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National Aeronautics and Space Administration

Recommendations and Actions

NASA04: Strengthen and Restructure NASA Management

BACKGROUND

The National Aeronautics and Space Administration (NASA) achieved spectacular success in a number of its early undertakings. With President Kennedy's firm direction, the agency moved rapidly to catch up in the space race. NASA helped secure the United States' position in the forefront of technology, and in the span of less than two decades advanced human enterprise beyond the planet Earth.

Recent struggles--marked by the Challenger space shuttle accident and by continuing cost overruns and delays--require an assessment of whether NASA has a mission worthy of national support or a management tradition worthy of renovation. This debate has centered most recently on the purpose and costs of the proposed space station.

On March 9, 1993, President Clinton asked NASA to undertake a 90-day effort to redesign the space station program in order to reduce costs. The Vice President, in turn, appointed an advisory committee to review this study and make recommendations to the President. The committee did so.

On June 17, 1993, the President announced his administration's position based on the advisory committee's findings: "At a time when our long-term economic strength depends on our technological leadership and our ability to reduce the deficit, we must invest in technology but invest wisely." The President stated his support for continuing the space station program but insisted that this must include a "redesign of NASA itself" in order to "cut costs, reduce bureaucracy and improve efficiency."[Endnote 1]

NASA leadership has recognized the need for an agency reinvention and management overhaul. This includes improvements in the agency's direct operations and in its contracts with private firms. (Contractor spending constitutes over 90 percent of the agency's budget.) The NASA administrator acknowledges that agency management across multiple field installations is poorly conducted, resulting in multi-loop review and reporting.[Endnote 2] The organizational structure ddiffuses accountability and results in too many people doing overlapping work. Poor coordinatioN sharpened the turf conflicts among offices.

Regarding the space station program specifically, both the advisory committee and the internal NASA review team found serious inefficiencies in NASA's management. The NASA team developed alternative management scenarios which were accepted and reemphasized in the advisory committee's report.[Endnote 3]

Based on the President's decision and the advisory committee's recommendations, NASA has initiated a process to transform its management structure to a more streamlined, efficient organization. This new management design will produce significant NASA staff reductions and modifications to its existing contracts. The number of contractors working on the new design may be significantly reduced. These changes represent a major shift in traditional NASA program management.

These changes must be extended beyond the space station program. Further study indicates that NASA's existing management contributes to a number of problems:

--NASA has an inadequate system for developing critical project definitions for either new or existing projects;

--NASA has few means to prioritize projects within and across its many program offices;

--NASA has no established conditions under which projects should be reviewed for potential termination;

--NASA has no consistent process for providing independent cost estimates for new or ongoing projects;

--NASA has insufficient performance measures, or metrics, by which to assess project success and effectiveness at all levels;

--NASA has no implemented strategic plan, including an up-to-date assessment of which facilities it needs; and

--NASA program, project, and other managers lack sufficient accountability.

Specifically, NASA programs and budgets have suffered from uncontrolled operational costs that have not been carefully managed during the definition, development, and implementation phases of programs.[Endnote 4] Excessive costs in individual programs often lead to less available funding for other programs still in the development stage. These cost overruns occur primarily as a result of poor cost estimating. Although many operational needs are difficult to assess prior to a project's implementation, NASA acknowledges that significant improvements can be made to better estimate the operational costs of new projects to avoid unforeseen problems and increased costs.

NASA has been able to achieve significant cost savings from programs currently in the operational phase, such as the space shuttle. This has derived from pressure to reduce funding levels. In response, the space shuttle program recently identified savings of $8.4 billion from fiscal year 1992 to 1998. NASA management has acknowledged that substantial savings can be obtained from other programs currently in the operational phase if an aggressive effort is made to review these programs for reductions in operational costs.

To match mission and strategic resources, a NASA strategic plan would help identify actual facilities needed, including those that support commercial aeronautics. The U.S. aerospace industry has been subject to increasing challenge by advances in aerospace technology that affect its ability to remain competitive in the global marketplace. Of course, these advances correlate with the operation of modern, highly productive research and development facilities. Currently, an overlap exists in government facilities in the aeronautics and space fields which reduces overall efficiency of operations and the effective use of increasingly scarce resources.

