# Presentation: 813834

## Operations Management Council Internal Controls Status Meeting 

**Operations Management Council**** Internal Controls Status Meeting **

**Tuesday, February 14, 2006**
**12:30 pm - 2:30 pm **
**NASA Headquarters**
** ****Room 2X40**

## Status Meeting Agenda for February 14th

**Status Meeting Agenda for February 14th**

**Introduction****	****	****	****	****Ms. Dale****	****	****  5 min.**
**Overview of NASA Internal Control ****	****	****Mr. Jedrey****	****10 min.**
**Status of Actions from Nov. 9 Meeting****	****Mr. Jedrey****	****  5 min.**
** ****	****	****	****	****	****	****	****	****	****    ****Target**
_**Corrective Actions on Internal Control Deficiencies**_**	****	****	**_**Correction Date**_
**	****	****	****	**
**Asset Management (MW)****	****	****OCFO****	****	****10 min.****	****09/30/06**
**Financial Management System (MW)****	****OCFO****	****	****10 min.****	****11/15/06**
**Financial Management Data Integrity (MW)****	****OCFO****	****	****10 min.****	****09/15/06**
**Financial Mgmt. Policy & Procedures (MC)****	****OCFO****	****	****  5 min.****	****06/30/06****	**
**Financial Management Staffing (MC)****	****OCFO****	****	****  5 min.****	****09/30/06**
**Full Cost Integration (OW)****	****	****OCFO****	****	****  5 min.****	****12/31/06**
**Space Shuttle (MW)****	****	****	****SOMD****	****	****10 min.****	****06/30/06****	**
**Shuttle Impact on ISS Operations (MC)****	****SOMD****	****	****  5 min.****	****06/30/06**
**Information Technology Security (OW)****	****OCIO****	****	****  5 min.****	****Ongoing**
**NASA Declassification Program (MC)****	****OIM****	****	****  5 min.****	****12/31/06**
**Open GAO Audit Recommendations (MC)****	****OIM****	****	****  5 min.****	****Ongoing**
**Mission Management Aircraft (OW)****	****OIM****	****	****10 min.****	****06/30/06**
**New Issues & Activities/Summary of Actions****	****Mr. Jedrey****	**** 15 min.**
**         **
**	**

- Key:  Material Weakness (MW); Other Weakness (OW); Management Challenge (MC)

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## Reason for Senior Level Emphasis Internal Control   

**Reason for Senior Level Emphasis**** Internal Control ****  **

- Key Law: **Federal Managers’ Financial Integrity Act** (1982) applies to programmatic, financial, and institutional controls
**GAO** **Standards** for Internal Control in the Federal Government (1999) provides 5 standards for implementing the law
- ***Sarbanes-Oxley** Act of 2002 – prompted by enormous bankruptcy scandals of Enron in 2001 and WorldCom in 2002, this law requires strict rules on corporate governance
**OMB Circular A-123**, Management’s Responsibility for Internal Control (revised 2004) – responds to Sarbanes-Oxley thrust applied to  federal government and to place more emphasis on GAO’s standards
- Revised **NPD 1200**, NASA Internal Control and Accountability (2006) presents Agency policy for implementing OMB Circular A-123 with tie into NASA Strategic Management & Governance Handbook     (NPD 1000.0)

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## Key NASA Definitions:Levels of Internal Control Deficiencies  

**Key NASA Definitions:****Levels of Internal Control Deficiencies****  **

- Material Weakness  (**MW**) – a deficiency in internal controls that is significant enough to be reported outside the Agency.
- Other Weakness (**OW**) – a deficiency in internal controls that should be reported and monitored internally.
- Management Challenge (**MC**) – a concern about a challenge to management.  There is insufficient information to confirm a serious systemic internal control weakness in this area.  It may pertain to issues that are outside management’s control or factors that may create an adverse condition.  Close monitoring is required.

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## Examples of Internal Controls

**Examples of Internal Controls**

- Published policy, i.e., NASA Directives
- Risk assessments on compliance with directives, standards, and other official NASA documents
- Effective use of councils and teams to plan, perform, and monitor work
- Regular assessments of physical security and information technology security compliance
- Reviews of written delegations of authority for accuracy
- Systematic reviews of physical asset inventories
- Certification that products were received & checked for possible defect or other problem before paying vendor
- Reviews of Program Commitment Agreements to ensure that cost & performance requirements are being met
- Records of employee training
- Tracking corrective/preventive actions & assigning new/more actions as deemed prudent by management
- ISO 9001:2000 based management system audits
**	**

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## Schedule for 2006 OMC Meetings Internal Controls

**Feb. 14** – 1st Progress Meeting.  Provide background on why internal control has become a high priority throughout government and the private sector. Assess actions taken to correct significant Agency deficiencies since Nov. 9 Decision Meeting.  Discuss any proposed new deficiencies to include on the council’s watch list.
**Apr. 12**  – 2nd Progress Meeting to assess actions taken during the last quarter.
**July 13** – (tentative date) 3rd Progress Meeting of 2006
**Oct. 5** – (tentative date) Annual Decision Meeting for determining what deficiencies will be reported outside the Agency in the Administrator’s Statement of Assurance, which is required as part of the NASA Performance and Accountability Report, submitted to OMB, the Congress, and the President.

