[Senate Hearing 109-]
[From the U.S. Government Publishing Office]



 
  COMMERCE, JUSTICE, SCIENCE, AND RELATED AGENCIES APPROPRIATIONS FOR 
                            FISCAL YEAR 2007

                              ----------                              


                       WEDNESDAY, APRIL 26, 2006

                                       U.S. Senate,
           Subcommittee of the Committee on Appropriations,
                                                    Washington, DC.
    The subcommittee met at 2:07 p.m., in room SD-192, Dirksen 
Senate Office Building, Hon. Richard C. Shelby (chairman) 
presiding.
    Present: Senators Shelby and Mikulski.

             NATIONAL AERONAUTICS AND SPACE ADMINISTRATION

STATEMENT OF HON. MICHAEL D. GRIFFIN, ADMINISTRATOR

                       CHAIRMAN'S OPENING REMARKS

    Senator Shelby. The subcommittee will come to order. Today 
we welcome the NASA Administrator Dr. Michael Griffin, who has 
joined us to testify on the President's fiscal year 2007 budget 
request for the National Aeronautics and Space Administration 
(NASA).
    The proposed budget for NASA is $16.8 billion. After 
accounting for one-time supplemental funds provided for 
Katrina-related expenses, the increase to NASA-based programs 
becomes $519 million, an increase of just over 3 percent. The 
requested increase can be attributed to nearly $900 million to 
fund the Vision and Exploration Program. While this is a 
significant increase, there are a number of programs slated for 
decreases that are troubling. Specifically, funding for 
aeronautics and education have been cut, and science has been 
shortchanged with little hope for funding in future years that 
I see now.
    Dr. Griffin, I feel that fulfilling NASA's goals including 
returning to the Moon are important and will take more than 
just plans for rockets and research missions. It will also take 
a sound financial structure, as we've talked about, a skilled 
workforce, and capable management. One of the greatest 
challenges that I believe NASA faces is building and retaining 
a technical workforce that we have talked about. NASA is one of 
the most publicly recognized agencies within the Federal 
Government. Such high visibility can be a powerful tool for 
aspiring future scientists, engineers, and explorers. The 
success of NASA programs in science and exploration seen by 
students today is the inspiration needed to attract the young 
people of this Nation to the careers of tomorrow.
    Further investment in education is the direct link to 
future generations. I believe we agree that we must continue to 
encourage young people to explore these educational avenues and 
endeavor to carry on the important research and exploration 
capabilities for which NASA is so well known. It is a serious 
issue that must be addressed in order to ensure that future 
exploration in space can occur, and one that I do not believe 
should be sacrificed.
    Dr. Griffin, this budget before us reflects the process of 
implementing the Vision for Space Exploration, and I understand 
that the path was laid out in the exploration systems 
architecture study. I believe that the intent of the study is 
commendable in its aim to reach the goal of returning to the 
Moon in a fiscally prudent, and safe manner. However, it is my 
hope that such implementation can be accomplished while 
maintaining the capabilities that NASA has developed in other 
areas of its mission. I do not believe that we should sacrifice 
important capabilities that will be vital to future missions 
and efforts at NASA in trying to attain this goal. I believe 
that we can and should find a balance, and I believe you will.
    The path laid out for returning to the Moon is contingent 
on several factors. However, we are both keenly aware that any 
unexpected bump in the path could pose significant challenges 
to NASA's long-term plans. Today we can point to the sizable 
funding requirements of the space shuttle, as well as the 
ongoing construction of the International Space Station (ISS) 
as hefty fiscal burdens on NASA's ability to continue down the 
path laid out in the Vision for Space Exploration.
    The evident strain on funding in the science missions and 
aeronautics budgets for NASA are indicators that we are 
traveling down a tenuous path. Return to Flight and the 
implementation of the Exploration Vision are a significant 
financial strain on NASA, and, therefore, require other aspects 
of NASA to remain relatively flat or decline over the next 5 
years. It is all important.
    I also believe that we will have an ongoing dialogue over 
the course of the year about NASA's ability to achieve the 
President's vision for space exploration. I am very interested 
in discussing how NASA will preserve its ongoing programs and 
how it will modernize its institutions and facilities which are 
critical to NASA's success in the coming years. Again, I 
believe that we can, and we have to, strike an appropriate 
balance.
    The Vision laid out by the President in 2004 calls for a 
return to the Moon, and building upon that foundation to 
eventually set foot on another planet. I am excited by the 
opportunities that lay ahead with the Exploration Vision at 
NASA, but I must point out that there are fiscal realities that 
may affect the vision.
    Dr. Griffin, I believe that this subcommittee has made 
every effort to work with you, and we will continue to do that, 
to provide NASA with the appropriate level of funding in an 
effort to ensure that roles and missions are protected and 
preserved. Along with that funding comes a fair amount of 
direction, but the subcommittee has provided NASA with 
reprogramming flexibility to react to those bumps in the path 
that I discussed. However, in return, there is the expectation 
that NASA will be a wise steward of taxpayers' dollars. I am 
concerned that the financial systems for NASA have earned the 
worst rating possible from the administration with little 
progress toward correcting the problem over the past 3 years. I 
realize that you have not been there all that time. Even more 
troubling is a recent report of NASA having violated the anti-
deficiency laws. These reports come at a time when NASA is 
holding an unprecedented amount of unobligated funds while 
claiming to need every additional dollar in order to accomplish 
the missions they have set out before them. Such reports have a 
tendency to erode confidence in NASA's ability to responsibly 
manage the funds that have been appropriated. Dr. Griffin, I 
appreciate, as I said a minute ago, that you have only been in 
your position for about 1 year, and I trust that you are 
working diligently, and I want to work with you to correct 
these problems, and ensure that there will be no further issues 
in complying with anti-deficiency laws. In addition, I expect 
that we will continue to discuss the unobligated balances that 
NASA has accumulated over the years and how those best can be 
utilized toward moving forward.
    I look forward to hearing your insights on how NASA can do 
better, your views, and the challenges ahead.
    Senator Shelby. Senator Mikulski.

            RANKING MINORITY MEMBER MIKULSKI OPENING REMARKS

    Senator Mikulski. Thank you very much, Mr. Chairman, and 
again I, too, wish to welcome Dr. Griffin.
    It has been a very busy and in many ways successful year 
for NASA, and I believe it is today that we celebrate the 25th 
anniversary of the first shuttle flight, in which we thought 
the shuttle was going to do wonderful things, and it did, but 
now the shuttle is getting old and we need to be able to look 
ahead.
    There have also been an amazing set of accomplishments in 
science. Dr. Bennett, of my very own Johns Hopkins, saw the 
first light, and actually almost the beginning, of the Big Bang 
through a gamma ray burst. We are looking at how we can 
successfully launch the mission to Pluto by a team at APL; 
Cassini, the probe that gave us the best pictures on Saturn; 
and of course, the Hubble telescope and many other things.
    Despite what we have been able to do, and despite the 
successes of NASA, it has been a difficult year for NASA. The 
cost of running the space shuttle to flight has run into delays 
which are absolutely crucial to ensure our number one priority, 
the safety of the astronauts, but it has also increased by $2.4 
billion. Hurricane Katrina caused over $600 million of damage 
to two NASA centers, and hats off to how the employees saved so 
much of the facility, and know even slept on floors, but 
nevertheless, will be a tremendous cost to rebuild, and the 
years of flat budgets have put great stress on all of NASA's 
programs.
    In looking at areas ahead, we know that we are facing new 
external challenges; a challenge from China. We know China 
wants to go to the Moon. We know that they want to be the first 
to go back to the Moon. We cannot let China be the first back 
to the Moon. I know we have to go to the Moon and go in a way 
that we can stay there for a variety of reasons.
    At the same time, the President has challenged us and 
worked with us on a bipartisan basis to be competitive, to 
promote innovation and discovery, to focus on education and 
research, innovation-friendly government. But we are concerned 
as we have responded to the call raised in the excellent report 
``Gathering Storm,'' that NASA was left out of that. I felt so 
strongly about that in a bipartisan meeting at the White House, 
to talk with the President about how his bold vision of 
returning to Mars was exactly what could inspire people, 
promote the development of incredible technology and 
breakthroughs that would help inspire the next generation of 
scientists, engineers and technologists, but also the kinds of 
new technologies that end up in the marketplace and help us be 
an economic superpower.
    What we have seen though is a fairly flat budget, a modest 
increase, but we are deeply concerned about the consequences of 
what we see here. NASA's role in promoting science is not 
included in the budget in the way we had hoped. Science is cut 
over $2 billion; Mars; solar system research; aeronautics 
research which is cut by $100 million which is so crucial. We 
need a robust science program, we do need human exploration, we 
do need a crew return vehicle (CRV), but we know that we have 
enormous stresses in our own appropriations.
    I'm going to work with my colleague, Senator Shelby, to 
find a balanced space program, to get that shuttle flying again 
and fix that shuttle, so as to move on to our next generation 
of science, technology, and aeronautics. But I am concerned 
that we are doing too much with too little money, that we have 
an aging workforce, we have aging technology, and that, quite 
frankly, I believe we have to find a way to do more, and we 
cannot continue to do more with less.
    So we look forward to your ideas. We thank you for your 
leadership and we thank you for your candor. I particularly 
want to express my appreciation for the way you have handled 
the question of the ability to speak your scientific views and 
so on, truth through power, and so we look forward to hearing 
your testimony today.
    Senator Shelby. Dr. Griffin, your written testimony will be 
made part of the record without objection, and you may proceed 
as you wish. Welcome to the subcommittee, sir.

                 OPENING REMARKS OF MICHAEL D. GRIFFIN

    Dr. Griffin. Thank you, Senator Shelby and Senator 
Mikulski. I am pleased to be here to discuss our fiscal year 
2007 budget request and how we are carrying out our missions of 
space exploration, scientific discovery, and aeronautics 
research, within the resources provided. With a 3.2 percent 
increase over last year's appropriation, this budget does 
represent the President's commitment to our Nation's civil 
space program, and especially so in view of the many pressures 
in the wake of Hurricane Katrina and the war on terrorism.
    As we begin, I want to thank this subcommittee for its 
leadership over the past year in providing emergency 
supplemental funds for NASA's recovery and repair efforts after 
Hurricane Katrina. We are also very appreciative of the action 
taken by the Committees on Appropriations, and by the Congress 
as a whole, in providing $16.5 billion in fiscal year 2006 
appropriations to the agency, and essentially the level of the 
President's fiscal year 2006 request before the application of 
rescissions, as well as the strong endorsement of the Vision 
for Space Exploration, timely development of the crew 
exploration vehicle (CEV) and the crew launch vehicle (CLV), 
and support for NASA's other core programs. We need the help of 
this subcommittee now, and will continue to need it in the 
future. Senator Shelby, I want specifically to address the 
concerns you raised, because I think they are very fair.

   NATIONAL AERONAUTICS AND SPACE ADMINISTRATION FINANCIAL MANAGEMENT

    With regard to NASA's financial management, we delivered to 
the Congress this past February an integrated cross-NASA 
corrective action plan to address the findings and 
recommendations to which you referred that were made by Ernst & 
Young in the 2005 financial audit. Through this plan we are 
working toward resolution of those audit issues by the third 
quarter of this fiscal year, fiscal year 2006. NASA does not 
control the opinion delivered by its auditors, but we fully 
expect that resolution of the issues they raised by the third 
quarter of this year will allow the auditors to perform a 
complete audit of NASA's 2006 financial statements. We will 
know when their opinion is released on November 15 of this 
year. I could not take your concerns more seriously, nor be 
more personally concerned about them myself.

                     ANTI-DEFICIENCY ACT VIOLATIONS

    You mentioned the ADA violations, Anti-Deficiency Act 
violations. Two of these did occur as a result of the agency's 
failure to file apportionment requests in fiscal 2004. The 
first was of magnitude $1.6 billion that was obligated in 2005, 
and a smaller one, $30.4 million, obligated in 2004. The funds 
were not willfully or knowingly obligated or overly expended, 
but that does not excuse the fact that it was done. We did 
catch it ourselves, and we brought both instances to OMB's 
attention. Again, that does not excuse the behavior, but we 
sought to mitigate it to the maximum extent possible. We 
addressed both of those issues without the need for 
supplemental funds, and we have implemented corrective actions 
in our financial accounting chain of command to see to it that 
they do not happen again. I am certain that our auditors will 
explore those issues as well.

                          UNOBLIGATED BALANCES

    With regard to the point you made about unobligated 
balances, it is true that as we sit here today we have $625 
million presently unobligated. Ninety-six percent of funds have 
been obligated. Of the $625 million, $108 million is for 
construction, and $517 million is for nonconstruction 
activities. We have definite plans for all of these funds. All 
of them will be obligated, and all of the funds are required or 
programs that have been approved by this Congress. I say again, 
I am happy to work with your staff or with you as Members to 
convince you that these statements that I am making today are 
true. I have been here but a year, however, I fully accept and 
in fact require ownership of these problems that you have 
raised. They became my problems on April 14 of last year when 
the Senate confirmed me, I do own them and we are working 
toward a resolution.
    In many ways, Mr. Chairman, NASA is a victim of its own 
success. Our can-do attitude toward the Nation's greatest 
technical challenges has left many people believing that NASA 
can do anything and everything. I hate to say it, but I am here 
to testify before you that NASA cannot do everything that our 
many constituencies would like us to do within our proposed 
$16.8 billion budget. I am truly sorry that this is so, but it 
is a fact. Given this fact, I believe that the President's 
fiscal year 2007 budget request before this Congress strikes a 
careful, disciplined approach to meeting congressional 
priorities and Presidential priorities for the Nation's civil 
space program within the resources we have. NASA must go as we 
can afford to pay across our entire mission portfolio of human 
space flight, science, and aeronautics.
    To gain a sense of perspective, I think it is useful to 
recall that at the peak of the Apollo Program, NASA's budget 
represented 4.4 percent of Federal outlays. Today, NASA's top 
line is six-tenths of 1 percent of the Federal budget. During 
Apollo, NASA funding employed over 400,000 contractors, civil 
servants, technicians, scientists, and engineers across all of 
its programs, and more than that. Today, NASA employs about 
75,000 full-time equivalent employees throughout the aerospace 
industry. NASA cannot and should not in this fiscal environment 
try to do everything. We need to set priorities carefully, and 
we need to execute our programs to match the resources 
available with incredible schedules.

                          NATIONAL PRIORITIES

    The national priorities that we have that have been agreed 
upon by this Congress are, to fly the space shuttle as safely 
as possible while using it to complete the assembly of the 
International Space Station, using the minimum number of 
flights necessary to do that, and to fulfill our commitments to 
international partners. To conduct a space shuttle servicing 
mission if technically possible to the Hubble space telescope, 
pending outcome of the next Return to Flight mission. To retire 
the space shuttle in 2010, and to bring on-line a new crew 
exploration vehicle and crew launch vehicle not later than 
2014, and possibly sooner. To develop a space shuttle derived 
heavy lift launch vehicle to enable lunar missions not later 
than 2020, and later missions to Mars and other destinations. 
To develop a balanced program of space and Earth science, along 
with aeronautics research, that appropriately leverage the new 
direction of NASA's Human Space Flight Program. To pursue 
appropriate commercial and international partnerships, 
especially with the International Space Station.
    These priorities require a careful balance of time, money, 
and energy within the overall agency budget. Thus, our budget 
request shifts resources to the space shuttle and the 
International Space Station from both science and exploration, 
to ensure that our highest priorities have the resources 
necessary to accomplish them between now and 2010. NASA's 
science missions remain one of our Nation's greatest 
achievements, but we must defer some missions that we would 
prefer to do sooner but simply cannot afford at this time. We 
will continue to maintain a robust portfolio of missions and 
research within the $5.33 billion science budget requested for 
fiscal year 2007. NASA is listening to the priorities of the 
science community in this process, and we will keep this 
subcommittee informed if we believe that any adjustments in 
mission or research priorities within that planned total 
funding are necessary.

                          AERONAUTICS RESEARCH

    In aeronautics research, NASA is developing a national 
policy and plan in concert with the White House, Office of 
Science and Technology Policy, and other Federal agencies, 
including the Department of Defense (DOD) and the Federal 
Aviation Administration (FAA), a policy which dedicates us to 
the mastery and intellectual stewardship of the core 
competencies of aeronautics in all of its flight regimes. This 
plan will focus our research efforts on those areas appropriate 
to NASA's unique capabilities. We hope to provide this plan 
which will inform future budget resource decisions to the 
Congress by December as required in our authorization act.

                          BALANCING THE BUDGET

    Mr. Chairman and members of the subcommittee, NASA's fiscal 
year 2007 budget request represents a careful balance, 
conscientiously apportioned. We will need your help to maintain 
that balance. As this subcommittee proceeds to mark up our 
appropriation for fiscal year 2007, I most strongly urge you to 
avoid the temptation to rob Peter to pay Paul by taking funds 
from NASA's replacements for the space shuttle, the CEV and 
CLV, to pay for science missions beyond the $5.33 billion 
requested. Doing so will delay the CEV beyond 2014, and will 
exacerbate problems in safety, workforce, and, frankly, 
perceptions of a loss of U.S. leadership in space during this 
gap in human space flight.
    Likewise, it is important to fly out and retire the space 
shuttle in a safe and orderly manner. The next several years 
are critical as we effect this transition from the space 
shuttle to the crew exploration vehicle. Indeed, this is NASA's 
greatest management challenge, and we will need your help to 
meet it.
    The Space Shuttle Program is dealing with many technical 
issues today, not least of which is fixing the external tank 
foam shedding problems. I believe we have a grasp on those 
issues, and I invite Members and staff of this subcommittee to 
their next launch which will be space shuttle Discovery STS-
121. The launch window opens in July, and we are making 
preparations for it, but we will fly only when we are ready.
    I must also ask your help in considering limits to 
redirection of funds to pay for congressional interest items. 
Back in fiscal 1997, specific direction for NASA constituted 
only $74 million for six specific projects. In fiscal year 
2006, NASA was earmarked at a total of $568.5 million for 198 
projects and programmatic increases. We and I fully acknowledge 
the prerogative of the Congress to direct and appropriate 
funds, but we desperately need your help and that of your staff 
to minimize impact on our proposed programs and activities. We 
simply cannot afford everything that everyone would like us to 
do.

                      EMERGENCY SUPPLEMENTAL FUNDS

    We are also asking for this subcommittee's help in 
providing some flexibility to use as much as $60 million in 
emergency supplemental funds to reimburse our space shuttle and 
space station programs for the funds used last fall to pay for 
immediate Hurricane Katrina damage recovery. We are still 
refining estimates of the total cost for the repair, 
refurbishment, and hardening of our facilities at Michoud 
assembly facility and the Stennis Space Center, but our most 
recent estimate is a little bit less than $500 million. As you 
consider the pending emergency supplemental appropriations 
bill, I ask that you favorably consider this legislative 
provision enabling flexibility for NASA. As we continue to 
refine our total estimates for Katrina recovery, we will keep 
the subcommittee fully informed as to how we would use this 
flexibility. I look forward to working with you to address this 
matter, and I think at this point it is good to thank the 
subcommittee for the help you have provided within the last two 
hurricane seasons which have been especially tough on NASA's 
facilities in Florida, Louisiana, and Mississippi. I regret to 
say that I will probably be counting on your help in the 
future.

                           HUMAN SPACE FLIGHT

    Space flight remains a dangerous endeavor. Following the 
loss of space shuttle Columbia, the Nation's leadership in both 
the White House and the Congress recognized that the broader 
goals of human space flight must be worth the cost and risk 
involved. The Vision for Space Exploration articulates just 
such goals, goals which are worthy of pursuit by a great 
nation. Our purpose is not to impress others, or merely even to 
explore the Moon and Mars, but, rather, to advance U.S. 
scientific, security, and economic interests through leadership 
in the grandest expression of human imagination of which we can 
conceive. Put simply, human space flight is today one of those 
strategic capabilities that define a nation as a superpower. 
Other nations and societies aspire to this capability and have 
achieved it, or will. The United States once surpassing command 
of this arena has vanished, but international cooperation 
leavened with a healthy dose of competition is what makes the 
United States the greatest country in the world. The pursuit of 
this vision requires technical excellence, hard work, 
sacrifice, and the necessary resources, but we also need 
leadership and we need the help of this Congress.

                           PREPARED STATEMENT

    Mr. Chairman and ranking member Mikulski, we have a long 
journey ahead of us. We need your help. I look forward to 
working with you and the members of the committee. Thank you.
    Senator Shelby. Thank you, Dr. Griffin.
    [The statement follows:]

                Prepared Statement of Michael D. Griffin

    Mr. Chairman and Members of the Subcommittee, thank you for this 
opportunity to appear today to discuss NASA's plans as represented in 
the President's fiscal year 2007 budget request for NASA. I will 
outline the highlights of our budget request and discuss the strategic 
direction for NASA in implementing the priorities of the President and 
Congress within the resources provided. The President's fiscal year 
2007 budget request for NASA of $16,792 million demonstrates his 
commitment to the Vision for Space Exploration and our Nation's 
commitment to our partners on the International Space Station. The 
fiscal year 2007 budget request is a 3.2 percent increase above NASA's 
fiscal year 2006 appropriation, not including the $349.8 million 
emergency supplemental for NASA's recovery and restoration efforts 
following Hurricane Katrina. However, let me put NASA's budget into 
perspective. NASA's budget is roughly 0.7 percent of the overall 
Federal budget. This is a prudent investment to extend the frontiers of 
space exploration, scientific discovery, and aeronautics research. With 
it, we enhance American leadership, our safety and security, and our 
global economic competitiveness through the technological innovations 
stemming from our space and aeronautics research programs. Our Nation 
can afford this investment in NASA.
    On January 14, 2004, President George W. Bush announced the Vision 
for Space Exploration to advance U.S. scientific, security, and 
economic interests through a robust space exploration program. NASA is 
very appreciative of the action by the Committees on Appropriations and 
Congress in providing regular fiscal year 2006 appropriations for the 
Agency totaling $16,456.8 million--essentially the level of the 
President's fiscal year 2006 request before application of 
rescissions--including a strong endorsement for the Vision for Space 
Exploration, timely development of the Crew Exploration Vehicle (CEV) 
and Crew Launch Vehicle (CLV) and support for NASA's other core 
programs. NASA is also grateful to the Congress for endorsing this 
Vision last December in the NASA Authorization Act of 2005 (Public Law 
109-155) and providing guidance and expectations for us in carrying out 
the Agency's missions of space exploration, scientific discovery, and 
aeronautics research. To that end, NASA is implementing the priorities 
of the President and Congress within the resources available. NASA 
carries out its missions with a ``go as you can afford to pay'' 
approach where we assume NASA's top line budget will grow at the 
moderate rate laid out in the President's 2007 budget request. NASA's 
Strategic Plan and fiscal year 2007 Congressional Budget Justification, 
provided to the Congress in February, reflect those priorities and 
describe how NASA is implementing those policies into practice by 
describing our programs, projected resources, and workforce needs.
    As part of his fiscal year 2007 budget request to Congress, the 
President proposed the American Competitiveness Initiative, or ACI, to 
encourage American innovation and strengthen our Nation's ability to 
compete in the global economy. Many have asked why NASA is not a part 
of the ACI. My response is that it is the mission of NASA to pioneer 
the future of space exploration, scientific discovery, and aeronautics 
research, while the ACI is focused on bolstering the Nation's economic 
competitiveness in areas such as information technology and 
nanotechnology. NASA contributes to the Nation's competitiveness 
through all of the cutting-edge exploration, science, and aeronautics 
investments accomplished by our Mission Directorates. As part of the 
President's Vision for Space Exploration, NASA expects to spawn entire 
new industries in this Nation. Furthermore, NASA's education and 
training initiatives are designed to enhance math and science 
education, as well as to provide research opportunities at the 
university level. We are currently reviewing our portfolio of education 
programs to assess opportunities for potential collaboration at the 
invitation of the Department of Education, National Science Foundation, 
and other Federal agencies. NASA can offer opportunities and 
inspiration to students as no one else can. For example, a University 
of Colorado-Boulder student-built experiment on the New Horizons 
mission is currently being activated and will be operated by university 
students all the way to Pluto and beyond.

                        IMPLEMENTING THE VISION

    Later this year, NASA will continue the assembly of the 
International Space Station (ISS) with the minimum number of Space 
Shuttle flights necessary to fulfill our commitments to our 
international partners before the Space Shuttle's retirement in 2010. 
The commitment of resources in the President's budget has shown our 
international partners that NASA and the United States are good 
partners through thick and thin and this commitment will encourage them 
to team with us in future endeavors of space exploration and scientific 
discovery. NASA has consulted with our international partners on the 
configuration of the ISS, and is working closely with them to determine 
the crew size and logistics necessary during this assembly period as 
well as the period following the retirement of the Space Shuttle. The 
heads of space agencies from Canada, Europe, Japan, Russia and the 
United States met at Kennedy Space Center on March 2, 2006, to review 
ISS cooperation and endorse a revision to the ISS configuration and 
assembly sequence. The partners reaffirmed their agencies' commitment 
to meet their mutual obligations, to implement six person crew 
operations in 2009, and to conduct an adequate number of Space Shuttle 
flights to complete the assembly of ISS by the end of the decade. The 
partners also affirmed their plans to use a combination of 
transportation systems provided by Europe, Japan, Russia, and the 
United States in order to complete ISS assembly in a timeframe that 
meets the needs of the partners and to ensure full utilization of the 
unique capabilities of the ISS throughout its lifetime. The fiscal year 
2007 budget request provides the necessary resources to purchase Soyuz 
crew transport and rescue for U.S. astronauts as well as needed 
Progress vehicle logistics support for the ISS from the Russian Federal 
Space Agency. Likewise, the fiscal year 2007 budget request provides 
necessary funds for U.S. commercial industry to demonstrate the 
capability to deliver cargo and/or crew to the ISS. If such cost-
effective commercial services are successfully demonstrated, NASA will 
welcome and use them.
    The next return to flight test mission, STS-121 commanded by 
Colonel Steve Lindsey, will confirm that we can safely return the Space 
Shuttle to its primary task of assembling the ISS. We have continued to 
reduce the risk associated with the release of foam debris from the 
external tank by eliminating the liquid hydrogen and the liquid oxygen 
protuberance air load ramps. We are now working toward a July launch, 
which is the next available lighted launch window as mandated for STS-
121. The window is open from July 1 through July 19. NASA will launch 
when ready. Pending the results of this test flight, I plan to convene 
my senior management team for space operations as well as my Chief, 
Safety and Mission Assurance and my Chief Engineer in order to 
determine whether the Space Shuttle can safely conduct a fifth 
servicing mission to the Hubble Space Telescope in 2007-08. NASA's 
fiscal year 2007 budget provides the necessary resources to conduct 
this mission.
    In previous budget requests, NASA reported only placeholder budget 
estimates for the Space Shuttle for fiscal year 2008-2010. The Agency's 
management focus on return to flight efforts of the Space Shuttle 
resulted in NASA deferring this analysis until the fiscal year 2007 
budget. As I testified before Congress last year, NASA's estimates of 
the budget shortfall required to safely fly out the Space Shuttle with 
the minimum number of flights necessary to complete ISS assembly and 
meet our international partner commitments were $3-$5 billion. With the 
fiscal year 2007 budget runout, NASA has added $2.4 billion to the 
Space Shuttle program and almost $1.5 billion to the International 
Space Station in fiscal year 2008-2010 compared to the fiscal year 2006 
budget runout. There is no ``new money'' for NASA's top line budget 
within the budget projections available given our Nation's other 
pressing issues, so, working with the White House, NASA provided 
sufficient funds for the Space Shuttle and ISS programs to carry out 
their missions by redirecting funds from the Science and Exploration 
budgets.
    There are several strategic implications behind this decision. 
Foremost among them is that our Nation will keep its commitment to our 
international partners on the ISS. Thus, with limited resources, we 
made some difficult decisions. Leadership means setting priorities of 
time, energy, and resources, and I have tried to make these decisions 
with the best available facts and analysis. The plain fact is that NASA 
simply cannot afford to do everything that our many constituencies 
would like the Agency to do. We must set priorities, and we must adjust 
our spending to match those priorities. NASA needed to reallocate 
budgeted funds from the Science and Exploration budget projections for 
fiscal year 2007-2011 in order to ensure that enough funds were 
available to properly support the Space Shuttle and the ISS. Thus, NASA 
cannot afford the costs of starting some new science missions at this 
time. It is important to know that NASA is simply delaying missions, 
not abandoning them. With the limited resources available, I believe 
that fulfilling our commitments on the International Space Station and 
bringing the Crew Exploration Vehicle (CEV) online in a timely manner, 
not later than 2014 and possibly much sooner, is a higher priority than 
these science missions during this period.
    There are several reasons not to delay the CEV farther. First and 
foremost is increased risk to the Vision due to an extended gap in our 
Nation's ability to launch humans into space after we retire the Space 
Shuttle in 2010. I experienced first-hand the stagnancy in the 
aerospace industry that existed during the gap in human spaceflight 
between the end of the Apollo program and the first flight of the Space 
Shuttle in 1981, and I know that our Nation's space program suffered 
greatly from the unintended loss of critical expertise. Our Nation's 
space industrial base withered. A longer gap in U.S. human spaceflight 
capabilities will increase risk and overall costs and lead to even more 
delays in pursuing the Nation's vision. Equally important, the United 
States may risk a perceived, if not a real loss of leadership in space 
exploration, if we are unable for an extended period to launch our 
astronauts into space when other nations are establishing or building 
on their own abilities to do so. An extended gap in U.S. human 
spaceflight capabilities also increases our risk posture to adequately 
maintain and utilize the ISS and, unless a commercial capability arises 
to transport our astronauts, NASA would continue to be reliant on the 
Russian Soyuz.
    Thus, further delays in the CEV are strategically more damaging to 
our Nation's space program than delays to these other science missions. 
I stand by my decision regarding how to implement the priorities of the 
President and Congress within the resources provided, and I will work 
closely with our stakeholders in Congress and the scientific community 
to make sure they understand my rationale. Some of our stakeholders 
will not agree with my position, but it is important for everyone to 
understand the rationale. These are difficult decisions, but we must 
balance the competing priorities for our Nation's civil space and 
aeronautics research endeavors with the limited resources available.
    If the funds budgeted for Exploration Systems were to be used to 
provide additional funds for Science missions, additional Aeronautics 
Research, or other Congressionally-directed items, I must advise the 
Congress that such redirection of already-budgeted funds will directly 
impact NASA's ability to effectively and efficiently transition the 
workforce and capabilities from the Space Shuttle to the new CEV 
systems. Funds available to carry out this transition are already lean, 
with little management reserve or margin for error. This transition 
from the Space Shuttle to the CEV is NASA's greatest management 
challenge over the next several years, and we will need everyone's help 
within NASA, industry, and our stakeholders to make the transition 
successful.
    Beyond fulfilling our existing commitment, NASA's fiscal year 2007 
budget provides the necessary resources to carry out the next steps of 
the Vision for Space Exploration. The fiscal year 2007 budget provides 
$3,978 million for Exploration Systems. Last summer, NASA defined the 
architecture for the exploration systems that will be necessary in 
carrying forth that Vision, and we notified the Congress of NASA's need 
to curtail several research and technology activities not directly 
contributing to the near-term priorities of timely development of the 
CEV and Crew Launch Vehicle (CLV) based on the results of that 
exploration architecture study and the limited funds available. I want 
to thank the Congress for its endorsement of the general architecture 
plans in the fiscal year 2006 Appropriations Act for NASA (Public Law 
109-108) as well as the NASA Authorization Act of 2005 (Public Law 109-
155).
    The fiscal year 2007 budget request is sufficient to bring the CEV 
online no later than 2014, and potentially much sooner. Given the 
analysis I have today and the need to balance budgets with proposed 
development work for the CEV and launch vehicles along with the cost 
estimates for that work, I cannot be more specific for our stakeholders 
in the White House and Congress at this time about the specific point 
between 2010 and 2014 when NASA will be able to bring the CEV online. 
NASA requested industry proposals for the CEV, and we have considerable 
incentives for an industry bidder to propose a planned development for 
the CEV as close to 2010 as possible. NASA has begun to evaluate those 
industry proposals, with a planned contract award in late summer/early 
fall 2006. NASA plans to select one industry contractor team for the 
design and development of the CEV. Concurrently, NASA will refine its 
independent cost estimates for the CEV and launch systems as well as 
find cost savings through workforce synergies and contract efficiencies 
between the Space Shuttle and CEV launch systems within the budget 
profile projected in fiscal year 2007. We believe we can find synergies 
and contract efficiencies by sharing or transferring subsystems, 
personnel, resources, and infrastructure between the Space Shuttle 
propulsion elements and the CEV, CLV, and Heavy-Lift Launch Vehicle. I 
believe that with the fiscal year 2007 budget, NASA and industry have a 
real opportunity to make the CEV operational sooner than 2014. I should 
be able to report a more definitive date for bringing the CEV online by 
the time we award the CEV contract. Until then, NASA is in the midst of 
source selection for the CEV procurement, and we are limited in our 
ability to provide information in this competitive environment 
involving a multi-billion dollar procurement.
    For the CLV, NASA has directed two industry teams to begin initial 
development of the vehicle's propulsion systems, and to develop designs 
for the CLV upper stage. The Agency also plans to award design, 
development, test, and evaluation contracts later this year. NASA is 
planning a systems requirements review for this project in the fall 
with a preliminary design review in 2008 in order for this new launch 
vehicle to be ready for when the CEV comes on-line.
    While NASA needed to significantly curtail projected funding for 
biological and physical sciences research on the ISS as well as various 
research and technology projects in order to fund development for the 
CEV, the U.S. segment of the ISS was designated a National Laboratory 
in the NASA Authorization Act. Thus, NASA is seeking partnerships with 
other government agencies like the National Science Foundation, 
Department of Defense, National Institutes of Health (NIH), Department 
of Energy, and the National Institute of Standards and Technology as 
well as the commercial sector to conduct research onboard the ISS. 
However, the research utilization of the ISS is impacted due to limited 
cargo and crew transportation. For this reason, NASA's need for 
investment to spur a commercial cargo and/or crew transportation 
service is even more compelling.

                          SCIENTIFIC DISCOVERY

    In 2005, NASA's science missions enjoyed a year of significant 
achievements. Deep Impact traveled 268 million miles to meet comet 
Tempel 1, sending its impactor to collide with the comet and providing 
researchers with the best-ever comet data and images. The Mars twin 
rovers continue studying the harsh Martian environment, well beyond 
their expected mission life. Cassini may have found evidence of liquid 
water erupting from below the surface of Saturn's moon Enceladus. The 
Mars Reconnaissance Orbiter successfully launched and went into orbit 
around Mars, to help us better understand the history of water on Mars. 
The Voyager 1 spacecraft entered the vast, turbulent expanse of the 
heliosheath, 8.7 billion miles from the Sun, where no human-made object 
has traveled before. The Hubble Space Telescope continues its 
successful mission of discovery and exploration. Among its many 
achievements was the discovery that Pluto may have three moons, 
offering more insights into the nature and evolution of the Pluto 
system and Kuiper Belt. Through coordination of observations from 
several ground-based telescopes and NASA's Swift and other satellites, 
scientists solved the 35-year old mystery of the origin of powerful, 
split-second flashes of light called gamma-ray bursts. The Tropical 
Rainfall Measuring Mission (TRMM) provided data to aid our 
understanding of the changes inside a hurricane, helping scientists re-
create storms on computer forecast models, which can assist in the 
forecasting of future tropical cyclone transformations. On January 19, 
2006, we successfully launched the New Horizons Mission, beginning its 
nine year journey to Pluto for scientific discovery. In the near 
future, we will launch CALIPSO (Cloud-Aerosol Lidar and Infrared 
Pathfinder Satellite Observations) and Cloudsat from Vandenberg Air 
Force Base. Together, they will provide new perspectives on Earth's 
clouds and aerosols, answering questions about how they form, evolve, 
and affect water supply, climate, weather, and air quality. Truly, this 
has been a successful year of science achievements--a trend I expect to 
continue.
    NASA's fiscal year 2007 budget request provides $5,330 million for 
the Agency's Science portfolio to explore the universe, solar system, 
and Earth. My decision to curtail the rate of growth for NASA's Science 
missions is not intended in any way to demonstrate any lack of respect 
for the work done by NASA Science. On the contrary, NASA's science 
missions remain one of the nation's crowning achievements, and NASA is 
a world leader with 54 satellites and payloads currently operating in 
concert with the science community and our international partners. My 
decision to slow the rate of growth for NASA's Science missions is 
simply a matter of how the Agency will use the available resources 
within the overall NASA portfolio. In fact, the Agency's Science budget 
has grown much faster than NASA's total budget since fiscal year 1993. 
In 1992, the Science budget represented only 24 percent of the overall 
NASA budget while it represents 32 percent of the Agency's budget in 
fiscal year 2007. NASA's Science budget is moderated to 1.5 percent 
growth in the fiscal year 2007 budget request compared with the amount 
appropriated for NASA in fiscal year 2006 (in accordance with NASA's 
Initial Operating Plan provided to the Committee) and then 1 percent 
per year thereafter through fiscal year 2011.
    In the fiscal year 2007 budget, there are some additional budget 
shifts within the Science portfolio to rebalance the program to better 
reflect our original science priorities and consistent with the fiscal 
year 2006 Budget Amendment. Within the Science budget, the Solar System 
Exploration budget provides $1,610 million to fund missions to all 
solar system bodies and to maintain the Deep Space Network. Mars 
exploration is kept at roughly its current level of funding which 
allows missions every 26 months when the Earth and Mars are in 
planetary alignment. Mars will be the most thoroughly studied planet 
besides our own Earth. NASA continues a series of openly competed 
missions for Discovery, New Frontiers, and Scout missions to various 
planetary bodies in the solar system. Juno, a competitively-selected 
mission to study Jupiter, is slated to be the next New Frontiers 
mission, following the New Horizons mission on its way to Pluto after 
its successful launch in January.
    After extensive reviews, NASA has extended the mission operating 
life of several Earth Science missions including TRMM and Terra, 
Heliophysics missions such as both Voyager spacecraft, and Astrophysics 
missions including Chandra and the Wilkinson Microwave Anisotropy 
Probe.

                          AERONAUTICS RESEARCH

    NASA's fiscal year 2007 request for the Aeronautics Research 
Mission Directorate is $724 million. Proper stewardship of this funding 
requires a coherent strategic vision for aeronautics research, which we 
are working to develop. While I am concerned that our Nation's aviation 
industry not lose market share to global competitors, NASA's research 
must benefit the American public by supporting a broad base of 
aeronautics research. NASA's aeronautics research cannot and will not 
directly subsidize work to specific corporate interests. There are 
fundamental questions in aeronautics research needing to be answered, 
and NASA will focus its aeronautics research on those issues. NASA will 
take responsibility for the intellectual stewardship of the core 
competencies of aeronautics for the Nation in all flight regimes, from 
subsonic through hypersonic flight. We will also conduct the 
fundamental research that is needed to meet the substantial challenges 
of the Next Generation Air Transportation System (NGATS), and we intend 
to work closely with our agency partners in the Joint Planning and 
Development Office (JPDO).
    Across our aeronautics portfolio, NASA is taking a long-term, 
strategic approach to our research plans to ensure that we pursue the 
cutting-edge across the breadth of aeronautics disciplines that will be 
required to support revolutionary capabilities in both air vehicles and 
the airspace in which they fly. NASA's commitment to technical 
excellence requires a commitment to rigor and discipline and will not 
focus on demonstrations that lack the traceability and scalability 
required for true scientific and engineering advancement. Hence, we are 
turning away from the four-demo approach proposed last year under the 
Vehicle Systems Program. Instead, our Fundamental Aeronautics Program 
will focus on fundamental research that addresses aeronautics 
challenges in areas such as aerothermodynamics, acoustics, propulsion, 
materials and structures, computational fluid dynamics, and 
experimental measurement techniques. The Fundamental Aeronautics 
Program will generate data, knowledge, and design tools that will be 
applicable across a broad range of air vehicles in subsonic (both fixed 
and rotary wing), supersonic, and hypersonic flight.
    In the Aviation Safety Program, NASA is developing strategic 
research plans, ensuring that the research conducted will lead to 
capabilities and technologies for improving safety consistent with the 
revolutionary changes anticipated in air vehicles foreseen in the 
future. The focus will be vehicle-centric, with areas of research that 
include vehicle health management, resilient aircraft control, aging 
and durability challenges, and advanced flight deck technologies.
    In the Airspace Systems Program, NASA will conduct the fundamental 
research required to bring about the revolutionary capabilities 
articulated in the JPDO's vision for the NGATS. Our research will focus 
on the development of future concepts, capabilities, and technologies 
that will enable major measurable increases in air traffic management 
effectiveness, flexibility, and efficiency.
    In addition to the Aeronautics Research Mission Directorate's three 
research programs, NASA is committed to preserving as national assets 
those aeronautics test facilities which are deemed mission critical and 
necessary to meet the needs and requirements of the Agency and the 
Nation. NASA has established the Aeronautics Test Program (ATP), a 
component of the Shared Capability Assets Program (SCAP), as a long-
term, funded commitment by NASA to retain and invest in test 
capabilities that are considered important to the Agency and the 
Nation. ATP's purpose is to ensure the strategic availability of the 
requisite, critical suite of wind tunnel and ground test facilities 
which are necessary to meet immediate and future National requirements.
    As part of our overall portfolio, NASA program managers and 
researchers will work closely and constructively with industry, 
academia, and other Government entities to enhance our Nation's 
aeronautics capability. In this vein, as a principal member of the 
interagency JPDO, NASA has established investment priorities that 
directly address the research and development needs of the NGATS which 
will enable major increases in the capacity and mobility of the U.S. 
Air Transportation System. NASA also plans to collaborate closely with 
industry and academia through the use of competitive research awards 
and Space Act agreements on prospective research work in line with the 
critical thrust areas of the Aeronautics program that will enable 
numerous commercial aviation and scientific applications. Our goal is 
to focus our total research investments on fundamental aeronautics 
questions that need to be answered, and that will benefit the broader 
community of academia, industry, and Government researchers. We will 
transition the achievements from NASA's Aeronautics research and 
technology for use by both Government and industry. Additionally, and 
in line with the refocused program's priorities, NASA will leave to 
others work more appropriately performed or funded by other Agencies or 
the private sectors.
    In accordance with the fiscal year 2006 Science, State, Justice, 
Commerce, and Related Agencies Appropriations Act (Public Law 109-108), 
NASA and the Office of Science and Technology Policy have been jointly 
developing a National Aeronautics Research and Development Policy which 
will establish a long term policy and guidance for future aeronautics 
research and development activities. This policy will establish the 
appropriate role for Federal investment in U.S. aeronautics research: 
near- and far-term, high-priority objectives; roles and 
responsibilities of the multiple agencies involved; and, guidance on 
related infrastructure and workforce challenges.

                     CROSS-AGENCY SUPPORT PROGRAMS

    In the fiscal year 2007 budget, NASA proposes a new direct budget 
category for programs that cut across NASA's portfolio of space 
exploration, scientific discovery, and aeronautics research. These 
Cross-Agency Support Programs include: NASA's Education programs funded 
at $153.3 million; Advanced Business Systems, or more commonly known as 
the Integrated Enterprise Management program, is called out as a 
separate program rather than being budgeted from within Corporate and 
Center General and Administrative accounts and is funded at $108.2 
million; NASA's Innovative Partnership Program, including Small 
Business Innovation Research (SBIR) and Small Business Technology 
Transfer (STTR), has been transferred from Exploration Systems so that 
these partnerships may better address Agency-wide needs and is funded 
at $197.9 million. Also, the Shared Capabilities Assets Program is 
funded at $32.2 million (with additional funding located in the Mission 
Directorates) and will ensure that NASA's unique facilities (e.g., wind 
tunnels, rocket engine test stands, high-end computing, thermal vacuum 
chambers, and other capital assets) are adequately managed with agency-
level decision-making to address NASA's and the Nation's needs.
    NASA's Education budget request sustains our commitment to 
excellence in science, technology, engineering and mathematics (STEM) 
education to ensure that the next generation of Americans can accept 
the full measure of their roles and responsibilities in shaping the 
future and meeting the workforce needs to implement the Vision for 
Space Exploration. NASA will continue to provide innovative programs 
that use STEM resources (NASA content, people and facilities) to 
inspire the next generation of explorers and innovators. I have 
outlined three primary goals for our education investments: (1) 
strengthening NASA and the nation's future workforce; (2) attracting 
and retaining students in the STEM pipeline; and, (3) engaging 
Americans in NASA's mission through partnerships and alliances. The 
greatest contribution that NASA makes in educating the next generation 
of Americans is providing worthy endeavors for which students will be 
inspired to study difficult subjects like math, science, and 
engineering because they too share the dream of exploring the cosmos. 
These students are our future workforce. Our education investment 
portfolio is directly linked to our overall workforce strategy.

                        NASA WORKFORCE STRATEGY

    The Vision for Space Exploration is a unique endeavor that will 
last many generations. The NASA management team has been working to 
build NASA as an institution having ten healthy field Centers known for 
technical excellence. We continue to define program management and 
research roles and responsibilities for each Center in order to carry 
out NASA's missions of space exploration, scientific discovery, and 
aeronautics research. All of our centers must contribute to NASA's 
primary missions. We are beginning the process of assigning specific 
research programs and projects to appropriate NASA Centers. We are not 
done, but we are taking the necessary steps to make it happen.
    We have many challenges in the Agency, but none more important than 
the technical excellence of NASA's workforce. Likewise, we are 
beginning to address the problems posed by the aging of NASA's 
facilities and physical assets. The overall objective is to transform 
the composition of NASA's workforce so that it remains viable for the 
long-term goals of NASA's missions. We have a lot of work cut out for 
us in the coming months and year ahead in assigning these program 
responsibilities and re-building the Agency's technical competence in 
performing cutting-edge work. NASA has been addressing the challenge of 
mitigating the number of civil service employees in the Agency that are 
not currently assigned or supporting NASA programs (the so-called 
``uncovered capacity'') through a number of means, which were addressed 
in a draft report, shared with the Subcommittee in February in 
compliance with the NASA Authorization Act of 2005. The final workforce 
report, reflecting input from our unions, was provided to the 
Subcommittee earlier this month. NASA will conduct a reduction in force 
of our civil servants only as an action of last resort consistent with 
our statutory constraints. Instead, NASA is focusing its efforts to 
solve its uncovered capacity workforce problems through a number of 
other actions, including the assignment of new projects to research 
Centers that will strengthen their base of in-house work, the Shared 
Capability Assets Program that should stabilize the skills base 
necessary for a certain specialized workforce; the movement of certain 
research and technology development projects from certain centers not 
suffering from uncovered capacity problems to centers that are; 
retraining efforts at field centers so that the technical workforce can 
develop new skills; and the pursuit of reimbursable work for projects 
and research to support other government agencies and the private 
sector through Space Act Agreements.

                      NASA'S FINANCIAL MANAGEMENT

    Earlier this month, NASA notified the Committee that it had two 
violations of the Antideficiency Act. The violations resulted from the 
Agency's failure to request from the Office of Management and Budget 
timely reapportionment of Congressionally-approved fiscal year 2004 
funds and timely apportionments of unobligated balances carried over 
from fiscal year 2004 to fiscal year 2005. The Agency has corrected the 
errors without the need for additional appropriations. The Agency has 
also identified the root cause of these errors and has addressed them 
through its aggressive staff training and process improvements.
    NASA has continued to make progress in addressing its other 
financial management and reporting challenges. The Office of Management 
and Budget has recently provided feedback to NASA affirming the 
Agency's progress. The Agency finalized a Corrective Action Plan 
addressing financial weaknesses identified in NASA's 2005 financial 
audit. The plan was delivered to the Congress, specifically at the 
request of the Subcommittee on Space and Aeronautics of the Committee 
on Science and the Subcommittee on Government Management, Finance and 
Accountability of the Committee on Government Reform, on February 15, 
2006. It incorporates the expert advice of NASA's Inspector General. In 
addition, we have reviewed the plan with the Office of Management and 
Budget. This Corrective Action Plan provides an integrated, cross-NASA 
approach to resolving the Agency's outstanding deficiencies. 
Implementation of these corrective actions is reviewed regularly by the 
NASA Deputy Administrator. While these corrective actions will require 
some time to implement, NASA remains committed to improving its 
financial management and reporting.

                  IMPACT OF EARMARKS ON NASA'S MISSION

    NASA pioneers the future in space exploration, scientific discovery 
and aeronautics research. In order to carry out this mission, NASA 
awards peer-reviewed science grants and conducts competitively-selected 
procurements to select research and development projects to benefit the 
public based on the priorities of the Congress, President, and 
scientific community. NASA is implementing these priorities within the 
resources provided. NASA's fiscal year 2006 appropriation totals 
$16.623 billion, including $349.8 million in emergency supplemental 
appropriations for Hurricane Katrina recovery at NASA facilities in 
Louisiana and Mississippi. Within this fiscal year 2006 appropriation 
is a total of $568.5 million in directed funding for 198 discrete site-
specific and programmatic Congressional interest items, a record high 
in both dollar amount and number of individual items. These 
Congressional interest items are offset by reductions within NASA's 
budget, to ongoing and planned NASA programs. Earmarks have increased 
by a factor of more than 30 in number and almost 8 in dollar value 
since fiscal year 1997, when NASA was earmarked $74 million, for 6 
discrete items. The growth of these Congressional directions is eroding 
NASA's ability to carry out its mission of space exploration and peer-
reviewed scientific discovery.
    In formulating our budget, NASA prioritizes activities to achieve 
an integrated package of programs and projects to best achieve the 
priorities that have been provided us by both the President and the 
Congress. The redirection of funding erodes the integrity of our plans, 
has resulted in delays and/or cancellation of planned activities, and 
may conflict with timely development of the CEV. In fiscal year 2006, 
as a result of earmarks, NASA had to redirect a significant portion of 
many planned budgets. Fully 50 percent of the planned Education program 
required redirection, 16 percent of the Innovative Partnerships 
Program, 5 percent of the Exploration Systems budget, and 4 percent of 
the Science budget. Further, the scientific community bases its 
research priorities on a peer-review process. Congressional site-
specific earmarks circumvent this process for setting research 
priorities within the science community and erode the integrity of that 
process. Site specific earmarks to institutions outside of NASA 
exacerbate the problems of NASA's ``uncovered capacity'' workforce, 
where NASA civil servant scientists and engineers do not have funds for 
their own research and development projects. As stated in the 
President's ACI, ``The rapidly growing level of legislatively directed 
research funds undermines America's research productivity.'' NASA seeks 
the assistance of this Committee and Congress in reducing earmarks in 
the fiscal year 2007 budget process.

                           NASA'S NEXT STEPS

    For the last three decades, NASA and the Nation's human spaceflight 
program have been focused on the development and operation of the Space 
Shuttle and the ISS. In its final report, the Columbia Accident 
Investigation Board (CAIB) was very forthright in its judgment that 
these goals are too limited to justify the expense, difficulty, and 
danger inherent to manned spaceflight, given the limitations of today's 
technology. The CAIB was equally forthright in calling for a national 
consensus in the establishment of a program having broader strategic 
goals. The Vision for Space Exploration is that endeavor. The Congress 
has endorsed it, and NASA is working to implement it. But to effect 
these changes, NASA must engage in a major transformation--taking the 
capabilities we have throughout the Agency and restructuring them to 
achieve a set of goals for the 21st Century that we have outlined 
earlier this month in our 2006 NASA Strategic Plan. This is an enormous 
challenge, but we have begun to transform our entire organization to 
foster these changes and to enhance a positive, mission-driven culture.
    The CAIB was also clear in its assessment that the lack of open 
communication on technical and programmatic matters was a direct cause 
of the loss of Columbia. We have understood and embraced this 
assessment, and are absolutely and completely committed to creating an 
environment of openness and free-flowing communication. However, NASA 
still has to make a number of improvements in its internal 
communications as well as how we communicate externally to our 
stakeholders, the scientific community, and the public. NASA is making 
a concerted effort to address all problems in this area.
    For America to continue to be preeminent among nations, it is 
necessary for us also to lead in space exploration, scientific 
discovery, and aeronautics research. It is equally true that great 
nations need allies and partners. The spirit of innovation and the 
muscle of government and industry are needed to turn the Nation's 
Vision for Space Exploration into reality. These journeys to the ISS, 
the Moon, Mars, or even Pluto are the most difficult things our nation 
does. June Scobee Rodgers, the widow of Dick Scobee, Commander of the 
Space Shuttle Challenger on that ill-fated day twenty years ago, 
recently noted, ``Without risk there's no discovery, there's no new 
knowledge, there's no bold adventure . . . the greatest risk is to take 
no risk.'' We must continue our journey. America, through NASA, leads 
the way.

                INTERNAL WEAKNESSES IN INTERNAL CONTROLS

    Senator Shelby. Can you be a little more specific on 
addressing the material weaknesses in internal controls that 
have been reported for several years?
    Dr. Griffin. I can be.
    Senator Shelby. Could you do that for the record?
    Dr. Griffin. I will do that for the record.
    [The information follows:]

                Internal Weaknesses in Internal Controls

    NASA's independent financial auditors identified three 
material weaknesses and one reportable condition through its 
fiscal year 2005 financial audit. The weaknesses are repeat 
findings from prior financial audits. NASA submitted a 
Corrective Action Plan in February 2006 to Congress, OMB and 
NASA's Office of Inspector General that addresses each of the 
recommendations made by the independent financial auditors. 
NASA has been executing this plan throughout fiscal year 2006.
    For your convenience, we have attached NASA's Financial 
Management Corrective Action Plan, which provides a complete 
list of in-process actions to address each material weakness.

            ANTI-DEFICIENCY ACT VIOLATIONS PREVENTIVE STEPS

    Senator Shelby. And the next question, what steps have you 
taken to prevent this type of ADA violation from occurring 
again? Do you want to do that for the record?
    Dr. Griffin. We will do it for the record to get the 
details right and proper.
    Senator Shelby. That will be fine.
    [The information follows:]

                    ADA Violations Preventive Steps

    NASA agrees with each of the OIG's specific recommendations:
  --OIG Recommendation #1.--We recommend that the Administrator report 
        the ADA violations for the funds carried over from fiscal year 
        2004 to fiscal year 2005 for each affected account and for the 
        $30,413,590 to the President of the United Statues through the 
        OMB Director, the Speaker of the House of Representatives, the 
        President of the Senate, and the Comptroller General of the 
        Government Accountability Office, as required by the ADA and by 
        OMB Circular A-11, section 145.7
  --OIG Recommendation #2.--We recommend that the Administrator request 
        a comprehensive demonstration by the OCFO that the 
        appropriations available to be spent in fiscal year 2006 can be 
        traced from appropriation to apportionments to allotments to 
        commitments and to obligations to help ensure that NASA is not 
        violating the ADA for fiscal year 2006
    In addition to accepting and acting upon NASA's OIG two specific 
recommendations, NASA has implemented specific correction actions in 
the OCFO. These corrective actions include:
  --Certification of reconciliations by responsible financial 
        management personnel. Both the Directors of Accounting and 
        Budgeting reconcile NASA appropriations to OMB apportionments. 
        They jointly certify apportionment requests to OMB. This 
        ensures that the operations of each organization, the budget 
        and execution of the budget, are appropriately reflected in 
        NASA financial systems. In addition, a manual of all related 
        apportionment transactions is maintained;
  --Met with the NASA OIG to demonstrate that the core financial system 
        has effective system controls that prevent obligations from 
        exceeding apportionment control totals;
  --Conducted Appropriations Law training for 30 staff in January 2006, 
        and 8 in March 2006;
  --Conducted OMB Circular A-11 training for 24 staff in February 2006. 
        An additional course is currently being scheduled;
  --Increased the staff size in the Funds Distribution branch from 7 to 
        14; and
  --Documenting enhanced internal controls, to include: Logging and 
        tracking of all OMB apportionment requests and approvals; and 
        reconciliation of OMB apportionments to Congressionally 
        approved Operating Plans to the funds loaded into the Agency's 
        centralized financial system.

    Dr. Griffin. But, basically, we have put additional cross-
checks in. We are working on training staff, and we have put 
additional cross-checks into the system so that it, frankly, 
does not happen again.
    Senator Shelby. We think that that is important, but I want 
to say again, Dr. Griffin, you may have inherited a lot of 
this, and you are strong to say it is your deal now, and it was 
not always your deal, but it does have to be addressed, as you 
know.
    Dr. Griffin. I thank you for that observation, Senator. You 
hired me to fix the problems, and we will fix them.

                INTEGRATED ENTERPRISE MANAGEMENT PROGRAM

    Senator Shelby. What is NASA's current estimated cost to 
develop, implement, and maintain the Integrated Enterprise 
Management Program including those costs incurred to resolve 
data integrity issues resulting from the initial implementation 
of the core financial system?
    Dr. Griffin. Sir, again, I do not have those figures.
    Senator Shelby. Will you do that for the record?
    Dr. Griffin. I will be happy to provide that for the 
record. We do have that data. I just don't have it right here.
    [The information follows:]

                Integrated Enterprise Management Program

    The development and implementation costs for NASA's 
Integrated Enterprise Management Program, including all the 
hardware, software, civil service labor, contractor labor, 
travel, and overhead costs associated with re-engineering 
business processes and implementing business systems for human 
capital management, financial management, asset management, and 
procurement and contract management are estimated at $842 
million for the development years 2000 through 2011, consistent 
with the fiscal year 2007 President's budget request.
    Of this total development estimate, $82.6 million is being 
expended to update NASA's financial system, which, among other 
benefits, helps resolve data integrity issues identified with 
the initial core financial system implementation. Approximately 
$50 million per year is expended operating and maintaining this 
business systems environment.

                ROBOTIC LUNAR EXPLORATION PROGRAM (RLEP)

    Senator Shelby. I know it is a complicated question. The 
Robotic Lunar Exploration Program?
    Dr. Griffin. Yes, sir.
    Senator Shelby. Let's get into that. Last December, NASA 
announced that the Marshall Space Flight Center would be the 
project lead for the second mission under the Robotic Lunar 
Exploration Program (RLEP-2). The intent of the announced 
mission is to land on the lunar surface and search for deposits 
of water and ice as a precursor to later human missions. 
Unfortunately, no funding for this mission was included in the 
President's budget request for fiscal year 2007, and there are 
concerns that RLEP-2 is no longer a priority for NASA. Could 
you provide us an update on the overall RLEP program and the 
current projects under the program, and is the RLEP-2 mission 
still proceeding as announced, and so forth?
    Dr. Griffin. Yes, sir. The concern that you cite that the 
RLEP Program is not a priority is not a well-founded concern. 
Indeed, it is a priority. As you know, sir, in order to meet 
our unfunded obligations for the space shuttle and space 
station, we had to remove from the Science Program $2.2 billion 
over the 5-year run-out, and $1.6 billion from exploration, the 
crew launch vehicle and crew exploration vehicle, and those 
budget hits to the tune of almost $4 billion have resulted in 
deferring some missions. We probably will not start RLEP-2 in 
fiscal year 2007. We will do that mission. Marshall Space 
Flight Center will continue to retain the project lead for that 
mission.
    Senator Shelby. You are committed to the mission?
    Dr. Griffin. I have committed to the mission. In the wake 
of difficult funding decisions, I cannot commit to the date, 
but I have committed to the mission, and to the leadership of 
the mission and to do so in a timely way to provide precursor 
information for returning humans to the Moon, but it probably 
will not start in fiscal year 2007.
    Senator Shelby. Would you give us a status of each of the 
elements for the next manned spacecraft, specifically focusing 
on the crew exploration vehicle, the crew launch vehicle, and 
the launch operations aspect of the program? I know it is early 
in the program.
    Dr. Griffin. It is, but I can give you a top-level status. 
If you want more when I am done, I will be happy to provide it 
for the record.
    Senator Shelby. Sure.
    Dr. Griffin. At the top level, since I last met with you in 
this formal setting, we have refined and issued the request for 
proposals for the crew exploration vehicle. There are two 
bidders on that. They have completed and submitted their 
proposals. The Source Evaluation Board is considering those 
proposals as we sit here at this moment. Later this spring we 
will enter into negotiations and oral presentations by those 
bidders, and this summer we will make a selection for the crew 
exploration vehicle which will represent a real milestone. It 
will be the first new development of a piloted space vehicle by 
this Nation in 35 years.
    The crew launch vehicle is the launch side of that. In 
fact, Marshall Space Flight Center has the lead for that. The 
crew launch vehicle is coming along slightly behind the crew 
exploration vehicle. The folks down there are actually led by 
Program Manager Steve Cook under the management of Center 
Director Dave King, and are doing a great job pulling together 
the concept design for that vehicle. We expect to have a 
request for information out on the street shortly. It will be 
followed by a request for proposals to industry. That program 
is on track.
    Launch operations modifications down at the Cape are at 
this point I can only say under study. We have asked for bids 
from construction contractors to begin work on those systems. 
Of course, the launch operations infrastructure has to follow 
from the nature of the launch vehicle and the crew vehicle that 
it serves, and so it necessarily follows a bit behind. But I 
am, frankly, real pleased with where we are on that.
    Senator Shelby. I understand progress has been made in the 
overall Constellation architecture by establishing project 
offices for the various elements involved. What is the time 
line for establishing the project offices for the remaining 
elements of the architecture such as the lunar lander?
    Dr. Griffin. The lunar lander is not the current first 
thing on our plate. We don't need that until starting out 
around 2012. As I think I just mentioned, Johnson Space Center 
has the crew exploration vehicle, Marshall Space Flight Center 
has got the launch vehicles, both the crew launch vehicle and 
the heavy lift launch vehicle. Kennedy Space Center, of course, 
will be the site for launch operations. Within those broad 
assignments of responsibility are our other seven centers. Each 
will have pieces because the effort overall must occupy all of 
NASA. By mid-May we will be I think prepared to say at the next 
level of detail down which elements of the system are going 
where.

                      VISION FOR SPACE EXPLORATION

    Senator Shelby. The Vision for Space Exploration is an 
initiative that will last a long time. While a lot of interest 
is paid on how much the exploration initiative will cost, an 
area that must also be addressed is the current state of NASA 
facilities. Many of the centers that will play significant 
roles in the Vision have aging infrastructures, we have talked 
about this before, and in many cases, buildings that were 
inherited from other agencies when we last went to the Moon. 
How does NASA address the need for facilities in this budget? 
What are the actual funding requirements to truly address the 
shortfalls in facilities? And do you believe that a worthwhile 
use of the billions in unobligated balances would provide the 
agency with the facilities? How do we attack this, I guess is 
what I'm saying.
    Dr. Griffin. Yes, sir, I understand the intent of the 
question. I must lead by saying that whatever the problem, the 
source of those funds cannot and should not be the unobligated 
balances, because although those are unobligated, in the sense 
that the fiscal accounting people go off in a corner and talk 
about unobligated funds, yes, they are unobligated.
    Senator Shelby. You have specific plans for them?
    Dr. Griffin. Precisely, sir. They are not unspoken for.
    Senator Shelby. That is a good phase, unspoken.
    Dr. Griffin. They are not unspoken for. You raise a very 
important point. NASA's physical infrastructure like many of 
the other bridges, roads, and buildings that are important to 
this country's public life, is an aging infrastructure, much of 
it in our newest buildings in our overall NASA infrastructure, 
all 10 centers. The newest buildings, the newest centers, by 
and large are approaching 50 years old, and many go back to 
World War II, and some are pre-World War II. They are aging, 
they are expensive to heat, and expensive to maintain. In a 
perfect world, we would have plenty of money to fix all those 
buildings. We do not. We have to set priorities.
    If I must be made to choose between executing missions, 
being run out of old buildings, or having new buildings and not 
being able to execute missions, then I'm going to choose the 
former. We replace buildings or modify or upgrade them in ones 
and twos as the need expresses itself, but we simply do not 
have the funding to embark on a substantial building campaign. 
I wish that we did.
    With regard to the buildings, infrastructure, and 
facilities needed for the Vision for Space Exploration, just 
exactly as the launch operations infrastructure at the Cape 
must follow the definition of the launch vehicle and the crew 
vehicle, so, too, must the buildings to support the mission 
follow the definition of all these things. I do not today have 
a plan for you regarding which of our NASA infrastructure we 
need for the future and which should be mothballed or 
demolished. I do not have that plan today.
    Senator Shelby. I agree with you to some extent that the 
mission must go on and just brick and mortar will not do it, it 
has to be beyond that, but sometimes you have to have a little 
brick and mortar to cover the roof.
    Dr. Griffin. You do, indeed. We try in our construction of 
facilities as compared with our mission priorities to set a 
reasonable balance and to make sure that this subcommittee and 
your staff knows where we are on that balance.

                          PROPULSION RESEARCH

    Senator Shelby. On propulsion, the Vision for Space 
Exploration will require many new technologies and systems to 
be developed in order to maximize our investment in returning 
to the Moon. One of these areas that will require ongoing 
research and development is in the area of, as you have told me 
before, propulsion. The Marshall Space Flight Center has 
expertise in this area and has worked on propulsion systems 
from the time of the last missions to the Moon and to the 
present. As research and development on Vision-related vehicles 
and systems begins, what do you anticipate we will need for 
propulsion research and development this year and in the 
future? In other words, where are we going and what do we need 
to get there?
    Dr. Griffin. That is an excellent question, and with all 
respect, the propulsion research needs to implement the Vision 
for Exploration are at this point rather minimal, and likely to 
remain so for a little while. One of the things that I tried 
very hard to do in crafting our exploration architecture was to 
utilize the technology and infrastructure for which the Nation 
had already paid in past years and decades. We have available 
or can restore to production the rocket engines that are needed 
for the Vision for Space Exploration. We have those today, by 
and large. That is not the most critical need. In some cases, 
we may need to resume or restore production on certain units, 
we may need to make modifications, but it is not in the nature 
of propulsion research.
    If we look much further out to when we are really ready to 
go to Mars in another 20 years, I would like to believe that 
the Nation will allocate funding for new propulsion research. I 
would like to believe that the decisionmakers of those later 
times will be able to restore research in, for example, nuclear 
thermal propulsion, one of my highest interest items. We do not 
need that technology for the Moon which means we do not need it 
anytime in the next 15 years, and certainly we do not in the 
next 15 years have the money for it. So what we need to do is 
we need to restore in this Nation's space program basic 
capabilities and basic infrastructure that we once owned and we 
have allowed to atrophy.
    Senator Shelby. When would that research you are talking 
about begin?
    Dr. Griffin. Sometime in the next decade. The research 
levels would begin sometime in the next decade.

     NATIONAL AERONAUTICS AND SPACE ADMINISTRATION'S SCIENCE BUDGET

    Senator Shelby. Dr. Griffin, in order to address the budget 
needs for the exploration program, NASA has reduced the rate of 
growth of the agency's science budget from about 6 percent to 
about 1 percent. I understand that the science budget at NASA 
is on a growth path, although at a reduced rate than previously 
projected. I also understand that the science activities at 
Marshall are actually taking a 10-percent cut over the next 
fiscal years. Would you provide us some insight into that 
reduction?
    Dr. Griffin. I can provide the specifics of that 10-percent 
reduction at Marshall Space Flight Center for the record.
    Senator Shelby. That would be fine.
    [The information follows:]
         Science Reductions at the Marshall Space Flight Center
    In the fiscal year 2007 budget request, there is a reduction of 
approximately 10 percent for Marshall Space Flight Center (MSFC) 
Science activities compared with fiscal year 2006. This is due, in 
part, to the fact that some projects are ending as planned. However, 
since release of the fiscal year 2007 budget, additional work for MSFC 
has been defined in several Science projects, and additional funding is 
likely, particularly in projects with pending competitive selections. 
Additional funding is likely in New Frontiers, James Webb Space 
Telescope, Chandra, Solar Terrestrial Probes, and other areas. When 
this new work (actual and likely) is factored in, fiscal year 2007 
Science funding to MSFC is expected to be equal to or higher than 
fiscal year 2006.
    At the same time, it should be noted that, as one of NASA's premier 
space flight centers, MSFC has been given project management 
responsibility for the new Crew Launch Vehicle (CLV) and Cargo Launch 
Vehicle (CaLV), both critical elements to our Nation's plans for humans 
to explore the frontiers of space. These responsibilities are supported 
by the President's fiscal year 2007 request from Exploration Systems.
    Specifically, Marshall's responsibilities include:
  --Responsible for achieving all CLV and CaLV objectives for the 
        agency.
  --Lead associated systems engineering and integration activities, all 
        CLV and CaLV safety and mission assurance activities.
  --First stage design and upper stage engine development contracts 
        management, as well as leading or otherwise overseeing CLV 
        associated demonstration testing.
  --Responsibility for advanced development flight test-0 and other 
        flight demonstrations.
  --Support responsibilities for the Crew Exploration Vehicle.
  --Support for launch abort systems, service module, and abort test 
        booster.
    Level II or project tasks include:
  --Safety, Reliability & Quality assurance (SR&QA)--Support integrated 
        hazards analysis and probabilistic risk assessment; represent 
        SR&QA at assigned systems integration groups; support quality 
        assurance, risk management, and safety software system 
        development; support Constellation SR&QA panels.
  --System engineering and integration: Co-Lead for several system 
        integration groups including thermal and environmental control 
        and life support, environments, human factors/human rating, 
        loads and structures.
  --Test and verification lead for loads/structures and environments 
        system integration group.
    In support of lunar exploration, Marshall will:
  --Establish a Lunar Precursor and Robotic Program Office, which 
        includes the Lunar Reconnaissance Orbiter and the Lunar Crater 
        Observation and Sensing Satellite.
  --Establish a Lunar Lander Project Office, under the Constellation 
        Program, responsible for performing early trade studies and 
        developing requirements for the Lunar descent stage.
  --Plan to use the Michoud Assembly for CLV and CaLV tank 
        construction.

    Dr. Griffin. But do understand, please, that Marshall Space 
Flight Center is receiving, and will receive substantial 
increases as we embark on the Crew Launch Vehicle Program. So 
although the skill mix of those employed at Marshall Space 
Flight Center may change, the overall employment base at 
Marshall Space Flight Center is and will continue to be quite 
healthy. Yes, it is true, prior to my tenure the science 
community had been promised growth rates of 5, 6, or 7 percent 
in science, but NASA's growth rate as a whole is only 2.4 
percent, averaged over the next several years.
    Senator Shelby. I agree with you that we need more money.
    Dr. Griffin. I did not say that.
    Senator Shelby. I can say it.
    Dr. Griffin. Yes, sir. Within the amount of money that the 
administration has chosen to allocate to the program, I cannot 
have science growing at 6 percent while the agency is growing 
at 2.4 percent and the science program at NASA is a full one-
third of our overall program, and in my judgement, sir, it is a 
very robust program.

                   SPACE SHUTTLE FLIGHT RATE SCHEDULE

    Senator Shelby. Dr. Griffin, assuming a successful shuttle 
launch this summer, NASA will begin a very aggressive flight 
schedule for construction of the International Space Station 
and the Hubble space telescope servicing mission. We pray you 
will be successful there. In order to accomplish the 16 to 18 
flights necessary for these missions and to retire the shuttle 
by 2010, as you mentioned earlier, would require a flight rate 
that has not been achieved for many years. How much 
flexibility, Dr. Griffin, is there in the schedule for the 
remainder of the flights of the space shuttle? Is there any 
room for unexpected delays that will not compromise both the 
retirement date of the shuttle and the completion of our 
agreements on the ISS? And how does NASA intend to balance the 
need for such a sizable workforce to maintain the shuttle 
program until it is retired and at the same time to build up 
Moon missions and so forth? I know it is a tough question.
    Dr. Griffin. But it is a good one, and I understand the 
question, so let me try to answer. First of all, I must simply 
say it is not correct that the fight rate required of the 
shuttle to complete the International Space Station by the 
shuttle's retirement date is something that we have not seen. 
In fact, the required flight rate is nothing more than our 
average flight rate over 25 years of history, and that 
includes, as I know you recall because you have been here, that 
includes basically 6 years of down time due to shuttle 
accidents and other technical problems. So even factoring in 
all of that down time, our average flight rate for the shuttle 
program over 25 years has been 4\1/2\ flights per year. If we 
fly successfully in July or if we fly successfully in September 
and then merely execute our average flight rate for the balance 
of the program, we will finish with margin to spare. So I 
believe we can do it.

                        WORKFORCE TRANSITIONING

    Now with regard to your question about transitioning the 
workforce, you are correct, and I have said this in many 
forums, our biggest challenge over the next 5 years is to 
develop a plan that allows us to fly the last shuttle mission 
as safely as the next one. At the same time, to be able to have 
the appropriately skilled workforce involved with the design 
and development of the replacement vehicle, the CEV, and to not 
damage either program in the process of doing so. We are 
working on that. We spend time on that at every Management 
Council meeting I have in NASA. We care about that problem a 
lot. I have top-level plans that I can share with your staff, 
and are those plans in their detail, we will be happy to share 
those plans with your staff as well.
    Senator Shelby. Thank you very much. I am going to go vote. 
Senator Mikulski has voted, and she is recognized.
    Dr. Griffin. Thank you, sir.

                      AGING AND DAMAGED FACILITIES

    Senator Mikulski. Thank you very much, Mr. Chairman, and I 
know Administrator Griffin, you probably have covered some of 
these issues. We know that you and the NASA budget is under a 
lot of stress.
    Let me go to the question about aging facilities and 
damaged facilities. I know that Senator Shelby talked about the 
aging facility issue. You talked about some of these go back to 
Apollo.
    Dr. Griffin. Or before.
    Senator Mikulski. Yes, sir. But let's go to what was 
damaged because of Katrina, again, acknowledging the 
magnificent efforts of the NASA staff and local responders, et 
cetera. The subcommittee provided $300 and some million last 
year toward this. The President's supplemental request had 
nothing in it. We had $35 million which is just a chunk of 
change. You estimate that it is going to be $500 million to 
really restore these facilities properly. Where are we, and 
where is this money going to come from?
    Dr. Griffin. Yes, ma'am. Yes, Senator Mikulski.
    Senator Mikulski. You need to know I was very disappointed 
that there was not money in the President's budget to do this, 
and it's beyond the scope of an individual Member, for example 
like myself, to find a $500 million offset, and we could not 
take it from the troops.
    Dr. Griffin. Of course not. I'm sorry, the damage estimate 
that we have is just under $500 million, $484 million to be 
specific. As we have continued to refine our estimates, we have 
kept you and your staff current on what those are. And you are 
right, last year the subcommittee, of course, appropriated 
roughly $330 million in supplemental funding to repair the 
damage. The balance of the money must come out of program funds 
which is shuttle and station unless we move money across 
accounts, and that would require special permission from our 
oversight committees.
    Senator Mikulski. How much would you need this year?
    Dr. Griffin. Pardon me?
    Senator Mikulski. No construction occurs at once.
    Dr. Griffin. At once, right.
    Senator Mikulski. What do you think for both Stennis and 
Louisiana would be required for this year?
    Dr. Griffin. I will answer for the record on the phasing of 
the money. The total that we know we need is $484 million at 
this point.
    Senator Mikulski. And that would take care of both?
    Dr. Griffin. That would take care of all years.
    Senator Mikulski. But it would take care of both Stennis 
and Louisiana?
    Dr. Griffin. Yes, Senator.
    [The information follows:]

                      Aging and Damaged Facilities

    After a detailed review by the Katrina Headquarters Recovery Team, 
as of April 25, 2006, the Agency reduced its total estimate of all 
costs for responding to Katrina and for catastrophic risk mitigation 
projects that would protect against future hurricanes to $483.8 
million. This estimate includes the following:
  --Michoud Assembly Facility--$220.2 million;
  --Stennis Space Center--$208.7 million;
  --NASA Shared Services Center--$7.7 million;
  --Other NASA Centers/HQ Support--$8.1 million; and
  --Program Contingency/Reserves--$39.2 million.
    Review of the content of this estimate is ongoing and will continue 
to be revised; NASA will keep the Committee informed of future 
adjustments to the estimate.
    As has been discussed during hearings and in briefings with 
Committee staff, NASA borrowed $100 million in fiscal year 2005 funds 
from the Space Shuttle and International Space Station (ISS) crew/cargo 
programs to provide immediate support of hurricane recovery efforts in 
the Gulf region before any supplemental funds were provided. The intent 
was to eventually repay these programs for this initial outlay of 
funds, and NASA repaid $20 million of the amount borrowed in the May 
update to the fiscal year 2006 Operating Plan.
    NASA currently has available $384.8 million in fiscal year 2006 
funding from two emergency supplemental appropriations and $80 million 
in fiscal year 2005 funding that was borrowed from the Shuttle and ISS 
crew/cargo programs. NASA may repay approximately $20 million in 
additional borrowed fiscal year 2005 funds that are not yet spent in a 
future Operating Plan update. The Agency continues to require transfer 
authority to use up to $60 million in available fiscal year 2006 
supplemental funding to repay the balance of funds borrowed and 
expended in fiscal year 2005 to allow the Agency to adequately fund the 
requirements of the Space Shuttle and ISS programs.
    Hurricane-related Center recovery and operations costs, along with 
real property repairs and programmatic recovery requirements are 
accommodated within the current funding availability. Catastrophic loss 
mitigation projects will be addressed on a priority basis depending on 
the availability of funding.
    The following Center recovery operations, real property repairs, 
and programmatic recovery activities are likely covered within 
available funding:

                        [In millions of dollars]
------------------------------------------------------------------------
                                                          Estimated Cost
------------------------------------------------------------------------
                  STENNIS SPACE CENTER

Center Recovery Operations Support......................           17.0
IT/Communications/Environmental/Other...................            6.0
Programmatic Recovery...................................            3.0
                                                         ===============
Real Property Repairs...................................       \1\ 82.61
    Repair Site wide Electrical Distribution System.....            7.79
    Repair/Replace Roofing Various Administration                   7.95
     Buildings..........................................
    Replace Bldg 2204 Roof..............................            7.91
    Repair Administration Building 1100.................            7.65
    Repair and Replace Perimeter Fencing................            7.95
    Replace Bldg 1100 North Wing & Bldg 1105 Roof.......            1.03
    Repair Bldg 2205 High Bay Roof (complete)...........             .73
    Repair Building 1100 North Wing--Interior...........            2.70
    Site wide Mold Remediation and Asbestos Abatement...            2.44
    Replace Bldg 2201 Roof..............................            3.50
    Repair/Replace Roofing Various Industrial Complex               1.74
     Buildings..........................................
    Repair/Replace Roofing Various Test Complex                     1.99
     Buildings..........................................
    Site wide Debris Cleanup............................            1.59
    Replace Bldg 8100/8110 Roofs........................            3.04
    Site wide Lightning Protection Repairs (Multiple                 .80
     Projects)..........................................
    Relocate Roads and Grounds Building.................             .87
    Repair and Pave Roads for Heavy Vehicles............            2.88
    Education Center (Replacement for Bldg 1200)........            1.93
    Site wide Electrical Panel Enhancements and Database            1.06
    Local Projects (<$500,000) and Maintenance Items....            7.06

                MICHOUD ASSEMBLY FACILITY

Center Recovery Operations Support......................           20.9
IT/Communications/Environmental/Other...................            2.4
Programmatic Recovery...................................           42.5
                                                         ===============
Real Property Repairs...................................       \2\ 69.00
    Hazardous Materials Investigation...................             .05
    Repairs of B103, Phase 1............................            2.50
    Repairs of B451, Phase 1............................             .75
    Repairs of B114.....................................             .60
    Repairs to Damaged Elevator B110....................             .10
    B303 Temporary Roof Repair..........................             .09
    TBD Projects during test and checkout...............             .50
    MSFC--COSS Contractor Support for damage assessment.             .04
    MSFC--M1 Yard Roof Repairs..........................             .01
    MSFC--Remove Damaged Trees and Repair B4707 Tower                .02
     Roof...............................................
    Work Plans for B420, 110, 114, 103, 303, 451, 220,               .94
     101, 102, 173, 175, 320, 404.......................
    Local Projects (<$500,000) and Maintenance Items....            5.21
    Repairs of B110, Phase 2............................            6.40
    Repairs of B173.....................................            2.02
    Repairs of B175.....................................             .68
    Repairs of B220.....................................            1.37
    Repairs of B303.....................................            6.60
    Repairs of B320A....................................            1.54
    Repairs of B320B....................................             .94
    Repairs of B404.....................................            1.49
    Repairs of B420.....................................            5.63
    Repairs of B103, Phase 2............................            4.77
    Repairs of B451, Phase 2............................            1.50
    Repairs of B101.....................................            5.04
    Repairs of B102.....................................            8.22
    Repairs B75, 105, 106, 107, 109, 113, 119, 127, 130,           12.00
     131, 135, 140, 171, 176, 177, 178, 179, 201, 203,
     206, 207, 221, 232, 239, 301, 302, 304, 305, 307,
     308, 318, 321, 327, 329, 359, 351, 360, 361, 406,
     409, 421, 423, 424, 419, 450, 480, 485.............

               NASA SHARED SERVICES CENTER

Recovery/Workarounds....................................            7.7

          OTHER NASA CENTERS/HQ SUPPORT/RESERVE

Center Recovery Operations Support......................            2.2
Other General Support...................................            4.0
FEMA Volunteers.........................................            1.9
Program contingency/Reserves............................           39.2
------------------------------------------------------------------------
\1\ Does not include $13.7 million in program manager reserve.
\2\ Does not include $10 million in program manager reserve.

    The following potential catastrophic loss risk mitigation projects 
been identified. Unless noted, the majority of these projects have not 
yet been approved for funding. Projects for each Center are listed in 
order of priority.

                        [In millions of dollars]
------------------------------------------------------------------------
                                                          Estimated Cost
------------------------------------------------------------------------
                  STENNIS SPACE CENTER

Hurricane Proof Emergency Operations Center.............       \1\ 14.90
Replace and Enhance Backup Generator Capability Site-               3.00
 wide...................................................
Enhance Site-Wide Electrical Distribution System                   18.65
 Hardening..............................................
Add Additional Bulk Diesel Storage......................             .50
Enhancement to Potable Water Pump Houses................             .10
Emergency Communications and EMCS Enhancements..........             .90
Hurricane Proof Record Retention Facility...............            2.50
Relocate Electrical Equipment Building 1200.............            1.00
Expand and Enhance Communication Ductbank...............            3.00
Inspect Bridge and Locks................................            1.00
Dredge Canal............................................            3.00
Enhance Administration Building 1100....................            3.00
Test Complex High Pressure System Uninterruptible Power.           30.00
Design Cost (6 percent).................................            4.89
                                                         ---------------
      Total.............................................           86.44
                                                         ===============
                MICHOUD ASSEMBLY FACILITY

Upgrades to Pump House..................................       \2\ 11.00
Install levee floodgate at barge dock...................             .70
Upgrades to Emergency Operations Building...............        \2\ 3.30
Rewire security cameras to operate on emergency power...         \2\ .70
Replace electrical feeders on poles below ground........            5.00
Reconfigure computer servers to provide critical ops                5.00
 during severe weather..................................
Replace main manufacturing building exterior siding.....            7.00
Levee improvements (requires Corp of Engineers                      5.00
 coordination and app)..................................
100 percent increased labor, materials, and                        37.7
 transportation costs...................................
                                                         ---------------
      Total.............................................           75.4
------------------------------------------------------------------------
\1\ Project is approved for funding. The total project cost is $21.4
  million; the remaining $6.5 million will be funded with fiscal year
  2005 Institutional CofF funds.
\2\ $1.7 million in funding has been approved for MAF projects as
  follows: $300,000 for designs and studies, $600,000 for remote
  controls for the existing Pump House, $500,000 for relocating the MAF
  Emergency Operations Building, and $300,000 for security cameras. The
  ``Install levee floodgate at barge dock'' project will be approved for
  funding as soon as design is complete.

                            CUTS IN SCIENCE

    Senator Mikulski. As we look ahead to our own mark up, I 
have not had a chance really to confer with Senator Shelby in-
depth until we complete all of our hearings. We have heard from 
Justice, the Byrne grants and COPS Programs have been cut. This 
is not to lay this on you. In just looking at NASA and know 
that it was flat-lined now and it has been flat-lined under 
this administration and the previous one, President Clinton, I 
feel we need more money. One of the things that I am going to 
suggest to Senator Shelby is that we look at the repair related 
to the Katrina damage in some kind of an emergency way so that 
it does not add further stress to the NASA budget. I don't even 
know if it is possible, but I am looking for legitimate ways to 
bring other revenue into our subcommittee, so just know that. 
That is why the sequencing of how much, so that we do ask for 
or even ponder appropriate amounts. You need to have your 
facilities, dedicated people have to work somewhere, and we 
have to be dedicated in restoring it as they did to protecting 
it.
    Your comments were don't rob Peter to pay Paul, don't go 
after the science budget, to some back to the other priorities, 
but in some ways I feel that is what we are doing. We are 
juggling and rearranging, and that you robbed Paul to give it 
to Peter, and you are telling us don't rob Peter to give it 
back to Paul. We don't see it as robbing, we see it as a give-
back.
    Could you tell us about the consequences of this deferral 
in science? I know you are committed to science programs, but 
we are troubled about the cuts in science. Could you tell us 
what you think the consequences are in this deferral? We are 
particularly concerned about all science. We are concerned 
about the impact on big science as people talk about it, the 
Webb telescope mission, like Earth science and some of the 
others? Could you share with us?
    Dr. Griffin. At the top level I can, and, again, as always 
I am happy to coordinate details with your staff at your 
discretion.
    Yes, I did propose and I am proposing taking money from 
both exploration and science in order to pay our bills for our 
nearer-term priorities to finish out the station and fly out 
the shuttle. The shuttle and station accounts as we both know 
when I took this job in the out-years had placeholder amounts 
in them. We did not have realistic amounts. Those were in the 
out-years at the time. The out-years have arrived, and if we 
are going to fly the shuttle and finish the station, then those 
bills had to be paid, and the only other source of money was 
exploration and science. So that is why I did what I did.
    As to the impact of deferrals, first of all, James Webb 
telescope mission as I think everyone knows is the National 
Academy's highest priority in their decade-old survey plan for 
astronomy, and that priority continues to be respected. James 
Webb telescope mission may be delayed a bit, but only because, 
I exaggerate to make a point, about 15 minutes after I was 
confirmed, the folks on the James Webb Program brought to me a 
$1 billion plus overrun on the program which is presently in 
its formulation stages. So we are currently in the middle of 
re-baselining that program not, to alter its priority within 
the queue. But I do not have over that time period an extra 
billion dollars laying around to fix it. So it will slip a 
little bit in schedule, not because of anything going on with 
the shuttle and station, but just because it is overrun.
    With regard to Earth science, before I took office, Earth 
science had been I would say damaged in the budgetary planning, 
and I have acted to restore that. It is not all the way back, 
but I know that you know, and that your staff will tell you, 
that I have acted to restore that as I have with heliophysics, 
but I cannot do it instantaneously.
    Senator Mikulski. They have shared that with me, and I 
appreciate it.
    Dr. Griffin. Other missions that we believe are very 
important to do like the space interferometry mission will be 
delayed for a couple of years.
    Senator Mikulski. So could I say what you are saying is 
though that they have not been eliminated, they have been 
deferred?
    Dr. Griffin. Correct.
    Senator Mikulski. But given where we are, do you think is 
deferral going to become a de facto elimination in some 
categories? I am not going to ask you to enumerate.
    Dr. Griffin. There may be smaller missions which just will 
not make the cut, but the major mission priorities that had 
been established and were on the table when I took office will 
continue to be respected. We must defer something. We will 
either defer the CEV, the Nation's replacement for the shuttle, 
or we will defer some of these science missions. In truth, I 
have delayed both of them a bit and I would be very 
uncomfortable delaying the CEV any more.

                             SPACE SHUTTLE

    Senator Mikulski. This brings me back to, first of all, 
Senator Shelby and me, and the whole committee, we are 
absolutely committed to the shuttle mission. The safety of the 
astronauts is a committee obsession that we share with you, so 
we know that is the priority. Second, I appreciate your 
willingness to consider a Hubble rejuvenation mission.
    Dr. Griffin. If we can possibly do Hubble, we will do 
Hubble.
    Senator Mikulski. And I understand now that it is up to the 
technical matters, but I appreciate your commitment to analyze 
as we progress, so we know what that is going to take, but we 
do not know how much more it is going to take. Am I correct? 
And it has cost $2 billion more to do the shuttle and return to 
flight than we had originally anticipated. And that is not a 
fault-finding. It is just a fact-finding.
    Dr. Griffin. Of course. I understand. I just want to answer 
accurately. We needed $3.8 billion more to fly out the shuttle 
and finish the station; $3.8 billion more was needed for those 
accounts than was bookkept in those accounts in the fiscal year 
2006 run-out. So as we prepared the fiscal year 2007 run-out, 
we had to fix that problem, so the total was $3.8 billion.
    Senator Mikulski. I am glad we are getting this out in the 
sunshine, quite frankly, because the only way we can truly get 
the proper national priorities, and the framework is there, but 
in other words, you inherited something that you have had to 
straighten out and get real life-cycle costs and accounting 
into it. Am I correct?
    Dr. Griffin. Yes, Senator. The way that I would phrase it 
is to say that, in having decided a couple of years ago that we 
would retire the shuttle, there was considerable uncertainty as 
to how much the run-out costs would be in retirement. As we 
have analyzed it as carefully as we can, we have concluded that 
the run-out costs to retire it do not drop off as rapidly as--
--
    Senator Mikulski. We are committed to this, and, again, I 
think I feel secure in saying this, I liked what you said when 
you said the next shuttle flight is going to be as safe as it 
possibly can be made, but that the last shuttle flight will be 
as safe. So we have a big kind of shaking-hands commitment that 
we need to make with you to ensure that safety of the next 
astronauts or the last astronauts to fly that shuttle, so we 
are in agreement with that. Then that is like a fixed cost that 
we have to almost be neurotic about. Am I correct?
    Dr. Griffin. Exactly, Senator. Exactly, and I have been 
neurotic about it, and the amount was $3.8 billion.

                      INTERNATIONAL SPACE STATION

    Senator Mikulski. I say that, because, again, it is the 
safety of our people.
    That takes me then to the station itself. Having done that, 
completed it, do all those things along the questions that 
Senator Shelby has raised, the 16 flights, et cetera, are we 
going to use the station? And how are we going to get to the 
station to use the station? Soyuz has been a lifesaver, but it 
is little, it cannot do cargo.
    Dr. Griffin. You are right, Senator.
    Senator Mikulski. We have this fantastic machinery at 
tremendous cost to build and maintain.
    Dr. Griffin. Let me try to answer.
    Senator Shelby. Is this going to be a techno-whoops? Then 
what will that take if we are talking about science and Webb 
and going to the Moon and so on? Or is this going to be one of 
those, well, now we have it, but we cannot afford to use it?
    Dr. Griffin. I certainly hope not. For the station for the 
next few years, the choices which confronted us were, given the 
available shuttle flights, that we could use the station 
approximately as it exists today, which is fairly stable but 
does not have much power and does not have a lot of research 
facilities, we could use it to a very limited extent. Or we 
could finish assembling it but not use it. I do not have enough 
shuttle flights to assemble it and utilize it at the same time. 
We have talked about this, we have committed to finishing the 
assembly.
    As the assembly is finished, it will be the full-up station 
that you have come to know and love with substantial research 
capability and a crew of six. In the period between retirement 
of the shuttle and deployment of the CEV, we will have no 
choice but to depend on international partner logistics and 
resupply. Or if our COTS initiative, our commercial initiative, 
works well, we hope that we may be able to bring some U.S. 
commercial capability on-line with seed funding from NASA. But 
the CEV, which is, of course, intended to service the station 
as well as go to the Moon, will not be available for 
operational use until, at this point, 2013-2014.
    Senator Mikulski. Then my question is, why should we do 
this now if we are not going to use it? We thought we are going 
to build it and they will come, but we are going to be building 
it but we cannot get there. I have not been harsh or sarcastic, 
and yet we are making a tremendous investment for the shuttle 
to go up there, for the safety of our astronauts, only then to 
complete an assembly of something.
    Dr. Griffin. We can use the station in concert with our 
international partners, and we can use it as soon as the CEV 
becomes available, and this, of course, addresses the gap that 
you have been so forceful about, and we can use it if we can 
get some commercial capability in space flight.
    Senator Mikulski. There are a lot of ifs.
    Dr. Griffin. But with our existing budgetary resources, 
there will be a gap between retirement of the shuttle and 
deployment of the CEV.
    Senator Mikulski. I think this is a dilemma.
    Dr. Griffin. Yes, Senator, it is.

                         INTERNATIONAL PARTNERS

    Senator Mikulski. Within the scope of the hearing it is 
difficult to discuss, and I am not advocating what we should 
do, but I am advocating that we need to come to grips with this 
dilemma, and a tremendous cost to finish our commitment. What 
do our international partners say about this, Dr. Griffin? 
Would they be able to use it? They have been very patient and 
steadfast, I think, in their ongoing commitment, and the 
Russians have proved to be a fairly reliable partner.
    Dr. Griffin. All of that is true. You, I believe, 
understand the situation perfectly. The international partners 
are appreciative of the renewed United States commitment to 
finish the station, because unless it is finished, the 
laboratory modules that they have worked on for many years will 
not fly. So they are appreciative of that. They, we, and I are 
concerned about what we will do in the period following 
retirement of the shuttle and prior to deployment of the CEV. 
We, as you say, are very grateful to our Russian partners for 
the reliability with which the Soyuz and Progress systems have 
worked, but they have, frankly, very minimal capability to 
really utilize the assets of the station and other partner 
capabilities.
    Senator Mikulski. So it will be hard for our international 
partners to get up there to use it.
    Dr. Griffin. Until we have the CEV deployed, right.
    Senator Mikulski. Let me try to get a timeframe. If 
everything works the way we hope and anticipate, when will the 
completion of the assembly of the station be done?
    Dr. Griffin. 2010.
    Senator Mikulski. Then at the same time, that is when you 
hope to retire the shuttle upon the completion?
    Dr. Griffin. Correct.

                        CREW VEHICLE DEVELOPMENT

    Senator Mikulski. Then with hopefully the new crew vehicle, 
with your time table, that would be 2013?
    Dr. Griffin. The first test flight, which is not the same 
as an operational flight, of course, of the CEV, at this point 
with the resources we believe we have to bring to bear on it, 
we project for 2012, and then operational use would be in the 
2013-2014 timeframe.
    Senator Mikulski. So there will be 4 years in which the 
United States of America will, number one, have a space gap? 
And, number two, 4 years where the station will be up there but 
will not be utilized, and I presume could even begin to 
deteriorate. Space, as you would share with me, is a harsh and 
demanding environment. I wonder where we are going here with 
the station.
    Dr. Griffin. That is, on the face of it, correct. I remind 
you again that we have the ISS Crew Cargo Program, our 
commercial orbital transportation or COTS initiative, where we 
are making available as seed funding to industry $500 million 
over the next few years to bring on-line, hopefully, a 
capability to ferry cargo and later crew to and from the 
station. If that works and industry invests, they stand to make 
a good profit, and we stand to be able to buy services.
    Senator Mikulski. First of all, we have been through the X-
Plane, and X-Planes have not come out too well. I would hope 
that the private sector could develop a cargo vehicle.
    Dr. Griffin. I hope they can. I hope they can. I consider 
it be a good gamble. It is well past time for NASA to do 
everything it can to stimulate commercial space transportation 
capability, and I am trying to do that. But you raise an 
excellent point, we cannot count on it.
    Senator Mikulski. And we will not know until 2012 whether 
it is going to happen. Is there any way you can accelerate in a 
prudent way, prudent, again, meaning always the safety factors, 
and prudent in fiscal reality, the development of a crew 
vehicle?
    Dr. Griffin. Again, Senator, not without moving money from 
other things which we all also like.
    Senator Mikulski. What do you think from a technological 
and engineering standpoint, and you are the expert in this?
    Dr. Griffin. From a technical and engineering standpoint, I 
could have a crew vehicle deployed in 2011, following right on 
the heels of the shuttle, from a technical and engineering 
standpoint.
    Senator Mikulski. What would it take to do that?
    Dr. Griffin. Fiscally I will have to take that for the 
record. I do not have that in my head because that is not a 
program we have been studying. We know we do not have that 
money, and so we are funding limited, as you have said.
    Senator Mikulski. Again, I do not know if we could even 
contemplate that. I know our colleague, Senator Hutchison has 
raised that with you yesterday at the Commerce hearing in which 
you testified.
    Dr. Griffin. She did.
    Senator Mikulski. I know we are troubled by the gap, and 
yet we do not want to take from Peter to pay Paul, and we do 
not want to take from Paul to pay Peter.
    Senator Shelby. Senator Mikulski, if you would yield, it is 
obvious that we need more money to fund NASA.
    Senator Mikulski. I think that that is it, Mr. Chairman, 
and that is where I was trying to ponder as we went through 
this.
    Senator Shelby. Absolutely. You are absolutely right.
    Dr. Griffin. From a technical point of view, the crew 
vehicle could be delivered to you in 2011. Anything after that 
is controlled by the funding.
    Senator Mikulski. Why don't you share with us what you 
think would be a realistic option?

                          AERONAUTICS RESEARCH

    One last point which goes to the aeronautics issue when we 
talk about commercial cargo in space. I really do not want us 
to lose ground aeronautically in the international marketplace, 
and I know we have declined an aeronautic research at 18 
percent. What do you think we can do about this? Again, I am 
concerned about the consequences, not only in futuristic sonic, 
hypersonic flight, but even aviation safety. We have a 
consortium in Maryland that is working on cockpit safety. One 
is at our historically black college, Morgan, the largest 
producer of African-American engineers in the State, and maybe 
even in the country. They are so enthusiastic. They feel they 
are working on things that are going to spur our economy, and 
working on cockpit safety. That is the next generation. They 
will be sitting there 20 years from now. So what can we do?
    Dr. Griffin. I am ready to give it to them sooner if you 
would like. With regard to aeronautics research, I share your 
concern. I think when you look at the loss of competitiveness 
in aeronautics to which you refer and that you see about you 
today, I believe that in actuality that is a consequence not of 
funding decisions, but of strategic decisions, what the money 
is spent on, that go back a decade or two.
    We have not in my opinion been doing in some areas the 
right things with our aeronautics funding. We are recrafting 
our Aeronautics Program to focus on basic aeronautical science 
which underlies the entire discipline of all flight regimes to 
learn new things and to be out at the frontiers of the state of 
knowledge in aeronautics. That, I believe, is in past decades 
what provided the kind of capability that allowed American air 
frame manufacturers to be second to none.
    When we started focusing on demonstrations and point 
designs and things that were off the beaten track for NASA's 
research skills, I believe that is when we started to lose 
ground. So I am trying to recraft and put into place----
    Senator Mikulski. Is that what we will get in the December 
report?
    Dr. Griffin. Yes, ma'am, that is what you will get.
    Senator Mikulski. What I would hope we could try to do, 
Senator Shelby, is stay the course or do a bit better, but that 
we really join hands and focus on this, because I think we are 
going to win the international markets not because we are going 
to be the most subsidized like other countries, but because we 
are going to be the smartest and the best, and we want to help 
you get there.
    Dr. Griffin. We have to be the best.
    Senator Mikulski. Mr. Chairman, I think I have gone over my 
questions.

                    AMERICAN COMPETITIVE INITIATIVE

    Senator Shelby. No, you have asked some good questions. Dr. 
Griffin, I will get into the American competitiveness 
initiative. I was surprised to see that NASA was not included 
as part of the American competitiveness initiative, ACI. The 
goal of ACI, as I understand it, is to ensure that the United 
States prominence in technology and our continued 
competitiveness in an ever-evolving global economy and ensure 
that we are there. Your stated goals for the education 
component of NASA's budget are to strengthen the Nation's 
future workforce, attract and retain students in science and 
engineering, as in your own background, and to engage Americans 
in NASA's missions, coupled with high public visibility and 
recognition that NASA enjoys. It seems that NASA would be a 
natural fit for such an initiative. Why was not NASA not 
included in this initiative in your judgment? I was surprised.
    Dr. Griffin. Senator, I have spoken with Dr. Marburger on 
precisely that issue, and the point that I would make is that 
the ACI was designed to target those agencies or portions of 
agencies such as physical science within the Department of 
Energy, which have not received good support in the recent past 
and which need significant help to get back to even. NASA 
received a 3.2 percent increase even without being part of the 
ACI in an environment where overall domestic nondefense 
discretionary funding is down by one-half of 1 percent. So NASA 
was treated by the President 3.7 percent better than the 
average domestic discretionary nondefense agency.
    It is hard to do better than that. I believe that we were 
well treated within the context of the overall administration, 
and to be part of the American competitiveness initiative was 
not really on point.
    Senator Shelby. I think it was not either.
    Senator Mikulski.
    Senator Mikulski. Senator Shelby, I just want to comment 
and share this with Dr. Griffin. I was part of a group at the 
White House with Senators Alexander and others talking about 
this, and I asked the President the same thing in a very 
cordial way because I thought his Mars statement was to inspire 
the next generation, and they said that they were going to give 
it more consideration. I wanted to follow-up with some of the 
staff.
    Senator Shelby. I think you are absolutely right.
    Senator Mikulski. Perhaps that is something that you and I 
could follow-up with.

                       CHAIRMAN'S CLOSING REMARKS

    Senator Shelby. We could work together because we think it 
is important, and Dr. Griffin is a product of it himself of 
many years.
    If I could, Dr. Griffin, I want to thank you on behalf of 
the subcommittee for your appearance here. We both are 
committed to NASA and we want to continue to work with you. I 
personally believe that NASA is still underfunded, as Senator 
Mikulski does.
    Senator Mikulski. Yes.
    Senator Shelby. We know that it is a tough environment, but 
we have some, I think, lofty goals out there and we want you to 
implement them, and you have the capability to do that.

                     ADDITIONAL COMMITTEE QUESTIONS

    We appreciate your appearance before the subcommittee 
today. There are a number of Senators, and we have been voting, 
and I keep the record open where they can submit questions for 
the record. I am going to ask you to, if you could, respond to 
them no later than June 9, which is a month or so.
    Dr. Griffin. We absolutely will do that, sir.
    [The following questions were not asked at the hearing, but 
were submitted to the agency for response subsequent to the 
hearing:]

            Questions Submitted by Senator Richard C. Shelby

                          FINANCIAL MANAGEMENT

    Question. NASA was recently cited for violation of the 
Antideficiency Act (ADA). According to the Inspector General, a lack of 
internal controls within the Office of the Chief Financial Officer 
(OCFO) was a major cause of the violations. It is also troubling that 
the Inspector General was unable to determine the exact size or number 
of ADA violations due to the unreliability of the agency's financial 
management system.
    What are the Agency's plans for addressing the material weaknesses 
in internal controls that have been reported for several years?
    Answer. NASA's independent financial auditors identified three 
material weaknesses and one reportable condition through its fiscal 
year 2005 financial audit. The weaknesses are repeat findings from 
prior financial audits. NASA submitted a Corrective Action Plan in 
February 2006 to Congress, OMB and NASA's Office of Inspector General 
(OIG) that addresses each of the recommendations made by the 
independent financial auditors. NASA has been executing this plan 
throughout fiscal year 2006.
    For your convenience, we have attached NASA's Financial Management 
Corrective Action Plan, which provides a complete list of in-process 
actions to address each material weakness.

 Corrective Action Plan Fiscal Year 2005 Financial Audit--February 15, 
                                  2006

                   CHIEF FINANCIAL OFFICER'S MESSAGE

    I am pleased to present the National Aeronautics and Space 
Administration's (NASA) financial audit corrective action plan. 
Achieving financial management excellence is essential to achieving 
NASA's Vision for Space Exploration. Efficiently managing all of our 
precious resources will maximize the opportunities for creative and 
safe programs and projects. In the Office of the Chief Financial 
Officer, from Headquarters to Field Centers, we are working hard to 
improve the financial management of our Agency.
    Reviewed by NASA's Office of Inspector General, the plan represents 
the collaborative efforts of the Office of the Chief Financial Officer, 
the Integrated Enterprise Management Program (IEMP), and the Office of 
Infrastructure and Administration. The plan articulates NASA's strategy 
for eliminating the root cause(s) of the four reportable conditions 
(three of which are material) identified in the 2005 financial audit:
  --1. Financial Systems, Analyses and Oversight (material weakness)
  --2. Fund Balance with Treasury (material weakness)
  --3. Property, Plant and Equipment (material weakness)
  --4. Environmental Liabilities
    For each of the four reportable conditions and related 
recommendations, the plan defines NASA's goals, objectives, strategies, 
activities, due dates and responsibilities for execution. Progress will 
be monitored throughout the execution of this plan.
    Our ability to improve the quality of the Agency's financial 
information, to better manage our assets, and to achieve business 
efficiencies is dependent on the successful execution of this plan with 
the support of the entire NASA community. NASA has always had a well-
deserved reputation for successfully meeting challenges head on, and 
this effort will be no different.
                                           Gwendolyn Sykes,
                                           Chief Financial Officer.

    INTRODUCTION TO THE FINANCIAL AUDIT CORRECTIVE ACTION PLAN (CAP)

    This corrective action plan addresses the material and significant 
weaknesses identified through NASA's 2005 financial audit. Those 
weaknesses reflect process, system and internal control issues that 
cross NASA functional areas, including procurement, infrastructure and 
administration, systems management, and financial management. 
Accordingly, this plan was developed through a coordinated effort with 
all NASA organizations that have a critical role and primary 
responsibility in the execution of it. In addition, the NASA Office of 
the Inspector General (OIG) reviewed and provided comments to this 
plan. The OIG's comments were considered in the final product.
    For each noted weakness, this plan documents the goals, objectives, 
strategies and planned corrective actions determined to be the most 
effective and efficient means for mitigating or eliminating those 
weaknesses. Through the course of implementation, changes to strategies 
or corrective actions may be either required or advisable given new 
information or events. The implementation approach and progress toward 
plan goals and objectives will be monitored, and plan adjustments made, 
by the Office of the Chief Financial Officer on a regular and ongoing 
basis until the those goals and objectives have been met. Status 
reviews will be conducted with NASA's Deputy Administrator.
    The weaknesses addressed in this plan are not new to NASA's 2005 
financial audit. They have, in fact, been noted in previous NASA 
financial audits. Significant work has already been performed to 
address them. The repetition of the recommendations is an indication of 
the technical complexity and organizational breadth of the issues. This 
corrective action plan reflects the work planned by NASA organizations 
over the next year, and highlights the work performed in previous years 
to address the audit recommendations. The integration of strategies and 
plans from multiple NASA organizations is an important success factor 
and reduces the risk of potentially disjointed, non-complementary 
solutions to common issues. Several other challenges to the successful 
accomplishment of plan goals have been identified and will be managed 
throughout plan implementation. These include:
  --Resource constraints. Sufficient resources to appropriately staff 
        the corrective action implementation teams have not yet been 
        fully secured. Authority for additional Office of the Chief 
        Financial Officer staff at both Headquarters and Field Center 
        locations was provided by NASA's Administrator in 2005. The 
        OCFO is in the process of hiring additional staff to support 
        NASA's financial management improvement initiative efforts. 
        While additional resources are being secured, there is a 
        familiarization and training lag before these resources are 
        fully able to contribute. Other areas of NASA, such as asset 
        management, which are critical to the success of this plan, 
        have identified additional staffing needs for which staffing 
        plans will be developed. These plans will identify staffing 
        shortfalls and associated options.
  --Change management. The anticipated process changes necessary to 
        resolve NASA's identified weaknesses, particularly in the area 
        of Property, Plant & Equipment (PP&E), will impact the way 
        business is conducted at NASA. These changes will require a 
        significant portion of NASA's workforce, both institutional and 
        programmatic, to change the way they currently perform their 
        daily activities. Communicating the need for change, 
        documenting new procedures and delivering training are key 
        elements embedded in each of the corrective action initiatives. 
        Additionally, initiative owners will work with NASA leadership 
        to build buy-in and support at the most senior levels of the 
        organizations for the changes that must take place. The strong 
        commitment provided by NASA's Executive leadership will be a 
        major factor in overcoming this challenge.
  --External support. Some of the proposed strategies--such as those 
        for PP&E and Environmental Liabilities--include changes to 
        policy or procedures that will require support from NASA 
        vendors and contractors. Just as process changes will impact 
        employees' daily activities and procedures, so will they impact 
        the activities and reporting requirements of NASA's vendors and 
        contractors. Contract changes, procedural changes, reporting 
        changes; all will take time and money to implement. Through the 
        course of executing the improvement initiatives, the OCFO will 
        be evaluating the risk, cost, benefit and trade-offs of each of 
        the changes that may be required to ensure the actions taken 
        are the most cost effective.
    While the challenges and risks are considerable, the strategies and 
plans presented in this corrective action plan are designed to achieve 
NASA's goals and objectives within the targeted timeframes.

                 CHAPTER 1: FINANCIAL AUDIT IMPROVEMENT
                WHY NASA NEEDS A CORRECTIVE ACTION PLAN

    NASA's vision for Space Exploration is an ambitious and bold 
journey into areas of space that man has never visited and into areas 
of science and research that man has yet to fully comprehend or master. 
Complex research and development projects, like those at NASA, require 
effective project planning and management to meet quality, schedule and 
budget requirements. Having ready access to accurate and reliable 
financial information is critical for NASA's program and project 
managers to achieve their own technical goals. Budget constraints 
combined with the uncertainties inherent in primary research and 
development further highlight the need for effective program and 
project financial management information.
    While NASA's program and project managers are the ultimate users of 
financial information, NASA management and external stakeholders have 
an important need for information that helps them to prioritize the 
allocation of scarce Federal dollars. Congress and the White House must 
be assured that NASA is using its resources in the most effective 
manner to achieve the goals they have set for the Agency. Only through 
well designed and implemented processes and systems, effective internal 
controls and well trained and disciplined staff will the Agency be able 
to deliver the fidelity of financial information that is required.
    Today it is clear from audit reports and the OCFO's own analysis of 
its processes, systems and data that improvement is necessary before 
the required fidelity is achieved. This comprehensive and integrated 
financial audit corrective action plan is an important tool for 
organizing and efficiently managing NASA's financial audit 
improvements. The problems cited in IG audit reports did not appear 
overnight; nor will they disappear quickly, either. This plan is a 
realistic reflection of the time and effort required to make the 
necessary improvements.
    This plan takes a holistic view of the financial management 
challenges at NASA. It recognizes the interrelatedness of process 
across the organization; how problems in an operations process can 
ultimately contribute to problems with how costs are captured and 
reported in financial management processes. With that perspective, this 
plan identifies and resolves the root causes of NASA's financial audit 
weaknesses.

                    WHAT THE CAP IS AND WHAT IT DOES

    NASA's financial audit corrective action plan (CAP) is NASA's 
response to the financial audit recommendations made by IG auditors in 
the 2005 financial audit. The CAP is organized around the reportable 
conditions contained in the auditor's Report on Internal Control (NASA 
Fiscal Year 2005 Performance and Accountability Report, pages 190-212). 
For each reportable condition, the plan is further organized by the 
specific recommendations contained in the Report on Internal Control. 
For each recommendation, NASA has developed, and has begun 
implementation of, logical, interdependent sets of specific actions 
that directly address that recommendation. The CAP lays out how NASA 
will address each recommendation made by the IG auditors. The 
graphicdepicts the layout of the plan for one sample reportable 
condition.




    The CAP is designed to provide NASA's framework for resolving the 
internal control and management weaknesses identified by the IG 
auditors. These extend beyond financial accounting into the operations 
of the agency. Effectively resolving the identified weaknesses will 
take a coordinated and integrated effort involving the support, buy-in 
and ownership of many NASA offices and directorates. Affected 
organizations have been involved in the creation of this plan, and, in 
many cases, have been assigned the primary responsibility for taking 
the necessary actions to resolve the identified weaknesses.
    The financial audit CAP is a living document. Performance against 
the plan will be monitored on a regular basis and initiatives will be 
adjusted as needed to ensure that results continue to meet the goals 
and objectives of the plan. The plan projects actions and target dates 
for resolving the issues. All projections are based on currently known 
information and may change over time.

        LINKING THE CAP TO NASA'S FINANCIAL LEADERSHIP PLAN (RP)

    In 2004, NASA's Office of the Chief Financial Officer published a 
four-year Financial Leadership Plan. This plan lays out the vision for 
financial management at NASA through three comprehensive goals:
  --1. Provide the Agency's Mission Directorates and Mission Support 
        Areas with the financial knowledge, information and tools 
        required to effectively manage programs, projects, institutions 
        and overall NASA resources.
  --2. Ensure that all stakeholders have a clear understanding and 
        accurate assessment of how NASA resources effectively and 
        efficiently support NASA's vision.
  --3. Enable the OCFO workforce to provide world-class management and 
        processes in support of the Agency's Mission Directorates and 
        Mission Support Areas.
    Each of these four-year goals is supported by a set of one to two-
year objectives. Each objective, or set of objectives, has associated 
with it initiatives intended to help NASA achieve that objective. 
Financial Leadership Plan initiatives are solution sets to known issues 
or improvements to current operations that contain specific activities 
scheduled, sequenced, and assigned in documented project plans. These 
initiatives are led by staff members from headquarters or one of the 
NASA Field Centers, and staffed by appropriate subject matter experts 
from across NASA. The graphic depicts the relationships throughout the 
planning process.




    This corrective action plan represents one set of initiatives that 
specifically addresses NASA's ability to provide accurate, reliable and 
timely financial information to decision-makers and external 
stakeholders. The Financial Leadership Plan includes other financial 
management improvement initiatives not directly linked to NASA audit 
recommendations.

                          MANAGEMENT OVERSIGHT

    NASA's commitment to making financial management improvements is 
evident at all levels of the organization, not just in the Office of 
the Chief Financial Officer. This plan was developed through a combined 
effort of the owners and operators of both the financial and those non-
financial processes that are contributing to the identified weaknesses. 
Through the sponsorship of NASA's Administrator and Deputy 
Administrator, the Agency is clear about the importance of resolving 
these outstanding management and internal control weaknesses. Several 
infrastructure elements are in place to help ensure the plan's success.

OCFO Governance Structure
    The Office of the Chief Financial Officer has developed a 
governance structure that will help to guide and speed information flow 
during the implementation of the corrective action plan. 
Recommendations for change that result from implementation of the plan 
will be presented to either the OCFO Financial Steering Group or the 
Financial Executive Roundtable, depending on the scope and magnitude of 
the anticipated changes, for approval and disposition. These groups are 
made up of OCFO headquarters and Field Center leadership who will have 
the ultimate responsibility for implementing changes in NASA financial 
processes and systems. The use of the governance structure will add 
discipline to the corrective action process, and speed communications 
and implementation.

Monthly and Quarterly Oversight
    Measuring progress against the corrective action plan begins with 
regular status reports from the initiative owners. The OCFO's program 
management function will asses progress, make project management 
recommendations, and suggest changes to specific initiatives, as 
necessary. Progress is measured both in terms of completed activities 
and assessments of work products.
    The OCFO will report on overall corrective action plan progress 
monthly to the Agency's Deputy Administrator. The Deputy Administrator 
has the authority to determine Agency improvement priorities and to 
address resource needs.
    The OCFO will provide regular updates to NASA's Inspector General 
and, as needed, with IG auditors.

Enhanced Human Resources
    Having the necessary resources to implement the plan is a 
recognized challenge. The Office of the Chief Financial Officer has 
received the authority to hire the staff and engage the contractors it 
needs to execute its responsibilities against the plan. The challenge 
lies in finding the right people at the right time, quickly 
familiarizing those people with the current issues, processes and 
systems, and doing all of this while managing the day-to-day operations 
of the office.

      CHAPTER 2: THE ELEMENTS OF THE CORRECTIVE ACTION PLAN (CAP)
          CHALLENGES IDENTIFIED BY THE NASA INSPECTOR GENERAL

    Each year the Inspector General (IG) conducts financial audits 
assessing NASA's operations and facilities as required by the Chief 
Financial Officers' Act of 1990 (Public Law 101-576) as amended. In 
2005, as in 2004 and 2003, the IG's independent public auditors 
determined that the scope of their work was not sufficient to enable 
them to express an opinion on NASA's financial statements.
    From the work that the independent public auditors were able to 
perform, they identified four reportable conditions, three of which 
they considered to be material. Each of these reportable conditions is 
a repeat condition from the fiscal year 2004 financial audit. A 
material weakness is an identified problem that may impact the accuracy 
and reliability of financial information. NASA is committed to 
implementing solutions that best resolve these weaknesses.
    The reportable conditions and NASA's goals, objectives and 
strategies for resolving them are contained in this section of the 
plan.

Initiative Overviews
    Financial Systems, Analyses, and Oversight
    Fund Balance With Treasury
    Property, Plant & Equipment
    Environmental Liabilities

1. Financial Systems, Analyses, and Oversight. (Material Weakness)
    ``Although progress was made [since the 2004 audit], significant 
financial management issues continue to impair NASA's ability to 
accumulate, analyze, and distribute reliable financial information.'' 
(Reference: NASA Fiscal Year 2005 Performance and Accountability Report 
(PAR), Part 3, page 193)
            Background
    The implementation of NASA's Core Financial system in fiscal year 
2003 represented a major transformation in NASA's financial management 
systems and processes. Immediately following the completion of the 
system's implementation, challenges were identified in system 
processing, configuration and capabilities. While challenges from this 
major change were anticipated, it has taken longer than expected to 
stabilize the financial environment. The current version of NASA's 
automated financial system has capability limitations which have 
required the definition and implementation of compensating controls. 
Examples of these limitations include:
  --Audit trails within the system do not distinguish between source 
        documents of original entry and correction transactions
  --Lack of fully automated support for adjustments to prior year 
        obligations
    The independent public auditors specifically noted that 
documentation regarding significant accounting events, recording of 
non-standard transactions, and post closing adjustments, as well as 
corrections and other adjustments made in connection with data 
conversion issues must be strengthened. (Fiscal Year 2005 PAR, page 
211)
    Future versions of the Core Financial system promise to provide 
capabilities to improve the integrity of budgetary ledger postings and 
to further automate accounting processes. NASA has scheduled a system 
update early in fiscal year 2007 that is intended to address many of 
these issues through enhanced system capabilities and process 
improvements.
    Implementation of a Commercial Off-the-Shelf Software (COTS) 
package in the federal government has presented its own set of 
challenges. The alignment of NASA processes and its enterprise resource 
planning (ERP) system is an ongoing activity.
            Goal
    NASA's goal for resolving this material weakness is to improve 
NASA's financial management system and processes to achieve accurate, 
reliable and timely financial information.
            Objective
    Supporting that goal is the objective of developing core standard 
agency-wide procedures and tools to review and validate that financial 
data and processes are consistent with authoritative guidance issued by 
FASAB, Treasury and OMB.
            Strategy
    The strategy for achieving that objective is to develop and 
implement procedures to identify and validate financial data and 
processes in IEMP, to strengthen internal controls to ensure 
consistency with authoritative guidance, and to implement automated 
financial system enhancements to complement process changes.
            Accomplishments in Fiscal Year 2005
    NASA made progress in 2005 towards resolving this material 
weakness, which was also identified in 2004. Highlights of these 
accomplishments are provided below, grouped by categories identified in 
the 2004 financial audit.
    ``Lack of Integrated Financial Management System'' (2004 Audit 
Finding Category)
  --NASA eliminated noted weaknesses in its Integrated Enterprise 
        Management (IEM) information technology control environment 
        (NASA's financial system is one component of IEM). The 
        weaknesses were identified in three control areas: access 
        controls; systems software; and, segregation of duties.
  --NASA implemented compensating controls and improved system 
        capabilities to improve its ability to identify and document 
        correction activities within the Core Financial system. With 
        these improvements, audit trails have been established by 
        identifying and linking certain system transactions between 
        original, reversal and re-post transactions.
  --Through systems configuration analysis and modification, and 
        through the reconciliation of remaining data anomalies from 
        conversion in 2003, NASA generated fully supported year-end 
        financial statements directly from the Agency's Core Financial 
        system. Year-end balances are now supported by the Core 
        Financial system.
    ``Financial Statement Preparation and Analysis'' (2004 Audit 
Finding Category)
  --Through policies and procedures established in NASA's Financial 
        Management Requirements (FMR), Volume 19, Periodic Monitoring 
        Controls Activities, all NASA Field Centers are performing 23 
        financial reconciliations or verifications on a scheduled 
        basis. Field Center CFOs are providing certifications for each 
        reconciliation or verification to Headquarters, where they are 
        tracked and reviewed.
  --NASA Field Center CFOs and Deputy CFOs reviewed and certified the 
        year-end financial management data from their Centers, and 
        included a statement that all corrections were fully 
        documented, for audit trail purposes, in NASA's official audit 
        tracking system.
  --NASA developed and adopted enhanced financial statement validation 
        procedures and checklists for use at all Field Centers and 
        Headquarters. Through the preparation of extensive crosswalks 
        between NASA and Treasury financial data, the Agency has 
        validated that both the data and the business rules for posting 
        data into specific accounts are accurate. Also, checklists are 
        now in place for the preparation of financial statements. These 
        checklists are reviewed and certified by Field Center 
        management.
    ``Additional Controls Need to be Strengthened'' (2004 Audit Finding 
Category)
  --NASA's Office of the Chief Financial Officer (OCFO) increased 
        staffing to support financial management activities. In May 
        2005, NASA's OCFO received relief from a NASA-wide hiring 
        freeze and approval to increase its headcount in fiscal year 
        2006 at Headquarters by 34 positions (including 2 Senior 
        Executive Service leadership positions) and at Field Centers by 
        50 positions. As of February 1, 2006, 90 percent of these 
        positions have been filled.
  --NASA published the first volumes of the NASA Financial Management 
        Requirements (FMR) to ensure complete and consistent 
        application of NASA financial management policy. The FMR has 
        been distributed to appropriate Headquarters and Center staff.
  --NASA established a financial quality assurance function to provide 
        direction and focus for NASA Internal Control activities. This 
        function has developed an agency-wide Policy Compliance Review 
        Plan, a corporate quality assurance strategy, and a 
        comprehensive internal control strategy to ensure that the 
        agency is positioned to successfully meet OMB A-123 
        requirements. In addition, all Centers have received internal 
        control training in conjunction with quality assurance visits.
  --Other noted weaknesses have been addressed through compensating 
        controls for subsidiary ledgers and systems, including 
        property, to ensure the quality of data entered into the 
        official accounting system. A new system was created for 
        Contractor held assets, Contractor-Held Asset Tracking System 
        (CHATS). CHATS implementation has provided additional 
        validation and checks and balances for property data input.
            Approach for Fiscal Year 2006
    NASA has developed a comprehensive set of planned corrective 
actions to further address each of the financial audit recommendations. 
Following is a set of tables that track each planned corrective action 
to the recommendations in the financial audit report.

--------------------------------------------------------------------------------------------------------------------------------------------------------
 Material Weakness or Reportable
  Condition with Recommendation      Number                        Planned Corrective Action (PCA)                       Target Date for PCA Completion
--------------------------------------------------------------------------------------------------------------------------------------------------------
#1 Financial Systems, Analyses,                Perform a review and verification to ensure that information presented   11/15/06
 and Oversight (1a-g)                           in the Performance and Accountability Report (PAR) is accurate and
Recommendation 1a: Continue to                  consistent with OMB Circular A-136, Financial Reporting Requirements.
 improve its financial reporting       PCA 1   Submitted fiscal year 2005 PAR to AGA for feedback on the construction,  Complete
 and internal quality review                    content, and applicability of the report, as part of the CEAR Award
 procedures to reasonably assure       PCA 2    process.                                                                3/31/06
 that information presented in         PCA 3   Review results of CEAR review process..................................  3/31/06
 the Performance and                   PCA 4   Gather feedback on PAR from OMB and Mercatus...........................  2nd Quarter
 Accountability Report is                      Review latest revision of OMB Circular A-136 and incorporate required
 accurate and consistent with the      PCA 5    updates for fiscal year 2006 PAR.                                       3/31/06
 requirements of OMB Circular A-               Review PAR's from other Federal Agencies to identify potential areas of
 136, Financial Reporting              PCA 6    improvement for NASA.                                                   Draft by 7/31/06. Final by 11/15/
 Requirements.                                 Incorporate improvements in the Management Discussion and Analysis        06
                                       PCA 7    (MD&A) section of the PAR as appropriate based on feedback received.    Volume to accompany Draft MD&A
                                               Verify accuracy of the MD&A portion of the PAR and compile supporting     by 7/31/06. Volume to accompany
                                                documentation.                                                           Final by 11/15/06
--------------------------------------------------------------------------------------------------------------------------------------------------------
#1 Financial Systems, Analyses,                Modify the statement of net cost (SONC) to provide a breakdown of net    To coincide with 2nd quarter
 and Oversight (1a-g)                           costs consistent with strategic plan and in the Management Discussion    financial statements
Recommendation 1b: Configure the                and Analysis (MD&A) section by major line of business.                  ................................
 Core Financial Module to provide      PCA 1   Defined the requirements and breakdown for the SONC; submitted a         Complete
 a breakdown of net costs                       Service Request (SR) to initiate the development of the report in SAP;
 consistent with programs                       and reviewed the requirements with IEMP Competency Center (CC).
 identified in NASA's strategic
 plan and in the Management's
 Discussion and Analysis (MD&A)
 section of the financial
 statements.
                                       PCA 2   Developed the report in SAP based on the requirements submitted by OCFO  Complete
                                                and coordinate with OCFO as needed.
                                       PCA 3   Test (jointly) the report to ensure the report meets the requirements,   2/21/06
                                                with OCFO approval required for production client.
--------------------------------------------------------------------------------------------------------------------------------------------------------
#1 Financial Systems, Analyses,        PCA 1   Generate monthly financial statements and review prior to interim and    Monthly
 and Oversight (1a-g)                           year-end reporting dates to ensure completeness. Produce monthly
Recommendation 1c1: Ensure that                 financial statements from SAP.
 systems used to prepare the           PCA 2   Establish a cross-Agency task team to develop monthly schedule with due  3/1/06
 financial statements are                       dates for data processing, reconciliations, verifications, feedback,
 complete and have been                         and reports.
 sufficiently tested prior to
 interim and year-end reporting
 dates.
                                       PCA 3   Distribute monthly schedule to Centers.................................  3/3/06
                                       PCA 4   Implement monthly schedule.............................................  3/31/06
                                       PCA 5   Established procedures to ensure that all system configuration changes   Complete
                                                are subject to regression tests and year-end test procedures which
                                                validate that changes made to the Core Financial System are valid,
                                                appropriate, and do not adversely impact end-to-end business
                                                processes, including external reporting.
--------------------------------------------------------------------------------------------------------------------------------------------------------
#1 Financial Systems, Analyses,        PCA 1   Update Center workplans to capture remaining data anomalies from fiscal  2/10/06
 and Oversight (1a-g)                           year 2003.                                                              ................................
Recommendation 1c2: NASA should        PCA 2   Coordinate corrective actions with Centers and IEMP Competency Center    3/31/06
 continue to validate its data                  to determine necessary steps.                                           ................................
 within the Core Financial Module      PCA 3   Monitor progress until remaining data anomalies are resolved...........  6/30/06
 to resolve issues with data
 integrity that date back to the
 system conversion in fiscal year
 2003 to ensure that date is
 accurate and complete.
                                       PCA 4   Perform monthly reconciliation of financial data residing in the core    Monthly
                                                financial system.
                                       PCA 5   Verify that Centers and IEMP Competency Center are executing standard    Monthly
                                                reconciliation procedures.
                                       PCA 6   Review results of Center and IEMP Competency Center reconciliation       Monthly
                                                procedures.
--------------------------------------------------------------------------------------------------------------------------------------------------------
#1 Financial Systems, Analyses,        PCA 1   Establish and implement an error correction and prior period adjustment  2/28/06
 and Oversight (1a-g)                           procedure consistent with the FASAB (SFFAS #7) standards that allows
Recommendation 1c3: In addition,                for the tracking of these items within SAP.
 NASA should continue to develop
 a long-term solution within IEMP
 to identify, support, and track
 adjustments made to general
 ledger accounts.
--------------------------------------------------------------------------------------------------------------------------------------------------------
#1 Financial Systems, Analyses,        PCA 1   Established safeguards to ensure that system does not pay cost in        Complete
 and Oversight (1a-g)                           excess of obligation.                                                   ................................
Recommendation 1d: Continue to         PCA 2   Develop compensating procedures to analyze Business Warehouse on a       3/31/06
 devise short-term and long-term                quarterly basis to ensure that liabilities are appropriately recorded.  ................................
 resolutions to IEMP systematic        PCA 3   Formed cross-functional task team to review current process and          Complete
 and integration issues. Lack of                identify opportunities for reengineering.
 internal controls surrounding
 costs in excess of obligations
 and downward adjustments.
                                       PCA 4   Conducted benchmarking sessions with Dept. of Education, Dept. of        Complete
                                                Agriculture, and others to identify best practices and lessons learned
                                                for funds control, cost collection, and accrual processing.
                                       PCA 5   Drafted proposed process design and high level requirements............  Complete
                                       PCA 6   Obtained OCFO and Center CFO approval of SAP Version Update Project      Complete
                                                Scope Document which incorporated requirements from task team efforts.
                                       PCA 7   Incorporate process design into Core Financial System Update Version     3rd Quarter Fiscal Year 2006
                                                proj-  ect.
                                       PCA 8   Implement Core Financial System Version Update project, including        10/1/06
                                                improved process designs.
--------------------------------------------------------------------------------------------------------------------------------------------------------
#1 Financial Systems, Analyses,        PCA 1   Developed an Operational Level Agreement (OLA) for the IEMP Competency   Complete
 and Oversight (1a-g)                           Center and Agency CFO to operate under that prescribes their            ................................
Recommendation 1e1: Formally                    respective responsibilities pertaining to master data management and    ................................
 document roles and                             periodic closing processes.                                             ................................
 responsibilities of                   PCA 2   Finalized the OCFO Governance Structure, which encompasses the decision  Complete
 Headquarters, IEMP Competency                  making process within the financial management community and its        ................................
 Center, and center financial                   communications with IEMP.                                               ................................
 management personnel across all       PCA 3   Developed performance metrics for Center CFOs to monitor compliance      Complete
 levels to ensure that                          with OCFO priorities, strategies, and objectives, as documented in the
 appropriate responsibilities are               Financial Leadership Plan.
 aligned with job functions and
 that accountability is achieved
 at each level.
                                       PCA 4   Shared performance metrics with Center CFO's...........................  2/1/06
                                       PCA 5   Begin capturing metric information.....................................  2/28/06, utilizing 1st Quarter
                                                                                                                         data
                                       PCA 6   Conduct quarterly evaluations or progress with Center CFO's............  Quarterly beginning 4/26/06
--------------------------------------------------------------------------------------------------------------------------------------------------------
#1 Financial Systems, Analyses,        PCA 1   Continue to hire as expeditiously as possible up to allocated ceiling..  On-going
 and Oversight (1a-g)
Recommendation 1e2: Additionally,
 we recognize that resource
 limitations may constrain NASA's
 ability to execute its mission.
 Management should continue to
 focus on filling key vacancies
 within the financial management
 organization.
--------------------------------------------------------------------------------------------------------------------------------------------------------
#1 Financial Systems, Analyses,        PCA 1   Issued quarterly report documenting all training conducted during the    Complete
 and Oversight (1a-g)                           1st quarter of fiscal year 2006.                                        ................................
Recommendation 1f: Provide             PCA 2   Utilize a needs assessment and develop a training plan for providing     3/31/2006
 additional ``hands-on'' training               the following training: Processing transactions, Performing account
 for financial personnel--at                    analyses and reconciliations, Maintenance of supporting documentation,
 headquarter and center levels--                and Financial reporting requirements.
 to ensure that they understand
 their roles in processing
 transactions, performing account
 analyses and reconciliations,
 maintaining supporting
 documentation, and updating
 their knowledge of financial
 reporting requirements.
                                       PCA 3   Execute and monitor the plan on a quarterly basis......................  9/30/2006
--------------------------------------------------------------------------------------------------------------------------------------------------------
#1 Financial Systems, Analyses,        PCA 1   Produce a series of management reports to facilitate financial           Monthly 15th working day
 and Oversight (1a-g)                           management oversight and analysis; e.g. aging, delinquencies, prompt
Recommendation 1g: Develop                      payment, etc. Suite of reports will be continually enhanced based on
 reports from the Core Financial                management requests.
 Module to facilitate reviews and
 ensure that aging of
 transactions and open items, un-
 liquidated obligations, grants,
 and other key areas are
 periodically assessed,
 researched, and resolved.
--------------------------------------------------------------------------------------------------------------------------------------------------------

2. Further Research Required to Resolve Fund Balance With Treasury 
        Differences. (Material Weakness)
    ``Although we were informed that many errors from fiscal year 2003 
were resolved, significant errors within the accounting system were 
still being identified by NASA in fiscal year 2005. Fund balance with 
Treasury reconciliation processes were ineffective in fiscal year 2004 
and much of fiscal year 2005, through the date of our visits to 
centers, but it is our understanding that steps taken by NASA in the 
last quarter of the year are believed by NASA management to have 
substantially improved the effectiveness of such reconciliations.'' 
(Reference: NASA Fiscal Year 2005 Performance and Accountability Report 
(PAR), Part page 201)
            Background
    NASA's Fund Balance with Treasury represents monies the agency can 
spend for authorized transactions. Each month, NASA is required to 
reconcile the difference between the amount of money it reports to be 
in its Fund Balance with Treasury with the amount that Treasury reports 
to be in the account. The 2005 audit identified FBWT as a material 
weakness due to unreconciled discrepancies between Treasury's balance 
and the balance represented in NASA's Core Financial system.
    IG auditors indicated that documentation to support the application 
of rigorous reconciliation processes was not available for their 
review. (Fiscal Year 2005 PAR, page 211)
            Goal
    NASA's goal for resolving this material weakness is to fully 
reconcile the agency's Fund Balance with Treasury and to process any 
future corrections in a timely manner.
            Objective
    Supporting that goal is the objective of monitoring Fund Balance 
With Treasury on a regular basis to ensure compliance with NASA and 
Treasury policies, procedures and practices.
            Strategy
    The strategy for achieving that objective is three-fold:
  --1. Center CFOs will perform monthly reconciliations and certify 
        their completion with Agency OCFO.
  --2. Agency OCFO will perform monthly reviews of Center 
        reconciliations to ensure compliance with reconciliation 
        policies and procedures.
  --3. OCFO will institute management reviews and monitor compliance 
        with the following metrics:
    --a. Reconciliations performed every 30 days
    --b. Corrections processed within 120 days of discovery
            Accomplishments in Fiscal Year 2005
    In fiscal year 2005, NASA enhanced its funds distribution process 
through policy and procedural changes to minimize manual and repetitive 
process steps. The Agency will continue to refine and implement 
enhancements.
    In addressing previous year differences in NASA's Fund Balance with 
Treasury, the OCFO reduced the out of balance condition through the 
following actions:
  --Developed and implemented a standard process that requires a review 
        and approval process be followed to correct errors, supported 
        with appropriate documentation.
  --Implemented across all Field Centers standard reconciliation 
        procedures and associated templates to monitor FBWT status on a 
        monthly basis. These procedures will help to ensure timely 
        resolution of variances. The procedures make up the Periodic 
        Monitoring Controls Activities handbook, Volume 19 of NASA's 
        Financial Management Requirements (FMR). Policy was also 
        implemented requiring each Field Center CFO to review and 
        certify to Headquarters monthly that the reviews and 
        reconciliations were performed, and are complete and accurate.
  --Developed and implemented a standard process to review and approve 
        the write-off of unsupportable differences.
  --Established teams to resolve identified FBWT issues at targeted 
        NASA Field Centers.
  --Implemented monthly Agency cash monitoring procedures and 
        guidelines to track reconciliations and the timely resolution 
        of differences.
  --Implemented across all Field Centers an automated cash 
        reconciliation tool to identify differences and augment timely 
        processing of transactions.
            Approach for Fiscal Year 2006
    NASA has developed a comprehensive set of planned corrective 
actions to address each of the financial audit recommendations. 
Following is a set of tables that track each planned corrective action 
to the recommendations from the financial audit report.

--------------------------------------------------------------------------------------------------------------------------------------------------------
 Material Weakness or Reportable
  Condition with Recommendation      Number                        Planned Corrective Action (PCA)                       Target Date for PCA Completion
--------------------------------------------------------------------------------------------------------------------------------------------------------
#2 Further Research Required to        PCA 1   Status Center CFOs to ensure monthly reconciliations are performed.....  Monthly
 Resolve Fund Balance with             PCA 2   Review and monitor compliance with Fund Balance with Treasury policies,  Monthly
 Treasury Differences (2a).                     procedures, and practices.                                              ................................
Recommendation 2a: We recommend        PCA 3   Perform a CRCS to SAP reconciliation and resolve differences...........  6/30/06
 that NASA continue to improve         PCA 4   Established Fund Balance with Treasury metrics.........................  Complete
 its current procedures to ensure      PCA 5   Assess compliance with Fund Balance with Treasury policies, procedures,  3/31/06
 that all reconciling items are                 and practices.
 thoroughly researched, timely
 resolved, and reviewed by
 appropriate center and
 headquarters OCFO personnel. In
 addition, NASA should retain all
 reports and documentation used
 in performing its fund balance
 with Treasury reconciliations to
 ensure that detailed, documented
 explanations and resolution
 actions are maintained for a
 sufficient audit trail.
--------------------------------------------------------------------------------------------------------------------------------------------------------

3. Enhancements needed for controls over Property, Plant and Equipment 
        (PP&E) and materials. (Material Weakness)
    ``Consistent with prior year audit reports, our review of property, 
plant, and equipment (PP&E), totaling approximately $35.0 billion, 
identified serious weaknesses in internal control that, if not 
corrected, could prevent material misstatements from being detected and 
corrected in a timely manner.'' (Reference: NASA Fiscal Year 2005 
Performance and Accountability Report (PAR), Part 3, page 203)
            Background
    NASA Mission-related products are designed, built and deployed to 
carry-out the agency's exploration and research objectives. Given the 
unique scientific nature of the agency's work, these programs, such as 
Hubble and the International Space Station, are highly specialized, and 
to develop and maintain them, NASA contracts with industry. Often 
multiple contractors participate in the design and creation of these 
products in a cycle that, in some cases, has taken as long as forty 
years from concept through deployment.
    The primary issues related to NASA property, plant and equipment 
are threefold:
  --1. the accuracy and completeness of the financial records--meaning 
        the classification (expense or asset) and valuation--of project 
        property, plant and equipment, as well as the coding of 
        documents at obligation that carry through expenditure
  --2. the accountability for the materials and equipment used in the 
        construction of physical products
  --3. the accuracy and timeliness of contractor provided financial 
        information--including the classification (expense or asset) 
        and valuation--related to the status of contractor-held 
        property, plant and equipment and materials
    First, given the complex and unique nature of its research and 
development work, NASA and its respective auditors and GAO 
representatives, have struggled over the years to define and agree upon 
an approach, and related policies, for reporting program and product 
costs in a manner consistent with FASAB guidelines. This impacts the 
classification of PP&E costs (asset or expense), the valuation of 
interim and finished products, and, ultimately NASA's financial 
statements.
    Second, as contractors develop parts and components of an overall 
product, they ship them from the manufacturing location to various NASA 
Centers across the country in preparation for assembly into a finished 
product. NASA has been working to ensure proper control over these 
components.
    Finally, preparation of NASA's financial statements is dependent 
upon contractors and their NASA program counterparts reporting costs 
associated with developing these parts. The accuracy, completeness and 
timeliness of this reporting must be improved.
    IG auditors specifically noted that controls relating principally 
to contractor-held PP&E and materials and NASA-held assets in space 
(Theme Assets) need improvement, and that headquarters oversight needs 
improvement. (Fiscal Year 2005 PAR, page 211)
            Goal
    NASA's goal for resolving this material weakness is to improve the 
agency's internal controls over its property, plant and equipment 
(PP&E).
            Objective
    Supporting that goal are the objectives to:
  --1. Develop core standard agency-wide procedures and tools to review 
        and validate that financial data and processes are consistent 
        with generally accepted accounting principles (GAAP) for 
        Federal reporting entities.
  --2. Provide relevant, accurate, reliable, and timely financial 
        property information to stakeholders.
            Strategy
    The strategy for achieving that objective has six elements:
  --1. Define Asset Categories (NASA-Held vs. Contractor-Held and 
        Program Related vs. Non-Program Related), based on published 
        accounting guidance (e.g. SFFAS #'s 6, 8, & 11 and SFAS #2)
  --2. Define appropriate accounting treatment of an asset based upon 
        its use (Alternative vs. No Alternative Future Use), based on 
        published accounting guidance (e.g. SFFAS #'s 6, 8, & 11 and 
        SFAS #2);
  --3. Review NASA's revised capitalization policy with OMB, OIG, GAO, 
        FASAB, and E&Y;
  --4. Review and revise, as necessary, the PP&E policy regarding the 
        accounting treatment;
  --5. Engage the entire NASA community (OCFO, Project/Program 
        Managers, Procurement, Logistics and Facilities) in improving 
        PP&E financial management and internal controls;
  --6. Define, Communicate, Train and Implement procedures for 
        effective Property, Plant & Equipment Lifecycle Management, to 
        include valuation of Assets.
            Accomplishments in Fiscal Year 2005
    NASA has made great strides toward enhancing its internal controls 
and addressing the weaknesses in NASA's accounting for its Property, 
Plant and Equipment and Materials.
    NASA successfully implemented a system to account for assets held 
by contractors, Contractor Held Asset Tracking System (CHATS) to 
address the potential concern of inadequate supervisory reviews of the 
Contractor submitted data and have a data base for the costs of these 
fixed assets. The system is currently being used and was in place when 
DCAA conducted its audit of agreed upon procedures on NASA's largest 
contractors. As a part of the audit, DCAA reviewed whether Contractor 
policies and procedures provide for detecting and correcting errors 
reported on the Monthly CHATS reports.
    The DCAA reviews were conducted closer to the end of the fiscal 
year than had previously been the case in order to support the asset 
balance on NASA's Balance Sheet at year-end. DCAA was also tasked with 
reviewing contractor compliance in resolving prior year reported 
deficiencies. Preliminary feedback from the draft reports indicates 
that progress has been made during fiscal year 2005 toward resolving 
these deficiencies.
    NASA now performs the following activities to ensure 
reconciliations of asset transfers between contractors:
  --Completion of a monthly validation checklist requiring that all 
        transfers of $1 million or more be supportable with appropriate 
        documentation.
  --Preparation monthly of a Transfer Matrix report by the NASA Center 
        property accountants. This report, using the data in CHATS, 
        lists all transfers made between and among contractors or with 
        NASA Field Centers. This reporting will assist NASA 
        Headquarters with readily identifying inter-contract transfers.
    In keeping with the auditors' recommendation to fundamentally 
revisit its approach to capitalizing property, NASA developed a 
proposed change in accounting policy for the capitalization of Theme 
Assets--the largest portion of NASA's PP&E. This policy would require 
NASA to expense all costs as incurred for projects that are exploratory 
in nature, that have no alternative future uses and are not reusable or 
repairable (i.e. research and development type costs). The change would 
more accurately reflect the nature of program and project expenditures.
    NASA also implemented the Project Management Information 
Improvement (PMI\2\) initiative in 2005. PMI\2\ is a project work 
breakdown coding structure that tracks a project from obligation 
through expenditure. PMI\2\ benefits include:
  --Alignment of the Agency's technical WBS with the financial coding 
        structure
  --Data standardization and configuration management
  --Consistent and standardized tool for project management reporting
  --Timely, consistent and reliable information for management 
        decisions
  --Program and Project managers gain the ability to view detailed 
        costs and obligations at the project level
            Approach for Fiscal Year 2006
    NASA has developed a comprehensive set of planned corrective 
actions to address each of the financial audit recommendations. 
Following is a set of tables that track each planned corrective action 
to the recommendations from the financial audit report.

--------------------------------------------------------------------------------------------------------------------------------------------------------
 Material Weakness or Reportable
  Condition with Recommendation      Number                        Planned Corrective Action (PCA)                       Target Date for PCA Completion
--------------------------------------------------------------------------------------------------------------------------------------------------------
#3. Enhancements Needed for            PCA 1   Defined Asset Categories based on published accounting guidance and      Complete
 Controls Over Property, Plant,                 NASA's business environment--Finalized how property will be classified
 and Equipment and Materials.                   (e.g., NASA Held and Contractor Held Program Related vs. Non-Program
Recommendation 3a1: We recommend       PCA 2    Related, etc.).                                                         Draft Complete
 that NASA continue to focus on                Completed draft defining appropriate accounting treatment per Asset      Final Complete
 resolving prior year issues and                category and use (based on published accounting guidance and NASA's
 completing its implementation of      PCA 3    business environment).                                                  2/28/06
 suggested recommendations and         PCA 4   Provide OMB, GAO, FASAB, and OIG NASA's revised capitalization policy..  3/15/06
 developing detailed corrective        PCA 5   Adjust capitalization policy as necessary..............................  3/31/06
 action plans.                                 Flowchart and document desired business processes and procedures, and
Recommendation 3a2a: In addition,               define roles and responsibilities for effective PP&E lifecycle
 we once again place further                    management, to include valuation of Assets.                             ................................
 emphasis on recommending that                    Incorporate OIG comments in the flow charts as appropriate and        ................................
 NASA fundamentally revisit its        PCA 6       disposition.                                                         3/31/06
 approach to capitalizing                      Identify and coordinate changes that must be made to existing policies
 property.                                      Agency-wide.
Recommendation 3a2b: Documenting,                 Meet with HQ Mission Support Offices (Procurement, Office of Chief
 analyzing, and implementing                       Engineer, Institutions & Management, etc.).
 robust control changes from end                  Develop a list of potential associated policy impacts
 to end to all categories of PP&E.                Coordinate with HQ Mission Support Offices to obtain draft policy
Recommendation 3a3: We also                        updates.
 recommend that all NASA
 obligation documents and
 expenditures be coded to
 identify whether they relate to
 a property acquisition to create
 a control for comparison to
 recorded property transactions
 and subsidiary ledgers, be they
 NASA activities or contractors.
                                       PCA 7   Assign cross-functional teams to participate in Working Groups to re-    4/3/06
                                                engineer, as necessary, NASA's current processes and procedures.
                                       PCA 8   Engage working groups to:                                                5/31/06
                                                  Identify process and system(s) gaps between current processes and
                                                   desired processes, as well as, identifying solutions. Specifically,
                                                   teams will focus on the following areas of PP&E Lifecycle
                                                   management:
                                                    Planning
                                                    Acquisition
                                                    Management Control and Accountability
                                                    Disposition
                                                  Ensure that OIG comments regarding specific corrective actions are
                                                   incorporated in the flow charts as appropriate and dispositioned.
                                                  Review Compensating Control Team recommendations and other relevant
                                                   material.
                                                  Establish single points of accountability within the PP&E Lifecycle.
                                                  Establish a certification requirement (Center Director for Real and
                                                   Personal Property/Chief Engineer or Mission Director for Program
                                                   Assets).
                                                  Establish format for new RSSI disclosure reporting requirements.
                                       PCA 9   Develop Process Implementation Plan for Changes Agency-wide............  6/16/06
                                      PCA 10   Complete interim policy and process changes, as necessary, to include    9/29/06
                                                the following:
                                                  Program/Project Management policies
                                                  Procurement policies
                                                  Financial policies
                                                  Logistics policies
                                                  Facilities policies
                                               Conduct focused communication forums with accountable parties to
                                                discuss their roles and responsibilities within the PP&E lifecycle.
                                               Prepare analysis and record changes to reported fixed assets and
                                                expenses based upon revised policies.
--------------------------------------------------------------------------------------------------------------------------------------------------------

4. Internal controls in estimating NASA's Environmental Liabilities 
        require enhancement.
    ``During our review of NASA's environmental liability estimates 
totaling $825 million as of September 30, 2005, and related disclosures 
to the financial statements, we continued to note weaknesses in NASA's 
ability to generate an auditable estimate of its unfunded environmental 
liabilities (UEL) and to identify potential financial statement 
disclosure items because of a lack of sufficient, auditable evidence.'' 
(Reference: NASA Fiscal Year 2005 Performance and Accountability Report 
(PAR), Part 3, page 207)
            Background
    Due to the highly complex scientific and technical nature of NASA's 
work, the Agency's scientific and engineering community develops the 
actual estimates for environmental liabilities. The OCFO provides 
accounting expertise in the form of policy and guidance to the 
Environmental Liabilities staff responsible for developing these 
estimates. Once estimates have been developed, they are then delivered 
to the OCFO accounting staff, who records them in NASA's Core Financial 
system.
    IG auditors specifically noted weaknesses in NASA's ability to 
generate auditable unfunded environmental liability estimates and to 
identify disclosure items. (Fiscal Year 2005 PAR, page 211)
            Goal
    NASA's goal for resolving this material weakness is to validate the 
tools and methodology used to prepare the unfunded environmental 
liability estimates.
            Objective
    Supporting that goal are the objectives to:
  --1. Develop standard agency-wide procedures to be applied by all 
        Environmental Liability staff on the preparation, reviewing, 
        validation, and processing of environmental liabilities, in 
        agreement with guidance from statutory agencies (OMB, FASAB, 
        Treasury, and State and local Governments).
  --2. Ensure that all staff involved in the development of the 
        environmental liability estimates and in the review, analysis, 
        and processing of those estimates in the financial system are 
        properly trained.
            Strategy
    The strategy for achieving that objective is to improve existing 
environmental liability procedures and implement needed internal 
controls to assure the improved procedures are adhered to and followed. 
NASA will also provide proper training to all staff involved in the 
development of the environmental liability estimates and the review, 
analysis, and processing in the financial system.
            Accomplishments in Fiscal Year 2005
    The OCFO and the Environmental Management Division (EMD) developed 
a close working partnership to coordinate policies, processes and 
controls for estimating NASA's environmental liabilities. Members from 
both offices met weekly to identify and resolve issues, and determine 
the most appropriate steps toward improved estimates.
    NASA has developed and conducted training in conjunction with the 
EMD for staff that provides guidance and policy for estimating 
environmental liabilities. The training outlines the process for 
estimating environmental liabilities, explains Federal accounting 
standards and guidance, defines quality review processes, and addresses 
existing audit findings.
    NASA has developed and published documented procedures for 
estimating environmental liabilities. These procedures have been 
distributed to all Centers.
            Approach for Fiscal Year 2006
    NASA has developed a comprehensive set of planned corrective 
actions to address each of the financial audit recommendations. 
Following is a set of tables that track each planned corrective action 
to the recommendation from the financial audit report.

--------------------------------------------------------------------------------------------------------------------------------------------------------
 Material Weakness or Reportable
  Condition with Recommendation      Number                        Planned Corrective Action (PCA)                       Target Date for PCA Completion
--------------------------------------------------------------------------------------------------------------------------------------------------------
#4 Internal Controls in                PCA 1   Update the plan developed in response to the 2004 management letter      2/28/06
 Estimating NASA's Environmental                comments.
 Liability Require Enhancement.        PCA 2   Host the second joint, OCFO and Environmental Management Division        3/31/06
Recommendation 4a1: We recommend                (EMD), training course to expedite the overall resolution of the
 that NASA expedite the progress                action plan.
 on the action plan it developed
 in response to our fiscal year
 2004 audit.
                                       PCA 3   Develop and have available for auditor review, the Environmental         5/31/06
                                                Liability estimates based on 2nd quarter data.
                                       PCA 4   Conduct review of Environmental Liability estimation process...........  7/15/06
                                       PCA 5   Complete final liability adjustments based on current information......  9/15/06
--------------------------------------------------------------------------------------------------------------------------------------------------------
#4 Internal Controls in                PCA 1   Update 2004 plan to include action and timeframes for addressing and     2/28/06
 Estimating NASA's Environmental                resolving center and facility specific findings.
 Liability Require Enhancement.
Recommendation 4a2: In addition,
 we recommend that NASA include
 in the action plan the center
 and facility specific findings
 that were identified during the
 fiscal year 2004 audit as
 opposed to the current work plan
 steps which address only those
 fiscal year 2004 observations
 that were thought to be common
 across all centers or apply to
 headquarters.
--------------------------------------------------------------------------------------------------------------------------------------------------------
#4 Internal Controls in                        Jointly assess the effectiveness of UEL internal controls, cost
 Estimating NASA's Environmental                estimation process and data gathering procedures.                       ................................
 Liability Require Enhancement.        PCA 2   Develop review/internal control checklist..............................  3/1/06
Recommendation 4a3: We also            PCA 3   Conduct site visits utilizing checklist................................  7/15/06
 recommend that NASA's OCFO            PCA 4   Generate report for management review and disposition..................  8/30/06
 perform a self-assessment of the      PCA 5   Incorporate changes as necessary based on joint assessment.............  9/15/06
 Unfunded Environmental Liability
 (UEL) estimation and aggregation
 process. This assessment should
 focus on identifying additional
 weaknesses in NASA's UEL system
 that went undetected because no
 final estimates were available
 for our review at the time of
 our audit.
--------------------------------------------------------------------------------------------------------------------------------------------------------
#4 Internal Controls in                PCA 1   Assess utilization of IDEAL parametric model...........................  8/30/06
 Estimating NASA's Environmental       PCA 2   Incorporate changes as necessary.......................................  9/15/06
 Liability Require Enhancement.
Recommendation 4b: NASA should
 also continue to validate the
 tools (including IDEAL) and
 methodology used at the center
 and facility level to prepare
 the UEL estimates.
--------------------------------------------------------------------------------------------------------------------------------------------------------

                    CHAPTER 3: INITIATIVE WORKPLANS

    Initiative Workplans
  --Financial Systems, Analyses, and Oversight
  --Fund Balance With Treasury
  --Property, Plant & Equipment
  --Environmental Liabilities




                                APPENDIX
                                ACRONYMS

    CAP--Corrective Action Plan
    CC--Competency Center
    CEAR--Certificate of Excellence in Accountability Reporting
    CFO--Chief Financial Officer
    COTS--Commercial off-the-shelf
    CRCS--Central Resources Control System
    DCFO--Deputy Chief Financial Officer
    EMD--Environmental Management Division
    E&Y--Ernst and Young
    FASAB--Federal Accounting Standards Advisory Board
    FBWT--Fund Balance With Treasury
    GAO--General Accounting Office
    HQs--NASA Headquarters
    IDEAL--Integrated Data Evaluation and Analysis Library
    IEMP--Integrated Enterprise Management Program
    MD&A--Management Discussion and Analysis
    NASA--National Aeronautics and Space Administration
    OCFO--Office of the Chief Financial Officer
    OIG--Office of the Inspector General
    OLA--Operational Level Agreements
    OMB--Office of Management and Budget
    PAR--Performance and Accountability Report
    PCA--Planned Corrective Action
    PP&E--Plant, Property and Equipment
    RSSI--Required Supplementary Stewardship Information
    SAP--Systems, Applications, and Products
    SFAS--Statement of Financial Accounting Standards
    SFFAS--Statement of Federal Financial Accounting Standards
    SONC--Statement of Net Cost
    SR--Service Request
    UEL--Unfunded Environmental Liability

    Question. Given this state of affairs, how can the Agency oversee 
the expenditure of its appropriated resources and ensure that its 
programs and operations are efficient and effective?
    Answer. NASA relies upon an integrated system of management 
controls to oversee the expenditure of its appropriated resources. 
These controls span multiple phases of resource management from the 
planning, programming and distribution of appropriations through to the 
application and use of those resources across the entire program and 
project lifecycle.
    With respect to oversight of appropriated funds, as appropriations 
are received and distributed, the Agency tracks them from appropriation 
to apportionments to allotments to commitments and to obligations to 
help ensure that NASA is tracking resource allocation through the 
program lifecycle.
    Efficient and effective programs and operations begin with planning 
and budgeting. NASA's Planning, Programming, Budgeting, and Execution 
(PPBE) is NASA's four-phased methodology for aligning resources in a 
comprehensive, disciplined approach that supports NASA's Mission and 
directs Agency resources toward the priorities set forth by Congress 
and the President. PPBE also enhances financial management quality and 
accountability by linking the Agency's financial, programmatic, and 
institutional communities for mission success. PPBE provides Agency 
leaders with timely, accurate, and useful information about where 
initiatives are and are not succeeding. This process helps to ensure a 
budget that supports the Agency's strategic priorities and that is 
traceable to outcomes.
    As NASA's Mission Directorates use these funds to accomplish their 
goals, NASA's three-Council governance structure helps to ensure that 
they are doing so efficiently and effectively. The Strategic Management 
Council serves as NASA's senior decision-making body for strategic 
direction and planning by determining NASA's strategic direction and 
assessing Agency progress in achieving NASA's Mission and the Vision 
for Space Exploration. The Operations Management Council oversees 
Center, or institutional, operations and performance while the Program 
Management Council (PMC) serves as NASA's senior decision-making body 
for base-lining and assessing program/project performance to ensure 
successful achievement of NASA Strategic Goals and outcomes.
    Below the PMC-level, NASA enforces the Agency's governance 
principles of ``Checks and Balances'' and ``Balance of Power'' by 
balancing and integrating the activities and authorities of the Chief 
Engineer, the Independent Technical Authority, Program Managers, and 
the Office of Safety and Mission Assurance.
    Funding requirements are set by law for government programs. The 
Independent Technical Authority not under program direction sets 
technical requirements. And, schedule requirements are set by a variety 
of factors, usually external and outside the Program Manager's control.
    In NASA, the Chief Financial Officer ensures funding compliance. 
Appropriate third parties monitor funding and schedule compliance. The 
Office of Safety and Mission Assurance (OSMA) ensures compliance with 
the established critical technical requirements. Schedule compliance is 
assured by third parties depending on the source of the schedule 
requirements. For these reasons, the Chief Financial Officer, the IG, 
the Independent Technical Authority, and OSMA are not in the Program 
Manager's chain of command.
    Three independent inputs give the NASA Administrator the confidence 
that the Agency has exercised appropriate checks and balances of 
Authorities, Responsibilities, and Accountabilities.
    Below these governing structures, NASA employs financial management 
and programmatic staff at each of its centers. These individuals have a 
thorough knowledge of each of the Agency's programs and projects, 
including the resources budgeted and expended to support those programs 
and projects. The processes and procedures employed to monitor program 
and project spending and performance were in place before the 
implementation of NASA's new financial management system in fiscal year 
2003. As the Agency continues to stabilize its centralized financial 
management system, our center financial management staff, as well as 
programmatic staff, continue to monitor and analyze the financial 
health of the Agency's programs and operations.
    Question. What steps has NASA taken to prevent this type of ADA 
violation from occurring again?
    Answer. NASA agrees with each of the OIG's specific 
recommendations:
  --OIG Recommendation #1.--We recommend that the Administrator report 
        the ADA violations for the funds carried over from fiscal year 
        2004 to fiscal year 2005 for each affected account and for the 
        $30,413,590 to the President of the United States through the 
        OMB Director, the Speaker of the House of Representatives, the 
        President of the Senate, and the Comptroller General of the 
        Government Accountability Office, as required by the ADA and by 
        OMB Circular A-11, section 145.7.
  --OIG Recommendation #2.--We recommend that the Administrator request 
        a comprehensive demonstration by the OCFO that the 
        appropriations available to be spent in fiscal year 2006 can be 
        traced from appropriation to apportionments to allotments to 
        commitments and to obligations to help ensure that NASA is not 
        violating the ADA for fiscal year 2006.
    In addition to accepting and acting upon NASA's OIG two specific 
recommendations, NASA has implemented specific correction actions in 
the OCFO. These corrective actions include:
  --Certification of reconciliations by responsible financial 
        management personnel.
  --Demonstrated effective system controls that prevent obligations 
        from exceeding apportionment control totals.
  --Conducted Appropriations Law training for 30 staff in January 2006 
        and 8 in March 2006.
  --Conducted OMB Circular A-11 training for 24 staff in February 2006. 
        An additional course is currently being scheduled.
  --Increased the staff size in the Funds Distribution branch.
  --Documenting enhanced internal controls, to include:
    --Logging and tracking of all OMB apportionment requests and 
            approvals; and
    --Reconciliation of OMB apportionments to Congressionally approved 
            Operating Plans to the funds loaded into the Agency's 
            centralized financial system.
    Question. What is NASA's current total estimated cost to develop, 
implement, and maintain the Integrated Enterprise Management Program, 
including those costs incurred to resolve data integrity issues 
resulting from the initial implementation of the Core Financial system?
    Answer. The development and implementation costs for NASA's 
Integrated Enterprise Management Program, including all the hardware, 
software, civil service labor, contractor labor, travel, and overhead 
costs associated with re-engineering business processes and 
implementing business systems for human capital management, financial 
management, asset management, and procurement and contract management 
are estimated at $842 million for the development years 2000 through 
2011, consistent with the fiscal year 2007 President's budget request.
    Of this total development estimate, $82.6 million is being expended 
to update NASA's financial system, which, among other benefits, helps 
resolve data integrity issues identified with the initial core 
financial system implementation. Approximately, $50 million per year is 
expended operating and maintaining this business systems environment.

                             ADA VIOLATION

    Question. The NASA Office of Inspector General reported that NASA, 
as a result of actions by officials in the Office of the Chief 
Financial Officer violated the Antideficiency Act (ADA). According to 
the IG report, the ADA violations occurred because of the lack of 
internal controls within the OCFO and OCFO personnel's misunderstanding 
of OMB apportionment requirements.
    The NASA Administrator agreed to report the ADA violations to the 
President of the United States through the OMB Director, the Speaker of 
the House of Representatives, the President of the Senate, and the 
Comptroller General of the Government Accountability Office, as 
required by the ADA.
    Question. When will NASA provide its report on the ADA violations?
    Answer. By letter dated June 23, 2006, the Administrator informed 
the Committee of activities initiated regarding recommendations 
concerning two ADA violations identified by the NASA Office of 
Inspector General (0IG) in a report dated April 10, 2006. The 
Administrator outlined his commitment to ensuring that the root causes 
of the violations are addressed and that effective remedies are 
instituted for all of NASA's financial management processes and 
systems. As part of those efforts, and in conformance with the 
requirements of OMB Circular No. A-11 and NASA Policy Directive 
9050.3E, Administrative Control of Appropriations and Funds, the 
Administrator received a determination from NASA's Office of the Chief 
Financial Officer regarding the identification of the alleged 
responsible party for the violations. That individual, no longer 
employed with the Agency, in response to notification and the 
opportunity to comment, has raised matters that the Administrator 
determined require further investigation.
    Accordingly, the Administrator directed an intra-Agency team, to 
include representatives from the NASA Offices of Program Analysis and 
Evaluation, Human Resources, and General Counsel, to conduct a de novo 
review of the situation. That review is now expected to be completed by 
July 31, 2006, and is expected to provide the requisite information for 
the Administrator to accurately and comprehensively meet reporting 
obligations per OMB Circular No. A-11 and complete formal 
notifications.
    Question. Who was responsible for the ADA violations?
    Answer. As indicated above, the Administrator has directed an 
intra-Agency team to conduct a de novo review that is expected to 
provide the requisite information to enable him to accurately and 
comprehensively meet reporting obligations per OMB Circular No. A-11 
and complete formal notification, including identification of 
responsible party/parties.
    Question. Has disciplinary action been considered as required by 
OMB Circular No. A-11?
    Answer. This determination will be an outcome of the review 
currently underway.
    Question. The IG's report noted that the OCFO was unable to 
determine the exact amount of the ADA violations because of the 
unreliability of NASA's financial management system. Given this state 
of affairs, how can the Agency oversee the expenditure of its 
appropriated resources and ensure that its programs and operations are 
efficient and effective?
    Answer. The ADA violations occurred because of NASA's failure to 
file timely reapportionment requests with the Office of Management and 
Budget and not as a result of NASA's financial management system.
    NASA has implemented corrective actions to ensure that 
reapportionment requests are filed in a timely manner and that internal 
controls are in place. These actions include:
  --Certification of reconciliations by responsible financial 
        management personnel.
  --Demonstrated effective system controls that prevent obligations 
        from exceeding apportionment control totals.
  --Conducted Appropriations Law training for 30 staff in January 2006 
        and 8 in March 2006.
  --Conducted OMB Circular A-11 training for 24 staff in February 2006. 
        An additional course is currently being scheduled.
  --Increased the staff size in the Funds Distribution branch.
  --Developing and documenting enhanced internal controls, to include:
    --Logging and tracking of all OMB apportionment requests and 
            approvals; and
    --Reconciliation of OMB apportionments to Congressionally approved 
            Operating Plans to the funds loaded into the Agency's 
            financial system.
    Question. In committing the ADA violations, did NASA expend any 
funds beyond those appropriated by Congress or, in a way that was 
inconsistent with Congressional direction?
    Answer. NASA did not expend funds beyond those appropriated by 
Congress or in a way inconsistent with Congressional direction. NASA's 
violations were the result of its failure to file timely 
reapportionment requests with the Office of Management and Budget. The 
first violation occurred during fiscal year 2005 when NASA authorized 
and obligated in fiscal year 2005 the unobligated balance of 
congressionally appropriated two-year funds from fiscal year 2004 
without requesting an fiscal year 2005 reapportionment as required by 
OMB Circular A-11. The second violation occurred when NASA failed to 
submit a timely reapportionment request to OMB in August 2004 to match 
congressionally approved Operating Plan changes.
    Question. Were any NASA programs or operations adversely impacted 
financially or operationally as a result of the ADA violations?
    Answer. No programs were impacted as a result of the first 
violation and no funding adjustments were necessary. To correct the 
second violation, NASA de-obligated $30 million of fiscal year 2004 
funds and used fiscal year 2005 funds to correct the overobligation. 
These de-obligated funds remain available to the impacted Mission 
Directorate to make any future upward adjustments to contracts awarded 
in fiscal year 2004.
    Question. What has NASA done to assure itself that it has not 
committed any additional ADA violations?
    Answer. NASA's Office of the Inspector General has recommended, and 
NASA has agreed, that NASA's Office of the Chief Financial Officer 
demonstrate to the NASA Administrator that the appropriations available 
to be spent in fiscal year 2006 can be traced from appropriation to 
apportionments to allotments to commitments and to obligations to help 
ensure that NASA is not violating the ADA for fiscal year 2006.
    Question. What steps has NASA taken to prevent this type of ADA 
violation from occurring again? Will there be any independent analysis 
to affirm that the measures implemented by NASA will prevent future ADA 
violations, in any form?
    Answer. NASA has implemented corrective actions to ensure that the 
weaknesses that led to the violations have been addressed. These 
actions include:
  --Certification of reconciliations by responsible financial 
        management personnel.
  --Demonstrated effective system controls that prevent obligations 
        from exceeding apportionment control totals.
  --Conducted Appropriations Law training for 30 staff in January 2006 
        and 8 in March 2006.
  --Conducted OMB Circular A-11 training for 24 staff in February 2006. 
        An additional course is currently being scheduled.
  --Increased the staff size in the Funds Distribution branch.
  --Developing and documenting enhanced internal controls, to include:
    --Logging and tracking of all OMB apportionment requests and 
            approvals; and
    --Reconciliation of OMB apportionments to Congressionally approved 
            Operating Plans to the funds loaded into the Agency's 
            financial system.
    NASA's Office of the Inspector General has recommended, and NASA 
has agreed, that NASA's Office of the Chief Financial Officer 
demonstrate to the NASA Administrator that the appropriations available 
to be spent in fiscal year 2006 can be traced from appropriation to 
apportionments to allotments to commitments and to obligations to help 
ensure that NASA is not violating the ADA for fiscal year 2006.

                              NASA CENTERS

    Question. One of the dilemmas that NASA faces is that some centers 
are better positioned to have future work on missions than others at 
NASA. It has been mentioned that an option NASA would entertain is to 
move the work to centers that will be having difficulty in the next few 
years in order to keep skilled workers at NASA. While NASA should do 
all it can to keep the skilled employees at NASA, I am concerned that 
this option could marginalize all of the centers.
    How do we ensure this does not occur? Could you please provide this 
Committee with an update on how NASA has eliminated, or is eliminating, 
the uncovered capacity related to facilities? Could you please explain 
how moving research projects from a Center with low uncovered capacity 
to a Center with high uncovered capacity reduces NASA's total uncovered 
capacity?
    Answer. As the NASA Administrator testified to both the House and 
Senate, ``NASA is focusing its efforts to solve its uncovered capacity 
workforce problems through a number of other actions, including the 
assignment of new projects to research Centers that will strengthen 
their base of in-house work, the Shared Capability Assets Program that 
should stabilize the skills base necessary for a certain specialized 
workforce; the movement of certain research and technology development 
projects from certain centers not suffering from uncovered capacity 
problems to centers that are; retraining efforts at field centers so 
that the technical workforce can develop new skills; and the pursuit of 
reimbursable work for projects and research to support other government 
agencies and the private sector through Space Act Agreements.''
    None of the above actions marginalizes any one Center. NASA's goal 
is not to make all Centers equally unhealthy, nor to transfer work 
packages so that all Centers end up with equal or near-equal amounts of 
future work on NASA missions. Such an expectation is not realistic. 
Rather the goal is to increase the future work at Centers currently 
having difficulty sustaining workforce skills, while not damaging the 
ability of the other Centers to maintain their workforce skills that 
are critical to NASA's future. NASA Centers cannot grow in size, but 
must effectively use other field Centers to get programs done. Work 
moving between Centers will be done with assurances that it does not 
aggravate an existing or potentially problematic situation. The 
decisions associated with work transfers, however, will not be based 
solely on numbers, but also on skills' availability and mismatches. For 
example, NASA may seek to place additional scientific work at a Center 
with uncovered scientists, but may move a limited number of engineering 
tasks (where its engineering workforce is saturated with work) to 
another Center that has uncovered engineers with the necessary skills 
to complete those tasks. Such transfers allow the Agency, ``to do all 
it can to keep skilled employees at NASA.''
    Regarding facilities and related workforce, NASA continues to pare 
the infrastructure wherever we can do so without compromising our 
mission. This is an ongoing process. To date, the workforce has been 
reduced by over 900 people through buyouts. Eligible employees for 
buyouts included those associated with excess infrastructure.

                              PROCUREMENT

    Question. This Committee has consistently noted their concern about 
NASA's lack of transparency in contracting practices as well as 
significant cost overruns. These issues have also been recognized by 
the GAO and the NASA IG.
    What is the Agency doing to improve its management of these 
programs in order to reduce its vulnerability to additional cost 
overruns?
    Answer. Over the past three years since the GAO and IG reports were 
issued, NASA has implemented a number of initiatives aimed at improving 
its cost estimating performance. These include an overarching 
initiative called Continuous Cost Risk Management, which requires the 
NASA project management, and cost estimating community to identify 
elements in projects, which have the potential to induce high cost and/
or schedule risk. CCRM goes on to include methods for tracking these 
risks throughout the life cycle and methods for applying cost risk 
dollars toward risk mitigation. The proper use of cost risk analysis 
itself has been greatly emphasized by the Agency as a new tool in its 
programmatic planning process. All major projects are now required to 
perform a cost risk analysis to identify the range of cost that is 
indicative of the risk of projects. Based on the cost risk analysis, 
the Administrator is requiring projects to budget to an independent 
cost estimate (ICE) that generally achieves a 70 percent level of cost 
confidence.
    Other improvements in NASA cost estimating includes the 
institutionalization of a new cost data collection system, the Cost 
Analysis Data Requirement (CADRe) which takes ``snapshots'' of each 
project's technical, programmatic and cost status at 5 key milestones 
across the project life cycle. The CADRe forms the basis of estimate 
for ICEs, which are being performed by the Independent Program 
Assessment Office within the Program Analysis and Evaluation 
organization at NASA Headquarters. All CADRe submissions are being 
maintained in a new NASA cost estimating data base, ONCE (One NASA Cost 
Engineering Data Base) for the use of the NASA cost estimating 
community.
    All of the above efforts should lead to a vastly improved ability 
to estimate projects more accurately at their outset and at the time 
the Agency makes a formal commitment to OMB and Congress, which is at 
Preliminary Design Review (PDR). After PDR, Earned Value Management 
(EVM) systems are being set up and used by ongoing projects to manage 
cost throughout the balance of the life cycle.
    It must be remembered that NASA projects often include cutting edge 
technology, which makes accurate cost estimation much more difficult. 
But better initial cost estimating and the use of EVM to manage the 
fiscal health of projects once underway, should significantly reduce 
the Agency's vulnerability to cost overruns.

                   NASA'S UNOBLIGATED BALANCE GROWTH

    Question. The Committee recognizes that NASA is authorized to 
obligate funds over a 2-year period, and that a research and 
development agency like NASA is expected to carry over some unobligated 
funds at the end of each fiscal year. While the Committee recognizes 
that NASA can use unobligated funds to help transition from one fiscal 
to the next, there is no firm guidance on how much NASA should carry 
over from year to year. NASA's balance of unobligated funds has more 
than tripled from $616 million at the end of fiscal year 2000 to $2.1 
billion at the end of fiscal year 2005.
    Please explain to the Committee why these balances have built up at 
NASA?
    Answer. First and foremost, let us assure you that all of these 
funds will be obligated within the assigned Mission Directorate or 
Office and all of these funds are needed to carry out NASA's missions. 
These are not ``extra'' funds that can be used to offset potential 
reductions to NASA's fiscal year 2007 budget request or to support 
unrequested activities. All of NASA's unobligated funds are needed to 
carry out the Agency's planned activities, and our multi-year resource 
planning strategy requires all of these funds. Unobligated funds are 
simply not yet committed under a binding agreement (e.g., grant or 
contract). Thus, the Agency has plans in place and needs all of its 
appropriated funds.
    There are several reasons why the unobligated balances have been 
increasing over the last few years. There has been a tremendous amount 
of change at NASA over the last several years, and many factors 
associated with those changes have contributed to an increasing 
unobligated balance. Effective in fiscal year 2004, we began 
implementation of a new financial system, and also implemented full 
cost management, budgeting, and accounting. As a result of these 
changes, unobligated balances increased for several reasons. Labor 
dollars embedded in the programs initially caused the slowing of 
funding allocation and distribution throughout the Agency. Providing 
the Mission Directorates (MDs) with full cost funding resulted in 
increased funding being held at Headquarters. The new funds 
distribution process slowed down the release of funding to the Centers, 
which led the centers to seek more forward funding at the beginning of 
the fiscal year in order to cover labor and other expenses.
    In addition, there were several programmatic changes that 
contributed to this instability. The Columbia accident required a major 
shift in resources, curtailing many planned activities. The Vision for 
U.S. Space Exploration announced January 2004, required redirection of 
about $11 billion over five years. The Exploration Systems Architecture 
Study identified some major shifts in budgetary resources, curtailing 
many technology activities to provide more funding for major 
development projects. Increasing levels of earmarks for NASA have had 
the effect of slowing program definition and the release of funding. 
Overall, through all these major changes over the last few years, there 
has been less program definition at the start of the fiscal year for 
guidance to be distributed down to the NASA Centers, and Centers have 
been slower to obligate given the rate of change and the uncertainty 
surrounding all these changes, and maturing definition of major 
programs such as Constellation.
    NASA recognizes this increasing trend over the last several years, 
and is working to reverse the trend. As of May 19, 2006, NASA had 
obligated 97 percent of our fiscal year 2005 appropriations ($535 
million is not yet obligated), and approximately 50 percent of our 
fiscal year 2006 appropriations ($8.1 billion is not yet obligated). 
NASA has definite plans for all of these unobligated funds. The funds 
include a total of $304 million for construction of facilities.
    While NASA does not consider the levels of fiscal year 2005 and 
fiscal year 2006 unobligated funds to be unreasonable, we are working 
to expedite the obligation process where possible, and, as required in 
the fiscal year 2006 Science, State, Justice, Commerce and Related 
Agencies Appropriations Act (Public Law 109-108), have begun reporting 
prior year, unobligated balances to the Committees on Appropriations on 
a quarterly basis.
    Question. What is the minimum amount of unobligated funds that NASA 
needs to transition from one fiscal year to the next? How much in 
unobligated funds does NASA believe it needs for other reasons?
    Answer. There is no general minimum amount of unobligated funds 
that can be applied generically. Over the past 2 months, NASA has 
performed its standard midyear ``phasing plan review'' that has 
consisted of an in-depth review of its expenditures down to the project 
and Center levels at all NASA installations. Both the current status of 
obligations and forecasts for expenditures has been scrutinized and 
monthly spending plans throughout the remainder of fiscal year 2006 
have been developed. Note that our 61 programs involve thousands of 
contractual actions for obligating funds across the Agency and at all 
Centers. In developing our spending plans, these procurements were 
viewed for each of the 555 projects within their respective program. 
The purpose of this standard in-house review was to ensure that we are 
allocating and spending our resources in the most efficient manner, and 
to ensure that we have the correct level of apportioned funding at the 
appropriate points in time for our programs. Projections for 
unobligated balances are about 9 percent at the Agency level, and range 
from a low of 2 percent for the Aeronautics Research Mission 
Directorate, to a high of 16 percent for the Science Mission 
Directorate. Program management at all levels at both NASA Headquarters 
and the Centers have participated in this expenditure review, and agree 
that these levels of unobligated balances are appropriate in order to 
ensure a smooth transition from one fiscal year to the next without a 
lapse in funding that could prompt potential work stoppages.
    Question. Has NASA ever submitted a request for more new budget 
authority than it can realistically use?
    Answer. No. NASA has never submitted a request for more new budget 
authority than it can realistically use.

            BANKING FUNDS FOR CREW EXPLORATION VEHICLE (CEV)

    Question. At a House Science Committee hearing in February, Dr. 
Griffin acknowledged that NASA is ``banking'' funds to smooth the 
funding profile for the CEV.
    Is NASA using a portion of past unobligated balances to bank 
funding for CEV? For how many additional fiscal years will NASA 
continue this practice? Is NASA banking funds to smooth the funding 
profiles of other major development efforts?
    Answer: The development profile for the Constellation program 
requires a funding curve that peaks in fiscal years 2008, 2009, and 
2010.
    This is the normal profile for hardware development efforts that 
maximizes the chances of Program success and provides the basis for any 
cost confidence evaluation.
    Confronted with a flat Agency budget, Constellation's management 
strategy is to carry unobligated fiscal year 2006 funds into fiscal 
year 2007 and use uncosted funds from fiscal year 2007 and fiscal year 
2008 to cover the peak requirements in fiscal year 2009 and fiscal year 
2010 (the years that the funds will be costed).
    These carry-in funds will be used to smooth the overall 
constellation development funding curve for all the Constellation 
development projects, including Crew Exploration Vehicle (CEV), Crew 
Launch Vehicle (CLV), Launch and Mission Systems (LMS), and Exploration 
Communication and Navigation Systems (ECANS).
    Current plans are to obligate money on the CEV contract that will 
be signed early this fall and on the CLV and LMS contracts that will be 
signed in 2007. As much as 90 percent of these funds will be obligated 
by the end of the fiscal year.
    NASA's strategy of using carry-in to smooth out the peak funding 
requirements is prudent use of multi-year funding to maintain schedule 
and reduce total costs.

                      LUNAR ROBOTIC ORBITER (LRO)

    Question. NASA recently announced that a small secondary payload 
has been selected to accompany the Lunar Robotic Orbiter mission in 
2008. NASA noted that the secondary mission should cost no more than 
$80 million.
    What is the current cost estimate for this secondary LRO mission?
    Answer. NASA has decided on the Lunar Crater Observation and 
Sensing Satellite (LCROSS) as its secondary payload on the Lunar 
Reconnaissance Orbiter (LRO) mission. Per NASA's original request for 
information requirements, the LCROSS vehicle should cost no more than 
$80 million. Integration for flight will cost an estimated $15 million. 
The total cost of LCROSS is therefore estimated to be $95 million.
    Question. Where is the funding coming from to pay for this 
secondary mission?
    Answer. The Lunar Precursor and Robotic Program (LPRP, formerly 
Robotics Lunar Exploration Program) has an existing funding line for 
``Future Missions'', specifically designed to accommodate missions like 
LCROSS.
    Question. Did NASA's fiscal year 2006 budget or Initial Operating 
Plan specifically include the requirement or justification for this 
secondary mission?
    Answer. The LRO mission is still in formulation, and as a result, 
did not have an established life-cycle cost and program content at the 
time of either the fiscal year 2006 or the fiscal year 2007 budget 
submission. Critical Design Review (CDR) is scheduled for this fall.
    In NASA's fiscal year 2007 budget submission, NASA rebaselined LRO 
for launch on an EELV (from a Delta II). This change decreased risk to 
the LRO development by reducing pressure to retain large design 
contingencies and by eliminating a spacecraft spin stability issue 
related to its original Delta II launcher.
    As a result of the rebaselining to an EELV, NASA issued a request 
for information, in January 2006, to industry to provide secondary 
payload concepts to take advantage of the additional capacity afforded 
by the launch vehicle. NASA's requirements for the secondary payload 
were that it benefit the robotic lander program, cost no more than $80 
million for development, and not exceed 2,205 pounds (1,000 kilograms). 
After a competition involving NASA centers and industry, LCROSS was 
selected as a secondary payload in April 2006.
    The secondary payload is a cost-effective component of the overall 
LRO mission. It will provide an important capability to help determine 
whether water-ice is present in the Moon's polar cold traps. Total cost 
of the secondary payload is estimated at $80 million, to be funded 
within LPRP through fiscal year 2009. The secondary payload supports 
LPRP LRO Level-1 Requirements (RLEP-LRO-M70), which state that, ``The 
LRO shall identify putative deposits of water-ice in the Moon's polar 
cold traps at a spatial resolution of better than 500m on the surface 
and 10km subsurface (up to 2m deep).''
                                 ______
                                 
             Questions Submitted by Senator Byron L. Dorgan

               UPPER MIDWEST AEROSPACE CONSORTIUM (UMAC)

    Question. The Upper Midwest Aerospace Consortium (UMAC) is a 
collaboration of eight universities in a five state region that 
partners with the National Aeronautics and Space Administration (NASA) 
to take data gathered from NASA satellites and makes it available in 
everyday applications to educators, farmers, ranchers and residents in 
the Upper Great Plains.
    The group is headquartered at the University of North Dakota in my 
state. I was proud to help connect the University to NASA in the 1990s 
and have worked with NASA and my colleagues in Congress to support 
funding to continue this important work.
    Do you agree that UMAC and other groups like it play an important 
role in connecting more Americans to the work and breakthroughs at 
NASA?
    Answer. Groups that connect Americans to NASA's research increase 
the return the public receives on its investment in NASA. Features 
common among such groups are: use of data provided by NASA satellites, 
ties to the NASA-sponsored research community in academia and industry, 
and direct connection to providers of goods and services to the public 
and the organizations that serve the public. To the extent that UMAC 
and other groups exhibit these features, they can perform a valuable 
function.
    Question. What role do you see for groups like UMAC in the future, 
especially as it relates to new space and exploration missions?
    Answer. NASA is dependent on the university community for the 
successful implementation of its new space and exploration missions. 
Opportunities to participate in NASA's missions will be openly 
competed, and peer review will be used to identify the most outstanding 
opportunities for participation by the university community. 
Opportunities to participate will span the entire array of mission 
activities including development of flight hardware (instruments and 
full missions), development of data processing and data archiving 
systems, participation in science teams including science operations, 
and analysis of data returned from NASA missions.

             WINDOW OBSERVATIONAL RESEARCH FACILITY (WORF)

    Question. NASA once intended to install a facility, Window 
Observational Research Facility (WORF), on the International Space 
Station (ISS) within which various earth-observing instruments could be 
operated. The University of North Dakota has been developing AgCam, a 
sensor intended to operate on the WORF.
    Is the Window Observational Research Facility (WORF) scheduled to 
be installed on the International Space Station? If so, when?
    Answer. NASA has assessed its plans for the utilization of the ISS, 
and focused its research and technology development goals toward those 
activities that most closely support the Vision for Space Exploration. 
In this environment of limited opportunities for the launch of 
facility-class payloads, it is critical that utilization planning align 
as closely as possible with the needs of the human exploration planning 
effort. The only missions for which specific payloads have been 
manifested on the Space Shuttle are the first two Return to Flight 
missions. Consistent with the Vision, the Space Shuttle will be retired 
by 2010. Prior to its retirement, it will be utilized primarily for the 
assembly of the ISS. Our top priority will be to make each flight safer 
than the last. As we noted in our November 2004, correspondence to you 
on this topic, in the event that an appropriate future flight 
opportunity does become available, the WORF facility will be considered 
for delivery to the ISS.
    Question. If not, will it be possible to install small instruments, 
such as AgCam, on the ISS that make use of the optical quality window 
but do not use the WORF rack?
    Answer. The AgCam hardware has been designed and built to be 
operated in the WORF. The WORF would provide resources such as power, 
thermal control, data and mounting positions for operations of the 
AgCam. The hardware as designed could not operate independently of the 
WORF. It might be possible to redesign the AgCam hardware and its 
operations concepts, but it would require additional funding, testing, 
and development time. Even with such a redesign, it is unclear whether 
the redesigned hardware could achieve the expected scientific value 
without the WORF.

                                  DC-8

    Question. The University of North Dakota (UND) recently signed a 5-
year agreement to operate the NASA DC-8 research flying lab. The 
transfer of the DC-8 from an in-house NASA operation to a UND operation 
has set a new precedent. To date, UND, on behalf of scientists 
everywhere has operated two missions, Stardust and INTEX-B with total 
success. I believe this approach has benefited education and public 
outreach.
    Does NASA see benefit in transferring some of its activities from 
NASA centers to universities and other research organizations?
    Answer. The success of the NASA program relies on partnerships with 
universities and other research organizations. It also relies on NASA 
maintaining core capabilities within the NASA Centers. In addition to 
the operations of the DC-8, NASA also relies on universities and other 
research organizations for activities such as the operation of the 
Hubble Space Telescope, operation of the Earth Science Distributed 
Active Archive Centers, and operation of the NASA Infrared Telescope 
Facility. NASA will consider proposals that offer benefits to both the 
science community and NASA.
    The NASA Centers have unique capabilities that are critical to the 
nation's preeminence in space science as well as to the successfully 
carrying out the NASA mission. In order to maintain ten healthy 
Centers, and in order to maintain critical core capabilities at the 
NASA Centers, it is necessary that certain activities remain at NASA 
Centers.

           GLOBAL EARTH OBSERVATION SYSTEM OF SYSTEMS (GEOSS)

    Question. Global Earth Observation System of Systems (GEOSS) is an 
international program in earth-observing designed to inform decisions 
that benefit all humanity.
    What will be NASA's role in providing societal benefits in the 
Global Earth Observation System of Systems (GEOSS)?
    Answer. NASA's Earth science activity is closely coordinated 
through interagency and international activities such as the Climate 
Change Science Program, US Group on Earth Observations, and Joint 
Subcommittee on Ocean Science and Technology, as well as their 
international counterparts. The majority of NASA's space-based 
observations of Earth involve such international partnerships on the 
instruments and flight missions that comprise the space-based 
contribution to the Global Earth Observation System of Systems (GEOSS).
    NASA Earth system science results in research and development of 
space-based observations and improved modeling capability are 
recognized as contributing nearly 46 instruments on 16 spacecraft for 
the international Global Earth Observation System of Systems (GEOSS). 
NASA Earth science applications are recognized for collaborating with 
partners to benchmark integrated system solutions to each of the nine 
societal benefit areas highlighted in the Strategic Plan for a U.S. 
Integrated Earth Observation System (IEOS) and the 10-Year Plan for a 
Global Earth Observation System of Systems.
    NASA develops and uses innovative remote sensing approaches to 
provide new views of the Earth to improve predictive capabilities for 
weather, climate and natural hazards and benchmarks the capacity to 
contribute to societal benefits through decision support. As an 
example, NASA collaborations with EPA, USDA, and the FAA have resulted 
in benchmarks for integrated solutions for air quality Nowcasting, 
global crop assessments, and de-icing assessments for aviation safety.
    The observation and Earth system modeling techniques NASA develops 
and tests are a basis for future operational systems carried out by 
other organizations (most notably NOAA and USGS). Through 
collaborations, NASA observations are tested to determine their 
capacity to contribute to policy formulation and resource management 
through decision support systems.
    Question. Will there be a role for universities to develop and 
deliver benefits to the residents of their regions?
    Answer. In implementing its Earth science program, the NASA Applied 
Sciences Program conducts solicitations for ``Decision support through 
Earth Science Research Results'' to provide universities, private 
sector and others an opportunity to participate in extending the 
benefits of NASA sponsored observations and predictive capabilities 
through decision support tools. NASA involves the broad research 
community through solicitation of principal investigator-led satellite 
missions, technology and applications development, and a basic research 
program as well as focused research efforts tied more specifically to 
the results of our satellite programs. In particular, the university 
community is very strongly represented in these areas, and the research 
carried out at universities is critical to the education and training 
of the next generation of Earth and environmental scientists.
    Question. How seriously do the reductions in Earth Science limit 
the U.S.'s role in the international program?
    Answer. The International GEOSS and the U.S. IEOS include framework 
architectures that can accommodate and benefit from the observations 
and predictions/forecasts resulting from NASA research and development 
of space-based Earth observation systems; including the ground 
segments, data handling capacity, modeling, computing, knowledge, and 
applied sciences and system engineering.
    NASA's Earth Science budget contributes to GEOSS and fluctuations 
in NASA Earth Science funding have a corresponding effect on 
contributions to GEOSS. NASA's plans for research and development of 
Earth observation systems include support for national and 
international priorities and goals, including the U.S. IEOS and 
international GEOSS. The GEOSS is architected to benefit from the full 
scope of the results of NASA research and development programs, flight 
missions and applied sciences partnerships on benchmarking enhancements 
to integrated system solutions for the nine societal benefit areas. 
Reductions in NASA's Earth Science flight program budget in recent 
years directly impact the U.S. Earth Observing space-based capabilities 
and therefore the U.S. contributions to that aspect of GEOSS. An 
example is the delay of the Global Precipitation Measurement mission 
(GPM) that is based on an international collaboration and has been 
viewed as a prototype satellite constellation for GEOSS. Reductions in 
the R&A budget have an indirect and non-immediate impact on system 
contributions to GEOSS, by effectively delaying the utilization of 
Earth observations in research and, further on, the development of 
products and services.
                                 ______
                                 
               Questions Submitted by Senator Tom Harkin

    Question. There has been significant publicity about the ``muzzling 
of scientists'' by the Administration when their conclusions do not 
match the policies of the Administration. Because science requires 
freedom of thought and discussion, we are concerned that this muzzling 
could have a chilling effect on the critical work that scientists 
pursue, as they will be afraid to undertake work that may lead to 
conclusions that clash with Administration policy. Since it is in the 
national interest to ensure that scientific discovery is free and 
unconstrained by political ideology, we would like you to explain the 
efforts you are making to ensure that NASA scientists are free to 
present their findings both publicly and to the media, without any fear 
of public affairs oversight that could limit their speech.
    Answer. Earlier this year, NASA's Administrator assembled a policy 
development team comprised of NASA employees with science, legal, and 
public affairs backgrounds to review existing policies, identify ways 
to improve them, and develop Agency practices to maintain our 
commitment for full and open discourse on scientific, technical and 
safety issues. The team recently concluded their review of the existing 
NASA policies and has produced a substantially revised document: http:/
/www.nasa.gov/pdf/145687main_information_policy.pdf
    In addition, the NASA Administrator issued an agency-wide statement 
on his views of Scientific Openness last February: http://www.nasa.gov/
about/highlights/griffin_science.html
    The revised policy and the personal commitment by the NASA 
Administrator reaffirm the Agency's commitment to open scientific and 
technical inquiry and dialogue with the public.
    Question. Around the world, governments are taking aim at our 
aeronautics industry--increasing their investment and making 
aeronautics R&D a top priority. Meanwhile the United States continues 
to deemphasize aeronautic research. For example, while NASA continues 
to downsize and internalize its aeronautics program, implementation of 
the European Union's Vision 2020 is accelerating. This trend will have 
a serious impact on the nation's competitiveness, national security, 
and our position as the world's leader in aeronautics research. How 
does the fiscal year 2007 budget request address this trend?
    Answer. To address this question, one must first ask, what is 
NASA's role in helping to ensure that the United States maintains its 
``edge'' in aeronautics? The answer is simply this: NASA's most 
important role in aeronautics is to provide technical leadership. And 
that is true regardless of budget.
    Over the past several years, many independent reviews by the 
National Research Council (NRC), the Aerospace Commission, and the 
National Institute of Aerospace (NIA) have all raised the concern that 
NASA needs to get back to the pursuit of long-term, cutting-edge 
research. Historically, that is what NASA aeronautics has been known 
for and that is what the Nation has relied upon NASA to provide. These 
concerns were raised independent of the budget, and the concerns were 
valid.
    The Aerospace Commission Report of 2002, commonly referred to as 
the ``Walker Report,'' stated that Government investment in long-term 
research will be essential for the United States to maintain its global 
leadership in aerospace. The report concluded that long-term research 
enables breakthroughs in new capabilities and concepts and provides new 
knowledge and understanding, often resulting in unexpected 
applications, and the creation of new markets. It also noted that 
industry has the responsibility for leveraging Government research and 
for transforming it into new products and services.
    NASA's Aeronautics program is currently undergoing a comprehensive 
restructuring to ensure that we have a strategic plan in place that 
enables us to pursue long-term, cutting-edge research for the benefit 
of the broad aeronautics community. A commitment to the pursuit of the 
cutting-edge, coupled with an unwavering commitment to technical 
excellence, will ensure a strong, positive impact on the U.S. aviation 
community.
    Question. Though I am concerned with the level of NASA funding for 
aeronautic research and development, I am equally concerned that a 
national aeronautics policy be created that is consistent with the 
government's historic role, to promote continued United States' 
leadership of civil and military aeronautics research. How will these 
cuts influence the national aeronautic policy? What progress has NASA 
made on the policy? When will a draft be released for comment? What 
input has NASA received from industry, academics and/or user groups on 
the national aeronautics policy?
    Answer. Work is currently underway on the creation of a National 
Aeronautics Science and Technology Policy. In anticipation of the call 
for a policy, the National Science and Technology Council (NSTC) 
Committee on Technology chartered an Aeronautics Science and Technology 
(AS&T) Subcommittee in September 2005. The AS&T Subcommittee is co-
chaired by NASA's Associate Administrator for Aeronautics Research and 
OSTP's Transportation and Aeronautics Representative. The AS&T 
Subcommittee is comprised of members from NASA, DOD (OSD, Air Force, 
Navy, Army), DOT (FAA), JPDO, DOE, DHS, DOC, EPA, NSF, NSC, and the EOP 
(OSTP, OMB, OVP, DPC and CEA). The development, publication, and, to 
some extent, execution through governance of the policy called for by 
statute, have been tasked to the AS&T Subcommittee. Round-table 
outreach discussions with industry and academia occurred in April 2006 
to ensure input from the stakeholder community. The policy is planned 
for completion by December 2006. A detailed implementation plan will 
follow completion of the National policy.

                          SUBCOMMITTEE RECESS

    Senator Shelby. For the information of the Senators and 
people in the audience on the subcommittee, we will review the 
fiscal year 2007 budget request for the Department of Commerce 
on Wednesday, May 3, in room S-146 of the Capitol. At that 
time, the Secretary of Commerce will be with us to discuss the 
budget for the programs under his jurisdiction. Until then, the 
subcommittee stands in recess.
    [Whereupon, at 3:20 p.m., Wednesday, April 26, the 
subcommittee was recessed, to reconvene at 2 p.m., Wednesday, 
May 3.]