MARCH 15, 2011

AUDIT REPORT

REPORT NO. IG-11-016 (ASSIGNMENT NO. A-09-018-00)

OFFICE OF AUDITS

PREPARING FOR THE SPACE SHUTTLE 

PROGRAM’S RETIREMENT: 

REVIEW OF NASA’S CONTROLS OVER PUBLIC SALES

OF SPACE SHUTTLE PROPERTY

OFFICE OF INSPECTOR GENERAL

National Aeronautics and 

Space Administration

 
REPORT NO. IG-11-016 

Final report released by:

Paul K. Martin

Inspector General

Acronyms 

CEA Center Export Administrator

C.F.R. Code of Federal Regulations 

EAR Export Administration Regulations

FMR Federal Management Regulation

FY Fiscal Year

GSA General Services Administration

ISS International Space Station

ITAR International Traffic in Arms Regulations

NPD NASA Policy Directive

NPR NASA Procedural Requirements

OIG Office of Inspector General

OMB Office of Management and Budget

PDO Property Disposal Officer

U.S.C. United States Code 
MARCH 15, 2011

REPORT NO. IG-11-016 

OVERVIEW

PREPARING FOR THE SPACE SHUTTLE 

PROGRAM’S RETIREMENT: 

REVIEW OF NASA’S CONTROLS OVER PUBLIC SALES OF 

SPACE SHUTTLE PROPERTY

The Issue

The Space Shuttle Program – whose first mission was flown in 1981 and whose last is 

scheduled for later this year – employs about 14,600 civil service and contractor 

personnel, occupies over 654 facilities, and includes more than 1.2 million line items of 

personal property.1 NASA has been planning for the retirement of the Space Shuttle 

Program since 2004, and the scope of work involved is one of the largest such efforts ever 

undertaken by the Agency. Much of the Shuttle property will be donated to museums, 

schools, and other parties; transferred to other Federal agencies; or sold to the public 

through the General Services Administration (GSA). 

To manage the disposal of this unprecedented amount of personal property, in November 

2008 NASA submitted to Congress a “Space Shuttle Program Transition and Retirement 

Personal Property Disposition Plan.” The Plan states that in disposing of Space Shuttle 

property NASA will follow all laws and regulations, including the Department of State’s 

International Traffic in Arms Regulations (ITAR) and the Department of Commerce’s 

Export Administration Regulations (EAR), which are intended to prevent unauthorized 

export of controlled technology. The Plan further recognizes that “[s]ome items [of 

Space Shuttle Program personal property] may not be able to be released from NASA to 

the public, or may need to be substantially modified or even destroyed to prevent release 

of export controlled information.” Although NASA does not know with certainty how 

much Space Shuttle personal property is export controlled, in December 2009 the Space 

Shuttle Main Engine Project – just one of the many projects under the Space Shuttle 

Program – completed an assessment that found 93 percent of its personal property is 

export controlled (117,380 out of 125,981 line items). Accordingly, NASA should expect 

 

1 Each line item of personal property as recorded by NASA may contain multiple pieces of equipment, 

materials, or supplies. For example, one line of bolts may equate to dozens of bolts. Personal property 

includes equipment, materials, and supplies, and ranges from common parts to complex tooling and Space 

Shuttle Program flight hardware. Personal property excludes real property such as land and facilities that 

NASA owns, leases, or otherwise manages. For the purposes of this report, the terms “property” and 

“personal property” are used interchangeably. 
OVERVIEW

ii REPORT NO. IG-11-016 

that a significant amount of Space Shuttle-related property will be subject to export 

control laws. 

Consequently, NASA must institute proper controls to prevent the improper release of 

NASA’s export-controlled information and property. In October 2008, the Department of 

Justice reported that efforts to illegally obtain U.S. technology are on the rise. In fiscal 

years (FYs) 2007 and 2008, the Department charged 255 defendants with criminal 

violations of U.S. export control laws, including an indictment related to the export of 

Space Shuttle technology. 

This audit by the NASA Office of Inspector General (OIG) reviewed NASA’s controls 

over the disposition of Space Shuttle Program property. In particular, we focused on the 

vulnerabilities created when Space Shuttle property is sold to the public. During the 

audit, we found significant weaknesses in NASA’s sanitization and disposal processes for

Space Shuttle-related information technology equipment – weaknesses that put the 

Agency at risk of releasing sensitive information and violating Federal laws and 

regulations protecting such information. Because of the time-sensitive nature of these

issues, we immediately reported our findings to the Agency and on December 7, 2010, 

publicly issued a separate report detailing those findings.2

 As part of our broader audit of 

the disposition of all Shuttle-related property, we also reviewed the management of funds 

received from the sale of Space Shuttle Program property. Because a significant amount 

of Space Shuttle property is located at and will be disposed of by personnel from the 

Kennedy and Johnson Space Centers, we conducted most of our work at these two 

Centers. Details of the audit’s scope and methodology are included in Appendix A.

Results 

NASA Risks Unauthorized Release of Export-Controlled Space Shuttle Property. 

We found that NASA had not fully integrated its export control and property disposition 

processes to reduce the risk that public sales of Space Shuttle property could result in the 

prohibited release of export-controlled items and technology. This occurred because the 

Agency did not fully recognize how the domestic sale of Space Shuttle property could 

result in an export. Moreover, NASA’s policies do not include the internal controls 

necessary to fully protect export-controlled property from unauthorized release.3 

For example, NASA’s primary property disposition policy does not require property 

disposal personnel to ensure that: 

• property marked for sale to the public has undergone an export control review; 

 

2 “Preparing for the Space Shuttle Program’s Retirement: A Review of NASA’s Procedures for the 

Disposition of Information Technology Equipment” (IG-11-009, December 7, 2010). Accessible online at 

http://oig.nasa.gov/audits/reports/FY11/IG-11-009.pdf. 

3 In particular, NASA Procedural Requirements (NPR) 2190.1, “NASA Export Control Program - Revalidated w/changes February 1, 2007.”
OVERVIEW

REPORT NO. IG-11-016 iii

• individuals seeking to purchase export-controlled property are not foreign 

persons; or 

• potential buyers have not been denied export privileges by the Department of 

State or the Department of Commerce.

4

 

The unprecedented amount of Space Shuttle property expected to flow through NASA 

Centers’ property disposal systems in the coming years requires a heightened awareness 

of the risk of inappropriately releasing protected technologies. Although we did not 

identify any examples of unauthorized release of export-controlled Space Shuttle 

property, our related December 2010 report examining Agency procedures to dispose of 

information technology equipment found that NASA had been preparing to sell a laptop 

that contained information subject to ITAR restrictions. In addition, we believe 

opportunities exist for NASA to strengthen the relationship between the Agency’s 

property disposition and export control processes, which could reduce the risk of 

unauthorized individuals gaining access to export-controlled Space Shuttle property. As 

a result of our audit, NASA has already begun working with GSA to improve controls 

over public sales of Space Shuttle property, which should help prevent unauthorized 

releases. 

NASA Forfeited Proceeds from Sales of Space Shuttle Property. In FYs 2008 and 

2009, NASA collected over $185,000 in proceeds from the sale of Space Shuttle Program 

property. However, due to ineffective management by the Office of the Chief Financial 

Officer and the Exploration Systems Mission Directorate’s Resources Management 

Office, NASA had to forfeit the money to the U.S. Treasury rather than use it for NASA 

programs. Although the Office of the Chief Financial Officer issued two new Financial 

Management Operating Procedures to ensure that the proceeds from Space Shuttle 

property sales would be used to purchase replacement property by the Exploration 

Systems Mission Directorate, NASA did not obligate the funds within the necessary 

timeframe to avoid forfeiture, nor did Agency officials seek a waiver to extend this 

timeframe. In NASA’s current budget environment, the Agency can ill afford to forgo

funds available for its use. NASA received $273,095 from Space Shuttle property sold in 

FY 2010, and proceeds from such sales will only increase in the coming years. The 

Agency must improve its management of these proceeds or risk forfeiting them as well.

