Boeing received 'unnecessary' contract boost for astronaut capsule, watchdog says

[November 16, 2019]  By Joey Roulette

WASHINGTON (Reuters) - Boeing's multibillion dollar contract to build U.S. astronaut capsules received an "unnecessary" extension from NASA, a watchdog report said on Thursday, the latest management blunders in the agency's program to restart domestic human spaceflight.

NASA agreed to pay Boeing Co <BA.N> a $287 million premium for "additional flexibilities" to accelerate production of the company's Starliner crew vehicle and avoid an 18-month gap in flights to the International Space Station. NASA's inspector general called it an "unreasonable" boost to Boeing's fixed-priced $4.2 billion dollar contract.

Instead, the inspector general said the space agency could have saved $144 million by making "simple changes" to Starliner's planned launch schedule, including buying additional seats from Russia's space agency, which the United States has been reliant on since the 2011 retirement of its space shuttle program.

Boeing and Elon Musk's SpaceX have received nearly $7 billion combined since 2014 from NASA to develop separate capsule systems designed to end U.S. reliance on Russia's Soyuz rocket for astronaut flights to the International Space Station. The program has been set back years by testing mishaps at both providers.

NASA justified the additional funds to avoid a gap in space station operations. But SpaceX, the other provider, "was not provided an opportunity to propose a solution, even though the company previously offered shorter production lead times than Boeing," the report said.

NASA also justified the additional expense to ensure Boeing “continued as a second commercial crew provider," the report said. Boeing was not immediately available for comment.

The Boeing logo is pictured at the Latin American Business Aviation Conference & Exhibition fair (LABACE) at Congonhas Airport in Sao Paulo, Brazil August 14, 2018. Picture taken August 14, 2018. REUTERS/Paulo Whitaker

In a response to the inspector general's report, NASA "strongly" disagreed with the report's findings that it overpaid Boeing, though it did agree the "complex and extensive" negotiations with the aerospace company could have resulted in a lower price.

"However, this is an opinion, three years after the fact and there is no evidence to support the conclusion that Boeing would have agreed to lower prices," the agency said in a letter to the inspector general.

The report comes as Boeing faces scrutiny over its management of NASA's Space Launch System — a massive rocket whose development has been beset with delays and billions of dollars in cost overruns. It has also faced harsh criticism from U.S. lawmakers over its best-selling 737 MAX aircraft, which was grounded after two deadly crashes in five months killed 346 people.

(Reporting by Joey Roulette; editing by Bill Tarrant)

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