SP-4102 Managing NASA in the Apollo Era
 

Chapter 7

The NASA Budgetary Process

THE FUNCTIONS OF THE BUREAU OF THE BUDGET

 

[179] The budgetary process accounted for the difference between what NASA wanted and what it ultimately received. In the strictest sense, the Federal budget is "the proposed annual financial plan . . . which the Congress considers and approves or modifies.... This is the medium through which an agency determines, requests, and obtains the financial authority needed to carry out contemplated programs, and the mechanism . . . for . . . control of operations within the limits of funds made available by the Congress." 1 This definition explicitly recognizes that the Federal budget is rather more than a financial document. It enunciates goals, serves as a benchmark for comparing actual with expected accomplishments, is the basis for authorizing and appropriating legislation, and (as the mechanism by which programs already approved are funded) is a record of past negotiations and a preview of programs not yet approved. The budget, in short, translates substantive programs into dollars and cents.

The absence of coordination, of legislative review and approval by a single body accounts for some of the distinctive features of the Federal budget. As Wildavsky notes, budgeting is fragmented because congressional subcommittees are semiautonomous units that concentrate on limited areas of the budget; specialized because the full congressional committees assign budget review to their subcommittees; nonprogrammatic because most committee members view their task as making marginal adjustments to existing programs; and incremental insofar as Congress and the Office of Management and Budget (OMB) take the previous year's budget, rather than the worth (in both senses) of the total program as their point of departure. 2 Particularly in the 1960s, critics of Federal budgetary procedures seized on these features because they made the establishment of priorities within the total budget impossible. Or-what came to the same thing-the division of budgets into smaller and smaller parts made overall evaluation exceedingly difficult. According to this view, "the overall budget tends to emerge as the [180] accidental outcome of a number of specialized decisions."3 Hence the number of proposals, dating from the first Hoover Commission (1947-1949), for reform. These included proposals for performance budgeting, that is, incorporating statements of output in agency budgets; for program budgeting, by which agencies would make their operating assumptions explicit to the Bureau of the Budget; for projecting multiyear costs; for examining alternatives to a given approach and for considering needs and costs together; and for introducing improved financial management systems according to guidelines prepared by the U.S. Comptroller General.4

The principal agent in preparing a unified national budget was the U.S. Bureau of the Budget (BOB). Long before it was reorganized as the Office of Management and Budget in July 1970, the Bureau's role transcended that of adding each agency's figures to get the correct sums.5 Substantive programs cost money; and the Bureau's power to review and adjust agency estimates amounted to policy making, whether intended or not. The Bureau and its successor had powers, some of them statutory, others assigned by executive order, to deal with a variety of Government-wide issues. It had (and still has) the authority to set personnel ceilings for most agencies, including NASA. It prescribed standards for agencies to use in contracting for services. It was responsible for supervising methods of financial reporting by Federal agencies and for promoting Government-wide procurement policies. Since 1939, when it became part of the Executive Office of the President, it has had the function of clearing all recommended legislation, whether or not it involved appropriations. In brief, BOB and OMB had policy-making functions, some assigned or delegated explicitly, others gained almost by default. The Bureau coordinated programs that involved more than one agency; appraised pending legislation in terms of its compatibility with the programs of the President; required departments to include cost projections of programs they wished to fund; and informed the President of executive agencies' performance. The questions examined here are, how did NASA work through the budgetary process, and how did the process itself affect the planning and conduct of NASA programs? As a corollary, to what extent did BOB coordinate Federal planning for science and technology in a period when NASA was spending one-third of the Federal R&D dollars?

 

DIFFICULTIES IN REVIEWING THE NASA BUDGET

 

Three features that NASA shared with other R&D agencies made external review difficult. First, there were no guidelines for a unified national science policy; second, BOB was at a disadvantage in reviewing NASA programs; third, the nature of the programs made them difficult to justify in quantitative terms. These were not necessarily disadvantages in the abstract; one might argue, for example, that there was no compelling reason for a unified Federal science policy.

[181] Indeed, the diffuseness of publicly sponsored research, the sector-by-sector approach, could be justified on the ground that it rescued publicly supported R&D agencies from a system of rigid centralization. Alternatively, the multiplicity of bodies for reviewing and coordinating Federal science policy tended to become self-defeating, especially in the absence of staff support. Congress in the 1960s lacked both the staff and the central review of the budget that would appear to be essential to legislate for science. The same weaknesses were evident within the Office of Science and Technology, the President's Science Advisory Committee, and the Federal Council for Science and Technology, all of which were chaired or directed by the President's Science Advisor. The effectiveness of a science advisory system depended on a conjunction of events and personalities that rarely occurred. The President had to want independent advice; Eisenhower gave his advisors an effective voice in shaping policy, Kennedy less so, and Johnson and Nixon least of all. There were, besides, structural defects built into the system. Thus Dr. Donald Hornig, President Johnson's Science Advisor, was limited by the small size of his permanent staff; by the direct access to the President enjoyed by the heads of DOD and NASA, the two agencies that accounted for the bulk of Federal R&D spending; by Johnson's preoccupation after 1965 with the Vietnam War; by the absence of yardsticks for determining priorities within the science budget; and by the ability of NASA or DOD to set their own policies-for example, establishing the Electronics Research Center or choosing lunar orbit rendezvous as the Apollo mission mode-while ignoring or circumventing the formal coordinating mechanisms of the Executive Office and its science policy staff.6 The Science Advisor and the committees he chaired could advise, persuade, issue reports, and appear individually before Congress. But neither Hornig nor the Science Advisory Committee could do very much to set policy within NASA.

The absence of advisors in the Executive Office who were at once effective and disinterested reinforced NASA's tendency to limit the scope and range of its planning. NASA planned in terms of substantive programs and did little to relate manpower to programs. BOB was the only agency that could, at least potentially, mesh NASA programs with each other and with the Federal community. But the difficulties of appraising the NASA budget went beyond the competence of Bureau examiners. Bureau officials knew that the size, not just the technical nature of NASA programs, made detailed oversight difficult. NASA R&D programs were funded incrementally; in other words, allotments were made by the program offices to the field installations more than once a year. This, along with NASA's contracting structure, made "the relationship of specific end items and annual funding requirements almost impossible to establish."7 Bureau examiners also had to contend with the uncertain nature of estimates for current or future programs, since unforeseen problems might render the estimates almost worthless. Finally, the number of examiners was very limited; as late as 1965 the Military Division, whose forty-three staff members oversaw the NASA, DOD, and Atomic Energy Commission budgets, had only three examiners working on the NASA budget.8

[182] Moreover, NASA programs by their very nature were peculiarly impervious to cost-benefit analysis. It was one thing to choose between two methods of attaining the same goal; it was another, considerably more difficult task to choose among competing goals. Few NASA programs produced benefits that could be measured in dollars. To study cost-effectiveness, NASA had to proceed on assumptions that were themselves open to question. Even when NASA tried to quantify the benefits of a specific program, other, noneconomic considerations eluded analysis. When NASA used cost-benefit studies to justify the decision to develop a reusable space shuttle, the General Accounting Office (GAO) pointed to issues that were not reducible to quantitative terms. Whether a space shuttle was or was not economically justified, NASA had to take other matters into account: whether the value of technological spinoffs was sufficient to justify the program; whether the shuttle offered the U.S. space program unique capabilities; whether the United States was prepared to use the shuttle indefinitely and not just to some predetermined date; finally, whether the nation should make so heavy a commitment to manned spaceflight, when unmanned vehicles might reap most of the benefits and avoid most of the risks of a manned system.9 The specific conclusions of the GAO report need not detain the discussion. What matters is that NASA officials were quite ready to concede the difficulty of making cost-benefit studies of space systems. 10 For that matter, such studies, especially when contracted out, might have little influence on decision making at the highest level, or they might be commissioned simply to justify decisions already taken for other reasons.* 11 One official frankly conceded that NASA found it "extremely difficult to quantify such elusive economic considerations as they affect research and development efforts in the space environment."12

Given these problems, what resulted from the annual budget reviews? The following sections involve a closer look at the review procedures of BOB, an account of the planning-programming-budgeting system from its introduction in 1965 to its demise in 1970-1971, and an analysis of the ways in which NASA's internal long-range planning tied to the external reviews of BOB and Congress. First, however, it is necessary to explain the categories under which NASA programs were funded.

 

HOW THE NASA BUDGET WAS FORMULATED

 

NASA Appropriation Accounts

From fiscal years 1963 through 1969, NASA was funded under three accounts: research and development (R&D), administrative operations (AO), ** and [183] construction of facilities (COF). These titles should not be taken too literally. Many items in R&D had little to do with research, while the COF account omitted some of the most important construction work when it involved the installation of "severable" equipment. With these caveats in mind, two features of the NASA budget are evident. NASA budgeted on a "program" or performance basis; and the requirement for an item, rather than the nature of the item itself, primarily determined the funding category to which it belonged.

