NATIONAL OCEANIC 

AND ATMOSPHERIC 

ADMINISTRATION 

Audit of Geostationary 

Operational Environmental 

Satellite–R Series: 

Comprehensive Mitigation 

Approaches, Strong 

Systems Engineering, 

and Cost Controls Are 

Needed to Reduce Risks 

of Coverage Gaps 

FINAL REPORT NO. OIG-13-024-A 

APRIL 25, 2013 

U.S. Department of Commerce 

Office of Inspector General 

Office of Audit and Evaluation 

FOR PUBLIC RELEASE 
UNITED STATES DEPARTMENT OF COMMERCE 

Office of Inspector General 

Washington, D.C. 20230 

April 25, 20 13 

MEMORANDUM FOR: 	 Dr. Kathryn D. Sullivan 

Acting Under Secretary of Commerce for Oceans 

FROM: 

Assistant 

:~::~::~:r and IT Security 

Inspector General for Systems 

c

Acquisition 

~ 

SUBJECT: 	 Audit ofGeostationary Operational Environmental Sate/lite-R Series: 

Comprehensive Mitigation Approaches, Strong Systems Engineering, 

and Cost Controls Are Needed to Reduce Risks ofCoverage Gaps 

Final Report No. OIG-13-024-A 

Attached is our final audit report on the Geostationary Operational Environmental Satellite-R 

Series (GOES-R) acquisition and development effort. Our audit objectives were to assess (I) 

the adequacy of contract management and administration and (2) the effectiveness of 

management's direction, monitoring, and collaboration for development of select components 

of the GOES-R program. 

We found that: 

• 	 NOAA needs to develop a comprehensive plan to mitigate the risk of potential launch 

delays and communicate to users and other stakeholders changes that may be necessary 

to maintain the first GOES-R satellite's launch readiness date. 

• 	 Program systems engineering has been strengthened; however, early in system 

development, it contributed to ground system schedule compression and increased 

costs. To ensure continued strength, NOAA must report on the adequacy of program 

systems engineering (including National Aeronautics and Space Administration support) 

for the integration and test phase of the program. 

• 	 NOAA needs to ensure NASA's evaluation of contractors' proposals and subsequent 

plans is effective in assessing technical readiness to reduce delays and cost increases. 

• 	 The award fee structures for some NASA contracts did not incentivize contractors to 

perform at exemplary levels; in one case, a contractor received award fees that were 

not commensurate with its performance. 

• 	 NOAA lost the opportunity to negotiate on a significant amount of costs for ground 

system contract changes because it did not finalize these changes in a timely manner. 
  

In responding to the draft report, NOAA concurred with five of our seven recommendations. 

NOAA did not concur with two of the seven recommendations, or with our assessment that 

these particular recommendations would improve the effectiveness of contractor incentives for 

controlling cost overruns and improving performance. However, we affirm our position and 

stand behind all of our findings and recommendations. Where necessary, we modified the final 

report to address relevant comments. We have summarized NOAA’s response and included its 

entire formal response as appendix E. The final report will be posted on OIG’s website 

pursuant to section 8L of the Inspector General Act of 1978, as amended. 

In accordance with Department Administrative Order 213-5, please provide us your action plan 

within 60 days of this memorandum. The plan should outline the actions you propose to take 

to address each audit recommendation. 

Please direct any inquiries regarding this report to me at (202) 482-1855, or Fred Meny, 

Director, Satellites and Weather Systems, at (202) 482-1931. 

Attachment 

cc:	 David Kennedy, Deputy Under Secretary for Operations, NOAA 

Mary E. Kicza, Assistant Administrator for Satellite and Information Services, NOAA 

Geovette E. Washington, Deputy General Counsel 

Mack Cato, Director, Office of Audit and Information Management, NOAA 
 

Report In Brief 

APRIL 25, 2013 

NATIONAL OCEANIC AND ATMOSHERIC ADMINISTRATION 

Audit of Geostationary Operational Environmental Satellite–R Series: 

Comprehensive Mitigation Approaches, Strong Systems Engineering, 

and Cost Controls Are Needed to Reduce Risks of Coverage Gaps 

OIG-13-024-A 

WHAT WE FOUND 

We found that: 

NOAA needs to develop a comprehensive plan to mitigate the risk of potential launch delays and 

communicate to users and other stakeholders changes that may be necessary to maintain the first 

GOES-R satellite’s launch readiness date. Schedule slips and a potential reduction in testing 

activities have raised concerns about the satellite’s readiness to launch. Cost increases and 

budget shortfalls may also delay development and launch. Further, scope reductions and 

delays are diminishing the satellite’s operational capabilities. 

Program systems engineering has been strengthened; however, early in system development, it 

contributed to ground system schedule compression and increased costs. NOAA accepted a core 

ground system development approach that was not flexible, resulting in increased costs. To 

re-plan the core ground system increases schedule risks. A lack of program systems 

engineering leadership further prolonged the coordination problem. 

NOAA needs to ensure NASA’s evaluation of contractors’ proposals and subsequent plans is 

effective in assessing technical readiness to reduce delays and cost increases. Contract award 

prices were significantly less than program estimates. The technical evaluation of an 

important contractor-designed instrument was inadequate. And award fees did not 

effectively incentivize exemplary performance or sufficient cost control. 

NOAA lost the opportunity to negotiate on significant costs for ground system contract changes 

because it did not finalize these changes in a timely manner. The lack of undefinitized contract 

action (UCA) time limit and cost incurred tracking policy—as well as the UCAs’ large 

scope—led to definitization delays. Further, the high UCA cost limits create disincentive for 

timely definitization. 

WHAT WE RECOMMEND 

We recommend that the NOAA Deputy Under Secretary for Operations: 

1. Develop a comprehensive set of tradeoff approaches to mitigate launch delays and 

communicate approaches to stakeholders and users. 

2. Keep stakeholders and users informed of tradeoffs made to meet the launch date. 

3. Direct NESDIS to report periodically on the adequacy of program systems engineering 

integration and NASA systems engineering support. 

We also recommend that the NOAA Assistant Administrator for Satellite and Information 

Services ensure that NASA: 

4. Effectively validates contractors’ proposals and subsequent plans, to verify that technical 

designs meet readiness requirements per NASA standards. 

5. Modifies contract award-fee structures to reduce award fee percentages and clearly
 

articulates how scores should be adjusted based on the magnitude of cost overruns. 

6. Adjusts future award fees to be more commensurate with contractor performance. 

We further recommend that the NOAA Deputy Under Secretary for Operations: 

7. Direct the development of a policy for managing undefinitized contract actions to 

definitize change orders in the shortest practicable time.
 

Background 

One of the primary functions of 

NOAA’s National Environmental 

Satellite, Data and Information 

Service (NESDIS) is to acquire and 

manage the nation's operational 

environmental satellites. One type 

of satellite NESDIS operates is the 

geostationary operational environmental satellites (GOES)—which 

orbit approximately 22,300 miles 

above Earth, producing images 

every 15 minutes. They provide 

cloud, land, and ocean temperatures; 

monitor sun activities; and assist with 

search and rescue activities. 

NOAA, in conjunction with the 

National Aeronautics and Space 

Administration (NASA), is developing the next generation of 

GOES satellites known as the 

GOES-R Series of four satellites 

(GOES-R, -S, -T and -U). The 

first satellite in the series, GOESR, is scheduled for launch in October 2015. 

Why We Did This Review 

The GOES-R program is a mission-critical acquisition and development effort with a life-cycle 

cost of $10.9 billion. The program engages multiple contractors and as it prepares for its 

integration and test phase, close 

management attention is required. The increasing risk associated with meeting key milestones 

in preparation for the first satellite’s launch readiness date of 

October 2015 necessitated our 

review. 

Our audit sought to assess (1) 

the adequacy of contract management and administration 

and (2) the effectiveness of 

management’s direction, monitoring, and collaboration for 

development of select components of the GOES-R program. 
U.S. DEPARTMENT OF COMMERCE OFFICE OF INSPECTOR GENERAL

Contents 

Introduction ........................................................................................................................................................................ 1 

Findings and Recommendations ..................................................................................................................................... 4 

I. NOAA Must Keep Stakeholders Continuously Apprised of Approaches to Mitigate the Likelihood 

of a Two-Imager Coverage Gap ............................................................................................................................. 4 

A. Schedule Slips and Potential Reduction in Testing Activities Raise Concerns About GOES-R 

Readiness to Launch ........................................................................................................................................... 6 

B. Cost Increases and Budget Shortfalls May Delay GOES-R Development and Launch ......................6 

C. Scope Reductions and Delays Are Diminishing GOES-R Operational Capabilities ...........................7 

D. A Comprehensive Set of Alternative Approaches for Mitigating a Launch Delay Has Not 

Been Developed .................................................................................................................................................. 8 

II. NOAA Needs to Ensure That Systems Engineering Remains Engaged in Coordinating the Flight 

and Ground Projects ................................................................................................................................................. 9 

A. NOAA Accepted a Core Ground System Development Approach That Was Not Flexible, 

Resulting in Increased Costs ............................................................................................................................ 9 

B. Prolonged Time to Re-plan the Core Ground System Introduced New Schedule Risks ...............10 

C. Lack of Program Systems Engineering Leadership Prolonged the Coordination Problem .............11 

III. NOAA Needs to Improve Flight Project Technical Oversight of NASA’s Contractors and Award 

Fee Measures to Limit Further Cost Overruns ................................................................................................ 11 

A. Contract Award Prices Were Significantly Less Than Program Estimates .........................................13 

B. Technical Evaluation of GLM Design Was Inadequate ............................................................................ 14 

C. Award Fees Did Not Effectively Incentivize Exemplary Performance or Sufficient 

Cost Control ..................................................................................................................................................... 14 

IV. NOAA Needs to Improve Management of Undefinitized Contract Actions (UCAs) ............................17 

A. Lack of UCA Time Limit And Cost Incurred Tracking Policy Led to Definitization Delays ..........18 

B. The Large Scope of UCAs Resulted in Delays .......................................................................................... 19 

C. High UCA Cost Limits Create Disincentive for Timely Definitization ................................................19 

Summary of Agency Response and OIG Comments .............................................................................................. 21 

Appendix A: Objectives, Scope, and Methodology ................................................................................................. 28 

Appendix B: GOES-R Suite of Instruments ............................................................................................................... 29 

Appendix C: Potential Monetary Benefits ................................................................................................................. 30 

Appendix D: Award-Fee Structure Scoring for ABI, GLM, and Spacecraft Contracts ...................................31 

Appendix E: Agency Response ..................................................................................................................................... 32 
                                                            

U.S. DEPARTMENT OF COMMERCE OFFICE OF INSPECTOR GENERAL

Introduction 

One of the primary functions of the National Oceanic and Atmospheric Administration’s 

(NOAA’s) National Environmental Satellite, Data and Information Service (NESDIS) is to 

acquire and manage the nation's operational environmental satellites. NESDIS operates two 

types of satellite systems for the United States: geostationary operational environmental 

satellites (GOES) and polar-orbiting operational environmental satellites (POES). GOES 

satellites are in geosynchronous orbit, approximately 22,300 miles above Earth, producing 

images every 15 minutes.1

 They provide cloud, land, and ocean temperatures; monitor activities 

of the sun; and relay emergency locator beacon signals to assist with search and rescue 

activities. 

