Transcripts
Transcript: Space4U podcast, Kevin Rice
Written by: Space Foundation Editorial Team
Hello, this is Andrew de Naray with Space Foundation, and you’re listening to the Space4U podcast. Space4U is designed to tell the stories of the people who have made space exploration today more accessible to all. Our guest today is Kevin Rice. Kevin spent 40 years in the aerospace industry, roughly split between Lockheed Martin’s legendary Skunk Works, and then the latter half at NASA’s Jet Propulsion Laboratory or JPL.
At Skunk Works, Kevin served as director of business management, where his responsibilities included management of several hundred employees in the execution of budgeting, scheduling proposal development, cost estimating and pricing, contracts, and risk management. His work supported tactical aircraft projects, including the F-117, F-22, and F-35
As well as reconnaissance projects, such as the U-2, SR-71, various C-130 projects, and the X-33. Additionally, he served as manager of program business for Lockheed Ontario’s international projects. The activities of which spanned 52 countries. Following that, and until his retirement in 2019, Kevin worked for NASA JPL as a division manager and director of project business management for NASA’s research and development centers.
Kevin developed, implemented and maintained JPL’s project controls processes and created JPL’s business policies and practices manual. Also known as the dark green book, which served as a model for business throughout NASA. He also developed the independent assessment model adopted by NASA to assess project performance.
He is recognized throughout NASA as one of the agency’s leaders in project controls and business management, often being referred to as the quote unquote father of business management across the agency. Additionally from 1992 to the present, Kevin has served as an adjunct professor of corporate finance, international business and global financial management at the University of Redlands in California.
Now in case listeners aren’t familiar with Lockheed Martin Skunk Works. It has a storied history that I can’t fully detail here, but I’ll attempt to give a nutshell synopsis for context. Skunk Works is a pseudonym for the company’s ADP or advanced development programs. It has produced many historic aircraft and today roughly 85% of the work Skunk Works does is classified.
Although ADP would begin in 1938 with the iconic Kelly Johnson as chief research engineer, the Skunk Works moniker became official in 1943 when the Army-Air Force met with Lockheed to express its need for a jet fighter. After Johnson’s team delivered the initial proposal and the go-ahead was given to start development, Skunk Works was born with Johnson at the helm.
The resulting P-80 Shooting Star would help usher in the jet age in the Air Force and remain in service for the U.S. until 1959. In case you’re wondering where the name came from that early ADP group variously worked in the former distillery that reeked of bourbon and another building constantly assaulted by the stench from a nearby plastic factory.
An ADP engineer began answering the phone “Skonk Works!” in reference to the comic strip, Lil’ Abner where the character, Big Barnsmell distilled his Kickapoo Joy Juice moonshine, and the name stuck. Johnson’s Skunk Works later produced the U-2 spy plane with the capability to photograph sites of strategic interest over the Soviet Union and subsequently China, Vietnam, and Cuba during the Cold War.
And it was still utilized in later conflicts in Afghanistan and Iraq. Another, the SR-71 Blackbird was a long range, high altitude supersonic reconnaissance aircraft introduced in 1966 and not fully retired until 1999. Kelly Johnson headed Skunk Works until retiring as senior vice president in 1975 and remained a contractor for the company until he passed away in 1990. His famous 14 basic operating rules, still echo in Lockheed Martin’s business ethos today. Skunk Works continued to produce notable supersonic and hypersonic aircraft, including the F-117 Nighthawk, which was the first successful aircraft to be designed around stealth technology, and which played a large role in the Persian Gulf War of 1991.
Another was the F-22 Raptor, a stealth tactical fighter aircraft that had its first flight in 1997 and is still in service. Our guest today, Kevin supported most of these projects and more at one point or another during his time at Skunk Works. Not that early stuff, but the stuff U-2 on. The history on NASA JPL is a little more commonly known and available.
So I’m not going to go through that here. But without further adieu, Kevin, thanks so much for taking the time to share your story with us today. It’s great to have you on the show. Well thank you. Thanks for having me on. Uh, so let’s begin with how you got your start at Skunk Works. And, uh, what was your career trajectory from there?
I started, uh, out of college, God way back way back and, uh, I just applied for an opportunity. I, I was in the business. My background is business. It’s not space or aircraft, you know, aerospace and large, but I was always fascinated by those kinds of things, you know? As everybody else can remember in 1969, when the moon… first landed on the moon, those sexy kind of things kind of opened a lot of young people’s eyes and for their future and all that.
