May 3, 2001

It is my pleasure to be with the subcommittee this morning, to discuss the International Space Station. As I am sure you all know, it has been 17 years since President Ronald Reagan proposed that the U.S. develop a space station with international partners. Over those long and at times difficult years, many have doubted that we would ever have a space station. There is no doubt that we do have one now – just look up at the right time and you can see it flying overhead, already one of the brightest objects in the night sky. It is an impressive sight and if you have not seen it first hand, I recommend it. Just ask NASA and they will tell you when and where to look. The Administration is very proud of the accomplishments of this program, as we all should be. Why, then, is the Administration proposing changes to the Space Station now?

The unfortunate but simple answer to that question involves cost growth and the lack of confidence that adequate management controls are in place. In January, NASA informed this Administration that estimates of cost growth on the Space Station program were roughly $4 billion over the next five years. This continued a history of cost growth that saw nearly $4 billion added to the cost of completing assembly of the Space Station over the last three years. What makes this latest increase particularly troubling is that it came with little warning and a magnitude that represents a 50 percent increase over what was projected only a little while ago. With numbers that large, and no certainty that even an additional $4 billion would be sufficient, it is necessary to take action now to put an end to this spiraling cost growth. The Administration’s plan to bring costs under control is what I’m here to talk to you about this morning.

Historical Background and Observations

In 1984, President Ronald Reagan initiated the Space Station with the promise from NASA that it would be built within a decade for $8 billion and include the participation of Europe, Japan, and Canada. In 1993, after a number of budget cuts, after $ 10 billion spent, no flight hardware built, and escalating cost, the Clinton Administration conducted a major review that revamped the program’s management structure. Shortly thereafter, the Russians joined the program. Five years later, the first hardware was launched into orbit, followed two years later with the first fulltime astronaut crew boarding the Station. Just last week, NASA successfully attached the Canadian robotic arm. Despite this progress, the total cost and time to complete Space Station development has grown every year recently, from a $17.4 billion cost and 2002 completion projected in 1996, to an estimated $24 billion cost and 2005 completion projected last year. The new $4 billion cost growth is in addition to last year’s estimate.

As I understand it, there are several issues that have made cost control a challenge for this program. To preserve support for the program, NASA felt compelled to pursue multiple objectives — human presence in space, scientific research, institutional needs, and foreign policy _- and, therefore, did not or could not make the tough prioritization decisions needed to control costs. The program has also been unable to make accurate cost projections because of estimating errors, partner instability, and changes in requirements that added new costs. Adding new funds did not fix the problem because the program kept asking for more. Adding funds may have made it too easy to avoid consideration of lower cost alternatives and make tough decisions to manage within budget. The assembly completion date also continued to slip because of technical problems. While this allowed the program to free up funds in the near-term, total costs increased in the long-term. For example, in 1996, NASA estimated it was 6 years and $14 billion away from completing Station; today, based on the cost growth estimates, including FY 2001 it would still be 6 years and $14 billion away. Finally, the focus on Russian delays masked serious issues with the Station program.

Guiding Principles

When confronted with the $4 billion cost growth, the Administration was determined not to repeat history and instead learn from the past. Therefore, we were prepared to make the tough decisions and considered a number of options to address this serious situation. These options ranged from completing the program at NASA’s so-called Phase 2, which is essentially the current elements in orbit now, to pursuing the original plans for the program but over a much longer period of time and at a substantially higher cost to completion. In the end, we chose a solution based on the following three principles:

  • Establish permanent human presence in orbit. This means safely supporting at least three astronauts in orbit continuously. Thanks to the recently successful U.S. and Russian assembly missions, the Space Station has this capability today.
  • Conduct world-class research. The International Space Station must be capable of doing something that no other U.S. vehicle has been capable of doing – including Space Shuttle, Spacelab, and Skylab — supporting long duration research that can be measured in weeks, months, and even years. The quality of research must be better than any prior capability for research in a space laboratory, including the Russian Mir station.
  • Accommodate international elements. The U.S. has multiple agreements with several partners for contribution of major hardware elements. Given their sizable investments made to date, accommodating this hardware is an important priority. Without those elements, the Space Station would be much less capable and much less international.

    Summary of Budget Actions

    The President’s FY 2002 Budget request provides $2.088 billion for Space Station in FY 2002 compared to $2.113 billion appropriated for FY 2001 and $1.859 billion for FY 2002 in the FY 2001 budget runout. Over five years through FY 2006, the President’s budget is $8.2 billion.

