1 

Interim Report #3 

June 26, 2002

www.aerospacecommission.gov 
Table of Contents 

I. Introduction 1 

 

II. Space Infrastructure 3 

 A. Establish Federal Spaceports 3 

B. Enhance Leasing Authority 4 

C. Provide NASA Utility Privatization Authority 5

III. Aerospace Industrial Base 7 

A. Sustain Critical U.S. Industrial Base Capabilities 7 

B. Ensure Department of Defense Program and Budget Stability 11 

IV. 21st Century Aerospace Workforce 15 

A. Develop and Maintain a 21st Century Workforce 15 

V. Summary 18 

Appendix A: U.S. Solid Rocket Motor Technology 

 and Production Capability 19 

Appendix B: Design Capability for Advanced, 

 High-Performance Aircraft 20 

i
1 

I. Introduction 

The Commission on the Future of the United States Aerospace Industry was 

established by Section 1092 of the Floyd D. Spence National Defense Authorization Act 

for fiscal year (FY) 2001, Public Law 106-398. It was formed to study the future of the 

U.S. aerospace industry in the global economy, particularly in relationship to U.S. 

national security; and to assess the future importance of the domestic aerospace industry 

for the economic and national security of the United States. 

This report is the third in a series of interim reports aimed at identifying issues the 

Commission believes are critical to the future of the U.S. aerospace industry and require 

immediate attention by the Administration and/or the Congress. The first report was 

issued on December 18, 2001, and focused on the need for the federal government to 

budget and fund aerospace activities as a sector. The second report was issued on March 

20, 2002, and focused on the aerospace business environment, defense/dual-use exports 

and air transportation. The focus of this report is on space infrastructure, industrial base, 

and workforce issues. The Commission will issue a final report to the President and 

Congress in November 2002 (which will contain more sweeping recommendations in 

these and other areas). 

A. Mission Statement 

The Commission shall develop and recommend a series of public policy reforms that 

will permit the U.S. aerospace industry to create superior technology, excel in the global 

marketplace, profit from investments in human and financial capital, benefit from 

coordinated and integrated government decision-making, assure our national security, 

access modern infrastructure, and give the United States a capacity throughout the 

21st Century to reach for the stars. 

B. Congressional Mandate 

The Commission was given a broad mandate to study: 

The adequacy of projected budgets of the federal departments and agencies for 

aerospace research and development and procurement; 

The adequacy of the current acquisition process of federal departments and 

agencies; 

The procedures for developing and fielding aerospace systems incorporating new 

technology in a timely fashion; 

The policies, procedures, and methods for the financing and payment of 

government contracts; 

Statutes and regulations governing international trade and the export of 

technology; 

Policies governing taxation, particularly with a view to assessing the impact of 

current tax laws and practices on the international competitiveness of the 

aerospace industry; 

Programs for the maintenance of the national space launch infrastructure; and 

Programs for the support of science and engineering education. 
2 

C. Commissioners 

The Commission is composed of 12 members: six appointed by the President, two 

each by the House and Senate Majority Leaders, and one each by the House and Senate 

Minority Leaders. The Chairman is the Honorable Robert S. Walker, former Chairman, 

U.S. House of Representatives Committee on Science, and the Vice Chairman is the 

Honorable F. Whitten Peters, former Secretary of the Air Force. 

The commissioners appointed by the White House are: 

Dr. Buzz Aldrin 

President, Starcraft Enterprises, Sharespace, Starbooster & Starcycler 

Mr. Edward M. Bolen 

President, General Aviation Manufacturers Association 

The Honorable John W. Douglass 

President, CEO and General Manager, Aerospace Industries Association 

Dr. Neil de Grasse Tyson 

Director, Hayden Planetarium 

The Honorable Robert S. Walker 

Chairman, Wexler & Walker Public Policy Associates 

Ms. Heidi R. Wood 

Executive Director, Morgan Stanley 

The commissioners appointed by the Congress are: 

Mr. R. Thomas Buffenbarger 

President, International Association of Machinists & Aerospace Workers 

The Honorable Tillie K. Fowler 

Partner, Holland & Knight 

The Honorable John J. Hamre 

President & Chief Executive Officer, Center for Strategic & International Studies 

The Honorable F. Whitten Peters 

 Partner, Williams & Connolly 

The Honorable William Schneider 

President, International Planning Services, Inc. 

Mr. Robert J. Stevens 

President and Chief Operating Officer, Lockheed Martin Corporation 
3 

II. Space Infrastructure

A. Establish Federal Spaceports 

 1. Issue 

 The National Aeronautics and Space Administration (NASA) and the United 

States Air Force (USAF) currently manage the space launch infrastructure at 

Kennedy Space Center (KSC) and Cape Canaveral Air Force Station (CCAFS). They 

do so according to their own distinct agency processes and procedures, even though 

both share the same infrastructure. A new paradigm to manage infrastructure is 

necessary to increase efficiency and reduce cost. 

