Supply deal results in sky-high costs for NASA

NASA has overpaid by an average of 24% for computer accessories and supplies purchased through a five-year-old desktop IT...

NASA has overpaid by an average of 24% for computer accessories and supplies purchased through a five-year-old desktop IT outsourcing arrangement, according to a recent audit.

In 1998 NASA signed a nine-year, $1.3bn deal awarding seven companies a contract to provide desktop, server and communication equipment and support services.

The Outsourcing Desktop Initiative for NASA (Odin) requires participating suppliers to maintain an online catalogue of supplemental computing supplies and accessories, such as keyboards, printer cartridges and PDAs, at each NASA site they support.

The seven companies include OAO (since acquired by Lockheed Martin), Affiliated Computer Services and Science Applications International. NASA spent $13.9m last year on products from Odin catalogues.

That total could have been trimmed significantly had NASA officers compared the catalogue prices against market prices, the audit found. Unnecessary product bundling and support choices restricted to the most expensive levels helped inflate the catalogue prices of components.

At one NASA research centre, a hard-drive cable listed at $52.14 could have been purchased for $2 had the catalogue offered the part without installation and maintenance support.

Missed volume discounting opportunities could have also helped NASA cut its supply costs. Some facilities had already negotiated discounts with suppliers, although not all NASA sites had plans in place to take advantage of consolidation purchasing.

While some NASA installations allowed employees to buy equipment from sources other than the Odin catalogues, other sites mandated the use of the catalogues, citing the advantages of centralised procurement and support. However, those advantages did not outweigh the cost savings from using outside suppliers.

The audit recommended that the use of Odin catalogues for purchases should be made optional at all NASA sites. The Odin Program Office will issue guidelines to administrators for reviewing catalogue prices to check their reasonableness, and will require the results of those reviews to be documented.

The office will also draft volume discounting provisions to be included in all orders, and encourage sites to co-ordinate on consolidation purchases.

NASA has already landed a $9,000 refund cheque from one supplier as a result of the audit.

Stacy Cowley writes for IDG News Service 

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