[House Hearing, 108 Congress]
[From the U.S. Government Publishing Office]
THE AEROSPACE COMMISSION
REPORT AND NASA WORKFORCE
=======================================================================
HEARING
BEFORE THE
COMMITTEE ON SCIENCE
HOUSE OF REPRESENTATIVES
ONE HUNDRED EIGHTH CONGRESS
FIRST SESSION
__________
MARCH 12, 2003
__________
Serial No. 108-7
__________
Printed for the use of the Committee on Science
Available via the World Wide Web: http://www.house.gov/science
______
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COMMITTEE ON SCIENCE
HON. SHERWOOD L. BOEHLERT, New York, Chairman
LAMAR S. SMITH, Texas RALPH M. HALL, Texas
CURT WELDON, Pennsylvania BART GORDON, Tennessee
DANA ROHRABACHER, California JERRY F. COSTELLO, Illinois
JOE BARTON, Texas EDDIE BERNICE JOHNSON, Texas
KEN CALVERT, California LYNN C. WOOLSEY, California
NICK SMITH, Michigan NICK LAMPSON, Texas
ROSCOE G. BARTLETT, Maryland JOHN B. LARSON, Connecticut
VERNON J. EHLERS, Michigan MARK UDALL, Colorado
GIL GUTKNECHT, Minnesota DAVID WU, Oregon
GEORGE R. NETHERCUTT, JR., MICHAEL M. HONDA, California
Washington CHRIS BELL, Texas
FRANK D. LUCAS, Oklahoma BRAD MILLER, North Carolina
JUDY BIGGERT, Illinois LINCOLN DAVIS, Tennessee
WAYNE T. GILCHREST, Maryland SHEILA JACKSON LEE, Texas
W. TODD AKIN, Missouri ZOE LOFGREN, California
TIMOTHY V. JOHNSON, Illinois BRAD SHERMAN, California
MELISSA A. HART, Pennsylvania BRIAN BAIRD, Washington
JOHN SULLIVAN, Oklahoma DENNIS MOORE, Kansas
J. RANDY FORBES, Virginia ANTHONY D. WEINER, New York
PHIL GINGREY, Georgia JIM MATHESON, Utah
ROB BISHOP, Utah DENNIS A. CARDOZA, California
MICHAEL C. BURGESS, Texas VACANCY
JO BONNER, Alabama
TOM FEENEY, Florida
VACANCY
C O N T E N T S
March 12, 2003
Page
Witness List..................................................... 2
Hearing Charter.................................................. 3
Opening Statements
Statement by Representative Sherwood L. Boehlert, Chairman,
Committee on Science, U.S. House of Representatives............ 11
Written Statement............................................ 12
Statement by Representative Ralph M. Hall, Minority Ranking
Member, Committee on Science, U.S. House of Representatives.... 72
Written Statement............................................ 72
Prepared Statement by Representative Nick Smith, Member,
Committee on Science, U.S. House of Representatives............ 91
Statement by Representative Bart Gordon, Member, Committee on
Science, U.S. House of Representatives......................... 13
Prepared Statement by Representative Jerry F. Costello, Member,
Committee on Science, U.S. House of Representatives............ 12
Panel I
The Honorable Robert S. Walker, Chairman, Commission on the
Future of the United States Aerospace Industry; President,
Wexler Walker Public Policy Associates
Oral Statement............................................... 13
Written Statement............................................ 15
The Honorable John W. Douglass, President and Chief Executive
Officer, Aerospace Industries Association of America, Inc.
Oral Statement............................................... 22
Written Statement............................................ 65
Biography.................................................... 71
The Honorable John J. Hamre, President and CEO, Center for
Strategic and International Studies
Oral Statement............................................... 73
Written Statement............................................ 75
Discussion
Role of Propulsion & Power..................................... 77
Using Defense Technologies for Civil Applications.............. 77
Peer Review of R&D Investment.................................. 78
Financial Health of Commercial Aviation........................ 78
Air Traffic Management......................................... 80
Future of Civil Aviation....................................... 80
Industry R&D Spending Practices................................ 82
Airline Ticket Taxes........................................... 82
NASA Infrastructure Investment................................. 83
Wind Tunnels................................................... 85
Engine Technology.............................................. 86
Future Air Traffic Management & OEP............................ 87
Trusted Traveler Program....................................... 88
Space Imperative............................................... 89
Space Tourism.................................................. 90
High Speed Propulsion Research................................. 90
Science & Math Education....................................... 92
NASA Aeronautics R&D Investment................................ 94
Aerospace Sectoral Budget...................................... 95
Improving NASA's Infrastructure................................ 96
National Aerospace Initiative.................................. 98
Panel II
Mr. Max Stier, President, Partnership for Public Service
Oral Statement............................................... 99
Written Statement............................................ 103
Biography.................................................... 111
Mr. Bobby L. Harnage, Sr., President, American Federation of
Government Employees, AFL-CIO
Oral Statement............................................... 111
Written Statement............................................ 113
Mr. George Nesterczuk, Nesterczuk and Associates
Oral Statement............................................... 117
Written Statement............................................ 119
Discussion
Employee Input to Workforce Plan............................... 122
Buyout Provisions.............................................. 123
Outsourcing.................................................... 124
Bonuses........................................................ 124
NASA Recruiting................................................ 125
Bonus Pay...................................................... 125
Funding Salaries and Bonuses................................... 126
Need to Compare Flexibility and Financial Problems............. 126
Pay for Scientists and Engineers............................... 127
Importance of Continuous Learning.............................. 128
Destination and Vision for NASA................................ 129
Demonstration Project.......................................... 130
Outsourcing.................................................... 130
Demonstration Projects......................................... 131
Need for Oversight............................................. 131
Plans for the Workforce Authorities............................ 132
Appendix 1: Answers to Post-Hearing Questions
Robert S. Walker, Chairman, Commission on the Future of the
United States Aerospace Industry; President, Wexler Walker
Public Policy Associates....................................... 136
John W. Douglass, President and Chief Executive Officer,
Aerospace Industries Association of America, Inc............... 138
Max Stier, President, Partnership for Public Service............. 140
Bobby L. Harnage, Sr., President, American Federation of
Government Employees, AFL-CIO.................................. 143
George Nesterczuk, Nesterczuk and Associates..................... 146
Appendix 2: Additional Material for the Record
H.R. 1085, NASA Flexibility Act of 2003.......................... 150
THE AEROSPACE COMMISSION REPORT AND NASA WORKFORCE
----------
WEDNESDAY, MARCH 12, 2003
House of Representatives,
Committee on Science,
Washington, DC.
The Committee met, pursuant to call, at 2 p.m., in Room
2318 of the Rayburn House Office Building, Hon. Sherwood L.
Boehlert (Chairman of the Committee) presiding.
HEARING CHARTER
COMMITTEE ON SCIENCE
U.S. HOUSE OF REPRESENTATIVES
The Aerospace Commission
Report and NASA Workforce
WEDNESDAY, MARCH 12, 2003
2:00 p.m.-4:00 p.m.
2318 RAYBURN HOUSE OFFICE BUILDING
Purpose of Hearing
On Wednesday, March 12, 2003, at 2:00 p.m. in room 2318 of the
Rayburn House Office Building, the House Science Committee will hold a
Full Committee hearing to review The Final Report of the Commission on
the Future of the United States Aerospace Industry and NASA Workforce
legislation. This hearing will consist of two panels. The first panel
will review the Aerospace Commission report issued last November to the
President and Congress. The second panel will review proposed
legislation, H.R. 1085, the NASA Flexibility Act of 2003. This bill
provides additional authorities for the agency to recruit and retain a
highly-skilled workforce which was one of the primary recommendations
from the Aerospace Commission.
Major Issues for Congress Taken From Aerospace Commission
Recommendations
Making U.S. leadership in aviation and space a national
imperative. The Commission urges Congress to call public attention to
how the aerospace industrial base is in serious danger of decline, and
to establish policies and programs to rebuild and sustain this
nationally critical industry.
Increasing Federal Investment in Aerospace Research. The
Commission calls on the Federal Government to significantly increase
its investment in basic aerospace research. One area of research the
Commission cites is the development of a new, highly automated air
traffic management system that is capable of handling more traffic than
could be managed with the Federal Aviation Administration's current
system.
Government-wide Management Structure Changes. The Commission
recommends a White House aerospace policy coordinating council,
creation of an aerospace management office in OMB, and a joint
committee in Congress to coordinate federal investment and policy
decisions for aerospace.
Revitalize the U.S. Aerospace Workforce. The Commission
recommends several programs to recruit and revitalize the U.S.
aerospace workforce for government and industry. One component, to be
explored in the second panel, is providing additional legislative
authority to enable NASA to recruit and retain skilled employees.
Need for the Aerospace Commission
The Aerospace Commission was established in the Defense
Authorization Act of 2001 (P.L. 106-398). Backers of the amendment to
create the Commission were concerned that U.S. aerospace industry was
at serious risk even before the tragedy of September 11, 2001. The
industry was already losing ground in the international marketplace for
an array of aerospace products, including commercial aircraft, space
launch vehicles and satellites, and military aircraft.
The aerospace industry is a powerful force in the U.S. economy,
contributing over 15 percent to the Nation's Gross Domestic Product and
supporting over 15 million high quality jobs. Last year, more than 600
million passengers relied on U.S. commercial air transportation, and
over 40 percent of the value of all U.S. freight was transported by
air. However, a convergence of negative trends in the commercial
aerospace market and government spending, aerospace workforce cuts and
industry consolidation, overseas competition, and a perceived lack of
planning led to a growing alarm and calls to investigate these complex
issues through a statutory Commission.
Charter of the Aerospace Commission
After enactment, the President, Senate, and House of Representative
named twelve members to the Commission with a broad range of experience
in government, industry, academia, Wall Street, trade associations and
unions. The President named former Science Committee Chairman Bob
Walker as Chair. The Commission was chartered to study the issues
associated with the future of the U.S. aerospace industry in the global
economy, particularly in relationship to national security, and to
assess the future importance of the domestic aerospace industry to U.S.
economic and national security. The scope included an examination of
the budget and acquisition processes within the Federal Government,
international trade and export controls, the impact of tax policies on
international competitiveness, space launch infrastructure, and science
and engineering education. Over the course of a year, the Commission
held six public hearings, received testimony from over 60 witnesses,
and met with over 50 government and industry organizations. The
Commission presented a final report to the President and Congress last
November. The details of the Commission's recommendations are listed in
Appendix A, and the final report is posted on the Commission's website
at http://www.aerospacecommission.gov.
NASA Workforce Challenges
One of the nine recommendations from the Aerospace Commission's
report was that government, industry, labor, and academia work together
to develop an aerospace workforce for the 21st century. Several studies
show an approximately 20 percent decline in the number of undergraduate
and doctoral degrees awarded in aerospace science and engineering over
the last ten years. As 60 percent of NASA's 18,800 civil service
employees are scientists and engineers (S&E), the agency's workforce is
adversely impacted by these larger national trends and the shrinking
talent pipeline of aerospace scientists and engineers. Within NASA's
S&E workforce, the over-60 population outnumbers its under-30
population by nearly 3 to 1. While the average age today of NASA's S&E
employees is 46 years old, the average age of NASA S&E employees during
the Apollo era was 39 years old.
These workforce trends jeopardize NASA's ability to manage its
highly complex missions. Since 2001, the General Accounting Office has
ranked ``strengthening human capital'' as one of NASA's top management
challenges. The GAO reported in January 2003 (before the Columbia
accident): ``NASA's shuttle workforce had declined significantly in
recent years to the point of reducing NASA's ability to safely support
the shuttle program. Many key areas were not sufficiently staffed by
qualified workers, and the remaining workforce showed signs of overwork
and fatigue. To the agency's credit, NASA has recognized the need to
revitalize the shuttle's workforce. . ..'' Additionally, NASA's
independent Aerospace Safety Advisory Panel report in 2001 made similar
observations relating to deficiencies with the Space Shuttle workforce.
Need for NASA Workforce Reform Legislation
In May 2002, NASA submitted a set of legislative proposals to
augment current civil service authorities to recruit, retain, and
restructure its workforce along with justifications for how each
proposal would help meet the agency's workforce challenges. The Space
and Aeronautics Subcommittee held a hearing on NASA's management and
workforce challenges on July 18, 2002 in order to review these
legislative proposals and their justification. Since then, some of
these legislative proposals were enacted government-wide in the
Homeland Security Act of 2002. The NASA Flexibility Act of 2003 (H.R.
1085) would provide the agency with additional civil service
authorities. The individual provisions for this legislation are
summarized in Appendix C along with comparisons to NASA's current civil
service authority.
Witnesses
Panel One--Aerospace Commission
The Hon. Bob Walker, Chairman, Aerospace Commission
President, Wexler Walker Public Policy Associates
The Hon. John Douglass, Commissioner
President, Aerospace Industries Association
The Hon. John Hamre, Commissioner
President, Center for Strategic and International Studies
Panel Two--NASA Workforce
Mr. Max Stier, President
Partnership for Public Service
Mr. Bobby Harnage, President
American Federal of Government Employees
Mr. George Nesterczuk,
Nesterczuk and Associates
Appendix A
Aerospace Commission Recommendations
1. The integral role aerospace plays in our economy, our security, our
mobility, and our values makes global leadership in aviation and space
a national imperative. Given the real and evolving challenges that
confront our nation, government must commit to increased and sustained
investment and must facilitate private investment in our national
aerospace sector. The Commission therefore recommends that the United
States boldly pioneer new frontiers in aerospace technology, commerce
and exploration.
2. The Commission recommends transformation of the U.S. air
transportation system as a national priority. This transformation
requires:
Rapid deployment of a new, highly automated air
traffic management system, beyond the Federal Aviation
Administration's Operational Evolution Plan, so robust that it
will efficiently, safely, and securely accommodate an evolving
variety and growing number of aerospace vehicles and civil and
military operations;
Accelerated introduction of new aerospace systems by
shifting from product to process certification and providing
implementation support; and
Streamlined new airport and runway development.
3. The Commission recommends that the United States create a space
imperative. The DOD, NASA, and industry must partner in innovative
aerospace technologies, especially in the areas of propulsion and
power. These innovations will enhance our national security, provide
major spin-offs to our economy, accelerate the exploration of the near
and distant universe with both human and robotic missions, and open up
new opportunities for public space travel and commercial space
endeavors in the 21st century.
4. The Commission recommends that the Nation adopt a policy that
invigorates and sustains the aerospace industrial base. This policy
must include:
Procurement policies which include prototyping,
spiral development, and other techniques which allow the
continuous exercise of design and production skills;
Removing barriers to defense procurement of
commercial products and services;
Propagating defense technology into the commercial
sector, particularly in communications, navigation and
surveillance;
Removing barriers to international sales of defense
products;
Sustaining critical technologies that are not likely
to be sustained by the commercial sector, e.g., space launch,
solid boosters, etc.; and
Stable funding for core capabilities, without which
the best and brightest will not enter the defense industry.
5. The Commission recommends that the Federal Government establish a
national aerospace policy and promote aerospace by creating a
government-wide management structure. This would include a White House
policy coordinating council, an aerospace management office in the OMB,
and a joint committee in Congress. The Commission further recommends
the use of an annual aerospace sectoral budget to establish
presidential aerospace initiatives, assure coordinated funding for such
initiatives, and replace vertical decision-making with horizontally
determined decisions in both authorizations and appropriations.
6. The Commission recommends that U.S. and multilateral regulations
and policies be reformed to enable the movement of products and capital
across international borders on a fully-competitive basis, and
establish a level playing field for U.S. industry in the global market
place. U.S. export control regulations must be substantially
overhauled, evolving from current restrictions on technologies through
the review of transactions to controls on key capabilities enforced
through process controls. The U.S. government should neutralize foreign
government market intervention in areas such as subsidies, tax policy,
export financing and standards, either through strengthening
multilateral disciplines or providing similar support for U.S. industry
as necessary.
7. The Commission recommends a new business model, designed to promote
a healthy and growing U.S. aerospace industry. This model is driven by
increased and sustained government investment and the adoption of
innovative government and industry policies that stimulate the flow of
capital into new and established public and private companies.
8. The Commission recommends the Nation immediately reverse the
decline in, and promote the growth of, a scientifically and
technologically trained U.S. aerospace workforce. In addition, the
Nation must address the failure of the math, science and technology
education of Americans. The breakdown of America's intellectual and
industrial capacity is a threat to national security and our capability
to continue as a world leader. The Administration and Congress must
therefore:
Create an interagency task force that develops a
national strategy on the aerospace workforce to attract public
attention to the importance and opportunities within the
aerospace industry;
Establish lifelong learning and individualized
instruction as key elements of educational reform; and
Make long-term investments in education and training
with major emphasis in math and science so that the aerospace
industry has access to a scientifically and technologically
trained workforce.
9. The Commission recommends that the Federal Government significantly
increase its investment in basic aerospace research, which enhances
U.S. national security, enables breakthrough capabilities, and fosters
an efficient, secure and safe aerospace transportation system. The U.S.
aerospace industry should take a leading role in applying research to
product development.
Appendix B
Aerospace Commission Members
The Honorable Robert S. Walker, Commission Chairman; Chairman, Wexler &
Walker Public Policy Associates
The Honorable F. Whitten Peters, Commission Vice Chairman; Partner,
Williams and Connolly
Dr. Buzz Aldrin, President, Starcraft Enterprises, Sharespace,
Starbooster and Starcycler
Mr. Edward M. Bolen, President, General Aviation Manufacturers Assn.
Mr. R. Thomas Buffenbarger, International President, International
Association of Machinists and Aerospace Workers
The Honorable John W. Douglass, President and Chief Executive Officer,
Aerospace Industries Association
The Honorable Tillie K. Fowler, Partner, Holland and Knight
The Honorable John J. Hamre, President and Chief Executive Officer,
Center for Strategic and International Studies
The Honorable William Schneider, President, International Planning
Services
Mr. Robert J. Stevens, President and Chief Operating Officer, Lockheed
Martin Corporation
Dr. Neil deGrasse Tyson, Director, Hayden Planetarium
Ms. Heidi R. Wood, Executive Director, Morgan Stanley
Appendix C
Major Provisions of H.R. 1085,
``NASA Flexibility Act of 2003''
Section 1: Title
Section 2: Compensation for Certain Excepted Personnel. This section
provides a technical correction to update section 203(c) of the NASA
Act of 1958 (the Space Act). The correction ties the pay scale for NASA
Excepted (NEX) Employees to level III of the Executive Schedule
($142,500) rather than the obsolescent pay scale of grade 18 of the
General Schedule.
Section 3: Workforce Authorities. This section amends the National
Aeronautics and Space Act of 1958 (NASA organic act) to provide an
additional title, ``Title V--Workforce Authorities'' and the following
sections would be included under that title.
Section 501. Definitions. Several terms used throughout the Act are
defined in this section. One key definition used throughout the Act is
the term ``critical need,'' which is a specific and important
requirement of NASA's mission that the agency is unable to fulfill due
to workforce limitations. Many of the authorities in the bill can be
used only to address a ``critical need.''
Section 502: Planning, Notification, and Reporting Requirements. This
section requires NASA to provide a Workforce Plan to Congress and NASA
employees before using its new authorities. The Plan would specify the
kinds of cases in which NASA would use its new personnel tools. In
addition, six years following enactment, the Administrator is required
to provide an evaluation of workforce actions and recommendations for
addressing any remaining critical needs.
Section 503: Workforce Authorities. This section lists the specific
workforce authorities provided until the time limit of October 1, 2009,
subject to certain exceptions specified in Section 511.
Section 504: Recruitment, Redesignation, and Relocation Bonuses. This
section authorizes the NASA Administrator to pay recruitment,
redesignation, and relocation bonuses. The size of the recruitment and
relocation bonuses is higher than what is allowed under current law. In
addition, a new category of bonus, a redesignation bonus, is added,
which could be paid to an employee who is newly appointed to a position
in NASA from any other Federal Government position without relocating.
The bonus allowed under the bill is up to 50 percent of an employee's
annual salary multiplied by the agreed-upon service period (up to four
years) if the position addresses a critical need, and 25 percent if the
position does not address a critical need. Under current law,
recruitment and relocation bonuses are authorized only up to 25 percent
of annual salary without locality adjustments and without the
multiplicative factor of service period.
Section 505: Retention Bonuses. This section authorizes the NASA
Administrator to pay retention bonuses up to 50 percent of an
employee's annual salary if the employee's position addresses a
critical need and 25 percent if the position does not address a
critical need. Current law authorizes retention bonuses only up to 25
percent of annual salary without locality adjustments.
Section 506: Voluntary Separation Incentives. This section allows the
NASA Administrator to pay Voluntary Separation Incentive (VSI) payments
up to 50 percent of an employee's annual salary (current law, under the
Homeland Security Act of 2002, only allows up to $25,000) if the
employee is in a position that fills a critical need. NASA employees
could not receive a VSI payment if they had received any bonus or
allowance in the previous 12 months.
Section 507: Term Appointments. This section authorizes the NASA
Administrator to make term appointments for up to six years. Current
law authorizes four year appointments. This section also allows term
appointments to be converted to permanent civil service appointments,
which is not allowed under current law. However, the section imposes
certain conditions on the use of this term appointment conversion
authority.
Section 508: Pay Authority for Critical Positions. This section
authorizes the Administrator to fix pay up to the level of the Vice
President's pay ($198,600 per year) for up to ten employees at any
given time.
Section 509: Assignments under the Intergovernmental Personnel Act.
This section allows the NASA Administrator to extend the term for
Intergovernmental Personnel Act (IPA) employees up to four years (from
current two years).
Section 510: Enhanced Demonstration Project. This section allows NASA
to conduct a personnel demonstration project agency-wide by exempting
NASA from the current limitation of 5,000 individuals.
Section 511: Termination. This section specifies that the workforce
authorities listed under section 503 terminate on October 1, 2009, but
grandfathers in bonuses and appointments made before the termination
date.
Chairman Boehlert. I want to welcome everyone here this
afternoon. I want especially to welcome Bob Walker, who I think
everyone knows. He was the first Republican Chair of this
committee, and he set a very high standard for all of us who
follow. Every time I sit in this chair, Mr. Walker, I have to
deal with Bob looking down at me from his portrait on the wall,
and it will be a nice change today for me to be able to look
down on you.
We are dealing today with two very important and related
subjects we have dealt with before. First, we will hear from
three members of the Commission on the Future of the United
States Aerospace industry, which Mr. Walker chaired. All three
have distinguished records of public service. John Hamre is a
dear and old friend, and it is always good to see him back. And
Mr. Douglass and Mr. Walker, we are so happy to have you here
on this panel. You have all performed great public service
through the Commission, which has emphasized the threat the
U.S. aerospace industry faces and the need to counter that
threat.
This is actually the third hearing we have had just this
year that has featured this issue. Members on both sides of the
aisle raised concerns about aeronautics research at our NASA
budget hearings just two weeks ago. And last week, our Space
Subcommittee, under the leadership of Mr. Rohrabacher, raised
concerns at its hearing on Aerospace Research at NASA and the
Federal Aviation Administration. So we are committed to doing
all we can to focus attention on the aerospace industry and
issues and to work to resolve them.
One of the issues the aerospace community faces is
difficulty in attracting and attaining a top-notch workforce.
And there is no place that problem is more obvious than at
NASA. As I noted in testimony that I gave before the Senate
last week, within five years, a quarter of the NASA workforce
will be eligible to retire. As a matter of fact, 15 percent of
the scientists and engineers are eligible for immediate
retirement. The most recent accounting office report on NASA
issued just this past January noted, ``The agency still needs
to deal with critical losses due to retirement in coming
years.'' This conclusion built on numerous past GAO reports
that concluded that NASA had to do more to address its
workforce needs.
I have introduced H.R. 1085 to help NASA deal with this
enormous challenge, and our second panel will comment on that
bill specifically. I hope we can move the bill through the
Committee swiftly. H.R. 1085 builds on existing law. It allows
NASA, for example, to offer larger recruitment and retention
bonuses than are permitted currently and to offer bonuses to
employees shifting between federal jobs without relocating. But
the language we use parallels existing law and Office of
Personnel Management Regulations.
This is a targeted and limited approach. We didn't give
NASA everything it asked for, and we have added accountability
provisions NASA didn't request. What we are offering is a well
thought out and effective approach that will help address
critical needs at all levels of the agency. Will this solve all
of NASA's problems? Of course not, but this is something we can
do right away that will help NASA regain strength while we come
up with additional steps to help the agency. To those who
criticize this as a Band-Aid approach, I would say that a Band-
Aid is a pretty good alternative to continued bleeding and
infection.
I look forward to hearing ideas today on how we can improve
H.R. 1085, but we do need to move ahead with this legislation.
All of the problems we will hear about today are pressing
matters. It is incumbent upon us to act.
[The prepared statement of Mr. Boehlert follows:]
Prepared Statement of Chairman Sherwood Boehlert
I want to welcome everyone here this afternoon, and I want
especially to welcome Bob Walker, who, I think everyone knows, was the
first Republican chair of this committee, and he set a high standard
for those of us who have followed. Every time I sit in this chair, I
have to deal with Bob looking down on me from his portrait on the wall,
and it will be a nice change today to be able to reciprocate by looking
down on him from the dais.
We're dealing today with two very important and related subjects
we've dealt with before. First, we'll hear from three members of the
Commission on the Future of the United States Aerospace Industry, which
Bob Walker chaired. All three have distinguished records of public
service--John Harare is also an old friend--and they have performed
another great public service through the Commission, which has
emphasized the threat the U.S. aerospace industry faces and the need to
counter that threat.
This is actually the third hearing we've had just this year that
has featured this issue. Members on both sides of the aisle raised
concerns about aeronautics research at our NASA budget hearing two
weeks ago, and last week our Space Subcommittee raised concerns at its
hearing on aerospace research at NASA and the Federal Aviation
Administration (FAA). So we're committed to doing all we can to focus
attention on the aerospace issues and to work to resolve them.
One of the issues the aerospace community faces is difficulty in
attracting and retaining a top-notch workforce. And there's no place
that problem is more obvious than NASA.
As I noted in testimony I gave before the Senate last week, within
five years, a quarter of the NASA workforce will be eligible to retire.
The most recent General Accounting Office (GAO) report on NASA, issued
just this past January, noted, (quote), ``The agency still need[s] to
deal with critical losses due to retirements in coming years.'' This
conclusion built on numerous past GAO reports that concluded that NASA
had to do more to address its workforce needs.
I've introduced H.R. 1085 to help NASA deal with this enormous
challenge, and our second panel will comment on the bill. I hope we can
move the bill through the Committee swiftly.
H.R. 1085 builds on existing law. It allows NASA, for example, to
offer larger recruitment and retention bonuses than are permitted
currently, and to offer bonuses to employees shifting between federal
jobs without relocating. But the language we use parallels existing law
and Office of Personnel Management (OPM) regulations.
This is a targeted and limited approach--we didn't give NASA
everything it asked for, and we've added accountability provisions NASA
didn't request. What we're offering is a well thought out and effective
approach that will help address critical needs at all levels of the
agency.
Will this solve all of NASA's problems? Of course, not. But this is
something we can do right away that will help NASA regain strength
while we come up with additional steps to help the agency. To those who
criticize this as a ``band aid'' approach, I would say that a ``band
aid'' is a pretty good alternative to continued bleeding and infection.
I look forward to hearing ideas today on how we can improve H.R.
1085, but we do need to move ahead with this legislation. All the
problems we will hear about today are pressing matters. It is incumbent
upon us to act.
Prepared Statement of Representative Jerry F. Costello
Good afternoon. I want to thank the witnesses for appearing before
our committee to discuss the Aerospace Commission report issued last
November to the President and Congress and Chairman Boehlert's proposed
legislation, H.R. 1085, the NASA Flexibility Act of 2003.
A strong aerospace industry will enable the United States to defend
itself, compete in the global marketplace, maintain a highly skilled
workforce, and provide all Americans with the ability to travel safely
and securely anywhere in the world. The Commission has done extensive
work in studying these issues and has made nine recommendations to
improve the aerospace industry. I look forward to hearing more from our
witnesses on the implementation and feasibility of these
recommendations.
Further, I support the Aerospace Commission's recommendation that
government, industry, labor, and academia must work together to develop
an aerospace workforce for the 21st century because the issue of a NASA
workforce shortage is problematic. However, I am concerned about the
effects the legislation would have on the NASA workforce. H.R. 1085
includes provisions relating to recruitment, redesignation and
relocation bonuses, retention bonuses, voluntary separation incentives,
special pay authority for critical positions, and unlimited enhanced
demonstration project authority. The legislation essentially exempts
NASA from several provisions governing the Federal Civil Service.
Recruitment and retention are significant problems throughout the
Federal Government and I believe that to address this effectively, it
is important to examine a comprehensive government-wide approach.
I welcome our witnesses and look forward to their testimony.
Chairman Boehlert. Mr. Gordon.
Mr. Gordon. Thank you, Mr. Chairman. And Bob, let me add my
welcome back to you. It is good to see you again. You certainly
served with distinction. We may have disagreed on some areas,
but it was never a matter of integrity. You were--you served
with great distinction. And Mr. Wilson, thank you for coming by
yesterday. It was a--Mr. Douglass rather. It was a very good
conversation. I wish that we had more time, and hopefully we
will have--can do that later.
And to the panel at large, let me thank you for your public
service. This is a very important issue. I know that it is
time-consuming, but we are glad that you spent the time to do
this.
Mr. Hall should be coming in later. If he has some words of
wisdom, I would hope, Mr. Chairman, that you would allow him to
speak at that time, otherwise, I am going to yield the floor so
we can get on and hear from the folks we need to.
Panel I
Chairman Boehlert. We always welcome the words of wisdom
from Mr. Hall. Our first panel is a very distinguished panel
consisting of the Honorable Bob Walker, Chairman, Aerospace
Commission. Bob is President of Wexler Walker Public Policy
Associates, and served with great distinction as the Chairman
of this committee; the Honorable John Douglass, Commissioner,
President, Aerospace Industries Association; and the Honorable
John Hamre, Commissioner, President, Center for Strategic and
International Studies.
Gentlemen, we would ask that you try to summarize your
statement. We will not be arbitrary, but try to be guided by
the five-minute rule, and then we will go right to the
questions. You are up first, Mr. Walker.
STATEMENT OF HON. ROBERT S. WALKER, CHAIRMAN, COMMISSION ON THE
FUTURE OF THE UNITED STATES AEROSPACE INDUSTRY; PRESIDENT,
WEXLER WALKER PUBLIC POLICY ASSOCIATES
Mr. Walker. Well, thank you very much, Mr. Chairman. And
thank you and Mr. Gordon for your words of welcome. And I
appreciate the reference to a portrait staring down upon you.
The portrait that stares down upon me in my office these days
is Mario Andretti, that great Pennsylvania philosopher. And it
does so because I think a statement of his characterizes the
work of this committee that I try to carry with me into the
private sector and that is he one time said, ``If you are in
control, you are not going fast enough.'' Well, I think that is
the reality of the world in which we live, but anyhow, I am
delighted to be here. And I thank you for the opportunity to
testify and report to you on the work of the Commission on the
Future of the United States Aerospace Industry.
Let me begin with a few thoughts about the Commission's
final product. First, our recommendations were unanimous.
Despite a very diverse group of commissioners whose diversity
brought great strength to our deliberations, we were able to
achieve unanimity in what we ultimately recommended. There
remained some differences in detail about some of the narrative
within the report, but we agreed on the nature of the problem
faced by the aerospace sector and on a series of recommended
paths for the Nation to pursue.
Second, our overall vision of the 21st century where
aerospace allows anyone and anything to go anywhere at any time
speak to the mobility that we believe international leadership
will require. The ability to move people, goods, services, and
munitions quickly to where they are needed and when they are
needed to be there is a definition for both global security and
global economic leadership.
From here, Mr. Chairman, I--my written testimony goes into
detailing the specific recommendations that the Commission
made. I will not go through those right now. If there are
questions about them, I would certainly be happy to deal with
it, but what I wanted to deal with in the rest of my testimony
was the questions that were raised as part of the charter for
this hearing.
First of all, you raised the issue about the
Administration's budget proposals as they relate to the
Commission's recommendations. My assessment is that the
Administration is moving aggressively in several areas to meet
our goals. NASA's request for funding for Project Prometheus is
very much in line with our recommendation that they move toward
technologies emphasizing power and propulsion. DOD and NASA are
cooperating on the National Aerospace Initiative that was
specifically endorsed by the Commission. NASA and FAA are
beginning cooperative efforts in an advanced air traffic
management system, a major focus of our report. And the
Commission's--or--and the Administration's Hydrogen Program is
very much in line with our recommendation for work on
breakthrough energy capabilities.
On the issue of foreign competition, I would make two
points. First, the global challenge comes from nations more
focused than we are about the importance of aerospace
technology and who are developing long-range plans to overcome
the United States in an area where we have strategic and
economic superiority. Second, our export control policies are
preventing U.S. companies from selling products into world
markets, meaning that we are undermining the strength of our
own aerospace supplier base. Next, we have been very concerned,
as this committee has been, about workforce issues. The
Commission said quite clearly the aerospace sector requires a
scientifically and technologically competent society.
We recommended several things in the workforce arena, which
were covered previously in my testimony, but I would point
particularly to the suggestion that educational reform should
emphasize individualized instructional programs and lifelong
learning. Finally, if there is one overriding conclusion of the
Commission it is that we must move toward horizontal decision-
making as opposed to the vertical silo decision-making regime
that characterizes government interaction with the aerospace
industry.
The aerospace mission crosscuts many different departments,
agencies, programs, Congressional Committees, and
Subcommittees. Decisions made inside of vertical silos are
wasteful of taxpayers' dollars and destructive of the
coordination needed to utilize aerospace resources to the
fullest capacity. For example, an advanced air traffic
management system is absolutely vital to our continued
leadership in aerospace.