 2. Background/Findings 

 Significant strides have been made in unifying KSC and CCAFS through the Joint 

Base Support Contract and a joint planning and customer service office to coordinate 

customer space launch needs. Merging KSC and CCAFS into one facility, then 

creating a quasi-federal entity (QFE) to manage it, might well improve efficiencies, 

reduce costs, and provide a simplified “single face” to the users of and suppliers 

supporting these two facilities. This would support both Government and commercial 

customers. 

 While the government could retain ownership of all land, the QFE could operate, 

maintain and upgrade the facility under the leadership of an executive director and 

Board of Directors comprised of the government owners of the facilities. The QFE 

should be allowed to operate more freely than traditional federal agencies through 

streamlined rules and regulations with respect to appropriations, real property and 

procurement. An appropriate model might be that of the Metropolitan Washington 

Airports Authority. The unified spaceport facility (KSC and CCAFS) would operate 

under a unified set of procedures rather than the two different sets of procedures 

(NASA and USAF) used today, incorporating the best practices of each. As tenants 

of a unified spaceport facility, NASA and the USAF could shed the direct 

responsibility for base operations in the expectation that this should result in more 

efficient operations and cost savings. Traditional government roles, such as range 

and airspace safety, could be left in the hands of NASA and the USAF, or transferred 

to other agencies, such as the Federal Aviation Administration (FAA). 

Interim Report #3, Recommendation 1

NASA and the USAF should immediately begin a short-term study, to be completed 

prior to May 2003, to support the FY 2004 legislative process. The study should 

build on the recommendations of the February 2000 Interagency Working Group 

report “The Future Management and Use of the U.S. Space Launch Bases and 

Ranges.” It should investigate the feasibility of establishing a national spaceport 

structure at KSC and CCAFS under a single management system. The study should 
4 

identify the advantages of a common management for the national spaceport system, 

potential cost savings, and process improvements above and beyond the current level 

of cooperation. Recognizing that the USAF today provides a significant subsidy to 

other users of CCAFS and KSC, the study should also consider the economic 

feasibility of a quasi-federal corporation in light of the current economic climate for 

space launch in the event that the USAF subsidy was unavailable to support range 

operations. The study should include representatives from Edwards Air Force Base, 

the Dryden Flight Research Facility and other government agencies, as appropriate. 

The results of the study should be delivered to the Administration and the U.S. 

Congress. 

B. Enhance Leasing Authority

 1. Issue 

 Currently, NASA and the Department of Defense (DoD) have only a limited 

ability to lease real property and, in the few instances in which they can, the proceeds 

generally return to the U.S. Treasury. Thus, there are few incentives for NASA and 

DoD to lease their property. At the same time, NASA and DoD are having difficulty 

adequately maintaining their space operations infrastructure due to budget constraints 

and/or competing priority operations. NASA and DoD should have expanded leasing 

authority and retain the proceeds from these arrangements to reimburse the impacted 

organization for operations and maintenance costs. 

 2. Background/Findings 

 Real property is liberally defined as land (including undeveloped land), facilities, 

capabilities and other resources provided to NASA and DoD customers under an 

official lease agreement. Currently, lease proceeds/rents are deposited in the U.S. 

Treasury as miscellaneous receipts rather than returned to the agencies for costs 

attributable to the lease. This inhibits NASA and DoD from entering into long-term 

agreements with state and commercial entities that would result in substantial state 

and private investment. 

 In early calendar year 1999, NASA proposed enhanced leasing authority 

legislation for consideration in Congress. Subsequently, Senator Bob Graham (D-FL) 

introduced the “Commercial Space Partnership Act of 1999” in the U.S. Senate in 

March 2000. The Senate postponed action on the bill at the Office of Management 

and Budget’s request to allow the General Services Administration (GSA) one year to 

investigate similar legislation for all agencies. However, GSA’s umbrella legislation 

for all agencies was not approved that year. 

 Since KSC and CCAFS still saw great potential for this legislation, they redrafted 

legislation that was included in NASA’s proposed FY 2003 Authorization Act. 

KSC’s proposed legislation is supported by Senator Graham and Congressman Dave 

Weldon (R-FL) and is consistent with the original bill, with the following significant 
5 

exceptions. It deletes the reference to the lease of personal property, increases the 

term for which a lease could be executed from five to 75 years, and adds new 

language concerning the flexibility of lease proceeds usage. 

