Status Report

IFPTE Report on the Effectiveness of NASA’s Workforce & Contractor Policies

By SpaceRef Editor
September 6, 2003
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March 2003

With the tragic loss of the seven astronauts on the shuttle Columbia, NASA is facing a challenge to its current role and future mission. Though the agency with the most ambitious scientific mission in the federal government has faced public scrutiny before, the tragedy provides an opportunity to evaluate and review NASA performance and management policies.

NASA faced serious challenges well before the recent Columbia tragedy. A combination of budget cuts, workforce downsizing, and contracting out of key NASA operations negatively affected the safety of NASA’s manned space program, its ability to retain and pass along core technical knowledge, and its oversight of the contractor workforce. NASA’s problems arose after the agency went through a drastic reorganization in the early 1990’s. This reorganization was motivated in large part by the political pressure from Congress and the White House to replace government work with private sector contracting. NASA’s senior management maintained that they could increase efficiency and performance while cutting its civil service workforce and relying on contractors to do the job. Yet, as the process of downsizing and contracting out proceeded, NASA workers, government reports and space policy experts warned of the consequences of performing critical projects, with little-to-no margin for error, with an insufficient budget and workforce.

The recent history of NASA’s reorganization is all the more relevant in light of the Bush Administration’s commitment of eventually contracting out half the current federal workforce. Through the Reagan and Bush Sr. administrations, increasing political pressure to downsize government intensified. Under the Clinton administration, Vice-President Gore drafted and directed the policy of “Reinventing Government,” downsizing civil servant jobs and contracting out to the private sector that eliminated some 426,200 federal jobs. NASA, which faced scrutiny for over-budget projects after the Challenger accident, was targeted for major cuts.

Under presidential and Congressional direction, NASA contracted out much of its work to achieve budget cuts. In 2003, NASA and all federal departments and independent agencies are facing quotas to contract out work. The rationale cited by proponents of moving government work to the private sector is that the private sector is more accountable, has incentive to produce at lower cost, and more able to operate at higher efficiency. NASA’s commitment to privatization extends to the most safety critical operations in the agency. Just before the Columbia accident, NASA commissioned a study on privatizing the entire shuttle operation, completely eliminating any NASA work on shuttle maintenance and operation. Yet there are no comprehensive long-term studies on federal contracting, and there remains little evidence to support privatization proponents’ argument that the private sector outperforms the federal government at a lower cost. However, NASA’s example offers some insight to the problems that arise when federal agencies rely heavily on contractors.

Today, with NASA relying increasingly on contractors than ever before, the Columbia shuttle tragedy and the issues surrounding NASA recall the Challenger shuttle accident in 1986, seventeen years before the Columbia accident. The federal investigation into the Challenger accident revealed the complexities inherent in the NASA management-contractor relationship and the decision-making process that involved both NASA and NASA contractor Morton Thiokol. Beyond the direct mechanical causes of the Challenger accident, that episode revealed larger administrative and managerial problems: the unclear accountability issues between contractors and NASA; NASA management’s institutional pressure to maintain launch schedules (as promised by NASA to Congress); the lack of management control between managers; and the organizational layers between the civil service workforce and the contract workforce. While the Columbia investigation will likely take months to return conclusive findings, recent reports from within NASA and the federal government’s investigative body suggest similar conditions currently exist.


At the onset of its creation in 1958, NASA used contractors to provide many of the services the agency needed. In 1962, NASA employed 23,000 civil servants and used the services of 3,500 contractor personnel. By 1964, the agency had grown to 32,000 civil servants and 79,000 contractors. Although contractors played a significant role during the mission to the moon, the agency maintained a civil servant workforce to provide technical expertise, effectively manage contractors and perform operations. At that time, NASA also began using contractors when the agency could not find the talent to fill its workforce. Though contractors have historically played a role at NASA, the recent growth of the contractor workforce has made NASA into more of a contract management agency than a research and development agency.

