December 12, 2013
Google Execs Received Fuel Discount Meant For NASA Flights
Lee Rannals for redOrbit.com - Your Universe Online
NASA said its Ames Research Center began leasing about 70,000 square feet of space in an aircraft hangar on its property to H211 -- a private company that manages aircraft owned or leased by Google executives Larry Page, Sergey Brin and Eric Schmidt.
When property goes unused at NASA centers, the space agency is allowed to lease it out to help generate revenue to reduce overhead expenses and defray the costs of maintaining and improving its infrastructure. H211 was paying NASA $1.4 million annually so it could store nine aircraft -- two helicopters and seven planes -- at Moffett Federal Airfield in California.
The company also struck a Space Act Agreement with NASA, allowing the space agency to use H211’s Alpha Jet aircraft in order to conduct Earth science research. In order to fuel flights for both private and NASA-related flights, H211 had to use the Defense Logistics Agency-Energy (DLA-Energy), which is the sole provider of aviation fuel at the California airfield.
According to NASA, there was a miscommunication with the original agreement between H211 and DLA-Energy, leading the company to pay less for fuel during private flights. DLA-Energy was charging the company the same amount for all fuel, regardless if it was for a private flight or for a NASA research flight.
Under the original agreement, H211 would have been paying less per gallon for the NASA science research flights than comparable aviation fuel prices. DLA-Energy was supposed to charge H211 the higher price, which would have included state and local taxes along with other fees. NASA said ultimately 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.
“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,” NASA said in a statement. “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.”
The space agency said even though Ames officials accurately reported to DLA-Energy the nature of the Center’s agreement with H211, the fuel supplier still misunderstood that the company 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,” NASA said. The agency added that the only potential “victims” of the situation are the state of California and local government which may have lost tax revenue associated with the fuel purchases. Moreover, a commercial fuel supplier may have missed out on potential profit from the fuel sales.
H211 has been paying NASA a market-based rate for fuel it purchases at Moffett since September 2013. NASA said it will be exploring options with H211 to determine a possible remedy for this situation.