Interim Report #3, Recommendation 2

Congress should approve an Enhanced Leasing Authority bill that allows NASA and 

DoD to lease real property at fair market value and retain lease proceeds to cover the 

total costs incurred in supporting the development and operation of the KSC and 

CCASF facilities. This legislation should grant the individual organizations the 

widest and most flexible interpretation and authority. 

C. Provide NASA Utility Privatization Authority 

 1. Issue

 The electrical distribution infrastructure at KSC and CCAFS is 40 to 50 years old 

and frequently fails. There were 22 unscheduled outages last year alone. The current 

infrastructure is obsolete and many parts are no longer manufactured or available. 

The infrastructure should have been replaced 20 to 30 years ago but has not been 

upgraded due to lack of funding. Absent a new source of funding for upgrading the 

system, it is only a matter of time before a power failure delays a launch. 

 2. Background/Findings

 Replacement of the electrical distribution infrastructure at KSC and CCAFS is 

long overdue but is now quite an expensive undertaking. There are 360 miles of 

primary and secondary electrical distribution lines. Some 170 miles of these lines are 

overhead/aerial and exposed to lightning strikes, which can propagate through the 

system causing extensive damage. It would cost $500,000 per mile or $85 million in 

total to relocate these lines underground in concrete-encased duct banks. An 

additional $17.7 million would be required to repair power cables on KSC. 

Replacing the power distribution on CCAFS and KSC would cost approximately 

$400 million. DoD and NASA budget priorities have precluded adequate 

maintenance and upgrade of the system. There is an urgent need for a new source of 

funding. In the commercial world, these upgrades would have been accomplished 

long ago (perhaps twice) through loans amortized over 30 years. 

 Congress enacted utility privatization legislation for DoD in 1994. The legislation 

authorized DoD to sell its utility systems, including electrical distribution and water 

and sewer to private companies. The USAF planned to sell its power and water 

utilities and had several bidders. If implemented, the companies would have owned, 

operated, and improved the systems, recovering the costs of operations and 

improvements from the CCAFS and KSC through monthly utility service charges. 

However, since CCAFS and KSC share the same electrical distribution system and 

NASA did not have the same legislative authorization, the USAF could not move 

forward with this plan until NASA received similar legislative authority, except at 

prohibitive expense to NASA. 
6 

Interim Report #3, Recommendation 3

Congress should grant NASA utility privatization authority. Privatization (whether to 

private, state or municipal utilities) holds great potential for NASA and DoD facilities 

(specifically KSC and CCAFS) to overcome the budget burdens associated with 

capital improvements to outdated infrastructure. This legislation should grant the 

individual organizations the widest and most flexible interpretation and authority. 

The legislation could also be a model for other government agencies. 
7 

III. Aerospace Industrial Base 

A. Sustain Critical U.S. Industrial Base Capabilities 

1. Issue 

The aerospace industry has raised concerns regarding the lack of sustaining 

design and engineering for manned fighter aircraft (following completion of the Joint 

Strike Fighter in 2008) and for solid rocket boosters used in strategic missile systems 

and space launch systems. 

The Commission recognizes the validity of industry’s concerns and includes a 

more detailed description and assessment of these issues as appendices to this Interim 

Report. The Commission also recognizes that the past decade’s dramatic shrinking 

and thinning of the overall aerospace industrial base and today’s continuing 

challenging business environment leave a high probability that additional similar subsector problems exist or may arise in the future. 

A broad assessment of the overall aerospace industrial base reveals the following: 

 Negative Conditions/Trends Positive Conditions/Trends

- General reduction in the number and 

robustness of aerospace companies 

- U.S. civil transport aircraft market share 

declining 

- Overcapacity in launch industry 

- Space Shuttle future replacement clouded 

- Commercial/Military integration weak 

- Overcapacity in satellite industry 

- NASA, FAA research funding in decline 

- No U.S. regional jet production 

- U.S. export controls confining global access 

- World Trade Organization (WTO) position on 

tax issues unfavorable to U.S. manufacturers 

- Serious air traffic control challenges, airport 

saturation 

- Financially weak airlines struggling with post 

September 11, 2001 challenges 

- Foreign government sponsored competitors 

- NASA elimination of rotorcraft research 

funding 

- Defense research, development, 

testing and evaluation increase 

helping 

- Unmanned aerial vehicle 

developments emerging 

- Overall general aviation aircraft sales 

are growing 
8 

The U.S. Government, particularly its national security organizations, must be 

alert to risks that arise from such an environment and be prepared to take action in 

order to avert serious damage to the aerospace industrial base. The establishment of 

this Commission shows that a degree of overall concern has been noted. The DoD 

does conduct ad hoc analyses of individual programs when particular concerns are 

raised, but performs no future-looking systematic assessment to identify potentially 

critical industrial base issues. In fact, DoD has recently asked the Congress to drop a 

requirement for annual reporting on the status of the U.S. defense industrial base. 

