Scathing NASA report blasts SLS rocket and Boeing overruns; first launch likely to be delayed

The much-anticipated premiere of NASA's Space Launch System rocket will likely see yet another push to the right, this time beyond mid-2020, as the program faces billions in cost overruns, according to a scathing audit released Wednesday by the agency's Office of Inspector General.

Originally slated to launch from Kennedy Space Center's pad 39B in December 2017, a 322-foot-tall version of the rocket known as SLS Block 1 will likely still be unprepared for a liftoff on the uncrewed Exploration Mission-1 by June 2020, auditors said.

Even if teams could technically meet that deadline, NASA would need to offer Boeing, the contractor building the first two core stages, an infusion of $1.2 billion: $800 million to secure first stage delivery to KSC by December 2019 and an additional $400 million to make sure EM-1 launches by June 2020.

"Consequently, in light of the Project’s development delays, we have concluded NASA will be unable to meet its EM-1 launch window currently scheduled between December 2019 and June 2020," a portion of the 50-page report reads.

Wednesday's report, the first of several planned on SLS, primarily took aim at NASA's management of the program and Boeing's performance. As of August, NASA had spent $11.9 billion on the heavy-lift launch system and Orion spacecraft designed to catapult humans beyond low-Earth orbit and into deep space.

"At its current rate, we project Boeing will expend at least $8.9 billion through 2021 —double the amount initially planned — while delivery of the first Core Stage has slipped 2 1⁄2 years from June 2017 to December 2019 and may slip further," auditors said. "Cost increases and schedule delays of Core Stage development can be traced largely to management, technical, and infrastructure issues driven by Boeing’s poor performance."

Several of those issues have contributed to the $4 billion cost overrun and delay in delivery of the rocket stages, including: 

• Boeing's underestimation of the scope of the work and a lack of well-staffed teams.
• Hardware required for second stage testing is two years behind schedule.
• Equipment-related issues and extreme weather events.

"Furthermore, Boeing’s cost and schedule challenges are likely to worsen given that the SLS has yet to undergo its 'Green Run Test' — a major milestone that integrates and tests the Core Stage components," the report reads.

The OIG reported that several "poor management practices by NASA" helped contribute to the overruns, including: 

• The agency lacks visibility into Boeing's costs because all its SLS-related activities were combined into one contract line. This means NASA cannot extrapolate the cost of a single core stage.
• Flaws in NASA's evaluation of Boeing's performance, which was at times deemed "excellent" and "very good."
• $321 million in expenditures that were not authorized through proper channels.
• NASA estimates it takes 52 months to procure a single core stage, jeopardizing the viability of future missions. To date, the agency has only ordered two core stages due to delays and overruns, meaning missions beyond the first two might be at risk.

Moving forward, the OIG said, NASA could pursue sustainability in the program by following seven recommendations. NASA agreed with all but one.

"NASA had already recognized the opportunity to improve contract performance management in this large-scale program prior to this OIG's audit," the response reads. "The OIG draft report is a fair assessment of NASA's management of the SLS Core Stages contract and of associated challenges, and the OIG's recommendations are consistent with the work NASA has underway."

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Talking to reporters last week, John Shannon, Boeing vice president and manager of SLS development, said the program has been funded differently than the Apollo moon program's storied Saturn V rockets.

Instead of a big funding spike early on that fell off as the rocket’s design was completed, SLS has had relatively flat annual funding of roughly $2 billion. As a result, the first rocket to fly will be the very first one built, something Shannon said was “a little bit unprecedented” and has slowed down work on the first core stage.

“What that means is that you have to pay extremely close attention to any first-time issues and make sure that you resolve them completely before you proceed,” he said. “I would say we underestimated that somewhat.”

Shannon acknowledged some missteps early on, but said lessons learned from the first SLS core stage would result in the next stages being built faster and more affordably.

He noted a $400 million “variance” over the planned cost of the first two core stages.

“But over a five-year period, that’s probably not unexpected,” he said.

NASA's Office of Inspector General is tasked with investigating instances of potential fraud, waste and abuse of programs that impact the agency.

Contact Emre Kelly at aekelly@floridatoday.com or 321-242-3715. Follow him on Twitter, Facebook and Instagram at @EmreKelly.

Reporter James Dean contributed to this story.

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