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February 16, 2007

GAO: NASA's Management of Its Contractor Award Fees Needs to Be Improved

The Government Accountability Office (GAO) released a report today (GAO-07-58) on procurement practices at the National Aeronautics and Space Administration (NASA) that identifies a number of problems with the agency’s management of its contractor award fees.

The GAO report, entitled Use of Award Fees for Achieving Program Outcomes Should Be Improved, was requested by House Committee on Science and Technology Chairman Bart Gordon (D-TN).

"Given NASA’s dependence on cost-plus-award-fee contracts, I’m concerned that GAO’s investigation found that NASA has failed to follow its own long-standing guidelines governing award fees," stated Chairman Gordon in response to the GAO findings.  "While there can be mitigating factors, I don’t think it makes sense for contractors to receive a majority of the allowable award fee if they don’t meet the contract’s cost, schedule, or performance requirements.  I want to make sure NASA is using taxpayer dollars as wisely and efficiently as possible."

GAO’s findings include the following:

  • NASA has not consistently implemented its own guidance on how the award fees given to its contractors should be managed.
  • In some cases there appears to be a significant disconnect between program results and fees paid.
  • NASA has paid significant amounts of available fee on all of the contracts GAO reviewed, including those contracts that did not meet the agreed-upon cost, schedule, or performance requirements.
  • NASA has not evaluated the effectiveness of award fees in achieving desired program results.

In its response to the GAO’s draft report, NASA said it agreed with GAO’s recommendations and was taking steps to address the problems identified.

"I’m encouraged that NASA recognizes that there is a problem and intends to address it.  The Science and Technology Committee will track NASA’s progress in implementing GAO’s recommendations over the coming months," concluded Chairman Gordon.

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