2. Background/Findings 

Highlighted findings from an overall view of the U.S. aerospace industrial base 

include the following: 

- Several economic and international trade issues are hampering the U.S. aerospace 

industry. The challenge of reforming U.S. export control policy has been raised 

by this Commission. The effect of recent WTO rulings on tax issues is to hurt 

U.S. companies while helping international competition. Furthermore, the 

impending expiration of research and development (R&D) tax credits will inhibit 

needed investment and innovation. 

- Given the failure of a robust commercial space business to emerge, there is a 

worldwide overcapacity in space launch. The U.S. space launch industry is also 

facing severe pressures from international competitors, many of whom are 

sponsored by their governments and therefore do not face the full consequences of 

the marketplace. 

- Even with DoD budgetary increases, the overall trend for consolidation and 

thinning of the aerospace industry will likely continue in the absence of 

government intervention. The government currently has not clearly stated its 

policy as to whether it favors or discourages further consolidation as the 

appropriate means to address overcapacity. As a result, the business community 

is less able to proceed efficiently in coordination with the national interest in 

strategic planning and development. 

- The government’s current mechanisms for addressing broad industrial base issues 

are weak and uncoordinated. Such mechanisms fail to match medium- and longterm future requirements with current policies affecting the size and structure of 

the aerospace industrial base. The current mechanisms do not address the 

significant barriers to entry for defense-related industries. These barriers make a 

free market model highly unreliable for industries seeking to reenter the defense 

market. 

For example, the anticipated gap in engineering design and 

development for manned fighter aircraft and solid rocket boosters is 

not clearly being addressed by the DoD. If these gaps do occur, 

reconstituting the engineering expertise needed for successful system 
9 

development will be extremely problematic, time consuming, and at 

high risk of losing lessons from past experience. 

- The budget increases proposed for the DoD by the Administration will clearly 

help support the defense sector. However, stability of these budgets will be 

required for improvements to be maintained over the long term. 

- The long-term cooperative efforts between NASA and the DoD in rotorcraft 

research are in serious turmoil. As NASA faces internal budget pressures, it has 

sought to eliminate all of its rotorcraft R&D activity unilaterally. In the face of a 

growing European rotorcraft industry, the future competitive U.S. capabilities in 

both military and commercial rotorcraft technology development is in serious 

jeopardy. 

- The past year’s recession and the effects of the September 11, 2001 terrorist 

attacks have severely impacted the U.S. aerospace industry. Airline traffic is 

down, aircraft orders have dropped, and 2001 saw fewer space launches than any 

year since 1963. The supplier base has been especially hard hit with the 

repercussions of slowing orders from prime contractors. A significant portion of 

government spending in the air transportation sector is being refocused to massive 

security responses, reducing the funding available for innovation and system 

efficiency improvements. 

- As stated in the Commission’s Second Interim Report, the limitations to air traffic 

capacity growth is a major challenge facing the nation. The effects will be felt in 

the near term. Traffic recovery from September 2001 is already underway and 

will continue with an economic recovery and success in preventing future terrorist 

incidents. Already, however, on time performance is dropping as traffic 

increases, highlighting the fact that the air traffic control (ATC) system is very 

near its effective capacity. New runway construction is a process that typically 

takes well over a decade to complete. NASA and FAA budgets aimed at air 

transportation’s growth have been decreasing for a number of years. The long 

lead-time for increasing aviation capacity calls for immediate Administration and 

Congressional attention to address this major national need.

- At this time of severe air transportation challenges, the senior leadership of the 

FAA is in transition. The FAA Administrator’s term expires in August of this 

year, the Deputy Administrator has indicated his intent to retire in the same time 

period, and the leader of the proposed Performance Based Organization for 

managing air traffic operations remains unnamed. 

In previous interim reports, the Commission has recommended a number of 

actions for the Administration and Congress that would directly improve the 

condition of the U.S. aerospace industrial base. It is important to consider industrial 

base issues in its full context, and worth reiterating several previous Commission 

recommendations: 
10 

- Congress should fully fund the President’s DoD budget request. 

- Congress and the President should ensure full funding of the FAA’s operations 

budget and its Operational Evolution Plan. 

- Congress should adopt the National Foreign Trade Council (NFTC) unitary 

proposal to replace the Foreign Sales Corporation (FSC)/Extra-territorial 

Exclusion Act of 2000 (ETI) with changes to U.S. tax laws that would ensure the 

future competitiveness of current users of the FSC/ETI regime in the global 

marketplace. 

