The high cost of these unsuccessful efforts and the potential costs of  implementing the Vision make it important that NASA achieve success in  its new exploration program beginning with the CEV project. The absence of firm cost estimates  is mainly due to the fact that the program is in the early stages of its life  cycle. While  changes to the program are appropriate at this stage when concepts are  still being developed, they leave the agency in the position of being unable  to firmly identify program requirements and needed resources. NASA  plans to commit to a firm cost estimate for the Constellation program at  the preliminary design review in 2008, when requirements, design, and  schedule will all be baselined. As  we reported in July 2006, there are years when NASA has projected  insufficient funding to implement the architecture with some yearly  shortfalls exceeding $1 billion; while in other years the funding available  exceeds needed resources. However,  despite initial surpluses, the long-term sustainability of the program is  questionable given the long-term funding outlook for the program. NASA’s  preliminary projections show multibillion-dollar shortfalls for its  Exploration Systems Mission Directorate in all fiscal years from 2014 to  2020, with an overall deficit through 2025 in excess of $18 billion. NASA must also contend with competing budgetary demands within the  agency as implementation of the exploration program continues. Lack of Sound Business Case Puts CEV Acquisition at Risk

In July 2006, we reported that NASA’s acquisition strategy for the CEV  placed the project at risk of significant cost overruns, schedule delays, and  performance shortfalls because it committed the government to a long- term contract before establishing a sound business case. Our report highlighted that NASA had yet to develop key elements of a  sound business case, including well-defined requirements, mature  technology, a preliminary design, and firm cost estimates that would  support such a long-term commitment. These changes to the acquisition strategy lessen the  government’s financial obligation at this early stage. However, in our 2005 report that assessed NASA’s acquisition policies, we  found that NASA’s policies lacked major decision reviews beyond the  initial project approval gate and a standard set of criteria with which to  measure projects at crucial phases in the development life cycle—key  markers for monitoring such progress. In the revised policy, NASA indicated that it  would require the results of the critical design review and, for projects that  enter a large-scale production phase, the results of the production  readiness review to be reported to the appropriate decision authority in a  timely manner so that a decision about whether to proceed with the  project can be made. The realistic identification of the  resources needed to achieve the agency’s short-term goals would provide  support for such a sustained commitment over the long term. As NASA  proceeds with its acquisition strategy for the CEV project and other key  projects, it will be essential that the agency ensure that the investment  decisions it is making are sound and based upon high levels of knowledge.
Why GAO Did This Study

The National Aeronautics and Space Administration (NASA) plans to spend nearly $230 billion over the next two decades implementing the President's Vision for Space Exploration (Vision) plans. In July 2006, GAO issued a report that questioned the program's affordability, and particularly, NASA's acquisition approach for one of the program's major projects--the Crew Exploration Vehicle (CEV). This testimony, which is based upon that report and another recent GAO report evaluating NASA's acquisition policies, highlights GAO's continuing concerns with (1) the affordability of the exploration program; (2) the acquisition approach for the CEV, and; (3) NASA's acquisition policies that lack requirements for projects to proceed with adequate knowledge.

What GAO Found

NASA's proposals for implementing the space exploration Vision raise a number of concerns. NASA cannot develop a firm cost estimate for the exploration program at this time because the program is in its early stages. The changes that have occurred to the program over the past year and the resulting refinement of its cost estimates are indicative of the evolving nature of the program. While changes are appropriate at this stage of the program, they leave the agency unable to firmly identify program requirements and needed resources and, therefore, not in the position to make a long term commitment to the program. NASA will likely be challenged to implement the program, as laid out in its Exploration Systems Architecture study (ESAS), due to the high costs associated with the program in some years and its long-term sustainability relative to anticipated funding. As we reported in July 2006, there are years when NASA, with some yearly shortfalls exceeding $1 billion, does not have sufficient funding to implement the architecture; while in other years the funding available exceeds needed resources. Despite initial surpluses, the long-term sustainability of the program is questionable, given its long-term funding outlook. NASA's preliminary projections show multibillion-dollar shortfalls for its exploration directorate in all fiscal years from 2014 to 2020, with an overall deficit through 2025 in excess of $18 billion. NASA's acquisition strategy for the CEV was not based upon obtaining an adequate level of knowledge when making key resources decisions, placing the program at risk for cost overruns, schedule delays, and performance shortfalls. These risks were evident in NASA's plan to commit to a long-term product development effort before establishing a sound business case for the project that includes well-defined requirements, mature technology, a preliminary design, and firm cost estimates. NASA adjusted its acquisition approach and the agency included the production and sustainment portions of the contract as options--a move that is consistent with the recommendation in our report because it lessens the government's financial obligation at this early stage. However, risks persist with NASA's approach. As we reported in 2005, NASA's acquisition policies lacked major decision reviews beyond the initial project approval gate and lacked a standard set of criteria with which to measure projects at crucial phases in the development life cycle. These decision reviews and development measures are key markers needed to ensure that projects are proceeding with and decisions are being based upon the appropriate level of knowledge and can help to lessen identified project risks. The CEV project would benefit from the application of such markers.