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NASA OIG: Audit of NASA's Engineering Services Contract at Kennedy Space Center

Status Report From: NASA Office of Inspector General
Posted: Thursday, May 5, 2016

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Full report

WHY WE PERFORMED THIS AUDIT

Kennedy Space Center's (Kennedy) Engineering Contract with Vencore is valued at approximately $1.9 billion and provides the Center with a wide variety of services ranging from laboratory and shop maintenance to space flight engineering. This cost-reimbursement contract includes award-fee provisions and two components: a baseline and an indefinite-delivery, indefinite-quantity (IDIQ) component. The baseline covers administrative and managerial services, while the IDIQ allows NASA to issue task orders when the need for a particular service arises. Under the contract, NASA reimburses Vencore for allowable costs it incurs producing or delivering contracted goods or services, and the company may earn additional money under an award fee by meeting or exceeding predetermined performance criteria.

Our previous work has identified issues with NASA's use of award-fee contracts that raise concerns about the Agency's ability to motivate contractor performance and improve acquisition outcomes. Given these concerns and the size of the Engineering Contract, we initiated this audit to determine whether NASA is appropriately managing the Contract to accomplish mission goals in a timely and cost effective manner.

WHAT WE FOUND

The size and scope of Kennedy's Engineering Contract has made managing the Contract particularly challenging. The cost and tasks included in the baseline and task order components of the Contract are not clearly defined, managers overseeing the Contract may lack appropriate expertise, and cost allocations are not clear. In addition, several tasks Vencore is performing on a cost-reimbursable basis appear more suitable for a fixed-price arrangement.

Moreover, NASA has limited its ability to evaluate Vencore's performance by including generic milestones and deliverables in some task orders, as well as employing evaluation standards that do not align with the Federal Acquisition Regulation or the Contract's award-fee plan. As a result, NASA's evaluations of Vencore's performance do not consistently support the award-fee scores assigned or the resulting payments, and we question more than $450,000 in award-fee payments NASA made to Vencore between fiscal years 2011 and 2014.

WHAT WE RECOMMENDED

In order to more effectively manage the Engineering Contract, we made four recommendations to Kennedy's Director of Procurement, including that he examine the feasibility of utilizing smaller, more manageable contracts for engineering services including the use of a combined fixed-price/cost-plus contract, and develop Federal Acquisition Regulation- compliant evaluation standards to ensure future award fee scores are appropriately aligned with contractor performance.

In response to a draft of our report, the Agency concurred with our recommendations and proposed corrective actions. We find the actions responsive to recommendations 1 and 3 and therefore these recommendations are resolved and will be closed upon verification of the corrective actions. For recommendations 2 and 4, however, we find the Agency's proposed actions insufficient and consider the recommendations unresolved.

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