Testimony of Martin Kress, VP, AIAA Public Policy Committee, before the Commission on the Future of the United States Aerospace Industry [Part 2]

Continued from Part 1

Recommended Enablers to Turn the Visions of Aerospace America into Realities

To turn any vision into a reality takes a well-defined and warmly embraced plan, the necessary resources, a well-formulated and well-executed schedule, outcomes that match expectations, a highly trained and committed group of people, innovative organizations, as well as management tools and techniques, the national will, strong public support, and some “enablers.” It is the combination of vision, commitment, resources and enablers that ensures success.

Let’s talk about some of the key “enablers” – people, technologies, policies, infrastructure, and investments.

People

A key issue on the AIAA agenda is people and workforce-related issues. And, I fear, it will be a key issue for years to come. Simply stated, we are not producing an adequate number of scientists, engineers, technicians in the U.S.; our current technical workforce is aging; the market for technically skilled workers and managers is expanding exponentially, but our labor pool is flat at best – 200,000 new graduates each year are offset by 200,000 retirees.

According to a recent report by General Moorman at Booz Allen, “U.S. Defense Industry Under Siege,” the number 1 issue for CEOs in the U.S. defense industry, unanimously and unequivocally, is “the graying of the workforce and the inability to attract and retain the best and brightest.” This issue was also a major finding of the Rumsfeld Report and has been highlighted in several”PQ‚icy statements by Administrator O’Keefe when he notes that there are twice as many people in NASA over 60 as there are under 30.

The canary has gone down into the mine, and it has come up gasping. We must initiate a comprehensive set of actions soon to address this problem, or we will adversely affect our nation for years to come.

Recommendations:

• The U.S. Government needs to initiate the analog to the GI Bill and ROTC to ensure the availability of technically trained workers to meet the future demands of our economy and national security. AIAA recommends the establishment of a National Science and Technology Corps – a program where students receive free college tuition for pursuing courses in math, science, engineering, and computer sciences, provided they agree to work at a federal R&D lab or organization, or teach math and science in an inner-city or rural school. The latter option also has an associated certification requirement.

• We also need to improve the overall management cadre of the federal government. It is not a timely subject – but it is a subject we need to discuss, taking the nail out of the “revolving door” to permit federal R&D agencies to attract the managerial and technical talent they need to successfully execute bold, innovative, high-risk technology programs and projects. People who enable such projects and bring business acumen and innovation to the table need to be allowed to serve the government and later return to the private sector, without facing severe financial penalties.

• We need to better inform and educate the American public about the goals and objectives of our Nation’s aerospace policy, programs, and projects. They need to know how they relate to them, what is the overall value, how they are linked to other national goals and objectives, why they are time-critical, and what they mean in terms of the quality of life of their children and grandchildren.

Every major report written in the last twenty years concerning the future of aerospace has addressed the need for this Nation to commit to an aggressive advanced technology program if a bold, innovative, far-reaching aerospace program is to be implemented. For example, the recent National Aerospace Initiative identified a number of key technologies to be pursued in support of the strategic and tactical framework of defense transformation:

1. Hypersonic technologies for strategic strike of time-critical targets, stealth capability, suborbital vehicles, unmanned combat vehicles, and fast transportation,
2. Access to space, first via two-stage-to-orbit airbreathing propulsion technologies, and subsequently with single-stage-to-orbit rocket-powered vehicles,
3. Advanced space technologies such as microsatellites and multifunction spacecraft,
4. Sensors, robotics, and unmanned vehicles,
5. Information technologies such as high-bandwidth communications, information and knowledge management, information assurance, global scope laser communications linking satellites and fiber optic cables, and cyberwarfare,
6. Power and energy technologies such as power generation (nuclear, diesel, jet engines, solar arrays, fuel cells, etc.), energy storage (batteries, flywheels, capacitors, electromagnetics), power management and control (energy conversion, catapults), and directed energy weapons F^ .asers and microwaves).

Please note that many of these same technologies were identified in the National Research Council Report that identified critical technologies to enable the future missions of NASA.

Unfortunately, most reports reiterate the same suite of technology initiatives because we have been unable to turn reports into projects. We spend too much time debating about what we are going to do, and not enough time doing. If we could optimize the talent at our national labs and in the aerospace industry (existing and emerging) and focus their attention on “doing” cutting edge technologies, then our aerospace investments would be driving our missions and our economy.

This year, AIAA is pleased to see that NASA has come forward with the Nuclear Space Power and Propulsion Initiative. If this is a harbinger of the future, we are finally on the right path. AIAA is also pleased to note that the Bush DOD budget request for FY 03 represents a significant reversal in defense spending and includes augmentations for DOD overall, as well as for DOD R&D.

However, there is still cause for concern. The overall NASA budget remains inadequate if we are to optimize the use of the Space Station and if the Nation is to retain its competitive posture in aeronautics. There appears to be less than desired correlation between the vision in the “Blueprint for Aeronautics” and the reality of the budget for aeronautics.

At DOD, one also has to be cautious, since funding for basic and applied research was reduced, even though the overall budget was substantially increased. This trend needs to be closely monitored. Our hope is that it is just an anomaly in light of warfighter needs and current threats. We also hope that the initiatives discussed in the Rumsfeld Report will eventually find their way into the budget.

However, despite the good news, progress toward affordable and assured access to space has been discouraging. We as a Nation have made a huge negative investment, and progress in formulating the innovative research institutes of the 21^st century has been slow in coming.

• AIAA strongly recommends increased R&T funding. It is a critical element of a vibrant aerospace program and vision. It also is the barometer by which young people will assess careers in this sector. Unfortunately, too many of our R&D agencies are being required to buy commercial “off-the-shelf” technologies because we do not have the next-generation systems, tools and techniques in the pipeline. Augmenting the NASA R&D budget and increasing the DOD 6.1 – 6.3

• AIAA strongly urges the Commission to address the termination of several major R&T initiatives in the last few years – in particular the HSR, X-33, and X-34 programs. Our Nation cannot afford to make negative investments, nor can industry afford to partner with an unreliable partner. The federal government’s charter includes high-risk, long-lead-time research and technology projects, and it should honor that charter.

• AIAA also recommends a major policy review of the overall government’s R&D investment and its focus on lower-level technology readiness levels. AIAA is concerned that we are not getting the maximum return on our Nation’s R&D investment. The government’s philosophical aversion to applied research, technology validation, and verification has targeted most research in the lower technology readiness domains: TRL levels 1-4. This decision has increased the technical risks associated with industry adopting or integrating the technology into emerging systems or products. AIAA is concerned that the so-called Valley of Death is getting deeper and wider as agencies such as NASA focus on technology readiness levels of 1-4, when you need to be at least at TRL 6 for industry to consider adoption and insertion of the technology.

• AIAA recommends that the White House and Congress agree to establish a percentage of the total budgets of the key aerospace R&D agencies to be set aside and dedicated to advanced technology development in those agencies. In the past, this option was discussed and tabled because there would be a short-term realignment. But based on AIAA’s analysis of the budget and trends over the last decade, we need a permanent correction and set-aside for advanced technology development.

• AIAA also recommends that the set-aside funds be commingled in a separate account to be overseen by the Aerospace Coordination Council, which should be constituted in the White House under the leadership of the Vice President of the United States. The expectation is that the coordination of advanced technology R&D activities across the government will ensure the optimal use of funds, target key advanced technology activities with the highest payoffs, facilitate joint agency activities that address multiple user requirements, and create a growing base of support for advanced technology development activities in the aerospace arena.

• AIAA also believes that the federal government should link its advanced technology initiative with the proposed National Science and Technology Corps. Assign the student participants to these cutting edge research activities or to discrete flight projects that will act as test beds for these technologies. Let them get engaged with innovative research and technology initiatives, and the odds of retaining them will greatly increase.

• AIAA strongly urges DOD and NASA to increase the amount of collaboration between the two agencies in the domain of aerospace research and technology. There is considerable expertise in both agencies in key technology domains, whether one is discussing on-orbit power and propulsion, interoperability between on-orbit assets, advanced materials, information technology, cyber security, satellite communications, aeronautics research, combined cycle propulsion systems, fuel cells, information technology, etc. A series of pilot programs between NASA and DOD in several key technology domains would represent a positive first step in this direction.

Although it is easier to discuss people and technology, successful execution of the Nation’s aerospace program also requires major policy initiatives, especially in the domain of procurement, budgetary, and personnel policy reforms.

The President’s “Management Agenda” and “Blueprint for New Beginnings” point to new and innovative ideas, as did the Clinton/Gore “Reinventing Government Initiative.” But changes in these domains are slow to come, and there is considerable resistance to fundamental changes by federal agencies and congressional committees of jurisdiction.

To successfully execute a bold, innovative aerospace agenda, it is time to design the processes, procedures, and institutions that can best implement this agenda. We can keep trying to amend what we have, or we can create what we need. To gain some momentum in this domain, it might be necessary to implement a series of “pilot projects” that are designed for today’s environment and for today’s projects.

