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Report to Congressional Requesters: 

August 2005: 

NASA Travel: 

Passenger Aircraft Services Annually Cost Taxpayers Millions More Than 
Commercial Airlines: 

GAO-05-818: 

GAO Highlights: 

Highlights of GAO-05-818, a report to the Committee on Homeland 
Security and Governmental Affairs, U.S. Senate: 

Why GAO Did This Study: 

Since its creation, the National Aeronautics and Space Administration 
(NASA) has operated passenger aircraft services. These operations have 
been questioned in several prior audit reports. GAO was asked to 
perform a series of audits of NASA’s controls to prevent fraud, waste, 
and abuse of taxpayer dollars. In this audit, GAO assessed (1) the 
relative cost of NASA passenger aircraft services in comparison with 
commercial costs, (2) whether NASA aircraft services were retained and 
operated in accordance with governmentwide guidance, and (3) the 
effectiveness of NASA’s oversight and management of this program. 

What GAO Found: 

NASA-owned and -chartered passenger aircraft services provide a 
perquisite to employees, but cost taxpayers an estimated five times 
more than flying on commercial airlines. While the majority of NASA air 
travel is on commercial airlines, NASA employees took at least 1,188 
flights using NASA passenger aircraft services during fiscal years 2003 
and 2004. 

Example of NASA Passenger Aircraft: 

[See PDF for image] 

[End of figure]

Use of NASA passenger aircraft services can save time, provide more 
flexibility to meet senior executives’ schedules, and provide other 
less tangible and quantifiable benefits. However, GAO’s analysis of 
available reported data related to NASA passenger aircraft services 
during fiscal years 2003 and 2004 showed NASA reported costs were 
nearly $25 million compared with estimated commercial airline coach 
transportation costs of about $5 million. Further, this relative cost 
comparison, based on available NASA reported costs, did not take into 
account all applicable types of costs associated with its passenger 
aircraft services, including, for example, depreciation associated with 
the estimated $14 million NASA paid in 2001 to acquire several aircraft 
used for passenger transportation. Consequently, NASA’s passenger air 
transportation services are much more costly than indicated by 
available data. Further, NASA is currently considering additional 
expenditures of about $77 million to upgrade and expand its existing 
passenger fleet. 

NASA’s ownership of aircraft used to provide passenger transportation 
conflicts with federal policy allowing agencies to own aircraft only as 
needed to meet specified mission requirements, such as prisoner 
transportation and aeronautical research. GAO’s analysis of NASA 
passenger aircraft flights for fiscal years 2003 and 2004 showed that 
an estimated 86 percent—about seven out of every eight flights—were 
taken to support routine business operations specifically prohibited by 
federal policy regarding aircraft ownership, including routine site 
visits, meetings, speeches, and conferences. Further, agencywide 
oversight and management of its passenger aircraft services was not 
effective. NASA’s ability to make informed decisions on continued 
ownership of its passenger aircraft fleet and on flight-by-flight 
justifications was impaired by the lack of reliable agencywide data on 
aircraft costs and other weak management oversight practices. 

What GAO Recommends: 

Because NASA management has been largely unresponsive to similar prior 
recommendations, this report includes a matter for congressional 
consideration concerning legislation to restrict NASA’s ownership of 
passenger aircraft and funding for passenger aircraft services to those 
needed solely to meet valid mission requirements. To the extent 
Congress determines NASA should retain passenger aircraft services, GAO 
makes recommendations to improve program management. NASA concurred 
with GAO’s recommendations and outlined various planned actions. 
Depending on NASA actions, additional congressional action may also be 
needed. 

www.gao.gov/cgi-bin/getrpt?GAO-05-818. 

To view the full product, including the scope and methodology, click on 
the link above. For more information, contact Gregory Kutz at (202) 512-
9505 or kutzg@gao.gov. 

[End of section] 

Contents: 

Letter: 

Results in Brief: 

Background: 

NASA Passenger Aircraft Costs Are Substantially More Than Commercial 
Airline Costs: 

NASA Passenger Aircraft Ownership to Support Routine Business Not 
Justified: 

Ineffective Oversight and Management of Passenger Aircraft Services: 

Conclusions: 

Matters for Congressional Consideration: 

Recommendations: 

Agency Comments and Our Evaluation: 

Appendixes: 

Appendix I: Scope and Methodology: 

Appendix II: Comments from the National Aeronautics and Space 
Administration: 

Appendix III: GAO Contact and Staff Acknowledgments: 

Tables: 

Table 1: Comparison of Commercial and NASA Passenger Transportation 
Costs by Location or Charter Provider for Fiscal Years 2003 and 2004: 

Table 2: Summary of Examples of Routine Business Flights Using NASA 
Passenger Aircraft during Fiscal Years 2003-2004: 

Table 3: Examples of Passenger Flights Not Included in Submissions NASA 
Certified as Complete: 

Figures: 

Figure 1: Overview of NASA-Owned Passenger Aircraft Type and Location: 

Figure 2: Percentage of NASA Passenger Aircraft Flights by Purpose: 

Figure 3: Percentage of NASA Passenger Aircraft Flights by Purpose 
(Excluding Flights Related to the Columbia Accident): 

Figure 4: Overview of NASA Methodology for Comparing Its Flight-by- 
Flight Variable Costs with Commercial Flight Costs: 

Letter August 26, 2005: 

The Honorable Susan M. Collins: 
Chairman: 
The Honorable Joseph I. Lieberman: 
Ranking Minority Member: 
Committee on Homeland Security and Governmental Affairs: 
United States Senate: 

The Honorable Ted Stevens: 
Chairman: 
Committee on Commerce, Science, and Transportation: 
United States Senate: 

Since its creation in 1958, the National Aeronautics and Space 
Administration (NASA) has owned and operated a small fleet of aircraft 
to provide passenger transportation. These aircraft are in addition to 
approximately 80 aircraft that NASA reported using in its research and 
development and program support operations. NASA also contracted with 
charter carriers or had interagency agreements with other federal 
agencies to obtain additional passenger air transportation services. 
Collectively, these NASA-owned and -chartered aircraft constitute 
NASA's passenger aircraft services. 

As we have previously reported, NASA is now contending with urgent 
fiscal challenges pressuring discretionary spending--requiring it to do 
more with fewer resources--as it seeks to carry out its new vision for 
space exploration.[Footnote 1] In this context, you asked us to focus 
on controls to prevent wasteful or abusive activity with respect to 
resources allocated to NASA's passenger aircraft services. In general, 
federal policy provides that agencies should operate aircraft only as 
necessary to meet mission requirements, such as prisoner transportation 
or aeronautical research. Federal agencies' use of aircraft has been 
the subject of numerous audit reports over the years, including a 1977 
GAO report[Footnote 2] that concluded that agencies should determine 
whether aircraft are "essential or merely nice to have" and whether 
essential work could not be accomplished some cheaper way. In this 
regard, you requested that our audit address (1) the relative cost of 
NASA passenger aircraft services compared with commercial coach costs, 
(2) whether NASA's retention and operation of aircraft for passenger 
transportation was in accordance with applicable governmentwide 
guidance, and (3) the effectiveness of NASA's oversight and management 
of its passenger aircraft services. 

To determine and assess the relative costs of NASA's passenger aircraft 
with comparable commercial airline costs, we relied primarily on 
available NASA cost data. However, wherever feasible we validated 
NASA's cost data with comparable independent data sources, including 
industry data from the manufacturers of both the Gulfstream and 
Beechcraft aircraft NASA used to provide passenger transportation 
services. Specifically, we validated the cost estimates used in our 
analysis with cost metrics the manufacturers reported related to their 
aircraft. In addition, because NASA did not maintain centralized 
agencywide data, we obtained available flight-by-flight NASA passenger 
aircraft cost and usage data from source documents maintained at NASA 
centers and compiled the information into our database of agencywide 
information. We did not attempt to determine the validity or 
appropriateness of the travel, nor did we assess whether the type and 
number of personnel using NASA passenger aircraft services were 
appropriate given the stated flight purposes. 

Further, while our audit focused on overall management controls in 
place to prevent waste concerning NASA's passenger aircraft services, 
it was not designed to, nor did it include, investigations of any 
specific instances of potentially abusive activity associated with 
travel on NASA's passenger aircraft. Nonetheless, based on our work, it 
is clear NASA's current policies and practices result in significant 
waste of taxpayer funds. Furthermore, given the weaknesses we found in 
the agency's controls over its passenger aircraft services, significant 
abuse of such services is possible. As a result, we are planning a 
separate forensic audit and investigative review in this regard and 
will report separately when it is completed. Further details on our 
scope and methodology are included in appendix I. We performed our work 
from November 2004 through June 2005 in accordance with U.S. generally 
accepted government auditing standards and our investigative work in 
accordance with investigative standards prescribed by the President's 
Council on Integrity and Efficiency. We received written comments on a 
draft of this report from the NASA Administrator which are reprinted in 
appendix II. 

Results in Brief: 

NASA's passenger aircraft services--including aircraft owned by NASA 
and chartered through the Federal Aviation Administration (FAA), the 
Department of Defense (DOD), and private charter services--cost 
taxpayers at least five times more per passenger than flying on 
commercial airlines. While the majority of NASA air travel is carried 
out using commercial airlines, NASA-provided data showed that NASA 
employees took at least 1,188 flights using NASA passenger aircraft 
services during fiscal years 2003 and 2004. 

An analysis of available data on the cost of these NASA passenger 
aircraft flights showed NASA passenger aircraft services were about $20 
million more costly than comparable commercial coach ticket costs. 
Costs associated with NASA's passenger aircraft services were in the 
order of $25 million, while commercial coach tickets for the same 
number of travelers would have been approximately $5 million. This cost 
comparison is based primarily on available NASA cost reporting. 
However, NASA's passenger air transportation services are much more 
costly than reported because NASA's cost reporting did not take into 
account all costs applicable to NASA's passenger transportation 
services, including costs associated with acquiring NASA's existing 
fleet of passenger aircraft, liability insurance costs, and costs 
associated with capital improvement. For example, NASA aircraft costs 
disclosed in its annual reporting did not reflect depreciation 
associated with NASA's 2001 aircraft acquisition of at least $13.9 
million. Further, NASA's costs of owning and operating passenger 
aircraft may increase significantly in the near future with about $77 
million that it is considering spending to upgrade and expand its 
passenger aircraft fleet. These costs include costs associated with new 
aircraft to replace its existing aging fleet and installation of noise 
abatement packages. If NASA incurs these additional passenger 
transportation service costs, the extent to which NASA's passenger air 
transportation service costs exceed commercial costs will increase 
further in the near term. 

While costly, using NASA-owned and -chartered passenger aircraft 
provides a perquisite to NASA employees. Passenger aircraft services 
can save NASA employees' time, afford greater flexibility in meeting 
senior executives' schedules, and provide opportunities for other less 
tangible and quantifiable benefits over using commercial airlines. 
Interviewed passengers stated that, while the travel could have been 
completed using commercial airlines, travel on NASA-owned or -chartered 
aircraft avoided airport delays and facilitated conducting NASA 
business while in-flight. 

