FEBRUARY 1, 2011

AUDIT REPORT

REPORT NO. IG-11-013 (ASSIGNMENT NO. A-09-007-00)

OFFICE OF AUDITS

STATUS OF SERVICES TRANSFERRED FROM NASA

CENTERS AND HEADQUARTERS TO THE NASA SHARED 

SERVICES CENTER

OFFICE OF INSPECTOR GENERAL

National Aeronautics and 

Space Administration
REPORT NO. IG-11-013

Final report released by:

Paul K. Martin

Inspector General

Acronyms

CSC Computer Sciences Corporation

FY Fiscal Year

GAO Government Accountability Office

G&A General and Administrative

IT Information Technology

NSSC NASA Shared Services Center

ODIN Outsourcing Desktop Initiative for NASA

OIG Office of Inspector General

OMB Office of Management and Budget

OPM Office of Personnel Management
FEBRUARY 1, 2011

REPORT NO. IG-11-013

OVERVIEW

STATUS OF SERVICES TRANSFERRED FROM NASA CENTERS 

AND HEADQUARTERS TO THE 

NASA SHARED SERVICES CENTER 

The Issue

NASA established the NASA Shared Services Center (NSSC) in 2006 in an effort to 

consolidate into a single location multiple business services in four functional areas –

financial management, human resources, information technology, and procurement 

services – that previously were conducted by civil service and contractor personnel at 

NASA Headquarters and the 10 Centers.1

 The NSSC, located at Stennis Space Center, is 

a partnership between NASA, the states of Mississippi and Louisiana, and a contractor, 

Computer Sciences Corporation. NASA’s goals in establishing the NSSC include 

providing consistent, high-quality, and timely services at lower cost; reducing resources 

expended for institutional support areas; and freeing up Center resources to focus on 

performing NASA’s core missions.2

 According to the NSSC Implementation Plan, after 

a stabilization period of 3 years NASA could expect to save approximately $6 million per 

year and reassign more than 200 civil service, full-time equivalent positions (hereinafter 

referred to as positions) as a result of creating the NSSC.3

Our audit objective was to examine the consolidation and transfer of selected services 

from NASA to the NSSC. Specifically, we sought to determine whether: (1) the transfer 

of services was accomplished timely and as planned, (2) positions at the Centers were 

redirected as planned to “critical mission-related activities,” and (3) projected cost 

savings were realized. To conduct our audit, we interviewed staff at NASA 

Headquarters, the NSSC, and five Centers and reviewed relevant documentation. Details 

of the audit scope and methodology are in Appendix A.

 

 1 NASA noted in the NSSC Implementation Plan that because IT activities had already undergone a 

consolidation, the IT community would not experience a reduction in total civil servants and contractors 

as a result of transitioning services to the NSSC. Therefore, no cost savings or consolidation for IT 

services was expected. Accordingly, we did not consider IT activities in our analysis.

2 “NASA Shared Services Center (NSSC) Implementation Plan Report” (NSSC-RPT-02, Volume 1, 

September 2003), p. 2.

3 Office of Management and Budget (OMB) Circular A-11 defines full-time equivalent (FTE) employment 

as the total number of hours worked divided by the number of compensable hours applicable to each fiscal 

year. For example, an FTE can equal one employee working full time for 1 year or 2 employees working 

full time for 6 months. 
OVERVIEW

ii REPORT NO. IG-11-013

Results

NASA has consolidated and transferred more than 40 services to the NSSC since its 

inception in 2006.4

Several Services Not Transferred Timely or as Planned. NASA developed a phased 

schedule for the transition of institutional support services to the NSSC and for the 

discontinuance of those services at the Centers. The transfer of most services occurred on 

time and as planned. However, the transfer of accounts payable and accounts receivable 

services was delayed due to concerns expressed by the NASA finance community that 

additional time was needed to ensure that systems were ready and NSSC personnel were 

trained. This delay resulted in NASA incurring approximately $3.75 million in additional 

expenses before the transfer was completed. 

 While most of the transfers occurred on time and as planned, the 

transfer of accounts payable and accounts receivable services was delayed, resulting in 

$3.75 million in additional costs. In addition, three services that initially were transferred 

to the NSSC were subsequently returned to the Centers for cost reasons. Moreover, 

although NASA originally expected that approximately 200 civil service positions at the 

Centers would be freed up and reallocated from performing institutional support services 

to “critical mission-related activities” as a result of creation of the NSSC, we found that at

the five Centers we visited positions were often redirected within the same functional 

area as the transferred services. Finally, we found that NASA’s claim that creation of the 

NSSC would save the Agency $121 million over a 10-year period (fiscal years 2006 

through 2015) was based on flawed data and is therefore not accurate.

In addition, three human resource services: organizing health fairs, managing logistics 

related to recruiting, and arranging awards ceremonies, that originally transferred to the 

NSSC subsequently were returned to the Centers because of unexpectedly high costs. 

Returning these services to the Centers resulted in fewer Center positions available for 

redirection to other functions. 

Benefits counseling services were also a source of transition problems. Some NASA 

employees requesting benefits counseling from the NSSC were unsatisfied with the 

advice provided by the NSSC contractor staff and continued to call Center-based staff. In 

response, NSSC hired additional civil service staff experienced in managing Federal 

benefits, which resulted in higher benefits counseling costs for the NSSC. 

Guidance for Redirection of Positions Not Established. NASA originally expected 

that approximately 200 civil service positions would be reallocated to “critical missionrelated activities” upon transfer of services to the NSSC. However, NASA did not define 

“critical mission-related activities” or provide the Centers with a consistent plan for how 

positions should be redirected to such activities. As a result, Centers developed their own 

interpretations of the term and established their own plans for redirecting staff. While 77 

 4 See Appendix B for a list of the 44 services transferred to the NSSC.
OVERVIEW

REPORT NO. IG-11-013 iii

positions were redirected and 50 positions were eliminated through attrition at the five 

Centers we visited, redirected employees were often placed in new positions or assigned 

to backfill positions in the same functional areas from which services had been 

transferred to the NSSC. Because Headquarters did not define “critical mission-related 

activities” and Centers were inconsistent in their interpretations of the term, we cannot 

determine whether Center positions were actually redirected to such activities. As a 

result, it is unclear to what extent NASA achieved its goal of reducing the number of 

Center-based positions dedicated to institutional support. 

