Report

of the Cost Assessment

and Validation Task Force

on the International Space Station

NASA Advisory Council

April 21, 1998

Table of Contents

Text of letter from NASA Advisory Council to Administrator Goldin

Text of letter from Advisory Committee on the International Space Station to the NASA Advisory Council

Text of letter from Cost Assessment and Validation Task Force on the International Space Station to NASA Advisory Council and dvisory Committee on the International Space Station

1.0 Executive Summary

2.0 ISS Program Overview

3.0 Analysis and Assessments

4.0 Other Observations

5.0 Summary

6.0 Appendices

LIST OF FIGURES
(found in designated sections)

Figure 2-1. Fiscal Years 1998 and 1999 Budgets

Figure 2-2 Fiscal Year Budget by Components

Figure 2-3. Components Budget by Fiscal Year

Figure 3-1. Overrun Trend

Figure 3-2. Staffing Projections

Figure 3-3. Fiscal Year 1998 Civil Service Staffing Levels

Figure 3-4. Schedule Milestone Trends

Figure 3-5. CAV Task Force Schedule Assessment

Figure 3-6. Impact of Schedule Stretchout

Figure 3-7. Assessment of Reserves

Figure 3-8. CAV Task Force Budget Recommendations

Figure 3-9. CAV Funding Assessment

LIST OF TABLES
(located in Section 3.0)

Table 3-1. Estimates of Schedule Slippage

Table 3-2. Estimates of Cost Growth

Table 3-3. CAV Task Force Budget Recommendations


Report of the

Cost Assessment and Validation Task Force

on the International Space Station

1.0 Executive Summary

The Cost Assessment and Validation (CAV) Task Force was established for independent review and assessment of cost, schedule and partnership performance on the International Space Station (ISS) Program. The CAV Task Force has made the following key findings:

1.1 Background

The International Space Station emanates from a 1993 NASA cost reduction-based redesign of the Space Station Freedom. NASA committed to build the new design within a $2.1 billion annual funding constraint and at a total cost to completion of $17.4 billion. Now, nearly five years later, hardware manufacturing for many of the first U.S.-developed flight elements has been completed. The program is well into the test and integration phase, preparing for the start of deployment later this year.

Progress on the ISS Program has been achieved by overcoming a variety of challenges. In 1997, cost growth and delivery delays, both in the U.S. and abroad, made considerable news. In May 1997, the ISS First Element Launch (FEL) was deferred by seven months from November 1997 to June 1998. In September 1997, after coordination with the International Partners on out-year ISS assembly flights, a new manifest was released that reflected a slip of over a year in completion of ISS assembly. These events and others have raised questions regarding the total cost and schedule for ISS development and operations.

In September 1997, the NASA Administrator asked Dr. Brad Parkinson to establish a Cost Assessment and Validation Task Force, reporting through the Advisory Committee on the International Space Station (ACISS) to the NASA Advisory Council, for independent review and assessment of cost, schedule and partnership performance on the ISS Program. The letter of request is in Appendix A. The objective of the Task Force, chaired by Mr. Jay Chabrow, was to provide advice and recommendations for improvement of the ISS business structure and cost management practices and to determine the total cost over the life of the Program. The Task Force Terms of Reference are in Appendix B.

On October 6, 1997, the Senate-House Conference Committee submitted Conference Report 105-297. This report specified certain NASA reporting requirements to Congress as a precondition to the March 1998 Congressional release of $851,300,000 in FY 1998 ISS funding.

The following items were required of NASA by Congress:

NASA requested the CAV Task Force to perform this independent assessment, either verifying NASA's data or explaining reasons for lack of verification. The letter making that request is in Appendix C, and the Task Force's assessment is in Appendix D.

Six additional experts made up the Task Force. Their biographies are in Appendix E. The members were selected to obtain a diversity of expertise in program management, cost estimation and formulation, technology development, and cost and schedule risk assessment, so that all aspects of the ISS Program could be analyzed and assessed. Task Force members have backgrounds in industry, the federal government, and the military and have experience in large-scale aerospace and other technology development programs.

