Space Access Update #132 5/6/13

Search on “The
Sequester” at this point and you’ll get over 2.5 million hits, but it’s
surprisingly hard to find an explanation of the actual mechanics.  Briefly, it is a set of mandatory
across-the-board post-2012 budget cuts, passed by Congress and signed into law
by the White House in fall 2011.  It was
intended to serve as a political doomsday device that would force resolution of
the political impasse over how to deal with continuing high Federal deficits.

As best we can tell, the
Sequester failed to force an agreement when the side favoring spending cuts
belatedly realized that letting it happen would give them, well, spending cuts,
even if in many cases not the ones they would have preferred.  After a two-month postponement from its
original start date, the Sequester went into effect this March 1st.

The Sequester law sets mandatory
overall ten-year deficit-reduction amounts for both Defense and
“non-Defense discretionary” programs (IE non-DOD non-entitlement
programs like NASA.)  The actual reductions
come in the first two years, ~5% cuts on overall non-defense discretionary for
FY’13 (the federal fiscal year that ends this coming September 30th) plus an
additional ~4% cuts in FY’14.   Overall
budgets will then stay flat (with a ~2% inflation allowance) for the following
eight years.

The law specifies that White House
OMB must apply the cuts equally down to the budget account level, but need not
apply them equally to each type of budgetary resource within a budget
account.  This gives the White House some
limited control over the details of the cuts. 
Congress of course retains control over each year’s nominal budget
amounts that the cuts are based on.  The
potential resulting tug-of-war makes it extremely hard to say ahead of time
what this means for any individual program.

One immediate result is that
we’re now seeing a government-wide case of “Washington Monument
Syndrome” (legendarily, what the Parks Service threatens to close first if
its funding is cut).  Many of the agencies
and departments and programs affected are now loudly proclaiming that the
Sequester will force drastic cutbacks in whatever they do they hope the public
cares about.

There are limits to this
tactic, however – when FAA furloughs of air traffic controllers started
actually backing up air traffic, the Congress quickly passed a law saying in
essence “cut something else”, and the White House quickly signed
it.  The way to bet though is that we
won’t see such bipartisanship on most lesser program disruptions, but rather
bitter political clashes – sometimes crosswise to traditional party lines,
depending on the interests involved.

We don’t see much chance of
the Sequester being repealed or replaced this year or next.  Between its cuts, the tax increases enacted at
the start of this year, and a slowly improving economy, projected deficits are
down considerably from the record levels of the past few years, but are still
far too high for budget loosening to be a good bet anytime soon.  We expect that it’s going to be an
interesting next couple of years as the non-Defense non-entitlement parts of
the Federal government forcibly get ~9% smaller.

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So, the Sequester is in
effect, and NASA is not exempt.  White
House OMB and NASA have some limited discretion in how they allocate the cuts
within NASA, but cuts are  happening
already to this year’s funding, and there will be more in the year to
come.  And of course Congress will decide
the baseline FY 2014 (starts October 1st) budget that those second-round cuts
will be made from, and thus will have considerable say on individual account
levels.  But Congress is very unlikely to
make up much (if any) of the overall NASA cuts, since they have a host of other
budget items also facing cuts.

NASA’s annual budget jumped
from $15.9 billion in 2007 to $17.3 billion in the first stimulus year of 2008,
climbed steadily from there to a peak of $18.7 billion in 2010, and has dropped
since – $18.4 billion in 2011 and $17.8 billion in 2012.   NASA’s current-year budget (FY’13) is
nominally $17.9 billion, but as of March 1st the Sequester cut that to $16.8
billion.  The White House FY’14 NASA
request is $17.7 billion, but the Sequester will cut whatever final budget
Congress sets by ~9%.  That’s $16.2
billion, if Congress leaves NASA’s nominal total at  $17.7 billion.

The overall balance between
NASA programs within this year’s budget (FY’13 finally passed earlier this
spring, and ends this September 30th) stayed largely unaltered.  (All figures are pre-Sequester unless stated
otherwise.)   Commercial Crew got a
significant increase to $525M, from 
$406M in FY’12 (but still far short of the $830M FY’13 NASA
request.)  Space Technology also got a
respectable increase, from $575M in FY’12 to $642M.  The Orion multi-purpose crew vehicle (MPCV)
stayed steady at around $1.2 billion, and the Space Launch System (SLS) heavy
booster also stayed steady, at something close to $1.9 billion once you add in
the various related ground equipment and construction projects.  Most of NASA’s other major budget items also
stayed close to their FY’12 levels – at least before the ~5% FY’13 Sequester
cuts are applied.

One notable exception to
roughly level FY’13 funding was Planetary Exploration, $1.5 billion in
FY’12.  The White House cut it back to
$1.2 billion in their FY’13 request, Congress bumped that back up to $1.4
billion in their final funding bill, and the White House and NASA then used the
reprogramming wiggle room they have (plus the Sequester cut) to trim the final
total back to $1.2 billion.  This is a
preview of the sort of infighting we expect to see more of in the FY’14 budget
process.

That’s already starting.  The FY’14 budget process got underway recently
with delivery of the White House budget proposal to Congress.   The White House proposal’s nominal NASA
total is down slightly at $17.7 billion (again, ignoring the ~9% FY’14
Sequester cuts.)  The Commercial Crew
FY’14 request is once again for a major jump, to $821M, but we have our doubts
about that happening – more on that below. 
Space Technology is up for another increase to $743M.  The Orion MPCV request is for a 15% cut, to
just over $1 billion, and the baseline Space Launch System development request
is down around 10% (although the overall SLS amount including ground equipment
and construction projects seems to have declined less than 2%, to about $1.85
billion.)

The relevant Congressional
committees are already making clear that they have their own NASA
priorities.  Spending more on SLS is a
particular focus, and the money will have to come from somewhere.  Commercial Crew’s $821M FY’14 request (a
large increase from this year’s nominal $525M) is near-certain to again get
scaled back considerably.

Our take on solving the
majority of NASA’s Sequester troubles is simple: Cut SLS funding by two-thirds,
scale the program back to a heavy-lift technology effort, and thus allow the
rest of NASA to get on with their useful missions with only mild cuts.

SLS is a jobs program,
nothing more.  Current levels of SLS
funding go largely to keeping various Congressionally-protected Shuttle program
remnants alive beyond their time; very little is left to build and operate
hardware.  It’s not clear to us that SLS
will ever fly without significant increases on its current ~$2 billion a
year.  (We, and many others, would
vigorously oppose such increases, because they would further cannibalize the
useful parts of NASA.)  NASA most likely
can’t even afford to develop and fly SLS, never mind then spend many billions
more to develop actual SLS payloads and missions.

Think we’re making this
up?  An independent review of SLS plans
by the consulting firm Booz Allen Hamilton singled
out the project’s cost projections as unjustifiably optimistic:  “Finding:
There are many instances of unjustified cost reductions in the Program
estimates. This exposes the Programs to cost risk and undermines the
credibility of the estimate. Cost reductions were generally observed in either
of two categories: scope reductions where the removed work will likely be
required, or the application of anticipated efficiencies (production,
competition, etc.) that NASA has not historically achieved.”  In other words, SLS’s
long-term budgeting contains a large element of wishful thinking.

Assuming it does eventually
fly, we see nothing SLS might then do in the way of deep-space exploration that
commercial boosters plus propellant depots couldn’t do sooner and cheaper.  Finally, it has recently been pointed out
that the current plan to fly SLS once every two years after 2021 (in a probably
vain attempt to stay within its likely budget) would mean the launch crews
would not get anywhere near enough practice to operate it safely.  Shuttle at four launches a year was near the
minimum.  One launch every two years
greatly increases the risk, every time SLS flies, of vital details being
forgotten.

Once again, we don’t expect
the regional SLS coalition in Congress to agree with us – but the time to kill
SLS is now.  Failing to do so now will
greatly increase cannibalization of other (useful) NASA programs, damaging the
agency more with every year that passes. 
At some point, the rest of Congress will realize that SLS is no longer
just Congressional horse-trading as usual, that it’s destroying NASA programs
the country both needs and cares about. 
The sooner that day comes, the sooner NASA can get back to actually exploring
space within a budget likely to remain austere for years to come.

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For the third year in a row,
NASA is asking Congress for over $800 million for the Commercial Crew program
(CCP), the NASA-commercial partnership to competitively produce affordable new
US crew transports for Station.  For the
third year in a row, Congress is not likely to provide more than a fraction of
that amount.  And for the third year in a
row, we have no intention of fighting for full funding, despite the fact that
we very much support this program.

