Agency Financial Rep

FY 201

nasa.gov

National Aeronautics and Space Administration
Front Cover:

Outside Front Main Image: 

Curiosity Landing Site Panorama, with the Heights of Mount Sharp, Mars. (Credit: NASA/JPL-Caltech/Malin Space 

Science Systems (MSSS))

Outside Front Bottom Images (left to right): 

MSL lifts off from Cape Canaveral aboard a United Launch Alliance Atlas V. (Credit: NASA/Scott Andrews/Canon); 

Curiosity Approaching Mars, Artist’s Concept. (Credit: NASA/JPL-Caltech); Curiosity’s Sky Crane Maneuver, Artist’s 

Concept. (Credit: NASA/JPL-Caltech)

Inside Front:

Space Shuttle Discovery Flown Over the U.S. Capitol (Credit: NASA/Smithsonian Institution/Harold Dorwin)

Rear Cover:

Inside Rear: The International Space Station. (Credit: NASA)

Outside Rear: Self-Portrait of Curiosity by Rover’s Arm Camera. (Credit: NASA/JPL-Caltech/MSSS)

Cover Image Credits
NASA FY 2012 Agency Financial Report iii

 

Message from the Administrator

 November 15, 2012

I am pleased to present to you the National Aeronautics and Space 

Administration’s (NASA) fiscal year (FY) 2012 Agency Financial 

Report (AFR). In this report, we share the Agency’s financial and 

programmatic performance highlights over the past 12 months. I 

fully understand the public’s expectation for transparency and stewardship from our Government; this AFR reports back to you, the 

American people, to the President of the United States, and to Congress, NASA’s accomplishments and stewardship of the resources 

entrusted to the Agency.

In 2012, NASA celebrated the pioneering Americans who decades 

ago planted our Nation’s flag on the surface of the Moon. The Agency’s daring spirit of adventure and discovery, exemplified in its past 

pioneers, remains fervent and undiminished in 2012. Looking to the 

future with great expectations, NASA’s achievements provide inspiring evidence that the Agency 

is once again on the brink of a new era in space exploration. In August 2012, we celebrated the 

landing of the aptly named Curiosity Rover on the surface of Mars. NASA’s people continue to 

work as tirelessly as they worked to guide the successful landing of Curiosity to inspire the next 

generation space scientists and explorers to carry on NASA’s mission for the Nation. 

The end of the Space Shuttle program this past year brought about a concern for NASA’s future. 

As I said on July 1, 2011, America’s leadership in space will continue for at least the next half-century. Our shift toward increased commercialization of space flights frees NASA to pursue its bold 

mission of human exploration beyond low earth orbit and ultimately land humans on Mars. This 

shift is well under way; the Dragon spacecraft completed the first commercial resupply mission 

to the International Space Station (ISS) in May 2012. Working with the U.S. commercial space 

industry provides safe, reliable, and cost-effective crew and cargo transportation to the ISS and 

allows NASA to focus on developing the new Orion Multi-Purpose Crew Vehicle and the Space 

Launch System to carry future astronauts farther into deep space than we have ever been. This 

year, NASA delivered the crew module to Kennedy Space Center on July 2, 2012, in preparation 

for a fiscal year 2014 demonstration mission. 

In addition, we are continuing a robust portfolio of over 1,000 research and technology investments 

that will boost the Nation’s capability to operate more efficiently in space and enable long-term, 

cost-effective deep space exploration. These investments include numerous high-value technology 

projects that are not currently commercially feasible, but hold great promise for our space exploration programs and commercial uses yet unknown.

We are proud of our progress this year, both in our program accomplishments and in the way we 

have managed our resources to efficiently deliver on our commitments. I encourage you to read 
iv NASA FY 2012 Agency Financial Report

the Performance section of this report to learn more about our program activities. I also encourage you to read the Financial section to get a better understanding of how we are managing our 

resources – your tax dollars. This AFR provides an integrated picture of the relationship between 

our financial stewardship and programmatic accomplishments. It also includes reports from independent auditors and the Inspector General. These independent reports highlight opportunities for 

improvement as we strive to continue to do better. 

NASA makes every effort to insure that performance data are subject to the same attention to detail 

as is devoted to our scientific and technical research. With this in mind, I can provide reasonable 

assurance that the performance data in this report are reliable and complete. Any data limitations 

are documented explicitly in this report. 

In addition, NASA accepts the responsibility of accounting for and reporting on its financial activities. During FY 2012, NASA received an unqualified “clean” opinion on its financial statements. 

This is the second year in a row that NASA has received an unqualified opinion. NASA continues 

to be in substantial compliance with the Federal Financial Management Improvement Act. Based 

on the results of this year’s efforts, I am able to provide reasonable assurance that this report’s 

financial data are reliable and complete.

We are proud of the strides we made this year in our programs and in our management of the 

Agency’s resources. For those seeking additional details regarding our performance and progress 

towards achieving our Strategic Goals, I invite you to read our Annual Performance Report, which 

will be released with the Congressional Budget Justification in early 2013.

We are excited to be part of this new age of space exploration and discovery. The discoveries we 

are making are re-writing textbooks and inspiring the next generation who want to make their own 

discoveries. As we begin a new fiscal year, we will continue our steady pace toward achieving 

our Strategic Goals. We look forward to sharing our new discoveries in the year ahead with the 

American people. 

Charles F. Bolden, Jr.

 Administrator
NASA FY 2012 Agency Financial Report v

Message from the Office of the Chief Financial Officer

 November 15, 2012

The National Aeronautics and Space Administration is firmly 

committed to delivering the highest standards of financial accountability, transparency and reporting in support of the nation’s 

aeronautics and space mission. Our Agency Financial Report is an 

important component in documenting and meeting those standards. 

In the report, the Agency discloses and reports on our key performance and financial outcomes for the fiscal year. 

As Administrator Bolden makes clear in his Message, the complexity, diversity and sheer volume of NASA’s Mission portfolio 

continues to grow as NASA enters a new era of space exploration, commercial partnerships and scientific research. The goals 

and performance results described in this Report help to describe 

and explain how NASA is meeting these exciting challenges. The 

Report also describes how NASA’s financial management requirements have necessarily evolved and grown to support this increasingly varied and complex mission and program environment. More 

than ever, it is vitally important that our financial systems and processes provide NASA leadership 

and program officials with the right information at the right time to make the most cost effective 

operational decisions. I invite you to read our full Agency Financial Report for highlights of our 

2012 performance and to better understand this intersection of NASA’s program and financial 

management. More detailed performance reporting will be available in our Annual Performance 

Report, to be released in February 2013. 

I am proud to report that NASA, for the second year in a row, received an unqualified or “clean” 

opinion on its financial statements. Clearly, we have continued to build on our prior year results 

as we enhance and improve our financial management processes and activities. Additionally, the 

Agency maintains a robust system of financial and operational controls overseen by senior leadership. The Agency is able to report that it is substantially compliant with the Federal Financial 

Management Improvement Act (FFMIA) for fiscal year 2012.

We are pleased with our continued progress and achievements, and remain committed to ensuring 

sound financial management. I appreciate the continued support of the entire Agency, with special 

thanks to the Office of Inspector General, as we continue to work together in our quest for excellence in financial management.

Dr. Elizabeth Robinson

 Chief Financial Officer
vi NASA FY 2012 Agency Financial Report

Table of Contents

Table of Contents

Management Discussion and Analysis . . . . . . . 1

Welcome to NASA.

Mission and Vision Statement. 

Organization. 

Workforce. 

Shared Values, Shared Results. 

FY 2012 In Review. 

Mission Performance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1

Performance Overview. .

Performance Summary. .

Spotlight: Mars Science Laboratory. .

Strategic Goal 1: Extend and sustain human activities across the 

Solar System.. .

Strategic Goal 2: Expand scientific understanding of the Earth and 

the universe in which we live.. .

Strategic Goal 3: Create the innovative new space technologies for 

our exploration, science, and economic future.. .

Strategic Goal 4: Advance aeronautic research for societal benefits. 28

Strategic Goal 5: Enable program and institutional capabilities to 

conduct NASA’s aeronautic and space activities.. .

Strategic Goal 6: Share NASA with the public, educators, and 

students to provide opportunities to participate in our Mission, 

foster innovation, and contributes to a strong national economy.. .

Financial Performance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3

Financial Overview. .

NASA Financial Values. .

Financial Highlights. .

Results of Operations. .

Sources of Funding. .

Balance Sheet. .

Limitation of the Financial Statements. .
NASA FY 2012 Agency Financial Report vii

Systems, Controls, and Legal Compliance . . . . . . . . . . . . . .47

Management Assurances . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48

Financial Systems Strategies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50

Looking Forward . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .51

Financials . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53

Introduction to the Principal Financial Statements . . . . . . . . . . . . . . . . 54

Financial Statements, Notes, and Supplemental Information . . . . . . . 55

Letter from the Inspector General on the Audit . . . . . . . . . . . . . . . . . . 89

Report of the Independent Auditors . . . . . . . . . . . . . . . . . . . . . . . . . . . 91

Report of the Independent Auditors on Internal Control . . . . . . . . . . . . 93

Report of Independent Auditors on Compliance and Other Matters . . 97

Management’s Response to Independent Auditors Report . . . . . . . . . 98

Other Accompanying Information . . . . . . . . . . 99

Office of Inspector General Letter on NASA’s Top Management and 

Performance Challenges . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 100

FY 2012 Inspector General Act Amendments Report . . . . . . . . . . . . 101

Background . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 118

NASA’s Audit Follow-up Program . . . . . . . . . . . . . . . . . . . . . . . . . 119

FY 2012 Audit Follow-up Results . . . . . . . . . . . . . . . . . . . . . . . . . 120

Improper Payments Information Act (IPIA) Assessment . . . . . . . . . . 124

Improper Payments Information Act Reporting Details . . . . . . . . . . . 126

Recapture Audit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 133

Schedule of Spending . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 136

Summary of Financial Statement Audit and Management 

Assurances. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 138
viii NASA FY 2012 Agency Financial Report

Photo (above): Endeavour and Atlantis come nose-to-nose while being moved from and into processing, respectively 

(Credit: NASA)
NASA FY 2012 Agency Financial Report 1

Welcome to NASA. 

Mission and Vision Statement. 

Organization. 

Workforce. 

Shared Values, Shared Results. 

Photo (above): Space Shuttle Enterprise and the Empire State Building, New York City, New York; Space Shuttle 

Endeavour and the Golden Gate Bridge, San Francisco, California; and Space Shuttle Discovery and the National 

Mall, Washington, DC. (Credit: NASA). Photo (opposite): MSL-Curiosity fires its ChemCam instrument laser at a rock 

in this artist’s depiction. (Credit: NASA)

Management Discussion 

and Analysis
2 NASA FY 2012 Agency Financial Report

Welcome to NASA

The fiscal year 2012 (FY 2012) Agency Financial Report (AFR), provides a review of NASA’s 

major programmatic and financial results for FY 

2012. It integrates financial and program performance to demonstrate NASA’s stewardship

and accountability. It highlights our achievements in FY 2012 and points to the financial 

and programmatic challenges and opportuni -

ties facing the Agency in the years ahead and

management’s efforts to meet them. The AFR

describes NASA’s successful landing of Curiosity Rover on Martian soil on an extraordi -

nary space science mission to understand the

Martian environment, which is one element of

NASA’s bold mission of deep space exploration 

and, ultimately, landing humans on Mars. Also

highlighted is the successful Space Explora -

tion Technologies (SpaceX) flight to the International Space Station (ISS), the first private 

sector resupply mission to the ISS. This points 

to strong future private sector spaceflight related 

industries now being nurtured with NASA ’s

resources and scientific research. As NASA 

prepares for deep space exploration beyond

low earth orbit, in addition to technological and 

scientific difficulties, the Agency must balance 

budget requirements in an environment of other 

competing national priorities. This is a serious 

challenge that the programmatic and financial 

communities will work together to address.

The AFR explains that NASA demonstrates 

stewardship and accountability through compliance with the Chief Financial Officers’ Act 

(CFO Act) and the Government Performance 

and Results Act (GPRA, as amended). NASA 

accounts for its financial activities according 

to a set of generally accepted accounting principles applied by the Federal Accounting Standards Advisory Board. 

How NASA links resources to program per -

formance for greater accountability is further 

demonstrated in the Financial Section of this 

AFR. The Financial Section shows the net cost 

of our operations by both major programs and 

the Agency as a whole to help the stakeholders 

understand the connection between resource 

use and program accomplishment. In addition, this section explains significant changes 

in NASA’s financial condition from FY 2011 to 

FY 2012. 

NASA could not be as successful without 

financial systems that meet requirements of 
NASA FY 2012 Agency Financial Report 3

the Federal Financial Management Improve -

ment Act. The AFR describes our compliance 

with this Act, as well as our system of checks 

and balances, as required by Office of Management and Budget’s (OMB) Circular A-123, 

which places responsibility on management 

to establish controls to safeguard assets and 

improve efficiency of operations.

Finally, the AFR presents NASA’s audited 

financial statements and the independent 

auditor’s financial audit opinion for readers to 

better understand the financial condition of the 

agency.

Mission and Vision

 Statement

NASA was created by the National Aeronautics 

and Space Act of 1958 to provide for research 

into problems of flight within and outside the 

Earth’s atmosphere and to ensure that the 

United States conducts activities in space 

devoted to peaceful purposes for the benefit 

of mankind. In 2010, the President unveiled 

an ambitious new direction for NASA, laying 

the groundwork for a sustainable program of 

exploration and innovation. Called the National 

Space Policy, this direction extends the life of 

the International Space Station (ISS), supports 

the growing commercial space industry , and 

addresses important scientific challenges. It 

also continues NASA’s commitment to robust 

human space exploration, science, and aero -

nautics programs. Later in 2010, Congress 

passed the NASA Authorization Act of 2010, 

which provided the Agency important guidance 

on program content and conduct.

On February 14, 2011, NASA released a new 

Strategic Plan that embodies the spirit, prin -

ciples, and objectives of this and other recent 

policies and legislation. The plan introduced a 

A cutaway of the Orion Multi-Purpose Crew Vehicle 

(MPCV). The crew module is shrouded inside the 

Launch Abort System atop the service module.

(Credit: NASA) 
4 NASA FY 2012 Agency Financial Report

new framework for NASA ’s strategic direction 

and included the following Vision and Mission 

statements:

• To reach for new heights and reveal the 

unknown, so that what we do and learn will 

benefit all humankind; and

• Drive advances in science, technology, and 

exploration to enhance knowledge, education, innovation, economic vitality, and stewardship of Earth.

Organization

The overarching strategies defined in the 2011 

Strategic Plan govern the management and 

conduct of NASA ’s aeronautics and space 

programs.

Each organization uses these strategies in 

developing and executing its plans to achieve 

the Agency’s strategic goals and annual performance plan. The strategies also provide a 

framework that guides NASA’s support for other 

areas of national and Administration policies.

NASA’s mission is organized into three core 

programmatic Mission Directorates, one Mis -

sion Support Directorate, and three additional 

Offices, through which it implements its science, research, and technology development 

programs and manages its operations.

Aeronautics Research Mission Directorate 

(ARMD) conducts foundational research into 

early-stage concepts and ideas, develops new 

technologies and operational procedures and 

demonstrates the potential of promising new 

vehicles, operations, and safety technology in 

relevant environments. ARMD’s cutting-edge

research yields technologies that overcome a 

wide range of aeronautics challenges for the 

Nation’s current and future air transportation 

system.

Human Exploration and Operations Mission Directorate (HEOMD) is responsible for 

human and robotic space exploration. HEOMD 

operates the International Space Station and 

develops technologies and capabilities for

human exploration beyond low Earth orbit.

It manages the commercial crew and cargo 

development programs, construction of the

Orion Multi-Purpose Crew Vehicle, development of a new heavy lift rocket known as the 

Space Launch System, launch operations,

space communications, rocket propulsion testing, human health and safety , and exploration 

technology development.

Science Mission Directorate (SMD) conducts 

the scientific exploration of the Earth, Sun, solar 

system, and universe. Its strategies include 

Overarching Strategies

Investing in next-generation technologies and approaches to spur 

innovation;

Inspiring students to be the future 

scientists, engineers, explorers, and 

educators through interactions with 

NASA’s people, missions, research, 

and facilities;

Expanding partnerships with international, intergovernmental, academic, 

industrial, and entrepreneurial communities and recognizing their role 

as important contributors of skill and 

creativity to NASA’s missions and for 

the propagation of NASA’s results;

Committing to environmental stewardship through Earth observation and 

science, and the development and use 

of green technologies and capabilities 

in NASA missions and facilities; and

Securing the public trust through 

transparency and accountability in 

NASA’s programmatic and financial 

management, procurement, and reporting practices.
NASA FY 2012 Agency Financial Report 5

ground-, air-, and space-based observatories; 

deep-space automated spacecraft; planetary 

orbiters; Landers; and surface rovers. It also 

develops innovative science instruments and 

techniques. 

Mission Support Directorate (MSD) provides 

efficient Agency-level management support of 

programmatic Mission Directorates. It includes 

Headquarters and Centers’ management and 

operations, facility construction, budget and 

finance, information technology, human capital 

management, and infrastructure. Organizing 

mission support services into a Mission Directorate ensures shared management practices 

across the Agency and provides maximum visibility for management support services inside 

and outside the Agency. 

Office of Education (Education) develops 

and manages a portfolio of educational programs for students and teachers at all levels. 

Education seeks to develo p a vibrant pool of 

future workforce for sustainable support of 

national and NASA mission by attracting and 

retaining students in STEM disciplines, and 

raising public awareness of NASA ’s activities. To achieve these goals, Education works 

in partnership with other government agencies, 

non-profit organizations, museums and the 

education community at large.

Office of the Chief Technologist (OCT) is the 

principal adviser to the Administrator and advocate on matters concerning agency-wide technology policy and programs. OCT manages 

NASA’s Space Technology programs and coordinates and tracks all technology investments 

across the Agency.

Office of the Chief Scientist (OCS) is the 

principal adviser to the Administrator and advocate on matters concerning Agency science 

programs, strategic planning, and the evaluation of related investments. OCS ensures scientific endeavors are aligned with and fulfill the 

Administration’s science objectives.

The Administrator’s Staff Offices support 

the Administrator’s administrative responsibilities by providing a range of high-level guidance 

and support in critical areas like safety and mission assurance, technology planning, education, equal opportunity, information technology, 

financial administration, small business administration, international relations, and legislative 

and intergovernmental affairs.

Administratively, NASA is organized into one 

Headquarters Office located in Washington, 

DC, nine operating Centers located across the 

country, and the Jet Propulsion Laboratory , a 

federally funded research and development 

center operated under a contract with the California Institute of Technology. NASA works in 

partnership with academia, the private sector, 

state and local governments, other Federal 

agencies, and a number of international organizations to support and achieve its mission.
6 NASA FY 2012 Agency Financial Report

Organizational Structure

*Center functional office directors report to Agency functional Associate Administrators. Deputy and below report to Center leadership.

Dashed lines indic ate independent organizations that report to the Administrator. Visit http://www.nasa.gov/about/org_index.html for staf f 

names and links to the associated offices.

Administrator

Deputy Administrator

Associate Administrator

Chief of Staff

Associate Deputy Administrator

Associate Deputy Administrator for Policy 

Integration

Assistant Associate Administrator

Education General Counsel

International and 

Interagency Relations

Legislative and Intergovernmental Affairs*

Mission Support 

Directorate

Ames Research 

Center

Goddard Flight 

Research Center

Dryden Flight 

Research Center

Glenn Research 

Center

Langley Research 

Center

Jet Propulsion 

Laboratory

Johnson Space 

Center

Kennedy Space 

Center

Marshall Space 

Flight Center

Stennis Space 

Center

Human Capital Management

Strategic Infrastructure

Headquarters Operations

NASA Shared Services Center

Internal Controls and 

Management Systems

Procurement

Protective Services

NASA Management Office

Inspector General

Advisory Groups:

NAC and ASAP

Aeronautics Research 

Mission Directorate

Human Exploration 

and Operations 

Mission Directorate

Science Mission 

Directorate

Chief Technologist

Chief, Safety and 

Mission Assurance Chief Scientist

Chief Information 

Officer*

Chief Health and 

Medical Officer

Chief Engineer Chief Financial 

Officer* Communications* Diversity and Equal Opportunity

Small Business 

Programs

Reports to the Administrator

Reports to the Deputy Administrator

Reports to the Associate 

Administrator

As of September 30, 2012
NASA FY 2012 Agency Financial Report 7

Centers and Facilities Nationwide

NASA

Headquarters

Goddard Space

Flight Center

(GSFC)

Glenn

Research

Center

(GRC)

5

1

2

3

4

6

Other NASA Facilities

(noted by numbers on map)

1) Plum Brook Station, Sandusky, OH managed by GRC

2) Software Independent Verification and Validation Facility, Fairmont, WV managed by GSFC

3) Goddard Institute for Space Studies, New York, New York managed by GSFC

4) Wallops Flight Facility, Wallops, VA managed by GSFC

5) White Sands Test Facility and Space Network, White Sands, NM managed by JSC

6) Michoud Assembly Facilities, New Orleans, LA managed by MSFC

Ames 

Research

Center

(ARC)

Dryden Flight

Research

 Center

(DFRC)

Jet 

Propulsion

Laboratory

(JPL)

Johnson 

Space

Center

(JSC)

Stennis Space

Center (SSC) and 

NASA Shared

Services Center 

(NSSC)

Marshall Space

Flight Center

(MSFC)

Kennedy

Space 

Center

(KSC)

Langley

Research

Center

(LaRC)

Other NASA Facilities

(noted by numbers on map)

1) Plum Brook Station, Sandusky, OH managed by GRC

2) Software Independent Verification and Validation Facility, Fairmont, WV managed by GSFC

3) Goddard Institute for Space Studies, New York, New York managed by GSFC

4) Wallops Flight Facility, Wallops, VA managed by GSFC

5) White Sands Test Facility and Space Network, White Sands, NM managed by JSC

6) Michoud Assembly Facilities, New Orleans, LA managed by MSFC
8 NASA FY 2012 Agency Financial Report

Workforce

As of the end of FY 2012, NASA employed more than 18,500 civil servants, including full-time, 

part-time, term appointees, student and other non-permanent workers at nine Centers, Headquarters, and the NASA Shared Services Center. In addition, approximately 5,000 additional workers 

are employed at the Jet Propulsion Laboratory, operated by the California Institute of Technology. 

To see more information about workforce profile and distribution, visit the Workforce Information 

Cubes for NASA at http://wicn.nssc.nasa.gov/.

This year, the Office of Human Capital Management (OHCM) released a Workforce Plan that 

outlines the policies, procedures, and structures necessary for ensuring that critical workforce 

skills and capabilities are available and effectively used to implement the Agency’s mission. The 

overarching goals of the 2012 Workforce Plan are to identify, acquire, and sustain the workforce 

necessary to conduct NASA’s current and future missions. The Workforce Plan has five goals: 

• Workforce Goal 1: Develop strategic human capital and position plan for mission success—analyze, develop policy, conduct organizational design and resource alignment to guide NASA’s 

multi-sector workforce. 

• Workforce Goal 2: Recruit and retain a highly qualified, diverse workforce—identify, recruit, and 

retain a diverse workforce with the right skills, at the right time, at the right place. 

• Workforce Goal 3: Train and develop talent—Develop and conduct training and employee 

development initiatives that address today’s and tomorrow’s workforce requirements to enable 

mission success. 

• Workforce Goal 4: Sustain a high-performing workforce—enable managers to sustain an environment conducive to workforce productivity, innovation and effectiveness. 

• Workforce Goal 5: Enable efficient human capital services—develop effective human resources 

programs supported by comprehensive, timely, and reliable information. 

OHCM will revise the Workforce Plan periodically to support NASA’s evolving strategic direction, 

priorities, and workforce needs. 

The Mars Science Laboratory (MSL) team in the MSL Mission Support Area react after learning 

the Curiosity rover has landed safely on Mars and images begin to arrive at the Jet Propulsion 

Laboratory, Sunday, August 5, 2012 in Pasadena, California. (Credit: NASA/Bill Ingalls)
NASA FY 2012 Agency Financial Report 9

Shared Values

Shared Results

NASA’s tradition of excellence is rooted on 

the four uncompromising shared core values 

of safety, integrity, teamwork, and excellence, 

as well as the firm belief that failure is not an 

option.

Safety: Constant attention to safety is the cor -

nerstone of mission success. NASA is committed, individually and as a corporate team, to 

protecting the safety and health of the public, 

NASA team members, and the assets that the 

Nation entrusts to the Agency.

Integrity: NASA is committed to maintaining an 

environment of trust, built on honesty , ethical 

behavior, respect, and candor. Agency leaders enable this environment by exemplifying, 

encouraging, and rewarding a vigorous, open 

flow of communication on all issues, in all directions, and among all employees without fear of 

reprisal. Building trust through ethical conduct 

as individuals and as an organization is a necessary component of mission success.

Teamwork: The most powerful force behind 

NASA’s mission success is a multi-disciplinary 

team of diverse, competent people across all 

NASA Centers and Headquarters. Teamwork 

at NASA embodies the belief that each team 

member brings unique experience and important expertise to project issues. This approach 

to teamwork improves the likelihood of identifying and resolving challenges to safety and mission success. NASA is committed to cultivating 

and sustaining an environment that fosters this 

approach to teamwork and processes that support equal opportunity, collaboration, continuous learning, and openness to innovation and 

new ideas.

Excellence: To achieve the highest standards 

in engineering, research, operations, and management in support of mission success, NASA 

is committed to nurturing an organizational culture in which individuals make full use of their 

time, talent, and opportunities to pursue excellence in both the ordinary and the extraordinary.

From March 1 to May 29, 2012, the twin GRAIL spacecraft, Ebb and Flow, worked together to map the Moon’s 

gravitational field. The mission entered its extended phase on August 30, 2012. Without the two spacecraft 

work in tandem, the mission could not have been completed. (Credit: NASA/JPL-Caltech/MIT)
10 NASA FY 2012 Agency Financial Report

FY 2012 In Review

Mission Performance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .12

Performance Overview . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12

Performance Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14

Spotlight: Mars Science Laboratory . . . . . . . . . . . . . . . . . . . . . . . . . . . 16

Strategic Goal 1: Extend and sustain human activities across the Solar 

System. .............................................. 18

Strategic Goal 2: Expand scientific understanding of the Earth and the 

universe in which we live. ................................ 20

Strategic Goal 3: Create the innovative new space technologies for 

our exploration, science, and economic future. . . . . . . . . . . . . . . . . 24

Strategic Goal 4: Advance aeronautic research for societal benefits. . 28

Strategic Goal 5: Enable program and institutional capabilities to 

conduct NASA’s aeronautic and space activities. .............. 31

Strategic Goal 6: Share NASA with the public, educators, and students to provide opportunities to participate in our Mission, foster 

innovation, and contributes to a strong national economy. ....... 33

Photo: The Orion Ground Test Vehicle arrived at NASA’s Kennedy Space Center Operations & Checkout (O&C) Facility on April 21. (Credit: NASA)
NASA FY 2012 Agency Financial Report 11

Financial Performance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3

Financial Overview. .

NASA Financial Values . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35

Financial Highlights. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38

Results of Operations. .

Sources of Funding. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41

Balance Sheet. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43

Limitation of the Financial Statements. .
12 NASA FY 2012 Agency Financial Report

Mission Performance

Performance Overview

Congress, the Government Accountability Office (GAO), and the Office of Management and 

Budget (OMB) have recognized NASA for its culture of performance and data-driven performance management. In recent years, the Agency has worked hard to improve its performance 

management system to increase accountability, transparency, and oversight. NASA continues to 

add sophistication and discipline to this system, leading to more consistent performance results 

across NASA’s missions and to make the best use of the resources entrusted to the Agency by 

the American people.

In FY 2012, NASA continued along the course it set with the 2011 Strategic Plan. At the heart of 

NASA’s strategic goals remain the core missions of human space exploration, Earth and space 

science, aeronautics, and technology development. The 2011 Strategic Plan also marked another 

step in the evolution of NASA’s performance management. The Agency set a new strategic goal 

to emphasize the importance of supporting the capabilities that enable NASA’s missions. The 

plan also calls out education and outreach as fundamental Agency activities in support of NASA’s 

Mission and Vision. These strategic additions to NASA ’s performance framework support more 

effective and holistic decision-making. Strategic Goals 5 and 6 allow NASA leaders to track organizational, institutional, and outreach performance beyond discreet program, projects, and spaceflight missions. This information makes data-driven decision-making possible across all of NASA’s 

activities, and gives decision-makers the objective performance information they need to prioritize 

and balance funding between individual mission needs and the requirements of institutional and 

program capabilities that enable those missions. NASA’s strategic goals are as follows:

• Strategic Goal 1: Extend and sustain human activities across the solar system.

• Strategic Goal 2: Expand scientific understanding of the Earth and the universe in which we 

live.

• Strategic Goal 3: Create the innovative new space technologies for our exploration, science, 

and economic future.

• Strategic Goal 4: Advance aeronautics research for societal benefit.

• Strategic Goal 5: Enable program and institutional capabilities to conduct NASA’s aeronautics and space activities.

• Strategic Goal 6: Share NASA with the public, educators, and students to provide opportunities to participate in our Mission, foster innovation, and contribute to a strong national 

economy.

Using Agency rating criteria, NASA measures and communicates its progress toward achieving 

its performance goals (PGs), targets for the next three to five years, and annual performance 

goals (APGs) for FY 2012. NASA determines these ratings based on a series of internal assessments that are part of ongoing monitoring of NASA’s program and project performance. External 
NASA FY 2012 Agency Financial Report 13

entities, such as scientific peer review committees, aeronautics technical evaluation bodies, and 

the OMB, validate the ratings prior to publication in the Annual Performance Report (APR). This 

year, NASA will present its APR and final ratings with the FY 2014 Congressional Budget Justification in February 2013. 

Rating Criteria for Performance Goals*

Rating Performance Goal and High Priority Performance Goal (HPPG)

Green

(On Track)

NASA achieved or expects to achieve the intent of the performance goal or high priority performance 

goal (HPPG) within the estimated timeframe. NASA achieved the majority of key activities supporting this 

performance goal or HPPG.

Yellow

(At Risk)

NASA expects to achieve the intent of the performance goal or HPPG within the timeframe; however, there 

is at least one likely programmatic, cost, or schedule risk to achieving the performance goal or HPPG.

Red NASA does not expect to achieve this performance goal or HPPG within the estimated timeframe.

(Not on Track)

White

(Canceled or 

Postponed)

NASA senior management canceled this performance goal and the Agency is no longer pursuing activities 

relevant to this performance goal or the program did not have activities relevant to the performance goal 

during the fiscal year.

*As part of the President’ s initiative to improve the performance of the Federal Government, 

NASA selected five HPPGs in the FY 2010, which have been retired as of FY 2012. NASA rates 

progress toward HPPGs using its performance goal criteria. Goals created for the next cycle of 

this initiative are designated as Agency Priority Goals, instead of HPPGs, and can be found on 

performance.gov.

Rating Criteria for Annual Performance Goals (APG)

Timeframe: 

When Will 

the APG Be 

Achieved

Rating Criteria for APG Types

Rating

Single Milestone or 

Deliverable

Multiple Deliverables, Targeted 

Performance, and Efficiencies

On-going Activities, Services, 

or Management Processes

Current FY as 

planned.

NASA achieved the event 

or the deliverable met the 

intent of the APG within 

the timeframe.

The program/project reached the 

stated numeric target.

The intended result of the 

program/project was achieved 

as defined by internally held 

success criteria.

Green

Achieve 

next FY (will 

not achieve 

this FY as 

planned).

NASA did not achieve this APG in the current fiscal year, but anticipates achieving it 

during the next fiscal year.

Will not be Yellow

achieved, but 

progress was 

made.

N/A NASA failed to achieve this APG, 

but made significant progress 

as defined by reaching 80% of 

the target or other internally held 

success criteria.

The intended results of the program/project were not achieved 

in this fiscal year, but significant 

progress was accomplished, as 

defined by internally held success criteria.

Will not be 

achieved.

NASA did not achieve the 

APG and does not anticipate completing it within 

the next fiscal year.

NASA achieved less than 80% of 

the target or other internally held 

success criteria.

Neither intended results nor significant progress were achieved. 

The progress toward the APG 

does not meet standards for 

significant progress for the internally held success criteria.

Red

Will not be 

achieved due 

to cancellation or 

postponement.

NASA senior management canceled this APG and the Agency is no longer pursuing activities 

relevant to this APG or the program did not have activities relevant to the APG during the fiscal 

year. White
14 NASA FY 2012 Agency Financial Report

Performance Summary

In FY 2012, NASA reviewed progress toward 96 two-to five-year performance goals and 137 

APGs. Prior to accessing these measures, the FY 2012 Performance Plan was updated to reflect 

changes due to both Congressional budget action and to correct inaccuracies found in several 

measures, which were not found prior to the measures’ provision in the FY 2013 budget submission to the Congress (available at http://www.nasa.gov/news/budget/index.html). 

The summary of NASA’s preliminary assessment of progress by strategic goal is provided below. 

The Agency will release final ratings with APR in February 2013.

Performance Goals*

FY 2012 Performance Goal Ratings by Strategic Goal

0%

20%

40%

60%

80%

100%

FY 2011

Performance Goals 108

FY 2012

Performance Goals 96

*These ratings reflect the preliminary year end assessment of progress. Final ratings will become available in February 2013.
NASA FY 2012 Agency Financial Report 15

Annual Performance Goals*

FY 2012 APG Ratings by Strategic Goal

0%

20%

40%

60%

80%

100%

FY 2011

APGs 149

FY 2012

APGs 137

*These ratings reflect the preliminary year end assessment of progress. Final ratings will become available in February 2013.
16 NASA FY 2012 Agency Financial Report

Spotlight: Mars Science Laboratory

Curiosity, NASA’s Largest and Most 

Capable Rover Ever, Sent to Another Planet

NASA’s Mars rover Curiosity drove about 70 feet (about 21 meters) on the mission’s 21st Martian day, or sol (August 30, 

2012), and then took images with its Navigation Camera that are combined into this scene, which includes the fresh tracks. 

The view is centered toward the west-northwest. (Credit: NASA/JPL-Caltech)

NASA’s Mars Science Laboratory (MSL) mission set down a large, mobile laboratory—

the rover Curiosity—at Gale Crater , using 

precision landing technology that makes many 

of Mars’ most intriguing regions viable destinations for the first time. During the 23 months 

after its landing, Curiosity will analyze dozens 

of samples drilled from rocks or scooped from 

the ground as it explores with greater range 

than any previous Mars rover. Curiosity carries 

the most advanced payload of scientific gear 

ever used on Mars’ surface, a payload more 

than 10 times as massive as those carried by 

earlier Mars rovers. Its assignment: Investigate whether conditions have been favorable 

for microbial life and for preserving clues in the 

rocks about possible past life.

NASA launched the Mars Science Laboratory spacecraft on November 26, 201 1. Mars 

rover Curiosity landed successfully on the floor 

of Gale Crater on August 6, 2012, Universal 

Time. Engineers designed the spacecraft to 

steer itself during descent through Mars’ atmosphere with a series of S-curve maneuvers 

similar to those used by astronauts piloting 

NASA space shuttles. During the three min -

utes before touchdown, the spacecraft slowed 

its descent with a parachute, and then used 

small retrorockets mounted around the rim of 

an upper stage. In the final seconds, the upper 

stage acted as a sky crane, lowering the upright 

rover on a tether to the surface. Curiosity is 

about twice as long (about 3 meters or 10 feet) 

and five times as heavy as NASA’s twin Mars 

Exploration Rovers, Spirit and Opportunity , 

launched in 2003. It inherited many design elements from them, including six-wheel drive, a 

rocker-bogie suspension system, and cameras 

mounted on a mast to help the mission’s team 

on Earth select exploration targets and driving 

routes. Unlike earlier rovers, Curiosity carries 

equipment to gather samples of rocks and soil, 

process them, and distribute them to onboard 

test chambers inside analytical instruments.

The overarching science goal of the mission 

is to assess whether the landing area has or 

ever had environmental conditions favorable to 

microbial life, both its habitability and its preservation. Curiosity landed near the foot of a layered mountain inside Gale Crater. 
NASA FY 2012 Agency Financial Report 17

Layers of this mountain contain minerals that 

form in water and may also preserve organics, 

the chemical building blocks of life.

The portion of the crater floor where Curiosity landed has an alluvial fan likely formed by 

water-carried sediments. New observations 

from Curiosity of rounded pebbles embedded 

within rocky outcrops provide concrete evidence that a stream once ran vigorously across 

this area on Mars, creating the alluvial fan. This 

evidence—images of rocks containing ancient 

streambed gravels—is the first of its kind. 

For the NASA MSL/Curiosity 

mission page, click here .

For the JPL MSL/Curiosity 

mission page, click here .

Link to a Watery Past

In this image from NASA’s Curiosity Rover, a 

rock outcrop called Link pops out from a Martian surface that is elsew here blanketed by 

reddish-brown dust. The fractured Link outcrop has blocks of exposed, clean surfaces. 

Rounded gravel fragments, or clasts, up to a 

couple inches (few centimeters) in size are in 

a matrix of white material. Many gravel-sized 

rocks have eroded out of the outcrop onto the 

surface, particularly in the left portion of the 

frame. The outcrop characteristics are consistent with a sedimentary conglomerate, or a rock 

that was formed by the deposition of water and 

is composed of many smaller rounded rocks 

cemented together. Water transport is the only 

process capable of producing the rounded 

shape of clasts of this size. 

The Link outcrop was imaged with the 100-millimeter Mast Camera on September 2, 2012, 

which was the 27th sol, or Martian day of 

operations. 

The name Link is derived from a significant 

rock formation in the Northwest Territories of 

Canada, where there is also a lake with the 

same name. 

Scientists enhanced the color in this version 

to show the Martian scene as it would appear 

under the lighting conditions we have on Earth, 

which helps in analyzing the terrain. 

