[Senate Hearing 108-28]
[From the U.S. Government Publishing Office]



                                                         S. Hrg. 108-28
 
    EVALUATING HUMAN CAPITAL AT THE NATIONAL AERONAUTICS AND SPACE 
                             ADMINISTRATION

=======================================================================

                                HEARING

                               before the

                  OVERSIGHT OF GOVERNMENT MANAGEMENT,
    THE FEDERAL WORKFORCE AND THE DISTRICT OF COLUMBIA SUBCOMMITTEE

                                 of the

                              COMMITTEE ON
                          GOVERNMENTAL AFFAIRS
                          UNITED STATES SENATE


                      ONE HUNDRED EIGHTH CONGRESS

                             FIRST SESSION

                               __________

                             MARCH 6, 2003

                               __________

      Printed for the use of the Committee on Governmental Affairs



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                   COMMITTEE ON GOVERNMENTAL AFFAIRS

                   SUSAN M. COLLINS, Maine, Chairman
TED STEVENS, Alaska                  JOSEPH I. LIEBERMAN, Connecticut
GEORGE V. VOINOVICH, Ohio            CARL LEVIN, Michigan
NORM COLEMAN, Minnesota              DANIEL K. AKAKA, Hawaii
ARLEN SPECTER, Pennsylvania          RICHARD J. DURBIN, Illinois
ROBERT F. BENNETT, Utah              THOMAS R. CARPER, Delaware
PETER G. FITZGERALD, Illinois        MARK DAYTON, Minnesota
JOHN E. SUNUNU, New Hampshire        FRANK LAUTENBERG, New Jersey
RICHARD C. SHELBY, Alabama           MARK PRYOR, Arkansas

           Michael D. Bopp, Staff Director and Chief Counsel
     Joyce Rechtschaffen, Minority Staff Director and Chief Counsel
                     Darla D. Cassell, Chief Clerk

                                 ------                                

   OVERSIGHT OF GOVERNMENT MANAGEMENT, THE FEDERAL WORKFORCE AND THE 
                   DISTRICT OF COLUMBIA SUBCOMMITTEE

                  GEORGE V. VOINOVICH, Ohio, Chairman
TED STEVENS, Alaska                  RICHARD J. DURBIN, Illinois
NORM COLEMAN, Minnesota              DANIEL K. AKAKA, Hawaii
ROBERT F. BENNETT, Utah              THOMAS R. CARPER, Delaware
PETER G. FITZGERALD, Illinois        FRANK LAUTENBERG, New Jersey
JOHN E. SUNUNU, New Hampshire        MARK PRYOR, Arkansas

                   Andrew Richardson, Staff Director
   Marianne Clifford Upton, Minority Staff Director and Chief Counsel
                      Cynthia Simmons, Chief Clerk


                            C O N T E N T S

                                 ------                                
Opening statement:
                                                                   Page
    Senator Voinovich............................................     1
    Senator Akaka................................................    11

                               WITNESSES
                        Thursday, March 6, 2003

Hon. Sherwood Boehlert, a Member of Congress from the State of 
  New York, and Chairman, House Science Committee................     4
Hon. Sean O'Keefe, Administrator, National Aeronautics and Space 
  Administration.................................................     6

                     Alphabetical List of Witnesses

Boehlert, Hon. Sherwood:
    Testimony....................................................     4
    Prepared statement...........................................    25
O'Keefe, Hon. Sean:
    Testimony....................................................     6
    Prepared statement...........................................    26

                                Appendix

Responses to questions submitted by:
    Senator Akaka................................................    35
    Senator Carper...............................................    38
    Senator Durbin...............................................    43
    Senator Lautenberg...........................................    45


    EVALUATING HUMAN CAPITAL AT THE NATIONAL AERONAUTICS AND SPACE 
                             ADMINISTRATION


                              ----------                              


                        THURSDAY, MARCH 6, 2003

                                       U.S. Senate,
Oversight of Government Management, the Federal Workforce, 
                  and the District of Columbia Subcommittee
                  of the Committee on Governmental Affairs,
                                                    Washington, DC.
    The Subcommittee met, pursuant to notice, at 10:03 a.m., in 
room SD-342, Dirksen Senate Office Building, Hon. George V. 
Voinovich, Chairman of the Subcommittee, presiding.
    Present: Senators Voinovich, Akaka, Carper, and Pryor.

             OPENING STATEMENT OF SENATOR VOINOVICH

    Senator Voinovich. The Subcommittee on Oversight of 
Government Management, the Federal Workforce and the District 
of Columbia will come to order. Good morning and thank you all 
for coming to today's hearing, which is titled ``Evaluating 
Human Capital at NASA.''
    Due to the location of the Glenn Research Center in 
Cleveland I have always felt close to the NASA family. Through 
my work as Mayor of Cleveland, Governor of Ohio, and now as a 
U.S. Senator, I have enjoyed my work with this important 
Federal agency. Several years ago I had the good fortune of 
getting to know the crew of STS-70 which was an all-Ohio crew 
but for one, and I made that person an honorary Ohioan. A 
picture of that crew hangs in my office here in Washington.
    In considering the men and women who have accepted the call 
of the Nation to participate in manned space flight since the 
1960's, I want to take this opportunity to extend my 
condolences to Administrator O'Keefe and the entire NASA family 
as they continue to come to terms with the tragic loss of the 
space shuttle Colombia and its brave crew. At the onset of this 
hearing let me be clear. I have not asked the administrator to 
come before the Subcommittee this morning to discuss this 
tragedy. I believe such questioning is premature as the 
Accident Investigation Board continues its important work.
    Today, however, we will examine an important element of 
NASA's management--its workforce, a small but very important 
segment of the Federal Government's 1.8 million civilian 
employees. Each day 20,000 dedicated individuals at NASA 
facilities such as the Kennedy Space Center in Florida, the 
Goddard Space Flight Center in Maryland, the Glenn Research 
Center at Lewis Field in Ohio, and the Jet Propulsion 
Laboratory in California push the limits of science and 
engineering for the benefit of our Nation and all mankind.
    This is the eleventh oversight hearing the Subcommittee has 
held on the formidable human capital challenges confronting the 
Federal Government. Some of those hearings took place during 
the time when Administrator O'Keefe was serving the Nation in 
his previous appointment as Deputy Director of the Office of 
Management and Budget. Over the past couple of years we have 
made great strides in addressing these problems by enacting 
legislative solutions and implementing administrative changes.
    Nevertheless, strategic human capital management remains on 
GAO's ``High-Risk'' list. In addition, GAO has identified 
NASA's contract management system as high risk. It is my 
understanding that NASA has put together a proposal containing 
the workforce flexibilities it needs to meet its mission. My 
hope is that the proposal also addresses the needs of the 
agency with regard to implementing and overseeing its contract 
and financial management systems to achieve success and remove 
the agency from the ``High-Risk'' list.
    During my time as Mayor of Cleveland and Governor of Ohio I 
worked to address the workforce challenges within our local and 
State governments. Working with a wide range of stakeholders we 
successfully empowered our employees while establishing a 
culture of quality management.
    Since coming to the Senate in 1999, I have stressed to my 
colleagues the urgency of the Federal Government's human 
capital challenges--the need to get the right people with the 
right skills in the right jobs at the right time. Robust 
personnel management includes the ability to recruit the best 
candidates, hire people in a timely manner, award performance 
bonuses and other motivational tools to encourage retention, 
and provide training and professional development opportunities 
and the flexibilities to shape and empower a balanced 
workforce. Good management includes the flexibility to act 
quickly and to compete in today's knowledge-based economy.
    I applaud the Bush Administration for its commitment to 
address these personnel challenges by making human capital one 
of five government-wide initiatives in the President's 
Management Agenda. I am also pleased that Congress enacted 
several important workforce reforms in the legislation to 
establish the Department of Homeland Security.
    Despite these reforms, however, the demographics of NASA's 
workforce remained a very real concern. For example, 15 percent 
of its workforce currently is eligible to retire. That number 
climbs to 25 percent in just 5 short years. Also disconcerting 
is the fact that scientists and engineers over age 60 outnumber 
those under age 30 by nearly 3 to 1. With so many eligible for 
retirement in the next few years, who knows how much 
institutional knowledge and expertise is going to walk out the 
door? This places the future of the agency at risk.
    I would note that under Administrator O'Keefe's leadership 
NASA has made headway in addressing its workforce challenges. 
The Office of Management and Budget has elevated NASA's overall 
status from red to yellow on the Management Scorecard for its 
human capital efforts--one of just a handful of Federal 
agencies to achieve such an accomplishment. NASA has also 
earned a green light for its progress for implementing the 
human capital management reforms outlined in the President's 
Management Agenda. I am eager to hear what steps NASA has taken 
to achieve this success. I am also hopeful we will learn what 
plans NASA has for utilizing the workforce flexibilities 
Congress enacted last November.
    While we have made progress, there is much work for 
Congress to do, which is why in January I introduced S. 129, 
the Federal Workforce Flexibility Act. In reviewing 
Administrator O'Keefe's written testimony I noticed many 
parallels in the reforms he is seeking for NASA.
    For example, both the Federal Workforce Flexibility Act and 
NASA's proposal would allow more flexibility in offering 
enhanced recruitment, relocation and retention bonuses, making 
agencies more competitive in assembling a workforce. NASA is 
seeking the ability to offer enhanced leave benefits to mid-
level professionals from the private sector. After talking with 
leading national experts I also included this benefit in my 
legislation. This is key to making the Federal Government an 
employer of choice and recruiting top talent.
    In addition, NASA has included in its proposal the 
authority to enter into workforce exchanges with the private 
sector. While these programs have long existed within the 
Federal Government, just last year Congress enacted the Digital 
Tech Corps Act. As the chief Senate sponsor of this 
legislation, I believe its provisions will help agencies tap 
private sector talent in the IT field. We desperately need 
these individuals today in the Federal Government. A similar 
program at NASA would provide a vital tool for the agency to 
access talent in academia and offer NASA employees an 
opportunity to gain experience from outside the agency.
    I am interested in hearing from Administrator O'Keefe today 
about his proposals. I am planning to introduce legislation 
next week to help provide the reforms and flexibility NASA 
needs for its workforce. I am eager to hear your thoughts, 
Administrator O'Keefe, why it is so important.
    We are very fortunate today to have with us someone I have 
known a long time and have high regard for, and that is 
Representative Sherry Boehlert of New York's 24th District. He 
is chairman of the House Science Committee. Having served since 
1983 on the Science Committee, NASA's authorizing committee, 
and as chairman of that panel beginning in the 107th Congress, 
Mr. Boehlert has taken a keen interest in NASA's workforce.
    The Subcommittee looks forward to gaining the benefit of 
the chairman's experience and expertise considering NASA. I 
think it is really significant, Sherry, that you have been 
working on this since 1983. It is just wonderful to have 
somebody like you that is chairman of a committee that has such 
a background. We are so glad to have you here this morning and 
I welcome your presence, and I am eager to hear your testimony. 
Thank you.

 TESTIMONY OF HON. SHERWOOD BOEHLERT,\1\ A MEMBER IN CONGRESS 
    FROM THE STATE OF NEW YORK, AND CHAIRMAN, HOUSE SCIENCE 
                           COMMITTEE

    Mr. Boehlert. Thank you very much, Senator. I will submit 
my prepared statement for the record and I will try to 
summarize.
---------------------------------------------------------------------------
    \1\ The prepared statement of Hon. Boehlert appears in the Appendix 
on page 25.
---------------------------------------------------------------------------
    A couple of things I would like to say at the outset. First 
of all, let me identify with everything you have said in your 
opening statement. You framed the issue just perfectly. The 
only possible exception is all honorary Ohioans. Maybe we might 
include New York because we are your neighbors and friends.
    But let me say at the outset that this is something that 
Administrator O'Keefe and his team and I and my committee, and 
I know you and your people have been working on for some time. 
This did not develop overnight. NASA has a human capital 
challenge I think of the highest order and it is something we 
have to address. That is not to suggest that the current 
workforce is not top-notch, cream of the crop, the best, and 
the brightest. The problem is they are leaving in droves. And 
as you mention in your opening statement and it bears repeating 
because it outlines the dimensions of the problem. The over-60 
population at NASA in skilled positions outnumbers the under-30 
by 3 to 1; 15 percent of their science and engineering 
workforce are eligible to retire right now, 25 percent over the 
next 5 years will be eligible to retire. This is something that 
should raise a red flag in a number of quarters. I know you are 
paying attention to it, I am, and it is up to both of us to 
convince our colleagues that this is something they had darn 
well better pay attention to.
    Now we need government-wide reform setting, no doubt about 
that. But we cannot wait. So we are setting up demonstration 
projects, we are agency-specific. It is not something permanent 
that will go on forever. It is a 6-year program. NASA just 
cannot do whatever it darn well pleases. They have got to 
present a plan to the Congress. But it gives them flexibility. 
It gives them incentives. It gives them some of the tools that 
any management team would want in order to provide the solid 
management that we have every right to expect of it.
    There are recruitment, redesignation, and relocation 
bonuses. There are retention bonuses. Bottom line, we give them 
flexibility, and that is very important. Now we did not give 
them everything they wanted. They wanted something permanent. 
They wanted--quite frankly, I can understand whether it is this 
agency or any agency saying, we will let Congress know after we 
do it, but we are going to go ahead and manage our agency to 
the best of our ability, and we do not want any outside 
interference. That is not the attitude of Administrator O'Keefe 
or the key people at NASA. They have said right along, we want 
to work with you. We have worked to develop this legislation. I 
introduced it yesterday and I am glad to hear you are going to 
be doing the same thing on the Senate side very shortly.
    When all is said and done, we have to give to NASA the 
flexibility, the incentives, the operational authority to 
retain and attract more of the best and the brightest to add to 
their already outstanding and very dedicated workforce. I am 
going to do my level best on my side of the Capitol to get our 
committee moving rapidly on this legislation. I know you will 
do the same on your side of the Capitol. We have had a good 
partnership over these years, Senator, and I look forward to 
that partnership continuing for all the right reasons. That is 
all I have to say.
    Senator Voinovich. Thank you very much. I cannot help but 
remember testimony that we had here over a year ago by Lee 
Hamilton. He was testifying on the great need for scientists 
and engineers in this country, and how we are really in very 
bad shape in terms of the availability of those people, and 
that too often many of them are coming from other countries to 
study here and then going back to their countries, and that we 
needed to produce a lot more engineers and scientists. One of 
the things we sometimes overlook is that NASA has to go out and 
compete for a limited number of these people, and if they do 
not have the tools that the private sector has, they are not 
going to be able to attract them to NASA. I wonder if you would 
like to comment on that.
    Mr. Boehlert. There is an Ohio connection here, so you will 
be pleased.
    I point out that the President of the United States signed 
a historic No Child Left Behind legislation in Ohio in a high-
profile ceremony, something that did the Congress, on the 
bipartisan basis, proud. A key provision of that measure is a 
science and math partnership, because we have got to do a much 
better job of developing our own in the science and math 
disciplines.
    We are not doing very well when we are in the international 
competition. A third annual TIM study, a science and math 
proficiency study, pointed out that our youngsters do not 
measure up very well in comparison with youngsters from other 
nations with whom we are competing. We are 15th and 16th, 
respectively in science and math proficiency. So we have got to 
start at the beginning.
    We have a limited workforce in these areas. And as you 
observed, NASA is competing for that limited workforce. And 
quite frankly, it is very difficult to compete, to come to 
government in a high-pressure, high-profile agency like that, 
and look at your counterparts in the private sector and see 
that they are doing much better in terms of financial 
remuneration and benefits, etc.
    But the people that come to NASA are inspired. But we want 
to give them more than inspiration and we want to give them 
fair treatment in terms of their compensation package.
    The numbers are startling. And if we do not do a better 
job, they are not going to be able to keep up. And when these 
people say bye, I am going off into the sunset, I have served 
the Nation and the Agency proud for many, many years, but it is 
my time to sit on the front porch and read a book or lower my 
golf handicap, or whatever they might decide to do, NASA has to 
be able to replace those people.
    That is what we are talking about today and it is 
critically important.
    Senator Voinovich. Thank you for being here today and the 
only thing I would ask you to do is convince your colleagues in 
the committee that has jurisdiction that we need to fast track 
this one.
    Mr. Boehlert. We will do our best.
    Senator Voinovich. There is some talk about waiting until 
we do all the other agencies. I think that the situation at 
NASA requires speedy action to deal with their personnel 
problem. And if you could do what you can to influence some of 
your colleagues that we ought to move this ahead of maybe some 
of the other requests that have come to us, it would help me a 
great deal.
    Mr. Boehlert. I can assure you we will do just that, and I 
look forward to a continuing partnership with you, Senator.
    Senator Voinovich. Thank you very much.
    I would like to welcome Senator Pryor here this morning. 
Glad to have you on the Subcommittee.
    Senator Pryor. Thank you.
    Senator Voinovich. With your background in government and 
management, I am sure that you are going to be a real asset to 
the Subcommittee and to the Committee. Would you like to make a 
statement?
    Senator Pryor. I do not have anything to say. Thank you.
    I look forward to working with you on this.
    Senator Voinovich. Thank you.
    I am now delighted to introduce NASA Administrator Sean 
O'Keefe. Administrator O'Keefe possesses an impressive career 
of public service to our Nation. Prior to serving as NASA's 
10th administrator, Mr. O'Keefe was appointed by President Bush 
to be the Deputy Director of the Office of Management and 
Budget. In the 1990's he served on then-Defense Secretary Dick 
Cheney's team as Comptroller of the Defense Department, and 
Secretary of the Navy--you must have been 18 when you did this, 
Sean--during the first Bush Administration.
    Mr. O'Keefe began his career with the Federal Government as 
a Presidential Management Intern, as have two members of my 
current Subcommittee staff. That is a wonderful program, the 
Presidential Management Intern Program. We bring some wonderful 
people into government because of that program. If we had not 
had it, you might not be here, Sean.
    So we are really happy to have you here, and I am looking 
forward to your testimony.

  TESTIMONY OF HON. SEAN O'KEEFE,\1\ ADMINISTRATOR, NATIONAL 
              AERONAUTICS AND SPACE ADMINISTRATION

    Mr. O'Keefe. Thank you, Mr. Chairman. Thank you very much, 
sir. And Senator Pryor, thank you very much for your time here 
this morning.
---------------------------------------------------------------------------
    \1\ The prepared statement of Hon. O'Keefe appears in the Appendix 
on page 26.
---------------------------------------------------------------------------
    I want to thank you again for your opening comments, and 
those of Chairman Boehlert, as well, and the leadership that 
you have taken on this very important issue. It is absolutely 
critical because it is about the future. It is about the 
consideration of so many, I think, elements of what we have as 
prospect as a proficient agency in the years ahead. And if we 
do not think about these kinds of issues now, and were it not 
for your leadership, we certainly would not have the tools and 
capability to shape and prepare for that in the time ahead.
    Senator Voinovich. Sean, can I just interrupt you a minute? 
We have a tradition here in this Subcommittee that we swear in 
our witnesses. If you would stand up.
    [Witness sworn.]
    Senator Voinovich. Let the record show that the witness 
answered in the affirmative. Mr. O'Keefe, you may resume your 
testimony.
    Mr. O'Keefe. Thank you, Mr. Chairman. I apologize.
    Again, your leadership in this regard is absolutely 
critical. It is one that I think is an aspect for the future of 
the Agency, as well as for our competency and capability to 
deal with the remarkable challenges that the public portfolio 
that is bequeathed to us of accomplishing, turns on our ability 
to be able to shape our capabilities and professional talents 
for the future. And your leadership in that regard is 
absolutely essential, and that of Chairman Boehlert and his 
willingness to go forward, as well.
    I want to associate myself entirely with the opening 
statements of both of you. I think you captured exactly the 
essence of the nature of the challenge. It is not one that is 
going to be happening some number of years from now. It is 
looming. It is upon us at this juncture.
    We have time now to work with these issues, but not much. 
So as a result I think it is critical to do so.
    If you would, sir, I will quickly summarize my statement 
because an awful lot of what I had planned to cover here in an 
opening statement has been handled quite admirably by both of 
you in your opening commentary, as well. So if you would, sir, 
I will submit that for the record and do a quick summary of a 
couple of other highlights.
    First of all, the point that the Comptroller General and 
head of GAO, having determined that this is the highest risk 
issue on the high-risk list that he has prepared of government-
wide challenges of human capital management, positively speaks 
to the years of review that have gone on here. For at least the 
last 4 or 5 years there has been repeated commentary from both 
the Comptroller General, as well as, other outside expertise 
that has pointed to this.
    It is what persuaded, I think as you alluded to, the 
President to make this an essential element of his management 
agenda. Indeed, it is the top item on that agenda, the 
strategic management of human capital.
    The challenges that each department and agency encounters 
requires applications of strategic principles. There is not a 
one size fits all solution to this. Every agency and department 
has a slightly different set of variations or concerns that 
need to be accommodated. So there is not a singular solution 
that can be handled in one sweep.
    So as a result, the approach that we are taking at NASA 
while again adhering to a number of very important strategic 
human resource principles that we have discussed on several 
other hearings, as well as in several fora that you have led 
and hosted, are the kind of things that we have attempted to 
incorporate in the proposals we sent forward, and that the 
President proposed last June as part of a legislative package 
to deal with human resource challenges.
    At NASA, those general patterns are exactly as you have 
described them. There is, I guess the most polite way to 
describe this, a maturing workforce. We are positively at a 
point where the average age, as much as I appreciate the 
allusion to my age, is nonetheless exactly the average of what 
the NASA professional capabilities is. I am 47 years old, and 
that is the average age of the organization.
    But as a result, that means there are many more folks on 
the more senior side of where I am than on the more junior end. 
And that speaks to a number of changes that have occurred over 
the course of time.
    The looming requirements in the time ahead and the 
retirements of what we anticipate are exactly as you have 
alluded. Certainly right now we have a very large percentage of 
the workforce that are eligible to retire. In the next 5 years, 
we are looking at better than a third of the workforce, as 
well.
    The unique part, and again it is not unique exclusively to 
NASA, but it is a characteristic that is rather unusual at our 
agency, it is a very dominant kind of concentration on science 
and technology talent. We are the No. 2 agency or department in 
the Federal Government in terms of hiring of engineers, 
scientists, and other related technical fields, surpassed only 
by the Department of Defense. So we are the second largest 
recruiter and retainer of engineers, scientists, and technical 
fields.
    Like every agency, I think the approach and the 
circumstances of what we are all confronting is quite telling. 
As you alluded, and I am delighted to hear the repeat of 
statistics that have been used often by both yourself as well 
as Chairman Boehlert, that the over-proportion of folks over 60 
exceeds by a factor of three the scientists and engineers under 
30. So as a consequence, that speaks to a lag in recruiting 
that occurred in the 1990's that we cannot make up. There is no 
way that the actuarial tables can be suspended and that we 
suddenly have folks with greater experience and capability by 
simply wishing it so.
    We have got to look at other creative approaches for mid-
level entry and a range of other opportunities that might not 
otherwise be possible to correct such a deficiency.
    But the other aspect of this that you alluded to, I think, 
in your exchange with Chairman Boehlert, that is equally 
significant is we are also confronting this particular 
challenge right now at a time when there is a real diminution, 
a trend that has been continuing nearly unabated for the past 
10 years, on the part of younger folks in the United States in 
science, math, engineering, and technical-related fields.
    Last May and June, universities across the United States 
conferred more degrees in sports and exercise science than they 
did in electrical engineering. As a consequence, there is a 
real drift off of the number of folks who have an interest in 
this particular area of engineering and technical-related 
aspects and science and that is the diminishing smaller cohort 
that we seek to recruit from in order to deal with replacement 
of this looming prospect in the next 5 years of approaching a 
third of our workforce retiring.
    So as a consequence, these are immediate near-term kinds of 
propositions and issues we have to deal with.
    The solutions, I think again, cannot be a one size fits all 
approach. I think every agency and department has a different 
emphasis or approach on what is there. Again, the point I have 
found most impressive in the manner, Mr. Chairman, in which you 
have approached this issue, as well as, that of Chairman 
Boehlert, is to look at what are the overall human resource 
principles, strategic focuses, that ought to be emphasized and 
then select from a range of tools that could be provided to 
uniquely fit the bill in any agency or department that has the 
specific requirements, ours being, again, not terribly unique 
but one that is different than what we would have at the Social 
Security Administration or the Small Business Administration or 
somewhere else.
    The solutions, again, cannot be one size fits all. So the 
approach that we are recommending, and is part of the 
President's legislation advanced last June in the Workforce 
Management Enhancement Act of 2002, at that time, now revised 
to 2003, as we await congressional action of those 
considerations. Our approach has been to look at three primary 
areas.
    The first is to examine and to try to correct what has been 
a decade-long lag in new hires and the capacity to bring in 
folks not only from undergraduate and graduate backgrounds in 
science and engineering principally, but also to look at mid-
level entry opportunities. So a number of tools that we have 
proposed are there to attempt to entice folks with some degree 
of experience in the related fields that may be attracted to 
public service and government service opportunities and 
contribute their talents after having gained some level of 
experience as well in that regard.
    So we are looking at both ends of new hires, straight out 
of graduate and undergraduate programs, as well as looking at 
trying to entice and attract folks with some degree of 
experience in related fields that may apply them towards public 
service opportunities.
    The second major area is to look at retention goals. The 
tools that we proposed and suggested within the Workforce 
Management Enhancement of Act of 2003, that the President 
proposed again last June, is to target very specific kinds of 
capabilities and fields that we see based on the trend analysis 
that there are certain core competencies or competency 
management issues that need to be emphasized in certain skill 
areas, that we would seek to apply those tools selectively in 
areas in which we seek to enhance our ability to arrest either 
a retirement rate that would otherwise decimate or dramatically 
reduce our talent skill in certain areas, or for our ability to 
retain folks who have a certain set of capabilities that we 
anticipate will be otherwise promoted or interested in moving 
on to other private sector opportunities were it not for those 
tools.
    The third area is to use other Federal demonstration and 
project authorities that have already been enacted that are 
unique, exclusive to a department or another agency, that seem 
to have some success rate. So it is in the spirit of, I think 
picking up on a concept, Mr. Chairman, that you have advanced 
on several occasions that I have seen or heard in hearings, as 
well as in several fora that you have hosted, of trying to 
adapt and use best practices across the Federal Government and 
adapt them with some track record for how we may employ them 
and use those capabilities within our own circumstance at NASA.
    Let me conclude, I guess, with a couple of observations. 
First and foremost, that you and Chairman Boehlert, again, have 
demonstrated a leadership capacity and interest on this 
particular topic that is absolutely critical. Chairman 
Boehlert's introduction of H.R. 1085 yesterday is a major first 
step in that direction as well. Your initiative of S. 129 and 
the fast-track approach that you are now looking to proceed 
with on this particular effort, or a version of it, to adapt 
specifically to NASA's requirements is not only encouraging, it 
is positively the break-through we have been seeking and 
looking for, and are most excited that you would be willing to 
put that kind of time and energy into.
    We do have time, but not much. This is something that, 
again, the statistics, the actuarial tables are very evident in 
terms of the direction we are going. We have been talking about 
these challenges as a government, as a group of public service 
leaders now for several years.
    Indeed, the debate that I find myself currently embroiled 
in on other aspects is a spirited exchange over folks judging 
the judgment of the current group of professionals in terms of 
their capacity, expertise, talents and understanding of 
operational issues, engineering, scientific, and technical 
issues that we are wrestling with just today as a consequence 
of our most recent challenges and the tragedy of the Columbia 
loss.
    That nonetheless tells me that within the next 5 years, as 
that talent pool moves on, the number of folks with that degree 
of experience is only going to be less, fewer of them. So that 
debate will become narrower and narrower and easier to have, 
about judging the judgments of a smaller group of the folks in 
the years ahead unless we arrest this challenge right now and 
begin to work that issue.
    The President, I believe, and I very much appreciate your 
observation, Mr. Chairman, at the opening, has stepped up to 
this approach. As part of the President's management agenda, 
this is the No. 1 item on the list of issues that he considers 
across the entire Federal expanse must be addressed. It has 
been a part of his agenda since the opening months of this 
administration.
    His legislative proposals specific to NASA that were 
submitted last June speak to his commitment and interest in 
assuring that we have the capacity and the tools that long 
outlive the time we spend in this administration or are 
privileged to serve ourselves in public service so that future 
administrations will have an opportunity to continue to see the 
expertise and talent that NASA can bring.
    Again, I think the remarkable distinction about this debate 
that has been going on now for several years and which we have 
all identified and come to a blinding flash of the obvious in 
terms of what the human capital challenges are, the major 
distinction is you and Chairman Boehlert are doing something 
about it. In that regard we are most grateful for that 
attention and your leadership and willingness to take on this 
important set of issues.
    Thank you, sir.
    Senator Voinovich. Thank you, Administrator O'Keefe.
    I would like to welcome Senator Akaka. Senator Akaka and I 
collaborated over the last couple of years on some human 
capital improvements and I am very proud that about half of our 
legislative package was adopted in the Homeland Security Act.
    Administrator O'Keefe, you are benefiting from some of 
those provisions right now. One of them that I have heard more 
about than any other one is the rule of three that we have had 
throughout the Federal Government, which is a statute enacted 
when Ohioan Ulysses Grant served as president and it was 
decided that there may have been too much cronyism during that 
administration so they went to a new system of hiring people. 
We now have a new way of hiring people, a category ranking 
system where we rate candidates as well qualified, qualified, 
and not qualified. And then managers can have a better 
opportunity to choose those people that will make a difference 
for the agency. And I am hopeful that is going to benefit you.
    Senator Akaka, would you like to make a remark or opening 
statement before we open it up for questions.

               OPENING STATEMENT OF SENATOR AKAKA

    Senator Akaka. Yes, Mr. Chairman. I want to thank you for 
having this hearing. I am very pleased to be here today and 
also to welcome Administrator O'Keefe.
    I will make a brief statement. Unfortunately I cannot stay. 
I wanted to express my appreciation to you for your efforts in 
making the Federal Government the employer of choice and not of 
the last resort. Senator Voinovich is certainly a pioneer and 
leader in this area of human capital.
    Administrator O'Keefe, thank you again for being here. I 
wanted you to know that I was an early member of the House of 
Representatives Space Caucus. As a matter of fact, I was 
chairman of the Caucus. It was a time in the early 1980's when 
NASA was having difficulties, but brought everything together 
to bring it back up. I am glad it did.
    I view NASA's mission of space exploration as unique within 
the Federal Government and sincerely believe that its employees 
are modern-day pioneers.
    Despite the headway made through space exploration, NASA 
faces many of the same workforce management challenges faced by 
all Federal agencies. The number of employees nearing 
retirement age is looming and the lack of trained and skilled 
scientists and technicians poses a great threat to NASA's 
future. Our national security agencies face a similar threat 
and next week--and I wanted to mention this--I am reintroducing 
legislation to strengthen their recruitment and retention 
efforts in the areas of science and mathematics. I am pleased 
that we have the opportunity today to review options for NASA 
was well.
    Mr. Chairman, I believe NASA has other management 
challenges. Nearly 90 percent of its workforce is comprised of 
contract or grant employees. With such a heavy reliance on 
contract personnel, it is critical that there be effective and 
strong contract management. And yet, GAO continues to find that 
NASA lacks the systems and processes needed to oversee contact 
activities and control costs effectively.
    I am concerned that these outstanding problems with 
outsourcing, coupled with NASA's need to achieve specific 
contracting goals, could complicated the steps NASA must take 
to address its operational, managerial, and safety challenges.
    So Mr. Chairman, I look forward to working with you and our 
colleagues to ensure that all Federal agencies have the tools 
to put the right people and skills in the right place to serve 
our Nation. So thank you for this opportunity for me to give my 
statement, and I ask that my full statement be made a part of 
the record.
    [The prepared statement of Senator Akaka follows:]

                  PREPARED STATEMENT OF SENATOR AKAKA

    Thank you Chairman Voinovich. I am pleased to join you this morning 
in welcoming NASA Administrator Sean O'Keefe to our subcommittee. 
Administrator O'Keefe, I thank you for being with us today. I want to 
express my appreciation to you, Mr. Chairman, for your efforts in 
making the Federal Government the employer of choice and not the 
employer of last resort.
    As an early member of the House of Representatives Space Caucus, I 
view NASA's mission of space exploration unique within the Federal 
Government. NASA employees are modern day pioneers who help uncover the 
mysteries of the universe and promote technological advancements, such 
as the wind-shear warning equipment used in commercial airliners. NASA 
space scientists have harnessed microgravity conditions to make 
advancements in medicine. Yet, despite the headway made through space 
exploration, NASA faces many of the same workforce management 
challenges faced by other Federal agencies.
    Senator Voinovich, Representative Boehlert, and Administrator 
O'Keefe have mentioned the large number of employees nearing retirement 
age at NASA and the lack of trained and skilled scientists and 
technicians which poses a great threat to NASA's future. Our national 
security agencies face a similar threat, and next week I am 
reintroducing legislation to strengthen their recruitment and retention 
efforts in the areas of science and mathematics. I am pleased we have 
the opportunity today to review options for NASA as well.
    I would be remiss in mentioning that Senator Voinovich and I worked 
together last year to amend the Homeland Security Act to provide new 
government-wide workforce management tools to augment existing 
flexibilities. Like other agencies, NASA enjoys certain flexibilities 
to manage its workforce. In fact, the Comptroller General convincingly 
argues that agencies already have 90 percent of the flexibilities 
needed to manage more effectively.
    But managerial flexibilities alone will not solve the workforce 
challenges facing NASA or any other agencies. Real solutions call for 
strong leadership from the top.
    Whatever approach is proposed--be it through new government-wide 
flexibilities or agency--specific measures--there must be a thorough 
review before any proposals are implemented to alter the way agencies 
hire, retain, train, or manage their workforces.
    Nearly 90 percent of NASA's workforce are contract or grant 
workers. With such heavy reliance on contract personnel, it is critical 
that there be effective and strong contract management.
    It is important to note that contract management has been 
identified as a high risk area by GAO since 1990 when GAO's high risk 
list was first begun. Unfortunately, GAO continues to find that NASA 
lacks the systems and processes needed to oversee contractor activities 
and control costs effectively.
    I am concerned that these outstanding problems with outsourcing, 
coupled with NASA's need to achieve specific contracting goals, could 
complicate the steps NASA must take to address its operational, 
managerial, and safety challenges.
    Last year, the Office of Inspector General at NASA concluded that 
the lack of proper contract oversight threatened the safety of the 
space shuttle operations. According to testimony from the Comptroller 
General, NASA faced staffing shortages that threatened its ability to 
operate its programs safely. Therefore, I am curious to learn how NASA 
proposes to balance its outsourcing goals while ensuring operational 
safety, contract oversight, and sound workforce management.
    I look forward to working with my colleagues to ensure that all 
Federal agencies have the tools to put the right people with the right 
skills in the right place to serve our Nation.
    Thank you Mr. Chairman, and thank you Administrator O'Keefe.