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## Actions from Nov. Internal Controls Meeting

- The CFO, in collaboration with the Asst. Administrator for I&A and the Asst. Administrator for Procurement, will develop a Corrective Action Plan (CAP) for the revised deficiency, Asset Management (MW).  The detailed plan will be provided in the Corrective Action Tracking System (CATS) and a summary of the CAP will be presented by the next OMC meeting.**  **
**Status:  **Open
- The CFO, in collaboration with the CIO, Chief Engineer, IEMP Program Executive, Asst. Administrator for I&A, and the Asst. Administrator for Human Capital, as appropriate, will develop CAPs for the four new deficiencies: Financial Management System (MW), Financial Management Policy and Procedures (MC), Financial Management Data Integrity (MW), and Financial Management Staffing (MC).  Detailed plans will be entered into the CATS and summaries of each CAP will be presented at the next OMC.
**Status:**  Open

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## Actions from Nov. Internal Controls Meeting

- The Asst. Administrator for Procurement will coordinate with the OCFO and OIG to determine if acquisition oversight is a deficiency and, if so, to develop its scope (e.g., what aspects are included, who is responsible, etc).  The Office of Procurement will present the results at the next OMC meeting.
**Status:  **Open (see next 3 charts)
- The OCE will develop proposed changes to NPR 7120.5 and bring to the PMC for approval by March 31, 2006.
**Status:  **Open

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## Action Item from November 9th OMC Meeting

**OMC Action 3:** The Assistant Administrator for Procurement will coordinate with the OCFO and OIG to determine if acquisition oversight is a deficiency and, if so, to develop its scope (e.g. what aspects are included, who is responsible, etc).  The Office of Procurement will present the results to the OMC.
**Deadline:** Next OMC Internal Controls meeting.
**Action Taken:** On Wednesday, January 11, 2006, representatives from the Office of General Counsel, the Office of the Chief Engineer, the Integrated Enterprise Management Program Office and the Office of Procurement met with the Inspector General to discuss the issue raised at the November OMC meeting.  The issues discussed were similar to those that led to the inclusion of Contract Management on GAO’s High-Risk list.  It was agreed by all that the OCE would be the lead/POC/spokesperson for GAO on this activity, but that support would come from the most appropriate office.  It was also agreed that since the OCE is going to be the lead for this activity, then Chris Scolese or his designee would report to the OMC quarterly.

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## OIG’s Response to Procurement Integrity Issue

- NASA does not have a Procurement Integrity Program.  Responsibility for integrity in contracting is fragmented, with no clear lines of authority or responsibility for assuring integrity in NASA contracting.  We believe that NASA should have an internal control framework designed to assure integrity in Government contracts, to promote competition in contracting, to vigorously address wrongdoing by contractors through coordinated activities with the OIG and the NASA Office of General Counsel, the Office of Procurement, the centers and the program offices.
- We note that 10 USC § 2307(i)(8) contemplates the establishment of remedy coordination officials within the Department of Defense and NASA and that NASA has not formally established such a position.  A remedy coordination official is a “person or entity in that agency who coordinates within that agency the administration of criminal, civil, administrative, and contractual remedies resulting from investigations of fraud or corruption related to procurement activities.”   [10 USC § 2307(i)(10)]  We believe that the Agency should establish such a position, that it be in the Office of General Counsel, and that it be the same person as the Agency point of contact for addressing contract fraud and related matters.

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## OIG’s Response to Procurement Integrity Issue

- A contract integrity coordination program under 10 U.S.C. § 2307 is contemplated to contain the following elements to assure that all remedies are carefully considered by NASA when it has been victimized by fraud:
- Consideration of reduction or suspension of advance and progress payments as authorized under 10 USC § 2307(i), where appropriate
- Consideration of termination of contracts and grants tainted by fraud in their performance or inducement
- Consideration of proposed debarment and suspension under the FAR
- Establishment of a full time Procurement Integrity unit to process suspension and debarment actions
- Consideration of actions under the Program Fraud Civil Remedies Act (PFCRA), 31 U.S.C. §§ 3801-3812
- Participation in the effectuation of  “global settlements” of criminal conduct, whereby contractual, administrative and civil remedies associated with a case are coordinated and resolved, when that is in NASA’s interests
- Consideration of disciplinary and other administrative actions against culpable individuals, including civil servants
- We believe that a well-coordinated contract integrity program would result in a more structured and thoughtful consideration of remedies, identification of best practices and reform of regulations and internal controls, better education of NASA employees about potential fraud, and, in sum, better protection of NASA.** **

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## Asset Management(Material Weakness)

- Office of the Chief Financial Officer
- Terry Bowie
- February 14, 2006

## Background

- This deficiency was introduced in February 2003 as a “Material Weakness” with planned actions to include monthly reporting by contractors; publication of a Federal Management Regulation for Property, Plant, and Equipment; and initiation of contractor and accountant training.
- In October 2003, the deficiency was reduced to an “Other Weakness”  when the OCFO completed the tasks of defining assets in space and issuing revised policy.
- In October 2004, the deficiency was re-designated as a Material Weakness when the IG questioned the accuracy and reliability of property related accounting data.
- During the 2005 Internal Control decision meeting, the Contractor-Held Property Material Weakness was renamed Asset Management, redefined to include Contractor-Held Property and NASA-Held Property, and designated as a Material Weakness.
- Currently, the OCFO is sharing responsibility for this Material Weakness with the Programmatic Internal Control Team (PICT) and the Institutional Internal Control Team (IICT).
- In January 2006, a Corrective Action Plan was developed for the FY 2005 Financial Audit, which defines the goal, objectives, strategies, and actions for improving NASA’s internal controls over property, plant, and equipment.

