ES, IG-98-027, NASA Costs Paid to Rehired Former JPL Employees

NASA COSTS PAID TO REHIRED FORMER
JET PROPULSION LABORATORY
EMPLOYEES
IG-98-027

Executive Summary

Background
The Jet Propulsion Laboratory (JPL) is a Federally Funded Research and Development Center (FFRDC) operated by the California Institute of Technology (CalTech) under National Aeronautics and Space Administration (NASA) contract NAS7-1260. JPL, staffed primarily with CalTech employees, is a Government-owned installation in Pasadena, California. JPL hires full-time and part-time employees, consultants ⁽¹⁾ and on-call ⁽²⁾ employees to perform work under contract NAS7-1260. Also, JPL's policy ⁽³⁾ (waiver, see Appendix B) allows current or former employees to form their own companies and bid for JPL procurements. As of October 1997, JPL consulting services authorized funds totaled about $13 million. For calendar year (CY) 1997, JPL reported an estimated $1.4 million for on-call services.

Objective
The overall objective was to determine whether NASA has adequate controls over payments to former JPL employees rehired to perform work under contract NAS7-1260. (See additional details on objective, scope, and methodology in Appendix A.)

Results of Audit
NASA controls over costs for former JPL employees rehired to perform work under contract NAS7-1260 can be improved. Specifically, JPL (1) rehired former employees as consultants and extended their services without adequate justification and (2) paid former employees as consultants at a daily rate that exceeded their JPL final salary rate. Also former employees were rehired as on-call personnel without adequate justification and were paid (1) for travel expenses not initially approved or (2) more than the annual maximum hours allowed without approval. As a result, we could not determine whether services received by NASA were allowable or reasonable. Of $538,496 in sampled costs for consulting services, we questioned $54,674 for consultants' pay that exceeded their final JPL compensation rate. Similarly, we questioned $41,274 of $3.8 million ⁽⁴⁾ for sampled on-call services paid to on-call personnel who worked in excess of the maximum hours allowed by JPL policy.

Recommendations
We recommended that the Director, NASA Management Office at JPL, direct JPL to (1) comply with existing procedures for hiring consultants and on-call personnel, (2) revise its procurement policies and procedures to include managerial review and approval of consultant agreements and documentation of consultants' work, and (3) establish procedures for justifying rehiring former employees for on-call services and for documenting travel expenses for employees who moved out of JPL's commuting area. Furthermore, we recommended that the Director review the reasonableness of costs paid for obtaining consulting and on-call services from former JPL employees and recover any unreasonable costs.

Management's Response and Evaluation of the Response
Management either concurred or concurred with the intent of all recommendations and will take recommended actions to ensure adequate controls over payments to former JPL employees rehired to perform work under contract NAS7-1260. We consider planned actions responsive to the intent of the recommendations.

FOOTNOTES

1. A consultant provides advisory services to JPL but does not supervise the performance of operating functions. Some consultants may be former JPL employees.

2. On-call employees may provide services (for example, manage specific work, supervise operations) other than advisory services. On-call employees may also work at irregular or infrequent intervals. Some on-call employees may be former JPL employees.

3. The audit scope did not include a review of this policy.

4. Reviewed on-call costs for CYs 1996 and 1997 totaled $2.4 million and $1.4 million, respectively.

Background	The Jet Propulsion Laboratory (JPL) is a Federally Funded Research and Development Center (FFRDC) operated by the California Institute of Technology (CalTech) under National Aeronautics and Space Administration (NASA) contract NAS7-1260. JPL, staffed primarily with CalTech employees, is a Government-owned installation in Pasadena, California. JPL hires full-time and part-time employees, consultants ⁽¹⁾ and on-call ⁽²⁾ employees to perform work under contract NAS7-1260. Also, JPL's policy ⁽³⁾ (waiver, see Appendix B) allows current or former employees to form their own companies and bid for JPL procurements. As of October 1997, JPL consulting services authorized funds totaled about $13 million. For calendar year (CY) 1997, JPL reported an estimated $1.4 million for on-call services.
Objective	The overall objective was to determine whether NASA has adequate controls over payments to former JPL employees rehired to perform work under contract NAS7-1260. (See additional details on objective, scope, and methodology in Appendix A.)
Results of Audit	NASA controls over costs for former JPL employees rehired to perform work under contract NAS7-1260 can be improved. Specifically, JPL (1) rehired former employees as consultants and extended their services without adequate justification and (2) paid former employees as consultants at a daily rate that exceeded their JPL final salary rate. Also former employees were rehired as on-call personnel without adequate justification and were paid (1) for travel expenses not initially approved or (2) more than the annual maximum hours allowed without approval. As a result, we could not determine whether services received by NASA were allowable or reasonable. Of $538,496 in sampled costs for consulting services, we questioned $54,674 for consultants' pay that exceeded their final JPL compensation rate. Similarly, we questioned $41,274 of $3.8 million ⁽⁴⁾ for sampled on-call services paid to on-call personnel who worked in excess of the maximum hours allowed by JPL policy.
Recommendations	We recommended that the Director, NASA Management Office at JPL, direct JPL to (1) comply with existing procedures for hiring consultants and on-call personnel, (2) revise its procurement policies and procedures to include managerial review and approval of consultant agreements and documentation of consultants' work, and (3) establish procedures for justifying rehiring former employees for on-call services and for documenting travel expenses for employees who moved out of JPL's commuting area. Furthermore, we recommended that the Director review the reasonableness of costs paid for obtaining consulting and on-call services from former JPL employees and recover any unreasonable costs.
Management's Response and Evaluation of the Response	Management either concurred or concurred with the intent of all recommendations and will take recommended actions to ensure adequate controls over payments to former JPL employees rehired to perform work under contract NAS7-1260. We consider planned actions responsive to the intent of the recommendations.