The secretary attended the semiannual Commercial Space Industry Leaders Conference here and visited Air Force Space Command's 11th Space Warning Squadron at nearby Schriever AFB, Colo. The 11th SWS provides theater ballistic missile warning.

One concern brought up during the visit was the progress of the Broad Area Review that was directed by Peters and Air Force Chief of Staff, Gen. Michael Ryan. The review's charter is to look at recent launch failures and recommend changes in practice, procedures and operations to prevent launch failures in the future.

"Right now, I don't see a systematic problem with our launch capability. Everything looks like a separate and distinct problem," said Peters. "The real questions that seem to be coming up are: Have we lost an important experience base? and, Have we stopped doing some procedures that we once did that would protect us from this?"

The working assumption, said Peters, is that there have been a lot of retirements and separations since the drawdown and that consolidation in the defense industry has had the same effect. In slang terms, a brain drain on the whole space industry.

"So at least one theory is that we've had a tremendous loss of corporate knowledge. If this assumption is true, then we need to go back and assess our processes and make sure we meet the standards," said Peters.

Another point of concern has been the Air Force's move from direct oversight of quality, to insight in the contractors' quality control practices.

"I'm not sure we are doing either at this point," said the Secretary.

"All insight does is put on the Air Force's shoulder the burden to look at the overall quality procedures, rather than do the quality tests ourselves. We look to make sure the basic safeguards are in place for the contractor. I still think that is the right way to go. However, the fundamental question is do we have the right quality procedures today, given the work force today, to assure launch. "Again, the theory is we've lost a lot of experienced people -- so before this loss of experience it didn't really matter what the procedures were, because our veteran work force would catch the problems. There is some belief that we now have to rely on those procedures more. But all of this is a guess," he added.

From the findings so far, Peters is confident that there are no major problems with the hardware design of the nations space launch vehicles.

"What I see, is whenever you have humans involved there's a chance for error. What we need to do is make sure the fundamental systems are basically OK. So what I see our problems boiling down to is, given the current work force, do we have the correct standards and procedures to give us consistent quality?

Another challenge facing Air Force Space Command is upgrading the two ranges it operates. The Eastern range, center at Patrick AFB, Fla., and the Western range run from Vandenberg AFB, Calif., are both in need of major upgrades.

"We have range modernization programs in place, but there's a historically very high risk that they will slip. Not because the programs are at fault, but because we keep taking the money for more high priority problems," said Peters. "I think ultimately we need to look at a different funding mechanism."

Range funding was one of the issues discussed with industry leaders during the conference.

"The basic economics at this point is we are putting in 100 percent of the dollars, but not using 100 percent of the capability. However, the way legislation is set up today, it is not clear that we could recover much of the cost we put in to modernization," said Peters.

The key is to balance what is good for the Air Force and what is good for the commercial space industry when paying for and upgrading the ranges.

"We need to look at two conflicting priorities: one is getting reimbursed for those costs, but second keeping the costs of launch low enough that we keep the bulk of our launches here in the United States," said Peters. "We agreed today to hold a conference to look at our current cost of operations and to look at some industry ideas on how we might allow them to invest in the ranges, and reshape the way we get reimbursed. This is a hard area, but range modernization should help everyone cut costs in the long run.

"Suppose we cut the cost of launch by $1, and we ask industry to contribute 50 cents. Now, the Air Force is better off by 50 cents and industry is better by 50 cents. So that is one of our fundamental economic questions we have: As we modernize are we cutting the cost to launch? If the answer is yes, then we should share the burden. This would also make it easier for me to hold on to range modernization money in the budget. These issues need extended discussion and it is happening. There is a White House working group looking at these kinds of questions about government and industry."

Peters said he was encouraged by the progress of the Evolved Expendable Launch Vehicle and hopes the new system will cut down on cost and improve reliability.

"Boeing's EELV facilities already under construction at Patrick, and Lockheed Martin is waiting for a Titan to launch so they can begin construction on their EELV facilities," said Peters. "The ground construction is ongoing and looks like it is on schedule. From what I understand the development of the launch vehicles is proceeding on schedule. It is our hope the standardization of the EELV processes will improve reliability and cut cost."

The Air Force's stable and reliable ICBM force of Minuteman III and Peacekeeper missiles are also facing challenges.

"I'm told we have a broken budget for the guidance and propulsion programs for the Minuteman, and we are trying to fix that," said Peters.

"Both are programmed at the minimum economic order quantity. As it turns out we need to do the guidance upgrade before the propulsion, but at the moment the propulsion contract is executing slightly ahead of the guidance upgrade.

"So we are going to have to reorganize those programs to get them back on track." The 50 Peacekeepers in silos at F.E. Warren AFB, Wyo., face an uncertain political and operational future. The system is schedule to be eliminated by the START II treaty, but Russia has not ratified the treaty yet. This makes the funding for the system a year-to-year problem.

"I raised that issue with OSD (Office of the Secretary of Defense) the other day. We are looking at more than $100 million a year to keep the system viable and effective," said the secretary.

"So far, I think the feeling is that it is money well spent. We are going to keep this funding level until we see whether we are going to move through Start II to Start III. It's very expensive to maintain, but on the other hand, it serves a very important overall strategic objective of reducing nuclear weapons," hed added