NASA Procurement

The National Aeronautics and Space Administration (NASA) has failed to seek competitive bids for managing the Jet Propulsion Laboratory. The California Institute of Technology ended up the only bidder for a new five-year contract under which Caltech is paid $14 million annually to run the laboratory. In 1992 this amount was higher than the fee paid to sponsors of other university-run federally funded research and development centers. Caltech began conducting rocketry and other experiments at the laboratory in the 1930s, and its work continued under U.S. Army sponsorship during World War II. Caltech has managed the laboratory for NASA since 1958. GAO questions the allowability of so-called "working meals," which the contractor is charging to the current contract on the basis of a very loose interpretation of the cost principle allowing educational institutions to be reimbursed for the cost of meals. NASA should also consider whether and to what extent laboratory employees should be reimbursed for their children's college tuition costs.

GAO found that: (1) the existing contract between NASA and Caltech contains 27 approved deviations from federal acquisition regulations (FAR) which limit Caltech's exposure to financial liability and affect internal controls on indirect costs; (2) although NASA has proposed dropping more than half of the deviations and strengthening FAR language in the remaining deviations, future contract deviations are possible and will be determined through contract negotiations; (3) the current solicitation contains fewer deviations that are narrower in scope and changes in allowable cost, financial risk, and cost accounting standards; (4) although NASA has reduced the number of deviations and strengthened other solicitation provisions, potential internal control weaknesses remain; (5) NASA needs to clarify certain provisions involving the type of work to be performed, new or revised federal regulations, and the allowability and reasonableness of certain costs such as meals and tuition benefits for JPL employees; and (6) although Caltech has received a fee under past contracts, NASA needs to clarify its policy regarding paying fees to educational institutions and justify the reasonableness of the amount.

Recommendations

Our recommendations from this work are listed below with a Contact for more information. Status will change from "In process" to "Open," "Closed - implemented," or "Closed - not implemented" based on our follow up work.

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