Summary Report to the Committee on 

Commerce, Science, and 

Transportation, U.S. Senate, and the 

Committee on Science, House of 

Representatives 

United States General Accounting Office 

GAO 

November 2003 BUSINESS 

MODERNIZATION 

NASA’s Challenges in 

Managing Its 

Integrated Financial 

Management Program 

GAO-04-255 
www.gao.gov/cgi-bin/getrpt?GAO-04-255.

To view the full product, including the scope 

and methodology, click on the link above. 

Highlights of GAO-04-255, a summary 

report of GAO-04-43, GAO-04-151, and 

GAO-04-118, reports to the Senate 

Committee on Commerce, Science, and 

Transportation, and the House Committee 

on Science 

November 2003 

BUSINESS MODERNIZATION 

NASA’s Challenges in Managing Its 

Integrated Financial Management 

Program 

IFMP offers NASA an opportunity to modernize its business processes and 

systems and improve its operations. However, NASA’s acquisition strategy 

has created a number of challenges for IFMP. First, NASA has acquired and 

implemented many IFMP components—including the Core Financial 

module, the backbone of the system—without an enterprise architecture, or 

modernization blueprint, to guide and constrain the program. NASA has 

since recognized the need for an architecture and, after GAO completed its 

audit work, released one that NASA stated was incomplete. NASA has also 

taken steps to implement key architecture management capabilities, such as 

establishing an architecture program office and designating a chief architect. 

However, NASA has yet to establish other key architecture management 

capabilities, such as designating an accountable corporate entity to lead the 

architecture effort. Moreover, the architecture products NASA has used to 

date were insufficient to manage its investment in IFMP. NASA’s approach 

of acquiring and implementing IFMP outside the context of an architecture 

increases the risk that the system’s components will not support agencywide 

operations—an outcome that could cause costly system rework. 

Two years into IFMP’s development, NASA accelerated its implementation 

schedule from fiscal year 2008 to fiscal year 2006, with the Core Financial 

module to be completed in June 2003. To meet this aggressive schedule, 

NASA deferred testing and configuration of many key capabilities of the 

Core Financial module, including the ability to report the full cost of its 

programs. When the module was implemented at each of NASA’s 10 centers, 

many of the financial events or transaction types needed by program 

managers to carry out day-to-day operations and produce useful financial 

reports had not been included. As a result of these and other weaknesses, 

NASA cannot ensure that the system routinely provides its program 

managers and other key stakeholders and decision makers—including the 

Congress—with the financial information needed to measure program 

performance and ensure accountability. 

IFMP is further challenged by questionable cost estimates, an optimistic 

schedule, and insufficient processes for ensuring adequate funding reserves. 

IFMP’s current life-cycle cost estimate does not include the full cost likely to 

be incurred during the life of the program. Until NASA uses more disciplined 

processes to prepare IFMP’s life-cycle cost estimate, the program will have 

difficulty controlling costs. In addition, IFMP’s schedule margins may be too 

compressed to manage program challenges—such as personnel shortages, 

uncertainties about software availability, and Office of Management and 

Budget initiatives to implement electronic systems for agency business 

processes governmentwide. These initiatives have already affected planning 

for IFMP’s payroll, procurement, and travel components, an outcome that 

could result in schedule delays and cost growth. Finally, reserve funding for 

IFMP contingencies may be insufficient—particularly problematic, given the 

significant risks confronting the program. 

The National Aeronautics and 

Space Administration (NASA) 

spends 90 percent—$13 billion—of 

its budget on contractors. Yet since 

1990, GAO has designated NASA’s 

contract management as a high-risk 

area—in part because the agency 

failed to implement a financial 

management system to provide 

information needed to make key 

program decisions. In April 2000, 

NASA initiated its most recent 

effort to implement an effective 

financial management system—the 

Integrated Financial Management 

Program (IFMP). Three years into 

the program, GAO found NASA 

risks building a system that will 

cost more and do less than 

planned. As a result, the Congress 

requested reviews of NASA’s IFMP 

enterprise architecture and 

financial reporting and program 

cost and schedule controls. 