    This includes the addition of $1 billion to the Space Station budget over five-years, from the transfer of Crew Return Vehicle (CRV) funding from the Space Launch Initiative back into the Space Station program. Besides this transfer, essentially no additional funds are provided over the next five years. However, to help address critical development activity, the budget does rephase the funding profile so there is about $300 million more in FY 2002-2003, and similarly less in FY 2004-2006. This budget takes the following actions with the International Space Station:

  • Continues assembly of Station through at least the point in its assembly sequence that will allow the international partners dependent on continued U.S. assembly – namely, Japan, Canada, and Europe – to bring up the major hardware elements they are currently developing. This means that NASA will pursue about 30 of the 36 assembly flights previously manifested. This point in the assembly sequence is being termed “U.S. core complete.” Continued development of any U.S. elements beyond this point will be enhancements, to be considered based on affordability, priority, technical risk, and quality of the cost estimate.
  • Continues assembly of Station through at least the point in its assembly Redirects funding from U.S. assembly elements after U.S. core complete, including highrisk, high-cost elements — the Propulsion Module, CRV, and the Habitation Module. The X-38, a possible CRV design, will continue near-term atmospheric tests until NASA can determine how much more it can afford for continued X-38 work.
  • Realigns the research hardware program to be consistent with the assembly plans. We will not be investing in the development of research hardware that will sit idle on the ground or in-orbit. Consequently, funding for research hardware development and associated operations will be reduced, so that Station can be assembled in orbit as soon as possible and important research can get underway. To prepare the science community for Station research, grants for pre-cursor scientific research will continue unabated.
  • Allows for the possibility of enhancements to the program, beyond U.S. core complete. However, there are conditions to meet before any potential enhancement is considered: technical issues need to be resolved, quality cost estimates must be in hand, and it must be a high priority and affordable within the five-year budget plan for Human Space Flight. If enhancements are pursued, we expect they would singularly focus on enhancing research.

    Budget Implications

    These actions will result in some outcomes we would have preferred to avoid, but which were necessary to get spending under control on the program. The permanent crew size will be limited to three, and we are extending our dependence on Russia for some important capabilities. In addition, the research program will not have all of the originally envisioned capabilities. As part of their ongoing program assessment to implement the budget guidance, NASA will give due consideration to new and innovative approaches to addressing these issues, in concert with their partners in industry and the international community. NASA remains committed to commercial activities aboard the Space Station, and still plans to make up to 30 percent of U.S. user accommodations such as power and lab space available for commercial use. Whatever the specifics of the path that gets us to completing the Station, we are committed to do so within the five-year budget plan in the President’s FY 2002 budget.

    Let me address the Russian contingency aspects. Russia is an integral partner in the Station. The good news is that the deorbit of the Russian Mir station should better enable Russia to meet its obligations, and the Service Module – their most critical hardware contribution – is now successfully in orbit and enabling the first full-time crew, three years earlier than planned in 1993 before the Russian partnership. In light of this recent progress, funding for backup capabilities is less of an urgent priority. Nonetheless, NASA still retains contingency capability and is studying other alternatives. For example, should Russia have shortfalls with the Progress launches to reboost Station into the appropriate orbit, NASA could instead use Shuttle for reboost in the near-term, augmented by the developing European and Japanese transfer vehicles in the mid-term, and finally enhanced by future launch systems under the Space Launch Initiative in the far-term. We will be keeping a watchful eye on Russian developments. Should Russian performance fail to meet the necessary obligations, such as Soyuz crew return vehicles, we are prepared to revisit the development of additional backup systems.

    The Administration is also determined to ensure that cost growth on Space Station is not a problem that we must revisit every year. Therefore, the Administration strongly supports the $25 billion development budget cap enacted into law last year by the NASA Authorization Act of 2000. In addition, the Administration is requesting a limit to the five-year spending authority on the program. We do add the caveat, however, that if NASA can identify efficiencies in the Human Space Flight program – both in its programs as well as its institutional activities – then NASA may apply these savings toward Station.

    Management Reforms

    We recognize that it will take more than money and design changes to complete the Station and get cost growth under control. That is why the Administration charged NASA with undertaking whatever management reforms are necessary to get the program back on track and to document those reforms in a management plan. NASA is preparing this action plan with a focus on four areas: institutional reforms, cost controls, research priorities, and operational philosophy. To enable NASA Headquarters to address these critical reforms, we had asked NASA to temporarily transfer management reporting for the program from Johnson Space Center to NASA Headquarters. Before management reporting is shifted back to Johnson Space Center, or enhancements to the program are considered, NASA must prove that reform milestones are being met, and that they can live within this budget.

