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Constellation Replan

Overview

June 9,2010
Summary

 NASA has explicitly directed Constellation program (CxP) that the Agency will
fully comply with provisions of FY 2010 Consolidated Appropriations Act with
respect to prohibitions of termination of CxP projects/activities.
 NASA has also reminded Constellation contractors that they must abide by the
provisions of their contracts with respect to termination liability.
 Allotted funding in FY10 includes all costs under the contract, for performance and for
any contingent liabilities, such as potential termination costs. It is the responsibility of
the contractor, not the Government,
G to manage all costs within the estimated cost off
the contract.
 The current CxP FY10 Operating Plan does not account for retaining sufficient
obligation authority for covering the Potential Termination Liability (PTL)
estimates on prime contracts.
 NASA has released nearly all FY 2010 funds to Constellation contractors
 NASA has no choice but to initiate a plan to rescope work in FY10 if it is not to
be anti deficient – The CxP now has enough information to initiate discussions
with contractors in order to determine content for remainder of the fiscal year.

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Termination Liability Estimates for Prime Contracts

Termination
As of Data
Contractor Contract Liability Data Source
Date
Estimate
Boeing U e Stage Production
Upper P od ction $54M 3/5/2010 Boeing

Boeing Upper Stage Instrument Unit Avionics $27M 3/5/2010 Boeing


Ares 1

PWR J-2X $48M 3/19/2010 PWR

ATK First Stage $500M 6/4/2010 ATK


Orion
n

Lockheed
Lockheed Martin Orion $350M 5/3/2010
Martin
ps. CSSS

Oceaneering Constellation Space Suit System (CSSS) $15M 3/5/2010 Oceaneering


Ground Op

N/A
N/A EGLS Contract 2/12/2010 N/A
RFP Cancelled

Total Estimate $994M

Termination liability estimates can vary over time, depending on current contract activity (status of
long-lead items, active subcontractors and suppliers, facility/lease costs, etc.). Provided above are
contractor estimates of termination liability received on the "As of Data Date". These amounts are
contractor estimates that NASA is continuing to evaluate. In the event of an actual contract
termination, the settlement amount that NASA will pay will be determined through audit and
negotiation of a detailed contractor termination settlement proposal. 3
Funds Remaining after Potential Termination Liability

 FY10 Current
C t Conditions
C diti
 Total Cost Authority (PY10 and Prior) : $4,073M
 Cost to date through May 2010: $(2,289)M
 Remaining available to Cost: $1,784M
 Estimated Encumbered Uncosted Carry forward to FY11: $(279)M
 Available to cost for June – Sept: $1,505M

 Less Current PTL required


q for Prime Contracts: -$994M
 ATK: $500M
 LM: $350M
 PWR: $48M
 Boeing: $81M
 Oceaneering:$15M
 Less Current PTL required for Non Prime: -$66M

 Funds
F d remaining
i i for
f costs
t in
i FY10 (Last
(L t 4 months):
th ) $445M
 This reflects a shortfall of $990M from 1,435M plan for remainder of the year
 FY10 cost rate to date averaging approximately $300M a month
 Unknown variable to consider is ATK response and action against $500M

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Path to Resolution

 NASA will prioritize activity on Constellation contracts but, because much


of the fiscal year has elapsed, there is little flexibility.
 Constellation
C t ll ti program h has bbeen given
i th
the authority
th it tto proceed
d
immediately to assign preliminary adjustments and funding reductions by
project and contract, including Ares, Orion, Ground Operations, Mission
Operations, EVA, and Program g Integration.
g
 Many of these reductions will be implemented via reductions in
workforce. A sizeable portion of those actions will be subject to WARN
Act procedures, under which actual separations would not occur until 60
days after the initial notification.
notification Actions that are not subject to the
WARN Act will begin immediately.
 This reprioritization of funding within the Constellation replan will have an
impact on planned program content and workforce
 Expected reduction is about 1/3rd of approximately 7,500 WYEs or 2,500. Worst
case scenario assumes ATK does not go at risk and WYE level would double at
5,000
 Primarily affecting Texas, Alabama, Colorado, Utah, and Florida. Further
quantification of regional effects will not be available for several weeks.

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Re Plan Guidance

 With the information received from the contractors now in hand, the
Constellation program is formulating a funding plan for the rest of the year to
allocate funding according to the following principles:
 Maximize retention of personnel/skills and capabilities that can contribute to future
technology development.
 Protect advanced development work that could transfer to planned programs as
reflected in the FY 2011 budget request.
 Enable -- to the extent possible -- a robust transition to work associated with a Crew
Escape Vehicle (as announced in the President’s speech of April 15, 2010) as the
highest funding priority; and enable work to continue on J2X, as the second funding
priority.
 Place the lowest priority on expenditures for hardware that can solely be used for the
program of record and are not applicable to programs as reflected in the FY 2011
budget request.
 In so doing, if possible:
 Re-plan ARRA funds towards the priorities above;
 Avoid actions that would require op plan changes; and
 Avoid NASA directed terminations.

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Effects by Project – Preliminary Analysis
Actions Required to Accommodate $990M Reduction from Plan

 Ares: The program will provide no additional funding to ATK beyond planned FY10 performance
(not place $500M on ATK for PTL); and descope the following contracts: Pratt Whitney Rocketdyne
materials, $15M; Boeing materials, $25M; and Ares support contractors, $23M; and $80M in
additional reductions (tasks at Stennis Space Center, MSFC, reduce uncosted, etc) .

 Orion: Lockheed Martin will initiate $30M prime content work adjustments and has already halted
$50M of planned procurements. In addition, the project will institute $38M in non-prime deferrals
and reductions and will determine an $82M additional reduction in the coming weeks.

 Ground Ops: The project scope will be reduced by $89M. The project will initiate support
contractor reductions in support contractor activities, reductions in task order scope, and
reductions in operating costs, and will attempt to preserve work to enable flight test strategy but
with schedule impact.
impact

 Mission Ops: The project scope will be reduced by $12M, which requires immediate reduction of
FY10 content.

 EVA: The program will delay in PDR for the prime suit, and reduce prime and non-prime content (to
be determined).

 Program Integration: The project scope will be reduced by $31M,


$31M which will result in a reduction of
66 percent in current support contractor WYE.