SEPTEMBER 21, 2010

REVIEW REPORT

REPORT NO. IG-10-023 (ASSIGNMENT NO. A-09-014-00)

OFFICE OF AUDITS

REVIEW OF NASA’S TRACKING AND DATA RELAY 

SATELLITE SYSTEM

OFFICE OF INSPECTOR GENERAL

National Aeronautics and 

Space Administration
REPORT NO. IG-10-023

Final report released by:

Paul K. Martin

Inspector General

Acronyms

C.F.R. Code of Federal Regulations

CM&O Center Management and Operations

EVM Earned Value Management

FY Fiscal Year

GAO Government Accountability Office

IDIQ Indefinite-Delivery, Indefinite Quantity

NPD NASA Policy Directive

NPR NASA Procedural Requirements

OIG Office of Inspector General

SCaN Space Communications and Navigation

TDRS Tracking and Data Relay Satellite

TDRSS Tracking and Data Relay Satellite System
SEPTEMBER 21, 2010

REPORT NO. IG-10-023

OVERVIEW

REVIEW OF NASA’S TRACKING AND DATA RELAY 

SATELLITE SYSTEM

The Issue

NASA’s Tracking and Data Relay Satellite System (TDRSS), also known as the Space 

Network, provides tracking, data, voice, and video services to the International Space 

Station; Space Shuttle; NASA’s space and Earth science missions; other Federal 

agencies, including the Missile Defense Agency and the National Science Foundation;

and commercial users, such as The Boeing Company and Lockheed Martin Commercial 

Launch Services. The Space Communications and Navigation Office at NASA 

Headquarters manages the system.

TDRSS is comprised of two segments – ground and space. The ground segment consists 

of stations in New Mexico, Guam, and Maryland that provide command and control 

services for the entire TDRSS network. The ground system also provides

telecommunication services between low-Earth orbiting spacecraft and user control 

centers, thereby eliminating the need for many of the worldwide ground stations 

previously used for tracking such spacecraft.

The space segment consists of eight Tracking and Data Relay Satellites (TDRS) in 

geosynchronous orbits

1 around Earth to provide global coverage. NASA launched the 

first of 10 satellites, TDRS-1, in 1983, and the newest satellite in the system, TDRS-10, 

in 2002.2

The existing TDRS fleet is aging and NASA predicts that, unless replacements are 

launched for the satellites nearing the end of their useful lives, there could be insufficient 

tracking capability to support NASA and other Government and non-Government 

missions as early as 2011. Accordingly, in December 2007, NASA entered into a 

$696 million contract with Boeing Satellite Systems (Boeing) to develop two new 

tracking satellites, TDRS K and L,

3

 1 A geosynchronous orbit is one in which the satellite is always in the same position with respect to the 

rotating Earth. The satellite orbits at an elevation of approximately 35,790 km because that produces the 

time for one orbit equal to the period of rotation of the Earth (23 hours, 56 minutes, 4.09 seconds). By 

orbiting at the same rate, in the same direction as Earth, the satellite appears stationary (synchronous with 

respect to the rotation of the Earth).

and to make associated modifications to the White 

Sands, New Mexico ground station. Expected launch dates for TDRS K and L are 2012 

2 TDRS-1 was decommissioned in 2009. The second TDRS satellite was lost in the 1986 Space Shuttle 

Challenger accident.

3 Following launch, TDRS K and L will be known as TDRS-11 and TDRS-12, respectively.
OVERVIEW

ii REPORT NO. IG-10-023

and 2013, respectively. In addition, in October 2003, NASA awarded a $185.2 million 

core contract with a maximum value of $600 million for task orders to Honeywell 

Technologies Solutions, Inc. (Honeywell) for continuous operations and monitoring of 

the space communications network and for the detection, reporting, isolating, and 

resolution of anomalies in network systems, interfaces, and services.

We initiated this audit to determine whether NASA has effectively managed the TDRSS 

Program to accomplish its technical objectives while meeting established milestones and 

controlling costs. Specifically, we examined whether NASA had taken steps to ensure 

that TDRS K and L were on schedule, within budget, and met technical requirements and 

that acquisition risks were identified and sufficiently mitigated. We also examined 

whether NASA performed adequate contract administration and whether other users of 

TDRSS properly reimbursed NASA for services provided to them and shared in the costs 

of system upgrades.

Prior to initiating this audit, we received an allegation that Boeing had submitted a low

bid in order to obtain the TDRS contract and subsequently had increased the Project’s 

cost through contract modifications. As part of this audit, we assessed the merit of this 

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

Results

Development of TDRS K and L is on schedule and meeting its planned budget. We 

found that NASA has managed the Project within cost, schedule, and performance 

requirements and Project managers implemented risk and earned value management 

(EVM) processes

4

Project Management Implemented Effective Processes. We found that NASA 

managed the TDRS K and L Project within established cost and schedule milestones and 

met overall technical objectives. Project managers identified and mitigated risks, thereby 

reducing the potential for project performance shortfalls. In addition, management used a 

formally validated EVM system to identify cost and schedule trends and variances, which 

allowed them to implement corrective actions in a timely manner.

to monitor and mitigate programmatic risks associated with TDRSS

development efforts. NASA also effectively administered the TDRSS development and 

support service contracts. However, we found that NASA has not revised the 

reimbursable rates it charges TDRSS customers since 2006 and that NASA officials did 

not know what factors were used to formulate the 2006 rates. Accordingly, NASA does 

not know whether the rates it has been charging customers during the past 4 years 

reflected current operating costs. We also found that internal controls for continuity of 

operations were not established, which led to the possible loss to NASA of reimbursable

dollars.

 4

 Risk management involves identifying potential risks and developing management decisions designed to 

avoid or mitigate those risks. Earned value management is an integrated management control system for 

assessing and quantifying what a contractor or field activity is achieving with program dollars.
OVERVIEW

REPORT NO. IG-10-023 iii

NASA Appropriately Administered and Monitored Contracts. We found that the 

Space Network Office and the TDRS Project Office appropriately awarded, administered, 

and monitored performance of the contracts with Honeywell and Boeing, respectively. 

For the Honeywell contract, we found that NASA followed appropriate procedures for 

awarding and administering the contract and monitored contractor performance in 

accordance with Federal and NASA Acquisition Regulations. For example, NASA 

conducted award fee evaluations as defined in the award fee plan and disbursed award 

fees in accordance with contract terms and conditions.5

The only modifications affecting the scope of the Boeing contract occurred in June 2010

when NASA changed contract requirements and increased the contract costs by directing 

Boeing to procure and test spare parts and accommodate contingency operations tests. 

Although the modifications did increase the contract cost, the changes were initiated by 

NASA and were not initiated by Boeing.

 For the Boeing contract, TDRS 

Project personnel and on-site representatives at the contractor facility performed the 

oversight required to manage the contract appropriately. In addition, communication 

between NASA and the contractor was sufficient to mitigate acquisition risks. Finally, 

we found no evidence substantiating the allegation that Boeing submitted a low bid in 

order to win the contract and then increased the contract cost through modifications. We 

found that NASA selected Boeing following an open competition in which NASA 

received two proposals.

NASA Needs to Review Its Current Reimbursable Rates to Ensure They Are 

Appropriate and Reasonable. We found that NASA has not revised the reimbursable 

rates it charges TDRSS customers since 2006, and that current NASA Program officials 

did not know what factors were used to formulate the 2006 rates. Therefore, NASA does 

not know, and we could not determine, whether the rates NASA was charging its 

customers at the time of our audit were appropriate or reasonable. In addition, NASA has 

failed to update the Code of Federal Regulations (C.F.R.)6

We found that these issues were attributable in part to repeated reorganizations in the 

TDRSS Program, which resulted in a loss of institutional knowledge. From the 1980s 

until the mid 1990s, TDRSS operated as a distinct directorate at NASA Headquarters. In 

1996, NASA transferred responsibility for TDRSS to Johnson Space Center. In 2001,

NASA transferred responsibility for TDRSS back to NASA Headquarters under what is 

now the Space Operations Mission Directorate. These repeated transfers of responsibility

and personnel caused a loss of institutional knowledge to the degree that present Program 

personnel acknowledged that they were unaware that the C.F.R. contained provisions 

relating to TDRSS and that they lacked the expertise to update the TDRSS reimbursable 

rates.

to reflect current rates and 

other current policies and practices.

