NASA Admits It Gave Jet Fuel Discounts To Google Execs' Company

An anonymous reader writes "In a letter to Senator Grassley of the Senate Judiciary Committee, NASA 'admits the agency was selling jet fuel at below market rates to H2-11, a company owned by the founders of Google.' The agency has since raised its rates to reflect market prices but has informed the Senator that it would be impossible for NASA to recoup the money that tax payers have paid in order to subsidize Google's jet fuel discounts."

Comments

Not a subsidy?

[Dominare]

Maybe I'm a simpleton, but the one page letter linked to seems to suggest fairly explicitly that NASA was selling the fuel at "full cost" not at any kind of loss, and therefore the claim in the article that tax payers are somehow out of pocket is a load of crap. Please do correct me if I'm wrong.

Re:Not a subsidy?

[sumdumass]

Its a little deeper then this. This letter is confirmation on an audit by some inspector. NASA leases several of the google jets for earth science related tasks and NASA was only allowed to sell them fuel to the extent of covering those missions.

What ended up happening is that H2 11 purchased fuel for private flights under the same account that had nothing to do with NASA or the government so the selling of that fuel was against the contract (possible law too). So the audit came out, someone asked about it, NASA confirmed it and said they didn't have any way to address it previously but do now.

http://oig.nasa.gov/Special-Re...

Now I didn't read the audit enough to see whether or not anyone explicitly made it clear that only fuel used for government services could be purchased under the contract. I'm going to assume it was an oversight or misunderstanding and the proper accounts weren't changed over when fueling. Pilots probably don't give one rats ass about the cost of fuel for someone else's aircraft they have to fly. They certainly wouldn't be privileged to the contracts NASA and H2 11 were part of and likely just gave the account name or number or charge card they were given for the government usages. I used to work for a company that operated heavy equipment and off road use fuel was tax free also. We had two fuel cards for when they were on site, one for the trucks and one for the equipment to keep tax credits separate and drivers often used the same card for everything. When asked why they thought they had a second fuel card for, they said in case they needed to get fuel at a stop the first one wasn't accepted at. Either management lacked something, the drivers and operators lacked something, or the fact that they could fuel the equipment in the yard and rarely needed to get more on site (outside what was brought with them), allowed them to forget what they were told once a long time ago.

Re:Not a subsidy?

[sumdumass]

It doesn't appear to be. It seems that it is a complete misunderstanding by the fuel company. From the audit,

"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. 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 Centerâ(TM)s agreement with H211, DLA-Energy misunderstood that H211 was drawing fuel for both private and NASA-related missions."

The audit also says that the h211 company has flown over 200 missions for NASA at no cost to NASA and as a result of the misunderstanding, H211 paid between 3.3 and 5.3 million less than market rate for fuel in the time frame because of it. It's a pretty interesting read once you start into it.

Re:Not a subsidy?

[camperdave]

NASA's Moffett field is only a ten minute from Google Headquarters. H2-11 is paying $108,000+ a month to rent hangar space at the airport PLUS NASA gets to use the aircraft for science missions. That's $1.3million per year plus an obligation to fly science missions for NASA. When they're fuelling up at Moffett, they pay full price for the only fuel available: non-taxed government fuel. I don't see the problem. Any other civilian organization could have organized similar arrangements. This isn't any sort of "billionaires only" club. Essentially it's no different than civilian workers eating government chow at Federal cafeterias.

Re:Not a subsidy?

[chaboud]

A number of public and private entities use the field. H211 (and others) typically do two things:

1. They pay fees to NASA for the storage and operation of their aircraft at this airfield.
2. They agree to allow NASA to install equipment in these aircraft and afford NASA the use of these aircraft for experiments.

In exchange for this, they get cheap fuel, but not below NASA's cost. Sure, they're not paying the normal taxes on this fuel because federal regulations prohibit the taxation of fuel sold from government owned airfields, and federal regulations allow for private operations to use NASA facilities under contract with NASA.

NASA has hangars, fuel storage/delivery facilities, a short supply of aircraft for research, and no money. Private entities have aircraft, no place to park them near their bases of operation, and money.

Would it piss you off if frequent government contractor Lockheed Martin operated private aircraft out of Moffett? Oh! Wait! They do! Would you be pissed if the highly publicized and technologically interesting solar plane venture Solar Impulse parked their plane in one of the hangars and threw parties around it while in the Bay Area? Oh! Wait! They did!

People need to chill out about this. This is no big deal. Either change the laws creating this condition or kick private entities out of Moffett, an idiotic action that would likely result in the financial collapse of an already under-funded operation of NASA.

But, yes, I'm willing to grant your first statement... you are simple minded.

Not just Google

[Todd Knarr]

It reads like it wasn't a subsidy to Google, it's that NASA sold fuel to all it's qualified partners at cost rather than at market rates. So the taxpayers didn't pay anything for a subsidy. NASA recouped what it paid for the fuel, it just didn't make a profit on the transaction. I don't see any compelling reason to require a government agency like NASA to turn a profit on it's deals, as long as it doesn't lose money on them either.

Re:Red Herring

[kqs]

From what I have heard, some years ago the government cut funding to NASA and told them "you need to have public/private partnerships to make money".

As part of this initiative, NASA leased part of AMES which they were not using to Google (for quite a lot of money), and did a deal where they could use planes for NASA science missions. Note that they didn't do this because they wanted to; they did this because the US govt told them to do this sort of thing.

So Google got preferential treatment by... renting excess space at market rates. A good deal for Google since it is close to their headquarters, and a good deal for NASA because they could continue doing science even when Congress cut their funding.

I suspect that if Apple, Cisco, and Facebook had wanted to pay the same market rates then they could have also leased space at AMES, though since that is a farther distance from their headquarters (especially with Bay Area traffic) it would be less tempting to them.

Re:They sold it at cost?

[JakartaDean]

You have the mentality of a peasant. Whatever the nobles do, it must be OK because they would never take advantage of their position at your expense. They're so much more deserving then you.

Let's use a car analogy: suppose that you buy gas at the same station that Google execs do. They get charged the rate that the gas costs at the refinery, and you pay retail. Their gas is 25% cheaper (made up value) then yours. You have to pay for shipping costs, infrastructure costs for the service station (electricity, upkeep), the salaries of everyone involved between the refinery and the pump, etc. All that stuff has to be paid for to get the gas to the pump, so you are subsidizing their gas.

Except it's not a private company selling the gas, it's government services paid for by your taxes.

+5 Insightful? I could see +5 Vituperative, but your post lacks both insight and manners. Rather than calling him a peasant, why didn't you spend time reading the linked letter and article widely cited above? NASA says, for example, "While we concluded that the fuel arrangement between Ames and H211 did not result in an economic loss to NASA or DLA-Energy..." The cost H211 paid was the fully loaded cost. Go look that up in an management accounting text. There were no government services paid for by anyone's taxes. The price they paid was below market rates -- at the time the deal was signed all fuel was provided by DoD and sold at subsidized price (DoD craft) or fully loaded cost (non-DoD craft, including the H211 craft that NASA sometimes used). Here's a flash for you: sometimes these craft just flew in the air, so they didn't have the option of going to another "gas station" down the road -- Moffet Field was the only game in town for NASA, and was often convenient for H211 folks. Cost recovery is the default option for charges at most airports, and managers are very good at calculating fully loaded costs.

The problem is that H211 was getting a better deal than other craft at other airports in the area, not that the government or taxpayer was losing money. Given how much NASA was saving by having easy access to H211's aircraft, everyone was winning. However, NASA decided it looked bad, so to avoid any allegations of impropriety (like yours), it was in the government's interest to collect market rates and pass the profit on to the Treasury, so they've been doing that since September 2013. Mr. Schmidt's compensation is irrelevant.