R&D and COF had more in common with each other than they had with AO. Both were funded on a no-year basis, with funds available until spent; AO was an annual appropriation, with unspent monies lapsing to the U.S. Treasury at the end of the fiscal year. Moreover, NASA was permitted under its annual authorizations to reprogram internally within COF and to transfer funds from R&D to COF with authority to construct. The principal limitations on transfers and reprogrammings were the extension of the powers of the congressional authorization committees from about 1963, the imposition of the requirement that NASA give the committees prior notice for certain kinds of reprogramming in the R&D and AO accounts, the reduction in 1965 of NASA's transfer authority from 3 percent to 0.5 percent of the total authorized for R&D,13 and restrictions on dollar amounts reprogrammed within COF.14 Some of these changes ensued from the shift in power from the appropriations to the authorization subcommittees. where the most intensive reviews of NASA took place. Others stemmed from the belief of committee members that NASA was not doing an adequate job of planning for its facilities; that much of NASA's capital spending duplicated equipment available at DOD installations; that NASA was using R&D money directly to fund its facilities projects; and from the resentment directed by Congress at NASA's practice of changing the quantitative scale of projects without actually changing their intended purpose, and of presenting requests for capital plant improvements as a lump sum amount.

Thus the NASA appropriation categories meant more and less than their titles signified. R&D funds could be used for facilities, provided the money was spent on "collateral" (or "severable") equipment; that is, equipment "placed in use in a facility but is not permanently attached thereto except for operating purposes and is removable without significant damage to the real property." 15 In other words, the shell of a building that cost $500 000 (and that was funded out of COF) might house equipment worth millions of dollars that was paid for by R&D funds. Administrative operations was more than an administrative overhead account. It included the direct expenses for operating the NASA centers, the salaries of all NASA civil service personnel, payments to support service contractors, and the funds for the operation and maintenance of the agency's capita] plant.16

Two other features of R&D not revealed by appropriation titles should be noted. R&D included certain items that were produced in quantity and as such hardly qualified as research or development. This was especially true of launch vehicle procurement: Once the uncertainties in the production of Centaurs and [184] Deltas were eliminated, those vehicles continued to be funded under R&D as a convenience. Also, a substantial portion of R&D (and AO) funds was used to pay non-NASA personnel, whether they worked directly on projects or in general support; NASA employees, on the other hand, were paid out of AO regardless of the activity in which they were engaged. With this exception, there was no hard-and-fast demarcation of categories. R&D included equipment funding, unit production costs of launch vehicles and overhead costs, as well as the costs inherent in research and development.

Accordingly, NASA appropriation titles and their line item entries can be seriously misleading if taken at face value. There is nothing to show that construction projects and other capital expenses were fully funded, that is, that the total funds were requested and appropriated within a single fiscal year; or that operating expenses were budgeted one year at a time; or that major R&D projects were funded incrementally. Furthermore, annual appropriations only represented new obligational authority, which was quite distinct from actual disbursements. As table 7-1 shows, during fiscal years 1965 and 1966 NASA's obligations were greater than its appropriations, and its expenditures were greater than either. This was possible because of the lag between obligation of funds on a contract (authority for the contractor to work) and expenditures (payments for work actually performed).

To compound the confusion further, the NASA budget included only those programs for which funds were both authorized and appropriated. What did this omit? It chiefly omitted those programs in the definition phase for which NASA had not yet sought authorization. For years the NASA authorization acts included the following provision:

 

No amount appropriated pursuant to this Act may be used for any program which has not been presented to or requested of either [authorization] committee.17

 

Yet when NASA presented its 1966 budget request to the Senate Aeronautical and Space Sciences Committee, members were surprised to learn that nearly $8 million in 1965 funds had been spent on one unauthorized program-Voyager. Seamans explained that Voyager was a "project," not a "program"; that the funds for Voyager had been reprogrammed from Mariner following the decision to start conceptual studies of Voyager; and that NASA would request authorization once management determined to go ahead with the program.18 Thus to the question, "When is a program not a program?," NASA could reply, "When it is a project."

In short, a line item entry for a major R&D program could not include all direct and indirect costs. The total expenditures for a single program would have to include funds reprogrammed, funds for facilities in support of the program, and, in particular, it would have to account for the differences between the amount appropriated, the amount obligated, and the amount spent. The following sections examine how these sums were determined.

 


[
185]

Table 7-1.-NASA requests, authorizations, appropriations, obligations, and disbursements-all appropriations, 1959-1968, in millions of dollars.

 

Fiscal Year

Budget Request

Authorization

Appropriation

Obligations1

Expenditures1

.

Total

34 156.1

33 100.4

32 399.8

32 082.2

30 446.4

.

1959

146.6

146.6

146.6

-

-

1959

280.02

259.2

184.33

298.7

145.5

1960

508.3

490.3

523.64

487.0

401.0

1961

964.6

970.0

964.0

908.3

744.3

1962

1 940.3

1 855.35

1 825.3

1 691.6

1 257.0

1963

3 787.3

3 744.1

3 674.1

3 448.4

2 552.4

1964

5 712.0

5 350.8

5 100.0

4 864.8

4 171.0

1965

5 445.06

5 227.5

5 250.07

5 500.7

5 092.9

1966

5 260.0

5 190.4

5 175.0

5 350.5

5 932.9

1967

5 012.0

5 000.4

4 968.0

5 011.8

5 425.7

1968

5 100.0

4 865.8

4 588.9

4 520.4

4 723.7

1 Actual obligations and disbursements during the fiscal year.
2 Requests for NACA/NASA amounted to $280 054 000. Requests for transfers from DOD resulted in the transfer of S146 619 532 in obligational authority to NASA.
3 Includes $101 100 000 appropriated to NACA, $83 186 300 to NASA, and $146 619 s32 transferred from DOD.
4 $38 500 000 based on FY 1959 authorization Public Law 86-12.
5 Includes $71 000 000 supplemental for COF for which existing authorization was available.
6 Includes $141 000 000 supplemental request for FY 1964 R&D program.
7 Includes $72 494 000 R&D supplemental against FY 1964 authorization.
 
Source: NASA Data Book, table 4-4.

 

The Preparation of the NASA Budget, 1958-1966

Between 1958 and 1970 NASA drafted and submitted its budget requests to BOB within two different sets of Bureau guidelines. The first procedure was employed from 1958 to the end of FY 1966; beginning in FY 1967, NASA was required to submit program memorandums and special studies conforming to the planning-programming-budgeting system mandated for executive agencies by President Johnson in August 1965. What, specifically, did BOB demand of the agency in justifying its request? How did NASA submit requests for R&D programs, few of which could be fully funded and thus had to be spread over several years for budgetary purposes ? From 1958 to 1966 the cycle began with the semiannual spring and fall previews. Although the spring preview was not a formal requirement, and actually preceded the letter from the Budget Director that began the cycle, it held certain advantages for top management. As "a [186] tentative and generalized first approximation," it eliminated marginal program elements, brought policy questions to the surface, and produced "a feedback into program implementation then underway." 19 Wyatt's Office of Programming assembled the materials sent by the program offices, prepared a first draft of the preliminary budget, and reviewed it at some length with top management.

The spring preview took place in March, fifteen months before the start of the fiscal year for which the budget was being prepared. Thus the review of March 1964 concerned fiscal year 1966, which began on 1 July 1965. The preliminary budget went to BOB in May, and it led to negotiations between management and the examiners of the Bureau's Military Division that continued until late summer, when the Bureau provided budget targets at two levels of effort. This concluded the first phase of the NASA budget review.20

By then NASA had begun to flesh out the details of its upcoming submission. In August and September top management sent instructions to the program offices for detailed estimates. On 30 September NASA formally submitted its request to BOB; during October and November Webb, Dryden, and Seamans met with the Director of the Budget and the President; and by January the President's final decisions had been converted into material for justifying the budget request before the authorization and appropriations committees. On the basis of various BOB staff papers, it does not seem that top management was deeply involved in the details of the budget submission until the final stages of the cycle. In 1967 one examiner thought it noteworthy that "unlike past years Mr. Webb has personally reviewed in great detail a variety of program alternatives . . . and has made all major program and planning decisions himself."21 Taken in context, this means no more than that he wrote and signed certain program memorandums enunciating his views on items in the 1968 budget. As a former Director of the Budget, Webb was aware that he could do more for NASA by establishing his agency's general posture toward the President's budget than by captious criticism of every detail. Webb contributed to firming up the budget by meeting with his program directors during the semiannual reviews, by meeting with the Director of the Budget to resolve any differences before the budget went to the Hill, and by using his right of appeal to the President to settle those matters that could not be settled between the Director and himself-a right that was itself controlled by guidelines issued by BOB.22

