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NASA Spends 72 Cents of Every SLS Dollar On Overhead Costs, Says Report (arstechnica.com)

A new report published by the nonpartisan think tank Center for a New American Security shows us where a lot of NASA's money is being spent. The space agency has reportedly spent $19 billion on rockets -- first on Ares I and V, and now on the Space Launch System rocket -- and $13.9 billion on the Orion spacecraft. If all goes according to plan and NASA is able to fly its first crewed mission with the new vehicles in 2021, "the report estimates the agency will have spent $43 billion before that first flight, essentially a reprise of the Apollo 8 mission around the Moon," reports Ars Technica. "Just the development effort for SLS and Orion, which includes none of the expenses related to in-space activities or landing anywhere, are already nearly half that of the Apollo program." From the report: The new report argues that, given these high costs, NASA should turn over the construction of rockets and spacecraft to the private sector. It buttresses this argument with a remarkable claim about the "overhead" costs associated with the NASA-led programs. These costs entail the administration, management, and development costs paid directly to the space agency -- rather than funds spend on contractors actually building the space hardware. For Orion, according to the report, approximately 56 percent of the program's cost, has gone to NASA instead of the main contractor, Lockheed Martin, and others. For the SLS rocket and its predecessors, the estimated fraction of NASA-related costs is higher -- 72 percent. This means that only about $7 billion of the rocket's $19 billion has gone to the private sector companies, Boeing, Orbital ATK, Aeroject Rocketdyne, and others cutting metal. By comparison the report also estimates NASA's overhead costs for the commercial cargo and crew programs, in which SpaceX, Boeing, and Orbital ATK are developing and providing cargo and astronaut delivery systems for the International Space Station. With these programs, NASA has ceded some control to the private companies, allowing them to retain ownership of the vehicles and design them with other customers in mind as well. With such fixed-price contracts, the NASA overhead costs for these programs is just 14 percent, the report finds.

10 of 166 comments (clear)

  1. Can't blame NASA by OverlordQ · · Score: 4, Insightful

    NASA is the easiest go to for pork barrel politics.

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    1. Re:Can't blame NASA by Gravis+Zero · · Score: 3, Insightful

      NASA is the easiest go to for pork barrel politics.

      I would like to remind you that about a trillion dollars a year go toward "defense". The budget for the F-35 is almost as large as the entire budget for NASA! If you want to talk about pork, you aren't talking about spending money on science, you're talking about defense spending.

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    2. Re:Can't blame NASA by Rei · · Score: 4, Insightful

      I'm anyone but someone to defend SLS, but this report seems rather flimsy. It seems that they're calling anything that NASA does in-house "overhead". That's not really a fair measure. A rocket is not just its physical construction; there's a huge amount of cost in research, design, testing, and support infrastructure - in the case of SLS, particularly the Exploration Ground Systems (EGS). Part of the problem however is that every time NASA builds something new, they're rarely allowed to shut it down. Including major projects with contractors. Congress keeps mandating this inefficiency, when what NASA really needs is the freedom to put large amounts of infrastructure to the axe when it can't contribute toward competitive costs, and reallocate the funds as is needed. So long as they face mandates to keep everything open (both internal, and with specific production lines run by particular suppliers), they shouldn't be criticized for their high costs - congress should.

      I really think NASA would fare better if it went back more to the NACA model - a research and support organization for other players, maintaining the common infrastructure and R&D used by others - with the addition of a scientific exploration program. NASA shouldn't be making anything that a private business case can be built for (for example, rockets reaching LEO / GEO), but they should be running the DSN, range support, creating a market for private industry to continually expand/improve its capabilities, nurturing startups to increase competition, and extensively working to bring more advanced technologies (that the market couldn't afford to sink money into due to the risk) from theory into real world - not trying to make "workhorses", but proof-of-concept systems that others will run with if merit and maturity can be demonstrated.

      In short:
      If there's a business model for it: private industry
      If it's too risky or long-term for business: NASA proof-of-concept
      If its a common need for multiple businesses in the field: NASA permanent infrastructure

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    3. Re: Can't blame NASA by Tyrannicsupremacy · · Score: 2, Insightful

      Yeah, this all started with Trump. *rolls eyes*

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    4. Re:Can't blame NASA by beelsebob · · Score: 5, Insightful

      Except we're not talking about profit here.

      We're talking about everything that is not manufacturing the rocket. That is... designing the bloody thing.

      The thing I find surprising about the 72% figure is not how high it is - it's how low it is. It apparently is only costing 3 times as much to design an entirely new rocket system than it costs to build the first vehicle.

      That's really fucking impressive.

    5. Re:Can't blame NASA by WheezyJoe · · Score: 5, Insightful

      Agreed. This report smells like sensationalized bullshit that makes light of what things really cost. The cost to essentially re-tool after decades out of the business of anything beyond low-earth orbit space travel has to be paid, and since NASA has to carry out the mission, they're the ones who first have to have everything in place. Measuring this against what contractors get is a head-fake; contractors should be specialists paid just for the piece of the puzzle required from them, so they should get paid less and later, after NASA has figured out to an excruciating degree of certainty what they need and how to get it done right so that contractors don't wind up making something useless.

