Cost of New Space Station $3.6 Billion Over Budget

NASA has quietly acknowledged that the international space station will cost $3.6 billion more than the original $17.4-billion cost cap established by Congress in 1993.

The massive cost overrun was included without notice in budget documents presented to Congress recently by the National Aeronautics and Space Administration, and NASA officials confirmed it in interviews last week.

Although experts had long feared the program was headed for a financial crisis, the scale of the cost overruns and the range of serious problems caught experts by surprise.

The $3.6-billion overrun, about 20%, ranks among the worst on a federal technology program in recent history. And NASA has yet to confront the most technically and politically challenging phase of the space station program: the more than 77 spacewalks beginning later this year to construct the outpost.

The overrun stems from a combination of contractor problems, Russian participation in the program and NASA’s own changes of direction. And there is virtually nothing Congress can do about it, short of canceling the program and alienating the 15 other countries that are partners in the project.

NASA officials, while acknowledging that the program’s cost has jumped sharply, insist that they are not facing any additional engineering problems.

“We have the situation in hand,” said Associate NASA Administrator Gretchen McClain.

But congressional leaders are fast losing their confidence in the space agency, saying that the program is “spiraling out of control” and that “unabated cost problems imply an inability to manage large, complex programs effectively.”

“I am real frustrated,” said House Science Committee Chairman F. James Sensenbrenner Jr. (R-Wis.), who charges that years of dishonest budgets by the Clinton administration have obscured festering problems.

“The cost overruns are big and very significant,” added Sen. John McCain (R-Ariz.), chairman of the Senate Commerce Committee, which oversees NASA.

At McCain’s request, the General Accounting Office is due to report later this month on its investigation of NASA’s costs. A separate NASA cost review is also expected to be completed within several weeks.

The $21.01-billion cost estimate in NASA’s new budget documents, which outline space station spending through 2004, marked the space agency’s first formal acknowledgment of a cost overrun, NASA officials said.

The space agency attributes its financial quagmire to delays in Russia on a crucial segment of the space station and to technical problems at prime contractor Boeing Co., as well as to its own design changes. The problems include:

* Boeing has an estimated $817-million cost overrun on its prime contract to build the key U.S. parts of the space station, reflecting technical glitches at subcontractors and Boeing’s own management problems.

* The space agency acknowledged the need for additional spare parts and engineering work on the space station, the result of a poorly negotiated contract with Boeing. Under a recent agreement, NASA will pay an additional $500 million for so-called sustaining engineering.

* NASA is spending $250 million for a piece of space station hardware, called an interim control module, that is meant as a backup if Russia fails to complete the service module, which is a key segment of the station. Even if Russia delivers on its commitments, NASA plans to orbit the backup module and put it to use.

* NASA decided to include the $626-million emergency crew return vehicle in the cost of the station, McClain said. Similarly, the agency has incorporated the $400-million cost of space shuttle flights to the Russian space station Mir, which it has described as essential to the future international space station effort.

The cost increases are broadly an outgrowth of NASA’s underestimation of the challenges, critics say, even though the space station has never involved the kind of innovative aerospace technology that distinguished the Apollo moon program or even the space shuttle.

Design changes and technical problems, for example, have included a key attachment point on the station--known as Node 1--that was judged structurally inadequate and in need of reinforcement, said Randy Brinkley, NASA’s program director for the space station.

Software problems also developed on the U.S. laboratory segment, Brinkley said. And subcontractors had serious problems with motor controllers and battery equipment.

Brinkley added that Boeing’s performance had improved in the past six months and that there was little evidence of additional cost growth.

“The program is making significant progress,” said John A. McLuckey, president of Boeing Space Systems, headquartered in Seal Beach. “The program is a very complicated endeavor and one that has 16 countries involved in it.”

But McLuckey, sounding a more cautionary note than even NASA officials, added: “There are a lot of challenges that could lead to additional program cost pressures. . . . Usually the most difficult thing is what lies ahead. . . . There are risks to the program.”

One looming risk is Russia, which ran into funding problems last year and fell eight months behind schedule in building the service module, which provides propulsion and orbital control. In recent interviews, NASA officials acknowledged that the service module might slip another three months.

Another serious issue involves Russia’s plan to shut down the troubled Mir station, possibly in 1999. As many as five flights of Russia’s Progress space vehicles may be required to bring Mir out of orbit safely, Brinkley said, and that could burden the already thinly stretched Russian space program.

“It has not been a bed of roses,” Brinkley said. “If it were just a NASA program, it would have been easier.”

