oversight

Analysis of Changes in Estimated Cost of the Skylab Program

Published by the Government Accountability Office on 1971-06-17.

Below is a raw (and likely hideous) rendition of the original report. (PDF)

National Aeromautics and
  Space Administration




       COMPTROLLER GENERAL
OF THE UNITED STATES



                           JUNE 1 7 , 1 9 7 1
                          C o n t e n t s
                                                         Page

DIGEST                                                     1

CHAPTER

   1      INTRODUCTION                                     6

   2      COST-ESTIMATING SYSTEM                         12

   3      COST-ESTIMATING PROCFDLIRES AND PRACTICES AT
          THE MARSHAU SPACE FLIGHT CENTER                18

   4      COST-ESTIMATING PROCEDURES AND PRACTICES AT
          THE MANNED SPACECRAFT CENTER                   26

   5      HEADQUARTERS REVIEW OF COST ESTIMATES          32

   6      ESTIMATED COST OF THE SKYLAB PRQGRAM           35

   7      EXPERIMENT D E F I N I T I O N PROJECT COSTS   41

   8      EXPERIMENT DEVELOPME" PROJECT COSTS            42

   9      SPACECRAFT MODIFICATIONS PROJECT COSTS         49

  10      SATURN WORKSHOP PROJECT COSTS                   53

  11      APOLLO TELESCOPE M O W PROJECT COSTS            69

  12      SATURN I B V M I C L E PROJECT COSTS            72

  13      SAT"    V vENICI_,E PROJECT COSTS               75

  14      PAYLOAD INTEGRATION PROJECT COSTS               78

  15      MISSION OPERATIONS PROJECT COSTS                79
  16      P R C G W SUPPORT PROJECT COSTS                 82

  17      CONTRACT ADMINISTRATION COSTS                   83

  18      AGENCY COMMENTS AND OUR EVALUATION              84
CHAPTER                                                     Page
  19        SCOPE OF REVIEW                                 87
APPEEJBIX
       I    letter dated March 2 , 1971, from the
              Associate Administrator for Organization
              and Management                                91
      I1    Ietter dated March 1, 1971, from the Director
              of the Marshall Space Flight Center         97

  111       Principal officials of the National Aeronau-
              tics and Space Administration responsible
              f o r the activities discussed in this re-
              port                                          113
                         ABBREVIATIONS
GAO         General Accounting Office
NASA        National Aeronautics and Space Administration
                                                  COMPTROLLER GENERAL ' S REPORT ON
                                                  ANALYSIS OF CHANGES I N ESTIWTED
                                                  COST OF THE SKYLAB PROGRAM
                                                  National Aeronautics and Space
                                                  Adniinistration B-172192

-D- I- -
       G- E
          . -S   T

WHY THE REVIEW WAS MADE
       The General k x o u n t i n g Off i c e (GAO) rev&yed..th?- syssJem. used by Na-
       tional Aeronautics and Space Administration (NASA) Office of Manned
       Space Flight i n estimating the cost of the Skylab Program--its fourth
       manned space f l i g h t program. GAO also analyzed changes i n the e s t i -
       mated cost and obtained NASA's reasons for those changes.
       The goal of Skylab i s t o establish a workshop and solar observatory
       i n earth o r b i t f o r the purpose of expanding s c i e n t i f i c knowledge of the
       earth and the surrounding universe. Skylab will also build the founda-
       tion f o r future manned exploration beyond the moons and i t i s the fore-
       runner t o a permanent space s t a t i o n . (See p. 6 , )
        Distribution of t h i s report i s being restricted because i t contains
        NASA's estimates of contract cost -for major hardware items. NASA be-
        1 i . ~ ~ ~ ~ . " - ~ ~ aj'-cfje'jo~ ~ ~ -estimates                       - ~ t o~ ~ ~ ~
                                                              - ~ d ' ln o"t be~ made
                                                   , p ~ ~ shoul

           --avoid prejudicing the Government i n future negotiations w i t h con-
             t r a c t o r s and
           --avoid the disclosure of data which would permit contractors t o base
             claims on NASA's estimates o f projected costs. (See p . 92.)

FINDIflGS AND CONCLUSIOflS

        Cost-est<mating system                                                               F
        The Office of Manned Space F l i g h t estimates the cost of Skylab through
        i t s program operating plan system. This system produces reports show-
        i n g prior actual and future estimated cost and obligation d a t a for
        manned space f l i g h t programs funded from NASA's research and develop-
        ment appropriation. These reports were designed t o furnish basic f i -
        nancial d a t a needed for budget planning and financial management and t o
        meet the requirements of external review agencies. ( S k e p . 12.)
        NASA o f f i c i a l s have stated t h a t , during the preparation of a program
        operating p l a n , emphasis is placed upon estimating the financial require-
        ments for the next budget submission. Estimates of the cost of the pro-
        gram may contain amounts which a r e n o t considered t o be good estimates


                                                                JUNE 1 7 , 1 9 7 I
                                            1
        b u t which remain in the t o t a l s because they are for future years. NASA
        o f f i c i a l s have s t a t e d , howevers t h a t , a t the time i t i s developed, the
        program operating p l a n ' s estimate i s the best available estimate of the
        cost of the Skylab Program. (See p. l Z - )
        The estimated cost of the Skylab Program does n o t represent the pro-
        gram's t o t a l cost. Costs funded by e i t h e r of NASA's two other appro-
        priations--research and program management o r construction o f f a c i l i -
        ties--do not appear as p a r t of the estimate. The additional costs
        charged t o these appropriations cannot be measured completely because
        they are n o t always identified as being related specifically t o a par-
        t i c u l a r manned space f l i g h t program.
        Also, the estimate d i d not include a l l research and development appro-
        priation costs. For exampleg the Office of Manned Space Flight estab-
        lished a policy t h a t , t h r o u g h the completion of the Apollo Program, the
        Skylab Program would f u n d i t s own support contracts, and the Apollo Pro-
        gram would f u n d the support contracts which benefited b o t h programs
        (common support). NASA d i d not identify the value of common support
        which was applicable t o the Skylab Program. (See p. 1 2 . )
        I n addition, the estimate did not include the cost of hardware and equip
        ment procured by the Apollo Program and transferred t o the Skylab Pro-
        gram. (See p. 1 6 . )
        The Office of Manned Space F l i g h t ' s guidelines for the preparation of
        program operating plans d i d not d i r e c t the centers t o provide for i n -
        f l a t i o n . GAO found t h a t some elements o f the Skylab estimate included
        a provision for inflation and others did n o t . Therefore the t o t a l i n -
        crease i n the estimated cost of the Skylab Program a t t r i b u t a b l e to in-
        f l a t i o n could n o t be determined. (See p. 1 7 . ) GAO i s making a
        Government-wide review of the policies and procedures for recognizing
        inflation i n cost estimates. The report will be issued t o the Congress
        a t a l a t e r date.
    8
    ?
    .



        Many cost estimates were based p a r t i a l l y or entirely on experience
        and/or judgment for which s u f f i c i e n t documentation was not available t o
        show what was considered i n a r r i v i n g a t the estimate. (See chs. 3
        and 4 . ) NASA indicated t h a t i t would continue i t s attempts to improve
        i n the area o f documentation.
!
        Changes
        __        in cost estimates
        The f i r s t program operating p l a n which provided an estimate of Skylab's
        cost was prepared i n October 1968. GAO compared this estimate with one
        made i n October 1970--the most current estimate available a t the time of
        the review.




                                             2
                                                 Estimated c o s t s        Increase or
                                              October       October        decrease ( - )
             Projests                          -
                                               1968           1970       Amount      Percent

                                                           (millions)

Experiment d e f i n i t i o n            $      23.8      $     47.2   $ 23.4            98
Experiment development                          110.8           218.8    108.0            97
Spacecraft modifications                        604.4           624.7     20.3             3
Saturn workshop                                 274.0           680.2    406.2          148
Apollo telescope mount                          195.8           113.2    -82.6          - 42
Saturn IB vehicle                               404.4           232.7   -171.7          -42
Saturn V vehicle                                  3.6           157.1    153.5         4264
Payload integration                             163.0           148.6    -14.4            -9
Mission operations                              281.1            54.7   -226.4          -8 1
Program support                                 164.7            74.3    -9Q.4          -55
Contract admi ni s t ra t i on                   11.7            15.6      3.9            33
Design and development                           14.0            14.0                        -
Lunar exploration                                 6.8            -        -6.8         -100
Space s t a t i o n d e f i n i t i o n           7.7            -        -7.7         -100

      To t a 1                            $2,265.8
                                           ____            $2,381.2-    $1.15.4                  5
Note:      Figures may n o t add due t o rounding.
      As shown above, the Office of Manned Space F l i g h t ' s October 1970 estimate
      of c o s t o f the Skylab Program was $2,381.2 million. Through f i s c a l year
      1970, NASA has obligated $849.9 million of this amount from i t s research
      and development appropriation. Consequently an additional $1,531.3 mil-
      l i o n i s needed for the program between f i s c a l years 1971 and 1974, the
      current estimated year of completion.
       NASA a t t r i b u t e d t h e increases primarily t o

            --change i n the earth orbiting workshop configuration,
            --better d e f i n i t i o n of experiments,
            --additional hardware,
            --contracting out for c e r t a i n work w h i c h was t o have been performed
              in-house,
            --launch schedule slippages t o t a l i n g 15 months, and
            --inclusion of f l i g h t support costs in t h e October 1970 estimate.




                                                 3
     NASA attributed the decreases primarily t o

       --canceled production of two Saturn It3 launch vehicles (except for
         the f i r s t stages),
       --cancellation of lunar module modifications and simplified command
         and service module requirements resulting from the change i n the
         works hop configuration
       --a reduction in the Office of Manned Space Flight's allowance for
          contingencies and
       --transfer of funding for certain support contracts from the Skylab
         Program t o the Apollo Program.
     In a d d i t i o n , NASA stated t h a t the transfer of program elements among
     projects explained many of the fluctuations in individual project cost
     estimates and t h a t , from an overall point of view, these transfers did
     not constitute unwarranted cost growth. NASA stated, however, t h a t i t
     would be difficult t o allocate the cost increases and decreases among
     projects involved i n the transfers and t h a t such an allocation could
     take as much as 3 months and might only result i n a rough estimate.
     Accordingly, GAO was not able t o price out the effect of the transfers.
     (See p. 85.)

RECOMMENDATIONS OR SUGGESTIONS

     None.

-
AGENCY ACTIOIVS AND UiVRESOLVED ISSUES

     NASA agreed,in general, with the information i n GAO's report. NASA's
     comments are included i n appendixes I and I 1 and are discussed i n chap-
     t e r 18.




                                     4
                                           CHAPTER 1

                                       INTRODUCTION

              R e P nding t o c o n g r e s s i o n a l i n t r e s t in t h e c o s t of
    major r e s e a r c h and development programs, w e have reviewed
    t h e system used by t h e National Aeronautics and S p a c e Admin-
    i s t r a t i o n ' s O f f i c e of Manned Space F l i g h t f o r e s t i m a t i n g t h e
    c o s t of t h e Skylab Program--its f o u r t h manned space f l i g h t
    program. W e analyzed changes i n t h e c o s t e s t i m a t e s and ob-
    t a i n e d NASA's reasons f o r t h e s e changes.

              Our review o f t h e O f f i c e of Manned Space F l i g h t ' s c o s t -
    e s t i m a t i n g system i s d i s c u s s e d i n c h a p t e r s 2 , 3 , 4 , and 5.
    Chapters 6 through 17 p r e s e n t t h e changes i n t h e c o s t es-
    t i m a t e s developed by NASA and NASA's reasons f o r t h e s e
    changes. Chapters 8 and 10 p r e s e n t a l s o t h e r e s u l t s of o u r
    examination i n t o t h e c o s t of s e l e c t e d hardware c o n t r a c t s .
    The i l l u s t r a t i o n s included i n t h i s r e p o r t were provided t o
    u s by NASA.

           The g o a l of t h e Skylab Program i s t o e s t a b l i s h a work-
    shop and s o l a r observatory i n e a r t h o r b i t f o r t h e purpose
    of expanding t h e s c i e n t i f i c knowledge of t h e e a r t h and t h e
    surrounding u n i v e r s e . The Skylab Program will also b u i l d
    t h e foundation f o r f u t u r e major s t e p s i n manned e x p l o r a t i o n
    beyond t h e moon, and i t i s t h e f o r e r u n n e r t o a permanent
    space s t a t i o n p r o j e c t .

    M I S S I O N PROFILE

!
              The Skylab Program i s s t r u c t u r e d around a s o l a r obser-
    v a t o r y and a workshop c o n t a i n i n g l a b o r a t o r i e s , work a r e a s ,
    c o n t r o l s t a t i o n s , and crew l i v i n g q u a r t e r s . Following t h e
    launch of t h e workshop, t h r e e teams of a s t r o n a u t s , u s i n g
    modified Apollo command and s e r v i c e modules, w i l l v i s i t and
    u s e t h e workshop d u r i n g an 8-month p e r i o d c u r r e n t l y planned
    t o begin i n November 1972. Following i s a p i c t o r i a l p r o f i l e
    of t h e f o u r Skylab Program missions which NASA i d e n t i f i e s
    a s SL-1, SL-2, SL-3, and SL-4.




                                                 6
                                A COMMAND
       M O L L 0 TELESCOPE
       MOUNT
       MULTIPLE DOCKING
       ADAPTER
       AIRLOCK MODULE
       DRY WORKSHOP

SL-1                          '%-2                      SL-3                        SL-4


 t                  1 DAY       1-3    M    O   N   T       H   S   1   3 MONTHS?




            A S a t u r n V launch v e h i c l e , w i t h i t s f i r s t two s t a g e s a s
  p r o p e l l a n t s t a g e s and i t s t h i r d s t a g e completely o u t f i t t e d
  as a workshop, w i l l launch t h e hardware f o r t h e Skylab Pro-
  gram i n t o an o r b i t approximately 235 n a u t i c a l miles above
  t h e e a r t h , This launch w i l l be followed 1 day l a t e r by t h e
  launch of a S a t u r n I B c a r r y i n g t h r e e a s t r o n a u t s t o t h e work-
  shop where they w i l l remain f o r up t o 28 days. Each of t h e
  two subsequent launches of Saturn IBIS a l s o w i l l c a r r y t h r e e
  a s t r o n a u t s t o t h e workshop where each group w i l l remain f o r
  up t o 56 days.

            The O f f i c e of Manned S p a c e F l i g h t a t NASA Headquarters
  manages t h e Skylab Program. I n c a r r y i n g o u t t h i s r e s p o n s i -
  b i l i t y , t h e O f f i c e of Nanned Space F l i g h t h a s t h e following
  t h r e e f i e l d c e n t e r s under i t s d i r e c t i o n .




                                                        7
             Center                                  Responsibility

    George C . Marshall            Systems e n g i n e e r i n g , payload i n t e g r a -
      Space F l i g h t Cen-       t i o n , l a u n c h v e h i c l e s , m u l t i p l e docking
      ter, Huntsville,             a d a p t e r , a i r l o c k module, Apollo t e l e -
     Alabama                       scope mount development, o r b i t a l work-
                                   shop systems, and payload e n c l o s u r e s .

    Manned S p a c e c r a f t     Command module and s e r v i c e module modi-
     Center, Houston,              f i c a t i o n s , medical r e s e a r c h and opera-
     Texas                         t i o n s , crew systems support and t r a i n -
                                   i n g , f l i g h t mission planning, opera-
                                   t i o n s , and recovery o p e r a t i o n s .

    John F . Kennedy               Launch o p e r a t i o n s and mission s u p p o r t .
      Space C e n t e r ,
      Florida

    H I S TORI CAL PROFILE

              The Skylab Program (formerly t h e Apollo A p p l i c a t i o n s
    Program), as d e s c r i b e d above, i s intended t o c a p i t a l i z e on
    t h e c a p a b i l i t i e s and r e s o u r c e s developed i n t h e Apollo Pro-
    gram, As e a r l y as 1962 s t u d i e s were being conducted t o de-
    f i n e f u t u r e manned missions a f t e r t h e Mercury, Gemini, and
    Apollo Programs. These s t u d i e s were aimed a t determining
    t h e f u t u r e u s e of Apollo f l i g h t hardware f o r e x t e n s i v e s c i -
    e n t i f i c and t e c h n o l o g i c a l space e x p l o r a t i o n . The Apollo
    A p p l i c a t i o n s Program, c a l l e d t h e A p o l l s Extension Systems
    u n t i l 1966, w a s a r e s u l t of t h e s e s t u d i e s .

              The o b j e c t i v e s of t h e Apollo A p p l i c a t i o n s Program, a s
    d e l i n e a t e d i n 1966, included p l a n s f o r both extended l u n a r
    e x p l o r a t i o n and e a r t h o r b i t o p e r a t i o n s . I n 1969, however,
    t h e extended l u n a r e x p l o r a t i o n p o r t i o n was dropped from t h e
    Skylab Program and w a s assigned t o t h e Apollo Program. The
    e a r t h o r b i t o p e r a t i o n s p o r t i o n remained w i t h t h e Apollo Ap-
    p l i c a t i o n s Program and has evolved i n t o what now i s r e f e r r e d
    t o as t h e Skylab Program.

U
              U n t i l J u l y 1969 t h e mission p l a n c e n t e r e d around con-
    v e r t i n g t h e S-IVB s t a g e of a S a t u r n I B launch v e h i c l e i n t o
    a workshop a f t e r i t s i n i t i a l u s e as p a r t of t h e p r o p u l s i o n
    system r e q u i r e d t o reach e a r t h o r b i t . The s p e n t S - I V B s t a g e

                                                8
was to have been cleansed of fuel fumes and corrosive resi-
due and used as a workshop for the conduct of scientific,
technological, and applications experiments. NASA referred
to this as the wet workshop concept.

     A solar observatory--the Apollo telescope mount--
carried in an unmanned modified lunar module ascent stage
was to be launched by another Saturn IB, with automatic
rendezvous and docking with the workshop occurring after
its arrival in orbit. A pictorial profile of the Apollo
Applications Program wet workshop concept is shown on
page 10.
     In July 1969 the mission p l a n was modified to use the
launch capability of the larger Saturn V launch vehicle to
launch simultaneously the orbital workshop, airlock module,
multiple docking adapter, and the Apollo telescope mount.
NASA refers to this as the dry workshop concept because the
orbital workshop will be outfitted on the ground and will
arrive in orbit equipped for immediate occupancy by the as-
tronauts. The total payload package being outfitted and
checked out on the ground eliminated the need for the as-
tronauts to prepare the spent S-IVB stage for the conduct
of scientific, technological, and applications experiments
while in orbit. The dry workshop concept is being used in
the Skylab Program today.

     The decision to switch from the wet to the dry concept
caused major program changes. The principal difference in
the hardware configuration was the clustering of a l l payload
modules into a single payload for the Saturn V launch
vehicle--that is, the workshop, airlock module, multiple
docking adapter, and Apollo telescope mount became integrated
for the launch. This integration eliminated the need for
the unmanned rendezvous and docking of the lunar module/
Apollo telescope mount with the workshop after its arrival
in orbit and thereby eliminated the need for the lunar
module ascent stage.

     The change from the wet to the dry concept also reduced
the interface requirements of the command and service module.
While docked under the wet concept, the command and service
module was the provider of the required atmosphere for the
cluster--including the pressurization of the airlock module,

                               9
                                                                                                                                       .B
                              ..............................     ..................................................................   ...................................   .....


               .cI


              I




                  I  '\
                                                                A
                                                               *'*   j   CWMAND
                                                                         SERVICE
                                                                     ;   MODULE




                          .    WORKSHOP




                     WORKSHOP REVISIT AN0 SO1

         ....-......................




                                                                                                                                                                  M D AWE H p M L
                                                                                                                                                                  W C K l N G OF WATM




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                                                                                                                           10
m u l t i p l e docking a d a p t e r , and workshop. I n a d d i t i o n , t h e
command and service module's p r o p u l s i o n system was t o pro-
v i d e t h e a t t i t u d e c o n t r o l f o r t h e c l u s t e r , whereas under
t h e d r y concept i t i s only a backup system.

          During docked o p e r a t i o n s under t h e dry concept, t h e
command and service module w i l l be powered down t o t h e l o w -
e s t level p o s s i b l e t o m a i n t a i n o p e r a t i o n a l r e a d i n e s s f o r re-
t u r n and w i l l draw power from t h e workshop f o r housekeeping
f u n c t i o n s . NASA r e f e r s t o t h i s as a q u i e s c e n t command and
service module as compared t o t h e command and service module
under t h e w e t concept.




                                               11
                             CHAPTER 2

                      COST-ESTIMATING SYSTEM

         The Off ice of Manned Space Flight estimates the cost
    of the Skylab Program through its program operating plan
    system, This system produces reports showing prior actual
    and future estimated cost and obligation data for manned
    space flight programs funded from NASA's research and devel-
    opment appropriation. These reports were designed to fur-
    nish basic financial data needed for budget planning and
    financial management and to meet the requirements of exter-
I
    nal review agenciese




         In each estimate NASA includes allowances for contin-
    gencies in future years. Accordkg to NASA officials the
!
    basic reason for including such allowances is that there
    are many un'lcnom variables in a research and development
    program, and these contingency allowances serve to absorb
    program changes that would otherwise cause changes in the
    estimated c o s t of the program.

         NASA officials have stated that, during the prepara-
    tion of a program operating plan, primary emphasis is placed
    upon estimating the financial requirements for the fiscal
    years to be included in the next budget submission. Each
    budget submission includes the preceding year, the current
    year, and the budget request € o r the next year. Because of
    this emphasis, differences which may arise between NASA
    Headquarters and the field centers concerning estimates for
    future years usually are not resolved until these years are
    included as part of a budget submission.

         In this regard the officials have added that the esti-
    mates of the cost of the program may contain amounts which
    are not considered to be good estimates but which remain in
    the totals because they are for future years. Even so,
    these officials have said that the program operating plan's
    estimate of the cost of the Skylab Program is the best
    available estimate at the time it is developed.




                                12
PREPARATION OF Tm
PROGRAM OPERATING PLAN
      The program o p e r a t i n g p l a n i s updated semiannually.
The s t e p s g e n e r a l l y followed d u r i n g each updating c y c l e a r e
a s follows:

       1. On t h e b a s i s of g e n e r a l g u i d e l i n e s from NASA Head-
          q u a r t e r s , t h e t h r e e manned space f l i g h t f i e l d cen-
          t e r s , as w e l l as NASA Headquarters, p r e p a r e e s t i -
          mates which are i n c o r p o r a t e d i n t o a p r e l i m i n a r y
          program o p e r a t i n g p l a n .

       2 , Headquarters o f f i c i a l s review t h e p r e l i m i n a r y p l a n
            i n v i e w of a n t i c i p a t e d funds a v a i l a b i l i t y and t h e i r
           'knowledge of t h e program and p r e p a r e r e v i s e d guide-
           l i n e s which provide estimate c e i l i n g s f o r each cen-
           t e r and f o r NASA Headquarters.

