NASA will give Boeing an additional cost contract for 10 SLS rockets

The principle behind the additional cost contract is simple. Sometimes, the government of the United States needs something extraordinarily difficult, complex, and unprecedented to build. In those cases, with almost certain technical challenges, the government pays a contractor the full value of development costs, a fee, often 10 percent.

It is a useful tool to get the best contractors in the country to focus their efforts on larger programs that value the government. But this is not a good way to encourage a company to move quickly to a program, especially when companies seek to maximize profits. The reason for this is that the longer a contract is, the more money is spent and the more fees are generated.

An alternative to this is a fixed price contract, in which the government pays a seller a flat rate for a product. If the company distributes a product for less, it makes a profit. If the product ends up costing more, the company eats the difference. Most of the time a company is not given money until they deliver a product.

Rockets were sometimes considered an exceptionally difficult and complex technology, and are still very difficult to obtain. However, commercial space companies are now manufacturing rockets independent of the United States government. US Air Force UU. They have recognized this and moved on from the greater cost of competitive fixed price awards for single-source contracts and national security launches.

More cost for production?

Nine years ago, NASA began the process of building the space launch system rocket, choosing Boeing as the main contractor for the vehicle's central stage. Although most propellers used mature technology, including main space shuttle engines, conventional rocket fuel, and side-mounted propellants derived from the shuttle, NASA awarded additional cost contracts for the development of the rocket. Building the central platform and assembling all rocket technology was difficult, complex and unprecedented, the agency said.

Rocket has said what critics have said about cost contracts in terms of urgency. The rocket is already three years late for its first launch and is unlikely to fly in at least mid or early 2021.

However, SLS builders say the rocket is now in production, as Boeing is almost complete with the first central stage, and work on a second vehicle is beginning. "The SLS is the only rocket sufficiently powerful to send Orion, astronauts, and supply to the moon in a single mission, and no other rocket in production is as deep as the rocket of the space launch system today. It cannot send too much cargo. ”John NASA's SLS program administrator Honeycutt said this week.

On Wednesday, NASA announced that it was negotiating a contract with Boeing to purchase 10 central stages of SLS. The press release does not mention the costs: NASA and Boeing have never been transparent about costs, but of course, the cost of production and operation for a single SLS launch would be over $ 1 billion. Nor does it refer to the contractual mechanism.

The agency's spokesman, Catherine Hambleton, told Ars that the terms of the contract had not yet been finalized. "NASA estimates that the contract will be a hybrid of cost-plus-incentive-rate and cost-plus-award-rate, which can go at a fixed-constant price," he said. "Cost incentives are designed to reduce costs during initial production to allow for the lowest possible unit prices for later scheduled price missions."

Political pressure

If it seems remarkable that a government contractor gets a more expensive contract to build a rocket that has nearly a decade to build, and one that has moved into production, and based on legacy technology Yes, it is. However, in their negotiations with NASA, companies such as Boeing (and Lockheed Martin, who had recently signed a similar agreement for the Orion spacecraft) know that they have strong political support.

In the case of SLS Rocket, the Alabama delegation, which includes a senator who effectively writes the agency's budget, has clarified that financing of the SLS rocket is his priority. Therefore, in this case, while NASA did not want to award Boeing an additional cost contract for the SLS rocket over the next 15 years, it is possible that it had few options.

The most notable thing about Artemis Moon of Programnasa is that as the agency's leaders have reiterated, the most complex technical component of the program is not the rocket. Rather, it is the human landing system that will take astronauts from lunar orbit to the surface and back. However, the Artemis program lacks strong congressional support. As a result, companies competing to build lunar landing modules will compete for fixed-price contracts.