United States Government Accountability Office

GAO Testimony before the Committee on 

Science, House of Representatives

NASA

Sound Management and 

Oversight Key to Addressing 

Crew Exploration Vehicle 

Project Risks 

Statement of Allen Li, Director, Acquisition and Sourcing 

Management 

For Release on Delivery

Expected at 2:00 p.m. EDT

Thursday, September 28, 2006 

 

GAO-06-1127T 
What GAO Found

United States Government Accountability Office

Why GAO Did This Study

Highlights

Accountability Integrity Reliability

September 28, 2006

NASA

Sound Management and Oversight Key to 

Addressing Crew Exploration Vehicle 

Project Risks 

Highlights of GAO-06-1127T, a testimony 

before the Committee on Science, House 

of Representatives 

The National Aeronautics and

Space Administration (NASA) 

plans to spend nearly $230 billion 

over the next two decades 

implementing the President’s 

Vision for Space Exploration 

(Vision) plans. In July 2006, GAO

issued a report that questioned the

program’s affordability, and 

particularly, NASA’s acquisition 

approach for one of the program’s 

major projects—the Crew

Exploration Vehicle (CEV). This 

testimony, which is based upon

that report and another recent GAO

report evaluating NASA’s 

acquisition policies, highlights 

GAO’s continuing concerns with: 

• the affordability of the 

exploration program;

• the acquisition approach for 

the CEV, and; 

• NASA’s acquisition policies 

that lack requirements for 

projects to proceed with 

adequate knowledge. 

Although GAO is not making 

recommendations in this 

testimony, we previously 

recommended that NASA modify 

the CEV acquisition strategy to 

ensure that a long-term 

commitment is not made prior to

attaining of key knowledge. NASA 

disagreed and stated that it had 

sufficient knowledge for 

proceeding. Subsequent to our 

report, NASA changed its strategy

to lessen the government’s fiscal 

obligation. GAO also made 

recommendations regarding 

NASA’s acquisition policies. The

agency agreed, but has yet to take

major actions to implement them. 

NASA’s proposals for implementing the space exploration Vision raise a number 

of concerns: 

• NASA cannot develop a firm cost estimate for the exploration program 

at this time because the program is in its early stages. The changes that

have occurred to the program over the past year and the resulting

refinement of its cost estimates are indicative of the evolving nature of 

the program. While changes are appropriate at this stage of the program,

they leave the agency unable to firmly identify program requirements 

and needed resources and, therefore, not in the position to make a long

term commitment to the program.

• NASA will likely be challenged to implement the program, as laid out in 

its Exploration Systems Architecture study (ESAS), due to the high

costs associated with the program in some years and its long-term 

sustainability relative to anticipated funding. As we reported in July 

2006, there are years when NASA, with some yearly shortfalls exceeding 

$1 billion, does not have sufficient funding to implement the 

architecture; while in other years the funding available exceeds needed

resources. Despite initial surpluses, the long-term sustainability of the

program is questionable, given its long-term funding outlook. NASA’s 

preliminary projections show multibillion-dollar shortfalls for its 

exploration directorate in all fiscal years from 2014 to 2020, with an 

overall deficit through 2025 in excess of $18 billion. 

• NASA’s acquisition strategy for the CEV was not based upon obtaining 

an adequate level of knowledge when making key resources decisions, 

placing the program at risk for cost overruns, schedule delays, and

performance shortfalls. These risks were evident in NASA’s plan to 

commit to a long-term product development effort before establishing a 

sound business case for the project that includes well-defined 

requirements, mature technology, a preliminary design, and firm cost 

estimates. NASA adjusted its acquisition approach and the agency

included the production and sustainment portions of the contract as 

options—a move that is consistent with the recommendation in our

report because it lessens the government’s financial obligation at this

early stage. However, risks persist with NASA’s approach. 

• As we reported in 2005, NASA’s acquisition policies lacked major 

decision reviews beyond the initial project approval gate and lacked a 

standard set of criteria with which to measure projects at crucial phases 

in the development life cycle. These decision reviews and development 

measures are key markers needed to ensure that projects are 

proceeding with and decisions are being based upon the appropriate 

level of knowledge and can help to lessen identified project risks. The

CEV project would benefit from the application of such markers.

www.gao.gov/cgi-bin/getrpt?GAO-06-1127T.