Projected Cost Savings Based on Unreliable Data. According to the Implementation 

Plan, NASA estimated it would save approximately $6 million per year by establishing 

the NSSC. In May 2009, 3 years after its inception, the NSSC reported projected cost 

savings of $121 million from fiscal year (FY) 2006 through FY 2015. NSSC also 

reported that NASA achieved the breakeven point on its investment in the NSSC in 

December 2008, 4 months earlier than had been predicted. 

However, our analysis determined that cost data supplied by the Centers, which were

essential in determining the baseline cost calculations and return-on-investment 

projections, were not reliable or verifiable. For example, some Centers’ salary 

calculations did not match applicable Office of Personnel Management pay scales and 

Center personnel told us that some time estimates were “guesstimates” based on tasks 

that were not clearly defined. We also found that NASA did not include in its return-oninvestment calculations $15.2 million of funding (including $3.75 million for the delayed 

transfer of accounts payable and accounts receivable) the Agency used to supplement 

NSSC start-up costs. As a result, NASA’s claim of a $121 million savings for FYs 2006 

through 2015 and the reported breakeven point of December 2008 was based on flawed 

data and therefore is not accurate.

Management Action

For NASA to accurately demonstrate cost savings and redirection of positions, it needs to 

ensure that the data used to evaluate the cost associated with consolidation of services at 

the NSSC is reliable and that the term “critical mission-related activities” is defined and 

uniformly applied across the Centers. We recommend that the NASA Associate 

Administrator for Mission Support (Associate Administrator): (1) develop a full-cost 

benefit assessment prior to transferring or implementing additional services to the NSSC; 

(2) develop a plan with milestones for the periodic re-evaluation of transitioned services 

to ensure their performance by NSSC personnel continues to be cost effective; (3) define 

and identify “critical mission-related activities,” develop a plan to ensure that Center 

resources are redirected to those activities, and document any instances where such 

redirection is not possible; and (4) provide clear guidance on what data should be 

obtained and the methodology that should be used to project cost savings to ensure 

savings projections are supported by documented and verifiable data. 
OVERVIEW

iv REPORT NO. IG-11-013

We submitted a draft of this report for comment to the Associate Administrator on 

December 13, 2010, and requested a response to our recommendations. On January 14, 

2011, we received comments from the Associate Administrator in coordination with the 

NSSC Executive Director regarding our recommendations. The Associate Administrator 

also provided technical comments to our report. We considered the technical comments 

and incorporated them into the body of our report as appropriate. 

The Associate Administrator concurred with all of our recommendations and in his 

response described a series of ongoing and planned actions by the Agency, including: 

1. Refining the process the Agency uses for transferring or assigning services to the 

NSSC for the NSSC to include a cost-benefit analysis; 

2. Continuation of regular briefings to the NSSC Board of Directors by NSSC Senior 

Leadership concerning the quality, timeliness, and cost of services provided by the 

NSSC, as well as submission to all Centers of detailed financial information 

concerning NSSC-provided services; 

3. Development of a generic definition for “critical mission related activities” and an

Employee Transition Plan as appropriate for transferred services; and

4. Development by February 28, 2011, of clear guidance and templates for collecting 

workforce and cost data for Business Case Analyses for NSSC activities. 

We consider these actions to be responsive to our recommendations, and accordingly 

consider the recommendations to be resolved. We will close the recommendations upon 

completion and/or verification of the proposed corrective actions.
FEBRUARY 1, 2011

REPORT NO. IG-11-013

CONTENTS

INTRODUCTION

Background _________________________________________ 1

Objectives __________________________________________ 2

RESULTS

Several Services Did Not Transfer Timely or as Planned ______ 4

NASA Failed to Develop Guidance for Redirection of 

Center Positions ___________________________________ 8

Cost Savings Claim Based on Insufficient Data and Therefore

Not Reliable______________________________________ 13

APPENDIX A

Scope and Methodology_______________________________ 17

Review of Internal Controls ____________________________ 17

Prior Coverage ______________________________________ 18

APPENDIX B

Services NASA Transferred to NSSC _____________________ 19

APPENDIX C

Management Comments ______________________________ 21

APPENDIX D

Report Distribution___________________________________ 24

FEBRUARY 1, 2011

REPORT NO. IG-11-013 1

INTRODUCTION

Background

Prior to 2006, Agency institutional support services such as human resources, financial 

management, information technology (IT), and procurement were largely provided by 

civil service and contractor personnel located at NASA Centers and NASA Headquarters. 

Beginning in March 2006, NASA consolidated several of these functions in one location 

at the NASA Shared Services Center (NSSC) at Stennis Space Center in Mississippi. 

NASA expected that this consolidation would provide consistent, high-quality “one-face” 

services to Centers, employees, external customers, and stakeholders more effectively, 

efficiently, and economically than the non-centralized system it had used for many years.5

The NSSC is a partnership between NASA, the states of Mississippi and Louisiana, and a 

contractor – Computer Sciences Corporation (CSC). CSC employees are responsible for 

providing the day-to-day services with oversight by NASA civil service employees. 

NASA reported an initial investment of $26 million to establish the NSSC, while 

Mississippi and Louisiana contributed $23.7 million and $1 million, respectively, for 

facility construction and training costs. 

 

In addition, NASA estimated that after a stabilization period of 3 years, the consolidation 

would result in approximately $6 million per year in cost savings and free up 200 civil 

service positions for reallocation to “critical mission-related activities.” 

The NSSC has four strategic objectives: unparalleled customer service, improving 

management and processes, standardizing business processes, and achieving savings. 

The NSSC operates using a working capital fund in which NASA Centers pay into the 

fund in advance of expenditures and the NSSC recovers from the fund the full cost of the 

goods and services it provides. The NSSC charges NASA Centers based on approved 

allocation methods and amounts identified in service agreements. 

