AUDIT REPORT IG-03-024

Report Recipients:

H/Assistant Administrator for 

Procurement 

ARC/D/Director, Ames 

 Research Center 

GSFC/100/Director, Goddard 

 Space Flight Center 

MSFC/DA01/Director, 

Marshall Space Flight Center 

IMPROVING NASA OVERSIGHT OF 

 PRIME CONTRACTORS’ 

 NONCOMPETITIVE SUBCONTRACTING 

August 15, 2003

cc: 

JM/Director, Management 

Assessment Division 

ARC/MS200-9/Audit 

Liaison Representative 

GSFC/MS201/Audit 

Liaison Representative 

MSFC/RS40/Audit Liaison 

Representative 

WARNING: This document is a final report of audit issued by the NASA Office 

of Inspector General (OIG). Contractor information contained herein may be 

company confidential. The restriction of 18 USC 1905 should be considered 

before this data is released to the public. Any Freedom of information Act 

request for this report should be directed to the NASA Inspector General for 

processing in accordance with Title 14 Code of Federal Regulations, Part 

1206.504. 

 National Aeronautics and 

Space Administration

OFFICE OF INSPECTOR GENERAL 

Released by: Original Signed by DAIGA, A. Lamoreaux for 

David M. Cushing, Assistant Inspector General for Auditing 
1 

IG-03-024 August 15, 2003

 A-02-011-00 

Improving NASA Oversight of Prime Contractors’ 

 Noncompetitive Subcontracting 

We evaluated the adequacy of competition in subcontracting by three NASA prime 

contractors -- Orbital Sciences Corporation (Orbital); Computer Sciences Corporation 

(CSC); and TRW, Inc. We also considered NASA oversight of the contractors’ 

performance. We found that noncompetitive subcontract awards at TRW, Inc. were 

adequately justified and limited our detailed analysis to Orbital and CSC. Competition in 

contracting is one of the overarching principles in Federal procurement because it is a 

means for keeping suppliers efficient and responsive. 

We found that Orbital and CSC had awarded 10 (48 percent) of 21 noncompetitive 

subcontracts without adequately justifying the lack of competition. As a result, NASA 

had reduced assurance that Orbital and CSC obtained fair and reasonable pricing for the 

10 noncompetitive subcontracts, which were valued at $5.5 million. Further, based on 

our audits at 13 NASA prime contractors (including those in this audit), we found that 60 

(54 percent) of 111 noncompetitive subcontracts reviewed, valued at $11.6 million, were 

not justified in accordance with the contract and Federal procurement requirements. 

Details of our audit objectives, scope, and methodology are in Appendix B. 

Noncompetitive Subcontract Awards Lacked Adequate Justifications 

Orbital and CSC had not complied with the Federal Acquisition Regulation (FAR) 

requirements for justifying noncompetitive subcontracts in their NASA contracts or with 

company policies on competition in subcontracting that implemented the contractual 

requirements (see Appendix D for competition requirements). 

• Four (40 percent) of the 10 noncompetitive subcontract awards lacked any 

documentation to support the company’s claim that the lack of competition was 

justified. Orbital awarded the four subcontracts under two separate NASA 

contracts involving the Marshall Space Flight Center (Marshall) and Ames 

Research Center (Ames). 

• Justifications for the remaining six subcontract awards did not contain adequate 

explanations to support the companies’ claims that the noncompetitive awards 

were necessary. For example, three subcontracts named specific individuals to 

perform engineering support work, but the justifications lacked required 

explanations about how the individuals were uniquely qualified to perform the 
2 

work or that the anticipated costs were fair and reasonable. Orbital and CSC 

awarded the six subcontracts under two separate NASA contracts awarded by 

Marshall. 

NASA Oversight Can Be Improved 

NASA contracting officer (CO) oversight did not identify the contractors’ inadequate 

justifications for noncompetitive subcontracting. COs can require contractors to obtain 

the COs’ consent prior to subcontracting. Such consent was required for the CSC 

contract at Marshall and the Orbital contract at Ames. The CO for the Orbital contract at 

Marshall did not require prior consent before subcontracting. 

NASA relies on the Defense Contract Management Agency (DCMA) to review 

contractors’ controls over their purchasing process. The DCMA conducts contractor 

purchasing system reviews (CPSRs) periodically based on a risk assessment of a 

contractor’s controls. 

