Final Memorandum on NASA’s Compliance with Provisions of the Duncan Hunter National Defense Authorization Act of 2009
March 14, 2012
TO: William P. McNally Assistant Administrator for Procurement
FROM: Paul K. Martin Inspector General
SUBJECT: Final Memorandum on NASA’s Compliance with Provisions of the Duncan Hunter National Defense Authorization Act of 2009 – Management of Cost- Reimbursement Contracts (Report No. IG-12-014; Assignment No. A-12-001-00)
Section 864 of the Duncan Hunter National Defense Authorization Act of 2009 (Duncan Hunter Act) requires agency Inspectors General to report on use of cost-reimbursement contracts and level of compliance with related Federal procurement rules.1 For this review, we examined 39 contracts and task order for facility management services, engineering services, aeronautics research and development, and components for NASA’s space vehicles, with a combined value of approximately $2.5 billion. (See Enclosure 1 for details on our scope and methodology.)
Summary Finding
With the specific exceptions described below, we found that NASA generally complied with the Duncan Hunter Act and related guidelines of the Federal Acquisition Regulation (FAR) by properly documenting during acquisition planning the rationale, risks, and resources for the use of other than firm-fixed-price contracts (such as cost-reimbursement contracts); assigning contracting officer’s technical representatives (COTRs) prior to contract award; and validating the adequacy of contractors’ accounting systems. However, we found several instances of noncompliance, including four contract files that did not contain written acquisition plans or documentation of all required acquisition planning elements; two files that did not contain documentation of the rationale for the type of contract selected; five instances in which COTRs were not appointed until after contract award; and one case in which we were unable to determine when the COTR had been appointed. Finally, we noted five cases where NASA had not validated the adequacy of the contractor’s accounting system.
We made three recommendations to the Agency to address the issues noted above: (1) issue a Procurement Information Circular to all procurement personnel to disseminate the new requirements for using cost-reimbursement contracts to all procurement personnel; (2) revise the NASA FAR Supplement to address inconsistencies between NASA’s guidance and the new requirements for using cost-reimbursement contracts; and (3) update the current training curriculum to include the new requirements for the use of cost-reimbursement contracts. The Assistant Administrator for Procurement partially concurred with our recommendation to issue a new Procurement Information Circular, stating that he planned to notify personnel of the new requirements through alternative means, and concurred with our other two recommendations. We found the Agency’s proposed actions to our recommendations to be responsive and therefore consider the recommendations resolved.
