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

Letter

Background

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.

NASA Faces Challenges Defining SSP Transition and Retirement Scope and Costs

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.

Lack of Finalized Constellation Program Requirements Contributes to SSP Transition and Retirement Uncertainties

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.

NASA Will Not Complete the TPA Process Until After the Agency’s Budget Request for Fiscal Year 2010 Is Submitted

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.

Other Challenges Further Hamper NASA’s Efforts

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.

SSP Transition and Retirement Costs Are Not Transparent in NASA’s Budget

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.

SSP Budget Line

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.

Cross-Agency Support Appropriation Account

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.

Environmental Compliance and Restoration

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.

Center Management and Operation (CM&O)

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.

Strategic Institutional Investments

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.

Exchange/Sale Authority

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.

Conclusions

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.

Recommendation for Executive Action

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.

Agency Comments and Our Evaluation

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.

Appendix I: Objectives, Scope, and Methodology

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.

Appendix II: Comments from the National Aeronautics and Space Administration

Appendix III: GAO Contact and Staff Acknowledgments

Acknowledgments

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.