    [House Hearing, 115 Congress]
    [From the U.S. Government Publishing Office]

                        NASA COST AND SCHEDULE OVERRUNS:
                            ACQUISITION AND PROGRAM
                             MANAGEMENT CHALLENGES

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

                                    HEARING

                                   BEFORE THE

                             SUBCOMMITTEE ON SPACE

                  COMMITTEE ON SCIENCE, SPACE, AND TECHNOLOGY
                            HOUSE OF REPRESENTATIVES

                         ONE HUNDRED FIFTEENTH CONGRESS

                                 SECOND SESSION

                                   __________

                                 JUNE 14, 2018

                                   __________

                               Serial No. 115-64

                                   __________

     Printed for the use of the Committee on Science, Space, and Technology

     [GRAPHIC NOT AVAILABLE IN TIFF FORMAT]

           Available via the World Wide Web: http://science.house.gov

                                  __________

                        U.S. GOVERNMENT PUBLISHING OFFICE
    30-875PDF                  WASHINGTON : 2018

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                  COMMITTEE ON SCIENCE, SPACE, AND TECHNOLOGY

                       HON. LAMAR S. SMITH, Texas, Chair
    FRANK D. LUCAS, Oklahoma             EDDIE BERNICE JOHNSON, Texas
    DANA ROHRABACHER, California         ZOE LOFGREN, California
    MO BROOKS, Alabama                   DANIEL LIPINSKI, Illinois
    RANDY HULTGREN, Illinois             SUZANNE BONAMICI, Oregon
    BILL POSEY, Florida                  AMI BERA, California
    THOMAS MASSIE, Kentucky              ELIZABETH H. ESTY, Connecticut
    RANDY K. WEBER, Texas                MARC A. VEASEY, Texas
    STEPHEN KNIGHT, California           DONALD S. BEYER, JR., Virginia
    BRIAN BABIN, Texas                   JACKY ROSEN, Nevada
    BARBARA COMSTOCK, Virginia           CONOR LAMB, Pennsylvania
    BARRY LOUDERMILK, Georgia            JERRY McNERNEY, California
    RALPH LEE ABRAHAM, Louisiana         ED PERLMUTTER, Colorado
    GARY PALMER, Alabama                 PAUL TONKO, New York
    DANIEL WEBSTER, Florida              BILL FOSTER, Illinois
    JIM BANKS, Indiana                   MARK TAKANO, California
    ANDY BIGGS, Arizona                  COLLEEN HANABUSA, Hawaii
    ROGER W. MARSHALL, Kansas            CHARLIE CRIST, Florida
    NEAL P. DUNN, Florida
    CLAY HIGGINS, Louisiana
    RALPH NORMAN, South Carolina
    DEBBIE LESKO, Arizona
                                     ------

                             Subcommittee on Space

                         HON. BRIAN BABIN, Texas, Chair
    DANA ROHRABACHER, California         AMI BERA, California, Ranking
    FRANK D. LUCAS, Oklahoma                 Member
    MO BROOKS, Alabama                   ZOE LOFGREN, California
    RANDY HULTGREN, Illinois             DONALD S. BEYER, JR., Virginia
    BILL POSEY, Florida                  MARC A. VEASEY, Texas
    STEPHEN KNIGHT, California           DANIEL LIPINSKI, Illinois
    BARBARA COMSTOCK, Virginia           ED PERLMUTTER, Colorado
    RALPH LEE ABRAHAM, Louisiana         CHARLIE CRIST, Florida
    DANIEL WEBSTER, Florida              BILL FOSTER, Illinois
    ANDY BIGGS, Arizona                  EDDIE BERNICE JOHNSON, Texas
    NEAL P. DUNN, Florida
    CLAY HIGGINS, Louisiana
    LAMAR S. SMITH, Texas
                                C O N T E N T S

                                 June 14, 2018

                                                                       Page
    Witness List.....................................................     2

    Hearing Charter..................................................     3

                               Opening Statements

    Statement by Representative Brian Babin, Chairman, Subcommittee
      on Space, Committee on Science, Space, and Technology, U.S.
      House of Representatives.......................................     4
        Written Statement............................................     6

    Statement by Representative Ami Bera, Minority Ranking Member,
      Subcommittee on Space, Committee on Science, Space, and
      Technology, U.S. House of Representatives......................     8
        Written Statement............................................    10
    Statement by Representative Lamar Smith, Chairman, Committee on
      Science, Space, and Technology, U.S. House of Representatives..    12
        Written Statement............................................    14

    Statement by Representative Eddie Bernice Johnson, Ranking
      Member, Committee on Science, Space, and Technology, U.S. House
      of Representatives.............................................    16
        Written Statement............................................    17

                                   Witnesses:

    Ms. Cristina Chaplain, Director, GAO: Contracting and National
      Security Acquisitions
        Oral Statement...............................................    19
        Written Statement............................................    22

    Mr. Steve Jurczyk, Associate Administrator, NASA
        Oral Statement...............................................    58
        Written Statement............................................    60

    Mr. Paul Martin, Inspector General, NASA
        Oral Statement...............................................    68
        Written Statement............................................    70

    Mr. Daniel L. Dumbacher, Executive Director, American Institute
      of Aeronautics and Astronautics (AIAA)
        Oral Statement...............................................    79
        Written Statement............................................    81

    Discussion.......................................................    89

                 Appendix I: Answers to Post-Hearing Questions

    Ms. Cristina Chaplain, Director, GAO: Contracting and National
      Security Acquisitions..........................................   112

    Mr. Steve Jurczyk, Associate Administrator, NASA.................   122

    Mr. Paul Martin, Inspector General, NASA.........................   136

    Mr. Daniel L. Dumbacher, Executive Director, American Institute
      of Aeronautics and Astronautics (AIAA).........................   139

                Appendix II: Additional Material for the Record

    Documents submitted by NASA......................................   144

                        NASA COST AND SCHEDULE OVERRUNS:
                            ACQUISITION AND PROGRAM
                             MANAGEMENT CHALLENGES

                                  ----------

                            THURSDAY, JUNE 14, 2018

                      House of Representatives,
                   Committee on Science, Space, and Technology,
                                                       Washington, D.C.
        The Subcommittee met, pursuant to call, at 10:04 a.m., in
    Room 2318 of the Rayburn House Office Building, Hon. Brian
    Babin [Chairman of the Subcommittee] presiding.
    [GRAPHICS NOT AVAILABLE IN TIFF FORMAT]

        Chairman Babin. Good morning. The Subcommittee on Space
    will come to order.
        Without objection, the Chair is authorized to declare
    recesses of the Subcommittee at any time.
        Welcome to today's hearing titled, ``NASA Cost and Schedule
    Overruns: Acquisition and Program Management Challenges.''
        I will now recognize myself for five minutes for an opening
    statement.
        NASA is at a critical juncture as it lays out the details
    of its roadmap for human exploration missions while determining
    the best business approach to success. However, human
    exploration doesn't encompass the breadth of NASA's total work.
    They are also launching interplanetary spacecraft systems,
    advancing science and aeronautics research, and developing
    critical technologies to enable U.S. leadership in space.
    Strategic acquisition planning, utilization of new contracting
    mechanisms, and improving management and oversight will be a
    crucial part of effective, affordable, and sustainable mission
    success for NASA.
        As Chairman of the Space Subcommittee and a proud
    representative of Johnson Space Center in Houston, I am a
    tireless advocate for NASA. However, as Members of this
    Committee, we have a responsibility to every taxpayer to ensure
    that NASA is being a good steward, managing the resources with
    which we have been entrusted. Today's hearing will touch upon a
    number of important oversight topics, including acquisition
    mechanisms, cost-estimation methodologies, and NASA program
    management.
        Procurements represent over 90 percent of NASA's annual
    budget. In fiscal year 2016, NASA procured over $18.6 billion
    through nearly 41,000 active procurements. That's a tremendous
    amount of work. Unfortunately, NASA has been plagued for years
    with contract management issues, which have resulted in
    substantial cost overruns and schedule slips. Generally, it's
    the high-profile, major programs which get the most scrutiny
    because of the funding and time associated with these
    procurements. However, there are other well-documented issues,
    many of which could constitute and possibly warrant a dedicated
    hearing.
        In May of this year, the Government Accountability Office
    released its annual Assessment of Major NASA Projects, those
    exceeding $250 million in appropriations. This assessment
    covered 26 major projects. I'd like to note the Subcommittee
    will have a dedicated hearing about the James Webb Space
    Telescope next month, but this project's long history of cost
    and schedule overruns is relevant to today's discussion as
    well.
        GAO reported an overall deterioration in the major program
    portfolio, primarily due to the fact that 9 out of 17 projects
    in development are experiencing cost and schedule performance
    growth as a result of risky program management decisions,
    significant technical challenges, and issues beyond the control
    of the projects.
        Last year, GAO assessed that NASA projects were
    ``continuing a generally positive trend of limiting cost and
    schedule growth, maturing technologies, and stabilizing
    designs.'' However, GAO also noted that many of the more
    expensive projects were ``approaching the phase of their life--
    their lifecycles when cost and schedule growth is most
    likely.''
        The Subcommittee will also investigate specific NASA cost-
    estimating methodologies such as the Joint Cost and Schedule
    Confidence Level, the JCL process, and NASA management
    techniques related to project schedule determination and the
    use of headquarters reserve funding. We are particularly
    interested in the NASA Inspector General's recommendations on
    improvements with NASA's cost estimating methodologies,
    especially if there is a need to continue using the JCL process
    or adopt another cost-estimating technique.
        Furthermore, the Subcommittee will investigate these and
    other questions: What acquisition mechanisms--cost plus, fixed
    price, award fee, Space Act Agreements, et cetera--are most
    appropriate for various types of procurements?
        Next, how do these acquisition tools incentivize the
    provider to perform safely and efficiently? What are the pros
    and cons?
        And then, are existing appropriation funding authorities
    sufficient for Congressional oversight of major NASA projects?
        And lastly, do current agency approaches hold both the
    agency and provider accountable for overall performance?
        And this is a very timely hearing today. In their report
    last month, GAO noted that NASA is planning to invest about $61
    billion over the lifecycle of its current portfolio of 26 major
    programs, and that doesn't even account for thousands of other
    procurements and a significant portion of NASA's spending
    authority. Whether large or small, all of NASA's business
    decisions matter. Decisions made now have long-lasting
    implications on NASA's mission success and leadership.
        I want to thank the witnesses for being here. I'm sorry I
    was a little bit late, didn't get a chance to shake each of
    your hands, but we're looking forward to your testimony on the
    challenges that NASA is facing in controlling program cost and
    schedule.
        [The prepared statement of Chairman Babin follows:]
        [GRAPHICS NOT AVAILABLE IN TIFF FORMAT]