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## Issue

*NASA needs to improve its management controls for the financial reporting of property, plant and equipment, and materials including Theme Assets (formerly Assets-in-Space), contractor-held property, spare parts and assets under construction.  Lack of proper management controls can result in inconsistent financial recording practices that can misstate asset values and period expenses.*
- Root cause
- NASA’s policies and procedures are not fully in conformance with federal requirements
- There is inconsistent application of existing policies and procedures
_**Corrective action taken to date**_
- Establishment of Financial Integration Team, subgroup on PP&E composed of the Deputy Chief Financial Officer, Associate Administrator for Infrastructure and Administration, and Director of Procurement.
- Presentation to and support received from the Senior Advisory Group on the overall plan to improve NASA's PP&E internal controls and financial reporting.
- Established PP&E Compensating Controls Group comprised of HQs and Center representatives.
- Prepared draft Theme Assets capitalization policy paper and submitted to OIG and external auditors for review and comment.
- Defined Asset Categories and finalized how property will be classified (NASA Held and Contractor Held Program Related vs. Non-Program Related).
- Defined appropriate accounting treatment per Asset category and use.

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## Recommendation

- Recommend this issue remain as currently assigned (Material Weakness).

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## Planned Actions for Next Quarter

- Provide OMB, GAO, FASAB, and OIG NASA’s revised capitalization policy.
- Adjust Capitalization policy as necessary.
- Flowchart and document desired business processes and procedures, and define roles and responsibilities for effective PP&E lifecycle management.
- Identify and coordinate changes to existing policies Agency-wide.
- The Institutional Internal Control Team (IICT), the Programmatic Internal Control Team (PICT), and the Financial Management Internal Control Team (FMICT) are addressing Asset Management as a priority area of focus.

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## Financial Management System(Material Weakness)

- Office of the Chief Financial Officer
- Terry Bowie
- February 14, 2006

## Background

- During the 2005 Internal Control decision meeting, the Management Operations Council granted the approval for the OCFO to close Material Weakness (MW-2004-02) Financial Management and open a new Material Weakness called “Financial Management System” that captures challenges related to:
- Confirming configuration
- Validating the accounting
- Validating construction of the financial reports
- The recommendation was made to separately manage the OCFO deficiencies, ensure traceability to external audits, and show that progress has been made.
- Currently, the OCFO is sharing responsibility for this Material Weakness with the Office of the Chief Information Officer and the Integrated Enterprise Management Program (IEMP) Office.
- Developed the Corrective Action Plan for the FY 2005 Financial Audit which addresses improving NASA’s financial management system and processes to achieve accurate, reliable, timely financial information.

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## Issue

*Since the completion of the rollout of the new system, challenges in system processing, configuration, and capabilities have surfaced and the current version of the SAP system has some capability limitations which have required the definition and implementation of compensating controls.*
- Root cause
- Conversion from 10 disparate legacy financial systems supported by over 120 subsidiary systems, along with over a decade of historical data, to a single integrated financial management system highlighted long-standing data and process issues.
_**Corrective action taken to date**_
- Submitted FY 2005 PAR to AGA for feedback on the construction, content, and applicability of the report, as part of the CEAR Award process.
- Modified the statement of net cost to provide a breakdown of net costs consistent with strategic plan and in the Management Discussion and Analysis section by major line of business.
- Established procedures to ensure that all system configuration changes are subject to regression tests and year-end test procedures which validate that changes made to the Core Financial System are valid, appropriate, and do not adversely impact end-to-end business processes, including external reporting.
- Established safeguards to ensure that system does not pay cost in excess of obligations.
- Formed cross-functional task team to review current funds control, cost collection, and accrual processes and identify opportunities for reengineering.
- Conducted benchmarking sessions with Dept. of Education, Dept. of Agriculture, and others to identify best practices and lessons learned.
- Drafted proposed process design and high level requirements.

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## Recommendation

- Recommend this issue remain as currently assigned (Material Weakness).

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## Planned Actions for Next Quarter

- Review results of CEAR review process.
- Gather feedback on PAR from OMB and Mercatus.
- Review latest revision of OMB Circular A-136 and incorporate required updates for FY 2006 PAR.
- Review PAR’s from other Federal Agencies to identify potential areas of improvement for NASA.
- Establish a cross-Agency task team to develop monthly schedule with due dates for data processing, reconciliations, verifications, feedback, and reports.
- Develop compensating procedures to analyze Business Warehouse on a quarterly basis to ensure that liabilities are appropriately recorded.

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## Financial Management Data Integrity (Material Weakness)

- Office of the Chief Financial Officer
- Terry Bowie
- February 14, 2006

## Background

- During the 2005 Internal Control decision meeting, the Management Operations Council granted the approval for the OCFO to close Material Weakness (MW-2004-02) Financial Management and open a new Material Weakness called “Financial Management Data Integrity” that captures challenges related to
- Environmental Liabilities
- Fund Balance with Treasury
- Currently, the OCFO is sharing responsibility for this Material Weakness with the Offices of Infrastructure and Administration, Procurement, and the Integrated Enterprise Management Program (IEMP).
- Developed the Corrective Action Plan for the FY 2005 Financial Audit which addresses validating the tools and methodology used to prepare the unfunded environmental liability estimates and reconciling Fund Balance with Treasury and processing corrections in a timely manner.