Three points about the budget review cycle deserve emphasis: the source of NASA's budget estimates, the multiyear character of NASA programs, and the Bureau's role in paring down the NASA budget. First, how did NASA officials match current expenditures against their requirements for the ensuing fiscal year? Estimates were made from the program operating plans (POPs) submitted quarterly by the field installations to the program offices and, through them, to the general manager. The POP was a financial plan that served as a basis for budget formulation, particularly when the greater part of the budget consisted of outlays for programs approved earlier; as a check on overobligating and overspending, both forbidden by the so-called Anti-Deficiency Act; as a basis for the current year [187] operating plan; and as the baseline of "planned financial activity" against which actual financial performance could be measured.23 The POP system was an effective tool for measuring actual expenditures, although it had to be adjusted to the everchanging demands of complex programs. Thus in 1966 the Management Committee chaired by Deputy Administrator Seamans made changes designed to leave the POP system more flexible than it had been. The committee confirmed the practice of fully funding fixed-price contracts, recommended an integrated financial management plan for comparing approved with actual funding levels, and authorized the centers to deviate from planned funding levels, provided they could justify their actions.24

Second, NASA had to consider three budgets simultaneously: the current operating budget, the budget for the ensuing fiscal year, and the preliminary budget for the fiscal year after that. The interrelations of the budgets were important because a deficiency in one year might be made good by reprogramming or diverting funds the following year. The NASA budget submissions explicitly recognized these relations. Even before the agency was required to adopt the planning-programming-budgeting system, NASA was sending up budget estimates with five-year cost projections. To that extent, drafting preliminary estimates constrained NASA officials to do some kind of long-range planning: to decide, for example, which year would provide a suitable launch window for an interplanetary probe; to determine whether a new tracking station that would support several spacecraft should be started this year or next; and generally, to establish some order of priorities.

Third, the detailed negotiations between NASA and BOB went far to strap' the content of the operating budget. For all the rhetoric and talk of "economy," Congress did little to alter the agency's requests before the 1967 session, and ever then it followed the Bureau's lead. Between 1961 and 1967 Congress cut the Administration's request by more than 10 percent only once: In 1964 it reduced the NASA request from $5.712 billion to $5.100 billion (table 7-2). Unlike the Bureau's action, this was an across-the-board reduction rather than the elimination of entire programs.

Actions of the Bureau, not Congress, led to canceling the last two Apollo flights; closing the Electronics Research Center; reducing Surveyor flights from 1 to 10; freezing NASA excepted positions at 425; and eliminating certain programs before they reached the development stage, such as the Advanced Orbiting Solar Observatory canceled by NASA in December 1965.*** The Bureau's strategy consisted of forcing NASA to make hard choices, to choose between programs that were merely desirable and those essential to the agency's mission. With only three or four individuals assigned to evaluate a $4 to $6 billion submission, and with several dozen budget officers in NASA prepared to justify every penny, the Bureau....

 


[
188]

Table 7-2.-NASA budget requests and appropriations, FY 1959-1971, in millions of dollars.

Fiscal Year

Administration Request

Amount Appropriated

Percent Cut

.

1959

$ 280.0

$222.8

20.4%

1960

508.3

485.1

4.6

1961

964.6

964.0

-

1962

1 940.3

1 825.3

5.9

1963

3 787.3

3 674.1

3.0

1964

5 712.0

5 100.0

10.7

1965

5 445.0

5 250.0

3.6

1966

5 260.0

5 175.0

1.6

1967

5 012.0

4 968.0

0.9

1968

5 100.0

4 588.9

10.0

1969

4 370.4

3 995.3

8.6

1970

3 715.5

3 696.6

0.5

1971

3 333.0

3 268.7

1.9

Source: Thomas P. Murphy, Science Geopolitics, and Federal Spending (Lexington, Mass.: Heath Lexington, 1971), p. 364.

 

....could force reductions only by concentrating on a few large programs. Secure in the knowledge (after 1967) that the White House would not intervene to restore major cuts in the NASA budget, Bureau officials wasted no time in cutting back. The history of the NERVA**** nuclear rocket program is a good example of how BOB/OMB tactics worked. When Congress eliminated the very ambitious NERVA II program in 1967, NASA kept the program alive at a more modest level. Sensing that the program was vulnerable, BOB/OMB pared down NASA budget requests over the next three years. By FY 1972 the program was barely alive; OMB reduced the NASA request for that year by nearly two-thirds, as the NERVA funding level dropped from $32 million to $9.9 million. Since no prospect of an operational nuclear rocket remained, in January 1972 NASA elected to terminate NERVA in favor of a smaller nuclear rocket system

However, in some cases programs were kept alive when Congress restored funds eliminated by the Bureau. In January 1965, for example, NASA, under pressure from the Bureau, announced that it would not request funds for the M-1 liquid-hydrogen engine, the SNAP-8 nuclear power system, or the large (6.6-meter-diameter) solid-fuel rocket motor. Webb and Seamans were very careful to avoid the words "cancelation" and "termination" in referring to these [189] development programs. As it happened, Congress restored funds sufficient to keep the large-solid-motor program alive for two more years, through the successful test firing of June 1967.25

The de facto cancelation of the three programs was important because it was the first major cut by the Bureau and the President since early 1961. By 1965 the advantage of managing programs that did not have to compete with equally compelling alternatives was almost gone. By then, the most important Great Society programs had been enacted, and the war in Southeast Asia was claiming a growing percentage of the budget. NASA submissions were beginning to come under the cold, hard scrutiny of Budget examiners, who were demanding that NASA offer alternatives to existing programs, quantify the noneconomic benefits of space exploration, show that a program like Apollo Applications did not duplicate DOD's Manned Orbiting Laboratory, and, generally, adopt a level of analysis that would have been unnecessary a few years earlier. Until then NASA had seldom been "nickeled and aimed" by the Bureau; now there would be little else. There seems little doubt that Webb was no longer able to influence the President to restore budget cuts to the NASA program. That had not always been the case. Webb's meeting with President Kennedy on 22 March 1961, when Webb appealed for restoration of cuts made by BOB in a supplemental appropriation request, initiated Kennedy's "involvement in space policy which was to culminate . . . with his announcing his decision that the United States should attempt to send men to the moon."26 In 1966 Johnson was no longer "the guy who said, I am your champion, I will go out there and fight your battles, I will get Kennedy and this Congress to give you the money." Instead, Johnson was telling Webb, "by God, I have got problems and you fellows are not cooperating with me. You could have reduced your expenditures last year and helped us out, you didn't do it."27

 

The Planning-Programming-Budgeting-System and the NASA Budget

The budgetary cycle just described was superseded in 1967 by a system that was controversial out of all proportion to its effect on Federal budgeting. The planning-programming-budgeting system (PPBS), already used by DOD for its budgeting cycle, was extended to many civilian agencies in 1965.28 The reasons for its success in shaping the DOD budget may account for its failure to "take" outside the Pentagon; in 1971 OMB quietly dropped the reporting requirements that were an essential part of PPBS. 29 The following section considers to what extent NASA's budget was "programmatic" before 1965 and why NASA failed to use the system in its internal planning.

Taken in isolation, the basic concepts of PPBS were neither new nor revolutionary. The purpose of the system was to combine analysis with budgeting in order to determine the output for specific programs. The system was intended to make goals explicit, to estimate total program costs (direct and indirect) over several years, and to present alternative paths to the same objectives. Some of the [190] analytical tools incorporated in PPBS had been available for years before its introduction: the 1921 Budget and Accounting Act had given GAO broad powers to review Federal programs, and an act of 1956 had called on agencies to provide long-range cost estimates and to maintain their accounts on an annual accrued expenditure basis.30 What was novel was combining these and other budgetary concepts in the Defense Department, when Robert McNamara became Defense Secretary in 1961. PPBS tools were refined by a team of analysts, many of whom were recruited from the RAND Corporation; and it was such former RAND staff members as Charles J. Hitch, who became Assistant Secretary of Defense (Comptroller), and Alain Enthoven, who headed the Pentagon Office of Systems Analysis, who introduced DOD to the rigors of program budgeting. Few agencies needed it more. The contrast between McNamara and his predecessors may have been overdrawn; for all his cost-reduction programs and cancelation of weapons systems like Skybolt and the B-70, there is little doubt that PPBS in the 1960s would have been impossible without the administrative reforms of the preceding decade, especially those embodied in the 1958 Reorganization Act (discussed in chapter 8). Nevertheless, prior to 1961 there had been an almost complete divorce between budgeting and military strategy within DOD. Budgeting had tended to be by service rather than by mission. Financial planning had been done on an annual basis, which led to premature commitments (and overcommitments) to weapons systems, as well as to considerable unnecessary duplication in the ballistic missile programs. Finally, there had been a "lack of reliable information on the costs of weapons systems.... new weapons systems generally ended up costing two to three times as much as they were estimated to cost when the program was originally approved. " 31 When McNamara became Defense Secretary about 40 percent of DOD development funds went for overruns on existing contracts.32