To view the full product, including the scope 

and methodology, click on the link above. 

For more information, contact Allen Li at (202) 

512-4841 or lia@gao.gov. 
Mr. Chairman and Members of the Committee: 

I am pleased to be here today to discuss the National Aeronautics and 

Space Administration’s (NASA) plans for implementing the President’s 

Vision for Space Exploration (Vision).1

 NASA plans to spend nearly $230

billion over the next two decades—more than $31 billion of which will be 

spent in the next 5 years—to bring the Vision to reality.2

 In July 2006, we 

issued a report that questioned the program’s affordability, and in 

particular, NASA’s acquisition approach for one of the program’s major 

projects—the Crew Exploration Vehicle (CEV).3

 My statement today, 

which is based upon that report and another report evaluating NASA’s 

acquisition policies,4

 highlights our continuing concerns with the 

affordability of the exploration program and the acquisition approach for 

the CEV project, as well as the absence of firm requirements in NASA’s 

acquisition policies for projects to proceed with development with the 

appropriate level of knowledge. Given the competing demands facing the

federal government and an already troubling funding profile for the 

program, it is imperative that NASA implement the various aspects of the 

Vision in a fiscally prudent and competent manner. Our work was 

performed in accordance with generally accepted government auditing 

standards. 

In summary, we found that because NASA’s exploration program is in its 

early stages, the agency cannot develop a firm cost estimate for the 

program at this time. The changes that have occurred to the program over 

the past year and the resulting refinement of its associated cost estimates 

are indicative of the evolving nature of the program. Furthermore, we 

found that it will likely be a challenge for NASA to implement the program, 

Summary 

 1

The Vision includes a return to the moon that is intended ultimately to enable exploration 

of Mars and other destinations. To accomplish this, NASA initially plans to (1) complete its 

work on the International Space Station by 2010, fulfilling its commitment to 15 

international partner countries; (2) begin developing a new manned exploration vehicle to

replace the space shuttle; and (3) return to the moon no later than 2020 in preparation for 

future, more ambitious missions. 

2

All cost estimates related to the Vision are reported as inflated (“real year”) dollars. 

3

GAO, NASA: Long-Term Commitment to and Investment in Space Exploration Program 

Requires More Knowledge, GAO-06-817R (Washington, D.C.: July 17, 2006). 

4

GAO, NASA: Implementing a Knowledge-Based Acquisition Framework Could Lead to 

Better Investment Decisions and Project Outcomes, GAO-06-218 (Washington, D.C.: Dec.

21, 2005). 

Page 1 GAO-06-1127T 
as laid out in its Exploration Systems Architecture study (ESAS)5

 due to 

the high costs associated with the program in some years and the longterm sustainability of the program relative to anticipated funding. Finally, 

we found that NASA’s acquisition strategy for the CEV was not based upon 

obtaining an adequate level of knowledge when making key resources 

decisions, placing the program at risk for cost overruns, schedule delays, 

and performance shortfalls. These risks were evident in NASA’s plan to 

commit to a long-term product development effort before establishing a 

sound business case for the project that includes well-defined 

requirements, mature technology, a preliminary design, and firm cost 

estimates. Furthermore, in our 2005 report on NASA’s acquisition policies, 

we found that NASA’s policies lacked major decision reviews beyond the 

initial project approval gate and lacked a standard set of criteria with 

which to measure projects at crucial phases in the development life cycle. 

These decision reviews and development measures are key markers 

needed to ensure that projects are proceeding with and decisions are 

being based upon the appropriate level of knowledge and can help to 

lessen project risks. 

In our July 2006 report, we recommended that NASA adjust its acquisition 

strategy to ensure that sufficient program knowledge—to include welldefined requirements, mature technologies, a stable design, and realistic 

cost estimates—be attained prior to committing the government to a 

long-term contract. NASA did not concur with our recommendation and in

late August awarded a contract for the design, development, production,

and sustainment of the CEV to Lockheed Martin. However, prior to 

awarding the contract, NASA adjusted its acquisition approach and the 

agency included the production and sustainment portions of the contract 

as options—a move that is consistent with the recommendation in our 

report because it lessens the government’s financial obligation at this early 

stage. While these changes are positive steps, the agency’s acquisition 

strategy needs further refinement to conform to acquisition best practices. 