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## Issue

*NASA needs to continue to improve its current procedures to ensure that all reconciling items are thoroughly researched, timely resolved, and reviewed by appropriate Center and Headquarters OCFO personnel.  NASA needs to improve existing environmental liability procedures and implement needed internal controls to assure the improved procedures are adhered to and followed. *
- Root cause
- Relates to issues from data conversion system processing in the early stages of production operation.
_**Corrective action taken to date**_
- Established Fund Balance with Treasury metrics.
- Conduct ongoing monitoring to ensure monthly reconciliations are performed.
- Conduct ongoing review and monitoring compliance with Fund Balance with Treasury policies, procedures, and practices.
- Revised FMR policy for Monitoring Controls Procedures.
- Implemented an automated tool to support FBWT reconciliations.

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## Recommendation

- Recommend this issue remain as currently assigned (Material Weakness).

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## Planned Actions for Next Quarter

- Host a joint OCFO and Environmental Management Division (EMD) training course to expedite the overall resolution of the action plan.
- Develop and have available for auditor review, the Environmental Liability estimates based on 2nd quarter data.
- Jointly assess the effectiveness of UEL internal controls, cost estimation process and data gathering procedures.
- Develop review/internal control checklist.
- Perform a Central Resources Control System (CRCS) to SAP reconciliation and resolve differences.
- Assess compliance with Fund Balance with Treasury policies, procedures, and practices.

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## Financial Management Policy and Procedures(Material Weakness)

- Office of the Chief Financial Officer
- Terry Bowie
- February 14, 2006

## Background

- During the 2005 Internal Control decision meeting, the Management Operations Council granted the approval for the OCFO to close Material Weakness (MW-2004-02) Financial Management and open a new Management Challenge called “Financial Management Policies and Procedures” that captures challenges related to:
- Completion of the Financial Management Requirements (FMR)
- Reengineering targeted business processes
- Developed the Corrective Action Plan for the FY 2005 Financial Audit which addresses developing core standard Agency-wide procedures and tools consistent with authoritative guidance issued by FASAB, Treasury, and OMB .

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## Issue

*NASA needs to continue to improve its current policy to ensure improvement existing procedures and implement needed internal controls to assure the improved procedures are adhered to and followed.*
- Root cause
- NASA’s policies and procedures are not fully in conformance with federal requirements
- Implementation of the Integrated Enterprise Management Program required revision of policies and procedures
_**Corrective action taken to date**_
- Provided OMB, GAO, FASAB, and OIG NASA’s revised NASA Asset Management capitalization policy.
- Recently published five FMRs
- Travel (4/29/05)
- Internal Controls (04/29/05)
- Special Accounts and Funds (04/29/05)
- Cash Management (09/30/05)
- Payroll (12/30/05)

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## Recommendation

- Recommend this issue remain as currently assigned (Management Challenge).

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## Planned Actions for Next Quarter

- Adjust the Asset Management capitalization policy as necessary.
- Flowchart and document desired business processes and procedures, and define roles and responsibilities for effective PP&E lifecycle management, to include valuation of Assets.
- Incorporate OIG comments in the flow charts as appropriate and disposition.
- Identify and coordinate changes that must be made to existing policies Agency-wide.
- Engage working groups to identify process and system(s) gaps between current processes and desired processes, as well as, identifying solutions.
- Publish four remaining FMRs
- Budget Formulation (05/01/06)
- Reimbursables (04/28/06)
- Information Systems (06/30/06)
- Overview (05/26/06)

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## Financial Management Staffing (Management Challenge)

- Office of the Chief Financial Officer
- Terry Bowie
- February 14, 2006

## Background

- During the 2005 Internal Control decision meeting, the Management Operations Council granted the approval for the OCFO to close Material Weakness (MW-2004-02) Financial Management and open a new Material Weakness called “Financial Management Staffing” that captures challenges related to:
- Staffing Levels
- Personnel Skill Mix
- Workforce Development
- Currently, the OCFO is sharing responsibility for this Management Challenge with the Office of Institutions and Management/Human Capital Management.
- Developed the Corrective Action Plan for the FY 2005 Financial Audit which addresses workforce development.

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## Issue

*NASA needs to ensure adequate staffing for financial management functions across Headquarters and the Centers and to continually provide additional “hands–on” training for financial personnel to ensure that they understand their roles in financial reporting. *
- Root cause
- With the implementation of the Integrated Enterprise Management Program (IEMP), additional training was required due to new processes.
- The implementation of the IEMP Core Financial system represented a major transformation of NASA's financial management systems and processes.
_**Corrective action taken to date**_
- Issued quarterly report documenting all training conducted during the 1st quarter of FY 2006.
- Increased staffing to support financial management activities.
- In May 2005, NASA’s OCFO received relief from a NASA-wide hiring freeze and approval to increase its headcount in FY 2006 at Headquarters by 34 positions (including 2 Senior Executive Service leadership positions) and at Field Centers by 50 positions.
- As of February 1, 2006, 90% of these positions have been filled.

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## Recommendation

- Recommend this issue remain as currently assigned (Management Challenge).

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## Planned Actions for Next Quarter

- Utilize a needs assessment and develop a training plan for providing the following training:
- Processing transactions
- Performing account analyses and reconciliations
- Maintenance of supporting documentation
- Financial reporting requirements
- Hire from anticipated job announcements.

