NASA audit reveals massive overruns in SLS mobile launch platform

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WASHINGTON — A new mobile launch platform that Bechtel is building for NASA will cost up to four times as much as originally planned and could push back the first launch of an upgraded version of the Space Launch System to the late 2020s, a NASA audit concluded.

The audit by NASA’s Office of Inspector General, published June 9, was sharply critical of both Bechtel and, to a lesser extent, NASA for cost overruns and delays in work on Mobile Launcher (ML) 2, which will be used for launches of the Block 1B version of the SLS starting with the Artemis 4 mission. The larger Block 1B cannot be accommodated on the existing mobile launch platform for SLS.

NASA awarded Bechtel a $383 million cost-plus contract in June 2019 to both design and build ML-2 for delivery to NASA in March 2023. That contract grew to $460.3 million by March because of “government-driven changes” that also pushed back delivery of the platform to January 2024.

The project has since suffered significant overruns and delays, though, revealed in the audit. As of February, Bechtel’s estimate of the cost at completion of ML-2 has increased to $960.1 million, or 2.5 times the original contract value. That estimate projects completing ML-2 in October 2025, after which more than a year of testing and other preparations is expected before it is ready for the Artemis 4 launch.

However, the audit noted that a joint confidence level analysis, which NASA uses to estimate the probability of completing a project at a set cost and schedule, projected only a 3.9% chance of completing ML-2 at the revised budget and schedule. Using the 70% confidence level that is the NASA standard for project estimates, an independent review team commissioned by the Kennedy Space Center concluded ML-2 would cost nearly $1.5 billion and not be delivered until November 2027. That would push the launch of Artemis 4, tentatively projected for 2027, to no earlier than the end of 2028.

The audit placed much of the blame for the overruns on Bechtel. More than 70% of the cost increase and 60% of the schedule delay “is related to poor contractor performance,” the audit stated.

“According to both NASA and Bechtel management, Bechtel underestimated the overall scope and complexity of designing and building the ML-2 at the onset of the project,” the report stated, significantly underestimating costs for equipment and supplies as well as labor hours. Bechtel also struggled with the weight of ML-2, with the original target weight of about 5.4 million kilograms exceeded by more than 400,000 kilograms as of January.

NASA also contributed to a lesser extent, the audit found. A lack of finalized requirements for the Exploration Upper Stage, used by the SLS Block 1B, contributed to some of the initial cost growth. NASA also “struggled to motivate and improve Bechtel’s performance using the award fee structure,” giving Bechtel nearly half of the $16.8 million in award fees it was eligible for through September 2021 despite problems with ML-2’s development.

Bechtel took issue with the audit’s conclusions. “Unfortunately, the Inspector General’s report does not provide a complete picture of what led to the current situation, and we strongly disagree with the report’s overarching conclusions on the primary causes of the cost increases,” a Bechtel spokesperson said in a statement to SpaceNews. The company had previously declined to comment on the project.

The company argued the audit “does not appreciate the significance of the impacts of necessary design changes” needed to support SLS Block 1B or the effects of the pandemic. It also claimed that the audit “wrongly attributes significant cost increases to poor project performance, including management of the mobile launcher weight,” which the company says it has resolved with NASA. The audit stated that NASA found additional margin in the crawler-transporter that carries the mobile launch platform, increasing its maximum capacity to just above the revised ML-2 weight.

NASA Administrator Bill Nelson expressed his frustration with ML-2 at a Senate hearing May 3. “Because Bechtel underbid on a cost-plus contract in order to, what appears, to get it,” he said, “they couldn’t perform. And NASA is stuck.”

Nelson said at the hearing that while he met with the chief executive of Bechtel, there was little the agency could do about the costs because of the nature of the cost-plus contract. “There’s no way, under the contract, since it’s a cost-plus contract, that we can do anything but eat it,” he said. “And that’s not right.”

Nelson used the agency’s experience with ML-2 to advocate for greater use of fixed-price contracts. The audit stated that NASA is investigating what parts of the ML-2 contract can be converted to a fixed-price structure.

“At this stage, it is too early to tell what impact these efforts will have on the ML-2 project’s cost and schedule,” the audit stated of overall recovery efforts for the contract. “In particular, while converting portions of the ML-2 contract to a fixed-price would reduce NASA’s risk and increase transparency, it is unclear whether Bechtel would agree to this approach nor is it clear if NASA could afford the high costs associated with this contract structure.”