To that end, NASA  plans to incrementally develop three progressively more capable SLS  launch vehicles—70-, 105-, and 130-metric ton (mt) variants. Program’s Ability to Meet Schedule for 2017 Test Flight at Risk

While the SLS program is satisfying many of NASA’s metrics that  measure progress against overall design goals, NASA has not  established an executable business case that matches the SLS  program’s cost and schedule resources with the requirement to develop  the SLS and launch the first flight test in December 2017 at the required  confidence level of 70 percent. Matching resources to requirements is  considered a best practice for establishing a successful acquisition  program. However, the development schedule of the core stage, which is  driving the overall program schedule, is aggressive and substantial  amounts of schedule that the program reserved to resolve unanticipated  issues is already threatened. In addition,  according to the program’s risk analysis, the agency’s current funding  plan for SLS may be $400 million short of what the program needs to  launch by 2017. NASA Has Not Matched Resources and Requirements for 2017 Initial Flight Test

NASA has not established an executable business case based on  matching the SLS program’s cost and schedule resources with the  requirement to develop the SLS and launch the first flight test in  December 2017 at the required confidence level of 70 percent. We have  also found that NASA’s previous attempts to develop new transportation  systems, such as the Constellation program, have failed in part because  they were focused on maturing designs without adequate funding to  support those efforts. Further, eliminating asbestos as a key insulating material within the solid  rocket boosters on the SLS has required changes to the booster  manufacturing processes to meet safety requirements. SLS Program Has Critical Gaps in Knowledge Needed to Assess Long-Term Affordability, but Opportunities Exist to Promote Affordability

NASA has yet to make mission decisions beyond EM-2 for the SLS  program and has not produced a complete life-cycle cost estimate for any  of the three planned variants; however, competition opportunities exist for  future development work that may promote long-term affordability. Although the agency has identified several possible destinations, it has  not decided upon specific missions for the SLS program beyond EM-1  and EM-2, which will directly affect the program’s future development  path and flight schedule. Mission selection will likely determine the order  of future development efforts, as the program can only afford to develop  one upgraded element at a time. Although the program costs are as yet unknown, there are  opportunities to improve long-term affordability through competition once  the element upgrade development path has been determined. NASA partially concurred  with our recommendations, citing among other reasons that actions  already in place such as establishing SLS, Orion, and related ground  support 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. Specifically, we pointed out that  establishing cost and schedule at the broader program level was unlikely  to provide the detail necessary to monitor the progress of each block  against a baseline; it was unclear from NASA’s response whether cost  commitments the agency plans within the SLS design review process  would serve the same purpose as establishing a cost baseline for each  respective upgrade; and reporting costs associated with EM-2 and  subsequent variants of SLS via the agency’s annual budget submission  would not provide information about potential costs over the long term  because budget requests neither offer all the same information as life- cycle cost estimates nor are necessarily linked to an established baseline  that indicates how much NASA expects to invest to develop, operate, and  sustain a capability over the long-term. Our body of work on contracting has shown  that competition in contracting is a key element for maintaining cost  control. An  updated assessment of the launch vehicle market could better position  NASA to sustain competition, control costs, and better inform the  Congress about the long-term affordability of the program. The initial launch date for SLS is just 3 and a half  years away. Beyond the SLS second flight in 2021, the program’s path is unclear. Recommendations for Executive Action

To provide the Congress with the necessary insight into program planning  and affordability, and to decrease the risk of cost and schedule overruns,  we recommend that NASA’s Administrator direct the Human Exploration  and Operations Mission Directorate to take the following four actions:
NASA should develop an executable business case for SLS based on  matching requirements and resources that results in a level of risk  commensurate with its policies. To promote affordability, before finalizing acquisition plans for future  capability variants, NASA should assess the full range of competition  opportunities and provide to the Congress the agency’s assessment  of the extent to which development and production of future elements  of the SLS could be competitively procured. Appendix I: Scope and Methodology

