Operations Management Council Internal Controls Status Meeting

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Operations Management Council Internal Controls
Status Meeting

• Tuesday, February 14, 2006
• 1230 pm - 230 pm
• NASA Headquarters
• Room 2X40

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Status Meeting Agenda for February 14th

• Introduction Ms. Dale 5 min.
• Overview of NASA Internal Control Mr. Jedrey 10
  min.
• Status of Actions from Nov. 9 Meeting Mr. Jedrey
  5 min.
• Target
• Corrective Actions on Internal Control
  Deficiencies Correction Date
• Asset Management (MW) OCFO 10 min. 09/30/06
• Financial Management System (MW) OCFO 10
  min. 11/15/06
• Financial Management Data Integrity (MW) OCFO 10
  min. 09/15/06
• Financial Mgmt. Policy Procedures (MC) OCFO
  5 min. 06/30/06
• Financial Management Staffing (MC) OCFO 5
  min. 09/30/06
• Full Cost Integration (OW) OCFO 5
  min. 12/31/06
• Space Shuttle (MW) SOMD 10 min. 06/30/06
• Shuttle Impact on ISS Operations (MC) SOMD 5
  min. 06/30/06
• Information Technology Security (OW) OCIO 5
  min. Ongoing
• NASA Declassification Program (MC) OIM 5
  min. 12/31/06
• Open GAO Audit Recommendations (MC) OIM 5
  min. Ongoing
• Mission Management Aircraft (OW) OIM 10
  min. 06/30/06

Key Material Weakness (MW) Other Weakness
(OW) Management Challenge (MC)
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Reason for Senior Level Emphasis Internal
Control

• Key Law Federal Managers Financial Integrity
  Act (1982) applies to programmatic, financial,
  and institutional controls
• GAO Standards for Internal Control in the Federal
  Government (1999) provides 5 standards for
  implementing the law
• Sarbanes-Oxley Act of 2002 prompted by
  enormous bankruptcy scandals of Enron in 2001 and
  WorldCom in 2002, this law requires strict rules
  on corporate governance
• OMB Circular A-123, Managements Responsibility
  for Internal Control (revised 2004) responds to
  Sarbanes-Oxley thrust applied to federal
  government and to place more emphasis on GAOs
  standards
• Revised NPD 1200, NASA Internal Control and
  Accountability (2006) presents Agency policy for
  implementing OMB Circular A-123 with tie into
  NASA Strategic Management Governance Handbook
  (NPD 1000.0)

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Key NASA DefinitionsLevels of Internal Control
Deficiencies

• Material Weakness (MW) a deficiency in
  internal controls that is significant enough to
  be reported outside the Agency.
• Other Weakness (OW) a deficiency in internal
  controls that should be reported and monitored
  internally.
• Management Challenge (MC) a concern about a
  challenge to management. There is insufficient
  information to confirm a serious systemic
  internal control weakness in this area. It may
  pertain to issues that are outside managements
  control or factors that may create an adverse
  condition. Close monitoring is required.

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Examples of Internal Controls

• Published policy, i.e., NASA Directives
• Risk assessments on compliance with directives,
  standards, and other official NASA documents
• Effective use of councils and teams to plan,
  perform, and monitor work
• Regular assessments of physical security and
  information technology security compliance
• Reviews of written delegations of authority for
  accuracy
• Systematic reviews of physical asset inventories
• Certification that products were received
  checked for possible defect or other problem
  before paying vendor
• Reviews of Program Commitment Agreements to
  ensure that cost performance requirements are
  being met
• Records of employee training
• Tracking corrective/preventive actions
  assigning new/more actions as deemed prudent by
  management
• ISO 90012000 based management system audits

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Schedule for 2006 OMC Meetings Internal Controls

• Feb. 14 1st Progress Meeting. Provide
  background on why internal control has become a
  high priority throughout government and the
  private sector. Assess actions taken to correct
  significant Agency deficiencies since Nov. 9
  Decision Meeting. Discuss any proposed new
  deficiencies to include on the councils watch
  list.
• Apr. 12 2nd Progress Meeting to assess actions
  taken during the last quarter.
• July 13 (tentative date) 3rd Progress Meeting
  of 2006
• Oct. 5 (tentative date) Annual Decision Meeting
  for determining what deficiencies will be
  reported outside the Agency in the
  Administrators Statement of Assurance, which is
  required as part of the NASA Performance and
  Accountability Report, submitted to OMB, the
  Congress, and the President.

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Actions from Nov. Internal Controls Meeting

• The CFO, in collaboration with the Asst.
  Administrator for IA and the Asst. Administrator
  for Procurement, will develop a Corrective Action
  Plan (CAP) for the revised deficiency, Asset
  Management (MW). The detailed plan will be
  provided in the Corrective Action Tracking System
  (CATS) and a summary of the CAP will be presented
  by the next OMC meeting.
• Status Open
• The CFO, in collaboration with the CIO, Chief
  Engineer, IEMP Program Executive, Asst.
  Administrator for IA, and the Asst.
  Administrator for Human Capital, as appropriate,
  will develop CAPs for the four new deficiencies
  Financial Management System (MW), Financial
  Management Policy and Procedures (MC), Financial
  Management Data Integrity (MW), and Financial
  Management Staffing (MC). Detailed plans will be
  entered into the CATS and summaries of each CAP
  will be presented at the next OMC.
• Status Open

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Actions from Nov. Internal Controls Meeting

• The Asst. Administrator for Procurement will
  coordinate with the OCFO and OIG to determine if
  acquisition oversight is a deficiency and, if so,
  to develop its scope (e.g., what aspects are
  included, who is responsible, etc). The Office
  of Procurement will present the results at the
  next OMC meeting.
• Status Open (see next 3 charts)
• The OCE will develop proposed changes to NPR
  7120.5 and bring to the PMC for approval by March
  31, 2006.
• Status Open

