Part 1: The Office of Commercial Space Transportation–Pre FAA
Before There Was an Office. Prior to the creation of the Office of Commercial Space Transportation, it was just a handful of people who had been involved in preparing DOT’s case for lead agency. Immediately following DOT’s designation as the lead agency, Jenna Dorn and Jeff Shane sent a memorandum to the Secretary outlining the next
steps and they identified this core group: Jenna Dorn, Jeff Shane, Norm Bowles, Warren Dean, Tad Herlihy, Shannon Roberts, Carl Rappaport, Bob Ross, and Don Trilling. This was the group most knowledgeable in the entire
Department on the topic; however, it could not stay together. Jeff was the Deputy General Counsel and needed to return to his position along with Warren and Tad, who were also from the General Counsel’s office. Shannon, the Director of Management Planning, left because she was overseeing a number of Departmental priorities including the final steps of the sunset of the Civil Aeronautics Board and privatization of Washington Metropolitan Airports. We still had a good team with extremely strong analytical skills, and for a program at its starting point, this was a good staffing start. It was only natural that most of us would stay on with the program, at least in the near term. Jenna, who became our first Director, started reaching out to other organizations to get high performing staff detailed to the space program.
It was apparent that this role wasn’t going to go away. DOT had new responsibilities to administer and already challenges were beginning to emerge. Starstruck was stuck in a multi-agency approval morass and needed help—that became one facet of my job. The specter of problems with NASA’s shuttle pricing was already beginning to emerge as well, and Don Trilling and Carl Rappaport focussed on that. Ann Linnertz joined us from the Urban Mass Transportation Administration, and Karlyn Daube joined us from the US Coast Guard. Jay Steptoe joined us from the General Counsel’s office for a while. We went a long time as a loosely organized group.
However, we knew that our loose, informal organization wasn’t going to work for long. Among other things, we needed a name, and the name was difficult to figure out initially. The President’s Executive Order discussed commercial expendable launch vehicles. Somehow, though, the Office of Expendable Launch Vehicles didn’t quite fit.
We had caught the entrepreneurial spirit, though, and we too were beginning to see the future of space through the eyes of the space entrepreneurs. Although the Executive Order viewed our authority through the lens of expendable launch vehicles, we saw a brighter, broader and more distant future. These were not simply rockets that we were facilitating. They were going to be another mode of transportation that was going to advance into something far greater than it was at the moment.
After a lot of discussions and playing around with various names, Jenna and all of us came to a consensus that we should be the “Office of Commercial Space Transportation”. It was bold, and far beyond our charter. But it was a name that would ultimately stand the test of time. It wasn’t too long before we had enabling legislation in the form of the Commercial Space Launch Act. And slowly but surely we would witness the emergence of a new industry.
DOT’s newest program had a high priority. Whatever we needed, Jenna arranged for us to get. We eventually got office space on the 10th floor, the same floor as the rest of the Office of the Secretary. In fact, the office space that we were assigned was actually carved out of the office suite in which my former organization, the Office of Management Planning, was located.
Jenna was going to take care of the short-term needs, such as office space, immediate funding, additional staffing. These were needs she could address by getting support from the Secretary or from the various Assistant Secretaries. I was taking care of the long-term institutional requirements such as organization, budgeting, long-term legal arrangements. These things were the bureaucratic functions that enable organizations to continue year after year. None of the others on the staff were familiar with these processes in any depth; so the job fell to me.
Over the next 10 years, I would serve 6 different OCST directors–5 Republicans and one Democrat. Two served less than 12 months. I was the person responsible for implementing the Commercial Space Launch Act, building the budget and organization, and designing the organizational strategy. In a sense, I was the institutional continuity, the bridge between Directors. There were many at that time, both in DOT and the industry that would label me as the “institutional guardian”. Some will say I did a good job; others may say that taking such a major and prominent role would ultimately guarantee that sooner or later a future Director would want to be free of this “institutional guardian”. It certainly was something I was aware of but I was willing to pay the price. I will accept criticism for any and all things I may have done wrong. I will take credit for building a well-established organization, with ample credibility and its own culture before it got absorbed into FAA.
OCST Becomes Official. Shannon Roberts, Director of the Office of Management Planning, and I prepared the material for the Department of Transportation Organization Manual. While this might seem a minor administrative detail, this document officially establishes the organization providing for the mission, authorities, delegations, and limitations of the Office, the Director, and the Office’s subcomponents. As Elizabeth Dole had committed to the White House, the function was placed in the Office of the Secretary. This was significant because this was the only “operational” organization ever to be housed in the Office of the Secretary. Up until this time, only “staff ” functions were placed in this part of DOT. “Operational” in DOT applied to Agencies that provided services to, or had regulatory or grant authority over entities external to DOT; “staff” applied to functions which principally served DOT internally.
