Reimbursable Space Act Agreements
NASA Generally Adhering to Fair Reimbursement Controls, but Guidance on Waived Cost Justifications Needs Refinement Gao ID: GAO-11-553R May 26, 2011Over the last few years, the National Aeronautics and Space Administration (NASA) has increasingly relied on its authority under the Space Act of 1958 to enter into agreements, commonly referred to as Space Act agreements (SAA), to stimulate private sector development of systems capable of transporting cargo and crew to the International Space Station and to assist partner firms in developing their technologies. Reimbursable Space Act agreements involve the use of NASA's facilities, personnel, or equipment primarily for the benefit of the agreement partner. NASA undertakes reimbursable work when it has unique goods, services, or facilities which can be made available to another party in a manner that does not interfere with NASA mission requirements and is consistent with the agency's mission. According to NASA guidance, the agency generally collects full reimbursement for costs associated with a reimbursable agreement. These types of agreements are known as fully reimbursable SAAs. However, NASA can accept less than full reimbursement in certain instances, such as when the reimbursement is fair and reasonable when compared to the benefits NASA receives from the work. When NASA waives costs under a reimbursable SAA, NASA guidance refers to this as a partially reimbursable SAA. At the time of our review, NASA had established internal controls to help ensure it is obtaining fair reimbursement under these agreements and partners' activities do not interfere and are in alignment with the agency's mission. These controls included developing a cost estimate, obtaining required approvals from financial and legal officials, documenting the rationale for waiving costs, inserting a non-interference clause in all agreements, and describing in the purpose section of each fully reimbursable agreement how the work to be performed aligns with NASA's mission. In response to your request, we reviewed reimbursable agreements to identify the internal controls NASA has in place and assess the extent to which the agency is adhering to its controls related to 1) fair reimbursement from agreement partners and 2) ensuring partner use is consistent with NASA's mission and reimbursable Space Act agreements do not interfere with NASA's use of its facilities. We provided your offices a draft copy of the enclosed briefing on April 26, 2011.
At the time of our review, NASA had requirements and controls in place related to fair reimbursement on Space Act agreements and was generally adhering to those controls. Unclear guidance in place at the time of our review, however, may have contributed to variation in the level of detail and format for waived cost rationales. In December 2010, NASA published an interim directive that increased oversight and provided additional guidance for determining when it is appropriate to waive costs. Partner activities appear to be consistent with NASA's mission and NASA is adhering to its internal controls to prevent interference with NASA's mission activities. Several other factors, such as a small amount of partner work at top utilized facilities and relatively open schedules to accommodate partner work at most facilities we reviewed, also help to ensure that Space Act agreement activities do not interfere with NASA work. Although NASA is generally adhering to its requirements and internal controls regarding fair reimbursement, alignment with NASA's mission, and preventing interference, the policy in place at the time of our review and the interim directive do not specify the type of information to include in the waived cost rationale or justification. In the current fiscal environment, it is important to fully and consistently document the rationale for waiving costs associated with work for NASA partners. This could help the agency ensure, in all cases, that waiving costs is fair and reasonable when compared to the benefits NASA is receiving. Although the existing mission and interference controls appear to be effective under the current state of demand placed on NASA facilities, should the level of demand materially change, NASA may have to re-evaluate its approach to managing partners' use of its facilities. We are recommending that the Administrator of NASA refine the agency's interim directive to clearly define the type of information that is required to support the waived cost rationale or justification. This type of information may include documenting that there is a clear and demonstrated benefit to NASA and quantifying the benefit to the extent practicable.
RecommendationsOur 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) 512-4859GAO-11-553R, Reimbursable Space Act Agreements: NASA Generally Adhering to Fair Reimbursement Controls, but Guidance on Waived Cost Justifications Needs Refinement
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GAO-11-553R:
United States Government Accountability Office:
Washington, DC 20548:
May 26, 2011:
Congressional Requesters:
Subject: Reimbursable Space Act Agreements: NASA Generally Adhering to
Fair Reimbursement Controls, but Guidance on Waived Cost
Justifications Needs Refinement:
Over the last few years, the National Aeronautics and Space
Administration (NASA) has increasingly relied on its authority under
the Space Act of 1958 to enter into agreements, commonly referred to
as Space Act agreements (SAA), to stimulate private sector development
of systems capable of transporting cargo and crew to the International
Space Station and to assist partner firms in developing their
technologies.[Footnote 1] Reimbursable Space Act agreements involve
the use of NASA's facilities, personnel, or equipment primarily for
the benefit of the agreement partner. NASA undertakes reimbursable
work when it has unique goods, services, or facilities which can be
made available to another party in a manner that does not interfere
with NASA mission requirements and is consistent with the agency's
mission. According to NASA guidance, the agency generally collects
full reimbursement for costs associated with a reimbursable agreement.
These types of agreements are known as fully reimbursable SAAs.
However, NASA can accept less than full reimbursement in certain
instances, such as when the reimbursement is fair and reasonable when
compared to the benefits NASA receives from the work. When NASA waives
costs under a reimbursable SAA, NASA guidance refers to this as a
partially reimbursable SAA. At the time of our review, NASA had
established internal controls to help ensure it is obtaining fair
reimbursement under these agreements and partners' activities do not
interfere and are in alignment with the agency's mission. These
controls included developing a cost estimate, obtaining required
approvals from financial and legal officials, documenting the
rationale for waiving costs, inserting a non-interference clause in
all agreements, and describing in the purpose section of each fully
reimbursable agreement how the work to be performed aligns with NASA's
mission.
In response to your request, we reviewed reimbursable agreements to
identify the internal controls NASA has in place and assess the extent
to which the agency is adhering to its controls related to 1) fair
reimbursement from agreement partners and 2) ensuring partner use is
consistent with NASA's mission and reimbursable Space Act agreements
do not interfere with NASA's use of its facilities.[Footnote 2] We
provided your offices a draft copy of the enclosed briefing on April
26, 2011. This letter formally transmits the detailed briefing slides
(see enclosure I) prepared in response to your request.
Scope and Methodology:
To identify controls in place and assess the extent to which NASA is
adhering to controls related to fair reimbursement, we analyzed all 44
partially reimbursable agreements awarded in fiscal years 2009 and
2010 as identified in the Space Act Agreement Maker (SAAM) database,
including the agreement, estimated price report, and justification for
waived costs. These agreements were located at five NASA centers
(Glenn, Johnson, Kennedy, Langley, and Marshall). We reviewed
estimated price reports for each partially reimbursable agreement, but
did not validate the inputs to the cost estimate, including labor and
indirect cost rates. To identify controls in place and assess the
extent to which NASA is adhering to controls to help ensure alignment
with NASA's mission and to minimize interference, we reviewed laws and
strategic planning documents and analyzed all 34 fully reimbursable
agreements awarded in fiscal year 2010 that involved the use of
facilities at three NASA centers (Ames, Glenn, Marshall) and one test
facility (White Sands Test Facility) as identified in the SAAM
database. These centers and test facility were selected because they
accounted for the highest dollar value for this type of agreement. For
both objectives, we also reviewed NASA policies and procedures for
reimbursable SAAs, conducted site visits to three NASA centers, and
interviewed NASA officials. Additional information on our scope and
methodology is provided on pages 8 to 10 of the enclosed briefing
slides.
We conducted this performance audit from July 2010 to May 2011 in
accordance with generally accepted government auditing standards.
Those standards require that we plan and perform the audit to obtain
sufficient, appropriate evidence to provide a reasonable basis for our
findings and conclusions based on our audit objectives. We believe
that the evidence obtained provides a reasonable basis for our
findings and conclusions based on our audit objectives.
Summary:
At the time of our review, NASA had requirements and controls in place
related to fair reimbursement on Space Act agreements and was
generally adhering to those controls. Unclear guidance in place at the
time of our review, however, may have contributed to variation in the
level of detail and format for waived cost rationales. In December
2010, NASA published an interim directive that increased oversight and
provided additional guidance for determining when it is appropriate to
waive costs. Partner activities appear to be consistent with NASA's
mission and NASA is adhering to its internal controls to prevent
interference with NASA's mission activities. Several other factors,
such as a small amount of partner work at top utilized facilities and
relatively open schedules to accommodate partner work at most
facilities we reviewed, also help to ensure that Space Act agreement
activities do not interfere with NASA work.
Although NASA is generally adhering to its requirements and internal
controls regarding fair reimbursement, alignment with NASA's mission,
and preventing interference, the policy in place at the time of our
review and the interim directive do not specify the type of
information to include in the waived cost rationale or justification.
