NASA’s Office of the Inspector General has released a report saying that ZERO-G Corporation has “provided inconsistent quality levels of microgravity flight services since it began providing NASA with reduced gravity flights in August 2008.”Â The space agency’s watchdog also criticized the terms of ZERO G’s contract, NASA’s lack of a backup plan, and poor financial controls that resulted in a smallÂ overpayment.
The OIG found thatÂ company’s parabolic flight rate successÂ during 9 flight weeks studied has ranged from 38 percent to 84 percent -Â well below the 90+ percent success rate ofÂ the NASAÂ C-9 aircraft it replaced. Despite the inconsistency, ZERO G has received “94 percent of the value of the issued task orders” under a contractÂ whose terms doÂ “not motivate consistent, high-quality performance on the part of the contractor.” Zero G receives a 100 percent of their payment even if it performs at 60 percent compliance.
The report also indicates that the number of flights under the agreement, which runs through 2012, has been lower than originally expected due to funding issues and concerns over the quality of Zero G’s services.
The contract provides that NASA will schedule a minimum of 1 but not more than 20 flight weeks (approximately 8.4 to 168 hours) each contract year and sets flight-hour rates ranging from $27,800 to $31,289 for flights from Johnson. From contract inception in January 2008 through March 2010, Zero G flew only about 70 flight hours during 9 flight weeks. According to NASA officials, the low number of microgravity flight hours was due in part to decreasing budgets, concern for the quality of Zero Gâ€™s flight services, and the full cost of the Zero G flight service being borne by the users of the services, such as NASA researchers and the Office of Education….
Zero G management stated that it was disappointed in the reduction in the number of flight weeks, but said they were committed to providing NASA with future flights. Specifically, Zero G pointed out that it had made significant investments in configuring its plane to NASA specifications and training pilots to conduct reduced gravity flights.
OIG also concluded that NASA does not have an adequate contingency plan in the event that ZERO G cannot or will not provide services to the space agency. Zero G was the lone bidder for the NASA contract, and it remains the only FAA licensed provider of microgravity flights in the United States.Â If ZERO G were to stop providing services, NASA plans to pull the C-9 aircraft out of storage. The OIG says that NASA has not fully evaluated the potential delays and risks associated with such a change.
Excerpts from the report are below:
Zero G has providedÂ inconsistent quality levels of microgravity flight services since it began providing NASA with reduced gravity flights in August 2008. We concluded that NASA should revise the contractâ€™s performance-based payment structure to motivate Zero G to provide more consistent, high-quality microgravity flights. We also found that NASA had not implemented a risk management plan that adequately identified and mitigated risks associated with the possibility of Zero G not providing microgravity flight services in the future. In addition, we found that NASAâ€™s payments to Zero G of approximately $2 million over a two-year period were in accordance with the contract terms, with the exception of a $23,000 overpayment that was due to math errors.
The Quality of Zero Gâ€™s Microgravity Flight Service Was Inconsistent. We determined that Zero Gâ€™s performance in providing microgravity flight services over the life of the contract has been inconsistent. During some of the period of performance, Zero Gâ€™s performance was satisfactory. However, their performance during other periods was not. Specifically, the percentage of parabolas meeting contract specifications during the 9 flight weeks from August 2008 through August 2009 that Zero G provided microgravity flight services varied from a low of approximately 38 percent (April 2009) to a high of 84 percent (August 2009).
NASA researchers stated that they have greater opportunity to successfully conduct their experiments when Zero G flies a high rate of parabolas that meet contract specifications. In that regard, Zero G improved its rate of successful parabolas flown since contract inception. For example, during the first flight week in August 2008, Zero G flew just 54 percent successful parabolas. Following some aircraft modifications and parabolic flight training for its pilots, Zero G flew 84 percent successful parabolas during the flight week in August 2009 and 83 percent of the researchers we surveyed rated Zero Gâ€™s flight services for that week as good or excellent.
The Johnson FCOD and program managers stated that the historic parabola success rate with the C-9 had been over 90 percent. NASA program managers told us that Zero Gâ€™s performance has been an issue of concern for researchers, who now had to fund the full cost of the flight services. The program managers said they have a greater likelihood of successfully completing experiments when parabolas consistently meet contract specifications. A Zero G program manager conceded that the company has experienced performance challenges, but stated that the company had dedicated its own resources to improve the quality of microgravity flight services by installing better instrumentation on the aircraft and providing pilot training to increase proficiency.
We concluded that the contract NASA entered into with Zero G does not motivate consistent, high-quality performance on the part of the contractor. Specifically, the indefinite-delivery, indefinite-quantity contract provides for performance-based payments that allow Zero G to receive 100 percent of the negotiated hourly rate if the contractor flies only 60 percent successful parabolas, and 80 percent to 90 percent of the hourly rate when Zero G flies just 30 percent to 59 percent successful parabolas. This payment structure was originally designed to encourage bidding on the contract and motivate contractors to meet performance levels. However, Zero G was the sole bidder on the contract, and the structure of the agreement resulted in Zero G earning approximately 94 percent of the value of the issued task orders even though Zero G exceeded an 80 percent successful parabola rate during only 2 of its 9 flight weeks from August 2008 through August 2009. Therefore, to provide incentive for Zero G to consistently deliver a higher parabola success rate, we recommend that NASA revise the contractâ€™s performance-based payment structure so that payments more accurately reflect the contractorâ€™s performance.