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## Full Cost Integration (Other Weakness)

- Office of the Chief Financial Officer
- Terry Bowie
- February 14, 2006

## Background

- In Feb 2003, the Associate Administrator for Earth Science recommended that full cost accounting be monitored as a “Management Challenge (MC).”
- In Feb 2005 the OCFO recommended closing the “Full Cost Accounting” MC based on FC Steering Committee actions. It was replaced with a new MC, “Full Cost Integration.”
- In May 2005, “Full Cost Integration” was elevated from an MC to an “Other Weakness (OW),” due to lack of understanding of full cost policies and procedures.
- In Dec 2005, a new Full Cost Reform Initiative Team was established to recommend changes to simply full cost policies and procedures, including developing an implementation plan for the recent PA&E Full Cost Simplification Proposal.

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## Issue

*Full Cost concepts need to be better integrated into NASA operations. Despite implementing a Full Cost accounting system and many Full Cost processes, NASA still lacks the level of cultural change needed to fully transition to Full Cost management.*
- Root cause
- Insufficient stakeholder training
- Unintended consequences and behaviors realized from initial full cost approaches
- Some policies and planned processes were based on insufficient experience and need to be refined to reflect lessons learned
_**Corrective action taken to date**_
- Completed Full Cost Assessment; delivered recommendations to Financial Integration Team on improving full cost implementation.
- Improve policy to resolve operational issues.
- Full Cost Reform Team meeting held from Jan 31st through Feb 1st to recommend steps to implement revised full cost policies and procedures, including PA&E Full Cost Simplification Proposal.

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## Recommendation

- Recommend this issue remain as currently assigned (Other Weakness).

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## Planned Actions for Next Quarter

- Implement recommendations from Full Cost team for FY 2008 POP Budget cycle and FY 2007 execution to the extent practical.  The initial steps include:
- Combine IT and Facility service pools with Center G&A into a single Center Management and Operations account per Center
- Eliminate budget and cost allocations between overhead pools
- Eliminate allocations of Center overhead to Corporate tasks
- Create control accounts for Center M&O budgeted and funded like direct projects; allocated to projects in final steps of budgeting and reporting
- Allocate overhead costs on a project’s pro-rata share of each Center’s direct budget (NOA)

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## Space Shuttle

- Space Operations Mission Directorate
- Lynn F. H. Cline
- February 14, 2006

## Background

- 	Following the loss of *Columbia *and her crew, the Deputy Associate Administrator for International Space Station and Space Shuttle Programs established a formal "Return-to-Flight Planning Team," to provide direction to the team for addressing actions required before a safe return to flight could be assured, as well as other actions determined necessary to comply with the formal recommendations of the CAIB.  Options and recommendations from the Return-to-Flight Planning Team were assessed by the Space Flight Leadership Council, co-chaired by the Associate Administrator for Space Operations and the Deputy Chief Engineer for Independent Technical Authority.  Return-to-Flight actions were implemented through normal Space Shuttle Program management. The Council was abolished on June 28, 2005, and all actions are now conducted through Space Shuttle Program management.
- 	Progress on implementation of Return to Flight actions is documented in periodic updates to the NASA "Implementation Plan for Space Shuttle Return to Flight and Beyond."

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## Issue

**Technical Deficiencies**
**Modeling was not as accurate when the Shuttle system was originally certified in the late 1970’s; Debris Transport Analysis was more art than science (point to point transport); and the analyses that was done was rarely supported with rigorous testing (e.g.,  wind tunnel testing, impact testing).**
**All pre-STS-107 flight history seemed to support the initial certification analyses.**
**Foam damage to the Orbiter failed to show positive correlation between liberated debris mass and TPS (tile) damage.**
**Post-STS-107 modeling told us where debris might strike the Orbiter, however, it was impact testing that defined critical debris (mass) thresholds for return to flight.  This testing showed us how fragile the Orbiter was to different materials and masses.  At that point, we knew we would have to eliminate all the critical debris sources, provide much improved debris impact monitoring, and determine to what extent we needed to harden the Orbiter before we could Return to Flight.**
**While STS-114 proved we had done a very credible job of eliminating critical debris, five In Flight Anomaly foam loss events made it clear additional work is required before the second RTF mission to increase our understanding of the cause of these foam debris events and taking the appropriate corrective actions.  This work is currently on-going.**
**Other Deficiencies**
**The Final Report of the Columbia Accident Investigation Board (CAIB) identified a number of systemic cultural, organizational, and managerial issues within both the Space Shuttle Program and NASA as a whole that contributed to the loss of Columbia on February 1, 2003. **

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## Issue

**Root cause****:**
- The physical cause of the loss of *Columbia* and her crew was a breach in the Thermal Protection System on the leading edge of the wing, caused by a piece of insulating foam which separated from the left bipod ramp section of the External Tank at 81.7 seconds after launch, and struck the wing in the vicinity of the lower half of Reinforced Carbon-Carbon panel number 8.
- The Final Report of the Columbia Accident Investigation Board (CAIB) identified a number of systemic cultural, organizational, and managerial issues within both the Space Shuttle Program and NASA as a whole that contributed to the loss of Columbia on February 1, 2003.
- Fifteen Return-to-Flight and fourteen continuing to fly recommendations are in the CAIB Report.  Four dealt explicitly with management issues, and many of the other recommendations have important organizational as well as technical implications.
- The CAIB Report also calls on NASA to prepare a detailed plan for defining, establishing, transitioning, and implementing these recommendations prior to Return to Flight, with the understanding that the implementation of the fundamental management changes will continue beyond the first Shuttle flight after Columbia.

