NASA's outsourcing gamble a winner

NASA's intention to get out of the operations business and invest in cutting-edge

technology is evident throughout the agency's 2001 budget proposal.

In a request that's $435 million greater than NASA's 2000 budget, major

increases will go to R&D for technologies that will stimulate scientific


One of the first steps in getting more money for that mission

came in October 1998, when responsibility was awarded to a single contractor

to consolidate and commercialize NASA's ground and space communications

networks. In January 1999, Lockheed Martin Corp. and a team of subcontractors

started on that 10-year, $3.4 billion contract — $1.4 billion less than

what the space agency would have spent to run those operations itself. The

plan is to apply the savings to scientific research and space exploration.

Now, one year later, the Consolidated Space Operations Contract (CSOC)

includes 11 previously distinct spacecraft operations and communications

system contracts. The cost savings so far are estimated at $50 million,

and CSOC is setting the trend for other agencies. The Air Force, for example,

is looking to outsource its spacecraft communications, and the Navy is looking

to do the same for a consolidated network to serve all Navy and Marine Corps


Any agency with geographically distributed units that use common processes

could benefit from NASA's CSOC model, said Kimberly Gavaletz, deputy program

manager for CSOC at Lockheed Martin Space Operations in Houston. For the

first time, NASA can look at equipment lists, vendor agreements and data

systems in a common way agencywide and achieve economies of scale, she said.

"A lot of people are looking to see how we're doing with CSOC," said

Stan Newberry, NASA's director of space operations. Newberry's organization,

the Space Operations Management Office at Johnson Space Center in Houston,

is responsible for managing the agency's telecommunications, data processing,

mission operations and mission planning services, as well as administering


With CSOC, a big payoff area for NASA has been streamlining management

and procurement costs through the consolidation and renegotiation of vendor

agreements and software licenses at NASA's 10 centers, said Doug Tighe,

Lockheed's CSOC program manager.

"We need to look at the common features that we can do in a common way

at different centers to save money," said Rich Schell, director of systems

engineering for CSOC at Lockheed. Some 70,000 pieces of NASA equipment have

been shifted to CSOC control.

Lockheed's CSOC plan is based on creating an integrated operations architecture.

A cornerstone of that effort is an integrated mission operations center

that would consolidate spacecraft ground communications and data processing

for multiple missions. NASA wants the contractor to provide those communications

as a service, rather than just operating the networks. The more capabilities

and savings Lockheed provides, the more it will win in award fees, Newberry


"The agency is supportive of the performance-based approach, and CSOC

is a good example of that," Newberry said. "[The challenge is] making sure

from a competitive standpoint that the government continues to get the best


Sharp focus on customer needs is another critical factor in the success

of a CSOC-style contract, Lockheed officials said. For example, Lockheed

has created a services catalog that enables mission managers to choose specific

services that fit their needs. The catalog and price list should be available

online by March, said Dan Brandenstein, vice president of customer service

for CSOC at Lockheed.

Meeting CSOC's aggressive cost targets always will be a challenge, Newberry

said. NASA failed to achieve savings planned for 1999 because of delays

in awarding the contract.

NASA's work force is about 15 percent smaller than it was before CSOC,

Tighe said. In the coming year, it will decrease from 3,000 spacecraft operators

to 2,000. To avoid layoffs, Lockheed has tried to transfer the employees

to the companies involved with CSOC or to other NASA and non-NASA contracts,

he said.


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