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Action Item from November 9th OMC Meeting

• OMC Action 3 The Assistant Administrator for
  Procurement will coordinate with the OCFO and OIG
  to determine if acquisition oversight is a
  deficiency and, if so, to develop its scope (e.g.
  what aspects are included, who is responsible,
  etc). The Office of Procurement will present the
  results to the OMC.
• Deadline Next OMC Internal Controls meeting.
• Action Taken On Wednesday, January 11, 2006,
  representatives from the Office of General
  Counsel, the Office of the Chief Engineer, the
  Integrated Enterprise Management Program Office
  and the Office of Procurement met with the
  Inspector General to discuss the issue raised at
  the November OMC meeting. The issues discussed
  were similar to those that led to the inclusion
  of Contract Management on GAOs High-Risk list.
  It was agreed by all that the OCE would be the
  lead/POC/spokesperson for GAO on this activity,
  but that support would come from the most
  appropriate office. It was also agreed that
  since the OCE is going to be the lead for this
  activity, then Chris Scolese or his designee
  would report to the OMC quarterly.

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OIGs Response to Procurement Integrity Issue

• NASA does not have a Procurement Integrity
  Program. Responsibility for integrity in
  contracting is fragmented, with no clear lines of
  authority or responsibility for assuring
  integrity in NASA contracting.  We believe that
  NASA should have an internal control framework
  designed to assure integrity in Government
  contracts, to promote competition in contracting,
  to vigorously address wrongdoing by contractors
  through coordinated activities with the OIG and
  the NASA Office of General Counsel, the Office of
  Procurement, the centers and the program
  offices. 
• We note that 10 USC 2307(i)(8) contemplates the
  establishment of remedy coordination officials
  within the Department of Defense and NASA and
  that NASA has not formally established such a
  position.  A remedy coordination official is a
  person or entity in that agency who coordinates
  within that agency the administration of
  criminal, civil, administrative, and contractual
  remedies resulting from investigations of fraud
  or corruption related to procurement
  activities.   10 USC 2307(i)(10)  We believe
  that the Agency should establish such a position,
  that it be in the Office of General Counsel, and
  that it be the same person as the Agency point of
  contact for addressing contract fraud and related
  matters.

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OIGs Response to Procurement Integrity Issue

• A contract integrity coordination program under
  10 U.S.C. 2307 is contemplated to contain the
  following elements to assure that all remedies
  are carefully considered by NASA when it has been
  victimized by fraud
• Consideration of reduction or suspension of
  advance and progress payments as authorized under
  10 USC 2307(i), where appropriate
• Consideration of termination of contracts and
  grants tainted by fraud in their performance or
  inducement
• Consideration of proposed debarment and
  suspension under the FAR
• Establishment of a full time Procurement
  Integrity unit to process suspension and
  debarment actions
• Consideration of actions under the Program Fraud
  Civil Remedies Act (PFCRA), 31 U.S.C.
  3801-3812
• Participation in the effectuation of  global
  settlements of criminal conduct, whereby
  contractual, administrative and civil remedies
  associated with a case are coordinated and
  resolved, when that is in NASAs interests
• Consideration of disciplinary and other
  administrative actions against culpable
  individuals, including civil servants
• We believe that a well-coordinated contract
  integrity program would result in a more
  structured and thoughtful consideration of
  remedies, identification of best practices and
  reform of regulations and internal controls,
  better education of NASA employees about
  potential fraud, and, in sum, better protection
  of NASA.

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Asset Management(Material Weakness)

• Office of the Chief Financial Officer
• Terry Bowie
• February 14, 2006

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Background

• This deficiency was introduced in February 2003
  as a Material Weakness with planned actions to
  include monthly reporting by contractors
  publication of a Federal Management Regulation
  for Property, Plant, and Equipment and
  initiation of contractor and accountant training.
• In October 2003, the deficiency was reduced to an
  Other Weakness when the OCFO completed the
  tasks of defining assets in space and issuing
  revised policy.
• In October 2004, the deficiency was re-designated
  as a Material Weakness when the IG questioned the
  accuracy and reliability of property related
  accounting data.
• During the 2005 Internal Control decision
  meeting, the Contractor-Held Property Material
  Weakness was renamed Asset Management, redefined
  to include Contractor-Held Property and NASA-Held
  Property, and designated as a Material Weakness.
• Currently, the OCFO is sharing responsibility for
  this Material Weakness with the Programmatic
  Internal Control Team (PICT) and the
  Institutional Internal Control Team (IICT).
• In January 2006, a Corrective Action Plan was
  developed for the FY 2005 Financial Audit, which
  defines the goal, objectives, strategies, and
  actions for improving NASAs internal controls
  over property, plant, and equipment.

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Issue

• NASA needs to improve its management controls for
  the financial reporting of property, plant and
  equipment, and materials including Theme Assets
  (formerly Assets-in-Space), contractor-held
  property, spare parts and assets under
  construction. Lack of proper management controls
  can result in inconsistent financial recording
  practices that can misstate asset values and
  period expenses.
• Root cause
• NASAs policies and procedures are not fully in
  conformance with federal requirements
• There is inconsistent application of existing
  policies and procedures
• Corrective action taken to date
• Establishment of Financial Integration Team,
  subgroup on PPE composed of the Deputy Chief
  Financial Officer, Associate Administrator for
  Infrastructure and Administration, and Director
  of Procurement.
• Presentation to and support received from the
  Senior Advisory Group on the overall plan to
  improve NASA's PPE internal controls and
  financial reporting.
• Established PPE Compensating Controls Group
  comprised of HQs and Center representatives.
• Prepared draft Theme Assets capitalization policy
  paper and submitted to OIG and external auditors
  for review and comment.
• Defined Asset Categories and finalized how
  property will be classified (NASA Held and
  Contractor Held Program Related vs. Non-Program
  Related).
• Defined appropriate accounting treatment per
  Asset category and use.