Other Matters of Interest. During the audit, we noted the improper sale or exchange of 

$28,802 of mostly non-Space Shuttle related property. The Federal Management 

Regulation (FMR) lists several categories of property, such as clothing and firefighting 

equipment, that may not be sold or exchanged unless the cognizant agency requests and 

receives a waiver from GSA. The FMR further states that under no circumstances will 

GSA grant waivers for the sale or exchange of weapons. However, we identified sales 

and exchanges of prohibited property without waivers at Kennedy, Johnson, and Stennis 

 

4 NPR 4300.1A, “NASA Personal Property Disposal Procedural Requirements (Revalidated 2/17/06 with 

Change 1).”
OVERVIEW

iv REPORT NO. IG-11-016 

Space Centers and an exchange of weapons at the White Sands Test Facility. When we 

informed Agency officials, they initiated procedures to prevent prohibited items from 

being sold through GSA without the required waivers. As a result, we are not making any 

formal recommendations relating to this issue. However, we believe that NASA should 

monitor the sale and exchange of prohibited items and follow up on the corrective actions 

taken to ensure these types of transactions do not occur in the future.

Management Action

We recommended that the Assistant Administrator for Strategic Infrastructure coordinate 

with the Associate Administrator for International and Interagency Relations and revise 

NPR 4300.1A to explain how property disposition activities, including NASA’s domestic 

property sales coordinated through GSA, can result in a violation of export control laws. 

In addition, the revision should require that responsible property disposal and export 

control personnel coordinate to ensure that export determinations are made, buyer 

citizenship is verified, and buyer identities are compared with lists of individuals who 

have been denied export privileges by the Department of State or the Department of 

Commerce. 

Further, the Associate Administrator for International and Interagency Relations should 

revise NPR 2190.1 to explain how NASA’s domestic sale of property may result in 

exports and require a review of Centers’ export-controlled property disposition activities 

during annual Export Control Program audits. We also recommended that the Center 

Directors at Kennedy and Johnson clarify Center-specific property disposition and export 

control policies to reflect the recommended revisions to NPR 4300.1A and NPR 2190.1. 

Finally, we recommended that the Office of the Chief Financial Officer determine how

much of the FY 2010 sales proceeds remain unobligated and proactively coordinate with 

the Exploration Systems Mission Directorate’s Resources Management Office to make 

timely use of the funds. 

The Assistant Administrator for Strategic Infrastructure concurred with our 

recommendation to work with the Office of International and Interagency Relations to 

revise NPR 4300.1A in a manner that will help integrate NASA’s disposition and export 

control processes. Management’s proposed actions are responsive and meet the intent of 

the recommendation. 

Although management concurred with the recommendation to update NPR 2190.1, the 

comments also stated that the existing procedure is clear and recognizes that exports can 

occur within the United States. Management also concurred with our recommendation to 

update the guidance for the annual Export Control Program audit; however, the response 

implied that NASA’s January 12, 2011, update to the guidance met the intent of the 

recommendation. Our recommendation is intended to more fully integrate NASA’s 

disposition and export control processes and we believe that Agency auditors should take 

additional steps to track export-controlled items further into the disposition process. 
OVERVIEW

REPORT NO. IG-11-016 v 

Therefore, we find management’s response to be inadequate and the recommendation

remains unresolved. 

Management concurred with the recommendations to clarify Center-level disposition and 

export guidance at Kennedy and Johnson, stating that the corrective action will be 

completed within 90 days of the Agency guidance being updated. Management’s 

proposed actions are responsive to the intent of the recommendations. 

The Office of the Chief Financial Officer concurred with the recommendation related to 

the forfeiture of exchange and sale proceeds and said it plans to have corrective action 

completed by September 30, 2011. Management’s proposed actions are responsive to the 

intent of the recommendation. The Office of the Chief Financial Officer also requested 

that we revise the report by attributing the forfeiture of exchange/sale proceeds to 

“untimely and less-than-effective communication” instead of a “lack of knowledge of 

procedures.” However, we disagree that the proceeds were forfeited solely due to 

ineffective communication and, accordingly, declined to make the requested revision. 

MARCH 15, 2011

REPORT NO. IG-11-016 

CONTENTS

INTRODUCTION

Background _________________________________________ 1 

Objectives __________________________________________ 3 

RESULTS

NASA Risks Unauthorized Release of Export-Controlled Space 

Shuttle Property Because Export Control and Property 

Disposition Processes Are Not Fully Integrated ____________ 4 

NASA Forfeited Proceeds from Sales of 

Space Shuttle Property _____________________________ 12

Other Matters of Interest______________________________ 17

APPENDIX A 

Scope and Methodology_______________________________ 19

Review of Internal Controls ____________________________ 23

Prior Coverage ______________________________________ 23

APPENDIX B 

Management Comments ______________________________ 24

APPENDIX C 

Report Distribution___________________________________ 29

MARCH 15, 2011

REPORT NO. IG-11-016 1 

INTRODUCTION

Background

In January 2004, President Bush directed NASA to end the Space Shuttle Program once 

construction of the International Space Station (ISS) had been completed. As of February 

2011, the final Space Shuttle flight is scheduled to take place in June 2011. 

Retirement of the Space Shuttle Program poses a number of challenges for NASA, 

including the disposition of over 1.2 million associated line items of property. Originally, 

500,000 of these items were expected to be used by NASA’s Constellation Program and

the remaining 700,000 were expected to enter the Centers’ property disposal systems 

between fiscal years (FYs) 2010 and 2013. However, cancellation of the Constellation 

Program may result in a significant number of additional items entering the disposal 

chain.

5

 As this “bow wave” of property enters their disposal systems, the Centers plan to 

use their standard property disposition processes, which allow for donating the property 

to museums, schools, or other eligible parties; transferring the property to other Federal 

agencies; abandoning and/or destroying the property; or selling the property to the public 

in partnership with the General Services Administration (GSA). 

Memorandum of Agreement with GSA. GSA’s mission is to streamline the 

administrative work of the Federal Government by performing services, such as sales of 

property, for agencies like NASA. GSA auctions property to the public through a GSAhosted website that provides for competitive bidding and online payment. GSA retains a 

percentage of the sales proceeds as payment for its services and remits the remainder of 

the proceeds to the agency. 

In accordance with a February 2008 Memorandum of Agreement with NASA, GSA is 

responsible for handling the sale of NASA property, including Space Shuttle-related 

property. Under the agreement, NASA receives 90 percent of the proceeds associated 

with the sale of Space Shuttle-related property and GSA retains 10 percent as a fee for its 

services. 

Export Control Laws and Regulations. Disposition of all Space Shuttle property, 

including disposition through GSA sales, must comply with applicable laws and 

regulations, to include the Department of State’s International Traffic in Arms 

Regulations (ITAR) and the Department of Commerce’s Export Administration 

 

5 The Constellation Program was NASA’s next generation human space flight program intended to achieve 

the goals laid out in President Bush’s “Vision for U.S. Space Exploration,” which was released in 

January 2004. In President Obama’s proposed FY 2011 budget the Constellation Program was defunded, 

and the NASA Authorization Act of 2010 directed NASA to develop a new multipurpose crew vehicle 

and space launch system. 
INTRODUCTION

2 REPORT NO. IG-11-016 

Regulations (EAR). In accordance with the Arms Export Control Act of 1976 (Public 

Law 94-329), ITAR governs the export of defense-related materials and makes it 

unlawful to transfer controlled items or technology to foreign persons without consent 

from the Department of State. The Export Administration Act of 1979 (Public Law 

96-72) is the statutory authority for the EAR, which governs the export of commercial 

items, including those with potential military use. The EAR makes it unlawful for an 

entity such as NASA to provide EAR-controlled technology or software to foreign 

persons without the consent of the Department of Commerce. In addition, both the 

Departments of State and Commerce maintain lists of individuals who NASA should 

preclude from acquiring its export-controlled items.6 

NASA generally does not make determinations regarding the export control status of its 

property until the property has been deemed ready for disposition. Accordingly, at this 

time NASA does not know with certainty how much Space Shuttle personal property is 

export controlled. Nevertheless, the Agency should expect that a significant amount of 

Shuttle property is subject to export control restrictions. For example, technology such as 

blueprints, plans, diagrams, engineering designs, and specifications for spacecraft systems 

and subsystems and all associated equipment, components, and parts are considered 

defense-related materials and are subject to ITAR export restrictions.7

 In addition, 

technology and software not related to spacecraft systems and subsystems and not subject 

to ITAR are subject to EAR export restrictions. As an illustration of the extent of 

controlled materials, the Space Shuttle Main Engine Project completed a property 

assessment in December 2009 in anticipation of the Space Shuttle Program’s retirement

and found that 93 percent of its personal property (117,380 out of 125,981 line items) is 

ITAR-controlled. 

