[House Hearing, 108 Congress]
[From the U.S. Government Publishing Office]
MISSION IMPOSSIBLE? FIXING NASA'S FINANCIAL MANAGEMENT
=======================================================================
HEARING
before the
SUBCOMMITTEE ON GOVERNMENT EFFICIENCY
AND FINANCIAL MANAGEMENT
of the
COMMITTEE ON
GOVERNMENT REFORM
HOUSE OF REPRESENTATIVES
ONE HUNDRED EIGHTH CONGRESS
SECOND SESSION
__________
MAY 19, 2004
__________
Serial No. 108-193
__________
Printed for the use of the Committee on Government Reform
Available via the World Wide Web: http://www.gpo.gov/congress/house
http://www.house.gov/reform
U.S. GOVERNMENT PRINTING OFFICE
95-741 WASHINGTON : 2004
_________________________________________________________________
For sale by the Superintendent of Documents, U.S. Government Printing
Office Internet: bookstore.gpo.gov Phone: toll free (866)512-1800:
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COMMITTEE ON GOVERNMENT REFORM
TOM DAVIS, Virginia, Chairman
DAN BURTON, Indiana HENRY A. WAXMAN, California
CHRISTOPHER SHAYS, Connecticut TOM LANTOS, California
ILEANA ROS-LEHTINEN, Florida MAJOR R. OWENS, New York
JOHN M. McHUGH, New York EDOLPHUS TOWNS, New York
JOHN L. MICA, Florida PAUL E. KANJORSKI, Pennsylvania
MARK E. SOUDER, Indiana CAROLYN B. MALONEY, New York
STEVEN C. LaTOURETTE, Ohio ELIJAH E. CUMMINGS, Maryland
DOUG OSE, California DENNIS J. KUCINICH, Ohio
RON LEWIS, Kentucky DANNY K. DAVIS, Illinois
JO ANN DAVIS, Virginia JOHN F. TIERNEY, Massachusetts
TODD RUSSELL PLATTS, Pennsylvania WM. LACY CLAY, Missouri
CHRIS CANNON, Utah DIANE E. WATSON, California
ADAM H. PUTNAM, Florida STEPHEN F. LYNCH, Massachusetts
EDWARD L. SCHROCK, Virginia CHRIS VAN HOLLEN, Maryland
JOHN J. DUNCAN, Jr., Tennessee LINDA T. SANCHEZ, California
NATHAN DEAL, Georgia C.A. ``DUTCH'' RUPPERSBERGER,
CANDICE S. MILLER, Michigan Maryland
TIM MURPHY, Pennsylvania ELEANOR HOLMES NORTON, District of
MICHAEL R. TURNER, Ohio Columbia
JOHN R. CARTER, Texas JIM COOPER, Tennessee
MARSHA BLACKBURN, Tennessee ------ ------
PATRICK J. TIBERI, Ohio ------
KATHERINE HARRIS, Florida BERNARD SANDERS, Vermont
(Independent)
Melissa Wojciak, Staff Director
David Marin, Deputy Staff Director
Rob Borden, Parliamentarian
Teresa Austin, Chief Clerk
Phil Barnett, Minority Chief of Staff/Chief Counsel
Subcommittee on Government Efficiency and Financial Management
TODD RUSSELL PLATTS, Pennsylvania, Chairman
MARSHA BLACKBURN, Tennessee EDOLPHUS TOWNS, New York
STEVEN C. LaTOURETTE, Ohio PAUL E. KANJORSKI, Pennsylvania
CANDICE S. MILLER, Michigan MAJOR R. OWENS, New York
MICHAEL R. TURNER, Ohio CAROLYN B. MALONEY, New York
KATHERINE HARRIS, Florida
Ex Officio
TOM DAVIS, Virginia HENRY A. WAXMAN, California
Mike Hettinger, Staff Director
Larry Brady, Professional Staff Member
Sara D'Orsie, Clerk
Adam Bordes, Minority Professional Staff Member
C O N T E N T S
----------
Page
Hearing held on May 19, 2004..................................... 1
Statement of:
Brown, Gwendolyn, Chief Financial Officer, National
Aeronautics and Space Administration, accompanied by
Patrick Ciganer, Program Executive Officer for Integrated
Financial Management, NASA; Robert Cobb, Inspector General,
National Aeronautics and Space Administration; and Greg
Kutz, Director, Financial Management and Assurance, U.S.
General Accounting Office, accompanied by Allen Li, NASA
Program Director........................................... 5
Letters, statements, etc., submitted for the record by:
Brown, Gwendolyn, Chief Financial Officer, National
Aeronautics and Space Administration, prepared statement of 7
Cobb, Robert, Inspector General, National Aeronautics and
Space Administration, prepared statement of................ 16
Kutz, Greg, Director, Financial Management and Assurance,
U.S. General Accounting Office, prepared statement of...... 30
Platts, Hon. Todd Russell, a Representative in Congress from
the State of Pennsylvania, prepared statement of........... 3
MISSION IMPOSSIBLE? FIXING NASA'S FINANCIAL MANAGEMENT
----------
WEDNESDAY, MAY 19, 2004
House of Representatives,
Subcommittee on Government Efficiency and Financial
Management,
Committee on Government Reform,
Washington, DC.
The subcommittee met, pursuant to notice, at 3 p.m., in
room 2247, Rayburn House Office Building, Hon. Todd R. Platts
(chairman of the subcommittee) presiding.
Present: Representatives Platts, Towns, Blackburn, Turner
and Harris.
Staff present: Mike Hettinger, staff director; Larry Brady
and Tabetha Mueller, professional staff members; Amy Laudeman,
legislative assistant; Sara D'Orsie, clerk; Adam Bordes,
minority professional staff member; Earley Green, minority
chief clerk; and Jean Gosa, minority assistant clerk.
Mr. Platts. This hearing of the Subcommittee on Government
Efficiency and Financial Management regarding NASA will come to
order.
I appreciate everyone's attendance here today and also
appreciate your patience both with the Murphy's law of the vote
schedule delaying the start of our mark up and thus pushing
back the start of this hearing as well. I appreciate your
indulgence. We are glad to be here today and begin this hearing
regarding the financial management of NASA.
As part of our ongoing oversight of financial management at
all Federal agencies, the subcommittee will discuss today the
business and accounting processes at the National Aeronautics
and Space Administration and the findings of its fiscal year
2003 financial audit. The audit raised some very serious
concerns, but it also provided important recommendations, all
of which we will discuss today.
Administrator Sean O'Keefe has made financial management a
top priority at NASA. With his leadership, NASA has begun the
process of re-engineering the way it does business by
implementing a more effective accounting system, the Integrated
Financial Management Program. The functioning of this new
system will be enhanced by NASA's plan to consolidate financial
services at one center in the near future. The process of
converting data from 145 different financial management systems
into one core data base has not been easy. In fact, the
enormous number of adjustments that had to be made, and that
have been widely reported in the media, came about largely
because of this data conversion.
We have to make sure that we understand exactly what this
number represents, and, more important, we need to make sure it
does not obscure the fact that other serious problems were
identified, such as a failure to comply with Federal accounting
standards. That is why this hearing today is so important. We
need to get the facts behind what the audit showed, and we need
to examine the recommendations that were made. We also need to
make sure that NASA is managing the implementation of its new
system properly. The IFMP is a huge investment, and it is our
hope that it will bring great returns.
We are honored to have before the subcommittee, Mr. Robert
Cobb, NASA's Inspector General; Ms. Gwendolyn Brown, Chief
Financial Officer for NASA; and Mr. Gregory Kutz, Director of
Financial Management and Assurance at the U.S. General
Accounting Office. I certainly thank each of you for your
attendance and participation here today. The written testimony
you submitted ahead of time was, as I call in my hearings, my
homework that you gave me in preparation for today's hearing,
and I look forward to our interaction with each of you as part
of this hearing.
I would now like to yield to our Vice Chair, the gentlelady
from Tennessee, Mrs. Blackburn, for purposes of making an
opening statement.
[The prepared statement of Hon. Todd Russell Platts
follows:]
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Mrs. Blackburn. Thank you, Mr. Chairman.
In your opening statement, you outlined some of the
concerns with NASA's financial management and one specific
persistent problem that is of concern to me is that NASA fails
to keep proper records which provide the key information for
auditors and investigators to track financial transactions.
First, NASA's own financial statements cannot be supported
or varied due to lack of proper documents. As information for
these financial statements was entered through its data
conversion process, NASA posted numerous adjustments as the
chairman mentioned outside its financial system and could not
provide documentation that would validate those adjustments.
Second, NASA is unable to support the amounts it has
obligated for the Space Station and the Space Shuttle support.
Even its new Core Financials module will not correct this
problem as it cannot provide cost information to Congress or
program managers to generate reliable data for daily operations
and decisionmaking. This new financial management system does
not even comply with the requirements of FFMIA where again no
audit trail will exist to support future financial statements.
Fourth, its own internal control weaknesses continue to
produce major errors in reporting property and materials for
financial statements. Mr. Chairman, I am distressed at how the
agency has failed to use best practices and has repeatedly
denied the existence of many of its financial management
problems that have been reported for many years by GAO and
NASA's Inspector General.
Mr. Chairman, I believe this agency will waste billions of
taxpayers' dollars in this new financial system and until they
transform its financial management organization, NASA will
continue to face the same financial management problems it has
for the last two decades.
I look forward to the hearing today and to having more
information and understanding of their financial situation.
Mr. Platts. Thank you, Mrs. Blackburn.
I would now like to swear in our witnesses. I understand
Mr. Ciganer and Mr. Li are going to be sworn in with you as
well.
[Witnesses sworn.]