NOAA simultaneously operates two primary GOES satellites, GOES-East and GOES-West. As 

part of its coverage policy, NOAA also maintains one satellite in on-orbit storage in the event 

of a failure of one of the operational satellites (see figure1). 

Figure 1. Location and Area of Coverage of the GOES Fleet 

Source: NOAA, GOES-R program documentation 

On September 23, 2012, the GOES-East satellite (GOES-13)2 was placed on standby due to 

anomalies in its instruments, causing NOAA to activate the on-orbit spare (GOES-14) to 

collect and provide data. NOAA began moving GOES-14 on October 1, 2012, toward the 

1

 The satellites orbit the equatorial plane of the Earth at speeds matching the Earth’s rotation. The satellites 

continually view the continental United States, the Pacific and Atlantic Oceans, Central and South America, and 

southern Canada. 

2

 When satellites are being developed, they are identified by letters; after they are launched, they are identified by 

numbers. For example, GOES-R will be GOES-16 once it is launched. 

FINAL REPORT NO. OIG-13-024-A 1 
                                                            

U.S. DEPARTMENT OF COMMERCE OFFICE OF INSPECTOR GENERAL

GOES-East 75 degree longitude position to maintain data collection coverage. On October 18, 

2012, movement of GOES-14 was stopped at 89.5 degrees west because GOES-13 was 

successfully restored to service. 

NOAA, in conjunction with the National Aeronautics and Space Administration (NASA), is 

developing the next generation of GOES satellites known as the GOES-R Series of four 

satellites (GOES-R, -S, -T and -U). The first satellite in the series, GOES-R, is scheduled for 

launch in October 2015. 

The overall GOES-R program is managed by NOAA with two integrated NOAA/NASA project 

offices—the Ground Project and the Flight Project—as well as integrated supporting offices 

such as Program Systems Engineering and Program Contracts. NOAA manages the acquisition 

and development efforts for the entire Ground Project—including the facilities; antenna sites; 

software and hardware for satellite command and control, as well as generating and distributing 

end-user products; and the remote backup unit for backup of mission-critical functions. NASA 

manages development and acquisition of the Flight Project, which consists of the spacecraft,3 

instruments, launch vehicle, and auxiliary communication payloads. 

The GOES-R series will deploy advanced instruments that will provide data used to generate 

more timely and accurate weather forecasts (see appendix B for instrument details). The 

primary instrument, the advanced baseline imager (ABI), is expected to introduce new GOES 

data products and improve on the existing products. NOAA projects the expected series 

lifetime benefit from ABI to be $4.6 billion4 due to improved tropical cyclone forecasts, fewer 

weather-related flight delays, and improved production and distribution of electricity and 

natural gas. Another instrument that will provide life and property benefits is the Geostationary 

Lightning Mapper (GLM). GLM is expected to provide early indication of growing, active, and 

potentially destructive thunderstorms over land as well as ocean areas, early warning of 

lightning ground strikes, and potentially improved tornado warning lead time of up to 21 

minutes. It is also expected to provide improved routing of commercial, military, and private 

aircraft over limited oceanic regions where observations of thunderstorm intensity are scarce. 

To reduce risk, the GOES-R program in 2004 initiated development of its most important and 

complex instrument, the ABI, years in advance of the other instruments and spacecraft. The 

program has also implemented risk reduction activities to improve the quality of the 

instruments and the spacecraft.5

 Following the recommendation of an independent review 

team,6

 the GOES-R program budgeted reserves for addressing risks, reducing the probability of 

3

 The spacecraft, the platform for GOES-R’s instruments, is designed for 10 years of on-orbit operation preceded 

by up to 5 years of on-orbit storage. 

4

 ABI lifetime benefits are noted on the GOES-R public-facing Web site, last updated April 4, 2013. GOES-R. 

Advanced Baseline Imager (ABI) [Online]. www.goes-r.gov/spacesegment/abi.html (accessed April 10, 2013).
 

5

 For example, the ABI contractor built a prototype model to test the instrument’s design. 

6

 The independent review team was a NOAA-appointed team of senior satellite, ground, and operations 

acquisition experts that assess GOES-R (and other NOAA satellite programs) for the NOAA Program 

Management Council; Goddard Space Flight Center Management Council; and, upon request, the Department of 

Commerce Office of the Secretary. 

FINAL REPORT NO. OIG-13-024-A 2 
                                                            

 

U.S. DEPARTMENT OF COMMERCE OFFICE OF INSPECTOR GENERAL

exceeding the life-cycle budget. Predictive models show that GOES-R is in fact likely to stay 

within its life-cycle budget of $10.9 billion for four satellites, the ground system, and supporting 

operations through 2036. 7 However, the program is facing near-term budget challenges in FY 

2013 and FY 2014. 

In May 2012, after the mission preliminary design review (MPDR),8 NOAA executives (in 

concurrence with NASA and the standing review board9

) gave the program approval to 

continue on course with its efforts to meet the October 2015 launch readiness date, despite 

acknowledging that the confidence level in meeting this deadline is less than 50 percent. It was 

determined that this course of action had the highest potential for maintaining GOES 

constellation availability. 

7

 In its FY 2012 program budget submission, NOAA added 2 satellites (GOES-T and -U) to the program’s existing 

two GOES-R satellites (GOES-R and -S), which increased the program’s life-cycle budget from $7.7 billion to $10.9 

billion. 

8

 The purpose of the MPDR is to (a) demonstrate project readiness to proceed with the detailed design and (b) 

complete the flight and ground system development and mission operations in order to meet mission performance 

requirements within the identified cost and schedule constraints. 

9

 The standing review board is comprised of experts in both NASA and NOAA systems that are fully independent 

of the GOES-R Program Office. Members provide expert technical review of the mission, including the adequacy of 

the planning, design, and implementation processes. 

FINAL REPORT NO. OIG-13-024-A 3 
 

                                                            

U.S. DEPARTMENT OF COMMERCE OFFICE OF INSPECTOR GENERAL

Findings and Recommendations 

Our audit objectives for reviewing the GOES-R acquisition and development effort were to 

assess (1) the adequacy of contract management and administration and (2) the effectiveness of 

management’s direction, monitoring, and collaboration for development of select components 

of the GOES-R program (for further details regarding our objectives, scope and methodology, 

see appendix A). 

We concluded that NOAA needs to develop a comprehensive plan to mitigate the risk of 

potential launch delays, as well as communicate changes to users and other stakeholders that 

may be necessary to maintain the first GOES-R satellite’s launch readiness date. Program 

systems engineering has been strengthened; however, early in system development, it 

contributed to ground system schedule compression and increased costs. To ensure continued 

strength, NOAA must periodically report on program systems engineering adequacy, to include 

NASA Goddard Space Flight Center (GSFC) and its headquarters’ support, for the crucial 

integration and test phase of the program. 

We also concluded that NOAA needs to ensure that NASA effectively validates contractor 

proposals and any subsequent plans to verify technical designs for readiness, to reduce delays 

and cost increases. Further, NOAA must work with NASA to improve its use of financial 

incentives in encouraging contractors to limit cost overruns and strive for exemplary 

performance. Appendix C summarizes past incentive costs we question as justifiable and the 

potential monetary benefits we identified if these incentives are improved. Lastly, NOAA does 

not have a policy in place to manage significant delays in finalizing certain cost contract actions, 

which may have resulted in increased costs to the program. 

I.	 NOAA Must Keep Stakeholders Continuously Apprised of Approaches to 

Mitigate the Likelihood of a Two-Imager Coverage Gap 

There is growing concern about a potential GOES-R launch delay, increasing the likelihood 

of a GOES two-imager10 data coverage gap that could impact the National Weather 

Service’s ability to issue severe weather alerts. The potential delay is due to both a 

diminishing program schedule reserve and budget challenges that could slow development. 

The GOES-R joint cost and schedule confidence level (JCL) assessment that is used to 

predict the likelihood of a program’s success indicated that GOES-R has only a 48 percent 

chance of an on-time launch.11 

If GOES-R launches on time, the GOES constellation (currently GOES-13, -14, -15) will still 

be at an unacceptable level of risk—only 64 percent probability of having two imagers in 

operation, whereas NOAA’s minimum acceptance level is 80 percent. The JCL assessment 

10 An imager is a satellite instrument that measures and maps the Earth and its atmosphere. Imager data are 

converted by computer into pictures. 

11 NASA programs typically require a 70 percent confidence level to move forward. 

FINAL REPORT NO. OIG-13-024-A 4 
U.S. DEPARTMENT OF COMMERCE OFFICE OF INSPECTOR GENERAL

projects that GOES-R is more likely to launch in February 2016, increasing the risk of a 

two-imager gap by 7 percent, leaving only a 57 percent chance of having two imagers in 

operation. However, even if GOES-R and GOES-S launch as planned, there will not be an 

on-orbit backup available while these satellites go through post-launch testing (based on 

GOES-13 and GOES-15 operational design lives; see figure 2). 

Satellite instruments are susceptible to data degradation and complete failures. For example, 

on September 23, 2012, NOAA had to place the GOES-13 satellite on standby due to 

problems with its imager and sounder. NOAA activated the GOES-14 on-orbit spare 

satellite to replace GOES-13, but the reliability of hurricane forecasts was potentially 

subject to degradation because some GOES-14 data would not have been available for use 

until a 30-day test period was completed. GOES-13 service was restored on October 18, 

2012, after more than 3 weeks of being in standby mode. 

