Says 'Misunderstanding' Led To Discounted Fuel Prices Charged To Aircraft Management Company

NASA's inspector general has released a report which says Google, through its aircraft management company H211, "has received a monetary benefit to which it was not entitled" at NASA's Ames Research Center at Moffett Field in California.

Google executives have been allowed to lease hangar space and purchase fuels at Moffett under an agreement reached between the Internet giant and the space agency, but a recent audit found that the hangars were not leased in a "transparent" manner, and the fuel was purchased at a discounted price. "We found that a misunderstanding between Ames and DLA-Energy personnel rather than intentional misconduct led to H211 enjoying the discounted fuel rate for flights that had no NASA-related mission," the report states. "From September 2007 until August 2013, H211 purchased fuel at Moffett from DLA-Energy either directly or through NASA for both its personal (non-NASA related) flights and NASA science flights at a rate intended only for government agencies and their contractors. Even though Ames officials accurately reported to DLA-Energy the nature of the Center’s agreement with H211, DLA-Energy misunderstood that H211 was drawing fuel for both private and NASA-related missions. While this arrangement did not cause a loss to NASA or DLA-Energy, it resulted in considerable savings for H211. Specifically, we calculated that since inception of its lease H211 paid approximately $3.3 million to $5.3 million less for fuel supplied by DLA-Energy than it would have paid to buy fuel at market rates."

The fuel being purchased was not subject to federal or California state taxes.

NASA did get something out of the deal. The IG's report indicates that "Since 2009, H211 has flown more than 200 flights to collect climate data at no cost to NASA – science missions Ames officials estimate would have cost the Agency between $1,800 and $6,500 per flight hour to operate depending on the type of aircraft used. Accordingly, we determined that NASA benefitted from both its lease and Space Act Agreement with H211."

Since September 2013 H211 has been paying NASA a market-based rate for fuel it purchases at Moffett, according to the report. "Initially, H211 paid the market rate for all flights regardless of their purpose, but this has since changed to two rates – a market rate for private flights and a cost-plus-surcharge rate for NASA science missions. From these payments, NASA reimburses DLA-Energy for the cost of the fuel at the “non-DOD Federal Government” rate, retains a percentage to cover its administrative and support costs, and remits the remainder to the U.S. Treasury. As a result of this new arrangement, the Government is collecting more money than it costs to provide the fuel to H211."

The IG has recommended that NASA review its leasing policy. In addition, while this arrangement did not cause an economic loss to NASA or DLA-Energy, "it did result in considerable savings for H211 and engendered a sense of unfairness and a perception of favoritism toward H211 and its owners. Accordingly, we recommend that NASA explore with the company possible options to remedy this situation."

(Image of Google aircraft at Ames from the NASA IG report)

FMI: IG Report