Mr. Platts. The clerk willl note that all witnesses
affirmed the oath. The subcommittee certainly appreciates the
substantive written testimonies that each of you have provided
for the record. We now move on to your oral testimony. We will
try to stay to about 5 minutes, not a hard and fast rule, but
if you can stay as close to 5 minutes with your opening
statement, then we will get to questions and answers.
First, we will begin with Ms. Brown and then we will follow
with Mr. Cobb and then Mr. Kutz. Ms. Brown, if you would like
to begin.
STATEMENTS OF GWENDOLYN BROWN, CHIEF FINANCIAL OFFICER,
NATIONAL AERONAUTICS AND SPACE ADMINISTRATION, ACCOMPANIED BY
PATRICK CIGANER, PROGRAM EXECUTIVE OFFICER FOR INTEGRATED
FINANCIAL MANAGEMENT, NASA; ROBERT COBB, INSPECTOR GENERAL,
NATIONAL AERONAUTICS AND SPACE ADMINISTRATION; AND GREG KUTZ,
DIRECTOR, FINANCIAL MANAGEMENT AND ASSURANCE, U.S. GENERAL
ACCOUNTING OFFICE, ACCOMPANIED BY ALLEN LI, NASA PROGRAM
DIRECTOR
Ms. Brown. Mr. Chairman and members of the subcommittee, I
am here this afternoon to report on the current state of NASA's
effort to improve its financial management capabilities. As
stated during my confirmation hearing last November, I accepted
the appointment of Chief Financial Officer to specifically
focus on enhancing NASA's financial management operation and to
help restore fiscal discipline and credibility to our agency.
NASA was implementing in planned phases, the Core Financials
module throughout fiscal year 2003. This is a commercial, off
the shelf, agency-wide accounting module which is part of the
Integrated Enterprise Resource Planning Software Suite of
applications acquired from SAP.
The implementation of the Core Financials module and other
related software applications is part of the agency's
Integrated Financial Management Program. In fiscal year 2000,
NASA initiated a 7-year agency-wide effort aimed at providing a
single integrated suite of financial project, contract and
human capital management tool. Mr. Patrick Ciganer, NASA's
Program Executive Officer for Integrated Financial Management,
manages this effort. Mr. Ciganer and I report directly to the
NASA Administrator. I thank you for allowing him to join me at
this hearing and to provide his insight on the deployment of
the Core Financials module during 2003 and the overarching
Innovative Financial Management Program.
As mentioned earlier, our Core Financials modules replaced
10 main disperate center accounting systems and over 120
ancillary subsystems in operation through NASA for the past two
decades. This conversion effort required some very complex data
cleanup, in addition to increased adjustments and reporting
work at the end of the fiscal year 2003. These activities
significantly impacted the timeliness and the initial quality
of the information required in preparing NASA's interim and
year-end financial statements.
NASA underestimated the amount of data that had to be
identified, validated and documented and adjusted during our
fiscal year-end closing process. Additionally, many of NASA
personnel were faced with the task of creating and processing
those adjustments in a new environment within a very short
timeframe. The result was a $565 billion in posted adjustments
to the new module. This figure reflects a year-end, absolute
dollar value adjustment to our records which we processed and
gave to the auditors. This amount is the sum of many consequent
correcting entries often for a single posting logged by the
internal tracking control function of our new system.
In the past, the agency had been cited for failing to
implement adequate internal controls in its contract management
activities. The new system is configured not to allow direct
reversal or erasures on our wrongly posted entries but rather
requires the usual use of a formal accounting series of steps,
e.g., credits and debits and debits and credits for any
reversal and logs for every single step in an absolute value
running total.
As has been promulgated by my colleagues here at the table,
NASA does have a significant challenge ahead. I am now leading
the financial management community in developing and
implementing standardized policies, processes and procedures
that will support the financial system and improve the
financial operations of NASA for the long run. We have the NASA
Financial Improvement Plan which is our overall, get well plan
for charting the course for improving financial management
operations. I have a long road to haul and I accept the
challenge willingly. I appreciate the support and the insight
that I have received from the IG and the GAO and many other
entities that have provided guidance which has been
instrumental in helping NASA to get it right in financial
management for the long term.
Thank you.
[The prepared statement of Ms. Brown follows:]
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Mr. Platts. Thank you, Ms. Brown.
Mr. Cobb.
Mr. Cobb. Chairman Platts, members of the subcommittee, in
the interest of time, with the committee's permission, I will
summarize my written testimony.
Mr. Platts. Thank you.
Mr. Cobb. Thank you for the opportunity to discuss
financial management at NASA. The Office of Inspector General
has identified NASA's efforts to improve financial management
as one of the most serious management and performance
challenges facing agency leadership. We think the attention
this committee is giving to the issue will help ensure the
agency's commitment to fixing its financial management
problems.
As requested in your letter of April 26, my testimony
addresses the findings of NASA's fiscal year 2003 financial
audit and reviews the efforts to improve overall financial
management at the agency. First, the fiscal year 2003 audit
disclaimer. In January 2004, the independent auditor
PriceWaterhouseCoopers conducted NASA's audit pursuant to the
Chief Financial Officer's Act and under the direction of the
Office of Inspector General and determined that it could not
render an opinion on NASA's financial statements for fiscal
year 2003. Generally speaking, the reason for the disclaimer is
that NASA cannot produce timely and accurate financial
statements. PriceWaterhouseCoopers, found that NASA lacked an
audit trail to show that its fiscal year 2003 financial
statements were presented fairly. They found that NASA made
inadequately documented adjustments of $2 billion net to its
fund balance with Treasury and found that NASA still lacked
adequate controls to reasonably assure that Government-owned
contractor-held property was accurately presented.
A major factor that contributed to NASA's inability to
provide sufficient evidence to support its statements was the
agency's conversion during fiscal year 2003 from 10 legacy
accounting systems to a single integrated financial management
system called the IFMP. The conversion led to significant
problems with data quality and accuracy that NASA was unable to
resolve. NASA management has not yet demonstrated that it can
produce quarterly financial statements from the Core Financial
Module of the IFMP.
Another factor is NASA's inadequate policies and procedures
to ensure accurate financial reporting such as appropriate
reviews and approvals of transactions and accounting entries. I
note that implementing agencywide internal controls is
particularly difficult where the 10 NASA Center Chief Financial
Officers report to Center Directors rather than the CFO.
Now I would like to describe NASA's efforts to improve
overall NASA financial management. This year NASA management
has taken initial steps toward improving financial management
by developing an improvement plan to address internal control
weaknesses. The high level goals of the NASA improvement plan
appear to be appropriate given the state of NASA's financial
systems and underlying records. The plan is designed to improve
the organization of the CFO's office and financial policies and
procedures. The plan also calls for the establishment of an
audit committee.
However, there are significant challenges to the success of
the improvement plan. For example, the Office of Inspector
General believes NASA has insufficient Civil Service staff to
carry out its plan. Heavy use of contractor personnel is not a
long-term solution to staffing shortages. Also, without
successful implementation of NASA's IFMP, NASA's high level
goals of its improvement plan will be difficult, if not
impossible, to achieve.
To date, there have been problems with IFMP. The data
conversion problems and the inability to generate accurate
financial statements impacted the financial audit. The Office
of Inspector General has found other problems with IFMP
planning, testing and reporting. The results of these problems
are bugs in the system and output that is not user friendly and
requires significant manual manipulation.
What is the outlook for the future? The pervasiveness of
NASA's control weaknesses and the inability to produce complete
and accurate financial data will most likely result in a
disclaimer of opinion on the fiscal year 2004 audit. Because of
the Government-owned, contractor-held property issue, it may be
years before NASA can achieve an unqualified or clean audit.
But getting clean audits should not be the priority. Fixing
NASA's internal controls and getting the IFMP to fulfill its
potential are critical. Fix those, and clean audits will
follow.
The Office of Inspector General is closely monitoring
NASA's efforts to improve financial management through
oversight of the financial audit being conducted by NASA's new
independent public accountant, Ernst & Young. We will be
conducting other activities to assess financial management
including auditing the overall status of IFMP.
The Office of Inspector General believes it is important
that NASA get its financial management in order so that
Congress and the public can have full confidence in agency
expenditure of taxpayer dollars.
Thank you.
[The prepared statement of Mr. Cobb follows:]
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Mr. Platts. Thank you, Mr. Cobb.
Mr. Kutz.
Mr. Kutz. Chairman Platts and Representative Blackburn,
thank you for the opportunity to discuss NASA financial
management.
Since its inception in 1958, NASA has made incredible
scientific and technological advances that have enhanced the
quality of life on Earth. However, that same level of
excellence is not evident in NASA's financial management, the
topic of today's hearing. My testimony has two parts, first,
NASA's history of financial management problems and second,
efforts to implement a new financial system.
First, our reports have shown that NASA's financial
management problems impact its ability to manage its
contractors and major programs. NASA has a long history of
schedule problems and cost overruns with its programs such as
the space station. Our reports have highlighted NASA's problems
overseeing its contractors and their financial performance,
controlling program costs, producing credible cost estimates
and supporting reports to the Congress related to spending
limits for the Space Station and related Shuttle support. In
fact, since 1990, we have reported NASA contract management as
an area of high risk in part due to the financial management
problems. However, a series of failed financial audits served
to mask NASA's problems, specifically from 1996 to 2000, Arthur
Anderson issued unqualified opinions on NASA's financial
statements, reporting no material weaknesses and systems that
complied with Federal standards. During that time, we reported
that Arthur Anderson's 1999 audit did not meet professional
standards and we questioned NASA management and its auditors'
conclusion that its systems complied with Federal standards.
Recent audit reports confirm the prior audit failures and
NASA's serious problems. Nonetheless, the misleading prior
audit reports fueled NASA's optimistic views of its financial
operations.
