SPEAKERS CONTENTS INSERTS Tables
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71–805PS
2001
SPACE STATION COST OVERRUNS
HEARING
BEFORE THE
COMMITTEE ON SCIENCE
HOUSE OF REPRESENTATIVES
ONE HUNDRED SEVENTH CONGRESS
FIRST SESSION
APRIL 4, 2001
Serial No. 107–8
Printed for the use of the Committee on Science
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Mail: Stop SSOP, Washington, DC 20402–0001
COMMITTEE ON SCIENCE
HON. SHERWOOD L. BOEHLERT, New York, Chairman
LAMAR S. SMITH, Texas
CONSTANCE A. MORELLA, Maryland
CHRISTOPHER SHAYS, Connecticut
CURT WELDON, Pennsylvania
DANA ROHRABACHER, California
JOE BARTON, Texas
KEN CALVERT, California
NICK SMITH, Michigan
ROSCOE G. BARTLETT, Maryland
VERNON J. EHLERS, Michigan
DAVE WELDON, Florida
GIL GUTKNECHT, Minnesota
CHRIS CANNON, Utah
GEORGE R. NETHERCUTT, JR., Washington
FRANK D. LUCAS, Oklahoma
GARY G. MILLER, California
JUDY BIGGERT, Illinois
WAYNE T. GILCHREST, Maryland
W. TODD AKIN, Missouri
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TIMOTHY V. JOHNSON, Illinois
MIKE PENCE, Indiana
FELIX J. GRUCCI, JR., New York
MELISSA A. HART, Pennsylvania
J. RANDY FORBES, Virginia
RALPH M. HALL, Texas
BART GORDON, Tennessee
JERRY F. COSTELLO, Illinois
JAMES A. BARCIA, Michigan
EDDIE BERNICE JOHNSON, Texas
LYNN C. WOOLSEY, California
LYNN N. RIVERS, Michigan
ZOE LOFGREN, California
SHEILA JACKSON LEE, Texas
BOB ETHERIDGE, North Carolina
NICK LAMPSON, Texas
JOHN B. LARSON, Connecticut
MARK UDALL, Colorado
DAVID WU, Oregon
ANTHONY D. WEINER, New York
BRIAN BAIRD, Washington
JOSEPH M. HOEFFEL, Pennsylvania
JOE BACA, California
JIM MATHESON, Utah
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STEVE ISRAEL, New York
DENNIS MOORE, Kansas
MICHAEL M. HONDA, California
C O N T E N T S
April 4, 2001
Hearing Charter
Opening Statement by Sherwood L. Boehlert, Chairman, Committee on Science, U.S. House of Representatives
Opening Statement by Dana Rohrabacher, Chairman, Subcommittee on Space and Aeronautics, U.S. House of Representatives
Opening Statement of Ralph M. Hall, Ranking Minority Member, Committee on Science, U.S. House of Representatives
Opening Statement of the Honorable Nick Lampson, a Representative in Congress from the State of Texas
Opening Statement of the Honorable Gary Miller, a Representative in Congress from the State of California
Statement of Marcia S. Smith, Specialist, Aerospace and Telecommunications Policy, Congressional Research Service
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Biography
Statement of Robert J. Polutchko, Member, Cost Assessment and Validation (CAV) Task Force Advisory Committee on the International Space Station
Statement of Russell A. Rau, Assistant Inspector General for Audits, National Aeronautics and Space Administration (NASA)
Biography
Response to Questions Submitted by Ralph M. Hall
Statement of Daniel S. Goldin, Administrator, National Aeronautics and Space Administration (NASA)
Responses to Written Questions Submitted by Chairman Boehlert
Opening Statement of the Honorable John Larson, a Representative in Congress from the State of Connecticut
Discussion
Planning Optimism
Independent Cost Estimates
Comparison With Apollo
Program Management
Cost Estimates
Cost Caps
Space Research
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Space Station History
Space Station Funding
Russian Participation
Early Indications of Cost Growth
Cost Estimates
Russian Involvement
ISS Program Management
Program Funding
Additional Cost Overrun
NASA Budget vs. Other Programs
Human Resources
Crew Requirements
International Partner Participation
Station Management
Commitment to Space
Research Cuts
Impact to Research
NASA Workforce
Discussion (continued)
Cost Overrun Timeline
NASA Contractors
Crew Size
SPACE STATION COST OVERRUNS
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WEDNESDAY, APRIL 4, 2001
House of Representatives,
Committee on Science,
Washington, DC.
The Committee met, pursuant to call, at 10:12 a.m., in Room 2318 of the Rayburn House Office Building, Hon. Sherwood L. Boehlert [Chairman of the Committee] presiding.
Chairman BOEHLERT. It is a pleasure to welcome everyone here this morning for our first full Committee hearing on the Space Program. Unfortunately, this first hearing will focus on some of the problems plaguing the Space Program. That is not because there aren't many positive developments in the program, but rather because the Space Station cost overrun is probably the most pressing issue facing NASA today, and the one demanding the most Congressional attention.
Let me start by saying that I have always voted for the International Space Station and I continue to support it. But this is not a case of unconditional love. The Space Station will continue to merit support only to the extent that it is well-managed, affordable, and useful. Inertia will not be enough to keep it in orbit. I am deeply concerned about the projected cost overruns, but I want this hearing to focus not on apportioning blame for the escalating costs, but on figuring out how to deal with them and prevent them from recurring.
I must say that what I have seen from NASA so far leaves me somewhat skeptical. This Committee must be sure that NASA is taking the cost overrun seriously and that it has a methodical, verifiable, and adaptable way of ensuring that they will not continue. NASA also must convince us that the redesign necessary to bring down the Space Station costs will not eliminate the ability to conduct useful science or make us overly dependent on foreign partners. These issues are critical, not just to the future of the Space Station, but to that of the entire Space Program.
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The Administration is exactly right to say that no other NASA programs will be cannibalized to pay for the Space Station. We will work to ensure that Space Station problems are remedies solely within the Space Station Program. I should add that the Space Station cost overruns are not the result of any malice or malfeasance. As with many large projects, the same traits that are needed to get the project completed can also tend to propel it off track.
So the kind of confidence and energy and optimism and can-do spirit that has been responsible for the Space Station's achievements, can also lead to under-appreciating and soft-pedaling its problems. That is why projects can destroyed both by excessive oversight and by lack of oversight.
In this case, excessive oversight has hardly been the problem. The Space Station Program needs to be reviewed with a supportive, yet critical, perhaps even jaundiced eye if it is to be completed within budget, which is the only way it is ever going to be completed.
I look forward to hearing from today's witnesses and to working with NASA to get the Space Station back on track, and I yield the balance of my time to the Chair of the—the distinguished Chair of the Subcommittee, Mr. Rohrabacher.
[Statement of Mr. Boehlert follows:]
PREPARED STATEMENT OF CONGRESSMAN SHERWOOD BOEHLERT
It's a pleasure to welcome everyone here this morning for our first full Committee hearing on the space program. Unfortunately, this first hearing will focus on some of the problems plaguing the space program. That's not because there aren't many positive developments in the program, but rather because the space station cost overrun is probably the most pressing issue facing NASA today, and the one demanding the most Congressional attention.
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Let me start by saying that I have always voted for the International Space Station, and I continue to support it. But this is not a case of ''unconditional love.'' The Space Station will continue to merit support only to the extent that is well managed, affordable and useful. Inertia will not be enough to keep it in orbit.
I am deeply concerned about the projected cost overruns. But I want this hearing to focus not on apportioning blame for the escalating costs, but on figuring out how to deal with them and prevent them from recurring.
I must say that what I have seen from NASA so far leaves me skeptical. This Committee must be sure that NASA is taking the cost overruns seriously, and that it has a methodical, verifiable, and adaptable way of ensuring that they will not continue. NASA also must convince us that the redesign necessary to bring down the Space Station's costs will not eliminate the ability to conduct useful science or make us overly dependent on foreign partners.
These issues are critical not just to the future of the space station, but to that of the entire space program. The Administration is exactly right to say that no other NASA programs will be cannibalized to pay for the space station. We will work to ensure that Space Station problems are remedied solely within the Space Station program.
I should add that the Space Station cost overruns are not the result of any malice or malfeasance. As with many large projects, the same traits that are needed to get the project completed can also tend to propel it off-track. So the kind of confidence, energy, optimism and ''can-do spirit'' that has been responsible for the Space Station's achievements can also lead to under-appreciating and soft-pedaling its problems. That's why projects can be destroyed both by excessive oversight and by lack of oversight.
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In this case, excessive oversight has hardly been the problem. The Space Station program needs to be reviewed with a supportive, yet critical—perhaps even jaundiced eye, if it is to be completed within budget—which is the only way it is ever going to be completed.
I look forward to hearing from today's witnesses, and to working with NASA to get the Space Station back on track.
Mr. ROHRABACHER. As long as it is not the extinguished Chair, that is all right. Thank you, Mr. Chairman, for yielding. Let me start by trying to put this problem in context. President Bush inherited the major problems that vex this program. That includes the unnecessary and inappropriate over-reliance on the Russian Government for key elements to the Space Station. This was done against the bipartisan advice of the Congress and we were very specific in that advice. The last Administration went its own way and now we find ourselves in this problem.
We also have to look to the continuing cuts that we found in the research part of this program that was done by the last Administration in order to free up funds to accommodate for the failure of our Russian partners. Then there was repeated tinkering with the baseline design, which was approved by Congress in 1993. We even had American modules replaced by foreign-built modules, et cetera. And then we have had, of course, the ongoing failure to meet self-imposed costs and scheduling targets. This sometimes and often goes with major projects.
But when Bush was inaugurated, let us face it, the program was already $7 billion over budget and 4 years behind schedule. And now, this projected $4 billion added increase to the cost that we find out about at this point. To his credit, President Bush has moved swiftly to put an end to these problems. He has streamlined the program management by cutting out middle layers of bureaucracy, but kept the key elements of the program at the Johnson Space Center while increasing the Headquarters' attention to this program. He has increased the 5-year run-out to the development of the facility by a billion dollars over his predecessor's budget and directed NASA to restructure the program to fit within its means.
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That is entirely consistent with the recommendations made by the Cost Assessment Validation Task Force 3 years ago and by Congress and by this Committee, when we capped the development costs of the Space Station at $25 billion in last year's NASA authorization. Congress sent a bipartisan message to President Clinton with that legislation, and I am happy that President Bush is heeding it.
That said, I want to work with the Administration to find ways of maximizing the Space Station's research capabilities and I would recommend and commend the agency for the work that it has done so far. We need to bring additional non-Federal resources to this program, rather than cut back on the program. We need to find ways of commercializing this project to bring resources rather than cutting the program. We need to work with our international partners instead of cutting the program. And we need to promote outside management and funding for the research activities that are going on in order to make this project, the Space Station project, the most effective and cost-effective that it can be, rather than trying to cut back the project.
A few of us met with the new OMB Director, Mitch Daniels, last week, and he was open to many of these ideas. So I think that it is time for us, on both sides of the aisle, to roll up our sleeves, come up with some creative alternatives, and make sure that the Space Station is a success. Thank you very much, Mr. Chairman.
Chairman BOEHLERT. Thank you very much, Mr. Rohrabacher. The Chair recognizes Mr. Hall, the Ranking Member.
Mr. HALL. Thank you, Mr. Chairman. I will take a minute-and-a-half and I will yield a half of that minute to Mr. Baird from the State of Washington. Go ahead, Mr. Baird.
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Mr. BAIRD. Thank you, Mr. Hall. I just want to add my agreement with the Chair's point about the importance of not compromising safety and about emphasizing U.S.-made and U.S.-controlled mission elements. Two particular issues of great concern to me have to do with both safety and scientific issues, and those concerns are these—the need for an escape vehicle, U.S.-made, that has full capacity to evacuate the crew so that a full crew can be put on board and conduct the kind of science we need. And I think it needs to be U.S.-made and controlled so that we have assurance that it will be a quality vehicle available to our personnel.
The second issue is the need for a thrust or a boost capacity on the Space Station itself so that, again, we have U.S.-made control and components and that we don't need to depend on foreign sources to keep the Space Station in the kind of orbit it needs or to move the Space Station into alternative orbits either for mission needs or for safety needs. And I hope the Panel will discuss this and I hope that as NASA looks towards cost-cutting measures, it does not jeopardize either the scientific integrity or the safety elements of this. And I yield back my time. Thank you, sir.
Mr. HALL. Thank you very much. And I just want to welcome those of you who are going to—who have given us your time, both preparing for this presentation, which is 15 or 20 years of hard work and knowledge, and then for the time you actually spend here, and to Dan Goldin, who is here and will be here. And I never can omit Buzz Aldrin, who is here always when we need him. But, Marcia, you are young, but you are an old hat here because you have been so many times. You have been so very helpful to many of us. And, Mr. Polutchko, I thank you and Mr. Rau.
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I thank this good Chairman for holding this hearing because it is a hearing he easily could have dodged. It is a hearing we ought to have and it is a hearing that I want to be clear about in my own position on it because I don't want to spend today's hearing trying to point fingers and assess blame. I am not happy about the reported cost growth in the Space Station Program. And I am sure that other members share in my own happiness, however, I want to use, Mr. Chairman, this time—if I can get this damned thing turned off—I thought I was going to have to pour water on it. If I can use our time productively and we need to know what kind of a problem we are confronting and my highest priority is determining what we ought to do about it. Thank you. I yield back my time.
[The prepared statement of Ralph M. Hall follows:]
PREPARED OPENING STATEMENT OF THE HONORABLE RALPH M. HALL
Good morning. I first would like to welcome Administrator Goldin and the other witnesses to today's hearing. We look forward to your testimony. I also want to thank Chairman Boehlert for his initiative in holding this hearing. The International Space Station is arguably NASA's single most significant development project, and its successful completion has been a bipartisan priority of this Committee for as long as there has been a Station program.
As we begin today's hearing, let me be clear about my own position. I do not want to spend today's hearing trying to point fingers and assign blame. Of course, I'm not happy about the reported cost growth in the Space Station program. And I'm sure that other Members share my unhappiness. However, I want to use our time here productively. While we need to know what kind of a problem we are confronting, my highest priority is determining what we should do about it.
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In that regard, I am concerned that the NASA ''budget blueprint'' for Fiscal Year 2002—while seeking to exert budgetary control over the Space Station program—could wind up further disrupting the Station development plan just when we finally have significant amounts of hardware on orbit or waiting to be launched. I'm afraid that the unintended result of the budget blueprint could be more cost and schedule risk—not less—as NASA undertakes yet another restructuring of the Station program. And, I'm also afraid that we could wind up with a Space Station that is just not worth the money that the taxpayers will have spent on it.
Let me summarize some of the likely results of the budget blueprint as I understand them:
NASA would have to eliminate the Space Station's Habitation Module, its Crew Return Vehicle, and the planned Propulsion Module.
The planned crew size would be cut from seven to just three.
The budget blueprint could also lead to the loss of one of the four planned solar arrays that provide power to the Space Station.
While we have not been able to get a clear answer from NASA yet, it looks as though the research centrifuge may be cut or at least delayed indefinitely.
And we understand that NASA intends to cut the Space Station research budget by 40 percent, with the result that whole areas of planned scientific and commercial research may be indefinitely deferred.
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Of course a cynic might say that the research funding cut wouldn't be that important, since it looks as though there won't be enough crew on the Station to do any meaningful research anyway under the proposed restructuring.
Now I know that NASA is scrambling to try to find International Partners that might be willing to provide some of the hardware that NASA was supposed to deliver. And I know that NASA is looking for more ''efficiencies'' and ''new ways of doing business'' that might save some more money. And I am sure that Administrator Goldin will do his best to convince us that we can still have a world-class research program on the Space Station—that's his job.
However, I've got my doubts. The history of this program is that when capabilities are cut from the Space Station program, it's tough getting them back. And vague assurances that eventually fundamental research disciplines will make their way back onto the Station when additional funding becomes available aren't terribly convincing.
Right now, in order to meet an arbitrary budgetary target, NASA seems to be on a track that will let Tim Roemer finally be able to say ''I told you so''.
I'm not convinced that's the right way to go. Let's put the current situation into context. The Congressional Research Service indicates that for the fiscal years 1985 through 2001, Congress appropriated a total of about $27.6 billion for the Space Station program. Both the Clinton Administration and the current Administration have proposed to spend an additional $8.2 billion on Station for the fiscal years 2002 through 2006. And NASA has recently indicated that it has identified potential cost growth of $4 billion over that same five-year period.
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For the moment, I'm going to leave aside the question of how that cost growth went undetected until well into last year. We need to hear from our witnesses about that, and about what needs to be done so that we don't have any more such surprises. What I instead want to point out is that the potential cost growth really represents about an 11 percent increase over what NASA was going to wind up spending on the Station through FY 2006 under the best of circumstances.
Would I want to spend that additional 11 percent if I could avoid it? Of course not. However, I also don't want to be ''penny-wise and pound-foolish''. The Space Station program is no longer just paper and viewgraphs. Pieces of the Space Station are on orbit—including the U.S. Laboratory Module. Our ability to make significant changes in the program without jeopardizing the objectives of the program is much more limited than it was a few years ago. To back away at this point from completing the Station that successive Congresses have supported seem to me to be a very bad idea. And cutting the Space Station research program that will deliver the hoped-for benefits to our citizens is an even worse idea.
Now I'm not suggesting that we raid other important NASA programs to ensure the successful completion of the Space Station. I support the Administration in that regard. However, we do have a surplus. And I've made no secret of my belief that we should use some of that surplus to invest in NASA.
So let's see what credible and sensible ways of saving money NASA can come up within the existing Space Station program. And then let's see what it realistically will cost to complete the existing Station design and to outfit it so that it can support the range of research disciplines we were promised—and let's do our best to validate that cost estimate so we minimize the chances of any future ''surprises''.
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But after we done all that, let's be willing to appropriate the money that is required to do the job right. We shouldn't pretend that we can fit one of the most challenging programs NASA has ever undertaken under an arbitrary budget ceiling if the facts are telling us otherwise.
I think that one of our witnesses, Mr. Polutchko, summed up our options as well as anyone could in his written testimony:
''. . .We need to maintain the Committee's steadfast support of the [Space Station] program and encourage NASA to take a fresh look at conservative planning and rebaselining of the ISS program, including reconsideration of the major deletions that NASA believes must be made in order to comply with existing fiscal funding and cap requirements. Yes, the rebaselined ISS program will require substantial additional funding but, on the other hand, providing a Space Station that has severe operational constraints and much reduced science return may not be in the best interests of our nation and our partners.''
I think we would do well to heed that advice.
Chairman BOEHLERT. Thank you, Mr. Hall. And that sets the tone for the hearing. Now, we are going to be forced to recess temporarily while we go answer a call to the House. In the interim, maybe, Astronaut Buzz Aldrin could give a tutorial while we are out of the room. It is good to have you here. We are in recess now.
[Recess]
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[Additional Opening Statements]
PREPARED OPENING STATEMENT OF THE HONORABLE NICK LAMPSON
Thank you, Mr. Chairman. As the member of Congress who represents the Johnson Space Center, I, too, am concerned about the Space Station program, the status and underlying causes of recent cost growth and actions NASA is taking to address these issues.
After years of hard work and having made some amazing technical advances by National Aeronautics and Space Administration (NASA) and our international partners, the ISS is finally becoming a reality. The past couple of years have seen the first critical Space Station segments successfully launched and assembled. Even the early rockiness of engaging many international partners has proven workable. Truly, the Space Station program has hit its stride.
I was distressed to learn that based on analyses undertaken last year and earlier this year, NASA is projecting that the cost of the Space Station might grow by $4 billion over the next five years if no corrective actions are taken. The Bush Administration's budget request for Space Station proposed a plan for dealing with the projected Space Station cost growth. The Administration budget plans call for reductions in key areas, including the end of the Crew Return Vehicle program, the paring back of key research and development projects, and the elimination of propulsion and habitation modules.
These proposed budget changes translate to serious reductions in utilization, especially in scientific research. Most notably, the eventual size of the Station crew will be reduced from seven to three. Since NASA estimates that basic ISS maintenance and operations require the equivalent of two and one half people, this dramatically reduces the amount of research that can be performed on the Station. Further, the proposed budget slashes Station research funds by 40 percent. Considering the potential for scientific achievement from the unique opportunities of the ISS, this represents a tragic misplacement of budget choices, crippling the Station's ability to deliver the world-class research program promised to Congress.
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I am hopeful that Congress increases NASA's funding to ensure adequate funds in fiscal year 2002 for the Station, including the Crew Return Vehicle, and not force drastic delays or cancellation of important ISS operations.
PREPARED OPENING STATEMENT OF THE HONORABLE GARY MILLER
Mr. Chairman,
I want to thank you for holding this hearing. I look forward to hearing the remarks and replies of the witnesses from both panels this morning. I hope we will hear some real, long term solutions for this issue we are here to discuss today.
I'm certain it will come as no great surprise that I am dismayed that we are here once again discussing shortcomings at NASA that appear to come directly from a lack of managerial discipline with in yet another of NASA's ''Grand Vision'' missions. It was just this past July that we sat in this room and listened to a panel of witnesses describe the failure of yet another Mars Lander and how administrative mistakes ultimately cost the taxpayers hundreds of millions of dollars. All the while, these failures could have been prevented if proper managerial steps would have been taken at the highest levels of this mission.
Now we are being made aware of $4 Billion in cost overruns for a program that has not maintained the mandatory annual independent audits, nor the recommended life cycle cost projections. All of this for a mission whose cost estimates have increased by 72% since 1994.
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I would like to go on record as saying that I am not discounting the importance or the value of the research being performed by our space program. I think you will find most Members here whole-heartedly support the scientific value of NASA's mission. However, I want to let these witnesses know that I do hold the administrators at NASA fully accountable for what I believe is a lack of institutional control. I don't believe it is a stretch to say that there are members of this body that are going to have to begin seeing significant changes and improvements in management before they can continue to lend support to this agency.
I hope through this hearing we can begin to find some consensus on both the problems and the resolutions. I also hope that NASA's Administrators will take to heart the recommendations of this committee as it begins to construct steps to improve its programming.
Thank you again, Mr. Chairman, for holding this hearing, and I yield back the balance of my time.
Chairman BOEHLERT. We will get started as our colleagues will come back shortly. Our first Panel today consists of Marcia Smith, the Specialist, Aerospace and Telecommunications Policy for the Congressional Research Service; Robert Polutchko, Member of the Cost Assessment and Validation Task Force; and Russell Rau, Assistant Inspector General for Audits for NASA. I want to thank all three of you for being very valuable resources for this Committee and we very much look forward to your testimony. What we would appreciate is if you would try to capsulize your statements at about 5 minutes or so. The Chair won't be arbitrary, but we are going to try to stick pretty much to schedule. Ms. Smith, you are up first.
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STATEMENT OF MARCIA S. SMITH, SPECIALIST, AEROSPACE AND TELECOMMUNICATIONS POLICY, CONGRESSIONAL RESEARCH SERVICE
Ms. SMITH. Mr. Chairman, members of the Committee, thank you for inviting me here today. You asked that I address two specific questions. Essentially, where is the Space Station Program today and how did it get there.
The Space Station is a laboratory in space where astronauts can perform research in a near zero-gravity environment. The station is being taken into orbit in segments and assembled there over a period of several years. NASA expects to operate it for at least 10 years after assembly is completed. Today it is called the International Space Station, reflecting the fact that it is being built by a partnership of countries, the U.S., Europe, Japan, Canada, and Russia.
The Space Station Program began 17 years ago. In his January 1984 State of the Union Address, President Reagan directed NASA to build a space station within a decade and to invite other countries to join. My written statement details the long road the Space Station has traveled since then. And I would request that my written statement be made part of the record.
For now, suffice it to say, that from 1984 to 1993, the Program, then called Freedom, experienced repeated cost growth that led to repeated redesigns and increasing Congressional concern. NASA spent approximately $11 billion during those years. Little hardware was built and none was launched.
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In 1993, responding to additional cost growth, President Clinton ordered another redesign, which led to termination of Freedom and initiation of the program underway today. It was during this process that Russia became a partner, a dramatic change. Not only did it move the Space Station further into the foreign policy arena, but many of Russia's contributions are in the critical path, meaning that if they are not provided, NASA would have to build alternate capabilities. Concerns about Russia's financial ability to fulfill its commitments have been discussed at several hearings before this Committee.
Like the Freedom program, the International Space Station also has encountered repeated cost growth. In 1993, NASA said the U.S. portion of the Station would cost $17.4 billion through completion of assembly, which was expected in the year 2002. That estimate rose to $21.3 billion in early 1998, prompting NASA to create an independent Cost Assessment and Validation Task Force, about which you will hear in a moment.
After that, NASA raised its estimate and raised it again in 1999, and again in 2000. At this time last year, NASA's estimate was $24.1 to $26.4 billion. The expected date for completion of assembly had slipped to 2006. Now, NASA has revealed $4 billion in cost growth for the next 5 years. That would raise development costs to $28 to $30 billion dollars, an increase of 61 to 72 percent over the 1993 estimate.
At the end of 1998, almost 15 years after President Reagan's speech, the first two Space Station modules were launched. The launches were good news, but a 19-month hiatus followed waiting for launch of the Russian-built Zvezda Module, which provides crew quarters. It was delayed because of Russian funding problems.
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Once Zvezda was launched in July 2000, the gates were opened for further Space Station construction. Today, four major Space Station modules are in orbit, including a U.S. laboratory, along with U.S.-built solar arrays generating 20 kilowatts of power. The first space station crew has already completed its 4-month shift and was replaced by a new crew last month.
In short, the International Space Station exists today, but it is far from the Space Station NASA and its partners envision. More than 70 launches over the next 5 years are still required to reach the assembly-complete stage, which will include five more laboratory modules, one each from the U.S., Japan, and Europe, and two from Russia; much more electrical power; and additional crew quarters and a more capable life boat that will enable the crew size to increase from its current complement of three to six or seven. Increased crew size is considered essential to scientific research, since two-and-a-half crew members are needed just to operate the facility.
But these plans are threatened by the $4 billion in cost growth. Congress has been concerned about Space Station costs for many years, and last year legislated a spending cap of $25 billion for development. The new estimate exceeds that cap.
The cost growth was a surprise to many, not only because of its magnitude, but because it is occurring so late in the program. Much of the U.S. hardware is built. Last year, NASA estimated that just over $7 billion more would be needed in the next 5 years to complete assembly, so the $4 billion in cost growth is an increase of more than 50 percent.
In response, NASA has proposed terminating Space Station construction early, at a point it calls U.S. Core Complete, followed by the launch of the European and Japanese laboratory modules. Other capabilities that it had planned to build would be indefinitely deferred. If the NASA proposal is adopted, the amount of scientific research could be sharply reduced and the Station would remain dependent on Russia for providing life-boat spacecraft for the crew.
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Congress has several options. It could choose to terminate the program, although 22 attempts to do so since 1991 have failed. Congress could decide to stop construction temporarily or permanently, now or at some other point along the assembly sequence with reduced science capability and continued dependence on Russia for certain functions. Or Congress could decide to provide additional resources and relax the cap to ensure the station is completed as originally planned, or to build some, but not all, of the capabilities NASA is proposing to defer.
Mr. Chairman, by the end of this Fiscal Year, NASA will have spent $17.7 billion since 1993 on this Space Station design and almost $29 billion on the program since 1984. The good news is that a Space Station has finally emerged from 17 years of designs, redesigns, and construction. The question is how much further down the road Congress wishes to travel with this program. Thank you.
[The prepared statement of Ms. Smith follows:]
PREPARED STATEMENT OF MARCIA S. SMITH
Mr. Chairman, Members of the committee, thank you for inviting me to testify today about the International Space Station program. You asked that I address two specific questions: what are the highlights of and major milestones for the space station program, and the history of its cost growth and schedule delays. Essentially you have asked—where is the program today and how did it get there?
EVOLUTION OF THE SPACE STATION PROGRAM: JANUARY 1984–JANUARY 2001
The space station program began 17 years ago. The program has had its share of ups and downs during that time. The story is quite complex. I have organized the program's history into several ''eras,'' tied to four key years: 1984 when it began; 1991 when the House held its first floor vote on whether to terminate it; 1993 when it survived in the House by a one-vote margin, and, later, Russia joined the program; and 1998 when construction began. Two tables are appended to this statement that provide more detail on changes to the design, schedule, and cost estimates for the program.
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1984–1990 THE PROGRAM BEGINS, THE CHALLENGER TRAGEDY, INTERNATIONAL PARTNERS JOIN, REPEATED COST GROWTH AND REDESIGNS
In his January 25, 1984, State of the Union address, President Reagan directed NASA to build a space station within a decade and to invite other countries to join the United States in the endeavor.
Thus began NASA's ongoing space station program.(see footnote 1) NASA had wanted permission to build a space station that could be permanently occupied by rotating crews since the late 1960s. Budget constraints, however, forced the agency to choose between a space station and a reusable space transportation system—the space shuttle. NASA decided to build the shuttle first. Soon after the first shuttle launch in 1981, NASA intensified efforts to win approval for a permanently occupied space station. President Reagan's 1984 speech was the culmination.
NASA estimated it would cost $8 billion to build the space station, which at that time was envisioned as three separate orbital facilities: an occupied base for the crew and two automated platforms for scientific experiments and Earth observations. The cost estimate grew rapidly. Throughout the rest of the 1980s, NASA and Congress struggled to contain program costs. Redesign followed redesign. The automated platforms were deleted from the plan, and the occupied base was scaled back. Cost growth drove the redesigns, but the 1986 space shuttle Challenger tragedy also caused NASA to reassess the design. Among the changes was a decision to build a ''lifeboat'' capability to ensure the astronauts could return to Earth in an emergency.
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During this period, the program was confined to the design phase. Little progress was made in actually building a space station. There was progress in other areas, though, particularly in bringing Europe, Canada, and Japan into a partnership with NASA to build the space station as an international undertaking. Formal agreement was reached in 1988. The partners decided to name the space station Freedom.
In July 1989, six months after taking office, President George H. Bush gave a speech commemorating the 20th anniversary of the Apollo 11 landing on the Moon. In that address, he committed the United States to returning humans to the Moon and going on to Mars, and endorsed the space station as the cornerstone of that effort. The Freedom program, however, was still experiencing cost growth and other problems, such as increased weight and growing requirements for spacewalks for in-orbit assembly. In 1990, Congress directed NASA to redesign it again. By December 1990, the cost estimate had grown to $38.3 billion, though it was difficult to compare with the original $8 billion estimate since they were expressed in different year dollars, and the larger figure included shuttle launches and other costs.
1991–1992 GROWING CONCERN IN CONGRESS, RENEWED U.S.–RUSSIAN SPACE COOPERATION
NASA released its redesign of Freedom in March 1991, with a new cost estimate of $30 billion (including launches). Congressional concern remained. Later that year, for the first time, a House floor vote was held specifically on the fate of the program after the House Appropriations Committee recommended its cancellation. That recommendation had come from the chairman of the VA–HUD–IA subcommittee (which funds NASA), Representative Traxler. On the floor, an amendment was offered by Representatives Chapman and Lowery to continue the program. The amendment was adopted 240–173, and the program survived. That was the first of 22 specific votes so far in Congress (14 in the House, 8 in the Senate) in NASA funding bills on whether to terminate the program. Each time, Congress has voted to continue it.
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In 1992, following the collapse of the Soviet Union, President George H. Bush rejuvenated U.S.–Russian space cooperation. Among other initiatives, the two countries agreed to launch a Russian cosmonaut on the U.S. shuttle and an American astronaut to Russia's space station Mir, with a docking between the U.S. shuttle and Mir.
1993–1997 $1 BILLION IN COST GROWTH, FREEDOM REPLACED WITH INTERNATIONAL SPACE STATION (ISS) PROGRAM, ONE-VOTE MARGIN IN HOUSE, RUSSIA JOINS AS A PARTNER
In January 1993, as President Clinton took office, NASA announced more cost growth in the Freedom program. President Clinton directed NASA to redesign the station again to reduce costs. By the summer, a new design was beginning to emerge, but was not finalized when the House was ready to vote on NASA's FY 1994 funding bills. What was known was that the Freedom program had been terminated, and would be replaced by a less expensive design. By then, NASA had spent $11.2 billion on Freedom. Little hardware had been built, and none had been launched. The White House expressed support for the newly emerging design, but limited its funding commitment to $2.1 billion a year for the next five years. Many in Congress were concerned about the program's direction. In June 1993, the House voted to continue the program by a one vote margin (215–216), defeating an amendment by Representative Roemer to the FY 1994 NASA authorization bill to end the program. A week later, Representative Roemer tried again on the FY 1994 VA–HUD–IA appropriations bill; that amendment failed by a wider margin (196–220).
The new design was released on September 7, but it had been preempted 5 days earlier by a dramatic announcement from the Clinton White House—Russia would join the space station program as a partner. Russia's participation had been contemplated during the redesign process, but as a supplier, not a partner. The Clinton Administration increased the number of joint flights that had been announced by President Bush, and vastly expanded the nature of the cooperation by essentially merging the U.S. and Russian space station programs. Russia agreed to build several modules including two that form the basis of the station (NASA agreed to pay for one of them), and to launch two Soyuz spacecraft a year to serve as ''lifeboats'' and several Progress spacecraft per year to ''reboost'' the station periodically to keep it in the correct orbit. These Russian-built elements are critical to the design of the space station, and require a continuing commitment by Russia. The Clinton Administration's motivation in bringing Russia into the space station program appears to have been rooted in foreign policy issues, among them the desire to convince Russia to abide by the Missile Technology Control Regime (MTCR) to stop ballistic missile proliferation. Russia's decision to abide by the MTCR was announced at the same time as the space station cooperation.(see footnote 2)
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NASA said that the agreement was beneficial to the space station program, too, and would save $2 billion and 1 year of schedule compared with the design it had just developed. The new ''International Space Station'' (ISS) program, including Russia, was estimated to cost $17.4 billion.
Some argued that President Clinton's decision to bring in Russia saved the program because its new foreign policy dimension attracted votes in Congress. Others contended that Russia might doom the program because of uncertainty as to whether it would be able to fulfill its sizeable commitments to the program. Shortly after the announcement that Russia would join the program, the Senate voted on the FY 1994 VA–HUD–IA appropriations bill. A Bumpers amendment to terminate the program was defeated by 19 votes, the closest margin of any of the eight Senate votes on space station from 1991–1998.
From the beginning, challenges arose with Russia's participation. Many promises were made by high ranking Russian government officials that sufficient funding would be provided to fulfill Russian commitments to ISS. Most were not kept. NASA initiated contingency plans to cope with the possibility that Russia might not build or launch elements that were in the critical path, including the Zvezda Service Module which provides crew quarters and guidance, navigation and control (GN&C) functions. Russia's ability to provide sufficient Soyuz ''lifeboat'' spacecraft and Progress ''reboost'' spacecraft also was questioned. Funding for Russia's space program was under severe stress, and construction of Zvezda, for which Russia was expected to pay, was significantly delayed.
After three years of insisting that it could build ISS for $17.4 billion, in September 1997, NASA finally conceded it could not. Cost overruns on Boeing's contract and the need for an additional $430 million for NASA in FY 1998 were announced. NASA began transferring funds from other NASA programs into space station construction.
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On the positive side, however, construction of ISS hardware was finally underway and NASA was engaged in the shuttle-Mir program with Russia. U.S. shuttle dockings with Mir became routine, and American astronauts joined Russian cosmonauts aboard Mir for long duration (several month) missions. NASA gained significant operational experience that included learning to cope with emergency situations such as a fire, and a collision between Mir and a cargo spacecraft.
