SEPTEMBER 12, 2011

AUDIT REPORT

REPORT NO. IG-11-026 (ASSIGNMENT NO. A-10-009-00)

OFFICE OF AUDITS

NASA’S GRANT ADMINISTRATION AND MANAGEMENT

OFFICE OF INSPECTOR GENERAL

National Aeronautics and 

Space Administration
REPORT NO. IG-11-026

Final report released by:

Paul K. Martin

Inspector General

Acronyms

C.F.R. Code of Federal Regulations

FY Fiscal Year

GAO Government Accountability Office

GIC Grant Information Circular 

NPR NASA Procedural Requirements

NSSC NASA Shared Services Center

OMB Office of Management and Budget

SAP Enterprise Resource Planning Software used by NASA

U.S.C. United States Code
SEPTEMBER 12, 2011

REPORT NO. IG-11-026

OVERVIEW

NASA’S GRANT ADMINISTRATION AND 

MANAGEMENT 

The Issue

NASA makes significant and sustained investments each year to fund scientific research, 

scholarships, fellowships, and educational activities in support of its mission. For 

example, over the past 5 years NASA has awarded approximately $3 billion in grants. In 

fiscal year (FY) 2010 alone, NASA awarded $569.8 million in grants. Given these large 

sums of money, it is imperative that NASA ensure its grants are properly administered

and managed.

NASA offices such as the Science Mission Directorate and Office of Education publicly 

issue announcements to solicit new research and development concepts in support of 

NASA’s mission. NASA also receives unsolicited proposals that are independently 

developed without the Agency’s assistance but that relate to NASA research objectives. 

Examples of solicited and unsolicited proposed activities submitted to NASA in the past 

include proposals for: 

• developing tools to analyze data on the evolution of the planet Mercury;

• developing a telescope and data collection instruments for mapping and analyzing 

star formation in the Milky Way;

• developing programs and resources to educate the public on the atmosphere and 

climate change; and

• administering internship programs to engage students in science, technology, 

engineering, and mathematics. 

According to NASA, it makes awards based on the best proposals given the funding 

available. The nature of the activities proposed dictates whether the Agency awards a 

grant or contract. Grants provide financial assistance to grantees to accomplish 

something that benefits the public and are used when the grantee independently performs 

the activities with minimal NASA involvement. In contrast, contracts are used to acquire 

specific property or services needed to accomplish a NASA mission or project for the 

direct benefit or use of NASA. 

The Headquarters Office of Procurement is responsible for establishing overall grant 

policies and procedures, while the NASA Shared Services Center (NSSC) is primarily 

responsible for processing grant awards. NASA established the NSSC in 2006 to
OVERVIEW

ii REPORT NO. IG-11-026

consolidate selected business activities from the Centers, and processing grant awards 

was one of the activities transferred to the NSSC. Before 2006, grant administration was 

decentralized, with officials at Headquarters and each of the 10 Centers responsible for 

awarding and managing their respective grants. NASA officials told us that transferring 

grant administration responsibilities from the Centers to the NSSC allows for more 

consistency in the award process, tighter controls over the expenditure of funds, and an 

independent review of the reason for the award. 

Even after the NSSC’s inception, Center procurement offices retained responsibility for 

grants awarded prior to its establishment. This authority includes extending existing 

grants and managing ongoing multi-year grants, but excludes awarding grants that require

a new proposal or new scope of work. Further, Centers retain the ability to award new 

grants to Science and Research Institutes, because these grants require close collaboration 

between the Institutes and the individual Centers.1

Our audit objectives were to determine whether NASA’s grant funds are being used for 

their intended purposes and whether the Agency is compliant with laws, regulations, and 

NASA requirements in administering and managing its grant program. To accomplish 

our objectives, we identified the universe of grant actions NASA awarded between 

October 1, 2007, and March 31, 2010; the value of those grants totaled $2.4 billion. 

From this universe, we judgmentally selected for review eight grants with a combined 

value of $17.3 million (see Appendix B). Selecting a sample allowed us to examine these 

grants in-depth throughout the entire process: from the Agency’s award, to the grantees’ 

performance, to NASA’s management of expenditures by grantees. As part of this 

examination, we interviewed grantees, staff at NASA Headquarters, the NSSC, Glenn 

Research Center (Glenn), and Goddard Space Flight Center (Goddard). In addition, we 

reviewed grant award documentation including technical and peer reviews, budget 

proposals, performance reports, and quarterly financial reporting documentation. We 

also visited grantees and performed substantive testing to validate whether grant funds 

were used for their intended purpose, to assess the sufficiency of grantee performance, 

and to examine NASA’s management of the grants. We reviewed internal controls at all 

levels of the process. Details of the audit scope and methodology are in Appendix A.

Results

NASA does not have an adequate system of controls to ensure proper administration and 

management of its grant program. Specifically, we identified weaknesses in the 

announcement, administration, and oversight of Agency grants. For example, we found

that NASA:

• awarded grants in lieu of contracts, contrary to Federal and NASA regulations and 

requirements;

 1 NASA established Science and Research Institutes in 1999 to foster greater involvement by the larger 

scientific community in the accomplishment of the Agency’s overall science and research programs.
OVERVIEW

REPORT NO. IG-11-026 iii

• awarded grants and grant supplements contrary to NASA requirements governing 

unsolicited proposals;

• did not provide adequate oversight of grantee performance and expenditures; and

• awarded unauthorized and unallowable grant supplements contrary to Federal and 

NASA regulations.

The nature of the control weaknesses identified lead us to believe our findings reflect 

systemic deficiencies in the administration and management of NASA’s grant program

(see Appendix C for a summary of the weaknesses by grant reviewed). 

Oversight of the Grant Award Process. We found that grants awarded by the Centers

do not receive independent oversight from the NSSC and are not otherwise subject to 

controls sufficient to validate the accuracy of the award instrument or appropriateness of 

the award. Specifically, we identified three grant supplements totaling $410,191 for 

which a contract would have been the more appropriate procurement instrument. Grants 

provide financial assistance to grantees for the independent completion of agreed-upon 

activities. In contrast, contracts are used to acquire property or services for the direct 

benefit or use of the Federal Government. For the three supplements we identified, 

contracts should have been used because the grantee performed personal services that

otherwise would have been performed by NASA employees or contractors for the direct 

benefit of NASA. Because procurement contracts are subject to statutory and regulatory 

requirements that generally do not apply to grants, use of an incorrect procurement 

instrument could intentionally or inadvertently bypass competition and other legal 

requirements.

We also found that NASA grant officers at two Centers awarded $7.3 million in grants 

and grant supplements (43 percent of our sample) contrary to NASA requirements 

regarding unsolicited proposals. Specifically, grant officers at Goddard improperly 

awarded 12 grant supplements totaling $1.3 million to one grantee and a grant officer at 

Glenn improperly awarded $6 million for two education grants and 19 supplements to 

another grantee when, in both cases, proposals for the work should have been solicited 

from the public. 

In the 20 years since the original grants were awarded to these two grantees, grant 

officers at Goddard and Glenn have routinely awarded related grants and grant 

supplements worth several million dollars to these two grantees for unsolicited proposals 

for work that was not new, unique, or innovative. We found that Center officials had 

direct involvement with the grantees prior to submission of the proposals, awarded grant 

supplements that were outside the scope of the original grant, and awarded grant 

supplements when a new grant should have been awarded. Because the two Centers did 

not follow NASA requirements governing unsolicited grant proposals they circumvented 

the competitive process and cannot be sure that they received the best value for NASA’s

money.
OVERVIEW

iv REPORT NO. IG-11-026

Monitoring Grantees’ Performance. During the audit, we found internal control 

weaknesses in NASA’s monitoring of grantee performance. NASA Office of 

Procurement officials have issued minimal requirements to ensure that once grant funds 

are awarded, grant officers, technical officers, and finance officials perform appropriate 

oversight of the grantee’s financial and programmatic performance.2

We also found that the NASA Grant and Cooperative Agreement Handbook (Handbook) 

issued by the Headquarters Office of Procurement provides that grantees may deviate 

from their proposed budgets without approval from NASA except when the change 

involves property, construction, or subcontract-related costs. In our view, this broad 

discretion to deviate from proposed budgets increases the risk that grantees will incur 

unauthorized or unallowable costs or expenditures unrelated to the purpose of the grant. 