My second point is that NASA is implementing a system
intended to address both program management and external
reporting needs. We agree with NASA's goal for the new system,
however, in 2003, we issued five reports expressing our
concerns that the new system as implemented will not meet
NASA's stated goal. For example, the system does not fully
address NASA's external reporting needs. NASA continues to
represent that the Core Financial module was fully implemented
in June 2003. However, we reported that significant
capabilities for external reporting were not implemented. More
importantly, we reported that the new system is not being used
to manage NASA's programs. We found that program managers and
cost estimators were not involved in developing requirements
for the system. As a result, they continued to use hard copy
reports, spreadsheets and other labor intensive means to
monitor contractor performance.
Historically, finance has not been viewed as an integral
part of NASA's program management decision process. Thus, it is
not surprising that the new system was not designed or
implemented with program managers or cost estimators in mind.
If program managers do not use the new system and continue
using their ad hoc systems, then NASA will continue to have two
sets of books.
In conclusion, it is clear that NASA has significant
financial challenges. However, as noted by Representative
Blackburn, NASA in many cases has denied the existence of its
problems and has attributed its difficulties to the auditors
sampling methodology or the lack of understanding of its
operations. Unfortunately, GAO and NASA have generally agreed
to disagree on many of the facts.
For reform to succeed, management must acknowledge the
serious nature of its problems and take action to address the
people, process and system challenges. Consistent congressional
oversight of NASA's financial management is also needed for
reform to succeed. We look forward to working with the
Inspector General and NASA management on solutions to these
challenges.
Mr. Chairman, this ends my testimony. Mr. Allen Li, the
Director in charge of our NASA program work is with me to
answer questions.
[The prepared statement of Mr. Kutz follows:]
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Mr. Platts. Thank you, Mr. Kutz.
Again, I appreciate all of your testimony and if Mr.
Ciganer or Mr. Li would like to join the other three at the
table as we move forward to questions. We will again be guided
by a loose 5 minute rule and begin questions with Mrs.
Blackburn and myself and Mr. Towns who is going to be rejoining
us.
I would like to start with the structure at NASA. One of
the things that came through loud and clear in the statements
here today and in the written statements and other coverage of
the challenges to NASA regarding financial management is the
need to change the culture. This must be a priority, and, in
reality, the programs NASA is so well known and appropriately
applauded for will be that much stronger if we do right on the
financial management side.
One of the challenges that seems to surface in the past
structure of NASA, hand in hand with the culture of leadership,
is the delineation of authority in the 10 separate centers with
the CFOs of each center answering to the center director but
not to the CFO for the entire agency. Ms. Brown, if you could
share with us what you are doing to address that decentralized
approach of the past and how you are trying to better
centralize it, because as we see here today you are the one
that needs to answer for the agency as the agency CFO. How you
are getting your hands around those 10 independent centers?
Ms. Brown. Thank you for that opportunity. I would like to
state for the record too that we are working that at NASA. It
is a challenge having 10 different, separate CFOs reporting to
a center director but I have imparted what we call team clarity
at NASA. It is basically a group of individuals at NASA within
the NASA community working toward restructuring and realigning
the agency as a total and whole in order to meet our new
vision. In that effort, we have had multiple discussions with
regards to the reporting structure that would be instrumental
in my being able to resolve this challenge we have in financial
management. To that end, we are looking at having a couple of
options, one being having the center CFOs report directly to me
or my being able to work with the center directors in the
hiring, firing and performance evaluation of those center CFOs
in order to strengthen that relationship. So we are looking at
a couple options and we will be providing those to the
committee once those are finalized.
Mr. Platts. Expand on that. I was under the belief that
delineation of authority or realignment had already occurred
where the center CFOs would be reporting directly to you. That
is something you are looking at and discussing but has not
taken place thus far?
Ms. Brown. Correct.
Mr. Platts. That is something that concerns me, that given
what we know about the challenges in the past, even in this
past year and the 2003 audit, the 2003 numbers, that we are now
halfway through 2004 and we have not actually made that change.
You are the agency CFO and the need for that information and
that authority over those centers is going to be critical if
you are to truly get your hands around the challenge before
you.
Ms. Brown. Chairman Platts, you are indeed correct on that.
We have taken steps within my organization to work with the
center CFOs. There hasn't been a challenge in that respect and
getting their attention to the issue. The disclaimer was a
definite wake-up call for that but we have not formally
documented that in our new organizational structure.
Mr. Platts. What is the timeframe for the two changes, one,
them answering to you directly, the center CFOs and two, your
having whether it is a veto role or a sign-off role in the
hiring of staff in the CFO offices in each of the centers?
Ms. Brown. Actually we are working toward those and should
have them within the next couple of weeks.
Mr. Platts. I would appreciate and ask that you do share
the results of that realignment as soon as it is complete so we
are aware of how you are going to be going forward. One of the
weaknesses that came forward I believe in the Inspector
General's statement was staff not understanding the
requirements of the Federal financial management laws and what
was required of them. Given that these are individuals being
entrusted with oversight of management of billions of dollars,
there clearly is a need for improvement in the staff knowledge
and actions. I know you have only been there 6 months or so,
but you accepted that challenge and now are responsible for
each and every one of those individuals within the financial
management field. We would appreciate your diligent efforts
regarding that management aspect.
Mr. Kutz or Mr. Li could you comment on the change in
culture, the alignment and what has occurred in GAO's opinion
and what needs to occur further?
Mr. Li. I think we can both address culture with regards to
the financial unit and the larger aspect of NASA. As you know,
after the Columbia Accident Investigation Board issued its
findings, it identified that culture was indeed an issue in the
whole agency. So while I am encouraged by what Ms. Brown talks
about in terms of the organizational improvements and the
realignment in her unit, the other thing we need to keep in
mind is that culture change also has to deal with the alignment
of both the program and the financial management unit. In other
words, if these people cannot talk to one another and manage
these programs, getting the financial data to manage these
programs like the spacecraft and the human space flight
programs, it is not going to work. So culture change cannot
just be one in which we fix what happens at the CFO level. It
has to be throughout the agency.
Mr. Platts. Is it your opinion that with the realignment,
and the shared services center up and coming would that help to
address some of that issue?
Mr. Li. I don't believe so, sir. I think that is an issue
of their trying to get more efficiencies and trying to co-
locate some of the administrative functions they have, so I
don't believe that is going to solve the cultural issue you
talked about.
Mr. Platts. I take it the issues being discussed that
direct authority of Ms. Brown over those center CFOs and input
into the hiring of the staffs in those center CFO offices, that
is something you think is important moving toward changing the
mentality and the way of operating?
Mr. Li. Yes, I do.
Mr. Platts. Mr. Kutz, did you want to add anything?
Mr. Kutz. I would just add with respect to the other
cultural issue, making sure that the program in finance is
better integrated. That is an important issue that goes back to
finance being somewhat stovepiped from the program which gets
into is this IFMP going to meet the needs of those people. I
think NASA's goal up front was for the integrated financial
management system to be something the program managers used to
manage on a day to day basis. We don't see that happening right
now and that needs to be one of the goals and results of this,
before we spend $1 billion on a system that is just an
accounting system. I think that is a very critical aspect to
discuss in today's hearing.
Mr. Platts. Mr. Cobb.
Mr. Cobb. I would like to comment just because I have a
slightly different dichotomy to lay out for you. In one sense I
don't think the CFO will have the ability to carry out her
function until the people who are the CFOs at the field centers
report directly to her and she writes their performance
evaluations and is responsible for their bonuses and
fundamentally they work for her. I am not sure that is what is
being contemplated in connection with the organizational
changes at NASA in the CFO shop or in the CIO shop or in the
Safety and Engineering area. I think they are contemplating
something that is more complex with dual reporting requirements
but that ultimately the employees we are talking about will be
responsive to the center directors.
Mr. Platts. I share your belief. As a subcommittee with
oversight, if those individuals aren't reporting and answering
to you, that means I am going to have to bring all 10 of the
individual center CFOs here to answer for themselves if they
are not going to be answering to you.
Ms. Brown. And given the two comments made from the GAO and
the IG, you see my dilemma in trying to formulate what is the
best plan moving forward. The GAO, as just stated, says you
need the financial manager and the program manager working
diligently together moving the agency forward. If I take the
CFOs and have them report directly to me, they are no longer
responsive to the center director or the program managers at
those different centers. Therefore, that relationship breaks
down and they will be responsive and beholding to me.
The IG feels we should have a stronger input having a
direct line to myself and that is the debate and discussion we
are having today within NASA. What is the best structure for
NASA, for our leadership in order to develop the agency not
only for today to meet the challenges I have currently for
financial management, but also moving forward and meeting the
vision. This dichotomy between the two here is the same debate
we are having at NASA. Once we finalize that, get it in written
form, we will provide it to the committee, but it is not my
hope to have 10 different accounting CFOs coming to report to
this committee. I am accountable for NASA's financial status
and they report to me and they work with me.
Mr. Platts. Under the CFO Act, you are deemed the one
accountable. Those regional, center CFOs are not under the act.
I did read it different, Mr. Kutz and Mr. Cobb, that they
didn't necessarily disagree, Mr. Kutz and Mr. Li, that program
managers need to work hand in hand with the CFOs but I want to
followup. Do you object or think it is a bad idea for the
center CFOs to answer directly to Ms. Brown in the chain of
command?
Mr. Li. No. I was not implying that the organizational
alignment of the CFO precluded or would impact upon that
closeness of working together between the program managers.
Just ensuring that the way of doing business incorporates the
financial discipline of managing a program does not require
that organizational alignment.
Mr. Platts. I think how I took the GAO's statement, Ms.