So it kind of wanted to get in that it was right when I was starting my college career. So I was at an ear and eye bent toward aerospace and things. And had an opportunity to go overseas, which was another attractive nature, because Ontario had its, uh, international division, any aircraft piece that Ontario, which is not that far from the Skunk Works where it’s, you know, it’s easily drivable.
And so had some time doing that. And as you mentioned earlier, you know, over 50 countries and things had an opportunity to do some business activities, mostly in the middle east, but, uh, you know, different meetings at different suppliers and things, drove me to opportunities to, to visit lots of countries and deal with.
It’s amazing how, what it really does other than hopefully develop your career, is it gives us a perspective on the world. And different cultures, what they think about, what they expect, what their rules and regulations are, as they are opposed to something else. How do they interface with business people.
The status of different things. I mean, it just, it’s a lot different than what you’re used to from here and know you recognize pretty early on that we are not in fact, the center of the universe after all, uh, but in any case, so that, that, and then I came back to the U.S. and became a supervisor of project controls in those days initially, and then got to be a business manager.
Then we kind of combined the operations with the Skunk Works. And so physically move up the road to where the Skunk Works was housed. And I was in the, what they call C4ISR in those days, which was the reconnaissance side. And that was the U-2 and the SR and other projects or systems that supported some of those projects.
And it was also a fair amount of, of Blackwell stuff. And then became the director of the project controls business kind of stuff. So it morphed into all that with the tactical aircraft and the X-33 and in all the C-130 and P-3 kinds of stuff. So it’s a fascinating opportunity in a, and th the reason I actually left that environment, uh, was not so much I was looking for greener pastures as it was we combined all of the aerospace divisions.
So shortly after they merged with Martin Marietta. And so the Skunk Works was became part of the overall aircraft company, which was headquartered at Fort worth. And so as a director level, I would’ve had to move down there to Texas and nothing against Texas, but I really didn’t want to leave the area.
My family was ingrained. I was a Professor type at a university and didn’t want to leave the area if I could avoid it. And just fortunately, I was contacted by JPL. I knew the deputy director, I had some background with him. And so they were looking for somebody to bring some business knowledge and experience to JPL.
You know, they are world class scientists and engineers there, but their business activities were not quite up to that. And so, got a little feedback from NASA that says, Hey guys, come on, get a business presence focused. So I, I was chartered with creating a business capability and so I didn’t have to leave the area in there. Same job.
Big difference though, you know, in the Lockheed world, it’s all about cashflow and earnings and sales orders, income, management, budgets, you know, cash flow, return on investment and all that kind of stuff. Whereas at JPL, it’s a federally funded research and development center. Which meant that it was all of the work.
Uh, even if it was to support other agencies actually, came under the NASA prime contract. So it was all NASA activity. So instead of cashflow and earnings and that stuff, it was all about cost management, schedule management, proposal generation, interface with suppliers, other center, NASA centers, headquarters, those kinds of things. And so, as I mentioned, Kelly Johnson had a protocol known as his 14 rules being that you came in at a point when he had stepped back except for working as a consultant, uh, how much did those rules apply to you within the framework of your responsibilities?
That was the Bible. Everybody’s 14 rules. You know, even if they didn’t know what they were, you know, all about efficiencies and get the job done and don’t worry about the irrelevant stuff. And so you live by that, it just kind of the motto, you know, and I guess actually that has evolved to where I know a lot of other interface that I’ve had with other companies and other agencies even, when they refer to that concept, they refer to it as the skunk works.
You work in the skunk work environment, not necessarily meaning Lockheed, but in the environment of those 14 rules of getting the job done and minimum levels of management and putting everybody on the program and focused on that. So, yeah, it’s uh, he was, uh, he was an icon for sure.
You know, a lot of people I think around the world think he was the chairman of Lockheed Martin or Lockheed. But he was not, obviously, as you’ve mentioned in your preamble at the beginning. He was the head of the Skunk Works, which was part of the aircraft company in those days. And I think Robert Gross was the head of Lockheed, but Kelly eclipsed almost everybody else—is probably that face of the Lockheed really, looking back.
So how do you estimate budget costs and set timelines for projects that are so massive that have so many moving parts and that may not even have a precedent. Sure. That’s a very good question. And it’s, if we knew the code to that effectively we’d all be rich, but generally what happens is, let’s take Lockheed, which is a little bit different in the corporate world where it’s profit driven and whatnot.