In order to assess the National Aeronautics and Space Administration’s  (NASA) progress to conduct its first flight in 2017, we interviewed and  obtained briefings and relevant documents from NASA and contractor  officials.
Why GAO Did This Study

SLS is NASA's first exploration-class heavy lift launch vehicle in over 40 years. Predecessor programs, such as Constellation, were canceled in the face of acquisition problems and funding shortfalls. NASA estimates it could spend almost $12 billion developing the first of three SLS vehicle variants and associated ground systems through initial launch in late 2017 and potentially billions more to develop increasingly capable vehicles. Ensuring that this program is affordable and sustainable for the long term is a key goal of the 2013 National Space Transportation Policy.
GAO was asked to evaluate SLS program challenges. This report examines (1) the SLS program's progress toward and risks for its first test flight in 2017 and (2) the extent to which the SLS program has plans in place to achieve its long-term goals and promote affordability. To do this, GAO reviewed relevant design, development, cost, and schedule documents; interviewed program officials; and evaluated SLS program actions using acquisition and cost estimating best practices.

What GAO Found

The Space Launch System (SLS) program is making solid progress on the SLS design. However, the National Aeronautics and Space Administration (NASA) has not developed an executable business case based on matching the program's cost and schedule resources with the requirement to develop the vehicle and conduct the first flight test in December 2017 at the required confidence level of 70 percent. NASA uses a calculation referred to as the “joint cost and schedule confidence level” to estimate the probable success of a program meeting its cost and schedule targets. NASA policy usually requires a 70 percent confidence level for a program to proceed with final design and fabrication. GAO's work on best practices has shown that programs that do not establish an executable business case that matches requirements—or customer needs—to resources, such as schedule and funding—are at increased risk of cost and schedule growth. The program is satisfying many of NASA's metrics that measure progress against design goals, such as requirements for design maturity. According to the program's risk analysis, however, the agency's current funding plan for SLS may be $400 million short of what the program needs to launch by 2017. Furthermore, the development schedule of the core stage—which drives the SLS schedule—is compressed to meet the 2017 launch date. NASA also faces challenges integrating existing hardware that was not originally designed to fly on SLS. For example, SLS is using solid rocket boosters from the Constellation program, but integrating a new non-asbestos insulating material into the booster design has proven difficult and required changes to the booster manufacturing processes.
The SLS program has not yet defined specific mission requirements beyond the second flight test in 2021 or defined specific plans for achieving long-term goals, but the program has opportunities to promote affordability moving forward. NASA plans to incrementally develop more capable SLS launch vehicles to satisfy long-term goals, but future missions have not been determined, which will directly affect the program's future development path and flight schedule. Mission selection will likely determine which element the program decides to develop next, as the program can afford to develop only one element at a time. The magnitude of these development efforts could be significant but is currently unknown as the program has not developed complete life-cycle cost estimates for the initial or future SLS launch vehicles. In May 2014, GAO recommended that NASA address this issue, and NASA partially concurred, citing that actions taken to structure the programs and track costs met the intent of the recommendations. However, GAO believes NASA's responses do not fully address the concerns about the program's cost estimates. There are opportunities, however, to improve long-term affordability through competition once the development path has been determined and NASA can finalize its acquisition approach. For example, the program plans to compete the procurement of one element; however, the agency has not finalized assessments of options for competitively procuring other future elements. Such assessments could better position NASA to sustain competition, control costs, and better inform Congress about the long-term affordability of the program. GAO's body of work on contracting has shown that competition in contracting is a key factor in controlling cost.

What GAO Recommends

Among other actions to reduce risk and allow for continued assessment of SLS progress and affordability, GAO recommends that NASA develop an executable business case for SLS that matches resources to requirements, and provide to the Congress an assessment of the SLS elements that could be competitively procured for future SLS variants before finalizing acquisition plans for those variants. NASA concurred with GAO's recommendations.