NASA Personnel: Challenges to Achieving Workforce Reductions (Letter
Report, 08/02/96, GAO/NSIAD-96-176).

Pursuant to a congressional request, GAO examined the National
Aeronautics and Space Administration's (NASA) efforts to downsize its
staff.

GAO found that: (1) NASA has reduced its fiscal year (FY) 2000 full-time
equivalent goal (FTE) by more than 3,000 personnel; (2) NASA has
provided eligible employees with voluntary separation incentive payments
in exchange for their voluntary retirement or resignation; (3)
two-thirds of the employees that left NASA in 1994 and 1995 took
buyouts; (4) NASA will not be able to reduce its personnel levels by FY
2000 without invoking involuntarily separation measures; (5) NASA is
relying on normal attrition, limited hiring, and redeployment to ensure
a proper mix of skills throughout the agency; (6) NASA is shifting its
program management control from headquarters to field centers and is
using a single prime contractor to manage its space shuttle program at
Kennedy Space Center; and (7) NASA would like to develop space science
institutes to improve the quality of its science programs, but these
efforts have been largely abandoned due to concerns regarding the
transfer of NASA employees to institute positions.

--------------------------- Indexing Terms -----------------------------

 REPORTNUM:  NSIAD-96-176
     TITLE:  NASA Personnel: Challenges to Achieving Workforce Reductions
      DATE:  08/02/96
   SUBJECT:  Employee buyouts
             Reductions in force
             Federal downsizing
             Personnel management
             Attrition rates
             Federal employees
             Human resources utilization
             Federal employee retirement programs
             Federal agency reorganization
             Employee transfers
IDENTIFIER:  NASA Space Science Program
             Apollo Program
             
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Cover
================================================================ COVER


Report to the Ranking Minority Member, Committee on Governmental
Affairs, U.S.  Senate

August 1996

NASA PERSONNEL - CHALLENGES TO
ACHIEVING WORKFORCE REDUCTIONS

GAO/NSIAD-96-176

NASA Personnel

(709175)


Abbreviations
=============================================================== ABBREV

  FTE - full-time equivalent
  FTP - full-time permanent
  NASA - National Aeronautics and Space Administration
  NPR - National Performance Review
  OMB - Office of Management and Budget
  ZBR - zero base review

Letter
=============================================================== LETTER


B-272392

August 2, 1996

The Honorable John Glenn
Ranking Minority Member
Committee on Governmental Affairs
United States Senate

Dear Senator Glenn: 

You requested that we examine the National Aeronautics and Space
Administration's (NASA) efforts and plans to decrease its staffing
levels.  In the early 1990s, NASA had projected an essentially flat
workforce profile of about 25,500 full-time equivalent (FTE)\1
employees through fiscal year 2000.  NASA currently plans to lower
this figure to about 17,500 by fiscal year 2000.  This report
discusses NASA's progress and its approach to achieving further
reductions. 


--------------------
\1 According to Office of Management and Budget (OMB) guidance, an
FTE generally includes
260 compensable days, or 2,080 hours, excluding overtime and holiday
hours. 


   RESULTS IN BRIEF
------------------------------------------------------------ Letter :1

By the end of fiscal year 1996, NASA will be about half way to its
goal.  NASA's success in reducing FTEs is principally due to the use
of voluntary separation incentive payments, or "buyouts," to eligible
employees in exchange for their voluntary retirement or resignation
from the government.  About two-thirds of the 4,000 employees who
left NASA in 1994 and 1995 took buyouts. 

NASA does not yet have fully developed plans to reduce its personnel
level by about another 4,000 FTEs to meet its overall goal by fiscal
year 2000 and may not be able to do so without involuntarily
separating employees.  NASA projections show that voluntary attrition
should meet the downsizing goal through fiscal year 1998, but NASA
estimates that attrition will not provide sufficient losses by fiscal
year 1999.  Thus, NASA officials intend to start planning a
reduction-in-force during fiscal year 1998, if enough NASA employees
are not retiring or resigning voluntarily. 

NASA's ability to achieve the 17,500-FTE goal is subject to major
uncertainties, including the shifting of program management from
headquarters to field centers and the award of a single prime
contract for the management of the space shuttle at Kennedy Space
Center.  Also, in 1995, NASA proposed space science institutes as a
potentially beneficial approach to maintain or improve the quality of
its science program in the face of organizational streamlining. 
However, its efforts to create such institutes have been discontinued
because proposed legislation, which would have eased the transfer of
its employees to the institutes, was not favorably reviewed in the
executive branch.  The institutes could have had a potentially large
FTE-reduction impact.  NASA intends to seek alternatives to the
institutes. 