In November 1992, the NASA administrator initiated the development of a comprehensive and integrated long-term plan for future aerospace facilities in coordination with the Departments of Defense (DOD), Energy, Transportation, Commerce and the National Science Foundation. Since that time, working groups involving all agencies have initiated a review to catalogue existing U.S. government and industry facilities that support aeronautics and astronautics research, development, testing, and operations. International facilities will also be examined to determine their potential to supplement U.S. facility shortfalls. The completed plan will consider current and future government and commercial needs as well as NASA and DOD mission requirements for the next 30 years. The plan is scheduled to identify overall facility shortfalls, new facility requirements, upgrades, consolidation, and the closure of existing facilities.

Reforms in agency management can reduce inefficiencies across the board, as well as produce significant savings in federal personnel. In addition, NASA headquarters must establish the means for terminating projects which fail to meet planned objectives or which incur significant cost overruns and delays. The NASA Centers must focus on an agencywide vision of success versus individual center priorities.

ACTIONS

1. NASA should aggressively complete its overhaul of the space station program management to include implementation of the following measures:

--NASA should reduce the number of total contractor and civil service staff by approximately 30 percent; and

--NASA should specifically reduce the number of government employees working on the space station program to approximately 1,000 (a reduction of 1,300 employees over the current program). In turn, efforts should be made to make other, appropriate assignments for affected space station personnel.

2. NASA should implement the management principles developed for the redesigned space station program across the agency in all areas of program and institutional management, including the following:

--authorize the NASA administrator to apply lean management practices and assign appropriately skilled personnel to current tasks at hand;

--establish clear lines of authority and responsibility, including the management conducted by outside contractors (ensure implementation of OMB Circular A-109 Major System Acquisition);

--reduce management layers and assign program authority to the program manager, as appropriate;

--define the role of the NASA center director as that of providing personnel, facilities and other field resources to support the program, rather than managing the overall program itself, as appropriate;

--eliminate unnecessary overlap between the centers, with a comprehensive review of all centers and the identification of opportunities to share functions, both developmental and operational, and facilities with other federal agencies and international organizations;

--reduce total civil service and contractor employees; and

--reduce NASA support contractors over the next five years in order to achieve cost savings. This will be applied in a way to avoid undue effect on small and disadvantaged businesses. In general, this should allow for 85 percent of the NASA budget to continue to go to outside contractors.

3. NASA should aggressively reposition its staff to meet the agency's new challenges, including the following personnel actions:

--accelerate the Presidentially mandated NASA personnel reduction by one year, so that approximately 1,000 full-time equivalent (FTE) positions will be eliminated from fiscal year 1994 to fiscal year 1995;

--establish measures that will allow this reduction to occur through attrition by early-out and buyout authorities, such as those granted to the Department of Defense and the Central Intelligence Agency;

--emphasize reduction of management positions, both at headquarters and at the centers, to consolidate all functional management at NASA headquarters (only one official will be responsible for developing agency policy in each functional area and overseeing its implementation at all field centers);

--improve communications between supervisors and employees and expand the performance evaluation system to establish clear performance expectations;

--establish agencywide education and training programs to ensure readiness for assignment and to provide hands-on training for future program managers;

--ensure a selection process for managers that stresses technical and management excellence, interpersonal skills, and work force diversity; and

--in particular, NASA should improve its management policies and processes in order to make all NASA managers accountable for their performance.

4. NASA should restructure its internal management processes for program formulation and implementation by formally instituting its Program Management Council (PMC) to be chaired by the deputy administrator and charged with performing the following functions:

--ensure the development of sound project definitions for all NASA projects. This would include clearly stated program objectives consistent with the proposed strategic plan, proper definition and understanding of all project requirements, and well- defined management roles and responsibilities with an emphasis on accountability. It would also require full sets of documentation governing non-advocate reviews, cost control, and performance commitments;

--implement its Independent Cost Estimation Process agencywide for all new and existing projects for which this activity has not been done;

--recommend an acquisition strategy consistent with program-specific objectives, risks, and constraints;

--ensure that every project in the design and development stage has life-cycle cost estimates for development and operations;

--require each project and program to identify tradeoffs among up-front hardware investments, annualized operation costs, and schedules;

--require project managers to identify potential opportunities to reduce operational costs through project modification or other means during the course of the annual budget process;

--provide NASA's ongoing programs with specific percentage targets for operational cost reductions, where appropriate;

--establish project cost-overrun thresholds that will trigger PMC recommendations to the administrator for project termination for existing NASA projects;

--identify program termination candidates during each budget cycle beginning in fiscal year 1995;

--oversee implementation of its proposed NASA Strategic Plan and revised NASA Management Instruction (NMI); and

--assign performance metrics for all programs and projects. The development of these metrics will be done by the appropriate program and project offices with the approval of the PMC.