1998–JANUARY 2001 CHABROW COMMITTEE REVIEWS PROGRAM, IN-ORBIT ASSEMBLY BEGINS, MORE COST GROWTH, CONGRESS LEGISLATES A CAP
Following the cost growth announced in late 1997, NASA convened an independent ''cost assessment and validation team'' headed by Jay Chabrow. The Chabrow committee concluded that the station could cost up to $24.7 billion and take 10–38 months longer to build than NASA estimates. NASA did not accept those findings in their entirety, but agreed that it would take longer to build and cost $1.4 billion more, bringing NASA's estimate at that time to $22.7 billion.
Amidst these announcements of increased costs and delayed schedules, in-orbit assembly of the space station finally began. Almost 15 years after President Reagan's speech initiating the space station program, in November and December 1998 the first two segments were launched. First was the Zarya (Dawn) module, built and launched by Russia, but paid for by NASA. Second was the Unity module, which was built, launched, and paid for by NASA.
The launches of Zarya and Unity were good news, but they were followed by a 19 month hiatus because of Russian delays in building the Zvezda module, for which Russia itself was expected to pay. Without it, crews could not remain on the space station without the shuttle being present. In July 2000, Zvezda was successfully launched and the gates were opened for ISS assembly. The U.S. laboratory module, Destiny, has now been added, along with solar arrays to provide electricity to the station, and Control Moment Gyros (CMGs) to keep the station oriented properly.
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The first crew, Expedition 1, took up residence in November 2000. The Mission Commander was American Bill Shepherd. He was joined by two Russians: Soyuz Commander Yuri Gidzenko and Flight Engineer Sergei Krikalev. Crews rotating on 4–6 month shifts are expected to continue through the lifetime of the station, conducting research in a variety of scientific disciplines.
Continuing attempts in the House to terminate the space station failed during this time period, with increasingly wider margins. The most recent House vote, in June 2000, defeated a Roemer amendment to the FY 2001 VA–HUD–IA appropriations bill by a vote of 98–325. There have been no Senate floor votes on terminating the station since the retirement of Senator Bumpers, who had spearheaded such attempts, in 1998.
However, Congress did enact a cost cap on the station, including in the conference version of the FY 2000–2002 NASA authorization act (P.L. 106–391) a Senate-passed provision limiting development costs to $25 billion and associated shuttle launch costs to $17.7 billion. According to the Act, the cap does not apply to operations, research, or crew return activities subsequent to substantial completion of the ISS (defined as when development costs comprise 5% or less of the total ISS costs for the fiscal year). Contingency funds of $5 billion for development and $3.5 billion for launch were also provided, although those funds may only be used for the following contingencies: lack of performance or termination of participation of any of the international partners; loss or failure of a U.S.-provided element during launch or on-orbit; on-orbit assembly problems; new technologies or training to improve safety on ISS; or the need to launch a shuttle to ensure the safety of the crew or maintain the integrity of the station.
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ISS PROGRAM STATUS TODAY
Assembly of the space station is continuing. The first crew exchange took place in March 2001, and one Russian (Commander Yuri Usachev) and two Americans (Flight Engineers James Voss and Susan Helms) now are aboard. The first research ''rack'' has been delivered. According to NASA, Russia appears to have sufficient funding to provide Soyuz and Progress spacecraft for this year and 2002, but Russian funding constraints and the overall relationship between Russia and the United States continue to add an element of uncertainty to the program's future.
Of more immediate note, President George W. Bush's ''budget blueprint'' revealed $4 billion in cost growth for FY 2002–2006, which would exceed the legislated cap. NASA insists that the figure is still being ''scrubbed'' and the final amount may be $2–3 billion instead. Even the lower figure represents a significant level of growth that many find all the more surprising because it is occurring so late in the program. Much of the U.S. hardware has been built and in-orbit assembly is underway. Many had assumed that, barring a catastrophe, the program was past its major cost hurdles. Instead, NASA now says that a ''bow wave'' of requirements had built up over the years that now are coming due.
Congress is now facing a proposal from NASA to take actions to reduce costs and stay within the legislated cost cap. I know these will be addressed by Mr. Goldin, so I will only briefly summarize them here. NASA is still assessing the extent of the cost growth and options for addressing it, so this represents a work in progress. Mr. Goldin may have more details in his testimony today. What is being considered includes:
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Terminating ISS construction after completion of the ''U.S. Core'' and launch of the European and Japanese laboratory modules. Several segments of the station scheduled for launch after the U.S. Core is completed (defined by NASA as the launch of Node 2) are being built for NASA by Europe and Japan as part of barter agreements. Node 3 and a Cupola are being built by Europe, and a centrifuge and its associated Centrifuge Accommodation Module by Japan, in exchange for NASA launching the European and Japanese laboratory modules. The fate of these elements is unclear, since if they are canceled, NASA would have to renegotiate the barter agreements. Also, the costs to integrate them onto the space station may be sufficiently small that they can be accommodated within NASA's proposed revised budget. Many in the scientific community consider the centrifuge to be one of the premier pieces of scientific equipment planned for the space station.
Indefinitely postponing the U.S. Habitation Module (the ''Hab'') and the Crew Return Vehicle (CRV) and canceling the Propulsion Module. Without the Hab and CRV, crew size could be limited to three instead of six or seven, with consequent impacts on the amount of scientific research that can be conducted. NASA estimates that it takes ''2 1/2'' people to operate the station, so only half of one person's time would be available for research. The Propulsion Module was initiated by NASA to reduce dependence on Russia for reboost. NASA has canceled it already. The European Space Agency (ESA) is planning to build an Automated Transfer Vehicle which could fulfill this function and is expected to be available in 2004. NASA apparently plans to rely on Europe as a backup to Russia for this purpose.
Reducing the ISS scientific research budget by 40%.
It must be noted that the $4 billion cost growth estimate is accompanied by a list of ''threats'' that might materialize, possibly resulting in additional cost growth in the future.
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SYNOPSIS OF COST GROWTH AND SCHEDULE DELAYS
The two tables appended to this statement provide details on cost growth and schedule delays in the space station program over the past 17 years.
Briefly, when NASA began the space station program in 1984, space station assembly was expected to be completed by 1994. By the time NASA terminated that design in 1993, that date had stretched to 2000. In 1993 when NASA announced initiation of the current ISS design, assembly was to be completed in 2002. That date has slipped to 2006. If compared to the original expectations in 1984, the current completion date is a 12 year delay. Compared to what was initially promised for this design in 1993, it is a 4 year delay.
As Appendix 1 explains, comparing the costs for the space station is extremely difficult since over the years what is included in those estimates has changed significantly. The $8 billion estimate provided in 1984 was expressed in FY 1984 dollars (as if all the funds were paid out that year). The estimate for the current design has grown from $17.4 billion in 1993 to $28-30 billion today. Both of those figures are expressed as ''real year dollars,'' which according to NASA reflect current and prior year spending unadjusted for inflation, plus future year spending that includes a factor accounting for expected inflation. The estimates for the original design in 1984, and for the current ISS design, are similar in that neither includes costs for launching the station into orbit, civil service salaries, or operational costs. They are dissimilar in that they reflect significantly different designs, with the current ISS design providing many fewer capabilities than the 1984 design.
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Focusing on cost growth for the current ISS design, the $17.4 billion estimate in 1993 has grown to $28–30 billion today, an increase of 61–72%. The growth occurred in stages. NASA maintained the $17.4 billion estimate until March 1998 when the agency announced that its new estimate was $21.3 billion. That cost growth led NASA to initiate the review by the Chabrow committee. Although NASA did not accept all of the Chabrow committee's findings, the agency raised its own estimate to $22.7 billion later in 1998. That figure grew to $23.4–26 billion in 1999, and to $24.1–26.4 billion at this time last year. The $28–30 billion figure today reflects the recently announced $4 billion in cost growth. NASA spent $15.8 billion on ISS from FY 1994–2000; $2.1 billion was appropriated for FY 2001.
CONCLUSION
Mr. Chairman, you asked where the space station program is today. The brief answer is that assembly is underway and crews have begun working aboard the station, but the program finds itself in a familiar situation-experiencing significant cost growth. Congress once again is faced with difficult choices about how to proceed with the program.
Congress has steadfastly supported the program—though sometimes with very close vote margins—through these many years. The questions Congress will need to address this year are whether to insist that NASA stay within the cap imposed last year or to relax that cap or permit the cost increase to be covered by the contingency funds. If the decision is made to retain the cap, questions are likely to arise about how to cope with the risk of continuing dependence on Russia and the impact of potentially reducing the amount of research that can be conducted there. If the cap is relaxed, the issue would remain of where additional funding might be found. Congress may also decide to direct NASA to build some, but not all, of the capabilities currently under review. For example, the decision could be made to build the Crew Return Vehicle, but not the Habitation Module.
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The choices are difficult, and there are no guarantees that, whatever decision is reached this year, Congress will not be presented with announcements of further cost growth in the future. That is one aspect of the space station program that has remained constant throughout the past 17 years.
APPENDIX 1: SPACE STATION COST ESTIMATES: 1984–2001
Table 1 shows cost estimates used by NASA since 1984 (FY 1985) to represent the cost of the U.S. portion of the space station program. These numbers are not directly comparable with each other, however. Hence, caution must be used in comparing these estimates.
For example, the $8 billion estimate from 1984 was only for research and development, and was expressed in FY 1984 dollars. In the FY 1988 NASA authorization bill, however, Congress directed NASA to include other costs in the estimate, including, for example, marginal shuttle launch costs during assembly, tracking and data services, the since-canceled Flight Telerobotic Servicer, and ground test facilities. Subsequent estimates for the Freedom program therefore included those additional items. Also, NASA began expressing the estimates in ''real year dollars,'' which in NASA parlance means that funding shown for previous years is not adjusted for inflation, while estimates of future year funding are adjusted for inflation. For the on-going International Space Station program, NASA returned to the practice of not including launch costs, for example, but includes the costs of science experiments, which were not included in cost estimates for Freedom.
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Another complication when comparing the original $8 billion cost with today's estimates is that the original design was not only for an occupied base where astronauts would live and work, but two automated platforms as well (one in an orbit near the space station for scientific research and one in an orbit around Earth's poles for earth observations). Other content changes also were made. Thus the $8 billion was an estimate for a much more capable set of space facilities than only the occupied base being built today.
The estimates from FY 1985–2000 are either through ''assembly complete'' or ''permanent human occupancy,'' and do not include operational costs past those dates. ''Assembly complete'' is the date when the space station would be completely assembled. ''Permanent human capability'' (PHC) was a benchmark NASA used for budgeting and scheduling purposes beginning with the March 1991 redesign through the end of the Freedom program in 1993. PHC denoted when a crew could remain aboard the station year-round without the space shuttle attached. NASA explained that it was using PHC instead of assembly complete to illustrate that the space station would continually evolve in an undefined and unbudgeted follow-on phase, and hence would not be ''complete'' at a particular point in time. With the advent of the International Space Station program, NASA returned to the practice of using an ''assembly complete'' date. However, in FY 2000, NASA added another benchmark, ''Development Complete,'' to denote when a 6- or 7-person research capability would begin. (Although NASA said ISS would accommodate 6 people, for several years it has suggested that 7 could be accommodated if an appropriately designed Crew Return Vehicle was available.) For FY 2000 and FY 2001, NASA listed both dates with accompanying schedule and cost estimates. Only the estimates for assembly complete are shown in Table 2.
In March 2001, following additional cost growth in the program, NASA has proposed terminating construction of ISS after completion of the ''U.S. Core,'' defined as the launch of ''Node 2,'' followed by the attachment of the European and Japanese lab modules. NASA has released a new schedule and cost estimate using that as the benchmark, as shown in the final entry to this table. Since NASA's decision has not been approved by Congress, it is shown as ''under discussion.''
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APPENDIX 2: MAJOR PROGRAM CHANGES TO THE U.S. PORTION OF THE INTERNATIONAL SPACE STATION
The space station program began in 1984, with a ''Power Tower'' configuration subsequently chosen as the reference design. In late 1985–1986, this was replaced by a ''dual-keel'' design; the details of this design were released in 1986 so this is listed as a 1985–1986 program change. Table 1 summarizes that change, and five subsequent major changes (another one later in 1986, 1987, 1989, 1990–1991, and 1993). All of these are often referred to as ''redesigns,'' though NASA refers to most of them as ''restructurings'' or ''rephasings'' instead. Here they are referred to them as ''program changes.''
Some analysts count 1990 and 1991 as separate program changes. They are counted here as one, since although the problems surfaced in 1990 and NASA began addressing them, the new plan responding to all the problem areas was released in March 1991 (in response to congressional direction that NASA restructure the program). Also, the 1993 program change is counted as one, not two, even though there were two phases of the process: one which resulted in the September 7, 1993 ''Alpha'' design, and the other which led to the current International Space Station (ISS) program. Hence, Table 1 identifies six major program changes from 1984–1993, although other analysts may cite a higher number.
The table includes NASA's recent proposal to curtail space station construction once the ''U.S. core'' is completed because of $4 billion in cost growth in the ISS budget. Since Congress has not yet approved NASA's decision, this potential program change is identified as ''under discussion.'' If NASA proceeds in this direction, three U.S. elements will not be built until and unless additional funding is available—the Habitation Module, Crew Return Vehicle (CRV), and Propulsion Module. Decisions have yet to made regarding hardware, such as Node 3 and the Centrifuge Accommodation Module and its associated equipment, being built by other countries for NASA on a barter basis. NASA has not decided whether these elements will continue to be part of the ISS program, depending on whether the integration costs NASA would incur can be accommodated within the new budget guidance. Thus, the impact of the recently proposed changes cannot yet be fully discerned. However, concern has been expressed that if the CRV is not built, the probable reduction in crew size from six or seven to three will limit how much scientific research can be conducted.
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More information on the reasons for bringing Russia into the space station program are discussed in CRS Issue Brief 93017.
[The information follows:]
BIOGRAPHY FOR MARCIA S. SMITH
Marcia Smith is a Specialist in Aerospace and Telecommunications Policy for the Resources, Science, and Industry Division of the Congressional Research Service, Library of Congress, Washington, D.C. She has been at CRS since 1975, serving as a policy analyst for the Members and committees of the U.S. Congress on matters concerning U.S. and foreign military and civilian space activities, and on telecommunications issues including the Internet (and formerly on nuclear energy). She was Section Head for Space and Defense Technologies from 1987–1991, and Section Head for Energy, Aerospace and Transportation Technologies from 1984–1985 in the Science Policy Research Division.
From 1985–1986, Ms. Smith took a leave of absence to serve as Executive Director of the U.S. National Commission on Space. The Commission, created by Congress and its members appointed by the President, developed long term (50 year) goals for the civilian space program under the chairmanship of (the late) former NASA Administrator Thomas Paine. The Commission published its results in the report Pioneering the Space Frontier.
A graduate of Syracuse University, Ms. Smith is the author or co-author of more than 220 reports and articles on space, nuclear energy, and telecommunications and Internet issues. Previously she worked in the Washington office of the American Institute of Aeronautics and Astronautics.
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Ms. Smith is a member of the Board of Directors of the Challenger Center for Space Science Education. She is the North American Editor for the quarterly journal Space Policy. She is a Trustee of the International Academy of Astronautics (was co-chair of the Space Activities and Society Committee from 1991–1997, and is a member of the International Space Policies and Plans Committee and the Scientific-Legal Liaison Committee). She is a Fellow of the American Institute of Aeronautics and Astronautics (AIAA). She is a member of AIAA's International Activities Committee, and its Honors and Awards Committee; served on its Ethical Conduct Panel (1997–1999, chairman in 1999); was a member of its International Space Year Committee (1989–1992), Public Policy Committee (1982–1989) and Space Systems Technical Committee (1986–1989); was an AIAA Distinguished Lecturer (1983–1988); and was a member of the Council of AIAA's National Capital Section (1994–1996). She is a member of the Kettering Group of space observers. She is a Fellow of the British Interplanetary Society. She is a member of the Board of Directors of the International Institute of Space Law (IISL). She was a founder of Women in Aerospace, was its President (1987) and member of its Board of Directors (1984–1990), and is an Emeritus Member. She was President of the American Astronautical Society (1985–1986), on its Board of Directors (1982–1985), and Executive Committee (1982–1987, 1988–1989). She is a Life Member of the New York Academy of Sciences and the Washington Academy of Sciences (Board of Directors, 1988–1989). She is a member of Sigma Xi (the honorary scientific research society). She was a member of the Committee on Human Exploration (CHEX) of the U.S. National Academy of Sciences' Space Studies Board (1992–93, 1996–97). She serves on the editorial board of the journal Space Forum and is a contributing editor for the Smithsonian Institution's Air & Space magazine. She is listed in several ''Who's Who'' directories, including Who's Who in the World, Who's Who of American Women, and American Men and Women of Science.
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Ms. Smith is the daughter of Sherman K. and (the late) Shirley Smith. Born on February 22, 1951 in Greenfield, Massachusetts, she now resides in Arlington, Virginia.
STATEMENT OF ROBERT J. POLUTCHKO, MEMBER, COST ASSESSMENT AND VALIDATION (CAV) TASK FORCE ADVISORY COMMITTEE ON THE INTERNATIONAL SPACE STATION
Mr. POLUTCHKO. Mr. Chairman, and, members of the Committee, I am pleased to appear before the Committee to answer your questions regarding Space Station. The American people can take great pride in recent NASA accomplishments which have established the beginnings of a functional system on orbit. Much remains to be accomplished and your sustained support is more important than ever before.
The CAV Task Force had hoped that our 3-year-old projections would have long been overtaken by positive corrective actions and many more programmatic successes. Recognizing that the CAV has not been involved with the program since 1998, you requested a look-back perspective relative to the current status of the program.
Obviously, much has happened over the last 3 years that has shaped the current situation, but the details of the to-go plan are most key. Your first question, what issues raised by the CAV have not been adequately addressed? The '98 report outlined issues, findings, major risk areas, and nine recommendations. Subsequent Committee hearings indicated that NASA found the report was constructive and helpful. However, the current summary status of the program causes concern that, perhaps, more attention should have been given to several of the CAV items.
As only one example, we recommended that the Rev. C program plan be revised so that it is achievable with the financial resources available. If necessary, program content should be eliminated or deferred to fit within funding constraints. Conversely stated, the CAV believed that if the program could not develop an achievable plan, additional resources should be brought to bear at that time in order to mitigate the inefficient and disruptive snowplowing of deferred work and the postponement of critical issues which exert additional pressure on schedule milestones and cost-to-complete expectations.
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The cost and schedule status data recently presented by NASA, unfortunately reconfirms the CAV conclusion that a success-oriented management approach continues and a large amount of parallel workaround and deferred work activities exist, which result in additional costs and schedule risks to the program.
It seems very—fairly clear that realistic achievable task planning, scheduling, and budgeting remains a critical program deficiency and a reformed management approach is desperately needed.
The next question, what is your assessment of the current Space Station cost overrun in light of the recommendations of the CAV Task Force? With all due respect, it would be presumptuous to make a top-of-the-head assessment of the current cost overrun without the detailed knowledge that is required to responsibly analyze the current situation. Many important changes have transpired over the last 3 years, including a number of remarkable successes. However, in the retrospective way that you have asked the question, I would make the following judgments in light of the Task Force results.
The current schedule and cost overruns for the Rev. F program plan should not have been unexpected, or, for that matter, are not terribly surprising. What is troubling, however, is, first, the degree to which we are now contemplating increasing rather than decreasing our dependence on the Russians. Second, reducing costs by terminating ISS construction after the U.S. Core is complete and European and Japanese lab modules are launched. Third, indefinitely deferring the Habitation Module, the Crew Return Vehicle, the Propulsion Module, and reducing the science return. And, fourth, as mentioned earlier, the continuation of optimistic program implementation plans given the restricted resources that were being made available to the program.
Based on our state of knowledge at that time, the Task Force projected a 50/50 estimate of $24.7 billion and a schedule delay of 2 years, to December of '05 for Assembly Complete. The 70/30 projection was $26.3 billion and 3 years beyond December of '03, namely December of '06. We also concluded that additional funding of about $140 million annually would be required beyond Assembly Complete for an additional 1.4 billion for the 10 years operation phase.
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Your third question, what recommendations do you have to minimize or prevent further unseen growth on the ISS program and reduce program risk? Preventing unforeseen cost growth is, of course, impossible. But minimizing the impacts of unforeseen problems can be accomplished by ensuring that the program is planned with unencumbered schedule and budget reserves. The sub-tier plans must have enough flexibility to fix unforeseen problems in their respective areas and minimize the collateral cost and schedule impact to other areas.
The more likely situations occur with known threats that have not yet evolved form the risk stage to problems that cause or could cause real substantial impact. In this area, the CAV found that budget and schedule constraints had precluded ISS project managers from adequately planning for contingencies. Budget availability, rather than technical requirements, have a large influence on cost-effective program planning. The fact that approximately $4 billion of work content now has to be deferred or eliminated beyond a new milestone called U.S. Core Complete, is testimony to the fact that most of those original funds are now needed to achieve this new milestone.
In summary, Mr. Chairman, the retrospective look at today's ISS Program from the '98 CAV Task Force perspective, leads me to a single overriding judgment and recommendation. Namely, that we need to maintain the Committee's steadfast support of the program and encourage NASA to take a fresh look at conservative planning and rebaselining of the ISS Program, including reconsideration of the major deletions that NASA believes must be made in order to comply with existing fiscal funding and cap requirements. Yes, the rebaselined ISS Program will require additional, substantial funding. On the other hand, providing an International Space Station that would have severe operational constraints, much reduced science return, and be further delayed with higher run-out costs, may not be in the best interests of our Nation and our partners. Thank you very much, and I have provided a more complete written statement for the record.
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[The prepared statement of Mr. Polutchko follows:]
PREPARED STATEMENT OF ROBERT J. POLUTCHKO
Mr. Chairman and Members of the Committee: I am pleased to appear before the Committee to answer your questions regarding the International Space Station. Thank you for the invitation. I believe that all members of the CAV Task Force had hoped that our three year old projections would have been long overtaken by positive recovery actions and programmatic successes.
The CAV Task Force recognized, as I'm sure anyone else who has had any involvement with the ISS Program recognizes, that the technical and management complexity of the program is, and has been, extremely challenging and the systems integration requirements are unprecedented. NASA, the Congress, the contractors, the international partners and the American people should take great pride in the recent ISS accomplishments which successfully and safely conducted thirteen flights and established the beginnings of a functional system on orbit. Much remains to be accomplished and sustained support to NASA's hardworking and dedicated ISS team is more important than ever before.
The Committee asked that I address several questions from a reference point of our CAV Task Force Report which was released to NASA on April 15, 1998 and briefed to this Committee during your May 6, 1998 Hearings. Since I have not been involved with ISS since the May 6, 1998 Hearing, you have requested a ''look back'' perspective relative to the current status of the ISS Program. The overall current program status as presented by the NASA briefing to the Congressional Staff on March 5, 2001 and the brief summary of the Administration's FY 2002 Budget Blueprint Summary for NASA dated February 28, 2001, is the information benchmark for my comments. The transcripts of the later Committee Hearings of June, August and October 1998 were also reviewed. Obviously much has happened over the last three years that has shaped the current situation and, perhaps, the unencumbered, retrospective view you have requested may be of some help as the program develops, re-assesses and re-baselines the details of the ''to go'' plan.
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The Committee provided the following questions:
1) What issues raised by the Cost Assessment and Validation Task Force have not been adequately addressed?
2) What is your assessment of the current Space Station cost overrun in light of the recommendations of the CAV Task Force?
3) What recommendations do you have to minimize or prevent further unforeseen cost growth on the Space Station program and reduce program risk?
WHAT ISSUES RAISED BY THE COST ASSESSMENT AND VALIDATION TASK FORCE HAVE NOT BEEN ADEQUATELY ADDRESSED?
The CAV Task Force Report outlined a number of issues, developed a series of findings, identified major risk areas and provided nine recommendations. Over the several months following the release of the report, it became apparent from the subsequent Committee Hearings that the ISS Program did not have serious disagreement to the vast majority of the CAV issues, findings or recommendations. Quite to the contrary, NASA found that the CAV report was constructive and helpful. I do not possess insight of the specific details of the corrective actions that were implemented by the program nor a working knowledge of the subsequent three years of program activities. However, the summary of the current cost and schedule status of the program causes concern that, perhaps, additional focus and attention should have been given to several of these CAV items. As only one example, the CAV recommended that ''the present (Rev C) program plan should be revised so that it is ACHIEVABLE (emphasis added) with the financial resources available. Realistic milestone dates should be established as the basis for development of the program plan and internally defined target dates should be used for execution. If necessary, program content should be eliminated or deferred to fit within funding constraints.'' Conversely stated, if the program could not develop an ACHIEVABLE plan with acceptable program content within the resources available, additional resources should have been brought to bear at that time in order to mitigate the inefficient and disruptive snowplowing of deferred work and the postponement of critical issues which, in turn, invariably exert additional pressure on future schedule milestones and cost to complete expectations.
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A retrospective look indicates that the four major on-orbit modules were successfully accomplished on the following schedule relative to the Rev C baseline:
Additionally, the current program milestone plan (Rev F) shows:
The underlying issue here seems to be a continuation of a ''success oriented'' planning, budgeting and management approach that necessitates a large amount of parallel, workaround and rework activities which results in additional cost and schedule risks to the overall program. For even a modestly complex development program, when highly integrated schedules, budgets and task plans are baselined without adequate margins, reserves and risk mitigation expenditures, inefficient and costly program turmoil and disruption become the everyday way of life. The current status of the ISS Program seems to strongly suggest that this management approach remains as pervasive on the program today as it was three years ago. Program management had continually predicted that the hardware and software developments will meet planned performance goals of schedule and cost, despite the fact that similar predictions in the past had not been realized. One unfortunate characteristic of this misguided management approach is that frequent, major re-planning and rebaselining exercises then require very high and untimely traffic in administrative and contractual change management. This process in and of itself causes costly inefficiencies for nearly every segment of the program.
The CAV determined that cost and schedule variances as a percentage of work performed were growing. This increase in overrun growth rate suggested a very serious omen for management. Also for FY 1998, NASA and other non-Prime contractors accounted for approximately 47% of the ISS budget and it was projected that within two years this group will be consuming the majority of the ISS budget. We noted that NASA did not have an earned value Performance Measuring System (PMS) in place for much of the NASA and other non-Prime efforts. Given the scope and content of the NASA effort, measuring and forecasting schedule and cost performance is severely hampered.
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It seems fairly clear that realistic task planning, scheduling and budgeting remains a critical program deficiency and, actions to reform the management approach to this process is desperately needed. The current cost and schedule summary data presented by NASA confirms this conclusion. For example, and I quote from the NASA status report and the FY '02 Administration Budget Blueprint:
''Staffing levels and downstaffing plans underestimated assembly and ops realities''
''. . Service Module(SM) delay, resolving test anomalies, & significant more effort than estimated to close out paper.''
''Ops have identified need for additional staffing for procedures, development, training, software updates, and operations.''
''SM and U.S. schedule delays undermined ability to estimate or advocate the overall budget runout required to address threats and liens against reserves.''
Why did this happen? The FY 2000 budget performance assessment by NASA shows that the FY 2002 budget estimate was based on optimistic performance projections. Again I quote,
''Costs for FY 2000 planned $2278—versus $2364 actual''
''Uncosted carryover into FY 2001 planned $500M—versus $412 M actual''
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''DDT&E destaffing was planned—versus actual increased staffing for integ and ops''
''Flight H/W and S/W deliveries expected on schedule—versus many delays''
''Program liens were discounted by plan—versus actual liens exceeded by both Prime and non-Prime performance.''
Planning, managing and executing a development program such as ISS on a essentially flat annual funding level (or cap) is intrinsically out of phase with the development life cycle and budgetary needs of the program. The development phase of a program contains very little level of effort activity. Budgeting and funding ISS essentially at a fixed annual level introduces a continuing program dilemma and tends to exacerbate an already very difficult and challenging management job. ISS requires a highly integrated program plan of a multitude of elements which coordinates the efforts of literally thousands of contractors in many countries as well as the extensive non-Prime efforts at numerous government facilities. When problems arise that require additional resources, there is an initial, natural desire (or bias) to believe that the schedule and cost impacts can be absorbed into the work in process since it is known that additional, unencumbered fiscal funds are not readily available to operational managers. The only management alternative in this situation is to defer other scheduled work downstream with the hope and belief that the deferred work can be accomplished later at the same cost that has to be diverted and allocated to fix the problem which caused the deferral. Unfortunately, the reality is that this work (before deferral) was planned and scheduled at that point in time because then is when the program needed it to be accomplished. Work deferrals have collateral cost and schedule impacts which are seldom considered on a task by task basis. When many problems are simultaneously being funded and fixed on a program the size of ISS with essentially a fixed annual budget, the work deferrals integrated over the program can become such a massive perturbation that the integrity of the highly integrated program plans is jeopardized.
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I believe I understand some of the historical reasons, commitments and legislation that are in place and why we continue to utilize this budgeting and funding approach for ISS. It needs to be emphasized that those considerations, albeit important, have tended to complicate and adversely impact the management process, the ultimate costs and schedule—and even more critical—the final configuration products of the ISS DDT&E phase when compared to other more traditional management methods for a complex development program.
WHAT IS YOUR ASSESSMENT OF THE CURRENT SPACE STATION COST OVERRUN IN LIGHT OF THE RECOMMENDATIONS OF THE CAV TASK FORCE?
The CAV Task Force conclusions in April of 1998 were based upon a statistical combination of the effects of the issues, findings and risk assessments of the Rev C plan rather than a summed or even statistical worst case. In addition, the CAV provided a sanity check on our statistical judgments by extrapolating prior available program schedule and cost performance into the future. Based on our state of knowledge at that time, we projected a 50/50 estimate of $24.7 B for ISS Assembly Complete with a corresponding schedule delay of two years beyond December 2003 (12/05). The corresponding 70/30 projection was $26.3 B and three years beyond December 2003 (12/06) for Assembly Complete. The Task Force also concluded that additional funding requirements of between $130 M and $150 M annually would be required beyond Assembly Complete. Therefore, for the planned ten year operations phase, an additional $1.3–1.5 B will be required. These estimates did not include funding for possible extreme contingencies such as: major element or launch failures; withdrawal of an International Partner; or, the development of a U.S. propulsion capability which the Task Force believed should be factored into an overall Russian contingency strategy.
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With all due respect to the Committee, it would be presumptuous to make a top of the head assessment of the current Space Station cost overrun without the detailed knowledge that is required to responsibly analyze the current situation. Many important changes have transpired over the last three years including a number of remarkable successes. However in the retrospective way that you asked the question, I would be willing to make the following judgments in light of the CAV Task Force results. The current schedule and cost overrun for the Rev F program plan should not have been unexpected or, for that matter, are not terribly surprising. What is troubling, however, is: (1) the degree to which we are now contemplating increasing, rather than decreasing, our dependence on the Russians—particularly regarding propulsion, logistics and crew return; (2) reducing costs by proposing to terminate ISS construction after the ''U.S. Core'' is complete and European and Japanese lab modules are launched; (3) indefinitely deferring the Habitation Module, Crew Return Vehicle, and the Propulsion Module; (4) and, as mentioned earlier in response to Question 1, the perpetuation over the last three years of optimistic program implementation plans given the restricted resources that were being made available to the program.
The CAV Task Force believed and reported that ''THE major threat to the long term viability of the ISS is the uncertainty associated with the Russian funding commitment and the potential impact on the basic station infrastructure and utilization capability. A diminished level of Russian participation could significantly alter the current ISS assembly sequence and final design. Proceeding forward with full knowledge of the past, present and to some extent, the future economic environment in Russia without implementing adequate contingency capabilities to address likely shortfalls is tantamount to accepting a level of risk that could drive U. S. costs significantly higher.''
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The reality of the current status and NASA's work in process to re-assess the entire program seems to indicate that we are close to deciding to accept an almost unbounded risk for the indeterminate future with regard to the viability of timely logistics, propulsion and crew return support from our Russian partners. This approach as well as indefinitely deferring the U.S. Habitation Module limits the ISS to three (vice six) crew members until sufficient Soyuz capsules can (or will) be made available which, in all likelihood in the interim, will adversely impact the amount of science return. In addition, it is very likely that additional, expensive Shuttle flights may be required to provide the back-up to, and a gap filler for, the Progress vehicles.
All of the above sounds like false economy and seems to be driven primarily by self-imposed, annual funding caps or congressional mandated program development caps. To the interested and dedicated outside observer (and taxpayer), we should be able to face up to the realities of the current status and develop the right remedies, rather than expeditious ones, for the program and the nation. NASA desperately needs to develop a conservative re-plan for the ISS Program and make the case to the Administration and the Congress of the absolute necessity to get the program on a sustainable track to mission success. Again a quote from the 1998 CAV Report, ''Program cost and schedule increases will occur; however, the negative impacts can be reduced if the Program has the reserves to develop necessary cost and schedule risk mitigation plans and then commits itself to implement these plans. This is an area in which NASA, the Administration, and Congress must have a clear understanding and an agreed-to course of action.''
WHAT RECOMMENDATIONS DO YOU HAVE TO MINIMIZE OR PREVENT FURTHER UNFORESEEN COST GROWTH ON THE ISS PROGRAM AND REDUCE PROGRAM RISK?
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With all due respect, I am humbled by a portion of the question. ''Preventing unforeseen cost growth'' is almost an oxymoron in a major development program like ISS. ''Minimizing'', on the other hand, the impacts of unforeseen problems when they occur can be accomplished by insuring that the program is planned with adequate unencumbered schedule and budget reserves. The Master Schedule and sub-tier schedules must have enough flexibility to fix unforeseen problems in their respective areas and minimize any collateral cost and schedule impact to other areas. I fully realize the statement sounds obvious and somewhat trite—and it is meant to be. Developing an achievable and sustainable plan for a highly integrated program such as ISS, however, is a very difficult and laborious job requiring top-to-bottom management commitment in order to sustain program viability and minimize disruptions caused by unanticipated problems or failures over the life cycle. The process involves a great deal more than tacking on schedule and budget reserves at the Master Schedule level.
The more likely situations occur, however, with known system or subsystem threats that have not yet evolved from the risk stage to problems that cause (or could cause) real, substantive impact. Prudently conservative program plans at all levels can be managed to incorporate targeted risk mitigation activities. Threat identification and awareness are necessary risk management activities but are not sufficient. Many times an ounce of risk mitigation yields a pound of cure if the threat materializes. In this area the 1998 CAV Task Force found that budget and schedule constraints had precluded ISS program managers from adequately planning for contingencies. Budget availability rather than technical requirements had, in certain circumstances, a large influence on program planning. As a result, contingency planning, cost and schedule risk management, and risk mitigation had tended to be less proactive than they could or should have been. I suspect that this situation is probably more true today than in 1998 when instances of this problem extended across the program: the procurement of spares, the resolution of continuing parts shortages, implementation of Multi-Element Integrated Test (MEIT) throughout the program, the lack of adequate contingency alternatives relative to Russian shortfalls, hardware obsolescence projections, and inadequate schedule and cost margins.