Because significant uncertainties have emerged since FY 2011 with the GOES-R 

development schedule, annual funding, and operational capability, NOAA needs to ensure 

that stakeholders in Congress, the Office of Management and Budget, and the Department 

stay informed of alternative approaches needed during development activities to mitigate 

the likelihood of a two-imager data coverage gap. 

Figure 2. Backup Satellite Policy 

Source: OIG, adapted from NOAA geostationary satellite schedules 

FINAL REPORT NO. OIG-13-024-A 5 
                                                            

 

U.S. DEPARTMENT OF COMMERCE OFFICE OF INSPECTOR GENERAL

A.	 Schedule Slips and Potential Reduction in Testing Activities Raise Concerns About GOES-R 

Readiness to Launch 

In February 2012, at the MPDR, management identified the core ground system as the 

development effort to closely monitor for the next 3 years because it was most likely to 

threaten the launch readiness date. By June 2012, delays fabricating the GOES-R 

spacecraft caused schedule reserve for the entire program to significantly decrease to 

below the recommended level for meeting the launch readiness date.12 The spacecraft 

replaced the core ground system on the program’s critical path. By August 2012, at the 

initial MCDR,13 the program office reported that the spacecraft was 3 months behind 

schedule, the ABI was 6 months behind schedule, and the GLM was 4 months behind 

schedule. 

At the initial MCDR, program management had not presented its detailed plan for 

system integration and test and the standing review board was concerned about fitting 

the plan into a constrained schedule. If system integration and test are reduced due to 

insufficient schedule, NOAA needs to inform stakeholders of any cutbacks to test 

activities needed to meet the launch readiness date that could result in changes to 

operational performance. Testing on the ground is crucial to minimizing problems in 

space, where corrective actions are limited and satellite performance may degrade or 

completely fail. 

B.	 Cost Increases and Budget Shortfalls May Delay GOES-R Development and Launch 

GOES-R funding stability is now the top risk in the program’s risk charts.14 The program 

needs substantial annual budget increases of $186 million in FY 2013 and an additional 

$150 million in FY 2014 (see table 1, below). Available funds are scarce due to significant 

contract cost increases of over $1 billion15 and budget adjustments in previous years 

amounting to $264 million;16 however, the program is not expected to exceed its lifecycle budget of $10.9 billion. According to the standing review board and NOAA, if the 

12 At the end of 2011, the program schedule reserve was 61 days above the NASA Goddard Space Flight Center 

minimum requirement at that stage of system development. Six months later (in June 2012), schedule reserve had 

dropped by 66 days to 5 days below the recommend level. The Goddard Space Flight Center recommends 

allocating 1 month of funded schedule reserve per year up to the start of integration and test of the spacecraft and 

instruments. 

13 The program office held the MCDR prematurely, before a detailed schedule for the spacecraft’s integration and 

test was available. As a result, the standing review board could not complete its evaluation of the program’s 

schedule and cost, necessitating a follow-up review (MCDR part II) held November 8–9, 2012. 

14 NOAA is currently assessing impacts to the GOES-R schedule due to sequestration and rescission of funds in 

the recently enacted FY 2013 appropriations law. 

15 Contract cost increases include the sum of executed modifications and estimated change proposals, due to both 

contractor cost overruns and government directed contract changes. Unexercised options are not included in this 

calculation.
 

16 Budget reductions in FY 2009, FY 2010, and FY 2011 amount to $106 million and the re-phasing of program 

funding in FY 2012 due to delays in spacecraft and ground contract awards totaled $158 million for an overall 

shortfall of $264 million.
 

FINAL REPORT NO. OIG-13-024-A 6 
 

                                                            

 

U.S. DEPARTMENT OF COMMERCE OFFICE OF INSPECTOR GENERAL

GOES-R annual budget plan is not sustained, then GOES-R will not be ready to launch 

and delays will require keeping the contractor labor force working on the project 

longer. At the current rate of $71 million per month, a protracted contract labor force 

will further increase life-cycle costs. 

Table 1. GOES-R Program Budget Plan (in $ Millions) 

Prior 

Years 

FY 

2010 

FY 

2011 

FY 

2012 

FY 

2013 

FY 

2014 

FY 

2015 

FY 

2016 

To 

Complete Total 

Total 1,489 642 662 616 802 951 845 782 4,071 10,860 

Source: OIG, adapted from GOES-R program documentation 

C. Scope Reductions and Delays Are Diminishing GOES-R Operational Capabilities 

Due to development delays, the GLM instrument may not be on the GOES-R satellite 

when it launches. NOAA research has demonstrated that the GLM could potentially 

improve tornado warning lead times from the current average of 13 minutes up to 21 

minutes. However, NOAA does not plan to delay the GOES-R launch if the GLM is not 

ready in time because the GLM does not provide the key environmental data products 

for the mission. Realizing the benefits of the GLM would have to wait until the launch of 

the next satellite, GOES-S. The program is studying modifications to the spacecraft 

necessary if the GLM is not on board. 

GOES-R has already had significant reduction in capabilities (or scope). In 2006, NOAA 

removed from the program the hyperspectral sounder instrument,17 expected to 

provide data for enhanced weather forecasts and severe weather warnings, due to the 

cost risk of readying a new technology for operational use in a geostationary orbit.18 

Additionally, in 2011, GOES-R management decided to terminate two core ground 

system contract options it had initiated in 2010—the option to complete the full set of 

environmental data products planned for the GOES-R series (only half of the planned 

products will be developed19) and the option to improve the speed of processing of 

incoming instrument data. NOAA is deferring development of the full set of data 

products to a later date. The agency terminated these options, valued at $51 million, 

due to budget constraints. NOAA must clearly communicate to stakeholders any 

additional changes to scope necessary to keep the launch schedule on track. 

17 NOAA planned on the hyperspectral sounder instrument providing atmospheric moisture and temperature data 

to support forecasts and warnings of high-impact weather.
 

18 A sounder is not flying on the GOES-R series; instead data from the ABI will be used to produce data products 

similar to those from GOES-13, -14, and -15. 

19 The partial set of products that GOES-R will generate is a significant improvement over the products generated 

by the current orbiting GOES satellites.
 

FINAL REPORT NO. OIG-13-024-A 7 
 

                                                            

U.S. DEPARTMENT OF COMMERCE OFFICE OF INSPECTOR GENERAL

D.	 A Comprehensive Set of Alternative Approaches for Mitigating a Launch Delay Has Not Been 

Developed 

The GOES-R program is entering the crucial stage of system development: completing 

fabrication of instruments and spacecraft, the ground system releases, and integration 

and tests in preparation for launch. There are numerous factors—a pessimistic JCL 

assessment, compressed schedule, and funding shortages—indicating that the October 

2015 launch readiness date is threatened. Nonetheless, the NOAA and NASA 

management councils, with concurrence of the standing review board, have decided that 

the best course of action is for the program to proceed as planned. 

Stakeholders need to understand whether the program is able to keep pace with its 

challenging schedule. However, program status information is not always kept up-todate or may not reveal issues with the program.20 Further, if the schedule remains 

threatened, stakeholders need to know what approaches are available to keep the 

program on track to meet the launch readiness date. For example, the standing review 

board recommended that GOES-R program management consider—as one approach to 

alleviate schedule pressure—consulting the GOES-R user community about relaxing 

operational requirements, particularly for the GLM that is significantly behind schedule.21 

Another approach to consider would be redirecting funds to more important activities, 

such as moving funds from core ground system development to the Flight Project, since 

some functions of the core ground system are not necessary until after launch.22 

Although GOES-R program management has identified approaches for resolving 

potential launch readiness date slips as problems arise, we believe NOAA should ensure 

that it develops a comprehensive set of tradeoff approaches—which identify impacts to 

cost, schedule, and satellite performance, along with a timetable to implement a change 

in course—and vets the approaches with users and stakeholders. This comprehensive 

set of approaches should identify trigger points for alternative action in the event that 

critical problems occur during fabrication and integration and test. As a precaution, 

NOAA should be prepared to implement a plan for obtaining alternative sources of data 

in the event of a GOES coverage gap. 

20 Examples of outdated status and other information that does not reveal the full breadth of program issues 

include (1) the GOES program did not update core ground system schedule variances for the Office of 

Management and Budget information technology dashboard; and (2) the earned value management variance reports 

reflect only contractor cost overruns, not government-directed cost growth. 

21 The GLM contractor is working to lower the error rate in detection of lightning events (i.e., decrease detection 

of false positives), but the user community may be satisfied with the current error rates since the GLM is a new 

GOES capability that could still provide valuable data to increase the warning time for tornados. 

22 Development of derived data product generation and distribution functions could be deferred until after launch. 

FINAL REPORT NO. OIG-13-024-A 8 
                                                            

U.S. DEPARTMENT OF COMMERCE OFFICE OF INSPECTOR GENERAL

II.	 NOAA Needs to Ensure That Systems Engineering Remains Engaged in 

Coordinating the Flight and Ground Projects 

NOAA accepted a core ground system development approach at contract award that was 

not flexible. From contract award in May 2009 until January 2011, GOES-R program 

management and its systems engineering organization had difficulty coordinating delivery of 

flight information necessary for core ground system development. The delay compressed 

the core ground system development schedule, and the plan to resolve the problem 

substantially increased core ground system costs. This delay was exacerbated by a lack of 

program systems engineering leadership. Since January 2011, the systems engineering 

organization has become more successful in facilitating coordination of the two projects. 

However, the GOES-R program is entering the final phases of development—completing 

satellite component fabrication, then integrating and testing the system—that are periods of 

peak spending and when schedule delays are most costly. Therefore, the GOES-R systems 

engineering organization needs to remain fully engaged. 

A.	 NOAA Accepted a Core Ground System Development Approach That Was Not Flexible, 

Resulting in Increased Costs 

The GOES-R core ground system development is performed under a contract, awarded 

May 27, 2009, for $736 million23 over a10-year period. The ground system will control 

the GOES-R series satellites and generate 

and distribute environmental data products 

to the National Weather Service and other 

users. This large-scale and complex system 

entails demanding processing, availability, 

and security requirements: for example, 

the core ground system must process 1.37 

terabytes of data daily while remaining 

available all but two hours per year. 