1.2 CAV Task Force Organization and Process

Three members of the CAV Task Force, who were serving as technical consultants on the ACISS, attended detailed budget reviews at each of the Prime contractor's production sites in October, 1997. The official kick-off meeting of the Cost Assessment and Validation Task Force was on November 6, 1997

Since the team's initial meeting, members of the CAV Task Force have met almost weekly. The team was given open access to every facet of NASA's ISS Program. Fact-finding trips were made for meetings with ISS Program management, line support organization personnel, and the Program's Prime Contractor. The CAV Task Force met with representatives of the European Space Agency (ESA) and the Russian Space Agency (RSA) at their production sites to gain first-hand knowledge of their performance. Representatives of Alenia Aerospazio, Turin, Italy, who are responsible for the delivery of several U.S. and European elements also briefed the CAV Task Force on their progress.

The Task Force's fact-finding focused on major aspects of past performance trends, current performance, and estimated projections by the ISS Program. The main thrust was to identify and evaluate major risk elements that would likely contribute to further cost growth and schedule slip. Pertinent information was gathered through summary and detailed status briefings, special topics briefings, site visits, and personal interviews with ISS program and line management and support personnel, and in conversations with other government oversight organizations. The compiled information was reviewed to assess the major impediments which could affect timely completion of the ISS.

1.3 Findings

1.3.1 Development

The ISS Program has been diligent and resourceful in managing the unique challenges of this complex venture given the significant complexity and uncertainty of international involvement and the difficult task of staying within annual and total funding caps established prior to final Program content definition. The Program has not incurred any extraordinary technical or programmatic "show stoppers" to date. Although cost and schedule growth have occurred, the magnitude of such growth has not been unusual, even when compared with other developmental programs of lesser complexity.

The $2.1 billion annual funding limitation has resulted in spread-out procurements, deferred and untimely work, and inadequate contingency planning, all of which have induced schedule delays and have increased cost. NASA's cost and schedule plans have been optimistic from the beginning of the Program and continue to be so today. Budget and reserve levels have been, and continue to be, inadequate for a program of this size, complexity, and development uncertainty despite NASA's past contentions that the total funding level is adequate. It could alternatively be stated that the Program has more content than it has funds available to achieve.

In the Task Force's opinion, Program de-staffing goals do not adequately account for: work yet to be accomplished, mitigation of current and potential cost and schedule risks, and the retention of an appropriate skill mix through completion of development. The Task Force analyzed ISS de-staffing plans for several prior years and found they were not achieved for reasons similar to those noted above. Current development de-staffing plans require Prime contractor off-loads at a greater rate than all previous plans. Past trends clearly indicate that this is not a realistic assumption. Therefore, the Task Force believes that attempting to adhere to the current de-staffing plans is unreasonable and will introduce additional cost and schedule risks that could otherwise be avoided.

Management challenges will remain large and diverse considering the significant on-orbit assembly tasks; the size and breadth of the integration required; the splintered delegation of systems integration functions; and the required coordination responsibilities among NASA, its Prime contractor and International Partners. ISS Program management, primarily due to past annual funding constraints, has not fully developed and implemented cost and schedule risk mitigation plans to minimize or eliminate larger schedule stretchouts or increased costs.

Major Development Risk Elements

There are a significant number of cost and schedule growth risks in a program of this magnitude that have direct implications to the total development cost of the Program and to the schedule for completion of assembly. The following list represents the major development risk elements the Task Force identified in the ISS program.

This phase of the ISS Program requires simultaneous integration of launch operations, on-orbit assembly operations, engineering support, and logistics and maintenance support with mission operations over an extended period of time. The full assembly sequence for ISS will span a period in excess of five and one-half years, involving over 93 flights of multiple booster types to assemble and check out, on orbit, hardware from around the world. The overall complexity and scope of this effort is beyond the current experience base of NASA and the International Partners and, as such, contain cost and schedule uncertainties and risks. The resource estimates, in terms of schedule and budget, for this undertaking are optimistic.

