NASA OIG Finds No Evidence Boeing Low-balled TDRS Bid

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The NASA Office of Inspector General (OIG) said Sept. 21 that development of NASA’s newest Tracking and Data Relay Satellites (TDRS) is proceeding on time and within budget, but faulted the agency for failing to revise the rates it charges government and nongovernment users of the TDRS system.

According to the OIG, NASA has not revised TDRS reimbursement rates since 2006 and current program officials do not know what factors were used to formulate these rates. As a result, NASA does not know, and the OIG could not determine, whether the rates NASA has been charging TDRS users were appropriate and reasonable. The OIG also found fault with NASA’s process for collecting TDRS user fees. “Specifically, when an analyst responsible for handling reimbursable payments was absent from the office for an extended period, customers were not billed in a timely manner, resulting in a loss of funds to NASA,” the OIG said in a press release. As a result, NASA wrote off $385,000 in 2009 that had not been timely billed to a customer who later became insolvent.

NASA has nine TDRS spacecraft in service providing tracking, data, voice and video services to the international space station, the space shuttle, various NASA science spacecraft and other federal agencies and commercial users. Two new satellites, TDRS K and TDRS L, are being designed and built by Boeing Space and Intelligence Systems of Seal Beach, Calif., under a $696 million fixed-price-incentive-fee contract awarded in December 2007. The contract includes options for two additional satellites, TDRS M and TDRS N, that could increase the value of the award to $1.2 billion.

In its review, the OIG said it found no evidence to substantiate allegations Boeing —the incumbent contractor on the TDRS program — deliberately underbid the program in order to defeat the only other bidder, incumbent Northrop Grumman, and subsequently submitted waiver requests for technical requirements.

While Boeing’s contract value has risen to $716.8 million since the award, the OIG said the increase was a result of changes sought by NASA, including a request that Boeing procure additional ground spares and make a technical change aimed at avoiding a glitch experienced by a TDRS satellite launched in 2002.

“[C]ontract modifications were not the result of Boeing attempting to increase contract costs but rather NASA’s decision to incorporate these changes,” the OIG wrote. “Accordingly, we found no evidence to support the allegation that Boeing ‘low-bid’ the contract in order to win the award and subsequently increased the cost through contract modifications.”

TDRS K is slated to launch in 2012 aboard a United Launch Alliance Atlas 5 rocket from Cape Canaveral Air Force Station, Fla. TDRS L is slated to launch in 2013.