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Before the Subcommittee on Space and Aeronautics, Committee on Science 
and Technology, House of Representatives: 

United States Government Accountability Office: 

For Release on Delivery: 
Expected at 10:00 a.m. EST:
Thursday, March 5, 2009: 


Projects Need More Disciplined Oversight and Management to Address Key 

Statement of Cristina Chaplain, Director: 
Acquisition and Sourcing Management: 


Madam Chairwoman and Members of the Subcommittee: 

Thank you for inviting me to discuss the National Aeronautics and Space 
Administration's (NASA) oversight and management of its major projects. 
As you know, in 1990, GAO designated NASA's contract management as high 
risk in view of persistent cost growth and schedule slippage in the 
majority of its major projects. Since that time, GAO's high-risk work 
has focused on identifying a number of causal factors, including 
antiquated financial management systems, poor cost estimating, and 
undefinitized contracts. Because cost growth and schedule delays 
persist, this area - now titled acquisition management because of the 
scope of issues that need to be resolved - remains high risk. 

To its credit, NASA has recently made a concerted effort to improve its 
acquisition management. In 2007, NASA developed a comprehensive plan to 
address systemic weaknesses related to how it manages its acquisitions. 
The plan specifically seeks to strengthen program/project management, 
increase accuracy in cost estimating, facilitate monitoring of 
contractor cost performance, improve agency wide business processes, 
and improve financial management. 

While we applaud these efforts our recent work has shown that NASA 
needs to pay more attention to effective project management. It needs 
to adopt best practices that focus on closing gaps in knowledge about 
requirements, technologies, funding, time and other resources before it 
makes commitments to large-scale programs. For instance, the Mars 
Science Laboratory, which was already over budget, recently announced a 
2-year launch delay. Current estimates suggest that the price of this 
delay may be $400 million--which drives the current project life-cycle 
cost estimate to $2.3 billion; up from its initial confirmation 
estimate of $1.6 billion. Also, in just one year, the development costs 
of NASA's Glory mission increased by 54 percent, or almost $100 
million, because of problems NASA's contractor is having developing a 
key sensor. Total project costs for another project, Kepler have 
increased almost another $100 million within 2 fiscal years because of 
similar issues. Taken together, these and other unanticipated cost 
increases hamper NASA's ability to fund new projects, continue existing 
ones, and pave the way to a post-shuttle space exploration environment. 

Given the constrained fiscal environment and pressure on discretionary 
spending it is critical that NASA get the most out of its investment 
dollars for its space systems. The agency is increasingly being asked 
to expand its portfolio to support important scientific missions 
including the study of climate change. Therefore, it is exceedingly 
important that these resources be managed as effectively and 
efficiently as possible for success. The recent launch failure of the 
Orbiting Carbon Observatory is an all-too-grim reminder of how much 
time, hard work, and resources can be for naught when a space project 
cannot execute its mission. 

In response to congressional direction, we have prepared a 
comprehensive report on the management and oversight of NASA's major 
projects. It contains summaries of 18 projects with a combined life- 
cycle cost exceeding $50 billion. It also contains an assessment of 
issues affecting projects across-the-board. A copy of this report is 
now available on GAO's Website [hyperlink,]. 
[Footnote 1] In conducting this work, we compared projects against best 
practice criteria for system development including attainment of 
knowledge on technologies and design, as well as various aspects of 
program management. We expect to continue this assessment on an annual 
basis and to continually refine our examination so that our work can 
inform your oversight and NASA's own efforts to improve in the high 
risk area of acquisition management. 

In responding to our report, NASA asserted that the unique nature of 
its work and external factors beyond its control make it difficult to 
apply the same criteria that we apply to other major government 
acquisitions, particularly those with large production runs. We 
disagree. The criteria we used to assess NASA's projects represent 
commonly accepted, fundamental tenets of disciplined project 
management, regardless of complexity or quantity. In fact, the concept 
of the knowledge-based approach we use has been adopted in NASA's own 
acquisition policy. Key criteria that we use have been developed by 
NASA and/or incorporated into its engineering policy. Moreover, facing 
long-standing cost and schedule growth and performance shortfalls, the 
Department of Defense (DOD) acknowledges the need for a knowledge based 
approach in the Air Force's "back to basics" policy for space systems. 
Lastly, we remain open to discussions with NASA as to whether 
additional criteria can and should be applied to its systems to ensure 
that decisions to move forward in development are well-informed and 
ultimately, that taxpayer dollars are well spent. 

Today I will be highlighting the results of this work, the actions NASA 
is taking to address the concerns raised in our high risk report and 
better position its projects to meet their goals, and what we believe 
is necessary to make these actions successful. Because we also have 
responsibility for examining military space systems, we will also 
highlight common challenges with space acquisitions within NASA and the 
Department of Defense (DOD). This testimony is based on previously 
issued GAO work, which was conducted in accordance with generally 
accepted government auditing standards. 

Acquisition Management Problems Persist: 

We assessed 18 projects in NASA's current portfolio. Four were in the 
"formulation" phase, a time when system concepts and technologies are 
still being explored and 14 were in the "implementation" phase[Footnote 
2], where system design is completed, scientific instruments are 
integrated, and a spacecraft is fabricated. When implementation begins, 
it is expected that project officials know enough about a project's 
requirements and what resources are necessary to meet those 
requirements that they can reliably predict the cost and schedule 
necessary to achieve its goals. Reaching this point requires 
investment. In some cases, projects that we reviewed spent 2 to 5 years 
and up to $100 million or more before being able to formally set cost 
and schedule estimates. 

Ten of the projects in our assessment for which we received data and 
that had entered the implementation phase experienced significant cost 
and/or schedule growth from their project baselines.[Footnote 3] Based 
on our analysis, development costs for projects in our review increased 
by an average of almost 13 percent from their baseline cost estimates-
-all in just two or three years--including one that went up more than 
50 percent. It should be noted that a number of these projects had 
experienced considerably more cost growth before a baseline was 
established in response to statutory reporting requirements. Our 
analysis also shows that projects in our review had an average delay of 
11 months to their launch dates. 

We found challenges in five areas that occurred throughout the various 
projects we reviewed that can contribute to project cost and schedule 
growth. These are not necessarily unique to NASA projects and many have 
been identified in other weapon and space systems that we have reviewed 
and have been prevalent in the agency for decades. 

* Technology maturity. Four of the 13 projects in our assessment for 
which we received data and that had entered the implementation phase 
did so without first maturing all critical technologies, that is they 
did not know that technologies central to the project's success could 
work as intended before beginning the process of fabricating the 
spacecraft. This means that knowledge needed to make these technologies 
work remained unknown well into development. Consequences accrue to 
projects that are still working to mature technologies well into system 
development, when they should be focusing on maturing system design and 
preparing for production. Simply put, projects that start with mature 
technologies experience less cost growth than those that start with 
immature technologies. 

* Design stability. The majority of the projects in our assessment that 
held a critical design review did so without first achieving a stable 
design. If design stability is not achieved, but product development 
continues, costly re-designs to address changes to project requirements 
and unforeseen challenges can occur. All of the projects in our 
assessment that had reached their critical design review and that 
provided data on engineering drawings experienced some growth in the 
total number of design drawings after their critical design review. 
Growth ranged from 8 percent to, in the case of two projects, well over 
100 percent. Some of this increase can be attributed to change in 
system design after critical design review. 

* Complexity of heritage technology. More than half the projects in the 
implementation phase--eight of them--encountered challenges in 
integrating or modifying heritage technologies. Additionally, two 
projects in formulation--Ares I and Orion--also encountered this 
problem. We found that the projects that relied on heritage 
technologies underestimated the effort required to modify them to the 
necessary form, fit, or function. 

* Contractor performance. Six of the seven projects that cited 
contractor performance as a challenge also experienced significant cost 
and/or schedule growth. For example, through our discussions with the 
project offices, we were informed that contractors encountered 
technical and design problems with hardware that disrupted development 

* Development partner performance. Five of the thirteen projects we 
reviewed encountered challenges with a development partner. In these 
cases, the development partner could not meet its commitments to the 
project within planned timeframes. This may have been a result of 
problems within the specific development partner organization or as a 
result of problems faced by a contractor to that development partner. 

Common Acquisition Management Challenges Persist between NASA and DOD: 

The challenges we identified in the NASA assessment are similar to ones 
we have identified in other weapon systems, including Defense space 
systems. We testified last year that DOD space system cost growth was 
attributable to programs starting before they have assurance that 
capabilities being pursued can be achieved within available resources 
and time constraints. For example, DOD's National Polar-orbiting 
Operational Environmental Satellite System (NPOESS) has increased in 
cost from roughly $6 billion to over $11 billion because of challenges 
with maturing key technologies. We have also tied acquisition problems 
in space systems to inadequate contracting strategies and contract and 
program management weaknesses. Further, we issued a report in 2006 that 
found DOD space system cost estimates were consistently optimistic. For 
example, DOD's Space-Based Infrared High program was originally 
expected to cost about $4 billion and is now expected to cost more than 
$10 billion. 

We have found these problems are largely rooted in the failure to match 
the customer's needs with the developer's resources--technical 
knowledge, timing, and funding--when starting product development. In 
other words, commitments were made to achieving certain capabilities 
without knowing whether technologies and/or designs being pursued could 
really work as intended. Time and costs were consistently 
underestimated. As we have discussed in previous work on space systems 
at both DOD and NASA, a knowledge-based approach to acquisitions, 
regardless of the uniqueness or complexity of the system is beneficial 
because it allows program managers the opportunity to gain enough 
knowledge to identify potential challenges earlier in development and 
make more realistic assumptions about what they can achieve. 