In the current fiscal environment, it is important to fully and
consistently document the rationale for waiving costs associated with
work for NASA partners. This could help the agency ensure, in all
cases, that waiving costs is fair and reasonable when compared to the
benefits NASA is receiving. Although the existing mission and
interference controls appear to be effective under the current state
of demand placed on NASA facilities, should the level of demand
materially change, NASA may have to re-evaluate its approach to
managing partners' use of its facilities. We are recommending that the
Administrator of NASA refine the agency's interim directive to clearly
define the type of information that is required to support the waived
cost rationale or justification. This type of information may include
documenting that there is a clear and demonstrated benefit to NASA and
quantifying the benefit to the extent practicable.
Agency Comments:
We provided a copy of the draft report to the National Aeronautics and
Space Administration for comment and the agency agreed with our
overall findings and concurred with our recommendation. In its
comments, the agency stated that it is in the process of reviewing
procedural requirements, including refining reporting requirements to
better support the rationale or justification for waived costs in the
estimated price reports. The agency also provided technical comments
which we incorporated as appropriate.
We are sending copies of this report to the appropriate congressional
committees. We are also sending a copy to the NASA Administrator. This
report will also be available at no charge on the GAO Web site at
[hyperlink, http://www.gao.gov]. Should you or your staff have any
questions concerning this report, please contact me at (202) 512-4841
or chaplainc@gao.gov. Contact points for our Offices of Congressional
Relations and Public Affairs may be found on the last page of this
report.
Key contributors to this report include Shelby S. Oakley, Assistant
Director; Jeffrey Hartnett; Morgan Delaney Ramaker; Laura Greifner;
Jean McSween; Megan Porter; Andrew Redd; Swati Thomas; and Alyssa Weir.
Signed by:
Cristina T. Chaplain:
Director: Acquisition and Sourcing Management:
Enclosures-2:
List of Requesters:
The Honorable Kay Bailey Hutchison:
Ranking Member:
Committee on Commerce, Science, and Transportation:
U.S. Senate:
The Honorable Bill Nelson:
Chairman:
Subcommittee on Science and Space:
Committee on Commerce, Science, and Transportation:
U.S. Senate:
The Honorable Ralph M. Hall:
Chairman:
The Honorable Eddie Bernice Johnson:
Ranking Member:
Committee on Science, Space, and Technology:
House of Representatives:
[End of section]
Enclosure I: Briefing Slides:
Reimbursable Space Act Agreements:
NASA Generally Adhering to Fair Reimbursement Controls, but Guidance
on Waived Cost Justifications Needs Refinement:
Briefing to Congressional Committees:
May 26, 2011:
For more information, contact Cristina Chaplain; 202-512-4841;
chaplainc@gao.gov.
Contents:
* Introduction;
* Reporting Objectives;
* Background;
* Scope and Methodology;
* Summary;
* Objective 1 ” Fair Reimbursement;
* Objective 2 ” Mission and Interference;
* Conclusions;
* Recommendations for Executive Action.
Introduction:
Over the last few years, the National Aeronautics and Space
Administration (NASA) has increasingly relied on its authority under
the Space Act of 1958 to enter into agreements, commonly referred to
as Space Act agreements (SAA), to stimulate private sector development
of systems capable of transporting cargo and crew to the International
Space Station and to assist partner firms in developing their
technologies.[Footnote 3]
Reimbursable Space Act agreements involve the use of NASA's
facilities, personnel, or equipment primarily for the benefit of the
agreement partner. NASA undertakes reimbursable work when it has
unique goods, services, or facilities which can be made available to
another party in a manner that does not interfere with NASA mission
requirements and is consistent with the agency's mission.
Agreement partners are usually required to reimburse NASA for the full
cost of these services. However, NASA can accept less than full
reimbursement in certain instances, such as when the reimbursement is
fair and reasonable when compared to the benefits NASA receives from
the work.
NASA has established internal controls to help ensure it is obtaining
fair reimbursement under these agreements and partners' activities do
not interfere and are in alignment with the agency's mission.
Reporting Objectives:
We were asked to review reimbursable Space Act agreements to
identify the internal controls NASA has in place and the extent to
which the agency is adhering to its controls related to:
1) Fair reimbursement from agreement partners and;
2) Ensuring partner use is consistent with NASA's mission and
reimbursable SAAB do not interfere with NASA's use of its facilities.
Background:
NASA was given authority to enter into other transactions, commonly
referred to as Space Act agreements, through the National Aeronautics
and Space Act of 1958.
One type of SAA is a reimbursable agreement[Footnote 4]:
* Reimbursable agreements-NASA's costs associated with the undertaking
are reimbursed by the agreement partner.
As outlined in NASA policy,[Footnote 5] NASA may undertake
reimbursable agreements when it has unique goods, services, or
facilities not being fully utilized to meet mission needs, which can
be made available to others in a manner that does not interfere and is
consistent with NASA mission requirements.
NASA has generally benefited from the work conducted under
reimbursable SAAs as these agreements can provide useful programmatic
knowledge and data for research and they help maximize the use of
underutilized facilities and staff.
According to NASA guidance, the agency generally collects full
reimbursement for costs associated with a reimbursable agreement.
These types of agreements are known as fully reimbursable SAAs. NASA
can accept less than full reimbursement when required by statute,
NASA's market pricing policies are applicable,[Footnote 6] or if the
reimbursement is fair and reasonable when compared to the benefits
NASA receives from the work. When NASA waives costs under a
reimbursable SAA, NASA guidance refers to this as a partially
reimbursable SAA.
NASA has delegated the authority to enter into reimbursable agreements
to its centers. Centers are able to waive either direct or indirect
costs.
* Direct costs include civil service salaries and benefits for
employees who work directly on the project, and travel and material
directly related to the reimbursable project.
* Indirect costs are costs that are not specifically identifiable with
any specific project; these include personnel, travel, materials, and
other goods and services necessary to manage and operate the center
(i.e., overhead costs). Overhead costs are calculated by multiplying
direct costs by an established rate.[Footnote 7]
Centers have different approaches to waiving direct and indirect costs.
* For example, Glenn Research Center generally only waives direct
costs. Langley Research Center waives overhead costs associated with
waived direct costs.
Examples of fully reimbursable work reviewed:
* A commercial firm obtained services from NASA's Marshall Space
Flight Center to conduct testing of an advanced coating technology, a
single-layer corrosion preventative compound.
* A commercial firm entered into an agreement with NASA's Glenn
Research Center for use of NASA's Icing Research Tunnel to evaluate
system performance of an aircraft deicing system.
Examples of partially reimbursable work reviewed:
* A federal agency partnered with NASA's Glenn Research Center to
conduct testing that would assess the performance of elevon shaft
seals. NASA waived costs in this case because the work helped NASA
maintain key competencies in the area of high temperature seal
development and testing.
* A university collaborated with NASA's Johnson Space Center to
conduct testing on the effects of collisions on cometary matter. NASA
waived costs in this case because the work assisted NASA in better
analyzing data retrieved from the Stardust and Deep Impact missions.
Scope and Methodology:
To identify controls in place and assess the extent to which NASA is
adhering to controls related to fair reimbursement, we:
* Reviewed NASA policies and procedures for reimbursable SAAB.
* Analyzed supporting documentation for all 44 partially reimbursable
agreements awarded in fiscal years 2009 and 2010 as identified in the
Space Act Agreement Maker (SAAM) database, including the agreement,
estimated price report, and justification for waived costs.[Footnote
8] These agreements were located at five NASA centers (Glenn, Johnson,
Kennedy, Langley, and Marshall). We reviewed estimated price reports
for each partially reimbursable agreement, but did not validate the
inputs to the cost estimate, including labor and indirect cost rates.
* Conducted site visits and interviewed relevant officials at Marshall
Space Flight Center, Glenn Research Center, and Johnson Space Center.
We held teleconferences with relevant officials at Kennedy Space
Center and obtained written responses from officials at Langley
Research Center.
* Conducted analysis based on the data collected in our review to
determine the total amount of waived costs, type of work conducted,
and type of agreement partner.
* Collected data from centers in our review regarding fiscal year 2010
total reimbursable awards and center budgets.
To identify controls in place and assess the extent to which NASA is
adhering to controls to help ensure alignment with NASA's mission and
to minimize interference, we:
* Reviewed relevant laws and strategic planning documents to describe
NASA's mission and NASA policies and procedures for reimbursable SAAs.
* Analyzed supporting documentation, such as the agreement, for all 34
fully reimbursable agreements awarded in fiscal year 2010 that
involved the use of facilities at three NASA centers (Ames, Glenn,
Marshall) and one test facility (White Sands Test Facility) as
identified in the SAAM database.[Footnote 9] These centers were
selected because they accounted for the highest dollar value for this
type of agreement. Agreements we reviewed comprised 87 percent ($10.1
million of $11.6 million) of fully reimbursable business that included
the use of NASA facilities.
