IG: NASA Needs to Better Document Cost Savings on Services Contracts

NASA needs better methods to track its efforts to minimize costs on the more than $16 billion worth of engineering and technical services the space agency purchases annually, according to a new audit by the Inspector General (IG).

[Full Report — PDF]

“Although NASA has a variety of mechanisms at the Headquarters and Center levels to share lessons learned, many of these are informal, dependent upon personal relationships between Centers, and not focused on sharing information on efficiencies,” the audit said.

“Without a methodology to capture, measure, and share such data, NASA may be missing opportunities to streamline and strengthen acquisitions while achieving savings and reducing duplicative requirements in its service contracts,” the document added.

To conduct the audit, the IG examined 12 engineering services contracts with a maximum value of $4.1 billion from NASA Goddard Space Flight Center, Kennedy Space Center, Langley Research Center, and Stennis Space Center.

The report recommended NASA’s Assistant Administrator for Procurement:

  • “develop an Agency-wide standardized set of metrics for contracts that can be collected, tracked, and analyzed over time to identify efficiencies resulting from a change in contract structure;
  • “require Center Procurement Offices to formally collect, track, and report data to the Headquarters Office of Procurement on these metrics at least annually; and,
  • “develop a community of practice to analyze contract structure changes that lead to the greatest efficiencies and share these lessons learned with the Agency’s procurement community.”

NASA concurred or partially concurred with the three recommendations and described steps the agency would take to address them. The IG found the answers responsive and plans to close out the recommendations once changes are implemented.

A summary of the report follows.

NASA’S Engineering and Technical Services Contracts

Office of Inspector General
March 26, 2019

[Full Report]

Why We Performed This Review

In fiscal year 2017, NASA awarded approximately $18.3 billion in contracts, about 90 percent of which ($16.4 billion) was for services, a broadly defined category of contracts that includes research and development, engineering and technical services, operation and maintenance of laboratories and facilities, and housekeeping and landscaping. In particular, the requirements for engineering and technical services contracts that support the development of complex, low maturity technologies are often less clearly defined, complex, and require state-of-the-art machinery and highly skilled personnel. In addition, the likelihood of technical requirements changing over time can also make it more difficult to estimate costs in advance. As a result, service contracts for engineering and technical services can place the government at a greater risk of unanticipated cost increases based on how the contracts are structured, the types of contracts used, inadequately scoped or defined requirements, and limitations on competition.

In 2016, NASA conducted an assessment of its procurement processes and implemented changes to reduce duplication of goods and services purchased, lessen contract and administrative costs, decrease the time required to award a contract, and improve procurement information sharing across the Agency. In 2017, NASA initiated the Mission Support Future Architecture Program (MAP) to optimize procurement and other services by moving toward a more interdependent model that enables the Agency to share capabilities across Centers, realign budget structure, and improve procurement services through collaboration. The Headquarters Office of Procurement began MAP activities in July 2018 and is scheduled to complete the review and begin implementing follow-on recommendations by October 2019.

Past reviews by our office and the Government Accountability Office have identified significant issues with service contracts at NASA and across the government. Given these concerns, as well as the billions of dollars NASA spends annually on procuring services and the Agency’s recent efforts to optimize this process, we initiated this audit to review NASA’s process for acquiring contracted services. Specifically, we focused on the Agency’s efforts to ensure efficiency and effectiveness when procuring engineering and technical services. To conduct this audit, we examined 12 engineering services contracts with a potential value of $4.1 billion from four NASA Centers: Goddard Space Flight Center, Kennedy Space Center, Langley Research Center, and Stennis Space Center.

What We Found

Each of the four NASA Centers we reviewed has made changes to the structure of its engineering and technical services contracts—such as the type of contract pricing or the length of the period of performance—in an effort to achieve cost savings, streamline technical requirements, and lessen administrative workload. We found that Centers made these changes to contract structure based on the complexity of requirements, predictability of demand, and each Center’s organizational culture. However, while recent procurement assessment efforts have focused on achieving efficiencies in the procurement process, data collection efforts related to determining whether these changes led to efficiencies were minimal. We attribute this, in part, to challenges associated with limited requirements to track such data across the Agency, which lessens the likelihood that lessons learned will be shared for future acquisitions. Although NASA has a variety of mechanisms at the Headquarters and Center levels to share lessons learned, many of these are informal, dependent upon personal relationships between Centers, and not focused on sharing information on efficiencies. Without a methodology to capture, measure, and share such data, NASA may be missing opportunities to streamline and strengthen acquisitions while achieving savings and reducing duplicative requirements in its service contracts.

What We Recommended

As NASA continues its efforts to assess procurement processes and optimize mission support services, in order to identify efficiencies and promote sharing of best practices related to service contract structures, we recommended NASA’s Assistant Administrator for Procurement (1) develop an Agency-wide standardized set of metrics for contracts that can be collected, tracked, and analyzed over time to identify efficiencies resulting from a change in contract structure; (2) require Center Procurement Offices to formally collect, track, and report data to the Headquarters Office of Procurement on these metrics at least annually; and (3) develop a community of practice to analyze contract structure changes that lead to the greatest efficiencies and share these lessons learned with the Agency’s procurement community.

We provided a draft of this report to NASA management who concurred or partially concurred with our recommendations and described actions the Agency plans to take to address them. We consider management’s comments responsive; therefore, the recommendations are resolved and will be closed upon verification and completion of the proposed corrective actions.