Congress grills NASA about space station cost overruns

Posted: April 5, 2001

NASA administrator Dan Goldin told members of Congress Wednesday that the space agency is still coming to terms with a $4 billion cost overrun on the International Space Station project and may look to its international partners to contribute key station components the U.S. was originally planning to build.

Goldin, the key witness at a hearing of the House Science Committee convened to discuss the overrun, said the $4 billion figure released earlier this year was an "overly cautious" estimate and that the agency was still working to refine that figure.

"I do not want to minimize the seriousness of the situation," Goldin said, adding that "we do not have all of the answers today but we do have an action plan."

The international space station continues to grow in orbit. This view was taken by the astronauts of shuttle Discovery last month. Photo: NASA
Goldin's testimony provided new details regarding the overrun's discovery. The first clues of a major overrun appeared in September, when ISS program manager Tommy Holloway noticed unusually high monthly spending rates on the program. A "quick-look" assessment of budget estimates for 2002 showed a considerable shortfall, prompting NASA to perform a more thorough bottom-up assessment of station costs starting in November. At the same time the agency alerted the Office of Management and Budget of the potential overrun, just three months after Goldin told OMB officials that station costs should "just fit" into the 2002 budget.

The final report on ISS costs, turned in to the OMB on February 1, included the $4 billion overrun estimate later reported in the media. Goldin said Wednesday that this estimate is based on conservative assumptions and includes a number of "low probability threats" as well as a $800 million reserve.

Some members of the committee, remembering past cost overruns, were skeptical that $4 billion was an upper limit to the size of the overrun. "It would be misleading to suggest to anyone that it's $4 billion, period," said Rep. Sherwood Boehlert (R-NY), chairman of the committee. "It's $4 billion plus. Our objective is to make sure that plus is minimized."

When asked by Boehlert if the $4 billion estimate was realistic, Goldin did admit that he is "not comfortable" now because the program lacks adequate budget reserves. "If I saw adequate and substantial reserves I would answer your question more affirmatively," he said. Goldin said it would take another two to three months before NASA could provide a more refined estimate of the cost overrun.

Goldin did say that while he would appreciate more funding for the program, he said he would continue to fit the station within a $25 billion cap on assembly costs approved by Congress last year. This will require cutting back on other aspects of the station, including the controversial plans to cancel habitation and propulsion modules and a crew return vehicle (CRV), as well as restructuring station research plans and canceling lower-priority human spaceflight projects, such as advanced research into Mars missions.

However, he did raise the possibility that some of the modules cut under the current program could be restored through agreements with the international partners, primarily Italy and other European nations. He confirmed rumors that NASA was talking with Italian officials about building a replacement habitation module, discussions that Goldin described as "in the premature phase but encouraging." He also said that there was "interest across Europe" in building the CRV, but added those discussions are "very, very preliminary."

If the European partners could contribute a habitation module and CRV, it could mitigate one of the key criticisms of NASA's plan to tackle the overruns: that a three-person crew would have little time to perform the science that is supposed to be one of the primary purposes of the station. "We going to have to have habitation space on board the station," Goldin acknowledged, "and the only question is whether we are going to go into a 'campout' mode and use the existing places to put the habitation racks or we have a habitation module."

One question Goldin did not answer was why the ISS has had an extraordinary record of cost overruns dating back to its origins as Space Station Freedom in the mid-1980s, when it carried a $8 billion price tag. Another witness, Robert Polutchko, who served on the Cost Assessment and Validation panel that studied the ISS program in 1998, suggested that the overruns were not evidence of efforts to deliberately underestimate costs but were the inevitable results of "success oriented" budgeting philosophies that resulted in optimistic, rather than realistic, estimates.

Pulutchko also blamed the overruns in part on a flat funding profile of about $2 billion a year that is "out-of-phase" with the natural funding profile for a large project. "Budgeting and funding ISS essentially at a fixed annual level introduces a continuing program dilemma and tends to exacerbate an already very difficult and challenging management job," he said.

Despite their concerns about the budget overrun, though, members of the House Science Committee were not especially hostile towards or critical of Goldin; some, in fact, heaped praise on him for leading the agency for the last nine years. Rep. Dana Rohrabacher (R-CA), who has been critical of NASA's handling of Russian participation in ISS and gave the agency a grade of "D" earlier in the hearing, changed his mind somewhat after hearing Goldin's opening statement, changing that grade to "at least a C".

Goldin, and NASA, will need all the support it can get within Congress in the months to come as the fiscal year 2002 budget battle heats up. "We are your advocates on the floor of the House," Rep. Dave Weldon (R-FL) reminded Goldin. "Please do whatever you can to make our job easier to fight for the space station program in the months and years ahead, not more difficult."