FAA Procurement: Competition for Major Data-Processing Project Was Unjustifiably Limited

Published by the Government Accountability Office on 1990-06-11.

Below is a raw (and likely hideous) rendition of the original report. (PDF)

                                                                           United Stales General                                                Accounting Officte

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GAO;?IMTEC-90-71                                                                                       0                                                                            '

                                 -                ·            ·           -     ·-       ·           ··                                    ·*     ·- ·       c''-:                     ~~~-   ·   ·-   ··
                   United States

                   Washington, D.C. 20548

                   Information Management and
                   Technology Division


                   June 11, 1990

                   The Honorable William Lehman
                   Chairman, Subcommittee on Transportation
                     and Related Agencies
                   Committee on Appropriations
                   HIouse of Representatives

                   Dear Mr. Chairman:

                   This report responds to your request that we review the Federal Avia-
                   tion Administration's (FAA) acquisition approach for its Computer
                   Resources Nucleus (CORN) project. The CORN project is intended to meet
                   the agency's general-purpose data-processing needs for 10 years and
                   provide optional processing support to other organizations within the
                   Department of Transportation. Specifically, you asked that we deter-
                   mine if a key design requirement in the CORN request for proposals may
                   have unnecessarily limited competition. Appendix I explains our objec-
                   tive, scope, and methodology.

Results in Brief   F'A.'s original objective for the CORN procurement was to achieve full and
                   open competiion and encourage innovative vendor proposals. This was
                   to be done by communicating what FAA needed (functional require-
                   ments) while allowing vendors flexibility in determining how best to
                   meet agency needs. Although initially recognizing that varied combina-
                   tions of hardware and software could meet its needs, FAA later decided
                   to require a single architecture solution on the basis that it would reduce
                   operational costs and provide a technical platform for an integrated
                   data base. A single architecture, however, will not necessarily meet
                   these objectives. Further, in its request for proposals, FAA did not define
                   key functional requirements for achieving its objectives, such as those
                   pertaining to data accessibility. As a result, FAA (1) unjust fiably limited
                   competition and restricted the range of solutions that vendors could
                   offer and (2) dictated a system design that may not satisfy the agency's

                   We have previously recommended that the CORN procurement not be
                   awarded because FAA had not adequately planned and justified the
                   acquisition.' In planning future procurements such as (ORN, FAA should

                   'FAA l'rocurement: Major [)ata lrocessing Contract Should Not Be Awarded (GAO/IMTEC-90-38,
                   May 25, 1990). In addition, we isued a fact sheet on the project', C4,nmputer Procurement: FAA's $1.5-
                   Billion Computer Resources Nucleus Project (GAO/IMTEC-89-44FS, Mar. 31, 1989).

                   Page I            GAO/IMTEC.90-71 Limited Competition on FAA Data-Procesing Procurement

                      define the agency's needs in functional terms wherever possible and
                      inciude restrictive provisions only if justified by the agency's mission

 ack1round            linder CORN, r'..A intends to divest itself of its general-purpose data-
                      processing resources, located at 12 agency facilities. In their place, FAA
                      plans to enter into a single contract under which the contractor would
                      provide the agency with data-processing services. The contractor would
                      provide, maintain, and operate computer facilities, equipment, systems
                      software, and technical support to meet IAA mission and program needs,
                      as specified in CORN'S request for proposals. The contractor would also
                      convert current applications to the new system, but FAA would continue
                      to develop and maintain its applications software. The contractor must
                      also be able to provide similar data-processing services for other organi-
                      zations within the Department of Transportation. The contract would
                      cover an initial 5-year period, followed by five 1-year renewals. FAA esti-
                      mates the contract value to be $1.5 billion.

                      FAA issued the CORN request for proposals in February 1989. The con-
                      tract was scheduled to be awarded by mid-1990. However, the House
                      Committee on Appropriations has directed FAA and the Department of
                      Transportation to defer awarding the CORN contract until they resolve
                      issues raised in our earlier report on the project.

