“We saw that the cost-plus contracts that NASA had been using to develop the combined SLS and Orion system worked to the contractor’s rather than NASA’s advantage.” We found the cost-plus contracts that NASA had been using to design the combined SLS and Orion system benefited the contractor, not NASA. NASA Inspector General Paul Martin didn’t hold back when characterizing the effects of inherited procurement methods. His criticism falls at the right time, as NASA’s $177 million grant to Firefly Aerospace for lunar payload transport is not only another robotic mission but a complete shift in the way the agency manages risk, cost, and responsibility in space exploration.
The days of cost-plus contracts where the government pays every bill and adds a profit margin are well past, leaving an indelible signature on NASA’s biggest programs. The Space Launch System, the backbone of Artemis, is symptomatic: development spanned over a decade, with costs soaring to $4.1 billion per launch, twice the initial estimates and six years behind schedule. The incentives were obvious, Martin explained to Congress: “The longer the development, the higher the cost. The higher the cost, the greater the fees the company takes home.” This system, once providing flexibility for technological uncertainties, now equates with overruns and delays, especially since congressional budgetary practices tended to promote scope increases and budgetary growth, sometimes even before NASA asked. The outcome: a system in which delays were greeted with accolades and additional appropriations, not urgency for change.
Conversely, NASA’s Commercial Lunar Payload Services program, now on which the Blue Ghost lander of Firefly is included, is fixed-price and milestone-based. In this system, the agency only pays for outcomes if a contractor stumbles, the financial burden is theirs, not that of the taxpayer. As previous NASA administrator Jim Bridenstine outlined, “We want to be one customer of many customers in a robust marketplace between the Earth and the Moon, and we want multiple providers that are competing on cost and innovation.” The deals, usually in the $100 million range, ask firms to not only construct lunar landers but to also provide and fund their own launches, leaving sliver-thin margins after accounting for them. This strategy is designed to promote a sustainable lunar commercial marketplace that encourages innovation and cost parsimony.
The fixed-price model is, however, not free from risks. The financial and technical risks are high, particularly for firms with no or limited experience in lunar landing. As explained in a recent study, CLPS contractors are frequently new players, and collapse can rapidly threaten their survivability. Masten Space Systems’ bankruptcy after a CLPS contract and Astrobotic’s acquisition of its assets demonstrate the vulnerability of this market. Yet, NASA’s risk strategy is intentional: the agency diversifies bets among many vendors, knowing that some missions will not work, but believing that the survivors will pull the market forward. Will every one of those landers be 100% successful? I doubt it, said Thomas Zurbuchen, NASA’s former science chief.
Firefly’s Blue Ghost lander, for example, has to carry not only NASA payloads but also commercial ones, like those from Fleet Space Technologies, to cover its high price tag. Rideshare payloads can command more than $4 million each, serving as a valuable source of revenue in an environment where NASA doesn’t support R&D or ops. The technical hurdle is formidable: Blue Ghost will have to land on the moon’s surface independently, endure the hostile environment, and send data to Earth all on a fraction of the budget legacy programs like SLS or Mobile Launcher-2 require.
This change in procurement ethos is taking place against a backdrop of changing congressional priorities. As the budgetary squeeze tightens, politicians are more and more focusing on highly leveraged projects usually quantifiable in terms of political capital or economic return instead of pure scientific exploration. Recent budget battles have included moves to shift funds from science to exploration, and to maintain the total NASA budget constant in real terms despite inflationary forces. The Senate, meanwhile, has resisted deep cuts to science, cautioning that mission cancellations without clear justifications may hinder scientific progress and U.S. leadership in space. But the Pentagon’s trend is unmistakable: projects that cannot show clear economic or strategic worth are subject to increasing scrutiny.
The infrastructure that underpins Artemis SLS, Exploration Upper Stage, the Lunar Gateway, and Mobile Launcher-2 is still critical to crewed space missions. The EUS, for instance, will allow SLS Block 1B to increase payload to the Moon by 40%, using four RL10 C-3 engines and state-of-the-art avionics to carry both crew and cargo. These systems, however, created with cost-plus contracts, are now cautionary tales for future acquisition.
NASA’s adoption of fixed-price lunar payload services contracts is a risked bet: ceding some degree of flexibility and control in exchange for assurances of efficiency, innovation, and market-inspired sustainability. As the agency and its partners develop in this new environment, the stakes are great not merely for the success or failure of specific missions, but for the future of U.S. leadership in lunar exploration.