At the time of our audit, the most recent DCMA CPSRs at Orbital and CSC occurred 

February 1997 and September 2001, respectively. The DCMA had not included a 

detailed evaluation of noncompetitive subcontracting in either review. After our 

discussions with the DCMA, it initiated a CPSR of Orbital and included an evaluation of 

Orbital’s subcontract awards. The DCMA found noncompetitive awards with inadequate 

justifications and, in some cases, no justifications. Further, the DCMA found that for 6 

(50 percent) of 12 sampled noncompetitive subcontracts, a price analysis either had not 

been accomplished (3) or was inadequate (3). 

 

We found that CO analyses performed in response to Orbital and CSC requests for 

consent to subcontract were inadequate. The contract files, for example, did not show 

that the COs evaluated whether the individuals were technically qualified, a lack of 

competition was properly justified, or the contractor performed adequate price analyses 

or comparisons for the required work. The FAR states that COs should be particularly 

careful and thorough in their analysis when subcontracts are proposed for award on a 

noncompetitive basis. Further, for two of the six subcontracts with inadequate 

justifications, the NASA COs’ actions directly contributed to the noncompetitive awards. 

• On a $736,700 subcontract, a Marshall CO, citing program requirements, directed 

CSC to purchase services from a specific vendor. The CO did not obtain approval 

from the Center Procurement Officer and Competition Advocate as required by 

the NASA FAR Supplement. 

• On a $3.1 million subcontract, a Marshall CO gave CSC such short notice (about 

3 weeks) of a new contract requirement that CSC had no choice but to select the 

existing subcontractor noncompetitively. The CO told us that the NASA program 

office did not give the CO adequate notice of the requirements to allow for the 
3 

subcontract to be competed. The justification did not discuss the extent and 

nature of the harm to the Government if the procurement was competed and did 

not include an analysis of costs. 

Recommendations, Management’s Response, and Evaluation of Management’s 

Response 

1. The Assistant Administrator for Procurement should request that the DCMA 

include a detailed analysis of noncompetitive subcontracting when performing 

CPSRs at NASA prime contractors. 

Management’s Response. Concur. DCMA will be requested to include a detailed 

analysis of noncompetitive subcontracting when performing CPSRs at NASA prime 

contractors via letter. The letter will be issued by October 31, 2003. 

The Director, Marshall Space Flight Center, should: 

2. Direct the Center Procurement Officer to ensure that COs require 

Orbital and CSC to comply with FAR requirements in their NASA 

contracts. 

Management’s Response. Concur. The Procurement Officer, via letter, will advise the 

COs to require Orbital and CSC to comply with FAR requirements in their NASA 

contracts. The letter will be issued by October 31, 2003. 

3. Direct the Center Procurement Officer to ensure that COs properly 

perform adequate analyses of contractor requests prior to approving 

consents to subcontract. Where appropriate, the analyses should include 

obtaining concurrences and approvals from the Center Procurement 

Officer and Competition Advocate, respectively. 

Management’s Response. Concur. The Procurement Officer, via letter, will advise the 

COs to properly perform adequate analyses of contractor requests prior to approving 

consents to subcontract. Where appropriate, the analyses should include obtaining proper 

concurrences and approvals from the center Procurement Officer and competition 

advocate, respectively. The letter will be issued by October 31, 2003. 

4. Direct the Center program offices to inform all of their program 

managers of the need to make the applicable COs aware at the earliest 

opportunity of any upcoming procurement requirements. 

Management’s Response. Concur. The Center program offices/program managers 

currently provide the COs with their annual Acquisition Forecast Requirements. 

However, the Center Director or his designee will issue correspondence to program 

offices advising of the need to make Contracting Officers aware of upcoming 
4 

requirements that are not in the forecast. The correspondence will be issued by October 

31, 2003. 

5. The Director, Ames Research Center, should direct the Center Procurement 

Officer to ensure that COs require Orbital to comply with FAR requirements in its 

NASA contract and to perform adequate analyses of contractor requests for consent 

prior to consenting to subcontract. 

 

Management’s Response. Concur. The Procurement Officer will advise the COs to 

require Orbital to comply with FAR requirements in its NASA contracts and to perform 

adequate analyses of contractor requests for consent prior to consenting to subcontract. 

The advisory will be issued by October 31, 2003. 

