aws@vax3.iti.org (Allen W. Sherzer) (12/19/89)
Below is a statement read into the record on HR2674 by NSS. -------------------------------------------------------------------- NOVEMBER 9, 1989 JIM BENNETT AMERICAN ROCKET COMPANY Dear Jim: NSS has produced a statement for the subcommittee to be inserted in the printed record. It is based on the "Review of the STSPA by the NSS Legislative Committee" as has been approved by the committee. The Committee staff agreed that a statement of public support for the Act was a good idea. Scott Pace wrote both the "Review" and this insertion. It is a statement of support for the intent of the legislation while offering helpful criticism. If you think it appropriate, please mention the fact that this statement has been submitted for the record. You might want to mention that you had a hand in developing it. Thanks for your help, good luck with your testimony, and stop by and see us before you leave town! Ad Astra, Lori Garver - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - STATEMENT OF THE NATIONAL SPACE SOCIETY ON THE BILL H.R. 2674 SPACE TRANSPORTATION SERVICES PURCHASE ACT OF 1989 BEFORE THE SUBCOMMITTEE ON SPACE, SCIENCE, AND APPLICATIONS COMMITTEE ON SCIENCE, SPACE AND TECHNOLOGY U.S. HOUSE OF REPRESENTATIVES NOVEMBER 9, 1989 Review of the "Space Transportation Services Purchase Act of l989" by the National Space Society Legislative Committee Summary The NSS Legislative Committee has reviewed the Space Transportation Services Purchase Act of l989 (HR 2674) and supports its structure and intent. We welcome the opportunity to participate in these hearings as a vital and constructive means to hear from all persons concerned with the competitiveness of the American launch industry and commercial space policy. The National Space Society sees substantial support for the intent of this legislation in Congress, the Administration, industry, and among pro-space activists. There are several portions of the bill which require clarification, however, to fulfill the intent of its authors, support U.S. commercial interests, and speed the development and settlement of space. This review covers, in brief, the rationale for this legislation, potential questions, and areas of concern that may arise from these hearings. Rationale Current Federal Acquisition Regulations and Presidential policy allow the purchase of commercial launch services, and such services have already been used to a limited extent by the Department of Defense. The major change affected by this legislation is to require the use of commercial launch services by the government, with some key exceptions for military and shuttle-unique payloads. The Space Transportation Services Purchase Act (STSPA) would not only promote commercial launch industry, but would implement policy options identified by the Office of Technology Assessment in its l988 memorandum Reducing Launch Operations Costs - New Technologies and Practices. The number one option for reducing the operations costs of existing launch systems was for the Congress to "require both NASA and the Air Force to purchase launch services, rather than vehicles, from private industry." The OTA went on to explain that "Under this form of purchase, the Government treats launch service providers much as it treats competitive commercial procurements from any other service industry, and pays for the delivery of a payload to a specified orbit. The launch service company provides the launch vehicles and all supporting services, including launch operations. Government officials work with the launch firm to assure that the firm meets Government standards of manufacture and service. However, they limit their involvement in the details of the manufacturing and launch process. The launch firm, not the Government, accepts the financial risk of a launch failure, and guarantees a reflight or other compensation." The National Space Society has consistently supported the need to lower the cost of access to space in order to promote human expansion into the solar system. A competitive commercial launch industry that has incentives to reduce costs within acceptable risks is a key element in meeting this need. In our view, the STSPA has several important objectives: 1) attach strong Congressional support to existing Presidential policy on commercial launch services; 2) increase private sector confidence in the government market for commercial launch vehicles; 3) save money for the taxpayer through innovations in traditional procurement practices; and 4) make the procurement of commercial launches a routine activity as a precedent for future space services. Potential Questions 1. Why encourage Congressional support for a Presidential policy? The commercial climate for the expendable launch vehicle (ELV) industry has been greatly assisted by the l984 Commercial Space Launch Act - beyond what would have occurred due to Presidential policy directives alone. Codifying executive orders into legislation leaves little doubt as to the permanence and seriousness of the established policy. This in turn increases investor confidence in the government's commitment and spurs the implementation of launch service contracts by procurement offices. The extension of service purchase practices to space transportation will bring greater consistency to government activity in commercial space development. 2. What innovations are introduced into the procurement process? The most important innovation is the shifting of financial and oversight responsibility to the firms providing launch services, and a reduction in Government reporting and documentation requirements. While companies may still choose to adhere to military and NASA qualification (milspec and S-spec) requirements, they will not be required to prove that they do so (save for range safety needs). This amounts to lowering barriers to entry for new firms and opens opportunities for alternative means of meeting space transportation needs. Not requiring cost data for cases of competitive bids and fulfillment of the contract is common practice for government purchases of many commercially available products and services. The government would retain, however, the option of requiring cost data for cases of directed sole source bids. Such bids would still require specific justification as is current practice under Federal Acquisition Regulations (FARs). 