    Senator Voinovich. Thank you, Senator Akaka.
    Senator Pryor, would you like to start the questions? 
Usually I do, but you did not get a chance to have an opening 
statement.
    Senator Pryor. Thank you, I would be glad to. If I may, I 
have just three or four questions, Mr. Chairman, on the 
retention of employees.
    The first question I have is a general question. Are you 
losing employees to retirement or are you losing them to the 
private sector?
    Mr. O'Keefe. Predominately it is retirement. In the 
aerospace industry over all, there is not a vigorous recruiting 
and hiring activity underway, but it is primarily for 
retirements.
    But NASA is a bit unique in the sense that there is a fair 
amount of movement at mid-levels, as well as towards private 
sector opportunities. But in this particular period, given the 
current state of the aerospace industry over the last 3 years, 
it has been a less than vigorous recruiting period. But 
throughout its history there has been a fair amount of movement 
at mid-levels from NASA directly to private industry, but it is 
primarily, at this juncture, retirement-related.
    Senator Pryor. With regard to the private sector, I assume 
the competing interests for most of these highly qualified 
employees that work for NASA would be mostly the aerospace 
industry?
    Mr. O'Keefe. Not necessarily. In certain aspects of what we 
are dealing with, certainly in the flight operations activities 
for international space station, for the space shuttle program, 
for some of the test flight centers that we operate, the 
aerospace industry is a dominant employer. But on the space and 
earth science functions, for example, it is a wide range of 
folks with backgrounds in astronomy, geology, you name it, any 
number of different disciplines in the scientific and 
engineering-related fields that are not necessarily directly 
applicable to aerospace industry directly.
    Senator Pryor. Are our salaries competitive? Is that one of 
the problems, that people get to sort of a plateau in the 
salary and it is just----
    Mr. O'Keefe. We have really got to do more exhaustive 
analysis because this is a real spirited debate that goes on 
constantly. The most recent data I saw from an outfit called 
the Partnership for Public Service that was quoting and using 
some Bureau of Labor Statistics data, suggest that it is 
competitive and that what we are dealing with, on average, for 
engineers principally, is pretty competitive with private 
industry.
    Now it is capped, to be sure, and so you will not find the 
high-end aberrations and I think part of it is skewed by the 
fact that, again, NASA is the No. 2 employer of engineers in 
terms of Federal employment across the government.
    Part of it, I think, may be a function of an aging and more 
mature workforce of engineers than what we see in the private 
sector because there are fewer folks by a long shot in the 
range and experience that ranges from 10 to 15 years, because 
there was a real recruiting lag that occurred throughout the 
1990's. As a result of that, you see a more high-end average 
because the folks who are still part of the workforce are in 
that area.
    But it appears to be competitive but it bears a lot more 
examination to really analyze that carefully.
    Senator Pryor. I just came out of an environment where I 
was the Attorney General of my State before I came here and we 
were always competing with the private sector for lawyers.
    Mr. O'Keefe. That is a very difficult task.
    Senator Pryor. And under our State system we were very 
limited on what we could pay. And literally, we had a situation 
where a lot of the best and brightest lawyers could come out of 
law school and within 2 or 3 years they could easily make as 
much as some of our most highly paid lawyers. At that point you 
have to rely on trying to find dedicated people than are 
committed to public service. And there is a lot more than just 
money for a lot of people.
    We were fortunate to have a very high quality staff there, 
but it was a struggle to try to keep all the pieces together.
    It sounds like NASA, that may not really be the primary 
issue but may be one of many issues. Is that fair to say?
    Mr. O'Keefe. Yes, sir. I think that is a fair assessment. 
The opportunities we have at our disposal, I think, that is 
really quite unique is what appears to be a pretty competitive 
salary range in terms of entry level. To be sure at mid-level.
    The other major advantage, and I think we have an 
opportunity, and it is quite an irony in the sense that this 
liability is now a virtue in a sense, that when you look at the 
range of experience and real paucity of folks within that 5- to 
15-years range of experience, it means to folks that there are 
great promotion opportunities if you come in.
    So there are a smaller cohort of folks competing for a 
larger number of opportunities, and so advancement is a very 
attractive kind of circumstance right now for not only folks 
coming in but also as an inducement for those who might want to 
look at a mid-level entry, having spent 5 or 10 years in an 
engineering firm and coming to the Federal Government with that 
approach.
    Much of what we have proposed in the Workforce Management 
Enhancement Act that the President sent up last June is 
designed specifically to provide some real incentives to sign 
up now, recruiting bonuses, opportunities for travel, coverage, 
all those kinds of things, the inducements that any company 
would normally provide, to a much lesser extent, but at least 
it is there. It is not like gee, we are just appealing to your 
sense of public service to come aboard. There at least are some 
competitive advantages.
    Overall, can you do better in the private sector? I think 
indisputably the answer is yes, you can do a lot better there. 
But in terms of entry-level opportunities and potentially mid-
level entry from other experience, it is a very attractive time 
to be part of an exciting program like NASA has to offer.
    Senator Pryor. Mr. Chairman, the last question I have is 
when I think of NASA I think obviously of some employment 
opportunities in the Washington, DC area, and then you have 
some in Florida and some in Texas. Are there other regions of 
the country where NASA has major facilities?
    Mr. O'Keefe. Yes, sir. As a matter of fact, the smallest 
number are here in Washington. The rest are in Texas, Florida, 
California, Alabama. Mississippi, Maryland, just up the road 
here at Goddard, and Ohio, of course.
    Senator Pryor. He left one State out there, though, 
Arkansas.
    Mr. O'Keefe. No, had to save the absolute punchline for the 
end there. And throughout Virginia, certainly at the Langley 
Research Center, as well.
    But it is a very expanded effort that you can trace the 
history of NASA's development from the early NACA days when, 
the Wright brothers and others all formed together as part of 
the original Langley efforts to bring about aeronautics as a 
focus of the Federal establishment and then trace it throughout 
the history of the development of NASA in 1958. It has grown up 
in lots of different locations around the country and some 
places are easier to recruit than others.
    Senator Pryor. I understand that.
    That is all I have, Mr. Chairman. Thank you.
    Mr. O'Keefe. Thank you, Senator. I appreciate your 
questions.
    Senator Voinovich. Mr. O'Keefe, last year we gathered a lot 
of experts from around the country to talk about human capital. 
And as you know, the John F. Kennedy School of Government at 
Harvard University made human capital the topic of several 
executive sessions.
    I had an opportunity to spend some time with some of the 
students there at Harvard and I have since then, as a result of 
that experience, talked to some other students in Ohio about 
them coming to work for the Federal Government.
    One of the issues that came up was that we are not getting 
as many young people to come to the Federal Government because 
they see so much of agencies' work being outsourced to third 
parties. And rather than come to work for the Federal 
Government they are choosing to go to work for those 
organizations.
    I thought about that at length, and I would like you to 
comment on whether you believe that one of the reasons we have 
been competing so much work is that the lack of flexibilities 
has made it difficult to attract and retain agency employees.
    Mr. O'Keefe. That may be part of it, but I think an 
overwhelming set of factors as to what has created the present 
condition, I think at NASA, appears to be again over the course 
of the past decade a very vigorous effort at transitioning the 
operational aspects of that we do, the launch services, all the 
technical work that goes into aerospace-related kinds of 
activities, rather than maintaining an infrastructure within 
the Federal establishment for that purpose. Instead looking to 
contract that specifically with aerospace companies with 
expertise in the field.
    It follows the same pattern I saw at the Defense 
Department, as a matter of fact, in my prior incarnation in 
public service, of looking at moving industrial-related 
activities that could be performed in a variety of other 
venues, and rather than maintaining a public infrastructure for 
those capabilities that is duplicative of that commercial set 
of options, that there was a very clear propensity and trend, 
certainly over the last decade, at NASA towards transitioning 
many of those activities over to commercial enterprises in the 
aerospace industry, specifically.
    As it pertains to the management of functions, the 
engineering capabilities, the design requirements, the 
decisionmaking about the conduct of operations, all that has 
been retained within NASA. If anything, I find the 
opportunities and the enticement for recruiting to an exotic 
agency like NASA, with very high name recognition among all 
Americans, to be a much easier kind of magnet, if you will, to 
attracting interest there.
    The problem is we lack some of the tools to bring the deal 
over the line, if you will, on bringing various folks into the 
agency because we have used all the tools at our disposal, 
every capability we have--and we have got many at NASA. It is 
really quite extraordinary to see the degree of flexibilities, 
for example, of the 1958 Space Act, and the capabilities that 
we have that are really quite unique relative to some other 
agencies and departments, to bring on folks in very limited 
numbers for capabilities and requirements we may have in an 
immediate time.
    Nonetheless, it is a very limited set of authorities. So 
much of what you have introduced, and Chairman Boehlert is 
sponsoring as well, and it was included in the President's 
original legislation last June, will give us that full expanse 
of tools to put the deal over the line, if you will, of 
bringing folks into the agency. Frankly, the name recognition 
alone is enough to bring folks to the door, at least to listen. 
Then we have got to have the capability to close the 
opportunity and actually bring folks in.
    Senator Voinovich. Of the things that you are suggesting 
that you need, what do you think is the most important, in 
terms of bringing them in the door?
    Mr. O'Keefe. The retention tools that we propose, there are 
three really important ones. The first one is a proposal we put 
forward a scholarship for service program, which is a very 
specific effort to try to link the opportunity for future 
engagement, employment, involvement in public service with 
undergraduate and graduate students currently engaged in 
research with principal investigators, professors on faculty at 
universities who are looking at science and research activities 
that have direct application to what we are doing at NASA.
    That is a golden opportunity to bring in folks who already 
have an interest, who already have an expertise, have dedicated 
some of their time as undergraduates and graduates towards the 
kinds of things we really need the expertise at, and then be 
able to bring them in, in the scholarship for service program, 
to offer them an opportunity to be part of the NASA family in 
the time ahead when they go seeking professional opportunities.
    If I had to pick one, that is clearly one of the most 
attractive. I find every time at a university campus I mention 
something like that, folks immediately light up and say there 
is an opportunity that is really quite enhancing.
    The other ones, I guess, that are equally critical in other 
respects are this mid-level entry aspects, of looking at folks 
with 5 to 10 years of experience in an engineering firm, for 
example. Having the kind of enticements that would say look, we 
have the capability to bring you in, maybe not at comparable 
salary, or at least we can try to be as competitive as possible 
in that regard given the nature of mid-level and mid-grade kind 
of salaries that the Federal Government provides. But here are 
some recruiting enticements for you. There are a series of them 
that we propose as tools that would open up the chance to not 
just look at fresh out of new entrant requirements right 
straight out of an undergraduate or graduate program.
    Senator Voinovich. One of the things that impressed me, as 
we moved along with the legislation, and I think you deal with 
it in your proposal, is the issue of leave accrual for mid-
level hires. A lot of people are not aware of this, but when 
one comes to work for the Federal Government he gets 13 days. 
If he is here 3 years, he gets 20 days. And if he is here 15 
years, he gets 26 days.
    Suppose some mid-level person goes to his or her spouse and 
says I want to go to work for NASA, I am excited about this 
opportunity. I may not make as much as I am in the private 
sector, but I want to serve my country. And the spouse asks the 
question, what kind of vacation will you receive? And then the 
potential employee explains to them. And after that, he or she 
may decide not to come because of that situation, because 
vacation has become so important a fringe benefit, I think, 
today in our country.
    Mr. O'Keefe. Absolutely.
    Senator Voinovich. Those are practical things.
    Mr. O'Keefe. You have hit the nail right on the head. Those 
are the kinds of maddening things that we do to ourselves 
inadvertently because of the limitations of the way the rules 
are structured. You have hit it right on. Because sometimes 
those become the deal breakers. And folks sit back and say gee, 
do I really want to sign up for this?
    We had a gent who just last year began as the Director of 
the Johnson Space Center, who was a retired 3-star marine. And 
he had gotten out back 5 years ago, I guess, having had a 
distinguished career in the Marine Corps all that time, went to 
work for a private company.
    We recruited him to be the director and he got no leave 
because of the way that the arrangement was structured. Now 
thank goodness, we were able to compel him to his public 
service calling, and recalling, and he agreed to do so.
    But it was just something he has had to fiddle with for the 
past year and work his way through, even though this is a gent 
who has had better than 30 years of public service time. And 
yet the rules would not permit something like that. You have it 
right on. That is exactly the problem.
    Senator Voinovich. How about the repayment of student 
loans? Do you want to comment on that?
    Mr. O'Keefe. That has some attractiveness to it and it is 
certainly one of the elements of the pending legislation that 
can be yet another tool that would put this deal over the line 
kind of condition where if you have folks with engineering 
degrees or any scientific degree that would be attractive, they 
would look at the Federal Government as an employer of 
attractive alternative if the opportunity for forgiveness of 
student loans were to be incorporated as part of that.
    That is a very creative end approach and one that, again, 
no one size fits all. If you have that full range of tools in 
the kit bag, and there is any number of things you can pull out 
to adapt to the individual case in which you are looking for, 
for individual competencies you seek, and the capabilities of 
people that may be applying.
    Senator Voinovich. I was shocked when I found out that if a 
person comes to work for the Federal Government and the Federal 
Government pays off his or her loans over a period of time that 
the payment of those loans is a taxable item for that employee. 
But if an educational institution repays the loans in return 
for public service, it is not taxable. That is a little quirk 
in the law, but again one I think that needs to be taken care 
of.
    Mr. O'Keefe. Yes, sir.
    Senator Voinovich. One of the areas that has been 
outstanding now for 13 years, and I addressed it in my opening 
statement, is the issue of contract management as a high risk 
item. For 13 years that has been a high risk area on GAO's 
list.
    I would like to know what are you doing about that issue, 
so that maybe a year from now David Walker can say it is no 
longer high risk?
    Mr. O'Keefe. Thank you, Mr. Chairman. That is a very 
important question and one that I had spent a lot of time 
working on as soon as I got to NASA because the primary reason 
why NASA was on the high risk list for contract management was 
what is referred to as undefinitized contracts.
    In other words, it was a case where GAO said you have got 
too many contracts out there that are aging, they have been out 
for a long time and they have no real expiration date on them, 
and all you do is keep amending these contracts for new 
services or new capabilities or whatever, and just modifying 
them as you go along.
    Absolutely right. This was just a rather frequent practice, 
apparently, that seemed to go on, and was really an acquisition 
policy issue that really was a major question because it spoke 
to the issue of wider liabilities, what are we committing the 
government to, the public to, for a longer term.
    And so we really worked very hard over the course of this 
past year to fry down the number of undefinitized contracts to 
an almost decimal dust number. As a matter of fact, in November 
and December, GAO notified us that we were to be now removed 
from the high risk list as a consequence of having brought that 
number down to zero.
    What put us back on the list, just recently, is a change in 
the Federal Accounting Standards Board procedures just about 2 
years ago, in which property held by contractors that belongs 
to the government, if it is not inventoried and accounted for 
properly, that then poses a high risk issue to GAO.
    What they noted in our audit a year ago was a variance by 
contractors that were reporting the various aerospace companies 
that we do business with, that were reporting varying numbers 
that were at odds with what we had valued as being the value of 
property that was in the hands of contractors for specific 
functions that we do.
    It relates to things like, again, the shuttle program, the 
international space station, the various space probes or 
whatever else we do, as well as assets on orbit, as a matter of 
fact, that may be controlled by a contractor but owned by the 
government. And the fact that the valuations were different and 
not in concert with the new Federal Accounting Standards Board 
rules put us back on the high risk list.
    So the reason we were on the risk for the past dozen years, 
we beat the parade rest and finally got our way off from that 
particular list for that set of reasons, on the contract 
issues. And we now have found ourselves for a new reason on the 
high risk list, which we have identified as part of our last 
audit that Price Waterhouse Coopers, our external auditor, came 
in and gave us some very constructive approaches on how we can 
police that question over the course of this coming year with 
all of our major contractors we do business with to get an 
exactitude of what we value and what they value as the value of 
government-owned property at contractor facilities.
    So I am very confident by this time next year that will not 
be an issue, and unless something new comes up, we will be once 
and for all off the high risk list for contract management 
issues.
    Senator Voinovich. Good.
    I have visited the facility there in Florida on a couple of 
occasions and I had a very good tour when STS-70 went up, I 
think it was in 1995, with our Ohio crew. I will never forget 
it because one of the astronauts was a graduate of Ohio State 
University and she made it so that the patch that they used 
featured an Ohio State block O, which she claims that NASA did 
not know about, but they later figured it out. I was impressed 
with what I saw.
    After the Challenger tragedy we were going through the 
center and NASA staff was showing us how they were repairing 
the tiles after the shuttle comes back. They have a lot of tile 
work that needs to be done after each mission.
    The thought occurred to me, are the people who repair those 
tiles once the shuttles come back on NASA's payroll or is that 
worked contracted out to somebody else?
    Mr. O'Keefe. There is a combination. This is part of this 
transition I referred to that appears to have occurred over the 
course of the past decade of looking at launch services and 
preparation for operations kind of activities to what is now a 
consortium arrangement between Boeing and Lockheed-Martin 
called the United Space Alliance and is a subsidiary of those 
two primaries that operate all of the launch services 
activities.
    Within the orbiter processing facility that it sounds like 
you went through, there are some 27,000 tiles on an orbiter. 
The inspection activity goes on with both United Space Alliance 
engineers and technical folks, as well as NASA folks. So we 
have got the better part of about, I want to say about 2,500 
NASA employees, but let me give you an exact number for the 
record of how many folks we have at the Kennedy Space Center. 
We have Air Force folks that are there from Cape Canaveral Air 
Force Station that will look at a variety of issues, and the 
United Space Alliance, as well as the other aerospace 
companies, that will have folks there that work through a 
variety of different issues.
    So if you go through the orbiter processing facility, 
chances are one in two that the folk you talk to are either 
NASA folks directly, U.S. Government personnel who are public 
servants, or they are United Space Alliance employees. And it 
depends on whether you talk to a manager, an inspector, someone 
who is actually working on some of the issues, it varies.
    Senator Voinovich. Do you believe that you have the people 
on board to guarantee that the contractors you have hired are 
the quality that you want and they are doing the job that you 
want? Before I was county auditor, we had contracted out our 
appraising business and we had some real problems, in fact, 
scandals. And when I became auditor I brought on a small staff 
of individuals whose main job was to review contractors' work. 
They were highly competent people who managed the work and made 
sure that we were getting what the contractor said he was going 
to do, in terms of quality of the people they hired and the 
work that came back.
    Do you feel that you, at this stage, have enough of those 
people on board that can make sure that we are getting what we 
are supposed to be getting from these contractors?
    Mr. O'Keefe. Well, it appears so. But again, much of what I 
think seems to be a focus of the Columbia Accident 
Investigation Board efforts, for example, is to look at systems 
and the management practices, the run up to pre-launch, as well 
as on-orbit activities, and how that interaction occurs between 
NASA, the primary contractors, folks who are part of the NASA 
community overall.
    They are going to be looking at that question and I am 
going to be guided by their findings in that regard.
    By anecdotal sense of this, though, is it does not matter 
whether it is a direct U.S. Government personnel or folks 
associated with a wide range of different companies that we do 
business with. For example, before every single launch, about 
10 days to 2 weeks prior, there is an assembly of folks in a 
room about this size of anybody and everybody who has anything 
to do with the launch of that particular mission from the U.S. 
Government who are NASA personnel, and of the senior folks from 
the Agency as well as lots of different contract folks who are 
engaged in pre-launch, on-orbit, etc., activities, senior 
engineers, and technical folks. Their responsibility is if 
there is a single anomaly to raise your hand. These flight 
readiness reviews, go on for the better part of a day to 2 days 
of beating every single anomaly that is viewed there. There is 
no one in the room, from the few that I have and the activities 
that I have seen there, that stops anybody and says wait a 
minute, you cannot speak because you are a contractor and you 
are a government employee, or you are not high enough up in the 
food chain, or whatever. It is anybody who has got an issue is 
authorized and expected to speak.
    It is a very coordinated effort that goes on. That has 
impressed me in the year or 14 months I have been at the 
Agency, to see that there is a very close communication, very 
close coordination of activities, independent of whose payroll 
is there, in support of those activities. It has little or 
nothing to do with where you are on the hierarchical chain. It 
is if you have a responsibility and you are accountable, the 
expectation is you will speak up. Because if it is not exactly 
right, we do not fly. And that is an ethos that has really made 
a strong impression on me, what I have seen in the last 14 
months.
    Senator Voinovich. In other words, they can all contribute. 
I guess the main thing that I am concerned about is do you have 
the people that work for you, that conduct an oversight of 
contractors to make sure they are giving the agency what is 
expected? And also to look at the quality of the work that is 
being done? Do you feel comfortable about that?
    Mr. O'Keefe. In terms of the management of our contract 
efforts for launch services, etc., it is very evident to me 
that the senior experience rate, capabilities, et cetera, is 
really quite impressive. In terms of the NASA employees and 
their experience rates, the folks who are in the jobs, who are 
in those capacities have a lot of maturity, to put a very kind 
diplomatic word to it. They are older folks. That is what 
scares me, is once they move on, there is not a whole lot there 
behind it in terms of our capacity. The bench strength is not 
as deep as it could be.
    That is why we have really got to use the tools now to get 
moving on not only growing a new cadre and core of people with 
that degree of experience, but we have also got to be looking 
at bringing in folks who have the capacity and capability.
    The good news is that the folks who are on the senior end 
of this and are the management team that do the contract 
oversight and our part of the iterative process on all the 
activities we are engaged in, have an awful lot of knowledge to 
import. Our experience base is just unsurpassed. All we have to 
do is get the folks in there who have the capacity to soak up 
that knowledge before they decided to move on.
    Senator Voinovich. I would be really interested to have 
someone in your shop do a survey over the last several years of 
what work has been competed and the decision on whether to 
contract it or leave it within the Agency. I have had some 
complaints from some folks in Cleveland at NASA that too much 
of their work is being contracted out to third parties.
    Mr. O'Keefe. Yes, sir, we certainly will.
    [The material requested for the record by Chairman 
Voinovich follows:]