Given the approach that NASA has chosen, continued congressional 

oversight will be critical for ensuring that the program stays within cost 

and schedule goals. This is especially true given NASA’s “go as you can 

 5

The ESAS was an effort to identify the best architecture and strategy to implement the 

Vision. The architecture supports the development of a new CEV, Crew Launch Vehicle 

(CLV), a Cargo Launch Vehicle (CaLV), and other supporting systems. The architecture also 

calls for various Research and Technology (R&T) and Robotic Lunar Exploration Program 

(RLEP) projects. NASA’s Exploration Systems Mission Directorate’s Constellation program

is responsible for the development of the CEV, CLV, and CaLV. 

Page 2 GAO-06-1127T 
afford to pay” approach, wherein lower priority efforts will be deferred, 

descoped, or discontinued to allow NASA stay within its budget profile. 

Competing demands within the agency, coupled with a declining supply of 

federal discretionary funding requires due diligence on the part the agency

and Congress to ensure successful program outcomes. As our work has 

found, all too often, programs are allowed to proceed without adequate 

knowledge being attained at key phases of development. Without such 

knowledge, it is difficult to predict with any confidence how much the 

program will cost, what technologies will or will not be available to meet 

performance expectations, and when the vehicle will be ready for use. 

Despite many successes in the exploration of space, such as landing the

Pathfinder and Exploration Rovers on Mars, NASA has had difficulty 

bringing a number of projects to completion, including several efforts to 

build a second generation reusable human spaceflight vehicle to replace

the space shuttle. NASA has attempted several costly endeavors, such as 

the National Aero-Space Plane, the X-33 and X-34, and the Space Launch 

Initiative. While these endeavors have helped to advance scientific and

technical knowledge, none have completed their objective of fielding a 

new reusable space vehicle. We estimate that these unsuccessful 

development efforts have cost approximately $4.8 billion since the 1980s. 

The high cost of these unsuccessful efforts and the potential costs of 

implementing the Vision make it important that NASA achieve success in 

its new exploration program beginning with the CEV project. 

Background 

Our past work has shown that developing a sound business case, based on

matching requirements to available and reasonably expected resources 

before committing to a new product development effort, reduces risk and 

increases the likelihood of success. High levels of knowledge should be 

demonstrated before managers make significant program commitments, 

specifically: (1) At program start, the customer’s needs should match the 

developer’s available resources in terms of availability of mature 

technologies, time, human capital, and funding; (2) Midway through 

development, the product’s design should be stable and demonstrate that

it is capable of meeting performance requirements; (3) By the time of the 

production decision, the product must be shown to be producible within 

cost, schedule, and quality targets, and have demonstrated its reliability. 

Our work has shown that programs that have not attained the level of 

knowledge needed to support a sound business case have been plagued by 

cost overruns, schedule delays, decreased capability, and overall poor 

performance. With regard to NASA, we have reported that in some cases 

the agency’s failure to define requirements adequately and develop 

Page 3 GAO-06-1127T 
realistic cost estimates—two key elements of a business case—resulted in 

projects costing more, taking longer, and achieving less than originally 

planned.6

Although NASA is continuing to refine its exploration architecture cost 

estimates, the agency cannot at this time provide a firm estimate of what it

will take to implement the architecture. The absence of firm cost estimates 

is mainly due to the fact that the program is in the early stages of its life 

cycle. NASA conducted a cost risk analysis of its preliminary estimates 

through fiscal year 2011. On the basis of this analysis and through the 

addition of programmatic reserves (20 percent on all development and 10 

percent on all production costs), NASA is 65 percent confident that the 

actual cost of the program will either meet or be less than its estimate of 

$31.2 billion through fiscal year 2011. For cost estimates beyond 2011, 

when most of the cost risk for implementing the architecture will be 

realized, NASA has not applied a confidence level distinction. Since NASA 

released its preliminary estimates, the agency has continued to make 

architecture changes and refine its estimates in an effort to establish a 

program that will be sustainable within projected resources. While 

changes to the program are appropriate at this stage when concepts are 

still being developed, they leave the agency in the position of being unable 

to firmly identify program requirements and needed resources. NASA 

plans to commit to a firm cost estimate for the Constellation program at 

the preliminary design review in 2008, when requirements, design, and 

schedule will all be baselined. It is at this point where we advocate 

program commitments should be made on the basis of the knowledge 

secured. 

