oversight

NASA: Major Management Challenges and Program Risks

Published by the Government Accountability Office on 2003-06-12.

Below is a raw (and likely hideous) rendition of the original report. (PDF)

                            United States General Accounting Office

GAO                         Testimony
                            Before the Columbia Accident
                            Investigation Board


For Release on Delivery
Expected at 9:00 a.m. EDT
Thursday, June 12, 2003     NASA
                            Major Management
                            Challenges and Program
                            Risks
                            Statement of Allen Li, Director
                            Acquisition and Sourcing Management




GAO-03-849T
                       Chairman Gehman and Members of the Columbia Accident Investigation
                       Board:

                       Thank you for inviting me to discuss the challenges and risks facing the
                       National Aeronautics and Space Administration (NASA). You asked that
                       we provide information concerning NASA, particularly the management of
                       the Space Shuttle Program. We recognize the complexity and difficulty in
                       establishing not only the cause of the Columbia accident, but also in
                       understanding the agency’s environment in which management decisions
                       are made. We believe our body of work can help the Board in this area.

                       Since its inception, NASA has undertaken numerous programs that have
                       greatly advanced scientific and technological knowledge. As you are
                       aware, NASA’s activities span a broad range of complex and technical
                       endeavors. But the agency is at a critical juncture, and major management
                       improvements are needed. In January of this year, we identified four
                       challenges facing NASA.1

                   •   Strengthening strategic human capital management.
                   •   Improving contract management.
                   •   Controlling International Space Station costs.
                   •   Reducing space launch costs.

                       Weak contract management and financial controls pose risks across the
                       agency. Therefore, we have placed this area on our high-risk list.


                       In summary, these challenges affect NASA’s ability to effectively run its
Results in Brief       largest programs. NASA’s ultimate challenge will be in tackling the root
                       problems impeding those programs. This will require (1) instituting a
                       results-oriented culture that fosters knowledge sharing and empowers its
                       workforce to accomplish programmatic goals; (2) ensuring that the agency
                       adheres to management controls to prevent cost overruns and scheduling
                       problems; (3) transforming the financial management organization so it
                       better supports NASA’s core mission; and (4) sustaining commitment to
                       change.




                       1
                        See U.S. General Accounting Office, Major Management Challenges and Program Risks:
                       National Aeronautics and Space Administration, GAO-03-114 (Washington, D.C.: January
                       2003).



                       Page 1                                       GAO-03-849T NASA Challenges and Risks
                     An agency’s most important organizational asset is its people—they define
Strengthening        the agency’s culture, drive its performance, and embody its knowledge
Strategic Human      base. Leading public organizations worldwide have found that strategic
                     human capital management must be the centerpiece of any serious change
Capital Management   management initiative. However, NASA, like many federal agencies, is
                     facing substantial challenges in attracting and retaining a highly skilled
                     workforce, thus putting the agency’s missions at risk. While NASA is
                     taking comprehensive steps to address this problem across all mission
                     areas, implementing a strategic approach to marshal, manage, and
                     maintain human capital has been a significant challenge.

                     In January 2001, we reported that NASA’s shuttle workforce had declined
                     significantly to the point of reducing NASA’s ability to safely support the
                     shuttle program.2 Many key areas were not sufficiently staffed by qualified
                     workers, and the remaining workforce showed signs of overwork and
                     fatigue. Recognizing the need to revitalize the shuttle program’s
                     workforce, NASA discontinued its downsizing plans in December 1999 and
                     initiated efforts to hire new staff. In September 2001, we testified that
                     NASA was hiring approximately 200 full-time equivalent staff and that it
                     had focused more attention on human capital in its annual performance
                     plan by outlining an overall strategy to attract and retain skilled workers.3
                     However, considerable challenges remain, including the training of new
                     staff and addressing the potential loss of key personnel through
                     retirement.

