1. Cost & Schedule Reporting:What NASA Reports to OMB, Congress, & GAO and Why Brian Card Kate Wolf Mary Beth Zimmerman

2. Session topics 2 Overview of changes in reporting since 2005. Why NASA is required to report on cost & schedule performance. The types of cost and schedule performance reports required. GAO cost and schedule performance audits How NASA manages this reporting

3. 1. Overview of Changes 3 2005 – Congressional Cost & Schedule Reporting (a.k.a., Major Program Annual Report or MPAR) 2006 – OMB Quarterly Reports 2007 – OMB Cost and Schedule Reporting (NSPD-49) 2008 – GAO ‘Quick Look’ Audit 2010 – Congressional Corrective Action Reports Note: Reporting on general performance is not included here. NASA also annually files an Annual Performance Plan (APP) and Performance Accountability Report (PAR) which includes cost & schedule information.

4. Projects in Reporting Number of Projects 3x the number of projects in 4 years Reporting requirements keep increasing each year. Includes projects in formulation & operations. Not limited to space flight projects. Generally, but not always, projects above $250M LCCE

5. Data Elements Reported

6. 2. Why NASA is Required to File these Reports Government-wide Requirements A general change in approach to federal governance Started with the Government Performance and Results Act (GPRA) of 1993. GAO initiated the High Risk series government-wide in 1990. Multiple stakeholders Reports due to OMB, Congressional committees, and GAO Even when purpose is the same, content requirements may vary enough to require different versions. NASA-specific Requirements Re-instatement of previous reporting Example: NASA reported lifecycle cost by phase in the budget through the FY2005 budget; when the by-phase information was dropped in the FY2006 budget, Congress added it as a requirement. In response to cost growth at NASA JWST, CxP growth cited in several provisions establishing new reports. A 2004 GAO finding that “NASA lacks discipline in cost estimation.” Multiple Operating Plans per year to address cost growth or phasing . Under-budgeted projects disrupt other existing projects or desired new starts. 6

7. Development Cost Growth Launched Total growth from KDP-C = $2.48 B Cost Growth Threshold 7

8. 3. Types of Cost & Schedule Reports 8 Baseline Reports (Congress, OMB) Provides basis for assessing cost & schedule performance. Current Estimate Reports (Congress, OMB, GAO) Provides updated cost and schedule data. Threshold Reports (Congress, OMB) If cost or schedule growth exceeds defined thresholds, explains the reasons for cost or schedule growth. Threshold Corrective Action Plan Updates (Congress) (NEW) If project has crossed a threshold, provides annual update on corrective actions. Rebaseline Report (Congress, OMB) Ifcost growth exceeds 30% or NASA chooses to rebaseline due to unforeseen external events.

10. For projects with an LCCE of $250M or more.

11. And which have awarded a contract for $50M or more with development content.

12. Establishes the following commitments with Congress & OMB:

13. Contract value

14. Established at KDP-C.

15. For projects with an LCC of $250M or more.

16. Establishes the following commitments with Congress & OMB:

17. LCC

18. Development Cost

19. Key Schedule Milestone (e.g., launch readiness)9

20. Current Estimate ReportsNo Changes in Requirements 10 Quarterly to OMB Filed by all projects with Project or Contract baselines Annual to Congress Included in the budget Called “Major Program Annual Report” or MPAR Filed by all projects with baselines which are still in development. Includes confidence level Reports changes in: Development cost Development schedule Contract value (OMB only) Also reports other changes (e.g.,) Cost phasing by year Development cost by WBS (Congress only) Acquisition strategy

21. 2010 MPAR Summary 11 Cost or schedule breaches since most recent baseline with Congress Explanations for projects breaching during preceding year.

22. Threshold ReportsNo Changes in Requirements 12 Provides Congress & OMB with explanations as to why cost or schedule have grown. Explains what steps NASA management has or is proposing to take to reduce pressures on cost or schedule (corrective actions). Identifies impacts on other NASA projects. In last 4 years, 10 projects have breached a threshold. Note: All of these projects were baselined without benefit of a JCL

23. Threshold LevelsNo changes in requirements 13

24. Corrective Action ReportsNew Requirement 14 Required by Section 1203 of the 2010 NASA Authorization Act. Tied to Agency level GAO High Risk Corrective Action Plan (will discuss below) Filed each year (in April) after a project has breached on cost or schedule. Describes steps being taken to control cost and schedule. First report this year includes: Aquarius, Glory, JWST, NPP, and SOFIA

25. Re-baseline ReportsNo change to requirements 15 Every change to a project’s cost or schedule estimate is not a rebaseline. Re-baselines are limited to cases in which Development cost has grown by 30% or Decision Authority judges external events or changes in scope require a re-baseline. Key Point: After reaching 30% project must wait for Congress to reauthorize before a re-baseline. Projects which have re-baselined: Glory, MSL. Projects which are in the process of a re-baseline: Glory, NPP.