        Chairman Babin. So now, I'd like to recognize the Ranking
    Member of the Subcommittee from California, Mr. Bera.
        Mr. Bera. Thank you, Mr. Chairman. Thank you for having
    this timely hearing, and welcome to the witnesses. I do look
    forward to your testimony.
        When you think about NASA, NASA is a unique agency. It's a
    source of national pride for us, but it also is a cutting-edge
    agency that serves to inspire. Those of us who grew up during
    the space race certainly understood that inspiration and it
    motivated many of us to go into the sciences.
        I want to also acknowledge it's not that often we walk into
    a hearing room and we see a line of folks waiting to get in
    here, and I think we're joined by NASA's interns and that next
    generation that hopefully is going to inspire, discover, and
    move us forward. So, thank you to the interns that are here.
    You are the future.
        In terms of thinking about Congress' role here, we clearly
    have a role, a fiscal responsibility and oversight, and those
    at NASA don't have an easy job. I mean, you are trying to think
    about what that future looks like. You are trying to put those
    projects together and I appreciate that check and balance. As
    you're doing things that we've never done before, you often
    encounter the unexpected. And I think that's why this is an
    important hearing.
        Resolving cost and scheduling issues are hard, and there
    really is no simple fix for these types of situations. That
    said I have no doubt that NASA's talented workforce is looking
    to find those improvements of how it conducts project
    management, oversees its contractors, collaborates with
    international partners, provides greater funding certainty, and
    applies cost estimation tools and techniques.
        But today's discussion of schedule delays and cost
    increases and the search for corrective actions cannot take
    away from the accomplishments and discoveries made by programs
    like Hubble, the International Space Station, and Mars
    Curiosity. These accomplishments and discoveries would not have
    happened had the nation not made the hard decisions that enable
    these projects to carry through in spite of scheduling delays
    and cost growth.
        And we've been well-rewarded with countless innovations
    thanks to the dedicated and inspired work by NASA, its
    supporting contractors, and the nation's colleges and
    universities. One area for improvement is a better agreement on
    the baseline from which cost growth and schedule delay are
    determined.
        The inconsistent measurement of cost growth across programs
    was noted in the National Academies' review of NASA Earth
    Science and Space Missions in 2010. For example, some people
    characterize the cost growth of the Webb Space Telescope using
    an initial baseline project cost of $1 billion to $3.5 billion.
    While this was the initial range cost estimated in 1996, that
    estimate was not based on a detailed analysis. A detailed
    analysis is needed to establish a baseline from which NASA
    makes a commitment to Congress that it can design, develop, and
    build a project at the cost specified. The initial baseline was
    established in the fiscal year of 2009, and according to that
    baseline, JWST was estimated to have a lifecycle cost of about
    $5 billion. That is a pretty different number than $1 billion.
        So, in closing, Mr. Chairman, this topic is timely. NASA's
    need to effectively manage its programs will gain even more
    importance as the agency seeks to manage its wide-ranging
    portfolio in an increasingly constrained fiscal environment
    while pursuing ambitious goals such as exploring Europa and
    sending humans far away from Earth.
        I look forward to a robust discussion at today's hearing,
    and with that, I'll yield back.
        [The prepared statement of Mr. Bera follows:]
       [GRAPHICS NOT AVAILABLE IN TIFF FORMAT]

        Chairman Babin. Thank you very much.
        And now I'd like to--in fact, before I recognize our next
    speaker, I also want to reiterate--thank you for saying this,
    Congressman Bera. I met some of you outside in the hall when I
    walked up, and I wanted to tell you that we're elated that
    we've have got all of these NASA interns in here, and we really
    appreciate the good work you're doing and just want to pat you
    all on the back. You're our future in the space program. Thank
    you for being here.
        Now, I'd like to introduce our--the Chairman of the full
    Committee, the gentleman from Texas, Chairman Lamar Smith.
        Chairman Smith. Thank you, Mr. Chairman.
        This Committee has demonstrated time and again that U.S.
    leadership in space is a bipartisan priority. Our vote on the
    2018 NASA Authorization Act in April was a clear demonstration
    of that.
        Congress and the Administration support a consistent,
    focused space program, and the current NASA budget demonstrates
    that resolve. NASA once again received one of the most
    favorable authorizations and appropriations of any agency.
        Healthy budgets are a good start, but they must be followed
    up with solid management and oversight to make certain
    taxpayers' funds are spent well. However, excessive costs and
    missed deadlines may undermine the very NASA projects Congress
    and the American people support.
        We recently held hearings discussing four of NASA's highest
    profile programs: SLS, Orion, Commercial Crew, and the James
    Webb Space Telescope. The Subcommittee will have a hearing next
    month about the JWST program breach, and Northrop Grumman's CEO
    has agreed to testify.
        The GAO's report identified significant cost and deadline
    problems with all four of these high-interest programs. SLS and
    JWST are identified as having deteriorating cost and schedule
    performance due to risky decisions involving technology. GAO
    found that the commercial crew contractors continue to have
    significant delays in the test flight schedules. And NASA
    expects the Orion program to exceed its cost baseline.
        GAO assessed other NASA major projects this year as well.
    For example, the Wide Field Infrared Survey Telescope remains a
    serious concern for Congress. This Committee has requested but
    not received the WFIRST lifecycle cost estimate that was
    required by the fiscal year 2018 omnibus.
        Congress has a responsibility to authorize and appropriate
    funding necessary to accomplish the tasks it directs NASA to
    carry out. But Congress also has a responsibility to not let
    cost overruns detract from other NASA priorities, such as
    research and small- and medium-class missions.
        It is time for NASA's contractors to deliver. The 2018 NASA
    Authorization Act takes important steps to impose a contractor
    responsibility watchlist. This watchlist would penalize poor
    performing contractors by restricting them from competing for
    further NASA work.
        Beyond contractor watchlists, NASA should continue to
    explore additional options to reduce the costs of these large
    programs, such as leveraging program surpluses, early-stage
    cost caps, firm fixed-price contracts, and public-private
    partnerships that benefit taxpayers. Anything short of that
    will undermine Congressional confidence in the contractors'
    ability to deliver on their promises at a reasonable cost.
        If space exploration is going to continue to earn the
    public's trust, then contractors will have to deliver on time
    and on budget. If they cannot, then they should face sanctions.
        Mr. Chairman, again, I look forward to our witnesses'
    testimony today and yield back the balance of my time.
        [The prepared statement of Chairman Smith follows:]
    [GRAPHICS NOT AVAILABLE IN TIFF FORMAT]

        Chairman Babin. Thank you very much.
        Now, I'd like to introduce the gentlewoman from Texas, the
    Ranking Member of the full Committee, Ms. Johnson.
        Ms. Johnson. Thank you very much, Mr. Chairman, and thank
    you for holding this hearing and thanks to our witnesses for
    being here.
        This morning, we hope we're going to get a status update on
    NASA's management and its programs, particularly cost and
    schedule status on its large missions. To that end, I hope the
    hearing will provide answers to some of our key questions. Is
    NASA's ability to manage cost and schedule on its programs
    improving or is it getting worse, as the Government
    Accountability Office seems to indicate in its recent report on
    NASA's major projects?
        If it is getting worse, what should be done, particularly
    by this Committee? Cost and schedule can be expected to be
    difficult on projects that push the state-of-the-art in science
    and engineering. Challenging missions and transformational
    science are what we expect of space programs worthy of this
    great nation.
        That said, Mr. Chairman, we can do better. In particular,
    we need to improve our ability to identify early on when we can
    still make design decisions whether a project runs the risk of
    exceeding budget constraints and, if so, what options we have
    at our disposal to make sure the program meets those budget
    constraints.
        The Wide Field Infrared Survey Telescope is a good example.
    After stakeholders, including the National Academies, expressed
    concerns that the WFIRST could run into potential cost and
    schedule growth, NASA established expert groups to rigorously
    review the cost, engineering, and science objectives for the
    mission. I commend NASA for taking this action. These steps are
    being taken before a final WFIRST mission design is established
    and while there is still time to reconsider the scope and
    approach of the mission to preclude the possibility of
    exceeding costs, schedule expectations as it starts its
    development.
        Mr. Chairman, I look forward to discussing learning
    opportunities such as this one in determining whether future
    NASA missions would benefit from incorporating similar
    processes to minimize the possibility of future schedule delay
    and/or cost increases.
        One thing I learned early on while serving on this
    Committee is that NASA is a unique engine of innovation, a
    force for pushing new advances in space technology and
    operations. That is why I'm anxious to hear from our witnesses
    on whether the costs and schedule models that are based on the
    past, traditional approaches to national project development
    are being updated to reflect the changes in today's
    manufacturing, operations, and technology environment. Is R&D
    on cost and schedule models needed? Are there other tools that
    could help NASA improve the management of cost and schedule in
    its acquisition of space systems?
        We do have a lot to discuss this morning, and I look
    forward to hearing from our witnesses. Thank you, and I yield
    back.
        [The prepared statement of Ms. Johnson follows:]
    [GRAPHICS NOT AVAILABLE IN TIFF FORMAT]

        Chairman Babin. Thank you very much.
        Now, I'd like to introduce our witnesses. Our first witness
    today is Ms. Cristina Chaplain, Director of Contracting and
    National Security Acquisitions at the U.S. Government
    Accountability Office. Among other topics, Ms. Chaplain has led
    reviews on the ISS, the SLS, and Orion crew capsule, as well as
    commercial cargo and crew projects at NASA.
        Ms. Chaplain received her bachelor's degree in
    international relations from Boston University and a master's
    degree in journalism from Columbia University. We welcome you.
        Our second witness today is Mr. Stephen Jurczyk, serving as
    the Associate Administrator of NASA, the agency's highest-
    ranking career civil service position. Prior to this
    appointment, Mr. Jurczyk served as Associate Administrator of
    the Space Technology Mission Directorate where he formulated
    and executed the agency's space technology programs.
        Mr. Jurczyk is a graduate of the University of Virginia
    where he received a Bachelor of Science and a Master of Science
    in electrical engineering. Thank you for being here.
        Our third witness today is Hon. Paul Martin, Inspector
    General of NASA. Prior to this appointment, Mr. Martin served
    as the Deputy Inspector General of the U.S. Department of
    Justice in the Office of Inspector General. Mr. Martin holds a
    Bachelor of Arts in journalism from Pennsylvania State
    University and a Juris Doctor from Georgetown University Law
    Center. Thank you for being here.
        Our final witness today is Mr. Daniel Dumbacher, the
    Executive Director of the American Institute of Aeronautics and
    Astronautics, or AIAA. Mr. Dumbacher--is it Bacher or Bacher?
        Mr. Dumbacher. Bacher.
        Chairman Babin. Bacher, I thought so. I served three years
    in Germany, so I thought so. Mr. Dumbacher has previously
    served as the Deputy Associate Administrator of the Exploration
    Systems Development Division of NASA's Human Exploration and
    Operations Mission Directorate.
        Mr. Dumbacher earned his bachelor's degree in mechanical
    engineering from Purdue University and a master's degree in
    business administration from the University of Alabama in
    Huntsville. He has also completed the Senior Managers in
    Government program at Harvard University.
        So I'd like to recognize Ms. Chaplain for five minutes to
    present her testimony.

             TESTIMONY OF MS. CRISTINA CHAPLAIN, DIRECTOR,

                          GAO: CONTRACTING AND

                     NATIONAL SECURITY ACQUISITIONS

        Ms. Chaplain. Chairman Babin and Ranking Member Bera,
    Chairman Smith and Ranking Member Johnson, thank you for
    inviting me today to discuss the cost and schedule performance
    of NASA's largest projects.
        Since we began our assessments of major projects ten years
    ago, we have seen NASA make progress in reducing acquisition
    risk, but our most recent review found that performance has
    worsened after several years of following a general positive
    trend.
        [Slide.]
        Ms. Chaplain. Specifically, as shown in this graph, the
    average launch delay, which is the yellow line with dots,
    increased from 7 months in our 2017 report to 12 months in this
    year's report. This was the first year we could not determine
    the extent of cost growth because NASA does not have a current
    estimate for the Orion program. Orion accounts for 22 percent
    of about $30 billion of development costs for major projects.
        Even without including Orion, however, the overall
    development cost growth increased to 18.8 percent, up from 15.6
    percent in 2017. We expect this number to increase further once
    Orion is factored in and probably even more as large projects,
    including James Webb, Space Launch System, and Exploration
    Ground Systems are in their riskiest phases of development.
        In regard to this graph, I'd also like to point out that
    when we started our assessments in 2009, cost and schedule
    growth was more problematic than depicted. Many baselines had
    been set just a couple years prior in response to a statutory
    requirement aimed at enabling more consistent reporting from
    NASA. So, as you can see, it's been a struggle for Congress to
    hold them accountable for years. Also in 2012, you can see the
    impact that James Webb had on the overall cost growth when its
    estimate increased from 4.9 billion to $8.8 billion.
        [Slide.]
        Ms. Chaplain. This next graph depicts some of the reasons
    why projects experience cost and schedule growth. They're not
    so different than what we've seen in the past at NASA and
    across government space programs. Cost and schedule growth is
    sometimes due to issues beyond a project's control--the light
    blue circles--which might include a delivery--a late delivery
    and a delay of the launch vehicle.
        In other times the dark blue circles, it was due to risky
    management decisions. For instance, human spaceflight programs
    have been operating with very low cost and schedule reserves,
    which has limited their ability to address unforeseen technical
    challenges. In other cases, projects encounter technical
    problems that can sometimes be avoided and sometimes not. The
    James Webb program is reporting delays, for example, due to
    workmanship errors that delayed the delivery of the spacecraft
    propulsion system and also because of unanticipated
    complexities involved with unfurling the sunshield, which is
    unique to the telescope. We're looking at whether more could
    have been done to avoid the workmanship issues.
        Since the mid-2000s, NASA has made strides in developing
    tools and approaches to reduce costs and schedule growth.
        [Slide.]
        Ms. Chaplain. As shown in this graph, for example, projects
    are increasingly building more knowledge about critical
    technologies early so that they do not discover problems when
    they're more expensive and time-consuming to fix. Similarly,
    they're building more knowledge about design before proceeding
    into integration. NASA has also improved cost and schedule
    estimating processes and its oversight processes.
        While we recognize NASA's progress, we believe more can be
    done to put programs on a sounder footing. For example, as
    mentioned earlier, the human spaceflight projects should not be
    operating with low cost and schedule reserves. Projects should
    also regularly update cost and schedule estimates, but they are
    more often reluctant to do so. For James Webb, an updated
    estimate may have forecasted the current schedule delays if it
    were done a few years ago.
        We also still find that some projects do not manage
    contractors well and react only after problems become
    overwhelming. This year, we saw that workmanship errors on even
    the smallest of components can sometimes have dramatic impacts.
        Lastly, NASA should take steps needed to ensure cost growth
    from a large project does not overwhelm a portfolio. NASA did
    this recently for its astrophysics portfolio when it undertook
    an independent review of the WFIRST telescope before the more
    costly phases of the acquisition process began. This type of
    assessment should continue.
        In conclusion, we recognize NASA projects are complex, they
    face inherent technical challenges. Some cost and schedule
    growth is inevitable when you push the state of technology, but
    more can be done to limit management risks that often
    exasperates problems.
        Chairman Babin, Ranking Member Bera, this concludes my
    statement, and I'm happy to answer any questions you have.
        [The prepared statement of Ms. Chaplain follows:]
        [GRAPHICS NOT AVAILABLE IN TIFF FORMAT]
        Chairman Babin. Thank you, ma'am.
        I now recognize Mr. Jurczyk for five minutes to present his
    testimony.