(Credit: NASA/JPL-Caltech/MSSS)

The image shows the layering in the base of Mount 

Sharp (the science destination for the Curiosity Rover) 

that made Gale Crater such an attractive science target 

for the Mars Science Laboratory Mission. The colors in 

this image have been enhanced to simulate the lighting 

conditions that exist on Earth, which was done to make 

comparisons with similar terrains easier. For scale, the 

conical mound in the foreground in the center of the 

image is approximately 1,000 feet (300 meters) across 

and 300 feet (100 meters) high. Mount Sharp is about 

3 miles (5 kilometers) high. (Credit: NASA/JPL-Caltech/

MSSS)
18 NASA FY 2012 Agency Financial Report

Strategic Goal 1:

Extend and sustain human activities across the Solar 

System.

For over 50 years, NASA has been tasked 

with developing the capabilities that will 

support the country’s long-term human spaceflight and exploration efforts. With the help of 

domestic and international partners, NASA 

has embarked on a steady progression of 

activities and milestones that has prepared 

the Agency for the more difficult challenges 

ahead—expanding permanent human pres -

ence beyond low Earth orbit. NASA will pursue 

this goal through strategic investments and 

partnerships to drive advances in science and 

technology. To be successful, NASA will need 

equal and full participation from international 

partners and the commercial sector.

Commercial Partner Successfully 

Completes First Commercial Cargo 

Demonstration Mission

On May 31, 2012, Space Exploration 

Technologies (SpaceX) completed its 

final Commercial Orbital Transportation Services (COTS) demonstration 

mission, and became the first commercial resupply service mission pro -

vider to the International Space Station 

(ISS). This mission was a huge step 

toward allowing regular cargo carrying 

missions to the ISS by the U.S. private 

sector.

SpaceX conducted the historic flight 

within 11 months of the final space 

shuttle flight, minimizing the gap in 

the U.S. space station cargo transportation capability. The SpaceX 

Falcon 9 rocket lifted off from the Kennedy Space Center on May 22, 2012 

and spent the first couple of mission 

days testing the Dragon spacecraft’s 

ability to perform specific tasks while maintaining a safe distance about 1.5 miles below the 

space station. 

Given the success of these demonstrations, 

NASA authorized SpaceX to approach the 

ISS on May 25. After closing to about 32 feet, 

Expedition 31 flight engineer Don Pettit of 

NASA used the space station’s robotic arm to 

capture Dragon and berth it to the ISS. The 

station crew opened the hatch, unloaded new 

supplies, and then packed return cargo before 

closing the hatch and releasing the Dragon 

on May 31. The Dragon spacecraft splashed 

down off the coast of California that same day, 

and NASA confirmed that SpaceX had successfully completed all COTS demonstration 

mission objectives.

Successful completion of this demonstration 

mission, along with SpaceX’s recent announceThe SpaceX Dragon commercial craft is berthed to the Earth-facing 

side of the International Space Station’s Harmony Node. (Credit: 

NASA)
NASA FY 2012 Agency Financial Report 19

ments of commercial launch agreements with 

other customers, indicate both goals of the 

COTS project—to enable the ability of NASA 

and commercial partner teams to develop complicated space systems that help NASA meet its 

needs, and to strengthen U.S. industrial capability and competitiveness—are being accomplished. Following the successful completion of 

this COTS demonstration mission, NASA will 

implement the Commercial Resupply Services 

contract for regular resupply mission to the ISS, 

beginning in FY 2013.

Other Key Achievements in FY12

In August 2012, NASA signed new agreements with three American commercial companies to facilitate industry’s development of an 

integrated crew transportation system. These 

agreements will enable advances that could 

ultimately lead to the availability of commercial human spaceflight services for government 

and commercial customers. NASA’s partners 

include Sierra Nevada Corporation, SpaceX, 

and The Boeing Company.

ISS has successfully transitioned from assembly to full utilization, and continues to operate 

safely on orbit with six crew. NASA continues to 

work closely with the Center for the Advancement of Science in Space (CASIS), to manage 

the portion of the International Space Station 

that operates as a U.S. national laboratory.

The three programs managed by the Explo -

ration Systems Division (ESD), the heavylift Space Launch System (SLS) booster, the 

Orion Multipurpose Crew Vehicle (MPCV), and 

the Ground Systems Development Operations 

(GSDO), continue to make appreciable progress. The Orion MPCV Program delivered the 

Exploration Test Flight 1 (EFT-1) crew module 

to Kennedy Space Center on July 2, 2012, in 

preparation for a Fiscal Year 2014 demonstration mission. The SLS and GSDO programs 

successfully completed several key Agencywide reviews in a process that will lead to project confirmation. 

The National Research Council’s recent 

report, titled “Recapturing a Future for Space 

Exploration: Life and Physical Sciences,” 

called on NASA to “reinvigorate its partnership 

with the life and physical sciences research 

community.” NASA has taken several important steps in response. After nearly a decade 

of uncertainty about the future of animal 

research in space, NASA has reinitiated firm 

plans to conduct basic biological research 

with rodents on the ISS. NASA has also reestablished its program in atomic physics, with a 

new payload in development that is projected 

to create the coldest matter in the universe 

aboard the ISS by 2017.

The six members of the Expedition 32 crew pose for a 

group portrait aboard the International Space Station 

(Credit: NASA)

Click here to read the National 

Research Council’s report.
20 NASA FY 2012 Agency Financial Report

Strategic Goal 2:

Expand scientific understanding of the Earth and the 

universe in which we live.

NASA is expanding the scientific understanding of Earth and the unive rse by pursuing 

the answers to profound science questions: 

How and why are Earth’ s climate and environment changing? How do planets and life 

originate? How does the universe work, and 

what are its origin and destiny? Are we alone? 

Using the priorities set by the Nation’s best scientific minds through the National Academies’ 

decadal surveys in Earth science, heliophysics, planetary science, and astronomy and 

astrophysics, NASA develops missions of scientific exploration. NASA uses space observatories and space probes to view the Earth from 

space, observe and visit other bodies in the 

solar system, and gaze out into the galaxy and 

beyond. NASA analyzes the data gathered by 

these science missions to enhance humanity’s 

understanding of its place in the universe

NASA Satellites Provide 

Forecasters with Timely 

Observations of Tropical Storm 

Isaac as it Drenches Gulf Coast 

States

Scientists used the data captured by NASA 

satellites to learn more about hurricanes and 

increase their predictability . NASA satellites 

provided forecasters with valuable data on 

rainfall rates within Tropical Storm Isaac as the 

storm tracked over Louisiana and Mississippi. 

Isaac supplied large quantities of rain, drawing 

its power from the warm waters of the Gulf of 

Mexico. NASA’s Tropical Rain Measuring Mission (TRMM) satellite captured relevant and 

timely data for forecasters. For example, the 

From TRMM’s Precipitation Radar 

observations, scientists at NASA ’s Goddard Space Flight Center developed a 

three-dimensional view of rainfall within 

then Hurricane Isaac. The 3-D image 

showed that very powerful thunder -

storms near Isaac’s eye were reaching 

heights of almost 11 miles. Those tall 

thunderstorms near a hurricane’s center 

release heat and contribu te to a hurricane’s power. 

The Moderate Resolution Imaging 

Spectroradiometer (MODIS) instrument 

onboard NASA’s Aqua satellite captured 

this visible true color image of Hurricane 

Isaac on August 29 at 2:50 p.m. EDT 

after it had made its second landfall. 

(Credit: NASA Goddard/MODIS Rapid 

Response Team) 
NASA FY 2012 Agency Financial Report 21

mission revealed that some areas within Isaac 

were dropping rainfall at a rate of 2.75 inches 

per hour. 

The TRMM satellite twice flew directly above 

Hurricane Isaac as it began to pound Louisiana 

with strong winds and heavy rainfall. NASA provided the operational forecasters, in near-real 

time, an animated fly-by of Hurricane Isaac’s 

rainfall and structure. 

Click here to read more about 

the Tropical Rain Measuring 

mission, a joint mission between 

NASA and the Japanese space 

agency JAXA .

NASA Heliophysics System 

Observatory Captures Earth’s 

Reaction to Solar Flares

NASA maintains a fleet of research spacecraft 

that monitor the Sun’s activity and its impacts 

on Earth and the solar system. Solar flares are 

one continually surprising solar phenomena 

observed by these satellites. When the energy 

from these flares impacts Earth’s atmosphere, 

it alters the atmospheric structure. This can 

affect the reliability of technologies located in 

space, such as communications and global positioning satellites (GPS), and on 

the ground, such as electric 

power grids. Eruptive flares 

on the Sun are the larg -

est explosive events in the 

solar system.

In March 2012, the Thermosphere, Ionosphere, Mesosphere, Energetics and 

Dynamics (TIMED) space -

craft and the Solar Dynamics Observatory (SDO) 

measured the impact of a 

powerful solar flare on the 

Earth’s upper atmosphere. 

In direct response to the 

energy input from the flare, 

the upper atmosphere 

was observed to heat up. During the heating 

impulse, the thermosphere puffed up like a 

marshmallow held over a campfire, temporarily increasing the drag on low-orbiting satellites. 

Extra drag helps clear space junk out of Earth 

orbit, but it decreases the lifetime of useful satellites by bringing them closer to re-entry.

Other flare observations by SDO and the 

Ramaty High Energy Solar Spectroscopic 

Imager (RHESSI) revealed that a substantial 

fraction of flares, approximately 15 percent, 

have a pronounced “late phase” that can pump 

40 percent more energy into space than previ -

ously realized. Solar Flares are intense bursts 

of highly energetic radiation caused by the 

release of magnetic energy associated with 

sunspot regions. NASA studies these bursts 

because radiation from space weather poses 

a danger to astronauts and spacecraft, and 

the energetic ultraviolet to X-ray emission from 

flares adds additional heat to the Earth’s upper 

atmosphere. Observations like those from 

SDO and RHESSI help NASA understand the 

hazards of space weather to equipment and 

humans. 

Observations by the instruments on the Solar Dynamics Observatory show 

the solar flaring and the surprising increase in extreme ultraviolet irradiance 

long after the impulsive flare phase. (Credit: NASA)
22 NASA FY 2012 Agency Financial Report

Wide-Field Infrared Survey 

telescope (WISE) has Spotted 

Millions of “Supermassive” Black 

Holes

NASA’s Wide-field Infrared Survey Explorer 

(WISE) mission has led to a bonanza of newfound supermassive black holes and extreme 

galaxies called hot DOGs, or dust-obscured 

galaxies. Images from the telescope have 

revealed millions of dusty black hole candi -

dates across the universe and about 1,000 

even dustier objects thought to be among the 

brightest galaxies ever found.

The latest findings are helping astronomers 

better understand how galaxies and the behemoth black holes at their centers grow and 

evolve together. For example, the giant black 

hole at the center of our Milky W ay galaxy, 

called Sagittarius A*, has 4 million times the 

mass of our sun and has gone through periodic 

feeding frenzies where material falls towards 

the black hole, heats up, and irradiates its surroundings. Bigger central black holes, up to a 

billion times the mass of our sun, may even 

shut down star formation in galaxies. In two 

other WISE papers, researchers report finding 

what are among the brightest galaxies known, 

one of the main goals of the mission. So far , 

they have identified about 1,000 candidates. 

These extreme objects can pour out more than 

100 trillion times as much light as our sun. 

With its all-sky infrared survey, NASA’s Wide-field Infrared Survey Explorer, or WISE, has identified millions of 

quasar candidates. Quasars are supermassive black holes with masses millions to billions times greater than 

our sun. The black holes “feed” off surrounding gas and dust, pulling the material onto them. As the material falls 

in on the black hole, it becomes extremely hot and extremely bright. This image zooms in on one small region 

of the WISE sky, covering an area about three times larger than the moon. The WISE quasar candidates are 

highlighted with yellow circles. (Credit: NASA/JPL-Caltech/UCLA)
NASA FY 2012 Agency Financial Report 23

Fermi Gamma-Ray Space 

Observatory Observations of Dwarf 

Galaxies Provide New Insights on 

Dark Matter

While scientists still don’t know what makes up 

the mysterious dark matter thought to dominate the universe, a new study of dwarf galaxies orbiting the Milky Way using NASA’s Fermi 

Gamma-ray Space Telescope has chipped 

away at the possibilities, offering intriguing 

hints about the nature of dark matter. 

Dark matter constitutes about 80 percent of 

the matter in our universe. By studying numerous dwarf galaxies—satellite systems that orbit 

our own Milky W ay galaxy—NASA’s Fermi 

Gamma-ray Space Telescope has produced 

some of the strongest limits yet on the nature of 

the hypothetical particles suspected of making 

up dark matter.

This dwarf spheroidal galaxy in the constellation Fornax is a satellite of our Milky 

Way and is one of 10 used in Fermi’s dark matter search. The motions of the 

galaxy’s stars indicate that it is embedded in a massive halo of matter that cannot 

be seen. (Credit: ESO/Digital Sky Survey 2)
24 NASA FY 2012 Agency Financial Report

Strategic Goal 3:

Create the innovative new space technologies for our 

exploration, science, and economic future.

For decades, NASA investment in space 

technology has helped make the United 

States the global leader in space explora -

tion and has significantly contributed to the 

technology-based U.S. economy. NASA continues that legacy today through a balanced 

portfolio of technology development at various 

stages of technical maturity . NASA invests in 

revolutionary concepts that help develop the 

Nation’s workforce and innovation community. 

NASA generates transformative and crosscutting technology breakthroughs that enable the 

Agency’s missions and benefit the commercial 

sector. NASA creates new ideas and markets 

that strengthen the economy and contribute to 

U.S. technological global leadership.

Developing the Innovation 

Community

During FY 2012, NASA invested in a potentially 

revolutionary concept to robotically construct 

Lunar and Martian infrastructure using in-situ 

resources. This system is based on contour 

crafting and other state-of-the-art three-dimensional (3-D) printing technologies, and it has 

potential for safe and affordable landing pads, 

roads, and protective hangers on the Moon and 

Mars. Automated building technologies could 

also revolutionize construction on Earth, especially in dense urban environments and remote 

regions of the globe. NASA invests in revolu -

tionary concepts, such as this university-led 

effort, not only to advance the technology stateof-the-art today, but also to develop new skills 

in the space technology workforce required for 

tomorrow’s breakthroughs.

Click here for more information 

about in-situ resource utilization.

NASA helps develop the Nation’s space technology workforce, in part, by investing in revolutionary concepts pursued by academic faculty 

and students. In FY 2012, one such student 

developed and characterized fast-burning 

solid fuels for hybrid rocket motors. The project resulted in a new casting procedure and 

experimental demonstration of enhanced fuel 

characteristics. While this project provides 

valuable data for the development of future 

propulsion systems, perhaps the greater value 

is in the professional development of the student researcher, who recently accepted a position as a Propulsion Development Engineer at 

a prominent aerospace firm. He directly credits 

his NASA fellowship for the opportunity. 

Click here for more information 

about the student research.

Generating Transformative 

and Crosscutting Technology 

Breakthroughs

In July, NASA launched the Inflatable Reentry Vehicle Experiment (IRVE-3) by sounding 

rocket. This experiment represents a critical 

step in achie ving rapid infusion of missioncapable hypersonic inflatable decelerator systems, and it demonstrates NASA’s commitment 

to transformative technol ogy breakthroughs. 

The IRVE-3 test showed that a space capsule 

can use an inflatable outer shell to slow and 

protect itself as it enters an atmosphere at 

hypersonic speed during planetary entry and 

descent. 

Click here for more information 

about IRVE-3.
NASA FY 2012 Agency Financial Report 25

In August, the Mars Science Laboratory Entry, 

Descent and Landing Instrumentation (MEDLI) 

suite entered the Martian atmosphere installed 

in the heat shield of the MSL aeroshell. MEDLI 

successfully returned the most complete 

Mars entry data set in history. MEDLI provided atmospheric entry progress informa -

tion to operators in real time and helped verify 

the MSL spacecraft aerodynamics, aerothermal environment, thermal protection system 

response, parachute performance, and guid -

ance and control system performance during 

entry. NASA is now applying its MEDLI flight 

experience to the Exploration Flight Test-1 

mission of the Multi-Purpose Crew V ehicle, 

solidifying expertise and saving valuable 

resources.

Click here for more information 

about MEDLI’s successful use 

during the MSL landing.

Engineers check out 

the Inflatable Reentry 

Vehicle Experiment 

(IRVE-3) following 

the complete inflation system test under 

vacuum conditions in 

the Transonic Dynamics Tunnel at NASA’s 

Langley Research 

Center in Hampton, Va.

(Credit: NASA Langley/

Sean Smith)

Photographed by the Mars Descent Imager instrument 

(MARDI), the MEDLI instrument array is visible on the 

MSL heat shield as it drops away during descent to Mars. 

(Credit: NASA/JPL-Caltech/MSSS)
26 NASA FY 2012 Agency Financial Report

Creating New Ideas and Markets 

that Strengthen Our Economy

In May, technology developed through NASA’s 

Small Business Innovative Research (SBIR) 

Program supported the docking of SpaceX’ s 

Dragon spacecraft during the first commercial cargo mission to the International Space 

Station (ISS). The innovative 3-D Flash Lidar 

Video Camera, developed by Advanced Scientific Concepts, Inc. (ASC), generates a 3-D 

image using a two-dimens ional imaging array, 

generates 30 images a second, and provides 

a motion picture of an approaching scene with 

a single camera flash. ASC’s system holds 

even greater potential for future automated 

docking and hazard avoidance applications. 

Accordingly, NASA continued to support the 

technology in FY 2012, focusing on embedded 

processing for even greater image enhancement. New, more advanced autonomous sys -

tems have the potential to impact industries 

outside spaceflight, such as robotics and manufacturing, thereby creating new capabilities 

and markets

The SpaceX Dragon spacecraft docks to ISS with the help of a NASA SBIR-Developed 3D Camera. (Credit: NASA)
NASA FY 2012 Agency Financial Report 27

Other Key Achievements in FY12

• Operation of the first in-space humanoid 

dexterous manipulator (Robonaut 2) on 

the International Space Station;

• Advancement of woven thermal protection systems from innovative concept to 

game changing technology development;

• Initiation of the Edison Demonstration of 

Smallsat Networks (EDSN) project;

• Completion of the preliminary design 

review of the Solar Sail technology demonstration; and

• Support of student researchers through 

80 Space Technology Research 

Fellowships.

Click here to learn more about 

how NASA drives advances in 

technology on NASA’s Office of 

the Chief technologist.

When the technology is fully mature, inflatable reentry vehicles would allow for larger payloads than current launch 

vehicle designs can accommodate. For example, a rover larger than Curiosity could be sent to Mars. (Credit: NASA)
28 NASA FY 2012 Agency Financial Report

Strategic Goal 4:

Advance aeronautic research for societal benefits.

A key enabler for American commerce and 

mobility, U.S. commercial aviation is vital 

to the Nation’s economic well-being. NASA’s 

aeronautics research focuses on the most 

appropriate cutting-edge research and tech -

nologies to overcome a wide range of aeronautics challenges for America’s current and 

future transportation system. As demands on 

the aviation transportation system grow, NASA 

is discovering ways to improve aviation safety 

and air traffic, and reduce fuel consumption, 

noise, and emissions. 

NASA Breakthrough Makes Flights 

More Time and Fuel Efficient in Bad 

Weather

The biggest cause of airline flight delays is 

hazardous weather. To help alleviate this problem, NASA developed and tested a new decision-support system called “Dynamic Weather 

Re-Route” that automatically finds alternative 

routes that help airlines save time and fuel for 

en-route aircraft.

Flight routes are based on predicted weather 

and established prior to aircraft departure. 

Because weather patterns and severity change 

over time, flight routes often become congested and inefficient which results in delays, 

wasted fuel, and sometimes hazardous conditions for aircraft and travelers. Air traffic controllers lack automation tools to generate new 

routes that save time and fuel once the aircraft 

are airborne. 

Laboratory simulations and field tests of NASA’s 

new Dynamic Weather Re-Route technology 

conducted with a U.S. air carrier have shown 

potential average savings in time of 10 minutes 

or in operating cost of $1,000 to $1,700 per 

flight impacted by severe weather. Additional 

testing is scheduled to take place in Fall 2012.

The Dynamic Weather Re-Route capability allows 

airlines to safely avoid weather hazards and reduce fuel 

burn saving time and money. (Credit: NASA)

Click here for more information 

about the Aviation Systems 

Division .

NASA Increases Understanding of 

Hazardous Ice Accumulation in Jet 

Engines

Aircraft flying through high altitude thunderstorms encounter high concentrations of ice 

crystals. Under certain conditions, these ice 

crystals may cause ice to form inside a jet 

engine in a way that can degrade its performance, potentially leading to engine power 

loss. To better understand the hazards of high 

altitude icing, NASA modeled the conditions 

an engine would encounter throughout a hypothetical flight. NASA’s model incorporated the 

effects of ice accumulation, melting, and sublimation (conversion from solid to gaseous state) 
NASA FY 2012 Agency Financial Report 29

into a basic jet engine performance computer 

simulation. A study used the model to estimate 

the risk of engine icing in ice crystal conditions 

and the effect of the blockage on engine performance. Results showed that ice particle size is 

an important factor affecting engine icing. The 

distribution of ice particle sizes in clouds is currently unknown and is of high interest to NASA 

and its U.S. and international partners. Working with partners, NASA is conducting studies 

that further explore the atmospheric conditions 

leading to ice crystal icing and the ef fects of 

that icing on engine performance. Results from 

these studies will help aircraft remain clear of 

hazardous icing conditions and make aircraft 

engines more resilient if those conditions do 

occur

Click here for more information 

about engine ice research.

NASA Researches Ways to Make 

Aircraft More Fuel Efficient and 

Quiet

NASA continued research on future aircraft 

engine designs that aim to dramatically reduce 

the impact of the aviation industry on the environment by focusing on reduction of fuel burn, 

noise, and emissions. Two types of highly fuel 

efficient jet engine concepts were compared 

to determine their performance in reducing 

the rate of fuel consumption and noise. One 

of the systems, called an “Open Rotor”, does 

not encase the engine fan blades in an engine 

housing, which is typical in traditional jet engine 

designs. The second system, referred to as an 

“Ultra High Bypass (UHB) Turbofan” is a much 

more fuel efficient version of the aircraft engine 

commonly used by airliners today. Research 

has validated that both engine concepts have 

the potential to dramatically reduce fuel burn. 

The Open Rotor shows greater potential, but at 

the price of increased noise production over the 

UHB concept. These results will provide data to 

the aviation industry and regulatory community 

to make informed decisions on future aircraft 

propulsion systems, with a continual emphasis 

on reducing their impact on the environment. 

Click here or more information 

about open rotor technology.

Other Key Achievements in FY12

• NASA flight tests in low visibility conditions demonstrated the ability of “Synthetic 

and Enhanced Vision Systems” to provide 

improved safety, and validated the results 

of previous simulator studies.

• NASA successfully transitioned the “Efficient Descent Advisor” technology to the 

Federal Aviation Administration for inclusion in their 3D Path Arrival Management 

operational capability, enabling fuel-efficient descents in terminal airspace. 

• NASA conducted successful wind tunnel 

testing of a low-noise aircraft design configuration called “Hybrid Wing Body” to 

assess its aerodynamic characteristics.

Click here for more information 

about NASA’s Aeronautics 

Research.

NASA research into high altitude icing will help pilots 

avoid hazardous conditions and lead to improved engine 

design (Credit: NASA)
30 NASA FY 2012 Agency Financial Report

 Research on future aircraft engine designs, such as the “Open Rotor” aims to reduce the environmental impact of aviation. 

(Credit: NASA, GRC)
NASA FY 2012 Agency Financial Report 31

Strategic Goal 5:

Enable program and institutional capabilities to conduct 

NASA’s aeronautic and space activities.

Diversity, sustainability, and innovation are 

keys to NASA’s adaptability, and an inte -

gral part of NASA ’s mission success. NASA 

strives for an organizational culture and work 

environment that includes varying perspectives, education levels, skills, life experiences, 

and backgrounds to enable excellence and 

allow individual and the organization to maximize potential. The support and participation of 

everyone at NASA, including executive leadership, managers, supervisors, and employ -

ees, are critical compon ents of successful 

implementation. 

Diversity: Enhancing NASA’s 

Inclusive Work Culture

NASA’s Diversity and Inclusion Strategic Implementation Plan, spearheaded by the Offices of 

Diversity and Equal Opportunity (ODEO) and 

of Human Capital Management (OHCM), provides a blueprint for fully leveraging the Agency’s diversity over the course of the next five 

years and beyond. As such, it offers innovative 

Agency guidelines and strategies designed 

to enhance the inclusiveness of NASA’s work 

environments and further broaden the reach of 

NASA’s education, recruitment, and small business efforts.

NASA developed an enhanced hiring program 

to refresh the Agency’s talent pool. Key com -

ponents of the program include the federal 

student employment initia tive and an agency 

recruitment program. OHCM and ODEO, under 

the auspices of the Agency Diversity and Inclusion Plan, have partnered closely to enhance 

the Agency’s recruitment strategies, allow -

ing the Agency to reach a broader and more 

diverse talent pool through implementation of 

the new Pathways Program.

NASA’s OHCM developed a human capital 

framework designed to create a workforce culture that builds on innovation. OCHM designed 

the Work from Anywhere campaign, an outreach effort to educate the NASA workforce on 

the flexible workplace policies already available that empower employees to engage effectively, in or out of the office. The NASA policies 

highlighted by the Work from Anywhere campaign remove geographical barriers to diversity 

in the Agency’s workforce, allowing employees 

to work in locations away from NASA Centers.

NASA also continues to make great strides in 

advancing equal opportunity for all employees, as evidenced in the implementation of the 

Agency’s Individuals with Disabilities plan. An 

Agency Stakeholders group meets regularly 

to address issues of access to electronic and 

information technology; NASA Centers recruit 

student interns with disabilities as part of Project Achieving Competence in Computing, Engineering, and Space Science (ACCESS); and 

Centers continue to improve the accessibility of 

facilities for individuals with disabilities.

In another key ef fort to advance equal oppor -

tunity, NASA developed procedures to provide 

the Agency’s lesbian, gay, bisexual, transgender (LGBT) community with an avenue 

of redress parallel to the Equal Employment 

Opportunity complaints process. Current federal employment discrimination law does not 

protect sexual orientation and gender identity.
32 NASA FY 2012 Agency Financial Report

Sustainability: Contemporary 

Management Concepts that Keep 

NASA Running Smoothly

Sustainability concepts and thinking are inherent in NASA ’s mission, strategic goals, and 

overarching strategies. NASA’s Office of Strategic Infrastructure has drafted the Strategic 

Sustainability Performance Plan which will 

guide NASA strategies for greenhouse gas and 

petroleum use reduction, water use efficiency, 

pollution prevention, waste reduction, and sustainable acquisition. In fact, NASA received a 

green rating on its most recent OMB scorecard 

by achieving a 12 percent reduction in petroleum use in its entire vehicle fleet compared to 

2005 and is on track for a 20 percent reduction 

by 2015. 

NASA is also promoting sustainability concepts 

throughout the Agency by implementing energy 

efficiency projects at three NASA Centers that 

will replace existing lighting and heating, ventilation, and air conditioning (HVAC) systems with 

higher efficiency systems, connect stand-alone 

HVAC equipment into central control systems 

for improved management of run hours and 

temperature setpoints, and retrocommission 

existing building electrical and mechanical systems to optimize system functionality considering current mission needs. When complete, 

these projects will reduce utility consumption 

and cost, reducing energy intensity and greenhouse gas emissions, and increasing high performance and sustainable buildings.

Innovation: NASA sets a New 

Standard for its Information 

Technology

NASA’s Office of the Chief Information Officer 

(OCIO) created the Information Technology 

Laboratory Prototype Project (IT Labs) to help 

NASA make strategic investments in innova -

tion. Information technology (IT) is not only a 

multi-faceted discipline, it is subject to constantly evolving technology. The IT Labs is an 

innovation incubator taking new ideas from the 

NASA community and developing them as part 

of a rapid, low-cost, low-risk process. Working with the OCIO Chief Technology Officer, IT 

Labs solicited proposals from across NASA. 

Thirty-six research candidates were submitted 

and NASA funded sixteen to proceed to execution. Candidates were assessed by a diverse 

group of reviewers, including the Center Technology Officers, OCIO Service Executives, and 

Agency Mission Partners. V ia labs.nasa.gov, 

the Agency OCIO shares the results of the program with all of NASA, enabling others to apply 

the lessons learned to their own projects, or 

collaborate on new efforts inspired by project 

results. 
NASA FY 2012 Agency Financial Report 33

Strategic Goal 6:

Share NASA with the public, educators, and students to 

provide opportunities to participate in our Mission, foster 

innovation, and contribute to a strong national economy.

Public outreach, partnerships, and external 

assistance are important methods for communicating NASA’s mission and inviting broad 

participation, allowing NASA to truly make 

space for all people. The Agency strives to 

include as many voices as possible. Fostering 

the interest of students in science, technology, 

engineering, and mathematics (STEM) education, particularly those who are traditionally 

underrepresented in STEM fields, aids greatly 

in meeting both National and Agency goals.

Reaching for New Heights

NASA’s Office of Communications informs 

the public and engages them in NASA ’s missions. The Office of Communications facilitates 

broad use of social media, NASA Television, 

nasa.gov, online streaming, media events, and 

exhibits, which enable NASA to broadly share 

its missions and activities with people around 

the country and around the world. 

On the night of August 5, 2012, the world held 

its breath as the car-sized rover named Curi -

osity began seven minutes of terror into the 

atmosphere of Mars. During the months that 

Curiosity traveled from Earth to Mars, NASA 

worked to not only make sure the rover landed 

safely, but also to inspire people to learn about 

and follow the mission. 

Curiosity’s landing gave NASA another unique 

event to share with the Nation and world. NASA 

hosted the first ever multi-center Social with inperson participants at seven NASA centers, 

and virtual viewers from around the world. The 

@MarsCuriosity Twitter account now has over 

a million followers. Millions of viewers watched 

the landing on NASA TV, UStream, and YouCuriosity Rover

@MarsCuriosity

Read your tweets loud & Clear! #NASASocial visited Goldstone #DSN

today; 1 of 3 stations where I phone home pic.twitters.com/hMakTYpA 5:08 PM - 15 Oct 12

Curiosity Rover

@MarsCuriosity

From chemist to explorer to mayor, I am one busy bot. Just became 

the mayor of Mars’ Gale Crater on @foursquare 4sq.com/QLh1uc 5:41 PM - 5 Oct 12

Curiosity Rover

@MarsCuriosity

A River Ran Through It. I found evidence of an ancient streambed on 

Mars, similiar to some on Earth pic.twitter.com/wfbpp7BW 3:12 PM - 27 Sep 12

Curiosity Rover

@MarsCuriosity

Road trip! I covered 32 meters of open Martian road yesterday (sol 

38). Every long drive needs a soundtrack. Any suggestions?

2:07 PM - 14 Sep 12

Curiosity Rover

@MarsCuriosity

Hello, Gorgeous! Snapped this self portrait while using my MAHLI 

camera & checking its dust cover [pic] http://1.usa.gov/QayglM 2:33 AM - 8 Sep 12

Curiosity Rover

@MarsCuriosity

These wheels were made for roving. Just completed a 100-ft (~30.5 

meters) drive -- my longest yet [pic] http://twitpic.com/arg0se 3:59 PM - 5 Sep 12

Curiosity Rover

@MarsCuriosity

Happy birthday, Ray Bradbury! My favorite Martian chronicler would 

have been 92 years old today 

1:54 PM - 22 Aug 12

Curiosity Rover

@MarsCuriosity

Interplanetary fist bump: @whitehouse called to congratulate my team 

today. Watch the video: http://www.ustream.tv/recorded/24681663 ... 

#MSL

1:07 PM - 13 Aug 12

Curiosity Rover

@MarsCuriosity

Me & My Shadow... & Mount Sharp. My view of the 3-mile-high 

mountain in the middle of Mars' Gale crater #MSL 

http://twitpic.com/agc3nk

8:23 PM - 6 Aug 12

The @MarsCuriosity Twitter feed has made over 

1,200 Tweets and has more than 1,000,000 followers. From August 3 to 9, 2012, it gained 813,300 followers and was mentioned more than 195,000 times.
34 NASA FY 2012 Agency Financial Report

Tube. And thousands of people gathered in 

New York City to watch history in the making 

on the iconic big screens of Times Square.

Maximizing Outreach Through 

STEM Education Partnerships

Partners help NASA reach new and broader 

audiences in creative ways. NASA’s Office of 

Education seeks to develop partnerships that 

have national impact and engage underrepre -

sented and underserved audiences. Working 

with partners, the Office of Education strives to 

make effective and efficient use of the Agency’s 

missions and educational resources to provide 

learners of all ages stimulating opportunities 

in STEM education. NASA enters into partnerships with innovative organizations that have 

wide ranging areas of expertise. The intent is 

to bring NASA STEM to learners and educators 

of all ages with varying interests and learning 

styles.

Reaching out to these broader audiences, 

NASA and its partners have developed eight 

NASA Summer of Innovation (SoI) themed 

camps. Thirty-hour, two-day, and one-day 

modules were outlined for each theme, allowing design flexibility for collaborators. They also 

awarded more than 200 SoI mini-grants, each 

with a maximum value of $2,500. The National 

Space Grant Foundation manages the 2012 

SoI mini-grants for NASA, and the awardees 

selected included non-profit educational organizations, public and private schools, youth 

foundations, and science centers. The program 

engaged 3,380 educators in SoI professional 

development activities. The summer session 

reached 38,949 students who were largely 

from underrepresented or underserved populations, including 31% Hispanic, 26% African 

American, and 79% low-income students.

A 21st Century Approach to Equal 

Opportunity and Inclusion

NASA champions the spirit of inclusivity with its 

commitment to civil rights, and to assure that 

all have access to participate in the business of 

space. NASA conducts a vigorous program of 

civil rights compliance reviews of its grantees. 

NASA’s Office of Diversity and Equal Opportunity continued its external technical assistance 

efforts on civil rights with the publication of a 

new resource tool for grantees, titled, “T itle IX 

& STEM: A Guide to Conducting Self-Evaluations for Science, Technology, Engineering, 

and Mathematics Programs” (June 2012). 

NASA published an interactive version of this 

tool online in addition to traditional hard copy 

publication to maximize accessibility and use. 

The White House Council on Women and Girls 

activities commemorating the 40th anniversary 

of Title IX, held on June 20, 2012, recognized 

the publication, as well. NASA’s external civil 

rights program continues to be acknowledged 

as a leader in the field by the Department of 

Justice Civil Rights Division, and external 

stakeholder organizations such as the Society 

of Women Engineers and the Association of 

Women in Science.

On September 17, 2012, Langley Research Center and 

the Virginia Air & Space Center (VASC) welcomed hundreds of boy scouts to earn their first ever robotics badge 

as part of a partnership between NASA and the Boy 

Scouts of America. (Credit: NASA/Sean Smith)
NASA FY 2012 Agency Financial Report 35

Financial Performance

Financial Overview

Over the years, NASA has made significant improvements to the integrity of its financial management systems, processes and reports, and the Agency overcame significant financial reporting 

challenges to achieve an unqualified audit opinion in 2011. In fiscal year 2012, NASA focused on 

maintaining the unqualified opinion while improving efficiencies and reducing costs. For example, 

in FY 2012 NASA achieved its administrative savings by reducing spending on travel, printing, 

supplies, and advisory services. These savings, which are associated with the Administration’s 

management agenda to Promote Efficient Spending, enabled the Agency to increase funding for 

research and development contracts, facilities enhancements and grants. NASA is committed 

to effectively and efficiently managing funds appropriated by Congress to incur obligations for 

goods and services necessary to execute NASA mission goals within the apportionment limits 

from Office of Management and Budget (OMB) and in compliance with federal financial accounting standards. 

NASA’s financial values are a critical component of the Agency’s effective financial management. 

The information provided in the next section reflect how NASA meets its financial values of ensuring financial stewardship, promoting effective resource management, ensuring the integrity of 

financial data, enhancing capabilities and delivering a positive customer experience.

NASA Financial Values

NASA’s financial values provide the foundation for effective financial management. The values 

work together to deliver information that can be readily understood and used by NASA decision 

makers, governmental stakeholders and the American public. The sections below explain each of 

the values and describe key actions taken to integrate the values into NASA’s financial processes 

to improve financial management and reporting.

Ensure Financial Stewardship 

NASA is committed to financial management excellence that complies with applicable laws and 

regulations that demonstrates stewardship of budgetary resources while achieving its missions. In 

achieving financial management excellence, emphasis is placed on effective controls and accurate financial information that promote accountability, transparency, and compliance. In FY 2011 

and continuing in FY 2012, the Agency accomplished the following selected initiatives:

• Strengthened internal controls and maintained financial data integrity by successfully completing OMB’s Circular A-123 process reviews.

• Complied with applicable laws and regulations, such as the Chief Financial Officers’ Act, 

Federal Financial Management Improvement Act, and financial management administrative 
36 NASA FY 2012 Agency Financial Report

guidelines of the Treasury Department and OMB, including the new Schedule of Spending 

report required for FY 2012. These efforts enabled the accurate reporting of NASA financial 

results.

Promote Effective Resource Management

Resource management directly impacts how NASA uses its resources most effectively to deliver 

program results. Emphasis continues to be placed on resource management and utilization to 

meet growing mission demands as budget resource s decrease. During FY 2012, the following 

selected resource management and utilization initiatives were accomplished:

• Improved the analysis of unliquidated obligation balances to improve the quality and timeliness of decisions related to the use of those funds.

• Enhanced the analysis and monitoring of financial performance to develop options and recommendations for the most efficient use of budgetary resources.

• Increased the use of less resource-intensive meeting methods, such as: teleconferencing, 

WebEx, and video-conferencing, rather than face-to-face venues.

• Developed a performance measurement dashboard to provide timely, consistent, and reliable performance information to enable management decisions, support accountability, and 

meet legislative requirements. This tool supports the performance tracking/measurement 

process and analysis, provides accurate and comparative performance reports that provide 

a standard set of core information based on NASA’s strategic framework, and provides 

flexibility to customize reports and analysis functions based on changes to the strategic 

framework. 

• Expanded the eBudget dataset to contain quarterly , budgetary, and key decision points 

(KDP) for projects’ cost and schedule data. This effort enhanced the eBudget tool to provide 

capability for importing and viewing data through the use of ad-hoc queries. 

Ensure the Integrity of Financial Data 

Reliable financial data supports accurate and useful financial reports that comply with applicable 

laws, regulations and guidance. NASA is committed to compliance with laws and regulations as 

well as maintaining effective internal controls. The following selected initiatives will be continued 

to ensure ongoing compliance and effective internal controls:

• Assessed the impact of new Treasury systems modernization initiatives, including the Government-wide Accounting (GWA) Central Accounting Reporting System and the Collection 

and Cash Management. These efforts positioned NASA as one of the federal agencies 

piloting the GWA and providing feedback to Treasury to ensure successful implementation. 

Currently, two NASA Centers are GWA reporters. 

• Enhanced communication with trading partners for more effective monitoring and confirmation of intragovernmental balances.

• Assessed the impact of the new Government-wide Treasury Account Symbol Adjusted Trial 

Balance System (GTAS) reporting requirements. NASA is one of the federal agencies providing feedback to Treasury regarding the viability of GTAS data criteria. NASA implemented 

the system capabilities of GTAS for the beginning of FY 2013 which includes functionality to 

meet future regulatory requirements. 
NASA FY 2012 Agency Financial Report 37

Enhance Capabilities 

Mission success, including financial management, depends on a diverse, highly skilled workforce, as well as efficient business processes. The following selected initiatives were enhanced 

to continue to develop the capabilities of the workforce and improve the effectiveness of NASA’s 

business processes: 

• Continued to provide training and development opportunities that strengthen critical knowledge, skills, and abilities in accounting, auditing, and financial and resources management. 

• Provided opportunities for participation in external committees, such as those of fered by 

Department of Treasury, Office of Management and Budget, and Federal Accounting Standards Advisory Board which are held to address government-wide accounting and financial 

management issues.

• Implemented financial system enhancements to ensure that NASA remains in compliance 

with federal financial management standards. 

• Developed systems solutions to meet the federal mandate that small businesses be paid 

within 15 days of receiving an invoice regardless of the payment terms (see Presidential 

Memo M-11-32 dated September 14, 201 1). This customization included new reports in 

NASA’s financial system to provide success metrics on accelerated payments.

• Reviewed available electronic invoicing solutions and benchmarked with agencies currently 

utilizing these solutions to develop an approach for streamlining and reengineering NASA’s 

Accounts Payable process. NASA successfully completed a pilot this fiscal year and is now 

finalizing the system solution to support implementation beginning in January 2013. 

Deliver a Positive Customer Experience

Financial management supports diverse internal and external customers. The following selected 

initiatives were emphasized to ensure continued delivery of a positive customer experience: 

• Enhanced capabilities for accurate cost-tracking and accounting for customer agreements 

with federal and non-fede ral entities, and responde d timely and accurately to customer 

inquiries. 

• Prepared financial statements and reports that met the needs of internal and external customers for reliable and timely financial information. 

• Enhanced analytical capabilities to support timely and accurate flow of financial information 

used by internal and external customers for decision making.

• Developed and communicated a comprehensive pricing policy to ensure compliant and consistent pricing based on the various types of agreements utilized to accomplish the mission 

of the Agency. Worked through an agency-wide team to capture process improvement 

opportunities for managing reimbursable activity across the Agency.

• Established a Communities of Practice framework to facilitate information sharing and 

benchmarking opportunities across various internal stakeholder communities.

• Improved clarity of the Agency’s budget decision making processes and increased transparency of those decisions with internal stakeholders.
38 NASA FY 2012 Agency Financial Report

Financial Highlights

This section provides selected highlights of NASA’s financial performance in the past fiscal year. 

The section is organized to provide a logical review of FY 2012 performance that explains the 

impacts of program and operational decisions and performance on financial results, where relevant and observable. Key components of this section include:

Results of Operations: An overview of how NASA used its financial resources to support its programs and mission.

Sources of Funding: An explanation of the type and amount of funds NASA received 

in FY 2012.

Balance Sheet: A description of major changes in assets, liabilities and net 

position between FY 2012 and FY 2011.

Results of Operations

NASA’s programs and activities are carried out through four Research and Development (R&D)/

Other Initiatives: Aeronautics Research, Exploration Systems, Science, and Space Operations. 

The Consolidated Statement of Net Cost presents NASA ’s net costs by R&D/Other Initiatives, 

which is summarized in the chart below. The net cost of operations represents the gross costs 

incurred by NASA, less any revenue earned for work performed for other government organiza -

tions and the public.

Net Cost by Research and Development and Other Initiatives 

(In Millions of Dollars)

Space Operations

$6,416

Science

$5,986

Exploration Systems

$4,841

Aeronautics 

Research

$712

The accompanying table provides net cost comparisons for FY 2012 and FY 2011 across the four 

R&D/Other Initiatives.
NASA FY 2012 Agency Financial Report 39

R&D/Other Initiatives 2012 2011 % Change

Aeronautics Research

Gross Costs $ 821 $ 808 2%

Less: Earned Revenue 109 119 -8%

Net Costs 712 689 3%

Exploration Systems

Gross Costs $ 4,938 $ 4,791 3%

Less: Earned Revenue 97 68 43%

Net Costs 4,841 4,723 2%

Science

Gross Costs $ 7,371 $ 7,030 5%

Less: Earned Revenue 1,385 1,019 36%

Net Costs 5,986 6,011 0%

Space Operations

Gross Costs $ 6,899 $ 7,253 -5%

Less: Earned Revenue 483 58 733%

Net Costs 6,416 7,195 -11%

Net Cost of Operations

Total Gross Costs $ 20,029 $ 19,882 1%

Less: Total Earned Revenue

Total Net Cost

2,074 1,264 64%

$ 17,955 $ 18,618 -4%

NASA’s net cost of operations for FY 2012 was $18.0 billion, a decrease of $663 million, or 4% 

compared to FY 2011. This decrease primarily represented reduced activity in FY 2012 for the 

International Space Station (ISS) and Space Shuttle Program (SSP) as explained below. 

Gross costs were $20.0 billion, an increase of 1% from FY 2011 at the overall NASA level. The 

largest year-to-year changes at the mission area level were in the largest R&D/Other Initiatives, 

Science and Space Operations. Gross costs for Science grew by $341 million in FY 2012, bringing its total gross costs to $7.4 billion, the highest of the four R&D/Other Initiatives. The James 

Webb Space Telescope and Mars Exploration programs contributed to the increase in Science 

costs in FY 2012. 

Space Operations experienced a reduction in gross costs of $354 million between FY 2011 and 

FY 2012, primarily related to decreases in the ISS and SSP programs. NASA completed construction of the ISS in FY 2011, which reduced the costs associated with new modules and module 

deliveries in FY 2012. The cost of on-going support for the ISS and the experiments performed on 

it partially off-set the reduction in construction costs. NASA’s fleet of space shuttles were retired, 

which reduced the cost to maintain the orbiters and support flight operations. 
40 NASA FY 2012 Agency Financial Report

After flying more than 130 missions in 30 years and performing numerous science and technology 

activities, the NASA Space Shuttle orbiters are being retired as national treasures. Various Shuttle artifacts are permanently 

displayed in museums and 

educational institutions so 

that the American public 

can share in the history and 

accomplishments of NASA’s 

Space Shuttle Program. 

Retirement of the Shuttles 

effectively removes the 

orbiters themselves from 

NASA’s accounting records.

The public will be able to 

view the four orbiters at various locations throughout the U.S. The facilities chosen have a legacy 

of preserving space artifacts and providing access to U.S. and International visitors. 

Hundreds of other shuttle artifacts have been alloc ated to museums and educational institutions. Donation of these items also reduces the balance of NASA’s property, plant and equipment 

account.

In 2012, NASA fostered the development of commercial cargo and crew capabilities as part of the 

Space Operations mission area for continued support of the ISS. The Agency executed numerous 

mission programs through Commercial Resupply Services (CRS) contracts with various private 

companies for resupply missions to the ISS following the retirement of the space shuttles. These 

contract costs partially off-set reductions in construction costs for the ISS and depreciation costs 

for the donated Shuttle orbiters.

Earned revenue for Science increased by 36%. The increase in Science-related earned revenue 

was driven by an increase in reimbursable revenues related to activities with the National Oceanic 

and Atmospheric Administration (NOAA) on the Joint Polar Satellite Systems (JPSS) and Geostationary Operations Environmental Satellite (GOES) projects. The change in earned revenue for 

Space Operations was largely related to a reclassification of certain costs associated with NASA 

communications satellites in FY 2011.

Artifact Museum(s) Location

Shuttle Simulators Alder Planetarium

Evergreen Aviation & Space Museum

Texas A&M Engineering Department

Chicago, IL

McMinnvile, OR

College Station, TX

Full Fuselage Trainer Museum of Flight Seattle, WA

Nose Cap Assembly and Crew 

Compartment Trainer

National Museum of the U.S. Air Force Wright-Patterson Air Force 

Base, OH

Flight Deck Pilot and

Commander Seats

NASA’s Johnson Space Center Houston, TX

Shuttle Name Museum Location

Shuttle Enterprise Intrepid Sea, Air & Space 

Museum

New York City, NY

Shuttle Discovery Smithsonian’s National Air 

& Space Museum Steven F. 

Udvar-Hazy Center

Chantilly, VA

Shuttle Endeavour California Science Center Los Angeles, CA

Shuttle Atlantis Kennedy Space Center 

Visitor’s Complex

Merritt Island, FL
NASA FY 2012 Agency Financial Report 41

On a net cost basis, Space Operations, at $6.4 

billion, remains NASA ’s largest R&D/Other Initia -

tive despite a year-to-year reduction of $779 million. 

This reduction in Space Operations net costs, as 

noted above, was largely related to lower mainte -

nance and flight support costs in the Space Shuttle 

program. The Balance Sheet section of this Finan -

cial Highlights section contains more information on 

these changes and their impacts.

Sources of Funding

NASA received the majority of its funds to support operations through FY 2012 Congressional 

appropriations. The remaining funds were comprised primarily of available unobligated funds 

brought forward from the prior year and reimbursable agreements with other entities. Budget -

ary resources for FY 2012 totaled $21.6 billion, of which $677 million is the unobligated balance 

brought forward from FY 2011. The sources and uses of budgetary resources are summarized 

in the table below.

NASA Budgetary Resources 

(In Millions of Dollars)

Spending 

Authority from

Offsetting Collections

$2,842

Total Obligations Incurred

$20,685

Total Unobligated

$933

FY 2012 Budget 

Authority

$17,771

Prior Year

Unobligated

 Balance

Brought 

Forward

$677 Recoveries of

Prior Year Unpaid

Obligations

$365

Other

($37)

The International Space Station’s Canadarm2 

installs SpaceX Dragon cargo craft to the Earth 

facing side of the Harmony node (Credit: NASA)
42 NASA FY 2012 Agency Financial Report

Line Item 2012 2011 % Change

FY 2012 Budget Authority $ 17,771 $ 18,449 -4%

Spending Authority from Offsetting Collections 2,842 2,031 40%

Recoveries of Prior Year Unpaid Obligations 365 257 42%

Prior Year Unobligated Balance Brought Forward 677 615 10%

Other (37) (36) 3%

Total Budgetary Resources $ 21,618 $ 21,316 1%

Total Obligations Incurred 20,685 20,639 0%

Total Unobligated $ 933 $ 677 38%

New Budget Authority, which is 82% of total budgetary resources for FY 2012, was provided 

by Congress primarily in two-year appropriations. In FY 2012, new Budget Authority decreased 

$678 million from FY 2011.

Spending Authority from Offsetting Collections increased by $811 million, or 40%, in FY 2012. 

The majority (99%) of these funds are realized reimbursable income from other Federal agencies 

and public entities. These organizations provide funds to NASA to leverage NASA’s capabilities, 

including the skills and experience of the Agency’s personnel and the Agency’s unique physical 

assets. The increase in reimbursable activity is related to activities with the National Oceanic and 

Atmospheric Administration for the Joint Polar Satellite System Program.

Recoveries of Prior Year Unpaid Obligations, which increased by $108 million, or 42% in FY 

2012, are funds that were obligated in the prior year , but deobligated in the current year . The 

increase is primarily attributable to recoveries in the Space Operations for contracts that sup -

ported the Space Shuttle Transition and Retirement activities and the International Space Station 

Program.

Prior Year Unobligated Balance Brought Forward represents prior year funds that were not 

obligated and are made available for obligation in the current year. The funds in this category 

increased by approximately $62 million, or 10%, in FY 2012. 

Obligations Incurred of $20.7 billion is the amount of available budgetary resources used in the 

R&D/Other Initiatives to accomplish the Agency’s goals. There was no appreciable change in the 

amount of Obligations Incurred from FY 2011 to FY 2012.

Other of ($37) million represents the amount of expired obligated and unobligated appropriation 

balances that are canceled as of September 30, 2012. There was no appreciable change in the 

amount of Other from FY 2011 to FY 2012. 
NASA FY 2012 Agency Financial Report 43

Balance Sheet

Assets

Total assets for FY 2012 were $19.0 billion, a decrease of $307 million or 2% from FY 2011. The 

major categories of assets are summarized in the table below.

Assets

(In Millions of Dollars)

The largest category of assets was Fund Balance with Treasury (FBWT) which represents 

NASA’s cash balance at the Department of Treasury. FBWT increased by $506 million, or 5%, 

from FY 2011.

Property, Plant and Equipment (PP&E), the next largest category of assets, decreased by $934 

million, or 9%, from FY 2011. Depreciation associated with the completed International Space 

Station was the primary contributing factor in the decrease in PP&E. 

Fund Balance with Treasury

$9,901

Property, Plant, & 

Equipment

$8,906

Other

$228

Line Item 2012 2011 % Change

Fund Balance with Treasury $ 9,901 $ 9,395 5%

Property, Plant & Equipment 8,906 9,840 -9%

Other 228 107 113%

Total Assets $ 19,035 $ 19,342 -2%
44 NASA FY 2012 Agency Financial Report

Liabilities

Total liabilities for FY 2012 were $4.3 billion, a decrease of $364 million from FY 2011. The major 

categories of liabilities are summarized in the table below.

Liabilities

(In Millions of Dollars)

Other Liabilities primarily represents an estimate of contractor costs incurred but not yet paid, as 

well as accrued payroll and related costs; which decreased by $16 million. 

Accounts Payable is the amount owed to other entities for goods and services received. It 

decreased by $71 million from FY 2011. This decrease is related to the liquidation of accounts 

payable in multiple programs.

Environmental and Disposal Liabilities are estimates of cleanup costs for activities that create 

or could create public health or environmental hazard and cleanup costs associated with the 

removal, containment, and/or disposal of hazardous wastes. These liabilities decreased by $276 

million, or 19%, in FY 2012 largely due to a decrease in outstanding liabilities related to cleaning 

up the Space Shuttle orbiters. Orbiters are cleaned prior to their donation to outside organizations, resulting in a change in classification from a liability to incurred cost.

Federal Employee and Veteran Benefits are amounts that the Department of Labor estimates 

on behalf of NASA for future worker ’s compensation liabilities for current employees. The estimate for future worker’s compensation benefits includes the expected liability for death, disability, 

medical and miscellaneous costs for approved compensation cases, plus a component of claims 

incurred but not reported. There was no appreciated change in the amount of Federal Employee 

and Veteran Benefits from FY 2011 to FY 2012.

Line Item 2012 2011 % Change

Other Liabilities $ 1,607 $ 1,623 -1%

Accounts Payable 1,459 1,530 -5%

Environmental and Disposal Liabilities 1,169 1,445 -19%

Federal Employee and Veteran’s Benefits 50 51 -2%

Total Liabilities $ 4,285 $ 4,649 -8%

Accounts Payable

$1,459

Federal

Employee and

 Veteran’s Benefits

$50

Other Liabilities

$1,607

Enviromental and 

Disposal Liabilities

$1,169
NASA FY 2012 Agency Financial Report 45

Net Position

Net Position, which is a summary indicator of financial condition, is the difference between 

assets and liabilities. It is comprised of Cumulative Results of Operations (CRO) and Unexpended 

Appropriations. It increased by $57 million over FY 2011.

Net Position 

(In Millions of Dollars)

Line Item 2012 2011 % Change

Unexpended Appropriations $ 7,234 $ 6,528 11%

Cumulative Results of Operations 7,516 8,165 -8%

Total Net Position $ 14,750 $ 14,693 0%

Cumulative Results 

of Operations

$7,516

Unexpended 

Appropriations

$7,234

Unexpended Appropriations were higher by $706 million, or 11%, for FY 2012 as compared to 

FY 2011. The increase is due to higher unexpended appropriations carried forward from FY 2011. 

The FY 2011 Continuing Resolution limited the availability of funds to NASA programs early in 

the fiscal year. This caused a delay in the execution of new contracts in FY 2011, which resulted 

in higher unexpended appropriations at the end of FY 2011 that was carried forward to FY 2012. 

Cumulative Results of Operations were lower by $649 million, or 8%, for FY 2012 as compared 

to FY 2011.
46 NASA FY 2012 Agency Financial Report

Limitation of the Financial Statements

The principal statements have been prepared to report the financial position and results of operations of NASA, pursuant to the requirements of 31 U.S.C. 3515(b). While the statements have 

been prepared from the books and records of NASA in accordance with generally accepted 

accounting principles for Federal entities and the formats prescribed by the Office of Management 

and Budget (OMB), the statements are in addition to the financial reports used to monitor and 

control budgetary resources, which are prepared from the same books and records. The statements should be read with the realization that they are for a component of the U.S. Government, 

a sovereign entity.
NASA FY 2012 Agency Financial Report 47

Systems, Controls, and 

Legal Compliance

Photo: Artist’s concept showing NASA’s NuSTAR mission orbiting Earth. (Credit: NASA)

Management Assurances. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48

Financial Systems Strategies. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50

Looking Forward. .
48 NASA FY 2012 Agency Financial Report

Management Assurances

Administrator’s Statement of Assurance

 November 15, 2012

NASA management is responsible for establishing and maintaining effective internal control and 

financial management systems that meet the objectives of the Federal Managers’ Financial Integrity 

Act (FMFIA), the Federal Financial Management Improvement Act (FFMIA), as well as all other 

related laws and guidance. NASA is committed to a robust and comprehensive internal control 

program. We recognize that ensuring the effective, efficient, economical, and responsible use of 

the resources that have been provided to the Agency is not only good stewardship, but also the 

right approach to maximize our progress toward the realization of our mission goals. Integrity and 

ethical values are emphasized throughout the Agency and communicated both formally and informally through training, codification in policy, and through organizational norms and culture. As a 

result, managers and employees throughout the Agency are active on a daily basis in identifying or 

updating key control objectives, assessing risks, implementing controls or other mitigating strategies, conducting reviews, and taking corrective actions as necessary.

NASA conducted its Fiscal Year 2012 annual assessment of the effectiveness of internal controls 

over operations and compliance with applicable laws and regulations in accordance with FMFIA 

and the Office of Management and Budget (OMB) Circular A-123, Management’s Responsibility 

for Internal Control. Based on the results of this evaluation, NASA can provide reasonable assurance that its internal controls over the effectiveness and efficiency of operations and compliance 

with applicable laws and regulations as of September 30, 2012, were operating effectively and no 

material weaknesses were found in the design or operation of the internal controls.

In addition, NASA’s Office of the Chief Financial Officer performed an assessment of the effectiveness of internal controls over financial reporting in compliance with OMB Circular A-123, Appendix A-Internal Control over Financial Reporting. Based on the results of the evaluation, there were 

no material weaknesses identified in the design or operation of these controls. NASA provides 

reasonable assurance that internal controls over financial reporting are operating effectively, as 

of June 30, 2012. Finally, in accordance with the requirements of the FFMIA, we assessed the 

implementation and maintenance of NASA financial management systems. We found that these 

substantially comply with federal financial management systems requirements, applicable federal 

accounting standards, and the U.S. Government Standard General Ledger at the transaction level.
NASA FY 2012 Agency Financial Report 49

In conclusion, NASA makes an “unqualified statement of assurance” that its internal controls for 

FY 2012 were operating effectively.

NASA will continue its commitment to ensuring a sound system of internal control exists over 

operations, reporting and financial systems and will continue to monitor and enhance its quality 

assurance activities.

Charles F. Bolden, Jr.

 Administrator
50 NASA FY 2012 Agency Financial Report

Financial Systems Strategies

SAP Core Financial (CF) serves as NASA’s financial accounting system of record and is the foundation for NASA’s business systems providing the core accounting functionality. Since its initial 

implementation, CF has been enhanced and expanded to demonstrate measurable progress 

toward achieving compliance with Federal Managers’ Financial Integrity Act (FMFIA) and Federal 

Financial Management Improvement Act (FFMIA), and an unqualified financial audit opinion. CF 

includes the standard SAP modules of funds distribution, cost management, accounts payable, 

accounts receivable, purchasing, asset accounting, and standard general ledger. In addition, 

NASA’s CF integrates with the Agency’s FedTraveler system, an eGov initiative providing agencywide travel processing. Lastly, NASA’s Contract Management Module (CMM) / PRISM is used as 

a hub to modernize/standardize NASA’s contract writing. It provides an integrated agency-wide 

procurement solution that interfaces with CF and promotes NASA’s internal initiatives to optimize 

business operations. These systems, along with others, such as Business Warehouse/Cognos, 

eBudget, Metadata Manager and Bankcard all define the NASA Financial Management System 

investment. 

There were no major Development/Maintenance/Enhancement (DME) projects during FY 2012; 

however, an eTravel-2 DME project is slated to begin in FY 2013. eTravel-2 will improve the end 

user travel experience and better position NASA to comply with requirements by the Federal 

Travel Regulation (FTR) for civilian Federal Government Travel. In FY 2013, NASA will also 

implement SAP’s Governance Risk Compliance (GRC) toolset to improve access control and 

transaction logging capabilities across the enterprise solution set.

NASA’s Financial Management System is an agency-wide solution for all Centers and installa -

tions. Since 2003 the CF System has served as NASA’s financial accounting system of record 

and is the foundation of NASA’s ability to achieve its financial management objectives and management of the budget. During November 2006 NASA implemented a major update to CF in 

addition to the implementation of the CMM/PRISM solution. A further contribution to Enterprise 

Architecture improvements came with NASA’s FedTraveler solution during 2009. 

These system strategies allow NASA to effectively manage enterprise data and information per 

the Agency’s vision for Enterprise Architecture. The CF System assists NASA in achieving its 

Enterprise Architecture target state goal of reducing duplicative systems and providing cost-effective and reliable applications to support NASA’s mission.
NASA FY 2012 Agency Financial Report 51

Looking Forward

Artist’s concept of NASA’s Space Launch System initial crew vehicle launching from the Kennedy Space Center. 

(Credit: NASA)
52 NASA FY 2012 Agency Financial Report

Looking Forward

In fiscal year 2013, NASA will build on the successes achieved across 2012, as we continue 

evolving the Agency’s space program. NASA and the Nation are embarking upon an ambitious 

exploration program that will incorporate new technologies and leverage proven capabilities, as 

we expand our reach out into the solar system. Successes such as the landing of the Curiosity 

Rover on Mars and the first demonstration of a resupply mission by a commercial provider, create 

a strong foundation for future endeavors. As the coming year unfolds, NASA will continue to 

conduct important research on the International Space Station, which continues to yield scientific 

benefits and provide key information about how humans may live and thrive in the harsh environment of space. Foundational to this research is the capability to bring supplies and crew to 

orbit, which will be enhanced in 2013 through more flights that deliver cargo from the commercial 

providers.

NASA will emphasize the work and contributions to the Nation that are realized from its scientific 

endeavors. After three years of preparation, the Landsat Data Continuity Mission will launch, and 

NASA will continue to make strides in the development of other key science missions such as the 

Global Precipitation Measurement Mission and the Mars Atmosphere and Volatile EvolutioN Mission. Development of the James Webb Space Telescope remains steadily on its new path, and is 

rapidly moving toward its completion and launch, planned in 2018. The Solar Dynamics Observatory, which launched on February 11, 2010, is expected to complete its prime science measurements, and bring back key findings about the Sun’s dynamic processes. And on the Astrophysics 

front, the Fermi Gamma-ray Space Telescope, launched in 2008, will also finish its primary mission objectives; since the telescope’s inception it has monitored more than a thousand galaxies. 

NASA expects its innovative technology development to serve the Nation by underpinning future 

spacecraft advancements, supporting life in space, and enabling the next generation air transportation system. In 2013, NASA will make progress on concept developments, small satellite 

missions and technology demonstrators. As current and future work results in new capabilities, 

knowledge, and technologies, it is a core part of NASA’s mission to share these advances with 

the Nation. Through this access, entrepreneurs, industry, academia, and other government agencies are encouraged to innovate in ways that can help address national and global needs and 

challenges. NASA will remain committed to addressing increased interest in science, technology, 

engineering, and mathematics (STEM) education, the Nation’s economic vitality, and stewardship 

of Earth.

This is an exciting time for NASA—a time of opportunities to shape a promising future for the 

Nation’s space program. As a foundational component of this journey, NASA will continue to 

focus on fiscal responsibility and long term affordability, and address any management challenge 

or risks that may pose a roadblock to future success. At the same time, incredible challenges lie 

ahead given the economic and fiscal environment in the United States. NASA will do its part to 

step up to these challenges through the effective and efficient use of the resources entrusted to 

the Agency.
NASA FY 2012 Agency Financial Report 53

Photo: Testing the Webb Telescope. (Credit: NASA/Chris Gunn)

Financials

Introduction to the Principal Financial Statements. .

Financial Statements, Notes, and Supplemental Information. .

Letter from the Inspector General on the Audit. .

Report of the Independent Auditors. .

Report of the Independent Auditors on Internal Control. .

Report of Independent Auditors on Compliance and Other Matters. .

Management’s Response to Independent Auditors Report. .
54 NASA FY 2012 Agency Financial Report

Introduction to the Principal Financial Statements 

Introduction to the Principal Financial Statements 

The principal financial statements have been prepared to report the financial position and results of 

operations of the National Aeronautics and Space Administration (NASA), pursuant to the requirements of 

31 U.S.C. 3515 (b). The statements have been prepared from the records of NASA in accordance with 

Generally Accepted Accounting Principles (GAAP) and the formats prescribed by the Office of 

Management and Budget (OMB) in Circular No. A-136, Financial Reporting Requirements. The 

statements are in addition to financial reports prepared by NASA in accordance with OMB and U.S. 

Department of the Treasury (Treasury) directives to monitor and control the status and use of budgetary 

resources, which are prepared from the same records. The statements should be read with the 

understanding that they are for a component of the U.S. Government, a sovereign entity. One important 

implication of this is that NASA has no authority to pay liabilities not covered by budgetary resources. 

Liquidation of such liabilities requires enactment of an appropriation. Comparative data for 2011 is 

included where applicable. The financial statements are the responsibility of management. The principal 

financial statements include: 

Consolidated Balance Sheet provides information on assets, liabilities, and net position as of the end of 

the reporting period. Net position, which is a summary measure of the Agency’s financial health at the end 

of the reporting period, is the difference between assets and liabilities. 

Consolidated Statement of Net Cost reports net cost of operation by major programs and for the Agency 

as a whole for the reporting period. Net cost of operations, which is the cost to taxpayers for achieving the 

Agency mission, is gross cost of operation less exchange (i.e., earned) revenue. 

Consolidated Statement of Changes in Net Position reports the beginning balance of net position, 

current financing sources and use of resources, unexpended resources (transactions that affect net 

position) for the reporting period, and ending net position for the current period. 

Combined Statement of Budgetary Resources reports information on sources and status of budgetary 

resources for the reporting period. Information in this statement is reported on the budgetary basis of 

accounting which supports compliance with budgetary controls and controlling legislation. 

Required Supplementary Stewardship Information provides information on NASA’s Research and 

Development and Other Initiatives costs. 

Required Supplementary Information contains a Combining Statement of Budgetary Resources and 

information on Deferred Maintenance. 
NASA FY 2012 Agency Financial Report 55

Financial Statements, Notes, and Supplemental Information 

National Aeronautics and Space Administration 

Consolidated Balance Sheet 

As of September 30, 2012 and 2011 

(In Millions of Dollars) 

Audited Audited

2012 2011

Assets (Note 2):

Intragovernmental:

Fund Balance with Treasury (Note 3) $ 9,901 $ 9,395 

Investments (Note 4) 17 17 

Accounts Receivable (Note 5) 208 89 

Total Intragovernmental 10,126 9,501 

Accounts Receivable, Net (Note 5) 1 1 

Property, Plant and Equipment, Net (Note 6) 8,906 9,840 

Other Assets (Note 8) 2 - 

Total Assets $ 19,035 $ 19,342 

Stewardship PP&E (Note 7)

Liabilities (Note 9):

Intragovernmental:

Accounts Payable $ 75 $ 99 

Other Liabilities (Note 11) 85 111 

Total Intragovernmental 160 210 

Accounts Payable 1,384 1,431 

Federal Employee and Veteran Benefits 50 51 

Environmental and Disposal Liabilities (Note 10) 1,169 1,445

Other Liabilities (Note 11) 1,522 1,512

Total Liabilities 4,285 4,649 

Commitments and Contingencies (Note 12)

Net Position:

Unexpended Appropriations 7,234 6,528 

Cumulative Results of Operations 7,516 8,165 

Total Net Position 14,750 

Total Liabilities and Net Position $ 19,035 

 14,693 

$ 19,342 

The accompanying notes are an integral part of this statement. 
56 NASA FY 2012 Agency Financial Report

National Aeronautics and Space Administration 

Consolidated Statement of Net Cost 

For the Fiscal Years Ended September 30, 2012 and 2011 

(In Millions of Dollars) 

Audited Audited

2012 2011

Cost by Research and Development and Other Initiatives (Note 13):

Aeronautics Research 

Gross Costs $ 821 $ 808

Less: Earned Revenue 109 119 

Net Costs 712 689 

Exploration Systems

Gross Costs $ 4,938 $ 4,791

Less: Earned Revenue 97 68

Net Costs 4,841 4,723

Science

Gross Costs $ 7,371 $ 7,030

Less: Earned Revenue 1,385 1,019

Net Costs 5,986 6,011

Space Operations

Gross Costs $ 6,899 $ 7,253

Less: Earned Revenue 483 58

Net Costs 6,416 7,195

Net Cost of Operations

Total Gross Costs $ 20,029 $ 19,882

Less: Total Earned Revenue 2,074 1,264

Net Cost $ 17,955 $ 18,618

The accompanying notes are an integral part of this statement. 
NASA FY 2012 Agency Financial Report 57

National Aeronautics and Space Administration 

Consolidated Statement of Changes in Net Position 

For the Fiscal Years Ended September 30, 2012 and 2011 

 (In Millions of Dollars) 

Audited Audited

2012 2011

Cumulative Results Of Operations:

Beginning Balances $ 8,165 $ 8,309

Budgetary Financing Sources:

Appropriations Used 17,027 17,590

Nonexchange Revenue 2 13

Other Financing Sources:

Donations and Forfeitures of Property 4 15

Transfers In/Out Without Reimbursement 100 676

Imputed Financing 176 193

Other (3) (13)

Total Financing Sources 17,306 18,474

Net Cost of Operations (17,955) (18,618)

Net Change (649) (144)

Cumulative Results of Operations 7,516 8,165 

Unexpended Appropriations:

Beginning Balance 6,528 5,706 

Budgetary Financing Sources:

Appropriations Received 17,800 18,485

Other Adjustments (67) (73)

Appropriations Used (17,027) (17,590)

Total Budgetary Financing Sources 706 822

Unexpended Appropriations 7,234

Net Position $ 14,750

 6,528 

$ 14,693

 

The accompanying notes are an integral part of this statement. 
58 NASA FY 2012 Agency Financial Report

National Aeronautics and Space Administration 

Combined Statement of Budgetary Resources 

For the Fiscal Years Ended September 30, 2012 and 2011 

 (In Millions of Dollars) 

Audited Audited

2012 2011

Budgetary Resources:

Unobligated Balance, Brought Forward, October 1 $ 677 $ 615

Recoveries of Prior Year Unpaid Obligations 365 257 

Other Changes in Unobligated Balance (37) (36)

Unobligated Balance from Prior Year Budget Authority, Net 1,005 836 

Appropriations 17,771 18,449

Spending Authority from Offsetting Collections 2,842 2,031

Total Budgetary Resources $ 21,618 $ 21,316

Status of Budgetary Resources:

Obligations Incurred $ 20,685 $ 20,639

Unobligated Balance, End of Year:

Apportioned 821 541 

Unapportioned 112 136 

Total Unobligated Balance, End of Year 933 

$ 

 677 

Total Status of Budgetary Resources $ 21,618 21,316

Change in Obligated Balance:

Unpaid Obligations Brought Forward, October 1 $ 9,526 $ 8,779

Uncollected Customer Payments from Federal Sources, Brought Forward, October 1 (851) (822) 

Obligated Balance, Start of Year (Net), As Adjusted 8,675 7,957

Obligations Incurred 20,685 20,639

Outlays (Gross) (19,562) (19,635)

Change in Uncollected Customer Payments from Federal Sources (467) (29)

Recoveries of Prior Year Unpaid Obligations (365) (257) 

Obligated Balance, End of Year:

Unpaid Obligations, End of Year (Gross) 10,284 9,526

Uncollected Customer Payments from Federal Sources, End of Year (1,318) (851) 

Obligated Balance, End of Year (Net) $ 8,966 $ 8,675

Budget Authority and Outlays, Net:

Budget Authority, Gross $ 20,613 $ 20,480

Actual Offsetting Collections (2,375) (2,002)

Change in Uncollected Customer Payments from Federal Sources (467) (29)

Budget Authority, Net $ 17,771 $ 18,449

Outlays, Gross $ 19,562 $ 19,635

Acutal Offsetting Collections (2,375) (2,002)

Outlays, Net 17,187 17,633

Distributed Offsetting Receipts 

Agency Outlays, Net $ 

 3 

$ 

 (16)

 17,190 17,617

The accompanying notes are an integral part of this statement. 
NASA FY 2012 Agency Financial Report 59

National Aeronautics and Space Administration 

Notes to Financial Statements 

For the Fiscal Years 2012 and 2011 

NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES 

Reporting Entity 

The National Aeronautics and Space Administration (NASA) is an independent agency established by 

Congress on October 1, 1958 by the National Aeronautics and Space Act of 1958. NASA was 

incorporated from its predecessor agency, the National Advisory Committee for Aeronautics, which 

provided technical advice to the United States (U.S.) aviation industry and performed aeronautics 

research. Today, NASA serves as the fulcrum for initiatives by the United States in civil space and 

aviation. 

NASA is organized into four Research and Development and Other Initiatives (R&D/Other Initiatives): 

• Aeronautics Research: conducts research which enhances aircraft performance, environmental 

compatibility, capacity, flexibility, and safety of the future air transportation system; 

• Exploration Systems: develops new capabilities, supporting technologies and foundational 

research for affordable, sustainable human and robotic exploration; 

• Science: explores the Earth, Moon, Mars, and beyond; charts the best route of discovery, and 

obtains the benefits of Earth and space exploration for society; and 

• Space Operations: provides critical enabling technologies through the Space Shuttle, the 

International Space Station, and flight support. 

NASA’s administrative structure includes a Strategic Management Council, a Mission Support 

Council, and a Program Management Council to integrate strategic, tactical and operational decisions. 

A number of other committees support NASA’s strategic focus and direction. The organizational 

structure enables NASA to implement the National Space Policy. 

Operationally, NASA is organized into nine Centers, a Headquarters, NASA Shared Services Center, 

and the Jet Propulsion Laboratory to carry out the activities of the Agency. The Jet Propulsion 

Laboratory is a federally funded Research and Development center owned by NASA but managed by 

an independent contractor. 

The accompanying financial statements include the accounts of all funds which have been 

established and maintained to account for the resources under the control of NASA management. 

Basis of Accounting and Presentation 

These consolidated financial statements are prepared in accordance with generally accepted 

accounting principles (GAAP) in the United States of America and accounting standards issued by the 

Federal Accounting Standards Advisory Board (FASAB) in format prescribed by the Office of 

Management and Budget (OMB) Circular No. A-136, Financial Reporting Requirements, Revised 

(August 2012). FASAB is recognized by the American Institute of Certified Public Accountants 

(AICPA) as the official accounting standards-setting body for United States government entities. The 

financial statements present the financial position, net cost of operations, changes in net position, and 

budgetary resources of NASA, as required by the Chief Financial Officers Act of 1990, Public Law 

(P.L.) 101-576, and the Government Management Reform Act (P.L. 101-356). 

The financial statements should be read with the realization that they are for a component of the U.S. 

government, a sovereign entity. One important implication of this is that liabilities cannot be liquidated 

without legislation providing resources and legal authority to do so. The accounting structure of 

federal agencies is designed to reflect proprietary and budgetary accounting. Proprietary accounting 

uses the accrual method of accounting. Under the accrual method of accounting, revenues are 
60 NASA FY 2012 Agency Financial Report

National Aeronautics and Space Administration 

Notes to Financial Statements 

For the Fiscal Years 2012 and 2011 

NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) 

Basis of Accounting and Presentation (continued) 

recognized when earned and expenses are recognized when incurred, without regard to the timing of 

receipt or payment of cash. Budgetary accounting does not use the accrual method of accounting; it 

accounts for the sources and status of funds and thus facilitates compliance with legal controls over 

the use of federal funds. 

Budgets and Budgetary Accounting 

NASA follows federal budgetary accounting policies of OMB Circular No. A-11, Preparation, 

Submission and Execution of the Budget. To accomplish its mission, Congress funds NASA through 

nine main appropriations: Science, Aeronautics, Exploration, Space Operations, Education, CrossAgency Support, Space Technology, Inspector General, and Construction and Environmental 

Compliance and Restoration. Reimbursements received under reimbursable service agreements 

cover the cost of goods and services NASA provides to other federal entities or the public. 

Research and Development (R&D), Other Initiatives and Similar Costs 

NASA makes substantial R&D investments for the benefit of the United States. NASA’s R&D 

programs include activities to extend our knowledge of Earth, its space environment, and the 

universe; and to invest in new aeronautics and advanced space transportation technologies 

supporting the development and application of technologies. Following guidance outlined in the 

Federal Accounting Standards Advisory Board's (FASAB) Technical Release No. 7, NASA applies the 

Financial Accounting Standards Board’s (FASB) Accounting Standards Codification (ASC) 730-10-25, 

Research and Development - Recognition, and FASB ASC 730-10-50 Research and Development - 

Disclosure, to its R&D projects. 

Use of Estimates 

The preparation of financial statements requires management to make assumptions and estimates 

affecting the reported amounts of assets and liabilities and disclosure of contingent liabilities as of the 

date of the financial statements and the reported amounts of revenues and expenses during the 

reporting period. Accordingly, actual results could differ from those estimates. 

Fund Balance with Treasury 

The U.S. Department of Treasury (Treasury) collects and disburses cash on behalf of federal 

agencies during the fiscal year. The collections include funds appropriated by Congress to fund the 

Agency’s operations and revenues earned for services provided to other federal agencies or the 

public. The disbursements are for goods and services received in support of its operations and other 

liabilities. Fund Balance with Treasury (FBWT) is the balance of cash NASA has in its cash account 

with the Treasury. NASA’s FBWT is comprised of balances in general funds, trust funds, and other 

types of funds. 
NASA FY 2012 Agency Financial Report 61

National Aeronautics and Space Administration 

Notes to Financial Statements 

For the Fiscal Years 2012 and 2011 

NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) 

Investments in U.S. Government Securities 

The NASA investments include the following Intragovernmental non-marketable securities: 

(1) The Endeavor Teacher Fellowship Trust Fund (Endeavor Trust Fund) was established from public 

donations in tribute to the crew of the Space Shuttle Challenger. The Endeavor Trust Fund biannual interest earned is re-invested in short-term bills. P.L. 102-195 requires the interest earned 

from the Endeavor Trust Fund investments be used to create the Endeavor Teacher Fellowship 

Program. 

(2) The Science, Space and Technology Education Trust Fund (Challenger Trust Fund) was 

established to advance science and technology education. The Challenger Trust Fund balance is 

invested in short-term bills and long-term bonds. P.L. 100-404 requires that a quarterly payment 

of $250,000 is sent to the Challenger Center from interest earned on the Challenger Trust Fund 

investments. In order to meet the requirement of providing funds to the Challenger Center, NASA 

invests the bi-annual interest earned in short-term bills with maturity that coincides with quarterly 

payments of $250,000 to beneficiaries. Interest received in excess of amount needed for 

quarterly payment to beneficiaries is invested in long-term bonds. 

Accounts Receivable 

The majority of NASA’s accounts receivable is for intragovernmental reimbursements for cost of 

goods and services provided to other federal agencies; a small portion is for debts to NASA by nonfederal government entities. Allowances for doubtful non-federal accounts are based on factors such 

as: aging of accounts receivable, debtors’ ability to pay, payment history, and other relevant factors. 

Doubtful non-federal debts over 180 days are referred to Treasury for collection, wage garnishment or 

cross-servicing in accordance with the federal Debt Collection Improvement Act. 

Operating Materials and Supplies 

NASA does not maintain inventory stock for resale. It follows the Purchases method of accounting for 

operating materials and supplies under which it expenses operating materials and supplies when 

purchased, not when used. 

Property, Plant and Equipment 

NASA reports depreciation expense using the straight-line method over an asset’s estimated useful 

life, beginning with the month the asset is placed in service. Property, plant and equipment (PP&E) 

with acquisition costs of $100,000 or more, a useful life of 2 years or more, and R&D assets that have 

alternative future use, is capitalized. PP&E that do not meet these capitalization criteria, including 

R&D assets that are not deemed to have alternative future use at the time of acquisition, are 

expensed. Capitalized costs include costs incurred by NASA to bring the property to a form and 

location suitable for its intended use. Certain of NASA's assets are held by government contractors. 

Under provisions of the Federal Acquisition Regulation (FAR), the contractors are responsible for the 

control and accountability of the assets in their possession. These government-owned, contractorheld assets are included within the balances reported in NASA’s financial statements. 

NASA has barter agreements with international entities; the assets and services received under these 

barter agreements are unique, with limited easement to only a few countries, as these assets are on 

the International Space Station (ISS). The intergovernmental agreements state that the parties will 

seek to minimize the exchange of funds in the cooperative program, including the use of barters to 

provide goods and services. As of September 30, 2012, NASA has received some assets from these 
62 NASA FY 2012 Agency Financial Report

National Aeronautics and Space Administration 

Notes to Financial Statements 

For the Fiscal Years 2012 and 2011 

NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) 

Property, Plant and Equipment (continued) 

parties in exchange for future services. The fair value is indeterminable; therefore, no value was 

ascribed to these transactions in accordance with FASB ASC 845-10-25 Non-Monetary Transactions 

– Recognition and ASC 845-10-50 Non-Monetary Transactions – Disclosure. The amounts reflected 

in NASA’s financial reports for the ISS exclude components of the ISS owned or provided by other 

participants in the ISS. For example, the Cupola is a European Space Agency-built observatory 

module of the ISS. 

Statement of Federal Financial Accounting Standards (SFFAS) No. 10, Accounting for Internal Use 

Software requires the capitalization of internally developed, contractor developed, and commercial off 

the shelf software. Capitalized costs for internally developed software include the full costs (direct 

and indirect) incurred during the software development stage only. For purchased software, 

capitalized costs include amounts paid to vendors for the software and material internal costs incurred 

by NASA to implement and make the software ready for use through acceptance testing. When 

NASA purchases software as part of a package of products and services (for example: training, 

maintenance, data conversion, reengineering, site licenses, and rights to future upgrades and 

enhancements), capitalized and non-capitalized costs of the package are allocated among individual 

elements on the basis of a reasonable estimate of their relative fair market values. Costs not 

susceptible to allocation between maintenance and relatively minor enhancements are expensed. 

Software in progress of being developed is not amortized until placed in service. NASA capitalizes 

costs for internal use software when the total projected cost is $1 million or more and the expected 

useful life of the software is 5 years or more. 

Liabilities Covered by Budgetary Resources 

As a component of a sovereign entity, NASA cannot pay for liabilities unless authorized by law and 

covered by budgetary resources. Liabilities covered by budgetary resources are those for which 

appropriated funds are available as of the balance sheet date. Examples of covered liabilities include 

accounts payable and employees’ salaries. Budgetary resources include unobligated balances of 

budgetary resources at the beginning of the year, new budget authority, and spending authority from 

offsetting collections.

Liabilities and Contingencies Not Covered by Budgetary Resources 

Liabilities not covered by budgetary resources are those for which congressional appropriation action 

is required to provide budgetary resources. Liabilities not covered by budgetary resources include 

certain environmental matters, legal claims, pensions and other retirement benefits, workers’ 

compensation, annual leave, and closed appropriations. 

Federal Employee and Veterans’ Benefits 

A liability was recorded for workers’ compensation claims related to the Federal Employees’ 

Compensation Act (FECA), administered by the U.S. Department of Labor. The FECA provides 

income and medical cost protection to covered federal civilian employees injured on the job, 

employees who have incurred a work-related occupational disease, and beneficiaries of employees 

whose death is attributable to a job-related injury or occupational disease. The FECA program initially 

pays valid claims and subsequently seeks reimbursement from the federal agencies employing the 

claimants. The FECA liability includes the actuarial liability for estimated future costs of death 

benefits, workers’ compensation, and medical and miscellaneous costs for approved compensation 

cases. 
NASA FY 2012 Agency Financial Report 63

National Aeronautics and Space Administration 

Notes to Financial Statements 

For the Fiscal Years 2012 and 2011 

NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) 

Personnel Compensation and Benefits 

Annual Sick and Other Leave 

Annual leave is accrued as it is earned; the accrual is reduced as leave is taken. Each year, the 

balance in the accrued annual leave account is adjusted to reflect current pay rates. To the extent 

current or prior year appropriations are not available to fund annual leave earned but not taken, 

funding will be obtained from future financing sources. Sick leave and other types of non-vested 

leave are expensed as taken. 

Retirement Benefits 

NASA employees participate in the Civil Service Retirement System (CSRS), a defined benefit plan, 

or the Federal Employees Retirement System (FERS), a defined benefit and contribution plan. For 

CSRS employees, NASA makes contributions of 7.0 percent of gross pay. For FERS employees, 

NASA makes contributions of gross pay of 11.9 percent to the defined benefit plan, 1.0 percent to a 

retirement saving plan (contribution plan), and matches employee contributions up to an additional 4.0 

percent of gross pay. For those employees participating in FERS, a thrift savings plan is 

automatically established and NASA makes a mandatory contribution to this plan. 

Insurance Benefits 

SFFAS No. 5, Accounting for Liabilities of the Federal Government requires Government agencies to 

report the full cost of Federal Employee Health Benefits (FEHB), and the Federal Employees Group 

Life Insurance (FEGLI) Programs. NASA uses the applicable cost factors and data provided by the 

Office of Personnel and Management to value these liabilities. 

NOTE 2. NON-ENTITY ASSETS

Non-entity assets are assets held by NASA but are not available for obligation by NASA. 

(In Millions of Dollars) 2012 2011

Total Non-Entity Assets $ - $ 1

Total Entity Assets

Total Assets

 

$ 

 19,035 19,341 

 19,035 $ 19,342
64 NASA FY 2012 Agency Financial Report

National Aeronautics and Space Administration 

Notes to Financial Statements 

For the Fiscal Years 2012 and 2011 

NOTE 3. FUND BALANCE WITH TREASURY 

Treasury processes cash receipts and disbursements for NASA. Those transactions are reconciled 

against NASA records. Fund Balance with Treasury (FBWT) is NASA’s cash balance with the U.S. 

Treasury. The FBWT is comprised of balances in general funds, trust funds, and other types of funds. 

General Funds primarily consist of appropriated funds for NASA. Trust Funds include balances in the 

Endeavor Trust Fund; Challenger Trust Fund; and Gifts and Donations. Other types of funds include 

Working Capital Fund; General Receipt funds; and Budget Clearing and Suspense funds. 

(In Millions of Dollars) 2012 2011

Fund Balances:

 General Funds $ 9,779 $ 9,317 

 Trust Funds 2 3 

 Other Fund Types

Total $ 

120 75

 9,901 $ 9,395 

The Status of Fund Balance with Treasury is primarily the total fund balance as recorded in the 

general ledger for unobligated and obligated balances. Unobligated Balances - Available is the 

amount remaining in appropriation funds available for obligation in future fiscal years. Unobligated 

Balances - Unavailable is the amount remaining in appropriation funds used only for adjustments to 

previously recorded obligations. Obligated Balances - Not Yet Disbursed is the cumulative amount of 

obligations incurred for which outlays have not been made. Non-budgetary FBWT is comprised of 

amounts in other types of funds. 

(In Millions of Dollars) 2012 2011

Status of Fund Balances with Treasury:

 Unobligated Balances

 Available $ 821 $ 541 

 Unavailable 112 136 

 Obligated Balance Not Yet Disbursed 8,966 8,675 

 Non-Budgetary FBWT 2 43 

Total $ 9,901 $ 9,395 
NASA FY 2012 Agency Financial Report 65

National Aeronautics and Space Administration 

Notes to Financial Statements 

For the Fiscal Years 2012 and 2011 

NOTE 4. INVESTMENTS 

NASA’s investments consist of non-marketable par value intragovernmental securities issued by 

Treasury’s Bureau of the Public Debt. The trust fund balances are invested in Treasury securities, 

which are purchased at either a premium or discount, and redeemed at par value exclusively through 

Treasury’s Federal Investment Branch. The effective-interest method was utilized to amortize 

premiums on bonds, and the straight-line method was utilized to amortize discounts on bills. 

Interest receivable on investments was less than one-half million dollars. In addition, NASA did not 

have any adjustments resulting from the sale of securities prior to maturity or any change in value that 

is more than temporary. 

2012

Amoritzed

Amoritization (Premium) Interest Investments, Other Market Value 

(In Millions of Dollars) Cost Method Discount Receivable Net Adjustments Disclosure

Intragovernmental Securities:

 Non-Marketable:

Straight-Line

Effective-interest

 Par value $ 19 0.115 – 6.602% $ (2) $ - $ 17 $ - $ 17 

Total $ 19 $ (2) $ - $ 17 $ - $ 17 

2011

Amoritzed

Amoritization (Premium) Interest Investments, Other Market Value 

(In Millions of Dollars) Cost Method Discount Receivable Net Adjustments Disclosure

Intragovernmental Securities:

 Non-Marketable:

Straight-Line

Effective-interest

 Par value

Total

 $ 19 0.025 – 6.602% $ (2) $ - $ 17 $ - $ 17 

$ 19 $ (2) $ - $ 17 $ - $ 17 

 

 
66 NASA FY 2012 Agency Financial Report

National Aeronautics and Space Administration 

Notes to Financial Statements 

For the Fiscal Years 2012 and 2011 

NOTE 5. ACCOUNTS RECEIVABLE, NET 

The Accounts Receivable balance represents net valid claims by NASA to cash or other assets of 

other entities. Intragovernmental Accounts Receivable represents reimbursements due from other 

federal entities for goods and services provided by NASA on a reimbursable basis. Accounts 

Receivable Due from the Public is the total of miscellaneous debts due to NASA from employees 

and/or smaller reimbursements from other non-federal entities. A periodic evaluation of public 

accounts receivable is performed to estimate any uncollectible amounts based on current status, 

financial and other relevant characteristics of debtors, and the overall relationship with the debtor. An 

allowance for doubtful accounts is recorded, for Accounts Receivable Due from the Public, in order to 

bring Accounts Receivable to its Net Realizable Value in accordance with SFFAS No. 1, Accounting 

for Selected Assets and Liabilities. The total allowance for doubtful accounts during both FY 2012 

and FY 2011 was less than one–half million dollars. 

 

2012

Allowance for 

Accounts Uncollectible Net Amount 

(In Millions of Dollars) Receivable Accounts Due

Intragovernmental $ 208 $ - $ 208 

Public

Total

 1 

 $ 209 

 - 

 $ - 

 1 

 $ 209 

2011

Allowance for 

Accounts Uncollectible Net Amount 

(In Millions of Dollars) Receivable Accounts Due

Intragovernmental $ 89 $ - $ 89 

Public

Total

 1 

 $ 90 

 - 

 $ - 

 1 

 $ 90 

 

 
NASA FY 2012 Agency Financial Report 67

National Aeronautics and Space Administration 

Notes to Financial Statements 

For the Fiscal Years 2012 and 2011 

NOTE 6. PROPERTY, PLANT AND EQUIPMENT, NET 

NASA reports depreciation expense using the straight-line method over an asset’s estimated useful 

life, beginning with the month the asset is placed in service. Property, plant and equipment (PP&E) 

with acquisition costs of $100,000 or more, a useful life of 2 years or more, and R&D assets that have 

alternative future use, is capitalized. PP&E that do not meet these capitalization criteria, including 

R&D assets that are not deemed to have alternative future use at the time of acquisition, are 

expensed. Capitalized costs include costs incurred by NASA to bring the property to a form and 

location suitable for its intended use. Certain of NASA's assets are held by government contractors. 

Under provisions of the Federal Acquisition Regulation (FAR), the contractors are responsible for the 

control and accountability of the assets in their possession. These government-owned, contractorheld assets are included within the balances reported in NASA’s financial statements. There is no 

known restriction to the use or convertibility of NASA PP&E. 
68 NASA FY 2012 Agency Financial Report

National Aeronautics and Space Administration 

Notes to Financial Statements 

For the Fiscal Years 2012 and 2011 

NOTE 6. PROPERTY, PLANT AND EQUIPMENT, NET (continued) 

PP&E net, as reported on the Consolidated Balance Sheet, is reflected by major class in the table 

below: 

2012

Depreciation Accumulated 

(In Millions of Dollars) Method Useful Life Cost Depreciation Book Value

Space Exploration PP&E

International Space Station Straight-line 5–20 years $ 12,369 $ (8,430) $ 3,939

Space Shuttle Straight-line 5–20 years 1,456 (1,456) — 

Assets Under Construction N/A 1,590 — 1,590 

 Total 15,415 (9,886) 5,529 

General PP&E

Land 122 — 122

Structures, Facilities and Leasehold

 Improvements Straight-line 15–40 years 8,878 (6,616) 2,262 

Institutional Equipment Straight-line 5–20 years 1,484 (1,239) 245 

Construction in Process N/A 710 — 710 

Internal Use Software and Development Straight-line 5 years 292 (254) 38 

 Total

Total Property, Plant and Equipment

11,486 (8,109) 3,377

$ 26,901 $ (17,995) $ 8,906

2011

Depreciation Accumulated 

(In Millions of Dollars) Method Useful Life Cost Depreciation Book Value

Space Exploration PP&E

International Space Station Straight-line 5–20 years $ 12,465 $ (7,325) $ 5,140

Space Shuttle Straight-line 5–20 years 5,516 (5,516) — 

Assets Under Construction N/A 1,337 — 1,337 

 Total 19,318 (12,841) 6,477 

General PP&E

Land 122 — 122

Structures, Facilities and Leasehold

 Improvements Straight-line 15–40 years 8,669 (6,480) 2,189

Institutional Equipment Straight-line 5–20 years 1,410 (1,116) 294

Construction in Process N/A 719 — 719

Internal Use Software and Development Straight-line 5 years 226 (187) 39

 Total

Total Property, Plant and Equipment

 11,146 (7,783) 3,363 

$ 30,464 $ (20,624) $ 9,840
National Aeronautics and Space Administration 

Notes to Financial Statements 

For the Fiscal Years 2012 and 2011 

NOTE 7. STEWARDSHIP PP&E 

Federal agencies are required to classify and report heritage assets in accordance with SFFAS No. 

29, Heritage Assets and Stewardship Land. 

Stewardship PP&E have physical characteristics similar to those of general PP&E (G-PP&E) but differ 

from G-PP&E because their value is more intrinsic and not easily determinable in dollars. The only 

type of stewardship PP&E owned by NASA are Heritage Assets. 

Heritage Assets are G-PP&E which possess one or more of the following characteristics: 

• historical or natural significance 

• cultural, educational, or aesthetic value 

• significant architectural characteristics 

Dollar value and useful life of heritage assets are not easily determinable. There is no minimum dollar 

threshold for designating a G-PP&E as heritage asset, and depreciation expense is not taken on 

these assets. For these reasons, heritage assets are reported in physical units, rather than with 

assigned dollar values. In accordance with SFFAS No. 29, the cost of acquisition, improvement, 

reconstruction, or renovation of heritage assets is expensed in the period incurred. 

Heritage assets that are used in day-to-day government operations and have a heritage function are 

considered "multi-use" heritage assets. Such assets are accounted for as general property, plant and 

equipment and are capitalized and depreciated in the same manner as other general property, plant 

and equipment. As of September 30, 2012, NASA had 73 buildings and structures that are considered 

to be multi-use heritage assets. The value associated with these multi-use heritage assets is reflected 

in the G-PP&E values reported in Note 6. 

When a G-PP&E is designated as heritage asset, its cost and accumulated depreciation are removed 

from the books. They remain on the record as heritage assets, except where there is legal authority 

for transfer or sale at which time they are removed from being a heritage asset. Heritage assets are 

withdrawn when they become inactive or reclassified as multi-use heritage assets. Heritage assets 

are generally in fair condition suitable for display. 

NASA currently has three major classes of heritage assets: Buildings and Structures; Air and Space 

Displays and Artifacts; and Art and Miscellaneous Items. The first two categories of heritage assets 

support NASA's mission by providing the public with tangible examples of assets which were built and 

deployed to support NASA's mission. These real life assets enhance the public's understanding of 

NASA's numerous programs. Typically the Buildings and Structures have been designated as 

National Historic Landmarks. 

The third category of heritage assets, Art and Miscellaneous Items, is mainly comprised of items 

created by artists who have contributed their time and talent to record their impressions of the U.S. 

Aerospace Program in paintings, drawings, and other media. These works of art not only provide a 

historic record of NASA projects, but they support NASA's mission by giving the public a new and 

fuller understanding of advancements in aerospace. 

NASA FY 2012 Agency Financial Report 69
70 NASA FY 2012 Agency Financial Report

National Aeronautics and Space Administration 

Notes to Financial Statements 

For the Fiscal Years 2012 and 2011 

NOTE 7. STEWARDSHIP PP&E (continued) 

The following table depicts NASA's heritage assets inventory: 

2011 Additions Withdrawals 2012

Buildings and Structures 13 - 5 8 

Air and Space Displays and Artifacts 481 172 18 635 

Art and Miscellaneous Items 1,005 6 1 1,010 

 1,653 

2011

Total Heritage Assets 1,499 178 24 

2010 Additions Withdrawals

Buildings and Structures 16 3 6 13 

Air and Space Displays and Artifacts 525 8 52 481 

Art and Miscellaneous Items

Total Heritage Assets

 

 

1,019 

1,560 

 1 

 12 

 15 

 73 

 1,005 

 1,499 

NOTE 8. OTHER ASSETS 

The Other Assets balance represents general PP&E assets that NASA determines are no longer 

needed and are awaiting disposal, retirement, or removal from services. These amounts are recorded 

at estimated net realizable value. 

(In Millions of Dollars) 2012 2011

 Removed from Service and Pending Disposal $ 2 $ - 

Total $ 2 $ - 
NASA FY 2012 Agency Financial Report 71

National Aeronautics and Space Administration 

Notes to Financial Statements 

For the Fiscal Years 2012 and 2011 

NOTE 9. LIABILITIES NOT COVERED BY BUDGETARY RESOURCES 

Liabilities not covered by budgetary resources are liabilities for which congressional action is needed 

before budgetary resources can be provided. They include certain environmental matters (see Note 

10, Environmental and Disposal Liabilities for more information), annual leave, workers’ compensation 

under the Federal Employees’ Compensation Act (FECA) administered by the Department of Labor, 

cancelled appropriations, legal claims, and pensions and other retirement benefits. 

The present value of the FECA actuarial liability estimate at year-end was calculated by the 

Department of Labor using a discount rate of 3.14% in FY 2012 and 4.03% in FY 2011. This liability 

includes the estimated future costs for claims incurred but not reported or approved as of the end of 

each year. NASA has recorded Accounts Payable related to cancelled appropriations for which there 

are contractual commitments to pay. These payables will be funded from appropriations available for 

obligation at the time a bill is processed, in accordance with P.L. 101-510, National Defense 

Authorization Act. 

(In Millions of Dollars) 2012 2011

Intragovernmental Liabilities:

Other Liabilities

 Workers' Compensation $ 13 $ 13 

 Accounts Payable for Cancelled Appropriations - 4 

 Total Intragovernmental 13 17 

Public Liabilities:

Accounts Payable

 Accounts Payable for Cancelled Appropriations 34 38 

Federal Employee and Veterans Benefits

 Actuarial FECA Liability 50 51 

Environmental and Disposal Liabilities 1,169 1,445 

Less: Environmental and Disposal Liabilities- Funded 37 226 

Other Liabilities

 Unfunded Annual Leave 207 215 

Total Liabilities Not Covered by Budgetary Resources 1,436 1,540 

Total Liabilities Covered by Budgetary Resources 2,849 3,109 

Total Liabilities $ 4,285 $ 4,649 
72 NASA FY 2012 Agency Financial Report

National Aeronautics and Space Administration 

Notes to Financial Statements 

For the Fiscal Years 2012 and 2011 

NOTE 10. ENVIRONMENTAL AND DISPOSAL LIABILITIES 

(In Millions of Dollars) 2012 2011

Environmental Liabilities $ 1,169 $ 1,445 

 Total Environmental Cleanup $ 1,169 $ 1,445 

Environmental and Disposal Liabilities represents cleanup costs resulting from: 

• Operations that include facilities obtained from other governmental entities that have resulted 

in contamination from waste disposal methods, leaks and spills; 

• Other past activity that created a public health or environmental risk, or 

• Total cleanup costs associated with the removal, containment, and/or disposal of hazardous 

wastes or material and/or property that have been deferred until operation of associated 

property, plant and equipment (PP&E) ceases either permanently or temporarily. 

Federal, state, and local statutes and regulations require environmental cleanup. Some of these 

statutes include: the Comprehensive Environmental Response, Compensation, and Liability Act; the 

Resource Conservation and Recovery Act; the Nuclear Waste Policy Act of 1982; as well as state and 

local laws. 

NASA assesses the likelihood of required cleanup as probable, reasonably possible or remote. If the 

likelihood of required cleanup is probable and the cost can be reasonably estimated, a liability is 

recorded in the financial statements. If the likelihood of required cleanup is reasonably possible, the 

estimated cost of cleanup is disclosed in the notes to the financial statements. If the likelihood of 

required cleanup is remote, no liability is recorded or estimate disclosed. 

If site-specific engineering estimates for cleanup are not available, NASA employs parametric 

modeling software to estimate the total cost of cleaning up known contamination at these sites for 

current and future years. The estimates calculated by the parametric models may be classified as 

probable or reasonably possible. 

Consistent with SFFAS No. 6, Accounting for Property, Plant, and Equipment, NASA estimates the 

anticipated environmental disposal cleanup costs for current and planned capital PP&E. NASA 

recognizes and records in its financial statements an environmental cleanup liability for those inservice PP&E with a probable and measurable environmental cleanup liability. 

Probable Environmental and Disposal Liabilities 

In FY 2012, NASA recorded a decrease of $276 million of environmental and disposal liabilities to 

reflect the estimated total cost of environmental cleanup on known hazardous conditions bringing the 

total to $1,169 million, which includes anticipated cleanup at disposal for Space Shuttle and PP&E. 

The amount recorded in FY 2011 was $1,445 million. The majority of the decrease is due to changes 

in liabilities from disposal-related cleanup costs for Shuttle PP&E. Estimates change for various 

reasons but primarily because of the availability of updated or new information on the extent of 

contamination. 
NASA FY 2012 Agency Financial Report 73

National Aeronautics and Space Administration 

Notes to Financial Statements 

For the Fiscal Years 2012 and 2011 

NOTE 10. ENVIRONMENTAL AND DISPOSAL LIABILITIES (continued) 

Reasonably Possible Environmental and Disposal Liabilities 

In addition to the probable cleanup costs for known hazardous conditions recognized in the financial 

statements, there are other potential remediation sites where the likelihood of required cleanup for 

known hazardous conditions is reasonably possible. Remediation costs at certain sites classified as 

reasonably possible were estimated to be $1 million for FY 2012 and 2011. 

With respect to environmental remediation that NASA believes is reasonably possible but not 

estimable, NASA believes that either the likelihood of NASA liability is less than probable but more 

than remote or the regulatory drivers and/or technical data that exist are not reliable enough to 

calculate an estimate. 

Other Information 

The current proposed decommissioning approach for the ISS is to execute a controlled targeted 

deorbit to a remote ocean location. This is consistent with the approach used to deorbit other space 

vehicles such as Russian’s Progress, Europe’s Automated Transfer Vehicle (ATV) and Japan’s H-II 

Transfer Vehicle (HTV). The target reliability for this decommissioning approach is calculated at 99 

percent. Based on past experience with the re-entry of satellites, larger portions or fragments of the 

ISS would be expected to survive the thermal and aerodynamic stresses of re-entry. The debris 

footprint associated with the deorbit of the ISS would be targeted for remote ocean regions. The 

disposal of satellites and vehicles into broad ocean areas with a controlled deorbit has left little 

evidence of their re-entry. Any hazardous materials on board the ISS would be removed or jettisoned 

prior to the decommissioning. As a result, only residual quantities, if any, of hazardous, toxic, and 

radioactive materials would remain prior to the decommissioning. These would be expected to 

vaporize during the re-entry. Any remaining contamination in the ISS debris field would not be 

expected to have a substantive impact on marine life. Therefore, the probability of NASA incurring 

environmental cleanup costs related to the ISS is remote and, in accordance with SFFAS 5 & 6, no 

estimate for such costs has been developed or reported in these financial statements. 

NASA maintains numerous structures and facilities, some of which are known to contain asbestos. 

Current accounting pronouncements do not require the recording of a contingent liability resulting 

from future asbestos remediation efforts. 
74 NASA FY 2012 Agency Financial Report

National Aeronautics and Space Administration 

Notes to Financial Statements 

For the Fiscal Years 2012 and 2011 

NOTE 11. OTHER LIABILITIES 

Other Liabilities are comprised of intragovernmental liabilities and liabilities with public entities. Other 

Accrued Liabilities primarily consist of the accrual of contractor costs for goods and services. The 

period of performance for contractor contracts typically spans the duration of NASA programs, which 

could be for a number of years prior to final delivery of the product. In such cases, NASA records a 

cost accrual throughout the fiscal year as the work is performed. Other Liabilities also includes 

federal employee payroll and benefit liabilities, including unfunded annual leave and funded sick leave 

that has been earned but not taken, and salaries and wages that have been earned but are unpaid. 

2012

(In Millions of Dollars) Current Non-Current Total

Intragovernmental Liabilities:

 Advances From Others $ 61 $ - $ 61 

 Workers’ Compensation 5 8 13 

 Employer Contributions and Payroll Taxes 7 - 7 

 Liability for Non-Entity Assets 1 - 1 

 Other Accrued Liability 3 - 3 

 Total Intragovernmental 77 8 85 

 Unfunded Annual Leave - 207 207 

 Accrued Funded Payroll 43 - 43 

 Advances from Others 90 - 90 

 Employer Contributions and Payroll Taxes 4 - 4 

 Liability for Deposit and Clearing Funds 2 - 2 

 Other Accrued Liabilities 1,176 - 1,176 

 Total from the Public

 Total Other Liabilities

 1,315 207 1,522 

$ 1,392 $ 215 $ 1,607 

2011

(In Millions of Dollars) Current Non-Current Total

Intragovernmental Liabilities:

 Advances From Others $ 80 $ - $ 80 

 Workers’ Compensation 6 7 13 

 Employer Contributions and Payroll Taxes 7 - 7 

 Liability for Deposit and Clearing Funds 6 - 6 

 Liability for Non-Entity Assets 1 - 1 

 Other Accrued Liability 4 - 4 

 Total Intragovernmental 104 7 111 

 Unfunded Annual Leave - 215 215 

 Accrued Funded Payroll 44 - 44 

 Advances from Others 33 - 33 

 Employer Contributions and Payroll Taxes 4 - 4 

 Liability for Deposit and Clearing Funds 37 - 37 

 Other Accrued Liabilities 1,179 - 1,179 

 Total from the Public 1,297 215 1,512 

 Total Other Liabilities $ 1,401 $ 222 $ 1,623 
NASA FY 2012 Agency Financial Report 75

National Aeronautics and Space Administration 

Notes to Financial Statements 

For the Fiscal Years 2012 and 2011 

NOTE 12. COMMITMENTS AND CONTINGENCIES 

NASA is a party in various administrative proceedings, court actions (including tort suits), and claims. 

For cases, management and legal counsel believe it is probable that the outcomes will result in a loss 

to NASA, contingent liabilities are recorded. There were certain cases reviewed by legal counsel 

where the probable future loss is remote and as such no contingent liability has been recorded in 

connection with these cases. 

There are certain other contracts which may contain provisions regarding contingent obligations to 

fund accumulated unfunded employee benefit plans upon contract termination. Currently, these 

potential liabilities are not measurable.
76 NASA FY 2012 Agency Financial Report

National Aeronautics and Space Administration 

Notes to Financial Statements 

For the Fiscal Years 2012 and 2011 

NOTE 13. INTRAGOVERNMENTAL COST AND EXCHANGE REVENUE 

Intragovernmental costs and revenue are exchange transactions made between NASA and other 

federal government entities. Costs and revenue with the Public result from transactions between 

NASA and other non-federal entities. 

(In Millions of Dollars) 2012 2011

Aeronautics Research 

Intragovernmental Costs $ 75 $ 60

Public Cost 746 748

Total Aeronautics Research Costs 821 808

Less:

Intragovernmental Earned Revenue 87 101

Public Earned Revenue 22 18 

Total Aeronautics Research Earned Revenue 109 119

Total Aeronautics Research Net Cost $ 712 $ 689

Exploration Systems

Intragovernmental Costs $ 250 $ 228

Public Cost 4,688 4,563

Total Exploration Systems Costs 4,938 4,791

Less:

Intragovernmental Earned Revenue 76 48 

Public Earned Revenue 21 20 

Total Exploration Systems Earned Revenue 97 68 

Total Exploration Systems Net Cost $ 4,841 $ 4,723

Science

Intragovernmental Costs $ 478 $ 400

Public Cost 6,893 6,630

Total Science Costs 7,371 7,030

Less:

Intragovernmental Earned Revenue 1,350 985

Public Earned Revenue 35 34 

Total Science Earned Revenue 1,385 1,019

Total Science Net Cost $ 5,986 $ 6,011

Space Operations

Intragovernmental Costs $ 325 $ 401

Public Cost 6,574 6,852

Total Space Operations Costs 6,899 7,253

Less:

Intragovernmental Earned Revenue 398 (20) 

Public Earned Revenue 85 78 

Total Space Operations Earned Revenue 483 58 

Total Space Operations Earned Net Cost $ 6,416 $ 7,195

Net Cost of Operations $ 17,955 $ 18,618 
NASA FY 2012 Agency Financial Report 77

National Aeronautics and Space Administration 

Notes to Financial Statements 

For the Fiscal Years 2012 and 2011 

NOTE 14. APPORTIONMENT CATEGORIES OF OBLIGATIONS INCURRED: DIRECT VS. 

REIMBURSABLE OBLIGATIONS 

Category A consists of amounts requested to be apportioned annually and distributed for each 

calendar quarter in the fiscal year. Category B consists of amounts requested to be apportioned on a 

basis other than calendar quarters, such as time periods other than quarters, activities, projects, 

objects, or a combination thereof. 

(In Millions of Dollars) 2012 2011

Direct Obligations:

 Category A $ 1 $ 1 

 Category B 18,155 18,601 

Reimbursable Obligations:

 Category B

Total Obligations Incurred

 2,529 2,037 

 $ 20,685 $ 20,639 

NOTE 15. EXPLANATION OF DIFFERENCES BETWEEN THE STATEMENT OF BUDGETARY 

RESOURCES (SBR) AND THE BUDGET OF THE U.S. GOVERNMENT 

The FY 2014 Budget of the United States Government (President’s Budget) presenting the actual 

amounts for the year ended September 30, 2012 has not been published as of the issue date of these 

financial statements. The FY 2014 President’s Budget is scheduled for publication in 2013 on the 

OMB website. 

NASA reconciled the amounts of the FY 2011 column on the SBR to the actual amounts for FY 2011 

in the FY 2013 President’s Budget for budgetary resources, obligations incurred, distributed offsetting 

receipts, and net outlays as presented below. 

(In Millions of Dollars)

Combined Statement of Budgetary Resources

Budgetary 

Resources Obligations

Distributed 

Offsetting 

Receipts

Net Outlays

$ 21,316 $ 20,639 $ 16 $ 17,617 

Included on SBR, not in President's Budget

 Expired Accounts (256) (120) - - 

 Distributed Offsetting Receipts

Budget of the United States Government

 - - (16) 17 

$ 21,060 $ 20,519 $ - $ 17,634 

 

The difference between the SBR and the President’s Budget represents expired accounts an

distributed offsetting receipts reported on the SBR but not in the President’s Budget. 

d 
78 NASA FY 2012 Agency Financial Report

National Aeronautics and Space Administration 

Notes to Financial Statements 

For the Fiscal Years 2012 and 2011 

NOTE 16. UNDELIVERED ORDERS AT THE END OF THE PERIOD 

Undelivered Orders at the end of the period totaled $7.7 billion and $6.8 billion as of September 30, 

2012 and September 30, 2011, respectively. 

NOTE 17. RECONCILIATION OF NET COST TO BUDGET 

SFFAS No.7, Accounting for Revenues and Other Financing Concepts for Reconciling Budgetary and 

Financial Accounting, requires a reconciliation of proprietary and budgetary accounting information. 

Accrual-based measures used in the Statement of Net Cost differ from the obligation-based measures 

used in the Statement of Budgetary Resources. This reconciliation shows the relationship between 

the net obligations derived from the Statement of Budgetary Resources and net costs of operations 

derived from the Statement of Net Cost by identifying and explaining key items that affect one 

statement but not the other. Prior year balances have been reclassified to comply with the current 

year’s presentation and disclosure. 

