Astronauts have joked that it's not exactly comforting to think about blasting off in a rocket made with parts that all came from the lowest bidders.
They may have to rewrite that joke, at least when it comes to Thiokol and its Utah-made space shuttle boosters.An investigation by the National Aeronatics and Space Administration inspector general complains that Thiokol did not seek bids at all for a large portion of its space shuttle parts between 1986 and 1988 - which may have led to inflated prices.
That ignored government rules and likely cost taxpayers between $1 million and $5.2 million annually, according to the investigation.
And even when Thiokol did seek bids, the lowest bidder sometimes was not awarded the contract for questionable reasons, according to documents obtained by the Deseret News through the Freedom of Information Act.
While the NASA inspector general attacked Thiokol, NASA's Marshall Space Flight Center defended the company in documents.
The center said Thiokol did not have time to competitively bid many subcontracts as it raced during that period to redesign and rebuild the boosters after the 1986 Challenger disaster. The center added that, in its view, bidding problems have been corrected.
Thiokol spokesman Steve Lawson said his company had no further response to the NASA inspector general's investigation. "The comments made by Marshall in response of the audit represent an adequate defense of our position."
The report of that investigation, dated May 25, 1990, was obtained by the Deseret News through the Freedom of Information Act after NASA allowed Thiokol to suggest what financial information within it should not be released to protect the company's competitive position.
Major findings include:
- About 42 percent of the money Thiokol spent on subcontracts from Oct. 1, 1986, through March 31, 1988, was awarded without competitive bids, even though such bids are required "to the maximum practical extent."
The situation likely led to inflated prices. Eventual value of Thiokol's "cost plus award" contract with NASA for space shuttle boosters is expected to reach $2.7 billion.
- The inspector general said a "conservative" estimate of how much that lack of more bids cost taxpayers each year is between $1 million and $5.2 million of the "estimated annual subcontracts of $165 million."
- Ninety-five percent of the non-competitive subcontracts had justifications for not taking bids that "did not comply with Thiokol's internal policies and procedures; did not meet government guidelines; or were not prepared," the report said.
- One Thiokol buyer, who has since left the company, also split purchase orders to keep their amounts under $1,000 to avoid requirements to take competitive bids. The inspector general figures that cost NASA an extra $100,000 in administrative costs.
- Even when Thiokol took competitive bids, its estimates for the price of contracts was off by an average of 41 percent.
- On one competitive bid for part of a stand to hold boosters during test firings, Thiokol rejected the low bidder, resulting "in significant higher costs to NASA . . . (although) neither subcontractor appeared to have qualifications superior to the other," the report said.
It added Thiokol said it thought the company to which it gave the subcontract could deliver the stand faster, but it actually "delivered the test stand several months later than the target delivery date."
- Thiokol also didn't do enough to check that the subcontractors' costs were accurate. "The audit also disclosed that Thiokol had not effectively audited direct labor hours on cost reimbursement subcontracts, ensured the integrity of Thiokol's procurement database or obtained certificates of current cost and pricing data when required."
- Thiokol did not do enough to find additional companies to bid for subcontracts. "Only one qualified source had been established for over 90 percent of (booster components and materials). Almost 10 years after the (booster) went into production in February 1979, the program remained heavily dependent on single suppliers."
NASA's Marshall Space Flight Center, which oversees NASA's contract with Thiokol, defended Thiokol in comments attached to the report. It said the report "does not provide adequate recognition of the improvements made during and since the audit.
"As a result, the report is somewhat misleading in that it gives the impression that corrective actions are still needed when in fact many have already been implemented."
It also disagreed with estimates that between $1 million and $5.2 million could be saved through more competitive bidding. It said such estimates assume Thiokol's operations were typical at the time.
"The period covered by this report did not represent typical operations for Thiokol" as it raced to redesign the booster.
Marshall Space Flight Center also said the report did not take into account the possible cost of delays from bidding and qualifying new companies to bid "that could outweigh potential savings from increased competition."
Thiokol's Lawson added that "Marshall was the customer, and we were responding to their needs and requirements."