* Contacted 17 major NASA program customers who used the same
facilities as those in our review about their ability to test on
schedule in fiscal year 2010.
* Obtained list of top utilized facilities and information on SAA
activity at these facilities in fiscal year 2010 from three NASA
centers and one test facility in our review.
* Conducted site visits and interviewed relevant officials at Glenn
Research Center and Marshall Space Flight Center.
* Obtained written responses from relevant officials at Ames Research
Center and White Sands Test Facility, and remaining contacts at Glenn
and Marshall.
We assessed the reliability of the SAAM database by (1) performing
electronic testing of required data elements, (2) reviewing existing
information about the data and the system that produced them, and (3)
interviewing agency officials knowledgeable about the data. We
determined that the data were sufficiently reliable for the purposes
of this report.
Additional data on the 78 agreements we reviewed can be found on pages
39 to 49.
We conducted this performance audit from July 2010 to May 2011 in
accordance with generally accepted government auditing standards.
Those standards require that we plan and perform the audit to obtain
sufficient, appropriate evidence to provide a reasonable basis for our
findings and conclusions based on our audit objectives. We believe
that the evidence obtained provides a reasonable basis for our
findings and conclusions based on our audit objectives.
Table 1: Total and Waived Costs for Partially Reimbursable Agreements
Awarded in FY 2009 and 2010:
Center[A]: Glenn Research Center (11);
Total full cost: $3,579,559;
Total waived costs[B]: $1,011,515;
Total waived-direct: $921,850;
Total waived-indirect: $89,665;
Waived as percentage of total: 28%.
Center[A]: Johnson Space Center (5);
Total full cost: $1,319,078;
Total waived costs[B]: $228,792;
Total waived-direct: $107,945;
Total waived-indirect: $120,847;
Waived as percentage of total: 17%.
Center[A]: Kennedy Space Center (1);
Total full cost: $209,777;
Total waived costs[B]: $25,277;
Total waived-direct: $0;
Total waived-indirect: $25,277;
Waived as percentage of total: 12%.
Center[A]: Langley Research Center (23);
Total full cost: $27,193,464;
Total waived costs[B]: $15,614,089;
Total waived-direct: $13,152,388;
Total waived-indirect: $2,461,701;
Waived as percentage of total: 57%.
Center[A]: Marshall Space Flight Center (4);
Total full cost: $2,117,478;
Total waived costs[B]: $1,035,978;
Total waived-direct: $915,014;
Total waived-indirect: $120,964;
Waived as percentage of total: 49%.
Center[A]: Total (44)
Total full cost: $34,419,356;
Total waived costs[B]: $17,915,651;
Total waived-direct: $15,097,197;
Total waived-indirect: $2,818,454;
Waived as percentage of total: 52%.
Source: GAO analysis based on NASA data.
[A] There were 44 partially reimbursable Space Act agreements awarded
in total. The number in parentheses represents the number of
agreements reviewed at each NASA center.
[B] Total waived costs include those instances where NASA agreed to
share costs with the agreement partner.
[End of table]
Table 2: Fully Reimbursable SAAs Using NASA Facilities Awarded in FY
2010:
Center[A]: Ames Research Center (4);
Reimbursed cost: $2,155,265;
Percentage of reimbursed cost: 19%.
Center[A]: Glenn Research Center (14);
Reimbursed cost: $4,304,810;
Percentage of reimbursed cost: 37%.
Center[A]: Marshall Space Flight Center (13);
Reimbursed cost: $1,808,572;
Percentage of reimbursed cost: 16%.
Center[A]: White Sands Test Facility (3);
Reimbursed cost: $1,839,500;
Percentage of reimbursed cost: 16%.
Center[A]: Remaining Centers and Wallops Flight Facility (14);
Reimbursed cost: $1,509,044;
Percentage of reimbursed cost: 13%.
Center[A]: Total (48);
Reimbursed cost: $11,617,191;
Percentage of reimbursed cost: 100%.
Source: GAO analysis based on NASA data.
Note: Percentages do not add to 100 due to rounding.
[A] We reviewed 34 fully reimbursable SAM involving use of facilities
at Ames, Glenn, Marshall, and White Sands-which accounted for 87
percent of the fully reimbursable business involving the use of
facilities in FY 2010. We did not include 14 fully reimbursable SAAs
involving the use of facilities at other NASA centers and Wallops
Flight Facility in our review because of low cumulative dollar value
of relevant agreements at these centers.
[End of table]
Summary:
Findings:
* NASA has controls in place related to fair reimbursement for SAAB
and is generally adhering to those controls.
* Unclear guidance in place at the time of our review may have
contributed to variation in the level of detail and format for waived
costs.
* Partner activities appear to be consistent with NASA's mission and
NASA is adhering to its internal controls to prevent interference.
* Several factors also help to ensure that SAA activities do not
interfere with NASA work.
Conclusion:
* NASA is generally adhering to its internal controls regarding fair
reimbursement, alignment with NASA's mission, and preventing
interference.
* In the current fiscal environment, it is important to fully and
consistently document the rationale for waiving costs associated with
work for NASA partners to help the agency ensure, in all cases, that
waiving costs is fair and reasonable when compared to the benefits
NASA is receiving.
* Based on the current state of demand placed on NASA facilities, the
agency's internal controls appear to prevent interference while
ensuring alignment with its mission. Should the level of demand
materially change, NASA may have to reevaluate its approach to
managing partners' use of its facilities.
Recommendations:
* We recommend that NASA refine its policy to clearly define the type
of information required to support the rationale or justification for
waived costs. This type of information may include documenting that
there is a clear and demonstrated benefit to NASA and quantifying the
benefit to the extent practicable.
Objective 1--Fair Reimbursement:
At the time of our review, NASA had controls in place in order to help
ensure it received fair reimbursement on SAAs:
* These controls were based on NASA policies and included:
1) Estimated Price Reports--included cost estimates that generally
identify direct labor, travel, procurement, and overhead costs.
[Footnote 10]
2) Required approvals--obtained from the Center Chief Financial
Officer and legal officials.[Footnote 11]
3) Rationale for waived costs.[Footnote 12]
Most agreements we reviewed generally adhered to the internal controls
regarding fair reimbursement, but unclear NASA policy in place at the
time of our review may have contributed to variation in the detail and
format of waived cost rationales at the centers:
* An estimated price report was prepared for all agreements.
* Required approvals were obtained from the Center Chief Financial
Officer and legal officials for all agreements.
* Most of the agreements we reviewed provided documentation for the
rationale for waived costs. However, the detail supporting and format
for documenting the rationale varied within and among the centers in
our review.
By adhering to internal controls, NASA helps to ensure all partially
reimbursable work was appropriate for the agency to conduct, such as
providing a direct benefit to the agency.
NASA's procedural requirements that were applicable to agreements in
our review state that the Center Chief Financial Officer is required
to maintain records of all reimbursable agreements, including
estimated costs, waived costs, and the rationale for the waiver.
The policy in place at the time of our review did not specify the type
of information which should be included in the rationale, nor did it
define the format for documenting the rationale for waived costs. For
example, the estimated price report instructions did not clarify that
this information should be included in the estimated price report.
This unclear NASA policy may have contributed to variation in the
detail and format of waived cost rationales at the centers.
The detail included in the rationale may have varied based on the
format used for documenting the rationale for waived costs.
* For example, Glenn Research Center uses a memo template which
requires an explanation of the benefits the agency will receive and
how the work aligns with NASA's best interest.
- "NASA's Hypersonics Project is interested in turbine-based combined-
cycle propulsion systems for access to space application. Furthermore,
joint efforts such as this one enable Fundamental Aeronautics Program
projects access to system level data critically needed to validate the
computational analysis and design tools being developed under the
projects."
Some rationales that were included as part of an estimated price report
did not directly explain the rationale for the waiver.
* For example, one Langley Research Center estimated price report
simply stated: NASA's waived costs for this project include civil
service salary and benefits, travel, a portion of material costs, plus
all direct costs from the 40-hour 14 x 22 wind tunnel test.
* An estimated price report from Marshall Space Flight Center simply
stated: The money that the agreement partner will pay NASA is
recovering housing costs for the percentage of non-NASA work that the
agreement partner has won.
Table 3: Number of Times in Which Various NASA Centers Formats Were
Used to Document Waived Cost Rationales at Five NASA Centers:
Center: Glenn Research Center (11);
Memo to file: 11;
Estimated price report: 0;
Body of agreement: 0.
Center: Johnson Space Center (5);
Memo to file: 2;
Estimated price report: 0;
Body of agreement: 3.