FAA's CORN            Federal Information Resources Management Regulation part 201-
                      30.013-1 states that specifications shall be developed in such a way as to
Acquisition Goal Is   maximize, not limit, competition. Establishing functional require-
Full and Open         nmants-that is, delineating precisely the needs that must be met, rather
Competition           than how those needs will be met X rh a particular system design-is
                      the preferred method for expressing users' requirements. The regulation
                      recognizes that the use of restrictive proN isions or conditions may be
                      necessary in acquiring property or services, but only to the extent
                      needed to satisfy the agency's needs. In other words, an agency may
                      restrict the technical options that potential contractors can use if the
                      agency can demonstrate that the restriction is necessary and justified.

                      One of the original and continuing objectives of the CORN project is to
                      obtain full and open competition. As stated in its September 30, 1987,
                      CORN itequirements Analysis, FAA intended to ensure, in accordance with
                      the requirements of the Competition In Contracting Act and other rele-
                      vant statutes, "that the project attracts a broad competitive range and

                      Page 2       GAO IMTEC-90 71 Limited Competition on FAA Data-Procewng Procurement

                           does not unfairly eliminate potential solutions." This position is in
                           keeping with the January 1987 CORN project charter, where FAA stated
                           that it "would not specify how the vendor would perform the job, only
                           what computing and other services would be provided at what levels.
                           The vendor would be responsible for obtaining the best hardware and
                           software to do the job and operating facilities that made data processing
                           most economical and responsive to users."

                           FA.'s declared acquisition strategy was to prepare a request for pro-
                           posals in functional terms that would "allow the widest possible selec-
                           tion fi solutions, while preserving the functional requirements of the
                           Agency."' In its April 1988 mission needs statement fcr CORN, FAA reaf-
                           firmed its intention to "conduct this procurement in a manner that
                           ensures the broadest competitive range of bidders and encourages the
                           submission of innovative configuration proposals."

FAA Decides to Limit       Although its acquisition strategy was to allow the widest possible selec-
                           tion of slutions, FAA decided to include a key design requirement for
Potential Computer         coRN's computer architecture. Computer architecture is the organiza-
Architecture Solutions     tional structure of a computer system, including hardware and software.
                           FAA decided that the ultimate solution to the agency's functional data-
                           processing needs must employ a single rather than a multiple architec-
                           ture. The C(ORN request for proposals, however, did not include a defini-
                           tion of either "single architecture" or "multiple architecture." Because
                           there are no generally accepted definitions of these terms, we asked pro-
                           jec!t officials to define them. They gave us the following:

                         · Single Architecture (synonymous with single computer architecture) - a
                           configuration of hardware and software components wherein all major
                           processor (('c i) Icentral processing unit] components run the same con-
                           trol program (operating system) at the same version level, and the same
                           system software (e.g., language versions, database management sys-
                           tems, utility software) such that FAA application processes (programs
                           and OCL 1Iperational control languagel) can be run on any such ci:
                           without modification.
                         · Multiple Architecture (synonymous with multiple computer architec-
                           ture) - a configuration wherein the major components, e.g., (l',! do not
                           meet the single architecture criteria.

                            F-'AA's Ie'enmitwr 1987 agency pnI urement request to t he General Setrvices Administration states
                           that (()oN "contracting will he accomplished under proxedurbes for full and opeln competition.
                           Requirements are bhing specified in funcllt ional ierformanve terms. A fully competitive procurement
                           will be used."

                           Page 3            GAO/IMTEC-90-71 Limited Competition on FAA Data-Proceseing Procurement

                           FrAA'S   current general-purpose data-processing system, which CORN is to
                           replace, is a particular type of multiple architecture environment made
                           up of one IBM 3084 mainframe computer and 22 Data General MV/
                           15000 minicomputers. The computers are interconnected by the
                           agency's Administrative Data Transmission Network. In justifying CORN,
                           FAA has maintained that limitations in its current multiple architecture
                           system are impeding the agency's ability to meet all its mission needs.

