Prediction: Time to cancel Boeing’s Mega Space Launch System rocket

Uh-oh. Looks like NASA’s Office of Inspector General is pissed Boeing (BA 0.86%) again. And this time it could be serious.

Maybe serious enough to finally get rid of NASA’s White Elephant Space Launch System and replace it with cheaper rockets from SpaceX and Blue Origin.

A litany of complaints

Over the years, the National Aeronautics and Space Administration’s Office of the Inspector General (OIG) has raised numerous complaints about the Space Launch System project, a project led by Boeing but involving Lockheed Martin (LMT 0.22%), Northrop Grumman (NIGHT 0.74%), L3Harris (LHX 1.28%) — indeed, almost everyone who is anyone in America’s space industry.

In 2022, for example, the OIG told taxpayers that “the current production and operations cost of a single SLS/Orion system (will be) $4.1 billion per launch for Artemis I through IV.” (Artemis is NASA’s name for the multibillion-dollar effort to return astronauts to the Moon.) The cost of the SLS alone is estimated at $2 billion, or about 4 times the estimated cost when Artemis was first proposed.

In 2023, the OIG calculated all the costs involved in Artemis to date and estimated that the total price tag will reach $93 billion sometime next year. Even though Washington, DC, where people are used to big numbers, the OIG called that cost “enormous.”

And now, the OIG is back with more bad news.

What OIG says about SLS

The OIG report focuses on SLS Block 1B, an improved version of the original SLS rocket that flew to the Moon and back (without astronauts) in 2022. Enhanced for 40 percent better payload capacity, Block 1B is designed to carry both an Orion spacecraft (built by Lockheed) and also a Lunar Gateway space station habitat module “I-HAB” (provided by the European Space Agency), to the Moon for Artemis.

As the OIG explains, Boeing is responsible for developing a new exploration upper stage (EUS) for SLS Block 1B, powered by four L3Harris RL10 engines (instead of just one engine in Block 1). The problem is that NASA budgeted less than $1 billion to develop the EUS initially, but the OIG now says it will cost $2.8 billion.

Plus other increases, Block 1B will likely cost $5.7 billion for development alone (meaning each Block 1B missile will cost more to build and launch). On top of the $24 billion already spent on Block 1 development, this increases the overall SLS development costs (again, developmentnot including production and launch) to nearly $30 billion.

It almost goes without saying that in addition to being over budget, Boeing is behind schedule in developing Block 1B. Originally planned to be ready in early 2021, it now looks more likely to be finished in early 2027.

While this would be (barely) in time for the planned 2028 launch date for Artemis IV (NASA’s second planned landing of astronauts on the Moon this century), the OIG warns that there is a real risk that Boeing’s poor quality control to make NASA miss this date. .

What’s wrong with Boeing

OIG does not know that Boeing is to blame for these delays and cost overruns. “Boeing’s quality management system … does not meet … NASA’s requirements,” the OIG complains. “From September 2021 through September 2023,” the Defense Contract Management Agency notified Boeing of no less than 71 separate “corrective actions” required for its work.

The OIG not only calls this “a large number” and points to “a recurring and degraded state of product quality control.” When notified of the deficiencies, the OIG says Boeing was “inadequate” and “ineffective” in addressing the problems identified and even “failed to take corrective action when the same quality control issues reoccur.”

And it gets worse. The OIG traced the problem to its source: “the lack of a sufficient number of trained and experienced aerospace workers at Boeing.”

What does this mean for investors?

That a company with Boeing’s reputation — Boeing contributed to the successful Apollo moon landings in the 1960s and 1970s and was prime contractor for the International Space Station — has deteriorated to the point where it now lacks the expertise to build a space decent. the racket is alarming. Unfortunately, it’s backed up by the facts — most notably, the highly publicized problems with Boeing’s Starliner spacecraft over the past few weeks.

Potentially worse for investors, all these revelations come just months before an expected change of administration in Washington. Could the next president decide to cut back on Boeing’s SLS rockets in favor of SpaceX’s Starship or Blue Origin’s New Glenn, for example? I don’t think we can rule that out. Could the new administration decide that cost overruns for SLS are? so is it getting out of hand that Artemis should happen without any use of SLS? And that is a risk.

Indeed, given the central role SLS plays in the Artemis project as a whole, Boeing’s problems with SLS could potential leads a new administration to cancel plans to return to the moon entirely — just as the Obama administration canceled the Bush-era Constellation moon program in 2010. And that could have ramifications throughout the space industry, from Boeing to Lockheed to Northrop at L3Harris. , and further.

Of course, this is an apocalyptic scenario. But it’s also a realistic worst-case outcome of Boeing’s difficulties with the SLS. Space investors need to be aware of the risk.