Evaluation of Management’s Response. Management’s planned actions are responsive 

to the intent of the recommendations. The recommendations are resolved but will remain 

undispositioned and open for reporting purposes until the corrective actions are 

completed. 

Appendices 

Details related to the disposition and closure of the recommendations are in Appendix A. 

Among the other appendices, note Appendix C, which identifies and discusses the 

specific noncompetitive subcontracts at Orbital and CSC, and Appendices E and F, which 

summarize the series of audits that, in total, identify a systemic problem of inadequately 

justified noncompetitive procurements by NASA prime contractors. 
5 

List of Appendices 

Appendix A – Status of Recommendations 

Appendix B – Objectives, Scope, and Methodology 

Appendix C – Noncompetitive Subcontracts With Inadequate 

 Justifications 

Appendix D – Competition Requirements 

Appendix E – Noncompetitive Subcontract Awards at 13 NASA 

 Contractors 

Appendix F – Summary of Prior Audits 

Appendix G – Management’s Response 

Appendix H – Report Distribution

Acronyms Used in the Report 

CO Contracting Officer 

CPSR Contractor Purchasing System Review 

CSC Computer Sciences Corporation 

DCMA Defense Contract Management Agency 

FAR Federal Acquisition Regulation 
6 

Appendix A. Status of Recommendations 

Recommendation No. Resolved Unresolved Open/ECD* Closed

1. X 10/31/03 

2. X 10/31/03 

3. X 10/31/03 

4. X 10/31/03 

5. X 10/31/03 

* ECD - Estimated Completion Date 
7 

Appendix B. Objectives, Scope, and Methodology 

Objectives

The overall objective was to evaluate the adequacy of NASA oversight of selected prime 

contractors’ management of subcontracts. Specifically, we determined whether: 

• contractors’ management of their subcontracts resulted in adequate competition in 

subcontracting and 

• NASA contracting officer involvement in the subcontract process was adequate. 

Scope and Methodology 

The initial scope for the audit was to select three contracts from among NASA’s top 

contractors. We eliminated from selection those contractors dealing with the 

International Space Station and Space Shuttle effort due to other significant audit 

coverage of both programs. We selected for review one cost-type contract each at 

Computer Sciences Corporation (CSC); Orbital Sciences Corporation (Orbital); and 

TRW, Inc. 

We selected two additional cost-type contracts, one contract each at CSC and Orbital, 

with contract expiration dates in and beyond fiscal year 2003. The selection criteria for 

the two additional contracts included the dollar value and time remaining on the contract 

award. In total, we reviewed 21 noncompetitive subcontracts valued at $13,453,700. 

We examined contractor policies and procedures, subcontract awards, related task orders, 

statements of work, justifications for noncompetitive procurements, and file 

correspondence. We also reviewed contractor purchasing system reviews (CPSRs) 

performed by the Defense Contract Management Agency for CSC and Orbital. In 

addition, we discussed procurement practices with contractor representatives and NASA 

contracting officers. We also reviewed contract file documentation pertaining to consent 

to subcontract requests, contracting officer analyses, and actual consent forms.
Administratively Controlled Information—Proprietary 

For Official Use Only

8

Appendix B

The four contracts reviewed at CSC and Orbital, contract number, dollar value as of 

June 30, 2002, and explanation of the services under each contract follow: 

 Computer Sciences Corporation, Federal Sector NAS 2-00014 $ 33,921,100 

 Computer Sciences Corporation, Applied Technology NAS 8-60000 1,159,796,200 

 Orbital Sciences Corporation, Technical Services NAS 2-97068 29,774,100 

 Orbital Sciences Corporation, Launch Systems Group NAS 8-01102 18,976,000

 Total $1,242,467,400

• Computer Sciences Corporation, Federal Sector, provides technical research and 

development for the Air Traffic Management Concepts and Automation 

Technologies at Ames Research Center (Ames). 

• Computer Sciences Corporation, Applied Technology, provides personnel and 

services to support the Program Information Systems Mission Services contract at 

Marshall Space Flight Center (Marshall). 

• Orbital Sciences Corporation, Technical Services, provides scientific, 

engineering, and technical services for the Earth Science, Space Science, and 

Space Projects Divisions within the Space Directorate at Ames. 