      Besides, NASA is not for-profit like the private sector. Money doesn't disappear down a profit hole, CEO bonuses or golden parachutes. If money is being stolen or misappropriated at NASA, it will be found out - some of that overhead, after all, goes to paper-trailing all the funding. That's why I'm saying bullshit to this article. Unless there are examples of specific misappropriation, then the money's being spent where it's gotta be spent (it sure as fuck isn't going to big, giant salaries or bonuses). It's easy and fashionable to shit on public-sector spending... 'cause it's public so trolls can see it and troll it and feel smug without taking the time to dig into the details... unlike the private sector where their spending is none of your damn business. Pros and cons. Yes, government agencies fuck up every so often and spend tax-payer money on bridges to nowhere and other shit. But they get caught because of the paper trail and the armies of trolls looking to expose them and feel smug about themselves.

      Given the high-exposure of NASA, and how crazy fucking hard it is to get a job there in spite of relatively meager salaries compared to what you could get in the private sector, I don't bet there's too much funny business really going on... except only for pork mandated by Congress, because a congressman wants something sweet in his state or district. In THAT case, don't blame NASA, blame the Congressman (and the people who voted for him).

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  2. It is in the nature of the business! by farrellj · · Score: 4, Insightful

    Going into space is an incredibly front loaded type enterprise. They aren't opening a a dollar store, they are sending people in to one of the most hostile environments known to man. They say "Measure twice, cut once", but when you have the lives of people in your hands, you measure tens of thousands of times to make sure the final cutting won't accidentally kill them! And before you go and say Blue Origin and SpaceX are doing it so much cheaper, yes, but that is because they are standing on a mountain of research & technology courtesy NASA. R&D done by NASA has given us billions and billions of dollars in spin-off technologies over the years, and I am sure if you charted it out, your return on investment is pretty good.

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    1. Re:It is in the nature of the business! by SiggyRadiation · · Score: 1, Insightful

      No, they aren't opening a dollar store, but the numbers from TFA are enormous. SpaceX and Blue Origin may be standing on a mountain of previous research & tech from NASA, but NASA itself is also standing on that same mountain. Since it is their own mountain, it should be logical that they would be more effective in applying previously discovered knowledge to their new projects.

      And, purely the fact that space is a hostile environment isn't a fact that can be used to explain away any level of bureaucracy and overhead. Arguably, the deep see is a more hostile environment because of the higher pressures. Combine that with using nuclear power in subs and you actually have an equally complex and risky environment, probably more. There are a lot more situations where quality control is an absolute requirement, such as nuclear power, (intensive) health care, chemical plants, etc. How big is overhead in those industries?

      Probably the biggest problem in discussing overhead numbers for something that doesn't work yet is that you don't have the complete picture yet. If NASA overhead costs, say 10 billion for a total program cost of 15 billion then you could argue that the overhead would be 66%. But if we actually start transporting stuff into orbit and send a bill to whoever is sending the stuff (even if it is an internal NASA team), and you could bill them 10 billion in the course of the program for the time and materials required for the launces, then the overhead percentage would suddenly be "only" 40% (I know I'm taking a lot of shortcuts and most management would probably stick around after the SLS has been delivered).

      But, no, simply ignoring these astronomical levels of overhead because of the complexity of space as an environment is in my opinion not valid.

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    2. Re:It is in the nature of the business! by farrellj · · Score: 5, Insightful

      Yes, they stand on that mountain, but they are still building it! As for your comparison with nuclear, health, etc...sorry, the tolerances there are much greater than for space. Certification for use in the medical or nuclear fields is much easier than getting something space rated!

      And most times when a "think tank" comes out with "proof" that some agency has too much bureaucracy, it is a prelude to justify budget cuts. It's just another piece of the propaganda war. :-(

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  3. They ignored inflation. by silentcoder · · Score: 4, Insightful

    In it's day Apollo 8 cost 20 billion dollars. In today's money that's about 110 billion dollars.
    The SLS costing the about the same in today's money as Apollo 8 cost in 1968 dollars - is actually a MASSIVELY cheaper and more efficient project then. .

    The argument is pretty flawed if you make such a silly mistake. Now let's consider the claim about amounts and where they go. Are these people seriously saying that ALL of what NASA does with their share is wasted effort ? Does NASA not have a stake in doing their own testing and validation - making sure that they get what they paid for and that their astronauts will be safe ? Outsourcing that seems seriously irresponsible but even if you DID the private sector companies would have to do the same tests. Maybe they COULD do it cheaper -but cheaper isn't the most important thing here, quality matters a lot more than price for this stuff.

    Why exactly is it a bad thing if a large chunk of NASA's budget is spent on the parts NASA does ? Why are these people arguing that NASA should outsource more than they do ? NASA is the customer here - and this seems like a thinly veiled attempt to use politics to force the customer to buy more.

    NASA is the dumbest thing to complain about in terms of cost anyway - as a fraction of the federal budget they are a blip. Seriously NASA has had it's funding cut so consistently for decades that, today, they are basically a rounding error on the budget.

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