For FY 2013, NASA’s budget request for SLS was $1.340 billion and for Orion was $1.025
billion. After taking account of the final enacted FY 2013 appropriation, the effects of
sequester and rescissions, and some upward funding adjustments by NASA, the FY 2013
Operating Plan was $1.415 billion for SLS and $1.114 billion for Orion. NASA executed to
these funding levels for the balance of FY 2013.

NASA’s FY 2014 budget request for SLS was $1.385 billion and for Orion was $1.027
billion, as part of a balanced program in pursuit of the Nation’s highest priorities in science,
exploration, and aeronautics. The final FY 2014 appropriation was $1.600 billion for SLS
and $1.197 billion for Orion. NASA funded the programs at these levels.

Question 6:

Had the Administration chosen to fund the Orion program at the rate of the continuing
resolution rather than the rate of the President’s budget request, would the Orion program
have been able to purchase long-lead items? Please provide all records related to the
planning associated with the procurement of Orion long-lead items in FY 13.

Answer 6:

NASA has funded Orion at the previous year’s appropriated level for each of the Continuing
Resolutions enacted in FY 2013 through FY 2015. NASA has not used the pending
President’s budget request levels to set funding levels for Orion during these Continuing
Resolutions. NASA funded the Orion program at the rate of the previous year’s
appropriation during the FY 2013 Continuing Resolution. After taking account of the
enacted appropriation, and the effects of sequester and rescissions, NASA’s FY 2013
Operating Plan was $1.114 billion for Orion. Following enactment of the FY 2013
appropriation, the Orion program replanned and reprioritized the procurement of long-lead
items and the performance of other design and testing activities, which reduced
programmatic risk to the EM-1 mission.

We look forward to supporting the Committee in its oversight function and we are committed to
keeping the Committee fully informed on SLS and Orion progress as we move out to execute this
national priority.

Sincerely,

Goh lath

L. Seth Statler
Associate Administrator
for Legislative and Intergovernmental Affairs


Reply to Attn of:

National Aeronautics and Space Administration

Headquarters
Washington, DC 20546-0001

November 5, 2014

OLIA/2014-00657f:RI:MDK:amb

The Honorable Lamar Smith

Chairman

Committee on Science, Space,
and Technology

U.S. House of Representatives

Washington, DC 20515

Dear Mr. Chairman:

The Administrator asked that I respond to your letter of August 27, 2014, signed jointly with
Chairman Palazzo, requesting information regarding NASA’s Orion and Space Launch System
(SLS) programs.

We are pleased to report that NASA continues to make strong progress on the SLS and Orion crew
vehicle. NASA is focused on moving forward to accomplish the goals that have been established for
us by the Congress and the Administration. As the Committee is aware, SLS and Ground Systems
have completed critical design reviews and are now proceeding into development. A similar review
for the Orion crew vehicle is planned for the coming months, and Exploration Flight Test-1 (EFT-1),
the important initial test of Orion, is planned for December 4, 2014. In short, NASA is moving out
on the priorities that the nation has set for us

Responses to your questions regarding Orion and SLS are provided below. Your letter also requests
that the Agency produce records related to the budget request for SLS and planning associated with
procurement of Orion long-lead items related to the budget request. Records responsive to this
request concern budget formulation and constitute internal agency deliberations between NASA and
the Administration. Release of documents concerning internal agency deliberations would
compromise our ability to conduct internal deliberative evaluations to review a range of potential
plans against a range of potential budgets.

Question 1:

Please explain the $400 million risk being tracked by the SLS program, as indicated by
GAO’s most recent audit. Please provide historical assessments of this risk including when
it was first identified, how it has shrunk or grown, and what the per annum amortized
amounts would be through flight readiness in 2017.

Answer 1:
In August 2014, as part of the NASA life cycle review process, and in accordance with

Agency policy, the Agency approved the Space Launch System (SLS) to proceed into the
development phase (Phase C), and as part of completing the Key Decision Point-C (KDP-C)


milestone, approved the Agency Baseline Commitment for the SLS. This commitment
establishes a no-later-than launch readiness date for SLS for the Exploration Mission 1 (EM-
1) flight of November 2018 and a not-to-exceed development cost of $7.0 billion, at a 70
percent joint cost and schedule confidence level, to attain the first launch vehicle capability
of 70 metric tons to low Earth orbit.