                    TESTIMONY OF MR. STEVE JURCZYK,

                     ASSOCIATE ADMINISTRATOR, NASA

        Mr. Jurczyk. Mr. Chairman and Members of the Committee, I
    am pleased to have the opportunity to discuss NASA's program
    management accomplishments and challenges.
        NASA is focused on its mission of science and exploration.
    In support of this mission, the agency has developed a rigorous
    process for program formulation, approval, implementation, and
    evaluation. NASA's challenge is to develop and improve our
    program project management capabilities to ensure both
    efficiency and accountability. We must execute and deliver
    missions on cost and on schedule. We have to execute in an
    environment that includes some significant risk, and we are
    focused on identifying and characterizing risks as quickly as
    possible. We must take corrective actions promptly, whether
    mitigating, accepting, evaluating, or monitoring an identified
    risk.
        NASA implements a rigorous process for project formulation,
    development, and execution. Projects proceed through a series
    of key decision gates. At Key Decision Point C, which we refer
    to as KDP-C, the agency commits to deliver a project within an
    established baseline cost and schedule. This agency baseline
    commitment is the baseline against we which we evaluate
    performance.
        Beginning in 2009, NASA adopted a joint confidence level--
    or JCL--approach to producing estimates, and this approach has
    resulted in improved performance. The JCL employs probabilistic
    risk assessment to establish a confidence level for an
    estimate. Typical NASA--typically, NASA establishes baselines
    for major projects around a 70 percent confidence level. Since
    the agency established its JCL policy, programmatic performance
    has significantly improved as NASA has launched more projects
    at or near their original cost and schedule baselines.
        NASA is committed to applying a robust set of available
    authorities to accomplish our mission efficiently and
    effectively. NASA's strategic acquisition process utilizes
    multiple authorities to meet agency objectives, including,
    though not limited to, federal acquisition regulation or FAR-
    based contracts, grants, cooperative agreements, international
    agreements, and Space Act Agreements. NASA has expanded its use
    of fixed-price contracts where appropriate with the percentage
    of funds NASA spends on firm fixed-price contracts increasing
    from 26 percent in 2013 to 35 percent in 2016.
        The JCL approach has certainly improved our performance,
    and we look forward to building on this success to address our
    ongoing challenges with major projects. NASA is working to
    strengthen program planning and control through a series of
    initiatives, including the application of industry-standard
    earned value management processes. NASA began the process of
    applying an in-house EVM capability in 2013 and has broadened
    its use in a stepwise fashion over time. NASA is leading an
    effort through the scheduling initiative to strengthen schedule
    management by building a community to identify and reinforce
    schedule management best practices.
        Our decision to conduct independent reviews of both WFIRST
    and JWST missions, along with our continued support for regular
    GAO reviews and audits, illustrate our commitment to
    transparency and our determination to identify risks as early
    as possible and immediately take action to mitigate them.
        Finally, Mr. Chairman, NASA will continue to accept the big
    challenges that the Committee and the nation place before us.
    Our missions will continue to incorporate cutting-edge
    technologies and to pursue the challenging goals that can only
    be accomplished in the hostile environment of space. NASA
    missions do things that have never been done before. The Parker
    Solar Probe will dive into the sun's corona. The James Webb
    Space Telescope will unfold itself almost a million miles from
    Earth and operate at minus 380 degrees Fahrenheit. The Space
    Launch System or SLS will enable humans to travel deeper into
    space than ever before. These missions will employ technologies
    that must be developed and tested on Earth but can only be
    demonstrated in space.
        All this is to say that NASA must accept the risk, but we
    are committed to managing that risk and executing within our
    cost and schedule commitments.
        Thank you for the invitation to testify before you today,
    and I look forward to answering any questions you may have.
        [The prepared statement of Mr. Jurczyk follows:]
        [GRAPHICS NOT AVAILABLE IN TIFF FORMAT]

        Chairman Babin. Thank you, Mr. Jurczyk.
        I would like to now recognize Mr. Martin for five minutes
    to present his testimony.

                     TESTIMONY OF MR. PAUL MARTIN,

                        INSPECTOR GENERAL, NASA

        Mr. Martin. Thank you, sir.
        Chairman Babin. Yes, sir.
        Mr. Martin. Members of the Subcommittee, over its 60-year
    history, NASA has been responsible for numerous scientific
    discoveries and technological innovations. However, many of
    NASA's largest projects cost significantly more to complete and
    take much longer to launch than originally planned.
        Our office has examined NASA's successes and failures in
    project management by examining the long-standing challenges
    the agency has faced in meeting cost, schedule, and performance
    objectives, as well as the tools it has developed to address
    these shortcomings. We identified four factors that present the
    greatest challenges to successful project outcomes: one, NASA's
    culture of optimism; two, underestimating technical complexity;
    three, funding instability; and four, development of new
    project managers. My remarks this morning address the first two
    of these challenges, optimism.
        Optimism exemplified by the agency's greatest achievement,
    landing humans on the Moon and safely returning them to Earth,
    NASA's ability to overcome obstacles has become part of its
    can-do culture. However, our work has shown that this attitude
    contributes to development of unrealistic plans and performance
    baselines, particularly with respect to its largest projects.
        And technological success, often at a significantly greater
    cost than originally estimated, tends to reaffirm a mindset
    that project cost and adherence to schedule are secondary
    concerns. In fact, several people offered a name for this
    phenomenon, calling it the ``Hubble psychology'' or an
    expectation that projects that fail to meet initial cost and
    schedule goals will receive additional funding and that
    subsequent scientific success will overshadow budget and
    schedule problems.
        The Hubble Space Telescope was two years late and about $1
    billion more than initial estimates, but most people don't
    remember that. Instead, they rightfully remember its stupendous
    images of the universe. While a few projects in NASA's recent
    past have been canceled because of poor cost and schedule
    performance, a too-big-to-fail mentality pervades agency
    thinking when it comes to NASA's larger and most important
    missions. While understandable given the investment of agency
    resources, cost overruns in these projects can result in delays
    to other missions as funding is reprioritized.
        Technical complexity: The technical complexity inherent in
    NASA projects remains a major challenge to achieving cost and
    schedule goals, with project managers attempting to predict the
    amount of time and the amount of money needed to develop one-
    of-a-kind and first-of-their-kind technologies. We found that
    NASA historically has underestimated the level of effort needed
    to develop, mature, and integrate such technologies.
        To help project managers avoid cost and schedule overruns,
    NASA has implemented a number of initiatives. I highlight two
    this morning. JCL: Required since 2009 for all NASA projects
    with lifecycle costs exceeding $250 million, a JCL analysis
    calculates the likelihood a project will achieve its objectives
    within budget and on time. The process uses software models
    that combine cost, schedule, risk, and uncertainty to evaluate
    how expected threats and unexpected events may affect a
    project's cost and schedule. Our examination of NASA's use of
    JCL found mixed success with the tool unevenly applied across
    agency projects.
        Contracting: NASA makes use of multiple procurement
    vehicles for its projects, including fixed-price and cost-
    reimbursement contracts, as well as funded Space Act Agreements
    used to spur development of commercial cargo and crew
    capabilities. As NASA looks increasingly to the private sector
    to leverage its resources, it must ensure that the contracting
    mechanisms it chooses are best suited to maximize the agency's
    significant investments.
        In sum, to meet cost and schedule goals, agency leaders
    must temper NASA's historic culture of optimism by demanding
    more realistic cost and schedule estimates, well-defined and
    stable requirements, and mature technologies early in project
    development. In addition, Congress and NASA managers must
    ensure that funding is adequate and properly phased.
        Finally, the agency must be willing to take remedial action
    up to and including termination when these critical project
    elements are not present. In our judgment, meeting these
    project-related challenges can only be accomplished through
    leadership that articulates a clear, unified, and sustaining
    vision for NASA and provides the necessary resources to execute
    that vision. Thank you, sir.
        [The prepared statement of Mr. Martin follows:]
        [GRAPHICS NOT AVAILABLE IN TIFF FORMAT]

        Chairman Babin. Thank you very much, Mr. Martin.
        Now, I'd like to recognize Mr. Dumbacher for five minutes
    to present his testimony.

                 TESTIMONY OF MR. DANIEL L. DUMBACHER,

                          EXECUTIVE DIRECTOR,

                   AMERICAN INSTITUTE OF AERONAUTICS

                        AND ASTRONAUTICS (AIAA)

        Mr. Dumbacher. Chairman Babin, Ranking Member Bera, and
    distinguished Members of the Committee and Subcommittee----
        Chairman Babin. You may want to push your button there. I'm
    sorry. Yes.
        Mr. Dumbacher. Chairman Babin, Ranking Member Bera, and
    distinguished Members of the Subcommittee, thank you for this
    opportunity to address you today. Your support for the nation's
    space program is to be commended.
        I sit before you as a former NASA Program Manager, former
    educator, and as the current Executive Director of the world's
    largest aerospace professional society.
        Let me first say that the work NASA employees and its
    industry partners do is purposely challenging. The NASA
    industry teams should be commended for their accomplishments
    under such tight constraints. Programs are complex, and a great
    deal of planning and commitment is necessary to execute a
    successful mission.
        Every program has its unique challenges. The NASA industry
    team works hard to address these issues, develop solutions, and
    incrementally make progress towards the respective missions. No
    matter how much planning takes place or how well-thought-out
    the plan, it's difficult to estimate the cost and schedules of
    these complex one-of-a-kind projects.
        All federal government departments and agencies are
    operating in a time of heightened fiscal responsibility and
    accountability. Accordingly, NASA has updated policies and
    guidance to focus on formulation and implementation with robust
    cost-estimating; well-defined baselines, designs, and risk
    postures at key decision points; and formal requirements and
    guidance.
        Especially during the implementation phases of its
    projects, NASA has processes to ensure that rigorous cost
    assessment is performed. Program progress is tracked through
    the periodic performance review process. Since NASA instituted
    its joint confidence level policy nearly a decade ago, NASA's
    cost and schedule performance has improved.
        From my perspective, the issues experienced in the NASA
    projects can be assessed in two categories: one, the need for
    stable, predictable, and consistent funding; and workforce
    development. Simply stated, project management has three basic
    knobs: content, schedule, and cost. A change in any one of
    these three variables directly affects the other two.
        Cost and schedule issues do arise when there are
    unanticipated changes to a program or when development
    challenges arise, particularly during first-time production and
    when technical capability is being pushed. Disruptions to the
    budget process and funding stream, along with major policy and
    priority shifts, affect schedules and contracts and ultimately
    lead to additional cost. It is also quite difficult for NASA to
    plan and implement programs without sufficient resources or
    reserves.
        A key issue is projects developed under a flatline budget.
    A flatline budget requires project managers to realign the work
    as they go to stay under the budget cap, resulting in hard
    priority decisions and inefficiencies that explicitly break the
    program linkages across schedule and budget. These
    circumstances can and do add to program cost to move schedules
    to the right. We learned this lesson with the International
    Space Station and yet now we're repeating it with SLS and
    Orion.
        The current budgeting process, including the regular use of
    continuing resolutions, late-year appropriations, and threats
    of government shutdowns result in endless multiple planning
    scenarios. As stated in October 2015 testimony before this
    Subcommittee, the need to constantly have backup plans for
    various potential appropriations outcomes, different budget
    planning levels, along with flexible workforce blueprints
    invites confusion and miscommunication.
        A related issue is the inability of NASA to include
    appropriate budget and schedule margin in its program planning
    due to externally imposed constraints. Planned margin is
    difficult to include because it becomes the first target for
    budget reduction in the budget and appropriations process.
        A separate but related issue that must be addressed is the
    workforce challenge impacting the aerospace community as a
    whole. There remains a nationwide shortage of workers for jobs
    requiring science, technology, engineering, arts, and
    mathematics. According to Aviation Week's 2017 workforce study,
    nearly 30 percent of the nation's aerospace and defense
    workforce are over the age of 55, and 22 percent are younger
    than 35.
        More concerning is the lack of development program
    experience. The vast majority of the NASA human spaceflight
    workforce has been hired and trained after space shuttle
    development. Space station development has provided on-orbit
    expertise. However, launch system development experience is
    minimal. NASA expertise that developed the space shuttle has
    mostly retired or passed away.
        For the United States to continue its long-held space
    exploration leadership, significant investments must be made in
    addressing the workforce development via hands-on real-world
    hardware programs and research. Key technical challenges for
    the future of space exploration such as new propulsion, on-
    orbit assembly, and human survival in microgravity should be
    addressed. Such investments would meet key research and
    engineering needs, while providing valuable experience. A well-
    developed leadership bench is also necessary for a program's
    mission success. This ensures the appropriate expertise to
    assess and balance risk and priorities.
        In conclusion, I thank this Committee for the opportunity
    to talk today and look forward to your questions.
        [The prepared statement of Mr. Dumbacher follows:]
        [GRAPHICS NOT AVAILABLE IN TIFF FORMAT]

