NASA OIG Report: NASA's Most Serious Management and Performance Challenges


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National Aeronautics and Space Administration
Office of Inspector General
Washington, DC 20546-0001

November 10, 2008

TO: Administrator FROM: Inspector General

SUBJECT: NASA's Most Serious Management and Performance Challenges

As required by the Reports Consolidation Act of 2000, this memorandum provides our views of the most serious management and performance challenges facing NASA. We continue to use this forum as a means to draw attention to areas within the Agency's key programs and operations that need to achieve greater economy, efficiency, effectiveness, and accountability. In determining whether to report an issue as a challenge, we consider the significance of the programmatic, institutional, and external concerns in relationship to the Agency's mission; susceptibility to fraud, waste, and abuse; whether problems are systemic; and whether there are safety issues that could result in injury or loss of life.

Through various initiatives and by implementing recommendations made by the Office of Inspector General (OIG) and other evaluative bodies, such as the Government Accountability Office (GAO), NASA is working to improve Agency programs and operations and address the following challenges:

  • Transitioning from the Space Shuttle to the Next Generation of Space Vehicles. Effectively planning, implementing, and monitoring transition activities while maintaining the capabilities required to fly the Space Shuttle safely and effectively.
  • Managing Risk to People, Equipment, and Mission. Ensuring that effective risk management, safety, and mission assurance controls are in place to provide robust and reliable operations in the context of very challenging mission schedules and budget constraints.
  • Financial Management. Ensuring that the Agency implements the appropriate processes, controls, and resources to improve NASA's ability to efficiently provide reliable information to management; address continuing problems, such as NASA's internal control over property, plant, and equipment (PP&E); and comply with the Chief Financial Officers Act and other Federal requirements.
  • Acquisition and Contracting Processes. Ensuring that adequate requirements and cost estimates are developed, program costs are adequately managed, and the most advantageous acquisition and procurement strategies and safeguards are in place to promote competition and ensure programs and projects are within schedule and performance parameters.
  • Information Technology (IT) Security. Continuing efforts to address management, operational, and technical weaknesses and to implement effective controls to protect the information and information systems vital to the Agency's mission.

NASA's greatest challenge remains the transition from Space Shuttle operations to Constellation Program implementation. Although the 2004 "President's Vision for U.S. Space Exploration" tasked NASA with retiring the Shuttle while simultaneously developing and deploying the capability to sustain human and robotic exploration to the Moon and beyond, restrictive budgets, technological hurdles, and geopolitical considerations have complicated programmatic decisions along the way. Thorough and detailed planning is required to coordinate the multitudes of interrelated schedules needed to smoothly transition human capital and critical skills, real and personal property, and related capabilities to support projects within the Constellation Program without compromising the safety and effectiveness of Shuttle operations.

Schedule pressures, from the Shuttle being essential to complete the International Space Station (ISS) before the planned 2010 retirement to convening Constellation Program life-cycle reviews on the defined timeframes, continuously reshape NASA operations. NASA needs to guard against maintaining a schedule at the expense of accepting undue risk. NASA must maintain a robust process for voicing safety and engineering concerns while balancing schedule pressures with the demands of mission execution.

Human capital assets are the backbone on which NASA is reliant for the successful accomplishment of its missions. Balancing the simultaneous requirements of safely flying and then retiring the Shuttle, hiring a workforce capable of managing the Constellation Program from development to implementation, and maintaining an experience base throughout the planned 5-year gap in U.S. space flight capability with the necessary skills to safely operate Constellation Program assets is a challenge that continues to weigh heavily on Agency officials at all levels.

We note that some members of Congress are interested in extending Shuttle flights beyond those currently scheduled. The NASA Authorization Act of 2008 includes language that directs NASA not to take any action that would prevent the Shuttle from flying beyond 2010. Any action taken to extend the Shuttle would be inconsistent with the plan NASA has executed for almost 5 years, which was dependent on Shuttle retirement in 2010. In 2003, the Columbia Accident Investigation Board (CAIB) concluded that "recertification . . . is essential if the Shuttle is to continue operating for another 10 to 20 years." The CAIB's recommendation was that, "[p]rior to operating the Shuttle beyond 2010, develop and conduct a vehicle recertification at the material, component, subsystem, and system levels." While many Shuttle improvements have been made over the past 5 years, the in-depth and costly processes associated with recertification have not been undertaken because the plan has been to end the program by 2010. This is but one example of many complicated and interrelated problems associated with continuing to operate these 1980s vehicles, designed and built with 1970s technology, beyond 2010. The Agency is currently conducting a Shuttle extension study to identify what additional work will be required if Shuttle operations are extended.