• Orbital Sciences Corporation, Launch Systems Group, provides the design, build, 

and launch services for the Demonstration of Autonomous Rendezvous 

Technology Flight Demonstration for Marshall. 

Use of Computer-Generated Data 

We used computer-generated data from the NASA Acquisition Information System online query tool to generate our universe of contracts. We relied on the results of a recent 

NASA Office of Inspector General review1

 for the testing of the system. Nothing came 

to our attention to cause us to question the validity of the specific data elements relied on 

in this audit. 

 

1

The Assistant Inspector General for Inspections and Assessments report, “Review of NASA’s 

Procurement Management System On-line Query Tool,” G-02-006, dated February 3, 2003. 
9

Appendix B

Management Controls Reviewed 

We reviewed management controls over the award of noncompetitive subcontracts by 

CSC and Orbital. We determined that management could improve its controls over such 

noncompetitive procurements (see the finding on page 1). 

Audit Field Work 

We performed audit work from March 2002 through February 2003 at Ames, Goddard 

Space Flight Center, and Marshall. We also visited contractor offices at CSC; Orbital; 

and TRW, Inc. We performed the audit in accordance with generally accepted 

government auditing standards. 
Administratively Controlled Information—Proprietary 

For Official Use Only

10

Appendix C. Noncompetitive Subcontracts With Inadequate 

Justifications

The noncompetitive subcontracts with inadequate justifications are shown below. 

Further discussion of the questioned subcontracts follows the list. 

Subcontact Subcontract

Number Subcontractor Name Dollar Value None Inadequate

Orbital Subcontracts (Marshall)

LSG0106-04 Kinetx $172,800 X

LSG0111-11 Emergent Space Technologies 3,300 X

LSG0203-03 Emergent Space Technologies 17,500 X

P.O. 129924 Surrey Satellite 360,000 X

SC03122 MirandaWorks, Inc. 38,400 X

SC03143 MirandaWorks, Inc. 19,200 X

Orbital Subcontract (Ames) (Note 1)

SC03009 Rose Engineering 167,500 X (Note 2)

CSC Subcontracts (Marshall) (Note 1)

116002 Madison Research Corporation 932,500 X (Note 2)

120429 Logistics Engineering & Env. 3,071,700 X (Note 3)

121196 Allied Technology Group, Inc. 736,700 X (Note 3)

__________ ___ ___

Total $5,519,600 4 6

Note 2. The contracting officers' analyses were inadequate to support the consent to subcontract.

Note 3. NASA actions directly contributed to the noncompetitive subcontract award.

Note 1. The prime contracts required contracting officer consent before contractors awarded subcontracts.

Justification

Orbital Subcontracts. Orbital’s support was inadequate for 7 of the 17 noncompetitive 

subcontracts reviewed. Orbital did not comply with the Federal Acquisition Regulation 

(FAR) requirements in its NASA contract and company policy to adequately justify 

noncompetitive procurements. The seven subcontracts were for engineering support 

services. Four of the seven subcontracts lacked any justification to support the 
Administratively Controlled Information—Proprietary 

For Official Use Only

11

Appendix C

noncompetitive subcontracts. The remaining three noncompetitive subcontracts named 

individuals to perform engineering support work, but the justifications lacked 

explanations as to why the individuals were uniquely qualified to perform the work. The 

explanations are required by the FAR section in the Orbital contract and by company 

policy. In addition, the three subcontracts did not comply with the FAR contract clause 

requiring that justifications include a determination that the anticipated costs are fair and 

reasonable. 

CSC Subcontracts. CSC’s support was inadequate for three of four noncompetitive 

subcontracts reviewed. The subcontracts were for computer services and a document 

repository. CSC’s justifications for the three subcontracts did not comply with the FAR 

contract clause requiring justifications to include a determination that the anticipated 

costs are fair and reasonable or with CSC’s own policy for justifying noncompetitive 

procurements. Further, the NASA CO approved one subcontract (i.e., 116002) that cited 

an unusual and compelling urgency but lacked a supporting rationale on the extent and 

nature of the harm to the Government if the subcontract was competed. For the two 

remaining subcontracts, the NASA CO’s actions directly contributed to CSC’s 

subcontracting on a noncompetitive basis. Details follow: 

• Allied Technical Group, Inc. (ATG). One subcontract for $736,700 

involved ATG managing the NASA Automated System and Incident 

Response Capability (NASIRC). ATG managed the NASIRC under a 

Goddard Space Flight Center (Goddard) contract that expired on August 31, 

2001. The Goddard procurement office issued solicitation number 630-0001 

on December 20, 2000, to determine whether other parties were interested in 

competing for a follow-on contract. A Goddard contract specialist told us that 

10 companies expressed an interest in bidding on the contract. 

