Shuttle’s end leaves NASA a pension bill

This is a perfect example of governmental inefficiency, to say the least.

The nation’s space agency plans to spend about half a billion dollars next year to replenish the pension fund of the contractor that has supplied thousands of workers to the space shuttle program. The shuttle program accounts for a vast majority of the business of United Space Alliance, originally a joint venture of Boeing and Lockheed Martin. With the demise of the shuttle program, United Space Alliance will be left without a source of revenue to keep its pension plan afloat. So the company wants to terminate its family of pension plans, covering 11,000 workers and retirees, and continue as a smaller, nimbler concern to compete for other contracts.

United Space Alliance hired the workers, so they were not employees of Boeing or L-M. But United Space was a joint venture of the two companies, so, in effect, they were employees of both. Or none. Infinitely fine legerdemain.

Normally, a company that lost a lifeblood contract would have little choice but to declare bankruptcy and ask the federal insurer, the Pension Benefit Guaranty Corporation, to take over its pensions. But that insurer limits benefits, meaning not everyone gets as much as they had been promised. United Space Alliance’s plan also allows participants to take their pensions as a single check and includes retiree health benefits, neither of which would be permitted by the pension insurer.

Not everyone gets as much as promised; that is a familiar phrase: private companies screw their workers, and now states are doing the same. But United Space Alliance workers are going to get corporate welfare, courtesy of NASA.

United Space Alliance, however, has a rare pledge from a different government agency to pay the bill. The National Aeronautics and Space Administration says in its contract with the company that it will cover its pension costs “to the extent they are otherwise allowable, allocable and reasonable.” NASA interprets this to include the cost of terminating its pension plans outside of bankruptcy. The pension fund now has about half the amount needed. The president’s budget proposal for the 2012 fiscal year requests $547.9 million for NASA to provide the rest. That is nearly 3 percent of the agency’s total budget and just about what the Science Mission Directorate at NASA spent last year on all grants and subsidies to study climate change, planetary systems and the origins of life in the universe.

Welfare, or science? Why, welfare, of course.


Although NASA was reimbursing the contractor for the annual pension contributions, it had no say over how the money was invested. United Space Alliance put most of the money into stocks. The backstop will be unusually costly because of market conditions. While United Space Alliance has made its required contributions every year, the fund lost nearly $200 million in the market turmoil of 2008 and 2009. When interest rates are very low, as they have been, the cost of the promises rises rapidly as well, creating a bigger shortfall.

That is inefficiency bordering on corruption: NASA agreed to pay, and had no further say on tax-payer dollars.

The cash infusion is also being readied at a time when some members of Congress are demanding cuts in spending and threatening to block anything that could be construed as a taxpayer bailout. “It’s unfortunate that it’s coming in this fiscal environment,” said Bill Hill, NASA assistant associate administrator for the space shuttle.

Very unfortunate. So are many other things, including States Lean on Public Workers for Bigger Pension Contributions. Very unfortunate.


He said that he hoped Congress would appropriate the money before the fiscal year ended on Sept. 30. If not, he said, NASA will have to divert funds from space-related activities.

Or maybe lay off some financial wizards it employs, the very bozos that worked out such an agreement with United Space Alliance.