          INFORMATION SUBMITTED BY MR. O'KEEFE FOR THE RECORD
    From early on in its existence, NASA has contracted with the 
private sector for most of the products and services it uses. Most of 
the Agency's funding is dispersed widely in the national economy 
through contracts, grants, and other agreements. Through these 
expenditures, NASA acquires a variety of scientific, technical, and 
support services for the civilian aeronautics and space programs. Over 
the last ten years, the agency-wide ratio of civil servant to 
contractor has been stable. What has occurred over that time has been 
the incremental rebalancing of capabilities in the civil service and 
contractor workforce. NASA has strengthened its in-house core 
capabilities while contracting out for increasingly available 
commercial services in a competitive environment, because we found that 
it is more efficient to contract for those services on an as-needed 
basis. NASA's limited in-house resources are focused on core mission 
related activities where possible, leaving routine operations and 
services for providers in the private sector. This rebalancing was 
completely accomplished through retraining, reassignment, and 
attrition.
    For example, NASA has implemented large-scale outsourcing of 
information technology over the last several years as the capabilities 
of commercial IT service providers have outstripped government 
capabilities. Specifically, the Outsourcing Desktop Initiative for NASA 
(ODIN) allowed NASA to focus its limited resources on its core mission. 
ODIN is a master contract awarded in June 1998 covering headquarters 
and all the NASA centers. Prior to ODIN, NASA had civil servants and 
multiple contractors who were responsible for providing administration 
and support for the Agency's computer and telecommunications systems. 
The Agency also was responsible for the maintenance and replacement of 
its approximately 38,000 desktop computers; 2,500 servers; and 51,000 
phones. With the award of ODIN, the Agency was able to turn all this 
over to three contractors, each of which is responsible for certain 
NASA centers and headquarters. This resulted in NASA being able to 
focus its civil servants on core mission related activities; to provide 
services to all customers regardless of platform; and to provide 
consistent and predictable technology refreshment for desktops, while 
reducing costs and improving cost management and cost containment since 
the monthly cost per seat is known and the price does not change. 
Another example of smaller proportions is the Wallops Sounding Rocket 
Program and Range Operations that was contracted out in 1996. Again, 
NASA was able to focus its civil servants on core mission related 
activities while routine operation of sounding rockets and ranges was 
transferred to contractors.
    The actions described above encompass the major activities that had 
been performed by the Agency and that were transferred to the 
contractor community in the last several years, even though several 
thousand civil service jobs were redirected as a result of contract 
consolidations, which improved Agency efficiency. The Space Flight 
Operations Contract (SFOC) is probably the prime example of where the 
Agency utilized contract consolidations to generate savings on one of 
its major complex technical programs. Prior to 1996, NASA embarked on a 
series of cost reduction activities to significantly decrease the cost 
of space flight operations. During this phase, emphasis was placed on 
consolidation, synergy and productivity improvements within functional 
areas, and ``working smarter'' by eliminating low priority products or 
processes. The next logical step in this process was the SFOC. This 
contract, which was awarded in 1996, consolidated shuttle operations 
performed under 12 contracts under this single prime contract. 
Subsequently, an additional 8 contracts were consolidated into the 
SFOC.
    Additionally, since 1992, NASA eliminated several thousand civil 
service positions during the downsizing of the workforce, which was a 
major Federal initiative at that time. NASA accomplished its downsizing 
through voluntary attrition; there was no associated reduction-in-
force.

    Senator Voinovich. And I am saying to you that if the word 
gets out around the country that you may go to work for the 
Federal Government but the work may be outsourced, why bother 
to go to work for NASA? Why not find a contractor that you 
probably think will be around for a while and go to work for 
them and not bother with NASA? You may be competing against 
yourself in that situation. I would be interested in getting 
some information back from you on that.
    Mr. O'Keefe. Yes, sir.
    Senator Voinovich. I am familiar with the legislation, the 
things that you are promoting. I can assure you that we will be 
getting the bill introduced. I will be trying to get as many 
co-sponsors as I can for it. I have been working with the House 
to try and make sure that they will be willing to move this 
ahead of some of the other legislation.
    We do know we have a human capital problem throughout the 
Federal Government. We have solved part of it with the 
amendments to the Homeland Security Act. There is a lot more 
that needs to be done. The Defense Department is going to be 
coming in and asking for some more flexibilities. But I think 
that your situation commands a high priority from us and we 
ought to move it forward.
    Mr. O'Keefe. I am grateful to you, Mr. Chairman. Thank you.
    Senator Voinovich. Senator Carper is here. Senator, have 
you had a chance to vote yet?
    Senator Carper. I have not. I thought we might vote 
together.
    Senator Voinovich. I do not have any further comments. 
Senator Carper, would you like to ask the Administrator a 
question or two before we go to vote together?
    Senator Carper. Will the hearing adjourn when we go to 
vote? Is that correct?
    Senator Voinovich. Yes, it will, unless you want to come 
back.
    Senator Carper. Let me just say to Mr. O'Keefe, thank you 
for being here and thank you for your stewardship. We know it 
has been a tough time for you and for the team that you lead.
    My staff has been here. I am sorry that I could not be here 
earlier. And as we walk over to the Floor, I will be chatting 
with our Chairman to get the gist of what transpired here.
    But I just want you to know that you and the NASA family 
have been in our thoughts and certainly in our prayers.
    Mr. O'Keefe. Thank you, Senator. You are most kind. We 
appreciate it. It is a pleasure to see you, too, sir.
    Senator Voinovich. Before I adjourn the hearing, I want to 
again thank you for being here today, along with your team.
    I would like to indicate that the record is going to remain 
open until 5 p.m. tomorrow so that my colleagues may submit 
statements. And also to give them an opportunity to raise 
questions that will be submitted to you, Mr. O'Keefe.
    Again, thank you very much. The hearing is adjourned.
    [Whereupon, at 10:43 a.m., the Subcommittee was adjourned.]

                            A P P E N D I X

                              ----------                              


PREPARED STATEMENT OF CONGRESSMAN BOEHLERT (R-NY), CHAIRMAN, COMMITTEE 
                               ON SCIENCE
    I greatly appreciate your allowing me to appear before you today to 
discuss the personnel problems facing NASA and how we might address 
them. As you well know, this issue has been of concern for many years, 
but is now receiving more attention from all of us because of the 
tragic loss of the Space Shuttle Columbia.
    I wanted to come before you today because I think that reform of 
NASA's workforce policies could be one of the positive changes to 
result from the demise of STS-107. That is not to say, of course, that 
different personnel policies would have prevented the loss of the 
Shuttle. But anything we can do to strengthen NASA as an agency will be 
valuable at this critical time. In the end, organizations, including 
Federal agencies, can only be as good as the people they comprise.
    That NASA needs to do more to recruit and retain the best people is 
hardly a secret, nor is it an attack on the current workforce. One of 
the greatest problems NASA faces is a huge retirement bulge. 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, ``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.
    Now, 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. Indeed, there's 
precedent for helping individual agencies solve their problems. In the 
1980's, the Science Committee, working with the civil service 
committees, got enacted civil service reforms exclusively to help what 
was then the National Bureau of Standards recruit and retain top 
scientists.
    And there's another reason not to wait for broader reform to help 
NASA. The changes NASA needs do not amount to any kind of startling 
break from the existing legal structure. The changes expand or revise 
existing legal authority in ways that should not raise undue concern.
    With this in mind, I commend to you the package of reforms the 
Science Committee majority negotiated with NASA. These reforms are 
incorporated in H.R. 1085, which I introduced yesterday. We plan to 
have a hearing on the bill next Wednesday, and would like to move it 
before the April recess. At our NASA budget hearing last week, Members 
on both sides of the aisle expressed interest in passing workforce 
legislation, and I'm hopeful we'll be able to build consensus for H.R. 
1085. With your permission, I'd like to submit the bill for the record.
    As I've said, 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.
    You'll be pleased to hear that I won't go through all the 
provisions of H.R. 1085 here, although it's a relatively short bill. I 
do want to point out, though, that we were very careful to give NASA 
only temporary authority so that Congress could evaluate the reforms 
before they became permanent. We also require a plan from NASA before 
the reforms are in place so that both the Congress and NASA's employees 
can understand how this new authority will be used. And many of NASA's 
actions will still require OPM review.
    NASA proposed some reforms that we rejected. Most notably we were 
unwilling to let NASA decide on its own to make permanent any large-
scale personnel demonstration projects. And we were unwilling to let 
NASA run exchange programs in which industry employees would act as 
NASA staff while being paid by their home companies. Whatever the 
advantage of such exchanges, that authority seemed like it raised too 
many conflict-of-interest concerns.
    So we think we've taken a cautious, balanced approach to solving 
some real problems. Working off NASA's own recommendations, we've 
expanded the utility of current law without throwing the existing 
system overboard and without abdicating our oversight responsibilities.
    We look forward to working with your Committee and with Chairman 
Davis in the House to come up with a package of reforms that will make 
NASA stronger without making the civil service system weaker. Thank 
you.

                               __________
PREPARED STATEMENT OF SEAN O'KEEFE, ADMINISTRATOR, NATIONAL AERONAUTICS 
                        AND SPACE ADMINISTRATION

    I am pleased to appear before the Subcommittee today to discuss 
NASA's Human Capital challenges. The Agency faces a number of strategic 
obstacles to our ability to manage our Human Capital effectively and 
efficiently. The President forwarded legislation to Congress last May 
to provide our managers the tools they need to reshape and reconstitute 
a capable world class workforce. We've worked with Chairman Sherwood 
Boehlert of the House Science Committee to reinvigorate legislative 
solutions to address our workforce issues, and we appreciate the hard 
work of Mr. Boehlert and his staff. Mr. Chairman, I know that you are a 
firm believer that reforms are needed to enable Federal managers to 
manage their human capital more strategically, and have supported 
designing flexible tools to make the Federal service desirable. I 
welcome this opportunity to work with you in these endeavors. We were 
similarly gratified that the Homeland Security Act included several 
government-wide human capital provisions, including several that NASA 
had on its legislative agenda forwarded by the Administration last 
summer. This is a step in the right direction.
    When President Eisenhower and the Congress created NASA. they 
sought to establish a government agency that could undertake and 
overcome the Nation's technological challenges in aeronautics and space 
exploration. Without NASA, there would be no American presence to take 
up these challenges. During the Cold War, the very best minds of our 
Nation joined forces to transform the futuristic dreams of our parents' 
generation into the historic reality our children learn about in 
today's classrooms. The legacy of that work continues today. Across the 
Nation, NASA scientists, engineers, researchers, and technicians have 
made and continue to make remarkable discoveries and advancements that 
touch the lives of every American. We are an Agency committed to 
``pioneering the future'' as only NASA can.
    In the wake of the Columbia tragedy, much has been written and 
discussed in the public debate about the prospect of future expertise 
at NASA. One of the greatest challenges before the Agency today is 
having the people--the human capital--available to forge ahead and make 
the future breakthroughs tomorrow's everyday reality. NASA's history is 
celebrated worldwide for having accomplished the things that no one has 
ever done before. None of those achievements happened by accident. They 
were the result of management innovation, revolutionary technologies 
and solid science and research. These three pillars of NASA's 
achievement were built by the men and women of NASA and without them, 
the history of achievement that we celebrate in aeronautics and space 
exploration never would have been possible. History is made everyday at 
NASA; but to maintain our leadership position, a new generation must be 
forged to carry our Nation's innovation and exploration forward.
    The legislation we will forward to the 108th Congress will be the 
same as that which the President submitted last year, with the possible 
inclusion of additional provisions recently developed, and is intended 
to provide us the flexible management tools to make sure NASA can 
continue to attract and retain the best and brightest minds and to 
reconfigure and reconstitute that workforce to meet the changing 
demands of that future innovation and exploration. The list of tools 
includes:

To recruit new talent:

    Scholarship-for-Service Program
    Enhanced recruitment bonuses

     Remove limitation to 25% of base pay for only one year 
and include locality pay
     Allow more than one method of payment (lump sum). E.g., 
installments pegged to continued performance.

    In addition, Streamlined Hiring Authority has been provided on a 
government-wide basis by section 1312 of the Homeland Security Act 
(P.L. 107-296):

     direct hiring for positions in ``critical needs'' or 
``severe shortage'' categories, and
     category rating system for evaluating candidates (for any 
position)--able to select from top group, not limited to top three or 
numerical ratings

To retain existing talent, attract short-term mid-level talent:

    1. NASA-Industry Exchange Program
    2. Allow extension of IPA Assignments from 4 to 6 years
    3. Term Appointments

     Allow extension of term appointments from 4 up to 6 years
     Allow conversion to permanent without second round of 
competition if competitively selected for term appointment

    Many NASA projects run more than 4 years and would benefit for 
retention of these individuals for the duration of the project.

    4. Enhanced relocation and retention bonuses
     Remove limitation to 25% of base pay for only one year 
and include locality pay
     Allow more than one method of payment (lump sum). E.g., 
installments pegged to continued performance.

    5. Allow increase maximum annual pay for NASA excepted service 
appointments from $134,000 to $142,500
    6. Allow increased pay for critical positions to level of the Vice 
President.

To try other new, quicker and more effective tools:

    Modify current law to allow NASA to request and implement a 
demonstration project, subject to OPM approval, quicker and without any 
limitation on the number of employees that would be covered by the 
project.
    I note with appreciation to you, Mr. Chairman, that several of 
these proposals were enacted into law last year as part of your 
amendment to the Homeland Security Act.

     In addition, we are working with the Administration on 
further legislative tools, such as enhanced annual leave, that may be 
forwarded later this session.
    The reduction in NASA's workforce during the 1990's has led to an 
imbalance of skills; too may in some areas not enough in emerging 
technologies (e.g., nanotechnology). In addition, NASA is confronted 
with convergence of three trends:

    1. reduction in number of science and engineering graduates;
    2. increased competition from traditional aerospace sector and 
non-aerospace sector for this reduced pool of scientists and engineers; 
and
    3. increasing number of experienced NASA employees eligible for 
retirement.

    NASA needs to have better tools to recruit new hires, retain 
existing mid-level workforce, and reconfigure the workforce to meet 
emerging needs.