Federal Management Regulation. NASA must ensure that it effectively manages 

proceeds from sales of Space Shuttle Program personal property. The exchange/sale 

authority established by the Federal Management Regulation (FMR) and implemented by 

GSA permits an agency to exchange or sell non-excess, non-surplus personal property 

and apply the proceeds in whole or in part toward the acquisition of similar property.8

 

The FMR states that an agency must use the proceeds for the purchase of replacement 

property either in the fiscal year in which the property was sold or in the following fiscal 

year, unless the agency seeks and obtains the necessary waiver to extend these 

timeframes. Otherwise, the agency loses the rights to the sale proceeds and instead must 

 

6

 The Department of State’s debarred parties list includes individuals who are barred by ITAR from 

participating directly or indirectly in the export of defense articles, including technical data, or furnishing 

of defense services for which a license or approval is required. The Department of Commerce’s denied 

persons list includes individuals and entities that have been denied export privileges. 

7 ITAR Part 121, United States Munitions List, Category IV (Launch Vehicle) and Category XV 

(Spacecraft Systems and Associated Equipment). 

8 The use of funds obtained through the exchange and sale of non-excess, non-surplus property is addressed 

in Title 41, Code of Federal Regulations (C.F.R.), Part 102-39, “Replacement of Personal Property 

Pursuant to the Exchange/Sale Authority.” Different regulations govern the sale of property that agencies 

identify as excess or surplus and proceeds from such sales must be remitted to the U.S. Treasury. 
INTRODUCTION

REPORT NO. IG-11-016 3 

send the funds to the U.S. Treasury. NASA originally intended to use proceeds from the 

sale of Space Shuttle Program property to purchase new property for the Constellation 

Program. 

Space Shuttle Program Property Disposition Plan. NASA’s “Space Shuttle Program

Transition and Retirement Personal Property Disposition Plan,” November 2008, 

identifies both disposal of export-controlled property and management of funds received 

from the sale of property as a priority and a challenge for the Program. Specifically, the 

Plan states, “For disposition of Space Shuttle property, Agency-level coordination and 

planning is essential to ensure comprehensive asset management and . . . to achieve . . . 

recovery of fair market value from items offered for sale, and compliance with . . . export 

control requirements.” 

Objectives

Our overall objective was to determine whether NASA had implemented effective 

controls over Space Shuttle Program personal property disposition. Specifically, we 

reviewed: 

• the vulnerabilities associated with selling Space Shuttle property to the public and 

• NASA’s management of sale proceeds. 

We previously issued a separate report, “Preparing for the Space Shuttle Program’s 

Retirement: A Review of NASA’s Procedures for the Disposition of Information 

Technology Equipment” (IG-11-009, December 7, 2010), detailing the weaknesses we 

found in NASA’s sanitization and disposal processes for Space Shuttle-related 

information technology equipment. 

See Appendix A for details of the audit’s scope and methodology, our review of internal 

controls, and a list of prior coverage. 
RESULTS

4 REPORT NO. IG-11-016 

NASA RISKS UNAUTHORIZED RELEASE OF 

EXPORT-CONTROLLED SPACE SHUTTLE 

PROPERTY BECAUSE EXPORT CONTROL AND 

PROPERTY DISPOSITION PROCESSES ARE 

NOT FULLY INTEGRATED

We found that NASA had not fully integrated its export control and property 

disposition processes to minimize the risk of public sales resulting in the transfer 

of export-controlled Space Shuttle property to unauthorized individuals. This 

occurred because the Agency did not fully recognize how domestic property sales 

may result in an export and, therefore, did not include in its policies the internal 

controls necessary to fully protect export-controlled property from unauthorized 

release. Although we did not identify examples of unauthorized release of exportcontrolled Space Shuttle property during this audit, we previously found that 

NASA was preparing to sell a laptop that contained ITAR-restricted information.9

 

We believe that NASA must take steps to strengthen its property disposition and 

export control processes to reduce the risk of unauthorized access to NASA’s 

controlled technologies. 

NASA’s Export Control and Property Disposal Requirements

NASA policies establish requirements, roles, and responsibilities for managing the 

Agency’s export-controlled assets and disposal of personal property. For example, 

NASA’s Office of International and Interagency Relations has Agency-level 

responsibility for the Export Control Program. NASA’s Logistics Division, within the 

Office of Strategic Infrastructure, has Agency-level responsibility to ensure Centers 

comply with the Agency property disposition policy. NASA policy requires each Center 

Director to appoint a Center Export Administrator (CEA) to serve as the Center’s resident 

expert on export control matters and to ensure compliance of all Center activities with 

U.S. export control laws and regulations. NASA policy also requires each Center 

Director to appoint a Property Disposal Officer (PDO) to ensure compliance with Agency 

property disposal requirements. 

The CEA and PDO should work together to ensure that the Center disposes of exportcontrolled personal property in a manner that complies with Federal laws and prevents 

unauthorized release of controlled technology. We found that NASA’s export control and 

property disposition processes were not sufficiently integrated to ensure that unauthorized 

 

9 As reported in “Preparing for the Space Shuttle Program’s Retirement: A Review of NASA’s Procedures 

for the Disposition of Information Technology Equipment” (IG-11-009, December 7, 2010), accessible at 

http://oig.nasa.gov/audits/reports/FY11/IG-11-009.pdf. 
RESULTS

REPORT NO. IG-11-016 5 

individuals could not purchase export-controlled Space Shuttle property. See 

Appendix A for a listing of applicable Agency- and Center-level requirements, policies, 

and procedures. 

Export Control and Property Disposition Processes Were Not Fully 

Integrated

Federal law makes it is unlawful to transfer export-controlled property to (1) foreign 

persons without authority or license from the Departments of State or Commerce or 

(2) any person (including a U.S. citizen) who has been prohibited from receiving such 

property by these Departments. However, we found that NASA had not fully integrated 

its export control and property disposition processes to reduce the risk that exportcontrolled Space Shuttle property would be sold illegally. Specifically, we found that 

there were missed opportunities to strengthen the relationship between the export control 

and property disposition processes at Kennedy and Johnson Space Centers. 

For example, although the PDOs at Kennedy and Johnson generally request the CEAs to 

review property and determine if export control restrictions apply to the property’s 

disposition, we found that no one involved in the disposition process verified that buyers 

of export-controlled property were U.S. citizens. Nor did anyone compare buyer 

identities with the lists maintained by the Departments of State and Commerce to 

determine whether buyers were eligible to receive export-controlled property. Without 

performing such verifications, there is no way to ensure that NASA does not sell exportcontrolled Space Shuttle property in violation of export control laws. 

In addition, although NASA’s Export Control Program requires annual audits of Centerlevel export control activities to identify weaknesses and export control vulnerabilities, 

we found this process was ineffective in ensuring that export-controlled Space Shuttle 

property disposed of through a GSA sale was properly protected. The audits did not 

review the Centers’ property disposition activities and processes or consider how a public 

sale of property may have export control implications. Annual Export Control Program 

audits do include thorough reviews of the Centers’ overseas shipments and traditional 

exports, including a review to ensure that the Centers routinely check debarred parties and 

denied persons lists prior to shipping items. However, the audits did not include a review 

of the Centers’ public sales of export-controlled property. 

Agency- and Center-Level Policies Lacked Controls Necessary to 

Fully Protect Export-Controlled Property 

Personnel at Kennedy and Johnson who were responsible for either export control or 

property management procedures told us that they believed that NASA’s domestic sales 

of Space Shuttle Program personal property were not considered exports because they 
RESULTS

6 REPORT NO. IG-11-016 

occurred within the United States and that, therefore, export control regulations were not 

an issue in such sales. However, NASA’s definition of an export includes anything 

transferred to a foreign person or foreign destination by any means and originating from 

any location. In addition, both the ITAR and EAR specify that the sale or transfer of 

property to a foreign person, even when it occurs in the United States, is an export if the 

property is on the United States Munitions List or is otherwise protected technology or 

software. Therefore, domestic sales of export-controlled Space Shuttle property may 

constitute an export, and the sale of such property without the proper export license or 

approval by the Departments of State or Commerce is prohibited. 

