I’m not NASA or BOEING, but I’m going to imagine that before, Nasa would be calling the shots, essentially designing the craft, and overseeing (as in breathing down their necks) what contractors built.

You’re exactly RIGHT on this part. This, in the industry, is called a “cost plus” contract. What this means is that NASA can ask for whatever they want no matter how outlandish and the aerospace contractor (such as Boeing in for Space Shuttle) will build it for them. NASA is bill for all of the actual costs of the design and construction PLUS a set percentage which is pure profit for the contractor. Aerospace contractors LOVE “cost plus”!

What frequently happens with big space projects like this is that design objectives change or material limitations are uncovered during construction over the years. NASA may start by saying “we want this to carry 10 Astronauts”. Contractor designs and starts building the main vehicle. Then during a unit test, they find the G forces produced on the angle of the seats is too high for safety, so the angle needs to be changed. All the money spent designing and building the old seats NASA still has to pay, and the contractor still gets their fixed Plus profit. The new design and construction of the safe seats are ALSO paid by NASA as well as a Plus profit for the new seats.

Now NASA goes “I want a thingy that goes up” and the contractor makes the decisions, cuts the corners it wants, and creates mind boggling cost overruns.

You’re exactly WRONG on this part.

Now what was used for private spaceflight companies (SpaceX cargo, Northrop cargo, SpaceX crew, Boeing Crew) is called “fixed price contracts”.

Ideally, NASA writes out the specs of the vehicle they want to exist. The aerospace contractor looks at the specs, determines how much money they would need to design, build, and profit from the exercise and gives NASA a fixed price. They compete with other contractors bidding on the same work. The Commercial Crew program had 3 bidding contractors, Boeing, SpaceX, and Sierra Space. NASA looks at the general designs, considers the contractors, and makes their choice. This is the end of how theory matches reality.

In reality, some of the same problems found during construction come up, or NASA changes their mind halfway through the construction. NASA originally wanted the crew vehicles to carry 6 Astronauts. However during landing tests, they found the G forces were higher than they liked on the humans. To lower the G forces, they had to lean the seats back at a less steep angle. However this means that they now can’t fit 6 seats in, but only 4. In a “cost plus” contract this would be business as usually, and the contractor would simply carry on charging NASA more money, but this is supposed to be Fixed Price. But the contractors didn’t sign up for 4 seats in the contract, and they’ve already done a lot of work they won’t be paid for, so contractors reasonably pushed back saying “no we’re not going to work for free. We built what you asked. Now you say you want something different. You want a change, pay us.”. NASA agree, and there were some additional payments made to the contractors.

So “Fixed Price” isn’t exactly fixed price when NASA changes the specs halfway through. Even with ALL of these challenges, Fixed price SpaceX and Northrop commercial cargo and SpaceX commercial crew have been HUGE cost savings over the old “cost plus” model.

The problem with Starliner is that NASA kept paying Boeing for milestone completion when Boeing didn’t complete the milestones.

If you want to see how much, check out the costs of the most recent “cost plus” human space vehicle Lockeheed Orion capsule. Your eyes will pop out of your heat.