Brown, in your written statement you capture it well where you
say ``A clean opinion should reflect a reliable, transparent
and efficient set of financial management practices.'' It
should not, in itself, be a goal but rather a reflection of
those practices; that by putting in the good processes,
including how we align the financial managers by their work,
they will generate good information that benefits program
managers because of having timely accurate information to work
with.
Ms. Brown. Correct.
Mr. Platts. I want to yield to the Vice Chair, but in this
first round, I wanted to get into one of the issues that goes
to the data and the errors in basic accounting. The 2003 audit
disclosed the $2 billion discrepancy between NASA's books and
the fund balance with Treasury. In reading the various reports
in preparing for this, I think it was best captured in the
GAO's written statements how I looked at that. I may be unusual
but I am the one that writes all the bills in our house and I
balance my checkbook to the penny every month. If I find I am
off a dime, I go find the dime. It was amazing to me as a
taxpayer, the way I understand this is that NASA's books were
off by $2 billion and there is basically just a correction made
but no effort, at least initially, and I am not sure yet there
has been a detailed explanation given of how that $2 billion
discrepancy came to be. Where is it? What happened to the
money?
Ms. Brown and Mr. Ciganer, if you can expand on that issue
because remember you are speaking to the guy who looks for the
dime I am missing at the end of the month in my checkbook
balance and $2 billion is a heck of a lot of money from
hardworking Americans.
Mr. Ciganer. Mr. Chairman, we actually share your concern
and one of the stated objectives of the new system was to
actually bring a level of transparency to the information and a
level of detail to the individual transactions that did not
exist in the previous systems. As we stated earlier not only
did we consolidate 10 separate, independent accounting systems
from each center but a variety of subsystems.
What we tried to do moving forward is not only rolling out
this new environment but also taking care of cleaning up an
awful lot of information that was residing at the level of
detail that we did not consider sufficient moving forward. We
were aiming, and are still aiming, at exactly what the GAO and
the IG pointed out, which is to develop a much closer
relationship in cost and performance on the management of our
major programs. We are very conscious that the stovepipes that
were established individually, geographically and even by
department, all have to be broken down very, very quickly. We
tried to actually not only convert the data from a historical
accounting standpoint, but also to look at the individual
transactions and the system we selected is transaction oriented
as opposed to just accounting oriented, and break down a lot of
the information that existed in a much higher level in the past
into a much lower level so you can go task by task and start
doing the analysis you require.
Mr. Platts. Those are issues that I do want to get into
with the new integrated financial management program and how we
are going to get more detail. I actually have some questions
about the way the system is designed and how much detail we
get. I would like to focus on the $2 billion discrepancy. As we
sit here today, do we know where that money went, why there was
a discrepancy, to ensure there wasn't fraud, waste or misuse of
funds?
Ms. Brown. No, it was not a matter of fraud, waste, abuse
or misuse of funds. Basically, it comes down to accounting
practices, policies and procedures. Again, as Patrick said,
when we implemented the new system, we had over 120 legacy
systems that we were migrating. A lot of those systems didn't
have the financial rigor or the reconciliation. Like you said,
every month you reconcile your checkbook even down to the dime.
It was not a prevailing practice. We weren't quite sure as we
were moving through the migration and we started doing a
reconciliation from pre-migration into that area. We started
seeing the differences and we are researching the differences.
What I have done in my NASA financial improvement plan
because that was one of the issues raised within the audit and
is a material weakness identified. In my plan, we are doing a
soup to nuts reconciliation starting back to 2000, 2001, 2002,
and 2003. Basically I am reconciling my checkbook for the last
5 years and I will continue that until I am able to get to a
point where I am comfortable in knowing where each and every
dime went.
Three weeks ago we received the tapes from Treasury so that
we can begin that process. I don't mind providing the committee
with the results of going through that process but again, it is
through years of being able to do that. We have it now in a
single system. I can identify at the transactional level down
to the detail because people had to go back and do that rework
and put in that information. Not all those systems had that
information in them. Now I am beginning to process through my
NASA financial management improvement plan to do that
reconciliation starting back in 2000.
Mr. Platts. If I understand correctly, as you are going
forward trying to best determine where that $2 billion went,
you have records from Treasury now that would be the records of
who was paid for what and what amount and you are working
through that process?
Ms. Brown. Correct and I do have support doing that.
Mr. Platts. You said it was 3 weeks ago you got that
information?
Ms. Brown. I received the tapes from Treasury starting from
2000, 2001, 2002, 2003, correct. It was a little difficult for
Treasury to come up with the older records.
Mr. Platts. There was a request a while back?
Ms. Brown. Correct.
Mr. Platts. And it took a while for Treasury to put
together the information?
Ms. Brown. Correct.
Mr. Platts. As you move through that process and get more
detail and try to account for all those dimes that make up that
$2 billion, I would appreciate that information being shared
because one thing as I read everything is more than 6 months
after the close of the end of the fiscal year, we still don't
know, and I am hesitant that we can say there was no misuse,
there was no intentional defrauding of the public. At this
point we really don't know where the money went. We just know
it went somewhere, $2 billion more than what NASA thought.
Ms. Brown. It is not that the money actually went
someplace, it is a matter of whether or not the information was
recorded in our legacy systems and properly transferred into
our current new environment.
Mr. Platts. You don't know at this point whether it was
even recorded in your legacy systems accurately?
Ms. Brown. Correct.
Mr. Platts. So the sooner we get to that detail, I think we
will be more comfortable because it really goes to one, how
taxpayer funds are being spent but also that foundation we are
trying to build on as you are making the transformation to the
new system that we are correcting the errors of the past. The
sooner we know what those errors were, the sooner we can make
sure they are corrected as we go forward.
Ms. Brown. Correct and that is why this is one of the
biggest and most pressing priorities we have been working on
the NASA Financial Management Improvement Plan. Again, it is
kind of like going back to your bank and asking for your prior
records from many years. I had to go back to Treasury and ask
for those records. Having received those, we are beginning the
effort of going back there and doing that reconciliation. That
is why we have not taken that $2 billion lightly. That is why
we are devoting the effort to do so.
Mr. Platts. One followup on that and I want to get Mr. Cobb
and Mr. Kutz's comments on this. I realize this was as you were
being sworn in as CFO but when the report was filed, there was
no mention of that $2 billion correction in the papers filed.
The auditor brought it to your attention so it should have been
at least footnoted. Is there an explanation from someone at
NASA of why? The Federal accounting requirements should have
shown that we made this correction. Is there an explanation for
why it was not noted?
Ms. Brown. Actually that was an initial oversight at the
point in time we actually provided our financial statements to
our auditors. It was literally an oversight. Of course we would
have adjusted them afterwards as we went through the process
but because of the timing and because of having to meet the
November 15 date, we never went back. At that point in time, we
also knew we were getting a disclaimer. It is a matter of not
going back and adding the footnote.
Mr. Platts. I say this in a respectful way and you are the
one here and the one responsible but I think it kind of
captures the cultural change that needs to happen that there is
a $2 billion oversight and whoever is putting together those
reports doesn't understand that we have a fiduciary
responsibility to disclose that. That epitomizes a lack of
appreciation for what the standard practice requires and what
is needed. I appreciate that is part of what you are seeking to
change.
Ms. Brown. Therein lies my challenge.
Mr. Platts. I do want to get to Mrs. Blackburn but Mr. Cobb
and Mr. Kutz, if you want to comment on this aspect of the
audit and the $2 billion and where we stand today?
Mr. Cobb. Just briefly, I think the reason you have
internal controls is so that you create an environment where
fraud, waste and abuse doesn't occur. That is one comment.
Second, it strikes me that NASA should be able to get to the
bottom of what happened to the $2 billion without going to the
bank to find out what happened with respect to the
transactions. That seems like a work around to a much better
way of getting at it.
Mr. Platts. It is fair to say, Ms. Brown, that is what you
are saying, that you had to go to the bank, the Treasury,
because your data was so inappropriately maintained in the
legacy systems?
Ms. Brown. Yes.
Mr. Platts. Mr. Cobb, your comment about the internal
controls, I assume something looking at whether there should be
an audit of their internal controls, an audit level opinion on
the internal controls, that is something you would support?
Mr. Cobb. I would agree with the notion and I have heard
discussions about the idea of whether or not the independent
auditors should render an opinion on internal controls, I would
agree with that notion. I think the NASA experience alluded to
in Mr. Kutz's testimony where there were a number of favorable
unqualified opinions, including most recently in fiscal year
2002, really hid the ball on what the problems were at NASA. If
there had been greater focus on internal controls, to the point
of rendering an opinion on internal controls, we might not be
in the situation we are in today.
Mr. Platts. Thank you.
Mr. Kutz, did you want to add anything?
Mr. Kutz. Just quickly. I would say your analogy is
accurate and unfortunately, NASA is not the first agency this
has happened to. This has happened in many other agencies
before. I would say it is kind of a two-part issue. One is you
have to go back and reconcile all the old stuff but the next
question is what has happened beyond September 30, 2003 with
the new. I think you have to look both ways. Some of the
agencies we have dealt with on this before, because they will
never reconcile it down to the dime as you mentioned in your
statement, they may have to get some write-off authority to
clean up the books. Then the important part is going forward
and not letting it happen again.
Mr. Platts. That internal control system being in place
going forward is critical too.
Mr. Kutz. Monthly balancing, yes.
Mr. Platts. After her patience with me, I was about to
yield. As soon as Mrs. Blackburn comes back we will yield to
her. Let me continue on some of the audit issues.
Ms. Brown, in your discussion about the $582 billion or so
adjustments and explaining how one correction may be $30
billion done three times and equals $90 billion, you sought to
explain that. Do you want to expand on that and how you are
looking at what happened in the past that we have that huge
number as we go into the 2004 end of the year audit. If there
is a one-time correction that cumulative is $582 billion
because you are correcting for all the wrongs of the past,
hopefully this year we are not going to see similar types of
corrections in this year's audits. Would you like to expand on
that?
Ms. Brown. We are going to show you a couple charts and I
am going to have Patrick explain to you what happened last
year, what is happening this year and hopefully give you an
idea of what you can expect with what regards to what we call
journal vouchers or JB type of entries.
Mr. Ciganer. As we mentioned earlier, 2003 was the year
where we deployed the new system and it was deployed in a
series of waves. We learned from the previous failed attempt in
trying to do everything at once was just not feasible while
trying to keep the risk at a limit we could live with.
Unfortunately, 2003 was the fiscal year in which the agency was
gradually converting to the new system. This created enhanced
work for the auditors that went beyond anybody's expectation.
All of a sudden, our audit team had to audit the old systems
and the conversion to the new system and then what the new
system reflected. Additionally the ability to prepare financial
statements following adjustments had to be done in a manual way
because the new system went live in late June for the last
centers of the agency. There was no capability, as was
accurately pointed out, to prepare our financial statements
right out of the system.
The first chart basically describes, and I will not go into
the detail, the number of steps that had to be taken in 2003 in
order to not only prepare the statements but also identify and
post all those adjustments. As we were at the end of the fiscal
year, generating the data in the new system, all of the
adjustments had to be posted to that new system and part of the
internal controls required the tracking of every individual
step and in addition, the training that was required to post
those adjustments, had not been as efficient as we had hoped.
Essentially, a lot of mistakes in postings were recorded
and then those postings had to be reversed. We have a specific
occasion, which is very unfortunate, where a simple $500,000
adjustment that got posted to a wrong account was reposted over
15 times and therefore the audit log trail we created
registered that amount. Imagine 10 centers, $15 billion, for
the year worth of adjustments, including all the open
contracts, some of which cover several years and you can see
the amount of postings and adjustments that took place. It is
not optimum, but, what we are aiming to do in 2004, is by
moving completely in 2003 the agency, since October 1, has been
operating in the new system and, as you can see, we now will
have a much cleaner way of producing the statements and the
adjustments.
Mr. Platts. When I saw that $582 billion, I thought it was
a misprint. I appreciate the explanation.
You diplomatically said that some of the errors or a large
part of those are mispostings that had to be corrected and one
apparently 15 different times and that tells us that the
training, the skill level of some of the individuals making
these postings was not adequate. I assume you are giving
everyone a crash course in how to more accurately post their
data?
Ms. Brown. An extremely correct assumption, yes, but will
people still incorrectly post adjustments or incorrectly post
data into the new system? Yes. It is part of the learning
curve, it is part of what we call the adaptation phase of any
new system of implementation. Will the numbers be in the
billions? I definitely hope not. We are working through these
areas. I don't think we have seen anything at this point in
time.
Mr. Platts. My understanding is that of the total amount of
adjustments, the $565 billion roughly was related to data
conversion. That still leaves another $17 billion that is not
related to data conversions. Can you expand on what that other
$17 billion relates to?
Ms. Brown. That is related to the contractor-held property
which again is outside of our system. That is the information
that is reported to us or pushed to us from our contractors. It
is basically contractor-held property that is in the hands of
contractors by which they have to report back to us. Those
discrepancies were in the contractors' information being pushed
to us and we cannot manipulate change or do anything with that
because it is reporting to us.
Mr. Platts. But you subsequently learned it was inaccurate
to the tune of $17 billion and corrected that. That leads us to
another issue which I was going to followup later which is your
contract management practices.
Ms. Brown. Correct.
Mr. Platts. As we said, the wrongful transfer of data was
about training and knowledge of making postings, and that $17
billion tells us that even though it seems small compared to
$582 billion, it is still $17 billion in errors by contractors
submitting information because it is contractor-held but NASA-
owned?
Ms. Brown. Correct.
Mr. Platts. So they are inaccurately reporting to the
taxpayers what their assets are. I assume you are taking
action. I don't know if you want to expand now on the contract
management and how you are trying to address the errors in
oversight of your contractors?
Mr. Ciganer. This became a very significant issue starting
2 years ago and over time we realized the only way we were able
to accurately track our assets that were currently being
developed by the contractors is to develop a more sophisticated
automation process. Currently the contractors are generating
essentially year-end reports that give us the information. That
report in itself needs to be audited. Every time we audited it,
we found mistakes.
The next module of the IFM program, Integrated Asset
Management which just got started right now, is specifically
focused at addressing this issue which is in itself very
complex from a systems standpoint because we need to have
insight into the various asset management systems held by our
contractors.
Mr. Platts. It is going to be a critical part because my
understanding is 90 percent of your budget is spent on
contracts. So you need to get this aspect in order.
Ms. Brown. About 98 percent contracted out and of the
assets on my balance sheet, it is actually 75 percent. This is
a very key element of our module that I am looking forward to
as the Chief Financial Officer in getting and it is a definite
requirement that we need.
Mr. Platts. Mr. Cobb and Mr. Kutz if you could comment and
then Mrs. Blackburn, I promise not to ask another question and
yield to you.
On the two issues we have talked about here, one is the
$582 billion in adjustments and your understanding of how that
came to be and also your assessment of the data that
substantiates what adjustments were made. Are you comfortable
with your knowledge base of how that huge sum came to be and
how it is being addressed?
The second part is on the contract management side of how
we are moving forward and getting our arms around the
contractors who expend a huge sum of the funds in NASA and hold
a huge portion of their assets.
Mr. Cobb. Yes, I do feel as though there is a general
understanding of how the large numbers came to be. I think in
simple terms, adjustments and multiple adjustments were made to
bundles of transactions because of errors in the system and
then those errors in the adjustments were grossed up and you
ended up with large numbers.
To me there were numerous in and outs that led to the gross
$582 billion. To me, the number is not as important as the
inadequacy of the documentation that shows what the basis was
for the various adjustments. But with respect to the difference
between the 2003 chart on how IFMP was going to work and the
2004 chart, the key is how much manual manipulation it is going
to take. Is the CFO going to be able to press a button and have
accurate financial statements issued? I think if you look at
the chart, it says in effect no because there is going to be a
body of corrective activity that has to take place. In fact, I
question whether or not one can press a button and have any
financial statements issued at this point.
We understand the problems that were identified in fiscal
year 2003 are not fixed. There continue to be data integrity
problems, and there continue to be questions about whether or
not the system can generate financial statements. Ultimately
the policies and procedures that Gwen's improvement plans are
trying to implement are still not firmly in place. So will
there be another year with $582 billion? The number will be
different I am sure and probably be less but my guess is there
are going to be substantial problems.
Mr. Platts. The underlying problems still exist that
generated all those adjustments? We are not yet close to
addressing that?
Mr. Cobb. That is right and I have a great deal of respect
for the CFO and her team that are trying to get on top of the
problems, as well as for Mr. Ciganer's efforts to get on top of
the issues relating to IFMP, but there are still plenty of
issues.
Mr. Platts. Mr. Kutz.
Mr. Kutz. Yes. I will be quick. I am sure Representative
Blackburn would like to take her turn.
With respect to the $565 billion, I think it is a
reflection of problems with following disciplined processes and
system implementation, issues with respect to requirements,
testing, and risk management. I am sure if they look back, they
would like to have dealt a little bit more with these things
before they implemented the system. Now it is kind of a
patchwork, catch-up, fix it after the fact, so that would be my
observation. I can't add anything more to what they have said
on the other part.
On the property, I agree 100 percent with Mr. Ciganer with
respect to the automated interfaces needed into the contractor
records which the analogy would be Procter and Gamble has the
same thing into WalMart's system and it is a little different
scenario with inventory but the same concept. They need to have
that to have asset traceability from their general ledger at
NASA to the detailed records at the contractor of the property
assets. I would agree with him on that.
Mr. Platts. What was the timeframe? You are beginning that
now, that module?
Mr. Ciganer. Yes, sir. As a matter of fact, one chart shows
we are starting right now development of the module and the
target date for completion is the first quarter of fiscal 2008,
again because it is a fairly complicated undertaking from both
a system design and validation and data integrity standpoint.
Mr. Platts. That leaves me to other questions but I am
going to hold on to them for now. Mrs. Blackburn has been very
patient. Mrs. Blackburn is recognized for the purpose of
questions.
Mrs. Blackburn. Thank you, Mr. Chairman. I want to thank
our panel for your time today. We really want to work with you
to be certain that these situations are addressed. I will
apologize to you all for stepping out. I had a group of four
constituents who were waiting to visit with me on an issue that
is as important to them and to our district as your financial
health and your agency's health is to our Nation.
Ms. Brown, I would like to begin with you just for a couple
points of clarification. As the chairman was talking with you
about the reporting structure for the CFOs, you mentioned your
timeline for change should be ready in about 2 weeks. My
question is, is this just your human capital change or does
that also include your financial systems and the changes there?
Ms. Brown. The change I was speaking of is mostly in human
capital. We are looking at reorganizing or restructuring within
the NASA community for the human capital. We are working toward
the systems side.
Mrs. Blackburn. Another point of clarification. In your
written testimony, you say you have used blended data to
prepare your financial statements. For the record, would you
explain what blended data is?
Ms. Brown. Blended data would have been the legacy system
and the SAP system because we had over 110 different systems
that we had to migrate through and it was done in a wave
approach. Not all the centers in fiscal year 2003 were all
operating on the SAP environment. We had to take data from the
legacy system up to the point of conversion and then also data
from the SAP system at the point of conversion forward. That is
what we termed blended data.
Mrs. Blackburn. Your SAP system, that software, is it my
understanding that is being phased out and that by 2012, you
will have no technical support for that financial system?
Ms. Brown. I am going to give that one to my project
manager.
Mr. Ciganer. It is accurate that the current version of the
software that is being implemented is being slotted for
upgrade. Those very large enterprise resource planning systems
are consistently developing new upgrades and new updates, so,
the SAP current product has been advertised as being phased
out. We have actually planned the migration to the new version
which is indicated in the schedule where it says: ``enterprise
upgrade'' will start fairly shortly and will take approximately
15 months. We were very aware unfortunately of the fact that
this type of environment requires you to consistently update
your system. This is just like Windows, just a lot more.
Mrs. Blackburn. Mr. Kutz, would you like to comment on
that, sir?
Mr. Kutz. I agree with what he said. I think there are
going to be some licensing fees and other costs involved in
this that may or may not be involved in the total cost of the
program at this point but hopefully, also there will be some
additional capabilities since it will be a new generation of
software. That might help them with other things.
Mrs. Blackburn. Mr. Kutz, the new financial system that we
are dealing with, how do you see this helping them address
their financial weaknesses and the internal controls. You may
have addressed this a bit while I was out of the room. I would
be interested in your take on that.
Mr. Kutz. With respect to the overall concept of having an
integrated system, I think it is definitely the right move. We
support what they are doing from a conceptual standpoint. Our
issues have been with the implementation of the system. Having
an integrated system and trying to shut down the different
systems at the 10 centers is the right thing to do so it should
help from that perspective. It should also help them with
issues such as property management in the long term, although
as Mr. Ciganer said, I think really to have their systems be
compliant with Federal standards, they are going to have to
develop that automated look into the contractors' records with
respect to the actual asset traceability. Those are really long
term types of issues but the concept of this for external
reporting purposes and also for program management purposes is
conceptually correct. Our issues have been with some of the
implementation steps.
Mrs. Blackburn. Is this FFMIA compliant?
Mr. Kutz. We reported it was not and again, we had reported
there were a number of capabilities that were deferred from
June 2003 when they said the core modules were fully
implemented, there were a lot of capabilities deferred in our
view relative to things like budgetary reporting, the property
issue is not dealt with and as Mr. Cobb noted, the system right
now cannot prepare financial statements. Their quarterly
reports to OMB are going over as estimates. Those are
significant capabilities that although they said the system was
fully implemented in June, clearly there are things that still
need to be done for it to be compliant. I think the property
issue that Mr. Ciganer says is 2008, our belief is that will
have to be done for the system to be compliant.
Mrs. Blackburn. So we are basically a long way away from
their having a compliant system?
Mr. Kutz. Given the timeline he mentioned, I would say yes.
Mrs. Blackburn. Do you have a thought on what the cost is
going to be, the true cost of this?
Mr. Li. The cost of the system that NASA has reported to
you this year, fiscal year 2005, when you take a look at that
number, it is around the $500 million. That is only for the
direct procurement costs of this particular system. What is not
within that explanation is that it requires also the Civil
Service costs associated with the personnel to implementing the
system and also the enterprise costs that are needed. The
enterprises are the individual organizations within NASA. When
you add up all those numbers, you are up to about three-
quarters of $1 billion. In our report we provided last
November, we reported on life cycle costs, which are the costs
that would be needed to not only develop the system but to
maintain it over the life of the system. The life we had used
in coming up with our estimate was 2000-2010. For that period,
the total, including the operations and maintenance for IFMP is
very close to $1 billion.
Mrs. Blackburn. Mr. Li, let me ask this. Would it be your
recommendation, the GAO recommendation, that they scrap this
and start over?
Mr. Li. No. I think we are beyond that point. I think Core
Financial has been implemented, I think at this point in time
there are recommendations we have made to NASA and I am hopeful
and I am encouraged they have accepted our recommendations. We
are looking forward to those changes being made.
Mrs. Blackburn. Mr. Cobb, did you have a comment on that?
Mr. Cobb. Just to followup on what Allen just said. The
Office of Inspector General intends to conduct an overall audit
of the IFMP. We intend to work closely with GAO and use
resources they have offered to us in connection with that
activity to get at whether or not NASA is following up on the
recommendations that GAO and we have made. We will look at the
contracts that have been entered in connection with IFMP, and
the resource issues to see whether or not the dollar numbers we
have been discussing are accurate. In addition, we will
evaluate whether the various modules work in concert with each
other so that the system can be most effective from the users'
standpoint in generating information for managing activities.
Mrs. Blackburn. Let us continue along that line. Mr. Kutz
said something about the contractor-held assets. We have talked
some about the internal controls. What type internal controls
should NASA establish so that they get a more reliable and
consistent reporting of those contractor-held assets?
Mr. Cobb. Fundamentally, I see the problem that NASA can
establish reporting systems for contractors to report on NASA-
owned contractor-held property. The independent auditor
typically looks for how NASA understands that the numbers being
reported are right, how does it go about that? Those are the
internal controls they are talking about. Both Mr. Ciganer and
Mr. Kutz have talked about that what you need is a system
linked between the contractors and the agency that gives you a
real time understanding of what is happening with respect to
evaluation of the contractor-held property. Until you have that
in place, contractor-held property is going to be a problem in
connection with the annual CFO audits that are conducted and if
everything else is fixed, might result in qualified opinions
until that asset module is in place and working.
Mrs. Blackburn. Mr. Kutz, did you have a comment on that?
Mr. Kutz. I would add he was getting into too that they are
reliant upon the controls at the contractor, so once that
automated interface is there you still have to have reliable
data at the contractor. I think that was the internal control
that Mr. Cobb was talking about and I would concur with what he
said.
Mrs. Blackburn. Ms. Brown, you had a comment?
Ms. Brown. I was also going to say I agree with Mr. Cobb on
two things. First, we need the system. Second, we need the real
time look into the contractor-held property but the third thing
that we would need is flexibility to be able to go in and do
quality assurance audits to ensure that they are in compliance
with those regulations and they have proper accounting of the
property onsite. That is something we are working toward also.
Mrs. Blackburn. Ms. Brown, do you have a set of best
practices or an agency you are looking at, something that is
more or less a template you are following to get things on
track?
Ms. Brown. Actually, we are looking at several. When we
first started the implementation of the SAP enterprise
relationship we had actually engaged Northrop Grumman and they
have kind of been our yardstick as to where we are and being
able to chart our milestones as we move through the process. As
we have been getting a lot of attention on our financial
management, other agencies have been coming to the forefront
and extending their best practices and some of the lessons they
have learned as they went through the process like Dupont and
also some other agencies.
Mrs. Blackburn. Mr. Kutz, if proper best practices had been
followed, wouldn't that have avoided a lot of the problems we
are talking about today?
Mr. Kutz. I believe to some extent that is true. You
mentioned Northrop Grumman and I visited with Northrop Grumman
also and they are putting in SAP in their organization but our
recommendations with respect to project management have gotten
into requirements, testing, and risk management, those types of
project management items. As Mr. Li said, we are hopeful they
will be implemented and they have said they will implement our
recommendations. If they do and follow the best practice and
discipline processes of project management, I think there is
nothing wrong with the SAP software. That has been proven to be
software that can be used to do the kinds of things we are
talking about. So it is a matter of having disciplined project
management to put that in place and make it work.
Mrs. Blackburn. I thank you for that and I think we all
know the best practices issue is probably one that we have
throughout Government.
Thank you, Mr. Chairman, and I will yield back.
Mr. Platts. Thank you, Mrs. Blackburn.
I want to followup with the new integrated financial
management program and the Core Financial Module in particular.
It was kind of touched upon, but I am not sure I have a
complete answer as far as the ability of the system, the CFM,
to generate financial statements. It is my understanding that
the quarterly statements for the first two quarters of this
year were generated manually, not by the CFM. Is that to
continue for this coming quarter? What is the problem that we
have a new system that wasn't designed to generate the
financial statements as required?
Mr. Ciganer. The question really breaks down into two
components. The first component is whether or not the system
itself, the environment we adopted in Core Financials is
capable of giving us the data that is required to produce
financial statements. The answer is yes. As Mr. Kutz indicated,
SAP is an off the shelf system that has the ability from an
accounting standpoint to manage and track the information very
accurately.
The byproduct of being an off the shelf system is the fact
that it did not come with NASA specific report writing
capability. That is something that the agency itself had to
develop. So the environment maintains the core transaction
information but the production of the reports to meet both our
internal and external requirements is truly an internal effort.
We are in the process of developing those reports. As was
accurately pointed out by the IG and the GAO, we did not have
that capability in October when the financial statements were
due. This is taking time. We are specifically focused on trying
to get the first test of the automated reporting capability in
June but, again, it is fairly complex. I would like to point
out that we are actually trying to do something which I don't
think is fairly pervasive in the Federal environment which is
extract financial statements and notes directly out of the
accounting environment. Most agencies produce trial balances
and then generate manual reports for reasons that range from
staffing levels to the complexity of our projects and programs
being consolidated. We decided to actually take a leading edge
position and develop a series of report generation capabilities
that would ultimately aim at what Mr. Cobb was stating which is
why I don't think we will ever be able to push a button but
will have a system doing the majority of the consolidation and
reporting work including generating the data from notes.
To date this has not been accomplished I believe anywhere
in the financial community we work with. So it is a daunting
task.
Mr. Platts. That is where we want everybody to be and
certainly you are striving for that approach because that is
part of why as taxpayers we are willing to spend perhaps $1
billion on technology, to allow you to be able to push a button
and not just at the end of the year but throughout the year
because that goes into what we talked about earlier, the
financial managers and the program managers being able to work
hand in hand. It can't be once a year at the end of the year
that you give information, it has to be pretty much ideally
every week, where are we, do we have problems with overruns and
costs. That information needs to be generated immediately. It
can't take a heroic manual effort each time. Otherwise you will
never have the benefit of what we are after.
