In recent years and particularly in recent months, NASA has been excoriated on two counts: Space science projects have become very expensive and, on top of that, they are overrunning.

The facts are incontrovertible; however, the excoriation shows a fundamental lack of understanding — besides being unfair.

The large cost of current projects is simply the result of the historical fact that the simple and relatively easy exploration has been done. After the Moon, if we want to make significant progress our spacecraft must reach Mars, then Jupiter and beyond. Every time a few hundred million kilometers of distance is added, the difficulties and the costs increase.

One may consider the latest target of the excoriation: the James Webb Space Telescope (JWST). Its cost, at least $6.5 billion, is due to the difficulty of building a very large mirror (6.5 meters) and placing it far from Earth for operation at cryogenic temperatures. The size is not arbitrary; rather it is determined by the fact that what can be detected with smaller mirrors (e.g., the 2.4-meter Hubble Space Telescope) has already been observed. The location of the observatory and its distance from Earth are also not due to whim; they are optimized for a range of wavelengths in the infrared region of the electromagnetic spectrum, and this range, in turn, is selected to reveal what is not observable in the visible.

Since the aperture of JWST is more than seven times that of the Hubble Space Telescope and factoring a quarter of a century of inflation, the cost of JWST per unit area of the mirror is only about one-quarter of that of Hubble, without even accounting for the greater distance from Earth and the temperature of operation.

As noted earlier, the least expensive observations have been made in years past and the advances of space science and knowledge, which by common recognition have been spectacular and often breathtaking, become more costly as the areas of investigation mature.

This is not much different from the fact that a good portion of the increasing cost of oil, for example, is due to the historical fact that many of the easily accessible basins have been drilled and drained. The next barrel must be sought from a greater depth.

Now, about overruns. Generally, cost growth of space science projects is demonstrably not due to fraud and waste. Even the recent report by the Independent Comprehensive Review Panel, not a particularly friendly review, confirmed that the JWST project, throughout its history, has been managed wisely, has spent appropriately and has achieved successful development of new and difficult technologies. The review — both independent and comprehensive — was performed at the behest not of NASA but of Congress, and found neither fraud nor incompetence.

So, why overruns?

Overruns are the result of rational decision-making under the current federal system of procurement that — perhaps unwittingly — strongly incentivizes overrunning.

Generally, a project succeeds through the initial approval process (all the way through Congress) only if the estimated cost is based on “optimistic assumptions.”

When one accumulates even only a dozen independent assumptions, each with an optimistic probability of success, let’s assume, of two-thirds, one can calculate that the probability of overrunning exceeds 99 percent.

Once a project has passed certain critical decision points and has spent a few hundred million dollars, generally it is not terminated — for many technical, practical and political reasons.

Although cost performance on past projects can be among the factors used in the evaluation of proposals, it is not used as a discriminator.

No individual, whether government or contractor employee, has been dismissed specifically for overrunning. A few changes and lateral transfers have occurred, but salaries and pensions continued to be paid unfailingly.

When the overrunning project is technically and scientifically successful, as is often the case, the success is celebrated joyfully, while the overrun is perfectly forgotten by all.

Hence, with some simplification, the incentives are in place for rational individuals to first minimize the cost estimate in order to obtain project approval and then to overrun the estimate in order to achieve the goals that were set.

The remedy is to disincentivize overruns and incentivize cost control. The details on how to accomplish this must be designed carefully for each project to reverse the conditions listed above and establish rewards for cost control. This is not rocket science: It is widely practiced in commercial contracts and is at the core of the bonus systems of the better-managed commercial firms.

In the last year or so, review bodies have recommended that cost performance incentives be adopted for space science projects.

When this is done, the temptation to implement penalties must be overcome. Overruns are the product of generally honest individuals making rational decisions in a faulty system; therefore, penalties would be detrimental and counterproductive.


Giulio Varsi, now retired, served as deputy assistant associate administrator for technology in NASA’s Science Mission Directorate in Washington.