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Recommendation

• Recommend this issue remain as currently assigned
  (Material Weakness).

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Planned Actions for Next Quarter

• Provide OMB, GAO, FASAB, and OIG NASAs revised
  capitalization policy.
• Adjust Capitalization policy as necessary.
• Flowchart and document desired business processes
  and procedures, and define roles and
  responsibilities for effective PPE lifecycle
  management.
• Identify and coordinate changes to existing
  policies Agency-wide.
• The Institutional Internal Control Team (IICT),
  the Programmatic Internal Control Team (PICT),
  and the Financial Management Internal Control
  Team (FMICT) are addressing Asset Management as a
  priority area of focus.

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Financial Management System(Material Weakness)

• Office of the Chief Financial Officer
• Terry Bowie
• February 14, 2006

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Background

• During the 2005 Internal Control decision
  meeting, the Management Operations Council
  granted the approval for the OCFO to close
  Material Weakness (MW-2004-02) Financial
  Management and open a new Material Weakness
  called Financial Management System that
  captures challenges related to
• Confirming configuration
• Validating the accounting
• Validating construction of the financial reports
• The recommendation was made to separately manage
  the OCFO deficiencies, ensure traceability to
  external audits, and show that progress has been
  made.
• Currently, the OCFO is sharing responsibility for
  this Material Weakness with the Office of the
  Chief Information Officer and the Integrated
  Enterprise Management Program (IEMP) Office.
• Developed the Corrective Action Plan for the FY
  2005 Financial Audit which addresses improving
  NASAs financial management system and processes
  to achieve accurate, reliable, timely financial
  information.

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Issue

• Since the completion of the rollout of the new
  system, challenges in system processing,
  configuration, and capabilities have surfaced and
  the current version of the SAP system has some
  capability limitations which have required the
  definition and implementation of compensating
  controls.
• Root cause
• Conversion from 10 disparate legacy financial
  systems supported by over 120 subsidiary systems,
  along with over a decade of historical data, to a
  single integrated financial management system
  highlighted long-standing data and process
  issues.
• Corrective action taken to date
• Submitted FY 2005 PAR to AGA for feedback on the
  construction, content, and applicability of the
  report, as part of the CEAR Award process.
• Modified the statement of net cost to provide a
  breakdown of net costs consistent with strategic
  plan and in the Management Discussion and
  Analysis section by major line of business.
• Established procedures to ensure that all system
  configuration changes are subject to regression
  tests and year-end test procedures which validate
  that changes made to the Core Financial System
  are valid, appropriate, and do not adversely
  impact end-to-end business processes, including
  external reporting.
• Established safeguards to ensure that system does
  not pay cost in excess of obligations.
• Formed cross-functional task team to review
  current funds control, cost collection, and
  accrual processes and identify opportunities for
  reengineering.
• Conducted benchmarking sessions with Dept. of
  Education, Dept. of Agriculture, and others to
  identify best practices and lessons learned.
• Drafted proposed process design and high level
  requirements.

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Recommendation

• Recommend this issue remain as currently assigned
  (Material Weakness).

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Planned Actions for Next Quarter

• Review results of CEAR review process.
• Gather feedback on PAR from OMB and Mercatus.
• Review latest revision of OMB Circular A-136 and
  incorporate required updates for FY 2006 PAR.
• Review PARs from other Federal Agencies to
  identify potential areas of improvement for NASA.
• Establish a cross-Agency task team to develop
  monthly schedule with due dates for data
  processing, reconciliations, verifications,
  feedback, and reports.
• Develop compensating procedures to analyze
  Business Warehouse on a quarterly basis to ensure
  that liabilities are appropriately recorded.

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Financial Management Data Integrity (Material
Weakness)

• Office of the Chief Financial Officer
• Terry Bowie
• February 14, 2006

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Background

• During the 2005 Internal Control decision
  meeting, the Management Operations Council
  granted the approval for the OCFO to close
  Material Weakness (MW-2004-02) Financial
  Management and open a new Material Weakness
  called Financial Management Data Integrity that
  captures challenges related to
• Environmental Liabilities
• Fund Balance with Treasury
• Currently, the OCFO is sharing responsibility for
  this Material Weakness with the Offices of
  Infrastructure and Administration, Procurement,
  and the Integrated Enterprise Management Program
  (IEMP).
• Developed the Corrective Action Plan for the FY
  2005 Financial Audit which addresses validating
  the tools and methodology used to prepare the
  unfunded environmental liability estimates and
  reconciling Fund Balance with Treasury and
  processing corrections in a timely manner.

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Issue

• NASA needs to continue to improve its current
  procedures to ensure that all reconciling items
  are thoroughly researched, timely resolved, and
  reviewed by appropriate Center and Headquarters
  OCFO personnel. NASA needs to improve existing
  environmental liability procedures and implement
  needed internal controls to assure the improved
  procedures are adhered to and followed.
• Root cause
• Relates to issues from data conversion system
  processing in the early stages of production
  operation.
• Corrective action taken to date
• Established Fund Balance with Treasury metrics.
• Conduct ongoing monitoring to ensure monthly
  reconciliations are performed.
• Conduct ongoing review and monitoring compliance
  with Fund Balance with Treasury policies,
  procedures, and practices.
• Revised FMR policy for Monitoring Controls
  Procedures.
• Implemented an automated tool to support FBWT
  reconciliations.

