From: dbm0000@tm0006.lerc.nasa.gov (David B. Mckissock)
Subject: NASA "Wraps"
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In the April edition of "One Small Step for a Space Activist",
Allen Sherzer & Tim Kyger write:
  "Another problem is what are called 'wraps' (or sometimes
   the 'center tax'). When work for a large program like
   Freedom or Shuttle is performed at a NASA center, the
   center skims off a portion which goes into what amounts
   to a slush fund. This money is used to fund work the
   center manager wants to fund. This sum is estimated to
   be over a third of the funds allocated. Think about
   that: Of the $30 billion cost of Freedom, fully $10
   billion won't be spent on anything having anything
   to do with Space Stations! Now, maybe that $10 billion
   was wisely spent (and maybe it wasn't), but the work done
   with it should stand on its own merits, not distorting
   the cost of other projects. Congress has no idea of the
   existense of these wraps; Congress has never heard the
   term 'center tax'. They look at the Station they are
   getting and the price they are paying and note that
   it doesn't add up. They wonder this blissfully unaware
   that a third of the money is going for something else."

My dear friends, your mixing fact and fiction here. A couple
of weeks ago, when I first read this in your posting, I
talked with one of the cost experts here in Space Station
at Headquarters [if you wondering why I didn't post a
response immediately, I do have a real job I'm supposed
to be doing here at Headquarters, & digging up old 20 kHz
data & looking into Sherzer/Kyger claims rates pretty low
on the totem pole of priority. Also, I spent last weekend
in Kansas City, at the National Science Teachers 
Association conference, extolling the virtues of SSF
to 15,000 science teachers.]

First off, yes, the concept of 'center tax', or 'wrap' does
exist. If I recall the numbers correctly, the total 'tax'
for the SSF program for this fiscal year is around $40 Million.
This was computed by adding up the WP-1, WP-2, and WP-4
center 'taxes'. With the SSF budget for this fiscal year at
$2.2 Billion, my calculater says the tax percentage is
04/2.2 = 1.8%

Over the life of the SSF program, using your figure of $30
billion for the cost of SSF, a tax at a 1.8% rate comes to
$540 million. This is alot less than $10 billion, but I
will concede it's still an appreciable amount of pocket
change.

I should note that your estimate of the tax rate at 1/3 could
be close to the actual rate. The tax is only charged on funds
that are spent at the center (kind of like McDonalds at some
states, where you do have to pay sales tax if you eat
the food at the restaurant, but you don't if you get it
take-out). For example, at WP-4, the vast bulk of the funds
we receive go to the Rocketdyne Contract, and are *NOT*
subject to the center tax (I don't have the numbers in
front of me, but I'd guess at least 95% of the WP-4 funds
go to Rocketdyne). So, you could be right about a tax
rate of 1/3, but it's only applied to funds spent at the
center, and not to the prime contracts.

This leads to the obvious question "What is the government
doing with SSF funds that don't go to the prime contractors?
(i.e. ok, WP-4 gets a slice of the $30 billion pie. A
big portion of this slice goes to Rocketdyne. What happens
to the balance of the funds, which aren't eaten
up by the center tax?)"

At WP-4, we call these funds we spend in-house supporting
development funds (as they are supporting the development
work done by Rocketdyne). We have used these funds to
setup our own testbed, to checkout the electrical
power system architecture. Our testbed has a real life
solar array field (left over from solar cell research
research a few years back), with lead-acid car batteries
(to simulate the Nickel-Hydrogen batteries on SSF), DC
switchgear, DC-DC converter units, and simulated
loads. Data from the testbed was used in a recent
change evaluation involving concerns about the stability
of the power system.

We have also used the supporting development money to
purchase Nickel Hydrogen batteries, which are on life
testing at both Lewis and the Crane Naval facility in
Indiana. As a side point, 6 of the battery cells on
test recently hit the four year life test milestone.
38 cells have completed 18,552 to 23,405 cycles (the
on-orbit batteries go through 5,840 cycles per year).

As a final example, my 'home' division at Lewis used
the supporting development funds to purchase personal
computers and work stations, for performing system
analyses (like modeling of the performance of the
electrical power system, availability calculations
using a Monte-Carlo simulation, setting up a 
database with information on weight of the power
system elements).

Finally, the money raised by the 'tax' does not all
go into a 'slush fund.' At Lewis, the director
does control a small discretionary fund. Each year,
any individual at Lewis can submit a proposal to
the director to get money from this fund to look
at pretty much anything within the Lewis Charter.

Most of the tax, however, goes to fund the 'general'
services at the Center, like the library, the 
central computer services division, the Contractor 
who removes the snow, etc. Thus, it is rather
difficult to determine what percentage of the
SSF budget doesn't go for SSF activities. To get
an accurate figure, you would have to take
the annual expenditure for the library (for example),
and then divide by the amount of the library funds
used to support SSF (which would be hard to
compute by itself - how would you figure out
what percentage of the bill for Aviation Week for
1 year is 'billable' to SSF, would you base it on
the person-hours SSF employees spend reading AV-week
versus the rest of the center personnel). You would
then have to compare this estimate of the SSF
portion of the library expense with the portion of
the tax that goes to support the library. Who knows,
maybe SSF overpays on the tax to run the library, but
we underpay for snow removal? Talk about
a burecratic nightmare!

My last point is that I can't believe your claim that
Congress has never heard of the term 'center tax.'
Unfortunately, all of the NASA testimony before
Congress isn't on a computer, so I can't do a simple
word search someplace to prove you wrong. But surely,
in some GAO audit somewhere, these NASA cost methods
were documented for Congress?
