Introduction
NASA’s ambitious Artemis campaign seeks to return astronauts to the Moon and eventually send crewed missions to Mars. A key component of this effort is the development of the Mobile Launcher 2 (ML-2) at Kennedy Space Center. The ML-2 will serve as the ground structure to assemble, process, transport, and launch the integrated Space Launch System (SLS) heavy-lift rocket and Orion spacecraft for missions beginning with Artemis IV, currently scheduled for September 2028.
In June 2019, NASA awarded a contract to Bechtel National, Inc. to design, build, and test the ML-2 for $383 million, with a planned delivery date of March 2023. However, the project has encountered significant challenges, leading to substantial cost increases and schedule delays. As of June 2024, the ML-2 project’s total cost is estimated to reach $1.8 billion, with the launcher now expected to be delivered to NASA in September 2027.
Background
The ML-2 is the second mobile launcher being developed by NASA, following the Mobile Launcher 1 (ML-1) which will support the first three Artemis missions. The decision to build a second mobile launcher was made to accommodate the larger, more powerful variants of the SLS rocket that will be used starting with Artemis IV.
Bechtel, as the prime contractor for the ML-2 project, is responsible for the launcher’s detailed design and construction, including project management, architectural and engineering designs, technical integration, fabrication, construction, testing, commissioning, and quality control. NASA’s Exploration Ground Systems (EGS) program, part of the Moon to Mars Program Office within the Exploration Systems Development Mission Directorate (ESDMD), oversees the development and operation of the ML-2.
Cost and Schedule Challenges
Since the ML-2 contract was awarded in 2019, the project has faced numerous challenges that have led to significant cost increases and schedule delays. Initially estimated to cost under $500 million with construction completed by March 2023, the ML-2 project’s cost has now ballooned to $1.8 billion, with the launcher not expected to be delivered to NASA until September 2027.
Contractor Performance Issues
Bechtel’s performance has been a primary driver of the ML-2 project’s cost increases and schedule delays. The company has struggled to provide NASA with reliable cost and schedule estimates, underestimating the project’s scope and complexity. This has resulted in substantial cost growth across various categories, including labor, equipment, and administrative expenses.
Bechtel has also faced technical challenges related to steel fabrication and weight management. Delays in steel deliveries have impacted the project’s schedule, as steel is required for the construction of the ML-2 structure. Additionally, potential changes to the ML-2’s design to withstand the predicted loads from SLS launches could further increase costs and add to the launcher’s weight.
Lack of Reliable Cost and Schedule Estimates
Until NASA established the Agency Baseline Commitment (ABC) in June 2024, the ML-2 project lacked an official cost and schedule baseline. Cost and schedule estimates from both NASA and Bechtel changed several times and increased significantly over the project’s duration, making it difficult for NASA to identify its funding needs, be accountable to stakeholders, and accurately measure project and contractor performance.
NASA’s Efforts to Improve Project Performance
To address the challenges faced by the ML-2 project, NASA has taken several steps to better manage the Bechtel contract and stabilize the project:
Descoping Work from the ML-2 Contract
NASA has reduced Bechtel’s responsibilities by removing, or descoping, various ML-2 umbilicals from the contract. Six of the eleven umbilicals needed for the launcher were descoped, with NASA taking over the responsibility for procuring these umbilicals and providing them to Bechtel as government-furnished equipment. This effort allowed Bechtel to focus on other tasks and enabled NASA to work directly with fabricators, avoiding potential future cost and schedule increases.
Minimizing Requirements Changes
NASA has worked to minimize government-driven requirements changes that have previously added cost and schedule to the ML-2 contract. As of January 2024, there have been no additional SLS Exploration Upper Stage requirements changes affecting the ML-2 project.
Improving Contract Management
NASA has taken steps to improve its management of the Bechtel contract, such as separating the contract’s cost tracking into design and construction categories, providing better visibility into the costs associated with those activities. The agency has also held discussions with Bechtel and other federal agencies to better understand how to incentivize the company’s performance.
Limitations in Incentivizing Contractor Performance
Despite NASA’s efforts to improve the ML-2 project’s performance, the agency has limited leverage to incentivize Bechtel to further improve its performance. The primary tool for incentivizing better contractor performance remains the use of award fees. While NASA has demonstrated a willingness to hold Bechtel accountable for substandard work by withholding award fees in some periods, the agency has also awarded questionable award fees to the company in other periods despite documented performance weaknesses.
NASA and Bechtel have revised the contract’s award fee evaluation plan to include objective milestone-based incentives as criteria for earning award fees, aiming to better motivate the contractor. However, it is too early to assess the merits of this revised plan.
Another potential option for incentivizing performance is converting the ML-2 contract from cost-plus to fixed-price, which could provide cost certainty. However, NASA has opted to prioritize the mission schedule and maintain the current contract structure, as a conversion would likely result in higher upfront costs and could disrupt the project team.
Projected Costs and Schedule
Despite NASA’s increased cost projections for the ML-2 project, analysis by the NASA Office of Inspector General (OIG) indicates that costs could be even higher. The OIG projects that the ML-2’s total cost could reach $2.7 billion by the time Bechtel delivers the launcher to NASA, nearly $1 billion more than the agency’s current estimate.
Furthermore, the OIG projects that the ML-2 will not be ready to support the Artemis IV launch in September 2028. Considering the time NASA requires after delivery to prepare the launcher, the OIG estimates that the ML-2 will not be ready until spring 2029.
Summary
The ML-2 project has encountered significant challenges since its inception, leading to substantial cost increases and schedule delays. Bechtel’s performance issues, including underestimating the project’s scope and complexity, have been a primary driver of these challenges. NASA has taken steps to stabilize the project and improve its management of the Bechtel contract, but the agency has limited leverage to incentivize further improvements in the contractor’s performance.
As the ML-2 is critical to the success of future Artemis missions, it is essential that NASA effectively manages the project to control cost increases and avoid further schedule delays. The agency must closely monitor Bechtel’s progress and continue to explore ways to motivate the contractor to achieve and sustain an improved level of performance throughout the construction phase.
Despite recent progress, the ML-2 project’s cost and schedule challenges remain a significant concern for NASA and its stakeholders. As the agency works towards its ambitious goals of returning humans to the Moon and eventually sending crewed missions to Mars, it must ensure that critical infrastructure projects like the ML-2 are delivered on time and within budget to support these endeavors.