As part of NASA’s process for managing programs within the Agency’s commitments, SLS
maintains an integrated technical and programmatic risk management system. One of the
discrete risks that SLS tracks in this system is Risk 11747, “SLS Vehicle Architecture
Closing on Cost and Performance.” The Program uses this risk to track the total potential
funding risk to its EM-1 launch readiness date. This risk is intended to capture the total
uncertainty around the Program receiving the level of funding required when it is needed.
This risk is not intended to predict specific years when the Program may or may not receive
funding consistent with program plans. Therefore, this risk is not phased by year in the risk
system. Nor is this risk intended to be predictive of what mitigation steps the Program might
undertake or propose if the risk were realized in a specific year (the reaction to which would
be determined by the extent of the funding disconnect and how the Program might re-phase
work and/or consider proposing a change to the launch readiness date).

Question 2:

Will NASA be able to fly the SLS for Exploration Mission — 1 in calendar year 2017? If it
will not, please explain what has changed since your testimony on April 24, 2013 and
whether, during your testimony on March 27, 2014, you were aware that this flight could be
delayed beyond calendar year 2017.

Answer 2:

NASA’s Space Launch System (SLS) has passed a number of significant milestones since
the Administrator’s testimony in early 2013, the most recent of which is Key Decision Point-
C in August 2014. In NASA’s program management process, KDP-C is the first point at
which the Agency commits to specific cost and schedule milestones — prior to KDP-C the
programs are still in formulation. For SLS, the Agency has made commitments to SLS
development costs no greater than $7.0 billion and a launch readiness date for EM-1 no later
than November 2018. While this date represents the Agency’s formal SLS launch readiness
commitment, established after a thorough review process, SLS has been, and remains, at this
time, on the internal planning readiness schedule that it has been executing to for three years.
The appropriations that SLS has received to date have enabled the program to effectively
manage risks to this internal planning date. We are continuing to evaluate schedule and
budget availability against both this internal planning schedule and the formal SLS launch
readiness commitment from KDP-C. The progress at the Michoud Assembly Facility is
good and B-2 Test Stand modifications are on track. If we determine that it is in the best
interest of the SLS program to modify the internal planning schedule, we will notify
Committee staff. The Agency remains confident that it can continue to meet the
commitment for an SLS launch readiness date no later than November 2018.

Question 3:

Do you stand by your testimony that stated “We have asked for...and stated over and over
that this is the amount of money that we need to deliver the SLS on the date and time that we
said, 2017 for the inaugural mission?” If you do not stand by this testimony, please explain


what has changed and how you would update this testimony to more accurately reflect the
program’s schedule.

Answer 3:

The Agency stands by the commitments it has made for SLS. Agency formal commitments
were made following a process based on best practices starting early in Program formulation
and culminating in Key Decision Point-C and approval to proceed into full development.
KDP-C takes into account both Program and independent assessments of the risk posture of
the Program, including both discrete risks and historical uncertainties. In its recent report,
the Government Accountability Office (GAO) recognized that NASA was following this
process and recommended that the Agency continue following best practices by making cost
and schedule commitments for SLS consistent with a joint cost and schedule confidence
level of 70 percent. NASA’s KDP-C commitments for SLS in August 2014 reflect this
recommendation. While KDP-C represents the Agency’s formal external SLS launch
readiness commitment, with a launch readiness date of November 2018, SLS remains, at this
time, on the schedule it has been executing to for three years.

Question 4:

What is the total in termination liability for the SLS program and how would relief from
NASA’s new interpretation of termination liability obligations affect the SLS and Orion
schedules?

Answer 4:

SLS carried $134.6 million in potential termination liability in FY 2014, and the Orion
Program carried $226.4 million. Termination liability generally decreases over the period of
performance of a contract as contracted work is completed, and ultimately decreases to zero
(i.e., all funds allotted to the contract are ultimately used for contract performance).
Termination liabilities for the SLS and Orion contracts for activities associated with
Exploration Missions 1 and 2 (EM-1 and EM-2) will decrease through the launches of EM-1
and EM-2. These contracts include the standard Federal Acquisition Regulation (FAR)
Limitation of Funds clause, under which it is the contractor’s responsibility to anticipate and
plan for any costs of termination within the total amount allotted to the contract by the
Agency.

Question 5:

Why did the Administration choose to fund the SLS and Orion programs at the President’s
budget request rather than higher rates appropriated under continuing resolutions? Please
provide all records (defined in attachment A) related to this guidance.

Answer 5:

NASA has funded SLS and Orion at the previous year’s appropriated level for each of the
Continuing Resolutions enacted in FY 2013 through FY 2015. NASA has not used the
pending President’s budget request levels to set funding levels for SLS and Orion during
these Continuing Resolutions.