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Recommendation

• Recommend this issue remain as currently assigned
  (Material Weakness).

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Planned Actions for Next Quarter

• Host a joint OCFO and Environmental Management
  Division (EMD) training course to expedite the
  overall resolution of the action plan.
• Develop and have available for auditor review,
  the Environmental Liability estimates based on
  2nd quarter data.
• Jointly assess the effectiveness of UEL internal
  controls, cost estimation process and data
  gathering procedures.
• Develop review/internal control checklist.
• Perform a Central Resources Control System (CRCS)
  to SAP reconciliation and resolve differences.
• Assess compliance with Fund Balance with Treasury
  policies, procedures, and practices.

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Financial Management Policy and
Procedures(Material Weakness)

• Office of the Chief Financial Officer
• Terry Bowie
• February 14, 2006

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Background

• During the 2005 Internal Control decision
  meeting, the Management Operations Council
  granted the approval for the OCFO to close
  Material Weakness (MW-2004-02) Financial
  Management and open a new Management Challenge
  called Financial Management Policies and
  Procedures that captures challenges related to
• Completion of the Financial Management
  Requirements (FMR)
• Reengineering targeted business processes
• Developed the Corrective Action Plan for the FY
  2005 Financial Audit which addresses developing
  core standard Agency-wide procedures and tools
  consistent with authoritative guidance issued by
  FASAB, Treasury, and OMB .

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Issue

• NASA needs to continue to improve its current
  policy to ensure improvement existing procedures
  and implement needed internal controls to assure
  the improved procedures are adhered to and
  followed.
• Root cause
• NASAs policies and procedures are not fully in
  conformance with federal requirements
• Implementation of the Integrated Enterprise
  Management Program required revision of policies
  and procedures
• Corrective action taken to date
• Provided OMB, GAO, FASAB, and OIG NASAs revised
  NASA Asset Management capitalization policy.
• Recently published five FMRs
• Travel (4/29/05)
• Internal Controls (04/29/05)
• Special Accounts and Funds (04/29/05)
• Cash Management (09/30/05)
• Payroll (12/30/05)

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Recommendation

• Recommend this issue remain as currently assigned
  (Management Challenge).

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Planned Actions for Next Quarter

• Adjust the Asset Management capitalization policy
  as necessary.
• Flowchart and document desired business processes
  and procedures, and define roles and
  responsibilities for effective PPE lifecycle
  management, to include valuation of Assets.
• Incorporate OIG comments in the flow charts as
  appropriate and disposition.
• Identify and coordinate changes that must be made
  to existing policies Agency-wide.
• Engage working groups to identify process and
  system(s) gaps between current processes and
  desired processes, as well as, identifying
  solutions.
• Publish four remaining FMRs
• Budget Formulation (05/01/06)
• Reimbursables (04/28/06)
• Information Systems (06/30/06)
• Overview (05/26/06)

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Financial Management Staffing (Management
Challenge)

• Office of the Chief Financial Officer
• Terry Bowie
• February 14, 2006

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Background

• During the 2005 Internal Control decision
  meeting, the Management Operations Council
  granted the approval for the OCFO to close
  Material Weakness (MW-2004-02) Financial
  Management and open a new Material Weakness
  called Financial Management Staffing that
  captures challenges related to
• Staffing Levels
• Personnel Skill Mix
• Workforce Development
• Currently, the OCFO is sharing responsibility for
  this Management Challenge with the Office of
  Institutions and Management/Human Capital
  Management.
• Developed the Corrective Action Plan for the FY
  2005 Financial Audit which addresses workforce
  development.

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Issue

• NASA needs to ensure adequate staffing for
  financial management functions across
  Headquarters and the Centers and to continually
  provide additional handson training for
  financial personnel to ensure that they
  understand their roles in financial reporting.
• Root cause
• With the implementation of the Integrated
  Enterprise Management Program (IEMP), additional
  training was required due to new processes.
• The implementation of the IEMP Core Financial
  system represented a major transformation of
  NASA's financial management systems and
  processes.
• Corrective action taken to date
• Issued quarterly report documenting all training
  conducted during the 1st quarter of FY 2006.
• Increased staffing to support financial
  management activities.
• In May 2005, NASAs OCFO received relief from a
  NASA-wide hiring freeze and approval to increase
  its headcount in FY 2006 at Headquarters by 34
  positions (including 2 Senior Executive Service
  leadership positions) and at Field Centers by 50
  positions.
• As of February 1, 2006, 90 of these positions
  have been filled.

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Recommendation

• Recommend this issue remain as currently assigned
  (Management Challenge).

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Planned Actions for Next Quarter

• Utilize a needs assessment and develop a training
  plan for providing the following training
• Processing transactions
• Performing account analyses and reconciliations
• Maintenance of supporting documentation
• Financial reporting requirements
• Hire from anticipated job announcements.

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Full Cost Integration (Other Weakness)

• Office of the Chief Financial Officer
• Terry Bowie
• February 14, 2006

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Background

• In Feb 2003, the Associate Administrator for
  Earth Science recommended that full cost
  accounting be monitored as a Management
  Challenge (MC).
• In Feb 2005 the OCFO recommended closing the
  Full Cost Accounting MC based on FC Steering
  Committee actions. It was replaced with a new MC,
  Full Cost Integration.
• In May 2005, Full Cost Integration was elevated
  from an MC to an Other Weakness (OW), due to
  lack of understanding of full cost policies and
  procedures.
• In Dec 2005, a new Full Cost Reform Initiative
  Team was established to recommend changes to
  simply full cost policies and procedures,
  including developing an implementation plan for
  the recent PAE Full Cost Simplification
  Proposal.