None of these problems could be considered apart from the others. For cost-estimation of military programs to be successful, several elements that were lacking would have been required: clear identifications of task, valid data, estimate updates, standardized work breakdown structures for estimates, independent reviews of estimates, and the like. The newly instituted DOD program budgeting procedures were designed to assemble everything necessary to track the real costs of programs. The Secretary of Defense was to be served by a central analytical staff, the Office of Systems Analysis, which reported directly to him and was independent of service interests. Financial planning was to be done on a multiyear basis. In addition to the annual budget, DOD officials would present Congress with a Five-Year Defense Plan, which included eight-year force projections and five-year projections of costs and manpower for the ten major military programs into which the Defense budget was divided.33 The plan combined costs and benefits, linked force with financial planning and, in Enthoven's words, "provided a vehicle by which the Secretary of Defense could make program decisions and tie them into the preparation of the annual budget."34 PPBS, in sum, led to a more integrated budget structure than DOD had yet known; with its emphasis on comparison of alternatives, the quantifying of outputs, and the use of cost [191] effectiveness techniques, it seemed to offer a revolutionary planning system for Government-wide use.

This was not to be. PPBS disappeared; it "became an unthing" before it had really been tested outside DoD.35 The history of PPBS in NASA may explain why the system failed to make much of a dent in the bureaucracy, especially since NASA seemed more disposed to use it than did other agencies. The NASA budget anticipated some features of PPBS: five-year cost projections, organization by broad program categories, and a budget structure that identified and considered costs for a specific project together. NASA had a multiyear budget. In addition aside from military interest in space, there was no division of responsibility for the conduct of the U.S. space program. Because the space program made use of systems like spacecraft and the vehicles that launched them, it seemed to lend itself especially well to program budgeting. In other words, "the space program consist[ed] mainly of a number of efforts to develop, test, manufacture and operate aggregations of physical equipment that perform clearly defined functions."36 So confident were BOB officials of NASA's willingness to accept the system that one examiner confided that "it will not be a matter of selling them on a new approach but more a matter of developing suggestions for worthwhile actions."37

Yet PPBS seems to have had very little effect on NASA budgeting. There were just enough similarities to make the reporting requirements of PPBS seem redundant, just enough differences to make it appear to be a threat to the stability of NASA program planning. The emphasis of the Pentagon Office of Systems Analysis on concentrating similar programs in one place suggested that PPBS might lead to amalgamation of NASA and DOD programs under single agency management. But the reasons for the failure of PPBS to take root in the Federal community in general and in NASA in particular go deeper. For one thing, it was oversold. President Johnson's endorsement of the system was enough to create suspicion that PPBS was too true to be good, that the system was nothing more than a gimmick. At the press conference in which PPBS was instituted, Johnson said that

 

under the new system each Cabinet and agency head will set up a very special staff of experts who, using the most modern methods of program analysis, will define the goals of the departments for the coming year.38

 

PPBS would "make our decisionmaking process as up to date . . . as our space exploring programs." The thrust of Johnson's message was that program budgeting would be imposed from the outside and, by implication, that most executive agencies were not equipped to understand the objective, scientific basis for decision making. The result is no surprise: Many of the agencies affected were quietly hostile to PPBS, although some were more than others. Agencies like the Department of Agriculture and the Department of Health, Education, and Welfare (DHEW) needed the integrated planning that PPBS purported to supply far more than NASA did. In the former, the principal constraint on program management [192] was the difficulty of discovering what the various bureaus and semiautonomous divisions actually did. DHEW and Agriculture had incentives to use PPBS that simply did not exist for NASA. Unlike NASA, neither agency had any kind of planning apparatus, especially for long-term planning. PPBS seemed to open the way for the Department Secretaries to gain some control over the bureaus-which were ostensibly subordinate but in reality semi-independent- that comprised their departments.39 Additionally, a rigorous system of policy analysis might establish the costs and benefits of the programs supported by, for example, the U.S. Office of Education, or it might establish the continued need for the Rural Electrification Administration, at a time when 99 percent of all U.S. farms were connected to regional power grids.

In general, PPBS could not be implemented where the agency head gave it no support. In cases of agency indifference or hostility, the system became merely one more reporting requirement imposed by BOB's Circular A-11. Webb's attitude was colored by his experience as President Truman's Budget Director. Moreover, he consistently opposed the delegation of responsibility for making decisions to any group of experts; this was the basis for his rejection, in 1966, of a proposal that NASA establish a general advisory committee of outside scientists to map a policy for the agency's space science programs. Whatever he might have said publicly, Webb was fundamentally sceptical of any system or technique that promised a "quick fix" to the uncertainties of research and development. As he explained to Budget Director Charles L. Schultze, one of the prime movers in the development of PPBS, the system promised a delusive certainty for programs with long lead times; NASA programs were not usually amenable to cost-effectiveness analysis; and the requirements of multiyear planning, "if literally insisted upon, could serve to deprive the agency head, the Bureau of the Budget, and the President of much of the flexibility they need."

 

The problem, as I see it, is to devise a procedure which will provide for essential and useful long-range planning of alternatives, and with the necessary information . . . communicated to the Bureau of the Budget for review, without requiring either the agency or the Bureau to give official status prematurely to a particular plan or action. To set such priorities too firmly in advance also invites constant and ingenious pressures to enlarge areas of special interest.40
 

Webb's lack of enthusiasm, the prior existence of a programmatic budget, the reluctance of officials to commit themselves in advance to programs of uncertain duration and funding, and the nonquantifiable nature of NASA's output sufficiently account for the insignificant role that PPBS played in post-Apollo planning. The essential difference between DHEW and NASA was that the former was, so to speak, the sum total of numerous quasi-autonomous divisions, while NASA was organized around projects whose successes or failures were obvious and unambiguous. In short, "much of what [Agriculture] or HEW generated in the form of information for use by management under PPBS was something NASA already had."41

[193] Consider the failure of PPBS from another perspective. Why did PPBS appear to succeed at the Pentagon, only to fail elsewhere? Principally because the Defense Secretary wanted independent analytical support and because he used the results of the analysis in preparing the budget requests that went to the President. Only superficially were the draft Presidential memorandums (DPMs), prepared by the DOD Office of Systems Analysis, the same as the program memorandums (PMs) required of civilian agencies. "The critical difference was that the DPM was sent to the President, while the Program Memorandums went to the Budget Bureau.... The DPM was a decisional document; the PM only an intermediate step in the long process of budgeting.... The DPM was prepared by systems analysts to reflect McNamara's views; the PM was composed by analysts removed from the centers of power."42 The concept of PPBS assumed a central "steersman" who directed and shaped agency policy. But as the analysis of headquarters organization in chapter 3 shows, and as other studies of public administration confirm, "the chief problem of the central administrator is to pick and choose a limited number of places and situations for strategic intervention, rather than seriously trying to 'steer the ship' in any detailed way.43 Had PPBS been rigorously applied within NASA, it would have seriously limited the discretion of the centers and program offices in carrying out the agency's mission.

 

The NASA Budgetary Cycle, 1967-1970

The introduction of PPBS did not immediately lead to any formal changes in shaping the NASA budget. The first, rather tentative guidelines, issued in October 1965 by BOB, explained the purpose of the system and described the three documents that agencies would henceforth submit: the program memorandum, which would cover each of the agency's programs, compare it with various alternatives, outline its assumptions, and list projected costs; special analytical studies in selected areas; and the program and financial plan (PFP), which would set forth projected funding in tabular form.44 The program categories to be used would be determined by the Budget Director in consultation with agency heads who, in turn, would assemble a staff to handle PPBS requirements.

How did these guidelines impinge on NASA? In organizational terms they had almost no effect. Webb established no new division to deal with PPBS. Instead, the work of drafting program memorandums, special studies, and PFPs was parceled out to offices burdened with other responsibilities. Indeed, the 1967 reorganization went completely against the grain of PPBS by splitting budget preparation from technical review. Webb virtually assured that there would be no division below the level of the Office of the Administrator to coordinate budget preparation. More precisely, the 1967 changes concentrated the responsibility for preparing the budget in Lilly's Office of Administration, not in Wyatt's new Office of Program Plans and Analysis. Lilly became the NASA Comptroller de facto five years before that position was created to take account of budgeterary [194] realities. The fate of the Office of Program Plans and Analysis illustrates a familiar pattern in NASA administration: No planning office has had much influence in shaping policy once it was divorced from daily operations. So far as one can tell, the creation of Program Plans and Analysis had nothing to do with BOB requirements and almost everything to do with power shifts at headquarters in the aftermath of the Apollo fire.

