GAO 

IJnited States General Accounting Office 

Transition Series 

December 1992 NASA Issues 

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Washington, D.C. 20548 ,, c 2 ,,.::’ ,“’ I ‘. ‘. ,, ,, 

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of the United States 

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Ikwmbcr 1992 

The Speaker of the House of Representatives 

The Majority Leader of the Senate 

In response to your request, this transition series report discusses 

mqjor policy, management, and program issues facing the Congress 

and the new administration at the National Aeronautics and Space 

Administration (NASA). This report recognizes the changes that have 

occurred since our first NASA transition report 4 years ago and 

summat’bxs the current challenges facing the agency: (1) bringing 

plans in line with likely budgets, (2) managing systems development 

more efficiently, (3) improving operations and oversight, and 

(4) preserving U.S. aeronautics leadership, 

As part of our high-risk series on program areas vulnerable to waste, 

fraud, abuse, and mismanagement, we are issuing a separate report 

that also addresses some of NASA'S current challenges, NASA Contract 

Management (GAOIHR-YSII, Dec. 1992). 

The oAo products upon which this transition series report is based 

are listed at the end of the report. 

We are also sending copies of this report to the President-elect, the 

Republican leadership of the Congress, and the 

Administrator-designate of NASA. 

Charles A. Howsher 
Contents 

NASA Issues 

Bringing Plans in 

Line With Likely 

Budgets 

4 

7 

,* .;: 

Managing 

Systems 

Development 

More Efficiently 

10 

Improving 

Operations and 

Oversight 

13 

Preserving U.S. 

Aeronautics 

Leadership 

17 

Rklated GAO 

Products 

19 

Tbansition Series 23 ‘; 

Page 2 GAOIOCG-93-27TK NASA ISSII~S 

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GAOIOCG-93-27TK NASA Issues .’ 

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In our November 1988 transition report, we 

noted that NASA needed to (1) launch 

planetary missions on time, 

(2) institutionalize a life-cycle cost 

management approach for the Space Station, 

and (3) develop a strategic plan and report 

full project costs to the Congress. Since that 

time, most of these issues have been at least 

partly resolved. 

When we issued that report, NASA'S program 

officials had established the protection of 

launch opportunities for four major 

planetary missions as their highest priority. 

The agency met the mission schedules that 

were in place at that time. NASA'S only 

remaining planetary mission currently under 

development-the Cassini mission to 

Saturn-is scheduled for launch in 

October 1997. 

In our report, we discussed the long-term 

cost savings potential of a life-cycle cost 

management approach for the Space Station 

program. However, the comprehensive use 

of such an approach, which can entail higher 

near-term development costs, has been 

hampered by budget levels lower than those 

required to support the program’s planned 

content and pace. As a practical matter, with 

budgets below planned levels likely to 

I’llgt? 4 GAO/OCG-93-27TR NASA Issues 
NASA Issue@ 

continue for the foreseeable future, the 

life-cycle approach cannot be fully 

implemented until upgraded and 

replacement systems are needed over the 

Space Station’s operating life. 

NASA still does not report complete cost 

estimates on all its significant projects, but it 

has improved its reporting of cost estimates 

on selected major development efforts. 

Under an agreement with its congressional 

authorization and appropriations 

subcommittees, NASA currently reports more 

comprehensive cost estimates on approved 

development projects when contractors’ 

costs to research and develop them are 

estimated at $200 million or more. 

In the late 1980s NASA intended to develop a 

strategic plan. However, no plan was issued 

until NASA was directed by the Congress to 

prepare one in association with its fiscal 

year 1993 budget request, That plan was 

deficient in a number of significant ways. 

Specific problems with the plan are 

discussed below in relation to a mismatch of 

more than $15 billion between the agency’s 

current 5year plan and its likely budgets. In 

addition, this report discusses other major 

issues facing NASA's management. All of 

these issues are known to NASA'S 

Page 5 GAO/OCG-93-27TR NASA Issues 
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m anagem ent and, in varying degrees, are 

currently being addressed by the agency. 

