ES, IG-99-057, A-76 Study of NASA-3 Aircraft

A-76 STUDY OF NASA-3 AIRCRAFT
IG-99-057

Executive Summary

Background
Office of Management and Budget (OMB) Circular No. A-126, "Improving the Management and Use of Government Aircraft," May 22, 1992, requires that Federal agencies periodically review the cost-effectiveness of their aircraft operations in accordance with the requirements of OMB Circular No. A-76, "Performance of Commercial Activities," August 4, 1983. NASA owns and operates a fleet of six mission management aircraft that are used to transport personnel and equipment. NASA-3 is one of the aircraft. Office of Inspector General (OIG) Audit Report No. LA-95-001, "NASA Aircraft Management," March 28, 1995, recommended that NASA perform the cost-effectiveness analyses required by Circular No. A-76 to justify retention of the mission management aircraft. Any aircraft that cannot be operated at a cost equal to or less than the cost of using commercial airlines or aircraft services should be disposed of or released for other use. Management responded that NASA Centers would perform A-76 studies that included use of commercial carriers. NASA management intended to use the A-76 study results on the NASA-3 aircraft as the basis for closing the remaining recommendation in Audit Report No. LA-95-001.⁽¹⁾

Objectives
The overall audit objective was to determine the adequacy of Marshall's A-76 study on the NASA-3 mission management aircraft. Specifically, we determined:

whether the information Marshall used in the study and the study results were reasonable;
whether Marshall adequately followed OMB Circular No. A-76 when it prepared the study; and
whether using commercial airlines is a cost-effective alternative to using a Government-owned, contractor-operated aircraft.
Details on our objectives, scope, and methodology are in Appendix A.
During the audit, we learned that NASA was developing plans to replace several of the mission management aircraft, including the NASA-3 aircraft. We conducted a limited review to determine whether NASA had completed the necessary A-76 studies.

Results of Review
Marshall personnel exercised care in collecting and analyzing the cost information used in the A-76 study. However, Agency use of the NASA-3 aircraft to transport personnel and equipment did not qualify as one of the purposes for which Federal policies authorize agencies to own or lease aircraft (see Finding A).
As a result of advice from the General Services Administration (GSA), Marshall did not evaluate the use of commercial airlines. Consequently, Marshall's A-76 study did not comply with OMB Circulars A-76 and A-126 or meet the intent of the 1995 audit recommendation. We estimated that the costs for using commercial airlines is $623,000 less than the costs for operating the NASA-3 aircraft during the first year of Marshall's A-76 study and $2.9 million (current dollars) less over the 5-year period covered by the A-76 study. NASA was evaluating a plan to replace three mission management aircraft, including the NASA-3 aircraft, and to upgrade a fourth aircraft. Management had not yet performed an A-76 study supporting the proposed aircraft purchase and upgrade, which would cost $43.9 million. Since these aircraft also do not meet the criteria for agencies to own or lease aircraft, NASA can avoid the $43.9 million dollar cost by using commercial airlines (see Finding B).

Recommendations
NASA management should dispose of the NASA-3 aircraft and use commercial airlines to satisfy Marshall's transportation requirements, revise Agency policy to conform with OMB requirements, evaluate commercial airlines and other aviation services when conducting A-76 studies for aircraft, and terminate plans to replace the existing mission management aircraft.

Management's Response
Management nonconcurred with the recommendations to dispose of the NASA-3 aircraft and use commercial airlines, to revise Agency policy to conform with OMB requirements, and to terminate plans to replace the existing mission management aircraft. Management concurred with the recommendation to evaluate commercial airlines and other aviation services when required in performing A-76 studies. However, management did not identify the specific actions to be taken. The complete text of management's response is in Appendix C.

Evaluation of Management's Response
We request that management reconsider its position and provide additional comments on the report. We consider management's concurrence with the recommendation concerning A-76 studies to be nonresponsive because no corrective actions were identified. Management concurred with a similar recommendation in the 1995 audit report but has not taken acceptable action on that recommendation. The recommendation from our 1995 audit and all recommendations from this 1999 report remain unresolved. In addition to responding to the recommendation, management provided extensive comments on the report. Our evaluation of those comments is in Appendix D.