The first cycle in which NASA was required to use the PPBS approach was in 1966-1967, for the FY 1968 budget. To complicate matters further, this was when NASA at last set into motion its apparatus for post-Apollo planning. By the spring of 1967, several groups were working concurrently on different segments of the budget. Wyatt's office drafted program memorandums; the Resources Analysis Division of the Office of Administration prepared the PFPs; and the program offices made the special analytical studies requested by BOB. By then PPBS and the agency's own internal planning were so intertwined that it was hard to know where one left off and the other began. The program offices, after all, were commissioning their own advanced studies; one on large space stations even was accepted by the Bureau to meet the analytical studies requirement. In addition, a Planning Coordination Steering Group had been created by the program directors at the end of 1965 to do long-range planning in selected areas; much of its work, and that of its supporting working groups, paralleled the reports demanded by the Bureau. One finds the same elements in either case, particularly the emphasis on analyzing options for specific programs. Yet there was little, save for the staff support of the Office of Program Plans and Analysis, to link the planning teams with each other.

By the fall of 1967 NASA had had some experience of the system mandated by BOB, yet that system was not widely understood within the Bureau itself. The staff papers of the Bureau examiners reveal that PPBS was not working as intended: NASA officials were not meeting budgetary schedules and the Bureau was not working with NASA planning groups to validate their cost estimates. In any case, the events of that year, including the Apollo fire, made coherent planning very difficult. During 1967 NASA and the Bureau were reorganized, making this the first budgetary cycle for many in both agencies.***** The internal reviews of the Apollo fire preoccupied every key official for months, affecting costs and schedules in areas that used two-thirds of NASA's funds. Congress had reported, and the President had agreed to, a $500 million appropriation cut in August, thus forcing major program changes on NASA. For the first time since 1961 (except for the 1964 reductions noted above) Congress rather than the Bureau cut the NASA budget request: Voyager and Advanced Manned Missions were deleted in conference, and NASA did not define its current year operating plan until November. Finally, the simultaneous hearings on the Apollo fire and the 1968 authorization tied up the agency for months; something had to give, and that something was the [195] agency's planning structure. Both sides, NASA and BOB, were accountable for the shortcomings of the 1967 budget cycle: BOB because it did not develop methods refined enough to evaluate the benefits of alternative space missions; NASA because it allowed itself to be overtaken by events and because of divided counsels and the loss of morale throughout the agency. A BOB examiner summed up the situation just after NASA received its appropriations for 1968:

 

Morale is bad throughout NASA because of its first beating at the hands of Congress in the agency's history, the lack of Presidential support . . . the Apollo fire and other severe technical problems and schedule delays, and the strict guidelines for the 1968 budget. Mr. Webb is under siege by his staff for not fighting as hard as they think he should for their programs, by Congressional critics for a variety of assumed slights and irritations, and by the trade press which tends to blame him for all NASA's current problems, both internal and external.45

 

The instinct of the Bureau examiners was to cut, pare, and slash requests they deemed wasteful. All too often, what was meant as program analysis ended up indistinguishable from plain old economizing.

In truth, there were events external to the space program that made it impossible to evaluate proposals on their merits. NASA requests were cut back steadily by the Bureau after 1966, not because they lacked virtues that earlier requests possessed, but because of the Vietnam War, a balance-of-payments deficit, an overheated economy, and the higher priorities of Great Society programs. Johnson wanted to reduce spending without sacrificing the substance of his social commitments. When the NASA authorization bill was sent to the White House in August 1967 for Johnson's signature, Schultze and Presidential Assistant Joseph Califano listed the pros and cons of the President's issuing a statement before signing the bill. In signing, Johnson would in effect accept a $517 million reduction already voted by the House Appropriations Committee. Schultze argued that by issuing a statement, "it will help avoid later charges by supporters of the space program of a double cross. Eventually we are going to have to cut at least this much from the space program. If supporters of the program . . . fight for and get some restoration of this cut only to be faced with an administration-initiated reduction, they may charge bad faith."46 Hence Schultze's warning to Webb: "Avoid making commitments . . . for increases above the levels at which you err operating.... Exercise special prudence in filling vacancies.... Except when major Presidential items are concerned, avoid appealing for restoration of congressional cuts in recommended appropriations."47

The changes in PPBS after 1967 should be considered in terms of NASA's long-range planning rather than its budgeting. In any case, the future of program budgeting became less certain once Johnson announced his decision not to run for reelection in 1968. Thus the program decisions generated by the Administration could have, at most, a provisional validity. More important, neither President Nixon nor his Budget Directors had much faith in the assumptions on which PPBS was based. By reorganizing BOB as the Office of Management and Budget [196] (OMB) and by establishing a Domestic Council within the Executive Office Nixon separated budgeting from program analysis as thoroughly as Webb had done for NASA in 1967. The formulation of policy would take place outside the budgetary process. In Schick's words, "budgeting would operate alongside program coordination.... and other administrative functions. It would not be the central process for shaping the President's program and analyzing policy alternatives."48 The separation of the Domestic Council from OMB and the subsequent elimination of the reporting requirements developed by Schultze and his staff effectively killed PPBS.

So much for the formal and procedural aspects of NASA's budget preparation. Chapter 9 offers a consideration of the substantive content of NASA's program memorandums and special studies and of their effect on the agency's long-range planning. Now the discussion turns to Congress and to the fate of the NASA budget request once it was approved by BOB and sent to the Hill.

 

The Authorization and Appropriation Cycle

For NASA the critical program choices were made and reviewed in the initial phases of the budgetary cycle. As discussed above, most of the substantial cuts were made by the President or the Budget Director before the NASA budget went to Congress. Until 1967 the sheer complexity of legislative review tended to work in NASA's favor. The process of review might, with luck, timing, and political skill, lead to appropriations that were at best higher and at worst no more than 10 percent lower than the original submission.

The following were the principal stages in the cycle of congressional review:

 

1. Initial hearings before the House and the Senate authorization committees, followed by passage of House and Senate authorization bills after debate on the floor of each House.
 
2. Similar review by the House and Senate appropriations subcommittees responsible for the NASA budget.
 
3. Convening conference committees to resolve differences in the versions of the authorization and appropriations bills passed by each House.
 
4. Passage of the final authorization and appropriation acts.

 

The important features of the cycle were, first, that NASA had to seek annual authorizing legislation before it could secure appropriations; second, that the locus of power tended to shift from the appropriations subcommittees to the legislative committees once the annual authorization requirement became permanent; third, the lengths to which NASA went to avoid friction with its committees; finally, the temporary erosion of some good will in Congress, owing to the disclosure of the events leading to the Apollo fire, NASA's reluctance to submit a complete copy of [197] the Phillips report, and the agency's failure to present Congress with a coherent post-Apollo program.

The annual authorization requirement stemmed from the "Johnson rider" to NASA's first appropriation act in 1959, a requirement extended indefinitely a year later. Before 1959 most agencies were permanently authorized, and their only recurring hearings were before their appropriations committees. In that year, the authorization requirement was extended not only to NASA but to all expenditures for "aircraft, missiles, and naval vessels"; in 1962, to all new military research and development programs; in 1963, to the Coast Guard's construction and procurement programs; and by 1966, to the Peace Corps, the Atomic Energy Commission, and the Agency for International Development.49 The authorization requirement doubled the number of annual reviews of NASA programs. But it signified more; the leaders of both Houses wanted "control" and "oversight" authority before administrative action was taken, as well as review after the fact. The authorization committees, especially the House Science and Astronautics Committee, developed staffing and review procedures to keep informed of every phase of the civilian space program. The House committee was divided into subcommittees corresponding to each of the NASA program offices; and these, especially the Manned Space Flight Subcommittee chaired by Representative Olin Teague (D-Tex.), expected to be fully briefed at the centers by key program officials.50 They, rather than the full committee, reviewed and passed on NASA requests.

