NASA: Actions Needed to Improve Transparency and Assess Long-Term Affordability of Human Exploration Programs
Published: 2014-05-08T00:00:00

Fast Facts:

Highlights:
section_title: Why GAO Did This Study
paragraphs: NASA is undertaking a trio of closely-related programs to continue human space exploration beyond low-Earth orbit: the SLS vehicle; the Orion capsule, which will launch atop the SLS and carry astronauts; and the supporting ground systems. As a whole, the efforts represent NASA's largest exploration investment over the next decade, potentially as much as $22 billion, to demonstrate initial capabilities. Beyond 2021, NASA plans to incrementally develop progressively more-capable SLS launch vehicles complemented by Orion capsules and ground systems.
GAO was asked to assess the costs of NASA's human exploration program. This report examines the scope of NASA's preliminary cost estimates for the three programs. To conduct this work, GAO reviewed NASA information on cost estimates for the three programs, discussed the estimates with NASA officials, and assessed the estimates against best practices criteria in GAO's cost estimating guidebook as well as NASA's own requirements and guidance.
section_title: What GAO Found
paragraphs: The scope of the National Aeronautics and Space Administration's (NASA) preliminary cost estimates for the Space Launch System (SLS), Orion Multi-Purpose Crew Vehicle (Orion), and associated ground systems encompasses only the programs' initial capabilities and does not include the long-term, life cycle costs associated with the programs or significant prior costs:
The SLS estimate is based on the funding required to develop and operate the initial 70-metric ton variant through first flight in 2017 but not the costs for its second flight in 2021. NASA is now incurring some costs related to the second flight, but it is not currently tracking those costs for life cycle cost estimating purposes. Furthermore, the estimate does not include costs to incrementally design, develop, and produce future 105- and 130-metric ton SLS variants which NASA expects to use for decades. NASA is now funding concept development and analysis related to these capabilities.
The Orion estimate does not include costs for production, operations, or sustainment of additional crew capsules, despite plans to use and possibly enhance this capsule after 2021. It also does not include $4.7 billion in prior costs incurred during the approximately 4 years when Orion was being developed as part of NASA's now-defunct Constellation program.
The ground systems estimate excludes costs to develop or operate the ground systems infrastructure beyond 2017, although NASA intends to modify ground architecture to accommodate all SLS variants.
NASA expects to use this same limited scope of work to establish the programs' baseline cost estimates in 2014. According to NASA, the agency is developing a tailored definition for the programs' life cycle cost estimates as allowed by NASA requirements. Agency officials stated that NASA chose its approach in part due to uncertainties about the programs' end dates and missions beyond 2021.
GAO recognizes that defining life cycle costs can be difficult when uncertainties exist, and that best practices for cost estimating look favorably on evolutionary development. Even so, best practices expect that a high-quality cost estimate will account for program uncertainties, forecast a minimum and maximum range for all life cycle costs, and clearly define the characteristics of each increment of capability so that a rigorous life cycle cost estimate can be developed. According to these practices as well as NASA's requirements and guidance, life cycle cost estimates should encompass all past, present, and future costs for a program, including costs for operations, support, and disposal. The limited scope that the agency has chosen for constructing preliminary and baseline cost estimates, however, means that the estimates are unlikely to serve as a way to measure progress and track cost growth over the life of the programs. For example, cost growth on the current SLS variant could be masked as the addition of scope associated with work for future variants, and the baseline estimate would no longer be applicable. Insight into program costs helps decision makers understand the long-term affordability of programs—a key goal of the National Space Transportation Policy—and helps NASA assess management of its portfolio to achieve increasing capabilities as directed in the NASA Authorization Act of 2010.
section_title: What GAO Recommends
paragraphs: NASA should establish separate cost baselines that address the life cycle of each SLS increment, as well as for any evolved Orion or ground systems capability, among other actions to enable assessment of affordability and enhance oversight.
In commenting on a draft of this report, NASA partially concurred with GAO's recommendations, citing that actions taken to structure the programs and track costs met their intent. However, GAO believes NASA's responses do not fully address the issues raised in this report.

