Office of the Administrator
Washington, DC 20546-0001

OCT 15 1998

Dear Mr. Chairman:

Thank you for your letter dated October 9, 1998 concerning NASA's planned reallocation of $60 million in FY 1998 International Space Station (ISS) funds for purchase of Russian goods and services to help ensure the completion and launch of the Service Module by summer 1999. Your letter suggests that payments to Russia should be part of a comprehensive plan ending our dependence on Russia. I believe that the Contingency Plan that NASA has had in place since 1997 -- and is continuing to implement -- is, in fact, achieving the objectives you have outlined. Further, I believe that it is in the interest of the ISS Program that NASA proceed immediately with the contract modification for purchase of Russian goods and services.

As the Committee is aware, NASA has, over the past several years, actively developed a U.S. Contingency Plan, and implemented portions of that Plan to deal with delays in Russian contributions to the ISS and has taken critical steps to reduce reliance on Russia over the life of the ISS program. NASA has testified before Congress concerning these efforts and has provided periodic status reports to Committee staff.

In light of the increased uncertainty in the Russian economic situation, NASA has assessed a range of options, such as:

• Proceed immediately with a plan for completion of the ISS without dependence on Russian contributions. If NASA were to adopt this approach, it would result in a delay of greater than 2 years in the beginning of assembly of the ISS, and a delay of more than 2 years in achieving permanent human research capability on the station. It would further add a safety risk because a greater portion of assembly would be accomplished in a human-tended capacity. In addition, important redundancy in human-rated systems and crew return would be lost. NASA would lose valuable Russian crewtime for U.S. Research. The resultant delay in the program would likely add billions in total U.S. costs, and would also add costs to the ISS International Partners as well.

• NASA could attempt to maintain the current baseline and sustain all the Russian contributions, with no further NASA investment in an independent U.S. capability. Given the current Russian economic situation, this approach would place NASA in the position of providing funding to Russia, as necessary, over the life of the ISS program. NASA would be driven by the Russian timeline, which would jeopardize the entire assembly sequence, resulting in significant costs not only for the United States, but for our other international partners as well.

• Alternatively, NASA could, with all deliberate speed, begin a build up of U.S. capability which would allow NASA to operate the ISS without dependence on Russian capabilities, while simultaneously procuring specific critical requirements from Russia at appropriate intervals prior to achieving U.S. self-reliance. Compared with the option which would sever ties with RSA, this approach is less expensive and delivers ISS capabilities on-orbit at the earliest possible time, beginning with launches of the Functional Cargo Block (FGB) and Node-1 in November and December 1998 respectively, and followed by launch of the Service Module in mid-1999. In addition this approach would retain the important redundancy in human rated systems and crew capability. It is NASA's assessment that this build up will be complete by 2003.

In spring 1997, NASA embarked on the initial steps of this Contingency Plan to provide U.S. capabilities to mitigate the impact of further Russian delays caused by the uncertain fiscal situation of the Russian Government. Step One consisted primarily of the development of an Interim Control Module (ICM), built by the U.S. Naval Research Laboratory for NASA, to provide command, attitude control, and reboost functions in the event the Russian Service Module was not provided, or later as a propulsion capability to mitigate reliance on Russian Progress vehicles. In addition, we modified the NASA-financed, Russian-built FGB to accommodate the ICM and provide refueling capability and enhanced attitude control.

During summer 1998, as the Committee is aware, NASA undertook initial efforts in Step Two of the Contingency Plan to provide flexibility for the United States in the event of further Russian delays. These efforts included initiation of development of an enhanced Shuttle reboost capability for the ISS. This long-term reboost capability will augment the existing Shuttle reboost capability, and will be obtained by modifying the Shuttle Orbiters so that the maximum amount of excess maneuvering propellant can be utilized by the Shuttle to reboost the ISS while docked. Also as part of Step Two, to further reduce further U.S. reliance upon Russian contributions, NASA is currently evaluating a proposal for Boeing for the development of a U.S. propulsion module which would provide permanent, independent reboost and attitude control. Upon completion of a detailed technical requirements review by NASA this fall, NASA will proceed on the long-lead procurements for this propulsion capability.

In addition, NASA will continue its development of a U.S. Crew Return Vehicle (CRV) to eliminate absolute reliance upon Russian crew return capabilities. NASA invested $100 million in the X-38 Project which, though its extensive atmospheric and space flight vehicle test program, is providing an unprecedented database valuable to the initiation of development of an operational CRV in 2000. Through the X-38 project, NASA is demonstrating confidence that the CRV will be available on-orbit in 2003. Enclosure 2 further describes the critical functions provided by the Russian Space Agency and the planned NASA augmentation/replacement for these functions.

In parallel to the development of independent U.S. capabilities for long-term self-reliance, NASA has maintained a regular dialogue with RSA representatives to fully understand their fiscal situation. As stated in NASA's September 29, 1998, letter to the Committee, NASA has concluded that RSA needs immediate funding to help ensure timely delivery of the critical Russian Service Module and to avoid costly delays in the first launches of ISS hardware. In return for this funding, NASA would secure readily accessible research stowage space in the Russian elements and valuable crewtime to conduct U.S-directed research.

To ensure uninterrupted continuation of ISS assembly, including certainty regarding availability of Russian Progress and Soyuz vehicles -- at the same time that development of independent U.S. capabilities is being pursued -- NASA's contingency planning envisions the possibility of further negotiation with Russian entities for purchase of appropriate goods and services over the next 3 to 4 years. Consistent with direction in the FY 1999 VA-HUD-Independent Agencies appropriations bill, NASA is evaluating alternative approaches whereby NASA could contract with Russian entities for goods and services related to the ISS. Where appropriate, NASA is prepared to competitively bid these requirements. The next decision point will be in December 1998, at which time additional funding may be needed to successfully compete integrated testing and launch processing of the Service Module in the event Russian government funding is not forthcoming. If such a transaction were deemed necessary, NASA would submit a separate FY 1999 Operating Plan adjustment to the Committee. NASA believes that this approach provides the best approach to realize completion and launch of the Service Module next summer, ensures detailed accountability on the part of Russia for funds provided in return for the purchase of goods and services, and allows NASA to move toward independence from Russian capabilities while avoiding costly delays in the ISS assembly sequence. The International Space Station Intergovernmental Agreement and the bilateral Memorandum of Understanding between NASA and RSA provide the flexibility to modify Russian participation in the ISS program, as a result of these negotiations, through a rebalancing of partner contributions and benefits.

Implementation of further steps in NASA's Contingency Plan and transfers of U.S. funding for additional procurements of Russian hardware or capabilities, as a contingency to preclude significant schedule deterioration, continues to be assess through the development of NASA's FY 1999 Operating Plan, in the context of the formulation, NASA has used a placeholder estimate of up to a total of $150 million for FY 1999. Additional purchases of goods and services are likely to be required in future years. The Administration will address these contingency requirements, and potential offsets, in a comprehensive fashion in the FY 2000 budget.

In summary, the Administration fully supports NASA's Contingency Plan and the steps NASA has implemented to date. In the coming weeks, the Administration will convey its views concerning the foreign policy aspects of this very important cooperative effort with Russia. NASA is taking specific steps to reduce the uncertainty of Russia contributions and is implementing contingency steps that accommodate Russian shortfalls as they arise, while moving steadily and expeditiously toward U.S. self-reliance.

Sincerely

[signed]
Daniel S. Goldin
Administrator

2 Enclosures

Enclosure 1