ES, IG-99-028, Management of NASA-held Equipment

MANAGEMENT OF NASA-HELD EQUIPMENT
IG-99-028

Executive Summary

Background
NASA buys or fabricates many types of equipment to carry out its mission and programs. Some of the equipment is assigned to, used, and controlled by NASA employees and is referred to as "NASA-held" equipment. Equipment is also provided to NASA contractors who are responsible for establishing their own procedures and systems to control and account for it as "contractor-held" equipment. As of July 1998, NASA-held equipment included about 605,000 items with a recorded cost of $4.7 billion. Our audit assessed a total sample frame of 173,140 equipment items, costing $1.2 billion, at Goddard Space Flight Center (Goddard), Marshall Space Flight Center (Marshall), and Stennis Space Center (Stennis).
Government property management regulations and NASA implementing policies require that all equipment be effectively accounted for and controlled, optimally used, and properly maintained and disposed of. Two primary internal controls for managing NASA-held equipment are the policies in NASA Handbook (NHB) 4200.1D, "Equipment Management Manual" (April 1992), and the NASA Equipment Management System (NEMS), which is the automated inventory system the Agency uses to identify, account for, and control equipment.⁽¹⁾ NASA Headquarters establishes the overall equipment management policies, while the Centers are expected to establish implementing policies and procedures to ensure effective and efficient equipment management and control.

Objective
The audit objective was to evaluate management of NASA-held equipment with respect to timely and accurate entry into the inventory, effective control and use, effective maintenance, and appropriate redistribution or disposal. Further details on the audit objective, scope, and methodology are in Appendix A.

Results of Audit
We identified no significant problems in verifying the existence of NASA-held equipment at Goddard, Marshall, and Stennis. Also, maintenance on the sampled equipment was timely and cost-effective. However, existing management controls over NASA-held equipment did not adequately ensure that all NASA-held assets were being fully used and effectively accounted for and managed. Specifically, we identified equipment at the three Centers for which data in the NEMS was incomplete or inaccurate and for which data had not been recorded into the inventory in a timely manner. Also, equipment was being underused but not made available for redistribution or disposal, and equipment fit the description of controlled equipment but had not been properly tagged and recorded in the NEMS.
We observed the same kinds of problems on some nonsample items that we also reviewed during the audit. Although those items were not part of our sample and are not included in our sampling projections and results, we believe they provide additional evidence of the problems noted with the sample items and reinforce the need to take corrective actions.
The problems were primarily caused by weaknesses in NEMS input controls, lack of compliance with or misinterpretation of extant control procedures, and lack of accountability for and emphasis on optimizing equipment use. As a result, the Agency's ability to meet its goals to conserve and minimize resources and to effectively account for and control valuable assets is significantly diminished.
Although management took actions during our audit to address problems related to some sampled items, more comprehensive actions are needed to eliminate and prevent the types of problems we identified. Also, we recognize that NEMS is a legacy system and that the Agency is planning to reengineer asset management policies and replace the related systems in the future. However, some reasonable corrective actions are needed and prudent, in our opinion, to improve how equipment is used and managed until those new changes and systems are operational.

Recommendations
We recommend that management improve the completeness and accuracy of NEMS data, ensure that equipment is used to the fullest extent possible and is promptly disposed of when no longer needed, and ensure that all controlled equipment is tagged and entered into the property records in a timely manner.

Management's Response
Management concurred with all the recommendations. Actions are planned to reemphasize and clarify user responsibilities for reporting changes to their equipment so NEMS can be updated and equipment use can be improved. To promote timely tagging of all equipment, metrics will be placed in each Center's performance-based contract for equipment management and will be evaluated each year. Also, managers at the annual Senior Equipment Management Officer (SEMO) meeting in June 1999 will discuss the issues cited in the report.

Evaluation of Management's Response
Management's proposed actions on the recommendations are considered responsive.