It sounded like you said for the June 30th quarterly, you
are going to test the ability of the system to generate the
financial statements?
Ms. Brown. Correct. We are in the process of testing that
feature at the moment and we are going through the initial dry
run. Our plan is to be able to, as Cobb says, press the button
in June and be able to produce the financial statements. That
is what we have been working toward. Right now, my staff has
informed me that it is in the testing phase at this point in
time so that we can go into actual operation by June.
Mr. Platts. Mr. Cobb and Mr. Kutz, your assessments of
where we are now in the system and the ability to generate
those financial statements?
Mr. Cobb. I have some skepticism as to whether or not on
June 30 the system is going to be able to generate financial
statements that are a fair representation of the financial
state at NASA.
Mr. Kutz. I would concur. I think this is a symptom of what
was a schedule driven, core module implementation in 2003 and
that we have a system now almost a year later that can't
prepare financial statements. I think in looking forward, a
lesson learned from this is as we move forward to make sure we
follow very disciplined processes and not jump ahead of
ourselves and turn on the switch before we are ready to go.
Mr. Platts. Is the fact that we moved forward without an
enterprise structure plan in place, in trying to get it out
there and underway, part of the reason why we maybe weren't as
thorough in having all the partners involved in the design and
plans for the system?
Mr. Kutz. I think it is really the requirements and
testing. If you had a requirement which it did have a
requirement, JFMIP requires you to have the system be able to
prepare financial statements. If you had a test case in place
to test it before you went live, you would have known that you
couldn't do it. So I think it gets back to basic project
management of requirements and testing.
Mr. Platts. Are we testing the ability of NASA to meet the
November 15 deadline for this 2004 end of the year statements?
Mr. Ciganer. I would like to clarify the fact that we are
testing our ability to produce quarterly financial statements
using this function. I do not think, and I agree with the
Inspector General, that the June results are going to be what
we want to see. This is the first time that a lot of the
weaknesses that were identified from the fiscal year end close
were fixed and at least some of them were patched because they
were fundamental software issues.
We should point out that although the report generation
capability is something we are developing internally, our
objective is to be able to very quickly generate the base
information out of the system. It is unlikely, and I agree with
the OIG and GAO, that in this fiscal year we will be able to
produce by November 15 a set of reports that accurately
represent automatically the financial position of the agency.
It is still going to require manual work.
Mr. Platts. You are still going to require manual work.
Even with that manual work, will you make the November 15th
deadline?
Ms. Brown. Yes, we will make the November 15th deadline. As
one of his most significant customers with the IFMP program
right now, I am demanding quite a bit of attention from him as
you see him sitting here with me today but also my whole goal
in being able to go through this process, as arduous as it is,
is making sure that we have a system that we are pulling data
directly from our system and producing those financial
statements in an automated fashion. As you know, moving the
date to November 15 is just the first step. I see down the
horizon that you will probably want to have financial
statements on a monthly basis. If I am successful in doing
this, this will set NASA on the course of being able to do
monthly financial statements with footnotes.
Mr. Platts. That relates to the issue now of monthly
reconciliations with Treasury?
Ms. Brown. Correct.
Mr. Platts. Is that ongoing?
Ms. Brown. Actually, we have already set up that process
with part of our NASA financial management improvement plan. We
have monthly reconciliations which are being certified not only
by the center CFOs but once we get the center CFOs educated and
working through this process, we are going to educate our
center directors also so that they have an understanding of
what is going on with their checkbook at each of the centers.
It is a two-pronged process we are working on but again, a lot
of these fixes are not going to happen overnight. We are
plotting a long-term course because this is a significant
challenge.
Mr. Platts. It is a balance between not rushing forward and
making errors that you have to spend a lot of time correcting
but at the same time, trying to be as quick as possible and
there is no easy way to err, quick and errors or longer and
less information in the meantime.
Ms. Brown. As I will echo from my Office of Inspector
General, we can no longer afford at NASA to continue to put
patches on different problems. We need to fix the problems for
the long term. Again, we sit down, we do the analysis, we say
what is it today, where is it we want to be tomorrow and what
are the changes that need to be implemented? That is what we
are doing in financial management at NASA because we have a
system that is the underpinning to getting us there and it has
flexibility.
Mr. Platts. It might be a good time for the broad question
of all of you. The track record, $180 million spent, two
different efforts, no success. We are now going to spend what
we believe to be close to $1 billion over 8 to 10 years on this
new system. Whatever time it takes, what is your confidence
level, each of you from your different perspectives that when
the system, all the modules are in place and we have the system
as we have planned it up and running that we will have a system
that generates accurate, timely, actionable information month
in, month out, year in and year out?
Ms. Brown. My confidence is high. Given right now the
challenges I see, it is hard to see, as they say, the light at
the end of the tunnel. If I take the time and use this
opportunity as the Chief Financial Officer to set the stage
today to do the right things in financial management to set the
course such that we can be there tomorrow, we will be able to
do that. I would probably like Mr. Ciganer to comment as far as
the cost because he has been doing a bit on that area. Again, I
am a primary customer of the IFMP program and I recognize that
yes, we do have a lot of challenges, the system is expensive
but it is the right course and right now as the CFO, I don't
see any other alternative.
Mr. Ciganer. I just want to add to what Ms. Brown was
saying. The system itself is a series of tools, it is an
environment that provides information more efficiently over
time, hopefully. A significant component of this entire process
is also the changes that should take place within the agency.
That includes some of the comments that were made in more
tightly coupling financial management to program management.
Those stovepipes cannot stay the way they are. We have to also
be sure that all program reviews consist of costs, technical
performance and schedule and all three of those elements have
to be looked at and analyzed.
We are building the tools but although daunting, the
technical challenges are only half of the undertaking. Changing
and moving forward the way we manage and also guide the agency
to using that information is a cornerstone. That is way beyond
the systemic element.
One last thing I want to add is that I know it is a
tradeoff on getting the system up and running or making sure it
is perfect and then getting it up and running. We made a
conscious decision, I made a conscious decision, to roll out
the system during fiscal year 2003 to get it at least running.
Some of the issues that we identified subsequently could not
have been identified solely in testing and simulation. In
addition to that, we should mention that for the first time in
its history, the agency is actually operating from a single
system day in and day out. All of the bills are paid out of
that system, all of the transactions are tracked. There is a
lot to be done, there absolutely are software flaws that need
to be fixed, processes that need to be changed but the
significant step has been taken forward in that 2003 extremely
painful year.
Mr. Platts. Mr. Cobb, Mr. Kutz, your confidence in where we
will be after the years pass and the $1 billion or so is spent?
Mr. Cobb. I think that I would agree with Mr. Ciganer that
a condition to being able to implement the system is that the
agency has to embrace it, the agency at all levels of
management. In terms of a prediction of success or failure, I
would only say I think there is going to be a vast number of
implementation issues that the agency has to work through over
a significant period of time. NASA is going to need to be
patient and beyond that, I don't have the audit work to support
a conclusion, but I think it is all the right idea and is worth
continuing to plug away at it. If we think it is going to be
good money after bad, we are certainly going to raise the flag
on that.
Mr. Platts. Things such as what we discussed earlier, Ms.
Brown having direct authority over those center CFOs, that is
part of the other half of the equation beyond the technology is
the personnel and structure of responsibility?
Mr. Cobb. It is a big issue the 45 year history of the
agency, and I think a lot of areas at NASA are fighting the
idea that you have in effect a centralized management.
Mr. Platts. Mr. Kutz.
Mr. Kutz. I would say from a confidence level with respect
to getting at least marginal improvement from the accounting
side, I think it is very likely they will get that. They have
already had some benefits and if they do some patchwork to deal
with some of the things like the budgetary reporting, year-end
closing and so forth, I think they are going to get that. The
harder part is going to be, as Mr. Ciganer said, to make this
NASA's system for program managers and to overcome that
obstacle which is a two-part obstacle. One, you have to get the
data that he talked about, cost schedule and performance
information for your contracts in the system so they actually
use it. Then you have to convince them to actually use the
system. That is going to be a major challenge as is the look
into the contractors systems for the property and equipment.
Those are major challenges that are fairly far out into the
future for them. Those are going to be probably the hardest
things to implement.
Mr. Li. If I can just comment, the first effort that failed
was an in-house effort. They tried to develop an integrated
financial system in-house. The second done was one in which a
firm indicated they had the solution but they would make minor
modifications to it. It turned out those modifications were a
lot more extensive and that failed.
The thing that differentiates this last effort with the
other two is the level of support and involvement in terms of
top management. I think Mr. O'Keefe has really been vigilant
and is imposing a lot of pressure on getting this particular
system. That is a two-edged sword because that pressure also
manifests itself in terms of the schedule pressures that my
colleague just talked about in terms of wanting to get this
particular system out there and when they did so, they only did
it because they were able to defer some functions, some
functions were not available, and I think that says something
about trying to meet a schedule as opposed to trying to meet
what your needs are.
Mr. Platts. I concur with you with Mr. O'Keefe's commitment
and Ms. Brown's commitment of changing the dynamics of the
agency and truly embracing what we are all after, that
accurate, reliable, actionable information.
Mrs. Blackburn.
Mrs. Blackburn. Just a couple quick things to wrap up. Ms.
Brown, I like your optimism and I think if anyone can make this
come about and get those reports by November 15, that you are
the one. You are going to put the energy in to accomplish that
so I would like to know if you agree with the Inspector
General's report that NASA has insufficient Civil Service staff
to carry out the financial management implementation plan?