Because NASA did not fully recognize and document that the Agency’s domestic sale of 

Space Shuttle property may result in an export, NASA’s policies do not include the 

internal controls necessary to properly protect export-controlled Space Shuttle property 

sold by GSA on NASA’s behalf. 

Agency-Level Policies. NASA’s primary Agency-level property disposition policy does

not require that PDOs ensure that: 

• property marked for sale to the public has undergone an export control review; 

• individuals seeking to purchase export-controlled property through a GSA sale are

U.S. citizens; or 

• buyer identities are compared with the Department of State’s debarred parties list

and the Department of Commerce’s denied persons list.10 

During the audit, we learned that NASA is revising NPR 4300.1A to include a 

requirement that buyers of export-controlled property self-certify that they are U.S. 

citizens. However, NASA does not plan to require that the identities of prospective 

buyers be checked against the Departments of State and Commerce lists. 

NASA’s export control policy states that an export can occur when technical data is 

disclosed to a foreign national by physical, electronic, oral, or visual means within or 

outside of the United States.

11 However, the policy does not make clear that an export 

can occur as a result of a domestic sale of property through the disposition process and 

does not set forth procedures relating to NASA’s domestic property sales. 

Center-Level Policies. We identified several ways in which the Centers can strengthen 

their policies to prevent the unauthorized release of export-controlled property. 

 

10 NASA Procedural Requirements (NPR) 4300.1A, “NASA Personal Property Disposal Procedural 

Requirements (Revalidated 2/17/06 with Change 1).” 

11 NPR 2190.1, “NASA Export Control Program - Revalidated w/changes February 1, 2007.”
RESULTS

REPORT NO. IG-11-016 7 

Kennedy Policies. Kennedy did not finalize a Center-level property disposition

policy until October 2010, 6 years after President Bush’s 2004 directive to end the Space 

Shuttle Program upon completion of the ISS. Moreover, neither this disposition policy 

nor Kennedy’s export control policy includes internal controls that we believe are 

necessary to prevent unauthorized release of export-controlled items.

12 Both policies 

require the CEA to review a list of property marked for disposal and identify exportcontrolled items. However, neither policy contains guidance regarding how any items 

identified by the CEA are to be disposed of in accordance with export control laws and 

regulations. Additionally, neither policy requires disposal or export control personnel to 

ensure that U.S. citizenship or buyer eligibility is verified when export-controlled 

property is sold through GSA. 

 Johnson Policies. Johnson’s property disposition policy acknowledges that 

Center property should not be transferred, exported to a foreign national, or shipped 

outside of the United States without complying with all applicable export control laws 

and regulations. The policy also requires that export control representatives identify 

export-controlled property before it is declared available for sale.

13 However, the policy 

does not clearly explain who at the Center is responsible for requesting the export control 

review. Johnson’s CEA attempted to identify export-controlled property by reviewing a 

list of property scheduled for disposition. Although the CEA was able to determine from 

the list whether the property was subject to export control under the ITAR or EAR, the 

CEA stated that he could not always make a recommendation about the property’s 

suitability for release, transfer, export, or sale to a foreign person because the property 

listing did not contain the necessary level of detail. 

 Johnson’s export compliance policy does not address how domestic sales of 

property may result in an export or clearly state when in the disposition process a 

determination of whether property is subject to export control should be made.14 Inherent 

in the policy is the assumption that, to effect an export, property would be exported 

overseas. Moreover, like Kennedy’s policies, Johnson’s policies do not require disposal 

personnel, in coordination with the CEA, to ensure that buyers’ citizenship or eligibility 

to purchase export-controlled property is verified in accordance with the ITAR and EAR.

 

12 “Kennedy Space Center Personal Property Transfer/Excess Process,” KDP-KSC-P-3716, October 13, 

2010; “KSC Export Control Process,” KDP-KSC-P-2613, June 30, 2010.

13 Johnson Space Center Work Instruction 4300.1, “JSC Instructions for Excess and Disposal of 

Government Property,” September 28, 2009.

14 Johnson Space Center Work Instruction 2190.1, “JSC Export Compliance,” June 26, 2009. 
RESULTS

8 REPORT NO. IG-11-016 

NASA Faces Increased Risk of Unauthorized Release of Controlled 

Space Shuttle Technology 

As the “bow wave” of more than a million line items of property from the retirement of 

the Space Shuttle Program enters the Agency’s disposal systems, any weaknesses in 

NASA’s internal controls relating to property disposal and export control may provide 

opportunities for unauthorized access to NASA’s controlled technology. 

NASA’s need to dispose of this large amount of property coincides with increases in 

attempts by countries like China and Iran to illegally acquire U.S. technology. The 

Department of Justice reported that in FYs 2007 and 2008 it had charged 110 and 145 

defendants, respectively, with criminal violations of U.S. export control laws, including 

some charges related to the illegal export of Space Shuttle technology.15 The Department 

of Justice noted that controlled technology was most often collected and sold to the 

highest bidder by foreign business people, scientists, and students who only began their 

illegal activities once they came to the United States and found that they had ready access 

to the technology in demand overseas. 

Although we did not identify examples of unauthorized release of export-controlled 

Space Shuttle property through a public GSA sale, we believe there is an increased risk 

that NASA’s controlled technologies may be obtained by unauthorized individuals given 

the weaknesses we identified in NASA policies. 

Management Actions

As a result of our audit, NASA began working with GSA to ensure that the online 

purchasing system GSA uses to publicly sell export-controlled Space Shuttle property 

will require buyers to provide citizenship information and certify at the point of purchase 

that export control laws and regulations are understood and will be followed. GSA is 

working with the Department of Homeland Security to develop a process to verify 

citizenship information provided by buyers before each online property purchase is 

completed. In March 2011, GSA’s Director, Sales Program Division, told us that by the 

end of June 2011 GSA expects to have access to the Department of Homeland Security’s 

database needed for such verifications. 

While NASA management’s prompt action and the planned improvements to GSA’s 

online purchasing system are steps in the right direction, we believe that NASA could 

further reduce the risk that controlled personal property will be improperly exported by 

requiring a check of the debarred parties list maintained by the Department of State and 

the denied persons list maintained by the Department of Commerce. 

 

15 Department of Justice Press Release 08-958: “More Than 145 Defendants Charged in National Export 

Enforcement Initiative During Past Fiscal Year,” October 28, 2008.
RESULTS

REPORT NO. IG-11-016 9 

Recommendations, Management’s Response, and Evaluation of 

Management’s Response

To fully integrate NASA’s property disposition and export control processes and reduce the 

risk of improperly selling export-controlled property to the public, we made the following 

recommendations. 

Recommendation 1.a. The Assistant Administrator for Strategic Infrastructure should 

coordinate with the Associate Administrator for International and Interagency Relations and 

include in the planned revision of NPR 4300.1A a clear explanation of how NASA’s 

property disposition activities, including domestic property sales, could result in a violation 

of export control laws. 

Recommendation 1.b. The Assistant Administrator for Strategic Infrastructure should 

coordinate with the Associate Administrator for International and Interagency Relations and 

include in the planned revision of NPR 4300.1A requirements that responsible property 

disposal and export control personnel ensure that export control determinations are made 

before property is disposed of and that the eligibility of potential buyers is verified prior to 

releasing controlled items to them. At a minimum, verifying buyer eligibility should include 

verifying citizenship and comparing identities with both the Department of State’s debarred 

parties list and the Department of Commerce’s denied persons list prior to the sale of exportcontrolled property. 

