Magazine article National Defense

Privatization of Space Operations Spawns Business Dilemma

Magazine article National Defense

Privatization of Space Operations Spawns Business Dilemma

Article excerpt

Companies seeking new business in the space and aeronautics market will be happy to know that the nation's civilian space agency, NASA, wants more of its work to go to the private sector.

There is something ironic, however, about NASA's latest push to turn over in-house functions to contractors. According to agency officials, NASA employees have been spending too much time monitoring contractors instead of focusing on more important science and technology missions.

NASA leaders have decided that one way to fix that problem is to cut back on the number of contractors by bundling various tasks into larger, consolidated projects performed by fewer firms. With not as many contractors to supervise, government staffers can then be moved out of the oversight bureaucracy and into scientific pursuits.

NASA wants the private sector to take up more of its support functions but it also wants to lighten the workload that contracts impose on public servants. It also wants to save money in the process. It appears that the agency is facing an impossible task.

Much like the Pentagon, NASA is under pressure to cut operating and support costs, which consume about 30 percent of its $13.5 billion budget. Privatization efforts at the Defense Department, which have accelerated in the wake of government work force reductions, are consistently hailed by its leaders as the best available option to lower costs in routine operations.

Congress, however, takes advantage of every opportunity it has to remind Pentagon senior officials that the savings from privatization still remain to be quantified. And lawmakers have been adamantly opposed to sacrificing public jobs in their home states in order to allow the Defense Department to hand the work to industry.

And to complicate the situation even further, the defense and aerospace industry has been consolidating at a fast and furious pace throughout the 1990s via corporate mergers and acquisitions. The current industry landscape, therefore, features a much smaller pool of suppliers-several of whom are large conglomerates that overwhelmingly dominate the market.

NASA leaders obviously know that they have no choice but to give privatization a chance to succeed. The space agency budget stands no chance of getting a financial boost from Congress, so it must cut costs wherever possible. They now hope that the private sector's efficiency can be translated both into savings and the opportunity for NASA workers to do what the agency was created to do-space and aeronautical research.

"We need to fundamentally shift our thought process" about the way NASA conducts its business, says Samuel L. Venneri, the agency's chief technologist, during a recent conference on satellite communications in Reston, Virginia, sponsored by ADPA/NSIA.

He notes NASA currently spends more than $4 billion a year on operations-$1.4 billion of which is allocated to service contracts. "We think that's too high. ... We want to start consolidating programs," says Venneri.

"We need to start putting people back to work [so they can] stop monitoring work. We have to get our civil servants' hands back on the work." Shrinking the number of contracts NASA employees must oversee, Venneri believes, will liberate the work force from non-core activities. …

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