“I can steal more money with a pencil than ten men with guns” – attributed to Al Capone’s bookkeeper
Whenever I did a press conference around a Space Shuttle event, there would always be one super hard question that made me stumble over the answer. Technical subjects I had down cold, the hard ones were always about the cost.
How much did the new safety gizmo cost? How much does ferrying the Shuttle across the country on the 747 cost? How much does the launch delay cost? What does each Shuttle launch cost?
If you look out on the internet there are ‘experts’ that will provide answers for these questions in plain and simple terms. I would honestly answer: ‘it depends’.
The simplest way to calculate the cost of each shuttle mission was to take the annual appropriation from Congress, adjust for inflation over the 40-year history of the program, and divide by 135 (the number of missions flown). Simple and totally inaccurate. Why? It’s complicated.
The Shuttle program manager was responsible for all the money spent but he could only control the portion called NOA – NASA Obligation Authority – which was a lot less than the money appropriated. Each NASA Center had a ‘tax’ on every program inside their gate. That is to say, if a program used a center, then the program contributed to the upkeep of the center: paying the guards at the front gate, mowing the grass, paying the light bill. Seem fair?
Well, if the Shuttle program was the ONLY program at a center – as it was for several of the largest NASA centers for a long time, the tax was eye wateringly high. Does the VAB need a new coat of paint? The Shuttle program gets to pay for that. Does the MCC need a new roof? The Shuttle program gets to pay for that. Does the A-2 Test Stand need a new flame bucket? The Shuttle program gets to pay for that. If the Shuttle program goes away, does the VAB still need paint and the MCC still need a roof? Yes. Paying for all those assets came to a head in about 2012 when the Shuttle program shut down and all the other programs had to scramble to find money to pay for infrastructure and center operating costs.
In that calculation of cost per launch, does one include those things that the agency still had to do whether or not the Shuttle flew? It’s a judgement call depending on what point you want to make.
And how about civil servant salaries? The Shuttle program was always in negotiation with the centers about how many civil servants to assign; but the program never got to vote on how many GS-13s vs GS-9s got assigned. Generally, there were more civil servants assigned to the Shuttle program than the program really wanted. Not negotiable, the agency needs to keep the ‘resource’ employed. So, CS salaries were extracted from the program which had very little input into that calculation. Carrying the salary costs so the agency had a ‘capability’ was not something that a Shuttle program manager really liked.
When one calculates the cost of ferrying the Shuttle from California to Florida, it makes sense to include the cost of the fuel used. And one should probably include some allowance for maintenance on the 747. But do you include an amount for the amortization of the capital expense of actually buying the plane in the first place? And the cost of the modifications made to change it from a passenger plane into a shuttle ferry, a one-time expense paid years ago? The pilots and the ground crews, do you include just the salary amount for the hours that they spend on the ferry flight, or include their entire salary for the year, maybe divided by the three-ish number of ferry flights performed? The generally stated cost of $1 million per ferry included all of that and more.
But if there were no ferry flights in a year, the shuttle program still paid for the pilots’ salaries and the maintenance of the airplanes – because the capability had to be there if needed.
Scrubbing a Shuttle launch was never fun, but they mostly saved the cryogenic fuel for the next launch attempt. Some hydrogen and oxygen were lost due to boiloff, etc., but the cost of lost fuel was in the single digit thousands. The work force was on payroll whether we launched or not. So, any calculation of cost for the scrub should really be based on the shift differential for the workers who were on the job overnight or on the weekend. The generally stated $750,000 cost of a scrub included all the salaries – even though folks would be back at their desks working on the next launch if we hadn’t scrubbed. So how accurate is that?
Is your head spinning? I’m the son of a CPA that grew up with dinner table discussions about depreciation schedules and amortization costs and I still find it confusing.
The standing joke around the Shuttle program office in the last years goes like this: “The first Shuttle launch of the year costs $3 billion; all the rest of the flights are free.”
In other words, if there is to be a program at all, a specialized skilled workforce dedicated to that program must be paid, specialized facilities dedicated to that program must be maintained, and all of those things must be paid for, never mind however many times a year they are used. A real space program is not a buy-it-by-the-yard kind of thing. The incremental cost of any additional shuttle flight was more realistically in the neighborhood of $200 million – not cheap – but a lot less than the $1.5 billion figure that comes from the ‘simple’ computation that throws in everything and divides by 135.
At some point, the calculation depends on whether the calculator is selling or buying. Does the author of the calculation want the program to look horribly expensive or reasonably cheap?
The title of this piece is the punch line to an old bookkeeper’s joke:
When asked ‘how much is 2 plus 2?’ the wily old accountant responded, ‘what figure did you have in mind’.
Any cost estimate depends on how it is calculated and a good question to ask is what is the motivation of the person doing the calculation.