Management’s Response. The Assistant Administrator for Strategic Infrastructure 

concurred with the recommendation and agreed to work with the Office of International 

and Interagency Relations to revise NPR 4300.1A by highlighting the implications of 

inadvertently releasing export-controlled Government property to unauthorized 

individuals or entities and by clearly explaining the potential risk. NPR 4300.1A is 

currently under revision, and the Assistant Administrator for Strategic Infrastructure 

expects the revision to be completed by mid-March 2011; however, it will have to 

undergo a formal review process and likely will not be finalized until early in the fourth 

quarter of FY 2011. The Assistant Administrator for Strategic Infrastructure also stated 

that NASA surrenders to GSA its authority to determine the final disposition of 

Government property when NASA reports the property as Agency excess. Further, the 

Assistant Administrator stated that the process for vetting property for sale ultimately 

resides with GSA because GSA controls the sale of property. As such, the Office of 

Strategic Infrastructure is working with GSA to ensure that GSA’s online purchasing 

system has the capability to verify citizenship and compare buyer identities to the denied 

and debarred parties lists maintained by the Departments of State and Commerce, 

respectively. GSA is coordinating with the Department of Homeland Security to add this 

functionality to the online purchasing system, and the current schedule calls for 

implementation of these protocols by the third quarter of FY 2011. Until GSA’s online 

purchasing system has that capability, NASA Centers will be responsible for ensuring 

that the lists are reviewed prior to the release of property to the buyer. 
RESULTS

10 REPORT NO. IG-11-016 

Evaluation of Management’s Response. Although the Assistant Administrator for 

Strategic Infrastructure stated that NASA surrenders its authority to determine the final 

disposition of Government property when the property is reported to GSA as excess, 

NASA remains the responsible party for ensuring that buyers of property are not foreign 

persons according to ITAR, EAR, and NASA regulations. However, we consider 

management’s proposal to work with GSA to reduce the risk that export-controlled 

Government property is released to unauthorized individuals or entities to be responsive 

to the intent of our recommendation. Accordingly, the recommendation is resolved and 

will be closed upon completion and verification of the proposed corrective actions.

Recommendation 2. The Associate Administrator for International and Interagency 

Relations should revise NPR 2190.1 to explain how NASA’s domestic sales of property may

result in exports and to require a review of Centers’ export-controlled property disposition 

activities during annual Export Control Program audits. 

Management’s Response. Management concurred with the recommendation, but 

asserted that NASA Policy Directive (NPD) 2190 and NPR 2190.1 already clearly state

that transfers of export-controlled hardware or data to foreign persons anywhere, 

including in the United States, require export authority. Management’s comments also 

noted that the Office of International and Interagency Relations recently revised 

NPR 2190.1 to inform NASA program and project managers that they should (1) consult 

with the Headquarters Export Administrator and their Center Export Administrator to 

determine the export classification of items and (2) document that information in 

applicable property accountability records. The revised NPR 2190.1 should begin the 

formal review process by March 30, 2011. In addition, on January 12, 2011, the Office 

of International and Interagency Relations updated the guidance for the annual Export 

Control Program audit to require Export Control Program auditors to verify that Center 

Export Administrators and Center Export Representatives are consulted to determine the 

export control classification of NASA property to be disposed. 

Evaluation of Management’s Response. We do not find management’s comments fully 

responsive to the intent of the recommendation. Although we agree that NPD 2190 and 

NPR 2190.1 clearly state that an export can occur within the United States, the intent of 

the recommendation is to more fully integrate NASA’s property disposition and export 

control processes. NASA is currently revising NPR 2190.1 and plans to begin the formal 

review process by the end of March. We believe that including in the planned revision an 

explanation of how an export can occur during the property disposition process will help 

more fully integrate the export control and property disposition processes. Similar to the 

agreed-upon revision to NPR 4300.1A, the revision to NPR 2190.1 should highlight the 

implications of inadvertently releasing export-controlled Government property to 

unauthorized individuals or entities and should clearly explain the potential risk. 

In addition, we acknowledge that having Center Export Administrators and Center Export 

Representatives identify export-controlled property prior to disposition is a good first 
RESULTS

REPORT NO. IG-11-016 11

step. However, we believe that NASA Export Control Program annual audits should 

include additional steps to test controls over the disposition of the items that were 

identified as export-controlled by responsible export control personnel. The additional 

steps should help ensure that unauthorized individuals or entities are unable to acquire 

NASA export-controlled property during public sales. For these reasons, we consider this 

recommendation unresolved. 

Recommendation 3. The Director, Kennedy Space Center, should clarify KDP-KSC-P3716 and KDP-KSC-P-2613 to reflect the recommended revisions to NPR 4300.1A and 

NPR 2190.1. 

Management’s Response. Management concurred with the recommendation and stated 

that KDP-KSC-P-3716 and KDP-KSC-P-2613 will be clarified to reflect the changes to 

NPR 4300.1A and NPR 2190.1 within 90 days of their release. 

Evaluation of Management’s Response. Management’s proposed actions are 

responsive. The recommendation is resolved and will be closed upon completion and 

verification of management’s corrective actions.

Recommendation 4. The Director, Johnson Space Center, should clarify Johnson Space 

Center Work Instruction 4300.1 and Johnson Space Center Work Instruction 2190.1 to 

reflect the recommended revisions to NPR 4300.1A and NPR 2190.1. 

Management’s Response. Management concurred with the recommendation and stated 

that Johnson Space Center Work Instruction 4300.1 and Johnson Space Center Work 

Instruction 2190.1 will be clarified to reflect the changes to NPR 4300.1A and 

NPR 2190.1 within 90 days of their release.

Evaluation of Management’s Response. Management’s proposed actions are 

responsive. The recommendation is resolved and will be closed upon completion and 

verification of management’s corrective actions.
RESULTS

12 REPORT NO. IG-11-016 

NASA FORFEITED PROCEEDS FROM SALES OF 

SPACE SHUTTLE PROPERTY

In FYs 2008 and 2009, NASA collected $185,718 in proceeds from the sale of Space 

Shuttle Program personal property. However, due to a lack of knowledge of 

procedures and ineffective management of the funds by the Office of the Chief 

Financial Officer and the Exploration Systems Mission Directorate’s Resources 

Management Office, NASA had to forfeit these funds to the U.S. Treasury instead of 

using them for NASA programs. NASA received $273,095 in proceeds from Space 

Shuttle property sold in FY 2010 and has until the end of FY 2011 to use these funds 

or to obtain a waiver permitting their use beyond that date. 

NASA’s Use of the Exchange/Sale Authority

As previously discussed, the FMR, implemented and administered by GSA, establishes 

the authority for agencies to exchange or sell non-excess, non-surplus property and apply 

the proceeds in whole or in part toward the acquisition of similar property. In accordance 

with the provisions of the FMR, NASA was required to use the proceeds from GSA sales 

of Space Shuttle personal property to purchase replacement property either in the fiscal 

year in which the property was sold or in the following fiscal year, unless the Agency 

sought and obtained from GSA a waiver to this requirement. Otherwise, the Agency 

would lose the rights to the proceeds and would be required to send the funds to the U.S. 

Treasury. NASA’s intention was to use proceeds from sales of Space Shuttle property to 

purchase new property for the Constellation Program. 

To assist NASA’s financial management community with managing the proceeds from 

GSA sales of Space Shuttle property and to ensure standard and consistent methods of 

processing, reporting, and reviewing financial data, NASA’s Financial Management 

Division wrote and published two Financial Management Operating Procedures 

specifically for Space Shuttle Program exchange/sales:

• NASA Financial Management Operating Procedure 9250.1-P01-A, “Exchange 

Sales of Space Shuttle Program Property Prior to October 1, 2009,” August 7, 

2009; and

• NASA Financial Management Operating Procedure 9250.1-P02-A, “Exchange 

Sales of Space Shuttle Program Property,” October 1, 2009. 

The new procedures notwithstanding, NASA did not make timely use of the sales 

proceeds and had to forfeit to the U.S. Treasury 100 percent of the proceeds collected in 

FYs 2008 and 2009 (see Table 1 for proceeds by fiscal year). 
RESULTS

REPORT NO. IG-11-016 13

NASA Forfeited Exchange/Sale Proceeds to the U.S. Treasury

Instead of using the proceeds from the sale of Space Shuttle Program property to offset 

costs of the Constellation Program as it had intended, NASA forfeited the $185,718 it 

obtained in FYs 2008 and 2009 as a result of sales conducted at Kennedy, Johnson, 

Marshall Space Flight Center, and Stennis Space Center. NASA has until the end of 

FY 2011 either to use the $273,095 in proceeds from sales that took place during 

FY 2010 or to obtain a waiver permitting their use beyond that date. 

