Major Management Challenges at the National Aeronautics and Space Administration

The National Aeronautics and Space Administration (NASA) continues to face management challenges and program risks in four key areas GAO identified in January 2003. Some progress has been made in addressing NASA's contract management challenge, but much work remains. Two management challenges—controlling space station costs and reducing space launch costs—have been affected by NASA's new vision for space exploration. However, because completing the space station and returning the shuttle to flight are initial steps in implementing the Vision, they will continue to be management problems that NASA needs to overcome, particularly in the projected future environment of continuing fiscal constraints. Ongoing and future GAO work will further assess progress in the remaining management challenge—strengthening human capital management.

In 1990, we designated NASA's contract management function as a high-risk area. Contract management has been designated as high risk principally because NASA has lacked a modern financial management system that provides accurate and reliable information on contract spending and has placed little emphasis on results, product performance, and cost control. NASA has taken recent actions to improve the management of its contracts, but GAO's recent and ongoing work has shown that contract management remains a high-risk area because of the considerable challenges NASA continues to face in implementing effective financial management systems and processes. For example, in November 2003, GAO reported that in implementing its most recent integrated financial management system, NASA did not reengineer its core business processes or establish adequate requirements for the system to address many of its most significant management challenges, including producing credible cost estimates. GAO recommended that NASA establish an effective architecture to guide the Integrated Financial Management Program (IFMP), address areas of IFMP financial reporting that do not comply with federal systems requirements, and follow best practices and NASA's guidance in preparing the IFMP life-cycle cost estimate. Subsequent to GAO's 2003 reports on NASA's IFMP, NASA began to take steps to strengthen its ability to manage its programs and projects and oversee its contractors—such as inventorying and categorizing its ongoing programs and projects by product line, size, and risk and defining specific management and information requirements for each category.

However, much work remains. For example, as GAO reported in May 2004, NASA often does not obtain from its contractors the financial data and performance information needed to assess progress on its contracts. In addition, NASA lacks data analysis tools and staff trained to perform cost analyses, including earned value management. Until NASA has the data, tools, and analytical skills needed to alert program managers of potential cost overruns and schedule delays before they occur and take corrective action, it will continue to face challenges in effectively overseeing its contractors. Finally, NASA continues to use unnegotiated (that is, uncosted) contract changes, a concern GAO and NASA's Office of Inspector General have previously raised. Uncosted contract changes increase the government's exposure to cost risk—the longer changes remain unnegotiated, the greater the risk. Although GAO reported in 2003 that NASA's use of such actions had significantly decreased, it recently reported a reversal in this trend. According to NASA officials, the recent increase is temporary and needed to expedite activities to return the space shuttle fleet safely to flight. Continued management attention will be needed to ensure such actions are justified. Additional information on contract management can be found in High-Risk Series: An Update ( GAO-05-207 ).

Regarding strengthening strategic human capital management, in January 2003, GAO reported that NASA was facing major workforce shortages—shortages that would likely increase as significant numbers of employees approached retirement age and the pool of new talent dwindled. Shortages were especially evident in areas critical to NASA's mission, such as engineering, science, and information technology. To address this challenge, GAO reported that NASA had undertaken a number of initiatives, including completing the development of a strategic human capital plan and establishing a new workforce planning and analysis system. NASA also requested that the Congress provide additional personnel flexibilities and authorities for attracting, retaining, developing, and reshaping a skilled workforce. In June 2003, GAO testified that the Congress was considering providing such authorities, and in February 2004, Congress enacted the NASA Flexibility Act of 2004.

GAO plans to issue a report in spring 2005 that focuses on NASA's progress and challenges in addressing Space Shuttle Program workforce issues in light of the planned retirement of the space shuttle. In the future, GAO plans to continue to monitor NASA's overall progress in addressing and resolving its human capital challenges, including implementing the provisions of the NASA Flexibility Act.

GAO also reported in January 2003 that NASA continued to face challenges in controlling space station costs. Development costs for the space station program had soared to the point where NASA had to cut back the program substantially, raising concerns among its international partners about the viability of the program. Although NASA had begun to institute management and cost-estimating reforms, it had yet to reach agreement with its partners on its planned cutbacks. In September 2003, GAO reported that the grounding of the shuttle fleet following the Columbia accident in February 2003 affected the space station's future, including the likelihood of additional costs to the station as a result of the grounding. In October 2003, GAO testified that NASA estimated the additional costs of maintaining the space station while the shuttle fleet was grounded would reach almost $100 million for fiscal years 2003 and 2004.

