NASA: Agency Faces Challenges Defining Scope and Costs of Space Shuttle Transition and Retirement
Published: 2008-09-30T00:00:00

Fast Facts:

Highlights:
section_title: Why GAO Did This Study
paragraphs: The Space Shuttle Program (SSP) is scheduled to retire in 2010, and the transition and retirement of its facilities and assets will be an immense undertaking involving approximately 654 facilities worth an estimated $5.7 billion and equipment with an estimated value of more than $12 billion. NASA plans to retire the SSP in 2010 to make resources available for the Constellation program, which is producing the next generation of space vehicles by 2015. Many of the SSP's resources are expected to transition to Constellation while others will be dispositioned or preserved for their historic value. The Consolidated Appropriations Act, 2008 directed GAO to assess NASA's plans and progress in transitioning and retiring the SSP's facilities and equipment. More specifically, GAO examined 1) the challenges NASA faces in defining the scope and costs of transition and retirement activities, and 2) whether the cost of these efforts is transparent in NASA's budget requests. To address these objectives, GAO analyzed SSP plans, budget guidance, and other documents, and interviewed relevant government officials and contractors.
section_title: What GAO Found
paragraphs: The National Aeronautics and Space Administration (NASA) faces disparate challenges defining the scope and cost of SSP transition and retirement activities. For example, because the Constellation program is still finalizing its requirements, the agency does not yet know what SSP property it needs to retain or the full cost of the transition effort. In addition, NASA faces other challenges that hamper its efforts to manage the transition and develop firm estimates of SSP transition and retirement scope and costs. For example, NASA has not developed final plans and/or cost estimates for making artifacts-- including the orbiters Atlantis, Discovery, and Endeavour--safe for public display. The total cost of SSP transition and retirement is not transparent in NASA's current budget request and is not expected to be reflected in its fiscal year 2010 budget request. This is due in part to delays in estimating costs, but also to where costs are being reflected. For example, although SSP's direct transition and retirement costs are identified in the SSP budget line, indirect costs related to environmental clean-up and restoration, maintenance of required real property facilities during the gap in human spaceflight, and demolition of excess facilities are not. In addition, NASA plans to offset some transition costs by utilizing an "exchange/sale" authority that allows executive agencies to exchange or sell non-excess, non-surplus personal property and apply the proceeds toward acquiring similar replacement property.

section_title: Letter
paragraphs: After providing the United States unrivaled access to space for decades,  the space shuttle is slated to make its last flight in 2010. The National  Aeronautics and Space Administration (NASA) plans to retire the Space  Shuttle Program (SSP) to make resources available for the Constellation  program, which is expected to achieve initial operational capability in  2015. The transition and retirement of the SSP’s facilities and assets  represent an immense undertaking. The SSP occupies approximately 654  real property facilities and holds about 1.2 million line items of personal  property. NASA estimates the total replacement value of all SSP facilities  is approximately $5.7 billion, which accounts for nearly one-fourth of the  value of the agency’s total facility inventory. The total SSP personal  property acquisition value is estimated by NASA at about $12 billion, and  there are numerous locations where government personal property is  used. The SSP transition and phase-out effort will be complex and  challenging, especially when coupled with simultaneously finalizing the  designs for the Ares I crew launch vehicle and Orion crew exploration  vehicle and conducting potentially the most complicated sequence of  shuttle flights ever attempted—completing the International Space Station  and conducting a fifth servicing mission to the Hubble Space Telescope all  by the end of 2010.
In light of the magnitude of this undertaking, in a joint explanatory  statement accompanying the Consolidated Appropriations Act, 2008 (Pub.  L. No. 110-161), you asked us to assess NASA’s plans and progress in  transitioning and retiring the SSP’s assets and facilities. More specifically,  GAO examined 1) the challenges NASA faces in defining the scope and  costs of transition and retirement activities, and 2) whether the cost of  these efforts is transparent in NASA’s current and upcoming budget  requests. To address these objectives, we obtained and analyzed SSP  transition and retirement plans and schedules, budget formulation  guidance, and transition property assessments. We also interviewed  responsible and cognizant government and contractor officials at relevant  NASA centers and NASA headquarters. For our full scope and  methodology, see appendix I. We conducted this performance audit from  February 2008 to August 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.
subsections: section_title: Background
paragraphs: In a major space policy address on January 14, 2004, President George W.  Bush announced his “Vision for U.S. Space Exploration” (Vision) and  directed NASA to retire the SSP after completing construction of the  International Space Station in 2010 and focus its future human space  exploration activities on a return to the Moon as a prelude to future human  missions to Mars and beyond. As part of the Vision, NASA is developing  new vehicles under the Constellation program, with an initial operational  capability currently scheduled for 2015. In order to accelerate  development and minimize development costs, NASA elected to pursue  shuttle-derived options and the use of heritage systems for the new  systems. The agency also found that shuttle-derived options are more  affordable, safe, and reliable and provide the use, in some instances, of  existing personnel, infrastructure, manufacturing and processing facilities,  transportation elements, and heritage system hardware.
