January 2001 Major Managem

Challenges and 

Program Risks

National Aeronautics a

Space Administration

GAO-01-258

Page 1 GAO-01-258 N

Letter 

Overview 

Major 

Performance 

and 

Accountability 

Challenges

Related GAO 

Products

Performance 

and 

Accountability 

Series
Page 2 GAO-01-258 NAS
of th

Page 3 GAO-01-258 N

United States General Accounting Office

Washington, D.C. 20548

January 2001

The President of the Senate

The Speaker of the House of Representati

This report addresses the major performa

accountability challenges facing the Natio

Aeronautics and Space Administration (N

seeks to advance human exploration and 

of space, advance and communicate scien

knowledge, and research and develop aer

space technologies. It includes a summar

that NASA has taken and that are under w

these challenges. It also outlines further a

GAO believes are needed. This analysis sh

new Congress and administration carry ou

responsibilities and improve government 

of the American people.

This report is part of a special series, first 

January 1999, entitled the Performance an

Accountability Series: Major Management 

and Program Risks. In that series, GAO ad

Congress that it planned to reassess the m

and criteria used to determine which fede

government operations and functions sho

highlighted and which should be designat

risk.” GAO completed the assessment, con

comments provided on a publicly availabl

draft, and published its guidance docume

Determining Performance and Accountab

Challenges and High Risks (GAO-01-159SP

November 2000.

The full 2001 Performance and Accountab

contains separate reports on 21 agencies—

each cabinet department, most major inde
Page 4 GAO-01-258 NAS

agencies, and the U.S. Postal Service. The se

includes a governmentwide perspective on p

and management challenges across the fede

government. As a companion volume to this 

is issuing an update on those government op

and programs that its work identified as “hig

because of either their greater vulnerabilitie

fraud, abuse, and mismanagement or major c

associated with their economy, efficiency, or 

effectiveness.

David M. Walker

Comptroller General

of the United States
Page 5 GAO-01-258 N
Page 6 GAO-01-258 N

The National Aeronautics and Space Adm

(NASA) mission encompasses human exp

development of space, the advancement a

communication of scientific knowledge, a

and development of aeronautics and space 

Its activities span a broad range of comple

technical endeavors—from investigating t

composition, evaluation, and resources of 

working with its international partners to 

operate the International Space Station; to 

satellite and aircraft observations of Earth 

and weather forecasting purposes; to dev

technologies designed to improve air fligh

Overall, NASA spends more than $12 billio

goods and services supporting these and o

mostly on contracts with businesses and o

organizations.

Since 1990, we have identified a number o

management challenges at NASA. Current

challenges warrant increased NASA atten

one area—contract management—that w

continuing to categorize as high risk. As h

this overview, NASA has made substantia

addressing these challenges. Nevertheless

remain.
Page 7 GAO-01-258 N

Contract 

Management

Much of NASA’s success depends on the w

contractors—on which it spends the grea

funds. As such, it is exceedingly importan

have accurate and reliable information on 

spending and to exercise effective contrac

1990, however, we identified NASA’s contr

management function as an area at high r

ineffective systems and processes for ove

contractor activities. At that time, there w

emphasis on end results, product perform

control; the acquisition process itself was 

and time-consuming; and NASA found itse

expensive hardware that did not work pro

NASA has made progress in developing sy

correct some weaknesses—notably by str

performance measurement and introducin

accepted standards for managing procure

activities. However, until its integrated fin

management system, which is central to p

effective management and oversight over 

• Correcting weaknesses in contract manag

• Controlling International Space Station

development and support costs

• Effectively implementing the faster-better-c

approach to space exploration projects

• Integrating a human capital approach into 

workforce management strategies
Page 8 GAO-01-258 NAS

procurement dollars, is operational, perform

assessments relying on cost data may be inc

and full costing will be only partially implem

Therefore, the agency’s contract managemen

remains a high-risk area. 