The contractor’s development plan that 

NOAA accepted could not accommodate 

changes in information dependencies 

between the Flight Project and core ground 

system. The contractor’s “waterfall” 

system development approach,24 which 

assumed that Flight Project deliverables 

would be available in time to build the 

The Re-Plan 

More flexible, but also more complicated 

to manage because of an increase in 

parallel development and integration and 

test activities, the re-plan allows 

development of partial capabilities 

(increments). The contractor can develop 

as much of a capability as possible with 

available flight information and then shift 

staff to developing other capabilities while 

waiting for the remaining information. An 

added extra step combines and tests 

capabilities into “capability-based builds,” 

which are then integrated into releases for 

end-to-end flight and ground tests. This 

approach aims to utilize contractor time 

efficiently and reduce rework. 

ground system, was not flexible enough to accommodate late delivery of flight 

information. However, due to NOAA’s plan to award the contracts only 2 months apart 

23 The contract includes award fees and two options valued at $51 million. 

24 The fundamental problem with the contractor’s waterfall approach was that the ground system was divided in 

large development blocks; each required a substantial amount of flight information.
 

FINAL REPORT NO. OIG-13-024-A 9 
U.S. DEPARTMENT OF COMMERCE OFFICE OF INSPECTOR GENERAL

(and a subsequent protest that delayed the award of the spacecraft contract by 8 

months), not enough time was left for the spacecraft contractor to plan or develop 

deliverables before the ground contractor needed them. 

To address the information dependency problem, the ground system contractor 

submitted a formal engineering change proposal (ECP) in October 2011 to “re-plan” the 

development effort. The program incorporated the re-plan into the ground system 

contract as part of the seventh ECP. In total, the proposal added $170 million to the 

contract cost. The re-plan amounted to $89 million of the total. Overall, the core 

ground system contract cost, including ECPs 1–7, has grown by $245 million to $981 

million. 

B.	 Prolonged Time to Re-plan the Core Ground System Introduced New Schedule Risks 

The prolonged wait to resolve flight-to-ground dependencies compressed a 3-and-a-halfyear development schedule by 7 months and did not fully resolve the information 

dependency problem. Also, according to the ground contractor, the re-plan has 

introduced new risks, including 

	 the need for increased parallel development and integration and testing, which is 

more complicated to manage, and 

	 the contractor may not have sufficient staff to perform the increased testing 

planned for this approach. 

The GOES-R program office, including program systems engineering, tried to coordinate 

flight-to-ground dependencies starting in October 2009, after the spacecraft and ground 

system contract awards, by arranging technical interchange meetings between the Flight 

Project and ground system contractors. 

However, by January 2011, a year and a half after awarding the ground system contract, 

the flight-to-ground dependencies had still not been reconciled. The GOES-R program 

office and the contractor concluded that following the original development plan would 

result in delaying the launch of GOES-R by 15 months (from October 2015 to January 

2017) and decided that the best course of action was to re-plan the development 

approach. 

The time it took to recognize the need for a re-plan and the time needed to develop the 

re-plan delayed the preliminary and critical milestone reviews. As a result, this delay 

reduced the time available for ground system development. 

Although the re-plan provided flexibility to adjust the ground system development 

schedule to variability in the Flight Project’s delivery schedule, not all flight information 

delivery dates were mapped to ground need dates. As a means to better track 

interdependencies, program systems engineering developed the Giver–Receiver InterSegment Database to map out Flight and Ground Project dependencies and began a 

weekly update process to handle newly discovered dependencies and schedule changes. 

However, the compressed schedule and the increased complexity of managing the reFINAL REPORT NO. OIG-13-024-A 10 
 

U.S. DEPARTMENT OF COMMERCE OFFICE OF INSPECTOR GENERAL

plan have increased the risk that the ground system will not be ready in time to meet 

the October 2015 launch readiness date. 

C. Lack of Program Systems Engineering Leadership Prolonged the Coordination Problem 

The prolonged wait to coordinate flight-to-ground information dependencies was 

primarily due to inadequate program systems engineering and management’s lack of 

recognition of this inadequacy. This delay has increased the risks of GOES-R 

performance, budget, and launch readiness issues. 

According to the GOES-R Management Control Plan and the Systems Engineering 

Management Plan, the program systems engineering organization is responsible for 

ensuring the integration of Flight and Ground Projects. It is also responsible for 

maintaining a system-level perspective of both projects by facilitating coordination and 

communication between projects and resolving project conflicts. 

Initially, the GOES-R program systems engineering organization only reviewed Flight and 

Ground Project deliverables rather than lead project integration. The NOAA 

Independent Review Team, at a key decision point review in July 2010, recognized that 

the program systems engineering organization lacked leadership and support for the 

Ground and Flight projects. It also noted that GOES-R did not receive adequate systems 

engineering support from NASA GSFC and its headquarters—which, according to the 

GOES-R Management Control Plan, should provide systems engineering expertise until 

NOAA developed the expertise in-house. In addition to the lead program systems 

engineer, GSFC was to provide oversight through its Center Management Council and 

the Code 400 Director of Flight Project Directorate, both of which the GOES-R 

program reports to monthly. 

In January 2011, after it was clear that the contractor would have to implement a replan to resolve the Flight and Ground Project misalignment, a newly-placed lead 

program systems engineer exercised more leadership in integrating Flight and Ground 

projects. Subsequently, the lead program systems engineer initiated development of the 

Giver–Receiver Inter-Segment Database and instituted weekly database updates. With 

the re-plan’s compressed ground system schedule, coupled with modifications to the 

Flight Project development, NOAA needs to monitor program systems engineering 

integration and NASA support activities to reduce risks of performance degradation, 

cost overruns, and launch delays. 

III.	 NOAA Needs to Improve Flight Project Technical Oversight of NASA’s 

Contractors and Award Fee Measures to Limit Further Cost Overruns 

NOAA is responsible for the success of the program and, therefore, the performance of the 

flight contracts, even though NASA is the primary acquisition agent and manager on the 

Flight Project. We found that NASA, at times, did not proactively address contractors’ 

actions that ultimately contributed to cost overruns. Specifically, NASA accepted contractor 

bids that were significantly less than the program office estimates. Further, it did not 

FINAL REPORT NO. OIG-13-024-A 11 
                                                            

U.S. DEPARTMENT OF COMMERCE OFFICE OF INSPECTOR GENERAL

adequately evaluate contractor technical designs for the GLM. Also, its administration of 

award fees did not adequately incentivize contractors for exemplary performance. Improved 

contract oversight by NOAA over NASA contracts would help to minimize the risk of such 

problems occurring. 

GOES-R costs increased more than $685 million for the Flight Project’s most beneficial 

instruments (ABI, GLM) and the spacecraft. Cost overruns—which occur when contractors’ 

incurred and planned costs exceed the expected costs of their contracts—represent the 

largest category ($361 million) of these increased costs.25 The ABI, GLM, and the spacecraft 

are currently overrunning their contracts by $264 million, $86 million and $11 million 

respectively. See figure 3, below, for a depiction of cost for the spacecraft, ABI, and GLM to 

date. 

25 NASA negotiated the other costs and added them to the contract for decisions made by program management 

(e.g., requirements changes, additional testing, and schedule adjustments). 

FINAL REPORT NO. OIG-13-024-A 12 

$897

a Spacecraft

Advanced
 

Baseline
 

Imager
 

(ABI) b
 

Geostationary

Lightning

Mapperc (GLM)

$97

$329

$779

$64

$153

$107

$86

$264

$0 $100 $200 $300 $400 $500 $600 $700 $800 $900 $1000

$11 $746

$247

Dollars (millions)

Cost Growthe Cost Overrunf Contract Priced

Source: Adapted from GOES-R program and NASA contract documentation a Includes the spacecraft for the GOES-R and -S flight models; b includes instruments for GOES-R and -S 

flight models; c includes instruments for GOES-R, -S, and -T flight models; d the contract price (base cost + 

award fee) at award including exercised contract options; e costs negotiated and added to the contract for 

decisions made by program management (e.g., requirements changes, additional testing, and schedule 

adjustments); f contractor incurred and planned costs that exceed the expected costs of their negotiated 

contracts. 

Figure 3. Costs of Spacecraft, ABI, and GLM, as of December 2012 
 

                                                            

U.S. DEPARTMENT OF COMMERCE OFFICE OF INSPECTOR GENERAL

The overruns were the result of contractors underestimating the effort and technical 

complexity of the instruments, immature designs, and difficulty managing subcontractors’ 

cost increases and schedule slips. While the spacecraft contract overruns, compared to ABI 

and GLM, have been minimal as of November 2012, the program recently disclosed that it 

expects spacecraft overruns to reach $140 million. 

A. Contract Award Prices Were Significantly Less Than Program Estimates 

The program accepted contractor bids that were significantly less than its own 

estimates. Altogether the ABI, GLM, and spacecraft contract awards totaled $1.55 

billion, or 28 percent less, than the program estimated (see table 2, below). 

Table 2. Comparison of Program Cost Estimates Versus Contract Award Prices 

Flight Project Contracts 

GOES-R Program Office 

Estimate (POE), 

in Millionsa 

Winning 

Bid, in 

Millionsb 

Difference 

Between 

Estimate 

and Bid 

Advanced Baseline Imager (ABI) $462 $359 21% 

Geostationary Lightning Mapper (GLM) $147 $97 34% 

GOES-R Spacecraft $1,538 $1,094 29% 

Totals $2,147 $1,550 28% 

Source: Adapted from GOES-R program and NASA contract data a Includes estimates for GOES-R through GOES-U flight models; b includes bids for GOES-R through GOES-U 

flight models.
 

The program office developed estimates before accepting contractor bids during the 

program’s formulation phase.26 Program experts (e.g., engineers, scientists) used trade 

studies, designs, and cost estimates, along with labor rates, to build the program office’s 

estimates. 

Flight Project officials acknowledged that they were aware the bids were too low but 

explained that getting better cost realism from contractors is arduous and risky. 

Typically, NASA only conducts a single round of discussions wherein they are permitted, 

though limited by counsel, to inform bidders that specific tasks are unrealistic. They 

explained that negotiation over cost realism is time-consuming, expensive, and 

potentially leads to protests from other vendors that provided higher bids. In an effort 

to compensate for awarding contracts that were underbid, the program stated that it 

had sufficient budget reserves to cover anticipated cost increases within the program’s 

life cycle cost of $10.9 billion. However, when contract prices do not reflect reasonable 

estimated costs, the costs and status of the effort become skewed as contractors 

26 During NASA’s formulation phase, the program manager initiates and conducts the planning and analysis 

necessary to develop a program plan that establishes a cost-effective program demonstrably capable of meeting 

agency and mission directorate goals and objectives. 