NASA will transfer whatever real (land, buildings, and facilities) and  personal (e.g., system hardware, tools, plant equipment) property is  practical given program requirements to Constellation and other programs  to offset the need for new acquisitions. Transferring property provides  NASA with distinct financial benefits. First, the receiving program avoids  the cost of acquiring the needed property. Second, the SSP avoids the  costs associated with disposing of the property. The SSP and its  contractors are currently conducting transition property assessments  (TPA) of property belonging to the SSP in two phases. In Phase 1 the  agency is identifying existing SSP personal property and determining  property category, item status, availability date, and whether the property  should be transferred or declared excess. This process is ongoing and  continues to identify SSP property. For example, as of May 2007 NASA had  identified about 1 million line items of SSP personal property. By May 2008  this number had increased to about 1.2 million line items. During Phase 2  of the TPA process, the agency is developing detailed plans for disposing  of excess SSP personal property including identifying hazardous materials,  cataloging recoverable precious metals, providing historical artifact  justification, and identifying final destinations. Based on discussions  between the Space Shuttle and Constellation programs, it is estimated that  about 40 to 47 percent of SSP personal property will be transferred to  Constellation and other NASA programs and the remaining property will  be declared excess.
NASA has yet to include an official estimate of the total cost of the SSP  transition and retirement in any of its budget requests. Although NASA has  developed a series of cost estimates for it—ranging from the $4.4 billion  reported by the NASA Inspector General in January 2007, to the  approximately $1.8 billion estimate prepared by the agency to support its  fiscal year 2009 budget request—and has been funding SSP transition and  retirement activities out of its approved Shuttle budget, the agency has not  included any of the estimates for fiscal years 2011 and beyond in its budget  requests to the Congress. NASA transition managers maintain that NASA  made a strategic decision not to release an estimate of transition and  retirement costs for fiscal years 2011 and later until the scope of the effort  and the associated costs and schedule were better defined. According to  NASA transition managers, the agency has now accomplished this better  definition and plans to include an estimate substantially lower than the  earlier $1.8 billion estimate for the total cost of SSP transition and  retirement in its fiscal year 2010 budget request.
We have previously reported on NASA’s management of the billions of  dollars of government equipment under its control. We found weaknesses  in the design and operation of NASA’s systems, processes, and policies  covering the control and accountability of equipment. We made  recommendations that focused on ways to strengthen NASA’s internal  control environment and improve its property management.
section_title: NASA Faces Challenges Defining SSP Transition and Retirement Scope and Costs
paragraphs: NASA faces disparate challenges defining the scope and costs of SSP  transition and retirement activities. The Constellation program is finalizing  the requirements that will inform the SSP of what real and personal  property needs to be retained and what should be declared excess.  Furthermore, the property assessments needed to inform NASA’s budget  planning process may not be completed in time to support the cost  estimates the agency plans to include in its fiscal year 2010 budget request.  In addition, NASA faces other challenges that further hamper the agency’s  efforts to develop firm estimates of SSP transition and retirement scope  and cost, including finalizing plans for safing artifacts.
subsections: section_title: Lack of Finalized Constellation Program Requirements Contributes to SSP Transition and Retirement Uncertainties
paragraphs: The Constellation program is still finalizing its requirements and defining  needed capabilities; therefore, the agency does not know, in all instances,  what SSP property needs to be retained and what property can be  declared excess. According to SSP and Constellation transition managers,  there is a symbiotic push and pull relationship between the SSP and the  Constellation program. Ideally, in this relationship the SSP would push the  property that it no longer needs for the safe operation of the space shuttle  to the Constellation program in order to avoid property maintenance  and/or disposal costs. Likewise, in order to avoid acquisition costs, the  Constellation program would pull the SSP property that it has designated  as needed. Thus far, however, this relationship has not worked as well as  the agency has desired. Essentially, the Constellation program has not  finalized its requirements for personal and real property from the SSP  because it is still in the process of defining its own programmatic  requirements. For example, at the time of our review, the Constellation  program had yet to hold its Preliminary Design Review during which it will  finalize its preliminary design and operations concepts, two key steps in  determining the Constellation program’s hardware and processing facility  needs. Further, according to the Exploration Systems Mission Directorate  (ESMD) Transition Manager, the Constellation program is just now  realizing the importance of “pulling” SSP assets to avoid costs, as any and  all of the SSP transition and retirement costs post-2010 will be borne by  NASA at the expense of the follow-on program(s) or Center Management  and Operations budgets.