• As noted above, AIAA believes that the White House needs to establish an Aerospace Coordination Council – an augmentation of the National Space Council. There are too many issues that cut across federal agencies engaged in aerospace R&D. A few examples are: protecting the security of the domestic aerospace infrastructure, identification and investment in technologies that address current and future national and economic security needs, access to space technology development, the architecture and operation of the national air traffic control system, the optimization of the research potential of the Space Station, and the formulation of an effective export control policy that also ensures effective growth in exports by domestic manufacturers of aerospace hardware, software and services.

• The Presidential Commission should recommend the immediate adoption and implementation of the recommendations contained in the “AIAA Defense Excellence Conference Report.” This activity addresses some of the fundamental issues underlying the proposed “transformation” of the DOD. The proposed actions in this proceedings have received considerable input and visibility with key DOD officials. For example, the federal government needs to provide incentives for firms to pursue innovative research. This could be in the form of higher fees, a practice that has born fruit at NRO, or bonuses for R&D that leads to new or better products. The government also needs to support operational prototyping and to reassess its use of firm, fixed-price R&D contracts. Cost-plus contracts do not inhibit innovation if the contracting officer understands the process and the need for flexibility in carrying out effective R&D.

• AIAA and its members strongly urge the Presidential Commission to update its March 2002 Report finding concerning the FSC-ETI tax/trade dispute. AIAA appreciates the Commission’s interest and recommendation. However, the circumstances have changed, and the proposed solutions need to be reassessed if this tax/trade dispute is to be resolved in a manner that permits the United States to be in compliance with its international trade obligations while simultaneously maintaining the competitiveness of U.S. companies that engage in international trade. In particular, AIAA would recommend that the Commission (1) fully support the industries unitary proposal for alternative tax legislation, and (2) urge the Administration to work with WTO to reaffirm the 1981 GATT Council Understanding that established the ground rules on which ETI’s predecessor, the FSC, was enacted, and eliminate the imbalance in the current WTO subsidy rules that favors tax systems that rely principally on indirect rather than direct taxes.

• The Presidential Commission should review and adopt many of the key recommendations contained in the new AIAA Information Paper on the “Ability of the United State Defense Industrial Base to Effectively Meet Our Current and Future National Security Requirements.” Although it is targeted on the procurement and acquisition of rapidly deployable sensors and platforms, it also addresses the need to develop leap-ahead technologies and architectures to enable a digitized battlespace. Many of these recommendations apply to NASA, as well as DOD. In particular, it is proposed that (1) DOD reshape antitrust evaluations to conform to the realities of the “Full Subsystem Capability Model” to complete the long-overdue consolidation of the U.S. mid-tier firms; (2) DOD expand the use of multi-year contracts to attract true “value investors,” since multi-year contracts substantially increase stock valuations due to investor perception of controlled risk; and (3) move to a two-year appropriations cycle on both R&D and procurement funding to stabilize programs and create an environment of controlled risk. AIAA would also recommend that the Commission assess providing full funding for a select number of NASA and DOD procurements in year one so that the emphasis of the project is managing to cost, and not replanning on an annual basis due to budget shortfalls or other changes.

• AIAA recommends that the Presidential Commission, in consultation with the appropriate Congressional Committees, assess the feasibility of multi-year authorizations and appropriations. Based on the ever-increasing congressional workload, there appears to be a trend wherein the “authorization on appropriations” is becoming more commonplace, since the committees of jurisdiction cannot produce annual authorization bills. Two-year authorizations could be a partial solution to this problem.

• AIAA recommends that the Commission reassess the many proposals that have been formulated during the last decade to consolidate key test facilities, tools and techniques utilized by the aerospace R&D agencies and industry. Again, many of the needs and requirements for the civil, military and commercial entities are similar. In particular, the Nation’s wind-tunnel assets are aging, and many are used more than one shift per week. With the consolidation that occurred in the industry and the reduction of major aircraft development programs by DOD, this is an area that could be realigned with the realities of the marketplace. Control of these assets could be vested in a single agency or a new entity, a quasi-government entity, or outsourced to a third party. The key issue is that part of this assessment should include a reinvestment plan that is committed to maintaining the overall quality and capability of our national infrastructure.

• AIAA recommends that the Commission reassess the SBIR/STTR Programs to make sure that small businesses are receiving adequate support to generate the new technologies of the future. AIAA is concerned that, upon the successful completion of phase 2 of these programs, firms are still not ready to enter the marketplace. AIAA believes the level of funding is adequate but that a phase 3 needs to be assessed in order to get firms through the Valley of Death.

• AIAA strongly recommends that the Commission urge the Administration to resolve the outstanding issues concerning export control laws and regulations. The U.S. government is severely hampering the ability of U.S. firms to compete in the international marketplace. The transition of responsibility for these requirements to the State Department may have made sense, but industry would strongly recommend the return of control to the Commerce Department to get a more appropriate balance between trade and foreign policy issues.