       3 . On t h e b a s i s of t h e r e v i s e d g u i d e l i n e s , t h e prelim-
           i n a r y p l a n i s a d j u s t e d by t h e t h r e e f i e l d c e n t e r s
           and NASA Headquarters and i s c o n s o l i d a t e d i n t o t h e
           f i n a l program o p e r a t i n g p l a n ,

         A s a p a r t of our review, w e examined i n t o t h e p r e p a r a -
t i o n of t h e October 1970 program o p e r a t i n g p l a n - - t h e most
r e c e n t estimate a t t h e t i m e of our review. The p r e p a r a t i o n
of t h i s estimate w a s i n i t i a t e d by g u i d e l i n e s d a t e d J u l y 31,
1970, i s s u e d by t h e A s s o c i a t e A d m i n i s t r a t o r f o r t h e O f f i c e
of Manned Space F l i g h t t o t h e Marshall Space F l i g h t Center,
t h e Manned S p a c e c r a f t Center, and t h e Kennedy Space Center.
On t h e b a s i s of t h e s e g u i d e l i n e s , p r e l i m i n a r y estimates of
t h e c o s t s of manned space f l i g h t programs were prepared and
submitted t o NASA Headquarters,

        The p r e l i m i n a r y estimate f o r t h e Skylab Program w a s
$ 2 , 1 b i l l i o n as shown below.,




                                             13
                                                                              Millions

          Marshall Space F l i g h t Center                                   $1 160 0
          Manned Spacecraft Centsr                                               757 a 2
          Kennedy Space Center                                                        86.5
          NASA Headquarters and o t h e r c e n t e r s                               97,3

                Total                                                         $ 2 , PO1,O

             During our review we examined i n t o t h e procedures f o l -
    lowed by t h e MarslialS Space F l i g h t Center and t h e Manned
    S p a c e c r a f t Center i n p r e p a r i n g t h e i r p r e l i m i n a r y estimates.
    W e examined a l s o i n t o t h e review process a t NASA Headquar-
    t e r s . The r e s u l t s of t h e s e examinations are presented i n
    c h a p t e r s 3, 4 , and 5,

    COSTS NOT INCLUDED I N ESTIMATE

               The program o p e r a t i n g p l a n ' s estimate of t h e c o s t of
    t h e S'kylab Program does n o t r e p r e s e n t t h e t o t a l c o s t of t h e
    program. Costs which a r e r e l a t e d t o t h e program but which
    a r e funded by e i t h e r of NASA's two o t h e r a p p r o p r i a t i o n s - -
I   r e s e a r c h and program management o r c o n s t r u c t i o n of f a c i l i -
    t i e s - - d o n o t appear as p a r t of t h e estimate. The a d d i t i o n a l
    c o s t s charged t o t h e s e a p p r o p r i a t i o n s cannot be measured
    completely because they a r e n o t always i d e n t i f i e d as being
    s p e c i f i c a l l y r e l a t e d t o a p a r t i c u l a r manned spaced f l i g h t
    program.

              We found t h a t t h e program o p e r a t i n g p l a n ' s e s t i m a t e of
    t h e c o s t of t h e Skylab Program had n o t included c e r t a i n re-
    s e a r c h and development a p p r o p r i a t i o n c o s t s r e l a t e d t o t h a t
    program. These c o s t s are d i s c u s s e d below.

    Common s u p p o r t

              The c o o r d i n a t i o n of t h e S'kylab Program w i t h t h e Apollo
    Program has r e s u l t e d i n t h e O f f i c e of Manned Space F l i g h t ' s
    e s t a b l i s h i n g a p o l i c y t h a t , through t h e completion of t h e
    Apollo Program, t h e Skylab Program w i l l fund i t s own support
    c o n t r a c t s , and t h e A p o l L o Program will fund t h e support con-
    t r a c t s which b e n e f i t both programs (common s u p p o r t )         W
                                                                                  ee
    found t h a t NASA d i d n o t i d e n t i f y t h e value of common support
    a p p l i c a b l e t o t h e S'kylab Program.

                                               I4
         A s a result of t h i s p o l i c y , changes i n t h e scheduled
completion d a t e f o r t h e Apollo Program have had a d i r e c t
e f f e c t upon t h e e s t i m a t e d c o s t of t h e Skylab Program. The
following c h a r t d e p i c t s t h e intended source of funding f o r
common sul.vort a t t h e d a t e s of t h e program o p e r a t i n g p l a n s
included i n our review and demonstrates t h a t t h e c o n t e n t of
t h e estimate i s d i f f e r e n t i n each of t h e estimates.

                         Programs funding common support
     Fiscal         October 1968 December 1969 October 1970
      year            (note a >     ( n o t e b)   (note c>

    1971 and
      prior              Apollo             Apollo             Apollo
    1972                 Skylab             Apollo             Apollo
    1973                 Skylab             Apollo             Skylab
    1974                                    Apollo             Skylab
a
 Apollo w a s scheduled f o r completion i n f i s c a l y e a r 1 9 7 1 ,
  and Skylab i n f i s c a l y e a r 1973.

bApollo w a s scheduled f o r completion i n f i s c a l y e a r 1975,
 and Skylab i n f i s c a l y e a r 1973.
c
 Apollo was scheduled f o r completion i n f i s c a l y e a r 1972,
  and Skylab i n f i s c a l y e a r 1974.

        A s shown above, t h e October 1968 program o p e r a t i n g
p l a n was prepared under t h e assumption t h a t t h e Apollo Pro-
gram would fund common s u p p o r t through f i s c a l y e a r 1971 and
t h a t t h e Skylab Program would assume funding r e s p o n s i b i l i t y
thereafter.

         P r i o r t o t h e p r e p a r a t i o n of t h e December 1969 program
o p e r a t i n g p l a n , t h e Apollo Program's scheduled completion
d a t e w a s extended p a s t t h e completion d a t e f o r t h e Skylab
Program, This r e s u l t e d i n t h e December 1969 program o p e r a t -
ing p l a n ' s being prepared under t h e assumption t h a t t h e
Apollo Program would fund common support,,

          The scheduled completion d a t e f o r t h e Apollo Program
w a s changed from f i s c a l y e a r 1975 t o 1972 p r i o r t o t h e prep-
a r a t i o n of t h e October 1970 program o p e r a t i n g p l a n , There-
f o r e t h i s p l a n was prepared under t h e assumption t h a t t h e

                                       15
    Apollo Program would fimd c:~l;i~-ionsuDDort     - *     through f i s c a l year
    1972 and t h a t , a f t e r f i s c a l RET   31972, cc3aion support would
    be d i v i d e d i n t o (1) f l i g h t szpport which would be funded 3y
    t h e Skylab Progran d u r i n g f i s c s l y e a r s 1973 and 1974 and
    ( 2 ) o p e r a t i n g base which would be funded as a separate
    item--not as a p a r t of any approved manned space f l i g h t re-
    s e a r c h and development program,

             F l i g h t support c o s t s c o n s i s t of hardware c o n t r a c t o r
    support f o r t h e S a t u r n IB v e h i c l e , t h e Saturn V v e h i c l e , and
    t h e command and service module, Contractor support i n c l u d e s
    checkout, I.aunch, p o s t f l i g h t d a t a a n a l y s i s and s u s t a i n i n g
    e n g i n e e r i n g , Tlie i n c l u s i o n of f l i g h t support f o r f i s c a l
    y e a r s 1973 and 1974 i n t h e October 1970 program o p e r a t i n g
    p l a n i n c r e a s e d t h e Skylab Program*s e s t i m a t e d c o s t by about
    $290 m i l l i o n ,

I            Operating base i s t h e t e r m used t o d e s c r i b e c o n t r a c t o r
    c o s t s a s s o c i a t e d w i t h c e n t e r o p e r a t i o n a l and support a c t i v -
    i t i e s n e c e s s a r y t o support approved and planned manned space
    f l i g h t programse The estimate f o r o p e r a t i n g base d u r i n g
    f i s c a l y e a r s 1973 and 1974 i n t h e October 1990 program oper-
    a t i n g p l a n w a s about $ 6 2 5 , 8 m i l l i o n . The p o r t i o n of t h i s
    amount a p p l i c a b l e t o t h e S'kyPab Program w a s n o t i d e n t i f i e d
    i n t h e program o p e r a t i n g p l a n ,

    Equipment

             Our review showed t h a t t h e following equipment was
    s u p p l i e d t o t h e Skylab Program by t h e Apollo Program and w a s
    n o t included i n t h e e s t i m a t e d c o s t of t h e Skylab Program,
                     Description (note a)                                            Units

Command and. s e r v i c e module and systemslcomponents                                4
Spacecraft guidance and navigation system                                               4
Spacecraft l u n a r module adapter                                                     4
h u n c h escape system
Saturn IB                                                                               b:
Saturn I B e l e c t r i c a l support equipment and ground
   support equipment                                                                    1
Saturn V ( S - F I B s t a g e s w i l l be o u t f i t t e d as an o r -
   b i t a 1 workshop)                                                                  2
Saturn V launch v e h i c l e d i g i t a l computers                                   2
Saturn V e l e c t r i c a l support equipment and ground
   support equipment                                                                    1
G r m d support equipment f o r t h e o r b i t a l workshop                            1
Apollo t e l e s c o p e mount automatic checkout equip-
   ment s t a t i o n s a t t h e Marshall Space F l i g h t Cen-
   t e r , t h e Manned Spacecraft Center, and t h e
   Kennedy Space Center                                                                 3
a
    The Skylab Program i s t o fund modifications,
b
    Current S'kylab Program plans require t h e use of only f o u r
    of t h e s e v e h i c l e s .

PROVISIONS FOR INFLATIQN

         The cost-estimating system used by t h e Office of Manned
Space F l i g h t does n o t provide uniform treatment f o r i n f l a -
tion,, Because t h e Off ice of Manned Space F l i g h t ' s guide-
l i n e s f o r t h e p r e p a r a t i o n of program operating plans had n o t
d i r e c t e d t h e c e n t e r s concerning provisions f o r i n f l a t i o n , we
found t h a t some elements of t h e Skylab Program estimate in-
cluded a provision f o r i n f l a t i o n and o t h e r s d i d n o t ,

         NASA o f f i c i a l s s t a t e d t h a t t h e amount of i n c r e a s e i n t h e
estimated c o s t f o r any element of t h e Skylab Program which
w a s a t t r i b u t a b l e t o i n f l a t i o n w a s never shown i n t h e pro-
gram operating plan as a s e p a r a t e i t e m and could n o t , i n
most i n s t a n c e s , be i d e n t i f i e d , , W    e were t h e r e f o r e u n a b l e t o
i d e n t i f y t h e a m ~ u n tof increase i n t h e estimated c o s t of t h e
Skylab Program t h a t w a s a t t r i b u t a b l e t o i n f l a t i o n ,




                                              17
                           COST-ESTIMATING PROCEDURES AND PRACTICES
                              AT THE I%RS)3EAU SPACE FLIGHT CENTER

              Upon r e c e i p t of t h e g e n e r a l g u i d e l i n e s from NASA Head-
    q u a r t e r s , t h e Marshall Space F l i g h t Center i s s u e d amglify-
    i n g i n s t r u c t i o n s t o each of i t s o r g a n i z a t i o n s f o r grepara-
    t i o n of t h e i r c o s t estimates f o r t h e p r e l i m i n a r y program
    o p e r a t i n g p l a n . The o f f i c e s r e s p o n s i b l e f o r t h e Skylab
    p r o j e c t s assigned t o t h e Nhrshall Space F l i g h t Center e s t i -
I   mated t h a t t h e s e p r o j e c t s would c o s t about $1.2 b i l l i o n a t
    completion. Of t h i s amount, $432 3 m i l l i o n r e p r e s e n t e d
    i n c u r r e d c o s t through f i s c a l y e a r 1970, and $727,7 m i l l i o n
    r e p r e s e n t e d t h e e s t i m a t e d c o s t t o complete t h e p r o j e c t s .
    The following schedule shows t h e e s t i m a t e d c o s t of t h e
    projects,                                            Actual cost    Estimated      Estimated
                                                  at June 30,       cost to           cost at
                           Project                   1970          complete         cornplction
                                                                   (millions)
                  - DEF1.NI.TI.Q'
        EXPER IMFhT
                .~~                                   $8.0          $A               $     8.0
    _-
    EXPERIMELTDEVEZOPM:
        -                                              64.5           32.2                96.7
            Apollo telescope mount experiments         61.8           29.4                91.2
            Other                                       2.7            2.8                 5.5
    SATURN_WORKSjiq_P:
    -                                                 159.6          474.8               634.4
        Airlock module                                 48.0          200.1               248.1
        Multiple docking adapter                        6.9           43.6                50.5
        Orbital workshop                               89.5          199.1               288.6
        Support                                        15.2           32.0                47.2
        APOEM  TELESCOPE
                -.       MOUNT:                       73.2            31.9               105.1
            Lunar module modifications                 9.7              .9                10.6
            Systems                                   63.5            31.0                94.5
    PAYLOAD INTEGRATI ON:
    -_~____                                           63.1            64.0               127.1
            Definition                                 9.9                                 9.9
            Implementation                            53.2            64.0               117.2
        PROGRAM SUPPORT
                ~~
                                                       7.7            23.2                30.9
        SATURN IB VEHICLE:
    ___.______                                        52.8           95.7                148.5
            S - I B stage                             28.7            32.7                61.4
            S-IVB stage                                5.8            27.3                33.1
            Instrunent unit                                           11.9                11.9
            Ground support equipment                    .3             7.9                 8.2
            Engines                                   14.4             2.2                16.6
            Vehicle support                            3.6            13.7                17.3
    ~   SATURN V VEHICLE:
            S - I C stage
                                                       3.4
                                                       2.3
                                                                     -
                                                                     5.9
                                                                      .5
                                                                                           9.3
                                                                                           2.8
            S - I 1 stage
            S-IVB stage
            Instrunent unit                                              .5                 .5
            Ground support equipment
            Engines                                    1.1               .2               1.3
            Vehicle support                                            4.7                4.7
    Total                                                           $U              $1,160.0
                                                 18
          I n p r e p a r i n g t h e p r o j e c t c o s t estimates, the estima-
t o r s a l l o n 3 t e d t h e c o n t r a c t v a l u e s t o a s s i g n t o each p r o j e c t
i t s a p p l i c a b l e s h a r e of t h e c o n t r a c t values. These a d j u s t -
ments were made because some of t h e Skylab Program con-
t r a c t s contained e f f o r t f o r more than one p r o j e c t , a s w e l l
a s e f f o r t f o r o t h e r NASA f i e l d c e n t e r s . The e s t i m a t o r s
then added t o t h e a l l o c a t e d c o n t r a c t values a n estimate f o r
changes t o t h e c o n t r a c t s t o complete t h e p r o j e c t s .

        These changes are c a t e g o r i z e d as a u t h o r i z e d changes-"
changes which t h e c o n t r a c t o r h a s been d i r e c t e d t o implement
b u t t h e c o s t s o f which have n o t been n e g o t i a t e d ; known and
probable changes--changes which t h e c o n t r a c t o r w i l l probably
be d i r e c t e d t o implement a t a f u t u r e d a t e ; and a n t i c i p a t e d
changes--changes f o r which t h e e x t e n t and magnitude have
n o t been d e f i n e d . The amounts included i n t h e s e c a t e g o r i e s
were based on b o t h in-house and c o n t r a c t o r - f u r n i s h e d e s t i -
mates.

        Before t h e p r o j e c t c o s t estimates w e r e f u r n i s h e d t o
NASA Headquarters, t h e y had been s u b j e c t e d t o reviews by
the r e s p e c t i v e Skylab P r o j e c t Managers, t h e Skylab Program
b n a g e r , t h e Center Program Management D i r e c t o r , and the
Pkrsha11 Space F l i g h t Center D i r e c t o r . During t h e review
by t h e Skylab Program Fknager, a n allowance f o r contingen-
cies was added t o some of the p r o j e c t estimates t o absorb
p o s s i b l e f u t u r e changes i n t h e p r o j e c t s . No o t h e r changes
had been made t o t h e p r o j e c t estimates b e f o r e t h e y were
submitted t o NASA Headquarters.

        The f o l l o w i n g schedule shows t h e i n c r e a s e s made by t h e
Skylab Program Manager t o the P r o j e c t Managers' e s t L m a t e F
f o r a n t i c i p a t e d changes,




                                                19
                                         Pb’Oj ect      Increase          Revised
                                        rnsnngers B     by Skylab        estimated
                                       estimate t o      Program          cost t o
          Proiect                      -
                                       CQllli31C?t€?     Manager         complete

                                       -               (rniEIions)
Project estimates not
  increased                              $165 7e          $     -          $E65 7
                                                                                e




P r o j e c t estimates i n -
   creased:
     S a t u r n workshop:
             A i r l o c k module         135.5                64,6         200.1
             M u l t i p l e docking
                adapter                    24,4                19.2          43.6
             O r b i t a l workshop       144 0e               55,l         199.1
             Support                       27.2                 4*8          32.0
                     Total                331 1e              143.7         474.8

    Payload i n t e g r a t i o n           51,O               13.0          64.0

     Program support                       19.6                 3.6          23.2
             Total                        401.7               160 3         562 0
                                                                                e




Total                                    $567,4           $160 3          $727 * 7

     A s shown above, $160.3 m i l l i o n was added by t h e Skylab
Program Manager t o t h e estimates f o r t h e S a t u r n workshop,
payload i n t e g r a t i o n , and program support p r o j e c t s .

        Our r e v i e w of the c o s t e s t i m a t i n g procedures a t t h e
Mkrshall Space F l i g h t Center included a d e t a i l e d examina-
t i o n i n t o t h e p r e p a r a t i o n of the estimates f o r t h e a i r l o c k
module p r o j e c t and f o r t h r e e o f t h e experiments planned f o r
t h e Apollo t e l e s c o p e mount. O f t h e $727,7 m i l l i o n e s t i -
mated t o complete thr? Skylab p r o j e c t s , we s e l e c t e d f o r re-
view $210.2 m i l l i o n , o r about 29 p e r c e n t ,




                                              20
APOLLO TELESCOPE MOUNT EXPERIMENTS

     Of the five major experiments planned for the Apollo
telescope mount, we reviewed three for which the estimated
cost to ramplete totaled $22.3 million. The composition of
this amount and the results of our review are shown below.

                                                          Effect of errors
                         Estimated    Amount not             made during-
                          cost to    supported by            preparation
                          complete   documentation     Overstated Understated

                                                  (millions)

Allocated contract
  value                    $6.1
Contract changes:
    Authorized                -3            -                  .2      .1
    Known and probable      16.0            2.5                .5      .2
    Anticipated             - -             -
                                            -               --         -
                                                                       -
         Tot a1             -16.3           -
                                            2.5             -.7        -
                                                                       .3
Total                       -
                           $=            $2.5
                                          -                $-
                                                            1.1       S-
                                                                       .4
Note:   Figures may not add due to rounding.



No supporting documentation

        A s shown above, documentation was not available to
support $2.5 million, or 15 percent, of the $16.3 million
estimated f o r contract changes. Although documentation was
available for $13.8 million of the $16.3 million estimated
f o r contract changes, we found that the in-house computa-
tions furnished for $9.4 million of this $13.8 million did
not show the basis used to arrive at the elements (men mul-
tiplied by time multiplied by dollar rates) included in the
computations. The estimator told us that the $2.5 million
and the elements for the $9.4 million had been based on dis-
cussions with the contractors and that documentation was not
available to show the content of the discussions.

E r r o r s made during the estimating process

        A s shown in the table above, errors made during the
estimating process caused overstatements of $1.1 million


                                       21
and understatements of $0.4 m i l l i o n i n t h e estimated c o s t
t o complete t h e t h r e e experiments.

          Our review of t h e computation made i n a r r i v i n g a t t h e
a l l o c a t e d c o n t r a c t v a l u e s of $6.1 m i l l i o n d i s c l o s e d t h a t
t h i s amount contained overstatements of $0.3 m i l l i o n , which
w a s p r i n c i p a l l y caused by t h e f a i l u r e t o d e l e t e from t h e
c o n t r a c t v a l u e s $0.3 m i l l i o n f o r e f f o r t a p p l i c a b l e t o o t h e r
Skylab p r o j e c t s , and an understatement of $70,000, which
r e s u l t e d from u s e of t h e wrong c o n t r a c t v a l u e f o r one of
t h e experiments.

         E r r o r s were a l s o made during t h e p r e p a r a t i o n of t h e
$16.3 m i l l i o n estimate f o r c o n t r a c t changes. These e r r o r s
caused t h e estimate t o c o n t a i n overstatements of $0.7 m i l -
l i o n and understatements of $0.3 m i l l i o n . W            e found, f o r
example, t h a t p a r t of t h e $0.7 m i l l i o n overstatement had
been caused by u s i n g an e s t i m a t e of $0.3 m i l l i o n f o r autho-
r i z e d c o n t r a c t changes although t h e s e changes had a l r e a d y
been n e g o t i a t e d a t a v a l u e of $0.2 m i l l i o n . The o f f i c i a l
who prepared t h e estimate t o l d u s t h a t he d i d n o t know t h a t
t h e changes had been n e g o t i a t e d a t t h e t i m e he prepared t h e
$0.3 m i l l i o n estimate.

     The following a r e o t h e r examples of t h e e r r o r s t h a t
were made.

        --Eight a u t h o r i z e d changes were n o t considered i n t h e
          p r e p a r a t i o n of t h e estimate because t h e e s t i m a t o r
          had n o t been aware of t h e changes a t t h e t i m e he had
          prepared t h e estimate.

        --An amount f o r c o n t r a c t o r e f f o r t w a s included i n both
           t h e computations f o r t h e a l l o c a t e d c o n t r a c t value and
           t h e estimate f o r known and probable changes t o t h e
           contract     a




       - - A computation e r r o r r e s u l t e d i n an $80,000 u n d e r s t a t e -
           ment of an estimate.

AIRLOCK MODULE

     The $474.8 m i l l i o n estimated t o complete t h e S a t u r n
workshop p r o j e c t included an amount of $200.1 m i l l i o n t o

                                              22
complete the airlock module. As a part of our review, we
exmined into the preparation of $187.9 million of this
$200.1 million estimate. The results of our review are
shorn below.

                           Estimated      Amount     Amount not
                            c o s t to   reviewed   supported by
                           complete       by GAO    documentation

                           ----.-----------(mi 11ions1

Allocated contract value    $ 60.3        $ 60.3          $        -
Contract changes:
    Authorized                42.9          39.8               22.1
    Known and probable        21*2          12.1               11.4
    Anticipated               75.8          75.8               75.8

        Total                139.8         127.6              109.2

Total                       $200 * 1      $187.9          $109 e 2

Mote:   Figures may not add due to rounding.

No sumortinn documentation

     As shown above, documentation was not available to
support $109.2 million, or about 86 percent, of the amount
we reviewed for contract changes. The remaining $18.4 mil-
lion was supported by contractor proposals or estimates,
During our review we were told that the bases for the
$109.2 million estimate were as follows:
                                                      Amount
           Bases f o r the estimate                 (millions)
                                                    -__I-




    In-house discus sions                                $ 80.7
    Verbal estimates obtained from
      the contractor                                       25.6
    In-house adjustments to contrac-
      tor proposals and estimates                             3.0

         Total                                           $109 2m




Note:   Figures may not add due to rounding.

                               23

                                                                       a
         ?he $ 8 0 , 7 million estimated on the basis of in-house
discussions included $4.9 million for known and probable
changes and $75.8 million for anticipated changes--
$ 6 4 , 6 million of which had been added by the Program Manager
during his review for a contingency-type reserve t o cover
possible future changes.

     We were advised that these estimates had been arrived
at in various management meetings and that no documentation
was available to show the bases €or the judgments made o r
the rationale considered in arriving at the estimates.

       $ 2 5 , 6 million

       Concerning the $25.6 million which was based on verbal
estimates received from the contractor, the estimator told
us t h a t he had maintained a file of informal notes for es-
timates obtained from the contractor but that he had thrown
h i s notes away after the preliminary program operating plan
had been prepared because he had no further use for the in-
formation.

         We reviewed selected written cost estimates smbse-
q u e n t l y received €rom the contractor after the preliminary
program operating plan based on the verbal estimates had
been submitted to NASA Headquarters. In a number of in-
stences, as shown by the following schedule, we noted sig-
nificant differences between the written estimates and the
verbal estimates. The estimator could not explain the dif-
ferences    e




 Estitnates based on
 v e r b a l information        Estimates l a t e r received
 from the c o n t r a c t o r
 -I                                from t h e c o n t r a c t o r   Differences
 -                                  (millions)
           sx,a                                $2.1                     $.3
                .2                               .o                       2
                                                                       -.
                                                                       -0

            1.0                                  .4                       7

            1.7
                .2                               .2                    -.1
                                               2.5                      .8
             .4
                -1
                                                 .1
                                                 -0
                                                                       -.13
                                                                       -0



 Note:     Figures may not add due t o rounding.

                                          24
        $3 m i l l i o n

         For t h e $3 m i l l i o n which was a r e s u l t of in-house ad-
j u s t m e n t s t o c o n t r a c t o r p r o p o s a l s and e s t i m a t e s , w e found
t h a t t h e c m t r a c t o r had f u r n i s h e d c o s t information showing
t h a t s i x c o n t r a c t changes had been e s t i m a t e d t o c o s t l e s s
t h a n $3.4 m i l l i o n . These estimates were a d j u s t e d t o $ 3 m i l
l i o n which included i n c r e a s i n g t h r e e from $1.4 m i l l i o n t o
$1.6 m i l l i o n and d e c r e a s i n g t h r e e from $2 m i l l i o n t o
$1.4 m i l l i o n .

