The X-34 Project started in 1995 as a cooperative agreement between NASA and Orbital Sciences Corporation (Orbital). The project was to demonstrate streamlined management and procurement, industry cost sharing and lead management, and the economics of reusability. Rockwell International was an industry partner with Orbital Science Corporation in the development of the commercial reusable vehicle.
However, the industry team, led by Orbital, withdrew from the agreement in less than 1 year, for a number of reasons including changes in the projected profitability of the venture. NASA subsequently started a new X-34 program with a smaller vehicle design. It was intended only as a flight demonstration vehicle to test some of the key features of reusable launch vehicle operations, such as quick turn-around times between launches.
Under the new program, NASA again selected Orbital as its contractor in August 1996, awarding it a fixed price, $49.5 million contract. Under the new contract, Orbital was given lead responsibility for vehicle design, fabrication, integration, and initial flight testing for powered flight of the X-34 test vehicle. The contract also provided for two options, which were later exercised, totaling about $17 million for 25 additional experimental flights and, according to a project official, other tasks, including defining how the flight tests would be undertaken.
Under the new effort, NASA's Marshall Space Flight Center was to develop the engine for the X-34 as part of its Low Cost Booster Technology Project. The initial budget for this development was about $18.9 million.
NASA did not prepare risk management plans for both the X-33 and X-34 programs until several years after the projects were implemented. Risk management plans identify, assess, and document risks associated with cost, resource, schedule, and technical aspects of a project and determine the procedures that will be used to manage those risks. In doing so, they help ensure that a system will meet performance requirements and be delivered on schedule and within budget. A risk management plan for the X-34 was not developed until the program was restructured in June 2000.
NASA started the X-34 Project, and the related NASA engine development project, with limited government funding, an accelerated development schedule, and insufficient reserves to reduce development risks and ensure a successful test program. Based on a NASA X-34 restructure plan in June 2000, we estimate that NASA's total funding requirements for the X-34 would have increased to about $348 million-a 307-percent ($263 million) increase from the estimated $86 million budgeted for the vehicle and engine development projects in 1996. Also, since 1996, the projected first powered flight had slipped about 4 years from September 1998 to October 2002 due to the cumulative effect of added risk mitigation tasks, vehicle and engine development problems, and testing delays.
Most of the cost increase (about $213 million) was for NASA-directed risk mitigation tasks initiated after both projects started. For example, in response to several project technical reviews and internal assessments of other NASA programs,(see footnote 8) the agency developed a restructure plan for the X-34 Project in June 2000. This plan included consolidating the vehicle and engine projects under one NASA manager. The project would be managed with the NASA project manager having the final decision-making authority; Orbital would be relegated to a more traditional subordinate contractor role.
Under the plan, the contract with Orbital would also be rescoped to include only unpowered flights; Orbital would have to compete for 2nd Generation Program funding for all the powered flight tests. The plan's additional risk mitigation activities would have increased the X-34 Project's funding requirements by an additional $139 million, which included about $45 million for additional engine testing and hardware; $33 million for an avionics redesign; $42 million for additional project management support and personnel; and $18 million to create a contingency reserve for future risk mitigation efforts.
In February 2001, NASA announced it would not provide any additional funding for the X-33 or X-34 programs under its new Space Launch Initiative.
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