• AIAA recommends that the Commission endorse proposals to make the R&D tax credit permanent. This issue has been on the agenda too long; it is time to make the tax credit permanent and to provide businesses with an incentive to make critical R&D investments.

As I sit here and listen to the testimony today, I am thoroughly convinced that, in order to succeed, we need to do six things:

First, we need to inspire a new generation of explorers, pioneers, and innovators to pursue careers and opportunities in the exciting domain of aerospace and to take an active role in formulating the national agenda for aerospace. We need to ensure they have career opportunities in which to apply their new skills and talents when they graduate; hiring freezes in R&D agencies are a non-starter.

Second, we need a plan – appropriately funded – that, if successfully implemented over the next ten years, will act as the catalyst toward a more aggressive set of aerospace missions and goals. It can build on the proposed agency initiatives by recommending targeted augmentations, better integration and consolidation, innovative institutional arrangements, external funding and support (state and private capital), innovative advanced technology initiatives that are responsive to a wide set of user requirements, as well as the mining and marketing of IP developed during the course of the projects.

Third, we need to be bold enough to consider new institutional arrangements and mechanisms for carrying out our programs and for providing the necessary intellectual resources. We have been reluctant to conduct a National Lab Review, but we must realize that, in order to maintain our leadership in aerospace and to make tomorrow better than today for our citizenry, we need to optimize the use of our assets, make key investments, and assess new delivery mechanisms.

Fourth, we need to let the end users and the potential commercial markets get engaged in the debate. We need to realize that the government’s role is to enable others to optimize the use of space assets. The day and age of “command and control” needs to end; it stifles innovation and maintains the status quo.

Fifth, we need to realize that our leadership is aerospace is being seriously threatened. One can understand the corrections that have taken place in certain markets; these are understandable economic phenomena. But, to be competitive in the future, we need to make the necessary investments, successfully execute key programs, push our technology envelope, and augment our pool of human resources.

Sixth, we need to work hard to recapture the attention, interest, support, and trust of the American public. They need to understand what we do, why we do it, and how they benefit. There is a lot of competition for the American public’s attention – but without their long-term interest and support, our dreams will not become realities.

Mr. Chairman, when I was a young boy, my dad would take me out in the back yard and we would watch Sputnik fly overhead. My buddies in the neighborhood and I would pitch our tent in the back yard and count every star in the night sky. It was an era was everybody was looking up – it was an era in which space had captured our attention.

I would like to think that the “right program” could do that again. I would like to think that our rate of progress in aerospace in America will be as phenomenal in the 21^st century as it was in the 20^th century, and that our perspective of the planet we live on and the universe we live in will continue to expand in the next 100 years.

Mr. Chairman, when you realize that there are tens of billions of stars, in tens of billions of galaxies, maybe as many as a trillion solar systems for every man, woman and child on the face of the planet Earth today, one thing is very clear – there is so much more to discover, and our journey has just begun.

May God speed be with each and every one of you – and may your dreams become realities.

Biography for Martin P. Kress

Marty Kress joined Battelle in July 1999, and is the Vice President and General Manager of the NASA Market Sector. In his current position, Mr. Kress is responsible for expanding the Battelle business base in NASA research and development activities, for the execution of technology transfer and commercialization programs for several federal agencies (NASA, EPA, USGS, SBA, and DoD), for nurturing the Public Technology Partnership Program, and for the development and licensing of intellectual property.

In addition to his Battelle activities, Mr. Kress serves as the Vice President of Public Policy for the American Institute of Aeronautics and Astronautics, and Fund Distribution Chair for the United Way Services of Cleveland. He also serves as a Member of the Board of Governors of the MIT Sloan Fellows Program, and as a Board Member of the National Environmental Technology Incubator.

Prior to joining Battelle, Mr. Kress served for over 20 years in senior management and staff positions with the U.S. Senate and NASA. In particular, from 1979 – 1990, Mr. Kress was the Senior Energy Analyst for the U.S. Senate Committee on the Budget, and the Senior Majority Staff Member for the U.S. Senate Subcommittee on Science, Technology, and Space. From 1990 – 1999, Mr. Kress served at NASA as the Associate Administrator for Legislative Affairs, Deputy Director of the Space Station Freedom Program, Deputy Director of the National Wind Tunnel Complex Initiative, and the Deputy Director of the Glenn Research Center in Cleveland, Ohio.

Mr. Kress has degrees from the University of Notre Dame (BA), Northeastern University (MPA), and the Massachusetts Institute of Technology (MSM). He also pursued Ph.D. coursework in political science at Georgetown University.

Mr. Kress is married with three children and resides in Solon, Ohio.