Blast Off!

When you are sitting in an office which has an orbit height of 400km; a maximum speed of 27,600 km/h you need to have confidence that someone has your back in terms of how the operations and maintenance of that “office” is going.

And so it it with a recent NASA Inspector General report into the management of the International Space Station operations and maintenance contracts.

Nearly every project that McLeod Governance has ever reviewed has said it is unique.  This particular project may just be right:

Many things taken for granted on Earth are not available in space, and safely operating the ISS and ensuring its crew has a sufficient supply of food, water, and oxygen requires precise planning and logistics.

As a context for the dollars that we are talking about:

The United States has invested almost $78 billion in the International Space Station (ISS or Station) over the last 21 years, and going forward, NASA plans to spend between $3 and $4 billion annually to maintain and operate the Station, including transportation for crew and cargo.

The structure of contractual arrangements within NASA precedes Neil Armstrong one small step:

NASA utilizes a variety of incentive contacts – including award-fee contracts – in which a predetermined amount of money is set aside for the contractor to earn based on its performance. Since the 1960s, NASA has used award-fee contracts to motivate contractor performance. An award fee is a pool of money a contractor may earn in whole or in part by meeting or exceeding predetermined performance criteria.

The largest contract is with

The Boeing Company (Boeing) for the design, development, test, and evaluation of hardware and software required to operate the Station.9 Boeing has been providing these services for 22 years under a cost-plus-award-fee contract that has grown in value to $17.7 billion.

As an overall observation the report notes:

NASA has taken a number of actions to control the operations and maintenance costs of the ISS Program, including openly competing contracts and eliminating some requirements from the Vehicle Sustaining Engineering and other contracts. Between FYs 2011 and 2015, the Program reduced these costs by $1.8 billion. However, given the unique operating environment of the ISS and the inherent challenge of operating at a flat operations’ budget of $1.3 billion beginning in FY 2018, it is unclear to what extent these strategies will result in future cost savings.

This is an interesting report that may not – of itself – add much to the genre.  Its importance, though, is to remind us that there is no project too big or too “unique” not to be reviewed:

To its credit, NASA has taken steps to reduce and control the operations and maintenance costs of the ISS, including competing contracts and eliminating some unneeded requirements. However, due to the unique operating environment of the ISS, in many cases the Agency continues to use incumbent contractors and obtain most services via cost-reimbursement contracts. We acknowledge the difficulty associated with contracting for ISS operations and urge NASA to continue to seek opportunities to control Station operations and maintenance costs, including revisiting the fixed-price option when appropriate.


Download PDF

Subscribe to Receive Our Email Updates

  • This field is for validation purposes and should be left unchanged.