DESTINATION MOON: A History of the Lunar Orbiter Program
Boeing Negotiations with Subcontractors
[105] Boeing satisfactorily completed technical negotiations with the Eastman Kodak Company by September 14, but cost negotiations became protracted. Eastman Kodak submitted a proposal of $27.1 million to Boeing, and this was substantially higher than the Boeing estimate of $19.3 million.14 By October 6 the Langley Project Office realized that cost overruns for the spacecraft would be in the areas of procurement and the major subcontracts. Boeing resumed negotiations with Eastman and completed them by October 28. The Eastman contract would cost $22.4 million, which was still higher than the original Boeing estimate.15 This meant that Boeing had already overrun the original contract by approximately $11.91 million: $3.07 million for procurement, $3.3 million difference [106] between budgeted and negotiated costs of the Eastman Kodak contract, and an estimated $5.64 million between budgeted and proposed costs for the RCA contract.16
Although negotiations with RCA originally were to run simultaneously with Eastman Kodak contract talks, they were delayed until Boeing had finished with Eastman. Scheduled for late November, the RCA talks were pushed back to December, when Boeing and RCA finally began cost negotiations. By December 9 RCA had offered Boeing a proposal for the communications subsystem with a total cost of $20.795 million for the spacecraft equipment and $5.329 million for the ground equipment. The cost was $8.4 million over the original Boeing estimate of $17.726 million.17 Boeing did not complete cost negotiations with RCA until January 15, 1965, and the final cost figure was $22.6 million, substantially higher than the $17.7 million Boeing estimate.18 These subcontracts brought the total cost of the Boeing contract to approximately $94.8 million by February 8, 1965. Of this, $4.0 million was for authorized changes and $10.3 million for estimated overruns.19