Investing in Space

NASA's deal to fly astronauts with Boeing is turning out to be much more expensive than SpaceX

Key Points
  • NASA expects to pay a significantly higher price per astronaut when flying with Boeing as opposed to SpaceX, an agency official told CNBC on Tuesday.
  • The estimate issued by NASA's Office of Inspector General (OIG) last week is inline with what NASA expects to pay the companies, the person said.
  • Under the Commercial Crew program, SpaceX and Boeing have each been developing their respective Crew Dragon and Starliner capsules.
The astronauts assigned to crew the first flight tests and missions of the Boeing CST-100 Starliner and SpaceX Crew Dragon acknowledge the media upon introduction at NASA's Johnson Space Center in Houston, Texas, U.S., August 3, 2018. The astronauts are (L to R): Victor Glover, Robert Behnken, Michael Hopkins, Douglas Hurley, Eric Boe, Sunita Williams, Christopher Ferguson, Josh Cassada, and Nicole Mann.
Richard Carson | Reuters

It's been nearly a decade since the U.S. has flown its own astronauts, a time NASA is eagerly hoping both Boeing and SpaceX will soon end.

The two companies expect to launch people to space for the first time next year. But NASA will pay a significantly higher price per astronaut when flying with Boeing as opposed to SpaceX, an agency official with knowledge of the costs told CNBC on Tuesday.

NASA's Office of Inspector General (OIG), the agency's auditor, said in a report last Thursday that NASA will pay $90 million to fly with Boeing – and just $55 million to fly with SpaceX. Both NASA and Boeing pushed back on OIG's report, with the company saying in a press release that it "rejects the average seat price assessment."

"NASA believes the seat prices identified in the OIG report are overstated because they did not account for the cargo capability of the Boeing and SpaceX systems," NASA spokesperson Josh Finch said in a statement.

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But the official who spoke to CNBC said that OIG's estimate is inline with NASA's own expectation, despite the agency and Boeing issuing public statements disputing the numbers. Additionally, neither NASA or Boeing clarified what the current set price is per astronaut. Boeing said OIG's estimate was flawed because the company "will fly the equivalent of a fifth passenger in cargo for NASA," while the auditor had only accounted for four astronauts in its analysis.

NASA previously estimated it would pay $58 million to fly its astronauts with either company. But the latest numbers essentially mean it is about 60% more expensive for NASA astronauts to fly with Boeing under the current contracts than with SpaceX.

Boeing and SpaceX declined CNBC's request for comment on this story, while NASA did not respond to a request for comment.

The official noted that NASA anticipated Boeing to be pricier when the agency awarded the contract. SpaceX had previously won NASA funding to build and fly a cargo capsule, which Elon Musk's company used as the basis for developing the crew capsule later. While the SpaceX cargo development funding is counted under a separate NASA contract, the person noted that Boeing had to build its crew capsule largely from scratch. Since NASA wanted multiple companies to develop capsules to fly astronauts, the person said the agency expected it would have to pay a higher price to other companies that would compete with SpaceX.

Under the Commercial Crew program, SpaceX and Boeing have each been developing their respective Crew Dragon and Starliner capsules. Commercial Crew is NASA's solution to once again launch U.S. astronauts from U.S. soil, as since the end of the Space Shuttle program in 2011, astronauts have flown to the International Space Station (ISS) aboard Russian Soyuz spacecraft.

The OIG report in part came about as the first Commercial Crew launches have been delayed from the original target of 2017, as delays have mounted for both SpaceX and Boeing. Both companies have suffered a number of setbacks, such as Boeing's test failure of a propulsion system and SpaceX's issues with parachute testing.

In the meantime, the cost per astronaut for flying with the Russians has steadily climbed, with the most recent contracts coming out to $86 million per astronaut.

SpaceX's Crew Dragon capsule splashed into the Atlantic Ocean after completing its test flight for NASA.
NASA TV

OIG explains its estimate

The key to calculating how much it will cost NASA comes down to two factors: How much development funding you include and the number of astronauts used when dividing the total mission cost. Two OIG officials spoke to CNBC on Tuesday about the auditor's report, to explain how it calculated NASA's costs.

OIG begins its estimate with the total NASA has awarded SpaceX and Boeing since 2014, rounding it to $2.5 billion for the former and $4.3 billion for the latter. Then OIG subtracted the development costs – $1.2 billion and $2.2 billion, respectively – and the special studies awards – $49 million and $32 million, respectively – to get the total cost of the six missions that NASA ordered. Under this calculation, the first six Boeing Starliner missions will cost NASA about $345 million each while SpaceX Crew Dragon will cost NASA about $209 million each.

The officials explained that OIG used the total funding awarded since 2014 because NASA separately accounts for the contracts awarded before then. This is especially key in calculating the per seat cost, as Boeing believes the assumed per seat cost should be based on carrying a fifth astronaut's weight in cargo. OIG's report noted that NASA's contract for the six missions required each provider supply a spacecraft that could fly four astronauts and 100 kilograms of cargo.

The Commercial Crew awards came under "firm-fixed" price contracts, meaning that if the companies went over budget then they would cover the costs. SpaceX has indeed done that, as Musk said earlier this year that the company has invested "hundreds of millions of dollars more" of its own money into developing Crew Dragon.

But OIG's report came about because, in Dec. 2016, NASA and Boeing renegotiated the contractor's pricing. The agency agreed to pay Boeing an additional $287.2 million to shorten the production schedule for some of its Starliner spacecraft.

"In our judgment, the additional compensation was unnecessary given that the risk of a gap between Boeing's second and third crewed missions was minimal," NASA Inspector General Paul Martin wrote in the report.

In its effort to solve for expected delays, NASA paid Boeing $95 million to add one more astronaut on the first crewed test flight. That test flight will now include one Boeing astronaut and two NASA astronauts, though the agency said the money went toward more than just buying one seat."The $95 million was to add a third crew member and also to extend the test flight to up to six months," NASA's Finch said.

Both Boeing and NASA have pushed back on the OIG report, with Boeing issuing a statement on its website.

"Because of our history in spaceflight, we understood how difficult this program would be on a short timeline, and priced our offering accordingly," Boeing said.

But the Commercial Crew program is still behind the schedule the contractors originally agreed to, with the first launches now expected three years late. The official who spoke to CNBC said the delays have some current NASA leaders wishing they could go back and award funding to Sierra Nevada Corporation (SNC), the third company that bid for the Commercial Crew program. SNC has a solid track record of delivering on time, the official said, and had bid its "Dream Chaser" reusable spacecraft as a possible crew transport.

While the official said SpaceX and Boeing won contracts in part because the companies agreed to launch by 2017, SNC had said 2019. But, as SNC has continued to develop a cargo version of Dream Chaser under a separate NASA contracts, the official said leaders inside the agency are still interested in seeing SNC develop the spacecraft into one that can carry crew.