Boeing’s Woes Deepen As Report Identifies Problems With NASA’s Moon Rocket Contract

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As NASA and Boeing continue to work on analyzing the data from the latter's Starliner spacecraft in hopes of a safe crew return to Earth, a report from NASA's Office of the Inspector General (OIG) has provided color into the pair's work on the Space Launch System (SLS). The first generation SLS launched in November 2022 with the Orion ship to the Moon, and NASA plans to launch a more powerful rocket in 2028 as part of the Artemis IV mission.

However, the OIG warns that the mission might be delayed due to significant manufacturing and project management issues with Boeing as part of its four recommendations - three of which NASA has accepted with the promise of implementing them as soon as this year. The OIG's report follows Boeing's new CEO taking over the role and shifting his office to Seattle to better understand the aerospace giant's manufacturing and production processes.

Boeing's Quality Management, Stamp Warranties, Insufficient Workforce Training & Project Monitoring Flagged By NASA OIG - NASA Assures Fixes Will Be Implemented This Year

The OIG's report covers the SLS Block 1B rocket, which will increase the SLS system's payload capacity from a current 27 tons to 38 tons. A key part of this upgrade is a new Exploration Upper Stage (EUS), which is the second stage responsible for sending Orion and other payloads to the Moon.

In its assessment, the OIG reveals that lackluster quality management at Boeing's Michoud facilities has led to considerable delays to the EUS' completion. These include "foreign object debris was identified inside the SLS Core Stage 2 liquid hydrogen fuel tank," including metal shavings and Teflon. These issues, along with others, have led the Defense Contract Management Agency (DCMA), which works with NASA for contractor oversight, to issue a total of 71 Level 1 and Level 2 Corrective Action Requests (CARs) to Boeing, out of which 24 were Level 2 CARs which are more serious.

NASA also requested its Stages chief safety officer to write an even more serious draft Level III CAR to combine findings from 20 CARs Is and IIs for stamp level warranties issued to Boeing between January 2022 and April 2023. A stamp warranty provides an undertaking to the agency that its contractor has met all work instructions and Level III CARs typically first see a draft before an official request is submitted.

Some violations flagged under these included an incorrect approval of "hardware processing under unacceptable environmental conditions, accepted and presented damaged seals to NASA for inspection," outlined the OIG.

The OIG also shares that due to the remote location of the Michoud facilities and low compensation, Boeing is finding it difficult to retain employees to work on SLS 1B hardware. While NASA officials stressed that Boeing is training its workforce and providing work orders, the inspector general believes these are insufficient. One delay resulting from these was in the EUS' completion, which suffered from a seven month delay because of improper welds on a liquid oxygen tank.

While Boeing is "working to establish a more robust hands-on training program, including model-based instructions and a mock-up of the EUS equipment shelf that houses avionics and flight computers," the OIG remains unconvinced that these changes will yield quick results, as it identifies other problems such as insufficient work orders that are difficult for inexperienced technicians to interpret.

These problems and other issues have led to a $700 million cost increase for the SLS 1B's development over the ~$5 billion baseline that NASA had established in December 2023. The OIG adds that the EUS alone will cost nearly $2.8 billion until 2028, or "three times the initially agreed-upon cost of $962 million in 2017." NASA disagrees with this assessment, and it maintained with the inspector general that as Boeing reduces its workforce for the 1B, the costs will come down instead.

These delays stem from several factors, which include diverting EUS funds to the Artemis 1 core stage, changing mission dates, manufacturing problems, supply chain issues and maintaining the EUS workforce. The OIG outlines that "Boeing spent on average $26 million a month on its EUS workforce, contractors, and related costs" between February and August 2023 and it expects this spending to continue until the EUS is delivered to NASA in 2027. It adds that NASA officials believe that "many supply chain challenges were exacerbated by Boeing’s late negotiations and contract agreements with its suppliers."

The remaining problems that have contributed to the EUS' delays include NASA's decision to avoid establishing a cost baseline until December 2023; a decision that the agency maintains was "based on lessons learned from cost estimation challenges with the SLS Block 1." Along with this, Boeing's Earned Value Management System (EVMS), its software used to monitor cost and schedule, has"impacted NASA’s Stages contract with Boeing—including visibility into cost, schedule, and resource needs for the contract’s remaining work."

This system has also run into trouble at the Pentagon since it has been in a disapproved status since 2020. Some problems that the DCMA has identified include "deficiencies in identifying management reserves, maintaining estimates at completion, and maintaining the baseline," and as part of its work under CAR II and CAR III requests, Boeing estimates that work will be finished by late 2024 as per the OIG.

These issues led the OIG to issue four recommendations to NASA. They are developing a quality management system compliant with the relevant standards, financially penalize Boeing for non compliance with quality control, conduct a cost overrun analysis for Boeing's contract performance and work with the DCMA to "ensure contractual compliance" with the EVMS requirements.

Out of these, NASA has agreed to the first, third and fourth recommendations. They are estimated to be completed by July 2025, December 2024 and October 2024. However, the second recommendation, i.e., the financial penalties are "outside the bounds of the contract," maintains the space agency. According to NASA, there "are already authorities in the contract, such as award fee provisions, which enable financial ramifications for noncompliance with quality control standards."

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