NASA Procurement: Contract Management Oversight

Published by the Government Accountability Office on 1997-03-18.

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

      United States
GAO   General Accounting Office
      Washington, D.C. 20548

      National Security and
      International Affairs Division


      March 18, 1997

      The Honorable Daniel S. Goldin
      Administrator, National Aeronautics
       and Space Administration

      Subject: NASA Procurement: Contract Management Oversight

      Dear Mr. Goldin:

      We have completed our survey of the National Aeronautics and Space
      Administration’s (NASA) approach to monitoring, measuring, and validating its
      progress in improving contract management. Our work focused primarily on the
      extent to which the agency’s oversight processes ensure that contract management
      weaknesses are identified and promptly corrected. The oversight activities we
      surveyed included the procurement self-assessment process and procurement
      performance measurements. We are discontinuing further review of both of these
      oversight activities at this time because we believe more time is needed for NASA
      to implement its processes. Specifically, we note NASA’s recent commitments to
      improve the procurement self-assessment process. Further, procurement
      performance measurements could potentially be impacted by NASA’s proposed,
      agencywide financial management system, which is planned to be fully implemented
      by mid-1999.

      During the survey, we formally asked about NASA’s plans for improving
      procurement self-assessments performed by its field centers.’ In its response, NASA
      acknowledged that the procurement self-assessment process could be improved and
      that some field centers could benefit from additional direction. NASA stated that it
      would issue additional guidance on self-assessments and that its procurement
      management survey teams would review the centers’ processes for conducting self-
      assessments. If properly implemented, the planned changes described by NASA
      should help improve its field centers’ procurement self-assessments.

      ‘NASA Procurement Assessments (GAO/NSIAD-97-80R, Feb. 4, 1997).

                                  GAOLNSLAD-97-114R NASA Procurement Management
During the survey, we also reviewed four performance measurements used by
NASA to assess its contract management improvement efforts and to oversee
selected procurement activities agencywide. NASA selected these four in response
to an Office of Management and Budget request for the identification of
procurement performance measures that ultimately are to be used in implementing
the Government Performance and Results Act.’ The four measurements are (1) the
extent of competition in NASA procurement, (2) the average time required to award
NASA contracts, (3) the extent to which NASA has had contractors perform
additional work before negotiating a price adjustment, and (4) progress towards
implementing performance-based contracting agencywide. While the measurement
of performance-based contracting is relatively new, NASA has used the first three
measures for several years. Based on our previous contract management work, we
also reviewed measurements related to NASA’s efforts to close inactive contracts in
a timely manner. NASA officials told us when reviewing a draft of this letter that
they still consider these performance measures tentative in regards to implementing
the Government Performance and Results Act.

These performance measurements indicate that NASA has been making progress,
but that further opportunities for improvement exist agency-wide or at specific
centers. For example, NASA has achieved significant reductions in the value of
contract changes for which prices have not yet been negotiated, going from $6.6
billion in December 1991 to under $.5 billion in September 1996. However, its
efforts to close inactive award instruments3 in a timely manner have had mixed
results. The total value of unliquidated obligations on inactive award instruments
decreased slightly agencywide over the past 4 fiscal years from just over $700
million to just under $700 million. As of September 30, 1996, over 46 percent of all
inactive awards were overaged. Overaged inactive awards ranged from a low of 26
percent of all inactive awards at Dryden Flight Research Center to a high of 53
percent of all inactive awards at the Goddard Space Flight Center. Delays in
incurred cost audits continue to impede the closing of inactive award instruments at
the Goddard center.

2Measuring and using performance information within the scope and requirements
of this Act is described in Executive Guide: Effectivelv Imnlementinn the
Government Performance and Results Act (GAO/GGD-96-118, June 1996).
31nactive award instruments include contracts, grants, interagency agreements, and
purchase orders.
4FederaI Acquisition Regulations and NASA policy established time standards for
closing various types of award instruments. An instrument not administratively
closed within the applicable time standard is considered overaged.

 Page 2                 GAO/NSIAD-97-114R NASA Procurement Management
NASA devotes substantial resources to gathering and reporting procurement
information, Two years ago, Goddard Space Flight Center identified its procurement
data system as a “workload driver” because of the extensive resources needed to
maintain the system and to enter and ensure that data were reasonably accurate.
Goddard cited several reasons for the problems in this system, including the lack of
common internal controls across the various procurement groups at the center.

NASA believes that its planned integrated financial management system will help
address the data problems at Goddard and throughout the agency. The system is
being designed to collect and retrieve past and current financial, program, and
related performance data for analysis, decisionmaking, and performance reporting
by managers at all levels. The agency believes the system will provide agency
officials and managers with complete, reliable, consistent, and timely information.
Planned features of the proposed system include single points of data entry;
common processing of similar kinds of transactions; common data elements;
consistent internal controls, processing and reporting; and consistent user interfaces
and data presentation. NASA projects that core finance, budget, executive
information system, and procurement components of the new system will be
operating agencywide by July 1, 1999. This is nine months behind the original
projected date of October I, 1998.

As you know, we have identified, and still list, NASA contract management as one
of the Comptroller General’s high-risk initiatives. During our contract management
work at NASA over the last 6 years, we have seen NASA effectively address many
problems throughout the procurement cycle. We believe that continuous effective
oversight of procurement activities requires both relevant and reliable performance
measurements and periodic performance reviews. As we noted in our recent report
on high-risk areas throughout the government,5 a procurement activity the size of
NASA’s is likely to experience some problems. One very important procurement
management element is the ability to identify such problems early and correct them
before they become systemic. Our judgment on removing NASA contract
management from the Comptroller General’s high-risk list will be largely based on
the processes and systems NASA uses to assess and oversee its procurement
activities and their capability to consistently produce accurate and reliable
information. To that end, we will, at a later date, do a complete review of NASA’s
procurement self-assessment process and NASA’s procurement performance

We are sending copies of this letter to the Chairs and Ranking Minority Members of
congressional committees with NASA appropriation, authorization, and oversight
responsibilities. Copies will also be sent to the Director, Office of Management and

5High Risk Series: Quick Reference Guide (GAO/HR-97-2, Feb 1997).

Page 3                  GAOLNSIAD-97-114R NASA Procurement Management

Budget, and made available to others upon request. If you have any questions,
please contact me at (202) 512-4841 or Mr. Frank Degnan, Assistant Director, at
(202) 5124131.

Sincerely yours,

Thomas J. Schulz
Associate Director
Defense Acquisitions Issues

                                                                                     . ..


 Page 4                 GAO/NSIAD-97-114R     NASA Procurement    Management
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