NASA’s contractors perform various services and provide the agency almost all aircraft and spacecraft. NASA always used contractors to build spacecraft, design hardware, and control some management functions. The NASA contracting philosophy stated that any work not related to planning and evaluation could and should be contracted out. This philosophy did not leave out the civil service workforce however. To understand and maintain the products and services purchased through contractors, NASA needed experienced engineers and scientists. Further, some scientific and engineering work has no equivalent in the private sector. Certain jobs, such as the astronaut corps, are part of the civil service and military because of their critical and governmental nature. NASA’s civil service workforce also provided mission support services that had no equivalent in the private sector. Though NASA relied extensively on contractors to accomplish its Apollo moon missions and valuable aeronautics research of the 1960’s, NASA managers, including eminent program director Werner Von Braun, questioned the use of contractors over in-house civil servants. Marshall Space Flight Center’s Robert Gilruth, in a letter to George Mueller, Director of Manned Space Flight, claimed “the most effective management of future programs calls for greater in-house engineering capability.”

While NASA kept the contractor workforce during periods of growth and shrinkage throughout the 1970’s and 1980’s, in the 1990’s contractors at NASA increased significantly. Although the federal government keeps no official headcount of contract workers, data pulled from federal contract information shows an increasing presence of contractors while civil service jobs disappear. In fact, while NASA aggressively cut costs in the 1990’s and trimmed its civil service workforce, the ratio of contractors to civil service employees more than doubled. As evidenced in the data complied by Paul C. Light, a scholar at the Brookings Institute, NASA civil service jobs fell from 22,100 in 1984 to 20,100 in 1996. Meanwhile, workers employed through NASA contracts grew from 171,000 in 1984 to 350,600 in 1996. During the same period, workers employed through NASA grants increased from 7,700 to 26,900. After staying level throughout the late 1980’s at approximately 21,000 full time civil servants, NASA’s civil service workforce grew to 24,416 in 1991, then shrunk to a 40 year low of 17,500. The majority of the civil service reductions were achieved through buyouts, starting in 1995 and ending in 2000. With less than 13% of NASA’s budget spent on its civil service workforce (including salary, benefits, and training), NASA has the second highest contractor to civil servant workforce ratio in the federal government.

These workforce shifts occurred as NASA’s budget was cut under Daniel Goldin, NASA’s Administrator from 1992 to 2001. He was appointed in 1992 by President Bush Sr. and directed to cut NASA’s budget and bring the fiscal discipline of the business world to the nation’s premier science, research and development agency. Under the Clinton Administration, the NASA budget was cut for seven out of eight years. Goldin saved the agency some $40 billion under a management plan he called “Faster, Better, Cheaper” (FBC). While the principle behind FBC was vague and open to interpretation for most of Goldin’s tenure, FBC attempted to “shorten development times, reduce costs, and increase the scientific return by flying more missions in less time.” Using FBC as a way to contract out services and move more of NASA’s resources into the private sector, Goldin eliminated much of the civil service infrastructure that monitored and held technical knowledge of the service and products contractors provided and oversaw NASA’s safe and successful operation.

Critics of FBC always doubted NASA’s ability to fulfill FBC without sacrificing either the “faster,” the “better”, or the “cheaper”. Concerns became widespread after the highly publicized Mars missions failed in 1999. Further concerns arose as NASA’s workforce reductions and increased contractor workforce, jeopardized the safety of space shuttle operations. Enough evidence existed in failed missions, close calls, and government reports that suggested the tradeoffs of FBC were inexperienced and reduced workforce capability; increased safety risks; and minor oversights that resulted in lost spacecraft.

In 2000, the Government Accounting Office (GAO) and the NASA Inspector Generals office took note of the safety lapses in the space shuttle program caused by the reduction of workforce. NASA’s independent safety review body, the Aerospace Safety Awareness Panel (ASAP), as well as NASA’s Space Shuttle Independent Assessment Team (SIAT), later echoed these concerns. The studies pointed to one critical factor: while NASA reduced its space shuttle operating costs by $1.2 billion, or 30%, personnel reductions in its civil service workforce from 3,000 in 1995 to 1,800 in 2000 placed the shuttle at greater risk. A 3% spending increase came in fiscal year 2000 after space probe failures, repeated warnings about safety and understaffing, and a Columbia shuttle mission that included alarming malfunctions such as a short circuit and ruptured cooling tubes. Although NASA’s budget has increased over the last three years, Congress still expects increased performance from an under-funded and understaffed workforce. In 2001 Congress, canceled some $530 million of the proposed $2.2 billion safety upgrades for the space shuttle fleet which were to span over five years.

