Inspectors General: Actions Needed to Improve Audit Coverage of NASA
Published: 2008-12-18T00:00:00

Fast Facts:

Highlights:
section_title: Why GAO Did This Study
paragraphs: GAO was asked to review the National Aeronautics and Space Administration (NASA) Office of Inspector General (OIG) and provide information on (1) the audit and investigative coverage of NASA; (2) the NASA OIG's audit and investigative accomplishments; (3) the NASA OIG's budget and staffing levels, including staff attrition rates; and (4) the results of external reviews of the NASA OIG. GAO obtained information from NASA OIG reports, interviews, and documentation.
section_title: What GAO Found
paragraphs: The fundamental mission of the statutory federal IG offices, including the NASA OIG, includes identifying areas for improved economy, efficiency, and effectiveness through independent and objective oversight and preventing and detecting fraud, waste, and abuse. Of the 71 reports issued by the OIG's Office of Audits in fiscal years 2006 and 2007, only 1 report had recommendations to address the economy and efficiency of NASA's programs and operations with measurable monetary accomplishments. Over the 5-year period of fiscal years 2003 through 2007, audit reports contributed to only 1 percent of the OIG's total monetary accomplishments. The remaining 99 percent came from the OIG's investigative cases. Of about $9 million in total reported monetary accomplishments from audits over the 5-year period, almost $7 million was from one audit completed in fiscal year 2007. When the monetary accomplishments of both audits and investigations in fiscal year 2007 are combined and compared to the OIG's budget of $34 million, the return for each budget dollar is $0.36. This calculation for all 30 OIGs with IGs appointed by the President and confirmed by the Senate averages $9.49, or 26 times that of the NASA OIG. The OIG's relative lack of monetary accomplishments from audits is due, at least in part, to the OIG's strategic and annual audit plans, which do not provide assurance that NASA's economy and efficiency will be addressed or that measurable monetary accomplishments will be achieved. We believe that during the planning process, the OIG should consult with an objective third party with experience in providing economy and efficiency audits with potential monetary savings. The OIG's budgets and staffing kept pace or did slightly better than all of NASA for these same resources during fiscal years 2003 through 2007. When comparing the fiscal year 2007 budgets of all 30 IGs appointed by the President and confirmed by the Senate with their respective agencies' budgets, the NASA OIG ranked 11th. Nevertheless, GAO noted that the OIG's ability to retain experienced audit personnel was adversely affected by a staff attrition rate that has increased from 12 percent to almost 20 percent over fiscal years 2003 through 2007. Due to the relatively high attrition rates, GAO believes that the OIG should use the assistance of an objective expert to identify the causes of staff turnover. The NASA OIG's most recent peer reviews for both audits and investigations have resulted in unqualified opinions. A recent investigation by the Integrity Committee of the President's Council on Integrity and Efficiency and the Executive Council on Integrity and Efficiency reported that the NASA IG had an appearance of a lack of independence. The investigation was closed, but corrective actions did not address this finding and the Integrity Committee considers the issue unresolved. This issue has been raised by members of the Congress as a limitation in obtaining independent oversight of NASA.

section_title: Letter
paragraphs: This report responds to your request that we review the operations and  activities of the National Aeronautics and Space Administration’s (NASA)  Office of Inspector General (OIG). The NASA OIG was established by the  Inspector General (IG) Act of 1978 to provide independent audits and  investigations of NASA’s programs and operations, promote economy and  efficiency, detect and prevent fraud and abuse, and recommend actions  for improvement.
In the three decades since passage of the IG Act, the IGs have played an  important role in enhancing government accountability and protecting the  government from fraud, waste, abuse, and mismanagement. In the current  environment of an escalating federal budget deficit and increasingly  limited resources, effective IG functions are needed to help transform  what government does and how it does business and to hold it  accountable for achieving real, positive, and sustainable results.
As discussed with your offices, we are providing information regarding   (1) the NASA OIG’s audit and investigative coverage of NASA, including  oversight of high-risk areas and NASA’s management challenges; (2) the  NASA OIG’s audit and investigative accomplishments; (3) the NASA OIG’s  budget and staffing levels, including staff attrition rates; and (4) the results  of external reviews of the NASA OIG, including peer reviews of its quality  assurance program and operations and an investigative report by the  Integrity Committee of the President’s Council on Integrity and Efficiency  (PCIE) and the Executive Council on Integrity and Efficiency (ECIE).
subsections: section_title: Scope and Methodology
paragraphs: To review the OIG’s audit oversight coverage of NASA, we obtained the 71  final reports from the Office of Audits as reported in the OIG’s semiannual  reports to the Congress for fiscal years 2006 and 2007, which included 46  audits with statements of compliance with Government Auditing  Standards and 25 reports without reference to compliance with auditing  standards. For purposes of our review, we considered only those reports  that stated compliance with Government Auditing Standards as audit  reports and refer to the reports without such statements as nonaudit  reports. We compared the contents of the 46 audit reports with the high- risk areas designated by us and with the management challenges identified  by the NASA OIG to determine the audit coverage of these areas. We also  analyzed the nature and scope of all 71 final reports and the resulting  recommendations to determine the extent to which they addressed  compliance with laws, regulations, and NASA policies and procedures;  economy and efficiency; or the effectiveness of NASA’s programs and  operations. To review the investigative coverage, we used the  identification of closed cases reported by the OIG in semiannual reports  for fiscal years 2006 and 2007. We also obtained the OIG’s strategic and  annual audit plans covering the same 2-year period to determine if they  contained goals and objectives to provide audit coverage of NASA’s  program compliance with laws and regulations and program economy,  efficiency, and effectiveness.
We identified monetary and other audit and investigative accomplishments  reported by the NASA OIG in semiannual reports to the Congress for fiscal  years 2003 through 2007 in order to observe any long-term trends. We  limited our review of the NASA OIG’s accomplishments to the results of  audits and investigations reported to the Congress for this period and did  not audit or otherwise verify the dollar amounts of the monetary  accomplishments or potential savings to the government reported by the  NASA OIG. We also obtained the semiannual reports issued by all 30 IGs  appointed by the President and confirmed by the Senate to obtain the  monetary accomplishments reported by those IGs during fiscal year 2007.  We obtained the total budgetary resources of each OIG for fiscal year 2007  from the Office of Management and Budget (OMB) and compared the  reported monetary accomplishments with budgetary resources to obtain a  return on investment for each IG office.
We obtained the total budgetary resources at the NASA OIG and the  agency for fiscal years 2003 through 2007 from OMB in order to observe  any long-range budgetary trends. We obtained additional information on  staffing levels, resource distribution, and attrition rates from the OIG to  identify staffing trends over this period. The attrition rates for NASA  overall were verified by NASA management officials. We compared the  total budgetary resources for fiscal year 2007 of the 30 IGs appointed by  the President and confirmed by the Senate with the total budgetary  resources of their respective agencies for the same year. We calculated a  ratio for each OIG’s budget information as a percentage of its respective  agency’s budget for comparative purposes.
We obtained reports from the external reviews of the NASA OIG  completed during fiscal years 2003 through 2007 to observe any long-term  trends in OIG quality for both audits and investigations. Specifically, we  obtained the audit peer review report of audit quality dated January 8,  2004, completed by the Department of Justice OIG, and the March 13,  2007, peer review report completed by the General Services  Administration OIG. We also obtained the July 8, 2005, peer review report  of the NASA OIG’s investigative quality completed by the Department of  Transportation OIG. In addition, we obtained the report of investigation  completed by the Integrity Committee of PCIE and ECIE, which addressed  allegations of the NASA IG’s misconduct and appearance of a lack of  independence. This investigative report was released in late March 2007 to  the House Committee on Science and Technology, which has oversight  responsibilities for scientific research and development at NASA and other  nondefense agencies. We discussed the disposition of the investigation  with the Integrity Committee. We met with the NASA IG and senior OIG  staff at the beginning of our review regarding our scope and methodology.   We conducted a series of interviews coordinated through the IG’s  Executive Officer which included the Deputy Inspector General, the  Counsel to the IG, the Assistant IG for Audits, the Assistant IG for  Investigations, and the Assistant IG for Management and Planning. At the  completion of our work we met with the NASA IG and senior OIG staff to  discuss our report findings, conclusions, and recommendations.
We conducted this performance audit from November 2007 through  December 2008 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: Background
paragraphs: NASA was established by the National Aeronautics and Space Act of 1958  to provide research into problems of flight within and outside Earth’s  atmosphere and to ensure that the United States conducts activities in  space devoted to peaceful purposes for the benefit of mankind. On  January 14, 2004, the President announced a new vision for space  exploration endorsed by the Congress in the NASA Authorization Act of  2005  which includes a journey of exploring the solar system, returning  astronauts to the moon in the next decade, and venturing to Mars and  beyond.
NASA comprises the Headquarters in Washington, D.C., nine field centers  located throughout the country, and the Jet Propulsion Laboratory (JPL)  operated for NASA by the California Institute of Technology. The NASA  centers and JPL conduct NASA’s programs in exploration, discovery, and  research and are led by four mission directorates at NASA Headquarters.  (See table 1.)
The NASA OIG was established by the IG Act to provide an independent  office within NASA to conduct and supervise audits and investigations;  provide leadership and coordination and recommend policies to promote  economy, efficiency, and effectiveness; and prevent and detect waste,  fraud, abuse, and mismanagement. The IG Act provides protections to IGs’  organizational independence through key provisions that require specified  IGs, including the NASA IG, to be appointed by the President with the  advice and consent of the Senate. This appointment is required to be  without regard to political affiliation and is to be based solely on an  assessment of the candidate’s integrity and demonstrated ability. Such  presidentially appointed IGs can only be removed from office by the  President who must communicate the reasons for removal to both houses  of the Congress. The current NASA IG was appointed by the President on  April 16, 2002, after Senate confirmation. In addition to the IG, the Deputy  IG, and the Executive Officer, the OIG is organized into four offices to  provide oversight of NASA, as shown in table 2.
As a presidentially appointed IG, the NASA IG is a member of the PCIE,  which together with the ECIE, operates a joint Integrity Committee that is  empowered to investigate allegations of wrongdoing against IGs and  certain members of their staff. The Inspector General Reform At of 2008,  enacted on October 14, 2008, authorizes a new statutory Council of the  Inspector General on Integrity and Efficiency which is to have its own  Integrity Committee with powers similar to the PCIE and ECIE Integrity  Committee and disestablishes the PCIE and ECIE effective on the earlier  of the creation of the new Council, or 180 days after the passage of the  Act. As of the date of this report the new Council has not yet been  established, and the PCIE, ECIE, and their Integrity Committee continue  operation.
Since 1990, we have periodically reported on government operations that  we have designated as high risk because of their greater vulnerabilities to  fraud, waste, abuse, and mismanagement as well as challenges to  economy, efficiency, or effectiveness. In January 2007, we identified 27  high-risk areas across the federal government. These included high-risk  areas applicable to NASA that had been reported in prior high-risk reports.  We specifically identified NASA’s contract management as a high-risk area  because of weaknesses in NASA’s integrated financial management  system. For example, we have reported that NASA’s contractor cost  reporting process does not provide cost information that program  managers and cost estimators need to develop credible estimates and  compare budgeted and actual cost with the work performed. Also, NASA  has lacked a modern financial management system to provide accurate  and reliable information on contract spending and placed little emphasis  on product performance, cost controls, and program outcomes. On a  governmentwide basis, we also identified protecting the federal  government’s information systems and strategic human capital  management across the executive branch as high-risk areas.
Beginning in 1997, the IGs were asked by congressional leaders to identify  the 10 most serious management problems in their respective agencies.  The request began a yearly process that continues in response to  requirements established in the Reports Consolidation Act of 2000. This  act calls for executive agencies, including NASA, to report their IGs’ lists  of significant management challenges in their annual performance and  accountability reports to the President, OMB, and the Congress. In fiscal  years 2006 and 2007, the NASA OIG identified management challenges that  included areas also identified in our high-risk reports and in the additional  areas of financial management, space operations and exploration, and  safety and security.
The OIG has identified NASA’s Integrated Enterprise Management  Program as key to improving NASA’s ability to provide reliable  information to management, support compliance with federal  requirements, and strengthen the internal control program to address  continuing problems, such as NASA’s internal control weaknesses over  property, plant, and equipment and materials. Regarding space operations  and exploration, the OIG has identified the transition from the space  shuttle to the next generation of space vehicles as a management  challenge as NASA balances schedule and resource constraints while  maintaining the capabilities required to fly the space shuttle and  simultaneously developing the next generation of space vehicles. In the  area of safety and security the OIG has identified NASA’s need to manage  risk, safety, and mission assurance controls to ensure reliable operations  in the context of aggressive launch and mission schedules, funding  limitations, and future uncertainties as management challenges.
section_title: NASA OIG Provides Limited Monetary Accomplishments from Audits
paragraphs: The IG Act requires independent IG offices to provide leadership on issues  of economy and efficiency and to report on the effectiveness of programs,  offices, and activities within their respective agencies. The NASA OIG’s  Office of Audits provides financial and performance audits and other  reviews to examine NASA’s operations. The NASA OIG has conducted  audit activity in most high-risk areas identified by us and the management  challenges identified by the OIG for fiscal years 2006 and 2007. In addition  to audits, the NASA OIG reported closing 153 investigative cases during  fiscal years 2006 and 2007 in response to allegations of fraud, waste, and  abuse. In providing audit coverage, the NASA OIG has generally not  focused on audits with recommendations for improving the economy and  efficiency of NASA’s programs and operations with potential monetary  savings. For example, during fiscal years 2006 and 2007 the OIG had one  audit with recommendations with potential monetary savings.
During the 5-year period of fiscal years 2003 through 2007, 99 percent of  NASA OIG’s dollar accomplishments came from investigations with 88  percent coming from two joint investigations with other OIGs. The  remaining 1 percent of the monetary accomplishments reported by the  NASA OIG during this 5-year period was from audits. We believe that  improvements to the OIG’s strategic and annual audit planning could help  to ensure that audits with an emphasis on NASA’s economy and efficiency  through potential cost savings are included in its annual audit activities.
subsections: section_title: Audit Coverage of High Risk Areas and Management Challenges
paragraphs: Over fiscal years 2006 and 2007 the NASA OIG’s Office of Audits reported  having completed 71 reports. Of these, the NASA OIG issued 13 audit  reports in fiscal year 2006 and 20 audit reports in fiscal year 2007 on high- risk areas identified by us, and on NASA’s management challenges  identified by the OIG. As shown in table 3, multiple NASA OIG audit  reports were completed in most of the areas designated as high risk and as  management challenges with the exception of asset management and  human capital. Most of the OIG’s reports were in the areas of information  technology security, contract management, and financial management. In  contrast, the area of asset management had one report, and there were no  audits of human capital issues even though these areas are both among  GAO high-risk areas and NASA’s management challenges. (The OIG is  currently auditing an issue of asset management and has plans to address  an issue of NASA’s human capital.)
In addition, the NASA OIG’s audit reports also addressed areas not  identified as high-risk areas or management challenges. These included  quality control reviews of the audits of federal award recipients by  nonfederal auditors to ensure that these audits are performed in  compliance with government auditing standards. In addition, while the  OIG’s audit policy is to complete audits using Government Auditing  Standards and the IG Act requires that all NASA OIG audits be completed  using these standards, 25, or approximately 35 percent, of the OIG’s 71  reports completed by the NASA OIG Office of Audits were completed  without using these standards. Those reports included transmittal letters  and information without a statement of compliance with auditing  standards. Consequently, we did not consider these reports as part of the  OIG’s audit coverage for high-risk areas and management challenges.
section_title: Investigative Coverage from Closed Cases
paragraphs: In addition to audits, the NASA OIG reported closing 153 investigative  cases during fiscal years 2006 and 2007 in response to allegations of fraud,  waste, and abuse. The OIG’s Office of Investigations investigates  allegations of crime, cybercrime, fraud, waste, abuse, and misconduct that  could affect NASA’s programs, projects, operations, and resources. The  Office of Investigations refers its findings either to the Department of  Justice for criminal prosecution and civil litigation or to NASA  management for administrative action. In addition, the Office of  Investigations identifies crime indicators and recommends measures for  NASA management that are designed to reduce NASA’s vulnerability to  criminal activity.
The OIG’s closed cases focused on NASA procurements or procurement  activities and investigations of computer crimes. (See fig. 1.) In addition,  there were investigations of conflicts of interest, large-scale thefts of  government property, and false statements. Other investigations included  safety, state and local crimes, travel card fraud, and drug abuse.
section_title: NASA OIG’s Monetary Accomplishments Are Largely from Investigations
paragraphs: Statutory OIGs subject to the IG Act, including the NASA OIG, are required  to report the monetary value of certain findings and recommendations in  their semiannual reports provided by the OIGs through their agency heads  to the Congress. As required, the NASA OIG’s semiannual reports for fiscal  years 2003 through 2007 included the number of audit reports issued and  the questioned costs, unsupported costs, and funds to be put to better use  identified by the OIG’s audits. As defined by the IG Act, questioned costs  include either alleged violations of laws, regulations, contracts, grants, or  agreements; costs not supported by adequate documentation; or the  expenditure of funds for an intended purpose that was unnecessary or  unreasonable. In addition, unsupported costs are defined as costs that do  not have adequate documentation, and funds to be put to better use are  inefficiencies identified by the OIG in the use of agency funds. These are  often potential savings to the government.
The monetary accomplishments of the NASA OIG’s Office of  Investigations are largely from closed investigations that result in  recoveries of federal dollars which include fines and court ordered  restitutions regarding individuals and contractors who have defrauded the  government. As shown in table 4, almost all of the NASA OIG’s monetary  accomplishments have come from investigations during fiscal years 2003  through 2007.
In fiscal year 2006 the OIG reported the results of a joint investigation with  the Department of Defense and Department of Justice OIGs that had total  recoveries of $615 million from a settlement with the Boeing Company  regarding criminal and civil allegations. Also, in fiscal year 2003 the OIG  reported another joint investigation with recoveries of about $111 million.  The results of these two investigations alone account for 88 percent of the  NASA OIG’s reported total monetary accomplishments of over   $824 million from both audits and investigations over fiscal years 2003  through 2007. The total monetary accomplishments from OIG  investigations for this period were $815 million, or 99 percent of all  reported OIG monetary accomplishments. In contrast, over the same 5- year period the OIG’s potential audit savings contributed about $9 million  or about 1 percent of the OIG’s total reported 5-year monetary  accomplishments, with one audit in fiscal year 2007 responsible for $7  million of this amount and another audit in fiscal year 2004 responsible for  about $1.5 million. Therefore, approximately 94 percent of all NASA OIG  audit monetary accomplishments reported over the 5-year period came  from the results of two audits. In addition, during the 1-1/2-year period  from April 1, 2004, through September 30, 2005, the OIG reported no  monetary accomplishments from its audit activity.
A comparison of the OIG’s fiscal year 2007 total budgetary resources of  $34 million to its reported combined monetary accomplishments for that  year results in a return of $0.36 for each budget dollar. When this same  calculation is made based on the monetary accomplishments reported by  all 30 OIGs with IGs appointed by the President and confirmed by the  Senate, the overall average return on their total budgetary resources in  fiscal year 2007 was $9.49 for every dollar spent by the government for  their offices, or almost 26 times that of the NASA OIG for fiscal year 2007.  In addition, when compared to these other OIGs, the year that the NASA  OIG had its largest monetary accomplishment from audits it ranked 27 out  of the 28 OIG offices reporting monetary accomplishments for fiscal year  2007. (See app. I.)
section_title: OIG Planning Lacks Economy and Efficiency Objectives
paragraphs: Of the 71 reports completed by the NASA OIG’s Office of Audits over fiscal  years 2006 and 2007, 70 did not include recommendations that address the  economy and efficiency of NASA’s programs and operations with potential  cost savings. The one exception to this was an OIG audit that addressed an  area of NASA’s economy and efficiency and resulted in about $7 million in  reported potential monetary savings. The remaining 70 reports included  recommendations for improving compliance with laws, regulations, and  NASA policies and procedures; internal controls; and addressed specific  areas of NASA’s operations. Nevertheless, these recommendations did not  provide measurable improvements to the costs and resources used to  achieve program results.
To illustrate, in fiscal year 2006 the NASA OIG audited the awards of  subcontracts worth $4.6 billion for NASA’s space flight operations. The  OIG found that the primary government contractor’s actions had complied  with requirements for competition, quality assurance, and other  procurement regulations, but also found examples of inadequate pricing  determinations. The report recommended that the NASA contracting  officer ensure compliance with contract agreements and procurement  regulations but did not include recommendations to help ensure that this  area will be effective or efficient in the future and did not identify any  measurable cost savings to the government resulting from inadequate  pricing. In addition, over the 2-year period we reviewed there were no OIG  audits with recommendations to increase the economy and efficiency of  NASA’s space flight operations with identified cost savings even though  the IG had identified this program as one of NASA’s management  challenges.
The OIG’s annual audit plan addresses NASA’s programs in high-risk areas  and management challenges but does not have a strategy to deal with  economy and efficiency associated with these NASA programs. The OIG’s  strategic plan and annual audit plans do not identify goals and audit  objectives related to evaluating NASA’s programs and operations through  economy and efficiency audits. The OIG’s annual audit plans for fiscal  years 2006 and 2007 provided details on the objectives of each individual  audit; however, similar to the results that we found for the OIG’s audits,  the objectives of the audits in these plans were not directed at audits that  might result in measurable cost savings. A subsequent revision of the fiscal  year 2007 audit plan also had no specific objectives for addressing NASA’s  economy and efficiency.
In addition, through limited scope audits of compliance as well as  investigations, the OIG addresses allegations received. To illustrate, OIG  auditors and investigators are often assigned reviews of allegations or  other assignments received from the OIG’s Senior Staff Referral Review  Committee (SSRRC). The SSRRC was established by the NASA IG in the  fall of 2005 to act as a clearinghouse for allegations and to review all work  planned for OIG staff. The SSRRC is composed of the Assistant IG for  Investigations, the Deputy Assistant IG for Audits, the OIG Counsel, and  the IG’s Executive Officer. The SSRRC meets once a week to coordinate  audit and investigative assignments, review fraud hotline information,  review letters with allegations, and decide on where to assign the work.  Generally, if the issues involve wrongdoing by NASA employees or  contract fraud the OIG investigators will handle the cases. The OIG  auditors are generally assigned limited scope procurement issues and  issues that involve violations of NASA regulations. Issues involving  standards of conduct or personnel matters will generally be referred to  NASA management.
The NASA OIG’s limited monetary accomplishments from its audit activity  can be attributed to (1) the lack of emphasis in its annual audit plan on  goals and objectives for areas to improve economy and efficiency of  NASA’s programs and operations and (2) the OIG’s focus on reviews of  allegations and limited scope issues in a reactive approach to audit  planning through assignments from the SSRRC, which can encroach on  the ability to assign staff needed for other performance audits that can  address potential dollar savings. We believe that the OIG can improve its  audit plans by providing more specific attention to performance audits  that address the economy and efficiency of NASA’s programs and  operations, and that the OIG should consult with an objective,  knowledgeable outside party with experience in these types of audits  when completing these plans.
section_title: NASA OIG’s Budgets and Staffing
paragraphs: From fiscal year 2003 through fiscal year 2007, the NASA OIG’s total  budgetary resources increased by approximately 17 percent, from  approximately $29 million to $34 million in constant dollars, while the  FTEs increased 4 percent, from 191 to 199. Of the 199 FTEs at the end of  fiscal year 2007, 47 percent were in the Office of Audits, 37 percent in the  Office of Investigations, 10 percent in the Office of Management and  Planning, and 4 percent and 2 percent, respectively, for the Counsel to the  IG and the IG’s immediate office. (See fig. 2.)
A comparison of NASA OIG’s total budgetary resources with NASA’s total  budgetary resources shows that the OIG’s budget as a percentage of  NASA’s budget has increased. In addition, NASA OIG’s staffing levels have  increased while NASA’s staffing level has decreased. During fiscal years  2003 through 2007, NASA’s overall total budgetary resources increased by  about 4 percent, compared with the OIG’s budgetary resources, which  increased by about 17 percent. Therefore, the NASA OIG’s total budgetary  resources as a percentage of NASA’s total budgetary resources increased  from 0.15 percent to 0.17 percent. (See table 5.) During that same period,  NASA’s FTEs decreased by approximately 2.7 percent, compared with the  OIG’s FTE increase of about 4 percent.
When NASA OIG’s budget-to-agency-budget ratio is compared to this same  ratio for other OIGs in which the IG is appointed by the President with  Senate confirmation, the percentages vary depending on the size of the  federal agencies, their missions, and the oversight issues emphasized by  each OIG. Such a comparison for fiscal year 2007 budgets indicates that  the ratio of the NASA OIG’s total budgetary resources to the total  budgetary resources for NASA was within the range of these percentages  for other OIGs and their agencies. Specifically, the comparison of these  other OIGs’ budgets with those of their agencies ranged from 0.005 percent  to 1.10 percent, and the NASA OIG’s percentage of NASA resources was at  0.17 percent, which ranks 11th of these 30 agencies. (See app. II.)
Regarding staffing levels, we obtained the attrition rates for the NASA OIG  for fiscal years 2003 through 2007. Attrition is the percentage of personnel  losses for all reasons during the fiscal year, and is measured by comparing  personnel losses during the year to the total personnel strength on board  at the beginning of the year. The staff attrition rate for NASA OIG has  increased over the 5-year period from 12.4 percent in 2003 to 19.9 percent  in 2007. Specifically, the NASA OIG had losses of 24 personnel in fiscal  year 2003 compared to a loss of 40 personnel in fiscal year 2007, an  increase of approximately 67 percent. (See table 6.) As a comparison, the  overall attrition rate for NASA was about 5 percent in both fiscal years  2006 and 2007.
From fiscal years 2003 through 2007, the NASA OIG lost 157 staff. These  losses affect the ability of the OIG to maintain experienced audit  personnel. To illustrate this effect on the Office of Audits, we compared  the audit staff on board in January 2003, shortly after the current IG took  office, to the audit staff on board in March 2008. Of the 78 auditors on  board in January 2003, 42 auditors have left the OIG audit directorate,  including 9 of the 10 management-level auditors. Those leaving included  all but one of the audit directors, the Assistant IG for Audits, and 2 deputy  assistant IGs for audits. We did not review the reasons for the OIG’s  employee turnover but believe that the OIG would benefit from a review  by an objective third-party expert to address the reasons for the relatively  high attrition rate as compared to the overall rate for NASA.
section_title: External Reviews of NASA OIG and the Integrity Committee’s Investigation
paragraphs: Over the 5-year period of fiscal years 2003 through 2007, NASA OIG had  three routine external peer reviews—two reviews of its auditing practice  and one review of its investigative practice. The NASA OIG also had a  nonroutine external review performed by the Integrity Committee of PCIE  and ECIE completed in fiscal year 2007 as a result of concerns about the  management practices and conduct of NASA’s IG.
subsections: section_title: Routine Peer Reviews
paragraphs: Government Auditing Standards requires audit organizations that  perform audits in accordance with the standards to have external peer  reviews on a routine basis, at least once every 3 years. Those reviews are  to be performed by reviewers independent of the audit organization. In the  federal IG community, other federal IGs perform these peer reviews. The  purpose of the peer review is to conclude whether the audit organization  has a system of quality control that is suitably designed and implemented  in order to provide reasonable assurance of conforming to applicable  professional standards. In addition, for investigations, the Homeland  Security Act of 2002 amended the IG Act to require that each OIG with  investigative or law enforcement authority under the act have its  investigative function reviewed periodically by another IG office.
For peer reviews of the audit practices, the external reviewers concluded  that NASA OIG’s system of quality control for the audit function provided  reasonable assurance of material compliance with professional auditing  standards. The peer review of the NASA OIG’s investigative function  concluded that the system of internal safeguards and management  procedures for the Office of Investigations was in full compliance with the  quality standards established by PCIE and ECIE and the Attorney  General’s investigation guidelines.
section_title: Integrity Committee’s Investigation
paragraphs: The NASA OIG also had a nonroutine external review completed in fiscal  year 2007 as a result of serious concerns that had been raised about the  management practices and conduct of the IG. At the request of the  Integrity Committee of PCIE and ECIE, the Department of Housing and  Urban Development’s (HUD) OIG conducted an investigation into the  allegations of possible misconduct by the NASA IG. The Integrity  Committee initiated the investigation through a request letter to the HUD  OIG dated January 6, 2006, and forwarded 18 complaints with 79 separate  allegations regarding actions of the NASA IG to the HUD OIG  investigators.
The HUD OIG submitted the results of its investigation for the Integrity  Committee’s consideration on August 30, 2006. In a January 22, 2007, letter  to the OMB Deputy Director for Management who serves as the Chair of  both PCIE and ECIE, the Integrity Committee concluded that (1) the  NASA IG had engaged in abuse of authority by creating an abusive work  environment and (2) the NASA IG’s actions in two instances created an  appearance of a lack of independence. In addition, the Integrity  Committee stated that the IG had sought to develop and maintain a close  relationship with the former NASA Administrator and that this effort  contributed to an appearance that his independence was being  compromised. However, the Integrity Committee offered no  recommendations for corrective actions in their letter.
Executive Order 12993 entitled Administrative Allegations Against  Inspectors General provides guidance to address investigations of alleged  IG wrongdoing. Under this guidance the Integrity Committee is  responsible for deciding whether the investigative report prepared at its  request establishes any administrative misconduct within its oversight  jurisdiction. If in the Integrity Committee’s opinion the report establishes  such issues or otherwise requires action, the report is referred to the Chair  of PCIE and ECIE with recommendations for appropriate action. The  Integrity Committee advised us that they had not believed it necessary to  include specific recommendations in this case due to the extent of the  findings and the presumption that the Chair of PCIE and ECIE would take  disciplinary action commensurate with these findings.
In accordance with the Executive Order, the Chair of PCIE and ECIE  advised the NASA Administrator to determine the appropriate actions to  address the investigation’s conclusions. The NASA Administrator  proposed to the Chair that the NASA IG attend the Federal Executive  Institute to develop a leadership and management training plan, attend at  least one management/leadership program annually, obtain the services of  an executive coach, and meet with the Deputy NASA Administrator on a  bimonthly basis to discuss implementation of the leadership and  management plan as well as the NASA IG’s professional growth. The NASA  Administrator also stated that the proposed actions would resolve any  concerns he had after reviewing the Integrity Committee’s report of  investigation.
Reacting to the NASA Administrator’s response, the Integrity Committee  expressed its view in a March 20, 2007 letter to the Chair of PCIE and  ECIE that the proposed actions were inadequate to address the  investigation’s conclusions. Specifically, the Integrity Committee stated  that “ll members of the committee believed the proposed course of  action recommended by the Administrator of NASA was inadequate to  address the conduct of . All members of the committee further  believed that disciplinary action up to and including removal could be  appropriate.”
In a follow-up letter dated March 29, 2007, the NASA Administrator  reaffirmed his belief that his proposed actions were adequate. With  respect to the appearance of a lack of impartiality he stated that he and the  IG had a professional arms-length relationship and that he did not believe  that additional corrective measures were necessary. In a letter also dated  March 29, 2007, the Chair of PCIE and ECIE asked the Integrity Committee  for confirmation on several matters including that its members (1) had not  concluded that the IG had broken any laws or acted illegally; (2) had no  uniform view on what actions would be appropriate to address its  concerns regarding the IG; (3) that it was not now recommending removal  of the IG as a disciplinary action; and (4) that the January 22, 2007, letter  to the PCIE and ECIE Chair had not contained recommendations on this  matter. That same day, the Chair of the Integrity Committee confirmed  that the PCIE and ECIE Chair’s understanding accurately reflected the  intent of the Integrity Committee. In accordance with the discretion  afforded in the Executive Order and the related implementing guidance,  on April 18, 2007, the Chair of PCIE and ECIE advised the Chair of the  Integrity Committee to consider the actions in the NASA Administrator’s  March 29, 2007, letter as constituting the final disposition of the  investigation. In line with the Executive Order, the Integrity Committee  informed the NASA IG that their review was complete and that the case is  considered closed.
Notwithstanding the formal process outlined by the Executive Order, the  Integrity Committee confirmed in a written response to our questions, its  continued concern that the actions taken regarding the appearance of a  lack of independence were insufficient. In the same response, the Integrity  Committee stated that the views expressed in its March 20, 2007, letter  remain unchanged and that the NASA IG’s lack of an appearance of  independence was not resolved by the actions proposed by the NASA  Administrator.
In late March 2007, both the Chairman of the Subcommittee on Space,  Aeronautics, and Related Matters, Senate Committee on Commerce,  Science and Transportation, and the Chairman of the Subcommittee on  Investigations and Oversight, House Committee on Science and  Technology, received a copy of the Integrity Committee’s report of  investigation. In their letter of April 2, 2007, to the President of the United  States, the Chairmen requested that the President remove the NASA IG  from office based on the results of the investigation. The letter states that  the committees and the public are not receiving useful assistance from the  NASA IG, one of their primary tools for oversight, and that the NASA IG  can no longer be effective in his office and should be replaced  immediately.
In prepared testimony on June 7, 2007, before a joint hearing between the  Subcommittee on Space, Aeronautics, and Related Sciences, Senate  Committee on Commerce, Science and Transportation, and the  Subcommittee on Investigations and Oversight, House Committee on  Science and Technology, the NASA IG disputed the findings of the  Integrity Committee investigation by calling the allegations unjustified and  the investigation flawed. The IG pointed out his views regarding possible  mistakes by the investigators, and provided arguments to explain his  actions regarding many of the allegations investigated. In this joint hearing  members of both the House and the Senate called for the IG to resign.
Independence is the cornerstone of professional auditing. The IG Act  requires that IGs comply with Government Auditing Standards, which  specifies that auditors and audit organizations be free from personal,  external, and organizational impairments and avoid the appearance of  such impairments to independence. Auditors and audit organizations must  maintain independence so that their opinions, findings, conclusions,  judgments, and recommendations will be impartial and, just as important,  viewed as impartial by objective third parties with knowledge of the  relevant information.
Quality Standards for Federal Offices of Inspector General issued by  PCIE and ECIE include requirements for IGs to be objective with an  obligation to be impartial, intellectually honest, and free of conflicts of  interest. Independence is considered by these standards to be a critical  element of objectivity, and without independence both in fact and in  appearance, objectivity is impaired.
As noted above, the absence of actions to address the perceived lack of  independence can perpetuate concerns regarding the IG’s objectivity in  dealing with IG responsibilities related to audits and investigations. Given  the importance of IG independence both in fact and appearance and the  lack of any corrective actions to fully resolve this matter, we believe that  additional follow up and recommendations by the Integrity Committee are  warranted related to its investigative finding dealing with the NASA IG’s  appearance of a lack of independence.
section_title: Conclusions
paragraphs: The fundamental mission of the NASA OIG includes providing  independent and objective oversight of NASA to identify areas for  improved economy, efficiency, and effectiveness, and to detect and  prevent fraud, waste, and abuse. While the OIG has conducted audits in  areas of high risk and management challenges and provided the results of  investigations, the OIG’s monetary accomplishments from its audit  activities have been limited by a lack of audits to evaluate the economy  and efficiency of NASA’s programs and operations that result in  recommendations for measurable cost savings.
The NASA OIG’s monetary accomplishments and recommendations in the  areas of economy and efficiency significantly lag behind the  accomplishments and return on investment of the federal OIG community  as a whole. A reevaluation of audit planning and methods within NASA’s  OIG is needed to include audits that hold NASA accountable for its  stewardship of public funds through independent audits and investigations  that include recommendations for economy and efficiency. Due to the  importance of this issue, we believe that a reexamination of the audit  strategy and planning approach within the OIG can best be accomplished  with the assistance of an objective outside party with experience in these  types of audits.
The OIG’s budgets and staffing levels have not been adversely affected  when compared to both the NASA budgets and staffing and to the budgets  of other OIGs. However, the effectiveness of the OIG can be negatively  affected by an environment of high staff turnover, which has especially  affected audit management staff. The reasons for the relatively high rate  and recent increases in employee turnover should be examined by an  objective expert so that any underlying issues can be addressed and the  NASA OIG can effectively meet its mission of providing objective and  reliable information.
The independence of the IG is central to the effectiveness of the IG’s  office. The Integrity Committee, which has the authority to make  recommendations regarding the outcomes of its investigations, considers  the actions taken by the NASA Administrator to be insufficient, that the  NASA IG’s lack of an appearance of independence is not resolved, and that  the views expressed in its letter of March 20, 2007, are unchanged.  Because independence is fundamental to effective oversight and  professional auditing, we believe that additional follow up actions are  warranted related to the Integrity Committee’s findings dealing with the  appearance of a lack of independence on the part of NASA’s IG.
section_title: Recommendations for Executive Action
paragraphs: In order to strengthen audit oversight and management of the NASA OIG,  we recommend that the NASA IG  include in strategic and annual planning, performance audits that  address NASA’s economy and efficiency with potential monetary  savings and that the OIG work closely with an objective outside party  to obtain external review and consultation in the strategic and annual  planning processes, and  identify the causes of high employee turnover with the assistance of an  objective expert, and determine actions needed as appropriate.
In order to resolve the matter regarding the appearance of independence  of the NASA IG, we recommend that the Integrity Committee  follow up regarding its investigative finding regarding the NASA IG’s  appearance of a lack of independence and make any recommendations  needed.
section_title: Agency Comments and Our Evaluation
paragraphs: In written comments on a draft of our report, the NASA IG expressed  widespread disagreement with our conclusions and recommendations and  questioned the depth and scope of our evaluation. We disagree with the IG  and in the following paragraphs reaffirm our conclusions and  recommendations. We augmented our discussions of the scope and  methodology of our work and expanded the evidentiary matter in the body  of this report for issues related to the Integrity Committee’s investigation  and the monetary accomplishments reported by the NASA OIG over fiscal  years 2003 through 2007. We rebut what we consider the most important  aspects of his disagreement in this section of the report. In addition, please  refer to the appendix section of this report following our reprint of the IG’s  comments (see app. IV)  in which we rebut or clarify other less material  matters.
The Integrity Committee limited its comments to matters in our draft  report concerning the committee’s investigation of allegations against the  NASA IG. The Integrity Committee restates its determination that actions  taken by NASA regarding the appearance of a lack of independence  findings were insufficient, states that the Integrity Committee has no  power to compel any particular action, and suggests that we should  present our recommendation to the Chair of PCIE and ECIE. However, we  see nothing in the guidance in Executive Order 12993 to prohibit the  Integrity Committee from making recommendations to the Chair of PCIE  and ECIE regarding its investigative finding which has not been fully  resolved. Therefore, we reaffirm our recommendation to the Integrity  Committee. (See app. III.)
subsections: section_title: Integrity Committee Investigation
paragraphs: In the written comments, the NASA IG stated that the Integrity Committee  investigation of allegations against him was a closed matter. He  emphasized that the Integrity Committee’s views regarding the  independence matter were from a historical perspective and that there  was nothing to suggest that the appearance of a lack of independence was  an ongoing issue. Further, he stated that the Integrity Committee had not  included any recommendations in its report and that therefore, nothing is  unresolved.
The IG commented that we had ignored the documented final disposition  of this matter in the PCIE and ECIE Chair’s April 18, 2007 letter, and that  we had selectively included or excluded information to suggest that a  closed matter is still open. We fully understand that the formal  investigation has run its course, and we have added discussion to the body  of the report to reflect the documented interactions among the Chairman  of PCIE and ECIE, the Integrity Committee, the NASA Administrator, and  the NASA IG. Our report acknowledges that the Integrity Committee did  not make any specific recommendations to address either the investigative  findings of an abusive work environment or the perception of a lack of  independence. However, despite the PCIE and ECIE Chair’s acceptance of  the actions proposed by the NASA Administrator and closure of the case,  the Integrity Committee stated in response to our questions, that the  actions were not adequate to resolve the investigative conclusion that the  IG lacked an appearance of independence.
As discussed in our report, the Integrity Committee told us that it did not  include recommendations for corrective actions in its January 22, 2007,  letter to the Chair of PCIE and ECIE regarding the results of its  investigation because of the extent of the findings and a presumption that  the Chair of PCIE and ECIE would take disciplinary action commensurate  with these findings. These concerns are captured in the Integrity  Committee’s March 20, 2007, letter to the Chair of PCIE and ECIE, which  stated that “ll members of the committee further believed that  disciplinary action up to and including removal, could be appropriate.”
Given the Integrity Committee’s documented dissatisfaction with the  corrective actions and that no actions we are aware of address the  independence issue, we disagree that this matter has been fully resolved.    Objective third parties with knowledge of the relevant information  including that of the Integrity Committee’s investigation; the lack of  actions to attempt to change perceptions; and the Integrity Committee’s  continuing concern, expressed in a written response to our questions, that  the actions taken were inadequate; could conclude that the appearance of  independence issues have not been resolved. As a result, the decisions and  actions of the IG may not be fully accepted as a basis for policy or other  changes. This perspective is illustrated by the stances taken by the  leadership of NASA’s oversight committees. As noted in the body of the  report, in their joint letter dated April 2, 2007, the Chairman of the  Subcommittee on Space, Aeronautics, and Related Matters, Senate  Committee on Commerce, Science and Transportation, and the Chairman  of the Subcommittee on Investigations and Oversight, House Committee  on Science and Technology, requested that the President of the United  States remove the NASA IG from office based on the results of the  Integrity Committee’s investigation. The letter states that the oversight  committees and the public are not receiving useful information from the  NASA IG, one of their primary tools for oversight, and that the IG can no  longer be effective in his office and should be replaced.
The Integrity Committee commented that it could not concur with our  recommendation because it lacked the authority to compel any particular  corrective action. However, our recommendation to the Integrity  Committee does not call for it to compel the corrective action, but rather  to exercise its authority as allowed in Executive Order 12993 and  acknowledge the concerns of its own members and make appropriate  recommendations to the Chair of PCIE and ECIE for corrective action  regarding its unresolved investigative finding that the NASA IG lacked an  appearance of independence. The Integrity Committee confirmed its  opinion that the actions taken were not sufficient and restated its opinion  in the March 20, 2007 letter to the Chair of PCIE and ECIE that it  supported a range of actions to be considered, up to and including removal  of the NASA IG from office. Because the Integrity Committee has the  authority to make recommendations within the guidance of the Executive  Order, we reaffirm our report recommendation.
section_title: Interviews with OIG Management
paragraphs: Contrary to the NASA IG’s statement that we failed to consult with NASA  OIG’s senior leadership on the important issues in this report, we met with  the NASA IG and the senior OIG staff at the beginning of our review  regarding our scope and methodology.  We also coordinated a series of  interviews through the IG’s Executive Officer with the OIG senior  management officials responsible for all areas addressed in our report. In  all instances, we identified the purpose of our planned contacts, and the  IG’s Executive Officer scheduled meetings with those NASA OIG  management staff who were best suited to address each matter. These  included the Deputy Inspector General, the Counsel to the IG, the  Assistant IG for Audits, the Assistant IG for Investigations, and the  Assistant IG for Management and Planning. At the completion of our work  we met with the NASA IG and the senior OIG staff to discuss our report  findings, conclusions, and recommendations. All meetings were  coordinated through the IG’s office, and we were available for any input  the IG may have wished to provide.
section_title: Audit Coverage
paragraphs: The NASA IG disagreed with our recommendation to revise approaches  taken in audits to include in strategic and annual planning, performance  audits that address NASA’s program results, effectiveness, and outcomes  as well as audits of economy and efficiency by working closely with an  objective outside party. Specifically, the NASA IG did not agree with our  conclusion that the OIG’s effectiveness has been hindered by reliance on  audits that do not include evaluating NASA’s program economy, efficiency,  and effectiveness, and result in limited monetary accomplishments. The IG  Act requires that IGs address issues of economy and efficiency and  provide independent audits and investigations. We have removed our  concern regarding effectiveness because of the subjective nature of  evaluating the OIG’s efforts in this regard. However, as stated in our  report, the NASA OIG had reported only one audit with recommendations  for economy and efficiency and potential cost savings to the agency over  fiscal years 2006 and 2007. Therefore, we have narrowed the focus of our  report and our recommendation in order to address our major concern  that the OIG has an insufficient number of economy and efficiency audits  that result in reported monetary savings.
In addition, the IG does not believe that our conclusions regarding audit  coverage are sufficiently balanced to recognize audits that are focused on  areas other than economy and efficiency. Contrary to this statement, our  report provides information stating that the OIG’s audits have addressed  areas designated as high-risk and management challenges. We also state  that while the OIG’s audits do not adequately address the economy and  efficiency of NASA’s programs and operations, they do include  recommendations for improving compliance with laws, regulations, and  NASA policies and procedures; internal controls; and other specific areas  of NASA’s operations.
The IG provided a listing of issued audit products that he said have  addressed economy, efficiency, and effectiveness issues and specifically  highlighted nine examples. While the report recommendations may affect  the economy and efficiency of NASA’s operations, none of these reports  highlighted by the IG have specific recommendations to improve NASA’s  economy and efficiency with potential cost savings. In addition, the  reports’ recommendations address compliance with laws, regulations,  policies and procedures, internal controls, and other areas. In addition,  two of the highlighted reports were not audits and made no reference to  professional auditing standards. To illustrate our concerns regarding the  lack of OIG audit reports with recommendations for improving NASA’s  economy and efficiency, our report provides an example of an OIG audit  regarding a NASA contractor’s inadequate pricing determinations. The  audit recommends that the contracting officer ensure compliance with  contract agreements. However, even though the OIG had the opportunity,  the report did not identify any measurable cost saving to the government  resulting from the inadequate pricing and made no recommendations to  help ensure that pricing determinations will be accurate in the future.
section_title: Monetary Accomplishments
paragraphs: The NASA IG states the difference between actual monetary recoveries  from investigations and potential monetary accomplishments from audits.  The IG comments that the results of audits are more speculative and must  rely on the implementation of management to be realized. This statement  acknowledges the different purposes of audits and investigations: audits  can recommend improvements to future operations, and investigations  tend to focus on the identification of fraudulent and illegal activities that  have occurred.
section_title: Audit Planning
paragraphs: Our review found that the OIG’s strategic and annual audit plans did not  have goals and objectives that specifically address the economy and  efficiency of NASA’s programs and operations. We had recommended that  the NASA IG include in strategic and annual planning, performance audits  that address NASA’s economy and efficiency with potential monetary  savings and that the OIG work closely with an objective outside party,  such as the PCIE,  to obtain external review and consultation in the  strategic and annual planning processes. The NASA IG stated his intent to  benchmark with the PCIE community to provide assurance that audits  address these areas. While this is a positive statement we continue to  make our recommendation that the IG work closely with an objective  outside party during the strategic and annual planning processes. However  we no longer specify that the IG work with the PCIE Audit Committee on  this issue.
section_title: Staff Attrition
paragraphs: The NASA IG also disagrees with our recommendation to identify the  causes of high employee turnover with the assistance of an objective  expert and determine actions needed as appropriate. The IG states that we  did not discuss employee turnover with OIG leadership. To the contrary,  our discussions with OIG management, both past and present, provided  the information on turnover in our report and alerted us to the problem of  the OIG’s relatively high staff attrition rate. The IG also provides attrition  rates of other agency OIGs that are all lower than that of the NASA OIG  and supports our conclusion that the NASA OIG has a comparably high  staff attrition rate even when compared to other OIGs. The IG also states  that a number of steps have been taken to address the continuing  significant turnover rates. We are encouraged that the IG is already taking  steps in this area, however, because of the OIG’s relatively high rate of  staff attrition we are recommending that the NASA IG use the assistance  of an objective expert to identify the causes of employee turnover.
As agreed with your offices, unless you publicly announce the contents of  this report earlier, we will not distribute it until 30 days from its date. At  that time we will send copies of the report to the NASA Administrator; the  NASA IG; the Chairman of the Integrity Committee; the OMB Deputy  Director for Management; the Chairman and Ranking Member of the  Senate Committee on Commerce, Science and Transportation; interested  congressional committees; and other parties. This report will also be  available at no charge on the GAO Web site at http://www.gao.gov.
If you have any questions or would like to discuss this report, please  contact me at (202) 512-9471 or franzelj@gao.gov. Contact points for our  Offices of Congressional Relations and Public Affairs may be found on the  last page of this report. Major contributors to this report are listed in  appendix V.
section_title: Appendix I: Monetary Accomplishments Reported in OIGs’ Semiannual Reports to the Congress for Fiscal Year 2007
subsections: section_title: Department of Housing and Urban Development
section_title: Appendix II: Comparison of OIGs’ Budgetary Resources with Total Budgetary Resources of Their Agencies for Fiscal Year 2007
paragraphs: Amounts for TVA’s IG are from PCIE’s fiscal year 2007 profile data.
section_title: Appendix III: Comments from the Integrity Committee
subsections: section_title: The following is GAO’s comment on the Integrity Committee’s letter dated October 10, 2008.
paragraphs: Comment 1.
As the Integrity Committee stated, the information related to its activities in this  report was obtained in connection with our separate ongoing audit of the activities  and operations of the Integrity Committee.
section_title: Appendix IV: Comments from the Inspector General, National Aeronautics and Space Administration
paragraphs: The following are GAO’s comments on the NASA Inspector General’s letter  dated October 14, 2008.
subsections: section_title: GAO Comments
subsections: section_title: Comment 1.
paragraphs: The meetings referred to by the IG do not result in an endorsement of the  OIG’s work plans but rather are discussions between the NASA OIG and  GAO for purposes of coordination and cooperation. Our review of the  NASA OIG’s strategic and annual plans on this audit was in response to  our findings regarding the need for additional oversight of NASA’s  economy and efficiency and measurable potential cost savings from OIG  audits. We are encouraged by the NASA IG’s intent to benchmark with the  PCIE community to provide assurance that audits addressing program  effectiveness, economy, and efficiency fulfill the OIG mission. Therefore,  we have modified our report recommendation to have the OIG work  closely with an objective outside party to include audits of NASA’s  economy and efficiency with potential monetary savings in strategic and  annual plans.
section_title: Comment 2.
paragraphs: The IG’s comments do not cite any specific recommendations that are  targeted toward economy and efficiency with potential cost savings. In  addition, we reviewed all the recommendations in the OIG’s audit  products issued during fiscal years 2006 and 2007 and found only one  report with these types of recommendations. By providing the titles of OIG  reports, the IG provides little if any additional information on whether  economy and efficiency issues were addressed by the outcomes of the  reports. Therefore, our report continues to focus on the OIG’s lack of  economy and efficiency audit results with measurable cost savings as well  as the lack of a strategy for dealing with these types of objectives in the  annual and strategic audit plans.
section_title: Comment 3.
paragraphs: The OIG’s audit of NASA’s plan for Space Shuttle transition concluded that  NASA’s transition plan did not comprehensively address all elements  critical for a successful transition and recommended that the planning be  enhanced and that the transition be recognized as an agency management  challenge. Neither this report nor any other OIG report issued during fiscal  years 2006 and 2007 had any specific recommendations to improve NASA’s  economy and efficiency with measurable cost savings related to this  important and costly transition program.
section_title: Comment 4.
paragraphs: We did not include the percent of OIG recommendations implemented as  part of our review. We evaluated the substance of the recommendations to  determine whether they identified opportunities for improvements to  NASA’s economy and efficiency with measurable potential cost savings.
section_title: Comment 5.
paragraphs: This investigation was a coordinated effort by several offices including  those from NASA, components of the Department of Defense, and  academia, but was not performed by the NASA OIG. Our scope was to  review the results of audits and investigations by the OIG and thus,we did  not include it in our review.
The IG also provided the title of an investigative report regarding  allegations that NASA had suppressed climate change information as an  example of an accomplishment. This information does not deal with the  economy and efficiency of NASA’s programs and operations and monetary  accomplishments which is a focus of our findings and recommendations.
section_title: Comment 6.
paragraphs: We did not consider DCAA audits to be related to the NASA OIG’s  accomplishments since they are routinely provided as a service to NASA’s  contracting officers. The NASA IG points out that in our comparison of  monetary accomplishments and the return on investment by 30 IG offices  where the IGs are appointed by the President and confirmed by the  Senate, our presentation of monetary accomplishments for the  Department of Agriculture OIG and the Department of Homeland Security  OIG includes the accomplishments of DCAA. Accordingly, we have  removed the DCAA amounts from the accomplishments reported for these  OIGs and adjusted the total monetary accomplishments for all 30 OIGs for  fiscal year 2007 from a $9.52 dollar return on all their budgets to a $9.49  return. This did not affect the status of the NASA OIG’s monetary  accomplishments, which continues to be a $0.36 dollar return on the OIG’s  budgetary resources and continues to rank 27th out of 28 OIGs reporting  such accomplishments for fiscal year 2007.
section_title: Comment 7.
paragraphs: We selected fiscal year 2007 for comparison because at the time of our  review it was the most recent full year with comparative data among the  OIGs, and it was the year with the largest reported dollar savings resulting  from NASA OIG’s audits. However, in response to the NASA IG’s  suggestion that we provide data on accomplishments over a 5-year period,  we added table 4 to our report. It shows the NASA OIG’s monetary  accomplishments from fiscal years 2003 through 2007 and further supports  our conclusion that the OIG provides limited monetary accomplishments  from audits.
section_title: Comment 8.
paragraphs: We agree that the NASA IG should be committed to the full range of  activities and objectives stated in the IG Act. Those objectives and  activities include audits that result in recommendations to improve the  economy and efficiency of NASA’s programs and operations with  measurable cost savings, as well as receiving whistleblower complaints.
section_title: Comment 9.
paragraphs: Our review compared the NASA OIG’s total budgetary resources to  NASA’s total budgetary resources for fiscal years 2003 through 2007 to  determine whether the OIG’s budgets were increasing or decreasing  relative to NASA’s overall budgets. As stated in our report, the OIG’s  budget as a percent of NASA’s budget increased from 0.15 to 0.17 percent  during this period. The NASA IG states that $3.5 million in funding was  shifted from NASA to the OIG to pay for financial audits but cites this as  having no actual impact on funds available for OIG operations. We  disagree that these funds do not contribute to the resources available for  OIG operations. The NASA IG is subject to the Chief Financial Officers Act  of 1990 which specifies that the IG is responsible for the financial  statement audits of the agency. The increase of $3.5 million provides  resources in the OIG’s budget for these mandated audits. As stated in our  report, over the 5-year period we reviewed the OIG’s budgets kept pace  with or were slightly better than NASA’s budgets as a whole. In addition,  when compared to other OIGs for fiscal year 2007, the NASA OIG ranked  11th out of 30 agencies in the ratio of the OIGs’ budgets to their agencies’  budgets.
section_title: Appendix V: GAO Contact and Staff Acknowledgments
subsections: section_title: Acknowledgments
paragraphs: In addition to the contact named above, Jackson Hufnagle, Assistant  Director; Francis Dymond; Jacquelyn Hamilton; Jason Kirwan; and  Clarence Whitt made key contributions to this report.