section_title: NASA Will Not Complete the TPA Process Until After the Agency’s Budget Request for Fiscal Year 2010 Is Submitted
paragraphs: NASA will not complete the last phase of the TPA process until after the  agency’s budget request for fiscal year 2010 is submitted and may not  complete all TPA activity until the end of fiscal year 2009. NASA plans to  complete Phase 1 of the TPA process by the end of September 2008.  However, delays in finalizing system designs within the Constellation  program are hampering the efforts of the Solid Rocket Booster element of  the SSP to complete Phase 1 on time. In effect, Phase 2 of the TPA process  will develop the type of detailed information needed to support accurate  SSP transition and retirement cost estimates. The TPA Phase 2 process,  however, is not scheduled for completion until January 2009—well after  the fiscal year 2010 budget request is formulated. Furthermore, the Space  Shuttle Main Engine does not anticipate completing TPA Phase 2 until  August 2009, well after the budget request is submitted to Congress.
section_title: Other Challenges Further Hamper NASA’s Efforts
paragraphs: NASA faces other challenges that further hamper the agency’s efforts to  define the scope and cost of SSP transition and retirement. In addition to  the issues discussed above, NASA has not yet developed final plans and/or  cost estimates for safing artifacts, including the orbiters Atlantis,  Discovery, and Endeavour. Moreover, the SSP lacks a centralized  information system to track and control all SSP property. A centralized  system would be particularly useful as transition and retirement activities  are expected to rapidly increase in 2010. These and other challenges are  summarized in table 1 below.
All of these challenges further hamper NASA’s efforts to develop firm  estimates of SSP transition and retirement scope and cost. Lastly, at the  time NASA will be experiencing an increase in transition activity, it will  simultaneously be finalizing the designs for the Ares I and Orion vehicles  and conducting potentially the most complicated sequence of shuttle  flights ever attempted—completing the International Space Station and  conducting a fifth servicing mission to the Hubble Space Telescope all by  the end of 2010. These activities will likely create additional challenges for  the transition efforts, as they may require more attention than anticipated  from the workforce as well as more resources should unexpected  problems occur.
section_title: SSP Transition and Retirement Costs Are Not Transparent in NASA’s Budget
paragraphs: SSP transition and retirement costs are not transparent in NASA’s current  budget request and are not expected to be fully reflected in its 2010  request. This is partly due to challenges and delays in finalizing cost  estimates as described above as well as where costs are being reflected in  the budget. Specifically, in laying out its plans for SSP transition and  retirement, NASA elected to capture transition and retirement costs within  its existing budget structure rather than display them separately.  Consequently, the costs of the SSP transition and retirement are dispersed  throughout NASA’s budget request. SSP’s direct transition and retirement  costs are included in the SSP budget line. The Cross-Agency Support  portion of NASA’s budget, however, includes funding for significant SSP  transition and retirement activities that NASA considers indirect costs,  including environmental compliance and remediation and demolition of  excess facilities. These funds, however, are not identified as SSP transition  and retirement costs and it is not easy to discern that they are transition  related. Furthermore, NASA plans to offset some transition costs by  utilizing an exchange/sale authority that allows federal agencies to  exchange or sell non-excess, non-surplus personal property and apply the  proceeds toward acquiring similar replacement property.
subsections: section_title: SSP Budget Line
paragraphs: The SSP budget request for fiscal year 2009 identifies a funding need of  about $370 million for transition and retirement through fiscal year 2010 to  pay for activities within each of the SSP’s three major projects—flight and  ground operations, flight hardware, and program integration (see table 2).  NASA will use these funds to cover the costs of the prime contractor, SSP  personnel, and support contractors working on transition and retirement  activities. These activities, however, do not represent the full scope of SSP  transition and retirement.
section_title: Cross-Agency Support Appropriation Account
paragraphs: The Cross-Agency Support appropriation account within NASA’s budget  includes or will include funding for significant SSP transition and  retirement activities. This appropriation account—which is not aligned  with a specific program or project—includes what are essentially NASA’s  administrative or overhead costs for all of its centers and activities. Cross- Agency Support will include SSP transition and retirement funding within  its Environmental Compliance and Restoration, Center Management and  Operation, and Strategic Institutional Investments budget lines. These  funds, however, are not identified as SSP transition and retirement costs.  As such, it is difficult to discern the full costs of the transition and  retirement effort.