          W e w e r e t o l d t h a t t h e s e adjustments had been made p r i -
m a r i l y because (1) t h e estimates had been considered t o be
e i t h e r t o o high o r t o o low f o r t h e proposed scope of work,
(2) some of t h e proposed e f f o r t had n o t been needed o r a l -
ready had been provided f o r under t h e c o n t r a c t , and ( 3 ) cer-
t a i n e f f o r t known t o be r e q u i r e d had n o t been c o n s i d e r e d by
t h e contractor. W           e were t o l d , however, t h a t t h e r e was no
documentation a v a i l a b l e t o support t h e r e v i s e d estimates.




                                             25
         COST- ESTIMATING PROCEDURES AND PRACTICES

              AT THE MANNED SPACECRAFT CENTER
     Upon receipt of guidelines fromNASA Headquarters f o r
the preparation of the preliminary program operating plan
estimate, the Manned Spacecraft Center issued amplifying
instructions to its various organizational elements, in-
cluding the Skylab Program Office and various directorate
level organizations which supported Skylab Program activi-
ties. The Skylab Program Office then distributed supple-
mental guidelines to the directorates supporting Skylab
Program activities.

     After estimates had been prepared, they were subjected
to review at three organization levels at the Manned Space-
craft Center before being transmitted to NASA Headquarters.
First, the estimates were reviewed at the directorate level
with the estimators generally participating in the review;
second, the estimates were reviewed at the Skylab Program
Office level; and third, the estimates were reviewed by
the Director, Manned Spacecraft Center, or his designated
representative.
     We were told that any changes made to an estimate dur-
ing the review process had been incorporated into all sup-
porting documentation before the estimate had been sent to
the next review level. This procedure precluded us from
determining the degree of, and reasons for, changes which
might have been made at any review level. In a number of
instances, our discussions with individual estimators dis-
closed that changes had occurred, but generally there was
no official documentation of the initial estimate or the
changes.

     The Manned Spacecraft Center's preliminary estimate
for the Skylab projects assigned to that center was
$757.2 million. As of June 3 0 , 1970, $185.1 million was
prior cost and $572.1 million was estimated cost to com-
plete. These costs are listed below by project,


                            26
                       Actual cost      Estimated Estimated
                           at            cost to   cost at
     Project          June 30, 1970     complete completion
                                      (millions)
Design and develop-
  ment                  $ 11.7           $    -        $ 11.7
Experiment defini-
  tion                    14.3                -         14.3
Experiment develop-
  ment                    25.6               104.8     130.4
Spacecraft rnodifi-
  cations                 87.0               418 9 a    505.9
Saturn I workshop         19.5                 -         19.5
Apollo telescope
  mount                    7.6                -          7.6
Payload integration       10.3                16.6      26.9
Mission operations         9.1                31.8      40.9

    Total               $185.1           $572.1        $757 2
                                                           e




HOW COST ESTIMATES WERE PREPARED
     To determine how the above cost estimates were pre-
pared, we reviewed the procedures and practices used by the
estimators in preparing the estimates for the spacecraft
modifications project. This project was selected because
the estimated cost to complete accounted for $418.9 million,
or about 73 percent, of the $572.1 million total cost to
complete the projects assigned to the Manned Spacecraft
Center. We were told by a center official that the prac-
tices and procedures used in preparing estimates for the
spacecraft modifications project were basically the ssme as
those used for the other estimates.
     Our review showed that approximately 50 percent of the
individual estimates for spacecraft modifications contained
some provisions for inflation. For example, in computing
some estimates, composite labor rates were used and were
increased by 5 to 7 percent annually,
     In addition to amounts provided for inflation or gen-
eral price increases, the spacecraft modifications project

                              27
    estimate contained a r e s e r w totaling $52.2 million. Our
    review, however, disclosed zddftional mounts within individ-
    ual estimates which vere categorized as reserves, change
    allowances, and contingencies. These amounts totaled
    $52.6 million and were not stqported by computations based
    on prior cost history, negotiated costs, or firm contractor
    proposals. The total of the above two amounts was
    $104,8 million, or about 25 percent of the $418.9 million
    estimated cost to complete the spacecraft modifications
    project  e




           Our review disclosed that the various individual esti-
    mates had been prepared by adding the actual costs through
    June 30, 1 9 9 0 , and the estimated costs to complete. We
    found that the methods of preparing the cost estimates var-
    ied significantly and ranged from computations using the
    latest manpower projections and cost data to estimates
    based entirely on the estimatorPsexperience and judgment
    without any supporting computations. The following exam-
    ples show how estimates were prepared for selected elements
    of the spacecraft modifications project,

    North American Rockwell Corporation--
                              I_




    $291.3
     --___ million

          The estimated cost of four command and service modules
    under contract with North American Rockwell Corporation was
    $291.3 million, This estimate consisted of prior actual
    costs as reported on the contractorss financial management
    report and estimated future costs. Costs of about $146 mil-
    lion funded by the ApoEEo Program were not included in the
    estimate, The future cost estimates were prepared by mul-
    tiplying man-hour estimates by applicable labor rates and
    adding estimated costs for labor burden, major subcontracts,
    minor subcontracts, material procurement, other materials,
    general and administration items, major interdivision work
    authorizations, provisi.oning, fee, closeout, and other
    items
         We were t o l d that the man-hour estimates were pro-
    jected by the estimator for each month on the basis of
    prior production history and the approved production sched-
    ulee


!



                                   28
     The labor rates used were composite l a b o r rates derived
from individual labor rates in a North American Rockwell
publication, and all but one were supported by several in-
dividual rates. The estimator derived the composite rates
by weighting the contractor's individual rates according to
the level af effort he anticipated for fiscal year 1971.
Supporting computations, however, showing the weighting of
the individual rate estimates and the composite cost rates
subsequently derived were not prepared.
     Percentages used in computing the labor burden, mate-
rial procurement, and general and administrative costs were
based on the estimatorss past experience. There was no sup-
porting documentation for these percentages.
     Major subcontract, minor subcontract, other materials,
major interdivision work authorizations, and provisioning
costs were developed from the contractor's financial man-
agement report and from the estimated cost of anticipated
changes not included in the report. Estimates for the costs
of changes were based on the estimator's experience and
were not supported by any computations or by any firm pro-
posals by the contractor,
     According to the estimator, other costs generally var-
ied proportionately with direct labor costs; therefore,
when the cost of direct labor was projected, the other costs
were projected proportionately. There was no supporting
documentation or computations for the other-costs estimate.

     The estimated fee was calculated by using a factor of
7,5 percent which was the same as the maximum fee negoti-
ated for the contract.

     Estimated closeout costs were arbitrarily allocated
between the Apollo and Skylab Programs, and there was no
supporting documentation for the allocation. The estimate
for closeout costs was based on discussions with individuals
involved in the closeout of contracts under the Mercury and
Gemini Programs.




                               29
Massachusetts Institute --
                        sf Tsc'hm%ogy--
$11.4 million

       Massachusetts Institute of Technology costs were for
computer services and related support, Support costs were
estimated by reducing the previous program operating plan
estimate to account f o r a decrease in projected manpower
requirements. The previous estimate was computed from (1)
manpower estimates based on the estimatoris experience and
( 2 ) cost rates determined from Massachusetts Institute of
Technologyreports increased at 7 percent compounded annu-
ally. Computer cost and travel and materials costs were
allocated between the Skylab and Apollo Programs in the
same ratio as software manpower projections for the two
programse




Astronaut life support assembly/
life support umbilical--$9.7 million

       The estimated cost of $9.7 million f o r astronaut life
support assemblyllife support umbilical consisted of (1)
the contractor's estimate at June 30, 1970, of $4.2 million,
( 2 ) estimated changes of $2.1 million, ( 3 ) potential overrun
of $0,4 million, ( 4 ) additional field support of $l,lmillion,
(5) cost of living increase of $0.3 million, and ( 6 ) contin-
gency reserve for production stretchout of $1.6 million.

     The contractorss estimate of $4.2 million was the to-
tal contract potential reported in the contractor's summary
of contract cost for the month ending June 30, 1970.

     The estimated cost of changes of $2,l million was com-
puted by multiplying an estimated annual change cost rate
by 2.5 years which included a 6-month production slippage
provision. The annual change cost rate was based on ap-
proved and proposed changes which had occurredover a
5-month period ending June 30, 1970.

     Potential overrun of $400,000 was based on the esti-
mator's belief that the contractor would overrun an equiv-
alent of about 3-months production costs on his analysis of
the contractorBsfinancial management report. There were
no computations supporting his analysis.


                            30
     Additional field support of $belmillion was the same
estimate used in the previous program operating plan,
There was no documentation to support this estimate. The
additional field support covered an 18-month period beyond
that covet.,edby the contract
     The contingency reserve of $1,6 million for an antici-
pated production stretchout consisted of about $11.3 million
which was developed f o r the previous program operating plan
and an increase of $0.3 million which was based on the es-
timator's judgment. He stated that he had no written sup-
port for this figure.

     The cost of living allowance of $300,000 was computed
by applying 6.5 percent a year to the estimated changes,
potential overrun, additional field support, and contin-
gency reserve costs. The estimator had no documented com-
putations to support the estimate.

Space suits--$16 million

     Estimated contract costs for space suits were allo-
cated between the Apollo and Skylab Programs. Total costs
were for production, management and engineering, field sup-
port, planned changes, and inflation at 7.5 percent, Costs
were allocated between the programs under the assumption
that (1) the Apollo Program would pay all field support
costs in fiscal years 1971 and 1972, (2) each program would
pay for production and change costs for the space suits it
would receive, and (3) other costs for each fiscal year
would be paid by the program which benefited most from the
contract,.

     According to the estimator, costs used in preparing
the total estimate were based on a contract modification;
however, he could not reconcile the costs with the modifica-
tion or reconstruct the basis for his allocation between
the two programs.




                             31
                           OF COST ESTIMATES

         As stated in chapter 2 , preliminary estimates of the
    cost of manned space flight programs for the October 1970
    program operating plan were prepared on the basis of guide-
    lines dated July 31, 1 9 9 0 , from NASA Headquarters.

         The following table showsp by project, the breakdown of
    the $2.1 billion preliminary estimate and the final estimate
    as printed in the October 1970 program operating plan:

                                   Pre-                    Increase
I                                biminary          Final      or
             Project             estimate        estimate decrease(-)
I
i                                                (millions)
    Experiment definition        $     47*3      $    47.2    $ -0.1
    Experiment development            235.7          218 8     -16.9
    Spacecraft modifications          508.7          624.7     116,O
    Saturn workshop                   684,5          680.2      -4.3
    Apollo telescope mount            113.6          113.2      -0.4
    Saturn IB vehicle                 190.2          232 7
                                                        0       42.5
    Saturn V vehicle                    9.3          157.1     147.8
    Payload integration               154.0          148.6      -5.4
    Mission operations                 52.3           54.7       2.4
    Program support                       75,7        74.3      -1.4
    Contract administration               15,6        15.6       -
    Design and development                14.0        14.0

        Total                    $2 100.9        $2,381.2     $280.3

    Note:   Figures may not add due to rounding.

         The preliminary estimate of $ 2 , 1 0 0 . 9 million initially
    was reviewed by Skylab Program Office personnel at NASA Head-
    quarters, and the total estimate was not changed, Only minor
    adjustments were made to projects within the estimate.
    After this review the Associate Administrator f o r Manned
    Space Flight decided that the Skylab Program's estimate

                                     32
should be increased to include the cost of flight support
during fiscal years 1973 and 1974, Prior to this decision
the cost of flight support was to have been funded by the
Apollo Program. When the scheduled completion date of the
Apollo Program was changed from fiscal year 1975 to fiscal
year 1972, however, funding for flight support during fiscal
years 1973 and 1974 could no longer be through the Ap01l0
Program.
      Subsequent to this decision the Skylab Program Office
at NASA Headquarters developed an estimate for flight sup-
port of about $224 million. According to agency officials
this estimate was based on manpower and dollar levels f o r
identical requirements in the A p o l l o Program. Revised guide-
lines reflecting this new funding requirement for the Skylab
Program were issued and sent to the centers on September 18,
1970.
     Upon receipt of these guidelines, officials at the NASA
centers felt that the allowed increase over their initial
submission was not sufficient to fund flight support require-
ments. NASA Headquarters allowed the centers to develop
their own flight support estimates for fiscal years 1973 and
1974 and to include these amounts in the October 1970 pro-
gram operating plan.
         A s developed by the centers and NASA Headquarters, the
S k y l a b Program's estimate increased from $2,100.9 million
to $2,381.2 million. This $280.3 million increase resulted
from a $289.9 million increase for flight support and a net
decrease of $ 9 , 6 million in other elements of the estimate.
According to agency officials there were no significant
changes, other than flight support, between the preliminary
estimate and the final estimate printed in the October 1970
program operating plan.

     A s discussed in chapter 2, estimating the c o s t of the
Skylab Program involves a great deal ~f uncertainty because
the program is a research and development effort. Therefore
provisions for contingencies in future years are incorpo-
rated into the estimated c o s t of the Skylab Program to ab-
sorb program changes that would otherwise cause changes in
the estimated cost of the program.


                               33
         Our review of t h e preparation of the October 1970 pro-
    gram operating plan showed that allowances for contingencies
    were added to the estimates at various levels within the cost
    estimating system. Although several different names were
    used by NASA to describe these contingency amounts--antici-
    pated changes, management reserves, or managergs reserve--we
    were told that all of them represented allowances for un-
    known but expected increases in program costs.

         During our review we identified the allowances f o r con-
    tingencies that were a part of the October 1970 estimate of
    the cost of the Skylab Program. The following schedule
    shows the amount of contingency allowances included in the
    estimated cost of the Skylab Program from July 1970 through
    completion.

                                        Estimated   Allowances for
                                         cost to     contingencies
                                        complete    Amount Percent

                                             (millions)

    Marshall Space Flight Center        $   844.5   $163.9    19
    Manned Spacecraft Center                641 6    103.6    16
    Kennedy Space Center                    175.4         -   -
    NASA Headquarters and other
I
      centers                               49.4      22.8    -
                                                              46

        Total                           $1,71LO     $290.3    17
                                                              -
    Note:   Figures may not add due to rounding.

             Of the contingency amounts for the Marshall Space Flight
    Center and the Manned Spacecraft Center, $34 million and
    $30 million, respectively, were included at the direction
    of NASA Headquarters. Tne remaining contingency amounts--
    $129.9 million for the Marshall Space Flight Center and
    $ 7 3 . 6 million for the Manned Spacecraft Center--were in-
    cluded by the respective centers during preparation of their
i   estimate of the cost to complete the Skylab Program.




                                   34
     The first program operating p l a n which provided an es-
timate of the c o s t of the Skylab Program through completion
was prepared in October 1968. Due to changing program def-
inition, earlier program ~perating p l a n s included o n l y es-
timates of costs to be incurred during the next 2 years,
Therefore we selected this estimate as the base f o r compari-
son with the current estimate.

     The schedule on the f o l l o w i n g   page compares the Oeto-
ber 1968 estimate with the October 1970 estimate--the most
recent estimate at the time of our review. A s discussed in
chapter 2, these estimates do not include costs associated
with (1) NASA's other two appropriations--research and gro-
gram management o r construction of facilities, (2) hardware
and equipment procured by the ApoPlo Program and transferred
to the Skylab Program, and ( 3 ) support contracts which bene-
fit both the Apollo and SkyEab Programs.
                             Error
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                             Error
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              A s shown above t h e O f f i c e of Manned Space F l i g h t D s
     October 1970 estimate of c o s t of t h e Skylab Program w a s
     $2,381.2 m i l l i o n . Through f i s c a l y e a r 1970, NASA o b l i g a t e d
     $849.9 m i l l i o n of t h i s amount from i t s r e s e a r c h and devel-
     opment a p p r o p r i a t i o n . Consequently an a d d i t i o n a l
     $1,531.3 m i l l i o n i s needed f o r t h e program between f i s c a l
     y e a r s 1971 and 1974, t h e c u r r e n t e s t i m a t e d y e a r of comple-
     tion.

               The above schedule a l s o shows t h a t , between October
     1968 and October 1970, t h e r e was a $115 m i l l i o n , o r
     5 - p e r c e n t , i n c r e a s e i n t h e e s t i m a t e d c o s t of t h e Skylab
     Program. The $115 million i n c r e a s e w a s t h e n e t r e s u l t of
     i n c r e a s e s a t t h e system l e v e l , t o t a l i n g about $800 m i l l i o n ,
     and d e c r e a s e s a t t h e system l e v e l , t o t a l i n g about $685 m i l -
     lion.

          The workshop launch d a t e on which each of t h e e s t i -
     mates was based i s shown i n t h e following t a b l e .

     Date of program             O f f i c i a l launch              Reason f o r
     o p e r a t i n g plan     d a t e f o r workshop              schedule s l i p

         O c t . 1968                 Aug. 1971                        (note a>

         Dec. 1969                    J u l y 1972            Program r e o r i e n t a t i o n
                                                              due t o change from
                                                              w e t t o d r y workshop
                                                              configuration

         O c t . 1970                 Nov. 1972               Reduction i n N A S A ' s
                                                              budget
     a
 I    I n May 1966 a launch schedule w a s approved f o r t h e launch
      of t h e f i r s t mission i n A p r i l 1968. The A p r i l 1968 launch
      d a t e w a s s l i p p e d t o August 1971 because of NASA c o n s t r a i n t s
      on Skylab Program funding.

 I   SUMMARY OF NASA REASONS FOR COST CHANGE

-#
          A s a p a r t of our review, w e obtained e x p l a n a t i o n s from
     NASA f o r t h e changes between t h e October 1968, December
     1969, and October 1970 estimates of c o s t of t h e Skylab Pro-
     gram. From t h e information provided by NASA, w e have


                                              38
summarized below t h e primary f a c t o r s which c o n t r i b u t e d t o
t h e o v e r a l l change during t h e 2-year p e r i o d .

         NASA a t t r i b u t e d t h e i n c r e a s e s between October 1968 and
October 1970 p r i m a r i l y t o (1) change from t h e wet t o t h e
dry workshop c o n f i g u r a t i o n , (2) b e t t e r d e f i n i t i o n of e x p e r i -
ments, ( 3 ) a d d i t i o n a l hardware, ( 4 ) c o n t r a c t i n g o u t f o r c e r -
t a i n work which was t o have been performed in-house,
(5) launch schedule s l i p p a g e s t o t a l i n g 1 5 months, and
(6) i n c l u s i o n of f l i g h t support c o s t s i n t h e October 1970
e s t i m a t e.

         Contracting o u t f o r c e r t a i n work which w a s t o have
been performed in-house increased t h e estimated c o s t be-
cause i t r e q u i r e d t h e Skylab Program t o fund, through t h e
r e s e a r c h and development a p p r o p r i a t i o n , c o s t s f o r c o n t r a c -
t o r l a b o r , burden, and p r o f i t . These c o s t s would otherwise
have been funded through t h e r e s e a r c h and program manage-
ment a p p r o p r i a t i o n i f f o r c i v i l service personnel salaries
and/or by t h e Apollo Program i f f o r support c o n t r a c t o r
costs.

          The decreases between October 1968 and October 1970
w e r e p r i m a r i l y a t t r i b u t e d t o (1) canceled production of two
Saturn I B launch v e h i c l e s except f o r t h e f i r s t s t a g e s ,
(2) c a n c e l l a t i o n of l u n a r module m o d i f i c a t i o n s and s i m p l i -
f i e d command and s e r v i c e module requirements r e s u l t i n g from
t h e change t o t h e dry workshop c o n f i g u r a t i o n , ( 3 ) a reduc-
t i o n i n t h e O f f i c e of Manned Space F l i g h t ' s allowance f o r
c o n t i n g e n c i e s , and ( 4 ) t r a n s f e r of funding f o r c e r t a i n sup-
p o r t c o n t r a c t s from t h e Skylab Program t o t h e Apollo Pro-
gram.

         The f a c t o r s causing i n c r e a s e s and decreases w i t h i n t h e
estimate during t h e 2-year p e r i o d , along w i t h our review of
s e l e c t e d c o n t r a c t s , are discussed i n more d e t a i l i n chap-
t e r s 7 through 1 7 . A d i s c u s s i o n of t h e design and develop-
ment, l u n a r e x p l o r a t i o n , and space s t a t i o n d e f i n i t i o n p r o j -
e c t s w a s n o t included i n t h e following c h a p t e r s because
(1) design and development included t h e nonrecurring c o s t s
f o r design and development of new and/or m o d i f i c a t i o n t o
hardware and s e r v i c e s , a l l o b l i g a t i o n s f o r which were inade
p r i o r t o t h e October 1968 estimate, (2) l u n a r e x p l o r a t i o n
funding was t r a n s f e r r e d t o t h e Apollo Program when t h e

                                             39
December 1969 estimate w a s prepared and ( 3 ) space s t a t i o n
d e f i n i t i o n w a s e s t a b l i s h e d as a funding category indepen-
dent of t h e Skylab Pr'ogram when t h e October 1970 estimate
was prepared.

REVIEW OF SELECTED HARDWARE CONTRACTS

         Although t h e October 1968 estimate w a s t h e f i r s t c o s t
estimate f o r t h e program as a whole, w e found t h a t e a r l i e r
estimates e x i s t e d f o r c e r t a i n hardware items. W        e examined
i n t o t h e c o s t h i s t o r y of t h e development e f f o r t f o r t h e
o r b i t a l workshop, a i r l o c k module, and two of t h e f i v e sci-
ence experiments f o r t h e Apollo t e l e s c o p e mount t o i d e n t i f y
t h e amount o f , and r e a s o n s f o r , changes i n t h e estimated
c o s t p r i o r t o t h e October 1968 estimate.

          The s t a r t i n g p o i n t s f o r our review w e r e August 1966,
when t h e c o n t r a c t w a s awarded f o r t h e development of t h e
a i r l o c k module, and e a r l y i n c a l e n d a r y e a r 1967, when t h e
i n i t i a l estimates were made f o r t h e development of t h e o r -
b i t a l workshop and t h e t w o Apollo t e l e s c o p e mount experi-
ments. We l i m i t e d our review t o t h o s e c o s t s t o be i n c u r r e d
under hardware c o n t r a c t s .

          NASA contended t h a t t h e c h o i c e of t h e s e s t a r t i n g p o i n t s
produced h i g h l y q u e s t i o n a b l e percentages of c o s t growth be-
c a u s e a t t h a t t i m e t h e o v e r a l l program d e f i n i t i o n and t h e
requirements on i n d i v i d u a l p r o j e c t s were s t i l l v e r y much
i n t h e formative s t a g e . NASA suggested t h a t October 1968
be used as t h e base because it w a s t h e d a t e of t h e f i r s t
completed program o p e r a t i n g plan showing c o s t through com-
p l e t i o n and because t h e program had s t a b i l i z e d reasonably
w e l l i n t o i t s p r e s e n t program c o n f i g u r a t i o n and number of
launches. I n a d d i t i o n , NASA advised u s t h a t , as l a t e as
J u l y 1969, changes as s i g n i f i c a n t as t h e one from Saturn
IB-launched w e t workshop t o Saturn V-launched d r y workshop
were s t i l l being made.

          We b e l i e v e , however, t h a t t h e 1966 and 1967 bases are
a p p r o p r i a t e when viewed i n t h e c o n t e x t t h a t NASA sought and
r e c e i v e d c o n g r e s s i o n a l approval f o r t h e Skylab Program i n
c a l e n d a r y e a r 1967.



                                          40
                                CHAPTER 7

              EXPERIMENT DEFINITION PROJECT COSTS

     Definition studies of experiments considered to be po-
tential candidates for manned space flight missions are
funded under the experiment definition project. The fields
covered are science, applications, technology, engineering,
biomedical, and human behavior,

     The following schedule compares the October 1968, De-
cember 1969, and October 1970 estimates of experiment defini-
tion cost.
                                                           Increase
October   Increase   December    Decrease(-)   October       1968-70
  1968    1968-69      1969        1969-70       1970    Amount   Percent

                        (mi 11i ons )

 $23.8     $23.5      $47.3        -$O. 1       $47.2    $23.4       98


NASA EXPLANATIONS FOR CHANGES
IN ESTIMATED COST
     We were advised by NASA that the net increase of
$23.4 million between October 1968 and October 1970 was
primarily due to (1) inclusion of $33.5 million applicable
to definition of Skylab Program experiments sponsored by the
Office of Space Science and Applications and the Office of
Advanced Research and Technology and (2) deletion of a
$10 million management reserve.




                                        41
                                                           CHAPTER 8

                           EXPERIMENT DEVELOPMENT PROJECT COSTS

         The locations of experiments to be performed in the
    Skylab Program are shown in the following pictorial profile.


