Audit Criticizes NASA’s Caltech Contract : Spending: Federal study finds agency ignored bidding process for management of JPL. Expenses are also questioned.

NASA ignores its own contracting rules by paying Caltech $14 million a year to manage the Jet Propulsion Laboratory in Pasadena and has failed to order the university to control costs at the federal research center, federal auditors have concluded.

The General Accounting Office also criticized $2.2 million in overhead fees paid to Caltech on a project allegedly performed by a subcontractor, and questioned the need to spend hundreds of thousands of dollars in business meals and college tuition grants for employees’ children.

Caltech spokesman Frank O’Donnell said the management fee is neither unusual nor excessive, and was approved by top NASA management. The rule violation cited by the GAO was an oversight and is being corrected, he said.

Government-paid business meals have been eliminated as a result of the GAO audit, O’Donnell added, but college tuition benefits will continue. The JPL spokesman said such fringe benefits are needed to attract the level of talent required by the lab.

“When you look at our total compensation package, it’s not out of the ordinary,� he said.

The critical review of JPL spending was issued as Caltech and the National Aeronautics and Space Administration are preparing to renew the university’s contract to manage the sprawling facility, which has an annual budget of more than $1.1 billion.

The expenses questioned by the GAO total $17.3 million, or about 1.5% of the JPL budget.

Sen. Carl Levin (D-Mich.), chairman of the Senate subcommittee on oversight of government management, said Congress may intervene if the new contract does not address the “weak cost controls (and) deviations from standard federal contract requirements� cited in the report.

The five-year contract is scheduled to take effect Oct. 1. Caltech, which was the only bidder on the contract, established the lab in the 1930s and ran it for the Army in the 1940s and ‘50s. It continued managing JPL after the lab was turned over to the newly created NASA in 1958.