Under an agreement with NASA,

2

 the Air Force will provide a 

1

Changes to CRAF/Cassini projects are described in Space Science: Causes and Impacts of Cutbacks to

NASA’s Outer Solar System Exploration Missions (GAO/NSIAD-94-24, Dec. 29, 1993).

2

“Memorandum of Agreement between the National Aeronautics and Space Administration and United

States Air Force on Titan IV-Centaur Launch Support for the Cassini Mission,” Aug. 11, 1994.

Page 1 GAO/NSIAD-95-141BR Cassini Mission
B-260888 

Titan IV expendable launch vehicle3 with a Centaur upper stage4 and

launch service from Cape Canaveral Air Force Station in Florida.

Results in Brief NASA’s most recent estimate for the Titan IV-Centaur launch of its Cassini

spacecraft is about $452 million, approximately $23 million less than its

$475-million estimate in April 1994. The decrease occurred principally

because NASA reduced its earlier estimate of mission integration costs. The

$452-million estimate includes about $253 million paid to the Air Force for

a Titan IV-Centaur launch vehicle and launch services. The remaining

Cassini launch costs are NASA funding to pay for potential future cost

increases, mission integration, prior-year studies, support by two NASA

field centers, and miscellaneous costs. The Air Force estimates that its

cost for launch vehicle and services is about $98 million more than the

$253 million NASA will pay. Air Force officials believe there are benefits to

providing a launch vehicle for Cassini. For example, the Air Force will

avoid an estimated $11.5 million to $13.8 million in storage charges and

will reduce mission reliability risk due to the aging of components.

Reductions in the cost of the Cassini launch may be possible because NASA

recently completed its negotiation of the mission integration contract for

$15 million less than estimated. However, cost savings in other areas of the

Cassini launch are unlikely, and some of NASA’s costs could increase. Also,

NASA missed a potential cost-saving opportunity because its agreement

with the Air Force does not require the Air Force to refund NASA payments

in excess of cost. Consequently, the Air Force is not required to refund to

NASA fees that the Air Force does not pay to the Titan IV contractor. These

fees include $2 million in award fees and a $9-million incentive fee. In

addition, NASA’s mission integration contract does not fully comply with

the agency’s revised policy for cost-plus-award-fee contracts, which was

implemented to encourage contractors to deliver quality products at

reasonable costs.

Scope and

Methodology

We obtained and analyzed NASA and Air Force documents, including

memoranda of agreement, estimated and negotiated costs, funding and

budget data, the mission integration contract, and launch and production

schedules. We interviewed personnel in NASA’s Office of Space Science and

in the Office of the Assistant Secretary of the Air Force (Acquisition) in

Washington, D.C. We also obtained information from officials at the 

3

An expendable launch vehicle is a disposable, unpiloted launcher.

4

An upper stage provides propulsion to carry a payload from a lower to a higher orbit around earth.

Page 2 GAO/NSIAD-95-141BR Cassini Mission
B-260888 

Titan IV Systems Program Office, Space Systems Division, Air Force

Systems Command, Los Angeles, California, and the Launch Vehicles

Project Office, Lewis Research Center, Cleveland, Ohio.

We performed our work from August 1994 to March 1995 in accordance

with generally accepted government auditing standards. As agreed with

your office, we did not obtain written agency comments on this report.

However, we discussed the information in a draft of this report with

officials from NASA and the Air Force and incorporated their comments

where appropriate.

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

distribution of this report until 10 days from its issue date. At that time, we

will send copies of this report to the NASA Administrator, the Secretaries of

Defense and the Air Force, the Director of the Office of Management and

Budget, appropriate congressional committees, and other interested

parties upon request.

If you or your staff have any questions concerning this report, please

contact me on (202) 512-8412. The major contributors to this report were

Frank Degnan, Raymond H. Denmark, and Sandra D. Gove.

Sincerely yours,

David R. Warren, Director

Defense Management and NASA Issues

Page 3 GAO/NSIAD-95-141BR Cassini Mission
Briefing Section I 

Cassini Launch Costs

GAO Estimated Cassini Launch Costs

Dollars in millions

Item Amount

 Vehicle and launch services $253.4

 Reserved funding 38.0

 Integration contract 104.7

 Other integration 5.0

 Prior-year studies 25.7

 Lewis support 15.6

 Kennedy support 5.5

 Miscellaneous 3.8

Total $451.7

Source: NASA’s fiscal year 1996 budget and data provided by NASA.