The authorization committees acted to shape NASA programs in three closely related ways. First, the bills reported out of committee set the ceiling, the maximum, for NASA appropriations. Second, the committee reports accompanying the authorizing legislation imposed limitations and preconditions on how the funds made available could be spent. Third, the committees prescribed the conditions under which NASA could reprogram or transfer between accounts, as well as the percentages and dollar sums involved. (Of some 130 reprogramming motions made by NASA between 1958 and 1969, virtually all were approved.) And the committees were extremely sensitive to any sign that NASA was trying to outflank them. In 1969, for example, the members of the Senate Aeronautical and Space Sciences Committee learned that the MSC Lunar Receiving Laboratory, originally authorized at $8.1 million, would be completed for approximately $16 million, most of which was accounted for by equipment provided out of R&D funds. They also discovered that NASA had built a neutral buoyancy facility at Marshall-a gigantic water tank to simulate weightlessness-using over $1 million of R&D money after the committees had denied funding under COF. To prevent this from recurring, the committee reaffirmed and wrote into the 1970 Authorization Act a provision that required NASA to notify the authorizing committees of intent to use R&D funds for any facility whose cost (including collateral equipment) would exceed $250 000. They further requested that every facilities project include "the total estimated costs necessary to provide for a completely operable facility." The same act also canceled unfunded authorizations [198] for fiscal years 1967-1969, that is, funds for which no appropriations were voted; committee members suspected that NASA was requesting more money than was necessary.51

By virtue of their authority to review the substantive content of NASA programs, the authorization committees were best able to consider the agency as a whole. The appropriations committees had to review numerous independent agencies, while the authorization committees reviewed at most two or three, including NASA and agencies like the National Science Foundation and the National Bureau of Standards. There were certain differences between the committees, differences subtly reflected in the language of their reports. Where the House Science and Astronautics Committee "recommended," the Senate Aeronautical and Space Sciences Committee "concurred." Because the House committee generally initiated the NASA authorization hearings, the Senate committee could act as a court of appeal to restore cuts made by the former. Since the Senate committee had no subcommittees, its review was less exhaustive than that of the House, which was doubtless a welcome relief for NASA officials who had to make the trip up the Hill.

Aside from limitations written into authorizing legislation, the many recommendations included in the reports, although not binding, tested NASA's responsiveness to congressional advice. Thus the 1964 act and subsequent authorization acts urged NASA to distribute R&D funds on a geographical basis.52 A 1966 staff paper listed occasions when NASA took action "consonant with" advice contained in reports of the Science and Astronautics Committee.53 The committee doubted the need for a lunar roving vehicle experiment for Surveyor; NASA discontinued the development. The committee instructed that the thirteenth, fourteenth, and fifteenth Ranger spacecraft be dropped; NASA deleted the last six, which suggests that NASA would have discontinued the program even without prodding from the House. The committee further requested that NASA not proceed with the Electronics Research Center until the agency had submitted a detailed report justifying the center and the site selection procedure; NASA submitted the report on 1 February 1964 and did not proceed with the center until after the report was submitted. As a final example, the committee recommended reducing the Mariner program by $15 million to eliminate a 1965 Venus flyby; NASA canceled the mission.

However, NASA did not invariably conform to congressional recommendations. In its 1964 report, the Science and Astronautics Committee suggested that NASA seriously consider closing its Flight Research Center, since there seemed to be no reason for its continued existence beyond the X-15 program. NASA replied that the X-15 was an ongoing program and that research on high-speed aeronautical flight called for the center's continued operation. Moreover, NASA would not comply with committee recommendations where it believed itself better qualified to pass on the technical merits of programs; for this reason, the agency did not follow the suggestion of the Science and Astronautics Committee to favor solid-fuel over liquid-fuel propulsion research.54 NASA took note of but did not [199] strictly comply with the committee's expressed wish that R&D funds be distributed on a geographical basis. Although NASA officials pointed to the use of subcontracts for distributing R&D money, there is little to show that contracts were let in order to maintain the regional parity that both Houses encouraged.+

Thus NASA complied with Congress where it could safely do so, and it reserved the right to determine its needs in other matters. Until 1967 NASA could count on strong support in the House and the Senate. All four of the committees that reviewed the agency's budget were chaired by members from districts (or regions) where NASA had placed large contracts. Representative George Miller (D-Calif.) was chairman of the Science and Astronautics Committee from 1961 to 1972. Senator Clinton Anderson (D-New Mex.), of the Aeronautical and Space Sciences Committee from 1963 to 1973, was also a member and sometime chairman of the Joint Committee on Atomic Energy. Albert Thomas (D-Tex.), the powerful chairman of the House Independent Offices Appropriations Subcommittee, was succeeded in 1966 by Tennessee Democrat Joe Evins; his Senate counterpart was Warren Magnuson (D-Wash.). Yet it would be as foolish to overestimate the importance of regional influences as it would be to ignore them entirely. For one thing, there were supporters of the space program, like Senator Margaret Chase Smith (A-Maine), who represented regions with which NASA did very little business, even indirectly. For another, many field centers and a goodly portion of the aerospace industry were already in place when NASA was established; for reasons predating NASA, it would have been exceedingly difficult for the agency to place prime contracts, say, for Apollo, outside those regions where the capability already existed, which were mainly, although by no means exclusively, southern California, Texas, the Southeastern States, and the New York and Boston areas. But most important, the so-called "political" decisions, like the selection of Houston as the site of the Manned Spacecraft Center, were no more (or less) political than the programs that first led to the decision to transfer the Space Task Group to a new installation. Granted that the Vice President (who was also the Space Council chairman), the Speaker of the House, the chairman of the House Independent Offices Appropriations Subcommittee, and the chairman of the House Manned Space Flight Subcommittee were Texans. There were other good reasons for selecting Houston: it was well located in relation to Marshall and the Cape, and it had some of the best port facilities in the country.55 As Murphy notes, "there were some powerful political figures in virtually every major metropolitan area where NASA might have put a facility. The series of location decisions led to an integrated system of facilities and in none of the cases involved did NASA select an unlikely or unsuitable site." 56 Moreover, the kind of political support gained by these decisions was emphatically a perishable good. As President, Johnson had other constituencies to satisfy than when he had been chairman of the Space Council. Nor did NASA's accumulated good will [200] survive the Apollo fire, BOB cuts, and the establishment of other priorities in the mid-1960s.

To understand, then, how NASA worked with and through Congress, one must recognize other strategies that were more important than the major site and source selection decisions; the latter were essentially nonrecurring. One tactic was the exceptional thoroughness with which NASA prepared for its annual hearings. No more than other agencies could NASA afford to come before Congress ill prepared. But sometimes the very thoroughness of the presentations tended to obscure the points being made. During the 1968 authorization hearings, members of one Science and Astronautics Subcommittee "received a lengthy lecture on the effect of control lag on the dynamic stability of aircraft, saw slides depicting the failure data for alkaline batteries under simulated space use, and learned the effect of heat stabilization on battery separator materials."57 Without technical staff support, it is unlikely that Congressmen could make much of such briefings; too often, it seemed as if NASA wanted to win committee votes by the sheer bulk of the information it supplied. NASA's congressional hearings could cut both ways. The committees were impressed by the thoroughness and tidiness of NASA's budget requests, a thoroughness intended to leave no doubt of the rightness of the agency's position. But that same thoroughness also irritated those Congressmen who had to pass on the NASA budget. As one frustrated subcommittee chairman-who was by no means unfriendly to NASA-told NASA Director of Space Sciences Newell:

 

Another real problem . . . which makes it difficult for the committee to function properly is that we never get two sides of the argument. It is fairly easy for me to make up my mind as to who is right or wrong . . . on the question of medicare, or tax reduction . . . because I have someone else doing my research for me . . . there are those who are opposed and who will mention all of the reasons why this act should not be allowed, and there are those on the other side who give all the reasons why it should be allowed.... We don't have people appearing before this committee in opposition to the manned lunar landing program . . . or the Surveyor program, or whatever it is.... once I think the committee should lose confidence in the judgment or in the veracity of the statement that is being given . . . I think probably it would be extremely disastrous.58

 

It was crucial that NASA's top officials be selected for their ability to get along with Congress. Glennan and Webb were careful to observe several rules of the game: keep the committees fully informed, even beyond statutory requirements; never present Congress with accomplished facts, such as "foot-in-the-door" programs that might commit the legislature to huge and continuing appropriations; respond to the mood of Congress by taking timely administrative action; and live within the funds voted, that is, not request supplemental appropriations unless such requests were unavoidable.++ All these rules might be summarized as follows: The head of the agency had to be able to sense what Congress would and [201] would not accept. As discussed, NASA tried to bring its advanced studies under some kind of control, lest Congress interpret them as studies of programs already approved by top management. This is why Seamans withdrew his approval of twenty-two studies in August 1967 and why NASA canceled an ill-timed study proposed by MSC for a manned Mars and Venus reconnaissance spacecraft. In other cases, NASA tried to anticipate the inclination of Congress. After being criticized for spending too little on aeronautical R&D, NASA established the position of Deputy Associate Administrator for Aeronautics (DART) in May 1967. To forestall a congressional investigation of the Centaur program, NASA transferred the program from Marshall to Lewis in October 1962. When the House subcommittees pressured NASA to spend more on unmanned space science, NASA created the Lunar and Planetary Missions Board, ostensibly to involve outside scientists in tactical as well as strategic decision making. And in one case, the 1964 investigation of the Ranger 6 failure, NASA seems to have tried it both ways: It used the hearings both as a forum for justifying its relations with JPL and as an implied threat to JPL to improve its managerial and technical performance.