The Crew Return Vehicle (CRV) is a new, crewed, vehicle development program which is required in early 2003 to support the autonomous, safe return of up to seven crew members. The CRV development and deployment is on the ISS Assembly Complete critical path. The X-38 is a NASA in-house program to develop some technology for the CRV vehicle. The X-38 Program is 10 months behind schedule. Currently, there is no integrated plan or acquisition strategy that would provide a seamless transition from the current X-38 Program to support CRV development and production requirements and schedule. Further, NASA's CRV budget and schedule allow only $5 million of expenditures in FY 1999, a production award in FY 2000, and only three and one-half years to operational need. In the CAV Task Force's opinion, current CRV Program plans will not support operational readiness requirements to meet the assembly sequence need date.

Multi-Element Integrated Testing (MEIT) is a rigorous integration and testing program intended to successfully demonstrate systems interface compatibility and end-to-end hardware and software functionality. Major flight hardware is scheduled to undergo MEIT just prior to launch; however, hardware and software production activities have very little remaining schedule reserve between now and launch to address unanticipated problems. Resolution of problems or issues identified during MEIT will likely result in launch delays. The highly integrated and interdependent nature of the MEIT hardware and software need dates and the phasing of MEIT activity also introduce a high potential for multiple ISS launch schedule impacts.

Additionally, the schedule impact of incorporating MEIT for the Phase III portion of the assembly sequence is not yet reflected in the Program plan or budget.

The Laboratory is currently several months behind schedule, with a significant amount of qualification and integrated testing remaining to be performed. Software development and testing are also major concerns. Considering past trends there is a high probability of additional schedule erosion of several weeks or more.

Schedule slippage is affecting training readiness. In addition to oral and written language complexities, there are also issues with respect to detailed approaches to training that are cultural or philosophical in nature and are yet to be fully resolved.

Software testing and integration are traditionally the areas of space system development subject to the greatest schedule problems. The ISS has a significant amount of software that has to be integrated across multiple domestic and international suppliers. While many software deliveries already have little schedule margin remaining, late flight hardware deliveries will place further pressure on software schedules due to hardware problems likely to be discovered during late stages of testing. Typically, late hardware problems are circumvented by software workarounds, thus increasing the time and effort required for software integration and testing.

To contain near-term spending to within

the funding profile during peak development, decisions were made to reduce contracting for parts and spares necessary to support the current schedule. Various program activities were hardware-limited during the development and test phases. Not procuring adequate spares during the initial production run of some components may lead to quality and consistency issues as well as increased cost.

1.3. 2 International

Sixteen countries on four continents are engaged in building hardware and software for the ISS. Each country has its own governmental limitations. Partner countries have adjusted, and will continue to adjust, their level of financial involvement and schedule commitments, ultimately affecting U.S. costs and schedules. Further, modifications to the assembly sequence, ground operations, and on-orbit operations all require integration and various levels of coordination and joint approval. The U.S. developmental effort cannot be isolated from these occurrences and their associated impacts: the Program has experienced cost growth and schedule slippage associated with this broad level of international involvement.

This has been especially true in the case of Russia. The anticipated one billion dollar cost savings to the U.S. to be accrued from Russian provision of the Functional Cargo Block (FGB in its Russian language acronym) and an Assured Crew Return Vehicle capability, was a faulty assumption as far back as 1994. The continuing economic situation in Russia has also negated most of the $1.5 billion in schedule savings to be achieved through their involvement. Russian schedule slippage, due largely to failure of the Russian government to deliver promised funding, translates directly to the most recent Service Module schedule slips. With continuing funding shortfalls carrying into 1998, the absence of any hard indicators that adequate Russian funding will be provided soon, and the recent cabinet shake-up in Moscow, it is likely RSA elements will experience further delays.

The CAV Task Force notes that a diminished level of Russian participation could significantly alter the current ISS assembly sequence and final design. Proceeding forward with full knowledge of the past, present, and to some extent, the future economic environment in Russia without implementing adequate contingency capabilities to address likely shortfalls is tantamount to accepting a level of risk that could drive U.S. costs significantly higher. NASA contingency plans extending beyond the development of the Interim Control Module are not reflected in the current budget. The Task Force believes the level of exposure to increased cost from Russian delays justifies the funding of additional contingency activities.

