.~I“.“. l._ll..-...---_- . - -....-- .-.... _. _-_-- .._._ .^ _. Defense’s Use of Engineering Contractors for Acquiring Automated Systems RELEASED RESTRICTED --Not to be released outside the General Accounting Office unless speclflcally , approved by the Office of Congressional Relations. GAO,‘IM’I‘E(:-91-19 --- United States GAO General Accounting Office Washington, D.C. 20648 Information Management and Technology Division B-242025 December 27,199O The Honorable William V. Roth, Jr. United States Senate Dear Senator Roth: The Department of Defense depends on in-house and outside technical expertise to design and develop highly complex command, control, com- munications, and intelligence (@I) systems. Defense relies on engineering support contractors for advice and direction on automated data processing software engineering, system architecture, and hardware design and development. In November 1989 you asked us to determine the extent to which Defense uses engineering support contractors. As agreed in later discussions with your office, this report describes the kinds of services these contractors perform and the cost of the contracts. Defense did not know the overall extent to which its components use outside engineering and technical support services. To obtain this infor- mation, we developed and gave a data collection instrument to Defense components that acquire c31 systems. Appendix I details our objective, scope, and methodology. As used in this report, engineering and tech- nical support services include (1) systems engineering, which often includes system integration functions; (2) task engineering, which usu- ally deals with specific areas of responsibility, such as preparing test specifications and documents; and (3) technical support services, which support different functions, such as acquisition support and data man- agement. (See app. II.) Defense provided data showing that from fiscal years 1985 through Results in Brief 1989 it spent about $3.4 billion for engineering and technical services in support of @I acquisitions. The Air Force was by far the largest user, accounting for over $2 billion of the $3.4 billion spent. Defense’s annual expenditures went from $494.5 million in fiscal year 1985 to $891.7 mil- lion in fiscal year 1989, an 80-percent increase. Defense supplements its own efforts to develop and acquire automated Background Y c31 systems by relying on engineering support contractors for advice and direction. The support contractors are for-profit companies, and non- Page 1 GAO/IMTEC91-19 Defense’s Use of Contractors for Automated Systems B242026 profit entities including federally-funded research and development cen- ters such as the Mitre Corporation in Massachusetts and the Oak Ridge National Laboratory in Tennessee. These centers are government-spon- sored institutions set up to meet a special long-term need that neither government agencies nor the private sector can meet. Support contractors offer a wide range of engineering and technical ser- vices. Mitre, for example, serves most often as general systems engineer and integrator for the Air Force’s Electronic Systems Division’s major C”I systems acquisitions and, as such, assumes full technical responsibility for program success. The Electronic Systems Division uses for-profit contractors for task engineering and technical support services-only rarely does the Division use them in the role of systems engineer. Defense officials responsible for acquiring @I systems differed on how they defined engineering and technical support services. In order to establish a common definition, we met with Defense officials and agreed on the following support categories: (1) systems engineering, (2) task engineering, and (3) technical support services. Typically, Defense’s accounting systems do not capture the costs for engineering and technical support services for @I system acquisitions. Consequently, we designed a data collection instrument to obtain cost data on a contract-by-contract basis from each component. The Office of the Assistant Secretary of Defense distributed it to Defense components that acquire 61 systems. For fiscal years 1985 through 1989, Defense had active engineering and Defense’s Use of technical support service contracts totaling about $4.7 billion.’ Defense Engineering and spent over $3.4 billion to support @I acquisitions during these 5 years. Technical Support As figure 1 shows, the Air Force accounted for over 59 percent of these expenditures. Services ‘This total includes a small amount for non-C31acquisitions. Further, because some contracts cover several years, the total includes some engineering and technical support services that may have occurred before fiscal year 1986, or after fiscal year 1989. Page 2 GAO/IMTEC-91-19 Defense’s Use of Contractors for Automated Systems 0242025 R Figure 1: Percentage of @ I Support Expenditure8 by Defense Component (Fiscal Years 1985-1989) 9.4% Defense Communications Agency .9% Defense Intelligence Agency 6.2% Defense Mapping Agency 9.7% Navy 7 &!%of the Secretary of Defense Air Force I Army As appendix III shows, Defense expenditures for engineering and tech- nical support increased by about $397 million, or 80 percent, from fispal year 1985 to fiscal year 1989. The Navy showed the largest increase, up 308 percent, from $27.7 million in fiscal year 1985 to $113 million in fiscal year 1989. The Defense Communications Agency increased the least, up about 15 percent, from $61.4 million to $70.3 million over the same period. W ithin the specific support categories, systems engineering expenhi- tures far exceeded the sum of the other two support categories-task engineering and technical support. Defense reported expenditures for systems engineering, task engineering, and technical support services separately and in various combinations. For support that was reported Page 3 GAO/IMTEGDl-19 Defense’s Use of Contra&m for Automated Systems 5242025 exclusively as systems engineering, Defense expended almost $2.3 bil- lion (66 percent of total expenditures). Similarly, technical support and task engineering accounted for about $388.3 million and about $40.4 million, respectively. Defense also reported $728.3 million of support expenditures as some combination of the three categories. (See app. IV.) Nonprofit contractors accounted for almost $2 billion (58 percent of total expenditures), with over 99 percent of the money going to the Mitre and Aerospace corporations. For-profit contractors accounted for the remaining 42 percent (about $1.45 billion), with General Electric Co., International Telephone and Telegraph Corp., Analytic Sciences Corp., and Planning Research Corporation among the largest recipients. More specific details can be found in appendixes IV and V. Our review was conducted from January through November 1990, in accordance with generally accepted government auditing standards. We did not obtain official agency comments; however, we discussed the con- tents of the report with Defense officials, and made changes where appropriate. As arranged with your office, unless you publicly announce the contents of this report earlier, we plan no further distribution until 30 days from the date of this letter. At that time, we will send copies of this report to the Secretary of Defense; the Secretaries of the Air Force, Army, and Navy; the Director of the Office of Management and Budget; and the heads of the other Defense components discussed in this report. Copies will also be made available to others upon request. If you have any questions about this report or require additional information, please contact me at (202) 275-4649. Major contributors to this report are listed in appendix VII. Sincerely yours, Samuel W. Bowlin Director, Defense and Security Information Systems Page 4 GAO/IMTEC91-19 Defense’s Use of Contractors for Automated Systems w Page 6 GAO/IMTEG91-19 Defense’s Use of Contractors for Automated Syeteme Contents Letter 1 Appendix I 8 Objective, Scope, and Methodology Appendix II Department of Defense Agreed-upon Definitions for Engineering and Technical Support Services Appendix III Engineering and Technical Support Contract Expenditures Appendix IV Types of Support Services Available Appendix V For-Profit and Non- Profit Expenditures Appendix VI 16 Engineering and Technical Support Contract Expenditures by Contractor Page 6 GAO/lMTEGSl-19 Defense’s Use of Contractors for Automated Systems Content0 Appendix VII 17 Major Contributors to This Report Tables Table III. 1: Engineering and Technical Support Contract 11 Expenditures by Defense Component Table IV. 1: System Engineering, Task Engineering, and 13 Technical Support Service Expenditures Table V. 1: Engineering and Technical Support Contract 15 Expenditures by For-Profit and Nonprofit Status Figures Figure 1: Percentage of 01 Support Expenditures by 3 Defense Component (Fiscal Years 1985-1989) Figure III. 1: Trends in Engineering and Technical Support 12 Contract Expenditures by Defense Component for Fiscal Years 1986 Through 1989 Figure IV.l:Trends in Expenditures for Systems 14 Engineering, Task Engineering, and Technical Support Services for Fiscal Years 1985 Through 1989 Figure V. 1 :Trends in Engineering and Technical Support 15 Contract Expenditures by For-Profit and Nonprofit ’ Entities for Fiscal Years 1986 Through 1989 Abbreviations C31 command, control, communications and intelligence GAO General Accounting Office IMTEC Information Management and Technology Division Page 7 GAO/IMTEG91-19 Defense’s Use of Contractors for Automated Systems Appendix I Objective, Scope, and Methodology In November 1989, Senator William V. Roth, Jr., asked us to determine the extent to which Defense relies on engineering support contractors to provide advice and direction on automated data processing software engineering, system architecture, and hardware design and develop- ment. In subsequent discussions with his office, we agreed that this report would describe contract costs and types of services provided during fiscal years 1986 through 1989 (October 1,1984, through Sep- tember 30,1989). Our primary objective was to obtain and analyze engineering support contract data in support of the acquisition of automated @I systems. c31 systems are significant users of automated data processing hardware and software, and it is during system development that engineering sup- port has the most impact on system requirements and technical per- formance. To identify appropriate contracts, we asked Defense officials to define engineering support. However, Defense officials did not have a generally accepted definition of engineering support. Often what is engi- neering support to one official is technical support to another. Working with Defense officials, we developed definitions of systems engineering, task engineering, and technical support. (See app. II.) We sought to obtain from Defense officials the contract data, including total expenditures for systems engineering, task engineering, and tech- nical support services, for each Defense component from fiscal years 1986 through 1989. However, Defense procuring components do not capture overall expenditure data. Instead, information was only avail- able on a contract-by-contract basis. Consequently, we developed a data collection instrument to gather data on the cost of engineering support contracts and the types of services provided. Officials from the Defense Inspector General’s Office coordinated data collection and designated individuals to serve as points-of-contact for each reporting component. Defense tasked its components to collect the data and report it to us by July 31, 1990. As of November 6, 1990, we had not received contract data from the Defense Advanced Research Projects Agency and the Navy laboratories that provide engineering support to Navy programs. A Navy official said that because accounting for the laboratories’ work is documented only by thousands of hard-copy military interdepart- mental procurement requests, the Navy could not devote the necessary resources to the effort. Total contract value information provided by the National Security Agency for fiscal years 1988 and 1989 is included in the $4.7 billion total contract value discussed in the letter. Further, the Defense Intelligence Agency submitted several contract data sheets, one Page 8 GAO/IMTEC91-19 Defense’s Use of Contractors for Automated Systems Appendix I Objective, Scope, and Methodology - of which is classified, More specific information about these contracts is classified and has not been included in the report. In addition, the Air’Force submitted incomplete information. Air Force officials said they did not have fiscal year 1986 and 1986 support con- tract expenditures because they did not keep summary records during that time. Also, only aggregate totals of all support contracts were avail- able for fiscal years 1987 and 1988. Air Force officials said that their data bases were inadvertently destroyed and individual contract data were lost. To estimate contract expenditures for each year, we multi- plied Air Force’s average staff year.cost for these services by the actual staff years used. We did not independently validate the information, nor