Further, NASA's ownership of aircraft to provide passenger 
transportation supporting routine business operations is not consistent 
with OMB policy guidance.[Footnote 3] OMB's governmentwide guidance 
directs agencies to acquire and retain only the number and size 
aircraft needed to meet direct mission requirements (such as counter- 
narcotics activities, troop transportation, and aeronautical research). 
OMB's guidance expressly provides that routine site visits, meetings, 
conferences, and speeches are not within its definition of mission-
required activities. In contrast, while NASA's implementing guidance 
reiterates the OMB policy prohibition on using aircraft supporting 
routine business operations as a basis for continuing aircraft 
ownership, its guidance also provides that mission-required use of 
aircraft includes support for activities "directly related to approved 
NASA programs or projects." This guidance has been interpreted to allow 
acquiring and retaining aircraft for any official travel related to 
NASA's programs or projects, regardless of whether the travel was 
mission required. 

Our analysis of available documentation on flight purposes shows that 
NASA's implementation of the provision in its guidance related to using 
aircraft in direct program or project support is inconsistent with OMB 
policy against owning aircraft to support meetings, conferences, and 
speeches. Specifically, our analysis of NASA passenger air 
transportation services for fiscal years 2003 and 2004 showed that 
about 86 percent of the flights were taken to support the types of 
routine business operations expressly prohibited by OMB's guidance for 
aircraft ownership. In effect, NASA's implementation of its guidance 
has resulted in NASA owning aircraft to provide passenger 
transportation for any purpose related to NASA programs or projects, 
regardless of whether it could have been as efficiently and effectively 
carried out using commercial airline services. 

With respect to oversight of its passenger aircraft services, NASA 
lacked agencywide data on costs and usage. This limited the agency's 
ability to provide complete, reliable cost and usage data to NASA top 
leadership and congressional decision makers for consideration in 
decisions on acquiring, operating, and retaining aircraft in support of 
direct mission requirements. Because all applicable agencywide costs 
associated with NASA's passenger aircraft services are not accumulated 
and visible to agency managers for day-to-day decision making, NASA 
program directorates requesting use of the aircraft may consider them 
as a "free" resource because the costs are not directly assessed 
against their budgets. 

Because NASA did not maintain agencywide data on passenger aircraft 
usage and costs for day-to-day management, we attempted to develop our 
own database capturing available NASA data on the costs and purposes of 
flights taken using NASA passenger aircraft services during fiscal 
years 2003 and 2004. However, while NASA certified to us that it 
provided complete data on all passenger flights, a comparison with FAA 
records showed that NASA records were missing data on 97 passenger 
flights. Further, our database did not include passenger flights by at 
least two other NASA aircraft--aircraft NASA classified as "program 
support" aircraft. 

Additionally, NASA's process for overseeing and managing flight-by- 
flight justifications was flawed. OMB policy requires agencies to 
compare applicable agency flight-by-flight variable costs for proposed 
flights to commercial airline costs, and to only use its own aircraft 
services for passenger transportation if such proposed usage is cost 
effective. Our analysis showed that although NASA flight-by-flight 
justifications were shown as and approved as cost beneficial to the 
government; in fact, in the majority of the cases the flights were not 
cost effective. Available flight-by-flight documentation showed that 
NASA systematically understated the variable costs associated with its 
passenger aircraft and overstated commercial costs through use of cost 
data that were 6 years out of date and use of a largely unsupported 
multiplier of 2.5 applied to salary costs for the additional time 
required to fly on commercial airlines. In addition, we found 
weaknesses in the processes in place at NASA centers to identify and 
collect reimbursements from nonofficial travelers on NASA-owned or 
chartered aircraft. 

Because NASA management has taken only limited action in response to 
similar prior audit recommendations in this area, this report includes 
a matter for congressional consideration concerning legislation to 
ensure that (1) NASA disposes of all passenger aircraft not used in 
accordance with OMB's explicit policy prohibition against owning 
aircraft to support travel to meetings, speeches, conferences, and 
routine site visits; and (2) funding for future NASA passenger aircraft 
purchases and operations is restricted to the minimum amount necessary 
to meet mission requirements consistent with OMB policy guidance 
restrictions. In addition, to the extent Congress determines NASA needs 
to continue to retain the ability to own or charter aircraft to provide 
passenger transportation services, we recommend NASA take a number of 
actions directed at establishing policies and procedures necessary to 
ensure that such services are carried out efficiently and effectively, 
including maximizing use of flexible cost-effective arrangements to 
obtain passenger air transportation to meet mission requirements. 

In its comments on a draft of this report, NASA concurred with the 
recommendations directed at NASA and outlined various ongoing and 
planned actions, including a comprehensive study of its passenger 
aircraft program to be completed by October 31, 2005. If NASA's study 
referred to above is carried out effectively and fully considers the 
various matters discussed in this report, it should provide the 
Congress valuable information for deciding whether legislation may be 
needed on this matter. 

Background: 

Under the provisions of the National Aeronautics and Space Act of 1958, 
NASA is authorized to acquire aircraft.[Footnote 4] Since its creation, 
NASA has operated a small fleet of aircraft, primarily to provide 
passenger transportation. According to the 2004 General Services 
Administration's Federal Aviation Interactive Reporting System, NASA is 
one of six civilian agencies[Footnote 5] that reported operating 
aircraft primarily for the purpose of passenger transportation. 

NASA's Aircraft Inventory: 

In fiscal year 2003, NASA reported owning and operating a fleet of 85 
aircraft valued at $362 million, including aircraft dedicated to 
program support, research and development, and passenger 
transportation. 

Program Support: 

NASA reported owning 53 aircraft that were used to provide support to 
programs such as the Space Shuttle, International Space Station, and 
Astronaut programs. The majority of these aircraft are located at the 
Johnson Space Center. For example, shuttle trainers are one type of 
program support aircraft. These aircraft have been modified to 
duplicate the shuttle's approach profile, cockpit cues, and handling 
qualities so that astronaut pilots can see and feel simulated 
approaches and landings before attempting an actual shuttle landing. 

Research and Development: 

NASA reports owning 25 aircraft to support its research and development 
efforts. These aircraft have been modified to support the agency's 
mission to conduct aeronautical research at varying altitudes and 
atmospheric conditions. For example, NASA operates a modified Learjet 
23 as a research platform for the Airborne Terrestrial Land Application 
Scanner. 

Passenger Transportation: 

NASA owns seven aircraft that are used to provide passenger 
transportation.[Footnote 6] In fiscal year 2004, NASA reported its 
seven passenger aircraft carried nearly 10,000 passengers and logged 
nearly 4 million passenger miles. Figure 1 provides an overview of the 
aircraft owned and operated by NASA to provide passenger transportation 
and their location. 

Figure 1: Overview of NASA-Owned Passenger Aircraft Type and Location: 

[See PDF for image] 

[End of figure] 

In addition, NASA obtained passenger transportation services through 
the Economy Act,[Footnote 7] a cooperative agreement, and a fractional 
ownership contract with DOD, FAA, and Flexjet, respectively. 

* DOD--Under provisions of the Economy Act, NASA acquired additional 
passenger aircraft services from DOD using Gulfstream V aircraft. DOD 
provided documentation for three NASA flights of more than 60 flight 
hours during fiscal years 2003 and 2004. DOD billed NASA approximately 
$290,000 for these services. 

* FAA--During fiscal years 2003 and 2004, NASA and FAA entered into a 
shared-use cooperative agreement for four aircraft, three of which were 
owned by FAA and the other by NASA. All four aircraft were housed at 
Reagan National Airport in Washington, D.C. In exchange for 
contributing its one aircraft and $1.1 million annually during 2003 and 
2004, NASA received the right to 450 total flight hours per year on any 
of the four aircraft. Under this agreement, NASA could schedule flights 
on these aircraft with a minimum of 24 hours advance notice. FAA agreed 
to pay routine maintenance, fuel, and personnel costs associated with 
the NASA aircraft. NASA was also allowed to purchase additional hours, 
beyond the agreed 450 hours, at the hourly rate for the specific 
aircraft used. During the 2-year period, NASA utilized the four 
aircraft in this arrangement for approximately 1,600 flight hours for a 
reported cost of $4.5 million, which included charges for the original 
900-hour agreement plus charges for additional hours. 

* Flexjet--In October 2000, conferees on the NASA fiscal year 2001 
appropriation bills directed NASA to prepare a plan that considers 
whether fractional ownership of passenger aircraft may be 
beneficial.[Footnote 8] In July 2002, pursuant to the conferee 
guidance, NASA awarded a contract with Flexjet for a 2-year 
demonstration program to determine the viability of using fractional 
ownership to meet NASA's administrative air transportation 
requirements. Under the 2-year demonstration NASA reported cost of 
approximately $3.5 million in return for a total of approximately 800 
flight hours of passenger transportation services. 

Federal Guidance on Aircraft Acquisition, Operation, and Retention: 

OMB Circular No. A-126 (Revised), Improving the Management and Use of 
Government Aircraft (May 22, 1992), prescribes policies for executive 
agencies to follow in acquiring, managing, using, accounting for the 
costs of, and disposing of government aircraft. This circular applies 
to all government-owned, leased, chartered, and rental aircraft and 
related services operated by executive agencies, except for aircraft 
while in use by or in support of the President or Vice President. OMB 
Circular No. A-126, section 6, a., provides that the number and size of 
aircraft acquired and retained by an agency and the capacity of those 
aircraft to carry passengers and cargo should not exceed the level 
necessary to meet the agency's mission requirements. OMB Circular No. A-
126, section 5, b., defines mission requirements to include activities 
related to the transport of troops and/or equipment, training, 
evacuation (including medical evacuation), intelligence and counter 
narcotics activities, search and rescue, transportation of prisoners, 
use of defense attaché-controlled aircraft, and aeronautical research 
and space and science applications. OMB Circular No. A-126, section 5, 
b. explicitly states that mission requirements do not include official 
travel to give speeches, attend conferences or meetings, or make 
routine site visits. 

In addition to the policies prescribed by OMB Circular No. A-126, 
agencies must also follow the guidance of OMB Circular No. A- 
76[Footnote 9] before purchasing, leasing, or otherwise acquiring 
aircraft and related services, to assure that these services cannot be 
obtained from and operated by the private sector more cost effectively. 
Further, agencies must review periodically the continuing need for all 
of their aircraft and the cost effectiveness of their aircraft 
operations in accordance with the requirements of OMB Circular No. A-76 
and report the results of these reviews to GSA and OMB. Agencies are to 
report any excess aircraft and release all aircraft that are not fully 
justified by these reviews. 

Once an agency has justified that it has a valid mission requirement 
for owning aircraft, OMB Circular No. A-126, section 8, a., permits 
agencies to use aircraft for official, but nonmission-required travel 
when: 

* no commercial airline or aircraft service is reasonably available 
(i.e., able to meet the traveler's departure and/or arrival 
requirements within a 24-hour period, unless the traveler demonstrates 
that extraordinary circumstances require a shorter period) to fulfill 
effectively the agency requirement; or: 

* actual cost of using a government aircraft is not more than the cost 
of using commercial airlines. 

OMB Circular No. A-126, section 14, also provides that agencies 
maintain systems that will enable them to: (1) justify the cost- 
effective use of government aircraft in lieu of commercially available 
air transportation services, and the use of one government aircraft in 
lieu of another; (2) recover the costs of operating government aircraft 
when appropriate; (3) determine the cost effectiveness of various 
aspects of their aircraft programs; and (4) conduct the cost 
comparisons required by OMB Circular No. A-76 to justify in-house 
operation of government aircraft versus procurement of commercially 
available passenger aircraft services. Attachment B of OMB Circular No. 
A-126 also provides that agency systems must accumulate and summarize 
costs into the standard passenger aircraft program cost elements. For 
example, standard cost elements would include items such as fixed and 
variable crew costs, maintenance costs, fuel costs, and overhaul and 
repair costs. 

