Assessment of ISO 9000 Contract Support
G-97-003
Purpose and Scope
The Office of Inspector General (OIG), Inspections and Assessments
(I&A), initiated an assessment of NASA's strategy for acquiring
contract ISO 9000 support and certification. In performing this
assessment, we reviewed the lawfulness and regulatory compliance
of the Marshall Space Flight Center's (MSFC) activities in this
area.
Methodology
The assessment team conducted interviews with employees and management
officials from NASA Headquarters, Goddard Space Flight Center
(GSFC), Kennedy Space Center (KSC), Johnson Space Center (JSC),
Lewis Research Center (LeRC), MSFC, the National Institute of
Standards and Technology (NIST), and three private firms involved
in ISO 9000 consulting. These interviews included employees involved
in quality assurance, procurement, strategic planning, directives
management, internal management controls, and ISO 9000 assessment
and certification. We reviewed relevant NASA policy and management
issuances, documents and publications about the ISO 9000 process,
marketing information from vendors, contracts and subcontracts,
and other related materials. An overview of the ISO process is
provided in Exhibit 1.
Background
On December 6, 1995, Daniel S. Goldin, the NASA Administrator,
directed the Agency to implement ISO 9000 standards in accordance
with NASA Management Instruction (NMI) 1270.3 (See Exhibit
2). NMI 1270.3 requires NASA and NASA suppliers to institute
and maintain a Quality Management System (QMS). This QMS, at
a minimum, should comply with the appropriate standards contained
in the current version of the International Organization for Standardization's
"ISO 9000" Standard series, or with the American National
Standards Institute/American Society for Quality Control's "Q9000
Series" and associated documentation. ISO 9000 is a series
of internationally accepted generic standards for quality management
and quality assurance. The quality management standards provide
guidance to implement an effective QMS, which generally increase
productivity and reduce costs associated with inefficiencies.
The standards also provide generic requirements to assess the
adequacy of the QMS. In addition, the ISO 9000 quality system
requirements may be tailored, or supplemented as necessary, to
ensure that all applicable requirements are met and that unnecessary
requirements are not imposed.
There is no national or Federal certifying organization for ISO
9000 in the United States (unlike most European nations where
a government institution oversees and endorses the ISO 9000 registrar
process). NASA must look to international qualified vendors to
provide ISO 9000 certification. International standards and practices
also stipulate that vendors who deliver pre-assessment support
(i.e., consultation services for organizational actions leading
to registration) should not register the same organization or
function. Within the ISO 9000 international community, this practice
would be considered a "professional conflict of interest."
NASA appears to be attentive to this issue. To date, this has
not been a problem. NASA plans to continually assess relationships
between consulting, pre-assessment, and registrar services.
In a memorandum of November 13, 1996, the NASA Administrator established
the requirement "that the Agency be third-party certified
in our key processes, by an internationally recognized registrar,
to ISO 9001" (See Exhibit 3). Further, Mr. Goldin
formally established April 1998, as the implementation deadline
for JSC, MSFC, and Stennis Space Center (SSC). The other NASA
Centers and Headquarters are to be certified by September 30,
1999.
Subsequently, the Acting Deputy Administrator directed the Associate
Administrator for Safety and Mission Assurance (Code Q) "to
develop an implementation plan for appropriate Agencywide certification
to ISO 9000" (Exhibit 4). Pursuant to this direction,
Code Q submitted the ISO 9001 Integrated Agency Plan, based upon
the consensus of the ISO 9001 Steering Group (See Exhibit 5).
That group consists of representatives from each Institutional
Program Office and Code C. As part of the plan, Code Q proposed
establishing an ISO 9001 Support Office to assist the field and
Headquarters in the implementation and certification process.
(For additional information on the proposed support office, see
Exhibit 6, Enclosure 1.) The Capital Investment
Council is scheduled to consider this plan in the near future.
Currently, the ISO 9001 Steering Group is working with the contracts
office at LeRC to obtain a consolidated contract for registrar
services for all NASA Centers. On April 18, 1997, LeRC released
for industry comment a proposed Statement of Work (SOW) for ISO
9001 Registration Services (See Exhibit 7). The release
of a complete solicitation for this requirement is anticipated
soon. According to the proposed SOW, the successful offeror shall
provide ISO 9001 Registration Services for each site (i.e., Center),
including management briefings, initial site visits, quality manual
audits, preliminary assessment audits, formal assessment for registration
(certification audit), non-conformity remediation reviews, and
surveillance audits (as defined in Exhibit 7). In accordance
with NASA's Consolidated Contracting Initiative (CCI), this requirement
will contain options that allow all NASA Centers to participate
(See Exhibit 8). MSFC and JSC are not likely to participate
in this contract since their efforts were consolidated under an
MSFC contract with Hernandez Engineering, Inc. (HEI).