To get the system we need, there will have to be
significant cooperation and funding coordination between FAA,
NASA, DOD, and NOAA. This is a very tall order, but also a very
necessary process. No one of these agencies can do the multi-
billion dollar expenditure necessary to get the new system in
place. But a cooperative effort with each agency doing its own
mission for its own reasons, coordinating research and
technology so that individual mission assets can be used
broadly is the way to go. DOD flew GPS for its own mission
requirements, but the technology has become even more valuable
as a broader mission. That is the kind of example that we think
needs to be done on a much broader basis. It is the way in
which the market has to go in the future.
I thank you for the opportunity to testify.
[The prepared statement of Mr. Walker follows:]
Prepared Statement of Robert S. Walker
Mr. Chairman, thank you for this opportunity to testify and report
to you on the work of the Commission on the Future of the United States
Aerospace Industry.
Let me begin with a few thoughts about the Commission's final
product.
First, the recommendations made were unanimous. Despite a diverse
group of Commissioners, whose diversity brought great strength to our
deliberations, we were able to achieve unanimity in what we ultimately
recommended. There remained some differences in detail about some of
the narrative within the report, but we agreed on the nature of the
problem faced by the aerospace sector and on the series of recommended
paths for this nation to pursue.
Second, our overall vision of a 21'' century where aerospace allows
anyone and anything to go anywhere at anytime speaks to the mobility
which we believe international leadership will require. The ability to
move people, goods, services and munitions quickly to where they are
needed when they are needed to be there is a definition for both global
security and global economic leadership.
Let me if I can outline the recommendations made by the Commission
and some of the reasoning behind those recommendations.
RECOMMENDATION 1: VISION: ANYONE, ANYTHING, ANYWHERE, ANYTIME
The integral role aerospace plays in our economy, our security, our
mobility, and our values make global leadership in aviation and space a
national imperative. Given the real and evolving challenges that
confront our nation, government must commit to increased and sustained
investment and must facilitate private investment in our national
aerospace sector. The Commission therefore recommends that the United
States boldly pioneer new frontiers in aerospace technology, commerce,
and exploration.
Background
The 20th century was America's century. Our nation thrived on
previously unimagined advances in ground, air and space transportation,
rapidly becoming the world leader in nearly every economic sector
driven by the progress of science and technology.
One hundred years ago, the slogan ``Anyone, Anything, Anywhere,
Anytime'' would have meant leaving home with transportation permitted
,and then allowing a week or two to travel between widely separated
American cities. Today, New York to London is a day trip. A package of
any size shipped today arrives tomorrow morning anywhere in the
country.
What could ``Anyone, Anything, Anywhere, Anytime'' mean a century
from now? A suborbital day trip between Japan and the United States? A
lunar vacation? A Martian hiking expedition? Whatever our future holds,
the aerospace sector will take us there, providing our nation and the
world with the ability to move people, goods, services, and ideas
wherever they are needed and wherever they are wanted.
We need a bold vision for air transportation that creates a new,
highly automated ``Interstate Skyway System.'' The system needs to be
safe, secure, and efficient and accommodate the large volume and
variety of civil and military aerospace vehicles the Nation will
require in coming years.
We also need an audacious vision of space exploration that
recognizes the solar system as our backyard, the Milky Way galaxy as
our neighborhood, and the universe as our hometown. We should do this
not simply because it's fun or thrilling, or challenging, or
enlightening. . .but because it represents a critical investment in our
economic strength and ultimately in our capacity to defend ourselves.
It's America's choice.
RECOMMENDATION 2: AIR TRANSPORTATION: EXPLOIT AVIATION'S MOBILITY
ADVANTAGE
The Commission recommends transformation of the U.S. air
transportation system as a national priority. The transformation
requires:
Rapid deployment of a new, highly automated Air
Traffic Management (ATM) system beyond FAA's Operational
Evolution Plan so robust that it will efficiently, safely, and
securely accommodate an evolving variety and growing number of
aerospace vehicles and civil and military operations.
Accelerated introduction of new aerospace systems by
shifting from product to process certification and providing
implementation support.
Streamlined new airport and runway development.
Objective
Delivering people and goods quickly and affordably--when and where
needed.
Background
Our air transportation system is severely limited in its ability to
accommodate America's growing need for mobility. The basic system
architecture, operational rules, and certification processes developed
decades ago don't allow today's technologies to be fully utilized and
don't allow needed innovations to be rapidly implemented. There are
barriers to advancing our air mobility.
First, the U.S. air traffic management infrastructure is not
scalable and is vulnerable. Air transportation's inherent speed
advantage is being limited by air traffic infrastructure and operating
concepts.
Second, revamped certification processes, procedural regulations,
and airborne equipage innovation is needed. The bulk of certification
and procedural regulations and processes were developed in an era whose
time has passed and hasn't kept pace with new technologies.
Furthermore, aircraft operators must equip with compatible hardware and
systems in order for a modernized air traffic network to succeed.
Third, new runway and airport development takes too long. Meeting
the Nation's demand for air transportation and fully exploiting its
benefits will require a ground infrastructure that accommodates
significant traffic increases. Many of the Nation's major airports are
operating at capacity limits during large portions of the day.
In addition, the economic downturn and the substantial added
security burden since 9/11 have seriously disrupted the economic health
of the airline industry. Well-intentioned security policies have
resulted in billions in post-9/11 costs and lost revenue and account
for a large majority of the projected $9 billion in airline industry
losses in 2002.
General aviation also has been acutely affected, manufacturers and
suppliers are suffering significant losses in aircraft and equipment
sales, and the overall impact is rippling through the rest of the U.S.
economy.
And, as the forced contraction of the industry continues, small and
mid-size communities are being disconnected from the national air
transportation system that is vital to their economies.
The U.S. government must assume full cost and responsibility for
assuring the protection of our aviation system against terrorist
attack. At the same time it must adopt rational security measures that
facilitate public access to the air transportation system, and thereby
encourage air travel.
RECOMMENDATION 3: SPACE: ITS SPECIAL SIGNIFICANCE
The Commission recommends that the United States create a space
imperative. The Department of Defense, NASA, and industry must partner
in innovative aerospace technologies, especially in areas of propulsion
and power. These innovations will enhance our national security,
provide major spin-offs to our economy, accelerate the exploration of
the near and distant universe with both human and robotic missions, and
open up new opportunities for public space travel and commercial space
endeavors in the 21st century.
Objective
The challenge we face on the space frontier is to build from dreams
and concepts the political will to move forward to new technologies and
destinations. For almost 20 years we have been satisfied to limit our
dreams, rely upon proven technologies, and invest little in building
public or political support for space initiatives. But the potential to
do great things has never been nearer.
Background
The Commission believes the Nation would benefit from a joint
effort by NASA and DOD to reduce significantly the cost and time
required to access space. Such an effort would build on the
capabilities of both organizations and provide the ``critical mass'' of
funding needed to create the necessary breakthroughs in propulsion.
Investment in the development of more advanced propulsion systems
will lead to faster transit times, improve operational flexibility, and
reduce the radiation impact for long-duration, human exploration
missions. Once the time to explore many parts of the solar system has
been reduced to reasonable numbers, the political imperative to do what
is now possible will be acted on.
A significant limiting factor in the performance of most
spacecraft, including the International Space Station, is the amount of
power that can be generated from solar energy, increasing available
power could expand opportunities in military, civil, and commercial
space applications. Once there is sufficient power in orbit to do real
things, investment will be more likely.
New technologies open up opportunities for a next generation of
satellites and launch systems for military operations, homeland
defense, global protection, and air transportation management.
The Commission believes the Nation needs a joint civil and military
initiative to develop a core space infrastructure that will address
emerging national needs.
Our national space infrastructure is aging. For example, the
Vehicle Assembly Building at Kennedy Space Center has a 35-year-old
roof that requires frequent patching and other failures that have
resulted from hurricanes and high winds. Replacement cost of
infrastructure is $3.9 billion at the Kennedy Space Center and $3.0
billion at Cape Canaveral Air Force Station. Clearly a new operations
and management structure is desirable for these facilities.
The civil and commercial aerospace sectors will look to space more
in the future to develop new products and services and create new
markets as they have for telecommunications and commercial remote
sensing. The U.S. commercial space industry continues to lose access to
markets as demand decreases and international competition increases.
Government regulations and incentives are necessary to bolster this
important market until there is a turn-around in demand.
The Commission believes that the search for knowledge will not only
answer fundamental questions but also will inspire our children and
provide a source of future products and services. This will require
that the U.S. government sustain its long-standing commitment to
science and space and continue to focus on international cooperative
efforts.
RECOMMENDATION 4: NATIONAL SECURITY: DEFEND AMERICA AND PROJECT POWER
The Commission recommends that the Nation adopt a policy that
invigorates and sustains the U.S. aerospace industrial base. This
policy must include:
Procurement policies that include prototyping, spiral
development, and other techniques that allow the continuous
exercise of design and productions skills.
Stable funding for core capabilities without which
the best and brightest won't enter the defense industry.
Removing barriers to international sales of defense
products.
Removing barriers to defense procurement of
commercial products and services.
Propagating defense technology into the civil sector,
particularly in communication, navigation, and surveillance.
Sustaining critical technologies that aren't likely
to be sustained by the commercial sector, e.g., space launch
and solid rocket boosters.
Objective
A healthy aerospace industry is central to maintaining a safe and
secure world. It provides the ability to:
Rapidly, safely; and securely send and receive
information;
Move troops, equipment, and supplies to anywhere on
the globe or into space at anytime, and
Prosecute effects-based warfare.
Background
The effectiveness of American defense is a crucial determinant of
world peace, prosperity, and stability. In the 21st century enabling
technologies for vital military capabilities will come from the
commercial sector as well as the defense sector. Today's military
capabilities are at risk due to a threatened industrial base, workforce
concerns, and the need to protect critical infrastructure.
The Defense Department should task the Defense Science Board to
develop a national policy that will invigorate and sustain the U.S.
aerospace industrial base. The policy should address issues such as
mergers and acquisitions, procurement and budgeting policies, research
and investment, technology transition, international sales, and
workforce development.
The United States must continually develop new experimental systems
in order to sustain the critical skills to conceive, develop,
manufacture, and maintain advanced systems and provide expanded
capabilities to warfighters.
The Federal Government and industry must partner to enhance the
operational readiness and capability of new and legacy military
aerospace systems. The government should fund research and technology
development programs to reduce total ownership costs and environmental
impacts and create a structured, timely, and adequately funded
technology insertion process and reform procurement practices
accordingly.
RECOMMENDATION 5: GOVERNMENT: PRIORITIZE AND PROMOTE AEROSPACE
The Commission recommends that the Federal Government establish a
national aerospace policy and promote aerospace by creating a
government-wide management structure. This would include a White House
policy coordinating council, an aerospace management office in the
Office of Management and Budget, and a joint committee in Congress. The
Commission further recommends the use of an annual sectoral budget to
establish presidential space initiatives, and replace vertical
decision-making with horizontally determined decisions in both,
authorizations and appropriations.
Objective
In the rapidly changing global economy, government leadership must
be increasingly flexible, responsive, and oriented toward decision-
making at macro levels. It must prioritize and promote aerospace within
the government and in its interactions with the industry in order to
realize the fullest potential of aerospace to the Nation.
Background
The development and implementation of federal aerospace policy is
currently spread across multiple government agencies with oversight by
numerous congressional committees. The government isn't organized to
define national aerospace priorities, develop federal aerospace sector
plans and budgets, manage programs that cross multiple departments and
agencies, or foster a healthy aerospace sector in a global economy.
The Federal Government is organized vertically while national
aerospace challenges are becoming more horizontal in nature. Without
integration, national aerospace policy occurs either by default or
piecemeal. The Commission believes that the U.S. government can only
ensure U.S. aerospace leadership by leading itself. To do this, the
executive and legislative branches need to be reoriented to better
address national aerospace issues.
Maintaining a national aerospace policy should be a function
assigned jointly to the National Security Council and the National
Economic Council. They should establish an Aerospace Policy
Coordinating Council to develop and implement an integrated national
aerospace policy. OMB should create a Bureau of Aerospace Management
that would translate the national policy into annual planning and
budget guidance.
Federal departments and many agencies should establish offices of
aerospace development to promote aerospace activities and align
aerospace with their missions. A prudent response from Congress would
be to organize a Joint Committee on Aerospace.
Government processes tend to be complex, lengthy, and inefficient.
As a result, aerospace products and services developed and used by the
government are more costly for the taxpayers and take longer to
acquire. Also, aerospace products and services developed by industry
for sale in the commercial marketplace take longer and cost more
because of extensive government barriers resulting in lost market share
and diminished profitability.
Government, industry, labor, and academia must work together as
partners to transform the way they do business, allowing the Nation to
capitalize on the best ideas available and apply them rapidly to new
aerospace products, processes, and services.
RECOMMENDATION 6: GLOBAL MARKETS: OPEN AND FAIR
The Commission recommends that U.S. and multilateral regulations
and policies be reformed to enable the movement of products and capital
across international borders on a fully competitive basis and establish
a level playing field for U.S. industry in the global marketplace. The
U.S. export control regulations must be substantially overhauled,
evolving from current restrictions on technologies through the review
of transactions to controls on key capabilities enforced through
process controls. The U.S. government should neutralize foreign
government market intervention in areas such as subsidies, tax policy,
export financing, and standards either through strengthening
multilateral disciplines or providing similar support for U.S. industry
as necessary.
Objective
A globally competitive U.S. aerospace industry.
Background
Open global markets are critical to the continued economic health
of U.S. aerospace companies and to U.S. national security. The 2001
U.S. aerospace trade surplus was nearly $32 billion, the largest
surplus of any U.S. manufacturing sector. However, the U.S. industry
share of the global market has declined in key sectors over the last 20
years. We are on the brink of ceding our position as the top producer
of large commercial aircraft and are losing market share in civil
helicopters and aircraft engines. Much of this decline is a direct
result of foreign government intervention and protectionist policies.
In order to remain global leaders, U.S. companies must remain at
the forefront of technology innovation. They also must have access to
global customers, suppliers, and partners.
The defense industrial base is falling farther and farther behind
the commercial marketplace because it has to cope with excessive
regulation. The current export control regime provides too little
security and is choking American companies and preventing effective
technology collaboration with others. U.S. export controls must be
completely overhauled, and defense procurement policies must more
effectively balance international collaboration and maintain U.S.
industrial capacity in critical technologies and capabilities.
Although we are ahead of other countries in investment in military
technology and capability, we are on the edge of dropping out of the
race in the civil sector. Instead of continuing to invest, our
government has increasingly pulled back from the civil aerospace market
and left it up to U.S. companies to compete against competitors
subsidized by their governments.
RECOMMENDATION 7: A NEW MODEL FOR THE AEROSPACE SECTOR
The Commission recommends a new business model designed to promote
a healthy and growing U.S. aerospace industry. This model is driven by
increased and sustained government investment and the adoption of
innovative government and industry policies that stimulate the flow of
capital into new and established public and private companies.
Objective
A strong and healthy U.S. aerospace industry that is attractive to
investors.
Background
The U.S. government budgeting and procurement system is
extraordinarily complex and inefficient. Unpredictable and unstable
government budgeting and funding creates a cycle that contributes to
the diminished return on the government's investment in national
security capabilities and serves as an impediment to long-term industry
excellence.
A stable long-term investment budget is critical to the
modernization and transformation goals of U.S. armed forces. The
Commission advocates increasing the government's financial flexibility
to make funding adjustments among and within programs.
In a call to revise program management policies, the Commission
believes the use of multi-year contracting for both procurement and R&D
programs will improve program stability and performance as well as
produce needed cost savings.
The U.S. aerospace industry extends through a network of
purchasers, subcontractors, suppliers, and partners--sometimes referred
to as the supply chain. Each of the participants is intrinsically tied
to the factors affecting the industry. Encouraging a climate that is
attractive to new entrants, while stable enough for current players,
will promote competition and innovation, add to efficiencies, and lower
costs.
Certain U.S. tax and trade laws and regulations that affect a
variety of industries weigh particularly heavily on defense and
aerospace in competition with domestic commercial entities as well as
in international markets.
Government and industry should work together to develop and
implement training and exchange programs that would educate and expose
their respective workforces to each other's challenges and
responsibilities.
Government must develop and implement a policy regarding
international cooperation in defense and aerospace that recognizes the
global industrial base. The Commission urges a review of the policy
regarding domestic and international business combinations.
RECOMMENDATION 8: LAUNCH THE FUTURE
The Commission recommends that the Nation immediately reverse the
decline in and promote the growth of a scientifically and
technologically trained U.S. aerospace workforce. In addition, the
Nation must address the failure of math, science, and technology
education of Americans. The breakdown of America's intellectual and
industrial capacity is a threat to national security and our capability
to continue as world leader. Congress and the Administration must
therefore:
Create an interagency task force that develops a
national strategy on the aerospace workforce to attract public
attention to the importance and opportunities within the
aerospace industry.
Establish lifelong learning and individualized
instruction as key elements of educational reform.
Make long-term investments in education and training
with major emphasis in math and science so that the aerospace
industry has access to a scientifically and technologically
trained workforce.
Objective
A well educated, scientifically literate, and globally competitive
aerospace workforce.
Background
There is a major workforce crisis in the aerospace industry. Our
nation has lost more than 600,000 scientific and technical aerospace
jobs in the past 13 years. Those losses began as a result of reduced
defense spending following the end of the Cold War. But subsequent
contraction of the industry through mergers and acquisitions and the
events of 9/11 have made that situation worse.
Due to these actions and events, many of the workers who have lost
their jobs are unlikely to ever return to the industry. These losses,
coupled with pending retirements over the next 10 years, represent a
devastating loss of skill, experience, and intellectual capital to the
industry. Few new young employees are in the ``pipeline'' to replace
the aging aerospace workforce.
The aerospace industry has historically been cyclical and strongly
driven by defense spending. Global competition, especially in
commercial aviation, has risen rapidly since 1989, most notably from
Europe, and is likely to grow.
The aerospace industry must have access to a scientifically and
technologically trained workforce. In the long-term, the Commission
stresses that that action must be taken to improve mathematics and
science education from K-12 through Ph.D.
It is likely that people entering the workforce now will hold five
or more jobs in their lifetime, and the education system must be
prepared to deliver training and education to meet these changing skill
requirements and labor market needs.
RECOMMENDATION 9: ENABLE BREAKTHROUGH AEROSPACE CAPABILITIES
The Commission recommends that the Federal Government significantly
increase its investment in basic aerospace research, which enhances
U.S. national security, enables breakthrough capabilities, and fosters
an efficient, secure, and safe aerospace transportation system. The
U.S. aerospace industry should take a leading role in applying research
to product development.
Objective
U.S. preeminence in aerospace research and innovation.
Background
In the past, aerospace led the technology revolution because of
large public investment in research directed at national security
imperatives and goals. Today, we have no integrated national aerospace
consensus to guide policies and programs. This has resulted in
unfocused government and industry investments spread over a range of
research programs and aging infrastructure.
The lack of sufficient, sustained public funding for research,
development, test, and evaluation infrastructure limits the Nation's
ability to address critical national challenges and to foster
breakthrough aerospace capabilities that could enable a new era in
aerospace leadership for America.
To provide focus for aerospace investments on developing
breakthrough capabilities, the Commission suggests the government
achieve, as a national priority, the following goals by 2010:
Air Transportation
Demonstrate an automated and integrated air
transportation capability that would triple capacity by 2025.
Reduce aviation noise and emissions by 90 percent.
Reduce the aviation fatal accident rate by 90
percent.
Reduce transit time between two points on Earth by
half.
Space
Reduce cost and time to access by half.
Reduce transit time between two points in space by
half.
Demonstrate the capability to monitor and survey
continuously Earth, its atmosphere, and space for a wide range
of military, intelligence, civil, and commercial applications.
Time to Market
Reduce the transition time from technology
demonstration to operational capability from years and decades
to weeks and months.
Now I would like to turn to the specific questions you raised in
your charter for this hearing.
On the issue of the Administration's budget proposals for research
and their relationship to Commission recommendations, my assessment is
that the Administration is moving aggressively in several areas to meet
our goals. NASA's request for funding of Project Prometheus is very
much in line with our recommendation that they move technologies
emphasizing power and propulsion. DOD and NASA are cooperating on the
National Aerospace initiative that was specifically endorsed by the
Commission. NASA and FAA are beginning cooperative efforts in an
advanced air traffic management system, a major focus of our final
report. The Administration's hydrogen program is in line with our
recommendation for work on breakthrough energy capabilities.
On the issue of foreign competition, I would make two points.
First, the global challenge comes from nations more focused than we are
about the importance of aerospace technology and who are developing
long-range plans to overcome the United States in an arena where we
have had strategic and economic superiority. Second, our export control
policies are preventing U.S. companies from selling product in world
markets meaning that we are undermining the strength of our own
aerospace supplier base.
Next, we are very concerned about workforce issues. The Commission
said quite clearly that the aerospace sector requires a scientifically
and technologically competent society. We recommended several things in
the workforce arena, which are covered previously in my testimony, but
I would point particularly to he suggestions that educational reform
should emphasize individualized instructional programs and lifelong
learning.
Finally, if there is one overriding conclusion of the Commission,
it is that we must move toward horizontal decision-making as opposed to
the vertical silo decision-making regime that characterizes government
interaction with the aerospace industry. The aerospace mission cross
cuts many different departments, agencies, programs, Congressional
committees, and subcommittees. Decisions made inside vertical silos are
wasteful of taxpayers' dollars and destructive of the coordination
needed to utilize aerospace resources to the fullest capacity.
For example, an advanced air traffic management system is
absolutely vital to our continued leadership in aerospace. To get the
system we need, there will have to be significant cooperation and
funding coordination between FAA, NASA, NOAA, and DOD. That is a very
tall order, but a very necessary process. No one of these agencies can
do the multi-billion dollar expenditure necessary to get the new system
in place, but a cooperative approach with each agency doing its own
mission for its own reasons coordinating research and technology so
that individual mission assets can be used broadly is the way we must
go. DOD flew GPS for its own mission requirements, but the technology
has become even more valuable as a broader mission. That is a market
for the future.
Thank you for this opportunity to testify.
Chairman Boehlert. Boy, what a skilled master you are. You
even left some time. Mr. Douglass.
STATEMENT OF HON. JOHN W. DOUGLASS, PRESIDENT AND CHIEF
EXECUTIVE OFFICER, AEROSPACE INDUSTRIES ASSOCIATION OF AMERICA,
INC.
Mr. Douglass. Thank you, Mr. Chairman. I would like to
begin by thanking you and Mr. Gordon for holding this hearing
today, sir. This is a very crucial time for our industry, and
your leadership in holding hearings like this is greatly
appreciated. But I would also like to thank my two colleagues
here for the work that they did on the Presidential Commission
and for the continuing involvement of the time and energy that
they both are putting into this work. And with your permission,
sir, I would like to submit my written statement for the record
and just briefly summarize it.
Chairman Boehlert. Without objection, all of the statements
will appear in the record and in their entirety.
Mr. Douglass. I--there are really three basic points that I
would like to make in this summary. The first is that the
aerospace industry, in its entirety, which is that its military
work, its civil aviation work, its space work, and its homeland
security work, is really the cornerstone and foundation of both
our national economy and our national security. It represents
about 11 million jobs, 15 percent of our gross domestic
product. And it is the single biggest positive export trade
balance in the American economy, approximately $30 billion in
fiscal year 2002. So it is the cornerstone of two of the most
important parts of American life: our economy and our national
security.
The second point, sir, is that the industry is passing
through a severe crisis. The American airline industry is
nearly bankrupt. Just yesterday, my colleagues at the Air
Transport Association, published a report called ``The Perfect
Storm,'' and with your permission, sir, I would like to also
enter that into the record. That outlines in detail the nature
of the crisis that the airline community is facing.
[The information referred to follows:]
Mr. Douglass. The second part of this second point is that
the commercial space market has almost ceased to exist. Several
years ago, a panel not unlike the Commission that the three of
us are on, looked forward to the first decade of this century
and estimated that we would see about 70 commercial launches a
year. Last year, there were two, sir. And so that part of the
market has almost collapsed, meaning that the military market
for space is taking up the whole load of our national
commitment to space.
Next, the manufacturing base is contracting at an alarming
rate because of these events in commercial aviation and civil
space. Despite the increases that we have seen in our defense
program, we have lost 115,000 jobs since September the 11th,
2001. That is approximately 15 percent of our workforce. And
today, the workforce, which underpins this vital part of our
economy and our national security, is at the lowest level that
we have ever kept records for. Our records go back to 1953. And
just by extrapolating from '53 back and discounting the war
years, we think we are at a level approximately of where we
were just before World War II broke out, which is the lowest
level in well over 50 years in terms of employment.
While all of this is going on, our international
competition has made it--this--I am primarily now talking about
the European aerospace industry, has set their national goals
to supplant us as the world's leader in aerospace.
Now my third point is, I think, the major point that was
made by the Commission in its entirety, and that is that we can
turn this situation around with a relatively modest investment
if we act now. Some of the key parts of the Commission report
that I would like to bring to your attention are first that we
must act to create an environment where air transportation
system is profitable. And we must be mindful of the long-term
needs of this sector of our economy. The second one is the one
that you introduced in your opening statement, sir, and that is
that we have got to renew our aerospace infrastructure. And
here, I am talking about our human capital in our facilities.
You outlined very eloquently some of the problems in the human
capital part of the industry.
Our facilities at NASA today are aging to the point where
no one wants to use them anymore. I just happened to be over
with the Navy the day before yesterday looking at some of their
advanced programs, and they, like industry, are thinking of
going to Europe for future wind tunnel testing because of the
old nature of NASA facilities.
Sir, we have got to also maintain our ability to use and
exploit our position as the world's leader in space technology.
If you think about where we are today and you think about the
dreams and vision of our leadership a generation ago, we pretty
much achieved all of those dreams and visions of a generation
ago in regards to what our nation can do in space. The issue
for us today is can we maintain that vision and where do we go
from here? And as we all know, the recent tragedy with the
space shuttle has made this even more complicated and more
difficult.
Finally, sir, we must not lose sight of our long-term needs
as we solve these current crises. There are huge, long-term
structural needs in modernizing our air traffic control system
here in the United States, and we have got to look to those
needs.
So I will just close with the good news. And the good news
is what my colleague pointed out in his testimony, and that is
that much of the technology that we need to solve these
problems exists today in our Department of Defense. And
hopefully, if we look at using this technology in a
crosscutting way in our economy, we can resolve some of these
problems without too much of a massive investment in new
research.
Thank you for the opportunity to talk, sir.
[The prepared statement of Mr. Douglass follows:]
Prepared Statement of John W. Douglass
Introduction
On behalf of the member companies of the Aerospace Industries
Association of America, or AIA, I wish to thank Chairman Boehlert,
Congressman Hall and the Members of the House Science Committee for the
opportunity to testify this afternoon regarding legislative
implementation alternatives proposed by the report of The Commission on
the Future of the U.S. Aerospace Industry. The House Science Committee
has worked diligently on issues affecting the vitality of our industry,
and AIA is grateful for your efforts. We also appreciate, Mr. Chairman,
your early and vocal support for the mandate and the recommendations of
the Aerospace Commission.
AIA operates as the Nation's largest trade association representing
small, medium and large manufacturers of aerospace products. We
currently have approximately 80 regular and 150 associate member
companies involved in the design and manufacture of aircraft and
spacecraft as well as related systems and subsystems. After discussing
some of the key economic and technological indicators of the industry's
position today, I will address the Commission's Research and
Development (R&D), civil aviation and space recommendations of
particular interest to the Committee and then highlight several
military programs of importance to the long-term defense of our
homeland as well as our allies and interests overseas.
A Snapshot of the Aerospace Industry
A Record of Industrial Innovation
The aerospace sector of our economy, Mr. Chairman, generates
economic activity equal to nearly 15 percent of the Nation's Gross
Domestic Product and supports approximately 11 million American jobs.
Our industry leads the Nation in net exports, posting a $30 billion
surplus in 2002. Aerospace workers furthermore represent 4.5 percent of
all manufacturing employment, and their productivity generated $148
billion in sales last year. Of this amount, civil aircraft revenue
totaled $43.3 billion while military and space-related sales accounted
for $80 billion.
Aerospace enterprises contribute directly to the economic and
national security of the United States. Civil aviation, for example,
enables the movement of people, resources and ideas that anchor jobs at
home while expanding our trade and investment opportunities abroad.
Cable and wireless technologies pioneered by the military planted the
seeds for the Internet and mobile telecommunications. Materials and
optical transmission research done by NASA and its contractors have
advanced life-saving diagnostic procedures, land management techniques
and our understanding of climate change. And in the realm of national
defense, Mr. Chairman, precision-guided weapons and real-time
reconnaissance systems prepare our dedicated forces to protect the
United States from new adversaries who blur the boundaries--and the
standards of conduct--between nations.
The Challenges Ahead
Economic, political and demographic developments of the last
several years, however, pose immediate challenges to the aerospace
industry. Since the end of the Cold War, two recessions, business re-
structuring and subsidized foreign competition have caused the U.S.
share of the global aerospace market to fall from 72 percent in 1985 to
less than 52 percent today. ASIA forecasts that sales of civil aircraft
alone will decline by nearly $20 billion between 2001 and the end of
this year. Commercial space sales peaked in 1997 at six billion dollars
but had fallen to $3.4 billion by the end of 2002. Most dramatically,
the aerospace manufacturing segment, with 689,000 employees as of last
December, stands at its lowest level since World War II. Just since the
attacks of September 11th, this work force has declined by 13 percent.
In answer to the second question of your invitation letter, Mr.
Chairman, the near-term decline in aerospace sales and employment have
harmed the overseas competitiveness of U.S. producers. The superiority
of American satellite, space-based communications, military and civil
airframe products, paired with ongoing improvements in worker
productivity and manufacturing automation, will aid our companies in
the search for stable international markets. But as the Aerospace
Commission made clear, prudent investment, regulatory strategic
policies on the part of government, which I will discuss beginning in a
few minutes, are equally vital to the long-term health of the industry.
I would like to address another question of interest to the
Committee concerning the relative impact of economic conditions and
evolving business models on aerospace profitability. Market- and
merger-driven business model reforms, compounded by changing government
funding cycles, have pressured the revenue streams of the industry.
DOD's FY04 procurement request, for example, recovers barely more than
one-half of the FY85 high point of $142 billion. Corporate mergers and
the rise of European state-subsidized consortia have intensified the
development of low-cost, highly-automated production lines in the civil
transportation segment just during the last seven years. Industry
business models, by emphasizing higher productivity per employee,
should have a stabilizing effect on cash flow. But long-term
profitability depends on the recovery of the civil aviation market and
substantial increases in defense procurement. Unfortunately, the
pending crisis in Iraq is eroding investment in each of these markets
as civil flights continue to decline and the operational needs of our
forces shift investment from modernization.
Next to revenue and job losses, the industry faces a significant
shortage of younger, technically-skilled professionals. The average age
of the aerospace manufacturing employee is now 51; the same number,for
engineers rises to 54. In 2008, 27 percent of aerospace workers will
become eligible for retirement. Government agencies confront similar
demographic trends. NASA's personnel under the age of 30, for instance,
are one-third the number over the age of 60. As the workforce ages,
technical professionals also migrate to other disciplines. Twenty-four
years ago, aerospace companies employed 20 percent of the Nation's R&D
scientists and engineers; by 2001, the level had tumbled to 2.4
percent. At the same time, foreign nationals represent 40 percent of
the students now earning engineering and science doctoral degrees in
the United States. These young people often return to their native
countries or cannot qualify for sensitive domestic defense and space
jobs.
By acting now, we have the opportunity, Mr. Chairman, to revitalize
the markets and human capital of an industry so critical to our
freedom, mobility and prosperity. As you and the Committee know, the
Aerospace Commission report contains nine overall recommendations for
civil aviation, space, military, acquisition, research and workforce
reforms. In the following sections of my testimony, I will offer some
legislative and policy proposals on aspects of the report that fall
under the jurisdiction of the Science Committee. I will then detail a
few items from the defense budget to complete the picture of how the
aerospace industry makes an integrated contribution to our national
security and socio-economic quality of life.
Aerospace Research and Development
The first question of your invitation letter, Mr. Chairman,
accurately noted that the Federal Government spends more on aerospace
research than any other country. But as your question further
anticipated, the Aerospace Commission found that the government should
create a systematic framework to support pre-competitive basic
aerospace research. This process would embrace the policy of fostering
capabilities for industry to apply in advanced air transportation;
navigation, surveillance and telecommunications products. Our foreign
competitors not only appreciate the value of pre-competitive research,
but also focus investment on product development. In a bold 2001
document entitled A Vision for 2020, the European Commission (EC)
established a multilateral goal for obtaining ``global leadership'' in
civil aviation during the next 17 years. More importantly, the EC has
committed $93 billion to its vision, making government entities
responsible for the funding of 30 percent of the continent's civil
aeronautics R&D. And as you wrote to the Secretary of Transportation on
October 1, 2002, Mr. Chairman, the European Air Traffic Alliance has
started to work on a next-generation Air Traffic Management system
scheduled for activation by 2018.
In the United States, however, the tide has moved in the opposite
direction. Since 1998, the combined NASA and DOD investment in
aeronautics research and technology programs has fallen by one-third.
Federal R&D and research infrastructure investments in aerospace
dropped 75 percent from 1987 to the year 2000 (after adjusting for
inflation). Taking these factors into account, the Aerospace Commission
warned that the Nation could miss several opportunities to incubate
``breakthrough capabilities'' in high-performance computers; propulsion
and energy systems; noise and emissions mitigation; and hydrogen-fueled
engines.