Center: Kennedy Space Center (1);
Memo to file: 1;
Estimated price report: 0;
Body of agreement: 0.
Center: Langley Research Center (23);
Memo to file: 0;
Estimated price report: 23;
Body of agreement: 0.
Center: Marshall Space Flight Center (4);
Memo to file: 2;
Estimated price report: 2;
Body of agreement: 0.
Source: GAO analysis based on NASA data.
[End of table]
In December 2010, the agency published a NASA interim directive for
reimbursable agreements that increased oversight and provided
additional guidance for determining when it is appropriate to waive
costs.[Footnote 13]
1) Headquarters Office of the Chief Financial Officer must review
agreements in which NASA centers waive direct costs (costs involving
labor, travel, or procurement specifically identified with that
agreement).
2) The policy has updated guidance to further explain that cost
waivers can only be considered where there is a clear and demonstrated
benefit to the agency and the benefit must be quantifiable to the
extent that it can be reasonably estimated. For example, valid
criteria for cost waivers fall into several categories:
* benefits directly related to NASA's mission,
* maintenance or improvement of NASA capabilities or facilities, and,
* collaborative efforts between NASA and other entities.
The interim directive better defines when it is appropriate to waive
costs, but it does not specify the type of information to include in
the justification.
Given NASA's new interim policy requirements for review by the
Headquarters' Chief Financial Officer, full and consistent
documentation of the rationale for waiving costs is important to
facilitate the review process and help NASA ensure it receives fair
reimbursement from agreement partners.
[End of Objective 1]
Objective 2--Mission and Interference:
NASA's Space Act Agreement Guide[Footnote 14] outlines the following
steps to ensure that SAA work is in alignment with NASA's mission:
* The purpose section of each fully reimbursable agreement needs to
describe how the activity is consistent with NASA's mission.
* As part of the preliminary review process for SAA activities that
could have a significant impact on the agency's mission, abstracts
outlining proposed SAA activities should include a description of how
activities support NASA's mission.[Footnote 15]
Table 4: NASA Goals and Objectives Supported by Fully Reimbursable
Agreements:
1. Advance knowledge in the fundamental disciplines of aeronautics,
and develop technologies for safer aircraft and higher capacity
airspace systems;
2006 NASA Strategic Plan, Strategic Sub-Goal 3E.
2. The development and operation of vehicles capable of carrying
instruments, equipment, supplies, and living organisms through space;
Section 102(c)(3) of the National Aeronautics & Space Act of 1958.
3. Understand the effects of the space environment on human
performance, and test new technologies and countermeasures for long-
duration human space exploration;
2006 NASA Strategic Plan, Strategic Sub-Goal 3F.
4. Establish a lunar return program having the maximum possible
utility for later missions to Mars and other destinations;
2006 NASA Strategic Plan, Strategic Goal 6.
5. Cooperation with Public Agencies;
Section 203(c)(6) of the National Aeronautics & Space Act of 1958 (as
amended).
Source: GAO analysis based on NASA data.
[End of table]
Partner activities under all 34 agreements we reviewed are consistent
with NASA's mission.[Footnote 16]
For example:
* At Ames Research Center, the commercial partner utilized NASA's B747
flight simulator for crew training and to collect data for aviation
safety research. This work is related to NASA's goal to develop
technologies for safer aircraft.
* At White Sands Test Facility, a federal partner used NASA's
propulsion test stand to conduct rocket engine testing. This work
supports NASA's goal to develop vehicles capable of carrying
instruments or equipment through space.
* At Glenn Research Center, a commercial partner utilized the Portable
Unit for Metabolic Analysis (PUMA) and calibration systems to support
development of a technology that may be used to monitor astronaut
health in space based environments. This work supports NASA's goal to
understand effects of the space environment on human performance.
As outlined in NASA's Policy Directive[Footnote 17] and Space Act
Agreement Guide, NASA has controls in place to help ensure
reimbursable activities do not interfere with the use of its
facilities:
1) All reimbursable agreements must provide that NASA has priority of
use. The sample clause in the guide explains that NASA can put its
needs before those of its partners. This may include delaying partner
testing to accommodate NASA testing requirements.
2) Resource availability (funding, services, equipment, expertise,
information, and facilities) is considered in the agreement
development process by various NASA stakeholders including:
* Agreement managers who are responsible for collecting information
needed to develop and implement the agreements, including determining
resource availability.
* Affected and interested NASA parties involved in the preliminary
abstract review process, which is coordinated by NASA's Office of
Program and Institutional Integration.
According to NASA center officials, management or technical points of
contact also play a role in determining if the center has resources
required to perform any proposed work.
Partner activities did not appear to interfere with NASA's use of its
facilities:
* All 34 SAAs we reviewed included a priority of use clause.
- According to NASA officials, there was only one instance where NASA
had to enforce the priority of use clause. Officials also provided
examples at two facilities where NASA and the agreement partner were
able to informally address scheduling conflicts without having to
invoke the priority of use clause. In both instances, the partner's
test schedule was delayed to meet NASA testing needs.
For example, SAA testing at the Space Environmental Effects Facility
at Marshall was delayed for two months in FY2010 due to unplanned,
extended testing required for NASA's Juno Program.
* According to NASA officials, responsible staff conducted the
necessary coordination steps to ensure resources required in proposed
SAA activities were available.
* We contacted 17 major NASA program users of facilities in our
review. All responses indicated that SAA activities did not interfere
with their testing needs.
- 14 NASA program users told us that they completed all testing on
schedule in FY 2010.
- 3 NASA program users experienced a delay in testing unrelated to
reimbursable activities conducted at the facilities.
Several factors also help to ensure that SAA activities did not
interfere with NASA work, including:
* Relatively small amounts of SAA work at NASA top utilized facilities;
* Openness in most facility schedules that accepted SAA work;
* Use of appropriate methods to manage utilization, such as formal
scheduling for high demand facilities.
In FY 2010, reimbursable work was conducted at fewer than half of the
top utilized facilities identified at centers in our review:
* 31 of 51 top utilized facilities identified by NASA officials at
three centers and one test facility did not support any SAA work in FY
2010.[Footnote 18]
* Activities related to 36 fully reimbursable SAAB and 4 partially
reimbursable SAAB were supported at 20 of 51 top utilized facilities
identified by NASA officials at four centers.
According to facility managers, most facilities with SAAB that we
reviewed had relatively open schedules to accommodate SAA work.
* Managers of 14 of 19 facilities in our review indicated that
utilization rates were 85 percent or less in FY 2010.
* According to NASA officials, at least 7 facilities in our review
involved partner activities that occupied NASA facilities for three
weeks or less in FY 2010.
Table 5: Utilization of NASA Facilities in Our Review:
Utilization overall, NASA and SAA partners[A]: Not utilized (Less than
30%);
No. of facilities: 1.
Utilization overall, NASA and SAA partners[A]: Under-utilized (30-
60%);
No. of facilities: 1.
Utilization overall, NASA and SAA partners[A]: Utilized (60-85%);
No. of facilities: 12.
Utilization overall, NASA and SAA partners[A]: Over-utilized (greater
than 85%);
No. of facilities: 5.
Source: GAO analysis based on NASA data.
[A] Utilization categories are based on laboratory utilization rate
codes reported in the Federal Real Property Profile, an inventory of
federal property, by all executive branch agencies including NASA.
[End of table]
Methods used to manage facilities and uphold NASA's non-interference
policy vary depending on facility features and demand:
* Facilities are managed to prevent interference by taking advantage
of facility features that enable support of multiple customers and
changes in the testing schedule. Facility features that enable
managers to accommodate both NASA and non-NASA customer testing needs
include:
- Option of operating facilities for extended periods (e.g., 24 hour
testing);
- Availability of multiple pieces of testing equipment (e.g., four
ultraviolet (UV) radiation test chambers used for UV testing);
- Flexibility within the testing plan (e.g., phased testing that can
be completed over a range of time);
- Relatively short testing periods (e.g., 5 minutes, 1 to 3 weeks);
- Facility utilization levels below capacity.
* High use facilities utilize more formal scheduling processes
compared to lower use facilities where formal scheduling is not
necessary.
- For example, the 9'x15' low speed wind tunnel is part of a wind
tunnel complex that was used at capacity in FY2010 for all but 25 days
when the facility was undergoing maintenance. A formal facility
schedule is maintained and shared monthly to keep NASA customers
updated on schedule changes.
* Ongoing communication with partners and NASA customers prior and
during testing was cited as a key tool in managing use at many
facilities.
NASA Facility Case Study: Icing Research Tunnel, Glenn Research Center:
Photograph: Testing to support the development of a wing heated air
ice protection system.
Source: NASA.
