Property Management: NASA's Goal of Increasing Equipment Reutilization May Fall Short without Further Efforts
Published: 2009-01-30T00:00:00

Fast Facts:

Highlights:
section_title: Why GAO Did This Study
paragraphs: In 2010, the planned retirement of the space shuttle will require the National Aeronautics and Space Administration (NASA) to make disposal and reutilization decisions regarding over 1.2 million types of equipment. To facilitate these and other equipment management decisions, NASA recently invested $29 million in a new program: the Plant, Property, and Equipment (PP&E) Module--a component of NASA's Integrated Enterprise Management Program. GAO was asked to assess the effectiveness of NASA's processes, systems, and controls for managing its PP&E. This report addresses whether NASA (1) effectively designed controls over steps NASA identified as key to its controlled equipment reutilization process, including sending equipment to disposal, and (2) implemented policies, controls, and processes to enhance equipment reutilization. To answer these questions, GAO reviewed NASA equipment reutilization policy and conducted on-site visits at five NASA centers.
section_title: What GAO Found
paragraphs: Inconsistent descriptions and inaccurate information on the condition of equipment hamper the PP&E Module's ability to produce equipment matches and enhance reutilization. Although descriptions of equipment items are crucial for the new module to succeed in identifying equipment for reutilization, NASA has not provided detailed guidance on what should be included in the description field, leading to widely varying descriptions. For example, the same type of computer server equipment was described as a "disk array," "disk drive unit," and "storage array unit." GAO's physical inspections at two centers found that 83 of the 84 equipment items inspected were incorrectly coded as new and unused in the PP&E Module. These problems may lead to reutilization opportunities being overlooked. Further hampering equipment reutilization is the PP&E Module's lack of detailed equipment availability information. The module does not identify the extent to which each piece of equipment is in use, necessitating a potentially lengthy search process. For example, an end user searching for an oscilloscope could currently have to contact up to 1,700 other end users to determine the availability status of these equipment items. These conditions contribute to inadequate end user utilization of the NASA Property Web interface (N-PROP), the PP&E Module's automated component. N-PROP allows end users to perform online equipment management functions, which NASA anticipated would generate cost savings by facilitating equipment reutilization and eliminating manual processes. However, 98 of the 121 end users who were responsible for equipment selected from a NASA-wide statistical sample stated that they had never used either N-PROP or the prior systems, limiting the potential savings from implementing the new PP&E Module. NASA's existing policies and procedures regarding equipment screenings and annual walk-through inspections--both key controls in the equipment reutilization process--were carried out inconsistently, if at all, at the five centers GAO visited. Without specific guidance on how to implement NASA's equipment screening policy, centers failed to ensure that screenings occurred prior to purchasing new equipment, undermining the purpose of the screenings. Further, NASA does not require users to justify the need to purchase new equipment when a screening has identified equipment available for reutilization. In addition, required walk-through inspections intended to identify idle equipment were not conducted at one center and were ineffective at the other four. Equipment managers did not always follow up to ensure that the PP&E Module was updated and GAO's testing estimated that about 16 percent of NASA's controlled equipment (with a value of at least $230 million) was improperly listed as being actively in use and had been overlooked during annual walk-through inspections.

section_title: Letter
paragraphs: The National Aeronautics and Space Administration (NASA) stands at one  of the most important crossroads it has faced since its inception in 1958.  The implementation of its new space exploration policy—A Renewed  Spirit of Discovery: The President’s Vision for U.S. Space Exploration— and the planned retirement of the space shuttle in 2010 will require NASA  to move into a period of major transition. The planned retirement of the  shuttle will require the agency to make disposal and reutilization decisions  regarding over 1.2 million types of equipment, including “controlled  equipment,” which is the focus of this report. During this transition  period, it will be crucial that NASA have the processes, systems, and  controls in place to ensure maximum reutilization and effective  management and control of its equipment.
In response to your request, this report addresses whether NASA has  effectively (1) designed controls over steps NASA identified as key to its  controlled equipment reutilization process, including equipment sent to  disposal, and (2) implemented policies, controls, and processes to  enhance equipment reutilization. During our review, NASA implemented  its new Integrated Asset Management Property, Plant, and Equipment  (PP&E) Module on May 19, 2008, and we examined the initial  implementation of this module. However, we did not review or assess  whether NASA followed best practices in customizing and implementing  the PP&E Module, which NASA designed to enhance visibility,  accountability, and management of PP&E.
In conducting this review, we    evaluated the design of key steps in NASA’s reutilization process by  reviewing and comparing NASA’s equipment management policies and  procedural guidance for equipment management and reutilization with  federal property management regulations and other property management  standards, including GAO’s standards for internal control, and assessed  key aspects of PP&E Module controls; reviewed information regarding the equipment reutilization process at five  centers, interviewed relevant NASA personnel to obtain their views on the  equipment reutilization process and the design and implementation of the  PP&E Module in facilitating equipment reutilization, and observed NASA  employees as they demonstrated the PP&E Module’s equipment  management, search, and disposal capabilities; and   selected a statistical random sample of equipment recorded in NASA’s  legacy NASA Equipment Management System (NEMS) and visited five  centers to determine whether equipment recorded as actively being used  was accurately recorded and transferred to the PP&E Module for reuse or  disposal.
We conducted this performance audit from December 2007 through  January 2009 in accordance with generally accepted government auditing  standards. Those standards require that we plan and perform the audit to  obtain sufficient, appropriate evidence to provide a reasonable basis for  our findings and conclusions based on our audit objectives. We believe  that the evidence obtained provides a reasonable basis for our findings  and conclusions based on our audit objectives. Additional details of our  scope and methodology are provided in appendix I.
We requested comments on a draft of this report from the NASA  Administrator or his designee. Written comments from the Deputy  Administrator are presented and evaluated in the Agency Comments and  Our Evaluation section of this report and are reprinted in their entirety in  appendix II.
subsections: section_title: Background
paragraphs: NASA’s mission is to pioneer the future in space exploration, scientific  discovery, and aeronautics research. To accomplish its mission, NASA  procures, fabricates, and maintains significant amounts of equipment. For  example, as of September 30, 2008, NASA reported that it had  approximately 307,000 controlled equipment items, costing $11.5 billion.
In April 2000, NASA launched the Integrated Enterprise Management  Program (IEMP), which is expected to improve the efficiency of many of  its financial and management functions. The IEMP system is intended to  promote standardization and integration of business processes and  systems across the agency, and various components have been designed  and implemented since its launch in 2000. On May 19, 2008, NASA  implemented the PP&E Module agencywide, which cost about $29 million,  and is designed to improve its management of and provide accountability  over the entire life cycle of controlled equipment.
The PP&E Module replaced NASA’s legacy equipment management  systems—NEMS and the NASA Property Disposal Management System  (NPDMS). The module was intended to allow end users to perform such  tasks as equipment searches—to identify equipment that may be available  for reutilization—acceptance, rejection, and transfer. The module was  designed, among other things, to allow equipment end users to compare  their equipment needs with equipment located anywhere within NASA  through two critical reutilization subcomponents, N-PROP and DSPL. N- PROP is a Web-based interface that allows end users to directly access the  module and view equipment located at all NASA centers, while DSPL is the  new disposal interface, which allows users to view equipment located in  disposal warehouses agencywide. Prior to the implementation of the  PP&E Module, NASA employees and contractors were limited to viewing  underutilized or excess equipment physically located at their local  centers.
NASA anticipates annual operational cost savings as a result of  implementing the PP&E Module. As part of the President’s fiscal year 2009  budget submission, NASA reported that the implementation of the PP&E  Module would result in annual operational cost savings of approximately  $19.6 million by eliminating manual processes and increasing the  reutilization of equipment.
subsections: section_title: NASA’s Property Management Organizational Responsibilities
paragraphs: According to NASA’s equipment management policy and procedural  guidance, property management and equipment reutilization at NASA  involves several key players:  The Logistics Management Division, located at NASA headquarters in  Washington, D.C., is part of NASA’s Office of Infrastructure and  Administration and is responsible for establishing policies and procedures  that govern the agency’s equipment management activities. The Logistics  Management Division is also responsible for (1) assisting NASA centers in  the development and operation of internal processes, procedures, and  systems to ensure their compatibility with agency programs;   (2) establishing necessary agency performance measures and reports on  the overall implementation of equipment management programs;   (3) conducting reviews and overseeing the implementation of equipment  management activities; and (4) defining training requirements to ensure  properly trained property personnel across the agency.
Individual end users, such as scientists or engineers, have a duty to protect  and conserve government property assigned to them and should not use  such property, or allow its use, for other than authorized purposes. Each  piece of equipment is assigned to an end user, who is responsible for  ensuring that the equipment is used only in approved NASA programs and  projects and notifying the property custodian when the equipment is no  longer being actively used.
Property custodians are designated by the director or chief for each  property management area or program. Their responsibilities include  maintaining records for all controlled equipment assigned to them,  identifying controlled equipment no longer needed for NASA programs or  projects, and coordinating its disposition with the end users.
NASA division directors (or equivalent organization heads) are the primary  officials responsible for equipment assigned to their organizations. This  responsibility includes performing annual walk-through inspections to  identify inactive equipment and ensuring that equipment no longer  required for the performance of a specific NASA program or project is  made available to others or properly disposed of.
Supply equipment management officers are responsible for managing each  centers’ equipment program, including implementing the necessary  equipment control procedures to ensure proper accountability for center  equipment; establishing a process to ensure that all personnel associated  with the utilization of government equipment receive documented, up-to- date property end user training; ensuring that end users are aware of the  requirement to identify inactive equipment and ensure its reuse or  disposal; and designating property disposal officers and center equipment  managers to perform screenings for equipment estimated to cost $25,000  or more.
Property disposal officers are responsible for managing and screening  NASA’s excess equipment inventory—equipment recorded in DSPL—prior  to a NASA or contractor employee initiating a purchase request for new  equipment costing $25,000 or more.
The center equipment managers are responsible for ensuring each center’s  compliance with the federal property management regulations to  maximize equipment reutilization and to minimize procurement of new  equipment. New purchase requests costing more than $25,000 are to be  routed through the center equipment manager, or designee, to perform a  second screening of excess equipment recorded in the PP&E Module. In  addition, the center equipment manager is responsible for ensuring that  equipment records are adjusted to reflect the results of all equipment  inspections.
section_title: Overview of Reutilization Process at NASA Centers
paragraphs: To reduce the unnecessary procurement of new equipment, federal  property management regulations require each executive agency to make  underutilized and excess equipment available for reutilization within the  agency and, if not needed, to other agencies. NASA equipment  management policy and procedural guidance require centers to  continuously inspect equipment under their control to ensure maximum  utilization. Excess and underutilized equipment that is available for  reutilization should be identified in the PP&E Module through ongoing  review by equipment end users, annual walk-through inspections, and  each center’s periodic physical inventories.
Once a piece of equipment is determined to be excess or underutilized,  NASA end users have the option to decide whether to transfer it to  disposal—through the property disposal officer—or make it available to  others through a transfer. If the end user elects to send the equipment to  disposal, the equipment is physically transferred to the center’s disposal  warehouse and made available—through DSPL—to all NASA centers for  21 days. If the equipment is not claimed by any NASA projects or programs  within this time period, it is transferred to the General Services  Administration (GSA) and made available to other federal and state  agencies for 21 days and is donated or sold to other institutions thereafter.
The PP&E Module was designed to facilitate the process of transferring  excess and underutilized equipment among end users by providing  transparency on all NASA-wide equipment and allowing end users to  directly make excess equipment available to other end users. End users,  who are not currently using a certain equipment item, may decide not to  transfer it to disposal because it is still in good working condition,  continues to have technological relevance, or has potential for future use  within the user’s project or program area. Upon using the module to find  existing equipment that may suit their needs, end users are to contact  other end users to whom that equipment is assigned to determine if it is  available for reutilization. If available, a direct end user to end user  transfer can take place. Figure 1 shows the key steps involved in NASA’s  equipment reutilization process.
section_title: Overview of NASA’s Equipment Screening Process
paragraphs: Equipment screening is a key part of NASA’s reutilization process and is  critical to identifying controlled equipment that can be reutilized. Prior to  purchasing new equipment, NASA equipment management policy and  procedural guidance require NASA employees and contractors to evaluate  alternative methods for meeting their equipment needs, such as utilizing  existing equipment and leasing or borrowing equipment from other NASA  projects or programs on a temporary basis. As such, equipment screening  is a control that should prevent unnecessary new equipment purchases  when equipment is on hand and available to meet the purchaser’s needs.  However, users are not required to reutilize equipment identified through  the screening process or to provide any justification for purchasing new  equipment instead.
Prior to initiating a procurement request for controlled equipment that is  expected to cost $25,000 or more, NASA equipment policy and procedural  guidance require the requesting office to contact the center’s property  disposal officer, or designee, and request a screening of NASA’s equipment  that has been transferred to disposal to determine the availability of  equipment that could satisfy the requirement. If a match is not identified, a  purchase request can be prepared. All such purchase requests ($25,000 or  more) are to be routed through the center equipment manager, or  designee, who is required to conduct a second screening of NASA’s  existing equipment recorded in the PP&E Module before processing the  purchase requests. The center equipment manager, property disposal  officer, or their designees are required to search based on the  manufacturer model and, if no items are found, optionally on the item  description. As an optional screening step, NASA guidance also permits  the screening of non-NASA excess equipment sites—such as GSA’s XCESS  (excess equipment depository) database. For controlled equipment  purchases of less than $25,000, NASA’s policy and procedural guidance  encourage, but do not require, end users to use the PP&E Module to  search NASA-wide for excess equipment. Figure 2 illustrates NASA’s  equipment screening process.
section_title: Ineffective Controls Hindered Equipment Reutilization
paragraphs: Improvements in the design of key controls associated with the PP&E  Module could help NASA increase equipment reutilization and better  enable it to realize cost savings. Inconsistent and unreliable descriptive  information and limited information about equipments’ availability hinder  NASA’s ability to effectively identify and reutilize equipment. If end users  lack confidence in the reliability of the PP&E Module’s information they  will be less likely to use it, thereby limiting opportunities to identify  equipment available for reutilization.
subsections: section_title: Unclear Guidance on Equipment Descriptions and Usability Prevent Matches That Could Identify Equipment for Reuse
paragraphs: Inconsistent descriptions, inaccurate information on physical condition,  and limited information about the equipment’s availability hamper the  PP&E Module’s ability to produce equipment matches. Though NASA  equipment management policy and procedural guidance only require  screeners to search by manufacturer model, screeners told us that they  seldom used manufacturer model numbers, but immediately searched the  description field and that the model numbers were not always available.  When users ask for a new piece of equipment, such as a digital camera,  they do not need to provide a preferred manufacturer or model number.  The descriptions should focus on equipment features and capabilities that  accurately reflect users’ needs based upon performance criteria, a basic  component of the federal procurement process. The descriptions of  equipment items, therefore, are crucial to the success of the new module  in identifying equipment for reutilization.
NASA has not provided adequate oversight and detailed guidance on what  type of information should be included in the description field. We found  that without detailed guidance, equipment descriptions varied widely  among NASA centers. According to NASA officials, along with entering  model number information, property management officials are responsible  for entering the descriptions in the PP&E Module using the Department of  Defense Logistics Information System (DLIS) cataloging system. For  example, a digital phosphor oscilloscope, a color digital oscilloscope, an  analog oscilloscope, and an infinium oscilloscope can all be described as  an oscilloscope. Unfortunately, we found that this system does not ensure  that equipment descriptions are consistently and accurately entered into  the PP&E Module. For example, items that should have been listed as  video frequency equipment racks were described as “disciplined frequency  standard” and a camera lens cover as a “rear cover multicontrol.” In  addition, the same type of computer server equipment was described as a  “disk array,” “disk drive unit,” and “storage array unit.” Similarly, a  generator was variously described as a “signal plug in generator,”  “modulator,” “plug in unit,” and “tuning unit.” These differences in  descriptions may lead to reutilization opportunities being overlooked.
Inaccurate information regarding the physical condition—or usability—of  equipment in the PP&E Module creates another barrier to reutilization.  The PP&E Module has a field where users can indicate the physical  condition of equipment items. At two centers, our physical inspection of  84 equipment items that were transferred to disposal determined that 83 of  the items were incorrectly coded as new and unused in the PP&E Module.  Based on our physical inspections of these items, none of the 83  equipment items were in original packaging and all appeared used. Three  of the 83 equipment items were computers with their hard drives removed,  in accordance with NASA policy, and thus not in usable condition.  Further, several end users we interviewed reported that they had retrieved  excess computers described as new and unused (in the NASA legacy  property disposal system NPDMS) only to find that the hard drives had  been removed. As a result, these end users told us that they do not have  confidence in the equipment’s condition as reported in the PP&E Module.
section_title: Limited Information on Equipment Availability Impedes Reutilization
paragraphs: Another potential barrier to equipment reutilization is the limited amount  of information in the PP&E Module on the availability of equipment. All  equipment listed in the PP&E Module is categorized as actively in use until  a determination is made that it will no longer be needed and the applicable  record is transferred to the DSPL submodule and classified as inactive.  According to NASA officials, this “active” equipment includes equipment  that is used daily as well as idle equipment that is still in working  condition—and still technologically relevant—that may be needed at some  future date by the end user to whom it is assigned. For example,  equipment that is used on a daily basis; on a regular basis, such as 2 days a  week or monthly; or episodically—2 months and then not again for 2  months—or even equipment that is used once a year is all classified as  “active” in the module. According to NASA officials, the PP&E Module was  partially designed to facilitate temporary transfers of this idle equipment  among end users. Although the PP&E Module provides visibility to these  types of idle equipment, it does not identify the extent to which the  individual equipment items are being used. Lacking more specific  information on the availability status of equipment, end users must  perform a potentially lengthy search process of calling or e-mailing other  equipment end users individually to determine if the equipment identified  through the PP&E Module is available for utilization, as shown in figure 3.  As of September 30, 2008, NASA’s PP&E Module reported approximately  60,000 computers, 38,000 display units, 10,000 printers, 10,000 computer  servers, 2,700 digital cameras, and 1,700 oscilloscopes. An end user  searching for an oscilloscope, for example, would currently have to  choose which of 1,700 other end users to contact to determine the  availability status of their “active” oscilloscopes. Several equipment end  users and property custodians we interviewed told us that information  relating to the availability status of the equipment would be critical in  deciding whether to search for existing equipment to reutilize.
Suitable equipment matches and assigned  end users are identified in NASA property  system.
Screening end user or center equipment  manager must contact each potential match  individually (via e-mail or phone) in order to  determine if equipment is actually available. !
Matches do not indicate that identified  equipment is actually available.
According to IEMP program managers, a field indicating the availability  status of equipment was not included in the PP&E Module because the  information in NASA’s legacy NEMS, which included an equipment  availability status field, was not accurate. Rather than taking the necessary  steps to improve the accuracy of the information in NEMS, NASA elected  to exclude this field from the PP&E Module. However, the Financial  Systems Integration Office’s property management systems requirements  (initially published by JFMIP) directs property management systems to  capture an equipment item’s current use status, which includes identifying  whether an equipment item is currently in use.
Because of unreliable equipment descriptions and limited information on  availability, NASA did not require the PP&E Module to consistently  identify available equipment that could satisfy the needs of equipment  requesters. At the time of our visits to the five centers—occurring from  May through July 2008—the equipment screeners told us that the searches  that they performed up to that point in fiscal year 2008 had failed to  identify any equipment matches that would satisfy the needs of equipment  requesters. Because the NASA center screeners we interviewed did not  maintain detailed documentation on the number of equipment searches  performed during the fiscal year, we were unable to determine the number  of screenings that had been made up to the time of our visit.
section_title: Inadequate End User Participation May Limit Potential Cost Savings
paragraphs: Unreliable equipment descriptions and limited information on availability  contribute to inadequate end user utilization of N-PROP and limit potential  cost savings that could be achieved through process automation and  increased equipment reutilization. N-PROP is the window to the PP&E  Module and the only automated component that provides direct access to  the equipment database. It allows end users to perform online equipment  management and accountability functions, such as accepting or rejecting  new equipment from vendors, declaring equipment as excess, and  screening for equipment to reutilize throughout the agency. According to a  September 2008 NASA Office of Inspector General (OIG) report, it was  anticipated that these features would generate operational cost savings  and reduce unnecessary procurements by facilitating equipment  reutilization, promoting intercenter equipment transfers and loans, and  eliminating manual processes.
The majority of end users we interviewed—98 of 121—stated that they had  never used N-PROP (or the prior systems) to screen equipment for  reutilization. Although this lack of use of N-PROP may be due in part to  the timing of our review, which coincided with initial implementation of  the PP&E Module, these responses also reflect a lack of end user  familiarity with and use of equipment management functions in the prior  systems. In addition, as the NASA OIG reported in September 2008, NASA  took steps to incorporate stakeholders in the requirements development  process of the PP&E Module to ensure that their needs were met.  Stakeholders identified and reviewed project requirements and, during  system development, helped determine whether each portion of the  system would meet their requirements. However, during our site visits we  observed that few end users appeared to be interested in learning about  the new module or taking a greater role in equipment reutilization. The  reasons end users said that they had not used the PP&E Module included  that they (1) had not taken the training NASA has made available on the  new module, (2) were not familiar with the equipment management and  screening features, or (3) had not obtained a password needed to use the  module. Considering the key role that end users need to play in achieving  cost savings through equipment management responsibilities, these facts  indicate that steps taken by NASA to encourage end user participation  may have been insufficient to change end users’ perceptions and  expectations.
Our interviews further disclosed that a substantial number of end users  did not view equipment management as necessary or important, another  factor that could limit the likelihood that they would use the new module.  Among the reasons that some end users gave for not screening through N- PROP before initiating a new procurement was that they preferred new  equipment; others told us that they viewed existing equipment as  undesirable and unlikely to meet their projects needs and they did not  consider the equipment description and physical condition reported in the  PP&E Module to be reliable, or that they were unfamiliar with the module.  Furthermore, in addition to responding to our interview questions, 29 of  the 121 end users we spoke with volunteered that they had more  important tasks to perform than managing equipment, did not view  property management as a key responsibility in their day-to-day duties, did  not want to learn how to use the module for equipment management, or  were not familiar with or had never heard of the new module.
End users were not required to use the PP&E Module and most end users  we spoke with had not used the PP&E Module at the time of our visits.  Therefore, property custodians had assumed many equipment  management responsibilities, perpetuating manual procedures that the  new module sought to automate. Because property custodians cannot  accept, receive, or transfer equipment for the end users, they must obtain  the end users’ signatures and submit the documentation to the centers’  logistics property management officials. As we previously reported, the  number of equipment items and end users assigned to each property  custodian can vary widely—with some property custodians responsible  for as many as 4,000 equipment items. According to NASA officials, one  use envisioned for the PP&E Module includes end users negotiating with  each other to work out when to share equipment. This is one of NASA’s  approaches to enhance equipment reutilization, but if many end users are  not using the system this is unlikely to occur. It is unrealistic to expect  property custodians to keep up on the nuances of equipment usage, such  as whether equipment that is used on an episodic basis is currently in use  or not, and therefore they are not in a position to determine whether other  uses could be negotiated. Continuing to rely upon property custodians  rather than focusing efforts to encourage direct end user involvement will  likely reduce the potential savings that NASA intended to achieve through  the PP&E Module by automating manual processes. Therefore, it will be  important that NASA take steps to enhance or provide additional  incentives so that end users recognize the benefits of reutilizing equipment  and encourage them to use the PP&E Module to identify potential matches  and negotiate with other users to help NASA increase equipment  reutilization. Steps to enhance end user participation could include setting  performance expectations for end users, setting equipment reutilization  goals by program or project, tracking agency performance measures on  equipment reutilization, providing awards and recognition to highlight  effective reutilization practices, emphasizing available N-PROP training,  and including goals for equipment reutilization in Senior Executive Service  contracts.
section_title: NASA Has Not Implemented Effective Policies and Detailed Procedures to Enhance Equipment Reutilization
paragraphs: NASA’s existing policies and procedures related to equipment reutilization  were either not being carried out or were being carried out inconsistently  at the five centers we visited. In addition, NASA’s equipment screening  policy is not sufficiently detailed. Before purchasing equipment costing  $25,000 or more, NASA equipment management policy requires centers to  screen the agency’s property records to determine whether existing  equipment could satisfy the request, but does not require that requesters  utilize such equipment or justify their need for new equipment. NASA  further requires that annual walk-through inspections be conducted to  identify excess or underutilized equipment that may be reutilized  elsewhere in the agency. These walk-through inspections provide a key  control to help ensure that equipment is fully utilized. During our visits we  found that not every center complies with these requirements and those  that were doing the walk-through inspections had different processes and  effectiveness, sometimes undermining NASA’s goal of equipment  reutilization. As noted earlier, end users’ perception of the new module  may limit the extent to which they use it for managing property, including  equipment reutilization.
subsections: section_title: Equipment Screening Policies and Procedures Are Not Sufficient to Ensure Comprehensive and Consistent Implementation of NASA’s Equipment Reutilization Policy
paragraphs: Although NASA provides general screening policy for centers, it has not  provided centers with specific guidance on how to implement this policy  to conduct effective and consistent screenings. NASA encourages centers  to customize their equipment management procedures to meet local  requirements; however, none of the five centers we visited had developed  local screening procedures despite the lack of reliable information in the  PP&E Module that would help identify potential matches. The centers  have failed to implement effective screening controls to ensure that  existing equipment is screened before they purchase new equipment.  NASA’s screening policies state that all center procurement requests for  items of equipment with an estimated cost of $25,000 or more must be  routed through the center equipment manager for screening. However, as  of September 30, 2008, 92 percent of NASA’s controlled equipment  consisted of items costing less than $25,000.
In addition, the policy does not require reuse nor does it ask for a  justification for decisions not to reutilize available equipment. Further, the  policy does not require users to provide support that they have a valid  program need to purchase new equipment instead of reutilizing available  equipment. Interviews with equipment screeners at the five centers we  visited disclosed that the screening processes varied among the centers  and none of the processes provided assurance that existing equipment was  thoroughly screened on a consistent basis before new equipment was  purchased. One problem was that NASA has not required uniform  implementation of a PP&E Module feature that officials from two of the  five centers we visited were unaware of, and thus were not using. This  feature was designed to suspend new procurements until the screening  process has been completed. Another problem was that the five centers  we visited were not following up to see if end users were purchasing new  equipment in lieu of reutilizing equipment items identified during  screening. One center did not have a designated center equipment  screener to conduct searches. Another center made equipment  procurements regardless of the outcome of the screening process. For  example, an equipment screener at one of the centers identified a digital  oscilloscope—an instrument commonly used at NASA for testing—that  was available at another center. However, upon notifying the purchaser  that a potential equivalent oscilloscope was available, the screener was  told that the requester preferred to purchase a new oscilloscope. In  another case, upon notifying a purchaser who had requested a  spectrometer—test equipment—that six equivalent spectrometers were  located, the screener was told that new equipment had already been  purchased. As a result, the screening process failed to prevent the  procurement of new equipment when equivalent equipment was available.
Although the other three centers were using the procurement suspension  control function to ensure screening, the equipment screener for one  center told us that only NASA contractor equipment requests were  screened, rather than all new procurements. Furthermore, we found that  NASA’s Logistics Management Division lacked the oversight to ensure that  this required screening occurs. At the time of our visits, 124 of 220  equipment end users and property custodians stated that they had never  requested a screening through the property disposal officer or center  equipment manager or used the PP&E Module or its predecessor— NEMS—to screen existing equipment before initiating and processing a  request to purchase equipment.
section_title: NASA-Wide Implementing Procedures for Walk- Through Inspections Are Not Sufficient to Ensure Consistent Performance
paragraphs: At the time of our visits the five NASA centers were not conducting  required annual walk-through inspections consistently, and sometimes not  at all. According to NASA equipment management policy, the annual walk- through inspections are intended to identify equipment that is not being  used or is no longer needed for ongoing NASA programs or projects, and  can be made available for utilization in another program or NASA center  or transferred to disposal. At each NASA center, the division director or  equivalent organization head is responsible for ensuring that his or her  staff conduct annual walk-through inspections. After staff complete an  annual walk-through inspection, the division director is required to  prepare and send a written memorandum, documenting the results of the  inspection, to the center’s supply equipment management officer. In  addition, the center equipment manager is required to ensure that the  PP&E Module is updated to reflect the results of the inspection.
One of the five centers we visited did not conduct these required  inspections and the other four did so in varying manners and to varying  degrees. For example, none of the centers maintain sufficient  documentation to determine whether the PP&E Module was updated to  reflect the results of the walk-through inspections, thus offering no  assurance that this control was effective. At two of these four centers,  directors prepared memorandums to document the results of the annual  walk-through inspections that outlined the equipment items’ names and  equipment control numbers and what specific actions were needed. At the  remaining two centers, directors documented that walk-through  inspections were performed, but not the detailed results of the  inspections. All four center equipment managers told us that they did not  follow up to ensure that the equipment management system—either NEMS  or the PP&E Module—was updated to reflect the changes identified by the  inspections. And none of the centers maintained any evidence to show  when the property system was updated, if it was updated at all.
Because of these inconsistencies, NASA was unable to demonstrate  whether the annual walk-through inspections met their objectives. Our  testing of equipment in NASA’s legacy NEMS (as of September 30, 2007)  estimated that about 16 percent of NASA’s controlled equipment (with a  value of at least $230 million) was improperly listed as being actively in  use in an ongoing program, and had been overlooked during annual walk- through inspections. In accordance with NASA equipment management  policy, this equipment should have been identified as excess or  underutilized and made available for reutilization or disposal. We selected  our sample in April 2008, before the PP&E Module’s implementation. All  equipment in our sample was transferred from NEMS to the PP&E Module,  including the sample items that were inaccurately described as actively in  use. Table 1 contains examples of equipment that we identified during our  visits to the five centers during the months of May through July 2008 that  was inaccurately reported in NASA’s NEMS as actively used by a NASA  program or project.
We did not assess whether any of the above equipment could have been  reutilized to avoid the purchase of new equipment because NASA could  not provide this information. However, these items should have been  identified during prior annual walk-through inspections and the property  management systems should have been updated to reflect that this  equipment was not being used. Correctly following NASA policy in this  area would have increased the chance that the equipment could have been  reutilized by other end users. In addition, NASA officials reported that in  fiscal year 2008, the agency reinstituted performing compensating controls  reviews, which are designed to evaluate the adequacy and consistency of  NASA policy execution and procedural compliance with NASA guidance.  NASA reported that it conducted four reviews in the third and fourth  quarters of fiscal year 2008.
section_title: Conclusions
paragraphs: NASA has attempted to more efficiently manage its controlled equipment.  Given NASA’s current and projected budget constraints, cutting costs  through equipment reutilization and improved equipment management  efficiencies will be critical if it is to free up vital resources for other  mission-related objectives. Unfortunately, ineffective controls over  equipment reutilization and limited utilization of the new system may  prevent the PP&E Module from fully delivering on its potential cost  savings. These shortcomings may prevent the PP&E Module from  providing NASA employees and contractors with the tools needed to make  informed decisions regarding the disposal or reutilization of equipment,  including over 1.2 million types of equipment if the space shuttle is retired  in 2010 and NASA transitions to its new space exploration policy as  planned.
Strong leadership will be critical to promoting and enforcing existing  equipment reutilization requirements, emphasizing the need for better  equipment accountability, and stressing the importance of reutilizing  equipment. Strengthening NASA-wide oversight and monitoring controls  and processes could help NASA managers more effectively oversee  NASA’s compliance with its policies and procedures. Effectively managing  the new PP&E Module could help NASA achieve increased savings from  equipment reutilization and provide Congress and other stakeholders with  more accurate and up-to-date information needed to make sound  management decisions.
section_title: Recommendations for Executive Action
paragraphs: We recommend that the NASA Administrator direct the Assistant  Administrator for the Office of Infrastructure and Administration to take  the following five actions to enhance comprehensive and consistent  equipment reutilization:    Develop and implement specific guidance, establish a mechanism to  oversee implementation, and provide the necessary training to assist  NASA employees and contractors in providing clear, consistent, and  accurate equipment descriptions and key information in the PP&E  Module, including the physical condition (usability). NASA management  should determine the extent to which it is cost effective to apply this new  guidance retroactively.
Modify the PP&E Module to capture information on the anticipated and  actual usage (availability) of equipment assigned to end users at the time  the equipment is accepted and provide a mechanism to ensure that this  information is updated as appropriate.
Provide incentives so that end users recognize the benefits of reutilizing  equipment and encourage them to fully use the PP&E Module to identify  potential matches and negotiate with other users to help NASA increase  equipment reutilization.
Revise NASA equipment management policy to require end users to justify  any valid program needs to purchase new equipment instead of reutilizing  available equipment and consider whether the $25,000 screening threshold  adequately maximizes reutilization. Establish NASA-wide screening  procedures across the centers and a process for monitoring  implementation to maximize reutilization of controlled equipment.
Establish NASA-wide procedures for conducting and reporting the results  of annual walk-through inspections to update the data in the PP&E Module  to facilitate equipment reutilization and disposal, along with an oversight  mechanism to ensure implementation.
section_title: Agency Comments and Our Evaluation
paragraphs: In written comments on a draft of this report, which are reprinted in  appendix II, NASA’s Deputy Administrator agreed with four of our five  recommendations. NASA did not concur with our recommendation to  modify the PP&E Module to capture information on the anticipated and  actual usage (availability) of equipment assigned to end users at the time  the equipment is accepted and provide a mechanism to ensure that this  information is updated as appropriate. NASA stated that records for  equipment in the PP&E Module reside within the Equipment Master  Record (EMR) module and are listed as “active.” NASA’s further stated  that because NASA’s “active” equipment is now visible NASA-wide, there  is no need to design and implement a separate status category for  equipment listed in the EMR. Further, it stated that this current level of  “active” equipment visibility provides the opportunity for programmatic,  technical, and scientific experts to discuss possible reuse through loans or  borrowing, coordinating through their property custodians or equipment  managers.
We continue to believe that not also including information in the PP&E  Module on the availability of equipment (the extent to which “active”  equipment is used, or is likely to be used) will present a barrier to effective  and efficient equipment reutilization. Specifically, because the module  does not identify the extent to which each piece of equipment is being, or  is likely to be, used, such as on a weekly or monthly basis, potential end  users must perform a potentially lengthy search by contacting other  equipment end users to determine the extent to which their “active”  equipment is available for utilization. For some types of equipment  commonly used in NASA, the potential users one would need to contact to  research actual availability of equipment listed as “active” could number in  the hundreds. This potentially labor-intensive research may serve as a  disincentive for users to try to identify when they could share equipment  rather than purchase new equipment.
Moreover, as discussed in our draft, our review identified some equipment  in storage that NASA listed as actively in use. In addition, the Financial  Systems Integration Office’s property management systems requirements  direct property management systems to capture an equipment item’s  current use status.
As agreed with your office, unless you publicly announce the contents of  this report earlier, we plan no further distribution until 30 days from the  report date. At that time, we will send copies to interested congressional  committees, the NASA Administrator, and the Director of the Office of  Management and Budget. The report also will be available at no charge on  the GAO Web site at http://www.gao.gov.
If you or your staff have any questions about this report, please contact me  at (202) 512-9095 or raglands@gao.gov. Contact points for our Offices of  Congressional Relations and Public Affairs may be found on the last page  of this report. GAO staff who made major contributions to this report are  listed in appendix III.
section_title: Appendix I: Scope and Methodology
paragraphs: To address whether the National Aeronautics and Space Administration  (NASA) has effectively (1) designed controls over steps NASA identified as  key to its controlled equipment reutilization process, including equipment  sent to disposal, and (2) implemented policies, controls, and processes to  enhance equipment reutilization, we reviewed prior NASA’s Office of  Inspector General reports and independent public accountants’ reports as  well as our own prior reports and related recommendations. We also  evaluated NASA management’s responsiveness to observations and  recommendations made in prior audit reports related to NASA’s property  management and utilization of equipment.
We evaluated the design of NASA’s internal controls by reviewing and  analyzing NASA equipment policy and procedural guidance for equipment  management, reutilization, and disposal and comparing NASA’s  equipment management policy and procedural guidance to federal  property management regulations and other standards, including GAO’s  standards for internal control. We also obtained and reviewed NASA  equipment management policy and procedural guidance for screening  existing equipment inventory; performing annual walk-through  inspections; and managing, reutilizing, and disposing of equipment. To  enhance our understanding of NASA’s process for ensuring maximum  utilization of equipment, we conducted walk-throughs at five NASA  centers where our sample equipment items were assigned: Goddard Space  Flight Center, Johnson Space Center, Kennedy Space Center, Langley  Research Center, and Marshall Space Flight Center. We interviewed NASA  officials responsible for equipment management and reutilization,  including the Director of the Logistics Management Division, Logistics  Management Division management analysts, asset managers, agency  equipment program managers, and supply equipment management officers  at headquarters and at each of the five NASA centers we visited and  warehouse officials, property disposal officers, center equipment  managers, center equipment screeners, property managers, property  custodians, procurement officials, equipment end users, and officials from  the Office of the Chief Financial Officer.
