2

The Environment

CIVIL AND MILITARY APPROACHES TO FACILITIES

The United States' space program always has been a combination of military and civil activities, with relatively sporadic cooperation and coordination between the two sectors. As mandated by the National Aeronautics and Space Act of 1958, NASA primarily manages civil scientific and human space missions; the DoD, primarily the Air Force and the National Reconnaissance Office, manages military and intelligence applications of space. 5 As the civil and military space sectors have independently grown over more than 35 years, distinct management cultures and operating procedures have emerged.

One tangible manifestation of these cultural differences has been the way facilities have been created and managed. When NASA was first formed, the agency acquired some existing laboratories and facilities, which had a history of integrated operations ranging from research to building and testing equipment; additional test and R&D facilities were added over time. This initial experience created an historical preference within NASA to build needed facilities in-house. As these facilities have become more numerous and complex, NASA has hired contractors to operate some of them, but NASA's facilities remain predominantly owned by NASA. One result of this approach to facilities has been some duplication of capabilities and dispersion of effort across NASA centers.

DoD, in contrast, has encouraged and often funded contractors to build their own facilities as part of the requirements for specific contracts. There are some DoD-owned facilities, but the majority of military space facilities are contractor owned and operated. Encouraging contractors to build facilities in order to bid competitively has led to a proliferation of industry's facilities and, in some companies, significant excess capacity, especially in the current budget environment.

These historic preferences affect operations philosophies. NASA centers, such as Marshall and Goddard Space Flight Centers, as well as the Jet Propulsion Laboratory, have some capability to design, develop, build, and test space hardware themselves. With this capability, NASA can act as both supplier and customer for its test facilities. Often contractors funded by NASA use NASA test facilities. DoD, in contrast, generally expects contractors to have the facilities necessary to meet contractual requirements and therefore relies on industry for its facilities needs.

These two distinct approaches to facilities have important implications for the NFS. The current inventory of space facilities includes a combination of government-owned, government-operated facilities (GOGOs), of which the NASA centers are the best examples; government-owned, contractor-operated facilities (GOCOs), which include the Palmdale and Downey, California Shuttle facilities operated by Rockwell for NASA; and contractor-owned, contractor-operated facilities (COCOs), which include most of the facilities of defense contractors. However, the inventory and analysis in the NFS are heavily weighted toward GOGO and GOCO facilities. The result is that NFS recommendations to close, consolidate, or modify facilities tend to focus on NASA facilities, while defense facilities are expected to be managed by contractors as business decisions taken in the context of rapidly shrinking budgets.

5

A few other agencies have been responsible for specific types of payloads, such as the National Oceanographic and Atmospheric Administration 's responsibility for weather satellites, but the bulk of federal funding and management responsibility has rested with NASA and DoD.