Partly this is because we
again see zero chance of Congress funding CCP at the requested level no matter
what we do.  But also, once again, we
think Congress reducing CCP funding from NASA’s request may actually do more
good than harm.

This requires a bit of
explanation…

Back in 2011, NASA was
getting ready to take CCP to its third phase, CCiCap
(Commercial Crew integrated Capability), where complete crew transportation
systems would be designed and initial demonstrations flown.  CCP up to that point had been run under a
special type of contract called “Space Act Agreements” (SAAs), designed to allow maximum flexibility for
NASA-industry cooperative projects.  The
result had been rapid progress at costs many times lower than traditional NASA
development projects run under the standard Federal Acquisition Regulations
(the FARs).

However, factions in Congress
and in the NASA “Human Spaceflight” (HSF) establishment wanted this
next CCiCap phase to be run under the FARs as a traditional NASA procurement.  Under pressure, in summer 2011 NASA HQ
announced plans to run CCiCap under standard FARs-based contracts. 

We had a few things to say
about this at the time.  From SAU #127,
July 2011, and SAU #128, September 2011:

“They plan to switch
over to contracts under the standard Federal Acquisition Regulations (the FARs) for the remainder of the program. The reason they
gave was that SAAs don’t give them sufficient control
over the details of the commercial crew launch projects, nor sufficient
authority to order changes in mid-project.”

“Our short response:
Excessive NASA bureaucratic control over project details, plus NASA’s
bureaucratic tendency to mandate mid-project changes with no consideration for
cost and schedule effects, are major parts of why big NASA projects so
consistently run years (if not decades) late and cost ten or more times the
commercial equivalents.”

“COTS, and CCDev till now, succeeded because their non-traditional
Space Act Agreement contracts prevented NASA from imposing their normal
procurement practices, and allowed the commercial partners to get things done
at far lower commercial cost levels.” 
“…the basic fact [is] that by their own admission NASA costs for
[even] ‘modified, streamlined’ versions of their normal procurement process are
still up to six times equivalent commercial costs.”

“If CCP management goes
ahead with [the switch to FARs] they will be effectively
killing the program, absent money miraculously raining from the
skies.”  “…all the arguments
over whether the results will actually be any better or safer are moot. There
will be no results, because the money isn’t there.”

When Congress trimmed NASA’s
$850m FY’12 CCP request to $406m, apparently our arguments gained some
force.  From SAU #129, December 2011:
“NASA has announced that in order to make the most of the limited
Commercial Crew funding in this year’s budget, the program will continue with
multiple competitive Space Act Agreements (SAAs) with
the commercial crew developers, rather than (as had been announced over the
summer) switching over to contracting under the standard Federal Acquisition
Regulations (the FARs).”

Now, two years later, CCiCap has also been working fine without benefit of FARs-based contracts, but NASA HQ, again under
Congressional and NASA HSF pressure, is planning to cut CCiCap
short and skip ahead to the next phase, Certification Products Contracts (CPC),
once again ditching SAAs to contract CPC under the FARs.  (The first
round of CPC contracts, $10m each to the three CCP competitors, are already in
place.)

(Are we the only ones feeling
a strong sense of deja vu here?)

CPC is where the Commercial
Crew systems will be gone over by NASA HSF in excruciating detail, in order to
be officially NASA-certified to carry NASA employees.  CPC is supposed to finish (assuming max
requested budgets and if all goes well) with initial flights to Station in
2017.  This schedule is important – NASA
just finished contracting with the Russians for a half-dozen more Soyuz seats
(at more than $70m a seat) to carry them to 2017.  If Commercial Crew is delayed further, the
next batch of Russian seats will certainly cost even more.

We’ve already pointed out
that “max requested budget” just isn’t going to happen – we’ll be
pleasantly surprised if Congress provides two-thirds of the request.

Nor do we think very much of
the solution some in Congress have been pushing, an immediate downselect from three CCP competitors to one winner.  NASA has not had a good track record picking
winners in recent decades.  (Venturestar, anyone?) 
Nor is picking a monopoly provider and eliminating competition early any
way to hold prices down over the long term. 
Picking an early winner also places all NASA’s eggs in one basket.  If the “winner” stumbles, NASA yet
again ends up with nothing for our money.