To determine the accuracy of the equipment recorded as “active” in the  NASA Equipment Management System (NEMS) database at the time we  started our review, we selected a random probability sample of all  equipment in NEMS, with an availability status code of “active.” We  obtained data from NEMS as of September 30, 2007, and identified 299,386  equipment items with availability status code “A” or “active,” representing  the sample universe. Based on previous audit work regarding the  reliability assessment of NASA’s accounting and property data, we  determined if inactive equipment was erroneously coded as active in  NEMS. We tested the random probability sample of 160 transactions, from  five NASA centers, from the population of transactions with the  availability status code “A” to determine the accuracy of the recorded  availability status code. NASA implemented its new Property, Plant, and  Equipment (PP&E) Module on May 19, 2008. To ensure that the sample  transactions we extracted from the legacy system were transferred and  recorded in the PP&E Module, we traced each sample item to the PP&E  Module, and verified that the sample transactions were transferred and  recorded in the module. However, we did not determine whether all legacy  system transactions were recorded in the PP&E Module, nor did we  review or assess whether NASA followed best practices in designing and  implementing the PP&E Module.
We selected a two-stage cluster sample with probability proportional to  size with replacement at the first stage of selection. At the first stage, we  selected eight NASA centers (clusters) with the probabilities of selection  being proportional to the number of pieces of equipment each center had  in the database (i.e., the larger centers had a better chance of being  selected in the sample). Each time a center was selected, it was returned  to the sample universe and given an additional chance of being selected.  Therefore, it was possible for a center to be selected more than one time  in the sample. We sampled eight clusters that yielded five distinct NASA  centers.
At the second stage, we selected a simple random sample of 20 pieces of  equipment, independently for each time a center was selected at the first  stage. The total sample size of items is 160 (8 clusters of 20 items per  cluster). Table 2 shows the description of the sample population and total  number of sample of transactions.
Because we selected a sample of equipment, our results are estimates of  the population and thus are subject to sample errors that are associated  with samples of this size and type. Our confidence in the precision of the  results from this sample is expressed in 95 percent confidence intervals,  which are expected to include the actual results in 95 percent of the  samples of this type. We used a ratio estimator to generate estimates of the  proportion and the total dollar amounts associated with equipment that  were inaccurate and calculated a one-sided 95 percent confidence lower  bound. Based on our sample results we estimate that about 16 percent (the  95 percent confidence interval ranges from 10 to 26 percent) of the  equipment with availability status code “A” in the NEMS database as of  September 30, 2007, was miscoded. Further, we are 95 percent confident  that this miscoded equipment represents at least 2 percent of the total  dollar amount of the equipment in NEMS with availability status code “A,”  or at least $230 million. We also traced each sample item to the PP&E  Module to verify that the sample transactions were transferred and  recorded in the module. However, we did not determine whether all legacy  NEMS transactions were recorded in the PP&E Module.
Incomplete and inaccurate data precluded us from examining the extent to  which waste and inefficiencies exist in NASA’s reutilization of equipment.  Lack of common data fields, missing information such as equipment’s  model and manufacturer, and the lack of clear and consistent descriptions  prevented us from comparing fiscal year 2007 equipment purchase  transactions to NASA’s disposal activity; this prevented us from identifying  instances and dollar values where NASA purchased new equipment rather  than reutilizing available equipment.
To determine the extent to which NASA’s planning and initial  implementation of the new PP&E Module addressed problems and control  weaknesses we identified in NASA’s reutilization of equipment, we  reviewed and analyzed NASA equipment management policy and  procedural guidance for the PP&E Module and module implementation  and planning documents, including briefings and overviews of PP&E  Module requirements. We reviewed and analyzed NASA equipment  management policy and procedural guidance for equipment reutilization at  the five centers we visited. We also interviewed the five visited centers’  PP&E Module project managers to obtain their views on the PP&E Module  and its impact on equipment reutilization.
We administered a data collection instrument to obtain end users’ and  property custodians’ views on the PP&E Module and its impact on  equipment reutilization. We interviewed a total of 220 end users and  property custodians who are accountable for all government-owned  equipment assigned to them. We interviewed 121 end users and 99  property custodians who were responsible for the items selected in our  statistical sample. We also observed equipment screeners and property  disposal officials as they demonstrated the PP&E Module’s equipment  search, disposal, and management capabilities. In addition, we conducted  physical inspections of equipment at two of the five centers visited that  reported new and unused equipment in the disposal system—DSPL—at  the time of our visit.
We conducted this performance audit from December 2007 through  January 2009 in accordance with generally accepted government auditing  standards. Those standards require that we plan and perform the audit to  obtain sufficient, appropriate evidence to provide a reasonable basis for  our findings and conclusions based on our audit objectives. We believe  that the evidence obtained provides a reasonable basis for our findings  and conclusions based on our audit objectives.
section_title: Appendix II: Comments from the National Aeronautics and Space Administration
section_title: Appendix III: GAO Contact and Staff Acknowledgments
subsections: section_title: GAO Contact
section_title: Acknowledgments
paragraphs: In addition to the contact named above, the following staff members made  key contributions to this report: Donald Neff, Assistant Director; James  Ashley; Fannie Bivins; Yvonne Dorcas; Patrick Frey; Inna Livits; and Jean  Mathew.