                                              SKYLAB EXPERIMENTS       FREW        APH CONTAUINATION MEAS.




                                                       RAY TELESCOPE




             WHITE U G H 1 CORWAGRAPH
               UV SPECTROHELIOGRAPH
    X-RAY   SPECTROGRAPHIC TELESCOPE
                UV SPECTROHELIOUET




                                FUMMAEILITY   a
                            MATERIALS PROCESSING
                                                                                                   h MOTION STUDY
                       AOIAN RHYTHM (VINEGAR F L Y )




                                                                                       FOOT CONTROLLED
                                                                                       MANEUVERING UNIT
                                                                                     ASTRONAUT MANEUVERING E Q U I P
                                                                                  BODY Mus
                                                                                  MEASUREMENT
                                                                              -VECTORCARDIOGRW




         The development, integration, and operation of Skylab
    Program experiments and the translation of experiment data
    into a usable form are funded under experiment development.
    The four categories of experiments currently being funded
    and their objectives are listed below.

              1. Medical--to accumulate information required to un-
                 derstand man's capability for long-duration space
n
U
                 flight.

                                                                  42
         2. Technology--to improve and apply scientific knowl-
            edge, methods, and research to industrial arts,

         3 . Science--to learn more about the universe, space
             environment, and phenomena in the solar system
             which affect the environment of man on earth and to
             learn more about the earth by gathering data for use
             by experts studying oceanography, water rrianagenent,
             agriculture, forestry, geology, geography, and ecol-
             ogy

         4 . Engineering--to evaluate and demonstrate engineering
             principles or techniques in a space environment.

     The following schedule compares the October 1 9 6 8 , De-
cember 1969, and October 1970 estimates of cost for each
category of experiments, including applications experinients
which were reclassified as science experiments in the Octo-
ber 1970 estimate.

                                                                                          Tnrrcnx or
                               Increase o r                   Increase o r               decrease(-)
                     October   decrease(-)    December        decrease(-)     October      1968-70
                      1968       1968-69        1969            1969-70        1970
                                                                               __       Amount Percent

                                                  ( m i l l i o n s1

 EXPERIMENT
   DEVELOPPENT:      $110.8       $70.3        $181.1              $37.7      $218.8    $108.0     97
     Medical           10.1         6.8           16.9                  0.8     17.7        7.6    75
     Technology         2.4         2.3            4.7                  0.5      5.2        2.8   117
     Science           71.4        25.9           97.3                 22.8    120.1      48.7     68
     Applications      16.4        -6.7            9.7                 -9.0      0.7     -15.7    -96
     Engineering       10.4        42.2           52.6                 22.5     75.1       64.7   622

 Note:    Figures may not add due t o rounding.



NASA EXPLANATIONS FOR
CHANGES I N ESTIMATED COST

       NASA attributed the increase of $70.3 nillion in the
December 1969 estimate to (1) a more refined estimate as
compared with the preliminary estimates in October 1968,
( 2 ) an ll-month launch schedule slippage from August 1 9 7 1 t o
July 1972, ( 3 ) incorporation of ZdditionaE experiments,
( 4 ) the change to the dry workshop configuration, ( 5 ) the
award of contracts for work which was to have been perforrried
in-house, and ( 6 ) cost overruns.


                                                  43
I li llll


                   NASA attributed the additional increase of $37.7 mil-
            lion in the October 1970 estimate to (1) additional experi-
            ment changes related to the dry workshop configuration,
            ( 2 ) a 4-month launch schedule slippage from J u l y to Novem-
            ber 1972, (3) incorporation of additional experiments,
            ( 4 ) revised estimates based on contract negotiations and
            better definition of some of the experiments, and ( 5 ) cost
            overruns.

                 The $6.7 million decrease shown under the applications
            category between October 1968 and December 1969 was due to
            the cancellation of experiments which had an estimated cost
            of $9.3 million and increases of $2.6 million in the esti-
            mated cost of the remaining experiments.

                 Between December 1969 and October 1970, the remaining
            applications experiments were reclassified as science exper-
            iments. Of the $9.7 million included in the December 1969
            estimate, $9 million was deleted from the applications cate-
            gory in the October 1970 estimate; the remaining $0.7 mil-
            lion in costs had already been incurred. When these experi-
            ments were reclassified as science experiments in the Octo-
            ber 1970 estimate, however, they were estimated to cost
            $12.7 million.
            REVIm OF SELECTED SCIENCE EXPERIMENTS

                 We reviewed the Marshall Space Flight Centerss con-
            tracts and the initial cost estimates for the X-ray spectro-
            graphic telescope ( S O 5 4 1 and the ultraviolet scanning poly-
            chromator spectroheliometer (S055A) to identify the amount
            of, and reasons for, changes in cost since the initial esti-
            mates were prepared. The initial estimates were included in
            an experiment implementation plan dated April 3, 1967.
            These experiments are two of the five science experiments
            scheduled to be flown on the Apollo telescope mount.

                 As of October 31, 1970, the contracts for experiments
            S055A and SO54 had experienced a cost increase of $27.9 mil-
            lion over the initial estimated cost of $8.3 million in
            April 1967. NASA estimated that a further cost increase of
            $11 million will be experienced through completion of the
            contracts. At completion, therefore, the total cost of the
            contracts is estimated to be $47.2 million.

                                           44
     The explanations provided by NASA for the changes be-
tween the October 1968 and October 1970 cost estimates were
generally consistent with the reasons identified during our
review.

Cost increase through
October 31, 1970

     The reasons and related dollar amounts established f o r
the $27.9 million cost increase include

     --$11.3 million for unrealistic initial estimates,

     --$6.7million for contractor cost overruns,
     --$5.3 million for redesign effort 2nd hardware modifi-
       cations,

     - - $ 2 . 7 million for development of an alternate experi-
       mentg and

     --$logmillion €or contract schedule slippage.

     The results of our review of this   cost   increase is d i s -
cussed in the next two sections.

     Comparison of initial estimates
     with initial contract values

     The initial estimates for the two experiments totaled
$ 8 . 3 million and were contained in an April 1967 experiment
implementation plan which provided for a three-phase pro-
curement. Phase 1 was to cover definition of the experi-
ments; phase 2 was to cover fabrication of flight hardware;
and phase 3 was to cover field support and data acquisition,
retrieval, and analysis. The contract files for the two ex-
periments showed that the initial contract value €or these
three phases was $19.6 nillion, or $11.3 million higher than
the initial estimates.

     The Chief of the Ekperiments Branch told us that, be-
cause there had been very little experience to rely upon,
the initial estrimte for experiment. S O 5 4 had been prepared
by doubling the cost of an orbiting solar observatory

                               45
    experiment which ha3 z b a s i c concept s i m i l a r t o -the S O 5 4 ex-
    periment. H e stzted t h a t the estim-te f o r experiment S055A
    also had been developed u s i n g e x p e r i e n c e gained from t h e
    o r b i t i n g s o l a r o b s e r v s t o r y program. H e a d v i s e d us t h a t t h e
    estimates l a t e r proved t o be u n r e a l i s t i c because (1) exper-
    iments of t h i s t y p e had never been b u i l t , ( 2 ) experiment
    d e f i n i t i o n hzd n o t been con;pleted a t t h e time t h e estimates
    were p r e p a r e d , and ( 3 ) t h e c o n f i g u r a t i o n of t h e Ap0l10 tele--
    scope mount and t h e f l i g h t c o n f i g u r a t i o n of t h e hardware t o
    which i t was t o be a t t a c h e d were un-known.

             We found that the r e a s o n s c i z e d f o r t h e estimates being
    u n r e z l i s t i c g e n . e r a l l y were supported by docvmenta.tion con-
    tained i n the f i l e s .

           Cost i n c r e a s e s over the
           i n i t i a l contract values

         A s of October 31, 1 9 7 0 , t h e c o n t r a c t va-lues f o r t h e two
    experiments t o t a l e d $ 3 6 . 2 m i l l i o n , o r $16.6 m i l l i o n h i g h e r
i   thzn t h e i n i t i a l values of $19.6 m i l l i o n .

           The c o n t r a c t f i l e s showed t h a t :
I

           - - A $ 6 . 7 m i l l i o n i n c r e a s e f o r c o n t r a c t o r c o s t overruns
               w a s attributed t o a number of r e a s o n s , i n c l u d i n g
                t e c h n i c a l problems, f a i l u r e of s u b c o n t r a c t o r s to de-
                l i v e r f l i g h t q u . l i t y components and subassemblies,
               l e t e d e l i v e r y of p a r t s , replacement of d e f e c t i v e
               partss,d i f f i c u l t i e s i n o b t a i n i n g power s u p p l i e s , and
               an u n r e a l i s t i c e s t i m a t e by one of t h e c o n t r a c t o r s
               f o r t h e phase 1 work.

           --There was a $5.3 m i l l i o n i n c r e a s e f o r r e d e s i g n e € -
             f o r t and hardwere nodif i c a t i o n s ? $ 3 . 6 m i l l i o n of
             which w a s a t t r i b u t e d t o t h e need f o r a d d i t i o n a l ex-
             periment d e f i n i t i o n e f f o r t t o c o r r e c t i n c o m p a t i b i l i -
             t i e s between t h e experiments and Apollo t e l e s c o p e
             mount c a n i s t e r d e s i g n s . The Chief of t h e Experi-
             ments liranc!: t o l d us that t h e s e i n c o m p a t i b i l i t i e s
             w e r e t h e r e s u l t OF oversights during t h e concurrent
             d e s i g n of t h e experiments and t h e c a - n i s t e r . The re-
             rmining $ 1 . 7 1iii1li.on cost i n c r e a s e w a s a t t r i b u t e d t o
             a nunibe.; of rezsons i n c l u d i n g (1) i n c o r p o r a t i o n of a

                                                 46
       mirror launch lock, ( 2 ) addition of pressure gauges,
       al.ternate power supply modules, and control and dis-
       play components, and ( 3 ) minor hardware modifications
       and additions.

     - - A $2.7 million increase was attributed to the devel-
       opment of an alternate experiment which was later
       canceled. When it became apparent that the contrac-
       tor could not deliver experiment SO55A in time to
       meet the launch date for the first Apollo telescope
       mount, the contractor was directed to initiate pre-
       liminary design and development of a less complicated
       instrument to be flown in place of the more complex
       S055A experiment. At the same time, however, the
       contractor was to continue the development of experi-
       ment S055A at a rate to meet the launch date for the
       second ApalLo telescope mount. A l l contract effort
       on the alternate experiment was terminated, however,
       when a 31-month slip in the scheduled launch date for
       the first Apollo telescope mount allowed the contrac-
       tor sufficient time to develop the more complex S055A
       experiment.

     - - A $1.9 million increase resulted from a decision to
         extend the delivery dates of the SO54 experiment pro-
         totype and flight units by 9 and 16 months, respec-
         tively. A Skylab official told us that the delivery
       dates had been extended because of a restriction
       placed on funds during fiscal year 1968.
Estimate of additional cost
increase through contract completion

     In addition to the value of the contracts at October31,
1970, NASA estimated that $11 million will be required to
complete the contracts. The estimated increase of $11 mil-
lion consists of (1) $5.5 million for additional field sup-
port and real-time data analysis, (2) $2.7 million for hard-
ware changes, ( 3 ) $2.4 million for additional postflight
data analysis, and ( 4 ) $ 0 . 4 million for changes in delivery
schedules.
      Included i n a p p e n d i x I1 of t h i s r e p o r t are the Marshall
Space F l i g h t CenterPs comments concerning programmatic and
other- influences c o n t r i b u t i n g to the cost increases during
the d2velopment of these experiments.
                                          CHAPTER 9

                SPACECRAFT MODIFICATIONS PROJECT COSTS

         The Skylab Program r e q u i r e s a s p a c e c r a f t t o t r a n s p o r t
each crew of t h r e e men i n t o e a r t h o r b i t , dock w i t h a work-
shop, and r e t u r n f o r a normal splashdown. During o r b i t a l
o p e r a t i o n s t h e s p a c e c r a f t w i l l be powered down t o t h e l o w e s t
level p o s s i b l e t o m a i n t a i n o p e r a t i o n a l r e a d i n e s s f o r r e t u r n .




SAT

          S p a c e c r a f t t o be used i n t h e Skylab Program are f o u r
Apollo command and service modules which have been t r a n s -
f e r r e d t o t h e Skylab Program and w i l l be m o d i f i e d to meet
Skylab Program o b j e c t i v e s . The Apollo Program i s f u n d i n g
c o m p l e t i o n of t h e s p a c e c r a f t s t r u c t u r e s and t h e Skylab Pro-
gram i s f u n d i n g development, p r o d u c t i o n , and i n t e g r a t i o n of
m o d i f i e d subsystems and t h e checkout o f t h e s e m o d i f i e d
spacecraft       .
                                                 49
     The following schedule compares the October 1968, De-
cember 1969, and October 1970 estimates of cost for each
funding element of spacecraft modifications.

                                                                                                      lnrrrase or
                                                  Incrca..e or              Increase o r              decrease(-)
                                        October   decrease(-)    Decrmber   decrrn.w(-)    October      19hR-70
                                         -
                                         1968       1968-69       __
                                                                  1969        - -
                                                                              1969-70
                                                                                1970                          -
                                                                                                     Amount Percent
                                                                                                     _I




 SPACECRAFT MODIFICATTONS:              $604.4     497.1         $507.3       $117.4       $624.7 $20.3            3
     Command and s e r v i c e module    295.0        36.9        331.9       -10.1         321.8     26.6      9
                                          22.1                     16.7         15.6         32.3     10.2     46
     Guidance and navigation
     Extended lunar module                 2.6
                                                      -5.4
                                                       -             2.6         -            2.6      -       -
     Subsystem development               123.2      -33.9          89.3         13.4       102.7     -20.5    -17
     Spacecraft s u h o r t              161.5      -94.7          66.8         98.4        165.2       3.7      2
 Note:   Figures may not add due t o rounding.




NASA EXPLANATIONS FOR
CHANGES IN ESTIMATED COST

     The explanations provided by NASA stated that the pri-
mary reason for the decrease in the December 1969 estimate
was that the Skylab Program no longer had responsibility
for funding common support. The Apollo Program funded all
common support in the December 1969 estimate. (See pp. 14
through 16,

     NASA attributed the $117.4 million increase in the
October 1970 estimate primarily to the addition of a manage-
ment reserve and to the Skylab Program's newly acquired
funding responsibility for flight support costs during
fiscal years 1973 and 1974 which were formerly to have been
funded by the Apollo Program.

     The following sections present NASA's explanations for
the changes shown in the above schedule of estimated cost
for each funding element of spacecraft modifications.

Command and service module

     The October 1968 estimate of $295 million was based on
preliminary estimates of the command and service module
modification costs required under the wet workshop concept.
A proposal had not been received from the contractor.
       The December 1969 estimate of $331.9 million, an in-
crease of $36.9 million, was based on preliminary estimates
f o r simplified quiescent command and service modules under
the dry workshop concept. The contract for the modifica-
tions to the command and service modules was not yet final-
ized. A l s o contributing to the increase was the 11-month
launch schedule slippage from August 1 9 7 1 to July 1972.

         The October 1970 estimate of $ 3 2 1 . 8 million represented
a decrease of $10.1 million from the December 1969 estimate.
This $10.1 million decrease was the net result of an in-
crease of $11.6 million due to the addition of flight sup-
port c o s t s for fiscal years 1 9 7 3 and 1974 and a decrease of
$ 2 1 . 7 million due to the June 1970 finalization of the con-
tract for modifications to the command and service modules.

Guidance and navigation

     The decrease in the estimate from $22.1 million in Oc-
tober 1968 to $16.7 million in December 1969 was attributed
to a reduced level of guidance and navigation contractor
support   a




     The increase of $15.6 million in the October 1970 esti-
mate was attributed to the funding by the Skylab Program
during fiscal years 1 9 7 3 and 1 9 7 4 of flight support costs
which were previously to have been funded by the Apollo Pro-
gram.

Subsystem development

     The October 1 9 6 8 estimate included funding f o r common
support amounting to $ 4 5 . 5 million. This funding responsi-
bility was not included under the Skylab Program in the De-
cember 1969 estimate. The December 1969 estimate, however,
included additional space suit funding amounting to
$11.6 million which resulted in a net decrease of $33.9 mil-
lion.

        The increase of $13.4 million reflected in t h e October
1970 estimate was attributed to the funding by the Skylab
Program of flight support costs during fiscal years 1 9 7 3 and
1974.


                                 51
Spacecraft support

          The d e c r e a s e of $94.7 m i l l i o n i n t h e December 1969 e s -
t i m a t e was a t t r i b u t e d t o

        - - d e l e t i o n of Skylab funding r e s p o n s i b i l i t y f o r common
            support ;

        --reduced estimates f o r a u t o m a t i c checkout equipment,
           s u p p o r t c o n t r a c t o r s , and l o g i s t i c s ;

        - - e l i m i n a t i o n of assembly and t e s t o f t h e lunar module
            f o r t h e Apollo t e l e s c o p e mount; and

       --more s u p p o r t from t h e Apollo Program, due t o l e s s
         checkout o v e r l a p t i m e on command and s e r v i c e modules.

       T h e i n c r e a s e of $98.4 m i l l i o n i n the October 1970 e s t i -
mate w a s &de t o t h e a d d i t i o n of Skylab f u n d i n g r e s p o n s i b i l -
i t y f o r f l i g h t s u p p o r t c o s t s d u r i n g f i s c a l y e a r s 1973 and
1974 and the i n c l u s i o n o f a management reserve d u r i n g f i s c a l
y e a r s 1972 and 1973.




                                           52
                        C i i T E R 10

               SATURN WORKSHQP PROJECT COSTS

     The Saturn workshop project includes the estimated costs
of the payload shroud, orbital workshop, airlock module,
and multiple docking adapter.

     A payload shroud provides an environmental shield and
an aerodynamic fairing for the workshop and protects the
multiple docking adapter, airlock module, and Apollo tele-
scope mount during launch. Certain consumables will be
carried on the lower fixed portion of the shroud whereas &e
upper portion will be jettisoned on attaining orbit.

     The orbital workshop is a modified S-IVB stage of the
Saturn V Paunch vehicle that is outfitted on the ground for
manned habitation. Modifications will be made prior to
launch t o remove systems required for a propulsive stage.
Integration of the orbital workshop provides for a

     --habitable environment with storage for crew provi-
       sions, consumables, and waste material;

     --capability for installation, storage, and operation
       of experiments;
     --propulsive capability for maneuvering the cluster;
       and

     --solar array electrical power source.




                              53
                                   PS




. ..   .   .....
            .      .
                       ."
                       _   A
                               .
 ,     .
       1
     The multiple docking adapter provides docking accomoda-
tions in space for the command and service module and permits
the transfer of personnel, equipment, power, and electrical
signals between the command and service module, airlock
module, and orbital workshop. Contained in the multiple
docking adapter is the control station for operation of the
Apollo telescope mount, earth resources and other experi-
ments, as well as the thruster attitude control system which
will orient the workshop to a solar-inertial attitude. Also
housed inside the multiple docking adapter is the control
and display equipment to operate the solar telescope system.
An optical quality window for viewing the earth is also
provided.




                            55
     The f o l l o w i n g schedule compares t h e October 1968, De-
cember 1969, and October 1970 estimates of c o s t f o r t h e S a t -
urn workshop p r o j e c t             .

                                           Increase or                                             Increase
                              October      decrease(-)     December   I n c r e a s e October       1968-70
                               -
                               1968          1968-69        -1969          ~1970
                                                                      1969-70                   -
                                                                                                Amount    -
                                                                                                         Percent   -
                                                           (millions)

SATURN WORKSHOP:              $274.0         $221.2        $495.2       $185.0 $680.2 $406.2              148
    O r b i t a l workshoD     115.4         112.3          227.7        61.3       289.0         173.6   150
    A i r l o c k module        87.2         104.6          191.8        56.1       247.9         160.7   184
    M u l t i p l e docking
       adapter                  9.4            4.8           14.2        31.6         45.8        36.4    387
    Support                    62.0           -0.5           61.5        36.0         97.5        35.5     57




                                                      56
NASA EXPLANATIONS FOR CHANGES
IN ESTIMATED COST
    The following sections present the explanations provided
by NASA for the changes in the estimated cost for each fund-
ing element shown in the above schedule.

Orbital workshop

     The increase of $112.3 million in the December 1969 e s -
t%mate was a result of the change from the wet to dry work-
shop configuration and the 11-month launch schedule slippage
from August 1971 to July 1972. Additional hardware included
in the December 1969 estimate was the habitability support
system, upgraded solar array system, and thruster attitude
control system.

     The increase of $61.3 million in the October 1970 esti-
mate was attributed to the negotiation of the contract for
the dry workshop configuration and changes that had been
made due to better definition of the dry workshop design.
Also contributing to the increase was the 4-month launch
schedule slippage from July to November 1972.

     We examined into the cost of the contracts for the de-
velopment of the orbital workshop. The results of our re-
view are discussed on pages 60 through 64 of this report.

Airlock module
     The increase of $104.6 million in the December 1969 es-
timate was a result of the change to the dry workshop con-
figuration and the 11-month schedule slippage from August
1371 to July 1972. Under the dry workshop configuration, the
airlock module became the control center for the workshop,
Additional hardware included in the December 1969 estimate
was a fixed airlock shroud and an Apollo telescope mount de-
ployment assembly.
     The increase of $56.1 million in the October 1970 esti-
mate was primarily due to further definitization of the dry
workshop configuration and completion of contract negotiations.
Also contributing to the increase was the 4-month launch


                                57
schedule slippage from July to November 1972 and the addition
of a jettisonable payload shroud.

     We examined into the cost of the contract for the devel-
opment of the airlock module. The results of our review
are discussed on pages 65 through 68 of this report,

Multiple docking adapter

     The October 1968 estimate of $ 9 . 4 million was based on
the complete multiple docking adapter being built in-house
at the Marshall Space Flight Center. In the conversion to
the dry workshop configuration, the need for the lunar module
was eliminated and some of the lunar module systems were
transferred to the multiple docking adapter. A contract was
awarded for the integration of the multiple docking adapter
internal systems. This integration effort and the 11-month
launch schedule slippage from August 1 9 7 1 to July 1972 were
primarily responsible for the $4.8 million increase in the
December 1969 estimate.

      The October 1970 estimate of $ 4 5 . 8 million, an increase
of $31.6 million, was based on a definitized contract for
the final assembly and integration of the multiple docking
adapter. Also contributing to the increase were the addi-
tion of effort for the integration of the earth resources
experiments package into the multiple docking adapter and
the 4-month launch schedule slippage from July to November
1972.



       The decrease of $0.5 million in the December 1969 esti-
mate was the net result of (1) increased requirements for
the attitude pointing control system, the 11-month launch
schedule slippage from August 1 9 7 1 to July 1 9 7 2 , and the in-
clusion of an estimate for a jettisonable payload shroud and
( 2 ) decreased requirements due to a revised major contractor
estimate and cancellation of the workshop attitude control
and solar array systems. The workshop attitude control and
solar array systems were replaced by the thruster attitude
control and upgraded solar array systems which were included
in the December 1969 estimate for the orbital workshop.


                                58
          The increase of $36 million in the October 1970 esti-
mate was attributed to (1) an $18.8 million increase result-
ing from the 4-month launch schedule slippage from July to
November 1972 and increases in the allowance for program
changes and ( 2 ) a $17,2 million increase resulting from re-
vised major contractor estimates and the reassignment of con-
t r a c t o r manpower formerly charged to the Saturn IB launch
vehicle project.

REVIEW OF SELECTED SATURN
WORKSHOP PROJECT COhTRACTS
     We reviewed the contracts f o r the orbital workshop and
the airlock module administered by the Marshall Space Flight
Center to identify the amount of, and reasons for, changes
in cost as of October 1970.

     The explanations provided by NASA for the changes be-
tween the October 1968 and October 1970 estimates of cost
are generally consistent with the reasons identified during
our review.




                              59
     Extent of cost increase in the
     orbital workshop contracts

           As of Septembc3r 29, 1970, the contracts for the orbital
     workshop had experienced a cost increase of $165.4 million
     over the initial estimate of $ 2 . 3 million in January 1 9 6 7 ,
     111 addition, NASA estimated that a further cost increase of
     $119.4 million will be experienced through contract comple-
     tion. The total cost of the contracts through completion
     therefore is estimated to be $287.1 million.

