Editorial: Protest Without End

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Sometimes, the most troubling aspect of a report on government management of taxpayer resources is only tangentially related to its main conclusions. A recent audit by NASA’s Office of the Inspector General on the agency’s Tracking and Data Relay Satellite (TDRS) System is a good example.

The recently released report painted two different portraits of NASA’s management of the TDRS program, which provides tracking and communications relay services for craft including the space shuttle, international space station and scientific probes.

On one hand, NASA received relatively high marks for its handling of contracts for two new TDRS satellites and for maintenance and operation of the system’s ground infrastructure.

On the other hand, the report found that those responsible for securing reimbursement from non-NASA users of the TDRS System lacked a good means of determining appropriate pricing and in some cases had failed to collect what was owed the agency. These outside users, including private companies, the U.S. Missile Defense Agency and other national security organizations, account for a significant portion of traffic over the TDRS System.

It’s not that the inspector general’s main conclusions were uninteresting. Indeed, it was refreshing to hear the procurement of the TDRS-K and TDRS-L satellites is being well managed, in spite of allegations — the audit didn’t say from whom — that Boeing Space and Intelligence Systems submitted a low-ball bid to win the contract in late 2007 and then jacked up the cost through contract modifications. In fact, the report concluded, the satellites are on schedule and within budget, while program risks have been effectively managed. Although there were changes that did increase contract costs, these were initiated by NASA to mitigate a potential risk.

Similarly, the audit examined the TDRS ground segment support contract held by Honeywell Technology Solutions since 2003 and found that NASA appropriately awarded and managed the contract in accordance with federal acquisition rules.

The report did uncover flaws in the way NASA bills outside users of the TDRS network. For example, not only had the billing office not updated its prices since 2006, it did not even understand the factors used to set those prices. The report also found that unclassified users of the TDRS System were being hit with expenses not charged to classified users, and that some customers were not billed in a timely manner, leading to instances where fees were never collected or had to be returned.

Some of these issues were due to a loss of institutional knowledge amid multiple reorganizations that shuffled TDRS System management responsibility among different NASA organizations. The failure to collect fees in a timely manner was attributed to an extended absence of a single analyst, and in one case inaccurate advice led to a return of funds to one customer.

But even here there was good news in the form of redemption. According to the report, the Office of the Inspector General made four recommendations to overcome the accounting and managerial issues that led to the billing problems, and in each case, the relevant parties concurred and are taking specific corrective actions.

The report treated almost as a peripheral matter the fact that the TDRS ground support contract held by Honeywell was the subject of a competition that was won by ITT Corp. two years ago. Honeywell filed a protest of that award with the U.S. Government Accountability Office (GAO), which handles most contract appeals. As a result, the GAO directed NASA to re-evaluate ITT’s past performance on similar contracts and after doing so, the agency once again made the contract award to ITT.

Bid protests are hardly unusual, especially these days, but as the report noted, Honeywell has since filed four additional protests, three with the GAO and one with NASA. These repeated protests have in effect earned Honeywell a two-year contract extension, the report said. Honeywell’s contract performance, meanwhile, declined in the nine months following the initial award to ITT due in part to “poor corporate decisions” that led to the exodus of skilled personnel from the program, the report said. “Additionally, performance on crucial tasks was unacceptable and Honeywell’s difficulty in completing required deliverables resulted in schedule delays, cost increases, and an inability to meet external customer needs,” the report said.

Although the report noted that Honeywell has since improved its performance significantly, the fact remains that a company has been able to keep a job that it lost in a competition simply by repeatedly refusing to accept the outcome. Honeywell’s current performance period, which runs through Oct. 8, could be extended to April 11 pending the outcome of corrective actions NASA is taking in response to the latest protest, which was filed July 20.

There is something terribly wrong with a system that allows this sort of thing to go on. Regardless of the legitimacy of Honeywell’s complaint, the way this has unfolded will only encourage other contractors in similar situations to drag out the appeals process for as long as they can. The government at some point has to be able to close such matters, one way or the other, and that shouldn’t be two or more years after the original contract award. This topic — the Honeywell example being a case study — is worthy of a separate and thorough evaluation by the appropriate agency.