GAO is making recommendations 

in three separate reports: 

• On IFMP’s enterprise 

architecture, GAO 

recommends that NASA 

establish an effective 

architecture to guide and 

constrain the program. 

• On IFMP’s financial reporting, 

GAO recommends that NASA 

identify and address all areas 

that do not comply with 

federal systems requirements. 

• On IFMP’s cost and schedule 

control, GAO recommends that 

NASA follow best practices 

and NASA guidance in 

preparing the life-cycle 

cost estimate. 
Page i GAO-04-255 Business Modernization 

Letter 1 

Appendix NASA’s Challenges in Managing Its Integrated Financial 

Management Program 4 

Results in Brief 4

IFMP Has Proceeded without an Enterprise Architecture, and 

NASA’s Ongoing Architecture Management Efforts Are Missing 

Key Elements 7

Core Financial Module Lacks Capabilities to Facilitate Timely and 

Accurate Reporting and Comply with Federal Law 9

IFMP Further Challenged by Questionable Cost Estimates and an 

Optimistic Schedule 11

Conclusions 13

Abbreviations 

IFMP Integrated Financial Management Program 

FFMIA Federal Financial Managememt Improvement Act of 1996 

NASA National Aeronautics and Space Administration 

OMB Office of Management and Budget 

Contents 

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Page 1 GAO-04-255 Business Modernization 

November 21, 2003 

The Honorable John McCain 

Chairman 

The Honorable Ernest F. Hollings 

Ranking Minority Member 

Committee on Commerce, Science, and Transportation 

United States Senate 

The Honorable Sherwood L. Boehlert 

Chairman 

The Honorable Ralph M. Hall 

Ranking Minority Member 

Committee on Science 

House of Representatives 

The National Aeronautics and Space Administration’s (NASA) activities 

encompasses a broad range of complex and technical endeavors—from 

investigating the composition and resources of Mars to providing satellite 

and aircraft observations of Earth for scientific and weather forecasting 

purposes. Over the past decade, NASA has advanced space exploration, 

scientific knowledge, and international cooperation, and has accomplished 

unparalleled feats of engineering. 

More than two-thirds of NASA’s workforce is made up of contractors and 

grantees, and 90 percent, or roughly $13 billion, of NASA’s annual budget 

is spent on work performed by its contractors. Yet since 1990, we have 

identified NASA’s contract management as a high-risk area—in part 

because the agency has failed to implement a modern, fully integrated 

financial management system. The lack of such a system has hampered 

NASA’s ability to oversee contracts, control program costs, and ensure an 

effective human capital strategy—raising serious concerns about NASA’s 

management of its largest and most costly programs, including the space 

shuttle program and the International Space Station. 

In April 2000, NASA initiated its third and most recent effort to implement 

an effective financial management system—the Integrated Financial 

Management Program (IFMP)—which NASA expects to complete in fiscal 

year 2006. Through IFMP, NASA plans to replace the separate and 

incompatible financial management systems used by NASA’s 10 centers 

with one integrated system. The new system is expected to provide better 

United States General Accounting Office

Washington, DC 20548 
Page 2 GAO-04-255 Business Modernization 

decision data, consistent information across centers, and improved 

functionality, thereby improving agencywide management of NASA’s 

financial, physical, and human resources. 

However, 3 years into the development of IFMP—with significant 

investment already made in the program—we found that NASA’s 

acquisition strategy has increased the risk that the agency will implement 

a system that will cost more and do less than planned. As a result, the 

Congress requested reviews of IFMP in three areas: enterprise 

architecture, financial reporting, and program cost and schedule control. 

