Proud to be Penny Pinchers

n February, NASA Administrator Daniel Goldin pronounced himself "proud" to be taking another budget cut for fiscal 1999, this time a reduction of $173 million from fiscal 1998. NASA is requesting $13.5 billion for fiscal 1999. The reduction is the sixth in as many years for NASA.

"We're better at doing things cheaper," Goldin said upon releasing the budget. Indeed, Goldin's exhortation to do things "faster, better, cheaper" has become a mantra throughout NASA. Program staff boast as much about quicker mission turnaround and lower costs as they do about spectacular space achievements. For example, Goldin lauds last July's astonishing Pathfinder mission to Mars as much for its low $266 million price tag and small 50-person staff as for the breathtaking pictures taken and the invaluable research conducted by the plucky Sojourner rover.

Goldin has taken NASA from an era of cost overruns-an average cost growth of 77 percent per program in 1992-to an average 6 percent underrun today. In July 1997, Goldin told the Senate Commerce, Science and Transportation Committee that NASA has canceled $13.5 billion worth of programs on his watch. Development times per spacecraft will drop from 8.3 years on average between 1990 and 1994 to 4.6 years through 1999 and 3.1 after 2000, Goldin predicted. He plans to take the agency from an average of two mission flights per year between 1990 and 1994 to 16 flights a year in 2000 and beyond. He hopes to bring cost per spacecraft from an average of $590 million in 1994 to $77 million at the turn of the century.

For fiscal 1997, NASA procurements totaled $12.8 billion, 88 percent of the agency's total obligations. Businesses received 77 percent of the procurement dollars. Nonprofit and educational institutions took in nearly 10 percent, other agencies received 4 percent and the Jet Propulsion Laboratory, operated for the government by the California Institute of Technology, got another 9 percent.

Contract modifications made up 84 percent of NASA's business with for-profit firms; just 16 percent was in new awards.

Over the past five years, the Johnson Space Center in Houston, the Goddard Space Center in Greenbelt, Md., and the Marshall Space Flight Center in Huntsville, Ala., have accounted for 50 percent to 70 percent of NASA's total procurements. With consolidation of the space shuttle and International Space Station contracts, both at Johnson, obligations awarded through that center have risen, while at Goddard and Marshall, procurements have remained stable.

Science Up, Space Flight Down

Under the 1999 plan, funding for NASA's biggest business line, human space flight, would slip from $5.7 billion to $5.5 billion. The category includes the International Space Station (ISS), which would drop from $2.5 billion to $2.3 billion in 1999 as station construction is completed and assembly in space begins. The space shuttle program, on the other hand, would get a boost, from $2.9 billion in fiscal 1998 to $3.1 billion in 1999 to cover eight scheduled 1999 flights-six for space station assembly-and safety and operations improvements.

Space science spending would rise from $1.9 billion to $2 billion in 1999, with 10 launches scheduled. The last of NASA's big unmanned science missions, the Cassini mission to Saturn, lifted off Oct. 15, 1997, and is slated to arrive at the ringed planet on July 1, 2004. The probe weighs six tons, is as big as a small house and cost $3 billion to develop and launch. Cassini's power source, 72 pounds of radioactive plutonium, brought unsuccessful legal efforts by environmental groups to block the launch out of concern for a disaster during takeoff. The launch went off without a hitch, however.

NASA plans to continue its search for the origins of the universe by sending powerful telescopes into space, adding to the capacity of the already orbiting Hubble. Development work will continue on the Stratospheric Observatory for Infrared Astronomy, which, at more than $300 million, was NASA's largest new procurement in 1997.

Funding for Earth Science, formerly the Mission to Planet Earth, would stay steady in 1999 at just under $1.4 billion. The program had a bumpy 1997, with a power loss on the $64 million Lewis earth-orbiting spacecraft soon after its launch in August followed by its re-entry into Earth's atmosphere and destruction Sept. 28.Then came the decision to scrub Lewis' partner, the Clark mission, early this year after an investment of $55 million. In March, NASA announced problems with the earth-observing spacecraft AM-1, a core component of the earth science enterprise. The satellite's operations software, built by Lockheed Martin, developed several problems and delayed the launch by at least eight months.