- The Administration should negotiate changes in the WTO rules that would 

remove the inequity in treatment of direct and indirect taxes that led to the 

European Union's challenge of the FSC/ETI tax regime, and put in place an 

equitable resolution that would ensure that U.S. business interests receive the 

same level of tax relief as European businesses enjoy from their government 

systems. 

- In the near term, Congress should revise the U.S. tax code to make the research 

and experimentation (R&E) tax credit permanent, and increase the alternative 

credit rates to achieve parity with the savings provided by the regular credit. In 

the longer term, Congress should enact structural changes to the R&E credit, 

including changes in the baseline period, increases in the rates for the Alternative 

Incremental Research Credit and other improvements that enhance its 

effectiveness in stimulating private sector investment in new technologies. 

Recommendations

This Interim Report recommends the following additional actions be taken to 

address areas of concern during Congressional deliberations in the current budget 

cycle and Administration preparation for the FY 2004 budget. 

Interim Report #3, Recommendation 4 

The Secretary of Defense should task the Defense Science Board (DSB) to review 

and recommend overall DoD policy toward future industrial base consolidation 

including its policies toward mergers and acquisitions. In particular, as part of this 

review, the DSB should: 

- Address the aerospace industry consolidation and workforce challenges 

resulting from today’s diminishing number of system design programs. 

- Assess approaches for aligning consolidation policies with procurement and 

budgeting policies. 

- Consider specific measures on the health of defense contractors such as the 

magnitude and longevity of a contractor’s production base and product 

development work. 

- Assess the long-term sustainability of the nation’s high performance aircraft 

and solid rocket booster design and development capabilities, including the 

potential of increasing/initiating high payoff technology development 

programs and/or continuing low rate production of strategic systems to bridge 

industry capabilities to a succeeding generation. 
11 

Interim Report #3, Recommendation 5 

The Administration and Congress should direct NASA and the DoD to coordinate 

R&D efforts in areas of common need and provide the appropriate funding for joint 

programs. For example, funding for joint Army/NASA rotorcraft R&D efforts should 

be restored. 

Interim Report #3, Recommendation 6 

Congress should hold hearings to address: 

- National challenges for future air traffic capacity needs cited in the 

Commission’s Second Interim Report. 

- Increases to NASA and FAA research and development funding needed to 

retain national leadership in aeronautics. 

Interim Report #3, Recommendation 7 

The Administration should ensure that a new FAA Administrator, Deputy 

Administrator and Chief Operating Officer of the new Performance Based 

Organization are recruited to fill important leadership vacancies without delay. Each 

should be given a mandate for substantial long-term ATC capacity growth. 

B. Ensure DoD Program and Budget Stability 

1. Issue 

Because of overall DoD budget constraints in the past decade, DoD investments 

have been inadequate to fund planned programs. This funding shortfall has been 

exacerbated by the practice of decrementing the investment accounts to provide 

supplemental funding for increasing operations and support (O&S) costs, the costs of 

unforeseen contingency operations and unanticipated internal program changes. The 

resulting program funding instability is contributing to increased weapon system costs 

and delays in military modernization. The current Administration seeks to resolve this 

issue by providing a significantly increased DoD budget top line that can 

accommodate fully the O&S accounts, including unplanned contingencies, and by 

budgeting more realistically for individual programs. 

2. Background/Findings

Protecting Investment Funding 

Stable and predictable funding levels for DoD procurement and R&D accounts 

are essential for achieving effective management of programs and costs, as well as 

meeting requirements for military modernization. Stable and predictable funding 

levels, though, must be accompanied with achievable and realistic requirements and 
12 

mature technologies, the lack of which also contribute to a program’s failure to meet 

established baselines. 

 

Ensuring adequate funding for both O&S and investment requirements would 

ameliorate some of the funding stability concerns for individual programs, and would 

help ensure adequate funding to complete and maintain the desired modernization and 

transformation of U.S. Armed Forces. 

Realistic Cost Estimates 

The competition for scarce resources, coupled with a desire to satisfy more 

requirements by having more programs ongoing than may be affordable, creates 

incentives and pressures on the Services and industry to be overly optimistic when 

estimating future system costs. As programs mature, actual costs are difficult to 

accommodate within the planned top line, leading to cost increases, delays, 

restructuring, or cancellation. Overly aggressive schedules and requirements also 

have a significant impact on program execution and delivery. 

Requiring more realistic cost and schedule estimates will help reduce the 

tendency to include too many ultimately unaffordable programs within the FYDP and 

preclude both contractor and DoD investment in programs that realistically will not 

be completed. 

Financing Flexibility 

The current financial system requires detailed estimates of program costs years in 

advance of execution, and then allows only very limited flexibility, once the budget is 

finalized, to address changes and emerging needs as the program progresses through 

execution. 