We have also reported that NASA is continuin

undefinitized change orders—that is, contra

initiating new work before NASA and the co

agree on a final estimated cost and fee—to c

work on its largest space station contract. Th

way of doing business because it increases th

for unforeseen cost increases and schedulin

Space Station Costs The International Space Station is character

of the most challenging engineering feats eve

attempted. When assembly is completed, the 

station will be a football field-sized laborator

by up to seven crewmembers. However, unti

station is completed, NASA will continue to 

challenges in controlling the cost and schedu

program. Initially, the prime contract for the 

station was expected to cost over $5.2 billion

assembly of the station was expected to be c

June 2002. By October 2000, the prime contr

had grown to about $9 billion, of which $986 

for cost overruns. Moreover, the prime contr

advised NASA of its intent to submit addition

totaling between $200 million and $300 milli

assembly sequence is now expected to be co

April 2006. NASA’s Office of Inspector Gener

the same cost overrun increase of $986 milli

February 2000 audit report on performance 

management of the International Space Stati

Inspector General stated that the prime cont

attributed part of this increase to contractor 

reorganization activities. 
Page 9 GAO-01-258 N

In response to the Inspector General’s 

recommendations, NASA agreed to take s

including discussing the prime contractor

performance at regularly scheduled meeti

preparing monthly written reports to seni

management on the overrun status. NASA

ability to meet space station schedules wi

whether previously experienced station co

be mitigated. We have reported that space 

growth stemmed in many cases from sche

particularly with Russian and U.S.-built co

Faster-BetterCheaper

NASA faces the challenge of exploring nu

planets and other distant bodies in a low-c

meet this challenge, NASA has embarked 

approach that emphasizes less complex de

be assembled quickly and launched at low

However, the recent failure of two faster-b

Mars probes shows that there are limits to 

approach. NASA-sponsored investigative 

recently found that opportunities to ident

problems prior to launch were missed due 

communications, budget pressures, and p

management and engineering practices. A

management officials were not aware of h

trouble the programs were in. NASA also 

significant challenges as it attempts to cre

reliable missions and faster more open co

under the budget constraints of its faster-b

space exploration strategy. 

Until NASA resolves these problems and f

effective way to capture and disseminate 

learned on an agencywide basis, space ex

programs using this approach may not ach

objectives, and NASA’s financial resource

vulnerable to ineffective use. 
Page 10 GAO-01-258 NAS

Human Capital The space shuttle is the world’s first reusabl

transportation system. Since it is the nation’s 

launch system capable of carrying people to 

space, its viability is critical to other space p

such as the International Space Station. Nev

since 1995, the shuttle workforce has decreas

than one-third. Several internal NASA studie

shown that the shuttle program’s workforce 

affected negatively by such downsizing. In p

the shuttle program has identified many key 

are not sufficiently staffed by qualified work

remaining workforce shows signs of overwo

fatigue. Moreover, the program’s demograph

and skill mix jeopardize the program’s ability 

off” leadership roles to the next generation a

a higher flight rate to support assembly of th

International Space Station. 

NASA has begun taking actions to address w

problems. For example, it has discontinued i

downsizing plans and has hired 114 full-time 

to support current shuttle program operation

requirements and shuttle program upgrades. 

undertaken a joint review with the Office of 

Management and Budget to address personn

that will enable it to identify its overall future 

needs. At the outset, NASA used a draft hum

self-assessment checklist we published as a 

discussions with the Office of Management a

A final version of the checklist was publishe

September 2000. Continued NASA managem

emphasis on human capital planning will be 

continued safe shuttle operations in an envir

increasing shuttle flights. 
Page 11 GAO-01-258 N

y g

Correcting 

Weaknesses in 

Contract 

Management

NASA spends more than $12 billion annua

and services—ranging from procurements 

space hardware to contracts for research 

development-related services. As such, m

success hinges on its contractors. Moreov

of its funds going to outside businesses an

organizations, it is exceedingly important 

have good control and oversight over its p

dollars.

In 1990, we began a special effort to revie

on federal program areas that our work ha

high risk because of vulnerabilities to was

abuse, and mismanagement. We identified 

contract management as an area at high r

lacked effective systems and processes fo

contractor activities. Specifically, little em

being placed on end results and on contro

Procurement processes themselves were 

and time-consuming. In 1992, we reported 

agency still had ineffective systems and p

overseeing contractors’ activities and that 

centers had failed to comply with contrac

requirements. 

Since then, NASA has made progress in ad

contract management challenges. In July 

example, we reported that NASA was dev

systems to provide oversight and informa

improve contract management and that it 

progress evaluating its field centers’ procu

activities on the basis of international qua

and its own procurement surveys. In Janu

found that NASA was implementing its ne

measuring procurement-related activities 

progress in evaluating procurement funct

centers.
Page 12 GAO-01-258 NAS

Nevertheless, as discussed below, key issues 

For example, in 1998 and again in 1999, we re

NASA had delayed implementation of its inte

financial management system—which was c

producing accurate and reliable information 

support contract management. Moreover, in 

reported that NASA needed to rely less on th

undefinitized contract actions—that is, unne

contract changes—as a way of doing busines

practice could result in contract cost overru

growth in the International Space Station pr

NASA Delayed 

Implementation of 

Integrated Financial 

Management System

Modernizing NASA’s financial management s

key to providing better oversight over contra

management activities. However, according 

the agency’s financial management environm

comprised of decentralized, nonintegrated sy

policies, procedures, and practices that are u

field centers. For the most part, data formats 

standardized, automated systems are not inte

on-line financial information is not readily av

program managers. Thus, it is difficult to ens

contracts are being efficiently and effectively 

implemented and budgets are executed as pl

addition, NASA has pointed out that the cost 

these systems has been high, since both data 

software are replicated at each field center.

To correct these problems, on September 18

NASA awarded a fixed-price contract, valued 

$186 million, to provide a NASA-wide integra

financial management system primarily base

commercial off-the-shelf software. The contr

required that the integrated financial manage

project be implemented at all NASA centers 

1999. From its inception, the project experie

significant development and implementation 

Work was stopped on the contract in March 

October 13, 2000, a settlement agreement wa
Page 13 GAO-01-258 N

between NASA and the contractor to term

contract for the convenience of the gover

total cost for the unsuccessful attempt to 

integrated financial management project w

$131 million. 

