oversight

Space Transportation: Progress of the X-33 Reusable Launch Vehicle Program

Published by the Government Accountability Office on 1999-09-29.

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

                       United States General Accounting Office

GAO                    Testimony
                       Before the Committee on Science, Subcommittee on Space
                       and Aeronautics, House of Representatives




For Release Expected
at 2:00 p.m. EDT
Wednesday,
                       SPACE
September 29, 1999
                       TRANSPORTATION

                       Progress of the X-33
                       Reusable Launch Vehicle
                       Program
                       Statement of Allen Li, Associate Director, National Security
                       and International Affairs Division




GAO/T-NSIAD-99-243
          Mr. Chairman and Members of the Subcommittee:

          We are pleased to be here today to discuss the status of the National
          Aeronautics and Space Administration’s (NASA) X-33 Reusable Launch
          Vehicle Program. The purpose of this program, co-sponsored under a
          cooperative agreement between NASA and the Lockheed Martin
          Corporation, is to develop and demonstrate advanced technologies and
          techniques needed for future reusable launch vehicles. These vehicles are
          in essence spacecraft or rockets whose components—either all or in
          part—are utilized on subsequent flights. If the X-33 Program is successful,
          Lockheed Martin may build a small fleet of operational vehicles called
          VentureStars. One way for NASA to reduce future launch costs may be to
          phase out the space shuttle fleet and purchase launch services from
          commercial sources. Our testimony summarizes our recent report on the
          X-33 Program1 and discusses (1) whether the X-33 Program is meeting its
          original cost, schedule, and performance objectives; (2) how NASA
          conducts oversight under the cooperative agreement; and (3) issues NASA
          may face if it decides to use Lockheed Martin’s VentureStar to service the
          International Space Station. At your request, we are also commenting on
          the progress of the X-33 Program in meeting the intent of the National
          Space Transportation Policy, the directive that establishes national policy,
          guidelines, and implementing actions for the conduct of national space
          transportation programs that will sustain and revitalize U.S. space
          transportation capabilities.



Summary   Because of problems in developing technologies for the X-33, the program
          will not meet some of its original cost, schedule, and performance
          objectives. Costs have increased, the test vehicle’s first flight was delayed
          by 16 months, and some performance objectives−such as a speed reduction
          from Mach 15 to Mach 13.8−were reduced. When the cooperative
          agreement was established in July 1996, Lockheed Martin and industry
          partners’ contributions totaled $211.6 million; NASA’s contribution was
          fixed at $912.4 million. We estimate that between July 1996 and March 1999,
          contractors’ total contributions increased by $75 million, to $286.6 million
          in response to problems encountered during development. Estimated
          government costs for NASA civil service personnel working on the program
          also increased, from $95.2 million to $113.1 million. These costs for NASA

          1
           Space Transportation: Status of the X-33 Reusable Launch Vehicle Program
          (GAO/NSIAD-99-176, Aug. 11, 1999).




          Page 1                                                              GAO/T-NSIAD-99-243
             personnel are not included in the agency’s agreement contribution; they are
             paid out of another budget account.

             Because the agreement permits NASA employees to work side by side with
             Lockheed Martin employees to perform various technical tasks, NASA’s
             oversight of the program is based on real-time and detailed insights from its
             personnel. With information from its employees, NASA’s X-33 program
             office monitors and verifies the program’s progress and pays the contractor
             when it meets milestones.

             Several issues will need to be addressed before NASA can decide whether
             to use VentureStar reusable launch vehicles to support the International
             Space Station. First, the results of the X-33 Program must provide sufficient
             information for NASA to determine that risks have been adequately
             reduced and that continuation of activities leading to the agency’s use of
             VentureStar is warranted. Second, even though VentureStar reusable
             launch vehicles are intended to be commercially owned and operated,
             government financial incentives may be needed to initiate such a venture.
             Third, the amount NASA would have to pay in additional development and
             production costs to enable VentureStar to carry people would need to be
             determined. Fourth, the need for and effect of additional flights would need
             to be considered. Because VentureStar would not carry as much cargo as
             the space shuttle, more frequent dockings are likely. This could reduce the
             amount of stable time available for some science operations.

             The design and management of the X-33 Program agreement reflect the
             intent of the National Space Transportation Policy. However, the extent
             that the program will achieve a cost reduction envisioned by that policy is
             unclear at this time. In our August 1999 report, we recommended that
             NASA establish performance targets and a clear linkage between the
             X-33 Program and the agency’s objective of reducing the cost of access to
             space. NASA concurred with our recommendation and stated that it would
             develop performance targets for the X-33 Program that (1) establish a clear
             path leading from the X-33 flight-test vehicle to an operational reusable
             launch vehicle and (2) show progress toward meeting the agency’s
             objective of significantly reducing launch costs.