Goldin’s NASA targeted the shuttle program for civil service workforce reductions and improved efficiency by consolidating the space shuttle’s maintenance and reducing the civil service role to monitoring safety. In 1996, NASA handed over shuttle maintenance to the United Space Alliance (USA), a contractor partnership between Lockheed Martin and Rockwell (now Boeing). The six-year contract worth $8 billion was extended this past summer for two years for $2.5 billion. Currently some 6,000 USA workers oversee launch operations at Kennedy Space Center in Florida, while 4,000 workers at Johnson Space Center are USA employees. Thus, contractors, not NASA employees, do the majority of the space shuttle work.

In 1999, NASA’s SIAT cited concerns that the space shuttle’s safety is eroding due to workforce problems. While both NASA and contractor employees hold safety in the highest regard, the SIAT report found that “the workforce has received a conflicting message due to emphasis on achieving cost and staff reductions.” With a reduced workforce directly involved in maintenance of the shuttle fleet, NASA could only perform safety monitoring, without much control over contractor procedures.

With a smaller civil service workforce, the GAO found that NASA is unable to properly monitor contractors’ adherence to safety guidelines. Furthermore, NASA lost technical competence during the workforce reduction process, as senior employees departed before new civil service employees and contractors could learn from them.

In testimony before the House Subcommittee on Space and Aeronautics on April 18, 2002, ASAP Chairman Richard Blomberg spoke of the “strongest safety concern the Panel has voiced in the 15 years [Blomberg] was involved with it.” In the 2001 Annual Report, the ASAP – a NASA safety watchdog created by Congress in 1967, after a launch pad fire claimed the lives of three Apollo 1 astronauts – stated, “inadequate budget levels can have a deleterious effect on safety.” From 1999 to its latest report released in 2002, ASAP cited grave concerns for the safe operation of the space shuttle. According to the report, along with budget and personnel cutbacks at NASA throughout the 1990’s, contractors at NASA also provided their services with a reduced workforce. Regarding NASA’s consideration to further privatize the space shuttle operation, ASAP noted that such a move would inherently introduce new risks to safe operation.

Downsizing also has implications for the future of NASA’s workforce capability. Although NASA halted its downsizing by 1999, its in-house competency had suffered greatly. A 1999 internal assessment of its workforce found NASA experiencing skills shortfalls in avionics, mechanical engineering, computer systems, and software assurance engineering. GAO also brought attention to much needed space shuttle safety upgrades that had not been budgeted. By 2000, GAO reported that NASA’s downsized civil service workforce was stretched thin and overworked.


As a result of extensive downsizing and contracting out as much as possible, NASA is facing a critical human resources problem: how to replenish a soon-to-retire workforce. While costs have been cut, its workforce is weaker and less experienced. The civil service workforce has to do more tasks with fewer staff, and the contractor workforce is working overtime due to their own staffing shortages. Though NASA hired 200 full-time workers for the shuttle operations in 2002, the shortfall remains. During the downsizing of the 1990’s, 14,268 civil servant employees left NASA, while only 8,173 employees were hired. Hiring new workers brings with it new challenges. Training new staff and incorporating them into the work processes and structure of NASA will take a great commitment of resources and time.

NASA’s workforce demographics are expected to compound the problem further. Within NASA’s science and engineering workforce, those over 60 years old outnumber the under 30 population by a ratio of 3 to 1. With 15% of science and engineering employees currently at retirement age and another 25% eligible within the next 5 years, NASA has begun tracking skills, competencies, and measuring what skills are lacking in the workforce. However, as the GAO reported to Congress in 2002, new hires needed considerable training and faced the challenge of having to replace more experienced workers, and staffing shortfalls are expected to continue if not worsen.

