Space Saver

NASA expects to conserve millions by centralizing back-office operations.

NASA is taking a lesson from corporate America and merging many of its back-office operations to boost efficiency and save millions of dollars a year. In October, the space agency will combine a variety of financial management, personnel, procurement and information technology functions in a facility similar to those now operated by 70 percent of the Fortune 500.

The countdown to centralization began in May, with site selection and a $230-million, 10-year contract award for the NASA Shared Services Center. It is expected to create about 500 jobs paying an average of $55,000 a year by the time it is fully up and running in 2007. On May 9, NASA chose Computer Sciences Corp. of Falls Church, Va., over Las Vegas-based Trax International and IBM of White Plains, N.Y., as the prime contractor. The agency said CSC chose Bay St. Louis, Miss., over the cities of Huntsville, Ala., and Brook Park, Ohio, to reap the economic benefit of a brand-new government facility.

Executive Director Richard Arbuthnot, the NASA official guiding the procurement, declined requests for interviews. But he said in a statement, "We look forward to establishing a world-class organization to provide the kind of timely, efficient and effective support so important to NASA operations." A document designed to answer frequently asked questions says consolidation "will support the agency's focus on 'one NASA' including 'one face' to customers." Employees can expect travel reimbursements in just two days instead of the usual five to 13, NASA says, offering an example of the faster, more efficient service the new facility will promote. Establishment of a shared services center will "shadow" NASA's implementation of an integrated financial management program, the document adds.

The jobs NASA is consolidating-high-volume transactional services and specialty areas that require the skills and knowledge of experts-are duplicated at 10 field installations across the country. Targeted work will migrate to the shared services center, leaving each NASA installation with about 50 fewer positions.

That knowledge has heightened anxiety among civil servants and contractor employees, but NASA says it is "committed to minimizing the stress and uncertainty of transition . . . by promoting discussions with supervisors and employees to review options and create individualized transition plans." The options include targeted buyouts, reassignments at their facilities, transfers to other centers, and the right of first refusal for competitively sourced jobs with the new service provider.

NASA will staff 159 inherently governmental positions during a three-year transition ending in 2008. The agency began posting the job openings on its Web site in March. The contractor also could elect to recruit qualified NASA employees, the agency said.

In early May, each of the three finalists was campaigning hard and counting its lucky stars, because none was the location NASA originally had in mind when it proposed the shared services center in March 2002. The agency had planned to pick a site and have contractors compete to run it. The center appeared destined for a site in Central Florida, near Kennedy Space Center. An economic development consortium put up $5 million to lure NASA to the Orlando area, and an agency internal review recommended the site.

When some members of Congress objected, NASA decided to launch a public-private competition under Office of Management and Budget Circular A-76. In December 2003, NASA announced separate contests for the site and the services. The agency submitted its own service proposal to compete with any it received from the private sector. Six of NASA's 10 field installations submitted site proposals.

After visits to the locations in February and March 2004, agency leaders said all the proposals were so good that they couldn't pick a winner. After that, they decided to pick a contractor and require the company to build on one of the sites. Potential service providers would team with "community partners" at a favorite location. Bidding this way would ensure each city a fair chance to compete, officials said.

Based on a review of proposals submitted late last year, NASA trimmed the candidate list to three in January. The selection committee passed over the early favorite, Orlando, as well as Newport News, Va., and Houston.

Most of the cities haven't released details of their proposals, but published reports provided glimpses into their high-powered campaigns. The Virginia partnership offered $7.5 million in incentives, including a new five-story building. Last year, the Ohio Legislature passed a bill offering a tax break of up to $577,000 a year for 20 years. The $24.7 million pledge from Mississippi and Louisiana was said to be the largest offered by the three finalists. Little is known about Alabama's bid, but the state is no stranger to huge financial incentives-having offered $253 million to land a Mercedes manufacturing plant in 1993.