Shuttle Program Going Private

After a bumpy 1995, which included efforts to deeply cut NASA's budget, President Clinton asked Congress in March to hold funding steady at $13.8 billion for fiscal 1997, virtually no change from 1996. Contract obligations will be approximately 89 percent of that total.

One major new project is planned for fiscal 1997, the Stratospheric Observatory for Infrared Astronomy program (SOFIA). SOFIA will be an optical infrared sub-millimeter telescope mounted in a Boeing 747 to be used for astronomical observations at stratospheric altitudes. The German space agency is NASA's partner in the project. The Germans will provide the telescope and NASA will provide the aircraft, aircraft modifications, mission control, ground facilities and support and management and system integration. Flight operations are slated to begin in 2000.

NASA's overall budget outlook is bleak. Funding is slated to drop to $13.1 billion in 1998, $12.4 billion in 1999 and $11.6 billion by 2000. Though NASA Administrator Daniel Goldin originally promised no "precipitous action" in 1996, a decision to speed downsizing brought news in April of a reduction in force to cut the NASA headquarters staff of 1,430 in half. Congressional opposition stalled the layoffs, but the agency's workforce will drop from 24,000 in 1993 to an estimated 21,000 in 1997 and is projected to fall to 17,500 by 2000. As many as 25,000 contractor personnel could also be jettisoned during the five-year free fall.

Next Generation Shuttle

A fifth of NASA's budget-$3.1 billion-is earmarked for the space shuttle program. Ten years after the Challenger exploded, plunging NASA into a maelstrom of soul-searching and image rebuilding, a new privatized shuttle program is emerging.

Last November, the agency announced plans for a cumulative reduction in shuttle funding of $2.5 billion between fiscal 1996 and 2000. A venture called United Space Alliance, which joins Rockwell International and Lockheed Martin Corp., has been formed to conduct day-to-day management of the shuttle as it becomes the ferry for parts and people to build International Space Station Alpha. The two firms held 70 percent of the dollar value of all shuttle contracts before they united. In July, an internal safety inspection team warned NASA the contractor takeover and cost-cutting in the shuttle program have demoralized employees and raised the risk of accidents. United Space Alliance is slated to take over Oct. 1.

The agency also has selected a builder for the prototype of the next generation space shuttle to replace the four now in service. Lockheed Martin will build and run test flights of the X-33 half-scale model by March 1999. The project will cost NASA $941 million through 1999. Lockheed will invest $220 million in the "Venture Star" design. NASA's aim is to develop a shuttle "that takes days, not months, to turn around; dozens not thousands of people to operate; reliability 10 times better than anything flying today; and launch costs that are a tenth of what they are today," Goldin says.

Alpha Construction in '97

NASA's joined forces with the Russian, Japanese, European and Canadian space agencies to build Space Station Alpha. Construction in space is slated to start in late 1997. The Russians are building one of the first components for the station. Slow payments by the Russians to subcontractors frightened NASA officials and legislators earlier this year. Members of Congress were concerned that a Russian pullout would delay the entire project and increase costs. Russia's unsteady politics and uncertain economics are likely to continue to jangle U.S. nerves, but the station will be built with or without the Russians, says Deidre Lee, NASA's associate administrator for procurement.

"Contingency planning has always been an active part of the [space station] program. If the Russians or any other partner falter, the [program] has an action plan to proceed," Lee says. "Currently, we could contain the impact to the assembly schedule to approximately a year and a half or less and the impact to science capability to approximately one year."

One hopeful note: the cash-starved Russian space agency is pulling in some advertising dollars from Pepsi. Cosmonauts on the Mir space station recently began shooting commercials in space with a giant replica of a Pepsi can. The space shots are part of a seven-figure ad campaign touting a newly designed version of the Pepsi can for the international market, according to Ken Ross, public relations vice president for Pepsi International.

On the American side of the project, NASA expects to spend $1.8 billion on the space station in 1997 and has handed management of the program over to Boeing Defense and Space Group, which will operate as the prime contractor. Previous primes McDonnell Douglas, Rocketdyne and Boeing-Huntsville will become first-tier subcontractors to Boeing. The space station program has moved its office to Houston and organized into integrated product teams responsible for bringing systems and elements together into launch packages. Adding in the cost of science programs and joint activities with the Russian Mir space station, fiscal 1997 space station costs total $2.1 billion.

Mission to Earth

NASA's Mission to Planet Earth is designed to study and explain the functioning of our atmosphere, weather, biosphere, land and oceans by gathering data from space. NASA sought $1.4 billion for the mission, the largest amount-$585.7 million-for developing the Earth Observing System.

The first EOS spacecraft is scheduled for launch in June 1998. NASA also sought $261 million for the EOS data and information system which will operate EOS spacecraft and distribute the data they gather. Lead EOS contractors TRW and General Motors' Hughes Applied Information Systems can expect close scrutiny from Congress, where EOS cost predictions already have raised eyebrows. NASA hopes to save $30 million through 2000 by consolidating data and operations for the first EOS spacecraft at White Sands, N.M.

Major contractors Allied Signal and Computer Sciences Corp. are entering into a voluntary partnership to streamline services and cut staffing in support of mission communications at Goddard Space Flight Center in Greenbelt, Md. In fiscal 1997 and 1998, the pact could save as much as $40 million, but the arrangement may lead to job cuts.

In April, NASA awarded McDonnell Douglas Aerospace of Huntington Beach, Calif., a contract to provide fixed-price medium-light class expandable launch vehicle services. The deal could be worth $500 million and will be managed by Goddard. In 1998, NASA will let a new performance-based Consolidated Space Operations contract.

Launching Into Cyberspace

NASA plans to save $4.9 billion between 1997 and 2000 as a result of a management review completed in May 1995. Privatization will account for $1.45 billion in cost-cutting. In addition, the move to performance-based contracting is supposed to save $100 million as NASA backs off specifying how work is to be accomplished and focuses instead on what is needed and by when. Aeronautics contractors will see a proliferation of performance-based pacts in 1996.

The May 1995 review also brought a reorganization of NASA's 10 major field centers and headquarters. Each has been assigned a specific mission and will serve as a center of excellence in a particular area of technical competence focusing on the center's strengths. The restructuring is expected to save $1.6 billion over five years.

NASA is using the World Wide Web to improve its relations with contractors. The agency's home page includes synopses and solicitations of all competitive acquisitions worth $25,000 and more. Since October 1995, synopses and solicitations for mid-range procurements have been available exclusively on line. NASA is working on a feature to identify synopses of interest to a contractor and automatically e-mail a notice to that contractor whenever such synopses are released. NASA's acquisition Internet services can be found at

NASA also is streamlining its source selection process for competitive procurements worth $500,000 or more. Reforms will include a standardized blackout period when requests for proposals are released, replacement of NASA's unique procedures with the Federal Acquisition Regulation procedures and fine-tuning to improve and speed proposal evaluations.

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