Table 1. Space Shuttle Program 

Exchange/Sale Proceeds 

Center FY 2008 FY 2009 FY 2010 Total

Kennedy $4,518 $ 94,174 $ 55,995 $ 154,687

Johnson 0 72,280 195,233 267,513

Marshall 0 14,466 17,605 32,071

Stennis 0 280 4,262 4,542

 Total $4,518 $181,200 $273,095 $458,813 

Kennedy was the first Center to conduct a Space Shuttle Program exchange/sale and 

collected $4,518 in FY 2008. As stipulated in the FMR, NASA had to either obligate

these funds by the end of FY 2009, seek a waiver from GSA, or forfeit the funds to the 

U.S. Treasury. Because the funds had not yet been obligated toward the acquisition of 

similar property within the Constellation Program and NASA did not seek the necessary 

waiver, just prior to the end of FY 2009, the Office of the Chief Financial Officer 

informed Kennedy’s finance office that the proceeds from FY 2008 could not be used. 

As a result, Kennedy transferred the funds to miscellaneous receipts and ultimately 

forfeited the $4,518 to the U.S. Treasury at the end of FY 2009. 

Kennedy, Johnson, Marshall, and Stennis conducted Space Shuttle Program 

exchange/sales in FY 2009. In order to retain these funds, NASA had to either obligate

the proceeds from these sales by the end of FY 2010 or seek a waiver from GSA. Just 

prior to the end of FY 2010, the Office of the Chief Financial Officer and Exploration 

Systems Mission Directorate’s Resource Managements Office attempted to coordinate 

and quickly obligate the proceeds. However, their efforts were unsuccessful, a waiver 

was not pursued, and, ultimately, the funds were forfeited to the U.S. Treasury at the end 

of FY 2010 (see the following timeline). 
RESULTS

14 REPORT NO. IG-11-016 

Management of Exchange/Sale Proceeds Was Ineffective

A lack of knowledge of procedures and the ineffective management of the proceeds by 

the Office of the Chief Financial Officer and the Exploration Systems Mission 

Directorate’s Resources Management Office resulted in NASA forfeiting Space Shuttle 

Program exchange/sale proceeds for two consecutive years. 

As shown in the timeline, the Office of the Chief Financial Officer met with the 

Exploration Systems Mission Directorate on August 10, 2010, to begin discussing the use 

of the FY 2009 Space Shuttle Program exchange/sale proceeds. The Office of the Chief 

Financial Officer realized that those proceeds had not been included in the annual 

“Apportionment and Reapportionment Schedule” (Standard Form 132) submitted to the 

Office of Management and Budget (OMB). On September 17, 2010, less than 2 weeks 

from the end of the fiscal year, the Office of the Chief Financial Officer submitted an 

additional Standard Form 132 to OMB, requesting approval to use the $181,200 in 

FY 2009 proceeds. In accordance with OMB Circular No. A-11, “Preparation, 

Submission, and Execution of the Budget,” July 2010, agencies, including NASA, must 

submit a Standard Form 132 to OMB by August 21 of each fiscal year or within 10 
RESULTS

REPORT NO. IG-11-016 15

calendar days after the approval of the appropriation, whichever is later, to provide an 

estimate of the amount of proceeds the agency expects to make from the exchange/sale of 

property in the upcoming fiscal year. Once the form is approved by OMB, agencies can 

record the estimated amounts in their accounting systems. When the actual proceeds are 

received, the estimates are adjusted accordingly. NASA did not add the amount of the 

proceeds collected in FY 2009 to the estimate of what would be collected in FY 2010 

and, therefore, this amount was not appropriated for use in FY 2010. This resulted in 

NASA having to submit an additional Standard Form 132 just weeks before the end of 

the fiscal year. OMB approved the request on September 24, 2010, and NASA received 

the approval notification the following Monday (September 27, 2010), just 3 days before 

the end of the fiscal year. 

Concurrently with the Office of the Chief Financial Officer’s efforts to secure OMB 

approval to obligate the sale proceeds, the Exploration Systems Mission Directorate’s

Resources Management Office tried to identify a need for the funds within the 

Constellation Program. With exactly 1 week left in the fiscal year, the Exploration 

Systems Mission Directorate’s Resources Management Office identified a Constellation 

project to which the money could be obligated. However, although the Office of the 

Chief Financial Officer learned of OMB approval on September 27, it did not notify the 

Exploration Systems Mission Directorate’s Resources Management Office of the 

approval until 2 days later, on September 29, 2010. By then it was too late to receive, 

record, and distribute the proceeds before September 30, 2010, the end of the fiscal year. 

Further, NASA’s Office of the Chief Financial Officer was unaware that it could have 

requested GSA to grant a waiver to the 2-year constraint on using exchange/sale 

proceeds. Had NASA requested and GSA approved a waiver, NASA could have retained 

the Space Shuttle Program exchange/sale proceeds from FYs 2008 and 2009 and used 

them toward the Constellation Program instead of having to forfeit the proceeds to the 

U.S. Treasury. 

Action Is Needed to Avoid Forfeiture of Additional Proceeds

NASA expended time and effort to establish and conduct GSA sales of Space Shuttle 

property. However, NASA failed to effectively manage FYs 2008 and 2009 proceeds to 

ensure they were used to meet NASA program needs. Although the Office of the Chief 

Financial Officer published two new Financial Management Operating Procedures to 

ensure proper management of GSA sales proceeds, it failed to disseminate or properly 

implement the procedures. The procedures include detailed guidance on the collection, 

accounting, use, and reporting of exchange/sale proceeds. Specifically, they discuss the 

funds and accounts that need to be established and used throughout the accounting 

process, as well as information on organizational responsibilities and a timetable of when 

certain tasks should be completed. The new procedures also include a section on periodic 

monitoring and internal controls. 
RESULTS

16 REPORT NO. IG-11-016 

In NASA’s current budget environment, the use of the exchange/sale authority is a 

valuable tool for offsetting the cost of replacing Agency property. NASA received 

$273,095 in proceeds from Space Shuttle property sold in FY 2010. The Agency must 

improve its coordination, awareness, and management of these and future proceeds, 

which will likely increase as Space Shuttle retirement nears, or risk forfeiture of the 

FY 2010 funds and future funds as well. 

Recommendations, Management’s Response, and Evaluation of 

Management’s Response

To avoid forfeiture of FY 2010 Space Shuttle Program exchange/sale proceeds, we made the 

following recommendations. 

Recommendation 5.a. The Office of the Chief Financial Officer should determine how 

much of the FY 2010 proceeds remain unobligated. 

Recommendations 5.b. The Office of the Chief Financial Officer should proactively 

coordinate with the Exploration Systems Mission Directorate’s Resources Management 

Office to make timely use of the funds in accordance with the relevant Financial 

Management Operating Procedures or, if necessary, request that GSA extend the time period 

during which NASA may make use of the funds. 

Management’s Response. The Office of the Chief Financial Officer concurred with the 

recommendation and plans to have corrective action completed by September 30, 2011. 

The Office of the Chief Financial Officer also requested that we change the report by 

attributing the forfeiture of exchange/sale proceeds to “untimely and less-than-effective 

communication” instead of a “lack of knowledge of procedures.” 

Evaluation of Management’s Response. Management’s proposed actions are 

responsive to the intent of the recommendation. The recommendation is resolved and 

will be closed upon completion and verification of management’s corrective actions. 

Although we agree that there were instances of ineffective communication when the 

exchange/sale proceeds were forfeited, we also believe the facts discussed in the report 

support our conclusion that the overall process was managed ineffectively. Therefore, we 

do not believe that exchange/sale proceeds were forfeited solely as a result of ineffective 

communication and, accordingly, have not revised the report language. 
RESULTS

REPORT NO. IG-11-016 17

OTHER MATTERS OF INTEREST

NASA Improperly Sold Property under Exchange/Sale Authority

NASA entered into the February 2008 Memorandum of Agreement with GSA to sell 

Space Shuttle personal property pursuant to the exchange/sale authority in the United 

States Code (U.S.C.) and the FMR.

16 However, under this authority, certain personal 

property is not eligible for exchange or sale. Specifically, agencies are prohibited from 

engaging in sales or exchanges of clothing and firefighting equipment unless they receive 

a waiver from GSA. In addition, they are prohibited from engaging in the sale or 

exchange of weapons, and no waiver process is available for such transactions. 

Our records review disclosed that NASA sold or exchanged personal property worth 

$28,802 in the following three prohibited categories: Clothing, Individual Equipment, and 

Insignia; Firefighting, Rescue, and Safety Equipment; and Weapons (as shown in 

Table 2). 

The PDO at Johnson sold $96 in clothing items without obtaining a waiver from GSA. 

