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NASA rethinks mechanics for commercial crew contracts
Posted: December 15, 2011

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Faced with uncertain budgets, NASA is giving up fixed-price contracts and moving back to more flexible, but less comprehensive, Space Act Agreements to continue design work on a new commercial manned spacecraft to ferry U.S. astronauts to and from the International Space Station, officials said Thursday.

This is an artist's conception of the Dream Chaser spacecraft docked at the International Space Station. Credit: Sierra Nevada
NASA had planned to send out a request for proposals Monday from companies hoping to win 21-month Commercial Crew Program contracts next summer to move development of proposed new spacecraft closer to the critical design review phase that precedes actual construction.

But Bill Gerstenmaier, director of space operations at NASA headquarters, told reporters Thursday the agency would instead continue the effort using more general Space Act Agreements like those currently helping fund preliminary design work by Boeing, Space Exploration Technologies, Sierra Nevada and Blue Origin. The next round in the competition will be announced in January and will be focused on overall system design.

"In the current budget environment, where we see some potential fluctuations in the budget over this 21-month period, it's really tough to lock in to firm, fixed-price contract with a number of providers that can keep us moving forward," Gerstenmaier said. "With that uncertainty, we decided ... we could do a Space Act activity, which has individual milestones and each one of those milestones can be incrementally approved. So it gives us some flexibility from a budget standpoint to make as much progress (as we can) during this time as we move forward."

NASA is currently in the second phase of commercial crew development design work, or CCDev 2, using cost-sharing Space Act Agreements. The long-range goal is to come up with one or more designs that could be built as commercial ventures and then leased or rented by NASA to carry U.S., European, Canadian and Japanese astronauts to and from the space station. Until a commercial spacecraft becomes operational, NASA and partner astronauts will be forced to hitch rides aboard Russian Soyuz spacecraft at more than $60 million a seat.

Under a compromise budget for fiscal 2012, NASA will get $17.8 billion, including $406 million for commercial crew development. That's about half what the Obama administration requested, a shortfall that will delay the debut of any new vehicle by about one year, to 2017 if not later. NASA's current contract with the Russian federal space agency expires in the spring of 2016.

Gerstenmaier said NASA will be forced to negotiate a contract extension in the 2013 timeframe to ensure additional Soyuz flights, assuming Congress grants a waiver to the Iran, North Korea and Syria Nonproliferation Act that otherwise would block the space agency from buying high-technology services from the Russians.

Faced with those realities, and uncertainty about the budget in 2013 and 2014, NASA managers decided to switch back to Space Act Agreements to keep the Commercial Crew Program moving forward.

"If we look at where we were with the contracts, in a fairly stable budget environment with very clear understanding of what the budget is going to be in each fiscal year, the contract is a very effective manner for us to get to a critical design," Gerstenmaier said. "We can work with the providers, we can tell them what we expect in their design, what we don't like in their design. ... So that allows us to make very concrete technical progress and get exactly what we want coming out of this phase with a contract.

"But in a very dynamic budget environment, it makes it very tough to deal with that budget fluctuation. If we don't get the funds that we anticipated, it makes it tough to renegotiate the contract, there's some inefficiency (and) we don't actually get the product we want out of this activity, we actually get a bunch of contract change paper back and forth, which isn't a very good way of doing business."

But using Space Act Agreements for the next phase of development means NASA will have less control and will face more risk of downstream delays.

"A contract gives us a product out the other side, but it needs a stable funding environment," Gerstenmaier said. "Without a stable funding requirement, there's a risk with the contract. The Space Act gives us a lot of flexibility, but it doesn't insure that we're going to get exactly what we need coming out the other side.

"So that's the technical risk. When we look at it in terms of what we know and where we sit from an overall standpoint, we think the right decision was to move forward with the Space Act, we think that allows us to really keep this goal of getting to a commercial crew capability as soon as possible."

But work to actually build a winning design will be carried out under contract in a more traditional fashion.

"Eventually, when we get to the point where we need an actual transportation service to ISS, at that point we need a contract," Gerstenmaier said. "Could we break it into another smaller piece? I don't know, I think it's unlikely. This is probably about as far as we want to go with Space Acts."