NASA’s private-public partnership faces challenges

On 15 December, NASA administrator Charles Bolden announced that the agency plans to make multiple, competitively selected awards—using Space Act agreements—for the next phase of developing transportation to the International Space Station. NASA’s initial plan had been to select multiple contractors through a more standard contracting approach, in which the agency would have had more control over the development process. Bolden said the Space Act approach will allow NASA to retain a larger number of partners and to more easily adjust technical direction, milestones, and funding. The modified contracting arrangement was deemed necessary for “a period of high budget uncertainty,” when NASA is receiving less funding for the commercial space program than the Obama administration had requested.

Four companies—Blue Origin, Sierra Nevada Corp, Space Exploration Technologies, and Boeing—have been vying to develop crew vehicles under current Space Act agreements, which total $269 million. Unique to NASA, Space Act agreements are exempt from federal acquisition regulations (FARs), and they provide little opportunity for government officials to specify approaches and components or to oversee the process. NASA officials have argued that the prime contractor approach is too expensive given current budgets. Such an approach was used to develop and build the space shuttles, Apollo, and earlier generations of crewed space vehicles. For the current fiscal year, the administration had requested $850 million for NASA to develop a crew vehicle, which was reduced to $500 million. In November testimony, Bolden told the Senate Committee on Commerce, Science, and Transportation that the funding reduction will likely delay launch of the first flight to the ISS by one year, until 2017, assuming that additional funding becomes available in the years ahead.

In a report delivered 15 December to Representative Ralph Hall (R-TX) and Senator Jay Rockefeller (D-WV)—chairmen of the House Committee on Science, Space, and Technology and of the Senate Committee on Commerce, Science, and Transportation, respectively—the Government Accountability Office mistakenly predicted that NASA would employ a FAR-based contract, called the integrated design contract, for the next 21-month-long phase of the development program. The GAO report stated that a NASA legal analysis of the benefits and risks associated with the range of acquisition instruments available had determined that the agency would be unable to meet its human spaceflight safety requirements under Space Act agreements. But in its 15 December announcement, NASA said it now intends to delay the switch to a FAR-governed contract until the development, test, evaluation, and certification stage of the program, currently scheduled to get under way in 2014. The safety and performance requirements of the chosen spacecraft can be fully ensured during the certification phase, the announcement said.

Hall, however, expressed concern with the NASA decision. “The disadvantage of using Space Act Agreements is that NASA cannot impose its safety requirements as would be possible under a normal acquisition,” he stated. “Therefore, it is vitally important that NASA and its industry partners work cooperatively to ensure the highest level of crew safety, even in the absence of safety requirements.” Hall questioned NASA’s ability to continue sustaining the multiple contractors as budgets decline, and he proposed that the developers combine their efforts instead to produce a single launch system.

Rep. Eddie Bernice Johnson (TX), the Science committee’s ranking Democrat, also had reservations. “In light of NASA’s acknowledgement that higher risk will be incurred using this new approach, I am concerned that NASA’s plan does not appear to contain sufficient margins and other risk reduction measures to give Congress confidence that it has a high probability of successfully meeting the objective of providing safe and cost-effective commercial crew transportation to and from the International Space Station by 2016 or even 2017.”

In addition to the likelihood of further funding shortfalls, the GAO report warned that other challenges lie ahead for NASA’s crew vehicle plan. The report also noted that the demand for crew and cargo delivery to ISS may be too small, in itself, to attract competition from multiple companies for the 2014 phase of the program.