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


June 21, 1998|By Greg Schneider | Greg Schneider,SUN STAFF

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.

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