Northrop Grumman writes off $100 million on its fixed-price Lunar Gateway contract
Northrop Grumman announced on January 25, 2024 that it has written off another $42 million on its fixed-price contract with NASA to build the main habitable module for its Lunar Gateway space station, bringing the total losses so far to $100 million.
The company blamed the latest charge primarily on “cost growth stemming from evolving Lunar Gateway architecture and mission requirements combined with macroeconomic challenges.” The company offered the same explanation when it reported the charge in the second quarter.
Northrop received a $935 million fixed-price contract from NASA in July 2021 to build the module, which is based on the company’s Cygnus cargo spacecraft. HALO will provide initial living accommodations on the Gateway and includes several docking ports for visiting Orion spacecraft and lunar landers as well as additional modules provided by international partners. It will launch together with the Maxar-built Power and Propulsion Element (PPE) on a Falcon Heavy.
In a fixed price contract NASA is not suppose to issue change orders. What must be happening is that either the company or NASA are recognizing there are some issues with the initial and then revised designs, forcing Northrop Grumman to issue its own change orders, delaying development and adding costs.
That the company is having problems however is a bit baffling. First, space station module design is not new. There is a history going back decades on how to do this. Second, Northrop is basing this module design on its already launched Cygnus freighters. Though unmanned, these freighters still have to be habitable after docking with ISS. It should not be so difficult to upgrade them.
Regardless, the company has now become hostile to bidding on any future fixed price contracts, or if it does, it will bid much higher (a decision that caused it to lose in another recent bidding contest). Hopefully this decision on fixed price contracts, similar to Boeing’s own decision, will not cause NASA to abandon such contracts. Just because these big, old-space companies can’t work efficiently doesn’t mean others can’t. Fixed-price is how every business in the real world must function. For most NASA projects such a deal is realistic. If these old companies can’t function practically let new companies bid instead. This will be better for NASA and the entire American space industry.
Northrop Grumman announced on January 25, 2024 that it has written off another $42 million on its fixed-price contract with NASA to build the main habitable module for its Lunar Gateway space station, bringing the total losses so far to $100 million.
The company blamed the latest charge primarily on “cost growth stemming from evolving Lunar Gateway architecture and mission requirements combined with macroeconomic challenges.” The company offered the same explanation when it reported the charge in the second quarter.
Northrop received a $935 million fixed-price contract from NASA in July 2021 to build the module, which is based on the company’s Cygnus cargo spacecraft. HALO will provide initial living accommodations on the Gateway and includes several docking ports for visiting Orion spacecraft and lunar landers as well as additional modules provided by international partners. It will launch together with the Maxar-built Power and Propulsion Element (PPE) on a Falcon Heavy.
In a fixed price contract NASA is not suppose to issue change orders. What must be happening is that either the company or NASA are recognizing there are some issues with the initial and then revised designs, forcing Northrop Grumman to issue its own change orders, delaying development and adding costs.
That the company is having problems however is a bit baffling. First, space station module design is not new. There is a history going back decades on how to do this. Second, Northrop is basing this module design on its already launched Cygnus freighters. Though unmanned, these freighters still have to be habitable after docking with ISS. It should not be so difficult to upgrade them.
Regardless, the company has now become hostile to bidding on any future fixed price contracts, or if it does, it will bid much higher (a decision that caused it to lose in another recent bidding contest). Hopefully this decision on fixed price contracts, similar to Boeing’s own decision, will not cause NASA to abandon such contracts. Just because these big, old-space companies can’t work efficiently doesn’t mean others can’t. Fixed-price is how every business in the real world must function. For most NASA projects such a deal is realistic. If these old companies can’t function practically let new companies bid instead. This will be better for NASA and the entire American space industry.