GSA Implementing Regulations: 

In addition, the General Services Administration (GSA) established 
governmentwide policy on the operation of aircraft by the federal 
government--including policies for managing the acquisition, use, and 
disposal of aircraft that the agencies own or hire. GSA publishes its 
regulatory policies in the Code of Federal Regulations 
(C.F.R.)[Footnote 10] GSA also publishes a number of other guides and 
manuals to help agencies manage the acquisition, use, and disposal of 
aircraft. These publications include the U.S. Government Aircraft Cost 
Accounting Guide, which contains information on how agencies should 
account for aircraft costs, and the Fleet Modernization Planning Guide, 
which provides guidance on developing cost-effective fleet replacement 
plans. 

Past NASA Inspector General Reporting on NASA Passenger Aircraft: 

NASA's Inspector General (IG) issued two reports on NASA's passenger 
aircraft, one in 1995 and another in 1999.[Footnote 11] Both NASA IG 
reports were critical of NASA's management of these aircraft, 
identifying weaknesses in NASA's accounting and justification for its 
passenger aircraft. In its 1995 report, the NASA IG reported that NASA 
passenger aircraft cost an estimated $5.8 million more annually when 
compared with commercial airline transportation. The IG recommended 
actions with respect to NASA's (1) compliance with many of the 
provisions of OMB Circular Nos. A-126 and A-76 (including fully 
considering commercial airlines as an alternative to NASA operations of 
passenger aircraft services), (2) use of outdated and incomplete cost 
data to justify trips and approval of some trips without adequate 
justifications, and (3) use of passenger aircraft that were more 
expensive to operate than using commercial airline services. 

The IG's 1999 report focused on one passenger aircraft located at 
NASA's Marshall Space Flight Center and estimated that the cost of 
commercial airlines in comparison with the NASA-owned aircraft was $2.9 
million less over a 5-year period. Similar to the 1995 report, the 1999 
report was also critical of NASA's implementation of guidance in OMB 
Circular Nos. A-126 and A-76. Further, the report noted that the agency 
had not effectively addressed actions recommended in the 1995 report 
concerning the need to more fully and effectively evaluate the use of 
commercial airlines. The IG recommended that NASA management dispose of 
the passenger aircraft at Marshall and instead use commercial airlines 
to satisfy Marshall's air transportation requirements. NASA management 
disagreed with the findings of both IG reports, stating that commercial 
airlines cannot effectively meet all the mission requirements and the 
capability of NASA aircraft outweighs the marginal costs savings of 
total reliance on commercial airlines. 

NASA Passenger Aircraft Costs Are Substantially More Than Commercial 
Airline Costs: 

An analysis of NASA's reported costs for its passenger aircraft 
services shows they are an estimated five times more costly than 
commercial airline coach tickets. For purposes of this aggregate 
comparative cost analysis, we considered available NASA reported data 
on costs applicable to its passenger aircraft services--both variable 
and fixed costs--in comparison with commercial airline service costs. 
Specifically, to assess the aggregate costs associated with NASA-owned 
and -chartered passenger aircraft, we accumulated available NASA annual 
report passenger aircraft services cost data for fiscal years 2003 and 
2004, validated to the extent feasible with industry standards, and 
compared these cost estimates with total estimated commercial airline 
costs based on the cost of an average coach ticket. We determined that 
NASA's reported costs for the aircraft it owned or chartered were on 
the order of about $20 million more costly over a 2-year period than if 
NASA had used commercial airline services to carry out the same number 
of business trips. Specifically, estimated costs associated with NASA's 
passenger aircraft operations during fiscal years 2003 and 2004 were 
almost $25 million, while we estimated the cost of commercial coach 
tickets for the same number of travelers would have been approximately 
$5 million--about $20 million more to provide NASA passenger aircraft 
services than if commercial airlines were used to provide passenger 
transportation over the 2-year period. 

Table 1 summarizes our analysis of commercial and NASA passenger 
transportation costs by types of NASA-owned or -chartered aircraft. We 
identified the number of passengers from NASA's aircraft request forms 
and NASA annual performance reports.[Footnote 12] We then multiplied 
the identified number of passengers by our estimate of NASA's average 
commercial coach round-trip ticket cost. We determined the average 
coach round-trip ticket cost of approximately $426 by analyzing all 
airfares purchased with NASA's travel cards in fiscal years 2003 and 
2004. Specifically, we identified approximately $49,776,000 in round- 
trip airfare tickets in NASA travel card purchases during fiscal years 
2003 and 2004, and divided this dollar amount by the number of tickets 
purchased (116,865) to determine an average ticket cost of 
approximately $426. Finally, we compiled an estimate of NASA's 
passenger aircraft service costs, which included costs related to 
personnel, maintenance, and fuel, from annual cost reports and budget 
information provided by NASA. 

Table 1: Comparison of Commercial and NASA Passenger Transportation 
Costs by Location or Charter Provider for Fiscal Years 2003 and 2004: 

Location or charter provider (type of aircraft): Johnson Space Center 
(Gulfstream I & Gulfstream II); 
Passengers flown: 2,009[A]; 
NASA's reported cost: $5,069,000[B]; 
Estimated average coach ticket costs: $856,000; 
Difference: $4,213,000. 

Location or charter provider (type of aircraft): NASA Headquarters 
(NASA Gulfstream III, FAA chartered Gulfstream IV, and two FAA 
chartered Citation Excels); 
Passengers flown: 2,109[A]; 
NASA's reported cost: $4,532,000[C]; 
Estimated average coach ticket costs: $898,000; 
Difference: $3,634,000. 

Location or charter provider (type of aircraft): Marshall Space Flight 
Center (Gulfstream IISP); 
Passengers flown: 2,374[A]; 
NASA's reported cost: $4,463,000[D]; 
Estimated average coach ticket costs: $1,011,000; 
Difference: $3,452,000. 

Location or charter provider (type of aircraft): Flexjet Chartered 
Aircraft (Learjet Models 31A and 60); 
Passengers flown: 1,337[A]; 
NASA's reported cost: $3,551,000[E]; 
Estimated average coach ticket costs: $570,000; 
Difference: $2,981,000. 

Location or charter provider (type of aircraft): Dryden Flight Research 
Center (Beechcraft 200); 
Passengers flown: 1,404[F]; 
NASA's reported cost: $3,380,000[D]; 
Estimated average coach ticket costs: $598,000; 
Difference: $2,782,000. 

Location or charter provider (type of aircraft): Kennedy Space Center 
(Gulfstream II); 
Passengers flown: 1,675[A]; 
NASA's reported cost: $2,548,000[D]; 
Estimated average coach ticket costs: $714,000; 
Difference: $1,834,000. 

Location or charter provider (type of aircraft): Wallops Flight 
Facility (Beechcraft 200); 
Passengers flown: 884[A]; 
NASA's reported cost: $856,000[D]; 
Estimated average coach ticket costs: $377,000; 
Difference: $479,000. 

Location or charter provider (type of aircraft): DOD Chartered Aircraft 
(Gulfstream V); 
Passengers flown: 34[A]; 
NASA's reported cost: $290,000[G]; 
Estimated average coach ticket costs: $14,000; 
Difference: $276,000. 

Total; 
Passengers flown: 11,826; 
NASA's reported cost: $24,689,000; 
Estimated average coach ticket costs: $5,038,000; 
Difference: $19,651,000. 

Source: GAO analysis based primarily on NASA's costs disclosed in 
various annual reports. 

[A] Passenger numbers were taken from aircraft request forms provided 
by NASA. 

[B] Costs for Johnson Space Center aircraft were taken from annual 
reports and budget information when passenger aircraft costs were not 
separated from program support aircraft costs. 

[C] Costs associated with the use of NASA's Gulfstream III and FAA 
aircraft at Reagan National Airport were taken from NASA Headquarters 
cost reports. 

[D] Aircraft costs were taken from 2003 and 2004 annual aircraft cost 
reports. 

[E] Flexjet costs were taken from NASA's Report on the NASA Fractional 
Aircraft Demonstration Program, July 2004. 

[F] Passenger numbers were taken from 2003 and 2004 annual aircraft 
performance reports. 

[G] Costs for flights on DOD aircraft were taken from NASA's aircraft 
request forms used to justify these flights. 

[End of table]

This calculation of the difference between the relative cost of NASA- 
provided passenger transportation services and commercial airline costs 
does not consider per diem, in-transit salary and benefits, and other 
factors associated with using NASA passenger services. NASA officials 
believe that a comparison of NASA and commercial airline passenger 
services should include estimates of such cost savings shown in its 
passenger aircraft request forms. We recognize that, to the extent that 
all passengers on the aircraft had a valid purpose for travel, there 
may be personnel-related cost savings associated with use of NASA's 
passenger aircraft services; however, it was not feasible for us to 
reliably identify such costs using independent (non-NASA) sources. 
Further, as discussed in a subsequent section of this report, we have 
concerns about the reliability of some of NASA's cost and associated 
savings data captured in its flight request documentation. In addition, 
we also identified questionable savings attributed to non-official 
travelers. 

However, NASA's cost estimates do serve to provide indicators of 
general ranges of costs that may be avoided by using NASA passenger 
aircraft services. Using available NASA documentation of costs that 
would have been incurred if commercial airlines were used would 
increase the estimated commercial airline costs to approximately $11 
million, and reduce the difference between NASA's passenger airline 
services and commercial airlines to about $13 million over the 2-year 
period.[Footnote 13] Specifically, available NASA passenger aircraft 
services flight request documentation generally included estimated 
costs associated with not only airline tickets, but also estimates for 
salary and benefit costs associated with lost work time, per diem 
expenses, and rental car costs associated with the additional time 
required if commercial airlines were used to provide passenger 
transportation. Consequently, even when available NASA estimates of 
costs associated with commercial airline transportation services were 
included, a comparison with the costs of its passenger air 
transportation services shows that they are nearly 2.3 times more 
costly than commercial airlines. 

Additional Costs Associated with NASA Passenger Aircraft May Be 
Substantial: 

Our cost analysis, based primarily on data included in NASA's annual 
reporting on its aircraft operations, did not include data on all 
relevant types of costs attributable to NASA's passenger aircraft 
services.[Footnote 14] Consequently, the full cost of continued 
operation of NASA's passenger aircraft fleet in comparison with 
commercial airline services would be substantially more than the $20 
million estimate for fiscal years 2003 and 2004. Specifically, the 
following types of costs were not accounted for in NASA's various 
annual reports on its passenger aircraft services. 

Acquisition and Capital Costs: 

NASA' s current inventory of seven passenger aircraft is valued at more 
than $33 million, including two Gulfstream II aircraft purchased in 
2001 for a total of about $13.9 million. An allocable portion of the 
acquisition and associated capital improvements to these assets is part 
of NASA's annual cost of operating its passenger aircraft services. In 
addition, these costs may increase in the near future. A July 2004 
fleet plan prepared for NASA recommended upgrading and expanding its 
passenger aircraft fleet as soon as possible with an initial investment 
of $75 million. Further, NASA is considering an investment of an 
estimated $1.5 million in a noise restriction package for its 
Gulfstream III aircraft during fiscal year 2008, making the total 
investment that NASA is currently considering about $77 million. 

Hangar Costs: 

NASA aircraft received hangar and maintenance services even though they 
were housed on government property. Industry data on hangar costs show 
that they total about 5 percent of total aircraft operation costs. 

