Mr. President, I strongly recommend that your administration reform the method by which the National Aeronautics and Space Administration (NASA) budget is allocated and administered.

Doing so will avoid the massive cost overruns that plague the space station, space shuttle, Hubble telescope, and virtually every other ongoing program. Unless corrected, this problem will undermine all future NASA projects as well.

The new approach that I propose -- known as "incentive-compatible" institutional design --will accomplish two challenging objectives: it will minimize wasteful spending and, at the same time, enable NASA to better manage the highly uncertain costs naturally associated with space missions that push the frontier of technological know-how.

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Molly K. Macauley devotes her research interests to space policy and the economics of new technologies. She serves on several National Research Council committees addressing space policy and has testified numerous times before Congress on her work.

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