 5 We reviewed award fee documentation and processes but did not independently evaluate NASA’s 

rationale for awards made to the contractor.

6 Title 14 C.F.R. Part 1215, “Tracking and Data Relay Satellite System (TDRSS).”
OVERVIEW

iv REPORT NO. IG-10-023

Lack of Internal Controls and Inaccurate Advice Led to Collection Issues and Loss 

of Revenue. We found a difference in the way that Program financial managers bill 

classified and nonclassified users, with one manager charging nonclassified users for 

expenses that were not charged to classified users. We also found that the Networks 

Integration Management Office, which is responsible for collecting fees from 

nonclassified users, did not have an internal control procedure in place to provide for 

continuity of operations. Consequently, when the resource analyst responsible for 

handling nonclassified reimbursable payments was absent from the office for an extended 

period of time, customers were not billed in a timely manner, resulting in a loss of funds 

to NASA. For example, in 2009 NASA wrote off $385,000 that had not been timely 

billed to a customer who later became insolvent. In addition, $58,700 was returned to 

customers based on advice by the Regional Finance Office that the funds had expired. 

However, this advice was not accurate, and $27,200 of this amount should have remained 

with NASA.

Management Action

We recommended that the Space Communications and Navigation Office assess and 

update the reimbursable rates NASA charges other TDRSS users and ensure that current 

rates as well as other current policies and processes are reflected in the Code of Federal 

Regulations. In conducting this assessment, the Office should ensure that the factors 

constituting the reimbursable rate formula are documented and consistently applied. In 

addition, to ensure user reimbursements to NASA are accurate and appropriately tracked, 

the Networks Integration Management Office should enhance its internal control 

procedures to provide for continuity of operations.

In response to our August 19, 2010, draft of this report, the Associate Administrator for 

Space Operations concurred with our recommendations and stated that the Space 

Communications and Navigation Office will update the algorithm used to calculate 

reimbursable rates to ensure it produces rates that are reasonable. In addition, the Space 

Communications and Navigation Office will review Title 14 C.F.R. Part 1215 to 

determine whether the regulation is still needed and, if so, ensure that it reflects the 

current TDRSS operating procedures and rates. With respect to our recommendation 

regarding ensuring continuity of operations, the Associate Administrator noted that the 

lack of timely billing we identified was related to an employee’s unexpected medical 

absence and stated that the Networks Integration Management Office has since increased 

the size of its staff and will document the step-by-step process for handling reimbursable 

accounts so that any future unexpected employee absence will not cause a similar 

disruption. Finally, the Associate Administrator indicated that a common process is 

being developed and will be employed for both classified and nonclassified projects. The 

full text of NASA’s comments is reprinted in Appendix C.

We consider the Associate Administrator’s proposed actions to be responsive to our 

recommendations. Therefore, the recommendations are resolved and will be closed upon 

verification that management has completed the corrective actions.
SEPTEMBER 21, 2010

REPORT NO. IG-10-023

CONTENTS

INTRODUCTION

Background _________________________________________ 1

Objectives __________________________________________ 3

RESULTS

TDRS Project Management Implemented Effective 

Management Processes______________________________ 4

NASA Appropriately Administered TDRSS Program Contracts ___ 8

NASA Needs to Review Its Current Reimbursable Rates to 

Ensure They Are Appropriate and Reasonable ___________ 12

Lack of Internal Controls Led to Collection Issues and 

Loss of Revenue __________________________________ 16

APPENDIX A

Scope and Methodology_______________________________ 19

Review of Internal Controls ____________________________ 20

Prior Coverage ______________________________________ 20

APPENDIX B

Protests of Support Service Contract Award _______________ 22

APPENDIX C

Management Comments ______________________________ 24

APPENDIX D

Report Distribution___________________________________ 26

SEPTEMBER 21, 2010

REPORT NO. IG-10-023 1

INTRODUCTION

Background

NASA built the Tracking and Data Relay Satellite System (TDRSS), also known as the 

Space Network, to provide tracking, data, voice, and video services to the International 

Space Station; Space Shuttle; NASA’s space and Earth science missions; other Federal 

agencies, including the Department of Defense and the National Science Foundation; and 

commercial users such as The Boeing Company and Lockheed Martin Commercial 

Launch Services. NASA launched the first TDRSS satellite – TDRS-1 – in 1983, and the 

most recent – TDRS-10 – in December 2002. The launch dates for each TDRSS satellite 

are set forth in Table 1.

Table 1. TDRSS Satellites by Launch Date

Spacecraft Name 

 Before Launch Launch Date 

Spacecraft Name 

 After Launch 

TDRS-A April 4, 1983 TDRS-1a

TDRS-B January 28, 1986

 (lost in the Challenger accident)

TDRS-C September 29, 1988 TDRS-3b

TDRS-D March 13, 1989 TDRS-4

TDRS-E August 2, 1991 TDRS-5

TDRS-F January 13, 1993 TDRS-6

TDRS-G July 13, 1995 TDRS-7

TDRS-H June 30, 2000 TDRS-8

TDRS-I March 8, 2002 TDRS-9b

TDRS-J December 4, 2002 TDRS-10 a

TDRS-1 was decommissioned on October 28, 2009 and end of mission activities were completed in 

June 2010.

b

TDRS-3 and TDRS-9 are in on-orbit storage.

Over the last 25 years, TDRSS has delivered pictures, television, and voice data to the 

scientific community and the general public, including data from more than 100 Space 

Shuttle and International Space Station missions and the Hubble Space Telescope. A 

principal advantage of TDRSS is that it consolidates communications services that had 

previously been provided by multiple worldwide ground stations.

TDRSS is comprised of ground and space segments. The ground segment consists of 

stations in Guam, Maryland, and New Mexico that provide command and control services 

for the entire TDRSS network. The space segment consists of eight satellites positioned 
INTRODUCTION

2 REPORT NO. IG-10-023

in geosynchronous7

Figure 1: Tracking and Data Relay Satellites and Ground Stations

Source: NASA TDRSS System Description

orbits around Earth to provide global coverage. Figure 1 depicts the 

relative position of the satellites and the ground stations.

TDRSS satellites were designed for a total life expectancy of 15 years, including 4 years 

of on-orbit storage. However, the satellites have generally outlasted design expectations. 

For example, TDRS-1 was in orbit for 26 years before failing. The two next-oldest 

satellites, TDRS-3 and TDRS-4, have been in orbit for approximately 22 and 23 years,

respectively. NASA has predicted that unless replacements are launched for the satellites 

nearing the end of their useful lives, there could be insufficient capacity to support NASA 

missions or the needs of other users as early as 2011. Therefore, in 2007 NASA began 

the acquisition process to build and deploy TDRS K and L.

