1 GAO-12-230R NASA Funded Space Act Agreements

-- 

November 17, 2011

The Honorable Kay Bailey Hutchison

Ranking Member

Committee on Commerce, Science, and Transportation

United States Senate

The Honorable Ralph M. Hall

Chairman

The Honorable Eddie Bernice Johnson

Ranking Member

Committee on Science, Space, and Technology

House of Representatives

The Honorable Bill Nelson

Chairman 

Subcommittee on Science and Space

Committee on Commerce, Science, and Transportation

United States Senate

Subject: Key Controls NASA Employs to Guide Use and Management of Funded Space Act 

Agreements Are Generally Sufficient, but Some Could Be Strengthened and Clarified

In the National Aeronautics and Space Act of 1958, Congress granted the National 

Aeronautics and Space Administration (NASA) authority to enter into transactions other than 

contracts, leases, and cooperative agreements; this gave the agency greater flexibility in 

achieving its mission.

1 NASA uses its other transaction authority through three kinds of 

instruments known as Space Act agreements. Specifically, NASA uses reimbursable 

agreements when costs associated with an undertaking are reimbursed by the agreement 

partner (in full or in part); the agency uses non-reimbursable agreements when each party 

bears the cost of participation in mutually beneficial activities. In 2006, NASA began to use a 

third kind of agreement—referred to as funded Space Act agreements—that have involved 

NASA providing significant funds to private industry partners to stimulate the development of 

large-scale commercial space transportation capabilities.2

 

1 Pub. L. No. 85-568, § 203. 

2 While this was the first time NASA has used its other transaction authority specifically to stimulate development 

of private-sector capabilities, NASA has used its other transaction authority in the past to enter into joint 

sponsored research agreements with private industry that shared funding and technical assistance on 

technology development efforts of mutual interest.

United States Government Accountability Office

Washington, DC 20548
2 GAO-12-230R NASA Funded Space Act Agreements

Under a funded Space Act agreement, appropriated funds are transferred to a domestic 

partner, such as a private company or a university, to accomplish an agency mission. These 

agreements differ from Federal Acquisition Regulation (FAR) contracts in that they do not 

include requirements that generally apply to government contracts entered into under the 

authority of the FAR. For example, under these agreements, partners are not required to 

comply with government contract quality assurance requirements.

3 NASA policy provides 

that this authority may only be used when agency objectives cannot be achieved through 

the use of a procurement contract, grant, or cooperative agreement.

4

 

NASA’s intent in using funded Space Act agreements was to encourage innovation in the 

private sector and stimulate development of a new commercial market; the agency’s 

commercial partners were to be both the principal drivers and beneficiaries of the effort to 

develop commercial cargo and crew capabilities. NASA anticipated receiving the ancillary 

benefit of being able to use the emerging commercial market to procure safe, reliable 

transportation services to the space station at a reasonable price, as commercial partners 

are expected to make their own significant investments. 

As of October 31, 2011, NASA has used funded Space Act agreements to provide industry 

partners with $833.1 million for completion of developmental milestones, with the aim of 

potentially procuring crew (i.e., transporting astronauts) and cargo transportation services to 

the space station. Partners can collectively earn another $248.3 million under these 

agreements through the first half of 2012. It is important that NASA have strong internal 

controls in place to ensure proper use and management of funded Space Act agreements

because they (1) permit considerable latitude by agencies and companies in negotiating 

agreement terms and (2) may not include the same oversight requirements found in 

traditional FAR-governed contracts.

5 NASA has established policies and guidance for 

implementing agreements under its other transaction authority, specifically NASA Policy 

Directive 1050.1I, Authority to Enter into Space Act Agreements and NASA Advisory 

Implementing Instruction 1050-1A, Space Act Agreements Guide.6

 

3 Quality assurance requirements ensure that supplies and services acquired under a government contract 

conform to the contract’s quality and quantity requirements. FAR Part 46. See for example, FAR Clauses 52.246-

4, Inspection of Services—Fixed Price and 52.246-5, Inspection of Services—Cost Reimbursement.

In this context, you 

asked us to evaluate the extent to which NASA’s controls ensure the agency appropriately 

manages funded Space Act agreements and enters into funded Space Act agreements only 

4 NASA Policy Directive 1050.1I, Authority to Enter into Space Act Agreements (Dec. 23, 2008).FAR, 48 C.F.R. 

ch. 1 (2011).