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SUMMARY
Mr. Chairman, in attempting to answer each of your three questions, my retrospective look at today's ISS program from the 1998 CAV Task Force perspective leads me to a single, overriding judgment and recommendation; namely, that we need to maintain the Committee's steadfast support of the program and encourage NASA to take a fresh look at conservative planning and rebaselining of the ISS program, including reconsideration of the major deletions that NASA believes must be made in order to comply with existing fiscal funding and cap requirements. Yes, the rebaselined ISS program will require substantial additional funding but, on the other hand, providing a Space Station that has severe operational constraints and much reduced science return may not be in the best interests of our nation and our partners.
Thank you very much and I have provided a more complete written statement for the record.
Chairman BOEHLERT. Thank you. And your entire statements, all of the panelists, will appear in the record at this juncture. Mr. Rau.
STATEMENT OF RUSSELL A. RAU, ASSISTANT INSPECTOR GENERAL FOR AUDITS, NATIONAL AERONAUTICS AND SPACE ADMINISTRATION (NASA)
Mr. RAU. Thank you, Mr. Chairman. Mr. Chairman, and, members of the Committee, I appreciate the opportunity to be here today to discuss the International Space Station. The NASA Office of Inspector General regularly conducts reviews and audits of the Space Station and related Human Space Flight programs. Over the last several years, we have made numerous recommendations to prove Space Station program management.
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The Space Station has had a number of recent successes, including the deployment of crew and key hardware. These successes have been accompanied by reports of cost growth and schedule delays. There was also continuing concern about the participation of international partners. As a result, we have identified the Space Station as one of the NASA's top ten management challenges.
NASA recently reported results of an ongoing internal assessment of funding requirements for the Space Station for Fiscal Years 2002 through 2006. This assessment found—excuse me—that funding requirements exceeded the Fiscal Year 2001 President's budget by $4 billion, more than 50 percent above the 7.2 billion originally budgeted.
NASA has stated its commitment to execute the Space Station Program in accordance with the funding profile in the President's budget and related statutory cost caps. Therefore, NASA has identified a number of options for consideration. These options include canceling the U.S. Propulsion Module, restructuring the approach to providing habitation and crew return capabilities, and rephasing research activities.
As a result, we are in a wait-and-see mode concerning these upcoming decisions. In the past, NASA has been overly optimistic about meeting budget and time constraints. Our work, since 1996, shows a pattern of understatement by the Boeing Company, the Space Station's prime contractor, of cost estimates to complete work on the Space Station contract.
For example, one review found that Boeing understated subcontractor costs and another that Boeing did not report some of the cost overruns by specific contract task, making it difficult to determine the route causes of cost overruns. As a result, Boeing did not promptly identify costs variances or design and implement corrective action plans to avoid at least some of the projected cost overruns.
NASA did not effectively challenge Boeing's low estimates, even though internal estimates of cost overruns were considerably higher. For example, Boeing received excess incentive fee from NASA based on unrealistically low cost estimates. NASA then had to recoup these overpayments. Also, NASA was not firm enough in assessing Boeing's cost management with determining the amount of award fee to pay Boeing. Finally, NASA did not insist that Boeing implement corrective action plans where potentially significant cost overruns were being projected.
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In 1999, Boeing reported its third major increase in estimated cost overruns on the Space Station contract in just 2 years. Specifically, Boeing reported cost overruns of $986 million, an increase of more than $200 million at that time. At that point, the NASA Administrator asked the Inspector General for review of the Space Station Program.
In February 2000, we reported that the overall management of the Space Station contract needed improvement. In addition to repeat concerns with cost and schedule management, we found that NASA had not paid sufficient attention to Boeing's reorganization and restructuring activities due to mergers and acquisitions. These activities had the potential to significantly increase the cost of the Space Station and other NASA contracts with Boeing. We also found that NASA had not routinely performed independent estimates of cost to compete these station contracts.
NASA has also not performed periodic independent life-cycle cost estimates or regular independent annual reviews of the Space Station Program. We believe that NASA can use the framework established by the National Aeronautics and Space Administration Authorization Act of 2000, together with better business practices, to help ensure the most accurate information on the Space Station Program is reported to Congress, the Office of Management and Budget, and NASA management.
Actions should include, as a minimum, annual accounting and General Accounting Office verification of compliance with statutory funding limitations; review by the NASA Inspector General of NASA notifications, if any, of changes in Space Station costs that require additional funding above statutory caps; improved use of contractor costs and schedule systems and data for monitoring performance; periodic independent life-cycle cost estimates; regular performance of independent annual reviews that include estimates of the cost to complete the Space Station contract; and, finally, timely implementation of agreed-to recommendations resulting from Office of Inspector General and other external reviews of the Space Station Program.
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We will continue our emphasis on oversight of the Space Station Program as one of our top ten management challenges. Thank you, and I would be pleased to answer any questions you may have.
[The prepared statement of Mr. Rau follows:]
PREPARED STATEMENT OF RUSSELL A. RAU
Mr. Chairman and Members of the Committee,
Thank you for the opportunity to be here today to discuss NASA's management of the International Space Station (ISS) Program. The NASA Office of Inspector General (OIG) regularly conducts reviews and audits of the ISS and related Human Space Flight(see footnote 3) programs and has made numerous recommendations to improve cost, schedule, and technical performance. In today's testimony, we will highlight major challenges to the ISS Program with particular emphasis on contract and program management.
INTRODUCTION
The ISS Program is one of the largest and most complex international scientific projects ever undertaken. The Program's mission is to build and operate the ISS, a world-class orbital research facility. ISS assembly in orbit began with the launch of the U.S.-owned, Russian-built Zarya control module on a Russian Proton rocket in November 1998. The launch of the Space Shuttle Endeavor carrying the U.S.-built Unity connecting module followed in December 1998. Further, Space Shuttle and Russian launches have resulted in the deployment of the Zvezda Service Module and Destiny Laboratory Module, among other components. The first ISS three-member crew was launched in October 2000 on a Russian Soyuz Rocket, and a replacement crew was launched on the Space Shuttle Discovery (STS–102) in March 2001.
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The NASA Inspector General has identified the ISS as one of the Top 10 management challenges at NASA. Specifically, the NASA Inspector General has identified the keys to an effective ISS Program as:
Managing the political, financial, technical, and safety challenges presented by an international partnership.
Overcoming technical challenges inherent in manufacturing, assembling, testing and integrating in space, complex hardware and software components provided by different nations.
Safely maintaining, upgrading, and operating a structure as complicated as the ISS.
Maximizing the beneficial use of the ISS for scientific research and technology development.
Based on a recent ongoing internal assessment of the ISS Program, NASA determined that significant revisions were required to continue the Program in accordance with the funding profile outlined in the FY 2001 President's Budget. In total, the assessment identified that $11.2 billion was needed for Program requirements of which more than $4 billion(see footnote 4) (56 percent) was in excess of the FY 2001 President's Budget funding profile for the outyears FY 2002 through 2006.(see footnote 5) NASA has stated its commitment to execute the ISS Program in accordance with the funding profile in the President's Budget and relatedstatutory cost caps(see footnote 6) and has identified a number of options for consideration in order to meet this commitment. These options include the canceling of the U.S. Propulsion Module,(see footnote 7) a restructured approach to providing habitation and crew return capabilities, and rephasing research activities.
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In summary, the NASA strategy will focus on:
Deferring capabilities, incorporating management reforms, and refocusing the workforce to build the ISS and maintain commitments to international partners within budget.
Identifying the path to achieving a six-person crew capability to maximize research activity.
Seeking additional partner contributions.
Prioritizing science to increase funding of research.
NASA estimates that statutory cost caps on ISS costs will not be exceeded prior to substantial completion of the ISS,(see footnote 8) and no contingency funding(see footnote 9) will be required, although certain contingencies are anticipated. The contingencies will be funded within the existing budget. NASA is continuing its review of options to meet the FY 2002 and beyond funding profile and expects to complete this review in June 2001.
BACKGROUND
On January 13, 1995, NASA awarded the ISS prime contract (NAS 15–10000) to The Boeing Company (Boeing) Space and Communications Group for a total cost-plus-award fee/fixed fee/incentive fee amount of $5.638 billion.(see footnote 10) The contract requires Boeing to design, develop, manufacture, integrate, test, verify, and deliver to NASA the U.S. on-orbit segment of the ISS including ground support equipment and to provide ground and orbital support operations. Boeing is also required to provide technical support and data for NASA's operation and utilization of the ISS. Since January 1995, costs have increased significantly. The total award value is now $9.598 billion—a 70 percent increase over the original contract value. This cost growth includes new work added to the ISS prime contract, reflecting maturity in the program, such as integration and operation of on-orbit segments and cost overruns.
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NASA has made significant revisions to the requirements for ISS components. For example, in August 1999, the ISS prime contract was modified to eliminate the Habitation Module,(see footnote 11) which Boeing forecasted would overrun budget even before substantive work started. In some cases, these revisions occurred due to uncertainty concerning the performance of international partners. In October 2000, NASA halted further development on the Interim Control Module (ICM)(see footnote 12) after deployment of the Service Module(see footnote 13) reduced the risk associated with the total loss of Russian propulsion capability. Subsequently, in March 2001, NASA canceled the U.S. Propulsion Module due to budget concerns and the reduced risk of a near-term Russian propulsion shortfall.
In December 1999, NASA modified the fee structure of the ISS contract(see footnote 14) and resolved numerous outstanding and potential contractor claims as part of a global settlement(see footnote 15) that included an increase in contract cost of $404 million. A significant change involved the Government's ability to recoup award fee if on-orbit performance is unsatisfactory.(see footnote 16) The restructure enables Boeing to earn up to 11 percent technical and cost award fees on new work added to the contract(see footnote 17) (other than spares which have a separate fee arrangement). The technical award fee on new work is not subject to Government recoupment based on on-orbit performance problems. NASA accepted all of the contractor claims in the settlement at the amounts estimated by the contractor. Additionally, the entire $404 million amount was applied to increase the contract target cost, which is subject to award fee.
At the time of the global settlement, the cost overrun reported by Boeing was $986 million, the amount first formally reported by Boeing in March 1999. Currently, Boeing is continuing to report the same overrun ($986 million (see footnote 18) ) while at the same time indicating that it will submit claims for at least an additional $200 million.
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The ISS Program Office estimates that prime contract activities are about $2.1 billion (26 percent) of the total new obligation authority of $8.0 billion provided in the FY 2001 President's Budget (FY 2001 through 2005). These amounts reflect the completion of design, development, test and evaluation (DDT&E) activities and an increase in research, launch, payload ground operations and other ''non-prime'' activities. These ''non-prime'' activities total $5.9 billion over the same 5-year period. As of December 2000, Boeing reported that the DDT&E portion of the ISS prime contract(see footnote 19) was more than 90 percent complete.
CONTRACT MANAGEMENT
The prime contract for the ISS Program requires an Earned-Value Management (EVM)(see footnote 20) System for cost and schedule reporting. EVM systems track variances from budgeted costs and schedules. These variances can be used to estimate future performance. Our work going back to 1996 (see Appendix A) shows continuing, significant understatement by Boeing of the cost estimates to complete work on the ISS prime contract. We found Boeing has not adequately used EVM data to identify negative variances nor designed and implemented timely corrective action plans to mitigate the problems causing adverse cost and schedule impacts. Additionally, we found that NASA management did not use cost and schedule data from the contractor's EVM system to effectively challenge Boeing on its understated estimates.
In February 2000, we issued a report on performance management of the ISS contract.(see footnote 21) We conducted the review resulting in this report at the request of the NASA Administrator following the disclosure of a large overrun in the ISS prime contract. Boeing announced in late March 1999 that the total of actual and projected cost overruns on the ISS prime contract had increased by $203 million, from $783 million to $986 million.(see footnote 22) This was the third major increase in cost overrun that Boeing reported in 2 years. Boeing attributed part of the cost overrun to unexpected increases in indirect cost rates due to reorganizations, including the merger with McDonnell Douglas Corporation and the acquisition of Rockwell International Corporation.
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We concluded that management of the ISS prime contract needed improvement. Specifically, we found:
Boeing reported to NASA unrealistically low estimates of projected cost overruns on the ISS prime contract.
NASA did not act to effectively challenge understated contractor estimates. NASA paid (and later recouped) $16 million in unearned incentive fee based on understated estimates.(see footnote 23)
NASA and Boeing did not sufficiently emphasize cost management at monthly meetings held to discuss the status of the ISS.
Boeing extensively delayed negotiating major cost overrun modifications by submitting late proposals.
NASA did not act to promptly definitize (that is, incorporate into the contract by a modification) cost overrun proposals submitted by Boeing. The delays in definitizing the overruns negatively impacted performance measurement by limiting variance analysis to top-level estimates rather than to the detailed distribution to the work breakdown structure.(see footnote 24)
Boeing used ''negative'' management reserves(see footnote 25) to accumulate cost overruns that should have been distributed to the specific work performed.
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NASA had not routinely performed independent estimates to complete the ISS contract using EVM data.(see footnote 26)
NASA made optimistic award fee evaluations during a period of significantly understated contractor cost overruns.
Boeing had not developed mitigation plans for known cost risks.
NASA paid insufficient attention to Boeing's reorganization and restructuring activities due to mergers and acquisitions and related cost impacts on the ISS and other NASA contracts (see Appendix B for a discussion of the related NASA OIG audit of Boeing restructuring costs).
NASA had not structured award fee provisions(see footnote 27) of the ISS prime contract to provide sufficient weight (and, therefore, incentive) to the cost management area to ensure reporting of realistic cost estimates. Consequently, even unsatisfactory ratings in this area reduced the award fee by only a minimal amount.
NASA had not required that monthly status reports on Boeing cost, schedule, and technical performance from the Defense Contract Management Command (DCMC)(see footnote 28) be summarized at the ISS prime contract level. These reports provide valuable insight into emerging issues, particularly those with cost and schedule impacts, such that corrective action can be taken to mitigate these adverse consequences.
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We made numerous recommendations to improve ISS contract and performance management. NASA generally concurred with our recommendations.(see footnote 29)
PROGRAM MANAGEMENT
Our oversight of the ISS has found that NASA could make many improvements in program management. Some of NASA's ISS management practices were inconsistent with the high-risk, technologically complex environment of the ISS Program. The international aspects of the program also compound the challenges facing NASA management (see Appendix C for a discussion of NASA OIG reviews related to ISS Program management and the risks associated with international partnerships). We will discuss two particular areas of concern: the need for periodic, independent life-cycle cost estimates and Independent Annual Reviews (IARs)(see footnote 30) of the ISS Program.
In 1998, the General Accounting Office (GAO)(see footnote 31) completed a life-cycle cost estimate of the ISS Program that totaled about $96 billion, but NASA had not developed its own estimate against which the GAO amount could be compared. NASA has not done an independent life-cycle cost estimate of the ISS, although the Agency has requested at least one major external review of ISS costs.(see footnote 32) Periodic independent life-cycle cost estimates are a key program management tool for determining and assessing budgets and identifying and quantifying areas of program risk.
The ISS Program was not subjected to an IAR in 2000 or to-date in 2001.(see footnote 33) The NASA Independent Program Assessment Office reported the results of the last IAR of the ISS Program in May 1999. That review was comprehensive and provided clear warning of cost, schedule, and technical problems that required management attention. Concerning the ISS prime contract with Boeing, the IAR concluded that cost overruns were likely to continue to grow because Boeing had not improved its cost performance since the prior (1998) IAR. Also, the IAR forecasted that similar poor cost performance could be expected in post-development activities such as sustaining engineering. The 1999 IAR did not independently estimate ISS Program life-cycle costs or the cost to complete the ISS prime contract with Boeing. The 1999 review followed up on recommendations made in the 1998 IAR of the ISS Program.
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In our February 2000 report, we indicated that independent estimates of ISS contract costs were not routinely performed by an activity outside the program management chain of command. The ISS Program Office does not conduct truly independent assessments given its management responsibilities for the Program. We recommended that such independent estimates be performed, and NASA agreed to obtain them as part of the IAR process. Since that time, however, NASA has not performed an IAR.
Independent cost estimates of both the ISS Program and its contracts serve NASA management as well as the Congress and OMB by providing a ''nonadvocate'' perspective on cost estimating assumptions and methodologies used to develop cost, budget, and other financial information.
CONCLUSION
In summary, NASA can use the framework established by the National Aeronautics and Space Administration Authorization Act of 2000 to accurately report ISS costs. In addition, improvements to existing contract and program management guidance can strengthen oversight of the ISS Program.
The combination of the following actions will help ensure the most current status of the ISS Program is reported to the Congress, OMB, and NASA management:
annual accounting for, and GAO verification of, statutory funding limitations as required by the National Aeronautics and Space Administration Authorization Act of 2000;
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review by the NASA OIG of NASA notifications, if any, of changes in ISS costs that require contingency funding above the statutory caps as required by the National Aeronautics and Space Administration Authorization Act of 2000;
improved use of EVM systems and data for monitoring contractor performance;
periodic independent life-cycle cost estimates;
regular performance of IARs that include independent estimates of costs to complete ISS contracts; and
timely implementation of actions agreed upon in response to independent reviews.
In addition, we plan to continue our emphasis on oversight of the ISS Program as one of our Top 10 NASA management challenges.
If you are interested in learning more about the activities or reports referenced in this testimony, you can find the full text of most of our reports on the NASA OIG homepage, at T3http://www.hq.nasa.gov/office/oig/hq, T1or contact our office at (202) 358–2061.
Thank you, and I would be pleased to answer any questions.
APPENDIX A: EARLIER NASA OFFICE OF INSPECTOR GENERAL REVIEWS OF INTERNATIONAL SPACE STATION COST AND SCHEDULE MANAGEMENT
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In 1996, we reported that Boeing was not revising its monthly performance measurement reports on the ISS prime contract to reflect a reasonable estimate of cost to complete the ISS.(see footnote 34) Boeing's performance management system required that the company review monthly its estimate at completion and update the estimate at least annually. Boeing was reporting a variance at completion of about $13 million. However, based on our review of Boeing cost performance, we estimated that the variance at completion could be more than $140 million—$127 million more than Boeing was then reporting to NASA.
We concluded that NASA did not have a reliable estimate at completion to manage future funding requirements. We stated that the ISS Program may have to fund overruns in FY 1996 through 2003 in order to build the ISS. As a result, we recommended that NASA require Boeing to better analyze and report estimate-at-completion data. NASA agreed with our recommendation.
In 1997, based on concerns that Boeing was continuing to report unrealistic cost estimates on the ISS prime contract, we performed a follow-up to our prior audit.(see footnote 35) Our 1997 audit again found that Boeing did not report in its monthly performance measurement reports, reasonable cost estimates for completing work. The estimates were not realistic because Boeing reduced the monthly estimates provided by major subcontractors under the prime contract and thus reported a smaller cost overrun. Boeing stated that it used these reduced estimates as a management tool to encourage managers to reduce costs. In fact, the reduced estimates did not decrease costs. Instead, they limited visibility into expected cost overruns.
In February 1997, Boeing's variance at completion—the expected cost overrun—was $278 million. At this same time, NASA estimated the overrun to be $425 million—$147 million, or about 53 percent, more than the Boeing estimate. In June 1997 (after our follow-up audit began), Boeing increased its estimated variance at completion from $278 million to $600 million.
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To increase the reliability of Boeing's cost estimates, we recommended that NASA require Boeing to prepare detailed support for adjustments tosubcontractor estimates. We also recommended that the ISS Program Office monitor Boeing's adjustments to subcontractor estimates. NASA agreed with our recommendations.
In 1999, we reported additional problems related to oversight of Boeing's Earned Value Management System.(see footnote 36) We found that NASA had not ensured that the DCMC, its agent at Boeing's Huntington Beach facility,(see footnote 37) accomplished Government surveillance of Boeing's EVM System, as required by the contract administration delegation and the DCMC surveillance plan. As a result, the ISS Program had not benefited from the intended early identification of Program risks and oversight of corrective actions.
In this same audit, we also found that Boeing had not resolved an earlier identified weakness in the preparation and submission of the Variance Analysis Report.(see footnote 38) In 1997, the ISS Program Office notified Boeing that the Variance Analysis Report elements, including recovery plans for negative variances, were inadequate and out of date. However, deficiencies still existed in the June 1998 Variance Analysis Report. NASA concurred with our recommendations to ensure effective surveillance of the EVM System and to direct Boeing to improve the quality of its Variance Analysis Reports.
APPENDIX B: DISCUSSION OF BOEING RESTRUCTURING COSTS
In our February 2000 report on performance management of the ISS contract, we found that Boeing proposed to charge NASA significant costs related to the company's reorganization at the same time that Boeing's military and commercial customers would receive net savings as a result of the reorganization. To determine the cost impact on the ISS and other Agency programs, we performed an audit of the effects of the Boeing restructuring on NASA.(see footnote 39)
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On December 17, 1999, Boeing entered into an advance agreement(see footnote 40) with the DCMA acting on behalf of the Department of Defense (DoD), NASA, and other U.S. Government customers of Boeing. The advance agreement allowed Boeing to claim costs to reorganize and restructure as a result of its previous acquisitions and mergers, with the expectation that future savings to the Government would be at least twice the amount of the restructuring costs incurred and charged to Government contracts. NASA did not benefit from Boeing's restructuring and its advance agreement with DCMA. Boeing estimated that its DoD customers could realize potential net savings of $276 million and that NASA could incur as much as $115 million(see footnote 41) in additional costs resulting from Boeing's acquisition of the Rockwell International Corporation Aerospace and Defense Units (Rockwell) and its merger with the McDonnell Douglas Corporation (McDonnell Douglas). NASA did not have legislation and regulations(see footnote 42) comparable to those of the DoD regarding external business restructuring costs. Also, NASA was not closely involved in reviewing and negotiating Boeing's restructuring proposal and related accounting changes. We concluded that NASA has an opportunity to recover about $64.7 million(see footnote 43) on the ISS and other Boeing contracts through a more equitable distribution of future contract cost reductions.
We recommended that NASA seek legislation for NASA similar to that provided to DoD regarding business restructuring costs and participate in negotiations between DCMA and Boeing to protect NASA interests. NASA has proposed alternative corrective actions that are potentially responsive to our recommendations, including the modification of acquisition regulations to ensure NASA receives a fair share of future restructuring savings. We are awaiting implementation of the corrective actions.
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APPENDIX C: RELATED NASA OFFICE OF INSPECTOR GENERAL REVIEWS OF ISS PROGRAM MANAGEMENT
The following are summaries of NASA OIG reviews that illustrate the need for increased management attention on various aspects of the ISS Program.
RISK MANAGEMENT
In a recent inspection, we found several problems with the ISS Portable Computer System (PCS) and the displays developed for the PCS.(see footnote 44) The on-board PCS is the crew's primary interface for command and control of the ISS and provides the crew with caution and warning information.(see footnote 45) We determined that the ISS Program was not using an integrated product team in the PCS display development process. An integrated product team would enhance coordination between the various organizations responsible for display development. The lack of an integrated approach resulted in a communication breakdown between organizations responsible for PCS display development and the design of procedures for its use.
We also found that the ISS Program had no independent verification (evaluation and validation) of PCS displays or of the display development process, primarily due to schedule and personnel constraints. An independent verification process would help detect and correct errors and enhance utility at an earlier stage in the display development process. In addition, we found several usability issues that may impact safety, cost, and schedule. The issues include the display of inaccurate information, inconsistent application of commands, and cumbersome navigation. Finally, our assessment determined that the ISS Program does not have a coordinated, well-defined process for software engineering and software management. In some cases, ISS crew members did not have an opportunity to see the software until they were trained in its use, which was so late in the process that changes were difficult to make. We made several recommendations to improve development of the PCS. NASA either concurred or partially concurred with our recommendations.
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For the X–38/Crew Return Vehicle (CRV) Project, NASA was using a ''rapid prototyping''(see footnote 46) strategy. Rapid prototyping is one of the methodologies used to respond to the NASA Administrator's challenge of performing projects ''faster, better, and cheaper.'' Under rapid prototyping, the X–38/CRV project was relying on a high degree of concurrency among design, development, test, and engineering/evaluation activities, assuming an optimistic schedule to accomplish development and production of the CRV. While this approach offers potential high payoff, we found that under the more likely ISS scenarios, the approach negatively affects NASA's ability to accurately adhere to project schedule and cost, thus increasing risk.(see footnote 47) We recommended the Project focus attention on risk and performance management, including the use of documented performance metrics and criteria needed to enter and exit from each Project phase. NASA agreed with our recommendations to develop and document major characteristics, criteria, and strategies for progressing though the major Project phases.
INTERNATIONAL PARTICIPATION
We reviewed the planned acquisition of the Propulsion Module and have issued a draft report to NASA on our findings and recommendations. The purpose of the Propulsion Module Project was to develop a U.S. propulsion capability to mitigate the risk of a Russian failure to deliver critical elements or provide support to the ISS. NASA began the Project in October 1998 and selected a design called the U.S. Propulsion Module (USPM) in February 1999. In May 2000, NASA canceled one of two major elements of the USPM because of unacceptable safety, technical, and cost risks.(see footnote 48) In September 2000, NASA selected a new design called the U.S. Propulsion System (USPS) that was intended to be simpler and safer than the USPM. The Project Office estimated that the cost to complete the USPS would be $675 million. However, NASA canceled the USPS in March 2001 because of budgetary concerns and the reduced risk of a near-term shortfall in Russian propulsion capability due to the deployment of the Service Module in July 2000.
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In relation to managing the risks of international participation, we also reported that the ISS Program Office had not effectively transferred lessons learned to subsequent phases of the program for experiences gained in other long-duration space flights and in working with international partners.(see footnote 49) In another review, we found that the ISS Program Office had not developed an integrated and comprehensive contingency plan to address risks to the successful assembly of the ISS by the possible delay or default of the international partners.(see footnote 50) The contingency plan did not contain or clearly identify several critical elements for effective risk management, as required by Agency guidance. Specifically, the Program contingency plan did not contain cost and schedule impacts and did not clearly identify risk mitigation measures and primary consequences of the contingencies. In addition, certain Agency actions being planned and implemented to prevent additional schedule delays caused by problems in Russian participation had not been incorporated into the contingency plan because the plan was not kept current. NASA cannot assess the feasibility of the proposed contingency responses or determine the budgetary impacts without current and complete contingency plans. NASA basically agreed to establish procedures to ensure the ISS Program contingency plan complies with Agency guidance for effective risk management and to establish a process to ensure the plan is kept current.
Another area of risk involving international partners is common operations offsets or ''bartering'' agreements intended for NASA and its international partners to make exchanges in furtherance of their individual and collective interests. For example, in response to a request by the Chairman, House Committee on Science, we conducted an assessment of a barter arrangement between NASA and Japan and its National Space Development Agency.(see footnote 51) We found that NASA already had operational contingency plans and partnership agreements in place to meet current emergency crew medical transport requirements and that the Agency's decision to proceed to acquire an aircraft through a barter arrangement was based on an incomplete analysis, did not consider all reasonable alternatives, and cannot be clearly linked to overall crew medical requirements.
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Because barter agreements lack the structure and visibility that would otherwise be provided by contractual actions requiring appropriated funds, we recently announced a review of these arrangements to determine whether NASA is receiving reasonable consideration for launch services and other ''bartered'' items identified in the related agreements with international partners.
APPENDIX D: PRIOR NASA OFFICE OF INSPECTOR GENERAL REVIEWS OF NASA'S INDEPENDENT ASSESSMENT PROCESS
NASA's ability to provide accurate and credible cost assessments for its projects has been a concern for many years. The 1990 Report of the Advisory Committee on the future of the U.S. Space Program recommended NASA for an independent cost analysis group made up of about 20 ''top-notch specialized personnel'' to advise the Administrator on significant cost estimates provided to the OMB and Congress. In 1992, the GAO emphasized that ''estimates and analysis provided to the Administrator by the cost analysis group need to be independent in fact and appearance.''
In 1996, we reported on the organizational location of NASA's independent program evaluation and assessment function.(see footnote 52) At the time of our review, the Office of the Chief Financial Officer at NASA Headquarters performed the function. NASA planned to transfer the function from Headquarters to the Langley Research Center (Langley).
We concluded that locating the independent assessment and cost estimation function in a subordinate organization (that is, Langley) placed the function's independence and impartiality at risk. True independence and impartiality require that the function reside with officials without any stake in the competition for limited resources. Moreover, accessibility of the function's analysts to both top management officials and key program and project staff at Headquarters and in the field was a significant issue and was fundamental to the function's success. A staff at Headquarters would have ready access to key counterparts at GAO, DoD, and other Federal agencies. Staff at the Langley Research Center would not have this same access.
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We recommended that NASA locate a core staff at Headquarters capable of managing and overseeing the independent assessment and cost estimation function. Assistance could be provided by personnel located at Langley but functionally assigned to Headquarters. Management established the Independent Program Assessment Office at Langley but did not locate a core staff at Headquarters.
In 2000, we conducted a review to assess NASA's current and planned ability to develop independent cost estimates(see footnote 53) in support of the Agency's program and project management processes. We found that NASA was taking positive steps to improve its cost estimating capability by establishing a System Management Office (SMO)(see footnote 54) at each Center and by adding cost estimators in the Independent Program Assessment Office at Langley. However, we found that the organizational structures for the independent cost estimating function at the Independent Program Assessment Office and SMO did not provide for independent reporting of findings directly to the approving official who is designated depending on the nature of the individual program or project. Also, the Independent Program Assessment Office and SMO are funded through the Centers—a process that may hinder their independence. Consequently, NASA has less assurance that the opinions, conclusions, and recommendations made to the Administrator or other approval authority on acquisitions for Agency programs and projects are independent in fact and appearance.
We made recommendations to improve the independence of the cost estimating function and revise Agency policy to require an independent cost estimate at major milestone reviews. NASA agreed to make the policy changes. Management stated that the Agency conducts cost assessments annually as part of the IAR process. NASA policy also requires that an independent cost estimate be performed during a Non-Advocate Review.(see footnote 55) In response to our recommendation, management agreed to require another independent cost estimate after the Critical Design Review.(see footnote 56) However, NASA has not implemented our recommendations to enhance the independence of the cost estimating function.
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[The information follows:]
BIOGRAPHY FOR RUSSELL A. RAU
In January 1998, Mr. Russell A. Rau was selected as Assistant Inspector General for Auditing, Office of Inspector General, National Aeronautics and Space Administration (NASA). He is responsible for advising the Inspector General on the accomplishment of all aspects of the audit mission specified in the Inspector General Act of 1978, as amended. Under the leadership of the NASA Inspector General, he provides direction to a nationwide audit organization that focuses on NASA programs and operations, including the performance ofNASA contractors and grantees. His audit responsibilities include coverage of the NASA enterprises and procurement, information technology, environmental and safety issues.
Mr. Rau previously served as the Assistant Inspector General for Policy and Oversight, Office of Inspector General, Department of Defense (DoD). From October 1995 to January 1998, he was responsible for fulfilling the statutory responsibilities of the Inspector General, DoD, concerning audit and criminal investigative policy and oversight. In that capacity, Mr. Rau provided oversight to the activities of the financial and performance audit, contract audit, and criminal investigative organizations within DoD. Additionally, he was also responsible for accomplishing the Inspector General, DoD, mission related to DoD intelligence activities, including oversight of intelligence operations and counterintelligence activities.
Prior positions with the Office of the Inspector General, DoD, included Program Director for Systems Acquisition with audit responsibility for the DoD acquisition process and major Defense acquisition programs. Mr. Rau has also served as the Director of Finance and Accounting Audit Directorate where he was responsible for accomplishing the worldwide audit mission of the Inspector General, DoD, involving Defense accounting and financial operations, including the financial statement audit requirements of the Chief Financial Officers Act of 1990, as amended, and the Federal Financial Management Improvement Act of 1994. Mr. Rau also directed audits of: automated financial systems, including computer security; DoD payments to individuals and contractors; and DoD implementation of fiscal statutes.
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Mr. Rau received his bachelor and master of science degrees in accounting from the State University of New York at Albany in 1977 and 1981, respectively. He is a Certified Public Accountant, Certified Internal Auditor, and Certified Information Systems Auditor.
Response to the Questions for the Record of the April 4th Hearing for Mr. Rau, Submitted by the Honorable Ralph M. Hall
Why didn't NASA realize the same benefits from the various Boeing mergers that the Department of Defense did?
NASA did not realize the same benefits from the various Boeing business combinations as did the Department of Defense (DOD) because NASA does not have legislation and implementing guidance for business combinations similar to the legislation and guidance applicable to DOD.
The Defense Federal Acquisition Regulation Supplement (DFARS)(see footnote 57), section 231.205–70, ''External Restructuring Costs,'' provides guidance on restructuring costs and states:
. . .for business combinations occurring after October 1996, the Undersecretary of Defense for Acquisition, Technology, and Logistics must certify that projections of future restructuring savings resulting to DOD from the business combination are based on audited cost data and the audited projected savings for the DOD will either exceed the costs allowed by a factor of at least 2-to-1 or that the business combination results in the preservation of a critical capability that might otherwise be lost to DOD.
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NASA has no legislation equivalent to that in Public Law 104–208 or guidance to parallel that in the DFARS regarding business combinations. Further, the NASA Federal Acquisition Regulation (FAR) Supplement does not address business restructurings and advance agreements. Thus, if an external restructuring affects both DOD and non-DOD customers, there is no requirement that effects on non-DOD customers be addressed as long as the 2-to-1 savings-to-cost ratio is realized for the DOD. Although Boeing and the Defense Contract Management Agency (DCMA)(see footnote 58) agreed to provide NASA equitable treatment under the advance agreement(see footnote 59) that allowed Boeing to charge its restructuring costs to Government contracts, we found that NASA's share of the potential savings based on Boeing's mergers and acquisitions was not equitable.
Another reason NASA did not realize the same benefits from the various Boeing mergers as did the DOD was that NASA did not actively participate in the development or negotiation of the advance agreement with Boeing as required by NASA policy.(see footnote 60)
The FAR, Part 31, section 109, ''Advance Agreements,'' states that an advance agreement may be negotiated with a particular contractor for a single contract, a group of contracts, or all the contracts of a contracting office, agency, or several agencies. The FAR further requires that, before negotiating an advance agreement, the Government negotiator shall:
(1) determine if other contracting offices inside the agency or in other agencies have a significant unliquidated dollar balance in contracts with the same contractor;
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(2) inform any such office or agency of the matters under consideration for negotiation; and
(3) as appropriate, invite the office or agency and the responsible audit agency to participate in prenegotiation discussions and/or in the subsequent negotiations.
DCMA invited NASA to review the advance agreement before its implementation, and NASA did so. However, DCMA did not invite NASA to participate in the subsequent review and negotiation of the advance agreement. Further, NASA did not pursue participation in the negotiation. At the time that NASA reviewed the advance agreement (before it was signed), Boeing had not yet presented the total cost impact of the restructuring on NASA. In our opinion, the lack of NASA involvement, for various reasons, in the negotiation of Boeing's restructuring cost reimbursement and the resulting net cost (costs in excess of savings) to NASA of $65 million reflect the weaknesses in the present process.
Is legislation needed to prevent this situation from occurring in the future?
No, not at this time. We previously recommended that NASA pursue legislation similar to that provided to the DOD (Section 8115 of the DOD Appropriations Act of 1997, Public Law 104–208) requiring that external restructurings yield a 2-to-1 savings-to-cost ratio for NASA. NASA management concurred with the intent of our recommendation but stated that the pursuit of legislation was not the best approach to take. Instead, NASA management proposed to pursue an agreement with DOD to achieve, in future restructurings involving NASA contracts, the same 2-to-1 savings-to-cost ratio required for DOD.
