The Final Frontier

n Sept. 30, 1996, United Space Alliance, a private company, inked an unprecedented $6.9 billion deal with the government to gradually take over the day-to-day operations of America's space shuttle fleet. Three days later, on Oct. 3, a Kennedy Space Center technician flipped the wrong switch during a fire extinguisher system test, touching off a water deluge that drenched an irreplaceable shuttle component. The orbital maneuvering engine wasn't damaged, but 14 pieces of costly protective thermal covering were ruined.

Mere coincidence? Hardly, say NASA officials, a safety advisory panel and an outside consulting firm. Nearly all observers now agree worker anxiety over sweeping changes within the National Aeronautics and Space Administration is at least partly to blame for a rising rate of similar close calls.

The Aerospace Safety Advisory Panel (ASAP), established by Congress in 1967 to watch over NASA, admonished in June that "the multiplicity of changes and uncertainty-transition to a single contractor, downsizing, reinventing NASA, increased workload, loss of significant personnel capabilities and low morale-have bred an environment which is ripe for human error" at the Kennedy Space Center in Florida, where shuttles are processed and launched.

The shuttle program is the emblem of the balanced budget era's leaner, meaner NASA. It presents, in microcosm, all the stresses and strains inherent in throttling back the once glorious mission and once grand budget of the world's premier space agency.

Facing the reality of a budget more than $10 billion short of its dreams for the year 2000, the space agency is decentralizing management and eliminating thousands of jobs at centers nationwide. The reorganization will leave NASA with half the federal workers it employed at the height of the Apollo moon landing program in the late 1960s, and with a "lead center" management system that mirrors one identified as an indirect cause of the 1986 Challenger disaster.

All this is happening as NASA embarks on an endeavor as taxing on people and resources as the six moon landings: construction of a $40 billion space station in partnership with Russia, Europe, Japan and Canada. The 440-ton complex will cover an area the size of a football field. At least 27 shuttle flights will be needed to haul components into Earth's orbit, and astronauts will spend an estimated 888 hours walking in space to assemble the outpost.

The massiveness of the task at hand has independent experts and agency officials questioning how to ensure safety and success with a much smaller workforce overseeing a more privatized mission structure.

Vice President Al Gore's campaign to reinvent and streamline government has squeezed the space agency, but nowhere as painfully as in the shuttle program.

NASA safety chief Frederick Gregory explains: "What we're doing . . . is trying to come up with a new way, a very innovative way, of assuring that when we launch a shuttle, it is safely launched, it accomplishes its mission on orbit, it lands safely, and the crew walks away from it. There are no books that tell us how to do this."

Radically Altering Programs

Just six years ago, NASA was projecting an overall budget of $22 billion by the turn of the century. But the $15 billion it got from Congress in 1991 was an all-time high, and the numbers have slid steadily since then. NASA's budget is $13.7 billion for 1997 and could fall to $11.6 billion by the turn of the century. President Clinton now seeks $13.5 billion for NASA in fiscal 1998, $13.4 billion in 1999, and $13.2 billion in 2000, but there's no guarantee he'll get it.

"If we're at $11.6 [billion] in 2000, then this is a significantly different agency, and we're going to end up . . . radically altering programs," says Shuttle Program Director Stephen Oswald, addressing what has become a sticky point for hundreds of civil servants. "What people don't understand is that you can't continue to balance the budget and do business as we always have."

NASA plans to reduce its federal workforce from about 20,000 today to about 17,000 by the year 2000. That's the lowest number of civil servants since 1961, the year John Glenn made history as the first American in orbit. It's a little more than half the 33,929 employed in 1969 when Neil Armstrong made the first human footprint on the moon.

NASA budget reductions also would cut an estimated 25,000 contractor personnel, a 14 percent reduction from the fiscal 1996 level of 177,000 contractors agencywide. When NASA officials announced the restructuring plan in May 1995, they already anticipated that putting a single company in charge of space shuttle flight operations eventually would eliminate 5,000 to 10,000 additional jobs held by NASA contractors.

At Kennedy alone, the federal workforce is expected to shrink from 2,099 at the start of this fiscal year to an estimated 1,400 in four years. Kennedy officials hope to reach their target through attrition, a lengthy hiring freeze, and buyouts that offer up to $25,000 for voluntary departures. Last November, when NASA offered its third buyout in as many years, 201 people at Kennedy expressed interest in leaving by Feb. 3.

