Reports that Matter

Columbia Accident Investigation Board Report, Volume I

CONGRESSIONAL BUDGET REDUCTIONS

Section 44 of 106

CONGRESSIONAL BUDGET REDUCTIONS

In most years, Congress appropriates slightly less for the

Space Shuttle Program than the President requested; in some cases, these reductions have been requested by NASA during the final stages of budget deliberations. After its budget was passed by Congress, NASA further reduced the Shuttle budget in the agencyʼs operating plan–the plan by which

NASA actually allocates its appropriated budget during the fiscal year to react to changing program needs. These released funds were allocated to other activities, both within the human space flight program and in other parts of the agency. Changes in recent years include:

Fiscal Year 1997

  • NASA transferred $190 million to International Space

Station (ISS).

Fiscal Year 1998

• At NASAʼs request, Congress transferred $50 million to

ISS.

• NASA transferred $15 million to ISS.

Fiscal Year 1999

• At NASAʼs request, Congress reduced Shuttle $31 million so NASA could fund other requirements.

• NASA reduced Shuttle $32 million by deferring two flights; funds transferred to ISS.

• NASA added $2.3 million from ISS to previous NASA request.

Fiscal Year 2000

• Congress added $25 million to Shuttle budget for up-

grades and transferred $25 million from operations to upgrades.

• NASA reduced Shuttle $11.5 million per government-

wide rescission requirement and transferred $15.3 million to ISS.

Fiscal Year 2001

• At NASAʼs request, Congress reduced Shuttle budget by

$40 million to fund Mars initiative.

• NASA reduced Shuttle $6.9 million per rescission requirement.

Fiscal Year 2002

• Congress reduced Shuttle budget $50 million to reflect

cancellation of electric Auxiliary Power Unit and added $20 million for Shuttle upgrades and $25 million for Vehicle Assembly Building repairs.

• NASA transferred $7.6 million to fund Headquarters re-

quirements and cut $1.2 million per rescission requirement.

[Source: Marcia Smith, Congressional Research Service, Presentation at CAIB Public Hearing, June 12, 2003] t attempt to exert bureaucratic control over a complex ganization, but rather set strategic directions and provide erating units with the authority and resources needed to rsue those directions. Another Deming principle was that ecks and balances in an organization were unnecessary and sometimes counterproductive, and those carrying out the work should bear primary responsibility for its quality. It is arguable whether these business principles can readily be applied to a government agency operating under civil service rules and in a politicized environment. Nevertheless, Goldin sought to implement them throughout his tenure.27

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Goldin made many positive changes in his decade at NASA. By bringing Russia into the Space Station partnership in 1993, Goldin developed a new post-Cold War rationale for the agency while managing to save a program that was politically faltering. The International Space Station became NASAʼs premier program, with the Shuttle serving in a supporting role. Goldin was also instrumental in gaining acceptance of the "faster, better, cheaper"28 approach to the planning of robotic missions and downsizing "an agency that was considered bloated and bureaucratic when he took it over."29

Goldin described himself as "sharp-edged" and could often be blunt. He rejected the criticism that he was sacrificing safety in the name of efficiency. In 1994 he told an audience at the Jet Propulsion Laboratory, "When I ask for the budget to be cut, Iʼm told itʼs going to impact safety on the Space Shuttle … I think thatʼs a bunch of crap."30

One of Goldinʼs high-priority objectives was to decrease involvement of the NASA engineering workforce with the

  • 1993 1994 1995 — 1996

Total Workforce 30,091 27,538 25,346 23,625

Total Civil Service

3,781 3,324 2,959 2,596 Workforce

JSC 1,330 1,304 1,248 1,076

  • KSC 1,373 1,104 1,018 — 932

  • MSFC 874 791 576 — 523

  • Stennis/Dryden 84 64 55 — 32

  • Headquarters 120 61 62 — 32

Total Contractor

26,310 24,214 22,387 21,029 Workforce

JSC 7,487 6,805 5,887 5,442

KSC 9,173 8,177 7,691 7,208

MSFC 9,298 8,635 8,210 7,837

  • Stennis/Dryden 267 523 529 — 505

  • Headquarters 85 74 70 — 37

Figure 5.4-1. Space Shuttle Program workforce. [Source: NASA Office of Space Flight]

Space Shuttle Program and thereby free up those skills for finishing the space station and beginning work on his pre- ferred objective–human exploration of Mars. Such a shift would return NASA to its exploratory mission. He was often at odds with those who continued to focus on the centrality of the Shuttle to NASAʼs future.

