Shuttle disaster came amid privatization debate

NASA was considering several alternatives for privatizing the space shuttle fleet-including shifting full ownership of the $3.2 billion program to private contractors-when the space shuttle Columbia disintegrated on Saturday.

The options, outlined in a December 2002 report by a Rand Corp. panel, ranged from complete privatization to consolidating existing shuttle operation contracts under a single prime contractor. Ordered by NASA Administrator Sean O'Keefe, the report was intended to explore whether the shuttle program could benefit from competitive sourcing, the administration's initiative to submit federal jobs to private sector competition.

The panel recommended that NASA pursue competitive sourcing in one form or another, a finding that was factored into President Bush's fiscal 2004 budget proposal.

"NASA is examining options for introducing greater competition for work that is currently performed directly by the federal government and federal contractors. A competition plan will be incorporated in next year's budget," stated the budget proposal.

But on Monday, a NASA spokesman said the report's findings would be considered only after the investigation into the Columbia accident was complete. "At this point all resources are being focused on the recovery and the investigation into the Columbia accident, and any of the recommendations in the report would be considered after the determination of what happened and why," said NASA spokesman Robert Jacobs.

Private companies already perform many shuttle operations. In 1996, the Clinton administration transferred many shuttle operation and training duties to the United Space Alliance, a Houston-based partnership between Boeing and Lockheed Martin. On Friday, NASA awarded the United Space Alliance a two-year, $2.9 billion extension to its contract, which will keep shuttle support at the company until September 2004.

United Space Alliance has assumed more responsibility for safety in the shuttle program since 1996, as NASA has gradually reduced strict contractor oversight in many operational areas, according to the Rand report. But NASA still handles procurement of shuttle propulsion systems and retains oversight on some shuttle operations.

"From a safety perspective, NASA is now straddling two worlds-the realm of operations and the realm of regulations," the Rand report found.

Competitive sourcing would likely shift more operational responsibility for shuttle safety to the private sector, according to the report. Some NASA officials opposed this shift before the Columbia disaster.

"Senior officials expressed the conviction to the task force that shuttle safety would be compromised by any competitive sourcing option that resulted in loss of NASA oversight or in the private sector playing a greater operational role," said the report.

Other experts have cautioned against shifting more shuttle duties to the private sector. Richard Blomberg, former director of the NASA Aerospace Safety Advisory Panel, told Congress at an April 19, 2001 hearing that altering the current NASA/contractor relationship could increase safety risks.

"If [the shuttle] were to be transitioned to a radically different operating posture without the traditional government/contractor checks and balances, I am convinced that risk would increase significantly at least for a time," he told the House Science Subcommittee on Space and Aeronautics.

But competitive sourcing could also improve safety in the shuttle program, according to the Rand report. Shifting ownership of shuttle assets to the private sector would likely help eliminate the $420 million maintenance backlog in the shuttle program, which includes physical infrastructure on the ground.

"It is likely that a private operator of the shuttle system would be exceptionally rigorous in maintaining equipment and infrastructure to ensure safety," the report said.

NASA contract management is still on the General Accounting Office's "high-risk" list of management challenges, even though contract oversight has improved over the last two years, GAO reported last week.

Future decisions regarding shuttle privatization will be made in light of the Columbia accident, according to Jacobs and other experts. The 1986 Challenger disaster grounded the shuttle fleet for almost three years. Companies and the military were much less interested in using the shuttle to transport items to space following the Challenger accident.

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