NASA also faces the challenge of recruiting engineering and science talent away from higher paying private sector jobs. With many of NASA’s operations in high-cost labor markets, NASA’s salaries can be as much as $20,000 below private sector jobs in the same market. NASA also looses recruits to the private sector because the hiring process can take up to six months. Though NASA is looking to implement incentives to attract, retain and replenish their aging workforce, its budget has limited their implementation. Furthermore, incentives to retain experienced workers would also be necessary for new hires to gain knowledge from the experienced workers. The obvious solution of providing competitive salaries for all NASA employees has yet to receive serious political attention.

With NASA’s workforce is stretched thin, work conditions have deteriorated. Recent GAO reports on NASA concluded that the civil service workforce is “showing signs of overwork and fatigue as a result of downsizing.” Unmanned space launch failures in 1998 and 1999 have been attributed to overworked civil service employees. Overstressed and overworked employees at NASA’s contractors also played a role in recent failures and safety lapses.

Though NASA is looking to contractors to fill the workforce gap, various studies have reported the unintended consequence of using contractor employees over civil servants. The SIAT reported that it “feels strongly that workforce augmentation must be realized principally with NASA personnel rather than with contract personnel.” The report found instances where important technical knowledge was possessed by only one civil servant. If that employee were to leave NASA, that technical knowledge leaves NASA as well.


For over twenty years, presidential administrations have planned for NASA’s privatization. Though previous plans to privatize the shuttle fleet in the 1980’s were placed on hold after the Challenger accident, the Reagan Administration set the course for NASA’s privatization. In 1984, Congress amended NASA’s charter “to seek and encourage to the maximum extent possible the fullest commercial use of space activities.” Under Goldin, NASA moved to privatize both manned space programs, the space shuttle and the International Space Station (ISS). In 1998, Congress passed the Commercial Space Act with bipartisan support. The law forbade NASA from building space launch vehicles and directed NASA to plan for the privatization of the shuttle and the ISS while encouraging private sector development and operation of future reusable launch vehicles.

NASA’s most apparent attempt to privatize major operations is the space shuttle. In 1995, a NASA commissioned study called the Kraft Report recommended that shuttle operations be contracted to one single contractor. The report cited that restructuring of the shuttle program was needed to reduce an overabundance of engineers and man-hours spent on each shuttle mission. The report suggested the shuttle could now be considered “operational” rather than “experimental,” suggesting risks associated with the shuttle had been mitigated since the Challenger accident. The report concluded with a recommendation that a consolidated shuttle operations contract could serve as a precursor to “further industry involvement and progression toward the privatization of the space shuttle.”

As a result of the Kraft Report, NASA awarded a non-competitive contract for shuttle flight operations to a joint-venture by Lockheed Martin and Rockwell called United Space Alliance (USA). Boeing acquired Rockwell’s space business in 1996 and took its place in USA. Though the intended goal of reducing costs was achieved, the contracting of NASA’s most safety-critical operations had repercussions.

After NASA awarded USA the shuttle operations contract, many commentators and investigative reports warned of the potential dangers of increased privatization. Criticism came from within NASA, as well as outside critics, warning of the workforce and safety implications. Space policy analyst John Pike of the Federation of American Scientists predicted the reports’ recommendations would one day be considered as “the turning point that led to the next shuttle accident.” Apollo Astronaut John Young warned “you can’t reduce people without introducing a lot of risk because you just work people too hard.” In a letter to President Clinton, Jose Garcia, a NASA manager with over 30 years of experience expressed urgent concern regarding the pressure to downsize the workforce and extensive contracting of shuttle operations. Because “the shuttle is a complex R&D vehicle that requires NASA to play an important oversight role”, Garcia wrote to Clinton, “it would be better to cancel the manned space flight program than to recklessly endanger a future shuttle and its crew” by contracting out and reducing NASA’s role in shuttle operations.

During the past two years, NASA has been moving closer toward privatizing shuttle operations. A 2001 study conducted by a NASA team at Johnson Space Center concluded that compete privatization of the space shuttle was necessary as NASA’s workforce entered retirement. Under a privatized scheme, the private shuttle operator would handle NASA’s current role of overseeing safety and technical requirements. In the fall 2002, the Rand Corporation delivered similar findings on privatizing the shuttle workforce in a follow-up study.