Up until this time, all of us staff, including Jenna, had been on temporary “detail” to the project; our paychecks came from the organizations of which we were originally a part. Once the Office was formally established it was possible to transfer each of us permanently to the Office.
Legal Counsel. Jenna had arranged with the General Counsel’s office to give us short-term legal support. The attorneys assigned to us were Bob Ross and Jay Steptoe. Any legal issues that arose, they would take care of, and even after we had the enabling legislation, they were still our attorneys.
Although in much of this narrative, I mention my familiarity with the regulatory process, that knowledge came incidental to my primary positions of management analyst, and internal organization and management consultant. By the time DOT was assigned the lead agency role for commercial space launches, I was a highly experienced management consultant with the knowledge and contacts to build the Office of Commercial Space Transportation.
I was hired in 1971 as a member of the first Secretary’s Management Intern Program in the Department of Transportation, just 4 years after the Department had been created. It was a tough Department to manage because it had been formed by piecing together transportation-related agencies from around the government. The Federal Highway Administration used to be the Bureau of Public Roads in the Department of Commerce. The Federal Aviation Administration had been an independent agency (Federal Aviation Agency) that had reported directly to the President. The St. Lawrence Seaway Development Corporation also had been independent. The United States Coast Guard was part of the Treasury Department. The Federal Transit Agency (Urban Mass Transportation Administration) was newly created, as was the Federal Railroad Administration. It was a mishmash of agencies, each going its own direction.
Thus, the initial goal for the Secretary of Transportation was to forge these diverse agencies into a cohesive Department of 110,000 people. The means to accomplish this was through William S. Heffelfinger, the Assistant Secretary for Administration. Heffelfinger wielded his power, in part, by centralizing certain administrative functions, but also through his Office of Management Systems. I learned the management analysis science and craft under a team he had personally assembled.
Later, after he left to become the controversial Assistant Secretary for Administration for the Department of Energy, I “apprenticed” under the talented Ray Sander whose credentials can be traced back to a “brain trust” in Treasury, and, before that, the Central Intelligence Agency. In the time I was in that office I was involved, in some way, in every major management study, reorganization, and improvement initiative conducted in the Department. I had participated in realignment of the various agencies’ regional offices; the firing of the air traffic controllers, and recovery from their strike; privatization of Metropolitan Washington Airports; creation of a new operating administration (Research and Special Programs Administration) by consolidating many small organizations; sunset of the Civil Aeronautics Board; and countless management studies of each of the different operating administrations. That management expertise not only was critical in the formation of the Office of Commercial Space Transportation, but also,12 years later, taking the FAA Logistics Center with its 600 person workforce and $125 million budget off the Federal budget (putting it into a revolving fund) and converting it into a Presidentially-recognized high quality, top performing business.
In my opinion, there was a problem with this initial arrangement. From the beginning, starting with the moment that Bob Fairman (with me present) talked to J. Lynn Helms, the space function was seen as having two alternative futures: either it became a separate Agency, or it became part of FAA. If we were to have any chance of evolving into a separate organization we needed to look like one from the start. Each of the operating administrations had their own legal counsel offices. This was because each operating administration’s law was specialized to its specific transportation mode. In my opinion, our law was also equally specific.
In the Office of the Secretary, the General Counsel’s office provided oversight legal services to the operating administrations. However, it provided dedicated legal support to the various offices in the Office of the Secretary (roughly 1,000 people at the time). The General Counsel’s office proposed supporting our office in the same manner as it did all the other OST offices. The problem was that we needed our own dedicated legal support which would function in a manner similar to the chief counsel offices in the operating administrations.
I went to the Deputy General Counsel and outlined the concept that I thought would work best. We sought to have an attorney assigned to us and placed in the Office of Commercial Space Transportation. That counsel would address all the legal needs of the Office, regardless of the topic. Thus, the attorney(s) would become not only specialists in space law but also the unique dimensions and issues that would be associated with the space office. In addition, I argued that the attorney should be reporting to and representing the interests of OCST and its Director. I had seen many times where the legal positions of DOTs Operating Administrations differed from those of the Department, and this created a dynamic tension between the Operating Administrations’ counsel offices and the OST General Counsel’s office. But, this tension worked extremely well in the sense that the combination of the two roles produced pretty good legal outcomes for DOT. The concept of OCST having its own dedicated counsel was labeled the “big ‘C’ concept” (for Counsel) as opposed to a “little ‘c’ concept”, the concept where we would receive the same broad legal services all the organizations in the Office of the Secretary received.