All these examples were, so to speak, actions at a distance. Although it was a response to an internal need, the decision to transfer Centaur was reinforced by the mood of the Congress. Needless to say, top NASA officials had to know their way around the Hill and how to deal directly with Congress. The Administrator not only had to speak on behalf of the agency but also had to anticipate budget cuts and to use personal influence either to avoid them or to restore whatever had been eliminated. One example that may stand for many occurred when the NASA appropriations bill reached the door of the Senate in August 1966. Senator William Proxmire (D-Wis.) introduced two bills to cut the 1967 authorization by $500 million and $156 million. Webb and his allies acted promptly. Senator Anderson "bolted his back and said, '$5 billion is the psychological level and I am going to do everything in my power to keep you from dropping below $5 billion."' Webb

 

had to round up Senators out of the boondocks . . . and get a live pair not to lose the Proxmire amendment.... I have to tell [Stuart] Symington, who is the senior Democrat on the [Aeronautical and Space Sciences] Committee that I was going to interpret his vote as a personal vote of confidence or a vote of no confidence in me personally because he was prepared to support (?) us on the $500 million cut and to vote with Dick Russell . . . to cut us $160 million on the second Proxmire amendment. . . . You have got to estimate this situation as accurately as we estimate the other elements of success in our business and I don't think that I am giving you anything except cold reality.59

 

Both motions were defeated.+++

[202] NASA could woo Congress with briefings at the centers and special presentations for the benefits of the committees. But the ability of NASA's top officials to twist arms or successfully threaten the collapse of the space program in the absence of funding was no small asset either.

What has been said so far applies mainly to events preceding the Apollo fire. Had there been no fire, the NASA budget would probably have tapered off as the Apollo mission was completed, construction was ended, and the costs of standardized launch vehicles became more predictable. To exaggerate, the fire was the great divide; for the first time since 1961 Congress began to question NASA budget requests, to eliminate (and not merely reduce) line items, and, in general, to make the NASA budget very austere indeed. To this point, the discussion has concerned the procedural aspect-the "how" of the budgetary process. It is now time to consider the substantive changes within the NASA budget: how total outlays grew and then declined rapidly, how NASA fitted into certain more general patterns of Federal R&D spending, and how other Federal programs impinged on NASA's programs.

 

FEDERAL R&D SPENDING IN THE 1960s

 

Broadly speaking, there are three ways to look at the NASA budget. One can regard it as a percentage of the Federal budget, especially of the portion for R&D; one can chart the growth rate of specific program categories; or one can take the entire NASA budget and consider the most important changes from the Kennedy administration until 1970. A useful analysis may begin by considering total R&D spending during the period under consideration. As a proportion of the gross national product (GNP), total R&D funding rose to 3.0 percent in 1964 and declined to 2.6 percent in 1970.60 The ratio of R&D expenditures to total Federal budget outlays declined from 12.4 percent in 1965 to an estimated 7.4 percent in 1972.61 Although these figures are useful indicators of gross trends in Federal spending, one must look at specific programs to see what the trends really amounted to (figures 7-1 and 7-2).

First, from 1960 to 1966 the steepest growth rates were influenced by the expansion of the space program; the decline of the program led to a corresponding drop in Federal R&D spending. The history of NASA funding, its dramatic rise and fall, was unique among R&D categories, most of which either remained stable or showed steady growth. What one sees in the late 1960s is a rise in absolute dollars for R&D, a drop in R&D spending as a percentage of total Federal outlays, and significant increases in R&D for programs or agencies that had previously spent little in this area. Some of the largest percentage increases in R&D spending after 1966 occurred in community development and housing programs; education and manpower programs, mostly sponsored by the U.S. Office of Education and the National Science Foundation; transportation, including joint NASA-DOT programs such as the supersonic transport and the quiet .....

 


[
203]

Figure 7-1. Federal R&D expenditures, FY 1960-1972.

Figure 7-1. Federal R&D expenditures, FY 1960-1972.

 

Figure 7-2. Ratio of R&D expenditures to total outlays, FY 1960-1972.

Figure 7-2. Ratio of R&D expenditures to total outlays, FY 1960-1972.

 

[204]..... engine program; and environmental and national resources programs that, while constituting only a modest percentage of Federal R&D spending, showed the largest relative growth from about 1971. In a sense, the increases for these programs can be considered independently of the fate of the NASA budget. Agencies such as the Department of Housing and Urban Development or the Office of Education are not R&D agencies in the sense that NASA and the National Institutes of Health are. Rather, there was a shift in spending from R&D to social welfare programs, whether or not they had R&D components. In this context, it is worth noting that although health outlays between 1966 and 1970 rose at a much higher average annual rate than any other function, almost all of the increase was attributable to funding the Medicare and Medicaid programs, beginning in 1966.62

The issue is not that funding for space declined in order to provide for social services. Features that were built into the space program, like the completion of facilities projects or the standardization of launch vehicles, would have reduced NASA spending even without competing programs. This is not to deny that Johnson and Nixon intended to cut the space budget in order to save their social welfare programs. But did the former decline because the latter increased? To prove that it did, one would need to know the extent to which funding for social programs simply marked a redistribution of existing dollars. If a causal relation existed, the space budget could be expected to resume its growth as the growth rate of domestic spending began to level off. However, independently of any shifts in domestic spending, the NASA budget declined for nine consecutive fiscal years, beginning in 1967.

The decline of NASA spending as a percentage of Federal spending was the result of many concurrent trends. On one hand, NASA continued to claim a large percentage of R&D funds; in 1972 defense, space, and atomic energy accounted for 86 percent of federal R&D spending.63 But R&D itself declined steadily as a percentage of the budget. To a degree this was because BOB/OMB and Congress began to question not only the kinds of research being funded but the rationale for doing such research at all. Hence the rider to the 1970 military authorization bill (the so-called "Mansfield Amendment"), which forbade the use of appropriations for research projects or studies "unless such project or study has a direct or apparent relationship to a specific military function or operations."64 Although Congress viewed NASA and DOD requests much more sceptically than it had five years before, there is little evidence that either Congress or BOB/OMB had any comprehensive scheme to redistribute R&D funds to domestic programs. The budgetary process did not work that way, nor were social investment and services all of one sort. Rather, the social programs-instituted by Johnson, continued by Nixon-have claimed a larger percentage of the budget since 1965. The principal increases were in retirement, disability and unemployment compensation, the creation of new low-income assistance programs for the poor, and the expansion (1965-1970) of social service programs in education, health, and manpower training. Together, the last three categories accounted for nearly 11 percent of [205] GNP (nonrecession) in 1970.65 Income security alone rose from 21 percent of the budget in 1960 to an estimated 29 percent in 1972.66 By comparison, NASA's share of the budget, which peaked at 4.7 percent in 1966, declined to 1.5 percent in 1972.67

 

TRENDS IN NASA PROGRAM CATEGORIES

 

The agency's program categories reflected the rise and fall that characterized the budget as a whole. The term "programs" is used here rather than appropriation accounts because of disadvantages in using the latter as yardsticks, including the use of R&D money for facilities projects, which distorts the real expenditures for R&D programs; the continual reprogrammings within accounts; the difficult, of discriminating between new obligational authority and actual outlays during the fiscal year; and the use of funds for both NASA and contractor employees. A categorical breakdown gives some idea of where the money went. The National Science Foundation (NSF) has classified all NASA activities as "space research and technology."++++ According to the NSF categories, NASA was the only Federal agency to conduct activities that involved either R&D or construction of R&D facilities. Moreover, the latter category declined steadily as major construction projects were completed; by the late 1960s the bulk of NASA facilities spending was for capital equipment rather than R&D plant construction. By 1970 such outlays represented less than 2 percent of total expenditures, and they were at no time more than 14 percent.68 Trends in R&D expenditures are shown in figure 7-3.

The principal trends in NASA outlays are readily apparent: the high proportion of funds spent on manned spaceflight and the sharp and steady decline in such funding after 1966; the parallel funding patterns for space science and applications, with a renewed spurt in 1968-1969 as Viking, Pioneers F and G, and Mariner 1971 got under way; the leveling-off for supporting space technology principally in tracking ships and aircraft for Apollo; and the steady growth in aircraft technology since 1963, especially in the form of nonreimbursable support for programs sponsored by FAA and DOD. Except for the last category, 1966 was the turning point, as measured by almost any standard. The decline of manned spaceflight (after completion of Gemini and with approaching completion of the heaviest investment in Saturn and Apollo), which in 1966 accounted for 71 percent of NASA outlays, was mainly responsible for the cutback in the average annual growth rate for R&D spending after 1966.

A related question concerns the effect of the funding levels on different agency functions. By definition, supporting space technology would tend to rise and fall with the programs it supported. But the relation between the funding....