The proceeds from that sale were included in the proceeds forfeited to the U.S. Treasury 

at the end of FY 2010. At Stennis Space Center, the PDO sold $6,806 worth of 

firefighting, rescue, and safety equipment in FY 2009 without obtaining a waiver from 

GSA. In July 2010, the PDO sent the proceeds to the U.S. Treasury after receiving 

notification from the NASA Headquarters Logistics Division that an ineligible sale 

occurred. Kennedy also exchanged $1,500 worth of firefighting, rescue, and safety 

equipment in FY 2009 without obtaining a waiver from GSA. 

 

16 Exchange/sale means to exchange or sell non-excess, non-surplus personal property and apply the 

exchange allowance or proceeds of sale in whole or in part payment for the acquisition of similar 

property (40 U.S.C. 503, “Exchange or Sale of Similar Items,” and 41 C.F.R. 102-39, “Replacement of 

Personal Property Pursuant to the Exchange/Sale Authority.”)

Table 2. Summary of Prohibited Exchanges and Sales in FY 2009 

Center Category Transaction Amount

Johnson Clothing Sale $ 96 

Stennis Firefighting Equipment Sale 6,806 

Kennedy Firefighting Equipment Exchange 1,500 

White Sands Weapons Exchange 20,400 

 Total $28,802 
RESULTS

18 REPORT NO. IG-11-016 

In addition, the White Sands Test Facility Supply Equipment Management Officer issued 

a procurement action with a gun dealer to exchange 68 handguns to offset the cost of new 

weapons for the White Sands Security Office. The procurement action totaled $30,630 

and the trade allowance was $20,400, which left White Sands to pay $10,230. However, 

the FMR specifically states that “under no circumstances will deviations be granted for 

FSC [Federal Supply Category] Class 1005, Guns through 30mm [millimeter].” The 

handguns that White Sands exchanged fall into this class. According to NASA’s 

Disposal and Warehouse Program Manager, it was apparent the White Sands’ Supply 

Officer was not aware that weapons were ineligible for exchange. 

Management Actions. We informed Agency officials of the sales and exchanges that 

occurred without the necessary waivers from GSA, as well as the prohibited exchange of 

the White Sands weapons. The responsible NASA personnel acknowledged that the 

exchange/sales did not comply with the FMR and initiated corrective actions. 

Specifically, the Agency’s Disposal and Warehousing Program Manager took the 

following steps: 

• Sent an e-mail to Agency PDOs reminding them that exchange/sale authority is 

prohibited for certain listed groups of property unless NASA obtains a waiver and 

informing them that all waiver requests are to be sent to the Logistics Division for 

review and concurrence prior to submission to GSA for its approval. 

• Contacted the system designer at NASA’s Enterprise Applications Competency 

Center to develop a system override that will allow items requiring a waiver to be 

listed in exchange/sales when a GSA waiver has been obtained. 

• Met with the GSA Sales Director to discuss alterations to GSA’s Sales Automated 

System to prevent items from being sold without a waiver when one is required. 

We agree that the actions discussed above should reduce NASA’s risk of engaging in 

transactions that do not comply with the FMR. To ensure that these types of transactions 

do not occur in the future, we believe that NASA should continue to monitor the 

sale/exchange of prohibited items and follow up on the implementation of the corrective 

actions.
APPENDIXES

REPORT NO. IG-11-016 19

APPENDIX A 

Scope and Methodology

We performed this audit from October 2009 through February 2011 in accordance with 

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

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

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

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

our audit objectives. 

Our overall audit objective was to determine whether NASA implemented effective 

controls over Space Shuttle Program personal property disposition. Initially, we focused 

our review on Kennedy’s personal property disposition processes. We interviewed key 

NASA Headquarters and Kennedy personnel involved in the Space Shuttle Program

transition and retirement and/or the personal property disposition processes. We 

identified and reviewed relevant federal laws and regulations, NASA policies, 

procedures, plans, and guidance, and other criteria (a detailed list of items reviewed is 

provided on the following pages). We also reviewed relevant NASA websites for 

additional records and information, such as transition property assessments, status 

briefings, plans, reviews, and meeting charts and minutes. Based on our review at 

Kennedy, we expanded our scope to include Johnson. The methodology we used for the 

review is described below. 

Compliance with Export Control Regulations. At both Kennedy and Johnson, we 

interviewed the CEAs regarding roles and responsibilities and Center processes for 

making export control determinations, Center property disposal officers, industrial 

property managers, legal counsel, and personnel at the property disposal facilities. We 

interviewed a GSA sales representative regarding procedures used by that agency 

regarding export control. At Johnson, we also interviewed several property custodians 

and the Center security chief.

Exchange/Sales through GSA. We reviewed the Memorandum of Agreement between 

NASA and GSA for the disposal of Space Shuttle Program personal property. At 

Kennedy and Johnson, we interviewed the Center PDOs, industrial property clearance 

specialists, and accounting managers. We also interviewed NASA Headquarters 

Logistics Division officials and GSA officials involved in the exchange/sales process. 

We reviewed Center sales records and reconciliations and traced a few sale items through 

the process from the time the items became available for sale to the time they were picked 

up by the purchaser. We also reviewed NASA records relating to sales proceeds and 

attempted to reconcile them to monthly sales reports.
APPENDIX A 

20 REPORT NO. IG-11-016 

OIG Legal Counsel. To determine (1) whether selling to a foreign national in the United 

States is considered an export, (2) whether NASA or GSA is responsible for ensuring 

buyers are not foreign nationals, and (3) what the potential effect is of NASA selling 

prohibited items during an exchange/sale without receiving a waiver from GSA, we 

obtained a legal opinion from the Office of Counsel to the Inspector General. The OIG 

legal staff reviewed pertinent case laws, applicable federal and Agency regulations, and 

applicable workpapers. 

We identified and reviewed the following as applicable to our audit objectives: 

Federal Laws, Regulations, Policies, and Guidance 

Federal Property and Administrative Services Act of 1949 (Public Law 63-385, June 30, 

1949), as amended 

OMB Circular A-11, “Preparation, Submission, and Execution of the Budget,” July 2010 

NASA Federal Acquisition Regulation Supplement: 

• Part 1804, “Administrative Matters”

• Part 1852, “Solicitation Provisions and Contract Clauses” 

FMR: 

• 41 C.F.R. 102-36, “Disposition of Excess Personal Property” 

• 41 C.F.R. 102-38, “Sale of Personal Property” 

• 41 C.F.R. 102-39, “Replacement of Personal Property Pursuant to the 

Exchange/Sale Authority”

• 22 C.F.R. 120-130, ITAR

• 15 C.F.R. 730-774, EAR 

U.S.C.: 

• 31 U.S.C. 1341, “Limitations on Expending and Obligating Amounts” 

• 31 U.S.C. 3302, “Custodians of Money” 

• 40 U.S.C. 503, “Exchange or Sale of Similar Items” 

• 40 U.S.C. 571, “General Rules for Deposit and Use of Proceeds” 
APPENDIX A 

REPORT NO. IG-11-016 21

NASA Policies and Procedures

NPD 1000.0A, “NASA Governance and Strategic Management Handbook,” August 13, 

2008 

NPR 2190.1, “NASA Export Control Program - Revalidated w/changes February 1, 2007” 

NPR 4100.1D, “NASA Materials Inventory Management Manual, (Revalidated 2/9/06)” 

NPR 4200.1G, “NASA Equipment Management Procedural Requirements,” March 30, 

2010 

NPD 4300.1B, “NASA Personal Property Disposal Policy (Revalidated 1/31/06)” 

NPR 4300.1A, “NASA Personal Property Disposal Procedural Requirements 

(Revalidated 2/17/06 with Change 1)” 

NPR 4310.1, “Identification and Disposition of NASA Artifacts (Revalidated w/Change 2 

1/31/06)” 

NPR 9250.1, “Property, Plant, and Equipment and Operating Materials and Supplies,” 

September 30, 2008 

NASA Interim Directive applicable to NPR 4300.1A, NM 4300-67, September 4, 2008 

NASA Financial Management Operating Procedure 9250.1-P01-A, “Exchange Sales of 

Space Shuttle Program Property Prior to October 1, 2009,” August 7, 2009 

NASA Financial Management Operating Procedure 9250.1-P02-A, “Exchange Sales of 

Space Shuttle Program Property,” October 1, 2009 

NASA Headquarters Transition Plans and Guidance

JICB-001, “NASA Transition Management Plan For Implementing the U.S. Space 

Exploration Policy,” NASA Exploration Systems Mission Directorate and Space 

Operations Mission Directorate, August 2008 

“Space Shuttle Program Transition and Retirement Personal Property Disposition Plan,” 

