NASA

Doing Fewer Projects More Safely

August 15, 2001

n late January, NASA Administrator Daniel Goldin delivered a sobering message to senior staff: With a downsized workforce and only modest budget increases on the horizon, NASA would have to scale back its ambitious research and space flight programs. "We must focus on doing fewer things better," Goldin said, in an apparent update to the "faster, better, cheaper" management philosophy he introduced to NASA in 1992.

The Bush administration reinforced Goldin's words, directing the agency to re-examine its priorities in a budget that hikes NASA spending by just 2 percent in fiscal 2002 to $14.5 billion. NASA has responded, axing two projects that had been central to the effort to develop a replacement for the space shuttle: the troubled $1.3 billion X-33 and $205 million X-34 projects, which aimed to create a spacecraft that could go directly from launch into orbit.

NASA is paring down to top priorities in part to focus on Goldin's latest management crusade: safety. Goldin has pushed to replace NASA's "missions at any cost" mindset with a "safety-first" philosophy that makes risk management an integral part of the contracting process. "If you identify and plan for risks up front, you can do things faster, better and cheaper throughout," says Thomas Luedtke, NASA's associate administrator for procurement.

Planning for risk is at the heart of NASA's efforts to improve its performance-based contracting methods. While NASA has been a leader in the performance-based approach-using such methods on 80 percent or more of all contract obligations in each of the last three years-the agency's performance-based research and development contracts still present oversight problems. For example, NASA has allowed extensive use of unnegotiated contract changes, under which a contractor begins work on a new order before a price has been negotiated, to address urgent problems on the International Space Station. NASA's contract management has been on the General Accounting Office's "high-risk" list of management problems since 1990, in part because the agency's use of unnegotiated contract changes has led to increased costs.

Better risk management will reduce the need for such procurement techniques, according to Luedtke, by anticipating phases of a project that require more oversight. NASA is moving to manage risk through performance-based incentives, such as the award fee that contractors collect when hardware in the space station functions as planned. Since full hardware performance is essential to reducing risk in the space station, contractors receive an award only if the hardware functions at a 100 percent level. NASA's largest new contract in fiscal 2002 will involve the Space Launch Initiative, the agency's new project to create an eventual replacement for the space shuttle. Unlike the cancelled X-33 project, which tapped Boeing to provide a specific vehicle design, the Space Launch Initiative has enlisted nine companies to develop new technologies expected to blossom into specific spacecraft designs by mid-decade.

In May, NASA awarded the first round of the contract, including a $138 million award to Boeing for airframe and systems studies and a $125 million award to Pratt & Whitney for work on propulsion designs. The full contract is worth $4.5 billion over the next five years.

In 2000, NASA's largest single new award went to Federal Data Corp. of Bethesda, Md., for research in micro-gravity environments. The contract is worth $317 million over the next seven years. The next-largest award was a $169 million, 10-year contract to provide launch services for NASA payloads. This contract went to Delta Launch Services of Huntington Beach, Calif.