On March 9, 2001, NASA program managers from Goddard and Marshall met 

to transfer the NASIRC effort from the Goddard contract to an existing 

Program Information Systems Mission Services contract at Marshall. On 

June 21, 2001, a Marshall CO directed CSC, the prime contractor on the 

Marshall contract, to subcontract with ATG for the NASIRC effort. CSC’s 

noncompetitive justification referenced ATG as the only vendor with the 

experience to coordinate security incidents NASA-wide. The justification 

lacked a determination that the anticipated cost was fair and reasonable. The 

Marshall CO approved the subcontract consent form, but did not obtain the 

required concurrence or approval by the Center Procurement Officer or 
Administratively Controlled Information—Proprietary 

For Official Use Only

12

Appendix C

Competition Advocate, respectively. NASA FAR Supplement 1806.304-702

required Center Procurement Officer concurrence and Competition Advocate 

approval of the noncompetitive award. 

• Logistics Engineering & Environmental Support Services (LESCO). One 

subcontract for $3,071,700 involved LESCO managing NASA’s central 

documentation repository. On March 8, 2001, the NASA CO requested from 

CSC a not-to-exceed estimate after the CO was notified by the program office 

responsible for the repository that the operation of the repository needed to be 

transferred to another NASA contract and that the repository needed to be fully 

operational by April 1, 2001. Although the NASA CO did not specify the 

subcontractor to be selected, the short time frame necessitated the selection of 

the incumbent subcontractor, LESCO, in order to meet the new contract 

requirement. The CSC Contracts Manager told us that CSC could not compete 

the subcontract because of the short time between the NASA notice about the 

new requirement and the date the repository had to be fully operational. The 

CSC manager stated the only option was to noncompetitively award the 

subcontract to the company that was already performing the work. The CSC 

noncompetitive justification cited an “unusual and compelling urgency” in 

procuring these services but lacked the supporting rationale on the extent and 

nature of the harm to the Government if the procurement was competed. The 

NASA CO approved the subcontract consent form without further analysis or 

approvals from Center management. 

 

2

 NASA FAR Supplement 1806.304-70 required Center Procurement Officer concurrence and Center or 

Headquarters Competition Advocate approval of justifications for noncompetitive procurements of more 

than $500,000 when NASA directed a prime contractor to subcontract on a noncompetitive basis. 
13

Appendix D. Competition Requirements 

The NASA contracting officers (COs) for Computer Sciences Corporation (CSC) and 

Orbital Sciences Corporation (Orbital) had incorporated the Federal Acquisition 

Regulation (FAR) clauses for competition in subcontracting in all the NASA contracts 

and for seeking CO consent before subcontracting into two of the contracts. A summary 

of the FAR clauses and requirements follows. 

• FAR Subpart 6.303-2, “Content.” This section requires justifications for 

noncompetitive procurements to contain sufficient facts and rationale to justify 

not providing full and open competition. 

• FAR 52.244-5, “Competition in Subcontracting.” This clause requires the 

contractor to select subcontractors on a competitive basis to the maximum 

practical extent consistent with the objectives and requirements of the contract. 

• FAR 52.244-2, “Subcontracts.” This clause requires the contractor to seek 

consent to subcontract and provide information to the CO reasonably in advance 

of placing any subcontract. 

The FAR provides guidance to the COs in reviewing contractors’ requests for consent to 

subcontract. 

• FAR 44.202-2, “Considerations,” paragraph (a), requires the CO responsible for 

consent to, at a minimum, review the request and supporting data and consider 13 

areas including, in part, the following: 

• is the selection of the particular supplies, equipment, or services technically 

justified? 

• was adequate price competition obtained or its absence properly justified? 

• has the contractor performed adequate cost or price analysis or price comparisons 

and obtained accurate, complete, and current cost or pricing data, including any 

required certifications? 

Paragraph (b) states that particularly careful and thorough consideration under 

paragraph (a) above is necessary when...

