Background of the Companies Involved NASA

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Organization Background: NASA was established on July 29, 1958. NASA is the main agency that led US space exploration including the Apollo missions, the Skylab space station, the Space Shuttle and the International Space Station. The mission for NASA is to pioneer the future in space exploration, scientific discovery and aeronautics research. Since NASA is a governmental organization, the Customer for NASA is the US public. The market for space programs is monopolistic in the 1970's. Other space programs such as Soviet Space Program and European Space Agency were not competing with NASA for the US civilian market. The Critical Success Factor for NASA is budgetary compliance and safety.

Space Shuttle Program History: In 1960s and 1970s NASA conceptualized a reusable and cost effective means of space transportation. After exploring various designs NASA shifted attention to cost-benefit analysis of the design in 1971. After lengthy negotiations between the Office of Management and Budget, White House and NASA the space shuttle program was scaled back from a much higher estimate to a total program cost of $5.1 Billion. The decision to scale back the program cost necessitated the SRB design. In this design the more expensive all-liquid-fuel design was replaced by a mixed solid and liquid system. This gave rise to the solid fuel rocket that later failed.

Morton Thiokol Co.

Organization Background: In 1929, The Thiokol Chemical Company was founded. Initially its business was synthetic rubber and polymer sealants. After discovering that their polymers were ideal for rocket fuels, it moved into the rocket propulsion field. Thiokol produced Space Shuttle SRB at its Promontory facility. Thiokol has a variety of other customers, but NASA is its only customer for the Space Shuttle SRBs. Their competitors include: Aerojet Solid Propulsion Co., Lockheed Propulsion Co., and United Technologies. The critical success factor for Thiokol is the same as NASA: budgetary compliance and safety of the missions. As of 2005 Thiokol employs over 15,000 people worldwide and has an annual sale of around $840 million. The Business model for Thiokol is to produce the best solution and best value for its customer.

Space Shuttle Program Involvement: In 1973, Morton Thiokol won the contract to design and produce the solid fuel rocket by beating three other competitors: Aerojet Solid Propulsion Co., Lockheed Propulsion Co., and United Technologies. The main advantage for Thiokol was the cost advantage of $100 million lower than the next competitor. The Thiokol dual O-Ring design was also a significant factor for the selection because it was perceived as the safest due to the redundant nature of the design. Prior to Space Shuttle SRB, Thiokol has never built anything on this scale: 149-foot-long tubes, 12 feet in diameter, each SRB weighed 1000 tons.

Description of Scandal/Fiasco

The following description was collected from news reports, a HBS case study (Hauptman & George, 1990) and the NASA Space Shuttle Mission archive (NASA).

The Disaster: On January 28th, 1986 at 11:38 AM, Space Transport System mission 51-L (STS-51-L) began as the Space Shuttle Challenger left the launch pad at Kennedy Space Center, Florida. 1 minute and 13 seconds into the mission while travelling at Mach 1.92 (1.92 times the speed of sound) at an altitude of 48,000 ft, STS-51-L's external tank ruptured, enveloping Challenger in a cloud of hydrogen and oxygen fuel vapour and the shuttle broke apart as it succumbed to aerodynamic forces.

None of seven crew members could survive in the shuttle disaster, including Sharon Christa McAuliffe, a 38 year old school teacher from Concord, New Hampshire and the first civilian to go to space; selected for the "Teacher in Space Project". The disaster led to a 32 month suspension of the shuttle program while a commission investigated the cause of the accident. The cause was linked to the failure of an O-ring seal on the right Solid Rocket Motor (SRM) milliseconds after ignition.

It is not uncommon for design flaws to lead to failures. However, it will be shown that this particular failure was preventable and that flaws in the culture and control systems within NASA and the supplier of the SRM's, Morton Thiokol (now ATK), had led to the disaster, and not the engineering practice itself.

Description of Events Leading Up to the Disaster: STS-51-L had been plagued with problems. Originally scheduled to launch at 3:43 PM EST on January 22nd, the date had slipped to the 23rd, 24th and on until finally rescheduling the launch for 9:37 AM, January 27th. The launch was then delayed another 24 hours when a hatch closing fixture could not be removed and had to be sawed off.

The weather forecast for January 28th predicted overnight lows of 26 degrees Fahrenheit. A day before the launch, NASA officials contacted engineers at Morton Thiokol to follow up on concerns over the O-ring sealing performance at very low temperatures. In preparation for the launch, engineers at Morton Thiokol, NASA Kennedy and NASA Marshall met by teleconference (Morton Thiokol is located in Utah). There was evidence of O-ring failures from past missions and Morton Thiokol's engineers believed cold temperatures contributed to and would exacerbate the problem. They insisted the launch should be delayed until temperatures were above 53 F, which was the lowest temperature the STS had yet experienced at launch. At one point in the conference, Larry Mulloy, manager of NASA's Solid Rocket Booster project, burst out saying: "My God Morton Thiokol! When do you want me to launch -- next April?" (Hauptman & George, 1990)

While engineers at Morton Thiokol protested, a "business" decision was made at Morton Thiokol to inform NASA it was safe to launch. This fateful decision was communicated to NASA at 11:45 PM the night before the launch in a fax signed by Joe Kilminster, VP Space Booster Programs at Morton-Thiokol.

While the events immediately preceding the launch suggest flawed priorities, a lack of control by engineers over the launch decision and cultural pressure within NASA to proceed with a launch at any cost, the flawed design of the SRM O-rings can be traced back to additional control issues within the shuttle program and Morton Thiokol.

A Flawed Design: In 1973, Morton Thiokol won a contract to supply the solid rocket fuel motor for the shuttle program, competing against Aerojet Solid Propulsion Company, Lockheed Propulsion Company, and United Technologies. NASA's evaluation board chose Morton Thiokol as its cost advantages were about $100 million less than the closest competitor, even though it was ranked fourth on design, development and verification.

