ASK OCE August 4, 2006 Vol. 1 Issue 11

NASA’s acquisition plan for the Crew Exploration Vehicle (CEV) could result in excessive costs, delays, and performance shortfalls, according to a report by the Government Accountability Office (GAO).

NASA intends to award a contract for the design, development, production and sustainment of the CEV to a prime contractor in fall of 2006. However, the project-level preliminary design review (PDR), which will introduce the sound business case for the project, will not be conducted until 2008. According to GAO, this early-stage contractual obligation puts the federal government at risk of being overcommitted before knowing the full scope of the budgetary and technological needs for the CEV.

GAO advocates the adoption of a “knowledge-based” approach to acquisitions, in which a sound business case is established before the external contracting partner is selected in order to reduce both financial and other risks and to increase the likelihood of successful outcomes. A sound business case matches the requirements of a project to resources — either currently or reasonably expected to be available — before committing to the project development effort.

In its draft report, GAO recommended that the NASA Administrator modify the current CEV acquisition strategy to ensure that the Agency does not commit itself, and in turn the federal government, to a long-term contractual obligation prior to establishing a sound business case at the project PDR.

NASA did not concur with GAO’s recommendation, countering that it has the appropriate level of knowledge to move forward with the acquisition plan for the CEV. “As the primary steward for achieving the Vision for Space Exploration, NASA fully recognizes the importance of investing its resources wisely and maintaining stakeholder confidence in its performance,” wrote Deputy Administrator Shana Dale in NASA’s formal response. Furthermore, the Agency has “a plan and process in place to address technology risks through in-house development work” as well as collaboration with the selected prime contractor.

Based on NASA’s nonconcurrence with its recommendations, GAO added to its final report that Congress should consider restricting NASA’s appropriations and obligations for the CEV project to only the amount of funding necessary to complete the project’s PDR successfully.

The CEV is critical to the Vision for Space Exploration, which calls for retiring the Space Shuttle in 2010 and replacing it with the CEV within four years. A key goal of the program is to limit the amount of time in which the United States lacks a human spaceflight capability. GAO acknowledged that NASA is focused on accelerating the CEV project to minimize this potential gap.

Read the GAO report. (PDF)