Liability Insurance Costs: 

Although the government operates under a self-insurance policy, the 
liability associated with operation of passenger aircraft is a cost 
factor that must be considered given the significant number of 
passenger flights taken using NASA-owned aircraft over the last 2 
years. Industry estimates show liability insurance costs represent 
approximately 2 percent of total aircraft operating costs. 

NASA Passenger Aircraft Ownership to Support Routine Business Not 
Justified: 

Not only were NASA's passenger aircraft services significantly more 
costly than commercial airlines, but NASA's continued ownership of 
aircraft to provide air transportation supporting routine NASA business 
operations was not in accordance with OMB guidance. OMB guidance (1) 
limits the number and size of aircraft acquired and owned by an agency 
to carry passengers to the level necessary to meet mission 
requirements, including, for example, use of aircraft for prisoner 
transportation, intelligence and counter narcotics activities, and 
aeronautical research; and (2) explicitly prohibits owning aircraft to 
support routine business functions, including providing air 
transportation to attend meetings, conferences, and routine site 
visits. In contrast, NASA's implementing guidance, while generally 
consistent with OMB guidance, was interpreted to allow acquiring and 
retaining aircraft for any official travel, regardless of the mission- 
required nature of the travel. Our analysis of available flight data 
showed that an overwhelming majority (86 percent) of the flights taken 
during fiscal years 2003 and 2004 using NASA passenger aircraft 
services were to support routine business operations, including 
attending meetings, conferences, and site visits. Excluding flights 
related to the Columbia accident, routine business flights accounted 
for about 97 percent of NASA passenger aircraft flights. Further, 
although OMB guidance required NASA to periodically prepare studies to 
determine if continued ownership of passenger aircraft was justified, 
the agency's studies were either incomplete or did not consider 
commercial airline service alternatives. 

Implementation of NASA Guidance Inconsistent with OMB Policy on 
Aircraft Ownership: 

NASA implementation is not consistent with OMB policy on aircraft 
ownership. OMB Circular No. A-126, the governing federal policy 
guidance in this area, provides that agencies should own aircraft only 
to the extent needed to meet mission requirements, such as troop 
transportation, prisoner transportation, intelligence and counter 
narcotics activities, and aeronautical research. OMB's policy guidance 
further provides that agencies should not own aircraft to provide 
transportation to meetings, routine site visits, and speeches. However, 
NASA implementing guidance, while generally consistent with OMB policy, 
does not clearly and uniformly address the federal policy limiting 
aircraft ownership to those assets needed to meet mission requirements. 
NASA Procedural Requirements (NPR),[Footnote 15] section 3.3.2, 
reiterates the OMB policy prohibition on using passenger aircraft to 
provide transportation supporting routine business operations as a 
basis for continuing to own aircraft. However, in the following 
sections (sections 3.3.2.1 through 3.3.2.5), NASA's guidance provides 
that mission-required use of aircraft includes support for activities 
"directly related to approved NASA programs and projects." These 
elaborating sections were mistakenly operationally determined to mean 
that all travel using NASA passenger aircraft services was directly 
related to NASA programs or projects, regardless of whether they were 
of a routine, nonemergency nature. 

The NASA IG's 1999 report[Footnote 16] on NASA's passenger aircraft at 
its Marshall Space Flight Center also questioned whether that 
aircraft's use was consistent with the OMB limitation on owning 
aircraft only for mission-required purposes. The audit report 
recommended that NASA change the definition of mission requirements in 
its policy guidance to conform to the definition of mission requirement 
stated in OMB guidance. However, in its response to the audit report, 
NASA management stated that there was no difference between its 
guidance and the OMB guidance and therefore it would not take any 
action to clarify its policy guidance. 

Most Flights on NASA Passenger Aircraft Do Not Meet OMB Definition of 
Mission Requirements: 

Our analysis of available documentation on flight purposes shows that 
NASA's implementation of its guidance related to using aircraft in 
direct program or project support has resulted in owning aircraft to 
support meetings, conferences, and speeches in direct conflict with 
OMB's policy prohibition in this area. In effect, NASA circumvented the 
OMB policy on restricting aircraft ownership to those needed to carry 
out mission requirements by operationally determining that nearly all 
travel using passenger aircraft services was directly related to NASA 
programs or projects. Our analysis of NASA passenger air transportation 
services for fiscal years 2003 and 2004 showed that about 86 percent of 
the flights were taken to support the types of routine business 
operations that are expressly prohibited by OMB's guidance for aircraft 
ownership. 

Specifically, we categorized the documented flight purpose listed on 
1,188 NASA aircraft request forms for NASA passenger aircraft usage 
during fiscal years 2003 and 2004 into 10 categories in order to 
determine the frequency of different uses for NASA's passenger aircraft 
services.[Footnote 17] In conducting our analysis, we categorized any 
flight as mission required if it could be linked to OMB's definition of 
mission requirements, regardless of its apparent, non-emergency nature. 
As a result, some flights we categorized as mission required may have 
actually been routine in nature. For example, in response to the 1999 
NASA IG report, NASA management stated that launch support flights were 
required to transport NASA emergency response teams to launch sites 
within hours to help resolve unexpected launch-related problems. 
However, most launch support flights during our audit period were 
scheduled more than 24 hours before the flight departure date. Of the 
19 flights we identified as directly supporting NASA launches, only 7 
were scheduled less than 2 days prior to the flight, and overall the 
flights were scheduled an average of approximately 3 days prior to 
departure. In one example, on July 29, 2003, Kennedy Space Center 
requested the use of a NASA passenger aircraft to fly from Florida to 
California as launch support for the joint Canadian Space Agency/NASA 
Scientific Satellite Atmospheric Chemistry Experiment Mission. The 
flight was requested on July 29, 2003, 12 days before the flight's 
August 10, 2003, departure and 14 days before the August 12, 2003, 
launch. We categorized this flight as being related to launch support. 
However, the fact that the flight was scheduled nearly 2 weeks in 
advance of the flight departure brings into question whether the flight 
was time sensitive and indicates that commercial coach service could 
have been used. 

Figure 2 presents the results of our analysis and categorization of 
NASA's use of owned and chartered aircraft over fiscal years 2003 and 
2004 into 10 categories. 

Figure 2: Percentage of NASA Passenger Aircraft Flights by Purpose: 

[See PDF for image] 

[End of figure] 

As shown in figure 2, available data showed that about 14 percent of 
the flights taken using NASA passenger aircraft had a stated purpose 
that appeared to comply with OMB Circular No. A-126's definition of 
mission required. As shown in figure 3, excluding flights related to 
the Columbia accident investigation, only 3 percent of NASA's passenger 
aircraft activity was related to mission-required travel. 

Figure 3: Percentage of NASA Passenger Aircraft Flights by Purpose 
(Excluding Flights Related to the Columbia Accident): 

[See PDF for image] 

[End of figure] 

Table 2 highlights examples of flights in which NASA passenger aircraft 
services were used to support non mission-critical NASA business 
operations that are not consistent with OMB's definition of mission- 
required use necessary to justify continued passenger aircraft 
ownership. 

Table 2: Summary of Examples of Routine Business Flights Using NASA 
Passenger Aircraft during Fiscal Years 2003-2004: 

Usage category: Internal meeting; 
Flight purpose description: Budget reviews for space shuttle and space 
station at the Johnson Space Center; 
Flight itinerary: Dulles, VA to Houston, TX and return; 
Estimated commercial ticket costs[A]: $3,000; 
NASA-reported flight cost[B]: $11,000. 

Usage category: Internal meeting; 
Flight purpose description: Senior management budget meetings at NASA 
headquarters; 
Flight itinerary: Johnson Space Center, TX to Washington, DC and 
return; 
Estimated commercial ticket costs[A]: 3,000; 
NASA-reported flight cost[B]: $24,000. 

Usage category: External affairs; 
Flight purpose description: Attendance at Pearl Harbor 60th anniversary 
ceremony, attendance at heads of agency meeting; 
Flight itinerary: Reagan National, VA to Anchorage, AK to Tokyo, Japan 
to Honolulu, HI and return; 
Estimated commercial ticket costs[A]: 28,000; 
NASA-reported flight cost[B]: $59,000. 

Usage category: External affairs; 
Flight purpose description: Attendance at the 2003 inauguration 
ceremony for the governor of Florida; 
Flight itinerary: Kennedy Space Center, FL to Tallahassee, FL and 
return; 
Estimated commercial ticket costs[A]: 2,000; 
NASA-reported flight cost[B]: $5,000. 

Usage category: External meeting; 
Flight purpose description: Travel by the Presidential Commission on 
Implementation of U.S. Space Exploration Policy (PCSE) to conduct 
required public hearings on the exploration policy; 
Flight itinerary: Dulles, VA to San Francisco, CA and return; 
Estimated commercial ticket costs[A]: 8,000; 
NASA-reported flight cost[B]: $51,000. 

Usage category: External meeting; 
Flight purpose description: Attendance at an annual Engineer of the 
Year Awards Conference; 
Flight itinerary: Kennedy Space Center, FL to Baltimore, MD and return; 
Estimated commercial ticket costs[A]: 3,000; 
NASA-reported flight cost[B]: $14,000. 

Usage category: Launch/landing viewing; 
Flight purpose description: Attendance at the Jet Propulsion Laboratory 
to observe the Cassini landing on Saturn; 
Flight itinerary: Reagan National, VA to Burbank, CA and return; 
Estimated commercial ticket costs[A]: 3,000; 
NASA-reported flight cost[B]: $11,000. 

Usage category: Executive retreat; 
Flight purpose description: Attendance at the NASA Enterprise Council 
Retreat in Blue Mountain Lake, NY and attendance at the Space Shuttle 
112 Crew Ceremony at Johnson Space Center; 
Flight itinerary: Kennedy Space Center, FL to Washington, DC to Saranac 
Lake, NY to Johnson Space Center, TX to Washington, DC and return to 
Kennedy; 
Estimated commercial ticket costs[A]: 8,000; 
NASA-reported flight cost[B]: $32,000. 

Usage category: Executive retreat; 
Flight purpose description: Participate in NASA Leadership Council 
retreat; 
Flight itinerary: Johnson Space Center, TX to Austin, TX to Washington, 
DC and return; 
Estimated commercial ticket costs[A]: 3,000; 
NASA-reported flight cost[B]: $23,000. 

Usage category: Training; 
Flight purpose description: E-Payroll training at Marshall Space Flight 
Center; 
Flight itinerary: Kennedy Space Center, FL to Marshall Space Flight 
Center, AL and return; 
Estimated commercial ticket costs[A]: 2,000; 
NASA-reported flight cost[B]: $18,000. 

Source: GAO analysis of NASA aircraft request forms and other NASA 
reports. 

[A] From NASA aircraft request forms. 

[B] Calculated by taking NASA's total reported costs, dividing by NASA 
reported flight hours for each aircraft, and then multiplying by the 
number of flight hours for the specific flight. NASA reported costs 
were taken from NASA's 2003 and 2004 Aviation Financial Reports and 
Johnson Space Center's Budgeted Costs for Mission Management Aircraft 
Operations. NASA aircraft flight hour usage numbers were taken from 
NASA's 2003 and 2004 Annual Aircraft Performance Reports. For aircraft 
not owned by NASA, the reported cost includes the amount billed to NASA 
as listed on the aircraft request form. 

