GAO

United States General Accounting Office

Testimony

Before the Committee on Science, Subcommittee on Space 

and Aeronautics, House of Representatives

For Release Expected

at 2:00 p.m. EDT

Wednesday,

September 29, 1999

SPACE

TRANSPORTATION

Progress of the X-33 

Reusable Launch Vehicle 

Program

Statement of Allen Li, Associate Director, National Security 

and International Affairs Division

GAO/T-NSIAD-99-243

Page 1 GAO/T-NSIAD-99-243

Mr. Chairman and Members of the Subcommittee:

We are pleased to be here today to discuss the status of the National 

Aeronautics and Space Administration’s (NASA) X-33 Reusable Launch 

Vehicle Program. The purpose of this program, co-sponsored under a 

cooperative agreement between NASA and the Lockheed Martin 

Corporation, is to develop and demonstrate advanced technologies and 

techniques needed for future reusable launch vehicles. These vehicles are 

in essence spacecraft or rockets whose components—either all or in

part—are utilized on subsequent flights. If the X-33 Program is successful, 

Lockheed Martin may build a small fleet of operational vehicles called 

VentureStars. One way for NASA to reduce future launch costs may be to 

phase out the space shuttle fleet and purchase launch services from 

commercial sources. Our testimony summarizes our recent report on the 

X-33 Program1

 and discusses (1) whether the X-33 Program is meeting its 

original cost, schedule, and performance objectives; (2) how NASA 

conducts oversight under the cooperative agreement; and (3) issues NASA 

may face if it decides to use Lockheed Martin’s VentureStar to service the 

International Space Station. At your request, we are also commenting on 

the progress of the X-33 Program in meeting the intent of the National 

Space Transportation Policy, the directive that establishes national policy, 

guidelines, and implementing actions for the conduct of national space 

transportation programs that will sustain and revitalize U.S. space 

transportation capabilities.

Summary Because of problems in developing technologies for the X-33, the program 

will not meet some of its original cost, schedule, and performance 

objectives. Costs have increased, the test vehicle’s first flight was delayed 

by 16 months, and some performance objectives−such as a speed reduction 

from Mach 15 to Mach 13.8−were reduced. When the cooperative 

agreement was established in July 1996, Lockheed Martin and industry 

partners’ contributions totaled $211.6 million; NASA’s contribution was 

fixed at $912.4 million. We estimate that between July 1996 and March 1999, 

contractors’ total contributions increased by $75 million, to $286.6 million 

in response to problems encountered during development. Estimated 

government costs for NASA civil service personnel working on the program 

also increased, from $95.2 million to $113.1 million. These costs for NASA 

1

Space Transportation: Status of the X-33 Reusable Launch Vehicle Program

(GAO/NSIAD-99-176, Aug. 11, 1999).
Page 2 GAO/T-NSIAD-99-243

personnel are not included in the agency’s agreement contribution; they are 

paid out of another budget account. 

Because the agreement permits NASA employees to work side by side with 

Lockheed Martin employees to perform various technical tasks, NASA’s 

oversight of the program is based on real-time and detailed insights from its 

personnel. With information from its employees, NASA’s X-33 program 

office monitors and verifies the program’s progress and pays the contractor 

when it meets milestones.

Several issues will need to be addressed before NASA can decide whether 

to use VentureStar reusable launch vehicles to support the International 

Space Station. First, the results of the X-33 Program must provide sufficient 

information for NASA to determine that risks have been adequately 

reduced and that continuation of activities leading to the agency’s use of 

VentureStar is warranted. Second, even though VentureStar reusable 

launch vehicles are intended to be commercially owned and operated, 

government financial incentives may be needed to initiate such a venture. 

Third, the amount NASA would have to pay in additional development and 

production costs to enable VentureStar to carry people would need to be 

determined. Fourth, the need for and effect of additional flights would need 

to be considered. Because VentureStar would not carry as much cargo as 

the space shuttle, more frequent dockings are likely. This could reduce the 

amount of stable time available for some science operations. 

