Getting Out of Operations

NASA's fiscal 2000 budget request for $13.6 billion is a scant $113 million more than requested for fiscal 1999, but $87 million less than what was appropriated. The NASA workforce has fallen from 25,000 in fiscal 1993 to 18,545 for fiscal 1999. Ever the optimist, NASA Administrator Daniel S. Goldin chose to see a silver lining in the budget and staffing cloud when he presented the fiscal 2000 request in February. "For the sixth year in a row, NASA's budget has declined while productivity improves," Goldin told the media assembly. "Doing more with less money and fewer people is consistent with the President's vision of a federal government that works better and costs less."

Goldin's vision is of a NASA focused not on day-to-day space work, such as operating the space shuttle to build the International Space Station, but on research and development and science endeavors such as figuring out the origins of the universe and Earth's environment. In February, Goldin told the House Science Subcommittee on Space and Aeronautics that the portion of NASA's budget devoted to science and technology had increased from 31 percent in 1991 to 41 percent today and will be 45 percent by 2004. At the same time, the percentage claimed by human space flight fell from 48 percent in 1991 to 40 percent today and will drop to 35 percent in 2004.

To shift NASA's priorities, Goldin hopes to rely increasingly on commercializing agency assets and buying space services from the private sector. For example, in May, Goldin told a biotechnology industry gathering that he sees the space station "as only a pathfinder for true commercial use of space. We are planning to devote 30 percent of on-orbit [space station] resources to commercial ventures and if demand requires we are willing to go up to 50 percent or more."

Commercial Copycats

NASA's moves to commercialize ongoing operations mean program managers are defining their requirements differently, says Thomas Luedtke, the agency's associate administrator for procurement. "We're looking at what is in the commercial marketplace," he says. As an example, Luedtke points to the 1997 Outsourcing Desktop Initiative for NASA (ODIN), a contract to lease desktop computers and service from seven firms. "We looked at how industry is getting its desktop computers. In the past, we would have gone our own way. Now we asked, 'What's the market like? What services are available? How can we change our way of doing things so we can acquire in a commercial manner?'"

As part of its move to commercialize, NASA is consolidating contracts. As a result, NASA's procurement shop is focusing more on contract administration and less on source selection. "More and more of our efforts and focus are directed toward managing large, long-term contracts," says Luedtke. NASA's deal with United Space Alliance (a joint venture of Lockheed Martin and Boeing North American) is perhaps the best-known example. The space flight operations pact entered its third year in 1998, and NASA began shifting 12 more contracts under the USA umbrella. The moves should be complete by 2001.

In 1998, the shuttle successfully completed five missions and USA received every dime of its performance incentive fees. Flights included Sen. John Glenn's return to space for nine days in October and the first space station assembly flight in December. On the latter mission, astronauts attached the first U.S. element, the Unity node, to the Russian Zarya element launched in November. Shuttle operations are slated to receive $2.9 billion in funding for 2000.

The space station, budgeted to receive nearly $2.5 billion in 2000, continues to be plagued by cost and schedule overruns. Prime contractor Boeing has estimated that the total overrun upon final station assembly, now scheduled for 2004, will be $986 million. Much of the schedule slippage is the fault of space station partner Russia, which continues to fall far short of meeting its assembly and launch deadlines. NASA has begun contingency planning to develop U.S. capability to provide the functions for which Russia is responsible. In addition, NASA will pay the Russians $100 million this year for goods and services.

NASA gained another $600 million to support the space station over the next five years when it pulled the plug on a high-speed aeronautics program to build a supersonic jetliner with Boeing. The company already had begun backing off the project last fall after the Asian financial crises led to cutbacks in orders for its planes. The partners had planned to build a 300-foot plane that would carry 300 passengers from Los Angeles to Tokyo in four hours and 20 minutes as opposed to the 10 hours jets now require for the trip.

Consolidation Trail

NASA's biggest new procurements in 1998, the Consolidated Space Operations Contract (CSOC) and the Joint Base Operations and Support Contract (JBOSC), both followed the consolidation trail blazed by the shuttle pact with USA. Both are performance-based contracts that brought many smaller contracts under one umbrella. Both required program managers to use new approaches when figuring out what products and services they required.

The space shuttle has no counterpart in the private sector and it carries a highly sensitive human cargo, so handing over its operations to USA has been a slow and delicate process. By contrast, the new CSOC covers data collection and communications, much less delicate processes that are commonly performed by private companies. "When you look at CSOC, you're looking at areas with more direct commercial analogs," says Luedtke. "Others have satellites; others get data down from satellites."