Initial Shuttle Workforce Reductions

With NASA leadership choosing to maintain existing programs within a no-growth budget, Goldinʼs "faster, better, cheaper" motto became the agencyʼs slogan of the 1990s.31 NASA leaders, however, had little maneuvering room in which to achieve efficiency gains. Attempts by NASA Headquarters to shift functions or to close one of the three human space flight centers were met with strong resistance from the Centers themselves, the aerospace firms they used as contractors, and the congressional delegations of the states in which the Centers were located. This alliance re- sembles the classic "iron triangle" of bureaucratic politics, a conservative coalition of bureaucrats, interest groups, and congressional subcommittees working together to promote their common interests.32

With Center infrastructure off-limits, this left the Space Shuttle budget as an obvious target for cuts. Because the Shuttle required a large "standing army" of workers to

  • 1997 1998 1999 2000 2001 — 2002

19,476 18,654 18,068 17,851 18,012 17,462

2,195 1,954 1,777 1,786 1,759 1,718

  • 958 841 800 798 794 — 738

  • 788 691 613 626 614 — 615

  • 401 379 328 336 327 — 337

  • 29 27 26 16 14 — 16

  • 20 16 10 10 10 — 12

17,281 16,700 16,291 16,065 16,253 15,744

10,556 10,525 10,733 10,854 11,414 11,445

  • 539 511 430 436 439 — 408

5,650 5,312 4,799 4,444 4,197 3,695

  • 536 453 329 331 203 — 196

  • 0 0 0 0 0 — 0

  • Because Johnson Space Center manages the Space Flight Operations Contract, all United Space Alliance employees are counted as working for Johnson.
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keep it flying, reducing the size of the Shuttle workforce became the primary means by which top leaders lowered the Shuttleʼs operating costs. These personnel reduction efforts started early in the decade and continued through most of the 1990s. They created substantial uncertainty and tension within the Shuttle workforce, as well as the transitional difficulties inherent in any large-scale workforce reassignment.

In early 1991, even before Goldin assumed office and less than three years after the Shuttle had returned to flight after the Challenger accident, NASA announced a goal of saving three to five percent per year in the Shuttle budget over five years. This move was in reaction to a perception that the agency had overreacted to the Rogers Commission recommendations – for example, the notion that the many layers of safety inspections involved in preparing a Shuttle for flight had created a bloated and costly safety program.

From 1991 to 1994, NASA was able to cut Shuttle operating costs by 21 percent. Contractor personnel working on the Shuttle declined from 28,394 to 22,387 in these three years, and NASA Shuttle staff decreased from 4,031 to 2,959.33 Figure 5.4-1 shows the changes in Space Shuttle workforce over the past decade. A 1994 National Academy of Public Administration review found that these cuts were achieved primarily through "operational and organizational efficiencies and consolidations, with resultant reductions in staffing levels and other actions which do not significantly impact basic program content or capabilities."34

NASA considered additional staff cuts in late 1994 and early 1995 as a way of further reducing the Space Shuttle Program budget. In early 1995, as the national leadership focused its attention on balancing the federal budget, the projected five-year Shuttle budget requirements exceeded by $2.5 billion the budget that was likely to be approved by the White House Office of Management and Budget.35 Despite its already significant progress in reducing costs, NASA had to make further workforce cuts.

Anticipating this impending need, a 1994-1995 NASA "Functional Workforce Review" concluded that removing an additional 5,900 people from the NASA and contractor Shuttle workforce – just under 13 percent of the total – could be done without compromising safety.36 These personnel cuts were made in Fiscal Years 1996 and 1997. By the end of 1997, the NASA Shuttle civilian workforce numbered 2,195, and the contractor workforce 17,281.

