Executive Summary

Background. In September 1995, NASA awarded a $398.7 million cost-plus-award-fee contract (NAS5-32954) to TRW, Inc., for two Earth Observing System (EOS) spacecraft, PM-1 and CHEM-1. Separate options for two additional spacecraft will, if exercised, increase the contract value to $668.5 million. The PM-1 and CHEM-1 spacecraft will serve as the platforms for obtaining 24 measurements (for example, measurements of clouds, precipitation, sea ice, etc.) that comprise the core of the EOS mission. TRW will design, fabricate, integrate, test, deliver, and provide launch support and sustaining engineering support for each spacecraft. The PM-1 spacecraft is scheduled for launch in 2000 and for CHEM-1 in 2002. Objectives. The overall objective of the audit was to evaluate contract administration. Specifically, we determined whether: planned schedule and costs are being achieved, quality control is adequate, award fee determinations are correct, and contractor performance is effectively monitored. Details on the scope and methodology are in Appendix A. Results of Audit. In general, the EOS contractor-planned schedule and cost performance is adequate, award fee determinations are correct, and program and project officials have effectively monitored performance. However, program management can be improved in the areas of quality control and communication of award fee determinations. NASA does not have assurance that the Defense Contract Management Command (DCMC) is performing required quality assurance services. Further, DCMC did not finalize and submit its Agency Quality Assurance Plan for contract NAS5-32954 in a timely manner. Although the plan has now been submitted, it has not been formally approved by NASA. Finally, DCMC has not submitted required status reports to the NASA Flight Assurance Manager at Goddard Space Flight Center (Goddard). The information is necessary to ensure that quality assurance issues are addressed in a timely manner. Event coordinators(1) disagreed with event monitors' assessment and scores regarding contractor award fees and did not discuss the differences with the event monitors.(2) Without the opportunity to discuss and reach agreement, award fee scores may not accurately reflect contractor performance. Recommendations. NASA should establish procedures to ensure the Program contingency plan complies with Agency guidance for effective risk management and establish a process to ensure the contingency plan is kept current. Recommendations. We recommend that NASA: ensure that DCMC performs required quality assurance services. improve communication of award fee determination to participants in the evaluation process. Management's Response. Management concurred with the recommendations and has taken actions to correct the cited deficiencies. The complete text of the response is in Appendix E. Management also provided some comments on the finding discussion which were resolved in meetings between the auditors and Goddard officials. Evaluation of Response. The actions taken are responsive, and we consider the recommendations closed with the issuance of this report.

Rev. 6/1/99