3. Why is the Transportation Department involved in determining exceptions to this Act? The Transportation Department is the most appropriate location for deciding whether a government payload should seek a commercial contract. It has an existing statutory role, its launch vehicle expertise is increasing with new licensing activity, and it can serve as a neutral civil arbitrator as it does not build payloads or launch vehicles. Payloads requiring the unique services of government launch vehicles (e.g.,Spacehab) are exempted as are national security payloads certified by the Secretary of Defense. Areas of Concern Fair Trade In 5(a), a further provision should be added for paragraph 5(a)(l) such that "A vehicle made in a particular foreign country, or a vehicle made in the United States primarily of components from a particular country, may be used to provide such services if the U.S. Trade Representative certifies that a general and mutual free-trade agreement for space goods and services providing mutual and equal open markets exists between that country and the United States." The trade talks between the United States and other states with space industries are crucial to the success of the U.S. industry. The United States should not have its hands tied by opening its government markets to them in advance of an agreement (such as the one with Canada), or by permanently excluding those markets. This added provision would also address concerns that the language is overly protectionist by specifying the conditions under which foreign firms would have access to the U.S. Government launch market. Determining Exceptions 4(b)(2) and (3) should be combined into a single clause providing for an exclusion reading "The Secretary finds, after requesting and reviewing proposals from commercial providers, that such providers cannot provide equivalent service, or that such service is unreasonably disadvantageous for technical or financial reasons." This exemption should be simple and precise, with a relatively clear and objective process for determination. Determinations by the Secretary of Defense or the Secretary of Transportation should be sufficient for the purposes of this Act, without requiring certification to the Space Council. The exemption decision needs to be a fairly routine judgment made on technical and/or economic grounds, not a continuing series of policy decisions at senior levels. Of course, disputes may always be taken to the Space Council by any of the members. Sections 6(c) and (d) also contain language requiring Space Council members to certify their compliance with limits on expenditures for international activities and studies, respectively. Disputes Section 5 should restore the Disputes section contained in previous drafts. This would read "5(c) DISPUTES--The Secretary shall establish a Space Transportation Services Appeals Board, and shall support and oversee the activities of the same. Any dispute regarding the interpretation of space transportation services agreements between commercial providers and the United States Government shall be resolved by this Board. The Board shall also adjudicate disputes between commercial space transportation providers and the United States Government regarding agreements for provision of launch property and services provided under terms of PL 98-575, as amended, and other laws or executive orders." The establishment of this Board would result, over time, in the creation of a body of case law defining precisely what a commercial space services procurement is. This will lay the basis for future space service procurements such as space power production and supplies of non-terrestrial materials. Without this provision, the Defense Contract Board of Appeals, or its NASA equivalent, would handle these cases. Those bodies are steeped in the details of conventional procurements that they are unlikely to allow for experimentation with new procurement practices. New procurement approaches that substitute competition and market forces for government oversight of contracts is the heart of this Act and something the nation badly needs. Furthermore, the creation of an Appeals Board avoids the need to deal with some questions that are bound to arise but probably cannot be adequately anticipated in legislation - for example, the precise distinction between providing space transportation services and engineering support services, or how to handle delays, or even what are the valid criteria for awarding or denying contracts. On this latter point, it should be noted that the Act does not demand that the lowest bidder get the contract, and properly so. Office of Management and Budget (OMB) directives should guide these matters. Grants We are concerned that requiring all grantees to run a government-style procurement in the traditional form of "full, fair, and open competition" would severely limit the number and type of researchers able to use these funds. Most small research institutions and individual researchers would have a difficult time dealing with the paperwork burden and associated procedures. This particularly endangers the voucher plan studied by NASA and the DOT last year, about which many researchers and companies have been enthusiastic. At minimum, language should be added to exempt a voucher plan for space researchers from the "full, fair, and open competition" requirement. Report language could refer to the existing NASA-DOT study carried out by Resources for the Future as an example of the kind of plan envisioned. Use of Government Launch Property In prior drafts of this Act there was a clause in Section 5 stating: "The use of United States Government launch property or services by United States commercial providers under the Commercial Space Launch Act of l984 (PL 98-575) as amended, shall not be calculated as an offset to the price of launch services supplied to the United States Government. This subsection shall not prevent bidding providers from listing pricing options for space transportation services conditioned on the availability of Government- furnished equipment or services not otherwise used by the provider." The purpose of the first part of this clause was to separate the selling of a launch service from the right to use government launch property under PL 98-575. Launch sites and related services are now made available to the commercial launch industry on a direct cost reimbursable (DCR) basis. Launch companies get this whether or not they launch any government payloads; the public interest being served by a healthy launch industry. This clause is to prevent a procurement official from saying "you should calculate the contribution of this 'free' launch site into your proposal." The second part of this clause is intended to encourage creativity on the part of commercial providers in proposing use of other government resources in responding to a specific launch opportunity. This concludes the statement submitted by the National Space Society. On behalf of the more than 24,000 members of the National Space Society, we wish to commend the subcommittee for its interest in this issue of national competitiveness and economic expansion. Our membership strongly supports the significant role that private enterprise plays in lowering the cost of access to space. We encourage the lessening of barriers which will eventually lead to the creation of a space-faring civilization which will establish communities beyond the Earth. With a nation-wide system of chapters and political activists the National Space Society should be seen as clearly supportive of the intent of this Act and will endeavor to see that this legislation advances to become public law. ---------------------------------------------------------------------------- | Allen W. Sherzer | Is the local cluster the result | | aws@iti.org | of gerrymandering? | ----------------------------------------------------------------------------