NASA Has No Risk Management Plan for Loss of Zero G Services. The Flight Crew Operations Directorate (FCOD) at Johnson had not developed a written, approved plan to mitigate the risk if, for some reason, Zero G stopped providing microgravity flight services to NASA. NASA Procedural Requirements (NPR) 8000.4A, â€œAgency Risk Management Procedural Requirements,â€ December 16, 2008, requires that the manager of each NASA organizational unit designate a risk manager and develop a risk management plan to address safety, technical, cost, and schedule risks. The Johnson FCOD stated that a risk management plan was not developed for the possible loss of microgravity flight capability because the Space Operations Mission Directorate (SOMD) intends to use the C-9 aircraft, which is in flyable storage, if Zero G withdraws from the contract or cannot perform. However, NASA management had not adequately considered the cost of maintaining the C-9 in an operational status nor analyzed the potential that using the C-9 may not meet its needs for microgravity flight services and had not developed a formal plan to mitigate that risk.
NASAâ€™s Reduced Gravity Program, which provides the simulated weightlessness of a zero gravity space flight environment for the development and verification of space hardware and experiments, crew training, and basic research could be adversely affected by schedule delays and cost increases if Zero G is unable or unwilling to provide flight services. Although Zero G stated that it is committed to fulfilling its NASA contract, which has options through 2012, Zero G is currently the sole domestic commercial provider of microgravity flight services. Therefore, NASA faces an unmitigated risk of interruption in microgravity flight services if Zero G is unable or unwilling to provide flight services in the future.
We interviewed Zero G management personnel and asked whether the relatively small number of microgravity flights flown since contract award in 2008 had affected their interest in continuing to provide parabolic flight services to NASA. Zero G management stated that it was disappointed in the reduction in the number of flight weeks, but said they were committed to providing NASA with future flights. Specifically, Zero G pointed out that it had made significant investments in configuring its plane to NASA specifications and training pilots to conduct reduced gravity flights. However, because Zero G is currently the only commercial provider of microgravity flight services in the United States, we see this as a significant risk that should be assessed by FCOD and, in keeping with NASA risk management policy, specific alternatives developed.
Recommendation 1. The Johnson Director of Procurement should negotiate a revised performance-based payment structure to provide greater incentives for the contractor to deliver consistent, high-quality microgravity flight service.
Managementâ€™s Response. The Associate Administrator for Space Operations concurred with the intent of the recommendation. He stated that NASA intends to redefine the payment structure during the development of the follow-on microgravity contract procurement strategy to ensure customers pay only for consistent, high-quality parabolas. However, the Associate Administratorâ€™s response stated that restructuring the current contract for option years 2011 and 2012 is not feasible for a variety of reasons described in his response. Although NASA did not provide an estimated date to redefine theÂ payment structure for future microgravity flight services, we expect NASA to take this action no later than December 31, 2012, the end of the final option period for the Zero G contract.
Evaluation of Managementâ€™s Response. The Associate Administratorâ€™s response and planned actions are responsive to the recommendation. Therefore, the recommendation is resolved. Although NASA requested that we close this recommendation upon issuance of our report, we will close the recommendation after verifying that management has taken corrective action by redefining the payment structure in the follow-on microgravity contract.
Recommendation 2. The Associate Administrator for SOMD should direct the Johnson FCOD to develop a formal risk management plan that identifies specific options to maintain NASAâ€™s access to microgravity flights if Zero G ceases providing microgravity flight services. Such analyses should include the cost of identifying another commercial contractor as well as the cost of maintaining the C-9 aircraft for operational use.
Managementâ€™s Response. The Associate Administrator for Space Operations concurred with the intent of the recommendation and stated that FCOD will formally document a risk management plan in Johnsonâ€™s Integrated Risk Management Application and identify specific options, as well as costs, safety, and schedule considerations to maintain access to microgravity flights, in the event Zero G ceases to provide those services to NASA. The estimated completion date for this action is October 1, 2010.
Evaluation of Managementâ€™s Response. The Associate Administratorâ€™s planned actions are responsive to the recommendation. Therefore, the recommendation is resolved. We will close the recommendation upon verifying that management has taken the corrective action.
Recommendation 3. The Chief of Glennâ€™s Procurement Division should review its internal controls for payments to contractors and modify its controls and procedures to detect and prevent errors like those to Zero G when calculating payments to contractors.
Managementâ€™s Response. The Associate Administrator for Space Operations concurred with the recommendation and stated that NASA management will instruct contracting officers with similarly complex pricing arrangements to have the contractor independently price the required services. The contracting officer will then verify the contractorâ€™s pricing against contract terms and conditions before issuing approval for payment. Although NASAâ€™s formal response did not provide a specific completion date, Glennâ€™s Procurement Division stated in a subsequent e-mail that these actions will be completed by July 30, 2010.
Evaluation of Managementâ€™s Response. The Associate Administratorâ€™s planned actions are responsive to our recommendation. Therefore, the recommendation is resolved. However, the recommendation will remain open until Glennâ€™s Procurement Division issues formal policy that describes the specific contract pricing arrangements and directs contracting officers to obtain and verify the contractorsâ€™ price invoices prior to approval for payment. We will close the recommendation after verifying completion of managementâ€™s corrective actions.