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The loss of the space shuttle Challenger will have repercussions for the entire national space program. In response to a request from the Chairman and the Ranking Minority Member of the Senate Committee on Commerce, Science, and Transportation, this staff working paper provides preliminary estimates of the effects of the Challenger accident on the National Aeronautics and Space Administration budget for fiscal years 1986 and 1987.

The paper was written by David H. Moore of CBO's Natural Resources and Commerce Division, under the direction of David L. Bodde and Everett M. Ehrlich. Richard Mudge of the Natural Resources and Commerce Division and Paul DiNardo of CBO's Budget Analysis Division made valuable contributions at all stages of the project.

The manuscript was edited by Patricia H.Johnston and prepared for publication by Kathryn Quattrone.
 

Rudolph G. Penner
Director
March 1986
 
 

SUMMARY

CHAPTER I - INTRODUCTION AND METHODOLOGY

CHAPTER II - COSTS RESULTING FROM THE CHALLENGER ACCIDENT

• Reconstitution Costs
• Operational Costs

CHAPTER III - ALLOCATION OF EFFECTS OF THE CHALLENGER ACCIDENT IN THE NASA BUDGET

• Space Flight, Control, and Data Communication
• Research and Development
• The Postaccident Flight Schedule and Research and Development Pay loads

CHAPTER - IV POLICY ISSUES
 
 

TABLE 1	NASA'S 1986 FUNDING AND THE ADMINISTRATION'S 1987 BUDGET REQUEST, BY MAJOR SUBFUNCTION
TABLE 2	PRELIMINARY CBO ESTIMATES OF REPLACEMENT COSTS
TABLE 3	PRELIMINARY CBO ESTIMATES OF OPERATIONAL COSTS AND SAVINGS (-)
TABLE 4	ACCIDENT COSTS AND SAVINGS (-) FOR SPACE FLIGHT, CONTROL, AND DATA COMMUNICATION BUDGET SUBFUNCTION, BY MAJOR COMPONENT
TABLE 5	MAJOR COMPONENTS AND PROGRAMS ELEMENTS IN THE RESEARCH AND DEVELOPMENT SUBFUNCTION WITH SAVINGS OPPORTUNITIES, 1986 FUNDING AND 1987 ADMINISTRATION'S REQUEST
TABLE 6	PREACCIDENT AND POSTACCIDENT ANNUAL FLIGHT RATES
TABLE 7	DISTRIBUTION OF POSTACCIDENT SHUTTLE FLIGHTS ASSUMING CURRENT POLICY PAYLOAD PRIORITY

 

The Challenger accident probably will raise total spending for the National Aeronautics and Space Administration (NASA) in fiscal years 1986 and 1987, even if a new orbiter is not procured. An estimate by the Congressional Budget Office (CBO)--based on very preliminary NASA data--of the needed net new budget authority is $142.5 million over 1986 funding and $115.5 million over the President's 1987 request. It should be emphasized, however, that these estimates may change significantly, depending on the cost of investigating the Challenger accident and on whether the investigation leads to modifications of the shuttle system itself or of NASA operating practices.

The Congress could meet these new costs either by authorizing new funds or by cutting other spending within the NASA budget. One possible area in which to reduce NASA spending over the next two to three years is the research and development (R&D) function, since the loss of shuttle capacity will lead to a dramatic reduction in shuttle flights available to launch R&D payloads during this period. Once the system returns to regular operations, pressing national security needs will fill most of the available flights for several years, thus delaying the launch of major scientific pay-loads--which require large R&D expenditures--by as much as three years beyond their original launch dates.

The budgetary effects of the accident can be broken down into two categories. The first, "reconstitution" costs, includes the expenses of the investigation, any shuttle system modifications suggested by the investigation, and the replacement of equipment lost in the accident.¹ The second class of effects includes those costs and savings that result from the lower flight rate forced on NASA by the loss of the Challenger. Currently, not all the reconstitution costs of the accident are known. Most important, the cost of the investigation and of modifying the system to provide for safe flight cannot be estimated yet. According to NASA's preliminary estimates, replacing capability lost in the explosion (exclusive of the orbiter) and modifying the system will require new expenditures of $240.5 million in 1986, $245.5 million in 1987, and related spending of $205 million in future years. Of this amount, $350 million will be spent to modify the shuttle system--$200 million in 1986 and $150 million in 1987. According to CBO's preliminary analysis, these NASA cost estimates may be low. Net savings in NASA operations may offset these new costs by $98 million in 1986 and $130 million in 1987. Of this amount, $45 million in 1986 and $124 million in 1987 would be saved by not operating the shuttle. Additional net savings--$53 million in 1986 and $6million in 1987--are estimated for research and development and for space tracking and data communications activities.

This analysis deliberately excludes consideration of longer-term budgetary issues, such as the procurement of a replacement orbiter. Provision of a new fourth orbiter would raise a number of significant issues for both space policy and the NASA budget. The cost of replacing the orbiter and the existing orbiter spare parts that would be consumed by a new orbiter is estimated by NASA to be $2.4 billion over four years. At the same time, the out-year operational costs of the shuttle system are likely to increase as the accident promotes more conservative and costly operational procedures. An expendable launch vehicle program to fill the deficiency left by the loss of an orbiter could be at least as expensive--for example, the Air Force recently purchased 10 rockets for $2 billion, roughly the cost of one shuttle.

Thus, purchasing either a small fleet of expendable launch vehicles or a new orbiter will raise serious budgetary concerns. Moreover, implementing NASA's preaccident suggestion of real increases in its budget to finance the space station program would require even greater resources. Together, procurement of a new orbiter, more costly shuttle operating procedures, and the space station program could require an additional $1 billion in NASA's annual budget through 1990. The Congress will be concerned about the budgetary effects of these issues not only in 1986 and 1987 but also well into the next decade, calling into question the future federal role in the commercial and scientific development of space.

This document is available in its entirety in PDF.

1. The cost of a fourth orbiter, however, is not construed as part of this replacement cost. This analysis assumes that the Congress will wish to determine independently whether a new fourth orbiter should be constructed.