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Title: NASA Issues
Subtitle:
Report No.: GAO/OCG-93-27TR Date: December 1992
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Author: United States General Accounting Office
Office of the Comptroller General
Addressee: Transition Series
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CONTENTS
NASA Issues
Bringing Plans in Line With Likely Budgets
- Need for Improvement in Strategic Plan
- Improvement Efforts Under Way
Managing Systems Development More Efficiently
- Space Station's Continuing Challenge
- Reduced Need for New Rocket Motor
Improving Operations and Oversight
- Shuttle Targeted for Reduction
- Need for Improvement in Contract-Management Activities
Preserving U.S. Aeronautics Leadership
- Research Support Limitations
Related GAO Products
- Plans and Budgets
- Systems Development
- Operations and Oversight
- Aeronautics Leadership
Transition Series
- Economics
- Management
- Program Areas
Office of the Comptroller General
Washington, DC 20548
December 1992
The Speaker of the House of Representatives
The Majority Leader of the Senate
In response to your request, this transition series report discusses major
policy, management, and program issues facing the Congress and the new
administration at the National Aeronautics and Space Administration (NASA).
This report recognizes the changes that have occurred since our first NASA
transition report 4 years ago and summarizes the current challenges facing the
agency: (1) bringing plans in line with likely budgets, (2) managing systems
development more efficiently, (3) improving operations and oversight, and
(4) preserving U.S. aeronautics leadership.
As part of our high-risk series on program areas vulnerable to waste, fraud,
abuse, and mismanagement, we are issuing a separate report that also addresses
some of NASA's current challenges, _NASA Contract Management_ (GAO/HR-93-11,
Dec. 1992).
The GAO products upon which this transition series report is based are listed
at the end of the report.
We are also sending copies of this report to the President-elect, the
Republican leadership of the Congress, and the Administrator-designate of
NASA.
NASA ISSUES
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In our November 1988 transition report, we noted that NASA needed to (1)
launch planetary missions on time,
(2) institutionalize a life-cycle cost management approach for the Space
Station, and (3) develop a strategic plan and report full project costs to the
Congress. Since that time, most of these issues have been at least partly
resolved.
When we issued that report, NASA's program officials had established the
protection of launch opportunities for four major planetary missions as their
highest priority. The agency met the mission schedules that were in place at
that time. NASA's only remaining planetary mission currently under
development--the Cassini mission to Saturn--is scheduled for launch in October
1997.
In our report, we discussed the long-term cost savings potential of a
life-cycle cost management approach for the Space Station program. However,
the comprehensive use of such an approach, which can entail higher near-term
development costs, has been hampered by budget levels lower than those
required to support the program's planned content and pace. As a practical
matter, with budgets below planned levels likely to continue for the
foreseeable future, the life-cycle approach cannot be fully implemented until
upgraded and replacement systems are needed over the Space Station's operating
life.
NASA still does not report complete cost estimates on all its significant
projects, but it has improved its reporting of cost estimates on selected
major development efforts. Under an agreement with its congressional
authorization and appropriations subcommittees, NASA currently reports more
comprehensive cost estimates on approved development projects when
contractors' costs to research and develop them are estimated at $200 million
or more.
In the late 1980s, NASA intended to develop a strategic plan. However, no plan
was issued until NASA was directed by the Congress to prepare one in
association with its fiscal year 1993 budget request. That plan was deficient
in a number of significant ways. Specific problems with the plan are discussed
below in relation to a mismatch of more than $15 billion between the agency's
current 5-year plan and its likely budgets. In addition, this report discusses
other major issues facing NASA's management. All of these issues are known to
NASA's management and, in varying degrees, are currently being addressed by
the agency.
BRINGING PLANS IN LINE WITH LIKELY BUDGETS
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NASA's strategic and program plans for future years do not adequately
recognize the likely level of available resources. From the mid-1980s until
last year, NASA's budget increased from less than $8 billion to over $14
billion. However, the agency's fiscal year 1993 budget is essentially
unchanged from that of 1992, and NASA has been told to expect only modest
budget growth in the near future. But NASA's plans call for future budgets
that are well above likely funding levels.