NASA Is Making a Concerted Effort to Reduce High Risk in Acquisition 
Management but More Needs to Be Done: 

NASA has also taken significant steps to improve in the high risk area 
of acquisition management. For example, NASA revised its acquisition 
and engineering polices to incorporate elements of a knowledge-based 
approach that should allow the agency to make informed decisions. The 
agency is also instituting a new approach whereby senior leadership is 
reviewing acquisition strategies earlier in the process and has 
developed broad procurement tenets to guide the agency's procurement 
practices. Further, NASA is working to improve management oversight of 
project cost, schedule, and technical performance with the 
establishment of a baseline performance review with senior management. 
In order to improve it's contracting and procurement process, NASA has 
instituted an agency wide standard contract-writing application 
intended to ensure all contracts include the most up-to-date NASA 
contract clauses and to improve the efficiency of the contracting 
process. NASA is also requiring project managers to quantify the 
program risks they identify and collect more consistent data on project 
cost and technologies. It is taking other actions to enhance cost 
estimating methodologies and to ensure that independent estimates are 

These changes brought the policy more in line with best practices for 
product development. However, as we previously reported,[Footnote 4] 
NASA lacks defined requirements across centers and mission directorates 
for consistent metrics that demonstrate knowledge attainment through 
the development cycle. In order for a disciplined approach to take 
hold, we would expect project officials across the agency to be held 
accountable for following the same required policies. 

More steps also need to be taken to manage risk factors that NASA 
believes are outside of its control. NASA asserts that contractor 
deficiencies, launch manifest issues, partner performance, and funding 
instability are to blame for the significant cost and schedule growth 
on many of its projects that we reviewed. Such unforeseen events, 
however, should be addressed in project-level, budgeting and resource 
planning through the development of adequate levels of contingency 
funds. NASA cannot be expected to predict unforeseen challenges, but 
being disciplined while managing resources, conducting active oversight 
of contractors, and working closely with partners can put projects in a 
better position to mitigate these risks should they occur. 
Realistically planning for and retiring technical or engineering risks 
early in product development allows the project to target reserves to 
issues NASA believes are outside of its control. 

In conclusion, managing resources as effectively and efficiently as 
possible is more important than ever for NASA. The agency is 
undertaking a new multi-billion dollar program to develop the next 
generation of spacecraft for human spaceflight and at a time when it is 
faced with increasing demands to support important scientific missions, 
including the study of climate change, and to increase aeronautics 
research and development. By allowing major investment commitments to 
continue to be made with unknowns about technology and design 
readiness, contractor capabilities, requirements, and/or funding, NASA 
will merely be exacerbating the inherent risks it already faces in 
developing and delivering new space systems. Programs will likely 
continue to experience problems that require more time and money to 
address than anticipated. Over the long run, the extra investment 
required to address these problems may well prevent NASA from pursuing 
more critical science and space exploration missions. By contrast, by 
continuing to implement its acquisition management reforms and ensuring 
programs do not move forward with such unknowns, NASA can better align 
customer expectations with resources, minimize problems that could hurt 
programs, and maximize it ability to meet increased demands. 

Madam Chairwoman, this concludes my statement. I will be happy to 
answer any questions that you have. 

GAO Contacts and Staff Acknowledgments: 

For additional information, please contact Cristina Chaplain at 202- 
512-4841 or Individuals making contributions to this 
testimony include Jim Morrison, Assistant Director; Shelby S. Oakley, 
Assistant Director; Greg Campbell; Richard A. Cederholm; Brendan S. 
Culley; Deanna R. Laufer; Kenneth E. Patton; and Letisha T. Watson. 

[End of section] 


[1] We only received data for 13 of the 14 projects in implementation. 
NASA did not provide cost or schedule data for the James Webb Space 
Telescope, which is in implementation. 

[2] For purposes of our analysis, significant cost and schedule growth 
occurs when a project's cost and/or its schedule growth exceeds the 
thresholds established for Congressional reporting per the National 
Aeronautics and Space Administration Authorization Act of 2005, Pub. L. 
No. 109-161, §103; 42 U.S.C. §16613 (b), (f) (4). 

[3] GAO, NASA: Sound Management and Oversight Key to Addressing Crew 
Exploration Vehicle Project Risks. [hyperlink,] (Washington, D.C.: Sep. 28, 

[4] GAO, NASA: Assessments of Selected Large-Scale Projects. 
[hyperlink,] (Washington, 
D.C.: Mar. 2, 2009). 

[End of section] 

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