Cutting the fat: DOD can learn how from NASA

March 1, 1998
WASHINGTON - One thing is clear from reading the Defense Department and National Aeronautics and Space Administration (NASA) 1999 budget requests submitted last month: officials of both organizations are trying to slash overhead to focus on their primary missions.

Cutting the fat: DOD can learn how from NASA

By John Rhea

WASHINGTON - One thing is clear from reading the Defense Department and National Aeronautics and Space Administration (NASA) 1999 budget requests submitted last month: officials of both organizations are trying to slash overhead to focus on their primary missions.

While DOD and NASA share this common thread, the difference between them is how their leaders are going about it. DOD officials, in fact, might be able to learn a thing or two from their brethren at NASA, who by necessity have been dealing longer with sparse budgets and who have learned a few tricks along the way.

Of the two, NASA seems to be taking the lead in accomplishing more with less. One small vignette may serve to illustrate this difference. "Viking, which went to Mars 20 years ago, had 1,000 people in mission operations," notes NASA Administrator Daniel Goldin. "Pathfinder [last year`s Mars lander] had 50. I`d like to get it down to under a dozen."

NASA officials are outsourcing the support operations - and fostering competition among the contractors - to drive down overhead costs and reinvest money in new programs.

On the face of it, DOD leaders face a far less daunting situation than does Goldin. The DOD budget next year, in fact, is projected to rise slightly, from this year`s $254.9 billion to $257.3 billion (although after inflation that represents a decline of 1.1 percent in real dollars). NASA, on the other hand, will continue its decline from $13.638 billion to $13.465 billion - with the enthusiastic approval of Goldin.

Contrast NASA`s situation with Defense Secretary William Cohen`s dilemma in trying to shed the white elephants that have accumulated in the defense infrastructure. He has to convince Congress (including the notorious "Depot Lobby" congressmen who have military bases in their districts) to approve two more rounds of the Base Realignment and Closure (BRAC) process.

"We have proposed a closure or a realignment of 152 major installations and some 235 smaller ones," he told a Pentagon news briefing. "We have invested roughly $23 billion in that effort. We will net out by the year 2001 some $14 billion total for the savings that have been achieved through the previous four rounds. Then we will have recurrent annual savings of roughly $5.6 billion each and every year."

Money for procurement

The heart of the issue is whether DOD officials can ever get to the $60 billion annual procurement demanded by just about everybody involved, particularly the Joint Chiefs of Staff. Procurement is due to edge up from $44.8 billion to $48.7 billion next year (Cohen was shooting for $50 billion), but it is not due to reach $60 billion until 2001.

Simply put, with BRAC that goal can be achieved; without it, no way.

It is not as though the bases were so swamped with work that they have been unable to maintain acceptable levels of operational readiness.

As Cohen points out, "if you look at the number, for example, of submarines that we had during the height of the Cold War, and the number of submarines that we have ... there is a substantial reduction in the numbers of subs. There`s not a substantial reduction in pier space." The situation is the same with respect to aircraft, he adds.

The situation throughout DOD represents the classical "zero sum game" of diplomatic parlance. A dollar added to one account is a dollar taken out of another; a dollar gained by one service is a dollar lost by the other services.

For example, procurement of the Navy`s F/A-18E/F jet fighter-bomber was cut from 1,000 to 548 aircraft, one wing of the Air Force`s F-22 advanced tactical fighter was cut, and initial procurement of the Joint Strike Fighter was pushed back to 2005.

The situation is not likely to change; indeed, there is no room for change under the Clinton Administration`s ground rules that next year`s $1.7 trillion federal budget has to balance (the first balanced budget request in 30 years).

DOD accounts for only 15 percent of the total federal budget. It represented at least half during the peak years of the Cold War. All other so-called discretionary spending, including NASA and the research activities of other federal agencies, amounts to another 17 percent. All the rest is for interest payments on the national debt, Social Security, Medicare, Medicaid, and other "entitlements."