Table 6: Icing Research Tunnel, FY 2010 Facility Information:
No. SAAs[A]: 9;
SAA Use[A]: 58 days;
Overall utilization: Under-utilized (30-60%);
NASA use (percentage of overall utilization): Typically 20%;
Average test time: 1-3 weeks;
Formal schedule: Yes.
Source: GAO representation of NASA data.
[A] The "No. of SAAs° and "SAA Use columns refer to agreements in our
review. This note also applies to similar tables in subsequent case
study examples.
[End of table]
Facility Description: Among the worlds largest refrigerated wind
tunnels, this facility duplicates natural icing conditions to test
effects of in-flight icing on actual aircraft components and aircraft
models. Facility supports icing protection system development and
certification.
Assessment of Interference: The risk of interference is mitigated by:
* the limited and predictable use of the facility by NASA customers,
* relatively short test times and low utilization rate in FY 2010
(which enable flexibility in scheduling), and,
* use of a formal schedule.
NASA Facility Case Study: PUMA Device and Calibration Systems, Glenn
Research Center:
Photograph: A prototype PUMA unit
Source: NASA.
Table 7: PUMA Device and Calibration Systems, FY 2010 Facility
Information:
No. SAAs[A]: 1;
SAA Use[A]: 3-4 days;
Overall utilization: Not utilized (Less than 30%);
NASA use (percentage of overall ): None;
Average test time: 3 days;
Formal schedule: No.
Source: GAO representation of NASA data.
[End of table]
Facility Description: The Portable Unit for Metabolic Analysis (PUMA)
system is a self-contained device that measures the six key quantities
(oxygen, carbon dioxide, flow, temperature, pressure, and heart rate)
capable of measuring human metabolic function at rest, during
exercise, in clinical settings, or in the field. PUMA and associated
calibration systems are being used by Orbital Research, Inc. to
support the development of its Pilot Physiologic Assessment System, to
be used to provide pilots with early warning signal of hypoxic state
(lack of oxygen) and could be similarly used by astronauts.
Assessment of Interference: Interference was not an issue at this
facility as there was no NASA work in FY 2010.
NASA Facility Case Study: B747-400 Flight Simulator, Ames Research
Center:
Photograph: Advanced Concepts Flight and B747 simulators.
Source: NASA.
Table 8: B747-400 Flight Simulator, FY 2010 Facility Information:
No. SAAs[A]: 1;
SAA Use[A]: 2 days;
Overall utilization: 60% (Utilized 60-85%);
NASA use (percentage of overall utilization): 95%;
Average test time: 3-9 months;
Formal schedule: Yes.
Source: GAO representation of NASA data.
[End of table]
Facility Description: The B747-400 simulator is part of the Ames
Research Center's Crew Vehicle System Research Facility which is used
to study air-traffic management concepts and technologies, aviation
human factors and safety, and develop and improve new simulation and
training tools. United Parcel Service (UPS) utilized the B747
simulator to support UPS crew operations familiarization and training
and to collect flight operations quality assurance data for aviation
safety research on typical UPS flight profiles.
Assessment of Interference: Interference is managed at this facility
through:
* Use of a two-step approval process involving NASA customers required
for all activity: (1) during SAA proposal and agreement development
stages, and (2) to placement of SAA work on the facility schedule.
* Schedule flexibility with use in FY2010 estimated at 60 percent.
* Limited use of the facility by SAA partners. For example, in FY 2010
UPS used facility for only 2 days.
NASA Facility Case Study: Components Services Section, White Sands
Test Facility:
Photograph: Precision cleaning at CSS:
Source: NASA Contract Number: NJO6HCOIC.
Table 9: Components Services Section, FY 2010 Facility Information:
No. SAAs[A]: 1;
SAA Use[A]: 250 hours;
Overall utilization: Utilized (60-85%);
NASA use (percentage of overall ): Predominantly NASA customers;
Average test time: 3-6 hours per component;
Formal schedule: Yes.
Source: GAO representation of NASA data.
[End of table]
Facility Description: The Component Services Section (CSS) performs
precision cleaning, component refurbishment and repair, and
hydrostatic testing. Equipment includes ultra sonic baths, clean
rooms, convection ovens, and other tooling required to perform
precision cleaning as well as tooling and equipment needed for
disassembling and reassembling components and pressure systems to
functionally check components.
Assessment of Interference: The risk of interference is mitigated by:
* Multiple components can be precision cleaned and tested at the same
time. In FY2010, this facility had the capacity to support work for
up to 24 customers at the same time.
* The facility maintained a relatively open schedule with utilization
identified in the 60-85 percent range by NASA officials.
* Potential SAA work must be approved by the Office Chief and is
managed by a special White Sands Test Facility Work Control unit that
is responsible for coordinating customer scheduling needs and managing
potential schedule interference for all work at service centers.
* The time necessary to complete SAA work was relatively small at 250
hours to precision clean and/or functionally test 206 components.
NASA Facility Case Study: Space Environmental Effects Facility,
Marshall Space Flight Center:
Photograph: Ultraviolet Radiation Test Chamber:
Source: NASA.
Table 10: Space Environmental Effects Facility FY 2010 Facility
Information:
No. SAAs[A]: 1;
SAA Use[A]: 21 weeks;
Overall utilization: Varies by capability[A];
NASA use (percentage of overall utilization): 75%;
Average test time: Ranges by capability, 1-3 weeks per sample;
Formal schedule: No.
Source: GAO representation of NASA data.
[A] Overall utilization of the four test capabilities used to support
partner activities in the five agreements we reviewed ranged from 40%
(under-utilized, 30-60%) to 90% (over-utilized, greater than 85%) in
FY2010, according to NASA officials.
[End of table]
Facility Description: The Environmental Effects Facility (SEE) houses
11 distinct testing capabilities. The Equipment is used to test
materials incorporated or planned for integration in spacecraft design.
Assessment of Interference: Interference is managed at this facility
through:
* Some test equipment used in partner activities have more than one
test chamber and can support testing for multiple customers.
* SEE has a relatively open schedule with only 2 or 3 test chambers
out of 15 available in use at any given time, according to NASA
officials.
* Tests are run for relatively short periods of 1 to 3 weeks per
sample. This enables facility managers to easily change test schedules
to meet customer testing needs and helps prevent interference.
NASA Facility Case Study: Hot Gas Facility, Marshall Space Flight
Center:
Photograph: Hot Gas Facility:
Source: NASA.
Table 11: Hot Gas Facility, FY 2010 Facility Information:
No. SAAs[A]: 1;
SAA Use[A]: 4 days;
Overall utilization: Utilized (60-85%);
NASA use (percentage of overall utilization): Top users are NASA
customers;
Average test time: Ranges by capability, 5 minutes;
Formal schedule: No.
Source: GAO representation of NASA data.
[End of table]
Facility Description: The Hot Gas Facility is a unique gaseous
hydrogen/air combustion-driven wind tunnel that can produce combined
environments of launch and reentry heating rates and dynamic pressure
used to certify thermal shield material for use on spacecraft.
Assessment of Interference: The risk of interference is mitigated by:
* Extremely short testing time with multiple test runs per day: This
facility tests sample materials for extremely short testing times of
five minutes and requires no hardware changes between testing. Up to
25 test runs may be conducted in a single day.
* Limited SAA activity: Planned SAA testing is expected to require 12
days, with 4 days of testing completed in FY2010.
* Openness in facility schedule: The facility was used only 103 days
last year. Officials also noted that the workload has decreased
recently related to the planned retirement of the Space Shuttle.
Conclusions:
NASA is generally adhering to its internal controls regarding fair
reimbursement, alignment with NASA's mission, and preventing
interference.
NASA policy requires documentation of the rationale or justification
for waived costs. The interim directive more clearly defines when it
is appropriate to waive costs than prior guidance, but it does not
specify the type of information to include in the rationale or
justification. In the current fiscal environment and given the new
requirement for the Headquarters' Office of the Chief Financial
Officer to review agreements in which direct costs are waived, it is
especially important to fully and consistently document the rationale
for waiving costs associated with work for NASA partners. This could
help the agency ensure, in all cases, that waiving costs is fair and
reasonable when compared to the benefits NASA is receiving.
The existing mission and interference controls appear to be effective
under the current state of demand placed on NASA facilities, but
should the level of demand materially change, NASA may have to re-
evaluate its approach to managing partners' use of its facilities.
Recommendations for Executive Action:
To ensure a more consistent and transparent approach to documenting
the rationale or justification for waived costs, we recommend that the
NASA Administrator direct the Offices of the Chief Financial Officer
and General Counsel to:
* Refine the agency's policy to clearly define the type of information
that is required to support the rationale or justification in the
estimated price report. This type of information may include
documenting that there is a clear and demonstrated benefit to NASA and
quantifying the benefit to the extent practicable.