A team headed by Lockheed Martin Space Operations Company and including Allied Signal, CSC, GTE and Booz Allen & Hamilton won the $1.8 billion contract in September and began operations in January. The Lockheed team will manage all NASA data collection, telemetry and communications for satellites, planetary exploration and human space flight. CSOC will consolidate 15 previous contracts. "With CSOC, NASA is consolidating multiple individual contracts into a single prime contract, thereby reducing overlapping activities, eliminating redundant activities and because of those efforts, achieving efficiencies and lower cost," said Joseph Rothenberg, associate administrator for space flight, during March testimony before the House Science Subcommittee on Space and Aeronautics.

Lockheed estimates the contract will save NASA $1.4 billion over 10 years as a result of consolidated management, use of commercial practices and conversion of work to fixed-price outsourcing. For example, through CSOC, NASA hopes to market unused capacity of its satellites, such as the Tracking Data Relay Satellite System (TDRSS). Commercial oil exploration vessels covet the NASA system because there are no commercial satellites that can handle the large amounts of data they require.

NASA's Space Operations Management Office, established in 1996 in part to handle CSOC, also is considering commercializing the agency's polar network of earth stations with the intent of achieving lower operating costs. To pursue commercialization, the office is seeking relief from restrictions on transferring assets and staff to the private sector, commercial use of TDRSS frequencies, and use of revenue generated from excess capacity of NASA assets. "We said, 'How can we take our data requirements and deal with them more effectively and efficiently in a constrained budget environment?' " Luedtke says.

Squeezing Dollars

The Joint Base Operations and Support Contract also attempts to deal with flat funding through creative procurement techniques. NASA and the Air Force jointly negotiated the cost-plus-award-fee contract to provide base support at the Kennedy Space Center, Patrick Air Force Base and Cape Canaveral Air Station in Florida. The three facilities lie side by side on Florida's East Coast, but until last year they had separate contracts for guard and fire protection services, grounds maintenance and all other support.

"We said, 'We have government agencies with similar requirements in proximity to one another. Why not buy and operate just one set of requirements?' " Luedtke says. The Air Force and NASA ran a joint vendor competition and a joint program office now manages the contract with a new Herndon, Va.-based joint venture called Space Gateway Support, made up of aerospace giant Northrop Grumman with ICF Kaiser Defense Programs and Wackenhut Services. "We're all trying to squeeze money out of base operations so we can put it into R&D or other operations," Luedtke says.

NASA also is trying to make the money it spends on new projects stretch further. Its reusable launch vehicle (RLV) partnership with Lockheed Martin's Skunk Works is an example. Hoping to get out of the business of hauling humans and cargo into space for ongoing operations, NASA is trying to spur private firms to develop fleets of RLVs. The single-stage-to-orbit vehicles take off and land without costly and increasingly unreliable expendable rockets now used to boost shuttles and satellites into space.

"Currently, we are spending $3 billion each year on space shuttle operations. If we extend the life of the shuttle out 30 years, without making any modifications, we will spend $90 billion-that's without correcting for inflation," Goldin told the U.S. Space Foundation's 15th National Space Symposium in April. "If we could turn this around and significantly increase our space launch research and development investment, we could save billions of dollars and have the money to do . . . bold missions."

In 1996, NASA struck a cooperative agreement with Lockheed Martin's Skunk Works to design and build a half-scale model RLV, Venturestar, to demonstrate the technical and financial feasibility of a fleet of full-sized vehicles for the commercial launch market. NASA put up $1 billion and Lockheed is devoting $220 million toward the effort, which NASA hopes will result in a commercial replacement for the space shuttle. "We're looking for ways we can partner with industry, where we can leverage off each other to do big projects that would be difficult to fund individually," says Luedtke. "In the past, we would have paid 100 percent to develop it and then [we would have] bought the vehicle." The Venturestar program is now in the final testing and validation stage preceding final assembly and vehicle rollout in January.

NASA also seeks to save money by avoiding the lengthy, costly process of negotiating new contracts. Instead, whenever possible, the agency rides existing pacts negotiated by its own program offices or by other agencies. In 1998, NASA placed 1,446 orders for $220 million against shared contracts, a 15 percent increase in the value of such contracts over 1997. This year, NASA is contemplating using a Transportation Department contract for high-end computational support, has placed an additional order against an Energy Department energy-saving infrastructure modernization contract, and is developing consolidated contracts for Internet-based training and engineering and medical services.

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