section_title: Letter
paragraphs: The National Aeronautics and Space Administration’s (NASA) Human  Exploration and Operations Mission Directorate (HEO) is undertaking a  trio of closely-related programs to continue human space exploration  beyond low-Earth orbit. These programs include the Space Launch  System (SLS) vehicle to launch astronauts and carry cargo into space,  the Orion Multi-Purpose Crew Vehicle (Orion) capsule that will launch  atop the SLS and carry the astronauts, and the Ground Systems  Development and Operations (GSDO) to support such activities as  assembly, test, and launch of the SLS and Orion. As a whole, the efforts  represent NASA’s largest exploration investment over the next decade  and may cost as much as $22 billion to demonstrate initial capabilities  that encompass the first SLS flight in 2017, the ground systems for that  effort, and the first two Orion flights in 2017 and 2021.
GAO has designated NASA’s management of acquisitions as a high-risk  area for more than two decades in view of persistent cost growth and  schedule slippage in the majority of its major projects. Last year we  reported that the agency had made progress in reducing risk on smaller- scale, less complex projects after years of struggling with poor cost  estimation, weak oversight, and risk underestimation. We also reported,  however, that demonstrating that this progress can be translated to  larger, more complex projects, such as SLS and Orion, will be especially  important in an era of constrained budgets and competing priorities.  Establishing an exploration program that will be affordable and  sustainable for the long-term is also a key goal of the 2013 National  Space Transportation Policy.
In light of these issues, you requested that we review the costs of NASA’s  exploration programs. Thus, we examined the agency’s preliminary cost  estimates for the SLS, Orion, and GSDO programs. Specifically, we  identified the scope of the cost estimates and assessed whether that  scope provided transparency into costs and enabled assessment of long- term affordability. This report provides the results of our review. In other  on-going work, we are performing a more in-depth assessment  addressing the credibility and reliability of NASA’s cost estimate for SLS.
To conduct this work, we reviewed NASA's preliminary cost estimates for  the SLS, Orion, and associated ground systems programs and  information related to the baseline cost estimates for the programs in  order to determine the scope of the estimates. We assessed the  estimates’ scope against best practices criteria outlined in GAO’s cost  estimating guidebook. We also discussed the estimates with NASA  officials, including the rationale for the estimates’ scope and exclusions to  that scope. We did not asses the reliability of the SLS, Orion, and GSDO  cost estimates.
We conducted this performance audit from March 2014 through May  2014 in accordance with generally accepted government auditing  standards. Those standards require that we plan and perform the audit to  obtain sufficient, appropriate evidence to provide a reasonable basis for  our findings and conclusions based on our audit objectives. We believe  that the evidence obtained provides a reasonable basis for our findings  and conclusions based on our objectives.
subsections: section_title: Background
paragraphs: The National Aeronautics and Space Administration Authorization Act of  2010 directed NASA to develop a Space Launch System as a follow-on to  the Space Shuttle and as a key component in expanding human  presence beyond low-earth orbit. The Act also directed NASA to continue  development of a multi-purpose crew vehicle for use with that system.that end, NASA plans to incrementally develop three progressively-larger  SLS launch vehicle capabilities—70-, 105- and 130-metric ton (MT)  variants—complemented by the Orion and supporting ground systems.
To  Figure 1 below illustrates NASA’s planned capabilities for the SLS, Orion,  and some of the related GSDO efforts.
These capabilities follow the agency’s previous attempt to develop a next- generation human spaceflight system, the Constellation program, which  was cancelled in 2010 when the program’s budget proved inadequate to  resolve technical challenges. The first version of the SLS being  developed is a 70-metric ton launch vehicle known as Block I. NASA  expects to conduct two test flights of the Block I vehicle—the first in 2017  and the second in 2021. The vehicle is scheduled to fly some 700,000  kilometers beyond the moon during the first test flight, known as  Exploration Mission-1 (EM-1), and to fly a second mission, known as  Exploration Mission-2 (EM-2), to test additional aspects of its  performance. After 2021, NASA intends to build 105- and 130-metric ton  launch vehicles, known respectively as Block IA/B and Block II, which it  expects to use as the backbone of manned spaceflight for decades.  NASA anticipates that these launch vehicles will require the development  of new systems to achieve the agency’s goals for carrying greater  amounts of cargo and traveling farther into space. The agency has not yet  selected specific missions for the increased capabilities to be provided by  Block IA/B and Block II but, in keeping with the language contained in the  2010 Authorization Act, anticipates using the vehicles for such deep- space destinations as near-Earth asteroids and Mars.