For example, we found that one grantee paid employee tuition costs totaling $7,388 even 

though the tuition costs were not included in the budget approved by NASA. 

 While the Science 

Mission Directorate and the Headquarters Office of Education have established or are in 

the process of establishing internal controls to monitor grantee performance, they have no 

requirements to perform such common grant monitoring actions as desk reviews or site 

visits. Further, while NASA complies with Office of Management and Budget (OMB)

Circular A-133, which requires that grantees have annual audits conducted when 

expenditures exceed $500,000, we believe it is unwise for NASA to rely on these audits 

as the sole means of monitoring grantee performance or identifying unallowable costs. In 

addition, we found NASA’s requirements concerning review of financial and program 

reports to be minimal at best. We believe the limited oversight currently provided by 

NASA officials is the reason we identified $7,031 in unauthorized or unallowable 

expenditures in the eight grants we reviewed (see Appendix D for details). 

During the course of our interviews, NASA technical officers said their reviews of 

grantee annual programmatic performance reports were necessarily cursory given their

workload. Further, one Center grant officer equated grant funding with giving a “gift” to 

the grantee, which in our view means that once the funding is awarded the Agency’s 

oversight responsibilities are minimal. Based on such comments and the minimal

internal controls, policies, and procedures in place for oversight of grantees, we conclude 

that NASA’s monitoring of grantee performance is inadequate. 

Moreover, NASA’s limited efforts to monitor its grant awards differs markedly from that 

of other Federal granting agencies. For example, the Department of Justice’s Office of 

Justice Programs, which in FY 2010 awarded $3 billion in grants, requires annual grantee 

desk reviews and recommends that such reviews be conducted semiannually.3

 2 Technical officers have experience in the proposed areas of work and evaluate the merits of the proposal.

 The 

Government Accountability Office (GAO) stated that Federal grant-making agencies in 

general need to exercise effective oversight and implement internal controls to ensure that

3 Department of Justice, Office of Inspector General, “Office of Justice Programs’ Management of Its 

Offender Reentry Initiatives” (Audit Report 10-34, July 2010).
OVERVIEW

REPORT NO. IG-11-026 v

the goals of the grant are achieved and that funds are used for their intended purposes.4

Management Action

 

Specifically, in June 2011 testimony before Congress, GAO testified that grant-making

agencies need effective processes for, among other things, monitoring the financial 

management of grants and ensuring results through performance monitoring. In our 

view, conducting periodic, comprehensive reviews of information reported by grantees 

using desk reviews or site visits could reduce the level of noncompliance with grant 

requirements, thereby reducing the risk of fraud, waste, or abuse in NASA’s grant 

program.

NASA needs to strengthen its policies, procedures, and internal controls to ensure that 

proper award instruments are used consistently; grants are solicited and awarded in an 

open and transparent fashion; supplements are not used when new grants should be 

awarded; and grantees do not incur unauthorized or unallowable costs. During our 

review, we found that Agency officials are taking steps to enhance management of 

NASA’s grant program, as evidenced by the Headquarters Office of Procurement holding 

its first “Grant Boot Camp” training session in March 2011. The primary objective of 

this training was to discuss with NASA grant-making officials the solicitation, award, and 

administration of grants, including how they differ from contracts. 

In keeping with our normal practice, the OIG provided a draft of this report to NASA 

management for review and comment. However, as of September 12, 2011, NASA had 

not provided an official response and therefore we are issuing the report without a 

management response. Technical comments received earlier from NASA have been 

incorporated as appropriate.

 4 GAO, “Federal Grants – Improvements Needed in Oversight and Accountability Processes” 

(GAO-11-773T, June 23, 2011).

SEPTEMBER 12, 2011

REPORT NO. IG-11-026

CONTENTS

INTRODUCTION

Background _________________________________________ 1

Objectives __________________________________________ 5

RESULTS

NASA’s Grant Oversight Needs Improvement _______________ 6

APPENDIX A

Scope and Methodology_______________________________ 17

Review of Internal Controls ____________________________ 20

Prior Coverage ______________________________________ 20

APPENDIX B

Grants Reviewed During the Audit_______________________ 21

APPENDIX C

Grant Objectives and Issues Identified ___________________ 22

APPENDIX D

Table of Questioned Costs _____________________________ 23

APPENDIX E

Report Distribution___________________________________ 24

SEPTEMBER 12, 2011

REPORT NO. IG-11-026 1

INTRODUCTION

Background

NASA makes significant and sustained investments each year to fund scientific research, 

scholarships, fellowships, and educational activities in support of its mission, often in the 

form of grant awards. NASA offices such as the Science Mission Directorate and Office 

of Education issue announcements to solicit new research and development concepts and 

provide opportunities for the public to contribute to NASA’s mission. NASA also 

receives unsolicited proposals independently developed and submitted from prospective 

grantees for activities that NASA did not originate. Examples of solicited and unsolicited 

proposals previously submitted to NASA include proposals for: 

• developing tools to analyze data on the evolution of the planet Mercury; 

• developing a telescope and data collection instruments for mapping and analyzing 

star formation in the Milky Way; 

• developing programs and resources to educate the public on the atmosphere and 

climate change; and

• administering internship programs to engage students in science, technology, 

engineering, and mathematics. 

NASA makes awards based on the best proposals given the funding available. The type 

of activities to be accomplished dictates whether the Agency awards a grant or contract. 

Grants provide financial assistance to grantees for accomplishing tasks that benefit the 

public and are used when the grantee independently performs the activities with minimal 

NASA involvement. In contrast, contracts are used to acquire specific property or 

services for accomplishing a NASA mission or project for the direct benefit or use of 

NASA. Unlike contracts, grants are generally not subject to Federal Acquisition 

Regulation requirements such as specific competition requirements, the ability to submit 

bid protests, and a specific jurisdiction for resolving disputes.

Under the National Aeronautics and Space Act of 1958, NASA funds three types of 

grants: 

1. Research grants to facilitate research and development projects that will stimulate 

or support the acquisition of knowledge or understanding.

2. Education grants to fund educational activities and research performed by 

educational institutions or other nonprofit organizations.
INTRODUCTION

2 REPORT NO. IG-11-026

3. Training grants to fund scholarships, fellowships, or stipends to teachers and/or 

faculty.5

According to NASA’s Annual Procurement Report, in fiscal year (FY) 2010 NASA 

awarded $569.8 million in grants: $417.9 million to educational organizations;

$138.7 million to nonprofit entities; and $13.2 million to commercial firms. As 

illustrated in the following figure, over the past 5 years NASA has awarded

approximately $3 billion in grants: $2.2 billion to educational institutions; $677 million 

to nonprofit organizations; and $81 million to commercial firms.

NASA Grants Awarded between 2006 and 2010 

Source: NASA Annual Procurement Reports

Grant Award and Management Responsibilities. The NASA Grant and Cooperative 

Agreement Handbook (Handbook) is the central source for all grant-related 

requirements.

6

 The Handbook provides the policies and procedures that NASA 

procurement officers, technical officers, and grantees should follow in the pre-award, 

award, post-award, and closeout phases of grant management.

7

 5 NASA may also fund facility grants for the acquisition, construction, use, maintenance, and disposition of 

facilities but, as of May 31, 2011, had not awarded any such grants.

 In addition, NASA issues 

Grant Information Circulars and Grant Notices to publicize regulatory changes not yet 

incorporated in the current version of the Handbook. 