The scope of the Constellation Program's development challenges extend to technical and research challenges. Thrust oscillation; the establishment, definition, and refinement of requirements; and research into the effects of long-duration space flight on humans are among the technical issues currently challenging the successful development of Constellation Program assets. NASA must be vigilant in its process of establishing and validating project requirements. Program risks increase when contractual obligations are established prior to the completion of research that would help define requirements. A disciplined approach using established life-cycle reviews should provide decision makers the knowledge needed to make informed decisions.

NASA's financial management remains on the list of challenges because of continued significant weaknesses in NASA's financial management processes and systems, including issues related to internal control over property accounting. These deficiencies have resulted in a disclaimer of opinion on NASA's financial statements since FY 2003. Many of the deficiencies disclosed by the independent public accounting firms' audits resulted from a lack of effective internal control procedures and from data integrity issues. Although NASA has made progress in addressing these deficiencies, the FY 2008 audit of NASA's financial statements disclosed that similar deficiencies still exist.

Two of the most significant deficiencies involve the financial statement preparation process and NASA's internal control over PP&E. NASA's financial statement preparation process contains deficiencies in Agency-wide internal control, which impaired NASA's ability to report accurate financial information on a timely basis. NASA's ongoing PP&E weakness has been improved through the implementation of new policies and procedures in FY 2008. However, certain legacy accounting issues related to the ISS and the Shuttle continue to impair NASA's ability to accurately report financial information related to PP&E. NASA's challenge will be to ensure its newly implemented processes and controls are operating effectively to accurately record capitalized property in a timely manner.

NASA also continues to face acquisition and contracting challenges. Over the past several years, the Agency has been addressing project management and contracting process weaknesses and has made progress in implementing a more disciplined approach. However, NASA continues to encounter cost overruns in major programs and projects that in many instances are due to ineffective cost-estimating processes used to provide the information necessary to establish priorities and quantify risks. Although NASA has made fundamental improvements to its acquisition approach, weaknesses in the execution of that approach continue to be reflected in the application and timing of project milestone events and NASA's inability to fully define project requirements prior to entering into contractual arrangements.

The Agency has also made commendable progress in the establishment of an Acquisition Integrity Program. However, we continue to report on the existence of management weaknesses in the prevention of conflict of interest violations, with some violations resulting in criminal convictions. We believe that the Agency's commitment to ethics is essential to NASA's ability to effectively and efficiently execute the Agency's mission. Through the establishment of the Acquisition Integrity Program, NASA has taken positive steps to address weaknesses in acquisition and contracting, and we believe that NASA's continued focus in these areas and on ethics compliance and awareness will yield even more improvements.

During FY 2008, NASA's Office of the Chief Information Officer (OCIO) reported making progress against the corrective action plan for IT security and worked diligently to address known weaknesses and implement effective management, operational, and technical controls intended to protect the information and information systems vital to the Agency's mission. In addition, the OCIO reported substantial progress with Federal Information Security Management Act (FISMA) requirements, to include 97 percent of non-national security systems being reported as certified and accredited. We independently assessed the Agency's actions taken to improve IT security and found that although the Agency has made significant progress, much work remains to ensure adequate management focus and completion of planned security actions. Based on the results of our review, we believe that the OCIO should focus its efforts in the coming year on issuing clearer guidance, better oversight of external systems, and ensuring end-to-end visibility and monitoring of NASA networks and systems. Therefore, to ensure continued focus on IT security deficiencies as well as ensure that sufficient management attention and adequate resources are provided, we continue to report IT security as a management and performance challenge.

In FY 2009, the OIG will continue to conduct work that focuses on NASA's efforts to meet these challenges as part of our overall mission to promote the economy and efficiency of the Agency and to root out fraud, waste, abuse, and mismanagement. If you have any questions, or need additional information, please call me at 202-358-1220.

signed

Robert W. Cobb Enclosure: NASA's Most Serious Management and Performance Challenges

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