The attached letter, dated 27 August, 1979, from Dr. Wheelon to C. A. Syvertson, director of NASA’s Ames Research Center, analyzes the cost growth in Hughes’ Pioneer Venus program. The contract was cost plus award fee and what was at stake here was the determination by the Ames Performance Evaluation Board of Hughes’ award fee. This analysis was undertaken at the invitation of Ames to provide the causes for the program cost growth.
The following comments have been added by Steve Dorfman:
Of course I wrote the letter and NASA took mercy. They appointed Tom Young from NASA HQ to adjudicate and he came up with 2% fee in a Solomon-like decision which gave us a $2M profit instead of a significant loss due to our aggressive cost share proposal which, in hindsight, was way too risky. We had proposed this aggressive cost share, which had us going to negative fee (that is losing money) to be consistent with NASA HQ desire to have a management experiment in reducing the cost of planetary programs. However Charlie Hall ignored the “management experiment” and ran the program just as he had all Pioneer programs. In hindsight Charlie was right and NASA HQ was wrong and naive and so were we. Tom Young knew all this and that is why he gave us a modest fee.
In fact the program was an outstanding success in keeping costs low when compared with other NASA Planetary Programs. For $105M Hughes achieved a technically ambitious and difficult program. A bargain.