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Cassini Launch Costs

The National Aeronautics and Space Administration (NASA) estimates the

Titan IV-Centaur launch of the Cassini spacecraft will cost $451.7 million,

or about 17 percent of NASA’s total estimated cost of $2.7 billion for the

mission. NASA’s current estimate is about $23 million less than its

$475-million estimate in April 1994. The decrease occurred principally

because NASA reduced its earlier estimate of mission integration costs.

NASA will pay the Air Force $253.4 million for a Titan IV-Centaur launch

vehicle and launch services for Cassini. Other estimated launch costs in

NASA’s fiscal year 1996 budget include $38 million in funding reserves to be

held by NASA to pay for future modifications to the launch vehicle and

other unanticipated cost increases; $104.7 million for an integration

contract; and $55.6 million for other integration, prior-year studies,

support provided at two NASA field centers, and miscellaneous items.

Page 5 GAO/NSIAD-95-141BR Cassini Mission
Briefing Section I 

Cassini Launch Costs

GAO Cassini Launch Costs

Percentage of dollars

Vehicle/services

Reserved funding

Integration

Prior-year studies

Center support

Miscellaneous

56.1%

8.4%

24.3%

5.7%

4.7%

0.8%

Source: GAO analysis of data provided by NASA.

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Cassini Launch Costs

About 56 percent of the total estimated launch cost is for the vehicle and

launch services provided by the Air Force. The mission integration

contract and other integration costs account for about 24 percent of

estimated launch costs; reserved funding, prior-year studies, center

support, and miscellaneous items account for the remaining 20 percent.

Page 7 GAO/NSIAD-95-141BR Cassini Mission
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Cassini Launch Costs

GAO Costs for Launch Vehicle & Launch 

Support Services

Category NASA cost

Titan core booster $109.2

Centaur upper stage 70.9

Mission-unique hardware 25.3

Range support 10.6

Miscellaneous 9.7

Mission success incentive 9.1

Propellant 7.0

Technical support 5.1

Generic integration 4.5

Award fee 2.0

Launch operations 0.0

Total $253.4

Dollars in millions

Source: Memorandum of agreement between NASA and the Air Force, Aug. 11, 1994.

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Cassini Launch Costs

According to an August 1994 memorandum of agreement (MOA), which was

established under the authority of the Economy Act (31 U.S.C. 1535), NASA

will pay the Air Force $253.4 million for a Titan IV-Centaur vehicle and

launch support services. Under its agreement with the Air Force, NASA was

also to retain $45 million to pay for future cost increases or unanticipated

future changes to hardware. This reserved funding is discussed later.

Over $205 million, or about 80 percent of the $253.4 million in charges for

launch service under the agreement, is for launch vehicle hardware—the

Titan IV core booster with a solid rocket motor upgrade, Centaur upper

stage, and mission-unique hardware.5

 Almost $37 million is for a variety of

items, including range support, miscellaneous costs (including storage),

propellant, technical support, and integration tasks that are not unique to

the Cassini mission, which are being performed under an Air Force

contract. The remaining charges of about $11 million cover award fees and

a mission success incentive to be paid to the launch vehicle contractor for

a successful launch.

5

About half of the cost of mission-unique hardware, or $12 million, is for a Space Vehicle Destruct

System. This system is required because the Cassini spacecraft will use plutonium-powered

Radioisotope Thermoelectric Generators.

Page 9 GAO/NSIAD-95-141BR Cassini Mission
Briefing Section I 

Cassini Launch Costs

GAO NASA's Cost Compared With

Air Force Estimate 

Dollars in millions

Category NASA cost Air Force estimate Difference

Titan core booster $109.2 $133.2 $24.0

Centaur upper stage 70.9 79.0 8.1

Mission-unique hardware 25.3 25.3 0.0

Range support 10.6 15.3 4.7

Miscellaneous 9.7 9.7 0.0

Mission success incentive 9.1 9.1 0.0

Propellant 7.0 5.7 -1.3

Technical support 5.1 5.1 0.0

Generic integration 4.5 4.5 0.0

Award fee 2.0 2.0 0.0

Launch operations 0.0 62.5 62.5

Total $253.4 $351.4 $98.0

a

aA more recent Air Force estimate of propellant cost is discussed later.