          The reasons and related dollar amounts established for
     the $165.4 million cost increase include

          - 4 3 2 . 4 million for placing work under contract previ-
             ously planned to be accomplished in-house and an in-
             crease in the complexity of the work;

13        --$64 million for the addition of a second orbital work-
            shop, incorporation of a habitability support system,
I           schedule slippages, and additional requirements f o r
            testing and ground support equipment;

          - - $ 6 4 million primarily for the change from the wet to
            the dry workshop configuration; and

I         --$5 million for orbital workshop effort included in
            the S-IVB stage production contract.

          The results of our review of these cost increases are
     discussed below.

          Cost increase between the initial estimate
          and approved procurement p l a n

            On the basis of an early concept of the orbital work-
     shop, the Marshall Space Flight Center prepared a statement
     of work dated January 31, 1966, which, in essence, provided
     for the incorporation of a passivation system into the basic
     S - L W stage and for special studies to ensure the acceptabil-
     ity of the stage for manned occupancy. The passivation func-
     tion includes dumping and venting of unused propellant and
     other residuals, deactivation of hazardous systems, and prep-
     asatiora for a pressurized atmosphere.

                                   60
     On February 10, 1 9 6 6 , the contractor furnished a rough
estimate of $848,000 for the effort but pointed out that the
estimate did not cover all th2 work which would be required.
In March 1966 the contractor was authorized to proceed with
certain modifications to the S - N B stage under the S-IVB
stage production contract.

     A s the Apollo Applications Program continued to be re-
fined during the first part of 1 9 6 6 , increased emphasis was
placed on establishing a basis for long-duration manned mis-
sions. As a result, NASA Headquarters decided in December
1966 that the orbital workshop would be made habitable and
that experiment modules would be docked to the workshop while
in orbit to form a cluster. In addition, the orbital work-
shop was to be capable of reactivation and reuse for subse-
quent missions occurring up to a year later,

     On the basis of these new mission requirements, the
Marshall Space Flight Center prepared a procurement plan dated
February 20, 1 9 6 7 , for the study, design, test, and manufac-
turing effort required to attain a shirt-sleeve environment
in the S-IVB stage for its use as an orbital workshop. The
procurement plan provided for the modification of four S-IVB
stages on a time-phased basis at an estimated cost of
$2.4 million.

     Skylab Program officials informed us, however, that the
estimate contained in the procurement plan did not include
total development effort. They provided us instead with an
estimate prepared in developing the January 1967 preliminary
program operating plan which included $11 million for in-
house effort and $17.3 million for contractor effort required
for development of three wet and two dry workshops.

     We were also told that the records showing a breakdown
of the estimated contract cost could not be located but that
about 40 percent of the $17.3 million, or $6.9 million would
have been applicable to the three wet workshops. On this
basis, we estimated that the contract cost for one wet work-
shop would have been about $2.3 million.

     On October 1 8 , 1 9 6 7 , a revised procurement plan was is-
sued by the Marshall Space Flight Center which provided for
the adaption of two S-IVB stages for use as orbital workshops

                                61
at an estimated cost of $34.7 mil’l.ionf o r the first one and
$34.9 million for the second. On January 8, 1968, after
making several changes to the procurement plan, including
the deletion of the second workshop, NASA Headquarters ap-
proved the procurement of one orbital workshop at an esti-
mated cost of $34.7 million.

     Skylab Program officials told us that one of the rea-
sons for the increase was their decision to have work ac-
complished by the contractor which was previously planned to
be accomplished in-house. The other reason was that the
complexity of the work required to develop the orbital work-
shop had increased considerably during the period between
the two estimates.

     Cost increase between the approved
     procurement plan and contract definitization

     On the basis of the procurement plan approved by NASA
Headquarters on January 8, 1968, the S-KrB stage production
contract was modified by a letter amendment issued in Febru-
ary 1968 which contained a complete statement of work for
the modification and adaption of one S-WB stage for use as
an orbitalworkshop, The letter amendment established a con-
tract delivery date of July 31, 1969, and a contract comple-
tion date of June 15, 1 9 7 0 , Before the issuance of the letter
amendment, modifications to the S-IVB stage production con-
tract had been issued on a time-phased basis for only cer-
tain segments of the work.

       In November 1968 a revised procurement plan to defini-
tize the letter amendment was issued which proposed to com-
bine the contractor’s effort on the airlock module and the
orbital workshop under the same contract except for certain
S - I D stage modifications which were to remain under the
basic S-IVB stage production contract. These modifications
consisted of changes to the S-lN3 stage which permitted the
installation of various hardware items. The procurement
plan also provided f o r a second orbital workshop and a hab-
itability support system which were major additions to the
scope of work previously planned. NASA Headquarters approved
the revised procurement plan in February 1969.



                              62
     Negotiations were completed in May 1969 to definitize
the letter amendment for the orbital workshop portion of the
contract at $98.7 million, or $64 million higher than the
$34.7 million estimate approved by NASA Headquarters in the
January 1968 procurement plan. A supplemental agreement, ef-
fective August 8, 1969, was issued incorporating the defini-
tized value for the orbital workshop effort into the airlock
module contract. The supplemental agreement also changed the
contract delivery date of the first orbital workshop from
July 31, 1969, to March 1, 1971, and the contract completion
date for the orbital workshop from June 15, 1970, to July 31,
1972. A delivery date of August 31, 1971, was established
for the second orbital workshop.
      In addition to the second orbital workshop, the habit-
ability support system, and the schedule slippage discussed
above, Skylab Program officials told us that an additional
requirement for ground support equipment and testing was an-
other major area of cost impact causing the $64 million in-
crease. Although the records did not contain a breakdown of
the c o s t increase applicable to each of these four areas,
Skylab Program officials estimated that the cost impact was
about $16 million for each area.

      Cost increase between contract definiti-
      zation and September 1970 contract value

     In July 1969 the Skylab Program mission plan was modi-
fied to use the launch capability of the larger Saturn V
launch vehicle which permitted the complete outfitting of the
workshop on the ground. A s a result of this decision, a num-
ber of redesign and structural modifications to the orbital
workshop were required. The scope of work under the contract
was also substantially increased by adding new tasks such as
the solar array system, thruster attitude control system, and
changes in water storage and food management facilities.

     Negotiations were completed in May 1970 to definitize
the wet to dry workshop configuration changes at $62.1 mil-
lion.  The contract d e l i v e r y d a t e s f o r t h e f l i g h t and backup
unit were changed from March and August 1971 to July 1971
and January 1972, respectively, and the contract completion
date was changed from July 1972 t o February 1973. These de-
finitized changes were incorporated into the contract on

                                       63
August 27, 1970. Since definitization of these changes, sev-
eral minor modifications totaling $1.9 million have been ne-
gotiated which increased the contract value to $162.7 million
as of September 29, 1970.

     Cost increase in the S-IVB
     stage production contract

     A s discussed above, certain modifications to the S-IVB
stage were accomplished under the S-IVB stage production
contract. We noted that the negotiations for the wet to dry
configuration changes included a part of the costs incurred
under the S-IVB stage production contract which were appli-
cable to the orbital workshop. A s of September 1970, how-
ever, the S-IVB stage production contract still contained
costs of $5 million applicable to the orbital workshop.

     Estimate of additional cost
     increase through contract completion

     In addition to the September 1970 contract values total-
ing $167.7 million, NASA estimated that a $119.4 million cost
increase will be experienced through contract completion.
This amount includes $112.7 million for redesign effort,
hardware changes, and increased testing requirements and
$6.7 million for schedule slippage.
                          - - - -
     Included in appendix I1 of this report are the Marshall
Space Flight Center's comments concerning programmatic and
other influences contributing to the cost increases during
the development of the orbital workshop.




                             64
Extent of c o s t i n c r e a s e i n
the a i r l o c k mo&ile c o n t r a c t s

        A s of October 19, 1970, t h e a i r l o c k module c o n t r a c t had
experienced a c o s t i n c r e a s e of $117.4 m i l l i o n s i n c e t h e i n i -
t i a l c o n t r a c t was awarded i n August 1966 f o r $10.5 million.
NASA e s t i m a t e d t h a t a f u r t h e r c o s t i n c r e a s e of $ 1 2 1 . 4 m i l -
l i o n w i l l be experienced; t h e t o t a l c o s t of t h e c o n t r a c t
through completion t h e r e f o r e i s e s t i m a t e d t o be $249.3 m i l -
l ion.

       The reasons and r e l a t e d d o l l a r amounts f o r t h e
$117.4 m i l l i o n c o s t i n c r e a s e between August 1966 and Octo-
b e r 1970 i n c l u d e

        --$25.9 m i l l i o n f o r a major r e d e f i n i t i o n of t h e a i r l o c k
          module;

       --$52.3 m i l l i o n f o r t h e a d d i t i o n of a second (backup)
         a i r l o c k module, schedule s l i p p a g e s , a d d i t i o n of sup-
         p o r t i n g engineering and i n t e g r a t i o n e f f o r t , r e d e s i g n
         e f f o r t and hardware m o d i f i c a t i o n s , and p r e p a r a t i o n of
         an updated t e s t program; and

        --$39.2 m i l l i o n f o r t h e change from t h e w e t t o the dry
          workshop c o n f i g u r a t i o n ,

         The r e s u l t s of our review of t h e s e c o s t i n c r e a s e s a r e
d i s c u s s e d below.

        --
        Cost i n c r e a s e between i n i t i a l - c o n t r a c t
        and p r o p o s e ~ d ~ ~ . ~ - ~ ~Q.-contracL
                                                    zation
        conver-sion

          I n August 1966 t h e Manned S p a c e c r a f t Center awarded a
f i x e d - p r i c e c o n t r a c t i n t h e amount of $ P 0 , 5 m i l l i o n f o r t h e
design and development of the a i r l o c k module and r e l a t e d
hardware. The contemplated d e s i g n of t h i s e a r l y u n i t w a s
e s s e n t i a l l y a p r e s s u r i z e d t u n n e l w i t h one end providing a
s e a l e d connection t o a hatch i n the orbital workshop and t h e
o t h e r end providing a docking a d a p t e r f o r t h e command and
s e r v i c e module. The performance requirements f o r t h i s e a r l y
u n i t were l i m i t e d t o a s i n g l e mission of 14 t o 28 days' du-
ration.

                                              65
      In December 1966,, NASA Ekadqrarters issued a new set
of mission requirements which established a more complex
program. A s a result, a major redefinition of the airlock
module hardware, supporting effort, testing sequiren,ents,
and i n t e r f a c e requirements with other modules WRS required.
Changes to be made to the airlock module included the in-
corporation of a power and distribution system, environ-
mental conditioning, a communications system, storage for
certain experiments, provisions for ground control, and a
means for astronaut extravehicular and intravehicular activ-
ity.

     Because of the significant changes to be made to the
airlock module, the Manned Spacecraft Center directed the
contractor to stop work on the early version and issued a
new scope of work for the more complex unit. The fixed-
price contract was then converted to a cost-type letter con-
tract to be definitized at a later date.
      In early 1968, negotiations were compl.eted to defini-
tize the letter contract for the redesigned airlock module
at $ 3 6 . 4 million, or $ 2 5 . 9 million higher than the value of
the fixed-price contract. The NASA Administrator decided
not to approve the definitization action and directed that
the performance period of the letter contract be extended to
December 1968. A NASA Headquarters official told us that
documentation was not available which showed the Administra-
tor's reasons for not approving the definitization action
and that he could only speculate on what the reasons were.
     Cost increase between proposed definitization
     of--contract convers_ion and definitized contract
     _---

     In September 1968 the NASA Administrator approved the
redignment of management responsibilities for developing
certain flight hardware, including the airlock module for
which responsibility was transferred to the Y!arshall Space
Flight Center. Because of the many changes to the unit
that resulted from the revised mission requirements issued
in December 1966, a new procurement plan was prepared and
submitted to NASA Headquarters f o r approval.

     In addition to incorporating the revised mission re-
quirements, the plan provided for a backup a i r l o c k module

                               66
and for systems engineering and integration effort. After
preparation of the procurement plan, the contractor was re-
quested to submit a proposal for the definitization of the
letter contract. To allow time for this action, the letter
contract period of performance was extended several times
with the last extension being to August 31, 1969.

     Negotiations were concluded in May 1969 to definitize
the letter contract at $88.7 million which was approved by
NASA Headquarters on August 8, 1969. The definitized con-
tract was $52.3 million higher than the amount negotiated
by the Manned Spacecraft Center in early 1968, and it estab-
lished a contract completion date of August 31, 1972. The
airlock nodule flight unit and backup unit were scheduled
for delivery on March 1 and August 1, 1971, respectively.

     We obtained an internal NASA working paper dated Febru-
ary 11, 1969, which summarized the various contract changes
and related contractor proposals that had been submitted
after the $ 3 6 . 4 million was negotiated with the contractor
by the Manned Spacecraft Center in early 1968. On the ba-
sis of discussions with Skylab Program officials and the
proposed dollar amounts shown on the working paper, we esti-
mated that $41.9 million of the $52.3 million increase in-
cluded about $17.4 million f o r the addition of the backup
airlock module, $113.2 million for schedule slippages,
$9.2 million for redesign effort and hardware modifications,
and $ 2 . 1 million for the preparation of an updated test pro-
gram. The contract files showed that the remaining
$10.4 million increase was for the addition of supporting
engineering and integration effort.

     Cost increase between definitized contract
     and contract value at October 197Q

     In July 1969 the Skylab Program mission plan was nodi-
fied to use the launch capability of the larger Saturn V
launch vehicle which permitted the complete outfitting of
the workshop on the ground. A s a result, major modifica-
tions to the airlock module were required; and a payload
shroud and deployment assembly for the Apollo telescope
mount were added to the airlock module contract. The con-
tract completion date was extended from August 31, 1972, to
February 28, 1973, and the delivery dates for the airlock

                              67
     module flight and backup units were changed from March E and
     August 1, 1971, respectively, t o July 1, 1971, for both
     units. These changes were incorporated into the contract
     on July 23, 1970, at a value of $39.7 million.

          On the basis of our review of the cdntractor proposals
     and contract files, we estimated that the $39.7 million in-
     crease consisted of $21.1 million for hardware modifica-
     tions, $15.8 million for hardware additions, and $2.8 mil-
     lion for schedule slippage. Since J u l y 23, 1970, several
     minor contract modifications have been made which reduced
     the value of the contract by $0.5 million for a total net
     increase of $ 3 9 . 2 million between definitization of the
     letter contract on August 8, 1969, and its value of
     $127.9 million as of October 19, 1970.

          Estimate of additional cost
          increase through contract completion

          In addition to the October 1970 contract value of
     $127.9 million, NASA estimated that an additional $121.4 mil-
     lion cost increase will be experienced through contract com-
     pletion. The estimated increase of $121.4 million consists
tl
     of $108.1 million for redesign effort, hardware modifica-
     tions, and testing and $ 1 3 . 3 million for schedule slippage.



          Included in appendix I1 of this report are the Mar-
     shall Space Flight Center's comments concerning programmatic
     and other influences contributing to the cost increases
I    during the development of the airlock module.
H
                                  CHAPTER 11

               APOLLO TELESCOPE MOUNT PROJECT COSTS

          The Apollo t e l e s c o p e mount i s t o be designed and de-
veloped t o permit man t o observe, monitor, and record s o l a r
phenomena o u t s i d e t h e d i s t o r t i n g atmosphere of t h e e a r t h
2nd t o demonstrate and e v a l u a t e man's a b i l i t y t o perform
s c i e n t i f i c experiments w i t h high r e s o l u t i o n astronomical
t e l e s c o p e s w h i l e i n space. Funding f o r t h e c o s t of e x p e r i -
ments t h a t are t o be f l o w n on t h e Apollo t e l e s c o p e mount i s
provided under t h e experiment development p r o j e c t .              (See
ch. 4 . )




                                          69
     The following schedule compares t h e October 1968, De-
cember 1 9 6 9 , and October 1970 estimates of c o s t f o r t h e
Apollo t e l e s c o p e mount p r o j e c t .

                                                                                                      Increase o r
                                                 Increase o r              Increase 0;                decrease(-)
                                                                                            1sm-m
                                       October
                                       -
                                       1966
                                                 decrease(-)
                                                   1966-69
                                                                December
                                                                 __
                                                                 1969
                                                                           decrcace(-)
                                                                            -
                                                                            1969-70      - -
                                                                                         1970  -
                                                                                         October
                                                                                               Percent
                                                                                                   Amount

                                                                  (millions)

  APOLLO TELCTOPE Y O t q :            SE,8       482.1         s113.7      -50.5        $113.2 -$G           -42
      Lunar module modifications       104.8       -85.3          19.5         -2.2       17.3     -87.5      -83
      Apollo t e l e s c o p e mount
        systems
      Support
                                        69.2
                                        21.8
                                                    21.4
                                                   -18.2
                                                                  90.6
                                                                   3.6
                                                                                5.3
                                                                               -3.6        -
                                                                                          95.9      26.7
                                                                                                   -21.8
                                                                                                               39
                                                                                                             -100


NASA EXPLANATIONS FOR CHANGES
I N ESTIMATED COST

          The major cause f o r t h e decrease i n t h e e s t i m a t e d c o s t
of t h e Apollo t e l e s c o p e mount w a s a t t r i b u t e d t o t h e c a n c e l -
l a t i o n of t h e m o d i f i c a t i o n s t o t h e l u n a r module t h a t would
have been r e q u i r e d under t h e w e t workshop c o n f i g u r a t i o n .

       NASA's e x p l a n a t i o n s f o r t h e changes i n e s t i m a t e d c o s t
f o r each funding element of t h e Apollo t e l e s c o p e mount p r o j -
ect a r e presented i n t h e following s e c t i o n s .

Lunar module m o d i f i c a t i o n s

        The d e c r e a s e of $85.3 m i l l i o n i n t h e December 1969 es-
timate r e s u l t e d from t h e c a n c e l l a t i o n of t h e l u n a r module
m o d i f i c a t i o n s t h a t were no l o n g e r r e q u i r e d a f t e r t h e change
t o t h e d r y workshop configuration.,

          The c o n t r a c t t e r m i n a t i o n and c l o s e o u t c o s t s f o r t h e
l u n a r module m o d i f i c a t i o n s were l e s s t h a n a n t i c i p a t e d and
r e s u l t e d i n an a d d i t i o n a l d e c r e a s e of $ 2 . 2 m i l l i o n which
w a s r e f l e c t e d i n t h e October 1970 estimate.

Apollo t e l e s c o p e mount systems

     The change t o t h e d r y workshop c o n f i g u r a t i o n and t h e
11-month launch schedule s l i p p a g e from August 1971 t o J u l y
1972 r e s u l t e d i n t h e i n c r e a s e of $21.4 m i l l i o n i n t h e Be-
cember 1969 e s t i m a t e .



                                                           70
         A f u r t h e r launch schedule s l i p p a g e t o November 1972 and
the a d d i t i o n of a backup mission c a p a b i l i t y r e s u l t e d i n t h e
i n c r e a s e of $ 5 . 3 m i l l i o n i n t h e October 1970 estimate.

Support

         The decrease of $18.2 m i l l i o n i n t h e December 1969 es-
timate was caused by t h e e l i m i n a t i o n of c o n t r a c t o r checkout
e f f o r t f o r t h e Apollo t e l e s c o p e mount a t t h e Kennedy Space
Center.

       Retained i n t h e December 1969 support c o s t e s t i m a t e
w a s a contingency fund amounting t o $ 3 . 6 m i l l i o n f o r p o s s i b l e
experiment i n s t a l l a t i o n c o s t s . This fund w a s subsequently
eliminated and a decrease of $3.6 m i l l i o n i n t h e October
1970 estimate r e s u l t e d .




                                         71
                                                                                         9L            Y   .




                           SATURN PI3 VEKHCLE PROJECT COSTS

     The two-stage Saturn IB launch vehicle will be used t~
launch three astronauts in a modified command and service
module for the initial visit and two subsequent visits to
the workshop. A picture of the Saturn IB on a modified
Saturn V mobile launch structure is shown on the following
page*
     Seven unused Apollo Saturn IB launch vehicles procured
by the Apollo Program have been transferred to the Skylab
Program. In addition to the seven vehicles procured by t h e
Apollo Program, the Skylab Program was funding the produc-
tion of two additional Saturn IB vehicles. In calendar
year 1969, production was suspended except for the two first
stages which were already near completion. Of the seven
vehicles transferred, three are t o be used for the initial
and two subsequent workshop visits, one is a backup, and
three will remain unassembled in storage.

     The following schedule compares the October 1968, De-
cember 1969, and October 1970 estimates of c o s t for each
funding element of the Saturn IB vehicle project. The pro-
duction costs of the seven vehicles transferred to the Sky-
lab Program are n o t reflected in the estimates shorn below.

                                                                                         Increase or
                                     I n c r e a s e or        Increase or               decrease(-)
                           October   decrease(-) December      decrease(-)   October       1968-70
                            1968         1968-69        1969
                                                        __       1969-70       -
                                                                               1970    -~
                                                                                       Amount P e r c e n t

                                                      (millions)

-_~-_
SA’IURN IB  VEHICLE:
             .~            $404.4    -$E
                                       $199.3                      $33.4      $232.7 -$U -42
    S-IB s t a g e           68.2       -24.4        43.8          21.1         64.9    -3.3     -5
    S-IVB s t a g e          83.9       45.2         38.7          12.2         50.9   -33.0    -39
    Instrumcnt u n i t       48.9       -26.2        22.7          -9.9         12.8   -36.1    -74
    Ground s u p p o r t
      equipment              23.8      -11.0        12.8           -5.1         7.7    -16.1    -68
    H-1 e n g i n e          20.4         2.7       23.1             8.9       32.0      11.6     57
    Vehicle support         159.1     -101.0        58.1             6.3       64.4    -94.7    -60

Note:   Figures may not add due to rounding.




                                                    72
73
NASA EXPLANATIQNS FOR CHANGES
IN ESTIMATED COST
     The primary reasons for the $205.1 million decrease in
the estimate as of December 1969 were the cancellation of
productionofthe second stage and instrument unit for two
Saturn IB vehicles and the elimination of the Skylab Program
funding responsiblity for common support. (See pp. 14
through 16.) Also contributing to the decrease were the
elimination of a Saturn IB dual launch capability, a lower
negotiated level of Saturn IB vehicle support, and a cost-
reduction study which resulted in cost savings and planning
changes.
     The increase of $ 3 3 . 4 million in the October 1970 esti-
mate was primarily a result of including closeout costs for
the completed S-IB stage contract and the Skylab Programos
newly acquired funding responsibility for flight support
costs during fiscal years 1973 and 1974 as a'result of the
Apollo Program phasing out. FLKlding for the assembly of
two instrument units was added, and the 4-month launch
schedule slippage from July to November 1972 contributed
to the increase. These increases were partially offset,
however, by the elimination of the Skylab Program's need
for launch complex 34 and the accompanying realignment of
contractor manpower at launch complex 39.




                              74
                                     CHAPTER 13

                       SATURN V VEHICLE PROJECT COSTS

     The availability of a Saturn V launch vehicle procured
by the Apollo Program enabled the Skylab Program to change
to the dry workshop configuration. Only the first two
stages (S-IC and S-11) of the Saturn V will be used to si-
multaneously launch the orbital workshop, airlock module,
multiple docking adapter, and Apollo telescope mount.
During the launch, the orbital workshop, airlock module,
multiple docking adapter, and Apollo telescope mount will
occupy the area that is normally occupied by the S-IVB
stage, lunar module, and command and service module during
Apollo missions. Skylab has funding responsibility f o r
modifications to the Saturn V vehicle configuration which
are unique to the Skylab Program.
         A picture of the Saturn V vehicle launch configuration
for the Skylab Program is shown on the following page.
     The following schedule compares the October 1968, De-
cember 1969, and October 1970 estimates of cost for the
Saturn V vehicle project.
                                                                                Increase
                        October   Increase December     Increase October        1Y68- 70
                         -
                         1968      1968-69   1969        _.1969-70 __
                                                                   1970     Amount Percent

                                                 (millions1
 SATURN V VEHICW:         $3.6      $U           $9.1    $148.0 $157.1      $153.5   4,264
     S-IC s t a g e       2.3         --         2.3
                                                  -
                                                              28.8
                                                              24.4
                                                                     31.1     28.8   1,252
                                                                                       -
     S-I1 stage                                                      24.4    24.4
     S-IVB stage
     Instrument unit
                            d         -
                                      -
                                                  -
                                                  -
                                                              27.3
                                                              41.9
                                                                     27.3
                                                                     41.9
                                                                             27.3
                                                                             41.9
     Ground support
       equipment            -         -           -            5.0    5.0      5.0     -
     F-1 engine            1.3        -          1.3           4.4    5.7      4.4
     Vehicle support        -        5.5         5.5          16.3   21.8     21.8     -
                                                                                      338


 Note:    Figures may not add due to rounding.