In order to address current and future TDRSS requirements, NASA entered into contracts 

with Honeywell Technologies Solutions, Inc. (Honeywell) and Boeing Satellite Systems 

(Boeing). The Honeywell contract, entered into in October 2003, is a cost-plus-award-fee 

contract8 for maintenance and operation of TDRSS ground operations. The contract 

includes a core requirement for ground and space network operations, engineering and 

maintenance, and network support functions, and indefinite-delivery, indefinite-quantity 

(IDIQ) requirements9

 7 A geosynchronous orbit is one in which the satellite is always in the same position with respect to the 

rotating Earth. The satellite orbits at an elevation of approximately 35,790 km because that produces the 

time for one orbit equal to the period of rotation of the Earth (23 hours, 56 minutes, 4.09 seconds). By 

orbiting at the same rate, in the same direction as Earth, the satellite appears stationary (synchronous with 

respect to the rotation of the Earth).

for supporting engineering operations. At contract award, the value 

of the core requirement was $185.2 million, with a maximum of $600 million for the 

issuance of IDIQ task orders. In April 2010, NASA extended the contract through 

8 A cost-plus-award-fee contract includes a base fee that NASA and the contractor establish prior to 

contract award and an award amount that the contractor can earn in whole or in part based on its contract 

performance. The award amount is intended to motivate the contractor in areas such as quality, 

timeliness, technical ingenuity, and cost-effective management. 

9 An indefinite-delivery contract is a type in which the time of delivery is unspecified in the original 

contract but established during performance. An indefinite-quantity contract provides for an indefinite 

quantity, within stated maximum or minimum limits, of specific supplies or services to be furnished 

during a fixed period, with deliveries scheduled by placing orders with the contractor.
INTRODUCTION

REPORT NO. IG-10-023 3

October 8, 2010, with an option for an additional 6-month extension to April 8, 2011. 

The current contract value, including the extension to October 2010, is $306.4 million for 

the core effort and a maximum of $824 million for the IDIQ portion. (See Appendix B.)

The contract with Boeing, entered into in December 2007, is a $696.6 million fixed-priceincentive-fee contract for the development and delivery of two new satellites, TDRS K

and L. Also included in the contract is a requirement for Boeing to modify the White 

Sands ground station to ensure that these two new satellites will be fully compatible with 

and capable of functioning as part of TDRSS. The planned launch dates for TDRS K and 

L are 2012 and 2013, respectively.

NASA has a contingency plan in place to meet the satellite capacity needs of both NASA 

and its customers until the new satellites become operational. However, according to the 

TDRS Project Manager, once TDRS K and L become operational, TDRSS will have 

sufficient capacity to meet NASA and other customers’ requirements through 

approximately 2016, as long as no existing satellites are decommissioned. Also, the 

Boeing contract contains an option for the development and delivery of two additional 

satellites, TDRS M and N.

Objectives

The overall objective of our audit was to determine whether NASA was managing the 

TDRS K and L Project in order to accomplish its technological objectives while meeting 

established cost and schedule milestones. Specifically, we examined whether

• acquisition risks were identified and sufficiently mitigated; 

• NASA adequately administered the TDRS K and L development and support 

services contracts; and

• non-NASA users of TDRSS properly reimbursed NASA for the services provided 

to them and shared in the costs of system upgrades.

Prior to beginning the audit, the Office of Inspector General (OIG) received an allegation

that Boeing had bid low on the TDRS K and L contract in order to win the contract and

then subsequently requested waivers to technical requirements that increased NASA’s 

cost. To assess the merits of this allegation, we reviewed the original competition and 

examined source selection information and contract modifications. See Appendix A for 

details of the audit’s scope and methodology, our review of internal controls, and prior 

audit coverage.
RESULTS

4 REPORT NO. IG-10-023

TDRS PROJECT MANAGEMENT 

IMPLEMENTED EFFECTIVE 

MANAGEMENT PROCESSES

Development of TDRS K and L is on schedule and meeting its planned budget. We 

found that NASA implemented sound project management principles to ensure that 

the Project met schedule milestones and technical requirements and that the TDRS 

Project Office executed a project plan and used sound risk management and earned 

value management (EVM) processes. Project planning and scheduling met budget 

and technical milestones because NASA and Boeing conducted appropriate oversight 

and communicated effectively throughout the development phases. In addition, use 

of risk management and EVM processes facilitated early identification of trends and 

variances, thus allowing sufficient time to implement corrective actions. As a result,

the planned launch schedule is consistent with the Project Plan, and the Project has 

sufficient reserves to meet planned launch dates and ground segment commitments, 

such as tracking services provided by a ground terminal.

TDRS Project Requirements Were Effectively Executed

As of May 2010, the TDRS K and L Project was meeting technical requirements on 

schedule and within budget. The TDRS Project Office effectively executed the “Tracking 

and Data Relay Satellite K Program, Code 454, Project Plan,” 454 KP SYS-PLAN-002, 

March 12, 2009 (Project Plan).

The Project Plan, outlines the technical, schedule, cost control plans, and risk 

management plans for both TDRS K and L, and provides the scope, implementation 

approach, project operational environment, and the baseline commitments of the TDRSS

Program and the TDRS K and L Project, in accordance with NASA Procedural 

Requirements (NPR) 7120.5D, “NASA Space Flight Program and Project Management 

Requirements,” March 6, 2007. The Project Plan provides detailed requirements for 

Project documents to include the TDRSS K and L Program Commitment Agreement

(Commitment Agreement),

10

 10 The Commitment Agreement, required by NPR 7120.8, “NASA Research and Technology Program and 

Project Management Requirements,” February 5, 2008, identifies key schedule milestones for the 

program and for each project in the program. 

which establishes the TDRS K and L launch delivery dates

of December 2012 and December 2013, respectively. NASA awarded Boeing the 

TDRS Project contract on December 28, 2007, for the design, development, and launch 

of TDRS K and L with launch dates of April 1, 2012, and February 9, 2013, respectively. 

By contracting for launch dates that are approximately 8 months earlier than those in the 
RESULTS

REPORT NO. IG-10-023 5

Commitment Agreement, NASA built in schedule reserves.

11

Project planning and scheduling were successful because of effective communication 

between NASA and Boeing. NPR 7120.5D, Appendix F.3.3.4.a, “Acquisition Plan,”

requires project management to develop a surveillance plan that enables the Government 

to determine whether the contractor’s program and processes are functioning in 

accordance with the terms of the contract. To satisfy the requirement, management 

developed the TDRS K Surveillance Plan, effective April 16, 2007. The NASA Senior 

Planning Specialist and Boeing Program Integrator met monthly to monitor schedule and 

technical issues.

 Monthly and quarterly 

status reports from the Project Office and Boeing indicated that the project was 

progressing in line with the Commitment Agreement.

We also found that the Project has maintained sufficient schedule reserves to meet 

contractual launch dates and ground segment upgrades. The Project Office and Boeing 

have issued separate monthly and quarterly status reports indicating that since 

November 2008, the Project was maintaining 4 months of launch schedule reserve. As of 

August 2009, the Project was carrying 87 days of reserve, putting the Project above the 

Goddard Guideline of 83.7 days.12

Management Tools Were Implemented Effectively

 The commitment date for the White Sands Complex

upgrade for TDRSS requirements is no later than 8 months prior to launch of TDRS K. 

As of September 2009, the White Sands Complex modification schedule maintained

2 months of schedule reserve.

NASA policy requires that specific project management tools be implemented for all 

Agency programs, projects, and contracts. Specifically, NASA policy requires use of risk

management and earned value management (EVM) to help ensure project success. Risk 

management involves identifying potential risks and developing management decisions

designed to avoid or mitigate those risks. When properly executed, risk management 

reduces the potential for cost overruns, schedule delays, and noncompliance with 

technical and safety requirements. EVM is an integrated management control system for 

assessing and quantifying what a contractor or field activity is achieving with program 

dollars. Successful use of EVM allows project management to measure cost and progress 

against schedule in the management plan, identify performance trends and variances from 

 11 NASA Schedule Management Handbook, October 2, 2006, Section 5.2.61, “Schedule Management 

Reserve,” states that schedule reserve is “used for future situations that are impossible to predict. It is a 

separately planned quantity of time . . . intended to reduce the impact of missing overall schedule 

objectives.”