The design and management of the X-33 Program agreement reflect the 

intent of the National Space Transportation Policy. However, the extent 

that the program will achieve a cost reduction envisioned by that policy is 

unclear at this time. In our August 1999 report, we recommended that 

NASA establish performance targets and a clear linkage between the 

X-33 Program and the agency’s objective of reducing the cost of access to 

space. NASA concurred with our recommendation and stated that it would 

develop performance targets for the X-33 Program that (1) establish a clear 

path leading from the X-33 flight-test vehicle to an operational reusable 

launch vehicle and (2) show progress toward meeting the agency’s 

objective of significantly reducing launch costs. 

Background The X-33 will be a half-scale model of Lockheed Martin’s planned singlestage-to-orbit VentureStar, an operational vehicle that does not drop tanks 

and boosters along its flight path like today’s launch vehicles. Lockheed 

Martin’s and NASA’s roles and responsibilities on the X-33 Program, 
Page 3 GAO/T-NSIAD-99-243

including joint funding arrangements, were set forth in a cooperative 

agreement established in July 1996. 

NASA’s decision on whether and how to upgrade its shuttle fleet will 

depend, in part, on the results of the X-33 Program. The X-33 Program is a 

key part of NASA’s strategy to reduce launch costs from $10,000 per pound 

on the space shuttle to $1,000 per pound using reusable launch vehicles. If 

the X-33 Program is successful and Lockheed Martin decides to build 

VentureStar, the company plans to begin launching cargo-only flights 

starting in 2005 and passenger flights starting in 2007. Lockheed Martin 

estimates that it would cost $7.2 billion to build and begin operating two 

vehicles. NASA would be one of Lockheed Martin’s potential customers for 

the cargo-only flights and, at this time, is the only anticipated customer for 

passenger flights. The passenger flights would carry crewmembers to and 

from the International Space Station.

Technical Problems 

Have Resulted in 

Increased Cost, 

Schedule Delays, and 

Reduced Performance 

Objectives

The X-33 Program has experienced technical difficulties developing 

advanced technologies for three key components of VentureStar: the fuel 

tanks, engines, and the heat shield. For example, the first major technical 

problem arose during fabrication of one of the fuel tanks used on the X-33. 

Sections of the tanks are made by bonding together layers of composite 

materials. Difficulties were encountered in bonding two lobes onto a 

y-shaped joint in the left-hand tank. The affected sections were removed, 

and two new sections were fabricated and are being installed on the tank. 

The right-hand fuel tank did not experience such fabrication difficulties 

and is undergoing qualification tests at NASA’s Marshall Space Flight 

Center. As discussed in our August 1999 report, other technical problems 

were experienced while fabricating one of the exhaust ramps for the rocket 

engines and during fabrication of metallic panels used for thermal 

protection.

Resolving the technical problems increased both industry and government 

costs. As of March 1999, Lockheed Martin estimated that industry’s 

contributions to complete the X-33 cooperative agreement had increased 

by $75 million, from $211.6 million to $286.6 million. The company has not 

yet formally revised the industry team’s estimated contribution, but 

expects to do so within the near future. In addition, estimated government 

costs for NASA civil service personnel working on the program not 

included in NASA’s X-33 program budget also increased, from $95.2 million 

to $113.1 million. These personnel costs are for salaries, benefits, and 

support services for the government personnel working on the program at 
Page 4 GAO/T-NSIAD-99-243

various NASA centers; such costs will be paid out of another NASA budget 

account. 