In March 2001, NASA met with DCMA to determine actions that could be taken to ensure that contractor external restructurings yield a 2-to-1 savings-to-cost ratio for NASA like that required for DOD. DCMA's position was that it could not require the same savings-to-cost ratio on NASA contracts because acquisition regulations do not require it. Accordingly, NASA has asked the Director, Defense Procurement, Office of the Secretary of Defense, to modify DFARS 231.205–70. The proposed new language would require the cognizant administrative contracting officer to ensure that projections of future restructuring savings resulting for NASA from the business combinations be based on audited data, result in overall reduced costs for NASA, and exceed projected costs by a factor of at least 2-to-1; or the costs allowed, and the business combination will result in the preservation of a critical capability that might otherwise be lost to NASA. This language is similar to the DOD position.
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NASA has also initiated a NASA FAR Supplement case proposing the requirement for a 2-to-1 savings-to-cost ratio when NASA maintains contract administration.
We believe that full implementation of the actions of modifying the DFARS and NASA FAR Supplement will help ensure that NASA receives an equitable share of the cost savings resulting from contractor restructuring activities. Should the change in regulations not materialize or not be effective, we would resubmit our recommendation for a legislative change.
Responses to written questions submitted by Cong. Hall resulting from the April 4, 2001, hearing.
QUESTION 1:
''Why didn't NASA realize the same benefits from the various Boeing mergers that the Department of Defense did? Is legislation needed to prevent this situation from occurring in the future?''
ANSWER 1:
NASA has been engaged with DoD to oversee the Boeing Company restructuring since it was first announced, and we remain involved. At the time Boeing submitted its restructuring proposal to DoD, it projected a ratio of savings to costs in excess of 3:1 for NASA. Therefore, as proposed, the restructuring provided forecasted benefits to NASA within the current statutory savings requirements for DoD. It should be noted that changes made by the Boeing Company to their accounting system contemporaneous with, but distinct from the restructuring, resulted in increased costs to both NASA and DoD. Since a NASA Office of the Inspector General (OIG) report on these subjects was originally published, NASA management has worked with the OIG to develop a series of actions designed to enhance the oversight of contractor restructuring activities. In this regard, we are working with the Defense Contract Audit Agency to verify the Boeing savings projections. We recently notified the Defense Contract Audit Agency of our intention to request an audit of actual savings accruing to NASA. This audit of the costs incurred and the savings realized (through the 2001 period) will determine the accuracy of Boeing's original multi-year projections.
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With respect to future contractor restructuring proposals, we do not believe additional legislation is necessary at this point in time. We have formally requested that DoD revise the Defense Federal Acquisition Regulation Supplement to add a requirement that projected savings for NASA should exceed projected costs to NASA by a factor of at least 2:1. Such a regulatory change will ensure NASA equivalent treatment to DoD. If we are unable to achieve this regulatory change, we will work with the NASA OIG and Congressional staff, as appropriate, to develop a legislative proposal.
QUESTION 2:
What specific steps do you intend to take so that Congress can have confidence in the cost estimates provided with whatever Space Station restructuring plan NASA provides in response to the Administration's directive?
ANSWER 2:
The Office of Space Flight has issued a number of actions intended to improve the quality of cost estimating and increase confidence in those estimates, including independent internal reviews as well as external reviews. Stricter management oversight and cost reporting at several levels is a critical component of this. Per guidance from the Budget Blueprint, increased oversight of the ISS program through management reporting has been transferred to NASA Headquarters until reforms are in place. This is being implemented through the use of a more formal process of checks and balances, including more in-depth reporting of activities by ISS Program
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Management at Johnson Space Center (JSC) to NASA Headquarters, and some transfer of approval authority for program changes and reserve use. Pursuant to recommendations by the Inspector General, NASA has already begun to address concerns on cost estimating ability, and the comprehensive budget reviews undertaken over the last several months are a reflection of NASA's continuing commitment to improving cost estimating, reporting and oversight.
At JSC, the ISS Program Manager will exercise greater oversight over the prime contractor Boeing, develop a plan to manage contractors to work force levels, and initiate workforce reductions after FY 2002. Also, all ISS engineering projects outside the scope of the prime contract will be organized under one manager responsible directly to the ISS Program Manager and reporting directly to the JSC Center Director.
Furthermore, NASA recognizes the importance of estimating risk and maintaining sufficient reserves. As management oversight is strengthened, due diligence will be applied to assure that sufficient reserves are maintained. Finally, NASA will validate our internal cost estimates with independent review and evaluation as well as external review, in accordance with guidance in the President's Budget Blueprint, and provide for continuous evaluations of cost performance and cost and risk assessments for the program, reportable to NASA HQ management.
That NASA has performed detailed out-year analysis to develop a more realistic ISS program baseline reflects our commitment to heed the recent recommendations by the General Accounting Office and Inspector General for improved cost estimating. This analysis has revealed the potential for significant future ISS cost growth and the continuing challenge to find effective means to reduce and control costs.
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QUESTION 3a:
You indicate a willingness to allow external review and validation of Station costs in the future. Hasn't NASA's Langley Center performed this function in the past?
ANSWER 3a:
The Independent Program Assessment Office (IPAO) at NASA's Langley Research Center will continue to conduct an Independent Annual Review (IAR) for all NASA programs, including a review of the ISS program beginning in May 2001. The IPAO last conducted an IAR of the Space Station program in 1999. In addition to the IAR, there will be an external review (with people outside of NASA) undertaken this summer.
QUESTION 3b:
What did their independent reviews find?
ANSWER 3b:
The IPAO's 1999 ISS IAR identified rising civil service staffing trends, difficulty in meeting destaffing targets, and contract overruns. Although it acknowledged that ISS program cost estimating and status reporting needed improvement, it did not anticipate increasing budget requirements. Rather, the IPAO assessed program reserves to be healthy, and suggested that realization of all existing liens would be unlikely. Obviously in hindsight, this assessment was in error. As part of NASA's ongoing assessment of recent cost growth, we will seek to identify better indicators to track for early warning of potential problems in the future.
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The IPAO also acknowledged the program's accomplishments and accurately described many of its challenges. Among the concerns expressed by the IPAO team were Russian funding shortfalls, U.S. and Russian schedule delays, the need to clarify software management plans and sustaining engineering critical skills requirements, and the need to strengthen management concepts for operations and utilization. The IAR also cited the need for better fidelity of software validation facilities, more robust software development staffing, and more time for multi-element integrated testing, crew and flight controller training, and operations preparation.
Many of these same issues were raised by the external Cost Assessment and Validation (CAV) Task Force which reviewed the ISS program in 1998 and reported to Congress.
QUESTION 3c:
Why have you discontinued using Langley for this function?
ANSWER 3c:
Use of LaRC's IPAO has not been discontinued by the ISS program. NASA requires that the conduct of all IARs be coordinated between the IPAO and the program manager to minimize program disruption. Because of the intensity of ISS development activities, element deliveries, and operations and utilization in 2000, ISS program management recommended, and Associate Administrator for the Office of Space Flight and the NASA Chief Engineer, in consultation with the Associate Deputy Administrator, decided to not conduct an IAR in 2000. Program assessments were focused on flight by flight readiness reviews. These reviews were conducted by NASA experts outside of the ISS program in preparation for the rapid schedule of on-orbit deliveries scheduled through the later half of 2000 and into 2001, and have proven to be very successful to date.
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QUESTION 3d:
Will you re-instate them?
ANSWER 3d:
The Office of Space Flight is coordinating with the IPAO to initiate the next ISS IAR in May 2001. This IAR will focus on the restructured program, including the high risk cost components identified during the recent bottoms-up review. NASA's Independent Assessment will increase emphasis on life-cycle costs for ISS program. The Team will be comprised of the best people available for the long-term look at technical risks and cost sensitivities required to provide the Agency's cost estimates at this point in time.
QUESTION 4a:
We have been told that the Space Station will require 2.5 to 3 people to operate and maintain it, leaving zero to 0.5 people to perform research if the Space Station crew size is limited to 3. Is this accurate?
ANSWER 4a:
To maximize the percentage of ISS crew time available for research, NASA, in concert with our International Partners, manages this valuable resource very carefully. The crew's schedule must accommodate a variety of standard tasks including routine system operation, equipment maintenance, stowage and inventory activity, visiting vehicle dockings/undockings, in-flight training and emergency drills, exercise, and medical exams and conferences.
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In the near term, although currently focused on assembling, activating, and checking out the ISS, as well as executing scores of new methods and procedures for the first time, we are devoting crew time to the U.S. research program. The research time is roughly equivalent to the efforts of 0.25 to 0.5 crew members during a typical work week. As we gain ISS operational experience, we will continue to refine crew time requirements and will seek opportunities to reduce the time burden on the crew to make more time available to supporting research activities.
QUESTION 4b:
Do we have agreements with the International Partners for U.S. astronauts to perform research for them on the Station?
ANSWER 4b:
The various Memoranda of Understanding between the U.S. and our International Partners stipulate that the ISS will have an integrated crew, and that the partner allocation of both flight assignments and crew time allocated for research will be commensurate with their contributions to the ISS program. Depending on the specific mix of astronauts making up a specific crew, U.S. astronauts may perform research for our European, Japanese, and Canadian partners, and crew members representing these International Partners may conduct research on U.S. experiments.
QUESTION 4c:
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If so, what will the crew reduction from 7 to 3 mean for the conduct of non-U.S. research?
ANSWER 4c:
For the next several years, there is no impact to limiting permanent crew capability to three, since a crew of three had been previously planned throughout the ISS assembly period, while the research equipment was being deployed and science operations ramped up. After assembly, however, keeping the ISS crew size at 3 will result in limitations in crew time available to conduct previously planned research, U.S. or otherwise. NASA is beginning to explore several opportunities to provide additional crew time to meet research needs. Use of crew time from Space Shuttle crews while docked to the Station is one option—including larger crews. These crews could either work directly on research experiments, or complete non-research tasks to free up the time of the permanent crew to conduct more research. Efforts will also be made to design the research program to minimize requirements for direct crew manipulation of experiments.
QUESTION 4d:
Will our European, Japanese, Russian, and Canadian partners be able to conduct any research on the re-scoped Station? Or conversely, will we?
ANSWER 4d:
Yes, the Space Station will support research with a crew of three. In fact, there is research going on currently in orbit with the crew of three, during assembly.
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QUESTION 5:
How many people and which Centers will be affected by the $1 billion cut to the Station research program?
ANSWER 5:
No decisions have been made at this stage. NASA has undertaken a 90-day trade study to restructure the research program to fit within a range of technical and fiscal constraints. As those constraints are refined, a prioritization approach may become necessary in order to align the research program with on-orbit capabilities and available fiscal resources. We are actively evaluating the options through the trade studies now underway, and will vet the results of these studies through NAC and NRC committees, subcommittees, and task groups, as they are developed. If a prioritization is determined necessary, it will be based on the Agency Strategic Plan. The Centers that would be potentially affected are Ames Research Center, Glenn Research Center, Jet Propulsion Laboratory, and Marshall Space Flight Center.
QUESTION 6:
One of the criticisms of the Administration's proposed restructuring of the Space Station program is that the elimination of the planned U.S. Propulsion Module and Crew Return Vehicle (CRV) would appear to increase the United States' dependence on the Russians for refueling of the Space Station and for the crew rescue capability (by means of its Soyuz piloted spacecraft). How does NASA intend to ensure that the Station will have those capabilities in the event of Russian non-performance?
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ANSWER 6:
The benefit of cooperative partnerships is realized though the reduction of requirements each party has to fulfill. Russian, Canadian, European and Japanese capabilities are integral to the success of the partnership. Flexibility in addressing shortfalls by one partner is also provided through the contributions of the entire partnership.
Regarding refueling and propulsion-related risks, Russia is meeting its obligations at this time, and our confidence in their ability to meet their commitments has improved compared to that of prior years. For example:
The Zvezda Service Module, Russia's keystone element, is on orbit and functioning nominally.
Rosaviakosmos funding has stabilized. While still inadequate to maintain schedules for some downstream elements, Rosaviakosmos has given higher priority to the delivery of Progress logistics and Soyuz crew support vehicles. The ISS Program is currently tracking Russian production of 7–8 Progress vehicles for use at the ISS.
Program contingency plans in the past have focused on the availability of Russian resources to maintain two orbiting space stations. Given the deorbit of Mir, the risk of Russia not being able to provide propulsion is also reduced.
With the U.S. Lab launch and checkout, the control moment gyros (CMG) are now active, dramatically reducing the ISS attitude control propellant requirement to levels even lower than had been predicted based on modeling assumptions.
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With any prolonged shortfall or curtailment of Russian propellant delivery services, the ISS Program has four remaining sources of propulsion capability to sustain operations. First, the Russian Segment maintains propellant reserves to provide at least one year of propulsion service. Second, the Space Shuttle is capable of providing some reboost. This capability is not absolute in that it takes advantage on a mission by mission basis, of propellant allocated for mission design dispersions that goes unused when the mission is nominal. This capability is estimated to be 20–30 percent of reboost needs with no performance penalty, with an less than 5 percent of additional reboost needs if propellant tanks are fully loaded, although this reduces payload capability to the Station. with over two years of ISS operations we now know the total system effectiveness of Shuttle reboost to be larger than prior conservative estimates. Third, NASA also has the Interim Control Module in standby mode. These capabilities, at present performance levels, are sufficient to support the ISS at least until activating the European Automated Transfer Vehicle (ATV) in late 2004 or early 2005. The ATV will give the program a robust propellant delivery and operating platform to augment Progress capabilities if needed for sustained operations.
The ISS partnership doesn't have as much flexibility in addressing a shortfall of Soyuz vehicles. Russian funding priority can be provided to the Soyuz vehicles over that of Progress vehicles because the partnership has propulsive alternatives such as those described above, as well as additional options to transport dry cargo and logistics equipment via the Shuttle and the Japanese H–II Transfer Vehicle to be delivered in 2005.
Without a means of emergency return, we will not allow crew on the Station. This means that if the Soyuz is unavailable for whatever reason, the only current alternative is the Shuttle. In this case, the Station would be in crew-tended mode with crew on-board only with the Shuttle docked until the Soyuz was again available or another alternative was developed.
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QUESTION 7:
Mr. Goldin, in your testimony regarding the U.S. Crew Return Vehicle (CRV), you state that ''the U.S. CRV has a significant set of design activities to complete before we are ready to enter into a production contract.'' And you go on to state that ''meanwhile, the X–38 project is advancing, continuing to reduce technology risks to support a future decision to restore CRV production within the President's FY 2002 budget runout, if required.''
ANSWER 7:
However, you have testified that the Administration's proposed runout is forcing you to remove $4 billion of work from the Space Station program. Under what set of circumstances could you foresee having sufficient money available to build a Crew Return Vehicle, with its estimated cost of at least $1.2 billion—even if the Europeans contributed some resources?
As described in the testimony, NASA is initiating reforms and developing a plan to ensure that future ISS costs will remain within the President's 2002 Budget plan. Future funding decisions to develop and deploy any U.S. elements or enhancements beyond completion of the U.S. core, including the CRV, will depend on the quality of cost estimates, resolution of technical issues, and the availability of funding through efficiencies within the 2002 Budget runout for ISS or other Human Space Flight programs and institutional activities. Significant test activities remain on the X–38 program to ensure that we have reduced the technical risk to the development program.
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QUESTION 8:
Despite your optimistic assessment of potential options, it is hard to see a 40 percent cut to the Station research budget and the reduced crew size as anything but devastating in their impact on the viability of the Space Station's research program. Under the proposed Station restructuring plan, it looks as though we will have the following situation:
For the foreseeable future, the funded Space Station's research racks will have essentially no more capability to perform experiments than those that have flown on the Shuttle for the past 20 years.
Although the U.S. had planned to fly 23 research racks on the Space Station, it is uncertain whether there will be sufficient funds under the proposed budget to build and fly more than the first 10 U.S. racks.
Crew health and safety research, which is to be the highest research priority on the restructured Station, will be severely hampered by the reduced crew size, since it will limit the number of available test subjects (especially since I understand that the Russians have not agreed to serve as test subjects).
Biotechnology research—which is to be the second highest research priority on the Station—requires an undisturbed microgravity environment. However, the plans to compensate for the reduced crew size by docking the Shuttle to the Station for extended periods (to allow Shuttle crew to do research), will disrupt the microgravity environment of the Station and have a negative impact on the quality of that research.
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Fundamental research, which your testimony describes as research that ''will lead to ground-breaking advances'' is to be the lowest research priority on the Space Station, and there is no assurance that there will be sufficient funds available to build the major ''facility-class'' research hardware needed for that fundamental research.
Under the best of circumstances, the centrifuge facility is not likely to show up until 2008—a two year slip—and may be delayed even further.
Proposals to compensate for reduced crew size by augmenting the Station's capability to support ''telescience'' from the ground are contradicted by the fact that there is no additional funding available in the budget for telescience beyond what is already planned.
Is there any part of this description of the research situation you with which you would disagree? If so, what?
ANSWER 8:
No, however, conducting world-class research in space continues to be a top priority for the ISS. NASA has already begun to produce top quality science research with the deployment of the first rack of the Human Research Facility to the ISS in March 2001, on STS–102.
NASA has not determined the level of reductions required to the research budgets, and will do so only after all other ISS budget elements have been appropriately scrubbed. In addition, the component of the research budget that supports research operations will be closely examined to ensure the research facilities and equipment are reduced as little as possible. The strategy to minimize the impacts to the U.S.-funded research is being developed. One aspect of the mitigation plan is to take advantage of the human research facilities and Express Rack experiments during the early Expeditions. Crew time is a critical resource to the research program because human intervention accelerates the rate of progress in most experimental endeavors involving biology and biomedical research. It is important to note that the crew of three was previously planned throughout the Station Assembly period, while the research equipment was being deployed and science operations scaled up. The budget plan for U.S. funding was originally based on supporting those capabilities consistent with a crew size of three. The potential impact of the ISS research budget restructure is to threaten NASA's ability to expand the on-orbit crew complement to six and to deploy the ''facility class'' research hardware. The Administration would welcome proposals from our International Partners that would expand the three-crew complement. During the period of three-person permanent crew size, NASA is considering options for significantly increasing astronaut time on-board the Space Station, such as flying a full crew complement on all Shuttle missions to the Station, and extending the length of Station visits from the Shuttle. The cost-benefit analysis of the extended Shuttle mission to the ISS will be made using all potential impact to both budget and the quality of the ISS microgravity environment.
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The U.S. Core Capability, with the International Partners' modules, supports approximately a 15-rack U.S. research program, compared to the previous 23-rack U.S. program. In the near term, the research program is concentrating on using available resources in the fields of biomedical research and biotechnology, with additional experimentation across the fundamental research disciplines to the maximum extent practical within resource constraints, and on Express Rack-level research activities during the early ISS assembly phase. The ongoing restructure effort will address the prioritization of the long term research by using the input from the scientific and commercial communities. Using this guidance, NASA will formulate a strategy to evolve the research capabilities beyond the initial ten racks to increase the impact of fundamental research. The current short term ''priorities'' are strictly dictated by the availability of resources and the previously planned time phasing of the research facilities.
The Centrifuge Accommodation Module (CAM) and centrifuge rotor are being developed by our Japanese partner in a barter arrangement with NASA. On-orbit delivery is currently scheduled near the end of the Assembly Sequence and is not specifically addressed in the U.S. Core program as defined by NASA. However, the CAM and associated hardware are critical to the Space Station Biological Research Project (SSBRP). A formal decision on the CAM and associated priority equipment will be made in the context of the research budget restructuring activity over the next 60 to 90 days, in consultation with our partners.
Planning Optimism
Chairman BOEHLERT. Thank you very much, and thank all of you. I noticed, Mr. Polutchko, that in your summary you said everybody needs to maintain its steadfast support of the program and I don't think that is in jeopardy. But you also say we should encourage NASA to take a fresh look at conservative planning and rebaselining. Has this served as a reality check for all involved in this venture? I mean, do you think people are finally coming to grips with the reality of the cost of this thing and what we need to do to go forward and do so in a responsible manner and following all the recommendations offered by the Inspector General?
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Part of the problem has been, it seems to me, the intent—intentional or otherwise, low-balling estimates of the cost of this program, and we keep coming back and back and it keeps escalating. Is—I—do you feel comfortable that people now realize we are where we are and are serious about getting where we need to go in a responsible way?
Mr. POLUTCHKO. Well, Mr. Chairman, I cannot verify that today. I have a lot of good friends on the program that I have lost contact with in the last 3 years. But my experience, having reviewed the program for those few months back in '97 and '98, is no one would purposely low-ball the program or low-ball a task. It is the question of how conservative one would be in evaluating downstream requirements and risks based on one's experience, and those estimates were very optimistic. And they were optimistic because people have a natural tendency to want to be successful. And there is a very dedicated team on this program and are they going to have estimates now that are more conservative? I hope so. I think, from what I have read in some of the summary documentation that was provided for this hearing, it surely sounds that way and all we can do is encourage that.
Independent Cost Estimates
Chairman BOEHLERT. I sometimes get the feeling that they—part of the uniform at NASA includes rose-colored glasses. And I hope the rose-colored glasses are off now. I mean, I want them to be optimistic. I want them to be enthusiastic and we are, and have been, traditionally, very supportive. But I also want them to be realistic.
And I wonder, Mr. Rau, your conclusion, your recommendations, it seems to me these would be almost automatic, some of the things that you are recommending in your conclusions. Why do you think this isn't routine? Why has it taken to this point where we have to outline, in specific terms, that we have periodic, independent life-cycle cost estimates—someone—something this expensive? Why isn't that automatic?
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Mr. RAU. Sir, I don't know why they haven't done them in the past. We—our office has been active in trying to encourage NASA to do independent cost estimates, not only on Space Station, but on other programs. But it is a tool. It is a management tool and everyone have used tools differently.
We feel that there are three interlocking tools that have to be considered here. One is looking at the estimated costs to complete the contract. One is looking at the estimated life-cycle costs of the program, as we were just talking about. And another is looking at the funding profile and getting an independent review if the funding profile is sufficient. Those three have to fit together. And what we are not seeing—what we haven't seen on the program is that type of relationship established among those reviews.
Chairman BOEHLERT. It just seems to me these are management tools that almost should be automatic—automatically employed on a routine basis. It shouldn't take rather significant cost overruns in a report from your office—
Mr. RAU. Uh-huh.
Chairman BOEHLERT. —to lead one to conclude that, hey, we missed the boat on that one.
Mr. RAU. Right. I agree with that.
Chairman BOEHLERT. Yeah. Well, I thank you very much for that and I am sure, Marcia, you would agree with that too.
Ms. SMITH. I think it is important to point out that while I think many people would like to say, whew, now we know it is $4 billion. If we just came up with $4 billion, maybe they could do the program as baselined. But NASA does have a list of threats against that $4 billion estimate, as well. And the NASA Controller has described that estimate as sort of being a 50/50 case.
Mr. Polutchko referred to two different estimates that his Task Force had come with: one was a 50/50 probability and one was 70/30. So even though you are coming up with these estimates of how much money you need, there are certain probabilities as to whether or not it is going to come true, and the $4 billion estimate is a 50/50 one. So it could be that downstream there might be more funding requirements. This may not be the end of it.
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Chairman BOEHLERT. I see my time is almost up and the Chair is going to be rather strict in timing today because there are so many other demands on the member's times. The Chair now recognizes Mr. Israel.
Mr. ISRAEL. I have no questions, Mr. Chairman.
Comparison With Apollo
Chairman BOEHLERT. Mr. Lampson.
Mr. LAMPSON. Thank you, Mr. Chairman. And thank all of you for being here today. Let me ask my first thought I was having during this time, and I probably ought to ask Mr. Rau, is the comparison to what we are facing right now with our difficulty of financing the ISS to what we went through during the time that we were trying to finance the Apollo project to go to the moon. And I know that there was a considerably greater percentage of our gross national product that we put into it—and I understand close to 4 percent and right now we are working with about 6/10 of 1 percent from what I understand. But what was the difference in how that was controlled and kept in line with its costs as compared to what we are living today?
Mr. RAU. Sir, I am not familiar with the Apollo Program, so I can't speak to that, but I can talk to what we have seen on the ISS Program. Basically, one of the fundamental tenants of cost and schedule management is looking at variances. When you start to have a negative variance, be it identified in cost or schedule, that someone looks at that and says, we need to do something about it. It has crossed a threshold and we need to start taking corrective action.
What we have not seen on the Station Program is enough of that—someone looking and saying, I need to develop a corrective action plan here and implement that plan and follow up to ensure that that plan is effectively completed, to try to control costs. The name of the game here is not just estimating what the cost overrun is. The name of the game is trying to control those costs, and we just haven't seen enough attention in that area. I don't think that we—it is acceptable to say the cost is what the cost is. There is management influence that can be exerted to control cost and that is what we would like to see.
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Mr. LAMPSON. Okay. Would either of the others like to make a comment on that? Do you know anything about the Apollo Program and maybe try to put it into perspective somehow? That makes sense what you said, but I—if you can tell me more, I would appreciate it.
Program Management
Mr. POLUTCHKO. Well, let me give one little slant toward this. A major development program, like any development program, has a life cycle to it in terms of resource requirements. You put together the best plan you can and it has a funding profile that we are—most everyone is familiar with. And the reason the profile looks like that is you try to schedule the work and the goes-intos and the comes-out-ofs that plan in a very efficient way. That minimizes the total run-out cost of the program.
When you take a program that intrinsically has that development cycle to it, and you superimpose on it, rather that kind of funding profile, a flat, or level of effort kind of funding profile, by judgment, enormous inefficiencies enter into the system. Work does not get done where it needed to get done. Work is only done that is affordable at that point in time.
But the entire run-out cost of the program becomes very large. That is what we noticed at the CAV in 1998, 3 years ago. I guess it was that way some years before that, and it clearly has been that way since 1998. Though if we are really worried about run-out cost, the ultimate cost of this program, we should be funding the program with a profile that meets the needs as they come up and not in a flat sense. There are too many dynamics involved to perform the work in such an in-efficient way.
Mr. LAMPSON. Thank you. Let me ask another question about whether or not we would be getting any different results if there was less an emphasis on privatizing and putting work out into the hands of contractors, as opposed to using more civil servants. Is that a successful direction in which to go? Anybody.
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Mr. POLUTCHKO. I haven't given that a lot of thought and I don't think I could constructively comment on that.
Mr. LAMPSON. Thank you, Mr. Chairman.
Chairman BOEHLERT. Thank you, Mr. Lampson. Mr. Rohrabacher.
Cost Estimates
Mr. ROHRABACHER. Well, thank you very much. Ms. Smith, you mentioned that the Space Station was first approved by President Reagan—it was back in 1984. I remember that. I was in the White House at the time.
Ms. SMITH. Uh-huh.
Mr. ROHRABACHER. What was the guesstimate as to what the cost—what was the President told, at that time, would be the cost of the Space Station?
Ms. SMITH. NASA's estimate in 1984 was $8 billion expressed in Fiscal 1984 dollars.
Mr. ROHRABACHER. And when we get this thing done, if we come through with $4 billion more and whatever we are going to have, what do you think we will have spent on the Space Station?
Ms. SMITH. Well, the current estimate for this design is up to about $30 billion since 1993, and then you would have to add in the money prior to that. So—
Mr. ROHRABACHER. Well, $11 billion has sunk into a lack hole someplace before that.
Ms. SMITH. Exactly. So it is a great deal more than the $8 billion estimate.
Mr. ROHRABACHER. Maybe more like $60 billion?
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Ms. SMITH. Well, you have to factor in Space Shuttle launch costs, operational costs, to get a true life-cycle cost for the Space Station. The last life-cycle cost I saw for the Space Station was from GAO, 2 or 3 years ago, and their life-cycle cost was, I think, $96 billion.
Mr. ROHRABACHER. Do you think someone lied to Ronald Reagan?
Ms. SMITH. I would say that they underestimated the cost significantly.
Mr. ROHRABACHER. We will see if it is—and we will leave it to people's imaginations if it was intentional or not. Let me ask you this. What do you think of Congressional oversight, in terms of how have we done our job, in the last—well, over the life of the Space Station—has Congress done a good job in overseeing this expenditure of federal—of the taxpayer's money.
Ms. SMITH. Congress, I think, has devoted considerable oversight to the program since 1984, both in Committees and on the Floor of the House and the Senate.
Mr. ROHRABACHER. And I am just asking this for the Panel, do you give Congress a ''B,'' a ''C,'' hopefully, or maybe even lower or what?
Ms. SMITH. I think CRS would always give Congress an ''A+.''
[Laughter]
Mr. ROHRABACHER. All right. I like that. What about you? What would you give Congress in oversight?
Mr. POLUTCHKO. Well, I, in the past, used to be a tougher grader, but, no, I welcome the oversight on any program that I have had managed in the past.
Mr. ROHRABACHER. Could you have done a better job at oversight than Congress has done? Was all of this—let us say, 8 billion to 60 billion just inevitable? It is like the—you know, comes the springtime, comes the ever—the blossoms and the ever-increasing cost of the Space Station.
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Mr. POLUTCHKO. I don't believe in the inevitability, no, Congressman. I—of course, we can always do a better job. I could have done a better job on the Task Force, as well. I am sure you could—you feel you could do a better job as well.
Cost Caps
Mr. ROHRABACHER. Mr. Rau, how would you rate Congress in this?
Mr. RAU. I don't know that I would assign a rating, but I would say that the—last year's Authorization Act, the Fiscal Year 2000 Authorization Act has, I think, excellent requirements in it for reviewing and managing the costs of the Space Station. And I am optimistic that those requirements will really add value to the program as it moves forward.
Specifically, there is a requirement for not only the cost cap of $25 billion, but also for annual accounting for that cost cap, by NASA, GAO review of that, and also limitations and Inspector General review of funding in excess of those limitations associated with contingencies. So I think it is a long-needed control on the program and I think it will really show dividends down the road.
Mr. ROHRABACHER. Well, I would give Congress possibly a ''C+,'' and I would certainly give NASA a ''D,'' and I would have to say that anybody who created the policy with the Russians during the last 8 years, deserves an ''F.'' And what we have now is a very serious fundamental problem. We are coming down here to the end game and it is not just the $4 billion, but it is how are we going to come up with that 4 billion, but also the other money that is bound to be needed to make this program a success without reducing what the program is—was meant to do in the first place.
I mean, we are—I would hope that we roll up our sleeves, as I mentioned in my opening statement, and work together on both sides of the aisle here to come up with some creative ways of bringing this Space Station project to completion without having to diminish what the Space Station could do for humankind. And we are going to have to give our—we are going to have to do—start all doing ''B+'' work in the next couple of years in order to do that. And, as I say, we haven't been making the grade—Congress hasn't been making the grade and neither has anybody else in the past.
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And, Mr. Chairman, in my opening statement, I did outline a few creative suggestions and I would hope that all of us, who are overseeing this project, will do our darnedest to come up with some ideas of how to find new revenue sources, not just by shoveling money out the back of the federal truck either, so—as well as making the management of this station more efficient than effective. So, thank you very much, Mr. Chairman, for holding this hearing—
Chairman BOEHLERT. I thank the gentleman. And should we note for the record that you give CRS an ''A+?'' Thank you very much. Ms. Rivers.
Space Research
Ms. RIVERS. Thank you, Mr. Chairman. I might add that given my recollection of the fact that there are at least two former Administrations involved in agreements between the United States and Russia on this issue, I would give some people's memory of history a low grade.
I have questions really that have to do with the effects of these cost overruns, and I am not sure that all of you can speak to them. Sometimes, those of us who have been most concerned about the cost of the Space Station have been accused of being not very interested in space-based research. And I can only speak for myself, though I believe others hold the same view, I am an ardent supporter of space-based research, and I am concerned that the continuing costs have forced other kinds of research to be set aside or abandoned at NASA.
And so I am wondering, first, when this project was started many, many years ago, there were a number of objectives that were supposed to be met through this project. It is my understanding that many of these scientific objectives have already been accomplished through other means. And, in fact, there is not the same sort of driving scientific necessity that was argued to start this project in the first place. Can anybody speak to that? Ms. Smith, maybe?
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Ms. SMITH. I am not quite certain what you are referring to. The Space Station, for all these years, has been envisioned as a laboratory for doing all types of research in space and it still is envisioned as being a research laboratory for a variety of disciplines. And so that really hasn't changed. In the elapsed time, since 1984, it may well be that some of the scientific questions that people wanted to explore in the Space Station have been answered through either ground-based means or through shuttle flights or by other types of methods. So it is possible that some of the specific questions that people had in mind have been answered, but I think—
Ms. RIVERS. Yeah.
Ms. SMITH. —some in the scientific community would argue there is still a lot of scientific interest in the Space Station.
Ms. RIVERS. Well, I—well, what I am recollecting, and I don't have it in front of me, what is caused me to get a bad grade for history as well. But my recollection is, is that, there were a list of specific projects and specific scientific objectives that were a part of the package that originally came to Congress as a justification and a goal for this and that. Many of them have either been accomplished or don't necessarily need space-based science—or space-based research—I am sorry—human space-based research to accomplish.
Ms. SMITH. Uh-huh.
Ms. RIVERS. And so I am trying to understand now whether we are in a position of saying, essentially, good money after bad. In other words, we have put so much money into it, we couldn't walk away. We have to keep putting more money. And even if, as you suggest, the spending goes off, even to a greater degree than is anticipated, where we are actually now spending money as an investment against certain kinds of scientific value in the future.
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Space Station History
Ms. SMITH. In the beginning, in 1984, when NASA first proposed the Space Station, it actually was going to be a set of three orbital complexes. There was going to be the occupied base where the astronauts did research. There was going to be a separate facility nearby where people did not live all the time because you can do some kinds of science better if you don't have people creating vibrations, et cetera.
Ms. RIVERS. Uh-huh.
Ms. SMITH. And then there was going to be another one, in a different orbit, around the earth's poles, to do earth observations. And during the 1980s, when there was so much cost growth, those two other facilities faded away. The one that—to do earth observations, went into NASA's Earth Science Program and changed after it got into NASA's Earth Science Program. So it was a much more complex set of facilities that NASA had in mind. Not all of them were science-related. Some of them were operationally related. The Space Station was going to have hangars on it so you could have orbital transfer vehicles that could do different things in orbit. So it was a very different complex, if you will, than what has survived until today. But what is left today is the laboratory.
Ms. RIVERS. So what you are saying is that we would have pursued the first proposal, it would be more expensive than where we are today.
Ms. SMITH. One can imagine that if the cost has increased this much for the occupied base, that if the other two parts had remained in the program, it would be even more expensive.
Space Station Funding
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Ms. RIVERS. Okay. The last question I have is, given the current proposals for funding at NASA—and people can argue whether we are seeing just a slowing in growth at NASA or we are actually seeing reductions proposed over the next few years—what will the impact of increased spending on the Space Station have for other research that goes on at NASA?
Ms. SMITH. NASA has stated that any additional money that would flow into the Space Station program would have to come from that part of NASA that funds Space Station currently, called the Office of Space Flight, and would not come from NASA's other programs, such as the robotic missions that go off to other planets or the astronomy facilities or anything like that. That is NASA's position.
Ms. RIVERS. Given the budget proposals that we have seen, is that possible?
Ms. SMITH. I have not seen, obviously, the budget for Fiscal 2002. So I don't know—
Ms. RIVERS. The White House—the proposed White House budget.
Ms. SMITH. I have only seen the budget blueprint, not the details of it. But the budget blueprint does indicate that any additional money for Space Station will come within the Human Space Flight activity at NASA.
Ms. RIVERS. But would be at the expense of the other manned-space space flight research that is going on, the Mars Mission, and other kinds of things.
