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> Because Starliner was funded by NASA through a fixed-price contract, as part of the Commercial Crew program, Boeing is responsible for any cost overruns and f

> Because Starliner was funded by NASA through a fixed-price contract, as part of the Commercial Crew program, Boeing is responsible for any cost overruns and financial losses due to delays. Given Boeing’s history here this feels like the right kind of contract for this sort of work. Ensures all incentives are aligned

kotaKat 3y ago
Hey, we're finally getting some of those lucrative tax breaks back in the form of watching Boeing suffer!
kawehjr 3y ago
The current NASA administrator, a bureaucrat who grew up during the Bush Cost+ era, is actually opposed to fixed-price contracts because they only save a lot of taxpayer money and might not actually help us get deliverables faster.
- OrvalWintermute 3y ago
  There is a different perspective on that from large acquisitions around firm fixed price contracts. If you're doing some low risk building, say a 10 mile road on flat ground with known soil, replacing a previous road, that is well-known to current specs with set-in-stone requirements (no pun intended) it is easy to pitch that firm fixed price because the contractor will know exactly what to do, and there are 20 road building companies that could do the work. Now, building an advanced spacecraft with a host of uncertainties in a vastly more complex environment that may require novel technologies development and a great deal of engineering is very different if you want to pitch that firm fixed price because the contractor perspective is that is very risky, and there are likely going to be changing requirements. The contractors will want to make the Govt pay for that risk, since they are on the hook for it. All risk is on the contractor. The contractor will also fight for $ for every changing requirement. By comparison, in a time & materials contract, the risk is on the government, and changing requirements don't matter much, if you change them, risk is still on the government. This explains why firm-fixed price is not always the best approach, and sometimes time & materials contracts may make for a more economical acquisition approach - because risk and changing reqs can translate into dollars.
  - hinkley 3y ago
    You can't even get your plumber to tell you how much it's going to cost to get your toilet working smoothly again. And you want to get to the moon on a fixed budget? (Which will also require a toilet). Software has the same problems. An unreasonable expectation of being able to predict the future (except the bits they don't want you to know about), and a lot of whining when we run into unexpected issues.
    - FreshStart 3y ago
      It's fixed price as long as it is fixed price territory. Extras are billable by the hour..
    - somewhat_drunk 3y ago
      >(Which will also require a toilet). Haha, nice.
    - ta1243 3y ago
      > And you want to get to the moon on a fixed budget? (Which will also require a toilet). Didn't last time https://www.nbcnews.com/sciencemain/poop-space-revisited-apollo-10s-floating-turds-pop-44-years-1C9284102 https://www.nbcnews.com/sciencemain/poop-space-revisited-apo...
      - hinkley 3y ago
        That's an article about why having a toilet on a space ship is a very, very good idea.
  - panick21_ 3y ago
    Those poor defense contractors. For once not able have the governemnt pay for their incompetence. My heart bleeds for the poor souls.
- SOLAR_FIELDS 3y ago
  Boeing has its own incentive to deliver quickly though in this case. The incentive is that SpaceX is absolutely eating their lunch at this game
- arijun 3y ago
  My brief search indicates that is wrong: https://arstechnica.com/science/2022/05/nasa-chief-says-cost-plus-contracts-are-a-plague-on-the-space-agency/ https://arstechnica.com/science/2022/05/nasa-chief-says-cost...
  - OrvalWintermute 3y ago
    Uncapped cost plus contracts (Time and Materiels contracts) are a plague, but not for the same reason, just like a Firm-Fixed Price contract that moves all risk to the contractor are a plague too, because if the contractor is carrying all the risk, they're going to make the government pay for all that risk (and aerospace engineering is risky). Any contract type where the political leadership can't terminate a contract for cause due to excessive political pressure, or is forced into paying through the nose, is untenable. The solution for that is not Firm Fixed Price or T&M contracts - but instead larger budgets and also multiple award contracts where you have simultaneous efforts competing against each other. When there are 5 options, all having company skin in the game, all as viable paths forward, and 1 option loses out, terminating for cause, enriching the other 4, no harm no foul.
- pavon 3y ago
  That wasn't the NASA Administrator, Bill Nelson. It was Jim Free, Associate Administrator for Exploration Systems Development[1]. Nelson has been a surprisingly strong supporter of fixed-price contracts, given his background. [1] https://arstechnica.com/space/2023/06/weirdly-a-nasa-official-says-fixed-price-contracts-do-the-agency-no-good/ https://arstechnica.com/space/2023/06/weirdly-a-nasa-officia...
acchow 3y ago
Wish municipal contracts could be done this way
constantcrying 3y ago
Fixed price contracts can be quite a problem in high risk projects. The issue is that incentives absolutely aren't aligned. The moment Boeing thinks it has achieved a certain part of the contract but NASA does not you have a huge problem on your hand where one side will try to get work done for free and the other has absolutely zero interest as they are not getting paid. If cost overruns are too great Boeing might also (depending on the contract) choose to withdraw, as the continuing development cost will be greater than any penalties from the contract.
- wongarsu 3y ago
  As much as I like the idea of having multiple independent vehicles (and knowing the impact of having your only crew-capable launch system grounded when it happened in the shuttle era), Starliner has been in systems integration hell for years now, always just a couple short months away. Boeing withdrawing and NASA restarting the bidding process for that contract might benefit everyone.
  - SahAssar 3y ago
    > Boeing withdrawing and NASA restarting the bidding process for that contract might benefit everyone. Who besides Spacex or ULA can reasonably bid for it? Or are you also looking at foreign options? It might not be Starliner but it seems like it'd be good to keep ULA in the game, just to make sure that Spacex is not the only option.
    - wongarsu 3y ago
      I would exclude SpaceX from the bid, but Sierra Space is the obvious other option with their Dream Chaser. Apart from Sierra and ULA there is also everyone who bid on the lunar lander, meaning Dynetics and the "National Team" (Blue Origin, Northrop Grumman and Lockheed Martin)

kotaKat 3y ago

Hey, we're finally getting some of those lucrative tax breaks back in the form of watching Boeing suffer!

kawehjr 3y ago

The current NASA administrator, a bureaucrat who grew up during the Bush Cost+ era, is actually opposed to fixed-price contracts because they only save a lot of taxpayer money and might not actually help us get deliverables faster.