12 Goddard Procedural Requirement 7120.7, “Schedule Margins and Budget Reserves,” states that there 

should be 1 month of funded schedule margin per year from confirmation to the beginning of observatory 

integration and test; from the start of integration and test to shipment to the launch site (or planned 

storage) there should be 2 months of funded schedule margin per year; and from delivery to the launch 

site to launch should be 1 week of funded schedule margin per month.
RESULTS

6 REPORT NO. IG-10-023

the management plan, and enables early decision making in time to apply effective 

corrective actions to minimize cost overruns.

Risk Management. Both NPR 8000.4A, “Agency Risk Management Procedural 

Requirements,” December 16, 2008 (Risk Management Requirements), and the 

“Tracking and Data Relay Satellite K Program Code 454 Continuous Risk Management 

Plan,” January 5, 2008 (Risk Management Plan), require project management to employ

continuous risk management as a decision-making tool. The Risk Management 

Requirements document identifies six requirements of effective risk management: 

identification, analysis, planning, tracking, control, and communication of the risk. The 

Risk Management Plan requires the participation of all project team members, including 

civil service and contract personnel, and provides metrics to assess program activities 

such as the number of open and closed risks.

We determined that Project management effectively used the Risk Management Plan 

metrics for measuring and quantifying risks. For example, as of October 13, 2009, 

Boeing identified and managed 189 unique project risks. All 189 risks had an identified 

owner responsible for overseeing implementation of the agreed-to risk disposition. For 

all risks, Project management provided a documented process for identifying, analyzing, 

planning, tracking, controlling, and communicating the risks. We interviewed 38 Project 

staff, all of whom told us that they believed this risk reporting system captured all 

identified risks and provided a sufficient mechanism for Project staff to report risks. 

During our audit, we did not identify any additional risks that should have been but were 

not addressed.

We tracked each of the risks through the risk identification, reporting, and mitigation 

process and determined that adequate controls were in place to address all 189 risks. 

Specifically, a core group of approximately 11 Project staff forms the Project’s Risk 

Management Board. The Board meets regularly to review risk status and the necessity for 

action. In addition, the Project Manager is responsible for elevating major risks to the 

Goddard Center Management Council and the Space Communications and Navigation 

(SCaN) Office for action. From January 2008 through December 2009, Project 

management elevated and subsequently closed three major risks through the Goddard 

Center Management Council and SCaN. For example, Project management identified a 

small supplier’s responsibility for providing a large quantity of low-noise amplifiers, 

reference generators, and frequency converters as having the potential to result in late 

deliveries and design, workmanship, and test issues that could affect the Project schedule. 

To mitigate this risk, Project management developed and implemented a 12-step risk 

mitigation plan that enabled them to make a determination that the likelihood of late 

deliveries or design, workmanship, or test issues was low. Management also identified 

and implemented mitigation strategies for procurement risks, by anticipating estimating 

and inflation errors, and design implementation risks in regard to structural changes that 

may become evident between TDRS K and L and previous TDRS.

Earned Value Management. Pursuant to applicable regulations, Boeing was required to 

demonstrate that the Government certified its EVM systems. Boeing provided TDRS 
RESULTS

REPORT NO. IG-10-023 7

Project management a signed agreement, dated February 3, 2009, documenting that their 

EVM system is Government certified. The Honeywell contract, as an operations and 

maintenance contract, is not required to use EVM.

We found that Project management implemented EVM in accordance with the Project 

Plan and NASA requirements. Effective use of EVM enabled Project management to

identify performance trends and variances from the management plan in a timely manner

and use the information to make informed decisions and implement corrective action. 

For example, in the months prior to a March 2009 design review, EVM data indicated

that the Project had overrun cost projections by 12 percent and that only 92 percent of the 

scheduled work had been completed. Project management analyzed the data and 

determined that the cost overrun resulted from the contractor underestimating engineering 

labor hours required to complete tasks, and the apparent schedule delay was due to an 

input error on the master schedule. Project management provided more realistic 

engineering labor hours and properly adjusted inputs to the master schedule, thus

preventing future Project cost overruns and mitigating impact to the launch schedule.
RESULTS

8 REPORT NO. IG-10-023

NASA APPROPRIATELY

ADMINISTERED TDRSS

PROGRAM CONTRACTS

The Space Network Office and TDRS Project Office appropriately awarded, 

administered, and monitored development and support service contracts with 

Honeywell and Boeing, respectively. The contracts complied with Federal and 

NASA acquisition regulations, and contained clearly defined technical requirements. 

Program management provided sufficient oversight of contract implementation, and 

communications between NASA and the contractors mitigated acquisition risks.

Management of Contract with Honeywell Followed Contracting 

Procedures

In October 2003, NASA awarded a 5-year cost-plus-award-fee contract that includes 

provisions for indefinite-delivery, indefinite-quantity tasks (IDIQ tasks) to Honeywell for 

continuous operations and monitoring of the space communications network and 

providing and supporting engineering operations. When NASA awarded the contract, its 

estimated value for the core effort was $185.2 million, with a maximum value of 

$600 million for the IDIQ tasks. That value subsequently increased to $306.4 million for 

the core effort and $824 million for IDIQ tasks, primarily as a result of multiple bid 

protests by Honeywell following award of the follow-on contract to ITT Corporation on 

October 10, 2008, which resulted in a two-year extension of Honeywell’s contract. 

Honeywell submitted four separate protests to the Government Accountability Office 

(GAO) and one to NASA, and ITT Corporation submitted one protest to NASA. (See 

Appendix B for specific details about the protests.) The current period of performance 

extends the contract until October 8, 2010, and includes an option for an additional 

6-month period (through April 8, 2011) if necessary, pending the outcome of 

Honeywell’s protest.

In examining the 2003 contract, we found that management and contracting personnel

followed contracting procedures for awarding and administering the Honeywell contract

and for monitoring Honeywell’s performance, in accordance with the Federal Acquisition 

Regulation (FAR) and the NASA FAR Supplement guidelines.

The TDRSS Performance Evaluation Board13

 13 For an award-fee contract, the Performance Evaluation Board, consisting of a minimum of five voting 

members that includes the Board chairman, evaluates contractor performance and determines the amount 

of award fee the contractor will earn. The five members include one technical representative from 

another technical organization, one senior procurement official, and two other voting members.

evaluates potential award fees every

6 months as defined in the award fee plan. We found that disbursements of award fees

were made in accordance with contract terms and conditions.
RESULTS

REPORT NO. IG-10-023 9

Since the contract’s inception, the contractor has received award fee ratings in the “very 

good”14

range, with the exception of a “good” rating for the October 9, 2003, to April 8, 

2004 period, and a “satisfactory” rating for the October 9, 2008, to July 8, 2009, period. 

According to NASA, factors that affected the satisfactory rating15

Management of Contract with Boeing Was Appropriate

included Honeywell’s 

inability to retain critical skills and poor corporate decisions leading to unprecedented 

losses of highly experienced personnel. Additionally, performance on crucial tasks was 

unacceptable and Honeywell’s difficulty in completing required deliverables resulted in 

schedule delays, cost increases, and an inability to meet external customer needs. 

Honeywell established a recovery plan and made significant progress in addressing 

NASA’s concerns. Through June 2010, NASA made 12 award fee ratings to Honeywell

representing approximately 85 percent of the available fee pool for these periods 

($14,066,260 of the potential $16,467,816).

In December 2007, NASA awarded a fixed-price-incentive-fee contract to Boeing for the 

development and delivery of TDRS K and L. The target price16 of the base contract, 

which includes the development and delivery of TDRS K and L and modifications to the 

White Sands ground station, is $696.6 million with a ceiling price17

This type of contract is used when supplies or services can be acquired at lower costs and, 

in certain instances, with improved delivery or technical performance by coupling the 

amount of profit to the contractor’s performance. Furthermore, because TDRS K and L 

are not significantly different from previous satellites, NASA officials said Boeing’s 

performance in developing and delivering TDRS H, I, and J made it advantageous to use 

a contract vehicle under which Boeing assumed responsibility for costs and an 

appropriate share of the risk.

of $772.4 million. 

