NASA IG: $3 Billion Hit to NASA Programs Due To COVID

NASA’s Inspector General estimates that the financial impact of COVID-19 on NASA programs could reach $3 billion. As of the end of FY2020, it was $1.6 billion, with the remainder a tentative estimate of impacts into the future. NASA stressed that the figures are not an assessment of the ability of any particular project to meet its milestones. Those are being determined on a case-by-case basis.

The Office of Inspector General (OIG) reviewed data collected by NASA’s Office of the Chief Financial Officer (OCFO) for major programs and projects — those with life-cycle costs of $250 million or more.

The Science Mission Directorate (SMD) is reporting the largest impact so far, almost $1 billion. The Human Exploration and Operations Missions Directorate (HEOMD) is second at $626 million, followed by the Space Technology Mission Directorate (STMD) at $39 million and the Aeronautics Research Mission Directorate (ARMD) at $22 million.

The key is that understanding the impact is an evolving process as the pandemic continues to affect operations of NASA and its contractors throughout the supply chain.

Among the HEOMD programs the OIG expects to be hit hardest are the Space Launch System (SLS) and Orion spacecraft. The OIG reported an $8 million impact for SLS in FY2020 with $355 million expected in the future due to “Advanced agreements paid to contractors for approved operations, engine build activities, and engine testing support, and schedule adjustment.” The OIG  also notes, however, that the SLS program’s initial estimate for FY2020 of $8 million was updated in January 2021 to $103.4 million, again illustrating how tentative the numbers are.

The impact on Orion for FY2020 was $5 million, with another $141 million anticipated because of “Cost and schedule impacts from the supply chain resulting from closures, interruptions, and other delays.”

In SMD, although no cost impact is registered for the James Webb Space Telescope (JWST) in FY2020, the expected future impact is $100 million because of the 7-month launch delay announced last year.

SMD officials have said repeatedly that the additional costs are covered by reserves, so do not represent an increase in the cost of the program overall.

The Nancy Grace Roman Space Telescope (formerly WFIRST) had a $3 million impact in FY2020, but the anticipated cost impact is $399.9 million due to “Schedule replanning, shutdowns at vendor sites and NASA centers, late contractor deliveries, and late delivery of government-furnished equipment.”

Astrophysics Division Director Paul Hertz told the National Academies’ Committee on Astronomy and Astrophysics last week that COVID happened at the worst possible time for Roman, just when it was entering Phase C and contractors were beginning work. He expects to have a new cost and schedule estimate for the program by September when it reaches its Critical Design Review (CDR) milestone.

A total of 30 programs across the agency are reviewed in the OIG memo, of which 18 are highlighted either because they self-identified as having experienced a significant impact, or are high profile or otherwise of special interest.

NASA’s response, published in an appendix, stresses that the data collected by the OCFO on which the memo is based was not intended to assess the impact on a project’s ability to meet milestones.

These project activity impact assessments were not intended to assess the long-term impact of COVID-19 on a project’s ability to meet its milestones. That assessment will continue on a project-by-project basis, using established Agency processes for monitoring project performance, managing risks and reserves and, where necessary, assessing project milestones and commitments.  We appreciate OIG highlighting this distinction in the Background section. We would caution readers that the memorandum’s use of the terms “Activity Impact, “Designated Impact Level,” and “Activity Level” all refer to current project operating status and not necessarily to the impact of COVID-19 on the project’s long-term goals.  — NASA (emphasis in original)