EPOC

[TaurusLittrow]

Does anyone know if NASA's proposed Exploration Production and Operations Contract (EPOC) with Boeing/NG for SLS launch services is a Cost-Plus OR Fixed-Price contract?

Kind of makes a difference don't ya think?

[VSECOTSPE]

Does anyone know if NASA's proposed Exploration Production and Operations Contract (EPOC) with Boeing/NG for SLS launch services is a Cost-Plus OR Fixed-Price contract?

NASA is trying to transition Orion and SLS production to fixed-price contracts.

A fixed-price contract is no guarantee that a contractor will perform within the terms of the contract.  If there’s no competition or alternative by which the government can achieve or supply the capability in question, the contractor still has the government over a barrel when the contractor underperforms, and the government has to accept the contractor’s cost increases if the capability is critical or important to the government.

This is the case with Orion/SLS.  NASA and Artemis have no alternate means of delivering astronauts to lunar orbit.  As long as that remains the case, contract consolidation efforts like EPOC and OPOC are unlikely to produce measurable cost savings.  Retroactive analyses of STS costs under SFOC and EELV costs after ULA’s creation showed no savings.  The only space transportation efforts to have demonstrated cost reductions or avoidance are EELV pre-ULA and COTS/CRS, both of which involved competition.

And just using common sense, unless there is talk of significant workforce reductions accompanying them, EPOC, OPOC, and the like aren’t much more than shell games.  The Orion/SLS workforce doesn't stop paying its mortgages just because there’s a new contract.  Regardless of contract consolidation, fiscal year after fiscal year, all we’ve seen from Orion/SLS are budget increases and a budgetary bow wave moving further into the future.  See post #477 here:

https://forum.nasaspaceflight.com/index.php?topic=57437.460

Hope this helps.

[TaurusLittrow]

Excellent points VSECOTSPE.

[tgr9898]

Does anyone know if NASA's proposed Exploration Production and Operations Contract (EPOC) with Boeing/NG for SLS launch services is a Cost-Plus OR Fixed-Price contract?

A fixed-price contract is no guarantee that a contractor will perform within the terms of the contract.  If there’s no competition or alternative by which the government can achieve or supply the capability in question, the contractor still has the government over a barrel when the contractor underperforms,


(Many excellent points snipped for brevity)

An extreme example of how far thus can go would be Boeing walking away from the DARPA Spaceplane contract without even completing it....

https://spaceflightnow.com/2020/01/22/boeing-withdraws-from-darpa-spaceplane-program/

 

[VSECOTSPE]

An extreme example of how far thus can go would be Boeing walking away from the DARPA Spaceplane contract without even completing it...

That is an example of a fixed price contract that went nowhere because the contractor decided for reasons having nothing to do with the contract that it no longer wanted to pursue the project.

That said, Boeing did not have the government over a barrel with XS-1 the way Orion/SLS has Artemis/NASA over a barrel.  Nothing the government was doing stopped because Boeing walked away from XS-1.  It was just an experimental vehicle.  DARPA just pocketed the savings and applied them to its next technology project.  Artemis, however, would grind to a halt if, say, Boeing were to walk away from its SLS Core Stage production contract.  If NASA wanted Artemis to move forward, with no alternative for lunar crew transport, NASA have no choice but to apply more budget to the SLS Core Stage production contract to keep Boeing at the table.

That’s why competition and alternatives are so important, more so than the type of contract involved.

[JohnFornaro]

An extreme example of how far thus can go would be Boeing walking away from the DARPA Spaceplane contract without even completing it...

That is an example of a fixed price contract that went nowhere because the contractor decided for reasons having nothing to do with the contract that it no longer wanted to pursue the project.

That said, Boeing did not have the government over a barrel with XS-1 the way Orion/SLS has Artemis/NASA over a barrel.  ...

If NASA wanted Artemis to move forward, with no alternative for lunar crew transport, NASA have no choice but to apply more budget to the SLS Core Stage production contract to keep Boeing at the table.

That’s why competition and alternatives are so important, more so than the type of contract involved.

Boy, this is a disappointing line of argument.  I don't seem to recall competition, in the normal meaning of the word, thruout the SLS process.  And now, we face the possibility of Boeing simply pulling out?

[VSECOTSPE]

Boy, this is a disappointing line of argument.  I don't seem to recall competition, in the normal meaning of the word, thruout the SLS process.

There was none, for all intents and purposes.  NASA sole-sourced the major elements.

And now, we face the possibility of Boeing simply pulling out?

I’m not trying to create a rumor that Boeing is threatening, or likely to threaten, to pull out of the SLS Core Production Contract.  There is no such rumor.

What I am trying to illustrate is that the government (NASA) is always at the mercy of such threats when it has no alternative to a given capability or contractor for a given function.  Artemis is at the mercy of Orion/SLS for the function of crew transport to/from lunar orbit.  So Orion/SLS has little to no incentive to control cost, deliver on time, etc.  There’s nothing that prevents Orion/SLS costs from continuing to increase and eat up an increasingly larger share of the Artemis budget and defer new lunar capabilities ever father to right — Artemis and NASA are held hostage and just have to suck it up if the nation wants a civil human lunar program.  And this is what we’ve seen in the Orion/SLS/EGS budget I linked above.  The cost bow wave just keeps growing and moving farther right.