Background   The X-33 will be a half-scale model of Lockheed Martin’s planned single-
             stage-to-orbit VentureStar, an operational vehicle that does not drop tanks
             and boosters along its flight path like today’s launch vehicles. Lockheed
             Martin’s and NASA’s roles and responsibilities on the X-33 Program,



             Page 2                                                     GAO/T-NSIAD-99-243
                       including joint funding arrangements, were set forth in a cooperative
                       agreement established in July 1996.

                       NASA’s decision on whether and how to upgrade its shuttle fleet will
                       depend, in part, on the results of the X-33 Program. The X-33 Program is a
                       key part of NASA’s strategy to reduce launch costs from $10,000 per pound
                       on the space shuttle to $1,000 per pound using reusable launch vehicles. If
                       the X-33 Program is successful and Lockheed Martin decides to build
                       VentureStar, the company plans to begin launching cargo-only flights
                       starting in 2005 and passenger flights starting in 2007. Lockheed Martin
                       estimates that it would cost $7.2 billion to build and begin operating two
                       vehicles. NASA would be one of Lockheed Martin’s potential customers for
                       the cargo-only flights and, at this time, is the only anticipated customer for
                       passenger flights. The passenger flights would carry crewmembers to and
                       from the International Space Station.



Technical Problems     The X-33 Program has experienced technical difficulties developing
                       advanced technologies for three key components of VentureStar: the fuel
Have Resulted in       tanks, engines, and the heat shield. For example, the first major technical
Increased Cost,        problem arose during fabrication of one of the fuel tanks used on the X-33.
                       Sections of the tanks are made by bonding together layers of composite
Schedule Delays, and   materials. Difficulties were encountered in bonding two lobes onto a
Reduced Performance    y-shaped joint in the left-hand tank. The affected sections were removed,
Objectives             and two new sections were fabricated and are being installed on the tank.
                       The right-hand fuel tank did not experience such fabrication difficulties
                       and is undergoing qualification tests at NASA’s Marshall Space Flight
                       Center. As discussed in our August 1999 report, other technical problems
                       were experienced while fabricating one of the exhaust ramps for the rocket
                       engines and during fabrication of metallic panels used for thermal
                       protection.

                       Resolving the technical problems increased both industry and government
                       costs. As of March 1999, Lockheed Martin estimated that industry’s
                       contributions to complete the X-33 cooperative agreement had increased
                       by $75 million, from $211.6 million to $286.6 million. The company has not
                       yet formally revised the industry team’s estimated contribution, but
                       expects to do so within the near future. In addition, estimated government
                       costs for NASA civil service personnel working on the program not
                       included in NASA’s X-33 program budget also increased, from $95.2 million
                       to $113.1 million. These personnel costs are for salaries, benefits, and
                       support services for the government personnel working on the program at



                       Page 3                                                      GAO/T-NSIAD-99-243
various NASA centers; such costs will be paid out of another NASA budget
account.

In addition, the government will bear part of industries cost increases
because Lockheed Martin and its partners are allowed to recover
independent research and development expenses by including them as
overhead in other government contracts. Potential government
reimbursement of industry’s independent research and development costs,
which is subject to an audit or review, is estimated at $161.2 million as of
March 1999. As a result, after factoring in both this potential
reimbursement and NASA personnel costs not included in the program
budget, we believe a more accurate representation of the estimated
government’s share of the X-33 Program is about $1.29 billion, while
industry’s estimated share is $125.4 million.

Technical difficulties have also caused test flight delays. The problems
encountered during fabrication of the engines and one of the fuel tanks led
to a 16-month delay of the first test flight of the X-33 vehicle, from March
1999 to July 2000. However, the program’s December 2000 completion date
remains unchanged. Lockheed Martin has maintained the original X-33
Program completion date by reducing VentureStar design and development
work that the company had planned to accomplish. Although problems in
fabricating the heat shield panels delayed delivery of the panels, this did
not affect the first flight schedule because the schedule had already been
delayed by the engine and fuel tank problems.