(In Millions of Dollars) 2012 2011

Resources Used to Finance Activities

Budgetary Resources Obligated

Obligations Incurred $ 20,685 $ 20,639 

Less: Spending Authority from Offsetting Collections and Recoveries 3,207 2,288 

Obligations Net of Offsetting Collections and Recoveries 17,478 18,351 

Less: Offsetting Receipts (6) 4 

Net Obligations 17,484 18,347 

Other Resources

Donations & Forfeitures of Property 4 15 

Transfers In/Out Without Reimbursements 100 676 

Imputed Financing from Costs Absorbed by Others 176 193 

Net Other Resources Used to Finance Activities 280 884 

Total Resources Used to Finance Activities 17,764 19,231 

Resources Used to Finance Items Not Part of the Net Cost of Operations

Change in Budgetary Resources Obligated for Goods, Services, and

 Benefits Ordered But Not Yet Provided (440) (823)

Resources that Fund Expenses Recognized in Prior Periods (294) (4)

Budgetary Offsetting Collections and Receipts that Do Not Affect the Net

 Costs of Operations—Other (6) 5 

Resources that Finance the Acquisition of Assets (1,113) (2,317)

Other Resources or Adjustments to Net Obligated Resources that Do 

 Affect Net Cost of Operations (4) (690)

Total Resources Used to Finance Items Not Part of the Net Cost of 

Total Resources Used to Finance the Net Cost of Operations

 (1,857) (3,829)

$ 15,907 $ 15,402 
NASA FY 2012 Agency Financial Report 79

National Aeronautics and Space Administration 

Notes to Financial Statements 

For the Fiscal Years 2012 and 2011 

NOTE 17. RECONCILIATION OF NET COST TO BUDGET (continued) 

(In Millions of Dollars) 2012 2011

Components of Net Cost that Will Not Require or Generate Resources

 in the Current Period

Components Requiring or Generating Resources in Future Periods

Increases in Annual Leave Liability $ - $ 2

Increases in Environmental and Disposal Liability - 404 

Other - 4 

Total Components of Net Cost that Will Require or Generate Resources

 in Future Periods - 410 

Components Not Requiring or Generating Resources

Depreciation 1,443 1,206 

Revaluation of Assets or Liabilities (8) (1)

Other 613 1,601 

Total Components of Net Cost of Operations that Will Not Require

 or Generate Resources 2,048 2,806 

Total Components of Net Cost of Operations that Will Not Require

 or Generate Resources in the Current Period

Net Cost of Operations

 2,048 3,216 

$ 17,955 $ 18,618 
80 NASA FY 2012 Agency Financial Report

National Aeronautics and Space Administration 

Required Supplementary Stewardship Information 

Fiscal Years 2012, 2011, 2010, 2009, and 2008 

Stewardship Investments: Research and Development and Other Initiatives

NASA’s programs and activities are carried out through four Research and Development and 

Other Initiatives (R&D/Other Initiatives): Aeronautics Research, Exploration Systems, Science, 

and Space Operations. Each R&D/Other Initiative costs is presented by the applicable NASA 

themes, which are described in the note. To provide a complete analysis of NASA costs, both 

R&D and non-R&D costs are presented. Non R&D costs are associated with NASA activities 

such as Education and Outreach, Space Operations Programs. Descriptions for the work 

associated with these costs are also presented. 

Research and Development and Other Initiative Costs by Theme 

(In Millions of Dollars) 2012 2011 2010 2009 2008

Research and Development Costs

Basic

Aeronautics Research:

Aeronautics Indirect Cost * $ - $ 1 $ 1 $ - $ - 

Subtotal $ - $ 1 $ 1 $ - $ - 

Exploration Systems:

Human Exploration Capability $ - $ - $ - $ - $ - 

Exploration Research and Development - - - 18 29

Exploration Indirect Cost * 3 5 5 1 1 

Subtotal $ 3 $ 5 $ 5 $ 19 $ 30

Science

Earth Science $ 329 $ 304 $ 306 $ 325 $ 294

Planetary Science 263 264 257 266 238

Astrophysics 194 198 194 149 103

Heliophysics 81 85 85 62 51

Science Indirect Cost * 4 7 7 17 46

Subtotal $ 871 $ 858 $ 849 $ 819 $ 732

Space Operations

International Space Station $ 303 $ 258 $ 363 $ - $ - 

Space and Flight Support - 1 - - -

Space Operation Indirect Cost * 4 8 9 3 2 

Subtotal $ 307 $ 267 $ 372 $ 3 $ 2

Total Basic Expenses $ 1,181 $ 1,131 $ 1,227 $ 841 $ 764
NASA FY 2012 Agency Financial Report 81

National Aeronautics and Space Administration 

Required Supplementary Stewardship Information 

Fiscal Years 2012, 2011, 2010, 2009, and 2008 

Stewardship Investments: Research and Development and Other Initiatives

Research and Development and Other Initiative Costs by Theme (continued) 

(In Millions of Dollars) 2012 2011 2010 2009 2008

Applied

Aeronautics Research:

Aeronautics $ 444 $ 429 $ 464 $ 465 $ 472

Aeronautics Indirect Cost * - 4 3 3 3 

Subtotal $ 444 $ 433 $ 467 $ 468 $ 475

Exploration Systems:

Exploration Research and Development $ 72 $ 124 $ 152 $ 169 $ 159

Exploration Indirect Cost * 3 28 26 21 17

Subtotal $ 75 $ 152 $ 178 $ 190 $ 176

Science

Earth Science $ 38 $ 38 $ 41 $ 40 $ 39

Science Indirect Cost * 4 36 31 26 24

Subtotal $ 42 $ 74 $ 72 $ 66 $ 63

Space Operations

International Space Station $ 1,483 $ 1,260 $ 1,773 $ - $ - 

Space and Flight Support - 5 - - -

Space Operation Indirect Cost * 4 40 42 34 29

Subtotal $ 1,487 $ 1,305 $ 1,815 $ 34 $ 29

Total Applied Expenses $ 2,048 $ 1,964 $ 2,532 $ 758 $ 743

Development

Aeronautics Research:

Aeronautics Indirect Cost * $ 1 $ 1 $ 2 $ 1 $ - 

Subtotal $ 1 $ 1 $ 2 $ 1 $ - 

Exploration Systems:

Human Exploration Capability $ 1,638 $ 2,431 $ 3,197 $ 1,478 $ 1,468 

Exploration Research and Development 155 185 227 253 239

Commercial Spaceflight - - - 122 -

Exploration Indirect Cost * 2 11 11 5 5 

Subtotal $ 1,795 $ 2,627 $ 3,435 $ 1,858 $ 1,712 

Science

Earth Science $ 609 $ 665 $ 536 $ 420 $ 307

Planetary Science 491 738 704 627 643

Astrophysics 144 406 480 552 72

James Webb Space Telescope 308 - - - -

Heliophysics 284 288 284 207 151

Science Indirect Cost * 3 14 13 118 598

Subtotal $ 1,839 $ 2,111 $ 2,017 $ 1,924 $ 1,771 

Space Operations

Space and Flight Support $ - $ 4 $ - $ - $ - 

Space Operation Indirect Cost * 2 16 18 8 7 

Subtotal $ 2 $ 20 $ 18 $ 8 $ 7

Total Development Expenses

Total Research and Development

$ 3,637 $ 

$ 6,866 $ 

 4,759 $ 

 7,854 $ 

 5,472 $ 3,791 $ 3,490 

 9,231 $ 5,390 $ 4,997 
82 NASA FY 2012 Agency Financial Report

National Aeronautics and Space Administration 

Required Supplementary Stewardship Information 

Fiscal Years 2012, 2011, 2010, 2009, and 2008 

Stewardship Investments: Research and Development and Other Initiatives

Non-Research and Development and Other Initiative Costs by Theme 

(In Millions of Dollars) 2012 2011 2010 2009 2008

Non-Research and Development Cost

Aeronautics Research:

Aeronautics $ 92 $ 110 $ 83 $ 144 $ 150

Aeronautics Indirect Cost * 284 263 263 215 154

Subtotal $ 376 $ 373 $ 346 $ 359 $ 304

Exploration Systems:

Human Exploration Capability $ 1,157 $ 239 $ 184 $ 1,672 $ 1,624 

Exploration Research and Development 124 76 101 151 260

Commercial Spaceflight 415 423 98 - -

Exploration Other (2) - 10 4 22

Exploration Indirect Cost * 1,371 1,269 1,349 1,259 987

Subtotal $ 3,065 $ 2,007 $ 1,742 $ 3,086 $ 2,893 

Science

Earth Science $ 590 $ 543 $ 677 $ 800 $ 1,083 

Planetary Science 472 432 374 429 512

Astrophysics 340 385 414 299 188

Heliophysics 245 223 231 283 419

Science Other (1) 4 17 88 243

Science Indirect Cost * 2,973 2,400 2,046 1,898 1,381

Subtotal $ 4,619 $ 3,987 $ 3,759 $ 3,797 $ 3,826 

Space Operations

Space Shuttle $ 928 $ 1,774 $ 3,215 $ 3,277 $ 3,394 

International Space Station 1,612 1,805 786 2,148 1,582

Space and Flight Support (159) 708 825 804 687

Space Operation Indirect Cost * 2,722 1,374 2,663 4,796 1,748

Subtotal $ 5,103 $ 5,661 $ 7,489 $ 11,025 $ 

$ 

 7,411 

Total Non-Research and Development Expenses $ 13,163 $ 12,028 $ 13,336 $ 18,267 14,434

Total Expenses $ 20,029 $ 19,882 $ 22,567 $ 23,657 $ 19,431

*Indirect Costs represents R&D and Non-R&D costs incurred by the Agency for various 

activities that support the Agency’s Research and Development and Other Initiatives. These 

activities relate to the areas of Construction and Environmental Compliance and Restoration, 

Space Technology, Education, Innovative Partnerships Program, Institutional Investments, 

Congressionally Directed items, Management and Operations, and the Office of Inspector 

General. 
NASA FY 2012 Agency Financial Report 83

National Aeronautics and Space Administration 

Required Supplementary Stewardship Information 

Fiscal Years 2012, 2011, 2010, 2009, and 2008 

Stewardship Investments: Research and Development and Other Initiatives

STEWARDSHIP INVESTMENTS: Research and Development and Other Initiatives 

(continued) 

NASA makes substantial research and development investments for the benefit of the nation. 

These amounts are expensed as incurred in determining the net cost of operations. 

NASA’s R&D/Other Initiatives programs include activities to extend our knowledge of Earth, its 

space environment, and the universe, and to invest in new aeronautics and advanced space 

transportation technologies that support the development and application of technologies critical 

to the economic, scientific, and technical competitiveness of the United States. 

Investment in R&D/Other Initiatives refers to those expenses incurred to support the search for 

new or refined knowledge and ideas and for the application or use of such knowledge and ideas 

for the development of new or improved products and processes with the expectation of 

maintaining or increasing national economic productive capacity or yielding other future 

benefits. 

Research and Development and Other Initiatives: Theme Descriptions 

INITIATIVE: AERONAUTICS RESEARCH 

Theme: Aeronautics 

Aeronautics develops technologies to improve aircraft and air system safety, security and 

performance; reduce aircraft noise and emissions; and increase the capacity of the National 

Airspace System (NAS). Programs include Aviation Safety, Airspace Systems Program, 

Fundamental Aeronautics, Aeronautics Test Program, and Integrated Systems Research. 

INITIATIVE: EXPLORATION SYSTEMS 

Theme: Human Exploration Capability 

The Human Exploration Capability (HEC) Theme develops the launch and spaceflight vehicles 

that will provide the initial capability for crewed exploration missions beyond low Earth orbit 

(LEO). Programs include Multi-Purpose Crew Vehicle and Space Launch System. 

Theme: Exploration Research and Development 

The Exploration Research and Development (ERD) Theme’s technology development efforts 

contribute toward advances in U.S. high technology products and services. Programs include 

Human Research Program and Advanced Exploration Systems. 

Theme: Commercial Spaceflight 

The Commercial Spaceflight Theme creates incentives for commercial providers to develop and 

operate safe, reliable, and affordable commercial systems to transport crew and cargo to and 

from the ISS and LEO. This approach will provide assured access to the ISS, strengthen 

America's space industry, and provide a catalyst for future business ventures to capitalize on 

affordable access to space. Programs include Commercial Cargo and Commercial Crew. 
84 NASA FY 2012 Agency Financial Report

National Aeronautics and Space Administration 

Required Supplementary Stewardship Information 

Fiscal Years 2012, 2011, 2010, 2009, and 2008 

Stewardship Investments: Research and Development and Other Initiatives

INITIATIVE: SCIENCE 

Theme: Earth Science 

The Earth Science Theme studies the dynamic Earth system to trace effect to cause, connect 

variability and forcing with response, and vastly improve national capabilities to predict climate, 

weather, natural hazards, and conditions in the space environment. Programs include Earth 

Science Research, Earth Systematic Missions, Earth System Science Pathfinder, Earth Science 

Multi-Mission Operations, Earth Science Technology, and Applied Sciences. 

Theme: Planetary Science 

The Planetary Science Theme advances scientific knowledge of the origin and history of the 

solar system, including the history of life and whether it evolved beyond Earth. Programs 

include Planetary Science Research, Lunar Quest Program, Discovery, New Frontiers, Mars 

Exploration, Outer Planets, and Technology. 

Theme: Astrophysics 

The Astrophysics Theme seeks to understand the cycles of matter and energy that formed, 

evolve, and govern the universe, and how they created the unique conditions that support life. 

Where are we from? Are we alone? NASA searches for answers to these questions looking far 

away, towards the beginning of time, to see galaxies forming, and close to home, in search of 

planetary systems like Earth around nearby stars. Programs include Astrophysics Research, 

Cosmic Origins, Physics of the Cosmos, Exoplanet Exploration, and Astrophysics Explorer. 

Theme: James Webb Space Telescope 

The James Webb Space Telescope (JWST) Theme represents a program and flagship mission 

that is an essential contributor to NASA's goals for astrophysics research. In FY 2012, this 

program became its own theme, separate from the Astrophysics theme. By being able to look 

back into the history of the universe, to see the first light from the first stars, JWST will enable 

the study of how galaxies, stars and planetary systems came into being, how they evolve, and 

ultimately how they end their lives. Additionally, the mission will make discoveries that will help 

scientists understand how matter, energy, space, and time behave under the extraordinarily 

diverse conditions of the cosmos, and the characteristics of planetary systems orbiting other 

stars. 

Theme: Heliophysics 

The Heliophysics Theme studies the science of the Sun-Solar System Connection to: (1) 

understand the Sun and its effects on Earth, the solar system, and the space environmental 

conditions that will be experienced by explorers, and (2) demonstrate technologies that can 

improve future operational systems. Programs include Heliophysics Research, Living with a 

Star, Solar Terrestrial Probes, Heliophysics Explorer, and New Millennium. 

INITIATIVE: SPACE OPERATIONS 

Theme: Space Shuttle 

Thirty-nine years ago, NASA was charged with developing the world's first reusable space 

transportation system, a powerful vehicle with the versatility to revolutionize how people access 

and operate in near-Earth space. In FY 2011, the Space Shuttle retired, marking the end of its 

chapter in the history of space exploration. 
NASA FY 2012 Agency Financial Report 85

National Aeronautics and Space Administration 

Required Supplementary Stewardship Information 

Fiscal Years 2012, 2011, 2010, 2009, and 2008 

Stewardship Investments: Research and Development and Other Initiatives

Theme: International Space Station 

The International Space Station Theme supports the operations of a research facility in low 

Earth orbit as one of NASA’s steps in achieving human exploration beyond Earth. The ISS 

provides a multi-disciplinary, cutting edge, unique research platform to pursue microgravity and 

engineering research and technology-development test bed applications. The ISS is a critical 

step in developing, testing, and validating the next generation of space technologies and 

operational processes needed to explore beyond low Earth orbit. In 2011, NASA completed 

assembly of and signed a Cooperative Agreement with the Center for the Advancement of 

Science in Space (CASIS) to serve as an independent, nonprofit research management 

organization to develop and manage the U.S. portion of the ISS to be operated as a National 

Laboratory. CASIS be a single point of contact for US (non-NASA) researchers and will be 

responsible for developing and managing a diversified research and development portfolio and 

maximizing the value of the ISS by stimulating its use as a National Laboratory. 

Theme: Space and Flight Support 

The Space and Flight Support Theme encompasses the 21st Century Launch Complex, Space 

Communications and Navigation, Human Space Flight Operations, Launch Services, and 

Rocket Propulsion Testing. 

 
86 NASA FY 2012 Agency Financial Report National Aeronautics and Space Administration Required Supplementary Information Combining Schedule of Budgetary Resources For the Fiscal Year Ended September 30, 2012 

American 

Space Operations Exploration Aeronautics Cross-Agency Office of Inspector Recovery and Space Tec

(In Millions of Dollars) Mission Science Mission Mission Mission Mission Education Mission General Reinvestment Act Miss

Budgetary Resources: Unobligated Balance, Brought Forward, October 1 $ 130 $ 83 $ 189 $ 12 $ 42 $ 28 $ 3 $ 2 $ 

Recoveries of Prior Year Unpaid Obligations 180 58 59 6 29 3 — 1 

Other Changes in Unobligated Balance — — — — — — 

Unobligated Balance from Prior Year Budget Authority, Net 310 141 248 18 71 31 3 3 

Appropriation 4,192 5,074 3,716 569 3,003 136 38 — 

Spending Authority from Offsetting Collections 10 — — — 2,557 — 1 — 

Total Budgetary Resources $ 4,512 $ 5,215 $ 3,964 $ 587 $ 5,631 $ 167 $ 42 $ 3 $ 

Status of Budgetary Resources: Obligations Incurred $ 4,404 $ 5,142 $ 3,868 $ 569 $ 5,248 $ 146 $ 39 $ 1 $ 

Unobligated Balance, End of Year: 

Apportioned 64 63 92 17 370 18 1 Unapportioned 44 10 4 1 13 3 2 2 

Total Unobligated Balance, End of Period 108 73 96 18 383 21 3 2 

Total Status of Budgetary Resources $ 4,512 $ 5,215 $ 3,964 $ 587 $ 5,631 $ 167 $ 42 $ 3 $ 

Change in Obligated Balance: Obligated Balance, Start of Year (Net), As Adjusted $ 2,013 $ 2,764 $ 1,712 $ 259 $ 1,086 $ 187 $ 4 $ 55 $ 

Obligations Incurred 4,404 5,142 3,868 569 5,248 146 39 1 

Outlays (Gross) (4,486) (4,778) (3,575) (566) (5,051) (152) (38) (45) Change in Uncollected Customer Payments from Federal Sources 5 — — — (482) — — 1 

Recoveries of Prior Year Unpaid Obligations (180) (58) 1,756 3,070 Obligated Balance, End of Year: (59) (6) (29) (3) — (1) 

1,946 256 772 178 5 11 

Unpaid Obligations, End of Year (Gross) 1,756 3,070 1,946 256 2,086 178 5 11 

Uncollected Customer Payments from Federal Sources, End of Year — — — (1,314) — — 

Obligated Balance, End of Period (Net) $ 1,756 $ 3,070 $ 1,946 $ 256 $ 772 $ 178 $ 5 $ 11 $ 

Budget Authority and Outlays, Net: Budget Authority, Gross $ 4,202 $ 5,074 $ 3,716 $ 569 $ 5,560 $ 136 $ 39 $ — $ 

Actual Offsetting Collections (15) — — — (2,075) — (1) (1) 

Change in Uncollected Customer Payments from Federal Sources 5 — — — (482) — — 1 

Budget Authority, Net 4,192 5,074 3,716 569 3,003 136 38 0 

Outlays, Gross 4,486 4,778 3,575 566 5,051 152 38 45 

Actual Offsetting Collections (15) — — — (2,075) — (1) (1) 

Outlays, Net 4,471 4,778 3,575 566 2,976 152 37 44 

Distributed Offsetting Receipts — — Agency Outlays, Net $ 4,471 $ 4,778 — — — — — — 

$ 3,575 $ 566 $ 2,976 $ 152 $ 37 $ 44 $ 
NASA FY 2012 Agency Financial Report 

National Aeronautics and Space Administration Required Supplementary Information Combining Schedule of Budgetary Resources For the Fiscal Year Ended September 30, 2011 

American 

Space Operations Exploration Aeronautics Cross-Agency Office of Inspector Recovery and Space Techno

(In Millions of Dollars) Mission Science Mission Mission Mission Mission Education Mission General Reinvestment Act Mission 

Budgetary Resources: Unobligated Balance, Brought Forward, October 1 $ 154 $ 61 $ 145 $ 34 $ 23 $ 5 $ 2 $ 2 $ 

Recoveries of Prior Year Unpaid Obligations 50 58 42 6 41 3 — 8 

Other Changes in Unobligated Balance 2 — — — 1 — — — 

Unobligated Balance from Prior Year Budget Authority, Net 206 119 187 40 65 8 2 10 

Appropriation 5,321 4,919 3,929 534 3,130 146 36 — 

Spending Authority from Offsetting Collections 5 — — — 1,937 — 1 — 

Total Budgetary Resources $ 5,532 $ 5,038 $ 4,116 $ 574 $ 5,132 $ 154 $ 39 $ 10 $ 

Status of Budgetary Resources: Obligations Incurred $ 5,401 $ 4,955 $ 3,927 $ 561 $ 5,090 $ 126 $ 37 $ 8 $ 

Unobligated Balance, End of Year: 

Apportioned 89 79 188 12 30 27 — 1 Unapportioned 42 4 1 1 12 1 2 1 

Total Unobligated Balance, End of Period 131 83 189 13 42 28 2 2 

Total Status of Budgetary Resources $ 5,532 $ 5,038 $ 4,116 $ 574 $ 5,132 $ 154 $ 39 $ 10 $ 

Change in Obligated Balance: Obligated Balance, Start of Year (Net), As Adjusted $ 1,713 $ 2,560 $ 1,258 $ 207 $ 1,042 $ 224 $ 6 $ 319 $ 

Obligations Incurred 5,401 4,955 3,927 561 5,090 126 37 8 

Outlays (Gross) (5,058) (4,693) (3,431) (502) (4,912) (161) (39) (281) 

Change in Uncollected Customer Payments from Federal Sources 7 — — — (93) — — 17 

Recoveries of Prior Year Unpaid Obligations (50) (58) 2,013 2,764 Obligated Balance, End of Year: (42) (6) (41) (3) — (8) 

1,712 260 1,086 186 4 55 

Unpaid Obligations, End of Year (Gross) 2,018 2,764 1,712 260 1,919 186 4 56 

Uncollected Customer Payments from Federal Sources, End of Year (5) — — — (833) — — (1) 

Obligated Balance, End of Period (Net) $ 2,013 $ 2,764 $ 1,712 $ 260 $ 1,086 $ 186 $ 4 $ 55 $ 

Budget Authority and Outlays, Net: Budget Authority, Gross $ 5,326 $ 4,919 $ 3,929 $ 534 $ 5,067 $ 146 $ 37 $ — $ 

Actual Offsetting Collections (12) — — — (1,844) — (1) (17) 

Change in Uncollected Customer Payments from Federal Sources 7 — — — (93) — — 17 

Budget Authority, Net 5,321 4,919 3,929 534 3,130 146 36 — 

Outlays, Gross 5,058 4,693 3,431 502 4,912 161 39 281 

Actual Offsetting Collections (12) — — — (1,844) — (1) (17) 

Outlays, Net 5,046 4,693 3,431 502 3,068 161 38 264 

Distributed Offsetting Receipts — — — — — — — — 

Agency Outlays, Net $ 5,046 $ 4,693 $ 3,431 $ 502 $ 3,068 $ 161 $ 38 $ 264 $ 
88 NASA FY 2012 Agency Financial Report

National Aeronautics and Space Administration

Required Supplementary Information 

For the Fiscal Years 2012 and 2011 

DEFERRED MAINTENANCE AND REPAIRS 

Deferred maintenance and repairs are maintenance and repair activities not performed when 

they should have been or were scheduled to be and which, therefore, are put off or delayed for 

a future period. NASA’s buildings, facilities and other structures which include heritage assets 

remain in fair to good condition. Heritage assets support NASA’s mission and enhance the 

public’s understanding of NASA’s numerous programs. 

NASA uses a Deferred Maintenance parametric estimating method (DM method) in order to 

conduct a consistent condition assessment of its facilities, buildings and other structures 

(including heritage assets). This method measures NASA’s current real property asset 

condition and documents real property deterioration. The DM method produces both a cost 

estimate of deferred maintenance and repairs, and a Facility Condition Index (FCI). Both 

measures are indicators of the overall condition of NASA’s facilities. The facilities condition 

assessment methodology involves an independent, rapid visual assessment of nine different 

systems within each facility to include: structure, roof, exterior, interior finishes, HVAC, 

electrical, plumbing, conveyance, and program support equipment. The DM method is 

designed for application to a large population of facilities; results are not necessarily applicable 

for individual facilities or small populations of facilities. Under this methodology, NASA defines 

acceptable operating conditions in accordance with standards comparable to those used in 

private industry and the aerospace industry. 

There has been no significant change in our deferred maintenance and repair estimate this 

year. The agency-wide FCI, based on the ratings obtained during the condition assessment site 

visits, remains unchanged from the previous fiscal year. The FCI values for the majority of 

individual Centers and sites varied less than 0.5, validating the relative stability of the Centers 

and sites despite the continued aging and deterioration of older facilities. Evaluation of the 

facility conditions by building type (Real Property Classification Code/DM Category) indicates 

that the Agency continues to focus maintenance and repair on direct mission-related facilities. 

Higher condition ratings are reported for Launch Facilities, potable water facilities, launch, 

communication, tracking, and fuel facilities agency-wide. Lower condition ratings occur for 

infrastructure, site related systems, and static test stands. 

Deferred Maintenance Method 2012 2011

 Facility Condition Index (FCI)

 Target Facility Index

 Deferred Maintenance Estimate 

 3.7 

 3.8 

 3.7 

 3.8 

 (Active and Inactive Dollars)

 (In Millions of Dollars)

$ 2,330 $ 2,472 
NASA FY 2012 Agency Financial Report 89

National Aeronautics and 

Space Administration 

Office of Inspector General 

Washington, DC 20546-0001 

November 15, 2012 

TO: Charles F. Bolden, Jr. 

Administrator 

Elizabeth Robinson 

Chief Financial Officer 

FROM: Paul K. Martin

Inspector General 

SUBJECT: Audit of the National Aeronautics and Space Administration’s 

Fiscal Year 2012 Financial Statements (Report No. IG-13-003; 

Assignment No. A-12-013-00) 

The Office of Inspector General contracted with the independent public accounting firm 

PricewaterhouseCoopers LLP (PwC) to audit NASA’s financial statements in accordance with 

the Government Accountability Office’s Government Auditing Standards and the Office of 

Management and Budget’s Bulletin No. 07-04, “Audit Requirements for Federal Financial 

Statements,” as amended. 

The audit resulted in an unqualified opinion on NASA’s fiscal year (FY) 2012 financial 

statements (Enclosure 1). An unqualified opinion means that the financial statements present 

fairly, in all material respects, the financial position and the results of the entity’s operations in 

conformity with U.S. generally accepted accounting principles. 

PwC also issued its reports on internal control and compliance with laws and regulations 

(Enclosures 2 and 3, respectively). For FY 2012, PwC identified one significant deficiency 

related to the environmental liability estimation process. During the audit, PwC identified no 

instances of significant noncompliance with applicable laws and regulations. 

In fulfilling our responsibilities under the Chief Financial Officers Act of 1990, we monitored 

the progress of the audit, reviewed PwC’s reports and related documentation, inquired of PwC’s 

representatives, and ensured that PwC met contractual requirements. Our review was not 

intended to enable us to express, and we do not express, an opinion on NASA’s financial 

statements; conclusions about the effectiveness of internal controls over financial reporting; or 

compliance with certain laws and regulations, including, but not limited to, the Federal Financial 

Management Improvement Act of 1996. 
90 NASA FY 2012 Agency Financial Report

PwC is responsible for each of the enclosed reports and the conclusions expressed therein. Our 

review disclosed no instances where PwC did not comply in all material respects with the 

Government Accountability Office’s Government Auditing Standards.

Please contact us if you have any questions about the enclosed reports. 

3 Enclosures 

 
PricewaterhouseCoopers LLP,

T: (703) 918 3000, F: (703) 918 3100

To the Administrator and the Inspector General

of the National Aeronautics and Space Administration

We have audited the accompanying consolidated balance sheet of the National Aeronautics and Space

Administration (NASA) as of September 30, 2012 and September 30, 2011, and the related consolidated

statements of net cost and changes in net position, and th

the years then ended. These financial statements are the responsibility of NASA's management. Our

responsibility is to express an opinion on these financial statements based on our audits.

We conducted our audits in accordance with auditing standards generally accepted in the United States of

America, the standards applicable to financial audits contained in

issued by the Comptroller General of the United States, and Office of M

Bulletin No. 07-04, Audit Requirements for Federal Financial Statements

require that we plan and perform the audits to obtain reasonable assurance about whether the financial

statements are free of material misstatement. An audit includes examining, on a test basis, evidence

supporting the amounts and disclosures in the financial statements. An audit also includes assessing the

accounting principles used and significant estimates made by management, as

overall financial statement presentation. We believe that our audits provide a reasonable basis for our

opinion.

In our opinion, the financial statements referred to above present fairly, in all material respects, the

consolidated financial position of NASA at September 30, 2012 and September 30, 2011, and its

consolidated net cost of operations and changes in net position, and the combined budgetary resources for

the years then ended, in conformity with accounting principles general

America.

The accompanying Management's Discussion and Analysis (MD&A)

Supplementary Information (RSI)

Information (RSSI) on pages

the United States of America to supplement the basic financial statements. Such information, although not

part of the basic financial statements, is required by the Federal Acco

OMB Circular A-136, Financial Reporting Requirements,

financial reporting for placing the basic financial statements in the appropriate operational, economic, or

historical context. We have applied certain limited procedures to the information in accordance with

auditing standards generally accepted in the United States of America, which consisted of inquiries of

management about the methods of preparing the information and com

consistency with management's responses to our inquires, the basic financial statements, and other

knowledge we have obtained during our audit of the basic financial statements. We do not express an

opinion or provide any assura

with sufficient evidence to express an opinion or provide any assurance.

Our audits were conducted for the purpose of forming an opinion on the consolidated and combined

financial statements of NASA taken as a whole. The Other Accompanying Information on pages

viii and pages 97 through 138

the consolidated or combined financial statements. The information is the responsibility of management

and was derived from and relates direct to the underlying accounting and other records used to prepare

the financial statements. Such information has not been subjected to the auditing procedures applied in

PricewaterhouseCoopers LLP, 1800 Tysons Boulevard, McLean, VA 22102

703) 918 3000, F: (703) 918 3100, www.pwc.com/us

Report of Independent Auditors

To the Administrator and the Inspector General

of the National Aeronautics and Space Administration

We have audited the accompanying consolidated balance sheet of the National Aeronautics and Space

Administration (NASA) as of September 30, 2012 and September 30, 2011, and the related consolidated

statements of net cost and changes in net position, and the combined statement of budgetary resources for

the years then ended. These financial statements are the responsibility of NASA's management. Our

responsibility is to express an opinion on these financial statements based on our audits.

udits in accordance with auditing standards generally accepted in the United States of

America, the standards applicable to financial audits contained in Government Auditing Standards

issued by the Comptroller General of the United States, and Office of Management and Budget (OMB)

Audit Requirements for Federal Financial Statements, as amended

require that we plan and perform the audits to obtain reasonable assurance about whether the financial

terial misstatement. An audit includes examining, on a test basis, evidence

supporting the amounts and disclosures in the financial statements. An audit also includes assessing the

accounting principles used and significant estimates made by management, as

overall financial statement presentation. We believe that our audits provide a reasonable basis for our

In our opinion, the financial statements referred to above present fairly, in all material respects, the

inancial position of NASA at September 30, 2012 and September 30, 2011, and its

consolidated net cost of operations and changes in net position, and the combined budgetary resources for

the years then ended, in conformity with accounting principles generally accepted in the United States of

The accompanying Management's Discussion and Analysis (MD&A) on pages 1 through 52

Supplementary Information (RSI) on pages 86 through 88, and Required Supplementary Stewardship

ages 80 through 85 are required by accounting principles generally accepted in

the United States of America to supplement the basic financial statements. Such information, although not

part of the basic financial statements, is required by the Federal Accounting Standards Advisory Board and

Financial Reporting Requirements, who considers it to be an essential part of

financial reporting for placing the basic financial statements in the appropriate operational, economic, or

We have applied certain limited procedures to the information in accordance with

auditing standards generally accepted in the United States of America, which consisted of inquiries of

management about the methods of preparing the information and comparing the information for

consistency with management's responses to our inquires, the basic financial statements, and other

knowledge we have obtained during our audit of the basic financial statements. We do not express an

opinion or provide any assurance on the information because the limited procedures do not provide us

with sufficient evidence to express an opinion or provide any assurance.

Our audits were conducted for the purpose of forming an opinion on the consolidated and combined

ements of NASA taken as a whole. The Other Accompanying Information on pages

138 is presented for purposes of additional analysis and

the consolidated or combined financial statements. The information is the responsibility of management

and was derived from and relates direct to the underlying accounting and other records used to prepare

Such information has not been subjected to the auditing procedures applied in

We have audited the accompanying consolidated balance sheet of the National Aeronautics and Space

Administration (NASA) as of September 30, 2012 and September 30, 2011, and the related consolidated

e combined statement of budgetary resources for

the years then ended. These financial statements are the responsibility of NASA's management. Our

responsibility is to express an opinion on these financial statements based on our audits.

udits in accordance with auditing standards generally accepted in the United States of

Government Auditing Standards,

anagement and Budget (OMB)

, as amended. Those standards

require that we plan and perform the audits to obtain reasonable assurance about whether the financial

terial misstatement. An audit includes examining, on a test basis, evidence

supporting the amounts and disclosures in the financial statements. An audit also includes assessing the

accounting principles used and significant estimates made by management, as well as evaluating the

overall financial statement presentation. We believe that our audits provide a reasonable basis for our

In our opinion, the financial statements referred to above present fairly, in all material respects, the

inancial position of NASA at September 30, 2012 and September 30, 2011, and its

consolidated net cost of operations and changes in net position, and the combined budgetary resources for

ly accepted in the United States of

on pages 1 through 52, Required

, and Required Supplementary Stewardship

are required by accounting principles generally accepted in

the United States of America to supplement the basic financial statements. Such information, although not

unting Standards Advisory Board and

who considers it to be an essential part of

financial reporting for placing the basic financial statements in the appropriate operational, economic, or

We have applied certain limited procedures to the information in accordance with

auditing standards generally accepted in the United States of America, which consisted of inquiries of

paring the information for

consistency with management's responses to our inquires, the basic financial statements, and other

knowledge we have obtained during our audit of the basic financial statements. We do not express an

nce on the information because the limited procedures do not provide us

Our audits were conducted for the purpose of forming an opinion on the consolidated and combined

ements of NASA taken as a whole. The Other Accompanying Information on pages i through

presented for purposes of additional analysis and is not a required part of

the consolidated or combined financial statements. The information is the responsibility of management

and was derived from and relates direct to the underlying accounting and other records used to prepare

Such information has not been subjected to the auditing procedures applied in

NASA FY 2012 Agency Financial Report 91
the audit of the consolidated and combined financial statements and, accordingly, we express no opinion

on it.

In accordance with Government Auditing Standards,

2012, on our consideration of NASA’s

November 15, 2012, on its compliance and other matters for the year ended September 30, 2012. The

purpose of those reports is t

and compliance and the results of that testing, and not to provide an opinion on the internal control over

financial reporting or on compliance. Those reports are an integral

accordance with Government Auditing Standards

considering the results of our audit.

November 15, 2012

the audit of the consolidated and combined financial statements and, accordingly, we express no opinion

Government Auditing Standards, we have also issued a report dated November 15,

on our consideration of NASA’s internal control over financial reporting and a report dated

November 15, 2012, on its compliance and other matters for the year ended September 30, 2012. The

purpose of those reports is to describe the scope of our testing of internal control over financial reporting

and compliance and the results of that testing, and not to provide an opinion on the internal control over

financial reporting or on compliance. Those reports are an integral part of an audit performed in

Government Auditing Standards and should be read in conjunction with this report in

considering the results of our audit.

the audit of the consolidated and combined financial statements and, accordingly, we express no opinion

ed a report dated November 15,

internal control over financial reporting and a report dated

November 15, 2012, on its compliance and other matters for the year ended September 30, 2012. The

o describe the scope of our testing of internal control over financial reporting

and compliance and the results of that testing, and not to provide an opinion on the internal control over

part of an audit performed in

and should be read in conjunction with this report in

92 NASA FY 2012 Agency Financial Report
PricewaterhouseCoopers LLP, 1800 Tysons Boulevard, McLean, VA 22102

T: (703) 918 3000, F: (703) 918 3100

Report of Independent Auditors on Internal Control

To the Administrator and Inspector General

of the National Aeronautics and Space Administration

We have audited the financial statements of

as of and for the year ended

2012. We conducted our audit

States of America, the standards applicable to financial audits contained in

Standards, issued by the Comptroller General of the United States, and Office of Mana

Budget (OMB) Bulletin No. 07

The management of NASA

financial reporting.

In planning and performing our audit, we considered

basis for designing our auditing procedures for the purpose of expressing our opinion on the financial

statements, but not for the purpose of expressing an opinion on the effectiveness of

control. Accordingly, we do not express an opinion on the effectiveness of

financial reporting.

We limited our control testing to those controls necessary to achieve the following OMB control objectives

that provide reasonable, bu

processed, and summarized to permit the preparation of the financial statements in accordance with

accounting principles generally accepted in the United States of America, and to safe

loss from unauthorized acquisition, use, or disposition; and (2) transactions are executed in compliance

with laws governing the use of budget authority, government

Appendix E of OMB Bulletin No. 07

material effect on the financial statements.

We did not test all internal controls relevant to the operating objectives broadly defined by the Federal

Managers' Financial Integrity Act of 198

A deficiency in internal control exists when the design or operation of a control does not allow

management or employees, in the normal course of performing their assigned functions, to prevent, or

detect and correct misstatements on a timely basis.

A material weakness is a deficiency, or a combination of deficiencies, in internal control such that there is

a reasonable possibility that a material misstatement of

or detected and corrected on a timely ba

A significant deficiency is a deficiency or a combination of deficiencies in internal control that is less

severe than a material weakness, yet important enough to merit attention by those charged with

governance. We identified

significant deficiency. The

1800 Tysons Boulevard, McLean, VA 22102

T: (703) 918 3000, F: (703) 918 3100, www.pwc.com/us

Report of Independent Auditors on Internal Control

he Administrator and Inspector General

of the National Aeronautics and Space Administration

We have audited the financial statements of the National Aeronautics and Space Administration

as of and for the year ended September 30, 2012, and have issued our report

. We conducted our audit in accordance with auditing standards generally accepted in the United

States of America, the standards applicable to financial audits contained in

issued by the Comptroller General of the United States, and Office of Mana

Budget (OMB) Bulletin No. 07-04, Audit Requirements for Federal Financial Statements

NASA is responsible for establishing and maintaining effective internal control over

ming our audit, we considered NASA's internal control over financial reporting as a

basis for designing our auditing procedures for the purpose of expressing our opinion on the financial

statements, but not for the purpose of expressing an opinion on the effectiveness of

Accordingly, we do not express an opinion on the effectiveness of NASA

limited our control testing to those controls necessary to achieve the following OMB control objectives

that provide reasonable, but not absolute assurance, that: (1) transactions are properly recorded,

processed, and summarized to permit the preparation of the financial statements in accordance with

accounting principles generally accepted in the United States of America, and to safe

loss from unauthorized acquisition, use, or disposition; and (2) transactions are executed in compliance

with laws governing the use of budget authority, government-wide policies and laws identified in

E of OMB Bulletin No. 07-04, and other laws and regulations that could have a direct and

material effect on the financial statements.

