NASA OIG: NASA’s Management of USRA’s Cooperative Agreements
WHY WE PERFORMED THIS AUDIT
Cooperative agreements are legal instruments of financial assistance between a federal awarding agency and a non-federal entity to support or stimulate a public purpose. They differ from contracts in that they provide greater flexibility to the awardee and less stringent deliverable and oversight requirements. Among the multitude of organizations to whom NASA awards cooperative agreements (as well as grants and contracts) is Universities Space Research Association (USRA)an independent, nonprofit research corporation established in 1969 to conduct collaborative research in astronomy, astrophysics, lunar science, planetary science, heliophysics, Earth science, and computer science and technology. USRA outsources much of this research to hundreds of universities and nonprofit organizations across the country through subcontracts or grants.
Historically, USRA has ranked in the top five recipients of the more than $1 billion the Agency awards annually to educational and nonprofit entities. Examples of USRA’s most significant research for NASA is operation of the Stratospheric Observatory for Infrared Astronomy (SOFIA) program, the Keck Remote Observation Center (operation of Mauna Kea telescopes in Hawaii), and the Goddard Earth Sciences Technology and Research (GESTAR) partnership. In addition, NASA has cooperative agreements with USRA to recruit, identify, and place interns across the Agency.
In this audit, we evaluated NASA’s management of cooperative agreements, specifically the management of USRA cooperative agreements relative to meeting Agency requirements. We focused on NASA’s management and oversight of 21 active cooperative agreements valued at approximately $476 million that the Agency had with USRA from fiscal year (FY) 2017 through April 2020. We selected this timeframe to increase the probability that the cooperative agreements would still be active. While this report focuses on cooperative agreements between NASA and USRA, the issues identified are similar to those we found in prior audits of other recipients of NASA cooperative agreements. To complete this work, we analyzed NASA and USRA documentation, including original cooperative agreements and relevant supplements; annual progress reports; quarterly reports; payroll and other financial data files; and evaluated the USRA general ledger using a keyword search to identify potential unallowable transactions. Additionally, we obtained publicly available tax documentation and other records to review executive compensation. We also interviewed NASA management and personnel from the Office of Procurement, Office of the Chief Financial Officer, Office of STEM Engagement, NASA Shared Services Center (NSSC), Center grant officers, and USRA management.
WHAT WE FOUND
NASA needs to take additional steps to improve its management and financial oversight of cooperative agreements given the limited recipient reporting requirements outlined in the Agency’s Grant and Cooperative Agreement Manual (GCAM) and the transactional approach the NSSC takes when processing cooperative agreement actions. Under this transactional approach, multiple grant officers complete individual actions (e.g., extensions or augmentation approvals) limiting any one grant officer’s overall oversight and familiarity with the agreements. While USRA plays an important role in many NASA science missions, we found that the Agency does not have adequate management or financial oversight of USRA’s cooperative agreements shortcomings similar to those we identified in previous audits of other recipients of NASA cooperative agreements. For instance, we found the total funded extensions and augmentations increased the overall value of USRA’s 21 agreements from $200.8 million to $475.6 million. Moreover, we found a lack of information available to support these increases and award decisions. In addition, the financial reports NASA receives from USRA do not contain sufficient information to determine whether funds are being spent appropriately. We identified approximately $6.8 million in transactions on 17 cooperative agreements that met our keyword search criteria for potential unallowable costs. We also identified that for FYs 2015 through 2020, USRA overcharged the government a total of $246,060 for its President/Chief Executive Officer’s compensation package because USRA relied on an opinion from its independent auditors as to what portion of the President/CEO’s total compensation should be allocable to NASA awards, an error USRA has since corrected in its general ledger.
Federal and NASA policy state that the primary factor in determining whether an agreement should be a cooperative agreement or contract is the principle purpose of the work whether it is stimulating a public purpose or providing a direct benefit to the Agency. The criteria for both cooperative agreements and contracts is outlined in the GCAM. However, we found that 12 of the 21 USRA cooperative agreements we reviewed specifically, GESTAR and 11 internship agreements should have been awarded as contracts because they provide direct benefits to NASA. As such, NASA is violating its own policy governing the determination of whether an award should be a contract or cooperative agreement and its oversight of USRA is more limited than it would have been had the Agency used a contract vehicle. While using cooperative agreements provided greater autonomy to USRA, NASA assumed greater risk in the performance of these awards. Moving forward, NASA officials said they plan to transition the internship cooperative agreements to contracts beginning in 2022, but GESTAR will remain a cooperative agreement despite our belief that it should be a contract.
WHAT WE RECOMMENDED
To increase management and financial oversight accountability for cooperative agreements, we made 11 recommendations to the Acting Chief Financial Officer and the Executive Director of the NSSC, including (1) revise the GCAM to add criteria and review approval thresholds for cooperative agreement extensions and augmentations, and new requirements for periodic sampling of supporting documentation to validate the accuracy and completeness of expenditures charged to the Agency; (2) ensure that the follow-on GESTAR cooperative agreement is assigned to a specific grant officer and not subject to transactional processing; (3) assign individual grant officers to specific agreements; (4) conduct periodic reviews of cooperative agreements to ensure the work performed is consistent with agreements and not contracts; (5) develop a plan for retaining NASA’s performance evaluation reports in a centralized database; and (6) review USRA expenditures for allowability and recover any expenditures deemed unallowable, including the excess in executive compensation. In addition, in order to increase accountability over NASA agreements we made one recommendation to NASA’s Associate Administrator for STEM Engagement to complete planned actions to transition internship cooperative agreements to contracts before the USRA cooperative agreement extensions end in August 2022.
We provided a draft of this report to NASA management, who concurred or partially concurred with 10 of our 12 recommendations and described actions they plan to take. We consider management’s comments responsive and therefore the recommendations are resolved and will be closed upon completion and verification of the proposed corrective actions. Management did not concur with our recommendations to reevaluate and reassign individual grant officers to specific agreements or to ensure excess executive compensation USRA charged NASA was credited back to the Agency. Those two recommendations will remain unresolved pending further discussion with the Agency.
