ES, IG-98-030, Single-Source Suppliers for Critical Items

SINGLE-SOURCE SUPPLIERS FOR CRITICAL ITEMS
IG-98-030

Executive Summary

Introduction
Most National Aeronautics and Space Administration (NASA) Space Shuttle and Space Station subsystems and components are produced by only one supplier. Single-source suppliers could present an immediate threat to Agency program operations if production stopped due to an unplanned event. In 1991, the Office of Space Flight issued "Policy Direction on Single-Source Suppliers of Critical Items," requiring analyses of single-source-supply situations to ensure uninterrupted availability of industrial materials.⁽¹⁾ (See Endnotes in Appendix A.) This policy distinguishes between production and logistics support suppliers and requires less rigorous analyses of the latter category. In 1996, the NASA Administrator and the Johnson Space Center (JSC) Director expressed concern that the listings of single-source suppliers may not be up-to-date and directed NASA program offices to develop current lists of single-source suppliers. The JSC Director asked the Office of Inspector General (OIG) to review this critical area. Related OIG reports are shown in Appendix C.

Objective
The overall audit objective was to evaluate actions taken by NASA to identify Space Shuttle and International Space Station reliance on single-source suppliers for critical items. Appendix B describes our specific objectives, scope, and methodology. The International Space Station Program Office took prompt corrective actions during our audit to include requiring the contractor, Boeing Company, to provide critical, single-source supplier listings where required. Therefore, we focused our audit on the Space Shuttle Program.

Results of Audit
The Space Shuttle Project Managers have not adequately developed analyses of critical, single-source suppliers of industrial materials. Specifically, analyses of production suppliers were frequently performed to meet the less rigorous analysis requirements for logistics support suppliers. Additionally, logistics support analyses were not adequately supported. As a result, risks may not be fully identified; alternatives to critical, single-source suppliers may not be available when needed; and corrective actions may not be taken to minimize risks to the mission.

Recommendations
We recommended that the Space Shuttle Program Manager revise the analysis and reporting requirements for critical, single-source suppliers and include the revised requirements in appropriate Shuttle Program contracts. We also recommended that the NASA Chief Engineer revise NASA policy to require rigorous analyses of all critical, single-source suppliers for all NASA programs and projects.

Management's Response
Management generally concurred with the intent of the recommendations and proposed alternative actions that are responsive to the recommendations. Management stated that it will consider revising NASA policy to include requirements for rigorous enslyses.

Evaluation of Management's Response
Management's planned actions are responsive except with regard to revising NASA policy to require more rigorous analyses. We request that management reconsider its position on that matter and provide additional comments.

Introduction	Most National Aeronautics and Space Administration (NASA) Space Shuttle and Space Station subsystems and components are produced by only one supplier. Single-source suppliers could present an immediate threat to Agency program operations if production stopped due to an unplanned event. In 1991, the Office of Space Flight issued "Policy Direction on Single-Source Suppliers of Critical Items," requiring analyses of single-source-supply situations to ensure uninterrupted availability of industrial materials.⁽¹⁾ (See Endnotes in Appendix A.) This policy distinguishes between production and logistics support suppliers and requires less rigorous analyses of the latter category. In 1996, the NASA Administrator and the Johnson Space Center (JSC) Director expressed concern that the listings of single-source suppliers may not be up-to-date and directed NASA program offices to develop current lists of single-source suppliers. The JSC Director asked the Office of Inspector General (OIG) to review this critical area. Related OIG reports are shown in Appendix C.
Objective	The overall audit objective was to evaluate actions taken by NASA to identify Space Shuttle and International Space Station reliance on single-source suppliers for critical items. Appendix B describes our specific objectives, scope, and methodology. The International Space Station Program Office took prompt corrective actions during our audit to include requiring the contractor, Boeing Company, to provide critical, single-source supplier listings where required. Therefore, we focused our audit on the Space Shuttle Program.
Results of Audit	The Space Shuttle Project Managers have not adequately developed analyses of critical, single-source suppliers of industrial materials. Specifically, analyses of production suppliers were frequently performed to meet the less rigorous analysis requirements for logistics support suppliers. Additionally, logistics support analyses were not adequately supported. As a result, risks may not be fully identified; alternatives to critical, single-source suppliers may not be available when needed; and corrective actions may not be taken to minimize risks to the mission.
Recommendations	We recommended that the Space Shuttle Program Manager revise the analysis and reporting requirements for critical, single-source suppliers and include the revised requirements in appropriate Shuttle Program contracts. We also recommended that the NASA Chief Engineer revise NASA policy to require rigorous analyses of all critical, single-source suppliers for all NASA programs and projects.
Management's Response	Management generally concurred with the intent of the recommendations and proposed alternative actions that are responsive to the recommendations. Management stated that it will consider revising NASA policy to include requirements for rigorous enslyses.
Evaluation of Management's Response	Management's planned actions are responsive except with regard to revising NASA policy to require more rigorous analyses. We request that management reconsider its position on that matter and provide additional comments.