5 NASA’s Inspector General issued a report on June 30, 2011 that discussed challenges that 

NASA must pay particular attention to in its decision-making process for determining the 

acquisition instrument for future rounds of its commercial crew efforts. NASA Inspector General, NASA’s 

Challenges Certifying and Acquiring Commercial Crew Transportation Services, IG-11-022 (June 30, 2011).

6 According to NASA’s Office of General Counsel, the chapter on funded Space Act agreements found in prior 

versions of the Space Act Agreements Guide has been deleted from the most recent one, dated June 10, 2011, 

as the information it contained was out of date and inconsistent with the agency’s current practice. New guidance 

relating to funded Space Act agreements is forthcoming. For the purposes of this report, unless otherwise noted, 

when we refer to NASA guidance we are referring to the current NASA Space Act Agreements Guide, NASA 

Advisory Implementing Instruction 1050-1B (June 10, 2011).
3 GAO-12-230R NASA Funded Space Act Agreements

when its objectives cannot be achieved through any other agreement instrument, such as a 

federal procurement contract. 

This letter is the third based on your request to review NASA’s use of Space Act 

agreements. The previous two letters dealt with NASA’s use of reimbursable Space Act 

agreements.7 We have also testified recently on NASA’s Commercial Orbital Transportation 

Services (COTS) program, which has been executed under funded Space Act agreements.8

COTS is focused on supporting and stimulating the development of a commercial market for 

space transportation, from which NASA could potentially acquire cargo transportation 

services (e.g., delivery of supplies to maintain the space station and equipment to conduct 

research).

Scope and Methodology

To determine the extent to which NASA’s internal controls ensure proper use and 

management of funded Space Act agreements, we reviewed federal laws, NASA policies 

and procedures for funded Space Act agreements, NASA’s broader agency acquisition and 

risk management policies, and GAO’s Standards for Internal Control in the Federal 

Government.

9 We compared NASA’s controls as outlined in agency policies and guidance 

with controls we found relevant in GAO’s Standards, specifically those associated with 

delegation of authority, separation of duties, risk assessment, documentation, and training. 

We also reviewed NASA planning documents related to the agency’s commercial cargo and 

crew capability development efforts including instrument selection papers and acquisition 

strategy documents. In addition, we reviewed laws, regulations, and policies relating to other 

transaction authority at the Department of Defense (DOD) and Department of Homeland 

Security (DHS) since these agencies have also been granted other transaction authority by 

Congress. We conducted interviews with NASA officials in its Office of General Counsel, 

and Human Exploration and Operations Mission Directorate regarding their approach for 

using funded Space Act agreements and their internal controls for managing these 

agreements, and with DOD and DHS procurement officials regarding their use of other 

transaction authority. 

We conducted this performance audit from July 2011 to October 2011 in accordance with 

generally accepted government auditing standards. Those standards require that we plan 

and perform the audit to obtain sufficient, appropriate evidence to provide a reasonable 

basis for our findings and conclusions based on our audit objectives. We believe that the 

evidence obtained provides a reasonable basis for our findings and conclusions based on 

our audit objectives.

 

7 GAO, Training Necessary to Address Data Reliability Issues in NASA Agreement Database and to Minimize 

Potential Competition with Commercial Sector, GAO-11-552R (Washington, D.C.: May 26, 2011); GAO, 

Reimbursable Space Act Agreements: NASA Generally Adhering to Fair Reimbursement Controls, but Guidance 

on Waived Cost Justifications Needs Refinement, GAO-11-553R (Washington, D.C.: May 26, 2011).

8 GAO, Commercial Launch Vehicles: NASA Taking Steps to Manage Delays and Risks, GAO-11-692T 

(Washington, D.C.: May 26, 2011).

9 GAO, Standards for Internal Control in the Federal Government, GAO/AIMD-00-21.3.1 (Washington, D.C.: 

November, 1999).
4 GAO-12-230R NASA Funded Space Act Agreements

Summary

In accordance with GAO’s Standards for Internal Control in the Federal Government, NASA 

policy and guidance provide internal controls for certain aspects of using and managing 

funded Space Act agreements, such as separation of duties and delegation of authority. For 

example, NASA separates duties associated with authorizing, managing, and reviewing 

funded Space Act agreements. 

According to GAO’s Standards for Internal Control in the Federal Government, risk 

assessment is also an important control for ensuring programmatic objectives can be met, 

and NASA policy and guidance provide for varying levels of risk assessment. NASA’s Space 

Act agreement policy and guidance provide controls for risk assessment related to 

reasonableness of cost estimates and whether or not a Space Act agreement is the 

appropriate legal instrument, but do not require specific documentation related to these 

assessments, as GAO’s Standards for Internal Control in the Federal Government call for. 

