Relocation of Space Shuttle Major Modification Work
Gao ID: GAO-03-294R December 2, 2002We assessed the National Aeronautics and Space Administration's (NASA) rationale and documentation to support its decision to relocate Space Shuttle Orbiter Major Modification (OMM) work from Palmdale, California, to Kennedy Space Center, Florida. OMM work entails alterations to improve the Space Shuttle's Safety, operational quality, and long-term support and to extend its life.
NASA had a sound basis for its decision to relocate OMM work to Florida based on our assessment of the strengths and weaknesses of NASA's cost analysis and potential savings. However, NASA needs to do a better job in preparing and documenting the cost analysis and methodologies used in its decision-making process so that it can further strengthen its basis for making future decisions. The documentation provided by NASA was not of sufficient detail to enable us to (1) verify the precise cost savings resulting from relocating OMM from Palmdale, California, to Kennedy Space Center, Florida, and (2) completely understand NASA's rationale until we had extensive discussions with agency officials. We also found that the written responses to the questions Senator Boxer submitted to NASA related to the relocation of OMM work need clarification.
GAO-03-294R, Relocation of Space Shuttle Major Modification Work
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United States General Accounting Office:
Washington, DC 20548:
December 2, 2002:
The Honorable Barbara Boxer
United States Senate:
Subject: Relocation of Space Shuttle Major Modification Work:
Dear Senator Boxer:
At your request, we assessed the National Aeronautics and Space
Administration‘s (NASA) rationale and documentation to support its
decision to relocate Space Shuttle Orbiter Major Modification (OMM)
work from Palmdale, California, to Kennedy Space Center, Florida. OMM
work entails alterations to improve the Space Shuttle‘s safety,
operational quality, and long-term support and to extend its life. To
make our assessment, we reviewed NASA‘s cost analysis and supporting
documents and held discussions about NASA‘s analysis with agency
officials in Washington, D.C.; Johnson Space Center, Houston, Texas;
and Kennedy Space Center, Florida; as well as NASA‘s prime contractor,
subcontractor, and union officials representing hourly workers at the
maintenance facility in Palmdale, California. At the conclusion of our
work, we met with NASA officials at NASA‘s headquarters in Washington,
D.C., to confirm the accuracy of the information we collected.
Background:
NASA maintains a fleet of four orbiters (Space Shuttles) in its space
transportation system. The vehicles are taken out of service for OMM
about every 3 years or after no more than eight flights. Structural
inspections and major modifications are performed during OMM. Boeing, a
subcontractor to United Space Alliance (USA), at U.S. Air Force Plant
42 in Palmdale, California, has performed maintenance and modification
on each of the four orbiter vehicles. Vehicle processing--preparing the
Shuttle for launch--is currently performed at Kennedy Space Center,
Florida. In May 2001, the Associate Administrator for Space Flight and
the Space Shuttle Program Manager directed the Vehicle Engineering
Office at Johnson Space Center, Houston, Texas, to conduct a cost
analysis to determine whether OMM could be performed more cost
effectively at Kennedy Space Center or Palmdale.
Results in Brief:
NASA had a sound basis for its decision to relocate OMM work to Florida
based on our assessment of the strengths and weaknesses of NASA‘s cost
analysis and potential savings. However, NASA needs to do a better job
in preparing and documenting the cost analysis and methodologies used
in its decision-making process so that it can further strengthen its
basis for making future decisions. The documentation provided by NASA
was not of sufficient detail to enable us to (1) verify the precise
cost savings resulting from relocating OMM from Palmdale, California,
to Kennedy Space Center, Florida, and (2) completely understand NASA‘s
rationale until we had extensive discussions with agency officials. We
also found that the written responses to the questions you submitted to
NASA related to the relocation of OMM work need clarification.
Assessment of Cost Analysis:
NASA decided to relocate OMM work to Florida because it believes that
location would be the most cost-effective location. NASA based its
decision on a comparative analysis of costs at the current site at
Palmdale, California, and Kennedy Space Center, Florida. After
considering the strengths and weaknesses of the cost analysis, and
potential savings, we found that NASA had a sound basis for its
decision.
The cost analysis used by NASA analyzed key factors such as workforce
and infrastructure utilization, cost, schedule, and risks. The risks
considered included the availability of personnel, ’stumble-on-work“
(work discovered during inspections), and competition for workers doing
vehicle processing. NASA‘s cost analysis also incorporated numerous
past studies and analyses (such as two reports from NASA‘s Inspector
General) that concluded that savings would be realized by relocating
OMM from Palmdale, California, to Kennedy Space Center, Florida. These
reports also concluded that relocation should not have taken place at
the time these reports were written because of the high-anticipated
flight schedule of about 12 flights a year. NASA currently has planned
an average flight schedule of four per year for the foreseeable future.
