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National Aeronautics and Space Administration
Office of Inspector General
Washington, D.C. 20546

March 11, 2003

RELEASE 2003-023: NASA'S REDUCTION OF UNDEFINITIZED CONTRACT ACTIONS

The audit report "NASA's Reduction of Undefinitized Contract Actions" 
(IG-03-008) has been posted to the NASA Office of Inspector General 
Web site at http://www.hq.nasa.gov/office/oig/hq/ig-03-008.pdf

In the past, NASA has relied heavily on undefinitized contract actions 
(UCAs) to modify work or initiate new work on existing contracts for 
major programs such as the International Space Station and the Space 
Shuttle.  As of March 31, 2000, NASA had about 186 UCAs totaling more 
than $2 billion.  UCAs are a financially risky way of doing business 
because contractors perform work before they have reached agreement 
with the Government on what the work will cost.  NASA management 
acknowledged that beginning work on contract changes before the cost 
is negotiated is not the preferred way of doing business because it 
increases the risk of cost growth.

Results of Audit

We found that NASA had significantly reduced both the number and 
dollar amount of UCAs since the General Accounting Office highlighted 
them as one reason for identifying contract management as a major 
management challenge for NASA.  By November 30, 2002, NASA had reduced 
the number of UCAs to 19 with a total estimated value of $61 million, 
representing reductions of about 90 percent in the number of UCAs and 
97 percent in estimated dollar value.  We also found that three 
Centers reviewed had inconsistent policies, which could cause 
inaccurate UCA reporting on certain relatively low-value contracts.

Recommendation

We recommended that the Assistant Administrator for Procurement 
establish guidelines for consistent treatment of all undefinitized 
contract changes NASA-wide.

Management's Response

Management concurred with the recommendation and implemented measures 
to ensure the consistent treatment and reporting of UCAs.  The 
Assistant Administrator for Procurement will notify NASA Procurement 
Officers of this policy by March 31, 2003.

To comment on this report, please send e-mail to igrelease{at}hq.nasa.gov

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