We did not test all internal controls relevant to the operating objectives broadly defined by the Federal

Managers' Financial Integrity Act of 1982.

A deficiency in internal control exists when the design or operation of a control does not allow

management or employees, in the normal course of performing their assigned functions, to prevent, or

detect and correct misstatements on a timely basis.

material weakness is a deficiency, or a combination of deficiencies, in internal control such that there is

a reasonable possibility that a material misstatement of NASA's financial statements will not be prevented,

or detected and corrected on a timely basis.

A significant deficiency is a deficiency or a combination of deficiencies in internal control that is less

severe than a material weakness, yet important enough to merit attention by those charged with

governance. We identified a deficiency in internal control over financial reporting that we consider to be

The deficiency noted below involves the environmental liability estimation process.

Report of Independent Auditors on Internal Control

National Aeronautics and Space Administration (NASA)

, and have issued our report thereon dated November 15,

in accordance with auditing standards generally accepted in the United

States of America, the standards applicable to financial audits contained in Government Auditing

issued by the Comptroller General of the United States, and Office of Management and

, Audit Requirements for Federal Financial Statements, as amended.

maintaining effective internal control over

internal control over financial reporting as a

basis for designing our auditing procedures for the purpose of expressing our opinion on the financial

statements, but not for the purpose of expressing an opinion on the effectiveness of NASA's internal

NASA's internal control over

limited our control testing to those controls necessary to achieve the following OMB control objectives

t not absolute assurance, that: (1) transactions are properly recorded,

processed, and summarized to permit the preparation of the financial statements in accordance with

accounting principles generally accepted in the United States of America, and to safeguard assets against

loss from unauthorized acquisition, use, or disposition; and (2) transactions are executed in compliance

wide policies and laws identified in

04, and other laws and regulations that could have a direct and

We did not test all internal controls relevant to the operating objectives broadly defined by the Federal

A deficiency in internal control exists when the design or operation of a control does not allow

management or employees, in the normal course of performing their assigned functions, to prevent, or

material weakness is a deficiency, or a combination of deficiencies, in internal control such that there is

financial statements will not be prevented,

A significant deficiency is a deficiency or a combination of deficiencies in internal control that is less

severe than a material weakness, yet important enough to merit attention by those charged with

al control over financial reporting that we consider to be a

the environmental liability estimation process.

NASA FY 2012 Agency Financial Report 93
NASA has recorded a total Environmental

NASA calculates an environmental liability associated with the following sub

1) Restoration Projects, 2) Property, Plant &

Assets. In fiscal year 2012, NASA’s management invested resources to develop and update policies and

procedures to accurately estimate and report this liability. The progress made by NASA during

2012 included the developme

up costs regardless of the amount for

improvements related to NASA’s environmental liability policies or procedure

noted the following:

1. Environmental Liability Policies and the Application of these Policies.

 Inconsistencies in the application of the restoration project environmental liability policy

key control in determining the accuracy and completeness of the environmental liability

associated with Restoration Projects is the joint review process. As stipulated within the

restoration project environmental liability policy, a joint review is

the environmental liability estimates. During our observation of the joint review process, we noted

the joint review monitoring controls are not completed at the same level of precision as the

restoration control activities.

detected during the joint review process. In addition, we noted inconsistencies with the

application and interpretation of the restoration control activities across NASA’s various Cente

 Inconsistencies in the application of the PP&E environmental liability policy

PP&E, we noted that NASA continues to update and improve the control activities used to

estimate this liability. However, we noted that the controls dev

estimate the liability for permitted facilities, which are facilities that have local, state or Federal

requirements for environmental

permitted facilities. While there may be some differences between these categories of PP&E,

substantive differences have not been identified and documented to support the rationale for

differing accounting policies. Finally,

of when the environmental liability associated with the PP&E items should be recognized.

 Incomplete space assets environmental liability policy

policy for Space Assets. However, this policy did not specify the control activities to ensure that

the liability is calculated in accordance with the applicable accounting standards and related

reporting guidance. The policy gu

and maintained to support the Space Asset environmental liability. In addition, the existing policy

guidance does not outline the monitoring controls to be used by NASA to ensure the accurac

completeness of the environmental liability for the Space Assets.

2. Analyses Supporting the Environmental Liability Estimates.

 Lack of analyses and/or support related to the methods and assumptions used to develop the

PP&E environmental liability esti

for key assumptions or methodologies used to calculate the

addition, they did not provide documentation to support the assumption that the population of

items tested by NASA to develop the “per unit” liability cost factor was representative of the full

PP&E population.

Environmental Liability Estimation Process

NASA has recorded a total Environmental Liability in the amount $1,169 million within its balance sheet.

NASA calculates an environmental liability associated with the following sub

1) Restoration Projects, 2) Property, Plant & Equipment (PP&E) - excluding Space

2012, NASA’s management invested resources to develop and update policies and

procedures to accurately estimate and report this liability. The progress made by NASA during

2012 included the development of a Space Assets environmental liability policy and the inclusion of clean

up costs regardless of the amount for PP&E. The results of our tests have identified that additional

improvements related to NASA’s environmental liability policies or procedure

Environmental Liability Policies and the Application of these Policies.

Inconsistencies in the application of the restoration project environmental liability policy

key control in determining the accuracy and completeness of the environmental liability

associated with Restoration Projects is the joint review process. As stipulated within the

restoration project environmental liability policy, a joint review is conducted annually to validate

the environmental liability estimates. During our observation of the joint review process, we noted

the joint review monitoring controls are not completed at the same level of precision as the

restoration control activities. As such, errors which occurred at the control activity level were not

detected during the joint review process. In addition, we noted inconsistencies with the

application and interpretation of the restoration control activities across NASA’s various Cente

Inconsistencies in the application of the PP&E environmental liability policy

PP&E, we noted that NASA continues to update and improve the control activities used to

estimate this liability. However, we noted that the controls developed or being developed to

estimate the liability for permitted facilities, which are facilities that have local, state or Federal

requirements for environmental cleanup, differ from those used to estimate the liability for non

permitted facilities. While there may be some differences between these categories of PP&E,

substantive differences have not been identified and documented to support the rationale for

ring accounting policies. Finally, NASA's current approach does not clearly specify the timing

of when the environmental liability associated with the PP&E items should be recognized.

Incomplete space assets environmental liability policy: NASA developed

policy for Space Assets. However, this policy did not specify the control activities to ensure that

the liability is calculated in accordance with the applicable accounting standards and related

reporting guidance. The policy guidance did not specify the type of documentation to be developed

and maintained to support the Space Asset environmental liability. In addition, the existing policy

guidance does not outline the monitoring controls to be used by NASA to ensure the accurac

completeness of the environmental liability for the Space Assets.

Analyses Supporting the Environmental Liability Estimates.

Lack of analyses and/or support related to the methods and assumptions used to develop the

PP&E environmental liability estimate: NASA was unable to provide supporting documentation

for key assumptions or methodologies used to calculate the PP&E portion of the liability. In

addition, they did not provide documentation to support the assumption that the population of

items tested by NASA to develop the “per unit” liability cost factor was representative of the full

population.

Environmental Liability Estimation Process

Liability in the amount $1,169 million within its balance sheet.

NASA calculates an environmental liability associated with the following sub-categories of projects/assets:

excluding Space Assets, and 3) Space

2012, NASA’s management invested resources to develop and update policies and

procedures to accurately estimate and report this liability. The progress made by NASA during fiscal year

nt of a Space Assets environmental liability policy and the inclusion of cleanhave identified that additional

improvements related to NASA’s environmental liability policies or procedures are needed. Specifically, we

Inconsistencies in the application of the restoration project environmental liability policy: NASA’s

key control in determining the accuracy and completeness of the environmental liability

associated with Restoration Projects is the joint review process. As stipulated within the

conducted annually to validate

the environmental liability estimates. During our observation of the joint review process, we noted

the joint review monitoring controls are not completed at the same level of precision as the

As such, errors which occurred at the control activity level were not

detected during the joint review process. In addition, we noted inconsistencies with the

application and interpretation of the restoration control activities across NASA’s various Centers.

Inconsistencies in the application of the PP&E environmental liability policy: As it relates to the

PP&E, we noted that NASA continues to update and improve the control activities used to

eloped or being developed to

estimate the liability for permitted facilities, which are facilities that have local, state or Federal

cleanup, differ from those used to estimate the liability for nonpermitted facilities. While there may be some differences between these categories of PP&E,

substantive differences have not been identified and documented to support the rationale for

NASA's current approach does not clearly specify the timing

of when the environmental liability associated with the PP&E items should be recognized.

: NASA developed an environmental liability

policy for Space Assets. However, this policy did not specify the control activities to ensure that

the liability is calculated in accordance with the applicable accounting standards and related

idance did not specify the type of documentation to be developed

and maintained to support the Space Asset environmental liability. In addition, the existing policy

guidance does not outline the monitoring controls to be used by NASA to ensure the accuracy and

Lack of analyses and/or support related to the methods and assumptions used to develop the

NASA was unable to provide supporting documentation

portion of the liability. In

addition, they did not provide documentation to support the assumption that the population of

items tested by NASA to develop the “per unit” liability cost factor was representative of the full

94 NASA FY 2012 Agency Financial Report
In addition, during the year NASA completed a data call to receive updated information from each

Center and facility

PP&E items. Two locations

PP&E items.

 Lack of analyses and/or support related to the methods and assumptions used to develop the

space assets environmental liability estimate

Space Assets include estimates related

and other space assets. NASA was unable to provide supporting documentation for key

assumptions or the overall methodology used to calculate the environmental liability associated

with this portion of the liability. For example, NASA’s documentation did not support the

determination to assign the same liability cost factor to those space assets classified as “highly

hazardous” and those space assets classified as “moderately hazardous”.

3. Interpretation of Accounting Standards related to the Recording of Environmental Liabilities.

During our review of the environmental liability estimates prepared by NASA, we noted that the

funded portion of the environmental liability associated with the Space Asset

financial statements. This treatment is inconsistent with related accounting standards and Treasury

reporting guidelines which requires all environmental liabilities

reported in the financial statements

We recommend that NASA perform the following for their environmental liability sub

 Update or redesign the control activities or the monitoring controls used to ensure that the

accuracy and completeness of the Restoration calculations

detail. In addition, the updated or redesigned controls should ensure the consistent

implementation and interpretation of the policies and procedures associated with the Restoration

Project estimates across each of

 Develop and maintain documentation to support the methodologies and assumptions

estimate the liability for PP&E assets. This would include, but not be limited to, the estimation

methodologies for both

representative sampling of PP&E items; the "cost factors" applied to real property to calculate the

associated environmental liability; and, a full inventory of all permitted and non

from all NASA Cen

environmental liability associated with the PP&E items should be recognized.

 Update the applicable environmental liability policy for Space Assets to include procedures to

appropriately calculate the liability in accordance with the applicable accounting standards and to

describe management's process to review this estimate. Develop and maintain documentation to

support the rationale for the methods and assumptions used to estimate the

Assets. Finally, NASA should ensure future environmental liability estimates include not only the

unfunded portion, but the funded portion of the liability.

during the year NASA completed a data call to receive updated information from each

and facility regarding the inventory and the associated environmental liability for

locations did not provide the supporting documentation asso

Lack of analyses and/or support related to the methods and assumptions used to develop the

assets environmental liability estimate: NASA’s environmental liability estimates for its

Space Assets include estimates related to future clean-up costs associated with the space shuttle

and other space assets. NASA was unable to provide supporting documentation for key

assumptions or the overall methodology used to calculate the environmental liability associated

n of the liability. For example, NASA’s documentation did not support the

determination to assign the same liability cost factor to those space assets classified as “highly

hazardous” and those space assets classified as “moderately hazardous”.

tion of Accounting Standards related to the Recording of Environmental Liabilities.

During our review of the environmental liability estimates prepared by NASA, we noted that the

funded portion of the environmental liability associated with the Space Asset

financial statements. This treatment is inconsistent with related accounting standards and Treasury

reporting guidelines which requires all environmental liabilities – unfunded and funded

reported in the financial statements.

We recommend that NASA perform the following for their environmental liability sub

Update or redesign the control activities or the monitoring controls used to ensure that the

accuracy and completeness of the Restoration calculations is completed at an appropriate level of

detail. In addition, the updated or redesigned controls should ensure the consistent

implementation and interpretation of the policies and procedures associated with the Restoration

Project estimates across each of the Centers.

Develop and maintain documentation to support the methodologies and assumptions

estimate the liability for PP&E assets. This would include, but not be limited to, the estimation

methodologies for both permitted and non-permitted facilities; the methodology used to complete

representative sampling of PP&E items; the "cost factors" applied to real property to calculate the

associated environmental liability; and, a full inventory of all permitted and non

from all NASA Centers. NASA should update their policy to document

environmental liability associated with the PP&E items should be recognized.

Update the applicable environmental liability policy for Space Assets to include procedures to

calculate the liability in accordance with the applicable accounting standards and to

describe management's process to review this estimate. Develop and maintain documentation to

rationale for the methods and assumptions used to estimate the

NASA should ensure future environmental liability estimates include not only the

unfunded portion, but the funded portion of the liability.

during the year NASA completed a data call to receive updated information from each

regarding the inventory and the associated environmental liability for their

provide the supporting documentation associated with their

Lack of analyses and/or support related to the methods and assumptions used to develop the

: NASA’s environmental liability estimates for its

up costs associated with the space shuttle

and other space assets. NASA was unable to provide supporting documentation for key

assumptions or the overall methodology used to calculate the environmental liability associated

n of the liability. For example, NASA’s documentation did not support the

determination to assign the same liability cost factor to those space assets classified as “highly

hazardous” and those space assets classified as “moderately hazardous”.

tion of Accounting Standards related to the Recording of Environmental Liabilities.

During our review of the environmental liability estimates prepared by NASA, we noted that the

funded portion of the environmental liability associated with the Space Assets was excluded from its

financial statements. This treatment is inconsistent with related accounting standards and Treasury

unfunded and funded – to be

We recommend that NASA perform the following for their environmental liability sub-categories/ assets:

Update or redesign the control activities or the monitoring controls used to ensure that the

is completed at an appropriate level of

detail. In addition, the updated or redesigned controls should ensure the consistent

implementation and interpretation of the policies and procedures associated with the Restoration

Develop and maintain documentation to support the methodologies and assumptions used to

estimate the liability for PP&E assets. This would include, but not be limited to, the estimation

ities; the methodology used to complete

representative sampling of PP&E items; the "cost factors" applied to real property to calculate the

associated environmental liability; and, a full inventory of all permitted and non-permitted items

ters. NASA should update their policy to document the timing of when the

environmental liability associated with the PP&E items should be recognized.

Update the applicable environmental liability policy for Space Assets to include procedures to

calculate the liability in accordance with the applicable accounting standards and to

describe management's process to review this estimate. Develop and maintain documentation to

rationale for the methods and assumptions used to estimate the liability for Space

NASA should ensure future environmental liability estimates include not only the

NASA FY 2012 Agency Financial Report 95
We have discussed our findings and recommendations with NASA’s management.

provide a corrective action plan to address the findings identified in this report. We have not performed

additional procedures to validate the corrective actions.

We did note other matters involving the internal control and its operation

NASA in a separate letter

Our consideration of internal control over financial reporting was for the limited purpose described in the

second paragraph of this report and was not designed to identify all deficiencies in internal

financial reporting that might be deficiencies, significant deficiencies or material weaknesses and

therefore, there can be no assurance that all deficiencies, significant deficiencies, or material weaknesses

have been identified. We did not

material weaknesses, as defined above.

This report is intended solely for the information and use of NASA management, NASA OIG, OMB and

Congress, and it is not intended to be and should n

November 15, 2012

We have discussed our findings and recommendations with NASA’s management.

provide a corrective action plan to address the findings identified in this report. We have not performed

additional procedures to validate the corrective actions.

We did note other matters involving the internal control and its operation that we will communicate to

Our consideration of internal control over financial reporting was for the limited purpose described in the

second paragraph of this report and was not designed to identify all deficiencies in internal

financial reporting that might be deficiencies, significant deficiencies or material weaknesses and

therefore, there can be no assurance that all deficiencies, significant deficiencies, or material weaknesses

have been identified. We did not identify any deficiencies in internal control that we consider to be

material weaknesses, as defined above.

This report is intended solely for the information and use of NASA management, NASA OIG, OMB and

Congress, and it is not intended to be and should not be used by anyone other than these specified parties.

We have discussed our findings and recommendations with NASA’s management. Management will

provide a corrective action plan to address the findings identified in this report. We have not performed

that we will communicate to

Our consideration of internal control over financial reporting was for the limited purpose described in the

second paragraph of this report and was not designed to identify all deficiencies in internal control over

financial reporting that might be deficiencies, significant deficiencies or material weaknesses and

therefore, there can be no assurance that all deficiencies, significant deficiencies, or material weaknesses

identify any deficiencies in internal control that we consider to be

This report is intended solely for the information and use of NASA management, NASA OIG, OMB and

ot be used by anyone other than these specified parties.

96 NASA FY 2012 Agency Financial Report
PricewaterhouseCoopers LLP,

T: (703) 918 3000, F: (703) 918 3200

Report of Independent Auditors on Compliance and Other Matters

To the Administrator and the Inspector General

of the National Aeronautics and Space Administration

We have audited the financial statements of the National Aeronautics and Space Administration (NASA)

as of and for the year ended September 30, 2012 and have issued our report thereon dated November 15,

2012. We conducted our audit in accordance with audit

States of America, the standards applicable to financial audits contained in

Standards, issued by the Comptroller General of the United States, and Office of Management and Budget

(OMB) Bulletin No. 07-04, Audit Requirements for Federal Financial Statements

management of NASA is responsible for compliance with laws and regulations.

As part of obtaining reasonable assurance about whether NASA's financial statements are free

misstatement, we performed tests of its compliance with certain provisions of laws and regulations

including laws governing the use of budgetary authority, government

Appendix E of OMB Bulletin No. 07

have a direct and material effect on the determination of financial statement amounts. Under the Federal

Financial Management Improvement Act of 1996

financial management systems substantially comply with the Federal financial management systems

requirements, applicable Federal accounting standards, and the United States Government Standard

General Ledger at the transaction level. To meet this re

FFMIA section 803(a) requirements.

We limited our tests of compliance to the provisions of the laws and regulations cited in the second

paragraph of this report. Providing an opinion on compliance with thos

of our audit, and, accordingly, we do not express such an opinion.

The results of our tests of compliance disclosed no instances of noncompliance or other matters that are

required to be reported under

instances of substantial noncompliance that are required to be reported under FFMIA.

The report is intended solely for the information and use of the management of NASA, Office of Inspector

General (OIG), OMB, the Government Accountability Office, and Congress and is not intended to be and

should not be used by anyone other than these specified parties.

November 15, 2012

PricewaterhouseCoopers LLP, 1800 Tysons Boulvard, McLean, VA 22102

703) 918 3000, F: (703) 918 3200, www.pwc.com/us

Report of Independent Auditors on Compliance and Other Matters

To the Administrator and the Inspector General

of the National Aeronautics and Space Administration

We have audited the financial statements of the National Aeronautics and Space Administration (NASA)

as of and for the year ended September 30, 2012 and have issued our report thereon dated November 15,

2012. We conducted our audit in accordance with auditing standards generally accepted in the United

States of America, the standards applicable to financial audits contained in

issued by the Comptroller General of the United States, and Office of Management and Budget

, Audit Requirements for Federal Financial Statements

management of NASA is responsible for compliance with laws and regulations.

As part of obtaining reasonable assurance about whether NASA's financial statements are free

misstatement, we performed tests of its compliance with certain provisions of laws and regulations

including laws governing the use of budgetary authority, government-wide policies and laws identified in

Appendix E of OMB Bulletin No. 07-04 and other laws and regulations, noncompliance with which could

have a direct and material effect on the determination of financial statement amounts. Under the Federal

Financial Management Improvement Act of 1996 (FFMIA), we are required to report whether N

financial management systems substantially comply with the Federal financial management systems

requirements, applicable Federal accounting standards, and the United States Government Standard

General Ledger at the transaction level. To meet this requirement, we performed tests of compliance with

FFMIA section 803(a) requirements.

We limited our tests of compliance to the provisions of the laws and regulations cited in the second

paragraph of this report. Providing an opinion on compliance with those provisions was not an objective

of our audit, and, accordingly, we do not express such an opinion.

The results of our tests of compliance disclosed no instances of noncompliance or other matters that are

required to be reported under Government Auditing Standards or OMB Bulletin No. 07

instances of substantial noncompliance that are required to be reported under FFMIA.

The report is intended solely for the information and use of the management of NASA, Office of Inspector

the Government Accountability Office, and Congress and is not intended to be and

should not be used by anyone other than these specified parties.

Report of Independent Auditors on Compliance and Other Matters

We have audited the financial statements of the National Aeronautics and Space Administration (NASA)

as of and for the year ended September 30, 2012 and have issued our report thereon dated November 15,

ing standards generally accepted in the United

States of America, the standards applicable to financial audits contained in Government Auditing

issued by the Comptroller General of the United States, and Office of Management and Budget

, Audit Requirements for Federal Financial Statements, as amended. The

management of NASA is responsible for compliance with laws and regulations.

As part of obtaining reasonable assurance about whether NASA's financial statements are free of material

misstatement, we performed tests of its compliance with certain provisions of laws and regulations

wide policies and laws identified in

d other laws and regulations, noncompliance with which could

have a direct and material effect on the determination of financial statement amounts. Under the Federal

FFMIA), we are required to report whether NASA’s

financial management systems substantially comply with the Federal financial management systems

requirements, applicable Federal accounting standards, and the United States Government Standard

quirement, we performed tests of compliance with

We limited our tests of compliance to the provisions of the laws and regulations cited in the second

e provisions was not an objective

The results of our tests of compliance disclosed no instances of noncompliance or other matters that are

or OMB Bulletin No. 07-04 and no

instances of substantial noncompliance that are required to be reported under FFMIA.

The report is intended solely for the information and use of the management of NASA, Office of Inspector

the Government Accountability Office, and Congress and is not intended to be and

NASA FY 2012 Agency Financial Report 97
98 NASA FY 2012 Agency Financial Report

Management’s Response to Independent Auditors Report

 November 15, 2012

Pamela D. Hanes
NASA FY 2012 Agency Financial Report 99

Photo: Spotlights bounce off the clouds over Space Launch Complex 41 on Cape Canaveral Air Force Station as 

NASA’s Radiation Belt Storm Probes lift off the pad at 4:05 a.m. EDT aboard a United Launch Alliance Atlas V rocket.

(Credit: NASA/Ben Smegelsky and Gary Thompson)

Other Accompanying 

Information

Office of Inspector General Letter on NASA’s Top Management and 

Performance Challenges  . 

FY 2012 Inspector General Act Amendments Report  . 

Background. . 

NASA’s Audit Follow-up Program  . 

FY 2012 Audit Follow-up Results  . 

Improper Payments Information Act (IPIA) Assessment. . 

Improper Payments Information Act Reporting Details  . 

Recapture Audit  . 

Schedule of Spending  . 

Summary of Financial Statement Audit and Management 

Assurances. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 138
100 NASA FY 2012 Agency Financial Report

National Aeronautics and 

Space Administration 

Office of Inspector General 

Washington, DC 20546-0001 

 November 8, 2012 

TO: Charles F. Bolden, Jr. 

 Administrator

FROM: Paul K. Martin 

 Inspector General 

SUBJECT: 2012 Report on NASA’s Top Management and Performance Challenges 

As required by the Reports Consolidation Act of 2000, this memorandum provides our views 

of the top management and performance challenges facing NASA for inclusion in the 

Agency’s fiscal year (FY) 2012 Performance and Accountability Report. 

In deciding whether to identify an issue as a top challenge, we consider the significance of the 

issue in relation to the Agency’s mission; its susceptibility to fraud, waste, and abuse; whether 

the underlying causes are systemic in nature; and the Agency’s progress in addressing the 

challenge. We previously provided a draft copy of our views to NASA officials and 

considered all comments received when finalizing this report. 

For 2012, we identified the following top management and performance challenges facing 

NASA: 

 The Future of U.S. Human Space Flight 

 Project Management 

 Infrastructure and Facilities Management 

 Acquisition and Contract Management 

 Information Technology Security and Governance 

This year we noted that declining budgets and fiscal uncertainties have compounded the 

difficulty of meeting these challenges. Perhaps more than any other factor, these fiscal 

pressures will present NASA leaders with difficult choices in the year ahead. 

During FY 2013, the OIG will conduct audit and investigative work that focuses on NASA’s 

continuing efforts to meet these challenges. Please contact us if you have questions. 

Enclosure 
NASA FY 2012 Agency Financial Report 101

NASA’s Top Management and Performance Challenges 

November 2012 

Introduction 

Fiscal year (FY) 2012 ended on a high note for NASA with the successful landing of the rover 

Curiosity on the surface of Mars in August. Over the next several years, Curiosity will explore 

the Red Planet in an effort to determine if it has ever been able to support life. Earlier in the 

year, NASA achieved a major milestone toward its goal of fostering the development of a 

commercial space transportation capability to low Earth orbit with the successful test flight of the 

Space Exploration Technologies Corporation’s (SpaceX) Dragon spacecraft to the International 

Space Station (ISS), followed in October by the first actual commercial resupply mission. 

The year was not without challenges, however. For example, due to cost overruns in the James 

Webb Space Telescope and other projects, NASA had to reprogram funds away from several 

Agency initiatives. This resulted in developmental delays in some ongoing projects and 

cancellation of other planned projects, including the ExoMars/Trace Gas Orbiter missions to 

Mars.1

Moreover, the congressional decision to provide NASA’s Commercial Crew Program (CCP) 

with less than half the funding requested by the President in FY 2012 extended to 2017 the 

earliest date that NASA expects to obtain commercial crew transportation services to the ISS, 

which is significant if NASA is unable to maintain and utilize the Station beyond its currently 

scheduled retirement date of 2020. In addition, as a result of the lower-than-expected funding 

level, the Agency delayed its planned transition from using Space Act Agreements to using 

Federal Acquisition Regulation (FAR)-based contracts for developing these systems. This 

decision heightened concern in some quarters about the ultimate ability of the commercial 

companies to meet NASA safety requirements. 

Finally, declining budgets and fiscal uncertainties remained at the forefront of the Agency’s 

decision-making processes this past year. Like the rest of the Federal Government, NASA began 

FY 2013 under a 6-month continuing resolution (CR) that funds the Agency at FY 2012 levels. 

Overshadowing the effects of the CR, however, is the possibility of an early January 2013 

sequestration that would reduce NASA’s anticipated budget by approximately $1.5 billion. Even 

if this looming cut is averted, NASA is likely to face constrained budgets for the foreseeable 

future. 

Against this rather bleak budgetary backdrop, we have identified five overarching issues we 

believe pose the top management and performance challenges to NASA leadership: 

 Future of U.S. Human Space Flight

 Project Management

 

1

 This joint project between the European Space Agency and NASA consisted of missions scheduled for launch in 

2016 and 2018. 
102 NASA FY 2012 Agency Financial Report

 Infrastructure and Facilities Management

 Acquisition and Contract Management

 Information Technology Security and Governance

In deciding whether to identify an issue as a top challenge, we considered the significance of the 

issue in relation to the Agency’s mission; its susceptibility to fraud, waste, and abuse; whether 

the underlying causes are systemic in nature; and the Agency’s progress in addressing the 

challenge. Several of these challenges – specifically project management, infrastructure and 

facilities management, and acquisition and contract management – are long-standing concerns 

likely to remain top challenges for the foreseeable future. However, with focused and sustained 

efforts we believe that NASA can make significant strides in addressing all of the challenges we 

have identified. 

1. Future of U.S. Human Space Flight 

NASA’s Space Shuttle era, which began with the maiden voyage of Columbia on April 12, 1981, 

ended after 135 missions when Atlantis landed at Kennedy Space Center on July 21, 2011. In 

the ensuing year, NASA delivered the four retired orbiters to their permanent homes for public 

display. NASA’s current spaceflight activities are focused on maximizing the productivity of the 

ISS, encouraging development of commercial companies seeking to provide cargo and crew 

transportation to the ISS, and developing new systems and technologies for exploration beyond 

low Earth orbit. Moving each of these programs forward in a “flat” or diminishing budget 

environment will be a significant challenge for the Agency. 

International Space Station. The ISS is currently scheduled to be retired in 2020, although 

NASA is conducting studies to see if the $60 billion facility can safely be inhabited and 

productively utilized until 2028. Whatever its remaining life span, a major focus for the Agency 

is ensuring the most effective use of the ISS. 

One of the most significant factors affecting utilization of the ISS is the amount of time the crew 

can commit to research. Although NASA has increased average crew research time from 

23.9 hours per week in 2010 to 35 hours per week in 2012, the Agency is unlikely to be able to 

raise that figure given current constraints on crew size.2 The ISS was designed to support a 

seven-member crew. However, because at present the only means of transportation to and from 

the ISS is the Russian Soyuz, which has a three-person capacity, only six crew members can 

safely be aboard at one time to allow for evacuation in case of an emergency. This limitation on 

crew size will exist until at least 2017, the earliest date at which NASA’s commercial partners 

are expected to be ready to fly manned, higher-capacity missions to the ISS. 

 

2

 NASA, “Consolidated Operations and Utilization Plan (COUP) 2010, Covering the period 2010-2015” (April 26, 

2011). Dan Hartman, Manager, Operations Integration, ISS Program Office, “International Space Station Program 

Status,” July 23, 2012, NASA Advisory Committee, Human Exploration and Operations Subcommittee, 

http://www.nasa.gov/pdf/672214main_1-Hartman_July12_NAC_Final_508.pdf (accessed October 8, 2012). 
NASA FY 2012 Agency Financial Report 103

The other limitation to full utilization is the ability to transport materials and supplies to and 

from the ISS. SpaceX’s Dragon flew a successful demonstration mission to the ISS in May 2012 

and began actual resupply missions in October 2012. NASA’s other commercial cargo partner, 

Orbital Sciences Corporation (Orbital), is slated to perform the first demonstration flight of its 

Antares rocket in December 2012, with a demonstration flight to the ISS with the Cygnus 

capsule in spring 2013. Although both systems are capable of delivering cargo to the ISS, only 

Dragon is capable of returning cargo and research experiments to Earth. In fact, other than the 

very limited capability of Soyuz, Dragon is the only system since the retirement of the Space 

Shuttles with any “downmass” capability. 

In August 2011, NASA entered into a cooperative agreement with the Center for the 

Advancement of Science in Space (CASIS) initially worth $15 million per year to manage the 

non-NASA science activities on the national laboratory portion of the ISS. CASIS, a non-profit 

organization, is responsible for ensuring that the laboratory is available to the broadest possible 

cross section of U.S. scientific, technological, and industrial communities. Part of its job is to 

select the experiments that will be conducted on the national laboratory. 

CASIS issued its first public solicitation in June 2012 with the goal of enabling research in the 

areas of protein crystallization and the life sciences. However, during its first year of operation 

CASIS encountered a variety of start-up challenges, including the resignation of its executive 

director, and as of October 2012, did not have a permanent Board of Directors. In the months 

and years ahead, NASA must ensure that CASIS forms an effective management team; develops 

a varied research and development portfolio based on national needs for basic and applied 

research; establishes a marketplace to help match research with funding; and stimulates interest 

in using the national laboratory for research and technology demonstrations and as a platform for 

science, technology, engineering, and mathematics education. 

NASA also needs to continue encouraging use of the ISS by other U.S. Government agencies, 

other nations, and the commercial sector while seeking partnerships and cost-sharing 

arrangements to supplement Agency funding of ISS research and operations. The Office of 

Inspector General (OIG) expects to issue a report examining NASA’s efforts to ensure full 

utilization of the ISS early next year. 

Commercial Launch Providers. Beginning in 2006, NASA entered into a series of Space Act 

Agreements designed to stimulate development by U.S. industry of transportation systems 

capable of providing safe and reliable cargo and crew services to the ISS and low Earth orbit. 

NASA initiated two activities to manage its investments in this area: the Commercial Orbital 

Transportation Services (COTS) Program and the Commercial Crew Program (CCP). Both 

programs use Space Act Agreements to support the development of commercial transportation 

capabilities and FAR-based contracts to certify the capabilities and to procure crew and cargo 

services to and from the ISS. The availability of domestic crew and cargo capability will enable 

the United States to transport its own astronauts to the ISS rather than relying on Russian 

vehicles and provide needed redundancy in cargo and crew transportation systems to the ISS. 

NASA has invested $750 million over the past 7 years in its effort to encourage development of 

cargo transportation by private companies. Two companies, SpaceX and Orbital, are under 

contract to resupply the ISS through 2016. As noted above, SpaceX flew its first successful 
104 NASA FY 2012 Agency Financial Report

demonstration flight in May 2012, during which its Dragon spacecraft berthed with the ISS, and 

its first resupply mission occurred in October 2012. The first demonstration flight of Orbital’s 

Antares rocket and Cygnus space freighter to the ISS is currently scheduled for late spring 2013, 

with the company’s first resupply mission coming as early as 3 months later. 

With respect to the development of commercial crew transportation services, in June 2011 we 

reported on a series of challenges NASA faces in certifying and acquiring those services from 

commercial entities: (1) modifying the Agency’s existing safety and human-rating requirements 

for commercially developed systems; (2) managing its acquisition strategy for commercial crew 

transportation services; (3) implementing the appropriate insight/oversight model for commercial 

partner vehicle development; (4) relying on an emerging industry and uncertain market 

conditions to achieve cost savings; and (5) managing the relationship between commercial 

partners, the Federal Aviation Administration, and NASA.3 

Although challenges remain, NASA has made progress in addressing several of these issues over 

the past year. For example, in November 2011 NASA updated and published detailed berthing 

and docking requirements for cargo and crew delivery systems, and in December 2011 the 

Agency finalized more than 280 specific safety and human-rating requirements for its CCP. 

With these requirements in hand, the Agency’s commercial partners will have greater insight into 

what will be required of their systems to attain NASA certification. The documents also provide 

the Agency’s methodology for insight and oversight into whether contractors are meeting the 

program’s requirements. Specifically, NASA embedded teams of NASA employees known as 

“Partner Integration Teams” with the commercial partners to acquire insight into their 

development efforts while a separate review board will provide more formal guidance, feedback, 

and an assessment of the partners’ activities. 

In August 2012, NASA awarded a third round of Space Act Agreements totaling $1.11 billion to 

three companies to further the development of their commercial crew systems.4 These 

Commercial Crew Integrated Capability (CCiCap) awards were made to Boeing Corporation 

($460 million); SpaceX ($440 million); and Sierra Nevada Corporation ($212.5 million).5 These 

awards deviated from the acquisition strategy the Agency announced in September 2011, 

whereby NASA planned to enter into firm-fixed-price contracts with one or more companies that 

would result in a complete end-to-end design compliant with NASA Crew Transportation 

System requirements. The award was to be followed by a separate solicitation for competitively 

awarded contracts to develop, test, evaluate, and certify a company’s vehicles. However, when 

Congress appropriated substantially less than the Agency requested for its CCP in FY 2012 

($406 million versus $850 million), NASA changed course and decided to award a third round of 

Space Act Agreements rather than move to a FAR-based fixed-price contract. 

 

3

 NASA OIG, “NASA’s Challenges Certifying and Acquiring Commercial Crew Transportation Services” 

(IG-11-22, June 20, 2011). 

4

 The first two rounds of Agreements consisted of $50 million in Commercial Crew Development 1 (CCDev 1) 

awards to five commercial partners and $300 million in CCDev 2 awards to four partners. 

5

 Nasa.gov, “NASA’s Commercial Crew Program Progressing for Future of U.S. Human Spaceflight,” Commercial 

Space Transportation, August 8, 2012, http://www.nasa.gov/exploration/commercial/crew/ccicapannouncement.html (accessed October 8, 2012). 
NASA FY 2012 Agency Financial Report 105

Both Congress and NASA’s Aerospace Safety Advisory Panel (ASAP) have voiced concerns 

about the Agency’s continued reliance on Space Act Agreements in connection with its 

commercial crew efforts.6

 At a September 2012 congressional hearing, the ASAP Chairman 

noted that unlike with traditional FAR-based contracts, when using Space Act Agreements 

NASA cannot dictate specific requirements to the commercial companies, thereby heightening 

the risk that the companies will ultimately not be able to deliver vehicles that satisfy NASA 

safety and performance requirements. NASA, however, believes it can ensure that commercial 

passenger vehicles will meet its requirements by utilizing a two-phase process. In Phase 1, 

currently scheduled for February 2013, NASA plans to award two to four fixed-price contracts 

worth up to $10 million for design acceptance and certification plans for the contractors’ crew 

transportation systems. In Phase II, scheduled for May 2014, NASA plans to award one or two 

fixed-price contracts for the development, test, evaluation, and certification of the contractors’ 

crew transportation system. This strategy anticipates at least one operational crew transportation 

system would be certified by NASA for crew transportation missions to the ISS by 2017. 

Further complicating NASA’s commercial crew effort is the uncertainty surrounding the Federal 

budget in light of the 6-month CR that essentially holds the Agency to a $406 million funding 

level for its CCP. At the September 2012 House hearing, NASA’s Associate Administrator for 

Human Exploration and Operations told Congress that if the CCP is not funded at approximately 

$830 million per year for FYs 2014–2017, the Program will face significant schedule delays that 

will push the first commercial crew launch beyond 2017. 