Greater flexibility to adjust funding requirements among programs, and within 

programs, would allow DoD to meet higher priority requirements as they arise, and 

solve problems discovered in testing during production or to provide support 

following production.

Multiyear Budgeting 

While a weapon system’s design and development program typically requires 

many years, often from five to ten, resources are requested and appropriated on an 

annual basis. Thus, while contracts span multiple years, program managers and 

contractors face annual uncertainty over the timely availability of adequate funding to 

do the next increment of work. As long as high priority programs are performing, 

Congress and DoD should recognize that funding reductions impact performance and 

should avoid funding perturbations resulting from undistributed cuts, disbursement 

lags, and other adjustments not related to program performance or funding 

requirements. Multiyear contracts for production offer a means of providing defense 
13 

companies with stable revenue and cash flow, lowering unit costs due to economies 

of scale and supporting a more stable workforce. 

Recommendations

Based on the need to adequately fund and manage investment in modernization 

and transformation, the Commission recommends that the Administration/DoD and 

Congress: 

Interim Report #3, Recommendation 8 

Establish and maintain a stable top line for DoD investment in the FYDP. 

a. Establish and maintain an adequate long-term investment (procurement and 

R&D) budget in the FY 2004-2009 FYDP. 

b. Establish and maintain an adequate O&S budget in the FY 2004-2009 FYDP. 

c. Protect continuity of long-term investment funding by seeking to limit 

downward adjustments across the FYDP for other than economic reasons (i.e., 

inflation) and/or by limiting reprogramming into O&S or other accounts in 

year of execution. 

Interim Report #3, Recommendation 9

Fully fund programs within the FYDP. 

a. Industry should submit realistic cost and schedule information in all bid 

proposals. 

b. DoD should provide sufficient funds in the FYDP based on realistic schedule 

and performance goals, using independent cost estimates as decided by the 

Milestone Decision Authority. 

c. DoD and industry should jointly manage programs to ensure visibility and 

review all requirements changes during program execution. If approved, 

funding will be adjusted for any such requirements. 

Interim Report #3, Recommendation 10

Increase DoD’s financial flexibility. 

a. Support the Administration’s proposal to provide authority for program 

managers to move funds from procurement to R&D within a program. 

b. Double reprogramming thresholds to $20 million for procurement and 

operations and maintenance and $8 million for R&D. 

Interim Report #3, Recommendation 11 

Support multiyear, full-phase funding for both development and production 

programs. 

a. Procurement Programs: Expand the use of multiyear procurement contracting 

and funding using existing criteria and by working to achieve the Secretary of 
14 

Defense’s (SECDEF) desired goals for multiyear contracts. SECDEF 

selected pilot programs with spiral development acquisition and multiyear 

funding will include mechanisms to allow the insertion of technology 

enhancements without invalidating the advantages (cost savings and program 

stability) of multiyear contracting. 

b. Development Programs: Develop baselines for selected development 

programs based on realistic cost, schedule and performance goals; establish 

and protect “milestone-to-milestone” budgets in the FYDP to provide fullphase funding from initiation to production, as long as acquisition program 

baseline goals are met. Enact legislation to provide “milestone” 

Congressional authorizations for the duration of each selected development 

program, and appropriate funds annually as required for each program so long 

as each program meets its baseline goals. 
15 

IV. 21st Century Aerospace Workforce 

A. Develop and Maintain a 21st Century Workforce 

1. Issue 

The future of the U.S. aerospace industry depends on the ability of the industry to 

attract, develop and retain a properly skilled professional, scientific, engineering and 

production workforce. Contractions in the industry due to mergers and consolidations 

and a downturn in the economy have produced large layoffs and few opportunities for 

new jobs. The U.S. aerospace industry is also dependent upon the U.S. educational 

system to develop high quality graduates in math and science. Declining national 

scores in math and science highlight the deficiencies of the educational system to 

effectively motivate and teach these skills. The impending retirement of the aging 

aerospace workforce, the fact that young people are not choosing engineering as a 

career field, and a lack of qualified, skilled workers will result in a shortage of 

aerospace workers in the next decade. 

2. Background/Findings 

With the end of the cold war, the rise of global competition, industry 

consolidation, and growth in other sectors of the economy – particularly in the 

computer sciences – the U.S. aerospace industry has lost its premier status as the 

employer of choice for many types of professional, scientific, engineering, production 

and maintenance workers. At the same time, the average age in the workforce on the 

defense side of aerospace is over 50 years old. In the next six years, nearly half of the 

workforce is eligible to retire, leaving a gaping hole in skills and experience. 

According to retired USAF General Thomas Moorman, “The work force is the 

biggest issue facing the industry today. We are not attracting and retaining the best 

and the brightest.” 

Maintaining and developing the required quality workforce is compounded by a 

K-12 education system that is woefully inadequate in math and science teaching and 

learning. A recent national commission report describes math and science teaching at 

the K-12 level as “nothing short of a national disgrace.”1

 It is also noted that “34% of 

public school math teachers and nearly 40% of science teachers lack an academic 

major or minor in these fields, and that a serious shortage of K-12 teachers exists in 

science and math.”2

The aerospace industry plays a major role in the health of the U.S. economy and 

in maintaining the strength of our nation’s security. It provides jobs for hundreds of 

thousands of workers in aerospace and related industries. The industry is constantly 

developing sophisticated technologies that have widespread application in increasing 

 

1

 “Before It’s Too Late”. A Report to the Nation from The National Commission on Mathematics and 

Science Teaching for the 21st Century, September 2000. 2

 “Road Map for National Security: Imperative for Change”, February 2001. 
16 

the nation’s productivity and in protecting our country from its enemies. The 

development of new technologies has also spurred the creation of other industries that 

have greatly contributed to our economy. 

None of the great benefits that have been derived from the aerospace industry 

would have been possible without the availability of a highly skilled and dedicated 

workforce. Despite its importance, however, the aerospace workforce is dramatically 

declining. From a peak employment in December 1989 to March 2002, over 600,000 

aerospace workers have lost their jobs. The impact of the recent use of commercial 

aircraft in attacks on the U.S. by terrorists and the current downturn in the business 

have led to a further unplanned loss of aerospace jobs. Aerospace industry 

representatives have noted that the total announced layoffs since the September 11, 

2001 terrorist attacks exceed 60,000 workers across the industry.

Recommendations

 Given the necessity of the U.S. aerospace industry for economic and national 

security, the Commission makes these recommendations for stemming these losses 

with an overall objective of stabilizing and growing the U.S. aerospace workforce. 

Interim Report #3, Recommendation 12

Interagency Workforce Task Force: The aerospace industry’s workforce provides 

the skills, knowledge, and technical capabilities necessary to keep the U.S. in the 

leadership of production, sales, and marketing for the 21st century aerospace industry. 

To ensure leadership throughout the 21st century the Commission recommends that 

the Administration: 

a. Through Executive Order, create an interagency Workforce Task Force to 

coordinate programs and initiatives composed of the Departments of 

Labor, Commerce, Education, and other agencies as appropriate to 

respond to industry workforce and training needs. 

b. As part of the Workforce Task Force, establish an Industry-Based 

Aerospace Capability Network to develop public/private partnerships in 

which all key stakeholders – business, labor, government, and community 

groups – coordinate agency resources, the development of skill standards 

and certification programs, and provide information on occupations and 

job availability in order to foster the growth of the American aerospace 

economy and workforce. 

Interim Report #3, Recommendation 13

Aerospace Industry Promotion (AIP): The Commission recommends that the 

Administration develop a national program to attract public attention to the 

importance and opportunities within the aerospace industry. This program should 

target high schools, community colleges and universities with engineering schools 

and be coordinated through the Aerospace Capability Network. Programs such as the 
17 

National Aerospace Initiative or the Automotive Youth Educational Systems could be 

models for promotion in the aerospace industry. 

Interim Report #3, Recommendation 14 

Tax credits for apprenticeship and training: The Commission recommends that 

the Administration and Congress consider targeted tax credits for employers who 

invest in the skills and training of the workforce for employees enrolled in registered 

apprenticeship programs and other short-term occupational training programs that 

meet the needs identified by industry. 

Interim Report #3, Recommendation 15

Make long-term investments in education and training to keep America’s highly 

skilled workforce “pipeline” filled. The Administration and Congress should: 

a. Support recommendations of the National Commission on Mathematics 

and Science Teaching for the 21st Century on improving K-12 

mathematics and science education. 

b. Create programs, including scholarships and internships, to encourage 

more young people to study and work in the mathematics, science, and 

engineering fields. 

c. Make investments in vocational education to develop a workforce with the 

skills needed by industry. 

d. Expand the use of registered apprenticeships for skilled and technical 

occupations. 