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Issue

• Full Cost concepts need to be better integrated
  into NASA operations. Despite implementing a Full
  Cost accounting system and many Full Cost
  processes, NASA still lacks the level of cultural
  change needed to fully transition to Full Cost
  management.
• Root cause
• Insufficient stakeholder training
• Unintended consequences and behaviors realized
  from initial full cost approaches
• Some policies and planned processes were based on
  insufficient experience and need to be refined to
  reflect lessons learned
• Corrective action taken to date
• Completed Full Cost Assessment delivered
  recommendations to Financial Integration Team on
  improving full cost implementation.
• Improve policy to resolve operational issues.
• Full Cost Reform Team meeting held from Jan 31st
  through Feb 1st to recommend steps to implement
  revised full cost policies and procedures,
  including PAE Full Cost Simplification Proposal.

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Recommendation

• Recommend this issue remain as currently assigned
  (Other Weakness).

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Planned Actions for Next Quarter

• Implement recommendations from Full Cost team for
  FY 2008 POP Budget cycle and FY 2007 execution to
  the extent practical. The initial steps include
• Combine IT and Facility service pools with Center
  GA into a single Center Management and
  Operations account per Center
• Eliminate budget and cost allocations between
  overhead pools
• Eliminate allocations of Center overhead to
  Corporate tasks
• Create control accounts for Center MO budgeted
  and funded like direct projects allocated to
  projects in final steps of budgeting and
  reporting
• Allocate overhead costs on a projects pro-rata
  share of each Centers direct budget (NOA)

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Space Shuttle

• Space Operations Mission Directorate
• Lynn F. H. Cline
• February 14, 2006

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Background

• Following the loss of Columbia and her crew, the
  Deputy Associate Administrator for International
  Space Station and Space Shuttle Programs
  established a formal "Return-to-Flight Planning
  Team," to provide direction to the team for
  addressing actions required before a safe return
  to flight could be assured, as well as other
  actions determined necessary to comply with the
  formal recommendations of the CAIB. Options and
  recommendations from the Return-to-Flight
  Planning Team were assessed by the Space Flight
  Leadership Council, co-chaired by the Associate
  Administrator for Space Operations and the Deputy
  Chief Engineer for Independent Technical
  Authority. Return-to-Flight actions were
  implemented through normal Space Shuttle Program
  management. The Council was abolished on June 28,
  2005, and all actions are now conducted through
  Space Shuttle Program management.
• Progress on implementation of Return to Flight
  actions is documented in periodic updates to the
  NASA "Implementation Plan for Space Shuttle
  Return to Flight and Beyond."

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Issue

• Technical Deficiencies
• Modeling was not as accurate when the Shuttle
  system was originally certified in the late
  1970s Debris Transport Analysis was more art
  than science (point to point transport) and the
  analyses that was done was rarely supported with
  rigorous testing (e.g., wind tunnel testing,
  impact testing).
• All pre-STS-107 flight history seemed to support
  the initial certification analyses.
• Foam damage to the Orbiter failed to show
  positive correlation between liberated debris
  mass and TPS (tile) damage.
• Post-STS-107 modeling told us where debris might
  strike the Orbiter, however, it was impact
  testing that defined critical debris (mass)
  thresholds for return to flight. This testing
  showed us how fragile the Orbiter was to
  different materials and masses. At that point,
  we knew we would have to eliminate all the
  critical debris sources, provide much improved
  debris impact monitoring, and determine to what
  extent we needed to harden the Orbiter before we
  could Return to Flight.
• While STS-114 proved we had done a very credible
  job of eliminating critical debris, five In
  Flight Anomaly foam loss events made it clear
  additional work is required before the second RTF
  mission to increase our understanding of the
  cause of these foam debris events and taking the
  appropriate corrective actions. This work is
  currently on-going.
• Other Deficiencies
• The Final Report of the Columbia Accident
  Investigation Board (CAIB) identified a number of
  systemic cultural, organizational, and managerial
  issues within both the Space Shuttle Program and
  NASA as a whole that contributed to the loss of
  Columbia on February 1, 2003.

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Issue

• Root cause
• The physical cause of the loss of Columbia and
  her crew was a breach in the Thermal Protection
  System on the leading edge of the wing, caused by
  a piece of insulating foam which separated from
  the left bipod ramp section of the External Tank
  at 81.7 seconds after launch, and struck the wing
  in the vicinity of the lower half of Reinforced
  Carbon-Carbon panel number 8.
• The Final Report of the Columbia Accident
  Investigation Board (CAIB) identified a number of
  systemic cultural, organizational, and managerial
  issues within both the Space Shuttle Program and
  NASA as a whole that contributed to the loss of
  Columbia on February 1, 2003.
• Fifteen Return-to-Flight and fourteen continuing
  to fly recommendations are in the CAIB Report.
  Four dealt explicitly with management issues, and
  many of the other recommendations have important
  organizational as well as technical implications.
  
• The CAIB Report also calls on NASA to prepare a
  detailed plan for defining, establishing,
  transitioning, and implementing these
  recommendations prior to Return to Flight, with
  the understanding that the implementation of the
  fundamental management changes will continue
  beyond the first Shuttle flight after Columbia.

