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CAPE CANAVERAL -- The system NASA uses to decide how much to pay shuttle contractor United Space Alliance is loaded with loopholes that help the company get the maximum bonus and could discourage workers from reporting safety problems, according to a study conducted for Columbia accident investigators.
The study's findings and recommendations did not make it into the Columbia Accident Investigation Board's final report, in part because researchers said they found no proof the shuttle contract incentives inhibited safety or had anything to do with the Feb. 1 disaster.
NASA's biggest contractor, a partnership of The Boeing Co. and Lockheed Martin Corp., said that six-plus years of performance measures show the contract enhances safety. Spokesman Jeff Carr said USA welcomes scrutiny of the Space Flight Operations Contract, or SFOC.
"We're not married to this award fee structure," Carr said.
The review, conducted by contractor Valador Inc. for Columbia investigators, was released this month among hundreds of pages of supporting documents compiled during the seven-month probe. The documents are marked as work material, with a note that they are not official board findings.
Overall, the contract review team found the award-fee system used in some shuttle contracts is "cumbersome and counterproductive." Among the weaknesses:
- USA's award fee is determined every six months using performance statistics, such as the number of potential safety problems reported and on-time delivery of orbiters at various stages leading up to launch. That makes engineers and technicians "more accountable to financial and contracting people whose job is try to win as large an award fee as possible" and that is "inconsistent with prompt and candid problem reporting."
Some performance measures tolerate "errors and lateness" on USA's part and others "include loopholes that render them largely irrelevant." The performance measure system "results in almost inevitably high grades and near maximum fees" for the contractors even when some reviewers give the contractor low marks. Government managers with day-to-day responsibility for shuttle work conduct the reviews, posing a conflict because "poor contractor grades might reflect adversely on their own performance." NASA should consider what's done by other technically-complex and dangerous government operations, such as the Naval Nuclear Propulsion Program. The nuclear program does not use financial incentives with the goal to "free those doing the work from corporate pressures to maximize profits." NASA said the accident board's conclusions are being considered in the agency's ongoing review of the Space Flight Operations Contract. The assessment began about a year ago, but was slowed by the shuttle accident, said Michael Kostelnik, the NASA manager in charge of the shuttle and space station programs.
"We are actively considering how best to structure the SFOC to strengthen both the mission performance and safety of our Space Shuttle operation," he said.
Carr commended the board for examining the complex contract and said it was appropriate for NASA to continually reevaluate the terms. The company says that its performance data disputes the concerns raised by the investigators, but added that it is willing to alter terms if NASA thinks it will increase safety or efficiency.
"Could it result in an improperly incentivised contract? I suppose so. Did it? No. Absolutely not," Carr said. "Considering what we've all been through, award fees is the least of our concerns. What's really important is we make sure we have the right checks and balances in the system that not only don't jeopardize safety, but reinforce the safety ethic."
Interestingly, critics and defenders of the award fee system pointed to the same performance scores to bolster their case.
NASA managers review contractor performance every six months based on a complex list of statistical measures, giving the companies on various shuttle contracts a score between zero and 100. The contractor then gets that percentage of the available bonus money.
The critics noted that overall scores for shuttle contractors consistently range in the mid 80s to low 90s, arguing the scoring system seems biased in favor of high scores.
USA's Carr said the high scores should be seen as further proof of the contractor's excellent performance. He also noted that if the contractor does not score above the minimum on safety, then the company gets none of its financial incentives. That's never happened since the contract began.
In addition, USA officials said in-flight problems are down 69 percent and technical errors that delay launches have dropped by 60 percent.
Furthermore, the company said it saved taxpayers more than $1 billion since NASA merged 29 separate shuttle ground processing and flight operations contracts into one deal.
Figures provided to Florida Today show that USA has earned $198 million of the possible $210 million in bonuses thus far. That's about 94 percent of available bonus cash.
The award fee for the Space Flight Operations Contract has not been determined for the six-month period that included the Columbia accident, agency spokesman James Hartsfield said.
The review that determines the fee could take until the end of the year. That is later than normal because NASA waited for the Columbia investigation to end before finishing the review.
If the NASA team that sets the award fee finds USA in any way accountable in the Feb. 1 accident, the company stands to lose as much as $45 million in bonus payments, officials said.
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