Major International Risk Elements

The most significant cost and schedule growth risks identified relative to International Partner contributions are as follows:

Inadequate funding will likely cause the Service Module schedule to slip a minimum of four months in addition to the eight months already acknowledged and incorporated into the Revision C baseline assembly sequence. Service Module subsystem deliveries are being affected, and this could result in a day-for-day slip until adequate funding is supplied. Approximately $45 million dollars in FY 1997 Russian funding are still outstanding, and there are no hard indicators that adequate Russian funding will be provided any time soon for FY 1998 and beyond.

Current RSA plans reflect a late 1999 Mir deorbit. This plan, which calls for deorbit a year later than NASA had desired, foreshadows a Russian logistics impact to the current ISS assembly sequence. Russia's demonstrated Progress spacecraft production capacity and its recent launch rate capability do not support the view by RSA that it can meet its collective ISS and Mir requirements.

1.3.3 Operations

In the operations timeframe, the ISS Program management believes it will be able to meet its $1.3 billion annual operations funding limit. The Task Force believes this level of funding is inadequate to support the total scope of the technical and operational requirements.

Major Operations Risk Element

The CAV Task Force anticipates that upgrades due to normal wear and tear, obsolescence, and degradation will be required, and additional funding will be necessary to support these needs. This issue is addressed in section 4.3, but it is not quantified. It is noted as an item of significance and one that merits additional in-depth consideration.

1.4 Conclusions

Given the above considerations, the Task Force concludes that the Program has inadequate funding to cover normal developmental program growth, ISS cost and schedule risks, and necessary risk mitigation activities. The ISS will also likely experience a delay of one to three years in the completion of assembly.

Relative to budget formulation, the Program will likely need the full level of funding requested in the FY 1999 budget submission to Congress. The Program should plan for the development schedule to extend an additional two years with additional funding requirements of between $130 million and $250 million annually, including the period beyond Assembly Complete. The specific annual CAV Task Force funding recommendations are provided in Table 3-3. This level of funding and schedule extension results in a total assessed cost of approximately $24.7 billion from the 1994 ISS redesign through ISS Assembly Complete.

This level of funding should be sufficient to address threats that are reasonably likely to occur, with several noted exceptions: it does not cover catastrophic launch vehicle or payload failures, the withdrawal of an International Partner, or the development of a U.S. propulsion capability which the Task Force believes should be factored into an overall Russian contingency strategy.

1.5 Recommendations

1) The present program plan should be revised so that it is achievable within the financial resources available. Realistic major milestone dates should be established as the basis for development of the program plan and internally defined target dates should be used for execution. If necessary, program content should be eliminated or deferred to fit within funding constraints.

2) Develop and implement a comprehensive cost and schedule risk evaluation and mitigation strategy associated with the delivery of Russian contributions, particularly for the uncertainties associated with propulsion and logistics capability and the Service Module delivery.

3) Develop and implement Phase III MEIT to mitigate on-orbit systems assembly and integration uncertainties.

4) Consider merging the NASA X-38 and the CRV development programs, accelerating the start of the CRV to FY 1999, and increasing the budget by $120 million. The CRV schedule urgency coupled with relatively high levels of technical and budgetary uncertainty support the need to have a seamless transition of experience and learning from the NASA

X-38 Program to the CRV Program.

5) Establish a specific organization and management structure with responsibility for Systems Engineering & Integration (SE&I) efforts, including sustaining engineering. The structure should include both government and contractor personnel from all participants and should be given clear management responsibility, authority and budget to carry out an integrated SE&I plan. NASA should also clearly delineate and document the systems integration responsibilities for which each party is accountable and currently performing.

6) Establish a competitive environment for support contracts, such as sustaining engineering, in order to reduce overall program costs.

7) Maintain the current level of research funding. Develop plans to maximize science utilization on-orbit during schedule stretchout.

8) Institute a system for determination of earned value performance measurement for the Non-Prime scope of effort. Non-Prime activities account for 65 percent of the total staffing in 1998 and are growing as a percentage of work performed. Implementing such a system would greatly increase the accuracy of status reporting and of Non-Prime cost and schedule projections.

9) Verify the appropriateness of a flat funding profile for the operations timeframe of the ISS, specifically assessing how obsolescence-induced upgrades will be planned and implemented.

Next: ISS Program Overview