                     As we reported in January 2003, these challenges have not been mitigated,
                     and work climate indicators, such as forfeited leave and absences from
                     training courses continue to reflect high levels of job stress. In addition,
                     staffing shortages in many key skill areas of the shuttle program remain a
                     problem, despite the recent hires. These areas include subsystems
                     engineering, flight software engineering, electrical engineering,
                     environmental control, and shuttle resources management. NASA’s hiring
                     posture for fiscal year 2003 has been to target areas where skill imbalances
                     still exist in the shuttle program.



                     2
                      See U.S. General Accounting Office, Major Management Challenges and Program Risks:
                     National Aeronautics and Space Administration, GAO-01-258 (Washington, D.C.: January
                     2001).
                     3
                      See U.S. General Accounting Office, Space Shuttle Safety: Update on NASA’s Progress in
                     Revitalizing the Shuttle Workforce and Making Safety Upgrades GAO-01-1122T
                     (Washington, D.C.: Sept. 6, 2001).



                     Page 2                                         GAO-03-849T NASA Challenges and Risks
    NASA believes that similar workforce problems affect the entire agency
    and that, as a result, its ability to perform future missions and manage its
    programs may be at risk. Currently, the average age of NASA’s workforce
    is over 45, and 15 percent of NASA’s science and engineering employees
    are eligible to retire; within 5 years, about 25 percent will be retirement
    eligible. At the same time, the agency is finding it difficult to hire people
    with science, engineering, and information technology skills—fields
    critical to NASA’s missions. Within the science and engineering workforce,
    the over-60 population currently outnumbers the under-30 population
    nearly 3 to 1. As the pool of scientists and engineers shrinks, competition
    for these workers intensifies. The agency also faces the loss of significant
    procurement expertise through 2007, according to NASA’s Inspector
    General.4 Coupled with these concerns, NASA has limited capability for
    personnel tracking and planning, particularly on an agencywide or
    programwide basis. Furthermore, NASA acknowledges that it needs to
    complete and submit to the Office of Management and Budget (OMB) a
    transformation workforce restructuring plan, which it notes that, in
    conjunction with its strategic human capital plan, will be critical to
    ensuring that skill gaps or deficiencies do not exist in mission- critical
    occupations.5

    NASA is taking steps to address its workforce challenges. For example:

•   NASA is developing an agencywide integrated workforce planning and
    analysis system that aims to track the distribution of NASA’s workforce
    across programs, capture critical competencies and skills, determine
    management and leadership depth, and facilitate gap analyses. NASA has
    completed a pilot of an interim competency management system to
    facilitate analyses of gaps in skills and competencies. NASA plans to
    implement the interim system agencywide in 2003 and integrate it with the
    new comprehensive workforce planning and analysis system in 2005. The
    new system should foster better management of the existing workforce
    and enable better strategic decisions about future workforce needs.
•   NASA has developed a strategic human capital plan, which identifies
    human capital goals, problems, improvement initiatives, and intended


    4
    See National Aeronautics and Space Administration, Audit Report: Procurement
    Workforce Planning, IG-01-041 (Washington, D.C.: September 2001).
    5
     As stated in President’s Management Agenda Action Plans for the National Aeronautics
    And Space Administration, (Washington, D.C.: May 9, 2002). This document is an
    agreement between NASA and OMB on NASA’s plans for addressing the governmentwide
    initiatives in The President’s Management Agenda.



    Page 3                                        GAO-03-849T NASA Challenges and Risks
    outcomes and incorporates strategies and metrics to support the goals.6
    The plan has been approved by OMB and the Office of Personnel
    Management (OPM). According to NASA, the plan is based on OMB’s
    scorecard of human capital standards and OPM’s scorecard of supporting
    human capital dimensions, as well as our own model, which we published
    in March 2002.7
•   NASA has renewed its attention to hiring applicants just out of college and
    intends to pursue this even more aggressively in coming years. The agency
    is undertaking a number of initiatives and activities aimed at acquiring and
    retaining critically needed skills, such as using the new Federal Career
    Intern Program to hire recent science and engineering graduates,
    supplementing the workforce with nonpermanent civil servants where it
    makes sense, and implementing a program to repay student loans to
    attract and retain employees in critical positions.
•   Finally, NASA has included an objective in its most recently updated
    strategic plan8 and fiscal year 2004 performance plan9 to implement an
    integrated agencywide approach to human capital management. The plans
    state that this approach will attract and maintain a workforce that
    represents America’s diversity and will include the competencies that
    NASA needs to deliver the sustained levels of high performance that the
    agency’s challenging mission requires.