Firm Cost Estimates 

Cannot Be Developed 

at This Time 

 6

GAO, NASA: Lack of Disciplined Cost-Estimating Processes Hinders Effective Program

Management, GAO-04-642 (Washington, D.C.: May 28, 2004).

Page 4 GAO-06-1127T 
NASA will be challenged to implement the ESAS recommended 

architecture within its projected budget, particularly in the longer-term. As 

we reported in July 2006, there are years when NASA has projected 

insufficient funding to implement the architecture with some yearly 

shortfalls exceeding $1 billion; while in other years the funding available 

exceeds needed resources. Per NASA’s approach, it plans to use almost $1 

billion in appropriated funds from fiscal years 2006 and 2007 in order to 

address the short-term funding shortfalls. NASA, using a “go as you can 

afford to pay” approach, maintains that in the short-term the architecture

could be implemented within the projected available budgets through 

fiscal year 2011 when funding is considered cumulatively. However, 

despite initial surpluses, the long-term sustainability of the program is 

questionable given the long-term funding outlook for the program. NASA’s 

preliminary projections show multibillion-dollar shortfalls for its 

Exploration Systems Mission Directorate in all fiscal years from 2014 to 

2020, with an overall deficit through 2025 in excess of $18 billion. 

According to NASA officials, the agency will have to keep the program 

compelling for both Congress and potential international partners, in 

terms of the activities that will be conducted as part of the lunar program, 

in order for the program to be sustainable over the long run.

Expected Budget and 

Competing Demands 

Will Challenge 

Architecture 

Implementation 

NASA is attempting to address funding shortfalls within the Constellation 

program by redirecting funds to that program from other Exploration 

Systems Mission Directorate activities to provide a significant surplus in 

fiscal years 2006 and 2007 to cover projected shortfalls beginning in fiscal 

year 2009. Several Research and Technology programs and missions were 

discontinued, descoped, or deferred and that funding was shifted to the 

Constellation Program to accelerate development of the CEV and CLV. In 

addition, the Constellation program has requested more funds than 

required for its projects in several early years to cover shortfalls in later 

years. NASA officials stated the identified budget phasing problem could 

worsen given the changes that were made to the exploration architecture

following issuance of the study. For example, while life cycle costs may be 

lower in the long run, acceleration of development for the five segment 

Reusable Solid Rocket Booster and J-2x engine will likely add to the nearterm development costs, where the funding is already constrained. NASA 

has yet to provide cost estimates associated with program changes. 

NASA must also contend with competing budgetary demands within the 

agency as implementation of the exploration program continues. NASA’s 

estimates beyond 2010 are based upon a surplus of well over $1 billion in 

fiscal year 2011 due to the retirement of the space shuttle fleet in 2010. 

However, NASA officials said the costs for retiring the space shuttle and 

Page 5 GAO-06-1127T 
transitioning to the new program are not fully understood; thus, the 

expected surplus could be less than anticipated. This year, NASA plans to 

spend over 39 percent of its annual budget for space shuttle and 

International Space Station (ISS) operations—dollars that will continue to 

be obligated each year as NASA completes construction of the ISS by the 

end of fiscal year 2010. This does not include the resources necessary to 

develop ISS crew rotation or logistics servicing support capabilities for the 

ISS during the period between when the space shuttle program retires and 

the CEV makes its first mission to the ISS. While, generally, the budget for 

the space shuttle is scheduled to decrease as the program moves closer to

retirement, a question mark remains concerning the dollars required to 

retire the space shuttle fleet as well as transition portions of the 

infrastructure and workforce to support implementation of the 

exploration architecture. In addition, there is support within Congress and 

the scientific community to restore money to the Science Mission 

Directorate that was transferred to the space shuttle program to ensure its 

viability through its planned retirement in 2010. Such a change could have 

an impact on future exploration funding. 