Ms. SMITH. Yes. And I think NASA has already indicated that the small amount of money that they had set aside for looking at human trips to Mars, for example, has been reallocated to Space Station.
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Ms. RIVERS. Thank you very much. Thank you, Mr. Chair.
Chairman BOEHLERT. Thank you very much. The Chair recognizes Mr. Weldon.
Russian Participation
Mr. DAVE WELDON. Thank you, Mr. Chairman. And I want to thank all of our witnesses for their very insightful comments. As I understand it, the timeline—we had the Russians put in the critical pathway by the Clinton Administration in 1993. We finally launched the FGB in November of '98 and then the Unity Module in December of '98. And then we, more or less, had kind of stand-down until July of 2000, when the Service Module finally was up there. And that was sort of like a breaking of the flood gates, and we have had lots of missions after that. That is a long period of time. And in the cost analysis that any of you have looked at, is there any way to get a handle on what that cost was?
Now, I know they did things during that time period. I know at Kennedy Space Center, they took advantage of having all the elements there and so they did a lot of integration testing and they were actually able to debug a lot of problems that might have required debugging on orbit. And so many of the technicians that I spoke to there at the Space Station Processing Facility said this is actually, in many ways, a blessing. But how much of this—is there any way we can estimate how much of this cost overrun is actually attributable to keeping all these engineers and technicians on board for all that extended period of time? Do you have any way to do that?
Mr. POLUTCHKO. Well, during the CAV Task Force, there is no straightforward way of doing that. Productive work was going on, on all the other elements in the program at the time. We, in the United States, were having significant troubles with our own laboratory at the time. There were critical and expanded test programs that were instituted. The so-called—
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Mr. DAVE WELDON. The problems with our own elements, I—you know, we get dollar figures on that. The problems with Boeing—people put a dollar number on that. But this problem with the Russians, you know, how much of this—the question I have is how much of this 4 billion can we attribute to the Clinton Administration's decision to put the Russians in the critical pathway? And you are saying that you can't answer that question.
Mr. POLUTCHKO. Well, I am saying you can't extract it very easily. Very clearly, there were not taxi meters just standing idly by. I mean, people were doing productive work that needed to get done. There were many schedules that were in jeopardy. There were a lot of critical paths that were being worked. So, no, I don't think you can extract that.
Early Indications of Cost Growth
Mr. DAVE WELDON. I have another question. This kind of hit us all like a ton of bricks—$4 billion, all of a sudden. You know, we get a new Administration come in and we have got a cost overrun of $4 billion. How could you not know that $4 billion was out there lurking as a problem 6 months ago? Did any of you see that? Did the Inspector General see this kind of thing coming?
Mr. RAU. I would say that there were any number of indications of the overrun.
Mr. DAVE WELDON. Was there any evidence that they were sitting on this and keeping this hidden from the Congress and from the public?
Mr. RAU. We have not seen an indication that it was being kept hidden. I think that there were indications that it was building. The overruns on the contract—obviously there were overruns building. The cost of other elements, obviously, those were building. And there were—at various times, I think that there were—there was a—there were measurements going on to see, well, how large really is this overrun going to be?
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Mr. DAVE WELDON. My time is almost up. I just have one more follow-up question. And I am—I don't want to sound like I am giving you a hard time.
Mr. RAU. Uh-huh.
Mr. DAVE WELDON. This is very frustrating for people like me and many of my colleagues—
Mr. RAU. Uh-huh.
Mr. DAVE WELDON. —here. You know, we have been fighting for this program to try to keep it alive, and it seems like every 2 years we get handed another hot potato. I talked to some of the old-timers in my district and they tell me during Mercury, Gemini, and Apollo, the senior administrators used to take the estimates from the contractors and from the people in the field and triple them and then submit those to Congress—triple them—and then there would be cost overruns. And, as I understand it, I wasn't around at the time, there were huge cost overruns in Space Shuttle development. There were huge cost overruns in Sky Lab.
Is there something we can learn from this? Is it like every time you want to do man-space, your cost estimates always end up being woefully low and you always end up with huge cost overruns, or am I mistaken? None—and I guess none of you were around during Mercury, Gemini, and Apollo. My time is up. So you don't have to answer that if you don't want to.
Chairman BOEHLERT. Any volunteers? Ms. Jackson Lee.
Ms. JACKSON LEE. Well? Mr. Chairman, thank you very much for holding this hearing and thank the witnesses very much. To each of them, I appreciate the independent testimony that you have given. I don't want to single out Ms. Smith, but I do want to particularly note the work of the CRS and its independence, and I thank you very much. Because I have either somewhat of an agreement or somewhat of a disagreement with the thrust of the questioning of some of my colleagues.
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Every day we face judgment decisions to be made in this Congress. I, particularly, in my district, have to be concerned about how many malnourished children I have, how many of those are unhoused, how much of unaffordable housing units I have, what is happening to uninsured children, what is happening in Social Security and Medicare. These are choices we have to make.
I am a little bit concerned as to whether or not we can even point the finger at where the cost overruns actually began. And I would like to probe the issue of whether or not, in general, looking at this program prospectively, we underestimated the massive costs. Let me suggest to you that in the tenure that I have had here in Congress, we have asked Dan Goldin and NASA to cut the budget, and they have, in great effort, as far as I know, maintained what we dictated to them to have, about a $13 billion, if I am not mistaken, over a 5-year period—and my numbers may be off a little bit. And every year we would come down hard to see whether they were keeping within that margin.
As we were doing that, we were privatizing and we were contracting out, which generates, by its very nature, an instability, in terms of keeping up with costs. As to whether or not we attribute it to the Clinton Administration—as far as I know, when Camelot came in 1963, '62, we began the Space Program, and our eyes looked forward to space.
The question America has to ask, and this Committee has to ask, are we going to finish the job or are we going to tinker around and hanky-panky around and undermine what we have begun? Now, frankly, I am outraged by the fact that we are not going to have the kind of area that allows us to have six to seven astronauts. What are we playing with? Who are we going to have up there, the janitor and the person who looks out the window? And so I am not sure what we are trying to do.
I say this to the Administration, as well, that if we are going to continue the work that we are trying to do, then let us get to the bottom of whether or not we don't know how to estimate these kinds of massive efforts, but certainly don't begin to point the finger at individuals who were told to cut, who operated under a cut, that this Congress supported, and who were told to privatize and contract out so you had a parallel, as I understand it, finance system—what was going on internally and what was going on externally.
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Cost Estimates
So to you, Ms. Smith, can I probe you for your independence, and tell us about cost estimates and whether or not there was any suggestion or whether or not we, from the very beginning, underestimated where we were going with the costs, and what might be some of the directions we can take to alleviate that issue? That is one of the questions that I would ask. And let me also say to Mr. Polutchko, I want to follow up on where your study went in terms of how we can fix or where we need to go. I understand your testimony to say stay on track, and I am not sure if I have heard you correctly on that. Ms. Smith, on the cost—either over—underestimates or overruns.
Ms. SMITH. A constant companion of the Space Station program since 1984 has been cost growth. It has been true since the program started. NASA would be better at explaining how it developed the $8 billion estimate, which clearly, in hindsight, would have been woefully inadequate for the Space Station that it was proposing in 1984. But I think it is very difficult, over the course of 17 years, to try to attribute blame to anyone. Obviously, it is something—invariably—
Ms. JACKSON LEE. Very good point.
Ms. SMITH. —NASA is managing the program, but over that period of years, there have been many different managers, many different NASA administrators. I can't tell you what it is that has plagued this particular program that has caused it to encounter the cost growth that it has perpetually.
Ms. JACKSON LEE. And that is what we need to probe. And you mentioned 1984, when you suggested that even at that time there were costs underestimates, if you will. They underestimated in that $8 billion projection.
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Ms. SMITH. Within 2 years, they had doubled the estimate.
Ms. JACKSON LEE. And so we need to get at the core issue of whether or not this kind of science, this kind of exploration, this kind of equipment, these kinds of partnerships that we have had with the Italians, the French, and the Russians, bear well for projecting accurate numbers. And that is a responsibility of this Congress and its oversight. But I hope that we are not beginning to make a new bill from the start what we were given—the hand that we were given. Mr. Polutchko, would you tell me about where we are with your Task Force on—I don't know if I want to put these words in your mouth—but staying on the track? Where are we in terms of where we need to go?
Mr. POLUTCHKO. Well, what I recommended was sustaining your support for the program. Staying on the track is not exactly the word I used. What I said was, we need to develop an achievable program plan that all of us can count on and measure. And that NASA has confidence, and they can demonstrate to you that they have confidence, that they can achieve the plan and it can be measured. And that is going to take more money. I have been very clear in my mind and my judgment about that. And I don't think we ought to kid ourselves about that. But we ought to develop that conservative plan such that we can all have confidence it can be accomplished.
Chairman BOEHLERT. The gentlelady's time has expired.
Ms. JACKSON LEE. I thank the Chairman.
Chairman BOEHLERT. I think if we look at the conclusions offered by the Inspector General, some of the basic management tools that should be employed day in and day out have not been employed day in and day out. And let us hope they will be employed in the future. The Chair recognizes Mr. Culberson.
Russian Involvement
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Mr. CULBERSON. Thank you, Mr. Chairman. I would like, if I could, to focus in on the involvement of the Russians and, in particular, the—as in relates only to the history of the program and, in particular, the $4 billion estimated cost overrun. It is my understanding, from your testimony, that about 960 million of that cost overrun is due—is Boeing's estimate—that portion of the 4 billion, 960 million is attributable to Boeing. Is that correct?
Ms. SMITH. I believe the Boeing estimate of its overrun at completion is $986 million, and NASA's estimate is about $1.2 billion.
Mr. CULBERSON. So the remaining 4 billion—what—where is that coming from? Is that—and what portion of that is attributable to the Russians' either inadequate design problems, or failures?
Ms. SMITH. I am afraid—
Mr. CULBERSON. What portion of that remainder is attributable to the Russians?
Ms. SMITH. I am afraid that I can't shed much light on essentially what the content is of that $4 billion estimate. I know that NASA has some information on that and can perhaps—
Mr. CULBERSON. Can any of you talk in—talk to us about what percentage of the remainder is attributable to the Russian involvement?
Mr. POLUTCHKO. Well, that question was asked earlier and I think you need to have NASA provide that information.
Mr. CULBERSON. Well, how would you—what—how should we run that down? What do you recommend when—what do we need to ask and—
Mr. POLUTCHKO. Well, as I understand it, they are currently doing a detailed bottoms-up assessment of what is needed and what comprises this $4 billion that is being talked about, and you need to ask NASA about that.
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Mr. CULBERSON. Looking at the history of the Space Station Program, the—I would like to ask any of the witnesses to please, if you could, identify for us which—give us examples of cost overruns in the past that are either a direct or indirect result of Russian involvement—either—whether it be design or equipment inadequacies or failures. Can you identify, in the past history of the program, any cost overruns that you can attribute to the Russian involvement?
Ms. SMITH. Congressman, CRS has not looked at this, but last year, I do believe a NASA witness testified in this Committee that he estimated that about $1 billion had been added to the program cost because of the Russian involvement. And, although there was that 19-month hiatus waiting for the Russian Zvezda Service Module to be launched, NASA recently said that they only attribute 5 to 6 months of that schedule delay to Russia itself because if there had not been the Russian delay, then the U.S. equipment also would not have been ready.
ISS Program Management
Mr. CULBERSON. I—and it is my impression that the unmanned program, operated by the Jet Propulsion Laboratory, has, over the years, when presented with a decrease in their funding for a particular program, been able to make adjustments and still achieve much of the basic science that was intended by the mission itself. Can any of you shed any light on the management approach of the Jet Propulsion Laboratory with our unmanned program versus the approach that has been used with the management of the International Space Station? And—
Mr. POLUTCHKO. I have had experience with JPL on many programs, particularly the Viking Program for over 10 years, and some of the more recent programs that we had going to Mars. Fundamentally, I don't think we are talking about a management difference, as much as we are the way the program was planned and funded to meet the requirements, to minimize total run-out cost.
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The ISS Program did, by their choice or someone else's choice—is running a tough race with a one-lead shoe. This flat-funding profile that has been in existence, has really cost a lot of money in terms of inefficient program planning. And I can't tell you how much it has cost, but, believe me, it is a very nonefficient utilization of resources.
Program Funding
Mr. CULBERSON. We have in—finally, Mr. Chairman, in Texas—I am a new Member of Congress coming from 14 years in the Texas House, and we instituted a number of years ago in Texas, performance-based budgeting, where each state agency was required to set out performance targets in their 2-year budget cycle that they needed to achieve. And then when they come up before the Appropriations Committee or the Authorizing Committee, they were required to go through a careful evaluation to see if they had met those targets. And it really was a—it is a healthy process, both for the agency and for the taxpaying public and their representatives, because it allowed us to see whether or not they were meeting their goals and where they fell short and how we could help them.
Would, in your opinion, it be helpful if we—Congress were able to adopt a longer-term budget plan, for example, for big programs like the Space Station, with some performance-based targets, for example, that you could have some assurance and certainty and stability in years ahead rather than going through the yearly cycle of budgets once every 12 months as we seem to do here?
Mr. POLUTCHKO. There is no question, from an old program manager's point of view, multi-year funding of a program is the way it ought to be done. And—
Mr. CULBERSON. And if that were done, the program, in your opinion, would, say, benefit from being held to very strict accountability standards and performance targets and, failure to meet those deadlines would have specified consequences and be held to a very careful review by Congress. That is, to me, a vitally important part of it, in exchange for that long-term stability in funding.
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Chairman BOEHLERT. Thank you very much. The gentleman's time has expired. The Chair recognizes the distinguished Vice Chairman of the Full Committee, Mr. Gutknecht.
Mr. GUTKNECHT. Thank you, Mr. Chairman. President Kennedy once observed that success has many fathers, but failures raised an orphan. And, you know, when things go right, we all want to take credit, and when things aren't going right, everybody wants to shift the responsibility. I just want to—there is a certain amount of revisionist history going on here today, and I want to clear up something, because I am one of the few members who serves both on this Committee, as well as the Budget Committee.
And, if I remember correctly, over the last 6 years, since I have been involved in this, or going into the 7th year, I think in all but 1, perhaps 2, of the years, we have given—ultimately we have given NASA more than they requested in their original budget request. I believe I am correct in that. And so, in terms of—one of the arguments being that flat-line budgeting has created cost overruns, I am not certain that is completely fair to the Congress.
But, be that as it may, I think the real issue is this—and I really don't so much have a question as a comment—and that is, as someone who supports the space programs, I do believe that some of the basic and fundamental research that we can do is, in the long light of history, something that is important for this country and future generations. But I have to also tell you that, at least from the Budget Committee's perspective, we try to weigh things in terms of cost versus benefits.
And what we see today out of this program is we see cost going up and up and up. And I think on behalf of our constituents, it is becoming more and more difficult to justify what are the benefits. I mean, you know, it has been pretty oblique so far in terms of, well, you know, the benefit is having a laboratory that will be up there 24 hours a day. You know, that is pretty hard to get your arms around if you are—you know, if you are a corn farmer in southeastern Minnesota. I mean, how does that really benefit them?
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And so it seems to me that there is an increasing burden of proof that is going to befall NASA, I think, as we go forward, to, number one, justify the cost, but, even more importantly, to justify the benefits. And I say that as someone who is a friend, I think, on this Committee, as well as the Budget Committee. But you are making—this is all making our jobs much, much more difficult. And if you want to comment on that, you are more than welcome to, but that is not really a question.
Chairman BOEHLERT. Mr. Gutknecht. Mr. Johnson. Mr. Lucas. Is there anyone else for the good of the order that has an additional question? If not, let me thank the panelists. Thank you. You have proven once again your value to this Committee, and we really appreciate it. Thank you.
Now, we will hear from the Administrator, who will be notified that we are ready to hear from him.
Chairman BOEHLERT. The bells are ringing. We have 15 minutes. So, I think, Mr. Administrator, your opening statement is—would 10 minutes be sufficient to capsulize it?
Mr. GOLDIN. I think I can do it.
Chairman BOEHLERT. All right. Fine. The Chair now recognizes the distinguished Administrator of NASA, Mr. Daniel S. Goldin.
STATEMENT OF DANIEL S. GOLDIN, ADMINISTRATOR, NATIONAL AERONAUTICS AND SPACE ADMINISTRATION, (NASA)
Mr. GOLDIN. Thank you, Mr. Chairman, and, members of the Committee. I welcome the opportunity to address you today with respect to the status of the International Space Station Program. And I congratulate you, Mr. Boehlert, on your selection as Chairman and look forward to working with you and the Committee. I am going to skip the second paragraph of my opening statement because there was quite a bit of discussion on it in the last session.
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Almost all of the U.S. developed hardware for the Core station is on orbit or at the Kennedy Space Center being prepared for launch. This long-awaited facility is becoming a reality. The men and women of NASA, our contractors, and international partners, have accomplished an incredible amount of difficult and complex work, but they continue to face challenges as we collectively take a major step beyond previous experience.
Space Station software computation resources are unprecedented and much less tolerant of error than industry practice. Frankly, however, our ability to forecast the complexity of station software engineering and technical support has missed the mark. As you know, in July, we finally witnessed the launch of the Zvezda Service Module. The launch of the Expedition One crew in October marked the beginning of the orbital station operation's environment. In effect, the rubber finally hit the road.
Before that time, station operation costs had been under-running. As late as August, in a meeting with the OMB to discuss our budget forecast, we believed that the funds appropriated for Fiscal 2001, coupled with the uncosted carryover, would leave the Station Program with just enough funds to meet Fiscal 2002 requirements.
We also recognized the post-2002 estimates were poorly understood and indicated that to the OMB. In September, prompted by unexpectedly high monthly program spending rates, the Station program manager decided to re-examine the premise that the cost projections for the assembly-phase operations, tended to be understated. A new look at the operating costs and budgetary risks were undertaken in advance of the normal budget formulation cycle.
Initial findings indicated higher Fiscal 2001 cost and in a significant Fiscal 2002 shortfall. In November, we alerted OMB and discussed the need for an in-depth bottoms-up assessment of anticipated program costs. We provided a preliminary assessment to OMB on February 1, characterizing it as a conservative, probably overly cautious estimate of the potential total program cost—an increase of about $4 billion over the 2002 through 2006 time period.
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The President's Fiscal Year 2002 budget blueprint is a straightforward proposal for dealing with the projected growth. First, the Administration does not break the statutory cost cap. Instead, funding previously targeted for specific program content, beyond the U.S. Core, is redirected to offset the growth.
Second, NASA is to undertake reforms and develop a plan to ensure that future costs remain within the Fiscal 2002 budget plan. An external review is to validate our revised cost estimates.
Third, we are consulting with our international partners on approaches to provide additional capabilities beyond the U.S. Core. And, finally, we have a charter to eliminate lower priority activities in Human Space Flight and propose the use of that funding to meet station needs. The prospect of elimination of lower-priority activities has already led well-intentioned advocates to seek redress within the Congress. That, of course, is their right in the democracy that must occur. But with a fixed budget, NASA must identify priorities and make difficult choices. We will openly discuss these perspective actions with the Committee, seek your oversight, and, after your analysis, seek your support. We will not proceed unilaterally.
We have enthusiastically accepted the challenge of the new administration. I do not want to minimize the seriousness of the situation. We do not have all the answers today, but we do have an action plan.
Several months of hard work are ahead of us to refine our cost estimates to have the credibility that goes with a thorough understanding of the risks and an allowance for the unknown. And we will subject them to an external, independent review, the results of which will be provided to this Committee, along with appropriate options for your consideration and your guidance to us.
With regards to research, we are fully committed to deliver on-orbit all of the research equipment planned for the next 3 years and to get it there on time. Obviously, there are many in the research communities who have legitimate concerns about the impacts of the budget constraints and crew resource limitations.
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We are developing a post-2004 research utilization strategy that will undergo their scrutiny and benefit from their prioritization and time-phasing capabilities, and, again, we will come back to the Committee for your support and guidance and oversight before we take action.
I want to let you know how pleased I am by the reaction of our international partners, particularly our European partners, who are productively engaged in discussions about habitation capability and crew-return vehicle. We will keep the Committee fully informed as we progress in those areas.
Finally, I must emphasize that this budget continues our commitment to station commercialization. Significant rack space is available to support worthy commercial payloads, starting almost immediately. We will continue to seek non-utilization opportunities so long as they result in reduced cost to the government. We are continuing to plan for alternative nongovernment organization concepts for station utilization.
In closing, the President's budget proposal is consistent with the principles of preserving the ability to accommodate international hardware elements, maximizing high-priority research within available resources, and preserving readiness to pursue contingency items in the future. Do we want more? You bet. Do we want to expand our exploration beyond the low-earth orbit? Yes, we do. But we cannot, and will not, seek to do more until we demonstrate that we can meet the challenges we face today. We cannot build to the future until our foundation is secure.
In my 9 years as NASA Administrator, I have seen the men and women of NASA meet and overcome incredible challenges. This Committee has been stalwart in its support, yet very careful and meticulous in its scrutiny. I would expect no less from the Committee today and I welcome your questions.
[The prepared statement of Mr. Goldin follows:]
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PREPARED STATEMENT OF DANIEL S. GOLDIN
Mr. Chairman and Members of the Committee, I am happy to be here today to discuss the reality, the promise and the challenges of the International Space Station. As we meet together in this hearing room, the second Expedition crew members are living and working in the International Space Station above us. As 800 million people on this planet saw during the Academy Awards program a week ago, the crew is in orbit; the International Space Station (ISS) is in orbit; and, in no small measure, this Committee has played a crucial role in making continuous presence in space a reality.
But that reality represents only the first step. When we finish, ISS will be a premier, world-class laboratory in low-Earth orbit that promises to yield insights, science, and information, the likes of which we cannot fully comprehend as we stand here at the beginning. It was nearly 20 years ago in his 1984 State of the Union address that President Ronald Reagan, challenging America to follow our dreams and dare to be great, directed NASA to develop the Space Station. Twenty years of flight experience with the Shuttle. Twenty years of limited-duration microgravity research. Twenty years of planning, defining, designing and, yes, redesigning and modifying what the Space Station will be, how it will be built, and what nations will participate.
Some would argue that it is 20 years too long, or $20 billion too much. We have had those debates in this Committee, and on the floor of the House and Senate. And we will continue to have them, perhaps even long after the ISS has fulfilled its primary mission. For that is the way of public policy and discourse in our Nation, and in this institution. Any program which makes use of large sums of taxpayer dollars, as the ISS program certainly does, must be subjected to the scrutiny of this Committee and the Congress as a whole, as well as the White House and the general public. We at NASA acknowledge the need for—and welcome—that scrutiny and debate, because we believe that NASA holds a public trust for which we must be accountable, and because it enables us to look beyond our computer terminals, machine tools and assembly operations to our larger responsibility of efficiently and effectively carrying out national policy.
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That brings me to the challenge that we face as we begin this first NASA-focused hearing of this Congress in this Committee—our projected $4 billion cost growth for the ISS. We come to you as representatives of a new Administration which, in response to large ISS cost growth, has established a new budget for the International Space Station with strict requirements and guidelines to manage within the stated budget while achieving priority goals of the program. Let me make it very clear to anyone who may have any doubt: we support the direction of this Administration regarding the ISS budget levels and program content. And we accept the challenges that the FY 2002 Budget presents us.
In the testimony that follows, I will describe those challenges more fully and illustrate what we are doing to meet them and continue our progress toward the goals of the International Space Station.
The NASA portion of the President's FY 2002 Budget Blueprint addresses projected cost growth in the Program, making necessary modifications to U.S. plans to meet our responsibilities for the ISS program. The revised plan will continue to support our high priority goals of: 1.) permanent human presence in space; 2.) accommodation of all international partner elements; and, 3.) world-class research in space. The ISS is funded at $2.1 billion for FY 2002, virtually the same level as the budget for FY 2001. This is approximately $230 million more for FY 2002 and about $1 billion more for the ISS over the FY 2002–2006 period from what had been planned in the FY 2001 ISS budget. This increase comes from transferred CRV funding that was in the Science, Aeronautics and Technology appropriations account.
After conservatively applying two years of actual operational experience to eliminate many unknowns and significantly refine our cost estimating, we have recently projected ISS cost growth to be potentially as high as $4 billion over the next 5 years. NASA is making hard decisions in order to curtail the projected growth while still supporting our high priority goals. The FY 2002 Budget redirects funds from high-cost elements still in the early stages of development, including the Propulsion Module, Crew Return Vehicle (CRV), and Habitation Module. The budget also reduces funding for U.S. research equipment and associated infrastructure commensurate with the availability of on-orbit resources. Over the next several months, we will evaluate the actions required to align research needs with our on-orbit capabilities. This budget maintains a commitment to launch the hardware which NASA has already built and maintains the current assembly schedule until at least 2004.
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NASA will not allow the projected cost growth to materialize unchallenged. We recognize that we must restrain the projected cost growth and restore credible cost estimates. We are working aggressively to meet those twin challenges and place ourselves in a position to meet our long-standing goals of seven-person crew and maximize the research capability within the requested budget. We recognize that our philosophy and assumptions regarding ISS operations are still conservative, in that they reflect our experience on highly time-critical Shuttle flights. We believe that there is considerable potential for instituting creative cost-cutting actions which streamline processes, focus resources, and leverage the strengths of our International Partners.
NASA is determined to control ISS costs within the Human Space Flight program and has already launched a comprehensive suite of specific management initiatives at the Johnson Space Center, Kennedy Space Center, Marshall Space Flight Center, and with our International Partners. These actions, described in more detail in this testimony, are designed to curtail cost growth, not only of the ISS program, but also of all programs within NASA's Human Space Flight program. I am confident that these initiatives will create savings, some in the near-term and others over a more gradual or phased timeframe. Although we are still in the process of assessing potential management actions and program schedules, we will refine our plans, research priorities, and general program restructuring strategy by this summer. We will be pleased to outline our conclusions at that time before this Committee.
ISS OPERATIONAL EXPERIENCE AND ACCOMPLISHMENTS
In order to put the current budget challenge in proper context, a review of recent ISS accomplishments is in order. Since the Service Module launch date was established in May 2000, we have collaborated with our partner, the Russian Aviation and Space Agency, to execute 11 successful launches and dockings to the ISS, with a net schedule slip of only 3 weeks. As a result of this surge of program activity over the past year, we have grown the ISS from the Unity and Zarya modules into a permanently crewed vehicle and initiated the steps to build the premier research laboratory in space. Among the elements now on-orbit are the Zvezda Service Module, Russia's keystone contribution, and the U.S. laboratory, Destiny, the most complex and capable element of the entire ISS facility.
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The ISS operations team has successfully activated and confirmed the functionality of life support, power, control, communications, structural, and Extravehicular Activity (EVA) subsystems. Remarkably, the operation of equipment, such as the massive control moment gyros (spinning at 6600 revolutions per minute) and the largest spacecraft solar arrays ever deployed, is proceeding superbly. Meanwhile astronauts and flight controllers have been learning about the on-orbit ISS environment, including air quality, acoustic levels, and electrical arcing hazards, helping to reduce the uncertainties associated with operating the ISS.
The operations team has also demonstrated an ability to deal effectively with a wide range of complex, often unpredictable events in a highly safe and methodical manner in the two years since the first ISS element launched. Although there have been some equipment anomalies (e.g., carbon dioxide removal units, air conditioners, and exercise equipment), the program has exhibited a robust capacity to deal with these problems by relying on an effective combination of backup systems, engineering analysis, maintenance procedures, and logistical support via both the Space Shuttle and Russian Progress vehicles. I hope that the Committee shares my pride in the fact that the present state of the on-orbit ISS is outstanding.
As ISS assembly proceeds overhead, vehicle development engineers are working with the vehicle elements for the next 14 U.S. flights, all of which have been delivered to the Kennedy Space Center (KSC) for testing and integration. Three quarters of all U.S. hardware is now either at KSC or deployed on-orbit. NASA's decision to conduct Multi-Element Integration Tests (MEIT), designed to reduce the technical risks of flight elements before they launch, has been validated through the successful on-orbit operations of the ISS to date. The second sequence of these MEIT's is currently underway. The Mission Control Center-Houston (MCC–H) expanded its real-time support and, after the activation of Destiny in February 2001, assumed responsibility from MCC–Moscow as the lead ISS control center.
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The Expedition One crew arrived at the ISS via a Soyuz spacecraft in November 2000, and executed an extremely productive 4-month tour on-orbit, marked by the buildup of ISS functionality, early research, and good health. Remarkably, all three members of the Expedition One crew walked off Discovery after their 4-month stay. This is a testimony to the lessons we have already learned in space. This pioneering crew handed over the keys to their successors who arrived via the Space Shuttle on March 10. Today, James Voss, Susan Helms, and Yury Usachev are in the early stages of their 3-month stay aboard the ISS, preparing to employ the Human Research Facility and other equipment to begin 18 NASA experimental investigations. What a difference a year makes. The experiences gleaned by the Expedition crews, flight controllers, logistics engineers, and test and verification engineers are providing the ISS program with a rich operations knowledge base which will be invaluable as we continue to seek more effective and cost-efficient methods of running a space station.
NATURE AND ORIGIN OF COST GROWTH
Before I describe the source of the ISS cost growth, let me explain the process by which we manage the ISS budget. The project management process routinely identifies ISS budgetary risk items—so-called ''liens'' and ''threats.'' The program manager assesses the risks for their probability of being incurred based on program schedules, past cost performance, priority of requirements, and program reserves. At any given point in time, there exists within the ISS program a list of these budgetary risks, which may or may not materialize. Generally, the total cost of these risks is greater than the available program reserves. The status of this list of risk items is regularly briefed to the Congress as part of the annual budget process. As the ISS program assesses the need for and likelihood of incurring these risk items, those that are deemed critical and inevitable are incorporated into the program baseline and are then negotiated as specific contract changes. A series of program control boards assesses all program changes and makes recommendations to the Program Manager for approval. These control boards validate the overall cost estimates of the changes.
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Following the July 2000, Zvezda Service Module launch, unexpected high monthly program spending rates prompted the ISS Program Manager to call for a new assessment of budgetary risks. This quick-look assessment of the entire program, completed and reported to the Office of Management and Budget (OMB) in November 2000, indicated a significant projected cost growth for the FY 2002–2006 period relative to the FY 2001 budget. To better understand the rising costs and clarify the program baseline, ISS Program Manager Tommy Holloway and the NASA Headquarters Office of Space Flight, led by Joe Rothenberg, jointly conducted a more in-depth ''bottom-up'' review of the components of the ISS Program, excluding the Crew Return Vehicle, which had been reviewed in the previous year, and Research.
Mr. Chairman, I am convinced that we will be able to present options that meet this budget challenge. I am assuming, of course, that we will encounter no major unforeseen problems during assembly. Our assessment, indicating potential cost growth of approximately $4 billion, was completed in late January and reported to the OMB immediately thereafter. The assessment is based on conservative assumptions for operations, includes most known liens and threats, including a number of low probability threats, and includes about $800 million in reserves.
Now I would like to address why this projection in cost growth has occurred. First and foremost, the cost growth is driven by the unprecedented technical and management complexity of the ISS program. Approximately half of this growth originates from identified liens and threats, for which reserve levels had been assumed adequate to cover. With the surge of activity triggered by the launch of the Service Module and preparation for the Expedition One crew, the number and value of realized liens began to mount sharply, and the level of available reserves dropped dramatically. This was a key factor in prompting the Program to begin the recent reassessment of cost growth potential.
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Prior to the launch of the Service Module, delay-driven under-spending in operations and other parts of the program, and a history of significant year-to-year carryover led to an assessment, as recently as August, that program funding was adequate but reserves were tight. As the pace of assembly accelerated, the true cost of permanently-crewed operations was experienced, carryover and reserve levels rapidly declined, and the full magnitude of the potential cost growth became apparent. I am very proud of our team, because as soon as we recognized the growth, we stepped up to face it and we are doing what needs to be done to contain it. As part of our efforts as an Agency to respond to this cost growth, we will ensure that lessons learned are captured and applied, to help us avoid future cost growth on ISS or other programs.
The remaining growth, in addition to some of the previously identified liens and threats that have now materialized—is due to newly identified risks, driven largely by a more mature understanding of operational and training requirements gleaned from the last two years of actual ISS operations experience. The areas affecting funding growth include the Propulsion Module, the Habitation Module, advanced life support equipment, software production and integration, mission operations, spares, and the workforce requirements necessary to test, integrate and prepare elements for launch and assembly. Within the past NASA appropriation, the annual budgets for the ISS were expected to peak in FY 2000 and then decrease sharply in FY 2001 and subsequent years. Due to continued workloads, the magnitude of program destaffing will not be as great in FY 2001 and FY 2002 as originally projected; however in subsequent years, decreases are still expected to be sizable.
Whether accounted for as established liens and threats or as newly-identified items, the cost growth drivers can be characterized as a collection of the following types: additional content (e.g., the Habitation Module and activities to verify that the hardware and software work together as designed); schedule slips (including the Propulsion Module); underestimated complexity (e.g., advanced life support systems, software integration, and Space Station training facilities development); obsolescence (e.g., avionics and spares); hardware failures (e.g., control moment gyro sensor repair); and over-ambitious budget phase-down plans (e.g., Boeing development de-staffing, savings from the Consolidated Space Operations Contract).
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A unique phase of the ISS program began last year, with the ISS partners bearing the responsibilities for ISS development, integration, testing, and operation simultaneously. At the initial signs of increased spending, NASA took proactive measures to update its assessment of programmatic risks, and identified the potential for significant cost growth. I would like to thank the ISS team for having had the foresight and courage to identify the trend, initiate this action and identify this budget challenge as early as they did. The good news for the program is that we are now fully engaged and addressing this problem. The following sections address our plan of action.
PLAN OF ACTION—REDIRECTION OF FUNDING
While NASA and the ISS program are undertaking reforms to curtail cost growth, it is clear that the total savings which can be attained will not be known for a number of months, and actually realizing savings may take considerably longer. The budget redirects funding in order to preserve the highest priority objectives, notably the deployment of the International Partner modules and further deployment of research capabilities. NASA has redirected funding from capabilities that are not required to achieve the primary ISS objectives. Future funding decisions to develop and deploy any U.S. elements or enhancements beyond completion of the U.S. Core will depend on the quality of cost estimates, resolution of technical issues, and the availability of funding through efficiencies within the FY 2002 budget runout for ISS or other Human Space Flight programs and institutional activities. The following sections address the strategy for propulsion capability, U.S. crew return capability, habitation capability, research capability, and cost controls.
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PROPULSION CAPABILITY—VARIOUS SYSTEM CAPABILITIES BEING DEMONSTRATED
In reassessing requirements in these areas, it is clear that the risk associated with reliance on the Russian propulsion services has been significantly reduced over the last year. We witnessed the successful launch and checkout of the Service Module (SM); timely Russian ISS appropriations including payment of past debts; and a continuing production stream of Progress and Soyuz vehicles. The Space Shuttle has clearly demonstrated that it is a viable means for ISS reboost and, over the course of several missions, has provided reboost capability equivalent to that of an entire Russian Progress vehicle. U.S. control moment gyros are now active, dramatically reducing the propellant required for attitude control, and overall propellant usage has been lower than predicted. The risk of inadequate ISS propulsive capability has also been reduced by the progress on the development schedule of the European-provided Automated Transfer Vehicle, that will be available earlier than the most recent schedule for deployment of a U.S. Propulsion Module.
