NASA consolidates financial management

After a three-year effort, all of NASA's field offices are now connected to a single accounting system, marking a "giant leap" toward improving the agency's financial management, officials said Wednesday.

The new system replaces 145 separate and duplicative systems. It allows managers at NASA's 10 field centers to pay bills and analyze accounts using common tools and methods, according to Patrick Ciganer, a program executive at NASA. It will also ensure that managers have up-to-date and reliable financial data, he said, and enable them to track finances from the agency level down to individual transactions.

Known as the "core financial module," the new system is a crucial component of NASA's Integrated Financial Management Program, the agency's three-year-old project to revamp its business practices. The project marks NASA's third attempt to overhaul its financial management systems, and is estimated to cost $861 million through 2008, according to the General Accounting Office. Five of the program's nine components are now complete.

When Administrator Sean O'Keefe took over at NASA in late 2001, he vowed to help the agency recover from budgeting problems and cost overruns that put some programs, including the International Space Station, at risk. At the time, NASA managed its books so poorly that it could not provide an accurate cost estimate for the space station.

Financial management has since improved. The agency earned an unqualified opinion from federal auditors in fiscal 2002, indicating that its books were reliable. This marks progress from fiscal 2001, when auditors gave NASA a disclaimer, meaning they were unable to express an opinion on the financial statements.

But despite improvements in overall financial management, oversight of money spent on procurement has remained relatively lax, according to GAO. In fiscal 2002, NASA spent approximately $13 billion-85 percent of its budget-on contractors. The agency's inadequate contract oversight has been on GAO's "high-risk" list, which includes agency programs vulnerable to waste and fraud, since 1990.

NASA's new integrated accounting system is not designed to help address weaknesses in contract oversight, according to a GAO report published in late April. When the agency designed its new financial management system, it did not consider the needs of several key groups of users, including managers responsible for overseeing procurement money, the report (GAO-03-507) said.

Overall, the system does little to "reengineer acquisition management processes, particularly with respect to the consistency and detail of budget and actual cost data provided by contractors," the report said. For instance, it said the system was not designed to process vendor invoices containing more than 200 line items, a length that is common on invoices related to some of NASA's larger contracts.

NASA disputed this claim. In response to the GAO report, Frederick Gregory, NASA's deputy administrator, said the integrated accounting system has "significant ability to capture contract costs at very detailed levels." He added that NASA did take all of the system's users into account during the design process, and said he believes GAO's description of the system understates its current capabilities.