Northrop CEO tells Congress cost overruns for new space telescope should not be paid by company
Northrop Grumman Corp.’s chief executive acknowledged Thursday that the company contributed to launch delays for a next-generation successor to the Hubble Space Telescope, but he balked at a suggestion during a congressional hearing that the defense giant pay for the cost overruns itself.
The exchange came during the second of a two-day hearing in Washington before the House Committee on Science, Space and Technology regarding the James Webb Space Telescope, a massive successor to the Hubble, which launched in 1990.
The nearly 7 ton telescope is intended to help scientists better understand the origins of the universe, and is being assembled and tested by the Falls Church, Va.-based government contractor at its Space Park facility in Redondo Beach.
Total development cost is expected to be $8.8 billion, up from the $8 billion established by Congress in 2011, meaning that the program will need more funding allocated next year. Along with the delays, the telescope’s total life cycle cost is now estimated at $9.66 billion.
“We recognize that we have contributed to the telescope’s delays,” CEO Wesley Bush admitted during the hearing. “Mission success is our top priority.”
However, previous testimony pegged some of the cost overruns on technological advances and the original design concept for the instrument.
Since the Webb telescope program was conceived in 1996, technology and scientific discoveries have changed, leading to expanded mission plans and capabilities, NASA and Northrop Grumman officials have said during the hearings.
And unlike the Hubble, the Webb was never intended to be serviced by astronauts, so teams on the ground must ensure that all potential problems are solved before the hulking telescope is launched into space.
On Wednesday, NASA administrator Jim Bridenstine was grilled about the program’s management and how the telescope’s expected launch date slipped from the originally scheduled 2007 to the current estimate of 2021.
“We were very optimistic in the amount of time we believed it would take to test this,” Bridenstine said. “Ultimately, that proved to be incorrect.”
Last month, an independent review board cited as factors for the delays avoidable human errors in assembly and problems discovered after parts were built and installed, as well as the system’s complexity and cutting-edge technology.
Some of those missteps included workers who used the wrong solvent to clean valves for the telescope’s propulsion system, resulting in damage to the hardware and fasteners intended to hold the telescope’s sunshield cover in place — which themselves had been incorrectly installed and came loose during testing, according to the report.
Tom Young, an ex-Lockheed Martin executive who heads the independent review board and formerly directed NASA’s Goddard Space Flight Center, said Wednesday that government contractors often will bid the “lowest credible cost” to win programs. He suggested that contract evaluators should have a firm grasp on realistic program costs to penalize companies that make unrealistic bids.
After describing the James Webb Space Program as a “not well-managed program,” Young proposed that all remaining award fees that Northrop Grumman would have received for meeting specific milestones be rolled into one lump sum that would be paid to the defense giant once the mission is launched and the telescope succeeds. He said that could lead to better performance for the remainder of the program.
Bush agreed with that during Thursday’s hearing, saying the firm already had discussed this possibility with NASA and would forgo future milestone awards in favor of a payment at the end. However, he bristled at a suggestion from Rep. Lamar Smith (R-Texas) that the company should agree to pay the estimated $837-million increase in cost.
“Our view on that is that that would create more of a fixed-price relationship on this program, which would significantly impede and impair the relationship between NASA and Northrop Grumman,” Bush said. “As we are focused on mission success, we think that would be the wrong approach.”
In a fixed-price government contract, which is typically awarded for projects that are seen as low risk, any cost overruns are paid by the contractor.
“I think that that would be justified, given the poor record and given the poor management,” Smith responded. “I only wish that Northrop Grumman was willing to take responsibility and show a little bit more good faith, both for the taxpayer and for the cost overruns, but it sounds like you’ve made up your mind.”
Bush said Northrop Grumman and NASA have a “safety net” in place to make sure that future work on the Webb is backstopped and double-checked for errors. In its most recent annual report, the company lists the telescope as a “key program” for its space sector.
Rep. Dana Rohrabacher (R-Costa Mesa) also grilled Bush on the company’s missteps, saying it “hasn’t suffered at all” from the cost overruns and questioned Bush on Northrop Grumman’s profit last year, to which Bush would only say that it was a “very large number.” Bush later said he would provide the committee with the precise number after further questioning from Smith.
Last year, Northrop Grumman reported net income of $2 billion on revenue of $25.8 billion, according to regulatory filings.
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