The planned launch dates for TDRS K and L are 2012 and 2013, respectively; however,

the contract includes a schedule incentive of up to $10 million if TDRS K is launched 

prior to December 2012. The contract also includes options for two additional spacecraft,

TDRS M and N. If all options are exercised, the potential contract value is $1.2 billion

with an 18-year period of performance.

Prior to beginning our audit, the OIG received an allegation that Boeing had submitted a

low bid in order to win the contract and thereafter submitted waiver requests for technical 

requirements that increased NASA’s cost. To evaluate the merits of this allegation, we 

 14 NASA uses adjectival ratings – excellent, very good, good, satisfactory, poor/unsatisfactory – to rate 

performance under award-fee contracts.

15 We did not independently evaluate NASA’s rationale for making this determination.

16 A fixed-price incentive contract includes a target price comprising a target cost, a target profit, a price 

ceiling, and a profit adjustment formula, which NASA and the contractor negotiate and establish prior to 

contract award. The target price represents the contract value at award.

17 The price ceiling is the maximum that may be paid to the contractor, except for any adjustment under 

other contract clauses.
RESULTS

10 REPORT NO. IG-10-023

reviewed the original competition method and examined source selection information and 

subsequent contract modifications.

We found that NASA awarded Boeing the contract following a full and open competition 

in which two proposals were received. NASA evaluated both proposals in accordance 

with source selection procedures described in FAR Part 15 and the NASA FAR 

Supplement Part 1815. Boeing’s proposal received a higher point score because of its 

technical approach, and had a lower overall cost to the Government following a costrealism analysis.18

We examined whether Boeing’s proposal addressed all contract requirements and 

whether NASA granted change orders for requirements outside the original proposal. 

Boeing submitted 21 waiver requests to the Project Office following contract award (6

were later withdrawn by Boeing). According to Project officials, Boeing submitted these 

waivers following an integrated baseline review during which Project officials discovered 

that Boeing had failed to include several items such as component random vibration 

testing for bus units and a spacecraft modal test in its baseline schedule. Project 

management evaluated each request and its supporting documentation to determine 

whether it should grant the waiver. Of the 15 waivers evaluated, NASA approved 13 and 

rejected 2.

 In addition, Boeing’s proposal took no exceptions to the contract 

terms and conditions or technical requirements.

The approved waivers did not alleviate Boeing from performing any of the technical 

requirements and did not affect the price of the contract. For example,

• On February 23, 2009, Boeing submitted a waiver request related to the number of 

fasteners to be tested, use of current in-stock fasteners, and fasteners on existing 

and new ground support equipment. The Project’s mechanical and structural

engineer reviewed the request and determined that approving the waiver would

not increase technical risk. However, NASA reserved the right to audit the 

fastener inventory and require additional testing. In addition, Boeing revamped its

overall system for procurement of the fasteners to ensure there would be no 

additional risks because of waiver approvals.

• On June 8, 2009, Boeing submitted a waiver requesting a deviation from the 

military standard definition of “Maximum Expected Operating Pressure.”19

 18 Cost-realism analysis is the process of independently reviewing and evaluating specific elements of each 

offeror's proposed cost estimate to determine whether the estimated proposed cost elements are realistic 

for the work to be performed; reflect a clear understanding of the requirements; and are consistent with 

the unique methods of performance and materials described in the offeror's technical proposal.

 The 

Project’s propulsion subsystem engineer and contracting officer granted the 

waiver after determining that Boeing had demonstrated that the workmanship of 

the manifold and component fabrications were proof-pressure tested above the 

19 Maximum Expected Operating Pressure refers to the wall strength of a pressurized cylinder, such as a 

pipeline or storage tank, and how much pressure the walls could safely hold before rupturing.
RESULTS

REPORT NO. IG-10-023 11

worst-case surge pressure and that waiving the requirement would eliminate the 

risk of a schedule delay.

In June 2010, NASA increased the contract value to $716.8 million after directing Boeing 

to procure and test ground spare parts and provide dual central processing unit redundant 

cross-strapping capability for the spacecraft emulators20

Accordingly, we found no evidence to support the allegation that Boeing “low bid” the 

contract in order to win the award and subsequently increased the cost through contract 

modifications.

to accommodate contingency 

operations tests. NASA initiated the contract modification to incorporate the ground 

spares to avoid future difficulties associated with purchasing spares with the same 

configuration as the production units, take advantage of efficiencies of a bulk buy 

purchase, realize efficiencies of testing units/items and spares at the same time, and 

minimize disruption to White Sands operations. A review board that assessed risk 

mitigation measures following a spacecraft emulator anomaly aboard the TDRS-9 

spacecraft recommended the modification for the spacecraft emulators. Thus, contract 

modifications were not the result of Boeing attempting to increase contract costs but 

rather NASA’s decision to incorporate these changes.

The contract includes an incentive fee tied to Boeing’s performance, completion of 

project milestones, and cost performance as evidenced in monthly and quarterly financial 

management reports. Using the information in these reports, NASA will determine the 

final amount of incentive fee earned by the contractor in accordance with the profit 

adjustment formula.

21

NASA has contracted with Aerospace Corporation, a federally funded research and 

development center, to ensure the accuracy of the monthly and quarterly status reports. 

Aerospace Corporation employs technical personnel to oversee implementation of the 

contract requirements on-site at Boeing and provide NASA daily reports concerning 

project status. The NASA and Boeing teams conduct weekly schedule assessments to 

ensure Project management understands the impact of schedule variances to the Project. 

Additionally, the lead Goddard Project scheduler travels to the Boeing facility to 

participate in all relevant schedule working groups and meetings.

 As of June 1, 2010, Boeing had received $28 million of the 

$78.7 million target fee paid upon successful completion of performance milestones as 

outlined in the contract.

 20 The purpose of spacecraft emulators are to test flight software and provide operations training and 

procedure checkout.

21 The profit adjustment formula is used to calculate the final profit earned by the contractor: when the final 

cost is less than the target cost, the final profit is greater than the target profit; conversely, when final cost 

is more than the target cost, the final profit is less than the target profit and could result in a net loss.
RESULTS

12 REPORT NO. IG-10-023

NASA NEEDS TO REVIEW ITS 

CURRENT REIMBURSABLE 

RATES TO ENSURE THEY ARE 

APPROPRIATE AND 

REASONABLE

NASA has not recalculated the TDRSS reimbursable rates since 2006. As a result,

current NASA Program officials do not know whether the factors used to formulate 

the 2006 rates are still valid and, consequently, do not know whether the rates NASA 

is charging its customers are appropriate or reasonable. In addition, NASA has failed 

to update the Code of Federal Regulations to reflect current rates and other current 

policy and practice.

NASA Does Not Know Whether the Rates It is Charging 

Customers are Reasonable

TDRSS represents an investment by the U.S. Government of more than $5 billion since 

inception. According to 14 C.F.R. Subpart 1215.1, “Tracking and Data Relay Satellite 

System Use and Reimbursement Policy for Non-U.S. Government Users,” NASA’s 

objective is to operate TDRSS as efficiently as possible to the mutual benefit of all users. 

NASA structured its reimbursement policy “to purposely influence users to operate with 

TDRSS in the most efficient and orderly manner possible.” For example, to prevent 

excessive use by any one user, the policy provides that users will be charged by the 

minute. In addition, according to the C.F.R., “a reasonable charge” should be made to 

TDRSS users. Accordingly, NASA has established user rates for various TDRSS 

services.