At the same time NASA is fostering the development of commercial cargo and crew capabilities, 

it has been directed to develop its own launch system and crew vehicle to carry astronauts 

beyond Earth’s orbit. Developing all of these capabilities simultaneously continues to present 

significant management challenges for NASA leaders. 

NASA Launch System and Crew Vehicle. The new heavy-lift rocket under development – the 

Space Launch System (SLS) – will have an initial capacity of 70 metric tons and eventually be 

capable of lifting 130 metric tons. As such, the rocket will be capable of more than double the 

lift capacity of any operational launch vehicle that exists today and America’s most powerful 

since the Saturn V rockets that carried Apollo astronauts to the Moon. 

The Multi-Purpose Crew Vehicle (MPCV), which is being developed using an existing contract 

and is based on design requirements for the canceled Constellation Program’s Orion Crew 

Exploration Vehicle, will be mounted atop the SLS. The MPCV will serve as the crew vehicle 

for missions beyond low Earth orbit. 

The NASA Authorization Act of 2010 set a goal for NASA to achieve operational capability for 

the SLS and MPCV by December 31, 2016. In November 2011, NASA reported that the 

Reference Design Vehicles for the SLS and MPCV would be unable to meet all requirements 

and schedule goals contained in the Authorization Act. Instead, NASA expects to launch an 

uncrewed test flight of SLS and MPCV in 2017 and the first crewed flight in 2021. NASA also 

 

6

 September 14, 2012, hearing before the Committee on Science, Space, and Technology Subcommittee on Space 

and Aeronautics, U.S. House of Representatives. 
106 NASA FY 2012 Agency Financial Report

reported that it plans to conduct a crewed launch once every 2 years thereafter.7 In the decades 

that follow, NASA plans to undertake crewed and robotic missions to destinations beyond low 

Earth orbit, such as a near-Earth asteroid, the Moon, or Mars. However, no final decisions have 

been made concerning specific missions and destinations. 

NASA’s management challenge in this area will be to concurrently develop a launch system and 

crew vehicle and modify the necessary supporting ground systems while meeting the NASA 

Administrator’s mandate that exploration systems be affordable, sustainable, and realistic. In 

particular, establishing realistic long-term budgets for the SLS, MPCV, and associated ground 

support programs will be difficult, as evidenced by an August 2011 independent cost assessment 

that concluded NASA’s estimates are reasonable for near-term budget planning but do not 

support establishment of long-term budgets or detailed baselines.8

 

Part of the challenge NASA faces in developing long-term budgets is the relative immaturity of 

the SLS Program. For example, in September 2012 we reported that although the Agency’s 

planned modification to adapt the Ares I Mobile Launcher for use on the SLS was technically 

feasible and the most cost-effective option for the initial versions of the new rocket, NASA will 

need to continually assess the modifications as the program evolves and the SLS vehicles 

become larger and more powerful.9 We found NASA’s ability to identify the technical risks and 

accurately estimate future operating costs of modifying the Mobile Launcher throughout the SLS 

Program life cycle is significantly affected by both the relative immaturity of the SLS Program 

and the evolvable nature of the SLS vehicles. 

NASA’s development efforts have also been impacted by the expectation of continued 

constrained budgets for the foreseeable future. For example, the MPCV Program is anticipating 

a “flat” budget profile for at least the next 10 years with no increases for inflation. As a result, 

NASA has adopted an incremental approach in developing the MPCV under which Program 

officials will concentrate initially on systems needed to meet the specific mission objectives for 

each test flight rather than working on all MPCV systems concurrently. The OIG is currently 

examining NASA’s efforts to develop the MPCV and will continue to examine NASA’s launch 

and crew transportation development efforts in the years to come. 

2. Project Management 

Over its 50 year history, NASA has been at the forefront of science and space exploration and 

responsible for numerous scientific and technological discoveries and innovations. However, in 

addition to their significant scientific and technological achievements, many NASA projects 

share another less positive trait – they cost significantly more to complete and take much longer 

 

7

 NASA, “Final Report Regarding NASA’s Space Launch System and Multi-Purpose Crew Vehicle Pursuant to 

Section 309 of the NASA Authorization Act of 2010 (P.L. 111-267)” (November 2011). 

8 Booz Allen Hamilton, “Independent Cost Assessment of the Space Launch System, Multi-Purpose Crew Vehicle 

and 21st Century Ground Systems Programs, Final Report,” August 19, 2011, 

http://www.nasa.gov/pdf/581582main_BAH_Executive_Summary.pdf (accessed November 5, 2012). 

9 NASA OIG, “NASA’s Plans to Modify the Ares I Mobile Launcher in Support of the Space Launch System” 

(IG-12-022, September 25, 2012).
NASA FY 2012 Agency Financial Report 107

to launch than originally planned. In this era of constrained Federal budgets, NASA’s ability to 

deliver projects on time and within budget is more important than ever if the Agency is to 

maintain a robust portfolio of science and space projects. 

Over the past year, the OIG conducted an extensive review examining NASA’s project 

management practices in an effort to identify the primary challenges to the Agency achieving its 

cost, schedule, and performance goals.10 The core of our fact-finding consisted of interviews of 

85 individuals from both inside and outside of the Agency, including the current and former 

Administrators, Associate Administrators, Center Directors, and project managers and staff. 

Key Challenges to Meeting Cost, Schedule, and Performance Goals. Cost increases and 

schedule delays on its projects are a long-standing issue for NASA. A 2004 Congressional 

Budget Office study that compared the initial and revised budgets of 72 Agency projects between 

1977 and 2000 reported a 61 percent increase between the projects’ initial and revised budgets.11 

Similarly, the Government Accountability Office (GAO) has consistently reported on cost 

growth and schedule delays in NASA’s major projects. For example, in its 2012 assessment of 

21 large-scale projects, GAO reported an average development cost growth of 47 percent or 

$315 million, much of which was attributable to the James Webb Space Telescope (JWST). The 

current “poster child” for NASA’s persistent difficulties in controlling cost and schedule growth, 

JWST has gone from an original life-cycle cost baseline estimate of $5 billion and a launch date 

of June 2014 to a projected cost of $8.8 billion and a launch date of October 2018.12

 

As GAO noted, cost and schedule increases on large projects like JWST can have a cascading 

effect on NASA’s entire portfolio. To illustrate, in FY 2012 NASA moved $156 million from 

other Science Mission Directorate projects and the Cross Agency Support account to cover cost 

increases in the JWST Project.13 In addition, several other missions including the Wide-Field 

Infrared Survey Telescope have been postponed to make funding available for JWST.14

 

Moreover, NASA announced in February 2012 that it was pulling out of an agreement with the 

European Space Agency on two future Mars missions and planned to reevaluate its Mars 

exploration strategy to accommodate a more restricted funding profile.

In our September 2012 report, we identified four factors that appear to present the greatest 

challenges to successful project outcomes at NASA: 

 NASA’s Culture of Optimism. Permeating all levels of NASA from senior 

management to frontline engineers, a culture of optimism is essential to overcoming the 

 

10 NASA OIG, “NASA’s Challenges to Meeting Cost, Schedule, and Performance Goals” (IG-12-021, 

September 27, 2012).

11 A Congressional Budget Office Study, “A Budgetary Analysis of NASA’s New Vision for Space Exploration,” 

September 2004. 

12 GAO, “NASA: Assessments of Selected Large-Scale Projects” (GAO-12-207SP, March 1, 2012). 

13 NASA’s Cross-Agency Support account funds support activities necessary to ensure the operation and 

administration of the Agency such as human capital management, security, and maintenance of real property 

assets that cannot be directly aligned to a specific program or project requirement. 

14 The Wide-Field Infrared Survey Telescope is a NASA observatory designed to settle essential questions in both 

exoplanet and dark energy research. 
108 NASA FY 2012 Agency Financial Report

extraordinary technical challenges inherent in the development of unique, first-of-theirkind space systems. However, this same optimism can sometimes prevent managers and 

leaders from making critical assessments of requirements, budgets, and schedules to 

determine what a project can realistically accomplish within a set budget and timetable.

 Underestimating Technical Complexity. Project managers we interviewed cited the 

technical complexity inherent in NASA projects as a major challenge to achieving cost 

and schedule goals. In our judgment, five factors explain the inherently uncertain nature 

of estimating costs for the type of space technologies NASA develops: (1) unique, 

first-of-their-kind technologies; (2) interdependent technologies and complex integration 

issues; (3) increased testing needs; (4) limited quantities; and (5) shrinking industrial base 

and reduced quality of parts. 

 Funding Instability. Funding instability includes situations in which a project receives 

less money than planned or where funds are disbursed on a schedule different than 

planned. Such instability may result from presidential, congressional, or Agency-directed 

actions and can cause work to be delayed and development risks to be identified late in 

the project life cycle, which in turn can lead to cost increases and schedule delays. 

 Limited Opportunities for Project Managers’ Development. Interviewees stated that 

the limited number of small and mid-size projects in NASA’s current portfolio allows too 

few opportunities for Agency personnel to gain experience managing a project’s cost, 

schedule, and technical performance efforts. In addition, they expressed concern that an 

increased reliance on contractors to design and build projects has led to a decline in 

Agency personnel with development experience. Finally, they stated that NASA 

engineers are primarily operating as overseers of work performed by contractors rather 

than gaining experience with in-house builds of instruments and spacecraft.

Given the anticipated funding challenges for all Federal agencies in the years ahead, changes to 

the way NASA develops and manages its projects are imperative. At the same time, the Agency 

is undergoing considerable changes in mission focus, with the end of the Space Shuttle Program 

and the first steps on a new path toward human space exploration. Collectively, these factors 

both necessitate and provide an opportunity for the Agency to reset itself and take steps toward 

meaningful change in the way its projects are developed and managed. 

Project Management Principles and Tools. To execute projects within established cost and 

schedule estimates, NASA needs to maximize the use of sound project management principles 

and tools in projects both large and small. To its credit, NASA has taken several steps in the last 

few years aimed at curbing cost growth and schedule delays. For example, in response to a 2007 

GAO report highlighting NASA’s lack of emphasis on cost controls and program outcomes, the 

Agency issued a Corrective Action Plan that established a definition of success that includes 

completing all development projects within 110 percent of cost and schedule baselines and 

meeting Level 1 requirements for 90 percent of the major development projects in its portfolio.15

 

 

15 “NASA Plan for Improvement in the GAO High-Risk Area of Contract Management,” dated October 31, 2007, 

and updated through January 31, 2008. A Level 1 requirement is a project’s fundamental and basic set of 

requirements levied by the Program or Headquarters. 
NASA FY 2012 Agency Financial Report 109

NASA hopes to achieve the Corrective Action Plan’s criteria for success by FY 2013, 

implementing the policies and processes on new projects while tracking and reporting the 

measures for existing projects.16

 

The Agency also has implemented a cost and schedule analysis methodology that produces what 

is known as the Joint Cost and Schedule Confidence Level to assist managers with cost and 

schedule estimating while enabling the Agency to evaluate more accurately whether projects 

have an executable plan as they proceed into implementation. NASA believes that this analysis 

has helped projects such as the Gravity Recovery and Interior Laboratory, Juno, and the Mars 

Atmosphere and Volatile Evolution meet cost and schedule goals.17

 

Moreover, NASA’s new program and project management policy requires that project plans 

document decisions to either build or procure items based on NASA’s in-house capabilities, 

maintenance of core competencies, cost, and best overall value to NASA. Project plans must 

also include baseline and threshold values for the performance metrics to be achieved at each 

Key Decision Point and mission success criteria associated with the program-level requirements 

that, if not met, trigger consideration of a Termination Review.18

 Furthermore, project plans are 

required to document how the project will periodically report cost and schedule performance and 

provide a mitigation and corrective action plan in the event the project exceeds development cost 

estimates. More recently, NASA appears to be holding project managers more accountable for 

meeting cost cap agreements as evidenced by its decision in May 2012 to terminate the Gravity 

and Extreme Magnetism Small Explorer mission because development costs were likely to 

exceed the agreed-upon budget. 

Apart from those positive actions, NASA was not fully utilizing at least one important tool in its 

arsenal – its Lessons Learned Information System (LLIS). Since 1994, LLIS has been NASA’s 

principal mechanism for collecting and sharing lessons learned from Agency programs and 

projects.19 The information in LLIS is drawn from individuals, directorates, programs, projects, 

and supporting organizations and personnel across NASA and is one component of NASA’s 

larger knowledge management and sharing system. Sharing lessons learned can reduce risk, 

improve efficiency, promote validated processes, and improve performance in ongoing and 

future NASA projects. In a March 2012 OIG report, we documented that NASA’s project 

managers did not routinely use LLIS to search for lessons identified by other projects or 

routinely contribute new information to LLIS. Specifically, we found inconsistent policy 

direction and implementation for the Agency’s overall lessons learned program; disparate levels 

 

16 NASA’s current set of major development projects were all underway prior to implementation of the Corrective 

Action Plan. These projects will gradually be completed (NASA’s typical timeline for development is 4 years) 

and replaced with projects that will be fully subject to the Plan. 

17 The Gravity Recovery and Interior Laboratory mission launched on September 10, 2011, to study the Moon’s 

interior. Juno launched on August 5, 2011, to investigate the origin and evolution of Jupiter and is scheduled to 

arrive at the planet in July 2016. The Mars Atmosphere and Volatile Evolution mission is scheduled to launch in 

late 2013 to investigate the Martian atmosphere. 

18 NASA Procedural Requirements (NPR) 7120.5E, “NASA Space Flight Program and Project Management 

Requirements,” August 14, 2012. 

19 LLIS is an online, automated database. The public can access LLIS at http://llis.nasa.gov/llis/search/home.jsp

(accessed October 8, 2012). 
110 NASA FY 2012 Agency Financial Report

of funding for LLIS activities across NASA Centers; deficient monitoring of critical Centerbased LLIS activities; and lack of definition in NASA’s overall strategy for knowledge 

management, lessons learned, and LLIS. Consequently, LLIS had been underutilized by project 

managers and marginalized in favor of other NASA knowledge sharing system components. 

3. Infrastructure and Facilities Management 

NASA is the ninth largest Federal Government property holder, controlling a network of 

approximately 4,900 buildings and structures that support Agency research, development, and 

flight activities. In total, the assets occupy 46 million square feet and their current replacement 

value is estimated at more than $30.8 billion. The 2010 Authorization Act requires NASA to 

develop a strategy for the most efficient retention, sizing, and distribution of facilities and other 

infrastructure consistent with the Agency’s mission. In a time of constrained Federal budgets 

and transition from the Space Shuttle era, successfully implementing this directive is among the 

most pressing challenges facing Agency management. 

Maintenance, Repair, and Use of Aging Facilities. NASA officials report that more than 

80 percent of the Agency’s facilities are 40 or more years old and beyond their design life. 

Under its current policy, NASA is required to maintain these facilities either in an operational 

status or, if they are not being used, in sufficient condition that they do not pose a safety hazard. 

However, NASA has not been able to fully fund required maintenance costs for these facilities 

and in 2011 estimated its deferred maintenance costs at $2.47 billion.20

NASA has struggled for years with managing its backlog of deferred maintenance projects. The 

Aerospace Safety Advisory Panel cited the condition of NASA’s facilities and infrastructure as 

an area of concern in its 2011 annual report, and in 2010 the National Research Council cited a 

“steady and significant decrease in NASA’s laboratory capabilities, including equipment, 

maintenance, and facility upgrades” that require more maintenance than funding permits. 

The challenge for NASA leadership in this area is to address the backlog of essential 

maintenance projects so that facilities will be available when needed to support future missions. 

Continuing to delay essential maintenance projects poses a threat to the safety of personnel and 

equipment and likely will result in higher repair costs in the future. 

Reducing Unneeded and Duplicative Infrastructure. One way NASA could reduce its 

facilities maintenance costs is to reduce the amount of underutilized and duplicative 

infrastructure in its inventory. In the 1990s, GAO issued several reports on NASA’s 

infrastructure challenges and noted that the Agency was building new facilities faster than it was 

consolidating or closing older ones, resulting in duplication of capabilities. More recently, GAO 

reported that over 10 percent of NASA’s real property assets were either underutilized or not 

being used at all.21 In 2008, NASA’s own Program Analysis and Evaluation Office identified 

 

20 NASA, “Deferred Maintenance Assessment Report: FY11 NASA-Wide Standardized Deferred Maintenance 

Parametric Estimate (Full Assessment),” October 1, 2011. 

21 GAO, “Federal Real Property: Progress Made Toward Addressing Problems, but Underlying Obstacles Continue 

to Hamper Reform” (GAO-07-349, April 13, 2007). 
NASA FY 2012 Agency Financial Report 111

203 facilities that had no future mission requirement yet were still listed in the NASA inventory. 

Finally, an August 2011 OIG audit found numerous NASA facilities that had not been utilized, 

some for as long as 10 years.22

 

The challenge for NASA leadership in this area is to reduce unneeded and duplicative property 

in light of the key missions, technologies, and programs the Agency intends to pursue over the 

next 20 to 30 years and the facilities it will need for those pursuits. In this effort, NASA must 

move beyond its traditionally conservative approach of “keep it in case we need it” in managing 

its facilities. Fundamental to the success of any such effort will be improving the quality of the 

Agency’s data regarding its real property assets. To this point, our August 2011 OIG report 

found that the data in NASA’s primary system for compiling and analyzing its real property 

assets were unreliable metrics for evaluating utilization, mission dependency, and condition of 

the Agency’s real property assets largely because NASA Centers used inadequate processes to 

gather and update this information. 

To its credit, NASA has begun to take positive steps toward addressing its infrastructure 

challenges. For example, in 2011 NASA developed its first integrated, Agency-wide real 

property master plan, which it intends to use to coordinate resources across the Agency by 

linking real property needs with projected funding. However, in December 2011 we reported 

that the Center master plans the Agency was using to develop this integrated plan contained 

deficiencies that may limit the plan’s usefulness in making strategic real property decisions.23

 

Developing an integrated Agency master plan in an uncertain budget environment is a significant 

challenge for NASA. Nonetheless, as noted in our report, better Center master plans will help 

NASA develop a more comprehensive Agency master plan, which in turn will enable the 

Agency to make better strategic decisions regarding its real property assets. 

In addition to its Agency-wide master planning effort, NASA is taking further action to better 

identify and assess the Agency’s strategic capabilities and the real property assets that will be 

needed to support those capabilities.24

 For example, the Agency has strengthened central 

authority over infrastructure decisions and initiated efforts to improve data management and 

better assess technical capability needs across the Agency. To assist in the Agency’s efforts to 

reduce its real property, the OIG is conducting an audit examining NASA’s efforts to identify 

and reduce unneeded and duplicative test stands, wind tunnels, vacuum chambers, airfields, and 

Space Shuttle-related infrastructure. 

Leased Space at NASA Centers. Leasing offers the Agency another means to help address the 

maintenance costs of its aging and underutilized facilities. However, Federal law and policy 

prohibits NASA (and other Government agencies) from leasing facilities for which it has no 

current or future mission-related use. For these facilities, NASA should consider other options, 

such as demolition or transferring the property to the General Services Administration for sale or 

 

22 NASA OIG, “NASA Infrastructure and Facilities: Assessment of Data Used to Manage Real Property Assets” 

(IG-11-024, August 4, 2011). 

23 NASA OIG, “NASA’s Infrastructure and Facilities: An Assessment of the Agency’s Real Property Master 

Planning” (IG-12-008, December 19, 2011). 

24 NASA defines a capability as the necessary infrastructure, equipment, workforce and other direct costs required to 

accomplish a given mission requirement. 
112 NASA FY 2012 Agency Financial Report

transfer to another entity. The challenge for NASA is to use leasing when appropriate to 

generate revenue to offset facilities operations and maintenance costs while not using it as a way 

to hold on to facilities the Agency does not need. Leasing property under the latter scenario 

frustrates the Agency’s efforts to reduce its real property footprint and can divert effort and 

resources from its core missions. 

An August 2012 OIG review found that NASA lacks clear guidance to ensure that property 

identified for leasing was not excess to the Agency’s needs.25 We also determined that NASA 

lacked a complete inventory of space available for lease as well as an effective marketing 

program to attract potential tenants. In addition, we found internal control weaknesses that limit 

NASA’s ability to ensure that leases provide the best value to the Agency and are fair to its 

partners and potential partners. Absent better controls and improved guidance, NASA will be 

hard-pressed to maximize the potential of its leasing program to help reduce the cost of 

maintaining underutilized facilities while meeting its obligation to ensure that leasing does not 

become a substitute for disposing of excess property. 

One tool available to NASA is Enhanced-Use Leasing (EUL), which allows the Agency to retain 

the proceeds it derives from leasing underutilized real property rather than turning them over to 

the U.S. Treasury. In FY 2003, Congress granted EUL authority to Ames Research Center and 

Kennedy Space Center. Using this authority, Kennedy entered into an EUL with a Florida utility 

for a 60-acre site that supports a solar farm that generates 1 percent of the Center’s power needs. 

Under subsequent legislation, all Centers may enter into EULs in which they receive either cash 

payments or in-kind consideration related to the development of renewable energy production

facilities. 

4. Acquisition and Contract Management 

Approximately 81 percent of NASA’s $18.5 billion FY 2011 budget was spent on contracts to 

procure goods and services and provide funding to grant and award recipients. As the President 

and Congress work to reduce Federal spending and the country’s budget deficit, NASA is likely 

to face constrained funding levels for the foreseeable future. Accordingly, it is critical that 

NASA work to ensure that the billions of dollars of taxpayer funds entrusted to it are spent 

wisely. However, systemic weaknesses in NASA’s internal controls related to acquisition and 

contracting continue to create challenges for the Agency. The OIG will continue to focus 

resources on this issue to identify fraud, waste, and abuse by contractors and awardees as well as 

weaknesses in the Agency’s system of internal controls. 

 

25 NASA OIG, “NASA’s Infrastructure and Facilities: An Assessment of the Agency’s Real Property Leasing 

Practices” (IG-12-020, August 9, 2012). 
NASA FY 2012 Agency Financial Report 113

Contract Management. Given the large amount of taxpayer funds NASA spends on contract 

awards, managers are constantly challenged to ensure that the Agency pays contractors in 

accordance with contract terms and receives fair value for its money. During the past year, the 

OIG continued to uncover fraud and overcharging by NASA contractors. Specifically, as a result 

of our investigative work in the past year: 

 A Government contractor and its parent company agreed to pay $3.3 million to settle 

allegations that they included unallowable costs in calculating overhead rates for NASA 

and national defense-related contracts. 

 Another Government contractor agreed to pay $617,789 to settle allegations that it 

submitted inflated invoices for engineering and technical services it provided to Dryden 

Flight Research Center. 

 A Texas business owner pleaded guilty and was sentenced to 3 years’ probation for 

making a false statement concerning space vehicle parts his business supplied to NASA 

for use on the ISS. The investigation found that the business owner had certified that 

ratchets his company produced met contract specifications when he knew they did not. 

The OIG’s audit work during the past year also identified weaknesses in NASA contract 

management. For example, we examined whether research funded by NASA Research 

Announcements (NRAs) advanced the Agency’s aeronautics research goals and whether award 

costs were allowable and properly supported.26

 Although we found that these NRA awards 

advanced the Agency’s aeronautics research goals, we also found that 18 of the 43 awards we 

reviewed (42 percent) contained approximately $2.4 million in questioned costs: $22,114 in 

unallowable fees, and $2,405,635 in unsupported costs.27

 Based on our sample results, we 

estimated that the NRA awards made by the Aeronautics Research Mission Directorate from 

May 2006 through January 2011 contained $25.2 million in unallowable or unsupported costs. 

In another audit, we reviewed NASA’s compliance with the Duncan Hunter National Defense 

Authorization Act of 2009 and found contract files lacking documentation related to acquisition 

plans and rationales supporting the type of contracts selected.28 We also identified several 

instances where the contracting officer’s technical representative was not timely assigned and 

cases where NASA had not validated the adequacy of the contractor’s accounting system – both 

critical to management and oversight of contractor performance. Recently, we initiated an audit 

 

26 NRAs are solicitations that announce research opportunities and provide a formal mechanism for corporations, 

universities, and research institutions to submit project ideas. From 2006 to 2010, NASA spent approximately 

$1.3 billion on NRA awards, of which approximately $435 million was spent by the Aeronautics Research 

Mission Directorate. 

27 NASA OIG, “NASA’s Use of Research Announcement Awards for Aeronautics Research” (IG-12-011, April 30, 

2012) 

28 The Act requires OIGs to report on their agencies use of cost-reimbursement contracts and level of compliance 

with applicable FAR rules related to the appropriate documentation for the award, use, and management of those 

contracts. See NASA OIG, “Final Memorandum on NASA’s Compliance with Provisions of the Duncan Hunter 

National Defense Authorization Act of 2009 – Management of Cost-Reimbursement Contracts” (IG-12-014, 

March 14, 2012). 
114 NASA FY 2012 Agency Financial Report

of NASA’s Strategic Sourcing Program to determine whether the Program has been effectively 

implemented and whether it has resulted in cost savings for NASA. 

One area in which NASA continues to be particularly challenged with regard to safeguarding 

against fraud is its Small Business Innovation Research (SBIR) program. NASA awarded 

approximately $190 million to small businesses under this program during FY 2011 to stimulate 

technological innovation, increase participation by small businesses in federally funded research 

and development, and increase private sector commercialization of innovations derived from 

federally funded research and development efforts. In multiple investigations and audits over the 

years, the OIG has identified significant fraud, waste, and abuse in NASA’s SBIR program. For 

example, this past year an OIG investigation resulted in the suspension of a technology firm and 

two of its principals from participation in Federal procurements for failing to disclose that the 

principals were primarily employed by a university when they submitted proposals to participate 

in the NASA and Navy SBIR programs. 

Moving forward, the OIG will continue to closely monitor the Agency’s SBIR activities and 

work collaboratively with the Agency to improve performance in this area. 

Grant Management. NASA faces the ongoing challenge of ensuring that the approximately 

$500 million in grants it awards annually are administered appropriately and that recipients are 

accomplishing stated goals. The Agency makes these awards to facilitate research and 

development projects; to fund scholarships, fellowships, or stipends to students and teachers; and 

to fund educational research performed by educational institutions or other non-profit 

organizations. 

Over the past 5 years, the OIG conducted 40 grant fraud investigations resulting in three 

prosecutions and $12.5 million in restitution and recoveries. As a result of one recent 

investigation, the Department of Justice filed a civil complaint under the False Claims Act 

alleging that a NASA grant recipient improperly spent over $3.75 million in grant funds intended 

for research purposes on construction of a building. 

In September 2011, the OIG reported that NASA did not have an adequate system of controls in 

place to ensure proper administration and management of its grant program and that as a result 

some grant funds were not being used for their intended purposes.29

 Following this report, we 

conducted three audits examining whether specific NASA grants are being used for their 

intended purpose and whether associated costs are allowable, reasonable, and in accordance with 

applicable laws, regulations, guidelines, and terms of the grants.30 Although we did not find any 

evidence of fraud or abuse in these audits, we did identify a number of internal control 

deficiencies and improvements needed in NASA’s grant oversight and management. For 

example, we determined that the Philadelphia College Opportunity Resources for Education, a 

not-for-profit organization that provides college scholarships to high school seniors, had charged 

 

29 NASA OIG, “NASA’s Grant Administration and Management” (IG-11-026, September 12, 2011). 

30 NASA OIG, “Audit of NASA Grants Awarded to the Alabama Space Science Exhibit Commission’s U.S. 

Space and Rocket Center” (IG-12-016, June 22, 2012); NASA OIG, “Audit of NASA Grants Awarded to the 

Philadelphia College Opportunity Resources for Education” (IG-12-018, July 26, 2012); and NASA OIG, 

“Audit of NASA Grant Awarded to HudsonAlpha Institute for Biotechnology” (IG-12-019, August 3, 2012). 
NASA FY 2012 Agency Financial Report 115

$60,511 in unallocable or unallowable expenditures and failed to maintain appropriate time and 

attendance documentation to support personnel charges totaling $156,409. 

NASA is faced with the challenge of conducting active oversight of grant recipients within 

resource and staffing limitations. Consequently, we will continue to focus resources in this area 

as the Agency works to enhance its grant management processes. 

5. Information Technology Security and Governance 

NASA’s portfolio of information technology (IT) assets includes more than 550 information 

systems that control spacecraft, collect and process scientific data, and enable NASA personnel 

to collaborate with colleagues around the world. Hundreds of thousands of NASA personnel, 

contractors, academics, and members of the public use these IT systems daily and NASA 

depends on them to carry out its essential operations. Overall, NASA spends more than 

$1.5 billion annually on its IT-related activities, $58 million of that for IT security. Although 

many NASA IT systems contain data that may be widely shared, some systems house sensitive 

information which, if lost or stolen, could result in significant financial loss, adversely affect 

national security, or significantly impair our Nation’s competitive technological advantage. 

Over the past 5 years, we have issued 21 audit reports containing 69 IT-related 

recommendations. In addition, OIG investigators have conducted more than 16 separate 

investigations of breaches of NASA networks, several of which have resulted in the arrests or 

convictions of foreign nationals in China, Great Britain, Italy, Nigeria, Portugal, Romania, 

Turkey, and Estonia. 

IT Security Weaknesses. Through our audits and investigations, we have identified systemic 

and recurring weaknesses in NASA’s IT security program that adversely affect the Agency’s 

ability to protect the information and information systems vital to its mission. For example, 

NASA has been slow to implement full-disk encryption on notebook computers and other mobile 

computing devices it provides to its employees, potentially exposing sensitive information to 

unauthorized disclosure when such devices are lost or stolen. Between April 2009 and April 

2011, NASA reported the loss or theft of 48 Agency mobile computing devices, which resulted 

in the unauthorized release of sensitive information including Social Security numbers, exportcontrolled data on NASA’s Constellation and Orion programs, and third-party intellectual 

property. Although NASA has selected an enterprise solution for encrypting data on its mobile 

computing devices and hopes to complete implementation by March 31, 2013, until this process 

is complete, sensitive data on the Agency’s mobile computing and portable data storage devices 

will remain at high risk for loss or theft. 

We also found that NASA continues to experience challenges as it moves from a compliancefocused “snapshot” approach for measuring the security of its IT systems to using tools and 

techniques to perform real-time security control monitoring. Although NASA has made progress 

implementing such a continuous monitoring program, the Agency needs to: (1) create and 

maintain a complete, up-to-date record of IT components connected to Agency networks; 

(2) define the security configuration baselines that are required for its system components and 

develop an effective means of assessing compliance with those baselines; and (3) use best 
116 NASA FY 2012 Agency Financial Report

practices for vulnerability management on all its IT systems. Only by making improvements in 

each of these areas can NASA ensure that its continuous monitoring program will adequately 

protect Agency IT assets. 

The CIO’s inability to ensure that NASA’s mission computer networks implement key IT 

security controls continues to put these critical IT assets at risk of compromise. Through our 

work we have found that Agency mission networks do not consistently implement key IT 

security controls. For example, the Agency has not yet implemented two recommendations from 

a May 2010 OIG audit report to monitor its mission networks for the presence of critical 

software patches and technical vulnerabilities.31

 Moreover, our detailed control tests of mission 

networks in 2010 and 2011 identified several high-risk technical vulnerabilities on systems that 

provide mission support to spacecraft. Until NASA implements measures to better protect its 

mission networks, they will remain at risk of compromise, which could have a severe adverse 

effect on NASA operations, assets, or personnel. 

Attacks on IT Infrastructure. In 2010 and 2011, NASA reported 5,408 computer security 

incidents resulting in the installation of malicious software on or unauthorized access to its 

computers. Such incidents disrupt Agency operations and can result in the loss or theft of 

sensitive data from NASA systems. NASA remains a target both because of the large size of its 

networks and because its information is highly sought after by criminals attempting to steal 

technical data or further other criminal activities. Moreover, NASA has increasingly become a 

target of a sophisticated form of cyber attack known as advanced persistent threats (APTs). The 

individuals or nations behind these APTs are typically well organized and well funded and often 

target high-profile organizations like NASA. Our investigation of a recent APT attack at the Jet 

Propulsion Laboratory (JPL) involving Chinese-based Internet protocol addresses has confirmed 

that the intruders gained full system access to numerous JPL systems and sensitive user accounts. 

With full system access the intruders could: (1) modify, copy, or delete sensitive files; (2) add, 

modify, or delete user accounts for mission-critical JPL systems; (3) upload hacking tools to 

steal user credentials and compromise other NASA systems; and (4) modify system logs to 

conceal their actions. 

In an effort to improve the Agency’s capability to detect and respond to these evolving threats, in 

November 2008 NASA consolidated its Center-based computer security incident detection and 

response programs into a single, Agency-wide computer security incident handling capability 

called the Security Operations Center (SOC). In an August 2012 audit, we found that 

establishment of the SOC had improved NASA’s computer security incident handling capability 

by providing continuous incident detection coverage for all NASA Centers.32 Moreover, the 

SOC’s communication processes, including weekly conference calls and security bulletins, were 

effective for sharing security incident and threat information with responders across the Agency. 

Finally, we found that NASA implemented an effective information system that enables Agencywide management and reporting of IT security incidents. 

 

31 NASA OIG, “Review of the Information Technology Security of [a NASA Computer Network]” (IG-10-013, 

May 13, 2010). 

32 NASA OIG, “Review of NASA’s Computer Security Incident Detection and Handling Capability” (IG-12-017, 

August 7, 2012). 
NASA FY 2012 Agency Financial Report 117

However, we also found that NASA’s computer systems and networks remain at high risk for 

loss of sensitive data because the Agency’s network firewalls and the SOC’s intrusion detection 

capability are ineffective for either detecting or preventing APTs from bypassing the Agency’s 

firewalls and perimeter defenses. Moreover, even after NASA fixes the vulnerability that 

permitted the attack to succeed, the attacker may covertly maintain a foothold inside NASA’s 

system for future exploits. The increasing frequency of APTs heightens the risk that key Agency 

networks may be breached and sensitive data stolen. We made three recommendations in our 

report for enhancing the Agency’s capability to detect and prevent these types of sophisticated 

cyber attacks and to improve overall SOC availability. The Agency is in the process of 

implementing these recommendations. 

NASA IT Governance. Achieving the Agency’s IT security goals will require sustained 

improvements in NASA’s overarching IT management practices and governance. Effective IT 

governance is the key to accommodating the myriad interests of internal and external 

stakeholders and making decisions that balance compliance, cost, risks, and mission success. 

Effective IT governance also helps ensure that public funds are efficiently spent by coordinating 

spending across NASA when purchasing IT products and services. 

Federal law and NASA policy designate the Agency Chief Information Officer (CIO) as the 

official responsible for developing IT security policies and procedures and implementing an 

Agency-wide IT security program. However, we have found that the CIO has limited ability to 

direct NASA’s Mission Directorates to fully implement CIO-recommended or mandated IT 

security programs. 

NASA’s IT assets generally fall into two categories: (1) the “institutional” systems and networks 

the Agency uses to support such administrative functions as budgeting and human resources and 

(2) the “mission” systems and networks that support the Agency’s aeronautics, science, and 

space programs such as the Mission Operations Directorate at Johnson Space Center, the 

Huntsville Operations Center at Marshall Space Flight Center, and the Deep Space Network at 

JPL. While the CIO has a complete inventory of and the authority to implement the Agency’s IT 

security program for NASA’s institutional IT assets, the CIO cannot fully account for or ensure 

that NASA’s mission IT assets comply with applicable IT security policies and procedures. 

IT assets on NASA’s mission computer networks are funded by the related Mission Directorate, 

which is responsible for IT security, including the authority for risk determination and risk 

acceptance. Moreover, IT staff responsible for implementing security controls on mission IT 

assets report to officials in the Mission Directorate, not the NASA CIO. Thus, the CIO does not 

have the authority to ensure that NASA’s IT security policies are consistently followed across 

the Agency. 

We are currently conducting a review examining NASA’s IT governance structure and anticipate 

making recommendations for improvement. 
118 NASA FY 2012 Agency Financial Report

FY 2012 Inspector General Act Amendments Report 

Background

The Inspector General Act Amendments of 1988 (P.L. 100-504), require that each agency head 

submit semi-annual reports to Congress on the actions taken in response to Office of Inspector 

(OIG) audit, evaluation, and inspection reports. Consistent with the Reports Consolidation Act 

of 2000 (P.L. 106-531), the National Aeronautics and Space Administration (NASA) 

consolidates and annualizes the required semi-annual Inspector General Act Amendments 

reporting elements for inclusion in its Agency Financial Report (AFR). 

Required agency reporting under the 1988 amendments consists of: 

1. Disclosure of OIG reports containing findings with monetary benefits (i.e., disallowed 

costs and funds put to better use): 

• for which management decisions were made during the reporting period (FY 

2012); 

• for which final management decisions have been made, but final management 

action is pending; 

• for which final management action was taken during the reporting period, and; 

• for which no final management action was taken during the reporting period. 

2. Disclosure of OIG recommendations pending final management action more than one 

year after the issuance of the associated audit report. 

In addition to above statutory requirements, the Office of Management and Budget (OMB) has 

issued specific action requirements to federal agencies in their Circular No. A-50, “Audit Followup.” These requirements include among other things that federal agencies ensure that final 

management decisions on audit recommendations are reached within six months after an OIG 

audit report is issued and that related corrective actions associated with the final management 

decision begin as soon as possible. 

The following definitions are provided to enhance the readability of NASA’s FY 2012 Inspector 

General Act Amendments Report: 

Final Management Decision is reached when management evaluates the OIG’s 

findings and recommendations, and determines whether or not to implement a proposed 

recommendation. If the final management decision is to implement an audit 

recommendation, a related corrective action plan is developed. 

Final Management Action is the point in time when corrective action, taken by 

management in conjunction with a final management decision, is completed. 