Even before the Administrator's November 1996 direction, MSFC
chose to become ISO 9000 compliant through third-party registration.
On December 7, 1995, MSFC began steps to implement ISO 9000 requirements.
Since then, MSFC:
(1) issued Contract Modification #7 to NASA Contract NAS8-40364
with HEI. Specifically, HEI was to "provide expertise for
the implementation of ISO 9000 at MSFC including, but not limited
to, training of MSFC employees on ISO 9000, implementation plan
and schedule development, procedure preparation and progress monitoring."
HEI's subcontractor, Raytheon, was assigned these changes as
part of their effort under the quality assurance portion of the
HEI contract;
(2) established ISO 9000 Implementation Teams and began Implementation
Team meetings in May 1996;
(3) assigned a Management Representative to the ISO 9000 process
at the direction from the NASA Administrator;
(4) issued a second task directive to HEI. HEI tasked Raytheon
to assist with registrar selection and with the ISO 9000 tasks
outlined in Modification #7. Raytheon determined the scope of
registration and surveyed the ISO 9000 registrar community. Raytheon
identified qualified registrars, requested and evaluated registrar
proposals for certifying MSFC as ISO 9000 compliant, and selected
National Quality Assurance (NQA) to perform the certification
process;
(5) issued NAS8-40364 Contract Modification #12 to include registrar
services which were not previously included in Modification #7;
(6) initiated formal ISO 9000 procedure reviews, categorizations,
reconciliation, and revisions in October 1996; and
(7) has dedicated approximately 150 Center personnel who are devoting
10 to 15 percent of their official time to ISO 9000 activities.
The estimated costs associated with Contract Modifications #7
and #12 are as follows:
Hernandez Engineering, Inc. (HEI) | Modification #7 | Modification #12 |
---|---|---|
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TOTAL |
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*Denotes total value of Raytheon subcontract for registrar services valued
at $70,504 and $8,000 for Raytheon to compete to contract a Registrar. HEI
did not allow Raytheon to add additional fee or general and administrative
expenses to their subcontract for registrar services.
Based on general ISO 9000 information and published literature,
MSFC ISO 9000 personnel anticipate that the costs incurred to
implement ISO 9000 will be recovered in approximately 3 years.
Expected benefits include reduced documentation, a universal
quality system, and compliance. MSFC assumes additional savings
to NASA if JSC and SSC use work already performed at MSFC regarding
registrar selection. For purposes of this assessment, we do not
offer an opinion on the validity of this projection. However,
we note that experience with estimating NASA ISO 9000 costs and
savings is extremely limited.
I. Questionable Inclusion of JSC Support in
MSFC Contract/Task
Since issuing our initial draft report, the OIG has been advised
that MSFC has issued an additional change order (Modification
#15) to the HEI contract to include registrar services for JSC.
The value of this effort has not yet been defined, but the current
estimated value of the modification is $95,000. While the ISO
9000 support obtained through HEI for MSFC is considered to be
within the scope of this contract, the support associated with
JSC is not. The HEI contract is clearly written to provide support
to MSFC. By adding this new JSC work to the HEI contract without
a Justification for Other than Full and Open Competition, MSFC
may have violated the Competition in Contracting Act and FAR 6.101(a).
While the OIG strongly supports NASA's contract consolidation
process for the purposes of obtaining ISO 9000 support, the procurement
should be competed such as the procurement in process at LeRC
(See Exhibit 7).
II. Need for Agencywide Acquisition Strategy
A. NASA's commitment to open contract competition and the contract
consolidation process should shape and guide the acquisition approach
for ISO 9000 services. NASA has taken an important first step.
It is clear that third-party certification firms or "registrars"
should be selected based on specialization and experience in the
targeted process (e.g., certain firms specialize in automotive
manufacturing, maritime systems, aeronautics, etc.) as well as
other factors, including cost. The ISO 9000 specialty requirements
will vary from Center to Center within NASA based on mission and
Center of excellence assignments. But, there will also be common
and cross-cutting processes among the NASA installations.
The CCI, effective November 4, 1996, documents NASA's commitment
to creative and cost-effective consolidations of contracts. The
CCI "aims at identifying and logically grouping together
similar requirements so they may be procured efficiently."
Further, the CCI goal "is to develop a core of world-class
contracts that will enable NASA and other government agencies
to acquire common goods and services quickly, at fair and reasonable
prices, with a minimum of administrative cost" (See
Exhibit 8).