5. NASA should work aggressively with its interagency counterparts to complete a summary report to the administration, by June 1994, identifying federal aerospace facility shortfalls, new facility requirements, consolidation opportunities, and recommendations for closing.

The report will also include estimates of cost impacts (savings and investments) as well as an assessment of other considerations which affect the report's recommendations, such as national security concerns, commercial competitiveness, technology transfer, and proprietary data rights.

Implementation of the foregoing recommendations should begin by January 1, 1994, and a report detailing the success of their implementation should be prepared by the administrator and submitted to the administration no later than June 1, 1994. (Note: The restructuring of space station program management will occur over a faster time period than the other NASA management changes. It may be appropriate to refer to the status and effects of the space station program changes in the administrator's report.)

IMPLICATIONS

Reforms in agency management can reduce inefficiencies across the board, as well as produce significant savings in federal personnel. NASA headquarters can establish the means for terminating projects which fail to meet planned objectives or which incur significant cost overruns and delays. NASA centers can focus on an agencywide vision of success versus individual center priorities.

These recommendations will help to ensure that NASA program and project management does not focus solely on project development costs while ignoring long-term operational costs. This should enhance overall program management and help to avoid the prevalence of unanticipated operations cost overruns. This should also help prevent NASA management from becoming burdened by substantial operational budgets that may affect its ability to implement new technology or conduct new science programs.

Implementation of the facilities study should lead to a more efficient array of federal aeronautics and space facilities that address both agency and industrial needs. This should also strengthen the competitiveness of U.S. aerospace industry, particularly those aeronautics and propulsion companies involved in commercial transport aircraft design and development.

These recommendations should significantly affect the way NASA does business and affect the roles and missions of the NASA center as it drastically changes the roles of the center director and headquarters program managers. They should establish clear lines of authority and accountability and eliminate duplication of effort. This should significantly improve agency performance.

FISCAL IMPACT

Already in the fiscal year 1994 budget process, NASA has made significant reductions through fiscal year 1998. Reductions in personnel and administrative expenses include $1.6 billion, including Civil Service reductions that eliminate 1 percent of the work force in fiscal year 1993 and an additional 1.5 percent in fiscal years 1994 and 1995. Other reductions will total $1.982 billion through fiscal year 1999 achieved by reducing support services contractors, restructuring the space station program, and other program reforms.

NASA should realize additional cost savings following the implementation of the above recommendations. The reductions associated with the space station redesign will be extended to all NASA programs. Furthermore, the final report on facilities review will include cost savings to be realized by facility consolidations, mothballing, and closures due to overlapping technical capabilities.

 
	  Budget Authority (BA) and Outlays 
	       (Dollars in Millions) 
 
 Fiscal Year
 
 1994    1995    1996    1997    1998    1999    Total
 
 BA
 n/a   -396.0  -396.0  -396.0  -397.0   397.0  -1,982.0
 
 Outlays
 n/a   -282.0  -372.0  -390.0  -397.0  -397.0  -1,838.0
 
 Change in FTEs*
 n/a   -723    -723    -723       -723    -723      -723
 
 * These figures show full-time equivalent (FTE) 
 reductions from the fiscal year 1994 President's 
 budget due to NPR recommendations.
 

ENDNOTES

1. The White House, Office of the Press Secretary, Statement of the President (June 17, 1993).

2. National Aeronautics and Space Administration, Space Station Redesign Team: Final Presentation to the Advisory Committee for the Redesign of the Space Station (Washington, D.C., June 7, 1993).

3. Advisory Committee on the Future of the U.S. Space Program, Report of the Advisory Committee on the Future of the U.S. Space Program (Washington, D.C., 1990), p. 16.

4. Ibid., p. 36.

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