FINAL REPORT NO. OIG-13-024-A 13 
                                                            

U.S. DEPARTMENT OF COMMERCE OFFICE OF INSPECTOR GENERAL

overrun their bids. Indeed, as the projects proceeded, significant cost increases and 

budget reductions eroded the reserves. The program reported, in November 2012, that 

program reserves for FYs 2012 and 2013 are below NASA recommended levels. 

B.	 Technical Evaluation of GLM Design Was Inadequate 

The initial GLM contractor’s project team was more experienced in building 

instruments for research missions rather than operational missions like GOES-R. Thus, 

the contractor underestimated the manpower, time, and materials needed to develop an 

operational instrument. For example, as part of its best and final offer, the GLM 

contractor stated its intention to change its baseline design for an important subcomponent (real time event processors) to a design that had a lower technology 

readiness level. 27 The program, 1 year later, identified that the design would not have 

been sufficiently mature by the next key technical milestone and thus rejected the 

proposal. This led to a re-design that was more costly than the contractor’s initial 

estimate. Flight Project officials estimate that costs increased by approximately $10 

million. Had NASA proactively engaged its rigorous technical review process earlier—at 

contract review and award—perhaps the time lapse, re-design, and cost overruns that 

occurred later in development could have been mitigated. 

Other technical issues also arose related to underestimation of the effort. For instance, 

	 the contractor’s original design for a fully redundant backup solution for the 

electronics systems that processes collected data did not meet requirements and 

had to be redesigned, and 

	 the contractor’s plans for reducing electromagnetic interference on the 

instrument did not meet operational standards and had to be redesigned. 

Had NASA performed sufficient upfront validation of plans and designs including parts, 

other hardware, and supporting software as part of its evaluation of contractor 

proposals, these issues may have been identified sooner and the associated overruns 

reduced or eliminated. 

C. Award Fees Did Not Effectively Incentivize Exemplary Performance or Sufficient Cost Control 

The award-fee structure for the ABI, GLM, and spacecraft contracts do not incentivize 

the contractors toward exemplary performance. In addition, the program provided the 

ABI contractor more award funds than we believe is justifiable based on the 

contractor’s performance. 

With cost-plus-award-fee contracts such as those awarded for the GOES-R Flight 

Project, award fees are 

27 Per NASA standard NPR 7120.8 sections 4.6.1-3, technology readiness levels (TRLs) are measurements used to 

assess the maturity of technology. 

FINAL REPORT NO. OIG-13-024-A 14 
                                                            

U.S. DEPARTMENT OF COMMERCE OFFICE OF INSPECTOR GENERAL

	 the government’s primary tool to incentivize contractors to meet and possibly 

exceed performance goals, 

	 awarded based on the government’s evaluation of the contractors performance 

(specifically technical, management, and cost performance for GOES-R), and 

	 provided to the contractor in excess of the costs of materials and work 

performed. 

The award-fee structure for ABI, GLM, and the spacecraft do not incentivize 

exemplary performance. The award-fee structures for the ABI, GLM, and spacecraft 

contracts are problematic in two ways: (1) the scale for assigning award fee provides 

too much fee for average performance and (2) there are no criteria or metrics to 

determine what constitutes a significant versus an insignificant overrun. Both of these 

issues were also previously noted in our May 2012 report28 which addressed the 

Ground Project contracts administered by NOAA. 

1.	 Award fee ranges—The award fee structures for the ABI, GLM, and spacecraft 

contracts use a numerical rating system with adjectival ratings “Excellent,” “Very 

Good,” “Good,” “Satisfactory,” and “Poor/Unsatisfactory” to determine the 

percentage of award fee paid to the contractors for each performance period 

(see appendix D). The scale allows the contractor to receive significant award 

fees (up to 70 percent) for “Satisfactory” performance. Contractors receiving 

the lowest score in the “Satisfactory” range (61) are entitled to receive an award 

fee. This spread allows a contractor performing at the lowest level of acceptable 

performance to receive over half of the award fee (61percent). For performance 

in the “Poor/Unsatisfactory” range (60–below), no award is provided. The 

numerical rating system should be adjusted such that contractors receive smaller 

percentages of award fee for non-exemplary performance.29 For example, a 

satisfactory rating should receive a score of 50 percent as specified by the 2011 

NASA Federal Acquisition Regulation (FAR) Supplement,30 which provides a 

more appropriate award fee for satisfactory performance.

2.	 Overrun materiality—Within the program’s performance evaluation criteria 

for award fees, contractors can receive fees even if they have overruns; 

however, the criteria’s language is subjective. Specifically, the criteria allow 

granting award fees in the case of overruns if the overruns are 

“significant.” They do not, however, define what constitutes significant 

versus insignificant. Further, they allow the government to increase the 

28 U.S. Department of Commerce Office of Inspector General, May 18, 2012. NOAA’s Cost-Plus-Award-Fee and 

Award-Term Processes Need to Support Fees and Extensions, OIG-12-027-A. Washington, DC: DOC OIG, 6. 

29 Although the ABI, GLM, and spacecraft contract award fee ranges were in compliance with NASA guidance 

when the contracts were awarded (2009 and earlier), the guidance was altered in 2011 after Federal Acquisition 

Regulations specified ranges that were lower. It is in the program’s best interest to use the new ranges because 

they are more likely to incentivize contractors towards excellent performance. According to the contracts, the fee 

determining official has the option to alter the plans and methods for determining award fee. 

30 NASA FAR Supplement, 48 C.F.R. § 1816.405-275(b). 

FINAL REPORT NO. OIG-13-024-A 15 
 

                                                            

U.S. DEPARTMENT OF COMMERCE OFFICE OF INSPECTOR GENERAL

award fee based on consideration of the contractor’s efforts to control or 

mitigate the overrun. OMB guidance requires tying awards to 

demonstrated results, as opposed to effort, in meeting or exceeding 

specified performance standards.31 Further, as stated in our May 2012 

audit report on NOAA cost-plus-award-fee contracts, “without clearly 

defined metrics and outcomes, performance ratings are subject to 

interpretation and can result in unsupported contractor performance 

evaluations and awards.”32 

NASA, by revising the performance evaluation plans for these contracts, will more 

effectively incentivize the contractors to strive for exemplary performance. We 

therefore expect NASA, through NOAA direction, to better use the funds remaining in 

the contract award fee pools (a combined total of approximately $106 million funds put 

to better use for ABI, GLM, and the spacecraft). The contractors are still eligible to earn 

these funds (through 2016 for the majority of the funds) based on their performance. As 

a result, these changes may not lead to immediate cost savings. However, more effective 

award fee administration is likely to improve contractor technical, management, and 

cost performance which may result in lower contract costs in the future. 

Fees awarded to the ABI contractor were not commensurate with contractor 

performance. Despite the ABI contractor’s management problems and cost overruns, 

we believe NASA awarded more fees than justifiable. 

Although the ABI contractor’s technical performance has typically been “Very Good” 

(see appendix D for performance rating scale), it has struggled with both cost control 

and subcontractor management. The $264 million ABI overruns are primarily the result 

of difficulties with managing subcontractor cost increases and schedule slips, as well as 

underestimating the amount of work and technical complexity of the instrument. 

In addition to identifying these issues, NASA stated in some of its award fee reports that 

the contractor applied excessive manpower to the project, did not provide correct 

status on select tasks, and was not responsive to some NASA requests. For example, 

the contractor proceeded with its selected approach for vibration testing on ABI 

components despite NASA requests to use a different approach that would not result in 

schedule slippage and increased costs. NASA noted that, because the contractor had 

experienced significant issues on another contract, it was taking an overly conservative 

risk posture with ABI. 

NASA evaluates performance and pays award fee to the ABI contractor for every six 

month period of contract performance. We evaluated 15 of these award fee periods 

and found that the fee determining official awarded the contractor a higher amount than 

31 Office of Management and Budget, Office of Federal Procurement Policy, December 4, 2007. “Appropriate Use 

of Incentive Contracts,” Memorandum. Washington, DC: OMB. 

32 DOC OIG, May 18, 2012. NOAA’s Cost-Plus-Award-Fee and Award-Term Processes Need to Support Fees and 

Extensions, OIG-12-027-A. Washington, DC: DOC OIG, 6. 

FINAL REPORT NO. OIG-13-024-A 16 
 

 

 

                                                            

U.S. DEPARTMENT OF COMMERCE OFFICE OF INSPECTOR GENERAL

justifiable by evaluation criteria in 4 periods. Because the documentation we reviewed 

did not demonstrate that these award fees were commensurate with actual contractor 

performance, we identified $8.8 million paid across the four periods as questioned 

costs.33 

We recognize the challenge the program has with striking the right balance between 

maintaining constructive contractor relationships and assessment of performance 

through award fees. However, we conclude that correcting the award fee structures 

and ensuring award fees are commensurate with performance will address this 

challenge. 

IV.	 NOAA Needs to Improve Management of Undefinitized Contract Actions 

(UCAs) 

NOAA has delayed finalizing negotiations for almost a year to two years on its six 

significant changes to the core ground system contract. Because of these delays, the 

government lost the opportunity to negotiate costs on an estimated $79.6 million (see 

table 3, below). 

Table 3. GOES-R Core Ground System Contract Action 

Definitization Delays 

ECPs Total Days to 

Definitize 

Estimated Costs 

Incurred Before 

Definitization (Millions) 

1 448 $ 3.3 

2 342 $ 0.3 

4 695 $10.3 

5 492 $ 0.9 

6 769 $ 3.5 

7 467a $61.3

 Total $79.6 

Source: Adapted from NOAA contract documentation
 a As of December 12, 2012. 

The program issued seven engineering change proposals (ECPs) after the award of the core 

ground system contract in May 2009. Six of these ECPs, totaling an estimated $245 million, 

included changes to the contract that required negotiating additional costs. Because NOAA 

33 An undetermined portion of the $8.8 million paid across these four periods was provided to the contractor 

without adequate justification. Thus, rather than declaring a specific dollar amount as inappropriate spending, we 

instead question the appropriateness of the amount paid for the four periods. 