Other risks that are traditionally assessed when making programmatic decisions, including

safety and technical risks, for example, are not addressed in NASA’s Space Act agreement 

policy. According to NASA, once it becomes clear that the agency can appropriately use a 

funded Space Act agreement for a given initiative, it is not necessary to assess such 

additional risks because these are borne by the agreement partner. When appropriate use 

of a funded Space Act agreement is less definitive based on programmatic objectives, 

according to NASA additional risks such as safety and technical risks are addressed through 

use of the agency’s strategic acquisition approach and related policies. It is not always clear, 

however, when and if the objectives of a program drive the need to follow NASA’s strategic 

acquisition approach and assess additional programmatic risks.

Finally, though federal standards for internal control highlight the importance of training to 

maintaining competence, NASA does not require or offer formal training for individuals 

responsible for managing funded Space Act agreements. For its Commercial Crew program, 

NASA did develop and document a process to guide program officials through procedures 

associated with its agreements. Although the documented process is a positive step for the 

Commercial Crew program, given the unique nature of funded Space Act agreements and 

the judgment that can be executed by agreement managers, training could help ensure that 

future agreements are executed appropriately. We are recommending that NASA 

incorporate additional internal controls relating to documentation and training in its policy 

and guidance for funded Space Act agreements, and that NASA clarify if, how, and to what 

extent agency officials should refer to NASA’s broader acquisition and risk management 

policies when considering use of a funded Space Act agreement. Commenting on a draft of 

this report, NASA concurred with our recommendations.

Background

NASA uses funded Space Act agreements to invest government funds and tailor the level of 

involvement by the government in sharing technical expertise to stimulate development of 

commercial capabilities, when the result may not provide a direct benefit to the agency. As 

such, in 2005 NASA established the COTS program to develop and demonstrate 
5 GAO-12-230R NASA Funded Space Act Agreements

commercial cargo transport capabilities.10 Under this program, NASA currently has funded 

Space Act agreements with Space Exploration Technologies Corporation (SpaceX) and 

Orbital Sciences Corporation (Orbital). Upon successful completion of all agreement 

milestones, SpaceX and Orbital will have received $396 million and $288 million, 

respectively.11

In 2010, NASA entered into similarly structured funded Space Act agreements with five 

companies to stimulate development and demonstration of commercial human spaceflight 

capabilities. Under this Commercial Crew Development effort (CCDev 1), NASA awarded 

Blue Origin, The Boeing Company (Boeing), Paragon Space Development Corporation, 

Sierra Nevada Corporation (Sierra Nevada), and United Launch Alliance agreements to 

further establish vehicle designs and develop and test key technologies and subsystem 

concepts. Those agreements ended earlier this year, with the companies collectively 

earning approximately $50 million. NASA subsequently awarded a second round of funded 

Space Act agreements (CCDev 2), worth nearly $270 million, to Blue Origin, Boeing, Sierra 

Nevada, and SpaceX. NASA recently provided its procurement strategy for the remaining 

phases of the commercial crew effort to Congress for its review.12

Since 1958, other federal agencies including the Department of Defense13 (DOD) and the 

Department of Homeland Security14 (DHS) have also been granted other transaction 

authority. Unlike NASA’s, however, DOD’s and DHS’s statutes explicitly authorize these 

agencies to develop and acquire prototypes for the direct benefit of their departments.

15

NASA’s statute does not provide this authority. In implementing its other transaction 

authority, NASA must comply with the Federal Grants and Cooperative Agreements Act of 

1977 (Chiles Act).16

 

10 GAO, Commercial Partners Are Making Progress but Face Aggressive Schedules to Demonstrate Critical 

Space Station Cargo Transport Capabilities, GAO-09-618 (Washington, D.C.: June 16, 2009).

This act outlines the principal purposes of various agreement

instruments according to the relationships they reflect between participants, as well as the 

level of involvement between the agency and participant. For example, a procurement 

contract must be used when the principal purpose of the instrument is to acquire property or 

services for the direct benefit of the government, or when the agency decides that in a 

specific instance its use is appropriate; grants and cooperative agreements are used when 

11 NASA initially entered into COTS agreements with SpaceX and Rocketplane Kistler; however, in October 2007 

NASA terminated its agreement with Rocketplane Kistler after the company failed to complete financial and 

technical milestones; the company had earned $32 million for milestones completed up to that point. Orbital was 

awarded its COTS agreement in February 2008.