In July 2006, we reported that NASA’s acquisition strategy for the CEV 

placed the project at risk of significant cost overruns, schedule delays, and 

performance shortfalls because it committed the government to a longterm contract before establishing a sound business case. We found that the 

CEV contract, as structured, committed the government to pay for design,

development, production and sustainment upon contract award—with a 

period of performance through at least 2014 with the possibility of 

extending through 2019.

Lack of Sound 

Business Case Puts 

CEV Acquisition at 

Risk 

Our report highlighted that NASA had yet to develop key elements of a 

sound business case, including well-defined requirements, mature 

technology, a preliminary design, and firm cost estimates that would 

support such a long-term commitment. Without such knowledge, NASA 

cannot predict with any confidence how much the program will cost, what 

technologies will or will not be available to meet performance 

expectations, and when the vehicle will be ready for use. NASA has 

acknowledged that it will not have these elements in place until the 

project’s preliminary design review scheduled for fiscal year 2008. As a 

result, we recommended that the NASA Administrator modify the current 

CEV acquisition strategy to ensure that the agency does not commit itself, 

and in turn the federal government, to a long-term contractual obligation

prior to establishing a sound business case at the project’s preliminary 

design review. In response to our recommendation, NASA disagreed and 

Page 6 GAO-06-1127T 
stated that it had the appropriate level of knowledge to proceed with its 

current acquisition strategy. NASA also indicated that knowledge from the 

contractor is required in order to develop a validated set of requirements 

and, therefore, it was important to get the contractor on to the project as 

soon as possible. In addition, according to NASA officials, selection of a 

contractor for the CEV would enable the agency to work with the 

contractor to attain knowledge about the project’s required resources and,

therefore, be better able to produce firm estimates of project cost. In our 

report, we highlighted that this is the type of information that should be 

obtained prior to committing to a long-term contract. To our knowledge, 

NASA did not explore the possibility of utilizing the contractor, through a 

shorter-term contract, to conduct work needed to develop valid

requirements and establish higher-fidelity cost estimates—a far less risky 

and costly strategy. 

Subsequent to our report, NASA did, however, take steps to address some

of the concerns we raised. Specifically, NASA modified its acquisition 

strategy for the CEV and made the production and sustainment schedules

of the contract—known as Schedules B and C—contract options that the 

agency will decide whether to exercise after project’s critical design 

review in 2009. Therefore, NASA will only be liable for the minimum 

quantities under Schedules B and C when and if it chooses to exercise 

those options. These changes to the acquisition strategy lessen the 

government’s financial obligation at this early stage. Table 1 outlines the 

information related to the CEV acquisition strategy found in the request 

for proposal and changes that were made to that strategy prior to contract 

award. While we view these changes as in line with our recommendation 

and as a positive step to address some of the risks we raised in our report, 

NASA still has no assurance that the project will have the elements of a 

sound business case in place at the preliminary design review. Therefore, 

NASA’s commitment to efforts beyond the project’s preliminary design 

review—even when this commitment is limited to design, development, 

test and evaluation activities (DDT&E)—is a risky approach. It is at this 

point that NASA should (a) have the increased knowledge necessary to 

develop a sound business case that includes high-fidelity, engineeringbased estimates of life cycle cost for the CEV project, (b) be in a better 

position to commit the government to a long-term effort, and (c) have 

more certainty in advising Congress on required resources. 

Page 7 GAO-06-1127T 
Table 1: CEV Acquisition Strategy in the Request for Proposal and Awarded Contract 

Contract schedule 

and type

Schedule activities and

deliverables 

Request for proposal period

of performance 

Contract period of

performance 

Contract cost 

estimate 

Schedule ADDT&E 

Cost plus award fee 

(CPAF)a

Indefinite delivery/ 

indefinite quantity 

(ID/IQ)b

Schedule A is for design 

development, test and 

evaluation of the CEV. 

Deliverables under Schedule A 

include all test articles and two 

operational CEV vehicles–one

human-rated variant and one 

pressurized cargo variant. 

