Blank check at NASA

GAO report: Poor financial management spurs cost overruns

Despite more than a decade of warnings from federal auditors, NASA risks inaccurately reporting the cost of its most expensive space missions because the agency still struggles to build a modern financial management system. Analysts say the agency's decentralized spending power is partly to blame.

Since the Government Accountability Office last reviewed the agency's Integrated Financial Management Program in 2003, progress has been slow, especially in establishing an enterprise architecture. Of the 45 recommendations made in 2003, NASA has completed only three and not started or barely started another 29.

"For more than a decade, we have identified weak contract management and the lack of reliable financial and performance information as posing significant challenges to NASA's ability to effectively run its largest and most costly programs," states a GAO report released last month.

NASA officials expect to complete the program in fiscal 2008. Now called the Integrated Enterprise Management Program, it is supposed to produce meaningful, reliable and timely information to support daily program management and external financial reporting.

Last month's GAO report -- requested by Reps. Sherwood Boehlert (R-N.Y.), chairman of the House Science Committee, and Bart Gordon (D-Tenn.), the committee's ranking member -- states that NASA has not developed an enterprise architecture policy that demonstrates agencywide commitment or written a policy for guiding its development.

According to the report, NASA's chief technology officer told auditors in May that the agency was in the process of drafting such policies. He told the report's authors that the agency would approve the policies by July.

"NASA respectfully challenges the GAO's assessment that NASA acquired and implemented significant components of [the Integrated Financial Management Program] without having and using an enterprise architecture to guide and constrain the program," wrote NASA Deputy Administrator Frederick Gregory in a letter included in the GAO report. "NASA has established a draft written/approved policy guiding the development of the enterprise architecture. The policy was submitted for final approval in July 2005."

Gregory recently resigned as deputy administrator, and according to auditors, GAO still has not seen the enterprise architecture policies.

The GAO report also states that NASA has improved its audit trail for supervising life cycle cost estimates.

GAO recommends creating an integrated enterprise master schedule with milestones that track improvement, plans already in place, completion dates, the methodology for measuring progress, and consequences for failing to meet deadlines and performance goals.

NASA has provided auditors with updated information since the release of the report, GAO officials said. This data is part of an ongoing governmentwide review of enterprise architectures. The updated information will appear in a separate cross-agency GAO report this summer.

Analysts say NASA's accounting woes may be the result of independent contract payments at each NASA center.

"Headquarters has a firm thumb on what goes on in the centers, but the centers have their own independent contract authority," said Ray Bjorklund, senior vice president and chief knowledge officer at Federal Sources, a market research firm. Incorporating each center's contract management results into one financial software system is important because the centers will likely disburse more than 70 percent of NASA's $16.5 billion fiscal 2006 budget, according to Federal Sources.

NASA finances

Individual NASA centers will distribute most of the proposed fiscal 2006 budget to contractors for mission support, which makes it difficult for NASA to manage its financial systems, analysts say.

Here are some of NASA's budget numbers.

  • According to Federal Sources, Congress' fiscal 2006 NASA budget: $16.5 billion
  • Amount research centers will divvy up for disbursements to contractors in fiscal 2006: About $12 billion
  • Amount those centers will disburse to contractors to support complex scientific and engineering activities, such as shuttle operations, Earth sensing missions and advanced studies: About $10 billion

-- Aliya Sternstein

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