In-space assembly of the controversial and beleaguered International Space Station is slated to begin this summer. In May 1997, NASA shifted $200 million from the space shuttle program to ISS. In October 1997, Congress appropriated just $230 million of $430 million in additional space station funds NASA had requested over and above its fiscal 1998 request. In February, the space agency asked again for authority to transfer the remaining $200 million from other programs to ISS-$27 million from Human Space Flight and $173 million from Science, Aeronautics and Technology and Mission Support.

Building a Station in Space

In April, an independent report on the ISS project concluded that the 1999 budget wouldn't cover ISS costs and that with likely construction delays and extra funding requests ISS costs could total $24.7 billion, 42 percent above the $17.4 billion cap set by the Clinton administration.

In September 1997, the General Accounting Office reported significant cost and schedule overruns by ISS prime contractor Boeing. In March 1997, the firm lost an award fee of nearly $34 million and was told to deduct a previous provisional award of $10 million from its next bill. NASA ascribes the cost and schedule problems primarily to Boeing subcontractors.

Congress has grown increasingly unhappy with NASA's handling of ISS and is pressing Goldin to commercialize the project.

At a March NASA authorization hearing before the House Science space and aeronautics subcommittee, Chairman Dana Rohrabacher, R-Calif., pressed the point, saying: "You want $173 million in transfer authority for fiscal 1998. Our support is going to come at a price. I will seek to put language into the conference authorization which will enable and mandate NASA to have its space flight operations contractor [United Space Alliance, a Lockheed-Boeing joint venture] and its space station prime contractor [Boeing] pursue opportunities to generate commercial revenue which could reduce the taxpayers' burdens on these programs without competing with existing commercial service providers." Goldin has said a commercialization plan is in the works. The first phase is due in August.

Going Commercial

Commercialization of various types already plays a key role in Goldin's cost-cutting efforts. For example, NASA is funding an effort to come up with a fleet of privately owned reusable launch vehicles that could replace the space shuttle. The agency wants to lower the cost of hauling cargo into space from the current $10,000 per pound on the shuttle to $1,000 per pound. One method could be an RLV-a single-stage-to-orbit vehicle that takes off and lands on its own power, without the costly and expendable rockets used to boost the shuttle into space.

In July 1996, NASA struck an innovative cooperative agreement with Lockheed Martin's Skunk Works to produce a half-scale model RLV, called Venturestar. The project is designed to demonstrate the technical and financial viability of creating a fleet of RLVs sustained by the commercial space launch market and used by NASA as well. NASA committed $1 billion to the project through 2000, and Lockheed will put up $220 million. NASA's 1999 budget request includes follow-on funding for the Venturestar program should industry decide not to take it on. Venturestar was slated for its first flight in July.

Meanwhile, United Space Alliance (USA) wants to take the shuttle commercial, too. USA began this year weathering some bumpy air, announcing in February plans to lay off between 300 and 400 workers at Kennedy Space Center, Fla., due to NASA spending cuts and a drop in the number of scheduled missions through fiscal 1998.

Despite safety fears raised by the layoffs, NASA announced in January that Sen. John Glenn, D-Ohio, will return to space 36 years after his 1962 Mercury mission. He is scheduled for a shuttle flight in October. Idaho third-grade teacher Barbara Morgan will ride the shuttle after Glenn.

USA holds a seven-year, $7 billion contract with two potential two-year extensions to privatize shuttle launch and flight operations. The performance-based contract allows NASA to financially reward USA for exemplary performance and to penalize it for falling short. On several occasions, NASA has withheld fees when problems have interrupted planned shuttle activities. But in each instance so far, the agency has later returned the funds to the contractor when investigators found USA was not directly responsible. The USA contract requires the company to split with NASA any savings over $400 million during the life of the contract. In July, NASA added $919.5 million more work to USA's contract.

