Some things are harder to kill than others. A simplistic myth abounds among the usual suspects, that the simple act of killing a government program ends it, cuts spending and thus the deficit. Like so many beliefs, this one is far from accurate. The government can terminate a contract for two reasons: the exceedingly rare case of breach of contract that can be proven in court, or convenience, when Congress or other officials pull the plug. Lately that's usually for fiscal-hawk reasons. But when a big government contract is chugging along, there are costs associated with shutting it down rarely taken into account by those poor souls suffering from late stage Deficit Obsession Syndrome. Bills already owed, fixed costs that cannot always be easily unwound, sometimes layoffs and severance benefits ahead. So, in many cases, the government requires a pile of money to be set aside to cover what's generally referred to as termination liability.
There are lots of ways to do this. The money can be folded into the cost or bid by a contractor, it can be set aside by the government or the company itself, or a combo of both in some cases, it might be waived in special situations. It should come as no surprise that that kind of ambiguity is fertile ground for lawmakers to meddle around in, as they muscle for advantage over one another in the endless, exhausting battle for taxpayer dollars flowing to their districts. It can affect any program theoretically. Right now it's affecting one agency in my blogging bailiwick of science and science policy: Specifically, NASA.
Follow me below through a few of the dark twists and turns of government-contractor termination protocol, and uncover a possible, latent right-wing power grab that could potentially be enlisted by Congress to micromanage every program in the US.
What's important to understand is that "The Government" sends a ton of dough to the private sector for all kinds of services and products. In the case of NASA, former Deputy Administrator Lori Garver spelled it out. "Historically, NASA has spent roughly 80 percent of its funding on private contractors. That was true during the Mercury and Apollo days and it continued during my tenure under Director Charles Bolden." But exactly how that money gets chopped up into the legislative sausage is another matter. Termination liability is one of those chopped bits.
It's aptly named: it's a liability for sure. Money out of commission, set aside in the event a vehicle or system is cancelled. So ... one way to throw an anvil to a particular firm or sector would be to ease it for one firm or firms and not others:
These programs are in fact the most expensive in NASA’s portfolio: the international space station; the James Webb Space Telescope; the Orion Multi-Purpose Crew Vehicle; and the Space Launch System (SLS) heavy-lift rocket. The bill, H.R. 3625, was approved by the House Science Committee in December and now awaits a vote by the full House. Mo Brooks (R-GA), whose district includes NASA’s Marshall Space Flight Center, the lead SLS integrator, says funds allocated each year for programs ought to be put to work on development rather than held in reserve to cover the theoretical cost of shutting down a canceled program.That might be a bit confusing and that's part of the problem: this can get real complicated, real fast. But one facet we can all understand easily enough is that there are bills in play using term liability that end up decreeing those four NASA programs cannot ever be cut, not by the President, not by the public, not even by NASA itself. The only people who can ever change that would be, guess who, the majority party in the House. Imagine if they tried that with other programs in other departments, and succeeded, imagine the fine control that would give the House over, well, everything really. That's the most chilling possibility, should it work here, where no one is paying much attention.
It is entirely possible, perhaps even likely, that Mr. Brooks and others were motivated in part by concerns that NASA headquarters might be using termination reserve requirements to hobble progress on programs that the White House — from which it takes its cues — does not fully support.
We could talk more about the concerns of industry experts who spoke on background that termination liability is being used like a test run to essentially wrest control of funding away from the usual administrators and civil servants and hand it off quietly to the GOP dominated House, who knows what denizens might be found lurking in the shadows there, ALEC, the Brothers Koch? Whole posts could be dedicated to the angle that the richest companies are said by some to be getting off free and those that can least withstand the burden of term liability are bearing the full cost. What a surprise, huh? Or we could outline the convoluted, arcane process—some might say sheer dumbassery—by which OMB may be counting some of the whopping $500 million already set aside for term liability against NASA's budget even though the agency and their receiving contractors cannot spend it. Any of which quickly unfolds into multi-layered intrigue worthy of a coven of scheming, spice-up space witches right out the classic sci-fi novel Dune. But let's take a conceptual step back.
NASA is a peaceful government agency that drives innovation in almost every field of science and industry like no other, not the least of which is aerospace, one of the few remaining domestic manufacturing sectors where the US still leads. In a saner world, America's space agency would be funded like the Pentagon, it would be nonpartisan, noncontroversial in any way, free to attract the best and brightest to develop the technology needed to explore and harvest the infinite bounty of our exquisite cosmos.
On a planet where resources are increasingly finite and population growth seems to know no bounds, a sane species would be piling cash into space faster than old Europe bled men and treasure into the New World centuries ago and for the same reasons. While we're at it, given the stakes, in a saner world zillionaires with a track record of spending money in space and on science for all humankind rather than sheltering it in offshore accounts for their own benefit, would be held up as the Edisons of our time, a role model for young people to admire and a challenge for fellow billionaires to match.
Alas, we all know that's not the blue marble we live on. In this era of selective penny-pinching, where elected clowns blow trillions cushioning Wall Street's latest fall from grace or fueling tragic wars, where many billions more are wasted on government shutdowns and other useless stunts, for some reason a few lawmakers suddenly get all hot and bothered about a miniscule fraction of that when it comes to science and progress. Playing games with termination liability is yet another, fantastic way to sap our potential and plow through scarce dollars at time when the riches of space are just beginning to come into reach.
The House must pass a fair, no special-interest strings attached version of term liability to insure shutdown costs from cancelled programs are paid in a timely manner as originally intended. Considering that every firm involved could best serve their investors, their employees, and the public by spending every possible dollar on stuff made right here in the good ole USA, efforts should be made to waive it whenever and where ever possible. Lastly, fair warning to Congress in an election year: we're aware of this now. Rest assured, my colleagues and I will be writing about this and related issues through the 2014 mid-terms and beyond.