Technical problems and schedule constraints led Lockheed Martin and
NASA to change two X-33 Program objectives and flight-test milestones.
For example, the test flight speed objective was reduced from Mach2 15 to
Mach 13.8. According to Lockheed Martin and NASA X-33 program
managers, the flight-test speed was reduced because the detailed design
phase of the program determined that the vehicle’s projected weight would
exceed design requirements and prevent it from reaching Mach 15. After
reviewing the vehicle’s design and technical objectives for the flight tests, a
panel of experts convened by NASA concluded that the flight-test technical
objectives could be achieved at a lower speed. According to Lockheed
Martin and NASA program officials, weight reduction measures have



2
 Mach numbers represent speed measured as units of the speed of sound, which is 741 miles
per hour at sea level. For example, Mach 2 equals 1,482 miles per hour.




Page 4                                                              GAO/T-NSIAD-99-243
                         already been incorporated into the preliminary design of the VentureStar to
                         meet the vehicle weight requirements.



NASA Relies on Insight   According to NASA program officials, the X-33 cooperative agreement
                         establishes a partnership business relationship between NASA and
Gained by Working        Lockheed Martin, and changes to the agreement must be made bilaterally.
With Lockheed Martin     The agreement assigns to Lockheed Martin responsibility for managing and
                         implementing the X-33 Program but also permits substantial involvement of
                         NASA personnel in performing various program technical tasks at NASA
                         centers, under the direction of Lockheed Martin. However, NASA program
                         managers ensure milestones are met before payments are made to
                         Lockheed Martin.

                         The cooperative agreement enables NASA to obtain information about the
                         program as it happens. In traditional research and development contracts,
                         such information is gained mostly after the fact; NASA sends personnel to
                         contractor facilities to perform an extensive review of whether the
                         contractor performed its assigned tasks in accordance with contract
                         specifications. In contrast, under the X-33 cooperative agreement,
                         technical personnel work side by side with personnel from Lockheed
                         Martin and other industry partners. This ongoing involvement in the work
                         enables NASA to obtain real-time and detailed insight into program
                         activities. For example, NASA became aware of a significant problem with
                         a fuel tank component only 1-day after the problem occurred.

                         Oversight is also performed by entities independent of the X-33 Program.
                         For example, NASA’s Advisory Council performs periodic reviews of the
                         X-33 Program. Members of the Council are volunteers appointed by NASA;
                         the Council reports to the NASA Administrator. At a recent meeting,
                         Council members discussed concerns about (1) whether there was a clear
                         growth path leading from the X-33 flight-test vehicle to an operational
                         single-stage-to-orbit vehicle and (2) NASA’s lack of funding to pursue the
                         shuttle/space station programs and single-stage-to-orbit development at the
                         same time.




                         Page 5                                                    GAO/T-NSIAD-99-243
Issues Facing NASA if    Before NASA decides to use VentureStar to support the space station, it
                         will need to evaluate (1) whether adequate progress has been made in
VentureStar Is Used to   resolving the technical problems in developing an operational reusable
Support the              launch vehicle; (2) what government financial incentives, such as loan
                         guarantees, may be needed to assist in developing an operational fleet of
International Space      VentureStars; (3) what NASA’s costs would be to build either two crew
Station                  return modules or to modify VentureStar vehicles to carry crewmembers to
                         and from the space station; and (4) what effect a larger number of
                         VentureStar dockings would have on the operation of the space station and
                         its science experiments because of VentureStar’s lower cargo capacity.

                         Establishing confidence that the X-33 Program results support reusable
                         launch vehicle development will be important. In 1995, the Office of
                         Science and Technology Policy, the Office of Management and Budget, and
                         NASA jointly established criteria to be used in deciding whether the
                         government should proceed beyond the X-33 Program to support
                         development of an operational single-stage-to-orbit VentureStar. The
                         specific technical criteria for proceeding beyond the X-33 Program include
                         requirements that NASA and the industry team use a flight-test vehicle to
                         demonstrate technologies that are scalable to potential single-stage-to-orbit
                         reusable launch vehicle configurations−a vehicle whose components are
                         launched and returned as a single unit.

                         Another issue NASA will face is determining the future financial incentives
                         the federal government may need to provide before Lockheed Martin can
                         begin building VentureStar. Government incentives could be needed to
                         enable Lockheed Martin to secure affordable private sector financing of the
                         estimated $7.2-billion cost of building two reusable launch vehicles and
                         begin flight operations. Borrowing costs for the VentureStar might be
                         relatively high because investors would require a high rate of return due to
                         the technical risks inherent in building a new space-launch vehicle.
                         Government incentives could take several forms, including loan guarantees
                         or NASA-funded technology development efforts.

