Budget Uncertainty Alters NASA’s Commercial Procurement Strategy

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WASHINGTON — Budget woes have prompted NASA to modify its plans for funding development of commercial crew taxis. The agency announced Dec. 15 that it will continue using flexible Space Act Agreements instead of shifting to more-traditional fixed-price contracts.

NASA had planned to release a request for proposals Dec. 19 for the Commercial Crew Integrated Design Contract, a 21-month effort intended to get at least two competing spacecraft designs ready to enter production.

NASA’s human spaceflight chief, William Gerstenmaier, told reporters during a Dec. 15 teleconference that budget concerns drove the agency to keep using funded Space Act Agreements — which impose fewer administrative burdens on the contractor and limit government oversight — to pursue the same goal: taking two or more competing concepts through critical design review by mid-2014.

But even with Space Act Agreements, which commercial space advocates say can deliver faster results for less money, Gerstenmaier said he does not expect a new U.S. crew vehicle to enter service before 2017. That is about a year later than NASA projected during the summer when Congress was still considering a budget request that included $850 million for the Commercial Crew Program for 2012.

Gerstenmaier said that the $406 million Congress ultimately approved as part of a broader $17.8 billion NASA budget will go further if it is spent on flexible, milestone-driven Space Act Agreements rather than more traditional contracts subject to the Federal Acquisition Regulation (FAR).

“We think with the Space Act we can carry more providers through this period,” Gerstenmaier told reporters.

NASA Administrator Charles Bolden said in a Dec. 15 announcement that changing procurement tactics “will allow us to preserve competition as we maintain our momentum to provide a U.S.-based commercial crew launch capability at the earliest possible time.”

NASA is counting on the Commercial Crew Program to end the United States’ dependence on Russia for ferrying astronauts to and from the international space station at some $63 million a seat. NASA’s current contract with the Russian Federal Space Agency runs through June 2016.

NASA Commercial Crew Program officials plan to hold a webcast briefing the week of Dec. 19 to provide more details about the revised acquisition strategy. Gerstenmaier said NASA intends to award multiple Space Act Agreements next summer, which is the same time frame the agency gave industry for awarding one or more fixed-price Commercial Crew Integrated Design contracts.

“In the current budget environment … it’s really tough to lock into a firm-fixed-price contract with a number of providers that can keep us moving forward,” Gerstenmaier said. “We decided that to help with that uncertainty, we could do a Space Act activity which has individual milestones, and each one of those milestones can be incrementally approved so it gives us some flexibility from a budget standpoint.”

NASA’s announcement coincided with the release of a Government Accountability Office (GAO) report praising NASA’s use of firm-fixed-price, performance-based contracts for Commercial Crew but questioning whether NASA could afford to fund more than one contractor under the budget Congress approved in November. The GAO advised NASA to reassess its procurement approach in light of the agency’s budget challenges.

NASA is heading into 2012 with a budget $648 million smaller than 2011 and nearly $1 billion below what it requested. Although NASA’s 2013 budget request is embargoed until February, U.S. aerospace industry officials are bracing for further cuts.

NASA in April awarded Space Act Agreements totaling $270 million — since increased to $315.5 million — to Blue Origin, Boeing, Sierra Nevada Space Systems and Space Exploration Technologies (SpaceX) to refine their commercial crew concepts and test key technologies in preparation for a more intensive design phase.

In July, NASA Commercial Crew Program officials said Space Act Agreements were ill-suited for the upcoming integrated design phase and that they would be switching to fixed-price, FAR-type contracts.

NASA’s about-face, then and now, drew a mixed reaction.

“This announcement was one small step for commercial crew, and one giant leap for common sense,” said Michael Gold, director of operations for Bigelow Aerospace, the North Las Vegas, Nev.-based company developing inflatable space habitats.

SpaceX President Gwynne Shotwell also praised NASA’s decision. “Given budget realities, NASA and domestic space companies need to innovate more than ever,” she said in a Dec. 15 statement. “We applaud NASA’s decision to use Space Act Agreements for the next round of commercial crew and look forward to the competition.”

Rep. Ralph Hall (R-Texas), chairman of the House Science, Space and Technology Committee, questioned the implications of NASA’s decision.

“The disadvantage of using Space Act Agreements is that NASA cannot impose its safety requirements as would be possible under a normal acquisition,” Hall said in a Dec. 15 statement.

Gerstenmaier acknowledged this limitation. “[A]lthough we can’t specify the exact requirements … we still get a lot of insight into what they’re doing. We can see how their designs are progressing, but we just can’t formally interact with them,” he said.

Hall also said he is concerned about NASA’s ability to afford funding multiple, competing efforts.

“Time is of the essence. We need to be able to fully utilize our Space Station until the end of this decade, and we also need to end our reliance on other countries to ferry our astronauts,” Hall said. “In order to reduce risk and cost, and to minimize further schedule slips, it would be my hope that two commercial companies would team together to jointly develop a cost-effective and safe launch system.”

Boeing spokeswoman Susan Wells said NASA’s procurement strategy is less important than “ensuring the aggressive implementation of a safe, |reliable and cost-effective |capability.”

“Our hope is that NASA balances the desire to maintain a large number of partners with the urgency to adequately support the International Space Station with a domestic transportation capability by 2015,” Wells wrote Dec. 15 in an email to Space News.

 

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