FOOTNOTES

1. George C. Marshall Space Flight Center (Marshall) prepared the A-76 study.

Background	Office of Management and Budget (OMB) Circular No. A-126, "Improving the Management and Use of Government Aircraft," May 22, 1992, requires that Federal agencies periodically review the cost-effectiveness of their aircraft operations in accordance with the requirements of OMB Circular No. A-76, "Performance of Commercial Activities," August 4, 1983. NASA owns and operates a fleet of six mission management aircraft that are used to transport personnel and equipment. NASA-3 is one of the aircraft. Office of Inspector General (OIG) Audit Report No. LA-95-001, "NASA Aircraft Management," March 28, 1995, recommended that NASA perform the cost-effectiveness analyses required by Circular No. A-76 to justify retention of the mission management aircraft. Any aircraft that cannot be operated at a cost equal to or less than the cost of using commercial airlines or aircraft services should be disposed of or released for other use. Management responded that NASA Centers would perform A-76 studies that included use of commercial carriers. NASA management intended to use the A-76 study results on the NASA-3 aircraft as the basis for closing the remaining recommendation in Audit Report No. LA-95-001.⁽¹⁾
Objectives	The overall audit objective was to determine the adequacy of Marshall's A-76 study on the NASA-3 mission management aircraft. Specifically, we determined: whether the information Marshall used in the study and the study results were reasonable; whether Marshall adequately followed OMB Circular No. A-76 when it prepared the study; and whether using commercial airlines is a cost-effective alternative to using a Government-owned, contractor-operated aircraft. Details on our objectives, scope, and methodology are in Appendix A. During the audit, we learned that NASA was developing plans to replace several of the mission management aircraft, including the NASA-3 aircraft. We conducted a limited review to determine whether NASA had completed the necessary A-76 studies.
Results of Review	Marshall personnel exercised care in collecting and analyzing the cost information used in the A-76 study. However, Agency use of the NASA-3 aircraft to transport personnel and equipment did not qualify as one of the purposes for which Federal policies authorize agencies to own or lease aircraft (see Finding A). As a result of advice from the General Services Administration (GSA), Marshall did not evaluate the use of commercial airlines. Consequently, Marshall's A-76 study did not comply with OMB Circulars A-76 and A-126 or meet the intent of the 1995 audit recommendation. We estimated that the costs for using commercial airlines is $623,000 less than the costs for operating the NASA-3 aircraft during the first year of Marshall's A-76 study and $2.9 million (current dollars) less over the 5-year period covered by the A-76 study. NASA was evaluating a plan to replace three mission management aircraft, including the NASA-3 aircraft, and to upgrade a fourth aircraft. Management had not yet performed an A-76 study supporting the proposed aircraft purchase and upgrade, which would cost $43.9 million. Since these aircraft also do not meet the criteria for agencies to own or lease aircraft, NASA can avoid the $43.9 million dollar cost by using commercial airlines (see Finding B).
Recommendations	NASA management should dispose of the NASA-3 aircraft and use commercial airlines to satisfy Marshall's transportation requirements, revise Agency policy to conform with OMB requirements, evaluate commercial airlines and other aviation services when conducting A-76 studies for aircraft, and terminate plans to replace the existing mission management aircraft.
Management's Response	Management nonconcurred with the recommendations to dispose of the NASA-3 aircraft and use commercial airlines, to revise Agency policy to conform with OMB requirements, and to terminate plans to replace the existing mission management aircraft. Management concurred with the recommendation to evaluate commercial airlines and other aviation services when required in performing A-76 studies. However, management did not identify the specific actions to be taken. The complete text of management's response is in Appendix C.
Evaluation of Management's Response	We request that management reconsider its position and provide additional comments on the report. We consider management's concurrence with the recommendation concerning A-76 studies to be nonresponsive because no corrective actions were identified. Management concurred with a similar recommendation in the 1995 audit report but has not taken acceptable action on that recommendation. The recommendation from our 1995 audit and all recommendations from this 1999 report remain unresolved. In addition to responding to the recommendation, management provided extensive comments on the report. Our evaluation of those comments is in Appendix D.