November 2008 

iTCB-001, “NASA Infrastructure Transition Implementation Plan,” NASA Office of 

Infrastructure, June 2009 

Various whitepapers on Space Shuttle Program personal property disposition issues, 

Logistics Division, NASA Office of Infrastructure, 2008 and 2009 
APPENDIX A 

22 REPORT NO. IG-11-016 

“Space Shuttle Program Artifacts,” Information Pamphlet, NP-2009-02-565-HQ, NASA 

Headquarters, August 28, 2009 

Agreement between NASA and the Smithsonian Institution Concerning the Transfer and 

Management of NASA Historical Artifacts, August 20, 2008 

Procurement Information Circular 09-02, “Deviation and Special Property Disposition 

Instructions for Space Shuttle Related Contracts,” NASA Office of Procurement, 

January 14, 2009 

NASA Space Shuttle Program Plans and Requirements

“Space Shuttle Program Plan,” Space Shuttle Program, April 4, 2008 

NSTS 07700, Volume XX (Revision A), “Space Shuttle Transition and Retirement 

Requirements,” Johnson Space Center, September 10, 2001 

NSTS 60576 (Change 1), “Space Shuttle Program Transition Management Plan,” 

Johnson Space Center, November 8, 2007 

NASA Center Transition Plans

JSC-63921 (Revision A), “Johnson Space Center Transition Management Plan,” Johnson 

Space Center, January 2008 

KSC-PLN-1727 (Revision A-2), “Shuttle Processing Transition Management Plan, 

Launch Vehicle Processing Directorate,” Kennedy Space Center, September 7, 2009 

IMSB-Plan-JICB-001, “Marshall Space Flight Center Transition Plan,” Marshall Space 

Flight Center, December 1, 2008 

NASA Center and Contractor Procedures, Instructions, and Other Directives

“Kennedy Space Center Personal Property Transfer/Excess Process,” KDP-KSC-P-3716, 

October 13, 2010 

“KSC Export Control Process,” KDP-KSC-P-2613, June 30, 2010 

Johnson Space Center Work Instruction 4300.1, “JSC Instructions for Excess and 

Disposal of Government Property,” September 28, 2009 

Johnson Space Center Work Instruction 2190.1, “JSC Export Compliance,” June 26, 2009 

L&M Technologies Procedure 6004, “Reutilization and Disposal,” July 27, 2009 
APPENDIX A 

REPORT NO. IG-11-016 23

Use of Computer-Processed Data. We did not use computer-processed data to perform 

this audit. 

Review of Internal Controls

We reviewed internal controls for NASA’s personal property disposition processes 

relating to protection of export-controlled technology, receipt and use of sales proceeds, 

and sanitization of excessed information technology equipment. The control weaknesses 

we identified are discussed in this report and the previously issued report on information 

technology disposition issues (IG-11-009). Our recommendations, if implemented, will 

correct the identified control weaknesses. 

Prior Coverage

In December 2010, the NASA OIG issued a related report, and during the last 5 years, the 

Government Accountability Office (GAO) has issued two reports of particular relevance 

to the subject of this report. Unrestricted reports can be accessed over the Internet at

http://oig.nasa.gov/audits/reports/FY11 and http://www.gao.gov. 

NASA Office of Inspector General

“Preparing for the Space Shuttle Program’s Retirement: A Review of NASA’s Procedures

for the Disposition of Information Technology Equipment” (IG-11-009, December 7, 

2010) 

Government Accountability Office

“NASA: Agency Faces Challenges Defining Scope and Costs of Space Shuttle Transition 

and Retirement” (GAO-08-1096, September 2008) 

“Property Management: Lack of Accountability and Weak Internal Controls Leave NASA 

Equipment Vulnerable to Loss, Theft, and Misuse” (GAO-07-432, June 2007) 
APPENDIX B 

24 REPORT NO. IG-11-016 

MANAGEMENT COMMENTS
APPENDIX B 

REPORT NO. IG-11-016 25
APPENDIX B 

26 REPORT NO. IG-11-016 
APPENDIX B 

REPORT NO. IG-11-016 27
APPENDIX B 

28 REPORT NO. IG-11-016 
APPENDIX C 

REPORT NO. IG-11-016 29

REPORT DISTRIBUTION

National Aeronautics and Space Administration

Administrator

Deputy Administrator

Chief of Staff

Chief Financial Officer

Associate Administrator for International and Interagency Relations 

Associate Administrator for Exploration Systems Mission Directorate

Associate Administrator for Space Operations Mission Directorate

Assistant Administrator for Strategic Infrastructure

Director, Logistics Division

Director, Ames Research Center

Director, Dryden Flight Research Center

Director, Glenn Research Center

Director, Goddard Space Flight Center

Director, Jet Propulsion Laboratory 

Director, Johnson Space Center 

Director, Kennedy Space Center

Director, Langley Research Center

Director, Marshall Space Flight Center

Director, Stennis Space Center

Non-NASA Organizations and Individuals

Office of Management and Budget

Deputy Associate Director, Energy and Science Division

Branch Chief, Science and Space Programs Branch

Government Accountability Office 

Director, NASA Financial Management, Office of Financial Management and 

Assurance

Director, NASA Issues, Office of Acquisition and Sourcing Management 

Congressional Committees and Subcommittees, Chairman and 

Ranking Member

Senate Committee on Appropriations 

Subcommittee on Commerce, Justice, Science, and Related Agencies

Senate Committee on Commerce, Science, and Transportation

Subcommittee on Science and Space

Senate Committee on Homeland Security and Governmental Affairs
APPENDIX C 

30 REPORT NO. IG-11-016 

Congressional Committees and Subcommittees, Chairman and 

Ranking Member (continued)

House Committee on Appropriations

Subcommittee on Commerce, Justice, Science, and Related Agencies

House Committee on Oversight and Government Reform 

Subcommittee on Government Organization, Efficiency, and Financial Management

House Committee on Science, Space, and Technology 

Subcommittee on Investigations and Oversight 

Subcommittee on Space and Aeronautics 
REPORT NO. IG-11-016 31

Major Contributors to the Report: 

Rebecca Sharek, Director, Space Operations Directorate

Raymond Tolomeo, Director, Science and Aeronautics Research Directorate

G. Paul Johnson, Project Manager 

Loretta Atkinson, Project Manager

Julia Eggert, Lead Auditor 

Doug Orton, Lead Auditor 

Eugene Bauer, Auditor 

Nicole Frish, Auditor 

Jim Griggs, Auditor

Jason Hensley, Auditor 

Barbara Moody, Auditor 

James Richards, Auditor 

Cedric Campbell, OIG Associate Counsel
MARCH 15, 2011

REPORT No. IG-11-016 

OFFICE OF AUDITS

OFFICE OF INSPECTOR GENERAL

ADDITIONAL COPIES

Visit http://oig.nasa.gov/audits/reports/FY11/ to obtain additional copies of this report, or contact the 

Assistant Inspector General for Audits at 202-358-1232. 

COMMENTS ON THIS REPORT

In order to help us improve the quality of our products, if you wish to comment on the quality or 

usefulness of this report, please send your comments to Mr. Laurence Hawkins, Audit Operations and 

Quality Assurance Director, at Laurence.B.Hawkins@nasa.gov or call 202-358-1543. 

SUGGESTIONS FOR FUTURE AUDITS

To suggest ideas for or to request future audits, contact the Assistant Inspector General for Audits. 

Ideas and requests can also be mailed to:

Assistant Inspector General for Audits 

NASA Headquarters

Washington, DC 20546-0001 

NASA HOTLINE

To report fraud, waste, abuse, or mismanagement, contact the NASA OIG Hotline at 800-424-9183 or 

800-535-8134 (TDD). You may also write to the NASA Inspector General, P.O. Box 23089, L’Enfant 

Plaza Station, Washington, DC 20026, or use http://oig.nasa.gov/hotline.html#form. The identity of 

each writer and caller can be kept confidential, upon request, to the extent permitted by law.