        Chairman Babin. Thank you, Mr. Dumbacher. We appreciate it.
        Now, I would like to recognize myself for five minutes for
    questioning. And I have a bunch of questions, and I'm sure
    everybody else does, too, so if you could just get right to the
    point, answer these things, we want to cover as much of this
    part of ground as we possibly can.
        NASA has a storied history with overrunning costs and
    schedules for space systems development. Some of these programs
    have even suffered cancelation as a result, and this has simply
    got to stop. We need performance, not excuses from the agency,
    as well as providers. And with that in mind, of NASA's options,
    what acquisition mechanisms such as cost-plus, fixed-price, or
    Space Act Agreements are most useful in promoting performance
    and holding the provider as well as the agency management
    accountable for meeting the acquisition requirements? And I'd
    ask you first, Mr. Dumbacher.
        Mr. Dumbacher. Congressman, I think the appropriate
    acquisition tool depends on the objectives of the program and
    the scientific engineering issues and risks associated with
    that.
        Typically, we have a lot of experience with cost-plus
    contracts in this country. NASA uses that a lot for its major
    programs. There is the discussion of public-private
    partnerships, which can also be valuable and have been tried in
    the past, some successful, some not. When we consider all of
    this, we need to consider the objectives that are for the
    program, what are the incentives and the motives that are
    necessary for success both in terms of how it would apply in a
    public-private partnership, as well as a cost-plus arena? And
    we need to sort through those and make valid, conscious,
    objective decisions.
        Chairman Babin. Thank you. And now that same question, Ms.
    Chaplain, if you would answer that. I don't need to repeat it,
    right?
        Ms. Chaplain. Right.
        Chairman Babin. Okay.
        Chairman Babin. So with fixed-price contracts, the
    contractor bears the most risk for meeting cost and schedule
    goals, so that's your main aim. That's a contract, but it's not
    really appropriate when you're facing a lot of unknowns at the
    beginning. If you're really stretching technology, don't know
    how long it's going to take, how much it's going to cost, in
    that case the government does need to bear the risk of the
    contract, and that's where cost-plus comes in.
        Chairman Babin. Okay. Thank you. And then we're talking
    about cost-plus, so I'm just going to--the second part of my
    question to you two, do cost-plus contracts provide any
    incentive for the provider to complete the project on time and
    on schedule?
        Ms. Chaplain. There are typically incentives built into the
    contract, and they come through the award fees. So some may be
    tied to performance and quality and things like that, but
    others could definitely be tied to cost and schedule.
        Chairman Babin. Okay. All right. Thank you. And, Mr.
    Dumbacher?
        Mr. Dumbacher. Just to add a little bit to that, when we
    have done award fee, cost-plus award fee, and incentive fee in
    the past, we do and can make schedule performance and cost
    performance part of the evaluation criteria, and that is
    typically included.
        Chairman Babin. Okay. Thank you. And then to Mr. Martin and
    Ms. Chaplain as well, acquisition encompasses a great deal,
    including strategic planning, procurement processes, and the
    development of clear requirements. For many years, the DOD has
    employed a robust training and certification program for
    defense acquisition professionals. What institutional
    improvements such as training, certification, and career
    progression are necessary or perhaps missing from NASA's
    acquisition processes?
        Ms. Chaplain. I know NASA has invested pretty heavily in
    training cost estimators and project management. They have
    conferences every year, for example. But I still think maybe
    more could be done in that area in certain techniques and
    especially more program management issues related to managing
    contracts.
        Chairman Babin. Okay. And then Mr. Martin?
        Mr. Martin. Attracting and retaining the project managers
    is a real challenge for the agency. As Mr. Dumbacher suggested,
    within NASA, 50 percent of the workforce is over 50 years old,
    and with a diminishing number of small projects for these
    project managers to really get the experience and cut their
    teeth on, it's a real concern.
        Chairman Babin. Okay. And then do you think NASA can gain
    from DOD's experiences?
        Mr. Martin. I'm not as familiar with DOD's experiences.
        Chairman Babin. Okay. Ms. Chaplain?
        Ms. Chaplain. I think that Defense Acquisition University
    is a very good model for training programs and all kinds of
    issues. It's something NASA could look toward.
        Chairman Babin. Okay. Thank you.
        Mr. Jurczyk, NASA recently took steps to control the costs
    of the Europa Clipper and WFIRST missions while in formulation.
    Have these steps proven helpful, and can similar measures be
    implemented on other major projects to control the cost?
        Mr. Jurczyk. Yes. On WFIRST we did an independent--had an
    independent review board come in and look at the project early
    in phase A, in formulation, and they confirmed that the project
    scope had grown and they were not going to be able to execute
    the mission within the $3.2 billion budget that we had for
    their--for them for the management agreement. They made some
    recommendations. The project took those recommendations and
    adjusted the scope and re-planned the cost and schedule
    estimates and they came in and presented their baseline to the
    agency program management council, which I chair. And we have
    confidence, based on their estimate given the re-plan, that
    they have a solid estimate going into phase B. I think that--
    and similarly for Europa Clipper. So I think that is a way to
    try to minimize cost and schedule risk early in the program.
        Chairman Babin. Okay. I'm out of time. I had several more
    questions, but thank you very much.
        I'd like to recognize the gentleman from California, the
    Ranking Member, Mr. Bera.
        Mr. Bera. Thank you, Mr. Chairman. Each of you in your
    opening statements obviously touch on the complexity of
    budgeting and scheduling when you're trying to do something
    that you may never have done before. And I have to imagine when
    we started on the Apollo missions, lots of cost overruns, lots
    of scheduling delays, but as you got further down the road,
    understood what we had to do, that started to reduce and there
    was more predictability.
        As we think about future missions, let's put it in the
    context of something we talk a lot about, Mars by 2033. We
    don't know how we're going to do that. We don't know the
    technology and the science and everything else. As we go into
    deeper space, we are encountering more complicated projects. As
    we look at the balance of the commercial sector, the
    entrepreneurial sector, more reliance on external entities.
    When we did Apollo, NASA was the launch vehicle, the landing
    vehicle, the science mission, maybe a little bit more control
    as you think about working with outside contractors and new
    startup companies that may be--a little bit more
    unpredictability, I think that adds another variable. As the
    international community becomes much more engaged, as you see
    countries like India, Japan, the European Space Agency start to
    do some of the science, another complicated variable.
        So, as opposed to budgeting and scheduling getting easier,
    my sense is budgeting and scheduling is going to get more
    difficult. Is that a reasonable--reasonably accurate thought? I
    guess, Ms. Chaplain.
        Ms. Chaplain. Well, I would like to note in the Apollo era,
    a lot of things had never been done before, so they were very
    difficult to estimate. I think now we have the benefit of time
    and history that there are a lot of things we can estimate even
    if we haven't done that particular mission.
        And I also know that in the past decade the three space
    agencies, DOD, NRO, and NASA have been working very closely
    together to kind of gain that historical perspective in costs
    and build databases so there is more knowledge there that gives
    you an advantage. But yes, those other complexities do make it
    hard.
        Mr. Bera. Right. And as we think about that, learning from
    what we've done in the past, trying to create more predictable
    models of budgeting and scheduling, I think to Chairman Babin's
    question, you know, I'll put it in the context of my profession
    as a doctor. We'll often--and--as we're caring for populations
    of patients, we'll have a shared risk pool that says, okay for
    a certain fee, we're going to take care of this population of
    patients. If we do really well, we improve health, et cetera,
    there's a reward on that end. If, on the other hand, we do a
    bad job taking care of these patients, we share some of that
    risk.
        And I don't know if in contracting--I think you touched on
    the shared risk award fees, et cetera. Have you noticed in that
    type of contracting that you actually get better predictability
    when not doing something that we know how to do and is pretty
    predictable but something where there is some risk involved?
    And Ms. Chaplain, if you want to answer that or, Mr. Martin, if
    you want to take that.
        Mr. Martin. Let me just toss in that over the last ten
    years, NASA has moved to a new procurement mechanism, the
    funded Space Act Agreements, particularly to spur development
    of transportation capabilities for cargo and crew services to
    the International Space Station. Now, NASA contributes
    significant--billions of dollars--to the funded Space Act
    Agreements, but the commercial companies also have a
    significant financial stake in the game. So having them have
    their skin in the game as well to develop these private
    capabilities of which NASA will be procuring as a service, I
    think is interesting and has been relatively successful.
        Has it increased cost schedule and timing? Not
    particularly.
        Mr. Bera. Mr. Jurczyk?
        Mr. Jurczyk. Yes, as I said before, we choose kind of--
    either a FAR-based, you know, contract, either cost
    reimbursement or fixed price or a public-private partnership
    where it makes sense. Particularly public-private partnerships
    where there's shared strategic common interests between
    ourselves and an industry partner or partners, that makes a lot
    of sense, and therefore, there--we also share the risk there in
    that partnership.
        We did do a reimbursable Space Act Agreement, a funded
    Space Act Agreement for cargo. We've kind of moved away from
    that approach because of our ability to have insight and
    manage. And our latest public-private partnerships have
    actually been through fixed-price contracts with cost-sharing
    where we use the FAR rules to manage the relationship and allow
    the contractor to contribute resources and share the risk.
        Mr. Bera. All right I'm out of time, so----
        Chairman Babin. Thank you very much.
        And now, I'd like to recognize the Chairman of the full
    committee, Mr. Smith from Texas.
        Chairman Smith. Thank you, Mr. Chairman.
        Ms. Chaplain and Mr. Martin, a lot of NASA contractors seem
    to not be able to stay on schedule, they fall behind, and they
    end up with cost overruns and fail to perform as we expect them
    to do. In the 2018 NASA Authorization Act, we have a watchlist
    for contractors who don't perform well.
        And let me--before I get to my specific question, let me
    just say that I think the American people are rightfully
    sometimes frustrated by the Federal Government when things go
    wrong, when projects end up not being performed as they should,
    when there are cost overruns, when the deadlines are missed.
    And somehow no one is held accountable; no one is responsible.
    It just happened. And I think that is frustrating to the
    American people when they see projects that cost millions if
    not billions of dollars more than expected.
        So I'd like to ask you all who you think would be good
    candidates for that watchlist. The watchlist is just that,
    these are contractors who need to be watched more closely, who
    need to be reminded of their contractual obligations and
    perhaps sanctioned if they don't improve their performance.
    But, given your investigations, who are some of the contractors
    that we might consider putting on such a watchlist? And, Ms.
    Chaplain, start with you if we could.
        Ms. Chaplain. It's a difficult question because in some
    cases there's a shared responsibility between NASA and the
    contractor, so it's hard to parse out who's really responsible
    for that overrun. Even when it comes to like a workmanship
    issue, there could be some shared responsibility there.
        If you look at the provision you were talking about, there
    are a couple projects in our list where performance has been
    bad consistently over time, and NASA has actually canceled or
    proposed canceling a project or is looking at whether to do
    that because--
        Chairman Smith. Okay.
        Ms. Chaplain. --contractor performance. In those cases--
        Chairman Smith. And who were those contractors?
        Ms. Chaplain. One is--for the SGSS project, that would be
    General Dynamics, so that project is being looked at.
    Performance has been a long-standing issue on that.
        Chairman Smith. Okay.
        Ms. Chaplain. The other one was the RBI Instrument, which
    is a weather satellite sensor. That one was proposed for
    termination. That was Harris Corporation and formerly Exelis.
    That--those are the more extreme cases--
        Chairman Smith. Okay.
        Ms. Chaplain. --that could possibly--but it's ultimately
    like NASA's decision, and they have to--
        Chairman Smith. I understand.
        Ms. Chaplain. --really investigate the situation.
        Chairman Smith. Okay. Thank you. Mr. Martin, in your
    testimony, you made a couple of really good suggestions I
    thought to try to avoid the to-big-to-fail syndrome. What are
    some other ways we can hold contractors accountable? We have
    the watchlist. What are some other things that we can do to
    keep projects on time and on budget?
        Mr. Martin. I think one of them is what you are doing here
    today is an oversight hearing and the proposed hearing several
    weeks from now to focus on the issues specific to JWST.
        Chairman Smith. Right.
        Mr. Martin. I think aggressive oversight by GAO and the
    IG's Office is important, and I think just a general sense that
    folks need to be held accountable for--you know, there's human
    failure, we all fail, but there are avoidable human mistakes on
    some of these projects. For instance, the improper use of a
    solvent on the JWST by Northrop Grumman, inadequate welding on
    the SLS core stage by Boeing, as the prime contractor. So we
    have individual avoidable mistakes.
        We have issues with our international partnerships, which
    are key to the future of NASA. But when the European Service
    Module is 14 months behind schedule, that impacts Orion.
        Chairman Smith. Right. Final question for you and also I
    think for Ms. Chaplain, and it is this, that it is very
    unlikely that NASA's budget is going to see a significant
    increase, say 25 percent, anytime soon. It's just not the
    nature of our spending, and various constraints are going to
    prohibit I think any agency from getting a significant
    increase. We're fortunate, I believe, to have--NASA had sort of
    a flatline budget. So many agencies--other agencies have been
    cut. Yet there are a lot of people and pundits who expect us to
    keep the International Space Station as-is, go back to the
    moon, and then on to Mars, and seem to be able to think we're
    going to do everything all the time.
        I think that in my opinion is not being willing to make
    some difficult decisions. Realistically, I don't think it's
    possible. I think it's very naive to think we can do everything
    all the time. Do you agree with that assessment or is--am I
    missing--is there some magic solution that will enable us to do
    everything all the time? Or are we going to have to take a hard
    look at some of these big missions like--either ones that we
    already have like the space station or others to come like the
    Moon and Mars?
        Mr. Martin. No, you're not missing anything. I think it's
    all about choices. There's a finite amount of resources, and
    you're right, NASA has been very fortunate in the budgets it's
    received over the years. But that's why cost and schedule
    estimation is so important, to come up with realistic cost and
    schedule so you can put it before the decision-makers at NASA
    and in Congress.
        Had NASA been able to say that the James Webb Space
    Telescope was going to cost $8 billion ten years ago when it
    was proposed, then it's a decision. You do James Webb--and I'm
    not suggesting it should or shouldn't have been done. It's
    going to do amazing things when it's up there--but you make a
    decision based on that. But if you say yes to James Webb,
    you're saying no to a lot of other things.
        Chairman Smith. Right. And that's what we have to
    appreciate and recognize and understand.
        My time is up but, Ms. Chaplain, can you give us a really
    brief response to that as well?
