Additional Cost Transparency and Design Criteria Needed for National Aeronautics and Space Administration (NASA) Projects

GAO published its third annual assessment of selected large-scale NASA projects. During this assessment we identified several issues that merit NASA's management attention. The federal government faces real fiscal limitations and will have to make difficult choices about upcoming priorities. This reality makes it more important than ever that NASA manage its programs and projects as efficiently and effectively as possible and within a budget that over recent years has remained relatively constant. It will also require that NASA make tough decisions about which projects to fund among core missions in science, aeronautics, and human space flight and exploration. Our work over the past three years has shown that NASA's major projects are frequently approved without evidence of a sound business case--ensuring a match between requirements and resources--and, therefore, cost more and take longer to develop than planned. Our March 2011 assessment found that 13 NASA projects that established baselines prior to fiscal year 2009 had experienced an average cost growth of almost 55 percent, with a combined increase in development costs of almost $2.5 billion from their baselines established at their Confirmation Review. While NASA has taken steps over recent years to help improve its acquisition management through several initiatives aimed at improving cost estimating and management oversight, the overall outcomes of these efforts will take time to become apparent. Based on the findings of our past three assessments, we are recommending that NASA (1) provide increased transparency into project costs to the Congress to conduct oversight and ensure earlier accountability and (2) develop a common set of measurable and proven criteria to assess the design stability of projects before proceeding into later phases of development.

Lack of Transparency Into Early Project Development Costs: Currently, NASA does not provide to the Congress cost and schedule information for projects in the early, critical phases of development and makes this information public only after the projects have been formally approved to enter implementation. Projects establish preliminary cost estimates in the formulation phase; these estimates, however, are for planning purposes only as they enable NASA decision-makers to better manage the overall portfolio of projects. NASA does not report deviations from these early estimates to the Congress. Although progress is not measured or reported externally against early planning baselines, cost growth and schedule delays can and do occur during the formulation phase. NASA's internal analysis of past projects indicates that there is an average of 14 percent growth in the development cost estimates during the formulation phase. Lack of Design Metric May Contribute to Project Cost Growth: During the course of our past three reviews of large-scale NASA projects and other work examining NASA's acquisition management, we found that NASA does not use a common, proven metric to assess design stability before allowing programs to move from the design phase to the test and integration phase of the development process. NASA's acquisition policy does not specify a metric by which a project's design stability is measured at the critical design review. Guidance in NASA's "Systems Engineering Handbook," however, mirrors an accepted best practice that at least 90 percent of engineering drawings should be releasable by the critical design review, although projects are not required to follow this guidance. We have found that if design stability is not achieved at the critical design review, but product development continues, costly re-designs to address changes to project requirements and unforeseen challenges can occur. Nearly all of the projects we reviewed over the last three years held their critical design review without 90 percent of engineering drawings being releasable--failing to meet NASA's Systems Engineering Handbook guidance and our best practices criteria for design stability. The only two projects in our 2011 review that met the design criteria--Orbiting Carbon Observatory-2 and Tracking and Data Relay Satellite Replenishment--to date have experienced no cost growth; however, these projects are based heavily on previous designs. To provide increased transparency into project risks, we recommend that the Direct the Office of the Chief Financial Officer (OCFO) to provide more transparency into project costs in the early, critical phases of development so that the Congress has sufficient information to conduct oversight and ensure earlier accountability. Specifically, the OCFO should provide progress reports for NASA space flight programs and projects in formulation that include information on cumulative prior budget authority and current cost ranges in NASA's annual budget submission to the Congress to enhance the knowledge with which they base funding decisions for NASA. To provide NASA decision-makers with a mechanism to consistently and accurately judge design stability, we recommend that the Direct the Office of the Chief Engineer to develop a common set of measurable and proven criteria, such as the percentage of releasable design drawings, to assess design stability and to allow decision-makers to make more informed, consistent determinations of approval for projects to proceed from the final design phase to the assembly, integration, and test phase of the development process and amend NASA's systems engineering policy, accordingly.

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.

Director: Cristina T. Chaplain Team: Government Accountability Office: Acquisition and Sourcing Management Phone: (202) 512-4859