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NASA OIG: NASA's Construction Of Facilities

Status Report From: NASA Office of Inspector General
Posted: Wednesday, September 8, 2021

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Full report

WHY WE PERFORMED THIS AUDIT

NASA facilities and infrastructure-including offices, laboratories, launch complexes, test stands, and wind tunnels- are necessary components for exploring the Moon and Mars, facilitating the commercial space industry, conducting aeronautics research, and studying Earth and space sciences. NASA manages $40 billion in facility assets with an inventory of more than 5,000 buildings and structures; however, over 75 percent of this infrastructure is beyond its design life and the Agency faces a deferred maintenance backlog of $2.66 billion as of 2020. To address these challenges and mitigate risks to current and future missions, NASA's Construction of Facilities (CoF) program focuses on modernizing NASA's infrastructure through consolidation into fewer, more efficient, sustainable facilities and repairing failing infrastructure to reduce overall maintenance costs.

NASA spent roughly $359 million each year over the past 5 years on its CoF program for institutional and programmatic projects. Institutional projects involve the repair or replacement of aging equipment, facilities, and infrastructure. Programmatic projects are Mission Directorate-funded projects for construction of specialized capabilities that directly support specific NASA missions. Given the age and changing needs for NASA's infrastructure, proper management of CoF funds is crucial to ensure that the right facilities are built or maintained in the right locations to meet mission requirements.

In this audit, we assessed the extent to which the Agency is effectively managing its facility construction efforts. Specifically, we examined whether NASA has processes in place to (1) justify, prioritize, and fund its CoF projects and (2) ensure that projects meet cost, schedule, and performance goals. To complete our work, we interviewed officials from the Facilities and Real Estate Division (FRED) at NASA Headquarters, Mission Directorates, and eight Centers. We also reviewed federal and Agency guidance and 20 CoF projects' justifications and performance.

WHAT WE FOUND

NASA's process for selecting and prioritizing CoF replacement and renovation projects is largely driven by Centers, regardless of their importance to the Agency's overall mission needs. Centers receive a percentage of the available institutional funds for building projects over a 5-year period based primarily on the current value of each Center's facilities. This process lacks the same rigor as the risk-based approach that NASA conducts for its repair project prioritization, and results in Centers with the highest replacement values receiving a bigger portion of available funds. FRED generally approves Centers' requested projects on a first-come, first-funded basis if the projects are within the Center's targeted funding levels, consistent with Center planning documents, and approved by the Agency's Mission Support Council. The process also does not effectively utilize business cases for Agency-level prioritization, despite their value towards providing the required business need and justification for initiating projects in terms of a cost-benefit analysis. Moreover, assumptions such as the scope of the projects used in the Agency's business cases did not consistently match the actual scope of the approved projects. For energy savings projects costing less than $10 million, Centers do not submit a business case to request funds. Instead NASA only considers a projected total cost savings per year with not all expenses, such as operations and maintenance, factored in as part of the life-cycle cost analysis.

In addition, NASA policy does not distinguish between the use of institutional and programmatic CoF funds. As a result, Centers often use funds that traditionally support institutional capabilities such as office buildings and utility systems to fund highly technical projects that Mission Directorates were unwilling to fund for various reasons including the difficulty in determining cost sharing arrangements for facilities with multiple users. Using institutional CoF funds to build specialized facilities for testing and development dilutes the funds available for making critical repairs and supporting other more traditional institutional requirements.

Several of the construction projects we reviewed also led to an expansion rather than consolidation of facilities and at times increased the amount of technical facility space such as laboratories while removing non-technical space such as warehouses. While NASA policy does not currently require the removal to come from facilities with space similar to what is being built, increasing technical space can be more expensive to maintain.

Further, Agency guidance does not require programs to identify facility needs or funding sources early in the development and implementation phases, increasing the risk that facility requirements will not be identified until later when it is more costly to address those issues. We also found NASA lacks an Agency-wide facility master plan that considers consolidation of activities between Centers. As a result, NASA may not be constructing the highest priority projects to meet future mission needs.

Of the 20 CoF projects we reviewed, 6 incurred significant cost overruns ranging from $2.2 million to $36.6 million and 16 of the projects are 3 months to more than 3 years behind their initial schedules. Costs increased primarily because requirements were not fully developed by the Agency before construction began, requirements were not fully understood by contractors, and contract prices were higher than originally estimated. Delays occurred because projects faced postponed start times and changing requirements, among other reasons. Finally, NASA did not provide effective oversight to determine whether the Agency's portfolio of CoF projects met cost, schedule, and performance goals. FRED has failed to consistently keep up with oversight requirements of approved and funded projects and current oversight guidance does not align with Agency facility goals. Increased costs and delays further limit NASA's CoF resources and hinder the Agency's ability to modernize its infrastructure into fewer, more sustainable and affordable facilities.

WHAT WE RECOMMENDED

To ensure NASA is effectively managing its facility construction efforts, we recommended NASA's Assistant Administrator for Strategic Infrastructure: (1) develop and institute an Agency-wide process to prioritize and fund institutional and programmatic CoF projects that align with Agency-level missions and require business case analyses to be completed and considered as part of the process prior to the projects' approval; (2) revise NASA Procedural Requirements 8820.2G to (a) define and establish parameters for the use of institutional and programmatic CoF funds and establish a cost-sharing method for facilities that will have more than one user, (b) require energy savings projects to consider life-cycle costs as part of their cost-benefit analyses, and (c) include requirements to reduce and consolidate the Agency's footprint that considers the demolition of like facilities when possible for discrete construction projects; (3) institute a process in coordination with the Mission Directorates to ensure facility requirements are identified and funding sources are specified during a program's development and implementation phases; and (4) reexamine policies regarding oversight of the CoF program to identify alternative approaches to more effectively oversee the program.

We provided a draft of this report to NASA management who concurred or partially concurred with our recommendations and described planned actions to address them. We consider the proposed actions responsive for recommendations 1, 2b, 2c, 3, and 4 and will close the recommendations upon their completion and verification. Recommendation 2a will remain unresolved pending further discussions with the Agency.


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