The President's FY04 NASA and FAA budget proposals represent a
modest start in addressing our federal R&D resource gaps. I
respectfully urge the Committee to support NASA's $959 million
Aeronautics Technology and the FAA's $100 million Research, Development
and Engineering requests. These two programs devote the majority of
their funding to civil aircraft safety and structural improvements: As
a complement to the President's budget, I also recommend that the
Committee pass the Aeronautics Research and Development Revitalization
Act of 2003 (H.R. 586), introduced on a bicameral, bipartisan basis by
Senators George Allen, Christopher Dodd and Representative John Larson
of this distinguished Committee. H.R. 586 gradually increases the NASA
and FAA research budgets between now and FY08, with more than 50
percent of the authorized funding reserved for low-noise, low-emissions
aircraft and aviation safety programs. The passage of H.R. 586 would
signal domestic air travelers and our competitors in Europe that the
United States has a vision of reliability for the civil aviation realm
to match our global superiority in the military realm. It would also
give the FAA more flexibility to adapt military surveillance and
communications technologies in upgrading the air traffic control
network.
Moreover, the Committee has an opportunity, in cooperation with the
Ways & Means panel, to re-visit the issue of the federal R&D tax
credit. The current 20 percent credit expires next year. Based on
outdated defense spending trends from the 1980s, however, the aerospace
industry qualifies only for an ``alternative credit'' of less than four
percent. This inequity has a disproportionate impact on companies that
invest in high-risk R&D to validate many of the aeronautics
capabilities that I mentioned a few moments ago. Furthermore, a recent
study by the General Accounting Office found that the R&D tax credit
generated one-third of real economic growth in the U.S. during the late
1990s. Congress should act this year on the conclusions of the GAO by
making the credit permanent and gradually increasing the
``alternative'' percentage to a level comparable with the standard
rate.
Finally, I recommend that the Committee consider legislation to
streamline the research information transfer process between the
government and the private sector. As the Aerospace Commission noted,
technology deployment often outpaces the completion of cooperative
agreements among federal agencies and private sector research
organizations. The manufacturing sector, in turn, has missed
opportunities to capitalize on government-sponsored basic research to
develop higher-performing aerospace systems. To address these problems,
the FY04 NASA Reauthorization bill could serve as a vehicle for
mandating an assessment of interagency research programs and new
guidelines to streamline proposal evaluation and contractual oversight
procedures.
Products and services that transform or prolong our lives always
begin with bold ideas, as proven, among others, by the Wright brothers,
Dr. Jonas Salk, and the information entrepreneurs who power the World
Wide Web. I therefore ask the Committee to support basic aerospace R&D
programs that will enable Americans to travel, trade and communicate
with greater efficiency in the future.
Civil Aviation
The decline in air travel and system delays following the attacks
of September 11th is temporary. Forecasters agree that growth in demand
for air transportation ultimately will return to much higher historic
levels and will outpace available and currently planned capacity. Aging
infrastructure and often insufficient capacity, coupled with high
passenger volume, should make the cause of airport and air traffic
management modernization an urgent national priority. U.S. airlines and
general aviation carriers serve more than 750 million passengers per
year, carry 27 percent of the Nation's exports and imports and pump
nearly one billion dollars into the domestic economy. But a duplicative
infrastructure review process delays many airport facility and runway
projects by between 10 and 15 years. At the same time, the Aerospace
Commission found that FAA policies and oversight practices fail to take
advantage of new communication, navigation, surveillance and air
traffic management (CNS/ATM) products to modernize our aging and
cumbersome air traffic control system.
NASA's Strategic Plan estimates that as domestic and international
airports reach full capacity without adequate expansion, the airline
industry could lose $20 billion in output and forfeit up to 200 billion
passenger miles by 2015. Your October 2002 letter to the Transportation
Secretary, Mr. Chairman, also noted that while the U.S. is ``the
world's preeminent provider of safe and efficient air navigation
services. . .at the federal level, no department or agency has taken on
the task of planning for a follow-on Air Traffic Management system.''
As a result of this crisis of economies and mobility, AIA and the
Aerospace Commission urge the Committee to consider the following
legislative initiatives to create an integrated federal strategy for
air transport modernization:
Full funding of the FAA's FY04 $3.9 billion request
for National Airspace System (NAS) safety, homeland security,
and air traffic automation programs to advance the Agency's
Operational Evolution Plan (OEP). The OEP anticipates the
expansion of national air transportation capacity by 30 percent
over the next nine years.
Passage of an amendment to the FY04 NASA and/or FAA
Reauthorization Bills establishing a joint program office among
DOD, NASA, FAA and NOAA. The amendment would mandate a multi-
year blueprint and timeline for a revitalized air traffic
management network that leverages capabilities and resources
from across the Federal Government. The integration and timely
dissemination of information using advanced networks will
enable the broad situational awareness and collaborative
decision-making essential to civil and military users. Beyond
the scope of OEP, this provision would also set general policy
guidelines for establishing system-level performance
requirements to meet long-term safety, security, capacity,
efficiency and environmental needs.
Industry could make a vital contribution to the
mission of this proposed joint program office. Many AIA member
companies, for example, have invested years of work with a
broad group of stakeholders to develop system performance
requirements as well as modeling and simulation capabilities to
evaluate advanced concepts.
Amending the Aviation Investment and Reform Act for
the 21st Century (AIR-21) to require a streamlined FAA regime
for airport improvements. Congress should request a detailed
plan for concurrent or deadline-driven permitting, licensing
and project approval milestones. A priority projects list
should also be prepared for the approval of the FAA's
authorizing and appropriating committees.
AIA believes, Mr. Chairman, that legislation of this nature would
begin to align the resources of government with the well-documented
capacity and technology shortfalls in the civil aviation sector.
Space Exploration
Transcending their pain and grief, the families of the Columbia
Seven Shuttle astronauts told the world that ``the bold exploration of
space must go on'' because our lost heroes had accepted ``risk in the
pursuit of knowledge.'' This declaration, Mr. Chairman, defines our
resilience as a people. And resilience, combined with curiosity about
the galaxy beyond our skies, has propelled America into space. Drawing
on the courage of the Columbia families and the determination of the
Administration and this committee, the U.S. space program can emerge
from tragedy in a stronger scientific and exploratory position.
AIA and its member space companies will work tirelessly with NASA,
the White House and the Gehman Board to uncover the causes of the
Columbia tragedy and to implement the needed reforms in our space
transportation programs. Towards this end, we commend you and the
Committee, Mr. Chairman, for obtaining the cooperation of NASA last
month in allowing the Board to retain independent professional analysts
and to set its own investigative timetable.
The Colombia disaster also requires us to sharpen our focus on the
cost, reliability, propulsion and safety hurdles posed by the
exploration of space over the last three decades. In the assessment of
the Aerospace Commission, government and industry must scrutinize the
``significant expense to get to orbit and a hostile and highly limited
environment once on-orbit.'' To tackle this issue, Mr. Chairman, I
respectfully urge the Committee to assess NASA's strategy for a long-
term Shuttle replacement vehicle. Before the Colombia tragedy, NASA had
determined that the space program would rely on the existing fleet for
at least another 15 years. This timeframe may still apply, but it
requires the agency to design a post-Shuttle architecture as rapidly as
possible so that human observation and experimentation can continue to
enrich our understanding of the universe.
Similar to the crisis in civil aviation, the challenges to the U.S.
space program center on the need for interagency coordination guided by
coherent policy objectives. In recognition of this fact, the FY04 NASA
Strategic Plan, which AIA urges the Committee to support, charts an
ambitious course for the country's space research and flight programs.
Six Enterprises (Space Science, Earth Science, Biological and Physical
Research, Aerospace Technology, Education and Space Flight) will
undertake a joint effort to breach what the Agency candidly defines as
``technological barriers'' in four areas: power, transportation, on-
orbit human capabilities and solar system communications.
To amplify the impact of the Strategic Plan, AIA and the Aerospace
Commission recommend the following amendments, summarized by program
categories, to the FY04 NASA Authorization Bill. These proposals will
also establish guidelines for reform in the relationship between NASA
and Congress.
Next-Generation Launch Vehicles
The Committee, in evaluating the budget justifications for the
Expendable Launch Vehicle, Space Shuttle upgrades and the Orbital Space
Plane concept, should consider a requirement for a separate, early 2004
report from the Administrator, to be followed by an oversight hearing,
on the state of research and experimentation to:
reduce the cost to orbit;
develop and test enabling technologies for a Reusable
Launch Vehicle in cooperation with DOD, a mission endorsed by
the Director of the National Reconnaissance Office;
improve control center operations and security; and
mitigate launch, flight and recovery constraints.
These areas, identified by the Aerospace Commission, represent the
key financial, navigational and safety issues for the post-Shuttle
generation of space transportation vehicles.
Power and Propulsion Systems
A second authorization amendment should formalize NASA-DOD joint
efforts, possibly by creating a program office or task force under the
auspices of the National Aerospace Initiative, on propulsion research
and power systems. NASA and the Aerospace Commission have both targeted
propulsion and power advances as the critical ingredients for the
sustainability of spacecraft.
Space Launch Infrastructure Upgrades
As a result of a presentation by NASA Kennedy Space Center (KSC)
officials, the Aerospace Commission revealed that the Current
Replacement Value of the KSC infrastructure amounts to $3.9 billion.
The main deficiencies include corrosion in the cable plant and the
Vehicle Assembly Building as well as aging and under-performing Shuttle
launch pad transporters. The Committee therefore should consider an
amendment mandating a launch infrastructure improvement plan from NASA
with out-year budget allocations based on the $3.9 billion estimate by
KSC management.
As J.F. Creedon, Associate NASA Administrator for Aerospace
Technology, testified on February 27th before the Senate Commerce
Subcommittee on Science, ``access to space will require interagency
partnerships to meet common needs.'' AIA strongly believes that the
Committee can clarify our strategic roadmap for space exploration by
creating and directing a new series of federal partnerships.
Human Capital
I noted at the beginning of my testimony, Mr. Chairman, the
difficulties faced by the aerospace industry in recruiting and
retaining skilled professionals. As the Aerospace Commission pointed
out, the United States has lost more than 600,000 aerospace jobs in the
last 13 years. Previewing future generations of workers, we find that
the math and science testing performance of students in the U.S.
relative to their European and Japanese counterparts gradually erodes
to the 10th percentile or below by the end of high school. Yet in the
awesome mix of platforms and technologies that characterize our
industry, no resource is more valuable than human and intellectual
capital.
AIA joins the Aerospace Commission, therefore, in urging Congress
to empanel an interagency task force, with a formally designated lead
agency or department, to build a strategy by mid-2004 for improving and
expanding the math, science, engineering, and technical/vocational
education of Americans. Congress should then sub-divide and revise the
various elements of the strategy to incorporate them as mandatory
mission planning objectives in the appropriate budget authorization
bills.
NASA's strategic human capital program, the subject of the second
panel of today's hearing, could serve as a model for an integrated
federal workforce plan. AIA strongly supports this comprehensive
initiative. The Education Enterprise of NASA will unite the Human
Resources division with other critical units, such as the Technical
Programs office, to design new scholarship and recruitment programs to
narrow gaps in professional skills across the organization. This
approach, by assigning responsibilities to all functional and program
activities, makes the improvement of human capital a continuous agency
mission.
National Security Programs
I want to draw the Committee's attention to a few key programs from
the FY04 defense budget that demonstrate the Pentagon's evolving Total
Force framework to deter or defeat the unpredictable adversaries of our
age.
Naval Force Modernization
The oceans cover 70 percent of Earth's surface, and the majority of
the world's population and industrial facilities reside within 250
miles of a coastline. If only for these reasons, the Navy's surface and
submarine fleets provide the United States with the forward military
presence, free of dependence on foreign bases, to prevent or prevail in
conflicts and to safeguard the global sea lanes of commerce. The Navy's
FY04 shipbuilding request of $12 billion deserves strong congressional
support as the Service continues to execute a full-scale modernization
and recapitalization program. The aircraft carriers, destroyers,
cruisers, submarines and combat support ships of the future will
magnify the power of ground forces with deep land attack, special
operations, theater missile defense and reconnaissance capabilities. As
a result of this strategy, Mr. Chairman, the Navy will assume an
increasingly important role in meeting many of our national security
objectives from the sea and along the shore.
Armored Programs
In their 2003 Posture Statement, Army Secretary White and Chief of
Staff Shinseki describe their vision of an Objective Force that by
2010, will complete training for ground dominance, cyber-warfare and
space exploitation operations. In addition, the current Stryker Brigade
Combat Teams and the planned Future Combat System (FCS) provide
soldiers with mobile air-ground units to project power and subdue
adversaries in the most austere or heavily urban environments. Armored
forces will therefore remain vital to our unchanging need for enemy
territorial control as the end-state of victory, and the FY04 Army
budget contains focused R&D and acquisition proposals to keep the
Objective Force plan on schedule. Aerospace technologies will also
provide a number of critical networked solutions to the fully-deployed
FCS. The current heavy armored deployments to the Persian Gulf theater
only underscore the requirement to keep the FCS program on schedule
since our soldiers will need state-of-the-art battle space management
and force protection equipment over the course of several years.
Today's Stryker industrial base reflects the successful shift from
a single product line to a flexible manufacturing process capable of
building multiple combat vehicles in a variety of weight classes. What
once functioned as a Cold War tank line now supports the production of
the Stryker family of 10 different vehicles. This armored
transformation would not have occurred without the resources, skills,
vendors and investment by both government and contractors. During
Operation Desert Storm, for example, a warm production line made it
possible to supply over 22,000 spare components and major assemblies on
short notice. As current and future ground threats arise, the existence
of a modernized armored industrial base will prove critical in
supporting the Nation's military response and deterrent objectives.
Tactical and Mobility Aircraft
Our combat experiences in Afghanistan, Southwest Asia and the
Balkans illustrated the dramatic utility of air power as a wartime
force multiplier. During the opening phases of conflict, precision air
power destroyed or crippled enemy air defense, fighter-bomber and
command-and-control networks, thereby depriving hostile forces of
territorial defense and combat attack assets. At the same time,
personnel and cargo transport aircraft enable the United States to
introduce troops and firepower into a zone of conflict during a time
when we lack fewer basing facilities overseas.
I subsequently urge Committee Members and Congress to support FY04
Air Force and Navy budget requests that dedicate a combined $21.3
billion to seven tactical and mobility aircraft (the F/A-22 tactical
fighter; the F/A-18E/F carrier-based strike fighter; Joint Strike
Fighter development; C-17 Airlifter procurement; C-5 avionics upgrades;
C-130 Transporter modernization; and V-22 Tiltroter procurement),
supplemented by more than 45,000 precision-guided munitions, to expand
the Nation's global force projection capabilities.
In addition to promoting the modernization of U.S. air-breathing
military forces, Congress should ensure that the appropriate DOD
components and Services sustain, as the Aerospace Commission advised,
critical, high-risk defense-related technologies such as combat system
design capabilities, solid rocket boosters and radiation hardening.
Conclusion
In closing, Mr. Chairman, I commend you, Congressman Hall, and the
entire Committee for serving as the trustees of scientific innovation
and programmatic accountability among your colleagues. Through this
testimony on implementation alternatives regarding the report of the
Aerospace Commission, I have tried to concentrate on legislative policy
reforms to improve interagency cooperation, direct the development and
fielding of new technologies for the civil aviation and space arenas,
and begin the vital effort of workforce revitalization. These three
assets--knowledge-sharing, modernization and people--will open new
frontiers for the aerospace industry to serve our commercial and war
fighting customers of tomorrow.
Biography for John W. Douglass
John W. Douglass is President and Chief Executive Officer of the
Aerospace Industries Association, which represents the Nation's
manufacturers of commercial, military, and business aircraft,
helicopters, aircraft engines, missiles, spacecraft, materiel, and
related components and equipment. Mr. Douglass became the seventh full-
time Chief Executive of the Association in 1998. Before that he served
for nearly three years as Assistant Secretary of the Navy for research,
development and acquisition of defense systems for the U.S. Navy and
U.S. Marine Corps.
A nationally recognized expert in systems acquisition, Mr. Douglass
has extensive acquisition experience in Congress, the Defense
Department, and the executive branch as a policy authority, contracting
officer, engineering officer, test and evaluation officer, program
control officer, and research director.
Before being named a civilian Navy executive, Mr. Douglass was with
the Senate Armed Services Committee where he was foreign policy and
science and technology advisor to Senator Sam Nunn and served as lead
minority staff member for defense conversion and technology
reinvestment programs.
Earlier Mr. Douglass completed 28 years of U.S. Air Force service
and retired as a brigadier general in 1992. His numerous Air Force
assignments included service as the deputy U.S. military representative
to NATO as well as Director of plans and policy and Director of science
and technology in the Office of the Secretary of the Air Force. He also
served as Special Assistant to the Under Secretary of Defense for
Acquisition.
Within the Executive Branch, Mr. Douglass was Director of national
security programs for the White House, responsible for formulating
policy on a broad range of national security issues. He served as
President Reagan's personal representative to the Blue Ribbon
Commission on Defense Management chaired by David Packard.
A native of Miami, Florida, he earned a Bachelor of Science degree
in industrial engineering from the University of Florida, a Master of
Science degree in industrial engineering from Texas Tech University and
a Master of Science degree in management science from Fairleigh
Dickinson University. Mr. Douglass has done postgraduate work at the
Cornell University Center for International Studies where he was an Air
Force Research Fellow with the Peace Studies Program.
Mr. Douglass is a member of the Board of Governors of the Aerospace
Industries Association, a member of the Commission on the Future of the
U.S. Aerospace Industry, and Chairman of the Aerospace Technology
Policy Forum. In addition, he is Chairman of the Board of Trustees of
the National Center for Advanced Technologies and Past Chairman of the
International Coordinating Council of Aerospace Industries
Associations.
AIA Positions:
Chairman, Aerospace Technology Policy Forum
Chairman, Board of Trustees, National Center for Advanced Technologies
Member:
Commission on the Future of the U.S. Aerospace Industry
National Contract Management Association
Space Day Foundation Council of Advisors
Chairman Boehlert. Thank you very much. Dr. Hamre, before
we go to you, we have been joined by the Ranking Minority
Member, the distinguished gentleman from Texas, and it is a
pleasure to recognize him for any remarks he might care to
make.
Mr. Hall. Mr. Chairman, thank you. And I subscribe to the
remarks you have made. I will be very brief. Of course, I want
to welcome all of the witnesses today. I know you have to
prepare, and you have to get here, and you have to testify when
you get here, and you have to get home, so you have gone to a
lot of trouble, and we appreciate it. And you are here because
it is obvious that we think you know a lot more than this panel
knows, and we kind of pick your brains, especially our old
friend, Bob Walker. Bob is a class guy, was a class guy, will
always be a class guy. He wrote a lot of bills that made this a
better Congress, and he improved a lot of bills that others had
written from time to time. Sometimes when we didn't want him to
improve them, he improved them. But Mr. Chairman, thank you for
that time. And I will ask unanimous consent to put a very
extraordinary speech in the--I haven't read it yet, but I know
it is a good one.
Chairman Boehlert. Without objection, so ordered.
[The prepared statement of Mr. Hall follows:]
Prepared Statement of Representative Ralph M. Hall
Good afternoon. I would like to welcome all of our witnesses to
today's hearing. We look forward to hearing your testimony. I'd like to
extend a particular welcome to former Chairman Bob Walker, who once was
an active Member and leader of the Science Committee.
We have a great deal to cover this afternoon. Each of the topics to
be discussed could easily merit a separate hearing. As a result, I will
be brief in my opening comments so that we can spend as much time as
possible hearing from our witnesses.
Let me say just a few words about the topic to be addressed by the
first panel, namely the report of the Aerospace Commission. The
Commission was chartered at a time of uncertainty for the Nation's
aerospace industry. However, the reality is that the future of the
industry is now even more uncertain than when the Aerospace Commission
started its work. More than 20 percent of the Nation's air carriers are
in bankruptcy. The Nation's space program is just coming to grips with
the loss of the Space Shuttle Columbia and its impact on a range of
programs, including the International Space Station. We are in the
midst of a sustained downturn in both the commercial launch market and
the commercial satellite market. The inherent conflicts between export
control policies and the globalization of the aerospace industry have
been growing. This committee is looking for some wisdom from the
Commission--not just regarding your long-term vision for aerospace, but
also your advice on how best to deal with the multiple challenges
facing the aerospace industry today.
That brings me to the second topic to be addressed in this hearing:
NASA workforce issues and Chairman Boehlert's proposed NASA workforce
flexibility legislation. I will say up front that I welcome the
Chairman's efforts to focus attention on the issue of how best to
attract and retain the skilled personnel NASA will need to retain its
vitality in the 21st century. I hope that the Committee will treat this
issue with the seriousness that it deserves and devote the time needed
to do thoughtful oversight. It can be tempting to some to try to
``short circuit'' the legislative process in their zeal to achieve
quick results, but I hope that we will resist that temptation.
The question before this committee is not whether we want to have a
skilled, diverse, and effective NASA workforce. I believe we would all
say that we do. The real question is what approaches are best suited to
deliver the desired result. That's not a simple question to answer.
For example, when the Nation's aerospace sector has lost almost 50
percent of its jobs since 1989, we should not be surprised to find that
many talented students are looking elsewhere for careers. Will NASA
recruitment bonuses or related measures have more than a marginal
impact on reversing that broad national trend? Are there other measures
that could be more effective?
If NASA wants to attract and retain talent in critical skills areas
through various incentives, does it send a mixed message to prospective
employees when it also advertises its intent to make 50 percent of its
remaining civil service jobs vulnerable to being contracted out within
the next few years?
To what extent is the aging of NASA's workforce the result of the
protracted hiring freeze that the agency faced during the 1990s--and
thus correctable under existing hiring rules now that the freeze has
been lifted?
And what are the implications of giving NASA management and OPM the
authority to change the workplace rules of the entire agency without
the prior approval of Congress? What changes is NASA management
proposing to make if they are given this authority?
The NASA workforce has been compared to a family. We need to
remember that the NASA family has been profoundly shaken by recent
events. Let us tread carefully and take the time to ensure that
whatever we do is in the best interests of all of the NASA employees.
Thank you, and I yield back the balance of my time.
Chairman Boehlert. And now, Dr. Hamre.
STATEMENT OF HON. JOHN J. HAMRE, PRESIDENT AND CEO, CENTER FOR
STRATEGIC AND INTERNATIONAL STUDIES
Dr. Hamre. Mr. Chairman, distinguished Members, thank you
for inviting me. I am so pleased to come up here knowing that I
am not going to get a whipping today. This is--usually I would
come up here and Mr. Boehlert would just thrash me something
fierce, because I give him something dumb, but thank you for
the chance to come up anyway.
I was asked to come up here I think largely because people
feel I have a disagreement with my Commission and my Chairman.
And I don't. And I would like to say for the record how pleased
I am that Bob Walker was our Chairman. He did a splendid job.
He brought very diverse people and perspectives to a consensus.
I think we are all very grateful for the time and the energy he
put into it, and I am always glad to be with my friend and
colleague John Douglass and I learn a lot from John all of the
time.
Both of them have said what, in essence, I had planned to
say, so I can be very short. I did feel at the time, and I feel
even more strongly now, that frankly we are facing a very
serious crisis with our aerospace industry. I mean, if you were
to use medical analogies, we are in the ICU unit. I mean, we
are on life support. And I depend, just as you do, every day on
being able to get on an airplane and fly safely across this
country in an industry that is making money, profitable
industry that is making money. And they are not. And we have
got to face up to that. We have got a real problem on our hands
for the long-term viability of this industry. It is not just
the airline industry; it is the people that make airplanes. We
can not live in this country with an industry that can't
manufacture state-of-the-art, modern airplanes. And that is at
risk.
The satellite industry, I am--I hate to say it, government
regulation is undermining the vitality of our satellite
industry and our launch capacity. I mean, we have excess
capacity, and it is imploding. And so we have got a genuine
crisis on our hands, and frankly it sits squarely with our
government, and we have got to do something about it.
Now I would like to focus on one specific set of issues,
and I would ask you all to take a look at how we regulate this
industry in terms of exports. We have got a set of policies in
place, which have not been updated since the end of the Cold
War. And we are creating protected markets for our foreign
competition by our export controls. Now I frankly want strong
export controls, but I think they are being trivialized by
their misapplication on--and being spent all of our energy on
trivia. We are regulating five-ton trucks and rearview mirrors
on F-16s. And God only knows what we are doing. With 40,000
licenses a year, and 99.6 percent of them get approved. And we
just go through agonizing months to get an approval, and we are
wasting lots of time and talent and resources looking at things
that are not important. And we are not spending the time and
the resources to look at the stuff that really is important.
And we have got to change our focus. Let us focus on things
that are really important.
Thirty percent of our exports are going to the United
Kingdom, and yet we treat them just like they are Pakistan in
terms of the--of having to get a license. Now there has got to
be some differentiation in the way we approach our best friends
and our skeptical partners. There has got to be some difference
between leading edge technology and dull edge technology. That
is not at all recognized in the way we approach this industry,
and we are choking and really hurting an industry.
Let me just take the satellite industry, and I--we have
done some work on this in my little think-tank, and I would
commend it to you, Chairman. I will give copies to your staff.
I don't expect Members to read it, but it outlines some
alternative approaches that give you stronger security and more
sensible regulation of an industry that we have to have and we
can not live without. And it starts with the premise that these
people do not want to violate American laws. They do not want
to hurt American security. They want to be our partners to
protect America. And we need to treat them like that and enter
into a new relationship with this industry so that we honor
that commitment that they have. And there are ways to do that,
and it has been worked on a lot of detail and a consensus
across the wide perspective of the community that knows a lot
about this.
Satellite industry, right now, we let a company develop an
export of technology only when they can prove a foreign
competitor can do it as well as they can. What does that tell
you? We are in essence providing a protected market for foreign
competition through American producers. This can't be the way
that we want to run this industry. Now there are other
approaches, but we have got to start thinking with an up-to-
date, modern export control system that is tailored to the kind
of business environment we live in today. And we do not have
that. We have an export control system that is tailored to the
1960's, and we need to change it.
Thank you very much for the chance to be with you, sir.
[The prepared statement of Dr. Hamre follows:]
Prepared Statement of John J. Hamre
Mr. Chairman, distinguished Members of the Committee on Science,
thank you for inviting me to join Aerospace Commission Chairman Robert
Walker, and my colleague and friend John Douglass, to testify before
you today on the work of the Commission on the Future of the Untied
States Aerospace Industry.
Mr. Chairman, let me note that I signed the report, and I stand by
the recommendations of the report. I would like to take this
opportunity to thank Chairman Walker for the enormous energy he gave to
this effort, and for the patience he had in bringing together the
thinking of such a diverse and talented panel. I believe that it is
best to let Chairman Walker speak on behalf of all of us to the
recommendations of the Commission. I will deal briefly only with the
questions you asked of me in your letter of invitation. Naturally, I
would be delighted to answer any question you pose, and provide any
additional information for the record that you and the Committee may
desire from me.
First, you asked what fundamental issues did the Final Report fail
to appropriately examine. The Commission was chartered to examine
fundamental factors that needed to be addressed to ensure the long-term
viability of the aerospace industry. I believe the Final Report did
this. My concern then--and this concern has only grown with time since
we concluded our work--is with the deteriorating financial health of
the aerospace industry. To use a medical analogy, the aerospace
industry is in the intensive care unit on life supports.
I personally depend on this industry every week. I cannot live
without a reliable, safe, efficient and profitable commercial airline
industry, yet since we finished our report several major carriers have
declared bankruptcy and more are likely to follow. We cannot rely only
on the current fleets of aircraft. Right now, the flying inventory is
quite new because the recession in the industry has caused the airlines
to mothball their oldest aircraft. But the replacement rate is
uncertain, and the viability of U.S. producers is challenged. We must
have new production aircraft on an indefinite basis.
Mr. Chairman, I personally consider this situation to be a crisis.
This industry is essential to America's vitality and productivity. Our
future national economic health and security depends on a healthy and
viable aerospace industry. And in all honesty, this industry is in
enormous trouble. Along with commercial aviation, our satellite
industry is imploding, with far too much capacity for the limited
market we forecast for the next decade. The launch industry is
similarly confounded by surplus capacity.
Solving this problem requires immediate action. The focus of our
Commission was on a longer-term perspective, and it is because of this
that I don't believe we have a crisp checklist of actions that the
Committee should take. So at this stage, I can only offer my personal
observations.
First, the airline industry itself has to get its own house in
order. Unfortunately this means tackling the unbearable cost structures
of the current business, and probably developing modified business
models for the future. I have to defer to others to develop those
strategies. I do believe that it has to be led by the industry itself,
in the context of the market place.
Second, the Federal Government has got to put more energy and
resources into the modernization of the air traffic control system. The
FAA's modernization plan is essential, but it is not by itself
sufficient for the long run. While the recession currently has eased
the pressure on the system, the modernization program will only carry
us another decade or so. New approaches are essential. Here I think the
Commission report provides useful direction, and I commend these
approaches to the Committee for consideration. I especially recommend
that the Committee devote time this year, as you prepare your
legislative agenda, to the need for a long-term solution to air traffic
control.
Third, the industry is burdened by an uneven patchwork of costs and
restrictions that have been imposed since September 11. Admiral Loy has
done a splendid job standing up the Transportation Security
Administration, but the overall architecture of security, and the
burdens that are placed on the industry, need to be dispassionately
examined. Most importantly, how should we finance the security we want
in aviation? Do we put it on the back of the airlines? Do we provide it
as a government service? In a post September 11 environment, how do we
strike a balance between security and efficiency? We don't have a clear
philosophy here, and the uneven patchwork of regulations and
obligations needs to be rationalized, in my view.
Fourth, we desperately need to modernize Government regulation of
this industry. Here let me refer to the second question you posed. You
asked for my views on export control and technology regulation.
Frankly, our approach to export control and technology regulation is
obsolete, stuck in a cold war mentality that fails to comprehend the
threats of our day.
I want stronger export controls on things that matter, not a rigid
adherence to bureaucratic rules that buy very little security and
merely satisfy the imperatives of a bureaucracy. The failings in this
area are profound. We make virtually no distinction between cutting
edge technology and old, prosaic technology. We make our best allies go
through the same process as we do the worrisome countries. We spend an
enormous amount of time and energy regulating trivia, which soaks up
the talent and resources of our government regulators. They should be
spending their time on truly important matters, and not waste their
time on five ton trucks and portable generators. The Commission has
outlined solid and constructive recommendations in this area, and I
would commend them to you and to the Committee staff.
Mr. Chairman, let me address the last question you raised in your
letter of invitation, and that is how do we encourage greater exports
without compromising critical technologies. Here we need reasoned
judgment, not the blind paranoia of mid-grade government examiners. We
have the naive idea that it is a simple matter to reverse engineer any
product to extract critical technology. Frankly, that is just not
correct. Reverse engineering is enormously difficult. If you ask any
high technology producer of virtually any product, they will tell you
it is nearly impossible to build a product, even if you give them the
complete drawings. The manufacturing art is essential, and that is not
compromised routinely. Indeed, our companies have an intrinsic and
reliable incentive not to compromise that art. If the government
approached the industry as partners, rather than as wayward mischievous
children needing discipline, we would get stronger security.
There are ways to do that. I would commend to the Committee work
that we have done at my research institute, the Center for Strategic
and International Studies (CSIS). With your permission, I would like to
submit two CSIS reports to complement your hearing record: ``Preserving
America's Strength in Satellite Technology,'' and ``Technology and
Security in the Twenty-First Century: U.S. Military Export Control
Reform.'' These reports outline a comprehensive new approach that would
provide stronger security and impose less burdensome regulation on a
troubled industry. Under existing regulation, we are burdening an
industry with choking regulation that buys very little security and is
isolating our industry from market opportunities and competitive forces
that are critical for its long-term health. This is especially true in
the area of satellite technology. Our current regulations are creating
a protected market for foreign competitors, and constraining American
producers to a market that is too small to maintain their
profitability. Under our current approach, we have in place all the
incentives to create the satellite manufacturing equivalent of Airbus.
We need well-designed and sensible controls on technology. I do
want a strong export control system. But it needs to be well designed
and it needs to comprehend the changes that are taking place in our
economy. Our current system is neither well-designed nor flexible to
change.
Mr. Chairman, distinguished Members of the Committee, thank you for
inviting me to participate in this important hearing. I would be
pleased to answer any questions you might have when the time for
questioning begins.
Discussion
Chairman Boehlert. I thank all of you very much. And
Chairman Walker, you and I have served for a long time in this
institution from our days in the '60's as staff members. And we
have seen very distinguished Commissions, and this one is not
an exception, very dedicated and able and committed Americans
make very clear policy recommendations. And then the reports
are put on the shelf and they gather dust. And so let us hope
that this one will be an exception and not fall under the
category of being the rule.
Role of Propulsion & Power
Let me ask you this, what areas of research do you think
are most essential for the future of the aerospace industry?
Mr. Walker, you are first up on that.
Mr. Walker. Well, we identified several in the report, but
in both air and space, propulsion is a major area where
research could produce some dramatic changes. We--if you want
additional speed to be able to go point to point, it is one of
the ways in which you get a commercial industry which is
different from the direction in which the Europeans are going.
That is propulsion in large part. If you want to do more
exploration of the solar system, you do propulsion research at
NASA and give yourself new options there.
Along with propulsion in space, power also becomes an
issue. It means that you can do far more in the way of
scientific missions if you have additional power aboard the
spacecraft. That also is a matter where you can put money. We
identified, for example, a need to do the National Aerospace
Initiative. One of the reasons why you do that is because it
will increase speed, largely for defense missions initially,
but also give you a platform off which you can do fully
reusable space vehicles in the future. That will be a materials
issue. It will also be a propulsion issue for the future.
