WASHINGTON (June 12) - Investigators have found a new threat to future space shuttles - a 40-pound bolt fragment that could fly off during launch and smash into the spacecraft with catastrophic results as it raced toward orbit.

Members of the investigation board that is searching for the cause of Columbia's destruction said Thursday they found radar evidence that a piece of a 2-foot-long heavy bolt that joins the solid-rocket boosters to the shuttle's external fuel tank may have flown loose during the launch.

There is no evidence that the bolt fragment hit Columbia, but Air Force Maj. Gen. John Barry, a member of the board, said, ''It has the potential to be catastrophic in the future.''

Barry said the discovery does not change the board's working scenario that Columbia was fatally damaged by a chunk of foam insulation that peeled off the fuel tank and smashed into the craft's left wing during launch, damaging the heat shield. It's thought that superheated gases entered the hollow wing and melted it from the inside during re-entry on Feb. 1. Columbia broke apart, killing seven astronauts and scattering debris over parts of Texas and Louisiana. The shuttle fleet has been grounded since.

Barry said that while investigating the role that the external tank may have played in Columbia's destruction, engineers looked at launch radar records of the craft and spotted an image of an object near the shuttle just moments after the solid rocket boosters were ejected from the external tank.

Investigators determined the image could be a fragment of the heavy bolt that somehow was thrown free during booster separation. The bolts are normally exploded to free the solid rockets. Fragments of the bolts are supposed to be captured by a cylinder called a bolt catcher.

Tests with equipment like that used on Columbia showed that ''the bolt catcher is not as robust as it should be,'' said retired Navy Adm. Hal Gehman, the board chairman.

In the tests, Barry said, the top of the bolt catcher came apart. If this happened during launch, a 40-pound chunk of the bolt would have been ejected and could have slammed into the space shuttle. He said the problem needs to be corrected before the space shuttle fleet is cleared to fly again.

The bolts attach the 150-foot-tall solid rocket boosters to either side of the shuttle's external fuel tank. When the solid rockets are burned out, explosives sever the bolts, separating the boosters which then fall back into the ocean for later recovery.

Barry's news conference followed a public hearing during which some of the nation's top space experts talked about NASA struggles to fly the space shuttle and build the international space station with budgets that were cut to the bone.

The experts said NASA moved money from the space shuttle program to pay for other programs. The board is investigating whether this compromised safety on the shuttle.

''The shuttle has been, if you want, the cash cow to finance the rest of the parts of the agency,'' said John Logsdon, a board member and a professor at George Washington University.

The 13-member Columbia Accident Investigation Board held its final public hearing before it retreats behind closed doors to prepare its formal report on the disaster. The board has indicated it wants to finish prior to the August recess by lawmakers in Washington.

Marcia Smith, who studies the space program at the Congressional Research Service, reviewed for the board the history of NASA's budget. She cautioned that it will be difficult for investigators to directly tie any decline in shuttle funding to the February tragedy. The research service advises lawmakers on policy issues.

It was ''not clear that an increased budget would have helped'' NASA appreciate the risks that breakaway insulating foam might damage shuttles on takeoff.

The budget for the shuttle approved by lawmakers during the last decade peaked at $4.04 billion in 1993, according to congressional researchers. It fell steadily until it dropped as low as $2.93 billion in 1998 and has gradually risen to $3.27 billion for fiscal 2002.

Russell Turner, a former chief executive at the United Space Alliance LLC, defended work the alliance performed under the ''Space Flight Operations Contract,'' an omnibus agreement with NASA. He said safety and quality are ''good or better'' compared to other contractors and costs are lower.

Turner disclosed that the alliance could lose up to $70 million in penalties and forfeited payments if NASA determines that its work contributed to the Columbia disaster. The alliance is NASA's primary shuttle contractor.

''A bunch of that is money we would have to pay back to the government,'' said Turner, currently president at Honeywell Engines, Systems and Services.

Under questioning by the board, Turner said the contractor responsible for the shuttle's external tank - the source of the suspected breakaway foam - is Lockheed Martin Corp., one of the founding partners of the United Space Alliance. But he said work done by Lockheed on the external tank is distinct from Lockheed's participation in the space alliance.

AP-NY-06-12-03 1724EDT

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