However, the NASA body responsible for evaluating manned aerospace programs warned that privatization could exacerbate safety risks. In 2002, the ASAP Chair Richard Blomberg told the House Subcommittee on Space and Aeronautics that NASA would have to indemnify any privatized shuttle operator from financial risk and require a technically experienced workforce to assess and regulate that risk. However, Blomberg reported that, “it is difficult to cultivate and maintain this government workforce when all operations have been turned over to the private sector.” Blomberg also noted that a departure from the “traditional government/contractor checks and balances” to privatized operation “would increase risk significantly for a time,” and would not improve safety from current levels.

Direct evidence of contractor failure to perform efficiently came in 1999 with the failure of a series of Mars spacecraft. The failures highlight how NASA contractors and NASA’s managerial commitment to FBC traded avoidable risk for lower cost. In September 1999, the $125 million Mars Climate Orbiter crashed into Mars. It was later revealed that contractor Lockheed Martin had used English measurements to calculate trajectory while NASA specified and navigated the craft using metric units. In December the same year, the $165 million Mars Polar Lander crashed into the planet’s surface as its braking thrusters failed to fire properly. NASA’s internal investigation revealed that no system-wide tests had been done on the Mars Polar Lander before launch. Two Deep Probe 2 microprobes accompanying the Polar Lander were also lost without contact and, according to a Mars Independent Assessment Team head Tom Young, simply were “not ready to launch.”

Under budget constraints, the renowned Jet Propulsion Laboratory (JPL) and Lockheed Martin tried to perform a mission they did not have the resources. Lockheed Martin significantly understaffed the development of the Polar Lander, Mars Observer and Deep Space 2 hardware, and then increased staffing by 80% half –way through the project. After additional engineers and technicians were brought on, Lockheed Martin required them to work in excess of 70 hours a week. Not only did this increase the costs of the spacecraft by $121 million, 44% over the original costs, but it also resulted in an overworked and poorly managed staff producing slipshod spacecrafts. Because launch dates were fixed and calculated so that the spacecrafts would rendezvous with Mars, Lockheed Martin rushed to meet their deadlines, while making simple yet critical mistakes.

Though JPL – an academic center under exclusive NASA contract to operate space probes – has a unique technical capability, it did not provide the necessary support the missions needed. Lack of review and analysis of risks allowed for consecutive failures. NASA’s investigation into the probe failures also noted “competent, but inexperienced, project managers” and inadequately trained navigation personnel at JPL did not catch Lockheed Martin’s mistakes. Though Lockheed Martin’s Mars Climate Orbiter navigation software used English units rather than the NASA specified metric units, JPL personnel could have saved the spacecraft before it crashed. However, with an understaffed workforce that did not fully understand the Climate Orbiter craft, JPL navigators failed to recognize anomalies caused by the spacecraft’s navigation. NASA’s mangers also lacked experience to understand the risks and potential for failure involved in planetary space missions. The inadequacy of testing and oversight on construction of Deep Space 2 probes was so severe that NASA does not have insight into why it failed beyond that it was not tested for operations.

While NASA did score successful low-cost robotic missions under FBC, such as the Mars Pathfinder and the Mars Global Surveyor, the overall results were not successful. NASA contracted an investigation through the Aerospace Corporation to compare the new mission regime to the traditional robotic probe projects. The study found that the failure rate under FBC missions was 44% compared to 30% for traditional missions. FBC missions were 57% more cost-effective than the traditional model. The faster, better, cheaper missions provided an average of 79 instrument months, over three times less than the average 305 instrument months that traditional robotic missions provided. The Aerospace Corporation report concluded that to achieve “faster” and “cheaper”, the mission must give up “better” by reducing scope and science return on a per mission basis.”