In October 1997, USA presented a shuttle privatization plan to NASA. The proposal would use shuttles to launch commercial satellites or to repair and maintain them once aloft; to haul commercial payloads to and from the space station; and to fly Earth observation and science missions for other countries. Laws passed after the 1986 Challenger accident currently bar the use of the shuttle for commercial or military payloads.

In addition to holding its own commercial potential, the shuttle has spawned new enterprises such as SPACEHAB, a Vienna, Va., company that, without a NASA contract, developed pressurized containers it now sells to NASA to house experiments and supplies on the shuttle.

Privatizing Communications

NASA would like to hand over its space communications operations to private industry by 2005 using a contract similar to USA's. The space agency hopes to award a 10-year, $5 billion, cost-plus-award-fee contract this summer to provide mission and data services for more than 100 current and planned spacecraft. In May 1997, Boeing and Lockheed Martin each won eight-month, $4 million contracts to study integrated operations architectures.

Protests by two firms delayed until March 1998 a smaller information services contract awarded to General Motors' Hughes division in June 1997. The five-year, $148 million pact covers software development and maintenance, engineering operations and maintenance and quality assurance at Ames Research Center, Calif. Upon re-evaluation, Raytheon (which purchased the Hughes operations from GM) was selected.

In another nod to the commercial market, NASA is outsourcing its desktop hardware, software and local area network services. The Outsourcing Desktop Initiative (ODIN) contract will cover all NASA employees and is open to other federal agencies as well.

"Instead of ordering specific kinds of hardware, software and other desktop computing resources, necessary services will be selected by the customer and delivered by the contractors that have been negotiated," says Deidre Lee, NASA's associate administrator for procurement. "Most importantly, acceptable performance will not be determined solely by the successful delivery of a product or service. Under ODIN, acceptable performance is determined by how well the contractor meets three metrics: customer satisfaction, availability and service delivery."

NASA is working closely with the General Services Administration's Seat Management Program, a similar outsourcing contract. NASA's requirements went beyond those in GSA's contract, according to Lee. "GSA and NASA acquisition teams will share information, resources and key personnel, and NASA will include provisions in its ODIN contracts that will give GSA exclusive authority to issue and administer governmentwide orders against ODIN contracts," Lee says.

NASA awarded nine-year ODIN contracts in June to Boeing, Computer Sciences Corp., Dyncorp, FDC Technologies, OAO Corp., RMS Information Systems Inc. and Wang Government Systems Inc.

Contracting Innovations

Lee also is proud of savings under another NASA procurement innovation, the consolidated contracting initiative (CCI), begun in November 1996. Under CCI, NASA facilities order against existing NASA and other multi-agency contracts whenever possible instead of awarding new contracts for every acquisition. CCI ended fiscal 1997 with 1,700 orders valued at $190 million placed against existing contracts. Through the first half of fiscal 1998, NASA had placed 677 CCI orders worth just over $83 million.

"CCI says when you have something to purchase, think about it. Could a sister center be using it?" Lee says. "We ask them to post their procurements on the CCI World Wide Web page and [all the centers] are supposed to look there for similarities in their procurement forecasts.

"Ninety percent of our annual budget goes out in procurement, less than 10 percent of it in new contracts," says Lee. "We are a contract management agency. We've got to spend less time up front and more time in managing the contracts we have on board."

NASA also continues to be a government leader in using performance-based contracting: writing work statements focusing on results rather than specifying how contractors work, setting standards and measuring contractor performance, and giving incentives and penalties based on performance.

Performance-based contracts can be more difficult to write than traditional deals, but Lee says innovations such as CCI will help give contracting offices more time to craft performance-based pacts. "If you get whatever you can off other [people's] contracts, you have more time to work on performance-based statements of work," she says.