NSSC Functional Areas. According to the NSSC Implementation Plan, before making a 

determination regarding which support services would be transferred to the NSSC, NASA 

reviewed 432 services in six functional areas: human resources, procurement, financial 

management, resources management, IT, and facilities. NASA initially identified 80 

services for transfer in financial management, human resources, procurement, and IT. 

During development of the work statement for creation of the NSSC, some of these 

services were combined or deleted from the list of planned transfers. Ultimately, NASA 

developed a transition plan under which 44 support services would be transferred to the 

 5 NASA “Consolidated Business Services: A New Opportunity for Better Services,” March 2002.
INTRODUCTION

2 REPORT NO. IG-11-013

NSSC in phases between March 2006 and December 2009.6

• Financial Management: travel voucher processing, payroll and time and 

attendance integration, accounts payable, accounts receivable, fund balance with 

Treasury, and permanent change of station/relocation assistance. The transfer of 

these financial management services is complete.

 The following is a summary 

of the services designated for transfer and their status:

• Human Resources: support to personnel programs, employee development and 

training, employee benefits, Senior Executive Service case documentation, 

personnel action processing, and electronic Official Personnel Folder record 

keeping. The transfer of these human resources services is complete. 

• Procurement: Agency contracting, Small Business Innovation Research and 

Small Business Technology Transfer contracts, training, and grants/cooperative 

agreements. The transfer of these procurement services is complete. 

• IT: ODIN Program Management Services, NASA’s Computing and

Communications Services, and Integrated Financial Management Competency 

Center Services.7

Objectives

 Ultimately, only ODIN Program Management Services were 

transferred. NASA plans to leave the other services at the Centers. 

Our audit objective was to determine whether the consolidation and transfer of 

institutional support services from NASA Centers to the NSSC was conducted in a 

timely, efficient, and cost effective manner. Specifically, we sought to determine 

whether: (1) the services identified for transfer were transferred timely and as planned; 

(2) positions at the Centers that were previously dedicated to the transferred functions 

were redirected to “critical mission-related activities”; and (3) projected cost savings were 

realized. In addition, we performed a review of internal controls related to the overall 

objective. 

To conduct our audit, we visited NASA Headquarters, the NSSC, Glenn Research Center, 

Johnson Space Center, Kennedy Space Center, Langley Research Center, and Marshall 

Space Flight Center. We also reviewed relevant documentation and interviewed 

personnel with responsibility for human resources, financial management, procurement, 

 6 See Appendix B for a complete listing of the functions that were transferred to the NSSC pursuant to this 

transition plan. Following completion of the transition plan, NASA added other functions to the NSSC’s 

work plan, including functions that had not previously been performed at the Centers. We did not include 

such “new” activities in our analysis.

7 Outsourcing Desktop Initiative for NASA (ODIN) is a long-term outsourcing arrangement with the 

commercial sector that transfers the responsibility for providing and managing the majority of NASA’s 

desktop, server, and intra-Center communications assets and services to a contractor.
INTRODUCTION

REPORT NO. IG-11-013 3

and IT at the NSSC, Headquarters, and the Centers. See Appendix A for details of the 

audit scope and methodology, our review of internal controls, and a list of prior coverage.
RESULTS

4 REPORT NO. IG-11-013

SEVERAL SERVICES DID NOT TRANSFER 

TIMELY OR AS PLANNED

For the most part, NASA transferred support services to the NSSC in accordance 

with its Implementation Plan. However, the transfer of services related to accounts 

payable and accounts receivable was delayed because of concerns that the planned 

schedule did not allow sufficient time to ensure that business processes could be 

reengineered, internal controls were in place, and the NSSC staff was adequately 

trained to handle the transferred services. Because the Centers needed additional 

money to pay their contractual obligations to the NSSC while maintaining staff at the 

Centers to perform these services until they were transferred to the NSSC, this delay 

cost NASA an additional $3.75 million over and above its initial $26 million 

investment in the NSSC. In addition, three human resources services – organizing 

health fairs, managing recruiting logistics, and arranging awards ceremonies – that 

originally transferred to the NSSC were subsequently returned to the Centers because 

of unexpectedly high costs. Finally, the NSSC hired additional civil service staff to 

perform benefits counseling due to NASA employees’ dissatisfaction with NSSC 

services in this area, which increased the costs of NSSC benefits counseling services 

beyond initial estimates. As a result of these delays and alterations to the original 

Implementation Plan, the Centers were not able to realize projected costs savings or 

redirect all intended staff to other activities as anticipated in the Plan. 

Transfer of Financial Services Was Not Timely

Most services scheduled for transfer to the NSSC transferred during the planned or 

subsequent quarter. However, the transfer of accounts payable and accounts receivable 

services was delayed for almost 2 years. According to planning documents, these 

services were to transition to the NSSC in three waves between July and November 2006. 

However, the transfer did not begin until February 2008 and was not completed until 

December 2009. NASA management officials told us that the transfer of these services 

did not occur as planned because the NASA finance community was concerned that the 

original schedule was too ambitious to ensure that business processes could be 

reengineered, internal controls were in place, and the NSSC staff had been adequately 

trained and would be adequately supervised.8

 8 In technical comments to the draft of this report, the NASA Associate Administrator for Mission Support 

explained that the delay in transitioning accounts payable and accounts receivable services was due to a 

significant upgrade to NASA’s Core Financial System (SVU Update), which provided several critical 

enhancements to the SAP Core Financial software, which was to be used by the NSSC to process accounts 

payable and accounts receivable transactions. NASA concluded that it would not be in the best interests

of the Agency to transition accounts payable and accounts receivable until the upgraded Core Financial 

System was completed, tested, and stabilized. 

 To accommodate the delay, the Office of 

Program and Institutional Integration authorized supplemental funding of $3.75 million 
RESULTS

REPORT NO. IG-11-013 5

from the Agency’s Corporate General and Administrative (G&A) account so Centers 

could meet their contractual obligations to the NSSC while maintaining the necessary 

staff at the Centers to perform the services until the transfer could be completed. 

According to NASA management, the Centers had the option of using these funds to pay 

NSSC or other bills. One Center used its portion of the money to pay non-NSSC bills; all 

other Centers sent 100 percent of their supplemental funding to the NSSC. 

