SPACE.com -- Boeing Faulted for Space Station Cost Overruns


	Boeing Faulted for Space Station Cost Overruns By posted: 05:01 pm ET 24 February 2000

BOEING FAULTED FOR SPACE STATION COST OVERRUNS

WASHINGTON (States News Service) - Facing nearly $1 billion in cost overruns on the International Space Station, NASA plans to more closely monitor the project's contractor, Boeing Co.

Boeing lagged in notifying NASA about increases in costs in merger and acquisition deals with both Rockwell International Corp. in 1996 and the McDonnell Douglas Corp. in 1997, NASA Inspector General Roberta Gross said in a recent report.

The overruns have increased Boeing's space station contract about 10 percent, bloating it to $9.8 billion.

"Boeing did not promptly notify NASA about the potential cost increases due to Boeing's reorganization," the report said. NASA "needs to monitor" Boeing's cost and savings performance.

In response to the report, NASA said it agreed more oversight of reporting costs was needed.

However, NASA said some of the report, made public this week, was "no longer pertinent" since the agency revamped its contract with Boeing in December, including strengthening its reporting procedures for cost overruns.

"Many of the findings released have already been taken care of in program improvements," said Boeing spokeswoman Kari Allen.

From at least October 1998 to February 1999, Boeing reported "unrealistically low" estimates of projected shortfalls, according to the report. Boeing in March 1999 announced cost overruns on its contract would rise from $783 million to $986 million. It attributed the shortfalls to its acquisition of Rockwell International Corp. and its merger with McDonnell Douglas Corp.

"On development programs it's not unusual to have cost overruns 10 or 15 percent of the total cost," Allen said. "It's a complicated program."

Two modules of the International Space Station currently are orbiting Earth. The addition of the next component, the Zvezda living, laboratory and propulsion module, has lagged due to Russian launch delays.