This report provides a summary of the results of these reviews, which are 

being reported today in the following three separate products: 

• Information Technology: Architecture Needed to Guide NASA’s 

Financial Management Modernization, GAO-04-43 (Washington, D.C.: 

Nov. 21, 2003). For more information on this report, please contact 

Randolph C. Hite at (202) 512-3439 or hiter@gao.gov. 

• Business Modernization: NASA’s Integrated Financial Management 

Program Does Not Fully Address External Reporting Issues, GAO-04-

151 (Washington, D.C.: Nov. 21, 2003). For more information on this 

report, please contact Gregory D. Kutz at (202) 512-9095 or 

kutzg@gao.gov, Keith A. Rhodes at (202) 512-6412 or Rhodes@gao.gov, 

or Diane Handley at (404) 679-1986 or handleyd@gao.gov. 

• Business Modernization: Disciplined Processes Needed to Better 

Manage NASA’s Integrated Financial Management Program, GAO-04-

118 (Washington, D.C.: Nov. 21, 2003). For more information on this 

report, please contact Allen Li at (202) 512-4841 or lia@gao.gov. 
Page 3 GAO-04-255 Business Modernization 

This summary report—along with our three reports—will not be further 

distributed until 30 days from its date, unless you announce its contents 

earlier. At that time, we will send copies to interested congressional 

committees, the NASA Administrator, and the Director of the Office of 

Management and Budget. We will also make copies available to others 

upon request. In addition, the report will be available at no charge on the 

GAO Web site at http://www.gao.gov. 

Randolph C. Hite, Director 

Information Technology Architecture and Systems Issues 

Gregory D. Kutz, Director 

Financial Management and Assurance 

Keith A. Rhodes, Chief Technologist 

Applied Research and Methods 

Allen Li, Director 

Acquisition and Sourcing Management 
Appendix: NASA’s Challenges in Managing Its 

Integrated Financial Management Program 

Page 4 GAO-04-255 Business Modernization 

For more than a decade, we have identified weak contract management 

and the lack of reliable financial and performance information as posing 

significant challenges to NASA’s ability to effectively run its largest and 

most costly programs. While NASA has made some progress in addressing 

its contract management weaknesses through improved management 

controls and evaluation of its procurement activities, NASA has struggled 

to implement a modern integrated financial management system. Such a 

system is key to efficiently producing accurate and reliable information to 

oversee contracts, estimate and control program costs, and report 

program financial activities to the Congress and other stakeholders. 

In April 2003, we issued a report on the agency’s Integrated Financial 

Management Program (IFMP)—NASA’s latest effort to implement a 

modern financial management system—and found that the agency has not 

followed key best practices for acquiring and implementing IFMP and 

concluded that the agency was at risk of implementing a system that 

would not optimize mission performance.1

 As agreed with the Congress, 

we continued our review to determine (1) whether NASA has been 

acquiring and implementing IFMP in the context of an enterprise 

architecture; (2) the extent to which key components of IFMP will assist 

NASA in meeting its external reporting requirements; and (3) the 

reasonableness of NASA’s life-cycle cost estimate, schedule, and reserve 

funding for IFMP. 

Through IFMP, NASA has committed to modernizing its business 

processes and systems in a way that will introduce interoperability and 

thereby improve the efficiency and effectiveness of its operations as well 

as bring the agency into compliance with federal financial management 

requirements. NASA has also committed to implementing IFMP within 

specific cost and schedule constraints. However, earlier this year, we 

reported that NASA faced considerable challenges in meeting these 

commitments. Through our reviews of NASA’s enterprise architecture and 

IFMP’s financial reporting and program cost and schedule control, we 

found that NASA remains challenged in its ability to meet its IFMP 

commitments in several areas—areas that continue to put the agency’s 

resources and programs at high risk. 

 1

 U.S. General Accounting Office, Business Modernization: Improvements Needed in 

Management of NASA’s Integrated Financial Management Program, GAO-03-507

(Washington, D.C.: Apr. 30, 2003). 