You’ve got to look at. What are some of the heritage things we’ve done in the past? I mean, even you’d take an F-22 or an F-35 and compared even to a C-130. Well, it’s a massive difference in what they do and stuff, but certain things are common. You know, they all have a power system. They all have, uh, you know, lots of things that have to happen irrespective of what the air frame is.
And so there a lot of data on that. So that is part of the baseline. And then you go through the contract, obviously, or if it’s in a proposal phase, the RFP, we look at what is required here, what are we trying to do? And so you break it into engineering, manufacturing, quality, integration tests. That kind of stuff. And you get key members of those particular divisions or those disciplines and, and they have should-cost kinds of things, like teams that say, hey, we’ve done this kind of a system before, or we’ve done this kind of requirement before and you upscale it based on how long ago it was and what happens, you look at we’re going to make it in-house.
Are we going to buy it? Is there an off the shelf type component that we could purchase. You know, one of those kinds of things. And you’ve got to fold in and all of your infrastructure costs, which are pretty well known. Like we have facilities, we have utilities, we have fringe benefits, ya know we have all the overhead kinds of stuff.
Those are well determined in they’re part of our foreign pricing. So it’s all about hands-on labor for these kind things, like quality and project management. And some certain support is actually called a CER, or a cost estimating relationship. So we don’t have to bid the quality control kinds of activities necessarily one by one.
It’s a factor of hands-on either engineering or manufacturing, depending on what it is you’re looking at, uh, unless there’s a special task specific that to do that. So, it’s more focused on the engineering, manufacturing, testing, integration, activities, touch labor, much of it. If we can is based on history and people’s expertise, we try to break it down and we’ll kind of how many drawings maybe is going to be involved here.
And how many of them are complex and how many of them are simple, how many of them are medium? How many are interface drawings, how many are assembly drawings? How many are concept, you know, you go through that, you kind of cut down to where you get a handful of say, this is kind of what it is. And you build that. We have models that kind of factor some of that.
And then you look at those models and see how reasonable it is. So you kind of get down and then you’ve got your business development people and say, hey competitive 1, 2, 3 we’re looking at is probably going to be in this range, a bogey might be here. So if our price is way above that, then we’ve got to re-look at that.
Or if it’s too low, what are we forgetting? You know, you’d go through those kinds of exercises till you get down to what it is. And then you look at your profitability. You look at your internal rate of return, which is really over my investment horizon. If you take your investment and what are the cash flows that need to support that investment.
So when you bring it back to time now and take away that investment, you’re neutral zero. So in other words, what will it take to get my money back over that period of time? And that’s an important number too. So all of those things go into creating a winning proposal. So that’s in the corporate, well, that’s in, because now all the bidders are bidding the same thing, same RFP, same stuff.
And then if you win, then you have to budget all of that. Now on the JPL side, big difference. We would respond to calls from NASA that are not that specific. In other words, JPL itself, they put in ten, fourteen, fifteen proposals on any call and they’re all different. So we don’t get something that says, go build this and go to Mars and do that.
What we do instead is there might be something called a discovery mission, which is now 400 ish million dollars, a little bit more maybe, but not that much more. And it’s consistent with the theme, like a solar system, or earth science, that decadal surveys will tell you kind of what the NASA or the academy of sciences are looking for.
But anyway, so you pair up with a scientist, maybe either from Caltech or JPL or some other university, and you put a proposal out that says, hey, for this $450 million, we are going to go here and do that. And this is the science we’re going to return. Another group of scientists and engineers may say, well, we’re got to go to this and do that.
Or we’re going to look at a comet or we’re going to go to this planet or whatever it happens to be and create this return of science. And so you’ll have competing proposals within your own organization. Within JPL itself, we’ll put out many. and Goddard will support something. APL. Other organizations and then you get down selected.
So it’s based on your ability to do that science, how in demand that science is and how well your proposal captures that notion and convinced the reviewers that yes, this is the best science we’ll get from the dollars we’re spending. And that’s how the proposal goes on. So it’s not about cash, it’s not about earnings.
Everybody’s putting in the same amount of dollars essentially, but it’s all about the science and that in the likelihood you can actually do that. Interesting different perspectives there. How about a risk management? What kind of considerations go into that? Especially when you know, some of these projects have the potential to endanger lives.
Did that weigh on you at all? Okay. That is always a big concern. You know, you go through what we call the five by five risk matrix, which is red, yellow, green, and on the Y and X axis. And you look at what is the likelihood that this is going to happen. And then what is the magnitude, i.e. the impact of it if it does happen?