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## Issue

**Corrective action taken to date: **
**In response to the CAIB report, NASA developed the Implementation Plan for Space Shuttle Return to Flight and Beyond. The Implementation Plan is an evolving blueprint for safely and reliably returning to flight.  It explains how NASA is complying with the recommendations of the CAIB and other corrective actions.  These additional corrective actions may include other CAIB observations, self-imposed Shuttle program initiatives or input from other sources.  Edition 11 of the Implementation Plan is scheduled for release on February 17, 2006.**
**On August 17, 2005, the Return to Flight Task Group released its Final Report.  In it, the Task Group unanimously closed all but three of the Board's Return-to-Flight recommendations.  The Task group noted NASA had made substantial progress relative to these recommendations, and emphasized that, "The ability to fully comply with all of the [Board's] recommendations does not imply that the Space Shuttle is unsafe."  The first three Return-to-Flight missions (STS-114, STS-121, and STS-115) will provide the data and flight experience needed to address the remaining open issues in these recommendations.  This work will be documented in future updates to the Implementation Plan.**
**Post-flight analysis of STS-114 indicated that, except for one event, the thermal protection system on the External Tank performed within expected parameters.  Most of the small foam shedding events that were observed with the newly upgraded imagery and sensor capabilities posed little or no threat to the Orbiter.  The one event of concern was the loss of an approximately one pound piece of foam from the area of the External Tank's liquid hydrogen protuberance air load (PAL) ramp.  NASA commissioned two teams (one led by the Space Shuttle propulsion manager, the other an independent "Tiger Team" reporting directly to the Associate Administrator for Space Operations) to analyze these foam loss events and recommend any forward work that would have to be done prior to the launch of the next mission, STS-121.  The final report is expected to be released in March 2006.**

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## Issue

- Corrective action taken to date:
**After a thorough engineering review, it was determined to proceed with removal of the External Tank’s PAL ramp to eliminate this source of debris.  While all testing and analysis to support this action is not yet complete, there is a high degree of certainty based on the extensive work done to date that removing the PAL ramp has no operational or safety impacts to flight.  All testing and validation associated with the PAL ramp removal will be completed prior to the launch of STS-121.**
**NASA will make the decision to proceed with the launch of STS-121 based on the totality of improvements made to the Space Shuttle system during Return to Flight, and the vetting of these improvements through a rigorous and multilayered engineering review process, which includes the successful completion of the External Tank Systems Design Certification Review, the Systems Debris Verification Review, as well as other Program reviews, culminating in the approved Certificate of Flight Readiness.**

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## Recommendation

- Until successful completion of STS-121, this item should remain a material weakness.
- Target Completion Date:  June 30, 2006

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## Planned Actions for Next Quarter

**The STS-121 launch window is May 3 – 22, 2006.  A decision on the target launch date is still pending.  The STS-300 Launch On Need (LON) date is currently expected to be No Earlier Than (NET) August 1, 2006, based on an External Tank delivery to KSC in early June 2006.  The STS-115 launch window is August 29 to September 14, 2006.**
**The Space Shuttle Program has identified the gap filler replacement work required for all three Orbiters prior to their next flights.  Discovery (OV-103) has currently completed approximately 3100 of 3800 gap filler installations (82%) mandatory for STS-121, and is on schedule for supporting the May 2006 launch window. Atlantis (OV-104) gap filler work is approximately 10% complete, and remains on schedule for supporting either a STS-300 LON or STS-115 mission.**
**The production of the External Tank (ET-119) at Michoud Assembly Facility (MAF) continues to progress as planned for supporting a STS-121 launch in the May 2006 launch window.  Shipment of ET-119 to KSC is targeted for March 3, 2006.  The production of ET-118 to support a STS-300/STS-115 launch also proceeds on schedule, to be ready for a shipment to KSC on May 30, 2006.**

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## Shuttle Impact on ISS Operations

- Space Operations Mission Directorate
- Lynn F. H. Cline
- February 14, 2006

## Background

- Following the Shuttle Columbia accident, February 2003, the ISS Partnership agreed to an interim operational plan that would allow continued crewed operation.  The plan called for a reduction of the crew size to two, with the crew exchanges to be conducted on the scheduled semi-annual Soyuz flights.  Cargo re-supply would be provided by Russian Progress vehicles.  This is an interim measure until the Space Shuttle returns to flight.
- The first of two Shuttle Return to Flight missions has been completed, STS-114, launched on July 26, 2005 and landed on August 9, 2005.
**	**

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## Issue

- Description of deficiency:
- 	The International Space Station (ISS) was designed with the Space Shuttle as its prime support for crew transport, assembly of on-orbit elements, utilization and operations.  Additional crew and cargo transport is provided by Russia.  Following the Space Shuttle Columbia accident, the Shuttle fleet was grounded. This has impacted the number of crew that can be supported onboard the ISS, temporarily halted assembly of the Station, and significantly reduced the available up and down mass support for Station operations and utilization.
- Root cause:
- 	The grounding of the STS fleet resulted in this impact on ISS operations.