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SPACE FACILITIES: MEETING FUTURE NEEDS FOR RESEARCH, DEVELOPMENT, AND OPERATIONS 2 The Environment CIVIL AND MILITARY APPROACHES TO FACILITIES The United States' space program always has been a combination of military and civil activities, with relatively sporadic cooperation and coordination between the two sectors. As mandated by the National Aeronautics and Space Act of 1958, NASA primarily manages civil scientific and human space missions; the DoD, primarily the Air Force and the National Reconnaissance Office, manages military and intelligence applications of space. 5 As the civil and military space sectors have independently grown over more than 35 years, distinct management cultures and operating procedures have emerged. One tangible manifestation of these cultural differences has been the way facilities have been created and managed. When NASA was first formed, the agency acquired some existing laboratories and facilities, which had a history of integrated operations ranging from research to building and testing equipment; additional test and R&D facilities were added over time. This initial experience created an historical preference within NASA to build needed facilities in-house. As these facilities have become more numerous and complex, NASA has hired contractors to operate some of them, but NASA's facilities remain predominantly owned by NASA. One result of this approach to facilities has been some duplication of capabilities and dispersion of effort across NASA centers. DoD, in contrast, has encouraged and often funded contractors to build their own facilities as part of the requirements for specific contracts. There are some DoD-owned facilities, but the majority of military space facilities are contractor owned and operated. Encouraging contractors to build facilities in order to bid competitively has led to a proliferation of industry's facilities and, in some companies, significant excess capacity, especially in the current budget environment. These historic preferences affect operations philosophies. NASA centers, such as Marshall and Goddard Space Flight Centers, as well as the Jet Propulsion Laboratory, have some capability to design, develop, build, and test space hardware themselves. With this capability, NASA can act as both supplier and customer for its test facilities. Often contractors funded by NASA use NASA test facilities. DoD, in contrast, generally expects contractors to have the facilities necessary to meet contractual requirements and therefore relies on industry for its facilities needs. These two distinct approaches to facilities have important implications for the NFS. The current inventory of space facilities includes a combination of government-owned, government-operated facilities (GOGOs), of which the NASA centers are the best examples; government-owned, contractor-operated facilities (GOCOs), which include the Palmdale and Downey, California Shuttle facilities operated by Rockwell for NASA; and contractor-owned, contractor-operated facilities (COCOs), which include most of the facilities of defense contractors. However, the inventory and analysis in the NFS are heavily weighted toward GOGO and GOCO facilities. The result is that NFS recommendations to close, consolidate, or modify facilities tend to focus on NASA facilities, while defense facilities are expected to be managed by contractors as business decisions taken in the context of rapidly shrinking budgets. 5 A few other agencies have been responsible for specific types of payloads, such as the National Oceanographic and Atmospheric Administration 's responsibility for weather satellites, but the bulk of federal funding and management responsibility has rested with NASA and DoD.

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SPACE FACILITIES: MEETING FUTURE NEEDS FOR RESEARCH, DEVELOPMENT, AND OPERATIONS CHANGING FUNDING ENVIRONMENT The funding environment for both military and civil space programs has been affected by three main factors. First, the end of the Cold War has caused major and continuing reductions in defense budgets. Second, political support for civil space probably peaked with the Apollo program. Third, efforts to reduce federal budget deficits have increased pressure to cut most federal program budgets, including space programs. As a result, recent federal budgets have not only increased the rate of reduction in the DoD space budget but also have inflicted real cuts in the civil space program. DoD's space budget declined from a peak of almost $18 billion in fiscal year 1988 to less than $14 billion in fiscal year 1994. NASA's budget grew from $9 billion in fiscal year 1988 to over $14 billion in fiscal year 1994, 6 but it is expected to decline to a little more than $12 billion in fiscal year 1999, based on five-year projections from the fiscal year 1995 President's budget request. The impact of shrinking federal budgets on the aerospace industry has been dramatic. From 1988 to 1994, some 500,000 highly trained workers left the payroll of the U.S. aerospace industry. 7 However, the vast infrastructure of space facilities developed over the past 37 years has not been commensurably reduced to fit the current budget and industrial work force. Although industry recognizes the existing overcapacity, financial and business incentives sometimes discourage closure and consolidation of space facilities. Within NASA and DoD, these budget realities have had several major repercussions. First, budgetary exigencies provide a strong incentive for greater cooperation among the civil, commercial, defense, and national security space programs. Although there has long been some civil and military cooperation, for instance in the Shuttle program, the current work of the national facilities task team is evidence that broader, multiagency cooperation may be increasing. Second, reduced budgets have forced the need to critically evaluate the status quo. The nation clearly has more resources for space R &D and operations than it can afford and less funding to meet future needs. “Right-sizing” this infrastructure through consolidation and closure of current facilities has been the primary objective of the space facilities task team. Finally, declining budgets severely inhibit the attention devoted to planning future space needs. Because there is little confidence that funding will be available, forward planning has generally taken the form of modest changes in the status quo, especially for launch vehicles. This caution is reflected in the NFS's conservative approach to advanced planning for future facilities needs. The situation raises the concern that budgetary decisions could create a de facto national space policy that could be detrimental to longterm U.S. space capabilities. U.S. SPACE STRATEGIES Through the years, the National Aeronautics and Space Act of 1958 and other national policies guided NASA's mission pursuits. The agency focused on science objectives and on demonstrating the nation's technical prowess through the manned space program. Although NASA has performed strategic planning periodically in the past, such agency-wide strategic planning often was not supported through the budget process. As a result, strategic direction was in effect accomplished by the control of “new starts” by both administrations and congress. It should not be surprising that at times NASA has encountered difficulties, because its allotted budgets have not met its commitments. Although NASA has instituted a planning process that should help anticipate future facility requirements for various NASA enterprises, there has been no clearly proclaimed and accepted national space policy or overall mission statement that could provide guidance for anticipating future facility needs. The problem is not that administrations have not articulated national space policies; it is that these policies were 6 Aeronautics and Space Report of the President, Fiscal Year 1993 Activities, Washington, D.C.: National Aeronautics and Space Administration, p. 98. 7 “Aerospace Employment by Product Group,” Aerospace Industries Association, December 15, 1993.

