NASA changes have cost Northrop Grumman $36 million on its Lunar Gateway module
Northrop Grumman yesterday revealed that unexpected requirement changes to the specifications of its HALO module for NASA’s Lunar Gateway space station has raised its cost for this fixed price contract by $36 million.
In the company’s fiscal second quarter financial results released July 27, the company announced an unfavorable estimate-at-completion adjustment of $36 million for its work on the Habitation and Logistics Outpost (HALO) module, one of the first elements of the Gateway. The company blamed the charge on “evolving Lunar Gateway architecture and mission requirements combined with macroeconomic challenges” that caused cost growth on the program.
…“We think that is best applied for commercial items or production programs with stable requirements and mature designs,” [the company’s CEO] said of fixed-price contracts. “As it’s turning out on the HALO program, the requirements are not as stable as we or the government anticipated, and we’re working with them to address that change management as we go forward.”
The HALO module was an upgrade of the company’s Cygnus cargo freighter, with its original fixed-price contract for $935 million.
On a fixed-price contract, NASA is not supposed to change its specifications. The company gets somewhat general requirements from NASA, and then builds the product to its own specifications. It appears that either NASA managers don’t seem to understand this and are causing the company problems, or the company itself had not anticipated some design and construction issues before bidding and are struggling to address them now. In the latter case Northrop Grumman managers might have themselves not understood the nature of fixed-price contracts, and had assumed NASA would simply pick up any increase in the project’s budget, as it does in cost-plus contracts. It apparently is not, and thus this old big space company is now suddenly forced to face reality.
On Christmas Eve 1968 three Americans became the first humans to visit another world. What they did to celebrate was unexpected and profound, and will be remembered throughout all human history. Genesis: the Story of Apollo 8, Robert Zimmerman's classic history of humanity's first journey to another world, tells that story, and it is now available as both an ebook and an audiobook, both with a foreword by Valerie Anders and a new introduction by Robert Zimmerman.
The ebook is available everywhere for $5.99 (before discount) at amazon, or direct from my ebook publisher, ebookit. If you buy it from ebookit you don't support the big tech companies and the author gets a bigger cut much sooner.
The audiobook is also available at all these vendors, and is also free with a 30-day trial membership to Audible.
"Not simply about one mission, [Genesis] is also the history of America's quest for the moon... Zimmerman has done a masterful job of tying disparate events together into a solid account of one of America's greatest human triumphs."--San Antonio Express-News
Northrop Grumman yesterday revealed that unexpected requirement changes to the specifications of its HALO module for NASA’s Lunar Gateway space station has raised its cost for this fixed price contract by $36 million.
In the company’s fiscal second quarter financial results released July 27, the company announced an unfavorable estimate-at-completion adjustment of $36 million for its work on the Habitation and Logistics Outpost (HALO) module, one of the first elements of the Gateway. The company blamed the charge on “evolving Lunar Gateway architecture and mission requirements combined with macroeconomic challenges” that caused cost growth on the program.
…“We think that is best applied for commercial items or production programs with stable requirements and mature designs,” [the company’s CEO] said of fixed-price contracts. “As it’s turning out on the HALO program, the requirements are not as stable as we or the government anticipated, and we’re working with them to address that change management as we go forward.”
The HALO module was an upgrade of the company’s Cygnus cargo freighter, with its original fixed-price contract for $935 million.
On a fixed-price contract, NASA is not supposed to change its specifications. The company gets somewhat general requirements from NASA, and then builds the product to its own specifications. It appears that either NASA managers don’t seem to understand this and are causing the company problems, or the company itself had not anticipated some design and construction issues before bidding and are struggling to address them now. In the latter case Northrop Grumman managers might have themselves not understood the nature of fixed-price contracts, and had assumed NASA would simply pick up any increase in the project’s budget, as it does in cost-plus contracts. It apparently is not, and thus this old big space company is now suddenly forced to face reality.
On Christmas Eve 1968 three Americans became the first humans to visit another world. What they did to celebrate was unexpected and profound, and will be remembered throughout all human history. Genesis: the Story of Apollo 8, Robert Zimmerman's classic history of humanity's first journey to another world, tells that story, and it is now available as both an ebook and an audiobook, both with a foreword by Valerie Anders and a new introduction by Robert Zimmerman.
The ebook is available everywhere for $5.99 (before discount) at amazon, or direct from my ebook publisher, ebookit. If you buy it from ebookit you don't support the big tech companies and the author gets a bigger cut much sooner.
The audiobook is also available at all these vendors, and is also free with a 30-day trial membership to Audible.
"Not simply about one mission, [Genesis] is also the history of America's quest for the moon... Zimmerman has done a masterful job of tying disparate events together into a solid account of one of America's greatest human triumphs."--San Antonio Express-News
I see the courts figuring out who pays in suit vs counter suit