NASA is undertaking its third attempt to i

integrated financial management project. 

focuses on learning from other organizati

in implementing similar projects, as oppo

revisiting its own failures. NASA has also a

single product approach that the two prio

as their basic architecture. Instead, the pr

broken down into implementable module

of the availability of proven software prod

Specifically, NASA has segmented implem

integrated financial management project i

modules, with estimated completion sche

year 2007. The first project scheduled for 

the core financial project for acquiring an

implementing financial software to serve 

backbone for all the other projects. Howe

established only tentative planning dates 

implementation.

Until the core financial project is operatio

devised an interim approach, which it bel

achieve certain benefits associated with f

accounting practices. The concept of full-

accounting ties all agency costs (including 

personnel costs) to major activities. NASA 

expect this approach to provide complete 

information to management for more fully 

decision-making. In September 1999, NAS

Financial Officer directed that (1) the cen

full-cost accounting activities in fiscal yea

focus in the immediate future be on provi

reports to center project managers; and (3

plan to spend significant amounts on enha

systems on the basis of current plans to re
Page 14 GAO-01-258 NAS

these systems, if not all, in the future. NASA 

follow this interim approach until the core fi

project is operational at all centers (estimate

NASA Has 

Implemented Its New 

System for Measuring 

Procurement-Related 

Activities

In response to our March 1997 report on NA

contract management and our observation o

agency’s need to produce accurate and reliab

procurement-related information, NASA imp

revised system of procurement metrics in fis

year 1999. This revised system involves the d

of measurable performance metrics, benchm

these metrics, and the development of both N

headquarters and agencywide procurement c

satisfaction surveys for timeliness, quality, a

According to a NASA official, the purpose of 

initiative is to help procurement managers m

improve the performance of their organizatio

NASA conducted a customer satisfaction sur

It showed that most participants were satisfi

procurement services quality, timeliness, and 

service. A second survey, now being analyze

further assess satisfaction in communication

service, meeting mission goals, and procurem

knowledge and skills. 

NASA Has Made 

Progress in 

Evaluating 

Procurement at Its 

Field Centers

To strengthen contract management across t

NASA now requires a management system th

minimum, complies with the International O

for Standardization (ISO) 90001

 series of stan

which includes a standard for purchasing. Th

series consists, in part, of 20 quality manage

assurance standards. The general purchasing 

1

 ISO is a worldwide federation of national standards bo

some 130 countries. ISO 9000 standards provide a frame

quality management and quality assurance.
Page 15 GAO-01-258 N

states that the supplier (for example, NAS

centers’ procurement offices) shall establ

maintain documented procedures to ensu

purchased products conform to specified 

In April 1998, NASA’s procurement officer

combination of ISO 9000 external and inte

and procurement surveys should provide 

confidence in the soundness of NASA’s pr

system. A NASA procurement official stat

survey teams are currently conducting sel

and extensive audits of center operations 

schedule. Furthermore, NASA headquarte

centers were certified as ISO 9000 compli

authorized independent accreditation org

of the end of fiscal year 1999.

NASA Continues to 

Use Undefinitized 

Contract Actions

NASA officials can authorize work to beg

contract change before NASA and the con

on a final estimated cost and fee. Such ch

referred to as undefinitized contract actio

unnegotiated contract changes. Relying on 

changes as a way of doing business is risk

increases the potential for additional unan

growth. This, in turn, may force an agency 

scarce budget resources intended for othe

programs. In view of this risk, the Federal 

Regulation and current NASA policy state 

contract changes that have not been nego

occur on an exception basis and be limite

requirements. 

Both NASA’s Office of the Inspector Gene

have reported our concerns about NASA’s 

of undefinitized contract changes. In May 

reported that NASA authorized 593 chang

station prime contract in fiscal years 1998 

cost of these changes amounted to $897.7 

593 changes, 280 added capability or revis
Page 16 GAO-01-258 NAS

designs. Added capabilities were to increase 

station’s operational performance, especially 

research needs. Revisions of initial designs i

changes to (1) correct operability and design 

deficiencies and (2) reduce cost, schedule, an

risks. The total estimated cost of changes ma

capabilities and revise initial designs was $3

NASA officials have stated that because the 

station program is complex and is nearing co

the design, development, test, and evaluation 

the program, the agency expects many urgen

the future. While they recognize that beginni

contract changes that have not been negotia

the preferred way of doing business, NASA o

believe that such changes are necessary in o

avoid delaying the space station program sch

modify ongoing work, or reduce the cost of a 

taking advantage of other ongoing work. 

Our recent review of space station prime con

changes, however, showed that unnegotiated 

orders accounted for more than one-half of a

authorized changes and 98 percent of the co

changes whereas the Federal Acquisition Re

limits the use of such change orders to an ex

basis. Moreover, the practice puts NASA at r

unanticipated cost increases that may requir

reallocations and negatively impact other cr

programs. 

