Managing from the outside

Big changes may be in store for NASA employees who work in the agency's 10 field centers if officials decide to let the nonprofit sector operate the centers. A change could mean new jobs — and new bosses — for agency employees.

But as NASA officials consider transformation options, they also are grappling with defining the right management solution. They have issued a request for information to gather suggestions about whether they should proceed with a new management model. One option is turning NASA field centers into Federally Funded Research and Development Centers (FFRDCs).

In June, the President's Commission on Implementation of U.S. Space Exploration Policy issued a final report urging NASA officials to consider FFRDCs. Other management models being evaluated include having universities or corporations manage the centers.

Public interest centers are a staple of the federal government. Thirty-six of them exist governmentwide, and they include facilities such as the Los Alamos National Laboratory and the National Cancer Institute. The government typically turns to such centers to provide expertise that cannot be found in-house.

Mitre Corp. is a not-for-profit organization that operates three FFRDCs. The company's president and chief executive officer, Martin Faga, said officials at the centers strive to "not allow [us] to be captured by the imperatives of the sponsoring organization. ... [We] offer independent advice, things they may not want to hear."

Part of the relationship between the FFRDC and the sponsoring agency, he said, is to give an honest assessment but to keep that information in-house.

This partnership comes with privileges. Federal sponsors give Mitre exclusive budget information and ask contractors to disclose proprietary information to Mitre. Contractors are willing to do this "because they know they will never meet us in the marketplace," Faga said.

According to a commission study led by U.S. Air Force Secretary Edward "Pete" Aldridge, employees at NASA's centers would receive salaries, benefits and work flexibilities competitive with those in the private sector if the centers become FFRDCs. The commission's report, known as the Aldridge Report, recommends that certain governmental functions such as contracting and launch and flight operations remain the responsibilities of NASA's civil servants.

Any management changes at NASA would come as agency officials are considering greater privatization. But the impact of the potential changes on current federal employees remains uncertain.

"If I were a NASA employee, I would not be particularly worried," said John Palguta, vice president for policy and research at the Partnership for Public Service, a nonprofit group that promotes government service. If agency officials choose the FFRDC model, he said, the full transformation could take a decade.

Employees who are eligible to retire soon would likely opt to work until the transformation is completed and then retire, Palguta said. Alternatively, he said, they could transfer to another center and work for possibly higher wages.

But shuffling employees can create problems. A 1998 audit by NASA's inspector general found that NASA officials bungled the rehiring of former employees at the Jet Propulsion Laboratory, an FFRDC run by the California Institute of Technology. The audit found that employees rehired on an on-call basis were hired without reason and paid a higher daily rate than the laboratory had paid them.

Employees' fear of layoffs is typical during management changes (See "Labor unions tussle with NASA"). The Aldridge Report recommends workforce flexibility similar to that in the private sector, but some employees say that could mean downsizing. Palguta, however, said such concerns probably are not warranted.

NASA Administrator "Sean O'Keefe is very committed to his employees and would want to make sure that if they made any sort of a change, they would minimize any negative impact," Palguta said. Contracts generally require that current employees get first consideration for work at FFRDCs, he added.

NASA spokesman David Steitz said agency officials are not planning any job cuts. The number of employees a transformation would affect would depend on which management option is selected. "NASA values its employees and is working to ensure career opportunities exist to maintain the rich skill mix so necessary for the agency to support the Vision for Space Exploration," President Bush's proposal for NASA to return to the moon, Steitz said.

Labor groups, however, are keeping a close watch on the discussions about management transformation, especially after the NASA Workforce Flexibility Act was signed into law in February. The law, which offers recruitment and retention incentives, drew mixed reviews from labor groups.

NASA officials are still weighing whether the benefits of a transformation would be worth the potential disruption.

But the centers are "certainly no silver bullet," according to Alan Chvotkin, senior vice president and counsel for the Professional Services Council, which has opposed FFRDCs.

Chvotkin said other proven options could attain the same goals. "FFRDCS by themselves are not insulated from conflict-of-interest concerns, but they can be held accountable to strict conflict-of-interest standards," he said. "The purpose is to be outside of the federal procurement and personnel rules — what the [Aldridge Report] cited as a constraint on NASA's ability to meet its overall recommendations."

Some industry groups also oppose the FFRDC model. Such centers have specialized rules that allow them to contract work to private companies, leading to "very strange bedfellows," said Olga Grkavac, executive vice president of the Enterprise Solutions Division at the Information Technology Association of America (ITAA).

Opponents generally agree that the centers, which have existed since World War II, serve a unique purpose but should be strictly contained. Lately, however, industry groups have been relatively silent.

The last time ITAA members were outspoken on the issue was 1998, when they tried unsuccessfully to halt plans for a center at the Internal Revenue Service.

Lately, lawmakers have largely glossed over the once-controversial centers. In April, the Homeland Security Department created its first FFRDC, the Homeland Security Institute, which is operated by Analytic Services Inc.

A mixed FFRDC solution could be the answer to NASA's management dilemma. The Ames and Langley research centers have been mentioned as potentially better sites for FFRDCs than some other sites, a staff member for the House Science Committee's Space Subcommittee said. He added that some companies and universities have shown interest in the NASA centers.

NASA officials have told subcommittee members that transforming the field centers would require authorization legislation, particularly to address the role of civil servants.

Some lawmakers are concerned that nonfederal employees would approach work differently, and some critics say the FFRDCs typically pay higher salaries than the government. The spending issue could be especially critical to NASA, whose funds were cut by $1 billion in the House Appropriations Committee's fiscal 2005 budget.

So where will the money come from? Ivan Oelrich, who spent several years working for the Institute for Defense Analyses, an FFRDC for the secretary of Defense, said the institute does not get a line in the budget. Instead, officials must convince decision-makers at the Pentagon to fund their studies every year.

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36 specialized centers across government

Since World War II, the federal government has been creating specialized centers to help with work at specific agencies. Here€s a breakdown of agencies that have partnerships with the centers:

• Defense Department: 10
• Energy Department: 16
• Department of Health and Human Services: 1
• NASA: 1
• Nuclear Regulatory Commission: 1
• National Science Foundation: 5
• Transportation Department: 1
• Treasury Department: 1

Source: National Science Foundation