Neither the Agency nor the NSSC treated the $3.75 million as additional start-up funds 

related to the NSSC. Rather, according to both NASA and NSSC management, the 

money was recorded as an indirect G&A cost in NASA’s financial accounting system. 

However, NASA guidelines provide that financial reporting must assist report users in 

evaluating NASA’s performance, including the cost of programs and projects, programs 

efforts, and accomplishments during the reporting period and the manner in which these 

efforts and accomplishments have been financed.9

Transfer of Several Human Resource Services Was Not Achieved 

as Planned

 In our view, by not attributing the 

$3.75 million to NSSC as start-up costs, NASA has not provided an accurate picture of 

the full amount it expended to transfer accounts payable and accounts receivable services 

to the NSSC or the amount of savings needed to recoup its investment. 

NASA transferred most services to the NSSC in accordance with its Implementation 

Plan. However, three services transferred to the NSSC subsequently have been returned 

to the Centers and other transfers have not been carried out as originally planned. 

Event Services. Services such as organizing health fairs, managing recruiting logistics, 

and arranging awards ceremonies were transferred to the NSSC during 2006 and early 

2007. However, these services were returned to the Centers in October 2007 because of 

higher-than-expected costs.10

Benefits Counseling. Benefits counseling also proved a source of transition problems. 

Specifically, NASA employees at several Centers we visited were unsatisfied with the 

service and advice provided by NSSC’s contractor staff on retirement and other benefits 

issues. Center management told us that even after the transfer of these functions to the 

NSSC, both Center employees and NSSC staff continued to call on Center-based staff for 

benefits counseling advice. NSSC management responded to the complaints by hiring 

 The effect of returning the responsibility for performing 

these services to the Centers was that Center staff positions could not be redirected to 

other functions as originally planned. 

 9 NASA Procedural Requirements 9200.1, “Accounting General Overview,” Chapter 1.1.1(3)b, September 

30, 2008.

10 The NSSC reported the costs per event for these services as $8,097 for recruiting events, $14,960 for 

health fairs, and $32,193 for award ceremonies.
RESULTS

6 REPORT NO. IG-11-013

additional civil service staff with Federal benefits experience to handle benefits 

counseling. This in turn resulted in higher benefits counseling costs for the NSSC. 

Conclusion

NASA transferred most of the human resources, financial management, IT, and 

procurement services according to the general timetable in its Implementation Plan with 

the exception of a few services such as accounts payable and accounts receivable, which 

were delayed for approximately 2 years and resulted in $3.75 million in additional costs 

to NASA. In addition, plans to transfer event services and employee benefits counseling 

to the NSSC were amended in light of complaints about high costs and quality, 

respectively. 

Recommendations, Management’s Response, and Evaluation of 

Management’s Response

Recommendation 1. We recommend that the NASA Associate Administrator for 

Mission Support conduct a full cost benefit assessment before transferring services 

performed at the Centers and Headquarters or assigning new services to the NSSC.

Management’s Response. The Associate Administrator concurred with our 

recommendation and stated that since the initial Implementation Plan was written NASA 

has refined the process it uses to review potential new business for the NSSC to include a 

cost-benefit analysis. The Associate Administrator further stated that this analysis is 

typically validated by an independent Agency team. Because the Agency has 

implemented these actions, the Associate Administrator requested closure of this 

recommendation upon issuance of the final report. 

Evaluation of Management’s Response. We find the Agency’s actions to be responsive 

to our recommendation and therefore consider the recommendation resolved. We will 

close the recommendation upon verification that management has taken these actions.

Recommendation 2. We recommend that the NASA Associate Administrator for 

Mission Support develop a plan with milestones for the periodic re-evaluation of services 

performed by the NSSC to ensure that this arrangement continues to be cost effective for 

NASA.

Management’s Response. The Associate Administrator concurred and described an 

ongoing process wherein the NSSC Senior Leadership briefs the NSSC Board of 

Directors quarterly and at the end of each fiscal year concerning NSSC’s overall Annual 

Operating Results, including providing the Board with detailed performance information 

about the quality, timeliness, and cost of NSSC-provided services. In addition, the 
RESULTS

REPORT NO. IG-11-013 7

Associate Administrator indicated that the Centers receive detailed information about 

NSSC’s performance at regular intervals. Because the Agency has implemented these 

actions, the Associate Administrator requested closure of this recommendation upon 

issuance of the final report. 

Evaluation of Management’s Response. We find the Agency’s actions to be responsive 

to our recommendation and therefore consider the recommendation resolved. We will 

close the recommendation upon verification that management has taken these actions.
RESULTS

8 REPORT NO. IG-11-013

NASA FAILED TO DEVELOP GUIDANCE FOR 

REDIRECTION OF CENTER POSITIONS 

According to NASA’s NSSC Implementation Plan, once the NSSC was fully 

operational more than 200 civil service positions that previously were dedicated to 

institutional support functions would be available for reassignment to “critical 

mission-related activities.” However, NASA did not define in the Plan what 

constituted a “critical mission-related activity” and neither NASA Headquarters nor 

the NSSC Implementation Team provided the Centers with guidance regarding how 

these positions should be reallocated. Accordingly, Centers developed their own 

plans for redirecting positions and reassigning employees whose responsibilities had 

been transferred to the NSSC. We frequently found that employees were placed in 

newly created positions in the same functional areas or were used to backfill existing 

positions in those areas. At the five Centers we visited, 77 positions were redirected 

within the Centers and another 50 positions were eliminated through attrition 

following the transfer of services to NSSC. However, because the Centers did not 

use a uniform definition of “critical mission-related activities,” it is unclear whether 

NASA achieved its goal of redirecting staff from institutional support to mission 

critical assignments. 

Implementation Plan Did Not Define “Critical Mission-Related 

Activities”

According to the NSSC Implementation Plan, NASA expected that by redirecting Center 

employees from their previous responsibilities to “critical mission-related activities,” the 

Agency could reduce the high-volume, repetitive administrative support work performed 

by civil service employees and allow management to direct its human capital resources 

toward more value-added activities that focused on NASA’s core missions. However, 

NASA did not define “critical mission-related activities” in the Plan or subsequently 

provide the Centers with guidance as to what constituted such an activity. Absent clear 

direction from Headquarters as to what activities are deemed “critical mission-related” or 

how employees whose functions were transferred to NSSC should be redirected, the 

Centers developed their own interpretations and reassigned employees and positions 

accordingly. 