Appendix: NASA’s Challenges in Managing Its 

Integrated Financial Management Program 

Results in Brief 
Appendix: NASA’s Challenges in Managing Its 

Integrated Financial Management Program 

Page 5 GAO-04-255 Business Modernization 

First, NASA has acquired and implemented significant components of 

IFMP—including the Core Financial module, the backbone of the 

system—without an enterprise architecture, or blueprint, to guide and 

constrain the program. Our research has shown that attempting major 

modernization programs like IFMP without having a well-defined 

architecture risks, for example, implementing processes and building 

supporting systems that are duplicative, lack interoperability, and do not 

effectively and efficiently support mission operations and performance. 

Since we completed our audit work, NASA issued an initial version of an 

enterprise architecture, continuing its commitment to pursing a complete 

architecture and acquiring and implementing IFMP within the context of 

that architecture. However, because of the timing of our report, we were 

unable to assess NASA’s initial architecture. NASA has also established 

some important architecture management controls—such as establishing 

an enterprise architecture program office and designating a chief architect. 

However, it has not yet established others, which will make its efforts to 

develop, implement, and maintain a well-defined architecture more 

challenging. 

Second, NASA has been pursuing an aggressive IFMP implementation 

schedule, to the point of delaying implementation of many system 

capabilities. NASA accelerated its schedule by 2 years, with the Core 

Financial module to be completed in fiscal year 2003. To meet this 

compressed schedule, NASA deferred configuration and testing of many 

key capabilities of the Core Financial module, including the ability to 

report the full cost of its programs. When NASA announced in June 2003, 

full implementation of the module at each of its 10 centers, many of the 

financial events or transaction types needed by program managers to carry 

out day-to-day operations and produce useful financial reports had not 

been included. If these and other weaknesses are not addressed, the Core 

Financial module and related systems will not comply with the 

requirements of the Federal Financial Management Improvement Act 

(FFMIA) of 1996.2

 Specifically, NASA cannot ensure that the system 

routinely provides NASA program managers and other key stakeholders 

and decision makers—including the Congress—with reliable, useful, and 

timely financial information needed to measure program performance and 

ensure accountability. 

 2

 31 U.S.C. 3512 note (2000) (Federal Financial Management Improvement). 
Appendix: NASA’s Challenges in Managing Its 

Integrated Financial Management Program 

Page 6 GAO-04-255 Business Modernization 

Finally, questionable cost estimates, an optimistic schedule, and 

insufficient processes for ensuring adequate funding reserves put IFMP at 

further risk of not meeting its cost and schedule commitments. In 

preparing the current cost estimate for IFMP’s 10-year life cycle, NASA 

did not include the full cost likely to be incurred during the life of the 

program, including costs to retire the system and other direct and indirect 

costs. Until NASA uses more disciplined processes in preparing the 

program’s cost estimate, the reliability of the life-cycle cost estimate will 

be uncertain and the program will have difficulty controlling costs. In 

addition, IFMP’s compressed schedule margins may be insufficient to 

manage program challenges—such as personnel shortages, uncertainties 

about software availability, and Office of Management and Budget (OMB) 

initiatives to implement electronic systems for agency business processes 

governmentwide. These OMB initiatives have put IFMP in a reactionary 

mode and are already affecting planning for the payroll, procurement, and 

travel components of the integrated system, further impacting the 

program’s cost and schedule. Reserve funding for IFMP contingencies may 

also be insufficient—which is particularly problematic, given the 

significant risks facing the program. The Budget Formulation module is 

already experiencing shortfalls in its reserves. 