                           Vision And Mission

    When I assumed the leadership of NASA a little over a year ago, I 
wanted to ensure that this pathfinder Agency had the means and mission 
to support that pioneering spirit through the next several decades. 
NASA has a vital role to play in today's world. My testimony today will 
touch on the management challenges that NASA must overcome if we are to 
achieve our mission. NASA is intent on continuing the gains made over 
45 years while pushing the edge of the envelope of what appears today 
to be impossible. We have developed a roadmap to continue our work in a 
more efficient, collaborative manner. NASA will fulfill its imperative 
not only for the sake of human knowledge--but also for our future and 
our security.
    In that spirit, we developed a new strategic framework and vision 
for the Agency. It is a blueprint for the future of exploration and a 
roadmap for achievement that we hope will improve the lives of everyone 
in this country and everyone on this planet. Our new vision is to 
improve life here, to extend life to there, and to find life beyond. 
This vision frames all that we do and how we do it. NASA will do this 
by implementing our mission--to understand and protect our home planet; 
to explore the Universe and search for life; to inspire the next 
generation of explorers . . . as only NASA can.
    To understand and protect our home planet, NASA will work to 
develop and employ the technologies that will make our Nation and 
society a better place. We will work to develop technology to help 
forecast the impact of storms on one continent upon the crop production 
on another; we will work to trace and predict the patterns of mosquito-
borne diseases, and study climate, geography and the environment--all 
in an effort to understand the multiple systems of our planet and our 
impact upon it.
    Our mission's second theme is to explore the universe and search 
for life. NASA will seek to develop the advanced technologies, 
robotics, and science that eventually will enable us to explore and 
seek firsthand the answers and the science behind our most fundamental 
inquiries. If we are to achieve such ambitious objectives, there is 
much we still must learn and many technical challenges that must be 
conquered.
    For example, today's rockets that have been the engine of 
exploration since the inception of space travel are today at the limit 
of what they can deliver. Propulsion is only one of the challenges 
facing further exploration of space. The physical challenges incurred 
by our space explorers also must be better defined. We still do not 
know or understand the long-term effects of radiation and exposure to a 
microgravity environment upon the human body. The infant steps we have 
taken via the Space Shuttle and the International Space Station have 
given us many answers to explore, but they have yielded even more 
questions for us to consider.
    Our third mission objective is to inspire the next generation of 
explorers. America often looks to NASA to help our Nation build an 
unequalled pool of scientific and technical talent. NASA accepts that 
responsibility and in partnership with the U.S. Department of 
Education, the National Science Foundation, other Federal agencies, and 
industry and educational partners, we will work to motivate our 
Nation's youth to embrace the study of mathematics, science and 
engineering disciplines. To emphasize the important role that education 
plays at NASA, last year we established a new Education Enterprise. The 
Education Enterprise will unify the educational programs in NASA's 
other five enterprises and at our 10 Field Centers under a One NASA 
Education vision. NASA's Education imperative will permeate and be 
embedded within all the Agency's initiatives. The dedicated people in 
this new Enterprise will work to inspire more students to pursue the 
study of science, technology, engineering, and mathematics, and 
ultimately to choose careers in aeronautics and space-related fields. 
Without the scholars to take the study of these disciplines to their 
next level, the missions we seek to lead remain bound to the launch 
pad. As the U.S. Department of Labor has reported, the opportunities in 
the technology sector are expected to quadruple in this decade. 
Unfortunately, the pool of college students enrolled in mathematics, 
science and engineering courses continues to decline. NASA faces 
similar challenges with having the scientific and engineering workforce 
necessary to fulfill its missions.
    Our mission statement concludes with the statement, ``as only NASA 
can.'' Our Agency is one of the Nation's leading research and 
technology Federal agencies. We possess some of our Nation's most 
unique tools, capabilities and expertise. NASA represents a National 
asset and investment unparalleled in the world. Nonetheless, to achieve 
success in our mission, our activities must focus on those areas where 
NASA can make unique contributions. To make the best use of our 
workforce and other resources, we must also leverage the unique 
contributions of our partners in academia, industry, and other Federal 
agencies.
    Our commitment to the American taxpayer is to continue providing a 
direct and very tangible means of improving life on our planet. We will 
overcome challenges and push on in the name of science and in the 
pursuit of knowledge to benefit all people. Extending life beyond the 
reaches of our Earth is not a process driven by any particular 
destination. Rather it is driven by science that will contribute to the 
social, economic, and intellectual growth of our society and the people 
who make that science possible are our greatest asset.

                          Workforce Challenges

    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. 
They need to be world-class if they are to be expected to break new 
ground in science and technology, explore the universe, or pioneer 
exciting discoveries here on Earth and beyond. Being ``good enough'' 
will not suffice; NASA needs the best and the brightest to build a 
world-class workforce. This means that NASA requires not only a broad 
pool of scientists and engineers who form the core of our workforce, 
but also highly competent professionals who can support NASA's 
technical programs, and address the Agency's financial, human capital, 
acquisition, business management, and equal opportunity challenges.
    Today, NASA faces an increasing management challenge in attracting, 
hiring, and retaining the talented men and women who, inspired by our 
amazing discoveries and innovations of the past 4 decades, will help 
mold the future of our Nation's aeronautics and space programs. As a 
Nation, we must ensure that the Agency continues to have the scientific 
and technical expertise necessary to preserve our role as the world's 
leader in aeronautics, space and Earth science, and emerging technology 
research. The President already has indicated his commitment to the 
strategic management of human capital in the Federal workforce, by 
making this imperative, first on in his Management Agenda. In fact, the 
resident's Management Agenda specifically references the human capital 
challenge that NASA faces and related skill imbalances. The President's 
recognition of the human capital challenges faced by NASA and other 
agencies is shared by the Government Accounting Office, which has 
placed the management of human capital as one of the items on the 
government-wide ``high-risk list.''
    At NASA, we are ready to do our part to make sure that we have the 
best people for the job at hand, and to do that we need to manage this 
resource efficiently and responsibly, as well as compete favorably in a 
very competitive market place. We have developed a Strategic Human 
Capital Plan to establish a systematic, Agency-wide approach to human 
capital management, aligned with our vision and mission. The Plan 
assesses NASA's current state with respect to human capital management, 
then goes on to identify goals, barriers, improvement initiatives, and 
intended outcomes. The Plan is an integrated approach to address the 
concerns of the Administration as well as our internal human capital 
needs. We are making progress, as evidenced by our improved ratings on 
the President's Management Scorecard.
    NASA's ability to implement its mission in science, technology, and 
exploration depends on our ability to reconfigure and reconstitute a 
world-class workforce--peopled with skilled workers who are 
representative of our Nation's strengths. The human capital 
flexibilities that we are requesting will help us shape the workforce 
necessary to implement our mission today and in the future.
    Today, NASA's ability to maintain a world-class workforce with the 
talent it needs to perform cutting-edge work is threatened by several 
converging trends. Each trend in isolation is a concern; in concert, 
the indicators are alarming. We need to address these trends now by 
anticipating and mitigating their impact on NASA's workforce in the 
near-term and beyond. These indicators could lead to a severe workforce 
crisis if we do not take prompt action. The warning signs are here, and 
we are paying attention. Many of our planned actions to deal with 
threats to our human capital are possible without the aid of Congress; 
but some of the solutions require legislation. We are proposing a 
number of human capital provisions, which the Administration believes 
are crucial steps toward averting a workforce crisis.
    The trends I'd like to discuss with you today fall into two broad 
categories. First, there are trends that affect the nationwide labor 
market, and the applicant pool from which we draw our workers. These 
indicators affect other employers, not just NASA, and point to 
worsening employee pipeline issues in the future. Secondly, I would 
like to address a number of NASA--specific demographics. Coupled with 
the nationwide issues we face, the NASA picture shows us that we need 
to take action and take it now.

                           Nationwide Trends 

          The Shrinking Scientist and Engineer (S&E) Pipeline

    There is growing evidence that the pipeline for tomorrow's 
scientists and engineers is shrinking. We are facing a critical 
shortage of students pursuing degrees in disciplines of critical 
importance to NASA--science, mathematics, and engineering. Several 
recent National Science Foundation reports document a disturbing trend: 
the science and engineering (S&E) pipeline has been shrinking over the 
past decade. This trend begins at the undergraduate level and extends 
through the ranks of doctoral candidates. Here are some statistics that 
illustrate what currently is happening to the S&E pipeline:

     Undergraduate Engineering Enrollment--The number of 
students enrolling in undergraduate engineering decreased by more than 
20% between 1983 and 1999. [National Science Board, Science and 
Engineering Indicators-2002, Arlington, VA: National Science 
Foundation, 2002 (NSB-02-01)]

[GRAPHIC] [TIFF OMITTED] T6741.001


               Undergraduate Engineering Enrollment Trend

     Graduate S&E Enrollment--Engineering graduate enrollment 
also declined from a high in 1992 of 128,854 to 105,006 in 1999. 
Graduate enrollment in the physical sciences, earth sciences, and 
mathematics also showed a downturn between 1993 and 2000. [National 
Science Foundation Data Brief. Growth Continued in 2000 in Graduate 
Enrollment in Science and Engineering Fields (NSF-02-306), December 21, 
2001)]
     Post-Graduate S&E Enrollment--By the year 2000, the 
number of doctorates awarded annually in engineering had declined by 
15% from its mid-decade peak; since 1994, the number of doctorates in 
physics declined by 22%. Even in mathematics and computer science--
where job opportunities are on the rise--the number of doctorates 
awarded declined in 1999 and 2000. [National Science Foundation Info 
Brief. Declines in U.S. Doctorate Awards in Physics and Engineering 
(NSF-02-316), April 2002]
     Foreign S&E Enrollment--40% of the graduate students in 
America's engineering, mathematics, and computer science programs are 
foreign nationals. In the natural sciences, the number of non-citizens 
is nearly 1 in 4. When we concentrate on engineering graduate students 
who are U.S. citizens, the number of enrollees declined precipitously 
between 1993 and 1999: from more than 77,000 to just over 60,000, a 23% 
drop in under a decade. [National Science Board, Science and 
Engineering Indicators-2002, Arlington, VA: National Science 
Foundation, 2002 (NSB-02-01)]
     Aerospace Enrollment--Graduate enrollment in aerospace 
engineering has declined steadily in recent years--from 4,036 in 1992 
to 3,407 in 2000, pointing to a diminishing interest in aerospace as a 
career. [National Science Board, Science and Engineering Indicators-
2002, Arlington, VA: National Science Foundation, 2002 (NSB-02-01) and 
National Science Foundation Data Brief. Growth Continued in 2000 in 
Graduate Enrollment in Science and Engineering Fields (NSF-02-306), 
December 21, 2001)]

    NASA is not alone in its search for enthusiastic, qualified 
employees representative of the best that our Nation has to offer. 
Throughout the Federal Government, as well as the private sector, the 
challenge faced by a lack of scientists and engineers is real and is 
growing by the day. The situation is summarized in the Hart-Rudman 
Commission's Final Report issued last year: ``The harsh fact is that 
the US need for the highest quality human capital in science, 
mathematics, and engineering is not being met.''
    The nationwide trends I have described have great significance to 
NASA since the Agency relies on a highly educated and broad science and 
engineering workforce: nearly 60% of the total NASA workforce is S&E, 
and fully half of those employees have Masters or Doctorate degrees.
    Increased Competition for Technical Skills
    At the same time that the national S&E pipeline is shrinking, the 
demand for the technical skills NASA needs is increasing. The job 
market in the S&E occupations is projected to increase dramatically 
over the next ten years. The need for technical expertise no longer is 
confined to the technical industries that have been traditional 
competitors. NASA will face competition from new arenas as graduates in 
the S&E fields now are sought after by the banking industry, 
entertainment industry, and elsewhere in career fields not 
traditionally considered as primary choices for technical graduates. In 
the academic sector, traditionally not a competitor, we find ourselves 
vying for the same high-level technical workers. America's top schools 
now offer very competitive salaries to academicians with world-class 
skills--the same skills NASA seeks. Specifically, here are some of the 
trends that the Nation is seeing in the job market:

     Increasing S&E Positions--The Bureau of Labor Statistics 
projects that employment in the fields of science and engineering is 
expected to increase about 3 times faster than the rate for all 
occupations between 2000 and 2010, mostly in computer-related 
occupations. Increases in engineering and the physical sciences are 
projected at 20% and 15%, respectively. [National Science Board. 
Science and Engineering Indicators-20G2, Arlington. VA: National 
Science Foundation, 2002 (NSB-02-01)]
     Increasing S&E Retirements--This report also notes that 
with current retirement patterns, the total number of retirements among 
S&E-degreed workers will increase dramatically over the next 20 years. 
More than half of S&E-degreed workers are age 40 or older, and the 40-
44 age group is nearly 4 times as large as the 60-64 age group. As 
employers seek to fill vacancies created by these retirements, 
competition for quality S&E workers will intensify.
     Low Interest in Government Employment--According to an 
October 2001 Hart-Teeter poll, the lowest levels of interest in 
government employment were found among college-educated and 
professional workers. Only 16% of college-educated workers express 
significant interest in working for the Federal Government, and a like 
number of professionals and managers would opt for a government job. In 
contrast, the poll also revealed that positive perceptions of private 
sector work increased dramatically among those with formal education. 
This indicates that NASA will face a significant challenge in trying to 
attract experienced mid and senior level professionals to the Agency.

                      NASA Demographics and Trends

  Current Skills Imbalances, Gaps, and Lack of Depth Within the NASA 
                               Workforce

    The trends I have just outlined are not unique to NASA; we share 
them with other employers in the labor market today. Unfortunately, the 
difficulties they present to NASA's ability to manage our human capital 
are only exacerbated by several Agency-specific threats, warning us 
that we need to pay attention to these indicators before they result in 
a crisis. The challenge of acquiring and retaining the right workforce 
is not a problem of the future--it exists now. The Agency currently has 
skill gaps in areas such as nanotechnology, systems engineering, 
propulsion systems, advanced engineering technology, and information 
technology. In emerging technology areas, NASA projects the need to 
employ more civil servants in ``hard to fill'' areas such as 
astrobiology, robotics, and fundamental space biology. In other 
professional areas such as financial management, acquisition, and 
project management, a lack of depth is becoming detrimental to our 
ability to manage our resources and programs.
    NASA has undergone significant downsizing over the past decade, 
reducing its workforce from approximately 25,000 civil servants in FY 
1993 to approximately 19,000 today. NASA made every effort to retain 
key skills, but in order to avoid involuntary separations in achieving 
those reductions, it was not always possible to control the nature of 
the attrition. Inevitably, we lost some individuals with skills we 
couldn't afford to lose, and now these skills need to be replaced. 
Through downsizing and the normal attrition process, we lost key areas 
of our institutional knowledge base.
    The 2001 report of the Aerospace Safety Advisory Panel made 
specific references to NASA's skills deficiencies when they noted the 
following:

     NASA faces a critical skills challenge in the Shuttle and 
International Space Station programs despite resumption of active 
recruitment.
     The Agency must ensure the availability of critical 
skills, using appropriate incentives when necessary to recruit and 
retain employees.
     Recent downsizing and hiring limitations by the Agency 
may cause a future shortage of experienced leadership.
     The shortage of experienced, highly skilled workers has 
contributed to increases in workforce stress.

    Unfortunately, NASA's need to reinvigorate the workforce with the 
right skills and abilities is occurring at the very time in which 
competition for workers with those skills is intense.

 Potential Significant Loss of Knowledge Due to Retirements within the 
                             S&E Workforce

    I have just discussed the skills imbalances that NASA faces today. 
The situation promises to worsen with time. New skills imbalances will 
occur over the next several years as the aging workforce reaches 
retirement eligibility. Approximately 15% of NASA's S&E employees are 
eligible to retire now. Within 5 years, almost 25% of the current 
workforce will be eligible to retire. Historical attrition patterns 
suggest that the percentage of those eligible for retirement should 
remain level at around 15-16% each year. In an Agency where the 
expertise is not as deep as we would like it to be, even a few 
retirements can be critical. Everywhere I go across the NASA Centers, I 
hear the same story: ``We're only one-deep. We can't afford to lose 
that skill.'' Clearly the Agency must begin preparing for its projected 
workforce needs now since a quarter of its senior engineers and 
scientists will depart this decade and the job market is far more 
competitive than in the past.
    Another way to look at the potential loss of knowledge is to 
examine NASA's current S&E profile. At this time, within the S&E 
workforce, NASA's over-60 population outnumbers its under-30 population 
by nearly 3 to 1. The age contrast is even more dramatic at some NASA 
Centers, at 5 to 1I! By comparison, in 1993 the under-30 S&E workforce 
was nearly double the number of over-60 workers. This is an alarming 
trend that demands our immediate attention with decisive action if we 
are to preserve NASA's aeronautics and space capabilities. 

[GRAPHIC] [TIFF OMITTED] T6741.002


    Increased Recruitment and Retention Problems

    The last NASA trend I want to discuss with you today involves the 
evidence of increased difficulty of recruiting and retaining employees. 
Historically, NASA has enjoyed unusually low attrition rates, due in 
part to the attraction of our unique mission and the fact that our 
employees simply love their work and stay on the job longer than the 
typical worker. However, one recent trend is of concern. We have noted 
a change in the attrition pattern among NASA's most recent hires. 
Compared to an overall attrition rate of just under 4% for all S&E's, 
the departure rate for S&E's hired since 1993 is nearly double--despite 
the fact that in the fall of 2000 the Agency completed downsizing.
    Our challenge continues once we manage to hire personnel. Although 
our historical attrition rates are low, we notice an alarming 
development among our youngest S&E population. After factoring out the 
55+-retirement eligibility group, attrition among the S&E workforce is 
highest in the 25-39 age group. This phenomenon has a multi-faceted 
impact on NASA. It represents a lost investment for the Agency; shrinks 
the potential pool of future leaders and managers; and skews the 
average age of S&E workforce toward retirement eligibility age.

                             Help is Needed

    All of these trends provide immediate warning signals that 
significant measures must be taken to address workforce imperatives 
that ultimately impact mission capability. We cannot resolve these new 
and emerging problems with past solutions, nor are current personnel 
flexibilities adequate.
    To address the human capital challenges I have outlined for you 
today, NASA needs additional tools. We have used the ones we have and 
we have been innovative and imaginative but we need the Congress' 
assistance. Specifically, we need to:

     Encourage students to pursue careers in science and 
technology
     Compete successfully with the private sector to attract 
and retain a world-class workforce.
     Reshape the workforce to address skills imbalances and 
gaps, and
     Leverage outside expertise to address skills gaps and 
strengthen NASA's mission capability.