Finally, GAO reported in January 2003 that NASA was facing challenges in its need to reduce the costs of space launches and replace its aging space shuttle. Accomplishing NASA's goals related to space launches would be difficult and risky in light of the technology advances NASA wanted to pursue and the high degree of communication and coordination required among industry and government partners. In January 2004, GAO reported that NASA had not resolved questions concerning the shuttle's operational life nor determined requirements for elements of its Integrated Space Transportation Plan, including space station requirements. Further, in November 2004, GAO reported that in responding to recommendations of the Columbia Accident Investigation Board, NASA estimated that the cost of returning the shuttle safely to flight would exceed $2 billion. NASA cautioned that such costs would remain uncertain until the first return to flight mission, which is scheduled to go to the space station in 2005.

NASA's efforts to address space station and space launch costs have taken on added emphasis. A key outcome of NASA's vision for space exploration is the retirement of the shuttle as soon as assembly of the space station is completed, planned for the end of the decade . Upon achieving such an outcome, NASA will then shift attention and resources away from the space station and shuttle and focus on new activities, such as robotic and human missions to the Moon.

Related GAO Products

Contract Management

Space Shuttle: Costs for Hubble Servicing Mission and Implementation of Safety Recommendations Not Yet Definitive . GAO-05-34 . Washington, D.C.: November 19, 2004.

NASA: Lack of Disciplined Cost-Estimating Processes Hinders Effective Program Management. GAO-04-642 . Washington, D.C.: May 28, 2004.

National Aeronautics and Space Administration: Significant Actions Needed to Address Long-standing Financial Management Problems . GAO-04-754T . Washington, D.C.: May 19, 2004.

NASA: Compliance with Cost Limits. GAO-04-648R . Washington, D.C.: April 2, 2004.

Business Modernization: Disciplined Processes Needed to Better Manage NASA's Integrated Financial Management Program. GAO-04-118 . Washington, D.C.: November 21, 2003.

Business Modernization: NASA's Challenges in Managing Its Integrated Financial Management Program. GAO-04-255 . Washington, D.C.: November 21, 2003.

Business Modernization: NASA's Integrated Financial Management Program Does Not Fully Address Agency's External Reporting Issues. GAO-04-151 . Washington, D.C.: November 21, 2003.

Information Technology: Architecture Needed to Guide NASA's Financial Management Modernization. GAO-04-43 . Washington, D.C.: November 21, 2003.

NASA: Major Management Challenges and Program Risks. GAO-03-849T . Washington, D.C.: June 12, 2003.

Business Modernization: Improvements Needed in Management of NASA's Integrated Financial Management Program. GAO-03-507 . Washington, D.C.: April 30, 2003.

Human Capital

[No new work has been done in this area although GAO plans to issue a report in spring 2005 that focuses on NASA's progress and challenges in addressing Space Shuttle Program workforce issues in light of the planned retirement of the space shuttle.]

NASA: Major Management Challenges and Program Risks. GAO-03-849T . Washington, D.C.: June 12, 2003.

Space Station

NASA: Shuttle Fleet's Safe Return to Flight Is Key to Space Station Progress . GAO-04-201T . Washington, D.C.: October 29, 2003.

Space Station: Impact of the Grounding of the Shuttle Fleet . GAO-03-1107 . Washington, D.C.: September 12, 2003.

NASA: Major Management Challenges and Program Risks. GAO-03-849T . Washington, D.C.: June 12, 2003.

Space Launch

Space Shuttle: Costs for Hubble Servicing Mission and Implementation of Safety Recommendations Not Yet Definitive . GAO-05-34 . Washington, D.C.: November 19, 2004.

Space Shuttle: Further Improvements Needed in NASA's Modernization Efforts. GAO-04-203 . Washington, D.C.: January 15, 2004.

NASA: Major Management Challenges and Program Risks. GAO-03-849T . Washington, D.C.: June 12, 2003.