6 Cooperative agreements provide financial assistance to recipients for accomplishing something that 

benefits the public but, unlike grants, are awarded when NASA has a substantial role in the completion of 

the funded activity. Cooperative agreements were not reviewed during the course of this audit.

7 NASA Procedural Requirements (NPR) 5800.1, “Grant and Cooperative Agreement Handbook,” is 

codified in the Code of Federal Regulations (C.F.R.) at Part 1260. 

Educational 

institutions, 

$2.2 billion 

(74%)

Nonprofit 

organizations, 

$677 million

(23%)

Commercial 

firms, 

$81 million 

(3%)
INTRODUCTION

REPORT NO. IG-11-026 3

The Office of Procurement is responsible for establishing grant policies and procedures, 

while the NASA Shared Services Center (NSSC) is primarily responsible for processing 

grant awards. NASA established the NSSC in 2006 to consolidate selected business 

activities from the Centers and to reduce duplication of effort and overhead. The 

processing of grant awards was one of the procurement activities transferred to the

NSSC. Before 2006, the grant-making process was decentralized, and officials at NASA 

Headquarters and each of the 10 Centers were responsible for awarding and managing 

their respective grants. NASA officials told us that transferring grant administration 

responsibilities from the Centers to the NSSC allows for more consistency in the award 

process, tighter controls over the expenditure of funds, and an independent review of the 

reason for the award. 

However, even after the creation of the NSSC, Center procurement offices retained 

responsibility for grants awarded prior to its establishment. This authority includes

extending existing grants and managing ongoing multi-year grants, but excludes Science 

and Research Institutes grants, and awarding grants that require a new proposal or 

involve a new scope of work. 

Phases of Grant Administration. The NASA grant cycle can be categorized into four 

phases: pre-award, award, post-award, and closeout. Responsibility for carrying out 

each phase differs depending on circumstances such as whether the grant was awarded by 

a Center or the NSSC or whether the grantee is a Science and Research Institute (in 

which case the award is made by a Center and not through the NSSC). According to the 

NSSC Grant and Cooperative Agreement Service Delivery Guide dated January 2007, 

seven Centers were managing grants to 16 Science and Research Institutes. 

Pre-Award. NASA may award grants based on solicited or unsolicited

proposals. NASA uses Broad Agency Announcements to solicit proposals to conduct 

research activities related to NASA’s mission or to perform a specific function, such as 

administering an internship or fellowship program. Educational institutions, nonprofit 

organizations, and private industry respond by submitting proposals describing how they 

will conduct the proposed activities, their competencies, and the funding that will be 

required to complete the proposed activities. Solicitation announcements are accessible 

to the public and offer the greatest opportunity for competition. Examples of Broad 

Agency Announcements NASA commonly issues include NASA Research 

Announcements or Announcements of Opportunity that result in the award of a contract, 

grant, or cooperative agreement. NASA also uses Graduate Student Research Program 

Announcements that result in training grants for graduate-level students. 

NASA also receives unsolicited proposals from grantees; these proposals are 

independently developed and submitted for activities that NASA did not solicit. These 

activities are based on an individual or organization’s ideas for conducting work related

to NASA’s mission. NASA regulations state that unsolicited proposals must be for new, 

unique, or innovative ideas that the proposer independently originated with limited 

NASA involvement.
INTRODUCTION

4 REPORT NO. IG-11-026

For all solicited and unsolicited proposals, a technical officer with expertise in the 

proposed area of work reviews the proposal. This review evaluates the merit of the 

proposal in relation to NASA’s mission and assesses the reasonableness of the proposal’s 

costs. Documentation of the technical officer’s review and approval of the proposal is 

submitted to the grant officer. The grant officer reviews the project’s proposed budget 

for compliance with Federal and NASA requirements and uses the technical officer’s 

recommendation to determine whether an award should be made and the appropriate type 

of procurement instrument to use. 

Award. As noted earlier, since May 2006 the NSSC has been responsible for 

awarding new grants except for grants to Science and Research Institutes, which remain 

the responsibility of the Centers. According to the Office of Procurement, authority over 

these grants was not transferred to the NSSC because these types of grants require close

collaboration between the Institutes and the Centers and the NSSC business model was 

not set up to handle this type of interaction. Center officials may request a waiver from 

the Office of Procurement to award other types of new grants that normally would be 

administered by the NSSC. However, Office of Procurement officials stated that as of 

April 2011 no such waivers had been approved.

Before awarding a grant, grant officers at the Centers and the NSSC ensure that all 

required documentation, such as the procurement, property, technical, and budgetary 

reviews, are contained in the grant package. Once a grant is approved, the grant officer 

requests the appropriate financial official to obligate either the total grant amount or an

incremental amount to the grantee. 

Post-Award. After a grant is awarded, the grantee is responsible for performing 

the agreed-upon activities and for meeting reporting requirements, including submission 

of quarterly and final financial reports, annual and final performance reports, annual and 

final inventory reports, and interim and final patent and invention reports. Technical 

officers monitor the grantee’s performance through review of performance reports. The 

grantee requests funding, scope of work, and period of performance changes to the 

original grant by submitting a supplemental proposal. The supplemental proposal goes 

through the same review and approval process as outlined in the pre-award phase. Grant 

officers are responsible for administering additional procurement activities such as 

awarding supplemental grants based on the technical officer’s recommendation.

For all NSSC-awarded grants, the NSSC sends grantees notice of performance report due 

dates, as well as notice of any late performance reports. The Centers are responsible for 

sending these notifications for Center-awarded grants. NASA finance officials monitor 

grantees’ use of grant funds. NASA uses the Payment Management System maintained

by the Department of Health and Human Services under which grantees draw down grant

funds and submit required financial activity reports. Although NASA relies on this 

system to identify late financial reporting, the system does not notify grantees when their

financial reports are late. NASA finance officials receive a report showing the amount of 

funds the grantee received and the status of the associated financial reports and, if 

warranted, can freeze grant funds. Centers retain responsibility for restricting access to 
INTRODUCTION

REPORT NO. IG-11-026 5

funds on the grants they monitor when grantees do not file required financial or 

performance reports in a timely manner.

NASA also requires grantee compliance with Office of Management and Budget (OMB) 

Circular A-133, which requires that grantees have annual audits conducted when Federal 

expenditures exceed $500,000. In addition, the Handbook notes that Agency officials

should monitor grantee performance; however, neither the Handbook nor any other 

NASA guidance sets forth specific requirements for how or when grant, technical, or 

finance officials should conduct such monitoring. Similarly, a Grant Information 

Circular issued in February 2008 states that officials should exercise due diligence when 

reviewing grant packages during pre-award and post-award phases to ensure costs are 

allowable, reasonable, and necessary; however, the Circular does not provide specifics 

about how to accomplish this “due diligence” or who is responsible for ensuring 

compliance. Further, we found no NASA requirements specifically addressing oversight 

of grantee performance during the grant performance period. 

Closeout. After the grantee completes all required activities, the NSSC and 

Center administratively end the grant through a formal closeout process that involves the 

grantee submitting final financial, performance, property, and patent and invention 

reports within 90 days after the period of performance has expired. NSSC and Center 

officials review the reports, de-obligate any unused funds, and archive the grant file 

documentation. According to the Handbook, the closeout process should be completed 

within 6 months after receipt of the grantee’s final reports. 