Backup Slides:
Table 12: Total Reimbursable Work and Center Budgets:
Center: Glenn Research Center;
FY 2010 total reimbursable awards: $30.7 million;
FY 2010 budget: $609 million;
Reimbursable work as percentage of budget: 5%.
Center: Johnson Space Center;
FY 2010 total reimbursable awards: $22.8 million;
FY 2010 budget: $6.3 billion;
Reimbursable work as percentage of budget: less than 1%.
Center: Kennedy Space Center;
FY 2010 total reimbursable awards: $85.4 million;
FY 2010 budget: $1.2 billion;
Reimbursable work as percentage of budget: 7%.
Center: Langley Research Center;
FY 2010 total reimbursable awards: $31 million;
FY 2010 budget: $656 million;
Reimbursable work as percentage of budget: 5%.
Marshall Space Flight Center
FY 2010 total reimbursable awards: $19.6 million;
FY 2010 budget: $2.8 billion;
Reimbursable work as percentage of budget: 1%.
Source: GAO analysis based on NASA data.
[End of table]
Figure 1: Types of Agreement Partner for Partially Reimbursable
Agreements:
[Refer to PDF for image: pie-chart]
Federal agency: 55%;
Commercial: 32%;
University/non-profit: 11%;
State and local government: 2%.
Source: GAO analysis based on NASA data.
[End of figure]
Figure 2: Types of Work Conducted for Partially Reimbursable
Agreements:
[Refer to PDF for image: pie-chart]
Research/Testing: 86%;
Other: 11%;
Expertise: 2%.
Source. GAO analysis based on NASA data.
[End of figure]
Table 13a: Partner Activities Consistent with NASA's Mission:
Goal/Objective 1: Advance knowledge in the fundamental disciplines of
aeronautics and develop technologies for safer aircraft and higher
capacity airspace systems:
Facilities utilized in SAA work[A]:
* Icing Research Tunnel;
* 9 x 15 Low Speed Wind Tunnel;
* 11 x 11 Foot Wind Tunnel;
Description of facility use in SAA work: Used to test aircraft
component and/or model performance under various in-flight conditions.
Facilities utilized in SAA work[A]: B747 Flight Simulator at the Crew
Vehicle Systems Research Facility;
Description of facility use in SAA work: To collect data for aviation
safety research.
Facilities utilized in SAA work[A]: Particulate Aerosol Laboratory;
Description of facility use in SAA work: Supports work on cleaner
combustion cycle on aircraft engines.
Facilities utilized in SAA work[A]: Aero Acoustic Propulsion Lab;
Description of facility use in SAA work: To measure nozzle performance
of various engine air-brake designs.
Source: GAO analysis based NASA data.
[A] Some of the listed facilities were utilized for work under
multiple fully reimbursable Space Act agreements in our review. This
also applies to the information on slide 44.
[End of table]
Table 13b: Partner Activities Consistent with NASA's Mission:
Goal/Objective 2: The development and operation of vehicles capable of
carrying instruments, equipment, supplies, and living organisms
through space.
Facilities utilized in SAA work[A]:
* National Center for Advanced Manufacturing;
* Space Environmental Effects Facility;
* Hot Gas Facility;
* Automated Surface Mount Assembly Lab;
* Failure Analysis Lab;
Description of facility use in SAA work: Development and testing of
new and improved materials for use in spacecraft.
Facilities utilized in SAA work[A]: Inducer Test Loop;
Description of facility use in SAA work: Performance pump testing for
potential application in NASA projects and programs.
Facilities utilized in SAA work[A]: Component Services Section;
Description of facility use in SAA work: Precision cleaning and
functional testing of components (e.g., space vehicle components such
as valves, fitting unions, tubing).
Facilities utilized in SAA work[A]: White Sands Test Facility
Chemistry Lab;
Description of facility use in SAA work: Analytical chemistry services
relating to propellants, propellant pressurizing gases, and material
compatibility testing in propellants
Facilities utilized in SAA work[A]: Propulsion Test Stand 401;
Description of facility use in SAA work: Rocket engine testing.
Source: GAO analysis based on NASA data.
[End of table]
Table 13c: Partner Activities Consistent with NASA's Mission:
Goal/Objective 3: Understand the effects of the space environment on
human performance and test new technologies and countermeasures for
long-duration human space exploration:
Facilities utilized in SAA work: Portable Unit for Metabolic Analysis
(PUMA) Device & Calibration Systems;
Description of facility use in SAA work: Support development of
technology that may be used to monitor astronaut health in space based
environments.
Goal/Objective 4: Establish a lunar return program having the maximum
possible utility for later missions to Mars and other destinations
Facilities utilized in SAA work:
* Fluid Mechanics Lab in-draft wind tunnel;
* Fluid Mechanics Lab water channel;
Description of facility use in SAA work: Supports development of solar
technologies that have potential for application in space based
environments
Goal/Objective 5: Cooperation with Public Agencies:
Facilities utilized in SAA work:
* Moffett Airfield Aircraft Maintenance Hangar;
Description of facility use in SAA work: Base of operation for
helicopters used to support local law enforcement and emergency
response capabilities.
Source: GAO analysis based on NASA data.
[End of table]
Table 14: SAA Activity in FY 2010 at Top Utilized Facilities at Glenn
Research Center:
Facility: Icing Research Tunnel;
Fully reimbursable agreements FY 2010: 11;
Partially reimbursable agreements FY 2010: 0.
Facility: 10 X 10 Supersonic Wind Tunnel;
Fully reimbursable agreements FY 2010: 0;
Partially reimbursable agreements FY 2010: 0.
Facility: 8 X 6 Supersonic Wind Tunnel;
Fully reimbursable agreements FY 2010: 0;
Partially reimbursable agreements FY 2010: 1.
Facility: 9 X 15 Supersonic Wind Tunnel;
Fully reimbursable agreements FY 2010: 2;
Partially reimbursable agreements FY 2010: 0.
Facility: Propulsion Systems Laboratory;
Fully reimbursable agreements FY 2010: 0;
Partially reimbursable agreements FY 2010: 1.
Facility: Engine Research Building Complex;
Fully reimbursable agreements FY 2010: 1;
Partially reimbursable agreements FY 2010: 1.
Facility: Aero0Acoustic Propulsion Laboratory;
Fully reimbursable agreements FY 2010: 0;
Partially reimbursable agreements FY 2010: 0.
Facility: Zero Gravity Research Facility;
Fully reimbursable agreements FY 2010: 0;
Partially reimbursable agreements FY 2010: 0.
Facility: Small Multi0Purpose Research Facility;
Fully reimbursable agreements FY 2010: 0;
Partially reimbursable agreements FY 2010: 0.
Facility: Total;
Fully reimbursable agreements FY 2010: 14[A];
Partially reimbursable agreements FY 2010: 3.
Source: GAO analysis based on NASA data.
[A] Partner work for 11 of these fully reimbursable SAM was conducted
at the Icing Research Tunnel at Glenn, which was included in our
review. This facility is predominantly utilized for commercial work,
with NASA-related work estimated at 20 percent. In addition, the
facility manager described this facility as under-utilized in FY2010.
[End of table]
Table 15: SAA Activity in FY 2010 at Top Utilized Facilities at White
Sands Test Facility:
Facility: 300 Area Propulsion Blockhouse;
Fully reimbursable agreements FY 2010: 0;
Partially reimbursable agreements FY 2010: 0.
Facility: 300 Area Propulsion Data Acquisition and Control;
Fully reimbursable agreements FY 2010: 0;
Partially reimbursable agreements FY 2010: 0.
Facility: 400 Area Propulsion Blockhouse;
Fully reimbursable agreements FY 2010: 1;
Partially reimbursable agreements FY 2010: 0.
Facility: 400 Area Propulsion Data Acquisition and Control;
Fully reimbursable agreements FY 2010: 1;
Partially reimbursable agreements FY 2010: 0.
Facility: Cryogenic Storage System;
Fully reimbursable agreements FY 2010: 0;
Partially reimbursable agreements FY 2010: 0.
Facility: Hypergols Storage, conditioning and distribution System, 400
area;
Fully reimbursable agreements FY 2010: 0;
Partially reimbursable agreements FY 2010: 0.
Facility: Inert Gas Storage & Distribution System;
Fully reimbursable agreements FY 2010: 0;
Partially reimbursable agreements FY 2010: 0.
Facility: Materials Flammability in Oxygen Enriched Atmospheres Test
Areas;
Fully reimbursable agreements FY 2010: 0;
Partially reimbursable agreements FY 2010: 0.
