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Highlights

Pursuant to a congressional request, GAO reviewed the National Aeronautics and Space Administration's (NASA) management of government equipment provided to contractors, focusing on: (1) NASA compliance with federal regulations intended to minimize the amount of government-owned, contractor-held general purpose equipment; (2) government and contractor controls over equipment; and (3) NASA reporting of this equipment.

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Recommendations

Recommendations for Executive Action

Agency Affected Recommendation Status
National Aeronautics and Space Administration 1. The Administrator, NASA, should require procurement organizations to enforce FAR requirements on providing general purpose equipment to contractors and on obtaining contracting officer consent before contractors acquire such equipment.
Closed - Implemented
FAR compliance is now an item for review during headquarters' procurement management surveys done periodically at NASA procurement offices. Also, the July 1993 "Guidance on Providing Government Facilities to Contractors" addresses this issue.
National Aeronautics and Space Administration 2. The Administrator, NASA, should develop and promulgate an agency strategy that: (1) minimizes the amount of general purpose equipment provided to contractors; (2) includes criteria to guide the decision on when the equipment should be provided to contractors; and (3) addresses the use of incentives to encourage contractors to provide their own equipment.
Closed - Implemented
The July 1993 "Guidance on Providing Government Facilities to Contractors" addressed the policy on minimizing provision of general purpose equipment and provides a strategy for doing so, using incentives.
National Aeronautics and Space Administration 3. The Administrator, NASA, should revise the NASA FAR Supplement to: (1) require contractors to gradually replace any government-owned general purpose equipment they currently possess or that has been made available for their use when the equipment can no longer be used and such equipment is still needed to accomplish the contract; (2) add a policy statement to prohibit contractor acquisitions of general purpose equipment for the government unless expressly approved in advance or identified item by item in the contract or by modification to the contract; and (3) make consistent NASA documentation requirements for providing general purpose equipment or making equipment available for use by contractors operating on a NASA center with those in FAR.
Closed - Implemented
The NASA FAR Supplement was revised in June 1994 to require contractors to gradually replace government-owned general purpose equipment they currently possess or that has been made available for their use when the equipment can no longer be used and such equipment is still needed to accomplish the contract. In addition, NASA published policy guidance to: (1) emphasize the prohibition on contractor acquisitions of general purpose equipment for the government unless expressly approved in advance or identified in the contract or by modification to the contract; and (2) establish documentation requirements for providing general purpose equipment or making equipment available for use by contractors operating on a NASA center.
National Aeronautics and Space Administration 4. The Administrator, NASA, should revise procurement management survey guidelines to provide for coverage of center compliance with FAR policies and regulations on providing general purpose equipment to contractors.
Closed - Implemented
Procurement management survey guidelines were revised to require review of compliance with regulations on providing general purpose equipment to contractors.
National Aeronautics and Space Administration 5. The Administrator, NASA, should require all contracting personnel, program monitors, and NASA property administrators to be sufficiently trained in government property issues.
Closed - Implemented
NASA has included coverage of property issues in its training programs on procurement and property topics. In addition, NASA has coordinated its efforts with the Department of Defense which has responsibility for on-site monitoring of property at contractors' facilities.
National Aeronautics and Space Administration 6. The Administrator, NASA, should require procurement personnel to clearly document that general purpose equipment costs are excluded from bases used to establish fee objectives, using techniques such as separate no-fee schedules, an explicit statement that the determination of fee was not based on equipment costs, or provision for all authorized general purpose equipment under a separate no-fee facilities contract.
Closed - Implemented
The FAR prohibition on earning profit or fees on the cost of government property has been emphasized in NASA's FAR Supplement, and contract file documentation is required when this situation exists.
National Aeronautics and Space Administration 7. The Administrator, NASA, should direct NASA property administrators, during their periodic property system analyses: (1) not to accept acquisition approvals from unauthorized NASA or contractor personnel; and (2) to evaluate whether acquisitions of government equipment meet regulatory and contractual requirements and report instances of noncompliance to contracting officials.
Closed - Implemented
Policy has been sent to field offices directing property administrators to accept acquisition approvals only from authorized personnel and to notify contracting officers when they find instances of noncompliance.
National Aeronautics and Space Administration 8. The Administrator, NASA, should direct NASA property administrators to: (1) ensure compliance with regulations requiring contractors to develop minimum use criteria; (2) maintain adequate utilization information on government equipment; and (3) report government equipment that is excess to known, current, or future needs as available for use by other contractors or government personnel.
Closed - Implemented
NASA property administrators have been directed to emphasize existing requirements for reviewing contractors' procedures and property control systems for use of minimum use criteria and development of utilization information in order to justify retention.
National Aeronautics and Space Administration 9. The Administrator, NASA, should revise delegation instructions to DOD contract administration offices requesting that they do the above during property system surveillance of NASA contracts.
Closed - Implemented
NASA has determined that DOD's property administration guidance includes adequate coverage of these matters. NASA has also addressed the issues with both DOD and industry groups at both training courses and national conferences.
National Aeronautics and Space Administration 10. The Administrator, NASA, should direct headquarters property managers to develop more cost-effective approaches for screening and reusing excess items.
Closed - Implemented
NASA developed and implemented a new approach to screening for, reusing, and disposing of excess equipment.
National Aeronautics and Space Administration 11. The Administrator, NASA, should require that during their periodic system analyses, NASA property administrators increase the detail and scope of their review of supporting data in order to improve the reliability and accuracy of contractors' property reports.
Closed - Implemented
NASA has instructed its property administrators to request Inspector General audits when they suspect major problems in the reporting systems. The Inspector General has selected several major contractors for review in order to judge the reliability of their property reports that support NASA's financial statements.
National Aeronautics and Space Administration 12. The Administrator, NASA, should revise the delegation instructions to DOD property administrators to request that they do the same during their analyses of NASA contractor-held property.
Closed - Implemented
The need for more detailed examination of NASA contractors' property reports was discussed with DOD personnel. Delegation instructions will not be revised to routinely require more effort, but emphasis will be placed on DOD's requirement to specifically address this issue where a problem is suspected.
National Aeronautics and Space Administration 13. The Administrator, NASA, should provide contractors with detailed instructions on how unique items of government property should be categorized, valued, and reported.
Closed - Implemented
Detailed instructions will not be provided. However, since GAO's examples illustrate contractors' failures to properly apply existing reporting criteria or poor judgement in categorizing selected items, NASA is addressing this issue in its seminars and workshops for property administrators.
National Aeronautics and Space Administration 14. The Administrator, NASA, should establish consistent materiality reporting criteria that meet both financial reporting and property administration needs.
Closed - Implemented
NASA modified its reporting process and requirements in a way that will meet both financial reporting and property administration needs. Reporting requirement changes were published in the "Federal Register" in September 1995 and were implemented in Septebmer 1996.

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