I’lIgc 6 GAO/OCG-Y3-27TK NASA Issues 
Bringing Plans in Line With Likely 

Budgets 

NASA'S strategic and program plans for future 

years do not adequately recognize the likely 

level of available resources. Prom the 

mid-1980s until last year, NASA'S budget 

increased from less than $8 billion to over 

$14 billion. However, the agency’s fiscal year 

1993 budget is essentially unchanged from 

that of 1992, and NASA has been told to 

expect only modest budget growth in the 

near future. But NASA'S plans call for future 

budgets that are well above likely funding 

levels. 

The overall situation is exacerbated by the 

increasing share of NASA'S total budget that is 

scheduled for the agency’s largest programs. 

In its fiscal year 1993 budget submission, 

NASA called for over $15 billion more for 

fiscal years 1993 through 1997 than the 

President’s budget, NASA'S 11 largest 

programs would absorb over three-quarters 

of the funding called for in the President’s 

budget. Programs with too much content 

and too fast a pace are a prescription for an 

annual cycle of cutbacks, restructuring, 

stretching of projects over more time than 

was planned, and potential terminations, as 

costs are postponed. 

” ‘., 

,,’ 

I’rrj’jc 7 GAOIOCG-93-27TK NASA ISSIICS 

‘. 
Need for 

Improvement in 

Strategic Plan 

In late 1988, we pointed out that NASA needed 

to develop a strategic plan that clearly stated 

the agency’s vision for the future and the 

steps needed to realize that future in an 

affordable manner. An effective strategic 

plan could provide a rational basis for 

helping NASA bring the content and pace of 

its programs more in line with likely future 

budgets. 

The Senate Committee on Appropriations 

directed NASA to complete an agencywide 

strategic plan by the time the fiscal year 1993 

budget was submitted to the Congress. The 

Committee specified certain criteria for the 

plan, including setting priorities, anticipating 

more modest future budget growth, and 

coming to grips with accurate cost 

estimates. In January 1992, NASA published a 

strategic plan called Vision 21. However, the 

plan did not indicate mission priorities, 

strike a balance between strategic planning 

and budgeting, or discuss plans for 

.’ ‘3:. 

,.I 

improving cost estimates. 

Improvement 

Efforts Under 

Way 

The NASA Administrator has stated that the 

development of a new strategic plan that 

matches specific program goals with 

realistic budgets is one of his highest 

priorities. Also, NASA officials told us they 

Page 8 GAO/OCG-93-27TR NASA Issues 

I 
Brlriging Plans in Line With Likely 

Budgets 

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will not pursue their major programs as 

currently planned at the expense of other 

essential activities if budget constraints 

require adjustments to programs. They are 

working to reshape their programs in 

recognition of more constrained future 

funding, and an agencywide review is under 

way with a goal of reducing the future cost 

of NASA'S major programs. However, the 

effects of NASA'S efforts to bring the content 

and pace of its programs more in line with 

likely budgets will not be known until the 

agency makes its fiscal year 1994 budget 

request. 

a 

/I ,‘.,, “v,,,. .” 

Pnge 9 GAO/OCG-93-27TR NASA Issues 

).’ 1. ‘, , 
In managing its research and development 

efforts, NASA must establish realistic cost, 

schedule, and technical performance goals 

and then work to identity and mitigate 

. ‘.’ ,’ 

problems that can significantly increase .’ .’ 

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costs, disrupt schedules, and impair 

performance. Currently, however, NASA ,' ,, 

; ,. projects often cost more than estimated, 

frequently do not meet schedules, and ‘,, 

sometimes perform at lower levels than 

originally forecast. Such cost, schedule, and 

performance problems arise for a myriad of 

reasons, some of which NASA can overcome. 

NASA must be willing to set priorities, identify 

and pursue cost-effective alternatives, and 

terminate low-priority projects. Two efforts 

that currently deserve special attention from 

NASA’S management are the Space Station 

Freedom and Advanced Solid Rocket Motor 

(hmf) programs. 

NASA faces a major challenge in keeping 

development of the Space Station on 

schedule and within its estimated cost 

without adversely affecting the facility’s 

remaining scientific purpose-microgravity 

and life science research. This challenge will 

be especially difficult because of the 

expectation of only modest growth in NASA'S 

b 

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Page 10 GAWOCG-93.27TR NASA Issues 
Mm~~ging Syntm~s Development More 

mleic~lltly 

,1 

budget and the program’s limited financial 

reserves, especially for the next few years. 

NASA estimates that Space Station Freedom 

will cost $30 billion to develop, construct, 

and operate through 1999, when permanent 

occupancy of the facility is scheduled to 

begin, However, we have reported that this 

estimate should be at least $40 billion 

because of additional equipment, assembly, 

and operations costs related to the facility, 

including a crew rescue vehicle and a 

centrifuge for life science experiments. The 

total estimated program cost increases to 

about $118 billion because another 

$78 billion will be needed to keep the facility 

fully operational between 2000 and 2027. 

I’agc I I 

Efforts are under way to examine how to cut 

the program’s cost. Some of these efforts 

may lead to increasing reliance on other 

countries’ funding, technology, or space 

hardware for the station. One such initiative 

is an assessment of the potential for 

adapting a Russian spacecraft for use as a 

crew rescue vehicle in lieu of NASA'S 

developing and constructing the vehicle at a 

cost well in excess of $1 billion. 

GAO/OC,G-93-27TR NASA ISSIICS 
ManaglngSyotemsDevelopmentMore 

Eftlclently 

Reduced Need for The ~sn~ was intended to enhance the space 

New Rocket shuttle’s safety and reliability and to provide 

Motor an additional 12,000 pounds of lift. So far, 

the ASRM’S development cost has almost 

doubled-to a total of more than $3 billion. 

Also, the ASRM’S first flight has slipped by 

over 2-l/2 years since the program was first 

approved, and another delay of about 2 years 

is expected. The cost of this additional delay 

is not yet known. 

NASA advisory groups have questioned the 

development of the ASRM because the motor 

currently in use has proven safe and reliable 

since being redesigned after the Challenger 

accident. In addition, the only two shuttle 

payloads requiring the added lift the ASRM 

would provide were the Advanced X-ray 

Astrophysics Facility and the Space Station’s 

laboratory modules. The X-ray facility will 

now be launched in smaller payloads. 

Moreover, as currently scheduled, the ASRM 

will not be available in time to launch the 

U.S. laboratory module for the Space 

Station, although it may be available for the 

Japanese and European laboratory modules. 

Ultimately, the ASRM may not be needed at all 

to help launch Space Station Freedom. NASA 

is currently evaluating alternatives to the 

space shuttle for launching the station. 

,, 

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Page 12 GAO/OCG-93-2 7TR NASA Issues 
Improving Operations and Oversight 

NASA can improve its efficiency and 

effectiveness by changing the way it 

manages its major operational system-the 

space shuttle-and the way it oversees its 

contractors. By strengthening its guidance 

and oversight, NASA could improve its 

operating efficiency and reduce the risk of 

inconsistent and substandard performance 

by its field centers and contractors. 

Contractor oversight could also be enhanced 

by improvements in accounting for and 

reporting contractors’ costs and 

government-owned property. 

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Shuttle Targeted 

for Reduction 

The space shuttle is the only U.S. vehicle for 

carrying humans into space, and it will have 

to continue operating into the Zlst century. 

To keep it flying, NASA must upgrade 

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. 

components to prevent obsolescence and 

improve some subsystems to maintain safety 

margins. The program to operate and 

maintain the shuttle is NASA'S most expensive 

one. It is, therefore, the most likely program 

to yield significant savings from the use of 

more efficient operating procedures. The 

shuttle currently consumes well over a 

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quarter of NASA'S budget, and the agency is ;, 

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trying to significantly reduce the system’s 

future operating costs. To do so may require 

that many flight processing procedures and 

“‘7 .’ 

