NASA is trying to shift the future cost risk in its overbudget and delayed moon launcher construction project to Bechtel, the project’s prime contractor.

Under the firm’s current cost-plus, design-build contract, it is not responsible for cost overruns.

The plan was described last month in the National Aeronautics and Space Administration’s response to a critical agency Inspector General report. It details NASA and Bechtel’s alleged mismanagement of the work and contract.

In recent years, NASA has been trying to change course on its contracting practices by using more fixed-price rather than cost-plus contracts. Bechtel is not among NASA’s biggest contractors, which include KBR Inc. and Jacobs. But the mobile launcher is integral to NASA’s efforts to put Americans on the Moon again and eventually on Mars.

The new mobile launch tower is needed to accommodate a bigger rocket planned for the missions. Being built at the Kennedy Space Center in Florida, the launcher structure will consist of a two-story base and a steel tower equipped with umbilical lines to the rocket and a walkway for personnel and equipment. 

In June 2019, NASA awarded Bechtel the job of designing, building and preparing the launcher for use under a $383-million contract with completion set for March 2023. Bechtel’s fee was to be $23.3 million

As of February, NASA had paid Bechtel half of about $16 million in additional incentive fees for good performance.

The Inspector General report states that now the launcher will cost at least $1 billion and won't be ready for use until 2026—too late for the first planned launch of an Artemis rocket meant to reach the moon.

NASA Also Receives Blame

The Inspector General stated that the trouble grew because of NASA’s decision to award the contract before all requirements were finalized

For its part, Bechtel underestimated the project scope and complexity, including cost of subcontracts, equipment and material and needed hours of labor, the Inspector General wrote. Bechtel also struggled to produce detailed steel fabrication drawings, the report says.  

The Inspector General also reported that Bechtel blamed a portion of the projected cost increase on COVID-19 impacts.

Bechtel officials could not be reached for comment, but in a statement issued to the Washington Post last month the company denied that it was to blame for the overruns and delays.

The Inspector General’s report, Bechtel stated, was incomplete about “what led to the current situation,” with the company adding that “we strongly disagree” with the report’s conclusions.

“The project has experienced significant cost and schedule growth beyond the original good faith estimates, which did not appreciate the project complexity and necessary change resulting from parallel design evolution of all launch systems,” Bechtel said.