House Science Committee Hearing Charter: The Space Station Task Force Report

COMMITTEE ON SCIENCE

U.S. HOUSE OF REPRESENTATIVES

2320 RAYBURN HOUSE OFFICE BUILDING

WASHINGTON, DC 20515

(202) 225-7858

(202) 225-6415 FAX

2318 Rayburn House Office Building, November 7, 2001, 10:00 am

On Wednesday, November 7, 2001 at 10:00am in 2318 Rayburn, the
Committee on Science will hold a full committee hearing on the Space
Station program. The hearing will review the findings and recommendations
of the recently released International Space Station (ISS) Management and
Cost Evaluation (IMCE) Task Force report, the credibility of NASA’s cost
estimates and program plan, and whether the Space Station as currently
planned will be able to achieve meaningful scientific objectives. In
addition, the Administration will present its assessment of the management
challenges facing the Space Station program. The following witnesses will
be testifying:

Mr. A. Thomas Young, Chairman, IMCE Task Force, will address the
following:

1. What were the findings and recommendations of the IMCE Task Force?


2. Has NASA adequately addressed the factors that led to the significant
   cost growth?


3. Is the currently approved U.S. Core program achievable within the
   projected resources?


4. Is the research program consistent with the overall ISS development
   program?

Mr. Sean O’Keefe, Deputy Director, Office of Management and
Budget, will address the following:

1. What is the Administration’s strategy to ensure that NASA fully
   implements the recommendations of the IMCE Task Force?


2. What criteria, if any, must be met before additional capability beyond
   the U.S. Core will be funded?


3. What are the Administration’s views regarding its commitment to the
   International Partners on the Space Station?

2. Background

From its inception, the Space Station program has suffered from
overly optimistic cost projections and significant schedule slips.
Originally estimated in 1984 to cost $8 billion, the Space Station was
re-designed and scaled back in 1993 after nearly $11 billion was spent and
no flight hardware had been built. In 1993, when the station was
redesigned, the International Space Station (ISS) was established, and the
Russians joined the program. At that time, the ISS was expected to be
complete in 2002 at a cost of $17.4 billion. Since 1998, however, the
estimated total cost to build the Space Station has grown every year by an
average of $3.2 billion. The complete ISS is now estimated to cost over
$30 billion and would not be complete until 2006. In addition, the
projected delivery by Japan of the centrifuge has slipped until 2008 (a
device necessary for biological research on the station). Since 1993, this
represents a 70% increase in cost and a 4-year slip in schedule.

In response to the $4 billion cost overrun announced earlier this year,
the Administration redirected funds from remaining development (primarily
the Crew Return Vehicle (CRV), Habitation Module, and Propulsion Module)
and cut research funding to offset most of the cost overrun. This scaled
back station, referred to as the "U.S. Core," can only support a
3-person crew on a permanent basis (although it can support more than 3
crew for limited periods), and has a less capable suite of research
facilities than the originally planned 6/7-person crew station. Due to
concerns with program cost, the Administration directed NASA to form an
independent external Task Force to assess credibility of the program plan.
The Task Force’s report is the primary subject of this hearing.

3. Task Force Report Summary: The Current Program is Not
Credible

The Task Force found that the currently planned program is
"not credible." They found deficiencies in management structure,
institutional culture, cost estimating, and program control. The Task
Force expressed concern over the validity of the original $8.3 billion cost
estimate in the NASA/OMB Agreement and the probability of achieving all the
projected savings (see section 7).

The Task Force recommended that NASA overhaul program management,
clearly define the science goals, and significantly reduce workforce levels
to keep the currently planned three-person U.S. Core program within the
projected budget. In addition, the Task Force recommended that the Shuttle
flight rate be reduced to four flights per year to save funds which could
be used to offset increased Space Station costs. The Task Force
recommended a performance-based approach whereby NASA must demonstrate
credibility over a sustained period of time as a prerequisite to proceeding
beyond the U.S. Core. The Task Force did caution that it would be very
difficult for NASA’s culture to change to the degree required to make the
program succeed. The Executive Summary of the report is attached.