• the prime contractor’s purchasing system or performance is inadequate, and 

• subcontracts are proposed for award on a noncompetitive basis. 

NASA Requirements and Guidance. The NASA FAR Supplement and other NASA 

guidance assist COs in performing their oversight duties. The NASA FAR Supplement 

Part 1844, “Subcontracting Policies and Procedures,” requires NASA COs to retain 

consent to subcontract authority unless delegation is approved in writing by the 

Procurement Officer. NASA COs for the CSC contract at the Marshall Space Flight 
14

Appendix D

Center (Marshall) and the Orbital contract at Ames Research Center (Ames) retained the 

authority to grant consent to subcontract. A NASA Self-Assessment Guide,3 addresses 

subcontract consent files and states the contract file should contain information showing 

the consents requested, an analysis, and actual consents granted. The Guide also states 

that contractors should support consent requests with adequate information and that 

evidence of adequate CO analysis should exist. 

NASA FAR Supplement 1806.303-170, “Sole-source purchases by contractors,” states 

that: 

The requirements of FAR Part 6 and NFS Part 1806 apply if NASA 

directs a prime contractor (by specifications, drawings, parts lists, or 

otherwise) to purchase items on a sole-source basis. Accordingly, 

procurement officers shall take necessary actions to ensure that such 

sole-source acquisitions are properly justified. 

Furthermore, NASA FAR Supplement 1806.304-70, “Approval of NASA justifications,” 

states that: 

Concurrences and approvals for justifications of contract actions 

conducted in accordance with FAR Subparts 6.2 and 6.3 shall be 

obtained as follows: 

(a) For proposed contracts over $500,000 but not exceeding 

$10,000,000 – 

 (1) Concurring official: Procurement Officer 

 (2) Approving official: Center or Headquarters Competition 

Advocate. 

Contractor’s Acquisition Policies and Procedures. NASA relies on contractors to 

incorporate FAR and NASA FAR Supplement requirements identified in their contracts 

into company policies and procedures and to follow those company policies and 

procedures. However, FAR requirements do not necessarily bind the prime contractor to 

use the same criteria as the CO in competing subcontracts and documenting 

noncompetitive procurements. Therefore, company policies vary, and it is the 

responsibility of the Defense Contract Management Agency (DCMA) contractor 

purchasing system review (CPSR) teams to determine the adequacy of documentation to 

support noncompetitive procurements. In the absence of a CPSR, NASA COs are 

responsible for granting contractors consent to subcontract and for being aware of 

company policies related to competition and documenting noncompetitive procurements. 

 

3

 The Self-Assessment Guide is intended for use by Center procurement staff in support of annual Center 

internal procurement reviews and is accessible through NASA’s Procurement Library Web site. 
15

 

Appendix D

COs are required by FAR Part 44 to analyze contractor requests to award subcontracts 

before granting consent. Therefore, NASA COs performing this analysis rely on 

contractors to develop competition policies that reasonably reflect FAR requirements and 

to follow those policies. Company policies and procedures for obtaining competition were 

similar for CSC and Orbital, with CSC using the phrase “full and open competition” while 

Orbital used the phrase “whenever possible.” Both contractors specifically required their 

 buyers to obtain at least two responsive and responsible bids. 
16

Appendix E. Noncompetitive Subcontract Awards at 13 NASA Contractor

Audit Reports Covering Noncompetitive Procurements in Past 3 Years

 Number of 

Number of Contract Subcontracts Noncompetitive Value of 

Audit Report Contractors Number (s) Reviewed Procurements (a) 

 (a) ($000) 

"Improving NASA Oversight of Prime Contractors' Noncompetitive 3 5 contracts 70 25 $15,910.7 Subcontracting," Assignment Number A-02-011-00 (current report) "NASA Contracts for Professional, Administrative, and Management 5 5 contracts 22 13 1,257.6 

Support Services," Report Number IG-03-003, October 16, 2002 "Lockheed Martin Space Operations' Use of Professional & Consultant 1 NAS9-19100 7 16 20,842.8 Services," Report Number IG-02-013, March 26, 2002 NAS9-98100 "Thiokol's Use of Professional and Consultant Services" 1 NAS8-30490 47 13 1,437.6 Report Number IG-01-019, March 30, 2001 NAS8-38100 