 


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206]

Figure 7-3. Space research and technology expenditures by function.

Figure 7-3. Space research and technology expenditures by function.

 

[207] ....levels of the three substantive program offices-OART, OSSA, and OMSF-is surprisingly difficult to ascertain. One almost has to fall back on impressions, hints, and occasional remarks in memorandums, since there are no detailed studies of, for example, the effect that Apollo had on the other offices' programs. Programs like Ranger and Surveyor were approved prior to Apollo, but their original purpose was subsumed in the greater glory of the lunar landing. Beyond such program changes, only a few tentative conclusions are possible, pending further research in this field.69 First, the introduction of Apollo appears to have had "only a very secondary beneficial impact" on OSSA funding growth from 1961 on; while the continued level of Apollo funding in fiscal years 1967 and 1968 seems to have contributed to a major slowdown in OSSA activities, beginning in FY 1967. Second, Apollo stimulated to some degree the growth in OART spending after 1961, principally in supporting research and technology; but even this influence is uncertain, because OART at the time was moving beyond NACA practice by not only doing applied research but by building hardware to "prove" the research concept. Also, the funding of all four program offices grew steadily until 1966. It seems likely that many research programs, particularly at the older centers, were approved because they were considered as direct or indirect support for Gemini and Apollo, but to demonstrate a causal relation, without a case-by-case evaluation of programs, is impossible. There seems to have been a more direct relation dating from 1967, when basic research and unmanned programs were cut to support Apollo.

 

PHASING DOWN THE SPACE PROGRAM, 1965 - 1970

 

The discussion in this chapter has tended toward one question: By what criteria did BOB and Congress decide whether and how much the NASA budget rose or fell? Obviously, NASA was not a closed system; one cannot entirely discount the budgetary impact of the Vietnam War and Johnson's policy of combining a tax cut with continued social service spending. Clearly, there was no grand scheme to shape the agency from outside. As far as it is possible to isolate internal from external causes, one of the major reasons for the decline in the NASA budget was the agency's failure to plan effectively for the long term. There were three kinds of programs for BOB and Congress to consider in the period of concern: approved programs that were nearing completion (such as Apollo); approved programs for which continued major funding was sought (Voyager); and new programs like Apollo Applications that NASA wished to initiate, with the implication that Congress would continue to fund them after the first year. But these categories were never watertight; much of NASA's work, especially in advanced research, would strongly influence future programs. Thus the future of NERVA hung on the decision to continue production of the Saturn V, of which NERVA was to be the upper stage. And the production of Saturn V depended in turn on the uses to which the vehicle might be put after the first lunar landing.

[208] The same considerations applied to the large-solid-motor program that NASA took over from the Air Force in 1963, almost had to terminate in 1965, but continued until 1967 with funds restored by Congress. The program led to remarkable advances in propulsion technology; on its final test firing, the SL-3 motor generated 25 million newtons of thrust, far more than any other rocket motor developed to that time.70 But no program in 1967 required technology of this order.+++++ Or consider the M-1 liquid-hydrogen engine, initiated when NASA planners were thinking in terms of a direct ascent mode for the lunar landing. Once Saturn V replaced Nova as the Apollo launch vehicle, no such engine was needed. Yet it was kept alive for more than another two years.

Three features of agency policy contributed to, perhaps caused, cutbacks in NASA programs. The first was the inability of the agency's top officials to submit or prepare an official long-range plan for post-Apollo missions. There was no lack of planning within NASA, considering the prospectuses by the program offices, center proposals, and advanced studies. But Webb was extremely reluctant to commit NASA to anything specific beyond Apollo, partly because there were serious disagreements even in OMSF over the future of manned spaceflight, partly because any formal plan would, in Webb's view, commit the agency to programs that it would not be able to renounce. Significantly, the one attempt between 1963 and 1968 to specify programs after Apollo was not even called a plan. The Future Programs Task Group, established in January 1964 after President Johnson requested of NASA a statement of objectives beyond those already approved, submitted a report in April 1965.71 But it merely enumerated, without choosing between, the kinds of options available once certain assumptions were granted. The Senate Committee on Aeronautical and Space Sciences criticized the report for just this reason: It did not explain how or when a selection between priorities would be made, indicate the funds needed for various alternatives, or mention military considerations and the role of DOD. In a sense, these criticisms were beside the point. As chapter 9 details, Webb was interested primarily in developing a capability to operate in space, while at least some Congressmen were more interested in the uses to which that capability would be put. Thus NASA and, to a degree, Congress, were at cross-purposes. Not Webb nor Mueller nor the Planning Coordination Steering Group could develop a convincing program, one that distinguished between the respective roles of manned and unmanned programs or the relative merits of orbiting space stations and applications satellites. To confuse the issue further, NASA officials tended to veer from one kind of justification to another. The Apollo mission was defended for reasons of prestige, for the benefit of beating the Russians in a race they were not always aware of being in, or for the long-term benefits it promised all mankind. But NASA did not hew to any line consistently or with conviction.72

[209] Second, the Apollo fire destroyed some of the trust that had developed between NASA and Congress since 1961. What angered some Congressmen almost as much as the fire itself were the circumstances in which NASA had awarded North American Aviation the command service module contract, as well as NASA's refusal to make public the Phillips report. Support in Congress declined, to be regained gradually over the succeeding eighteen months. Those who had opposed the space program before the fire became more open in their opposition, while others tended to back away from earlier positions of support.

Finally, NASA tended to conduct long-range planning in almost purely substantive terms. As discussed in chapter 5, one of NASA's primary problems was what to do with its skilled manpower once the programs for which they were recruited phased down. If scientists and engineers were to remain at one center, it was imperative to establish the center's role beyond its original mission. As mentioned, as early as 1963 the House Science and Astronautics Committee had suggested closing the Flight Research Center. During the next seven years NASA was forced to close the Electronics Research Center, place the Mississippi Test Facility on a standby basis, and order sharp reductions in force that threatened the ability of other centers to keep their most talented people.

In conclusion, the budgetary process worked in NASA's favor when it had an overriding mission to accomplish, few direct competitors, and no opposing vested interest. In one sense, NASA's problem after 1965 was to develop an integrated plan that would involve all its capabilities; in another sense, it was to attract new clients with an interest in furthering the space program. For lack of both, Voyager was canceled and Saturn V was discontinued after the fifteenth vehicle.73 Several missions, including the Skylab space station (Apollo Applications renamed) and the unmanned Viking mission to Mars, were delayed, the former by four years, the latter by almost three. Furthermore, the agency's Sustaining University Program was canceled; and the nuclear rocket program, though kept alive as NERVA I, lacked a specific mission. The fragmented, incremental nature of budgeting worked in NASA's favor during the early 1960s because what was lost at one stage could be regained further down the line. However, this feature of the budgetary process did not prevent continually declining budget requests and continually declining appropriations after 1966;74 it merely guaranteed that the NASA budget would not be reviewed as a whole. Perhaps the civilian budget was never amenable to such examination. Few of its larger programs were susceptible to the kind of cost-benefit analysis that was at the heart of PPBS. As shown, the very special conditions that made PPBS work at the Pentagon did not hold for most civilian agencies and particularly not for NASA.

 


* The decision to build a Tracking and Data Relay Satellite System may have owed more to NASA's desire to reduce its dependence on tracking stations located on foreign soil than to any presumed cost benefits.

** From 1959 to 1962 this account was "salaries and expenses"; for FY 1963 it was merged with R&D as "research, development, and operations"; and since 1969 (FY 1970) it has been "research and program management. "

*** It is also possible that the Bureau reduced NASA's requests to forestall action by a Congress that was in an economizing frame of mind.

**** Nuclear Engine for Rocket Vehicle Application.

***** One of the changes within the Bureau was the establishment of an Economics, Science, and Technology Division, headed by Jack Young, to monitor the NASA budget.

+ NASA had more funding flexibility in its university programs, since supportable work could usually found in any large geographical region.

++ Congress was more than normally unpredictable in passing on supplementals. NASA's request for a $141 million supplemental for FY 1964 was cut by half.

+++ On another occasion, when the chairman of the House Appropriations Committee tried to reduce the NASA budget by close to S I billion, NASA officials managed to kill the move by going to all the subcommittee chairmen and impressing them with the fact that if this could happen to NASA, then it could happen in their own areas. In this way, the various members of the main Appropriations Committee were able, in a sense, to "take it away from the chairman."

++++ DOD space programs were placed in a separate "military astronautics" category. The sharp drop in spending for military space R&D in 1969 was due mainly to the cancelation of the Air Force Manned Orbiting Laboratory.

+++++ Once the development team was dispersed, it would have cost more to start up the program than to carry it to completion. One wonders how much NASA spent in the late 1960s on closeout costs for programs that were terminated.


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