        Ms. Chaplain. I think NASA is at risk of having too many
    programs to pay for at one time. Even if you look at what we've
    been looking at over the years, we started out with 15 to 16
    projects. That helped them reduce cost overall.
        Chairman Smith. Okay.
        Ms. Chaplain. Now, we're looking at 26.
        Chairman Smith. Okay. Thank you. Thank you, Mr. Chairman.
        Chairman Babin. Great questions. Thank you.
        I now recognize the gentlelady from Texas, Ms. Johnson.
        Ms. Johnson. Thank you very much.
        Ms. Chaplain, in your 2017 assessment of NASA's major
    projects, you indicated that in October 2015, NASA decided to
    decentralize its independent assessment function and deploy the
    staff to the agency centers in part to better use its workforce
    to meet program needs in areas such as program management and
    cost estimating.
        GAO had previously reported on the potential risk that this
    change could pose for project oversight but stated that it was
    too early in the transition to assess its effect on areas such
    as independence, the robustness of the reviews, and
    information-sharing. So now one year later, are you able to
    tell us whether that decentralization was successful?
        Ms. Chaplain. We haven't seen a real visible impact either
    way yet. We're still very concerned about that move. I think
    it's beneficial to the agency to have centralized expertise in
    those areas. They really can leverage each other a lot.
        Ms. Johnson. Mr. Jurczyk, do you have any comment?
        Mr. Jurczyk. Yes, I think we've moved to a model where
    we're putting the responsibility and accountability of the
    mission directorate to manage the programs to do that
    independent assessment, and so far, they've stepped up to the
    job, and I think they're doing an effective job in implementing
    our spaceflight project management processes, including
    reviews.
        We do still have a cadre of experts in the Office of the
    Chief Financial Officer that have schedule and cost assessment
    expertise that the review boards can draw on. And we've also
    given stewardship of project planning and control to the Office
    of the Chief Financial Officer, and that's been very
    beneficial, and not only this cadre of people for schedule and
    cost estimating but improving our skills and processes and
    capabilities in cost and schedule estimating and management.
        Ms. Johnson. Okay. Let me ask you this. What are the most
    important things that NASA can do to minimize cost and schedule
    growth? And when NASA is faced with an unexpected cost growth
    and schedule delay, what are the tradeoffs that NASA can make?
    And give me some examples of successful tradeoffs.
        Mr. Jurczyk. Yes, so, you know, I think we continue to
    mature and effectively apply the joint confidence level process
    is going to be really important. And I've seen--since 2009,
    I've seen the value of that in budgeting projects at the agency
    based on coming in at the 70 percent confidence level, and I
    think we can do even better there in maturing that process. And
    I've seen success, and I think we need to continue to have
    success there.
        I think we can--we need to continue to focus on development
    of the project management workforce and the program planning
    and control workforce has been noted, including, you know,
    hiring and developing the talent through hands-on project
    management and project experience and training.
        About 15 years ago, we identified a shortage of skills in
    project planning and control, and we've really taken on an
    effort to hire and train people in that area, cost estimating
    and schedule estimating and management, and I think that's paid
    off. We need to continue to do that.
        We talked about independent assessments, and we can
    continue to strengthen independent assessments.
        And then we have capturing and communicating lessons
    learned and looking for systemic issues and challenges across
    programs and putting corrective action plans in place to deal
    with those like the shortage of program planning and control
    staff. We need to continue to do that. And I think all those
    things can lead to improved program project--continued improved
    program project performance.
        Ms. Johnson. Thank you very much. My time is about out, but
    would any other witness like to comment on any of the
    questions?
        Ms. Chaplain. I would just add a couple more things to his
    list. One would be to update cost estimates and schedule
    estimates as risks change over time. We see programs reluctant
    to do that. And then focusing more on quality management
    because these workmanship issues come up all the time. There
    has been efforts to focus on that, but I think more can be
    done.
        Mr. Dumbacher. Congressman, I would like to add also
    there's also--there is a need to recognize that you need
    appropriate skills for the portion of the program lifecycle you
    are in. So development skills are needed upfront in a
    development program, operational skills at the end, and we need
    to make sure that we're working for the right skills at the
    right time.
        Ms. Johnson. Thank you very much. Thank you, Mr. Chairman.
        Chairman Babin. Yes, ma'am. Thank you.
        I'd like to recognize the gentleman from Oklahoma now, Mr.
    Lucas.
        Mr. Lucas. Thank you, Mr. Chairman.
        And thinking about the questions that my colleagues have
    had, Mr. Jurczyk, let's discuss for a moment in January of 2018
    GAO found that the commercial crew program contractors Boeing
    and SpaceX experienced additional schedule delays for their
    demonstration missions and their certification of the vehicles
    for human spaceflight, and these delays could jeopardize the
    ability of NASA to maintain access to the International Space
    Station. Will there be a gap in U.S. access to the
    International Space Station?
        Mr. Jurczyk. No, there will not be a gap in access. We've
    taken actions and we have other actions we can take to minimize
    the risk of a gap, so the first action we have taken is to buy
    three more seats on Soyuz, and that extends the ability to
    access station by that capability and minimizes the risk of any
    gap between our Soyuz contracted seats ending and commercial
    crew coming online.
        There's a couple other things that we're looking at. One is
    adding a third crewmember to the first Boeing crewed flight.
    That will be important. The other is extending missions from
    approximately 140 days to 190 days and being able to space the
    launches--the Soyuz launches out, and these are other actions
    we can take to further mitigate any risk of a gap.
        Mr. Lucas. But you're confident that the direction the
    contractors are going, that we won't have to use those
    measures?
        Mr. Jurczyk. We--this summer, we're engaging in an
    assessment of the schedules for both SpaceX and Boeing, and
    we'll have a better handle on whether we need to take those
    initial measures at the end of the summer. We'd be glad to
    report back to you on that.
        Mr. Lucas. Fair enough. Mr. Chairman, that answers my
    question. I yield back.
        Chairman Babin. Yes, sir. Thank you.
        And now, I'd like to recognize the gentleman from Virginia,
    Mr. Beyer.
        Mr. Beyer. Mr. Chairman, thank you very much, and thank you
    all for being here.
        Ms. Chaplain, you mentioned that it would be helpful to
    have much more frequent updates of cost and timelines, that
    these come very sporadically. I know in the family business we
    update the projections at least once a month. Here in the
    Federal Government we're getting all kinds of monthly reports
    on new-home sales and unemployment claims and new jobs created.
    Why are NASA and the contractors reluctant to update on a
    regular basis when it would be probably a lot easier to
    tolerate?
        Ms. Chaplain. Yes, it would be easier if they continually
    did it because then it wouldn't be such a chore to do it after
    a couple years. But right now, they set the baselines when they
    really start their program, and they don't revisit. And in some
    cases I think they don't want to revisit. They don't want to
    really show to the world like what the cost truly is at that
    point. But you'd really have to ask the programs. I think it's
    a healthy thing to do when you see conditions change.
        In the James Webb program there were a lot of things that
    had changed in a few years. The cryocooler, for example, took
    way longer to manufacture than anticipated. That would have
    been a good time to reassess where the project stood, but they
    didn't do it.
        Mr. Beyer. This may be one of the things as we move forward
    is looking at requiring much more frequent updates on both cost
    and timeline.
        Mr. Dumbacher, this may be more of a rhetorical editorial
    comment, but you write, ``The current budgeting process,
    including the regular use of continuing resolutions, late-year
    appropriations, threats of government shutdowns, result in
    endless, multiple planning scenarios.'' Resolving complex
    technical issues, hold schedules, and predicting accurate
    flight dates is difficult when the budget is constantly in
    flux. Is it then credible to say that Congress plays a role in
    the problems that NASA has with budget and timeline?
        Mr. Dumbacher. Yes, sir, I would say that.
        Mr. Beyer. You don't need to say anymore. But thank you for
    making that so clear.
        Mr. Jurczyk, why not under-promise and overperform? I know
    that's what my children do with me.
        Mr. Jurczyk. Yes. So, you know, our job on--in any given
    program area is to optimize the portfolio and deliver the most
    science or exploration missions that we can for the budget
    given. So we have, you know, taken an approach of having a
    portfolio of small, medium, and large missions and an approach
    where we budget these missions at the 70 percent confidence
    level. We think that balances the risk of projects in
    formulation and implementation against the opportunity cost of
    budgeting more than at the 70 percent confidence level and
    delaying starting new missions. So it's a matter of optimizing
    the portfolios and delivering the most science and exploration
    content we can for the budget that we have been given.
        Mr. Beyer. I would suggest to you that part of optimizing
    that is managing the expectations of the people whose
    expectations you have to----
        Mr. Jurczyk. Yes, we can definitely do a better job at
    managing expectations.
        Mr. Beyer. Mr. Martin?
        Mr. Martin. I think one of the other realistic things is if
    you under-promise, you're in greater danger of not getting your
    project started in the first place, of attracting enough
    excitement and attention to get the project funded. So I think
    what NASA's problem is often is they overpromise, obviously
    overpromise the maturity of the technology.
        I was struck in the--like a lawyer going over the footnote
    on page 3 of our written statement, there's a quote from former
    Administrator Griffin. I think he was current Administrator at
    that time talking about projects, proponents of individual
    missions, downplay the technical difficulty and risk, grossly
    at times, in order to gain new start funds. I think that has
    been a historic problem for NASA.
        Mr. Beyer. You raised two interesting pieces in your
    testimony, Mr. Martin. One was that there's this culture of
    optimism that was too optimistic, and, number two, that we
    needed far more accountability. But at the same time, the
    dilemma with the accountability is we also have a shortage of
    the talent that we need, you know, more than half are over 50
    years old, the challenge with getting the STEM kids. How do you
    ratchet up accountability and not depress, you know, the
    enthusiasm, the sense of worth? And also how do you dampen out
    the optimism in an agency that has to be so optimistic?
        Mr. Martin. It's an incredibly difficult--you're dancing on
    the edge of a knife when you do that because, as you point out,
    you have to have that optimism, that freethinking to really
    think of things that have never been built before, to
    conceptualize them and then actually put--to start bending
    metal on them. So it's an incredibly difficult balance.
        If it was easy, NASA would be doing it. I mean, it is
    rocket science after all, and so it is very difficult. And I
    just think--and, like I said, NASA has brought in a lot of its
    cost-estimating techniques and its JCLs and other processes--
    they just need to force adherence to it, to those requirements.
        Mr. Beyer. Great. Thank you. Mr. Chair, I'll yield back.
        Chairman Babin. Yes, sir. Thank you.
        Now, I'd like to recognize the gentleman from Alabama, Mr.
    Brooks.
        Mr. Brooks. Thank you, Mr. Chairman.
        I am concerned by the perceived transition process away
    from the current operational format of the International Space
    Station. There have not been, in my judgment, enough
    substantive public debate on what this transition involves.
        And with that as a backdrop, I have a question directed at
    Ms. Chaplain, Director, Contracting and National Security
    Acquisitions, GAO; and NASA Associate Administrator Stephen
    Jurczyk. First, has NASA come up with a definition of what
    commercialization of the International Space Station means?
        Ms. Chaplain. We have not been doing work in that area, and
    I don't believe they have yet, but I'll let Steve----
        Mr. Jurczyk. Yes, so let me tell you where we are with I
    would say the more detailed planning of the station transition.
    So we released a solicitation not too long ago for studies,
    industry studies on transitioning space station to some sort of
    collaborative or commercial enterprise. We're getting the
    proposals back in this week, and we'll evaluate those.
        And what we asked for in those studies is the capabilities
    that commercial thinks they can provide us as compared to what
    we need and what we have and we need in the future. The second
    is their technical approach to achieving those capabilities.
    And then third is their business plan. You know, what is their
    business plan? Because, although we don't have a rigorous
    definition, NASA should be a maybe 20, 30 percent user of the
    capability and other government entities and commercial
    entities should also use that capability. We should not be the
    80 or 90 percent, you know, kind of anchor tenant of a
    capability. To me--personally to me, it's not--I would not
    define it as commercial.
        So we're going to get those studies back in December, and
    that will inform a more detailed transition plan. And I think
    we'd be ready to come to you all and present that plan and get
    your feedback and input on it.
        Mr. Brooks. When do you anticipate having that more
    detailed plan that you can present to us that we have a better
    understanding of what this commercialization means?
        Mr. Jurczyk. Yes, we'll get the results from the studies in
    December of this year, so we'll probably need some number of
    months, so probably, you know, first half of next calendar year
    we'll definitely be able to come back to you and lay that out
    informed by that--those industry studies and industry input of
    what looks feasible in the mid-'20s time frame.
        Mr. Brooks. So you would be in a position to answer the
    question in the first 6 months of 2019? Is that correct?
        Mr. Jurczyk. Yes. And I can take a question to get back to
    you on a more exact date if you'd like.
        Mr. Brooks. All right. Thank you.
        Mr. Martin, your audit of commercial resupply services to
    the International Space Station report dated April 26, 2018,
    notes that, quote, ``SpaceX's average pricing per kilogram will
    increase approximately 50 percent under CRS-2 while Orbital
    ATK's average per-kilogram pricing will decrease by roughly 15
    percent.'' The major difference between those contracts is
    SpaceX's introduction of reusability. SpaceX has noted multiple
    times that customer should not expect substantial discounts on
    reused hardware.
        My question is this: Are you concerned about whether
    taxpayers will save money with reusable rockets? And second
    follow-up question is, is it possible reuse may end up costing
    NASA and the United States taxpayer more overall?
        Mr. Martin. Steve could probably answer this more
    specifically, but I believe there is a slight reduction in the
    area of 3 to 7 percent for use of a reused SpaceX rocket. I
    think it's happened once if not twice so far for commercial
    cargo, so there is a slight reduction.
        And am I concerned? I mean, it's a safety issue, and so the
    launch services people need to assess the specific rocket, and
    they have access to the rocket, before they authorize them for
    launch.
        Mr. Brooks. Well, Mr. Jurczyk, since Mr. Martin pointed the
    finger at you----
        Mr. Jurczyk. Yes.
        Mr. Brooks. --with your insight, can you----
        Mr. Jurczyk. Yes, I think----
        Mr. Brooks. --share what insights you may have on that
    question?
        Mr. Jurczyk. Yes, I think Mr. Martin is right with respect
    to the marginal cost reduction, with the introduction of the
    reusability of the first stage of the Falcon 9, and they're
    also working towards reusing the fairing and they recently
    are--announced that they're looking at approach to reuse the
    upper stage also.
        I think as we--as they gain experience and as anybody gains