    Each request in the legislative proposal will be carefully crafted 
to enhance NASA's ability to manage our human capital efficiently and 
effectively, in concert with the mandate of the President's Management 
Agenda--and plain old-fashioned good, sound management. Many of these 
provisions have been implemented by other agencies (such as the 
Department of Defense in their demonstration projects, and the Internal 
Revenue Service through their reform legislation). Without these 
legislative tools, NASA's challenges will soon become its crisis in 
human capital management.

                         Legislative Proposals

    We are proposing several legislative provisions to address the 
threat to the S&E pipeline. The Scholarship for Service program would 
offer college scholarships to students pursuing undergraduate and 
graduate degrees in science, engineering, mathematics, or technology. 
In return, the students would fulfill a service requirement with NASA 
following their graduation, thus providing a return on our investment. 
Current statutes do not allow a service obligation for scholarship 
recipients.
    The NASA Industry Exchange Program, modeled on the very successful 
Intergovernmental Personnel Act authority, introduces a means for NASA 
to engage in mutually beneficial, collaborate ventures with industry to 
infuse new ideas and perspectives into the Agency, develop new skills 
within the workforce, and strengthen mission capabilities. Without such 
an authority, talented individuals from industry remain an untapped 
resource for the Agency since the salaries and benefits of the Federal 
sector are not competitive with the compensation packages offered to 
industry's most talented workers. Assignments would be limited to 2 
years, with a 2-year extension, and would be subject to the full range 
of Federal criminal laws in title 18, including public corruption 
offenses, and adhere to current statutes covering government ethics, 
conflicts of interest, and procurement integrity. The Information 
Technology Exchange Program, established in the E-Government Act of 
2002, which was passed by the House during the last Congress, 
represents a similar endeavor to establish an exchange program between 
the Federal Government and the private sector in order to promote the 
development of expertise in information technology management, and for 
other purposes.
    Enhancing the Intergovernmental Personnel Act authority to permit 
assignments up to 6 years (rather than 4) is another tool that will 
facilitate knowledge transfer--an important goal of an Agency that must 
sustain its intellectual capital. This flexibility will allow 
individuals from academia or other institutions to continue working in 
support of long-term projects or programs when the need for continuity 
is critical.
    Enhanced recruitment, relocation, and retention bonuses will help 
us with enhanced authority to offer financial incentives to individuals 
to come to work for us, to relocate to take on a new assignment, or to 
remain with the Agency instead of leaving to pursue a more lucrative 
job opportunity or retiring. Current bonus authority offers up to 25% 
of basic pay, and has proved useful--to a point. Our proposal would 
base bonuses on the higher locality pay salaries, allow greater amounts 
when coupled with longer service agreements, and make more flexible 
payment options available (such as a choice between up front payments, 
installments, and payments at the conclusion of an assignment). These 
payment options could be tailored to the situation at hand, and tie 
payment of the incentive to actual performance.
    The enhanced annual leave provisions are targeted particularly to 
mid-career hires, who likely would give up attractive vacation packages 
to become first-time Federal employees. Rather than starting out with 
the minimal annual leave benefits available in current law, these 
provisions would permit all senior executives to accrue annual leave at 
the maximum rate; and permit crediting new employees with up to 10 days 
of annual leave as a recruitment incentive. These flexibilities help 
NASA to compete with the compensation packages available to private 
sector employers.
    The term appointment authority is used extensively within the 
Agency to support many NASA programs and projects. It is useful for 
work of a time-limited duration, and it allows the Agency to terminate 
employment without adverse action when the need for the work/
competencies wanes. The bill's provision to allow a limited number of 
term appointments to be extended up to 6 years, rather than 4, will 
enhance its usefulness by accommodating the length of some NASA 
programs and projects. In addition, the bill provides that a term 
employee may be converted to a permanent position in the same line of 
work without further competition, provided the employee was initially 
hired under a competitive process and the public notice specified the 
potential for conversion. This provision does not alter any feature or 
principle of the competitive process, but eliminates the need for 
duplicative competition. Ultimately it may make the concept of term 
appointments more attractive to potential applicants and thereby 
provide a more robust labor pool for NASA management to consider. 
Conversions of term employees to permanent positions that differ from 
the position for which the employee initially competed would require 
internal competition.
    In order to attract world-class talent into NASA's most essential 
positions, we propose changes to the authority to pay employees in 
critical positions. We seek authority to grant critical pay for up to 
10 positions per year, subject to approval by the NASA Administrator, 
with pay up to that of the Vice President (currently $198,600). These 
enhancements will help us compete in an enormously competitive job 
market. The provisions raising the annual compensation cap for NASA 
excepted employees appointed under the Space Act from Level IV of the 
Executive Schedule to Level III will address this need as well. Based 
on the current pay scale, this would allow an increase from $134,000 to 
$142,500.
    Separation incentives (``buyouts'') are a valuable tool to 
encourage voluntary attrition as the Agency rebalances skills and 
reshapes its workforce. NASA needs the tools to encourage targeted 
attrition in areas in which the need for certain skills has diminished 
so that it can recruit and reshape a workforce that is aligned to 
current and future mission needs. The Homeland Security Act provides 
authority to pay up to $25,000. However, we have found that this amount 
is not always enough to entice highly paid NASA professionals to leave; 
the typical NASA employee stays on the job longer than average and is 
dedicated to the work. Our proposal would allow NASA to pay buyouts up 
to 50% of base salary to a limited number of employees, under 
circumstances outlined in our Agency plan.
    Finally, the streamlined demonstration authority provision provides 
the Agency with an effective and extensively tested mechanism for 
pursuing additional human resources innovations in response to changing 
workforce needs. A number of agencies, notably the Department of 
Defense and Department of Agriculture, have operated highly successful 
projects. Unfortunately, the legal requirements to initiate a 
demonstration project are daunting. Current law limits ``demo'' 
projects to 5,000 employees, requires multiple Federal Register 
notices, a public hearing, and a 180-day notice to affected employees. 
Once an agency successfully tests a system, it must seek additional 
legislation to make that system permanent. The authority we are seeking 
would remove the coverage limit to allow widespread testing of new 
ideas, and shorten the steps to implement a project. Once a project 
proves successful, the Office of Personnel Management could approve 
conversion from a demo to a permanent alternative personnel system 
without further legislation.
    Mr. Chairman and Members of the Subcommittee, each of these 
legislative provisions when taken individually will only help NASA deal 
with its human capital strategic threats to a limited degree. However, 
when taken together as an integrated package they form a strong nucleus 
in support of the Agency's Strategic Human Capital Plan and the 
President's Management Agenda, and will be invaluable as we deal with a 
diminishing pipeline, recruitment and retention of a world-class 
workforce, and skills imbalances. With these tools in hand, we will be 
able to avert a serious human capital crisis at NASA.
    The missions we seek to lead and make possible are the visions that 
we all have for our future--new launch systems, innovations in high-
performance computing, advances in biological research and exploration 
of our cosmos that extend our lives and way of life out there. Those 
things can only happen if we have the people that can make them happen. 
Technology and exploration will go nowhere without the human know-how 
and presence to make today's impossible into tomorrow's reality. After 
meeting and working with many of the men and women of NASA during the 
past year, I know we can do those things and I look forward to working 
with you and sharing the rewards of your investment and trust in us.

                               __________
      RESPONSES TO WRITTEN QUESTIONS SUBMITTED BY SEN. AKAKA FROM 
                         ADMINISTRATOR O'KEEFE

Question 1:
    The National Aeronautics and Space Administration's (NASA) 
workforce proposals include flexibilities relating to the recruitment, 
compensation, and management of its workforce. One of these proposals 
would provide the broad authority to establish a new demonstration 
personnel system for the entire NASA workforce. Under current law, 
agencies are authorized to implement demonstration projects for up to 
5,000 employees. NASA's in-house workforce currently consists of about 
20,000 workers.
    What type of authority would you test under this new personnel 
system that is not included along with your other workforce proposals?

Answer 1:
    Specific proposals would be developed in collaboration with 
employees, unions, and managers--focusing on those flexibilities that 
are most needed to address NASA's human capital challenges and achieve 
the Agency's strategic and programmatic goals. We have learned from the 
positive experiences other agencies (including the Department of 
Defense, the National Institute of Standards and Technology, Department 
of Commerce, and the Department of Agriculture) have had with their 
demonstration projects. We may find it beneficial initially to develop 
proposals similar to some of the successfully tested flexibilities 
implemented in past and current demonstration projects, tailoring them 
to meet the specific workforce challenges NASA faces. We are likely to 
look closely at various compensation and hiring tools that have been 
used in those demonstration projects.

Question 2:
    Last year, the General Accounting Office (GAO) completed a study on 
the effective use of managerial flexibilities. GAO noted that the 
manner in which agencies utilize these flexibilities is just as 
important as which flexibilities are made available. In fact, the 
report concluded that inefficient and ineffective use of personnel 
flexibilities can significantly hinder the ability of Federal agencies 
to recruit, hire, retain, and manage their workforce.
    How will you ensure that NASA uses the additional flexibilities you 
have requested effectively?

Answer 2:
    The GAO study provides very sound recommended practices for 
implementing human capital flexibilities effectively; these 
recommendations have served as a useful guide in our planning for the 
use of additional tools.
    The study notes the importance of ensuring that the use of 
flexibilities is part of an overall human capital strategy clearly 
linked to an agency's program goals, along with a plan for using and 
funding the authorities. NASA places great importance on the need to 
have an effective human capital strategy. On OMB's most recent 
Executive Management Scorecard for strategic management of human 
capital, NASA was one of only six Federal agencies rated ``yellow'', 
and received an assessment of ``green'' in recognition of successful 
progress made in this area.
    Our use of such flexibilities would be aligned with our human 
capital strategy--which is documented in our approved Strategic Human 
Capital Plan and its companion Strategic Human Capital Implementation 
Plan. These plans represent an integrated, systematic, Agency wide 
approach to human capital management, and identify our human capital 
goals, challenges, improvement initiatives and intended outcomes. In 
developing these plans, we identified flexibilities and authorities 
that the Agency may need to pursue through legislation in order to most 
effectively achieve our human capital goals and outcomes; they are 
included as an appendix to the Implementation Plan and many of them are 
incorporated into S. 610, the NASA Workforce Flexibility Act of 2003.
    Appropriate and successful use of new flexibilities must be based 
on analysis of current workforce needs. We are developing an Agency 
wide, integrated workforce planning and analysis system, with a 
competency management system component. This component will facilitate 
a more comprehensive identification of our workforce competency 
strengths and weaknesses so that we can more effectively align our 
workforce to the mission. The analyses generated from these tools will 
enable NASA to use new flexibilities in a strategic way.
    The GAO report also notes the importance of streamlining and 
improving administrative processes for using flexibilities. NASA's 
actions demonstrate commitment to this objective. Over a year ago NASA 
launched a ``Freedom to Manage'' initiative to solicit ideas from the 
workforce for removing bureaucratic barriers and giving managers and 
employees more flexibility to do their jobs. Employees were encouraged 
to identify practices, internal regulations, government regulations, 
and statutes that impose needless impediments. This on-going effort has 
resulted in streamlining Agency procedures and delegating more 
authorities, wherever the changes could be effected by modifying Agency 
practices, policies, and regulations. In those instances in which 
removing impediments to effective management required changes to 
Federal regulations or statutes, we assessed whether such changes 
should be pursued. Many of the provisions in our human capital 
legislative package were developed through this process, in response to 
the input we received from the Freedom to Manage effort.
    The Freedom to Manage initiative actively seeks input from the 
Agency workforce at all levels. Town Hall meetings have been held at 
all Centers to stimulate discussion and encourage suggestions. NASA 
created a website devoted exclusively to the Freedom to Manage 
initiative, with a mechanism for submitting suggestions easily and 
anonymously.
    This effort led to other benefits. It encouraged employees at all 
levels to become engaged in reviewing and suggesting improvements to 
policies and procedures. In addition, the on-going discussions served 
to educate managers and employees on existing authorities and their 
use. These are practices the GAO study indicated are also necessary to 
successful implementation of human capital flexibilities. If NASA is 
authorized to use additional flexibilities, we will build upon these 
approaches in working with employees, unions, and managers in 
implementing changes.
    Also critical to effective implementation of new flexibilities is 
ensuring that there are clear and equitable guidelines for using the 
tools--while ensuring that managers are accountable for their use. We 
would engage appropriate stakeholders from all Centers in developing 
internal policies and procedures for their use. A change management 
strategy, incorporating communications strategies, will be developed to 
ensure that the workforce understands the reasons for, and nature of, 
the changes. As suggested above, this dialogue has been initiated to a 
limited extent through the Freedom to Manage actions; many of the 
legislative provisions we seek were proposed through the Freedom to 
Manage discussions at our Centers.

Question 3:
    During the 1990's, NASA underwent significant downsizing, which has 
contributed to overall staffing shortages. According to the Comptroller 
General's testimony before the House Science Committee last year, 
``many key areas were not sufficiently staffed by quality workers, and 
the remaining workforce showed signs of overwork and fatigue.'' Just 
this year, GAO reported that staffing shortages remain a concern and 
threaten NASA's operational safety and effectiveness.
    Would you recommend increasing overall in-house staff levels at 
NASA, and if not, why?

Answer 3:
    In 1999 the Agency conducted a NASA-wide Core Capability 
Assessment, a center-by-center analysis to identify workforce and 
infrastructure requirements. One of the objectives of the review was to 
help chart a strategy that would provide the OSF Centers with the 
requisite flexibility to attract and retain the critical skills 
necessary to ensure safe mission and program success. Over the past few 
years, the OSF Centers have been able to hire additional personnel to 
fill some of those critical areas. Additional personnel may be required 
if the Columbia Accident Investigation Board recommends new Shuttle 
program requirements.

Question 4:
    Staffing levels and contractor oversight has been a concern at NASA 
for sometime. In 1995, your predecessor, Dan Goldin, stated that NASA 
staffing levels were the same as they were in 1961. GAO reported this 
year that staffing shortages threaten NASA's operational safety and 
that NASA does not have the processes and mechanisms in place to 
oversee contracted operations.
    Do you believe NASA has the staffing levels required to inspect and 
oversee the operations of its contractor workforce effectively?

Answer 4:
    We have a complement of skilled and dedicated civil servants and 
contractors who are fully able to perform the work required to ensure 
the continued safety and viability of our space program. Additional 
personnel may be required if the Columbia Accident Investigation Board 
recommends new Shuttle program requirements.

Question 5:
    On February 3, 2003, a NASA spokesman said that findings from the 
Rand Corporation report entitled Alternate Trajectories: Options for 
Competitive Sourcing of the Space Shuttle Program would be considered 
only after the investigation into the Columbia disaster was complete. 
Competitive sourcing is not a NASA-only objective, but part of the 
President's Management Agenda and NASA progress with meeting the 
milestones in the agenda is determined by Office of Management and 
Budget (OMB). According to the Management Agenda, the administration 
will, identify mismanaged, wasteful, or duplicative government 
programs, with an eye to cutting their funding, redesigning them, or 
eliminating them altogether NASA received a green light on progress 
made for competitive sourcing but received a red for overall status.

Answer 5:
    As of this date, NASA has exercised a 2-year extension option to 
the current Space Flight Operations Contract (SFOC), which carries the 
contract through October 2004. NASA's FY 2004 budget does not provide 
for ``privatization alternatives,'' but rather assumes continued 
exploration of alternatives for competitive sourcing of Space Shuttle 
flight operations. Further examination of Shuttle competitive sourcing 
options is being held in abeyance until the Gehman Board 
recommendations are received and assessed. It would be premature for 
NASA to propose any detailed plans for Shuttle competitive sourcing 
prior to receipt of the Columbia Accident Investigation Board 
conclusions.

Question 6:
    Do you believe that a delay in implementing a long-term outsourcing 
plan will hurt NASA's future OMB rating, thus leading to budget cuts in 
the coming years? Have you received assurances from OMB that any delays 
in competitive sourcing policies would not be held against NASA?

Answer 6:
    A delay in incorporating the Space Shuttle in NASA's competitive 
sourcing plan is unlikely to be held against the agency. Even without 
the Space Shuttle, NASA has already developed an interim competitive 
sourcing plan that achieves the President's government-wide, 15 
percent, near-term competitive sourcing goal. And NASA's final 
competitive sourcing plan to achieve the government-wide, 40 percent, 
long-term competitive sourcing goal is under development.

Question 7:
    Once NASA decides on a competitive sourcing option and begins to 
move more jobs to the private sector, what do you believe will be the 
key metric used by OMB to determine success? Do you believe it will be 
the number of jobs moved, overall financial savings, or increased 
safety?

Answer 7:
    It is not clear at this time that the Space Shuttle competitive 
sourcing decision will move more jobs to the private sector. It is 
still early in the process and NASA intends to move cautiously and 
prudently in developing a Space Shuttle competitive sourcing plan. A 
key metric used by NASA and OMB to measure success is not the number of 
jobs moved but the number of jobs exposed to competition. The 
competitive sourcing initiative is not about downsizing or outsourcing 
but about exposing the government's commercial activities to 
competition in order to cause the government to operate more 
effectively and efficiently. Safety is of paramount concern to NASA and 
has been and will be the most important consideration in the 
development of any competitive sourcing plan for the Shuttle program. 
However, it is important to note that Space Shuttle contractors have no 
less incentive than the civil servant workforce for ensuring safe 
Shuttle flight operations.

Question 8:
    The RAND Corporation's 2002 report on options for competitive 
sources of the Space Shuttle Program proposed a three-key safety 
process whereby the launch of a space shuttle could not take place 
without the concurrence of NASA, an Independent Safety Assurance 
Office, and the contractor.
    How will you ensure that NASA maintains the expertise necessary for 
proper oversight if more operational responsibilities are shifted to 
private contractors? Will NASA be an informed party to a three-key 
safety process?

