The audit report “Lockheed Martin Space Operations’ Use of
Professional and Consultant Services” (IG-02-013, March 26, 2002) has
been posted to the NASA Office of Inspector General Web site at:

Lockheed Martin Space Operations (LMSO) manages and performs two major
contracts with NASA’s Johnson Space Center: the Consolidated Space
Operations Contract and the Science, Engineering, Analysis, and Test
contract. The Defense Contract Management Agency (DCMA) provides the
Government’s oversight of LMSO’s purchasing system, and the Defense
Contract Audit Agency (DCAA) reviews LMSO’s incurred costs for

Both contracts require LMSO to comply with Federal Acquisition
Regulation (FAR) requirements pertaining to professional and consultant
services. The contracts require LMSO to competitively award
subcontracts to the maximum extent practical and to maintain documented
evidence on the nature and scope of the furnished professional and
consultant services. This includes documenting efforts to identify
potential sources for the services and documenting the nature of the
actual services performed. Costs for professional and consultant
services must be supported by documented evidence to be allowable costs
on the contracts.

We found that LMSO officials had not prepared written justifications
for noncompetitive procurements of services and did not maintain
evidence on the nature and scope of the furnished services. As a
result, NASA had reduced assurance that LMSO obtained the best
available source or price for professional and consultant services and
that the work performed was proper and did not violate the law or
regulations related to competing procurements and conflicts of
interest. We also found that $383,777 LMSO charged to NASA for
services may include unallowable costs.

We recommended that NASA coordinate with the DCMA to require LMSO to
prepare written justifications for future noncompetitive selections of
professional and consultant services and to maintain documentation on
the details of actual services performed by the professionals or
consultants including deliverable items such as required analyses and
reports. We also recommended that NASA ask the DMCA to include
professional and consultant service subcontracts in future risk
assessments and reviews of LMSO’s purchasing system and that the DCAA
review LMSO costs for professional and consultant services in future
incurred cost audits.

NASA concurred with the findings and recommendations and asked the DCMA
and DCAA to initiate actions to ensure compliance with the FAR

To comment on this report, please send e-mail to: