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The Starship Enterprise Nasa Turns Shuttle Program Over To Private Company, A Joint Venture Into Space

TUESDAY, OCT. 1, 1996

NASA hands the keys to the space shuttles over to a private company today, hoping the private sector can run the multibillion-dollar program more cheaply than the federal government.

In a $7 billion, six-year contract, NASA is turning over daily shuttle operations to United Space Alliance in phases. The first phase begins today with the consolidation of 12 contracts worth $1.2 billion.

The space alliance said it plans to cut its portion of shuttle costs by at least $400 million over the life of the contract. Consolidating computer contractors already has saved $100 million, spokeswoman Barbara Zelon said.

After the $400 million savings is achieved, the space alliance - a joint venture of shuttle-builder Rockwell International and shuttle-processor Lockheed Martin - will get 35 cents for every additional $1 it saves NASA and will share cost overruns in a similar manner. A clause in the contract allows NASA to withhold the profits if agency inspectors say safety is less than “very good.”

NASA officials hailed the contract, the space agency’s largest, as historic. It can be expanded to 10 years for $12 billion. The contract was signed last week.

“This is a very, very major turning point for this agency,” NASA Administrator Dan Goldin said. “They are going to do a job that is going to cause the shuttle to operate safer and cause the shuttle to operate for a lot less money.”

Goldin compared NASA’s new role to the Federal Aviation Administration overseeing airline safety. Critics said the changeover only increases safety concerns.

NASA plans to sharply reduce its own work force by 1998. Those plans will leave the agency without enough people to provide crucial safety oversight, said John Pike, space policy director for the non-profit Federation of American Scientists. NASA is still looking at how big the cuts will be, but one plan would slash the number of jobs at Kennedy Space Center in half by 2000.

“Given the very small number of people NASA’s going to have left, I think they’re going to have a hard time grading the contractor on safety,” Pike said. “Do you really want ValuJet to run the shuttle, which basically is what they’re doing.”

Norman Parmet, a member of the independent Aerospace Safety Advisory Panel, set up after the Apollo 1 fire, said his group supports the change but is concerned that too much is happening too fast in the shuttle program.

But NASA shuttle program manager Tommy Holloway said Monday in a press conference that the government will have enough people and expertise to keep an eye on the space alliance. NASA is going slower with the changeover than originally planned because of safety concerns.

Still, NASA officials concede that any change involves risk.

“Is it risk-free? No,” said space shuttle program coordinator Steve Oswald, a former astronaut. “Is it something we can manage? Yeah.”

Oswald said NASA had no choice but to privatize the shuttle program.

“This is the only way we’re able to achieve real significant amount of savings in the program,” Oswald said.

The space alliance needs to reduce its work force 7 percent at KSC by 2002. However, the company hopes to reach the goal through retirement and attrition, said Chief Operating Officer Jim Adamson. There are about 6,200 alliance employees at Kennedy.


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