We have made a number of recommendations in our three reports to 

improve NASA’s acquisition strategy for IFMP. NASA reviewed and 

provided comments on drafts of each of the three reports and concurred 

with all of our recommendations aimed at establishing and maintaining an 

effective enterprise architecture and accurately estimating program cost 

and predicting the impact of program challenges. However, NASA did not 

concur with our recommendations aimed at ensuring compliance with 

FFMIA requirements because the agency believes that it is currently in 

compliance. NASA’s comments and our response can be found in the full 

reports. Because this summary report draws exclusively from our three 

IFMP reports and previously issued reports, we did not ask NASA to 

provide separate comments on a draft of the summary report. 
Appendix: NASA’s Challenges in Managing Its 

Integrated Financial Management Program 

Page 7 GAO-04-255 Business Modernization 

NASA has thus far acquired and deployed system components of IFMP 

without an enterprise architecture, or agencywide modernization 

blueprint, to guide and constrain program investment decisions—actions 

that increased the chances that these system components will require 

additional time and resources to be modified and to operate effectively 

and efficiently. To correct this past practice, NASA released an initial 

version of a new enterprise architecture after we completed our audit 

work, which NASA recognizes as not yet complete but plans to evolve and 

use to guide and constrain future IFMP investment decisions. NASA’s 

ability to do so effectively, however, is constrained by missing architecture 

management capabilities. NASA’s chief technology officer agreed that 

these capabilities need to be established and said that NASA plans to do 

so. 

More specifically, NASA’s stated intention is to use an architecture as the 

basis for agencywide business transformation and systems modernization. 

Such an intention necessitates that its architecture products provide 

considerable depth and detail as well as logical and rational structuring 

and internal linkages. That is, it means that these architecture products 

should contain sufficient scope and detail so that, for example, (1) 

duplicative business operations and systems are eliminated, (2) business 

operations are standardized and integrated and supporting systems are 

interoperable, (3) use of enterprisewide services are maximized, and (4) 

related shared solutions are aligned, like OMB’s e-Government initiatives.3

Moreover, this scope and detail should be accomplished in a way that (1) 

provides flexibility in adapting to changes in the enterprise’s internal and 

external environments; (2) facilitates its usefulness and comprehension by 

varying perspectives, users, or stakeholders; and (3) provides for properly 

sequencing investments to recognize, for example, the investments’ 

respective dependencies and relative business value. 

The architecture artifacts that NASA’s chief technology officer provided to 

us and represented as those used to date in acquiring and implementing 

IFMP do not contain sufficient context (depth and scope of agencywide 

operational and technical requirements) to effectively guide and constrain 

 3

 OMB has identified 24 Electronic Government—or “e-Government”—initiatives that 

advocate the use of Internet-based technologies governmentwide for agency business 

processes, such as payroll, travel management, and recruiting. These initiatives are 

expected to support the goal of the President’s Management Agenda and ultimately 

provide improved government services to citizens, businesses, and other levels of 

government. 

IFMP Has Proceeded 

without an Enterprise 

Architecture, and 

NASA’s Ongoing 

Architecture 

Management Efforts 

Are Missing Key 

Elements 
Appendix: NASA’s Challenges in Managing Its 

Integrated Financial Management Program 

Page 8 GAO-04-255 Business Modernization 

agencywide business transformation and systems modernization efforts. 

More specifically, these artifacts do not satisfy the most basic 

characteristics of architecture content, such as clearly distinguishing 

between artifacts that represent the “As Is” and the “To Be” environments. 

In general, these products were limited to descriptions of (1) technology 

characteristics, which is one of many enterprise architecture elements, 

and (2) one of nine business operations (finance and accounting). The 

chief technology officer agreed that the architecture products used to date 

to acquire and implement IFMP do not provide sufficient scope and 

content to constitute a well-defined enterprise architecture. 

Moreover, as NASA proceeds with its enterprise architecture effort, it is 

critical that it employs rigorous and disciplined management practices. 