Ms. Brown. Definitely I do. Of course coming on board as
the new Chief Financial Officer in November, that has been one
of the areas I have been working diligently with my current
CFOs. They have identified to me already the staffing shortages
and we are working through that in order to promulgate that
through the budget process to see if we can get those
additional resources. Even at the headquarters level, I am
having staffing challenges. I have went to three 1990's from 75
just in the financial management area and I am now down to
about 22 at this point in time. That is the staff that I have
to put together the whole agency's financial management
statement.
Mrs. Blackburn. Am I correct in understanding you have
hired an outside consultant to assist with this?
Ms. Brown. Yes. Due to the deficiency that I have in my
current personnel allocation, I have had to hire contractor
resources to do that. It is only a short term fix. I am
confident and hopeful that through the committee and through
other processes that I would be able to increase, augment and
be able to supplement throughout the future as that has been
identified by the IG as a definite high risk area for myself.
Mrs. Blackburn. Mr. Cobb, did you have a comment on that?
Mr. Cobb. No, it seems as though Ms. Brown agreed with what
most people are articulating. in terms of the issuance of
financial statements by November 15, one question is whether or
not those financial statements are going to be auditable in a
manner that could get you to something other than a disclaimer
or an unqualified opinion. I think that is unlikely.
Mrs. Blackburn. Mr. Kutz, any comment?
Mr. Kutz. I think that the human capital issue is critical
here because when you look at something like this, you see
human capital all over it. I look at NASA kind of as where IRS
was several years ago with respect to that and bringing in
several really good people could make a big difference for the
CFO. I believe that is an important aspect of this. The
environment out there for hiring is not bad although in
Washington it is particularly difficult because there are so
many people looking for government accounting types but we have
found we are much more competitive at GAO compared to the big
four accounting firms than we might have been 4 or 5 years ago.
We have gotten some very, very good people recently so I hope
the NASA people will be able to bring in some good talent.
Mrs. Blackburn. Ms. Brown, I don't want you to take the
time to answer this today but I am going to ask you to submit a
written answer. I know we are running long. I am looking at the
clock and it is already 4:30 p.m. and you all have been very
generous with your time to talk with us today. We have kind of
talked all around this. We have talked about the errors and how
the books have not reconciled and not knowing where some of the
money is. Those are of great concern to us. We are talking long
term and we are talking stop gap. I want to go back to the stop
gap right now.
What I would like to know from you is what measures you
have implemented can minimize the numerous additional
transactions to undo and correct your financial reporting in
those transactions? I think that would be instructive to us as
we look at going forward and just to know what we are dealing
with, what measures you all have taken to be sure that this
year we are going to be moving toward having timely and
accurate financial statements?
Mr. Chairman, I will yield back to you.
Mr. Platts. Thank you, Mrs. Blackburn.
I have just a couple followup questions that we will wrap
up with. One is on the staffing issue and I appreciate your
frankness on the need both in the centers and in the
headquarters for additional staff. I believe the current budget
year request is about $900 million increase from last year that
has been submitted by the administration. Is any part of that
specifically allocated to additional staff for financial
management activities?
Ms. Brown. Yes. I actually received an augmentation of 15
individuals for my staff. Unfortunately, those are 15 other
than full-time equivalents meaning they are anywhere from 2
year to 3 year temporary type hires.
Mr. Platts. So there is some help but it is not a permanent
acknowledgment for the need for additional commitment. That is
something I think in trying to help move along this process,
this committee, because we are investing whether it is a $500
million settlement, the procurement aspects of this new but we
are not adequately funding the human capital side of this
effort, is going to be good money after bad because it is not
going to work. It is going to have to be a partnership. I hope
internally you will continue advocate the human capital side of
what you need, although we are an oversight committee and not
an appropriating committee, we would like to be on the
appropriating side but it is something that is going to be
critical to your efforts.
Mr. Li. On that point of human capital, I think we have
identified and GAO has identified human capital as a major
challenge for the entire Federal Government. In addition to
financial management organizations having difficulty, I think
this is prevalent throughout not only all agencies but at NASA.
NASA in the past year has received additional personnel
flexibilities by which it will be able to retain and attract
higher talent. So it is not like they haven't addressed this
particular issue. They do have some tools available to them.
Mr. Platts. Are you seeing benefits from that flexibility?
It is similar to what we have done at DOD and the GAO in
wanting to have those same types of options.
Ms. Brown. Actually I have seen great benefits from that
because I have actually been sending some of my direct reports
from here out to the colleges and universities and using that
capability we have been given and that flexibility to do direct
hiring at the colleges and universities in order to bring in
individuals. We are looking at being able to get one out of the
two offers we just did within the last 30 days. So we are using
a lot of those flexibilities. Mr. Chairman, I am using anything
that I can to get any bodies that I can into my organization be
it here at headquarters or at the centers in order to address
this issue.
Mr. Platts. I am not sure how the funds for financial
management come to you in the agency. The dollar amount
correlates to both the technical and the human capital but how
is it allocated? Is it specifically delineated for financial
management or is it part of a larger pool of money for the
general management? How is that set up?
Mr. Ciganer. It is actually part of our G&A allocation both
at the corporate level and also at center level.
Mr. Platts. Explain to me as a lay person, G&A?
Mr. Ciganer. General and administrative.
Mr. Platts. Generic administrative sum and then you compete
for your amount within that?
Mr. Ciganer. Exactly. We are not viewed as a line item
project. We are competing every year for those funds supporting
our budgetary requirements.
Mr. Platts. Given Mr. O'Keefe's commitment to this effort,
is there discussion ongoing about it being delineated as a
parity line item?
Mr. Ciganer. Yes, there is. As we move away from the purely
financial components as Mr. Kutz mentioned, the accounting
system parts into the much broader applications that we want to
develop, project management, asset tracking, human capital, the
need to be very stable in managing the funding requirements is
becoming more pervasive. So there is ongoing discussion.
Mr. Platts. Mr. Cobb, do you want to comment?
Mr. Cobb. No.
Mr. Platts. One final question. As we look ahead to this
year's year-end statements, one of the things that struck me in
Mr. Kutz's testimony is the fact that the auditor of the 2003
statements stated, I guess this was the third year and
concurred with the GAO's opinion that the financial statements
were not in compliance with the Federal Financial Management
Improvement Act. I think that is one of the areas where there
is agreement to disagree at some point or if we are all on the
same page, I would like each of you to comment on the fact that
is the auditor's opinion as stated in that audit, that the 2003
and previous years were not in compliance with FFMIA and where
will it be in the 2004 audit. Will we have a similar
discrepancy? Mr. Cobb.
Mr. Cobb. I think consistent with my prior testimony on
this, I would render a prediction and I would expect that the
new independent auditor is going to find problems in terms of
compliance with FFMIA in this year, 2004, and quite possibly
into 2005.
Mr. Platts. Mr. Kutz.
Mr. Kutz. We don't believe they have ever been in
compliance with FFMIA despite prior reports that said they
were. I believe one of the reasons they are implementing IFMP
is to truly become in compliance with that. Things like the
property and equipment reporting and using the system to manage
programs are two of the critical elements in our view that are
necessary for that to be successful and that is not going to
happen in the short term in all likelihood.
Mr. Platts. You think the asset module will be several
years in the process. You envision to get true compliance, we
will need that in place?
Mr. Kutz. That would be GAO's view.
Mr. Platts. Right.
Ms. Brown. We would be in agreement with that. Again, like
I said, our goal here is we do want to become compliant but we
need to lay the foundation and the groundwork to do so. Again,
it is going to take time and we will be working through these
processes to make sure we are compliant as we go through the
steps. We are looking to show measurable improvement moving
toward and in that direction of being FFMIA compliant.
Mr. Platts. We look forward as a committee to continue to
work with each of you in your respective entities as you go
forward. Certainly all of us will anxiously await November 15th
to see this year's reports. I meant to emphasize up front and
will close with, that as a subcommittee, Mrs. Blackburn,
myself, Mr. Towns and other Members, we see ourselves as
partners with the agencies we are working with. In today's
hearing, to have you, Ms. Brown and Mr. Ciganer for the agency,
the Inspector General, GAO, as well as Mr. Kutz and Mr. Li,
what I hope is that the dialog that has gone on today will
continue on a regular basis as we go forward especially between
each of your entities as you work together to get what we are
all after which is to allow NASA to do its great work and be
able to be openly accountable to the American taxpayers who are
funding that great work.
I look at the record of the past years and into the 1990's
and where the independent auditor thought maybe it was doing
NASA and its staff and its supporters a favor in giving audit
opinions that were clean when they shouldn't have been and what
the record tells us today, they really did a disservice to
NASA. I appreciate that each of you are seeking to correct the
errors of the past today and hence forth. Given the number of
years the practices were not as legitimate and accurate as they
should have been, that certainly is a challenge. As a
subcommittee, we look forward to continuing to work with you.
Ms. Brown, as you work to have better authority over those
independent centers and the financial management end of this, I
have plenty to fill my schedule but if it means I need to have
10 center CFOs be requested to testify because they are not
adequately being responsive to you, then so be it. I am
optimistic as well that you are going to be persuasive in that
realignment and gain the oversight and authority you need to
well fulfill your statutory responsibilities. We wish you well
in that effort.
Ms. Brown. Thank you.
Mr. Platts. Mrs. Blackburn, did you have anything in
closing?
Mrs. Blackburn. No.
Mr. Platts. If not, we will keep open the record for 2
weeks from today for those who want to submit additional
information and for that additional information, Ms. Brown, we
have asked of you.
I certainly appreciate the majority and minority staff
members' efforts today in working with each of our guests and
their staffs and appreciate everyone's attendance and
participation.
This hearing stands adjourned.
[Whereupon, at 4:45 p.m., the subcommittee was adjourned,
to reconvene at the call of the Chair.]
[Additional information submitted for the hearing record
follows:]
[GRAPHIC] [TIFF OMITTED] 95741.040