Objectives

The objectives of the audit were to determine whether NASA’s grant funds are being 

used for their intended purpose and whether the Agency is compliant with established 

laws, regulations, and NASA-specific requirements when administering and managing 

grants. To accomplish our audit, we conducted interviews with representatives from the 

NASA Office of Procurement, grant officers, technical officers, and grantees. We visited 

NASA Headquarters, the NSSC, and two Centers to observe and document activities, 

processes, and internal controls related to grant solicitation, award, and closeout. We 

also reviewed laws, regulations, and documentation pertinent to our detailed review of

eight grants with a combined value of $17.3 million. Additional details of the audit scope 

and methodology, internal controls, and prior audit coverage are in Appendix A; 

Appendix B lists the eight grants that we reviewed.
RESULTS

6 REPORT NO. IG-11-026

NASA’S GRANT OVERSIGHT 

NEEDS IMPROVEMENT

NASA does not have an adequate system of controls in place to ensure proper 

administration and management of its grant program. As a result, some grant funds 

are not being used for their intended purposes. In addition, NASA has not 

established adequate policy or internal controls to effectively administer and manage 

the grant award process, review grant expenditures, or assess grantee performance. 

As a result, NASA awarded $7.3 million in grants and grant supplements that did not 

comply with NASA requirements for unsolicited proposals. Further, we found 

$299,599 in unauthorized or unallowable expenditures associated with two Office of 

Education grants and one Science Mission Directorate grant. The nature of the 

control weaknesses identified lead us to believe our findings reflect systemic 

deficiencies in the administration and management of NASA’s grant program.

Inadequate Administration and Management of NASA Grants

NASA does not have an adequate system of controls to ensure proper administration and 

management of its grant program. Specifically, we identified weaknesses in NASA’s 

oversight of awards and monitoring of grantee performance and financial expenditures. 

See Appendix C for a summary of the weaknesses by grant reviewed.

NASA’s Grant Award Process. NASA established the NSSC in 2006 to consolidate

certain business activities from NASA Headquarters and the 10 Centers, including the

award and administration of new grants. By transferring these responsibilities to the 

NSSC, NASA processes most of its grant awards from a central location to facilitate 

greater consistency in the award process, tighter controls over the expenditure of funds, 

and an independent review of the basis for awards. However, the Centers still manage 

grants awarded prior to establishment of the NSSC, including supplemental funding to 

such grants.

Of the grants reviewed during the course of our audit, we found that grants awarded by 

the Centers are not subject to sufficient controls to ensure use of the proper award 

instrument or the appropriateness of the underlying award. Specifically, we identified 

instances in which Center personnel awarded grants when contracts were the appropriate 

procurement instrument and awarded supplements as if they were based on unsolicited 

proposals even though the proposals were for such routine activities as administering

student internships and online coursework and were not submitted independent of 

involvement from Center personnel. We believe that NASA needs to issue clear 

requirements to ensure that all grants are subject to a consistent level of review and to 

ensure the correct award instrument is used. 
RESULTS

REPORT NO. IG-11-026 7

In an effort to enhance NASA’s management of its grant program, in March 2011 the 

Office of Procurement held the first “Grant Boot Camp” training. The primary objective 

of this training is to review with NASA grant officers the solicitation, award, and 

administration of grants and discuss how grants differ from contracts. In addition, NASA 

issued a Grant Information Circular in May 2011 that requires all unsolicited proposals 

be reviewed by the NSSC. We believe this training, in conjunction with strengthened 

policies and procedures, will help improve the Agency’s efforts to administer grant 

awards.

Appropriateness of Award Instrument. We identified three instances of one Center 

awarding a combined total of $410,191 in grant supplements when contracts would have 

been the proper award instrument. Because Center grant officials were able to award 

these grant supplements without oversight from NASA Headquarters or the NSSC, no 

controls were in place to independently validate their choice of award instrument. 

We found that grant officers at Goddard Space Flight Center (Goddard) awarded 

$410,191 in three grant supplements under an existing, appropriately awarded Space 

Grant when, according to the Handbook, they should have issued contracts to acquire 

these services.8

As noted earlier, grants are supposed to provide financial assistance to grantees for the 

independent completion of agreed-upon grant activities, whereas contracts are the 

appropriate instrument to acquire property or services for the direct benefit of the Federal 

 Specifically, for two supplements, $292,568 was funded by the Space 

Grant Program for the grantee to hire an individual to perform duties in NASA’s 

Headquarters Office of Education associated with administering the National Space Grant 

Program – duties that typically would be performed by civil servant or contractor staff. 

This individual assisted NASA’s Space Grant Program Office in reviewing and tracking 

state program budgets, proposals, and reports and provided support for selection and 

review panels. The third supplement totaling $117,623 was funded by Langley Research 

Center (Langley) under the Global Climate Change Education Program (Program) for the 

grantee to hire an individual to perform duties associated with administering the Program 

and other duties as assigned in NASA’s Headquarters Office of Education – duties that 

typically would be performed by civil servant or contractor staff. This individual assisted 

in the transition of the Program’s management to Langley and served as the NASA 

Headquarters liaison for the Program. This individual was also tasked to contribute to the 

development of the Office of Education Employee Handbook, including chapters on the 

budget cycle and releasing of Office of Education competitive solicitations. 

 8 The congressionally mandated National Space Grant Program is intended to (1) promote science, 

mathematics, and technology education; (2) recruit and train underrepresented minorities and persons 

with disabilities; (3) encourage interdisciplinary education, research, and public service programs related 

to aerospace; and (4) encourage joint programs among universities, aerospace industry, and Federal, state, 

and local governments. The Space Grant national network includes over 850 affiliates from universities, 

colleges, industry, museums, science centers, and state and local agencies organized into 52 consortia in 

all 50 states, the District of Columbia, and the Commonwealth of Puerto Rico. A lead institution 

represents each consortium. NASA announces funding opportunities within the National Space Grant 

Program, although only proposals from the lead institution for each consortium are accepted for 

consideration.
RESULTS

8 REPORT NO. IG-11-026

Government. Indeed, the Handbook states that a procurement contract is to be used to 

acquire goods or services related to a NASA mission or project for NASA’s benefit while 

grants provide financial assistance to grantees for accomplishing a public purpose that 

benefits the public. Procurement contracts are subject to a variety of statutory and 

regulatory requirements that generally do not apply to grants, such as specific 

competition requirements, the ability to submit bid protests, and a different jurisdiction to 

resolve contract disputes. Therefore, to comply with Federal and NASA requirements, 

grant officials should use the appropriate funding instrument in these matters. 

During our audit, representatives from the Headquarters Office of Education informed us 

that they were aware of the issue we identified with this grant and had worked with the 

Office of Procurement and the Office of General Counsel to resolve this matter. To this 

end, the Office of Education provided documentation supporting the resignation of the 

grant coordinator in May 2007 and the subsequent modification of an ongoing support 

services contract to provide the resources needed for the administration of the Space 

Grant Program. The documentation also included support to show that the grant fellow 

resigned in March 2010 and was hired by the support services contractor in March 2010. 

On May 24, 2011, NASA issued a Grant Information Circular that requires the NSSC to 

independently review and approve unsolicited proposals that do not exceed $550,000

prior to award.9

With regard to the use of Space Grant funds for the two supplements, the Space Grant 

Program Manager stated that using the funds to administer the Program was allowable. 

However, legislative history accompanying Appropriations Acts for FY 2005 and FY

2009 specifically identified that for NASA Space Grants, not more than $1,000,000 shall 

be retained for program administration.10, 11 Further, the 2006 conference report set forth 

specific grant funding amounts, leaving $650,000 for other expenses.12

Appropriateness of Award. We found that grant officials at Goddard and Glenn 

Research Center (Glenn) awarded $7.3 million in grants and grant supplements to Old 

 Because the 

$292,568 was used for the purpose of program administration under the guise of a 

grantee award, we have cause for concern that the Agency may have circumvented the

congressional intent for administrative costs and used grantee funds to supplement its 

administrative budget. We made numerous requests for supporting documentation to 

verify the Space Grant Program administration costs incurred by the Agency in an effort 

to assess this position. However, we did not receive the requested documentation. 

 9 NASA Grant Information Circular (GIC) 11-02, “Requirements for Non-Competitive Agency Grant and 

Cooperative Agreement Actions, Exclusive of those actions prescribed by 14 CFR 1260.17, Evaluation 

and Selection of Unsolicited Proposals,” May 24, 2011. 