Such practices form the basis of our architecture management maturity 

framework,4

 which specifies by stages the key architecture management 

controls that are embodied in federal guidance and best practices, 

provides an explicit benchmark for gauging the effectiveness of 

architecture management and provides a road map for making 

improvements. During the course of our review of IFMP, NASA 

implemented some of these key architecture management capabilities, 

such as having an enterprise architecture program office, designating a 

chief architect, and using an architecture development methodology, 

framework, and automated tools. However, NASA has not established 

other key architecture management capabilities, such as designating an 

accountable corporate entity to lead the architecture effort, having an 

approved policy for developing and maintaining the architecture, and 

implementing an independent verification and validation function to 

provide needed assurance that architecture products and architecture 

management processes are effective. 

The chief technology officer agreed that NASA needs an effective 

enterprise architecture program and stated that efforts are under way to 

establish one. The chief technology officer also provided us with an initial 

version of a NASA enterprise architecture on September 24, 2003, which 

was after we completed our audit work. According to this official, while 

this initial version of the architecture is incomplete, it does provide some 

 4

 U.S. General Accounting Office, Information Technology: A Framework for Assessing 

and Improving Enterprise Architecture Management (Version 1.1), GAO-03-584G

(Washington, D.C.: Apr. 1, 2003). 
Appendix: NASA’s Challenges in Managing Its 

Integrated Financial Management Program 

Page 9 GAO-04-255 Business Modernization 

of the missing contextual information (operational and technical) that we 

had identified during our review. 

Based on our experience in reviewing other agencies, not having an 

effective enterprise architecture program is attributable to limited senior 

management understanding and commitment, and cultural resistance to 

having and using one. Our experience with federal agencies has also 

shown that attempting to define and build major IT systems, like IFMP, 

without first completing an enterprise architecture often results in IT 

systems that are duplicative, are not well integrated, are unnecessarily 

costly to maintain and interface, and do not effectively optimize mission 

performance. 

The Core Financial module, considered the backbone of IFMP,5

 is intended 

to provide NASA’s financial and program managers with timely, 

consistent, and reliable cost and performance data to support management 

decisions and external financial reporting. However, as we reported in 

April 2003, the Core Financial module was not designed to integrate the 

cost and schedule data needed to oversee NASA’s contractors—primarily 

because NASA did not adequately define the requirements of key 

stakeholders, including program managers and cost estimators, to allow it 

to configure the module to address their needs. 

NASA originally planned to complete implementation of IFMP in fiscal 

year 2008, but in fiscal year 2002, NASA accelerated the implementation 

schedule to fiscal year 2006, with the Core Financial module to be 

completed in fiscal year 2003. To meet this compressed schedule, NASA 

deferred configuration and testing of almost half of the financial events or 

transaction types that NASA identified as critical for carrying out day-today operations and for producing external financial reports. Moreover, 

NASA does not plan to automate more than a third of the critical 

transaction types. Rather, NASA plans to continue entering these 

transactions manually, making the agency more vulnerable to processing 

errors and delays. For example, the Core Financial module does not 

appropriately capture and record property, plant, and equipment and 

material in its general ledger at the transaction level—which is needed to 

provide independent control over these assets. 

 5

 Related IFMP modules will be integrated or interfaced with the Core Financial module, 

where applicable. 

Core Financial 

Module Lacks 

Capabilities to 

Facilitate Timely and 

Accurate Reporting 

and Comply with 

Federal Law 
Appendix: NASA’s Challenges in Managing Its 

Integrated Financial Management Program 

Page 10 GAO-04-255 Business Modernization 

As part of its implementation strategy, NASA delayed conversion to fullcost accounting until the Core Financial module was implemented at all 

centers. After announcing in June 2003 full implementation of the module 

at each of its 10 centers, NASA began designing the new cost allocation 

structure and expected that the full-cost accounting capabilities needed to 

provide the full cost of its programs and projects for external reporting 

purposes would be available through the Core Financial module in 

October 2003. Because of the timing of our reports, we could not verify the 

availability of this capability. 

