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Jacob J. Lew - August 6, 1998

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AUGUST 6, 1998

I am pleased to appear before the Committee today, and address your concerns regarding the International Space Station. The International Space Station continues to be one of the Administration's top priorities. We are committed to achieving the program's fundamental goals of providing a research facility in space that takes advantage of the unique capabilities of humans. We are also committed to cooperation with Russia generally, and to the partnership with Russia and our other international partners. The continued Russian involvement in the program has important benefits to our country, as evidenced by the success of NASA's cooperative activities aboard the Russian Mir space station.

Now NASA is about to begin the exciting next phase of the program, the assembly in orbit of the International Space Station. When the Administration considered in 1993 the merits of continuing U.S. participation in the Space Station program, over ten years' effort had been invested and $10 billion had been spent. And yet, we were still many years away from seeing any Space Station flight hardware in orbit. Now we are only a few months away from the first planned assembly launch. We and our international partners are on the verge of seeing the concept become reality.

Space Station Cost Growth and Russian Contingency

The International Space Station program is an ambitious venture. The technical demands of assembling and maintaining in orbit a space station of this size and capability are unprecedented. It will involve the coordination of fifteen nations. Over forty U.S. and Russian launches will be required to fully assemble the Station.

Given the scope of this undertaking, we are bound to face challenges on technical, cost and schedule issues. We are challenged by both domestic cost growth and continued fiscal problems of the Russian government. Space Station reserves have been expended to address these challenges. Furthermore, the Administration has taken steps to provide additional budget to the program. In FY 1997 and FY 1998, we provided a total of $250 million within NASA's budget to address concerns related to Russian delays. In the FY 1999 budget, we added $1.2 billion within NASA's budget to the Space Station program from FY 1999-2003 to address primarily domestic issues concerning development problems, and provide for a U.S.-developed crew return vehicle. We feel that these funding increases have provided the Space Station program with needed flexibility to address unforeseen issues and development problems. We share your concern about program cost growth and Russian funding shortfalls. We will continue to work with NASA to ensure that the agency and the prime contractor take all steps necessary to contain possible future cost growth within budget and schedule constraints.

The Administration has spent considerable effort addressing the Russian situation, including holding diplomatic discussions at the highest levels of the Russian government and funding backup measures as needed. The President and Vice President have spoken to President Yeltsin and Prime Minister Kiriyenko on separate occasions on the importance of Russia meeting their commitments to the program and the need for the timely delivery of the Service Module. The most recent of these discussions took place during the Vice President's trip to Moscow in July.

Last year NASA initiated the first step in the contingency plan by developing a U.S.-built Interim Control Module that can help accommodate delays in initial Russian hardware. Given continued Russian funding shortfalls, NASA is now prepared to implement an additional step. On August 4, 1998, we approved NASA's submittal of an Operating Plan adjustment to the Congress that would begin modifications to the U.S. Space Shuttle fleet for enhanced ability to meet a significant portion of the Station reboost requirements. This action, aimed at providing additional backup for current Russian contributions, will be funded within the Administration's FY 1999 budget request for Space Station. NASA is also exploring other steps that may be necessary in the future, and we are fully engaged in addressing the risks posed by potential additional shortfalls in Russian funding.

While taking these backup actions, we are committed to and will continue to work with the Russian government to ensure its participation in the International Space Station program. The Space Station is far more robust and capable due to Russian participation, including the many years of experience they bring to this project. NASA has stated that they have learned more about long duration space flight in the last three years on the Russian Mir space station program than they did in the previous 17 years on the Space Shuttle alone -- and there is much more to be learned. We too are concerned about the funding shortfalls the Russians are experiencing, but we are committed to seeing the partnership through with them. We believe it is the right thing to do.

Budget Strategy

As you know, in October 1997, the NASA Administrator chartered the Cost Assessment and Validation (CAV) Task Force, chaired by Jay Chabrow, to perform an independent review of the Space Station program. Published just a few months ago, the report concluded that the program funding and schedule estimates were overly optimistic in light of the complexity of the challenges facing the program. As you know from NASA's previous testimony, NASA agrees with many of the key risks cited in the report and has undertaken efforts to address the most urgent risks within the FY 1999 budget request such as additional testing and training.

We believe that the FY 1999 budget request is sufficient at this time to address the FY 1999 demands with respect to the Russian situation as well as domestic concerns raised by the CAV report. To address these issues, NASA needs the full funding for the President's FY 1999 request for the Space Station and Space Shuttle programs. Consequently, I urge your support for the restoration of the Administration's request in forthcoming Conference action on the VA/HUD appropriation bills. We believe that a significant portion of the funding could be available if the appropriation Conferees were to moderate the high level of earmarks within the NASA budget.

