NASA Travel: Passenger Aircraft Services Annually Cost Taxpayers 
Millions More Than Commercial Airlines (26-AUG-05, GAO-05-818).  
                                                                 
Since its creation, the National Aeronautics and Space		 
Administration (NASA) has operated passenger aircraft services.  
These operations have been questioned in several prior audit	 
reports. GAO was asked to perform a series of audits of NASA's	 
controls to prevent fraud, waste, and abuse of taxpayer dollars. 
In this audit, GAO assessed (1) the relative cost of NASA	 
passenger aircraft services in comparison with commercial costs, 
(2) whether NASA aircraft services were retained and operated in 
accordance with governmentwide guidance, and (3) the		 
effectiveness of NASA's oversight and management of this program.
-------------------------Indexing Terms------------------------- 
REPORTNUM:   GAO-05-818 					        
    ACCNO:   A34459						        
  TITLE:     NASA Travel: Passenger Aircraft Services Annually Cost   
Taxpayers Millions More Than Commercial Airlines		 
     DATE:   08/26/2005 
  SUBJECT:   Air transportation 				 
	     Audit reports					 
	     Commercial aviation				 
	     Comparative analysis				 
	     Cost analysis					 
	     Financial analysis 				 
	     Internal controls					 
	     Noncompliance					 
	     Policy evaluation					 
	     Program management 				 

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GAO-05-818

                 United States Government Accountability Office

                     GAO Report to Congressional Requesters

August 2005

NASA TRAVEL

     Passenger Aircraft Services Annually Cost Taxpayers Millions More Than
                              Commercial Airlines

                                       a

GAO-05-818

[IMG]

August 2005

NASA TRAVEL

Passenger Aircraft Services Annually Cost Taxpayers Millions More Than
Commercial Airlines

                                 What GAO Found

NASA-owned and -chartered passenger aircraft services provide a perquisite
to employees, but cost taxpayers an estimated five times more than flying
on commercial airlines. While the majority of NASA air travel is on
commercial airlines, NASA employees took at least 1,188 flights using NASA
passenger aircraft services during fiscal years 2003 and 2004.

Example of NASA Passenger Aircraft

Source: NASA.

Use of NASA passenger aircraft services can save time, provide more
flexibility to meet senior executives' schedules, and provide other less
tangible and quantifiable benefits. However, GAO's analysis of available
reported data related to NASA passenger aircraft services during fiscal
years 2003 and 2004 showed NASA reported costs were nearly $25 million
compared with estimated commercial airline coach transportation costs of
about $5 million. Further, this relative cost comparison, based on
available NASA reported costs, did not take into account all applicable
types of costs associated with its passenger aircraft services, including,
for example, depreciation associated with the estimated $14 million NASA
paid in 2001 to acquire several aircraft used for passenger
transportation. Consequently, NASA's passenger air transportation services
are much more costly than indicated by available data. Further, NASA is
currently considering additional expenditures of about $77 million to
upgrade and expand its existing passenger fleet.

NASA's ownership of aircraft used to provide passenger transportation
conflicts with federal policy allowing agencies to own aircraft only as
needed to meet specified mission requirements, such as prisoner
transportation and aeronautical research. GAO's analysis of NASA passenger
aircraft flights for fiscal years 2003 and 2004 showed that an estimated
86 percent-about seven out of every eight flights-were taken to support
routine business operations specifically prohibited by federal policy
regarding aircraft ownership, including routine site visits, meetings,
speeches, and conferences. Further, agencywide oversight and management of
its passenger aircraft services was not effective. NASA's ability to make
informed decisions on continued ownership of its passenger aircraft fleet
and on flight-by-flight justifications was impaired by the lack of
reliable agencywide data on aircraft costs and other weak management
oversight practices.

                 United States Government Accountability Office

Contents

  Letter

Results in Brief
Background
NASA Passenger Aircraft Costs Are Substantially More Than

Commercial Airline Costs NASA Passenger Aircraft Ownership to Support
Routine Business Not Justified Ineffective Oversight and Management of
Passenger Aircraft

Services Conclusions Matters for Congressional Consideration
Recommendations Agency Comments and Our Evaluation

1 3 6

13

16

24 33 34 34 35

Appendixes                                                              
                Appendix I:             Scope and Methodology              37 
                              Comments from the National Aeronautics and   
               Appendix II:                     Space                      
                                            Administration                 43 
              Appendix III:     GAO Contact and Staff Acknowledgments      44 
                              Table 1: Comparison of Commercial and NASA   
     Tables                                   Passenger                    
                               Transportation Costs by Location or Charter 
                                                              Provider for 
                                      Fiscal Years 2003 and 2004           14 
                               Table 2: Summary of Examples of Routine     
                                        Business Flights Using             
                               NASA Passenger Aircraft during Fiscal Years 21 
                                                                 2003-2004 
                              Table 3: Examples of Passenger Flights Not   
                                             Included in                   
                                Submissions NASA Certified as Complete     27 
    Figures                                   Figure 1:                    
                                              Figure 2:                    
                                              Figure 3:                    
                                              Figure 4:                    

Overview of NASA-Owned Passenger Aircraft Type and
Location 8
Percentage of NASA Passenger Aircraft Flights by
Purpose 19
Percentage of NASA Passenger Aircraft Flights by
Purpose (Excluding Flights Related to the Columbia
Accident) 20
Overview of NASA Methodology for Comparing Its
Flight-by-Flight Variable Costs with Commercial Flight
Costs 30

Contents

This is a work of the U.S. government and is not subject to copyright
protection in the United States. It may be reproduced and distributed in
its entirety without further permission from GAO. However, because this
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copyright holder may be necessary if you wish to reproduce this material
separately.

A

United States Government Accountability Office Washington, D.C. 20548

August 26, 2005

The Honorable Susan M. Collins
Chairman
The Honorable Joseph I. Lieberman
Ranking Minority Member
Committee on Homeland Security and Governmental Affairs
United States Senate

The Honorable Ted Stevens
Chairman
Committee on Commerce, Science, and Transportation
United States Senate

Since its creation in 1958, the National Aeronautics and Space
Administration (NASA) has owned and operated a small fleet of aircraft to
provide passenger transportation. These aircraft are in addition to
approximately 80 aircraft that NASA reported using in its research and
development and program support operations. NASA also contracted with
charter carriers or had interagency agreements with other federal agencies
to obtain additional passenger air transportation services. Collectively,
these NASA-owned and -chartered aircraft constitute NASA's passenger
aircraft services.

As we have previously reported, NASA is now contending with urgent fiscal
challenges pressuring discretionary spending-requiring it to do more with
fewer resources--as it seeks to carry out its new vision for space
exploration.1 In this context, you asked us to focus on controls to
prevent
wasteful or abusive activity with respect to resources allocated to NASA's
passenger aircraft services. In general, federal policy provides that
agencies should operate aircraft only as necessary to meet mission
requirements, such as prisoner transportation or aeronautical research.
Federal agencies' use of aircraft has been the subject of numerous audit
reports over the years, including a 1977 GAO report2 that concluded that
agencies should determine whether aircraft are "essential or merely nice
to
have" and whether essential work could not be accomplished some

1GAO, Space Shuttle: Actions Needed to Better Position NASA to Sustain Its
Workforce through Retirement, GAO-05-230 (Washington, D.C.: Mar. 9, 2005).

2GAO, Improvements Are Needed in Managing Aircraft Used By Federal
Agencies, LCD77-430 (Washington, D.C: Dec. 22, 1977).

cheaper way. In this regard, you requested that our audit address (1) the
relative cost of NASA passenger aircraft services compared with commercial
coach costs, (2) whether NASA's retention and operation of aircraft for
passenger transportation was in accordance with applicable governmentwide
guidance, and (3) the effectiveness of NASA's oversight and management of
its passenger aircraft services.

To determine and assess the relative costs of NASA's passenger aircraft
with comparable commercial airline costs, we relied primarily on available
NASA cost data. However, wherever feasible we validated NASA's cost data
with comparable independent data sources, including industry data from the
manufacturers of both the Gulfstream and Beechcraft aircraft NASA used to
provide passenger transportation services. Specifically, we validated the
cost estimates used in our analysis with cost metrics the manufacturers
reported related to their aircraft. In addition, because NASA did not
maintain centralized agencywide data, we obtained available
flight-by-flight NASA passenger aircraft cost and usage data from source
documents maintained at NASA centers and compiled the information into our
database of agencywide information. We did not attempt to determine the
validity or appropriateness of the travel, nor did we assess whether the
type and number of personnel using NASA passenger aircraft services were
appropriate given the stated flight purposes.

Further, while our audit focused on overall management controls in place
to prevent waste concerning NASA's passenger aircraft services, it was not
designed to, nor did it include, investigations of any specific instances
of potentially abusive activity associated with travel on NASA's passenger
aircraft. Nonetheless, based on our work, it is clear NASA's current
policies and practices result in significant waste of taxpayer funds.
Furthermore, given the weaknesses we found in the agency's controls over
its passenger aircraft services, significant abuse of such services is
possible. As a result, we are planning a separate forensic audit and
investigative review in this regard and will report separately when it is
completed. Further details on our scope and methodology are included in
appendix I. We performed our work from November 2004 through June 2005 in
accordance with U.S. generally accepted government auditing standards and
our investigative work in accordance with investigative standards
prescribed by the President's Council on Integrity and Efficiency. We
received written comments on a draft of this report from the NASA
Administrator which are reprinted in appendix II.

Results in Brief	NASA's passenger aircraft services-including aircraft
owned by NASA and chartered through the Federal Aviation Administration
(FAA), the Department of Defense (DOD), and private charter services-cost
taxpayers at least five times more per passenger than flying on commercial
airlines. While the majority of NASA air travel is carried out using
commercial airlines, NASA-provided data showed that NASA employees took at
least 1,188 flights using NASA passenger aircraft services during fiscal
years 2003 and 2004.

An analysis of available data on the cost of these NASA passenger aircraft
flights showed NASA passenger aircraft services were about $20 million
more costly than comparable commercial coach ticket costs. Costs
associated with NASA's passenger aircraft services were in the order of
$25 million, while commercial coach tickets for the same number of
travelers would have been approximately $5 million. This cost comparison
is based primarily on available NASA cost reporting. However, NASA's
passenger air transportation services are much more costly than reported
because NASA's cost reporting did not take into account all costs
applicable to NASA's passenger transportation services, including costs
associated with acquiring NASA's existing fleet of passenger aircraft,
liability insurance costs, and costs associated with capital improvement.
For example, NASA aircraft costs disclosed in its annual reporting did not
reflect depreciation associated with NASA's 2001 aircraft acquisition of
at least $13.9 million. Further, NASA's costs of owning and operating
passenger aircraft may increase significantly in the near future with
about $77 million that it is considering spending to upgrade and expand
its passenger aircraft fleet. These costs include costs associated with
new aircraft to replace its existing aging fleet and installation of noise
abatement packages. If NASA incurs these additional passenger
transportation service costs, the extent to which NASA's passenger air
transportation service costs exceed commercial costs will increase further
in the near term.