[End of table]

The results of our interviews with passengers on such flights showed 
that, while use of the NASA aircraft was more convenient, better 
accommodated busy NASA SES-level staff schedules, and was more 
productive, the trip purposes could have been accomplished through 
travel on regularly scheduled commercial airlines. 

Flawed Implementation of OMB Guidance on Use of Government vs. 
Commercial Resources: 

OMB Circular No. A-126 policy guidance instructs agencies to 
periodically conduct OMB Circular No. A-76 cost comparisons to 
determine whether commercial activities should be conducted using 
government resources or commercial sources. NASA's A-76 studies 
conducted to date have asserted that because not all flight purposes 
could be achieved using commercial airlines, commercial airlines are 
not a viable alternative and were not considered in any of the studies. 
However, as discussed previously, our analysis of NASA passenger 
aircraft flights taken during fiscal years 2003 and 2004 as well as our 
discussions with passengers on those flights disclosed that the vast 
majority of the flights could have been accomplished using commercial 
airlines. As a result, NASA's A-76 studies inappropriately excluded 
potentially more cost-effective commercial airline services from 
consideration. 

Little supporting documentation is available for four of the seven 
aircraft in NASA's passenger aircraft fleet that were acquired decades 
ago. Consequently, it was difficult to determine how these aircraft 
acquisitions were justified and if there was a mission requirement 
justifying aircraft ownership at that time.[Footnote 18]

The five NASA A-76 studies on NASA-owned aircraft did not include a 
comparison of NASA's passenger aircraft costs with commercial airline 
costs.[Footnote 19] NASA's studies compared its aircraft ownership 
costs against costs of NASA leasing aircraft to provide passenger 
transportation services because "commercial airlines cannot effectively 
meet all mission requirements." For example, NASA's March 2004 A-76 
study was based on the assumption that NASA aircraft would be required 
to support mission requirements of an estimated 400-450 flight hours a 
year--essentially the total number of flight hours flown by that NASA 
center's passenger aircraft during 2003 and 2004. While NASA may 
continue to require access to some mission-required passenger aircraft 
services for which commercial airlines would not be a viable 
alternative, assuming that all prior flight hours were mission required 
without first examining the purpose for these flights is not consistent 
with the OMB guidance. 

In addition to NASA-owned aircraft, as discussed previously, NASA 
obtained passenger aircraft services through interagency agreements 
with DOD and FAA, and a fractional ownership pilot demonstration 
contract with Flexjet. These alternative approaches offer ready access 
to passenger aircraft without the fixed cost investment and the need to 
fund aircraft maintenance, pilot training, and other costs associated 
with aircraft ownership. For example, under NASA's contract with 
Flexjet, NASA had guaranteed availability to passenger air 
transportation services. Specifically, the contract with Flexjet 
allowed NASA to schedule flights with a minimum of 8 hours advance 
notice. According to a NASA contractor's December 2004 study, such 
arrangements to obtain passenger transportation services provide a cost-
effective alternative to agency ownership of aircraft when demand is 
highly variable or less than 150 to 200 hours a year. Such flexible 
arrangements could provide NASA with quick-turnaround access to air 
passenger transportation services, and appear to have the ability to 
have met NASA's limited mission-required needs during the period of our 
review. 

Further, NASA has not performed any A-76 studies for three of its 
aircraft that were used as passenger aircraft. NASA purchased two 
Gulfstream II aircraft in 2001 as contingency backups to, and eventual 
replacements for, its existing shuttle trainer aircraft fleet. However, 
since purchasing the aircraft, NASA has been using these aircraft as 
part of its passenger aircraft services fleet. Subsequent changes in 
NASA's long-term strategy for space flight now show that shuttles will 
not be used after about 2010. As a result, the continuing mission- 
required need to retain these aircraft is questionable. 

In its 1995 and 1999 reports, the NASA IG[Footnote 20] expressed 
concern over NASA's exclusion of commercial airline transportation from 
its A-76 studies. In both reports, the IG reported that the A-76 
studies NASA management performed with respect to its passenger 
aircraft improperly excluded a cost comparison with commercial 
airlines. While the IG recommended that NASA program offices 
responsible for passenger aircraft operations perform A-76 studies to 
include consideration of accomplishing air travel needs using 
commercial airlines, NASA management contended that because of isolated 
travel destinations and extremely short advance notice, commercial 
airlines could not meet its travel needs. However, our analysis of 
available documentation supporting flights taken during fiscal years 
2003 and 2004 shows that most were requested more than 24 hours in 
advance of flight departure and most NASA centers are located within an 
hour's drive of commercial airports. 

Ineffective Oversight and Management of Passenger Aircraft Services: 

NASA's oversight and management controls over its passenger aircraft 
operations were ineffective. NASA lacks the systems or procedures to 
accumulate and use agencywide usage and cost data needed to provide the 
transparency and accountability necessary to effectively support day- 
to-day management of its passenger aircraft service operations. 
Specifically, NASA did not: 

* Maintain agencywide records on the purposes for which its passenger 
aircraft are used and their costs. Such data are critical to (1) 
determining whether usage is consistent with OMB guidance limiting 
aircraft ownership to those agencies with mission requirement needs, 
and (2) maintaining visibility and accountability for the full costs 
associated with its passenger aircraft operations. Lacking such full 
cost visibility and passenger accountability, NASA's passenger aircraft 
services are sometimes viewed as a "free" resource by NASA project and 
program officials. 

* Correctly justify the cost effectiveness of individual flights. These 
justifications were flawed in that they relied on (1) inaccurate cost 
data and (2) other unsupported factors used in the cost-justification 
calculation. 

* Have processes in place to obtain reimbursements from nonofficial 
passengers flying on NASA-owned or -chartered aircraft. This may 
include NASA employee spouses and relatives, contractors, or other 
federal agency personnel. 

Flawed Procedures for Accumulating and Using Passenger Aircraft Usage 
and Cost Data: 

NASA systems or procedures in place to accumulate detailed usage and 
cost data related to its passenger aircraft services were flawed. Other 
than data compiled once a year to meet external reporting requirements, 
neither NASA management nor congressional oversight officials had 
agencywide aircraft usage and cost data needed to provide the 
transparency and accountability needed to make informed decisions on 
continued ownership of passenger aircraft. 

Costs associated with ownership and operation of NASA's passenger 
aircraft services were usually included in center overhead accounts 
that were allocated to programs based on the number of personnel 
assigned to programs without regard to the extent to which program 
personnel actually used NASA passenger aircraft services. Therefore, it 
is not surprising that some NASA personnel expressed the view that use 
of NASA-owned or -chartered aircraft is a "free" resource to them in 
that they did not have visibility or accountability over associated 
costs as part of their program or project budget execution reporting. 

Because NASA lacked a system for routinely collecting agencywide usage 
and cost data, it could not provide us with the complete and accurate 
agencywide information on aircraft usage and cost that we requested as 
part of this audit. Although each center that possesses and manages 
passenger aircraft is required to maintain a flight justification and 
manifest for each trip, the flight usage data contained in these 
documents are not compiled or analyzed on an agencywide basis to 
support decisions related to mission-required needs. Specifically, NASA 
data on the purposes and costs of its passenger aircraft services 
during fiscal years 2003 and 2004 were contained in paper flight 
justifications and manifests maintained at six different locations. We 
created a database of descriptive cost and usage data for approximately 
1,200 flights using NASA-owned or -chartered aircraft for which 
sufficiently complete data were available. Although, as mentioned 
previously, we obtained evidence that NASA also utilized at least two 
additional program support aircraft to meet its passenger air 
transportation needs, the limited data on use and costs associated with 
flights using these aircraft did not allow us to include data on these 
flights in our database. Further, data on passenger aircraft services 
for about 200 flights at one center was missing most of the data 
elements on the flight request justification forms, including flight 
purpose and cost-justification calculations. Without agencywide data on 
flight purposes and costs related to its passenger aircraft services, 
NASA managers and Congress lack critical information they need to make 
key aircraft ownership decisions. 

In addition to the limited agencywide usage and cost data, we also 
found that the data provided by NASA, although certified by NASA 
management as complete and accurate, were not always complete or 
accurate. Our comparison of NASA-supplied data on flights taken in 
fiscal years 2003 and 2004 with FAA data showed that (1) data on 97 
passenger flights were not included in the aircraft usage data NASA 
certified as complete; and (2) as discussed in a subsequent section, 
NASA-supplied data did not always include all legs of trips taken using 
NASA passenger aircraft. After our identification of the flights, while 
not complete in all cases, NASA was able to provide some form of 
supporting documentation showing these flights occurred, including 
proof of authorization, approval, or a determination of cost 
effectiveness. Examples of some of the flights not included in the data 
NASA officials certified as complete are summarized in table 3. 

Table 3: Examples of Passenger Flights Not Included in Submissions NASA 
Certified as Complete: 

Stated flight purpose: Hurricane evacuation for select Kennedy Space 
Center personnel and their families and parents, and aircraft pilots 
and maintenance personnel and their families; 
Destination: Two trips from Kennedy Space Center, FL to Washington, DC 
and return; 
Number of passengers: 9; 
NASA's estimated commercial costs: $3,000; 
Estimated NASA flight cost: $29,000. 

Stated flight purpose: Presentation of a plaque to the city of 
Shreveport, LA in appreciation for help during the Columbia disaster; 
Destination: Kennedy Space Center, FL to Shreveport, LA and return; 
Number of passengers: 7; 
NASA's estimated commercial costs: $4,000; 
Estimated NASA flight cost: $22,000. 

Stated flight purpose: Two-day trip to Las Vegas to meet with a 
contractor for a "technical interchange"; 
Destination: Johnson Space Center, TX to Las Vegas, NV; 
Number of passengers: 11; 
NASA's estimated commercial costs: $8,000; 
Estimated NASA flight cost: $22,000. 

Stated flight purpose: Participation in Brookhaven National Laboratory 
ceremony dedicating a new NASA space radiation laboratory; 
Destination: Johnson Space Center, TX to Long Island, NY; 
Number of passengers: 10; 
NASA's estimated commercial costs: $15,000; 
Estimated NASA flight cost: $27,000. 

Stated flight purpose: University research and affairs at Texas A&M 
University; 
Destination: Johnson Space Center, TX to College Station, TX; 
Number of passengers: 11; 
NASA's estimated commercial costs: $3,000; 
Estimated NASA flight cost: $4,000. 

Source: GAO analysis, based on NASA Aircraft Request forms and annual 
reporting. 

Note: We used NASA aircraft request forms to identify estimated 
commercial ticket costs. We estimated NASA passenger aircraft costs by 
dividing NASA's total reported costs by NASA's reported flight hours 
for each aircraft. We then multiplied the result by the number of 
flight hours for the specific flight. We used NASA's 2003 and 2004 
Aviation Financial Reports and Johnson Space Center's Budgeted Costs 
for Mission Management Aircraft Operations to identify NASA reported 
costs. NASA aircraft flight hour usage numbers reflect usage hours 
shown in NASA's 2003 and 2004 Annual Aircraft Performance Reports. 

[End of table]

Further, we identified a breakdown in controls over flight data record 
integrity at one center. Specifically, when we inquired about provided 
documents that did not appear to be originals, NASA officials told us 
that flight requests and approvals related to a 1-year period covering 
parts of fiscal years 2003 and 2004 were lost and recreated after 
flights took place. NASA officials stated that the loss of these 
important aircraft usage data was apparently not discovered until after 
our initial request for documentation as part of this audit. NASA 
officials did not inform us that documents were recreated until after 
we questioned inconsistencies in the documentation. 

