WASHINGTON — Northrop Grumman said it took a $36 million charge on its contract to build a module for NASA’s lunar Gateway, citing changing mission requirements and broader economic issues.
In the company’s fiscal second quarter financial results released July 27, the company announced an unfavorable estimate-at-completion adjustment of $36 million for its work on the Habitation and Logistics Outpost (HALO) module, one of the first elements of the Gateway. The company blamed the charge on “evolving Lunar Gateway architecture and mission requirements combined with macroeconomic challenges” that caused cost growth on the program.
Northrop received a $935 million fixed-price contract from NASA in July 2021 to build the module, which is based on the company’s Cygnus cargo spacecraft. HALO will provide initial living accommodations on the Gateway and includes several docking ports for visiting Orion spacecraft and lunar landers as well as additional modules provided by international partners.
In an earnings call, Kathy Warden, chief executive of Northrop Grumman, said earlier work on HALO to mature the design had been done on cost-plus contracts before the fixed-price contract two years ago to produce HALO.
“We think that is best applied for commercial items or production programs with stable requirements and mature designs,” she said of fixed-price contracts. “As it’s turning out on the HALO program, the requirements are not as stable as we or the government anticipated, and we’re working with them to address that change management as we go forward.”
Neither Warden nor the company elaborated on those changing requirements. The Gateway program has evolved significantly over the last several years, notably with NASA’s decision in 2020 to launch HALO and the Maxar-developed Power and Propulsion Element (PPE) together, rather than launching them separately and having them dock in lunar orbit.
“Overall, it was a good decision. It really burns down a lot of risk,” said Rick Mastracchio, director of business development at Northrop Grumman Space systems, of the decision to launch PPE and HALO together. “Bolting them together on the ground certainly greatly reduces risk.”
Speaking on a panel at the American Astronautical Society’s Glenn Memorial Symposium July 18, he noted that launching PPE and HALO together on a Falcon Heavy does present some challenges. “Putting the two vehicles on the one launch vehicle, mass became the top issue,” he said. “The team has been working on that for quite a while.”
“We all understood that there were going to be technical challenges associated with this level of change,” said Chris Coker, Maxar vice president for the Power and Propulsion Element, on that panel. He credited NASA for encouraging the two companies to work together “as true partners” to best integrate their respective modules.
Another challenge, Mastracchio said, is the lack of experience operating around the moon. “Building a permanent Gateway in cislunar space is a lot harder than it sounds,” he said. “We still have yet to understand the specifics of how to operate and design for cislunar space and the lunar surface.”