FINAL REPORT NO. OIG-13-024-A 17 
 

 

                                                            

U.S. DEPARTMENT OF COMMERCE OFFICE OF INSPECTOR GENERAL

needed the work to begin before it and the contractor could fully negotiate cost, NOAA 

chose to issue these ECPs as UCAs.34 

FAR specifies that agencies should definitize UCAs “in the shortest practicable time.”35 In 

addition, the Department of Defense generally requires their agencies to definitize all UCAs 

in 180 days. Further, Government Accountability Office (GAO) reports36 also stress the 

importance of definitizing UCAs in a timely manner. We found that NOAA experienced 

delays in definitizing its UCAs because 

 it lacks policies for governing their time limits37 and cost incurred tracking, 

 the scope was too large, and 

 cost limits were set too high. 

While NOAA policy does not specify any time limit for definitizing UCAs, NOAA should 

make every effort to reduce the time that contracts remain undefinitized, given the risks of 

increased cost the longer they are delayed. 

A. Lack of UCA Time Limit And Cost Incurred Tracking Policy Led to Definitization Delays 

NOAA does not have a policy for how expeditiously UCAs should be definitized. On 

average, the core ground system contractor prepared the estimates and proposals for 

the UCAs in 86 days. However, it took NOAA an average of 348 days to evaluate the 

contractor’s proposal and identify its negotiation targets. NOAA does not have a 

mechanism to determine the amount of cost due to such delay. Its Acquisition and 

Grants Office (AGO) receives weekly reports that include the status of UCAs but not 

how much of the UCA costs have already been incurred. Further, the program office 

neglects to identify these costs until right before they are definitized. Thus, the 

significance of these delays is not communicated and their impact is not understood. 

34 An undefinitized contract action (UCA) is a federally-regulated contract instrument that allows the government
 

to authorize contractors to begin work immediately before contract terms and conditions are completely 

negotiated. Once both parties can evaluate and negotiate the additional work and cost, the contract action is 

“definitized”—the contractor and the government agree upon the total work and its estimated cost.
 

35 FAR 43.204(b)(1).
 

36 U.S. General Accountability Office, September 2006. Iraq Contract Costs: DOD Consideration of Defense Contract 

Audit Agency’s Findings, GAO-06-1132. Washington, DC: GAO, 8.
 

U.S. GAO, June 2007. Defense Contracting: Use of Undefinitized Contraction Actions Understated and Definitization Time 

Frames Often Not Met, GAO-07-559. Washington, DC: GAO, 4–6. 

U.S. GAO, January 2010. Defense Contracting: DOD Has Enhanced Insight into Undefinitized Contract Action Use, but 

Management at Local Commands Needs Improvement, GAO-10-299. Washington, DC: GAO, 17–18.
 

37 Although NOAA Acquisition Handbook 16.3(d) specifies a time limit for one type of UCA (letter contract), it does 

not do so for other UCAs, such as the ECPs issued for the core ground system contract. 

FINAL REPORT NO. OIG-13-024-A 18 
 

                                                            

U.S. DEPARTMENT OF COMMERCE OFFICE OF INSPECTOR GENERAL

B.	 The Large Scope of UCAs Resulted in Delays 

Each UCA includes many configuration change requests (CCRs),38 which include both 

major and minor changes to the contract. NOAA has grouped 68 CCRs with cost 

impacts—all of which, regardless of size, must be evaluated and negotiated—into only 

six UCAs. NOAA took this approach because it had limited acquisition staff, looking to 

reduce the effort needed to definitize CCRs. Despite NOAA’s strategy, the effort 

needed to definitize CCRs increased. In contrast, NASA contracting officers minimized 

the need for UCAs by processing changes individually or in small groups on Flight 

Project contracts; when UCAs were necessary, NASA definitized them quickly. 

C.	 High UCA Cost Limits Create Disincentive for Timely Definitization 

NOAA set the government’s limit of liability prior to definitizing UCAs to 50 percent of 

the contractor’s estimated cost for all except the seventh. Because these UCAs cover 

multiple years of work, the contractor could perform work on an UCA for a year or 

more before reaching 50 percent of the estimated costs. Spending on the UCAs did not 

reach or exceed the 50 percent limit. However, we believe this approach neither 

provides incentive for the contractor nor motivates NOAA to quickly definitize because 

the government has already obligated money for the work to be performed. 

Fortunately, the program reduced the risk of this approach by significantly reducing the 

government’s limit of liability for the seventh UCA and shortening the duration for 

performing authorized work. 

Recommendations 

To mitigate GOES two-imager coverage gap threats, we recommend that the NOAA Deputy 

Under Secretary for Operations ensure that NOAA 

1.	 Develops a comprehensive set of tradeoff approaches (with impacts and implementation 

timetable) to mitigate launch delays and communicates approaches to stakeholders and 

users. 

2.	 Keeps stakeholders and users informed of any tradeoffs that have to be made to meet 

the launch readiness date. 

To maintain robust systems engineering for the GOES-R program, we recommend that the 

NOAA Deputy Under Secretary for Operations 

3.	 Directs NESDIS to report periodically to the NOAA Program Management Council on 

the adequacy of program systems engineering integration and NASA GSFC and 

headquarters systems engineering support. 

38 A configuration change request is a documented request to issue, change, revise, or delete a controlled 

requirement, function, or item. 

FINAL REPORT NO. OIG-13-024-A 19 
 

U.S. DEPARTMENT OF COMMERCE OFFICE OF INSPECTOR GENERAL

To limit cost overruns and improper award fees for GOES-R Flight Project contracts, we 

recommend that the NOAA Assistant Administrator for Satellite and Information Services 

ensure that NASA 

4.	 Effectively validates contractors’ proposals and any subsequent plans, to verify that 

technical designs meet technology readiness requirements per NASA standards. 

5.	 Modifies ABI, GLM, and spacecraft contract award-fee structures to reduce award fee 

percentages in accordance with the current NASA FAR Supplement, as well as clearly 

articulates how scores should be adjusted based on the magnitude of cost overruns. 

6.	 Adjusts future award fees for the ABI to be more commensurate with contractor 

performance, to incentivize the contractor to control costs. 

To improve contract administration and management, we recommend that the NOAA Deputy 

Under Secretary for Operations 

7.	 Directs the development of a policy for managing undefinitized contract actions and 

includes Federal Acquisition Regulation guidance on definitizing change orders in the 

shortest practicable time. 

FINAL REPORT NO. OIG-13-024-A 20 
U.S. DEPARTMENT OF COMMERCE OFFICE OF INSPECTOR GENERAL

Summary of Agency Response and OIG 

Comments 

In responding to our draft report, NOAA concurred with five of our seven recommendations. 

It also included suggested factual and technical changes to our findings and editorial 

comments. See appendix E for NOAA’s complete response. 

We address NOAA’s responses to all of our recommendations and significant issues regarding 

the basis of our findings. We also address NOAA’s recent decisions to restrict OIG access to 

critical meetings where major program issues are discussed. 

We held several discussions with the GOES-R program management and staff before and after 

issuing the draft report in order to obtain feedback about all findings and recommendations. 

However, the GOES-R program focused these discussions only on the four award fees periods 

for the ABI contract that we identified in finding III. During these discussions, we reviewed the 

award fee periods in question, the issues that led to our finding, and offered to discuss the 

finding in more detail. In all of these discussions, the only information GOES-R managers and 

staff provided to substantiate the award fees paid was undocumented “verbal discussions” that 

occurred during the fee determination process which are not sufficient to justify award fees. 

While GOES-R managers and staff have agreed that, in the future, “verbal discussions” should 

be documented, they disagree with our recommendation regarding award fees. If NOAA does 

not implement OIG’s recommendation to modify contract award-fee structures in accordance 

with the current NASA Federal Acquisition Regulation (FAR) Supplement and articulate 

adjustments made for cost overruns, there will continue to be weaknesses in the award fee 

process. 

In summary, based on our fieldwork and our discussions with NOAA, we reaffirm our findings 

and all of the recommendations. 

Agency Response to Recommendations, with OIG Comments 

Recommendations 1 and 2: NOAA concurs. NOAA indicates it has developed and presented 

cost and schedule tradeoff options in response to requests from the NOAA–NASA Program 

Management Council (PMC) based on numerous budget questions. The tradeoff options 

included supporting additional shifts for spacecraft integration and test activities and deferring 

development of ground capabilities—but what remains unclear, for example, are the conditions 

under which ground capabilities will be deferred or the plan for implementing this option. 

In discussions with NOAA regarding our draft report recommendations, it became apparent 

that the GOES-R program and National Weather Service had conflicting views about 

postponing the launch of GOES-R based on GLM’s readiness. Presenting and vetting a 

comprehensive set of tradeoff approaches with relevant parties would minimize such 

disagreements. NOAA needs to include all tradeoff options in one comprehensive set, and 

more importantly, indicate events that would trigger implementation of each option. 

FINAL REPORT NO. OIG-13-024-A 21 
 

U.S. DEPARTMENT OF COMMERCE OFFICE OF INSPECTOR GENERAL

Recommendation 3: NOAA concurs. NOAA asserts, and we agree with independent 

reviewers, that program systems engineering has been strengthened. This reflects an 

improvement from June 2010 when the GOES-R independent review team criticized the lack of 

program systems engineering leadership integrating the flight and ground projects. However, 

we disagree with NOAA’s assertion that the lack of adequate systems engineering leadership 

did not contribute to the delay in developing an approach (the re-plan) to resolve the flight and 

ground projects’ information dependency issues. 

Before the new lead program systems engineer was put into place, a significant communication 

barrier existed between the flight and ground projects and the lead program systems engineer 

did not have the technical leadership authority necessary to resolve issues. This lack of 

leadership—in identifying the extent of the misalignment of the availability of flight information 

needed by the ground project until the software requirements review—was a contributing 

factor that led to the need for a costly re-plan and schedule slip. 

The GOES-R program will soon start its system integration and test phase, when program 

systems engineering plays an important role in ensuring proper integration of flight and ground 

systems. Periodic review of the effectiveness of systems engineering both within the program 

and at NASA Goddard Space Flight Center will contribute to having a robust satellite system 

and meeting the launch readiness date. 

Recommendation 4: NOAA concurs. NOAA agrees with the spirit of our recommendation 

to validate contractors’ proposals and subsequent plans; however, it misunderstands our 

recommendation’s intent. NOAA discusses the rigor of NASA’s instrument development and 

review process. We do not dispute the rigor of NASA’s process. Instead, we recommend that 

NOAA ensure NASA applies this process more effectively and consistently during all stages of 

development, beginning with contract evaluation. In this instance, NASA did not identify an 

issue during the GLM acquisition. This omission, during contract evaluation, ultimately led to 

cost increases due to the need to later redirect the contractor to a proven design of sufficient 

technology readiness. 