A solid rocket motor is essentially a hollow tube with a solid fuel lining the inside. When the fuel ignites, the entire inner chamber is filled with combustion gases and the internal pressure increases significantly. A segmented solid rocket motor design leaves cracks at each of these segments, the inner portion of which is filled with a temperature resistant grease and an O-ring (a donut shaped rubber seal) is fitted between the segments to seal the connecting parts and prevent gases from escaping through the cracks. The segmented design had been avoided by most competitors due to this design flaw, despite cost advantages in manufacturing, transportation and maintenance.

Thiokol's design was based on the design of the Titan III solid rocket motor, which required the rocket to be assembled from multiple segments. However, the Titan III solid rocket motor had a single O-ring seal whereas Thiokol's had two. This was perceived as a redundancy; if the first O-ring failed the second would prevent bypass. This redundancy provided a Criticality 1R classification for the O-rings in NASA's safety classification system, "Redundant components, the failure of both could cause loss of life or vehicle".

Testing had not revealed problems with the O-ring design. However, when the O-ring's were examined following several STS missions, evidence of O-ring erosion and hot-gas blow by emerged, leading to further analysis of the design and a conclusion that if the first O-ring failed, the structure would bend in a such a way as to render the second O-ring useless. This led NASA to reclassify the O-ring as a Criticality 1 component, losing its redundancy status.

This change in classification provides evidence of the first of many control failures as the engineers at Thiokol were not made aware of the change. Further evidence demonstrates that engineers at Morton Thiokol were not given the opportunity to resolve critical issues and management did not see these as a priority.

Conclusion and Relevance to Management Controls

The STS-51-L disaster, preceding events and engineering challenges at Morton Thiokol illustrate a failure of management to establish appropriate goals for safety and performance of the product and to support the ethical behavior of their engineering staff. It is an important reminder that proper control and decision making will not always lead to desirable, short term business outcomes.

In this case, Morton Thiokol's business needed to keep NASA happy and not be responsible for further launch delays. NASA was also trying to avoid the bad publicity. One could argue that NASA's decision to choose Morton Thiokol's design was flawed from the beginning; fed by results controls that held a lower cost over safer design. The real result, however, was disastrous. In addition to the loss of seven lives, the program also suffered a 32 month delay, the loss of an entire space transport system, and an irreversible blow to NASA's image.

Research Plan

Along with group meetings, "BU620" Google group has been effectively used to share research and feedback. Not limited to this but as for now, following list of research resources will be utilized in the course of doing company fiasco project.

Text Book: Merchant, K. and Van Der Stede, W. Management Control Systems Prentice Hall, 2nd edition, 2007

Final Voyage of the Challenger. Detail Only Available By: Hauptman, Oscar; Iwaki, George. Harvard Business School Cases, Nov1990, p1, 35p

Final Voyage of the Challenger: Aftermath. By: Hauptman, Oscar; Iwaki, George. Harvard Business School Cases, Nov1990, p1, 5p

Report of the Presidential Commission on the Space Shuttle Challenger Accident

http://science.ksc.nasa.gov/shuttle/missions/51-l/docs/rogers-commission/table-of-contents.html

Why decisions fail: avoiding the blunders and traps that lead to debacles, 1st ed, Nutt, Paul C.

San Francisco, CA: Berrett-Koehler Publishers 2002

National Aeronautics and Space Administration (NASA) site; history.nasa.gov/sts51l.html

Thiokol Site, http://www.atk.com/

NASA takes a beating. Time, 6/23/86, Vol. 127 Issue 25, p32

Disaster on Flight 51-L: An IE Perspective on The Challenger Accident. By: Hunsucker, John L.; Law, Japhet S.. Industrial Management, Sep/Oct86, Vol. 28 Issue 5, p8

Trial by Fire. By: Covault, Craig. Aviation Week & Space Technology, 7/11/2005, Vol. 163 Issue 2, p60

A total restructuring. Aviation Week & Space Technology, 6/9/86, Vol. 124 Issue 23, p16

Fixing NASA. (cover story) Time, 6/9/86, Vol. 127 Issue 23, p14

Management Support: The Key to Safety's Effectiveness. Safety Management, Jul2002, Issue 472, p7

Engineers and Management: The Challenge of the Challenger Incident. By: Werhane, Patricia H.. Journal of Business Ethics, Aug91, Vol. 10 Issue 8, p605-616

Engineer Who Opposed Launching Challenger Sues Thiokol for $1 Billion: By Philip M. Boffey, New York Times, January 29, 1987

Organizational Learning at NASA: The Challenger and Columbia Accidents: Julianne G. Mahler. Washington, DC: Georgetown University Press, 2009. 238 pp

Engineering Disasters: Engineering & Technology 25 April - 8 May 2009

Accountability in the Public Sector: Lessons from the Challenger Tragedy. Romzek, Barbara S.; Dubnick, Melvin J.. Public Administration Review, May/Jun87, V. 47 Issue 3

Morton Thiokol: Reflections on the Shuttle Disaster: Dobrzynski, Judith H.. Business Week. New York: Mar 14, 1988. , Iss. 3042; p82

Can Thiokol Rise From Challenger's Ashes? By: Mendes, Joshua. Fortune, 6/8/1987, Vol. 115 Issue 12, p152-156

Thiokol revamps engineering systems By: Hoffman, Thomas. Computerworld, 11/7/94, Vol. 28 Issue 45, p71

Engineers testify. Aviation Week & Space Technology, 3/3/86, Vol. 124 Issue 9, p18

Solid rocket under scrutiny. Aviation Week & Space Technology, 2/10/86, V.124 Issue 6

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