So my guess is that those are the places where you would
get the biggest payoff for your research dollars at the present
time.
Using Defense Technologies for Civil Applications
Chairman Boehlert. Mr. Douglass.
Mr. Douglass. Sir, Chairman Walker has mentioned almost
everything that I would have on my list, in terms of
categories, I think the insight that I could add to you is the
following thoughtful comment. If you look at our military
today, we are two to five generations ahead of anybody else in
the world. We are the only people with stealth fighters,
stealth bombers, big tankers, J-stars, transport airplanes that
can do marvelous things, precision guided munitions of all
types, information technology, data fusion. And then you go
over to the commercial side, and you say, ``Hey, wait a minute.
Why is a brand new airplane approximately the same as a brand
new Airbus?'' And part of the answer is we, as a Nation, are
not effectively taking the technology we have already developed
and paid for, American citizens have paid for, and moving it
from our military side to our commercial side the way we used
to do years ago. Part of that lies in the globalization of the
industry, but part of it lies in the stovepipe nature of the
way our government is structured here. And so there is a huge
opportunity for us to help civil space and civil aviation by
linking up what we have already paid for on the Department of
Defense side to the commercial side.
I think Chairman Walker mentioned that one of the good news
is that NASA and the FAA are cooperating to share research on a
new air traffic control system. DOD should be a part of that
program, because much of the technology the DOD uses is in
information warfare. For example when I was the Assistant
Secretary of the Navy, we developed--and when John was a Deputy
Secretary at DOD, we developed a thing called a cooperative
engagement capability where every single ship in the fleet can
see what every other ship's sensors see. That is a perfect
application for air traffic control. It is developed. It is
there. The Navy is using it. It ought to be brought over to the
commercial side.
Chairman Boehlert. Mr. Hamre, you have been in and out of
the government in responsible positions. Some would say you
have a better vantage point from which to view how things need
to be changed within the government. What can we do?
Peer Review of R&D Investment
Dr. Hamre. Well, sir, I forgot I couldn't pass high school
physics. I am not going to tell you how to spend R&D money. I
am personally very skeptical that the government can pick
winners and losers in R&D. I think that--and I think that we
really should try, and I think you honor this by trying to have
a peer review process that provides expertise that comes in
from the outside and say that is a winner, that is a loser. I
think that that becomes very important. The government does
need to provide the infrastructure for the scientific community
that it can't afford to buy or won't because it is just out of
scale to what an individual project can undertake. That is what
the Genome Project is. I mean, we spent a lot of money mapping
the genome, and now you are going to see an incredible
explosion of the exploitation of that knowledge. That is what I
think the Committee should be doing is focusing on the--what
are the technologies we know that could be developed but the
infrastructure impediments are standing in the way. That would
be the greatest contribution we could make, and frankly, I
think we are lagging on infrastructure investment in R&D these
days.
Chairman Boehlert. I see my time is expired. The gentleman
from Texas, Mr. Hall.
Mr. Hall. Mr. Chairman, thank you. And Mr. Douglass, good
to see you again. I remember the day you and Tom Tate came in.
I had the pleasure of recommending you. Dr. Hamre, thank you
for your very good presentation. You didn't know too much about
physics. I was a Navy cadet at TCU, Texas Christian University,
and took celestial navigation. That gave me six hours of
physics with an A. And it sure helped me later, and I can't
spell physics to this good day. I asked Dan Quayle to help me,
and he said ``F-i,''.
Financial Health of Commercial Aviation
Dr. Hamre, the U.S. aviation industry is going through a
lot of tough times now. Of course, you broke into that, and
thank you for doing that. Over 20 percent of our airlines, I am
told, are in bankruptcy, and passenger carriers have lost
around 18 billion over the last two years or so, it has been
reported. How really worried are you about the potential
collapse of our U.S. airline industry? We just can't allow that
to happen, and I am going to ask you for some advice on that.
What do you think ought to be done? And who should pay for it
and how it should be paid for, a grant, loan, or what?
Dr. Hamre. Well, I am sure going to need the wisdom of my
colleagues to answer that question, but sir, I think we can not
live with a collapsed industry. I mean, it is--the heartbeat of
the--of our economy depends on this being a viable, safe,
continuing, functioning airline industry. It is very sick. Some
of it is self-imposed, some self-induced through decisions that
were made by the companies, and they are going to have to sort
their way through it. So far, the people that have been paying
the price for whatever the mistakes are has, frankly, been
stockholders. I mean, we have seen as the collapse of the
values of these companies. We have not seen the fundamental
restructuring of the costs of these companies. And there is
going to have to be a restructuring of the costs, and that is
frankly what bankruptcy is about. But right now, the bulk of
the costs have been carried by stockholders, to be perfectly
candid. Now we are going to need a more balanced view, and it
has to be sorted out by the industry.
Now one comment, and then I will turn to my colleagues. I
think the government needs to figure out what is the right
relationship it should have with the industry as for security
and safety of operations. Right now, we tend to just put all of
the burden on them and let them pass it through as a cost to
the customer. That didn't work with safety. We didn't like what
we got out of that, and I think we need to be asking ourselves
do we have the right mix. I don't have a good formula for you,
but that needs to be evaluated in a very dispassionate way.
Mr. Douglass. Sir, I would tell you I think on September
the 11th, 2001, we entered into a new era. And I think the key
comment that John made is that we have got to determine what is
inherently a governmental responsibility and what is inherently
the responsibility of private industry. And some of the losses
that the airlines have talked about today could be conservative
if some of the worst case scenarios happen. For example, there
have already been, I think, around the world about 20 or 30
attempts by various terrorists to shoot down airliners with
hand-held anti-airplane missiles. And fortunately, they have
missed in the last few tries. We don't--we think they have got
some hits in Africa and a few other places where we don't have
a lot of information about what happened.
But if this begins to take on a wider global perspective,
just think of cost that it would be for equipping all of the
airline fleets all around the world for a defense against that
kind of an attack. Now who would pay for that? We couldn't turn
to this industry that is near bankruptcy today. Is that an
inherently governmental thing that we have to do? How do we
regulate foreign airplanes coming into our airspace or our
airplanes going into theirs? There are some very fundamental
questions like this that we need to resolve in the light of
this new and very, very difficult era that our country has now
come into after September the 11th.
Mr. Hall. Mr. Chairman, I am going to have a few minutes
left. Would you like to----
Mr. Walker. Sure. Let me just hit a couple of points. I
agree with the points that my two colleagues have made. But one
thing that the airline industry did identify for us in the
Commission was the fact that they are tremendously overtaxed at
the present time. The fact is that if you get a bargain $100
ticket, about $46 of that goes for one tax or another. And it
is a burden that the industry is bearing at the present time.
It is having an impact on their ability to compete.
Air Traffic Management
Let me give you one technology side of this, though, that
provides some hope and that is that we do have emerging
technologies that will give us the opportunity to redefine the
airline industry in some remarkable ways. The reason why air
traffic management has come up in both John's and my testimony
is the fact that in order to do some of these new concepts, you
have to have a far more robust way of managing air traffic than
we now have. But if you get there, you can do point to point
travel, and you can use point to point travel with relatively
small airplanes that allow businessmen, for instance, to fly
from one small town to another small town and do it on an air
taxi. That is a very different kind of concept. It is a very
different kind of airline structure for the future, but it is
entirely possible if we develop the technologies needed to get
there. That doesn't replace the need for the kind of airline
industry that we have at the present time, but we do need to
think about how you provide consumers with what they want. Why
are businessmen going out and spending a lot of time and money
getting into partial leases of airplanes at the present time?
Because they don't want to fly hub to hub. They want to go
where they want to go when they want to get there. And we need
to think about how you do the technology that allows a
restructuring of the industry around that model.
Mr. Hall. Thank you. My time is up.
Mr. Rohrabacher [presiding]. Thank you very much, Mr. Hall.
As you can see, we have a new person holding the gavel, and I
will be, I guess, conducting this hearing for another hour
until the Chairman returns, and I will take the prerogative of
having my time now.
Future of Civil Aviation
I think that the points Mr. Walker was just making are very
astute and people need to focus on. When we say that we have a
sick aerospace industry and we--and the airlines are in
trouble, and we have this trouble and things aren't working, we
tend to think that what we want to do is make something that is
configured the way it has been configured for the last 30 years
work. Well, that is obviously not the case, is it, Mr. Walker?
What you were just outlining for us is a totally different
vision of an aerospace industry.
Mr. Walker. Well, there is no doubt that there are
opportunities ahead of us to reconfigure the industry. And if
you look at the desirability of point to point travel, it is a
very different model than what we have pursued in the industry
up until now. And but it does demand probably new kinds of
aircraft, because you can not fly very large aircraft point to
point.
Mr. Rohrabacher. Right. And also--well, there is some
research going on now in San Diego. I know it may or may not be
successful with the development of the DP-2, which is a plane
that carries 45 people, will go up and down like a Harrier jet,
and be able to use very small runways and be able to go from
very secondary runways. And from what you are describing and
also with the change in the air traffic control system where we
take greater advantage of GPS rather than the system we had in
the past, what would you say the odds are that we are going to
have a totally new type of aviation industry 20 years from now?
Mr. Walker. Well, I think you are going to see a very
different kind of technology mix inside the industry that will
give you a much different structure and probably a much
different economic structure. But understand, it also
complicates some of the problems that John Douglass mentioned.
It allows you to use more and more airports across the country,
but that means that in this present environment, the security
issues that arise in utilizing vastly more airports complicate
and add cost into the system.
Mr. Rohrabacher. Right. And Mr. Douglass actually mentioned
a specific technology that would have helped us develop exactly
what I am talking about in his testimony. You mentioned, Mr.
Walker, propulsion. Mr. Douglass mentioned a radar system, a
shared radar system. Do we have--now Mr. Douglass, however,
suggested in his testimony that we have the technology we need
to have an overhaul of our aerospace industry. You suggested,
perhaps, we need some more technology work before that is
possible. And you focused on propulsion.
Mr. Walker. I agree absolutely with what John Douglass said
about air traffic management. I think that we are developing
and have a lot of control navigation surveillance systems that
the Defense Department has developed that would give us the
ability to do an air traffic management system in an automated
way that would be very important. What I am suggesting is that
one of the things that characterizes a new technological
approach is more speed inside the system, and there you are
going to have to have some new propulsion. We haven't developed
much in the way of new engines in recent years.
Mr. Rohrabacher. The--I was just going to get to that. Now
who do you represent, Mr. Walker?
Mr. Walker. Who do I represent?
Mr. Rohrabacher. Yeah, what--do you represent big
companies?
Mr. Walker. Sure.
Mr. Rohrabacher. And do you represent big companies, Mr.
Douglass?
Mr. Douglass. Generally speaking, sir, I represent all of
the aerospace companies.
Mr. Rohrabacher. Okay.
Mr. Douglass. We have about 250 members.
Mr. Rohrabacher. Okay. And Mr. Hamre, do you represent big
companies?
Dr. Hamre. No, I run a think tank.
Mr. Rohrabacher. Okay. So they listen to you?
Dr. Hamre. Yeah, I hope so.
Industry R&D Spending Practices
Mr. Rohrabacher. Well, let me put it this way. I know a
fellow with a--incredible credentials who has come up with a
revolutionary new engine concept. But everybody seems to be
waiting for the government to put the money into developing the
new engine. Is there a problem here with the industry being
willing to invest?
Mr. Walker. Yeah, one of the real problems with the
industry is the fact that they haven't been making any money.
It doesn't matter whether you are building aircraft or flying
aircraft and so on. The profit margins inside the industry have
been very, very poor. One of the things that our report looked
at is what kind of investment climate can you create that will
allow more investment money to come in so that some of these
industries would have the money to do some R&D on their own and
develop new products. But at the present time, they haven't
been able to do that.
Mr. Rohrabacher. Mr. Douglass, do you want to jump in
there?
Mr. Douglass. Generally speaking, the manufacturing part of
the industry makes about $6 or $7 billion a year in profit on
sales of around $150 billion. That is everything combined. So
it is profitable. In other words, the manufacturing part is not
losing money like the airlines are, but the level of
profitability, as Chairman Walker said, is not the same level
that you see in other parts of manufacturing.
Mr. Rohrabacher. But will you be depending on the
government to come up with--let us just say, hypothetically
there is someone with great credentials who has a new engine,
all right, which is--obviously I haven't been in contact with
somebody like that, but who is going to develop--who is going
to build the first prototype of that engine? Would it be
private industry? Would they put money in? Or will you just be
totally relying on the government to build the first prototype
to these type of engines?
Dr. Hamre. In engine technology, at the large engine end of
the spectrum, the new development of new technology is
generally shared between the government and industry. There is
a program called HPTET. It is a long series of letters. I
apologize for not being able to tell you exactly what it is,
something like High Performance Engine something something, and
that is a shared program where the Department of Defense and
industry share in the development of new engine technologies.
As you go down further, sir, into smaller and smaller engines,
generally you find that industry pays for the development of
those engines.
Mr. Rohrabacher. All right. Well, I see my time is up. And
Mr. Gordon from Tennessee.
Airline Ticket Taxes
Mr. Gordon. Thank you, Mr. Chairman. Bob, you mentioned
that, like, some $46 or whatever amount of a $100 ticket went
to taxes. I assume most of that was for the trust fund or for
the local infrastructure and things of that nature. Do you
think we have adequate infrastructure so that we need those
funds, or would you recommend that those dollars come out of
public--or not public, but general funds rather than user fees?
Mr. Walker. Well, I think we need to sort that out. I mean,
I think that there are some things that it is entirely
reasonable for people who utilize the system to pay for it. But
the problem is that an awful lot of that money in recent months
has gone into security, for example. And there really is a
question as to whether or not the airlines and the ticket tax
ought to be the prime vehicle for providing the security
options for the country. And so there is a sorting out process
that needs to be done here about which are the real obligations
of government to fund through general revenues and which are
the things that ought to be a part of a user fee structure? I
think if you did that sorting out process, you might be able to
relieve some of the burden that has been placed on the airlines
and ultimately on their competitive position inside the
transportation system.
NASA Infrastructure Investment
Mr. Gordon. And also you mentioned some interesting new
programs for NASA and how they are being funded in this current
budget. My concern is do we have an adequate infrastructure to
support these programs. I mean, I have a real concern that we
have an aging infrastructure at NASA that we have got equipment
facilities that need to be upgraded. And so I guess two
questions: one, you know, how concerned are you about that and
are--do we have adequate funding, and if not, do we need to
have more funding there; and secondly, do you think that it
would be a good idea for NASA to conduct a comprehensive review
of its current and future infrastructure needs along with the
pragmatic assumptions that would guide these requirements?
Mr. Walker. Let me point you to the Commission report on
that, because I think we did feel strongly that the
infrastructure that the--inside NASA is deteriorating, is a
major problem. We suggested a new approach to that. We
suggested municipalization and/or privatization of a lot of
facilities so that you could, in fact, go out and use bonding
authority in order to put new infrastructure in place. If you
take a look at what has happened down at Kennedy, the newest
structures at Kennedy Space Center are, in fact, built with
bonded money, that--the two platforms for the EELVs down there
were actually developed by the Florida Space Authority and then
turned over to the contractors for their use.
It seems to me that there may be a model there for
upgrading and building new facilities at a lot of----
Mr. Gordon. Well, with virtually every state, except for, I
think, Montana, on the ropes now, you know, who is going to be
able to afford that? And I guess secondly, even if it is
bonded, somebody has to pay the premium, so----
Mr. Walker. Sure. But the issue is that the reason why we
have not been able to get the money that is needed for
infrastructure improvement is as these things have gone through
the appropriations cycle every year, that is tended to be
downgraded. It is not the absolute necessity right now, and so
it is not done. This would allow----
Mr. Gordon. But you think we need additional funding for
infrastructure?
Mr. Walker. Yeah. This is a way in which what you could do
is assure that you get the infrastructure now but pay it off
over a period of 30 years or so. And yes, that would take some
additional money for the appropriation so that NASA could, in
fact, afford to do the bonding. But the fact is that much of
this, if we depend upon the actual appropriation structure to
get all of the infrastructure we need, it is simply not going
to happen, and we are going to continue to have a very serious
problem.
Mr. Gordon. But we need--you know, whether it is--we need
more money budgeted for the infrastructure regardless of
whether it is paying off a bond or doing it ourselves----
Mr. Walker. Right.
Mr. Gordon [continuing]. But one way or the other, we have
got to have additional funds, is that correct?
Mr. Walker. Well, again, I would suggest to you that the--
that there are many states who are prepared, because it is a
good business opportunity for them, to go out and do some of
this bonding that will not require huge amounts of new NASA
money to be put in. The states will develop this because----
Mr. Gordon. Are they going to pay off the bonds?
Mr. Walker. No, the authorities have the ability to go out
and bring private industry into those areas that are
municipalized, and therefore they make the money that can be
used to pay off the bonds. And so----
Mr. Gordon. I thought we had a surplus in infrastructure--I
mean, not infrastructure, but in terms of assets of depressed
launch.
Mr. Walker. Well, for example, if you are going to do an
orbital space plane, as NASA has proposed, if that is going to
be the new generation of technology, you are going to have to
have facilities that allow you to integrate that aboard the
EELVs or integrate it in whatever other way that you would
utilize it. Who is going to build those facilities? Is NASA
going to build them out of the appropriations stream or should
you look for a more unique way of providing the facilities? We
already have the example now that the Air Force utilized that--
a bonding authority through a federal--the Florida Space
Authority in order to put the facilities in place which are now
being used for EELV. We are simply suggesting that that may be
a model that gives you the capacity to get what you need for
the future.
Mr. Gordon. Well, I think--I hope that would be worthwhile.
Most states that I have been hearing say that we are passing
too much down to them now. But let us see if the other
panelists think that the states and private sector can afford
to take this on or whether or not we need to have additional
funding at the federal level and also whether or not we need to
have that strategic resource review to determine what we have
got and what is the situation? And what are you going to do
with it? Mr. Douglass.
Mr. Douglass. My input would be we probably do need some
kind of a strategic review of NASA's infrastructure and a plan
to modernize it. There are a number of structural problems that
exist today with NASA that are huge bills to be paid in the
future. One of them is the revitalization of this
infrastructure to meet the long-term needs of the Nation.
Another one is some substantial amount of research to help the
FAA with its long-term air traffic control needs. And then in
the not too distant future, we have got to figure out a way to
replace the shuttle, and----
Mr. Gordon. Mr. Douglass, I am sorry. I don't want to be
imposing on these other people's time, so I guess the question
is do you expect the private sector and the states to assume
this or are we going to have to have additional federal dollars
to accommodate this?
Mr. Douglass. My guess is you will need additional federal
dollars, sir.
Mr. Gordon. Substantial or----
Mr. Douglass. Substantial.
Mr. Gordon. Mr. Hamre.
Dr. Hamre. I can only speak very narrowly. I mean, if--
there are only three ways that you fund things when it is a
public good that you want that the marketplace won't provide.
It is you mandate the cost and you just impose it on the
private sector, you have a user fee, or you do a direct
appropriation. Each of these has a different impact on
efficiency and on incentives. I will give you an example of
what I don't--I think you do not want to use user fees, and you
do not want to have a mandate, and that is air traffic control.
I mean, I think--I remember when we were talking about having
user fees for air traffic control. You know, all you are going
to get is a bunch of people that won't file flight plans,
because they are trying to avoid cost. I mean, I think you--
there are certain things that you have got to structure in your
mind what are the incentives that come from it. I think we are
going to have to spend more money on air traffic control.
Clearly the OEP Program is under-funded, and it needs to be
funded at a higher level. And we need to invest in a modern air
traffic control beyond the OEP.
Mr. Gordon. And do you think that NASA should have a
strategic resource review?
Dr. Hamre. Well, I certainly--it is always helpful. We
certainly need it at DOD. I would recommend it, sure.
Mr. Gordon. If I could just conclude, Mr. Chairman, by
saying that the OMB requested that, the appropriators required
it, NASA started it but wouldn't finish it. And so I think if
within your spheres of influence you would suggest to NASA that
they move forward with this strategic resource review, as was
required by OMB and by the center appropriators, then I think
it would be beneficial for all of us. Thank you. And thank you
for your time.
Mr. Rohrabacher. Mr. Gordon, we probably will have time for
a second round, and you will be able to follow-up even more.
Now Mr. Calvert.
Wind Tunnels
Mr. Calvert. Thank you, Mr. Chairman. We--some number of
years ago, Bob, you probably remember this, we were talking
about wind tunnels 10 years ago. And as far as I know, we
haven't done a lot since then. And I guess the state-of-the-art
wind tunnel that we have in the United States, I guess, is
Ames, and I don't know if we have really improved it
substantially. Did you look into wind tunnel technology here in
the United States versus what others are using throughout the
world?
Mr. Walker. Yeah. We did not spend a lot of time on it, but
clearly, the United States has not invested in wind tunnel
technology. Most of the wind tunnels we have built have been
fairly small wind tunnels where you test models. A full-scale
wind tunnel, I don't believe we have built one in, what, 40
years or something like that. And much of the rest of the world
is migrating to other places to have wind tunnel testing done,
because they have far more modern facilities than we do and far
more up-to-date use of information technologies within those
wind tunnel facilities.
Mr. Calvert. And I remember from our discussions years ago
that you couldn't expect, say, Boeing or any particular
aerospace industry to front the cost of a wind tunnel, because
it just doesn't get a pay back on it. But there was some
discussion about having a joint type of facility where the
military, obviously who has a function, and the industry
themselves coming together to maybe finance this type of thing.
Is there--is that a good idea or do you think it should be a
direct appropriation to build a state-of-the-art wind tunnel in
the United States?
Mr. Walker. Well, again, I would say to you that the
clearer message that you should take out of the final report of
the Aerospace Commission is that we need a lot more in the way
of cooperative efforts among agencies. Now all of them, in
fact, depend upon appropriation streams, but the fact is that
time and time again we came up against issues where there was a
need for civilian, commercial, and military uses of the same
kind of resource. And our feeling is that Congress and the
Administration needs to figure out ways to crosscut
horizontally through the vertical silos that now exist so that
we get a really maximum use of the resource we put into these.
But yes, I mean, everybody in the country that is concerned
with aeronautics and aerospace requires up-to-date wind tunnel
technology. It should not be laid off on only NASA to provide
that for the Nation. There ought to be a cooperative approach
among a variety of agencies that have that need in order to see
to it that it gets done.
Engine Technology
Mr. Calvert. Another question on--we have--the Chairman
brought up engine technology and can--and maybe, Mr. Douglass,
you are the best person to answer this question. Can--do you
think of any time a major engine design in the United States
that has been put forward has not had government participation
in some way?
Mr. Douglass. Not in recent years, sir. We are at a level
of technology in engines today where the primary performance
parameters are all set by the government. And the most recent
series of parameters that we have imposed on the industry have
been noise parameters. We have made our commercial aviation
engines substantially less noisy than they were 10 years ago.
We are at what is called stage three noise reduction. We are
looking to go towards--in a year or so, toward stage four, but
the new thing we are also looking at are how do we reduce the
emissions that come out of an engine. And when you talk noise
and emissions and thrust together, you pretty much tied down
the design of the engine.
Future Air Traffic Management & OEP
Mr. Calvert. And one last question on regards to air
traffic control. All of us fly a lot, and we are all
frustrated. The industry is frustrated, as the public is
frustrated. And we have been talking about fixing our air
traffic control system here in the United States for a long,
long time. And do you think we are going to get any closer to
actually taking this from the idea stage to actual
implementation of a plan that can take us to the 21st century
with the technology that is available today?
Mr. Douglass. First of all, Mr. Calvert, I want to--just by
way of a disclosure, I was asked if I represent anybody, I am
on the Board of Directors for a not-for-profit R&D corporation.
And it is the FFRDC that supports FAA. So just by way of
disclosure, I just delineate that I have a relationship with
them. It is a--you know, it is a not-for-profit government
corporation.
The OEP is a good program. And it--and this is the program
that is in place now. It has been designed by the FAA to
improve the efficiency of what is there now. And it definitely
is a crucial thing to do. It--but I will have to tell you, the
OEP program is a treading water program. If you put in place a
$15 billion investment, and we need to make it, 10 years from
now, we are going to have all of the same problems with air
traffic control that we have today. If you don't put in that
investment, it is going to become a nightmare over the next
several years. So you have got to make this investment in order
to avoid a dramatically deteriorating situation once we get out
of this recession.
But it is not the long-term. The long-term we need to move
to a new technology. And I think that we all have the vision of
this new system, but it hasn't been engineered in any concrete
way. This really does need to be--I would commend it to you,
sir, as a focus for this committee, there needs to be some
effort put on this. And it is going to be crucial, but it is a
10-year out, 15-year out solution. You have to stay with the
OEP program if you are going to see--if we are going to avoid
terrible problems with air traffic control once the economy
pumps up.
Mr. Calvert. So in closing, you would say we need to do a
two-track type of a process here. One is to attempt to fix the
system that we have now to get through the short-term, and in
the long-term, scrap what we have and start over again with a
state-of-the-art system that will take us forward in the
future?
Mr. Walker. Well, what you are talking about is a change in
the fundamental underpinnings of the system. I mean, the system
that we have had for 50 years depends upon voice communication
between controllers and pilots. If you are going to have
substantial increases in the amount of air traffic and then you
are going to put unmanned aircraft into the same environment as
human-controlled aircraft, if you are going to put space
aircraft into the same environment as air vehicles, you simply
can not rely upon a voice communication system. You have to go
to a far more automated system. And as we have suggested here
earlier, the military has assets that are--that could be
utilized for such a system.
And so what we are suggesting is that as you develop OEP to
enhance the voice communication derived system, you also begin
to move to this automated system that gives you the opportunity
then to do the complete switch at some point in the future.
Mr. Calvert. Thank you.
Mr. Rohrabacher. Mr. Lampson.
Trusted Traveler Program
Mr. Lampson. Thank you, Mr. Chairman. Somewhat the same
line that Mr. Calvert was just talking about, our travels
through airports certainly has been one of the significant
bottlenecks for the airline industry to--that has added to
their difficulties. And we have talked from the last year or so
about a trusted traveler program that might help significantly
move people through those airports more quickly. What are your
thoughts about what impact it would have, any of you, on the
airline industry and their finances if we implemented a trusted
traveler program? And how quickly can we do this?
Mr. Walker. Well, it is not an issue where the Commission
spent a good----
Mr. Lampson. I understand.
Mr. Walker [continuing]. Deal of time looking at it. I will
tell you, as one of the people that travels a lot, and I think
all of us here and so on do, I would love to see it come into
place, because it would certainly make it more convenient for
people who fly a lot to be able to get on and off airplanes
easier. And I think that has economic implications for the
airlines.
Clearly people who have to spend long hours waiting in
lines are not people who are going to be happy consumers. If
you are flying in this country less than 500 miles, the average
speed of travel is 35 miles an hour by air. So the fact is that
that is not a system that ultimately gets you to what you want
to do. Is that--isn't it 35 or is it 85? It may be 85, but
anyhow, it is a very, very low speed compared to the speed of
the aircraft, because the time is being spent in other
pursuits. And so insofar as you can move away from those kinds
of numbers, you will have a more profitable industry.
Mr. Lampson. I just wanted to raise that, because I feel
very strongly about it. And I am on the other Committee that
hopefully can push to do something. But we have--we are holding
this up. The technology is there, and we are not moving it. And
somehow or other, we must.
Mr. Walker. I want to get it in the record just right. It
says for air travel--this is out of our Commission report. For
air trips less than 500 miles, doorstep to destination travel
time is now between 35 and 80 miles per hour.
Mr. Gordon. Well, I think I will get Mario Andretti to give
us a lift.
Mr. Douglass. Sir, I would like to add one thought to that.
And it also stems from what Mr. Calvert said before. Where some
of these issues intersect is that the government can develop
the technologies needed to do these kinds of things, and
indeed, in many areas, the technology has already been
developed. The issue is deploying it. And if we have an airline
industry that is absolutely bankrupt, how are we going to
deploy it?
Mr. Lampson. Do you think they are waiting on us, then, to
say, ``Do it,'' or for us to do it?
Mr. Douglass. I believe the issue for us, all of us as
Americans, is in the light of this new security environment
that we are in, is where does inherently governmental
responsibilities to protect our people end and where does
private enterprise responsibilities begin to pick up? And I
think we all have to think our way through that, because the
passenger part of airline security is only the tip of the
iceberg. I mean, I--my own personal view is given what happened
out there in Pennsylvania, those brave Americans that rose up
in that airplane and killed those damn hijackers, you are not
going to see a lot of them try that any more. So what you are
going to see are terrorist events which have to do with
sneaking it in through the baggage or hiding out at the end of
the runway with a missile or some other kind of thing.
So the security environment is really now almost anywhere
below 10,000 feet the airplane operates where, you know,
somebody can get at them.
Dr. Hamre. Sir, could I just ask you, the problem isn't
with the industry. It is with our government that has old,
obsolete, paper-based rules that it keeps wanting to impose on
us, because that is the way they have always done it. How many
times have you traveled internationally and filled out that I-9
form, you know, before you land at Dulles? You know. Well, I
don't know what they do with all of those pieces of paper. I
can not get on an airplane without the company swiping my
passport. They could compare that today to say that is John
Hamre. I am just filling out that form so I can stand in an
hour-long line out there to hand it to an inspector.
Mr. Lampson. You could carry a smart card that has all----
Dr. Hamre. That is exactly right.
Mr. Lampson [continuing]. Of that data on it, and you could
put your airline ticket and everything that happened in your
past----
Dr. Hamre. But you have got to change. This is not an
industry problem. This is a government problem.
Space Imperative
Mr. Lampson. I thank you very much, and I am totally
running out of time to do what I really wanted to do. Tell me a
little bit about the comment that was made in the report, Mr.
Walker, about the recommendation to create a space imperative.
It sounds like a positive step. I am a little unclear about it.
What did the Commission mean by that phrase, ``create a space
imperative,'' and what specifically are you recommending to be
done to create a national space imperative?
Mr. Walker. Most of that is based upon our belief that if
you could cut the time of travel, for instance, to places like
Mars and some of the places that we have dreamed about going in
space, that you are more likely to be able to have the
imperative to fund them, that one of the problems inside the
political system is that when you say that it takes months or
years to go to places, it is very hard to get people excited
about them in a sense of actually getting them paid for inside
the system. And so a large portion of that was our belief that
if, in fact, you come up with new propulsion systems that cuts
the travel from Earth to Mars to weeks rather than months, that
it becomes far more politically viable to fund a program that
has that kind of potential.
Mr. Lampson. Have we funded any of the research recently,
and we cut some of the funding that was leading toward the
engine that would help us to----
Mr. Walker. Yeah, well--but you--but the proposal that you
have before you right now coming out of NASA is for Project
Prometheus, which would fund nuclear plasma rockets that would,
in fact, give you the ability to cut the time of travel to Mars
to a matter of weeks.
Mr. Lampson. My time is up. Thank you, Mr. Chairman. Thank
you, panel.
Mr. Rohrabacher. Thank you very much, Mr. Lampson. Mr.
Lucas.
Space Tourism
Mr. Lucas. Thank you, Mr. Chairman. Chairman Walker, there
has been a lot of discussion in the past couple of years about
the commercialization of space ventures and the part that
entrepreneurial companies can play in that. Would you assess
the role of suborbitals as we look at our national space policy
for the next couple of years?
Mr. Walker. Well, the problem right now in the entire
commercial marketplace in space is the fact that it is flat on
its back, that there is very little investor interest in
putting money in, because in large part, the great hope of
generations of satellite constellations that--where the
profitability was going to be simply has never materialized.
And so you have excess launch capacity at the present time and
not very many people who are willing to put investment dollars
in. Where I believe that there may be some hope for the future
and where some small commercial companies are beginning to at
least try to make a go of it is in space tourism and
particularly in suborbital flight. And you have about 24
companies that are out there right now worldwide competing for
the X-prize. Success on the X-prize may, in fact, give you a
generation of vehicles that would be used almost exclusively
for commercial space tourism. And that is one of the places
where we see, and where the report says that there is a
potential for perhaps a profitable enterprise in the future.
High Speed Propulsion Research
Mr. Lucas. Thank you. You mentioned, and your colleagues on
the panel also mentioned the importance of engine propulsion
work being a major initiative for NASA and the Federal
Government. And I know over the recent decades, literally we
and the Europeans have spent hundreds of millions of dollars on
efforts to develop supersonic transportation propulsion
systems. And there has been discussion even amongst those of us
in Congress about the potential to restart some of those
programs. Did the Commission--did you on the Commission make
any recommendations about restarting such research? Or maybe
the better question is what do you think of the whole concept?
Mr. Walker. Well, if--in the report, we make a
recommendation that endorses the National Aerospace Initiative
that is largely being run out of the offices of DDR&E and
Defense but is being done in cooperation with NASA. And the
whole idea behind that is to begin with our capabilities right
now to do about mach II, mach III, and move ahead by one mach a
year over the next 10 years, so that at the end of that time
you have a capacity to do something in the area of mach XII or
mach XV. The reason why that is an important initiative is
because it will take advantage of some new propulsion concepts
that we have as well as take advantage of some new materials
technology that is emerging.
And we believe that that cooperative effort between NASA
and DOD is in fact a very important program for this nation to
do for two reasons. First of all, it gives the military some
capability--some speed capabilities that it vitally needs for
the future, but secondly, the vehicle that you develop could
become the basis for the first stage of a two-stage, fully
reusable, orbital vehicle in the future. And that is a
potential that we need to recognize as we begin the--to do the
work of developing the orbital space plane, for example.
