I'd say that's a little bit blown out of proportion... but only a little bit.
I'm on a project right now, we're in our engineering model build. My organization was brought into the contract to quell political tension between the existing branches, two NASA branches and another organization. Between the four of us, it's pathetic how inefficient things progress. We're far behind schedule, and everyone knows that by the time it's time to build the flight model, we'll need additional funding. The project will be so far mature by that point that we can absolutely count on a budget extension. When someone completes a project on time and on budget, well, that's a miracle.
The red tape? Oh FUCK that shit. They want me to track spare, unused mechanical parts that are built-to-spec Swiss cheese with no potential usability in any future project, yet no one has the money to fund this level of traceability. Am I going to apply power to an instrument? I better check that the continuity and isolation of every single prong matches what's expected. Did I execute a line of code? Better fill a 50 page procedure, burn a CD, and submit to QA for approval.
Also, every single entity involved with NASA is so top-heavy because they can't afford to hire bright new minds, but the culture has a tendency to promote people like clockwork. You've got too many queens, and far too few worker bees.
Know what's pretty tight though? Sounding rockets. No QA, the small budgets can't afford such a luxury, and they have a >80% success rate.
Anyway, I have to work (swamped at the moment), but I'll answer anyone curious about specifics... eventually.
Source: entrenched contractor