In the case of DOD, the operation and maintenance (O&M) account is expected to continue its steady upward trend. This reflects the decision to maintain high readiness standards rather than buying more weapons without the resources to employ them.

But research, development, test, and evaluation (RDT&E) is dropping steadily. The projected growth for O&M from $94.4 billion this year to $101.9 billion by 2003 almost matches the RDT&E decline from $36.6 billion to $34.3 billion over the same period.

This situation may not be as alarming as it looks at first glance.

An analysis by the American Institute of Physics in College Park, Md., breaks out the research and development component within the RDT&E account and uncovers a dramatic shift in priorities. While the overall R&D request for next year is down 7.9 percent, from $7.8 billion to $7.18 billion, there are modest gains in basic research (designated 6.1) at the same time there are deep cuts in advanced technology development (6.3). Applied research (6.2) remains virtually unchanged.

With the Army leading the way with an 11.2 percent increase in basic research, overall basic research spending at DOD next year is due to rise 6.7 percent to $1.11 billion. Army officials are also taking the biggest cut in advanced technology development, 28.5 percent, and DODwide this category is due to fall 18.9 percent to $3.05 billion.

Industry takes the load

What this shift represents in practical terms is that DOD is getting its applied research and development from industry at a reduced cost through the mechanism of commercial- off-the-shelf (COTS) technology.

Once government agencies pay for the high-risk basic research applicable to all industries, there is no need to fund the development that industry is more than willing to do to compete in the larger, more profitable commercial markets.

This trend is discernable in the category of defensewide research, the principal component of which is the Defense Advanced Research Projects Agency (DARPA).

Basic research is due to edge up 3.7 percent next year, from $326.2 million to $338.4 million, while advanced technology development falls 20.2 percent from $2.16 billion to $1.72 billion. The growth in applied research, up 9.5 percent from $1.28 billion to $1.4 billion, is mostly due to a reorienting of DARPA`s priorities away from its traditional focus on basic research. DOD has been shifting this role to the services to enable DARPA scientists to concentrate on more pressing requirements.

In the case of NASA, two major categories are due to drop next year: human space flight from $5.7 billion to $5.5 billion; and science, aeronautics, and technology from $5.55 billion to $5.46 billion. The third, mission support, is due to increase from $2.39 billion to $2.48 billion. This situation is expected to change in the out years, however, as the outsourcing process proceeds.

The two big individual items in NASA`s budget remain the space station, down from $2.5 billion to $2.27 billion, and the space shuttle, up from $2.9 billion to $3.1 billion. Nonetheless, within NASA`s changing priorities, officials are seeking additional money for space science: from $1.98 billion to $2.06 billion.

Space science provides money for new starts for small satellite programs, many of them launched by inexpensive expendable launch vehicles rather than the shuttle, which in the past has eaten up NASA`s dollars without delivering the results that scientists have demanded.

In the broader context of federal support for R&D, a new feature is an attempt to coordinate the efforts of the individual agencies under what is described as the "Research Fund for America" and which appears to be the pet project of Vice President Al Gore.

The idea, which some Washington observers call "unprecedented," would aim at reducing duplication and making core technologies - particularly from the civilian agencies - available across the board. Leaders of the Departments of Energy, Commerce, and Transportation, for example, are concerned with vehicle fuel efficiency, but they tend to protect their own turf. The Defense Department also needs help in this area.

The program that Gore unveiled calls for treating science as a seamless whole. "There has never been a better time to make this historic investment," Gore says, noting that many areas of science are close to major discoveries.

Only NASA and DOD suffer minor cuts, plus the Environmental Protection Agency, which is due to drop by 1 percent next year. These agencies should have greater access to the basic research that other federal agencies are funding.

The big winners in the new research budget are the National Science Foundation and Department of Energy, both of which are due for 11 percent gains.

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