In view of the uncertainties affecting NASA's ability to achieve
significant reductions in personnel to meet likely future budgets,
Congress may wish to consider requiring NASA to submit a workforce
restructuring plan for achieving its fiscal year 2000 FTE goal. 


   BACKGROUND
------------------------------------------------------------ Letter :2

Since NASA was established in 1958, its civil service workforce has
fluctuated widely.  In 1967, during the Apollo program, the workforce
was at about 35,900.  In the 1970s, due to unfunded programs, the
workforce shrank, with several thousand employees involuntarily
separated during the middle of the decade.  By 1980, the workforce
had stabilized near 21,000.  It remained close to that level until
1986, when the space shuttle Challenger accident forced a
reexamination of NASA.  In the mid- and late 1980s, NASA began some
ambitious new programs and its workforce began to grow again in the
latter part of the decade and into the early 1990s--peaking in 1992
at more than 25,000. 

When the current administration took office in 1993, it initiated
steps to reduce the size of the overall federal workforce.  An
executive order in February 1993 directed that the workforce be
reduced by 4 percent (100,000 employees) by the end of fiscal year
1995.  Then, in September 1993, the National Performance Review (NPR)
recommended a reduction of 252,000 federal employees by 1999.  By the
time Congress passed the Federal Workforce Restructuring Act in March
1994, which legislated an overall reduction of 272,900 federal
employees by 1999, NASA was already cutting its workforce, which was
more than 24,000 in fiscal year 1993, in response to the executive
order and the NPR recommendation.  NASA currently plans to achieve an
FTE level of about 17,500 employees by fiscal year 2000, an overall
reduction of about 8,000 from its previously planned level for that
year. 

The 17,500-FTE goal is predicated on the President's fiscal year 1996
budget, which requested $14.3 billion for NASA, with future
projections of $13.9 billion, $13.7 billion, $13.4 billion, and $13.2
billion, respectively, for fiscal years 1997 to 2000.  NASA's fiscal
year 1996 budget was approved at $13.8 billion.  In a message to NASA
employees regarding the fiscal year 1997 budget request of $13.8
billion, the NASA Administrator stated that, "Beyond FY 1997, there
are obvious uncertainties.  The out-year projections are
significantly lower than previous projections:  $13.1 billion for FY
1998; $12.4 billion for FY 1999; and $11.6 billion for FY 2000." He
went on to say that

     "As Administrator, I have decided not to take any precipitous
     action in FY 1996 to work toward these figures because to do so
     would involve a major disruption to our employees.  It would not
     be fair to put them through this process to reach projections
     that are not hard and fast."


   PERSONNEL REDUCTIONS IN RECENT
   YEARS
------------------------------------------------------------ Letter :3

Through fiscal year 1995, NASA reduced its previously planned fiscal
year 2000 FTE goal by over 3,000 FTEs, and it was planning to
increase the aggregate reduction to about 4,000 FTEs in 1996.  As
shown in table 1, NASA had just over 24,700 FTE personnel in fiscal
year 1993.  This number dropped below 23,100 in fiscal year 1995, and
it is expected to decrease to about 21,500 in fiscal year 1996. 



                                Table 1
                
                Full-time Permanent (FTP) and FTE Staffs
                        for Fiscal Years 1993-95

Occupation                                        1993    1994    1995
----------------------------------------------  ------  ------  ------
Scientists and engineers                        13,321  12,728  12,042
Professional administrative                      4,692   4,460   4,221
Clerical                                         2,599   2,370   2,100
GS technician                                    2,420   2,294   2,024
Wage board                                         648     564     487
FTP staff                                       23,680  22,417  20,874
FTE staff                                       24,731  24,265  23,075
----------------------------------------------------------------------
Source:  NASA. 


      BUYOUTS WERE THE PRINCIPAL
      MEANS OF ACHIEVING THE
      REDUCTIONS
---------------------------------------------------------- Letter :3.1

A key feature of the Federal Workforce Restructuring Act of 1994 was
the authorization for agencies to pay up to $25,000 to separating
workers--a buyout.  Initially, NASA planned to offer this buyout to
no more than
825 personnel.  However, after nearly 2,000 employees indicated
interest, NASA decided to offer 1,252 buyouts in 1994.  This buyout
was accepted by 1,178 employees.  The buyout allocations focused on
Headquarters, Marshall Space Flight Center, Lewis Research Center,
and Kennedy Space Center--the installations most affected by the
space station's redesign and program management restructuring.  No
occupational categories were targeted in the 1994 buyout, but members
of the Senior Executive Service, attorneys at Kennedy Space Center
and Marshall Space Flight Center, and astronauts were not permitted
buyouts, in part, because NASA felt that critical skills would be
lost if these employees separated. 