Officials dread the thought of an agencywide reduction in force anticipated in 1998 because they will be required by law to cut people with the least seniority. And lately, those are the people leaving Kennedy. Kennedy Acting Deputy Director James Jennings worries about a generation gap like the one that opened between the Apollo and shuttle programs in the late 1970s. "I get really concerned because you end up not having anybody in your work force below 35 years old, and that's not good."

The latest reductions come after a four-year effort to trim the shuttle's fiscal fat by 30 percent. Between 1992 and 1995, NASA sliced $1.2 billion from the shuttle operating budget and 2,800 workers-including 300 civil servants-from the Kennedy payroll.

The contractor workforce at Kennedy currently includes 6,400 people employed by United Space Alliance. Company officials decline to provide firm employment targets. They say significant job cuts are not planned in the next couple years, but they won't dismiss the possibility of layoffs.

Shifting the Shuttle

NASA's upheaval started two years ago. At the same time that the agency's so-called "Zero-Base Review" team was pondering ways to streamline the functions of field centers across the country, an independent panel appointed by NASA Administrator Daniel Goldin was looking for ways to drastically reduce the $3.2 billion-a-year cost of operating the shuttle fleet. Responding to the Zero-Base Review team's recommendations, Goldin last March shifted overall responsibility for the shuttle program from the agency's Washington headquarters to the Johnson Space Center in Houston. Johnson now coordinates all shuttle launch operations at the Kennedy Space Center as well as propulsion system work done at the Marshall Space Flight Center in Huntsville, Ala., and the Stennis Space Center in Bay St. Louis, Miss.

Goldin's independent panel told NASA to combine 85 shuttle contracts-traditionally awarded piecemeal to separate companies which designed and manufactured various shuttle components-into one and to back itself out of routine shuttle flight operations at Johnson and Kennedy for a projected savings of $1 billion a year. NASA heeded the advice. In November 1995, it picked United Space Alliance (USA), a joint venture of Lockheed Martin and Rockwell International (now Boeing North America), to negotiate a contract. The two companies already held 69 percent of all shuttle contracts and performed 83 percent of all shuttle operations work.

Ultimately, only 12 of the old shuttle contracts were consolidated under the new contract with USA, for a projected minimum savings of $400 million over six years. With a pair of two-year options, the USA contract could extend to 10 years. The contract includes an incentive that rewards USA for cost savings, allowing the alliance to keep 35 cents of every dollar it saves. The contractor is penalized in a similar way for any cost overruns.

The contract emphasizes economy, but USA executives and their NASA bosses insist saving money never was the principal goal. "It's clearly understood that our priorities are to fly safely, maintain the schedules and manifest, and then reduce cost-in that order," says Kent Black, USA's chief executive officer. "But we can't lose track of the fact that it is our job to reduce costs. Somewhere, jobs have to come out of the program."

The Aerospace Safety Advisory Panel offered solutions to NASA's employment woes in a November 1996 report on issues associated with the safe operation and management of the shuttle program. The report followed a six-month review ordered by the White House. Among its 22 recommendations, the panel singled out Kennedy as a tangled thread in the tapestry, suggesting that the launch site be given "latitude and flexibility" to reduce work requirements and revise personnel levels "to ensure that arbitrary employment targets do not adversely affect the safety of space shuttle and international space station operations."

In the same report, the safety panel also urged Congress to grant NASA's previous requests for more attractive buyouts, up to $50,000 each, to entice older employees to retire early. The panel described an enhanced buyout provision as an "important tool" in avoiding a disruptive RIF. It also recommended that the space agency be permitted to hire limited numbers of younger scientists and engineers.

Black has begun several initiatives designed to preserve jobs by ultimately increasing the number of income-producing shuttle flights. He is trying to lure the Defense Department with its spy satellites back into the shuttle's customer fold. Black also is lobbying the Clinton Administration to rescind President Reagan's order banning commercial satellites from the shuttle. If Black succeeds, the shuttle's flight rate could increase from the current seven or eight to as many as 12 per year.

NASA has been criticized for the speed at which the transition to USA operation is taking place. During a summer 1996 visit, ASAP members observed Kennedy's celebrated teamwork atmosphere deteriorating into "an' us and them' adversarial stance" among civil servants and contractor employees. "A cooling off period is absolutely necessary," the panel wrote in an internal memo. "This may take a year or more of operations under USA. Without this hiatus, the safety risk is likely unacceptable."

