Editorial | Vanishing Savings at CNES

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Government agencies and their political overseers are fond of touting potential cost savings from operational efficiencies, but rarely do they actually deliver. It therefore is noteworthy that the French space agency, CNES, has been able to reduce its internal operating cost, in part through better management practices at the CNES-run Guiana Space Center, Europe’s satellite launching facility. Over the last decade, CNES has reduced the spaceport’s operating costs by about 14 percent —even as the number of rockets that launch from the spaceport increased from one to three — through measures including having prospective contractors regularly compete for work.

Outgoing CNES Director Yannick d’Escatha told reporters recently that the savings are being reinvested into research and development projects and flight demonstrations, reinforcing what he sees as the agency’s primary role. It’s an important point: These are precisely the kinds of activities that are often the first to go when budgets get tight, as they are today in Europe and just about everywhere else, the United States in particular.

Alas, it seems that no good deed goes unpunished. During the same briefing, Mr. d’Escatha said CNES’s budget will take a hit after two French agencies that contributed to its 2012 spending account demanded some of their money back at the end of the year.

In fairness, the clawbacks likely have nothing to do with CNES’s success in cutting its operating costs. But it is nonetheless ironic, even more so since those demanding partial refunds, the French research and defense ministries, stand to benefit from the work done by CNES.

Clawbacks are not unusual, especially in times like these, but what makes this one particularly galling is the fact that the total refund being demanded, at 64 million euros ($86 million), is more than double the 26 million euros CNES had set aside in anticipation that this would happen. Exacerbating the resulting shortfall is that some of the funding CNES is being asked to return has already been paid out to contractors and research laboratories.

What this means is CNES will have to cover part of the clawbacks out of its 2013 budget for defense-related programs, which is bound to disrupt some of its investments planned for the year. On top of that, CNES, given the experience of late 2012, might feel compelled to set aside a bigger cash reserve in 2013, and this is an account that almost by definition advertises itself as there for the taking.

There has to be a better way. To invest wisely, particularly in multiyear programs, CNES, like any other agency, needs a relatively predictable budget. Clawbacks are a fact of life at CNES, but contributing ministries need to get a better handle on what they need from the agency and how much they are willing to invest. As it stands, the refund demanded by the defense ministry, 41 million euros, affected programs having nothing to do with defense.

CNES and its employees, having proved that doing more with less can be more than just a rallying cliché for tough fiscal times, deserve better.