NASA inspector general criticizes additional Boeing commercial crew payments

WASHINGTON — NASA paid Boeing nearly $300 million more than originally planned in its commercial crew contract in part because of agency concerns that the company might drop out of the program, a new report claims.

The Nov. 14 report on the commercial crew program by NASA’s Office of Inspector General (OIG) highlighted several issues with the commercial crew program that, it warns, could hinder NASA’s ability to access and utilize the International Space Station in the near future.

While some of those issues, like ongoing delays with development of commercial crew vehicles and potential loss of access to the station when Soyuz seats run out, are not new, the report highlighted a change to Boeing’s contract that the OIG concluded was largely unnecessary.

According to the report, Boeing proposed in September 2016 prices for four “post-certification missions,” or PCMs, of its CST-100 Starliner vehicle that NASA originally rejected as too high, based on a table in the original contract that set prices based on the number of missions ordered and the date ordered.

NASA instead requested Boeing “propose prices for additional flexibilities to fill an anticipated crew access gap, including shortening its lead times for rocket and spacecraft production,” the report states. After what OIG described as “prolonged negotiations,” NASA agreed to pay Boeing an additional $287.2 million for those mission flexibilities.

The OIG report concluded that much of those payments were not necessary, since there were other methods to provide schedule flexibility to mitigate gaps in crew access to the station. The report specifically notes that, five days after NASA agreed to the additional payment to Boeing, the company submitted a proposal to NASA offering to sell five Soyuz seats it has acquired from Russian company RSC Energia for $373.5 million.

The report concluded NASA’s payment of $144 million to accelerate the timetable for two of the four Starliner missions was unreasonable, and that it overspent by $43 million when it granted Boeing authorization to proceed on one Starliner mission a year earlier than necessary.

OIG also criticized NASA for not giving SpaceX, the other company with a commercial crew contract, an opportunity for offering its own proposal to address any gap in crew access to the ISS. “In our judgment, contacting both providers would have been a prudent approach to maximize the Agency’s options while also ensuring fairness,” the report concluded.

Both NASA and Boeing defended the decision to provide the company with additional funding. “NASA understands the OIG believes that NASA could have negotiated better prices” for those four missions, Ken Bowersox, acting associate administrator for human exploration and operations, stated in a Nov. 8 response to the OIG report included in the final document.

“However, this is an opinion, three years after the fact and there is no evidence to support the conclusion that Boeing would have agreed to lower prices,” he argued. “Thus, NASA strongly disagrees with the OIG’s characterization that NASA ‘overpaid’ for the Boeing PCMs or that the final agreed-to prices were ‘unnecessary,’ ‘not justified,’ ‘unreasonable,’ or ‘higher’ than some hypothetical lower amount.”

“Through fair and open negotiations with our customer in a competitive environment, we offered NASA additional flexibility and schedule resiliency to enhance future mission readiness by offering single-mission pricing for PCM’s 3-6 that was included in the pricing table in the original contract,” Boeing spokesperson Josh Barrett said in a statement to SpaceNews.

“This flexibility means Boeing is taking significantly more up-front financial risk, and is already helping NASA with critical decisions key to optimizing future ISS operations,” he added. “Doing so under the structure of the original contract would have increased cost and schedule uncertainty and would have limited NASA’s flexibility in mission planning.”

The report also suggested that NASA agreed to the additional payment as an incentive to Boeing to remain a part of the commercial crew program. “According to several NASA officials, a significant consideration for paying Boeing such a premium was to ensure the contractor continued as a second crew transportation provider,” the OIG report states, adding that senior, unnamed officials in NASA’s commercial crew program “believed that due to financial considerations, Boeing could not continue as a commercial crew provider unless the contractor received the higher prices.”

Barrett said Boeing has not considered withdrawing from the program. “Boeing has made significant investments in the commercial crew program and we are fully committed to flying the CST-100 Starliner and keeping the International Space Station fully crewed and operational,” he said.

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