Ironically, it was Russia’s entry into the program that put it on solid political footing in Congress. NASA promised that Russia’s contribution of hardware would reduce U.S. costs by $2 billion and speed up construction. Those advantages have since evaporated.

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The space agency now estimates that the station will be fully assembled in late 2003, a year and a half past the original target date of June 2002.

Despite the setbacks, NASA officials say that they believe they can complete the job under the new $21.01-billion budget and that political support for the program will remain solid.

“You are seeing the typical kinds of problems you see in a big program,” Associate NASA Administrator McClain said. “We have a very good understanding of the program.”

Once NASA actually starts assembling the space station, public support for the project could swell. Critics charge that NASA has attempted to camouflage the cost overruns until it can begin assembly and make the program politically unassailable.

Sen. McCain, among others, dismisses NASA’s new assurances that the program is under control as another in a long series of shaky promises. “There is no doubt in my mind” that the cost will grow further, McCain said.

Indeed, the cost problems have occurred on the most predictable part of the space station program--producing hardware on the ground.

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The actual in-orbit construction of the station will require more spacewalks than have been conducted in the entire Space Age. Astronauts visiting on the shuttle and later living aboard the station will walk in space for 1,499 hours.

In the last 12 months alone, an additional three spacewalks were deemed necessary, according to Kevin Chilton, NASA’s chief for operations on the program. A number of the spacewalks have yet to be rehearsed by astronauts.

Astronaut Jerry L. Ross will be on the first U.S. assembly mission and is spending long hours practicing in an underwater tank at the Johnson Space Center in Houston. In July, Ross is scheduled to make three six-hour spacewalks to connect a U.S. node to the Russian functional cargo block that will have been launched in late June.

The straight-talking astronaut called his new job “fairly challenging” and cautioned that a lot of right stuff will be needed to pull off even the first assembly mission flawlessly.

“The challenge is just the magnitude of the job, flight after flight,” Ross said. “Each flight has to go correctly to prepare for the next one. It is a very complex set of hardware built by different nations.”

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In an effort to mitigate some of the technical risks, NASA is using the schedule delays caused by Russia to conduct additional ground testing. The agency will integrate various pieces of hardware at Kennedy Space Center at a cost of $6 million to insure they will operate correctly in space. But the test is limited.

“We are not doing a full-up integrated test of the hardware before we launch,” Ross said. “I suspect that is where we are going to find our biggest problems.”

When NASA went to the moon in the Apollo program, it had multiple cost overruns but a virtual blank check from Congress. Political support for the space agency is more tenuous today, and that has forced NASA to make some subtle cost cuts.

Critics charge that NASA has cut the scientific capability of the space station and conceded some of the U.S. rights to the space station’s research capabilities.

Sensenbrenner, the House science chairman, notes that NASA has transferred $600 million from its budget for scientific research on the space station to the budget for construction. It plans to transfer back only a portion of that money to research.

NASA also negotiated an agreement with Italy to build a structure, designated Node 2, that was originally supposed to be built by the U.S. And Brazil is building test racks and other equipment that was originally a U.S. commitment.

In exchange, NASA is trading U.S. rights to use the space station and to provide launch services--a cost to U.S. taxpayers not included in the space station budget.

McClain minimized the trade-offs, saying both the Brazilian and Italian agreements would amount to less than 2% of the U.S. utilization rights to the station. But American scientists want far more access to the space station than is available.

In addition to the U.S. costs, the Europeans, Japanese and others are spending about $8.5 billion for hardware, according to McClain. NASA has no estimate of what Russia is spending.

Critics say the $21.01-billion cost is only a fraction of the space station’s true price tag. It does not include the space shuttle flights to launch pieces into orbit, for example.

The GAO is trying to estimate the total U.S. costs. When it last examined the issue several years ago, it pegged the cost at $94 billion.

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Into Orbit

The fiscal 1999 NASA budget now seeks substantially higher spending levels to complete the international space station. By 2004, according to the space agency’s new estimates, the project will have cost the U.S. $21.01 billion since the mid-1980s. The table shows the revised spending for 1997 and new spending estimates for the current and future fiscal years, in millions of dollars:

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Increase from last year’s Fiscal year Total spending budget estimates 1997 $2,149 $000 1998 2,501 430 1999 2,270 160 2000 2,134 219 2001 1,933 336 2002 1,766 619 2003 1,546 1,546 2004 350 350

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Source: Congress and National Aeronautics and Space Administration