12 NASA submitted a procurement system review which includes its acquisition strategy for its next commercial 

crew phases to the Committee on Commerce, Science, and Transportation of the Senate and the Committee on 

Science, Space and Technology of the House of Representatives on September 16, 2011. GAO is required to 

assess NASA’s strategy and plans and report to these committees within 90 days after NASA’s submission. 

National Aeronautics and Space Administration Authorization Act of 2010, Pub. L. No. 111-267, § 403.

13 National Defense Authorization Act for Fiscal Years 1990 and 1991, Pub. L. No. 101-189, § 251 (1989).

14 Homeland Security Act of 2002, Pub. L. No. 107-296, § 831.

15 10 U.S.C. § 2371 and 6 U.S.C. § 391.

 16 Pub. L. No. 95-224 (1978) (codified at 31 U.S.C. § 6301 et seq.).

 
6 GAO-12-230R NASA Funded Space Act Agreements

the principal purpose of the relationship is to transfer something of value to a recipient to 

accomplish a public purpose of support or stimulation, with varying levels of involvement 

from the government agency. Because NASA must comply with the Chiles Act, 

consideration of provisions of this Act has been a key element of NASA’s recent decisions to 

use funded Space Act agreements for its COTS and CCDev efforts. 

NASA Policy Addresses Most Key Internal Controls but Some Could Be Strengthened 

and Clarified

Consistent with GAO’s Standards for Internal Control in the Federal Government, NASA’s 

policy regarding funded Space Act agreements provides internal controls for the separation 

of duties pertaining to authorizing, managing, and reviewing funded agreements. According 

to these internal controls, in order to reduce the risk of error or fraud, responsibilities and 

key duties should be divided among different positions such as authorizing, processing, and 

reviewing transactions. Separation of duties is important because work responsibilities 

should be separated so that one individual does not control all critical stages of a process. In 

addition, dividing duties between various individuals diminishes the likelihood that errors and 

wrongful acts will go undetected, because the activities of one group or individual will serve 

as a check on the activities of the other.

NASA Space Act Agreements Policy Provides Internal Controls for Separation of Duties 

 

NASA’s policy regarding funded Space Act agreements is in line with this standard. For 

example, agreement officers manage and track funded agreements as they go through the 

approval process to ensure they proceed in a timely and appropriate manner. For 

headquarters agreements, the Office of the Chief Financial Officer is responsible for 

preparing and reviewing cost estimates of funding and any other NASA contributions to be 

committed under the agreement. The signing official17 is given the responsibility of executing 

the agreement as well as ensuring that NASA’s proposed contribution is fair and reasonable 

compared to NASA program risks, corresponding benefits to NASA, and the funding and 

resources to be contributed by the agreement partner. Lastly, NASA policies specify the 

agency general counsel’s responsibilities associated with reviewing funded Space Act 

agreements before execution to ensure compliance with applicable statutes, regulations, 

and policies. Table 1 below identifies how various duties were separated relating to review, 

authorization and management for the funded agreements we reviewed. 

 

17 According to agency policy, a signing official is a NASA employee delegated the responsibility to execute 

agreements for the agency. In the case of funded agreements, individuals delegated such authority may be one 

level below the official authorized to execute, amend, and terminate such agreements (authorizing officials 

include mission directorate associate administrators, officials-in-charge of headquarters offices, center directors, 

and the manager of the NASA Management Office—Jet Propulsion Laboratory, depending on where the 

agreement is initiated).
7 GAO-12-230R NASA Funded Space Act Agreements

Table 1: Separation of Duties for Executing and Managing Funded Space Act Agreements. 

Duties

Role Review Authorize Manage Responsibilities

Agreement 

Officer (i.e., 

contracting 

officer)

X Conducting daily transactions; tracking agreement 

through approval process

Chief 

Financial 

Officer

X Preparing and reviewing cost estimates

General 

Counsel

X Reviewing the use of funded agreement to ensure 

compliance with statutes, regulations, and policies

Signing 

Official (e.g., 

Mission 

Directorate 

Associate 

Administrator) 

X Executing agreement and determining NASA's 

contribution is fair and reasonable

Source: NASA.

Note: Data are from NASA Policy Directive 1050.1I. 

NASA policy also provides appropriate internal controls for delegation of authority, as it 

relates to funded Space Act agreements. According to GAO’s Standards for Internal Control 

in the Federal Government, transactions and other significant events should be authorized 

and executed only by persons acting within the scope of their authority, and this authority 

should be clearly communicated to managers and employees. These standards state the 

control environment is often affected by the manner in which the agency delegates authority 

and responsibility throughout the agency. Delegation covers authority and responsibility for 

operating activities, reporting relationships, and protocols for authorizations. For funded 

Space Act agreements, NASA policy states that the delegation of authority to execute, 

amend, and terminate funded Space Act agreements can only be delegated one level below 

the authorized official; delegation authority must be in writing and indicate the extent of the 

delegation. For example, the policy states that either the mission directorate associate 

administrators, the officials in charge of headquarters offices, or the directors of NASA 

centers—depending on where the agreement is initiated—have the responsibility for the 

negotiation, execution, amendment, and termination of funded agreements. Further, it states 

that these individuals may delegate agreement execution authority to signing officials. 

Figure 1 provides an example of the delegation of authority as exercised in accordance with 

NASA’s policy in CCDev 1 and CCDev 2. 

NASA Space Act Agreements Policy Provides Internal Controls for Delegation of Authority
8 GAO-12-230R NASA Funded Space Act Agreements

Figure 1: Delegation of Authority on CCDev 1 and CCDev 2 

Note: The Exploration Systems Mission Directorate is now the Human Exploration and Operations Mission Directorate. 

In accordance with GAO’s Standards for Internal Control in the Federal Government, 

NASA’s Space Act agreement policy provides internal controls for conducting an 

assessment of risks, though the policy is limited in the types of risks it covers and does not 

require documentation of such assessments. GAO’s standards direct agencies to identify 

and analyze risks to meeting their objectives. Analysis may include:

NASA Policy and Guidance Provide Controls for Varying Levels of Risk Assessment, but 

When, If, and the Extent to Which These Controls Are to Be Followed Is Not Always Clear 

and Documentation Requirements Could Be Strengthened

• estimating the risk’s significance; 

• assessing the likelihood for the risk to occur; and 

• deciding how to manage the risks and what specific actions to undertake.

Additionally, these standards state that internal controls, transactions, and important events 

should be clearly documented and such documentation should be readily available for 

examination. 

NASA’s Space Act agreement policy and guidance require assessment of risks associated 

with the fair and reasonableness of cost estimates and whether a Space Act agreement is 

the appropriate legal instrument. Specifically, the policy requires the agency’s chief financial 

officer to prepare and review cost estimates to give signing officials a basis for determining

that NASA’s proposed contribution is fair and reasonable. The policy requires that costs be 

weighed against program risks, corresponding benefit to NASA, and the funding and 

resources to be contributed by the agreement partner. According to the Space Act 

agreement policy and guidance, agency officials must also determine whether the agency 

objectives can be achieved through any other instrument. According to NASA and based on 

the documentation we reviewed, this determination includes an analysis of the Chiles Act.

The policy, however, contains no specific requirements for how, and if at all, to document 

these assessments. As a result, different programs had varying levels of documentation of 
9 GAO-12-230R NASA Funded Space Act Agreements

these assessments. For example, in some cases the COTS program provided memos 

signed by the Chief Financial Officer asserting that estimated costs were fair and 

reasonable. For CCDev 1 and 2, NASA indicated that no specific documentation was 

developed for the cost estimates and that the information was encompassed in source 

selection documentation.18 This documentation, however, was not prepared or reviewed by 

the Chief Financial Officer, as the policy directs. The absence of controls requiring clear 

documentation in NASA Space Act agreement policy could diminish NASA’s ability to 

ensure that decisions associated with use of funded Space Act agreements are being 

consistently made and documented. 

Other key risk considerations that could affect the agency’s ability to meet programmatic 

objectives, such as safety and technical risks that generally apply to developmental 

programs, however, are not addressed in the Space Act agreement policy and guidance. 

According to NASA, the objectives of a program or project define the appropriate level and 

type of risk assessment necessary and inform the type of instrument used to implement the 

program. Agency officials stated that if program objectives are such that NASA is not

procuring goods or services for its direct benefit, thereby enabling agency use of a funded 

Space Act agreement, assessment of additional developmental risks becomes unnecessary

because they are borne primarily by NASA’s agreement partners. Agency officials 

emphasized that in such instances NASA’s risk is limited only to ensuring that its 

contribution of resources supports programmatic objectives. Further, according to NASA, its 

source selection process19 for funded Space Act agreements also allows the agency to 

ensure that awarded agreements align with programmatic objectives.