Contractor fault was also cited in a string of unmanned commercial and military space launch vehicle failures in 1998 and 1999. With seven launch failures over two years, launch vehicle builders Boeing, builder of two of the failed rockets, and Lockheed Martin, builder of the remaining five failed launches, faced intense scrutiny. With three of the undelivered payloads being military satellites, the Air Force investigated the cause of the failures. At the risk of losing commercial business, Boeing and Lockheed-Martin also conducted their own internal investigations. Beyond the direct technical causes, all the investigations came to similar conclusions: the companies’ poor oversight and evaluation and understaffed workforce allowed engineering and workmanship deficiencies. Even the Defense Department contractor responsible for assessing and certifying the operability of defense launch systems, the Aerospace Corporation, cited its own reduced workforce and limited resources under a $3.65 million contract.

Though NASA’s recent experience with contractors shows the limits of performing dangerous and difficult work through the private sector, a privatized NASA may be even more detrimental. NASA’s core mission is research and development of new technologies in aerospace, expanding human knowledge of airflight, spaceflight and space and earth sciences for the benefit of the public, including the engineering and scientific communities, as well as the private sector. Privatizing NASA would move aerospace and earth and space science research out of the sphere of public goods and into private hands.

As a public good, the data and research that NASA produces from its projects are publicly available. A telling example of private ownership of space research is the privatization of the Landsat remote sensing satellite system. The Carter Administration’s 1978 proposed plan to privatize the satellites was realized in 1985 when EOSAT, a joint venture by Hughes and RCA, took over the operation of the system. The Landsat data that was once available to the international science and research community was now EOSAT’s proprietary data. The cost of purchasing Landsat data increased from $400 to $4,400 an image, out of the reach of many researchers in the scientific community. After NASA and the National Oceanic and Atmospheric Administration requested relief from high prices, Congress passed and President Bush Sr. signed, the Land Remote Sensing Policy Act of 1992, putting the satellite system back in the government’s hands again. The bill acknowledged that privatizing Landsat, a research program that provides essential data, had deleterious effects and is not likely to work in the future.

Privatization allows for the possibility that profitability and market value, rather than scientific value, will prioritize the scientific and research work that NASA currently does. Even though a privatization scheme can be developed to give the federal government some oversight into strategic planning, the federal government would be unable to staff a workforce without some operational knowledge. Further, the lack of safety and risk oversight that results from NASA’s understaffed civil service workforce, demonstrates how a privatized aerospace venture would be prone to safety issues.

For the purposes of securing funding and winning contracts, contractors have an incentive to aggressively price their service and products. The space launch failures in 1999 point to private sector managers cutting staff and diminishing engineering quality to competitively price their launch services. As NASA’s independent investigation into the 1999 Mars spacecraft failures shows, both Lockheed Martin and JPL, the academic contractor, placed concern with cost before success. While Lockheed Martin’s proposal was aggressively priced, they were not able to provide an effective product. Instead of relaying risk assessments and concerns to NASA, JPL’s communication with NASA “was more one of advocacy for the program and presenting a positive image to the customer (NASA Headquarters).”

In recent years, NASA’s mission has been defined by budgets, not science. With private sector salaries significantly higher than government’s, NASA is losing its ability to attract talented individuals, as ambitious science and engineering are secondary to contracting, privatizing, and cost cutting. While a publicly funded aerospace program can invest in developing projects that have a high scientific value but no immediate profit, private industry’s involvement in aerospace is justified by profit first and foremost. Before the decision to launch the doomed Challenger in January 1986, shuttle contractor Morton Thiokol’s senior managers overruled a contractor engineers concerns for the safety of the launch and gave NASA the go-ahead to launch. The contractor’s management chose not to contradict NASA managers who were eager to launch. With the contract up for renewal, Morton Thiokol was eager to please NASA mangers.

In the coming months, the investigation into the Columbia accident will answer where accountability for the critical failure lies. With the majority of the shuttle’s functions under the control of one contractor, United Space Alliance is already facing scrutiny. With a chorus of warnings about the dangers of contracting out a manned space vehicle that offers little room for a safety lapse, presidential administrations, Congressional budget appropriations committees and NASA senior managers that pushed for lower costs over successful operation, may also have to face scrutiny for their decisions that reduced the effectiveness of NASA.

SpaceRef staff editor.