And so in the green areas means, well, it might happen, but probably not. But if it does happen, it’s not a big cost. So don’t worry about it kind of thing. You get into the yellow section. It’s like, well, you know, the odds it’s going to happen maybe a little bit higher. And the impact might be a little higher. And so what are the probabilities of that happening?
And let’s say you do the math it’s X times Y gives you 60%. This says it’s 60% likely it’s going to happen. And if it does, it’s going to cost us $20 million or whatever it is. And so you’ve got to factor that in, and it goes into your estimate to complete the work, uh, whether it’s a proposal or a budget or whatever.
So that happens and it gets red, which is the upper right quadrant now. That usually means it’s a showstopper if you don’t have a plan, it’s high likelihood it’s going to happen. And the impact could in fact kill people or risk their lives, or even if it’s not a life, it could be the cost to fix it is out of sight and we just can’t get there from here.
Generally green means the project just deals with it. The yellow means they could deal with it, but they might need institutional help. Like other divisions within the company or senior management needs to play a role. Maybe they need more money or they want more infrastructure or more people or something that they might not be able to solve it internally themselves.
Maybe they could, but maybe not. Generally the red means they need outside help. They either need, if it’s a NASA project, they might need NASA to relax a requirement, or they might need to extend the schedule or they might need to do something that they don’t have control over internally. They might need more money.
Sometimes it’s just a money thing. Like we just don’t have the funds. And so to mitigate this risk, we need another X million dollars. And so that’s out of their control. So those are the kinds of considerations you’d go through in either case, JPL or Lockheed. It all translates into dollars ultimately, unless it’s a safety of flight.
If it’s a safety of flight and you’ve got another whole nother game going, and usually safety of flight means we need a redundant system or we need some other measure that will solve whatever that problem is. So really at the end of the day, that’s money also. Yeah, it kind of makes sense. Yeah. As I mentioned, about 85% of the work that Skunk Works does is classified.
How difficult was it maintaining constant discretion on those projects? Maybe, you know, if you had to work with subcontractors for procurement or whatever, how did, how did that work? Very strict protocol on how that worked. You had a badge that identified what accesses you have. Uh, and so people couldn’t even talk about projects of any kind that had, you know, the, that you weren’t clear to do.
And, and you couldn’t talk about them out in the open and walking around for lunch and that kind of stuff, even if it’s like you and I were both cleared on the same project, it doesn’t mean that we could go out to Wendy’s and have lunch and talk about it. Yeah. Uh, yeah, it was hard to do that. You’d be very careful. You had to push code buttons to get into buildings and they changed, they scrambled all the time.
So it’s very unique, but you get used to that and you pay a lot of attention, you know, you don’t leave your computer on, you know, there’s just so many things that have protocols that have to be followed very strictly. And then when you get to a higher position and you’re not cleared on all those, I mean, I had people in my group that I wasn’t cleared on certain programs for because they have very limited billets and things.
So I really couldn’t find out any details on that. You know, I remember we had these program reviews every month, or especially every quarter we called quarterly reviews. And our business manager, the head of the ADP, which is the classified part of that, all the rest of us, you know, before I got to be the leader of some of that was, uh, you know, we had to give what our sales and orders and income and margins and cashflow was and what our forecasts were and what, you know, all the issues that were coming up and what the cost ramifications were for that.
How are we tracking to our management budget and our goals for sales and orders and all those things. Whereas that guy got up and put up one chart that said, Hey, we’re doing good. That’s all you get to know. ‘Cause he couldn’t talk about it, you know, and, uh, so yeah, so, uh.
Again, you’ve managed program business for Lockheed Ontario’s international projects that took you to all these different countries. Um, was that like intrinsic or how did you navigate through the ins and outs of that? You know, do you have to be, I assume you have to be knowledgeable in global business practices and international law to avoid those pitfalls. We worked closely with our international group. Which, you know, ITAR became part near the end.
You know, when that, all that stuff came into being, a lot of regulations about what you had to do or not do with the rules of that particular nation. Most of it was driven by the contract. So if you were familiar with the contract, the terms and conditions and what you kind of got a really good feel for what those things happened to be.
And so you just got a feel for a lot of that. But some of the things that were different are the expectations of the other side. For example, maybe we’re doing business with Spain. Well, they have certain expectations about what we should provide. Because their culture is like that. Whereas we would say, no, that’s a business thing.