In concert with SLS, NASA expects to evolve the Orion and ground  systems. The agency plans an un-crewed Orion capsule to fly atop the  SLS during EM-1 in 2017, a crewed capsule during EM-2 in 2021, and  ultimately, at a date to be determined, a crewed capsule with capability  for such missions as a Mars landing. NASA is also modifying the existing  ground systems so that they can support the SLS Block I variant and  eventually accommodate the Block IA/B and Block II launch vehicles as  well as enhanced versions of the Orion crew capsule. For example,  NASA plans to add moveable floors to the vehicle assembly building at  Kennedy Space Center so that the three launch vehicle variants can be  more easily prepared for flight as the SLS capability evolves.
NASA established the preliminary cost estimates for the initial capabilities  of the SLS, Orion, and associated GSDO as each of these programs  entered the preliminary design and technology completion phase of  development, known as key decision point B (KDP-B). At KDP-B,  programs use a probability-based analysis to develop a range of  preliminary cost and schedule estimates which are used to inform the  budget planning for the programs. This phase culminates in a review at  key decision point C (KDP-C), known as program confirmation, where  cost and schedule baselines with point estimates are established and  documented in the agency baseline commitment. After this review,  programs are considered to be in the implementation phase of  development, and program progress is subsequently measured against  these baselines. NASA plans to hold the program confirmation review for  SLS in spring 2014 and expects to conduct the KDP-C review for GSDO  in May 2014 and Orion in December 2014. Because the life cycle costs of  these programs are expected to exceed $250 million, NASA is required to  report the programs’ baseline estimates to Congress once the programs  are approved to move into implementation. The agency provides this  information through its annual budget submission. NASA also uses the  annual budget submission to inform Congress about the preliminary cost  ranges for projects proceeding into formulation.
section_title: Limited Scope of Exploration Program Estimates Does Not Capture Life Cycle Costs
paragraphs: NASA’s preliminary cost estimates for the SLS, Orion, and associated  GSDO programs do not provide a complete picture of the costs required  to develop and operate the programs through the entire course of their  respective life cycles. These preliminary estimates include the funding  required for the scope of work related to initial capabilities—that is,  development and operations through 2017 for the SLS launch vehicle and  ground systems and through 2021 for the Orion. NASA also expects to  use this same limited scope of work to develop the SLS, Orion, and  GSDO baseline cost estimates. Moreover, NASA’s estimates do not  capture the cost of the second flight of the 70-metric ton vehicle during  EM-2, the costs of development work that will be necessary to fly the  increased 105- and 130-metric ton SLS capabilities, and the costs  associated with legacy hardware that will be used for the Orion program.  In contrast, best practices for cost estimation call for “cradle to grave” life  cycle cost estimates in order to help assess a program’s long-term  affordability.
subsections: section_title: Cost for Initial SLS, Orion, and GSDO Capabilities Totals up to $22 Billion
paragraphs: NASA’s preliminary cost estimates for the three programs’ initial  capabilities total a low-to-high cost range of approximately $19 to $22  billion. Table 1 below depicts the scope, including content and schedule,  of the SLS, Orion, and GSDO initial capabilities’ preliminary cost  estimates. As the SLS, Orion, and GSDO programs move from  formulation into implementation phases, NASA plans to use the same  content and scope for calculating the programs’ respective baseline cost  estimates.
section_title: NASA’s Estimates Do Not Include Life Cycle Costs
paragraphs: NASA’s preliminary cost estimates for SLS, Orion, and GSDO provide no  information about the longer-term, life cycle costs of developing,  manufacturing, and operating the launch vehicle, crew capsule, and  ground systems:
The SLS estimate does not cover the cost to build the second 70- metric ton vehicle and conduct EM-2 in 2021 with that vehicle. NASA  is already incurring costs for EM-2 because it is funding some EM-2  development in concert with EM-1 efforts, such as work on the solid  rocket boosters and core stage that are expected to help power the  70-metric ton SLS. NASA officials indicated at one point in our review  that they did not expect to begin formally tracking EM-2 costs until  after the SLS design’s maturity was assessed at a critical design  review scheduled for 2015; however, the agency stated in technical  comments to this report that it is tracking those costs for budget  purposes and plans to begin formally reporting them once SLS  reaches the project confirmation phase. Additionally, the SLS estimate  does not address the potential for costs NASA would incur to produce,  operate, and sustain flights of the 70-MT Block I capability beyond  2021. NASA officials stated that there are currently no plans to fly that  vehicle beyond 2021, but that the agency could reassess its decision  if a specific mission arises for the vehicle.