Thousands of Lockheed Martin and Rockwell International employees donned the USA badge while their bosses were negotiating the contract. In reality, little else has changed since the contract was signed. "Things are operating today very nearly identically to the way they were operating in August and September. We don't intend to leave it that way, without a doubt," says Jack Boykin, the contract administrator at Johnson. "We are moving out as crisply as we and USA can agree but we're also doing it under a documented transition plan."

That plan, developed after the ASAP issued its summer warning, says NASA will transfer control gradually, without firm deadlines. NASA and USA expect to complete the transition between mid-1998 and late 1999. NASA will permit USA to absorb 16 additional contracts if its performance remains satisfactory. Those contracts cover the supply of critical components such as main engines, external fuel tanks and solid rocket boosters.

Unlike the contracts NASA traditionally awards, this one holds the contractor responsible for performance. "The old environment we worked under what was called a 'level of effort' contract," says USA chief operating officer James Adamson. "We've got to move eventually from that kind of environment to one where the contractor not only performs those processes but actually determines the requirements of those processes."

No longer will civil servants work elbow-to-elbow with contractor counterparts as they have done for nearly four decades. Civil servants will become like auditors with the IRS: They will watch from a distance and make spot checks at random.

"It's a major departure from the way we've done business since the beginning," says Robert Sieck, shuttle operations director, who joined NASA in 1963. "The modus operandi then was that NASA takes the lead and the contractor follows. NASA was right there with them, every step of the way, making sure they did it the way NASA had in mind."

Taking NASA Out of the Loop

NASA's way is based on the belief that two heads-two sets of eyes-are better than one. For the last 16 years, for example, a government engineer has looked over the shoulder of each contractor technician working in the shuttle maintenance hangars, and both have been required to sign documents certifying the quality of their work. Between 8,000 and 10,000 of these documents are signed and reviewed before every shuttle flight.

Under the new system, contractor technicians will be required to certify their own work. It's a difficult adjustment for both sides, says NASA contract administrator Boykin. "The general culture is to say, 'Hey, wait a minute! Where's my NASA guy?' So they are struggling as well."

The Aerospace Safety Advisory Panel struggled with the new system, too, in its November report. "The withdrawal of NASA personnel from day-to-day interface with their contractor counterparts has the potential to eliminate a significant independent reporting path," the panel wrote. "This may reduce the likelihood of contractor personnel utilizing their NASA associates to elevate issues they are reluctant to raise with their own management."

NASA already has been taken out of the signature loop on dozens of low-complexity ground support tasks in which there is little chance of damage to flight hardware or injury to people in the event of a mistake. Some 700 additional tasks of moderate to high complexity-those with more dire consequences for a mistake-will be handed over as USA demonstrates its ability to handle them.

Michael McCulley, a USA vice president who directs launch site operations for the contractor, acknowledges the challenge of continuing the tempo of operations while making the transition. "There's a lot of things the NASA folks do . . . that the contractor can do more cheaply and more efficiently," he says. "What's making it difficult is to do both of those changes simultaneously while still flying eight times a year."

Distractions and Downsizing

As the restructuring gains speed, employee morale has sunk to new lows. "It's worse than I've seen it in my 32, 33 years here at Kennedy," says Jose Garcia, a civil servant who heads one of the center's shuttle engineering divisions.

Incidents attributable to human error are on the rise. While the number of processing mishaps involving injury to workers or more than $25,000 in damage to flight hardware dropped in 1996, mistakes serious enough to warrant work stoppage and investigation were being made with ever-increasing frequency.

USA's McCulley recalls one close call in which an electrical technician managed to escape injury when he was removing and replacing a cable. "He took a saw and cut into an electrical wire without validating first that the power was off," says McCulley. "You wonder, 'What in the hell was he thinking about?' "

A number of contract employees admit privately that they are distracted by concerns about retirement benefits that were tangled up in red tape as a result of Lockheed's 1995 merger with Martin Marietta and the decision to partner with Rockwell. "When I walk into an [Orbiter Processing Facility] bay, and I get three or four people around me, and the first couple questions I get have to do with 401ks as opposed to the payload on [a shuttle], then what that tells me is that folks are concerned about stuff that's outside of their job," McCulley says. Civil servants worry whether they'll have careers at all.

NASA Shuttle Operations Director Sieck attributes the rising incident rate to three factors: procedural changes designed to simplify the work, the loss of institutional knowledge caused by relentless downsizing, and distractions. "There's a lot of concern and trepidation as to what all this is going to mean to the average worker," he says.