So that’s going to add costs or that’s going to, we have to modify the contract, but they are very surprised. Like, no, that’s just being friends. We just do that. And so those things become issues. So it’s, it’s more culture driven and also just how they conduct businesses was the biggest eye-opener for me now, you go to some countries, Americans, and I’m just very stereotyping and it’s obviously lots of differences where it doesn’t happen, but generally speaking, U.S. people like to get there, get in the conference room, have their view graph.
Those days, view graph. Now it’s PowerPoint stuff all ready get down to business. Hi, my name is Kevin and I’m here. We’re here to talk about this and when do we want to start? You know, you get right into it. You know, other countries say, whoa, stop.
No, no, we might not even get to business until day two. You know, it’s not just social they’re, they’re making the measure of you when they’re talking to you. They understand, know what you thinking about where you’re coming from. Just in general social conversation.
In Spain, a lot of time, a lot of the business was done at lunch, you know, lunch is from, I don’t know, 11 to 2:30 or something, you know, and, and you go out and you do all that stuff at lunchtime. And their work time is different. They come to work when they get up and they, they go and, you know, have big lunch and then they go off and do stuff and then they show back up for work later and work until they’re done.
And then they’d go out and have dinner at, you know, restaurants open at 10, you know, and socialize or even do some more business sometimes. And you know, it’s just, we’re not that, we’re way more regimented I think in my view again, it’s just my opinion, but I think I’ve sensed that over time. So it was kind of getting to know customary things, basically.
That’s right. And the more you do that, the more you are successful because they know you, they recognize your values and your credibility and those kinds of things. Right. It’s easier to relate. That’s right. You know, and they, you know, other cultures I ran into would expect certain things like maybe. I’m making this up because it didn’t happen that way, but this is, uh, this was, uh, a for instance, a program manager from a country on a C-130 project, for example, maybe his son that was coming over to LA for vacation.
He would think nothing of calling us or me or one of my team or somebody else and have me me, and say, Hey, you know, my son’s coming over to LA, you know, could somebody look after him. You know, pick him up or, you know, you don’t pay for him or anything, but you, you know, make sure he gets to the hotel and show him around Disneyland.
You know, the things that we, you know, as people we would like to help, but it’s not an expectation. You know, if my son was going to Europe or let’s use Spain again, we were, he was going there. Uh, and how it’s working with a project over there. You know, I don’t think I would ask them to take care of him.
You know, I would say, hey, he runs into trouble. Could he call you? You know, but I wouldn’t expect that to happen. You know, where they would, they would do that. And so it’s, it’s those things that are different and you get used to that and it’s, uh, it’s very exciting, but it really makes you see the world is definitely different and there’s a lot of smart people out there. And there’s a lot of people that have a lot of things that are really top-shelf stuff.
Skunk Works’ X-33 program with NASA in the 1990s was an early attempt at building a reusable launch vehicle that unfortunately wasn’t completely realized. Do you know if any lessons learned from that program may have been applied to the most recent successes that SpaceX and Blue origin have had with reusable launch vehicles? Are there any lines that can be drawn there?
Yeah, I would hope so, but you know, first of all, X-33 was a scale model. It was like a 60% version. So even if it all worked flawlessly, it wasn’t the final article by any means. And I, I’m not an engineer, but I’m almost a hundred percent sure you just don’t upscale it to a hundred percent.
You know, there’s lots of things that go into making it from 60% to a hundred percent. But the real problem we had was, we pressurize the tanks. Hydrogen tanks was it? A large portion of this vehicle was the fuel or the capacity for that. And it was down and we were all excited about testing the fuel tanks there.
And so it passed, hey, you know, you pressurized the tanks and it passed all that. But then when it was decompressioned, it all crunched in like a beer can. And so game over. Right? So obviously fixing that was a key consideration on whoever came next, but it was significant enough to say, no, we just don’t have the money to recalibrate right now.
And so that was pretty much the end of it, but it would have been really, really interesting because it was a pretty sexy looking aircraft to be honest. Yeah, it was cool. It was, you know, and they were testing the thermal system protection, those patches, you know, because of the Challenger, Columbia. So yeah, I, I got to believe that, you know, SpaceX, all those people have learned some of those lessons for sure.
And there was a big, uh, I wasn’t privy to it or didn’t have it, but there would obviously would’ve been a, what happened report would come out and, you know, the lessons learned. You mentioned, uh, you know, Lockheed and consolidating there with Martin Marietta. And, uh, so you made the jump to government work at NASA JPL.