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## Issue

**Corrective action taken to date:**** **
- Established an understanding with the ISS partnership to (1) rely on Russian vehicles for crew and cargo support until Shuttle returns to flight and (2)  reduced the crew size from 3 to 2 to reduce the logistics burden, given the reduced capability of the Russian vehicles compared to the Space Shuttle.
- Until STS-115, ISS crew transfer and resupply will rely on Russian Soyuz and Progress spacecraft.
- Since 2003, there have been 6 crew exchanges using Soyuz  and 10 crew exchanges using Progress for resupply flights.
- Successfully completed the ISS objectives for the STS-114 mission:
- Flew the combined Space Shuttle/ISS stack in a new configuration designed to minimize the threat of orbital debris and micrometeorite impact damage.
- Transferred more than 15,000 pounds worth of supplies and hardware to the ISS, including food, water, nitrogen, lithium hydroxide canisters, and scientific equipment.
- Returned more than 7,200 pounds worth of expended hardware and unneeded supplies from the ISS back to Earth.  Returning this hardware allows for failure analysis and possible reuse of Russian Elektron (oxygen generation) and Kurs (for docking of Russian Soyuz and Progress vehicles) hardware, as well as U.S. components like a Control Moment Gyroscope (CMG), Global Positioning System sensor, and spacesuit.

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## Issue

- Repaired and/or replaced two of the ISS’s four CMG’s (which provide attitude control for ISS), restoring the Station to its full capability.
- Installed the External Stowage Platform-2, an external platform for storing components and assisting astronauts in conducting EVAs from the ISS, transferred the Human Research Facility-2 rack to the U.S. Destiny module on the ISS (increasing the scientific capabilities of the Station), and deployed and retrieved the Materials International Space Station Experiment Passive Experiment Containers from the outside of the ISS.
- Reboosted the orbit of the ISS and conducted a fly-around and completed photographic survey of the ISS prior to reentry.
**Current Status**
- As of February 2, 2006, the ISS has 182 days of food, 281 days of water (with a functional Elektron), and 215 day days of Oxygen (without Elektron).  Nitrogen and Propellant are not an issue at their current levels.
- Since arriving at ISS in October 2005, the Expedition 12 crew has successfully completed two EVAs and performed maintenance and utilization activities.
- ISS assembly will resume with STS-115.

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## Recommendation

- Until successful completion of STS-121, this item should remain a management challenge.
- Target Correction Date:  June 30, 2006

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## Planned Actions for Next Quarter

- ISS Crew Exchange
- Soyuz TMA-8/12S launch with Expedition 13 (with   Marcos Pontes of Brazil) on March 30, 2006
- Soyuz TMA-7/11S undocking and reentry with Expedition 12 (with Marcos Pontes of Brazil) on April 9, 2006
- STS-121 launch is currently scheduled for NET May 2006, and STS-115 is scheduled NET July 2006.  ISS assembly will resume with STS-115.

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## Information Technology Security

- Office of the Chief Information Officer
- Scott Santiago
- February 14, 2006

## IT Security Objectives

- NASA information management meets or exceeds Federal and NASA policy and requirements.
- All access to NASA information and information systems follows consistent, well defined and understood paths.
- Utilize trusted electronic identities to control access to all NASA information and information systems.
- NASA can verify that its internal controls and safeguards are working as intended.

- 2

## Background

- The NASA OIG through their audits of NASA’s IT Security Program had identified a large number of deficiencies over the years that led them to recommend IT Security to be declared a Material Weakness.
- NASA has been working since FY 2003 to correct those deficiencies found as a result of those audits and to correct systemic problems with the ITS Program.

- 3

## Issue

- Root Cause:
- NASA IT Security, while improving, needs more effective implementation, monitoring, and enforcement. In addition, NASA’s policy and procedures have not kept up with OMB direction
- OMB Continues to focus attention on  IT Security which requires NASA to make significant changes in how IT Security is managed.

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## Issue

- Corrective action taken to date
- Rewrote NASA IT Security policy and requirements documents to reflect NIST Guidance as directed by OMB, pending approval. Waiting on final approval.
- Establishing a central database of all NASA systems and IT Security plans status and added a module to CATS for tracking all IT Security weaknesses according to FISMA.
- Established a certification and accreditation (C&A) program as Directed by OMB NIST SP 800-37 “Guide for the Security Certification and Accreditation of Federal Information Systems
- Expanded the NASA ITS training Program

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## Issue

- Corrective action taken to date
- Improved Incident reporting and tracking
- Establishing centrally managed monitoring of the NASA network
- Establishing centrally managed security services to correct known security weaknesses in managing sensitive information and to meet HSPD-12 requirements.
- Established Agency metrics (ITS Scorecard) based on external and internal ITS performance requirements.

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## Recommendation

- Continue to categorize NASA’s IT Security Program as an Other Weakness (OW) until new policy is approved and changes are implemented and they begin to demonstrate the required results.

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## Declassification Review ProcessManagement Challenge (MC)

- Office of Security and Program Protection
- Clint Herbert, Deputy Assistant Administrator
- February 14, 2006

## Background

- NASA had a significant backlog of permanent records containing classified national security information (CNSI) that needed to be reviewed for continued classification pursuant to EO 12958 amended.
- NASA faces a December 2006 deadline to insure that all permanent records containing CNSI that are 25-years old or older are subjected to classification review.
- Poor records management practices prevented the identification of records subject to Section 3.3 of EO 12958 amended, resulting in NASA’s inability to identify its total universe to be considered for declassification
- The identified root causes had significantly impeded the classification review program’s efforts.
- EO 12958 as amended contains a sliding-window requirement for NASA to conduct yearly classification reviews of permanent records containing CNSI.

