Cost allowability is governed by the contract and by the Office of Management and Budget’s (OMB) Circular A-21, “Cost Principles for Educational Institutions.”
In our first report to the Committee, we discussed JPL’s fixed fee, selected cost controls, scope of work, food and beverage charges, and tuition payments for dependents. The key is the “auditability” of JPL’s cost submission and the supporting documentation. The NASA Administrator responded that the tuition benefit is part of Caltech’s general compensation and benefit plan and that it would be reviewed as part of a comprehensive JPL compensation review that NASA would conduct during fiscal year 1994. JPL’s dependent tuition assistance program was specifically targeted for review. NASA Oversight Resources

The flexibility in the JPL contract places increased importance on oversight by the NASA Management Office. Improved coordination of audit resources could complement that oversight. Two of these maintain offices at JPL—the NASA Office of the Inspector General and DCAA. To analyze how NASA handled contractual and oversight concerns, we compared its current contract with Caltech to the previous one and to NASA’s Request for Proposal for the current contract. As requested, we did not obtain agency comments on a draft of this report.
Why GAO Did This Study

Pursuant to a congressional request, GAO reviewed the contract between the National Aeronautics and Space Administration's (NASA) and the California Institute of Technology (Caltech) for the operation of the Jet Propulsion Laboratory (JPL) and analyzed modifications to it.

What GAO Found

GAO found that: (1) NASA has improved the JPL contract in several areas including award fee, selected cost controls, scope of work, and number of contract deviations; (2) although NASA has not yet reviewed the reasonableness of paying the college tuition of JPL employees' dependents, it requested that the Defense Contract Audit Agency perform a comprehensive review of the JPL compensation package and the dependent tuition assistance benefit; (3) the success of the contractual and oversight changes at JPL will depend on effective implementation; and (4) NASA needs to better coordinate its audit resources to meet the demands of its oversight responsibilities.