While costly, using NASA-owned and -chartered passenger aircraft provides
a perquisite to NASA employees. Passenger aircraft services can save NASA
employees' time, afford greater flexibility in meeting senior executives'
schedules, and provide opportunities for other less tangible and
quantifiable benefits over using commercial airlines. Interviewed
passengers stated that, while the travel could have been completed using
commercial airlines, travel on NASA-owned or -chartered aircraft avoided
airport delays and facilitated conducting NASA business while in-flight.

Further, NASA's ownership of aircraft to provide passenger transportation
supporting routine business operations is not consistent with OMB policy
guidance.3 OMB's governmentwide guidance directs agencies to acquire and
retain only the number and size aircraft needed to meet direct mission
requirements (such as counter-narcotics activities, troop transportation,
and aeronautical research). OMB's guidance expressly provides that routine
site visits, meetings, conferences, and speeches are not within its
definition of mission-required activities. In contrast, while NASA's
implementing guidance reiterates the OMB policy prohibition on using
aircraft supporting routine business operations as a basis for continuing
aircraft ownership, its guidance also provides that mission-required use
of aircraft includes support for activities "directly related to approved
NASA programs or projects." This guidance has been interpreted to allow
acquiring and retaining aircraft for any official travel related to NASA's
programs or projects, regardless of whether the travel was mission
required.

Our analysis of available documentation on flight purposes shows that
NASA's implementation of the provision in its guidance related to using
aircraft in direct program or project support is inconsistent with OMB
policy against owning aircraft to support meetings, conferences, and
speeches. Specifically, our analysis of NASA passenger air transportation
services for fiscal years 2003 and 2004 showed that about 86 percent of
the flights were taken to support the types of routine business operations
expressly prohibited by OMB's guidance for aircraft ownership. In effect,
NASA's implementation of its guidance has resulted in NASA owning aircraft
to provide passenger transportation for any purpose related to NASA
programs or projects, regardless of whether it could have been as
efficiently and effectively carried out using commercial airline services.

With respect to oversight of its passenger aircraft services, NASA lacked
agencywide data on costs and usage. This limited the agency's ability to
provide complete, reliable cost and usage data to NASA top leadership and
congressional decision makers for consideration in decisions on acquiring,
operating, and retaining aircraft in support of direct mission
requirements. Because all applicable agencywide costs associated with
NASA's passenger aircraft services are not accumulated and visible to
agency managers for day-to-day decision making, NASA program directorates
requesting use of

3 OMB Circular No. A-126 (Revised), Improving the Management and Use of
Government Aircraft (May 22, 1992).

the aircraft may consider them as a "free" resource because the costs are
not directly assessed against their budgets.

Because NASA did not maintain agencywide data on passenger aircraft usage
and costs for day-to-day management, we attempted to develop our own
database capturing available NASA data on the costs and purposes of
flights taken using NASA passenger aircraft services during fiscal years
2003 and 2004. However, while NASA certified to us that it provided
complete data on all passenger flights, a comparison with FAA records
showed that NASA records were missing data on 97 passenger flights.
Further, our database did not include passenger flights by at least two
other NASA aircraft-aircraft NASA classified as "program support"
aircraft.

Additionally, NASA's process for overseeing and managing flight-by-flight
justifications was flawed. OMB policy requires agencies to compare
applicable agency flight-by-flight variable costs for proposed flights to
commercial airline costs, and to only use its own aircraft services for
passenger transportation if such proposed usage is cost effective. Our
analysis showed that although NASA flight-by-flight justifications were
shown as and approved as cost beneficial to the government; in fact, in
the majority of the cases the flights were not cost effective. Available
flight-byflight documentation showed that NASA systematically understated
the variable costs associated with its passenger aircraft and overstated
commercial costs through use of cost data that were 6 years out of date
and use of a largely unsupported multiplier of 2.5 applied to salary costs
for the additional time required to fly on commercial airlines. In
addition, we found weaknesses in the processes in place at NASA centers to
identify and collect reimbursements from nonofficial travelers on
NASA-owned or chartered aircraft.

Because NASA management has taken only limited action in response to
similar prior audit recommendations in this area, this report includes a
matter for congressional consideration concerning legislation to ensure
that (1) NASA disposes of all passenger aircraft not used in accordance
with OMB's explicit policy prohibition against owning aircraft to support
travel to meetings, speeches, conferences, and routine site visits; and
(2) funding for future NASA passenger aircraft purchases and operations is
restricted to the minimum amount necessary to meet mission requirements
consistent with OMB policy guidance restrictions. In addition, to the
extent Congress determines NASA needs to continue to retain the ability to
own or charter aircraft to provide passenger transportation services, we
recommend NASA take a number of actions directed at establishing

policies and procedures necessary to ensure that such services are carried
out efficiently and effectively, including maximizing use of flexible
costeffective arrangements to obtain passenger air transportation to meet
mission requirements.

In its comments on a draft of this report, NASA concurred with the
recommendations directed at NASA and outlined various ongoing and planned
actions, including a comprehensive study of its passenger aircraft program
to be completed by October 31, 2005. If NASA's study referred to above is
carried out effectively and fully considers the various matters discussed
in this report, it should provide the Congress valuable information for
deciding whether legislation may be needed on this matter.

Background	Under the provisions of the National Aeronautics and Space Act
of 1958, NASA is authorized to acquire aircraft.4 Since its creation, NASA
has operated a small fleet of aircraft, primarily to provide passenger
transportation. According to the 2004 General Services Administration's
Federal Aviation Interactive Reporting System, NASA is one of six civilian
agencies5 that reported operating aircraft primarily for the purpose of
passenger transportation.

NASA's Aircraft Inventory	In fiscal year 2003, NASA reported owning and
operating a fleet of 85 aircraft valued at $362 million, including
aircraft dedicated to program support, research and development, and
passenger transportation.

Program Support	NASA reported owning 53 aircraft that were used to provide
support to programs such as the Space Shuttle, International Space
Station, and Astronaut programs. The majority of these aircraft are
located at the Johnson Space Center. For example, shuttle trainers are one
type of program support aircraft. These aircraft have been modified to
duplicate the shuttle's approach profile, cockpit cues, and handling
qualities so that

4 42 U.S.C. S: 2473 (c) (3). This authorization is subject to Congress
making available appropriations.

5The other five civilian agencies that reported to GSA that they owned and
operated aircraft in fiscal year 2004 primarily for the purpose of
passenger transportation were the Departments of Homeland Security,
Justice, State, Interior, and Transportation.

astronaut pilots can see and feel simulated approaches and landings before
attempting an actual shuttle landing.

Research and Development	NASA reports owning 25 aircraft to support its
research and development efforts. These aircraft have been modified to
support the agency's mission to conduct aeronautical research at varying
altitudes and atmospheric conditions. For example, NASA operates a
modified Learjet 23 as a research platform for the Airborne Terrestrial
Land Application Scanner.

Passenger Transportation	NASA owns seven aircraft that are used to provide
passenger transportation.6 In fiscal year 2004, NASA reported its seven
passenger aircraft carried nearly 10,000 passengers and logged nearly 4
million passenger miles. Figure 1 provides an overview of the aircraft
owned and operated by NASA to provide passenger transportation and their
location.

6 Three of NASA's seven passenger aircraft are classified as program
support because they were acquired as backups for existing shuttle trainer
aircraft. However, since shortly after their acquisition (one in 1991 and
two in 2001), these aircraft have been used primarily to provide passenger
transportation. In addition, one aircraft, a Gulfstream I aircraft
operated by the Johnson Space Center, was retired from active service in
March 2005.

In addition, NASA obtained passenger transportation services through the
Economy Act,7 a cooperative agreement, and a fractional ownership contract
with DOD, FAA, and Flexjet, respectively.

o 	DOD--Under provisions of the Economy Act, NASA acquired additional
passenger aircraft services from DOD using Gulfstream V aircraft. DOD
provided documentation for three NASA flights of more than 60 flight hours
during fiscal years 2003 and 2004. DOD billed NASA approximately $290,000
for these services.

o 	FAA-During fiscal years 2003 and 2004, NASA and FAA entered into a
shared-use cooperative agreement for four aircraft, three of which were
owned by FAA and the other by NASA. All four aircraft were housed at
Reagan National Airport in Washington, D.C. In exchange for contributing
its one aircraft and $1.1 million annually during 2003 and 2004, NASA
received the right to 450 total flight hours per year on any of the four
aircraft. Under this agreement, NASA could schedule flights on these
aircraft with a minimum of 24 hours advance notice. FAA agreed to pay
routine maintenance, fuel, and personnel costs associated with the NASA
aircraft. NASA was also allowed to purchase additional hours, beyond the
agreed 450 hours, at the hourly rate for the specific aircraft used.
During the 2-year period, NASA utilized the four aircraft in this
arrangement for approximately 1,600 flight hours for a reported cost of
$4.5 million, which included charges for the original 900-hour agreement
plus charges for additional hours.

o 	Flexjet--In October 2000, conferees on the NASA fiscal year 2001
appropriation bills directed NASA to prepare a plan that considers whether
fractional ownership of passenger aircraft may be beneficial.8 In July
2002, pursuant to the conferee guidance, NASA awarded a contract with
Flexjet for a 2-year demonstration program to determine the viability of
using fractional ownership to meet NASA's administrative air
transportation requirements. Under the 2-year demonstration NASA reported
cost of approximately $3.5 million in return for a total of approximately
800 flight hours of passenger transportation services.

7 31 U.S.C. S: 1535. Under the Economy Act, federal agencies are permitted
to obtain services from other federal agencies when such services cannot
be provided as conveniently or costeffectively from commercial sources,
and reimburse the other agencies for the cost of the services obtained.

8 H.R. Conf. Rep. No. 106-988, at 164 (2000) accompanying Pub. L. No.
106-377.

    Federal Guidance on Aircraft Acquisition, Operation, and Retention

OMB Circular No. A-126 (Revised), Improving the Management and Use of
Government Aircraft (May 22, 1992), prescribes policies for executive
agencies to follow in acquiring, managing, using, accounting for the costs
of, and disposing of government aircraft. This circular applies to all
government-owned, leased, chartered, and rental aircraft and related
services operated by executive agencies, except for aircraft while in use
by or in support of the President or Vice President. OMB Circular No.
A-126, section 6, a., provides that the number and size of aircraft
acquired and retained by an agency and the capacity of those aircraft to
carry passengers and cargo should not exceed the level necessary to meet
the agency's mission requirements. OMB Circular No. A-126, section 5, b.,
defines mission requirements to include activities related to the
transport of troops and/or equipment, training, evacuation (including
medical evacuation), intelligence and counter narcotics activities, search
and rescue, transportation of prisoners, use of defense attache-controlled
aircraft, and aeronautical research and space and science applications.
OMB Circular No. A-126, section 5, b. explicitly states that mission
requirements do not include official travel to give speeches, attend
conferences or meetings, or make routine site visits.

In addition to the policies prescribed by OMB Circular No. A-126, agencies
must also follow the guidance of OMB Circular No. A-769 before purchasing,
leasing, or otherwise acquiring aircraft and related services, to assure
that these services cannot be obtained from and operated by the private
sector more cost effectively. Further, agencies must review periodically
the continuing need for all of their aircraft and the cost effectiveness
of their aircraft operations in accordance with the requirements of OMB
Circular No. A-76 and report the results of these reviews to GSA and OMB.
Agencies are to report any excess aircraft and release all aircraft that
are not fully justified by these reviews.

Once an agency has justified that it has a valid mission requirement for
owning aircraft, OMB Circular No. A-126, section 8, a., permits agencies
to use aircraft for official, but nonmission-required travel when:

o 	no commercial airline or aircraft service is reasonably available
(i.e., able to meet the traveler's departure and/or arrival requirements
within

9 OMB Circular No. A-76, (Revised), Performance of Commercial Activities
(May 29, 2003) establishes policies for competition of agency commercial
activities including the use of aircraft.

a 24-hour period, unless the traveler demonstrates that extraordinary
circumstances require a shorter period) to fulfill effectively the agency
requirement; or

o 	actual cost of using a government aircraft is not more than the cost of
using commercial airlines.

OMB Circular No. A-126, section 14, also provides that agencies maintain
systems that will enable them to: (1) justify the cost-effective use of
government aircraft in lieu of commercially available air transportation
services, and the use of one government aircraft in lieu of another; (2)
recover the costs of operating government aircraft when appropriate; (3)
determine the cost effectiveness of various aspects of their aircraft
programs; and (4) conduct the cost comparisons required by OMB Circular
No. A-76 to justify in-house operation of government aircraft versus
procurement of commercially available passenger aircraft services.
Attachment B of OMB Circular No. A-126 also provides that agency systems
must accumulate and summarize costs into the standard passenger aircraft
program cost elements. For example, standard cost elements would include
items such as fixed and variable crew costs, maintenance costs, fuel
costs, and overhaul and repair costs.

GSA Implementing Regulations

In addition, the General Services Administration (GSA) established
governmentwide policy on the operation of aircraft by the federal
government-including policies for managing the acquisition, use, and
disposal of aircraft that the agencies own or hire. GSA publishes its
regulatory policies in the Code of Federal Regulations (C.F.R.).10 GSA
also publishes a number of other guides and manuals to help agencies
manage the acquisition, use, and disposal of aircraft. These publications
include the U.S. Government Aircraft Cost Accounting Guide, which contains
information on how agencies should account for aircraft costs, and the
Fleet Modernization Planning Guide, which provides guidance on developing
cost-effective fleet replacement plans.

10 41 C.F.R. pt. 102-33 (2002).

    Past NASA Inspector General Reporting on NASA Passenger Aircraft

NASA's Inspector General (IG) issued two reports on NASA's passenger
aircraft, one in 1995 and another in 1999.11 Both NASA IG reports were
critical of NASA's management of these aircraft, identifying weaknesses in
NASA's accounting and justification for its passenger aircraft. In its
1995 report, the NASA IG reported that NASA passenger aircraft cost an
estimated $5.8 million more annually when compared with commercial airline
transportation. The IG recommended actions with respect to NASA's (1)
compliance with many of the provisions of OMB Circular Nos. A-126 and A-76
(including fully considering commercial airlines as an alternative to NASA
operations of passenger aircraft services), (2) use of outdated and
incomplete cost data to justify trips and approval of some trips without
adequate justifications, and (3) use of passenger aircraft that were more
expensive to operate than using commercial airline services.

The IG's 1999 report focused on one passenger aircraft located at NASA's
Marshall Space Flight Center and estimated that the cost of commercial
airlines in comparison with the NASA-owned aircraft was $2.9 million less
over a 5-year period. Similar to the 1995 report, the 1999 report was also
critical of NASA's implementation of guidance in OMB Circular Nos. A-126
and A-76. Further, the report noted that the agency had not effectively
addressed actions recommended in the 1995 report concerning the need to
more fully and effectively evaluate the use of commercial airlines. The IG
recommended that NASA management dispose of the passenger aircraft at
Marshall and instead use commercial airlines to satisfy Marshall's air
transportation requirements. NASA management disagreed with the findings
of both IG reports, stating that commercial airlines cannot effectively
meet all the mission requirements and the capability of NASA aircraft
outweighs the marginal costs savings of total reliance on commercial
airlines.

11NASA Office of the Inspector General, Final Report, NASA Aircraft
Management, LA-95001 (Washington, D.C.: Mar. 28, 1995) and NASA Office of
the Inspector General, A-76 Study of NASA 3 Aircraft, IG-99-057
(Washington, D.C.: Sept. 30, 1999).

  NASA Passenger Aircraft Costs Are Substantially More Than Commercial Airline
  Costs

An analysis of NASA's reported costs for its passenger aircraft services
shows they are an estimated five times more costly than commercial airline
coach tickets. For purposes of this aggregate comparative cost analysis,
we considered available NASA reported data on costs applicable to its
passenger aircraft services-both variable and fixed costs--in comparison
with commercial airline service costs. Specifically, to assess the
aggregate costs associated with NASA-owned and -chartered passenger
aircraft, we accumulated available NASA annual report passenger aircraft
services cost data for fiscal years 2003 and 2004, validated to the extent
feasible with industry standards, and compared these cost estimates with
total estimated commercial airline costs based on the cost of an average
coach ticket. We determined that NASA's reported costs for the aircraft it
owned or chartered were on the order of about $20 million more costly over
a 2-year period than if NASA had used commercial airline services to carry
out the same number of business trips. Specifically, estimated costs
associated with NASA's passenger aircraft operations during fiscal years
2003 and 2004 were almost $25 million, while we estimated the cost of
commercial coach tickets for the same number of travelers would have been
approximately $5 million-about $20 million more to provide NASA passenger
aircraft services than if commercial airlines were used to provide
passenger transportation over the 2-year period.

Table 1 summarizes our analysis of commercial and NASA passenger
transportation costs by types of NASA-owned or -chartered aircraft. We
identified the number of passengers from NASA's aircraft request forms and
NASA annual performance reports.12 We then multiplied the identified
number of passengers by our estimate of NASA's average commercial coach
round-trip ticket cost. We determined the average coach round-trip ticket
cost of approximately $426 by analyzing all airfares purchased with NASA's
travel cards in fiscal years 2003 and 2004. Specifically, we identified
approximately $49,776,000 in round-trip airfare tickets in NASA travel
card purchases during fiscal years 2003 and 2004, and divided this dollar
amount by the number of tickets purchased (116,865) to determine an
average ticket cost of approximately $426. Finally, we compiled an
estimate of NASA's passenger aircraft service costs, which included costs
related to personnel, maintenance, and fuel, from annual cost reports and
budget information provided by NASA.

12When request forms did not include data on passengers, we used other
NASA reports to identify the number of passengers on flights.

Table 1: Comparison of Commercial and NASA Passenger Transportation Costs
by Location or Charter Provider for Fiscal Years 2003 and 2004

                                                        Estimated 
                           Passengers        NASA's average coach 
     Location or charter                                                      
      provider (type of         flown reported cost  ticket costs  Difference
          aircraft)                                               
    Johnson Space Center                                                      
       (Gulfstream I &         2,009a   $5,069,000b      $856,000  $4,213,000
       Gulfstream II)                                             
NASA Headquarters (NASA                                                    
     Gulfstream III, FAA                                          
          chartered            2,109a    4,532,000c       898,000   3,634,000
Gulfstream IV, and two                                         
FAA chartered Citation                                         
           Excels)                                                
    Marshall Space Flight                                                     
     Center (Gulfstream        2,374a    4,463,000d     1,011,000   3,452,000
            IISP)                                                 
      Flexjet Chartered                                                       
      Aircraft (Learjet        1,337a    3,551,000e       570,000   2,981,000
     Models 31A and 60)                                           
Dryden Flight Research      1,404f    3,380,000d       598,000   2,782,000 
Center (Beechcraft 200)                                        
    Kennedy Space Center       1,675a    2,548,000d       714,000   1,834,000 
       (Gulfstream II)                                            
Wallops Flight Facility       884a      856,000d       377,000     479,000 
      (Beechcraft 200)                                            
DOD Chartered Aircraft         34a      290,000g        14,000     276,000 
       (Gulfstream V)                                             
            Total              11,826   $24,689,000    $5,038,000 $19,651,000 

Source: GAO analysis based primarily on NASA's costs disclosed in various
annual reports.

aPassenger numbers were taken from aircraft request forms provided by
NASA.

bCosts for Johnson Space Center aircraft were taken from annual reports
and budget information when passenger aircraft costs were not separated
from program support aircraft costs.

cCosts associated with the use of NASA's Gulfstream III and FAA aircraft
at Reagan National Airport were taken from NASA Headquarters cost reports.

dAircraft costs were taken from 2003 and 2004 annual aircraft cost
reports.

eFlexjet costs were taken from NASA's Report on the NASA Fractional
Aircraft Demonstration Program, July 2004.

fPassenger numbers were taken from 2003 and 2004 annual aircraft
performance reports.

gCosts for flights on DOD aircraft were taken from NASA's aircraft request
forms used to justify these flights.

This calculation of the difference between the relative cost of
NASAprovided passenger transportation services and commercial airline
costs does not consider per diem, in-transit salary and benefits, and
other factors associated with using NASA passenger services. NASA
officials believe that a comparison of NASA and commercial airline
passenger services should include estimates of such cost savings shown in
its passenger aircraft request forms. We recognize that, to the extent
that all passengers on the aircraft had a valid purpose for travel, there
may be personnelrelated cost savings associated with use of NASA's
passenger aircraft services; however, it was not feasible for us to
reliably identify such costs using independent (non-NASA) sources.
Further, as discussed in a subsequent section of this report, we have
concerns about the reliability of some of NASA's cost and associated
savings data captured in its flight

request documentation. In addition, we also identified questionable
savings attributed to non-official travelers.

However, NASA's cost estimates do serve to provide indicators of general
ranges of costs that may be avoided by using NASA passenger aircraft
services. Using available NASA documentation of costs that would have been
incurred if commercial airlines were used would increase the estimated
commercial airline costs to approximately $11 million, and reduce the
difference between NASA's passenger airline services and commercial
airlines to about $13 million over the 2-year period.13 Specifically,
available NASA passenger aircraft services flight request documentation
generally included estimated costs associated with not only airline
tickets, but also estimates for salary and benefit costs associated with
lost work time, per diem expenses, and rental car costs associated with
the additional time required if commercial airlines were used to provide
passenger transportation. Consequently, even when available NASA estimates
of costs associated with commercial airline transportation services were
included, a comparison with the costs of its passenger air transportation
services shows that they are nearly 2.3 times more costly than commercial
airlines.

    Additional Costs Associated with NASA Passenger Aircraft May Be Substantial

Acquisition and Capital Costs

Our cost analysis, based primarily on data included in NASA's annual
reporting on its aircraft operations, did not include data on all relevant
types of costs attributable to NASA's passenger aircraft services.14
Consequently, the full cost of continued operation of NASA's passenger
aircraft fleet in comparison with commercial airline services would be
substantially more than the $20 million estimate for fiscal years 2003 and
2004. Specifically, the following types of costs were not accounted for in
NASA's various annual reports on its passenger aircraft services.

NASA' s current inventory of seven passenger aircraft is valued at more
than $33 million, including two Gulfstream II aircraft purchased in 2001
for a total of about $13.9 million. An allocable portion of the
acquisition and

13Reported costs for NASA passenger aircraft services totaled $24,689,000,
and estimated commercial costs provided by NASA totaled $11,311,000,
yielding a difference of $13,378,000 between commercial and NASA passenger
aircraft costs.

14Statement 4 of the Statements of Federal Financial Accounting Standards
defines full cost as the total cost of direct and indirect support used to
produce an output.

associated capital improvements to these assets is part of NASA's annual
cost of operating its passenger aircraft services. In addition, these
costs may increase in the near future. A July 2004 fleet plan prepared for
NASA recommended upgrading and expanding its passenger aircraft fleet as
soon as possible with an initial investment of $75 million. Further, NASA
is considering an investment of an estimated $1.5 million in a noise
restriction package for its Gulfstream III aircraft during fiscal year
2008, making the total investment that NASA is currently considering about
$77 million.

Hangar Costs	NASA aircraft received hangar and maintenance services even
though they were housed on government property. Industry data on hangar
costs show that they total about 5 percent of total aircraft operation
costs.

Liability Insurance Costs	Although the government operates under a
self-insurance policy, the liability associated with operation of
passenger aircraft is a cost factor that must be considered given the
significant number of passenger flights taken using NASA-owned aircraft
over the last 2 years. Industry estimates show liability insurance costs
represent approximately 2 percent of total aircraft operating costs.

  NASA Passenger Aircraft Ownership to Support Routine Business Not Justified

Not only were NASA's passenger aircraft services significantly more costly
than commercial airlines, but NASA's continued ownership of aircraft to
provide air transportation supporting routine NASA business operations was
not in accordance with OMB guidance. OMB guidance (1) limits the number
and size of aircraft acquired and owned by an agency to carry passengers
to the level necessary to meet mission requirements, including, for
example, use of aircraft for prisoner transportation, intelligence and
counter narcotics activities, and aeronautical research; and (2)
explicitly prohibits owning aircraft to support routine business
functions, including providing air transportation to attend meetings,
conferences, and routine site visits. In contrast, NASA's implementing
guidance, while generally consistent with OMB guidance, was interpreted to
allow acquiring and retaining aircraft for any official travel, regardless
of the mission-required nature of the travel. Our analysis of available
flight data showed that an overwhelming majority (86 percent) of the
flights taken during fiscal years 2003 and 2004 using NASA passenger
aircraft services were to support routine business operations, including
attending meetings, conferences, and site visits. Excluding flights
related to the Columbia accident, routine business flights accounted for
about 97 percent of NASA passenger aircraft flights. Further, although OMB
guidance required NASA to periodically

prepare studies to determine if continued ownership of passenger aircraft
was justified, the agency's studies were either incomplete or did not
consider commercial airline service alternatives.

    Implementation of NASA Guidance Inconsistent with OMB Policy on Aircraft
    Ownership

NASA implementation is not consistent with OMB policy on aircraft
ownership. OMB Circular No. A-126, the governing federal policy guidance
in this area, provides that agencies should own aircraft only to the
extent needed to meet mission requirements, such as troop transportation,
prisoner transportation, intelligence and counter narcotics activities,
and aeronautical research. OMB's policy guidance further provides that
agencies should not own aircraft to provide transportation to meetings,
routine site visits, and speeches. However, NASA implementing guidance,
while generally consistent with OMB policy, does not clearly and uniformly
address the federal policy limiting aircraft ownership to those assets
needed to meet mission requirements. NASA Procedural Requirements (NPR),15
section 3.3.2, reiterates the OMB policy prohibition on using passenger
aircraft to provide transportation supporting routine business operations
as a basis for continuing to own aircraft. However, in the following
sections (sections 3.3.2.1 through 3.3.2.5), NASA's guidance provides that
mission-required use of aircraft includes support for activities "directly
related to approved NASA programs and projects." These elaborating
sections were mistakenly operationally determined to mean that all travel
using NASA passenger aircraft services was directly related to NASA
programs or projects, regardless of whether they were of a routine,
nonemergency nature.

The NASA IG's 1999 report16 on NASA's passenger aircraft at its Marshall
Space Flight Center also questioned whether that aircraft's use was
consistent with the OMB limitation on owning aircraft only for
missionrequired purposes. The audit report recommended that NASA change
the definition of mission requirements in its policy guidance to conform
to the definition of mission requirement stated in OMB guidance. However,
in its response to the audit report, NASA management stated that there was
no difference between its guidance and the OMB guidance and therefore it
would not take any action to clarify its policy guidance.

15NPR 7900.3A, effective April 1999, expires December 2005. 16NASA
Inspector General Report, IG-99-057.

    Most Flights on NASA Passenger Aircraft Do Not Meet OMB Definition of
    Mission Requirements

Our analysis of available documentation on flight purposes shows that
NASA's implementation of its guidance related to using aircraft in direct
program or project support has resulted in owning aircraft to support
meetings, conferences, and speeches in direct conflict with OMB's policy
prohibition in this area. In effect, NASA circumvented the OMB policy on
restricting aircraft ownership to those needed to carry out mission
requirements by operationally determining that nearly all travel using
passenger aircraft services was directly related to NASA programs or
projects. Our analysis of NASA passenger air transportation services for
fiscal years 2003 and 2004 showed that about 86 percent of the flights
were taken to support the types of routine business operations that are
expressly prohibited by OMB's guidance for aircraft ownership.

Specifically, we categorized the documented flight purpose listed on 1,188
NASA aircraft request forms for NASA passenger aircraft usage during
fiscal years 2003 and 2004 into 10 categories in order to determine the
frequency of different uses for NASA's passenger aircraft services.17 In
conducting our analysis, we categorized any flight as mission required if
it could be linked to OMB's definition of mission requirements, regardless
of its apparent, non-emergency nature. As a result, some flights we
categorized as mission required may have actually been routine in nature.
For example, in response to the 1999 NASA IG report, NASA management
stated that launch support flights were required to transport NASA
emergency response teams to launch sites within hours to help resolve
unexpected launch-related problems. However, most launch support flights
during our audit period were scheduled more than 24 hours before the
flight departure date. Of the 19 flights we identified as directly
supporting NASA launches, only 7 were scheduled less than 2 days prior to
the flight, and overall the flights were scheduled an average of
approximately 3 days prior to departure. In one example, on July 29, 2003,
Kennedy Space Center requested the use of a NASA passenger aircraft to fly
from Florida to California as launch support for the joint Canadian Space
Agency/NASA Scientific Satellite Atmospheric Chemistry

17We were unable to identify a purpose for and categorize all flights
because of (1) missing documentation and (2) incomplete data. For example,
flights for Dryden Flight Research Center's Beechcraft 200 passenger
aircraft were not included because descriptive flight data, such as flight
purposes, were not consistently listed on request forms. In addition, we
excluded flights on two other program-support aircraft that were
occasionally used to transport passengers. In addition, request forms for
approximately 97 flights were not provided by NASA until after we
identified the flights through a review of FAA flight tracking records,
and were therefore not provided in time for our analysis.

Experiment Mission. The flight was requested on July 29, 2003, 12 days
before the flight's August 10, 2003, departure and 14 days before the
August 12, 2003, launch. We categorized this flight as being related to
launch support. However, the fact that the flight was scheduled nearly 2
weeks in advance of the flight departure brings into question whether the
flight was time sensitive and indicates that commercial coach service
could have been used.

Figure 2 presents the results of our analysis and categorization of NASA's
use of owned and chartered aircraft over fiscal years 2003 and 2004 into
10 categories.

Figure 2: Percentage of NASA Passenger Aircraft Flights by Purpose

Internal meeting

External affairs

External meeting

3% Launch viewing

3% Training 3% Executive retreats 1% Other routine business

Columbia accident related

2% Launch support

                           1% Other mission-required

Total flights: 1,188

                         Mission-required flights (14%)
                         Routine business flights (86%)
              Source: GAO analysis of NASA Aircraft Request Forms.

As shown in figure 2, available data showed that about 14 percent of the
flights taken using NASA passenger aircraft had a stated purpose that
appeared to comply with OMB Circular No. A-126's definition of mission
required. As shown in figure 3, excluding flights related to the Columbia

accident investigation, only 3 percent of NASA's passenger aircraft
activity was related to mission-required travel.

Figure 3: Percentage of NASA Passenger Aircraft Flights by Purpose
(Excluding Flights Related to the Columbia Accident)

Internal meeting

External affairs

External meeting

3% Launch viewing 3% Training 3% Executive retreats

1% Other routine business 2% Launch support 1% Other mission-required

Mission-required flights (3%)

Routine business flights (97%)

Source: GAO analysis of NASA Aircraft Request Forms.

Table 2 highlights examples of flights in which NASA passenger aircraft
services were used to support non mission-critical NASA business
operations that are not consistent with OMB's definition of
missionrequired use necessary to justify continued passenger aircraft
ownership.

 Table 2: Summary of Examples of Routine Business Flights Using NASA Passenger
                     Aircraft during Fiscal Years 2003-2004

                                                      Estimated 
                                                     commercial               
                                                       ticket   NASA-reported
    Usage     Flight purpose description    Flight       costsa  flight costb 
category                                itinerary            
Internal Budget reviews for space                            
meeting  shuttle and                                         
            space station at the Johnson                        
            Space                                               
                        Center                                  

Dulles, VA to Houston, TX and return

$3,000 $11,000 Internal meeting Senior management budget meetings Johnson Space
                   Center, 3,000 24,000 at NASA headquarters

TX to Washington, DC and return

External affairs Attendance at Pearl       Reagan National,  28,000 59,000 
                    Harbor 60th                    VA to               
                       anniversary ceremony,  Anchorage, AK to         
                               attendance at       Tokyo,              
                    heads of agency meeting  Japan to Honolulu,        
                                                   HI and              
                                                   return              
External affairs Attendance at the 2003                             
                    inauguration                                       
                    ceremony for the                                   
                    governor of Florida                                

Kennedy Space Center, FL to Tallahassee, FL and return

2,000 5,000 External meeting Travel by the Presidential Commission Dulles, VA to
                                San 8,000 51,000

on Implementation of U.S. Space Exploration Policy (PCSE) to conduct
required public hearings on the exploration policy

                            Francisco, CA and return

External meeting	Attendance at an annual Engineer of the Year Awards
Conference

Kennedy Space Center, FL to Baltimore, MD and return

3,000 14,000 Launch/landing Attendance at the Jet Propulsion Reagan National, VA
                                to 3,000 11,000

viewing Laboratory to observe the Cassini landing on Saturn

                             Burbank, CA and return

Executive retreat Attendance at the NASA     Kennedy Space    8,000 32,000 
                     Enterprise                    Center,             
                     Council Retreat in Blue  FL to Washington,        
                            Mountain                DC to              
                     Lake, NY and attendance Saranac Lake, NY to       
                             at the                                    
                      Space Shuttle 112 Crew    Johnson Space          
                                 Ceremony at       Center,             
                      Johnson Space Center    TX to Washington,        
                                                     DC                
                                                and return to          
                                                   Kennedy             
Executive retreat   Participate in NASA      Johnson Space                 
                           Leadership              Center,       3,000 23,000
                         Council retreat     TX to Austin, TX to       
                                             Washington, DC and        
                                                   return              
                     E-Payroll training at      Kennedy Space                 
       Training      Marshall Space                Center,       2,000 18,000
                          Flight Center        FL to Marshall          
                                                    Space              
                                              Flight Center, AL        
                                                     and               
                                                   return              

Source: GAO analysis of NASA aircraft request forms and other NASA
reports.

a From NASA aircraft request forms.

b Calculated by taking NASA's total reported costs, dividing by NASA
reported flight hours for each aircraft, and then multiplying by the
number of flight hours for the specific flight. NASA reported costs were
taken from NASA's 2003 and 2004 Aviation Financial Reports and Johnson
Space Center's

Budgeted Costs for Mission Management Aircraft Operations. NASA aircraft
flight hour usage numbers were taken from NASA's 2003 and 2004 Annual
Aircraft Performance Reports. For aircraft not owned by NASA, the reported
cost includes the amount billed to NASA as listed on the aircraft request
form.

The results of our interviews with passengers on such flights showed that,
while use of the NASA aircraft was more convenient, better accommodated
busy NASA SES-level staff schedules, and was more productive, the trip
purposes could have been accomplished through travel on regularly
scheduled commercial airlines.

    Flawed Implementation of OMB Guidance on Use of Government vs. Commercial
    Resources

OMB Circular No. A-126 policy guidance instructs agencies to periodically
conduct OMB Circular No. A-76 cost comparisons to determine whether
commercial activities should be conducted using government resources or
commercial sources. NASA's A-76 studies conducted to date have asserted
that because not all flight purposes could be achieved using commercial
airlines, commercial airlines are not a viable alternative and were not
considered in any of the studies. However, as discussed previously, our
analysis of NASA passenger aircraft flights taken during fiscal years 2003
and 2004 as well as our discussions with passengers on those flights
disclosed that the vast majority of the flights could have been
accomplished using commercial airlines. As a result, NASA's A-76 studies
inappropriately excluded potentially more cost-effective commercial
airline services from consideration.

Little supporting documentation is available for four of the seven
aircraft in NASA's passenger aircraft fleet that were acquired decades
ago. Consequently, it was difficult to determine how these aircraft
acquisitions were justified and if there was a mission requirement
justifying aircraft ownership at that time.18

The five NASA A-76 studies on NASA-owned aircraft did not include a
comparison of NASA's passenger aircraft costs with commercial airline

18 NASA acquired two of the aircraft in 2001 to serve as replacements for
two of the agency's four shuttle trainer aircraft. Those aircraft were
used for passenger transportation during the period of our review. Another
aircraft was acquired in 1991 to serve as a shuttle trainer, but was never
modified to serve in that role.

costs.19 NASA's studies compared its aircraft ownership costs against
costs of NASA leasing aircraft to provide passenger transportation
services because "commercial airlines cannot effectively meet all mission
requirements." For example, NASA's March 2004 A-76 study was based on the
assumption that NASA aircraft would be required to support mission
requirements of an estimated 400-450 flight hours a year--essentially the
total number of flight hours flown by that NASA center's passenger
aircraft during 2003 and 2004. While NASA may continue to require access
to some mission-required passenger aircraft services for which commercial
airlines would not be a viable alternative, assuming that all prior flight
hours were mission required without first examining the purpose for these
flights is not consistent with the OMB guidance.

In addition to NASA-owned aircraft, as discussed previously, NASA obtained
passenger aircraft services through interagency agreements with DOD and
FAA, and a fractional ownership pilot demonstration contract with Flexjet.
These alternative approaches offer ready access to passenger aircraft
without the fixed cost investment and the need to fund aircraft
maintenance, pilot training, and other costs associated with aircraft
ownership. For example, under NASA's contract with Flexjet, NASA had
guaranteed availability to passenger air transportation services.
Specifically, the contract with Flexjet allowed NASA to schedule flights
with a minimum of 8 hours advance notice. According to a NASA contractor's
December 2004 study, such arrangements to obtain passenger transportation
services provide a cost-effective alternative to agency ownership of
aircraft when demand is highly variable or less than 150 to 200 hours a
year. Such flexible arrangements could provide NASA with quick-turnaround
access to air passenger transportation services, and appear to have the
ability to have met NASA's limited mission-required needs during the
period of our review.

Further, NASA has not performed any A-76 studies for three of its aircraft
that were used as passenger aircraft. NASA purchased two Gulfstream II
aircraft in 2001 as contingency backups to, and eventual replacements for,
its existing shuttle trainer aircraft fleet. However, since purchasing the
aircraft, NASA has been using these aircraft as part of its passenger
aircraft

19 Aviation Services Studies: Johnson Space Center, NASA 2 Mission
Management Aircraft, March 2004; Johnson Space Center, NASA 2 Gulfstream
G-1, December 1999; Dryden Flight Research Center, NASA 7 King Air 200,
February 2000; Goddard Space Flight Center - Wallops Flight Facility, NASA
8 King Air 200, February 2000; NASA Headquarters, NASA 1 Gulfstream III,
February 2000.

services fleet. Subsequent changes in NASA's long-term strategy for space
flight now show that shuttles will not be used after about 2010. As a
result, the continuing mission-required need to retain these aircraft is
questionable.

In its 1995 and 1999 reports, the NASA IG20 expressed concern over NASA's
exclusion of commercial airline transportation from its A-76 studies. In
both reports, the IG reported that the A-76 studies NASA management
performed with respect to its passenger aircraft improperly excluded a
cost comparison with commercial airlines. While the IG recommended that
NASA program offices responsible for passenger aircraft operations perform
A-76 studies to include consideration of accomplishing air travel needs
using commercial airlines, NASA management contended that because of
isolated travel destinations and extremely short advance notice,
commercial airlines could not meet its travel needs. However, our analysis
of available documentation supporting flights taken during fiscal years
2003 and 2004 shows that most were requested more than 24 hours in advance
of flight departure and most NASA centers are located within an hour's
drive of commercial airports.

  Ineffective Oversight and Management of Passenger Aircraft Services

NASA's oversight and management controls over its passenger aircraft
operations were ineffective. NASA lacks the systems or procedures to
accumulate and use agencywide usage and cost data needed to provide the
transparency and accountability necessary to effectively support day-today
management of its passenger aircraft service operations. Specifically,
NASA did not

o 	Maintain agencywide records on the purposes for which its passenger
aircraft are used and their costs. Such data are critical to (1)
determining whether usage is consistent with OMB guidance limiting
aircraft ownership to those agencies with mission requirement needs, and
(2) maintaining visibility and accountability for the full costs
associated with its passenger aircraft operations. Lacking such full cost
visibility and passenger accountability, NASA's passenger aircraft
services are sometimes viewed as a "free" resource by NASA project and
program officials.

20NASA Inspector General Report, IG-99-057 and NASA Inspector General
Report, LA-95-001.

o 	Correctly justify the cost effectiveness of individual flights. These
justifications were flawed in that they relied on (1) inaccurate cost data
and (2) other unsupported factors used in the cost-justification
calculation.

o 	Have processes in place to obtain reimbursements from nonofficial
passengers flying on NASA-owned or -chartered aircraft. This may include
NASA employee spouses and relatives, contractors, or other federal agency
personnel.

    Flawed Procedures for Accumulating and Using Passenger Aircraft Usage and
    Cost Data

NASA systems or procedures in place to accumulate detailed usage and cost
data related to its passenger aircraft services were flawed. Other than
data compiled once a year to meet external reporting requirements, neither
NASA management nor congressional oversight officials had agencywide
aircraft usage and cost data needed to provide the transparency and
accountability needed to make informed decisions on continued ownership of
passenger aircraft.

Costs associated with ownership and operation of NASA's passenger aircraft
services were usually included in center overhead accounts that were
allocated to programs based on the number of personnel assigned to
programs without regard to the extent to which program personnel actually
used NASA passenger aircraft services. Therefore, it is not surprising
that some NASA personnel expressed the view that use of NASA-owned or
-chartered aircraft is a "free" resource to them in that they did not have
visibility or accountability over associated costs as part of their
program or project budget execution reporting.

Because NASA lacked a system for routinely collecting agencywide usage and
cost data, it could not provide us with the complete and accurate
agencywide information on aircraft usage and cost that we requested as
part of this audit. Although each center that possesses and manages
passenger aircraft is required to maintain a flight justification and
manifest for each trip, the flight usage data contained in these documents
are not compiled or analyzed on an agencywide basis to support decisions
related to mission-required needs. Specifically, NASA data on the purposes
and costs of its passenger aircraft services during fiscal years 2003 and
2004 were contained in paper flight justifications and manifests
maintained at six different locations. We created a database of
descriptive cost and usage data for approximately 1,200 flights using
NASA-owned or -chartered aircraft for which sufficiently complete data
were available. Although, as

mentioned previously, we obtained evidence that NASA also utilized at
least two additional program support aircraft to meet its passenger air
transportation needs, the limited data on use and costs associated with
flights using these aircraft did not allow us to include data on these
flights in our database. Further, data on passenger aircraft services for
about 200 flights at one center was missing most of the data elements on
the flight request justification forms, including flight purpose and
cost-justification calculations. Without agencywide data on flight
purposes and costs related to its passenger aircraft services, NASA
managers and Congress lack critical information they need to make key
aircraft ownership decisions.

In addition to the limited agencywide usage and cost data, we also found
that the data provided by NASA, although certified by NASA management as
complete and accurate, were not always complete or accurate. Our
comparison of NASA-supplied data on flights taken in fiscal years 2003 and
2004 with FAA data showed that (1) data on 97 passenger flights were not
included in the aircraft usage data NASA certified as complete; and (2) as
discussed in a subsequent section, NASA-supplied data did not always
include all legs of trips taken using NASA passenger aircraft. After our
identification of the flights, while not complete in all cases, NASA was
able to provide some form of supporting documentation showing these
flights occurred, including proof of authorization, approval, or a
determination of cost effectiveness. Examples of some of the flights not
included in the data NASA officials certified as complete are summarized
in table 3.

    Table 3: Examples of Passenger Flights Not Included in Submissions NASA
                             Certified as Complete

                                                          NASA's 
                                                      estimated     Estimated 
                                           Number of commercial   NASA flight 
    Stated flight purpose   Destination   passengers       costs         cost 

Hurricane evacuation for select Kennedy Space Center personnel and their
families and parents, and aircraft pilots and maintenance personnel and
their families Two trips from Kennedy Space Center, FL to Washington, DC
and return

9 $3,000 $29,000 Presentation of a plaque to the city of Shreveport, LA in
 appreciation for help during the Columbia disaster Kennedy Space Center, FL 7
                   4,000 22,000 to Shreveport, LA and return

Two-day trip to Las Vegas to meet with a contractor for a "technical
interchange"

Johnson Space Center, TX to Las Vegas, NV

                                11 8,000 22,000

      Participation in Brookhaven     Johnson Space Center,  10 15,000 27,000 
          National Laboratory                   TX                     
     ceremony dedicating a new NASA     to Long Island, NY             
            space radiation                                            
               laboratory                                              
University research and affairs at Johnson Space Center,  11               
               Texas A&M                        TX              3,000   4,000
               University             to College Station, TX           

Source: GAO analysis, based on NASA Aircraft Request forms and annual
reporting.

Note: We used NASA aircraft request forms to identify estimated commercial
ticket costs. We estimated NASA passenger aircraft costs by dividing
NASA's total reported costs by NASA's reported flight hours for each
aircraft. We then multiplied the result by the number of flight hours for
the specific flight. We used NASA's 2003 and 2004 Aviation Financial
Reports and Johnson Space Center's Budgeted Costs for Mission Management
Aircraft Operations to identify NASA reported costs. NASA aircraft flight
hour usage numbers reflect usage hours shown in NASA's 2003 and 2004
Annual Aircraft Performance Reports.

Further, we identified a breakdown in controls over flight data record
integrity at one center. Specifically, when we inquired about provided
documents that did not appear to be originals, NASA officials told us that
flight requests and approvals related to a 1-year period covering parts of
fiscal years 2003 and 2004 were lost and recreated after flights took
place. NASA officials stated that the loss of these important aircraft
usage data was apparently not discovered until after our initial request
for documentation as part of this audit. NASA officials did not inform us
that documents were recreated until after we questioned inconsistencies in
the documentation.

Cost data compiled by NASA did not disclose all passenger aircraft cost as
travel costs. First, the costs related to the operation of passenger
aircraft were not directly assigned to users, but were allocated through
center overhead accounts. These accounts, which include other expenses
such as facilities maintenance and auditing services, are usually
allocated to each NASA program based on the number of employees. This
allocation, which

does not relate to use of aircraft and does not reduce program travel
budgets, essentially provides a free resource to users, and does not
encourage efficient use of the aircraft. In commenting on air travel using
NASA-chartered aircraft, one NASA traveler stated,

"Although everything about the flight was very positive - convenience,
shorter trip time, professional service, etc. - the cost was considerably
more than flying a commercial airline. ... As much as I enjoyed the door
to door service, if the travel costs had been coming out of my project I
would have chosen to fly commercial."

This statement summarizes how NASA decision making on aircraft operations
is distorted by the lack of complete data on the cost of using this
resource. Second, NASA does not classify costs related to passenger
aircraft services in its annual financial and budget reports to Congress
as a cost of transportation of persons. In annual reports, one specific
object expense class, object class 21, is designed to capture and disclose
agencies' costs for transporting passengers. Instead, the cost of NASA
passenger aircraft services are included in overhead cost accounts, which
understates the true cost of transporting NASA passengers.

    Weaknesses In Justification Process for Individual Passenger Aircraft
    Flights

As discussed previously, our analysis of available estimates of NASA's
aggregate costs associated with its passenger aircraft services in
comparison with commercial airline ticket costs showed that NASA's
passenger aircraft services cost about $20 million more than commercial
airlines. In addition, NASA's individual flight cost justification process
for its passenger aircraft services was flawed. Our analysis of
cost-comparison documentation supporting passenger aircraft flights taken
during fiscal years 2003 and 2004 revealed critical flaws, including
variable cost data that were 6 years out of date and unsupported cost
factors. Available NASA documentation supporting NASA's individual flight
justifications for flights taken during 2003 and 2004 showed a total
estimated savings of $6 million over the 2-year period. However, if these
justifications had included up-to-date NASA variable costs and excluded
unsupported cost factors attributed to the additional time required to use
commercial airline flights, most flights would not have been approved
because they would have been more costly than commercial air travel.

Policy guidance in OMB Circular A-126 provides an agency may use aircraft
on a flight-by-flight approval basis for routine business purposes to the
extent that a comparison between the agency's specified variable costs and
the costs of commercial travel shows the proposed flight is cost
effective.

Specifically, OMB Circular A-126, Attachment A, provides that costs of
commercial travel must be compared with the variable costs of operating
the agencies' passenger aircraft21 and that proposed flights using
agencies' passenger aircraft for routine business purposes should only be
approved if they result in a cost savings to the government. Further, OMB
guidance provides that variable cost estimates used in flight-by-flight
cost justification calculations are to be updated annually. This policy on
flightby-flight variable cost justification does not replace the agencies'
need to first establish a valid mission requirement for owning aircraft,
and overall cost effectiveness. As discussed previously, our analysis of
flight purposes showed that about seven of every eight flights were for
routine business travel.

Consistent with OMB policy guidance, NASA regulations provide that
individual cost justifications comparing estimated commercial airline
travel costs with estimated variable costs associated with using NASAowned
or -chartered aircraft should be prepared prior to all passenger aircraft
flights. Figure 4 provides an overview of the methodology NASA used to
compare NASA and commercial costs for its flight-by-flight justifications.

21OMB Circular No. A-126, Attachment A, defines commercial cost to include
estimates of commercial tickets, additional per diem and rental cars, and
estimates of lost work time costs due to the extra time it takes to travel
commercially. OMB Circular No. A-126, Attachment B, defines variable costs
to the agency to include variable crew costs, maintenance costs, labor,
parts, contracts, engine overhauls, fuel, and landing and tie down fees.

Figure 4: Overview of NASA Methodology for Comparing Its Flight-by-Flight
Variable Costs with Commercial Flight Costs

Source: GAO analysis of NASA Aircraft Request Forms.

Several NASA centers had not updated the variable costs used in their
flight-by-flight cost-comparison calculations for over 6 years. Such
out-ofdate variable costs significantly understated NASA's
flight-by-flight costs. For example, at two centers, the $964 variable
cost per flight hour used for flight-by-flight justifications during
fiscal years 2003 and 2004 was over 6 years out of date. According to NASA
aircraft management officials, this hourly rate was last adjusted in 1998.
At one center, a recent recalculation, done in 2005 pursuant to our audit,
increased the center's variable cost rate from $964 to $1828 an hour,
almost a 90 percent increase. Further, even this 90 percent higher rate
may understate NASA's actual variable costs. For example, the aircraft
manufacturer for the aircraft in use at that center reported a direct cost
per flight hour rate of approximately $3,000 a flight hour, including
estimated fuel costs alone in excess of $1,300 an hour.

NASA variable costs were also understated at one center because the
flightby-flight justifications included only variable cost estimates for
one round trip when the aircraft actually made two round trips to meet
passengers' transportation requirements. Our analysis of FAA flight
information and flight documentation obtained from the center showed that
the flight request data we were provided included estimates related to
only two of four flight legs flown to complete 14 flight requests over the
2-year period of our review. For example, on August 6, 2003, NASA's
passenger aircraft transported passengers from Houston, Texas, to Pueblo,
Colorado, and then returned without passengers to Houston the same day.
Three days

later, pilots flew an empty aircraft to Pueblo to pick up passengers and
return them to Houston. Center officials stated that additional round
trips were necessary to return the flight crew to their home station where
they could be more productive performing other duties. Center officials
stated that they did not include the two extra flight legs in their
calculations of the variable costs associated with NASA's passenger
transportation because they classified these legs as crew training
flights. Nonetheless, the costs incurred by these additional flights
should be considered among the costs related to NASA's passenger air
transportation services.

In addition to understatements of NASA's variable costs, NASA's
flight-byflight cost comparisons were also flawed in that they increased
the cost associated with flying commercially by using a largely
unsupported multiplier of 2.5. NASA could not provide any specific
NASA-related empirical evidence to validate use of the multiplier in its
flight-by-flight justification process. NASA used this multiplier in
addition to factors for time and salary costs accounted for in its
cost-justification calculation. The use of a multiplier to increase the
value of an employee's time beyond his or her salary and fringe benefits
is not expressly provided as part of OMB's Circular No. A-126 guidance.
Further, cognizant OMB officials told us that it was not their intent that
agencies use any such multiplier (beyond the salary and fringe benefits
associated with any time savings) in determining whether proposed flights
were cost effective. They also stated they were not aware of any agencies
using such a multiplier in their flight justification calculations. While
NASA officials informed us that they had been using this multiplier for a
number of years and that they believed it was a conservative factor, they
did not provide any documentation demonstrating the appropriateness of the
multiplier as it applies specifically to the experiences of NASA personnel
who used these aircraft. Consequently, lacking such documentation, NASA's
use of a 2.5 multiplier improperly overstates the costs of commercial
alternatives.

The overall effect of understating NASA costs and overstating commercial
costs in NASA's flight-by-flight justifications was that NASA incorrectly
approved individual flights as cost effective. For example, NASA justified
one round trip from Kennedy Space Center, FL to Burbank, CA as cost
effective, calculating a savings of $4,800. NASA calculated a cost savings
for the flight because it used a 1998-based variable cost factor for the
NASA plane of $964 per hour and also multiplied the travelers' salary
costs savings by the unsupported 2.5 multiplier. If the variable cost was
updated to NASA's 2004 estimate of $2,528 per hour for that aircraft and
the unsupported multiplier was removed, the estimated variable costs

associated with the proposed NASA passenger aircraft flight would have
exceeded estimated commercial airline costs by $17,408. Further, even
after incorporating NASA's unsupported estimate that employee fringe
benefits increase employee direct salary costs by an additional 50
percent, the NASA aircraft variable costs for this flight would still have
exceeded commercial costs by about $16,000.

    NASA Procedures Not Effective in Consistently Identifying and Collecting
    Reimbursements from Nonofficial Travelers

NASA lacks procedures to consistently and effectively identify and recover
the applicable costs of operating government aircraft when nonofficial
passengers fly on NASA-owned or -chartered aircraft. As a result,
nonofficial travelers were provided free transportation using NASA's
passenger aircraft services. However, because of the lack of procedures
and documentation in place concerning the determination of the official
status of travelers, we could not determine, and more importantly NASA
could not determine, if any of the travelers should have, but did not,
reimburse the government for the cost of their transportation.

According to OMB Circular No. A-126, travelers flying on a space-available
basis on government aircraft for a purpose other than the conduct of
official agency business generally must reimburse the government for the
full coach fare.22 Reimbursement for travel at the government rate for the
cost of coach tickets would have covered about one fifth of NASA's
reported costs associated with the use of NASA's passenger aircraft
services.

However, NASA has not implemented agencywide policies and procedures to
ensure that such travelers reimburse the government for the corresponding
coach cost. Processes in place at each of the six centers to obtain
reimbursements ranged from none at all to ad hoc procedures that
essentially relied on individual travelers to identify and submit
payments. For example, at one center, NASA's procedures consisted of
notifying NASA travelers of the need to obtain reimbursement from
nonofficial travelers flying on the aircraft, but did not provide for any
follow-up to monitor and collect the requisite amount from non-NASA
travelers.

For example, between September 2, 2004, and September 6, 2004, several
Kennedy Space Center employees and their families and contractors and

22Exceptions to required reimbursements are listed in section 9,c.

their families used the center's Gulfstream II aircraft to fly to
Washington, D.C. in advance of Hurricane Francis. According to center
officials, the center was required to evacuate the aircraft from the path
of the approaching hurricane, and a decision was made to transport the
contractor pilots, mechanics, and their families over 800 miles north to
Washington. After flying the contractors and their families out of the
area, the aircraft then returned to pick up other center management
personnel, personnel associated with the aircraft management, and their
families and flew them to Washington. A NASA official stated that at least
one of the passengers on these flights should have reimbursed the
government for a portion of the cost of their transportation. However, the
official did not know if such reimbursement was obtained.

NASA officials at two other centers stated that they have not obtained
reimbursements or they had no documentation showing the extent to which
reimbursements from nonofficial passengers on NASA flights were identified
and obtained. In addition, we identified over 100 other travelers that
NASA classified as dependents flying on NASA passenger aircraft that may
have been nonofficial travelers. These passengers may have been required
to reimburse NASA for a portion of the costs of their transportation.

Conclusions	As NASA strives to carry out its new vision for the future of
the agency, using its resources as efficiently as possible will be a
growing fiscal challenge. Operating what is essentially its own small
passenger airline service, while potentially providing certain benefits to
the agency and its employees, costs an estimated five times more than if
commercial airlines were used to provide these services. Further, NASA's
ownership of aircraft to support essentially routine business operations
is in direct conflict with OMB's policy prohibition on such uses and
passenger interviews which showed that in almost all cases, the travel
could have been accomplished using commercial airlines.

NASA management has disagreed with, and taken only limited action with
respect to similar prior audit recommendations in this area and
insufficient management attention and agencywide oversight has allowed
NASA to continue this costly program for decades. The cumulative effect
has been failures in effectively justifying the extent to which such
passenger aircraft services are needed to address critical, time-sensitive
mission requirements, as well as effectively determining the extent to
which these services could be accomplished without incurring the
substantial, fixed

operation and maintenance costs associated with aircraft ownership.
Immediate actions to dispose of all aircraft not needed to address mission
requirements and adoption of more flexible, less costly alternatives to
satisfy future mission requirements would best position NASA to meet its
stewardship responsibilities for taxpayer funds it receives, and better
enable it to meet its current fiscal challenges.

Matters for Congress should consider whether legislation is necessary to
ensure that

(1) NASA disposes of all of its passenger aircraft not used in
accordanceCongressional with OMB's explicit policy prohibition against
owning aircraft to support Consideration travel to routine site visits,
meetings, speeches, and conferences; and (2)

funding for future NASA passenger aircraft purchases and operations is
restricted to those necessary to meet mission requirements consistent with
OMB guidance.

Recommendations	To the extent that Congress determines that NASA should
continue to retain aircraft or passenger aircraft charter services to
provide passenger transportation, we recommend that the Administrator of
NASA take the following six actions:

o 	Establish policies and procedures for accumulating and reporting on its
passenger aircraft services to provide complete and accurate agencywide
cost and utilization data to support oversight and decision making on
operating and retaining such aircraft services.

o 	Clarify policies and procedures applicable to aircraft acquisition and
retention to limit the number and type of aircraft owned and chartered for
passenger transportation to those necessary to meet the "missionrequired"
criteria in OMB guidance.

o 	Periodically assess the extent to which NASA has a continuing need to
own aircraft to provide passenger transportation in support of mission
requirements in accordance with OMB guidance.

o 	Maximize the use of flexible, cost-effective arrangements to meet
mission-required passenger air transportation service needs in lieu of
aircraft ownership.

o 	Revise existing policies and procedures used to determine if individual
flights are justified to include use of up-to-date variable costs and
limit commercial cost estimates to include airfare, in-transit salaries
and fringe benefits, and other costs directly related to reasonable
estimates of delays incurred in meeting commercial airline flight
schedules in accordance with OMB and GSA guidance.

o 	Establish agencywide policies and procedures for identifying and
recovering applicable costs associated with nonofficial personnel
traveling using NASA passenger aircraft services on a reimbursable basis.

  Agency Comments and Our Evaluation

In its written comments, the NASA Administrator concurred with our
recommendations and set out several actions to address identified
deficiencies. Specifically, he said NASA would review its policies and
procedures related to aircraft management to ensure they are aligned with
OMB requirements and conduct a comprehensive study of the agency's
passenger aircraft operations to be completed by October 31, 2005. These
actions are consistent with the intent of our recommendations to NASA and
if carried out fully and effectively will help address the deficiencies we
found.

If NASA's study referred to above is carried out effectively and fully
considers the various matters discussed in this report, it should provide
the Congress valuable information for deciding whether legislation may be
needed on this matter. NASA's comments on a draft of this report are
reprinted in appendix II.

As agreed with your offices, unless you publicly announce its contents
earlier, we plan no further distribution of this report until 30 days from
the report date. At that time, we will send copies of the report to
interested congressional committees. We will also send copies of this
report to the Office of Management and Budget and the General Services
Administration. We will make copies available to others upon request. In
addition, the report will be available at no charge on the GAO Web site at
http://www.gao.gov. If you or your staffs have any questions regarding
this report, please contact me at (202) 512-7455 or [email protected]. Contact
points for our Offices of Congressional Relations and Public Affairs may
be

found on the last page of this report. GAO staff who made key
contributions to this report are listed in appendix III.

Gregory D. Kutz Managing Director, Forensic Audits and Special
Investigations

Appendix I

Scope and Methodology

To assess reasonableness of costs, use, and agency oversight and
management of the National Aeronautics and Space Administration's (NASA)
passenger aircraft services, we met with officials of NASA's Office of
Infrastructure and Administration Aircraft Management Office and
appropriate officials at the Johnson Space Center, Houston, Texas;
Marshall Space Flight Center, Huntsville, Alabama; Kennedy Space Center,
Cape Canaveral, Florida; Wallops Flight Facility, Wallops Island,
Virginia; and Dryden Flight Research Center, Edwards, California. We
reviewed aircraft utilization and management reports prepared by NASA and
its contractor and aircraft operations budget/cost information, including
annual Aviation Financial Reports for fiscal years 2003 and 2004, Annual
Aviation Report: Aircraft Performance for fiscal years 2003 and 2004, and
NASA's 2004 Mission Management Aircraft Fleet Plan. At each center, we
observed and assessed the process for managing passenger aircraft services
and scheduling and justifying costs for individual flights. We also
reviewed available documentation supporting the various cost-justification
factors and multipliers NASA used to estimate the variable costs of using
its passenger aircraft as well as the alternative costs of using
commercial airline transportation.

As part of our effort, we collected and compiled available
flight-by-flight NASA passenger aircraft cost and usage data from NASA
mission management aircraft request forms. These forms provided such
descriptive data as dates and purpose for travel, itinerary, passengers,
levels of approval, and cost justification for aircraft use. We asked for
all documentation maintained at NASA centers for flights flown using
NASA's passenger aircraft services during fiscal years 2003 and 2004. We
selected the most recently completed 2-year period because NASA's
regulations specify retaining source documents related to passenger
aircraft usage for at least 2 years. While incomplete, we ultimately
obtained some type of documentation indicating that NASA passenger
aircraft services during this 2-year period included about 1,500 flights.
However, because of the limited amount of supporting documentation
available for several hundred flights, we included only 1,188 flights in
our analysis. For example, we could not use any of the approximate 200
flights from the Dryden Flight Research Center in our analysis because few
of the requested documents included all the required usage and cost data
necessary for such an analysis. To independently verify the reliability
and completeness of individual flight source documentation maintained at
NASA centers, we compared the NASA-provided flight information with
information on NASA aircraft flights maintained by the Federal Aviation
Administration's (FAA) Enhanced Traffic Management System and reconciled
differences. Further,

Appendix I Scope and Methodology

while not included in our analysis, we obtained documentation showing that
2 of NASA's aircraft classified as program support aircraft were also used
to provide passenger transportation, we did not attempt to determine if
any of NASA's other program support or research aircraft may have also
been used to provide passenger transportation as part of this audit. Also,
we did not review the effectiveness of safety or maintenance programs
related to NASA's passenger aircraft services.

To analyze the relative costs of NASA's passenger aircraft services
compared to commercial airline costs, we relied primarily on available
NASA cost data from NASA Aviation Financial Reports. We validated this
data wherever feasible with comparable independent data sources including
industry data. For example, we contacted the manufacturers of both types
of passenger aircraft used by NASA to validate that the cost estimates
used in our analysis were similar to the manufacturers' cost metrics for
operating those aircraft. We used fiscal year 2003 and 2004 cost data in
annual Aviation Financial Reports reported by each center that operated
one or more of NASA's passenger aircraft and the costs NASA incurred for
chartering passenger aircraft from other government agencies or
contractors. At one center where reported cost data for passenger aircraft
in the Aviation Financial Report were combined with data for other agency
aircraft, we used annual budget data that were limited to passenger
aircraft operations. At NASA headquarters, we used annual cost data
provided by NASA because their annual Aviation Financial Reports did not
contain costs associated with NASA's use of Federal Aviation
Administration aircraft. Finally, costs from NASA's Report on the
Fractional Aircraft Demonstration Program were used to determine the total
cost of Flexjet flights. We used NASA Mission Management Aircraft Request
forms to determine the estimated cost for flights taken on Department of
Defense (DOD) aircraft. We then compared reported costs of NASA aircraft
operations and aircraft charter costs with our estimates of travel costs
that NASA would have incurred had the passengers who flew on NASA's
aircraft during our 2-year test period used commercial airline
transportation instead. To estimate the commercial transportation costs of
NASA employees who traveled using NASA's passenger aircraft, we used the
average commercial airline round-trip fare of $426 for all flights flown
by NASA employees during this same time period as reported in a database
of travel card transactions for NASA provided by NASA's contractor, Bank

Appendix I Scope and Methodology

of America.1 This average commercial round-trip air fare estimate is
intended to approximate NASA's passenger transportation costs if it had
used commercial airline services instead of its own services. As such, it
may reflect amounts that in some cases would exceed NASA's actual
commercial costs. For example, to the extent to which unofficial travelers
were included in estimates of passengers, commercial costs would be
overstated. Conversely, in other cases our estimate may have
underestimated NASA's costs. For example, costs may have been understated
to the extent that such travel involved passenger aircraft services to
remote locations or locations with limited commercial air service.

To determine the number of travelers who flew on NASA-owned and -chartered
aircraft during the 2-year period, we used the number of passengers
identified on individual hard-copy flight manifest documentation NASA
provided to us. During the course of our review, we became aware of
additional flights flown at some centers for which we were not provided
flight manifest documentation. However, we were unable to obtain and
analyze documentation for these additional flights in time to complete our
analysis. To the extent that the number of passengers on flights for which
individual flight documentation was not provided to us, the estimate of
commercial airfare costs is understated. At the Dryden Flight Research
Center, where individual hard-copy flight documentation did not contain
complete information, we used the number of passengers the center reported
to NASA headquarters for inclusion in annual aircraft performance reports.

We did not use the numbers of passengers reported for all centers because
the centers reported their passenger counts inconsistently and we were
unable to validate them. Although the number of passengers reported on
individual flight manifests often included passengers who flew only one
way or on one or more legs of the trip, we counted these partial-trip

1 To compute an average commercial round-trip air ticket cost, we used
Bank of America's Travel Card Air Transactions database for NASA to
develop a population of round-trip commercial nonpremium class airline
ticket purchases (debit transactions) during the period covering October
1, 2002, through September 30, 2004. In total, the nonpremium class
airline ticket population consisted of 116,865 tickets, totaling
approximately $49,775,733. Using this amount, we computed the average cost
of a commercial, round-trip, nonpremium class airline ticket to be
approximately $426 per ticket. We validated the Bank's transaction
database with comparable data reported by publicly available GSA travel
card information and found the data, both in numbers of transactions and
value, to be sufficiently reliable.

Appendix I Scope and Methodology

passengers as having flown round-trip for purposes of estimating the
commercial costs of passengers flown on NASA's aircraft. Consequently, in
this respect, our estimated savings are likely to be understated in that
including these partial-trip passengers in the total number of passengers
overstated our estimate of airfare costs that NASA would have incurred had
the passengers traveled on commercial airlines. Conversely, our estimated
savings may be overstated because our estimated commercial travel costs
did not include additional lodging and other incidental costs that
travelers would periodically incur and salary costs for additional lost
work time.

To estimate the lost work time associated with commercial airline travel,
including salary and benefit costs, per diem, rental cars, commercial
tickets, and other costs, we utilized cost estimates included in NASA
individual flight request forms. For the 1,188 flights for which we
received data, we used NASA's estimates for salary costs multiplied by
lost work hours, number of travelers, and NASA's benefit factor of .5.
Because accounting for fringe benefit costs was recognized in OMB
guidance, while unsupported, we used NASA's estimated fringe benefits
factor of .5 to increase passengers' salary costs. In addition to salary
costs, we also included available NASA estimates for additional per diem,
commercial tickets, rental cars, and other travel costs associated with
lost work time from using commercial airline services. For one aircraft,
we did not receive any flight justification cost estimates. Instead, the
location operating the aircraft had developed standard calculations for
the average commercial cost for their two common flight patterns. We
averaged the estimated commercial cost for the two flight patterns to
determine the average cost savings per traveler for the aircraft. We then
multiplied the commercial cost by the number of travelers NASA reported
for the aircraft during fiscal years 2003 and 2004 to determine the total
commercial cost of transportation for travelers on the aircraft.

To assess whether NASA aircraft were operated and retained in accordance
with applicable governmentwide guidance, we primarily reviewed the Office
of Management and Budget (OMB) Circular No. A-126, Improving the
Management and Use of Government Aircraft; and Circular No. A-76
(Revised), Performance of Commercial Activities. We also reviewed
applicable governmentwide guidance in OMB Circular No. A-11,

Preparation, Submission and Execution of the Budget Part 7: Planning,
Budgeting, Acquisition and Management of Capital Assets (Revised June
2005); General Services Administration's (GSA) Federal Property Management
Regulations, 41 C.F.R. Subtitle C; and Federal Travel

Appendix I Scope and Methodology

Regulations, 41 C.F.R. Subtitle F. We also reviewed NASA's implementing
publications, NASA Policy Directive (NPD) 7900.4B, NASA Aircraft
Operations Management (April 2004); NASA Policy Regulation (NPR) 7900.3A,
Aircraft Operations Management (April 1999); and centerspecific
implementing instructions. We held discussions regarding these policies
and procedures with officials of OMB's Office of Federal Procurement
Policy, Transportation/GSA Branch, and Science and Space Branch; GSA's
Office of Government-wide Policy; and NASA's Office of General Counsel and
NASA Center and program managers.

At each center, while we observed the process for managing aircraft
operations and scheduling and justifying individual flights, we
interviewed managers and program officials to discuss the importance to
which they assessed the need and justification for owning/leasing
passenger aircraft. We analyzed the purpose cited by NASA for individual
flights flown during our 2-year test period to determine whether NASA's
stated purpose complied with criteria established in OMB and GSA guidance.
We interviewed agency personnel who requested, approved, and/or were
passengers on approximately 80 flights during our 2-year test period to
ensure that we understood the purpose for the flights and the basis for
utilizing NASA's aircraft. We did not assess the adequacy of safety or
maintenance programs related to NASA's passenger aircraft. Further, we did
not attempt to determine the validity or appropriateness of travel using
NASA's passenger aircraft, nor did we assess if the type and number of
personnel on the NASA passenger aircraft were appropriate given the stated
flight purposes.

To assess the effectiveness of NASA's oversight and management of its
passenger aircraft operations, we held discussions with appropriate
aircraft management officials at NASA headquarters and centers operating
passenger aircraft. We also identified and assessed (1) NASA's
implementing policies and procedures with respect to OMB and GSA policy
guidance, (2) the process used to approve and document passenger aircraft
utilization, (3) associated aircraft management reports, (4) other recent
assessments and studies done with respect to NASA passenger aircraft
services, and (5) the extent to which accurate, current agencywide data
were available to agency managers for day-to-day decision making on
passenger aircraft usage and costs.

We briefed NASA officials on the details of our audit, including findings
and their implications. On June 28, 2005, we requested comments on a draft
on this report. We received comments on July 28, 2005, and have summarized

Appendix I Scope and Methodology

those comments in the Agency Comments and Our Evaluation section of this
report. NASA's comments are reprinted in appendix II. We conducted our
work from November 2004 through June 2005 in accordance with U.S.
generally accepted government auditing standards and quality standards for
investigations as set forth by the President's Council on Integrity and
Efficiency.

Appendix II

Comments from the National Aeronautics and Space Administration

Appendix III

                     GAO Contact and Staff Acknowledgments

                          GAO Contact Gregory D. Kutz

Acknowledgments	In addition to the contact named above, Mario L.
Artesiano, James D. Berry, Fannie M. Bivins, Latasha L. Brown, Matthew S.
Brown, Harold J. Brumm, Carey L. Downs, Richard T. Cambosos, Francine M.
Delvechio, Francis L. Dymond, Dennis B. Fauber, Geoffrey B. Frank, Diane
G. Handley, Alison A. Heafitz, Christine A. Hodakievic, Jason M. Kelly,
Jonathan T. Meyer, George J. Ogilvie, James W. Pittrizzi, Kristen M.
Plungas, John J. Ryan, Sidney H. Schwartz, Joan K. Vogel, and Leonard E.
Zapata also made key contributions.

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