    With regard to institutional reforms, NASA has already begun to implement some important actions. NASA Headquarters now is taking many more direct responsibilities including approval of content changes and reserve use, as well as fee determination for major contracts. NASA has begun to re-focus its civil service workforce on critical near-term challenges like getting Space Station spending under control. NASA’s Aerospace Technology Enterprise is lending its expertise and some of its top people to the Space Station program to help achieve these goals. NASA is looking at consolidating work, eliminating overlap of work in organizations that remain stovepiped, and strengthening the management of the numerous non-prime contracts on the program by putting them under the responsibility of one individual and holding that individual accountable for their management.

    In the area of cost controls, NASA is working to improve its cost estimating capability with the goal of achieving credibility in this critical area. To do this, NASA is assessing where modeling and predictive capabilities could be improved, instituting more rigorous training in the latest cost estimating tools and methods, and developing a plan to effectively integrate independent and external assessments directly into their processes. One of the particular areas of cost control that OMB will monitor – as a good indicator of program health – is budget reserves. There must be adequate budget reserves not just for the next couple of years, but for the five-year budget plan of the program. Those budget reserves must be managed tightly, and used sparingly. Before tapping into the reserves, the program should consider how requirements might be adjusted or how some other lower priority activity might be used as an offset. In addition, the program must -_ without compromise — demonstrate a preference for research when such trades are conducted, while ensuring safe operations.

    in the research program, there are many opportunities for management improvement as well. NASA is working to better integrate research interests into decision making on the program. The research team is an integral part of the ongoing program assessment, and research is a clear priority. Within the research program, areas of research are being prioritized to focus limited resources in promising areas. In addition, NASA plans to move Space Station program funding for research to the Biological and Physical Research Enterprise in the FY 2003 budget. This will give the research interests more control over research funding decisions by the Space Station program so that funding decisions will better reflect research priorities. Another reform is improving the tracking and management of individual research projects by reporting on each project much as the Space Science program reports on each spacecraft. In addition, one person will be made responsible and accountable for this overall activity. One of the management reforms planned is also expected to greatly contribute to the effectiveness of the research program – one that we are very supportive of — the creation of a non-Government Organization (NGO) to manage research operations and possibly other Station operations as well. NASA is currently assessing options for how best to pursue an NGO for Station.

    NASA committed to an annual operations cost for Space Station of $1.3 billion in the past. With business as usual, achieving this may not be possible. Therefore, NASA must begin to think differently about the Space Station’s operational philosophy. Having already recognized that the Station must operate differently than the Space Shuttle, changes are being made in the number of Space Station shifts and the time allowed to work contingency issues when they arise. NASA is also exploring how to better involve the international partners in routine operations. Better integration of the research program into programmatic and operational decisions is also being pursued. The use of knowledge-based tools is being explored, as a means to reduce the level of staffing required for sustaining engineering. NASA is developing an integrated competition plan for future hardware and service procurements – including an NGO for research operations as I previously mentioned. This plan will be open to comment from industry, and will include performance-based contracting and encourage innovation and cost saving ideas. All of these activities should help control the operational costs of the Space Station.


    Business as usual must come to an end. The Station program must begin to change its culture and throttle back its spending plans to live within its means. We are hopeful that management reforms under development will indeed identify efficiencies in how the Station is assembled and operated. Should that be the case, and NASA can demonstrate with confidence that elements beyond completion of the U.S. core are affordable within this budget, then the Space Station could end up providing many of its earlier planned capabilities. However, it would be a mistake to begin adding content back to the program now, when we still do not have confidence that U.S. core complete can be achieved within the available budget. Should costs continue to grow, the Station will be able to only provide what is possible within this budget.

    Looking at the history of cost growth on the Space Station over the last ten years, it is hard to know how many new opportunities for space exploration may have been lost due to the year-to-year struggle of adding funding to the Station. As the Station begins to demonstrate the value of its research agenda and Station costs are brought under control, we anticipate the potential for new activities such as enhancing Station research. In the meantime, NASA will be working with U.S. industry, academia and the international partners to make sure that the best ideas are being pursued to get the most research out of this Space Station. We expect that NASA will complete their management plan and program assessment some time in June. This should allow time for external reviews in support of NASA’s preparation of the FY 2003 submission to OMB.

    NASA’s degree of success in gaining control of cost growth on Space Station will not only dictate the capabilities that the Station will provide, but will send a strong signal about the ability of NASA’s Human Space Flight program to effectively manage large development programs. NASA’s credibility with the Administration and the Congress for delivering on what is promised -and the longer-term implications that such credibility may have on the future of Human Space Flight – hang in the balance.

    I urge you in the Congress to support the President’s budget request for the Space Station, and work with the Administration in the pursuit of the strategy laid out for bringing spending on this important program under control. To succeed, I believe it is imperative that we work together, and I look forward to working with this subcommittee and others in the Congress to achieve this goal.