The SLS estimate also does not include costs to design, develop,  build, and produce the 105- or 130-metric ton Block IA/B and Block II  SLS variants that NASA intends to use well into the future. NASA  indicated that these variants will require new systems development  efforts—including advanced boosters and a new upper stage to meet  the greater performance requirements associated with larger payloads  as well as travel to Mars or other deep-space locations. NASA has  started funding concept development, trades, and analyses related to  these new designs, such as assessing the use of lightweight materials  to construct the upper stage and selective laser melting to produce  system components. In addition, NASA anticipates a re-start of the  production line for the RS-25 engine that it plans to use to power the  Block IA/B and Block II vehicles. Currently, the agency has enough  residual RS-25 liquid-fuel engines from the Space Shuttle program to  launch the SLS for up to 4 flights. NASA expects to need more of the  engines beyond that, but it has not yet finalized acquisition plans to  manufacture them.  According to agency officials, re-starting the  production line would entail at least 3 years, whereas development of  a new engine would require a minimum of 8 years.
The Orion estimate does not address costs for production, operations,  or sustainment of additional crew capsules after 2021 nor does it  address prior costs incurred when Orion was being developed as part  of the now-defunct Constellation program. NASA initiated the crew  capsule’s development in 2006 as part of the Constellation program.  During approximately 4 years that the capsule’s development  occurred under Constellation, the agency spent about $4.7 billion for  the capsule’s design and development. When Constellation was  cancelled in 2010 and the work transitioned to the current Orion  program, however, NASA excluded the Constellation-related costs  from Orion’s current preliminary cost estimate of $8.5 to $10.3 billion  through 2021.
The GSDO estimate does not address the costs to develop or operate  SLS ground systems infrastructure beyond EM-1 in 2017, although  NASA intends to modify ground architecture to accommodate all SLS  variants.
NASA officials have indicated that the road ahead involves many  decisions about the programs beyond 2021, including how development  will proceed, what missions will be performed, when the programs will  end, and how each effort will be managed. They noted that the agency is  using a capability-based approach to SLS, Orion, and the associated  GSDO development, in which system capability grows over time. They  indicated that the programs’ preliminary cost estimates are for attainment  of capabilities rather than the full cost of the programs, and that it is  difficult to define life cycle costs because the programs’ intended long- term uses and life spans have not been fully determined. According to  NASA, the agency is developing a tailored definition for life cycle cost  estimating that is allowed by NASA requirements. Because the missions  drive the number and types of vehicles, crew capsules, and ground  systems that would be required, as missions are defined, NASA officials  said they would be in a better position to estimate the programs’ life cycle  costs. The officials stated that NASA is looking ahead to future costs as  much as possible, and NASA indicated in technical comments to this  report that the SLS program plans to begin formally reporting costs for the  launch vehicle’s EM-2 after the program’s anticipated confirmation in  spring 2014.
We recognize that defining life cycle costs can be difficult when  uncertainties exist. However, in contrast to NASA’s tailored approach,  both widely-accepted best practices for cost estimation and the agency’s  own requirements support the need for full life cycle cost estimates. Even  when uncertainties exist, best practices maintain that a high-quality cost  estimate takes into account those uncertainties while forecasting the  minimum and maximum range of all life cycle costs. The best practices,  developed by the GAO in concert with the public and private sector cost  estimating communities, call for “cradle to grave” life cycle cost estimates  and maintain that life cycle cost estimates should provide an exhaustive,  structured accounting of all resources and associated cost elements  required to develop, produce, deploy, and sustain a particular program.  This entails identification of all pertinent cost elements, from initial  concept through operations, support, and disposal. Likewise, NASA’s  program management requirements direct that programs develop a  preliminary full life cycle cost estimate. In accordance with the agency’s  guidance regarding life cycle costs, such an estimate would encompass  total costs from the formulation through the implementation phase,  including design, development, mission operations, support, and disposal  activities.