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## Issue

- Deficiency Description:
- NASA has a significant backlog of permanent records containing classified national security information (CNSI) that must be reviewed for continued classification pursuant to EO 12958 amended.  NASA faces a December 2006 deadline to insure that all permanent records containing CNSI that are 25-years old or older are subjected to classification review. Poor records management practices prevents the identification of records subject to Section 3.3 of EO 12958 amended; resulting in NASA’s inability to identify its total universe to be considered for declassification. The identified root causes have significantly impeded the classification review program’s efforts.  EO 12958 as amended contains a sliding-window requirement for NASA to conduct yearly classification reviews of permanent records containing CNSI.
- Root Causes:
- Insufficient staffing;
- Historically poor records management;
- Insufficient funding;
- Lack of Declassification Guides;
- Insufficient resident expertise to perform classification reviews for older programs;
- Insufficient support from senior management (commitment of resources)
- Corrective Action Plan (CAP):
- A comprehensive CAP has been developed and has been distributed to the OC, all Mission Directorates, and Center Security Offices on 11/205

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## Recommendation

- Closeout. NASA has made significant progress in declassification efforts and is now positioned to meet the December 31, 2006 deadline. Only approximately 1.5 million pages, from an original 17 million pages, remain under this initial deadline.

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## Planned Actions for Next Quarter

- Continue declassification efforts
- Maintain monthly accountability

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## Government Accountability Office Open Audit Recommendations

- Office of Infrastructure and Administration
- Chris Jedrey
- February 14, 2006

## Background

- History or information leading up to this issue being designated as a deficiency
- August 2005: As a result of an increase in GAO audit activity; highly visible and politically sensitive GAO audits (e.g., Mission Management Aircraft); and continued congressional interest in the health of NASA's financial management, the Operations Council agreed to add the status of GAO audit recommendations as a Management Challenge (MC)

- 2

## Issue

- Description of deficiency
- GAO audit recommendations remain unimplemented.
- Of the 58 outstanding GAO audit recommendations issued to NASA, 42 (72%) were issued more than 1 year ago.
- OMB Circular A-50 encourages implementation within 1 year of issuance of the recommendation.

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## Issue

- Root cause (1)
- August 2005: GAO issues audit report on Mission Management Aircraft (GAO-05-818) which highlights significant control deficiencies with respect to the management of NASA's MMA.
- GAO assessed (1) the relative cost of NASA passenger aircraft services in comparison with commercial costs, (2) whether NASA aircraft services were retained and operated in accordance with government-wide guidance, and (3) the effectiveness of NASA's oversight and management of this program.

- 4

## Issue

- Root cause (2)
- GAO has issued several audit reports focusing on inadequate controls over financial management specially relating to the agency's implementation of an Integrated Enterprise Management Program.  These reports focus on fundamental problems with NASA's financial operations that undermine the agency's external financial reporting ability and impair efforts to effectively manage and oversee major programs.
- GAO's recommendations relating to these IEMP audit reports and NASA's inability to timely and effective implement GAO's recommendation were addressed during the confirmation hearing of the NASA's nominee for Deputy Administrator on November 1, 2005.

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## Issue

- Root cause (3)
- Since 1990, GAO has identified NASA's contract management function as an area at high risk, principally because the agency lacks accurate and reliable financial and management information on contract spending, and it has not placed enough emphasis on end results, product performance, and cost control.
- Since financial and contract problems threaten the success of NASA's major programs, GAO believes that contract management continues to be an area of high risk. To further improve contract management, GAO recommends that NASA successfully complete its design and implementation of a new financial management system (IEMP). GAO recommends that NASA transform its operations to better support its core mission.

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## 7

## Recommendation

- Continue to monitor as a Management Challenge (MC)

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## Planned Actions for Next Quarter

- Management continues to work toward the timely implementation of GAO audit recommendations.

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## Mission Management Aircraft

- Infrastructure and Administration
- Chris Jedrey
- February 14, 2006

## Background

- GAO audit of Agency’s FY03 and FY04 Mission Management Aircraft (MMA) operations highlighted control deficiencies with respect to management of NASA’s MMA.
- MMA operations were also questioned in several prior GAO and NASA IG audit reports.

- 2

## Issue

- Inadequate documentation and periodic review of MMA mission requirements - Resolved
- Issued NPR 7900 Interim Change to comply with OMB A126
- PA&E review complete, mission requirements identified; Implementing approved recommendations
- Insufficient HQ oversight - Resolved
- Augmented HQ AMD staff for MMA
- Instituted annual HQ review of Center MMA operations
- Lack of integrated IT system to capture and report aircraft cost & utilization
- NASA Aircraft Information System (NAMIS) being implemented for MMA utilization data.  To be in place Spring 2006 (6 months early).
- Core Financial BW unable to provide accurate aircraft cost allocation and reporting to comply with OMB A126.  Assisting OCFO Aircraft Cost Accounting PAT.

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## Recommendation

- The aircraft utilization and cost accounting issues should continue to be carried and reported as “Other Weakness”.

- 4

## Planned Actions for Next Quarter

- Implement NAMIS at all centers that operate MMA by June 2006 to provide visibility into utilization and comply with OMB A126.
- Continue to support OCFO with aircraft cost accounting process action team

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