Specifically, as we discuss in finding III part B, the GLM contractor identified—in its best and 

final offer—its intent to change its baseline design, which had met the appropriate technology 

readiness level, to another technology which did not. This change was not identified by the 

source evaluation board or any of the subject matter experts tasked to help the board before 

the contract was issued. 

As a result, the GLM contractor proceeded with conducting trade studies from contract award 

in December 2007, to the instrument’s preliminary design review (PDR) in March 2009. (A PDR 

serves as an approval gate for the contractor to proceed with the instrument’s design.) 

According to the program, on December 1, 2008—a year after contract award and prior to the 

PDR—NASA was provided with a draft trade study concerning this design change. However, it 

was not until just before PDR (i.e., over a year after the contractor changed its design) that 

NASA directed the contractor to go back to the original baseline design and technology. As we 

state in our finding, had this issue been identified at contact award as part of NASA’s review 

process, impact to cost and schedule could have potentially been mitigated. 

FINAL REPORT NO. OIG-13-024-A 22 
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Recommendation 5: NOAA does not concur. NOAA does not concur with this 

recommendation to modify the ABI, GLM, and spacecraft contract award-fee structure in 

accordance with the 2011 NASA FAR Supplement and clearly articulate the adjustments made 

for cost overruns. NOAA asserts that the program was not expected to comply with the 

NASA FAR Supplement issued in 2011 because these contracts were awarded prior to the 

issuance of the Supplement. As part of its suggested factual and technical changes comments, 

NOAA explained that the contracts’ limit of 61 percent for satisfactory performance is superior 

to the lower limit found in the current NASA FAR Supplement because contractors will receive 

no award fee for scores below 61 (the program’s methodology pays the contractor a 

percentage of the award fee equal to its performance score). As it relates to modifying the fee 

structure in accordance with the current NASA FAR Supplement, our finding does not state a 

condition of noncompliance; rather, it encourages use of the current Supplement because it will 

improve contractor incentives. Regarding NOAA’s assertions that the program’s award fee 

structure for these contracts was superior to the current NASA FAR Supplement because of 

the higher limit for satisfactory performance—based on our analysis, we found GOES-R award 

fee plans could be more effective. 

In addition to modifying the contracts’ fee structure as we recommend, NOAA should ensure 

that NASA consistently adjusts scores based on cost overruns. For example, with the GLM 

contract, NOAA’s award fee evaluation resulted in the replacement of the contractor project 

manager. We agree with the program’s actions in that award period in which contractor 

performance was especially egregious (contract value more than doubled as the result of an 

overrun). However, on the ABI contract, despite the zero cost score given for the significant 

cost overrun, the contractor was still able to receive 62 percent of the available award fee— 

only 2 percent above the threshold for getting no award fee. In that instance, the contractor 

had an overrun of $162 million (64 percent of the base contract cost)—which led the program 

to score the contractor zero points for cost performance and the fee determining official to 

conclude that “the amount of the overrun is so egregious that it overwhelms all the good 

technical work accomplished this period by the ABI Team and puts the entire GOES-R Program 

in a very bad light.” In our opinion, a higher limit for earning award fees coupled with lack of 

clear guidance on adjustment for cost overruns can lead to this type of situation. To address 

this situation, and to avoid inconsistency in the treatment of cost overruns, NOAA should 

ensure that NASA clearly articulates how scores should be adjusted based on the magnitude of 

cost overruns. 

In its comments NOAA also asserts, and we agree, that NOAA is involved in the process of 

determining award fees for contractors. Because of its involvement in this process, NOAA 

should work with NASA to implement this recommendation for improving the methods and 

plans for determining award fee. 

Recommendation 6: NOAA does not concur. NOAA does not concur with our 

recommendation to adjust future award fees for the ABI contract such that they are 

commensurate with contractor performance and incentivize the contractor to control costs. 

NOAA states that its method is clear, effective, and proven to incentivize contractors and 

provided an example where its feedback to the contractor effectively improved performance in 

one technical area. While the example is good, it occurred prior to the four periods addressed 

FINAL REPORT NO. OIG-13-024-A 23 
U.S. DEPARTMENT OF COMMERCE OFFICE OF INSPECTOR GENERAL

in our finding. Our extensive analysis of the program contract documentation supporting the 

program’s award fee determination decisions for ABI, GLM, and spacecraft contracts (over 28 

award fee periods) reveals improvements should be implemented in the award fee process. 

In our analysis, we reviewed documentation from the program and contracting officers’ files 

which included award fee letters, performance evaluation reports, event monitor and event 

coordinator assessment reports, contract staff comments, contractor self-assessment reports, 

performance evaluation plans, and earned value metrics. Our analysis included three contracts 

(ABI, GLM, and spacecraft) with a combined total of 28 award fee periods. In all we found that, 

in four award fee periods specific to the ABI contract, the program did not provide the 

contractor with award fees that were commensurate with its performance. Specifically: 

	 The contractor advised the program in two periods that it would have overruns totaling 

$86 million. However, the program gave little consideration of these overruns in its 

evaluation of the contractor. To date, the contract’s total overruns have reached $264 

million on a contract priced around $329 million. 

	 In three of the award fee periods, the program criticized the contractor for ineffective 

subcontractor management with statements such as “the cost and schedule issues at 

these suppliers continue to pose significant challenges to the program” and 

“subcontractor performance has been a challenge during this award fee period.” 

However, in each period, the program scored the contractor higher than we believe is 

justifiable based on the contract’s evaluation criteria. 

	 In two award periods, the program had issues interacting with the contractor. There 

were specific instances of the contractor not complying with government requests to 

cancel unnecessary testing and to use updated metrics, issuing incident reports that 

were difficult to understand, not providing promised resources, misrepresenting the 

status of a task, not providing immediate notification of problems, not holding planned 

meetings, and not providing feedback on assigned actions. However, the program did 

not adequately reflect these difficulties in its evaluation scores. 

	 In two award periods, the program evaluated contractor technical performance as 

“good” and “very good” respectively, meaning that at the very least there were 

“reportable deficiencies, but with little identifiable effect on overall performance.” 

However, the program identified that technical issues had “major cost and schedule 

impact to the program” in one period. In the other period, the program noted that half 

of the technical milestones were missed and that “delivery of the PFM [Protoflight 

Model] has slipped five months.” These assertions of significant impact to the program 

are not commensurate with the above description for a “good” rating. 

Despite these issues, the program awarded the contractor 78 percent of the total award fee 

pool available for these four periods. 

We informed the program as early as December 2012 that we had concerns that the award 

fees paid in four periods were not commensurate with contractor performance. As noted 

above, after sharing our concerns with the program, we discussed these award fees with 

FINAL REPORT NO. OIG-13-024-A 24 
                                                            

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program staff in detail and gave them multiple opportunities to provide documentation 

supporting these award fees. However, they asserted that the award fee determinations 

included substantial undocumented subjective considerations. Because these considerations are 

undocumented, we were unable to include them in our review. We suggest that this 

recommendation could be implemented by ensuring that, in the future, evaluation scores and 

rationale are effectively validated against the program’s evaluation criteria and all significant 

subjective rationale that affects the scores be documented. 

Recommendation 7: NOAA concurs. NOAA concurs with this recommendation; however, in 

its response, it disagreed with each part of the finding supporting this recommendation. 

Because of this response, we are concerned about its understanding of the finding and 

recommendation. We therefore provide the following comments to address NOAA’s 

misunderstanding of the finding and reiterate the need for the recommendation. 

	 NOAA asserts that the definitization timeline did not affect the government’s ability to 

negotiate costs. However, the NOAA Acquisition and Grants Office (AGO) provided us 

documentation that specified that $79.6 million was incurred prior to the determination 

of negotiated costs for the ECPs. Also, staff from the AGO explained that in 

circumstances where definitization is significantly delayed the government has very little 

room to negotiate because only the work that has not been completed can still be 

negotiated. 

	 NOAA states that it did not execute the ECPs under UCA authority; instead, they were 

issued as change orders. We were aware that the AGO did not use UCA authority to 

execute ECPs and have been careful in our report to only include FAR statements that 

are applicable to change orders. We have used the term UCAs in the report in an effort 

to use general concepts better understood by stakeholders so as not to delve into 

contracting minutia. The risks and impacts of lengthy delays definitizing change orders 

and contract actions is the same and, thus, using UCAs is reasonable in this context. 

	 NOAA states that limited staff resources in the AGO, coupled with managing mission 

requirements, primarily contributed to delays. However, AGO staff informed us that 

having insufficient staff has only contributed to delays by a matter of a few days. 

	 NOAA states that the significance of definitization delays was communicated and 

understood. However, as mentioned in our finding, the costs incurred by the contractor 

are not tracked by the AGO or reported in the weekly meetings. As a result, the AGO 

cannot fully understand the impact of definitization delays. 

	 NOAA comments that its use of 50 percent cost limits is supported by the inclusion of 

this limit in the Defense Federal Acquisition Regulation Supplement (DFARS). However, 

we agree with GAO’s statements in a January 2010 report39 that criticized the 

Department of Defense for immediately setting cost limits to the maximum 50 percent 

39 U.S. GAO, January 2010. Defense Contracting: DOD Has Enhanced Insight into Undefinitized Contract Action Use, but 

Management at Local Commands Needs Improvement, GAO-10-299. Washington, DC: GAO, 18, 20. 

FINAL REPORT NO. OIG-13-024-A 25 
U.S. DEPARTMENT OF COMMERCE OFFICE OF INSPECTOR GENERAL

permitted by the DFARS. GAO stated “contractors may have little incentive to quickly 

submit proposals and agencies have little incentive to demand their prompt submission, 

since funds are available to proceed with the work” and “obligating at or above 50 

percent may encourage extended periods of performance prior to definitization.” 

NOAA Bans OIG and GAO Attendance at Program Management Council 

Meetings 

On November 30, 2012, the NOAA Deputy Secretary for Operations informed the Inspector 

General via e-mail that his staff would not be invited to attend NOAA’s monthly Program 

Management Council (PMC) meeting. In the past, OIG and GAO have been routine observers 

at PMC meetings, where the NESDIS environmental satellite program management offices 

report progress and issues to NOAA (and NASA) executives. Because PMCs are the highest 

decision-level forum within NOAA for satellite programs, by attending these meetings, the OIG 

has been able to gain valuable insight into NOAA leadership’s direction and program execution 

for our ongoing satellite audits and oversight activities. 