According to best practices, because life cycle estimates encompass all  possible costs, they provide a wealth of information about how much  programs are expected to cost over time. Life cycle cost estimates,  including a range for preliminary costs as directed by NASA requirements  for programs in the formulation phase, enhance decision making,  especially in early planning and concept formulation of acquisition. High- quality cost estimates, as noted by best practices, can support budgetary  decisions, key decision points, milestone reviews, and investment  decisions. For example, a preliminary life cycle cost estimate provides the  basis of the financial investment that the agency is committing the  government to, while a baseline life cycle cost estimate forms the basis  for measuring cost growth over time. Because NASA expects to continue  with a limited scope for the SLS, Orion, and baseline estimates, however,  cost growth over time within the programs will be difficult to identify and  could be masked as growth in the SLS capability if the most current cost  estimate did not contain the same content as the baseline estimate.
As noted in best practices for cost estimating, the quality of a program’s  cost estimate is also key to determining its affordability, that is, the degree  to which a program’s funding requirements fit within an agency’s overall  portfolio plan. However, NASA’s preliminary cost estimates do not  address the affordability of increased capabilities because they exclude  the life cycle costs associated with the SLS Block IA/B and Block II launch  vehicles that the agency intends to use well into the future. According to  agency officials at the time of our review, NASA has not yet decided  whether it will manage the Block IA/B and Block II development efforts as  individual programs and, if so, what the programs’ scope would be. Best  practices for cost estimating look favorably on the incremental  development approach NASA has chosen for SLS, and they also state  that programs following such an approach should clearly define the  characteristics of each increment of capability so that a rigorous life cycle  cost estimate can be developed. In addition, we have previously  concluded that it is prudent for an agency to manage increasing  capabilities of an existing program on par with the investments yet to  come and in a way that is beneficial for oversight. For example, we have  recommended that agencies developing weapon systems in increments  consider establishing each increment of increased capability with its own  cost and schedule baseline. According to cost estimating best practices,  dividing programs into smaller pieces makes management and testing  easier and helps avoid unrealistic cost estimates, resulting in more  realistic long-range investment funding and more effective resource  allocation. These are important considerations given that NASA is likely to  spend billions of dollars beyond its initial investment of up to $22 billion to  develop the increased capabilities. Development of human-rated liquid- fueled engines, for example, has been among the most difficult, time- intensive, and costly parts of launch vehicle development. As a case in  point, NASA spent about 8 years and $1.5 billion to develop a human- rated engine known as J-2X for use on Ares launch vehicles within the  agency’s now-defunct Constellation program.
NASA has faced issues with affordability of its manned space flight  investments and other major projects in the past, and those affordability  issues have sometimes contributed to a program’s cancellation. For  example, NASA originally envisioned that the Space Shuttle would fly up  to 100 times per vehicle at a cost of $7.7 million per launch. In reality,  the Shuttle flew 135 times in total over a period of 30 years at a cost that  was about $3.5 billion per year around the 2008 timeframe. Amid  concerns that included the Shuttle’s costs and safety, the program ended.  NASA then focused on building human spaceflight alternatives that  included Constellation. In 2010, Constellation was canceled because, as  noted by NASA’s Administrator, the program could not return astronauts  to the moon at an affordable cost and would require far more funding to  make the agency’s approach viable. In a recent example noted in the  agency’s 2015 presidential budget request, NASA may place in storage  the Stratospheric Observatory for Infrared Astronomy, an airborne  observatory for studying astronomical objects and phenomena, after  spending some 23 years and more than $1 billion to develop the project.  The agency cited high operating costs, estimated at some $1.8 billion  over the project’s planned life, as a factor in its considerations.
section_title: Conclusions
paragraphs: The SLS, Orion, and GSDO programs NASA has established to fulfill its  mandate of providing the capability for transporting humans to space are  well underway. These programs represent a significant investment for the  country—as much as $22 billion for initial capabilities and potentially  billions more to field increased capabilities over time as envisioned in the  2010 NASA Authorization Act. Given the goals that have been outlined for  NASA as part of the National Space Transportation Policy, the success of  these programs is to be measured not only by the capability that is  achieved but also by NASA’s ability to achieve them within a reasonable  timeframe and cost to the U.S. taxpayer. As such, establishing these  programs with both near-term and long-term affordability in mind is key.  The limited scope that NASA has chosen to use as the basis for  formulating the programs’ cost baselines, however, does not provide the  transparency necessary to assess long-term affordability and will hamper  oversight by those tasked with assessing whether the agency is  progressing in a cost-effective and affordable manner. If the SLS, Orion,  and GSDO baseline cost estimates cannot be compared to current costs,  the baseline estimates lose their usefulness because they no longer  serve as a means to hold NASA accountable for cost growth and program  progress. Furthermore, if NASA does not clearly delineate costs for  operations and sustainment of the initial capabilities or separate cost and  schedule baselines for upcoming capabilities, then it will be difficult to  assess program affordability and for the Congress to make informed,  long-term budgetary decisions. Estimates that use all available  information to establish a potential range of costs for the full scope of  these upcoming capabilities can help inform such decisions.