As I mentioned there, you’ve been referred to as NASA’s Father of Business Management. And, uh, we talked about Kelly Johnson’s 14 rules earlier. Would you say that you have a few of your own commandments for business management? Oh, well, you know, that moniker is. It came about a few times and it was, it was mentioned in some meetings and things, you know, it’s in, the, it goes in that category in the land of the blind, the one-eyed man is king kind of thing.
You know, NASA certainly was focused really heavily on the technical, and science, and human space flight, doing all those amazing things, a little bit less focused on business. Really it wasn’t in it to make profit obvious as a government agency.
JPL a little bit different because we were not civil servants. And we were, we actually reported to, uh, the Caltech, which we were actually employees of Caltech. And so we had a board of trustees was really our entity that we, that we had to satisfy. And so I had a little bit more flexibility to do things and I’d come from a background of business.
And, and so I had to write a document for JPL, which is here’s what business is here. And here’s what we’re going to do kind of thing. And that was the dark green book. And it came about because you know, the, the project manual, the flight project practices is what you call, what the project follows to do, their projects, was a red book.
And I think that the blue book was the engineering policies. And I think the yellow book was quality, mission assurance stuff. So, and money’s green. So I call it the green book and as NASA started to evolve toward a little bit more focused on business and things. They started thinking, well, what do I do?
Well, I had preached at various, uh, I was on a few committees, talked about what we were doing at JPL, and I did an independent assessment process. And so it became like, well, maybe we can adapt some of this stuff in our center. The centers are all different. And so you could, some centers could adapt lots of it, some good adapt a little of it, you know, depending on what they do and how they’re orchestrated, architected and all that.
But nonetheless people said, well, this is what we’re looking for in business. And so somebody coined that term and it got out. I focus on, I think I have a couple of commandments and not written or not codified, but it’s all about analysis and assessment. You know, we spend an awful lot of time tracking, fractional work hours and things instead of on really what’s happening.
And I wanted our business people to understand that their job isn’t just to collect the data and print out reports and kick it over to the project. You want to be part of the team. You want to understand what does this do when, when the financial information comes out, you want to be in a position to analyze that data.
And, and, and, and there’s a key difference between analysis and assessment. Everybody, they think of me, they know this speech: It’s about understanding the trends. What are the facts? What is the relationship between facts? That’s analysis. Assessment is what do I do with that information? You know, what is the risk attendant to that?
How reasonable is it? What are some of the alternatives that we can apply to some of that. For example, if you’re a project manager and you’re telling me that it takes six weeks to develop a cryo cooler, but then I’m looking at the last six projects that created a cryo cooler. It took four months. My question has to be to you, what makes you think you can do it in six weeks?
It doesn’t mean you can’t, it just means help me understand why that is, because if you can’t, then that drives schedule and it will increase costs because it’s going to create a problem because you are off by a factor of three, right? So it’s that kind of stuff. And so I wanted our business community to start asking questions, engaging in the right conversations and looking at these kinds of things, not just being reporters, we’re not reporters, we’re contributors to the financial process.
And that’s the key message of everything I did there. And it kind of took hold. And I think there’s a lot of focus on that. That’s great. NASA appropriations are notoriously fickle from year to year and administration to administration. Uh, from your perspective, what was it like riding that rollercoaster? It was a rollercoaster and because a whole myriad of things happen, you know, you bid a project and a lot of people think, oh, it’s going to be X million dollars or billion dollars.
It really is cut into yearly increments. Okay. So, because funding is from October 1st to September 30th, and you can spend prior year money, but you can’t spend money you haven’t got yet. So you have to stay within the yearly appropriation. And that impacts other stuff, because if I’m on a project, and it’s an important one and I can’t get there from here with the money I have and I need to request more.
Well, that means somebody else doesn’t necessarily get their money. What’s more likely to happen is if I had to take some money from you. I mean, again, this is sometimes you can’t do that because all sorts of other reasons, but let’s make believe for a moment.
Your project is going to be sacrificed because my project is either more priority or it’s further down the road and we need to get through a milestone. So now you’re short. Uh, so what do they do? Your project now gets stretched out. Okay. So instead of completing this year, maybe it’s going to be next year now because the funds that you would have had this year, you don’t have now.
So that dynamic is a frequent type thing. Again, I’m oversimplify. And things get pushed out. It’s just, we don’t have the funds. You know, NASA gets earmarks and things get, you know, Congress plays a role. OMB does certain things. And in other projects take priority in some cases, or it was supposed to be awarded at this particular time.