The Core Financial module as implemented in June 2003 also lacks the 

capability to automatically classify and record upward and downward 

adjustments of prior year obligations to the appropriate general ledger 

accounts—a federal financial management system requirement and a key 

capability to providing the data needed to prepare a Statement of 

Budgetary Resources.6

 When NASA tested specific requirements related to 

adjustments to prior year obligations, the Core Financial module 

incorrectly posted the adjustments. Consequently, NASA deferred 

implementation of these requirements and opted to rely on manual 

compilations, system queries, or other work-arounds to extract these data. 

This cumbersome, labor-intensive effort to gather end-of-year information 

greatly increases the risk of misreporting—as we stated in March 2001, 

when NASA reported a misstatement of $644 million in its fiscal year 1999 

Statement of Budgetary Resources.7

 While NASA had hoped to use a 

“patch” release or future software upgrade to post upward and downward 

adjustments—and thereby eliminate manual work-arounds—these efforts 

have proven unsuccessful. NASA is continuing to work with the software 

vendor to reconfigure the software as necessary to accommodate upward 

and downward adjustment processing. 

Finally, the Core Financial module does not capture accrued costs or 

record accounts payable if the cumulative costs exceed obligations for a 

given contract. Yet, federal accounting standards and NASA guidance 

require costs to be accrued in the period in which they are incurred and 

any corresponding liability to be recorded as an account payable—

regardless of amounts obligated. Further, federal standards require 

 6

 The Statement of Budgetary Resources provides information on the availability and use of 

budgetary resources, as well as the status of budgetary resources at the end of the period. 

7

 U. S. General Accounting Office, Financial Management: Misstatement of NASA’s 

Statement of Budgetary Resources GAO-01-438, Mar. 30, 2001). 
Appendix: NASA’s Challenges in Managing Its 

Integrated Financial Management Program 

Page 11 GAO-04-255 Business Modernization 

agencies to disclose unfunded accrued costs—that is, costs in excess of 

obligations. As of June 30, 2003, NASA had not processed approximately 

$245 million in costs that exceeded obligations or recorded the 

corresponding accounts payable. Instead, these transactions have been 

held outside of the general ledger in suspense until additional money can 

be obligated. As a result, costs or liabilities could be understated in its 

reports by the amount held in suspense if NASA fails to adjust these 

amounts. 

The Core Financial module was intended to streamline many of NASA’s 

processes and eliminate the need for many paper documents. However, in 

some areas, the new system has actually increased NASA’s workload. 

Because the core financial software allows obligations to be posted to the 

general ledger before a binding agreement exists, NASA must process 

purchase orders and contract documents outside the system until they are 

signed or otherwise legally binding. At that point, NASA initiates the 

procurement action in the system and repeats the steps that were 

manually performed outside the system. 

If NASA continues on its current track—one that has resulted in 

significant limitations with regard to property accounting, full-cost 

reporting capabilities, budgetary accounting, accrued costs, and accounts 

payable—the Core Financial module and IFMP will fail to comply with 

FFMIA requirements to build a fully integrated financial management 

system that routinely provides decision makers with timely, reliable, and 

useful financial information. 

Questionable cost estimates, an optimistic schedule, and insufficient 

processes for ensuring adequate funding reserves have put IFMP at an 

even greater risk of not meeting program objectives. In preparing its lifecycle cost estimates for IFMP,8

 NASA did not use disciplined costestimating processes as required by NASA and recognized as best 

practices. For example, NASA’s current IFMP life-cycle cost estimate—

which totals $982.7 million and is 14 percent, or $121.8 million, over the 

previous IFMP life-cycle cost estimate—was not prepared on a full-cost 

basis. The estimate includes IFMP direct program costs, NASA enterprise 

support, and civil service salaries and benefits, but it does not include the 

cost of retiring the system, enterprise travel costs, the cost of nonleased 

 8

 Fiscal years 2001 through 2010. 

