Johnson Space Center Procurement:
Controls Over Payments to Contractors Should Be Strengthened
IMTEC-93-2, Oct 23, 1992
GAO reviewed the National Aeronautics and Space Administration's (NASA) contract management practices, focusing on the Lyndon B. Johnson Space Center's (JSC) internal controls over the management of information processing contracts, grants, and purchase orders.
GAO found that: (1) while existing controls were sufficient to monitor contractor performance, JSC management directives did not require end users to verify that contractors had actually delivered the goods and services being billed before authorizing contractor payments; (2) contracting officers and financial management officials relied on the Defense Contract Audit Agency (DCAA) for assurance that goods and services were actually provided, and that contractors' cost vouchers had been adequately reviewed and approved for payment; (3) although DCAA reviewed and approved cost vouchers, it was not required to link performance to vouchers; (4) DCAA must review vouchers in 5 or fewer days, and therefore, only checked them for accuracy and conformity before provisionally approving them for payment; (5) DCAA auditors could catch unsupported, unreasonable, or unallowable costs during incurred cost audits, but did those audits several years after the contracts expired; (6) JSC procurement officials believed that their management controls were adequate, and that linking vouchers to receipts would lead to greater costs and administrative burdens; (7) one high JSC procurement official conceded that it probably could not prevent or be able to detect fraudulent acts; and (8) federal regulations require agencies to match requisition, purchase orders, receiving and authorization documents, and invoices before payment.
- Review Pending
- Closed - implemented
- Closed - not implemented
Recommendation for Executive Action
Recommendation: To provide better assurance that controls are sufficient to prevent waste, abuse, and mismanagement, the Administrator, NASA, should require JSC to systematically assess its internal control system for payments made under cost-reimbursement contracts, and develop appropriate procedures to link payment to contractors with acceptance of goods and services actually ordered and delivered.
Agency Affected: National Aeronautics and Space Administration
Status: Closed - Implemented
Comments: NASA concurred with the report's recommendation and assessed the vulnerability of its internal controls over cost reimbursement contracts. NASA also implemented plans to increase coordination with DCAA to ensure that contractors' billing systems are audited as required and that any additional audit work needed to ensure that JSC is getting what it paid for are scheduled and completed. NASA also entered into agreements with DCAA and DCMC to provide audits to centers as needed on an hourly reimbursable rate. NASA and JSC consider this recommendation closed as of April 2, 1993.