• Contract award date 

through 2013 

• 2006 through 

2013 

$3.9 billion 

(CPAF) 

Up to $750 

million (ID/IQ) 

Schedule BProduction 

ID/IQ 

Schedule B is for production 

beyond the two operational 

vehicles delivered under 

Schedule A. The CEV request 

for proposal stated that the 

“guaranteed minimum” quantity 

for Schedule B is “two CEV,” the 

type of which, according to 

NASA officials is undetermined. 

• 2009 through 2014 

(base period) 

• 5-year option period 

through 2019 

• Initial option period 

from 2009 through 

2014 

• Additional option 

period from 2014 

through 2019 

$3.5 billion 

(Not to exceed) 

Schedule CSustaining 

Engineering 

ID/IQ 

Schedule C is for sustainment 

in support of operations 

and in support of Schedule B 

activities. 

• 2009 through 2014 (base 

period) 

• 5-year option period 

through 2019 

• Initial option period 

from 2009 through 

2014 

• Additional option 

period from 2014 

through 2019

$750 million 

Source: GAO Analysis of NASA’s CEV Request for Proposal and Contract 

a

A cost-plus-award-feed contract is a cost-reimbursement contract that provides for a fee consisting of 

a base amount (which may be zero) fixed at inception of the contract and an award amount, based 

upon a judgmental evaluation by the government, sufficient to provide motivation for excellence in 

contract performance. 

b

An indefinite quantity contract provides for an indefinite quantity within stated limits, of supplier or

services during a fixed period. The government places orders for individual requirements. This type of 

contract includes a minimum quantity and a maximum quantity. 

Sound project management and oversight will be key to addressing risks 

that remain for the CEV project as it proceeds with its acquisition 

approach. To help mitigate these risks, NASA should have in place the 

markers necessary to help decision makers monitor the CEV project and 

ensure that is following a knowledge based approach to its development. 

However, in our 2005 report that assessed NASA’s acquisition policies, we 

found that NASA’s policies lacked major decision reviews beyond the 

initial project approval gate and a standard set of criteria with which to 

measure projects at crucial phases in the development life cycle—key 

markers for monitoring such progress. In our review of the individual 

center policies, we found that the Johnson Space Center project 

Sound Management 

and Oversight Key to 

Addressing CEV 

Project Risks 

Page 8 GAO-06-1127T 
management policy, which is the policy that the CEV project will be 

required to follow, also lacked such key criteria. We concluded that 

without such requirements in place, decision makers have little knowledge 

about the progress of the agency’s projects and, therefore, cannot be 

assured that they are making informed decisions about whether continued 

investment in a program or project is warranted. 

We recommended that NASA incorporate requirements in its new systems 

engineering policy to capture specific product knowledge at key junctures

in project development. The demonstration of such knowledge could then 

be used as exit criteria for decision making at the following key junctures: 

• Before projects are approved to transition in to implementation, we 

suggested that projects be required to demonstrate that key 

technologies have reached a high maturity level. 

• Before projects are approved to transition from final design to

fabrication, assembly, and test, we suggested that projects be required 

to demonstrate that the design is stable. 

• Before projects are approved to transition to production, we suggested 

that projects be required to demonstrate that the design can be

manufactured within cost, schedule, and quality targets. 

In addition, we recommended that NASA institute additional major 

decision reviews that are tied to these key junctures to allow decision 

makers to reassess the project based upon demonstrated knowledge. 

While NASA concurred with our recommendations, the agency has yet to

take significant actions to implement them. With regard to our first 

recommendation, NASA stated that the agency would establish 

requirements for success at the key junctures mentioned above. NASA 

planned to include these requirements in the systems engineering policy it

issued in March 2006. Unfortunately, NASA did not include these criteria 

as requirements in the new policy, but included them in an appendix to the 

policy as recommended best practices criteria. In response to our second

recommendation, NASA stated it would revise its program and project 

management policy for flight systems and ground support projects, due to

be completed in fall 2006. In the revised policy, NASA indicated that it 

would require the results of the critical design review and, for projects that 

enter a large-scale production phase, the results of the production 

readiness review to be reported to the appropriate decision authority in a 

timely manner so that a decision about whether to proceed with the 

project can be made. NASA has yet to issue its revised policy; therefore, it 

remains to be seen as to whether the CEV project decision authorities will 

Page 9 GAO-06-1127T 
have the opportunity to reassess and make decisions about the project 

using the markers recommended above after the project has initially been

approved. Briefings that we have recently received indicate that NASA 

plans to implement our recommendation in the revised policy. 

