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Mr. Chairman and Members of the Subcommittee, I appreciate this opportunity to discuss restructuring the National Aeronautics and Space Administration (NASA) and the agency's continuing effort to adapt to lower budgets. The Congressional Budget Office (CBO) presented testimony to this Subcommittee in October 1993 and released a related study, Reinventing NASA, in March 1994, both of which respond to the questions before the Subcommittee today. CBO's last look at NASA reached two conclusions:

• Changing the way that NASA does business may offer improved program management and technical performance and some cost reductions, but the associated budgetary savings are uncertain and unlikely to be realized in the near term.
  
  
• Canceling, scaling back, or stretching out programs and reducing NASA's federal workforce are necessary to lower the cost of NASA's program to the level included in the President's 1994 budget plan. Cost reductions created by more efficient management, procurement, and acquisition practices are unlikely to be large enough to allow NASA's budget to be cut further without additional reductions in its program. Ultimately, a smaller budget will mean a smaller program and fewer accomplishments for the civilian space program.
  
  

The five-year plan consistent with the President's budget for 1996 requires the agency to make unspecified reductions of slightly more than $4 billion for 1997 through 2000. The agency is faced with the unenviable choice of reducing its current program, trimming its institutional capability (including the civilian workforce), dramatically narrowing its focus, or some mix of the three. The conclusion CBO reached 18 months ago seems more pertinent than ever: ultimately, a smaller budget will mean a smaller program and fewer accomplishments for the civilian space program.

Absorbing a large part of the $4 billion reduction may be possible by decreasing NASA's civilian workforce and other costs carried in the agency's institutional accounts (largely captured in the accounts known as research and program management). One might question, however, whether maintaining the current program's scope with reduced overhead delivers the most benefit to the taxpayer. An alternative approach would be to adopt a strategy that narrows the agency's mission, or product line (to use the language of the private sector), based on a clear understanding of which activities produce the greatest benefit for their cost. That approach may capture even greater saving than those required by the President's request for 1996. NASA might be called on to make such larger reductions should the Congress devise an overall budget plan that reduces the deficit more than the President's budget proposal does.

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