10 House Appropriations Committee Print for “Omnibus Appropriations Act, 2009” (Public Law 111-8), 

March 11, 2009.

11Conference Report, H. Report 108-792 for “Consolidated Appropriations Act, 2005” (Public Law 108-

447), December 8, 2004.

12Conference Report, H. Report 109-272 for “Science, Justice, Commerce, and Related Agencies 

Appropriations Act, 2006” (Public Law 109-108), November 22, 2005.
RESULTS

REPORT NO. IG-11-026 9

Dominion University Research Foundation (Old Dominion) and the Ohio Aerospace 

Institute (Ohio Aerospace), respectively, based on proposals that were not in compliance 

with the Handbook and Guidance for the Preparation and Submission of Unsolicited

Proposals (Guidance for Unsolicited Proposals). 

Specifically, according to the Handbook and the Guidance for Unsolicited Proposals, 

such unsolicited proposals should: 

• be for new, unique, or innovative ideas;

• be independently originated and developed by the proposer without significant 

Government supervision, endorsement, direction, or direct involvement; and

• not be an advance proposal for a known agency requirement that can be acquired 

by competitive methods.

Space Grant Program. We found that Goddard grant officers improperly awarded 

12 supplements totaling $1.3 million to Old Dominion based on proposals that were not 

in compliance with this guidance. Nine of these supplements were for routine activities 

that were not new, unique, or innovative, and NASA representatives from Langley and 

Wallops Flight Facility were actively involved in developing proposals for five of the 

supplements. Moreover, a Goddard grant officer awarded one supplement to Old 

Dominion for research activities that were specifically for the benefit of the U.S. Navy; as 

such, these activities fell outside the scope of the original training grant so NASA should 

not have been involved in funding them. Finally, we found that the Goddard grant officer 

awarded two supplements unrelated to the original grant that should have been awarded 

as a new grant. Together, the supplements Goddard awarded to Old Dominion were as 

follows:

• Three supplements totaling $550,000 were awarded to administer the Virginia 

Aerospace Science and Technology Scholars program at Langley. The interns 

funded under these supplements worked with the state government to create 

awareness of the program and coordinated with the state Department of Education 

in recruitment and selection of students. We found an e-mail in the grant file that 

showed a Langley training specialist requested Old Dominion submit this

proposal. NASA was actively involved with the submission of what was 

ostensibly a proposal, which does not comply with NASA regulations for 

unsolicited proposals. Additionally, we found that the administration of the 

Scholarship Program involved the selection of interns for an online course and 

summer scholarship program. Administration of a scholarship program is a 

routine activity and not new, unique, or innovative; therefore, awarding these

grant supplements as if they were based on unsolicited proposals was 

inappropriate.

• Two supplements totaling $8,500 were awarded for administering an internship 

program at Wallops to recruit and select students to work in the Exploration 
RESULTS

10 REPORT NO. IG-11-026

Systems Mission Directorate in areas such as spacecraft, propulsion, lunar and 

planetary surface systems, and ground operations. Documentation showed that 

the proposal was submitted in December 2008. However, e-mail correspondence 

between a Wallops public affairs specialist and the grantee 5 months earlier 

discussed the funding available as well as the terms for this award. Based on this 

e-mail correspondence, we determined that prior to the submission of the 

proposal, Wallops had already identified the two individuals who would be 

selected for the program. This level of involvement by NASA prior to submission 

of the proposal does not comply with NASA requirements for unsolicited

proposals. In addition, administration of a scholarship program is a routine 

activity and not new, unique, or innovative; therefore, awarding these grant 

supplements as if they were based on unsolicited proposals was inappropriate.

• Four supplements totaling $514,000 were awarded to administer Langley’s 

Geospatial Informational Systems internship program. The tasks involved 

identifying students for the internship program, providing staff to assist with 

research and development, working with NASA to develop and distribute a 

marketing and recruiting plan, and developing a website to advertise the program. 

Again, because management of an internship program is a routine activity and not 

new, unique, or innovative, awarding these grant supplements as if they were 

based on unsolicited proposals was inappropriate.

• The supplement involving the Navy totaled $175,000 awarded for students to 

determine the effects of design modifications on the airworthiness and reliability 

of a small, unmanned flight vehicle under development. The U.S. Navy’s Naval 

Air Systems Command requested and funded this research activity through 

NASA. The Navy should have independently awarded a grant to Old Dominion 

for this research. Instead, the Goddard grant officer used Navy funding to award

this supplement. The Space Grant should not have been used as a vehicle to 

transfer funds between the Navy and Old Dominion since the research activity did 

not involve NASA.

• Finally, we found that the Goddard grant officer awarded two supplements to the 

Space Grant with Old Dominion totaling $51,280 for routine travel. The 

supplements funded student travel to a Fundamental Aerospace Annual Meeting 

in Atlanta, Georgia, in 2008 and 2009. A letter in the grant file from Langley to 

the NASA Space Grant Program Manager showed that each year Langley 

requested and funded the supplements from an existing project and that the 

supplements were only awarded for “running project funding through” the Space 

Grant award. Funding travel in this manner is inappropriate. Instead, Goddard’s 

grant officer should have competed this travel as separate procurement actions

and should not have funded them as supplements to the Space Grant award with 

Old Dominion.
RESULTS

REPORT NO. IG-11-026 11

In the 20 years since the original grant award, grant officers at Goddard have awarded 

hundreds of thousands of dollars to Old Dominion. The technical officer used the 

longevity of Old Dominion’s relationship with NASA as justification for awarding the

supplements that were not in compliance with the requirements for unsolicited proposals. 

Specifically, the technical officer cited Old Dominion’s 15 years of experience in the 

design, development, implementation, and coordination of student research programs. 

However, awarding these supplements as if they were based on unsolicited proposals was 

not consistent with NASA policy and circumvented the competitive process. Further, 

since NASA did not solicit competitive bids for these awards, the Agency cannot be sure 

that it received the best value for the money. 

Internship Program. Similar to the issues we identified for the Space Grant 

Program, we found that since 1991 a grant officer at Glenn awarded grants annually to 

the Ohio Aerospace Institute (Ohio Aerospace) for administration of the Lewis Education 

and Research Collaborative Internship Program (Lewis Internship Program) for high 

school and college students. The Lewis Internship Program allows students to work with 

Glenn employees in fields related to their academic education. The students also attend 

symposiums and workshops to aid in the students’ technical, professional, and academic 

development. 

We found that contrary to requirements in the Handbook and Guidance on Unsolicited

Proposals:

• Glenn officials improperly awarded $6 million for 2 education grants and 19

supplements to Ohio Aerospace. Since Glenn had a yearly need for an 

organization to manage its internship program, a Broad Agency Announcement 

should have been issued to the public to solicit applications for administration of

the program. During the “Grant Boot Camp” training, NASA Headquarters 

Office of Procurement officials confirmed this by stating that grants can only be 

awarded based on unsolicited proposals for new, unique, or innovative ideas. 

However, once a grant is awarded for an unsolicited proposal, the idea is no 

longer new, unique, or innovative since it was done previously and subsequent 

awards must be made based on proposals solicited via a Broad Agency 

Announcement. Because these grants and supplements funded a long-standing 

Glenn internship program and were not for new, unique, or innovative ideas, we 

believe funding the proposals as if they were unsolicited proposals was 

inappropriate. 

• Glenn officials also awarded seven supplements totaling $3.7 million to extend 

Ohio Aerospace involvement in the 2009 Lewis Internship Program through 

2013. These supplements enabled Glenn to guarantee grant funds to Ohio 

Aerospace for an additional 4 years in a manner that denied other organizations in 

the area the opportunity to compete for the funding.
RESULTS

12 REPORT NO. IG-11-026

• Glenn officials awarded a $99,000 supplement to Ohio Aerospace to assist

Kennedy Space Center with its FY 2011 internship program to fund a professor 

and an undergraduate student to complete a research project at Kennedy. This 

funding for Kennedy’s internship program was outside the scope of work and 

period of performance of the original 2009 grant awarded to Ohio Aerospace. 