section_title: Recommendations for Executive Action
paragraphs: To provide the Congress with the necessary insight into program  affordability, ensure its ability to effectively monitor total program costs  and execution, and to facilitate investment decisions, we recommend that  NASA’s Administrator direct the Human Exploration and Operations  Mission Directorate take the following 3 actions:
Establish a separate cost and schedule baseline for work required to  support the SLS Block I EM-2 and report this information to the  Congress through NASA’s annual budget submission. If NASA  decides to fly the SLS Block I beyond EM-2, establish separate life  cycle cost and schedule baseline estimates for those efforts, to  include funding for operations and sustainment, and report this  information annually to Congress via the agency’s budget submission.
Because NASA intends to use the increased capabilities of the SLS,  Orion, and GSDO efforts well into the future and has chosen to  estimate costs associated with achieving the capabilities, establish  separate cost and schedule baselines for each additional capability  that encompass all life cycle costs, to include operations and  sustainment. When NASA cannot fully specify costs due to lack of  well-defined missions or flight manifests, forecast a cost estimate  range — including life cycle costs — having minimum and maximum  boundaries. These baselines or ranges should be reported to  Congress annually via the agency’s budget submission.
Because a significant amount of the original Orion development work  occurred under the Constellation program, include those costs in the  baseline cost estimate for the Orion program.
section_title: Agency Comments and Our Evaluation
paragraphs: NASA provided written comments on a draft of this report. These  comments are reprinted in Appendix I.
In responding to a draft of our report, NASA partially concurred with our  three recommendations, citing among other reasons that actions already  in place at the time of our review such as establishing SLS, Orion, GSDO  as separate programs and a block upgrade approach for SLS—and  actions it plans to take to track costs—met the intent of our  recommendations. In most cases, the actions that NASA plans to take do  not fully address the issues we raised in this report. We continue to  believe that our recommendations are valid and should be fully addressed  as discussed below. NASA also provided technical comments which we  incorporated as appropriate.
NASA partially concurred with our first recommendation to establish a  separate cost and schedule baseline for work required to support the SLS  Block I EM-2, report this information to the Congress through NASA's  annual budget submission, and establish separate life cycle cost and  schedule baseline estimates for EM-2 if NASA decides to fly Block I  beyond EM-2. NASA also partially concurred with our second  recommendation to establish separate cost and schedule baselines that  encompass life cycle costs, including operations and sustainment, for  each additional SLS, Orion, and GSDO capability and to report cost  estimates for the capabilities annually via the agency budget submission  until key requirements are defined and baselines can be established.  In  its response, NASA stated that it had established separate programs for  SLS, Orion, and GSDO and adopted a block upgrade approach for SLS.  This approach, NASA stated, is in concert with best practices and NASA  policy. In addition, NASA indicated that it will establish cost and schedule  estimates for initial demonstration of the three programs as they enter  respective implementation phases and will begin reporting development,  operations, and sustainment costs for SLS Block I and subsequent  variants starting in fiscal year 2016 via its annual budget submission to  Congress. Finally, the agency stated that it intends to conduct design  reviews for upgraded SLS elements, including the upper stage and  booster, and set up cost commitments similar to what it has done for  Block I capability as part of that design review process, but that it does  not intend to establish life cycle estimates for SLS through the end of the  program because flight rates, mission destinations and other strategic  parameters are yet unknown.
As discussed in the report, best practices for cost estimating recognize  that NASA’s evolutionary development approach for SLS, Orion, and  GSDO helps reduce risk and provide capabilities more quickly. Given  NASA’s planned long-term use of the SLS, Orion, and GSDO, its block  upgrade approach and intention to conduct design reviews for each of the  planned upgrades will provide some understanding of the development  work and resources required. For example, such reviews are typically  expected to yield information about technical progress against  requirements. While NASA's prior establishment of SLS, Orion, and  GSDO as separate programs lends some insight into expected costs and  schedule at the broader program level, it does not meet the intent of our  first two recommendations because cost and schedule identified at that  level is unlikely to provide the detail necessary to monitor the progress of  each block against a baseline. Furthermore, it is unclear from NASA's  response whether the cost commitments the agency plans within the  design review process will serve the same purpose as establishing a cost  baseline for each respective upgrade.
