A Case Study in NASA-DoD - The Black Vault

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Cost-quantity effects in spacecraft depend more on the size of
each individual procurement than on the cumulative quantity procured.
A block buy of six may reduce total cost by 20 percent, but a buy of
six spacecraft one at a time may produce no cost reduction. Since the
manner of procurement could not be specified in this study, cost reduction
was related to annual production rate according to the following
empirically derived schedule:
Annual
Production Cost (%)
1 100
2 90
3 87
4 85
In estimating spacecraft costs it was further assumed that:
1. Procurement of the AEM by the Space Test Program Office
begins at Unit 9. The first eight units will be procured
by NASA before 1980.
2. Procurement of the MMS by the Space Test Program Office
begins at Unit 5. The first four units will be procured
by other agencies before 1980.
3. NASA procures two MMS per year during the decade considered.
The Air Force buy is incremental to NASA procurement.
4. The Air Force procures MMS for SIRE, which means that an
Air Force-compatible communication and data handling subsystem
would be developed for MMS and would be available
to the Space Test Program Office for the missions discussed
in this study at no additional cost.
A block buy usually means accepting delivery from the contractor
of all the spacecraft at one time or over a short period of time. The
alternative is to spread the delivery uniformly over a much longer time
period.