NASA and its international partners—Japan, Canada, the European Space Agency, and Russia—are building the space station as a permanently orbiting laboratory to conduct materials and life sciences research, earth observation and commercial utilization, and related uses under nearly weightless conditions. Each partner is providing station hardware and crew members and is expected to share operating costs and use of the station. The NASA space station program manager is responsible for the cost, schedule, and technical performance of the total program. The Boeing Corporation, the prime contractor, is responsible for development, integration, and on-orbit performance of the station. By the end of 1997, the United States and its partners had produced well over 358,000 pounds of space flight hardware, of which the prime contractor was responsible for about 260,000 pounds. According to NASA, by the end of 1998, virtually all flight hardware for the first six flights will have been delivered to Russian or American launch sites. In June 1995, we reported that the U.S. funds required to design, launch, and operate the space station would be about $94 billion—over $48 billion to complete assembly and almost $46 billion to operate and conduct research. That total included $17.4 billion for station development activities, $13 billion for operations, and $50.5 billion for shuttle launch support during assembly and operations. Our report also noted that the program’s funding reserves were limited and that the launch and assembly schedule would be difficult to achieve. Since June 1995, total space station cost estimates have increased from $93.9 billion to $95.6 billion (see table 1). In particular, the development cost estimate has increased by more than 20 percent, in-house personnel requirements have increased dramatically, and eight shuttle flights have been added to the development program. However, the shuttle support cost, as of April 1998, is less than that of June 1995 because NASA is projecting a significant reduction in the average cost per flight. The higher development costs—$21.9 billion versus $17.4 billion—are attributable to schedule delays, additional prime contractor effort not covered by funding reserves, additional crew return vehicle costs, and costs incurred as a result of delays in the Russian-made Service Module. In June 1995, NASA expected to complete assembly in June 2002. Partially due to delays in the Russian program, the last flight in the assembly sequence is now scheduled for December 2003, a delay of 18 months that has increased development costs by more than $2 billion. Also, NASA has undertaken activities such as developing the Interim Control Module to mitigate delays in the delivery of the Service Module. These activities are estimated by NASA to cost more than $200 million. It should be noted that our estimate includes the cost of the Russian Space Agency contract, which NASA does not include in its portrayal of station development funding needs. The increased in-house personnel costs during development—$2.2 billion versus $0.9 billion—are attributable to a longer development program, higher estimated personnel levels, and a more inclusive estimating methodology. Our June 1995 estimate was based on a development program scheduled to end in June 2002 while our current estimate includes an additional 18 months of effort. In addition, our prior estimate was based on an average of 1,285 civil service staff annually. NASA’s budget now estimates that about 2,000 staff per year will be needed during development. The increased staffing levels are attributable largely to the inclusion of science and crew return vehicle personnel into the station budget, which in most cases were previously covered under the Science, Aeronautics and Technology budgets. Finally, our current estimate is based on an allocation of all research and program management costs to the station program, while the previous estimate did not include all components of that budget line. Regarding shuttle support, our 1995 estimate was based on 35 flights during development and 50 during operations. However, NASA now estimates 43 flights during development, including 2 additional flights to the Russian space station Mir, 1 flight to test the crew return vehicle, and flights required by changes to the assembly sequence. NASA continues to estimate that 50 flights will be needed during operations. However, NASA’s estimate of average cost per flight is now lower, resulting in a shuttle launch support cost of $17.7 billion during assembly, essentially the same cost as estimated in 1995, despite the increased number of flights. During operations, the estimated cost for shuttle support is now significantly less—$25.6 billion versus $32.7 billion—based on the same number of flights. NASA’s estimated reduction in the average cost per flight is based on its expectation that program efficiencies and other cost savings will be achieved and sustained throughout the operating life of the space station. If that expectation is not realized, the cost for shuttle support will increase. A number of potential program changes could significantly increase the current estimate. First, the development costs shown in table 1 would increase if the assembly complete milestone slips beyond December 2003. Second, it is likely that the program will ultimately require more shuttle flights than are included in our analysis. Finally, NASA is now considering modifying space shuttle Columbia