 NAS8-97238 

"United Space Alliance's Use of Professional and Consultant Services" 1 NAS9-20000 9 9 1,908.2 Report Number IG-01-012, March 16, 2001 "Raytheon Subcontract Management" 1 NAS9-18181 32 17 6,900.0 Report Number IG-00-002, December 21, 1999 "Allied Signal Subcontract Management" 1 NAS9-95682 31 18 1,600.0 Report Number IG-99-042, September 16, 1999 

Total 13 18 218 111 $49,856.9 

 Percentage of Inadequate Justifications of Sole-source Procurements (60/111) 
17

Appendix F. Summary of Prior Audits

NASA Office of Inspector General Reviews. The NASA Office of Inspector General 

has issued six reports dealing with noncompetitive procurements. For copies of those 

reports, visit http://www.hq.nasa.gov/office/oig/hq/issuedaudits.html. Details follow. 

“NASA Contracts for Professional, Administrative, and Management Support 

Services,” Report Number IG-03-003, October 16, 2002. NASA can improve its 

award and management of support services contracts. For 3 of the 5 support services 

contracts reviewed, contractors did not obtain adequate competition for 13 

(59 percent) of 22 subcontracts awarded and did not adequately justify the lack of 

competition for the 13 awards. As a result, NASA has reduced assurance that the 

selected subcontractors offered fair and reasonable prices for the 13 subcontracts valued 

at about $1.3 million. Also, NASA did not maximize opportunities to facilitate the use of 

fixed-price contracting for routine administrative services with reasonably definite 

requirements. As a result, NASA assumed more risk than necessary because the use of 

cost-type contracts rather than fixed-price contracts can minimize the contractor’s 

incentive to control costs and perform effectively. In addition, cost-type contracts can be 

more costly and burdensome for NASA to administer due to more stringent contract 

reporting and review requirements. We recommended that NASA contracting officers 

(COs) require contractors to develop and to improve upon company policies for 

documenting the rationale for noncompetitive subcontract awards and to follow policies 

for competing subcontracts and documenting noncompetitive procurements. We also 

recommended that COs thoroughly document their analysis and approval of contractor 

requests for consent to subcontract and that contract files include contractor consent 

requests. We further recommended that the NASA COs collect sufficient historical 

workload data for routine administrative services to allow for expanded use of fixed-price 

contracting in future awards when data and circumstances indicate fixed-price 

contracting is appropriate. 

“Lockheed Martin Space Operations’ Use of Professional and Consultant Services,” 

Report Number IG-02-013, March 26, 2002. NASA can improve its controls over the 

contractor’s use of professional and consultant services. Further, the contractor’s 

management controls did not ensure compliance with Federal Acquisition Regulation 

(FAR) requirements. For two of seven professional and consultant service subcontracts 

reviewed, Lockheed Martin Space Operations officials had not properly justified 

noncompetitive procurements. We recommended that the COs for the two contracts in 

question coordinate with the administrative contracting officer (ACO) to require the 

contractor to follow its established procedures by preparing written justifications for 

future noncompetitive procurements. 

“Thiokol’s Use of Professional and Consultant Services,” Report Number 

IG-01-019, March 30, 2001. NASA’s controls over Thiokol Propulsion’s (Thiokol’s) 

use of professional and consultant services can be improved. For 7 of the 13 professional 
18

Appendix F

and consultant services subcontracts we reviewed, Thiokol buyers did not follow 

company policy requiring adequate justifications for noncompetitive procurements when 

dealing with former Thiokol employees or prior subcontractors. Also, Defense Contract 

Management Agency (DCMA) purchasing system and surveillance reviews and Defense 

Contract Audit Agency (DCAA) audits of incurred costs did not include professional and 

consultant service subcontracts due to the relatively low-dollar value of these 

subcontracts and no consideration of the inherent risk. Further, the DCMA consent to 

subcontract review excludes professional and consultant services subcontracts because 

the subcontracts do not meet the threshold dollar value for the review. We recommended 

that the NASA CO: (1) direct Thiokol to ensure contractor personnel submit timely and 

acceptable justifications for noncompetitive procurements, (2) request the DCAA to 

include professional and consultant service costs in samples selected for future incurred 

cost audits, (3) request the DCMA ACO to include professional and consultant services 

subcontracts as part of DCMA’s surveillance reviews, and (4) request the DCMA ACO 

to include in oversight reviews the allocation of professional and consultant services 

costs that are charged as indirect costs. 

