Comments on: House bill would free up termination liability funds for NASA programs

By: Hiram

Hiram — Mon, 09 Dec 2013 00:29:29 +0000

The question was where the money goes if they don’t use it. Can contractors “keep it in the bank” for another year? In which case, termination liability is largely a one-time appropriation. Or does the obligation simply expire, such that the amount has to be re-appropriated each year. If the latter, then that’s money in the NASA budget allocation that never gets spent. That’s an interesting concept, if a very significant fraction of agency appropriations doesn’t get spent.

By: Vladislaw

Vladislaw — Sun, 08 Dec 2013 22:47:18 +0000

They are supposed to hang on to it as a reserve. Traditionally, if the project/program has a broad support they use the money right away, The Contractors for the constellation spent the money and they had to be bailed out. Bolden had said very early in his appointment that contractors would no longer be bailed out for termination costs if they failed to save them.

By: Coastal Ron

Coastal Ron — Sun, 08 Dec 2013 17:01:24 +0000

Hiram said:

“But where does termination liability money go when it isnâ€™t used for project termination?”

My understanding is that it’s part of the overall reserve fund, with some of it held for overruns, and some for project termination.

But we do need someone with specific knowledge to weigh in on this.

By: Andrew Swallow

Andrew Swallow — Sun, 08 Dec 2013 13:41:43 +0000

And maybe there isnâ€™t a need anymore, for a variety of reasons, but I think the situation here is an attempt to funnel as much money as possible, as soon as possible, into certain political districts.

Which Senators are coming up for re-election in 2014 and 2016?

By: Hiram

Hiram — Sun, 08 Dec 2013 00:52:13 +0000

“Not sure about this contract, but Iâ€™ve seen where contract reserves are held until near the end …”

No, I meant the funds that are appropriated to cover termination liability. Contract reserves that are held in case of budget overruns just flow into the project if they aren’t used for budget overruns. They’re appropriated to the project. But where does termination liability money go when it isn’t used for project termination? The project is gone. The money can’t just drop into the agency as discretionary funds. It wasn’t appropriated for that. If it simply doesn’t get spent, then that means that the amount of money NASA spends is actually significantly less than the amount appropriated for the agency. That’s an interesting concept. Now, if that money doesn’t end up in NASA’s hands, it means that NASA has no particular disincentive for termination. That termination money doesn’t come out of their hide.

By: Coastal Ron

Coastal Ron — Sat, 07 Dec 2013 22:54:22 +0000

Hiram said:

“What happens to that appropriated money if the project is not terminated?”

Not sure about this contract, but I’ve seen where contract reserves are held until near the end, and then either used when the risk of cancellation has passed (i.e. the project is close to be completed) or (and this hardly ever happens) the funds are not spent and returned to the general fund.

“Heâ€™s just being creative in applying that to NASA.”

These things can be cyclical as the new people in charge have no institutional memory for the value of why things are being done today.

And maybe there isn’t a need anymore, for a variety of reasons, but I think the situation here is an attempt to funnel as much money as possible, as soon as possible, into certain political districts.

By: Hiram

Hiram — Sat, 07 Dec 2013 16:59:35 +0000

Let me get this straight. This $500M that is being withheld for termination liability is not $500M/yr, but $500M total. That is, that $500M doesn’t disappear at the end of the year. It’s money that isn’t used if the contract isn’t terminated. It’s obligated but not expended. What happens to that appropriated money if the project is not terminated? It would seem that on the scale of the total life cycle budget for development of SLS and Orion, $500M is chump change. If that’s the case, the real purpose of this bill isn’t to provide significant extra funding to these projects (as the bill claims), but just to strongly discourage termination.

FWIW, I believe the GAO is right now in the process of assessing termination liability funding in DOD projects, where the issue is whether the DOD contractors are coming up with the right numbers for that liability that would be due to them, and the extent to which that liability is really a factor in decisions about termination. First results suggest that it probably is a factor. This study was mandated by the 2013 Defense Authorization Act. Rep. Brooks is on the Armed Services Committee that drafted that legislation, so his office was probably well attuned to termination liability issues for major projects, and its power in discouraging termination. He’s just being creative in applying that to NASA.

By: Andrew Swallow

Andrew Swallow — Sat, 07 Dec 2013 09:46:23 +0000

Congress can still cancel the SLS and Orion; it just does not pay any compensation (termination liability cost).

By: Malmesbury

Malmesbury — Fri, 06 Dec 2013 20:08:41 +0000

Think about all the programs you don’t like – the ones you want to elect new representatives to get them shut down. Think of a future where a change of government won’t change a thing.

If this is done once, it will spread like wildfire. *Everything* will be uncancelable.

By: josh

josh — Fri, 06 Dec 2013 19:25:26 +0000

fyi congress decided to cancel constellation. also, your water carrying for crony capitalists is getting pretty damn pathetic.