NASA pact up in the air Boeing, Lockheed vie for right to manage agency's satellites; $6 billion contract; First privatization may be extended to other agencies; Aerospace


The public may yawn at rocket launches these days, but NASA has put some thrill back into the space program for its contractors.

Around July 1, the space agency plans to make a fundamental change in the way it does business, handing over management of satellites to private industry so that NASA can concentrate on science.

Two groups of companies are counting down to the announcement of who won the$6 billion, 10-year NASA contract. Many consider this the first phase of a much vaster privatization that may take in the space networks of the Pentagon and intelligence services.

The primary pursuers of the job are the country's biggest aerospace contractors: Lockheed Martin Corp. of Bethesda and Seattle's Boeing Co.

Each is orbited by a swarm of support companies, and probably none is more interested in the outcome than AlliedSignal Technical Services Corp. of Columbia, which is on the Lockheed Martin team.

The AlliedSignal subsidiary has, under one corporate name or another, operated most of the National Aeronautics and Space Administration's Earth-orbiting satellites since 1958, almost as long as such devices have existed. About 1,700 of its 5,500 employees work in satellite ground control at NASA's Goddard Space Flight Center in Greenbelt.

The individual engineers are not likely to suffer if AlliedSignal loses the all-or-nothing new contract; Boeing has said it would like to hire workers who are already on the job.

But AlliedSignal Technical Services, as a company, has a great deal on the line. "This is must-win for them, absolutely must-win," said Brett Lambert, an industry expert with the DFI International consulting firm in Washington. "Their revenue base for that division is largely dependent on these types of services."

The company is leery of rocking the boat by talking about the pending contract, which is called the Consolidated Space Operations Contract, or CSOC (SEE-sock). Division President Ivan Stern would say only that the work is a "natural extension" of his company's years of experience. He pointed out AlliedSignal Technical Services won a George M. Low Award for excellence this year from NASA.

"We are confident that our award-winning performance and demonstrated ability to reduce operations expense for NASA will help us win CSOC," Stern said.

AlliedSignal joined the less risky of the two competing teams. In what seems to be a recurring pattern for the country's leading aerospace companies, Lockheed Martin and Boeing have taken distinctly different approaches to the contract.

Lockheed Martin stuck with its gray-flannel-and-pinstripes corporate image. Its team, which includes Computer Sciences Corp. of Northern Virginia along with GTE, Booz Allen and Hamilton and several others, features most of the incumbent companies who have been doing such work for NASA for decades.

"It was principal to the design of our strategy," said Ken Asbury, vice president of business development for Lockheed Martin Space Mission Systems and Services in Houston. "We wanted to make sure we captured the institutional memory that NASA has made probably hundreds of millions of dollars of investments in."

For instance, more than half of the initial CSOC business will be at the Goddard Space Flight Center, where NASA controls most of its Earth-orbiting satellites. Computer Sciences Corp. and AlliedSignal Technical Services have not only handled ground control duties at Goddard for years, but have recently pioneered the CSOC concept by sharing operational responsibilities.

Lockheed Martin's strategy is to use that knowledge as a baseline for bringing NASA around to more efficient ways of doing business. The space agency's 1998 budget of about $14 billion is equal to what the Pentagon spends in about three weeks, and the Clinton administration plans no increases for the foreseeable future.

NASA Administrator Daniel S. Goldin is pushing the agency to focus on its core sciences and privatize everything else. A joint venture of Lockheed Martin and Boeing, for instance, took over management of the space shuttle program last year.

The CSOC contract involves consolidating routine space operations for NASA's major space centers. The primary portion of the job -- at least initially -- will be managing unmanned satellites, though the CSOC contractor will also oversee data and computer networks used in human space missions.

NASA hopes to cut operations spending in half by switching to more efficient commercial practices and unifying numerous separate contracts into CSOC. Any savings are to be plowed back into research and exploration.

The effort could mean closing some NASA facilities, Lockheed Martin's Asbury said. His company's team claims that its years of experience qualify it to make tough decisions.

"If you're starting from a much less learned position, you might have a more difficult time making the changes you need to make," Asbury said.

Boeing, by contrast, went after CSOC with the same leather-jacket-and-Ray-Bans spirit that has colored the company's recent approach to other big government contracts, such as the race to build the Pentagon's next generation of multipurpose jet fighters.

"Let's not look at how business is done today, but at what does technology enable us to do?" said Rick Stephens, president of Boeing Space Operations in Downey, Calif. "We set ourselves a vision for the future unencumbered by the past as opposed to looking at where we are today and then evolving to the future. We started with a clean sheet of paper and said, 'What's the best we can go do?' "

With team members such as Lucent Technologies, SAIC and Johnson Engineering, Boeing wants to move quickly to drive satellite access into the hands of research scientists. Rather than go through Goddard, for instance, a researcher should be able to communicate with his or her satellite from the university or even home, Stephens said.

The company plans to speed that process by creating an "integrated services center" in Maryland near Goddard, he said. The center would be a clearinghouse for data passing between researchers and spacecraft.

Lockheed Martin's team also plans to help scientists get direct access to satellites, but speaks of that process as being several years down the road.

Stephens is more dramatic. The basic goal for his team, he said, was to "provide an offering that NASA could look at and say, 'Boy, if we implement what the Boeing team is proposing, we're going to do things differently.' "

The $6 billion question is how bold NASA wants to be.

"You can make a case, really, for either approach," said Loren Thompson, who studies the industry for the Lexington Institute think-tank in Rosslyn, Va. "The space business by its very nature is risky, and therefore too much innovation can be asking for trouble. On the other hand, NASA knows it needs to change the way it's doing business so clearly there is some room here for creativity."

How much room may depend on the other sets of eyes watching the CSOC process. While NASA has several dozen satellites to maintain and runs tracking stations across the globe, the military space market is bigger.

"Whoever wins this, if they don't screw it up, the multiplier effect of this contract four or five years down the road is going to be tremendous," said analyst Lambert. "They can expect several times larger dollar amounts within the Department of Defense."

Pub Date: 6/21/98

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