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Boeing reports a $410M charge in case NASA decides Starliner needs another test

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Re: Boeing reports a $410M charge in case NASA decides Starliner needs another test

#21

Post by wmf »

alistairSH wrote: post #4
tectonic wrote: post #2

From today’s Orbital Index ( https://orbitalindex.com/archive/2020-01-30-Issue-49/ ): The Best Way to Make a Profit as an Aerospace Company is to Fail ( https://qz.com/1784335/the-space-military-industrial-complex... ), a compelling piece about how massive corporations like Northrop Grumman have little incentive to hit their contract budgets and are arguably incentivized not to. “Northrop Grumman […] won the James We…

I never understood why there aren't performance requirements in government contracts. Same thing with infrastructure construction here in DC... new offices go up in a year, but changes to the intersection in front of said office take 5 years and cost multiple of the office itself. [hyperbole, but only just]

So if the contractor runs out of money and goes bankrupt when the project is 90% complete, then what? Spend far more money with a different contractor to try to pick up the pieces?

Re: Boeing reports a $410M charge in case NASA decides Starliner needs another test

#22

Post by wmf »

fgonzag wrote: post #20
alistairSH wrote: post #4

Earlier quoted context omitted.

I never understood why there aren't performance requirements in government contracts. Same thing with infrastructure construction here in DC... new offices go up in a year, but changes to the intersection in front of said office take 5 years and cost multiple of the office itself. [hyperbole, but only just]

I'm starting to believe it'd be cheaper to just start out the same project with 2 or 3 companies, and then just keep the be st performing one and dump the other two as soon as its clear that one will be finishing the project in time and within budget. That would only double the cost (if you dump early enough) of a govt project, and since most projects seem to have a budget overrun much larger than that, it'd actually…

I've seen that done with DARPA contracts but I wonder if it just incentivizes contractors to back-load all the overages.

Re: Boeing reports a $410M charge in case NASA decides Starliner needs another test

#23

Post by njarboe »

tectonic wrote: post #2

From today’s Orbital Index ( https://orbitalindex.com/archive/2020-01-30-Issue-49/ ): The Best Way to Make a Profit as an Aerospace Company is to Fail ( https://qz.com/1784335/the-space-military-industrial-complex... ), a compelling piece about how massive corporations like Northrop Grumman have little incentive to hit their contract budgets and are arguably incentivized not to. “Northrop Grumman […] won the James We…

Yes. It is great that NASA is trying to get away from this model with the Commercial Crew Program. Boeing would eat this cost, just like SpaceX does when it has problems. Cost plus contracts, while maybe necessary in some situations, evolves huge cost bloat in defense, large public works, and health insurance sectors of the economy.

Re: Boeing reports a $410M charge in case NASA decides Starliner needs another test

#24

Post by njarboe »

fgonzag wrote: post #20
alistairSH wrote: post #4

Earlier quoted context omitted.

I never understood why there aren't performance requirements in government contracts. Same thing with infrastructure construction here in DC... new offices go up in a year, but changes to the intersection in front of said office take 5 years and cost multiple of the office itself. [hyperbole, but only just]

I'm starting to believe it'd be cheaper to just start out the same project with 2 or 3 companies, and then just keep the be st performing one and dump the other two as soon as its clear that one will be finishing the project in time and within budget. That would only double the cost (if you dump early enough) of a govt project, and since most projects seem to have a budget overrun much larger than that, it'd actually…

SpaceX also has a contract with NASA to build a rocket and spaceship for astronauts to get to the space station. It has passed its last big test recently. If there are no further delays, NASA will be using it in a few months.

Re: Boeing reports a $410M charge in case NASA decides Starliner needs another test

#25

Post by patorjk »

tectonic wrote: post #2

From today’s Orbital Index ( https://orbitalindex.com/archive/2020-01-30-Issue-49/ ): The Best Way to Make a Profit as an Aerospace Company is to Fail ( https://qz.com/1784335/the-space-military-industrial-complex... ), a compelling piece about how massive corporations like Northrop Grumman have little incentive to hit their contract budgets and are arguably incentivized not to. “Northrop Grumman […] won the James We…

I worked at Northrop Grumman a decade ago on a contract that was missing it's deadlines. It was pretty choatic, and management was not very good (every new thing became a #1 priority). To try to get things done we were allowed to work as much overtime as possible. They even had white board showing who had worked the most hours (the top several people people worked over 2000 extra hours during a 12 month period). I almost burned out during this time period (though that's a different story). I didn't get the impression that there was an incentive to fail, quiet the opposite. People were genuinely worried about the reputation of the company. However, that was just my perspective as a ground level grunt. I don't know what was going on at the higher levels.