Some of that cost growth is probably due to contractor threats, implied or actual.  For example, Boeing needs EUS or award fee X to stay fat and happy on the SLS Core Production Contract, even if Boeing’s performance on that contract doesn’t warrant additional work like EUS or award fees for work well done.  But a lot of it is also just managerial and contracting and accounting laziness — there’s no incentive for the Orion/SLS programs overall to get their acts together because they know that Artemis and NASA are held hostage to their lunar crew transport capability and will pay whatever the poorly managed bottom line for this capability comes to.

The only way out of that hostage situation for the government is to identify or create an alternative capability.  If the government wants a contractor or program to perform well, the contractor or program has know that they’re not the only game in town.  Everything else, like contract type, is secondary.

Hope this helps.

[sdsds]

The only way out of that hostage situation for the government is to identify or create an alternative capability.  If the government wants a contractor or program to perform well, the contractor or program has know that they’re not the only game in town.  Everything else, like contract type, is secondary.

Perhaps it's implicit, but there's also the requirement that there's no collusion between the superficially competing sources of the capability.

Replacing a monopoly with a duopoly might not lead to much improvement.

[TrevorMonty]

For suppliers to have hope of coming up with fixed price they need NASA to commit to X number of SLS/Orion launches a year. NB can't just buy 2 one year and only launch one as somebody has to pay for storage of extra LV.

Problem is SLS/Orion launches also need a lot of additionsl funding to pay for other mission items eg landers, rover lunar habitats. Unless NASA want to fly crew to gateway regularly to spend few weeks looking at moon. Funding for these additional missions items if fickle.

[jadebenn]

@TrevorMonty The block buy observation is prudent - and it's why, I suspect, that EPOC is structured (in the most recent stage of negotiations we are aware of) as a 5-mission block buy minimum.

[su27k]

Regardless of the merit of fixed cost vs cost plus contract, I'd still like to know the answer to the original question. There're not much information about these contracts, there should be, given how much taxpayer money is at stake.

Too bad space reporters are more interested in reporting twitter than digging up information that actually matters.

[VSECOTSPE]

Regardless of the merit of fixed cost vs cost plus contract, I'd still like to know the answer to the original question. There're not much information about these contracts, there should be, given how much taxpayer money is at stake.

Too bad space reporters are more interested in reporting twitter than digging up information that actually matters.

Like I wrote in the first sentence of the second post, OPOC and EPOC are supposed to eventually be fixed-price:

The first six spacecraft will be acquired by cost-plus-incentive-fee ordering. Because the cost of a complex, high-tech system generally decreases over time as the design stabilizes and production processes mature, NASA will negotiate firm-fixed-price orders for future missions to take advantage of the anticipated spacecraft production cost decreases.

https://www.nasa.gov/press-release/nasa-commits-to-long-term-artemis-missions-with-orion-production-contract

EGS will begin to define its requirements to support development of a firm-fixed-price proposal following award

https://procurement.ksc.nasa.gov/-/media/COMET/BiddersLibrary/Informational%20Materials/COMET_EPOC_Ground%20Rules%20and%20Assumptions.ashx

There are probably better references, but those two should put the question to rest.

That said, I would be shocked if either effort produced cost savings.  I lived thru SFOC, and NASA’s own retrospective review could find no cost savings.  Same goes for EELV under ULA.  Without the threat of an competitor or alternative, there’s no incentive to bring costs down, no matter the type of contract.  That sole-sourced contractor still has the government over a barrel.

[su27k]

Regardless of the merit of fixed cost vs cost plus contract, I'd still like to know the answer to the original question. There're not much information about these contracts, there should be, given how much taxpayer money is at stake.

Too bad space reporters are more interested in reporting twitter than digging up information that actually matters.

Like I wrote in the first sentence of the second post, OPOC and EPOC are supposed to eventually be fixed-price:

The first six spacecraft will be acquired by cost-plus-incentive-fee ordering. Because the cost of a complex, high-tech system generally decreases over time as the design stabilizes and production processes mature, NASA will negotiate firm-fixed-price orders for future missions to take advantage of the anticipated spacecraft production cost decreases.

https://www.nasa.gov/press-release/nasa-commits-to-long-term-artemis-missions-with-orion-production-contract

Ok, but this is for Orion only, no? The OP's question is about SLS.

[VSECOTSPE]

Ok, but this is for Orion only, no? The OP's question is about SLS.

EPOC is SLS.  OPOC is Orion.

[TrevorMonty]

At present Orion is only payload for SLS.

[Hog]

At present Orion is only payload for SLS.

What else would Orion be payload for?

[Zed_Noir]

At present Orion is only payload for SLS.

What else would Orion be payload for?

In theory the Orion could be lofted to LEO by commercial lift in the form of Falcon 9, Falcon Heavy, Vulcan Centaur, New Glenn, Neutron, Terran-R and others. A separate transit propulsion & service module need to be either pre-position in LEO or launch right after the Orion.

IMO. There is no reason to use the Orion if one is to use distributed launches to assemble a Moon bound vehicle stack. Can use a transit habitat module along with a minimalist crew taxi capsule for example.

The Orion or something like it is only required for a Moon mission if using a single launch vehicle. Of course even with the Orion/SLS mission architecture a separately launch Lunar lander is needed.