Therefore, the supplement was inappropriate and instead should have been 

awarded as a new grant.

Further, we found Glenn employees provided significant input to Ohio Aerospace prior to 

submission of its proposal, which is unallowable under NASA requirements for 

unsolicited proposals. Specifically, a Glenn Educational Programs Office employee and 

a grantee employee informed us that the Educational Programs Office provided Ohio 

Aerospace with the number of interns to include in its proposal, and Glenn developed the 

online internship application system. Moreover, we found that Glenn’s internal request 

for funding was dated prior to receipt of Ohio Aerospace’s proposal for the Lewis 

Internship Program. Glenn employees’ failure to follow NASA requirements for 

unsolicited proposals resulted in circumvention of the competitive process. Finally, since 

NASA did not solicit competitive bids for these awards, the Agency cannot be sure that it 

received the best value for its money. 

Ohio Aerospace is located directly outside one of Glenn’s entrances. The Glenn 

Procurement Officer told us that Glenn awarded these grants and supplements to Ohio 

Aerospace because Glenn needed a facility in close proximity to the Center to host the 

workshops and symposiums that are part of the internship program. He said they hold the 

workshops and symposiums at the Ohio Aerospace’s facilities because there is limited 

space available at Glenn. Additionally, he stated that Ohio Aerospace is the only 

organization that has an ongoing relationship with all Ohio universities, which enabled 

Ohio Aerospace to secure professional development workshops for program students. 

However, we found that other types of meetings, workshops, and symposiums are 

regularly held at Glenn using existing meeting and conference space. Moreover, there is 

no reason to believe that other organizations could not arrange for similar professional 

development workshops and symposiums.

Monitoring Grantee Performance and Expenditures. During our audit we identified 

internal control weaknesses in NASA’s monitoring of grantee performance and financial 

expenditures. Specifically, NASA has minimal requirements in place to ensure that, once 

grant funds are awarded, grant officers perform adequate oversight of the grantee’s 

financial and programmatic performance. We found that neither the Handbook nor 

related NASA requirements address whether the Agency should perform desk reviews or

site visits to grantee locations. In fact, we found the requirements concerning review of

grantee financial and programmatic performance reports minimal at best. 

NASA policy does not require grant officers and technical officers to visit grantees to 

monitor grantee performance or expenditures. Further, Agency grant officers are not 

required to perform desk reviews of file documentation or grantee expenditures to 
RESULTS

REPORT NO. IG-11-026 13

identify any negative indicators regarding a grantee’s performance. Although NASA 

complies with OMB Circular A-133, which requires that grantees obtain annual audits 

when Federal expenditures exceed $500,000, we believe that NASA should not rely

solely on these audits to monitor grant performance or identify unallowable costs. 

According to June 2011 Government Accountability Office (GAO) testimony concerning 

A-133 requirements, the single audit process does not facilitate the timely identification 

and correction of audit findings. GAO’s testimony also noted that it could take years to 

correct significant deficiencies and material weaknesses that expose Federal funds to 

misuse or fraud.13

During the course of our review, we found examples of NASA managers who 

implemented mechanisms for monitoring grantee performance despite limited Agency 

requirements. Specifically, we found that the Science Mission Directorate maintains a 

tracking system to oversee the funding and performance of its grants. According to 

Directorate officials, this system is used to track the receipt and review of performance 

reports. For the Science Mission Directorate grants we reviewed, we found that this 

system was effective in ensuring that supplemental funding was not approved if reports

were not received, but we did not find evidence that the technical officer had reviewed 

the grantees’ performance reports. Further, a Headquarters Office of Education official 

informed us that a Performance Measurement System to track performance for education 

projects is currently under development. However, another technical officer we spoke 

with indicated that examination review of grantee annual performance reports essentially 

consisted of a cursory review. Further, a grant officer equated grant funding with giving

a “gift” to the grantee, which in our view means that once the funding is awarded the 

Agency’s oversight responsibilities are minimal. Based on such comments from Agency 

grant officers and the limited internal controls, policies, and oversight procedures in 

place, we have significant concerns about the adequacy of NASA’s monitoring of grantee

performance.

 While we see value in the single audit process, we believe that NASA 

policy needs to specify additional oversight requirements to assess grantee performance 

and expenditures of grant funds.

Although grantees submit quarterly financial and annual performance reports, we found 

minimal evidence that grant officers monitor the performance or expenditures of

grantees. Specifically, we found little evidence that they use the reports to substantively 

assess grantee performance or test the validity of expenditures. We found no evidence 

that grant officers either perform desk reviews or conduct site visits of grantees, and 

officials at each of the eight grantees reviewed confirmed that NASA officials had not 

conducted site visits at their locations. As previously mentioned, NASA policy does not 

require this type of monitoring. However, we believe these oversight procedures are 

important to help ensure that NASA’s grant funds are used judiciously and accomplish 

the grant’s goals and objectives. Failure to adequately monitor grantee performance 

 13 GAO, “Federal Grants – Improvements Needed in Oversight and Accountability Processes” 

(GAO-11-773T, June 23, 2011).
RESULTS

14 REPORT NO. IG-11-026

increases the risk that grant goals will not be met and also reduces the Agency’s ability to 

identify fraud, waste, or abuse.

NASA’s limited requirements regarding the monitoring of grant awards markedly differs 

from that of other Federal grant-making agencies. For example, the Department of 

Justice’s Office of Justice Programs, which in FY 2010 awarded $3 billion in grants, 

requires annual desk reviews of grant awards and recommends such reviews be done

semiannually.

14 A recent audit by the Department of Justice’s Office of Inspector 

General found that grant monitoring should include communication with grantees 

through e-mail, mail, or by telephone to address specific grantee questions or program 

manager concerns regarding: (1) compliance or performance; (2) completion of desk 

reviews of the materials in a grantee file to determine administrative, financial, and 

programmatic compliance, as well as grantee performance; and (3) for selected grants, 

completion of site visits that include on-site monitoring at program facilities or events 

and in-person visits with grantees.15

Further, in congressional testimony in June 2011 regarding improvements needed for 

oversight of Federal grants, the GAO stressed the need for effective oversight and 

internal controls over the grant process to ensure that the goals of the grant are achieved 

and that funds are properly used for their intended purposes.

 The report further identified improvements the 

Department of Justice had made in monitoring and oversight that included: (1) 

establishing a working group to review existing monitoring practices and develop 

standard monitoring approaches and procedures; (2) developing and enhancing grant 

tools such as the Grants Management System, Grant Monitoring Tool, and the Grant 

Assessment Tool; (3) updating oversight and monitoring procedures in the Grant

Manager’s Manual; and (4) making progress on revising the site visit report quality 

review process to improve site visit documentation and the quality of site visit reports. 

16

In our view, conducting periodic, comprehensive reviews of grantee information would 

improve NASA’s ability to respond to grantee noncompliance with grant requirements. 

For example, we believe the limited oversight currently provided by NASA officials is

the reason we identified unauthorized and unallowable costs in two of the eight grants we 

reviewed (see Appendix D for a table of questioned costs). Specifically, under one

 The GAO stated agency 

monitoring of grantee performance is important to ensure that grantees are meeting 

program and accountability requirements. The GAO testified that in its audit work, it 

found: (1) weaknesses in the control systems of Federal agencies awarding grants;

(2) oversight issues such as improper payments to grantees; and (3) lack of 

documentation that limited the agency’s ability to explain its decisions.

 14 Department of Justice, Office of Inspector General, “Office of Justice Programs’ Management of Its 

Offender Reentry Initiatives” (Audit Report 10-34, July 2010).

