
Boeing reports a $410M charge in case NASA decides Starliner needs another test - zecken
https://techcrunch.com/2020/01/29/boeing-reports-a-410m-charge-in-case-nasa-decides-starliner-needs-another-uncrewed-launch/
======
tectonic
From today’s Orbital Index
([https://orbitalindex.com/archive/2020-01-30-Issue-49/](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...](https://qz.com/1784335/the-space-military-industrial-complex-
profits-off-us-failure/)), 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 Webb
Space Telescope contract in 1996 with a promise that the project would cost
$500 million and be flight-ready in 2007. The telescope is now likely to
launch in 2021 and is expected to cost nearly $10 billion. [...] [W]ith every
delay and snafu, Northrop Grumman rakes in more money as missed deadlines
extend the timeline and require more funding from the government. One delay in
2018 brought Northrop Grumman close to a billion dollars alone—twice the price
the firm originally quoted to the government for the entire project.”
According to this document (pdf) released on Jan. 28 by the Government
Accountability Office, the JWST has only a 12% chance of launching in March
2021. The massive overruns by Boeing on SLS are a similar example.

~~~
alistairSH
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]

~~~
fgonzag
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 end up cheaper.

Companies with no competition and a guaranteed contract will never deliver the
goods.

~~~
pavon
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.

~~~
ceejayoz
> 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.

LOL. Boeing knows how to handle minor obstacles like that.

[https://spacenews.com/nasa-inspector-general-criticizes-
addi...](https://spacenews.com/nasa-inspector-general-criticizes-additional-
boeing-commercial-crew-payments/)

"NASA paid Boeing nearly $300 million more than originally planned in its
commercial crew contract in part because of agency concerns that the company
might drop out of the program, a new report claims."

------
chrispauley
'Charge' here is a confusing term. The way I take it they have set aside this
money in case they need to do another test. The title makes it seem as if they
have charged (or are preparing to charge) Nasa for this amount. That wouldn't
be too surprising given Boeing's history, but does not appear to be the case
here (yet).

Directly from the financial report from Boeing:

> Fourth-quarter operating margin decreased to 0.5 percent due to a $410
> million pre-tax Commercial Crew charge primarily to provision for an
> additional uncrewed mission for the Commercial Crew program, performance and
> mix. NASA is evaluating the data received during the December 2019 mission
> to determine if another uncrewed mission is required.

[https://boeing.mediaroom.com/2020-01-29-Boeing-Reports-
Fourt...](https://boeing.mediaroom.com/2020-01-29-Boeing-Reports-Fourth-
Quarter-Results)

~~~
jdsully
This is standard jargon for investors. The charge is to the company and a hit
directly to their earnings.

Similar wording can also be used with respect to debt that will never be
collected.

[https://en.wikipedia.org/wiki/Charge-
off](https://en.wikipedia.org/wiki/Charge-off)

~~~
chrispauley
Thanks for info on the jargon. I assumed it was, however I also assume there
are many like me initially confused by the term without knowledge of how that
term is used in that space.

------
VT_Dude
Boeing just posted it's first full-year loss since 1997. If you have to tell
your investors bad-news, better to throw in all of the potential bad news that
you were on the fence about than to have to make follow-up announcements.
(Honey I totaled the car, and the other car may be out of gas, and all our
toilets might be backed up.)
[https://abcnews.go.com/Business/wireStory/boeing-posts-
annua...](https://abcnews.go.com/Business/wireStory/boeing-posts-annual-
loss-1997-max-costs-rise-68608773)

~~~
kapnobatairza
Correct - See "big bath" accounting.

------
aj7
Why do we even have this program?

~~~
jessriedel
Commercial crew program is going to be a way, _way_ cheaper method of putting
astronauts in low-Earth orbit than the Space Shuttle. And most of the
capabilities that the Shuttle had but Starliner/Dragon lack are either
obsolete or are being handled more efficiently by the dedicated X-37
spacecraft.

~~~
sebazzz
If you take the dollar per weight price the Space Shuttle wasn't that
expensive, right? Assuming a full cargo bay. Source: everyday astronaut.

I don't understand why (as far a I know) the weak points of the space shuttle
weren't addressed, like the heat tiles which were supposedly fragile. Instead,
they aborted the entire program.

~~~
DuskStar
Dollar per kg to orbit of the Space Shuttle was pretty respectable - _if you
count the mass of the orbiter as part of the payload_. If you don't, it's
absolutely ruinous. (~$5,000/kg with orbiter, $20,000/kg for what it could
carry in the payload bay, 2020ish dollars - yes the orbiter outweighed its
payload 3:1)

Look, the Saturn 1B - the man-rated, 20,000kg-class, _safe_ predecessor to the
Saturn 5 - cost ~$330m 2020 dollars per launch. The Space Shuttle could carry
24,000kg to orbit at a marginal cost per launch of somewhere between 500 and
700 million dollars. (This ignores all the costs attributed to the Space
Shuttle program that were incurred even if a launch never occurred)

The Saturn V, of course, could put 140,000kg into LEO for ~1,250 million 2020
dollars.

So for half the price of a shuttle launch, you can put the 80% the mass into
orbit on a Saturn 1B. Or for double the price of a shuttle launch, you can put
5.8 times as much mass into orbit on a Saturn V. Or double the shuttle's
orbital payload mass - but on a trans-lunar injection trajectory instead.

And this is all comparing the shuttle to the technology of a decade and a half
_earlier_.

Yes, a Shuttle Two - get rid of the reinforced carbon-carbon (hell, maybe even
move to an ablative heatshield), ditch the SRBs, ditch the wings, lose the
cross-range capability and maybe even move the fuel tank internal - might have
been viable. But the closest thing to that (the X-33 program/VentureStar)
never got the funding it needed, and even then might have been a bit too
ambitious. Time will tell if an affordable SSTO ends up ever happening, but
I'd bet on things like SpaceX's Falcon SuperHeavy/Starship (fully reusable
TSTO craft) being the real successes.