Shifting Shuttle Management Arrangements

Workforce reductions were not the only modifications to the Shuttle Program in the middle of the decade. In keeping with Goldinʼs philosophy that Headquarters should concern itself primarily with strategic issues, in February 1996 Johnson Space Center was designated as "lead center" for the Space Shuttle Program, a role it held prior to the Challenger accident. This shift was part of a general move of all program management responsibilities from NASA Headquarters to the agencyʼs field centers. Among other things, this change meant that Johnson Space Center managers would have authority over the funding and management of Shuttle activities at the Marshall and Kennedy Centers. Johnson and Marshall had been rivals since the days of Apollo, and long-term Marshall employees and managers did not easily accept the return of Johnson to this lead role.

The shift of Space Shuttle Program management to Johnson was worrisome to some. The head of the Space Shuttle Program at NASA Headquarters, Bryan OʼConnor, argued that transfer of the management function to the Johnson Space Center would return the Shuttle Program management to the flawed structure that was in place before the Challenger accident. "It is a safety issue," he said, "we ran it that way [with program management at Headquarters, as recommended by the Rogers Commission] for 10 years without a mishap and I didnʼt see any reason why we should go back to the way we operated in the pre-Challenger days."37 Goldin gave OʼConnor several opportunities to present his arguments against a transfer of management responsibility, but ultimately decided to proceed. OʼConnor felt he had no choice but to resign.38 (OʼConnor returned to NASA in 2002 as Associate Administrator for Safety and Mission Assurance.)

In January 1996, Goldin appointed as Johnsonʼs director his close advisor, George W.S. Abbey. Abbey, a space program veteran, was a firm believer in the values of the original human space flight culture, and as he assumed the directorship, he set about recreating as many of the positive features of that culture as possible. For example, he and Goldin initiated, as a way for young engineers to get hands-on experience, an in-house X-38 development program as a prototype for a space station crew rescue vehicle. Abbey was a powerful leader, who through the rest of the decade exerted substantial control over all aspects of Johnson Space Center operations, including the Space Shuttle Program.

Space Flight Operations Contract

By the middle of the decade, spurred on by Vice President Al Goreʼs "reinventing government" initiative, the goal of balancing the federal budget, and the views of a Republican-led House of Representatives, managers throughout the government sought new ways of making public sector programs more efficient and less costly. One method considered was transferring significant government operations and responsibilities to the private sector, or "privatization." NASA led the way toward privatization, serving as an example to other government agencies.

In keeping with his philosophy that NASA should focus on its research-and-development role, Goldin wanted to remove NASA employees from the repetitive operations of various systems, including the Space Shuttle. Giving primary responsibility for Space Shuttle operations to the private sector was therefore consistent with White House and congressional priorities and attractive to Goldin on its own terms. Beginning in 1994, NASA considered the feasibility of consolidating many of the numerous Shuttle operations contracts under a single prime contractor. At that time, the Space Shuttle Program was managing 86 separate contracts held by 56 different firms. Top NASA managers thought that consolidating these contracts could reduce the amount of redundant overhead, both for NASA and for the contractors themselves. They also wanted to explore whether there were functions being carried out by NASA that could be more effectively and inexpensively carried out by the private sector.

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An advisory committee headed by early space flight veteran Christopher Kraft recommended such a step in its March 1995 report, which became known as the "Kraft Report."39 (The report characterized the Space Shuttle in a way that the Board judges to be at odds with the realities of the Shuttle Program).