We reviewed the reassignment plans at the five Centers we visited and found that each 

Center developed its own plan to redirect employees. In these plans, “redirection” 

included redesigning jobs within an area to perform related activities that had not been 

transferred to the NSSC, as well as actually reassigning employees to other functional 

areas at the Center. 
RESULTS

REPORT NO. IG-11-013 9

Some Center officials informed us that all redirected employees were performing “critical 

mission-related activities” as defined by the respective Center. Other Centers expanded 

the areas from which services had been transferred – for example, the human resources 

offices at several Centers formed Organizational Development divisions to handle tasks 

such as performance assessments and change management. Still others simply retained 

employees in their existing functional area to provide assistance to NSSC staff. This 

resulted in some Centers having functional area staffing levels after the transfers to the 

NSSC that were little changed from before.

Causes for Redirection Slippage

The NSSC Implementation Plan estimated that approximately 200 civil service positions 

would be redirected to “critical mission-related activities” as a result of the creation of the 

NSSC. However, because of laws that restrict NASA’s ability to terminate employees, 

employees whose functions were transferred to the NSSC and who did not retire or leave 

the Agency voluntarily had to be redirected to jobs elsewhere in the Agency.11

As previously noted, some services initially identified for transition were combined or 

eliminated during the development of the performance work statement. Center managers 

reported that, as a result, fewer positions were affected by the transition than initially 

estimated. In addition, Center managers reported that some services, particularly in the 

human resources area, were further divided into subcomponents and that only a certain 

portion of these subcomponents were transferred to the NSSC. In such cases, only a 

portion of any given employee’s responsibilities were transferred to the NSSC and 

therefore the employee’s position could not be redirected as initially planned. Finally, 

Center management sometimes redirected employees to new assignments but did not 

create corresponding position descriptions for their new job functions. In an effort to 

determine what duties the redirected employees were performing, we spoke with a variety 

of Center staff. We were told that the redirected employees were performing duties 

related to their former assignments that were more strategic and analytical than the 

original duties. However, we were unable to determine whether these employees were 

performing functions that could be described as “critical mission-related activities.” 

 Moreover, 

because NASA did not define “critical mission-related activities,” the Agency was not in 

a position to ensure that employees were ultimately redirected to such activities. 

NASA Center management also attributed some of the redirection slippage to changes in 

functional area workloads, including adjustments to NASA’s financial and travel 

processing systems, implementation of new programs requiring additional support, and 

 11 Public Law 110-422-October 15, 2008, section 1108, Reduction-in-force Moratorium. NASA shall not 

initiate or implement a reduction-in-force, or conduct any other involuntary separations of permanent, 

non-Senior Executive Service, civil servant employees before December 31, 2010, except for cause on 

charges of misconduct, delinquency, or inefficiency. The NASA Authorization Act of 2010 contains 

similar wording and extends the moratorium to September 30, 2013. 
RESULTS

10 REPORT NO. IG-11-013

unexpected work associated with the contractual agreement with the NSSC (for instance, 

Centers’ efforts to handle a portion of grants management, personnel action processing,

and training registration services originally thought to be the responsibility of the 

NSSC).12

As shown in the chart below, the transfer of services in the functional areas of human 

resources, financial management, and procurement to the NSSC did not result in 

significant changes in Center staffing levels dedicated to those functions. 

Source: Centers provided staffing levels, in civil service positions and contractor-equivalent 

work years, in the Office of the Chief Financial Officer, Office of Procurement, and Office of 

Human Capital. 

The vertical bars in Figure 1 show the overall changes between FY 2006 and FY 2009 in 

Center staffing levels for the transferred functional areas; levels increased in some areas 

but decreased in others. Three of the five Centers we reviewed had an overall decrease in 

civil service positions in financial management, human resources, and procurement: 

Marshall’s civil service staff decreased from 280 to 257 (a decrease of 8.21 percent); 

Langley’s civil service staff decreased from 165 to 157 (a decrease of 4.85 percent); and 

Glenn’s civil service staff decreased from 162.8 to 154.8 (a decrease of 4.91 percent). 

 12 Examples given as “new work” by the Centers were implementation of Constellation, implementation of 

new financial and travel processing systems, addition of Organizational Development activities, and 

unexpected work associated with the contractual agreement with the NSSC (e.g., grants management and 

training registration).Civil Servants

Contractors

Civil Servants

Contractors

Civil Servants

Contractors

Civil Servants

Contractors

Civil Servants

Contractors

Johnson Kennedy Marshall Langley Glenn 

0

50

100

150

200

250

300

350

400

450

Number of FTE Positions

Figure 1. FY 2006-FY 2009 Trends in Functional Area Staffing 

Levels at Five NASA Centers

FY 2006

FY 2007

FY 2008

FY 2009
RESULTS

REPORT NO. IG-11-013 11

Two of the Centers had an overall decrease in contractor staffing levels for this same 

period: Langley’s contractor staff decreased from 64.5 to 59.5 (a decrease of 7.75 

percent) and Glenn’s contractor staff decreased from 57 to 39 (a decrease of 31.58 

percent). Therefore, while reductions did occur, fewer positions were eliminated than 

was originally expected.

According to the Implementation Plan, the number of civil service positions associated 

with human resources, financial management, and procurement services at the Centers 

would decrease from 321 to 119 (approximately 63 percent) as services were consolidated

at the NSSC. Conversely, the number of NSSC contractor positions would increase from 

218 to 291 (approximately 33 percent), with the overall number of positions decreasing 

by approximately 24 percent. Table 1 shows, by function, the number of positions 

identified as candidates for the NSSC transfer compared to the projected number of 

positions the NSSC needed to perform the same functional services. 