4
46
Issue

• Corrective action taken to date
• In response to the CAIB report, NASA developed
  the Implementation Plan for Space Shuttle Return
  to Flight and Beyond. The Implementation Plan is
  an evolving blueprint for safely and reliably
  returning to flight. It explains how NASA is
  complying with the recommendations of the CAIB
  and other corrective actions. These additional
  corrective actions may include other CAIB
  observations, self-imposed Shuttle program
  initiatives or input from other sources. Edition
  11 of the Implementation Plan is scheduled for
  release on February 17, 2006.
• On August 17, 2005, the Return to Flight Task
  Group released its Final Report. In it, the Task
  Group unanimously closed all but three of the
  Board's Return-to-Flight recommendations. The
  Task group noted NASA had made substantial
  progress relative to these recommendations, and
  emphasized that, "The ability to fully comply
  with all of the Board's recommendations does
  not imply that the Space Shuttle is unsafe." The
  first three Return-to-Flight missions (STS-114,
  STS-121, and STS-115) will provide the data and
  flight experience needed to address the remaining
  open issues in these recommendations. This work
  will be documented in future updates to the
  Implementation Plan.
• Post-flight analysis of STS-114 indicated that,
  except for one event, the thermal protection
  system on the External Tank performed within
  expected parameters. Most of the small foam
  shedding events that were observed with the newly
  upgraded imagery and sensor capabilities posed
  little or no threat to the Orbiter. The one
  event of concern was the loss of an approximately
  one pound piece of foam from the area of the
  External Tank's liquid hydrogen protuberance air
  load (PAL) ramp. NASA commissioned two teams
  (one led by the Space Shuttle propulsion manager,
  the other an independent "Tiger Team" reporting
  directly to the Associate Administrator for Space
  Operations) to analyze these foam loss events and
  recommend any forward work that would have to be
  done prior to the launch of the next mission,
  STS-121. The final report is expected to be
  released in March 2006.

5
47
Issue

• Corrective action taken to date
• After a thorough engineering review, it was
  determined to proceed with removal of the
  External Tanks PAL ramp to eliminate this source
  of debris. While all testing and analysis to
  support this action is not yet complete, there is
  a high degree of certainty based on the extensive
  work done to date that removing the PAL ramp has
  no operational or safety impacts to flight. All
  testing and validation associated with the PAL
  ramp removal will be completed prior to the
  launch of STS-121.
• NASA will make the decision to proceed with the
  launch of STS-121 based on the totality of
  improvements made to the Space Shuttle system
  during Return to Flight, and the vetting of these
  improvements through a rigorous and multilayered
  engineering review process, which includes the
  successful completion of the External Tank
  Systems Design Certification Review, the Systems
  Debris Verification Review, as well as other
  Program reviews, culminating in the approved
  Certificate of Flight Readiness.

6
48
Recommendation

• Until successful completion of STS-121, this item
  should remain a material weakness.
• Target Completion Date June 30, 2006

7
49
Planned Actions for Next Quarter

• The STS-121 launch window is May 3 22, 2006. A
  decision on the target launch date is still
  pending. The STS-300 Launch On Need (LON) date
  is currently expected to be No Earlier Than (NET)
  August 1, 2006, based on an External Tank
  delivery to KSC in early June 2006. The STS-115
  launch window is August 29 to September 14, 2006.
• The Space Shuttle Program has identified the gap
  filler replacement work required for all three
  Orbiters prior to their next flights. Discovery
  (OV-103) has currently completed approximately
  3100 of 3800 gap filler installations (82)
  mandatory for STS-121, and is on schedule for
  supporting the May 2006 launch window. Atlantis
  (OV-104) gap filler work is approximately 10
  complete, and remains on schedule for supporting
  either a STS-300 LON or STS-115 mission.
• The production of the External Tank (ET-119) at
  Michoud Assembly Facility (MAF) continues to
  progress as planned for supporting a STS-121
  launch in the May 2006 launch window. Shipment
  of ET-119 to KSC is targeted for March 3, 2006.
  The production of ET-118 to support a
  STS-300/STS-115 launch also proceeds on schedule,
  to be ready for a shipment to KSC on May 30, 2006.

8
50
Shuttle Impact on ISS Operations

• Space Operations Mission Directorate
• Lynn F. H. Cline
• February 14, 2006

51
Background

• Following the Shuttle Columbia accident, February
  2003, the ISS Partnership agreed to an interim
  operational plan that would allow continued
  crewed operation. The plan called for a
  reduction of the crew size to two, with the crew
  exchanges to be conducted on the scheduled
  semi-annual Soyuz flights. Cargo re-supply would
  be provided by Russian Progress vehicles. This
  is an interim measure until the Space Shuttle
  returns to flight.
• The first of two Shuttle Return to Flight
  missions has been completed, STS-114, launched on
  July 26, 2005 and landed on August 9, 2005.

2
52
Issue

• Description of deficiency
• The International Space Station (ISS) was
  designed with the Space Shuttle as its prime
  support for crew transport, assembly of on-orbit
  elements, utilization and operations. Additional
  crew and cargo transport is provided by Russia.
  Following the Space Shuttle Columbia accident,
  the Shuttle fleet was grounded. This has impacted
  the number of crew that can be supported onboard
  the ISS, temporarily halted assembly of the
  Station, and significantly reduced the available
  up and down mass support for Station operations
  and utilization.
• Root cause
• The grounding of the STS fleet resulted in this
  impact on ISS operations.

3
53
Issue

• Corrective action taken to date
• Established an understanding with the ISS
  partnership to (1) rely on Russian vehicles for
  crew and cargo support until Shuttle returns to
  flight and (2) reduced the crew size from 3 to 2
  to reduce the logistics burden, given the reduced
  capability of the Russian vehicles compared to
  the Space Shuttle.
• Until STS-115, ISS crew transfer and resupply
  will rely on Russian Soyuz and Progress
  spacecraft.
• Since 2003, there have been 6 crew exchanges
  using Soyuz and 10 crew exchanges using Progress
  for resupply flights.
• Successfully completed the ISS objectives for the
  STS-114 mission
• Flew the combined Space Shuttle/ISS stack in a
  new configuration designed to minimize the threat
  of orbital debris and micrometeorite impact
  damage.
• Transferred more than 15,000 pounds worth of
  supplies and hardware to the ISS, including food,
  water, nitrogen, lithium hydroxide canisters, and
  scientific equipment.
• Returned more than 7,200 pounds worth of expended
  hardware and unneeded supplies from the ISS back
  to Earth. Returning this hardware allows for
  failure analysis and possible reuse of Russian
  Elektron (oxygen generation) and Kurs (for
  docking of Russian Soyuz and Progress vehicles)
  hardware, as well as U.S. components like a
  Control Moment Gyroscope (CMG), Global
  Positioning System sensor, and spacesuit.

4
54
Issue

• Repaired and/or replaced two of the ISSs four
  CMGs (which provide attitude control for ISS),
  restoring the Station to its full capability.
• Installed the External Stowage Platform-2, an
  external platform for storing components and
  assisting astronauts in conducting EVAs from the
  ISS, transferred the Human Research Facility-2
  rack to the U.S. Destiny module on the ISS
  (increasing the scientific capabilities of the
  Station), and deployed and retrieved the
  Materials International Space Station Experiment
  Passive Experiment Containers from the outside of
  the ISS.
• Reboosted the orbit of the ISS and conducted a
  fly-around and completed photographic survey of
  the ISS prior to reentry.
• Current Status
• As of February 2, 2006, the ISS has 182 days of
  food, 281 days of water (with a functional
  Elektron), and 215 day days of Oxygen (without
  Elektron). Nitrogen and Propellant are not an
  issue at their current levels.
• Since arriving at ISS in October 2005, the
  Expedition 12 crew has successfully completed two
  EVAs and performed maintenance and utilization
  activities.
• ISS assembly will resume with STS-115.

5
55
Recommendation

• Until successful completion of STS-121, this item
  should remain a management challenge.
• Target Correction Date June 30, 2006

6
56
Planned Actions for Next Quarter

• ISS Crew Exchange
• Soyuz TMA-8/12S launch with Expedition 13 (with
  Marcos Pontes of Brazil) on March 30, 2006
• Soyuz TMA-7/11S undocking and reentry with
  Expedition 12 (with Marcos Pontes of Brazil) on
  April 9, 2006
• STS-121 launch is currently scheduled for NET May
  2006, and STS-115 is scheduled NET July 2006.
  ISS assembly will resume with STS-115.

7
57
Information Technology Security

• Office of the Chief Information Officer
• Scott Santiago
• February 14, 2006

58
IT Security Objectives

• NASA information management meets or exceeds
  Federal and NASA policy and requirements.
• All access to NASA information and information
  systems follows consistent, well defined and
  understood paths.
• Utilize trusted electronic identities to control
  access to all NASA information and information
  systems.
• NASA can verify that its internal controls and
  safeguards are working as intended.

2
59
Background

• The NASA OIG through their audits of NASAs IT
  Security Program had identified a large number of
  deficiencies over the years that led them to
  recommend IT Security to be declared a Material
  Weakness.
• NASA has been working since FY 2003 to correct
  those deficiencies found as a result of those
  audits and to correct systemic problems with the
  ITS Program.

3
60
Issue

• Root Cause
• NASA IT Security, while improving, needs more
  effective implementation, monitoring, and
  enforcement. In addition, NASAs policy and
  procedures have not kept up with OMB direction
• OMB Continues to focus attention on IT Security
  which requires NASA to make significant changes
  in how IT Security is managed.

4
61
Issue

• Corrective action taken to date
• Rewrote NASA IT Security policy and requirements
  documents to reflect NIST Guidance as directed by
  OMB, pending approval. Waiting on final approval.
• Establishing a central database of all NASA
  systems and IT Security plans status and added a
  module to CATS for tracking all IT Security
  weaknesses according to FISMA.
• Established a certification and accreditation
  (CA) program as Directed by OMB NIST SP 800-37
  Guide for the Security Certification and
  Accreditation of Federal Information Systems
• Expanded the NASA ITS training Program

5
62
Issue

• Corrective action taken to date
• Improved Incident reporting and tracking
• Establishing centrally managed monitoring of the
  NASA network
• Establishing centrally managed security services
  to correct known security weaknesses in managing
  sensitive information and to meet HSPD-12
  requirements.
• Established Agency metrics (ITS Scorecard) based
  on external and internal ITS performance
  requirements.

6
63
Recommendation

• Continue to categorize NASAs IT Security Program
  as an Other Weakness (OW) until new policy is
  approved and changes are implemented and they
  begin to demonstrate the required results.

7
64
Declassification Review ProcessManagement
Challenge (MC)

• Office of Security and Program Protection
• Clint Herbert, Deputy Assistant Administrator
• February 14, 2006

65
Background

• NASA had a significant backlog of permanent
  records containing classified national security
  information (CNSI) that needed to be reviewed for
  continued classification pursuant to EO 12958
  amended.
• NASA faces a December 2006 deadline to insure
  that all permanent records containing CNSI that
  are 25-years old or older are subjected to
  classification review.
• Poor records management practices prevented the
  identification of records subject to Section 3.3
  of EO 12958 amended, resulting in NASAs
  inability to identify its total universe to be
  considered for declassification
• The identified root causes had significantly
  impeded the classification review programs
  efforts.
• EO 12958 as amended contains a sliding-window
  requirement for NASA to conduct yearly
  classification reviews of permanent records
  containing CNSI.

