NASA procurement

The Government Accountability Office (GAO) was asked to examine (1) the extent National Aeronautic and Space Administration's (NASA) guidance on award fees addresses problems previously identified with the use of award-fee contracts and (2) whether NASA follows its guidance in using award fees to achieve desired outcomes. Cost-plus-award-fee contracts accounted for almost half of the NASA obligated contract dollars for fiscal years 2002-2004. Since 1990, GAO has identified NASA's contract management as a high-risk area--in part because of a lack of emphasis on end results. GAO reviewed the top 10 dollar value award-fee contracts active from fiscal years 2002 through 2004 and recommends NASA improve its current use of award fees by reemphasizing tying award-fee payments to desired outcomes, limiting the number of factors used in contractor evaluations as its guidance recommends, and by using this contract type only when justified by a consideration of costs and benefits. GAO also recommends that NASA develop metrics for measuring the effectiveness of award fees, establish a system for collecting data on the use of award-fee contracts, and regularly examine the effectiveness of award fees in achieving desired outcomes. In commenting on a draft of this report, NASA concurred with all three recommendations.