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Improving Operations and OversIght 

related documentation requirements be 

streamlined or eliminated. Special care must 

be taken to see that this streamlining does 

not compromise the safety of ground 

personnel or crews. 

Need for 

Improvement in 

ContrxtManagement 

Activit;ies 

NASA spends almost 90 percent of its funds 

each year on contracts, and since the late 

198Os, the agency has acknowledged in its 

Federal Managers’ FinanciaI Integrity Act 

reports that its contract management is 

inadequate. Without effective management 

of its contracts, NASA cannot reasonably 

ensure that its contract funding is properly 

used and accounted for. In some cases, 

inadequate contractor oversight has 

contributed to cost increases, schedule 

delays, and performance problems with 

space equipment. 

NASA’S difficulties in contract management 

stem mostly from three major problems. The 

first is the previously discussed mismatch 

between plans and budgets. With such a high 

proportion of its budget linked to contracts, 

NASA is forced to adjust the planned content 

and pace of work under contract when 

optimistic expectations are met with funding 

levels substantially lower than planned. 

Pago 14 GAO/OCG-93-27TR NASA Issues 

b 

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i .,’ :, ,*, ), 
Improving Operations and Oversight 

The other two problems involve instances of 

noncompliance by NASA’S field centers with 

contract management requirements and the 

use of ineffective procedures and systems in 

overseeing contractors. The latter problem 

includes inadequacies in NASA’S accounting, 

reporting, and property management 

systems. For example, contractors’ costs and 

reports on government-owned property are 

sometimes not received, are filed late, or 

contain errors and insufficient detail. In 

addition, the results of property management 

system surveys that are intended to provide 

NASA with reasonable assurance that its 

contractors’ property reports are reliable are 

not always reported to NASA. NASA also has a 

long-standing and well-recognized need to 

develop an adequate agencywide accounting 

system to help improve its oversight of 

contractors by providing more timely and 

accurate information. However, NASA’S 

efforts have been slow, and the agency’s 

planning for the new system has been 

inadequate. 

NASA now has an opportunity to correct its 

financial management weaknesses. A Chief 

Financial Officer providing strong and 

sustained leadership could greatly improve 

the agency’s financial management systems 

and operations by eliminating existing 

“., ,_‘,/ ,t 

Page 16 GAO/OCG-93-27TR NASA Issues 
Improving Operations and Overslght 

system weaknesses and expediting the 

development and implementation of the new 

system. 

NASA has taken, or plans to take, steps to 

correct most of the contract management 

and contractor oversight problems discussed 

in our reports in recent years. NASA officials 

have also initiated other corrective actions in 

contract management and related areas. 

NASA'S problems have been many years in the 

making, and they will not be corrected 

quickly or easily. NASA'S management faces a 

formidable challenge that will require vision, 

perseverance, and strong leadership. 

Page 16 GAO/OCG-93.27TR NASA Issues 
Preserving U.S. Aeronautics Leadership 

Foreign companies have made significant 

gains in the globa market for aeronautics 

products at the expense of U.S. 

manufacturers. According to the National 

Research Council, foreign companies now 

dominate the general aviation/commuter 

market, seriously threaten the subsonic jet 

transport market, and are positioning 

themselves for a leading role in the 

supersonic transport market. The Council 

also noted that foreign governments, in 

concert with their industries, have increased 

their investments in aeronautics research 

and development, especially for the subsonic 

jet transport market. A major airline 

manufacturer values this market at between 

$1.6 trillion and $1.8 trillion through 2030. 

Research Support NASA is responsible for helping the U.S. 

Limitations aeronautics industry maintain its leadership 

position. However, NASA'S aeronautics 

research funding has been limited relative to 

the agency’s overall budget. An analysis of 

NASA'S budget over the last 20 years 

illustrates that the agency has placed greater 

emphasis on space programs than it has on 

,aeronautics programs. In fiscal year 1992, 

NASA budgeted about $1 billion-about 

7 percent of its total budget-for its 

aeronautics program. 

l’nge 17 GAOIOCG-93-27TR NASA Issues 

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Preserving U.S. Aeronautics Leadership 

Moreover, within its limited aeronautics 

budget, NASA has emphasized fundamental 

research rather than systems technology 

(demonstration and validation) efforts. 