Annual Cost Caps a Major Factor in Overrun: According to the
report, the single greatest factor in the program’s cost growth is NASA’s
culture to simply manage to its annual budget without regard to total
program cost. The Clinton Administration imposed a $2.1 billion annual
cost cap in 1994 as a means to control costs. However, the result was that
it only controlled cash flow. In general, annual cost caps are
counterproductive to controlling total program costs.

4. Key Task Force Recommendations

The Task Force made 12 specific recommendations. Some of the
key recommendations are provided below with analysis.

Create an Associate Administrator for Space Station: The Task
Force recommended creating a new position, Associate Administrator for the
International Space Station (ISS), to better focus agency attention on the
program. The AA/ISS would combine the responsibilities of Space Station
development and operations as well as responsibility for scientific
research. This change is intended to increase the importance of science in
decisions regarding station capabilities. In the past, however, research
funds have been raided to pay for development overruns. To prevent further
raids on research funds, the Administration and Congress have recommended
that funding and responsibility for the research be moved out of the
station budget.

Reduce Shuttle Flight rate and Extend Crew Rotation Period: The
Task Force recommended revising the crew rotation period to six months
(currently 3-4 months). They estimated that 6 fewer Shuttle launches to
the station would be required over the next five years (FY02-06) at a
savings of $668 million. These savings could be used to offset the current
shortfall. However, this may result in fewer crew flight opportunities
which the International Partners or others might find objectionable.

Independent Cost Estimate Needed: The Task Force recommended that
a formal independent cost estimate be completed. The Task Force had an
excellent Cost Analysis Support Team (CAST), but did not have the time
required to develop its own estimate. It will probably take 12 months to
complete a rigorous cost estimate, but this is highly recommended.
Although NASA claims that a cost estimate was completed in 1993, NASA was
unable to provide it to the Task Force and apparently it has not been
updated or used as a management tool to examine the cost of various program
options. The NASA culture emphasizes resource-driven budget
estimates and does not use content-driven cost estimates.

Implement a Performance-Based Approach: The Task Force stated
that the program should not end at U.S. Core complete. They recommended,
however, that NASA be required to meet strict budget and management
performance criteria prior to any decision to enhance the station beyond
the U.S. Core. The Task Force did not specify what these criteria should
be or the metrics used to do make these decisions, but have agreed to help
develop these criteria.

Establish Clear Research Priorities: The Task Force found that
the research program assumed the capabilities of the original 6/7-person
crew Space Station while the Space Station Program Office continued to
develop the U.S. Core station with a three-person crew and a much more
limited capability to perform research. Because the research program was
assuming the greater research capabilities of the original Space Station,
it was maintaining projects and contracts not aligned with currently
planned station capabilities. This resulted in an inefficient use of the
limited research funds. The Task Force recommended that science priorities
be clearly established and the research program aligned with the planned
Space Station capabilities.

Increase Research with Extended Shuttles and Additional Soyuz
Capsules: The Task Force recommended the use of extended-duration
Shuttle missions and that additional Soyuz capsules be procured from Russia
to increase crew size to conduct research. The Task Force, however, did
not estimate the cost of the extended-duration Shuttle missions nor did
they estimate the cost of the Russian Soyuz capsules. The costs for these
have not been budgeted. Furthermore, current law (Iran Non-Proliferation
Act) prohibits the U.S. from purchasing Russian Soyuz vehicles without a
Presidential finding on Russian proliferation to Iran.

5. Key Areas Not Addressed by the Task Force

The Task Force report addresses many key problems with the Space
Station program and provides useful input for deliberations on the future
of the program. However, the report does not provide a complete picture of
the challenges facing the Space Station program. Several important factors
were not addressed because they were either beyond the scope of the charter
or were not possible to complete in the 10 weeks the Task Force had to
complete its review.