Evolution of the Single    At first, FAA did not mandate that the CORN configuration have a single
Architecture Requirement   architecture. In the two initial draft CORN specifications documents
                           developed in 1987, FAA stated that it recognized that there are varied
                           combinations of automatic data processing hardware and software that
                           could provide the services needed. Accordingly, the September 1987
                           draft specifications, which FAA provided to vendors for comment, state:

                           A single type hardware and software architecture solution is not mandated. If mul-
                           tiple architectures are proposed as part of the solution then each must fully meet
                           the stated criteria. Since a single architecture provides relatively greater return on
                           investment for the Agency in the long term the evaluation of proposals will consider
                           this as a factor.

                           A vendor could, therefore, propose either a single or multiple system
                           architecture as a solution to FAA'S need, thr'llghout the life of the

                           In its June 1988 version of the draft solicitation document, however, FAA
                           changed its position and included a basic system architecture require-
                           ment. FAA deleted the sentence stating that a single architecture solution
                           was not mandated and added the requirement for a single architec-
                           ture-eithei initially or within the first 3 years of the contract. This
                           requirement is included in the final version of the CORN request for pro-
                           posals, specified as follows:

                           If multiple architectures are provided then each shall fully meet the performance
                           level requirements stated in this Section Isection C]. If the Contractor provides mul-
                           tiple architectures initially, the transition to a single architecture shall be completed
                           within the first three (3) years of the Contract.

                           'One architecture-related restriction included in the fist two draft specifications documents
                           addresses the possibility that a contractor might propose to piovide a multiple architecture system
                           initially with a plan to switch eventually to a single architecture. In this situation, FAA required that
                           the transition be completed within the first 5 years of the contract.

                           Page 4            GAO/IMTEC-90?I71 Limited Competition on FAA Data-Proceen                  Procurement

                                  According to FAA, the purpose of the requirement is to ensure that there
                                  would be no confusion in meeting CORN objectives and to ensure con-
                                  formance with agency policy regarding the need for an integrated data
                                  base environment-.

Vendor Concerns                   After the CORN iequest for proposals was issued in February 1989, FAA
            Regarding             received written comments from two industry vendors questioning the
     tecture Restricnecessity                  and rationale for the single architecture requirement. The ven-
Architecture Restriction            ~dors claimed that a multiple architecture system could result in signifi-
                                  cant benefits and asked FAA to relax this requirement, or at least mrke it
                                  only a desirabiL option. For example, one vendor claimed a multiple
                                  architecture option could substantially reduce the cost of the conver-
                                  sion, allow of ferors to design a technical solution that best addresses the
                                  application environment of FAA, and reduce the system life cycle cost of
                                  equipment and maintenance. In addition, the veltdior claimed that a mul-
                                  tiple architecture would drastically improve the time frame for transi-
                                  tioning from the current system to CORN?.

FAA's Rationale for               In a July 1989 internal issue paper,
                                  to support the single architecture requirement :'
                                                                                      FAA   cited the following key reasons
Requiring a Single
Architecture Solution           * A single architecture will provide a technical platform for an integrated
                                  data base environment, where accurate and current information could
Is Not Justified                  be readily accessed by whoever needs it.
                                * A multiple architecture will consume 300 more employee years than a
                                  single architecture system and significantly increase costs to the

                                  This rationale is inadequately supported and therefore inclusion of thfs
                                  requirement limiting all CORN design solutions to a single architecture is
                                  not justified.

                                   'FAA alsou emphasized that the initial draft solicitation documents, which did not contain the require-
                                   ment, were intended as requetsts for comment from interested parties, ar.d should not be considered
                                   final, polished statements of requirements.

                                   'Project officials currently estimate that it will take 3 rears tm convert current applications to CORN.

                                   'In its delegation of prKocurement authority for CORI'. the General Services Administration urged
                                   F.4A to thoroughly document the project's procilrement files with supporting justification for actions
                                   that may tend to restrict competition. FAA officials state that the July 1989 issue paper represents
                                   the agency's rationale for the single architecture requirement. Key points in the paper were provided
                                   to vendors in a July 1989 "Questions and Answers" document.