Cost data compiled by NASA did not disclose all passenger aircraft cost 
as travel costs. First, the costs related to the operation of passenger 
aircraft were not directly assigned to users, but were allocated 
through center overhead accounts. These accounts, which include other 
expenses such as facilities maintenance and auditing services, are 
usually allocated to each NASA program based on the number of 
employees. This allocation, which does not relate to use of aircraft 
and does not reduce program travel budgets, essentially provides a free 
resource to users, and does not encourage efficient use of the 
aircraft. In commenting on air travel using NASA-chartered aircraft, 
one NASA traveler stated,

"Although everything about the flight was very positive - convenience, 
shorter trip time, professional service, etc. - the cost was 
considerably more than flying a commercial airline. .. As much as I 
enjoyed the door to door service, if the travel costs had been coming 
out of my project I would have chosen to fly commercial."

This statement summarizes how NASA decision making on aircraft 
operations is distorted by the lack of complete data on the cost of 
using this resource. Second, NASA does not classify costs related to 
passenger aircraft services in its annual financial and budget reports 
to Congress as a cost of transportation of persons. In annual reports, 
one specific object expense class, object class 21, is designed to 
capture and disclose agencies' costs for transporting passengers. 
Instead, the cost of NASA passenger aircraft services are included in 
overhead cost accounts, which understates the true cost of transporting 
NASA passengers. 

Weaknesses In Justification Process for Individual Passenger Aircraft 
Flights: 

As discussed previously, our analysis of available estimates of NASA's 
aggregate costs associated with its passenger aircraft services in 
comparison with commercial airline ticket costs showed that NASA's 
passenger aircraft services cost about $20 million more than commercial 
airlines. In addition, NASA's individual flight cost justification 
process for its passenger aircraft services was flawed. Our analysis of 
cost-comparison documentation supporting passenger aircraft flights 
taken during fiscal years 2003 and 2004 revealed critical flaws, 
including variable cost data that were 6 years out of date and 
unsupported cost factors. Available NASA documentation supporting 
NASA's individual flight justifications for flights taken during 2003 
and 2004 showed a total estimated savings of $6 million over the 2-year 
period. However, if these justifications had included up-to-date NASA 
variable costs and excluded unsupported cost factors attributed to the 
additional time required to use commercial airline flights, most 
flights would not have been approved because they would have been more 
costly than commercial air travel. 

Policy guidance in OMB Circular A-126 provides an agency may use 
aircraft on a flight-by-flight approval basis for routine business 
purposes to the extent that a comparison between the agency's specified 
variable costs and the costs of commercial travel shows the proposed 
flight is cost effective. Specifically, OMB Circular A-126, Attachment 
A, provides that costs of commercial travel must be compared with the 
variable costs of operating the agencies' passenger aircraft[Footnote 
21] and that proposed flights using agencies' passenger aircraft for 
routine business purposes should only be approved if they result in a 
cost savings to the government. Further, OMB guidance provides that 
variable cost estimates used in flight-by-flight cost justification 
calculations are to be updated annually. This policy on flight-by- 
flight variable cost justification does not replace the agencies' need 
to first establish a valid mission requirement for owning aircraft, and 
overall cost effectiveness. As discussed previously, our analysis of 
flight purposes showed that about seven of every eight flights were for 
routine business travel. 

Consistent with OMB policy guidance, NASA regulations provide that 
individual cost justifications comparing estimated commercial airline 
travel costs with estimated variable costs associated with using NASA- 
owned or -chartered aircraft should be prepared prior to all passenger 
aircraft flights. Figure 4 provides an overview of the methodology NASA 
used to compare NASA and commercial costs for its flight-by-flight 
justifications. 

Figure 4: Overview of NASA Methodology for Comparing Its Flight-by- 
Flight Variable Costs with Commercial Flight Costs: 

[See PDF for image] 

[End of figure] 

Several NASA centers had not updated the variable costs used in their 
flight-by-flight cost-comparison calculations for over 6 years. Such 
out-of-date variable costs significantly understated NASA's flight-by- 
flight costs. For example, at two centers, the $964 variable cost per 
flight hour used for flight-by-flight justifications during fiscal 
years 2003 and 2004 was over 6 years out of date. According to NASA 
aircraft management officials, this hourly rate was last adjusted in 
1998. At one center, a recent recalculation, done in 2005 pursuant to 
our audit, increased the center's variable cost rate from $964 to $1828 
an hour, almost a 90 percent increase. Further, even this 90 percent 
higher rate may understate NASA's actual variable costs. For example, 
the aircraft manufacturer for the aircraft in use at that center 
reported a direct cost per flight hour rate of approximately $3,000 a 
flight hour, including estimated fuel costs alone in excess of $1,300 
an hour. 

NASA variable costs were also understated at one center because the 
flight-by-flight justifications included only variable cost estimates 
for one round trip when the aircraft actually made two round trips to 
meet passengers' transportation requirements. Our analysis of FAA 
flight information and flight documentation obtained from the center 
showed that the flight request data we were provided included estimates 
related to only two of four flight legs flown to complete 14 flight 
requests over the 2-year period of our review. For example, on August 
6, 2003, NASA's passenger aircraft transported passengers from Houston, 
Texas, to Pueblo, Colorado, and then returned without passengers to 
Houston the same day. Three days later, pilots flew an empty aircraft 
to Pueblo to pick up passengers and return them to Houston. Center 
officials stated that additional round trips were necessary to return 
the flight crew to their home station where they could be more 
productive performing other duties. Center officials stated that they 
did not include the two extra flight legs in their calculations of the 
variable costs associated with NASA's passenger transportation because 
they classified these legs as crew training flights. Nonetheless, the 
costs incurred by these additional flights should be considered among 
the costs related to NASA's passenger air transportation services. 

In addition to understatements of NASA's variable costs, NASA's flight- 
by-flight cost comparisons were also flawed in that they increased the 
cost associated with flying commercially by using a largely unsupported 
multiplier of 2.5. NASA could not provide any specific NASA-related 
empirical evidence to validate use of the multiplier in its flight-by- 
flight justification process. NASA used this multiplier in addition to 
factors for time and salary costs accounted for in its cost- 
justification calculation. The use of a multiplier to increase the 
value of an employee's time beyond his or her salary and fringe 
benefits is not expressly provided as part of OMB's Circular No. A-126 
guidance. Further, cognizant OMB officials told us that it was not 
their intent that agencies use any such multiplier (beyond the salary 
and fringe benefits associated with any time savings) in determining 
whether proposed flights were cost effective. They also stated they 
were not aware of any agencies using such a multiplier in their flight 
justification calculations. While NASA officials informed us that they 
had been using this multiplier for a number of years and that they 
believed it was a conservative factor, they did not provide any 
documentation demonstrating the appropriateness of the multiplier as it 
applies specifically to the experiences of NASA personnel who used 
these aircraft. Consequently, lacking such documentation, NASA's use of 
a 2.5 multiplier improperly overstates the costs of commercial 
alternatives. 

The overall effect of understating NASA costs and overstating 
commercial costs in NASA's flight-by-flight justifications was that 
NASA incorrectly approved individual flights as cost effective. For 
example, NASA justified one round trip from Kennedy Space Center, FL to 
Burbank, CA as cost effective, calculating a savings of $4,800. NASA 
calculated a cost savings for the flight because it used a 1998-based 
variable cost factor for the NASA plane of $964 per hour and also 
multiplied the travelers' salary costs savings by the unsupported 2.5 
multiplier. If the variable cost was updated to NASA's 2004 estimate of 
$2,528 per hour for that aircraft and the unsupported multiplier was 
removed, the estimated variable costs associated with the proposed NASA 
passenger aircraft flight would have exceeded estimated commercial 
airline costs by $17,408. Further, even after incorporating NASA's 
unsupported estimate that employee fringe benefits increase employee 
direct salary costs by an additional 50 percent, the NASA aircraft 
variable costs for this flight would still have exceeded commercial 
costs by about $16,000. 

NASA Procedures Not Effective in Consistently Identifying and 
Collecting Reimbursements from Nonofficial Travelers: 

NASA lacks procedures to consistently and effectively identify and 
recover the applicable costs of operating government aircraft when 
nonofficial passengers fly on NASA-owned or -chartered aircraft. As a 
result, nonofficial travelers were provided free transportation using 
NASA's passenger aircraft services. However, because of the lack of 
procedures and documentation in place concerning the determination of 
the official status of travelers, we could not determine, and more 
importantly NASA could not determine, if any of the travelers should 
have, but did not, reimburse the government for the cost of their 
transportation. 

According to OMB Circular No. A-126, travelers flying on a space- 
available basis on government aircraft for a purpose other than the 
conduct of official agency business generally must reimburse the 
government for the full coach fare.[Footnote 22] Reimbursement for 
travel at the government rate for the cost of coach tickets would have 
covered about one fifth of NASA's reported costs associated with the 
use of NASA's passenger aircraft services. 

However, NASA has not implemented agencywide policies and procedures to 
ensure that such travelers reimburse the government for the 
corresponding coach cost. Processes in place at each of the six centers 
to obtain reimbursements ranged from none at all to ad hoc procedures 
that essentially relied on individual travelers to identify and submit 
payments. For example, at one center, NASA's procedures consisted of 
notifying NASA travelers of the need to obtain reimbursement from 
nonofficial travelers flying on the aircraft, but did not provide for 
any follow-up to monitor and collect the requisite amount from non-NASA 
travelers. 

For example, between September 2, 2004, and September 6, 2004, several 
Kennedy Space Center employees and their families and contractors and 
their families used the center's Gulfstream II aircraft to fly to 
Washington, D.C. in advance of Hurricane Francis. According to center 
officials, the center was required to evacuate the aircraft from the 
path of the approaching hurricane, and a decision was made to transport 
the contractor pilots, mechanics, and their families over 800 miles 
north to Washington. After flying the contractors and their families 
out of the area, the aircraft then returned to pick up other center 
management personnel, personnel associated with the aircraft 
management, and their families and flew them to Washington. A NASA 
official stated that at least one of the passengers on these flights 
should have reimbursed the government for a portion of the cost of 
their transportation. However, the official did not know if such 
reimbursement was obtained. 

NASA officials at two other centers stated that they have not obtained 
reimbursements or they had no documentation showing the extent to which 
reimbursements from nonofficial passengers on NASA flights were 
identified and obtained. In addition, we identified over 100 other 
travelers that NASA classified as dependents flying on NASA passenger 
aircraft that may have been nonofficial travelers. These passengers may 
have been required to reimburse NASA for a portion of the costs of 
their transportation. 

Conclusions: 

As NASA strives to carry out its new vision for the future of the 
agency, using its resources as efficiently as possible will be a 
growing fiscal challenge. Operating what is essentially its own small 
passenger airline service, while potentially providing certain benefits 
to the agency and its employees, costs an estimated five times more 
than if commercial airlines were used to provide these services. 
Further, NASA's ownership of aircraft to support essentially routine 
business operations is in direct conflict with OMB's policy prohibition 
on such uses and passenger interviews which showed that in almost all 
cases, the travel could have been accomplished using commercial 
airlines. 

