Change, Contracts, and Complexity

“Fools ignore complexity. Pragmatists suffer it. Some can avoid it. Geniuses remove it.”
–Alan Perlis.

Recently I’ve been drawn to conversations concerning change implied by the President’s 2011 budget for NASA’s human spaceflight, versus the rollback of some of those changes embodied in the NASA Authorization bills in work by the Senate and House.  Depending on where you sit, you can point out things to like and things to hate, whether you are an advocate for the status quo, a supporter of New Space, or whatever.  Other conversations have concerned contract type – specifically, fixed price versus cost reimbursable – and their potential use once we get through appropriations and put together an actionable plan to execute the human spaceflight policy.  A common theme has reoccurred in all those conversations: complexity.  So, my observations today are about change, contracts, and complexity; how do they relate, and what can we do to deliver an affordable and sustainable human presence in space?

On the topic of change and Congress, I have an observation that goes back to a Congressional Operations class I took in DC four years ago.  It’s a statement that was offered by one of our guest lecturers, specifically geared towards us engineering types: he said, “think of Congress as a friction-maximizing device.”  Now, who would design a device that intentionally maximizes friction?  Engineers are trained to minimize friction!  He said it in this way to make an important point.  As an institution, and as intended by our Founding Fathers, Congress was designed to provide continuity and to resist rapid change on purpose.  Granted, we see a complete turnover of the entire House and 1/3 of the Senate every two years; yet the checks and balances, the protocol and process, are intended to preserve the status quo as a starting point upon which they make refinements through legislation and appropriations.  That way, we are not reinventing the wheel (so to speak) with every election cycle.  Contrast this with the President, who as the head of the Executive Branch is up for election every four years, often on a platform of change.  (Sound familiar?)

In terms of the change spectrum, the change contained in the authorization bills is a transactional change; the breath, depth, number, and types of interaction between the pieces involved is small (i.e., is simple), and the outcome is predictable.  (Contrast this with the President’s proposal: I’ve made the case previously that the change is transitional or potentially transformational.)  I rationalize it as follows.  Look at it from the perspective of a House member or Senator: you want your contribution to be understood by your constituents, so they can realize the value you bring to the home district.  Therefore, the simpler the change appears, the better understood it will be.  That seems to me why both the Senate and the House have authorization bills in work that look closer to the way human spaceflight is conducted today, with some adjustments and refinements that can be understood by the home districts.  I’m not making conclusory statements on whether the President’s proposals or those contained in the authorization bills are better or worse; I’m making an observation on the degree of change contained in each and why that would be the case, given the checks and balances of our tripartite system of government.  Congress is a friction-maximizing device, resisting change beyond the transactional level, and thus we have the situation we have today.

On the topic of contracts, the concept of complexity enters into the equation as one of several factors to be considered when selecting contract type.  This topic is of interest due to the idea being discussed in the space community of a commercial crew transportation service being procured by NASA under a fixed price arrangement, and how that will bring the best value.  Here is how complexity enters into the fray, excepted from the Federal Acquisitions Regulations Part 16: “Type and complexity of the requirement…when performance uncertainties or the likelihood of changes makes it difficult to estimate performance costs in advance.”  What this means is that when considering the acquisition of crew transportation services, one of the factors to be considered is the underlying complexity of the requirement and whether performance uncertainties or potential changes will allow a potential company (and the Government) to estimate the costs associated with the good or service to be purchased.  In cases where the requirement is complex and drives cost uncertainty, this is a factor (not the sole factor, but an important one) in deciding to go with a cost plus contract; the Government will bear the cost risk caused by the uncertainties and potential changes.  In cases where the requirement is not complex and the cost uncertainty is low, that is a factor (again not the sole factor) for going with a fixed price contract; the contractor hired will bear the cost risk and could potentially make a sizable profit if it can deliver the product or service for less than the bid price.  (There are other factors to be considered in selecting contract type that are beyond the scope of the topic today, because I want to focus on complexity.)

In terms of complexity and its impact on requirements, I’d like to introduce two types of complexity: inherent complexity, and imposed complexity.  Inherent complexity is part of the nature of the problem being solved (i.e., “it really IS rocket science”) or involves a system of systems where the number, depth, breath, and types of interactions between the systems is numerous.  Imposed complexity is that which we do to ourselves through organizational structures, processes, procedures, regulations, and so forth.  One way to help drive the complexity down is to minimize the imposed complexity as much as possible with streamlined organizations, few imposed processes and procedures, and simplified regulations.  Another way is to minimize the inherent complexity by going with a more “black box” performance-based approach (tell me “what” you want) versus a specifications-driven approach (tell me “how” to do it to the “nth” degree).  Some combination of the two – reducing imposed and inherent complexity – will be needed by NASA as the first steps towards procuring crew transportation services under a fixed price arrangement.  I can envision the potential firms who might be interested in commercial crew transportation would prefer this: “Keep the Government out of my knickers and from telling me how to do it, and let us figure out the best way to deliver the crew transportation service you need that meets your requirements.”  It would be up to NASA to define requirements that reduce complexity and uncertainty in a way that a fixed price model would deliver the best value.  In my opinion, I think it is conceivable if we can overcome some challenges.

I’ll be following continued developments in finalizing the NASA authorization bill, passing appropriations, then building a plan for a sustainable and affordable human spaceflight program that contains a mix of public and commercial approaches.  We do indeed live in interesting – and often complex – times.

Change, Contracts, and Complexity