Contract 

Management 

Remains a High-Risk 

Area

While NASA has made progress in correcting 

weaknesses in contract management, it has n

established a financial management system o

integrated it with full-cost accounting practic

starting its third attempt on this effort by seg

implementation of the project into 14 modul

completion tentatively scheduled in fiscal ye

This effort will require continued manageme
Page 17 GAO-01-258 N

to correct problems and keep projects on 

NASA included an objective in its fiscal ye

strategic plan to continue to develop a ne

financial management system. The strateg

that the integrated financial management 

other initiatives, such as full-cost account

improve NASA’s financial resource manag

the system is operational, performance as

relying on cost data may be incomplete an

will be only partially implemented. 

In NASA’s view, with the exception of an i

financial management system, significant 

been made resolving those contract mana

challenges related to the procurement fun

measuring procurement-related activities 

procurement activities at its field centers. 

NASA officials believe designating contra

management as a major management cha

high-risk area is no longer warranted. 

While these actions are steps in the right d

actions are required to provide for effectiv

and management of the entire contract im

process. Principally, NASA still needs an e

efficient integrated financial management 

well as cost controls, particularly for the I

Space Station program. Moreover, NASA’s 

General and we have repeatedly reported 

limit the use of undefinitized contract cha

prevent further unanticipated cost increas

scheduling delays. Therefore, we are retai

management as a major management cha

high-risk area.
Page 18 GAO-01-258 NAS

Controlling 

International Space 

Station 

Development and 

Support Costs

NASA and its international partners—Japan, 

the European Space Agency, and Russia—ar

space station as a permanently orbiting labo

conduct research on materials and life scien

observe the earth, and to provide commercia

under nearly weightless conditions. In Decem

NASA successfully coupled the first two elem

space station in orbit. Since then, several oth

have been successfully launched, including t

provided Service Module in July 2000. Howe

estimates continue to increase substantially. 

Prime Contract and 

Nonprime Activity 

Costs Continue to 

Increase

Initially, the prime contract for the space sta

expected to cost over $5.2 billion, and the as

the station was expected to be completed in 

In September 1997, we reported that the cos

schedule performance of the space station’s 

contractor, which showed signs of deteriorat

had continued to worsen steadily and that pr

financial reserves for contingencies had dete

principally because of program uncertainties 

overruns. At that time, we also reported that 

questioned the accuracy of the prime contra

reported estimate of the cost overrun at com

the basis of an internal review, the prime con

more than doubled its estimate of the total c

at contract completion, from $278 million to 

$600 million. We also reported that NASA ha

concerned with Russia’s ability to meet its 

commitments. 

As shown in table 1, costs for the station hav

to escalate since our 1997 report—leading to 

shortfalls and subsequent delays in assembly 

station.
Page 19 GAO-01-258 N

Table 1: Space Station Cost Escalation 

a Review Report: Performance Management of the 

Space Station Contract (IG-00-007; Feb. 16, 2000).

May 1998 • We reported that the life-cycle cost estimate to develop, operate, a

decommission the station had increased by about $2 billion since 

$95.6 billion. The increase in development cost was offset by a dra

in NASA’s estimate of the shuttle support costs for the station. 

• Also, the final assembly date of the station slipped from June 2002 

2003 and a number of potential program changes, including additi

delays and the need for more shuttle launches, threatened to furth

costs. Moreover, financial reserves appeared inadequate, conside

development was still about 6 years from completion.

January 1999 • We reported that the program was still facing cost and schedule ch

continued to identify cost growth and limited reserves as major pro

and gave added attention to problems with nonprime contractors. T

contractor’s latest estimate of cost overruns at completion increase

$600 million to over $780 million. 

• We reported that cost increases had negatively impacted the prog

1998, NASA and its partners revised the official assembly sequen

additional shuttle flights and extending the assembly date of the st

2004.

August 1999 • We reported that the estimated development costs for the station w

$24 billion and $26 billion primarily due to further schedule slippag

manufacturing delays. The prime contractor’s estimate of cost ove

assembly completion increased from $783 million to $986 million. 

• We also reported that one mechanism that could help managers d

growth risks was a thorough risk management plan. Such a plan c

managers to identify and cost out all major program risks and deve

strategies for mitigating risks. We recommended that NASA finaliz

space station plan before the launch of the Service Module, an im

component.

February 2000 • NASA’s Office of Inspector General reported on the station’s cost 

$986 million on the basis of its review of performance managemen

station contract and stated that the prime contractor attributed par

overrun to unexpected cost increases due to contractor reorganiza

The Inspector General made 14 recommendations aimed at stren

station performance management and minimizing or eliminating th

NASA of contractor restructuring activities. 

September 2000 • NASA officials stated that on the basis of the agency’s review of th

at completion in June 2000, the prime contractor was still estimatin

at $986 million.b

 Moreover, the prime contractor advised NASA of 

submit claims totaling between $200 million and $300 million. NAS

it could not comment on the validity of the claims since they had n

submitted for adjudication. 

