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Faster Better Cheaper: Lessons Defense Could Learn From NASA

Posted by Dan Ward on

cutting-dollar-red-1350932342As the Department of Defense continues to wrestle with the high costs and often slow pace of military technology and acquisition programs, it would do well to take a closer look at that other bastion of high-tech government programs: the National Aeronautics and Space Administration. NASA’s low-cost missions from yesteryear just might hold the secret to bringing the price tags of today’s Pentagon programs down to Earth.

In the 1990’s, NASA’s portfolio of Faster, Better, Cheaper (FBC) missions included some truly impressive accomplishments. Notable examples include the Mars Pathfinder mission, which put a rover on another planet for the first time ever. Pathfinder was developed in half the time and one fifteenth the cost of the earlier Viking mission to Mars and went on to explore Mars three times longer than its projected lifespan.

And then there was the Near Earth Asteroid Rendezvous (NEAR) mission, which came in $78 million under budget and still collected 10 times more data about the asteroid Eros than expected. Despite not being designed as a lander, NEAR went on to land on its target– another first. The touch-down was so smooth and gentle, the spacecraft continued to broadcast from the surface of Eros for two full weeks.

Of course, it wasn’t all rainbows and unicorns over at America’s space agency. Some of the FBC missions were real turkeys. As it turns out, one of NASA’s most instructive history lessons just might come from the Faster, Better, Cheaper mission that got cancelled. Whether that particular mission qualified as a success or failure is a question worth asking.

The Lewis and Clark satellites were part of NASA’s Small Satellite Technology Initiative. Designed as remote sensing spacecraft, neither Lewis nor Clark made it to orbit. Interestingly, they each missed the target for different reasons.

A design flaw caused Lewis to spin out of control and burn up in the atmosphere. Despite that dramatic, fiery imagery, the details of what went wrong are rather prosaic and boring. Clark on the other hand failed to reach orbit for less explosive, but more interesting reasons: In 1998, NASA leaders boldly went where few had gone before and cancelled Clark because its cost growth exceeded 15%. Science News reported the cancellation in these words:

“NASA has canceled its remote-sensing Clark satellite, citing cost overruns and launch schedule delays. The long-expected decision, announced today, is a setback for NASA’s new emphasis on fast and cheap scientific missions.”

While this wasn’t good news for the Clark team, it wasn’t exactly a setback for FBC per se. Instead, this is precisely how FBC was supposed to work. One might even call it a successful application of the NASA’s thrifty, speedy method.

Rather than accept cost growth as inevitable, as typically happens in the federal government, NASA terminated the program entirely. This willingness to make hard decisions was all part of the plan under NASA’s Faster, Better, Cheaper concept and was a key element of its determination to find low-cost, high-speed access to space.

The decision to cut NASA’s losses was not a simplistic knee-jerk reaction or a superficial zero-tolerance policy. The cancellation was not triggered by a 1% cost blip. In fact, Clark’s projected cost growth was headed towards 23%, well above the 15% threshold established by NASA leaders. (Eds. note: Pentagon watchers, of course recognize that 15 percent threshold, long enshrined as the marker for Nunn-McCurdy breaches.) Unlike a satellite’s orbital insertion, the budget had a fair amount of room to maneuver and a modest margin for estimation error. But unlike deep space, there was not infinite room to maneuver. There was a limit to how much growth NASA would accept, and that limit was right around 15%, more or less.

Note the language used in Science News. This was a “long-expected decision,” not a surprise move. It was the result of robust analysis, discussion and debate. Even before things went south everyone knew overspending could lead to termination. All involved parties understood that expenditures would not be allowed to grow beyond a certain point. How refreshing.

The cancellation blow was somewhat softened by the fact that Clark was a high-speed, low-cost mission in the first place, so the sunk cost was more tolerable than if it had spent decades and billions. The New York Times reported some fiscal details:

“The agency terminated the Clark mission in February, citing delays in the launching schedule and rising costs. The agency estimated that it would cost $62.5 million to complete the project, a 23 percent cost growth that far exceeded the 15 percent maximum allowed in the contract. The agency said it had invested about $55 million into Clark, but had recovered some assets from the mission that might be used in other projects, including three major instruments, spacecraft components and rights to a booster rocket.”

Yes, tens of millions of dollars is a lot of money, but in terms of space exploration projects it is on the low end of the spectrum.

Here’s why this matters: this approach could help any federal government agency, including the military, restrain the cost of high tech projects. Just for fun, let’s consider an example from the Pentagon’s current portfolio: the F-35 Joint Strike Fighter.

