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Second SLS Mobile Launcher Costs Rise to Almost $1 Billion as Schedule Slips More Than 2 Years

By Doug Messier
Parabolic Arc
June 9, 2022
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Comparison between ML-1 and ML-2 concepts. (Source: NASA OIG presentation of Agency information)
  • 2.5 times more expensive than original contract
  • Completion delayed at least 2.5 years
  • Additional cost overruns and delays likely

by Douglas Messier
Managing Editor

Bechtel’s $383 million project to build a second mobile launcher (ML-2) for NASA’s Artemis moon program has ballooned to at least $960.1 million while completion has slipped more than two years from March 2023 to October 2025, according to a new Office of Inspector General (IG) report. And more delays are highly likely.

The delay means that the earliest NASA could launch the Artemis IV mission to the moon would be pushed back to at least November 2026 due to the need for the agency to conduct testing after construction of the mobile launcher is completed. ML-2 is required for the heavier and more powerful Space Launch System (SLS) Block 1B booster, which is set to debut on the Artemis IV flight.

Credit: NASA Office of Inspector General

The audit said additional delays are likely. There is “only a 3.9 percent confidence level” that Bechtel will be able to meet that revised schedule.

“In fact, an Independent Review Team analysis determined the project would require an additional $447 million and 27 months, for a total contract value of $1.5 billion and a launcher delivery date of December 2027—a schedule that would enable an Artemis IV launch no earlier than the end of 2028,” the audit said. “Further, while the Exploration Ground Systems (EGS) Program, which manages the ML-2 project, established a formal Agency Baseline Commitment (ABC) for the overall EGS Program—the cost and schedule baseline against which a project is measured—NASA has not established a separate ABC for the ML-2, a recommendation we made in our March 2020 report.”

The audit put most of the blame on Bechtel.

“We found Bechtel’s poor performance is the main reason for the significant projected cost increases
and schedule delays to the design and development of the ML-2. Specifically, of the $577.1 million total
projected cost increase and over 2.5 years of schedule delay, more than 70 percent ($421.1 million) and
over 1.5 years of delay is related to poor contractor performance, primarily Bechtel’s underestimation of
the ML-2 project’s scope and complexity. According to Bechtel officials, a portion of the projected cost
increase is due to the impacts of Coronavirus Disease 2019 (COVID-19),” the report said.

The IG made five recommendations to NASA to get the program back on track (see below). The space agency concurred and agreed to implement them.

The audit’s Findings in Brief section is reproduced below.

NASA’s Management of Mobile Launcher 2 Contract
Office of Inspector General
Report No. IG22-012
June 9, 2022

Results in Brief

Why We Performed This Audit

Key to NASA’s goals of sustaining a human presence on the Moon and future exploration of Mars is development of the Space Launch System (SLS)—a two-stage, heavy-lift rocket that will launch the Orion Multi-Purpose Crew Vehicle (Orion) into space. NASA is developing two mobile launchers at Kennedy Space Center in Florida that will serve as the ground structure to assemble, process, transport to the pad, and launch various iterations of the integrated SLS/Orion system. The launchers consist of a two-story base structure—the platform to support the SLS—and a tower equipped with connection lines; launch accessories; and a walkway for personnel, equipment, and astronauts.
In March 2020, the NASA Office of Inspector General issued a report examining development efforts for both mobile launchers. Construction of the first mobile launcher was completed in 2010 for the since-canceled Constellation Program’s Ares I launch vehicle with the structure later modified to support the SLS/Orion system’s first three missions known as Artemis. In 2019, NASA awarded a $383 million contract to Bechtel National, Inc. (Bechtel) to design, build, test, and commission a second mobile launcher (ML-2) to support larger variants of the SLS beginning with Artemis IV.
In this audit, we examined the extent to which NASA is meeting cost, schedule, and performance goals for the ML-2 contract. To complete this work, we reviewed budget, contract, acquisition planning, schedule, program status, risk management, and award fee documentation and data from NASA and Bechtel. We also reviewed Earned Value Management System (EVMS) documentation provided by the Defense Contract Management Agency (DCMA) and conducted interviews with NASA, Bechtel, and DCMA officials.

What We Found

NASA is estimated to spend approximately a billion dollars or at least 2.5 times more than initially planned for the ML-2 contract with final delivery of the launcher to NASA expected to take at least 2.5 years longer than initially planned. As of March 2022, NASA had obligated $435.6 million of Bechtel’s current $460.3 million contract value and extended the contract’s performance period 10 months. However, as of May 2022, design work on the ML-2 was still incomplete and Bechtel officials do not expect construction to begin until the first quarter of fiscal year 2023 at the earliest. To complete contract requirements and deliver an operational ML-2, Bechtel estimates it will need an additional $577.1 million, bringing the structure’s total projected cost to $960.1 million coupled with an October 2025 rather than March 2023 delivery date. We expect further cost increases as inevitable technical challenges arise when ML-2 construction begins. Given the time NASA requires for additional testing once the structure is delivered, the earliest the ML-2 will be available for Artemis IV is November 2026.