FOOTNOTE

1. Only "controlled" equipment is entered into NEMS and managed under special procedures. A controlled equipment item is one that has an acquisition cost of $1,000 or more, and an estimated service life of 2 years or more and that will not be consumed or expended in an experiment. Controlled equipment also includes items costing less than $1,000, such as weapons, cameras, and computers, if they are considered "sensitive" due to losses or other factors.

Background	NASA buys or fabricates many types of equipment to carry out its mission and programs. Some of the equipment is assigned to, used, and controlled by NASA employees and is referred to as "NASA-held" equipment. Equipment is also provided to NASA contractors who are responsible for establishing their own procedures and systems to control and account for it as "contractor-held" equipment. As of July 1998, NASA-held equipment included about 605,000 items with a recorded cost of $4.7 billion. Our audit assessed a total sample frame of 173,140 equipment items, costing $1.2 billion, at Goddard Space Flight Center (Goddard), Marshall Space Flight Center (Marshall), and Stennis Space Center (Stennis). Government property management regulations and NASA implementing policies require that all equipment be effectively accounted for and controlled, optimally used, and properly maintained and disposed of. Two primary internal controls for managing NASA-held equipment are the policies in NASA Handbook (NHB) 4200.1D, "Equipment Management Manual" (April 1992), and the NASA Equipment Management System (NEMS), which is the automated inventory system the Agency uses to identify, account for, and control equipment.⁽¹⁾ NASA Headquarters establishes the overall equipment management policies, while the Centers are expected to establish implementing policies and procedures to ensure effective and efficient equipment management and control.
Objective	The audit objective was to evaluate management of NASA-held equipment with respect to timely and accurate entry into the inventory, effective control and use, effective maintenance, and appropriate redistribution or disposal. Further details on the audit objective, scope, and methodology are in Appendix A.
Results of Audit	We identified no significant problems in verifying the existence of NASA-held equipment at Goddard, Marshall, and Stennis. Also, maintenance on the sampled equipment was timely and cost-effective. However, existing management controls over NASA-held equipment did not adequately ensure that all NASA-held assets were being fully used and effectively accounted for and managed. Specifically, we identified equipment at the three Centers for which data in the NEMS was incomplete or inaccurate and for which data had not been recorded into the inventory in a timely manner. Also, equipment was being underused but not made available for redistribution or disposal, and equipment fit the description of controlled equipment but had not been properly tagged and recorded in the NEMS. We observed the same kinds of problems on some nonsample items that we also reviewed during the audit. Although those items were not part of our sample and are not included in our sampling projections and results, we believe they provide additional evidence of the problems noted with the sample items and reinforce the need to take corrective actions. The problems were primarily caused by weaknesses in NEMS input controls, lack of compliance with or misinterpretation of extant control procedures, and lack of accountability for and emphasis on optimizing equipment use. As a result, the Agency's ability to meet its goals to conserve and minimize resources and to effectively account for and control valuable assets is significantly diminished. Although management took actions during our audit to address problems related to some sampled items, more comprehensive actions are needed to eliminate and prevent the types of problems we identified. Also, we recognize that NEMS is a legacy system and that the Agency is planning to reengineer asset management policies and replace the related systems in the future. However, some reasonable corrective actions are needed and prudent, in our opinion, to improve how equipment is used and managed until those new changes and systems are operational.
Recommendations	We recommend that management improve the completeness and accuracy of NEMS data, ensure that equipment is used to the fullest extent possible and is promptly disposed of when no longer needed, and ensure that all controlled equipment is tagged and entered into the property records in a timely manner.
Management's Response	Management concurred with all the recommendations. Actions are planned to reemphasize and clarify user responsibilities for reporting changes to their equipment so NEMS can be updated and equipment use can be improved. To promote timely tagging of all equipment, metrics will be placed in each Center's performance-based contract for equipment management and will be evaluated each year. Also, managers at the annual Senior Equipment Management Officer (SEMO) meeting in June 1999 will discuss the issues cited in the report.
Evaluation of Management's Response	Management's proposed actions on the recommendations are considered responsive.