The principle behind the plus cost contract is simple. Sometimes the US government needs something extremely difficult, complex and unprecedented to build. In these cases, there are technical challenges that must arise, but the government pays the contractor the full cost of development costs plus a fee – often 10 percent.
This is a useful tool for getting the best performers in the country to focus their efforts on large programs that the government considers valuable. But this is not a good way to encourage a company to move quickly through a program, especially as businesses seek to maximize profits. This is because the longer a contract expires, the more money it costs and the higher the fees it generates.
The alternative to this is a fixed price contract whereby the government pays the seller a flat fee for a product. If the company delivers a product for less than that, it is profitable. If the product ultimately costs more, the company eats the difference. Most of the time, a company does not get paid most of the financing until it delivers a product.
Rockets were once considered to be an extremely difficult and complex technology – and it is still very difficult to obtain accurately. However, commercial space companies are already building capable missiles, regardless of the US government. The US Air Force recognized this and moved from single source contracts, plus costs to competitive, fixed-price awards to launch national security.
Travel costs for production?
Nine years ago, NASA began the process of building a Space Launch System rocket, selecting Boeing as the vehicle's prime contractor. Although much of the boosters have used mature technology, including mainstream space shuttle engines, conventional rocket fuels, and side mounted boosters derived from the shuttle, NASA awards plus-cost contracts for rocket development. Building the main stage and integrating all the technology of the rocket was difficult, complex and unprecedented, the agency said.
It seems that the rocket has coped with what critics say about plus and emergency contracts. The missile is already three years late for its first launch and is unlikely to launch before at least mid or late 2021.
However, SLS builders say the missile is already in production since Boeing is almost finished the first main stage and the work begins on the second vehicle. "SLS is the only rocket powerful enough to send Orion, astronauts and deliveries to the moon in one mission, and no other rocket in production today can send as much cargo into deep space as the Space Launch System rocket," John Honeyck, NASA  On Wednesday, NASA announced it was negotiating a contract with Boeing to purchase 10 major SLS milestones. The announcement did not specify costs – NASA and Boeing have never been transparent about costs. , but surely the production and operating costs of a single SLS launch will be much more than $ 1 billion, and there is no mention of the contract mechanism.
Agency spokeswoman Catherine Hambleton told Ars that the terms of the contract have not yet been finalized. "NASA anticipates that the contract will be a hybrid of a plus-incentive-fee and a price-plus-award-fee, potentially moving to a fixed price," she said. to reduce costs during early production to enable the lowest possible unit cost for later fixed-price missions. "
If it seems remarkable that a government contractor would conclude a plus-cost contract to produce a rocket that has been around for nearly a decade to learn how to build and that went into production and which based on inheritance technology, that's it. However, in negotiations with NASA, companies like Boeing (and Lockheed Martin, which recently received a similar deal for the Orion spacecraft) know that they have strong political backers.
In this case, with the SLS missile in Alabama, which o includes a senator who writes the agency's budget effectively, making it clear that SLS missile financing is his priority, so in this case, though NASA may not necessarily want to give Boeing a spending contract plus for rockets SLS for the next 15 years, it may have little choice.
What is even more remarkable about NASA's Artemis Lunar program is that, as agency executives have repeatedly stated, the most sophisticated technological component of the program is not rockets. . Rather, the landing system will take astronauts out of the moon's orbit, down to the surface and back. However, the Artemis program does not have strong support from Congress. As a result, companies struggling to build lunar land will bid for fixed-price contracts.