Mr. Lucas. Thank you. Thank you, Mr. Chairman.
Mr. Rohrabacher. Mr. Smith.
[The prepared statement of Mr. Smith follows:]
Prepared Statement of Representative Nick Smith
I want to thank Chairman Boehlert and Ranking Minority Member Hall
for holding this hearing today to review the state of the United States
Aerospace Industry and NASA Workforce legislation.
The aerospace industry has impacted our nation beyond simply
contributing to the technology of flight. It contributes to the
efficiency and security of our air transportation system. Discoveries
made through aerospace research and development have led to significant
improvements in our transportation, communications, and defense
capabilities. And perhaps most importantly, aerospace employs millions
of Americans all across the country.
In order to maintain our technological and competitive position in
the world, our country needs to produce young people with the best
science and math training. The second half of this hearing will focus
on the difficulties that NASA is having recruiting and retaining
quality employees. Clearly there is a great need to improve math and
science education in this country.
Last year, we were able to pass legislation that improved research
and education efforts at the National Science Foundation. One section
of this bill--known as tech talent--established a competitive grant
program to increase the number of students pursuing and receiving
degrees in science, math, engineering, and technology. I am pleased to
see that the Commission's report recognizes the importance of continued
improvement in math and science education.
Still, it is one thing to ensure that quality educational programs
are available to Americans, but it is another to actually motivate and
see American students entering and completing degrees in these fields.
Forty percent of the graduate students in engineering, mathematics, and
computer science in this country are foreign nationals. We should be
very concerned that we are simply educating the S&T workforces of other
nations while more and more of our own students are ill-prepared to
succeed in these careers.
Personally, I think that NASA and the space program could be a
fantastic motivator for getting kids excited about science.
I will be interested to learn how the Commission would recommend
how we can encourage more American students to enter into these fields
that are so important to maintaining our economic and national security
in the future.
Mr. Smith. Thank you, Mr. Chairman. Gentlemen, thank you.
Bob, good to see you again. I was trying to think of the issues
we were talking about when you were Chairman of this committee,
one, two, three, four, five, six, seven, eight----
Mr. Walker. The issue was balancing the budget back then.
That was the issue.
Science & Math Education
Mr. Smith. We won't even talk about that. I guess--I Chair
the Research Subcommittee now, and we were pretty aggressive in
the NSF reauthorization bill to push an effort to try to
encourage more of our American students in the science and
math. And of course with some place between 60 and 70 percent
of NASA's employees being engineers or scientists, what--did
the Commission talk about this? Is there a concern that almost
half of our graduate students in aerospace science engineering
are now foreign students? What was the Commission's
recommendations?
Mr. Walker. We are very concerned about it. You will find
in our report that one chapter of the report and one full
recommendation is related to workforce issues. And a
substantial portion of that relates to education. There are a
couple of issues here. First of all, if, in fact, you are going
to do the kinds of things we need to do in aerospace in the
future, you have to have a scientifically and technologically
competent society. It isn't just the people who have----
Mr. Smith. Yeah, that is what I tried to say, but how do we
do it?
Mr. Walker. Well, we recommend, among other things, we
recommended some coordinated activities between the Department
of Labor, the Department of Education, NASA, and other agencies
and so on to begin to define what the needs are so that the--we
can speak, again, across agencies to meeting the need.
Secondly, we recommended implementation of educational reforms
that would include both individualized and structural
curriculums and lifelong learning. We believe that there was
a--that there is a real need in our society to refocus
education away from the idea of the teacher as an imparter of
information but rather a teacher as the manager of information.
Utilize all of the information now inside the system, use
technology so that you can tailor instructional programs to the
needs and the interests of the individual student.
That is entirely possible. The aerospace industry is doing
it now. They have programs that they use to train their own
workers that do those kinds of things. We think that it--there
is a need to merge that into the public education system, into
the university systems, in a way that you get a far better
competency level.
Mr. Smith. Yeah, I think NASA will--in 1957, after Sputnik,
NASA was developed, and there was sort of a momentary bubble
that excited a lot of youth. Two of my four kids went into
physics and engineering, I think, partially because of that
little stimulus out there and excitement. Somehow, I am not
sure NASA still fulfills that excitement role for youth, but--
--
Mr. Walker. One of our commissioners, Neil Tyson, said that
it is very important to have some exciting projects that you
are doing, because that is what does stimulate students. He
said you won't get very many aerospace engineers who will come
on board in order to make the next generation of engines 10
percent quieter. The fact is that you need some real programs
out there that really stimulate people to do exciting things.
And that is one of the things that our Commission----
Mr. Smith. Do you other gentleman have----
Mr. Douglass. Yes, sir. I would like to add a couple of
things to that. First of all, when you look at this problem,
you immediately come to the issue that the American educational
system is not all run by the Federal Government as primarily,
as we know, in our states and local communities. And so one of
the things that industry is doing, the aerospace industry is
doing, is we are going to take the Commission recommendations
and over the summer and fall of this year, try to create a
national plan, which is a cooperative plan between the Federal
Government, the states, local communities, and industry and
academia to get at this problem, because it is not just a NASA
problem. It is an industry problem. It is an Air Force problem.
It is a Navy problem. It is a NOAA problem. Anywhere where
aerospace touches our government, we are finding that our
workforce is aging and we aren't getting the human capital we
need to sustain the industry or the oversight part of the
government that regulates the industry.
Mr. Smith. Let me ask one last question, I think, and then
maybe, if the Chairman lets me--because I think education--I
mean, it certainly is the seed corn to our future, whether we
are talking about aerospace or whether we are talking about
innovations to be competitive in a world market. Give me the
Commission's position or recommendation or evaluation on the
current NASA, FAA trying to bring in DOD and Homeland Security
in an effort to design how we are going to better structure new
management and organization for the air traffic program.
Mr. Walker. Well, from my perspective, they are just in the
process of getting it off the ground. That in and of itself is
a good sign. I mean, for a long time, there has been resistance
of the agencies to work together. There has been resistance
inside of FAA to step out on programs that would change the
system in revolutionary ways. I think that attitude is
changing. I have been over and briefed a number of people
inside of Department of Transportation and FAA. They are very
much on board with the idea of moving toward new systems. NASA
has some very exciting things that they bring to the table on
this. You--the question will be whether or not you can utilize
some of these DOD assets. I mean, there--if you can't do that,
it becomes a system, which is probably too expensive for us to
do.
If you can utilize some of those assets, then I think it is
entirely possible that you could develop a system here that
would be in the range of affordability. But that is a
cooperative effort that----
Mr. Smith. So you say--pretty much, is that an agreement?
You say yes, it is a good thing.
Mr. Walker. Yeah, it is a good thing.
Mr. Smith. And Mr.--is it Hamre? I am sorry. I don't know
how to pronounce your name. Any last words on education or----
Dr. Hamre. The only thing is that you really can't have the
educated workforce if you don't buy anything. You know, we have
got to buy stuff. And either you can educate them, you can
crank them out the door, but if they don't have real things to
do when they get out, that is going to be the problem. So it is
creating a vision and actually choosing to extend what it is we
set as a goal for our society, what we want to do. But just
educating the next generation of engineers without having
things for them to work on is probably going to be
counterproductive.
Mr. Smith. Thank you.
Mr. Walker. The fact is, we are graduating aerospace
engineers. They end up working in the computer industry.
Mr. Smith. Right. And they are being offered 40,000 right
out of--with a bachelor's degree, and so a larger and larger
percentage of our researchers getting our federal grants are
foreign nationals. Thank you, Mr. Chairman.
Mr. Rohrabacher. Thank you very much. I think that, of
course, we all have to recognize you will be able to attract
young people, bright young people, into engineering and
scientific jobs if you pay them more money. Surprise, surprise.
I mean, if you are paying--I mean, I drive down in my
community, and I--a lot of aerospace people live in my area,
but the people who live in the best houses are all lawyers. So
we won't go into that. Mr. Larson, I don't know if he is a
lawyer or not.
NASA Aeronautics R&D Investment
Mr. Larson. Thankfully not. And with all due respect to the
legal profession, I am a teacher, so I thank the Chairman, and
I thank him for this--for the hearing. And I want to thank
these gentlemen on the panel today, Mr. Walker, Mr. Douglass,
and Mr. Hamre, who have been instrumental in putting together
the Aerospace Commission's recommendations.
My concern, and I will cut right to the chase, you know, we
face European Vision 2020, global competition. And when we look
to the NASA budget, and as we reminded NASA when they were in
here the other day that part of NASA, as the second--the first
A in NASA stands for Aeronautics, and yet we see, again, a cut
of five percent. And actually, it is probably deeper than that
when you take into consideration inflation and costs.
If that cut is allowed to stand, and especially in lieu of
your recommendations before--to the President before Congress,
what impact will that have on research and development and our
ability to compete into the future? We will start with Mr.
Walker and----
Mr. Walker. Well, I think you do have to look at the budget
in terms of the totality of it. And that is that a large
portion of what NASA intends to do in the aeronautical area
does involve the National Aerospace Initiative. And there, you
need to look at the fact that that is a program that the
Administration is standing up for over at DOD and where they
are cooperating with NASA. NASA will be the beneficiary of
being able to utilize the DOD resources. And the fact is that
some of the NASA input to this will be very important to the
long-term of the program. So I think that it is important that,
as a Nation, we are investing in aeronautics and in propulsion
and in a number of things of that type. I would want to look at
the entire resource base, however, of what is going into it and
not just single out particular agency budgets.
Mr. Larson. Mr. Douglass.
Mr. Douglass. I think we have got to do a lot more in
aeronautics. I think one of the manifestations of a lack of
investment in this area can be seen in situations like Boeing
when they were thinking of developing the sonic cruiser, having
to go to Toulouse to do it in a wind tunnel, to their arch
rival. I think there are other areas where the cutbacks in
aeronautics have caused us to be less competitive in a very
competitive global economy.
If we accept the model that NASA is supposed to be the
engine for basic research for the civil side and the DOD is
supposed to supplement that or we glean what we can, and Bob
pointed out the structural problem we sometimes have that DOD
technology is very expensive because it is, in many cases,
absolutely life or death and so on. But there are only two
places to get the technology we need for the commercial side:
one is from NASA, and the other is from the Department of
Defense as far as basic research is concerned. And if we don't
invest as a Nation, we are gradually going to lose this part of
our economy, as sure as God made little green apples. And there
is a cause and effect here. It is very hard to draw, you know,
micro connections. But when you go back to the macro view and
you see that the EU, as you mentioned, in 2020 has pledged to
spend $95 billion over the next 10 or 15 years to displace us,
and you look at our--what is going on in the civil aviation
side of our economy, you see we have these huge structural
problems that we have got to deal with.
Mr. Larson. Mr. Hamre.
Dr. Hamre. I--my gut instinct says that we probably need to
be spending more, but we do need to--an awful lot of work for
aviation in the future is really on things like materials
technology, nanotechnology. So it may not be showing up in the
kind of ways that in the past you would think about going into
a NASA budget into a wind tunnel. You would have to get people
that are more expert that are really looking into the details
of it to know where we need to be. But you know, I think this
is an industry right now that most people have decided it is an
old, mature industry, and it is not very exciting. And people
are walking away from it. And I think that is going to be a
mistake.
Mr. Larson. Well, it is a very alarming mistake inasmuch as
we are shedding workforce, we are shedding expertise and
technology. And as Mr. Douglass said, here is Europe staring us
directly in the face and saying, ``Oh, by the way, we are
coming after you. We are going to subsidize our industry,
because ultimately we are going to take it away, because your
government is no longer wed to supporting this kind of research
and development, and ours is.'' And ultimately, without
governmental intervention and support here in dramatic fashion,
it is just going to be the slow attrition and the constant
outsourcing to other nations and other industry as we lose our
core base of aerospace industry here in the country. I mean, it
is incredibly alarming that we would let this take place.
Aerospace Sectoral Budget
Mr. Walker. Mr. Larson, I agree with you. The one thing I
would suggest, though, that may be worth you looking at is the
fact that one of the things that the Commission did as a part
of our work was developed an aerospace sectoral budget. We went
through and figured out where all of the spending was taking
place in aerospace inside the government. What you come to a
conclusion is--now that did not include the military, because
the military was off, but if you take a look at all of the
resources, you will find a tremendous amount of money that is
being spent in aerospace. The question is whether or not it is
being spent correctly, and whether or not it is being spent
with any kind of rational plan behind it.
And one of the things that really needs to be done in order
to address the issues that you are talking about is to assure
that we are spending that money for the things that really need
to be done. And what the Commission tried to do was prioritize
how that money should be spent. And we would agree with you
that it is extremely important that we spend some money in
these areas that are going to determine the future of the
industry.
Mr. Larson. Thank you very much.
Mr. Rohrabacher. Thank you, Mr. Walker.
Mr. Larson. Thank you, Mr. Chairman.
Mr. Rohrabacher. And there is a difference between
subsidies that our foreign competitors might have the advantage
of and perhaps incentives that we could provide. And there are
two different approaches to trying to make people competitive.
We could--I will recognize Mr. Bart Gordon for a 1-minute
summary. And I will give a 1-minute summary, and we will move
on to the next panel.
Improving NASA's Infrastructure
Mr. Gordon. Thank you, Mr. Chairman. And I hope that the
Committee will follow this same brevity.
Is it fair to say that it is the consensus of this panel
that there needs to be infrastructure, and I would say even
significant infrastructure improvements within NASA, that some
portion of that may very well need to come from already
financially strapped aviation industry and states, but also
that there needs to be additional resources, and what I mean
bluntly, is spending on infrastructure by the Federal
Government within NASA? Is that a fair consensus? Does anybody
not agree with that?
Mr. Walker. Well, the only caveat I would put on it is that
I would also put a part--as a part of that better utilization
of the resources that are already being spent.
Mr. Gordon. Okay. Well, good. That is--but the first part,
we do need to--we are going to have to spend some more, is that
fair? Okay. Then the second part is going to what you have
suggested. Is it also a fair consensus that this committee
would recommend that NASA have an inventory or strategic
resource review of its assets and facilities, what improvements
need to be made, what consolidations need to be made, if any,
and any--and what expenses need to be made? Would it be fair to
say that there should be that type of review of NASA? Does
anybody--for the record, I think all of the----
Mr. Walker. I don't disagree with that.
Mr. Gordon. Okay. So we have got horizontal--or rather,
vertical heads.
Mr. Walker. Again, that was not included in the Commission
report, so we can't say that that is what--where the Commission
came from----
Mr. Gordon. But the panelists.
Mr. Walker [continuing]. But I am speaking for myself,
personally----
Mr. Gordon. Thank you.
Mr. Walker [continuing]. I don't have a problem with that.
Mr. Gordon. Thank you.
Mr. Rohrabacher. Thank you, Mr. Gordon. And thank you to
all of the panelists today. Let me just note a couple of
things. We heard several times about the possibility that there
is a lack of cooperation in terms of utilizing technology that
is available. I--this--as Subcommittee Chairman, Mr. Gordon
is--just walked out, but as Ranking Member, I am sure he would
agree, we have--we will be having a hearing of the Subcommittee
that is focused on that issue of whether or not there are
technologies and how to free them up from the--especially from
DOD over to the civilian sector. Also, part of that hearing
will be whether or not labeling this of secrecy in our
government, whether or not that has something to do with an
obstacle to competitiveness where there might be some
technologies that aren't permitted to be utilized by the
civilian sector by, perhaps, an overaggressive use of secrecy
now that the Cold War is over with. So we will address that in
this Subcommittee.
I am noting that Mr. Walker repeated numerous times the
lack of propulsion and how we should focus on propulsion. Let
me note that if the airline industry is losing money, if we had
engines that would be--cost less, meaning they wouldn't have to
be replaced after every 20,000 hours or so, or they would be a
better use of fuel and were, perhaps, lighter, the airline
industry may well be able to be competitive again. And I know
there are some engines around that have not been followed up
on, that are not--that there have been no prototypes, but there
are engineers, who are very respected engineers, who have got
some good ideas. And I would hope that we have an industry that
is open to these ideas as well as having our government open to
these ideas.
Now with that said, thank you all very much, and Mr. Ehlers
came in late, but because he has the Ph.D., and the guy who
really knows all of the answers, we are going to give him a
chance to ask whatever questions he wants. Go right ahead, Mr.
Ehlers.
Mr. Ehlers. Thank you, Mr. Chairman. I will be very brief.
Actually, I was here very early, but I have made a McArthur-ist
return. Just--and I was in an Aviation Committee hearing, and I
heard the same thing I heard here, that the industry is in
trouble. If we can get rid of government regulation, we can
save 10 percent. So I find it interesting that both ends, the
production end and the consumer end, are in the same problem.
Just a quick question, Mr. Walker, and if you have already
covered this and it is in the record, you don't have to answer,
but I was intrigued with your comments earlier about the
propulsion issue. Now were you referring to space propulsion or
to commercial aircraft propulsion?
Mr. Walker. In the case of the space propulsion, it is in
space propulsion largely that we are looking at and to cut the
times for particularly exploration of the solar system. In
terms of aircraft propulsion, we have mentioned a couple of
times here that the National Aerospace Initiative is aimed at
increasing the speed substantially over the next 10 years.
Mr. Ehlers. And what do you mean by ``substantially''?
National Aerospace Initiative
Mr. Walker. The National Aerospace Initiative is aimed at
taking the present speed capacity we have of mach II to mach
III and moving it up at one mach a year over the next 10 years,
so that after a decade, you would have the capacity to do a XII
to XV mach.
Mr. Ehlers. And you are talking about this for passenger
service or----
Mr. Walker. Well, we are talking about having the
capability for a number of uses. One of the uses for it would
be to provide the air portion of a two-stage to orbit vehicle
for space travel. Some of it would be to deliver goods. Some of
it would be to deliver munitions. You know, there are a variety
of uses. And you might not use all of that speed for commercial
aviation immediately, but it does give you the capacity once
you have developed the materials and propulsion to look at much
higher speed aircraft for commercial passenger use.
Mr. Ehlers. Okay. You are probably not going to use Middle
East oil for that, either.
Mr. Walker. We are going to use hydrogen.
Mr. Ehlers. Somehow I am not surprised at that answer. I
yield back, Mr. Chairman. Thank you.
Mr. Rohrabacher. And because the Chairman gave himself an
extra minute, we are going to give Mr. Lampson a minute.
Mr. Lampson. Such a magnanimous individual. Thank you, Mr.
Chairman. I just wanted to really make more of a comment than
ask a question at--Bob, your comment about the--being a space
imperative, and I was--I guess my thought was perhaps that we
ought to give more credence to trying to get the cost of
getting into lower orbit down more so that we could do more in
space and then ultimately set bigger goals that would take us
further on out into space with the better engines or faster
engines that would let us move to Mars more quickly.
Mr. Walker. Well, that is a part of our recommendation as
well. I mean, we--if you look at the Commission report, we also
recommended trying to come up with systems that would give us
lower cost of transportation to orbit in the first place, and
then particularly looked at reusable spacecraft on that. And
that is the one reason why the National Aerospace Initiative,
in conjunction with the orbital space plane that could provide
both pieces of an ultimately viable, reusable vehicle are
important here. So we would agree that reducing the cost to
orbit is also important, but we thought that the imperative
comes from the ability to do more things in a time frame which
is more practical.
Mr. Rohrabacher. All right. And let us remember that Mr.
Hamre suggested that there are a lot of things that we are
doing regulatory-wise that are obsolete and are causing great
costs to our industry, and we can change that without spending
any money. And we should. There is no excuse for us in Congress
not doing our job and getting at those and trying to have those
reforms. Thank you very much, panelists.
Panel II
NASA Workforce
Mr. Rohrabacher. We have a second panel with us. And are
you going to invite the second panel? All right. Thank you all
very much.
The witnesses from the previous panel certainly hit certain
problems right on the head, and one of the major problems that
the Aerospace Commission identified was its workforce in terms
of aerospace workforce of the United States both in industry
and government. Chairman Boehlert has been working with NASA
trying to address this problem, and in fact, I have just today
cosponsored Chairman Boehlert's legislation aimed at trying to
deal with this problem, which is H.R. 1085, the NASA
Flexibility Act of 2003. And hopefully, once we pass that, it
will begin to address the agency's critical needs in terms of
workforce.
So NASA has a workforce that is aging. NASA scientists and
engineers, many of them are over 60 years old, and they
outnumber those under 30 by a ratio of 3:1. This committee will
be considering this legislation and the problems facing NASA
and the challenge of a workforce for the next century. And this
panel is here to give us some insights into this major issue.
Our first witness is Max Stier, President and CEO of the
Partnership for Public Service. The partnership works to make
the United States Government an employer of choice for
talented, dedicated Americans through educational outreach,
through legislative advocacy and hands-on partnership with
agencies like NASA. And Mr. Stier, you may proceed. And if
would ask again, if you could summarize down to about five
minutes, we could get to the questions and have a little
dialogue.
STATEMENT OF MR. MAX STIER, PRESIDENT, PARTNERSHIP FOR PUBLIC
SERVICE
Mr. Stier. Thank you, Mr. Chairman, Members of the Science
Committee. And it is a great pleasure to be here, particularly
with this panel, with President Harnage, and Mr. Nesterczuk.
I am going to focus my oral remarks, the initial remarks
here, on three key questions: the first of which is why this
matters; the second, why NASA now; and third, and finally, is
what is needed.
NASA Workforce Demographics
On the why this matters, the demographic chart that I have
up there, and I think may even be on some of these screens,
really tells the full story.
What you see there is very much a workforce that is
absolutely out of balance. When you look at the under 30 at
NASA, the percentage is close to five percent of the workforce.
Industry average on engineering, in the private sector, is
closer to 14 percent. That is a real problem. What the--NASA
needs to do and what it needs to do here and now is make sure
that it keeps the cohort in the 30- to 49-year-old range. It
has to retain the talent there, and it needs to recruit the
under 30 to bring it up. And it is a real challenge. And why is
it a real challenge? Because there is a war for talent, and the
war is very difficult.
NASA's Competition for Talent
So in the next chart here, you will see what NASA is up
against. This is the competition. The competition is
extraordinary. And obviously, you had the last panel here,
which represented many of the industry actors here. And the
fact of the matter is they are doing what they are supposed to
be doing. They are going out there and getting the very best
talent for their companies. And we need to make sure NASA can
do the very same thing.
I would note that these logos all come from a website,
spacejobs.com. The web is an unbelievable place to get
information about jobs. That is where young people, in
particular, are looking. And we need to be able to compete in
the government in the same way. There are no academic
institutions on there. If you put them there, we wouldn't have
any room on the chart, so we had to exclude them, but they are
real competitors, too.
So the question is well what are they doing and how is it
that NASA can compete. Well, let me tell you an anecdote that
comes from a report that was done for the Air Force about Ames,
actually a NASA facility. And I will quote from that report in
a discussion about how private companies are targeting--
actually targeting government engineers and scientists. And
they describe one incident, ``A case in point is a Silicon
Valley company that rented a small airplane, attached a
recruiting banner to the tail of the aircraft, and then made
repeated low passes over a government research facility.'' That
was the NASA Ames facility. ``The major''--extraordinary, but
it goes on. ``The major commuting roads into the government
research facility are also lined with billboards placed there
by local companies with recruiting messages directed at the
government researchers who work there.''
Now the bottom line is NASA doesn't need to do exactly
this, but that is the marketplace out there. And NASA has to
have the tools to be able to compete in that marketplace. Now
why are the competitors doing that? The bottom line is because
human capital counts. When you look again at private sector
data, and that is because that is where all of the data is
today in these issues, the fact of the matter is that is
replete with examples of why human capital counts. When you
look at the data, you see upwards of 40 percent plus returns on
capital over and above the normal when you see effective human
capital management.
That is what the government needs to do. It needs to be
able to effectively manage its human capital in order to see
the returns that all of us need as a country.
Role of NASA Workforce Legislatiion
Now the legislation that you are talking about here is a
good start. I would add two things, though. First, it is just
legislation. That is the starting point. The key question is
going to be in implementation, and I think that the provisions
you have in here in terms of oversight to looking at what
happens with these different authorities is very important. I
also think it is very important for the Committee to support
NASA in the resources that it needs, and Congress needs to
support it and the resources it needs in order to implement
these flexibilities and ones that are already on the table. The
legislation is the beginning part of the stage, but again, you
can change that playbook as much as you want, but if you don't
have players that have the resources and the know-how to
execute those plays, it is not going to change.
Role of Employee Commitment
The second component, and we have President Harnage here,
which I think is quite important, is you absolutely have to
have employee involvement and employee commitment to the
process. And that is something that again the private sector
data is replete with examples that it is essential to success
and that in and of itself, employee engagement will create
better returns.
Need for NASA-specific Workforce Legislation
So now a question that rises is why NASA. This is clearly a
problem in NASA, as we have heard from the prior panel, you
have got this problem certainly in the science and technology
fields across government. It is also a problem government-wide
in many other occupations.
And I would argue that is why NASA rather than a
government-wide piece here and now is first and foremost
because NASA is ready. When you look at NASA, it has a
strategic human capital plan. It is being scored in the OMB
scorecard with a green on progress and it is one of only six
agencies to receive a yellow. And it is ready. It has a plan to
attack the problem, and it needs to be given the tools, too, in
order to succeed.
It is also true that NASA has specialized needs. It has a
workforce that is 60 percent science and technology, science
and engineering, and those are the most difficult professions
here and now to recruit. Again, if you look at a recent private
sector survey, engineering was the second hardest category to
recruit just following the IT area.
I notice my time is over. I would love to talk about what
is needed. Clearly, I think this bill is a step in the right
direction, but it is not the full story, and other things, for
example, Scholarship for Service Program, would benefit NASA
and, frankly, this country enormously. Thank you very much.
[The prepared statement of Mr. Stier follows:]
Prepared Statement of Max Stier
I want to thank the House Committee on Science and Chairman
Sherwood Boehlert for the invitation to testify before you today on an
issue that is of great interest to me and the Partnership for Public
Service. The National Aeronautics and Space Administration (NASA) is
confronted with a number of urgent workforce challenges and I am
pleased to discuss our views regarding the potential for a proposed
bill, the ``NASA Workforce Flexibility Act of 2003,'' to assist in
meeting those challenges. The Partnership for Public Service strongly
supports giving federal agencies meaningful workforce management tools
to better enable them to become the high-performing organizations that
the public justifiably demands. At the same time, we also believe those
tools must be carefully crafted to ensure that they do not conflict
with the public's interest in a merit-based civil service system. For
the reasons outlined in this testimony, we support the provisions of
the ``NASA Flexibility Act of 2003'' as a good step in the right
direction. We also offer suggestions for additional proposals that the
Committee may wish to consider.
Basic Principles
The views expressed in this testimony are based on three
fundamental principles which must be preserved in the design and
implementation of any new federal workforce management flexibilities.
First, as noted in the Partnership's July 31, 2002, report,
``Homeland Security: Winning the War for Talent to Win the War on
Terror,'' whether in the private sector or public sector, active
employee involvement in the design and implementation of management
improvement activities is a proven method for achieving positive
results. Every federal demonstration project or alternative personnel
system that has successfully tested or implemented a human resources
management policy outside the requirements of Title 5 has first engaged
in consultation or negotiation with employee unions or, in the absence
of a union, direct consultation with affected employees.
Second, effective use of any HR flexibility presupposes that
sufficient resources are available and allocated for their use. We
strongly encourage congressional appropriators and the Office of
Management and Budget to take this into account during budget
development and deliberations. We appreciate the fact that there are
many demands placed upon the limited funds that are available for
federal operations. However, good human resources management is an
investment in the long range health and vitality of the federal
workforce and the health and vitality of the government itself. We've
seen the negative results associated with attempts to exact ``savings''
by short-changing constructive human resource initiatives. Workforce
management done ``on the cheap'' will fail.
Third, agency leadership committed to effective mission
accomplishment and the long-term health of the public service is an
essential ingredient for successful workforce management. Commitment
and accountability for positive results and adherence to public service
values must exist at all levels of agency management.
Why Are New Flexibilities Needed?
By now, of course, it is well documented that the entire Federal
Government is facing severe workforce challenges. Further, those
challenges are approaching crisis proportions in at least some federal
organizations. For example, the General Accounting Office has
designated strategic human capital management as a government wide
high-risk area. The President's Management Agenda contains five
government-wide management initiatives, the first of which focuses on
the strategic management of human capital. The challenge today is not
one of finding additional evidence of federal workforce problems, for
the evidence abounds. The real challenge is to develop and implement a
viable response to those problems. In that regard, I commend the House
Committee on Science for its initiative to seek answers and to propose
solutions.
Background
Before I summarize what I see as the unique workforce challenges
confronting NASA and some of the more promising responses to those
challenges, it might be instructive to briefly share a little
background on the Partnership for Public Service. The very existence of
this non-partisan, non-profit organization that I have the privilege to
lead is itself testimony to the seriousness of the problems confronting
NASA and the rest of government.
The Partnership for Public Service is dedicated to helping recruit
and retain excellence in the federal civil service. Through an
aggressive campaign of hands-on agency partnerships, legislative
advocacy, focused research and educational efforts, the Partnership
encourages talented people to choose federal service for some or all of
their careers and works with the government to help retain high-
achieving federal employees. We exist because of the vision and concern
of our founder, Samuel J. Heyman, who was himself a federal employee in
the 1960's. Although Mr. Heyman left government in 1968 to run the
family business after the death of his father, he never lost his
appreciation for the fact that the quality of life in this country is a
direct reflection of its government and that the quality of the
government is a direct reflection of its workforce.
Concern over a potential decline in the quality of the federal
workforce has been fueled in part by the knowledge that over the next
five years well over half of the federal workforce may qualify for
retirement, including over 70 percent of its senior executives.
Moreover, this turnover will occur after a decade of downsizing which
resulted in skills imbalances in a number of agencies and left some
staffs stretched perilously thin. Additionally, interest in federal
employment remains low among some of the most highly talented, and
marketable, members of the national labor force. This was, and is, a
scenario for disaster. Out of a determination to do something about
this situation, the Partnership was established and a public launch was
planned for September 12, 2001.
On September 11, 2001, we were in the midst of a congressional
breakfast being held to introduce the Partnership when word of the
terrorist attacks reached us and the building was evacuated. If
anything, however, the events of September 11, 2001, reminded the
American public of the need and value of a strong and vital public
service. Unfortunately, the renewed appreciation for the public service
has not resulted in increased interest in federal employment. To that
end, the Partnership has been actively engaged since its establishment
in working with Congress, the Administration, federal employees and
their representatives, corporate leaders, academic institutions, and
other individuals and organizations interested in ensuring that the
Federal Government has a high-performing workforce within a high-
performing workplace.
While the Federal Government competes in the same arena as the
private sector, it operates with a significant handicap in terms of a
compensation system that is relatively inflexible and which does not
respond to ``market-pressures'' when competing for the ``best and
brightest,'' particularly in occupations where the demand exceeds the
supply. Nor is the federal recruiting disadvantage simply a matter of
pay. Even well-qualified individuals who are actively interested in
federal employment must face what has been described as a ``civil
service hiring labyrinth'' that in comparison to private sector hiring
is viewed as slower, more confusing, and less fair. Finally, the
current system also offers limited opportunities for high performing
employees to receive monetary awards based on their performance or
contributions.
Implications for NASA
The problems and challenges described above apply to all agencies,
but not equally. The predominance of positions in NASA that require
high levels of technical and scientific expertise magnifies its
recruitment and retention difficulties in a unique way. As noted in the
NASA profile attached to this testimony, over 60 percent of NASA
employees are in professional positions (positions with positive
educational requirements at the college level). NASA's top three
occupations in terms of the number of employees in that occupation are
aerospace engineers, general engineers, and computer engineers--all
skills that are in great demand in the private and academic sectors.
NASA also faces acute short-term recruiting needs with three times as
many employees over the age of 60 as there are under the age of 30.
Further adding to its workforce management challenges, NASA went
through a sustained downsizing effort starting in 1993 that lasted
through 2000 with negative consequences for the depth of its technical
capacity. As noted in the President's Management Agenda for FY 2002:
Downsizing at NASA over the last decade through attrition and
buyouts has resulted in an imbalance in NASA's skills mix.
Having identified a problem and having the ability to do something
about it, however, are two different issues. Many of the positions that
NASA will need to fill are among those for which competition with the
private sector is particularly acute. Plus, as the overall talent pool
shrinks, NASA will increasingly be at a disadvantage in comparison to
private sector employers who are better able to adapt their personnel
policies and practices to the changing labor market. As noted by the
General Accounting Office in its January 2003 report, ``Major
Management Challenges and Program Risks: National Aeronautics and Space
Administration'':
NASA is facing shortages in its workforce, which could likely
worsen as the workforce continues to age and the pipeline of
talent shrinks. This dilemma is more pronounced among areas
crucial to NASA's ability to perform its mission, such as
engineering, science, and information technology.
Finally, we agree with the NASA Administrator, Sean O'Keefe, who
noted in his written statement to the Senate Subcommittee on Oversight
of Government Management, the Federal Workforce and the District of
Columbia, Committee on Governmental Affairs, that:
NASA's ability to fulfill its ambitious mission is dependent
on the quality of its workforce. An agency is only as strong as
its people.. . . Being ``good enough,'' will not suffice: NASA
needs the best and the brightest to build a world-class
workforce.
Unfortunately, it's difficult to attract and retain a world-class
workforce when the hiring system is not only convoluted and off-
putting, but the starting salaries offered are below national averages
and, as the chart below shows, significantly below the salaries paid to
graduates from some of the Nation's top schools. Although average
engineering salaries in the public and private sector tend to be
comparable, the private sector pays higher entry level rates to attract
top candidates. This provides a significant advantage over the
relatively inflexible federal pay system.