“United Space Alliance’s Use of Professional and Consultant Services,” Report 

Number IG-01-012, March 16, 2001. For seven of nine professional and consultant 

services subcontracts we reviewed, United Space Alliance (USA) officials did not 

prepare acceptable justifications for noncompetitive procurements. USA procedures did 

not sufficiently implement FAR requirements for USA personnel to prepare acceptable 

acquisition justifications for noncompetitive procurements. As a result, NASA had 

reduced assurance that the contractor obtained the best source and price for the 

noncompetitive procurements. We recommended the NASA ACO implement procedures 

that comply with the FAR requirements for the acceptable preparation of acquisition 

justifications for noncompetitive procurements. We also recommended that the DCMA 

ACO establish a process that includes USA’s monthly report of professional and 

consultant services subcontracts in the semiannual surveillance reviews. 

“Allied Signal Subcontract Management,” Report Number IG-99-042, 

September 16, 1999, and “Raytheon Subcontract Management,” Report Number 

IG-00-002, December 21, 1999. Purchasing department buyers for the two contractors 

did not maintain documentation to support justifications for noncompetitive 

procurements. The contractors’ purchasing policies did not require contractor personnel 

to keep supporting documentation. Additionally, Government oversight reviews of the 

contractors’ procurement systems did not include examinations of supporting 

documentation for noncompetitive procurements. As a result, NASA had reduced 

assurance that contractors maximized competition. In response to our recommendations, 

NASA management instructed the contractors to maintain adequate documentation in 

support of noncompetitive procurements. NASA management also took actions to 

include reviews of supporting documentation in future reviews of the contractors’ 

purchasing systems. 

Appendix G. Management’s Response
19
20

Appendix G 
21

Appendix G 
22 

Appendix H. Report Distribution 

National Aeronautics and Space Administration (NASA) Headquarters 

A/Administrator 

AA/Chief of Staff 

ADI/Associate Deputy Administrator for Institutions and Asset Management 

ADT/Associate Deputy Administrator for Technical Programs 

B/Deputy Chief Financial Officer for Financial Management 

B/Deputy Chief Financial Officer for Resources (Comptroller) 

BF/Director, Financial Management Division 

G/General Counsel 

H/Assistant Administrator for Procurement 

HK/Director, Contract Management Division 

HS/Director, Program Operations Division 

J/Assistant Administrator for Management Systems 

JM/Director, Management Assessment Division 

L/Assistant Administrator for Legislative Affairs 

M/Associate Administrator for Space Flight 

R/Acting Associate Administrator for Aerospace Technology 

S/Associate Administrator for Space Science 

Y/Associate Administrator for Earth Science 

NASA Centers 

ARC/D/Director, Ames Research Center 

GSFC/100/Director, Goddard Space Flight Center 

KSC/CC/Chief Counsel, Kennedy Space Center 

MSFC/DA01/Director, George C. Marshall Space Flight Center 

Non-NASA Federal Organizations and Individuals 

Assistant to the President for Science and Technology Policy 

Deputy Associate Director, Energy and Science Division, Office of Management and 

 Budget 

Branch Chief, Science and Space Programs Branch, Energy and Science Division, Office 

 of Management and Budget 

Managing Director, Acquisition and Sourcing Management Team, General Accounting 

 Office 

Senior Professional Assistant, Senate Subcommittee on Science, Technology, and Space 
23 

Appendix H 

Chairman and Ranking Minority Member – Congressional Committees and 

Subcommittees 

Senate Committee on Appropriations 

Senate Subcommittee on VA, HUD, and Independent Agencies 

Senate Committee on Commerce, Science, and Transportation 

Senate Subcommittee on Science, Technology, and Space 

Senate Committee on Governmental Affairs 

House Committee on Appropriations 

House Subcommittee on VA, HUD, and Independent Agencies 

House Committee on Government Reform 

House Subcommittee on Government Efficiency and Financial Management 

House Subcommittee on Technology, Information Policy, Intergovernmental Relations, 

 and the Census 

House Committee on Science 

House Subcommittee on Space and Aeronautics 

Congressional Member 

Honorable Pete Sessions, U.S. House of Representatives 
NASA Assistant Inspector General for Auditing 

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Major Contributors to the Report 

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