• NASA’s own projections predicted a cost overrun at assembly com

$1.2 billion, due to additional costs to rework flight hardware and s

resolve problems relating to integration, parts quality, and pre-launc

officials indicated that the agency was taking steps to increase its 

development budget reserves to cover the potential impact of the p

claims. NASA’s most recent station assembly sequence showed a 

date of April 2006.
Page 20 GAO-01-258 NAS

b

 In December 2000, NASA officials stated that by Octo

prime contract cost had grown to about $9 billion, of wh

$986 million was for cost overruns.

Figure 1 shows the trend of estimated cost o

the prime contract and NASA’s budget for ov

Figure 1: Estimates of Prime Contract Cost Overruns at Completion

Source: NASA

In the past, we reported that NASA had initia

number of actions to mitigate the impact of c

increases and delays that affected the assem

completion milestones. These actions includ

(1) negotiating with partners to provide hard

0

 200

 400

 600

 800

1000

1200

1400

Prime contractor cost overruns

 NASA budget for cost overruns

Dollars in millions

Dec-95

M

Jun-96

ar-96

Sept-96

Dec-96

Mar-97

Jun-97

Sept-97

Dec-97

Mar-98

Jun-98

Sept-98

Dec-98

M

Jun-99

ar-99

Sept-99

Dec-99

Ma
Page 21 GAO-01-258 N

associated with the U.S. commitment in r

launch services or other considerations; (

components from the design; (3) transferr

other NASA programs, notably science fu

(4) deferring activities, such as the procur

parts, until later fiscal years.

We also reported in August 1999 that the c

nonprime portion of the program’s develo

budget—activities related to science facil

ground and vehicle operations—had incre

$8.5 billion in 1994 to over $12.4 billion by 

The increase was due largely to added sco

schedule slippage. NASA began undertaki

to improve its oversight of nonprime cont

including requiring periodic evaluations a

visibility through high-level reviews. In Se

NASA officials told us that although nume

changes had been made to the content of 

budget, the overall budget outlook had re

constant since our August 1999 report. NA

information that indicated that nonprime 

approximately $12.5 billion, slightly highe

$12.4 billion in our August 1999 report. Ac

NASA officials, the agency is continuing t

initiatives to improve the oversight of nonp

activities. 

Overall Contingency 

Plan Not Yet 

Approved

We reported in August 1999 that because 

continuing funding problems, NASA had d

multifaceted contingency plan to mitigate 

further delays in the Russian Service Mod

possibility that the Russians may not prov

capability for the station. The contingency 

for financial assistance to the Russian Spa

development of additional U.S. hardware. 

stated in our August 1999 report that whil

plan to deal with Russian nonperformanc

have an approved overall contingency pla
Page 22 GAO-01-258 NAS

space station development issues involving a

NASA identified the lack of such a plan as a 

risk and, in response, drafted a plan to addre

such as late delivery or loss of critical hardw

However, the plan lacked an estimate of the 

cost of all contingencies. According to progra

the higher priority items included in the over

contingency plan would ultimately be costed

recommended that the NASA Administrator 

station program manager to finalize the over

contingency plan before the Russian Service 

was launched to minimize the potential of fu

schedule disruptions and related cost increa

September 2000, the plan was still a draft an

been approved by all station partners. Also, t

cost of all contingencies in the plan had not 

estimated. We continue to believe that comp

such a plan is critical if potential disruptions 

cost increases are to be minimized. 

Space Station Cost 

Control and 

Contingency 

Planning Are Not 

Adequately 

Addressed 

NASA’s fiscal year 2000 and 2001 performanc

not include performance measures that direc

space station cost control issues or risk miti

activities and contingency planning. These pl

an objective to deploy and use the space stat

advance scientific, exploration, engineering, 

commercial objectives. However, we reporte

2000 that the objective would be strengthene

performance measures that clearly addresse

station cost control and risk mitigation issue

established. Also, in addressing factors that 

influence NASA’s ability to achieve its goals a

objectives, NASA’s 2000 strategic plan states 

has developed alternate courses of action in t

International Space Station partner is unable 

commitment. The value of this statement wo

strengthened if the plan went a step further a

described some of the actions NASA had dev

referenced a separate plan that included suc
Page 23 GAO-01-258 N

We will continue to monitor NASA’s annua

and strategic plans to determine the progr

is making in addressing cost control issue

mitigation activities and contingency plan

Effectively 

Implementing the 

Faster-BetterCheaper Approach 

to Space 

Exploration 

To meet the challenge of exploring space 

way, NASA began following a faster-better

management philosophy in 1992. The app

on building less expensive space probes m

than in the past. It is intended to stimulate 

development and application of technolog

policies and practices, and energize and c

workforce to continue to safely and succe

undertake bold new missions in an era of 

resources. Specifically, NASA is emphasiz

following with this new approach: 

• Distribution of risk by moving from sin

long development time missions to mu

shorter development time missions.