Table 1. Number of Positions as Candidates for Transfer to 

and Projected as Needed by the NSSC

 Number of Positions 

Candidates for Transfer 

 to NSSCa 

Projected to Be Needed 

 by NSSC 

 Functional Area 

Civil 

Service Contractor Total

Civil 

Service Contractor Total

Human Resources 79 76 155 21 94 115

Procurement 100 44 144 40 91 131

Financial Management 142 98 240 58 106 164

 Subtotal minus IT 321 218 539 119 291 410

Information Technologyb 118 553 671 118 553 671

 Total 439 771 1,210 237 844 1,081

a September 2002 data. 

b Assumes the number of IT positions remains constant. Numbers include directors, secretaries, and 

customer service representatives.

Source: NSSC Implementation Plan Report

However, the Implementation Plan also projected that, in addition to the increase in 

contractor personnel, the NSSC would need 159 civil service personnel to support the 

range of services being transferred, which included an additional 40 positions for 

necessary IT and executive directorate staff. The NSSC achieved this staffing target 

through reductions to Centers’ and Headquarters staffing levels and transferring those 

positions to the NSSC.13

 13 NSSC Guidance, FY 2006 Budget Cycle, Revision 2/4/04 Final Draft. 

 
RESULTS

12 REPORT NO. IG-11-013

Conclusion

Because NASA Headquarters did not provide clear direction as to what constituted 

“critical mission-related activities,” Centers developed their own interpretations and 

sometimes redirected civil servant positions within the same functional areas from which 

the services had been transferred. As a result, Centers did not achieve the decreases in 

functional area staffing levels originally planned. Because Headquarters did not define 

“critical mission-related activities” and Centers were inconsistent in their interpretations 

of the term, we cannot determine whether creation of the NSSC increased the focus on 

NASA’s core mission goals or whether these positions at the Centers were appropriately 

redirected to “critical mission-related activities” as intended. 

Recommendation, Management’s Response, and Evaluation of 

Management’s Response

Recommendation 3. We recommend that the Associate Administrator for Mission 

Support define “critical mission-related activities” and develop a plan to ensure that 

resources affected by the transfers to NSSC are redirected to those activities. We further 

recommend that the Associate Administrator document any instances where redirection is 

not possible. 

Management Response. The Associate Administrator concurred with our 

recommendation and provided a generic definition developed by the Agency for “critical 

mission-related activities.” He further stated that with regard to future transfers an 

Employee Transition Plan addressing the human capital aspects of the transition will be 

developed and that he will document instances where redirection is not possible. The 

Agency plans to finalize and distribute the definition by February 28, 2011.

Evaluation of Management’s Response. We find the proposed actions to be generally

responsive to our recommendation. However, the Associate Administrator should ensure

that Employee Transition Plans specifically address how to redirect resources to meet 

mission-critical requirements. With this in mind, the recommendation is resolved and 

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

REPORT NO. IG-11-013 13

COST SAVINGS CLAIM BASED ON INSUFFICIENT 

DATA AND THEREFORE NOT RELIABLE

The NSSC Implementation Team used cost data supplied by the Centers to determine 

baseline cost calculations and estimate return-on-investment projections. However, 

the Implementation Team did not verify the data or provide adequate guidance to the 

Centers to ensure they provided consistent cost information. For example, we found 

that some Centers’ salary calculations did not match applicable Office of Personnel 

Management (OPM) pay scales and that their estimates of the time required to 

complete services were “guesstimates” based on unclear descriptions of the services 

at issue. As a result, the data NASA used to calculate baseline costs for the transition 

of selected services to the NSSC was not consistent, accurate, or supportable. We 

also found that NASA officials did not treat $15.2 million in supplemental NSSC 

funding as part of the baseline costs for the NSSC and that accordingly this sum was 

not included in NASA’s return-on-investment and savings calculations. As a result, 

NASA’s claim of a $121 million savings from the NSSC for FY 2006 through 

FY 2015 was based on flawed data and is therefore not accurate. 

Accuracy of Cost Data Supplied by Centers Is Questionable

Prior to creation of the NSSC, NASA officials developed a baseline cost for each of the 

services identified for transfer. This baseline was used to compare the costs of 

performing the services at NASA Centers to the estimated cost of performing those 

services at the NSSC. 

To calculate the baseline cost, the Implementation Team requested that each Center 

submit a cost summary of the services identified as candidates for transfer. The cost 

summary included estimates of the time required by an employee to complete the activity 

as well as the salary, housing, IT, and management and secretarial costs associated with 

the employee.14

We reviewed the cost summary information each Center provided to the Implementation 

Team in an effort to assess the validity of the data used to project cost savings and 

calculate the return on investment from the creation of the NSSC. As a result of our 

review, we determined that Centers did not utilize a uniform methodology for formulating

cost estimates. For instance, the instructions provided by the NSSC Implementation 

Team left the decision to each Center to determine whether costs such as travel and 

training should be included, and did not instruct Centers on how to capture labor costs for 

services that required only a fraction of an employee’s time. In addition, Centers reported 

 14 Housing costs included facility services, utilities/maintenance, and phone services.
RESULTS

14 REPORT NO. IG-11-013

that the estimates they prepared at the time the data was requested were preliminary and 

would have changed as transitioning tasks became more defined. We also determined 

that salary information provided by some Centers was not always accurate when 

compared to salary information in OPM’s General Service pay scale for a Center’s 

locality. Moreover, according to some NASA personnel we interviewed, because it was 

not always clear to Center personnel exactly which services were to be transferred to the 

NSSC, the time estimates they provided were essentially “guesses.” In addition, some 

Centers did not provide the requested housing and IT costs so the NSSC implementation 

cost analysis team used estimates based on old data and information provided by other 

Centers. 

NASA’s initial estimate of its return-on-investment from creation of the NSSC was 

approximately $6 million per year. In addition, NASA predicted that it would recoup its 

initial $26 million investment in the NSSC by April 2009. 

In October 2008, NASA estimated its return-on-investment to result in a cost savings of 

$119.7 million from FY 2006 through FY 2015. This estimate exceeded NASA’s initial 

estimate by approximately $9 million to $14 million annually. In addition, NSSC 

officials reported that they achieved the breakeven point in December 2008, 4 months 

earlier than initially predicted. In May 2009, the NSSC revised the return-on-investment

figure to a cost savings of $121 million from FY 2006 through FY 2015, taking into 

account adjustments for new business costs and the return of events-related human 

resource services to the Centers. However, without a reliable accounting of the baseline 

costs for services transferred to the NSSC, an accurate costs savings projection cannot be 

determined. Accordingly, NASA’s claim of $121 million in savings as a result of 

creating the NSSC was based on flawed data and is therefore not accurate.