Space Shuttle $1 Billion Short: The Space Shuttle program is
also experiencing a financial crisis. It is underfunded by nearly $1
billion over the next 5 years. This does not include funds necessary to
address the deterioration of infrastructure required for the Shuttle. This
situtation has a direct impact on the Space Station program since the
Shuttle is critical to the assembly and maintenance of the Space Station.
Resolution of the Space Shuttle problems will be central to efforts to
restore credibility to the International Space Station program. The
shortfall on the Shuttle program also raises questions on the viability of
the Task Force’s recommendation to offset station costs through savings
from the Shuttle program.

No Recommendation on Scientific Benefit of Enhanced Capabilities:
The Task Force was asked to assess the cost estimate of possible U.S.
funded enhancements, such as CRV, but was not chartered to provide an
assessment of whether the scientific return of any enhancements would be
worth the investment. Eventually this will be important information to
support any decision to deploy additional capability. Unfortunately, the
Task Force did not have enough data to make an informed assessment
regarding the cost of any enhancements.

Independent Cost Estimate Not Developed: As stated before, the Task
Force did not develop a rigorous independent cost estimate of its own. The
estimates of costs and workforce levels are primarily the result of
judgment calls by the Task Force members themselves. They did recommend
that a complete independent cost estimate be developed and that it would
take a dedicated team up to 12 months to complete given the level of
information available by NASA.

Review Limited to 5-Year Runnout: The Task Force did not examine
the full life cycle costs of the program, the assumptions underlying NASA’s
claim that mature operation of the Space Station will cost $1.5 billion
annually, or funding necessary to address obsolescence issues over the life
of the program.

No Review of Barter Agreements: The Task Force did not examine
the current barter agreements in any detail or examine any of the proposals
put forward by the International Partners. Barter agreements may provide
an alternative way to expand the research capabilities of the Space Station
by leveraging the capabilities and contributions of the partners. For
example, the Japanese are providing the centrifuge in exchange for launch
of the Japanese Experiment Module (JEM) on the Space Shuttle. However,
barter agreements can also be used to move problems "off budget"
by solving Space Station problems without using Space Station funds.

When confronted with the $4 billion cost growth earlier this
year, the Administration considered a number of budget and management
options. These options ranged from stopping further development with the
current elements in orbit now, to pursuing the original plans for the
program, but over a much longer period of time and at a substantially
higher total cost.

In the end, the Administration chose a solution based on the following
three principles:

1. Establish permanent human presence in orbit. This means safely
   supporting at least three astronauts in orbit continuously. The Space
   Station has this capability today.


2. Conduct world-class research. The quality of research must be better
   than any prior capability for research in a space laboratory, including the
   Russian Mir station.


3. Accommodate International Partner’s elements. The U.S. has multiple
   agreements with several partners for contribution of major hardware
   elements.

The Administration reaffirmed its concerns about the budget and
management of the ISS when Deputy Director of OMB, Sean O’Keefe, testified
before the VA, HUD and Independent Agencies subcommittee in March of this
year. At that hearing, Mr. O’Keefe stated that "NASA’s credibility
with the Administration and the Congress for delivering on what is promised
– and the longer-term implications that such credibility may have on the
future of Human Space Flight – hang in the balance."

7. NASA/OMB Agreement – $484M Funding Shortfall

In June 2001, NASA and OMB came to an agreement regarding
adjustments in content and funding to partially address the nearly $1
billion shortfall which remained after the CRV, Hab, Prop Module and
research program budgets were reduced or deleted. The NASA/OMB plan shows
that NASA has sufficient funds to continue the program for FY02 and FY03.
However, a significant shortfall — $484 million — remains for FY04-FY06.
NASA and OMB have agreed to a plan which they recognize won’t work. NASA’s
strategy is to issue a "management challenge" to find cost
savings to make up for the shortfall.

