The Kindest Cut

Everywhere I go, it seems, my friends and colleagues in the aerospace community are depressed. NASA's budget is shrinking and military spending is flat. They talk as though the world they know is ending and wonder about the future of aerospace.

In fact, smaller budgets could be the best thing to happen to aerospace in some time. But rather than just nibbling at the edges, the Deficit Hawks of Congress need to make the kinds of budget cuts that kill programs and close offices. Such deep cuts would not only help reduce the federal budget deficit; in the long run, they might even be a net benefit for U.S. space technology.

This may seem like an example of "voodoo economics"--spend less, get more--but there is a good amount of reasoning and evidence to support it. In reality, some of the most important innovations in aerospace have occurred during periods when spending on research and development was flat or even falling: Cockpit instrumentation in the 1930s is one example; satellite navigation in the 1970s is another.

This is because R&D is relatively cheap. The largest costs of an aerospace project are incurred when the program enters full-scale series production. The early phases--when new technology is actually developed and demonstrated--usually account for only 10 to 15 percent of the total cost of the project. Basic research--combustion science, materials research, developing new software concepts--is even cheaper. R&D requires some money but not a lot.

Indeed, many people might be surprised to learn that NASA--an agency whose main mission is supposedly research and development--spends only $9.5 billion of its current $14.2 billion annual budget on R&D. The rest, which even the government does not classify as R&D, is spent on operations, maintaining the space shuttle, administration, and infrastructure.

So it's clear we can support an aggressive R&D effort even while we trim the budget. Yet one could take the argument a step further. In the long run, cutbacks in space programs could actually accelerate the state of the art.

Giant steps in technology--the kinds of leaps that aerospace saw in the 1950s with the development of jet propulsion and rocket systems--require at least two conditions. One is that there need to be good ideas waiting to be exploited, as was the case just after World War II, when the aerospace community could easily see the potential of jet engines and long-range missiles. The second is that innovative people need to have a clear field on which to run. Someone needs to tame the research bureaucracy, which squelches radical innovation, or better yet, the field needs to be so new that bureaucracies have not yet had a chance to take root.

Left to their own devices, bureaucracies--and make no mistake, the government's aerospace community is a collection of bureaucracies--keep to a steady, predictable course. Indeed, this is why we like big, staid bureaucracies to be in charge of things like airline safety, for which reliability is all-important. The Federal Aviation Administration may use computer technology that is 20 years behind the times, but you don't see too many airliner crashes. The FAA is rigid, inefficient, and uncompromising, and people who fly a lot should like it that way.

Alas, once a bureaucracy has been around for a while, often nothing short of an explosive charge can get it to change course. This may be okay in the case of the FAA, but it can be disastrous if an organization needs to be flexible and innovative, as aerospace R&D requires.

This, at least in part, may explain why innovation in aerospace research and development--space technology in particular--has been slowing down.

Organizations in the R&D community have staked out their territories and settled into their own orthodoxies for research priorities and design philosophies. Ideas that don't fit the current program are labeled "offbeat," "unproven," or "leapfrog technologies."

It's not that NASA or Department of Defense officials are unusually parochial or narrow-minded. It's just that the same attributes that make mature bureaucracies efficient in some areas, such as reliably carrying out routine operations, make them ill-suited for other tasks, such as taking risks and questioning conventional wisdom.

There are basically two schools of thought on how to get organizations to generate new ideas and new ways of doing business. The first is to encourage (or compel) an organization to change its mindset and its way of doing business. The second assumes that a mature bureaucracy will not change its thinking on its own, leaving two alternatives: thoroughly shaking up the organization from the outside or giving other organizations an opportunity to compete.

The first approach is the one Daniel Goldin has been trying for the past three years at NASA, pushing the agency to work "faster, better, cheaper." Unfortunately, experience suggests that changing a bureaucracy's way of doing business may be one of the hardest tasks in the world. There are usually too many people within a large organization with too much invested in their education and experience to suddenly change direction. And these attitudes are reinforced by formal procedures and rules.

What's more, such organizations can be remarkably resilient. They may change at the margins but keep as much "business as usual" as they can. Recall the U.S. auto industry during the 1970s, for example. Detroit was beginning to face stiffer competition from Japan, which had figured out that there was a market in America for low-priced, well-built small cars. U.S. companies, which had prospered for decades building big, unsophisticated turnpike cruisers, resisted. When pushed, Detroit would build smaller, more efficient cars (often with tragi-comic results, like the Pacer and Vega), but its heart was in selling Impalas.

Similarly, in response to its critics, NASA is undertaking new programs like the Small Satellite Technology Initiative and the New Millennium program for building cheaper space probes (total budget for the 1996 fiscal year: about $30 million each). But its priority is still mega-projects like the space station (total FY 1996 budget: $1.8 billion) and keeping the space shuttle flying (total FY 1996 budget: $3.2 billion). NASA's culture is manned space and big projects. In other words, Impalas.