    The 108th Congress is currently considering a series of legislative
    proposals developed by NASA to provide it with further flexibilities and
    authorities for attracting, retaining, developing, and reshaping a skilled
    workforce. These include a scholarship-for-service program; a streamlined
    hiring authority for certain scientific positions; larger and more flexible
    recruitment, relocation, and retention bonuses; noncompetitive
    conversions of term employees to permanent status; a more flexible
    critical pay authority; a more flexible limited-term appointment authority
    for the senior executive service; and greater flexibility in determining
    annual leave accrual rate for new hires.



    6
     NASA has also developed a companion strategic human capital implementation plan that
    contains detailed action plans for the improvement initiatives.
    7
    See U.S. General Accounting Office, A Model of Strategic Human Capital Management,
    GAO-02-373SP (Washington, D.C.: Mar. 15, 2002).
    8
    See National Aeronautics and Space Administration, 2003 Strategic Plan (Washington,
    D.C.: 2003).
    9
     NASA’s fiscal year 2004 performance plan is integrated with its fiscal year 2004 budget
    request.



    Page 4                                           GAO-03-849T NASA Challenges and Risks
                      We continue to monitor NASA’s progress in resolving its human capital
                      problems, including how well its human capital initiatives and reforms and
                      any new and existing flexibilities and authorities are helping to
                      strategically manage and reshape its workforce.


                      Much of NASA’s success depends on the success of its contractors—who
Correcting            received more than 85 percent, or $13.3 billion, of NASA’s funds in fiscal
Weaknesses in         year 2002. However, since 1990, we have identified NASA’s contract
                      management function as an area at high risk because of its ineffective
Contract Management   systems and processes for overseeing contractor activities. Specifically,
                      NASA has lacked accurate and reliable information on contract spending
                      and has placed little emphasis on end results, product performance, and
                      cost control. NASA has addressed many of these acquisition-related
                      weaknesses, but key tasks remain, including completing the design and
                      implementation of a new integrated financial management system.

                      Since 1990, our reports and testimonies have repeatedly demonstrated just
                      how debilitating these weaknesses in contract management and oversight
                      have been. For example, our July 2002 report on the International Space
                      Station found that NASA did not effectively control costs or technical and
                      scheduling risks, provide adequate oversight review, or effectively
                      coordinate efforts with its partners. In other examples, we found that
                      NASA lacked effective systems and processes for overseeing contractor
                      activities and did not emphasize controlling costs.

                      Center-level accounting systems and nonstandard cost-reporting
                      capabilities have weakened NASA’s ability to ensure that contracts are
                      being efficiently and effectively implemented and that budgets are
                      executed as planned. The agency’s financial management environment
                      is comprised of decentralized, nonintegrated systems with policies,
                      procedures, and practices unique to each of its field centers. For the
                      most part, data formats are not standardized, automated systems are not
                      interfaced, and on-line financial information is not readily available to
                      program managers. NASA’s lack of a fully integrated financial management
                      system also hurts its ability to collect, maintain, and report the full cost of
                      its projects and programs. For example, in March 2002, we testified that
                      NASA was unable to provide us with detailed support for amounts that it
                      reported to the Congress as obligated against space station and related




                      Page 5                                    GAO-03-849T NASA Challenges and Risks
    shuttle program cost limits,10 as required by the National Aeronautics and
    Space Administration Authorization Act of 2000.11