NASA management has disagreed with, and taken only limited action with 
respect to similar prior audit recommendations in this area and 
insufficient management attention and agencywide oversight has allowed 
NASA to continue this costly program for decades. The cumulative effect 
has been failures in effectively justifying the extent to which such 
passenger aircraft services are needed to address critical, time- 
sensitive mission requirements, as well as effectively determining the 
extent to which these services could be accomplished without incurring 
the substantial, fixed operation and maintenance costs associated with 
aircraft ownership. Immediate actions to dispose of all aircraft not 
needed to address mission requirements and adoption of more flexible, 
less costly alternatives to satisfy future mission requirements would 
best position NASA to meet its stewardship responsibilities for 
taxpayer funds it receives, and better enable it to meet its current 
fiscal challenges. 

Matters for Congressional Consideration: 

Congress should consider whether legislation is necessary to ensure 
that (1) NASA disposes of all of its passenger aircraft not used in 
accordance with OMB's explicit policy prohibition against owning 
aircraft to support travel to routine site visits, meetings, speeches, 
and conferences; and (2) funding for future NASA passenger aircraft 
purchases and operations is restricted to those necessary to meet 
mission requirements consistent with OMB guidance. 

Recommendations: 

To the extent that Congress determines that NASA should continue to 
retain aircraft or passenger aircraft charter services to provide 
passenger transportation, we recommend that the Administrator of NASA 
take the following six actions: 

* Establish policies and procedures for accumulating and reporting on 
its passenger aircraft services to provide complete and accurate 
agencywide cost and utilization data to support oversight and decision 
making on operating and retaining such aircraft services. 

* Clarify policies and procedures applicable to aircraft acquisition 
and retention to limit the number and type of aircraft owned and 
chartered for passenger transportation to those necessary to meet the 
"mission-required" criteria in OMB guidance. 

* Periodically assess the extent to which NASA has a continuing need to 
own aircraft to provide passenger transportation in support of mission 
requirements in accordance with OMB guidance. 

* Maximize the use of flexible, cost-effective arrangements to meet 
mission-required passenger air transportation service needs in lieu of 
aircraft ownership. 

* Revise existing policies and procedures used to determine if 
individual flights are justified to include use of up-to-date variable 
costs and limit commercial cost estimates to include airfare, in- 
transit salaries and fringe benefits, and other costs directly related 
to reasonable estimates of delays incurred in meeting commercial 
airline flight schedules in accordance with OMB and GSA guidance. 

* Establish agencywide policies and procedures for identifying and 
recovering applicable costs associated with nonofficial personnel 
traveling using NASA passenger aircraft services on a reimbursable 
basis. 

Agency Comments and Our Evaluation: 

In its written comments, the NASA Administrator concurred with our 
recommendations and set out several actions to address identified 
deficiencies. Specifically, he said NASA would review its policies and 
procedures related to aircraft management to ensure they are aligned 
with OMB requirements and conduct a comprehensive study of the agency's 
passenger aircraft operations to be completed by October 31, 2005. 
These actions are consistent with the intent of our recommendations to 
NASA and if carried out fully and effectively will help address the 
deficiencies we found. 

If NASA's study referred to above is carried out effectively and fully 
considers the various matters discussed in this report, it should 
provide the Congress valuable information for deciding whether 
legislation may be needed on this matter. NASA's comments on a draft of 
this report are reprinted in appendix II. 

As agreed with your offices, unless you publicly announce its contents 
earlier, we plan no further distribution of this report until 30 days 
from the report date. At that time, we will send copies of the report 
to interested congressional committees. We will also send copies of 
this report to the Office of Management and Budget and the General 
Services Administration. We will make copies available to others upon 
request. In addition, the report will be available at no charge on the 
GAO Web site at [Hyperlink, http://www.gao.gov]. If you or your staffs 
have any questions regarding this report, please contact me at (202) 
512-7455 or [Hyperlink, kutzg@gao.gov]. Contact points for our Offices 
of Congressional Relations and Public Affairs may be found on the last 
page of this report. GAO staff who made key contributions to this 
report are listed in appendix III. 

Signed by: 

Gregory D. Kutz: 
Managing Director, Forensic Audits and Special Investigations: 

[End of section]

Appendixes: 

Appendix I: Scope and Methodology: 

To assess reasonableness of costs, use, and agency oversight and 
management of the National Aeronautics and Space Administration's 
(NASA) passenger aircraft services, we met with officials of NASA's 
Office of Infrastructure and Administration Aircraft Management Office 
and appropriate officials at the Johnson Space Center, Houston, Texas; 
Marshall Space Flight Center, Huntsville, Alabama; Kennedy Space 
Center, Cape Canaveral, Florida; Wallops Flight Facility, Wallops 
Island, Virginia; and Dryden Flight Research Center, Edwards, 
California. We reviewed aircraft utilization and management reports 
prepared by NASA and its contractor and aircraft operations budget/cost 
information, including annual Aviation Financial Reports for fiscal 
years 2003 and 2004, Annual Aviation Report: Aircraft Performance for 
fiscal years 2003 and 2004, and NASA's 2004 Mission Management Aircraft 
Fleet Plan. At each center, we observed and assessed the process for 
managing passenger aircraft services and scheduling and justifying 
costs for individual flights. We also reviewed available documentation 
supporting the various cost-justification factors and multipliers NASA 
used to estimate the variable costs of using its passenger aircraft as 
well as the alternative costs of using commercial airline 
transportation. 

As part of our effort, we collected and compiled available flight-by- 
flight NASA passenger aircraft cost and usage data from NASA mission 
management aircraft request forms. These forms provided such 
descriptive data as dates and purpose for travel, itinerary, 
passengers, levels of approval, and cost justification for aircraft 
use. We asked for all documentation maintained at NASA centers for 
flights flown using NASA's passenger aircraft services during fiscal 
years 2003 and 2004. We selected the most recently completed 2-year 
period because NASA's regulations specify retaining source documents 
related to passenger aircraft usage for at least 2 years. While 
incomplete, we ultimately obtained some type of documentation 
indicating that NASA passenger aircraft services during this 2-year 
period included about 1,500 flights. However, because of the limited 
amount of supporting documentation available for several hundred 
flights, we included only 1,188 flights in our analysis. For example, 
we could not use any of the approximate 200 flights from the Dryden 
Flight Research Center in our analysis because few of the requested 
documents included all the required usage and cost data necessary for 
such an analysis. To independently verify the reliability and 
completeness of individual flight source documentation maintained at 
NASA centers, we compared the NASA-provided flight information with 
information on NASA aircraft flights maintained by the Federal Aviation 
Administration's (FAA) Enhanced Traffic Management System and 
reconciled differences. Further, while not included in our analysis, we 
obtained documentation showing that 2 of NASA's aircraft classified as 
program support aircraft were also used to provide passenger 
transportation, we did not attempt to determine if any of NASA's other 
program support or research aircraft may have also been used to provide 
passenger transportation as part of this audit. Also, we did not review 
the effectiveness of safety or maintenance programs related to NASA's 
passenger aircraft services. 

To analyze the relative costs of NASA's passenger aircraft services 
compared to commercial airline costs, we relied primarily on available 
NASA cost data from NASA Aviation Financial Reports. We validated this 
data wherever feasible with comparable independent data sources 
including industry data. For example, we contacted the manufacturers of 
both types of passenger aircraft used by NASA to validate that the cost 
estimates used in our analysis were similar to the manufacturers' cost 
metrics for operating those aircraft. We used fiscal year 2003 and 2004 
cost data in annual Aviation Financial Reports reported by each center 
that operated one or more of NASA's passenger aircraft and the costs 
NASA incurred for chartering passenger aircraft from other government 
agencies or contractors. At one center where reported cost data for 
passenger aircraft in the Aviation Financial Report were combined with 
data for other agency aircraft, we used annual budget data that were 
limited to passenger aircraft operations. At NASA headquarters, we used 
annual cost data provided by NASA because their annual Aviation 
Financial Reports did not contain costs associated with NASA's use of 
Federal Aviation Administration aircraft. Finally, costs from NASA's 
Report on the Fractional Aircraft Demonstration Program were used to 
determine the total cost of Flexjet flights. We used NASA Mission 
Management Aircraft Request forms to determine the estimated cost for 
flights taken on Department of Defense (DOD) aircraft. We then compared 
reported costs of NASA aircraft operations and aircraft charter costs 
with our estimates of travel costs that NASA would have incurred had 
the passengers who flew on NASA's aircraft during our 2-year test 
period used commercial airline transportation instead. To estimate the 
commercial transportation costs of NASA employees who traveled using 
NASA's passenger aircraft, we used the average commercial airline round-
trip fare of $426 for all flights flown by NASA employees during this 
same time period as reported in a database of travel card transactions 
for NASA provided by NASA's contractor, Bank of America.[Footnote 23] 
This average commercial round-trip air fare estimate is intended to 
approximate NASA's passenger transportation costs if it had used 
commercial airline services instead of its own services. As such, it 
may reflect amounts that in some cases would exceed NASA's actual 
commercial costs. For example, to the extent to which unofficial 
travelers were included in estimates of passengers, commercial costs 
would be overstated. Conversely, in other cases our estimate may have 
underestimated NASA's costs. For example, costs may have been 
understated to the extent that such travel involved passenger aircraft 
services to remote locations or locations with limited commercial air 
service. 

To determine the number of travelers who flew on NASA-owned and - 
chartered aircraft during the 2-year period, we used the number of 
passengers identified on individual hard-copy flight manifest 
documentation NASA provided to us. During the course of our review, we 
became aware of additional flights flown at some centers for which we 
were not provided flight manifest documentation. However, we were 
unable to obtain and analyze documentation for these additional flights 
in time to complete our analysis. To the extent that the number of 
passengers on flights for which individual flight documentation was not 
provided to us, the estimate of commercial airfare costs is 
understated. At the Dryden Flight Research Center, where individual 
hard-copy flight documentation did not contain complete information, we 
used the number of passengers the center reported to NASA headquarters 
for inclusion in annual aircraft performance reports. 

We did not use the numbers of passengers reported for all centers 
because the centers reported their passenger counts inconsistently and 
we were unable to validate them. Although the number of passengers 
reported on individual flight manifests often included passengers who 
flew only one way or on one or more legs of the trip, we counted these 
partial-trip passengers as having flown round-trip for purposes of 
estimating the commercial costs of passengers flown on NASA's aircraft. 
Consequently, in this respect, our estimated savings are likely to be 
understated in that including these partial-trip passengers in the 
total number of passengers overstated our estimate of airfare costs 
that NASA would have incurred had the passengers traveled on commercial 
airlines. Conversely, our estimated savings may be overstated because 
our estimated commercial travel costs did not include additional 
lodging and other incidental costs that travelers would periodically 
incur and salary costs for additional lost work time. 

To estimate the lost work time associated with commercial airline 
travel, including salary and benefit costs, per diem, rental cars, 
commercial tickets, and other costs, we utilized cost estimates 
included in NASA individual flight request forms. For the 1,188 flights 
for which we received data, we used NASA's estimates for salary costs 
multiplied by lost work hours, number of travelers, and NASA's benefit 
factor of .5. Because accounting for fringe benefit costs was 
recognized in OMB guidance, while unsupported, we used NASA's estimated 
fringe benefits factor of .5 to increase passengers' salary costs. In 
addition to salary costs, we also included available NASA estimates for 
additional per diem, commercial tickets, rental cars, and other travel 
costs associated with lost work time from using commercial airline 
services. For one aircraft, we did not receive any flight justification 
cost estimates. Instead, the location operating the aircraft had 
developed standard calculations for the average commercial cost for 
their two common flight patterns. We averaged the estimated commercial 
cost for the two flight patterns to determine the average cost savings 
per traveler for the aircraft. We then multiplied the commercial cost 
by the number of travelers NASA reported for the aircraft during fiscal 
years 2003 and 2004 to determine the total commercial cost of 
transportation for travelers on the aircraft. 