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SPACE FACILITIES: MEETING FUTURE NEEDS FOR RESEARCH, DEVELOPMENT, AND OPERATIONS not backed by budget actions and, therefore, were often ignored. Accordingly, the frame of reference for the space operations and R&D facilities task groups primarily has been the budget. The DoD's space strategy has changed over the past decade or so. In the early days of DoD's space program at the height of the Cold War, space was viewed as an indispensable means of surveillance. As the value of these early space assets became clear, broader capabilities in communications, battlefield management, weapons targeting, and reconnaissance have been added. In recent years, the trend has been to integrate space systems into overall warfighting capabilities and force structures. In fact, the capabilities demonstrated in Operation Desert Storm have raised demand for space systems from warfighters in all of the military services. The strategic focus, therefore, is to capitalize on existing space assets, modernize those assets, and learn to apply the resulting capabilities virtually routinely to accomplish military objectives. However, even under these circumstances, budget realities are forcing DoD to balance funding for space systems against that for alternatives such as aircraft. In DoD as well as NASA, budgetary considerations are having a major impact on space strategy. THE U.S. SPACE MARKET In the current environment of reduced government spending on space programs and the lack of clear articulation of long-term national objectives in space, it is sometimes assumed that growing commercial investment will offset shrinking government funding. Significant growth in the commercial space sector could have repercussions for facilities needs, so it is important to understand the nature of the domestic space market and the role of commercial space systems. The overall U.S. space market can be divided into four related but different areas, plus launch vehicles, which are discussed briefly below. These are human space exploration, space science, military and intelligence space systems, and commercial space systems. Human Space Exploration NASA has been responsible for launching men and women into space and will continue to be in the future. Because of environmental and safety requirements and the extreme launch reliability mandated by the presence of people, this market segment is truly unique. The hardware is expensive, complex, heavy, and therefore of limited use to unmanned programs. The Shuttle is the only vehicle now used for launching people. Many expensive facilities, such as neutral buoyancy tanks and centrifuges, are part of the program for humans. This market segment is entirely government funded. Space Science and Applications Most scientific satellites, space probes, and observatories are funded by government, so they face the same constraints as other discretionary federal programs. Historically, NASA has held the space science program constant at about 20 percent of its budget, which, if continued, will result in lower funding as NASA's budget declines. 8 However, the trend toward smaller, cheaper satellites may create opportunities for commercial applications satellites, that is, communications and remote sensing satellites. For instance, there is growing commercial interest in Earth observation systems, which to date have depended on government funding. Military and Intelligence Space Systems Reductions in defense budgets in the last few years have affected funding available for military and intelligence space systems. Lower spending is causing a significant decrease in the number of military and 8 Some in Congress have expressed concern about the direction of space science funding. When adjusted for inflation, flat budgets for NASA amount to a 20 percent decline in space science spending power over the next four years, with particularly tight budgets for space science at the end of the decade. See, for example, Liz Tucci, “Flat Budget Forecasts Threaten Cuts in Science,” Space News, April 18-24, 1994, p. 3.

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SPACE FACILITIES: MEETING FUTURE NEEDS FOR RESEARCH, DEVELOPMENT, AND OPERATIONS intelligence satellites being developed and launched. (Ironically, these spending reductions are occurring just as the full value of space-based military capability is becoming better understood, as was demonstrated in the Persian Gulf.) Commercial Space Systems The commercial communications satellite business appears to be relatively stable. The trend toward miniaturization enables increased capabilities on smaller spacecraft operating in low Earth orbits. In terms of the value of the commercial satellite business, a decline in the number of large commercial satellites could be partially offset by the growth in small-satellite systems. Several commercial firms are actively developing small satellites (e.g., less than 500 kilograms) and associated small launch vehicles. Although the growth in this segment of the commercial space market is large, it is small in absolute terms and is not expected to stress facilities requirements for some time. Launch Vehicles Because of the declining number of projected satellite launches from the United States and the smaller size of many anticipated new satellite systems, there is significant overcapacity in the medium and large launch vehicle production base. 9 Growth in commercial launches will not create sufficient demand to alleviate this situation. Attempts by General Dynamics and Martin Marietta to market commercial variants of Atlas and Titan launch vehicles developed for the government resulted in significant losses to both companies. 10 Causes contributing to the situation are obsolete, manpower-intensive designs and subsidized foreign competition with modern, efficient designs and modes of operation. Analysis The relative size of these five business segments is important to understand. Government spending in the military and civil segments far exceeds industry spending in the traditional commercial segment and the emerging small-satellite segment. Currently, the United States averages 30-40 launches per year, of which approximately five are purely commercial. By the end of the decade, the total number of commercial launches worldwide is estimated to be 18 per year, of which only five or six are likely to use U.S. launchers. 11 Thus the launch vehicle segment probably will continue to be predominantly influenced by government requirements. To further complicate the situation, with stable or declining government spending the number of launches will not be sufficient on any given launcher to reduce per-launch costs. Per-launch costs are determined by both the costs of building the launcher and the costs of operating the launch facility. Fewer launches lower production rates thereby reducing scale economies in the manufacturing process. Fewer launches also reduce the ability to amortize the high fixed costs of operating and maintaining launch facilities. The resulting higher launch costs can consume funds that could otherwise be available for new satellite systems development, which will further reduce demand for launches. This cycle can only be broken if launch costs can be lowered significantly, through large investments to improve the efficiency of launch facilities or to develop new launch technologies. The nation has thus far been unwilling to make such investments. INTERNATIONAL ENVIRONMENT Another major change in the conditions facing the U.S. space community that will have effects on facilities decisions is the 9 In both the United States and Russia, conversion of ballistic missiles to provide low-cost launch vehicles has been considered. However, the likely impact on facilities would not be significant, and the committee did not consider this issue germane to its charge. 10 Martin Marietta recently concluded its purchase of General Dynamics ' Space Systems Division. 11 Lt. Gen. Thomas Moorman, Jr., Chairman, DoD Launch Modernization Study, briefing to the committee, March 9, 1994.