                                   Page 5            GAO/IMTEC-90-71 Limited Competition on FAA Data-Processilng Procurement

Specifying an Architecture     According t') FA-, the single architecture requirement is directly sup-
Does Not Assure an             ported by policies found in the agency's Information Resources Manage-
,Integrated Data mase          "ment Plan, which requires that information   systems incorporate the
 Integrated Data Base          following concepts in their design:
                             · data elements are entered once and thereafter used and reused by
                               anyone who needs them;
                             * information derived from multiple sources cart be interrogated and
                               accut-sed as a whole; and
                             * high flexibility is provided to accommodate changes through the elimi-
                               nation of interdependencies among user language, data-processing
                               pri(cesses, and data base organization.

                                However, these concepts are not inciuded as functional requirements in
                               the request for proposals. Moreover, agency officials do not recognize
                               that specifying an architecture will not ensure that these goals can be
                               achieved or necessarily provide a technical platform for easily attaining
                               an integrated data base. There may be cases where a single architecture
                               would not meet these goals whereas a multiple architecture could. For
                               example, a distributed system could be proposed wherein several of the
                               same processors with the same operating and system software are con-
                               nected via a local area network. In this system, some FAA applications
                               would be resident on one machine, others would be resident on a second
                               machine, and so on. with the samec data base management system resi-
                               dent on each machine. Such a system would satisfy FAA's requirement
                               for a single architecture. However, if data are stored in this system on
                               separate machines as separate data bases and not .s a single, distributed
                               data base, it would not be possible to interrogate and access all the data
                               in the system as a whole. Also, depending on the locations of the dif-
                               ferent applications, the data, and the applications' data needs, it may be
                               necessary to enter data several times, not just once, for each application
                               to have ac(ess to the data it needs.

                              Conversely, an open distributed system of different processors con-
                              nected via a local ares network, which meets the definition of a multiple
                              architecture, could achieve the r)lan's goals. In this system, if a common
                              user interface and an open distributed data base management system
                              are employed. then it may be possible to interrogate and access all data
                              in the system as a whole and to enter the data only once. Although we
                              are not suggesting that one architecture is preferable to another, FAA's
                              rationale that only a single architecture can meet its information man-
                              agement goals is not supported.

                              Page 6        GAO/IMTEC-9071 Limited Competition on FAA Data-Processing Procurement

Increased Costs to FAA     According to FAA, another reason for requiring a single architecture is
Not Supported              that the costs to the government will be significantly higher in a mul-
                           tiple architecture environment due to additional programming costs and
                           programmer/analyst tLaining, decreased productivity, and higher opera-
                           tional costs resulting from less efficient processing. As discussed below,
                           these programming, productivity, and operational cost estimates are

                         * Programming Costs: F9. states that the additional time for >FAA
                           programmer/analysts to maintain a common user inteiface in a multiple
                           architecture environment "is estimated at 15%, whicn translates into
                           the equivalent of over 300 additional staff years" or an estimated cost
                           of $137,280,000 over 10 years. No rationale or data have been provided
                           for the derivation of this estimate and the use of 15 percent. Further-
                           more, FAA programmers would not nc,'essarily be responsible for main-
                           taining a common user interface. The interface could be considered part
                           of the contractor's equipment and facilities, and as such would be the
                           contractor's responsibility to maintain, not FAA'S. Also, FAA programmers
                           and analysts would not necessarily need to learn more than one environ-
                           ment. A vendor with a multiple system architecture could propose a
                           single, integrated development environment for the programmer/ana-
                           lysts, which would permit them tr target software for any machine in
                           the architecture. In this case, the. programmer/analysts would only have
                           to learn one environment for development.
                         * Productivity Costs: l.4A states that if a multiple architecture is provided
                           with,r Acommon user interface, "each user would waste 15 minutes per
                           day moving between different architectures while completing daily
                           automation tasks .vithout a common interface." FAA equates this with
                            logging ort and off the different architectures and estimates that it will
                            result in a loss of productivity of $87 million. This argument is not valid
                           since it is not applicable solely to a multiple architecture. A distributed
                           system could be proposed that meets the de finition of a single architec-
                            ture but which requires users to log on and off different processors in
                            the system to reach the processor where the application is resident and
                            to meet security procedure s. Therefore, the additional cost of $87 mil-
                            lion for a multiple architecture is not supported.
                         * Operational Costs: FAA maintains that it is likely that superimposing a
                            common user interface on a multiple architecture environment will
                            require more computer resources over the life of the contract than per-
                            fo-rning the same functions in a single architecture environment. 'rhere-
                            fore, i'AA concludes that a multiple architecture system would increase
                              AA's l()0-year computer operations costs. FAA, however, offers no sup-
                            port for this assumption.