The risks that NASA has accepted by moving ahead with awarding the 

contract for DDT&E for CEV could be mitigated by implementing our 

recommendations as it earlier agreed. Doing so would provide both NASA 

and Congress with markers of the project’s progress at key points. For 

example, at the preliminary design review, decision makers would be able 

to assess the status of the project by using the marker of technology 

maturity. In addition, at the critical design review, the agency could assess 

the status of the project using design stability (i.e., a high percentage of 

engineering drawings completed). If NASA has not demonstrated 

technology maturity at the preliminary design review or design stability at 

the critical design review, decision makers would have an indication that 

the project will likely be headed for trouble. Without such knowledge, 

NASA cannot be confident that its decisions about continued investments 

in projects are based upon the appropriate knowledge. Furthermore, 

NASA’s oversight committees could also use the information when 

debating the agency’s yearly budget and authorizing funds not only for the 

CEV project, but also for making choices among NASA’s many competing 

programs. If provided this type of information from NASA about its key 

projects, Congress will be in a better position to make informed decisions 

about how to invest the nation’s limited discretionary funds. 

NASA’s ability to address a number of long-standing financial management 

challenges could also impact management of NASA’s key projects. The 

lack of reliable, day-to-day information continues to threaten NASA’s 

ability to manage its programs, oversee its contractors, and effectively 

allocate its budget across numerous projects and programs. To its credit, 

NASA has recognized the need to enhance the capabilities and improve the 

functioning of its core financial management system, however, progress 

has been slow. NASA contract management has been on GAO’s high-risk 

list since 1990 because of such concerns. 

In conclusion, implementing the Vision over the coming decades will 

require hundreds of billions of dollars and a sustained commitment from 

multiple administrations and Congresses. The realistic identification of the 

resources needed to achieve the agency’s short-term goals would provide

support for such a sustained commitment over the long term. With a range 

of federal commitments binding the fiscal future of the United States, 

Conclusions 

Page 10 GAO-06-1127T 
competition for resources within the federal government will only increase 

over the next several decades. Consequently, it is incumbent upon NASA 

to ensure that it is wisely investing its existing resources. As NASA 

proceeds with its acquisition strategy for the CEV project and other key 

projects, it will be essential that the agency ensure that the investment 

decisions it is making are sound and based upon high levels of knowledge. 

NASA should require that the progress of its projects are evaluated and

reevaluated using knowledge based criteria, thereby improving the quality 

of decisions that will be made about which program warrant further 

investment. Furthermore, it will be critical that NASA’s financial 

management organization delivers the kind of analysis and forwardlooking information needed to effectively manage its programs and 

projects. Clear, strong executive leadership will be needed to ensure that 

these actions are carried out. Given the nation’s fiscal challenges and 

those that exist within NASA, the availability of significant additional 

resources is unlikely. NASA has the opportunity to establish a firm 

foundation for its entire exploration program by ensuring that the level of

knowledge necessary to allow decision makers to make informed 

decisions about where continued investment is justified. Doing so will 

enhance confidence in the agency’s ability to finally deliver a replacement 

vehicle for future human space flight. 

Mr. Chairman, this concludes my prepared statement. I would be pleased

to respond to any questions that you or other Members of the Committee 

may have. 

For further information regarding this testimony, please contact Allen Li at

(202) 512-4841 or lia@gao.gov. Contact points for our Offices of 

Congressional Relations and Public Affairs may be found on the last page 

of this testimony. GAO staff who made key contributions to this testimony 

include Greg Campbell, Richard Cederholm, Hillary Loeffler, 

James L. Morrison, Jeffrey M. Niblack, and Shelby S. Oakley.

Page 11 GAO-06-1127T 

GAO Contact and 

Staff 

Acknowledgements 

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