According to NASA, where the objectives of a program are such that appropriate use of a 

funded Space Act agreement is less certain and involve a greater emphasis on meeting 

NASA’s mission needs, additional risks are assessed through NASA’s strategic acquisition 

approach and related acquisition and risk management policies.

20 This involves 

development of a strategic approach to implementing a program or project in support of 

NASA’s long term goals and objectives. More specifically, NASA’s broader acquisition and 

risk management policies provide controls for ensuring that other risks to meeting 

programmatic objectives, such as safety, technical, cost, and schedule risks, are considered 

as the agency formulates an acquisition strategy. 

When appropriate use of a funded Space Act agreement has been clear, as was the case 

with the COTS and CCDev 1 and 2 programs, NASA addressed very few elements of 

programmatic risk in initiating these programs. For example, NASA officials stated that given 

the programmatic objectives of these efforts (i.e. the agency was spending funds to 

stimulate private sector capabilities and was not actually acquiring anything), a funded 

 

18 The documents outline how potential partners’ proposals were evaluated based on their 

business cases—including their financial contribution and the funding requested from NASA— 

and their technical approach.

19 NASA uses an independent Participant Evaluation Panel to evaluate proposals, support the signing official for 

the funded Space Act agreement, and develop the formal selection statement for the awards.

20 NASA Policy Directive 1000.5A, Policy for NASA Acquisition (Jan. 15, 2009, revalidated Mar. 17, 2010).
10 GAO-12-230R NASA Funded Space Act Agreements

Space Act agreement was determined to be the appropriate legal instrument in each 

instance and risk considerations were limited primarily to the fairness and reasonableness of 

NASA’s contributions to the efforts.21 In contrast, for the next phases of its Commercial Crew 

effort NASA determined that meeting its space station crew transportation needs was a key 

program objective and, therefore, appropriate use of a funded Space Act agreement was 

less definite. As a result, the cost, technical, and schedule risks associated with using 

contracts, cooperative agreements, and funded Space Act agreements—to the extent they 

would affect the programmatic objectives—were all considered during the process of 

selecting an appropriate legal instrument for these phases. NASA also produced a risk 

management plan for the Commercial Crew Program as required per NASA’s risk 

management policy. Additionally, as part of its overall risk analysis, NASA assessed risks 

associated with its ability to impose requirements for certifying vehicles on commercial 

partners (i.e., verifying that the system has met technical requirements and is safe to carry 

NASA crewmembers).22 Through this process, the agency decided that it could not use a 

Space Act agreement for this effort.

We did not assess the appropriateness of NASA’s decision to use or not use a funded 

Space Act agreement for its commercial crew and cargo efforts. Similarly, we did not assess 

NASA’s adherence to its broader acquisition and risk management policies, because the

policies do not explicitly apply to funded Space Act agreements. In practice, NASA has used

the basic framework provided by its broader acquisition and risk management policies in 

guiding some decisions that have contemplated the use of a funded Space Act agreement. 

It remains unclear, however, when and if program managers need to use this framework

when a funded Space Act Agreement is being considered among a number of instrument 

options. Lack of clear direction for using relevant agency policies could result in insufficient 

assessment and consideration of programmatic risks during formulation of an overall 

strategy that includes consideration of the use of a funded Space Act agreement. 

NASA policy and guidance do not require training for officials involved in executing funded 

Space Act agreements. GAO’s Standards for Internal Control in the Federal Government

stipulate that all personnel need to possess and maintain a level of competence that allows 

them to accomplish their assigned duties as well as understand the importance of 

developing and implementing good internal controls. Additionally, management needs to 

identify appropriate knowledge and skills needed for various jobs and provide appropriate 

training. NASA’s policy and past and current guidance regarding funded Space Act 

agreements does not require agreement officers, who are responsible for managing the 

agreements on a daily basis, to attend training prior to exercising their responsibilities. A 

NASA Policy and Guidance Do Not Require Training for Space Act Agreement Officers 

 

21 NASA’s authorization act for fiscal year 2008 directed the agency to use competed, funded Space Act 

agreements for its initial commercial crew effort (CCDev 1). Similarly, in fiscal year 2011 NASA was operating 

under a continuing resolution and restrictions on starting new programs; however, the agency’s authorization act 

for fiscal year 2010 provided for a continuation of NASA’s existing commercial crew effort. Thus, CCDev 2 

agreements were awarded as a follow-on effort to CCDev 1.