As a result of our initial on-orbit operational experience, NASA is more confident of the total propulsion capability and in redirecting planned Russian Program Assurance funds to meet other ISS needs. We have stopped work on the Propulsion Module and are continuing to store the U.S. Interim Control Module (ICM) at the Naval Research Laboratory in Washington D.C. The ICM, which provided limited protection (due to its short life) against a SM launch failure, will continue to undergo specific testing and documentation to preserve its call up potential. In the interim, NASA will also explore possible options of ICM divestiture. Though our risk posture has improved, NASA will continue to remain vigilant regarding overall contingency planning and will continue to approach future risk mitigation as a responsibility shared among all partner nations.
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U.S. CREW RETURN CAPABILITY—MATURING THE DESIGN
The X–38 rapid prototyping effort is demonstrating a low-cost, rapid design, development and testing methodology, producing results at a fraction of traditional costs. Continuing on a steady path of progress, 6 X–38 atmospheric flights of prototype vehicles have demonstrated numerous new advanced technologies. Each of the landmark X–38 flights was performed with flight paths and velocities that come progressively closer to matching an actual reentry from space. The technologies being matured meet the rigorous standards of human-rated spacecraft and will have direct application to the Crew Return Vehicle (CRV) and other possible future projects.
However, the U.S. CRV has a significant set of design activities to accomplish before we are ready to enter into a production contract. Just last year, NASA's Integrated Action Team, focusing on program management excellence, concluded that technology risk reduction programs and design definition must be concluded before committing to production contracts to best insure that cost, schedule and technical targets can be realized. Given the magnitude of planned funding dedicated to CRV and the remaining definition work, funding allocated for the CRV production phase has been redirected to help resolve ISS core content budgetary shortfalls. NASA has initiated discussions with the European Space Agency (ESA) on a role in the CRV project. Critical efforts such as X–38 atmospheric flight testing and some preliminary CRV design work and linkages with CTV under SLI will continue so as to maintain viable options for future CRV development. The planned space flight test of the X–38 is under review as part of the program assessment.
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While funding for the CRV has been redirected, capability to support a crew size of up to seven is under discussion with our International Partners. Meanwhile, the X–38 project is advancing, continuing to reduce technology risks to support a future decision to restore CRV production funding within the President's FY 2002 budget runout, if required.
SEVEN-PERSON HABITATION CAPABILITY—ENHANCING A KEY RESOURCE
Since shortly after the ISS redesign activity, the International Partners have supported accommodating seven ISS crewmembers. In the past, we have evaluated a variety of options to satisfy the crew size through utilization of existing equipment other than the U.S. Habitation Module, such as Node 3. Faced with the current budget challenge, NASA is earnestly evaluating potential options in detail. There are a number of options to increase habitation capability, which may fit within the President's budget runout. The NASA team is assessing these, and will recommend an option to pursue within a few months. We are also working with our International Partners to identify any additional resources that they can provide to the program.
RESEARCH RESTRUCTURING—MAXIMIZING SCIENCE RETURN
Conducting world-class research in space continues to be a top priority for the ISS. NASA is on track to deliver the first 10 research equipment racks to ISS as planned. In addition, we have already selected more than 100 specific experiments planned for the first 6 ISS increments. To maximize research opportunities within the fiscal resources available, however, NASA is restructuring the ISS research budget to align it with the on-orbit capabilities and fiscal resources available. This restructuring activity will take place over the next few months. The results of this restructure will require adjustment to our current research planning. In consultation with the research community, the program is prioritizing and time-phasing research plans for internal lab-based biomedical, biotechnology and fundamental research, as well as external truss and exposed platform Fundamental Physics, Earth and Space Sciences research. The program will build multipurpose research facilities to enable human research, fluids and combustion, materials science, fundamental physics, and fundamental biology programs. In order to ensure the research capability needed to achieve our priority science objectives, NASA's strategy is to grow to the needed complement of U.S. research racks required to support our biological and physical sciences program.
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NASA is engaging the scientific community as part of its process for prioritizing research areas on ISS consistent with available resources. NASA's Office of Biological and Physical Research (OBPR) has proposed a framework, consistent with NASA's commitment to safety, for prioritizing ISS research. This framework will serve as the basis of discussion with the scientific community.
OBPR's proposed priorities for near-term research are: (1.) biomedical research; (2.) biotechnology research; and, (3.) fundamental research. Within each of these research areas, OBPR will pursue enhanced safety and performance in space as well as contributions to Earth-based medicine and industry. Biomedical research is primarily mission driven research focused on increasing safety, ensuring health of astronauts, improving space craft environments, and reducing risks associated with long duration space flight. Biotechnology research includes fundamental and applied research such as Cellular and Molecular Biology, Structural Biology, Genomics, and Biomolecular Physics and Chemistry. More applied biotechnology disciplines include Tissue Engineering, and Biomaterials. Fundamental research includes fundamental biological, physical, chemical, and engineering research. Fundamental research will lead to ground-breaking advances in atomic physics, evolutionary, developmental, and integrative biology, combustion, materials science, and engineering.
OBPR's proposed framework includes an emphasis on interdisciplinary research. Our approach will be based on flexibility in scheduling research experiments, enabling OBPR to take advantage of opportunities as they occur. NASA's Office of Earth Science has proposed its SAGE–III experiments and other peer-reviewed research as its highest priority. The Office of Space Science plans to focus on peer-reviewed pallet based research opportunities.
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The Expedition One crew initiated several U.S. research activities in the areas of Earth observations, education seed growth experiments, crystal growth of biological macromolecules, motion and vibration technology experiments and human research data collection. With the delivery of the U.S. Laboratory Module, Destiny, in February 2001, the stage was set to begin significant levels of ISS research. Rack volume, power and crew-time are now available to initiate scientific and commercial research. Lab outfitting began with the delivery of the Human Research Facility following the STS–102 launch on March 8, 2001, and two additional multipurpose racks will be delivered on the STS–100 launch planned for April 19th.
Eighteen NASA experiments are scheduled to become operational during Expedition Two. The early experiments will include a wide variety of experiments in human life sciences, physical sciences, commercial space product development, Earth observation, as well as education and technology demonstrations. NASA will continue to maximize the research content within the available resources. The ISS International Partner research laboratories will be delivered in 2004–2005, each containing 5 racks of international research facilities and 5 rack locations for additional NASA research hardware. Limited crew time for supporting on-orbit experiments-due to the reduction in permanent crew size from 7 to 3—will be the major resource constraint for research activities. We are exploring options for enhancing crew time at the ISS for research support, using both permanent and non-permanent crews. One option for doing this is using Shuttle crews when the Shuttle is docked to the ISS. Longer Shuttle stays and full Shuttle crews could provide some increase in capability for selective research areas. Our goal is to increase the time spent by permanent crew to enhance the research program and to deploy the needed major research facilities.
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COST CONTROL ACTIONS
I want to be candid with the Committee—achieving the necessary savings requires difficult decisions. We have started to do that now be redirecting funding from new developments, and we will continue to make tough decisions as we reassess the program in the coming months in order to solve our current budget problems. This is a challenging budget. I cannot tell you today that ISS funding problems are behind us. Although our confidence is growing with the maturity of the hardware, its successful performance, and our operational experience, I am sure that we will continue to face challenges. But the roadmap is clear—as we confront potential cost growth, we will have to make decisions within the ISS program, and within the other Human Space Flight programs, on content, capabilities and schedule that allow us to achieve our commitment to living within our means.
As described in the President's Budget Blueprint, NASA is initiating reforms and developing a plan to ensure that future ISS costs remain within the President's 2002 Budget plan. Future funding decisions on our current program, as well as our ability to develop and deploy any U.S. elements or enhancements beyond completion of the U.S. Core will depend on the quality of cost estimates, resolution of technical issues, and the availability of funding through efficiencies within the 2002 Budget runout for ISS or other Human Space Flight programs and institutional activities. We are rapidly moving out to meet the challenge. Some of the reform actions being executed through early summer are detailed below.
COST ESTIMATING QUALITY:
The Office of Space Flight has issued a number of actions intended to improve cost estimating credibility. Stricter management oversight and cost reporting at several levels is a critical component of this. Per guidance from the Budget Blueprint, oversight of the ISS program has been transferred to NASA Headquarters until reforms are in place. This is being implemented through the use of a more formal process of checks and balances, including more frequent reporting of activities by ISS Program Management at Johnson Space Center (JSC) to NASA Headquarters, and some transfer of approval authority for high-value changes. In fact, pursuant to recommendations by the Inspector General, NASA has already begun to address concerns on cost estimating ability, and the comprehensive budget reviews undertaken over the last several months are a reflection of NASA's continuing commitment to improving cost estimating, reporting and oversight.
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We recognize that our own expertise in this area, although substantial, must be enhanced. Additionally, we are considering drawing on external groups and companies that have the expertise and depth of experience with complex programs to help us.
At JSC, the ISS Program Manager will exercise greater oversight over the prime contractor, Boeing, develop a plan to manage contractors to work force levels, and to initiate workforce reductions after FY 2002. Also, all ISS engineering projects outside the scope of the prime contract will be organized under one manager responsible directly to the ISS Program Manager and reporting directly to the JSC Center Director.
Furthermore, NASA recognizes the importance of estimating risk and maintaining sufficient reserves. As management oversight is strengthened, due diligence will be applied to assure that sufficient reserves are maintained. Finally, NASA is prepared to subject our internal cost estimates to external review and validation, in accordance with guidance in the President's Budget Blueprint.
That NASA performed detailed out-year analysis to develop a more realistic ISS program baseline reflects our commitment to heed recent recommendations by the General Accounting Office and Inspector General for improved cost estimating. That this analysis has revealed the potential for significant future ISS cost growth represents a continuing challenge to find effective means to reduce and control costs.
MANAGEMENT AND OPERATIONAL EFFICIENCIES:
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The Office of Space Flight (OSF), with the full support of the ISS Program Manager and OSF Center Directors, has launched an extensive review to identify and implement process efficiencies to address the ISS budget challenge. These include the cancellation of some non-ISS work, the potential consolidation of similar tasks such as ISS and Space Shuttle sustaining engineering support; as well as analytical engineering at the Johnson Space Center, Kennedy Space Center, and Boeing. Finally, there are activities underway to consolidate or close facilities, including trainers and simulators, vacuum chambers, and other engineering laboratories.
NASA will also redouble its efforts to leverage innovation and cost savings, whether by injecting more competition into future ISS procurements, as prescribed in the Budget Blueprint, or by deploying new technology, such as knowledge-based tools with application to mission operations and sustaining engineering.
In an attempt to leverage flight experience from both the Shuttle program and the past two years of the ISS program, new approaches to human space flight operations are being evaluated. These include refinements to the current real-time response philosophy; astronaut and flight controller training requirements; MEIT requirements; ground communications and tracking architectures; and de-centralized contractor management of mission and data services. Again, in accordance with the Budget Blueprint, we welcome suggestions from external reviews of both our requirements and efficiency initiatives.
REFOCUSING CIVIL SERVANTS:
I am personally working with the Associate Administrator for Space Flight, the four OSF Center Directors, and the ISS and Space Shuttle Program Managers to focus NASA's resources on the current budget challenge, especially the successful accomplishment of the ISS and Shuttle program goals. Our experts working on lower-priority programs, including Mars/advanced exploration technology development at the Johnson Space Center and Kennedy Space Center, have been redirected to help meet the higher-priority needs of the ISS and Space Shuttle programs. Furthermore, NASA is committed to augmenting ISS program resources with the skills and technologies from non-OSF Centers. This includes the use of items such as knowledge-based tools as well as redirecting civil servants from lower-priority work to support both the ISS and Shuttle programs.
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INTERNATIONAL COOPERATION:
Finally, NASA has begun discussion with our International Partners to ascertain the viability of increased partner cooperation. The focus of these discussions is to provide additional resources/capabilities, which would restore up to seven-person crew capability and research capacity, by addressing both the current shortfall in habitation equipment, and the potential need for additional crew return capability.
ADHERENCE TO BUDGET CAP
H.R. 1654 specifies an ISS budget cap of $25.0 billion with an additional $5 billion flexibility in case of emergency. The intent of the cap language is certainly to force content trades instead of increased funding. This budget inherently does that. In fact, this budget plan indicates that the program will be within the $25 billion cap when the U.S. Core Complete is achieved in FY 2004. How the cap language should apply to elements that are considered enhancements is an issue that we must work with the Congress.
CONCLUSION
Since 1993, I have seen the ISS mature from a paper design to become humanity's premier platform for exploration in space. It is proving its promise with each successful day of operation. The accomplishments of NASA, our contractors, and our International Partners in building the ISS are no less than historic. These accomplishments are the direct result of diligent preparation, continued attention to safety, and a great deal of dedication and hard work. However we cannot rest on our laurels, and the current budget challenge reminds us that we must live within our means. The FY 2002 budget reflects the Administration's determination to contain cost growth in all Federal programs while applying sound, proactive management principles. NASA and the ISS program are embracing this philosophy by identifying potential cost growth in advance, initiating necessary reforms, and focusing resources on the top priorities: 1.) permanent human presence in space; 2.) accommodation of international partner elements; and, 3.) world-class research in space.
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Considering the technical and management complexity of the program, we have made incredible progress. Let me assure you that NASA will continue to strive to control ISS program costs, for our success in doing so is critical to the future of the Unites States Human Space Flight program. In fact, it is not unreasonable to assume that the extent to which NASA's performance overcomes this budget challenge in the coming years will strongly influence the direction and vigor of future human space endeavors.
While NASA retains its hopes of expanding our human exploration activities beyond low-Earth orbit, at this time NASA's Human Space Flight program is completely focused on two priorities: flying the Space Shuttle safely and completing the construction, assembly and operation of the ISS. The Administration's direction to NASA provides the flexibility to build back to the current baseline capabilities over time, provided it can be done within the resources gained through other efficiencies and subject to Administration approval. As such, we will continue to manage risks and priorities, while exercising fiscal restraint and executing cost control efforts. As we enact reforms or review requirements to control cost, safety will remain NASA's first priority.
I welcome the opportunity to discuss our progress, and I remain confident that with the continued support of this Committee, the entire Congress and the Administration, we will meet this challenge and build on the tremendous success that the International Space Station has achieved to date.
Responses to written questions submitted by Chairman Boehlert resulting from the April 4, 2001, hearing.
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Life Cycle Cost Estimate:
QUESTION 1:
Please provide a full life cycle cost estimate for the Space Station program that includes development, Shuttle support costs, operations, research, civil servant costs, etc. Provide a breakdown by year for the life of the program, and by category for both Revision F of the baseline and for the new re-planned baseline.
ANSWER 1:
Attachment 1 contains a summary of the FY 2002 budget for space station funding to date plus the budget blueprint estimates through FY 2006. Details of the budget estimates after FY 2001 are currently under review and should be available in summer 2001. Like previous budgets and program estimates, the FY 2002 budget estimates do not include the amounts being contributed by the International Partners; the initial $400 million contract with the Russian Space Agency for the Shuttle/Mir program; the costs of non-program unique NASA facilities; Shuttle performance improvements and flight operations costs; and general and administrative support used to execute the program.
The estimate to complete assembly of the ISS in the FY 2001 budget was $24.1 billion to $26.4 billion, including Phase 2 of the Crew Return Vehicle (CRV) project held in the Science and Technology (SAT) budget. Approximately $5.4 billion is provided in the President's FY 2002 budget for FY 2002–FY 2004, which should accomplish U.S. Core Complete (the total from FY 1994–FY 2004 would be $23.3 billion).
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The annual cost of mature operations of the Space Station was estimated at $1.3 billion per year in 1994. In December 1999, NASA developed a preliminary update to this, estimated in a study of ISS post-assembly operations costs through FY 2015. This preliminary study showed average annual costs, exclusive of Shuttle flights, and exclusive of Agency civil service work force and other overhead, of about $1.5 billion. This $1.5 billion includes $150 million per year for 6 years in preplanned product improvement (P31) that was not in the previous estimate and is not in the budget, or about $15.0 billion for 10 years of nominal operations and research utilization. The estimate identified uncertainties in the NASA knowledge base that would affect the total cost of mature operations. In particular, NASA needed to complete additional work to define work force requirements for post-assembly sustaining engineering, needed to prioritize and phase the introduction of preplanned program improvements (P31), and to determine the contingencies that would drive budget reserve levels. The estimate also did not take into account the impact of major ISS element replacements or costs for recovery from catastrophic incidents.
The cost of Space Shuttle flights can be stated in multiple ways including marginal cost and annual average cost. The marginal cost to add a Shuttle flight is about $85 million, reflecting the variable cost associated with the addition of a flight to the Space Shuttle manifest. The annual average cost of an FY 2001 Shuttle flight is approximately $437 million, based on a budget of $3,119 million and a flight rate of 7. The nominal value contained in the NASA FY 2001 Authorization (H.R. 1654), pertaining to cost caps for the International Space Station, is $380 million per flight. Using the authorization value for the approximately 40 Space Shuttle flights flown or planned for station assembly, the present cost estimate for Space Shuttle flights supporting Space Station is approximately $13.7 billion, including flights for partner elements.
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Living within the Budget and Cost Cap
QUESTION 2A:
Will the Space Station program remain within the $25 billion budget cap set into law last year?
ANSWER 2A:
Yes. The FY 2002 budget, redirecting planned funding from high risk development items in order to complete the U.S. Core station, is based on the assumption that the point at which substantial completion will be reached (less than 5 percent of the annual Space Station budget is spent on development) will occur in FY 2004 when the U.S. Core Capability is reached. Total Space Station program funding from FY 1994 through FY 2004 is projected at $23.3 billion in this budget. Should assembly extend into FY 2005, costs through the end of FY 2005 should be no more than $24.7 billion.
QUESTION 2B:
Will NASA count all of the funds spent for the development of the Crew Return Vehicle against the $25 billion cap?
ANSWER 2B:
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Funds spent to date for X–38/CRV development will be counted against the $25 billion cap. Should additional funds be made available for CRV within the five-year runout of the President's FY 2002 budget request and per the conditions stated in the Budget Blueprint, NASA will review program estimates pertaining to the caps.
QUESTION 2C:
If NASA establishes a baseline which does not include several elements, such as the Habitation Module, Crew Return Vehicle, Propulsion Module or possibly other elements, and these elements are deemed to be ''enhancements'' to the program, will NASA count these developments against the $25 billion cost cap?
ANSWER 2C:
As mentioned above, should additional funds be made available for ''enhancements'' within the five-year runout of the President's FY 2002 budget request and per the conditions stated in the Budget Blueprint, NASA will review program estimates pertaining to the caps.
Independent Annual Reviews
QUESTION 3A:
Why was the Independent Annual Review (IAR) cancelled in 2000?
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ANSWER 3A:
NASA requires that the conduct of all Independent Annual Reviews be coordinated between the Agency's Independent Program Assessment Office (IPAO) and the program manager to minimize program disruption. Because of the intensity of ISS development activities, element deliveries, and operations and utilization in 2000, NASA decided to focus program assessments on flight by flight readiness reviews. These reviews were conducted by NASA experts outside of the ISS program in preparation for the rapid schedule of on orbit deliveries scheduled through the latter half of 2000 and into 2001, and have proven to be very successful to date.
QUESTION 3B:
Who made the decision to cancel the review?
ANSWER 3B:
Based on recommendations by the ISS program management, the Associate Administrator of the Office of Space Flight and the NASA Chief Engineer, in concert with the Associate Deputy Administrator, decided not to conduct an IAR during 2000.
QUESTION 3C:
Are all programs required to perform an IAR? If not, what is the threshold for performing an IAR?
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ANSWER 3C:
Yes, all programs are required to have Independent Annual Reviews unless agreed not to by the Administrator. However, the Agency program management process allows some flexibility in how and when these assessments are to be performed. The specific timing and method is stated in the top-level documentation for each program and jointly signed by the Administrator and the responsible Associate Administrator.
QUESTION 3D:
According to the written testimony of the Assistant Inspector General, an IAR for Space Station is scheduled for July 2001, but the scope of the IAR has not yet been determined. What will be the scope of the IAR?
ANSWER 3D:
The Office of Space Flight is coordinating with the IPAO to initiate the next ISS Program IAR in May 2001. This IAR will focus on the restructured program and the high risk cost components identified during the recent bottoms-up review. Unlike the 1999 IAR, the 2001 IAR will extend its analysis beyond the near-term by assessing anticipated costs through the life cycle of the program. The specific topics to be included in the review are being documented in a Terms of Reference (TOR) between the Office of Space Flight, the ISS Program Office, and the [PAO], and may include the ISS Software Integration Lab, flight software production and integration, avionics obsolescence, sustaining engineering, advanced life support system development, and operations training systems. The Chief Engineer will approve the TOR.
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QUESTION 3E:
Will the IAR include an independent ''full-cost'' life cycle cost estimate?
ANSWER 3E:
No, the IAR will focus on critical risk areas as described above. While it may look at elements of the life cycle cost in these areas, it will not produce a full ISS life cycle cost estimate.
QUESTION 3F:
What steps has NASA taken to ensure that the IAR process results in a credible, reliable, and truly independent analysis of the program?
ANSWER 3F:
The IAR team is organized by the Agency's Independent Program Assessment Office to cover all technical and management issues using the best independent expertise available in the Agency and external consultants as identified by the IPAO, the program, and the Enterprise Associate Administrator. The Team is reviewed by the Enterprise Associate Administrator to assure all risk areas are sufficiently addressed and approved by the NASA Chief Engineer who certifies the team as being truly independent. The individuals are chosen not only for their independence, but also for their demonstrated expertise in the specific areas to be reviewed as well as experience in performing high quality independent analyses. The IAR team includes lead members from the NASA Independent Program Assessment Office to help assure the validity of the overall process as well as to provide technical expertise.
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The IPAO's 1999 ISS IAR identified rising civil service staffing trends, difficulty in meeting destaffing targets, and contract overruns. Although it acknowledged that ISS program cost estimating and status reporting needed improvement, it did not anticipate increasing budget requirements. Rather, the IPAO assessed program reserves to be healthy, and suggested that realization of all existing liens would be unlikely. Obviously in hindsight, the near term focus of the assessment obscured the risk of future cost growth. As part of NASA's ongoing assessment of recent cost growth, we will seek to identify better indicators to track for early warning of potential problems in the future.
Management Reforms
QUESTION 4A:
What specific steps is NASA taking to restore cost estimating and management credibility as laid out in the President's budget blueprint?
ANSWER 4A:
In order to first stabilize spending, and focus program efforts on achieving U.S. Core Complete, NASA is temporarily shifting program reporting to the Office of Space Flight (OSF), NASA Headquarters. The ISS Program will report monthly program status and risk assessments directly to OSF, but with more emphasis on predictive measures of program health. OSF will control the introduction of new program content in accordance with the President's budget blueprint, and a program budget reserve will be established at Headquarters with the FY 2002 budget. In addition, OSF will shift major station contract fee determination authority to Headquarters. For the long term, NASA will ensure more effective use of existing independent assessment assets, and will establish a cost, schedule, and risk assessment group for continuous evaluations of cost performance and cost projections. An external review will also be undertaken this summer (as discussed in the response to 4B). NASA will also assess the current staffing level for station program analysts and resource managers and increase staffing as required. Existing training programs and resource training initiatives recently undertaken will be leveraged to ensure NASA has the most up-to-date tools and methods for cost estimating and control. Finally, NASA will take an objective look at routine program resource reporting to determine how to institutionalize an early-warning capability and the long-term view of program costs.
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QUESTION 4B:
Does NASA plan to have an outside group of experts (non-NASA employees) to evaluate and validate the results of the bottoms up review? If so, what are the planned scope and schedule of this review?
ANSWER 4B:
Yes, NASA plans to use an external assessment team to evaluate the costs for the work to go toward U.S. Core Complete this summer. In addition, the Agency will establish a permanent assessment group for continuous evaluations of cost performance and evaluation of costs and risks for post-U.S. Core Complete additions to station content. Before the reviews can proceed, NASA must complete the assessments and trade studies in progress. As reported in testimony, NASA expects these efforts to conclude in early summer of this year. The independent and external assessments could then commence.
QUESTION 4C:
Is NASA planning steps to bolster the independent review process? If so, what steps are being taken?
ANSWER 4C:
Yes, NASA is taking steps to bolster the agency-wide independent review process. NASA has established resources and training programs to augment its cost estimating capabilities. NASA already utilizes leading experts from other Government branches and industry to join the review teams to assist in both technical and financial areas. Alternative methods of conducting independent reviews are under consideration, including establishing a standing independent review team for each major program. This team follows the progress of the program and conducts independent reviews in conjunction with major milestone reviews (e.g., Systems Requirements Reviews, Preliminary Design Review, etc.). With this process, the team has a deeper understanding of the program at the outset of each review. The team membership is supplemented with personnel bringing additional skills as required at that point in time to focus on critical areas of the program.
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NASA will continue to rely on the Independent Program Assessment Office (IPAO) at Langley Research Center to provide independent assessments of ISS costs and risks. The Office of Space Flight is scheduling, with the NASA Chief Engineer's Office, the next independent annual review for the station to ensure that the IPAO evaluates the high risk cost components identified during the recent bottoms-up review. NASA will ensure that the IPAO increase emphasis on life-cycle costs for NASA programs, and ensure that it taps the best resources available for the long term look at risks and cost.
U.S. Core
QUESTION 5A:
What U.S. station elements or components are necessary in order for the space station to be ready to accept major international hardware elements?
ANSWER 5A:
The U.S. flight elements not already on orbit and necessary to accommodate major international hardware elements are as follows: the Airlock, several truss segments/photovoltaic modules (S0, S1, P1, P3/P4, S3/S4, P5, S5), and Node 2. Two-thirds of this hardware is currently at the launch site, Kennedy Space Center (KSC).
QUESTION 5B:
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When do you expect that milestone to be met?
ANSWER 5B:
Per the latest unofficial assembly sequence assessment, accounting for a Shuttle flight rate of 6 flights per year, Node 2, the final U.S. flight element necessary to accommodate major IP elements, is expected to be launched in 2004.
QUESTION 5C:
What is the development cost to complete the U.S. Core?
ANSWER 5C:
While the split between development and operations costs to complete the U.S. Core is still being assessed, NASA can project that development costs should be less than 5% of total station costs by late in FY 2004 or early FY 2005. By the end of FY 2004, total station costs should be under $23.3 billion, and by the end of FY 2005—after U.S. Core Complete—total station costs should be no more than $24.7 billion.
QUESTION 5D:
What is the development cost to complete Space Station based on the Rev F Assembly Sequence?
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ANSWER 5D:
NASA is determined to keep station development within the President's FY 2002 budget request. The actions previously discussed, including the redirection of funding for selected content, management controls, and cost cutting initiatives, are all focused on achieving U.S. Core Complete as early as possible and within budget. Clearly, if no actions were taken, and the Rev F sequence were implemented with the original program content intact, station development costs would be about $4 billion higher than projected under the President's budget blueprint through FY 2006.
QUESTION 5E:
What U.S. elements of the Space Station are being deleted if we stop at the ''U.S. Core?''
ANSWER 5E:
The following U.S. elements were scheduled in the Rev. F assembly sequence to be launched after Node 2, and are now considered potential enhancements beyond the U.S. core capability: the Crew Return Vehicle (CRV), the Habitation Module, the Propulsion Module, the S6 truss segment and photovoltaic module, Node 3, the advanced Environmental Control and Life Support Systems (ECLSS), the Cupola, and the Centrifuge Accommodation Module (CAM).
NASA is pursuing options to identify efficiencies and cost savings that could allow recovery of some of these elements or functions within the President's FY 2002 budget runout.
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QUESTION 5F:
What options are being investigated by NASA to regain a 6- or 7-member crew?
ANSWER 5F:
As described in the testimony, NASA has evaluated a variety of options to use existing equipment besides the Habitation Module, such as Node 3, for achieving up to a seven crew member capability. Faced with the current budget challenge, NASA is earnestly evaluating this potential in detail. There are a number of options to increase habitation capability, which may fit within the President's budget runout. The NASA team is assessing these, and will recommend an option to pursue within a few months. As announced last week, we are also working with the Italian Space Agency to investigate the potential for them to provide a Habitation Module.
While funding for the CRV has been redirected, capability to support a crew size of up to seven is under discussion with our International Partners. Meanwhile, the X–38 project is advancing, continuing to reduce technology risks to support a possible future decision to restore CRV production funding if required.
Cost Estimating
QUESTION 6A:
What insight does NASA have into Space Station costs beyond FY 06? How probable is it that the overrun is more than $4 billion if you looked beyond FY 06?
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ANSWER 6A:
The annual cost of mature operations of the Space Station was estimated at $1.3 billion per year in 1994. In December 1999, NASA completed a preliminary study of post-assembly operations costs and concluded that average annual operations and research would run about $1.5 billion per year, including $150 million per year for 6 years in pre-planned product improvement (P31) that was not in the previous $1.3 billion annual estimate and is not in the budget. The study pointed out that estimates for Pre-Planned Program Improvement (P31) and Sustaining Engineering needed additional work. The content and phasing of the projected P31 effort was not well defined, and work force requirements for Sustaining Engineering needed to be tied to a unified operating concept and adjusted to fit the risks specific to each subsystem. The recent bottoms-up review confirmed that additional work was needed to define post-assembly Sustaining Engineering. P31 was not included in the bottoms-up review because it is not a part of the existing development baseline. Therefore, based on the December 1999 study, and the recent bottoms-up review, there is no reason to believe that the station would experience significant cost increases beyond those already identified.
QUESTION 6B:
Are there additional liens and threats, such as pre-planned product improvements, which may increase the cost of developing and operating the International Space Station but are not included in the $4 billion? If so, please list those with an expected development cost exceeding $50 million.
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ANSWER 6B:
During testimony, NASA provided a list of threats not included in the $4 billion cost estimate. The contents of that list have not changed, and are provided below:
International Partner & Participant Performance
Additional Hab Module & CRV Costs
Pre-Planned Program Improvement (P31)
Contractor Performance (Including Utilities)
Spares
ISS Software Integration Lab (ISIL) Upgrades
Ripple Effect of Work Deferred to the Out-Years
Budgeted Out-Year Efficiencies Not Achieved
Major Flight Anomalies
QUESTION 6C:
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What would the estimated overrun be if NASA looked at the life-cycle cost, including the cost of Shuttle support, civil servants, operations, and research?
ANSWER 6C:
The baseline budget reassessment accounted for all known development, assembly, and operations risks to the ISS Program through FY 2006, and the $4 billion estimate includes coverage for every element with the exception of those threats listed in response to Question 6.B above. As a result of the reassessment, a series of actions have been initiated to reduce program costs. As NASA proceeds through to completion of the reassessment, there will be additional costs and savings identified, and some impact on mature operations costs, the net impact of which is still unknown.
Research Impacts
QUESTION 7:
NASA has stated that research funding will be cut by 40% to offset the cost overrun. What research is NASA considering cutting? When will this decision be made?
ANSWER 7:
Reductions to the Space Station research budget will be part of the solution to containing the estimated $4 billion cost growth in Station development and operations. No decisions on the level of reductions to specific areas of research have been made at this stage. NASA is undertaking a 90-day program assessment of the overall program to ensure that the Station budget will remain within the five-year budget plan in the President's FY 2002 budget request. A key element of this assessment is to restructure the research program to fit within a range of technical and fiscal constraints. The results of the assessment will then be subject to an external review in preparation for decisions in the Fall, as part of preparation of the President's FY 2003 budget request.
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QUESTION 7A:
Can meaningful science be accomplished with a 3-member crew?
ANSWER 7A:
Yes. Prior to the estimated $4 billion cost growth, which necessitated a reduction in the planned crew size, there were to be three crew for about the next five years. NASA has always planned to conduct of a significant amount of meaningful science during this period with three crew members. Crew time is a critical resource to the research program because human intervention accelerates the rate of progress in most experimental endeavors involving biology and human physiology. Physical sciences and biotechnology investigations' reliance on crew intervention will be less extensive, especially if remote control and automated instrumentation capabilities are enhanced.
Top quality science began with the deployment of the first rack of the Human Research Facility in March 2001 on STS–102. Each successive flight adds to research capability and brings new experiments to the Station. Just recently, the first use of tele-operation for Space Station research was successfully demonstrated. During the period of 3-person crew size, NASA is considering options for significantly increasing astronaut time on-board the space station, such as flying a full crew complement on all Space Shuttle missions to the ISS, and extending the length of ISS visits from the Space Shuttle. These options will be factored into the ongoing program assessment, with a clear priority of maximizing research capability within available resources.
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QUESTION 7B:
What are NASA's top priorities for Space Station research if limited to a 3-member crew?
ANSWER 7B:
NASA is undergoing a program assessment, which includes options to restructure the ISS research program to fit within a range of technical and fiscal constraints. For that exercise, NASA's near-term (through 2006) research priorities are: 1) Crew health and safety, 2) Biotechnology, 3) Fundamental Research. NASA plans to vet these priorities with the science community in mid-June. Priority definitions are as follows:
1. Crew Health and Safety (mission-driven)
Biomedical Research is a cross-discipline, cross-divisional effort focused on increasing safety, ensuring the health of astronauts and reducing risks associated with long duration space flight. The knowledge gained through this research will be applied for public health benefits. It will cover research in radiation health, bone and muscle loss in space, psycho-social issues in extreme environments, cardiovascular deconditioning, neurovestibular adaptation, and advanced technology for medical care and human support in space. Research will investigate basic mechanisms for changes in human physiology in space, development of models for human physiology, and human experimentation which will culminate with the validation of technologies and techniques for operational use. The Biomedical Research will be carried out through a combination of ground- and space-based research.
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2. Biotechnology Research (application-driven)
The Biotechnology program is a cross-disciplinary, cross-divisional effort involving fundamental and applied research. The low gravity environment of low-Earth orbit allows advanced research in many areas of Biotechnology with potential for significant impact on Earth-based applications. The general category of Biotechnology includes research areas such as Cellular and Molecular Biology, Structural Biology, Genomics and Proteomics, and Biomolecular Physics and Chemistry. Such disciplines can be explored through a focused approach using gravitational effects as revealing tools to probe aspects of physical, chemical, and biological processes which cannot be addressed at 1 G. In the applied arena, Biotechnology includes Tissue Engineering, Biomaterials, Biofluid Dynamics and Microfluidics Applications to Biomedical Research, Pharmaceuticals Development, and Agricultural and Food Biotechnology. All of these sub-disciplines can directly benefit from on-orbit research.
3. Fundamental Research
The long duration exposure to the space environment afforded by ISS provides a unique opportunity for conducting fundamental biological, physical, chemical, and engineering research. A high priority within the NASA research program will be to address scientific, technological, and industrial challenges on Earth. Previous results of low-gravity research indicate that significant advances in technological and biological processes may be achieved when ISS-based research facilities are implemented. Ground-breaking advances in atomic physics; evolutionary, developmental, and integrative biology; combustion; materials science; and engineering will impact the development of future technologies such as atom lasers, advanced composite materials for defense and civilian applications, biomedical research, and energy production. The effective exploitation of the low-gravity environment will require the use of dedicated and technically capable research facilities that expand investigations beyond the scope of small sub-rack-level payloads. This fundamental research is also crucial to achieving NASA's mission goals.
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These priorities will serve as the basis for a discussion with the scientific community. OBPR has established a schedule for briefing the relevant committees of the National Research Council and the NASA Advisory Council.
QUESTION 7C:
Will the re-alignment of the research program mean a heavier dependence on ground-based research?