    In recent years, NASA made progress in addressing its contract
    management challenges. For example:

•   In July 1998, we reported that NASA was developing systems to provide
    oversight and information needed to improve contract management and
    that it had made progress in evaluating its field centers’ procurement
    activities on the basis of international quality standards and its own
    procurement surveys. In January 1999, we reported that NASA was
    implementing its new system for measuring procurement-related activities
    and had made progress in evaluating procurement functions in its
    field centers.
•   NASA has also made progress reducing its use of undefinitized contract
    actions (UCA)12—that is, unnegotiated, or uncosted, contract changes. In
    2000, we reported that NASA’s frequent use of undefinitized contract
    changes could result in contract cost overruns and cost growth in the
    International Space Station program. In March 2003, NASA’s Office of
    Inspector General reported that NASA had significantly reduced both the
    number and dollar amount of undefinitized contract actions since we
    highlighted UCAs as one reason for designating NASA’s contract
    management as a major management challenge.
•   NASA has also recognized the urgency of implementing a fully integrated
    financial management system. We recently reported that NASA has
    estimated the life-cycle cost of this effort through 2008 to be $861
    million.13, 14 While this is NASA’s third attempt at implementing a new
    financial management system (NASA’s first two efforts covered 12 years


    10
     See U.S. General Accounting Office, National Aeronautics and Space Administration:
    Leadership and Systems Needed to Effect Financial Management Improvements,
    GAO-02-551T (Washington, D.C.: Mar. 20, 2002).
    11
     Section 202 of P.L. 106-391.
    12
     An undefinitized contract action means a unilateral or bilateral contract modification or
    delivery/task order in which the final price or estimated cost and fee have not been
    negotiated and mutually agreed to by NASA and the contractor. 48 C.F.R. 1843.7001.
    13
     See U.S. General Accounting Office, Business Modernization: Improvements Needed in
    Management of NASA’s Integrated Financial Management Program, GAO-03-507
    (Washington, D.C.: Apr. 30, 2003).
    14
      For this estimate, NASA has defined life-cycle costs to include implementation efforts
    through fiscal year 2008 and major upgrades, plus operation and support costs for each
    system module for the first 2 years after the module goes live.



    Page 6                                           GAO-03-849T NASA Challenges and Risks
and cost $180 million), this effort is expected to produce an integrated,
NASA-wide financial management system through the acquisition and
incremental implementation of commercial software packages and related
hardware and software components.15 The core financial management
module, which NASA considers to be the backbone of the Integrated
Financial Management Program, is currently operating at 6 of NASA’s 10
centers16 and is expected to be fully operational in June 2003. According to
NASA’s business case analysis for the system, the core financial module
will provide NASA’s financial and program managers with timely,
consistent, and reliable cost and performance information for
management decisions.

While NASA has made noteworthy progress in strengthening its contract
oversight, much work remains. As NASA moves ahead in acquiring and
implementing its new financial management system, NASA needs to
ensure that its systems and processes provide the right data to oversee
its programs and contractors—specifically, data to allow comparisons of
actual costs to estimates, provide an early warning of cost overruns or
other related difficulties, and monitor contract performance and make
program requirement trade-off decisions. In addition, NASA must employ
proven best practices, including (1) aligning its selection of commercial
components of the system with a NASA-wide blueprint, or “enterprise
architecture;” (2) analyzing and understanding the dependencies among
the commercial components before acquiring and implementing them;
(3) following an event-driven system acquisition strategy; (4) employing
effective acquisition management processes, such as those governing
requirements management, risk management, and test management;
(5) ensuring that legacy system data are accurate to avoid loading and
perpetuating data errors in the new system; and (6) proactively positioning
NASA for the business process changes embedded in the new system, for
example, by providing adequate formal and on-the-job training.