                         Lockheed Martin plans to build VentureStars that initially carry only cargo
                         and begin flights in 2005. Lockheed Martin is designing the VentureStar
                         primarily to meet the needs of commercial customers who want to launch
                         satellites. However, because much of Lockheed Martin’s VentureStar
                         projected revenues will come from servicing the International Space
                         Station, the company is exploring design modifications that would enable
                         the vehicles to carry four or five crewmembers. According to NASA’s X-33



                         Page 6                                                     GAO/T-NSIAD-99-243
program manager, if the agency chooses to use VentureStar to service the
International Space Station, NASA would need to obtain either two crew
modules, at an estimated cost of $900 million to $1.2 billion, to be carried in
the VentureStar cargo bay or two crew transfer/return vehicles being
developed for the International Space Station.3

NASA will need to determine the effect of VentureStar on space station
operations if it chooses to use that vehicle to assume the space shuttle’s
mission. For example, the agency’s projections show that more VentureStar
flights would be needed because the space shuttle can carry heavier
payloads. Additional flights would result in more docking and undocking
operations, potentially disrupting scientific activities aboard the space
station. The space station requires replenishment of supplies for science
experiments as well as propulsion fuel, spare parts, food, water, and air.
Periodic replacement of station crewmembers is also required. NASA
currently plans to use an average of five shuttle flights per year to resupply
the station and to have some of its international partners use an average of
eight flights per year to supply the station on other launch vehicles.
Additional resupply flights would likely be required to provide the people
and materials needed to solve technical problems that may arise aboard the
space station. Each space shuttle can carry 34,200 pounds of cargo,
including up to seven people, to the space station. However, in servicing
the International Space Station, a VentureStar vehicle would be able to
carry 25,800 pounds of cargo or three to four people and a small amount of
cargo. Also, NASA plans to use shuttle crewmembers on the resupply
flights to perform maintenance of the station. According to NASA X-33
program officials, a VentureStar vehicle would have to make two to three
flights to provide as much cargo, as many people, or as much maintenance
support to the space station as a single shuttle flight. The actual number of
flights would depend on the mix of cargo, people, and maintenance
operations required for a particular mission.




3
 The emergency return vehicle for the International Space Station crew is being considered
as an alternative that would be attached to the exterior of the VentureStar.




Page 7                                                               GAO/T-NSIAD-99-243
Progress Toward        The design and management agreement of the X-33 Program reflect the
                       goals and guidelines of the National Space Transportation Policy. Issued in
Meeting National       August 1994, this policy establishes national policy, guidelines, and
Space Transportation   implementing actions for the conduct of national space transportation
                       programs that will sustain and revitalize U.S. space transportation
Policy Goals           capabilities. Assuring reliable and affordable access to space through U.S.
                       space transportation capabilities is identified as a fundamental goal. In
                       support of that goal, the policy states that the U.S. government will
                       promote the reduction in the cost of current space transportation systems.
                       Relevant to the X-33 Program, the policy’s guidelines state that (1) NASA
                       will be the lead agency for technology development and demonstration of
                       next generation reusable space transportation systems, (2) the objective of
                       NASA’s technology development and demonstration effort is to support
                       government and private sector decisions by the end of the decade on
                       development of an operational next-generation reusable launch system,
                       and (3) it is envisioned that the private sector could have a significant role
                       in managing the development and operation of a new reusable space
                       transportation system.

                       The X-33 partnership established between NASA and Lockheed Martin,
                       Lockheed Martin’s proposed VentureStar, and NASA’s intent to acquire
                       commercially provided launch services are indications that NASA is
                       meeting the intent of the policy. However, the extent the X-33 Program will
                       enable NASA to achieve cost reductions is unclear at this time and depends
                       on the success NASA and Lockheed Martin achieve in resolving several
                       challenges. These challenges range, in the short term, from implementing a
                       successful test flight program that demonstrates needed technologies to, in
                       the long term, moving ahead with a reusable launch vehicle such as the
                       VentureStar that can meet both commercial and government needs in a
                       timely and cost-effective manner. In this regard, adopting annual
                       measurable objectives and performance targets that establish a clear path
                       leading from the X-33 test flight vehicle to an operational reusable launch
                       vehicle, as we recommended in our August 1999 report, will help ensure the
                       program continues in that direction. NASA concurred with our
                       recommendation.




                       Page 8                                                      GAO/T-NSIAD-99-243
                     Mr. Chairman, this concludes our statement. We will be happy to answer
                     any questions you or Members of the Subcommittee may have.


Contact and          For future contacts regarding this testimony, please contact Allen Li at
Acknowledgement      (202) 512-4841. Individuals making key contributions to this testimony
                     included Jerry Herley, Jeffery Webster, and Lorene Sarne.




(707448)     Leter   Page 9                                                     GAO/T-NSIAD-99-243
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