As an effort limited to MSFC and the other Space Flight Centers
tasked with early implementation, acquisition approaches taken
provided a speedy approach to implementing registrar and other
support activities. The proposed modifications to the MSFC contract
for ISO 9000 are estimated to be in excess of $900,000. Moreover,
the MSFC contract modifications approach, if expanded to include
all Centers or duplicated at other Centers, will be costly for
the Agency. According to some employees we interviewed, "given
NASA's diverse programs and numerous physical assets, the value
of ISO 9000 pre-assessment and certification/registrar contracts
may easily exceed $15 million in the next few fiscal years."
If NASA does not consider an Agencywide approach, violations
to the Agency's commitment to both open competition and contract
consolidation to achieve savings will occur.
B. Without an overall Agency strategy, NASA may not effectively
respond to and/or shape future developments in the ISO 9000 area.
Although the largest source of expertise in ISO 9000 consulting
and registration support resides with the vendor community, other
Federal and public organizations may develop such capabilities
in the future. As ISO 9000 takes hold and expands within the
U.S. public sector, opportunities will exist for alternatives
to the vendor-supplied support. For example, such organizations
as the Defense Supply Center in Columbus, Ohio, have provided
certification services to suppliers. The Agency should closely
monitor the development of such capabilities to consider supplementing
or replacing previous contracting approaches.
NASA, as it implements its own ISO 9000 processes, could be a
leader in developing partnering arrangements that would comply
with the Administrator's guidance, and are of potentially low
or no cost to NASA. NIST, the Office Management and Budget, and
such departments as the Department of Defense (DoD) could jointly
expand Federal capability in ISO 9000 development, consulting,
and registration processes.
III. Other ISO 9000 Implementation Concerns
Some managers are confused regarding the relationship of ISO 9000
with NASA's strategic planning process (only a single parenthetical
reference to ISO 9000 is included in NASA's new Strategic Management
Handbook), continuous improvement processes, and directives reduction
activities. (Both JSC and MSFC have taken steps to include their
directives managers in their ISO 9000 implementation strategies.)
In addition, concurrent initiatives related to the Zero Base
Review, Full Cost Accounting, the Integrated Financial Management
Project (IFMP), and the Government Performance and Results Act
may create duplication of effort. For example, is the Agency
coordinating process flow documentation and reengineering activities
between ISO 9000 and IFMP where activities overlap? NASA needs
to coordinate these initiatives so they complement each other.
Moreover, the employees need to understand that these initiatives
are complementary.
Since the issuance of the Second Internal Draft Report (dated
June 11, 1997), the Agency is making progress in its initial phases
of ISO 9001 implementation and in preparing for third-party certification.
The Agency is moving forward with its efforts to initiate a consolidated
contract for registrar services for all Centers and Headquarters.
Code Q is initiating standardized training across NASA in an
attempt to reduce costs and redundancies. In addition, since
the ISO 9001 Implementation Workshop held at Headquarters in April,
1997, the Agency has scheduled regular video teleconferences and
workshops in order to coordinate activities and to share lessons
learned.
Recommended changes to the Second Internal Draft Report are incorporated
as applicable in this final report.
We recommend NASA management take the following steps:
1. Develop an integrated and comprehensive acquisition strategy
to provide for all necessary ISO 9000 contracted support.
a. The strategy should fully comply with existing NASA policy
governing the advocacy of open competition.
b. NASA should avoid the proliferation of potentially costly local
procurements of ISO 9000 support and services. The Agency should,
where possible, consolidate training services to avoid local procurements
and to limit redundancies and inconsistencies.
c. NASA Enterprises and Centers should have the capability to
move quickly to arrange pre-assessment and registrar support.
The consolidated procurement approach should provide for flexibility
in securing such ISO 9000 services from a vendor or vendors capable
of handling specific industrial and service processes.
d. The Office of Safety and Mission Assurance and the Office of
Procurement should monitor the development and availability of
potential low-cost or no-cost partnering opportunities with other
Federal and public organizations to provide ISO 9000 consulting
and registrar services.
2. Monitor closely the ISO 9000 activity of MSFC and other Space
Flight Centers to learn and share implementation experiences as
lessons learned.
3. Expand and enhance the ISO 9000 content of forthcoming versions
of the NASA Strategic Management Handbook and Program Management
Handbook. Additionally, increased awareness and specialized
training should be provided as early as possible for the NASA
work force.
4. Assure tighter coordination between staffs and groups responsible
for ISO 9000 planning and implementation, and the NASA directives
management community. Common goals and objectives should be developed
and understood between the ISO 9000 quality system documentation
requirements and the NASA commitment to streamline its directives
processes.
Last Update: September 11, 1997