However, as we reported in April 2003, the core financial module is not
being designed to accommodate much of the information needed by


15
 The system is to consist of nine modules: core financial management, resume
management, travel management, position description management, human resource
management, payroll, budget formulation, contract administration, and asset management.
16
  NASA is comprised of its headquarters offices, nine centers located throughout the
country, and the Jet Propulsion Laboratory. The Jet Propulsion Laboratory is operated by
the California Institute of Technology, but for the purpose of this testimony, we treat the
Jet Propulsion Laboratory as a center.



Page 7                                           GAO-03-849T NASA Challenges and Risks
                      program managers and cost estimators.17 For example, to adequately
                      oversee NASA’s largest contracts, program managers need reliable
                      contract cost data—both budgeted and actual—and the ability to integrate
                      these data with contract schedule information to monitor progress on the
                      contract. However, because program managers were not involved in
                      defining system requirements or reengineering business processes, the
                      core financial module is not being designed to integrate cost and schedule
                      data needed by program managers. In addition, because NASA has
                      embedded in the core financial module the same accounting code
                      structure that it uses in its legacy reporting system, the core financial
                      module is not being implemented to capture cost information at the same
                      level of detail that it has received from NASA’s contractors. Finally,
                      because NASA has done little to reengineer its acquisition management
                      processes to ensure that its contractors consistently provide the cost and
                      performance information needed, the core financial module does not
                      provide cost estimators with the detailed cost data needed to prepare
                      credible cost estimates.

                      Because more work is needed to demonstrate substantial progress in
                      resolving the root causes of NASA’s contract management weaknesses,
                      our 2003 Performance and Accountability Series continued to report
                      contract management as a major management challenge for NASA and a
                      high-risk area. We are continuing to monitor NASA’s progress in
                      addressing contract management weaknesses. In response to a request
                      from the Senate Commerce, Science, and Transportation Committee and
                      the House Science Committee, we continue to assess the extent to which
                      NASA’s financial management system acquisition is in accordance with
                      effective system acquisition practices and is designed to support NASA’s
                      decision-making needs and external reporting requirements.


                      The International Space Station represents an important effort to foster
Controlling           international cooperation in scientific research and space exploration. It is
International Space   also considered one of the most challenging engineering feats ever
                      attempted. The estimated cost of the space station has mushroomed, and
Station Costs         expected completion has been pushed out several years. NASA is taking
                      action to keep costs in check, but its success in this area still faces
                      considerable challenges. In the meantime, NASA has had to make




                      17
                       See GAO-03-507.



                      Page 8                                   GAO-03-849T NASA Challenges and Risks
substantial cuts in the program, negatively impacting its credibility with
the Congress, international partners, and the scientific community.

The grounding of the shuttle fleet following the Columbia accident has had
a significant impact on the continued assembly and operation of the
International Space Station. The shuttle is the primary vehicle for
transferring crew and equipment to and from the station and is used to
periodically reboost the station into a higher orbit. Although on-orbit
assembly of the station has stopped, NASA must continue to address the
challenges of developing and sustaining the station and conducting
scientific experiments until shuttle flights resume. While controlling cost
and schedule and retaining proper workforce levels have been difficult in
the past, the shuttle grounding will likely exacerbate these challenges.
Because the return-to-flight date for the shuttle fleet is unknown at this
time and manifest changes are likely, the final cost and schedule impact on
the station is undefined at this time.

NASA has had difficulty predicting and controlling costs and scheduling
for the space station since the program’s inception in 1984. In
September 1997, we reported that the cost and schedule performance of
its prime development contractor, which showed signs of deterioration in
1996, had continued to worsen and that the program’s financial reserves
for contingencies had all but evaporated. In our January 2001 Performance
and Accountability Series, we reported that the prime contract was
initially expected to cost over $5.2 billion and that the assembly of the
station was expected to be completed in June 2002. But by October 2000,
the prime contractor’s cost had grown to about $9 billion—$986 million of
which was for cost overruns—and the current estimate is about $11
billion. Because of on-going negotiations with the international partners
and uncertainty associated with the shuttle’s return to flight, the station’s
final configuration and assembly date cannot be determined at this time.
NASA’s Office of Inspector General also reported cost overruns in a
February 2000 audit report, and based on recommendations in that report,
NASA agreed to take several actions, including discussing the prime
contractor’s cost performance at regularly scheduled meetings and
preparing monthly reports to senior management on the overrun status.
However, in July 2002, we reported continued cost growth due to an
inadequate definition of requirements, changes in program content,
schedule delays, and inadequate program oversight.18 While NASA’s