As for the outyears, we have the time to examine these issues as part of our FY 2000 budget preparations this fall. NASA has advised OMB that it would be premature to adjust its Station budget plans until there is a greater understanding of the funding required to respond to the remaining risks on the domestic side such as schedule and budget reserves, as well as Russian contingency options. NASA is aggressively analyzing whether lower cost alternatives are available to mitigate these risks. NASA management understands that the budget is tight and they need to try to control their costs within the human space flight budget and make the tough tradeoffs. It would be premature to act now until NASA completes this assessment, and premature for me to speculate how it will be paid for.

Although many in Congress are seeking a detailed plan today, we must be careful not to act in haste, foregoing better approaches. As one example, in 1995 NASA evaluated a variety of U.S. options designed to provide a temporary backup for the Russian Service Module, including a "Bus-1" and other designs ranging in cost from $500 - $750 million. As the Committee knows, NASA did not pursue any of those options, but just last year was able to proceed with the development of the Interim Control Module that the Naval Research Lab was responsible for developing. The Interim Control Module will cost much less than the original options. Time and patience allowed us to pursue a better choice. We believe the same is true here. We have the time to examine these issues in the outyears as part of our FY 2000 budget preparations this fall, and we will do so.

As OMB previously indicated in our statement for the record for this Committee's May 6 hearing, if additional resources are warranted for Station development, the Administration intends to look first for offsets within NASA while protecting Administration priorities in space and earth science, advanced space transportation, and aviation safety research. We will look for offsets first from within the $6 billion spent annually in the Human Space Flight account, as long as they do not compromise Shuttle safety, and second from other non-priority areas. And, in order to build this Station at the lowest total development cost, reductions or deferrals in other Station activities such as operations, research, and later assembly hardware, may be necessary.

This strategy has come under considerable scrutiny by this Committee, and I want to take this opportunity to share with you the broader issues that have led us to this position. First, additional funding outside NASA is not currently available. The discretionary caps remain tight and the Appropriation Committees allocations make it a challenge to fund many important priorities. Second, the success of all human space flight programs is intimately tied to the success of Station. For example, if Station experiences delays, the Shuttle does not fly, science payloads are on-hold, and some operations are deferred. This then frees up resources to try to minimize further Station delays. Finally, Space Station is the largest annual investment in the nation's civilian space R&D portfolio. A small percentage increase for Space Station could eliminate the entirety of a smaller program. Recognizing our commitment to Space Station as an Administration priority, we need to be careful that it does not crowd out other worthwhile R&D investments, particularly outside of human space flight.

In seeking to accommodate Station cost growth within human space flight, we will not compromise Space Shuttle safety. We share the Committee's priority when it comes to Shuttle safety. Last year, the White House requested a Shuttle safety review that reaffirmed the safe operations of the program. NASA has its own on-going independent assessments. My understanding is that Shuttle job reductions have been the result of NASA efforts to streamline the Shuttle program, not because of Station budget issues. We will continue to be very careful every step of the way not to compromise safety, and we will continue to rely on NASA's expert judgement and assurances for that assessment.

To date, the Administration has funded increases for Station without major sacrifice to other priority NASA programs. Even as NASA's budget has decreased by approximately 15 percent in constant dollars since 1993, we have made provision for several important new initiatives to maintain the delicate balance between human space flight, earth and space science, and advanced aeronautics and space transportation technology. Examples include the X-33 experimental launch vehicle that will demonstrate technology that promises to reduce the cost of space transportation; the "Origins" space science initiative that will explore Mars and other planets, and examine whether life exists elsewhere; a new series of Earth probes that will augment the Earth Observing System as we attempt to address some of the most vexing puzzles underlying the Earth's environment; and, NASA's participation in the Administration's aviation safety initiative to reduce the aircraft accident rate by a factor of five.

The FY 1999 budget provides NASA the funding necessary to sustain its participation in these vital Administration priorities. In the long term, we recognize that many of NASA's programs require multi-year funding and, hence, we have provided the agency the outyear stability to appropriately conduct these programs. This includes the necessary flexibility afforded multi-year programs by carryover balances. NASA has aggressively reduced its overall carryover over the last two years and is on track to achieve the appropriate levels in FY 1999.


In conclusion, this Administration remains firmly committed to the success of the International Space Station. We are concerned about the history of cost growth in the program and the potential for further funding requirements to meet the program's objectives. We are fully engaged with NASA in working to address the potential cost and schedule risk posed by continued domestic cost growth and potential shortfalls in funding from the Russian Government. Again, I ask your support for the full funding of the President's budget request for NASA and the International Space Station.

Completion of the Space Station promises to be an important milestone in this Nation's space program. It provides permanent presence of humans in space and the opportunity to work with 14 other nations in the development and operation of an orbital laboratory. We appreciate the Committee's support of NASA and the Space Station program and look forward to working with you on these important issues.

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