NASA watchdog report sharpens debate over cost of SpaceX vs. Boeing spaceships

Boeing is in line to get paid substantially more per seat than SpaceX for astronaut trips to the International Space Station, in part because it negotiated an increase in what was meant to be a fixed-cost contract, NASA’s Office of the Inspector General says in a watchdog report.

The 53-page report, issued Thursday, estimates the per-seat cost for flights on Boeing’s CST-100 Starliner capsule at $90 million, which would be more than the $84 million or so that NASA has been paying the Russians for rides on their Soyuz spacecraft. In contrast, the price for a seat on a SpaceX Crew Dragon capsule was estimated at $55 million.

In response, SpaceX CEO Elon Musk tweeted that “this doesn’t seem right.” He said it was “not fair that Boeing gets so much more for the same thing.

Boeing, meanwhile, took issue with the way the figures were calculated. And while the officials in charge of NASA’s Commercial Crew Program generally accepted the report’s findings, they said Boeing’s increased payout was fairly negotiated.

The inspector general’s report fueled criticism over cost overruns and scheduling delays in the development of commercial space taxis for transporting astronauts to and from the space station. NASA has had to rely on the Russians for such rides since the retirement of the space shuttle fleet in 2011.

The first crewed flights for the Crew Dragon and Starliner are already two years behind the original schedule, and the report says “final vehicle certification for both contractors will likely be delayed until summer 2020, based on the number of ISS and CCP certification requirements that remain to be verified and validated.”

Certification would come after the initial crewed demonstration flights for both spacecraft, which are currently planned for early 2020.

The report said NASA may have to reduce staffing on the station’s U.S. orbital segment in 2020 due to the delays — a state of affairs that would also affect Canadian, European and Japanese astronauts.

In a letter responding to the report, Ken Bowersox, a former astronaut who’s the acting associate administrator for human exploration and operations, said NASA is already negotiating with the Russians for more Soyuz seats as an insurance policy.

The report acknowledged that the delays arose because of technical challenges with parachutes, propulsion systems and launch abort systems — but it faulted NASA managers for how they handled those challenges. “Taken together, these factors may elevate the risk of a significant system failure or add further delays to the start of commercial crewed flights to the ISS,” the report said.

Actions relating to Boeing came in for special criticism. NASA’s original contracts called for Boeing to receive $4.82 billion for Starliner development, while SpaceX was allotted $3.14 billion for Crew Dragon development. But the report said that in 2016, NASA agreed to pay Boeing $287.2 million above the previously agreed-upon fixed price in order to address a perceived 18-month flight gap for four crewed missions, starting with the third flight.

Part of the justification was “to ensure the company continued as a second commercial crew provider,” the report said. In fact, the report quoted unnamed senior NASA officials as saying they thought Boeing wouldn’t continue work on Starliner unless it got more money.

In the opinion of the reviewers, most of the increased payout was unnecessary because NASA had other ways to mitigate the risk of a flight gap.

The reviewers also faulted NASA managers because they found that “SpaceX was not provided an opportunity to propose a solution even though the company previously offered shorter production lead times than Boeing.”

In his letter, Bowersox said NASA was following through on the report’s recommendations for tightening up supervision of the Commercial Crew Program. But he took issue with the claim that the increased payout to Boeing was unnecessary or unreasonable.

“NASA understands the OIG [Office of the Inspector General] believes that NASA could have negotiated better prices for the PCMs [post-certification missions]. However, this is an opinion, three years after the fact, and there is no evidence to support the conclusion that Boeing would have agreed to lower prices,” he wrote.

In response to inquiries, Boeing and SpaceX both issued statements regarding the report. Here’s what SpaceX had to say:

SpaceX and NASA have worked in close partnership, applying all that we have learned from extensive testing and analysis to improve our systems and ensure Crew Dragon is one of the safest, most reliable spacecraft ever built. There is nothing more important to our company than human spaceflight, and we look forward to safely flying NASA astronauts to and from the International Space Station starting early next year.”

And here’s a Boeing statement addressing the price discussion:

“We do not agree with that average seat price assessment.  The goal of the Commercial Crew Program is to offer safe, reliable and redundant access to the International Space Station for NASA and international partner astronauts, and to foster long-term commercial access to low Earth orbit. The pricing changes on PCMs 3-6 offered NASA additional flexibility and resilience, and significantly shortened the mission cycle from 32 months to launch after given the Authority to Proceed (ATP), and now allows Boeing to offer two crewed flights of the CST-100 Starliner per year.  Additionally, Boeing is also flying the equivalent of a fifth passenger in cargo for NASA, so the per-seat pricing should be considered based on five seats.

“Through fair and open negotiations with our customer in a competitive environment, we offered NASA additional flexibility and schedule resiliency to enhance future mission readiness by offering single-mission pricing for PCMs 3-6 that was included in the pricing table in the original contract. This flexibility means Boeing is taking significantly more up-front financial risk, and is already helping NASA with critical decisions key to optimizing future ISS operations.  Doing so under the structure of the original contract would have increased cost and schedule uncertainty and would have limited NASA’s flexibility in mission planning. This also facilitates shorter lead time for NASA and provide more flexibility in adjusting launch dates within that lead time. Boeing is also now holding all of the up-front mission costs, which NASA will not have to pay until after each mission is officially ordered and given the Authority to Proceed (ATP).”

Update for 10 a.m. PT Nov. 18: Boeing issued a statement providing more detail about its disagreement with the conclusions of the NASA inspector general’s report. Some tidbits:

  • On the average seat price estimate: “For proprietary, competitive reasons Boeing does not disclose specific pricing information, but we are confident our average seat pricing to NASA is below the figure cited.”

  • On the claims of overpayment: “Contrary to the conclusion in the IG report, Boeing contends that the benefits in shorter lead time and flexibility in adjusting launch dates are well worth the higher price in the table.”

  • On reported worries that Boeing might not continue work on Starliner unless it was paid more money: “Any implication that we ever wavered in our participation in Commercial Crew is false.”

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