ES, IG-98-041, Consolidated Network Mission Operations Support Contract, Transition and Implementation

CONSOLIDATED NETWORK MISSION
OPERATIONS SUPPORT CONTRACT, TRANSITION
AND IMPLEMENTATION
IG-98-041

Executive Summary

Introduction
On April 15, 1996, NASA signed a tripartite agreement with AlliedSignal Technical Services (Allied) and Computer Sciences Corporation (CSC) to provide support services for network and mission operations; systems, engineering, and analysis; and operations and maintenance of radar telecommunications. The agreement consolidated three existing support service contracts ⁽¹⁾ into Allied contract NAS5-31000, the Consolidated Network Missions Operations Support (CNMOS) contract. The CNMOS contract is a cost-plus-award-fee contract with total negotiated costs of about $1.8 billion. The former Mission Operations and Data Systems Directorate (Code 500) at Goddard Space Flight Center led the consolidation effort because two of the prior contracts supported Code 500 divisions.
NASA policy is to implement performance-based contracting (PBC), ⁽²⁾ wherever feasible, to produce contract savings. In October 1996, Allied and NASA negotiated $34.8 million in a contract cost reduction. The reduction represented the costs that were avoided by consolidating the three contracts. NASA agreed to share 20 percent of the negotiated savings with Allied, or about $7.2 million.

Objectives
The audit objectives were to determine whether:

Contractors are complying with the cost savings sharing clause.
NASA has adequately planned to provide services from September 30, 1997, until the award of the Consolidated Space Operations Contract (CSOC).
Cost savings to NASA, from the consolidation, are occurring and reasonable.
See Appendix A for additional details on the audit objectives, scope, and methodology.

Results of Audit
Allied has complied with reporting requirements of the cost savings sharing clause. Additionally, NASA adequately planned to provide services, through a contract extension, from October 1, 1997, until the award of the CSOC. However, the Allied cost reduction proposal for the period April 15, 1996, through September 30, 1997, overstates savings by about $9.0 million. As a result, Allied received $1.8 million more than entitled under the contract's cost savings sharing clause.

Recommendation
The Agency should seek a recoupment of the overstated share of savings paid to Allied.

Management Response and Evaluation of the Response
Nonconcur. Management stated that the audit calculations were inaccurate. Further, the audit methodology used two separate time periods rather than the single contract performance period. No overstated savings occurred, and there is an inadequate basis for recoupment of savings.
In response to management's nonconcurrence, we reaffirm our position, taking into account new data Goddard Space Flight Center provided in its response that was not available during the audit. We revised the finding to reflect the new data presented, which did not change our position but did reduce the overstated savings by $.2 million, and we request additional comments on the final report.

FOOTNOTES

1. NAS5-31000; Network Mission and Operations Support, Allied; NAS5-31500, Systems, Engineering, and Analysis Support, CSC; and NAS5-32153, Operations and Maintenance of Radar Telecommunication, Optics, and Television Systems and Meteorological Forecasting at Wallops Flight Facility, Allied.

2. Performance-based contracting (PBC) refers to a NASA procurement initiative that structures all aspects of an acquisition around the purpose of work to be performed as opposed to how the work is to be performed. PBC emphasizes objective, measurable performance requirements and quality standards in developing statements of work, selecting contractors, determining contract-type and incentives, and performing contract administration.

Introduction	On April 15, 1996, NASA signed a tripartite agreement with AlliedSignal Technical Services (Allied) and Computer Sciences Corporation (CSC) to provide support services for network and mission operations; systems, engineering, and analysis; and operations and maintenance of radar telecommunications. The agreement consolidated three existing support service contracts ⁽¹⁾ into Allied contract NAS5-31000, the Consolidated Network Missions Operations Support (CNMOS) contract. The CNMOS contract is a cost-plus-award-fee contract with total negotiated costs of about $1.8 billion. The former Mission Operations and Data Systems Directorate (Code 500) at Goddard Space Flight Center led the consolidation effort because two of the prior contracts supported Code 500 divisions. NASA policy is to implement performance-based contracting (PBC), ⁽²⁾ wherever feasible, to produce contract savings. In October 1996, Allied and NASA negotiated $34.8 million in a contract cost reduction. The reduction represented the costs that were avoided by consolidating the three contracts. NASA agreed to share 20 percent of the negotiated savings with Allied, or about $7.2 million.
Objectives	The audit objectives were to determine whether: Contractors are complying with the cost savings sharing clause. NASA has adequately planned to provide services from September 30, 1997, until the award of the Consolidated Space Operations Contract (CSOC). Cost savings to NASA, from the consolidation, are occurring and reasonable. See Appendix A for additional details on the audit objectives, scope, and methodology.
Results of Audit	Allied has complied with reporting requirements of the cost savings sharing clause. Additionally, NASA adequately planned to provide services, through a contract extension, from October 1, 1997, until the award of the CSOC. However, the Allied cost reduction proposal for the period April 15, 1996, through September 30, 1997, overstates savings by about $9.0 million. As a result, Allied received $1.8 million more than entitled under the contract's cost savings sharing clause.
Recommendation	The Agency should seek a recoupment of the overstated share of savings paid to Allied.
Management Response and Evaluation of the Response	Nonconcur. Management stated that the audit calculations were inaccurate. Further, the audit methodology used two separate time periods rather than the single contract performance period. No overstated savings occurred, and there is an inadequate basis for recoupment of savings. In response to management's nonconcurrence, we reaffirm our position, taking into account new data Goddard Space Flight Center provided in its response that was not available during the audit. We revised the finding to reflect the new data presented, which did not change our position but did reduce the overstated savings by $.2 million, and we request additional comments on the final report.