    experience operationally with the system and they gain
    experience with reuse, I think there is opportunity to further
    reduce the risk and reduce the cost, my understanding what the
    condition of the hardware is when it comes back and how much
    effort it takes to recondition it, to re-fly it, so there's
    opportunity there. I'm not able to predict what additional
    savings they might achieve through reuse at this point.
        Mr. Brooks. Is there any chance you could expound on
    increased risk factor of using a novel approach, i.e., reusable
    rockets?
        Mr. Jurczyk. Yes, we're--like Mr. Martin said, we're--the
    Launch Services Program is in the process of assessing that
    risk for all missions, and I can take a question for the record
    on that to get back with you when that assessment will be done.
        Mr. Brooks. Please. Thank you, Mr. Chairman.
        Chairman Babin. Thank you. I now recognize the gentleman
    from Pennsylvania, Mr. Lamb.
        Mr. Lamb. Thank you, Mr. Chairman.
        Everyone, I appreciate you highlighting the difficult
    position that you're in when it comes to unpredictable funding
    streams, threats to shut down the government, funding by CRs,
    that kind of thing. I'm trying to learn a little bit more about
    how that actually affects you on the ground day-to-day. This is
    a question for anyone. Can you share some more specific
    examples of how that might have affected a particular project?
        Mr. Dumbacher. Well, I'll be happy to take that because I
    lived it for a while. And what happens, Congressman, is when
    you're working on a program and you're trying to put the plan
    together for the future and what's my workplan for this year,
    what's my workplan over a five-year budget horizon? And as I'm
    working through the appropriations budgeting process, every
    time I'm--I have to plan to a different number, that means I've
    got to go back through that planning iteration process.
        So at a time when the President's budget request was
    significantly different from what was typically coming from the
    appropriations process, it was necessary to--A, to do the plan
    that was supportive and was inclusive in the President's budget
    request, and I had to be ready as a program manager that if
    additional appropriations did come in, I at least had an
    ability to plan and be able to react to that.
        Mr. Lamb. And what type of program were you managing that
    you're talking about right now?
        Mr. Dumbacher. At the time I was doing this, this was the
    beginning of the SLS and Orion programs.
        Mr. Lamb. Okay. And so that was a program that was supposed
    to take how long kind of from start to finish?
        Mr. Dumbacher. At the time I was there, we were looking at
    first launch in the 2017, 2018 time frame, and in the--while
    I--during my tenure as the Program Director for SLS and Orion,
    we had to deal with a government shutdown, continual
    negotiations on both ends of Pennsylvania Avenue, and then in
    addition to that, while I'm doing all that planning, my--the
    team's focus is pulled away from the day-to-day management of
    these technically complex jobs. So we were working through all
    of that and actually had to deal with a government shutdown and
    work through that and then all the multiple planning cycles.
        Mr. Lamb. Thank you. And, Ms. Chaplain, it seemed like you
    had something to add.
        Ms. Chaplain. I think I've heard very similar things from
    other agencies that I oversee like Missile Defense, that kind
    of constant re-planning and the chaos and time that it
    consumes. But another real example of like the impact of a
    shutdown can have is a cryocooler--or cryo test at the end of a
    program like James Webb, it might take a couple weeks to get
    the facility ready for this test and then two weeks to cool
    down, and the shutdown--I think there was a shutdown threat
    while there were doing that test this time, and they were
    really worried, like if we had to shut down, we're going to
    lose a whole month of time.
        Mr. Lamb. Okay. Thank you very much.
        And, again, a question for really anyone because I think
    it's pressing, but some of you have highlighted the workforce
    development issues that you have within NASA, and I think it
    was Mr. Dumbacher that talked about young people especially
    leaving NASA for higher-paying jobs in the private sector,
    which is a challenge obviously across the government. It
    happens in the military, too. But if there was one reform you
    could suggest or one thing that we can improve or strengthen to
    retain some of this talent and to attract new talent, what
    would it be?
        Mr. Dumbacher. Well, as I stated in my testimony, the one
    thing I would recommend is good real hardware programs that--to
    go address those technical needs that we need for space
    exploration and for the NASA mission but to go give these
    students, give these young professionals real hands-on hardware
    experience because that informs their capability and informs
    their experience throughout their career.
        Mr. Jurczyk. Yes, I would just like to second that. The
    first project I worked on after I got out of college was a
    spaceflight instrument development project in-house at NASA
    Langley Research Center, so I was able to design, build,
    integrate, test all the way through environmental test flight
    hardware, and that experience was critical throughout my entire
    career as I moved to a Subsystem Manager and Systems Engineer
    and Project Manager and then Line Manager. So I would just
    second that. I--it--without that experience, I don't know how I
    would have been able to be as effective as I was as I moved
    through my career at NASA.
        Mr. Dumbacher. And if I may just give you a little bit of a
    story, too, if you stand back and look at--there are a group of
    people of which I was one, Robert Lightfoot was one, where we
    had the ability and we were asked and required by our mentors
    to actually test shuttle main engines in-house, and we tested
    the new technology that ultimately became the final flight
    configuration for shuttle. And that hands-on experience--they--
    our mentors, our leaders forced us into that because they knew
    that it fit into the long-term career.
        Mr. Martin. Just echoing the same thing, we've heard from a
    number of Project Managers that we've spoke with, their
    frustrations about their spending--agency engineers are
    spending most of their time overseeing contractors' effort, and
    that's frustrating.
        Mr. Lamb. Thank you. Thank you, Mr. Chairman.
        Chairman Babin. Yes, sir. Thank you.
        I'd like to recognize the gentleman from Louisiana, Mr.
    Higgins.
        Mr. Higgins. Thank you, Mr. Chairman. Mr. Chairman, it's
    uplifting to see these young Americans here today, these NASA
    interns, and I hope you young men and women are paying
    attention to these budget discussions. We are a nation that's
    $20 trillion in debt. And should this body ever manage to
    produce a surplus, say, $1 billion, it would require 20,000
    years of $1 billion surplus to address a $20 trillion debt.
        So I'm prayerful that NASA has a spirit of doing more with
    less because not only are individual projects at risk, but
    certainly anyone can recognize that a $20 trillion debt puts
    the entire stability of all programs at risk in every
    government agency. I'm very hopeful that you young Americans
    are paying close attention to this conversation.
        Mr. Martin, I'm concerned about the culture of optimism
    that you referred to and the too-big-to-fail attitude amongst
    Project Managers. But I understand their perception that their
    projects are too big to fail because in every case a tremendous
    amount of American treasure has been invested in that project,
    and therefore, it's quite logical for these Project Managers to
    have this cavalier attitude of too big to fail. What can this
    Committee do, what can Congress do to ensure projects are
    developed and managed within their budget constraints,
    including--I'd like your thoughts, sir, regarding
    accountability for our contractors within these projects.
        Mr. Martin. Again, I think more frequent conversations with
    Members of Congress about the status of individual projects is
    important, more fidelity to the cost estimating that NASA does
    right now, and then the occasional example that projects large
    or small are going to be terminated if they go too far over
    cost and schedule. And in preparation for this hearing, I think
    the last project that I remember being canceled was something
    called GEMS. It was a telescope that was supposed to look for
    evidence of black holes, and it was a smaller program from
    NASA. It was capped at $105 million. And then partway through
    formulation, they realized in an independent cost assessment
    that it was going to be 20 or 30 percent over that $105 million
    cap, and NASA canceled it. And it got people's attention.
        Mr. Higgins. Generally speaking, the contractors that are
    involved in cost overruns for NASA projects, large projects,
    these are for-profit companies, are they not?
        Mr. Martin. They are, sir.
        Mr. Higgins. And has that ever been addressed within the
    leadership at NASA, that, you know, most Americans, if we
    receive a bid from a professional contractor to perform a
    particular service, then we expect that service performed for
    the price that was bid. And they're held accountable legally by
    civil law, and there's a certain expectation of performance
    when you're giving a bid. And yet within the Federal Government
    and certainly within NASA's large projects there seems to be an
    attitude of well, we're not really accountable for the actual
    bid that we presented, and we won't be forced to perform.
        Mr. Martin. He's NASA leadership.
        Mr. Jurczyk. Okay. So, yes, the--most--a lot of the time
    we're doing things--building--designing and building systems
    for the first time that no one else has ever built before, and
    so in those cases we use a cost reimbursement contractor. And
    the incentives--and we use incentives to hold the contract
    accountable through a performance evaluation plan. And those
    incentives are tied to fee, usually award fee, and that is
    their profit. So if they do not perform and--they should get a
    low score against their performance evaluation plan and either
    receive much less profit or no profit depending on how we
    weight the incentives in the plan and how they're scored.
        So given the high-risk nature and--the nature of what we
    do, very complex systems, very high-risk with new technology,
    we take that approach, and then we hold them accountable. And
    the ultimate price to pay for them if they don't perform is
    loss of--complete loss of profit.
        Mr. Higgins. Gentlemen, thank you for your response.
        Mr. Chairman, my time has expired. If there's a second
    round, I have a question for Ms. Chaplain.
        Chairman Babin. Yes, sir. Thank you very much.
        Now, the--Mr. Foster.
        Mr. Foster. Yes. Thank you. And I guess I'd like to start
    just by making an observation about the--you know, the amount
    of funding that you can think about having in the next decades.
    Last week, the Federal Reserve made the historic announcement
    that household net worth in the United States, the wealth of
    Americans, just went over $100 trillion. This is up $45
    trillion since President Obama signed the stimulus, reversed
    the economic collapse, and triggers the economic growth that's
    going on today. So when people tell you there is not enough
    money to do this or that, the scale for that is what fraction
    of $100 trillion might we think about, you know, using to
    travel to Mars or wherever--whatever your dream is.
        I also want to say that I resonated--as a former Project
    Manager and someone doing technical components for large
    federal projects, I very much resonated with your desire to
    retain in-house expertise. It is very, very difficult to manage
    a project if you've never done it yourself. And so when I
    decided that I had to manage a group doing a large number of
    integrated circuits, I learned all the integrated circuit
    design control tools and made integrated circuits myself before
    I decided that now I could sit at the top and emit
    specifications for other engineers.
        And this is crucial, and we have to look very carefully
    when we--this rush to privatization runs the risk of losing the
    in-house expertise that will ultimately cost more money because
    you'll have projects that are not managed as well as they could
    be. So I just--we ought to be very cognizant of that as we
    contemplate this transition.
        Now, you know, when I think about cost overruns, you know
    they're sort of two big general classes. The first ones are in
    enthusiast cost estimates, you know, in the initial scoping of
    a project, the initial scoping is always done by people who are
    advocates for the project, and then you have to get adults in
    the room with experience to actually pull back and say, okay,
    how does this compare to actual cost?
        The other one is legitimate technical risk. And I would
    just like to say that I would hope that my colleagues in
    Congress would be much more tolerant of technical risk. You
    know, it is okay to take significant technical risk. And if you
    assemble a group of experts that say success is not assured but
    this looks like a good bet and then it turns out you lose the
    bet, then Congress should be, you know, very understanding and
    tolerant but much less tolerant when projects are approved when
    everyone in the room knows the--you know, I don't want to point
    fingers, but I'm sure in your minds you know several projects
    that have been approved where a large number of the people knew
    that you weren't really going to get the project done for that
    cost. And it's not just NASA. This happens everywhere in the
    government.
        And so I just was wondering, are there ways that you can
    identify retrospectively the times when you've had enthusiast
    cost estimates? Are there any sociological red flags that would
    allow you to say, okay, I'm suspicious that this is not a real
    cost estimate? Yes.
        Ms. Chaplain. I always--I can tell like when I'm
    suspicious. It's usually when there are very grand statements
    made about the program and the achievements that it's going to
    get seem overly exaggerated. And that's when you start
    wondering, are these estimates real?
        What I would say in the case of NASA, I kind of trust the
    process that they have because they do review those estimates
    pretty carefully. They have standing review boards that look at
    them before they make their decisions. They could have more
    independent estimating to kind of compare. That's one thing.
    But I do believe that their processes now, as opposed to a few
    years ago, are pretty rigorous in ensuring those estimates are
    complete.
        I would just add, one thing you said about taking risks,
    you know, that's--you need to still do that. I think there is a
    concern within NASA and other places in the government that
    we're not taking enough technical risk, that we're too afraid
    to do that.
        Mr. Foster. Yes, I concur.
        Mr. Martin. With respect to science missions, NASA relies
    extensively on the findings of the National Research Council
    and their decadal surveys that identify specific projects, so I
    think that's another check as opposed to----
        Mr. Foster. No, they don't do cost estimates. They're sort
    of given external estimates is my understanding.
        Mr. Martin. I think they do cost--they don't do very good
    cost estimates, but they do cost estimates.
        Mr. Foster. Yes. That's where you need the expertise and
    judgment, at that stage. Yes.
        Mr. Dumbacher. And if I may, Congressman, is when I think
    back on my career and some of the places where I've seen this
    problem occur the most, one key thing stands out, and that is
    have the people doing the cost estimate be the ones that will
    be held accountable for the program execution. I have seen a
    couple of instances where the people making the initial
    estimate putting the plan together knew that they were going to
    be moving on to something else and then they brought the new
    person and the new person was what's this?
        I think if you--if there is an air of accountability and
    they know that they're ultimately accountable for that cost--
    for executing to their cost estimate, that starts to get the
    behavior where I think you want it sociologically.
        Mr. Foster. Thank you. And it's--well, there's a whole set
    of questions when you go to an external contractor model, who
    does the cost estimate and who takes the responsibility in that
    model?
        I guess I'm out of time here.
        Mr. Brooks. [Presiding] Thank you. The Chair recognizes
    Congressman Dunn from Florida.
        Mr. Dunn. Thank you very much, Mr. Chairman. Jump right in
    here.
        Mr. Jurczyk, the Canadian Space Agency last month canceled
    its participation in WFIRST project for budgetary reasons. In
    your assessment what will the impact be to the technology
    development and the cost which results from CSA's decision to
    pull out of the WFIRST?
        Mr. Jurczyk. Yes, so that decision was factored into the
    projects re-planning after the independent review of WFIRST and
    was factored into the plan they brought forward to move from
    phase A to phase B. So they've been able to adjust scope and
