United States GAO General Accounting Office Washington, D.C. 20548 National Security and International Affairs Division B-277667 August 13, 1997 The Honorable Daniel S. Goldin Administrator, National Aeronautics and Space Administration Subject: NASA Interest Earned on Letter of Credit F’unds Dear Mr. Goldin: As part of our ongoing work on budget issues, we assisted in resolving a disagreement between the National Aeronautics and Space Administration (NASA) and the California Institute of Technology (Caltech). Caltech, a nonprofit private university, operates the Jet Propulsion Laboratory (JFL) for NASA under a &year cost-type research and development contract with an annual value of about $1 billion.’ The contract is funded by a letter of credit, managed by the Department of Health and Human Services. The disagreement related to Caltech’s retention of interest earned on letter of credit funds after the funds were deposited in its bank account but before Caltech’s checks were paid by the bank. We discussed the disagreement with NASA Management Office, Caltech, and Defense Contract Audit Agency (DCAA) representatives and reviewed the NASAKahech contract and the regulations governing the use and disposition of funds withdrawn from letters of credit. We also arranged and attended a series of meetings between Caltech and NASA Management Office personnel to help resolve this matter. Caltech notified NASA in a July 9, 1997, letter that, in consideration of its relationship with NASA, it would remit to the Treasury $389,540.16 in interest ‘JPL is a federally funded research and development center, with about 90 percent of its work funded by NASA and 10 percent funded by other customers. GAO/NSIAD-97-241R Interest on Letter of Credit /?7 /57 B-277667 earned through June 1997.2 Caltech also stated that it would continue to remit interest earnings on a quarterly basis. Caltech’s check dated July 29, 1997, has been received. These actions satisfactorily resolve our interest in this matter. Because similar issues may arise with other letter of credit funded contracts, we are sending copies of this letter to other federal agencies involved in establishing, implementing, and reviewing federal procurement and letter of credit policies, procedures, and practices or in sponsoring large federally funded research and development centers-including the Office of Management and Budget; DC@, and the Departments of the Treasury, Health and Human Services, Defense, and Energy. Copies of this letter are also being sent to Caltech and will be made available to others upon request. We appreciate the assistance and cooperation of NASA Management Office, Cahech, and DCAA personnel during our work on this issue. If you or your staff have any questions, please contact me on (202) 512- 4341. Sincerely yours, Allen Li Associate Director Defense Acquisitions Issues (707259) 2The letter also stated that Caltech would make an additional letter of credit draw of $137556.34 to offset previous letter of credit interest payments made to NASA. Page 2 GAO/NSLAD-97-241R Interest on Letter of Credit Ordering Information The first copy of each GAO report and testimony is free. Additional copies are $2 each. Orders should be sent to the following address, accompanied by a check or money order made out to the Superintendent of Documents, when necessary. VISA and Mastercard credit cards are accepted, also. Orders for 100 or more copies to be mailed to a single address are discounted 26 percent. Orders by mail: U.S. General Accounting Office P.O. Box 6016 Gaithersburg, MD 20884-6015 or visit: Room 1100 700 4th St. NW (corner of 4th and G Sts. NW) U.S. General Accounting Office Washington, DC Orders may also be placed by caBing (202) 612-6000 or by using fax number (301) 2584066, or TDD (301) 413-0006. Each day, GAO issues a list of newly available reports and testimony. To receive facsimile copies of the daily list or any list fFom the past 30 days, please call (202) 512-6000 using a touchtone phone. A recorded menu will provide information on how to obtain these lists. For information on how to access GAO reports on the INTERNET, send an e-mail message with “info” in the body to: firstname.lastname@example.org or visit GAO’s World Wide Web Home Page at: htQMwww.gao.gov United States General Accounting Office Bulk Rate Washington, D.C. 20548-0001 Postage & Fees Paid GAO Official Business I Permit No. GlOO Penalty for Private Use $300 Address Correction Requested
NASA: Interest Earned on Letter of Credit Funds
Published by the Government Accountability Office on 1997-08-13.
Below is a raw (and likely hideous) rendition of the original report. (PDF)