But for some other political reasons, it slipped out six months. So now it kicks into next year. All of that dynamic. I can imagine. Yeah. I mean, it’s, you know, the public sees those big numbers of the appropriations, but not really thinking, like you said, that it’s, it’s annual appropriations and it, you know, given out and increments and, uh, and then of course the future is not even certain on that.
So, you know yeah. I could imagine. And there’s so many major suppliers. I’m sure other agencies have the same issue, but both at Lockheed and at NASA. There’s a lot of, in fact, in many cases, requirements to engage small businesses and, you know, for the whole idea of a diverse economy and all of that. So you work with a lot of small suppliers, sometimes some have off the shelf kinds of things, or these have to develop it.
Uh, and even you deal with the larger companies, more mature, or even a big one, like Boeing or Northrup, or Lockheed from the other side. And a lot of times they can’t meet their schedule because of technical issues or their suppliers are late, or maybe they’re counting on a supplier that all of a sudden went out of business and now they got to go out and recompete something for some other supplier.
All of that could drive something on the critical path. And so you’re constantly dealing with those things and they could drive something into another year and delay a major review and delaying a major review could cause a schedule to slip. You know, those things happen, not infrequently. So dealing with that is, yeah, it’s hard.
So you’ve had to handle situations where projects maybe went significantly over budget or fell behind schedule — and how did you handle that? Well, there’s a process you have to go through, you have certain reserves and you can allocate certain reserves to certain problems because it’s part of the, for NASA, for as part of the budget or part of the total funding.
And so when you get to the point, because you have to look at this financial information constantly. So when it starts to realize that the funds to go either by year or in total are not sufficient, we have to notify NASA obviously. And then we, it triggers a whole nother process. It could be that we don’t need to overrun the total at the end, but we need more money this year, or it could be, I think we’ve got enough to get through this year, but we ain’t going to happen the rest of the way we can’t get there from here because the money we have, then it’s a different discussion.
You go into the over guides, which is, I need more money for this and you defend it. Goes through a cancellation review theoretically. And so all of those things tend to create uncertainty about when it’s going to happen. Generally you will get the money, ultimately, because you’ve invested so much… These projects are not quick turnaround they last seven, 10 years before long.
And so, you know, you don’t want to get six years into a project and have it canceled. That’s just not a good idea because you know, the science community is very upset because they said this was a key science we needed. And now we’ve wasted six years, and the project manager on the NASA side and the JPL side both don’t look that great now because they couldn’t do certain things. We’re going to lose all the money. I mean, it’s just really not the option you want. And so they work through that and it ends up increasing the total cost and they get funds. What people have to understand is, you never, ever overrun a project because we can’t spend money we don’t have.
So we go in and ask for more money. And then when we get that, now that’s our funding, you know what I mean? So let’s say you got a hundred million dollars and that’s all the funding you had. Well, you can’t spend $105 million. What you have to do is go back and ask for five more million. And now you’ve got 105.
So you didn’t really over on after all, because you can’t spend money that’s not appropriated. You can go over your original target. And that happens often. Actually, you don’t actually overrun, you overrun your target, your original budget, but there are gates. You know, every flight project goes through very structured gates.
Phase A is all about concept, you know, what are you doing? What are the level one requirements? Where are you going? How big is it? What are you going to make? What are you going to buy? Kind of what it’s going to cost? What is the science you’re going to return? All of those … is a bigger than a breadbox kinds of things. Phase B is your planning.
Now you’re getting down to devolving some of those requirements in a level two and beyond you’re looking at who are some suppliers putting them on contract to do some planning stuff. So phase B is your planning and your preliminary design. And that’s a important phase. Then you get into the key transition, which is the transition between phase B and phase C, phase C or sometimes it’s together with Phase C-D is your final design and your, what we call ATLO, which is your manufacturing, assemble, test, integrate, that stuff.
And once you get through that gate, you’re now a real project. Up until then it might not be feasible. So the really big review is called the it’s called PDR preliminary design view, but it’s really the gate transition between your development aspect into your now you’re making it and it’s, here’s what the mission is it.
Now Congress is involved. You get what they call an agency baseline commitment, which is what we can do it for. This is how much it’s going to cost. And here’s how long it’s going to take. At least the initial target. It’s a, it’s now on the front page of newspapers and things. I mean, it’s a real project now, but you’re actually in phase C by then each one of those phases, you have budget targets, you have schedule targets, you have deliverable targets.
Each one of those review, they’re called a gate review, have a very significant and very focused review structure. You have to pass these and you go through these steps to do that. There’s a standing review board that reviews all this stuff, and it takes two, three days to go through these reviews. If you pass it, you go to the next phase.