                                            75
76
NASA EXPLANATIONS FOR CHANGES
IN ESTIMATED COST
     The October 1968 estimate of $3.6 million was for long-
lead procurements for Saturn V launch vehicles. Early Sky-
lab Program planning included several missions which re-
quired Saturn V vehicles. At that time all Apollo Saturn
V's were still assigned to Apollo lunar missions which made
it necessary for the Skylab Program to purchase additional
Saturn V vehicles. The procurement was canceled, however,
when all requirements for follow-on Saturn V's were re-
moved from the Skylab Program. Long-lead items already
purchased were placed in storage for use as spares.
     The $5.5 million increase for vehicle support in the
December 1969 estimate was attributed to effort for launch
umbilical tower modifications required by and unique to the
Skylab Program. These modifications were required as a re-
sult of the change to the dry workshop configuration.
     The additional increase of $148 million in the. October
1970 estimate consisted of (1) $ 1 4 2 . 3 million for flight
support costs in fiscal years 1973 and 1974 due to the
planned completion of the Apollo Program in fiscal year
1972 and (2) $5.7 million for Saturn V modifications re-
quired for the dry workshop configuration.




                                77
            --mission a n a l . y s i s f o r experiment operations,
            --system analysis,
            ---systemiiitegration and requirements analysis
            --experimer;t analysis, and
            --program management requirements and controls.
i

         The f o l l m 6 n g schedule compares the October 1968, De-
    cember 1 9 6 9 , and October 1970 est.imates of c o s t f o r these
    activities.
                                                                                               Increase or
                                           Increase or                                          . .- - - - . .
                                                                                               decrease(-)
                                 Octohrr   decrense(-)   Dccrmber   Decrcnse(-)   October        1968- 70
                                 1968
                                 __          1958-69         1969     1969-70
                                                                      -I__
                                                                                  1970      Amount     Percent



    PAYLOAD INTEGRATIE?:         $153.0
                                  ._--       -$l_  $151.5
                                                    s                -$Q          $148.6 -$=              -9
        Definition                 36.1      -24.3   11.8                           11.8    -24.3        -67
        Implementation            125.9       12.8  139.7             -2.9         136.8       9.S          8


    NASA EXPLANATIONS FOR CHANGES
                    -
                    -____ml
                          ^ _l
                             l
                             _




         The October 1968 estimate of $163 million was based on
    preliminary e s t i m - i e s made prior to negotiation of t h e con-
    tract for the p a y l o d integration effort,

         The December 1969 estimate of $151.5 million, a de-
    crease of S l 1 , 5 mf4_.1fo1i, was primarily attributed to (a> a
    decrease of $13.1 rn:hllfon which resulted from the negotiated
    contract being ! . P S S than th.e October 1968 preliminary esti-
    mate and ( b > a partially offsetting increase of $1.6 million
    which was caused by the 11-month launch schedule s l i p p a g e
    from August 1 9 9 1 to J u l y 1972,

         The decreasp sS' $2.9 million from Becernber 1969 t o Oc-
    tober 1.470 was primarily attributed to a reduction in the
    allowhnce for program changes                        e




                                                         78
                        CHhlgTER 15

             MISSION OPERATIONS PROJECT COSTS
     Mission operations provides for the overall operational
capability of the Skylab Program. Mission operations fund-
ing includes all mission control; preflight, flight and re-
covery operations; crew training; crew systems; crew opera-
tions; launch support operations; launch instrumentation
support; and liaison activity for the NASA offices partici-
pating in each Skylab Program mission.




     The following schedule compares the October 1968, D e -
cember 1969, and October 1970 estimates of cost for mission
operations.




                             79
                                                                                              Decrease (- 1
                                Gctok.cr   Decrease(-)    Derrmtwr    Decrensc(-)   @ctc;hrr     1968-70
                                 1968
                                 -           1968-69        1969        1969-70      -
                                                                                     1970    - - _ _Percent
                                                                                             Amount  _
                                                               (millions)

    MISSION OI'EPATIONS:        $281.1     -$=                $66.9     -412.2      $54.7 -4226.4     -81
        M i s s i o n control     54.8           -59.0         0.8                    0.8    -59.0    -99
         Flight operations        60.4           -37.5        22.9          -3.6     19.3    -41.1    -68
         Flight crew oper-
           ations                 39.6           -16.7        22.9          -2.2     20.7    -18.9    -48
         Launch operations       108.8           -89.8        19.0          -6.2     12.8    -96.0    -88
         Launch instru-
           mentation              12.5       -11 1   D         1.4          -0.3      1.1    -11.4    -91
    Note:   Figures may not add due to rounding.


     NASA EXPLANATIONS FOR CHANGES-
     I N ESTIMATED COST

            The f o l l o w i n g s e c t i o n s p r e s e n t NASA's e x p l a n a t i o n s as
    t h e y r e l a t e t o each element of c o s t shown i n t h e above sched-
    ule.

    Mission c o n t r o l

         The d e c r e a s e of $59 m i l l i o n i n t h e December 1969 e s t i -
n   mate w a s a t t r i b u t e d t o the e l i m i n a t i o n of t h e Skylab Pro-
    gram's funding r e s p o n s i b i l i t y f o r common support. (See
    pp. 14 through 16.)

    Flight operations

               The d e c r e a s e s of $37.5 m i l l i o n and $3.6 m i l l i o n i n t h e
    December 1969 and October 1970 estimates, r e s p e c t i v e l y , were
    a t t r i b u t e d t o a reduced level of support c o n t r a c t o r e f f o r t .

    F l i g h t crew o p e r a t i o n s

              The d e c r e a s e of $16.7 m i l l i o n i n t h e December 1969 es-
    timate w a s p r i m a r i l y a t t r i b u t e d t o t h e d e l e t i o n of t h e l u n a r
    rnodule/Apollo t e l e s c o p e mount s i m u l a t o r when t h e workshop
    c o n f i g u r a t i o n was changed from w e t t o d r y .

              The $ 2 . 2 m i l l i o n d e c r e a s e i n t h e October 1970 estimate
    r e s u l t e d from reduced camera requirements and t h e t r a n s f e r
    of k m d i n g r e s p o n s i b i l i t y f o r m o d i f i c a t i o n s and maintenance
    of s i m u l a t o r s from t h e Skylab Program t o t h e o p e r a t i n g b a s e .


                                                         80
Launch operations

     The decrease of $89.8 million in the December 1969 es-
timate was attributed to (I) elimination of the Skylab Pro-
gram's funding responsibility €or cormnon support, ( 2 ) con-
version of contractor tasks to in-house at the Kennedy Space
Center, and ( 3 ) cost reductions at the Air Force Eastern
Test Range where Saturn IB launches were scheduled to take
place

     The decrease of $6.2 million in the October 1970 esti-
mate was primarily a result of the consolidation of manned
launch operations at launch complex 39 which eliminated the
Skylab Program's need for Paunch complex 3 4 .

Launch instrumentation

     The decrease of $11.1 million in the December 1969 es-
timate was primarily attributed to the elimination of the
Skylab Program's funding responsibility for common support.
     The decrease of $0.3 million in the October 1970 esti-
mate was primarily attributed to better manpower utiliza-
tion through the consolidation of manned launch operations
at launch complex 3 9 .




                             81
                                                 CHAPTER 1 6

                                  PROGRAM SUPPORT PROJECT COSTS

             The program s u p p o r t p r o j e c t p r o v i d e s a c L i v i t i e s t o a s -
    s i s t t h e Skylab Program O f f i c e i n the e s t a b l i s h m e n t o f pro-
I   gram r e q u i r e m e n t s and t h e review of program implementation
    a c t i v i t i e s . Program s u p p o r t i n c l u d e s f u n d i n g f o r systems
    e n g i n e e r i n g , t e c h n i c a l and management services, and r e l a t e d
    s u p p o r t services, i n c l u d i n g some e l e c t r i c a l s u p p o r t equip-
    ment.

         The f o l l o w i n g s c h e d u l e compares t h e October 1968, D e -
    cember 1 9 6 9 , and October 1970 estimates o f c o s t f o r program
    support.


                                                                                    De c re as e (-)
    0ct o b e r   De c r e a s e (-1   December    Decrease (-)   0 c t ob e r       1968-70
A    1968            196 8-69            1969        1 969-70        1970         Amount      Percent

    --                                            (mi Ilions)-

    $164.7          -$5.1               $159.6       -$85.3        $74.3         -$90.4       -5 5


    NASA EXPLANATIONS FOR CHANGES
    I N ESTIMATED COST

             The d e c r e a s e of $5.1 m i l l i o n i n the December 1969 e s t i -
    mate was the n e t r e s u l t of (1) a d e c r e a s e of $33.5 m i l l i o n
    due t o t h e t r a n s f e r of funding r e s p o n s i b i l i t y t o the Apollo
    Program f o r common s u p p o r t c o s t s a p p l i c a b l e t o l a b o r a t o r y
    s u p p o r t c o n t r a c t o r s a t t h e Marshall Space F l i g h t C e n t e r and
    (2) a n i n c r e a s e of $28.4 m i l l i o n i n t h e management r e s e r v e
    when the workshop c o n f i g u r a t i o n was changed from w e t t o dry.

              The d e c r e a s e o f $85.3 m i l l i o n i n t h e October 1970 e s t i -
    mate was t h e n e t r e s u l t o f (1) a n i n c r e a s e of $3.5 m i l l i o n
    due t o t h e 4-month launch s c h e d u l e s l i p p a g e from J u l y t o
    November 1 9 7 2 and (2) a n $ 8 5 . 8 m i l l i o n d e c r e a s e r e s u l t i n g
    from a r e d u c t i o n i n t h e management reserve and reduced con-
    t r a c t o r e f f o r t f o r t h e t e s t program, t h e r e l i a b i l i t y -
    q u a l i t y - s a f e t y program, and c o n f i g u r a t i o n management.


                                                     82
                                  CHAPTER 17

                     CONTRACT ADMINISTRATION COSTS

     Contract administration funding consists of the Skylab
Program's allocated portion of costs associated with audits
of NASA contractors which are performed primarily by Depart-
ment of Defense audit agencies. The following schedule
compares the October 1968, December 1969, and October 1970
estimates of c o s t for contract administration.

                                                                Increase
October   Increase     December     Decrease(-)   October       1968-70
  1968    1968-69        1969         1969-70      -
                                                   1970     Amount   Percent

                            (millions)

 $11.7      $4.1        $15.8         -$0.2        $15 6     $3.9          33

NASA EXPLANATION FOR CHANGES IN
ESTIMATED COST
     NASA attributed the net increase of $ 3 . 9 million be-
tween the October 1968 and October 1970 estimates to ex-
tended Department of Defense audit activities resulting
from launch schedule slippages           e




                                       a3
                           CHAPTER 18

             AGENCY COMLVIETJTS   AND OUR EVALUATION
     In a letter dated March 2, 1971, the Associate Adminis-
trator for Organization and Management commented upon the
rationale behind N A S A P s revest that we restrict the dis-
tribution of our report and transmitted the Office of Manned
Space Flight's comments on the report. This letter is in-
cluded as appendix I. Comments were also obtained from the
Director of the Marshall Space Flight Center and these are
included as appendix 11. Following is a summary of N A S A ' s
comments and our evaluation thereof.

     NASA commented that the general facts showing only a
small cost growth since mid-1968 were sound and that the
general narrative of the program in chapter 1 reasonably
portrayed the situation. NASA felt, however, that the re-
port became very confusing in later chapters on individual
projects because we had shifted the reference base for costs
from the October 1968 program operating plan to various
earlier bases.

     NASA stated that the October 1968 program operating
plan had been well chosen as the base for the general sec-
tion of the report because this represented the first com-
pleted program operating plan containing the estimated cost
of the program through completion and because the program
had stabilized reasonably well into its present program con-
figuration and number of launches. NASA stated also that
the use of reference bases as early as 1966 in the report
for several individual projects--a time when the overall
program definition and the requirements on individual proj-
ects were still very much in the formative stage--had made
it extremely difficult to follow a train of logic through
the report, NASA felt that it also produced highly ques-
tionable percentages of cost growth and strongly suggested
that the project sections of the report be rewritten around
the same base as the more general parts of the report.

     Initially, we had planned to use as our base the
earliest possible estimate of the cost of the program as a
whole. Since the October I968 estimate, however, was the
first estimate of the cost of the program through completion,

                                  84
we decided t o trace the c o s t of selected hardware iteins from
the initial estimate to the most recent estimate to obtain
a more complete understanding of the changes in the program.
We believe that the bases used, 1966 and 1967, in this part
of our review are appropriate when viewed in the context
that NASA sought and received congressional approval for the
program in calendar year 1967.

TRANSFER OF EFFORT

     NASA commented that the transfer of program elements
between projects had explained many of the fluctuations in
individual project cost estimates. A s an example, NASA com-
mented that major functions of the lunar module had been
transferred to the airlock module which increased its cost;
however, because of this transfer, it was possible to cancel
the lunar module prqject and decrease its cost. NASA be-
lieves that identification of such transfers is essential
since they do not, from the overall point of view, consti-
tute unwarranted cost growth.
     We met with officials of the Marshall Space Flight Cen-
ter on March 19, 1971, to discuss the effect of transfers
between projects. During this meeting, the officials stated
that the transfers pertained only to the period between
July 1969 and October 1970--the ,timewhen transfers between
projects were being made as a result of the decision to
change from the wet to the dry workshop configuration. They
stated also that it would be a difficult task to allocate
the applicable c o s t increases and decreases among the proj-
ects involved in the transfers. They estimated that such
an allocation could take as much as 3 months and even then
might result in only a rough estimate. Therefore we were
not able to price out the effect of the transfers.

ACCOUNTING EFFECTS

     NASA commented that the effect of changes in accounting
had perhaps been overemphasized by our comments regarding
common support costs. In this regard, the information pro-
vided in our report concerning the common support was pro-
vided by NASA as part of its explanation for cost decreases
in the program. We reported and explained common support
as it was presented to us.

                               85
    METHODS OF ESTIMATING

         The agency also stated that within our report there
    were numerous references to the fact that estimates were
    often based on judginent and experience and that documents in
    the file did not preserve the rationale and calculations on
    which the estimates were based. NASA felt that the report-
    ing of the use of judgment and experience should not be con-
    strued as critical in a program of this nature.

         In this regard, emphasis in our report was placed on
    NASA's lack of documentation. We were not suggesting that
    judgment and experience should not be used but that suffi-
    cient documentation was not available to show what was con-
    sidered in arriving at the estimate. NASA indicated that
    it would continue its attempts to improve in the area of
    documentation.

    PROVISION FOR INF'LATION

         NASA commented that a GAO summary of facts concerning
    our review at the Marshall Space Flight Center had errone-
I   ously indicated that conflicting statements had been made
    by center officials concerning the provision for inflation.
    NASA stated that provision for inflation had been made in
    the cost estimates but that inflation had not been sepa-
    rately identified as a percentage factor.
         We do not feel that conflicting statements were pre-
    sented. During our review, one official told us that an es-
    timate being discussed did not include a specific provision
    for inflation but that the estimate included contractor-
    proposed costs which did. Other officials told us that es-
    timates would provide for inflation but that they could not
    identify the amounts provided.

         In contrast to our summary of ficts, our final report
    does not deal with the provision for inflation solely at the
    Marshall Space Flight Center. Rather, we state that program
    operating plan guidelines do not direct the centers concern-
    ing the provision for inflation and that, as a result, some
    estimates do not include a provision for inflation.



                                 86
                         CHAPTER 19

                       SCOPE OF REVIEW

     We examined the policies, procedures, and practices
followed by the Marshall Space Flight Center, Huntsville,
Alabama; the Manned Spacecraft Center, Houston, Texas; and
NASA Headquarters, Washington, D.C., in estimating the cost
of the Skylab Program. We discussed with agency officials
the procedures followed in preparing the most recent esti-
mate of the cost of the program--the October 1970 estimate.

         At NASA Headquarters we also examined into the cost
history of the program between October 1968 and October
1970. We selected as our base the estimate of program cost
in the October 1968 program operating plan because it p r o -
vided the first estimate of the cost of the Skylab Program
through completion. Due to changing program definition,
earlier program operating plans included only estimates of
c o s t s to be incurred during the next 2 years of the program,
We identified the changes that occurred between the October
1968, December 1969, and October 1970 program operating
plan estimates and obtained NASA's reasons for these changes,

     We examined the cost history of selected Marshall Space
Flight Center hardware contracts. We reviewed the records
and documents related to these contracts and held discus-
sions with cognizant NASA officials. The contracts selected
and the related hardware being developed are shown below.

           Item                       Contractor

   Orbital workshop        McDonnel1 Douglas Astronautics
                             Company
   Airlock module          McDonne11 Douglas Astronautics
                             Company
   X-ray spectrographic    American Science and Engineer-
     telescope               ing, Inc.
   Ultraviolet scanning    Harvard College Observatory
     polychromator spec-
     troheliometer



                              87
APPENDIXES




 89
                                                                                                         APPENDIX I




                                                                                                  MhR 2 1971
REPLY TO
ATTN OF    D-2


           M r . K l e i n Spencer
           Assistant Director, C i v i l Division
           U,S e General Accounting O f f i c e

           Dear M r . Spencer:

           I n r e s p o n s e t o your l e t t e r , d a t e d February 2 4 , 1971, t h e r e a r e e n c l o s e d
           t h e comments of t h e O f f i c e of Manned Space F l i g h t r e l a t i n g t o GAO'S d r a f t
           r e p o r t on t h e review o f e s t i m a t e d c o s t o f t h e Skylab Program.

           The f o l l o w i n g i n f o r m a t i o n i s f u r n i s h e d p u r s u a n t t o your r e q u e s t f o r a
           r e i t e r a t i o n of t h e r a t i o n a l e behind NASA's l i m i t a t i o n s on t h e u s e and
           r e l e a s e o f c e r t a i n t y p e s of i n f o r m a t i o n made a v a i l a b l e t o t h e GAO a u d i t o r s
           a s s i g n e d t o t h e review of t h e Skylab Program. Such r a t i o n a l e was s t a t e d
           i n t h e s e v e r a l GAO/NASA meetings t h a t were h e l d on t h e need f o r documents
           and d a t a . These meeting r e s u l t e d i n m u t u a l l y a c c e p t e d "groundrules" f o r
           t h e performance o f t h i s s u r v e y and, a l s o , f o r t h e o t h e r r e c e n t l y announced
           "cost-growth" reviews of c e r t a i n OSSA and OART Programs

           S p e c i f i c a l l y , GAO a u d i t o r s a g r e e d n o t t o u s e o r d i s c l o s e t o o t h e r s , w i t h -
           o u t p r i o r a p p r o v a l of NASA, any o f t h e f o l l o w i n g d a t a i f i t should come t o
           t h e a u d i t o r s ' a t t e n t i o n w h i l e o t h e r i n f o r m a t i o n i s b e i n g made a v a i l a b l e
           f o r GAO review:

                   (a)     Budget e s t i m a t e s u n t i l such time a s t h e y a r e made p u b l i c by
                           the President,

                   (b)     O b s o l e t e budget r e q u e s t s of t h e A d m i n i s t r a t o r .
                   ( c ) Agency e s t i m a t e s o f t h e run-out c o s t s of i n d i v i d u a l c o n t r a c t s .
           There was no r e s t r i c t i o n on N A S A I s l a t e s t e s t i m a t e o f t o t a l program run-
           o u t c o s t s f o r t h e Skylab Program, i n c l u d i n g a breakdown of t h e elements
           ( l i n e i t e m s ) comprising such t o t a l , Provided: budget e s t i m a t e s o r p r o -
           gram p r o j e c t i o n s , by f i s c a l y e a r s , were n o t u s e d o r d i s c l o s e d . Also,
           t h e r e was no r e s t r i c t i o n on t h e u s e o r d i s c l o s u r e of agency e s t i m a t e s of
           t o t a l run-out c o s t s o f a l l Skylab c o n t r a c t s i n t h e a g g r e g a t e .



                                                                  91
          APPENDIX I


         The r a t i o n a l e s u p p o r t i n g t h e above l i m i t a t i o n s (a) and (b) i s s e t f o r t h i n
         NMI-7440.1 and EOB C i r c u l a r A - 1 0 which a r e designed t o implement t h e i n -
         s t r u c t i o n s of t h e Executive O f f i c e of t h e P r e s i d e n t , The r a t i o n a l e behind
         l i m i t a t i o n ( c ) above i s t o p r e v e n t p u b l i c d i s c l o s u r e o f in-house determi-
         n a t i o n s on e x i s t i n g c o n t r a c t s i n o r d e r t o :

                  1.            Avoid p r e j u d i c i n g t h e Government i n f u t u r e n e g o t i a t i o n s w i t h
                                 t h e c o n t r a c t o r s , and

                  2.            Avoid t h e d i s c l o s u r e of d a t a which would permit c o n t r a c t o r s
                                t o p r e d i c a t e t h e i r claims on NASA's estimates of p r o j e c t e d
                                costs.

         I n b r i e f , t h e s e l i m i t a t i o n s a r e designed t o p r o t e c t t h e i n t e r e s t s of t h e
         United S t a t e s .

         To our knowledge, t h e above groundrules have c r e a t e d no s i g n i f i c a n t pro-
         blems i n t h e conduct of t h e review of t h e Skylab Program. I n f a c t , t h e
         GAO a u d i t o r s themselves recognized t h a t c a r e would have t o be e x e r c i s e d i n
         t h e p r e s e n t a t i o n of some schedules and f i n a n c i a l d a t a , as w e l l a s n a r r a -
         t i v e , i n t h e GAO r e p o r t t o p r e c l u d e a meaningful i n t e r p r e t a t i o n by con-
         t r a c t o r s ' r e p r e s e n t a t i v e s even though i d e n t i f i c a t i o n of NASA p r o j e c t i o n s
         of run-out c o s t s on i n d i v i d u a l c o n t r a c t s might n o t be r e a d i l y a p p a r e n t t o
         some r e a d e r s of t h e r e p o r t . For example, r e p o r t f i n a n c i a l d a t a o r n a r -
         r a t i v e on a program l i n e i t e m (or sub-item) might be e x t r a p o l a t e d t o
         i n f o r m a t i o n on i n d i v i d u a l c o n t r a c t s by knowledgeable c o n t r a c t o r s even
         though c o n t r a c t o r c o n t r a c t o r i d e n t i f i c a t i o n i s n o t shown.

         The d r a f t r e p o r t provided w i t h your l e t t e r of February 24, 1971, does
         i n c l u d e s e v e r a l NASA e s t i m a t e s ( s p e c i f i c o r i n t e r p r e t a b l e ) of run-out
         c o s t s on i n d i v i d u a l c o n t r a c t s . As a matter of p r e f e r e n c e , NASA c o n t i n u e s
         t o u r g e you t o d e l e t e from your r e p o r t t h e agency's e s t i m a t e s of run-out
         c o s t s of i n d i v i d u a l c o n t r a c t s . I f , however, such i n f o r m a t i o n i s i n G A O q s
         view e s s e n t i a l t o t h e r e p o r t t h e n a s a minimum we r e q u e s t t h a t you make
         t h e survey r e p o r t " r e s t r i c t e d " , i n compliance w i t h t h e l i m i t a t i o n s a g r e e d
         upon, and accompany i t w i t h a s u i t a b l e e x p l a n a t i o n r e g a r d i n g t h e s e n s i t i v e
         n a t u r e of t h e s p e c i f i e d i n f o r m a t i o n .

            ,--I
           5-d
                 L:    ,,   '   +(     '
                                       7:.,   .'L
    ,4   Richard C . McCurdy                   4'
    "'&'A s so c i a t e A dmin i s t tdt o r f o r
L        O r g a n i z a t i o n and Management
         'Enclosure:
           As stated


                                                                      92
                                                                                 APPENDIX I


                                NATIONAL AERONAUTICS AND SPACE ADMINISTRATION
                                                   WASHINGTON.
                                                            DC        20546




REPLY TO
ATTN OF
                                                                          MAR 2 1971


           MEMORANDUM

           TO :           D/Associate A d m i n i s t r a t o r
                          f o r O r g a n i z a t i o n and mnagement

           FROM:          M/Deputy A s s o c i a t e A d m i n i s t r a t o r
                          f o r Manned Space F l i g h t

           SUBJECT:       Comments on t h e GAO February 2 4 D r a f t Report
                          on t h e Skylab Program


           Attached a r e OMSF comments i n response t o t h e GAO d r a f t
           r e p o r t on Skylab, r e c e i v e d February 2 4 .

