One of the great controversies of the new space policy announced last year was the intent of NASA to turn over the transportation of cargo and crew to orbit to commercial industry. The first part of that effort, the Commercial Orbital Transportation Services (COTS) contract is expected to bear fruit soon, though problems with the Russians and ISS may delay things a bit for the first test flight by SpaceX, which may slip from late November into early next year. This program is for cargo only, and to date, it has been funded not through the traditional Federal Acquisition Regulations (FAR), but through what are called “Other Transactional Authority,” in this case Space Act Agreements (SAAs) between the agency and the commercial providers, in which fixed prices are paid for completed milestones, with no payment occurring until the milestone is complete (thus reducing risk to the taxpayer, who pays for performance, not time and material regardless of results). The approach has been very successful, allowing NASA to nurture a new capability at a cost a small fraction of what it would have been with a conventional cost-plus contract, based on the agency’s and Air Force’s own cost models.
For several months, NASA has been saying that it cannot use SAAs for the Commercial Crew contracts, and intends instead to procure the services under the FAR. This has caused a great deal of concern among the providers that this would skyrocket their costs of doing business. Over at Space Transport News, Clark Lindsey reports that they have indeed decided to go this route:
Despite protests from industry and several advocacy groups, NASA is going with the contracting method they decided several months ago to use. Instead of the Space Act Agreement approach used in the COTS cargo demonstration program, they will go with standard contracting but supposedly modified to reduce the huge overhead costs and intrusive interference in the running of projects at the companies that comes with it.
Here is the reason (sort of), according to the Space Access Society:
CCP management have stated that they must do it this way, because their lawyers told them they have to. In July they were asked repeatedly for the detailed legal brief from their lawyers, and also for the requirements they gave their lawyers that led to that brief. Months later, as best we know they still haven’t answered either question. We hope someone asks them again in the short-notice CCP briefing happening tomorrow, and we hope that this time CCP management provides real answers.
We suspect that won’t happen though, because our best guess is that the reason NASA’s lawyers told CCP management they have to dump the SAA’s that had been working well, in favor of a variant of traditional NASA (high cost) procurement, was because CCP management first told NASA’s lawyers “we must control the details.”
It’s an obvious circular argument, given both halves: “Our lawyers told us we have to use contracts that let us control all the details, because we told our lawyers it’s a requirement that we control all the details.”
All of which misses the basic fact that by their own admission NASA costs for “modified, streamlined” versions of their normal procurement process are still up to six times equivalent commercial costs.
Emphasis in original. I would encourage reading of the entire SAS post, which has an interesting discussion on the difference in cost between conventional NASA procurement and what they did on COTS.
Unfortunately, it’s not just a problem at NASA. The Senate has also gotten into the act, in their proposed appropriations bill today:
The bill includes $500 million for Commercial Crew, but only $307.4 million will initially be available. The remaining $192.6 million would be released only after NASA publishes “the notifications to implement acquisition strategy” for SLS and starts to execute “relevant contract actions in support of development of SLS.”
That is, it is holding some of the Commercial Crew funds hostage to make sure that NASA initiates wasting money on the Senate Launch System (which NASA formally announced this week) as soon as possible. But here’s the part relevant to the above discussion:
The same report section requires NASA to “develop and make available to the public detailed human rating processes and requirements to guide the design of all crew transportation capabilities” funded by NASA, be they government- or commercially-operated. It also directs NASA to limit its use of Space Act Agreements for future CCDev rounds, although NASA is already planning to move to contracts (incorporating some elements of such agreements) for the next CCDev procurement.
Emphasis mine, this time. Why the Senate wants to micromanage NASA in how to do procurement is an interesting question, and I hope we’ll find out in the near future. I hope it’s not an attempt by some staffers there to sabotage the program (if CCDev is successful, it would threaten major rice bowls such as the Senate Launch System).
Meanwhile, in light of all this, the Space Access Society has some questions for NASA, which it submitted on the feedback form today:
The rationale given for changing to FARS-based contracts for the Commercial Crew program seems to boil down to, NASA must ensure that the commercial crew transports that result meet NASA certification standards for transporting NASA personnel.
Why is it considered beneficial to impose on vulnerable-to-cost-and-schedule-increases commercial operations the increased costs and friction of the NASA oversight required to ensure that result, as opposed to the proven successful (in COTS) practice of relying on the commercial operators’ obvious strong interest in selling services to NASA as adequate incentive to meet applicable NASA standards?
Has an analysis of the extra commercial operation costs likely to be imposed by the planned new NASA FARS-based approach, versus the degree of extra assurance (if any) of meeting NASA certification standards likely to be produced by the new approach, been done? Was the increased likelihood of commercial failures due to increased costs and friction factored in?
If any such analysis was done, we request access to the contents and results.
When will those NASA certification standards be finalized and published?
Will further changes be then allowed in those standards before the completion of the CCP program?
If such further changes are allowed, by what process will NASA determine such changes? What, if any, opportunity will there be for review and feedback by the affected industry and the interested public?
I await answers as well.