ANSWER 7C:
Ground-based research has always provided the foundation for flight experiments, and this will continue to be the case during the Space Station era. Such efforts include the development of experimental systems for low-gravity simulation (such as enhanced NASA bioreactor technology) and the use of short-duration low-gravity platforms, such as drop towers, aircraft flying parabolic trajectories which induce 20-second low-gravity periods, and sounding rockets. Once the program assessment and the restructuring of ISS research is completed, the ground-based research program will be realigned as appropriate, consistent with the restructured program.
An example would be in the enhancement of the development and validation of remote control capabilities or automated operations of space-based investigations. Another area of potential increased ground-based activities would be in the development of experimental systems for low-gravity simulation (such as enhanced NASA bioreactor technology), or the increase use of short-duration low-gravity platforms such as drop towers, an airplane flying parabolic trajectories for 20-second low-gravity periods, and sounding rocket flights. Once the program assessment and the restructuring of ISS research is completed, the ground-based research program will be re-aligned as appropriate, consistent with the restructured program.
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International Partner Implications
QUESTION 8:
What is NASA's current contingency plan if Russia does not meet its obligations to provide crew-return and propulsion capabilities? What, if any, alternatives to its current contingency plan is NASA exploring to mitigate the risk of Russian nonperformance in providing crew return and propulsion capabilities?
ANSWER 8:
The benefit of cooperative partnerships is realized though the reduction of requirements each party has to fulfill. Russian, Canadian, European and Japanese capabilities are integral to the success of the partnership. Flexibility in addressing shortfalls by one partner is also provided through the contributions of the entire partnership.
Regarding propulsion-related risks, Russia is meeting its obligations at this time, and our confidence in their ability to meet their commitments has improved compared to that of prior years. For example:
The Zvezda Service Module, Russia's keystone element, is on orbit and functioning nominally.
Rosaviakosmos funding has stabilized. While still inadequate to maintain schedules for some downstream elements, Rosaviakosmos has given higher priority to the delivery of Progress logistics and Soyuz crew support vehicles. The ISS Program is currently tracking Russian production of 7–8 Progress vehicles for use with the ISS.
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Program contingency plans in the past have focused on the availability of Russian resources to maintain two orbiting space stations. Given the deorbit of Mir, the risk of Russia not being able to provide propulsion is also reduced.
With the U.S. Lab launch and checkout, the control moment gyros (CMG) are now active, dramatically reducing the ISS attitude control propellant requirement to levels even lower than had been predicted based on modeling assumptions.
With any prolonged shortfall or curtailment of Russian propellant delivery services, the ISS Program has four remaining sources of propulsion capability to sustain operations. First, the Russian Segment maintains propellant reserves to provide at least one year of propulsion service. Second, the Space Shuttle is capable of providing 20–30 percent of reboost needs with no performance penalty, with up to 5 percent more of reboost needs if propellant tanks are fully loaded, although this reduces payload capability to the Station. With over two years of ISS operations we now know the total system effectiveness of Shuttle reboost to be larger than prior conservative estimates. Third, NASA also has the Interim Control Module in standby mode. These capabilities, at present performance levels, are sufficient to support the ISS at least until activating the European Automated Transfer Vehicle (ATV) in late 2004 or early 2005. The ATV will give the program a robust propellant delivery and operating platform to augment Progress capabilities if needed for sustained operations.
The ISS partnership doesn't have as much flexibility in addressing a shortfall of Soyuz vehicles. Russian funding priority can be provided to the Soyuz vehicles over that of Progress vehicles because the partnership has propulsive alternatives such as those described above, as well as additional options to transport dry cargo and logistics equipment via the Shuttle and the Japanese H–II Transfer Vehicle to be delivered in 2005.
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Without a means of emergency return, we will not allow a crew on the Station. This means that if the Soyuz is unavailable for whatever reason, the only current alternative is the Shuttle. In this case, the Station would be in crew-tended mode with crew on-board only with the Shuttle docked, until the Soyuz was again available or another alternative was developed.
71805a.eps
Chairman BOEHLERT. Thank you very much. We have approximately 7 minutes to answer the call of the House and there are a series of two votes. So the Chair will announce that we stand in recess for approximately 15 minutes.
Mr. ROHRABACHER. Mr. Chairman, would you indulge me for 2 minutes?
Chairman BOEHLERT. The Chair is used to indulging you. Yes. The Chair will indulge.
Mr. ROHRABACHER. Okay.
Chairman BOEHLERT. Let me explain why the Chair has to indulge Mr. Rohrabacher—because of his deep interest in this, and, secondly, he has got an important meeting dealing with redistricting that he has to go to. Mr. Rohrabacher.
Mr. ROHRABACHER. Thank you very much, Mr. Chairman. Let me say that I might have been a little harsh in my grading after listening to Dan and talking to him behind the scenes. NASA gets at least a ''C'' on this. Okay. And Congress still gets a ''C+;'' the last Administration, okay, we will give them a ''D.'' But let me just say that Dan has done a terrific job as Chairman of NASA and I believe that he has worked his heart out on this project.
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And there are a lot of things—there are a lot of factors that have come to play on this Director of NASA. And let us remember, Dan was first appointed by George Bush, Sr., and kept on and now here he is in the third Administration. And so, Dan, I just want to express the appreciation that we all have for the hard work and good work that you have done on this project, which has been a very frustrating project. You have had people coming at you from all directions, making demands. And we are just trying to make sure it is—in the end, a success. And I just wanted to make those congratulatory remarks to him.
Mr. HALL. Would the gentleman—
Chairman BOEHLERT. Thank you very much, Mr. Rohrabacher.
Mr. HALL. Would the gentleman yield for—
Chairman BOEHLERT. I yield to the gentleman from Texas.
Mr. HALL. When you go to giving people grades, I always remember back in my very questionable background of scholarly—lack of scholarly background—I made four ''Fs'' and one ''D'' one time and my dad whipped me for spending too much time on one subject. So that is for Dan.
Chairman BOEHLERT. With that, the Chair stands in recess.
[Recess]
Additional Cost Overrun
Chairman BOEHLERT. Welcome back. Let me start out by pointing to that $4 billion projected cost overrun over the next 5 years. This is reality check time. That is not the whole story. I mean, there is going to be more. It doesn't include funds to address threats and liens and system obsolesce, pre-plan product improvement or enhancements, as some people call them, anomalies, and the list goes on. Could you please address what is not in that $4 billion overrun projection and provide an estimate of the additional cost you might project, Mr. Administrator?
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Mr. GOLDIN. Yes. There are a number of them, some of which we don't have control over, some of which we do. Let me talk about some of them which depend on others—the international partner performance. So far, we have had a significant amount of trouble with the performance of the Russians because of cost problems. That appears to be over. With regards to our other partners, their performance appears to be pretty good, with the exception of the Japanese that are having trouble with the Centrifuge Module.
Probably the single biggest issue is in the threats, and the additional Hab and CRV costs. We are going to have to have habitation space on board. And the only question is are we going to go into a camp-out mode and use the existing places to put the habitation racks or will we have a Habitation Module?
We have had some very productive talks with the Europeans and there appears to be an interest there. If the Europeans supply the habitation unit—costs of course, would be essentially negligible. On the Crew Return Vehicle, which is probably the biggest issue we face, I think we are taking a very prudent step here. One of the issues—I was listening to some of the prior discussion—that wasn't discussed is, an ability to retire the risk before you commit to do something. And there are a number of things we started where we didn't retire the risk.
We have a program called the X–38, where we intend to rigorously test the Crew Return Vehicle and really understand the limits and retire the risk over the next few years. I think it is prudent to say, let us not start the Crew Return Vehicle until we understand it.
We want to also see whether we have a radically new approach that could be cost-effective or not. We have talked, again, to the Europeans on this issue and we think there is significant opportunity, as Mr. Rohrabacher has pointed out to search for other sources for solving these problems. So if we were to go make a list and add money for these things, I think we would be doing ourselves a disservice now, (a)—we haven't retired the risk on some of these things. We don't have real good valid cost estimates. And, by the way, one of the reasons the Hab Module was eliminated is that it was an area of significant growth, hundreds of millions of dollars. So we said, no, we are not going to do that.
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Major flight anomalies. I don't know how one programs for that, except to say that since May of last year, we have launched 11 elements to space and we have held to within 3 months of the program. We have budgeted for efficiencies which have not yet been achieved. There we have some more work to do.
Then there are few issues that I do think we have to address and we intend to address them. Pre-planned product improvement. There is always a wish list of what everybody wants on pre-planned product improvement. Now, we have addressed what we thought were the essential things—avionics obsolesce. We have a 386 chip in that spacecraft right now. We are going to go to a Pentium processor.
By the way, I was incorrect, when I said we held to 3 months—we held to 3 weeks over a year. And everything worked.
We have a new ammonia pump. So where we have to make corrections, we do. Now, there is a big long wish list of other things that need to be done. I don't think in the next few years we even ought to address that.
Chairman BOEHLERT. Well, let me ask you this, Mr. Administrator—I will get at it another way. Is this $4 billion figure a best-case scenario with inevitability that there is going to be some plus-up? This is reality-check time.
Mr. GOLDIN. Reality check.
Chairman BOEHLERT. We are really trying to get a handle on this thing.
Mr. GOLDIN. Yeah. Okay. Let me come at it this way. I am not comfortable right now because I don't feel we have adequate and substantial reserves. If I saw adequate and substantial reserves, I would answer your question more affirmatively. And the CAV—Mr. Polutchko, I read his material; I listened to him—was absolutely right on.
So, in terms of reality check, as we go through what we are going through, when we come back to you in 2 or 3 months, if we convince ourselves we have adequate reserves to cover things we can't define, I think the response to that will be, yes, we are okay. I am not yet ready to do that reality check until we spend the next 2 or 3 months at it.
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Chairman BOEHLERT. Well, we will look forward to that 2- or 3-month period. But I think we want to be honest with everyone, and I think there is a certain inevitability about the direction in which we are proceeding. And it would be misleading to suggest to anyone that it is 4 billion, period. It is 4 billion, plus. Our objective is to make sure that plus is minimized.
Mr. GOLDIN. Yes.
Chairman BOEHLERT. All right. And I have one final question and then I am going to ask Mr.—recognize Mr. Hall and I will ask Mr. Weldon to assume the Chair. Can the Space Station cost overrun be solved solely from within the Human Space Flight account?
Mr. GOLDIN. One of the problems that NASA had a number of years ago, in the '80's is, there were raids on the other accounts, and it created a very, very bad environment between those scientists that worked on the Space Station and those that worked in other mediums. It created a terrible situation.
One of the things we have tried to work on very, very strongly is isolate those two. I would say, if we can solve those problems, we are going to have to do less or get more money. But going to those other accounts and raiding them, I think, is a very inappropriate thing to do.
Chairman BOEHLERT. And I think the consensus on this Committee would support that proposition. We don't like the idea of raids from other accounts. We like certainty in those other accounts because the whole NASA program is more than just the Space Station. With that, the Chair will recognize the distinguished gentleman from Texas, Mr. Hall.
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Mr. HALL. Mr. Chairman, I thank you. Mr. Goldin, based on NASA's own numbers, elimination of the Habitation Modules, the Crew Return Vehicle, and the Propulsion Module, would it most would save, I guess, somewhere around $2 billion. And if you slash the Station research budget by 40 percent, would maybe get you another billion, but at pretty high cost and lost capacity and lost capability.
How confident are you that you can—I started to say credit, I believe, but I—let us—let me ask you, how confident are you that you can eliminate the rest of the projected 4 billion in cost growth?
Mr. GOLDIN. As I sit here today, we have a set of numbers. And, as I indicated to the Chairman, my concern about those numbers is, I don't see adequate and substantial reserves. One of the things we have had a difficult time handling on this program is having enough resources to handle the unknown things, not the things we could define. And unless we could get that—those set of reserves adequately defined, I can't make any commitments.
Mr. HALL. Well, if you decide you can't make any commitments, you are going to come back and tell us. Aren't you?
Mr. GOLDIN. Absolutely. It will be an open book. And that is why I tried to be very precise in my opening statement, saying, we will share with you exactly where we believe we are, not where we would like to be. But we understand the guidance we have from the Administration and we are going to take some very, very tough, difficult steps. I indicated that in my opening statement. We are going to prioritize things.
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And there are things that are higher priority, like research, as compared to a number of centers having same capability to do the same thing, that neither one is world class. And we have had some trouble eliminating some of those things. So we are going to go there first before we come back and say to the President we can't do the job.
Mr. HALL. So if NASA completes its restructuring review and you can't—you say that you can't credibly—I will use that word again—achieve the 4 billion in cost savings, or that you achieve these savings at too high a cost, in terms of the lost capability that we talked about, you are prepared to come and tell Congress so and tell this chairman so and copy me with it.
Mr. GOLDIN. We will tell you very clearly———
Mr. HALL. And———
Mr. GOLDIN.—book, line, and verse.
Mr. HALL.—I think that is what I expect of you. And that is—and I thank you for the hard times you must be going through and the hard times you have had in the last 60 days and for the years that you have given us. I think ''W'' needs our support and he has got mine and I think you are very gracious to have offered yours for as long as he wants it, whether it is the next 6 months or the next 8 years. So I thank you for being available.
Mr. GOLDIN. Mr.———
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Mr. HALL. I yield back my time.
Mr. GOLDIN. Mr. Hall, can I provide a little bit more background to the answer I just gave?
Mr. HALL. Please go.
Mr. GOLDIN. Could I have Chart #2?
NASA Budget vs. Other Programs
Chairman DAVE WELDON. [Presiding] Can we get Chart #2 on the screen? There we go.
Mr. GOLDIN. I think it is very important for context, listening to the first session, that everyone see this chart and see what a fabulous job the NASA employees have done. What I have plotted here is the budget normalized to 1993. If you look at that blue line—and this isn't corrected for inflation—the NASA budget, for a large number of years, was 5 percent below where we started in '93, and in the last 2 years, we have come up a little bit.
If you take a look at non-defense discretionary spending, they are up 37 percent. The defense is up about 15 percent. Now, we have lived with the most unbelievable cost constraints at NASA, and there are a lot of theories about how you could do things better, different. But the fact of the matter is this NASA team lived with a declining budget and we performed.
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I have a set of numbers which are very important to understand. In 1994, we prepared the Fiscal '95 budget. And we said, in the end of 2001, we would be at 16 billion. Seven years later, with almost all the Core equipment in space or at the Cape, and almost 50 percent of the software done, we are at 17.8 billion. So over a 7-year period, we are 1.8 billion over that estimate or 12 percent growth. Given all the ups and downs, I wanted to provide that context to say, these folks have done a fine job.
And the last point I want to make is, when do you define when we are done? In 2002, we are going to have 40 percent of the research racks on board that station. Yet, we have this bookkeeping procedure that says, when are we done with the Station? So do we put the stop in 2004, 2005, 2006? But the fact of the matter is, we are doing research.
And my contention is, the President was right in not allowing the budget to pop up j of a billion dollars in 2002, and he said, take action. And what this NASA team has done is, we have worked with this Committee year to year, and had this Committee not had the oversight in NASA, had you not worked with us, we wouldn't have a good story like this to tell.
And that is the perspective I want to put for the Committee and for the public. And we will work in the same manner, Mr. Hall, with you, and with this Committee, openly talking about our problems and we will solve them together.
Mr. HALL. I yield back my time, Mr. Chairman.
Human Resources
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Chairman DAVE WELDON. I yield myself 5 minutes. Following on that question, do you have enough people to manage this program? I say that in the context—if you were the CEO of a company and you had somebody running a division that reported cost growth developments somewhat suddenly and unexpectedly, you would have to conclude that the management team is not capable or that the management team is somehow hamstrung in not managing the program correctly, either by a lack of staffing or policies. I mean, do you have enough people at headquarters to keep track of what all the contractors are doing and all the implications of all this at Johnson Space Center, in the Inspector General's office?
Mr. GOLDIN. Well, I think there is a third possibility that there were conditions that we were unaware of. It is not a question of the number of people. We had operational estimates, but we didn't have an understanding of the operations that we now do.
But getting to your question, we have the people, because a year or so ago, we made a decision, based upon inputs from the Aerospace Safety Advisory Panel, which is commissioned by this Committee, and others, that we had to start hiring again. And we are out hiring about 2,000 people over the next few years in the Human Space Flight area at NASA.
The other issue is, the people were incentivized at NASA, and this gets to the core of what I was referring to in my opening statement. Our brightest people were feeling they got their rewards by working on advanced technology for going to Mars, other advanced technologies, instead of the core shuttle/station programs. So one of the things we are doing is we are shutting down those activities for the next 2 or 3 years and taking those people and getting them focused on the Station and shuttle.
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In addition to that, we found we had some deficiencies within the Human Space Flight account. Some of their analytical skills weren't as broad as they should be. So we went to the Aerospace Enterprise, and Sam Venneri worked with the center directors and we are going to get a few hundred people from the Aerospace Enterprise, brought to support the folks at Kennedy and Johnson and Marshall and Stennis, to bring those analytical skills to it.
So the answer is, we are hiring more people, (a), and, (b), we are reprogramming people and we are eliminating lower priority activities to make those people available and the funds available to do those tasks. We accept that reality.
Crew Requirements
Chairman DAVE WELDON. Marcia Smith said that it takes two-and-a-half crew to operate the Space Station. Is that an accurate statement?
Mr. GOLDIN. I don't know. Let me check that. She is right.
Chairman DAVE WELDON. So if we don't develop some kind of workaround for habitation to get up to the full complement of six, then we have a serious problem performing the science on the Space Station. Correct?
Mr. GOLDIN. I believe that is the challenge before us.
International Partner Participation
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Chairman DAVE WELDON. Now, I have been told there have been some discussions with some of our European partners, of them, perhaps, playing a role in some of the workaround concepts for the crew. In particular, I have been told that the Italians have expressed some interest, but the French are not interested. Is that correct?
Mr. GOLDIN. There is interest across Europe in the Crew Return Vehicle, but the discussions are very, very preliminary. We have had preliminary discussions with the Italians on the Habitation Module. Those probably have been the most aggressive discussions. But since they are in a premature phase, I can't say that it will definitely happen, but they are encouraging.
Chairman DAVE WELDON. The problem, as I understand it, is with the French Government, not the people in the French Space Agency.
Mr. GOLDIN. I don't know of that particular problem. We have had some positive responses in the discussions we have had. And if there is data that is available, I will be happy to track it down. But, as far as I could tell, and as I know, we have had preliminary discussions and there was some interest in the Crew Return Vehicle. Let me just validate that 1 minute. That is correct. The French have indicated interest.
Chairman DAVE WELDON. Okay.
Mr. GOLDIN. And we will——
Chairman DAVE WELDON. So I am——
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Mr. GOLDIN. We will check back——
Chairman DAVE WELDON. I am mistaken when I——
Mr. GOLDIN. I don't know. I won't go that far, but we will check back through government channels and try and validate or devalidate the data that you just brought up.
Chairman DAVE WELDON. I think my time has expired. The Chair now recognizes the gentleman from Texas, Mr. Lampson, for 5 minutes.
Station Management
Mr. LAMPSON. Thank you, Mr. Chairman. And thank you, Mr. Goldin. Nice to see you and to hear your testimony. There are lots of questions, and I almost don't know where to go to start, but let me tell you that we have had a lot of questions from folks in the area of the Johnson Space Center. And I would like to try to get answers to—let me start with just three questions. Let me ask them and let you comment on them and help—I guess, give it to me in the perspective of how I can answer them for those folks.
And we start with the possibility of the Station program management being moved or changed in some way so that program management would be answerable directly to headquarters. If you would give me some comments on that and tell me about cost benefits that will come from that particular change in moving from JSC to NASA headquarters.
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And the second one, what is the impact on the Station program of decisions to delay or abandon the work on a crew vehicle—Crew Rescue Vehicle or Habitation Module in light of the fact that if they are stopped and nothing is done on them by others or us, what happens to our costs when we decide that we do need them? Did we waste money by stopping this process along the way?
And then, third, what are the costs and schedule implications of stopping Hab Module and the CRV work now, should we decide at a future point that the crew size for the Station does, indeed, need to be increased to six or seven people?
And what I understand is, that if we see that we are going to need the additional people and have to rely on any other means, other than a CRV, to return our people to earth, that it may be incumbent on us to use Soyuz vehicles for that. If—and there has been some talk of even about the possibility of using two of their vehicles. And would that not reduce the availability of our crew because of those people necessary to operate them? Let me start with those three. If I let—and if there is time at the end, I will ask yet another.
Mr. GOLDIN. Well, I will do my best.
Mr. LAMPSON. Okay.
Mr. GOLDIN. First, with regards to moving the management of the Station from Johnson to headquarters, plain and simple, we've got to restore confidence in the ability of Johnson to be the lead center. It is not a permanent move. We have a set of criteria that we have to work through and we intend, hopefully, in months, after we get these reforms in place, to move it back to Johnson.
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Mr. LAMPSON. Would it affect the movement of people and is there a——
Mr. GOLDIN. No people are—no——
Mr. LAMPSON [continuing]. Cost benefit or—okay.
Mr. GOLDIN. No people are going to move.
Mr. LAMPSON. Okay.
Mr. GOLDIN. It is just that there will be direct contact, contact between Tommy Holloway, the program manager, who is a wonderful man, terrific man. I salute him for identifying the problem. He did it as fast as humanly possible. He will solve it. But we want to put systems into place. We want to be able to tell the Administration that this is where we needed to be and we believe this can happen in months. So that is the answer to the first question.
Mr. LAMPSON. Okay.
Mr. GOLDIN. And it is not a statement that anyone did anything wrong, but we want to make sure we understand we have clear rules.
Mr. LAMPSON. Understand.
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Mr. GOLDIN. Secondly, I believe we have done the right thing. And I have to be very clear. Right now, we are going to live within the budget we have and we do not have resources identified for the Hab Module or for the CRV. And that there are three thing that will allow that to happen.
First, we have to retire the technical risk. I don't believe we have retired the technical risk. And, even in the area of the Hab Module, we have to review the advanced environmental and life-control support systems. So retire the risk. We need a quality cost estimate that we have confidence in and then we have to make sure the resources are available within the funding that we have, which says we had to be more efficient in how we are going to do the job and we have to have adequate reserves. Another way of getting at it is to work with our partners who are willing to put their own money into it. So right now, today, we are in a hole and we have to dig out. And that is why I did not want to answer affirmatively to Mr. Hall that we had these problems solved.
THE ISSUE IS, THE President wants us to live within our means and the President wants to see what steps we are going to take to resolve these issues. Do we know how to prioritize things? Do we know how to shut things down that are not essential? Do we know how to use knowledge-based tools? There are a whole variety of things. So——
Commitment to Space
Mr. LAMPSON. And that makes sense. I understand that. But let me look at that a different way. The chart that you put up there a minute ago indicates, to me, that, perhaps, our commitment to space may have changed as an American people, not NASA, but as America. Because if we had a vision of a facility that is going to give us the opportunity to do things like creating businesses that help save kids' lives with cyberonics, with the Vegas nerve stimulator—if we are going to have the opportunity to dream of those things that are far beyond us and that we have been wondering about for all of these—this millennia, then what are we doing?
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Why aren't we out here beating the doors down of the President, of every Member of Congress, saying, we have got to make this happen. We believe in it. If it is real, if we want to have it, if it is something that is going to make a difference in our lives, why aren't we there saying, we can't do it for this. It is going to take this—let us go forward.
Mr. GOLDIN. Let me say the following. I listened to the campaign very carefully. Our President has a set of priorities that he ran on in the campaign. His opponent had a set of priorities. The American people are very smart in their infinite wisdom, and I listened carefully. Now, I hear the space cadets talking about why doesn't NASA have more money? These are the priorities that are set by the Nation. And, as NASA Administrator, I am going to carry out the policy of the President. Would we love more money? Yes.
But I want to come to another point that is very important here that the space community needs to hear. If you take a look at that curve, we wanted and, perhaps, need more money, but the fact that we didn't get it made us smarter and tougher. The Shuttle is a billion dollars a year less and the reliability is significantly more. Our average spacecraft are about g the cost and we are flying four times as many in 40 percent less time. And this Space Station was done, as I indicated, for a tough cost.
Now, these are the priorities. When the priorities change, we have a list. NASA is the only agency I know of—or maybe the only organization in the country that has a 25-year strategic plan. We know we want to go to Mars. We want to put colonies on asteroids. We want to have telescopes that are going to find life out of our solar system. These plans are all there. The vision is all there. The question is, what are the priorities in the Nation? So, as long as I sit here and I work with the President of the United States, I am going to live within the guidelines the President gave me. And it is up to the Congress. We propose and the Congress disposes. And that is all I could say.
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Mr. LAMPSON. And we believe that for every dollar we spend in space, we get $9 back, we better do our jobs better and tell the public that. We need their help.
Chairman DAVE WELDON. I would have interrupted you sooner, but I liked what you were saying. The gentlelady from Texas, Ms. Jackson Lee.
Ms. JACKSON LEE. Thank you, Mr. Chairman. I don't know, I might start singing, so you can join me as well. This is a very tough challenge, Mr. Goldin. And I, frankly, appreciate your congeniality. I am less congenial and I prefer to express my opposition to the position being taken by the Administration. And, frankly, I believe that Congresspersons, Republicans and Democrats, might join me in agreeing with Mr. Polutchko's position, which is to find a plan that we all can have confidence in and stick to it. I had him on the track and he made sure that I got it right, which is to get a plan that we have confidence in.
And I think that is appropriate. My colleague, who was just here from Texas, a new member, offered another suggestion, which is multi-year funding, which is somewhat what we had with strict performance requirements, which rings somewhat sincere primarily because what we have here is political swings. And this is not a program that can deal with political swings.
First of all, if we look at your first chart, you are down to number eight as the agency that has gotten increases. So we are within the realm of reasonableness. Ms. Smith indicated that in 1984, we started off with some unfortunate costs—underestimates. I believe that was under the Administration of President Reagan. The good news is the Inspector General said there is no evidence that we were covering up or hiding. And I want to applaud the NASA employees, and, in particular, those at the centers, and certainly Johnson Space Center, where I see nothing but dutifulness to the issue.
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Research Cuts
Let me quickly go to my question and say to you that in my opposition, I don't see how a 40 percent cut is going to get us to do any more research, any more research racks, than we have had to do in the last 20 years. I don't see where we are going to do the 23 that we would like. I see that we are only going to be able to do ten.
I think that crew health and safety research falls short with three. Biotechnology research—when I go into inner cities and I talk about research for diabetes and HIV, AIDS, and heart disease, that is where I draw the heartstrings of the American people. Dealing with ground-breaking advances—all of that seems to be penalized by our efforts.
And let me follow up by saying, what agreements do we have with our international space partners, to do research for them? What does the seven down to three do to that? Lastly, Mr. Chairman, my question is, I have got some other issues. Nick and I share neighborhoods. Nick is the very established and respected Congressperson for the Johnson Space Center, and we share our constituents, because some of them work in his district and live in mine. Some of them are civil servants and there is a suggestion of the transfer—a number of them being transferred out. Some suggestions of privatization. And, as I notice your expression, I would be delighted for you to correct any suggestion. There is supposed to be 100 to 200. Will your privatization initiative limit NASA's ability to deal with the $400 billion cost overrun and will it limit NASA's ability to restructure a useful research program?
When we are home in our districts, these hard-working civil servants are concerned about their ability to contribute. And, as well, we have concerns about not only the hard-working civil servants, but the workers who are employees of the private companies. Are they going to be undermined in their work to ensure a safe and healthy NASA and one that this country can all be proud of?
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So I conclude simply by saying, Mr. Goldin, I raise my hands in ultimate frustration because the question has to be whether the American people buy into the rightness of a space program and what it does for them. And I, frankly, with all due respect, disagree with any suggestion that the last election and the victor was, in any way, a suggestion that the American psychic voted to downsize the Space Program and to eliminate its vitality. And that is what I am hearing you say. So I—that is my editorial comment. I gave you three questions and I don't see how we are going to function, and I believe we are going to have to work in a better way—a smarter way. And I appreciate your answers.
Mr. GOLDIN. Please let me address that last point first. What I said was, both candidates in the debates, in the materials, didn't have space as a high priority. That is all I said. I didn't draw any other conclusions from that.
Ms. JACKSON LEE. Thank you for that. That you for that clarification.
Mr. GOLDIN. Being one interested in the Space Program, I listened to everything and I read everything. So please don't take any other conclusion from that.
Ms. JACKSON LEE. I wouldn't want the American people on——
Mr. GOLDIN. Okay.
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Ms. JACKSON LEE.—for denouncing it. Thank you.
Mr. GOLDIN. Now, look, I want to come to another point which is very important. First, I don't know of civil servants that are going to be transferred, so I don't know how to address that. But there is another issue that we——
Ms. JACKSON LEE. You will get back with me on that if we—if I am unclear on it.
Mr. GOLDIN. Yes.
Ms. JACKSON LEE. Thank you.
Mr. GOLDIN. Okay. But there is another issue that is important. NASA is not an assured jobs program. Jobs get finished and they have to be shut down. When there is difficulty and financial trouble in the private sector, the CEO makes a decision and, you will see, people get hired and people get laid off. We have to live within a budget. And I don't want to sound callous, but we have to look at NASA, that we are going to make some hard decisions. And we are going to make it fairly. We will not make decisions and take action until we consult with you. But I cannot sit here and guarantee that everyone is going to have a lifetime job that is part of a contract——
Ms. JACKSON LEE. Would you answer my next two questions, because I see the Chairman's gavel coming down. I gave him three questions, Mr. Chairman.
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Chairman DAVE WELDON. Your time is expired.
Impact to Research
Ms. JACKSON LEE. I would ask the indulgence of the Chairman to allow Mr. Goldin to answer the research racks question and whether or not we have agreements with other space—international space partners to do research and how the seven down to three will impact that.
Mr. GOLDIN. Right now, we know that we have ten racks that are going to go up in the next year. We are working with the Japanese on four more racks, with the Centrifuge, that is 14. And then, we are looking at another five, if it is possible, which gets us to 19 from 27. That is a large number of pieces of equipment. We want to work with our international partners and see if there is some barter arrangements that we could work out where we could work with them. So until we have the study done, I am not ready to say that we are giving up.
And what I committed to Mr. Hall, I will commit to you. We will go through, collect the data, and present the data to you. We will tell you the very best we could do, living within the budget we have. And then it is up to the Congress to decide what they want to do.
Ms. JACKSON LEE. I thank the Chairman for his indulgence and I think this Committee will do a lot of hand-holding, Mr. Chairman, over the next couple of weeks and months on this issue, because I am very troubled. I thank you.
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Chairman DAVE WELDON. The gentleman from Connecticut, Mr. Larson, is recognized for 5 minutes.
Mr. LARSON. Thank you very much, Mr. Chairman, and, once again, welcome to the Committee, Dan. It is a pleasure to see an individual who, I believe, is an extraordinary American and what a great service you have provided to this Nation, and your leadership as the—at the helm of NASA has just been exemplary. And I can't underscore that enough. Mr. Chairman, I have a written statement with regard to a number of the attributes that Mr. Goldin has brought over his tenure that I would like to submit for the record.
Chairman DAVE WELDON. Without objection.
[The information referred to follows:]
PREPARED OPENING STATEMENT OF THE HONORABLE JOHN LARSON
During his tenure as NASA's longest-serving Administrator, Daniel S. Goldin has initiated a revolution to transform America's aeronautics and space program. Despite lower budgets, Administrator Goldin's aggressive management reforms have enabled the Agency to deliver programs of high value to the American public without sacrificing safety. Personally, I have enjoyed working closely with Mr. Goldin, and in my relatively short time in Congress have found him to be the most accessible, open and forthcoming of the Agency-heads that I interact with on a regular basis.
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When Dan Goldin became Administrator in the spring of 1992, outside observers perceived the Agency to be a bloated bureaucracy pursuing missions that were too expensive, took too long to develop and flew too infrequently. NASA also was criticized for an imbalance between human and robotic missions.
In awarding Dan Goldin the 1998 Laurel Award for outstanding achievement in aviation and aerospace, Aviation Week & Space Technology magazine stated he has ''delivered on his promise to reshape NASA into a model government agency.'' Mr. Goldin has implemented a more balanced aeronautics and space program by reducing human space flight funding from 48 percent of NASA's total budget to 38 percent and increasing funding for science and aerospace technology from 31 to 43 percent. As NASA's Administrator, he also has cut the time required to develop Earth- and space-science spacecraft by 40 percent and reduced the cost by two-thirds, while increasing the average number of missions launched per year about four times. During this period, the Agency's civil service workforce has been reduced by about a third, while the Headquarters' civil service and contractor workforce has been reduced by more than half. These reductions were accomplished without resorting to forced layoffs. At the same time, NASA's productivity gains climbed 40 percent.
In revitalizing NASA, Dan Goldin has been a vigorous proponent for increased exploration of Mars and has established a series of robotic missions that will visit the planet every two years for the next decade. These missions are being developed in one-third the time and at one-tenth the cost of previous Mars expeditions. Featuring new technologies such as planetary rovers, penetrators and sample returns, these missions are designed to determine if life and water may have existed on Mars, and will be instrumental in the development of human missions to Mars.
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Exploration of Mars is a key component of Administrator Goldin's comprehensive strategy for space exploration. He initiated the Origins Program to understand how the Universe has evolved, to learn how life began on Earth and to see if life exists elsewhere. He led a rescue plan for the successful installation of a ''contact lens'' on the Hubble Space Telescope, leading to startling discoveries of the cosmos. Mr. Goldin has challenged Origins planners to search for Earth-like planets within 100 light years of our planet. He also has laid the foundation to complete the first scientific census of the solar system and to send the first probe into interstellar space.
In expanding opportunities for public and educational participation in the adventure of space exploration and research under Dan Goldin, NASA's program managers incorporated Internet access into mission outreach plans. This new policy attracted over three-quarters of a billion ''hits'' for the Mars Pathfinder mission, while CNN reported an unprecedented half million hits per minute during its Webcast of STS–95, the mission which included former Senator John Glenn's return to flight.
Dan Goldin has also led NASA in making significant contributions to the socio-economic climate of the United States in the 1990s. During his tenure, contract and subcontract dollars to small businesses went from $2.2 in FY 92 to $3.5 billion in FY 2000. With regard to minority owned businesses such figures more than doubled from $615 million in FY 92 to $1.6 billion in FY 2000. Meanwhile, contract and subcontract dollars to women-owned businesses more than tripled from $156 million to $543 million. Moreover, NASA has a congressional-mandate to award 8% of its total contract and subcontract dollars to small disadvantaged businesses, which include not only women and minority-owned small businesses but also tribal colleges, Hispanic Serving Institutions and Historically Black Universities and Colleges. Prior to Mr. Goldin's arrival at NASA, the agency had never met the 8% goal. In the first full year of Mr. Goldin's tenure, however, the agency met the goal and has surpassed it every year since, accomplishing 18.3% or $2 billion in FY 2000. More importantly, in FY 2000, small disadvantaged businesses won six times more contract dollars on a competitive basis, outside of a sheltered market program, than they did prior to Mr. Goldin's arrival.
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Similarly, fueled by Mr. Goldin's personal commitment to educational excellence for all Americans, many Historically Black Colleges and Universities (HBCU) and Other Minority Universities (OMU) have become model institutions of teaching, learning, research and service, effectively educating diverse populations for NASA and the Nation. Mr. Goldin's exceptional leadership has been repeatedly recognized nationally and as a result, NASA's HBCU and Hispanic Education Programs have often been cited by the White House Initiative Offices as models for the Federal sector. Several HBCUs have attributed their ability to gain approval of the doctoral programs in such discipline as Physics, Atmospheric Sciences, and Electrical Engineering directly to NASA's sustained investment in research infrastructure and the technical assistance of the Agency's scientists and engineers.