Interim Report #3, Recommendation 16

U.S. Aerospace Workforce Stabilization: Since the tragedy of September 11, 2001, 

the current erosion of U.S. aerospace employment has accelerated. U.S. policy 

towards domestic aerospace employment must reaffirm the goal of stabilizing and 

increasing the number of good and decent jobs in the industry. The Administration 

and the Congress should consider the impact on U.S. aerospace employment of 

domestic and international policies. 
18 

V. Summary 

To support development of its findings and recommendations, the Commission has 

conducted three public meetings – on November 27, 2001, February 12, 2002, and 

May 14, 2002 – and has three more public meetings scheduled for this year – August 22, 

September 17, and October 23. The public is encouraged to attend these meetings, as 

well as to provide inputs directly to the Commission via its website at: 

www.aerospacecommission.gov or to Mr. Paul F. Piscopo, Staff Director, Commission 

on the Future of the U.S. Aerospace Industry, Crystal Gateway 1, Suite 940, 1235 

Jefferson Davis Highway, Arlington, Virginia 22202, via phone (703-602-1515), fax 

(703-602-1532), or e-mail (aerospace.commission@osd.pentagon.mil). 
19 

Appendix A: U.S. Solid Rocket Motor 

Technology and Production Capability 

 1. Issue 

 The United States solid propellant production programs for strategic missiles will 

end in 2008 with no follow-on development or production anticipated before 2015. 

Current trends indicate that civil and commercial markets beyond 2008 will not 

sustain the production base for solid rocket motors. The loss of the solid rocket motor 

industrial base would impede, if not prevent, the development and production of the 

next generation of U.S. strategic missiles. 

 2. Background 

 Our strategic, tactical and missile defense weapons depend on solid rocket motors 

for propulsion systems. Currently, the U.S. Navy is procuring Trident II D-5 Fleet 

Ballistic Missiles (FBM) and the U.S. Air Force is beginning a life extension program 

for 500 Minuteman III Intercontinental Ballistic Missiles (ICBM). Rocket motor 

production for these programs will end in 2008, and missile deployment is planned 

through 2020. For the first time in 50 years, no new strategic missile solid propulsion 

development or production program is on the horizon. 

 The defense industry is no longer the dominant solid rocket motor customer. In 

1984 the $2.5 billion solid rocket motor market was two-thirds defense related and 

one-third commercial space related. By 1999, the market dropped to $1.2 billion: 

commercial space became the dominant customer with two-thirds of the market while 

defense made up only one-third of the market. Space launch customers using solid 

rocket motors include the NASA Space Shuttle, Air Force Titan IV and commercial 

Delta and Atlas vehicles. However, these customers plan to transition to liquid 

propulsion systems for their next generation vehicles. Potential reductions in 

strategic missiles will further dampen demand for solid rocket propulsion. 

Future U.S. strategic missile development and production capability is now 

threatened. Inadequate solid propulsion markets could erode the U.S. ability to 

develop solid rocket boosters to meet future demands. Critical engineering design 

skills could be lost. Already the workforce is in decline: experienced engineers are 

retiring, and young talent is not entering the labor force. If there is ever a requirement 

for more advanced capabilities in strategic missiles, then we must continue to pursue 

related research and development. If we ever need to increase production of solid 

rocket motors in the future, then we must retain our production capability. 
20 

Appendix B: Design Capability for 

Advanced, High-Performance Aircraft 

 1. Issue 

Based on current plans, by the end of the current decade, the United States will 

not be designing and developing a new advanced, high-performance aircraft. There 

will be no new fighter on the drawing boards to follow the Joint Strike Fighter. As a 

result, the U.S is at risk of losing its broad combat fighter aircraft design capability. 

2. Background 

There is concern over the declining design capability for advanced, highperformance aircraft in the U.S. aerospace industry. Over the past 50 years, the 

number of military manned aircraft design programs per decade has dropped 96% 

(1950s – 46 programs; 1960s – 16; 1970s – 12; 1980s – 7; 1990s – 6; 2000s – 2 [the 

Joint Strike Fighter (JSF), a manned aircraft, and the Uninhabited Combat Air 

Vehicle (UCAV), an as yet unproven concept]. This translates into a huge drop in the 

number of programs a technician, engineer, or manager will work on during a 40-year 

career. According to the RAND Corporation, declining experience levels have 

contributed to the problems observed in many recent military aircraft development 

programs. While experienced employees are retiring (54% are over 45 years of age, 

and 33% are eligible for retirement in 5 years), there are few, if any, high-tech aircraft 

programs on the horizon that would allow companies to attract and develop young 

talent, as well as maintain expertise throughout the workforce. 

The JSF System Design and Development SDD will end in 2012. The UCAV 

program will complete its major design work by 2010. From that point forward, DoD 

plans leave a combat fighter aircraft design gap of 10 to 20 years, seriously impacting 

the capability of the U.S. to retain critical skills. Except for the possibility of a Long 

Range Strike Aircraft (B-2 replacement) or a possible National Aerospace Initiative 

hypersonic aircraft, there are no new military aircraft programs of any kind under 

consideration until 2024.