After the 1994 buyout, NASA was confronted with an even larger
downsizing challenge when the President's fiscal year 1996 budget
request reduced NASA's budgets through fiscal year 2000 by $4.6
billion.  NASA announced its intention to cover this reduction by
cutting its infrastructure, including personnel, rather than
canceling or cutting back program initiatives.  The NASA
Administrator tasked the agency to conduct a zero base review (ZBR),
which included examining every civil service and support contractor
position in NASA to find and eliminate overlap and over staffing. 
One of the review's conclusions was that NASA's civil service
workforce could be reduced to about 17,500 by the end of the decade
without eliminating core programs.  In anticipation of lower numbers
of personnel, NASA offered another buyout in 1995.  All employees
were eligible and it was accepted by 1,482 employees. 

The 2,660 buyouts represented about 66 percent of the more than
4,000 employees who left NASA during fiscal years 1994 and 1995, as
shown in table 2. 



                                Table 2
                
                Total and Buyout Losses in Fiscal Years
                1994-95 By General Occupational Category

                                                        Number  Percen
                                                 Total      of       t
                                                reduct  buyout  buyout
Occupation                                        ions       s       s
----------------------------------------------  ------  ------  ------
Scientists and engineers                         1,870   1,224      65
Professional administrative                      1,003     663      66
GS technician                                      484     353      73
Clerical                                           577     361      63
Wage board                                         104      59      57
======================================================================
Total                                            4,038   2,660      66
----------------------------------------------------------------------
Source:  NASA. 

NASA's scientists and engineers had the largest reductions in
numbers, but the smallest proportionate reductions, as shown in table
3.  Consequently, as of September 30, 1995, scientists and engineers
made up almost 58 percent of NASA's FTP employees--slightly higher
than a few years ago when they were about 56 percent of NASA's
workforce. 



                                Table 3
                
                  Net Loss Numbers and Percentages by
                General Occupational Category for Fiscal
                        Years 1993 through 1995

                                                                Percen
                                                   Net            t of
Occupation                       Hires  Losses    loss    FTPs    loss
------------------------------  ------  ------  ------  ------  ------
Scientists and engineers
1993                               174     414     240  13,321     1.8
1994                               342     938     596  12,728     4.7
1995                               231     932     701  12,042     5.8
Professional administrative
1993                               106     235     129   4,692     2.7
1994                               160     554     394   4,460     8.8
1995                                90     449     359   4,221     8.5
GS technicians
1993                                10      91      81   2,420     3.3
1994                                34     184     150   2,294     6.5
1995                                10     300     290   2,024    14.3
Clerical
1993                                92     159      67   2,599     2.6
1994                               171     323     152   2,370     6.4
1995                               102     254     152   2,100     7.2
Wage board
1993                                 6      21      15     648     2.3
1994                                33      60      27     564     4.8
1995                                15      44      29     487     6.0
----------------------------------------------------------------------
Source:  NASA. 

NASA personnel managers consider the two buyouts a success.  Given
the rate of employee turnover experienced in the 2 years preceding
the buyouts, they estimate that as many as 2,000 workers left the
agency sooner than they would have without a buyout. 


   FUTURE PERSONNEL REDUCTIONS MAY
   REQUIRE INVOLUNTARY SEPARATIONS
------------------------------------------------------------ Letter :4

As previously noted, buyouts accounted for about two-thirds of the
employees leaving NASA in fiscal years 1994 and 1995.  However, the
buyout authority has expired.  Without buyout authority, NASA
personnel projections as of March 1996 showed that voluntary
retirements and other separations should enable the agency to
continue to meet its downsizing goals through fiscal year 1998, but
attrition would not be sufficient in fiscal year 1999 to meet the
proposed budgets of about half of NASA's centers or for the agency as
a whole.  As a result, NASA personnel officials said a
reduction-in-force would be required by late fiscal year 1998. 