The overall situation is exacerbated by the increasing share of NASA's total
budget that is scheduled for the agency's largest programs. In its fiscal year
1993 budget submission, NASA called for over $15 billion more for fiscal years
1993 through 1997 than the President's budget. NASA's 11 largest programs
would absorb over three-quarters of the funding called for in the President's
budget. Programs with too much content and too fast a pace are a prescription
for an annual cycle of cutbacks, restructuring, stretching of projects over
more time than was planned, and potential terminations, as costs are
postponed.
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NEED FOR IMPROVEMENT IN STRATEGIC PLAN
In late 1988, we pointed out that NASA needed to develop a strategic plan that
clearly stated the agency's vision for the future and the steps needed to
realize that future in an affordable manner. An effective strategic plan could
provide a rational basis for helping NASA bring the content and pace of its
programs more in line with likely future budgets.
The Senate Committee on Appropriations directed NASA to complete an agencywide
strategic plan by the time the fiscal year 1993 budget was submitted to the
Congress. The Committee specified certain criteria for the plan, including
setting priorities, anticipating more modest future budget growth, and coming
to grips with accurate cost estimates. In January 1992, NASA published a
strategic plan called _Vision 21_. However, the plan did not indicate mission
priorities, strike a balance between strategic planning and budgeting, or
discuss plans for improving cost estimates.
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IMPROVEMENT EFFORTS UNDER WAY
The NASA Administrator has stated that the development of a new strategic plan
that matches specific program goals with realistic budgets is one of his
highest priorities. Also, NASA officials told us they will not pursue their
major programs as currently planned at the expense of other essential
activities if budget constraints require adjustments to programs. They are
working to reshape their programs in recognition of more constrained future
funding, and an agencywide review is under way with a goal of reducing the
future cost of NASA's major programs. However, the effects of NASA's efforts
to bring the content and pace of its programs more in line with likely budgets
will not be known until the agency makes its fiscal year 1994 budget request.
MANAGING SYSTEMS DEVELOPMENT MORE EFFICIENTLY
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In managing its research and development efforts, NASA must establish
realistic cost, schedule, and technical performance goals and then work to
identify and mitigate problems that can significantly increase costs, disrupt
schedules, and impair performance. Currently, however, NASA projects often
cost more than estimated, frequently do not meet schedules, and sometimes
perform at lower levels than originally forecast. Such cost, schedule, and
performance problems arise for a myriad of reasons, some of which NASA can
overcome. NASA must be willing to set priorities, identify and pursue
cost-effective alternatives, and terminate low-priority projects. Two efforts
that currently deserve special attention from NASA's management are the Space
Station _Freedom_ and Advanced Solid Rocket Motor (ASRM) programs.
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SPACE STATION'S CONTINUING CHALLENGE
NASA faces a major challenge in keeping development of the Space Station on
schedule and within its estimated cost without adversely affecting the
facility's remaining scientific purpose--microgravity and life science
research. This challenge will be especially difficult because of the
expectation of only modest growth in NASA's budget and the program's limited
financial reserves, especially for the next few years.
NASA estimates that Space Station _Freedom_ will cost $30 billion to develop,
construct, and operate through 1999, when permanent occupancy of the facility
is scheduled to begin. However, we have reported that this estimate should be
at least $40 billion because of additional equipment, assembly, and operations
costs related to the facility, including a crew rescue vehicle and a
centrifuge for life science experiments. The total estimated program cost
increases to about $118 billion because another
$78 billion will be needed to keep the facility fully operational between 2000
and 2027.
Efforts are under way to examine how to cut the program's cost. Some of these
efforts may lead to increasing reliance on other countries' funding,
technology, or space hardware for the station. One such initiative is an
assessment of the potential for adapting a Russian spacecraft for use as a
crew rescue vehicle in lieu of NASA's developing and constructing the vehicle
at a cost well in excess of $1 billion.