After a lengthy discussion with the Deputy General Counsel, the concept of the big “C” legal support for OCST was treated seriously. The problem was that this created a major dilemma for the General Counsel’s office. No organization in OST had its own dedicated attorneys for all legal issues. Further, all the General Counsel’s attorneys were centrally located. This would break with precedent, and could cause other offices to ask for the same arrangement. In response to that, I contended that there were no other operational offices in OST. We were the only one.
The Deputy General Counsel needed to think about the concept and also discuss it with the General Counsel. Everyone said that it wouldn’t happen. Their contention was that the General Counsel’s office was too protective of its role to let us have our own counsel. Finally, we got the answer.
The General Counsel’s office bought into the concept of the “big C”, but it wanted to modify the concept. The attorney assigned to us could have an office in OCST but also would have an office in the General Counsel’s office. That attorney would represent OCST and the Director, but still, would report to the General Counsel and meet with a supervisor once a week. Our counsel would also support/represent us on all issues, but our counsel was to rely on the legal specialists in the General Counsel’s office for that expertise.
The Deputy General Counsel told me it would take awhile to find us a dedicated attorney. Several weeks later, he introduced a young attorney, Gerald Musarra, as the first “Program Counsel” to the Office of Commercial Space Transportation. Compared to others on the staff, Gerald was fairly new, having worked in the Department only a few years. There couldn’t have been a better selection for that position, though. He quickly evolved into the position. He and I developed the early licensing regulations, insurance requirements, and all the early legal formulations for commercial space transportation together. Later, other attorneys, Elaine David and Esta Rosenberg, joined the commercial space transportation program.
The “program counsel” arrangement wasn’t perfect, but it was the set up that we needed to be a mini-Operating Administration. As time went on, the value of this arrangement proved itself many times. By the time I left the Office, we had three attorneys dedicated to us full time. The additional two attorney’s offices were kept in the General Counsel’s office, but the relationship stayed the same.
The Budget. In the federal government, the budget is everything. Because government agencies do not operate off revenues, each Agency has to request the resources it needs. The budget request itself is not simply a money request. Because the request process starts two years ahead of when it is ultimately assigned, it is a statement about the future. It is a stated expectation of what the organization expects to see. Further, it is the building block upon which the years ahead will be built. Additionally, it is a statement of the performance level expected in the years ahead. But most importantly, depending on how well it is thought out and defended, once it is approved by DOT, OMB, and then the Congress, the authors will live with the results of the request two years later.
This was one of the most challenging of all the tasks in OCST. People are cautious when they develop budgets because inevitably the request is going to be challenged each step of the way. Usually, government officials make small incremental requests because large increases create conflict. Moreover, most organizations see only incremental changes in their workloads, so officials make small incremental requests for increases.
I believed that OCST was about to go on a wild ride. We didn’t know how many rocket launches we would see, but I knew for sure that we didn’t have the capability to handle very much. Moreover, in a short period of time, it was apparent that we were dealing with very “big elephants”, such as NASA and the US Air Force, in our arena and if we came off the slightest bit ignorant we were going to be pushed all over the map. Finally, if we got caught short-handed, we would not be able to rectify the problem because we would be behind the power curve. If we underestimated what we needed in one year, we would be paying the price for multiple years.
I made the office budgeting process my bailiwick—it stayed that way until I left. Jenna had secured us some money initially that were “expropriated” from the United States Coast Guard and the Federal Aviation Administration, as well as some small funds from OST. That money would cover us for a couple of years. But we needed to be up and running as a fully capable organization as quickly as possible.
The nature of the money we got was extremely important. In OST, there were three types of money: Salaries and Expenses (S&E–one-year money); Transportation Research and Development (TPR&D—multiyear money); and a revolving fund. We couldn’t work with a revolving fund. Salaries and Expenses money could cover our staff, but with our mission and our uncertain environment, it was severely limited because the money had to be spent in the year it was allocated. I had been fighting in my previous job, along with a few others in OST, to eliminate TPR&D money because it was money that often was not used and instead it was banked for years. In this job, however, I saw this type of funding as essential. It would give us the flexibility to plan and operate in the context of our data needs and the needs of our industry. So, despite the certain fights we were going to encounter, we decided to start requesting no-year money, i.e. TPR&D funds. (This was a compromise at best. Congress didn’t like the TPR&D category any more than I had liked it in my previous position. Now, by OCST also requesting TPR&D funds, that budget line item was about to get bigger. Eventually, Congress would recommend OCST get its own line item.)