           Per our c o n v e r s a t i o n t h i s morning, t h e s e a r e i n t e n d e d
           t o be a t t a c h e d t o your l e t t e r t o GAO.




           Charles W. Mathews
           A t t a c h en t




                                                  93
    APPENDIX I


                    NASA C O L W N T S ON GENERAL ACCOUNTING O F F I C E

                          DRAFT REPORT ON THE SKYLAB PROGRAM




    The g e n e r a l f a c t s showing only a s m a l l c o s t growth s i n c e mid
    1968 a r e sQiind, and t h e g e n e r a l n a r r a t i v e of t h e program i n
    Chapter 1 reasonably p o r t r a y s t h e s i t u a t i o n . However, t h e
    r e p o r t becomes very confusing i n l a t e r c h a p t e r s on i n d i v i d u a l
    p r o j e c t s because i t s h i f t s the r e f e r e n c e base from P3P 68-2
    t o various e a r l i e r bases.        mis makes it v e r y d i f f i c u l t t o
    f o l l o w through t h e t h r e a d of development and a l s o l e a d s t o
    erroneous conclusions a t t h e p r o j e c t l e v e l .

    Base

    The POP 68-2 was well choosen a s t h e base f o r t h e g e n e r a l
    s e c t i o n of t h e repDrt because t h i s r e p r e s e n t e d t h e f i r s t
    completed POP going t o runout and because t h e program had
    s t a b l i z e d reasonably w s l l i n t o i t s p r e s e n t program c o n f i g -
    u r a t i o n and number of launches. Even a f t e r t h a t t i m e , as
    l a t e as J u l y 1 9 6 9 , changes as s i g n i f i c a n t a s t h e one from
    S a t u r n IB-launched w e t t o S a t u r n V-launched d r y workshop
    were s t i l l being made.
    E a r l i e r reference bases a r e used i n the r e p o r t f o r s e v e r a l
    i n d i v i d u a l p r o j e c t s e x t e n d i n g back i n t o p e r i o d s a s e a r l y a s
I   1 9 6 6 , a t i m e when t h e o v e r a l l program d e f i n i t i o n and t h e
    requirements on i n d i v i d u a l p r o j e c t s were s t i l l v e r y much i n
    t h e formative s t a g e . S t r u c t u r i n g these i n d i v i d u a l p r o j e c t
    a n a l y s e s t o a d i f f e r e n t base i n t i m e and i n degree of
    d e f i n i t i o n makes it extremely d i f f i c u l t t o f o l l o w a t r a i n of
    l o g i c through t h e r e p o r t .             It a l s o produces h i g h l y ques-
    t i o n a b l e p e r c e n t a g e s of c o s t growth. For i n s t a n c e , t h e
    A i r l o c k Module i s r e p o r t e d t o have experienced a v e r y l a r g e
    p e r c e n t a g e c o s t growth. This was c a l c u l a t e d from a very
    e a r l y base r e l a t e d t o e a r l y t a s k s and a concept of a
    simple Airlock which l a t e r grew i n t o a s o p h i s t i c a t e d nerve
    c e n t e r of t h e C l u s t e r , t a k i n g a v e r numerous f u n c t i o n s
    o r i g i n a l l y a s s i g n e d e l s e w h e r e . This i s t y p i c a l of numerous
    i n s t a n c e s where growth i n one p r o j e c t r e p r e s e n t e d t r a n s f e r s
    of e f f o r t from a n o t h e r p r o j e c t w i t h o u t i n c r e a s e t o o v e r a l l
    program     e




    It i s s t r o n g l y suggested t h a t t h e p r o j e c t s e c t i o n s of t h e
    r e p o r t be r e w r i t t e n around t h e Sam? POP 68-2 base a s t h e
    more g e n e r a l p a r t s of t h e r e p o r t .


                                                  94
                                                                           APPENDIX I


T r a n s f e r of E f f o r t

Both t h e g e n e r a l s e c t i o n of t h e r e p o r t and t h e d e t a i l e d
p r o j e c t a n a l y s i s could be g r e a t l y improved by s t r e s s i n g
and p r e s e n t i n g more c l e a r l y t h e t r a n s f e r of program elements
from p r o j e c t t o p r o j e c t . Such t r a n s f e r s e x p l a i n many f l u c -
t u a t i o n s i n i n d i v i d u a l p r o j e c t s which, without accompanying
e x p l a n a t i o n , would a p p e a r q u i t e unusual. For i n s t a n c e , u s i n g
t h e example c i t e d b e f o r e , major f u n c t i o n s of t h e LM w e r e
t r a n s f e r e d i n t o t h e A i r l o c k Module c r e a t i n g a s u b s t a n t i a l
growth i n c o s t of t h e A i r l o c k W d u l e p r o j e c t ; b u t because of
t h i s and s i m i l a r changes it was p o s s i b l e t o c a n c e l t h e L M
p r o j e c t a l t o g e t h e r w i t h a consequent d e c r e a s e i n c o s t of t h e
LM p r o j e c t . I d e n t i f i c a t i o n of such t r a n s f e r s i s e s s e n t i a l
s i n c e t h e y do n o t , from t h e o v e r a l l p o i n t of view, c o n s t i t u t e
unwarranted growkh. As w r i t t e n , i n d i v i d u a l p r o j e c t c h a p t e r s
could be c o n s t r u e d t o imply unwarranted growth.


Accounting E f f e c t s

The e f f e c t oE changes i n NASA a c c o u n t i n g h a s perhaps been
over-emphasized by i m p l i c a t i o n i n Chapter 1's comments
r e g a r d i n g the o p e r a t i n g b a s e . While t h e r e have been some
changes i n t o and o u t of t h e program, w e b e l i e v e t h a t t h e
o v e r a l l success i n h o l d i n g c o s t growth t o 4% r e f l e c t s the
l e g i t i m a t e management p r o c e s s a t work.         lSee GAO note p . 96.1

Methods of E s t i m a t i n g

There a r e numerous r e f e r e n c e s t o t h e f a c t t h a t e s t i m a t e s were
o f t e n based upon judgment and e x p e r i e n c e and t h a t documents
i n t h e f i l e do n o t p r e s e r v e t h e r a t i o n a l e and c a l c u l a t i o n s
upon which t h e e s t i m a t e s a r e based.            I n advanced R&D p r o j e c t s
we must and should r e l y h e a v i l y upon experienced development
e n g i n e e r s and e s t i m a t o r s . We choose t h a t k i n d of people f o r
t h e work. We w i l l c o n t i n u e t o a t t e m p t t o improve o u r documen-
t a t i o n ; b u t r e p o r t i n g the u s e of judgment and e x p e r i e n c e
should n o t be c o n s t r u e d a s a c r i t i c a l comment i n a program of
t h i s n a t u r e , and it would be h e l p f u l i f t h e r e p o r t made t h i s
clear.




                                             9s
 APPENDIX I


Other Specifics
There a r e other s p e c i f i c d e t a i l s of f a c t o r emphasis which
a r e being d e a l t with routinely by comments from the Skylab
Program Office and the Centers d i r e c t l y t o GAO. MSFC i s
making a w r i t t e n response dealing i n g r e a t e r d e t a i l with
the s p e c i f i c cost h i s t o r y o r MSFC's p r o j e c t s .


GAO note:     The c o s t growth percentage w a s r e v i s e d from 4 p e r -
              cent t o 5 percent i n the f i n a l report.




                                      96
                                                                                        APPENDIX I1


                                 NATIONAL AERONAUTICS AND SPACE ADMINISTRATION
                                       GEORGE C MARSHALL SPACE FLIGHT C E N T E R
                                          MARSHALLSPACE F L I G H TCENTER,A L A B A M A 358:2

                                                        MAR 1 1 9 7 1
REPLY TO
ATTN OF    Dm


           Mr. J. J. Bevis
           Audit Manager
           G e n e r a l Accounting Of€ice
           Building 4202, Room B- 18
           George C. M a r s h a l l Space Flight Center
           M a r s h a l l Space Flight Center, Alabama 35812

           Dear M r . Bevis:

           Although we have not h e r e t o f o r e provided w r i t t e n comnients t o the
           GAO f a c t s h e e t s on c o s t growth and c o s t estimating p r o c e d u r e s of
           s e l e c t e d MSFC Skylab c o n t r a c t s , our concern h a s been e x p r e s s e d
           to your people in meetings with what we consider i m p r o p e r context
           and other shortcomings of the f a c t sheets.

           We have now r e c e i v e d copies of the GAO d r a f t r e p o r t transmitted
           to Mr. McCurdy of NASA by l e t t e r , dated F e b r u a r y 24, 1971, Prom
           M r . Spencer of GAO. Although o v e r a l l r e s p o n s e to this r e p o r t will
           be forthcoming f r o m NASA H e a d q u a r t e r s , o u r concern continues
           with t h e individual f a c t s h e e t s , which a r e c o n t a h e d in toto in the
           body of the r e p o r t .

           In reviewing your r e p o r t , we note t h a t a f t e r d e s c r i b i n g the h i s t o r y
           of the p r o g r a m , October 1968 w a s selected a s the b a s e l i n e f o r K & D
           c o s t s through completion f o r e a c h p r o j e c t and s y s t e m contained in
           the Skylab P r o g r a m . In the s e l e c t e d MSFC c o n t r a c t s , however, the
           baseline e s t a b l i s h e d was 1966, two y e a r s e a r l i e r , Not o n l y i s this
           e n t i r e l y inconsistent with the p r o j e c t and s y s t e m s c o s t examination
           i n the r e p o r t , but t h e s e individual f a c t s h e e t s alone a r e misleading
           in s e v e r a l r e s p e c t s .

           First, they do not a d d r e s s the m a j o r external. influenccs, p r o g r a i n -
           m a t i c o r b r o a d e r , caused by the concept evolution d e s c r i b e d in the
           h i s t o r i c a l profile. The p e r i o d s e l e c t e d w a s one when the Workshop
           and ATM w e r e the relatively simple f i r s t m i s s i o n or' an extensive
           p r o g r a m , a s c o m p a r e d to t h e i r constituting the hub o f the total
           p r o g r a m today.

                                                      97
APPENDIX I1


Next, no recognition i s made that many additions t o the individual
c o n t r a c t s w e r e not additions t o the p r o g r a i n , but r a t h e r r e q u i r e m e n t
s h i f t s f r o m another p a r t of the p r o g r a m . F o r instance, inany of the
functions added to the Airlock r e q u i r e m e n t s had f o r m e r l y been p r o -
vided by the CSM.

Another shortcoming of the f a c t s h e e t s i s a skipping back and f o r t h
among p r o c u r e m e n t plan e s t i m a t e s , c o n t r a c t value, and P O P e s t i m a t e s .
Although the amounts cited in the f a c t s h e e t s f o r c o n t r a c t values and
c o n t r a c t changes a r e generally c o r r e c t , coherency is l o s t because
t h e r e i s no connection made between t h e s e c o n t r a c t e s t i m a t e s and the
P O P e s t i m a t e s ; r a t h e r they have been lumped a s a total differential
t o the c u r r e n t c o n t r a c t value.

F o r the foregoing r e a s o n s , we recommend t h a t t h e MSFC cost growth
f a c t s h e e t s be s t r i c k e n f r o m the r e p o r t . If GAO f e e l s t h a t individual
c o n t r a c t c o s t growth exaiminations m u s t be made, we recommend the
following:

            a.     Use October 1968 a s the baseline, consistent with t h e
s y s t e m l e v e l c o s t review;

             b.  Recognize that e a c h addition t o a c o n t r a c t i s not n e c e s -
s a r i l y an addition t o the p r o g r a m , but m a y be a r e q u i r e m e n t shift
f r o m another p a r t of the p r o g r a m ;

          c.   Use consistent method of describing p r o j e c t e d i n c r e a s e s ,
f r o m P O P to POP.

In l i n e with the above, we a r e enclosing logical descriptions of each
of the s e l e c t e d c o n t r a c t s .

We have a l s o reviewed your individual f a c t s h e e t s on c o s t estimating
p r o c e d u r e s and your g e n e r a l observations, and a r e enclosing our
comments to them.

We will be happy to m e e t with you a t any t i m e to provide f u r t h e r
amplification o r clarification.




                                                   E b e r h a r d Reds
                                                   Dire ctor

Enclosures

                                                   98
                                                                                              APPENDIX I1

                           COMMENTS ON GAO COST GROWTH FACT SHEET
                                       AIRLOCK MODULE
                                    MDAC-EASTERN DIVISION
                                     CONTRACT NAS9-6555



The l o g i c a l s t a r t i n g p o i n t f o r examining t h e A i r l o c k P r o j e c t c o s t
growth i s e a r l y CY 1969, a t t h e t i m e of s u b m i s s i o n o f POP 69-lC.                             This
was t h e f i r s t budget s u b m i s s i o n c o n t a i n i n g MSFC e s t i m a t e o f r e q u i r e -
ments f o r a " w e t " workshop m i s s i o n and hardware t h a t i s r e a s o n a b l y
comparable t o t o d a y ' s "dry" workshop. P r i o r t o t h a t t i m e , t h e m a j o r
a d d i t i o n a l r e q u i r e m e n t s t o t h e o r i g i n a l p r e s s u r i z e d t u n n e l had n o t
been f i r m l y d e f i n e d n o r c o m p l e t e l y b u d g e t e d . The o r i g i n a l p r e s s u r i z e d
t u n n e l c o n c e p t w a s b a s e d on t h e CSM s u p p l y i n g power, oxygen and n i t r o g e n ,
and e n v i r o n m e n t a l c o n t r o l . Because o f t h e m a j o r changes i n v o l v e d i n r e -
v i s i n g t h i s c o n c e p t , work on A i r l o c k f l i g h t hardware was suspended f o r
a p p r o x i m a t e l y a y e a r d u r i n g 1967-68.

The POP 69-1C w a s t h e f i r s t POP which p r o v i d e d MSFC e s t i m a t e s and i n -
c l u d e d $ 8 9 . 5 M. The A i r l o c k Module w a s t o be d e l i v e r e d i n March 1971
t o s u p p o r t a n August 1971 l a u n c h d a t e . The p r i m a r y A i r l o c k Module
f u n c t i o n a t t h i s t i m e was t o s u p p o r t t h e "wet" workshop m i s s i o n .
B r i e f l y , t h i s m i s s i o n was t o l a u n c h a n o r b i t a l workshop as t h e p r o p u l -
s i v e S a t u r n I B S - I V B t o be c o n v e r t e d i n o r b i t by t h e crew f o r h a b i t a t i o n
and f o r t h e c o n d u c t o f s c i e n t i f i c and e n g i n e e r i n g e x p e r i m e n t s . The
m i s s i o n of t h e A i r l o c k Module w a s t o s u p p o r t t h e o r b i t a l o p e r a t i o n s
d u r i n g t h e p l a n n e d 14-days o p e r a t i o n s u s i n g p r e v i o u s l y q u a l i f i e d h a r d -
ware from t h e Gemini and A p o l l o programs and t o s u p p o r t a n "open-ended"
m i s s i o n beyond t h e f i r s t 14 d a y s up t o 28 and 56-day d u r a t i o n s . The
A i r l o c k Module a t t h i s p o i n t was t o p r o v i d e access h a t c h e s t o t h e
M u l t i p l e Docking A d a p t e r and Workshop and a n e x t e r n a l h a t c h f o r EVA
p u r p o s e s . The i n s t r u m e n t a t i o n and communication s y s t e m s would p r o v i d e
e n g i n e e r i n g and o p e r a t i o n a l d a t a and some l i m i t e d e x p e r i m e n t a l d a t a .
The command o r ground c o n t r o l s y s t e m would only p r o v i d e f o r t h o s e f u n c -
t i o n s n e c e s s a r y f o r s a f e t y and t o p r e p a r e t h e AM-OWS-MDA f o r d o c k i n g by
t h e CSM w i t h t h e crew. The e l e c t r i c a l power and d i s t r i b u t i o n s y s t e m
would u t i l i z e s t o r e d and d i s t r i b u t e d e l e c t r i c a l power from t h e OWS s o l a r
a r r a y s and the CSM. The e n v i r o n m e n t a l c o n d i t i o n i n g s y s t e m p r o v i d e d o n l y
f o r p r o p e r mixing and p u r e f i c a t i o n of t h e b r e a t h i n g a t m o s p h e r e . I n sum-
mary, t h e A i r l o c k Module was a s e m i - p a s s i v e module w i t h l i m i t e d c a p a -
b i l i t y f o r d i s t r i b u t i n g e l e c t r i c a l power, t r a n s m i t t i n g t e l e m e t r y d a t a ,
p r o v i d i n g means f o r EVA and stowage o f some e x p e r i m e n t s and equipment
and p r o v i d i n g equipment t o m a i n t a i n p r o p e r p r e s s u r e and a t m o s p h e r e .

The next m a j o r c o s t growth and c o r r e s p o n d i n g hardware c h a n g e s was t h e
"wet" t o "dry" c o n v e r s i o n c o n f i g u r a t i o n as r e f l e c t e d i n POP 69-2C a t
$132,6M. The A i r l o c k Module w a s t o be d e l i v e r e d i n J u l y 1971 t o sup-
p x t a March 1972 l a u n c h d a t e . A s a r e s u l t of t h e new " w e t " t o "dry"
c o n f i g u r a t i o n and added h a r d w a r e r e q u i r e m e n t s t o t h e AM, more emphasis
w a s b e i n g p l a c e d on t h e f u n c t i o n of t h e AM t o s u p p o r t t h e f u l l 8-month
mission duration.              I t was t o b e d e t e r m i n e d by a n a l y s i s and a d d i t i o n a l

                                                           99
     APPENDIX I1

    t e s t i n g o n h3rdvk1.-k tl;-it fri                    J e s i g n s t a n d p o i n t a l l . sysr.cJ- should be
    c a p a b l e of o p e r a t i n g for t h e 3-month m i s s i o n d u r a t i o n , The m i s s i o n
    r e q u i r e m e n t s of t h i s d-iai1ge r e f l e c t e d i n t h e A i r l o c k Moiixie were: ( a )
    a d d i t i o n o f t h e F i x e d A i r l o c k Shroud (FAS) f o r stowage of 02 and N2 con-
    sumables, f o r m e r l y provided b y t h e CSM, t o s u p p o r t t h e e n t i r e m i s s i o n
    w i t h o u t o r b i t a l r e s u p p l y ; ( b ) added t h e t e m p e r a t u r e o r t h e r m a l c o n t r o l
    p r o v i s i o n s t o t h e e n v i r o n m e n t a l c o n t r o l system f o r t:? AM-PIT)A-OWS and
    CSM; ( c ) a d d i t i o n a l power s t o r a g e , c o n d i t i o n i n g and d i s t r i b u t i o n system
    s i n c e t h e CSM would now be q u i e s c e n t d u r i n g o p e r a t i o n of t h e OWS by t h e
    crew; ( d ) expanded communication system t o accomodate a d d i t i o n a l o p e r a -
    t i o n s , h o u s e k e e p i n g , e n g i n e e r i n g and e x p e r i m e n t d a t a ; ( e ) expanded ground
    c o n t r o l s y s t e m s i n c e t h e crew would n o t be u t i l i z i n g t h e CSM; ( f ) added
    t h e two-gas c o n t r o l s y s t e m t o t h e AM; ( g ) added a d d i t i o n a l c o o l i n g l o o p
I
i
    r e q u i r e m e n t s t o s u p p o r t ATM; and ( h ) p r o v i d e d emergency and warning
    system f o r t h e s a f e t y of t h e crew. Many o f t h e s e a d d i t i o n a l r e q u i r e -
    ments, i n c l u d i n g c o o l i n g f o r t h e ATM C o n t r o l s and D i s p l a y s and a d d i t i o n a l
    i n s t r u m e n t a t i o n , were added t o r e p 1 ace F u n c t i o n s f o r m e r l y p r o v i d e d by t h e
    LM which had b e e n d e l e t e d from t h e program f o r a n o v e r a l l s a v i n g s t o t h e
    program. D e l e t i o n o f t h e LM a l s o r e q u i r e d changes t o t h e A i r l o c k a t t e n -
    d a n t t o i t s becoming t h e primary EVA mode.

    The n e x t major A i r l o c k c o s t growth corresponded t o t h e a d d i t i o n of t h e
    Payload Shroud and t h e ATM Deployment Assembly as r e f l e c t e d i n POP 69-2
    e s t i m a t e of $ 1 8 1 . 8 M.     These two i t e m s were added t o t h e program a s a
    r e s u l t of c o n v e r t i n g t o t h e "dry" workshop c o n c e p t , b u t i t was n o t u n t i l
I   POP 69-2 t h a t t h e y were i n c l u d e d a s A i r l o c k components. The Payload
    Shroud i s used t o p r o t e c t t h e AM-MDA-ATM d u r i n g l a u n c h and a l s o s u p p o r t s
    t h e weight o f t h e ATM u n t i l e a r t h o r b i t i s a t t a i n e d . It r e p l a c e s t h e
    SLA which w a s p r o v i d e d f o r i n a n o t h e r c o n t r a c t d u r i n g t h e " w e t " workshop
    program. The ATM w e i g h t i s t h e n t r a n s f e r r e d t o t h e Deployment Assembly
    f o r p o s i t i o n i n g t h e ATM f o r i n - o r b i t o p e r a t i o n . The Deployment Assembly
    i s a t u b u l a r s t r u c t u r e n o t o n l y f o r s u p p o r t i n g t h e ATM b u t v a r i o u s ex-
    p e r i m e n t s and equipment.

     S i n c e t h e POP 69-2, a d d i t i o n a l m i s s i o n r e q u i r e m e n t s and c o r r e s p o n d i n g
    hardware changes have been added t o t h e A i r l o c k Module. A new l a u n c h
    d a t e o f November 1972 w i t h f l i g h t hardware d e l i v e r y o f F e b r u a r y 1972
    w a s r e f l e c t e d i n POP 70-2. A complete l i s t i n g of changes w i l l n o t be
    enumerated, b u t some examples are c i t e d t o convey t h e r a t i o n a l e f o r
    i n c r e a s e d c o s t o f t h e A i r l o c k Module. R e c e n t l y t h e AM t r a i n e r t o b e
    d e l i v e r e d t o MSC f o r crew t r a i n i n g underwent a complete r e v i e w and up-
    d a t e of r e q u i r e m e n t s and s p e c i f i c a t i o n t o r e f l e c t t h e l a t e s t MSC crew
    t r a i n i n g hardware r e q u i r e m e n t s .        The E a r t h R e s o u r c e s Experiments a r e
    becoming more m a t u r e i n d e s i g n and r e f l e c t r e q u i r e m e n t s f o r a d d i t i o n a l
    AM power, communication, and c o o l i n g . A d d i t i o n a l hardware h a s been
    r e q u i r e d t o s u p p o r t t e s t i n g r e q u i r e m e n t s t h a t were n o t i n e a r l i e r pro-
    gram r e q u i r e m e n t s .    The r e v i e w s of hardware d e s i g n f o r t h e crew have
    r e s u l t e d i n many changes t h a t add c o s t t o t h e program. A s i g n i f i c a n t
                                                                                  APPENDIX I1

i n c r e a s e i n c o m p l e x i t y o f t h e C a u t i o n and Warning system t o improve
crew s a f e t y h a s caused c o n s i d e r a b l e c o s t i n c r e a s e i n t h e program. The
changes imposed on t h e AM from e x t e r n a l i n t e r f a c i n g equipment a t t h i s
p o i n t i n t h e program add t o c o s t , e s p e c i a l l y when hardware h a s t o be
r e f a b r i c a t e d o r changed l a t e i n f a b r i c a t i o n .