While useful in supporting long-term 

competitiveness, fundamental research is 

less likely to affect near-term 

competitiveness. Under current policies, 

NASA has limited its support for the systems 

technology efforts needed to reduce the 

aeronautics industry’s economic and 

technical risks in applying new technology. 

NASA has devoted only a small part of its 

research activities to the area with the 

greatest near-term sales potential-large, 

subsonic jet transports. In addition, NASA has 

not adequately supported the U.S. industry’s 

aircraft wind tunnel test requirements. 

NASA recently reorganized to achieve a better 

balance of its aeronautics research and 

technology programs in sub-, super-, and 

hypersonics. However, given existing 

policies, it will be difficult for NASA to put 

more emphasis on systems technology work. 

Pnge IS GAOlOCG-93-27TR NASA Issues 

,,I.. 2”;. 

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:“: I’ 
Related GAO Products 

Plans and 

Budgets 

NASA: Large Programs May Consume 

Increasing Share of Limited Future Budgets 

(GAo/NsIAD-92-278, Sept. 4, 1992). 

NASA Budget: Potential Shortfalls in Funding 

NASA'SF>-Y~ZWP~~~(GAO~~-NSIAD-~~-~~, Mar. 17, 

1992). 

NASA 5-Year-Planning (~~omxA~-92-155~, Feb. 

19, 1992). 

NASA Issues (GAo/ocG-89-15TR, Nov. 1988). 

Systems 

Development 

Space Shuttle: Status of Advanced Solid 

Rocket Motor Program (GAOmSIAD-93-26, 

Nov. 17, 1992). 

Space Programs: NASA'S Independent Cost 

Estimating Capability Needs Improvement 

(GAOMIAD-93-73, Nov. 5, 1992). 

Space Station: Status of Financial Reserves 

(GAO/NSIAD-92-279, July 20, 1992). 

Weather Satellites: Action Needed to Resolve 

Status of the U.S. Geostationary Satellite 

Program (GAommD-91-252, July 24, 1991). 

Page 19 

, 

,:. 

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GAOiOCG-93-27TR NASA Issues 
. 

,, 

Itelated GAO Products 

Questions Rem ain on the Costs, Uses, and 

Risks of the Redesigned Space Station 

(GAO~~-NSIAD-Q~-~~, M ay 1, 1991). 

;. 

space ~anSpOI%atiOn: NASA Has No Firm 

Need for Increasingly Costly Orbital 

M aneuvering Vehicle (GAO&IAD-90492, 

July 31, 1990). 

Operations and NILsA Contract M anagem ent (GAomR-93-11, 

Oversight Dec. 1992). 

Financial M anagem ent: NASA'S Financial 

Renorts Are Based on Unreliable Data 

(GAO/AF'MD-93-3, Oct. 29, 1992). 

NASA Procurem ent: Opportunities to Improve 

Contract M anagem ent (CX~IT-NsIm-9233, 

M ay 7, 1992). 

NASA Procurem ent: Improving the 

M anagem ent of Delegated Contract 

Functions (GAOMSIAD-92-q M ar. 27, 1992). 

NASA Procurem ent: Approach to Sharing Risk 

Under Certain Research and Developm ent 

Contracts Is Starting to Change 

(GAOfPNSIAD-92-12, M ar. 18, 1992). 

Pnye 20 GAOIOCG-93-27TR NASA Issues 
NASA Procurement: Agencywide Action 

Needed to Improve Management of Contract 

Modifications (GAOINSIAD-w-87, Mar. 2, 1992). 

Space Shuttle: NASA Faces Challenges in Its 

Attempt to Achieve Planned Flight Rates 

(GAO~SIAD-92-32, Dec. 6, 1991). 