Re: Boeing reports a $410M charge in case NASA decides Starliner needs another test

#26

Post by garmaine »

njarboe wrote: post #23
tectonic wrote: post #2

From today’s Orbital Index ( https://orbitalindex.com/archive/2020-01-30-Issue-49/ ): The Best Way to Make a Profit as an Aerospace Company is to Fail ( https://qz.com/1784335/the-space-military-industrial-complex... ), a compelling piece about how massive corporations like Northrop Grumman have little incentive to hit their contract budgets and are arguably incentivized not to. “Northrop Grumman […] won the James We…

Yes. It is great that NASA is trying to get away from this model with the Commercial Crew Program. Boeing would eat this cost, just like SpaceX does when it has problems. Cost plus contracts, while maybe necessary in some situations, evolves huge cost bloat in defense, large public works, and health insurance sectors of the economy.

Unfortunately Boeing has petitioned for, and received amendments to its “fixed-price” contract to cover these extra costs in the past. Boeing making this number public, which they would have every reason to keep secret for competitive reasons if it was their own cost, is the first step in normalizing the customer to the added cost. Watch as they threaten to pull out as they have done before...

Re: Boeing reports a $410M charge in case NASA decides Starliner needs another test

#27

Post by ska »

jariel wrote: post #14
spamizbad wrote: post #9

Earlier quoted context omitted.

There used to be a lot more defense contractors during the cold war. Also, more accountability. So there was competitive pressure to be seen as an organization that could reliably deliver projects. Over the years, many of the major companies merged, then shifted strategies to geographically dispersing their jobs to bolster congressional support. Take the Joint Strike Fighter / F-35 for example: 4 bids. Lockheed won t…

"There used to be a lot more defense contractors during the cold war. Also, more accountability. " Gear today is far more complicated. Schedule and cost increase geometrically with complexity. Many of the 'innovations' on early era fighters were quick iterations made by tiny teams. But it's no longer the 100's of fighters that will win, it's the one squadron with the best gear, radar, comms backed up by the rest of i…

It's worth drawing a distinction between increasing costs and schedule complexity, and increasing overruns in both.

Regardless of how complex or expensive a project it, if the people doing it aren't strongly incentivized (positively or negatively) to keep these things under control, the will not. That doesn't matter what era you are talking about.

Re: Boeing reports a $410M charge in case NASA decides Starliner needs another test

#28

Post by tristador »

patorjk wrote: post #25
tectonic wrote: post #2

From today’s Orbital Index ( https://orbitalindex.com/archive/2020-01-30-Issue-49/ ): The Best Way to Make a Profit as an Aerospace Company is to Fail ( https://qz.com/1784335/the-space-military-industrial-complex... ), a compelling piece about how massive corporations like Northrop Grumman have little incentive to hit their contract budgets and are arguably incentivized not to. “Northrop Grumman […] won the James We…

I worked at Northrop Grumman a decade ago on a contract that was missing it's deadlines. It was pretty choatic, and management was not very good (every new thing became a #1 priority). To try to get things done we were allowed to work as much overtime as possible. They even had white board showing who had worked the most hours (the top several people people worked over 2000 extra hours during a 12 month period). I al…

> 2000 extra hours during a 12 month period

11.5 hour days, 7 days a week for a year?

> I almost burned out

No kidding. Seems like a recipe for much worse than burn out.

Re: Boeing reports a $410M charge in case NASA decides Starliner needs another test

#29

Post by pavon »

fgonzag wrote: post #20
alistairSH wrote: post #4

Earlier quoted context omitted.

I never understood why there aren't performance requirements in government contracts. Same thing with infrastructure construction here in DC... new offices go up in a year, but changes to the intersection in front of said office take 5 years and cost multiple of the office itself. [hyperbole, but only just]

I'm starting to believe it'd be cheaper to just start out the same project with 2 or 3 companies, and then just keep the be st performing one and dump the other two as soon as its clear that one will be finishing the project in time and within budget. That would only double the cost (if you dump early enough) of a govt project, and since most projects seem to have a budget overrun much larger than that, it'd actually…

That is exactly what NASA did for Commercial Crew. The started out awarding 5 contracts, then at each stage down-selected to 4,3, and finally 2 suppliers, Boeing and SpaceX. Also commercial crew contracts are fixed-price, pay-for-performance, not the standard cost-plus contracts. So Boeing won't get a dollar to repeat this test; they have to pay for it out of their own pocket.

Re: Boeing reports a $410M charge in case NASA decides Starliner needs another test

#30

Post by [deleted] »

tristador wrote: post #28
patorjk wrote: post #25

Earlier quoted context omitted.

I worked at Northrop Grumman a decade ago on a contract that was missing it's deadlines. It was pretty choatic, and management was not very good (every new thing became a #1 priority). To try to get things done we were allowed to work as much overtime as possible. They even had white board showing who had worked the most hours (the top several people people worked over 2000 extra hours during a 12 month period). I al…

> 2000 extra hours during a 12 month period 11.5 hour days, 7 days a week for a year? > I almost burned out No kidding. Seems like a recipe for much worse than burn out.

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