CAPE CANAVERAL - Money planned for the space shuttle program may be slashed by about $1 billion between 2003 and 2007, industry and government officials said.

NASA recently notified its top five space shuttle contractors to develop plans to cope with the reductions, which would amount to $200 million to $300 million a year.

The cutbacks could lead to a smaller shuttle work force, with at least one less shuttle launch per year.

"Absent some correction, that will be tough to handle," said Howard DeCastro, United Space Alliance's vice president and shuttle program manager. "We attribute it to NASA received less money than it needs to do its job."

USA helps NASA manage the massive space shuttle program.

News of the reduction comes at the same time NASA is figuring out how to cope with a $4.8 billion cost overrun in the International Space Station program. Furthermore, it's happening in a time when President Bush has shown little confidence in NASA's ability to manage its budget.

A Florida Today investigation revealed NASA leaders mismanaged their budget and disregarded warnings about cost growth, leading to the station cost overruns. Three recent government reports also found management problems at the agency.

The president's Office of Management and Budget has demanded NASA make up for the space station overrun within its budget for the human spaceflight program, which includes the space station, space shuttle and astronaut programs.

"No funds from the space shuttle program have been redirected to the space station program, nor are there any plans for such a redirection in the future," NASA spokeswoman Kirsten Larson said. NASA itself refused to disclose the size or other details of the planned spending cuts.

Larson said the space shuttle program faces rising contractor rates, eroding business support, higher energy costs and the aging shuttle fleet.

Contractor rates, which could range between $80,000 to about $120,000 per worker, have increased. Fewer businesses will support one-of-a-kind parts for the shuttle because they rarely make money. That forces NASA to seek replacement parts for systems no longer built by the aerospace industry.

Budget talks between NASA and the Office of Management and Budget will continue through the summer, Larson said. President Bush will present budget plans to Congress in January or February.

The reduction to shuttle program plans reflects, in part, a budget providing only a 1.8 percent increase for inflation, rather than a typical 4 percent or so, DeCastro said.

In the meantime, United Space Alliance, Boeing Corp., Lockheed Martin, Thiokol and Rocketdyne will work closely with NASA to handle the proposed cutbacks. The reductions are based on a requirement of about six shuttle launches a year, down from seven in 2001. The shuttle program received about $3 billion in its budget this year.

By canceling the space station's living module, crew escape vehicle and a thrust module, NASA will need to launch fewer shuttles to deliver parts. Each launch is estimated to cost about $500 million.

But DeCastro said the same number of workers are needed to launch six shuttles as are required for seven or eight. The Aerospace Safety Advisory Panel said this year that shuttle managers run an extremely lean operations team. Any further reduction in the work force could become a safety concern, the panel said.

DeCastro said USA has about 6,500 people working on the shuttle.

"About 70 percent of our costs and subcontractor's costs go to people," he said.

But he said USA would try to avoid layoffs and would study reductions through retirements and other voluntary departures. DeCastro said USA loses between 800 and 900 people through typical attrition each year.

"If we are leaner than we want to be then we'll partner with NASA to determine best course of action," DeCastro said. "We'll make sure safety will never be compromised.

USA's contract with NASA to support the space shuttle program will end next year. DeCastro said USA would seek to renegotiate its contract then.