NASA Procurement: Management Oversight of 

Contract Cost and Time Changes Could Be 

Enhanced (GAOINSIAD-91-2~1, Sept. 30, 1991). 

Space Project Testing: Uniform Policies and 

Added Controls Would Strengthen Testing 

Activities (GAO~NSIAD-91-248, Sept. 16, 1991). 

Financial Management: Actions Needed to 

Ensure Effective Implementation of NASA'S 

Accounting System (GAO~WMD-91-74, Aug 21, 

1991). 

Management Issues at the National 

Aeronautics and Space Administration 

(GAO/I'-NSIAD-91-48, Aug 1, 1991). 

,11 

.,’ ‘,’ ., ,/ 

&ace Shuttle: External Tank Procurement 

Does Not Comply With Competition in 

Contracting Act (GAOINSIAD-89-62, Dec. 16, 

1988). - . 

Pnge 2 1 GAOIOCG-93-27TR NASA Issues 

Y 
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Related GAO Products ,, 

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1 ‘/ ’ .,, .1. 

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Aeronautics 

Leadership 

NASA Aeronautics: Efforts to Preserve US. 

Leadership in the Aeronautics Industry Are 

Limited (GAOIT-~~~~-92-14, Mar. 18, 1992). , ‘,, 

Pago 22 GAO/OCG-93-27TR NASA lwuf?s 

*U.S.G.P.O.:1993-336-740 
Transition Series 

Economics BudgetIsSues (GAOKXG-93iTR). 

hestment (GAO/OCG-93-2TR). 

Management Government Management Issues 

(GAOIOCG-93-3TR). 

Financial Management Issues 

(GAOIOCG834TR). 

Information Management and Technology 

kW.K?S (GAO/OCG-93-5TR). 

l?I’OgIYkmEvaluation kSueS(GAO/OCG-93-6TR). 

The Public seI.ViCe (GAOIOCG-93-7TR). 

Program Areas Health Care Reform (GAo~ocG-93r8TR). 

National &?CWityISSUeS (GAOIOCG-938TR). 

Financial Services Industry Issues 

/ ’ 

” 

(GAO/OCG-93-10TR). 

International Trade Issues (GAO/OCG-93-11TR). 

Commerce Issues (cAo/occ-9342m). 

Energy ISSUeS (GAO/OCG-9%13TR). 

Page 23 GAOIOCG-93-2 7TR NASA Issues 

., ,,‘. _, 

,‘_ ‘. 

.) , : :, 

‘( 

., 

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,‘,, 

,, , . 

I, 
‘.” 

: 

, 

,, 

TransItIon (Jerks 

, 

~~SpOrtatiOIl ISSUeS (GAO/OCG-93-14TR). 

Food and Agriculture Issues 

(GAO/OCG-93-15TR). 

Environmental Protection Issues 

(GAOIOCG-93-16TR). 

Natural Resources Management Issues 

(GAOIOCG-93-17TR). 

Education Issues (GAOIOCG-93-18~~). 

Labor kWeS (GAOlOCG-931QTR). 

Health and Human Services Issues 

(GAOIOCG-93-20TR). 

Veterans Affairs Issues (cAo/ocG-93-2im). 

Housing and Community Development 

ISSUeS (GAO/OCG-93-22TR). 

Justice kSSueS (GAO/OCG-9~231'1~). 

Internal Revenue Service Issues 

(GAWOCG-93-24TR). 

Foreign Economic Assistance Issues 

(GAO/OCG-93-25TR). 

Page 24 GAO/OCG-9%27TR NASA Issues 

.: 

!, /’ 

,,‘<:: 

:: 

./ 
TransItion Series 

Foreign AffairS~SSUeS (GAOOCG-93-26TR). 

NASAkSUeS (GAOIOCG-93-27TR). 

General SeWiCeS Issues(GAO/OCG-93-28TR). 

0 II.:;,. (;.I’.(‘,. 199&33&7'CO Page 26 

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GAOIOCG-9%27TR NASA Issues 

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