15 Department of Justice, Office of Inspector General, “Audit of the Office of Justice Programs’ Monitoring 

and Oversight of Recovery Act and Non-Recovery Act Grants” (Audit Report 11-19, March 2011).

16 GAO, “Federal Grants – Improvements Needed in Oversight and Accountability Processes” 

(GAO-11-773T, June 23, 2011).
RESULTS

REPORT NO. IG-11-026 15

Office of Education grant awarded by Glenn and one Science Mission Directorate grant

awarded by the NSSC, we identified the following unauthorized and unallowable costs:

• Unauthorized Costs. The grantee purchased a Bio Safety Cabinet totaling 

$6,086, which was not an authorized expense in the grant budget. Although the 

grantee stated that they had verbally advised the NASA technical officer that the 

equipment needed to be replaced, they did not obtain written authorization to 

do so. 

• Unallowable Costs. Another grantee paid $945 in travel expenses for a NASA 

civil servant to travel on “personal” business in conjunction with a recruiting 

event. The employee stated that her previous supervisor had verbally approved 

the recruiting trip to be paid for by the grantee. However, we found no 

documentation to substantiate this claim. After we alerted them to the issue, 

Glenn managers issued a letter of collection to the grantee for the reimbursement 

of these funds; the grantee made such reimbursement on July 26, 2011.17

We also found that a grantee paid employee tuition totaling $7,388; however, the tuition 

cost was not included in the budget approved by NASA. The Handbook provides that 

grantees may deviate from their proposed budgets without approval from NASA except 

when the change involves property, construction, or subcontract-related costs. In our 

view, this broad discretion to deviate from proposed budgets increases the risk that 

grantees will incur unallowable costs or expenditures unrelated to the purpose of the 

grant.

Recommendations

Recommendation 1. The Assistant Administrator for Procurement should revise grant 

requirements to clearly define the criteria for evaluating an unsolicited proposal, including 

the requirements related to justifications for making awards based on unsolicited proposals.

Recommendation 2. The Assistant Administrator for Procurement should strengthen the 

competitive requirements in the Handbook regarding competing grant awards, including 

clearly defining (a) the role of the grant officer and technical officer and (b) when 

unsolicited proposals should be awarded for research, education, and training activities.

Recommendation 3. The Assistant Administrator for Procurement should expand on the 

newly initiated “Grant Boot Camp” training and establish a formal, recurring training 

program for grant officers and technical officers that, among other topics, addresses the 

issue of choosing the appropriate type of award instrument.

 17 On July 26, 2011, the grantee reimbursed the funds identified in the letter of collection. However, as of 

August 8, 2011, the funds had not been credited to NASA because of processing delays at the 

Department of Health and Human Services, the agency responsible for the collection, receipt, and 

processing of payments collected from grantees on behalf of NASA.
RESULTS

16 REPORT NO. IG-11-026

Recommendation 4. The Assistant Administrator for Procurement should establish internal 

controls, policies, and procedures to require the independent review and approval of all 

grants and supplements for propriety of award competition, justification, and choice of 

instrument prior to award.

Recommendation 5. The Assistant Administrator for Procurement should improve internal 

controls, policies, and procedures for performing periodic examinations of grantee

expenditures such as desk reviews and site visits in order to identify unallowable and 

unsupported expenditures and increase the oversight necessary to ensure that grant funds are 

used for their intended purpose.

Recommendation 6. The Assistant Administrator for Procurement should remedy the

$6,086 in unauthorized costs for the purchase of unapproved equipment. 

Recommendation 7. The Assistant Administrator for Procurement should return to the 

Space Grant Program the $292,568 in unallowable costs for funds used for other than Space 

Grant purposes. 

Recommendation 8. The Assistant Administrator for Procurement should revise the 

Handbook to require a minimum threshold for all grantee budget deviations (excluding 

categories already requiring approval) and that technical officers approve budget deviations 

in excess of such threshold prior to the expenditure of grant funds.

Recommendation 9. The Glenn Research Center Director should develop and implement a 

plan to ensure that future awards for the Lewis Education and Research Collaborative 

Internship Program and other educational programs are competitively announced and 

proposals are independently reviewed and approved prior to award.

In keeping with our normal practice, the OIG provided a draft of this report to NASA 

management for review and comment. However, as of September 12, 2011, NASA had not

provided an official response and therefore we are issuing the report without a management 

response. Technical comments received earlier from NASA have been incorporated as 

appropriate.
APPENDIXES

REPORT NO. IG-11-026 17

APPENDIX A

Scope and Methodology

We performed this audit from June 2010 through August 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 audit objectives were to determine whether NASA’s grant funds are being used for 

their intended purpose and whether the Agency is compliant with established laws, 

regulations, and NASA-specific requirements in its administration and management of 

the grants. We interviewed key personnel at NASA Headquarters, NSSC, Goddard, and 

Glenn involved in grant administration, management, and award processes. We 

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

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

provided on the following pages). The methodology we used for the review is described 

below. 

Grant Universe and Review Period. The NASA Office of Procurement provided us 

with the universe of grants with actions out of the Federal Procurement Data System,

with the financial portion from the Office of the Chief Financial Officer out of SAP, 

NASA’s accounting system, for the period of October 1, 2007, through March 31, 2010. 

Grant Selection. During the audit, we judgmentally selected eight grants for substantive 

testing. We selected open and closed grants, awarded by both NASA Centers and the 

NSSC that were in excess of $450,000. Research, education, and training grants were 

selected for comparative purposes. In addition, no cooperative agreements were selected 

for substantive testing during the audit, nor were facility grants because as September 

2010 when we selected the grants for review, NASA had not awarded any facility grants. 

Grant Award File Documentation. We reviewed grant award documentation including 

technical and peer review reports, budget proposals, and quarterly financial reporting 

documentation. We interviewed NASA grant officers and technical officers responsible 

for the grants examined during the audit.

Grantee Site Visits. We also performed site visits at grantee locations for the eight 

grants examined during the audit to interview grantee officials, to perform substantive 

transaction testing necessary to validate whether NASA grant funds were used for their 

intended purpose, and to assess the sufficiency of grantee performance and the 

sufficiency of NASA oversight of awarded grants.
APPENDIX A

18 REPORT NO. IG-11-026

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

Federal Laws, Regulations, Policies, and Requirements

Public Law 107-347, “Federal Information Security Management Act of 2002,” 

December 17, 2002

2 C.F.R. Part 215, “Uniform Administrative Requirements for Grants and Agreements 

with Institutions of Higher Education, Hospitals and Other Non-Profit Organizations

(OMB Circular A-110),” January 1, 2006

2 C.F.R. Part 220, “Cost Principles for Educational Institutions (OMB Circular A-21),”

August 31, 2005

2 C.F.R. Part 225, “Cost Principles for State, Local and Indian Tribal Governments 

(OMB Circular A-87),” August 31, 2005

2 C.F.R. Part 230, “Cost Principles for Non-Profit Organizations (OMB Circular 

A-122),” August 31, 2005

14 C.F.R. Part 1260, “Uniform Administrative Requirements for Grants and Cooperative 

Agreements with Institutions of Higher Education, Hospitals, and Other Non-Profit 

Organizations,” January 1, 2009

31 United States Code (U.S.C.) § 6304, “Using Grant Agreements,” January 5, 2009

31 U.S.C. § 6305, “Using Cooperative Agreements,” January 5, 2009

OMB Circular A-133, “Audits of States, Local Governments and Non-Profit 

Organizations,” June 27, 2003

OMB Memorandum M-10-15, “FY 2010 Reporting Instructions for the Federal 

Information Security Management Act and Agency Privacy Management,” April 21, 

2010

NASA Policies, Procedures and Circulars

NPR 2810.1A, “Chapter 4 - Contracts, Grants, and Agreements,” May 16, 2006

NASA Policy Directive 5101.1E, “Requirements for Legal Review of Procurement 

Matters,” September 15, 1997

NPR 5800.1, “Grant and Cooperative Agreement Handbook” (14 C.F.R. 1260), April 20, 