So far, distractions haven't resulted in disasters, McCulley says. "The human error incidences we've had, there have been no harm, no foul kind of stuff . . . but there's been a handful of them that were a whole hell of a lot closer to hurting something than I'm comfortable with."

Many employees are succumbing to confusion and frustration by getting out, a situation the ASAP foresees diluting safety and quality assurance programs of both NASA and the contractor. Independent assessment functions "may be further eroded through the loss of critical skills and experience among NASA personnel," the panel wrote in November. NASA should not be misled by the apparent initial success of transition efforts."

For example, doubt about their futures in a flight program that appears headed for wholesale privatization has young NASA engineers quitting at a record pace. Kennedy lost 5 percent of its civil service workforce in 1996. The attrition rate was more than three times the norm. Before last year, retirees accounted for the bulk of the departures at Kennedy. Of the civil servants who left in 1996, 65 percent were 40 or younger with less than 10 years' service. Nearly 72 percent were scientists and engineers.

"They're leaving because they're not sure [about] the type of work that's going to be left to do," says Kennedy Acting Deputy Director Jennings. They also are leaving in search of careers they perceive to be more stable than the space program.

The exodus is not without irony, says Alan Parrish, who retired in January as associate director of the Kennedy Space Center. "We actually have people going into the textile business in South Carolina. I can't think of an industry more threatened."

Charles Pierce, a 32-year-old propulsion engineer, watched a number of his colleagues with three to four years' experience jump into the private sector in hopes of staying employed. He resisted the temptation and opted for a transfer out of shuttle operations at Kennedy into a job in engineering and development at Marshall Space Flight Center. Pierce says uncertainty about the future contributed little to his decision to leave, but he acknowledges having concerns over the restructuring. "We all did, I think. There is always a lot of anxiety when a stable program is turned upside down," he says. "We all felt like NASA was telling us that our contributions to the shuttle program were basically unneeded."

Officials say that's not the message they were trying to communicate. "In the word association game, change equals bad. But what we're trying to do is something good," says Kennedy Director Jay Honeycutt, who retires this month. "I don't exactly understand what, in addition, we have to do to get the message across." If privatization is such a good idea, why are so many so upset? Adamson has an answer: "They're not sure they trust us with the program they have guarded carefully for years."

Garbled Messages

Communication has not been NASA's strong suit. Word about booster rocket O-ring problems never got to senior managers who cleared the shuttle Challenger for launch on its catastrophic flight in 1986. A presidential commission investigating the explosion blamed a lack of communication fostered by turf battles between centers and a confusing chain of command.

Shuttle program managers and their USA counterparts agree that communication is the most daunting issue in the transition. "Our employees don't give us a very good score card-never have-on communications," says Wayne Littles, director of the Marshall center. "There are always people who believe for whatever reasons they don't know everything they should."

While the USA contract was being negotiated, officials on both sides of the table conducted numerous question-and-answer sessions with employees in hopes of explaining the transition. But somehow, they say, the message got garbled. "We tend to send mixed messages," says NASA Shuttle Program Director Oswald.

The agency sent yet another mixed message last Dec. 13, when it presented the ASAP's cautious and concerned November report as a glowing endorsement of the shuttle hand-off to USA. "I'm very pleased that the panel has given the space shuttle program a clean bill of health," NASA Administrator Goldin said in an agency news release, "This report validates our actions and will guide us as we continue."

Employees complain that in addition to mixed messages, little substantive information comes through management channels. "We got our news from the press," says Pierce. "I don't feel anyone lied to us [but] I'll be honest, I skipped most staff meetings dealing with the subject because I felt my time was better served wading through the insurmountable mounds of paper on my desk." A management consulting firm, Right Associates in Orlando, Fla., hired last year to gauge the tension at Kennedy reported that "the younger employees expressed restlessness and want answers now-good or bad."

As 1996 drew to a close, officials were working on a new communication plan that targeted Kennedy with more small group meetings and auditorium conferences designed to make employees aware of the potential benefits of the transition.

"What we need to do is talk about where we'd like to take the agency and the reason for ramping the budget down and cutting back on the number of people," Oswald says. "They need to understand that the reality of the budget is that it ain't gonna get bigger again."

But it will take more than talk to calm nerves and soothe feelings, says USA's CEO Black. "We will instill trust by performing," he says. "You can talk about it all you want, but the only way to instill trust is for them to see evidence that you're putting the right kind of decision ahead of company financial gain."