NASA's Procurement Chief Keeps an Eye on the Next Era

Federal Contracts Report™ delivers concise, authoritative reports covering the complete spectrum of issues affecting the federal acquisition of goods and services, to keep you abreast of policies...

By Sam Skolnik

Aug. 11 — Bill McNally, NASA’s top procurement official, has helped the agency transition out of the space shuttle era and into grand new adventures like the proposed human mission to Mars.

He’s overseen more than a dozen of NASA’s most sensitive contracts, including those for resupply to the International Space Station (ISS) and commercial crew transportation.

And since taking over as NASA’s senior procurement executive in 2007, McNally has spearheaded an effort to overhaul the agency’s contracting process by reducing transaction costs.

He’s also the first to concede that despite all this experience, he hasn’t yet mastered NASA’s main dialect: astronaut-speak. During a recent interview, he described how, after docking at the ISS, the Orbital ATK capsule “disintegrates with the garbage” during its return trip. A NASA spokeswoman corrected him by noting that, technically, the capsules burn up when re-entering the Earth’s atmosphere.

“I’m just a procurement guy,” McNally said while laughing. “I don’t know some of the technical terms. But it’s cool stuff, you know.”

‘High-Risk Mission.'

To say McNally is just a procurement guy is a serious understatement.

He’s been in the procurement business for more than three decades. At NASA, procurement dollars eat up 80 percent of the agency’s $19 billion annual budget, and as assistant administrator for NASA’s Office of Procurement and deputy chief acquisition officer, he oversees a 700-person acquisition staff spread out over 11 regional buying offices, plus his headquarters staff in Washington, D.C.

McNally’s acquisition experience goes beyond NASA. He served in the Air Force for 26 years, during which he was a contract administrator and industrial specialist for the Atlas space program, and worked as a contract officer for the Tomahawk cruise missile, among other assignments.

Given some of the trickier issues McNally, 61, has faced at NASA — especially in recent years, having to work under tight budgetary constraints — it’s fair to say that all of his experience is being put to good use.

His most significant challenge to date, he told Bloomberg BNA, is the commercial crew program that enlisted aerospace contractors to transport crew and scientific experiment equipment to and from the ISS.

Last December, NASA ordered its second post-certification mission under the program. Boeing and SpaceX each have won the right to participate and, once certified by the agency, each company will be capable of two crew launches to the ISS per year, top NASA officials have said.

A significant benefit of the commercial program, McNally said, is that it allows for a decreased reliance on the Russian space agency to transport American astronauts to and from the ISS. Success for NASA meant contracting with two companies instead of one.

“The challenge was: a) having enough money for the contracts, and b) having companies that could demonstrate the capability of doing that type of transportation successfully,” McNally said.

Another adjustment he had to make was recognizing that he needed to award some mission contracts before the vehicles had been fully certified as safe and functional.

“We actually have taken risk by awarding contracts on vehicles that aren’t certified yet,” he said. “But we have to do that because of the lead time. We can’t wait.”

Shuttle Close-Out

Several times during the interview, McNally brought home the fact that space exploration is an inherently chancy venture.

Over the years, he said, “one of the things that hasn’t changed is support of a high-risk mission. That’s been constant.”

McNally is still overseeing the remnants of the space shuttle program, which formally ended in August 2011, one month after the program’s last mission was flown by the shuttle Atlantis.

The majority of contracts NASA approved to make the shuttle program function have long since expired. But several still have yet to be formally closed, McNally said. In these cases, he said, the rates have to be finalized so the contracts can be officially ended.

Many of the remaining contracts at the Johnson Space Center in Houston stem from NASA’s work with the United Space Alliance, a joint venture of Boeing and Lockheed Martin that had served as a spaceflight operations company and main NASA contractor during much of the shuttle program’s existence, McNally said. “We’re working very closely in monitoring the close-out activities,” he said.

The end of many of these contracts has meant figuring out what to do with various pieces of ground support equipment such as the “crawlers,” the massive mobile platforms formerly used to bring the shuttle out from the vehicle assembly building to the launchpad. He said one of those crawlers has been modified to perform the same function for the Space Launch System, a heavy-lift rocket designed to carry astronauts beyond low Earth orbit.

Promoting Efficiency

One of the ways NASA can afford to buy what it wants, even in the era of the sequestration, is by finding ways to save money by promoting efficient contracting processes. Recognizing this, several years ago, McNally began a departmentwide effort to reduce transaction costs, with an eye toward how much industry is paying to prepare proposals and how much NASA spends internally to execute contracts.

“(W)e’re trying to be more efficient,” McNally said, “and reduce the number of contracts we have, the number of task orders we have, the number of incremental funding actions we have. We’re trying to reduce the work required to get the contracts we need.”

McNally said his department’s efforts have shown some success, including reducing both the number of task orders and incremental funding actions.

He’s also been trying to weed out inefficiencies in the source selection process, he said. In certain cases, NASA contracting officials aren’t weighing bids with what he calls a “full trade-off,” meaning, looking at a company’s technical approach to its job, its management style, past performance and price. Instead, they’re looking only at the overall acceptability of the company for the job, past performance and price.

This saves time and money both for contractors and the agency, and it makes sense in cases where, say, security guard businesses are vying for a contract. In that situation, the management and technical approaches of each company clearly matter a lot less than their general acceptability and past performance, he said.

Promised Cost

McNally’s tenure has attracted praise and criticism from the NASA Inspector General’s office and the Government Accountability Office (GAO).

A GAO report issued Feb. 26, for example, found that over the past five years, NASA’s overall procurement performance has made progress. The cost and schedule performance of most of the agency’s major projects in development has improved, the report found.

But preliminary results from GAO also showed that NASA had “rebaselined a major project for each year eight out of the last nine years, which means the projects experienced significant cost or schedule growth.” Projects that have made those recalibrations include the James Webb Space Telescope and the Mars Science Laboratory.

NASA’s Inspector General’s office has similarly offered mixed reviews, including commendation in a 2015 report for reducing the operations and maintenance costs of the ISS by $1.8 billion between fiscal 2011 and 2015.

A 2014 report by Inspector General Paul Martin, however, knocked NASA’s procurement team for its implementation of the “strategic sourcing” effort agencies have been encouraged to put in effect using governmentwide contracts to lower prices.

“NASA has failed to develop a robust, Agency-wide strategic sourcing program over the past 7 years, thereby missing opportunities to maximize savings by aggregating its purchasing power and market position when procuring commodities,” the report found.

‘Innovative Period.'

Observers credit McNally with leading a procurement division at NASA that’s been faced with several tough challenges, including the agency’s evolving space exploration goals, its changing partnership with industry, and agency budgets that have risen only slightly over the past half-dozen years.

“It’s been a very innovative period for NASA in providing transportation to low Earth orbit,” Frank Slazer, vice president of space systems with the Aerospace Industries Association, told Bloomberg BNA.

In part, Slazer is referring to the Commercial Orbital Transportation Services (COTS) program designed to coordinate delivery of crew and cargo to the ISS. When NASA was forced to end its agreement with one of the first two COTS contractors — Rocketplane Kistler — because of private funding issues, the agency in 2008 signed an agreement with Orbital Sciences to fill its place.

Between that quick adjustment and NASA’s response to the end of the Constellation human spaceflight program in 2010, the agency and its procurers demonstrated resiliency and creativity, Slazer said. “This shows what NASA can do with industry as a partner,” he said.

To contact the reporter on this story: Sam Skolnik in Washington at

To contact the editor responsible for this story: Seth Stern at

Copyright © 2016 The Bureau of National Affairs, Inc. All Rights Reserved.

Request Federal Contracts Report