                                               101
APPENDIX I1



          COMMENTS ON GAO COST GROWTH FACT SHEET
                     WORKSHOP PROJECT
  McDONNELL-DOUGLAS ASTRONAUTICS COMPANY - WESTERN DIVISION
                     CONTRACT NAS9- 655 5


   The p r o g r a m identified by P O P 68-2C, fourth q u a r t e r CY 1968, funding
   r e p r e s e n t s a common baseline in t e r m s of making a d i r e c t p r o g r a m
   c o m p a r i s o n with the p r o g r a m h a r d w a r e and missions of today ( P O P 70-2C).
   JR t h e formative period p r i o r to this t i m e the m a j o r effort was spent in
   trying to define p r o g r a m s and missions that would make use of the basic
   Apollo hardware. Today's p r o g r a m h a s matured f r o m t h e original intent
   of allowing a n EVA astronaut to open t h e hatch of a Saturn S-IVB spent
   stage, e n t e r f o r a s h o r t experimental period and r e t u r n t o the CSM. T h a t
   rudimentary concept has evolved into a spacecraft that is capable of fully
   sustaining the c r e w of t h r e e astronauts, 24 hours a day continuously f o r
   the f u l l 28 and 56 day missions.

   The $104. 5M in P O P 68-2C i s funding f o r a "wet" Workshop p r o g r a m
   scheduled t o be completed in January 1972. KSC delivery was M a r c h
   1971. The b a s i c p r o g r a m consisted of:

           1.   One propulsive Saturn I B (S-IVB 212) flight stage;

          2.    One propulsive Saturn IB (S-IVB 210) backup stage.

                          a. S c a r modifications t o the basic propulsive S - I V B stage
   t o permit kit installation of Workshop life support equipment a f t e r the
   propellants a r e evacuated, including p r e - installed open g r i d walls and
   floor, quick-opening hatch, t h e r m a l curtains, f i r e retardative l i n e r ,
   m i c r o m e t e o r o i d bumper and passivation capability.

                b. Hardware in the f o r m of kits that could be installed i n
   the spent propulsive stage after passivation;

                   c.    One one-g t r a i n e r for u s e by the crew;

                     d.  Thirty-one ( 3 1 ) items of z e r o - g and neutral buoyancy
   t e s t , plus one complete s e t of neutral buoyancy t r a i n e r hardware;

                   e.    Habitability Support System t o be provided a s G F E by
   NASAIMSC;

                   f.    123 qualification and development t e s t s ;

                   g. Production acceptance testing of a " s c a r r e d " S-IVB to
   be the s a m e a s Saturn;




                                             102
                                                                    APPENDIX 11


              h.   Launch support operations to be covered by Saturn/
Apollo;

             i.   The hot gas Attitude Control System and Solar Array
System was t o be provided a s G F E by MSFC;

                j.  Twenty-seven (27)new models of GSE and thirty-five
( 3 5 ) modified models;

              k.    P r o g r a m completion scheduled for January 1972;

              1.    Launch date scheduled for August 1971.




The $121.7M in P O P 69-1C, first quarter CY 1969, i s funding for a
*BwetBB
      Workshop program. The major program differences f r o m the
previous P O P 68-2C are:

      1.   Flight configured manufacturing development fixture;

      2. One one-g trainer utilizing the flight configured manufacturing
development fixture from MDAC-WD;

      3.   Active Environmental Control System;

      4.  Habitability Support System to be provided by the M S F C
contractor;

       5.   Production acceptance testing of the s c a r r e d stage, plus c o m -
patibility testing of hardware kits;

      6 . Launch support and mission operations to be funded by the
Orbital Works hop Project;

     7.  F o u r (4) additional new models of GSE, four (4) fewer modified
S-IVB models of GSE;

        8.  Eighteen (18) new development and qualification t e s t s o n the
Habitability Support System. Other development and qualification tests
w e r e reduced f r o m 123 to 63;




                                     103
APPENDIX


         9. P r o g r a m completion extended six months, f r o m January to July
   1972, t o provide f u l l coverage of launch operations with the l a t e r launch
   date of August 1971;

         10.     Food f r e e z e r s w e r e added.




   The $199. 3M i n P O P 69-2C, third q u a r t e r CY 1969, is funding f o r a "dry"
   Workshop p r o g r a m . The m a j o r p r o g r a m differences f r o m the previous
   P O P 69-1C are:

              1. One "dry" Saturn V (S-IVB513) flight stage in l i e u of a
   S a t u r n IB stage;

              2.  One lldry" Saturn V (S-lVB 515) backup stage in lieu of a
   S a t u r n IB stage

                a.   Hardware to be completely installed during manufac-
  turing since the stage would be a livingfworking environment and be
  launched "dry. I ' Beefed-up c r e w q u a r t e r s floor. A tank a c c e s s door
  w a s added;

                     b.    One Dynamic T e s t Article using the basic S-IVB
   facilities stage;

                     c.    One s e t of z e r o - g and neutral buoyancy hardware;

                      d.   One engineering mockup with l a t e r conversion t o a
  one-g t r a i n e r ;

                 e.   Accommodations f o r twenty-two ( 2 2 ) G F E experiments,
  including responsibility f o r Interface Control Documents. Two scientific
  Airlocks w e r e added;

                      f.  Habitability Support System f o r food, water, waste and
  p e r s o n a l hygiene management, including a closed loop r e f r i g e r a t o r system.
  Added Z-local v e r t i c a l orbit capability.

                     g.    Cold gas Attitude Control System, (TACS);

                     h.    Solar A r r a y System to be furnished by MSFC contractor;




                                                  104
                                                                      APPENDIX I1


               i.Consolidated GSE into fewer models but with m o r e s y s -
tems capability. Number of new models reduced f r o m 31 to 21, and
number of modified models changed from 31 to 7;

                     j. Environmental Control System, Caution and Warning,
plus a l l e l e c t r i c a l lighting and provisions for a 28-day and two 56-day
orbital missions:

                  k. Extended program completion seven months, f r o m July
1972 t o F e b r u a r y 1973, due to change in the launch date;

              1. Slipped KSC delivery four months, f r o m March to July
1971, due t o change in the launch date;

              m. Slipped launch date seven months, f r o m August 1971 t o
March 1972, due to F Y 70 budget restrictions, plus the u s e of the l a r g e r ,
m o r e complex t t d r y t tWorkshop;

            n. Total update of the development and qualification testing
requirements to be compatible with the Saturn V stage, loads, vibration
and new environments in the "dry" Workshop. The number of develop-
ment and qualification t e s t s was changed f r o m 6 3 to 82;

               0.    Production acceptance testing peculiar only t o the
Workshop.




The $225. 3M in P O P 69-2, fourth quarter CY 1969, is funding f o r a "dryt'
Workshop program. The m a j o r p r o g r a m differences f r o m the previous
P O P 69-2C are:

       1.   Reorientation of floor and ceiling;

       2.   Addition of a viewing window in the wardroom;

       3.   C r e w compartment rearrangement;

       4.   Additiond general illumination lighting;

       5.   C r e w s y s t e m evaluation l a b a t MDAC- WD;

       6.   Addition of a t r a s h disposal Airlock;

     7.  Additional sleep accommodations caused by the deletion of a
DOD experiment.




                                        105
APPENDIX I1


   The $239.4M in P O P 70-1C, f i r s t q u a r t e r CY 1970, is funding f o r a r r d r y r r
   Workshop p r o g r a m . The major p r o g r a m differences f r o m the previous
   P O P 69-2 are:

          1. F o u r months slip in launch date, f r o m March to July 1972, due
   to a total budget reduction;
                                                                            0
          2.   Changed the flight inclination t r a j e c t o r y f r o m 3 5 to 50';

          3.   Noise s u p p r e s s o r s for fans;

        4.   Habitability Support System (HSS) refrigeration subsystem re-
   packaging f o r s y s t e m safety improvement in use of coolanol;

          5.   Added film vaults;

          6.   Orbital Workshop proof p r e s s u r e testing;

          7.   Added Experiment S183;

          8.   High Fidelity Mockup.




   The $286. 8M in P O P 70-2C, third q u a r t e r C Y 1970, i s funding for a "dryll
   Workshop program. The major p r o g r a m differences f r o m the previous
   P O P 70-1C a r e :

         1. F o u r months adjustment in KSC delivery date, f r o m July to
   November 1971, f o r better compatibility with the KSC need and July 1972
   launch date, plus a n anticipated t h r e e months additional delay in delivery.

         2. Major changes in Habitability Support System (HSS) (food,
   water, waste, sleep, off-duty equipment).

           3. Numerous GSE changes for compatibility with the f l i g h t hard-
   w a r e changes;

         4.    Redesign of the T h r u s t e r Attitude Control System;

         5.    Additional measurements for in-flight monitoring;

         6.    Orbital Workshop film vault changes;

         7.    Caution and Warning System changes;




                                               106
                                                                   APPENDIX I1


      8.   Experiment accommodation changes;

      9.   Optical viewing window;

    10. Additional subsystem a s s e s s m e n t and testing for flight environ-
ments with increased criteria;

     11.   Increased 2-local vertical orbit capability;

     12.   Added Experiment S063;

     13.   Fidelity improvement of engineering mockup;

     14.   Increased stowage capability.




The $287. 2M in F O P 70-2, fourth q u a r t e r CY 1970, i s funding for a "drytt
Workshop prdgram. The major p r o g r a m differences f r o m the previous
P O P 70-2C a r e :

       1. Deleted the cost for a potential t h r e e month delay in delivery
t o KSC reported in P O P 70-2C;

      2.   Added Critical Design Review (CDR) and Crew Station Review
(CSR)Review Item Discrepancies (RID'S);

       3. F o u r months slip in launch date, f r o m J u l y to November 1972,
due t o changes in Apollo launch scheduling. SL-1 to be launched five
months after Apollo 17;

      4.   Extended program completion date f r o m F e b r u a r y 1973 to
November 1973 to provide coverage of l a t e r launch operations caused by
a change i n launch dates.




                                     107
                                                                                                                              *
                                                                                                                              Td
                                                                                                                              cd
                                                 SATURN WORKSHOP PROGRAM                                                      M
                                                                                                                              z
                                                                                                                              U
                                                         POP        POP       POP        POP         POP        POP           H
                                            POP                                                                               x
                                            68-2C        69-1C      69-2C     69-2       70-1C       70-2c      70-2
                                            $1 04.5M     $121.7M    $199.3M   $225.34    $239.4M     $286.811   S267.2F-I     H
                                                                                                                              H
     Program Completion Date                Jan. 1972 Jhly 1972 Feb. 1973 Feb. 1973 Feb. 1973        Feb. 1973 Nov. 1973

     KSC Delivery OWS-1,                    Mar. 1971 Mar. 1971 July 1971 July 1971 J d y 1971       Nov. 1971 Nov. 1971

     KSC Delivery OWS Backup                AUG. 1971 Aug. 1971 Jan. 1972 Jan. 1972 Jan. 1972 Apr. 1972 Apr. 1972
                                                                N O SYS tst N O SYS tst NO SYS tst K O SYS tst No SYS t s t
     Launch Date (OWS-1)                    Aug. 1971 Aug. 1971 Nar. 1972 Mar. 1972 Jul. 1972 Jul. 1972 Nov. 1972

     ows-1                                  SAT. TB   SAT. IB       SAT. V    SAT. V     SAT. V      SAT. V     SAT. V
       (Launch Vehicle)                     (212)     (212)         (513)     (513)      (513)       (513)       (513)
     OWS Backup                             SAT. IB   SAT. IB       SAT. V    SAT. V     SAT. V      SAT. V     SAT.     V
       (Launch Vehicle)                     (220)     (210)         (515)     (515)      (515)       (515)      (515)
Y
     Habitability Support System            GFE (MSC) CFE           CFlE      CFE        CFE         CFE        CFE
00
     Solar Array System                     GFE (MSFC)   G W        CFE       CFE        CFE         CFE        CFE

     Attitude Control System                GFE (MSFC) GFE          CFE       CFE        CFE         C FE       CPE

     One-G Trainer                          Yes          Use D.F.   Convert   Convert    Convert     Convert    Convert:
                                                                    EMU       EPlU       EMU         EMU         E!4 u
     Development Fixture (D.F.)             No           Yes        Yes       Yes        Yes         Yes        Yes
     Engineering Mockup (EMU)               Yes          Yes        Yes       Yes        Yes         Yes         Yes
     0-G & Neutral Bouyancy Hardware        1imited      limited    Yes       Ye5        Yes         Yes         Yes
     High Fidelity Hockup                   NO           NO         NO        KO         Yes         Yes         Yes
     C r e w System Evaluation Laboratory   NO           NO         NO        Yes        Yes         Yes        Yes
     Dynamic Test Article                   NO           NO         Yes       Yes        Yes         Yes         Ye=
                                                                                            APPENDIX I1

                 COMMENTS ON GAO COST GROWTH FACT SHEET
                          ATM EXPERIMENT S-054
                    AMERICAN SCIENCE AND ENGINEERING
                           CONTRACT NASS- 9041


In context with the g e n e r a l Skylab P r o g r a m p r e a m b l e , t h e S-054 ex-
p e r i m e n t with A m e r i c a n Science and Engineering went through a
f o r m a t i v e phase during t h e period f r o m l a t e 1966 to l a t e 1968. T h e
design concept of t h e e x p e r i m e n t w a s finalized during the p e r i o d f r o m
completion of the P r e l i m i n a r y Design Review i n D e c e m b e r 1967 until
completion of the C r i t i c a l Design Review i n J u n e 1968, a t which t i m e
P O P 68-2 w a s p r e p a r e d . The r e s u l t i n g h a r d w a r e definition w a s e s s e n -
t i a l l y the s a m e a s e x i s t e d on November 1970.

T h e t o t a l c o s t a s r e g i s t e r e d i n P O P 68-2 w a s $14.4 M. In P O P 70-2
we r e g i s t e r e d a t o t a l c o s t of $20.2 M, f o r a c o s t growth of $5.8 M.
T h i s c o s t growth f r o m P O P 68-2 through P O P 70-2 i s explained a s
follows:

O v e r r u n (technical p r o b l e m s                                                             $3.4 M
d
.
*A-




Additional scope                                                                                          .8 M
*:)e



Nine month launch s l i p                                                                                 1.0 M

W e t to d r y c o n v e r s i o n r e s u l t i n g in i n c r e a s e d m i s s i o n s u p p o r t $    6M


*      Hycon camera p r o b l e m
       L a t e d e l i v e r y of F a i r c h i l d i n t e g r a t e d c i r c u i t s
       P o w e r supply p r o b l e m s
       Difficulties i n manufacturing which n e c e s s i t a t e d a l t e r n a t e s o u r c e s
       Quality f a i l u r e i n m a i n e l e c t r o n i c a s s e m b l y

**       . 3 C&D components
         . 2 Rocket shot
         .  1 Main e l e c t r o n i c a s s e m b l y p r o b l e m
         . 1 Filter
         .1 C a m e r a




                                                       109
APPENDIX I1


              COMMENTS ON GAO COST GROWTH FACT SHEET
                       ATM EXPERIMENT S - 0 55
                        HARVARDCQLLEGE
                        CONTRACT NAS5- 3949

In context with the g e n e r a l Skylab P r o g r a m p r e a m b l e , t h e S-055 ex-
p e r i m e n t with H a r v a r d College went through a f o r m a t i v e phase during
the period f r o m l a t e 1966 to l a t e 1968. T h e design concept of the
e x p e r i m e n t was finalized during t h i s period. The r e s u l t i n g h a r d w a r e
definition w a s initially t h e s a m e a s existed i n November 1970.

The total c o s t r e g i s t e r e d i n P O P 68-2 w a s $14.7 M. In POP 7 0 - 2
we r e g i s t e r e d a t o t a l c o s t of $22 M, f o r a c o s t growth of $7.3 M.
T h i s c o s t growth f r o m P O P 68-2 through POP 70-2 is explained a s
follows:

Under e s t i m a t e of p h a s e two i n November 1968                            $1.6 M

O v e r r u n (technical p r o b l e m s )                                           1.9 M
.P
.I.




Added scope                                                                          1.4 M
.*
44    .I




I n c r e a s e in field support    - 9   month extension in duration                1.6 M

Wet t o d r y configuration with i n c r e a s e d m i s s i o n duration                .8 M

:gDetecter unit p r o b l e m s - Bendix qualification of p r i m a r y
m i r r o r assembly

++Power supplies and p r e s s u r e relief valve                                   .3
M i r r o r launch lock                                                             .2
A l t e r n a t e launch lock                                                       c.4
Additional UV t e s t i n g                                                         02
P r e s s u r e gauge                                                            -  a 3
                                                                                  1. 4




                                             110
                                                                                     APPENDIX I1


  GENERAL COMMENTS O N GAO COST ESTIMATING F A C T SHEETS



ThrougE.out the f a c t s h e e t s dealing with c o s t e s t i m a t i n g , there a r e
r e p e a t e d r e f e r e n c e s t o the l a c k of available documentation to support
change e s t i m a t e s . We f e e l t h a t an amplification of the change p r o j e c t i o n
p r o c e s s i s in o r d e r t o provide p r o p e r p e r s p e c t i v e to the r e f e r e n c e s .

In p r e p a r a t i o n of a P O P , the p r o j e c t s a r e asked to s t a t e t h e i r r e q u i r e -
m e n t s in o r d e r of t h e i r m a t u r i t y of definition. Naturally, t h e r e f o r e ,
the c o n t r a c t value i s s t a t e d f i r s t . N e x t come the changes which have
been authorized but not definitized, Normally, t h e s e changes will have
complete detailed documentation of c o s t s in the f o r m of firm p r o p o s a l s
within sixty days of authorization. P r i o r to t h a t t i m e , documentation
m a y c o n s i s t of E C P e s t i m a t e s , c o n t r a c t o r R O M ' s , o r MSFC R O M ' s .
As cited in the f a c t s h e e t s , a s m a l l portion ( 2 + % cited in the Airlock
fact s h e e t ) of t h e s e changes do not have w r i t t e n documentation d e s c r i b i n g
the breakdown of the c o s t e s t i m a t e . In a development p r o g r a m of this
magnitude, and with the i n t e r f a c e complexity, t h e r e a r e n e c e s s a r i l y
s o m e i n s t a n c e s when changes must b e authorized on r e l a t i v e l y s h o r t
notice in o r d e r to m i n i m i z e p r o g r a m impact. In t h e s e i n s t a n c e s , an
e s t i m a t e obtained by m e a n s of meetings o r telephone conversations
among the p r i n c i p a l s affected m a y s a t i s f y t h e i m m e d i a t e r e q u i r e m e n t .

The next c a t e g o r y of r e q u i r e m e n t s , known and probable changes, con-
s i s t s of potential r e q u i r e m e n t s t h a t have been defined to s o m e d e g r e e
of d e t a i l but which have not been authorized. A considerably l a r g e r
p e r c e n t a g e of the changes cited in the f a c t s h e e t a s not having supporting
documentation of c o s t e s t i m a t e d e t a i l a r e i n t h i s category. It should be
noted, however, t h a t t h e r e i s usually a l a r g e amount of documentation
d e s c r i b i n g the technical a s p e c t s of the p r o b l e m o r r e q u i r e m e n t . This
information p r o v i d e s the b a s i s f o r p r o j e c t ROM c o s t e s t i m a t e s of the
change, and c o n v e r s a t i o n or m e e t i n g s with the c o n t r a c t o r provide con-
t r a c t o r ROM's.

The definitions of t h e s e known and probable changes m a t u r e a s they
p r o c e e d through the E C P cycle, p r e p a r a t i o n , evaluation, decision.
T h e r e is a c o n c u r r e n t m a t u r a t i o n of the c o s t e s t i m a t e f r o m ROM t o
E C P e s t i m a t e to f i r m proposal. Detailed documentation of c o s t e s t i -
m a t e a t beginning of cycle i s not w a r r a n t e d b e c a u s e the definition
p r o c e s s r e s u l t s in changes, As w a s pointed out in the Airlock C o s t
E s t i m a t i n g F a c t Sheets, later e s t i m a t e s m a y be 5070 or m o r e different
f r o m the o r i g i n a l ROM's, although the s u m of t h e s e e s t i m a t e s a g r e e s
within 4'70of t h e ROM' s.
         The l a s t category, anticipated changes, covers potential problem a r e a s ,
         many of which have been identified, but whose extent h a s not been defined.
         The e s t i m a t e s made f o r these changes, f r o m the wide range of possible
         c o s t s , a r e based on the P r o j e c t Manager's knowledge and p r i o r experi-
         ence with similar changes. The contingency r e s e r v e added in the P r o g r a m
         M a n a g e r ' s review is a f u r t h e r range of anticipated change based on
         P r o g r a m Manager's knowledge and experience in overall p r o g r a m aspects,
         and m a y include allowance for out-of-plan a s s e s s m e n t and Headquarters
         d i r e c t e d contingency r e s e r v e .
     i

    'I   It should be apparent f r o m the foregoing description that the amount of
     I   detail f o r cost e s t i m a t e s should be proportional to the maturity of the
    "I   change definition, and that r e c o r d documentation of cost e s t i m a t e s , other
-I       than the P O P r e c o r d , is warranted generally only when the change r e a c h e s
.i       the E C P stage of definition. Therefore, the percentages of available
 I
 I
         documentation cited in the fact s h e e t s a r e considered reasonable when
         examined in the p r o p e r context.


    j    In the General Observation F a c t Sheet, t h e r e is a n e r r o n e o u s indication
    Ii   that conflicting statements w e r e made about inclusion of provisions for
         inflation in cost e s t i m a t e s . T o s e t the r e c o r d straight, provision f o r
    Ii   inflation -     is m a d e in the cost e s t i m a t e s , but is not separately identified
         as a percentage factor. The l a b o r r a t e s used in making government
    I
-i       c o s t e s t i m a t e s a r e comparable t o r a t e s negotiated with the contractor.

.I
    i    Those negotiated r a t e s a r e mid-point r a t e s , which allow for cost of
         living i n c r e a s e s , projected overhead changes, and other f a c t o r s usually

I
    !    r e f e r r e d to a s inflation. Higher r a t e s a r e used f o r e s t i m a t e s f o r changes
         beyond the c u r r e n t contract life.
i
         We have f u r t h e r comments on details such a s arithmetic e r r o r s which
         we will be happy to d i s c u s s in a meeting with you.




I                                                        112
                                                              APPENDIX 111


                    PRINCIPAL OFFICIALS OF TEE

       NATIONAL AXRONAUTICS          AND SPACE ADMINISTRATION
                 RESPONSIBLE FOR THE ACTIVITIES

                      DISCUSSED I N THIS REPORT

                                                Tenure of o f f i c e
                                                -
                                                From

ADMINISTRATOR:
    James C. F l e t c h e r                 Apr. 1971         Present
    George M. Low ( a c t i n g )            Segt. 1970        Apr. 1971
    Thomas 0. P a i n e                      Oct. 1968         Sept. 1970
    James E. Webb                            Feb. 1961         Oct. 1968

DEPUTY ADMINISTRATOR:
    George M. Low                            Dec.    1969      Present
    Thomas 0. P a i n e                      Mar.    1968      O c t . 1968
    Robert C . Seamans         Jr.           Dec.    1965      J a n . 1968
    Hugh L. Dryden                           Oct.    1958      Dec. 1965

ASSOCIATE ADMINISTRATOR:
    Homer E . N e w e l 1                    Oct.      1967    Present
    Robert C. Seamans, Jr.                   S e p t . 1960    S e p t , 1967

ASSOCIATE ADMINISTRATOR FOR MANNED
  SPACE FLIGHT:
    Dale D. Myers                            Jan.    1970      Present
    Charles W. Mathews ( a c t i n g )       Dec.    1969      J a n . 1970
    George E. Mueller                        Sept.   1963      Dec. 1969
    D. Brainerd Holmes                       Nov.    1961      S e p t . 1963

DIRECTOR, KENNEDY SPACE CENTER:
    Kurt H. Debus                            July    1962      P r e s en t

DIRECTOR, MANNED SPACECRAFT CEN-
  TER:
    Robert R. G i l r u t h                  Nov.    1961      Present




                                       113
                                                 Tenure of o f f i c e
                                                 From              To
     DIRECTQOR, MARSHALL SPACE ??LIG€€I'
        CENTER:
          Eberhard F. M e Rees                Mar.   1970    Present
          Wernher von Braun                   July   1960    Mar. 1970
.I


     DIRECTOR, S K Y W P R O G W :
i
         W i l l i a m C. Schneider           Jan.   1969    Present
         John H. Disher ( a c t i n g )       Nov.   1968    Jan. 1969
         Harold T. Euskin                     May    1968    Nov. 1968
         Charles W. Mathews                   Jan.   1967    Apr. 1968
         Major General David M. J o n e s ,
            USAF (acting)                     Aug.   1965    Jan.       1967
 I




                                                             3.S. GAO Wash., D.C.

                                      114