                            Page 7       GAO/IMTECr90-71 Limited Competition on FAA Data-Processing Procurement

Data-Processing          Restricting the design solution to any particular architecture is not an
                         adequate Slubstitute for carefully delineating the agency's functional
Requirements Need to     requirements wherever possible and specifying them in the request for
Be Clearly Defined       proposals. As previously noted, establishing functional requirements is
                         the preferred method for expressing users' requirements. Further,
                         defining functiopal requirements in the request for proposals enables
                         vendors to determine how to respond with proposed solutions that
                         would meet the requirements. Htowever, 'AA did not fully define its func-
                         tional reouirements. For example, FAA did not translate the Information
                         Resources Management Plan goals into its request for proposals as func-
                         tional requirements. Examples of areas where F'AA may need to define
                         specific requirements are:

                       o single entry of data;
                       · the interrogation, accessing, and interchanging of data resident any-
                         where in the system; and
                         the porting (moving) of applications, and system and support software
                         (e.g., operating sy!:tem and data base management systems) among the
                         different data-processing equipment in the system.

                         FiA  officials stated that it was unnecessary to include these require-
                         rr.ents in the request for proposals. They argued that F'AA'S intent has
                         been identified in its overall program objectives and th. t if a vendor's
                         proposal did not satisfactorily accomplish these objectives, FAA could
                         remedy this dulring subsequent negotiations. Itowever, the request for
                         proposals, not the agency's intent, is the official document that vendors
                         use to determine whether and how to respond.

Conclusions                     ,FAA'S
                                 ntended acquisition approach is to define the agency's data-
                         processing needs in functional terms in order to promote full and open
                         competition. Ilowever, instead of defining key functional requirements
                         in the ('OrSN request for proposals, FAA has substituted a single arc!hitec-
                         ture design solution which it maintains will enable the agency to meet
                         mission needs. In requiring a single architecture, FAA unjustifiably lim-
                         ited competition and restricted the range of solutions that vendors couid
                         offer. Moreoverl, FAA dictated a system design that may not satisfy the
                         agency's needs. As a result. potent ial cost-effective solutions :nay have
                         been unnecessarily eliminmted arnd systems propesed by vendors may
                         not satisfy the agency's needs.

                         Page 8        (AO/' IMTE'-90-71 Limited Competition on FAA Data-Processing Procurement

Recommendation to   In our May 1990 report on CORN, we recommended that the contract not
                    be awarded because FAA had not adequately planned and justified the
the Secretary of    procurement. We pointed out that the agency should adequately define
Transportation      its data-processing needs before proceeding with an approach such as
                    CORN. In defining the best way to meet these needs, we recommend that
                    the Secretary of Transportation direct the Administrator, FAA, to first
                    fully specify the agency's functional requirements wherever possible.
                    Examples of functional requirements that may need to be specified
                    include single entry of data; interrogation, accessing, and interchanging
                    of data; and porting of software among different equipment. In co.lin.
                    this, if FAA determines that the procurement should have restrictive pro-
                    visions, then it should justify their inclusion. :FAA should then allow the
                    vendors to propose systems that they believe will best meet the agency's
                    requirements. FAA should plan to adequately test and evaluate vendors'
                    proposals to determine how well they meet the stated requirements, at a
                    reasonable cost and acceptable risk to the government.

