RSS Feed
Twitter
1 Comment
NASA OIG Review of NASA's Shared Services Center
"... Moreover, although NASA originally expected that approximately 200 civil service positions would be freed up from performing institutional support services and reassigned to "critical mission-related activities" as a result of the transfer of services to the NSSC, the Office of Inspector General (OIG) found that these employees were often placed in new positions or assigned to backfill positions in the same functional areas from which services had been transferred.
Finally, the OIG found that NASA's claim that creation of the NSSC would save the Agency $121 million over a 10-year period (fiscal years 2006 through 2015) was based on flawed data and is therefore inaccurate. Our analysis determined that cost data supplied by the Centers, which was essential in determining the baseline cost calculations and return-on-investment projections, were not reliable or verifiable."
This was entirely predictable. On first hearing of this effort many years ago it was an easy matter to conclude then that there would be no traceable cost benefit. I recall the conversations went as follows: (1) Consolidating overhead is an idea used in industry, for certain overhead functions like accounting or human resources, placing them into one physical location and standard set of processes. (2) In the case of industry, people are offered physical transfers, for those that are not let go, consistent with the idea that the new operation won’t be allowed more resources than the sum of the previous efforts. (3) in the NASA case no layoffs were planned, so this was an incomplete idea, as applied. (4) Conclusion-there will be no money saved, and likely costs will rise for the total functional area.
The same process has occurred in many government agencies doing “A-76” type competitions. I believe the IRS fell into the same basic problem on a much larger scale. Outsourcing, no layoffs, attrition not as expected, no savings, possibly costs more. DoD has seen this too (and the phenom was observed by SecDef Gates recently). Part of the failed dynamic seems to be that there is no connection between budgets for the new thing and budgets for the old thing, so that money for one comes out of the other from the start. If that were the case, most of these open-loop improvement initiatives, open-loop in the sense that there is no built-in connection to the bigger picture and it’s fiscal picture, would never get approved. They are ultimately internal competitions for funds where winning and seeming to move into the next best wave of how things are done is really just one group winning resources from another, usually from someone in the future. After all, in this case the “functional” cost of the services provided probably increased dramatically through the improvement initiative. One would sum the cost of the NSSC (up-front and operational) to the costs of on-going functional equivalents and non-utilized (but unavailable) personnel at the centers.
Don’t get me wrong. My workings with the NSSC have been great. No complaints. But that’s not the point here.
I’m reminded of how we need to take any improvement initiatives people push nowadays and see how it is the costs will rise faster than before when these ideas are executed. I believe you’ll find reports on Medicare Advantage programs, an “outsourcing” type initiative there, that show how that got sidetracked along the way to reducing health care costs as well. Of course, from the perspective of the private sector providers this is business they did not have before, which then they do! So the ROI is infinite goodness. For the nations healthcare costs, or the Medicare program as a whole, the bill went up faster than if nothing had been done to “improve” costs by bringing in the private sector (albeit on the later “advantage” outsourcing the dynamic causing total costs to rise is more sophisticated).
It’s the total that matters. ROI people, put the spreadsheets down a minute. A calculator with plus and minus is all you need.