Additionally, NASA's planned approach for reporting costs associated  with EM-2 and subsequent variants of SLS via its annual budget  submission only partially meets the intent of our first two  recommendations. Providing cost information at an early phase when  baseline estimates have yet to be established is helpful to ensure costs  associated with EM-1 and EM-2 are not conflated and funding  requirements for future flights of the Block I SLS and future variants are  somewhat understood. Reporting the costs via the budget process alone,  however, will not provide information about potential costs over the long- term because budget requests neither offer all the same information as  life cycle cost estimates nor serve the same purpose. Plainly, progress  cannot be assessed without a baseline that serves as a means to  compare current costs against expected costs. An agency’s budget  submission reflects its current annual fiscal needs and anticipated short- term needs up through an additional 4-year period for a particular  program, is subject to change based on fiscal negotiation, and is not  necessarily linked to an established baseline that indicates how much the  agency expects to invest to develop, operate, and sustain a capability  over the long-term. Conversely, life cycle cost estimates establish a full  accounting of all program costs for planning, procurement, operations and  maintenance, and disposal and provide a long-term means to measure  progress over a program’s life span. As NASA establishes parameters for  the additional flights of the first SLS capability and upgraded capabilities,  including flight rates, mission destinations, and other requirements, it will  be well-poised to move from reporting costs in budget submissions to  establishing baseline cost and schedule estimates for each capability and  reporting progress against these respective baselines. Therefore, we  continue to believe that NASA should baseline costs for EM-2 and each  future variant of SLS and report progress against those established  baselines.
NASA makes no specific mention of how it plans to account for future  work associated with Orion and GSDO.  We believe it is important to treat  Orion and GSDO with the same significance as SLS because this trio of  programs is expected to work in concert now and in the future to achieve  NASA’s goals for human space exploration. Reporting Orion and GSDO  development, operations, and sustainment costs in the annual budget  request, as NASA plans for SLS, would be a logical first step. Just as with  SLS, however, it will be important for NASA to establish and report  progress against baseline costs and schedules for each block of Orion  and GSDO efforts as flight rates, missions, and other strategic  parameters are defined because doing so will help the agency more  effectively manage not only each program but its human exploration  portfolio as a whole.
NASA partially concurred with our third recommendation to include the  costs of Orion development work under the Constellation program as part  of the baseline cost estimate for the Orion program. Agency officials  stated that they agree those costs should be tracked and disclosed, but  that the current Orion program has a new concept of operations,  requirements, and budget plan than that under the Constellation effort.
The past costs incurred for Orion’s development are important because  they provide visibility into the total cost of developing a crew capsule for  human space exploration.  Exclusion of these costs from Orion’s current  estimate understates how much NASA will invest to put humans into  space.  Although NASA notes that it has changed Orion’s concept of  operations and requirements, the agency nonetheless migrated Orion  critical technology development efforts from Constellation to the SLS  program. For example, NASA began efforts to develop the coating for  Orion’s heat shield as part of Constellation, and the agency continues that  development today in preparation for the capsule’s launch atop SLS.  Therefore, we continue to believe our recommendation to include Orion  development costs under Constellation in the baseline cost estimate for  the current Orion program is valid and should be fully implemented.
We are sending this report to NASA’s Administrator and to interested  congressional committees. In addition, the report will be available at no  charge on GAO’s website 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 chaplainc@gao.gov.  Contact points for our Offices of Congressional Relations and Public  Affairs may be found on the last page of this report. Other key  contributors to this report are listed in Appendix II.
section_title: Appendix I: Comments from the National Aeronautics and Space Administration
section_title: Appendix II: GAO Contact and Staff Acknowledgments
subsections: section_title: GAO Contact
section_title: Staff Acknowledgments
paragraphs: Key contributors to this report were Shelby S. Oakley, Assistant Director;  Tana M. Davis; John S. Warren, Jr.; Jennifer Echard; Laura Greifner;  Roxanna Sun; and Sylvia Schatz.