If the DoD had canceled the Joint Strike Fighter when its cost growth exceeded 15%, it would have done so in 2007. That is when the plane’s costs jumped to $278 billion, a 19 percent increase over 2001’s budget baseline (pardon my math). Keep in mind, 2007 was six years and $117 billion in additional cost growth ago. As of March 2012, the new baseline cost rose to $395 billion, an increase of 69 percent over 2001.

Problems with the JSF’s costs are well known and widely acknowledged. In May 2011, Ash Carter, then undersecretary of Defense for acquisition, technology and logistics, said the per-aircraft cost “has doubled.” He went on to call the situation “unacceptable” and “unaffordable.” And that was before the March 2012 rebaseline added more time and money to the program.

At this point I should explain that I am not recommending that anyone terminate the F-35 program per se. Such decisions should be made by people who know a lot more about national defense, international politics and stealth fighters than I do. I’m just an engineer following the data and pointing out that in a hypothetical situation where 15 percent cost growth triggers cancellation, we could have terminated the Joint Strike Fighter in 2007.

Had the JSF been cancelled in 2007, what then? Well, since the most recent estimates say the jet will be ready for service in 2019, we could have presumably spent the next 12 years building a simpler, less-expensive alternative and still delivered something by the time the JSF is projected to be declared operational. For that matter, we might have even managed to get a fleet of simpler, cheaper jets in the air before 2019. Also, the charges of “acquisition malpractice” levied by Mr. Kendall in 2012 might have been unnecessary if the JSF had been cancelled in 2007.

The Defense Department has cancelled programs before, such as the Future Combat System, the A-12 Avenger jet, the Comanche helicopter and the Crusader field artillery piece, all of which had cost growth well over 15 percent. Unlike Clark, each of these military terminations resulted in much gnashing of teeth. Also unlike Clark, these cancellations were largely surprising to those involved, not to mention painful and drawn-out. In fact, the validity of the A-12 termination was argued before the Supreme Court in 2011, 20 years after its termination. And then there is the V-22 Osprey, which Secretary of Defense Dick Cheney tried unsuccessfully to cancel four times in four years. Clearly, cancelling a military acquisition program is not easy, even for the SecDef and even when the cost growth far exceeds 15 percent. (Eds. note: A particularly wonderful example in space acquisition is the notorious NPOESS weather satellite program.)

While termination may never be embraced by the program team and their supporters, the general consensus is that canceling those programs was a good idea. Canceling them earlier would have been an even better idea. Terminating a program is difficult, but establishing clear contractual termination mechanisms, linked to specific cost growth figures, would make the whole acquisition experience less messy, painful, and protracted. That might be the best idea of all. For that matter, an unambiguous incentive to avoid cost growth might have helped constrain their costs and prevented the need to cancel in the first place. Such incentives were clearly not in place for Avenger, Comanche, Crusader or Osprey.

Which brings us back to NASA. Under the Faster, Better, Cheaper initiative, NASA leadership made its expectations clear and legally binding. Clark’s termination threshold was part of a larger ethos that placed a premium on thrift, speed and simplicity. Upon closer examination of the 16 missions in the FBC portfolio, we discover that only Clark exceeded the 15 percent threshold. For the most part, the remaining missions had money left over when all was said and done. The threat of cancellation does not deserve all the credit for NASA’s constrained expenditures, but it certainly played a role.

Today’s defense portfolio certainly contains more than one program that should be terminated, but if history is any indicator, such moves will be difficult, protracted and tardy, partly because tolerance for cost growth is so deeply ingrained but also because straightforward termination mechanisms are generally absent. It need not be that way. Starting now, every new contract could include a clause establishing the option to cancel if cost growth exceeded a certain percentage – might I suggest 15 percentage is a good place to start? Nothing in acquisition policy, regulation or law prevents us from doing this.

This is not about sequestration or the economic downturn. It is entirely about getting a good return on our investment and delivering best-in-class capabilities. The fact that it would help save money during the current Age of Austerity is a nice bonus, but reducing wasteful spending was always a good idea, even when funding came easy. It was always a good idea to cut our losses and start over when a program spiraled out of control. In 1998, NASA proved it can be done. Perhaps it is time to apply that lesson to the defense business. And who knows, maybe NASA could do it again too.

Lt. Col. Dan Ward is an active duty acquisitions officer in the U.S. Air Force, currently stationed at Hanscom Air Force Base. The views expressed in this article are solely those of the author and do not reflect the official policy or position of the U.S. Air Force.

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