One element of the expected difficulty in 1999 is that about 70
percent of NASA's planned personnel reductions in the 1996-2000
period are scheduled in 1999 and 2000, with most of those--1,730 out
of 2,822--scheduled for 1999.  A NASA personnel official explained
that reductions were being scheduled for late in the period, in part,
to allow sufficient time to work out the details of the conversion to
a space shuttle single prime contract at Kennedy Space Center.  With
the difficult launch schedule associated with the space station, NASA
officials were concerned about mission performance if they lowered
personnel levels too quickly at Kennedy. 

One of NASA's major concerns is ensuring a proper skill mix
throughout the agency.  Currently, NASA's strategy to deal with this
concern is to rely on normal attrition, limited hiring focused on the
most critical areas, and redeploying employees.  NASA officials
intend to refine their workforce planning efforts later this year. 
They stated that these refinements will include developing more
detailed demographic information and turnover predictions,
identifying specific skill-mix requirements, determining skill
excesses and shortages, developing cross-training and relocation
opportunities, and implementing specific programs and policies to
help achieve an appropriate skill mix for the 17,500 FTE level. 


   UNKNOWN PERSONNEL IMPACTS OF
   MANAGEMENT AND OPERATIONAL
   CHANGES
------------------------------------------------------------ Letter :5

NASA's efforts to meet its planned FTE level while avoiding
involuntary separations will be affected by the results of several
management and operational changes, including the shifting of program
management from headquarters to field centers and the use of a single
prime contractor for managing the space shuttle at Kennedy Space
Center. 


      PROGRAM MANAGEMENT SHIFTING
      FROM HEADQUARTERS TO FIELD
      CENTERS
---------------------------------------------------------- Letter :5.1

NASA is in the process of shifting program management control from
its headquarters program offices to the field centers.  Prior to the
ZBR, the NPR recommended several management changes at NASA,
including reducing its headquarters workforce by 50 percent,
eliminating duplication of functions at headquarters and the centers,
and reducing management layers.  The ZBR, which was undertaken to
develop strategies to meet funding reductions, proposed giving the
centers increased management control.  The ZBR defined the centers'
missions and designated each as a Center of Excellence; that is,
having preeminence within the agency for a recognized area of
technical competence.  A center's mission denotes its role or
responsibility in supporting NASA's five major enterprises:  Mission
to Planet Earth, Aeronautics, Human Exploration and Development of
Space, Space Science, and Space Technology.  All program
implementation responsibilities previously performed by headquarters
offices are being reassigned to the field centers.  In essence, it is
intended that headquarters focus on what the agency does and why,
while centers focus on executing programs. 

Table 4 shows the proposed ZBR reductions for program and staff
offices in headquarters, and table 5 shows proposed reductions by
NASA installation as of March 1996. 



                                Table 4
                
                Headquarters Reductions Proposed by the
                                  ZBR

                                          June
                                          1995      FY          Percen
                                           FTE    2000     FTE    t of
                                        ceilin     FTE  reduct  reduct
Office                                       g    goal     ion     ion
--------------------------------------  ------  ------  ------  ------
Space Flight                               156      88      68      44
Aeronautics                                101      61      40      40
Space Communications                        47      28      19      40
Space Science                              121      68      53      44
Life and Microgravity                       78      49      29      37
 Sciences and Applications
Mission to Planet Earth                     80      58      22      28
Space Access and Technology                102      63      39      38
Safety and Mission Assurance                86      46      40      47
Staff offices                              866     550     316      36
======================================================================
Total                                    1,637   1,011     626      38
----------------------------------------------------------------------
Note:  As of June 1996, the headquarters offices' FTE levels were
under further review. 

Source:  NASA. 



                                Table 5
                
                  FTE Reduction Goals by Installation


                                                                Percen
Installation                              1996    2000  Number       t
--------------------------------------  ------  ------  ------  ------
Ames Research Center                     1,660   1,415     245      15
Dryden Flight Research Center\a            450     607    +157     +35
Goddard Space Flight Center              3,770   3,071     699      19
Johnson Space Center                     3,154   2,559     595      19
Kennedy Space Center                     2,270   1,135   1,135      50
Langley Research Center                  2,622   2,454     168       6
Lewis Research Center                    2,396   2,059     337      14
Marshall Space Flight Center             3,157   2,519     638      20
Space Station Program Office               349     349       0       0
Stennis Space Center                       219     208      11       5
NASA Headquarters                        1,508   1,112     396      26
======================================================================
Total                                   21,555  17,488   4,067      19
----------------------------------------------------------------------
\a Increase due to transferring aircraft from other centers, a
consolidation that was uncertain at the time of our work. 