In addition, the government will bear part of industries cost increases 

because Lockheed Martin and its partners are allowed to recover 

independent research and development expenses by including them as 

overhead in other government contracts. Potential government 

reimbursement of industry’s independent research and development costs, 

which is subject to an audit or review, is estimated at $161.2 million as of 

March 1999. As a result, after factoring in both this potential 

reimbursement and NASA personnel costs not included in the program 

budget, we believe a more accurate representation of the estimated 

government’s share of the X-33 Program is about $1.29 billion, while 

industry’s estimated share is $125.4 million.

Technical difficulties have also caused test flight delays. The problems 

encountered during fabrication of the engines and one of the fuel tanks led 

to a 16-month delay of the first test flight of the X-33 vehicle, from March 

1999 to July 2000. However, the program’s December 2000 completion date 

remains unchanged. Lockheed Martin has maintained the original X-33 

Program completion date by reducing VentureStar design and development 

work that the company had planned to accomplish. Although problems in 

fabricating the heat shield panels delayed delivery of the panels, this did 

not affect the first flight schedule because the schedule had already been 

delayed by the engine and fuel tank problems.

Technical problems and schedule constraints led Lockheed Martin and 

NASA to change two X-33 Program objectives and flight-test milestones. 

For example, the test flight speed objective was reduced from Mach2

 15 to 

Mach 13.8. According to Lockheed Martin and NASA X-33 program 

managers, the flight-test speed was reduced because the detailed design 

phase of the program determined that the vehicle’s projected weight would 

exceed design requirements and prevent it from reaching Mach 15. After 

reviewing the vehicle’s design and technical objectives for the flight tests, a 

panel of experts convened by NASA concluded that the flight-test technical 

objectives could be achieved at a lower speed. According to Lockheed 

Martin and NASA program officials, weight reduction measures have 

2

Mach numbers represent speed measured as units of the speed of sound, which is 741 miles 

per hour at sea level. For example, Mach 2 equals 1,482 miles per hour.
Page 5 GAO/T-NSIAD-99-243

already been incorporated into the preliminary design of the VentureStar to 

meet the vehicle weight requirements.

NASA Relies on Insight 

Gained by Working 

With Lockheed Martin

According to NASA program officials, the X-33 cooperative agreement 

establishes a partnership business relationship between NASA and 

Lockheed Martin, and changes to the agreement must be made bilaterally. 

The agreement assigns to Lockheed Martin responsibility for managing and 

implementing the X-33 Program but also permits substantial involvement of 

NASA personnel in performing various program technical tasks at NASA 

centers, under the direction of Lockheed Martin. However, NASA program 

managers ensure milestones are met before payments are made to 

Lockheed Martin. 

The cooperative agreement enables NASA to obtain information about the 

program as it happens. In traditional research and development contracts, 

such information is gained mostly after the fact; NASA sends personnel to 

contractor facilities to perform an extensive review of whether the 

contractor performed its assigned tasks in accordance with contract 

specifications. In contrast, under the X-33 cooperative agreement, 

technical personnel work side by side with personnel from Lockheed 

Martin and other industry partners. This ongoing involvement in the work 

enables NASA to obtain real-time and detailed insight into program 

activities. For example, NASA became aware of a significant problem with 

a fuel tank component only 1-day after the problem occurred.

Oversight is also performed by entities independent of the X-33 Program. 

For example, NASA’s Advisory Council performs periodic reviews of the

X-33 Program. Members of the Council are volunteers appointed by NASA; 

the Council reports to the NASA Administrator. At a recent meeting, 

Council members discussed concerns about (1) whether there was a clear 

growth path leading from the X-33 flight-test vehicle to an operational 

single-stage-to-orbit vehicle and (2) NASA’s lack of funding to pursue the 

shuttle/space station programs and single-stage-to-orbit development at the 

same time.
Page 6 GAO/T-NSIAD-99-243

Issues Facing NASA if 

VentureStar Is Used to 

Support the 

International Space 

Station

Before NASA decides to use VentureStar to support the space station, it 

will need to evaluate (1) whether adequate progress has been made in 

resolving the technical problems in developing an operational reusable 

launch vehicle; (2) what government financial incentives, such as loan 

guarantees, may be needed to assist in developing an operational fleet of 

VentureStars; (3) what NASA’s costs would be to build either two crew 

return modules or to modify VentureStar vehicles to carry crewmembers to 

and from the space station; and (4) what effect a larger number of 

VentureStar dockings would have on the operation of the space station and 

its science experiments because of VentureStar’s lower cargo capacity.