IFMP Further 

Challenged by 

Questionable Cost 

Estimates and an 

Optimistic Schedule 
Appendix: NASA’s Challenges in Managing Its 

Integrated Financial Management Program 

Page 12 GAO-04-255 Business Modernization 

NASA facilities for housing IFMP, and other direct and indirect costs likely 

to be incurred during the life of the program. In addition, NASA did not 

consistently use breakdowns of work in preparing the cost estimate, 

although NASA guidance calls for breaking down work into smaller units 

to facilitate cost estimating and project and contract management as well 

as to help ensure that relevant costs are not omitted. In cases where work 

breakdowns were used, the agency did not always show the connection 

between the work breakdown estimates and the official program cost 

estimate. This has been a weakness since the inception of the program. 

Without a reliable life-cycle cost estimate, NASA will have difficulty 

controlling program costs. 

In addition, NASA’s schedule may not be sufficient to address program 

challenges, such as personnel shortages and uncertainties about software 

availability. To address personnel shortages during the implementation of 

the Core Financial module, NASA paid nearly $400,000 for extra hours 

worked by center employees and avoided a slip in IFMP’s compressed 

schedule. However, the schedule for implementing the Budget 

Formulation module has slipped because IFMP implemented this module 

simultaneously with the Core Financial module—an action advised against 

by a contractor conducting a lessons-learned study—placing heavy 

demand on already scarce resources. Uncertainty regarding software 

availability also puts the program at risk for completing the integrated 

system on schedule. OMB’s e-Government initiatives—which aim to 

eliminate redundant systems governmentwide by using “best of suite” 

software—could also create more difficult interface development and a 

less integrated system, risking additional schedule delays and cost growth. 

E-Government initiatives are already affecting planning for IFMP’s payrolland procurement-related modules, and OMB’s e-Travel could replace 

IFMP’s Travel Management module, which has already been implemented. 

IFMP’s fiscal year 2002 Independent Annual Review found that eGovernment initiatives are forcing the program into a reactive mode, 

noting that (1) the benefits of a fully integrated system could be lost under 

e-Government, (2) the scope of IFMP and timing of future projects’ 

implementation have become uncertain, and (3) cost increases and 

schedule slippage to accommodate directives may occur. 

Finally, the program did not consistently perform in-depth analyses of the 

potential cost impact of risks and unknowns specific to IFMP, as required 

by NASA guidance. Instead, the program established funding reserves on 

the basis of reserve levels set by other high-risk NASA programs. As a 

result, reserve funding for IFMP contingencies may be insufficient—which 

is particularly problematic, given the program’s questionable cost 
Appendix: NASA’s Challenges in Managing Its 

Integrated Financial Management Program 

Page 13 GAO-04-255 Business Modernization 

estimates and optimistic schedule. One module—Budget Formulation—is 

already experiencing shortfalls in its reserves, and project officials 

expressed concern that the module’s functionality may have to be 

reduced. Moreover, the program did not quantify the cost impact of highcriticality risks—risks that have a high likelihood of occurrence and a high 

magnitude of impact—or link these risks to funding reserves to help IFMP 

develop realistic budget estimates. 

NASA’s latest effort to develop and implement an integrated financial 

management system has been driven by an aggressive schedule—not by 

requirements, available resources, and strategic planning. Without a 

mature enterprise architecture to rationalize IFMP’s implementation 

schedule and reliable life-cycle cost estimates to ensure program 

efficiency, NASA is creating a system that may lack the functionality to 

achieve its intended goal: to provide accurate and timely financial data 

needed to manage NASA’s programs and account for the billions of dollars 

the agency spends annually on work performed by its contractors. 

In our three reports being issued today, we make a number of 

recommendations to the NASA Administrator, which if implemented 

appropriately should help program managers get IFMP on track and, 

ultimately, provide NASA with the fully integrated financial management 

system that it has sought to acquire for more than a decade. 

Conclusions 

(120303) 
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