22 According to NASA officials, these additional risks were considered for the next phase of the commercial crew 

effort in connection with how use of a funded Space Act agreement factored into NASA’s overall acquisition 

strategy—specifically the eventual need to certify commercial systems for human spaceflight. This was not the 

case with CCDev 1 and 2 because those efforts did not involve development of fully integrated launch and 

spaceflight systems intended to carry NASA crewmembers—they were focused on maturing technologies and 

subsystem designs.
11 GAO-12-230R NASA Funded Space Act Agreements

NASA official told us that they do not require or offer formal training for funded agreements

because they are used infrequently. 

While not providing training, the Commercial Crew program has developed a documented 

process to guide agreement officers23 in fulfilling their duties relative to these specific 

agreements. For example, a specific milestone payment process was established for 

agreements executed under the commercial crew program. Additionally, direction is 

provided to agreement officers to manage funded agreements through knowledge transfer 

from earlier agreement officers, as well as support from the Office of General Counsel. For 

example, officials at the Johnson Space Center jointly managed aspects of the commercial 

crew effort for a time to assist their counterparts at the Kennedy Space Center who would 

be taking over responsibility for the program. This was intended to facilitate an effective 

transfer of knowledge between the centers for agreement officer support and other program

functions. 

We acknowledge that these steps have value but, as we have previously reported, the 

unique nature of other transaction agreements requires staff with experience in planning and 

conducting research and development acquisitions, strong business acumen, and sound 

judgment to enable them to operate in a relatively unstructured business environment.24

Although NASA’s other transaction authority is not bounded by the same legal framework 

that applies to DHS’s authority, DHS policy, for example, requires its other transaction 

contracting officers to hold a certification for the most sophisticated and complex contracting 

activities and to take training on the use of this authority. A documented process for one 

program may not necessarily provide those managing these agreements with the skill set 

necessary to manage the flexibility and exert appropriate judgment when executing funded 

Space Act agreements in general. As a result, the lack of required targeted training for use 

of funded Space Act agreements could diminish NASA’s ability to ensure that such 

agreements are being properly executed. 

Conclusions

In recent years, NASA has for the first time used its other transaction authority to help fund 

development of large-scale commercial space transportation systems. In light of this 

unprecedented use and the fact that these agreements are not subject to many of the laws 

that apply to traditional contracts executed under the FAR, it is important that NASA ensure 

this authority is used and managed appropriately. Internal controls are a key element of

effective management and help to facilitate good program outcomes and foster 

accountability. NASA’s policies provide for such controls regarding separation of duties and 

delegation of authority, as well as for conducting risk assessments associated with the 

decision to use funded Space Act agreements. However, there are no documentation 

requirements associated with these assessments. Although NASA considers its strategic 

acquisition framework and related policies the mechanism by which additional risks are 

 

23 A NASA official explained that agreement officers are warranted contracting officers who are permitted to 

commit government funds under agreements. Contracting officers obtain warrants as a certificate of their 

authority to enter into, administer, or terminate contracts and make related determinations and findings. 

Contracting officers may bind the government only to the extent of the authority delegated to them.

24 GAO, Department of Homeland Security: Improvements Could Further Enhance Ability to Acquire Innovative 

Technologies Using Other Transaction Authority, GAO-08-1088 (Washington, D.C.: Sept. 23, 2008).
12 GAO-12-230R NASA Funded Space Act Agreements

considered when use of a funded Space Act agreement is being considered among a range 

of instruments, it is not clear from this framework and accompanying policies if, how, or the 

extent to which they apply in such cases. As a result, it may be difficult for NASA to ensure 

these policies are appropriately followed for future efforts that contemplate the use of a 

funded Space Act agreement along with other instrument types. Additionally, while a formal 

process is now in place for administering NASA’s commercial crew effort, the agency does 

not require or offer training specific to the use of funded Space Act agreements. This could 

affect NASA’s ability to ensure this authority is used appropriately and effectively. 

Recommendations for Executive Action

To continue to ensure funded Space Act agreements are used and managed appropriately, 

we recommend that the Administrator of NASA direct the appropriate offices to update the 

agency’s policies and guidance to: 

• Incorporate controls for documenting, at a minimum, the agency’s decision to use a 

funded Space Act agreement and its analysis supporting the determination that no 

other instrument is feasible, as well as the agency’s assessment of the fairness and 

reasonableness of the costs it is contributing to an effort conducted using a funded 

Space Act agreement; 

• Clarify if, how, and to what extent NASA officials are to refer to the agency’s broader 

acquisition and risk management policies when contemplating use of a funded 

Space Act agreement; and 

• Ensure training is provided to officials involved in executing funded Space Act 

agreements, when appropriate. 