The Office budget was broken up into three parts: the Director’s funding; the Policy Division’s funding, and the money for the licensing and safety function. I drafted the Director’s budget portion and the licensing group’s request. The policy side, under Don Trilling and later Dick Scott drafted theirs.
One challenge I confronted was my belief that the office had to grow proportionally if possible. It was very easy for the regulatory side to justify its funding and for it to constitute 95% of the Office’s budget. That was not healthy in my view. The image I wanted to avoid was that of a fiddler crab with one huge claw (the regulatory program) and the other minuscule (the policy program). Another challenge was that the policy side could budget for the issues that they saw at the time, but not the issues beyond. I didn’t think either the policy or the regulatory side could afford to be short of funds two years out simply due to unexpected events. Thus, in order to ensure there wasn’t a disproportionate imbalance and to be sure the policy side always had sufficient resources, I would review their component and beef up the narrative and the size of their funding request.
The regulatory side was problematic. How does one budget for a period of years when there might be zero launches? The first years were easy. There were no launches. However, when a new company or application came in, we could not simply say “Just wait.” So, even though we were starting with zero launches on our plate, we had to begin making large requests for funds. The justifications were drafted in the context of needs that anyone worried about the future of the industry could understand. Simply, if we didn’t get the money, we would not be able to help the industry. There were enough buzz words and known problems that the DOT, OMB, and Congress would give us an ok. But as time went on, we were going to have to justify the budget on the basis of workload. That got me into the forecasting business.
Our task involved projecting 3 or 4 years into the future. For example, the money we were budgeting in 1988 for 1990 was so we would have the technical capability to address the technical issues that we could see were going to confront us in 1992. As a real-life example, our 1990 funding was going into research that would enable us to deal with issues that we would confront with reentry vehicles several years later.
The challenge was estimating the number of launches that were going to occur each year. I tried to do a good job to create a manifest that we could defend. Those estimates succeeded in getting us our budgets, but none of them ever played out as predicted. We would use our known manifest and then add launches from companies that seemed on the verge of applying for licenses, and added a few from companies that seemed like they could surprise us. I don’t think we ever got the count more than 2/3 right. Occasionally, I would get snide comments from OST or the Hill about those estimates, but after I walked them through what I could see, everyone tended to conclude they were reasonable. By FY 1989, the OCST budget was almost $4 million and growing.Ultimately, the budgeting strategy paid off because when COMET, the reentry vehicle arrived on our doorstep, we had the technical expertise and process in place to handle it.
During the last three years I was in the Office, the budgeting process got harder. Our workload was increasing but our size within OST created resistance to our budget requests. By that time, it was easier to get funding increases approved than additional staff. All the offices in the Office of the Secretary had remained the same size both in funding and staffing, while OCST was growing topsy-turvy. Our budget requests were getting cut by the OST budget office and Congress was not getting a chance to give us the resources we needed. Because it was easier to get funding than staffing, the solution to a staffing shortage was to get additional technical resources by using contractors. By 1994, the ratio of contractors to licensing and safety staff was 2 to 1. Even Congress acknowledged we were understaffed. Our own calculations were saying we were short staffed by half. A study in September 1993 by McManis Associates, a management consulting firm, also concluded the regulatory program had less than half the resources needed to effectively carry out its mission. Later, an Office of Inspector General study in July 1994 found a shortage of OCST licensing personnel. Additionally, the OIG noted that OCST’s heavy reliance on contractors because of staffing shortages created the perception in the industry that OCST did not have technical competency.
The role of contractors in the regulatory program was important, but not in the manner that many in the industry believed. From the start, OCST had all the “expertise” needed to evaluate a license application. After all, the first two commercial launches, SSI and Starstruck, had virtually no evaluation. As long as the companies were launching from familiar, experienced launch sites, there were no safety issues for us to address. We looked at what a company was doing, what processes it used and were they effective. We did not need to know the technical details of a launch, just enough information about the processes to believe that if the processes were followed, they were safe. However, we needed extensive help to document those things that leave a record for decisions. To preempt challenges to the program because of impacts on the environment, we immediately started environmental studies that later allowed us to “categorically exclude” many future launch actions. Even though we knew that space launches were not the safety threat NASA and USAF’s insurance requirements suggested they were, we needed contractors to collect and document an extensive body of information to unequivocally avoid challenge. For those interested, the archives will show that we commissioned large numbers of studies and reports to provide the evidentiary basis for the direction we were heading and decisions we were making. The last two studies I commissioned addressed voluntary standards; it wasn’t going to be possible to argue that the industry could self-regulate without something to back up that strategy. We did use contractors for technical analyses when we needed to understand whether something in an application was supported by the license applicant. This was particularly true of the re-entry vehicle. But the other part of this was that the contractors gave us the opportunity to understand certain issues in ways that would enable us to eventually streamline the process. For example, once we completed the Hazards Analysis and the options studies for setting insurance, the process became pretty simple. The first parts of a new concept, such as re-entry vehicles or airborne launches, relied more on contractor support for the initial reviews than would be necessary for subsequent reviews. Once we understood the dimensions of risk for new applications, and what was truly relevant, there wouldn’t be a need to repeat the entire same process. To my knowledge, the contractors never actually conducted any of the regulatory roles.