subsections: section_title: Environmental Compliance and Restoration
paragraphs: Funding for SSP-related environmental clean-up is included under NASA’s  Environmental Compliance and Restoration program. NASA currently  estimates that the SSP has contributed to environmental contamination at  94 of 163 sites and that the agency’s total environmental clean-up liability  is about $1 billion over several decades. Agency officials maintain that  they are unable to separate the cost of SSP environmental clean-up from  the total estimate of the agency’s environmental liability because, in most  instances, NASA is unable to differentiate between clean-up associated  with the SSP and clean-up associated with legacy programs such as  Apollo. Agency officials indicate that historically NASA has spent about  $51 million annually on environmental compliance.
section_title: Center Management and Operation (CM&O)
paragraphs: The CM&O budget request is part of the Cross-Agency Support  appropriation account that funds the maintenance of facilities. Funding for  the property disposal offices at the centers that will physically dispose of  excess SSP personal property and funding to maintain real property  facilities is included in the CM&O line. The SSP is supposed to provide  funding to these offices for any level of SSP property disposal above their  normal level of activity, e.g., 62,994 pieces of property in fiscal year 2007.  The sheer volume of SSP disposal activity, hundreds of thousands of line  items of personal property, however, will likely consume the near full  attention of these offices during the time frame of the SSP transition and  retirement. Consequently, the baseline CM&O funding will be applied  primarily to SSP transition and retirement activities. In terms of facilities  maintenance, centers and programs maintain a tenant/landlord-like  relationship wherein programs such as the SSP and Constellation in effect  pay the centers for the use of facilities, except where specific facilities are  entirely program funded. Any facility maintenance costs beyond those  covered by the lease-type arrangements between the centers and the  programs are offset by the CM&O budget.
section_title: Strategic Institutional Investments
paragraphs: NASA plans to eventually demolish excess SSP facilities. According to  agency officials, NASA plans to fund the demolition of excess real  property within the Strategic Institutional Investments line within the  Cross-Agency Support appropriation account at a level of about $15  million annually. The officials noted that because NASA has already  scheduled demolition activities through 2015, NASA would probably not  request funds to demolish excess SSP facilities until after fiscal year 2015.  However, facility demolition post retirement of the Space Shuttle will  occur when needed.
section_title: Exchange/Sale Authority
paragraphs: NASA plans to offset some transition costs by utilizing an exchange/sale  authority that enables federal agencies to exchange or sell non-excess,  non-surplus personal property and apply the proceeds toward acquiring  similar replacement property. This authority may also enable agencies to  reduce certain costs, such as storage and administrative costs associated  with holding the property and processing it through the normal disposal  process. NASA intends to use proceeds from the exchange/sale of SSP  personal property to offset the cost of acquiring replacement Constellation  hardware. According to NASA,it will use the General Services  Administration (GSA) to conduct Federal Asset Sales of all personal  property located at or near NASA Centers and the Defense Contract  Management Agency for the disposition of personal property located at  vendor facilities.According to agency officials, however, NASA has not  prepared an estimate of anticipated exchange/sale revenue. The officials  indicated that proceeds received from the exchange/sale of SSP property  will be transferred initially to an existing budget clearing account, wherein  the agency will move the funds to a lower-level direct budget work  breakdown structure element to supplement the acquisition of  replacement property by the Constellation Program.
section_title: Conclusions
paragraphs: SSP transition and retirement is an immense undertaking involving  numerous actors across government and the aerospace industry. NASA  faces great challenges in completing all planned efforts between now and  the end of 2010. Effective implementation of these efforts requires careful  planning to safely complete the ISS and repair the Hubble Space Telescope  while expeditiously freeing SSP funding and facilities for the Constellation  program. NASA is still in the process of developing the required plans.  Incomplete planning, however, does not preclude the agency from  providing the Congress with a more informed basis for decision making.  Indeed, NASA’s strategic decision to delay submission of an estimate until  planning is near complete has placed the Congress at a knowledge deficit  relative to available information when considering the agency’s total  funding needs. In the current budget environment, in which needs outpace  available funding, it is imperative that NASA provide the Congress with the  best information available, even if that information is incomplete or  subject to change.
section_title: Recommendation for Executive Action
paragraphs: To provide congressional decision makers with a more transparent  assessment of funding needs for the SSP’s property transition and  retirement activities, we are recommending that the NASA Administrator  direct the Space Operations Mission Directorate to include in NASA’s  fiscal year 2010 and future budget requests the agency’s best estimates of  the total direct and indirect costs associated with transition and retirement  of space shuttle property, including estimates of potential exchange/sale  revenue. These estimates should include but not be limited to  those costs borne directly by the SSP;  those funds requested under Cross-Agency Support that will be used to  support property transition and retirement activities, such as   funds requested to demolish excess facilities and buildings, and   funds requested for environmental compliance and remediation, and;  the potential proceeds from exchange/sales of excess space shuttle  property.
NASA’s fiscal year 2010 and future budget requests should also identify all  required transition and retirement activities which NASA has identified but  not yet included in cost estimates and report NASA’s progress in  completing SSP transition and retirement activities.
section_title: Agency Comments and Our Evaluation
paragraphs: In written comments on a draft of this report (see app. II), NASA  concurred with our recommendation. NASA acknowledged that, thus far,  it had not included estimates of the full scope and cost of Space Shuttle  transition and retirement costs in any of its budget requests and that the  agency is still in the process of finalizing the scope and cost of Space  Shuttle transition and retirement activities. NASA stated that it expects  estimates for fiscal year 2011 and beyond to be sufficiently mature to  include in the President’s budget proposal for 2010 and that the agency  intends, subject to approval by the Office of Management and Budget, to  include the estimates in its fiscal year 2010 budget request. NASA also  acknowledged the need to provide the Congress estimates of anticipated  revenue from exchange sales but noted that, even taking into account the  large amount of personal property to be disposed after fiscal year 2010, the  agency does not expect large amounts of revenue from exchange sales.  NASA also stated that the SSP was only one contributing factor to specific  sites requiring environmental remediation and that NASA consolidates its  budget for environmental remediation. This report recognizes that legacy  programs contributed to environmental contamination and that NASA has  a consolidated budget for environmental remediation apart from  individual programs. Nevertheless, environmental remediation of SSP sites  represents a substantial portion of the total costs associated with  transition and retirement of the SSP. Separately, NASA provided technical  comments which have been addressed in the report as appropriate.
We are sending copies of the report to NASA’s Administrator and  interested congressional committees. We will also make copies available  to others upon request. In addition, the report will be available at no  charge on GAO’s Web site at http://www.gao.gov.
Should you or your staff have any questions on matters discussed in this  report, please contact me at (202) 512-4841 or at ChaplainC@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 that made  key contributions to this report are listed in appendix III.
section_title: Appendix I: Objectives, Scope, and Methodology
paragraphs: To assess National Aeronautics and Space Administration’s (NASA)  challenges in transitioning and retiring the Space Shuttle Program’s (SSP)  assets and facilities and to determine if the cost of these efforts is  transparent in NASA’s budget requests, we obtained and reviewed NASA  documents including the Human Space Flight Transition Plan, Space  Shuttle Program Transition Management Plan, Space Shuttle Program  Transition and Retirement Requirements, and the Space Shuttle Program  Risk Management Plan. We also examined NASA’s contract  documentation, budget requests, and NASA’s 2009 Planning, Programming,  Budgeting and Execution Guidance. We physically inspected property and  interviewed and received detailed briefings from NASA and contractor  transition management officials at NASA Headquarters in Washington,  D.C.; the Kennedy Space Center in Orlando, Florida; the Johnson Space  Center in Houston, Texas; the Marshall Space Flight Center in Huntsville,  Alabama; the Stennis Space Center in Mississippi; and the Michoud  Assembly Facility in New Orleans, Louisiana. We also attended NASA’s  Transition Quarterly Program Manager’s Review at the Stennis Space  Center. We discussed government property disposal policies and practices  with General Services Administration officials in Washington, D.C., and  Defense Contract Management Agency officials at the Kennedy Space  Center. In addition, we held discussions with Congressional Research  Service staff members on their prior and ongoing work related to NASA’s  transition effort. Furthermore, we met with NASA’s Office of Inspector  General to discuss its report on the Space Shuttle Program’s transition and  retirement and reviewed previous GAO testimonies and reports related to  NASA’s transition effort.
We conducted this performance audit from February 2008 to August 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: Appendix II: Comments from the National Aeronautics and Space Administration
section_title: Appendix III: GAO Contact and Staff Acknowledgments
subsections: section_title: Acknowledgments
paragraphs: In addition to the contact named above, Jim Morrison, Assistant Director;  William C. Allbritton; Helena Brink; Greg Campbell; Sylvia Schatz; John S.  Warren; and Alyssa Weir made key contributions to this report.