Facility: Photo and Video Test Support Laboratory;
Fully reimbursable agreements FY 2010: 0;
Partially reimbursable agreements FY 2010: 0.
Facility: Small Altitue Simulation System 400 Area;
Fully reimbursable agreements FY 2010: 0;
Partially reimbursable agreements FY 2010: 0.
Facility: Standard Materials Test Areas;
Fully reimbursable agreements FY 2010: 0;
Partially reimbursable agreements FY 2010: 0.
Facility: Test Materials Preparation,Staging,and Controlled Access
Storage Areas;
Fully reimbursable agreements FY 2010: 0;
Partially reimbursable agreements FY 2010: 0.
Facility: Test Stand Support Buildings (400 Area);
Fully reimbursable agreements FY 2010: 1;
Partially reimbursable agreements FY 2010: 0.
Facility: WSSH Shuttle Landing Training and Shuttle Landing Facility;
Fully reimbursable agreements FY 2010: 0;
Partially reimbursable agreements FY 2010: 0.
Facility: Ordnance Storage Bunkers;
Fully reimbursable agreements FY 2010: 0;
Partially reimbursable agreements FY 2010: 0.
Facility: Total;
Fully reimbursable agreements FY 2010: 1[A];
Partially reimbursable agreements FY 2010: 0.
Source: GAO analysis based on NASA data.
[A] The work at the 400 Area Propulsion Blockhouse and Data
Acquisition and Control and Test Stands Support Buildings was related
to one fully reimbursable SAA.
[End of table]
Table 16: SAA Activity in FY 2010 at Top Utilized Facilities at Ames
Research Center:
Facility: 11 foot Wind Tunnel;
Fully reimbursable agreements FY 2010: 2;
Partially reimbursable agreements FY 2010: 0.
Facility: 80 x 120 Wind Tunnel;
Fully reimbursable agreements FY 2010: 1;
Partially reimbursable agreements FY 2010: 0.
Facility: Ames Research Center Arcjet Facility;
Fully reimbursable agreements FY 2010: 1;
Partially reimbursable agreements FY 2010: 0.
Facility: Fluid Mechanics Laboratory, 48 x 32 Wind Tunnel Facility;
Fully reimbursable agreements FY 2010: 1;
Partially reimbursable agreements FY 2010: 0.
Facility: Hangar 3;
Fully reimbursable agreements FY 2010: 2;
Partially reimbursable agreements FY 2010: 0.
Facility: Hangar 144;
Fully reimbursable agreements FY 2010: 2;
Partially reimbursable agreements FY 2010: 0.
Facility: Magnetic Test Facility, N-217/A;
Fully reimbursable agreements FY 2010: 1;
Partially reimbursable agreements FY 2010: 0.
Facility: Moffett Federal Airfield;
Fully reimbursable agreements FY 2010: 4;
Partially reimbursable agreements FY 2010: 1.
Facility: NASA Ames Crew Vehicle Systems Research Facility (CVSRF);
Fully reimbursable agreements FY 2010: 1;
Partially reimbursable agreements FY 2010: 0.
Facility: NASA ARC Laboratories;
Fully reimbursable agreements FY 2010: 1;
Partially reimbursable agreements FY 2010: 0.
Facility: Vertical Motion Simulator (VMS) Facility;
Fully reimbursable agreements FY 2010: 1;
Partially reimbursable agreements FY 2010: 0.
Facility: Total;
Fully reimbursable agreements FY 2010: 17;
Partially reimbursable agreements FY 2010: 1.
Source: GAO analysis based on NASA data.
[End of table]
Table 17: SAA Activity in FY 2010 at Top Utilized Facilities at
Marshall Space Fight Center:
Facility: Building 4705 Mechanical Fabrication (including surface
treat/plating/painting);
Fully reimbursable agreements FY 2010: 0;
Partially reimbursable agreements FY 2010: 0.
Facility: Building 4755 ECLSS Development Facility;
Fully reimbursable agreements FY 2010: 0;
Partially reimbursable agreements FY 2010: 0.
Facility: Building 4487 Software Development Facility (SDF);
Fully reimbursable agreements FY 2010: 0;
Partially reimbursable agreements FY 2010: 0.
Facility: Hot Gas Facility;
Fully reimbursable agreements FY 2010: 4;
Partially reimbursable agreements FY 2010: 0.
Facility: Test Stand 1160 high pressure engine system components;
Fully reimbursable agreements FY 2010: 0;
Partially reimbursable agreements FY 2010: 0.
Facility: Test Stand 1150 multi-purpose, multi-position
oxygen/hydrogen facilities for scale-model combustion devices;
Fully reimbursable agreements FY 2010: 0;
Partially reimbursable agreements FY 2010: 0.
Facility: Environmental Test Facilities in West end of 4619;
Fully reimbursable agreements FY 2010: 0;
Partially reimbursable agreements FY 2010: 0.
Facility: Structural (Static and Dynamic) Testing in East end of 4619
Fully reimbursable agreements FY 2010: 0;
Partially reimbursable agreements FY 2010: 0.
Facility: Mechanical Metallurgy and Corrosion Research Facilities
(MMTF);
Fully reimbursable agreements FY 2010: 0;
Partially reimbursable agreements FY 2010: 0.
Facility: Materials Diagnostic Facility;
Fully reimbursable agreements FY 2010: 0;
Partially reimbursable agreements FY 2010: 0.
Facility: Hydrogen Test;
Fully reimbursable agreements FY 2010: 0;
Partially reimbursable agreements FY 2010: 0.
Facility: Ceramic Composite and Ceramic Testing Lab;
Fully reimbursable agreements FY 2010: 0;
Partially reimbursable agreements FY 2010: 0.
Facility: Propulsion Research Development Laboratory;
Fully reimbursable agreements FY 2010: 0;
Partially reimbursable agreements FY 2010: 0.
Facility: Payload Operations Center;
Fully reimbursable agreements FY 2010: 0;
Partially reimbursable agreements FY 2010: 0.
Facility: Imaging Lab;
Fully reimbursable agreements FY 2010: 0;
Partially reimbursable agreements FY 2010: 0.
Facility: Human Factors La;
Fully reimbursable agreements FY 2010: 0;
Partially reimbursable agreements FY 2010: 0.
Facility: Total;
Fully reimbursable agreements FY 2010: 4;
Partially reimbursable agreements FY 2010: 0.
Source: GAO analysis based on NASA data.
[End of table]
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[End of Enclosure I: Briefing Slides]
Enclosure II: Comments from the National Aeronautics and Space
Administration:
National Aeronautics and Space Administration:
Headquarters:
Washington, DC 20546-0001:
May 20, 2011:
Reply to attention of: Office of the General Counsel:
Ms. Cristina Chaplain:
Director:
Acquisition and Sourcing Management:
United States Government Accountability Office:
Washington, DC 20548:
Dear Ms. Chaplain:
The National Aeronautics and Space Administration (NASA) appreciates
the opportunity to review the Government Accountability Office (GAO)
draft reports entitled "NASA Reimbursable Space Act Agreements" (GAO-
11-553R; report number 120926) and "NASA Data Issues and Compliance"
(GAO-11-552R; report number 120983). NASA values the continued open
communications between NASA and the GAO team and appreciates the
constructive comments arising as a result of this effort.
NASA agrees with GAO's concern regarding managing programs and
projects as efficiently and effectively as possible, especially within
a budget that is likely to be constrained due to the fiscal
limitations currently faced by all Federal Government agencies. NASA
remains dedicated to continuous improvement of the Agency's Space Act
Agreement's (SAA) internal controls and business practices. We are
pleased that GAO recognized the policy requirements and other internal
controls in place related to Agency SAA practices and found that NASA
is generally adhering to those controls.
We also appreciate GAO's constructive findings from the two reports
regarding the need to clarify existing Agency guidance in regard to
certain Reimbursable SAA pricing policies (i.e., waived costs), the
need for improved training and internal controls to ensure the data
integrity in NASA's Space Act Agreement Maker (SAAM) system, and the
need for improved training and internal controls to ensure that NASA
does not violate statutory provisions or policy regarding competition
with the private sector. NASA is committed to promptly address these
issues and, in fact, has already taken several actions and has planned
additional action toward that end, as discussed below.
In the two draft reports, GAO makes a total of four recommendations to
the NASA Administrator to address the findings identified in the
reports. Those recommendations, and NASA's responses, are as follows:
GAO-11-553R:
Recommendation 1: Direct the Offices of the Chief Financial Officer
and General Counsel to refine the agency's policy to clearly define
the type of information that is required to support the justification
in the estimated price report. This type of information may include
documenting that there is a clear and demonstrated benefit to
NASA and quantifying the benefit to the extent practicable.
