	Background

The National Aeronautics and Space Administration Authorization Act of  2010 directed NASA to develop a Space Launch System as a follow-on to  the Space Shuttle and as a key component in expanding human  presence beyond low-earth orbit. The Act also directed NASA to continue  development of a multi-purpose crew vehicle for use with that system.that end, NASA plans to incrementally develop three progressively-larger  SLS launch vehicle capabilities—70-, 105- and 130-metric ton (MT)  variants—complemented by the Orion and supporting ground systems. Limited Scope of Exploration Program Estimates Does Not Capture Life Cycle Costs

NASA’s preliminary cost estimates for the SLS, Orion, and associated  GSDO programs do not provide a complete picture of the costs required  to develop and operate the programs through the entire course of their  respective life cycles. These preliminary estimates include the funding  required for the scope of work related to initial capabilities—that is,  development and operations through 2017 for the SLS launch vehicle and  ground systems and through 2021 for the Orion. NASA also expects to  use this same limited scope of work to develop the SLS, Orion, and  GSDO baseline cost estimates. In contrast, best practices for cost estimation call for “cradle to grave” life  cycle cost estimates in order to help assess a program’s long-term  affordability. NASA’s Estimates Do Not Include Life Cycle Costs

NASA’s preliminary cost estimates for SLS, Orion, and GSDO provide no  information about the longer-term, life cycle costs of developing,  manufacturing, and operating the launch vehicle, crew capsule, and  ground systems:
The SLS estimate does not cover the cost to build the second 70- metric ton vehicle and conduct EM-2 in 2021 with that vehicle. The Orion estimate does not address costs for production, operations,  or sustainment of additional crew capsules after 2021 nor does it  address prior costs incurred when Orion was being developed as part  of the now-defunct Constellation program. During approximately 4 years that the capsule’s development  occurred under Constellation, the agency spent about $4.7 billion for  the capsule’s design and development. The GSDO estimate does not address the costs to develop or operate  SLS ground systems infrastructure beyond EM-1 in 2017, although  NASA intends to modify ground architecture to accommodate all SLS  variants. According to  NASA, the agency is developing a tailored definition for life cycle cost  estimating that is allowed by NASA requirements. We recognize that defining life cycle costs can be difficult when  uncertainties exist. Even  when uncertainties exist, best practices maintain that a high-quality cost  estimate takes into account those uncertainties while forecasting the  minimum and maximum range of all life cycle costs. Because NASA expects to continue  with a limited scope for the SLS, Orion, and baseline estimates, however,  cost growth over time within the programs will be difficult to identify and  could be masked as growth in the SLS capability if the most current cost  estimate did not contain the same content as the baseline estimate. Best  practices for cost estimating look favorably on the incremental  development approach NASA has chosen for SLS, and they also state  that programs following such an approach should clearly define the  characteristics of each increment of capability so that a rigorous life cycle  cost estimate can be developed. These programs represent a significant investment for the  country—as much as $22 billion for initial capabilities and potentially  billions more to field increased capabilities over time as envisioned in the  2010 NASA Authorization Act. The limited scope that NASA has chosen to use as the basis for  formulating the programs’ cost baselines, however, does not provide the  transparency necessary to assess long-term affordability and will hamper  oversight by those tasked with assessing whether the agency is  progressing in a cost-effective and affordable manner. Because NASA intends to use the increased capabilities of the SLS,  Orion, and GSDO efforts well into the future and has chosen to  estimate costs associated with achieving the capabilities, establish  separate cost and schedule baselines for each additional capability  that encompass all life cycle costs, to include operations and  sustainment. Agency Comments and Our Evaluation

NASA provided written comments on a draft of this report. In responding to a draft of our report, NASA partially concurred with our  three recommendations, citing among other reasons that actions already  in place at the time of our review such as establishing SLS, Orion, GSDO  as separate programs and a block upgrade approach for SLS—and  actions it plans to take to track costs—met the intent of our  recommendations. In most cases, the actions that NASA plans to take do  not fully address the issues we raised in this report. We believe it is important to treat  Orion and GSDO with the same significance as SLS because this trio of  programs is expected to work in concert now and in the future to achieve  NASA’s goals for human space exploration.
Why GAO Did This Study

NASA is undertaking a trio of closely-related programs to continue human space exploration beyond low-Earth orbit: the SLS vehicle; the Orion capsule, which will launch atop the SLS and carry astronauts; and the supporting ground systems. As a whole, the efforts represent NASA's largest exploration investment over the next decade, potentially as much as $22 billion, to demonstrate initial capabilities. Beyond 2021, NASA plans to incrementally develop progressively more-capable SLS launch vehicles complemented by Orion capsules and ground systems.
GAO was asked to assess the costs of NASA's human exploration program. This report examines the scope of NASA's preliminary cost estimates for the three programs. To conduct this work, GAO reviewed NASA information on cost estimates for the three programs, discussed the estimates with NASA officials, and assessed the estimates against best practices criteria in GAO's cost estimating guidebook as well as NASA's own requirements and guidance.

What GAO Found

The scope of the National Aeronautics and Space Administration's (NASA) preliminary cost estimates for the Space Launch System (SLS), Orion Multi-Purpose Crew Vehicle (Orion), and associated ground systems encompasses only the programs' initial capabilities and does not include the long-term, life cycle costs associated with the programs or significant prior costs:
The SLS estimate is based on the funding required to develop and operate the initial 70-metric ton variant through first flight in 2017 but not the costs for its second flight in 2021. NASA is now incurring some costs related to the second flight, but it is not currently tracking those costs for life cycle cost estimating purposes. Furthermore, the estimate does not include costs to incrementally design, develop, and produce future 105- and 130-metric ton SLS variants which NASA expects to use for decades. NASA is now funding concept development and analysis related to these capabilities.
The Orion estimate does not include costs for production, operations, or sustainment of additional crew capsules, despite plans to use and possibly enhance this capsule after 2021. It also does not include $4.7 billion in prior costs incurred during the approximately 4 years when Orion was being developed as part of NASA's now-defunct Constellation program.
The ground systems estimate excludes costs to develop or operate the ground systems infrastructure beyond 2017, although NASA intends to modify ground architecture to accommodate all SLS variants.
NASA expects to use this same limited scope of work to establish the programs' baseline cost estimates in 2014. According to NASA, the agency is developing a tailored definition for the programs' life cycle cost estimates as allowed by NASA requirements. Agency officials stated that NASA chose its approach in part due to uncertainties about the programs' end dates and missions beyond 2021.
GAO recognizes that defining life cycle costs can be difficult when uncertainties exist, and that best practices for cost estimating look favorably on evolutionary development. Even so, best practices expect that a high-quality cost estimate will account for program uncertainties, forecast a minimum and maximum range for all life cycle costs, and clearly define the characteristics of each increment of capability so that a rigorous life cycle cost estimate can be developed. According to these practices as well as NASA's requirements and guidance, life cycle cost estimates should encompass all past, present, and future costs for a program, including costs for operations, support, and disposal. The limited scope that the agency has chosen for constructing preliminary and baseline cost estimates, however, means that the estimates are unlikely to serve as a way to measure progress and track cost growth over the life of the programs. For example, cost growth on the current SLS variant could be masked as the addition of scope associated with work for future variants, and the baseline estimate would no longer be applicable. Insight into program costs helps decision makers understand the long-term affordability of programs—a key goal of the National Space Transportation Policy—and helps NASA assess management of its portfolio to achieve increasing capabilities as directed in the NASA Authorization Act of 2010.

What GAO Recommends

NASA should establish separate cost baselines that address the life cycle of each SLS increment, as well as for any evolved Orion or ground systems capability, among other actions to enable assessment of affordability and enhance oversight.
In commenting on a draft of this report, NASA partially concurred with GAO's recommendations, citing that actions taken to structure the programs and track costs met their intent. However, GAO believes NASA's responses do not fully address the issues raised in this report.