Compounding Bechtel’s projected cost increases and schedule delays, an ML-2 project analysis provided only a 3.9 percent confidence level that the nearly $1 billion cost and October 2025 delivery estimates were accurate. NASA requires projects to develop budgets and schedules consistent with a 70 percent joint cost and schedule confidence level (JCL), meaning a 70 percent likelihood the project will finish equal to or less than the planned costs and schedule. In fact, an Independent Review Team analysis determined the project would require an additional $447 million and 27 months, for a total contract value of $1.5 billion and a launcher delivery date of December 2027—a schedule that would enable an Artemis IV launch no earlier than the end of 2028. Further, while the Exploration Ground Systems (EGS) Program, which manages the ML-2 project, established a formal Agency Baseline Commitment (ABC) for the overall EGS Program—the cost and schedule baseline against which a project is measured—NASA has not established a separate ABC for the ML-2, a recommendation we made in our March 2020 report.

The ML-2’s substantial cost increases and schedule delays can be attributed primarily to Bechtel’s poor performance on the contract, with more than 70 percent ($421.1 million) of the contract’s cost increases and over 1.5 years of delays related to its performance. For example, Bechtel underestimated the ML-2 project’s scope and complexity, experienced ML-2 weight management challenges, and experienced staffing turnover and retention issues. Additionally, Bechtel’s lack of a certified EVMS since inception of the ML-2 contract—a contractually required tool for measuring and assessing project performance—has limited NASA’s insight into the project’s cost and schedule issues. Bechtel’s performance notwithstanding, NASA’s management practices contributed to the project’s cost increases and schedule delays. NASA awarded the ML-2 contract while the Exploration Upper Stage—the primary reason NASA needed a second mobile launcher—lacked final requirements, impacting the ML-2 design. With respect to contract management, while NASA withheld award fees for a 6-month performance period in spring 2021 due to Bechtel’s poor performance, the Agency did not continue this practice despite the contractor’s continued poor performance in the subsequent award period. Therefore, we question nearly $3 million in award fees NASA awarded to Bechtel for this period.
During this audit, we urged NASA to take immediate corrective action given the substantial concerns surrounding Bechtel’s performance. Bechtel has developed a recovery plan focused on addressing weight concerns and updating the project’s cost and schedule, while NASA is assessing whether to transition to a fixed-price contract in the construction phase. It is too early to tell what impact, if any, these efforts will have on improving the trajectory of the project.

Subsequent to completion of our audit work, we learned the Agency rated Bechtel’s performance for the award fee period ending in March 2022 as “unsatisfactory,” resulting in no award fee for this period. Additionally, Bechtel developed a revised interim cost and schedule estimate that projected even higher contract costs and delivery of the ML-2 to NASA in late 2026—more than 3.5 years later than originally promised. While we did not evaluate Bechtel’s revised cost and schedule estimate or the award fee rating as part of this audit, we will examine both as we continue to monitor NASA’s management of the ML-2 contract.

What We Recommended

To improve NASA’s management of the ML-2 contract and Bechtel’s performance, we recommended the Associate Administrator for Exploration Systems Development Mission Directorate: (1) evaluate Bechtel’s support for the updated estimate of cost and schedule at project completion and finalize negotiations for Bechtel’s currently proposed cost increases and NASA’s government-driven changes; (2) before completing and finalizing the ML-2 project-level ABC, update the JCL analysis to reflect realistic life-cycle cost and schedule estimates to ensure effective budgeting and management of the project; (3) to the extent that some or all of the Bechtel contract is converted to a fixed-price contract, ensure the Critical Design Review has been completed in accordance with NASA’s life-cycle policies prior to conversion and an independent government cost estimate is established before entering into any new contractual agreements; and (4) ensure acquisition officials minimize the availability of award fees when contract modifications and value increases are the result of shortcomings in contractor performance and require documentation of the rationale for any award fees granted. To increase accountability and improve future selection and management of contracts, we recommended the Assistant Administrator for Procurement (5) issue policy guidance to reinforce current Federal Acquisition Regulation (FAR) and NASA FAR Supplement regulatory guidance for stopping or withholding payments to a contractor for significant deficiencies in business systems, such as the EVMS.

We provided a draft of this report to NASA management who concurred with our recommendations and described their planned actions. We consider the proposed actions responsive and will close the recommendations upon completion and verification.

36 responses to “Second SLS Mobile Launcher Costs Rise to Almost $1 Billion as Schedule Slips More Than 2 Years”

  1. ThomasLMatula says:
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    Ahh, SLS, the Project that keeps the Pork flowing…

  2. Cameron says:
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    The longer it takes, the more money flows in. Follow the incentive.

  3. Andrew Tubbiolo says:
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    Sigh. Please Space X make this an easy decision to make. Get Starship flying so the killing of this program can be obvious to the lest informed citizen.