OrvalWintermute 3y ago
There is a different perspective on that from large acquisitions around firm fixed price contracts. If you're doing some low risk building, say a 10 mile road on flat ground with known soil, replacing a previous road, that is well-known to current specs with set-in-stone requirements (no pun intended) it is easy to pitch that firm fixed price because the contractor will know exactly what to do, and there are 20 road building companies that could do the work. Now, building an advanced spacecraft with a host of uncertainties in a vastly more complex environment that may require novel technologies development and a great deal of engineering is very different if you want to pitch that firm fixed price because the contractor perspective is that is very risky, and there are likely going to be changing requirements. The contractors will want to make the Govt pay for that risk, since they are on the hook for it. All risk is on the contractor. The contractor will also fight for $ for every changing requirement. By comparison, in a time & materials contract, the risk is on the government, and changing requirements don't matter much, if you change them, risk is still on the government. This explains why firm-fixed price is not always the best approach, and sometimes time & materials contracts may make for a more economical acquisition approach - because risk and changing reqs can translate into dollars.
- hinkley 3y ago
  You can't even get your plumber to tell you how much it's going to cost to get your toilet working smoothly again. And you want to get to the moon on a fixed budget? (Which will also require a toilet). Software has the same problems. An unreasonable expectation of being able to predict the future (except the bits they don't want you to know about), and a lot of whining when we run into unexpected issues.
  - FreshStart 3y ago
    It's fixed price as long as it is fixed price territory. Extras are billable by the hour..
  - somewhat_drunk 3y ago
    >(Which will also require a toilet). Haha, nice.
  - ta1243 3y ago
    > And you want to get to the moon on a fixed budget? (Which will also require a toilet). Didn't last time https://www.nbcnews.com/sciencemain/poop-space-revisited-apollo-10s-floating-turds-pop-44-years-1C9284102 https://www.nbcnews.com/sciencemain/poop-space-revisited-apo...
    - hinkley 3y ago
      That's an article about why having a toilet on a space ship is a very, very good idea.
- panick21_ 3y ago
  Those poor defense contractors. For once not able have the governemnt pay for their incompetence. My heart bleeds for the poor souls.
SOLAR_FIELDS 3y ago
Boeing has its own incentive to deliver quickly though in this case. The incentive is that SpaceX is absolutely eating their lunch at this game
arijun 3y ago
My brief search indicates that is wrong: https://arstechnica.com/science/2022/05/nasa-chief-says-cost-plus-contracts-are-a-plague-on-the-space-agency/ https://arstechnica.com/science/2022/05/nasa-chief-says-cost...
- OrvalWintermute 3y ago
  Uncapped cost plus contracts (Time and Materiels contracts) are a plague, but not for the same reason, just like a Firm-Fixed Price contract that moves all risk to the contractor are a plague too, because if the contractor is carrying all the risk, they're going to make the government pay for all that risk (and aerospace engineering is risky). Any contract type where the political leadership can't terminate a contract for cause due to excessive political pressure, or is forced into paying through the nose, is untenable. The solution for that is not Firm Fixed Price or T&M contracts - but instead larger budgets and also multiple award contracts where you have simultaneous efforts competing against each other. When there are 5 options, all having company skin in the game, all as viable paths forward, and 1 option loses out, terminating for cause, enriching the other 4, no harm no foul.
pavon 3y ago
That wasn't the NASA Administrator, Bill Nelson. It was Jim Free, Associate Administrator for Exploration Systems Development[1]. Nelson has been a surprisingly strong supporter of fixed-price contracts, given his background. [1] https://arstechnica.com/space/2023/06/weirdly-a-nasa-official-says-fixed-price-contracts-do-the-agency-no-good/ https://arstechnica.com/space/2023/06/weirdly-a-nasa-officia...

acchow 3y ago

Wish municipal contracts could be done this way

constantcrying 3y ago

Fixed price contracts can be quite a problem in high risk projects. The issue is that incentives absolutely aren't aligned. The moment Boeing thinks it has achieved a certain part of the contract but NASA does not you have a huge problem on your hand where one side will try to get work done for free and the other has absolutely zero interest as they are not getting paid. If cost overruns are too great Boeing might also (depending on the contract) choose to withdraw, as the continuing development cost will be greater than any penalties from the contract.

wongarsu 3y ago
As much as I like the idea of having multiple independent vehicles (and knowing the impact of having your only crew-capable launch system grounded when it happened in the shuttle era), Starliner has been in systems integration hell for years now, always just a couple short months away. Boeing withdrawing and NASA restarting the bidding process for that contract might benefit everyone.
- SahAssar 3y ago
  > Boeing withdrawing and NASA restarting the bidding process for that contract might benefit everyone. Who besides Spacex or ULA can reasonably bid for it? Or are you also looking at foreign options? It might not be Starliner but it seems like it'd be good to keep ULA in the game, just to make sure that Spacex is not the only option.
  - wongarsu 3y ago
    I would exclude SpaceX from the bid, but Sierra Space is the obvious other option with their Dream Chaser. Apart from Sierra and ULA there is also everyone who bid on the lunar lander, meaning Dynetics and the "National Team" (Blue Origin, Northrop Grumman and Lockheed Martin)