Managers Get Blame for NASA Cost Overruns : Hearing: U.S. agency and private contractors both at fault, House panel is told, along with efforts to redesign the $31-billion space station project.
NASA’s controversial space station program developed potential cost overruns of more than $1 billion because of management failings by NASA and private contractors--including McDonnell Douglas in Huntington Beach, government officials said Tuesday.
They also said continuing efforts to redesign the $31-billion project have contributed to potential cost overruns.
In a hearing before a congressional oversight panel, officials of the National Aeronautics and Space Administration said they have offset all but about $500 million of the potential cost overruns for the next three years, largely by cutting NASA management jobs and replacing private consultants with government employees. The potential cost to NASA involves over-budget expenses reported by space station contractors, which the space agency has not yet agreed to pay.
NASA’S cost-cutting efforts failed to satisfy several members of a House Science, Space and Technology subcommittee, who questioned the program’s management structure and NASA’s ability to ride herd on the aerospace companies that are under contract to complete the space station by the end of the decade.
“NASA has become a bureaucratic behemoth,” said Rep. Dana Rohrabacher (R-Huntington Beach), whose district is home to McDonnell Douglas Space Systems Co. “I submit that this mishmash of management . . . has something to do with these cost overruns.”
One of the space station’s three prime contractors, McDonnell Douglas is responsible for the largest share of potential cost problems--$533 million before the offsets were made, NASA officials said.
The future of the space station is critical to the space company, which holds contracts on the project valued at $5 billion and extending into the 21st Century. About 1,100 workers at its Huntington Beach plant are directly involved in building the orbiting laboratory.
Some members of the space subcommittee suggested that President Clinton’s recent order to once again redesign the station could increase, rather than cut costs, while robbing the orbiting laboratory of much its remaining scientific capability.
“I’ve lost count on how many redesigns its had,” said Rep. Dick Zimmer (R-N.J.), a longtime critic of the program. “We are risking another round of unpredictable increases in costs. Someone once defined insanity as doing the same thing over and over again and expecting a different result.”
Clinton called for the fifth redesign effort two weeks ago, partly in response to the news that space station contractors had reported to NASA excess costs totaling $1.08 billion.
NASA officials said the agency so far has found savings, primarily in staff reductions, that would reduce the projected overruns to $503 million through the 1995 fiscal year. Meanwhile, NASA Administrator Daniel S. Goldin has assembled an independent team to recommend a new, less costly plan for the space station within the next few months.
Much of the increased cost of the program can be blamed on NASA for making overly optimistic estimates of savings associated with the last redesign of the program in 1991, said Arnold D. Aldrich, NASA’s associate administrator for space systems development.
“There was optimism on the part of NASA in terms of . . . how much we could reduce (costs) to meet the targets of both performance and schedule,” Aldrich said, adding that the agency set cost-cutting goals and then failed to meet some of them.
In other cases, contractors were responsible for running over budget. Robert Moorehead, deputy director of the space station program, blamed $231 million in over-budget costs paid to McDonnell Douglas last April on the company’s failure to provide “engineering and technological leadership” by properly supervising its 87 subcontractors. McDonnell Douglas reported to NASA that it had overspent on engineering drawings and computer software development.
However, in written testimony, Gale Schluter, a McDonnell Douglas vice president, said a major factor in current and projected cost increases was NASA’s decision to redesign and reduce funding for the space station in 1991 without spreading out construction over a longer period of time.
Schluter said that “cost growth” is “approximately 10% of our authorized contract value. While this is indeed significant on a program of this size, it is not unusual on a development program such as this.”
After the hearing, McDonnell Douglas spokesman Thomas E. Williams said, “The problems Mr. Moorehead referred to in the hearings today are definitely behind us.” A disproportionate share of the overruns are associated with McDonnell Douglas, Williams added, because the company is responsible for nearly 40% of the work on the space station and nearly all of its work comes early in the program.
Rep. Jim Bacchus (D-Florida), a strong space station supporter, said Congress also shares the blame for potential cost increases.
“Congress agreed to a restructure in 1991, and then promptly cut $700 million in funding over the next four years,” Bacchus said. “We must commit ourselves to stable . . . funding. I want to make sure (the) space station is truly a space station and not just a floating whistle stop in the sky.”