Source:  NASA. 


      PERSONNEL REDUCTIONS DUE TO
      SINGLE PRIME CONTRACT FOR
      SPACE SHUTTLE MANAGEMENT
---------------------------------------------------------- Letter :5.2

In November 1995, NASA selected United Space Alliance--a Rockwell
International and Lockheed Martin partnership--as the prime
contractor for space flight operations.  Although NASA will retain
responsibility for launch decisions, NASA personnel will be less
involved in day-to-day operations.  Thus, fewer civil servants will
be required to manage the program.  However, conversion efforts are
still underway and have not reached the point where NASA officials
are able to judge the full extent to which NASA personnel will be
involved in overseeing the contractor's operations. 

Despite this uncertainty, NASA estimates that it should be able to
make personnel reductions in the range of 700 to 1,100 FTEs at the
Kennedy Space Center.  Because the length of the transition period is
uncertain, NASA personnel officials show these reductions occurring
in 1999 and 2000.  However, NASA officials believe the personnel
reductions at this center will not be precipitous, but will occur
more gradually over the transition period.\2


--------------------
\2 The NASA Administrator has reaffirmed the agency's commitment to
shuttle safety and said he would not downsize the agency's staffing
in any way that would jeopardize shuttle safety.  NASA recently
requested its Aerospace Safety Advisory Panel to review the space
shuttle program, concentrating on its safety.  The Panel's report is
expected by the end of November. 


   FURTHER EFFORTS TO ESTABLISH
   SPACE SCIENCE INSTITUTES
   DISCONTINUED
------------------------------------------------------------ Letter :6

During the course of the ZBR, the concept of institutes was
identified as a potentially beneficial approach to maintain or
improve the quality of national science in the face of organizational
streamlining.  The recommendation was made to reshape NASA's science
program under a reinvention strategy to bind NASA's science program
more closely to the larger community that it serves.  The strategy
involved "privatization" of a portion of NASA's science program into
a number of science institutes.  The purpose for establishing science
institutes was to preserve and improve the quality of NASA's
contributions to national science in the face of reductions in the
size of the federal workforce.  Under its Science Institute Plan,
NASA intended to select universities, not-for-profit organizations,
or consortia to operate 11 institutes under competitively awarded
contracts or cooperative agreements to conduct research supporting
the specific missions of selected NASA field centers, among other
purposes. 

NASA was working with OMB to identify ways to make the transition to
institutes attractive to NASA personnel.  Proposed legislation for
the agency's fiscal year 1997 authorization bill was sent to OMB. 
The legislation would have facilitated the institutes' employing of
NASA personnel by relaxing current laws that restrict the employment
of former federal workers by the private sector and enabling NASA
employees to retain the bulk of their federal retirement benefits
should they accept an offer of institute employment.  Each institute
would make its own decisions on hiring NASA employees.\3 This
proposal was not favorably reviewed in the executive branch, in part
because of concern that covering former NASA personnel with federal
benefits after they became private-sector employees would set a
precedent to do the same for other federal employees whose jobs are
privatized.  As shown in table 6, the potential loss of civil service
work years as a result of creating science institutes would vary
greatly from center to center. 



                                Table 6
                
                Potential Space Science Institute Impact
                      on Civil Service Work Years

                                                   Approximate loss of
NASA Field Centers and                              civil service work
Proposed Science Institutes                                      years
----------------------------------------------  ----------------------
Ames Research Center
Astrobiology Institute                                             334
Goddard Space Flight Center
Goddard Institute for Space Studies                                 20
National Space Science Data Center                                  12
Johnson Space Center
Biomedical Research Institute                                       20
Astromaterials Institute                                            30
Langley Research Center
Atmospheric Science Institute                                      237
Lewis Research Center
Microgravity Institute                                             371
Space Power Institute                                              259
Marshall Space Flight Center
Global Hydrology and Climate Center                                168
Microgravity Institute (Materials &                                374
 Biotechnology)
Space Science Institute (Astrophysics & Space                      164
 Physics)
======================================================================
Total                                                            1,989
----------------------------------------------------------------------
Source:  NASA. 

According to NASA officials, the extent to which NASA personnel would
voluntarily leave to accept the institutes' offers of employment
would depend largely on the enactment of the proposed legislation
designed to ease such transfers.  Without such legislation, NASA
officials believe that the number of employees voluntarily leaving
NASA would likely be negligible. 