                    We obtained the views of Department of Transportation and FAA offi-
                    cials on the key facts, conclusions, and recommendation contained in
                    this report. These officials disagreed with our conclusions and recom-
                    mendation. They maintained that the single architecture requirement is
                    necessary to achieve FAA's information management goals. A senior
                    department official for information resource management stated that
                    the single architectl e requirement was a judgment based on how the
                    agency should do its business and did not require detailed written justi-
                    fication. FAA officials also questioned the need to put the type of func-
                    tional requirements identified in this report into the CORN request for
                    proposals. FAA maintained that the vendors were aware of FAA's intent
                    and that if a vendor's solution did not adequately provide needed capa-
                    bilities, any such problems could be addressed during negotiations or the
                    contract could simply not be awarded.

                    Regarding the view that the decision was based on the agency's judg-
                    ment and did not require documentation, the General Services Adminis-
                    tration urged F.A to thoroughly document the project's procurement
                    files with supporting jus' ifications tor aci,ons that may tend to restrict
                    competition. While FAA documented its decision for a single architecture
                    to some extent, we have demonstrated that FAA'S rationale was faulty. In
                    response to our requests for further justification of its decision, FAA did
                    not expand on its rationale. Regarding functional requirements, we
                    believe that a system architecture requirement is an inadequate substi-
                    tute for detailed specifications of the agency's functional requirements.

                    Page 9       GAO/IMTEC90-71 Limited Competition on FAA Data-Processing Procurement

Such specifications should precede any decision to require a particular
type of system architecture.

As arralged with your office, unless you publicly announce its contents
earlier, we plan no further distribution of this report until 30 days after
the date of this letter. We will then send copies to interested congres-
sional committees; the Secretary, Department of Transportation; the
Administrator, FAA; the Director, Office of Management and Budget; the
Administrator of General Services; and other interested parties.

This work was performed under the direction of JayEtta Z. ' ,cker,
Director, Resources, Community, and Economic Developme ii nforma-
tion Systems, who can be reached at (202) 275-9675. Other i.,, jot con-
tributors are listed in apprendix II.

Sincerely yours,

Ralph V. Carlone
Assistant Comptroller General

Page 10      GAO/IMTEC-G9071 Limited Competition on FAA Data-Processing Procurement
   Page 11   GAO/IMTEC-90-71 Limited Competition on FAA Data-Proceimng Procurement
Appendix I

Objective, Scope, and Methodology

               The Chairman, House Committee on Appropriations, Subcommittee on
               Transportation and Related Agencies, asked that we review FAA'S $1.5-
               billion CORN procurement. Our specific objective was to determine if a
               key design requirement in the CORN request for proposals may have
               unnecessarily limited competition

               Accordingly, we reviewed the provisions of the Competition in Con-
               tracting Act, the Federal Acquisition Regulation, and the Federal Infor-
               mation Resources Management Regulation regarding competition. We
               interviewed FAA and Department of Transportation officials to deter-
               mine their rationale for having a restrictive system architecture require-
               ment. We also examined all relevant project documents, inc.lding the
               requirements analysis, project charter, mission need statement, agency
               procurement request, the delegation of procurement authority, draft
               solicitation documents, the request for proposals and subsequent
               amendments, vendors' comments on the request for proposals and FAA'S
               responses, and an internal FAA paper discussing the rationale for
               requiring a single architecture system.

                Our review was conducted at FAA headquarters in Washington, D.C.,
                from April through June 1990. We performed our work in accordance
                with generally accepted government auditing standards.

                Page 12     GAO/IMTEC90-71 Limited Competition on FAA Dat-Procesnag Procurement
Appendix II

Major Contributors to This Report

                           Joel Willemssen, Assistant Director
Information                John P. Finedoi'e, Evaluator-in-Charge
Management and             Dr. Rona B. Stillman, Chief Scientist
Technology Division,       Frank Reilly, Senior Technical Adviser
                           Susan Maciorowski, Presidential Exchange Executive
Washington, D.C.           William D. Hadesty, Technical Adviser
                           David M. Bruno, Computer Scientist

Office    of the General
   Office of the General   Jerold D. Cohen. Assistant General Counsel


(510556)                   Page 13      GAO/IMTEC9O-71 Limited Competition on FAA Data-Procesing Procurement
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