Establishing confidence that the X-33 Program results support reusable 

launch vehicle development will be important. In 1995, the Office of 

Science and Technology Policy, the Office of Management and Budget, and 

NASA jointly established criteria to be used in deciding whether the 

government should proceed beyond the X-33 Program to support 

development of an operational single-stage-to-orbit VentureStar. The 

specific technical criteria for proceeding beyond the X-33 Program include 

requirements that NASA and the industry team use a flight-test vehicle to 

demonstrate technologies that are scalable to potential single-stage-to-orbit 

reusable launch vehicle configurations−a vehicle whose components are 

launched and returned as a single unit.

Another issue NASA will face is determining the future financial incentives 

the federal government may need to provide before Lockheed Martin can 

begin building VentureStar. Government incentives could be needed to 

enable Lockheed Martin to secure affordable private sector financing of the 

estimated $7.2-billion cost of building two reusable launch vehicles and 

begin flight operations. Borrowing costs for the VentureStar might be 

relatively high because investors would require a high rate of return due to 

the technical risks inherent in building a new space-launch vehicle. 

Government incentives could take several forms, including loan guarantees 

or NASA-funded technology development efforts.

Lockheed Martin plans to build VentureStars that initially carry only cargo 

and begin flights in 2005. Lockheed Martin is designing the VentureStar 

primarily to meet the needs of commercial customers who want to launch 

satellites. However, because much of Lockheed Martin’s VentureStar 

projected revenues will come from servicing the International Space 

Station, the company is exploring design modifications that would enable 

the vehicles to carry four or five crewmembers. According to NASA’s X-33 
Page 7 GAO/T-NSIAD-99-243

program manager, if the agency chooses to use VentureStar to service the 

International Space Station, NASA would need to obtain either two crew 

modules, at an estimated cost of $900 million to $1.2 billion, to be carried in 

the VentureStar cargo bay or two crew transfer/return vehicles being 

developed for the International Space Station.3

NASA will need to determine the effect of VentureStar on space station 

operations if it chooses to use that vehicle to assume the space shuttle’s 

mission. For example, the agency’s projections show that more VentureStar 

flights would be needed because the space shuttle can carry heavier 

payloads. Additional flights would result in more docking and undocking 

operations, potentially disrupting scientific activities aboard the space 

station. The space station requires replenishment of supplies for science 

experiments as well as propulsion fuel, spare parts, food, water, and air. 

Periodic replacement of station crewmembers is also required. NASA 

currently plans to use an average of five shuttle flights per year to resupply 

the station and to have some of its international partners use an average of 

eight flights per year to supply the station on other launch vehicles. 

Additional resupply flights would likely be required to provide the people 

and materials needed to solve technical problems that may arise aboard the 

space station. Each space shuttle can carry 34,200 pounds of cargo, 

including up to seven people, to the space station. However, in servicing 

the International Space Station, a VentureStar vehicle would be able to 

carry 25,800 pounds of cargo or three to four people and a small amount of 

cargo. Also, NASA plans to use shuttle crewmembers on the resupply 

flights to perform maintenance of the station. According to NASA X-33 

program officials, a VentureStar vehicle would have to make two to three 

flights to provide as much cargo, as many people, or as much maintenance 

support to the space station as a single shuttle flight. The actual number of 

flights would depend on the mix of cargo, people, and maintenance 

operations required for a particular mission. 