Table 1: NASA/OMB Agreement on Space Station

($M)

Task Force Recommendations Regarding the Funding Shortfall: Table 2
below provides the Task Force’s recommended solution to solving the $484
million shortfall, preserving $750 million for unencumbered reserve, and
adhering to the $8.3 billion allocated for FY02-06 in the NASA/OMB
Agreement. During the review, new cost increases totaling $366 million
were identified, but not broken out in the report. In addition, several
more concerns were identified, but not costed, in the areas of contractor
rates, International Partner costs stemming from scaling back, risks of
research, and inadequate planning for necessary system upgrades. Offsets
in the amount of $440 million from within the program were identified,
primarily from staff reductions and reevaluation of sustaining engineering
needs.

The Task Force identified approximately $1 billion of potential
additional savings from within the Human Spaceflight account ($668 million
from reduced Shuttle flight rate and approximately $350 – $450 million from
savings due to the ongoing NASA Strategic Resources Review savings effort).
The Task Force expressed concern over the validity of the original $8.3
billion cost estimate in the NASA/OMB Agreement and the probability of
achieving all the projected savings.

Table 2: Task Force Cost Review Results

8. NASA Management Vacuum – Top Three Layers of Management Not
in Place

NASA Administrator Dan Goldin announced his resignation,
effective November 17. Associate Administrator for Human Spaceflight, Joe
Rothenberg, announced his retirement effective December 15. In addition,
the Johnson Space Center in Houston, Texas which is the lead center for the
Space Station does not have a permanent Center Director. Roy Estes has
been Acting Center Director since George Abbey was removed following the
disclosure of the cost overruns. NASA’s Chief Scientist Kathie Olsen has
been Acting Associate Administrator for the Office of Biological and
Physical Research (OBPR) which is responsible for planning and implementing
the research program. The search for a permanent AA for OBPR has been
on-going for nearly a year. NASA will not be able to restore credibility
to this program without stable leadership in these positions.

9. Congressional Actions

The House and the Senate VA-HUD appropriations bills differ
significantly regarding the Space Station. While the House bill provides
$275 million for the Crew Return Vehicle (CRV), subject to several
conditions, the Senate version has no such provision. The conference
committee has yet to report, but the conventional wisdom is that the
conferees will provide either no funding at all for CRV or some limited
funding (~$40 million) to keep the program alive. Also, the House bill
provides $35 million to augment the fluids and combustion research
facilities while the Senate bill adds $50 million for research without
specifying any particular areas. Both bills recommend transferring Space
Station research funds out of the Human Spaceflight account and into the
Science, Aeronautics, and Technology account to prevent further raids on
research funds to pay for Space Station assembly and operations. However,
the Task Force was concerned that this transfer would exacerbate
disconnects in planning and managing resources between the research program
and the overall Space Station program.

While OMB has directed NASA to use funds previously marked for
the CRV, Habitation Module, and the Propulsion Module to fix the core
program, OMB has also laid out the criteria for developing and deploying
enhancements to the program. Specifically, decisions to pursue
enhancements to the U.S. Core, such as CRV or the Habitation Module, will
depend on (1) the quality of cost estimates, (2) resolution of technical
issues, and (3) the availability of funds. While these criteria may be
difficult to achieve in the immediate future, they reflect the
Administration’s desire to fix the base U.S. Core program first without
precluding future enhancements. NASA has stated it is examining options
that include long-duration shuttle missions to ISS, use of the X-38 as a
4-person crew return vehicle as well as other options. The International
Partners have proposed concepts to expand the capability of the Space
Station as well. Specific proposals include: increased European
participation in the CRV, a barter arrangement with the Italians for
habitation space, and commercial deals with Russia to provide habitation.
All of the ideas proposed require NASA to provide funds not currently
provided within its budget.

• Why is the existing program plan for executing the FY 02-06
  budget not credible?


• What are the appropriate metrics for deciding whether or not proceed
  with enhancements?


• The Task Force outlined severe basic deficiencies in management
  structure, institutional culture, cost estimating, and program control.
  How can NASA overcome these deficiencies?


• How did the Task Force derive the cost savings identified in the
  recommendations?


• What is the Administration’s strategy to ensure that NASA fully
  implements the recommendations of the IMCE Task Force?


• What are the Administration’s views regarding its commitment to the
  International partners on the Space Station?