Answer 8:
    The idea of an Independent Safety Assurance Office was a concept 
proposed by the RAND-led Task Force, should NASA decide to further 
reduce our role in Shuttle operations. NASA currently accomplishes the 
independent safety assurance function through the Office of Safety and 
Mission Assurance, and recognizes the importance of maintaining an 
independent safety assurance function for the future. Should there be a 
decision in the future to shift more operational responsibilities to 
private contractors, one of the key factors for developing such a plan 
will be to assure that there is sufficient expertise to fulfill the 
oversight role. NASA is still evaluating the best course of action to 
take for the future of the Shuttle Program and has not made any final 
decisions in this regard.

Question 9:
    Making the Independent Safety Assurance Office a partner in a 
three-key safety process shows the importance that independent 
assessment plays in terms of ensuring safety, free of either launch 
pressures or concerns of profitability. Indeed, an Independent Safety 
Assurance Office would provide an added dimension to shuttle safety, 
provide oversight of both NASA and contractor safety practices, and 
help design practices to continually improve shuttle safety.
    Is there room in the NASA budget for such an office?

Answer 9:
    The NASA Office of Safety and Mission Assurance was structured to 
provide just such an independent safety assurance function. This 
organization is headed by the Associate Administrator for Safety and 
Mission Assurance, who reports directly to the NASA Administrator. The 
Associate Administrator for Safety and Mission Assurance is free of 
both launch schedule and Program budgetary pressures, and participates 
directly in the review and concurrence process for each Shuttle launch.

Question 10:
    In addition to the four outsourcing options and two privatization 
options noted in the RAND report, RAND also examined using a national 
Space Authority to ensure safety in the Space Shuttle Program while 
moving ahead with management reform. In its report, RAND stated, ``an 
authority typically is established in circumstances where inherent 
barriers to competition, or other flaws in the market setting make the 
ideal of purely commercial supply unachievable.'' For example, 
authorities are seen in municipal or regional transportation entities 
and finance and service industries. Often an authority is viewed as a 
pseudo-governmental institution as a result its creation might be 
construed as a step backwards from the notion of competitive sourcing.
    Are you considering this option even though it may conflict with 
the President's Management Agenda?

Answer 10:
    The RAND-led Task Force offered a broad array of possible 
organizational structures to accomplish Shuttle competitive sourcing. 
The report indicates that the concept of a Space Authority would be the 
most challenging to implement. NASA has reviewed the findings and 
recommendations of the RAND report along with other studies and 
reports, which have also addressed this subject. In addition, we 
anticipate that the Columbia Accident Investigation Board may also 
offer findings and recommendations on how NASA should structure the 
future of the Shuttle Program. NASA will consider all of this data and 
information as it formulates planning for the future operation of the 
Space Shuttle Program in coordination with the Administration and 
Congress.
     RESPONSES TO WRITTEN QUESTIONS SUBMITTED BY SEN. CARPER FROM 
                         ADMINISTRATOR O'KEEFE

Question 1:
    In your legislative proposal, you ask for increased authority to 
hire certain kinds of workers on a temporary basis without going 
through the competitive hiring process laid out in current law. As you 
know, Congress, through the Homeland Security Act, gave Federal 
managers government-wide the option of abandoning current competitive 
hiring procedures in favor of a categorical hiring system. This system 
has been tested at the Department of Agriculture and has allowed 
managers to make new hires quicker than they can under the current 
system. Does NASA plan to make use of the new hiring authority granted 
them under the Homeland Security Act? How? Finally, how is this new 
authority inadequate in meeting NASA's hiring needs?

Answer 1:
    NASA has been very supportive of the concept of a category rating 
system as an approach that streamlines the hiring process while 
preserving veterans' preference. We certainly will use this methodology 
and we are assessing the changes that need to be made in our automated 
staffing system and our internal regulations to use it effectively.
    Although the category rating approach represents a valuable 
flexibility in the hiring process, additional tools are needed to 
address specific workforce issues facing NASA. The proposals regarding 
term appointments and the Distinguished Scholar Appointment Authority 
illustrate this point.

    Term Appointment Authority
    Many of NASA's scientific and technical projects are of limited 
duration (e.g., 3-6 years), so the Agency may hire term employees for 
the anticipated time of the project. These term employees are hired 
under the same rules and procedures of competition as permanent 
employees. However, term employees cannot be converted to permanent 
status without going through exactly the same competitive application, 
evaluation and selection process they underwent when being hired for 
the term positions. This is true even in those situations in which a 
permanent position becomes available in the same line of work and the 
same organization as the term position for which initially hired. 
Requiring the term employee to apply for an essentially identical 
permanent position in the same organization is a duplicative effort 
that wastes time and is frustrating to the employee.
    For that reason, we propose permitting a term employee to be 
converted to a career-conditional appointment, without further 
competition, if certain conditions are met. The employee must have been 
selected for the term position under competitive examining procedures; 
the competitive announcement must have stated that there is potential 
for conversion to permanent status; and the conversion must be to a 
position in the same occupation, same location, and with the same 
promotion potential. If the position is not essentially identical, then 
the term employee must apply for consideration under internal merit 
promotion competition.
    Although a category rating system will streamline the competitive 
hiring process, we believe that under the very specific circumstances 
described above it is not necessary to make a term employee re-apply 
through the competitive examining process at all, since it is 
duplicative of the process he/she already underwent.
    Distinguished Scholar Appointment Authority
    The Distinguished Scholar Appointment authority is a hiring 
authority that could be used only in appointing individuals to 
positions identified by OPM as requiring education and training in the 
principles, concepts, and theories of the occupation that typically can 
be gained only through completion of a specified curriculum at a 
college or university. These are commonly referred to as positions that 
have a ``positive education requirement.'' For some scientist and 
engineer positions within NASA, the Agency seeks candidates who are 
recent, exceptional graduates with a specific degree (undergraduate or 
graduate) directly related to the position. Often such candidates have 
no professional work experience in the field for which they are being 
hired since they have just graduated--but their academic 
accomplishments make them highly desirable candidates for the position.
    Traditional examining methods may unintentionally favor candidates 
with experience, failing to give due weight to academic 
accomplishments. The Distinguished Scholar recruitment authority would 
appear to be an appropriate way to make qualitative distinctions among 
graduating engineers and scientists who lack work experience but have 
impressive academic credentials. It could be used in those situations 
in which NASA is targeting its recruitment toward fresh out science and 
engineering graduates, rather than experienced scientists and 
engineers.
    The category rating methodology would continue to be used in 
external hiring for many scientists and engineering positions--
particularly those in which experience is desired.

Question 2:
    In your legislative proposal, you ask for the authority to offer 
significantly more in recruitment, retention and relocation bonuses 
than you can under current law. Has NASA made use of these bonuses in 
the past? How have they been used? Why is the amount you are allowed to 
offer today insufficient? If you are given the authority to offer more, 
how will this authority be used?

Answer 2:
    NASA has utilized ``the 3 R's'' when appropriate to recruit and 
retain high quality individuals, when salary just isn't enough. For 
example, recruitment bonuses may be used at the entry level to entice 
``fresh out'' engineers who are receiving competing offers from private 
companies that far exceed what NASA can pay in base salary. In other 
cases, the recruitment bonus may be offered to a mid-level engineer or 
scientist from the private sector as a means of offering a compensation 
package that is competitive with the individual's current employer. 
Generally, such a bonus is combined with a salary offer at an advanced 
step on the General Schedule pay scale, based on the qualifications of 
the candidate. The bonus is an attractive incentive to sweeten the 
offer, and is a one-time cost to NASA.
    Relocation bonuses have been useful in compensating NASA employees 
who relocate between our Centers. Over the past decade, several hundred 
employees changed geographic locations to accommodate program changes, 
downsizing, and more effective distribution of skills. Such movements 
serve the Agency's need to broaden the perspective of its workers and 
managers, as well as enhance the capabilities of the individual. Many 
employees find it difficult to uproot family and move to a new area in 
mid-career, especially when moving to a higher cost area. Although 
travel and transportation costs are provided, the government travel 
reimbursements do not completely cover the actual costs of some high-
cost moves. Relocation bonuses have made the difference to facilitate 
moves of employees--including senior managers--between geographic 
locations. Without the option of providing this bonus, it is doubtful 
that many of these employees would have agreed to relocate to accept 
these jobs.
    In an Agency with a ``mature'' workforce, it is vital to sustain 
our critical knowledge base and essential competencies. Retention 
allowances have proven a valuable tool to convince valuable employees 
who are contemplating retirement or being wooed by the private sector 
to stay on at NASA if program needs require their continued knowledge 
and leadership. For example, one NASA Center has used a retention 
allowance to retain a senior executive in supercomputing and 
intelligent systems that had been offered numerous attractive job 
offers, including Vice-President for Engineering at a high-tech company 
and Vice Chancellor positions at two universities.
    Despite the use of these incentives, there are cases where the 
current authority is not sufficient to meet our needs. Here are a few 
compelling examples of NASA recruitment and retention problems:

     A NASA Center lost a key individual last year--the head 
of an Advanced Supercomputing Division--to the Los Alamos National 
Laboratory. The lab offered a salary increase of almost $40,000 and, in 
addition, the job was located in a much lower cost of living area. This 
was a significant loss to the Agency; the employee had been with the 
Agency since 1986, had experience at two Centers, and was highly 
respected.
     A NASA Center attempted to recruit an impressive 
candidate for nanotechnology research. He had a Ph.D. in chemistry from 
Scripps Research Institute and three years of Postdoctoral Fellow 
research at Harvard University in which he specialized in the 
development of micro fabrication techniques using mesoscale self-
assembly. These were competencies highly desired by that Center. 
Despite being offered a salary at an advanced step of his grade, along 
with a recruitment bonus, he declined the offer due to the high cost of 
living in that area. NASA's compensation package simply wasn't 
adequate.
     One NASA Center is in danger of losing one of their 
brightest recruits in the last two years. The employee has a Ph.D. from 
Yale University School of Medicine and conducted Postdoctoral Fellow 
research in DNA sequencing at the Stanford Genome Technology Center. He 
conducts nanotechnology and DNA/genome research with application to 
NASA missions such as the development of medical diagnostics, in vivo 
gene detection and astronaut health monitoring. He is heavily recruited 
by organizations such as Intel Corporation and by Yale University with 
starting salaries at approximately $150,000--or more than one and a 
halftimes his current salary.
     A fresh out Ph.D. candidate from the University of 
California at Berkeley declined a job offer from a NASA Center that 
included a salary at the top step of the grade and a recruitment bonus. 
He was offered a position at Lawrence Livermore Laboratories at a 
salary almost $20,000 more than this Center could offer.
     Recently, a NASA Center attempted to hire a fresh out 
Ph.D. from MIT who had a background in nanotechnology computing. 
Despite NASA's salary offer at an advanced rate, combined with a 
recruitment bonus, he declined the offer to accept a position with a 
small start-up company in one of the Boston high-tech communities.
     A NASA Center lost a high quality employee at the GS-14 
level to the private sector. The company raised the person's salary by 
over 50%, bought his house, moved him to corporate housing, helped him 
buy a new house, gave him stock options, and other perks.

    These examples may sound unusual, but they are real cases. NASA 
needs more flexibility to pay recruitment, relocation, and retention 
bonuses so that we do not lose individuals of this caliber. The current 
authority works in most cases; but when you deal with people with 
world-class skills who are in high demand by companies and 
organizations who can offer generous and flexible compensation 
packages, it's not enough. Our proposal would allow for payment of 
higher bonuses, with flexible payment methods to meet a variety of 
needs.
    NASA's proposal for a more generous, flexible recruitment/
retention/relocation bonus authority is an enhancement to the existing 
government-wide authority, which NASA has used for many years. The 
Agency's use of the new authority would not differ from the manner in 
which it implements the current authority. Our Centers would continue 
to make judicious use of the bonuses, taking into account the need to 
attract and retain the very best talent and the need to balance the 
costs associated with bonuses against competing needs.

Question 3:
    On average, how much more can a graduate with a doctorate in 
science or engineering earn in the private sector than they can at 
NASA? How will the new pay authority you ask for in your legislative 
proposal help close the gap? If, as you say, interest in aerospace work 
among qualified graduates is fading, how will NASA's ability to pay 
them more enable you to recruit the kind of talent you need?

Answer 3:
    According to the recent National Association of Colleges and 
Employers (NACE) Salary Survey for 2001-2002, the average ``beginning 
offers'' to doctoral graduates for specific engineering disciplines 
were as follows:

    Aerospace/Aeronautical/Astronautical Engineering Electrical $70,506
    Electrical/Electronics/Communications Engineering $77,316
    Computer Engineering $59,211

    By comparison, in 2002, the Federal Government salary rates for 
fresh out graduates with doctorates in engineering were:

    Aerospace Engineer (non-research) $47,240 to $59,741
    Aerospace Engineer (research) $51,624 to $66,609
    Electrical/Electronics Engineer (non-research) $48,629 to $61,130
    Electrical/Electronics Engineer (research) $54,954 to $69,939
    Computer Engineer (non-research) $49,187 to $63,939*
    Computer Engineer (research) $56,454 to $73,387*

    The Federal salaries are shown as a range, since there are ten 
steps within each grade level. An applicant can be offered a salary at 
the higher end of the range, if he/she possesses superior 
qualifications for the job. Also, the salary scale for computer 
engineers differs by geographic region. The salary range for computer 
engineer positions reflects most geographic regions in the U.S.; 
however, the salary scales are higher in large metropolitan areas such 
as San Francisco, New York, Houston, Los Angeles, Boston, Denver, 
Chicago, Philadelphia, and Washington, D.C.
    According to the NACE Salary Survey for 2001-2002, the average 
salary representing ``beginning offers'' to doctoral students in the 
sciences in 2002 were as follows:

    Chemistry $63,168
    Mathematics $54,219
    Physics $51,936

    By comparison, in 2002, the Federal Government salary rates for 
fresh out graduates with doctorates in the sciences ranged from $45,285 
to $58,867 for non-research positions, and $54,275 to $70,555 for 
research positions. Again, the ranges would be higher in certain 
metropolitan areas.
    It is important to note that the above figures represent starting 
salaries for ``fresh out'' graduates--not salaries for engineers and 
scientists who have experience in their field subsequent to receiving 
the doctorate. Attracting (and retaining) the experienced scientists 
and engineers is one of NASA's most difficult human capital challenges. 
Our legislative proposals contain several provisions that are intended 
to address that challenge.
    In addition to the enhanced recruitment/relocation/retention 
bonuses, we propose to raise the cap on the salary associated with the 
critical pay authority and the NASA Excepted (NEX) authority. 
Typically, the NEX authority is used to hire individuals with unique, 
exceptional talent needed for critical programs; similarly, the 
critical position authority is used in filling positions that require 
expertise of an extremely high level in a technical or professional 
field, critical to successful accomplishment of our mission. These are 
the circumstances in which we need to be able to compensate an 
individual at a level commensurate with his/her expertise and at a 
level competitive with the private sector.
    The provision regarding enhanced travel benefits for new hires, 
which would provide new hires with the same travel and relocation 
benefits that permanent employees receive when they transfer, would be 
particularly beneficial in attracting the mid-career and senior-level 
candidates. These employees often are reluctant to accept positions in 
different geographic areas--particularly high cost areas--if they 
cannot receive reimbursement for many of the costs associated with the 
relocation. The ability to offer competitive relocation benefits would 
be a great help in attracting talented experienced individuals.
    A more generous annual leave benefit for new hires would constitute 
a different type of incentive that would be useful in attracting mid-
career and senior-level candidates. Typically, employees at those 
levels have accrued substantial vacation benefits in the private 
sector, which they would forfeit in coming to the Federal Government. 
Many regard this benefit as an important part of the total 
``compensation package'' when considering competing job offers.
    We recognize that providing a more competitive compensation package 
is only part of the solution in addressing the challenge of attracting 
high-quality engineers and scientists to the Agency. We must address 
one of the underlying causes of the intense competition for technical 
talent: the shrinking science and engineering applicant pool. As a 
long-term solution we want to guide U.S. students toward science and 
engineering careers. Our proposed ``Scholarship for Service'' 
proposal--along with our many other education initiatives--is intended 
to do this.

Question 4:
    You say that downsizing that occurred at NASA during the 1990's 
left you with a surplus of talent in some areas but with a shortage of 
other, more critical workers. Explain to me the nature of the 
downsizing effort NASA undertook in the 1990's. Was it a part of a 
comprehensive personnel plan? Why did it occur? What kinds of workers 
were let go? What kind of work do the surplus workers do?

Answer 4:
    During the 1990's, NASA was an agency in transition. NASA embraced 
a philosophy of reinvention that extended beyond mandated reductions 
and focused on maximizing the efficiency, effectiveness, and vitality 
of the Agency. Our managers used these cuts to become more efficient 
and more relevant and to make real changes in our thinking, culture, 
and products. One of the major changes was a transition away from 
operational work and an increased focus on research and development 
within NASA.
    NASA developed a Human Resources Management Plan designed to take 
advantage of available options to meet or exceed current year 
downsizing targets and posture the Agency for known future reductions. 
NASA was able to achieve its workforce reductions through normal 
attrition, hiring restrictions, and several uses of time-limited buyout 
offerings, coupled with early retirement incentives. To help our 
employees find new jobs in the private sector, we opened Career 
Transition Assistance Program (CTAP) Centers at Field locations, 
offering help with career planning, skills assessment, interview 
techniques, and resume preparation. NASA's downsizing effort was 
accomplished without a single involuntary separation, and in that 
regard, served as a model for other agencies.
    In the early stages of downsizing, NASA offered voluntary 
separation incentives to employees in all skill groups, since the 
targeted reductions were quite large. After several years, incentives 
were sharply restricted, targeted to specific locations, organizations, 
and/or job skills, as we came closer to our numerical goals and began 
to be concerned about maintaining adequate skill levels in key areas. 
For example, one buyout program at Langley Research Center was focused 
on engineering technicians, particularly in wind tunnel operations, 
where the need for that skill was sharply reduced; but buyouts were not 
available to professional engineers who were still needed for ongoing 
aeronautics research. In another instance, operation and maintenance of 
aircraft was transitioned from the Ames Research Center to the Dryden 
Flight Research Center; employees impacted by this action who could not 
be absorbed into the Ames workforce and did not wish to relocate were 
offered separation incentives.
    At this point, we know that we have workforce imbalances, resulting 
partly from downsizing, but also from changing technology and program 
needs, compounded by normal attrition. We know that we need people with 
backgrounds in information technology, nuclear engineering, human 
factors engineering, space physics, astronomy and astrophysics, program 
and project management, and contract management. We are developing and 
refining tools to facilitate workforce analysis and competency 
assessments to lend consistency and structure to decisions regarding 
the skills NASA needs today and in the future.