3 The emergency return vehicle for the International Space Station crew is being considered 

as an alternative that would be attached to the exterior of the VentureStar.
Page 8 GAO/T-NSIAD-99-243

Progress Toward 

Meeting National 

Space Transportation 

Policy Goals

The design and management agreement of the X-33 Program reflect the 

goals and guidelines of the National Space Transportation Policy. Issued in 

August 1994, this policy establishes national policy, guidelines, and 

implementing actions for the conduct of national space transportation 

programs that will sustain and revitalize U.S. space transportation 

capabilities. Assuring reliable and affordable access to space through U.S. 

space transportation capabilities is identified as a fundamental goal. In 

support of that goal, the policy states that the U.S. government will 

promote the reduction in the cost of current space transportation systems. 

Relevant to the X-33 Program, the policy’s guidelines state that (1) NASA 

will be the lead agency for technology development and demonstration of 

next generation reusable space transportation systems, (2) the objective of 

NASA’s technology development and demonstration effort is to support 

government and private sector decisions by the end of the decade on 

development of an operational next-generation reusable launch system, 

and (3) it is envisioned that the private sector could have a significant role 

in managing the development and operation of a new reusable space 

transportation system. 

The X-33 partnership established between NASA and Lockheed Martin, 

Lockheed Martin’s proposed VentureStar, and NASA’s intent to acquire 

commercially provided launch services are indications that NASA is 

meeting the intent of the policy. However, the extent the X-33 Program will 

enable NASA to achieve cost reductions is unclear at this time and depends 

on the success NASA and Lockheed Martin achieve in resolving several 

challenges. These challenges range, in the short term, from implementing a 

successful test flight program that demonstrates needed technologies to, in 

the long term, moving ahead with a reusable launch vehicle such as the 

VentureStar that can meet both commercial and government needs in a 

timely and cost-effective manner. In this regard, adopting annual 

measurable objectives and performance targets that establish a clear path 

leading from the X-33 test flight vehicle to an operational reusable launch 

vehicle, as we recommended in our August 1999 report, will help ensure the 

program continues in that direction. NASA concurred with our 

recommendation. 
Page 9 GAO/T-NSIAD-99-243

Mr. Chairman, this concludes our statement. We will be happy to answer 

any questions you or Members of the Subcommittee may have.

Contact and 

Acknowledgement

For future contacts regarding this testimony, please contact Allen Li at 

(202) 512-4841. Individuals making key contributions to this testimony 

included Jerry Herley, Jeffery Webster, and Lorene Sarne.

(707448) Letr
Ordering Information

The first copy of each GAO report and testimony is free.

Additional copies are $2 each. Orders should be sent to the 

following address, accompanied by a check or money order made 

out to the Superintendent of Documents, when necessary, VISA and 

MasterCard credit cards are accepted, also.

Orders for 100 or more copies to be mailed to a single address are 

discounted 25 percent.

Orders by mail:

U.S. General Accounting Office

P.O. Box 37050

Washington, DC 20013

or visit:

Room 1100

700 4th St. NW (corner of 4th and G Sts. NW)

U.S. General Accounting Office

Washington, DC

Orders may also be placed by calling (202) 512-6000

or by using fax number (202) 512-6061, or TDD (202) 512-2537.

Each day, GAO issues a list of newly available reports and 

testimony. To receive facsimile copies of the daily list or any list 

from the past 30 days, please call (202) 512-6000 using a touchtone 

phone. A recorded menu will provide information on how to obtain 

these lists.

For information on how to access GAO reports on the INTERNET, 

send an e-mail message with “info” in the body to:

info@www.gao.gov

or visit GAO’s World Wide Web Home Page at: 

http://www.gao.gov
PAGE12 GAO/XXXX-98-??? NAME OF DOCUMENT
United States

General Accounting Office

Washington, D.C. 20548-0001

Official Business

Penalty for Private Use $300

Address Correction Requested

Bulk Mail

Postage & Fees Paid

GAO

Permit No. GI00