18
 See U.S. General Accounting Office, Space Station: Actions Under Way to Manage Cost,
but Significant Challenges Remain, GAO-02-735 (Washington, D.C.: July 17, 2002).


Page 9                                        GAO-03-849T NASA Challenges and Risks
                 controls should have alerted management to the growing cost problem
                 and the need for action, they were largely ignored because NASA focused
                 on fiscal year budget management rather than on total program
                 cost management.

                 NASA is instituting a number of management and cost-estimating reforms,
                 but significant challenges threaten their successful implementation. First,
                 NASA’s new life-cycle cost estimate for the program—which is based on a
                 three-person crew instead of a seven-person crew, as originally planned—
                 will now have to be revised because of changes to the program’s baseline.
                 The lack of an adequate financial management system for collecting space
                 station cost data only exacerbates this challenge. Second, NASA must still
                 determine how research can be maximized with only a limited crew. Last,
                 NASA has yet to reach agreement with its international partners on an
                 acceptable on-orbit configuration and sharing of research facilities and
                 costs. As a result, the capacity and capabilities of the space station, the
                 scope of research that can be accomplished, and the partners’ share of
                 operating costs are unknown at this time.

                 Ongoing cost and schedule weaknesses have profoundly affected the
                 utility of the space station—with substantial cutbacks in construction, the
                 number of crew members, and scientific research. As a part of the space
                 station’s restructuring, further work and funding for the habitation module
                 and crew return vehicle have been deferred, which led to the on-orbit crew
                 being reduced from seven to three members, limiting the crewmember
                 hours that can be devoted to research. Additionally, the number of
                 facilities available for research has been cut from 27 to 20. NASA’s
                 international partners and the scientific community are not satisfied with
                 these and other reductions in capabilities and have raised concerns about
                 the viability of the space station science program.


                 In our earlier identification of costs to build the International Space
Reducing Space   Station, we identified space shuttle launch costs as being a substantial cost
Launch Costs     component—almost $50 billion.19 NASA recognized the need to reduce
                 such costs as it considered alternatives to the space shuttle. Indeed, a key
                 goal of the agency’s earlier effort to develop a reusable launch vehicle was
                 to reduce launch costs from $10,000 per pound on the Space Shuttle to



                 19
                  U.S. General Accounting Office, International Space Station: U.S. Life-Cycle Funding
                 Requirements, GAO/NSIAD-98-147 (Washington, D.C.: May 22, 1998).



                 Page 10                                       GAO-03-849T NASA Challenges and Risks
$1,000 through the use of such a vehicle. As we testified in June 2001,
NASA’s X-33 program—an attempt to develop and demonstrate advanced
technologies needed for future reusable launch vehicles—ended when the
agency chose not to fund continued development of the demonstrator
vehicle in February 2001.20

Subsequently, until November 2002, NASA was pursuing its Space Launch
Initiative (SLI)—a 5-year, $4.8 billion program to build a new generation of
space vehicles to replace its aging space shuttle fleet. SLI was part of
NASA’s broader Integrated Space Transportation Plan, which involves
operating the space shuttle program through 2020 as successive
generations of space transportation vehicles are developed and deployed,
beginning around 2011. The primary goals for SLI were to reduce the risk
of crew loss as well as substantially lower the cost of space transportation
so that more funds could be made available for scientific research,
technology development, and exploration activities. Currently, NASA
spends nearly one-third of its budget on space transportation.

In September 2002, we reported that SLI was a considerably complex and
challenging endeavor for NASA—from both a technical and business
standpoint.21 For example, SLI would require NASA to develop and
advance new technologies for the new vehicle, including (1) new airframe
technologies that will include robust, low-cost, low-maintenance structure,
tanks, and thermal protection systems, using advanced ceramic and
metallic composite materials, and (2) new propulsion technologies,
including main propulsion systems, orbital maneuvering systems, main
engines, and propellant management. The program would also require
NASA to carefully coordinate and communicate with industry and
government partners in order to reach agreements on the basic
capabilities of the new vehicle, the designs or architectures that should be
pursued, the sharing of development costs, and individual partner
responsibilities. Last, the SLI project would require careful oversight,
especially in view of past difficulties NASA has had in developing the
technologies for reusable launch vehicles to replace the space shuttle.
These efforts did not achieve their goals primarily because NASA did not



20
  U.S. General Accounting Office, Space Transportation: Critical Areas NASA Needs to
Address in Managing Its Reusable Launch Vehicle Program, GAO-01-826T (Washington,
D.C.: June 20, 2001).
21
 See U.S. General Accounting Office, Space Transportation: Challenges Facing NASA’s
Space Launch Initiative, GAO-02-1020 (Washington, D.C.: Sept. 17, 2002).



Page 11                                      GAO-03-849T NASA Challenges and Risks
develop realistic requirements and, thus, cost estimates, timely acquisition
and risk management plans, or adequate and realistic performance goals.

Most importantly, however, we reported that NASA was incurring a high
level of risk in pursuing its plans to select potential designs for the new
vehicle without first making other critical decisions, including defining the
Department of Defense’s (DOD) role in the program; determining the final
configuration of the International Space Station; and identifying the
overall direction of NASA’s Integrated Space Transportation Plan. At the
time, indications were that NASA and DOD differed on program priorities
and requirements; NASA had yet to reach agreement with its international
partners on issues that could dramatically impact SLI requirements, such
as how many crew members would operate the station.

NASA agreed with our findings and, in October 2002, postponed its
systems requirements review for SLI so that it could focus on defining
DOD’s role, determine the future requirements of the International Space
Station, and firm up the agency’s future space transportation needs. In
November 2002, the administration submitted to the Congress an
amendment to NASA’s fiscal year 2003 budget request to implement a
new Integrated Space Transportation Plan. The new plan makes
investments to extend the space shuttle’s operational life for continued
safe operations and refocuses the SLI program on developing an
orbital space plane—which provides a crew transfer capability to and
from the space station—and next-generation launch technology. The
Integrated Space Transportation Plan is an integral part of our ongoing
work assessing NASA’s plans to assure flight safety through space shuttle
modernization through 2020.

As NASA proceeds with its revised plans, it will still be important for
NASA to implement management controls that can effectively predict
what the total costs of the program will be and minimize risks. These
include cost estimates, controls designed to provide early warnings of cost
and schedule overruns, and risk mitigation plans. With such controls in
place, NASA would be better positioned to provide its managers and the
Congress with the information needed to ensure that the program is on
track and able to meet expectations.




Page 12                                  GAO-03-849T NASA Challenges and Risks
                     In addition to taking actions to address its management challenges, NASA
Better Mechanisms    uses various mechanisms to communicate lessons garnered from past
Needed for Sharing   programs and projects. In 1995, NASA established the Lessons Learned
                     Information System (LLIS), a Web-based lessons database that managers
Lessons Learned      are required to review on an ongoing basis. NASA uses several
                     mechanisms to capture and communicate lessons learned—including
                     training, program reviews, and periodic revisions to agency policies and
                     guidelines—but LLIS is the principal source for sharing lessons
                     agencywide. In January 2002, we reported that NASA had recognized the
                     importance of learning from the past to ensure future mission success and
                     had implemented mechanisms to capture and share lessons learned.22
                     However, spacecraft failures persist, and there is no assurance that
                     lessons are being applied toward future mission success. We reported that
                     insufficient risk assessment and planning, poor team communications,
                     inadequate review process, and inadequate system engineering were often
                     cited as major contributors to mishaps. (See table 1.)