    • redneck says:
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      Yes, a similar payload capability vehicle flying monthly should make the decision easy. Never mind the frequent flyer stretch goals.

    • ThomasLMatula says:
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      If the environmentalists really were interested in protecting the environment they would be protesting toxic rockets like the SLS that fill the oceans with their acid exhaust killing marine life on every flight…

      But I guess all of the donations that legacy space firms make to environmental groups get them to look the other way…

      • Andrew Tubbiolo says:
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        I normally think you go a bit overboard on this subject, but the argument given here is smack dab on. I’d yell this point from the viewing stands right there with you. SRB’s have to be the most toxic damaging type of rocket propellant out there. The damage done to ozone is quite immense I read back in the late 80’s. Worse than UDMH/NTO. And the H2 is stripped from hydrocarbons. CH4 is mined directly from the planet, much less pre processing.

        • Robert G. Oler says:
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          the rocket wont fly enough to become more then a single point environmental hazard pitty the fish where it lands…

          the problem with SLS and Orion (and really lunar starship) is that Bill has his space program, the one he argued for during the Obama administration…but he has figured out that 1) he cant afford it and 2) he cannot figure out how to move to something he could afford

          the joy of ARM is that it had a chance of working and being affordable. go out get the big rock, bring it back and it along with (eventually) some sort of gateway becomes a cheap way to have an exploration program for a few years…while one sorts out a few other problems and keep the contractors and politicians happy

          problem is now the money to operate SLS/Orion is high and who knows what SpaceX will actually turn out with…and the other contractors came up with a lunar module replacement that is well very expensive.

          and all in all there is no interest to fund this at any real level

          or survive really any single point failure. from Orion failing a test flight to lunar starliner tipping over. boom doom 🙂

          I have bought another project plane. a Swift 🙂

          • therealdmt says:
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            Those Swifts are pretty cool looking.

            Have fun 🙂

          • ThomasLMatula says:
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            It is just not in the impact zone where they sink to the sea floor to rot and release toxic compounds into the fragile environment, it is the acidic exhaust cloud from the SRBs at launch that cover the wildlife refuge and water, burning and poisoning everything it touches from the acid.

            • Robert G. Oler says:
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              sure but the flight rates are very very low

              • ThomasLMatula says:
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                Low flight rates should not exempt it from environmental review given how toxic it is.

              • duheagle says:
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                Thing is, the SLS SRBs are pretty much just modestly bigger versions of the Shuttle SRBs. And the Shuttle flew for 30 years from the very same pad. The environmental review for Shuttle was probably conducted when I was still in school.

              • duheagle says:
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                Right now, Vulcan’s flight rate is zero because it isn’t a thing yet. To meet Kuiper’s deployment deadlines, both Vulcan and Ariane 6 will be flying a lot more than their predecessor rockets have been doing in recent years.

              • Robert G. Oler says:
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                no doubt but their solids are quite small and pretty cheap

              • duheagle says:
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                Compared to SLS SRBs they’re small and cheap. But they’re still pretty big. And when a bunch of them are needed at one time, they’re not all that cheap, either.

              • Robert G. Oler says:
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                they are pretty cheap

              • redneck says:
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                And the gang murderer activity rate is quite low. Only every couple of years so it’s not a problem.

              • duheagle says:
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                Actually, it isn’t. Bad analogy. But I think I get your point even so.

        • therealdmt says:
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          1 flight every two years makes it not worth talking about

          • ThomasLMatula says:
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            It is still a very dirty rocket. You have to wonder why the environmental groups haven’t required NASA to do an EIS on it. Guess they don’t want to endanger their donations from the NASA contractors looking to earn their ESG brownie points for being “environmentally friendly”…

            • duheagle says:
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              Big Green tends to be a bit like a supermodel – it doesn’t get out of bed unless there’s a big payday in it. Nobody is paying them to make any noise about SLS.

              • ThomasLMatula says:
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                Yes, if Elon Musk had just paid his ESG protection money like the others, instead of actually trying to make the world better.

              • duheagle says:
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                Yes, Elon is pretty stingy with the baksheesh. His companies also do not advertise, which is why a lot of the industry mags and websites are also no friends of his.

        • duheagle says:
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          Once you accept that Big Green is about money and power far more than it is about the environment, then everything falls into place. The environment is just the McGuffin. Big Green opposes fracking because the Saudis pay them to. Ditto opposing the Keystone XL pipeline. The Kingdom is certainly getting its money’s worth from Big Green and the Biden regime.

  4. Stanistani says:
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    *moans deeply in taxpayer*

  5. Antonio Fanella says:
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    Well, if the SLS Block 1B will postpone to 2028, then the missions Artemis IV, V and VI will be able to use the SLS Block 1 and have an annual cadence.

  6. therealdmt says:
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    There is no cheap!

  7. savuporo says:
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    Need another blue ribbon committee

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