We provided a copy of the draft report to NASA for comment, and the agency agreed with 

our overall findings and concurred with our recommendations. In commenting on the draft, 

NASA indicated that the agency has plans to take actions to address the issues we raised. 

For example, NASA stated that it will update its guidance to ensure a written determination 

on the proposed use of funded Space Act agreements, including appropriate analysis 

supporting the determination, is required prior to the initiation of any funded Space Act 

Agreement activities. Additionally, the agency clarified that current policy regarding cost 

estimates for funded Space Act agreements assumes agreements are handled 

independently with a defined level of funding. In practice, however, funded agreements have 

been awarded using a competitive process with the signing official authorized to evaluate 

proposals and make awards based on agency objectives and overall funding limits. NASA 

said the policy will be updated to reflect this practice. NASA stated that the agency’s 

acquisition management policy will be updated to include the proposed use of a funded 

Space Act agreement as an element in the development of a strategy for implementing its 

mission. Finally, NASA said it will develop appropriate guidance on the roles and 

responsibilities of agreements officers and will implement the guidance through training all 

agreements officers assigned to support funded Space Act agreements. NASA also 

provided technical comments that we have incorporated as appropriate.

Agency Comments 
13 GAO-12-230R NASA Funded Space Act Agreements

_________________________________________________________________________

We are sending copies of this report to interested congressional committees. In addition, the 

report will be available at no charge on GAO’s website at http://www.gao.gov. 

If you or your staff have any questions regarding this report, please contact me at (202) 512-

4841 or chaplainc@gao.gov. Contact points for our Offices of Congressional Relations and 

Public Affairs may be found on the last page of this letter. Key contributors to this report 

were Shelby S. Oakley, Assistant Director; Andrew Redd; Laura Greifner; Jean McSween; 

Kenneth Patton; Megan Porter; and Alyssa Weir.

Cristina T. Chaplain

Director

Acquisition and Sourcing Management

Enclosure
14 GAO-12-230R NASA Funded Space Act Agreements

Enclosure

Comments from the National Aeronautics and Space Administration
15 GAO-12-230R NASA Funded Space Act Agreements

Enclosure
16 GAO-12-230R NASA Funded Space Act Agreements

Enclosure

(120971)
This is a work of the U.S. government and is not subject to copyright protection in the 

United States. The published product may be reproduced and distributed in its entirety 

without further permission from GAO. However, because this work may contain 

copyrighted images or other material, permission from the copyright holder may be 

necessary if you wish to reproduce this material separately.
The Government Accountability Office, the audit, evaluation, and 

investigative arm of Congress, exists to support Congress in meeting its 

constitutional responsibilities and to help improve the performance and 

accountability of the federal government for the American people. GAO 

examines the use of public funds; evaluates federal programs and 

policies; and provides analyses, recommendations, and other assistance 

to help Congress make informed oversight, policy, and funding decisions. 

GAO’s commitment to good government is reflected in its core values of 

accountability, integrity, and reliability.

The fastest and easiest way to obtain copies of GAO documents at no 

cost is through GAO’s Web site (www.gao.gov). Each weekday afternoon, 

GAO posts on its Web site newly released reports, testimony, and 

correspondence. To have GAO e-mail you a list of newly posted products, 

go to www.gao.gov and select “E-mail Updates.”

The price of each GAO publication reflects GAO’s actual cost of 

production and distribution and depends on the number of pages in the 

publication and whether the publication is printed in color or black and 

white. Pricing and ordering information is posted on GAO’s Web site, 

http://www.gao.gov/ordering.htm. 

Place orders by calling (202) 512-6000, toll free (866) 801-7077, or 

TDD (202) 512-2537. 

Orders may be paid for using American Express, Discover Card, 

MasterCard, Visa, check, or money order. Call for additional information.

Contact:

Web site: www.gao.gov/fraudnet/fraudnet.htm

E-mail: fraudnet@gao.gov

Automated answering system: (800) 424-5454 or (202) 512-7470

Ralph Dawn, Managing Director, dawnr@gao.gov, (202) 512-4400

U.S. Government Accountability Office, 441 G Street NW, Room 7125

Washington, DC 20548

Chuck Young, Managing Director, youngc1@gao.gov, (202) 512-4800

U.S. Government Accountability Office, 441 G Street NW, Room 7149 

Washington, DC 20548

GAO’s Mission

Obtaining Copies of 

GAO Reports and 

Testimony

Order by Phone

To Report Fraud, 

Waste, and Abuse in 

Federal Programs

Congressional 

Relations

Public Affairs