To assess whether NASA aircraft were operated and retained in 
accordance with applicable governmentwide guidance, we primarily 
reviewed the Office of Management and Budget (OMB) Circular No. A-126, 
Improving the Management and Use of Government Aircraft; and Circular 
No. A-76 (Revised), Performance of Commercial Activities. We also 
reviewed applicable governmentwide guidance in OMB Circular No. A-11, 
Preparation, Submission and Execution of the Budget Part 7: Planning, 
Budgeting, Acquisition and Management of Capital Assets (Revised June 
2005); General Services Administration's (GSA) Federal Property 
Management Regulations, 41 C.F.R. Subtitle C; and Federal Travel 
Regulations, 41 C.F.R. Subtitle F. We also reviewed NASA's implementing 
publications, NASA Policy Directive (NPD) 7900.4B, NASA Aircraft 
Operations Management (April 2004); NASA Policy Regulation (NPR) 
7900.3A, Aircraft Operations Management (April 1999); and center- 
specific implementing instructions. We held discussions regarding these 
policies and procedures with officials of OMB's Office of Federal 
Procurement Policy, Transportation/GSA Branch, and Science and Space 
Branch; GSA's Office of Government-wide Policy; and NASA's Office of 
General Counsel and NASA Center and program managers. 

At each center, while we observed the process for managing aircraft 
operations and scheduling and justifying individual flights, we 
interviewed managers and program officials to discuss the importance to 
which they assessed the need and justification for owning/leasing 
passenger aircraft. We analyzed the purpose cited by NASA for 
individual flights flown during our 2-year test period to determine 
whether NASA's stated purpose complied with criteria established in OMB 
and GSA guidance. We interviewed agency personnel who requested, 
approved, and/or were passengers on approximately 80 flights during our 
2-year test period to ensure that we understood the purpose for the 
flights and the basis for utilizing NASA's aircraft. We did not assess 
the adequacy of safety or maintenance programs related to NASA's 
passenger aircraft. Further, we did not attempt to determine the 
validity or appropriateness of travel using NASA's passenger aircraft, 
nor did we assess if the type and number of personnel on the NASA 
passenger aircraft were appropriate given the stated flight purposes. 

To assess the effectiveness of NASA's oversight and management of its 
passenger aircraft operations, we held discussions with appropriate 
aircraft management officials at NASA headquarters and centers 
operating passenger aircraft. We also identified and assessed (1) 
NASA's implementing policies and procedures with respect to OMB and GSA 
policy guidance, (2) the process used to approve and document passenger 
aircraft utilization, (3) associated aircraft management reports, (4) 
other recent assessments and studies done with respect to NASA 
passenger aircraft services, and (5) the extent to which accurate, 
current agencywide data were available to agency managers for day-to- 
day decision making on passenger aircraft usage and costs. 

We briefed NASA officials on the details of our audit, including 
findings and their implications. On June 28, 2005, we requested 
comments on a draft on this report. We received comments on July 28, 
2005, and have summarized those comments in the Agency Comments and Our 
Evaluation section of this report. NASA's comments are reprinted in 
appendix II. We conducted our work from November 2004 through June 2005 
in accordance with U.S. generally accepted government auditing 
standards and quality standards for investigations as set forth by the 
President's Council on Integrity and Efficiency. 

[End of section]

Appendix II: Comments from the National Aeronautics and Space 
Administration: 

National Aeronautics and Space Administration: 
Office of the Administrator: 
Washington, DC 20546-0001: 

July 28, 2005: 

Mr. Gregory D. Kutz: 
Managing Director: 
Forensic Audits and Special Investigations: 
Government Accountability Office: 
Washington, DC 20548: 

Dear Mr. Kutz: 

Thank you for giving NASA an opportunity to review and comment on your 
draft report on the effectiveness of our Aircraft Management Program 
(GAO-05-818). I concur with the recommendations directed to the 
National Aeronautics and Space Administration (NASA) in the draft 
report. 

Since 1958, NASA has used aircraft to support national aeronautical and 
space research. Our goal is to fully comply with Federalwide aircraft 
management policy. We will revisit our policies and procedures and 
improve them where necessary to ensure our program is aligned with the 
requirements of the Office of Management and Budget. For example, I 
have directed that NASA use a new methodology to cost justify the use 
of Government aircraft that does not use a multiplier to calculate lost 
productivity. I have also ordered a comprehensive study of NASA's 
Mission Management Aircraft Program. The review will include a baseline 
analysis of NASA's mission requirement needs, recommend the number and 
size of assets needed to fulfill those requirements, and consider 
alternatives to aircraft ownership. It will also review our program 
management, oversight, reporting, and cost-accounting processes. The 
review will be conducted by NASA's Office of Program Analysis and 
Evaluation, in coordination with the Office of the Chief Financial 
Officer, and will be completed by October 31, 2005. 

If you have any questions or would like additional information about 
our Aircraft Management Program, please contact Jeffrey E. Sutton, 
Assistant Administrator for Infrastructure and Administration, at (202) 
358-2800. 

Sincerely,

Signed by: 

Michael D. Griffin: 
Administrator: 

[End of section]

Appendix III: GAO Contact and Staff Acknowledgments: 

GAO Contact: 

Gregory D. Kutz: 

Acknowledgments: 

In addition to the contact named above, Mario L. Artesiano, James D. 
Berry, Fannie M. Bivins, Latasha L. Brown, Matthew S. Brown, Harold J. 
Brumm, Carey L. Downs, Richard T. Cambosos, Francine M. Delvechio, 
Francis L. Dymond, Dennis B. Fauber, Geoffrey B. Frank, Diane G. 
Handley, Alison A. Heafitz, Christine A. Hodakievic, Jason M. Kelly, 
Jonathan T. Meyer, George J. Ogilvie, James W. Pittrizzi, Kristen M. 
Plungas, John J. Ryan, Sidney H. Schwartz, Joan K. Vogel, and Leonard 
E. Zapata also made key contributions. 

(192163): 

FOOTNOTES

[1] GAO, Space Shuttle: Actions Needed to Better Position NASA to 
Sustain Its Workforce through Retirement, GAO-05-230 (Washington, D.C.: 
Mar. 9, 2005). 

[2] GAO, Improvements Are Needed in Managing Aircraft Used By Federal 
Agencies, LCD-77-430 (Washington, D.C: Dec. 22, 1977). 

[3] OMB Circular No. A-126 (Revised), Improving the Management and Use 
of Government Aircraft (May 22, 1992). 

[4] 42 U.S.C. § 2473 (c) (3). This authorization is subject to Congress 
making available appropriations. 

[5] The other five civilian agencies that reported to GSA that they 
owned and operated aircraft in fiscal year 2004 primarily for the 
purpose of passenger transportation were the Departments of Homeland 
Security, Justice, State, Interior, and Transportation. 

[6] Three of NASA's seven passenger aircraft are classified as program 
support because they were acquired as backups for existing shuttle 
trainer aircraft. However, since shortly after their acquisition (one 
in 1991 and two in 2001), these aircraft have been used primarily to 
provide passenger transportation. In addition, one aircraft, a 
Gulfstream I aircraft operated by the Johnson Space Center, was retired 
from active service in March 2005. 

[7] 31 U.S.C. § 1535. Under the Economy Act, federal agencies are 
permitted to obtain services from other federal agencies when such 
services cannot be provided as conveniently or cost-effectively from 
commercial sources, and reimburse the other agencies for the cost of 
the services obtained. 

[8] H.R. Conf. Rep. No. 106-988, at 164 (2000) accompanying Pub. L. No. 
106-377. 

[9] OMB Circular No. A-76, (Revised), Performance of Commercial 
Activities (May 29, 2003) establishes policies for competition of 
agency commercial activities including the use of aircraft. 

[10] 41 C.F.R. pt. 102-33 (2002). 

[11] NASA Office of the Inspector General, Final Report, NASA Aircraft 
Management, LA-95-001 (Washington, D.C.: Mar. 28, 1995) and NASA Office 
of the Inspector General, A-76 Study of NASA 3 Aircraft, IG-99-057 
(Washington, D.C.: Sept. 30, 1999). 

[12] When request forms did not include data on passengers, we used 
other NASA reports to identify the number of passengers on flights. 

[13] Reported costs for NASA passenger aircraft services totaled 
$24,689,000, and estimated commercial costs provided by NASA totaled 
$11,311,000, yielding a difference of $13,378,000 between commercial 
and NASA passenger aircraft costs. 

[14] Statement 4 of the Statements of Federal Financial Accounting 
Standards defines full cost as the total cost of direct and indirect 
support used to produce an output. 

[15] NPR 7900.3A, effective April 1999, expires December 2005. 

[16] NASA Inspector General Report, IG-99-057. 

[17] We were unable to identify a purpose for and categorize all 
flights because of (1) missing documentation and (2) incomplete data. 
For example, flights for Dryden Flight Research Center's Beechcraft 200 
passenger aircraft were not included because descriptive flight data, 
such as flight purposes, were not consistently listed on request forms. 
In addition, we excluded flights on two other program-support aircraft 
that were occasionally used to transport passengers. In addition, 
request forms for approximately 97 flights were not provided by NASA 
until after we identified the flights through a review of FAA flight 
tracking records, and were therefore not provided in time for our 
analysis. 

[18] NASA acquired two of the aircraft in 2001 to serve as replacements 
for two of the agency's four shuttle trainer aircraft. Those aircraft 
were used for passenger transportation during the period of our review. 
Another aircraft was acquired in 1991 to serve as a shuttle trainer, 
but was never modified to serve in that role. 

[19] Aviation Services Studies: Johnson Space Center, NASA 2 Mission 
Management Aircraft, March 2004; Johnson Space Center, NASA 2 
Gulfstream G-1, December 1999; Dryden Flight Research Center, NASA 7 
King Air 200, February 2000; Goddard Space Flight Center - Wallops 
Flight Facility, NASA 8 King Air 200, February 2000; NASA Headquarters, 
NASA 1 Gulfstream III, February 2000. 

[20] NASA Inspector General Report, IG-99-057 and NASA Inspector 
General Report, LA-95-001. 

[21] OMB Circular No. A-126, Attachment A, defines commercial cost to 
include estimates of commercial tickets, additional per diem and rental 
cars, and estimates of lost work time costs due to the extra time it 
takes to travel commercially. OMB Circular No. A-126, Attachment B, 
defines variable costs to the agency to include variable crew costs, 
maintenance costs, labor, parts, contracts, engine overhauls, fuel, and 
landing and tie down fees. 

[22] Exceptions to required reimbursements are listed in section 9,c. 

[23] To compute an average commercial round-trip air ticket cost, we 
used Bank of America's Travel Card Air Transactions database for NASA 
to develop a population of round-trip commercial nonpremium class 
airline ticket purchases (debit transactions) during the period 
covering October 1, 2002, through September 30, 2004. In total, the 
nonpremium class airline ticket population consisted of 116,865 
tickets, totaling approximately $49,775,733. Using this amount, we 
computed the average cost of a commercial, round-trip, nonpremium class 
airline ticket to be approximately $426 per ticket. We validated the 
Bank's transaction database with comparable data reported by publicly 
available GSA travel card information and found the data, both in 
numbers of transactions and value, to be sufficiently reliable. 

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