to permit its use for some station missions. A recent independent assessment by NASA’s Cost Assessment and Validation Task Force suggests that the program’s schedule will likely experience further delays and require additional funding. We believe NASA and its partners face a formidable challenge in meeting the launch schedules necessary to complete assembly. Those schedules depend on the launch capacity in the United States and Russia and the program’s ability to meet all manufacturing, testing, and software and hardware integration deadlines. Through December 2003, over 90 launches by NASA and its international partners will be needed for assembly, science utilization, resupply, and crew return vehicle purposes. During this period, NASA’s shuttles are currently scheduled to be flown up to 9 times a year for both station and nonstation needs, and Russia will have to average 9 to 10 launches a year to accommodate its station commitment. While these rates have been achieved in the past, a January 1998 NASA study of personnel reductions at Kennedy Space Center concluded that, without additional processing efficiencies, the required shuttle flight rate may not be supportable. If NASA is unable to maintain the planned flight rate, the station assembly schedule could experience further slippage. Also, recent Russian annual flight rates to support the Mir space station have been significantly lower than the required rate to support space station assembly. The assembly schedule also assumes that further critical manufacturing delays will not occur. According to NASA’s Aerospace Safety Advisory Panel’s 1997 annual report, the program’s schedule is at risk due to software, hardware, and testing issues. The report states, in part, that the “. . . software development schedule is almost impossibly tight. If something else does not cause a further delay in (station) deployment, software development may very well do so.” Further, the report pointed out that the crew return vehicle development schedule is “extremely optimistic,” noting that any delays in the availability of the vehicle could constrain station operations. In addition, the panel stated that, while integrated testing is a “very positive step for safety,” there is no room in the current schedule for required changes that may be discovered during this testing. Delays in the development program would increase costs because, at a minimum, fixed costs such as salaries, contractor overhead, and sustaining engineering would continue for a longer period than planned. Assuming NASA would continue to spend at the rate assumed in its current estimate for fiscal year 2003, the program would incur additional costs of more than $100 million for every month of schedule slippage. The program could require more shuttle flights than are baselined in our estimate. For example, the baseline does not include additional flights that may be needed for crew return vehicle testing and launches and some resupply flights. While some of these possibilities are subject to program changes that have not been adopted, it appears that the costs associated with launching the crew return vehicle are not included. Depending on the ultimate life expectancy of that vehicle, two additional flights could be needed. On the basis of NASA’s estimate of average cost per flight for the shuttle, this could add about $1 billion to the total estimate. According to NASA, sustaining engineering costs associated with the crew return vehicle will have to be absorbed by the program’s operations budget. Also, NASA is reviewing alternatives for making Columbia capable of supporting the station. A modified Columbia could be used as a backup (in the event one of the other orbiters is out of service) or as a delivery vehicle for cargo. Between November 1997 and April 1998, an independent cost assessment and validation team examined the program’s past and projected performance and made quantitative determinations regarding the potential for additional cost and schedule growth. Reflecting many of the same areas we identified, the team cited complex assembly requirements and potential schedule problems associated with remaining hardware and software development and concluded that the program could require an additional $130 million to $250 million in annual funding. The team also indicated that the program could experience 1 to 3 years of schedule growth beyond the currently anticipated completion date of December 2003. The estimate we derived in 1995 and our latest estimate include those costs related to the space station’s development, assembly, and operations. They do not include potential costs that may be incurred to satisfy NASA’s space debris tracking requirement. Due to its large size and long operational lifetime, the space station will face a risk of being struck by orbital debris. NASA plans to provide shielding against smaller objects and maneuver the station to avoid collisions with large objects. The National Space Policy requires NASA to ensure the safety of all space flight missions involving the space station and shuttle, including protection against the threat of collisions from orbiting space debris. However, NASA has no surveillance capability and must rely on the Department of Defense (DOD) to perform this function. As mentioned previously, NASA updated its overall requirement for space debris tracking as it relates to supporting the space station, to include the ability to track and catalog objects as small as 1 centimeter.