2002, A Space Odyssey Or Just Pork Pie In The Sky?

In 1984, President Ronald Reagan promised a new era in space. Within 10 years, he pledged, the U.S. would build an orbiting space station, capable of everything from servicing satellites to providing a staging base for missions to Mars. Freedom--the station's name--would also allow America to wrest bragging rights from the Soviet Union, then the world's space-station leader.

Since then, about the only thing that's off the launch pad is the price. Washington has spent nearly $12 billion of a projected $27.5 billion on the project, but only a small fraction of the 500,000 pounds of U.S. hardware has been built. Even if all goes well, the first of many launches needed to loft into orbit the pieces of a redesigned station, renamed Alpha, won't go until late 1997.

What's more, an analysis by BUSINESS WEEK of the money spent so far, shows that less than half of it has bought anything of value for the current design. The rest, say experts inside and outside the National Aeronautics & Space Administration, has been frittered away on a series of wheel-spinning redesigns or as a result of a management structure so convoluted that "they ought to send it up to Harvard business school to give them a good laugh," says a former NASA official.

Some say that even the ill-spent money hasn't been wasted. Supporters in Congress argue that those dollars preserved crucial skills and some 10,000 jobs in the declining aerospace industry. To critics, though, that's just pork by another name. "By and large, the money went to welfare for the aerospace industry," charges physicist Robert L. Park of the University of Maryland.

Beyond the misspent billions, the space station offers a sobering lesson about how difficult it is for the government to pull off major long-term projects. To broaden support for the program on Capitol Hill, NASA spread the wealth in as many congressional districts as possible. That meant doling out responsibility for pieces of the project to four installations: Lyndon B. Johnson Space Center in Houston, John F. Kennedy at Cape Canaveral, Fla., George C. Marshall in Huntsville, Ala., and Goddard in Greenbelt, Md. The resulting arrangement was cumbersome and ineffective.

Making matters worse, Congress repeatedly cut funding and asked for major capability changes, forcing costly delays and redesigns. "The overwhelming problem with the space station has been the vacillation ef our nation's leadership," says James E. VanLaak, manager of integrated risk management at Johnson. The delays cost NASA up to $1.6 billion, estimates a top budget officer for the project.

TRUSS FUNDS. Trouble has dogged the ambitious Freedom project from the start. The agency realized belatedly that there was no demand for a satellite-service facility and that a Mars mission was still pie in the sky. NASA also clung to a design in which the labs, crew quarters, and solar panels were attached to an enormous 560-foot girder. This "truss" would have to be assembled in space, a fiendishly difficult and costly task. Not until 1991, under cost-cutting pressure from Congress, did the agency switch to a smaller truss that could be built in sections on the ground. The move saved billions in the long run but ran up the short-term redesign tab.

Not all problems were fixed so easily, thanks to a byzantine management structure. Above the field centers, NASA added layers of management--2,300 people in all--in what experts say was a wrong-headed attempt to cut risk after the 1986 Challenger space shuttle disaster. The price tag just for the extra bodies was $100 million a year, and they resulted in monumental inefficiencies. To get a decision made, "we had to go through a bureaucratic maze," observes John B. Winch, a Boeing vice-president in Huntsville.

Program leaders in Washington didn't have full authority over the centers, either. Thus, important decisions were never made, and "a year of money might be spent on hardware no one wanted," observes VanLaak. Take the complex data-management system put together by McDonnell Douglas' subcontractor, IBM. It never worked the way it was supposed to. But not until NASA's switch to the new Alpha design did the agency pull the plug. The cost of the discarded system: $500 million.

Nor did NASA managers tackle hundreds of other key issues. Performing experiments on materials in the near-weightlessness of space, for example, requires that the station be virtually vibration free. Freedom's team had plans to keep the hardware "quiet," but "ignored the fact that the crew was running around," says Boeing's Douglas C. Stone, head of integration for the Alpha station.

NASA did acknowledge this and other problems, but "solving them would have required people to admit they were wrong," says Stone. It was so bad that, if Freedom had proceeded, "we wouldn't even be rearranging the deck chairs on the Titanic," says VanLaak, one of the few top Freedom officials to move to Alpha. "We would be showing viewgraphs [overhead slides] of where to put the chairs."

Since last summer, NASA Administrator Daniel S. Goldin and the Clintonites have overhauled the program, fixing many of the problems. In addition to making extensive use of proven Russian space technology, the agency has switched from three prime contractors to one--Boeing--and moved the NASA management team to Johnson.

BYE BYE BILLIONS. The number of NASA engineers and managers has been slashed from 2,300 to 1,000, and they're actually making significant decisions, such as throwing out balky software and deciding to isolate experiments from gravity with an active suspension system. "I've never seen government change so rapidly," says Charles M. Vest, president of Massachusetts Institute of Technology, who headed a panel that scrutinized the program. Once the changes were made, "it's amazing how quickly the project has shaped up," says Boeing manufacturing chief James D. Waterman in Huntsville.

But the changes, which have helped to bolster weakening support in Congress, also mean that even more of the money spent to date has been lost. The Alpha design, for instance, will replace with Russian equipment or with new systems the previous propulsion and guidance systems. The money spent so far just on these discarded systems? Nearly $1 billion.

Some 75% of the old hardware will be used in Alpha. But the pieces are being assembled in new ways. As a result, only about 62% of the money spent on Freedom applies to Alpha. Add together Freedom's problems and the switch to Alpha, and more than $5 billion has gone toward needless salaries, equipment, and blueprints. "I don't think we've gotten much for our money," says Representative Tim Roemer (D-Ind.).

Will the future be any different? Both NASA and the Clinton Administration insist yes. They vow to complete Alpha by 2002--for another $17.4 billion (of which about $1 billion has already been spent). If everything should go perfectly, that's "doable," says Jay W. Chabrow, a former TRW Inc. executive and a member of the Vest panel.

But many within NASA, especially old Freedom hands, remain skeptical. They point out that the Alpha program is taking a big risk--by cutting corners: Instead of building prototypes, testing them exhaustively, and then constructing final flight hardware, for instance, the Alpha team plans to fly many of those first test pieces. In addition, the schedule calls for a complex choreography of launches involving space shuttles, Russian rockets, and Europe's still-unflown Ariane 5 to carry up parts for the station. "We don't have all the answers," admits William M. Shepherd, deputy space-station manager at Johnson. "This is a tremendous challenge for the whole team."

Recent changes have given the program a shot in the arm. But if technical glitches again hamper the program, "the political consensus, which is now as good as it has ever been, could quickly erode," frets a top Capitol Hill aide. That could lead to more of the budget-trimming and congressional meddling that helped cripple the Freedom program. And it would prove, once again, that making good use of taxpayer dollars in huge government projects is tougher than a trip to the stars.

      Of $11 billion spent on the space station, half may have been ill-spent. Here's where some of the money went:
      -- At least 24 months of delays due      $1.6 BILLION
      to congressional budget-trimming
      and frequent redesigns
      -- Hefty extra layer of management       $1.1 BILLION
      -- Discarded propulsion and              $900 MILLION
      guidance unit
      -- Failed data management system         $500 MILLION
      -- Redesigning everything from the       $400 MILLION
      fire-suppression system to vacuum
      hoses in the labs and crew quarters
      -- Deleting unnecessary orbiting         $200 MILLION
      platforms and robot capability
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