NASA Has Not Revised Rates. NASA has not revised TDRSS service rates since 2006. 

Moreover, the rates published in the current C.F.R. date to 1997. According to Program 

management personnel, they have not revised the rates since 2006 because they assumed 

another office was responsible for this task and because they did not possess the 

knowledge necessary to do so. In addition, NASA Program officials said they do not 

know what factors were used to formulate the 2006 rates. Accordingly, they do not 

know, and we were not able to determine, whether the rates NASA was charging reflected 

operating costs. The C.F.R. rates and the reimbursable service rates charged by NASA in 

2009 are provided in Table 2.
RESULTS

REPORT NO. IG-10-023 13

Table 2. Commercial and Noncommercial Rates as Published in 14 CFR Part 1215 

Compared with Rates Charged by NASA in 2009

 Commercial Rate Noncommercial Rate 

 Service Category 

Published in 

 C.F.R. 

Charged by 

NASA in 2009

Published in 

 C.F.R. 

Charged by 

NASA in 2009

Single Access $180 $119 $184 $131

Multiple Access Forward $39 $29 $42 $29

Multiple Access Return $13 $14 $13 $14

Sources: C.F.R. Part 1215 Appendix A provides the C.F.R. rates, and the Space Operations Mission 

Directorate provided the rates charged by NASA in 2009.

In October 2009, NASA directed a contractor staff member who had previously worked 

with the reimbursable formulas as a NASA employee to determine how the reimbursable 

rates were calculated in order to develop new rates with factors that reflect the current 

operating environment. Although the contractor employee was able to locate a logic 

document relating to the 2006 formula, the document did not reflect the cost factors 

considered or the actual formula. NASA told us it plans to develop a new formula that it

will apply for FY 2011 rates.

Since NASA has not updated the rate in more than 4 years, there is no assurance that the 

charges are appropriate or reasonable, as required by C.F.R. §§ 1215.100, which states 

that

this reimbursement policy has been established to purposely influence users to operate 

with TDRSS in the most efficient and orderly manner possible. Additionally, the 

reimbursement policy is designed to comply with the [Office of Management and Budget] 

Circular A-25 on User Charges, dated September 23, 1959, which requires that a 

reasonable charge [emphasis added] should be made to each identifiable recipient for a 

measurable unit or amount of Government service or property from which a special 

benefit is derived.

NASA Lost Institutional Knowledge During Multiple Reorganizations. During the 

1980s and most of the 1990s, TDRSS operated as its own directorate from NASA 

Headquarters. In 1996, NASA transferred management responsibility for TDRSS to the 

Space Operations Management Office at the Johnson Space Center (Johnson). In 2001, 

NASA dissolved the Space Operations Management Office, and responsibility for 

TDRSS was transferred to the Office of Space Flight (later renamed the Space Operations 

Mission Directorate) at NASA Headquarters. Within the Space Operations Mission 

Directorate, responsibility for TDRSS falls under the Space Communications and 

Navigation (SCaN) Office. However, no personnel from offices with prior management 

responsibilities for TDRSS were working in the Program during our audit. Consequently, 

Program personnel did not possess the knowledge required to update the reimbursable 

rates and were unaware of the existence of the C.F.R. policy.
RESULTS

14 REPORT NO. IG-10-023

C.F.R. Provisions Do Not Accurately Reflect Current Procedures 

The regulations in the C.F.R. pertaining to TDRSS were originally published in 1983 and, 

apart from minor revisions in 1991 and the revision to the rates in 1997, have not been 

updated. Thus, the provision is outdated and does not reflect current TDRSS operating 

procedures. For example, although the C.F.R. provides that payments be collected six 

months in advance of the service period, NASA does not require customers to remit funds 

that far in advance. Because the C.F.R. is “the codification of the general and permanent 

rules published in the Federal Register by the executive departments and agencies of the 

Federal Government,” NASA should update the document to reflect current procedures. 

SCaN Office personnel said they plan to update Part 1215 to make it consistent with 

current TDRSS operating procedures.

With regard to collecting reimbursable payments, we found that NASA was collecting 

payments in advance, as required by C.F.R. §§ 1215.115, but not the required 6 months in 

advance. The C.F.R. divides the calendar year into two service periods – January through 

June and July through December – and states that the estimated cost of service for

January through June is due the previous July 1 and will be billed 60 days prior to the 

payment due date. In other words, the customer must pay NASA 6 months in advance of 

the service period. NASA is not following the criterion requiring the 6-month advance 

payments because, according to Project management personnel, customers do not want to 

commit funds so far in advance of actual needs.

In addition, C.F.R. §§ 1215.101 states that memorandums of agreement concerning 

TDRSS use with its customers must be signed by the Associate Administrator for Space 

Operations. However, the position of the Associate Administrator for Space Operations 

has not existed since 1996, and at the time of our audit the Deputy Associate 

Administrator for the Space Operations Mission Directorate signs the memorandums of 

agreement. Nevertheless, we found that Goddard personnel signed the memorandums of

agreement for TDRSS nonclassified customers.22

SCaN Office personnel said they plan to update C.F.R. Part 1215 to make it consistent 

with current TDRSS operating procedures.

 In addition, C.F.R. §§ 1215.113 states 

that slew time (that is, the time it takes to reposition a satellite for the next project) will 

be charged to the customer. However, Goddard’s support contractor (Honeywell) 

personnel did not charge nonclassified customers for slew time (although they did charge 

classified users) because the satellite scheduling system does not automatically account 

for it and they determined that the time of up to 2 minutes was negligible. Additionally, 

the Chief, Networks Integration Management Office, stated that they simply forgot to 

account for slew time, but will begin to account for it as required by the C.F.R.

 22 Nonclassified customers include both commercial and noncommercial customers.
RESULTS

REPORT NO. IG-10-023 15

Recommendations, Management’s Response, and Evaluation of 

Management’s Response

Recommendation 1. We recommended that the Associate Administrator for the Space 

Operations Mission Directorate direct the SCaN Deputy Associate Administrator to annually 

update TDRSS reimbursable rates so that they reflect current operating costs.

Management’s Response. The Associate Administrator for the Space Operations 

Mission Directorate concurred, stating that the SCaN Program is updating the algorithm 

used to calculate reimbursable rates to ensure it produces reasonable rates, and that the 

required timing for updating the rates is appropriate. In addition, beginning with 

FY 2012, the SCaN Program will notify customers of rate changes on an annual basis. 

Management expects to complete its review of the algorithm by December 1, 2010.

Although NASA’s formal response did not provide a specific completion date 

(Fall 2010), the SCaN Office’s Director for Network Services stated in a subsequent 

e-mail that these actions would be completed by December 1, 2010.

Evaluation of Management’s Response. Management’s planned action is responsive. 

The recommendation is resolved and will be closed after we verify completion of the 

corrective action.

Recommendation 2. We recommended that the Associate Administrator for the 

Space Operations Mission Directorate direct the SCaN Deputy Associate 

Administrator to revise 14 C.F.R. Part 1215, “Tracking and Data Relay Satellite 

System (TDRSS),” to reflect current operating procedures and rates.

Management’s Response. The Associate Administrator for the Space Operations 

Mission Directorate concurred, stating that the SCaN Program is reviewing the Code of 

Federal Regulations to determine if the regulation is still needed and, if so, will take steps 

to ensure it reflects the current TDRSS operating procedures and rates. Management 

expects to complete the proposed action by December 1, 2010. Although NASA’s formal 

response did not provide a specific completion date (Fall 2010), the SCaN Office’s

Director for Network Services stated in a subsequent e-mail that these actions would be 

completed by December 1, 2010.

Evaluation of Management’s Response. Management’s planned action is responsive. 