NOAA stated that one reason for banning OIG (and GAO) attendance at PMC meetings was a 

recommendation in July 2012 by the NESDIS Independent Review Team (IRT) to restrict 

satellite oversight activities. However, the IRT recommendation was directed specifically to 

Department and NOAA executive offices and the reporting they required of satellite programs. 

The IRT did not recommend restricting OIG oversight. 

In an e-mail to the Inspector General on December 18, 2012, NOAA cited another reason for 

restricting OIG attendance—that NOAA program managers were not “free to bring their 

challenges to NOAA management without concern that pre-decisional actions or preliminary 

reports will be incorporated into external reviews before NOAA has had an opportunity to 

address them.” The OIG does not release predecisional material. Further, OIG’s ability to 

observe the NOAA decision-making process promotes higher-quality recommendations to 

improve the performance of the nearly $24 billion GOES-R and Joint Polar Satellite System 

(JPSS) programs. 

NOAA’s recent notification that they intend to restrict OIG attendance at other GOES-R 

meetings and reviews would, if implemented, create additional obstacles to effective oversight 

of the satellite programs. On February 8, 2013, we requested that NOAA provide us schedules 

and attendance information for upcoming GOES-R contractor and technical reviews in order to 

start planning our continued oversight and audit of the program. However, later that month, 

GOES-R program management presented a briefing slide to the PMC indicating that they intend 

to deny our request to attend these meetings. Again, the OIG has been a welcomed observer 

at technical and contractor meetings in the past—and have gained invaluable perspective on the 

GOES-R program that has made our reports more accurate and helpful to the program and 

stakeholders. 

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In response to two Congressional committee requests to the Department and NOAA to allow 

OIG attendance at PMC meetings,40 the Inspector General directed his staff to attend the 

March 2013 PMC. At the March PMC, the Acting Undersecretary for NOAA, chairing the 

meeting, indicated that NOAA was still working to address the Congressional requests. As of 

the date of this report, OIG attendance at PMC meeting (as well as other NESDIS satellite 

oversight and technical meetings) is still restricted. 

Over the past 3 months, while OIG has been banned from PMC meetings and waiting for 

NOAA to resolve this issue, NOAA has spent approximately $429 million (based on NESDIS 

budget plans) on its GOES-R and JPSS programs. Restricting OIG attendance hampers our 

oversight of these high-cost, challenging, primary mission-essential programs and our ability to 

effectively provide independent assessments to Congress and our other stakeholders. 

40 Letters from House Science, Space, and Technology Committee, February 28, 2013, and House Appropriations 

Commerce, Justice, Science, and Related Agencies subcommittee, March 5, 2013. 

FINAL REPORT NO. OIG-13-024-A 27 
 

 

U.S. DEPARTMENT OF COMMERCE OFFICE OF INSPECTOR GENERAL

Appendix A: Objectives, Scope, and 

Methodology 

This audit was initiated in February 2012, with fieldwork ending in November 2012. Our 

objectives were to assess (1) the adequacy of contract management and administration and (2) 

the effectiveness of management’s direction, monitoring, and collaboration for development of 

select components of the GOES-R program. 

The scope of our review included assessment of key contracts’ terms, modifications, and 

amendments, as well as their impacts on schedule and costs. After identifying the universe of 

GOES-R contracts and the values, risks, and challenges with each, we selected contracts for 

more in-depth analysis based on the magnitude of the challenges and impacts of known risks. 

We selected the ABI, GLM, core ground system (CGS), and spacecraft contracts; contract 

management and administration findings in this report pertain to the four aforementioned 

contracts. We also assessed integration efforts between the ground and space projects by 

evaluating management’s ability to provide direction, monitoring, and collaboration in areas 

such as project management and program systems engineering. 

We reviewed internal controls significant within the context of our audit objectives and 

employed a comprehensive methodology to achieve those objectives. Specifically, we 

	 identified and assessed the universe of GOES-R contracts, 

	 reviewed and assessed the impact of issues and risks with the program, 

	 interviewed NOAA, NASA, and contractor personnel, as well as observed selected 

program and project-level reviews locally and at contractor facilities, 

	 reviewed NOAA/NASA planning and project status documentation, 

	 reviewed past recommendations made by GAO, as well as NOAA’s standing review 

board and independent review teams, and 

	 examined program activities and documentation supporting baseline development. 

Although we could not independently verify the reliability of all the information we collected, 

we compared it with other available supporting documents to determine data consistency and 

reasonableness. Based on these efforts, we believe the information we obtained is sufficiently 

reliable for this report. 

We conducted our review under the authority of the Inspector General Act of 1978, as 

amended, and Department Organizational Order 10-13. We performed our work in 

accordance with generally accepted government auditing standards. Those standards require 

that we plan and perform the audit to obtain sufficient, appropriate evidence that provides 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. 

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U.S. DEPARTMENT OF COMMERCE OFFICE OF INSPECTOR GENERAL

Appendix B: GOES-R Suite of Instruments 

Instrument Functional Purpose 

Advanced Baseline Imager 

(ABI) 

As the primary instrument, the ABI enables forecasters to use 

the higher resolution images to track the development of 

storms in their early stages; it offers a wide range of 

applications related to weather, oceans, land, climate, and 

hazards such as fires, volcanoes, hurricanes, and storms that 

cause tornados. 

Geostationary Lightning 

Mapper (GLM) 

The GLM provides early indication of storm intensification over 

land and ocean areas, severe weather events, and potentially 

improved tornado warning lead time of up to 21 minutes, as 

well as data for long-term climate variability studies. NOAA 

anticipates the GLM will have immediate applications to aviation 

weather services, climatological studies, and severe 

thunderstorm forecasts and warnings. 

Space Environment In-Situ 

Suite (SEISS) 

The SEISS sensors will monitor the proton, electron, and heavy 

ion fluxes at geosynchronous orbit; assess radiation hazard to 

astronauts and satellites; and provide warnings of high flux 

events which will mitigate damage to radio communication. 

Solar Ultra Violet Imager 

(SUVI) 

The SUVI allows users to observe the sun in the extreme 

ultraviolet (EUV) wavelength range, characterizing complex 

active regions of the sun, and solar flares and eruptions—space 

weather that could disrupt power utilities, communication and 

navigation systems, and potential damage to orbiting satellites 

and the International Space Station. 

Extreme Ultra Violet/X-Ray 

Irradiance Sensor (EXIS) 

The EXIS sensor will monitor solar flares that can disrupt 

communications and degrade navigational accuracy, affecting 

satellites, astronauts, high latitude airline passengers, and power 

grid performance. 

Magnetometer (MAG) 

The MAG will provide measurements of the space environment 

magnetic field that controls charged particle dynamics 

potentially dangerous to spacecraft and human spaceflight. In 

addition, it will provide alerts and warnings to many customers, 

including satellite operators and power utilities. 

Source: OIG adapted from GOES-R program documentation 

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U.S. DEPARTMENT OF COMMERCE OFFICE OF INSPECTOR GENERAL

Appendix C: Potential Monetary Benefits 

Description Questioned 

Costs 

Funds Put to 

Better Use 

Unsupported ABI awardfee payments $ 8,857,750 $ 0 

Balance of ABI, GLM, 

and spacecraft contract 

award-fee pools 

$ 0 $ 105,940,788 

Source: OIG adaptation and analysis of NASA contract documentation 

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U.S. DEPARTMENT OF COMMERCE OFFICE OF INSPECTOR GENERAL

Appendix D: Award-Fee Structure Scoring for 

ABI, GLM, and Spacecraft Contracts 

GRADING TABLE 

Range of Performance 

Adjectival Rating Points Description 

Excellent 100–91 

Of exceptional merit; exemplary performance in a 

timely, efficient and economical manner; very minor 

(if any) deficiencies with no adverse effect on 

overall performance 

Very Good 90–81 

Very effective performance, fully responsive to 

contract; contract requirements accomplished in a 

timely, efficient and economical manner for the 

most part; only minor deficiencies 

Good 80–71 

Effective performance; fully responsive to contract 

requirements; reportable deficiencies, but with little 

identifiable effect on overall performance 

Satisfactory 70–61 

Meets or slightly exceeds minimum acceptable 

standards; adequate results; reportable deficiencies 

with identifiable, but not substantial, effects on 

overall performance 

Poor/Unsatisfactory Less than 

61 

Does not meet minimum acceptable standards in 

one or more areas; remedial action required in one 

or more areas; deficiencies in one or more areas 

which adversely affect overall performance 

Source: OIG, adapted from NASA contract documentation 

Any factor receiving a grade of “Poor/Unsatisfactory” (less than 61) will be assigned zero 

performance points for purposes of calculating the award fee amount. The contractor will not be 

paid any award fee when the total award fee score is “Poor/Unsatisfactory.” 

In order to earn a total overall rating of “Excellent,” the contractor must be under contract 

cost, on or ahead of schedule, and be rated “Excellent” under Technical Performance. 

FINAL REPORT NO. OIG-13-024-A 31 
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Appendix E: Agency Response 

FINAL REPORT NO. OIG-13-024-A 32 

UNITED STATES DEPARTMENT OF COMMERCE 

Tho Ooputy Under Secretary for 

Operations Washington, O.C. 20230 

m~ :! 9 2012 

MEMORANDUM FOR: Allen Crnwlcy 

Assiswm Inspector General for Systems Acquisition 

and IT Secut'ity 

FROM: Da

Depmy 

vid M. 

Un

K

der 

enn

Secre

edy 

tary 

[ ./

for 

..., 

Opemtions 

( lt-t L ~ \ 

SUI3JECT Audit qf'Geosuuiollw~· Operotional Ellvironn:ell/(1/ Sau·l/itc-R 

Series: Comprehe11sive Mitigation ApJ•roadt••s, Stro11g Systems 

Eugi11eering. and Cos/ Controls are Ne·edf'd to R(>t/uce Ri~ks u.f 

Coveragt! Gaps 

Drnfi OIG Audi t Rcpo11 

Thank you forthc opportunity to comment on the Ontce of the Inspector Genentl's draft audit 

rc:port evaluating the evaluating the Geostationary Operational Environmental Satcllitc-R Series 

(GOES-R) acquisition and dcvelor>ment effort. NOt\/\ 's specific comments on the report's 

tindings and recommendations are auachcd. 

Anachment 
U.S. DEPARTMENT OF COMMERCE OFFICE OF INSPECTOR GENERAL

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