The report made the following findings and recommendations:

  • "The Shuttle has become a mature and reliable system … about as safe as todayʼs technology will provide."
  • "Given the maturity of the vehicle, a change to a new mode of management with considerably less NASA oversight is possible at this time."
  • "Many inefficiencies and difficulties in the current Shuttle Program can be attributed to the diffuse and fragmented NASA and contractor structure. Numerous contractors exist supporting various program elements, resulting in ambiguous lines of communication and dif- fused responsibilities."
  • NASA should "consolidate operations under a single- business entity."
  • "The program remains in a quasi-development mode and yearly costs remain higher than required," and NASA should "freeze the current vehicle configuration, minimizing future modifications, with such modifications delivered in block updates. Future block updates should implement modifications required to make the vehicle more re-usable and operational."
  • NASA should "restructure and reduce the overall Safety, Reliability, and Quality Assurance elements – without reducing safety."40

When he released his committeeʼs report, Kraft said that "if NASA wants to make more substantive gains in terms of efficiency, cost savings and better service to its customers, we think itʼs imperative they act on these recommendations … And we believe that these savings are real, achievable, and can be accomplished with no impact to the safe and successful operation of the Shuttle system."41

Although the Kraft Report stressed that the dramatic changes it recommended could be made without compromising safety, there was considerable dissent about this claim. NASAʼs Aerospace Safety Advisory Panel – independent, but often not very influential – was particularly critical. In May 1995, the Panel noted that "the assumption [in the Kraft Report] that the Space Shuttle systems are now ʻmatureʼ smacks of a complacency which may lead to serious mishaps. The fact is that the Space Shuttle may never be mature enough to totally freeze the design." The Panel also noted that "the report dismisses the concerns of many credible sources by labeling honest reservations and the people who have made them as being partners in an unneeded ʻsafety shieldʼ conspiracy. Since only one more accident would kill the program and destroy far more than the spacecraft, it is extremely callous"

The notion that NASA would further reduce the number of civil servants working on the Shuttle Program prompted senior Kennedy Space Center engineer José Garcia to send to President Bill Clinton on August 25, 1995, a letter that stated, "The biggest threat to the safety of the crew since the Challenger disaster is presently underway at NASA." Garciaʼs particular concern was NASAʼs "efforts to delete the ʻchecks and balancesʼ system of processing Shuttles as a way of saving money … Historically NASA has employed two engineering teams at KSC, one contractor and one government, to cross check each other and prevent catastrophic errors … although this technique is expensive, it is effective, and it is the single most important factor that sets the Shuttleʼs success above that of any other launch vehicle … Anyone who doesnʼt have a hidden agenda or fear of losing his job would admit that you canʼt delete NASAʼs checks and balances system of Shuttle processing without affecting the safety of the Shuttle and crew."43

NASA leaders accepted the advice of the Kraft Report and in August 1995 solicited industry bids for the assignment of Shuttle prime contractor. In response, Lockheed Martin and Rockwell, the two major Space Shuttle operations contractors, formed a limited liability corporation, with each firm a 50 percent owner, to compete for what was called the Space Flight Operations Contract. The new corporation would be known as United Space Alliance.

In November 1995, NASA awarded the operations contract to United Space Alliance on a sole source basis. (When Boeing bought Rockwellʼs aerospace group in December 1996, it also took over Rockwellʼs 50 percent ownership of United Space Alliance.) The company was responsible for 61 percent of the Shuttle operations contracts. Some in Congress were skeptical that safety could be maintained under the new arrangement, which transferred significant NASA responsibilities to the private sector. Despite these concerns, Congress ultimately accepted the reasoning behind the contract.44 NASA then spent much of 1996 negotiating the contractʼs terms and conditions with United Space Alliance.

The Space Flight Operations Contract was designed to reward United Space Alliance for performance successes and penal- ize its performance failures. Before being eligible for any performance fees, United Space Alliance would have to meet a series of safety "gates," which were intended to ensure that safety remained the top priority in Shuttle operations. The contract also rewarded any cost reductions that United Space Alliance was able to achieve, with NASA taking 65 percent of any savings and United Space Alliance 35 percent.45

NASA and United Space Alliance formally signed the Space Flight Operations Contract on October 1, 1996. Initially, only the major Lockheed Martin and Rockwell Shuttle contracts and a smaller Allied Signal Unisys contract were transferred to United Space Alliance. The initial contractual period was six years, from October 1996 to September 2002. NASA exercised an option for a two-year extension in 2002, and another two-year option exists. The total value of the contract through the current extension is estimated at $12.8 billion. United Space Alliance currently has approximately to make such an accusation.42 10,000 employees.

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The contract provided for additional consolidation and then