Before coming to NASA, Mr. Goldin was Vice President and General Manager of the TRW Space and Technology Group in Redondo Beach, CA. During a 25-year career at TRW, Dan Goldin managed production of advanced communication spacecraft, space technologies and scientific instruments. He began his career at NASA's Lewis Research Center, Cleveland, OH, in 1962, and worked on electric propulsion systems for human interplanetary travel. Mr. Goldin is a member of the National Academy of Engineers and a Fellow of the American Institute of Aeronautics and Astronautics.
Mr. LARSON. And associate myself with the remarks of Ranking Member Hall, who, I think, again, lauded you for your service to the Nation and to the past Administration and current Administration. And it is my sincere hope that the Administration, if you are willing, retains you in this position where you have served this Nation in extraordinary capacity.
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And I also would like to associate myself with the remarks of Representatives Lampson and Lee in terms of overall concern, as a member of the Committee, that even given the restraints and understanding the importance of an Administrator, that we, on this Committee, should be the advocates and understand the importance in what you have been able to accomplish. And you should not be punished for success, by virtue of what you have been able to do, both in controlling cost and gaining greater efficiencies from a Federal agency. I believe, as the annals of history are rolled out, that this will stand as a stellar example of what efficiency can be within a Federal agency. And so I commend you with that.
NASA Workforce
And my questions stem along the line. You mentioned that there is no guarantee of a job. And I can recall, in conversations, either before this Committee, or what I have been able to read, I am concerned about the future workforce in this area. And how are we going to continue to attract people to become involved and committed to NASA and all that it represents and stands for in this Nation? And Nick said it best, in terms of the spin-off—is there any envision with respect to that? I know the long-term plans and visions and missions to Mars, and telescopes that can peer into other life beyond our galaxy. But perhaps you could illuminate how we might provide incentives for people to come to NASA.
Mr. GOLDIN. Well, this, to me, is the issue. And it is my job to defend the Administration policy, not to question it. It makes us stronger and better at NASA. But there is an issue that all of us in America have to worry about. That is, over the next decade, there is a need for a 50 percent increase in the science and engineering workforce. And if you take a look at potential of college graduates and retirements, we end up with a net zero movement.
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In the last 3 to 5 years, our young people have chosen not to go into science and engineering, and the enrollments are declining at a time when they should be going up. There is the graying of the technical workforce in America and we have twice as many people over 60, as under 30 at NASA. This is an issue that is of importance, not just to NASA, but to the vitality of the Nation. Some Members of the Senate have talked about this just for the defense of the Nation. It is something I am worried about.
What are we doing at NASA? I can't talk about some of the budget things, but I could tell you we have a research park out at NASA Ames, which is a prototype, where we intend to bring together academia, industry, and government, to give students an opportunity to have, if you will, a learning hospital for software. If this works, we intend to spread it throughout the country.
We have a number of other initiatives in the budget which I cannot talk about until the 9th of April. But we, at NASA, are very concerned. We are not the Department of Education. But, as an individual, I view this as one of the highest priorities, an educational priority, which is a priority within the Administration and within the Congress and within the American people. But education needs to be looked at from the vantage point that we can't have a Nation that litigates for the world, a Nation that does the books for the world, and a Nation that does the recreation for the world. We need value-added industry. This is what NASA is about leading the charge there.
So in the next hearing, I think I will be in a better position to talk about the things we are doing. But we are not going to have huge budgets, but they are going to be very focused. And, by the way, there is another tragedy in America. If you take a look at the demographics, minority Americans make up 24 percent of the population and only 3 percent of the real hard-core engineering and science workforce. It is disproportionate by a factor of eight. Women make up 23 percent of the science and engineering workforce and only about 9 percent of the hard-core.
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So the problem I talked about could be solved in a decade if we find the best and the brightest and they are proportionately represented in the workforce. To me, this is the issue and NASA is going to be on the cutting edge of resolving that problem.
Mr. LARSON. I hope you are there to lead us and, if I could, just—and not a question, but just a comment, briefly.
Chairman DAVE WELDON. Sure. We are going to have another round if you———
Mr. LARSON. Oh. Okay.
Chairman DAVE WELDON.—if you would like to.
Mr. LARSON. Well, I think you answered—you are going to be talking on the 9th more specifically about some of the programs, et cetera.
Mr. GOLDIN. Yes.
Mr. LARSON. I will reserve that for then. Go ahead, Mr. Chairman. Thank you.
Chairman DAVE WELDON. The Chair recognizes himself for 5 minutes.
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Ms. JACKSON LEE. Mr. Chairman———
Chairman DAVE WELDON. Yes.
Ms. JACKSON LEE. Mr. Chairman, I thank you for giving us the second round. I will not be able to stay and I just wanted to make sure that I got on the record my appreciation for the thoughtfulness of Mr. Goldin in the years of his service. I believe that he is going to need a lot of help, but we certainly want to pay tribute to him and his leadership in what he has done for the Space Program. So I thank you for giving us a second round and indulging me. I yield back to the Chairman.
Cost Overrun Timeline
Chairman DAVE WELDON. Dan, could you just explain to me in a little bit more detail the timeline on the $4 billion cost growth in terms of you and your staff recognizing it. You had an announcement to us a year ago that there was going to be some cost growth, but it was substantially smaller than what emerged right after the inauguration. And I am just a little bit surprised that figures this big could sneak up on us like this and maybe you can explain to me a little bit better how this all played out.
Mr. GOLDIN. Yes. And I think, in the simplest form, each year we would come forward with liens and threats. Then we would report those liens and threats and we report the reserve status each year. And taking a look at the budget pressure, we have a process—and someone talked about multi-year funding—we have a process that appropriates in 1 year increments, and we always focus on that 1 year. And we deal with the liens and threats pretty accurately for that 1 year. And then, when we look out, there is always a temptation on the part of the NASA leadership, on the part of the Administration, to say, well, we will deal with that later on. And that, in my mind, was one of the driving forces, and I put that in my written testimony.
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So what happened was, we had 2 years of delay. We were sitting waiting for the Station to go up. And it is looking like underrun. And I feel there was an underassessment of the liens and threats in the out years. So the second part is we are sitting there waiting and then, all of a sudden, we have a huge increase in activity. We have had 11 launches in less than a year. And, all of a sudden, Tommy Holloway, who is the Station program manager—and the operational costs, were estimates until that time. He started getting real operational costs. And the program was supposed to come down pretty sharply and the people are not coming off the program, because the first objective is safety. We will never, never, ever, let costs stand in the way of doing the right thing. So the people didn't come off, and rightfully so.
So I think he started—the input he got in September was for August. Costs are up, and July were higher than should be. He immediately took action and started doing a cost assessment. And instead of doing tops-down, he said, let us do it bottoms-up and I want everyone to be as conservative as possible.
And in our cost assessment, we did things like using the Shuttle model. And I will give you an example of why I think it is a little conservative. With the Shuttle, you have to respond instantly, so you have people 24/7. You have, you know, the equivalent of five shifts to make sure you are there 7 days a week, 24 hours a day. On the Station, you have time to react. So you put it in a safe mode and then wait for the crew to come in. But he said, let us go and assume it is Shuttle operation, even though we are going to go to station operation.
So he came up with this conservative estimate and, by October or November, we got the input, went to the administration. We needed a little bit more time and they said get back to us before we have to go forward with the budget. We got back February 1. By the way, I found out December 12, if you want to know my personal knowledge of it. And we met with them and we briefed the Congress.
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I have one chart, which, I think, shows you the results of what I am saying. Could I have Chart #5? Okay. Ah. There it is. This is an accounting from the summer of '98 through January of '01 of our reserves and the uncosted carryover. And I feel those uncosted carryover numbers are too low in retrospect. But you see, we sat with a pretty good reserve in '98 with the uncosted carryover, $2.5 billion, and we have our threats. In '99, the reserves came down, still workable, still an appreciable number.
Summer of '00 the problem is beginning to surface, and this is when Tommy is getting worried. And here you see the reserves have dipped down, but we are seeing a significant increase in the threats. And then we did the rebaseline, because we had to maintain safety, the workforce was supposed to come down and the workforce has been pretty level, and that is why we ate up the reserves, and that is why we see the problem we have. So this is where the $4 billion came from and that is the time sequence of events that occurred to get there.
And in the lessons learned, looking at multi-year funding, with regards to liens and threats, and aggressively and conservatively pursuing them, I think, could have given us a little earlier warning.
Chairman DAVE WELDON. So in the summer of '00 and the fall, you had no idea it was going to be this bad.
Mr. GOLDIN. No. I did not. In fact, I went to a briefing with the head of OMB in August and told him that I thought it would be tough, but we would make the 2002 budget. When this estimate came out on February 1, it said we needed another j of a billion dollars in 2002.
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Chairman DAVE WELDON. My time has expired. The gentleman from Texas, Mr. Lampson, is recognized.
NASA Contractors
Mr. LAMPSON. Thank you, Mr. Chairman. You made the comment a while ago that NASA is not a jobs program, and I agree with that—it is not. But nothing happens in space unless we have those people there. And I wanted to ask a couple of questions in that line. You had made the comment that there would be no civil servants lost from this—from our projections right now, with where we are going with the budget. Will there be the potential of contract cutbacks to the extent that people will be laid off from those companies that support NASA?
Mr. GOLDIN. I hesitate to shoot from the hip until I see the numbers. But let me tell you what I do know so there is no confusion at Johnson. There are some contracts that are coming to an end independent to this action. They are at the completion point. I don't remember the names of the contracts. And I think, as those contracts get completed, there will be some hundreds of jobs that will be lost. I don't know about whether they are going to be reabsorbed because, as part of this activity, we are talking to our contractor, Boeing. We are talking about consolidating activities at Johnson and Kennedy from their other corporate activities to get them closer to where the work is. It could be that there are hundreds of jobs involved in that———
Mr. LAMPSON. Uh-huh.
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Mr. GOLDIN.—but we don't know. Then, when we go through and take a look at some of the other activities, we are going to shut things down. But we are going to take that money and reinvest it in the Space Station. So until we get all the plusses and minuses, I can't talk to you because we have to take a look at the geographic distribution. But my point is, we are not going to take money away and put it into another account. The money is going to be reinvested in the Space Station by saying we are getting rid of lower-priority activities.
Will that be enough to build us substantial reserves so we have confidence? I don't know. Will that be enough to address the concerns that were raised by Mr. Hall and other members relative to research? I don't know. But we will live within the budget we got. Then we will tell you the results, and then it is up to the Congress to dispose.
Crew Size
Mr. LAMPSON. All right. Or we have got to make changes here to make sure that there are adequate—there is adequate funding to accomplish those goals. And that is what we have got to get to the bottom of here. You mentioned that within 3 years all research equipment would be delivered to the Station. And you talked about the schedule of the racks that are going into the research modules and such. What about the people necessary to use that equipment? Will there be adequate people there to do the things once the equipment is there to accomplish what our goals were originally?
Mr. GOLDIN. For the next 3 years, we have an adequate crew. In fact, in hearings before this Committee and other Committees, years ago, concern was expressed that we didn't have early research on the Station. We changed the Station configuration to get the solar array up there earlier, which was an additional cost, so we could have these ten research racks. This is a promise we made and a promise we are delivering on. So for the next 3 years, we have the capability to handle the ten racks of equipment that we committed to a number of years ago to get up there.
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In 2004, we then have to take a look at the additional facilities we are going to put up and we don't know how to address that. But we are doing exactly what we said we would do for the next 3 years.
Mr. LAMPSON. We will rely on a life boat, the Soyuz, crew—as a Crew Return Vehicle, which is limited to three people being up there. And, as long as it is there, I am assuming there has to be a Russian commander of that. Right?
Mr. GOLDIN. Yes.
Mr. LAMPSON. Which leaves two other people. What—how do you see those three people functioning? What will they be able to do and what happens to our costs? And this, I guess, relates back to what I asked a while ago. When we decide that we can't function with that wonderful facility that we have up there, and are not getting the biggest bang for our buck on earth, and we want to do more, what happens then to our costs when we decide we have got to have the Crew Return Vehicle that we have been working on and want to make it happen so that we can put seven people up, I gather, when we spend so much more money later to restart——
Mr. GOLDIN. No. We are not stopping. I think we are doing the prudent thing. The X–38 has to be thoroughly tested. It is okay to say to the contractors, we are not going to start you at some hundreds of millions of dollars a year for the next 2 years. Remember the criteria—retire the risk, get quality cost estimates, and then make sure you have money. We are not going to spend a nickel extra by spending the time to do all those drop tests out in the Mojave Desert to make sure it works. We are not going to lose a nickel by doing thorough worst-case analysis to make sure it works. We are not going to lose a nickel and we are not going to start that CRV until we take it up to orbit—the prototype model—and then bring it back down to the ground. So we have time to work the CRV.
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Now, are some contractors unhappy because they don't have big contracts going now? You bet. But we are going to exercise fiscal discipline, and this is something in retrospect that we should have done before—to take the time to retire the risk to understand the costs. And that was part of the issue. So over the next 2 years, I believe we are not going to spend an extra nickel on the CRV and hopefully we will get money from the Europeans and we will be able to deliver it in a relatively short period of time.
One last thing, we are looking at a configuration that may get us a CRV a little bit earlier. But since we haven't done the analysis yet, I don't know if we could do it. I don't want you to get the impression that the contractors are bad, but sometimes there is a desire to get started sooner to have that old contract in their hands and we are going to hold steady a little bit. I don't believe it is going to add to the cost. If we wait more than 2 or 3 years, yes. But over the next 2 or 3 years, we have funding for the X–38. We have funding to do the right kind of things at a low level to get the CRV contractor up and going. And then, when we step on the accelerator, we could do it right, if we don't cost-limit it, as the CAV pointed out.
Chairman DAVE WELDON. The gentleman's time has expired. The gentleman from Connecticut, Mr. Larson.
Mr. LARSON. Yes. In courtesy to my senior member from Texas who has a burning question that he would like to ask, could I yield him a portion of my time to, if I could, Mr. Chairman?
Mr. LAMPSON. Thank you, John. You are a champion. I appreciate that. I just wanted to continue that just for a——
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Mr. GOLDIN. Yeah. Sure.
Mr. LAMPSON.—little bit more. The—and I ended up losing my train of thought, but it had to do with—we are still looking at the use of the people and the Crew Return Vehicle and what Congress can do to support, not just those projects, but anything else that could potentially hold back our reaching the goal, our original goal. And I don't mind being the one that gets out there, or the ones, because I know how Dave Weldon feels and I know how John Larson, and I know how other of our colleagues feel about wanting to see this thing be what our original dream was. What kind of costs might be necessary for us to, from the standpoint of Congress, work on, to be able to achieve these things more quickly? What—do we want to just stop what we are doing, and, as you have explained, keep and apply that fiscal restraint, which I fully understand—I don't want any money wasted.
But, at the same time, knowing that it is—we are building something that has never been done before, knowing that NASA is working with an amount of money that is somewhere around 6/10 or so of a percent of the GNP, as compared to what we did during the Apollo period, which was 4 percent of the GNP, what do we do? Are we doing our jobs properly here by not pushing America to get on the side of this thing and do what we said we would do now?
And I have got to say what is driving this. I had a conversation with rabbi that I introduced this morning on the Floor who gave the—who gave our prayer. And he said—and we were talking about this and he said he was reminded of a Star Trek series where the Starship Enterprise crashed into a jet and killed its pilot and they had to travel back in time. And they were doing—they had to put this—restore this man. And they decided—they figured out—they did some research and found out that this pilot's grandson had invented something that was critical to the operation of Starship Enterprise. And they realized that if they just put him back and made everything okay, that that grandson might not come.
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Well, what might we be doing if we leave something undone right now that can be done to change the course of our history? Will those children be affected? Will those companies that have jobs and they are paying taxes and are creating economic development, be affected to the point where we make a mistake and someday, somebody can say, shame on you all? I don't want that to happen to me.
Mr. GOLDIN. Neither do I. However, we have a budget that we have to live within and we are going to be very prudent. We are going to make sure we retire the risk. We will have quality cost estimates. And I shouldn't have said the money is going to come from the Europeans. We will do barter arrangements and they will spend the monies and do things in their countries. But we need to have the resources available.
We are going to take some time to look at this. And all I am asking for is your tolerance to let us go do this analysis. I commit to you, we will present the options. Clearly, we are going to have a program that lives within the guidelines that the President gave us. I could guarantee it and we will vigorously support it.
However, saying that, since the Congress disposes on what the Administration proposes, we will give you the options and the other issues. I believe we are doing all the right things. And sometimes doing what you say you are going to do is important. This is very important to me. I always like to do what I say I am going to do. And I am frustrated by this. But this is tough sledding.
I had, in my opening statement, words about I know people want to go to Mars. I know people have the vision of doing all these things, of going to Mars. We got to show the American public that we do what we said we are going to do. And I view that as a real sacred trust. And that is why we want to get this done right. And I believe, if we do that, my whole life's dream—I started in 1962 on a human mission to Mars—I will see that happen some years from now. But we have got to do what we said we are going to do. And that is why we are being so tough.
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That is why I am taking this ornery position. That is why I am signaling to everyone we are going to be in charge of this at NASA to propose. If anyone wants to come around us in the contracting community, how about it, because it is a democracy, but we are not going to be swayed by their need for business. We are not going to be swayed by their need for protecting jobs. We are going to be swayed by NASA doing what it said it is going to do.
Mr. LAMPSON. Thank you, Mr. Goldin. Mr. Chairman, may I ask unanimous consent that you extend Mr. Larson's time that which he graciously gave to me? And I apologize, but thank the both of you for letting me have the time that you did.
Chairman DAVE WELDON. Does the gentleman from Connecticut have a question?
Mr. LARSON. Yes. I do, Mr. Chairman. But I wanted to first start by saying that I had a Irish Catholic priest that I visited this morning, and he had a story for me. No. I respect the fact that I—actually my question would have only piggybacked on that and I thank the Chairman for his indulgence. Thank you so much.
Chairman DAVE WELDON. That is it. Well—question?
Mr. LARSON. Well, actually, I do, if you—I have plenty of questions, but I was just honoring the——
Chairman DAVE WELDON. No. I think we will end it here. Thanks. I want to thank all of our witnesses. I do want to remind you, Mr. Goldin, that we are your advocates on the Floor of the House. Please do what you can to make our job easier to fight for the Space Station Program, in the months and years ahead, not more difficult.
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All members are advised that the Committee members have 1 week, if they have additional questions. They must submit them in writing and this adjourns our hearing.
Mr. GOLDIN. Well, could I just——
Chairman DAVE WELDON. Yes.
Mr. GOLDIN.—say one thing? I know—there is one other thing I neglected to say. I think it is, again, important for this Committee. I think our President and Mr. Gore passionately believe in the Space Program. And I botched up what I said. They had a set of priorities that they were working to. It doesn't mean they don't support space. I have been with this President for a half hour. He has a passion for space. He believes in space. But he is holding us accountable for doing what we say we are going to do and he is giving us tough love. I don't think that is bad. I think we are going to rise to the occasion. We are going to work with this Committee and other Members of Congress and we are going to do the right thing for the country.
Chairman DAVE WELDON. With that, the meeting is adjourned.
[Whereupon, at 1:26 p.m., the Committee was adjourned.]
(Footnote 1 return)
NASA had an earlier space station, Skylab, from 1973–1974. Skylab was not designed to be permanently occupied. Three 3-man crews visited that station, one remaining for 84 days, a record at that time. Skylab made an uncontrolled reentry in 1979, raining debris on the Indian Ocean and Australia.
(Footnote 2 return)
More information on the reasons for bringing Russia into the space station program are discussed in CRS Issue Brief 93017.
(Footnote 3 return)
NASA was appropriated $5.46 billion in FY 2001 for Human Space Flight.
(Footnote 4 return)
This overrun accounts for planned program content in accordance with the most current ISS assembly sequence. The FY 2001 President's Budget provided a funding profile for FY 2002 through 2006 totaling $7.2 billion, and the ISS assessment concluded $11.2 billion was required, a difference of about $4 billion. Primary areas of cost growth included mission operations and production and integration of hardware and software, the Habitation and Propulsion Modules, and avionics.
(Footnote 5 return)
On February 28, 2001, the President signed ''A Blueprint for New Beginnings.'' The Blueprint states: ''To address this unprecedented cost growth and ensure the program remains within the five-year budget plan, the President's 2002 Budget will include important decisions regarding the funding and management of the (ISS) program while preserving the highest priority goals: permanent human presence in space, world class research in space, and accommodation of international partner elements. Thus, the U.S. core will be complete once the Space Station is ready to accept major international hardware elements.''
(Footnote 6 return)
The National Aeronautics and Space Administration Authorization Act of 2000 establishes a funding limitation on the ISS Program of $25 billion. The statutory cost cap is not associated with a specific set of requirements or configuration of the ISS. The Act provides that, with each annual budget request and as otherwise deemed necessary, the Administrator will provide a written notice and analysis of funding required in excess of the limitation. The notice is required prior to obligating any funding in excess of the limitation, and the NASA Office of Inspector General is required to review the notice and supporting analysis and report to the Congress. The Act limits this contingency funding in excess of the limitation to $5 billion and to certain listed contingencies. The Act also requires that NASA submit an accounting for the funding limitations as part of the annual budget request and arrange with the General Accounting Office (GAO) to perform a verification of the accounting.
(Footnote 7 return)
In March 2001, NASA canceled the Propulsion Module, which was intended to provide a backup U.S. propulsion capability to the Russian Service Module.
(Footnote 8 return)
The Act states substantial completion of the ISS occurs when the development costs comprise 5 percent or less of the total ISS costs for the fiscal year. Based on this provision, NASA estimates that substantial completion will occur in FY 2005 and that the cumulative ISS budget will exceed $25 billion in FY 2006, when the funding limitation is no longer applicable.
(Footnote 9 return)
Contingencies identified in the Act include (a) the lack of performance or the termination of participation of any of the international countries that are party to the Intergovernmental Agreement, (b) the loss or failure of a U.S.-provided element during launch or on-orbit, (c) on-orbit assembly problems, (d) new technologies or training to improve safety on the ISS, and (e) the need to launch a Space Shuttle to ensure the safety of the crew or to maintain the integrity of the station.
(Footnote 10 return)
Boeing initially proposed a contract price of $6.6 billion but reached agreement with NASA on August 31, 1994, at a ''not-to-exceed'' price of $6.2 billion. On January 13, 1995, NASA and Boeing agreed to the $5.638 billion award. At the time of the contract award, NASA and Boeing entered into a Memorandum of Understanding that Boeing officials stated reflected an understanding that the $600 million difference between the prior agreement and negotiated price would be added to the contract target cost, if needed. We found that Boeing expected the $600 million reduction in contract price negotiated in January 1995 to be added to the contract target cost, if needed. NASA disagreed with this interpretation. In February 2000, we recommended the agreement be rescinded, and NASA agreed.
(Footnote 11 return)
The Habitation Module was intended to provide crew quarters including a galley, wardroom and eating area, exercise equipment, and crew cleansing compartment.
(Footnote 12 return)
The ICM was intended to provide a low-cost capability to ensure ISS guidance and navigation control, attitude control, and reboost for at least a year to bridge a potential gap between the end of the useful service life of the Russian-built Control Module and the deployment of the Russian Service Module. After the Service Module became operational, the ICM would have been a short-term solution to delays or shortages in Russian Progress resupply vehicles. The Naval Research Laboratory was performing the work on the ICM.
(Footnote 13 return)
The Service Module, which Russia successfully delivered to the ISS in July 2000, provides attitude and reboost control, communications, electrical power generation, life support supplies and storage, crew systems, and mechanism control.
(Footnote 14 return)
The Price Negotiation Memorandum for this modification stated: ''In January 1999, Boeing notified the Government that the estimated Variance at Completion (VAC) for contract NAS 15–10000 was $986 million. This additional VAC means that the contractor will now earn the minimum incentive fee (2 percent) specified in the contract. Therefore, there is no longer either a positive or negative incentive to control costs on existing work. Additionally, the earnings potential of any new work is penalized by past performance issues. It is important to re-incentivize Boeing's cost performance.'' The prior award fee provisions did not emphasize cost management because the incentive fee provisions were focused exclusively on cost. Therefore, the previous incentive fee provisions were converted to a fixed fee at the minimum 2 percent, and award fee pools were established for cost and technical management on new work added to the contract. The objective was to incentivize cost management by enabling the contractor to earn a reasonable return on the new work and not be further penalized by previous poor cost performance.
(Footnote 15 return)
The Price Negotiation Memorandum referred to the global settlement in the following manner: ''The global settlement was negotiated as an integral part of the overall contract restructure which included moving to a new fee structure and reorganizing the Statement of Work to allow a new management approach for the Integration and Operations effort. No attempt was made to establish negotiation positions for, or to reach cost or fee agreement on individual issues. . . . The required result of the global settlement was to reach bottom line agreement on the estimated cost and fixed fee amount to be added to contract value to settle RFEA (Request for Equitable Adjustment) issues.''
(Footnote 16 return)
Unearned award fee is also subject to reconsideration that could result in the fee being paid.
(Footnote 17 return)
In its Master Buy Plan for the ISS as of March 2001, NASA estimates that about $1 billion in additional contract value will be added to the ISS contract through completion in December 2003 for sustaining engineering, post-production support, and integration and operation activities.
(Footnote 18 return)
NASA estimates the cost overrun to be $1.14 billion, $154 million more than Boeing's estimate.
(Footnote 19 return)
The ISS prime contract with Boeing has performance-based and level-of-effort portions. The performance-based portion includes: DDT&E, the development, verification, and delivery of hardware and software for the U.S. on-orbit segment of the ISS; the integration and operation of U.S. and other ISS elements; acquisition and deployment of spare hardware components for ISS maintenance and repair; and development and delivery of hardware and software including ground support equipment. The level-of-effort portion includes: sustaining engineering, multi-element integrated testing, technical definition, and post-production support.
(Footnote 20 return)
Earned-value management is a tool that assists in the effective execution, management, and control of contract performance through integrated evaluation of cost, schedule, and technical performance against a performance measurement baseline. The baseline is an allocation of the contract target cost to specific contract tasks.
(Footnote 21 return)
The OIG issued Report IG–00–007, ''Performance Management of the International Space Station Contract,'' on February 16, 2000.
(Footnote 22 return)
Boeing submitted an ''Over-Target Baseline'' proposal for a $600 million overrun on February 19, 1999, and a ''Delta'' proposal for an additional $183 million on April 15, 1999. Boeing stated in the ''Delta'' proposal that another proposal would be submitted by June 28, 1999, for additional cost growth. Boeing submitted this proposal for the remaining $203 million in cost overrun on September 22, 1999, resulting in the $986 million projected overrun.
(Footnote 23 return)
NASA had previously reduced award fee payments to Boeing due to deficiencies in its cost and schedule performance reporting to the Government.
(Footnote 24 return)
The work breakdown structure displays and defines the product, or products, to be developed and/or produced. It relates the elements of the work to be accomplished to each other and to the end product.
(Footnote 25 return)
Management reserve is an amount of the contract target cost set aside for management control purposes that is not budgeted to accomplish specific contract tasks. ''Negative'' management reserves represent cost overruns that have been identified but not allocated to specific contract work. As a result, the cost overrun for that work is understated.
(Footnote 26 return)
Periodic independent assessments performed by an entity independent of the Program Office would help ensure that the Government has a reliable basis for (1) challenging unrealistically low contractor cost estimates, (2) adjusting fee payments based on cost performance, and (3) budgeting sufficient funds to complete the contract. See the discussion starting on page 9 concerning independent assessments of costs to complete the contract.
(Footnote 27 return)
Award fee is an element of a contract that provides for a fee consisting of (1) a base amount fixed at inception of the contract and (2) an award amount that the contractor may earn in whole or in part during performance and that is sufficient to provide motivation for excellence in such areas as quality, timeliness, technical ingenuity, and cost-effective management.
(Footnote 28 return)
The Defense Contract Management Command was the predecessor to the present Defense Contract Management Agency (DCMA). NASA generally delegates numerous contract administration responsibilities to DCMA related to oversight of NASA contracts including surveillance of EVM systems and data.
(Footnote 29 return)
Although NASA concurred with the recommendation to estimate the cost to complete the ISS contract as part of independent reviews, the Agency has not performed a review since 1999.
(Footnote 30 return)
NASA has established an Independent Program Assessment Office that is intended to conduct reviews of programs and projects in support of the NASA program and project management process. The Assessment Office conducts IARs of major programs and projects, the results of which are presented to the NASA Program Management Council, which is chaired by the NASA Associate Deputy Administrator. The Council is NASA's highest level forum for addressing planning, implementation, and management of NASA programs. (See Appendix D for a discussion of prior OIG reviews on the NASA independent assessment process.)
(Footnote 31 return)
The GAO issued Report NSIAD–98–147, ''International Space Station: U.S. Life-Cycle Funding Requirements,'' on May 22, 1998. GAO reported that life-cycle cost is the sum total of direct, indirect, recurring, and nonrecurring cost of a system over its entire life through disposal. GAO concluded the life-cycle cost to develop, assemble, and operate the ISS to be $96 billion, a $2 billion increase over a similar estimate GAO made in June 1995. NASA did not agree with several key aspects of the GAO estimates.
(Footnote 32 return)
In September 1997, the NASA Administrator asked the Chairman of the NASA Advisory Council to establish a Cost Assessment and Validation Task Force, reporting through the Advisory Committee on the International Space Station (ACISS) to the NASA Advisory Council, for an independent review and assessment of cost, schedule, and partnership performance on the ISS Program. In April 1998, the Task Force reported its estimates that the overrun on the ISS prime contract could be $1 billion based on work included in the contract at that time. In addition, the Task Force estimated funding requirements of $24.6 billion through FY 2003 compared to $20.3 billion in the FY 1999 budget request. This report was a one-time review of ISS costs but did not include a full life-cycle cost estimate and was not a part of an established independent cost estimating process within NASA.
(Footnote 33 return)
NASA has advised us that an IAR is now scheduled for July 2001, but the scope has not been defined. The NASA OIG is presently reviewing NASA's IAR implementation.
(Footnote 34 return)
The OIG issued Report JS–96–002, ''Space Station Prime Contractor Performance Management,'' on June 11, 1996.
(Footnote 35 return)
The OIG issued Report IG–98–002, ''Space Station Performance Measurement Cost Data,'' on November 13, 1997.
(Footnote 36 return)
The OIG issued Report IG–99–007, ''Space Station Corrective Action Plans,'' on January 28, 1999.
(Footnote 37 return)
Boeing Huntington Beach is one of the prime contractor's sites that supports the ISS Program.
(Footnote 38 return)
Boeing uses the Variance Analysis Reports to identify problems causing negative cost and schedule variances, record corrective action plans, and report progress on implementing corrective action to NASA.
(Footnote 39 return)
The OIG issued Report IG–01–006, ''Impact of the Boeing Company's Restructuring on NASA,'' on November 27, 2000.
(Footnote 40 return)
The Federal Acquisition Regulation (FAR) and the Department of Defense Federal Acquisition Regulation Supplement permit contractors to enter into advance agreements with the Government for the treatment of special or unusual costs.
(Footnote 41 return)
The amount related to the ISS prime contract could be $30.6 million.
(Footnote 42 return)
The Defense Federal Acquisition Regulation Supplement (DFARS) is the implementing guidance for DoD concerning contractor restructuring as a result of legislation provided under Section 8115 of the DoD Appropriations Act of 1997 (Public Law 104–208). This Act is implemented through the DFARS, which states: ''. . . (DoD) must certify that projections of future restructuring savings resulting to DoD from the business combination are based on audited cost data and the audited projected savings for the DoD will either exceed the costs allowed by a factor of at least 2-to-1 or that the business combination results in the preservation of a critical capability that might otherwise be lost to DoD.''
(Footnote 43 return)
NASA agreed to pursue this amount, but the actual settlement has not yet occurred.
(Footnote 44 return)
We issued Report G–99–01A, ''Assessment of the Portable Computer System and the Data Display Process,'' on August 11, 2000.
(Footnote 45 return)
The caution and warning system is designed to warn the crew of conditions that may adversely affect ISS operations. The system consists of hardware and electronics that provide the crew with both visual and aural cues when a system exceeds predefined operating limits.
(Footnote 46 return)
Rapid prototyping allows project maturation through fault detection, analysis, and correction during system development rather than after system development.
(Footnote 47 return)
The OIG issued Report IG–00–005, ''X–38/Crew Return Vehicle Project Management,'' on February 9, 2000.
(Footnote 48 return)
The unacceptable risks related to the use of a volatile bipropellant fuel; a complex system of lines, valves, and tanks for transferring the fuel; a permanent weight increase of about 1,500 pounds to the Space Shuttle Orbiters; and significant cost growth.
(Footnote 49 return)
The OIG issued Report G–98–012, ''Review of International Space Station Phase I Lessons Learned Activity,'' on December 23, 1998.
(Footnote 50 return)
The OIG issued Report IG–99–009, ''Space Station Contingency Planning for International Partners,'' on March 9, 1999.
(Footnote 51 return)
The OIG issued a letter (G–00–015) to Hon. James F. Sensenbrenner regarding the Crew Medical Transport on October 6, 2000.
(Footnote 52 return)
The OIG issued a report on ''Assessment of the Relocation of NASA's Independent Program Evaluation & Assessment Activities to LaRC [Langley Research Center],'' on July 8, 1996.
(Footnote 53 return)
An independent cost estimate is a cost projection by analysts who are not part of the program/project under review.
(Footnote 54 return)
The SMOs, which are located at some NASA Centers, provide (1) support and independent evaluation of projects and programs for compliance with and implementation of NASA guidelines; (2) leadership, consultation services, and technical expertise on system engineering process; and (3) support in forecasting costs for advanced program/project planning initiatives.
(Footnote 55 return)
A Non-Advocate Review is an analysis of a proposed program or project by a nonadvocate team comprised of management and technical and budget personnel who will not participate in the implementation of the proposed program or project. The review provides Agency management with independent assessments of new program and project starts.
(Footnote 56 return)
NASA performs a Critical Design Review to determine that the detailed design of a program or project satisfies the performance and engineering requirements of the development specification.
(Footnote 57 return)
The DFARS is the DOD implementing guidance concerning contractor restructurings as a result of legislation provided under Section 8115 of the DOD Appropriations Act of 1997 (Public Law 104–208).
(Footnote 58 return)
The DCMA is the contract manager for the DOD. The DCMA's mission is to ensure Federal acquisition programs, supplies, and services are delivered on time and within cost and meet performance requirements. DCMA provides to DOD components and to other Government agencies (including NASA) contract management and administration services that consist of on-site surveillance and program-specific processes that cannot be monitored by off-site buying agencies.
(Footnote 59 return)
FAR, Part 31, section 109, ''Advance Agreements,'' requires that contracting officers and contractors seek advance agreements on the treatment of special or unusual costs.
(Footnote 60 return)
The NASA FAR Supplement contains provisions for Agency representatives to participate with DOD in situations involving NASA's interests. Specifically, the NASA FAR Supplement Subpart 1842.705–1(a)(i) states: ''Since many NASA contractors are under DOD's final overhead rate determination procedure, NASA's policy is to participate jointly with DOD for those companies where NASA has a major financial interest. The NASA participant shall be a representative from that installation having the predominance of NASA work''.