Why NASA and Not All of Government?
I know there is some concern regarding the ``Balkanization'' of the
federal civil service system by allowing individual agencies relief
from the requirements of Title 5 of the U.S. Code and not others. An
alternative to the flexibilities being considered in the proposed
``NASA Flexibility Act of 2003,'' might be to wait for government-wide
civil service changes that would benefit all federal agencies. As
attractive as that proposition sounds on the surface, the realities of
the situation argue against it for three reasons. First, NASA's needs
are too acute to await a broader legislative package. Second, we
believe NASA has demonstrated that it is presently ready to manage the
proposed flexibilities in a responsible and effective manner. Third,
while we support the broader goal of comprehensive government-wide
reforms, we see no reason to delay action on the current proposals
until that more ambitious agenda is realized.
Any proposed change to a provision in Title 5 should be evaluated
within the context of the need of the agency or organization involved
and the capacity of that agency to handle the change in a responsible,
merit-based fashion. On the first point, and based on the information
provided in the first part of this testimony, we must agree with
Committee Chairman Boehlert who, in his testimony before the Senate
Subcommittee on March 6, 2003, stated:
LNow, NASA is not the only agency facing workforce issues, in
general, or issues involving its scientific and engineering
workforce in particular. But NASA's needs are especially
critical. I don't believe we have to wait for massive,
wholesale reform of civil service law to take care of NASA's
immediate problems.
NASA does not have the luxury of waiting if it is to successfully
meet the substantial workforce and mission challenges it faces.
On the issue of whether NASA is ready to handle in a responsible,
merit-based fashion the flexibilities being proposed, I would note the
findings of the General Accounting Office in its January 2003 report on
NASA which, while finding that NASA's human capital was still at risk,
also found that:
LSince our last Performance and Accountability Series report
issued in January 2001, NASA has been taking actions to address
each of its challenges. For example, NASA has hired new staff,
who helped address imbalances in some critical skill areas in
the shuttle program, and it has developed a strategic human
capital plan to enhance its entire workforce.
We also note that based on the Office of Personnel Management's and
the Office of Management and Budget's assessments of the progress being
made in its human capital management, NASA received a ``green'' in
human capital management progress and was one of only six agencies that
received a ``yellow'' rather than a ``red'' in that area in the
executive management scorecard.
Finally, calling for government-wide reforms in lieu of agency-
specific relief ignores the fact that there are already more federal
employees who work in federal organizations that are exempt from some
or all of Title 5 than there are employees in organizations that are
fully covered by Title 5. A 1998 report by the U.S. Office of Personnel
Management, ``HRM Policies and Practices in Title 5--Exempt
Organizations,'' found that:
LIn the Federal Government, the trend toward flexibility has
manifested itself in a number of ways, including the attempt by
a number of agencies to move away from the specific
requirements of Title 5. Full or partial exemption from Title 5
is of course nothing new. Agencies such as the Tennessee Valley
Authority, and the Federal Reserve Board have been outside
Title 5 for decades. But the movement in that direction has
gained momentum, to the extent that nearly half of federal
civilian employees are now outside of some aspect of Title 5
coverage.. . .''
Note that this report was written before the Internal Revenue
Service was granted substantial flexibilities and before the Department
of Homeland Security and its 180,000 employees were exempted from
portions of Title 5 that still cover many of the remaining federal
agencies. So an argument that all federal organizations should remain
under Title 5 and that any changes should apply government-wide seems
to have been lost some time ago. Given this background, the present
legislative proposal is a welcome continuation of a long time trend
toward limited grants of flexibilities on an agency-by-agency basis.
Why Now?
NASA's workforce problems have also been exacerbated by significant
changes in the aerospace industry itself. The ``Final Report of the
Commission on the Future of the United States Aerospace Industry,''
which was the subject of the first panel at this hearing, found that:
LClearly, there is a major workforce crisis in the aerospace
industry. Our nation has lost over 600,000 scientific and
technical aerospace jobs in the past 13 years.. . .most of the
workers who have lost their jobs are unlikely to return to the
industry. These losses, coupled with pending retirements,
represent a devastating loss of skill, experience, and
intellectual capital to the industry.
That finding, along with the well documented decline in the number
of U.S. students pursuing degrees in science, mathematics, and
engineering, strongly suggests that any increase in interest in federal
employment, especially among science and engineering students, is
likely to be temporary at best. I would also note, as has been reported
by the National Science Foundation, that 40 percent of the graduate
students in America's engineering, mathematics, and computer science
programs are foreign nationals. Since the Federal Government restricts
its hiring to U.S. citizens only, this further shrinks the pipelines.
Finally, as I previously noted, the goal for NASA should not be the
hiring of simply qualified employees, but the development of a world-
class workforce with a world-class work environment. That talent may
still not be readily available to NASA even now, and it seems even more
certain that it will not be available a few years from now.
Will the ``NASA Flexibility Act of 2003'' Give NASA What It Needs?
As I stated at the opening of this testimony, this bill is
definitely a step in the right direction. It may not give NASA all the
tools that it needs--there is still the question of funding along with
the need for sustained leadership and commitment, among a few other
necessities--but these provisions and flexibilities will be helpful. It
is also noted that there are a number of safeguards built in, including
development of a public ``workforce plan,'' and notification and
periodic report requirements that also significantly diminish the
possibility that the authorities will be abused. As detailed below,
these proposed flexibilities promise to be of substantial assistance to
NASA in meeting its workforce challenges:
The ability to provide recruitment, redesignation,
and relocations bonuses (Sec. 504) that are substantially
greater than those currently authorized and that are combined
with a service agreement should help offset the ability of
other employers to substantially out-bid NASA up-front. Since
federal compensation comes closer to private industry averages
several years after initial hire, retention should also not be
a problem even though the bonuses are not part of base pay.
These flexibilities also track ``best practices'' in the
private sector. In a recent WorldatWork survey of private
sector employers, engineering was the second most-difficult
occupation in terms of attracting and retaining qualified
applicants. Further, more than three of every five employers in
this category (61 percent) used sign-on or hiring bonuses in
response to that difficulty.
Retention bonuses (Sec. 505) at a level higher than
currently available will be particularly useful not only in
retaining crucial talent, but also for ensuring that new
employees have experienced staff members to train and develop
them.
Voluntary separation incentive payments (Sec. 506)
have also proven to be useful when used conscientiously as part
of a workforce reshaping effort as opposed to simply promoting
workforce reductions. Under a reshaping effort, the employees
separated are typically in positions no longer essential to the
mission of the agency and their departure frees resources that
can be used to bring new employees on board who fill new
positions that are essential. While this provision, especially
at the monetary levels provided, could be quite useful, that
fact that it is restricted to only 10 positions a year may
limit its effectiveness.
The use of Term appointments (Sec. 507) for up to six
years and, if the need appears to be continuing, allowing
conversion to a permanent appointment (under the conditions
specified in the bill), can provide needed flexibility in
dealing with the normal uncertainties of a highly scientific or
technical environment and shifting congressional or
Administration priorities.
The authority (Sec. 508) to pay up to ten individuals
in critical positions at a level above the current pay caps is
another authority, that while subject to some debate, has been
used in the Internal Revenue Service and found by an
independent evaluator (Hal Rainey, a distinguished professor in
the School of Public and International Affairs, the University
of Georgia) to be an effective tool. It should be noted that
the higher rates of pay, which are certainly attractive
compared to the current federal pay cap, can still be
relatively modest compared to private sector salaries for
similar levels of responsibility.
The expansion of assignments under the
Intergovernmental Personnel Act (Sec. 509) from a maximum of
two years to four years, is again a flexibility that used
judiciously can be quite useful, especially given the fact that
the nature and duration of a scientific endeavor can be
difficult to accurately predict in advance.
Enhanced demonstration project authority (Sec. 510)
takes the existing authority in Section 4703 of Title 5 and
removes the 5,000 person limit. In essence, this would allow
NASA to propose a project that could cover all 18,000 plus
employees in the agency. Given that there has been 25 years
worth of experience under this authority without any major
problems, this provision breaks little new ground and seems
amply supported by the long history of relatively successful
demonstration projects.
Additional Suggestions
As we noted at the outset, we believe the proposed flexibilities in
the ``NASA Flexibility Act of 2003, are a step in the right direction.
We also believe that there is one additional flexibility and one
modification to a provision already contained in the proposed bill,
that would also be useful. They are:
Among a number of recommendations by NASA for
additional human capital legislation that have merit, a
proposal for a ``scholarship for service'' program stands out.
As the number of students in the engineering and science
educational pipeline shrinks, particularly students who are
U.S. citizens, NASA's ability to attract its fair share of the
``best and brightest,'' is likely to become increasingly
difficult. This will be especially true when students with
student loans to repay are lured by higher starting salaries in
the private sector. A NASA supported scholarship program could
serve two worthy purposes: (i) encouraging students to consider
a course of study leading to a career in science or
engineering; and (ii) provide another entry point for talented
students to join the NASA workforce by coupling the scholarship
to a requirement for service.
Section 510 of the ``NASA Flexibility Act of 2003,''
provides one valuable enhancement to the current demonstration
project authority in Section 4703 of Title 5 by allowing more
than 5,000 employees to be covered. However, it would still
require NASA to go through the rather daunting and time
consuming process contained in Section 4703. Those original
provisions, however, were part of the 1978 Civil Service Reform
Act and were appropriate safeguards for an untried process.
Today, however, we have over 25 years experience with
demonstration projects and a long history of successful
projects and lessons learned. We would recommend that serious
consideration be given to a more streamlined process similar to
that given to the Internal Revenue Service in 1998 and codified
in Section 9507 of Title 5. There remains a requirement for
union negotiation and congressional notification of proposed
projects, but IRS has been able to move more rapidly than other
agencies. It's noteworthy that many of the successful
demonstration projects that have been undertaken, including the
very first demonstration project in 1981 at the Naval Weapons
Center, China Lake, California have involved employees in
scientific and engineering environments, since the agencies
involved were experiencing some of the same difficulties as
NASA in recruiting and retaining top talent. By providing the
same process flexibilities to NASA that have been given to the
IRS, NASA could more easily adapt some of the successful
practices and lessons learned in other environments.
Mr. Chairman and Members of the Committee, I want to again thank
you for allowing me to share with you the perspectives of the
Partnership for Public Service on these important issues regarding the
future of the NASA workforce. We would be happy to assist the Committee
in any way we can as you seek to ensure that NASA has the world-class,
highly motivated workforce that it needs for the challenges that lie
ahead. I would be happy to answer any questions you may have.
Biography for Max Stier
Max Stier is the President and CEO of the Partnership for Public
Service. He has worked previously in all three branches of the Federal
Government. In 1982, he served on the personal staff of Congressman Jim
Leach. Mr. Stier clerked for Chief Judge James Oakes of the United
States Court of Appeals for the Second Circuit in 1992 and clerked for
Justice David Souter of the United States Supreme Court in 1994.
Between these two positions, Mr. Stier served as Special Litigation
Counsel to Assistant Attorney General Anne Bingaman at the Department
of Justice. In 1995, Mr. Stier joined the law firm of Williams &
Connolly where he practiced primarily in the area of white collar
defense. Mr. Stier comes most recently from the Department of Housing
and Urban Development, having served as the Deputy General Counsel for
Litigation. Mr. Stier is also an adjunct professor of law at Georgetown
University and is a graduate of Yale College and Stanford Law School.
Mr. Rohrabacher. I am sure we will touch on some of those
creative ideas during the question and answers.
Mr. Stier. Thank you.
Mr. Rohrabacher. Mr. Harnage, you may proceed.
Mr. Harnage. Thank you, Mr. Chairman.
Mr. Rohrabacher. You need to touch your microphone button.
Mr. Harnage. Here we go.
Mr. Rohrabacher. There you go.
STATEMENT OF MR. BOBBY L. HARNAGE, SR., PRESIDENT, AMERICAN
FEDERATION OF GOVERNMENT EMPLOYEES, AFL-CIO
NASA Workforce Downsizing
Mr. Harnage. On behalf of more than 600,000 federal and DC
Government employees that I represent, I want to thank you for
the opportunity to testify here today on the Committee's draft
proposal for sweeping civil service changes at NASA. Like the
rest of the government, NASA will experience a wave of
retirements over the next several years. Unfortunately, NASA
has, for more than a decade, pursued a vigorous and ill-
conceived program of downsizing and outsourcing, which has made
its problem even more acute than other agencies. Instead of
careful consideration of whether its mission could be most
effectively and economically carried out by hiring in-house
employees, it has engaged in wholesale privatization, not
competitive sourcing, and made reliance on contractors rule.
Indeed, the President's fiscal year 2004 budget includes an
evaluation of NASA's compliance with the so-called competitive
sourcing initiative and knows that NASA has made its entire
privatization quota without ever even having a single
competition.
Correction to Written Statement
Mr. Chairman, at this point, I want to point out in my
written statement that I had indicated on that the
investigation in the shuttle disaster was looking into NASA's
relationship with the contractors making a contribution to that
disaster. And I want to correct that. What we should have said
is the investigating committee is looking at the potential of
that, and we don't want to appear to have made any foregone
conclusion, and I apologize for that. And my written statement
has been corrected to reflect that.
NASA Outsourcing
Reliance on contractors are proven to be a costly mistake
for NASA, both in terms of taxpayer dollars and in terms of the
agency's internal human resource infrastructure, eliminating
federal positions and rushing to contract out as much
government work as possible rather than building and planning
for a transition to the next generation of NASA employees who
are dedicated to career service with the agency has made the
coming retirement wave challenges for NASA. NASA needs a stable
workforce able to hold its massive and far-flung army of
contractors honest and accountable to the government's own
procurement rules. It also needs an adequate in-house
technical, scientific, and engineering workforce able to bring
contractor work back into the government and evaluate the
quality of work that is permitted to remain in the hands of
contractors.
Comments on H.R. 1085
The authorities proposed for NASA can fairly be described
as constituting a ``white knight'' strategy for rescuing the
agency from its contracting failures. They addressed the
symptoms of those failures, not their cause, and only offered
temporary solutions. The fact is that too much contracting out
and privatization caused NASA's workforce deficits and only a
reversal of contracting out and privatization will resolve
them.
Before implementing a bonus for some and super-sized
salaries for a few others instead of an adequate salaries for
all approach, NASA should ask itself, ``Should employees who
are loyal and have made a decision to dedicate their careers to
public service be penalized financially relative to those who
are in and out within six years? Should the federal pay system
reward only those willing to extort a bonus from an agency by
continually threatening to leave in the middle of an important
project? Or should the Federal Government pay adequate,
competitive salaries to all of its employees?'' No federal
agency, including NASA, should have a human resource plan that
explicitly encourages constant turnover and puts no values on
continuity, dedication, or career development for the incumbent
workforce, yet that is exactly the direction this draft
legislation would take the agency.
I ask you to strongly vote in favor of a focus on improving
pay as a means of improving recruitment and retention of
federal employees. However the approach contained in this
legislation is, at best, incomplete, at worst, misplaced.
Federal salaries are too low, not just for prospective
employees or for employees the agency expects to employ if for
only a short period; they are too low for everyone.
Mr. Chairman, we are willing to work with this committee in
developing this legislation, fine tuning this legislation, but
we don't believe that shortchanging the federal employee is
going to attract future employees for any long period of time.
And that concludes my testimony. I would be glad to answer any
questions you might have.
[The prepared statement of Mr. Harnage follows:]
Prepared Statement of Bobby L. Harnage, Sr.
Mr. Chairman and Members of the Committee: My name is Bobby L.
Harnage, and I am the National President of the American Federation of
Government Employees, AFL-CIO (AFGE). On behalf of the more than
600,000 federal employees our union represents, I thank you for the
opportunity to testify here today on the Committee's draft proposals
for sweeping civil service changes at NASA.
My testimony will address not only the Committee's specific
legislative proposals, but also AFGE's assessment of NASA's most
important workforce-related challenges over the next ten years, our
views of the most effective strategies for recruitment and retention of
federal employees, and whether the Committee's proposals would further
those goals, and finally, AFGE's own recommendations, and our opinion
of the wisdom of seeking civil service changes on an agency-by-agency
basis rather than government-wide.
Many of the proposals contemplated in this legislation have been
presented elsewhere as government-wide changes or earlier in the form
of legislation prepared by NASA's political leadership, and have been
rejected largely on the grounds that they undermine merit system
principles, that they would exacerbate the Federal Government's ``human
capital'' crisis, and that they would create serious conflicts of
interests between private sector interests and the public good. In
addition, they fail to address the root causes of NASA's (and the other
executive branch agencies') workforce problems: inadequate salaries,
and mindless contracting out, privatization, and downsizing.
For these reasons and others, AFGE opposes most of the human
resources proposals contained in this legislation. Further, it must be
noted that the Committee on Government Reform has primary jurisdiction
and expertise in matters involving Title 5. With all due respect, these
proposals do not belong in the Committee on Science where the
jurisdiction and expertise is in areas other than federal personnel.
AFGE strongly opposes the implied policy of seeking changes to civil
service laws on an agency-by-agency basis.
Like the rest of the Federal Government, NASA will experience a
wave of retirements over the next several years, as workers with
between 25 and 35 years of federal experience reach retirement
eligibility. Unfortunately, the policies both NASA and other federal
agencies have been pursuing for the past decade will exacerbate the
problems and challenges the retirement wave presents. Prior to the
retirement wave, NASA has for more than a decade pursued a vigorous and
ill-conceived program of downsizing and outsourcing. Instead of careful
consideration of whether NASA's mission could be most effectively and
economically carried out by hiring in-house employees, it has engaged
in wholesale privatization ( NOT ``competitive sourcing''), and made
reliance on contractors the rule. Indeed, the President's FY 2004
Budget includes an evaluation of NASA's compliance with the so-called
``competitive sourcing'' initiative and notes that NASA had met its
entire privatization quota without ever having held a single
competition!
This has proven to be a costly mistake for NASA, both in terms of
taxpayer dollars and in terms of the agency's internal human resource
infrastructure, not to mention the victims of the recent shuttle
disaster. Eliminating federal positions and rushing to contract out as
much government work as possible, rather than building and planning for
a transition to the next generation of NASA employees who are dedicated
to career service with the agency has made the coming retirement-wave
challenges truly daunting for NASA. Indeed, The New York Times reported
on March 6, 2003 that NASA's inability and disinclination to oversee
its contractors is being examined by the independent panel
investigating the loss of Columbia, i.e., excessive contracting out
without regard to the public interest has already been identified as a
contributing factor to the disaster.
In this context, the proposals the Committee is considering seem
rather paradoxical. The proposals would encourage the elimination of
even more federal positions through Voluntary Separation Incentive
Payments (VSIPs), and thereby further undermine the agency's ability to
assemble a new generation of career civil servants dedicated to
carrying out NASA's mission in the most efficient and reliable way for
taxpayers. The proposals would establish NASA as a place where people
might take a short turn through the revolving door between the agency
and its contractors, but not a place to build a career, not a place
that expects loyalty from its employees or that will exhibit any in
return.
Almost all the new authorities the Committee is contemplating in
its legislative proposals turn on the concept of ``critical need.'' The
legislation proposes to define critical need as ``a specific and
important requirement of the Administration's mission that the
Administration is unable to fulfill because the Administration lacks
the appropriate employees either because of the inability to fill
positions or because employees do not possess the requisite skills.''
It is unfortunate that virtually none of the proposals that follow
would help NASA with a long-term strategy of acquiring a regular,
reliable workforce with ``requisite skills.''
Even the Administrator implicitly acknowledges that the agency
finds itself in a helpless state, admitting that ``it doesn't have a
very deep bench,'' and is apparently entirely at the mercy of its
contractors. Yet his metaphor is telling; he needs to learn that
staffing a federal agency is not like staffing a football or basketball
team where short service on the bench or elsewhere is all that is
needed or expected. NASA in particular needs a stable workforce able to
hold its massive and far-flung army of contractors honest and
accountable to the government's own procurement rules and cost
accounting standards. It also needs an adequate in-house technical,
scientific, and engineering workforce able to bring contracted work
back into the government and evaluate the quality of work that is
permitted to remain in the hands of contractors.
Unfortunately, the ``workforce authorities'' the Committee has
proposed for NASA can fairly be described as constituting a ``White
Knight'' or ``Band-Aid'' strategy for rescuing the agency from its
contracting failures. The proposals only address the symptoms of those
failures, not their cause. To make matters worse, all the proposed new
authorities are aimed at temporary solutions to be followed by
subsequent temporary solutions. The fact is that too much contracting
out and privatization caused NASA's workforce deficits, and only a
reversal of contracting out and privatization will solve them.
The ``workforce authorities'' provided to NASA in the Committee's
draft include authority to pay recruitment, ``redesignation,''
relocation, and retention bonuses; authority to eliminate jobs through
voluntary separation incentive payments; authority to expand the
definition of temporary employment at NASA to as long as six years;
authority to fix basic rates of pay for ``critical'' jobs; and
authority to lengthen intergovernmental personnel act assignments, and
increases the number of people covered by NASA demonstration projects
to 5,000. All but the last of these would be triggered by a NASA-
determined but Congressionally-approved identification of ``critical
needs.''
The proposals for enhanced authority to offer recruitment,
relocation, ``redesignation'' and retention bonuses of up to 100
percent of salary (50 percent for retention of those who are
``critical'' and 25 percent for those who are not) over four years are
similar to those proposed last year by NASA, and those being considered
in the context of government-wide civil service reform legislation.
AFGE is strongly in favor of Congressional willingness to focus on the
importance of improving pay as a means of improving recruitment and
retention of federal employees.
However, we believe that the approach to financial incentives for
recruitment and retention contained in this legislation is at best
incomplete, at worst, misplaced. Federal salaries are too low not just
for prospective employees, or for employees the agencies expect to
employ only for a short period. Salaries are too low for all employees.
There are market-driven reasons why the Federal Government should pay
competitive salaries, and there are values-driven reasons why the
Federal Government should pay competitive salaries. While market-driven
reasons such as recruitment and retention may on the surface only
appear to apply to prospective employees and ``flight risks,'' they in
fact apply to all employees.
AFGE does support the use of bonuses and other financial incentives
to reward federal employees. Yet they should never be used as
substitutes for a fully funded regular pay system. The ``human
capital'' crisis these bonuses are ostensibly meant to alleviate is in
part a result of the repeated failure to implement and fund the Federal
Employees Pay Comparability Act (FEPCA), passed in 1990. FEPCA already
provides broad authority for the payment of recruitment and retention
bonuses. According to a comprehensive study published by OPM in 1999,
less than one percent of eligible federal employees had received
bonuses under FEPCA's authority. The main reason for the failure to use
existing authority cited repeatedly by agency managers was an absence
of funding.
It is also important to note that the legislative proposals do not
provide a separate, supplemental funding mechanism for either the
payment of bonuses, or the payment of salaries equivalent to that paid
to the Vice President of the United States for ten lucky individuals.
Implicitly, the assumption is that the bonuses and super-salaries would
be financed from existing salary accounts. That is, the agency would
only be able to use the broadened authority in the draft legislation if
it paid for them through the elimination of jobs or the denial of other
salary adjustments for those not selected for a bonus. Again, that is
not a good long-term strategy for rebuilding in-house capacities.
It is foolish to pretend that, if enacted, these provisions would
improve NASA's ability to recruit and/or retain federal employees.
Bonus payments do not count as basic pay for purposes of retirement or
other salary adjustments. They are a poor substitute for the provision
of competitive salaries and regular salary increases that allow
employees to maintain decent living standards.
Before implementing a bonuses-for-some and super-sized salaries for
a few others, instead of an adequate-salaries-for-all approach, NASA
should ask itself the following: Should employees who are loyal and
have made a decision to dedicate their careers to public service be
penalized financially relative to those whose only loyalty is to their
individual paycheck? Should the federal pay system reward only those
willing to extort a bonus from an agency by continually threatening to
leave in the middle of an important project? Or should the Federal
Government pay adequate, competitive salaries to all its employees?
The legislative proposals make the following scenario possible: a
recent graduate is hired ``directly'' for a ``temporary'' position at a
job fair, effectively beating out three other candidates who had
applied for the position through normal competitive procedures (among
the three were a veteran with relevant experience and the same degree
from the same university, a disabled veteran with 10 years of federal
employment and a similar degree, and a recent graduate from another
university with the same type of degree but a higher GPA who mistakenly
thought the best route to federal employment was to follow procedures
and fill out a Standard Application Form 171). To encourage the direct
hire person to accept the position, he is promised bonuses worth 25
percent of salary each year for four years (indeed, he must also accept
a service agreement wherein he agrees to work for NASA for a period
``not to exceed four years''). During that four-year period, the agency
would repay the employee's student loans. At the end of the four-year
service agreement, the employee threatens to leave in the middle of a
project. NASA wants to keep him on for at least two more years. A
retention bonus of 50 percent of salary, for two years, is authorized
because a ``critical need'' is identified. One year later, he is
converted to permanent status. At the end of this period, a new
Administration/political appointee at NASA decides it would rather do
without him, and offers him a Voluntary Separation Incentive Payment
(VSIP), determined not on the basis of the regular severance formula in
Title 5, but rather equal to 50 percent of his salary, since the
Administrator has determined that to eliminate this position is
critical to his restructuring efforts. Over six years, the lucky
employee has received more than eight and a half years of salary. And
the expertise and experience he has built up over that period is lost
to the agency. But the authorities remain, so NASA can go through this
song and dance all over again.
That's quite a windfall for the hypothetical employee, quite an
expensive experiment for taxpayers, and quite an insult to the
thousands of rank and file federal employees who are taken for granted
and denied competitive salaries, benefits, or any form of job security.
The question is: Is it a reasonable response to the ``human capital''
crisis? Will it allow the government to replace the more than 50
percent of federal employees who will be eligible to retire within the
next five years with a new generation of employees who exhibit the same
level of skill, dedication, and reliability as our nation has relied
upon in the past? What chance is there that employees in the existing
workforce who have as good or better skills than those hired under the
authorities being contemplated will share in the kind of ``critical
need'' bounty to be lavished on temporary workers?
Federal agencies, particularly science-dominated agencies like NASA
are not fly-by-night operations or flashes-in-the pan. They are not
here today and gone tomorrow, nor do they produce technological fads
with only passing relevance or utility. As such, no federal agency,
including NASA, should have a human resources plan that explicitly
encourages constant turnover and puts no value on continuity,
dedication, or career development for the incumbent workforce. Yet that
is exactly the direction this draft legislation would take the agency.
We urge NASA and other executive branch agencies to stop looking
for short-term fixes. NASA's need for a high quality workforce and
comprehensive in-house capacity are neither temporary nor short-term,
and the government as well as the employees deserve to have the
security and continuity that a workforce with regular civil service
appointments conveys. With regular permanent appointments, the
government obtains the expertise it needs, as well as the authority to
supervise, manage, and control the substance and direction of that
work. Taxpayers' interests are best served by knowing that federal
employees, sworn to uphold the public good and work in the public
interest, perform government work.
The idea of treating ongoing government programs as temporary, even
when the particular work project is estimated to last for less than six
years, is wrong. It is just an extreme case of ``managerial
flexibility'' that is contrary to the agency and the public interest.
Just in order to be able to get rid of a worker without notice, or any
due process, the agency seems willing to be staffed by a group of
contingent workers to whom absolutely no loyalty, commitment, training,
or career development is offered. If NASA expects to be around longer
than six years, why does it want to treat its work and its workers,
even those who work for the agency up to six years, as temporary?
The authority to offer Voluntary Separation Incentive Payments
(VSIP) described in the legislation fails to address an important
question. In earlier drafts, the VSIP proposals for NASA required a
one-to-one elimination of full-time-equivalent positions as the only
means of using them. We believe that using VSIPs only for position
elimination is ridiculous. At a minimum, there should be no connection
between efforts to restructure and delayer and authorized agency FTE
levels. At a time when NASA and other federal agencies are asking for
expanded authority to pay bonuses and repay student loans in their
efforts to hire more federal workers, why should they simultaneously be
required to eliminate FTE's and pay employees to leave federal service?
Couldn't the money be better spent on retraining? On improving
salaries? On improving the Federal Employees Health Benefits Program
(FEHBP) which this year pays only 70 percent of the premium of the plan
that covers over half of all enrollees?
I have saved the worst, and most damaging proposal for last. The
Committee's draft would eliminate the 5,000 person limit on the number
of employees covered by a demonstration project and allow NASA's
Administrator to decide what number of employees to be included. If
enacted, this provision would allow NASA to put every single one of its
employees under a demonstration project of management's unilateral
design. Only those covered by a collective bargaining agreement would
have the opportunity to vote to decide whether to give up their rights
under Title 5 and join the project.
Granting this authority to the NASA administrator would be highly
destructive of civil service standards, and in fact destroys the entire
notion of a demonstration project as an experiment or pilot plan. If no
substantial number of NASA employees remain in the regular Title 5
system as a baseline or constant, then against what standard is the
demonstration project being tested? That is the reason Congress
required numerical limits on those covered by a particular
demonstration project in the first place. I fear the removal of limits
on the number of people covered by a NASA demo may just be an easy to
impose on NASA a new personnel system that would not otherwise pass
muster if it were proposed as a legislative change to Title 5. AFGE
strongly opposes this section of the legislative proposal, and urges
the Committee to reject it.
Finally, the legislation would require annual reporting to Congress
on the exercise of the workforce authorities it establishes, and prior
approval of all the details of any ``Workforce Plan'' NASA might
concoct for the exercise of the authorities in the bill. Later, NASA
would have to come back to Congress for any reauthorization or
enactment of legislation to make the authorities permanent. While this
approach is far superior to other approaches that usurp the role of
Congress altogether with respect to large scale and permanent changes
to Title 5, it is still a unilateralist approach that is inappropriate
for a unionized agency. Why is there no allowance for federal employees
to have their views of any proposed ``Workforce Plan'' heard through
the process of collective bargaining? Why exclude the wisdom,
expertise, and experience of the front-line in-house NASA workforce
from the formulation of proposals to improve recruitment and retention
of the next generation of NASA scientists and engineers? NASA's
management has certainly shown itself capable of grave miscalculation,
and extremely poor judgment. AFGE urges the Committee to require
collective bargaining over the terms of any recommended ``Workforce
Plan'' that will affect bargaining unit positions.
This concludes my testimony. I will be happy to answer any
questions Members of the Committee may have.
Chairman Boehlert. Well, and let me say I firmly agree with
that statement. I don't want to shortchange the union employees
of the Federal Government. As a matter of fact, you should know
that one of my sons-in-law is a former president of one of your
affiliates.
Mr. Harnage. Oh, very good.
Chairman Boehlert. And----
Mr. Harnage. I will stand in one. I should know.
Chairman Boehlert. Let me tell you, I have been blessed.
All of my sons-in-law are outstanding. They darn well had to be
to get my okay.
The third witness is Mr. George Nesterczuk, a private
consultant for human resources management and legislative
analysis, who has worked on both Capital Hill and the Executive
Branch for many years. And he also had the good judgment to go
to school at Cornell in upstate New York, which is near and
dear to my heart. And I understand his first choice was working
for NASA as he completed his studies. Mr. Nesterczuk, we look
forward to your testimony.
STATEMENT OF MR. GEORGE NESTERCZUK, NESTERCZUK AND ASSOCIATES
Mr. Nesterczuk. Thank you, Mr. Chairman. Thank you, Members
of the Committee, for giving me the opportunity to testify on
H.R. 1085 today.
NASA Recruiting
As you noted, Mr. Chairman, I did work for NASA early on in
my career, and I was one of those people on the bubble in the
late '50's and the early '60's who was attracted to the space
program and aerospace research. Back in those days, NASA was a
very young agency, a start-up agency, on the cutting edge of
technology, and that is what was drawing a lot of the young
talent across the country--the notion of being involved in
cutting edge issues. I would like to say that was true today. I
don't think it is, and that is part of the difficulty NASA is
facing as it looks into the future--to re-establish a mission
and the direction to become that kind of cutting edge agency
that it once was.
NASA's Workforce Compared To Other Government Agencies
The problems that NASA faces today are no different than
those many other federal agencies face. In light of the
cutbacks and the workforce reductions, budget reductions of the
past 20 years, a lot of HR issues were swept under the table.
Insufficient strategic planning in dealing with workforce
issues basically has led a lot of federal agencies to the
dilemma that they are facing today. NASA, as a high-tech agency
and one requiring a specialized workforce, is akin to NIH in
the health field, Department of Energy, Defense Department. A
number of agencies need to gain relief from current civil
service rules in order to attract and retain some of the people
with specialized skills that they need in order to fulfill
their missions.
Review of H.R. 1085
I don't want to dwell too much on what has happened in the
past and how the agencies got there since we need to be looking
to the future to resolve these problems. And H.R. 1085, in that
respect, I think is a very fine bill. It addresses a lot of
short-term issues in proposing the retention bonuses,
recruitment bonuses, the special provisions for high pay for
people with specialized skills. I think those will address some
of the short-term problems that NASA faces with the liabilities
of a lot of people possibly headed into retirement.
However, compensation alone is not going to solve NASA's
problems. There are a lot of inherent systemic management
systems inherent to Federal Government that make it a difficult
place to work and a difficult place to manage.
Demonstration Project Provision
Therefore, I believe that section 510, the provision in
1085 that allows NASA to engage in an agency-wide demonstration
project in personnel is probably the most important feature of
the bill. So let me address some comments on that specifically.
The key point in that provision is to lift the statutory limit
of 5,000 employees on demonstration project. That would permit
NASA to run an agency-wide HR program and examine changes in
areas such as broad pay reform, reform with the classification
system, performance management, dealing with problem employees
and the whole question of recruitment in the intake stream.
