Mr. SENSENBRENNER. Thank you, Mr. Johns. STATEMENT OF SPENCE M. ARMSTRONG, ASSOCIATE ADMIN- Mr. ARMSTRONG. Thank you, Mr. Chairman. First I'd like to introduce Mr. Ed Frankle, NASA's general counsel who is here to back me up in case there are any legal issues. I was asked to make an oral statement for about five minutes, and I'll attempt to do that. It turns out that about three years ago exactly that Ed Frankle and I were here before this committee to push for a NASA-only buy-out. The committee was very supportive of it. Unfortunately, we were not successful because of something known as PAYGO which we weren't very familiar with at the time. But we were in a problem because when we redesigned the space station, as Dr. Johns has said, the Congress immediately took some FTE out of our budget so we were headed for a problem in 1994. We did get the buy-out; we did exercise it. We were looking for 825; we got 2,000 applications, and were able to take 1,200, and that got us below the line that we were trying to do. We were also on a 13-percent decrease at that time. Things were going along well until calendar year '95, and we were hit with a three, five, seven, and nine percent reduction in our budget, starting in '97. We did two things immediately. We commissioned a ZBR, zerobased review team, of senior managers to go all over our agency to find places where we could consolidate and cut back. We also initiated a second round of the buy-out even though we had said earlier that we didn't need to do that, because as a result of the zerobased review, we then changed from a decrease of staffing from 13 percent to 30 percent. In the meantime, the zero-based review team came up with the idea that we needed to establish 11 science institutes located adjacent to our centers. In trying to benchmark and set those up, there were a couple of impediments to that, one being the affordability of the benefits for the NASA scientist who would be employable by the institute, and the other being the restrictions on post-employment that NASA employees would have, especially if they were involved in doing anything with the statement of work, or the source selection. So we submitted those early on. Those went through the process within the Administration. We got some responses from the Office of Government Ethics and from OPM, which I mentioned in my testimony. Basically they were concerned about the precedent. They recognized the need perhaps to do it, but they felt it should be government-wide, as opposed to agency only. At the same time that we did that, later on we realized that we were going to have a problem in meeting our FTE in the out years starting in '98. So we started a motion to get our own buy-out after the government-wide buy-out did not go forward, and toyed with a number of different pieces of that. You asked me in your letter to talk about the $50,000; I'll be prepared to do that. We also asked each of our centers to tell us what they were going to need in the year 2000, because this was not a 30 percent across the board, but it was by location, by program. So basically, we asked him to come back and say, "Okay, today you've got X; in the year 2000, you've got Y. What's the difference?" It's that delta of about 3,500 that we would target for buy-out; we would target for retraining while we have time; or in the final analysis we may have to target for a RIF. Those inputs have been received. They have not been studied yet. So at this stage of the game, we are still trying very hard to get a buy-out that's applicable for NASA. We've settled on 25,000 since that was in the Senate Authorization and the Senate Appropriation Bill. We'd like to have it as soon as possible so that we can begin that as soon as the FY begins. That concludes my opening statement, sir. [The prepared statement of Mr. Armstrong follows:] Statement of Spence M. Armstrong Associate Administrator for Human Resources and Education before the Subcommittee on Space and Aeronautics U.S. House of Representatives July 24, 1996 Mr. Chairman and Members of the Committee, thank you for inviting me to address the Subcommittee on two sections of the proposed bill which are related to NASA's streamlining process: Section 103 on Exceptions to Employment Restrictions, and Section 104 on Benefits for Certain Employees Transferring from NASA. As you know, NASA is undergoing fundamental changes in the way it conducts business. Not only are we addressing challenges of reducing and restructuring our workforce to perform our mission faster, better, and cheaper, but we are also looking to change the way in which we interact with industry and the scientific and academic communities. As an example, NASA recently studied the concept of establishing science institutes as a potentially beneficial approach to maintain or improve the quality of national science in the face of organizational streamlining. Turning to the specifics of the proposed legislation, Section 103 of the Space Commercialization Promotion Act of 1996 would provide exceptions from certain post-Government employment restrictions. Current law prohibits former Government employees from representing their private sector employer before any Federal department or in any judicial proceeding. This restriction is permanent for any matter in which the employee participated personally and substantially while with the Government, but only for two years for any matters pending under the employees official responsibilities within one year before his or her departure from the Government. In addition, former senior personnel, such as those paid at the rate for level V of the Executive Schedule, are prohibited from making contact with their former Agency on behalf of their new employer for one year after their departure. As a result of Section 103, many NASA employees who accepted employment with the Space Flight Operations Contract (SFOC) contractor or “an organization receiving an award as a result of "NASA" streamlining activities” would not be covered by these post-Government employment restrictions. Section 104 would provide pension portability and extension of health benefits to individuals who accept employment with the SFOC contractor or organizations receiving awards from streamlining activities, within one year of the award. When we at NASA looked into the ideas of consolidating Space Shuttle contractor operations in one single prime contract and of establishing science institutes, we found many benefits but also some pitfalls. It became clear to us that some number of NASA employees with critical jobs that cannot be adequately replaced by the private contractor would be reluctant to consider employment outside of the Federal Government due in part to the loss of civil service benefits. Prior Federal Government privatization efforts, involving the portability of benefits such as the transfer of the Alaska Railroad in 1983 and the Airport Authority in 1985 have proven successful. The Administration believes that NASA's situation is significantly different from these earlier privatization efforts involving the portability of benefits. NASA's situation would involve the movement of functions within an organization; prior privatization efforts involving portability included the movement of entire organizations. The Administration believes that using government employment benefits to encourage former government employees to become employees of a government contractor is inappropriate and that it would be inequitable to single out NASA's former employees for special treatment. Both the executive and legislative branches are exploring various mechanisms for transferring government functions to the private sector. Conflict of interest and portability of benefits issues can arise in conjunction with such transfers. However, since current law does not specifically prohibit NASA employees from accepting jobs in private industry, the Administration believes that these agencyspecific proposals are not appropriate. In your letter inviting me to testify, you indicated that you would also welcome our comments on our proposed buyout legislation. NASA is committed to a total restructuring of the agency. Over the past several years, we have been dealt our share of deficit-reduction-driven budget cuts, and we have stepped up to them. NASA has aggressively redesigned itself to become more efficient and more relevant, and to make real changes in its thinking, culture and products. Looking ahead, the agency needs to continue to restructure in an orderly, well-reasoned fashion; deliver a space and aeronautics program that is relevant, balanced and stable; and protect the dignity of its employees. Separation incentives, or buyouts, would provide NASA with the optimum mechanism for achieving these goals. Properly managed, buyouts would enable the agency to manage within budget and provide a cost savings 2 |