• Accountability and responsibility for s

with the implementing teams at NASA’

well as within industry and academia.

• Efficiency in process and methodology 

exploitation of new, yet mature, techno

and enhance new and challenging scie

technology programs and projects con

short development cycles.

Since NASA has introduced this approach

launched 158 missions valued at a total of 

All but 10 missions were successful. Howe

of two recent failed missions to Mars, at a 

$300 million, the approach has come unde

scrutiny.

The Mars Climate Orbiter, which was inte

observe Mars’ seasonal climate and daily w
Page 24 GAO-01-258 NAS

low orbit around the planet, was lost on Sep

1999. Then on December 3, 1999, the Mars Po

a robotic spacecraft intended to land near th

Pole of Mars for a planned 90-day mission to 

planet’s layered polar terrain, was also lost. 

NASA sponsored investigative boards to det

causes of the failed Mars missions. For exam

Mars Program Independent Assessment Team 

a combination of mission design and executi

had caused the failures. Further, opportuniti

identify and resolve problems were missed d

communications, budget pressures, and poo

management and engineering practices. Also

management officials were not aware of the 

the programs’ problems. 

In March 2000, NASA’s Administrator delegat

authority to NASA’s chief engineer to define 

integrated plan to address the recommendat

NASA-sponsored investigative boards in resp

two failed Mars missions, shuttle wiring prob

generic assessment of NASA’s approach to ex

faster-better-cheaper projects. NASA’s chief e

chartered a NASA-wide senior team, the NAS

Integrated Action Team, which concluded th

faster-better-cheaper principles are valid if p

applied. However, the team found that agenc

associated with the application of faster-bett

principles to actual situations was not suffic

articulated. Moreover, the report recommend

NASA improve its approach to applying the p

with safety and prudent risk as key criteria. 

Furthermore, the report concluded that one 

critical elements for success in the faster-bet

approach is the project manager’s ability to u

and control risk.
Page 25 GAO-01-258 N

NASA still faces significant challenges as 

create highly reliable missions and foster 

communications under the budget constr

agency’s faster- better-cheaper space expl

strategy. In addition, real success will requ

comprehensive integration of lessons lear

failures on an agencywide basis. Until NA

these problems, its financial resources are 

inefficient use. We will continue to monito

future progress in refining its faster-better

strategy.

Integrating Human 

Capital Approach 

Into NASA’s 

Workforce 

Management 

Strategies

The space shuttle is the world’s first reusa

transportation system. Since it is the natio

launch system capable of carrying people 

space, its viability is critical to other spac

such as the International Space Station. In 

we reported that, according to internal NA

workforce reductions were affecting NAS

safely support the shuttle’s planned flight 

Recognizing that in-house workforce redu

gone too far, NASA discontinued its down

began addressing critical staffing needs. H

agency still faces several human capital c

including attracting and retaining employ

critical skills.

Recent Studies and 

NASA’s Actions 

Highlight Shuttle 

Workforce Problems

In August 2000, we reported that several i

studies had shown that the agency’s space 

program’s workforce had been affected ne

NASA’s downsizing, much of which occur

Since 1995, the shuttle workforce has dec

more than one-third, to about 1,800 full-tim

employees.2

 The studies found that stress 

2

 Full-time equivalent is a measure of staff hours equ

employee who works 40 hours per week in 1 year.
Page 26 GAO-01-258 NAS

reached the point of creating an “unhealthy” 

According to NASA’s Associate Administrato

Office of Space Flight, the agency faced sign

safety and mission success risks as a result o

downsizing. NASA’s Aerospace Safety Adviso

concluded that workforce problems could p

impact flight safety, as the shuttle launch rat

to meet International Space Station’s deman

In addition, NASA concluded that the shuttle 

workforce was showing signs of overwork a

as a result of downsizing. For example, indic

forfeited leave, absences from training cours

stress-related employee assistance visits wer

rise. Moreover, the program’s demographic s

skill mix jeopardized the program’s ability to 

leadership roles to the next generation, achie

flight rate to support assembly of the Interna

Space Station, and safely support the shuttle

flight rate. For example, throughout the Offi

Flight, which includes the shuttle program, t

more than twice as many workers over 60 ye

under 30 years old. 

NASA has identified many key areas in which 

program is experiencing critical skill shortag

areas include avionics, mechanical engineer

computer systems, and software assurance e

One internal NASA study has concluded that 

should determine the size of the workforce, 

and experience needed to maintain and oper

shuttle at the anticipated higher flight rates. 

program flew four flights each in fiscal year 

1999. However, the number of flights is proje

increase substantially over the next 5 years. 

example, NASA plans nine flights in fiscal ye
Page 27 GAO-01-258 N

NASA Has Begun 

Taking Actions to 

Address Shuttle 

Workforce Problems

We reported in August 2000 that NASA ha

actions to address its shuttle workforce p

discontinued downsizing plans and was e

add 95 full-time equivalent employees to t

program in fiscal year 2000 to address man

shortages. Data obtained from NASA sinc

2000 report show that of the 873 total pers

all NASA centers, 778 are new hires to the 

95 are transfers from other centers. NASA

Space Flight has gained a total of 405 pers

including 370 new hires and 35 transfers. 

space flight centers have hired 114 full-tim

the shuttle program. The Kennedy Space 

hired 55 full-time personnel, the Marshall 

Center has hired 31, and the Johnson Spa

hired 28. These new hires have been staff

current shuttle program operation require

upgrades. In addition to these new hires, t

have reallocated personnel from other act

space shuttle program. According to NAS

combination of new hires and realignmen

experienced personnel has helped the shu

infuse new talent to meet current program 

In its fiscal year 2001 budget request, NAS

authority to add another 278 full-time equ

employees to the shuttle workforce.