Civil Service Classification System
The classification system in particular is very
problematic. It is a system that was implemented in the civil
service 60 to 70 years ago. And I, frankly, welcome the
Committee's willingness to get into some of the arcane aspects
of personnel by proposing this bill, because that is where you
are going to get to the root cause of some of the morale
problems faced by NASA and its workforce. The classification
system is a stovepipe system. It basically brings people in one
occupational line, and they are expected to pursue a career in
that line for the next 20, 30, 40 years. You know, that worked
back in the '30's and '40's. Today's workforce is much more
mobile. The skills mixes have to be much broader, and no
allowances are made for that. So people who would like to cross
over, perhaps having picked up additional experiences in 10 or
15 years of government work, can't make those cross overs into
other occupations because of the classification system. In many
instances, that would be allowed. They would have to take a pay
cut, a grade reduction of two or three grades, to make that
kind of a cross over. That is just not logical. The private
sector doesn't work that way. It is not giving proper respect
to the human capital element of your organization. If you are
going to rely on it, you have got to work with them, permit for
career enhancement, and for cross training, and allow people
more mobility in the agency.
Demonstration Projects Is a Core Provision
Section 510 of 1085 basically will provide that. Although I
think some of the language is a little restrictive, it will
need to be broadened to permit NASA to establish a demo
authority of its own without tight supervision from OPM. So I
would recommend rewriting some of that language, but that is
basically a core provision in there.
I see my time has run out, and I will leave the rest for
questions.
[The prepared statement of Mr. Nesterczuk follows:]
Prepared Statement of George Nesterczuk
Mr. Chairman and Members of the Committee, thank you for the
opportunity to testify today on H.R. 1085, the NASA Flexibility Act of
2003, a bill to make certain personnel authorities and enhanced
flexibilities available to the National Aeronautics and Space
Administration. My name is George Nesterczuk and I am President of
Nesterczuk and Associates, a management-consulting firm located in
Vienna, VA.
Introduction
As a long time participant in public sector management initiatives
I welcome the Committee's willingness to delve into some of the arcane
aspects of civil service personnel rules. I come to these issues with a
perspective of someone trained in the sciences that, through no fault
of his own, became immersed in the realm of human resource management.
I began my professional work experience as a graduate research
assistant at the Goddard Space Flight Center. During subsequent years I
spent a decade as a government contractor supporting NASA satellite
tracking operations, and performing research in geodesy, atmospheric
physics, and remote sensing.
Later, during the Reagan years I went on to hold senior positions
at the U.S. Office of Personnel Management, the Department of Defense,
and the Department of Transportation. While at OPM I managed a variety
of programs including government-wide pay and performance management
systems and the Senior Executive Service. At the Department of
Transportation I served as Science and Technology Advisor to the
Secretary and was DOT's liaison with the White House Office of Science
and Technology Policy. In 1995, I returned to federal human resource
management issues as Staff Director of the Subcommittee on the Civil
Service in the House of Representatives. I have now dealt with federal
HR issues continuously for over 20 years.
Background
The problems that confront NASA are not new nor is NASA alone in
its predicament. Over the past twenty years a continuous stream of
budget reduction and downsizing initiatives have taken their toll on a
workforce previously accustomed to lifetime employment with careers
spanning 30 to 40 years. Managers could expect to recruit a steady
stream of young entry-level college graduates every year to replace a
fairly predictable cohort of retirees. In recent years, however,
reduced budgets and lower staff ceilings have resulted in hiring
freezes and occasional reductions in force to complement the steady
outflow of retirement eligible federal employees. In the mid-1990s a
new tool came along--the Voluntary Separation Incentive, also known as
the buy-out--to further accelerate retirements.
Now federal agencies must deal with the aftermath: an aging
workforce and a significantly reduced pool of young talent from which
to grow the next generation of senior managers and executives. In
addition to this aging workforce syndrome, NASA faces the challenge of
recruiting and retaining highly skilled technical professionals against
a highly competitive private sector. Further, NASA must also deal with
a potential crisis in depleted expertise as an increasing proportion of
its aging workforce achieves retirement eligibility. The agency is
aware of these problems and has provided demographic data to the
Committee to illustrate and quantify these problems.
General Support for H.R. 1085
H.R. 1085 contains measures to deal with at least some of these
issues in the short-term using financial incentives to attract and
retain quality staff in critical functions. However, in the long-term,
more basic systemic reforms will be needed to reestablish some balance
in NASA's workforce and promote and maintain a high performance
environment. Though very important, compensation alone is not
sufficient. The quality of the work environment is an important factor
that can attract or drive away talent.
To that end, the enhanced demonstration authority proposed in the
bill is perhaps the most important part of H.R. 1085. It will permit
NASA to experiment with agency-wide reforms that can streamline
recruitment, revamp the pay and classification systems, and reform the
administrative appeals procedures by which the agency deals with
problem employees.
Broadly speaking, I support the intent of H.R. 1085 and believe its
provisions will indeed provide NASA much needed flexibility in dealing
with some vexing human resource issues. At the same time I have serious
reservations about the provision extending increased voluntary
separation incentives.
Views on Specific Provisions
At this point in my testimony, I will provide more detailed
provisions of H.R. 1085.
Using NASA's organic act
The Committee has chosen to amend NASA's organic act instead of the
civil service statutes contained in Title 5 of the U.S. Code. This is a
sound strategy which permits you to tailor agency specific remedies for
provide immediate relief without bearing the burden of justifying
government-wide changes and bearing the cost and attendant
implementation issues.
There is ample precedent of Congress providing other federal
agencies with flexible personnel provisions to deal with agency
specific problems. The annual authorizing legislation for the
Department of Defense invariably carries a handful of civil service
provisions to deal with DOD specific matters. Federal banking
regulators and financial institutions received broad pay exemptions
back in the 1980s to the exclusion of all other federal agencies. In
1995, the FAA was removed from coverage by Title 5 USC and permitted to
establish an entirely separate system of personnel rules. More
recently, the IRS, the Transportation Security Administration, and the
Department of Homeland Security were all provided extensive
flexibilities by Congress to modify existing personnel rules in order
to function more effectively.
Limitations on authorities granted
Sections 501 and 503 impose important limitations on the
authorities granted. First, the financial recruitment and retention
incentives are limited to situations of critical need. In addition the
workforce authorities themselves expire after a period of approximately
six years. These are important controls that place the agency on notice
that abuses would not be tolerated. Unchecked or unlimited reliance on
recruitment and retention bonuses would ultimately create new morale
problems in the workforce and give rise to questions of equitable
treatment and raised expectations.
Placing a limit on the duration of these flexibilities will also
put the agency on a notice of ``use it or lose it.'' It will speed up
the implementation of needed reforms and provide Congress with a
specific opportunity to revisit these issues after a reasonable time
period has elapsed. Based on prior demonstration projects five years is
sufficient time to gather data to evaluate the efficacy of the
demonstration. This depends however on the depth and breadth of
proposed reforms. More complicated HR changes may require a longer
evaluation period.
To answer the specific question posed by the Committee as to the
adequacy of the six year time limit placed on these authorities I would
answer yes on the critical pay, on bonuses, buy-outs, term conversions,
and IPA assignments. As to the demonstration authority a more qualified
response is called for. Broad and/or complex changes may require a
longer period. Much will depend on NASA's ability to propose specific
reforms in the first few months of this authority and what it can
reasonably proceed to implement during the first year of the
demonstration authority.
Congress and the Agency will have the sixth year to decide which
authorities to extend, which to make permanent, and which to terminate.
At that point the demonstration authority itself could be extended if
NASA needs additional time to tackle remaining agency-wide HR problems.
The important thing is for all parties--NASA, its employees and
Congress--to know that oversight over the process and its results will
be maintained in order to promote an environment of accountability.
Notification requirements
The planning and reporting requirements set out in Section 502 give
the agency 90 days in which to submit to Congress a Workforce Plan
stipulating how it will implement the workforce authorities granted
under H.R. 1085. Employees are to be provided the Workforce Plan at
least 60 days before any authorities are exercised. Subsequent changes
require similar Congressional and employee notification. Both
notifications to Congress and employees are reasonable requirements and
should not pose an undue burden on the agency. The disclosures will
permit the Committee to track the implementation of authorities and
provide insight into NASA's implementation rationale.
Demonstration project authority
Since the demonstration project authority granted in Section 510 is
perhaps the most important authority extended to NASA I will address it
first. The enhancement over existing demonstration project authority
consists of lifting the limit on the size of the demonstration from
5,000 employees to as many as the Administrator determines necessary.
This would permit NASA to implement much needed agency-wide personnel
rule changes in areas such recruitment and selection procedures, pay
and classification systems, and administration procedures to deal with
performance and conduct cases.
It is not clear, however, that the current statutory language in
H.R. 1085 will suffice since all other language governing demonstration
projects remains in place in Chapter 47 of Title 5 USC. Thus, if 10
other projects are already under way according to 4703(d)(2) NASA could
not proceed with its own demonstration. OPM could also find grounds to
keep NASA from implementing since it remains the controlling authority
over demonstration projects.
I believe more directive language will be required in the bill to
give NASA the lead in establishing a demonstration project. OPM should
be designated a consulting agency to NASA during the term of the
demonstration authority, and the project could follow the remaining
rules in 5 USC 4703. The notification requirements contained in
4703(b)(1) however should be overridden and streamlined by language in
H.R. 1085 since the existing notifications are extremely cumbersome and
arguably not appropriate to the Committee's intent. The notification
rules in section 502 of H.R. 1085 are more appropriate than those
currently in 4703(b)(1).
Targeted financial incentives
The provisions in Sections 504 and 505 permitting bonuses for
recruitment and retention, and for transferring or relocating employees
will allow NASA greater leeway in attracting and keeping certain
employees with highly specialized skills. The critical pay authority in
Section 508 will serve the same purpose.
These bonuses could address the difficulty faced by many federal
agencies in attracting mid-career employees either from other federal
agencies or the private sector. The use of service periods to make sure
an employee ``buys in'' to the agency for several years is a
particularly good idea. The size of the bonuses makes them noteworthy.
Currently they are limited to 25 percent of pay, payable in a lump sum.
The bill proposes to increase this to 50 percent for critical jobs for
each of two years and up to 25 percent for up to four years for non-
critical jobs. The payout can be spread out over time but in no
instance can it exceed 100 percent of basic pay.
Buyouts
Since the mid-1990s voluntary separation incentives have been quite
the rage in federal HR circles. Reported data from the initial
implementation of buyouts indicated that out of 132,000 buyouts between
1994 and 1998, 92 percent went to retirement eligible employees. In
other words nearly $4 billion was spent in extending a ``golden
handshake'' to freely departing federal employees. The justification
for the high cost was that this was a more effective means of
downsizing than running reductions in force. While this point can be
argued, Members of Congress were sufficiently persuaded that they
extended buyout authority permanently and government-wide in
legislation establishing the Department of Homeland Security.
Existing law pegs the buyouts at $25,000 per handshake and requires
no offsetting payment into the retirement system. The earlier buyout
authority recognized that moving people prematurely into retirement
shifted the cost burden from the Treasury payroll account to the
Treasury retirement account and required that an appropriate payment be
made into the already underfunded Civil Service Retirement and
Disability Fund.
Section 506 proposes to raise the ``golden handshake'' in value
from $25,000 to 50 percent of salary--over $70,000 for a Senior
Executive, and it too has no offsetting provision for cost to the
retirement system. This is a highly problematic provision that sends a
mixed message at best. How can an agency express concern about losing
senior talent, make a special effort to pay retention bonuses and then
turn around and spend money on separation bonuses which is all a buyout
really is.
H.R. 1085 proposes to limit these huge ``golden handshakes'' to
individuals in ``critical need'' positions. How is one to understand
this? The ``critical need'' designation makes the incumbent eligible
for a retention bonus of up to 100 percent of salary. If instead he is
offered $50,000 or $60,000 or maybe $70,000 to leave what does that
tell us about his value to the agency or his performance on the job?
And is he a better or worse performer than the one in the non-critical
job to whom you only offer $25,000 to leave? Are you willing to pay
more money because the incumbent in the critical job does more damage?
Non-performing or non-productive employees should be removed or
reassigned into jobs they are better suited for. They should not be
rewarded with cash to get them to move on. That simply short changes
the good performers who aren't getting performance awards for lack of
money.
Buyouts raise a lot of questions as to intent of purpose,
especially if the function is not being abolished following the
incumbent's departure. Their use sends a mixed message at best
particularly in an organization arguing for relief because it is losing
talent. I strongly urge the Committee to delete this provision entirely
and leave NASA to tip toe around the existing government-wide
authorities for buyouts at the $25,000 level. The agency will have its
hands full making buyouts credible at the lower level without the extra
public scrutiny of $70,000 ``golden handshakes.''
Other provisions
Section 507 provides for the conversion to career status of
employees serving in term appointments. This is a useful flexibility
for the Administrator to exercise as long as the provisions are not
abused, for the abuses would seriously undermine merit system staffing
principles. Temporary hires are usually brought in to deal with peak or
surge workloads. Since they are temporary the rules by which such
positions are filled tend to be relaxed and don't necessarily comply
with full and open competition requirements for career status in the
civil service. If a pool of temporary employees serves as an agency
``farm team'' entry into permanent civil service positions will over
time become compromised.
The flexibility in extending IPA assignments by four years as
proposed under Section 509 is likewise a very useful provision for the
Administrator to have. Since it is exercised after the initial two-year
appointment expires there would have been ample opportunity to evaluate
the individual's performance hence the provision poses no risk to the
agency. One must nevertheless guard against the abuse of sending non-
performers out of the agency for extended periods of time. IPA
assignments for federal employees to State and local governments have
been known to be examples of ``turkey farms.'' The Administrator should
implement controls to make sure this does not occur--it is a very
costly practice.
Summary and Conclusion
In conclusion let me express general support for H.R. 1085 and its
intent to provide NASA with much needed HR flexibility. The bill
provides the immediate remedy of additional compensation for specific
purposes of retaining and attracting talented individuals for critical
agency needs. The pay differentials paid in bonuses and the higher pay
authorized are substantially above current authorities and therefore
meaningful. These provisions will provide the agency with better access
to professionals at mid career rather than at entry level. Most
important is the enhanced demonstration project authority that will
permit NASA to experiment with agency-wide reforms to potentially
streamline recruitment; revamp the pay and classification systems, and
reform the administrative appeals procedures by which the agency deals
with problem employees.
This concludes my testimony. I will be happy to respond to any
questions you may have.
Discussion
Employee Input to Workforce Plan
Chairman Boehlert. Well, thank you very much. I don't think
it is going to surprise anyone to learn that I am going to have
the majority of my questions for Mr. Harnage, because you have
raised some concerns about the bill, and we want to address
concerns.
Let me ask you, what kind of mechanisms would you suggest
we use to give employees more input into the workforce plan,
which is required in 1058--1085 I mean?
Mr. Harnage. We had a very good system that was working. It
was slow in getting off of the ground, because it didn't have
the full support of all of the agencies. But it was called
partnership where we were showing that the input of the people
doing the work did create efficiencies, and increase in
productivity, and a lowering of cost. But for some reason, when
this Administration came in, it desired to eliminate the
partnership program, and it has taken us two years to begin to
get it started back. It is beginning to come back in some
agencies, working very well, for example right now in the Air
Force, probably the most outstanding one we have got left
there.
So, I think the more involvement of the workforce in making
these changes and what they see is working the--a better way of
doing it, more involvement of their representative----
Chairman Boehlert. Well, this is agency specific, and I
think arguably, you could say, crisis driven. Do you have any
reason to conclude that you couldn't have a good working
relationship with NASA?
Mr. Harnage. If there was a desire to do so.
Chairman Boehlert. Do you sense that there is a lack of
desire or you haven't addressed the question yet?
Mr. Harnage. Well, I am not going to say there is a lack of
desire. Let us say there is a lack of taking the opportunity.
For example, on this very legislation, we weren't contacted
until the latter part of last week. And supposedly, you know,
for us to meet and talk about this legislation. The problem was
the material that was supposed to be with that letter wasn't
with that letter, and it wasn't until yesterday that my staff
was able to meet with NASA. My calendar didn't allow that on
that short of notice, so something as important as this, you
would think that we would have been talking about it months
ago.
Chairman Boehlert. You would think that. I can acknowledge
the merit of that statement. Well, we--maybe we can serve as an
intermediary to----
Mr. Harnage. I am sure you can.
Chairman Boehlert [continuing]. Facilitate a closer working
partnership, because I think it is essential that you be at the
table----
Mr. Harnage. It is essential.
Chairman Boehlert [continuing]. And work well with the
officials.
Mr. Harnage. And I would like to point out, if I might,
that----
Chairman Boehlert. Sure.
Mr. Harnage [continuing]. We are not resisting change. In
fact, we are--we consider ourselves a change agent. There are a
lot of things in the human resource area that we recognize are
antiquated and need changes. It is that a lot of what is being
pushed is being pushed on buzzwords and things that tend to
work in the private sector but does not necessarily work in the
federal sector.
Chairman Boehlert. I think our task is going to be a little
bit easier, because it is agency specific.
Mr. Harnage. Right.
Chairman Boehlert. And they all differ, so we will work
with you and with NASA, because you want to identify with a
solution to the problem. I think you can agree that the problem
is very real. It is not----
Mr. Harnage. Yes.
Buyout Provisions
Chairman Boehlert [continuing]. Imagined. We didn't make it
up. Why do you think it is going to result in the reduction of
jobs? It--you know, our--from our point, we think it is going
to create new opportunities for people.
Mr. Harnage. Well, we were looking for, where you are
offering--early out, in previous legislation, that required a
quid pro quo for every position you had a buyout, you couldn't
replace it. I don't know that that allows that in this
legislation, so----
Chairman Boehlert. That was from guys downtown, not from
here.
Mr. Harnage. Right.
Chairman Boehlert. All right.
Mr. Harnage. And so that is one of our concerns where we
are offering a buyout. We are not necessarily indicating that
that position then can be filled by another civil service
employee either whether it is out of college or off the street,
whatever the needs of the agency is, so that is one of our
concerns.
Outsourcing
The other concern is, like I said, in the outsourcing. This
agency has--we recognize that it is always going to be
contractor heavy. That is the nature, you know, of the mission,
but we believe they have gone too far, and there is no
indication of slowing down. And it is going to be very hard to
recruit employees when you say, ``Come on and go to work for
the government, but while you are thinking about that, we are
studying your job for privatization.''
Bonuses
Chairman Boehlert. Do you have any problem with the
existing bonus system? And address that somewhat, if you will,
you know, because we have provided even larger bonuses. We are
trying to give some incentives to the agency to get the people
they need to fill the vacancies that are going to come just
like that. And we don't want that.
Mr. Harnage. I don't have any problem with bonuses, per se.
The bonuses that have been applied in the past, we do have a
problem with, and some of these that are indicated. For
example, when we looked in at the current FEPCA, the Federal
Employee Pay Comparability Act, allows for bonuses, yet they--
only something like two percent of bonuses are being utilized,
and we tried to find out why. The reason is they weren't
funded. So when a manager made a decision to give somebody a
bonus, he had to either not fill a position or use some salary
in some other place in order to make that up, so there is no
incentive for the manager to give those bonuses. So they have
to be funded if they are going to really work. They have to be
funded. So that would be the number one problem.
The number two problem is offering bonuses to recruit
someone to come on board where you pay 25 percent of their
salary for four years. And they come on board working side-by-
side with somebody equally qualified, maybe be even better
qualified, that has been, say, working for 10 years drawing
less money than the new person is. There has to be some way of
addressing the morale of the current workforce while you are
trying to also address the need for bringing in more employees.
Chairman Boehlert. Well, we want to work with you and with
NASA to address a real problem that the agency is facing. And
when the agency faces a problem, that concerns us, and it
should concern all Americans, so we will work with you, Mr.
Harnage.
Mr. Harnage. I appreciate that. And one of the biggest
things that I saw missing out of all of this is it doesn't
involve the--you know, the workers at all. And it doesn't
involve any collective bargaining. It seems to, you know, just
give total flexibility without the checks and balances that the
employees themselves can pay a real value to this process. And
so I would like to see that that is protected.
Chairman Boehlert. Thank you for your willingness to work
with us. Mr. Gordon.
Mr. Gordon. Thank you, Mr. Chairman. Let me first point out
to Mr. Harnage, my father was a groundskeeper at the VA and--in
my hometown of Murfreesboro, and was a member of AFGE for a
long time. And I know firsthand how it has improved our lives.
And let me also say that this legislation is much improved from
what we saw last year. And I think that Chairman Boehlert very
much wants to move forward with a good bill. And when he says
he wants to talk to you, he means that sincerely. And so we do
need to develop this dialogue, because I think something is
going to happen, and let us make it happen the best that it
can.
I do have a concern as to what really are our problems. And
let me go through that just quickly. The proposed NASA
Workforce Legislation includes recruitment, retention, and
relocation bonuses that would be higher than under existing
law. And I would assume the justification is that the existing
incentive levels are insufficient. Yet NASA's own national
recruitment initiative report published in January of 2002
states, ``NASA centers are increasing the use of hiring
incentives to attract candidates and retain employees. These
flexibilities, commonly referred to as the three Rs, are
recruitment, retention, and relocation incentives, were offered
by OPM beginning in 1991. It is important to note that the
payment of these bonuses comes from the center's budget. There
is no extra money for the payment of these bonuses. Most center
managers say the budget constraints keep them from making
greater use of these flexibilities.'' So we have got to
determine what really is problems within the existing law and
what--or problems with just not adequate funding.
NASA Recruiting
Also NASA, as we know, has had a hiring freeze until
recently. And I think that we need to find out better, in terms
of the need to recruit new candidates what information we have
since this hiring freeze has been taken off. And I would like
to know whether any of the witnesses can provide any specific
data on how successful NASA has been in hiring new employees
after the hiring freeze has been removed and any data that you
might have on what problems NASA is having in attracting and
retaining employees.
Bonus Pay
Mr. Harnage. Well, I can't answer that question, because I
don't know how hard they have tried to hire new employees. That
would have to be the first test, how often and how many people
have they tried to hire, and then what was their success rate.
But you talk about the bonuses. As I stated earlier, the
problem with the past bonuses is they have not been funded, and
therefore, that was a disincentive to a lot of managers to use
those. So----
Mr. Gordon. Well, that is what I am trying to find--you
know, we know we have a problem, but what I am trying to
determine is the problem not adequate funding of existing
flexibility----
Mr. Harnage. Right.
Mr. Gordon [continuing]. Versus a problem of needing
additional flexibility. So----
Mr. Harnage. Well, in addition to that, though, it--and I
heard one of the Congressmen state earlier, it is pay. One of
our problems with the bonuses is they are being utilized, or
seem to be utilized, to make up for a deficiency in the pay.
And that is not a purpose of a bonus. To give a bonus, you are
giving somebody what they are really worth instead of rewarding
them. They should get what they are worth, and a bonus should
be a reward for excellence in service.
Mr. Gordon. This goes back to whether we have a structural
problem or a financial problem.
Funding Salaries and Bonuses
Mr. Stier. Congressman, I think that the problem is that
there is not a problem. There are several problems, and there
are a lot of different things that need to be done here. And I
think you are 100 percent right. This is an issue of resourcing
for sure. It is that a lot of these flexibilities exist. They
can't be adequately used, because the dollars aren't there to
actually fund them. But it is also true that NASA needs
additional flexibilities. I think, again, if you look at that
chart, that is what NASA is up against. NASA needs to be able
to compete in a very, very difficult marketplace. They are
plenty of----
Mr. Gordon. Okay. So do you have some data that shows since
the NASA freeze has come off that this chart you have
demonstrates that it has--there has been a problem?
Mr. Stier. What I have for you is data that is in my
testimony, and I should have asked for that to be entered into
the record. But the data shows that on, for example, entry-
level salaries, NASA is not able to compete against the private
sector. And what I have is data that shows when you----
Mr. Gordon. So that is not a structural problem, then that
is a financial problem.
Mr. Stier. That is a financial problem. What I have is data
that shows that private sector companies, those companies, 60-
plus percent of them use consistently recruitment and retention
bonuses in order to keep the talent that they have. What I have
is data from--anecdotal data from NASA of the number of top-
tier scientists, engineers, etcetera, that they have wanted to
keep that they can't keep. And I can give you specific
examples, if you would like them. They are anecdotal rather
than data, but it demonstrates that there is a real problem
there.
Need to Compare Flexibility and Financial Problems
Mr. Gordon. Yeah, but again, we know we have a problem. We
are trying to find out what solution and whether or not there
is already that flexibility. And what I would--just if I could
real quickly close, Mr. Chairman, by saying I think we need
more data to--in an effort to try to determine structural
versus lack of funding. And for the record, last year's
Subcommittee hearing on NASA workforce issues, the Comptroller
General of GAO stated that without a detailed review of NASA's
plans, GAO was ``not in a position to assess NASA's use of
existing authorities, the sufficiency of those authorities, and
their relationship to this agency-wide human capital goal''. So
again, I would hope that as we go through this process, we can
get more data to really determine what is structural that needs
to be changed and----
Chairman Boehlert. And what is financial.
Mr. Gordon. Financial that needs to be improved.
Chairman Boehlert. Thank you very much, Mr. Gordon. Mr.
Rohrabacher.
Pay for Scientists and Engineers
Mr. Rohrabacher. Thank you very much. Mr. Stier, you stated
earlier that 60 percent of NASA's workforce are engineers or
scientists. What are the other 40 percent?
Mr. Stier. Other 40 percent are, you know, a variety of
different activities from clerical work to all of the
activities that NASA is engaged in. It is a virtually unique
among agencies with respect to the percentage of professional
engineering and science staff.
Mr. Rohrabacher. Okay. Now the 60 percent that are
engineering and scientists----
Mr. Stier. Yes.
Mr. Rohrabacher [continuing]. Are they the higher-paid 50
percent?
Mr. Stier. By and large, they are going to be higher-paid,
absolutely. They have positive educational requirements. They
start out, generally speaking, at a higher level, and they will
be higher paid.
Mr. Rohrabacher. Okay. There is a Space News report there
that suggests that the--NASA's workforce--that the engineers in
NASA's workforce make around an average of $74,000 a year as
compared to $68,000 a year in the private sector. First of all,
do you think that that is accurate?
Mr. Stier. It is accurate. It comes from the Bureau of
Labor Statistics data. It reminds me of an anecdote where Bill
Gates walks into a bar with 38 people. And everyone
immediately, on average, becomes a billionaire. The point here
is that that it is a median. That tells you something, but it
doesn't give you the full story.
Mr. Rohrabacher. I got it. Now the--but by and large, the
employees at NASA who are not the engineers and scientists are
making much less than this then?
Mr. Stier. Some are, and some are going to be making
similar. I mean, again, there are different professionals, in
addition to scientists and engineers there, that will clearly
be in equivalent grades.
Mr. Rohrabacher. All right. So making--you know, when Mr.
Gordon was mentioning about trying to differentiate between a
structural versus pay differentiation, if indeed you could have
fewer people being paid more money to do a job, then you could
actually say that is structural, couldn't you?
Mr. Stier. Well, I think that is--that I would----
Mr. Rohrabacher. Please feel--the other panelists can feel
free to jump in.
Mr. Nesterczuk. Let me comment on that. The pay issue is a
structural issue. The pay system is established in statute. It
is rigid. You are pegged to a pay scale depending on your years
of service and experience. On the intake stream, you don't have
a lot of flexibility as an agency to reset the entry-level
salary. So that is a structural issue. The financial aspect of
it comes in the way of the bonuses. If on this pay system, you
can overlay some flexibility with a recruitment bonus to
attract someone to get them started into the agency, but you
don't have the money for those bonuses, yes, that is a
financial issue.
Mr. Stier. If I might add----
Mr. Nesterczuk. So the pay structure----
Mr. Rohrabacher. So we can give the--I guess what I am
saying is we are not necessarily talking about spending a huge
chunk of more federal dollars----
Mr. Nesterczuk. No.
Mr. Rohrabacher [continuing]. In the sense that you can use
those dollars to pay some people more money who we really need
there as compared to some other people whose skills may not be
as up-to-date. I mean, let me just note, I am a former
journalist. I don't think I could go back into the field of
journalism right now, because I have been technologically left
behind. Journalists now have to have an incredible number of
technical skills that I don't have. And then when you--that is
when you see that NASA's workforce or engineers that are aging
engineers as compared to the younger people who are 25- to 30-
year-olds. I would note that the 25- to 30-year-olds maybe have
up-to-date skills where some of the older fellows and older
ladies don't have those same skills. And----
Mr. Stier. I would say first that NASA does have a
structural issue with respect to a starting pay salary, which
is lower than the private sector. Some of the older people you
are talking about, I think one of the real challenges NASA
actually has is in keeping them, because they need to be in
NASA to train the new people that are coming through.
Mr. Rohrabacher. Right.
Importance of Continuous Learning
Mr. Stier. You heard from the prior panel about the
importance of continuous learning. In the case of the workforce
that NASA has, there is quite a bit of that that goes on, and
so just because--as a young guy, I have to say this, just
because you are old doesn't mean that you are not up to speed.
Mr. Rohrabacher. Well, let me take that as a--let me
suggest that that is a very wise answer to the question,
because those of us who are here and go into politics, we don't
always continue learning. And maybe that is not a good
comparison then.
Mr. Harnage. Well, if I might add, one of the reasons you
don't continue learning, you talk about in the journalism area,
is because that is no longer, you know, required of the job
that you are now doing. But when we make these comparisons, I
often like to use--I am a very proud American. I am a veteran,
and I am proud that we have got the best-trained military in
the world. We are now facing, with the probability of war, and
there is no doubt in any United States citizens' mind who is
going to come out on top on that. The only question is how many
casualties will there be, but they are well trained, the best
trained military in the world. And every one of them came to
work at the entrance level. We trained them continually through
their career, so that they kept pace, and that is what we ought
to be doing with our civilian workforce.
Chairman Boehlert. The gentleman's time has expired.
Mr. Rohrabacher. If the Chairman would indulge me 30
seconds just to say----
Chairman Boehlert. A nanosecond.
Mr. Rohrabacher. The Japanese have known that if you pay
your engineers more than your lawyers, it is a very--it is
something good for society. And perhaps we can structure it so
in our society that the people who go to work for NASA would be
making more money if they--especially if they have the skills
that we need. And I thank the Chairman for his leadership in
trying to give us a little experiment here with trying to make
things better.
Chairman Boehlert. Thank you. And we give some flexibility
to NASA, and I think it is very important that there be
constant communication with you and representing your
membership, and you have input. But we lift the arbitrary 5,000
cap, and it is agency-specific. Goodness knows we need a lot of
reform in government overall, but if we wait to do it for
everybody, we will never get it done. And this is an agency we
have to address the urgent need right now. I don't think there
is any disagreement on the need. The question is how best to
address the need. And we are trying, to the best of our
ability, to come up with a proposed solution. But we should not
exclude anyone in the development of that demonstration
activity and the solution. So you have got my pledge that we
will be facilitators to make certain your voices are heard,
your input is given the consideration it deserves.
With that, let me turn to Mr. Hall.
Mr. Hall. Mr. Chairman, I have not been here. I have been
in another hearing, and I don't know what has been asked, and I
don't want to abuse their time. I will submit questions for
later.
Chairman Boehlert. Okay. Thank you very much. Unless there
is someone who has--Mr. Lampson, I'm sorry.
Mr. Lampson. Thank you, Mr. Chairman. I don't want to be
left out.
Chairman Boehlert. The other gentleman from Texas.
Destination and Vision for NASA
Mr. Lampson. Thank you very much. I have to agree with
every word that you said about there is a problem. We have
known that problem existed in NASA for a while, and there was
concern from years back, because I have visited with people,
particularly at the Johnson Space Center, about the loss of
continuity form project to project. And as people were not
being replaced and brought in to work with the older heads and
gaining the experience of actually doing those tasks before
they move to the next project, then it becomes lost.
And I am one who firmly believes after--I think we had a
hearing on this subject some time last year. I don't remember
exactly when it was. But I remember during the course of the
hearing, I got up and went and sat with a group of about 20
college students in the back. And I asked them. I said, ``You
are the potential employees for NASA. What do you want? Are you
most interested in the dollars that can be put into your pocket
or is there something else?'' And almost to a person, it was,
``Where are we going? What can I do to build on my dream? What
can I do to make me feel like I have accomplished something
significant?'' And I think that is a huge factor that has to be
put into this equation and make sure that we have got a
destination for NASA and a vision, something that is going to
challenge the people who want to come in and live a dream and
take a shot at making a huge difference in the world, like so
many people who have come into NASA so long ago have done, and
hopefully will continue to do.
Demonstration Project
But with that, let me ask a couple of questions so that we
might get down to where we might make improvements in the bill.
I wish there were someone from NASA here, but the bill seems
that it would allow the NASA Administrator to carry out agency-
wide personnel demonstration projects. Could the
Administrator--and any of you answer. Could the Administrator
use that authority to eliminate the federal pay classification
system at NASA?
Mr. Nesterczuk. Yeah, I will take that. Yes, the
Administrator would be allowed to change the classification
system at NASA.
Mr. Lampson. Could they then establish their own pay
classification system?
Mr. Nesterczuk. Yes, they could.
Mr. Lampson. Could the Administrator arbitrarily eliminate
the current Administrative appeals procedure available to NASA
employees and replace it with something else?
Mr. Nesterczuk. To a limited extent. The administrative
aspect of it, which is up to the level of the Administrator
inside the agency, that appeals process could be changed, but
subsequent external reviews to the Merit Systems Protection
Board and elsewhere, no.
Outsourcing
Mr. Lampson. What would be the effect of that authority on
the establishment of a diverse workforce? And would it effect--
would it increase the NASA Administrator's power to expand
outsourcing?