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REDUCED NEED FOR NEW ROCKET MOTOR
The ASRM was intended to enhance the space shuttle's safety and reliability
and to provide an additional 12,000 pounds of lift. So far, the ASRM's
development cost has almost doubled--to a total of more than $3 billion. Also,
the ASRM's first flight has slipped by over 2-1/2 years since the program was
first approved, and another delay of about 2 years is expected. The cost of
this additional delay is not yet known.
NASA advisory groups have questioned the development of the ASRM because the
motor currently in use has proven safe and reliable since being redesigned
after the _Challenger_ accident. In addition, the only two shuttle payloads
requiring the added lift the ASRM would provide were the Advanced X-ray
Astrophysics Facility and the Space Station's laboratory modules. The X-ray
facility will now be launched in smaller payloads. Moreover, as currently
scheduled, the ASRM will not be available in time to launch the U.S.
laboratory module for the Space Station, although it may be available for the
Japanese and European laboratory modules. Ultimately, the ASRM may not be
needed at all to help launch Space Station _Freedom_. NASA is currently
evaluating alternatives to the space shuttle for launching the station.
IMPROVING OPERATIONS AND OVERSIGHT
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NASA can improve its efficiency and effectiveness by changing the way it
manages its major operational system--the space shuttle--and the way it
oversees its contractors. By strengthening its guidance and oversight, NASA
could improve its operating efficiency and reduce the risk of inconsistent and
substandard performance by its field centers and contractors. Contractor
oversight could also be enhanced by improvements in accounting for and
reporting contractors' costs and government-owned property.
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SHUTTLE TARGETED FOR REDUCTION
The space shuttle is the only U.S. vehicle for carrying humans into space, and
it will have to continue operating into the 21st century. To keep it flying,
NASA must upgrade components to prevent obsolescence and improve some
subsystems to maintain safety margins. The program to operate and maintain the
shuttle is NASA's most expensive one. It is, therefore, the most likely
program to yield significant savings from the use of more efficient operating
procedures. The shuttle currently consumes well over a quarter of NASA's
budget, and the agency is trying to significantly reduce the system's future
operating costs. To do so may require that many flight processing procedures
and related documentation requirements be streamlined or eliminated. Special
care must be taken to see that this streamlining does not compromise the
safety of ground personnel or crews.
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NEED FOR IMPROVEMENT IN CONTRACT-MANAGEMENT ACTIVITIES
NASA spends almost 90 percent of its funds each year on contracts, and since
the late 1980s, the agency has acknowledged in its Federal Managers' Financial
Integrity Act reports that its contract management is inadequate. Without
effective management of its contracts, NASA cannot reasonably ensure that its
contract funding is properly used and accounted for. In some cases, inadequate
contractor oversight has contributed to cost increases, schedule delays, and
performance problems with space equipment.
NASA's difficulties in contract management stem mostly from three major
problems. The first is the previously discussed mismatch between plans and
budgets. With such a high proportion of its budget linked to contracts, NASA
is forced to adjust the planned content and pace of work under contract when
optimistic expectations are met with funding levels substantially lower than
planned.
The other two problems involve instances of noncompliance by NASA's field
centers with contract management requirements and the use of ineffective
procedures and systems in overseeing contractors. The latter problem includes
inadequacies in NASA's accounting, reporting, and property management systems.
For example, contractors' costs and reports on government-owned property are
sometimes not received, are filed late, or contain errors and insufficient
detail. In addition, the results of property management system surveys that
are intended to provide NASA with reasonable assurance that its contractors'
property reports are reliable are not always reported to NASA. NASA also has a
long-standing and well-recognized need to develop an adequate agencywide
accounting system to help improve its oversight of contractors by providing
more timely and accurate information. However, NASA's efforts have been slow,
and the agency's planning for the new system has been inadequate.
NASA now has an opportunity to correct its financial management weaknesses. A
Chief Financial Officer providing strong and sustained leadership could
greatly improve the agency's financial management systems and operations by
eliminating existing system weaknesses and expediting the development and
implementation of the new system.