    adjust their cost and schedule estimates to stay within the
    $3.2 billion and still without the Canadian contribution, so
    that----
        Mr. Dunn. How does that affect the technology development?
        Mr. Jurczyk. I don't think it significantly affects the
    technology development. I think that the project has a really
    good plan to early on develop prototype hardware----
        Mr. Dunn. All right.
        Mr. Jurczyk. --to reduce the risk of that element, as well
    as other elements of high risk----
        Mr. Dunn. How about the mission itself? Does the
    capability--the mission goals, do they change because----
        Mr. Jurczyk. No. No, the level-one science goals do not
    change, and they will meet the requirements of the mission as
    defined in the NRC decadal survey for astrophysics.
        Mr. Dunn. That's great news. So the '18 omnibus bill
    required a lifecycle cost estimate by May 22. That's behind us.
    When will that be submitted to Congress?
        Mr. Jurczyk. We will get you that within the next couple of
    weeks. It's been done, and they're just wrapping up the
    documentation, and it will be here hopefully within the next 2
    or so weeks. That's our plan.
        Mr. Dunn. Great. So many people here on the panel have
    called the assessment--many assessments, that you need stable,
    predictable funding to plan. So let's close our eyes just for a
    minute and imagine that Congress might provide multiyear
    funding authority. It's a pleasant fiction, I know, but let's
    imagine that. In that scenario, how would that--how would this
    authority change your planning for your programs?
        Mr. Jurczyk. Well, I think it would allow us to only plan
    once and execute to that plan and deal with the challenges that
    Mr. Dumbacher had articulated before.
        The one example that we have of getting multiyear funding
    was OV-105, which is the replacement orbiter after the
    Challenger accident where Congress appropriated multiyear
    funding for that project. And they were very successful in
    executing on schedule and on budget with the profile that
    ramped up, peaked, and ramped down like any project--rational
    project plan should, and having the money--the adequate money
    when they needed it, so that's just an example of what you're
    talking about.
        Mr. Dunn. So that might actually be good for a lot of
    different agencies in the government?
        Mr. Jurczyk. For any large complex program that's going to
    take multiple years to execute, I would think so.
        Mr. Dunn. I'm thinking Ms. Chaplain would love that, right?
        So let me--in our limited time, so again for--well,
    actually, Mr. Jurczyk, you may be under constraints, unable to
    answer this. I think we're all disappointed that the James Webb
    Space Telescope cost overruns missed--and missed deadlines.
    What programmatic changes would you make to that program to
    prevent that in light of that failure? Can you answer that?
        Mr. Jurczyk. I can tell you what we have done----
        Mr. Dunn. Okay, good.
        Mr. Jurczyk. --to date, and so the first is a series of
    actions that we worked on with Northrup Grumman. So, first of
    all, we completely restructured the I&T organization in
    Northrup to flatten it and be able to more clearly hold people
    accountable for getting through the integration and test
    program. That also has allowed them to identify and resolve
    issues in a more timely manner to minimize the impact of those
    issues.
        We've also added staffing to the I&T team out at Northrup,
    and we've really strengthened the mission assurance function
    and personnel out there to deal with some of the workmanship
    and quality issues that were mentioned by Ms. Chaplain and
    others to try to avoid these human errors that have caused
    schedule delays. Like was mentioned, a small error or problem
    has a very large effect on a program like JWST.
        Mr. Dunn. I can well imagine. In the 30 seconds remaining,
    Mr. Martin, do you have anything to add to Mr. Jurczyk's
    comments on that?
        Mr. Martin. Yes, we have not done significant oversight of
    JWST. Congress directed----
        Mr. Dunn. How about you, Ms. Chaplain?
        Ms. Chaplain. Yes, I believe the actions they've taken have
    been reasonable. I would note they were--already had some
    onsite presence over at NGAS, but we'll be looking to see how
    effective those actions are as we do our next review.
        Mr. Dunn. Well, here's wishing you multiyear funding
    authority. And with that, Mr. Chairman, I yield back.
        Mr. Brooks. The gentleman yields back.
        The Chair recognizes Representative Lofgren from
    California.
        Ms. Lofgren. Thank you, Mr. Chairman. I think this is an
    important hearing, and most of the questions have been asked,
    but I would like to think about what further Congress could do
    in addition to avoiding the kind of situations Mr. Lamb
    addressed, the shutdowns issue, the inconsistency between the
    President's requested budget and what's appropriated that lends
    uncertainty to the planning process. What could Congress do to
    limit the uncertainty in funding other than those two issues?
    The idea of a multiyear funding program for large projects is
    valuable, but can you give us further guidance to stem losses
    through our own actions?
        Ms. Chaplain. I'd--I'll start. I would say avoid over-
    specifying what your expectations are, avoid setting dates for
    a program, avoid choosing, you know, how they're going to do it
    because that limits their choices even more in what they can
    do.
        Mr. Jurczyk. Yes, I would just echo that. We seem to be
    getting more and more direction through the appropriations
    process, particularly through the report, and we're--the
    expectation is we will follow that direction. And that
    constrains the solution space and our ability to manage
    effectively sometimes, so I'd say just to echo what Ms.
    Chaplain said. I think that's one additional thing I could
    think of.
        Mr. Martin. With respect to the funding issues, not only
    the actual dollar amount, it's when that dollar amount comes,
    the proper phasing----
        Ms. Lofgren. Right.
        Mr. Martin. --of the appropriation has impacted NASA
    programs.
        Mr. Dumbacher. I would add work to make sure that the
    environment in which we have these discussions is less punitive
    and more objective and more willing to hear the risks and
    understand the issues. I think we have to be careful that a lot
    of the--that we can be--you've inadvertently set up a vicious
    cycle of oversight leads to conservativism leads to more
    oversight, and it just keeps going around in a circle. And I
    think what Congress can do and this Subcommittee can do because
    of its oversight activities is to help establish an environment
    that allows more open communication on these kinds of issues.
        Ms. Lofgren. Well, I think the point that Mr. Foster made
    all scientists know, which is failure is a learning experience.
    I mean, science is testing and not knowing the answer before
    you start. And we need to foster that sense of discovery and
    willingness to take risks if we're going to be successful.
        Let me just close with sort of a parochial question. I
    represent part of Santa Clara County. NASA Ames is located in
    Santa Clara County. And thinking about the demographic issues
    we face in NASA with so much of the workforce being over 50
    years of age, the NASA Ames facility is located in a key part
    of the country. It's in Silicon Valley, and there's a lot of
    synergy between what's going on in the tech community and NASA
    Ames. And although it's very expensive to live in Santa Clara
    County, actually, they just built some housing for NASA
    employees so that it's possible to maintain their--that
    synergy.
        I'm just wondering in terms of that facility as well as
    others that are co-located with technology centers, what
    further we can do to move top scientists away from really
    better-paying jobs into the agency to make young people who are
    smart and who are good scientists want to work in NASA? If
    anybody has an answer to that.
        Mr. Dumbacher. I'll take a try at it. I think what the
    young people want now is similar to what the young people
    wanted when I got out of school. They want exciting work, they
    want to know that they have an opportunity to make a
    difference, and they want to help solve today and future
    problems. And I think providing those and then in addition to
    the infrastructure kind of options that you have described
    would be extremely beneficial.
        I think they want to--from my experience teaching at Purdue
    for a few years is if you hit those first three bullet, then
    the students will come. That's why they go to SpaceX and Blue
    Origin. They see exciting work. That's why they still want to
    come to NASA because NASA still has that cachet that it's
    always had. So exciting work, help make a difference, and do
    something quick, and I think you'll be a long way down the
    road.
        Ms. Lofgren. Thank you very much. I see my time is expired,
    Mr. Chairman, so I yield back.
        Mr. Brooks. Thank you for your questions and participation.
        The Chair next recognizes Representative Rohrabacher of
    California.
        Mr. Rohrabacher. Thank you very much, Mr. Chairman. I
    apologize for being late to the hearing. Obviously, two
    important hearings have to happen at exactly the same time,
    which perhaps leads me to the first point, which is we need to
    make sure we hold NASA accountable, but I have to assume that
    the Congress isn't doing its job all that well either. And when
    we're talking about continuing resolutions and omnibus bills, I
    mean, that's a reflection on the fact that we aren't doing our
    job here as well. So please don't think if there's any
    criticism here coming from this end that we don't realize--or
    at least some of us don't realize that there is justified
    criticism of the way Congress is doing its job.
        Let me ask a couple of questions here about these cost
    overruns and--that seem to be around. They've been around as
    long as I've been around. And let me ask you this. Is a lot of
    this intentional low bidding on the part of companies in order
    to achieve a contract? Is this part of that? And to whoever can
    answer that question.
        Mr. Jurczyk. You know, we have a pretty rigorous request
    for proposal and proposal evaluation process, including
    independent cost and schedule estimates by the government to
    ensure that what's being proposed is actually executable.
    What's being proposed in that contract is executable.
        Mr. Rohrabacher. So it's not to say you don't see this as a
    scheme by some big corporation to intentionally bid low, get
    the contract, and then realize we're going to have to pay for
    it later on?
        Mr. Jurczyk. I do not.
        Mr. Rohrabacher. Okay. Anybody believe that at all? Good.
    Thank you. That helps our understanding of this.
        And a lot of these companies that do have the cost overruns
    are companies that are worth billions and billions of dollars
    themselves. If--what penalty does a company have that goes
    through a major cost overrun and doesn't meet its commitments
    through a contract? What's the punishment?
        Ms. Chaplain. So, as we discussed earlier, you can take
    actions to punish companies just through award and incentive
    fees, but often, they're tied to multiple objectives so you're
    limited in terms of what you can do. So the ultimate thing is
    just to cancel a program if you really feel like----
        Mr. Rohrabacher. Well, what about the next program? Can a
    company that did not meet its contract be denied the next
    contract or a contract down the road because they have not met
    their obligation?
        Ms. Chaplain. Yes, I think that's possible. And the
    proposal that's in your bill about a contractor watchlist, they
    could go on that list if they're not performing well and that
    NASA will not deal with them in the future for a period of
    time. That is one option. I didn't know if you want to comment.
        Mr. Rohrabacher. Yes, maybe you could expand on that for
    me.
        Mr. Jurczyk. Yes, so what we do now--first of all, we have
    a very robust acquisition integrity program within the agency
    that's run by our Office of Procurement and our Office of the
    General Counsel and so, you know, they, along with the
    programs, look at contract performance and we'll use the FAR
    process for suspension and debarment for lack of performance or
    for waste and abuse, you know, so we use the existing process.
        The other thing we do is we have the contractor performance
    assessment reporting system, so when we evaluate a contractor
    on a regular basis, that assessment goes into that system, as
    well as the assessments of all of the departments and agencies
    within the Federal Government, and then not only NASA but other
    departments and agencies can draw on that to use in assessing
    past performance of the contract to determine whether to award
    them anything in the future.
        Mr. Rohrabacher. Well, it seems to me that we have to be
    much more diligent on--in that area and--if--unless we have
    accountability and responsibility for these things, we can
    expect to have more problems. And I have to assume that we did
    not have the amount of discipline in our system and the
    accountability that will deter companies--perhaps maybe
    companies that make bids should be held responsibility for that
    bid, meaning that the money that's lost perhaps should be
    absorbed by the company. As I say, these are multibillion-
    dollar companies, and if they're going to be taking the
    taxpayer money and failing in what they're claiming to do, why
    should the taxpayer pick it up?
        We have--we just mentioned a--we have $20 trillion debt,
    and the gentleman mentioned how that is--if there's anything
    that's going to keep us from going into space, it's going to be
    the total disintegration of our economic system so that we
    can't afford any of this stuff.
        I would--also, let me just note that we're also going to
    have to--we have a $20 billion budget for NASA, $20 billion. We
    should be able to do a lot with $20 billion. And let me just
    note that when I first got involved that I realized that the
    budget wasn't enough to accomplish the missions, and that's why
    I dramatically--I tried to focus totally on international
    cooperation and private sector investment. So let's hope that
    we--that's one avenue of making more revenue come in, but we
    also have to make sure we pay attention to what this hearing is
    all about is making sure that we're managing the actual
    projects themselves in a way to minimize the loss of very
    scarce dollars.
        So thank you very much, Mr. Chairman.
        Mr. Brooks. Certainly. The Chair thanks the gentleman for
    his participation.
        We're nearing the noon hour and we're going to finish by
    noon, but from what I understand, there may be a member who
    wishes to ask a second set of questions, and as long as we are
    able to do so within that time frame, the Chair is most
    comfortable in doing so.
        Mr. Higgins, did you want to do follow-up?
        Mr. Higgins. Thank you, Mr. Chairman. I have one question.
        Mr. Brooks. Well, one second. The Chair recognizes
    Representative Higgins of Louisiana for that follow-up.
        Mr. Higgins. Thank you, Mr. Chairman, for recognizing me
    and allowing me to ask one question to Ms. Chaplain.
        Ms. Chaplain, NASA has received multiple recommendations on
    ways to better develop cost and schedule estimates, as well as
    perform joint cost and schedule confidence level analysis
    during the beginning stages of the implementation phase of
    large projects. In December 2012, it was recommended that the
    JWST project update its JCL. According to the report, NASA
    concurred with this recommendation, and yet no steps were taken
    to implement it. Further analysis indicates that, if
    implemented, an updated JCL may have prevented schedule delays.
        Among the many known and unknown challenges that NASA
    encounters regarding cost and schedule continuity, can you
    elaborate on why this recommendation was purposefully
    overlooked?
        Ms. Chaplain. At the time they did concur, as you said, so
    I didn't ever have an official reason why it was overlooked. I
    think they just were reluctant to relook at their costs. A
    couple years later, we recommended that they at least do
    something similar to do a cost schedule risk analysis and
    really take a deep look at their risks, and we even were going
    to do that ourselves, working with the contractor, but that was
    rejected by the contractor. And then it wasn't until they were
    getting ready to work with the launch agency on setting the
    date that they actually did a schedule risk analysis themselves
    and realized how far behind they really were.
        Mr. Higgins. Ms. Chaplain, thank you for your candid
    answer.
        Mr. Chairman, thank you for allowing me to ask a second
    question.
        Mr. Brooks. Certainly.
        Any other member wish to ask any other follow-up questions?
        Seeing none, I thank the witnesses for their valuable
    testimony and the Members for their questions. The record will
    remain open for two weeks for additional comments and written
    questions from Members.
        This hearing is adjourned.
        [Whereupon, at 11:57 a.m., the Subcommittee was adjourned.]

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