In addition, NASA has undertaken a joint 

the Office of Management and Budget wit

identifying overall future workforce need

will assess potential tools for and approac

agency personnel management. NASA and 

Management and Budget plan to complete 

time for consideration during the fiscal ye

process. 

The President made human capital manag

priority management objective in the fisca

budget and in June 2000, he directed the h
Page 28 GAO-01-258 NAS

executive branch federal agencies to integra

resource management into planning, budget

mission evaluation processes. The directive 

each agency to include specific human resou

management goals and objectives in its strat

annual performance plans beginning Octobe

NASA human resource officials told us that th

using a draft human capital self-assessment c

published as a guide in ongoing workforce p

discussions with the Office of Management a

A final version of the checklist, which was p

September 2000, follows a five-part framewo

comprises strategic planning, organizational 

leadership, talent, and performance culture. 

example, NASA has developed a draft Human 

and Education Functional Leadership Plan t

establishes the human resource managemen

development strategies and flexibilities nece

achieve the agency’s missions and goals. In a

NASA’s Office of Human Resources and Edu

working collaboratively with NASA’s chief en

developing the agency’s next strategic capab

This review will assist NASA in developing f

strategic capabilities and in identifying and a

current and future skill gaps. 

NASA included a broad objective in its fiscal 

strategic plan to invest in the agency’s use of 

capital, developing and drawing upon the tal

its employees. The objective states that NASA 

the management of its employees to best ach

strategic goals and objectives. In reviewing N

year 2000 annual performance plan, we foun

plan did not adequately describe how the ag

strategies and human capital resources wou

achieve performance goals. NASA’s fiscal yea

performance plan addressed at least some h

capital issues in that it included an objective 

workforce health monitoring. However, addr

other relevant human capital issues, such as 
Page 29 GAO-01-258 N

and staffing levels, would be beneficial to 

and provide a better link to the human cap

in the strategic plan. NASA has an opport

include in its future annual performance p

performance measures for achieving its st

capital objective. We will continue to mon

annual performance plans and reports to 

progress the agency is making in integrati

resource management into its performanc

in establishing results-oriented human cap

performance measures for the space shut

programs. 

To ensure that a proper skill mix and staff

the shuttle program are achieved and mai

continued NASA management emphasis o

capital planning is critical, especially for c

shuttle operations in an environment of in

rates. In dealing with its workforce issues

program officials will have to deal with a 

complicating challenges. These include (1

increased training needs deriving from hig

levels, (2) ensuring adequate staffing level

upgrade program, (3) attracting and retain

with critical skills, and (4) achieving a hig

flight rate in support of the International S

compared with rates of recent years. 

NASA’s human capital problems can be se

broader pattern of human capital shortco

have eroded mission capabilities across th

government. See our High-Risk Series Up

Update (GAO-01-263) for a discussion of h

as a newly designated governmentwide hi
Page 30 GAO-01-258 NAS

Key Contact Allen Li, Director

Acquisition and Sourcing Management

(202) 512-4841

lia@gao.gov
Page 31 GAO-01-258 N

Contract 

Management

Space Station: Prime Contract Changes

(GAO/NSIAD-00-103R, May 11, 2000).

NASA Procurement: Status of Efforts to Im

Oversight (GAO/NSIAD-98-198R, July 13, 

NASA: Major Management Challenges

(GAO/T-NSIAD-97-178, July 24, 1997).

High-Risk Program: Information on Select

Areas (GAO/HR-97-30, May 16, 1997).

NASA Procurement: Contract Managemen

(GAO/NSIAD-97-114R, Mar. 18, 1997).

NASA: Procurement Assessments (GAO/N

Feb. 4, 1997).

NASA: Contract Management (GAO/NSIA

Feb. 16, 1996).

NASA Budgets: Gap Between Funding Re

and Projected Budgets (GAO/NSIAD-95-15

1995).

International 

Space Station

Observations on the National Aeronautics 

Administration's Fiscal Year 1999 Perform

and Fiscal Year 2001 Performance Plan

(GAO/NSIAD-00-192R, June 30, 2000).

Space Station: Russian Commitment and 

Problems (GAO/NSIAD-99-175, Aug. 17, 19

Space Station: Status of Russian Involvem

Control Efforts (GAO/T-NSIAD-99-117, Ap
Page 32 GAO-01-258 NAS

Space Station: U.S. Life-Cycle Funding Requ

(GAO/T-NSIAD-98-212, June 24, 1998).

