WASHINGTON — A contract to build a second mobile launch platform for the Space Launch System could ultimately cost NASA more than six times its original value, according to a report by the agency’s inspector general.

The August 27 report from NASA’s Office of Inspector General (OIG) concluded that NASA could ultimately spend $2.5 billion on a contract with Bechtel to design and build Mobile Launcher 2 (ML-2). ML-2 is the launch platform to be used by the larger Block 1B version of the SLS and may not be ready for launch until 2029.

NASA awarded Bechtel the $383 million ML-2 contract in August 2019. The platform is scheduled to be delivered to NASA by March 2023. However, costs have increased significantly while schedules have been delayed. An earlier OIG review of the project in 2022 found the official cost had risen to $960 million. Independent forecasts estimate the cost will reach nearly $1.5 billion.

The OIG report noted that NASA set the so-called agency baseline commitment for the ML-2 project in June, setting a cost of $1.8 billion and a delivery date of September 2027. That cost includes $168 million in NASA’s own costs for ML-2 outside of the Bechtel contract. But NASA said it would hold Bechtel to a previous December estimate of $1.3 billion and a November 2026 delivery.

However, an independent review conducted as part of the development of the agency’s base commitment concluded that the project would instead cost $2.1 billion and would not be delivered until January 2028. That review, as well as a separate assessment of NASA’s Exploration Ground Systems (EGS) program, “both found a zero percent probability that Bechtel will deliver the launch vehicle by November 2026,” the OIG said in its report.

The OIG report also projects that cost growth on Bechtel’s contract will continue, reaching $2.5 billion by 2027. That would be 6.5 times the original contract value when it was awarded five years ago.

“Our projections are based on the significant cost increases the Bechtel contract has incurred over the past three years, performance issues identified during the design phase in preparing detailed drawings for steel fabrication and handling the weight of the launch vehicle, and the significant amount of construction work that remains,” the report said.

NASA strongly disagreed with that conclusion. “A simple, straight-line extrapolation, such as the OIG made, does not accurately reflect the current development situation,” said Cathy Koerner, NASA’s deputy director for exploration systems development, in a response accompanying the report.

She argued that past trends cannot be extrapolated because the project is moving entirely from planning to execution, and that the agency is seeing cost improvements. “The OIG forecast a linear trend, while the actual trend is nonlinear in nature.”

However, the OIG was not convinced. “Although progress has been made with the start of construction on ML-2, we believe it is too early to assess the impact on further contract cost growth and to assess whether Bechtel can achieve and maintain improved performance levels throughout the construction phase,” the report said. In addition, “Bechtel has yet to demonstrate the sustained performance levels required to reduce overall costs.”

The report added that the total cost of the ML-2 project could reach $2.7 billion when including NASA’s contributions, which have risen from $96 million at the start of the project to $168 million today. Part of that increase relates to work that was eliminated from the Bechtel contract, such as the development of 6 of the 11 utility arms for the launch tower, which NASA will instead build and provide to Bechtel as government equipment.

The cost growth, the OIG said, could strain NASA’s budget. NASA has proposed spending $415.5 million on EGS development projects, including ML-2, for fiscal years 2025 through 2027 in its fiscal year 2025 budget request, a 72% increase over the 2024 request. But that would not be enough to cover the OIG’s projected costs for ML-2 development during that period, with a projected shortfall of nearly $400 million.

NASA has little chance of getting Bechtel to reduce its costs, the report said. The cost-plus contract does include the option to convert it to a fixed-price contract, but NASA is unlikely to use that option, the report said, because Bechtel would have to agree to that change. “Bechtel would likely provide a cost estimate well beyond NASA’s budgetary capabilities to account for the additional risk that a fixed-price contract entails,” the report said, citing discussions with NASA officials.

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