2007

NPR 9680.1, “NASA’s Management of Grants and Cooperative Agreements,”

October 31, 2008
APPENDIX A

REPORT NO. IG-11-026 19

Grant Information Circular (GIC) 01-01, “Guidance on Property Administration 

Requirements for Special Purpose and General Purpose Equipment,” March 29, 2001

GIC 03-01, “Accelerated Schedule for Property Reporting,” September 4, 2003 

GIC 05-03, “Additional Guidance Related to the Processing of Unsolicited Proposals, 

Successor Proposals and Congressional Interest Items (Earmarks),” April 7, 2005

GIC 05-04, “Peer Review Documentation,” October 17, 2005

GIC 06-02, “Personal Identity Verification of Grantees and Recipients,” September 22, 

2006

GIC 07-02, “Scientific and Technical Information,” April 5, 2007

GIC 08-01, “Ensuring Only Allowable, Reasonable, and Necessary Costs in the Award of 

Grants and Cooperative Agreements,” February 14, 2008

GIC 09-01, “Class Deviation to Remove the United States Citizenship Requirement for 

Students and Faculty Receiving Direct Support under Education and Training Grants,” 

July 16, 2009

GIC 09-04, “Substitution of Standard Form (SF) 425 for Standard Form (SF) 272: Class 

Deviation from the Requirements at C.F.R. 1260.26 and Exhibits D & G of 14 C.F.R. 

Part 1260,” October 27, 2009

GIC 11-02, “Requirements for Non-Competitive Agency Grant and Cooperative 

Agreement Actions, Exclusive of those actions prescribed by 14 CFR 1260.17, 

Evaluation and Selection of Unsolicited Proposals,” May 24, 2011

“Guidance for the Preparation and Submission of Unsolicited Proposals,” revised

February 10, 2000

Use of Computer-Processed Data. We used computer-processed data to determine our 

NASA grants universe. However, we initially found discrepancies in the computerprocessed data concerning the actual number of grants reported between Federal 

Procurement Data System and SAP, the information systems used to develop the NASA 

grants universe used in the audit. We brought the discrepancies to the Office of 

Procurement’s attention and worked closely with Agency officials to identify and 

determine the cause of the discrepancies. As a result, we were able to identify and 

reconcile the discrepancies and identify a usable universe.
APPENDIX A

20 REPORT NO. IG-11-026

Review of Internal Controls

We reviewed internal controls for NASA’s grant administration and management 

processes related to the solicitation, pre-award, award, and closeout of grants, including 

the oversight of NASA grantees and their progress in meeting established grant award 

requirements. The control weaknesses we identified are discussed in this report. Our 

recommendations, if implemented, will correct the identified control weaknesses. 

Prior Coverage

During the last 5 years, NASA and the GAO have issued the following reports and 

testimony that are 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/

(NASA OIG) and http://www.gao.gov (GAO).

NASA Office of Inspector General

“Audit of NASA Education and Training Grants” (IG-07-029, September 18, 2007)

“Audit of NASA’s Management and Funding of Fiscal Year 2006 Congressional 

Earmarks” (IG-07-028, August 9, 2007) 

Government Accountability Office

“Federal Grants – Improvements Needed in Oversight and Accountability Processes” 

(GAO-11-773T, June 23, 2011)

“Grants Management – Grantees’ Concerns with Efforts to Streamline and Simplify 

Processes” (GAO-06-566, July 2006)
APPENDIX B

REPORT NO. IG-11-026 21

GRANTS REVIEWED DURING THE 

AUDIT

Grant Number Grantee Grant Type

Responsible 

NASA Center Total

NNC07ZA03G Ohio Aerospace Institute Education Glenn $984,807

NNC09ZA01G Ohio Aerospace Institute Education Glenn $4,966,377

NNG05GF89H Old Dominion University 

Research Foundation

Training Goddard $5,451,164

NNX07AR77G Case Western Reserve 

University

Research NSSC $560,009

NNX09AB74G Carnegie Institution of 

Washington

Research NSSC $1,985,641

NNX08AJ82G Johns Hopkins UniversityApplied Physics LaboratoryResearch NSSC $1,709,893

NNX09AL39G Science Museum of Minnesota Education NSSC $758,686

NNX08AP05G Adler Planetarium and 

Astronomy Museum

Education NSSC $903,879

 Total $17,320,456
APPENDIX C

22 REPORT NO. IG-11-026

GRANT OBJECTIVES AND ISSUES 

IDENTIFIED

Grant Number Grantee Grant Objectives Issues Found

NNC07ZA03G Ohio Aerospace Institute Administer Glenn’s summer 

internship program for college 

and high school students

Limited oversight after 

grant award

NNC09ZA01G Ohio Aerospace Institute Administer Glenn’s summer 

internship program for college 

and high school students

Unallowable costs; 

circumvention of 

required grant award 

process; limited

oversight after grant 

award

NNG05GF89H Old Dominion University 

Research Foundation

Space Grant Program to 

broaden the base of aerospace 

research, enhancing aerospace 

education and conducting 

public service functions

Unallowable costs;

circumvention of 

required grant award 

process; limited

oversight after grant 

award

NNX07AR77G Case Western Reserve 

University

Provide operational assistance 

and expertise in geophysical 

datasets

No issues identified

NNX09AB74G Carnegie Institution of 

Washington

Accomplish science and 

technology activities to 

address questions about the 

Mars sample return

Unauthorized costs; 

limited oversight after 

grant award

NNX08AJ82G Johns Hopkins UniversityApplied Physics 

Laboratory

Understand the life cycle of 

the Interstellar Medium

No issues reported

NNX09AL39G Science Museum of 

Minnesota

Establish a program to educate 

the public on climate change 

issues

No issues reported

NNX08AP05G Adler Planetarium and 

Astronomy Museum

Development of two exhibits

(Planet Explorers and Deep 

Space Adventure)

No issues reported
APPENDIX D

REPORT NO. IG-11-026 23

TABLE OF QUESTIONED COSTS

Questioned Costs* Amount Page

Unauthorized Costs

Unauthorized purchase of a Bio Safety Cabinet $ 6,086 14

Unallowable Costs

Grant fellows hired to perform daily administrative tasks 292,568 7

Travel expenses for NASA civil servant to travel on “personal” 

business in conjunction with a recruiting event** 945 14

 Total $299,599

* Questioned Costs are expenditures that are questioned by the Office of Inspector General because of an 

alleged violation of legal, regulatory, or contractual requirements, are not supported by adequate 

documentation at the time of the audit, or are unauthorized or unallowable.

**The $945 in travel expenses associated with this issue was reimbursed by the grantee on July 26, 2011. 

However, as of August 8, 2011, the funds had not been credited to NASA because of processing delays 

at the Department of Health and Human Services, the agency responsible for the collection, receipt, and 

processing of payments collected from grantees on behalf of NASA.
APPENDIX E

24 REPORT NO. IG-11-026

REPORT DISTRIBUTION

National Aeronautics and Space Administration

Administrator

Deputy Administrator

Chief of Staff

Assistant Administrator for Procurement

NASA Advisory Council’s Audit, Finance, and Analysis Committee

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

Executive Director, NASA Shared Services 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 E

REPORT NO. IG-11-026 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-11-026 27

Major Contributors to the Report:

Laura Nicolosi, Director, Mission Support Directorate

Joseph Shook, Project Manager

Daniel Birnbaum, Lead Auditor

Bobbie Wells, Senior Auditor

Lynette Westfall, Senior Auditor

Susan Bachle, Senior Auditor

Amy Bannister, Senior Auditor

Rebecca Carpenter, Senior Management Analyst

Annette Huffman, Program Assistant

Elizabeth Richardson, Associate Counsel, Office of Inspector General
SEPTEMBER 12, 2011

REPORT No. IG-11-026

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.