Of course, NASA is a favorite target for criticism these days, but in truth, the aerospace community as a whole has grown grayer and slower. For example, in 1956 the Air Force could develop the Thor intermediate-range ballistic missile (the forerunner of today's Delta launch vehicle) in just 13 months. Today the Department of Defense is spending 18 months just to decide what kind of launch vehicle the United States should develop next!

This is why the second approach to generating new ideas seems to have the most potential: Change the very organization itself, or look for a new one. Alas, in the case of bureaucracies like the aerospace community, the most effective tool for bringing about such changes may be massive budget cuts.

The private sector has lots of ways to shake up organizations and eliminate those that refuse to adapt. For example, in the case of General Motors, after a series of failures and fiascoes in developing a car to compete with Toyota and Nissan, the board of directors finally fired the management and moved the company out of its long-established headquarters in downtown Detroit to the Detroit suburbs. Private companies can also sell off entire divisions that no longer fit their market strategy (one reason why General Electric no longer makes satellites). They can take over companies to acquire new talent (a la IBM and Lotus Development) or merge to develop synergy (Northrop Grumman, Lockheed Martin, etc., etc.). Or, if they really screw up, they can simply go out of business (Pan Am, Eastern Airlines).

Even in the political world, there is a ready means to replace organizations in order to introduce new ideas and new thinking. Ask George Bush. Ask Tom Foley.

Not so with bureaucracies like NASA and DOD. Government agencies do not have to deal with a competitive market or elections. They are insulated from such pressures by political patrons, special interests, and civil service protection. So another, more Shermanesque approach is necessary.

Mancur Olson, an economist at the University of Maryland, published a book a few years ago, The Rise and Decline of Nations, in which he noted that virtually all governments became

moribund over time. The notable exceptions, he discovered, were countries such as Germany and Japan, which had lost major wars. Olson concluded that losing a war and experiencing the total uprooting of one's government had the unexpected benefit of dislodging special interest groups and bureaucracies that had grown inefficient and complacent.

Since we can't very well send a flight of B-29s to NASA headquarters on a mission to "streamline" its bureaucracy and inject some competition, the best solution may be the massive budget cuts proposed by House Budget Committee Chairman John Kasich and his fellow Deficit Hawks.

Halfhearted cuts of, say, one or two billion per year would not work. Indeed, they could be counterproductive, because the small, innovative programs that NASA and DOD have undertaken would be the most vulnerable to being lopped off. We need to be more aggressive.

For example, imagine for a moment what would happen if we cut back NASA's budget by about 30 percent--to $10 billion. We would not be able to meet the target just by eliminating the small programs. We would be forced to cancel the space station. We might even have to ground the shuttle.

On the other hand, we would also free up several billion dollars more each year to spend on more productive R&D and technology development. Once we kill the dinosaurs, we could foster more competition by spreading smaller amounts of money over a larger number of organizations--including some from outside the current establishment.

Consider some of the opportunities. An all-out test program for hybrid rocket motors could be completed for about $80 million. A program to develop a lower-cost, low-pollution solid rocket motor could cost about the same. Low-cost, high-payoff probes and satellites like Lewis, Clark, Lunar Prospector, and Mars Explorer go for about $50 to $150 million each; we could, in effect, double or even triple Goldin's New Millennium effort.

At the higher end of the scale, we could support a wider variety of approaches to reduce launch costs. For instance, NASA now spends about $170 million to support three teams developing single-stage-to-orbit vehicle concepts; probably only one team will get the chance to build a prototype. By flying less now, we could support a broader-based SSTO effort and still have enough left over to fund other launch concepts, such as two-stage-to-orbit vehicles and low-cost expendables.

Now ask yourself: Which would produce more science--flying a few shuttle missions each year or launching hordes of low-cost probes and satellites? Which would have the greater long-run effect on space technology--building a manned space station or deferring the station and using the funds to develop the technologies necessary for truly economical launch vehicles? By canceling high-profile programs today, we could redirect the money and lay the groundwork for a new golden age of space exploration in, say, 2005.

Naturally the current aerospace establishment will loathe those options. Bureaucracies always want to keep the status quo. The agencies will argue that they are too important to cut, and they will lobby to protect existing programs. That's why Congress must act.

Ironically, despite the cries over budget cuts in aerospace, most reductions so far are just promises for future years. For example, this year the space station flew through Congress, supported by newly minted Republican legislators who were elected because they had pledged to take the knife to federal spending. Some observers credited the good feelings produced by the movie Apollo 13--ironic, considering that the improvisational, rough-and-ready approach depicted in the film is exactly the opposite of the current operating mode typical in NASA and most of the aerospace community today. (Will we ever see a Ron Howard film in which Tom Hanks plays a GS-15 employee in a two-day source selection meeting for a $500,000 contract?)

The current budget crisis gives us a chance to shake the trees and trim the undergrowth in the aerospace community. We need to make the most of the opportunity. So go for the gusto. Take a big bite.

A former staff member of the U.,S. Senate Select Committee on Intelligence and an adjunct professor in the Department of Engineering and Public Policy at Carnegie Mellon University, Bruce D. Berkowitz writes frequently about issues in technology development.