If you don’t you get a Delta review, which says, hey, okay on this, but these three or four things, you didn’t convince us, so go back and fix that, then you’d go through it again. You know? So it’s all about getting everything done, satisfactorily. And so you don’t get to later in the program. And have something bad happen and you do these at the suppliers too.
So let’s say Lockheed is doing a major system or on the spacecraft or whatever it is, they go through the same kind of process at the same gate transitions that we do. They’re part of that as well. So it touches everybody and it’s very structured and it gets you there. So when it’s time to launch this, then were pretty sure we checked all those boxes.
Wow. That is an arduous process. I can imagine the heartbreak of you know, if you just don’t jump through one of those hoops or whatever, and you, like you said, you may lose the project and then lose face, you know? I, I can’t imagine. Wow. Yeah. So one final question: With the number of commercial passenger spaceflights bound to increase following the recent successes by Blue Origin and SpaceX, there have been concerns about whether the current framework in place is sufficient regarding the risks, you know, in those space flights.
In your risk assessment experience, with celebrities like William Shatner now going up to the Karman line, how will those commercial companies need to cover themselves in the event of a potential tragedy? Yeah, that’s, that’s a good question. And I, I don’t have any A-priority data to support that, ‘cause I’m not even sure there is any, but I can almost rest assured that everything leading up to the guys getting in capsule is pretty much the same, whether it’s an astronaut or not.
It’s very rigorous activities that go into that. And then there’s obviously certain things that the passengers will have to do, and I’m sure, uh, you know, Elon’s team and then those guys have the same kind of rigor in what they’re doing when it involves people. You know, when you start looking at live passengers, now, you’ve got a whole different focus.
This, there, there, the redundancy has to be there. And these people have to be able to health-wise in a situation to tell you — this is not a ride to the market. This is a big deal. And so yeah, with Shatner, what 90 some years old. But, you know, you gotta wonder whether it’s based on anything other than instinct is hard to say is that as you multiply the number of passengers and companies that are commercial, as opposed to the rigor of the government, which I’m not sure which one’s more rigorous to be truthful, nonetheless, you’re bound to run into things that could create a problem.
And it’s one of those sad things is that everything goes fine. You know, life’s good. But when one thing goes wrong, it sends it back. Let’s say we’re having a constant passenger traffic going up in these missions or these up and back to orbit, whatever their mission is to do. Everybody gets excited about it and you get more and more, but when something goes bad and somebody crashes, you’ve scaled way back now, you’ll see a lot less people going up, you know, the rigor will go higher and they’ll be fewer and farther between until they kind of get past that
Anyway, that’s just the nature of things. So hopefully we don’t run into that. I think there’s been a lot of, uh, risk reduction activities done over the years, going up to the space station in reality, that’s just a bus ride to the space station is what it is.
Payloads get delivered and all of that. But you know, it’s getting into spacecraft, going up to the space station, delivering the cargo, putting things into orbit,coming back. And so they worked out that pretty well. And so now more interested, you know, you, you got to just hand it to these, you know, Elon Musk and Bezos and Branson, and these guys have made this sexy.
You know, NASA and the astronauts have always been kind of interesting and held in high regard, but these guys have really made it interesting and really made it exciting. And so we’re going to see that now, and then that that’s a good thing.
And it spawns lots of startups, it spawns lots of interest in space and will generate capital and investment dollars on behalf of venture capitalists and private equity you know all that will kick in. It’s the new frontier, you know, we’ve already been to Chicago, so we got to go somewhere else now. So that’s kinda what it’s about. Excellent. Well, Kevin, thanks again for taking the time to speak with us today. Yeah, we, uh, we appreciate you sharing your vast experience with us.
And, uh, I hope this conversation will give listeners who would like to, or are pursuing aerospace or space commerce careers, some insight into the inner workings. You know, most of what I said was true. I believe you, okay. That concludes this episode of Space Foundation’s Space4U podcast. You can subscribe to this podcast and leave us a review on Podbean, Apple Podcasts, Google podcasts, and Spotify.
Don’t forget to follow us on Facebook, Twitter, Instagram, and LinkedIn. And of course our website spacefoundation.org, where you can also learn about the various ways you can support Space Foundation. On all of these outlets and more it’s Space Foundation’s mission to be a gateway to education, information, and collaboration for space exploration and space-inspired industries that drive the global space ecosystem. Here at Space Foundation, we will always have space for you.
Thanks for listening.