When talking about spaceflight launch vehicles used by NASA, it is frequently pointed out how the older style “cost plus” contract model let vendors take advantage of US taxpayers by delivering subpar final solutions with astronomically high costs, all while guaranteeing a healthy profit for the vendor. Vendors deserve lots of the blame, but not all of it, and here we see why:
“We don’t have a lot of opportunities to force specific design changes beyond what they had originally proposed,” he said. “There are very few opportunities for us to essentially force them to provide the telemetry and instrumentation that we may want to have.”
This NASA official wants something from the vendor that was not agreed to when the vendor and NASA signed the contract. He wants to force the vendor to do it anyway (implicitly also wants it for free). However, this isn’t a “cost plus” contract. Instead its a fixed service contract where the vendor will provide the outcome contracted (in this case landing astronauts on the moon), but the vendor has the freedom to design and deliver the method to reach that outcome themselves irrespective of NASA’s late add-on desires.
That was particularly truefor the HLS contracts, he said, where cryogenic fluid management is a means to an end, transporting astronauts toandfrom the lunar surface using a services contract. “The service isto deliver crew to the moon. It’s notto deliver a cryogenic fluid management system that we can validate,” he said.
We’ve seen vendors feet held to the fire to deliver on these fixed bid contract for spaceflight, and now we see how its keeping NASA from being a bad actor too.
I’d frame this discussion somewhat differently. Fixed-cost service contracts are really good when everyone involved knows what the hell they’re doing. When the contractor doesn’t know what they’re doing, they either inflate the bid or under-bid and lose money. When the government doesn’t know what it’s doing, it gives bad requirements and the result is either poor outcomes (spent the money, didn’t get what we needed) or shitloads of change orders (which is where cost-plus bites you anyways).
So - for fixed-price to work, it needs to be for a service both parties fully understand. Guess what? Nobody knows what the hell we’re doing with lunar travel. Not NASA, not the billionaire space enthusiasts, nobody. We’re making it up as we go along… and that’s okay unless we’re locked into contract mechanisms that make adjustment and collaboration difficult. Guess what? That’s exactly what we did.
Fixed-price is a different kind of “screwed” than cost-plus. It’s not less screwed…just different.
Let’s add this technology development piece to the story. Everyone doing space stuff needs CFM. In the old days, NASA would pay a lot of money to have a technology developed… but they’d own the rights and could license it or give it away. In the new world order, NASA is still paying (slightly less) for the technology to be developed… but the solutions may not be broadly useful to the rest of NASA’s goals… and nobody else gets the benefit of the technology. That’s called vendor lock, and vendor lock sucks in any situation.
So I dunno. It’s complicated, but it’s not the fault of the CFM engineers. NASA is indirectly throwing money at CFM, and they’re not getting good value for money in that investment. If you ask me, it’s the fault of the contracts folks for not thinking through these enormously obvious pitfalls and coming up with ways to manage them.
When talking about spaceflight launch vehicles used by NASA, it is frequently pointed out how the older style “cost plus” contract model let vendors take advantage of US taxpayers by delivering subpar final solutions with astronomically high costs, all while guaranteeing a healthy profit for the vendor. Vendors deserve lots of the blame, but not all of it, and here we see why:
“We don’t have a lot of opportunities to force specific design changes beyond what they had originally proposed,” he said. “There are very few opportunities for us to essentially force them to provide the telemetry and instrumentation that we may want to have.”This NASA official wants something from the vendor that was not agreed to when the vendor and NASA signed the contract. He wants to force the vendor to do it anyway (implicitly also wants it for free). However, this isn’t a “cost plus” contract. Instead its a fixed service contract where the vendor will provide the outcome contracted (in this case landing astronauts on the moon), but the vendor has the freedom to design and deliver the method to reach that outcome themselves irrespective of NASA’s late add-on desires.
That was particularly true for the HLS contracts, he said, where cryogenic fluid management is a means to an end, transporting astronauts to and from the lunar surface using a services contract. “The service is to deliver crew to the moon. It’s not to deliver a cryogenic fluid management system that we can validate,” he said.We’ve seen vendors feet held to the fire to deliver on these fixed bid contract for spaceflight, and now we see how its keeping NASA from being a bad actor too.
I’d frame this discussion somewhat differently. Fixed-cost service contracts are really good when everyone involved knows what the hell they’re doing. When the contractor doesn’t know what they’re doing, they either inflate the bid or under-bid and lose money. When the government doesn’t know what it’s doing, it gives bad requirements and the result is either poor outcomes (spent the money, didn’t get what we needed) or shitloads of change orders (which is where cost-plus bites you anyways).
So - for fixed-price to work, it needs to be for a service both parties fully understand. Guess what? Nobody knows what the hell we’re doing with lunar travel. Not NASA, not the billionaire space enthusiasts, nobody. We’re making it up as we go along… and that’s okay unless we’re locked into contract mechanisms that make adjustment and collaboration difficult. Guess what? That’s exactly what we did.
Fixed-price is a different kind of “screwed” than cost-plus. It’s not less screwed…just different.
Let’s add this technology development piece to the story. Everyone doing space stuff needs CFM. In the old days, NASA would pay a lot of money to have a technology developed… but they’d own the rights and could license it or give it away. In the new world order, NASA is still paying (slightly less) for the technology to be developed… but the solutions may not be broadly useful to the rest of NASA’s goals… and nobody else gets the benefit of the technology. That’s called vendor lock, and vendor lock sucks in any situation.
So I dunno. It’s complicated, but it’s not the fault of the CFM engineers. NASA is indirectly throwing money at CFM, and they’re not getting good value for money in that investment. If you ask me, it’s the fault of the contracts folks for not thinking through these enormously obvious pitfalls and coming up with ways to manage them.