     RESPONSES TO WRITTEN QUESTIONS SUBMITTED BY SEN. DURBIN FROM 
                         ADMINISTRATOR O'KEEFE

    Nearly three years ago, joined by Senators Voinovich and Akaka, I 
offered an amendment to the FY 2001 Defense Authorization bill to 
address concerns I had that Federal agencies were not taking advantage 
of one of the many recruitment and retention options made available to 
them by Congress. That particular tool is the use of student loan 
repayments of up to $6,000 per year for qualified employees. My 
amendment, adopted by the Senate, was made part of the final conference 
package signed into law on October 30, 2000.
    In July of 2001, OPM published amendments to those regulations to 
reflect changes in the law as a result of passage of my amendment. 
These changes addressed removal of the incentive to only professional, 
technical or administrative personnel and the limitation of the 
incentive to employees covered under General Schedule pay rates. The 
rules also broaden the types of loans that qualify for repayment, as my 
amendment provided. Finally, the new rules require that agencies report 
to OPM their use of the incentive and require that OPM report to 
Congress on the agencies' use of the incentive.

Question 1:
    Has NASA implemented the student loan repayment program for its 
employees? With what results?

Answer 1:
    Yes, NASA has implemented the student loan repayment program. 
During FY 2002, eight employees received student loan repayments. NASA 
considers this incentive to be a valuable tool in recruiting or 
retaining high-quality individuals to the agency who might otherwise 
accept positions with competing employers.

Question 2:
    Which specific skills have been particularly difficult for NASA to 
either recruit or develop?

Answer 2:
    Recruiting top talent in information technology and engineering 
continues to be a challenge for NASA because the competition from the 
private sector (including academic institutions) for these skills is 
intense. In large part, this is due to the shrinking domestic pipeline 
of engineers and scientists that this country faces, so we anticipate 
that recruiting for these technical skills--particularly computer 
engineering and computer science--will be very difficult in the coming 
years.
    Within the broad field of engineering, aerospace engineering is an 
area of particular concern since aerospace engineers comprise 35% of 
NASA's scientist and engineering workforce. In the past decade, the 
number of students choosing that field of study has declined, making 
recruitment more difficult. (To illustrate, as reported in the National 
Science Board's Science and Engineering Indicators 2002 report, 
graduate enrollment in aerospace engineering declined from over 4,000 
in 1992 to only 3,400 in 2000.)
    Some of the specialized technical areas that have been especially 
difficult to fill during the past few years include: nanotechnology 
computing, DNA/genome research, and astrobiology.
    Recruitment challenges are, to some extent, a function of location 
as well. For example, NASA Centers in high-cost areas--such as the Ames 
Research Center in the Silicon Valley--may encounter difficulty in 
recruiting a wide range of occupations since Federal salaries in many 
instances are not sufficiently competitive to attract individuals to 
that area.
    From a development perspective, NASA has maintained a strong focus 
on providing continuous learning opportunities for the workforce. 
Employees are encouraged to enhance technical skills through academic 
training, as well as conferences and symposia to ensure state of the 
art capacity in such skills as engineering, science, and information 
technology. In addition, to supplement technical skills and competency 
development, a comprehensive array of opportunities for development and 
enhancement of competencies in leadership and management development, 
program and project leadership, acquisition, and business acumen are 
available to the workforce.

Question 3:
    Which recruits or new hires does NASA tend to lose to the private 
sector? For what reasons?

Answer 3:
    Although we maintain data on losses of new hires for reasons other 
than retirement, the database does not capture the specific reason an 
employee left NASA. We know that many left to accept jobs in the 
private sector, while others may have left for different reasons--e.g., 
to attend graduate school. Data for 1998 through 2002 shows that among 
the engineering and science workforce, the highest number of losses 
among those with under five years of Federal service were in the 
following categories, listed in order of frequency:

    Aerospace Engineer
    Electronics Engineer
    Computer Engineer
    Space Flight Operations Engineer
    General Engineer--Management
    Data Systems and Analysis Engineer
    Facilities and Environmental Factors Engineer
    Electrical Engineer

    The pattern is very similar among hires with five to nine years of 
Federal experience. The highest numbers of losses were in the following 
categories, listed in order of frequency:

    Aerospace Engineer
    Computer Engineer
    Electronics Engineer
    General Engineer--Management
    Space Flight Operations Engineer
    Facilities and Environmental Factors Engineer
    Data Systems and Analysis Engineer
    Materials Engineer
    Electrical Engineer

    NASA has an initiative underway to develop an Employee Preference 
Survey to better understand ``turnover risk'' in the Agency. Since this 
initiative is in the developmental stage at this time, meaningful 
Agencywide data is not yet available.
    However, in connection with our National Recruitment Initiative 
study conducted in 2001, focus groups were held at all NASA Centers 
with new and recent science and engineering hires to gather information 
that would be helpful in developing effective recruitment and retention 
strategies. These employees were asked to address why they came to work 
for NASA, the critical factors in retaining a top quality science and 
engineering workforce at NASA, and their recommendations for attracting 
scientists and engineers to NASA in the future. Their responses showed 
that the most important factors influencing their decision to accept a 
job were challenging work and growth potential, followed by 
developmental opportunities, job stability, and benefits.
    The National Association of Colleges and Employers (NACE) found 
similar results when they conducted a survey in 2000 on what employees 
value in an employer. The responses were: room for advancement (52%), 
good benefits (46%), continuing education and training (41%), 
geographic location (39%), and job security/stability (34%).

Question 4:
    What would be the specific components of an effective Scholarship 
for Service Program that would meet NASA's needs?

Answer 4:
    The desired components of proposed NASA Science and Technology 
Scholarship Program are outlined below:

Enrollment/Eligibility
    --U.S. Citizenship
    --Full Time Student or Pending Graduate at Accredited 2-year or 4-
year University/College/Community College
    --Rising Sophomore or Junior (Pilot Year); Add Graduate 
Continuance Eligibility Over Time
    --Clearly established articulation agreement with or matriculation 
letter from fully accredited 4-year college/university
    --Minimum Cumulative GPA of 3.0/4.0
    --Academic Coursework/Curriculum Highlighting NASA Critical Skill 
Areas (Engineering, Physical/Natural/Life Sciences, Computer Science, 
Mathematics)

Scholarship Provisions
    --Student Eligibility for up to 4 Academic Years
    --Tuition paid directly to academic institution
    --Covers Tuition, Fees, and Other Expenses, as determined
    --Student Academic Program Approved and Progress Reviewed/Approved 
Annually by NASA
    --Student Must Maintain Academic Standing As Required By College/
University

Service Obligation
    --One Year of NASA Service for Each Full Academic Year of 
Scholarship Enrollment
    --Service Obligation To Begin Within 60 Days of Graduation
    --Deferral Option for Graduate Studies (NASA Approval)
    --NASA-sponsored Summer Internship
    --Obligation Can Be Served As Temp, Term, Career Conditional 
Employee (NASA Decision)

Penalties For Breach of Contract
    --First Year Under Scholarship: Considered ``Under Probation'' (No 
Penalty for Withdrawal)
    --Renewal Year(s): Repayment of Scholarship Tuition Costs If 
Academic Year is Not Completed (Repay Year's Tuition)
    --Upon Graduation: Repayment of Scholarship Tuition Costs If 
Service Obligation Not Met (Repay 3 Times Total Scholarship Expenses)

Program Partner & Scope
    --Seek An Experienced Program Partner to Help Structure, Market 
and Coordinate Scholarship Program
    --Anticipate 150-200 Students First Year: 50-100 Rising 
Sophomores; 50-100 Rising Juniors
    --Grow to Full Complement of -300, Adjusting Intake with 
Graduations/Withdrawals/NASA Workforce Requirements
    --NASA to Establish Target Academic Disciplines/Goals (% in 
Engineering, NaturaI/Life Sciences, etc.)

   RESPONSES TO WRITTEN QUESTIONS SUBMITTED BY SEN. LAUTENBERG FROM 
                         ADMINISTRATOR O'KEEFE

Question 1:
    Mr. O'Keefe, I believe that we must also address NASA's 
organizational culture with regard to information flow, and assure the 
proper level of internal oversight.

Answer 1:
    A tremendous effort has been implemented over the years to motivate 
staff to communicate safety concerns and reinforce the expectation that 
any individual with a safety concern is expected to communicate it.
    Numerous mechanisms are in place to facilitate this communication 
and employees are rewarded for expressing their concerns. United Space 
Alliance, the Space Shuttle program's prime contractor, has a formal 
Time-Out Policy (E-02-18) signed by the Vice President, Safety Quality 
& Mission Assurance, that encourages and actively supports the safety 
practice of calling a ``time out'' when anyone is unsure or 
uncomfortable with any situation. Policies are in place for all 
employees whether civil service or contractors to stop any activity 
that they feel is unsafe. This safety awareness behavior is highly 
encouraged and rewarded at all levels. NASA management has an excellent 
record of responding to safety concerns expressed by individuals.
    Since Challenger, the management structure for space flight 
programs has been reviewed and undergone significant changes in 
organization, personnel, and management philosophy. Program reporting 
channels have been redefined and streamlined. In the past year, 
additional changes have been made, further improving the oversight and 
accountability of program management. Since last year, the Program 
Managers for both the Shuttle and International Space Station Program 
have reported directly to the Deputy Associate Administrator for 
International Space Station and Space Shuttle Programs at NASA 
Headquarters.
    Because of the lessons NASA learned following the Challenger 
tragedy, we put in place a process for ensuring that elements of the 
Shuttle system are safe before we commit to flight. Each Shuttle flight 
is subjected to a rigorous review prior to certification of flight 
readiness (COFR). Two weeks prior to launch, NASA holds a Flight 
Readiness Review (FRR), chaired by the Associate Administrator for 
Space Flight. The FRR is attended by all senior program management and 
contractor officials. At the FRR, project managers assess readiness for 
launch, report hardware status, problems encountered during launch 
processing and their resolution, and launch constraints. Each manager 
and official is required to sign the COFR.
    In the recent past, this process has identified several potentially 
serious issues with Shuttle flowliners and the ball strut tie-rod 
assembly (BSTRA). These problems were analyzed and resolved prior to 
flight.
    Even at the risk of delays to our launch schedule, NASA is 
committed to identifying and resolving potential safety issues. Each 
and every employee is empowered and obligated to identify issues that 
they believe may pose a risk to the Shuttle and her crew.
    This process is codified in NSTS 08117, ``Requirements and 
Procedures for the Certification of Flight Readiness,'' which lays out 
the steps in the COFR process: including Project Milestone Reviews; the 
Program Milestone Reviews; and the Flight Readiness Review (FRR).
    In addition to formal COFR and other processes, employees and 
contractors are encouraged to identify and report safety issues both 
through regular reporting channels and anonymously through the NASA 
Safety Reporting System (NSRS). The Office of Safety and Mission 
Assurance is responsible for this anonymous process.
    The NSRS is an anonymous, voluntary, and responsive reporting 
channel to notify NASA's senior management of employee concerns about 
hazards. It is managed independently by NASA's Office of Safety and 
Mission Assurance and is designed to supplement local hazard reporting 
channels. Anyone can initiate an NSRS report. Personnel are directed to 
report hazards first through their local channels and then to NSRS if 
no remedial action is taken; if they are unsatisfied with the action 
taken; or if they fear reprisal if they report the hazard through 
normal channels. NSRS reports receive prompt attention from senior 
personnel. A summary of NSRS status is presented at each FRR. The NASA 
Administrator established the NSRS in 1987 following the Challenger 
accident. This system has supported all Shuttle flights since that time 
and has been expanded to cover all NASA operations.

Question 2:
    And on the question of the ratio of employees to contractors, tell 
me, what expansion of your workforce will be needed to assure 
excellence in safety and in order to position NASA to meet its goals 
for the 21st Century?

Answer 2:
    The ratio of civil servant to contractor is not constant but varies 
depending on the nature of the work. For example, for a project that 
entails work that is commercial in nature, the work could be 
accomplished with a bare minimum of government involvement; whereas, if 
the project involves work that is not performed in the private sector, 
civil servants may perform it mostly or wholly. Most complex aerospace 
projects are somewhere on the continuum and can involve a mix of 
contractor and civil servant employees. Assuring excellence might not 
necessarily require the expansion of either the civil servant or 
contractor workforce. Rather, program excellence relies on well-
informed and experienced-based management decisions regarding the 
effective deployment (mix) of civil servant and contractor human 
capital resources based on the nature of the project and the risk of 
program failure.

Question 3:
    Do you foresee more government workers or private contractors?

Answer 3:
    Rather than dictating increases or decreases in the number of 
certain types of employees, the Federal Government has set a path in 
recent years to make greater use of regular competitions as a tool to 
ensure that managers do effectively deploy civil servant and contractor 
human capital resources. The Competitive Sourcing reform in the 
President's Management Agenda is the government-wide vehicle for this 
improved approach to Federal human capital management.

Question 4:
    To inspire our young people to enter scientific fields and to 
entice the best and brightest to choose a career with NASA, rather than 
say, Wall Street or Microsoft, what visions will you offer to the next 
generation and how will you communicate it to our young people?

Answer 4:
    NASA's mission to understand and explore depends upon an educated 
and motivated workforce with the ingenuity to invent tools and solve 
problems and the courage to always ask the next question. To accomplish 
this, education has been made a core mission of the Agency: ``To 
Inspire the Next Generation of Explorers . . . as only NASA can.'' Two 
Agency goals in our FY 2004 Strategic Plan guide our educational 
efforts:
    Goal 6: Inspire and motivate students to pursue careers in science, 
technology, engineering and mathematics.
    Goal 7: Engage the public in shaping and sharing the experience of 
exploration and discovery
    As stated in the NASA Strategic Plan, education and inspiration are 
integral parts of NASA's programs, and educational and motivational 
activities are being incorporated into every NASA program from the 
earliest stages. To guide this process, a new NASA Enterprise--
Education--has been created to serve as the Agency's umbrella 
organization for defining and articulating an overarching education 
vision and mission. The Education Enterprise will serve as the focal 
point for education planning and implementation, program reviews, and 
the evaluative performance of all NASA sponsored educational programs. 
The evaluation of NASA's education programs will be based upon 
benchmarked criteria as is practiced or tracked through established and 
recognized educational tools as well as commensurate with other NASA 
research and development activities.
    The Education Enterprise has established four new initiatives in FY 
2004 to inspire and entice students to enter scientific fields and 
choose a career with NASA or NASA affiliated organizations:
    The Educator Astronaut Program: seeking America's exemplary 
teachers to become members of the NASA Astronaut Corps to bring the 
wonder of space exploration into our education system;
    Explorer Schools: through a competitive process, identify middle 
schools that will bring teams of educators together to work in 
partnership with NASA over a 3-year period to enhance their 
professional development, and provide them unique teaching tools and 
learning resources for students, in support of increased student 
achievement in mathematics and science.
    Scholarship for Service (proposed--enabling legislation pending): 
providing full scholarships for students seeking degrees in science or 
engineering fields of high priority for NASA in exchange for a year for 
year matching employment requirement by the student recipient; and
    Explorer Institutes: working with the Nation's museums, and science 
and technology centers to provide compelling learning experiences for 
students, their parents and the general public.
    The United States needs a technically competent workforce that 
reflects our Nation's diversity. Inspiring and motivating students to 
pursue careers in science, technology, engineering and mathematics 
assures NASA a new and continuing generation of explorers and a 
workforce that will keep America technologically and economically 
competitive. Our vision is ``To Inspire the Next Generation of 
Explorers'' to pursue education and careers in science and technical 
fields and to be prepared to join NASA in pursuit of exploration and 
discovery.
    NASA also must be effective in communicating this vision and 
marketing the Agency as an ``employer of choice'' to the graduates who 
are ready to enter the workforce. NASA recognized the importance of 
having an effective recruitment program and during FY 2002 conducted a 
National Recruitment Initiative study to develop hiring strategies and 
tools for NASA's current and future science and engineering needs. The 
study focused on strategies appropriate for hiring new graduates--the 
``fresh-outs''--and provided valuable insights regarding effective 
recruitment approaches to use in today's labor market.
    Using what we learned from that focused study, as well as other 
research, we developed new recruitment materials and more effective 
communications strategies to appeal to the emerging workforce. Our 
marketing techniques have become more expansive in order to compete in 
today's environment. We established a unified NASA JOBS website to 
provide easy access to information on jobs, with direct links to 
information on NASA's mission and the ability for individuals to apply 
for positions on-line. We developed new promotional materials, 
including CD ROM business cards with links to the NASA JOBS web site 
and a short movie on the history of NASA. We have developed an 
employment DVD that provides information on what it's like to work at 
NASA from those who know best--our own employees. We have put a face on 
the thousands of individuals throughout the agency engaged in 
challenging, state-of-the-art work. The themes of challenging work and 
opportunities for growth are included throughout the DVD as employees 
explain why they came to NASA and why they stay.
    In summary, our core mission ``To Inspire the Next Generation of 
Explorers . . . as Only NASA Can'' guides both our education and 
employment strategies to inspire and entice the best and brightest to 
choose a career with NASA.
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