Effectiveness of Firm-Fixed Price Spacecraft Contracts to Curb Cost Growth

摘要

There are many types of contracts used by NASA for science missions to procure spacecraft, this paper focuses on two main categories: Cost-Plus (CP) contracts and Firm-Fixed Price (FFP) contracts. When CP contracts are used, the government agrees to cover the actual expenses of the project which include the planned original cost and any additional labor or material costs incurred to complete the work. The CP contract mechanism is ideally implemented when government requirements are not well-defined, and the likelihood of a modification to the scope of the project is high. When FFP contracts are used, the government agrees to cover a non-variable cost and will not pay for any additional labor or material costs incurred to complete the work. The FFP contract mechanism is ideally implemented when the government requirements are well-defined, costs can be predicted, and the contractor has experience in manufacturing a product that fulfills the requirements. This paper investigates historical cost growth of spacecraft for a variety of NASA science missions launched over the last 20 years, by comparing historical cost growth of CP and FFP spacecraft from contract start to delivery. Additionally, this paper will also examine the potential causes of cost growth on FFP contracts, including schedule delays, requirement changes, the addition of new scope after the contract was signed, and mistakenly formulating a basis of estimate by assuming high heritage to a previous spacecraft. The results of this study will provide guidelines and lessons learned to help NASA and other government agencies determine when an FFP contract can be used effectively and efficiently.