2
66
Issue

• Deficiency Description
• NASA has a significant backlog of permanent
  records containing classified national security
  information (CNSI) that must be reviewed for
  continued classification pursuant to EO 12958
  amended. NASA faces a December 2006 deadline to
  insure that all permanent records containing CNSI
  that are 25-years old or older are subjected to
  classification review. Poor records management
  practices prevents the identification of records
  subject to Section 3.3 of EO 12958 amended
  resulting in NASAs inability to identify its
  total universe to be considered for
  declassification. The identified root causes have
  significantly impeded the classification review
  programs efforts. EO 12958 as amended contains
  a sliding-window requirement for NASA to conduct
  yearly classification reviews of permanent
  records containing CNSI.
• Root Causes
• Insufficient staffing
• Historically poor records management
• Insufficient funding
• Lack of Declassification Guides
• Insufficient resident expertise to perform
  classification reviews for older programs
• Insufficient support from senior management
  (commitment of resources)
• Corrective Action Plan (CAP)
• A comprehensive CAP has been developed and has
  been distributed to the OC, all Mission
  Directorates, and Center Security Offices on
  11/205

3
67
Recommendation

• Closeout. NASA has made significant progress in
  declassification efforts and is now positioned to
  meet the December 31, 2006 deadline. Only
  approximately 1.5 million pages, from an original
  17 million pages, remain under this initial
  deadline.

4
68
Planned Actions for Next Quarter

• Continue declassification efforts
• Maintain monthly accountability

5
69
Government Accountability Office Open Audit
Recommendations

• Office of Infrastructure and Administration
• Chris Jedrey
• February 14, 2006

70
Background

• History or information leading up to this issue
  being designated as a deficiency
• August 2005 As a result of an increase in GAO
  audit activity highly visible and politically
  sensitive GAO audits (e.g., Mission Management
  Aircraft) and continued congressional interest
  in the health of NASA's financial management, the
  Operations Council agreed to add the status of
  GAO audit recommendations as a Management
  Challenge (MC)

2
71
Issue

• Description of deficiency
• GAO audit recommendations remain unimplemented.
• Of the 58 outstanding GAO audit recommendations
  issued to NASA, 42 (72) were issued more than 1
  year ago.
• OMB Circular A-50 encourages implementation
  within 1 year of issuance of the recommendation.

3
72
Issue

• Root cause (1)
• August 2005 GAO issues audit report on Mission
  Management Aircraft (GAO-05-818) which highlights
  significant control deficiencies with respect to
  the management of NASA's MMA.
• GAO assessed (1) the relative cost of NASA
  passenger aircraft services in comparison with
  commercial costs, (2) whether NASA aircraft
  services were retained and operated in accordance
  with government-wide guidance, and (3) the
  effectiveness of NASA's oversight and management
  of this program.

4
73
Issue

• Root cause (2)
• GAO has issued several audit reports focusing on
  inadequate controls over financial management
  specially relating to the agency's implementation
  of an Integrated Enterprise Management Program.
  These reports focus on fundamental problems with
  NASA's financial operations that undermine the
  agency's external financial reporting ability and
  impair efforts to effectively manage and oversee
  major programs.
• GAO's recommendations relating to these IEMP
  audit reports and NASA's inability to timely and
  effective implement GAO's recommendation were
  addressed during the confirmation hearing of the
  NASA's nominee for Deputy Administrator on
  November 1, 2005.

5
74
Issue

• Root cause (3)
• Since 1990, GAO has identified NASA's contract
  management function as an area at high risk,
  principally because the agency lacks accurate and
  reliable financial and management information on
  contract spending, and it has not placed enough
  emphasis on end results, product performance, and
  cost control.
• Since financial and contract problems threaten
  the success of NASA's major programs, GAO
  believes that contract management continues to be
  an area of high risk. To further improve contract
  management, GAO recommends that NASA successfully
  complete its design and implementation of a new
  financial management system (IEMP). GAO
  recommends that NASA transform its operations to
  better support its core mission.

6
75
7
76
Recommendation

• Continue to monitor as a Management Challenge (MC)

8
77
Planned Actions for Next Quarter

• Management continues to work toward the timely
  implementation of GAO audit recommendations.

9
78
Mission Management Aircraft

• Infrastructure and Administration
• Chris Jedrey
• February 14, 2006

79
Background

• GAO audit of Agencys FY03 and FY04 Mission
  Management Aircraft (MMA) operations highlighted
  control deficiencies with respect to management
  of NASAs MMA.
• MMA operations were also questioned in several
  prior GAO and NASA IG audit reports.

2
80
Issue

• Inadequate documentation and periodic review of
  MMA mission requirements - Resolved
• Issued NPR 7900 Interim Change to comply with OMB
  A126
• PAE review complete, mission requirements
  identified Implementing approved recommendations
• Insufficient HQ oversight - Resolved
• Augmented HQ AMD staff for MMA
• Instituted annual HQ review of Center MMA
  operations
• Lack of integrated IT system to capture and
  report aircraft cost utilization
• NASA Aircraft Information System (NAMIS) being
  implemented for MMA utilization data. To be in
  place Spring 2006 (6 months early).
• Core Financial BW unable to provide accurate
  aircraft cost allocation and reporting to comply
  with OMB A126. Assisting OCFO Aircraft Cost
  Accounting PAT.

3
81
Recommendation

• The aircraft utilization and cost accounting
  issues should continue to be carried and reported
  as Other Weakness.

4
82
Planned Actions for Next Quarter

• Implement NAMIS at all centers that operate MMA
  by June 2006 to provide visibility into
  utilization and comply with OMB A126.
• Continue to support OCFO with aircraft cost
  accounting process action team

5