ES, IG-98-028, Audit of Transportation Costs for Non-NASA Payloads Flown in the Spacehab Module

AUDIT OF TRANSPORTATION COSTS
FOR NON-NASA PAYLOADS FLOWN IN THE
SPACEHAB MODULE
IG-98-028

Executive Summary

Introduction
On December 18, 1997, NASA awarded the Research and Logistics Mission Support (ReALMS) Contract, NAS9-97199 to SPACEHAB, Inc., for $42.86 million. The contract covers lease of SPACEHAB's pressurized modules to be flown in Space Shuttle missions and provides associated integration and operation services for NASA payloads. NASA agreed to allow non-NASA customers secured by SPACEHAB to share payload capacity on Space Shuttle missions covered by the contract. The NASA Office of Inspector General received an allegation that the Agency might not receive consideration ⁽¹⁾ from SPACEHAB for Shuttle transportation costs associated with the non-NASA payloads.

Objective
The objective of the audit was to determine whether the Agency sought and received appropriate consideration from the contractor for Shuttle transportation costs allocable to non-NASA payloads.
Appendix A provides details on the scope and methodology used for the audit.

Audit Results
NASA management initiated and subsequently withdrew a waiver of consideration and sought consideration through a reduced price for the ReALMS contract. However, because there is no clear guidance on how to determine the appropriate amount of consideration, NASA has no assurance that it received sufficient consideration. Using the methodology applied to previous contracts, we calculated that the transportation costs should have been $27.32 million, $19.12 million more than NASA received. Moreover, without appropriate guidance, NASA has no assurance that, in the future, it will receive adequate consideration.

Recommendation
The Associate Administrator for Space Flight should develop guidance for calculating transportation fees (consideration) for commercial payloads flown on the SPACEHAB module.

Management's Response
Management concurred with the recommendation and is developing a Plan for Commercialization of the International Space Station; SPACEHAB has indicated a desire to participate. The planned actions are a positive step toward satisfying the intent of the recommendation. However, we request additional comments to clarify how the planned actions will specifically address the recommendation.

FOOTNOTE

1. Consideration can mean a reduced contract price, reimbursement, or other compensation.

Introduction	On December 18, 1997, NASA awarded the Research and Logistics Mission Support (ReALMS) Contract, NAS9-97199 to SPACEHAB, Inc., for $42.86 million. The contract covers lease of SPACEHAB's pressurized modules to be flown in Space Shuttle missions and provides associated integration and operation services for NASA payloads. NASA agreed to allow non-NASA customers secured by SPACEHAB to share payload capacity on Space Shuttle missions covered by the contract. The NASA Office of Inspector General received an allegation that the Agency might not receive consideration ⁽¹⁾ from SPACEHAB for Shuttle transportation costs associated with the non-NASA payloads.
Objective	The objective of the audit was to determine whether the Agency sought and received appropriate consideration from the contractor for Shuttle transportation costs allocable to non-NASA payloads. Appendix A provides details on the scope and methodology used for the audit.
Audit Results	NASA management initiated and subsequently withdrew a waiver of consideration and sought consideration through a reduced price for the ReALMS contract. However, because there is no clear guidance on how to determine the appropriate amount of consideration, NASA has no assurance that it received sufficient consideration. Using the methodology applied to previous contracts, we calculated that the transportation costs should have been $27.32 million, $19.12 million more than NASA received. Moreover, without appropriate guidance, NASA has no assurance that, in the future, it will receive adequate consideration.
Recommendation	The Associate Administrator for Space Flight should develop guidance for calculating transportation fees (consideration) for commercial payloads flown on the SPACEHAB module.
Management's Response	Management concurred with the recommendation and is developing a Plan for Commercialization of the International Space Station; SPACEHAB has indicated a desire to participate. The planned actions are a positive step toward satisfying the intent of the recommendation. However, we request additional comments to clarify how the planned actions will specifically address the recommendation.