International Space Station: U.S. Life-Cycle F

Requirements (GAO/NSIAD-98-147, May 22, 

Space Station: Cost Control Problems

(GAO/T-NSIAD-98-54, Nov. 5, 1997).

Space Station: Deteriorating Cost and Sched

Performance Under the Prime Contract

(GAO/T-NSIAD-97-262, Sept. 18, 1997).

Space Station: Cost Control Problems Are W

(GAO/NSIAD-97-213, Sept. 16, 1997).

NASA: Major Management Challenges

(GAO/T-NSIAD-97-178, July 24, 1997).

Space Station: Cost Control Problems Contin

Worsen (GAO/T-NSIAD-97-177, June 18, 1997

Space Station: Cost Control Difficulties Cont

(GAO/NSIAD-96-210, July 24, 1996).

Space Station: Cost Control Difficulties Cont

(GAO/NSIAD-96-135, July 17, 1996).

Space Station: Estimated Total U.S. Funding 

Requirements (GAO/NSIAD-95-163, June 12, 

Space Shuttle 

Human Capital

Human Capital: A Self-Assessment Checklist 

Leaders (GAO/OCG-00-14G, Sept. 2000).

Space Shuttle: Human Capital and Safety Up

Challenges Require Continued Attention

(GAO/NSIAD/GGD-00-186, Aug. 15, 2000).
Page 33 GAO-01-258 N

Space Shuttle: Human Capital Challenges 

Management Attention (GAO/T-NSIAD-00

2000).

Human Capital: A Self-Assessment Check

Leaders (GAO/GGD-99-179, Sept. 1999).

Observations on the National Aeronautics 

Administration's Fiscal Year 2000 Perform

(GAO/NSIAD-99-186R, July 20, 1999). 
Page 34 GAO-01-258 N

Major Management Challenges and Progr

Governmentwide Perspective (GAO-01-24

Major Management Challenges and Progr

Department of Agriculture (GAO-01-242)

Major Management Challenges and Progr

Department of Commerce (GAO-01-243)

Major Management Challenges and Progr

Department of Defense (GAO-01-244)

Major Management Challenges and Progr

Department of Education (GAO-01-245)

Major Management Challenges and Progr

Department of Energy (GAO-01-246)

Major Management Challenges and Progr

Department of Health and Human Service

(GAO-01-247)

Major Management Challenges and Progr

Department of Housing and Urban Develo

(GAO-01-248)

Major Management Challenges and Progr

Department of the Interior (GAO-01-249)

Major Management Challenges and Progr

Department of Justice (GAO-01-250)

Major Management Challenges and Progr

Department of Labor (GAO-01-251)

Major Management Challenges and Progr

Department of State (GAO-01-252)
Page 35 GAO-01-258 N

Major Management Challenges and Progr

Department of Transportation (GAO-01-25

Major Management Challenges and Progr

Department of the Treasury (GAO-01-254)

Major Management Challenges and Progr

Department of Veterans Affairs (GAO-01-2

Major Management Challenges and Progr

Agency for International Development (G

Major Management Challenges and Progr

Environmental Protection Agency (GAO-0

Major Management Challenges and Progr

National Aeronautics and Space Administ

(GAO-01-258)

Major Management Challenges and Progr

Nuclear Regulatory Commission (GAO-01

Major Management Challenges and Progr

Small Business Administration (GAO-01-2

Major Management Challenges and Progr

Social Security Administration (GAO-01-2

Major Management Challenges and Progr

U.S. Postal Service (GAO-01-262)

High-Risk Series: An Update (GAO-01-263
Ordering 

Information

The first copy of each GAO report is free. Addi

reports are $2 each. A check or money order sh

out to the Superintendent of Documents. VISA 

credit cards are accepted, also.

Orders for 100 or more copies to be mailed to a 

are discounted 25 percent.

Orders by mail:

U.S. General Accounting Office

P.O. Box 37050

Washington, DC 20013

Orders by visiting:

Room 1100

700 4th St. NW (corner of 4th and G Sts. NW)

U.S. General Accounting Office

Washington, DC

Orders by phone:

(202) 512-6000

fax: (202) 512-6061

TDD (202) 512-2537

Each day, GAO issues a list of newly available r

testimony. To receive facsimile copies of the dai

from the past 30 days, please call (202) 512-60

touchtone phone. A recorded menu will provide 

how to obtain these lists.

Orders by Internet:

For information on how to access GAO reports 

send an e-mail message with “info” in the body 

info@www.gao.gov

or visit GAO’s World Wide Web home page at: 

http://www.gao.gov

To Report Fraud, 

Waste, or Abuse in 

Federal Programs

Contact one:

• Web site: http://www.gao.gov/fraudnet/fraud

• e-mail: fraudnet@gao.gov

• 1-800-424-5454 (automated answering syst

Official Business

Penalty for Private Use $300

Address Correction Requested