NASA Risks Unauthorized Release of Export-Controlled Space Shuttle Property. We found that NASA had not fully integrated its export control and property disposition processes to reduce the risk that public sales of Space Shuttle property could result in the prohibited release of export-controlled items and technology. This occurred because the Agency did not fully recognize how the domestic sale of Space Shuttle property could result in an export. Moreover, NASA's policies do not include the internal controls necessary to fully protect export-controlled property from unauthorized release.
For example, NASA's primary property disposition policy does not require property disposal personnel to ensure that:
* property marked for sale to the public has undergone an export control review;
* individuals seeking to purchase export-controlled property are not foreign persons; or
* potential buyers have not been denied export privileges by the Department of State or the Department of Commerce.
The unprecedented amount of Space Shuttle property expected to flow through NASA Centers' property disposal systems in the coming years requires a heightened awareness of the risk of inappropriately releasing protected technologies. Although we did not identify any examples of unauthorized release of export-controlled Space Shuttle property, our related December 2010 report examining Agency procedures to dispose of information technology equipment found that NASA had been preparing to sell a laptop that contained information subject to ITAR restrictions. In addition, we believe opportunities exist for NASA to strengthen the relationship between the Agency's property disposition and export control processes, which could reduce the risk of unauthorized individuals gaining access to export-controlled Space Shuttle property. As a result of our audit, NASA has already begun working with GSA to improve controls over public sales of Space Shuttle property, which should help prevent unauthorized releases.
NASA Forfeited Proceeds from Sales of Space Shuttle Property. In FYs 2008 and 2009, NASA collected over $185,000 in proceeds from the sale of Space Shuttle Program property. However, due to ineffective management by the Office of the Chief Financial Officer and the Exploration Systems Mission Directorate's Resources Management Office, NASA had to forfeit the money to the U.S. Treasury rather than use it for NASA programs. Although the Office of the Chief Financial Officer issued two new Financial Management Operating Procedures to ensure that the proceeds from Space Shuttle property sales would be used to purchase replacement property by the Exploration Systems Mission Directorate, NASA did not obligate the funds within the necessary timeframe to avoid forfeiture, nor did Agency officials seek a waiver to extend this timeframe. In NASA's current budget environment, the Agency can ill afford to forgo funds available for its use. NASA received $273,095 from Space Shuttle property sold in FY 2010, and proceeds from such sales will only increase in the coming years. The Agency must improve its management of these proceeds or risk forfeiting them as well. Other Matters of Interest. During the audit, we noted the improper sale or exchange of $28,802 of mostly non-Space Shuttle related property. The Federal Management Regulation (FMR) lists several categories of property, such as clothing and firefighting equipment, that may not be sold or exchanged unless the cognizant agency requests and receives a waiver from GSA. The FMR further states that under no circumstances will GSA grant waivers for the sale or exchange of weapons. However, we identified sales and exchanges of prohibited property without waivers at Kennedy, Johnson, and Stennis
Space Centers and an exchange of weapons at the White Sands Test Facility. When we informed Agency officials, they initiated procedures to prevent prohibited items from being sold through GSA without the required waivers. As a result, we are not making any formal recommendations relating to this issue. However, we believe that NASA should monitor the sale and exchange of prohibited items and follow up on the corrective actions taken to ensure these types of transactions do not occur in the future.
We recommended that the Assistant Administrator for Strategic Infrastructure coordinate with the Associate Administrator for International and Interagency Relations and revise NPR 4300.1A to explain how property disposition activities, including NASA's domestic property sales coordinated through GSA, can result in a violation of export control laws. In addition, the revision should require that responsible property disposal and export control personnel coordinate to ensure that export determinations are made, buyer citizenship is verified, and buyer identities are compared with lists of individuals who have been denied export privileges by the Department of State or the Department of Commerce.
Further, the Associate Administrator for International and Interagency Relations should revise NPR 2190.1 to explain how NASA's domestic sale of property may result in exports and require a review of Centers' export-controlled property disposition activities during annual Export Control Program audits. We also recommended that the Center Directors at Kennedy and Johnson clarify Center-specific property disposition and export control policies to reflect the recommended revisions to NPR 4300.1A and NPR 2190.1. Finally, we recommended that the Office of the Chief Financial Officer determine how much of the FY 2010 sales proceeds remain unobligated and proactively coordinate with the Exploration Systems Mission Directorate's Resources Management Office to make timely use of the funds.
The Assistant Administrator for Strategic Infrastructure concurred with our recommendation to work with the Office of International and Interagency Relations to revise NPR 4300.1A in a manner that will help integrate NASA's disposition and export control processes. Management's proposed actions are responsive and meet the intent of the recommendation.
Although management concurred with the recommendation to update NPR 2190.1, the comments also stated that the existing procedure is clear and recognizes that exports can occur within the United States. Management also concurred with our recommendation to update the guidance for the annual Export Control Program audit; however, the response implied that NASA's January 12, 2011, update to the guidance met the intent of the recommendation. Our recommendation is intended to more fully integrate NASA's disposition and export control processes and we believe that Agency auditors should take additional steps to track export-controlled items further into the disposition process.
Therefore, we find management's response to be inadequate and the recommendation remains unresolved.
Management concurred with the recommendations to clarify Center-level disposition and export guidance at Kennedy and Johnson, stating that the corrective action will be completed within 90 days of the Agency guidance being updated. Management's proposed actions are responsive to the intent of the recommendations.
The Office of the Chief Financial Officer concurred with the recommendation related to the forfeiture of exchange and sale proceeds and said it plans to have corrective action completed by September 30, 2011. Management's proposed actions are responsive to the intent of the recommendation. The Office of the Chief Financial Officer also requested that we revise the report by attributing the forfeiture of exchange/sale proceeds to "untimely and less-than-effective communication" instead of a "lack of knowledge of procedures." However, we disagree that the proceeds were forfeited solely due to ineffective communication and, accordingly, declined to make the requested revision.