At a recent hearing, the House Science Committee explored NASA’s methods for estimating mission costs and managing projects to minimize budget and schedule overruns. The hearing follows a recent Government Accountability Office report that found the agency’s project management performance has slipped.
The House Science Committee’s Space Subcommittee convened a hearing on June 14 to examine NASA’s efforts to control the costs of its space missions and prevent schedule delays. The hearing follows a recent Government Accountability Office finding that, after years of improvements, NASA’s performance in managing its most expensive projects has slipped.
The hearing concentrated primarily on the general causes of cost and schedule overruns rather than specific missions, and it explored a number of mechanisms NASA uses to keep its projects on track. Testifying were GAO official Cristina Chaplain, NASA Associate Administrator Steve Jurczyk, NASA Inspector General Paul Martin, and American Institute of Aeronautics and Astronautics Executive Director Dan Dumbacher.
The Science Committee plans to hold a separate hearing on the James Webb Space Telescope (JWST) in July. That hearing will consider the implications of today’s announcement that the mission's launch will now be delayed to March 2021 and that it will breach the $8 billion cap that Congress placed on its development costs by $800 million.
Witnesses say NASA cost estimates have room for improvement
A major focus of this month's hearing was the reliability of NASA’s estimates of future project costs. Since 2009, NASA has used a defined process to assign a Joint Confidence Level (JCL) to projects expected to cost more than $250 million over their lifecycle. Martin explained, “The process uses software models that combine cost, schedule, risk, and uncertainty to evaluate how expected threats and unexpected events may affect a project’s cost and schedule.”
Jurczyk said the objective is to establish a baseline cost estimate for projects with 70 percent confidence it will be met. He remarked, “Since the agency established its JCL policy, programmatic performance has significantly improved as NASA has launched more projects at or near their original cost and schedule baselines.”
Martin, however, reported, “Our examination of NASA’s use of JCL found mixed success, with the tool unevenly applied across agency projects.”
Chaplain stressed that projects ought to update their cost estimates to reflect changing circumstances, but noted they often do not. She speculated that project leaders are reluctant to reveal what the new costs may be. She suggested the recent troubles with JWST might have been anticipated earlier had NASA updated its cost estimate for the mission, when, for instance, the project experienced troubles with the manufacture of its cryocooler.
NASA’s culture a factor in its cost estimates and decision making
Asked by Committee Chair Lamar Smith (R-TX) whether NASA can realistically accomplish all the missions on its agenda with its current budget, Martin replied the agency and Congress need to make choices and that realistic budget estimates help them to weigh options. Referring to ballooning costs in JWST’s early development, he remarked, “Had NASA been able to say that the James Webb Space Telescope was going to cost $8 billion 10 years ago when it was proposed, then it’s a decision. … If you say ‘yes’ to James Webb, you’re saying ‘no’ to a lot of other things.”
However, Martin also stressed there are pressures to discount risk. He referred to “NASA’s culture of optimism” in asserting that NASA’s confidence in its ability to meet extreme challenges and accomplish extraordinary goals has “reaffirmed a mindset that project cost and adherence to schedule are secondary concerns.” He also argued that projects’ promise of outstanding scientific success makes them difficult to cancel when they do overrun, saying,
While a few projects in NASA’s recent past have been cancelled because of poor cost and schedule performance, a too-big-to-fail mentality pervades agency thinking when it comes to NASA’s larger and most important missions.
Asked by Rep. Don Beyer (D-VA) if it would be wiser to “under-promise and overperform,” Jurczyk replied, “Our job in any given program area is to optimize the portfolio and deliver the most science or exploration missions that we can for the budget given.”
Beyer responded that such optimization might include managing expectations, prompting Martin to remark, “I think one of the other realistic things is if you under-promise you’re in greater danger of not getting your project started in the first place.” He said such pressure can cause project teams to underestimate their projects’ difficulty.
The witnesses agreed, though, on the basic integrity of NASA’s cost estimates. Asked by Rep. Bill Foster (D-IL) how GAO identifies suspicious estimates, Chaplain replied that “very grand statements” tend to raise red flags. “But,” she continued, “I would say in the case of NASA, I kind of trust the process that they have because they do review those estimates pretty carefully.” She also said the agency’s cost-estimating practices, which include independent reviews, are more rigorous than they were “a few years ago.”
Committee explores measures for keeping projects on track
The hearing also explored mechanisms for keeping projects on track once started.
Subcommittee Chair Brian Babin (R-TX) asked about the use of fixed-cost contracts, in which the contractor assumes the risk of overruns, versus cost-plus contracts, in which the government does.
Chaplain pointed out that many NASA projects entail numerous uncertainties, which makes fixed-cost contracts inappropriate. Jurczyk reported in his opening statement that NASA has increased the use of fixed-cost contracts from 26 percent of its expenditures in 2013 to 35 percent in 2016.
Smith mentioned that NASA authorization legislation the committee recently approved would establish a “watch list” of underperforming contractors. Pressed to name examples of such contractors, Chaplain identified General Dynamics and Harris Corporation as consistently poor performers on the Space Network Ground Segment Sustainment project and the recently cancelled Radiation Budget Instrument, respectively. Later in the hearing, Jurczyk pointed out the agency has an Acquisition Integrity Program, which provides procedures that can lead to contractors being suspended or debarred.
Asked by Smith about other ways to keep projects on time and budget, Martin said that oversight by Congress, GAO, and the inspector general’s office all help improve accountability. He also said NASA must be willing to cancel projects and impose other remedial actions. Responding to a similar question from Rep. Clay Higgins (R-LA), Martin pointed to NASA’s cancellation of the Gravity and Extreme Magnetism Small Explorer (GEMS) x-ray telescope in 2012, saying the move “got people’s attention.”
Dumbacher emphasized that Congress also plays a role in causing overruns, citing unstable and flat budgets, the routine use of budget stopgaps, delayed appropriations, and threats of government shutdowns.
Asked to elaborate on this problem by Rep. Conor Lamb (D-PA), Dumbacher referred to his own previous experience as a NASA program director, saying that whenever he received a different budget target he had to repeat the budget planning process. He noted that it distracted his team from the “day-to-day management of these technically complex jobs.”
Dumbacher also stressed that the aerospace workforce is aging and that there is a shortage of individuals with program management experience, particularly in human spaceflight.
Replying to a question on this issue by Babin, Martin agreed, saying,
Attracting and retaining the project managers is a real challenge for the agency. As Mr. Dumbacher suggested, within NASA 50 percent of the workforce is over 50 years old, and with a diminishing number of small projects for these project managers to really get the experience and cut their teeth on, it’s a real concern.