Interest groups are coming out of the woodwork in the never-ending struggle over NASA’s commercial crew programs. While the battles are usually over funding and debates about the balance between commercial crew program and the Space Launch System, this time the fight concerns the government’s role and responsibilities when it comes to NASA’s stewardship of taxpayer resources.
The Senate Appropriations Committee recently recommended passage of its version of the fiscal year 2015 Commerce, Justice, Science appropriations bill. At issue is a particular provision that would impose all the rules, regulations and bureaucracy associated with government-compliant cost-accounting systems on NASA’s commercial crew program.
These procedures are a subset of the Federal Acquisition Regulations (FAR), which are extraordinarily time-consuming and expensive. They add cost to everything the government does, but government created them over the years in order to reduce the likelihood contractors and government employees would exploit the taxpayers’ purse or perform inadequate diligence in spending those resources. For every past abuse, there is a new rule or regulation. Large government contractors maintain a significant bureaucracy and standardized procedures to comply with the FAR. From a product standpoint, the FAR cost and pricing data requirements do not add much value, just cost and time. From a stewardship standpoint, such data are a significant way of holding government agencies and contractors accountable for their use of tax dollars.
For large development contracts, particularly in markets for which the government is a monopsonistic consumer — meaning it is the only meaningful purchaser of goods and services such that its decisions determine the shape and size of the market — the government routinely uses the more intrusive cost and pricing components of the FAR. The supply and demand signals that usually set prices and the competitive function that improves quality over time in a commercial market are missing. Cost and pricing data are the principal means of setting a reasonable price and protecting taxpayer interests.
Normally, human spaceflight would fall into this category. The only meaningful customer is the government and it has rather unique requirements. A truly healthy free market does not exist. Moreover, the taxpayers are contributing significant resources to the development of these capabilities, which they then will not own. Despite constant rhetoric to the contrary, there is nothing “commercial” about the commercial crew program. Without government demand, funding and support, the private companies working with NASA likely would not be in this business. Investors and shareholders would not stand for the expenditure of such resources, preferring to chase higher returns in a more profitable sector. This may be changing, but not in a time frame useful for government needs. From that standpoint, the Senate Appropriations Committee’s move to apply the FAR’s cost and pricing data to NASA’s efforts to acquire crewed access to low Earth orbit (LEO) makes perfect sense.
However — and there is always a “however” in public policy — it is also a mistake in this case. The United States does not apply the cost and pricing provisions of the FAR (among others) to its procurement of human launch services from Russia. There were compelling reasons of national interest, having much to do with foreign policy and then our dependence upon Russia, not to. All this means is that the need for FAR-compliant cost and pricing data is not absolute, required above all other things. There are such interests at stake in the development of crewed services to LEO now.
First, the added layers of bureaucracy and oversight associated with the additional bookkeeping requirements could delay the development of a useful vehicle, reducing its utility in two areas, but not its necessity. U.S. dependence on Russia for human spaceflight services is a critical vulnerability in the U.S. space program; it gives Moscow leverage over one of the crown jewels of American soft power at a time of poor relations, to put it mildly.
Second, the government requires human access to LEO in the near- to mid-term to exploit the international space station, which is scheduled to end in 2024. NASA’s LEO programs, in cooperation with several private companies, may produce a useful capability by 2017. Delaying the availability of these services would narrow that period of utility, minimizing the near- to mid-term benefits the taxpayers expect from having spent money on the commercial crew program in the first place.
Third, NASA’s relationship with the companies involved in both its cargo and crew programs represents a different approach to developing technology in service of the American taxpayer. Rather than following a typical procurement process under the FAR, NASA and these companies employed Space Act Agreements to move the technology forward more quickly. The authority to conduct such Agreements was created specifically to reintroduce the kind of flexibility and burden-sharing that the government needs if it intends to exploit the emerging private space companies for the public interest: flexibility that the FAR slowly stifled as it added layers of red tape. NASA already plans to move in that direction as development activities mature; additional layers of approved cost paperwork will not accelerate the provision of human spaceflight services.
Finally, declining to adopt the FAR cost and pricing data requirements would not preclude the government from meeting its obligations to assure that taxpayer resources are used wisely. NASA was deeply involved in developing the cargo capabilities to ensure they would not pose a threat to the space station. In the case of human spaceflight, NASA has been quite close to the development of new, privately owned capabilities due to its need to ensure that they are safe and reliable enough for people. While that insight may not focus on cost and pricing data, it helps reduce the likelihood that any contractor would be able to hoodwink the taxpayers. The resources used on paperwork would be better spent understanding design and hardware decisions and how they relate to safety.
When it comes to human spaceflight in the United States, NASA cannot pursue “business as usual” approaches. It lacks funding and time for a traditional procurement or development program. Without Russia, the United States is stranded on the surface of Earth, which ought to be an intolerable situation. The need for new capabilities is urgent.
At some point after the commercial crew program has produced a working, safe vehicle, completed a technical shakeout period and established procedures strongly enough to make the purchases of human spaceflight services routine, it may be appropriate and necessary to introduce the more burdensome aspects of the FAR into the government-contractor relationship. Until then, Congress, NASA and the spaceflight suppliers need to focus on getting the needed vehicles built and in service as quickly as possible.
Eric R. Sterner is a fellow at the George C. Marshall Institute. He is a former NASA associate deputy administrator and also was staff director of the U.S. House Science space and aeronautics subcommittee.