On June 7, 1996, the NASA Administrator announced that, due to
objections to the proposed legislation from the Office of Government
Ethics, the Office of Personnel Management, and OMB, efforts to
establish new science institutes other than the Biomedical Research
Institute at Johnson Space Center would be discontinued.  The
Administrator stated that NASA did not intend to migrate civil
service functions and positions to institutes absent legislative
relief.  However, NASA will continue to consider alternative options
to the proposed institutes. 


--------------------
\3 Under the proposed legislation, NASA employees in charge of
selecting the universities or corporations to operate the new
institutes would be prohibited from accepting employment at any
institute. 


   MATTER FOR CONGRESSIONAL
   CONSIDERATION
------------------------------------------------------------ Letter :7

NASA recently requested buyout authority from Congress.  We have
previously reported that savings from buyouts generally exceed those
from reductions-in-force and that savings from downsizing largely
depend, among other things, on whether the workforce restructuring
has been effectively planned.\4

As previously noted, NASA is currently involved in developing future
workforce plans to help ensure a proper skill mix to support its
programs and activities.  In commenting on a draft of this report,
NASA said it had a human resource planning activity underway in
support of its fiscal year 1998 budget request.  We believe that the
results of this effort would provide useful information to Congress
in reviewing both NASA's request for buyout authority and its fiscal
year 1998 budget request.  Therefore, Congress may wish to consider
requiring NASA to submit a workforce restructuring plan for achieving
its fiscal year 2000 FTE goal. 


--------------------
\4 Federal Downsizing:  The Cost and Savings of Buyouts Versus
Reductions-in-Force (GAO/GGD-96-63, May 14, 1996).  Also, see
Workforce Reductions:  Downsizing Strategies Used in Selected
Organizations (GAO/GGD-95-54, Mar.  13, 1995). 


   AGENCY COMMENTS
------------------------------------------------------------ Letter :8

NASA officials concurred with our report and stated that it is a good
synopsis of the progress made and the problems remaining.  NASA said
that civil service staffing at the Kennedy Space Center may not be
able to go below 1,360 FTEs.  NASA indicated that it would reassess
the size of the reduction in preparing its fiscal year 1998 budget
request.  NASA also summarized its reasons for wanting new buyout
authority.  NASA's comments are included in appendix I. 


   SCOPE AND METHODOLOGY
------------------------------------------------------------ Letter :9

We researched NASA's workforce history, reviewed NASA workforce
statistics and centers' and headquarters' downsizing plans, examined
workforce reviews and studies prepared by NASA discussing its
downsizing activities, and discussed with NASA officials how the most
recent reductions were achieved.  We also examined projected
workforce statistics through fiscal year 2000 and obtained
information on NASA's approach to achieving future downsizing goals. 

We reviewed workforce statistics from three field centers--Goddard
Space Flight Center, Marshall Space Flight Center, and Lewis Research
Center--and we reviewed the centers' strategies for meeting future
reductions.  We relied primarily on information contained in NASA's
Civil Service Workforce Report for most of our statistical data.  We
did not independently verify NASA's statistics.  The civil service
workforce totals discussed in this report reflect NASA's planning at
the time of our review.  The likelihood they will continue to be
revised to reflect changes is high. 

We conducted our review principally at NASA headquarters, Washington,
D.C., and the Goddard Space Flight Center, Greenbelt, Maryland.  We
also discussed personnel-related issues with NASA officials at
Marshall Space Flight Center, Huntsville, Alabama, and Lewis Research
Center, Cleveland, Ohio.  We performed our work from June 1995 to
June 1996 in accordance with generally accepted government auditing
standards. 


---------------------------------------------------------- Letter :9.1

Unless you publicly announce its contents earlier, we plan no further
distribution of this report until 14 days from its issue date.  At
that time, we will send copies of this report to appropriate
congressional committees, the NASA Administrator, the Director of
OMB, and other interested parties upon request. 

If you or your staff have any questions concerning this report,
please contact me on (202) 512-4841.  The major contributors to this
report were Frank Degnan, Lawrence Kiser, and Roberta Gaston. 

Sincerely yours,

Thomas J.  Schulz
Associate Director,
 Defense Acquisitions Issues




(See figure in printed edition.)Appendix I
COMMENTS FROM THE NATIONAL
AERONAUTICS AND SPACE
ADMINISTRATION
============================================================== Letter 

Note:  We are not publishing the three enclosures to NASA's comments. 
These enclosures included copies of external correspondence and
suggestions for technical changes, which we incorporated where
appropriate. 



(See figure in printed edition.)


*** End of document. ***