From: NASA Office of Inspector General
Posted: Tuesday, May 29, 2018
WHY WE PERFORMED THIS AUDIT
To advance its science, spaceflight, and aeronautics missions, NASA regularly enters into reimbursable agreements with academic, government, industry, international, and nonprofit entities. Under these agreements, NASA commits to provide goods, services, or facilities the Agency is not fully utilizing, enabling partners to access NASA's technical capabilities and unique resources. In fiscal year 2017, about 13 percent of NASA's spending authority, or $2.3 billion, came from funds collected through reimbursable agreements. In fiscal years 2018 and 2019, reimbursable agreements are anticipated to generate $2.8 billion and $2.1 billion, respectively.
As reimbursable agreements have accounted for an increasingly larger percentage of NASA's overall funding authority, the challenges for successfully managing and reporting on these agreements has similarly increased. Currently, NASA relies on two electronic data systems to manage its reimbursable agreements – the Partnership Agreement Maker (PAM) for domestic agreements and the System for International External Relations Agreements (SIERA). Over the last 7 years, the NASA Office of Inspector General, the Government Accountability Office, and an independent accounting firm have each issued reports identifying deficiencies in NASA's management of reimbursable agreements, including incomplete and inaccurate agreement information, insufficient polices, failure to identify costs incurred, and an inability to separate reimbursable billings and collections. Since 2013, members of Congress also have expressed concern regarding the Agency's management of reimbursable agreements.
In light of their significance to NASA's budget, prior audit concerns, and congressional interest, we initiated this audit to examine the Agency's management of reimbursable agreements. To complete this audit, we reviewed a sample of 115 domestic reimbursable agreements and 25 international agreements. We also visited six NASA Centers, reviewed relevant public laws and Agency policies, and interviewed Agency personnel.
WHAT WE FOUND
NASA has made improvements in the way it manages reimbursable agreements, but still cannot provide Congress and other stakeholders with fully accurate and complete information on their use. Specifically, half of the PAM and SIERA records we sampled contained substantial errors, such as incorrectly listing reimbursable agreement values and waived costs (i.e., costs incurred for which the partner does not reimburse NASA). For example, while PAM listed the total estimated value for the 115 domestic agreements we sampled as $11.7 billion, we found the correct value to be closer to $7.8 billion – an overstatement of nearly $4 billion, or 51 percent. Additionally, our calculation of the estimated waived costs for the sampled agreements was only $10.8 million, or 6.5 percent, of the Agency's reported total in PAM – an overstatement of $154.7 million. We were unable to make similar comparisons for agreements with international partners because SIERA does not capture estimated dollar values and waived costs. Nevertheless, in our judgment the data in PAM and SIERA is neither accurate enough to comply with congressional reporting requirements nor meaningful enough given its high error rate to provide helpful information to the Agency and its stakeholders.
The inaccuracies in PAM and SIERA data result from changing expectations for how the databases would be used and the lack of an effective data validation process. Both databases were initially designed as repositories for creating agreement records and storing documents, and were not intended to track and report agreement values and related activities. In addition, data entry is manual and thus the database contains many errors. Furthermore, although NASA implemented a process to validate PAM data in 2014, the process was not effective until further modifications were implemented in October 2017.
We also found a significant number of inaccurate links between PAM and SIERA and NASA's core financial system. For reimbursable agreements, NASA must be able to accumulate, process, and present accurate agreement data that cohesively incorporates both financial and nonfinancial information to trace reimbursable revenue back to corresponding agreements. Such integrated information can provide management and outside stakeholders insight into the size of the agreements, their progress (i.e., costs incurred), remaining obligations, and Federal Government contributions, including waived costs (which are tracked only in PAM). In a 2014 audit report, we found nonfinancial information for reimbursable agreements was not readily associable, and in response to our recommendations NASA modified its financial system to incorporate PAM and SIERA identifiers. However, 3 years later NASA is still struggling to consistently implement this process.
Finally, we identified internal control concerns that could indicate additional problems with agreement approval and execution processes. While NASA has taken actions to improve its management of reimbursable agreements by publishing an agreement handbook and establishing policies for vetting potential partners and mitigating conflicts of interest, we identified additional issues where NASA could further strengthen its process controls in these areas.
WHAT WE RECOMMENDED
To increase the accuracy, transparency, accountability, and oversight of NASA's reimbursable agreements, we recommended NASA's Chief Financial Officer, Associate Administrator for International and Interagency Relations, and Associate Administrator for Mission Support Directorate jointly (1) revise current processes to ensure information in PAM and SIERA is up to date and accurate, (2) reassess current data recording processes to minimize duplication and ensure consistency, (3) expand and update access rights to include responsible agreement personnel, (4) reexamine the agreement closeout process, (5) revise the information objectives for the estimated waived dollars field, (6) identify common data structures to meet congressional reporting requirements and managerial oversight, (7) strengthen practices to ensure accurate PAM and SIERA identification numbers are entered into the Agency's core financial system, (8) foster periodic and timely communication among agreement process participants, (9) reassess current process and improve communication of ethical concerns to avoid conflicts of interest, (10) share due diligence review best practices across the Agency, and (11) update procedures to reflect policy and process revisions resulting from the above actions.
In response to a draft of this report, NASA management concurred or partially concurred with our recommendations and described its planned actions. We consider management's comments responsive; therefore, the recommendations are resolved and will be closed upon verification and completion of the proposed corrective actions.
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