Corrective Action consists of remediation efforts on the part of management which are 

intended to mitigate an audit finding. 
NASA FY 2012 Agency Financial Report 119

Questioned Costs are costs identified by the OIG as being potentially unallowable or 

unallowable because of: a) a purported violation of law, regulation, contract, grant, 

cooperative agreement, or other device governing the incurrence of cost; b) a finding 

that, at the time of the audit, such cost is not supported by adequate documentation, or; 

c) a finding that the cost incurred for the intended purpose is unnecessary or 

unreasonable. 

Disallowed Costs are questioned costs that management has sustained or agreed 

should not be charged to the Government. 

Funds Put to Better Use (FPTBU) represent potential cost savings that could be 

realized through the implementation of an audit recommendation. 

NASA’s Audit Follow-up Program

NASA’s audit follow-up program is an integral component of the Agency’s integrated internal 

control framework, and is a key element in terms of improving the overall efficiency and 

effectiveness of NASA’s operations and activities. NASA is committed to ensuring timely and 

responsive final management decisions along with timely and complete final management 

action on all audit recommendations issued by the NASA OIG. In this regard, NASA has 

implemented a comprehensive program of audit follow-up intended to ensure that audit 

recommendations issued by the OIG are resolved and implemented in a timely, responsive, and 

effective manner. 

 

NASA has designated the Office of Internal Controls and Management Systems (OICMS) as the 

Agency’s office of primary responsibility for policy formulation, oversight, and functional 

leadership of NASA’s audit follow-up program. OICMS implements related program activities 

through an agency-wide network of Audit Liaison Representatives (ALRs), who, in turn, are 

responsible for executing program activities at the operating level. This network of ALRs, in 

conjunction with OICMS’ oversight, provides the functional structure to support NASA’s audit 

follow-up program. Program activities are tracked, monitored and reported through the 

utilization of NASA’s Audit and Assurance Information Reporting System (AAIRS). AAIRS is a 

web-based tracking and reporting tool utilized by OICMS and NASA ALRs to monitor key 

activities and milestones associated with audits performed by the OIG. 

In accordance with requirements delineated in OMB Circular A-50, “Audit Follow-up,” OICMS 

monitors audit recommendations issued by the OIG to ensure that a final management decision 

is reached within six months of the issuance of a final audit report. A final management 

decision consists of agreeing to implement an OIG recommendation, agreeing to implement a 

portion of an OIG recommendation, or declining to implement an OIG recommendation. In those 

instances where agreement between the OIG and NASA management cannot be reached, a 

final management decision will be sought from NASA’s Audit Follow-up Official (AFO) within six 

months of the issuance of a final audit report. 

Once a final management decision has been made to either implement or partially implement an 

OIG audit recommendation, corrective action on the part of management is pursued as rapidly 

as possible, in accordance with provisions of OMB Circular A-50. In some instances the 

corrective action associated with a final management decision spans multiple fiscal years due to 

factors such as the complexity of the planned corrective action, or unforeseen delays in the 

formulation, review and approval of NASA policies, procedural requirements, or regulations. 

NASA management continues to aggressively pursue the implementation of agreed-upon 

corrective action relating to audit recommendations issued by the OIG, in spite of inherent or 

unforeseen delays in the implementation of associated corrective action.
120 NASA FY 2012 Agency Financial Report

FY 2012 Audit Follow-up Results 

The Inspector General Act Amendments of 1988 require that heads of federal agencies report 

on actions taken, or remaining to be taken, in response to OIG audit reports containing 

monetary findings. The amendments also require that management disclose those OIG audit 

reports for which a final management decision had been made in a prior reporting period, but 

where final management action is still pending. In addition to the statutory reporting 

requirements delineated in the Inspector General Act Amendments of 1988, OMB Circular A-50, 

requires that final management decisions on OIG audit recommendations be made within six 

months of the issuance of a final audit report. NASA’s reporting in conjunction with the 

requirements of the Inspector General Act Amendments of 1988 and OMB Circular A-50 

follows: 

1. OIG Audit Reports with Monetary Findings 

Prior year (FY 2011) carry-over of OIG audit reports with monetary findings consisted of three 

audit reports with OIG identified questioned costs (potentially disallowed costs) totaling 

$4,816,615, along with and two audit reports with OIG identified funds put to better use 

(potential cost savings) totaling $93,800,000. During FY 2012, management dispositioned infull (e.g., recovered, collected, wrote-off, offset, etc.), the entirety of prior year OIG identified 

questioned costs and prior year OIG identified funds put to better use. 

During FY 2012, the OIG issued four audit reports with identified questioned costs totaling 

$25,546,032, and two audit reports with identified funds put to better use in the amount of 

$4,313,759. Of the $25,546,032 in OIG identified questioned costs, management dispositioned 

$25,284,545. The balance of FY 2012 OIG identified questioned costs in the amount of 

$261,4871 were pending management’s disposition at September 30, 2012. The entirety of FY 

2012 OIG identified funds put to better use ($4,313,759) was dispositioned in-full prior to 

September 30, 2012 (see Table 1). 

 

1

 $216,920: Audit of NASA Grants Awarded to the Philadelphia College Opportunity Resources for Education (IG12-018, dated July 26, 2012), and $44,567: Audit of NASA Grant Awarded to the HudsonAlpha Institute for 

Biotechnology (IG-12-019, dated August 31, 2012). 
NASA FY 2012 Agency Financial Report 121

Table 1: Audit Reports with Monetary Benefits 

(Disallowed Costs and Funds Put to Better Use) 

For the Year Ended September 30, 2012

Disallowed Costs 

Funds to be Put 

Better Use 

To 

Category Number of 

Reports (Dollars)

Number of 

Reports (Dollars)

Line 1

Audit reports with monetary 

that required disposition by 

(prior year carry-over) 

benefits issued 

management in 

in FY 2011 

FY 2012 3 $4,816,615 2 $93,800,000 

Line 2

Plus: Audit reports with monetary benefits issued 

FY 2012 that required disposition by management 

during FY 2012 

in 

4 $25,546,032 2 $4,313,759 

Line 3

Total audit reports with monetary benefits ( prior 

year and current year) that required disposition 

by management in FY 2012 [line 1 + 2] 

7 $30,362,647 4 $98,113,759 

Line 4

Audit reports 

management 

FY 2012 

with monetary benefits on which 

disposition was completed during 5 $30,101,160 4 $98,113,759 

Line 5

Audit reports with monetary benefits still 

pending disposition by management at 

the end of FY 2012 [line3-4] (carry-over 

into FY 2013) 

2 $261,487 0 $0 

 

2. OIG Audit Recommendations Open More Than One Year After 

Report Issuance 

As of September 30, 2012, there were 15 OIG audit reports issued in prior fiscal years 

containing a total of 38 audit recommendations pending final management action more than one 

year after the issuance of the related OIG audit report (see Table 2). Although these 38 

recommendations remain open more than one year after issuance of the respective audit 

reports, NASA management continues to aggressively pursue related corrective actions. For 

the majority of these recommendations (20), outstanding corrective actions consist of the 

implementation of various management oversight, internal monitoring, and compliance review 

activities. For the balance of these recommendations (18), outstanding corrective actions 

consist of the completion of policy development and policy revision activities. 

By way of comparison, for the fiscal year ended September 30, 2011, there were 15 OIG audit 

reports containing 33 recommendations on which final management decisions were made but 

final management action was still pending. For the five year period ended September 30, 2012, 

the number of OIG audit recommendations pending final management action one year or more 

after issuance of a final audit report has ranged between 33 and 42. 
122 NASA FY 2012 Agency Financial Report

Table 2: Summary of OIG Audit Reports Pending Final Management 

One Year or More After Issuance of a Final Report

(As of September 30, 2012) 

Action

Report No. No. of Recommendations

(Report Date) Report Title Open Closed Total 

IG-05-016 

(5/12/2005) NASA’s Information Technology Assessment 2 Process 1 3 4 

IG-09-003 

(11/13/2008) Review of NASA Stolen Property at GSFC and MSFC 1 4 5 

IG-09-017 

(7/28/2009) Review of the Space Flight Awareness Honoree Launch Conference Event 1 0 1 

IG-10-013 

(5/13/2010) 

Review of the Information Technology 

Operational Network (IONet) 

Security of the Internet Protocol 

2 0 2 

IG-10-015 

(6/18/2010) Review of NASA's Microgravity Flight Services 1 2 3 

IG-10-016 

(7/6/2010) 

NASA's Astronaut 

Care Activities 

Corps: Status of Corrective Actions Related to Health 

1 1 2 

IG-10-018 

(8/5/2010) 

Audit of Cybersecurity 

Management System 

Oversight of NASA's Enterprise Document 

1 14 15 

IG-10-019 

(9/14/2010) 

Information 

Continuous 

Technology Security: Improvements 

Monitoring Processes 

Needed in NASA’s 

2 0 2 

IG-10-024 

(9/16/2010) 

Review of NASA's Management 

Technology Security Program 

and Oversight of Its Information 

2 1 3 

IG-11-004 

(12/13/2010) Review of the Jet Propulsion Laboratory’s Occupational Safety Program 6 9 15 

IG-11-016 

(3/15/2011) 

Preparing for 

Controls over 

the Space Shuttle Program’s Retirement: 

Public Sales of Space Shuttle Property 

Review of NASA’s 

4 3 7 

IG-11-017 

(3/28/2011) Inadequate Security Practices Expose Key NASA Network to Cyber Attack 3 0 3 

IG-11-023 

(8/10/2011) NASA’s Payments for Academic Training 6 0 6 

IG-11-024 

(8/4/2011) 

NASA Infrastructure and 

Real Property Assets 

Facilities: Assessment of Data Used to Manage 

1 2 3 

IG-11-026 

(9/12/2011) NASA’s Grant Administration and Management 6 3 9 

15 Totals 38 42 80 

3. Final Management Decisions Not Made Within Six Months of a 

Report Date 

During FY 2012, the OIG issued 22 reports containing 197 recommendations addressed to 

NASA which required a final management decision within six months of the respective final 

report dates. For the fiscal year ended September 30, 2012, NASA reports no outstanding final 

management decisions pending more than six months after the issuance of a final OIG audit 

report. For comparative purposes, for the fiscal year ended September 30, 2011, NASA 

similarly reported no outstanding final management decisions pending more than six months 

after the issuance of a final OIG audit report. Furthermore, for the five-year period ended 

September 30, 2012, no final management decision on any OIG audit recommendation was 

made more than six months after issuance of a final OIG audit report. 

4. Audit Recommendation Closure Efficiency 

 

2

 Final management action was completed on September 27, 2012. As of September 30, the recommendation was 

pending OIG review for closure. 
NASA FY 2012 Agency Financial Report 123

During FY 2012, a total of 103 OIG-issued audit recommendations (including 80 

recommendations issued in prior fiscal years) were closed based on the implementation of final 

management action. Of the 103 recommendations closed in FY 2012, 63 percent (65 

recommendations) were closed within one year of the issuance of the associated audit report, 

while 91 percent (94 recommendations) were closed within two years of the issuance of the 

associated audit report (see Table 3). 

For comparative purposes, during FY 2011, a total of 72 OIG-issued audit recommendations 

(including 41 recommendations issued in prior fiscal years) were closed based on the 

implementation of final management action. Of the 72 recommendations closed in FY 2011, 43 

percent (31 recommendatios) were closed within one year of the issuance of the associated 

audit report, while 83 percent (60 recommendations) were closed within two years of the 

issuance of the associated audit report. For the five year period ended September 30, 2012, an 

average of 48 percent of OIG-issued audit recommendations were closed within one year of the 

final issance of the assocated audit report, while an average of 85 percent of OIG-issued audit 

recommendations were closed within two years of the issuance of the associated audit report. 

Closed < 1 

Closed > 1 

Closed > 2 

FY 2008 FY 2009 FY 2010 FY 2011 FY 2012 

year after report 40% 52% 41% 43% 63% 

< 2 years after report 35% 34% 49% 40% 28% 

years after report 25% 14% 10% 17% 9% 

Table 3 

Although NASA faces myriad challeges in the pursuit of implementing corrective actions 

associated with OIG audit recommendations in an efficient and effective manner, NASA 

management remains committed to the improvement of Agency operations and activities as 

identified by the OIG in their audit reports and associated recommendations.
124 NASA FY 2012 Agency Financial Report

Improper Payment Compliance 

NASA is dedicated to reducing fraud, waste, and abuse by adequately reviewing and reporting 

programs susceptible to improper payments in accordance with the Office of Management and 

Budget (OMB) Circular A-123 Management’s Responsibility for Internal Control, Appendix C, 

Requirements for Effective Measurement and Remediation of Improper Payments. To improve 

the integrity of the Federal government’s payments and the efficiency of its programs and 

activities, Congress enacted the Improper Payments Information Act (IPIA) of 2002 (Public Law 

No. 107-300). The IPIA contains requirements in the areas of improper payment identification 

and reporting. It requires agency heads to annually review all programs and activities, identify 

those that may be susceptible to significant improper payments, estimate annual improper 

payments in susceptible programs and activities, and report the results of their improper 

payment activities. 

On July 22, 2010, the President signed into law the Improper Payments Elimination and 

Recovery Act (IPERA; Pub. L. No. 111-204). IPERA amended the IPIA and generally repealed 

the Recovery Auditing Act (Section 831, Defense Authorization Act, for FY 2002; Pub. L. No. 

107-107). Subsequently, OMB issued Memorandum M-11-16 modifying Circular A-123 

Appendix C, Part I and Part II (which was issued in August 2006 as OMB Memorandum M-06-

23). OMB Memorandum M-11-16 requires each Executive branch agency to: 

 Review all of its programs and activities to identify those susceptible to significant 

improper payments. IPERA defines significant improper payments as gross annual 

improper payments (i.e., the total amount of overpayments plus underpayments) in the 

program exceeding (1) both 2.5 percent of program outlays and $10,000,000 of all 

program or activity payments made during the fiscal year reported or (2) $100,000,000 

(regardless of the improper payment percentage of total program outlays). 

 Obtain a statistically valid estimate of the annual amount of improper payments in 

programs and activities for those programs that are identified as susceptible to 

significant improper payments. 

 Implement a plan to reduce improper payments. 

 Report estimates of the annual amount of improper payments in programs and activities 

and progress in reducing them. 

The IPIA* defines an improper payment as any payment that should not have been made or that 

was made in an incorrect amount (including overpayments and underpayments) under statutory, 

contractual, administrative, or other legally applicable requirements. It includes any payment to 

an ineligible recipient, any payment for an ineligible service, any duplicate payment, payments 

for services not received, and any payment that does not account for credit for applicable 

*IPIA as used hereafter, refers to IPIA, as amended by IPERA 
NASA FY 2012 Agency Financial Report 125

discounts. Moreover, when an agency’s review is unable to discern whether a payment is 

proper as a result of insufficient or lack of documentation, this payment must also be considered 

an improper payment. 

Throughout the past five years, NASA has diligently met IPIA program compliance by launching 

OMB-compliant risk assessments, updating NASA payment process documentation, selecting 

OMB-compliant statistical samples for testing, drafting comprehensive test procedures, 

reporting results in the annual Agency Financial Report (AFR) or Performance and 

Accountability Report (PAR) and documenting the IPIA review process and results in 

comprehensive work papers. 

During FY 2012, NASA continued its efforts to improve the integrity of its payments and the 

efficiency of its programs by updating the annual risk assessment. The risk assessment 

identified 44 programs in scope and covered $18.5 billion in FY 2011 disbursements. Once the 

programs were evaluated, NASA identified the following ten programs to further evaluate their 

susceptibility to improper payments: 

 Center Management and Operations 

 Institutions and Management 

 International Space Station (ISS) 

 James Webb Space Telescope 

 Mars Exploration 

 Multi-purpose Crew Vehicle 

 Reimbursable-Science Mission Directorate (RMB-SCMD*) Programmatic 

 Space Communications and Navigation (SCaN) 

 Space Launch System 

 Space Shuttle Program 

*SAP Identifier; refers to the SMD program used hereafter 

Total disbursements related to these programs amounted to approximately $11.96 billion in FY 

2011. As in previous years, with the assistance of contractor support, NASA performed an 

improper payment review of each program in accordance with Appendix C of OMB Circular A123. NASA evaluated approximately 1,600 transactions for approximately $2.2 billion and found 

no improper payments. Although the test results indicate that the programs evaluated are not 

susceptible to a high risk of improper payments, NASA will continue to monitor payments and 

take appropriate corrective action for any identified improper payments. 
126 NASA FY 2012 Agency Financial Report

Improper Payments Information Act Reporting Details 

To conduct the FY 2012 IPIA assessment, NASA adhered to the established improper payment 

methodology, considered lessons learned from past IPIA assessments, and adhered to the 

NASA Risk Assessment methodology. In order to satisfy the IPIA requirements, the following 

tasks and activities were executed: 

 Updated the FY 2011 risk assessment; 

 Selected a statically valid sample of payments; 

 Conducted a test of all transactions selected in the sample and extrapolated the results 

to make a valid estimate; and, 

 Reported on the details of testing and findings (if any) of the Improper Payment Program 

(IPP). 

I. Risk Assessment 

NASA’s risk assessment methodology was developed using criteria established for determining 

levels of risk and evaluating all major programs against these criteria. Risk factors included 

conditions related to financial processing and internal controls, internal and external monitoring 

and assessments, human capital risk, programmatic risk, and the nature of programs and 

payments. 

In FY 2012, NASA performed a comprehensive qualitative and quantitative risk assessment to 

identify programs susceptible to high risk of significant improper payments. NASA’s risk 

assessment methodology is illustrated in Table 1 below, along with a brief summary of steps 

and results. 

Table 1: NASA's Risk Assessment Methodology and Results 

Determine Scope 

Identify Programs 

Eligible for 

Assessment 

Analyze Risk 

Conditions 

Prepare Risk 

Assessment 

 Identified 143  Identified 44  Evaluated FY 2011  Updated risk 

distinct programs programs within audit reports, assessment based 

encompassing $19.6 assessment scope findings and on information 

B in FY 2011 encompassing $18.5 recommendations gathered from NASA 

disbursements B in FY 2011  Evaluated trends in financial 

 Estimated maximum disbursements internal control management reports 

error rate of program  Included non- results and independent 

disbursements at programmatic  Evaluated risk reviews 

12.5% disbursements such conditions including  Populated Risk 

 Set materiality level as Institutions & control environment, Assessment matrix 

of programs in- Management human capital risk with initial feedback 

scope at >$80M and nature of 

payments. 





Identified 6 

programs 

susceptible to 

improper payments 

based on risk ratings 

Expanded scope 

with additional 4 
NASA FY 2012 Agency Financial Report 127

Determine Scope 

Identify Programs 

Eligible for 

Assessment 

Analyze Risk 

Conditions 

Prepare Risk 

Assessment 

programs in 

accordance with 

NASA’s 3-yr. 

baseline Risk 

Strategy 

(1) Determine Scope 

To determine the scope of programs subject to the Risk Assessment, NASA prepared an initial 

selection based on the FY 2011 total disbursements; identifying 143 distinct programs. NASA 

generated and provided the disbursement totals for each program from its financial 

management system. The aggregate disbursement total was validated against NASA's SF-133, 

Report on Budget Execution and Budgetary Resources. 

 

(2) Identify Programs Eligible for FY 2012 Assessment 

A review of the 143 distinct programs was made to determine whether or not they met the 

materiality thresholds for review. The materiality of disbursements is derived from an estimated 

error rate of 12.5 percent of program disbursements. Using this estimate, the materiality level of 

programs in scope was set at greater than $80 million. As a result of the materiality threshold 

analysis it was determined that 44 programs met the in scope criteria. 

(3) Analyze Risk Conditions 

The control environment, internal and external monitoring, human capital risk, programmatic 

risk, and nature of program payment risk factors were analyzed during the risk assessment. 

NASA also reviewed documents, including the NASA Office of Inspector General (OIG) Report 

NASA’s Efforts to Identify, Report, and Recapture Improper Payments (Report No. IG-12-015, 

(Assignment No. A-11-020-00)). Among other documents, NASA also examined the FY 2011 

report regarding the assessment of Internal Control over Financial Reporting. Once this review 

and analysis was complete, the FY 2012 Risk Assessment was updated to reflect the NASA 

programs found susceptible to improper payments. 

(4) Prepare Risk Assessment 

The programs identified for the FY 2012 IPP review are: Center Management and Operations; 

Institutions and Management; ISS; James Webb Space Telescope; Mars Exploration; Multipurpose Crew Vehicle; RMB-SMD Programmatic; SCaN; Space Launch System, and; Space 

Shuttle. Table 2 below provides the FY 2012 programs susceptible to improper payments. A 

score greater than 3.00 is deemed “high risk” per the NASA Risk Assessment Methodology. 
128 NASA FY 2012 Agency Financial Report

Table 2: NASA Programs Identified as Susceptible to Improper Payments 

Program 

Determined 

Risk After 

Testing in 

FY 2010 

Determined 

Risk After 

Testing in 

 FY 2011 

FY 2012 Risk 

Assessment 

Rating 

Tested in FY 

2012 

Center 

Management 

and Operations 

N/A N/A 3.14 Yes 

Institutions and 

Management1 N/A Low 2.98 Yes 

International 

Space Station 

(ISS) 

N/A Low 3.14 Yes 

James Webb 

Space 

Telescope 

N/A N/A 3.10 Yes 

Mars 

Exploration1 N/A Low 2.74 Yes 

Multi-purpose 

Crew Vehicle N/A N/A 3.26 Yes 

RMB-SMD 

1 Programmatic N/A Low 2.20 Yes 

Space 

Communications 

and Navigation 

(SCaN)1 

Low Low 2.74 Yes 

Space Launch 

System N/A N/A 3.26 Yes 

Space Shuttle N/A Low 3.14 Yes 

1

Certain programs identified as low risk were subject to testing in the FY 2012 IPP so that these programs 

complete at least three consecutive years of testing in accordance with NASA’s 3-year baseline risk 

strategy. 

II. Statistical Sampling 

For each program selected for testing, NASA developed a statistically valid random sample of 

program payments, in accordance with OMB guidelines. NASA constructed a stratified, random 

sample to yield an estimate with a 90 percent confidence level with a margin of error of plus or 

minus 2.5 percent for each program. The sample was drawn from the universe of 

disbursements that occurred from October 1, 2010 through September 30, 2011. For each 

selected program undergoing an improper payment review, NASA developed samples for the 

following payment types: vendor payments; grant drawdowns; letter of credit contracts; 

government purchase card transactions; and travel expenditures. NASA expanded the scope of 

its IPP review in FY 2012 to include grant transactions. Additionally, NASA reviewed letter of 

credit transactions, the bulk of which are contract payments to the Jet Propulsion Laboratory 

(JPL). The letter of credit (LOC) is a method of payment that NASA uses for nonprofit 
NASA FY 2012 Agency Financial Report 129

organizations and universities that receive grants, cooperative agreements and advance 

payment contracts with NASA. The LOC method allows the grantees to draw funds directly 

from the Department of Health and Human Services (DHHS) Payment Management System 

(PMS) whereby grantees can draw funds for their immediate cash needs. The LOC process 

eliminates delays in payment that could be experienced using the invoice payment method. 

Figure 1 below illustrates the net outlays for each program selected. 

Figure 1: Net Outlays for Programs Susceptible to a High Risk of Improper Payments 

A random sample was selected for each of the ten programs identified as susceptible to risk of 

significant improper payments. A total number of 1,613 payment transactions for a total of $2.2 

billion were selected for FY 2012 IPP testing. Table 3 lists the number of transactions and net 

dollar value tested for each program: 
130 NASA FY 2012 Agency Financial Report

Table 3: Samples by Program 

Program Vendor 

Payments 

Grants & 

LOC Travel Purchase Card Total Tested 

Center Management and Operations

Dollars $34,091,962 $428,519 $6,107 $1,350 $34,527,938

Transactions 118 13 11 15 157

Institutions and Management

Dollars $206,587,219 $345,740 $0 $4,496 $206,937,455

Transactions 177 24 0 4 205

International Space Station

Dollars $794,242,070 $(57,807) $2,705 $0 $794,186,968

Transactions 159 2 3 0 164

James Webb Space Telescope

Dollars $158,705,435 $817,582 $0 $30 $159,523,047

Transactions 37 44 0 1 82

Mars Exploration

Dollars $40,448,769 $192,346,39

6 $31 $0 $232,795,196

Transactions 22 210 2 0 234

Multi-purpose Crew Vehicle

Dollars $20,706,315 $46,318 $2,450 $2,322 $20,757,405

Transactions 120 14 3 6 143

RMB-SMD Programmatic 

Dollars $54,275,576 $45,390,344 $0 $6 $99,665,926

Transactions 28 73 0 1 102

Space Communications and Navigation

Dollars $115,847,517 $66,065,475 $0 $156 $181,913,148

Transactions 41 68 0 2 111

Space Launch System

Dollars $293,020,238 $3,130,379 $634 $20 $296,151,271

Transactions 239 35 3 1 278

Space Shuttle

Dollars $151,709,517 $(287,033) $955 $40 $151,423,479

Transactions 130 4 2 1 137

TOTAL

Dollars $1,869,634,61

8 

$308,225,91

3 $12,882 $8,420 $2,177,881,833

Transactions 1,071 487 24 31 1,613
NASA FY 2012 Agency Financial Report 131

III. Conclusion 

Although NASA found no improper payments, NASA will continue to monitor payments and take 

appropriate corrective action as needed. NASA attributes much of the positive results to the 

centralized procurement and payment activities conducted at the NASA Centers and the NASA 

Shared Services Center (NSSC). Centralized processing provides a sound internal control 

environment that mitigates the risk of improper payments across the entire Agency. Table 4 

below shows the total payments by population, sample amount, and annual estimate of 

improper payments by program. 

Table 4: Total Payments by Population, Sample Amount and Annual 

Estimate of Improper Payments by Program 

Program Population 

(Net Outlays) Sample 

FY 2012 

Estimate of 

Improper 

Payments 

FY 2012 

Estimate of 

Improper 

Payments 

Center 

Management 

and Operations 

$ 2,220,499,507 $ 34,527,938 0.00% $0

Institutions and 

Management 727,077,318 206,937,455 0.00% 0

International 

Space Station 2,267,359,329 794,186,968 0.00% 0

James Webb 

Space 

Telescope 

343,270,179 159,523,047

0.00% 0

Mars 

Exploration 462,613,131 232,795,196 0.00% 0

Multi-purpose 

Crew Vehicle 1,155,846,260 20,757,405 0.00% 0

RMB-SMD 

Programmatic 796,377,210 99,665,926 0.00% 0

Space 

Communications 

and Navigation 

519,330,448 181,913,148

0.00% 0

Space Launch 

System 1,511,354,910 296,151,271 0.00% 0

Space Shuttle 1,952,809,161 151,423,479 0.00% 0

Total $11,956,537,453 $2,177,881,833 0.00% $0
132 NASA FY 2012 Agency Financial Report Table 5: Improper Payment Reduction Outlook (in millions) Program FY 2011 Outlays FY 2011 IP FY 2011 IP FY 2012 Outlays FY 2012 IP FY 2012 IP FY 2012 Over- Payment FY 2012 Under- Payment FY 2013 Est. Outlays FY 2013 IP FY 2013 IP FY 2014 Est. Outlays FY 201

IP 

Center Management and Operations $2,220.5 0% $0 $2,204.1 0% $0 $0 $0 $2,093.3 0% $0 $2,093.3 0

Institutions and Management $727.1 0% $0 $727.1 0% $0 $0 $0 $727.1 0% $0 $727.1 0International Space Station $2,267.3 0% $0 $2,829.9 0% $0 $0 $0 $3,007.6 0% $0 $3,177.6 0

James Webb Space Telescope $343.3 0% $0 $518.6 0% $0 $0 $0 $627.6 0% $0 $659.1 0Mars Exploration $462.6 0% $0 $587.0 0% $0 $0 $0 $360.8 0% $0 $227.7 0Multi-purpose Crew Vehicle $1,155.8 0% $0 $1,200.0 0% $0 $0 $0 $1,024.9 0% $0 $1,028.2 0

RMB-SMD Programmatic $796.4 0% $0 $1,533.9 0% $0 $0 $0 $1,489.1 0% $0 $1,674.0 0

Space Communications and Navigation $519.3 0% $0 $445.5 0% $0 $0 $0 $655.6 0% $0 $570.7 0Space Launch System $1,511.3 0% $0 $1,502.6 0% $0 $0 $0 $1,340.0 0% $0 $1,429.3 0

Space Shuttle $1,952.8 0% $0 $556.2 0% $0 $0 $0 $70.6 0% $0 $0 0
NASA FY 2012 Agency Financial Report 133

Recapture Audit 

On July 22, 2010, the President signed into law the Improper Payments Elimination and 

Recovery Act (IPERA; Pub. L. No.111-204). IPERA requires all federal agencies to conduct 

payment recapture audits. NASA continues to perform recapture audits as part of its overall 

program to ensure effective internal control over payments for each program and activity that 

expends $1 million or more annually if conducting such audits would be cost-effective. In FY 

2012 NASA completed its recapture audit of FY 2010 disbursements. 

In accordance with the amended Office of Management and Budget (OMB) Circular A-123, 

Appendix C guidance, agencies may determine to exclude classes of contracts and contract 

payments from recapture audit activities if the agency determines that the recapture audits are 

inappropriate or not a cost-effective method for identifying and recovering improper payments. 

NASA employs the Defense Contract Audit Agency (DCAA), at significant expense, to perform 

auditing procedures on cost-type contracts. Performing a separate recapture audit on these 

cost-type contracts would be duplicative and not cost-effective. In addition, the contractual 

terms of NASA’s cost-type contracts provides for audit access only by the DCAA. Increasing 

audit access would require contract modifications for existing contracts, which would likely result 

in increased costs. Consequently, NASA does not consider it cost-effective to conduct payment 

recapture audits for cost-type contracts. Consequently NASA does not include cost-type 

contracts in its assessment for recapture audits. 

NASA engages an industry leading contracting firm to perform recapture auditing under a 

contingency contract. This year, the FY 2010 disbursements review was completed and the 

results are listed in the table below. Currently, the recapture audit of FY 2011 disbursements is 

underway.
134 NASA FY 2012 Agency Financial Report Payment Recapture Audit Reporting % of Amount % of Determined Amount Not to be Amounts Cumulative 

Amount Recovered % of Amount Amount Collectable Identified Amounts 

Identifed out of Outstanding Determined out of for Amounts Identified fo

rogram Amount Subject to Actual Amount for Amount Amount Amount out of Amount Not to be Amount Recovery Recovered Recovery 

or Type of Review for Reviewed and Recovery Recovered Identified Outstanding Identified Collectable Identified (2009 + (2009 + (2010 + 

Activity Payment Reporting FY2010 Reported FY2010 FY2010 FY2010 FY2010 FY2010 FY2010 FY2010 FY2010 PYs) PYs) PYs) 

Fixed Price ASA Contract $4,215,197,938 $4,215,197,938 $7,335 $3,525 48% $3,810 52% $3,810 52% $237,893 $218,556 $245,22

*NASA considers these four (4) claims totaling $23,147 as uncollectible as they have been forwarded to the 

PN
Subject to 

NASA FY 2012 Agency Financial Report 135

Payment Recapture Audit Targets 

Type of CY Amount CY Amount CY Recovery Rate CY + 1 CY + 2 CY + 3 

Payment Identified Recovered (Amount Recovery Rate Recovery Rate Recovery Rate 

Recovered/Amount Target Target Target 

Identified) 

Fixed Price $7,335 $3,525 48% 91%* 91%* 91%* 

Contracts 

*Recovery Rate Target is based on the cumulative amounts recovered/cumulative amounts identified, but 

no less than 90%. 

Aging of Outstanding Overpayments 

Type of Payment CY Amount 

Outstanding (0-6 

months) 

CY Amount 

Outstanding (6 

months to 1 year) 

CY Amount 

Outstanding (over 1 

year) 

Fixed Price Contracts $0 $3,810 $0 

Disposition of Recaptured Funds 

Type of Agency Payment Financial Original Office of Returned to 

Payment Expenses Recapture Management Purpose Inspector Treasury 

to Auditor Improvement General 

Administer fees Activities 

the 

Program 

Fixed Price $0* $881** $0 $0 $0 $0 

Contracts 

*NASA believes these administrative costs to be marginal and currently has not accumulated 

a cost figure. 

**Recapture Auditor Fees for FY2010 only. 

Overpayments Recaptured Outside of Payment Recapture Audits 

Source of Amount Amount Amount Amount Cumulative Cumulative 

Recovery Identified Recovered Identified Recovered Amount Amount 

(CY) (PY) (PY) Identified recovered 

(CY+PYs) (CY+PYs) 

N/A* $0 $0 $0 $0 $0 $0 

*There are no overpayments recaptured outside of the payment recapture audit to report during 

this period. 

NASA has taken steps through Improper Payment reviews and recapture audits to continue 

holding Agency managers accountable for reducing and recovering improper payments. The 

recapture audit process is monitored by the Office of the Chief Financial Officer to ensure 

compliance with NASA’s Recapture Audit Guidance. In addition, all collection and disbursement 

functions are centralized which ensures consistent application of the control environment and 

reduction of improper payments risk. NASA has the infrastructure and information technology in 

place to reduce improper payments. There are no statutory or regulatory barriers limiting 

NASA’s ability to reduce improper payments.
(In Millions of Dollars) 2012 2011

Section I: What Money is Available to Spend?

Total Resources $ 21,618 $ 21,316 

Less Amount Available but Not Agreed to be Spent 821 541

Less Amount Not Available to be Spent 112 136

Total Amounts Agreed to be Spent $ 20,685 $ 20,639 

Section II: How was the Money Spent?

Space Operations Mission

Personnel compensation and benefits $ 368 $ 453

Contractual services and supplies 4,033 4,508

Acquisition of assets 31 37

Grants and fixed charges 17 6 

Other 5 2 

Total Spending 4,454 5,006

Science Mission

Personnel compensation and benefits $ 315 $ 303

Contractual services and supplies 3,532 3,582

Acquisition of assets 55 73

Grants and fixed charges 559 557

Other 1 6 

Total Spending 4,462 4,521

Exploration Mission

Personnel compensation and benefits $ 433 $ 441

Contractual services and supplies 3,058 2,946

Acquisition of assets 23 44

Grants and fixed charges 80 91

Other 1 4 

Total Spending 3,595 3,526

Aeronautics Mission

Personnel compensation and benefits $ 195 $ 201

Contractual services and supplies 303 336

Acquisition of assets 23 18

Grants and fixed charges 27 23

Other 1 2 

Total Spending 549 580

Cross-Agency Mission

Personnel compensation and benefits $ 1,211 $ 1,348

Contractual services and supplies 3,478 3,131

Acquisition of assets 111 168

Grants and fixed charges 68 94

Other 10 57

Total Spending 4,878 4,798

Education Mission

Personnel compensation and benefits $ 7 $ 3 

Contractual services and supplies 28 33

Grants and fixed charges 129 146

Total Spending 164 182

136 NASA FY 2012 Agency Financial Report

Schedule of Spending 
SCHEDULE OF SPENDING (continued) 

Section II: How was the Money Spent? (ctd.) 2012 2011

Office of Inspector General

Personnel compensation and benefits $ 32 $ 33

Contractual services and supplies 6 6 

Acquisition of assets - 1 

Total Spending 38 40

Space Technology Mission

Personnel compensation and benefits $ 103 $ -

Contractual services and supplies 124 -

Acquisition of assets 3 -

Grants and fixed charges 2 -

Total Spending 232 -

Construction and Environmental Compliance and Restoration

Personnel compensation and benefits $ 160 $ -

Contractual services and supplies 218 140

Acquisition of assets - 115

Total Spending 378 255

Other

Personnel compensation and benefits $ 19 $ 17

Contractual services and supplies 760 651

Acquisition of assets 29 54

Grants and fixed charges 3 4 

Other 1 1 

 727

 19,635 

Total Spending 812

Total Spending 19,562 

Amounts Remaining to be Spent 1,123 1,004

Total Amounts Agreed to be Spent $ 20,685 $ 20,639 

Section III: Who did the Money go to?

Federal $ 1,319 $ 1,203

Non-Federal

Total Amounts Agreed to be Spent

 19,366 

$ 20,685 

 19,436 

$ 20,639 

NASA FY 2012 Agency Financial Report 137
Summary of Financial Statement Audit 

and Management Assurances 

The following tables summarize the Agency’s FY 2012 Financial Statement Audit and 

Management Assurances. Table 1 summarizes the status of prior year--FY 2011 material 

weaknesses identified, if any by the Financial Statement Auditor. Table 2 summarizes the 

status of prior year material weaknesses, if any identified by NASA Management. 

Table 1: Summary of Financial Statement Audit 

Audit Opinion Unqualified 

Restatement No 

 

Beginning Ending 

Material Weaknesses Balance New Resolved Consolidated Balance 

None 0 0 0 0 0 

Total Material Weaknesses 0 0 0 0 0 

Table 2: Summary of Management Assurances 

Effectiveness of Internal Control Over Financial Reporting (FMFIA 2)

Statement of Assurance Unqualified 

Beginning Ending 

Material Weaknesses Balance New Resolved Consolidated Reassessed Balance 

None 0 0 0 0 0 0 

Total Material Weaknesses 0 0 0 0 0 0 

Effectiveness of Internal Control Over Operations (FMFIA 2)

Statement of Assurance Unqualified 

Beginning Ending 

Material Weaknesses Balance New Resolved Consolidated Reassessed Balance 

None 0 0 0 0 0 0 

Total Material Weaknesses 0 0 0 0 0 0 

Conformance With Financial Management System Requirements (FMFIA 4)

Statement of Assurance Systems conform. 

Beginning Ending 

Non-Conformances Balance New Resolved Consolidated Reassessed Balance 

Total non-conformances 0 0 0 0 0 0 

Compliance With Federal Financial Management Improvement Act (FFMIA)

Overall Substantial Compliance 

1. System Requirements met? 

2. Accounting Standards met? 

3. USSGL at Transaction Level met? 

Agency 

Yes 

Yes 

Yes 

Yes 

Auditor 

Yes 

138 NASA FY 2012 Agency Financial Report

NASA Headquarters

Washington, DC 20546

NP-2012-11-911-HQ