Why NASA Can’t Control Cost

 Theodore Goldsmith  - January, 2002

 The NASA organizational structure, while fine for research, is not designed to allow good control of large projects such as Space Station; here’s why:

The major NASA “Enterprises” are Space Flight (including Shuttle and Station), Space Science, and Earth Science.  These enterprises are managed by associate administrators at NASA Headquarters and the work is carried out by seven NASA field centers (and their contractors) around the country. 

 NASA has what is known as “matrix management” under which most field center employees have two bosses.  One chain of command extends down from each enterprise chief and provides for management of NASA’s missions.  This chain of command controls money for purchases and contracts (“R & D” money). 

 A second chain of command extends from each field center director and controls civil servant hiring and firing, personnel assignments, promotions, office space allotments, most awards and perks, employee development, and travel money.  Needless to say, center employees are loyal to the center directors, not the enterprise chiefs.

On paper, the dual chains of command converge at the enterprise chiefs because center directors report to them.  For example, the Marshall, Kennedy, and Johnson center directors report to the Associate Administrator for Space Flight. 

 In practice, NASA field centers are among the most important Federal activities in their respective states.  Compared to say, a military base, field centers have a large proportion of highly paid, highly educated employees, have major ties to local universities, and attract high-tech, growth industry.  NASA field centers and their directors therefore get plenty of attention from their state’s congressional delegation and have a major political presence of their own.   

 This leads to a much larger degree of field center independence than is conveyed by the organizational chart.  There have been cases where the NASA Administrator clearly wanted to fire a center director but couldn’t because the director had too much political clout.  Barriers between centers are ubiquitous.  Centers are allowed to have their own (sometimes incompatible) engineering, management, and process standards.  Employees from other NASA field centers are sometimes treated as if they were from another country.  Tasks which involve more than one field center (most major projects) frequently entail elaborately documented “handovers”, reviews, and duplication of effort not associated with passing work within a center.  Centers can levy requirements on other centers passing them work in an effort to “throw cost over the wall”.  Centers can impose “taxes” on enterprise R & D money.  Centers can blame each other for any problems in multi-center projects.  Transfer of personnel between centers is unusual and is the equivalent of moving to another company.  Centers occasionally attempt hostile takeovers of work being performed by other field centers.

 In response to the multi-center problems, NASA Headquarters periodically conducts consolidation exercises (like the Zero Base Review) along the lines of: “If only we could move all of Project XYZ to a single center our problems would be over and we could save a lot of money”.  Invariably, the answer comes back that the savings would be overshadowed by the cost of doing the move.  This is not surprising since no personnel would be moving, retraining would be needed on both ends, there would be a transition period and learning curve during which both centers would be charging to the job, new facilities at the receiving center would often be required, and at least one center is hostile to the change.  Experience people have spent decades acquiring at government expense would be wasted.  Note the basic premise: the people are owned by their center.

 When NASA was organized over 40 years ago, before the development of fax, email, the Internet, video conferencing, and relatively cheap travel, geography was a significant barrier and decentralized management was more necessary.  Now the barriers are organizational.

 The NASA organizational structure is suitable for (and in my opinion was designed for) research.  Research is typically level-of-effort or grant oriented and so cost control is essentially a non-issue.  Research doesn’t involve major inter-center interfaces.  Culture differences between research centers can be useful.  One center could be a great place for astrophysicists, another could attract the best biologists.  Of course, NASA still does a lot of research.

 But the current organization is very poor for accomplishing large projects with major multi-center interaction, which now represent the majority of the budget.  The enterprise chiefs are responsible for successful, on-time, on-cost completion of their missions but the center directors have most of the power and control.  This is a disaster when it comes to cost control.  Congress may well tell NASA to cut the budget, but I find it difficult to believe that the Texas senators and congressmen are telling the JSC center director to reduce jobs and contracts in Texas or to move work to other states if it is more cost effective to do so.  The tails are wagging the dog!

 What are possible fixes?  One simple step which would help is to move control of civil service enterprise travel money to enterprises vs centers.  (Even better would be the elimination of the separate fund for civil service travel, a leftover from a much earlier age.)  Travel is obviously an extremely critical function for large multi-center projects.  In addition, at least the more senior project people at field centers should report  (for promotions, assignments, etc.) to their enterprise.  Awards and bonuses for these people should be under enterprise control.  Career ladders which allow and encourage personnel transfer between field centers would then be possible and should be implemented.  Standards, management instructions, and processes should be NASA wide unless there is convincing proof that local control is necessary in a particular case.  These kinds of changes would reduce inter-center barriers, help eliminate the need for most physical consolidations, and simultaneously allow moves of personnel if necessary.  Employee growth opportunities would now be realistically agency wide instead of center wide. 

Space Station and Shuttle are NASA’s largest and most massively multi-center projects and are therefore the most negatively affected by NASA’s antique organization.  The multi-billion dollar question is: will the new NASA Administrator be allowed to reform NASA?  The politics are going to be fierce.  Mr. O’Keefe may be the man for the job. 


Theodore Goldsmith is a former NASA project manager.

Send comments to: tgoldsmith@aol.com

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