                     22
                      See U.S. General Accounting Office, NASA: Better Mechanisms Needed for Sharing
                     Lessons Learned, GAO-02-195 (Washington, D.C.: January 2002).



                     Page 13                                      GAO-03-849T NASA Challenges and Risks
Table 1: Persistent Reasons for Spacecraft Failures




                                         At that time, we also reported on a survey we conducted of NASA’s
                                         program and project managers. The survey revealed that lessons are not
                                         routinely identified, collected, or shared by programs and project
                                         managers. The survey found that less than one-quarter of the respondents
                                         reported that they had submitted lessons to LLIS; almost one-third did not
                                         even know whether they had submitted lessons. In addition, most
                                         respondents could not identify helpful lessons for their program or
                                         project.

                                         Furthermore, many respondents indicated that they were dissatisfied with
                                         NASA’s lessons learned processes and systems. Managers also identified
                                         challenges or cultural barriers to the sharing of lessons learned, such as
                                         the lack of time to capture or submit lessons and a perception of
                                         intolerance for mistakes. They further offered suggestions for areas of


                                         Page 14                                GAO-03-849T NASA Challenges and Risks
improvement, including enhancements to LLIS and implementing
mentoring and “storytelling,” or after-action reviews, as additional
mechanisms for lessons learning.

While NASA’ s current knowledge management efforts should lead to
some improvement in the sharing of agency lessons and knowledge, they
lack ingredients that have been shown to be critical to the success of
knowledge management at leading organizations. Cultural resistance to
sharing knowledge and the lack of strong support from agency leaders
often make it difficult to implement an effective lessons-learning and
knowledge-sharing environment. We found that successful industry and
government organizations had overcome barriers by making a strong
management commitment to knowledge sharing, developing a well-
defined business plan for implementing knowledge management,
providing incentives to encourage knowledge sharing, and building
technology systems to facilitate easier access to information. The
application of these principles could increase opportunities for NASA to
perform its basic mission of exploring space more effectively.


To fulfill its vision, NASA is taking on a major transformation aimed at
becoming more integrated and results-oriented, and at reducing risks
while working more economically and efficiently. However, to
successfully implement its human capital, financial management, and
other reforms, NASA will need sustained commitment from senior leaders.
Given the high stakes involved, it is critical that NASA’s leadership provide
direction, oversight, and sustained attention to ensure that reforms stay on
track. NASA’s Administrator, who comes to the position with a strong
management background and expertise in financial management, has
made a personal commitment to change the way NASA does business and
has appointed a chief operating officer to provide sustained management
attention to strategic planning, organizational alignment, human capital
strategy, performance management, and other elements necessary for
transformation success. The challenge ahead for NASA will be to achieve
the same level of commitment from managers at NASA centers so that
NASA can effectively use existing and new authorities to manage its
people strategically and quickly implement the tools needed to strengthen
management and oversight.




Page 15                                  GAO-03-849T NASA Challenges and Risks
                     This testimony was drawn from the most recent23 in a series of GAO
Objectives, Scope,   reports first issued in 1999 as well as additional reports that summarize
and Methodology      numerous individual GAO reviews that identify important management,
                     oversight, and workforce issues facing NASA. The purpose of the series is
                     to help sustain congressional attention and an agency focus on continuing
                     to make progress in addressing these issues. The individual reviews were
                     conducted in accordance with generally accepted government auditing
                     standards.

                     Chairman Gehman, this concludes my statement. I will be happy to answer
                     any questions you or members of the board may have.

                     Contacts and Acknowledgments
                     For further information regarding this testimony, please contact Allen Li at
                     (202) 512-4841. Individuals making key contributions to this testimony
                     included Jerry Herley, Shirley Johnson, Charles Malphurs, and Karen
                     Sloan.




                     23
                      GAO-03-114.



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