NASA has taken, or plans to take, steps to correct most of the contract
management and contractor oversight problems discussed in our reports in
recent years. NASA officials have also initiated other corrective actions in
contract management and related areas. NASA's problems have been many years in
the making, and they will not be corrected quickly or easily. NASA's
management faces a formidable challenge that will require vision,
perseverance, and strong leadership.
PRESERVING U.S. AERONAUTICS LEADERSHIP
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Foreign companies have made significant gains in the global market for
aeronautics products at the expense of U.S. manufacturers. According to the
National Research Council, foreign companies now dominate the general
aviation/commuter market, seriously threaten the subsonic jet transport
market, and are positioning themselves for a leading role in the supersonic
transport market. The Council also noted that foreign governments, in concert
with their industries, have increased their investments in aeronautics
research and development, especially for the subsonic jet transport market. A
major airline manufacturer values this market at between $1.6 trillion and
$1.8 trillion through 2030.
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RESEARCH SUPPORT LIMITATIONS
NASA is responsible for helping the U.S. aeronautics industry maintain its
leadership position. However, NASA's aeronautics research funding has been
limited relative to the agency's overall budget. An analysis of NASA's budget
over the last 20 years illustrates that the agency has placed greater emphasis
on space programs than it has on aeronautics programs. In fiscal year 1992,
NASA budgeted about $1 billion--about
7 percent of its total budget--for its aeronautics program.
Moreover, within its limited aeronautics budget, NASA has emphasized
fundamental research rather than systems technology (demonstration and
validation) efforts. While useful in supporting long-term competitiveness,
fundamental research is less likely to affect near-term competitiveness. Under
current policies, NASA has limited its support for the systems technology
efforts needed to reduce the aeronautics industry's economic and technical
risks in applying new technology.
NASA has devoted only a small part of its research activities to the area with
the greatest near-term sales potential--large, subsonic jet transports. In
addition, NASA has not adequately supported the U.S. industry's aircraft wind
tunnel test requirements.
NASA recently reorganized to achieve a better balance of its aeronautics
research and technology programs in sub-, super-, and hypersonics. However,
given existing policies, it will be difficult for NASA to put more emphasis on
systems technology work.
_Financial Management: NASA's Financial Reports Are Based on Unreliable Data_
(GAO/AFMD-93-3, Oct. 29, 1992).
_NASA Procurement: Opportunities to Improve Contract Management_
(GAO/T-NSIAD-92-33,
May 7, 1992).
_NASA Procurement: Improving the Management of Delegated Contract Functions_
(GAO/NSIAD-92-75, Mar. 27, 1992).
_NASA Procurement: Approach to Sharing Risk Under Certain Research and
Development Contracts Is Starting to Change_ (GAO/T-NSIAD-92-12, Mar. 18,
1992).
_NASA Procurement: Agencywide Action Needed to Improve Management of Contract
Modifications_ (GAO/NSIAD-92-87, Mar. 2, 1992).
_Space Shuttle: NASA Faces Challenges in Its Attempt to Achieve Planned Flight
Rates_ (GAO/NSIAD-92-32, Dec. 6, 1991).
_NASA Procurement: Management Oversight of Contract Cost and Time Changes
Could Be Enhanced_ (GAO/NSIAD-91-259, Sept. 30, 1991).
_Space Project Testing: Uniform Policies and Added Controls Would Strengthen
Testing Activities_ (GAO/NSIAD-91-248, Sept. 16, 1991).
_Financial Management: Actions Needed to Ensure Effective Implementation of
NASA's Accounting System_ (GAO/AFMD-91-74, Aug. 21, 1991).
_Management Issues at the National Aeronautics and Space Administration_
(GAO/T-NSIAD-91-48, Aug. 1, 1991).
_Space Shuttle: External Tank Procurement Does Not Comply With Competition in
Contracting Act_ (GAO/NSIAD-89-62, Dec. 16, 1988).