The reports also recommended that NASA reevaluate the location for OMM
work when there is a significant change in the planned flight schedule.
A further strength of the analysis was that it used the engineering
approach, which sums the costs of components at each location. Of all
cost techniques, this one is usually the most accurate if the data are
reliable.
On the other hand, we observed several areas of the cost analysis that
could be improved. First, the cost analysis did not provide sufficient
detailed documentation to determine the precise amount of savings to be
realized by relocating OMM. Expected savings ranged from $16 million to
$70 million annually, and several of those estimates were about $30
million. The amount of savings was imprecise because the estimates
sometimes included professional judgment. For example, estimates were
made on the amount of savings that may or may not be realized by
integrating OMM work with normal vehicle-processing activities.
Second, although data provided by NASA‘s contractor were reviewed and
considered to be reasonable by NASA officials, there was no formal,
documented, and independent verification of contractor-provided data
upon which NASA based its relocation decision.
Third, the security implications of collocating maintenance and launch
capability, although considered, were not formally documented in the
cost analysis. NASA Security Officials and Program Managers said that
owing to the high level of current security at Kennedy Space Center in
Florida, collocating OMM at the launch site was not a significant risk
factor.
Finally, NASA‘s Policies and Procedures Manual for conducting a program
or project evaluation does not contain specific guidelines for
performing a cost analysis (including identifying what documentation
would be necessary to support the analysis). We identified this
weakness to NASA officials during the course of our work. They said
that they did not currently have specific guidelines to conduct a cost
analysis but said they plan to improve their cost analysis procedures,
including documentation requirements, with the next revision of NASA‘s
Policy and Procedures Manual 7120.5A. They are currently working on the
revision.
Clarification Needed in Prior
Responses to Senator Boxer:
Following extensive discussions with NASA officials, it became clear
that three of NASA‘s written responses to your prior questions needed
clarification.
First, you asked if NASA did a labor market survey of skilled workers
in Florida. NASA replied that United Space Alliance, the prime
contractor for Orbiter maintenance, did an annual labor market survey.
We found that USA relied on data published by the U.S. Department of
Labor, Division of Wage Determinations, rather than conducting its own
labor market survey. The Department‘s data are published by
metropolitan service area (e.g., by Florida counties) and includes
wages and benefits by occupation.
Second, you asked what number of new workers would be hired at Kennedy
to perform OMM work. NASA replied that USA planned for 235 workers to
perform OMM at Kennedy Space Center without making it clear whether
these workers would be new hires or current employees. We found that
the 235 workers will be drawn from the total of about 1,900 that work
directly on Shuttle Processing. These workers‘ experience averaged 13.5
years. USA will hire 176 new workers who will not necessarily work
directly on OMM but will be assimilated throughout the entire
workforce.
Third, you asked for the number of employees at the Palmdale facility
that received offers to relocate to Florida. NASA responded that USA
had extended 25 offers to workers in California to relocate to Kennedy
Space Center, Florida. We found that 33 offers were extended and that 3
other offers to workers were planned but could not be made because the
workers could not be contacted.
Agency Comments:
In written comments on a draft of this report, NASA‘s Deputy
Administrator said that the agency concurs with our audit findings,
adding that NASA is working to improve its cost analysis techniques.
Scope and Methodology:
To assess the reasonableness of the assumptions used to establish
workforce and infrastructure needs, we obtained NASA‘s rationale for
including/excluding factors in the analysis, obtained NASA‘s support
for the conclusions reached, and discussed our observations with
responsible officials. To assess the cost of relocating the OMM work,
we obtained NASA‘s analyses comparing the alternatives and discussed
and verified our assessment with responsible NASA officials. We
determined, through an analysis of NASA‘s documentation and discussions
with NASA staff, the extent to which NASA assessed increased security
risks. We also assessed the extent to which all available analysis
supported the relocation decision, which was included in the available
documentation that NASA believed supported its decision.
We performed our review from June through October 2002 in accordance
with generally accepted government auditing standards.
Unless you publicly announce its contents earlier, we plan no further
distribution of this report until 30 days from its issue date. At that
time, we will send copies of this report to the NASA Administrator; the
Director Office of Management and Budget; and other interested parties.
We will also make copies available to others on request. In addition,
this report will be available at no charge on the GAO Web site at
http://www.gao.gov.
Please contact me at (202) 512-4841, if you or your staff have any
questions about this report. Major contributors to this report were
Jerry Herley, Thomas Hopp, William McNaught, and Sylvia Schatz.
Sincerely yours,
Allen Li
Director
Acquisition and Sourcing Management:
Signed by Allen Li:
