NASA Faulted for ‘Unnecessary’ $287.2 Million Boeing Payment
The additional funds were the result of “fair and open negotiations,” Boeing spokesman Joshua Barrett said in an email.
(Bloomberg) -- NASA paid Boeing Co. an “unnecessary” $287.2 million premium for work on a new space vehicle -- a payment meant to compensate for scheduling delays caused by the company, a government audit found.
The additional compensation, disclosed Thursday in a NASA Inspector General report, was intended to mitigate the effects of a delay in four planned flights to ferry astronauts to the space station, according to the audit. But NASA postponed the flights because Boeing had missed its own deadlines, the report said.
“For these four missions, NASA essentially paid Boeing higher prices to address a schedule slippage caused by Boeing’s 13-month delay” in finishing a design review, auditors wrote. The report also found that NASA used flawed assumptions in 2016 when it calculated an 18-month schedule gap that prompted the extra cash.
In granting Boeing more money, the National Aeronautics and Space Administration wanted “to ensure the company continued as a second commercial crew provider,” the report said.
The additional funds were the result of “fair and open negotiations,” Boeing spokesman Joshua Barrett said in an email. Boeing has taken on “significantly more up-front financial risk” in the project, and the payments help ensure NASA has the flexibility it needs for adjusting launch dates, he said.
The space agency believes Boeing’s pricing “represents appropriate value of the missions,” and for U.S. transport options to the station, Ken Bowersox, NASA’s acting associate administrator for human exploration and operations, said in a Nov. 8 response letter to the IG. There is no evidence to support the auditor’s conclusion that Boeing would have been willing to accept less money, he said.
In an emailed comment Thursday, NASA added to its response, saying the agency “did not base its price on Boeing potentially leaving” the project.
Project Basics
Chicago-based Boeing is working to complete its CST-100 Starliner vehicle to carry NASA astronauts to the space station, with its first test flight to the space station tentatively set for Dec. 17. Elon Musk’s SpaceX completed its uncrewed test flight to the ISS earlier this year, and is working to certify its Crew Dragon for human flight in 2020.
In a tweet responding to an Ars Technica report on the payments, Musk wrote “This doesn’t seem right.” The article said the seat price for Starliner was $90 million compared with $55 million for Dragon.
Neither Boeing nor SpaceX will likely have the necessary NASA certifications for their vehicles before summer 2020, the Inspector General said.
As of August, NASA has spent $5.5 billion for the commercial crew program, which awarded Boeing and SpaceX contracts worth a combined $6.8 billion in September 2014. Each company is obliged to provide NASA six crewed flights under the contracts; both have experienced delays of more than two years, the IG said.
--With assistance from Will Davies.
To contact the reporter on this story: Justin Bachman in Dallas at jbachman2@bloomberg.net
To contact the editors responsible for this story: Brendan Case at bcase4@bloomberg.net, Susan Warren, Richard Clough
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