The recommendation is resolved and will be closed after we verify completion of the 

corrective action.
RESULTS

16 REPORT NO. IG-10-023

LACK OF INTERNAL CONTROLS LED 

TO COLLECTION ISSUES AND 

LOSS OF REVENUE

The lack of internal controls in Goddard’s Networks Integration Management Office

led to a loss of revenue for NASA: financial responsibilities were neglected; and 

reimbursements were not tracked, billed, or received during an employee’s extended 

absence. This occurred because the Networks Integration Management Office did 

not have a contingency plan for continuity of operations or a standardized method of 

calculating reimbursements for classified and nonclassified projects. As a result,

NASA did not receive reimbursements from nonclassified customers in a timely 

manner and did not recoup all payments owed for provision of TDRSS services.

Reimbursables Were Not Handled Consistently

The Networks Integration Management Office at Goddard provides mission services to 

spacecraft and science customers. The Office provides spacecraft tracking and data 

acquisition options, assistance with mission-unique communications requirements, and 

assistance in requirements definition. The Office is also responsible for collecting

TDRSS user fees from nonclassified users. Goddard’s Space Network Project is 

responsible for collecting user fees from classified users.

Accounts for classified and nonclassified TDRSS customers are handled by two different 

financial managers who maintain separate customer records and have different operating 

procedures. The financial manager for nonclassified accounts bills customers a 

percentage to cover costs for Center Management and Operations (CM&O)23

As discussed above, the reimbursable rates have not been recalculated for several years

and NASA does not know what factors were included in the formula used to calculate 

those rates, we were unable to determine whether either of the financial managers was 

correctly charging customers. The former NASA employee hired to recalculate the usage 

rates stated that all maintenance and operations costs associated with TDRSS are included

in the per-minute rate, and costs for award fees and CM&O are part of those rates. 

However, he could not provide documentation to substantiate that statement. In any 

based on 

the estimated cost of the launch. After the launch is completed and the number of 

minutes used is determined, this financial manager adds a percentage for award fees to 

the cost of the minutes used. However, the financial manager for classified accounts said 

she considers CM&O costs and award fees to be included in the per-minute charge and 

therefore does not add this amount to her customers’ charges.

 23 The Center Management and Operations budget consolidates the overhead costs from the nine NASA 

field centers, not including the Jet Propulsion Laboratory. CM&O was previously known as General and 

Administrative costs.
RESULTS

REPORT NO. IG-10-023 17

event, until this issue is resolved NASA may be overcharging some customers and 

undercharging others.

Lack of a Contingency Plan and Inaccurate Advice Led to 

Loss of Revenue

Required duties were not performed during a 6-month period, from March 28, 2008,

through September 14, 2008, when the nonclassified reimbursables resource analyst went 

on extended leave and no one was brought in to replace her. Specifically, funds were not 

obligated to TDRSS reimbursable projects for minutes used and, in some cases,

government customers were not billed in a timely manner and therefore the funds that 

would have been used to pay for particular service periods were no longer available from 

a budgetary perspective. For example, approximately $31,500 had to be returned to the 

Missile Defense Agency because NASA did not bill the Agency before the available 

funds for that service period expired.

During the 6-month vacancy, NASA did not bill a customer who owed $585,000 for 

services rendered. Later, the customer claimed insolvency prior to NASA receiving 

payment. The customer launched its rocket in January 2008. However, NASA did not 

bill the customer until June 9, 2009. The company filed for bankruptcy on June 22, 2009

and NASA ended up recovering only $200,000 from the company.

The current financial manager returned nonexpiring funds, or no-year-authority funds, to 

six customers because of miscommunication with the Regional Finance Office. The 

financial manager was told by Regional Finance Office staff that the funds at issue 

expired after 2 years. However, when we requested documentation that the funds had 

expired, we received information showing they had not. Therefore, we concluded that 

approximately $27,200 in nonexpiring funds had been inappropriately returned to 

customers. Upon further review, documentation maintained by the Regional Finance 

Office showed that the period of performance for the six customers had expired and on 

that basis the funds were rightfully returned to the customers. However, according to the 

financial manager, the information about the period of performance expiring had not been 

communicated to her; if it had been, she could have been taken steps to extend the period 

of performance and avoid returning the customers’ funds.

The Network Integration Management Office informed us that they do not plan to pursue 

collection of the approximately $58,700 in returned funds (the $31,500 to the Missile 

Defense Agency plus $27,200) because the charges were not billed in a timely manner

and because of the costs involved in collecting the payments.
RESULTS

18 REPORT NO. IG-10-023

Recommendations, Management’s Response, and Evaluation of 

Management’s Response

Recommendation 3. We recommended that the Chief, Networks Integration Management 

Office, establish and document internal control procedures to ensure a continuity of 

operations and timely billing of TDRSS service fees.

Management’s Response. The Associate Administrator for Space Operations concurred,

stating that the Networks Integration Management Office has hired additional staff, is 

updating and examining each reimbursable account monthly during a Business Status 

Review, and will document the step-by-step process for handling the reimbursable 

accounts so that written guidance will be available to employees. Management expects to 

complete the proposed action by November 15, 2010.

Evaluation of Management’s Response. Management’s planned action is responsive. 

The recommendation is resolved and will be closed after we verify completion of the 

corrective action.

Recommendation 4. We recommended that the Chief, Networks Integration Management 

Office, establish a standardized method of calculating reimbursements for classified and 

nonclassified projects.

Management’s Response. The Associate Administrator for Space Operations concurred,

stating that a common process is being developed and will be employed within the 

Goddard Exploration and Space Communications Projects Division for both classified 

and nonclassified projects. Management expects to complete the proposed action by 

October 25, 2010.

Evaluation of Management’s Response. Management’s planned action is responsive. 

The recommendation is resolved and will be closed after we verify completion of the 

corrective action.
APPENDIXES

REPORT NO. IG-10-023 19

APPENDIX A

Scope and Methodology

We performed this audit from July 2009 through August 2010 in accordance with 

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

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

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

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

our audit objectives.

We reviewed planning, financial, and scheduling documents and conducted interviews 

with Project officials to determine that the TDRS K and L Project Plan was effectively

executed and that the Project is on schedule and meets technical requirements. We 

reviewed the TDRS K Program Commitment Agreement, which provides the TDRS K 

and L launch delivery dates. We found that the dates were in agreement with the 

contractual launch dates provided in the Boeing TDRS K contract, dated December 28, 

2007. Additionally, we reviewed monthly and quarterly status reports from the TDRS K 

Project Office and Boeing and found they were in agreement with the Program 

Commitment Agreement.

We also reviewed the preliminary design review and compared it to the TDRS K Project 

documents, NASA Procedural Requirements, and standard business practices to 

determine that the TDRS K Project implemented effective risk and earned value 

management. In addition, we reviewed Boeing Satellite Systems and Honeywell 

Solutions Technology Inc. contracts and requirements for compliance with U.S. laws, 

regulations, and NASA Procedural Requirements and regulations to determine that there 

was effective administration of the TDRS K design and development and support service 

contracts. We compared the results to the most current weekly, monthly, and quarterly 

status reports for internal controls.

During our review, we concluded that 14 C.F.R. Part 1215 did not reflect current 

operating procedures for determining how reimbursables are charged, billed, or received. 

We also reviewed lists of nonclassified reimbursable customers and reimbursable rates 

charged for minutes used for the period January 1, 2008, through August 7, 2009. For 

classified missions, we reviewed the same documents for fiscal years 2008 and 2009. For 

internal controls related to the continuity of operations, we reviewed cost estimates, 

invoices, and financial reports from the Networks Integration Management Office.

Finally, to determine whether all nonmanagerial Project staff were able to report 

identified risks, we interviewed nonmanagerial Project staff. As of June 2009, the TDRS 

Project Office comprised 72 positions: 18 managers, 2 support staff, and 

52 nonmanagerial staff. Of the 52 nonmanagerial staff, we interviewed 38, 3 positions 
APPENDIX A

20 REPORT NO. IG-10-023

were vacant, 6 of the staff were no longer with the Project, and the remaining 5 members 

were unavailable during the interview process.