26. 4. GAO AuditsAdditional Projects, Data Collected 16 ‘Quick Look’ Audit Annual audit initiated by Congress in 2008 Appropriations Act. Additional projects included in audit in 2010 Began with space flight & ground support projects in development (Phase C-D) Projects now tracked after they enter operations. Projects in formulation included if they are included in the NASA budget. Annual interviews Each project, more extensive interview the first year in reporting Contractors may be interviewed as well. Semi-annual data collection Cost ranges are being provided during formulation. GAO is given both the Congressional baseline and, if different, the project’s KDP-C baseline. Monthly status reports are now being provided to GAO. Contract, technical performance, design status, other information included. ‘High Risk’ Audit Annual update on corrective actions to improve acquisition management (project & contract management) Semi-annual update on cost & schedule performance of projects approved for development since 2008. Additional metrics being added in 2011 addressing implementation of newer policies (e.g., CADRes, JCL).

27. Agency Corrective Action Plan 17 Better cost estimates UFE held by project & MD is part of the project baseline and cost estimate JCLs with integrated, resource-loaded schedules CADRes capture cost estimates at defined lifecycle reviews Managing project performance Cost & schedule tracking Baseline Performance Review Managing contract performance Contract cost reports system More training PM Challenge, Master’s Forums, APPEL

28. 5. How NASA manages this reporting 18 Linked to Agency policies NPR 7120 KDPs NPD 1000.5 JCL and UFE policy Single, standardized data tracking for all reports Project-managed costs By Formulation, Development, and Operations By WBS element (e.g., spacecraft, payload) Project-managed UFE (i.e., reserves, contingency) By budget category (Procurement, Labor, CoF) MD-managed costs MD- or Program-managed UFE OCFO-managed costs ‘Legacy’ indirect costs, such as Center M&O or Corporate M&O, from FY2004 to FY2007

30. Ensures all parties agree to the baseline commitments the Agency is making.

31. Distinguishes UFE (and schedule margin) managed by MD.

32. Provides the narrative for Program Baseline Report to OMB/Congress.

33. This content updated annually for MPAR (the Current Estimate Report to Congress).

34. Provides starting point for % changes in Current Estimate Reports.

35. Same spreadsheet as used for quarterly updates.19

36. Treatment of UFE in cost reporting 20 All UFE, whether managed by the project or its MD, is included in the project’s baseline cost commitment. Release of UFE by the MD to the project does not show up as cost growth in Congressional or OMB reporting. No different than when a project manager releases UFE to a sub-project manager. Cost growth only reported if it becomes clear project will require more funding than provided for by all UFE—project managed and MD managed—combined.

37. Data Template Tracks Changes for Current Estimate Reporting 21 Roll-Up Reported to OMB & Congress WBS costs managed by project. CSLE/UFE managed by MD ‘Legacy’ indirect costs managed by OCFO.

38. Change in Data Template to Distinguish Labor & CoF Costs 22 New cells for labor by WBS New cells for CoF

39. Signatures 23 Ensures projects are aware of what cost or schedule information is being reported to OMB or Congress. Ensures everyone involved understands the trace between the dollars the project manages & the costs reported.

40. Frequently Asked Questions 24 What is the difference between ‘cost estimate’ and ‘budget’? Cost is what it will really take to get the job done; budget is what you are given to get the job done. The project’s cost estimate, by year, is established as part of 7120 processes. Budgets are set as part of the budget planning process. Ideally, budget = established cost. Projects are frequently given maximum budget numbers for the next few years to use as constraints in planning their workflow. This budget constraint may affect the cost estimate if it stretches out the project’s development. What happens if my project does not receive a budget that matches the approved cost estimate profile? Projects may have to re-estimate their costs if the budget they receive differs from the one they planned to. For example, if your cost estimate was based on being able to do $30M worth of work in the current year and you only receive $20M, you are going to have to postpone some work and it is likely to cost you more than $10M in a future year.

41. Frequently Asked Questions 25 When should cost growth be reflected in a quarterly update? When the Project Manager, Program Manager, and MDAA are in agreement that the estimated cost-at-completion for the current scope has grown. This does not necessarily mean that the MD has agreed to a replan providing the additional amounts required. Why does labor have to be allocated to WBS elements? The simple answer is that NASA has to report cost at the WBS element level, so we have to be track it this way. The more important answer is that this assures that NASA has a good handle on the resources required to complete a mission.

42. Frequently Asked Questions 26 Why does the template change so frequently? The template changes to reflect changes in (1) external requirements or (2) changes in NASA policy. We have had a lot of changes in both in recent years. Why are launch services included in the ‘project managed’ portion of costs? All project WBS requirements are part of the project’s cost estimate, whether the project has direct control over the work or not. Even when the project does not have direct control over the costs, it does have the responsibility to estimate costs realistically.

43. Backup 27

44. Types of threshold reports 28 Written Notification Passed onto Congress Written Notification to NASA Administrator 15 days 30 days Administrator Determination will exceed 15% cost or 6 month schedule threshold 15 days Threshold Report to Congress These2 reports have sometimes been combined. 30 days If intend to continue projects, initiate analysis or alternatives. 6 months Analysis complete Analysis to Congress Source: This is a simplified version of flow diagram created by Julie Pollitt (see backup)

46. Glory has re-baselined under this process.

47. MSL is in this process.Determination that project dev. cost will exceed 30% of Baseline 18 months Congressional reauthorization received? Yes Rebaseline report required. No additional funds on program except termination. No Source: This is a simplified version of flow diagram created by Julie Pollitt (see backup)

48. Two Ways to Look at Baselines 30 File 15% threshold report 30% threshold rebaseline Reporting Requirement Management Perspective 30

49. Tracking Reported Cost & Schedule Data Over Time 31