Unplanned Additional Funding

As noted above, NASA’s initial contribution for NSSC start-up costs was $26 million. In 

FY 2007, NASA allocated an additional $15.2 million in NSSC-related funding as 

follows: (1) $6.25 million in additional start-up funding; (2) $5.2 million for 

procurement services; and (3) $3.75 million for costs incurred as a result of the delay in 

transferring accounts payable and accounts receivable services to the NSSC.15

 15 Procurement activities included purchase card processing, sponsored research business activities, 

customer surveys, training, NASA’s Consolidated Contracting Initiative, and the NASA Contracting 

Internship Program.

 NASA 

recorded the $15.2 million in the Agency’s financial accounting system as an indirect 

corporate G&A cost. Management in NASA’s Mission Support Directorate stated that 

additional costs associated with setting up the NSSC and Agency-level procurement 

services previously funded by corporate G&A increased the Agency’s NSSC costs in 
RESULTS

REPORT NO. IG-11-013 15

excess of what had been planned for by the Centers.16

Our review of the NSSC return-on-investment chart found that the $15.2 million in 

supplemental funding was not included in NASA’s return-on-investment calculation. 

Rather, NASA calculated this figure based on $26 million in start-up costs. NASA 

officials stated that the $15.2 million was not included in the return-on-investment 

savings projection because those costs were recorded in the Agency’s financial 

accounting system as indirect costs and therefore were not considered directly related to 

the NSSC. 

 In addition, the Agency’s decision 

to delay the transfer of accounts payable/accounts receivable to the NSSC further 

increased the Agency’s NSSC costs. According to the Mission Support managers, at the 

time the Agency operated under full-cost management in which indirect costs were 

funded via an allocation from appropriations accounts. Under this approach, the 

Agency’s corporate and Center G&A accounts were funded as indirect accounts. These 

indirect accounts funded Agency and Center operations, including the cost of some 

services that were identified for transfer to the NSSC. Since the NSSC’s rates charged to 

the Centers had already been established for the year, NASA management decided to 

have the Centers pay the NSSC according to the established rates and payment schedules 

and Mission Support management funded the increase in costs through the corporate 

G&A account. 

However, in our judgment the lack of recognition of the $15.2 million in the start-up 

funding line undermines both NASA’s projected cost savings estimates and its claim that 

it reached the break-even point in December 2008. NASA needs to recognize the 

combined total of the NSSC start-up funding as $41.2 million ($26 million start-up 

funding added to the $15.2 million supplemental start-up funding) and therefore 

recognize that claiming a break-even point based on the $26 million alone is not 

appropriate. 

Conclusion

NASA’s claim of $121 million in return-on-investment savings resulting from creation of 

the NSSC was based on flawed data and is therefore not accurate. First, the NSSC 

implementation team used cost data from the Centers that was of questionable accuracy to 

calculate the baseline costs for functional activities transferred to the NSSC. And second, 

NASA inappropriately excluded from its return on investment calculation $15.2 million 

that in our judgment should have been allocated to NSSC start-up costs.

 16 At the time of our review, the officials we spoke to were part of the Office of Program and Institutional 

Integration (OPII). As of February 23, 2010, OPII became part of the Mission Support Directorate.
RESULTS

16 REPORT NO. IG-11-013

Recommendation, Management’s Response, and Evaluation of 

Management’s Response

Recommendation 4. We recommend that, going forward, the NASA Associate 

Administrator for Mission Support provide clear guidance to the Centers regarding the 

data to be gathered and methodology to be used for projecting cost savings for NSSC 

activities to ensure that savings are supported by documented and verifiable cost data.

Management Response. The Associate Administrator concurred with our 

recommendation, stating that management would develop clear guidance and templates 

for the Centers to use for collecting workforce and cost data. These templates will be in 

place by February 28, 2011. 

Evaluation of Management’s Response. We find the proposed actions to be responsive 

to our recommendation. Accordingly, the recommendation is resolved and will be closed 

upon completion and verification of the proposed corrective actions.
APPENDIXES

REPORT NO. IG-11-013 17

APPENDIX A

Scope and Methodology

We performed this audit from February 2009 through January 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. 

We performed work at NASA Headquarters, the NSSC, and five NASA Centers: Glenn 

Research Center, Johnson Space Center, Kennedy Space Center, Langley Research 

Center, and Marshall Space Flight Center. We reviewed NASA shared services planning 

documents such as the NASA Consolidated Business Services Study and the NASA 

Shared Services Center Implementation Plan Report and implementing documents 

including the NSSC transition schedule and Center redirection plans. We interviewed 

managers and functional area representatives in Human Resources, Financial 

Management, Procurement, and Information Technology to determine, in part, adherence 

to transition plan schedules, identification of “critical mission-related activities,” and 

redirection of employees. We also reviewed staffing numbers and position ceilings at the 

selected NASA Centers from FY 2002 through FY 2009 to establish a trend for whether 

the number of positions increased or decreased in the Center functional areas since the 

inception of the NSSC.

Use of Computer-Processed Data. We determined that the computer-based data 

obtained through the course of the audit is of undetermined reliability, as we did not test 

the data obtained by Center functional area managers from computer systems. However, 

we believe our conclusions were adequately supported by appropriate evidence in the 

form of managers, supervisors, and employee interviews and documentation available 

outside of the information systems.

Review of Internal Controls 

We reviewed and evaluated the internal controls associated with transitioning activities to 

the NSSC, redirecting positions to “critical mission-related activities,” and developing a 

cost baseline for the activities that were to be transitioned to the NSSC. We found 

internal control deficiencies as discussed in this report. Our recommendations, if 

implemented, should correct the weaknesses we identified.
APPENDIX A

18 REPORT NO. IG-11-013

Prior Coverage

During the last 5 years, the U.S. Government Accountability Office (GAO) issued two 

reports of particular relevance to the subject of this report. Unrestricted reports can be 

accessed over the Internet at http://www.gao.gov.

GAO-07-434R, “Implementation of OMB Circular No. A-76 at Science Agencies,” 

March 16, 2007, reports on how five science agencies, including NASA, have 

implemented the May 2003 revised OMB Circular A-76 process, which seeks to make 

commercial activities now performed by government available for public-private 

competition. The report includes the NSSC in a table of Competitions Won by 

Contractors (FY 2003 through FY2005). The report also identifies post-competition 

accountability requirements of the agencies, as the “agency tracks execution of their 

competitions from the date of the public announcement through either the completion or 

cancellation of the competition and maintains a historical record of each competition.” 

GAO-07-58, “NASA Procurement: Use of Award Fees for Achieving Program 

Outcomes Should Be Improved,” January 17, 2007, reports: “During the early 1990s, 

the National Aeronautics and Space Administration (NASA) Inspector General and 

NASA internal studies raised concerns about NASA’s use of CPAF [cost-plus-award-fee] 

contracts. As a result, NASA developed specific guidance to improve the effectiveness of 

award fees. The CPAF contract type continues to be used extensively by NASA for 

obtaining both goods and services, accounting for almost half of NASA contract dollars 

for fiscal years 2002 through 2004. GAO examined NASA’s use of award-fee contracts 

and determined (1) the extent NASA’s guidance addresses the problems previously 

identified with the use of award-fee contracts and (2) whether NASA follows its guidance 

in using award fees to achieve desired outcomes.” GAO reported NASA did not 

consistently implement key aspects of the Agency’s guidance on major award-fee 

contracts that it reviewed. In addition, GAO reported, “NASA’s satisfaction was based 

on its evaluations of contractor performance against criteria established in the award-fee 

plan. While NASA’s evaluations would indicate generally good contractor performance, 

such performance did not always translate into desired program outcomes.”
APPENDIX B

REPORT NO. IG-11-013 19

SERVICES NASA

TRANSFERRED TO NSSC

Cumulative 

Count Functional Area

Area Count Procurement

1 1 Purchase Card Program

2 2 Consolidated Contracting Initiative

3 3 Agency-Wide Contract Close-Out Services

4 4 NASA Procurement Survey

5 5 Procurement Training (1102)

6 6 NASA Contracting Intern Program

7 7 Grants & Cooperative Agreements

8 8 Sponsored Research Business Activities (SRBA)

9 9 Small Business Innovation Research & Small Business 

Technology Transfer Programs

10 10 Offsite Training-Registration and Reimbursementa

11 11 Internal (NASA & Centers) Training-Processing Noticesb

Area Count Financial Management

12 1 Accounts Payable

13 2 Accounts Receivable

14 3 Payroll, Time & Attendance

15 4 Fund Balance with Treasury

16 5 Domestic Travel

17 6 Permanent Change of Station 

18 7 Foreign Travel a Off-site training is a service with roles and responsibilities in both procurement and human resources, according to 

NSSC Service Delivery Guide 019, “Registration –Reimbursement for External Training.”

b Internal Training is a service with roles and responsibilities in both procurement and human resources, according to 

NSSC Service Delivery Guide 037, “Processing of Training Notices for Internal NASA & Center Training (Internal 

Training).”
APPENDIX B

20 REPORT NO. IG-11-013

Cumulative 

Count Functional Area

Area Count Human Resources 

19 1 Drug Testing Program Management

20 2 General Employment Inquires

21 3 Coordination of Position Classification Appeals

22 4 Award Processing, Agency Honor Awards

23 5 Preparation & Distribution of Employee Notices

24 6 Advisory Services to Human Resources Specialist

25 7 Production of Information Materials

26 8 Development & Procurement of Training Services

27 9 Registration/Reimbursement for Off-Site Traininga

28 10 Processing of Training Notificationsb

29 11 Administration and Oversight-On-Line Agency Training

30 12 Special Human Resources Studies

31 13 Benefits Processing

32 14 New Hire, Transfer & Reassignment Processing

33 15 Administration-Leave Donor Program/Advanced Sick Leave 

34 16 Health & Safety Fairsc

35 17 Financial Disclosure

36 18 Human Resources Information Systems

37 19 Human Resources & Training Web Site Development

38 20 User Support/Expertise Center Human Resources Data Users

39 21 Maintenance of Official Employee/Performance Records

40 22 Personnel Action Processing

41 23 Recruiting Event Logisticsc

42 24 Senior Executive Service (SES) Case DocumentationAppointments

43 25 SES Case Document-CDP Mentor Appraisals

Area Count Information Technology

44 1 ODIN Program Management

aOff-site training is a service with roles and responsibilities in both procurement and human resources, according to 

NSSC Service Delivery Guide 019, “Registration – Reimbursement for External Training.”

b Internal Training is a service with roles and responsibilities in both procurement and human resources, according to 

NSSC Service Delivery Guide 037, “Processing of Training Notices for Internal NASA & Center Training (Internal 

Training).”

c This service transitioned to the NSSC but was returned to the Centers because of high costs charged by NSSC to the 

Centers.
APPENDIX C

REPORT NO. IG-11-013 21

MANAGEMENT COMMENTS
APPENDIX C

22 REPORT NO. IG-11-013
APPENDIX C

REPORT NO. IG-11-013 23
APPENDIX D

24 REPORT NO. IG-11-013

REPORT DISTRIBUTION

National Aeronautics and Space Administration

Administrator

Deputy Administrator

Chief of Staff

Chief Financial Officer

Chief Information Officer

Associate Administrator for Mission Support

Assistant Administrator for Internal Controls and Management Systems

Assistant Administrator for Human Capital Management

Assistant Administrator for Procurement

Executive Director, NASA Shared Services Center

Director, Johnson Space Center

Director, Kennedy Space Center

Director, Marshall Space Flight Center

Director, Glenn Research Center

Director, Langley Research 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 D

REPORT NO. IG-11-013 25

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-11-013 27

Major Contributors to the Report:

Laura Nicolosi, Director, Mission Support Directorate

Karen VanSant, Project Manager

Janice Smith, Auditor

Amy Bannister, Auditor
FEBRUARY 1, 2011

REPORT No. IG-11-013

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