Mr. Nesterczuk. It is not related. It is not really
related. The question of dealing with the appeals processes in
cases of problem employees who may be subject to removal or
some such action, how you deal with that, basically, is that
appeals process. The question of outsourcing is something that
OMB handles. It is beyond the scope of the demonstration
authority.
Mr. Lampson. Anybody want to make any comments about any of
that before I move----
Chairman Boehlert. Yeah, I do. I want you to know that we
are going to be monitoring this very, very carefully. And they
have to come to us with their plan. And so we will be working,
and you have my pledge, as does Mr. Harnage, that we are going
to be examining this very carefully. And we are going to
consider all aspects. We better solve some problems, not create
new ones.
Mr. Lampson. Good. Thank you, Mr. Chairman, for that
statement.
Demonstration Projects
Mr. Stier. Mr. Chairman, if I might add one comment on
that, and that is that the demo project authority includes, as
it ought to and needs to, consultation and work with employee
groups, union groups, where they exist. There is a long history
here. The demo project authority actually goes back 25 years.
One of the points that I think is quite important for the
Committee to look at is that this has been a way for government
to experiment. It has been experimenting for 25 years primarily
in this arena around scientists and engineers. We have learned
a lot. Why are we waiting 25 years to take what we have learned
to make the government a better place? And I would say that we
ought to be making sure that we find out what has worked and
try to use that in places where it is really needed, like NASA.
I think that is one of the advantages of demo projects and
clearly something that obviously has to include employee
involvement.
Need for Oversight
Mr. Nesterczuk. Yeah, let me clarify the point. The
Administrator can't unilaterally make changes. The
Administrator can propose a change to the system. It then has
to be debated, reviewed through the normal clearance processes
in the demonstration authority and then subsequently accepted
and implemented. But he can't unilaterally just go ahead and
make a change.
Mr. Harnage. Well, one thing that I would say is that I
have asked Congress to be very cautious about giving up its
oversight over any agency where you give them the authority.
This wouldn't be a demonstration project, because it would be
agency-wide. And it would be the agency's rules and
regulations. And I am a little confused on what the appeals
process would be when you have circumvented the classification
process with this demonstration project. But I also want the
Committee to understand when I was--a while ago when I said we
are a change agent, I tried for four years to get the Clinton
Administration to sit down with us and talk about pay reform.
And I have tried now for two years to get the Bush
Administration to sit down and let us talk about pay reform. We
recognize there is a need. We recognize that it has got to be
addressed if you are going to do anything about the recruitment
and retention problem. But so far, neither Administration has
been willing to sit down and start working on it. It is time we
started working on it.
Chairman Boehlert. The gentleman's time has expired.
Mr. Lampson. Can I just make one ending comment?
Chairman Boehlert. One ending comment.
Mr. Lampson. It follows--and it is just a few words. And it
follows sort of what your comments are. They will have to come
back to the Committee to make a report under this bill, but
they wouldn't have to get Congress's approval. And I would like
to at least for us to have a dialogue on that some how or
other.
Chairman Boehlert. I can assure you and everyone that we
are going to continue to have a dialogue in this. As a matter
of fact, first of all, Congress never, never gives up its
oversight authority and responsibility. I can guarantee you
that. Secondly, and not surprisingly, NASA is not like--
unlike--is like any other agency; they wanted authority to do
what they wanted to do permanently, and without any
consultation. And we said, in essence, ``Like Hell. We are not
going to give you that open-ended opportunity to do whatever
you darn well please,'' although we do think they would act
responsibly, but we are going to make sure they act
responsibly. Until they--as Mr. Stier pointed out, consult,
this is not a unilateral action by a select group of people
over in a corner addressing a problem. This is a select group
of people over in a corner identifying the problem, opening up
to everyone saying, ``This is a real problem. We have got to
get at it, and we are determined to get at it in a responsible
way.'' But we are not going to yield on oversight. We are not
going to let them do whatever they darn well please. And I
don't want to prejudge what they might come up with their
demonstration project. It might be just wonderful. You and I
might be standing up applauding. But I doubt if that will be
the case. I think it will need a little massaging, but we are
here. We are masseurs. Thank you very much.
Mr. Gordon. Can I close, also, please, sir?
Chairman Boehlert. All right. You have an opportunity to
close, Mr. Gordon.
Plans for the Workforce Authorities
Mr. Gordon. Thank you. Just a couple quick points. As Mr.
Lampson pointed out, really the only responsibility or
obligation of NASA is to come back and report what they are
going to do, which brings us, to some extent, into this chicken
and the egg situation, in that they have continued to say, ``We
want this additional authority,'' but they haven't told us what
they want the authority for. And you know, if they would maybe
come forth and tell us what they want to do with this and what
they plan to do with it, I think that would be beneficial.
The other--and the other point is this: there has been a
lot of discussion about salary. And part of the way to enhance
the recruitment and retention of NASA employees is to increase
salary. And I mean, this bill doesn't talk about salary. But--
and as a practical matter, I know we are really talking about
compensation in general. This--but this bill is more about
compensation in general, which is bonuses and these sort of
things. And once again, you know, under OPM, NASA has the
ability to a lot of flexibility in terms of additional bonuses.
But the centers' managers are afraid--not afraid, they are not
using it, because they don't have adequate funds. So we really
do need to know more about could they get the job done with
adequate funding without additional legislation?
And the final point is, I just want to once again emphasize
that I think that we have a fair forum here with Mr. Boehlert
in trying to--I have no doubt that he wants to do the right
thing. And we need to get the best information before this
committee to do that.
Chairman Boehlert. That is closing in a really positive
note. Thank you very much for being resources for this
committee. We really appreciate your input, all of you. And the
dialogue will continue.
Mr. Nesterczuk. Thank you.
Chairman Boehlert. Thank you so much.
Mr. Nesterczuk. Thank you, Mr. Chairman.
Chairman Boehlert. This hearing is adjourned.
[Whereupon, at 4:30 p.m., the Committee was adjourned.]
Appendix 1:
----------
Answers to Post-Hearing Questions
Answers to Post-Hearing Questions
Responses by Robert S. Walker, Chairman, Commission on the Future of
the United States Aerospace Industry; President, Wexler Walker
Public Policy Associates
Questions submitted by Representative Ralph M. Hall
Q1. LThe Aerospace Commission has made an extensive set of
recommendations to improve the civil space and aviation sectors in the
United States.
How much do you estimate it would cost to implement
all of those recommendations?
In light of the current state of the aerospace
industry, will the private sector be able to contribute much of
the needed funds, or will the Federal Government have to pay
for the major share of the cost?
A1. The Commission on the Future of the United States Aerospace
Industry did not specifically cost out our programmatic
recommendations. You will note that most of our recommendations would
encompass a variety of potential programs and therefore costing out any
one of those would not be particularly useful.
That said, however, it is clear that tens of billions of dollars of
new investment is needed in the aerospace sector. Our approach to
finding the resources for that needed investment was to look at the
aerospace expenditures now being made or contemplated, combine that
spending into a sectoral budget, prioritize what are the real needs
inside that budget and then suggest better horizontal management of the
resources so that real priorities get addressed.
Certainly additional money beyond that already committed is needed
to return U.S. aerospace leadership, but a considerable amount can be
achieved by Congress and the Administration organizing activities
within the sector in such a way that programs are complimentary rather
than competing. Our most vivid suggestion in that regard is to assure
that space based control, navigation and surveillance assets being
designed for military missions also include capability to be utilized
as an integral part of a modernized air traffic management system.
A substantial part of the investments needed for a robust aerospace
future will have to come through government actions. The Commission
suggested a series of business related reforms, which we believed would
make the aerospace industry more attractive to the private investment
community. The present situation of cyclical business and relatively
meager profits even in the best of times does not attract much capital
into the industry. Our belief was that policy change which results in
making aerospace a more attractive investment arena will assure the
finance base for additional research and development, more new products
and a stronger ability to compete in the global economy.
Questions submitted by Representative Bart Gordon
Q1. In the Commission report, you stated [page 3-3]:
``The use of revolutionary reusable launch vehicles (RLV) is
within our grasp in this decade. Developing the next generation
of RLVs (in low, medium, and heavy lift configurations) could
dramatically improve both the affordability and reliability of
access to space.''
However, NASA's latest integrated space transportation plan
slows down the development of a next generation RLV and assumes
the continued operation of the Shuttle fleet for another
fifteen years or so. It also seems to back away from earlier
cost reduction goals.
Why does the Commission believe that next
generation RLVs are achievable in this decade?
What would it take to develop a next
generation RLV on that timetable?
Did NASA discuss your RLV recommendations
with you before they issued their new integrated space
transportation plan?
A1. Your question made me realize that our specific wording could lead
to misinterpretation and therefore was not as artful as it should have
been.
The advent of RLVs within the decade is not likely as a NASA
program. We would hope that the Orbital Space Phase could be completed
within the decade. Our discussions with NASA led us to believe that
they plan to design the OSP in a way that it could ultimately be used
as the second stage of a two-stage RLV. But, since the first stage of
such a vehicle is most likely to emerge from the National Aerospace
Initiative, the timeframe for such integration is probably toward the
middle of the century's second decade. Prior to that, of course, the
OSP would be on an EELV, a concept attractive to the Commission as a
way of better utilizing our EELV investment.
What our Commission statement refers to is the possibility of
privately financed RLVs being launched within the decade. Several
competitors for the x-prize are likely to fly such vehicles, which
while not orbital, will be fully reusable technologies going to the
edge of space. In addition, efforts such as those underway at Kistler
also have the potential of creating reusable vehicles for, at least,
small payloads.
The Commission's hope was that the development of reusable
technologies would lead to vehicle configurations addressing a
multitude of space needs. Our intent was to push for the earliest
possible timetable for such development because we believe that the
result would be a dramatic reduction of cost to orbit.
Answers to Post-Hearing Questions
Responses by John W. Douglass, President and Chief Executive Officer,
Aerospace Industries Association of America, Inc.
Questions submitted by Representative Ralph M. Hall
Q1. LThe Aerospace Commission recommended that the Federal Government
significantly increase its investment in basic aerospace research.
However, NASA's budget request calls for an almost 5 percent cut
(excluding the effects of inflation) in aeronautics R&D funding over
the next five years. This runs counter to the Commission's
recommendations.
What will be the impact of continued cuts to
aeronautics R&D?
Will it be possible to achieve the future air traffic
management system recommended by the Commission if NASA and
FAA's R&D budgets follow the trend laid out in the
Administration's budget request?
What would you recommend be done?
A1. Long-term reductions to the aeronautics Research & Development
(R&D) budgets of the FAA and NASA would postpone the deployment of
leading-edge technologies to improve the speed, range, safety and
environmental efficiency of American air and space travel. As the
report of the Aerospace Commission warned, patterns of declining
federal aeronautics R&D spending could result in missed opportunities
for the Nation to take advantage of ``breakthrough capabilities'' in
high performance computers; propulsion and energy systems; noise and
emissions mitigation; and hydrogen-fueled engines.
These patterns could also jeopardize the critical need for
integrating the resources of federal aviation agencies to modernize the
Nation's aging Air Traffic Management (ATM) system, as required by
Title VI, Sec. 622 of The Century of Aviation Reauthorization Act of
2003. This initiative will require sustainable multi-year funding to
reduce the reliance of the National Airspace System (NAS) on vulnerable
ground stations and to foster the development of advanced satellite-
based networks for both civil and military aviation communications,
navigation and surveillance.
Insufficient Federal Government investments in aeronautics R&D
would also increase the challenge of recruiting sufficient numbers of
scientists and engineers into the Nation's aerospace industrial
workforce during a decade when nearly 30 percent of the sector's
employees will reach retirement eligibility.
Finally, a contraction of our commitment to aeronautics R&D at home
will only yield aviation market leadership to our competitors abroad.
European Union (EU) governments underwrite approximately 30 percent of
the continent's civil aeronautics R&D, and in the realm of space, the
EU, as well as Japan, China and Russia, have aggressively pursued new
payload launch capabilities for at least the last five years. Our
competitors overseas have calculated that the United States lacks
either the will or the means to leverage its military superiority into
world-class civil aviation and commercial space transportation systems.
Robust programs of aeronautics R&D, however, would represent the first
step in proving them wrong.
To place American aeronautics R&D programs on a stable glide path
for economic growth and innovation, the Aerospace Industries
Association recommends the following changes in the mission planning
cycles of NASA and the FAA.
NASA
Restoration of the balance between the Space and
Aeronautics Enterprise budgets by increasing the latter to 30
percent of the Space Science account ($1.672B) over a five-year
period.
Increased funding of Space Flight Capabilities,
Shuttle life extension, the Orbital Space Plane and Propulsion
and power technologies with the objective of deploying a new
manned launch vehicle by 2010.
An aggressive recapitalization of NASA's
infrastructure to facilitate aeronautics and space research.
FAA
A reversal of budgetary trends through an increase in
the FAA's Research, Engineering & Development top line by 30
percent (above the FY03 $100M level) as well as the Facilities
& Engineering NAS modernization program by 45 percent (above
the $3B FY03 level).
The establishment of public/private partnerships to
accelerate the development of advanced ATM technologies,
propulsion and fuel capabilities, environmental efficiency and
rotorcraft platforms.
These additional resources would significantly enhance NAS safety
and capacity.
Answers to Post-Hearing Questions
Responses by Max Stier, President, Partnership for Public Service
Questions submitted by Chairman Sherwood Boehlert
Q1. LHow do recruitment, relocation, and retention bonuses for industry
and academia compare to the current legal limits for Federal Government
employees?
A1. While there is considerable variance among different industries and
academia with regard to their use of recruitment, relocation, and
retention bonuses, overall both sectors provide larger bonuses to
proportionately more recruits or employees compared to the Federal
Government. The December 1999 report by the Office of Personnel
Management, ``The 3Rs: Lessons Learned from Recruitment, Relocation,
and Retention Incentives,'' does a good job of outlining some of the
major differences between the federal and non-federal environment
regarding use of these tools. In that report, for example, OPM notes
that ``. . .use of recruitment bonuses in the private sector is
increasing. In a recent survey of 41 companies offering recruitment
bonuses, over half offered bonus amounts of more than $3,500. The
majority of all bonuses range from 6 to 15 percent of base pay.''
Private sector employers also frequently use finder's fees as part of
their recruitment techniques and there is more managerial discretion
regarding when and how recruitment incentives are used.
Similarly, OPM found that 50 percent of non-federal public sector
and private sector contacts said they provide relocation incentives as
either lump sum bonuses or salary differentials. OPM also found that
non-federal employers typically provide a variety of additional
relocation incentives typically not available in the federal sector,
including housing allowances and reimbursement for cost of evaluating
school systems. Finally, OPM found that retention or ``stay for pay''
incentives are administered differently outside the Federal Government,
particularly in the private sector where there are the options of using
deferred compensation, cash on a lump sum basis, stock options and
profit sharing.
Q2. LHow do recruitment, relocation, and retention bonuses for industry
and academia compare to the new limits for NASA employees in H.R. 1085?
A2. The new and higher limits for recruitment, relocation, and
retention bonuses proposed in H.R. 1085 for NASA employees would bring
NASA closer to what industry and academia can provide when competing to
attract or retain talented applicants or employees. Overall, the
proposed higher limits in H.R. 1085 seem quite reasonable, particularly
since they are contingent upon the employee entering into a service
agreement with NASA. Of course, the ultimate utility of these
incentives will depend to a large degree on whether NASA has sufficient
resources to use them effectively. If they do, the incentives should be
quite useful and, ultimately, very cost effective.
Questions submitted by Representative Ralph M. Hall
Q1. LIt is reasonable to presume that NASA and its contractors are
competing for many of the same employees due to the specialized skills
involved. Given that, would increased recruitment and retention bonuses
as envisioned in H.R. 1085 have any net positive effect--or would it
just result in higher costs for both NASA and its contractors as they
compete in offering better incentives?
A1. NASA contractors, in our view, are unlikely to be ``open-ended'' in
the amount of any recruitment or retention bonuses they provide. Since
NASA is only one of several potential competitors for the sought-after
talent, we do not think that enabling NASA to become more competitive
by increasing the amount of the recruitment and retention bonuses they
can provide would be canceled out by a concomitant increase by its
contractors. The marketplace for talent, in essence, is much larger
than that. Overall, therefore, we think the provisions of H.R. 1085
would provide a net benefit for NASA and its mission capability by
allowing them to become more competitive in that marketplace.
Questions submitted by Representative Bart Gordon
Q1. As part of the President's Management Agenda, 50 percent of the
remaining NASA jobs are to be made available for potential outsourcing
over the next few years.
How effective are bonuses and other incentives likely to be in
attracting employees to NASA if they believe that their jobs
could be transferred to the private sector within a few years?
A1. Despite the potential for some outsourcing of NASA jobs, the
increases in recruitment, relocation, and retention bonuses proposed in
H.R. 1085 should still be effective in helping NASA attract highly
capable employees. Part of our reasoning behind this conclusion is that
the outsourcing goals of the President's Management Agenda call for
fifty percent of jobs that are commercial in nature to be made
available for potential outsourcing, not fifty percent of all agency
jobs. The total number of NASA positions affected by outsourcing,
therefore, may be much smaller than some anticipate. The Partnership
also takes the view that work that is not inherently governmental can
in some circumstances be appropriately competed, but great care must be
taken to ensure that the ``not inherently governmental'' standard is
indeed met. In addition, where jobs are appropriate for competition,
public sector employees are often the best value. Accordingly, the
competitive sourcing process must ensure a level playing field for
public employees. Further, the rhetoric around this issue should not in
any way denigrate public servants. If these conditions are met, the
impact of outsourcing considerations on potential applicants should be
fairly minimal. If NASA is successful in attracting the highly
qualified applicants it needs, we think most of those applicants will
not be deterred by possible commercial sourcing competitions since they
will accurately see their skills as highly marketable under any
conditions. Our bottom line is that good civil servants are essential
to America's well-being. The core responsibilities of government should
not be outsourced and every effort must be made to retain the talented
federal workers the government needs to meet those responsibilities.
The provisions of H.R. 1085 will be helpful in that regard.
Q2. Do you have any survey data or other empirical data to justify
your view?
A2. We know that starting salaries and bonuses are important to new
college graduates with student loans and other debts that were incurred
while obtaining advanced degrees. The results of a recent survey co-
sponsored by the Partnership which examined the impact of law school
debt are transferable to other occupations as well. As the report of
that study, ``From Paper Chase to Money Chase: Law School Debt Diverts
Road to Public Service,'' notes ``. . .many law school graduates must
forgo the call to public service despite their interest and commitment
to such a career. Public interest and government employers will
increasingly lose in their efforts to recruit and retain talented and
dedicated attorneys.'' Students graduating from schools of engineering
or science, particularly those with advanced degrees are likely to be
in a similar position. Recruitment bonuses or the offer of student loan
repayments as a recruitment incentive can make a very positive
difference. Further, there is a growing body of research on the
expectations of new entrants to the job market and particularly new
college graduates who are likely to anticipate and even look forward to
several different employers throughout their careers. The possibility
that a potential employer may outsource some positions is not likely to
be nearly as important a consideration as initial salary levels or
recruitment and relocation bonuses.
With regard to the value of retention bonuses, the recently
released results from OPM's 2002 Federal Human Capital Survey lends
support to the proposition that retention bonuses can be an effective
tool for retaining some needed employees. For example, while nearly
two-thirds of all federal employees are satisfied with their retirement
benefits (an incentive to leave) fewer than half of them are satisfied
with the recognition they receive for doing a good job (a disincentive
to stay). A retention bonus sends a very strong signal to an employee
that they are valued and their contributions are recognized.
Note: Four questions from Congressman Gordon are most appropriately
answered by NASA and we assume that responses have been provided. Those
questions are:
H.R. 1085 contains retention bonuses to incentivize employees
to stay at NASA. Do you have any hard data on how many
employees NASA loses to industry and how many employees NASA
gains form industry on an annual basis?
Are you aware of any exit surveys by NASA to determine the
specific reasons employees have left the agency and what would
have made them stay?
How many employees does NASA need to carry out its missions
over the next ten years? Does NASA currently have too many
employees or not enough?
Associated with these latter questions, however, Congressman Gordon
asks two additional questions to which we can respond as follows:
Q3. Would such data be useful to have in determining what, if any,
additional legislative authorities should be provided to NASA?
A3. Answers to the questions raised by Congressman Gordon are certainly
useful in determining what, if any, additional legislative authorities
should be provided to NASA. The Partnership for Public Service is an
advocate of employee surveys, including exit surveys, as a useful
method of gaining valuable information and insights regarding workforce
management. Also, the use of hard data or employment metrics such as
employee turnover via resignations and retirements can be very useful,
particularly when tracked over time.
Q4. How would you recommend this committee go about determining the
answers to those questions?
A4. Much of this information should be obtainable from NASA. Additional
information, including some benchmark data on the experiences of other
agencies should be available from the Office of Personnel Management
either from the information contained in the Central Personnel Data
File or via government-wide studies and surveys such as the ``2002
Federal Human Capital Survey.''
Answers to Post-Hearing Questions
Responses by Bobby L. Harnage, Sr., President, American Federation of
Government Employees, AFL-CIO
Questions submitted by Chairman Sherwood Boehlert
Q1. What is the basis of the statement in your written testimony that
H.R. 1085 ``undermines merit system principles'' when the legislation
clearly tells NASA to plan ``the safeguards and other measures that
will be applied to ensure that this title is carried out in a manner
consistent with merit system principles.''
A1. AFGE believes several of the proposed changes to NASA's personnel
system undermine merit system principles. The direct hire authority--on
the spot hiring--undermines the principle that there should be free and
open competition for federal jobs. The bonus authority undermines the
principle of equal pay for substantially equal work since not everyone
will be eligible for the bonuses, only those who threaten to leave or
refuse to join NASA without a bonus. Those who perform equal work but
don't threaten to leave, and don't refuse to join in the absence of a
bonus will not receive the same pay as those who do.
Questions submitted by Representative Ralph M. Hall
Q1. Should federal workforce issues be addressed legislatively on a
government-wide basis or only for selected agencies? For example, the
DOE designs nuclear weapons and has similar workforce issues as NASA.
Why should NASA be singled out, but not DOE.
A1. AFGE is strongly opposed to agency-by-agency civil service reform.
It undermines the merit system principles of equal pay for
substantially equal work, and raises costs for the government at large
as agencies compete with one another for resources and employees. There
is nothing to prevent a race to the bottom as is so often the case in
the private sector.
Q2. If a NASA only bill is passed, what will the consequences be for
other government agencies with significant numbers of scientists and
engineers? Could there be an unintended brain drain from an agency with
less generous incentives to one with more employee incentives?
A2. We believe that the NASA only approach is wrong for exactly those
reasons. NASA has a poor record for personnel management and contract
oversight. NASA has had difficulty in recruitment because of its
relentless contracting out and privatization, and its failure to
support or invest in its own workforce. Bonus authority is a Band-Aid
for them that does not address its more profound management problems.
Q3. How appropriate is it to single out one agency's science and
engineering workforce for special treatment?
A3. It is highly inappropriate and will further undermine morale in an
agency that is already suffering from low morale because of its
penchant for contracting out and privatization without giving incumbent
federal employees the opportunity to compete. NASA's workforce will
languish while a few temporary employees who are in favor will receive
large bonuses under the Administrator's plan. His plan is profoundly
unpopular with the career workforce at NASA.
Q4. Is it reasonable to presume that NASA and its contractors are
competing for many of the same employees due to the specialized skills
involved. Given that, would increased recruitment and retention bonuses
as envisioned in H.R. 1085 have any net positive effect--or would it
just result in higher costs for both NASA and contractors as they
compete in offering better incentives?
A4. Ironically, if a scientist or engineer wants to work ``for'' NASA
and is interested in job security and career development and good pay,
he or she should work for NASA's contractors. NASA's record is to
contract out everything it can, without competition. Taxpayers foot the
bill, but the contractor gets all the institutional knowledge and the
agency and we are at the contractors' mercy because in-house capacity
is depleted. Contractors have exploited this situation and overcharge
making the task of rebuilding in-house capacity ever more expensive and
difficult.
Questions submitted by Representative Bart Gordon
Q1. Since H.R. 1085 doesn't establish separate funding for the
proposed incentive payments, one has to assume that the funds for
bonuses, critical pay authorities, and VSIPs would have to come out of
NASA's general salary funds. Therefore, NASA's use of those incentives
would reduce the funds available for raises for the rest of the
workforce. What will be the net effect of the proposed incentives on
employee morale and retention if the overall workforce salaries are
being depressed to pay for bonuses and incentives for selected
employees? Is your conclusion based upon any hard data?
A1. AFGE members at NASA tell me unequivocally that they oppose the use
of the incentives for what is essentially a temporary workforce. NASA's
own rationale for these authorities is that federal salaries are too
low, but they will not be able to address the problem of low salaries
across the board without additional funding. So necessarily some will
benefit and others will lose in this zero-sum game. AFGE has requested
data from the Office of Personnel Management (OPM) from demonstration
projects throughout the government that have experimented with the
types of authorities NASA wants so that we can find out if our
suspicions are correct. After almost a year of repeated requests, even
from the pay workgroups at the Department of Homeland Security, we
still have never gotten any information from OPM on how different pay
systems affect the distribution of salary monies.
Q2. H.R. 1085 would allow the NASA Administrator to carry out agency-
wide changes to the workforce rules under the demonstration projects
provision. Could the Administrator use that authority to eliminate the
federal pay classification system at NASA? Could the Administrator
arbitrarily establish his own pay classification system? Could the
Administrator arbitrarily eliminate the current administrative appeals
procedures available to NASA employees and replace it with something
else? What would be the effect of this authority on the establishment
of a diverse workforce? Would this authority increase the NASA
Administrator's power to expand outsourcing?
A2. The answer to the first three questions is YES. We cannot know the
effect on diversity, but if officials exercised their discretion in a
discriminatory way, the workforce could certainly become less diverse,
but the burden would be on disappointed job seekers to prove that they
were victims of discrimination. The Administrator has already expanded
outsourcing without giving taxpayers the benefits of public-private
competition. He could simply fill all positions he calls ``new'' with
contractors.
Q3. As part of the President's Management Agenda, 50 percent of the
remaining NASA jobs are to be made available for potential outsourcing
over the next few years. How effective are bonuses and other incentives
likely to be in attracting employees to NASA if they believe that their
jobs could be transferred to the private sector within a few years?
A3. AFGE believes that the bonuses will simply be given to individuals
making their way in the revolving door between NASA and its
contractors. The current Administrator has met the President's entire
privatization quota without any public private competition at all,
i.e., without ever once giving NASA employees the chance to compete in
defense of their jobs, according to the President's own FY04 Budget
Scorecard. Since NASA has shown so little commitment to its career
workforce--either in preventing their jobs from being arbitrarily
outsourced without competition, or in paying them competitive salaries,
it is highly unlikely the bonuses will help NASA with its stated
recruitment goals.
Q4. Do you have any survey data or other empirical data to support
your view?
A4. Agencies are not required to collect data on the government work
that they contract out to the private sector. But NASA own submission
to OMB as published in the President's '04 Budget shows that they
simply contract out without competition.
Q5. H.R. 1085 contains retention bonuses to incentivize employees to
stay at NASA. Do any of you have any hard data on how many employees
NASA loses to industry and how many employees NASA gains from industry
on an annual basis?
A5. No.
Q6. Are you aware of any exit surveys by NASA to determine the
specific reasons employees have left the agency and what would have
made them stay?
A6. AFGE's members at NASA leave because their salaries are too low and
because their jobs have been privatized. They would have stayed if
FEPCA would have been complied with, and if their jobs hadn't been
contracted out.
Q7. The proposed modifications in H.R. 1085 to the existing statutes
governing term appointments are potentially significant. It has been
argued by employee unions that the rules governing the hiring of term
employees are less stringent with respect to diversity, veterans
preferences, and so forth, than regular employee hiring rules. The
proposed legislation would make it easier to convert term appointments
to permanent appointments. What is the rationale for such a provision,
and how will it alter the makeup of the NASA workforce over time if it
is implemented?
A7. It is likely to make the workforce less diverse, and the hiring of
veterans more rare. It is an invitation to management to hire without
the benefit of full an open competition, and will benefit insiders, but
not taxpayers and citizens who should have an open and fair opportunity
to compete for any federal job. It will also reduce career development
opportunities for the existing federal workforce and allow managers to
``wire'' promotions and hirings.
Q8. Could significant numbers of political appointees be converted to
permanent employees if this provision were adopted? What is to prevent
such a possibility?
A8. Yes, this authority can be abused to allow political appointees to
``burrow in'' to permanent jobs. Nothing will prevent this.
Q9. How many employees does NASA need to carry out its missions over
the next 10 years? Does NASA currently have too many employees or not
enough? How would you recommend this committee go about determining the
answers to these questions?
A9. No one knows how many employee NASA has because NASA doesn't count
its contractor employees and doesn't have to. NASA and all agencies
should be required to report not only how many contractor employees
they have, but what the contractors do, how much they cost, and whether
what they do is of an acceptable level of quality. Until those
questions are answered, no one will be able to evaluate NASA or any
other agency's operations fairly.
Answers to Post-Hearing Questions
Responses by George Nesterczuk, Nesterczuk and Associates
Questions submitted by Chairman Sherwood Boehlert
Q1. How do recruitment, relocation, and retention bonuses for industry
and academia compare to the current legal limits for Federal Government
employees?
A1. While there is considerable variance among different industries and
academia with regard to their use of recruitment, relocation, and
retention bonuses, overall both sectors provide larger bonuses to
proportionately more recruits or employees compared to the Federal
Government. The December 1999 report by the Office of Personnel
Management, ``The 3Rs: Lessons Learned from Recruitment, Relocation,
and Retention Incentives,'' does a good job of outlining some of the
major differences between the federal and non-federal environment
regarding use of these tools. In that report, for example, OPM notes
that ``. . .use of recruitment bonuses in the private sector is
increasing. In a recent survey of 41 companies offering recruitment
bonuses, over half offered bonus amounts of more than $3,500. The
majority of all bonuses range from 6 to 15 percent of base pay.''
Private sector employers also frequently use finder's fees as part of
their recruitment techniques and there is more managerial discretion
regarding when and how recruitment incentives are used.
Similarly, OPM found that 50 percent of non-federal public sector
and private sector contacts said they provide relocation incentives as
either lump sum bonuses or salary differentials. OPM also found that
non-federal employers typically provide a variety of additional
relocation incentives typically not available in the federal sector,
including housing allowances and reimbursement for cost of evaluating
school systems. Finally, OPM found that retention or ``stay for pay''
incentives are administered differently outside the Federal Government,
particularly in the private sector where there are the options of using
deferred compensation, cash on a lump sum basis, stock options and
profit sharing.
Q2. How do recruitment, relocation, and retention bonuses for industry
and academia compare to the new limits for NASA employees in H.R. 1085?
A2. The new and higher limits for recruitment, relocation, and
retention bonuses proposed in H.R. 1085 for NASA employees would bring
NASA closer to what industry and academia can provide when competing to
attract or retain talented applicants or employees. Overall, the
proposed higher limits in H.R. 1085 seem quite reasonable, particularly
since they are contingent upon the employee entering into a service
agreement with NASA. Of course, the ultimate utility of these
incentives will depend to a large degree on whether NASA has sufficient
resources to use them effectively. If they do, the incentives should be
quite useful and, ultimately, very cost effective.
Questions submitted by Representative Ralph M. Hall
Q1. It is reasonable to presume that NASA and its contractors are
competing for many of the same employees due to the specialized skills
involved. Given that, would increased recruitment and retention bonuses
as envisioned in H.R. 1085 have any net positive effect--or would it
just result in higher costs for both NASA and its contractors as they
compete in offering better incentives?
A1. NASA contractors, in our view, are unlikely to be ``open-ended'' in
the amount of any recruitment or retention bonuses they provide. Since
NASA is only one of several potential competitors for the sought-after
talent, we do not think that enabling NASA to become more competitive
by increasing the amount of the recruitment and retention bonuses they
can provide would be canceled out by a concomitant increase by its
contractors. The marketplace for talent, in essence, is much larger
than that. Overall, therefore, we think the provisions of H.R. 1085
would provide a net benefit for NASA and its mission capability by
allowing them to become more competitive in that marketplace.
Q2. What is the nature of your concerns with the Voluntary Separation
Incentive provision in H.R. 1085?
A2. The VSIP as proposed is far too generous and will work at cross
purposes. Employees approaching retirement may develop expectations of
separating with a bonus as opposed to simply retiring when they are
ready to do so. Employees will have an incentive to stay on until they
are bought out thereby affecting normal retirement rates.
Experience with VSIs in the Federal Government has shown that over
90 percent have gone to retirement eligible employees. The notion that
such incentives can somehow be used to ``restructure'' the federal
workforce by eliminating skills imbalances is fictitious. Further, if
the agency has experienced a loss of talented and experienced personnel
then the focus ought to be on retention bonuses rather than on
separation incentives. Finally, if the VSI is to be an inducement to
usher a poor performer out the door then what signal does this send to
the good performers in the agency?
Question submitted by Representative Bart Gordon
Q1. How many employees does NASA need to carry out its missions over
the next ten years? Does NASA currently have too many employees or not
enough? How would you recommend this committee go about determining the
answers to those questions?
A1. The appropriate level of staff for NASA is dependent on its mission
and the programs NASA undertakes to fulfill this mission. It is up to
Congress in its oversight and appropriating capacities to authorize and
fund the agency's programs. Subsequently NASA can determine what mix or
combination of federal employees and contracted labor is most effective
in implementing those programs. Without a thorough review of this
aspect of NASA operations I am unable to provide a more concise
response to the question.
Appendix 2:
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Additional Material for the Record