(It is interesting to note that NASA and the USAF rely much more on contractors than OCST ever did and that industry wasn’t complaining about encountering a “lack of expertise” in NASA or USAF. Whereas OCST’s regulatory program had a contractor to federal employee ratio of 2:1, in 1994 the ratio of contractor to civilian employees in DOD, NASA, and DOE was 4:1. If one included ALL military personnel as well, the ratio was more like 2:1.
(The difference was that the contractors in the industry that worked for the NASA space and DOD space programs would contend that they were part of the NASA and DOD expertise. When some of those same contractors became launch companies, then the industry looked at OCST as the regulator relying on contractors and they turned that around to argue that OCST lacked expertise.)
Staffing the Regulatory Program. As soon as Jenna started getting funding, I started staffing the regulatory program. The objective was to find highly qualified technical experts with varied transportation experiences. We didn’t need space experts on staff—we could contract for that type of support—but we did need personnel who could look at space from a transportation perspective.
Ron Gress came from the USCG, and when I called his boss to check out his references, his boss literally said, “Please don’t tell me you are going to take Ron. He’s the very best there is.” I found ample evidence time and time again that his former boss was absolutely correct. Phil Brinkman came from Federal Highways. A couple, Randy Repcheck and Derek Lang, both aerospace engineers came to us straight out of school. As we got additional positions, we brought on more. I told each of them as they came on board, “Don’t allow yourself to think you have this all figured out for at least two years, otherwise you will have lost your ability to deal with the new ideas and concepts we are going to see.” All in all, most were able to jump into this new world. There were those who wanted us to hire NASA, US Air Force or industry personnel. We brought on the skills we needed. No one was excluded because of where they came from. Some outside the office thought we should be hiring ex-space people. However, we also were not launching rockets ourselves. Moreover, having someone who had worked on a specific rocket design, such as a Delta would not have been extremely helpful when doing the license evaluation for the COMET reentry vehicle or, later, for Burt Rutan’s SpaceShipOne.
We were active on the contractor front as well to give us the regulatory and technical backup support we needed. The technical skills needed to evaluate safety resided in OCST. We used contractor support to conduct research or to augment our own technical skills. Given our small staff, it was best to keep our organizational personnel broad-based. The advantage to contractors was that they could bring technical experts we wanted on a short-term basis, a flexibility that didn’t exist within the government staffing rules. Research Triangle brought us space pioneering experience of Loyd Parker and extensive risk research capabilities as well as access to safety databases of Cape Canaveral. ICF brought us the regulatory experience of Howard Dugoff, as well as the research capability of Bruce Berkowitz. Futron got us whatever help we needed. The Transportation System Center brought us Aviva Brecher, Dick Robichaud, and access to the entire research database of the Department of Transportation.
That system served us fairly well. Because we were such a small operation, as much as we tried, we couldn’t keep everyone happy. With a staff of less than 10, we were handling new commercial spaceports, a re-entry vehicle, launch vehicles of different sizes, and a large number of license applications. Within a few years, we managed to prove to the space community that we not only brought energy to the space world but we were making meaningful contributions to the body of knowledge (within the first 5 years we had changed the perception of risk, and had cleared all the environmental hurdles for the new industry). By the end of the first couple of years, the Director(s) of OCST were hearing very few recommendations that we needed to get people who had launched rockets on the staff—especially since we had already overseen a couple dozen launches ourselves. (Note: it was a specious argument in the sense that none of the OCST Directors had been involved in launching a rocket, and only two had been tangentially involved in the rocket launch business at all.)
The organization continued to evolve. When Stephanie Lee Miller became the Director, she brought on a former colleague of hers, Chuck Kline. Chuck was a veteran reporter and press person. He was a natural as a public affairs officer. We attempted to institutionalize this function in OCST as yet one more step toward becoming an independent organization outside of OST. Unfortunately, we ran into the same issue with the OST Office of Public Affairs that we had with the General Counsel’s office many years earlier: they didn’t want any public affairs officers in OST outside of their own organization. Chuck still operated as our press person, but all releases had to be cleared by the OST Office of Public Affairs.