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SPACE FACILITIES: MEETING FUTURE NEEDS FOR RESEARCH, DEVELOPMENT, AND OPERATIONS growth of foreign space capabilities. Today the other major players in the world space business are Russia, Europe (both through the European Space Agency—a consortium of 14 European nations—and through individual national programs), China, and Japan. Indigenous launch capabilities include Russia' s Proton, China's Long March, and Europe's Ariane 4, which are the primary competitors to U.S. launchers. In addition, several European companies, such as British Aerospace, Matra Marconi Space, and Alenia, are highly competitive in the communications satellite market. The implications for the U.S. space community of these strong and growing foreign capabilities continue to unfold. For both political and economic reasons, foreign launchers are likely to garner increasing global market share, particularly for commercial launches. Despite international agreements on fair pricing and limitations on the number of launches that can be sold (e.g., in the case of Proton and Long March), foreign launch services are often priced below their American competitors. For large, sophisticated satellites, the price of the launch is probably less important than its reliability and scheduling, but for smaller payloads, launch prices may be the most significant factor in choosing a launch supplier. For government launch customers, who dominate the launch market, domestic launch vehicles and facilities will continue to be the primary choice. In this sector, foreign competition for launches is not a bona fide threat, but the fact that foreign launchers are priced lower demonstrates the possibilities and highlights the inefficiencies of domestic launch services. In a tightening budget environment where high launch costs squeeze out other spending, foreign capabilities may provide an increasingly attractive alternative, even for government customers. SUMMARY The environment in which national space activities are conducted has changed significantly in recent years. Technological advances, domestic and foreign policy shifts, economic constraints, and international competition all have affected priorities in the space program and increased options for achieving objectives. These changing conditions need to be considered explicitly before any major decisions in facilities planning can be made with confidence. The relevant issues can be placed into four categories. The roles and missions of NASA and DoD have evolved in a relatively uncoordinated manner, resulting in different operating cultures and approaches to facilities. Declining budgets in both the civil and military space programs will increase pressure for greater cooperation among the relevant agencies. Redefining and clarifying their roles and missions offers opportunities to reduce redundant facilities and increase efficiencies, but cultural differences must be recognized and managed to take advantage of these opportunities effectively. The United States has an excess of space R&D facilities, a great number of which are affiliated with DoD programs and owned by industry. Even in the past expanding space market, the capacity was excessive, driven largely by the competitive process and the desire of every large developmental program to possess its own testing capability. The U.S. government is paying most of the cost of these facilities through industry overhead. Initiatives to close, consolidate, and modernize facilities should consider these private facilities as well as those owned by the government. There are limits to the amount of consolidation of space facilities that can be undertaken without adverse effects on efficiency and capabilities. Some redundancy in R&D facilities is desirable to allow competition that spurs innovative thinking and to provide for contingencies. Some redundancy is also justified in operations facilities. For instance, the need for east- and west-coast launch capabilities will continue into the indefinite future, with obvious duplication of supporting infrastructure. U.S. launch facilities evolved over more than 30 years to support a large variety of systems. Attempts to modify old equipment to satisfy new requirements may respond to near-term budget constraints but be considerably more expensive in the long term and vastly less efficient.

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SPACE FACILITIES: MEETING FUTURE NEEDS FOR RESEARCH, DEVELOPMENT, AND OPERATIONS A fluctuating and uncertain U.S. launch vehicle posture makes future planning difficult. Foreign competition has newer facilities, is better focused for efficient operations, and has lower prices. Innovative approaches toward launch operations, a subject not discussed in the NFS, will be key to the future competitiveness of U.S. launch capabilities. In short, the environment within which U.S. space programs are conducted poses significant problems for planning. There is no widely accepted, up-to-date national strategy for dealing with issues that are truly national in nature.12 Against this background, no decision seems final, and, as a result, any long-term plan is viewed with skepticism. Nonetheless, the many developments in the domestic and international environments for space activities have created unrelenting pressure for change. “Right-sizing ” the number and content of U.S. facilities to support a reasonable range of space program alternatives can be an important step in the change process. 12   The Clinton Administration released a new U.S. space launch policy on August 5, 1994 that calls for DoD to update expendable launchers and NASA to develop new launch technologies. Because it had not yet been announced, this policy did not appear to affect the NFS.