There has been a great deal of concern over the past few months among the potential providers of crew services to NASA over their stated plans to shift the efforts of the Commercial Crew Program from successful Space Act Agreements, that had been so successful in the Commercial Orbital Transportation Services program, to a more traditional procurement approach. Under the Space Act Agreements, the providers had the flexibility to come up with their own solutions without a lot of NASA oversight, and were only paid when they actually achieved the specified milestones, reducing risk for the taxpayer. However, NASA was concerned that this approach wouldn’t provide them with sufficient assurance that they would get systems designed to meet their exacting safety and mission-success requirements for transport of astronauts to the International Space Station, and they had accordingly decided to move to a standard (though still fixed price) contract under the Federal Acquisition Regulations (FAR) for the next phase of the program. Many in the industry objected, fearing that this would increase both development and operational costs not only for NASA flights, but commercial ones as well. In fact, Elon Musk, CEO and founder of one of the leading potential providers, went so far as to threaten to withdraw from the program if NASA pressed forward with the change. Nonetheless, NASA had announced that it would be issuing a Request For Proposal (RFP) on Monday under the new procurement rules for the program, with planned selection and awards next summer.
Well, Mr. Musk won’t have to make good on his threat for now. This morning, Bill Gerstenmaier, NASA’s Associate Administrator for Space Operations, announced in a press conference that that the RFP wouldn’t be released on Monday, and that the agency has decided to stick with the Space Act Agreements for the next phase of the program, for almost the next two years. In response to questions from the press, he said that NASA hadn’t changed its mind as a result of industry pressure, but rather because they hadn’t gotten as much funding as they had anticipated when making their original procurement plans earlier in the year. NASA had requested $850 million for the program for 2012, but in its “minibus” appropriations bill last month, Congress gave the agency less than half of that, only $406 million. Gerstenmaier, of course, made sure to thank Congress for what it had provided, noting that it was more than they had ever had for the program, and that earlier versions of the bill had less (in one case, zero).
NASA has always expressed its desire to continue forward with multiple contractors, to maintain competition and to help establish a robust industry, but many had feared that the reduced amount would result in an earlier “necking down” in the selection process, perhaps resulting in moving forward with only a single provider (in fact, that had been a suggestion in the appropriations language from Congress). According to Gerstenmaier, the decision to stick with Space Act Agreements was their solution to this problem, because it gave them more flexibility in a time of “a dynamic budget environment,” and would allow them to carry at least two, and hopefully more providers forward for the next couple years.
When asked why, after all their previous rationale that they had to switch to FAR-based contracts for the next phase it had suddenly become acceptable to stick with SAA, he responded that some of their concerns had been alleviated by their recent release of certification requirements for the program, and industry response to them. While NASA recognized some increase in risk that they wouldn’t get what they expected in terms of mission assurance and safety, they felt that the requirements mitigated it sufficiently to allow them to move toward a Critical Design Review under SAAs, after which a shift to a standard FAR approach would be required for the certification and operations phase of the program. Contractors would remain free for the next couple years to continue to come up with their own “innovative and creative” approaches to program problems.
It’s not a complete recovery from the funding shortfall, though. NASA estimates that first operational flight has slipped from 2016 to 2017 as a result of the new direction, which means that the $450 million saved next year will have to be paid out then for another year of semi-annual Soyuz flights in the spring and fall. That also means that they’ll have to get another waiver from Congress for the Iran/Syria/North-Korea-Non-Proliferation Act (INKSNA) because the current one expires at the end of 2016, and the Russians will presumably remain in violation of it with their continuing aid to Iran’s nuclear and missile programs. Of course, SpaceX believes that it can fly a year or two earlier than that. But Boeing, and especially SpaceX, Sierra Nevada, and Blue Origin should be feeling relieved that they can continue at their current rapid pace for now and not get bogged down, at least yet, in traditional contracting bureaucracy.