NASA OIG Finds Agency was “Overly Generous” with Lockheed Orion Award Fees

NASA OIG has found the agency was “overly generous” with Lockheed Orion award fees.
Image credit: NASA/Frank Michaux

A NASA OIG report has determined that the contract amount the agency awarded to Lockheed Martin for the development of the Orion spacecraft was “overly generous.” The report attributed the overly generous nature of the Orion award fees to subjective fee evaluations and “nebulous and dated criteria used by the program.”

The NASA OIG report entitled “NASA’s Management of the Orion Multi-Purpose Crew Vehicle Program” was published on July 16. The investigation detailed within the report sought to understand the significant cost overruns and schedule delays suffered by the program.

Among a number of concerning discoveries, the report suggested that NASA had been “overly generous” in the award fees given to Lockheed for the development of the spacecraft. The amount, which totaled $740.9 million from the inception of the contract in 2006 through January 2020 was found to be inflated by at least $27.8 million.

The primary reason for the inflated contract award was, according to the report, subjective fee evaluations and “nebulous and dated criteria used by the program.” This led to the contractor receiving “Excellent” ratings that may not have accurately reflected reality. This in turn reduced transparency and hindered the effective management of the program’s cost and schedule.

As NASA continues to prepare for its return to the Moon in 2024, challenges to the Orion program continue to plague the agency. Since the cost and schedule baseline for Orion was set in 2015, the program has suffered over $900 million in cost overruns through 2019. Additionally, according to the OIG report, this figure is expected to balloon to $1.4 billion by 2023.

Despite NASA spending significantly more than it expected, the Orion program continues to be years behind schedule. The spacecraft’s first mission, Artemis I has slipped more than three years. Additionally, the first crewed mission, Artemis II is expected to slip at least two years.

Andrew Parsonson is a space enthusiast and the founder of Rocket Rundown. He has worked as a journalist and blogger for various industries for over 5 years and has a passion for both fictional and real-life space travel. Currently, Andrew is the primary writer for Rocket Rundown as we look to expand our reach and credibility.