NASA's Response: Concur. The Office of the Chief Financial Officer
(OCFO) is already working with the Office of General Counsel (OGC) and
other offices addressing this recommendation. We are in the process of
reviewing these and other refinements to NASA Interim Directive
9090.1, as part of the transition to a NASA Procedural Requirement
this year. Among the refinements being reviewed are reporting
requirements including the additional types of information recommended
above.
GAO-11-552R:
Recommendation 1: Direct the Office of Program and Institutional
Integration to rectify the data inaccuracies in the SAAM database that
we have identified in this report.
NASA's Response: Concur. All of the data inaccuracies identified in
the GAO report have been corrected in coordination with the respective
Center and Headquarters Agreement Managers.
Recommendation 2: Direct the Office of Program and Institutional
Integration to assess why the coding errors identified in this report
occurred and develop procedures for enhancing the accuracy of the data.
NASA's Response: Concur. The Mission Support Directorate (MSD) has
assessed each instance and found that there were two primary causes
for the data entry errors:
1) Initial misclassification by the Agreement initiator due to a lack
of understanding of how to classify certain Agreements in the system.
We also identified some problematic SAAM data entry protocols that
confused users and allowed erroneous classification entries such as
"Fully Nonreimbursable" or "Fully Reimbursable [with waived costs
entered]," which contributed to this problem.
2) Failure or inability of the Agreement Manager to update the initial
classification of an Agreement if it changed during the course of
discussions with the partner (e.g., from "Fully reimbursable" to
"Partially reimbursable" or vice versa). We also found that system
restrictions that prohibited the Agreement Managers from being able to
directly make changes to the agreement classification after it had
been initially established contributed to this problem.
In order to enhance the accuracy of the system data, we conducted
training on proper agreement classification protocols during the Space
Act Agreement Community of Practice Meeting at Stennis Space Center on
May 18-19.2011. In addition, we implemented changes to the SAAM system
to allow designated Center and Headquarters Agreement Managers to make
changes to the classification of their Agreements as needed. Finally,
are in the process of implementing additional changes to the SAAM
system to automatically "flag" such errors and eliminate the
possibility of confusing or contradictory agreement classification
entries.
Recommendation 3: Direct the Office of Program and Institutional
Integration to provide refresher training, as part of NASA's annual
Space Act agreement community of practice, to SAAM users to explain
the various agreement types, stress the importance of accurately
inputting data into the SAAM database, and clarifies NASA's policy
regarding competition with the private sector.
Management's Response: Concur. MSD will conduct training on proper
agreement classification protocols during the upcoming Space Act
Agreement Community of Practice Meeting referenced above. As part of
that training, we discussed the findings from the GAO's audit and
provided both policy and technical training regarding how to properly
classify and enter SAAs in SAAM, emphasizing the importance of users
accurately inputting data into the system. During the meeting, MSD and
OGC also covered the legal and policy requirements relating to the
"competition with the private sector" issue and the related policies
and internal controls in place to prevent that.
The GAO report finding regarding "competition with the private sector"
in SAAM 7492 (CRC's SAA3-1112 wiTechnical Directions Inc.), we have
reviewed the circumstances surrounding that particular agreement. We
agree with the facts as stated in the GAO report, and offer the
following additional background information for further context.
Under the agreement, GRC performed work on a small jet engine that the
company was developing for the Department of Defense (Dort) using
CRC's Propulsion Systems Laboratory (PSL). The PSL is NASA's only
ground-based test facility that can provide true flight simulation for
experimental research on air-breathing propulsion systems. When the
Agreement was initiated, the GRC Agreements Manager relied on the
written statement in SAAM by the PSL facility manager that there were
no other vendors available who could do the work. After additional
inquiry, however, it appears that there may have been another vendor
capable of performing the testing conducted under the agreement.
GRC indicated that, although the agreement was with a commercial
entity (DTI), the work was known to be for the direct benefit of DoD.
Accordingly, the testing was conducted within the context of a policy
arrangement between NASA and DoD regarding aerospace research of
mutual interest to both agencies. For example, GRC waived certain
costs incurred under the agreement pursuant to its practice of waiving
such costs for testing conducted in conjunction with the DoD. While we
understand that these facts do not fully address the issue of avoiding
competition with the private sector, we believe that the context of
NASA and DoD's mutual commitment to conduct joint aeronautics research
at reduced costs and on appropriate terms and conditions is useful in
providing an understanding of the circumstances surrounding this
particular agreement.
GRC is planning to conduct additional Center-level training in
response to the GAO report finding. Specifically, GRC has taken the
following three corrective actions: (1) Since January 2011, shortly
after this issue became known, the GRC Agreement Managers make it a
standard practice to more extensively question GRC staff to gain
better understanding of the uniqueness of requested NASA facilities
and the possible existence of other potential vendors; (2) The GRC
Office of Chief Counsel and the GRC Chief Technologist convened a
meeting with the Propulsion Systems Laboratory facility manager and
his management on May 3, 2011, to re-emphasize and explain the NASA
policy that NASA must not compete with the private sector in
performing reimbursable work; and (3) The GRC Offices of Chief Counsel
and Technology Partnerships and Planning have agreed to hold refresher
training sessions for GRC staff on initiating and implementing Space
Act Agreements.
NASA is committed to continuous improvement of our SAA internal
controls and practices, as with all Agency practices, in order to
explore and utilize Space in an affordable way for the benefit of the
Nation. Toward this end, we look forward to continuing to work with
the GAO to measure and improve our performance and management
practices.
Thank you for the opportunity to comment on the two draft reports. If
you have any questions or require additional information, please
contact Richard McCarthy at (202) 358-2031.
Sincerely,
Signed by:
Michael C. Wholley:
General Counsel:
[End of Enclosure II]
Footnotes:
[1] The National Aeronautics and Space Act of 1958, Pub. L. No. 85-568.
[2] As part of this review, we identified two other issues that were
not directly related to our audit objectives and have included a
discussion of those issues in a separate management letter to NASA.
See GAO, Training Necessary to Address Data Reliability Issues in NASA
Agreement Database and to Minimize Potential Competition with
Commercial Sector, [hyperlink,
http://www.gao.gov/products/GAO-11-552R] (Washington, D.C.: May 26,
2011).
[3] The National Aeronautics and Space Act of 1958, Pub. L. No. 85-568.
[4] There are two other types of SAAs that are not included in our
review. Funded SAM are those under which appropriated funds are
transferred to an agreement partner to accomplish an Agency mission.
Non-reimbursable SAM involve NASA and one or more partners in a
mutually beneficial activity that furthers NASA's mission, where each
party bears the cost of its participation and there is no exchange of
funds between the parties.
[5] NASA Policy Directive 1050.11 "Authority to Enter into Space Act
Agreements" (2008).
[6] Under certain circumstances, the NASA pricing policy requires the
agency to charge market rates which are based on a market survey.
[7] Our review did not include an evaluation of the methods used by
NASA to determine the established rate.
[8] We limited our review on fair reimbursement to partially
reimbursable SAM because we determined that agreements involving
waived costs represented the greatest risk to NASA obtaining fair
reimbursement.
[9] We limited our review on NASA's mission and interference to fully
reimbursable SAM involving the use of facilities because there is a
direct benefit to NASA's mission under partially reimbursable SAAs and
we determined it was more feasible to assess interference involving a
facility than with goods and services.
[10] NASA Procedural Requirements, 9090.1, Section 3.12 (Sept. 30,
2008) (superseded by NASA Interim Directive, 9090.1, "Reimbursable
Agreements" (Dec. 15, 2010)).
[11] NASA Procedural Requirements, 9090.1, Section 1.2 (2008)
(superseded).
[12] NASA Procedural Requirements, 9090.1, Section 1.2.6(i) (2008)
(superseded).
[13] NASA Interim Directive 9090.1 "Reimbursable Agreements," December
2010.
[14] NASA Advisory Implementing Instruction, 1050-1A, "Space Act
Agreement Guide" (Aug. 15, 2008).
[15] SAAs generally not requiring an abstract include renewals or
extensions of existing routine, previously vetted agreements with
partners, or agreements for routine, previously vetted activities with
U.S. partners with whom NASA has worked repeatedly in the past.
Guidance on proposed SAAs generally requiring an abstract is provided
in the Space Act Agreement Guide.
[16] Further description of SAA activities in our review that support
listed NASA goals and objectives can be found on slides 43 to 45.
[17] NASA Policy Directive 1050.11 "Authority to Enter into Space Act
Agreements" (2008).
[18] For a list of top utilized facilities and corresponding SAA
activity at each of the four centers, see slides 46 to 49.
[End of section]
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