Source: NASA cost based on memorandum of agreement, Aug. 11, 1994; Air Force estimate as of

September 1994.

Page 10 GAO/NSIAD-95-141BR Cassini Mission
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Cassini Launch Costs

The total charges to NASA under the agreement are $98 million less than a

September 1994 Air Force estimate for the Titan IV-Centaur launch vehicle

and launch services. NASA costs, except for range support and launch

operations, reflect initial contract costs or estimated costs at varying

points during the period when NASA and the Air Force were negotiating the

agreement.

Air Force officials stated there are a number of benefits associated with

the agreement. For example, the Air Force has a backlog of hardware

because it has launched Titan IVs at much lower rates than originally

planned. By providing a Titan IV unit to NASA, the Air Force avoids an

estimated $11.5 million to $13.8 million in storage charges and reduces

mission reliability risk due to the aging of components.6

6

However, NASA will pay an estimated $7 million in storage charges. These charges are included in the

“miscellaneous” category in the table.

Page 11 GAO/NSIAD-95-141BR Cassini Mission
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Cassini Launch Costs

GAO Launch Vehicle Cost Difference

NASA is paying the 

initial contract cost 

for the Titan booster 

and upper stage.

NASA is not paying 

cost increases 

stemming from 

subsequent 

slowdowns.

NASA cost Air Force estimate

0

50

100

150

200

250

300

180.1

212.2

Dollars in millions

Source: GAO analysis of data provided by the Air Force.

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Cassini Launch Costs

The $98-million difference between NASA charges under the agreement and

the later Air Force estimate is primarily due to two reasons. First, NASA is

paying the initial contract cost for the specific unit that it will use but not

cost increases stemming from subsequent slowdowns in launch vehicle

production.

Recent production slowdowns were necessary because the Air Force has

launched Titan IVs at much lower rates than originally planned. The

launch vehicle that the Air Force is providing to NASA was acquired under

an existing $12.1-billion contract with Martin Marietta for 41 vehicles. The

Air Force negotiated a number of production slowdowns with the Titan IV

contractor during the period when NASA and the Air Force were negotiating

the launch costs for Cassini. Each slowdown resulted in an increase in

Titan IV unit costs. The Air Force estimates that production slowdowns

have added about $32 million in costs to the Titan IV-Centaur vehicle it is

providing to NASA. However, under the MOA, NASA is not paying the

increased costs as the Air Force’s Titan IV classified customer is required

to do.

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Cassini Launch Costs

GAO Range Support & Launch Operations 

Cost Differences

Air Force is not 

charging NASA for 

routine, recurring 

costs.

NASA cost Air Force estimate

0

20

40

60

80

100

10.6

77.8

Dollars in millions

Source: GAO analysis of data provided by the Air Force.

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Cassini Launch Costs

Second, under a reciprocal agreement,7 the Air Force is not charging NASA

for the routine, recurring costs of operating and maintaining launch

facilities and ranges. These are funded annually by the Air Force at a set

amount and prorated among scheduled launches for the fiscal year. NASA

will not reimburse the Air Force for about $63 million in estimated costs

for launch operations, including the receipt, inspection, assembly,

integration, servicing, and testing of the Titan IV system. NASA will pay

$10.6 million, or almost $5 million less than the Air Force estimate, for

range support. NASA range support charges are based only on those

services that are directly related to the Cassini mission, such as planning

and range documentation, safety, security, launch pad refurbishment,

contractor supplies, and utilities.

The Air Force has a different arrangement with its other Titan IV customer

for launch services. For example, the Air Force funds the classified user’s

launch services at Cape Canaveral. The classified user funds all launch

services for its West Coast launches.

7

“Memorandum of Agreement between the National Aeronautics and Space Administration and United

States Air Force on Launch Services and Range Support to Government Expendable Launch Vehicle

Programs,” Feb. 1, 1994.

Page 15 GAO/NSIAD-95-141BR Cassini Mission
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Cassini Launch Costs

GAO Propellant Cost Difference

NASA's cost is 

based on an earlier, 

higher estimate.

The Air Force's 

current estimate 

exceeds NASA's 

cost.

September 1994

NASA 

cost

Air Force estimates

0

2

4

6

8

10

7

5.7

7.5

Dollars in millions

Current

Source: GAO analysis of data provided by the Air Force.

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Cassini Launch Costs

NASA is paying $7 million for propellant—$1.3 million more than the Air

Force’s September 1994 estimated cost for propellant because NASA’s cost

is based on an earlier, higher price. A NASA official noted that the cost of

propellants has fluctuated significantly in recent years, and NASA and the

Air Force established the cost early in discussions about Air Force launch

support for the Cassini mission. The NASA official also noted that

propellant cost was not an area of concern for NASA or the Air Force,

because it represents a small fraction of total launch costs. Air Force

officials noted that the Air Force’s current estimate for Titan IV propellant

is $7.5 million, or about $500,000 more than NASA’s cost under the

agreement. The Air Force will absorb the projected higher cost.

Page 17 GAO/NSIAD-95-141BR Cassini Mission
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Cassini Launch Costs

GAO Reserved Funding

NASA will retain $38 million, or about 8 percent of 

estimated launch costs, to pay for future changes.

Reserved funding

Vehicle/services

Integration contract

Other integration

Prior-year studies

Center support

Miscellaneous

8.4%

56.1%

23.2%

1.1%

5.7%

4.7%

0.8%

Source: GAO analysis of data provided by NASA.

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Cassini Launch Costs

Under its agreement with the Air Force, NASA agreed to retain $45 million,

or about 10 percent of the estimated cost of the Cassini launch, to pay for

future cost increases or unanticipated future changes to hardware.

However, NASA’s fiscal year 1996 budget estimate includes $38 million in

reserved funding. NASA officials said the reserved funding reduction was

made when the agency was directed by Congress to reduce its launch

budget by $7 million.

The $45-million funding reserve estimate established in the MOA was

developed by the Air Force based on experience, historical data, and

estimated hardware costs. The current Air Force funding reserve estimate

is almost $67 million. NASA will have to pay for any costs for changes for

the Cassini launch that exceed its current reserved funding level of

$38 million.

Changes covered by reserved funding can stem from mission-driven,

safety, or mission assurance modifications or from other unanticipated

cost increases, including those for integration and launch services.

Approximately $11.7-million worth of hardware changes have already been

proposed by or negotiated with the launch vehicle contractor. An Air

Force official noted that the Air Force was aware of the need for some of

these changes when NASA and the Air Force were negotiating the

agreement, and the Air Force is in the process of determining if it will

charge NASA for these costs.

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Cassini Launch Costs

GAO Mission Integration Costs

Dollars in millions

 Item Maximum cost

 Payload integration

 Cost $76.1

 Award fee 8.3

 Base fee 1.9

 Minimum positive incentive 1.2

 Total payload integration 87.5

 Special studies and analyses

 Cost $1.8

 Award fee 0.2 

 Base fee a

 Total special studies and analyses 2.0

Total contract cost $89.5

aBase fee for special studies and analyses is $43,750.

Source: NASA’s mission integration contract.

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Cassini Launch Costs

NASA’s fiscal year 1996 budget includes $104.7 million for a Cassini mission

integration contract. In December 1994, NASA finalized an $89.5-million

cost-plus-award-fee contract to integrate the Cassini spacecraft with the

Titan IV launch vehicle. The contract is divided into two main

areas—$87.5 million for payload integration and $2 million for special

studies and analyses. Estimated fees in the contract total $11.7 million,

including $8.5 million in award fees, $1.9 million in base fees, and a

$1.2-million performance incentive fee that will be paid to the contractor

for successfully completing integration tasks in a timely manner.8

Although the Air Force has a separate contract providing for integration

services on Titan IV launches, it has agreed to allow NASA to contract

directly for these services for the Cassini mission. NASA officials believe the

direct contract will enhance the agency’s ability to manage integration

activities for Cassini and to control costs. NASA’s Lewis Research Center

will oversee mission integration.

8

The performance incentive may be increased by award fee not paid to the contractor up to a total of

$2 million, as discussed in more detail later.

Page 21 GAO/NSIAD-95-141BR Cassini Mission
Briefing Section I 

Cassini Launch Costs

GAO Mission Integration Contract Cost 

Elements

Payload integration

management and support

launch site services

interface design and verification

mission-unique hardware and software 

design

independent verification and validation

Under NASA’s contract, payload integration covers management and

support, including launch site services; interface design and verification;

mission-unique hardware and software design; and independent

verification and validation.

Page 22 GAO/NSIAD-95-141BR Cassini Mission
Briefing Section I 

Cassini Launch Costs

GAO Mission Integration Contract Cost 

Elements

Special studies and analyses

task orders

related to general scope of payload 

integration

NASA will issue task orders for special studies and analyses related to the

general scope of payload integration.

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Cassini Launch Costs

GAO Other Integration, Studies, Centers' 

Support, and Miscellaneous Costs

$5 million for other integration.

$25.7 million for earlier studies funded 

through the Air Force.

$21.1 million for support provided by 

Lewis Research Center and Kennedy 

Space Center.

$3.8 million for other services.

Page 24 GAO/NSIAD-95-141BR Cassini Mission
Briefing Section I 

Cassini Launch Costs

Other mission integration costs of approximately $5 million include the

cost of integration studies and about $1.7 million to pay the contractor for

preparing the proposal and negotiating the integration contract. NASA

officials said the contractor, who was already under contract with the Air

Force to perform Cassini integration, was paid because there was no

reason for the contractor to prepare documentation or to assemble a

negotiation team, except to comply with NASA’s request for a separate

integration contract. NASA believes that the advantages of having a separate

integration contract outweighed the added costs. These advantages were

discussed previously.

The $25.7 million for prior-year studies represents the cost of studies

funded through the Air Force over a period of 4 or 5 years, when Cassini

was paired with the Comet Rendezvous Asteroid Flyby program, which

was canceled in 1992. Studies included reviews of launch vehicle

integration and performance analysis.

The combined budget for Lewis Research and Kennedy Space Centers for

the Cassini mission is $21.1 million, including costs for launch support

activities by contractors and use of facilities. Lewis’ responsibilities for the

Cassini mission include overseeing the technical areas of the integration

contract, independently validating critical analyses, and identifying and

defining mission-unique requirements. Kennedy is responsible for a variety

of activities, including coordinating Cassini mission and Air Force range

activities.

Miscellaneous costs estimated at $3.8 million cover a variety of services,

including government inspections, audits, and contract services at

contractors’ facilities.

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Cassini Launch Costs

GAO Cost Savings Are Possible, but There 

Is Also Cost Growth Risk

Integration contract negotiated for 

$15.2 million less than earlier estimate.

Most of NASA's costs are firmly 

established under MOA with Air Force.

Costs for range support and launch 

operations could increase.

Maintaining solid rocket motor as option 

could increase costs.

Reserves are below MOA amount.

Reductions in the cost of the Cassini launch may be possible. In

December 1994, NASA completed negotiations on a mission integration

contract with an estimated cost of $89.5 million—$15.2 million less than

the fiscal year 1996 budget estimate. If other estimated launch costs

remain relatively stable, this reduction could lead to a decrease in total

estimated launch costs.

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Cassini Launch Costs

However, cost savings are unlikely in other areas of the launch budget,

including NASA’s $253.4-million agreement with the Air Force, under which

most of NASA’s costs are firmly established. In addition, some costs could

increase. For example, NASA would have to pay additional costs for range

support and launch operations if it is responsible for launch delays or

changes that increase Air Force costs. Both NASA and Air Force officials

believe such increases are unlikely. A NASA official noted that it is critical

that Cassini be launched on schedule, and the agency will make a

concentrated effort to do so. He also said the agency has launched all

other planetary missions within their initial time frames. An Air Force

official said that, due to the way the Air Force contracts for launch

operations (i.e., a level of support over a period of time rather than by

launch vehicle), a launch delay does not necessarily result in increased

costs.

An unresolved issue that could significantly increase NASA’s launch costs is

that of maintaining the solid rocket motor (SRM) as an option for the

Cassini launch. NASA currently plans to use the solid rocket motor upgrade

(SRMU) for the Cassini launch. The first use of the SRMU is planned for

October 1996, and two other launches using the SRMU are scheduled before

the Cassini mission. NASA is currently evaluating the feasibility and cost of

maintaining the SRM as a risk reduction option and expects the results in

late April 1995. According to NASA officials, maintaining the SRM as an

option could add $50 million or more to the cost of the launch.