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

reimbursable mission universe. We found discrepancies in the computer-processed data 

concerning the consistency of the data provided. We brought the discrepancies to the 

Networks Integration Management Office’s attention and worked closely with Agency 

officials to determine the process by which the Networks Integration Management Office 

records, tracks, and updates launch missions to the extent the launch missions records are 

complete and accurate. The results showed that databases key to our review were not 

consistent and the data was incomplete. Therefore, we determined the data was not 

sufficiently reliable. However, by comparing the data received, we were able to identify a 

usable universe.

Review of Internal Controls

We reviewed NASA policies, procedures, and internal controls governing the award and 

administration of the Boeing and Honeywell contracts for compliance with Federal and 

NASA acquisition regulations. We obtained and reviewed the Procurement Management 

Survey Report dated March 23 to April 3, 2009, performed by the Headquarters

Procurement Office. We found that the NASA Headquarters Office of Procurement 

reviewed the TDRS K Project using NASA Policy Directive (NPD) 5000.2A, “Uniform 

Methodology for Determination of Small Business Subcontracting Goals,” dated June 14, 

2000. We reviewed NASA policies, procedures, and internal controls related to the 

TDRSS contracts and no issues were found. However, we found that the Code of Federal 

Regulations related to the management of TDRSS operations does not reflect current 

operating procedures and that there is no continuity of operations plan in effect for 

collection of TDRSS reimbursables.

Prior Coverage

During the last 5 years, neither NASA nor the Government Accountability Office (GAO)

has issued a report of particular relevance to the subject of this report. However, we 

found NASA issued two older reports, 1996 and 1997, concerning the recording and 

usage of revenues generated by the C-band agreement.24

 24 In 1990, NASA entered into the C-band agreement with Columbia Communications Corporation

(Columbia) for Columbia to use excess C-band capacity from TDRS-4 and TDRS-5. Columbia, in turn, 

leased the excess C-band capacity to commercial customers for international telecommunications 

purposes.

 In addition, GAO issued four

older reports. A report issued in 1991 concerned scheduling the usage of TDRSS. 

Another report issued in 1990 assessed ground stations and terminal use. A third report 

issued in 1989 involved the closing of ground stations, stating NASA had not performed 

a risk assessment of closing certain ground stations. The fourth report, issued in 1980,
APPENDIX A

REPORT NO. IG-10-023 21

concerned displacement of TDRSS workers due to ground station closures. Access 

unrestricted reports over the Internet at http://oig.nasa.gov/audits/reports/FY10 (NASA)

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

National Aeronautics and Space Administration

“Commercial Use of NASA’s Tracking and Data Relay Satellite System (TDRSS)” 

(IG-97-026, June 24 1997)

“Final Rapid Action Report Recording of Revenues Generated by the Commercial Use of 

NASA’s Tracking and Data Relay Satellite System (TDRSS)” (IG-97-010, December 17, 

1996)

Government Accountability Office

“Space Communications: Better Understanding of Scheduling System Limitations 

Needed” (GAO/IMTEC-91-48, September 17, 1991)

“Space Communications: Performance of NASA’s White Sands Ground Terminal” 

(GAO/IMTEC-90-56, May 29, 1990)

“Space Operations: NASA’s Communications Support for Earth Orbiting Spacecraft” 

(GAO/IMTEC-89-41, April 7, 1989)

“Staffing Implications of Tracking and Data Relay Satellite System and Remote Sensing 

Activities” (PSAD-80-47, May 28, 1980)
APPENDIX B

22 REPORT NO. IG-10-023

PROTESTS OF SUPPORT SERVICE 

CONTRACT AWARD

Honeywell Technologies Solutions, Inc. holds the current contract for the continuous

operations and monitoring of NASA’s space communications network. Following a 

competitive procurement, NASA selected ITT Corporation (ITT) to continue the 

operations and monitoring services.

Following contract award to ITT on October 10, 2008, five protests were submitted 

concerning NASA’s evaluation of the bidders’ past performance information. Honeywell 

submitted three separate protests to GAO and one to NASA, and ITT submitted one 

protest to NASA.

On October 20, 2008, Honeywell submitted the first protest to GAO claiming NASA’s 

evaluation of the proposals and subsequent source selection decision was improper. On 

January 27, 2009, GAO ordered that NASA reevaluate ITT’s past performance. After 

reevaluation, NASA awarded the contract to ITT on April 7, 2009.

Following this award, Honeywell filed a second protest with GAO on April 24, 2009,

claiming NASA irrationally evaluated the past performance of ITT and its proposed team 

members, and as a result, NASA’s best value decision was unsupportable. GAO held a 

hearing on June 25, 2009, to determine whether NASA’s reevaluation of ITT’s past 

performance was proper. On June 30, 2009, NASA notified GAO of its intent to take 

corrective action in response to the second protest by reevaluating updated past 

performance information obtained from each bidder, Internet resources, and direct contact 

with references. After the corrective action was completed, NASA again selected ITT for 

the Space Communications Network Services contract.

On July 13 and 20, 2009 respectively, Honeywell and ITT submitted Agency-level 

protests regarding NASA’s planned corrective action. On August 11, 2009, the NASA 

contracting officer denied Honeywell’s protest. The ITT protest was also denied on 

August 11, 2009 as untimely.

On August 21, 2009, Honeywell submitted its third protest to GAO claiming NASA’s 

corrective action was improper because it was limited to the issue of past performance. 

GAO denied this protest on November 23, 2009, stating the agency decision to limit 

corrective action to the area of past performance is unobjectionable where it is sufficient 

to remedy the procurement impropriety at issue.

On July 14, 2010, the U.S. House of Representative’s Committee on Science and 

Technology notified the NASA Administrator about their concerns that the Space 

Communications Network Services competition managed by Goddard Space Flight 

Center’s Procurement Office was not conducted in a fair and open manner. In addition,

they questioned the integrity of NASA’s contract management and contracting processes
APPENDIX B

REPORT NO. IG-10-023 23

as well as the conduct of Agency and Goddard legal offices. On July 20, 2010, 

Honeywell submitted their fourth protest to GAO on NASA’s third selection of ITT as 

the successful offeror.

NASA hopes to award the contract prior to the early October 2010 expiration of the 

current contract.
APPENDIX C

24 REPORT NO. IG-10-023

MANAGEMENT COMMENTS
APPENDIX C

REPORT NO. IG-10-023 25
APPENDIX D

26 REPORT NO. IG-10-023

REPORT DISTRIBUTION

National Aeronautics and Space Administration

Administrator

Deputy Administrator

Chief of Staff

Associate Administrator, Space Operations Mission Directorate

Director, Goddard Space Flight Center

Assistant Administrator for Procurement

Project Manager, TDRS

Project Manager, Space Network Project

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

House Committee on Appropriations

Subcommittee on Commerce, Justice, Science, and Related Agencies

House Committee on Oversight and Government Reform

Subcommittee on Government Management, Organization, and Procurement

House Committee on Science and Technology

Subcommittee on Investigations and Oversight

Subcommittee on Space and Aeronautics
REPORT NO. IG-10-023 27

Major Contributors to the Report:

Raymond Tolomeo, Director, Science and Aeronautics Research Directorate

Diane Choma, Project Manager

Bill Falter, Auditor, Team Leader

Theresa Becker, Procurement Analyst

Gina Davenport-Brazeau, Auditor

Cindy Stein, Aerospace Technologist
SEPTEMBER 21, 2010

OFFICE OF AUDITS

OFFICE OF INSPECTOR GENERAL

ADDITIONAL COPIES

Visit http://oig.nasa.gov/audits/reports/FY10/ 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.