One cost category in the Cassini launch budget with the potential for

future reduction is that of engineering change orders and risk. However, as

previously noted, NASA’s current budget reflects a funding level of

$38 million, or $7 million less than the amount agreed to with the Air

Force. If the $45-million reserve estimate in the MOA is accurate, NASA will

overspend, rather than underspend, in this cost category. Also, there is

already about $11.7 million in proposed or negotiated hardware changes,

accounting for more than 30 percent of the $38 million currently budgeted

for unanticipated cost increases.

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Cassini Launch Costs

GAO Missed Savings Opportunities

The MOA does not require the Air Force 

to refund any NASA payment that 

exceeds actual costs.

Air Force is not required to refund fees 

it does not pay to the contractor. 

NASA could pay $9 million to the Air 

Force for an unsuccessful launch.

Excess payments will be used to fund 

other program costs.

Page 28 GAO/NSIAD-95-141BR Cassini Mission
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Cassini Launch Costs

NASA’s agreement with the Air Force does not provide for potential cost

savings for NASA for the Cassini launch. Under this agreement, there is no

provision requiring the Air Force to refund any NASA payment that exceeds

actual costs. For example, NASA’s payments to the Air Force would not

decrease even if actual fees paid to the contractor were lower than the

maximum amounts scheduled. This could result in NASA’s paying $9 million

to the Air Force to cover the contractor’s incentive payment even if the

launch is unsuccessful. In addition, NASA’s payments to the Air Force for

award fees are based on the contractor’s maximum potential award fee of

$2 million for the Titan IV vehicle. However, for the last two Titan IV units

built, payments have averaged about 90 percent of the total available

award fee. Based on this recent payment history, NASA could give the Air

Force about $200,000 more for award fee than the Air Force will pay to the

contractor.

A NASA official acknowledged that NASA and the Air Force have not

discussed the possibility of the Air Force’s refunding incentive or award

fees that are not paid to the contractor. He noted that NASA and the Air

Force would discuss unpaid fees should a serious performance problem

arise, and NASA would probably request that some of the money be

refunded or be used for investigating the problem and taking corrective

action. An Air Force official noted that excess payments by NASA in

incentive or award fees and other cost categories in the agreement will be

used to fund other program costs that exceed the price negotiated with

NASA.

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Cassini Launch Costs

GAO NASA's Mission Integration Contract

NASA's revised award fee policy 

encourages contractors to deliver quality 

products at reasonable cost.

Mission integration contract does not 

fully comply with revised policy.

Contract allows for "roll-over" of some 

unearned award fee.

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Cassini Launch Costs

In October 1993, NASA revised its award fee policy to encourage

contractors to deliver quality products at reasonable costs.9

 However,

NASA’s integration contract does not fully comply with the revised policy.

The policy states (1) the center procurement officer must determine in

writing that the use of base fee is in NASA’s best interest and (2) base fee, if

used, will be paid only if the contractor’s performance is satisfactory or

better. The determination that the use of base fee is in the agency’s best

interest was not made for the mission integration contract, which includes

about $2 million in base fees, and these fees will be paid to the contractor

regardless of performance. NASA officials noted that the Air Force’s 

Titan IV integration contract has a base fee that is not tied to satisfactory

performance, and this fee provision was transferred to the NASA contract.

Officials stated they attempted to convince the contractor to agree to

modify the base fee provision in order to comply with the agency’s revised

award fee policy.

In addition, a provision in the mission integration contract, although not

expressly prohibited by award fee policy, highlights the need for

management oversight of the agencywide implementation of NASA’s revised

award fee policy. While the policy eliminates the “roll-over” of unearned

award fee from one award fee period to a later period, the integration

contract allows the roll-over of up to $800,000 in unearned award fee to a

performance incentive. NASA officials at Lewis Research Center believe

that, by allowing the contractor to recoup a relatively small proportion of

the total award fee—less than 10 percent—as part of a performance

incentive, they are providing the contractor with an additional incentive to

perform well and to help meet the objective of launching the Cassini

mission successfully at the optimal time. NASA headquarters’ procurement

officials told us that other centers have also converted unearned award fee

to increase an incentive fee. These officials indicated that award fee

guidance will be revised to ensure that this practice is used appropriately

and effectively.

(709091)

9

We reported on NASA’s award fee policy revisions in NASA Procurement: Challenges Remain in

Implementing Improvement Reforms (GAO/NSIAD-94-179, Aug. 18, 1994).

Page 31 GAO/NSIAD-95-141BR Cassini Mission
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