did we evaluate any documentation related to individual Defense contracts. While we did not obtain official agency comments, we checked responses for consis- tency with the instructions we provided, discussed the submissions with Defense points-of-contact, and made changes where appropriate. Page 9 GAO/IMTEGOl-19 Defense’s Use of Chntractmw for Automated Systems Appendix II Department of Defense Agreed-upon Definitions for and Technical Support Services l!Cngineering Systems Engineering Systems engineering, which often includes system integration functions, can also include (1) overall system and program definition; (2) specifica- tion of technical performance requirements; (3) analysis and verification of system and subsystem design; (4) assessment of design compromises and tradeoffs; (5) definition of system interfaces; (6) reviews of hard- ware and software specifications, tests, and test results; (7) appraisal of contractors’ technical performance; and (8) integration within a system or within associated systems or subsystems. Task Engineering Task engineering involves less than overall engineering responsibility. It defines specific areas of responsibility such as (1) preparing plans or specifications; (2) serving as non-government advisers in the evaluation of technical proposals, plans, or system development progress; (3) pre- paring test specifications and test documents; (4) supervising or directing tests; (6) analyzing and evaluating technical problems or defi- ciencies; and (6) monitoring and preparing guidance for specified con- tractor activities. Technical Support Technical support services include (1) development planning (e.g., requirements analysis and baseline development); (2) acquisition sup- port (e.g., source selection advice and contractor monitoring); (3) spe- cialty engineering (e.g., systems safety, human factors, reliability and maintainability, and electromagnetic compatibility); (4) manufacturing engineering (e.g., various productivity and producibility analyses); (5) program control (e.g., program and budget analysis, and schedule assessments); (6) logistics support; (7) configuration and data manage- ment; (8) cost estimating services, and (9) independent verification and validation. Page 10 GAO/IM’IECSl-19 Defense’s Use of Contractora for Automated Systems Appendix III Engineering and Technical Support Contract Expenditures Table 111.1:Engineering and Technlcal Support Contract Expenditures by Defense Component Dollars in millionsa Percent Perce;;tz; increase, Fiscal Year fiscal 1985- Defense component 1985 1986 1987 1988 1989 Total expenditures 1989 Air Force 279.1 346.7 425.0 465.9 518.8 2,035.4 59.1 “. 85.9 A& --- 93.1 82.6 79.6 95.7 108.4 459.5 13.3 16.4 Defense Cohmkications Agency 61.4 57.4 66.9 66.9 70.3 322.9 9.4 14.5 Defense Intelligence Agency _______--- 3.8 5.8 7.9 5.7 7.4 30.6 0.9 94.7 Defense Mapping Agency _...-_ _.--...--.-__-~ 29.3 33.8 34.9 56.2 50.6 212.8 6.2 100.0 Navy. 27.7 25.1 75.0 93.6 113.0 334.4 9.7 308.0 Office of Secretary _ _. of ..~ Defense .._-... 0 0 18.6 14.5 15.2 48.3 1.4 N/A Total 494.5 551.3 707.9 798.5 891.7 3,443.g 100.0 80.3 aFigures may not add due to rounding Y Page 11 GAO/IMTEGI)l-19 Defense’s Use of Contractors for Automated Systems . Appendix III EngLneerln~S and Technical Support Contract Expenditures Figure 111.1:Trends in Engineerlng and Technical Suppoti Contract Expenditures by Defense Component for Fiscal Years 1985 Through 1989 850 Total Expanditum In Mllllom Dofonr Component I FY 1885 Fyi988 FY IQ87 FY 1988 FY lQ89 Page 12 GAO/IMTEGVl-19 Defense’s Use of Contractors for Automated Systems ’ :, Appendix IV Types of Support Services Available Table IV.1: System Engineering, Task Engineering, and Technical Support Service Expenditures Dollars in millionsa _. ._...- .._.-.--.--_l__--- Percent Percent of increase, Fiscal Year total fiscal 1985 Type of supportb -.. - -~.- --~-. - .._ ..---____-1985 1988 1987 1988 1989 Total expenditures 1989 __-- Systems engineering __ -~~~.~.--.~_--__----.- 370.2 411.6 466.9 500.6 537.6 2,288.g 66.4 45.2 Task’engineenng .. 4.8 6.8 ____. 6.3 10.9 11.6 40.4 1.2 140.0 - Technical support services 36.2 23.6 81.6 112.9 133.9 388.3 11.3 269.6 sul.iotsi .. 411.2 442-O- 554.8 824.4 683.1 2,715.6 Systems engineenng .__ and task- engineering __....-_. .._...----_-----._____. 4.6 5.5 9.6 12.9 15.7 48.4 1.4 -____. 239.0 Systems engineering and technical support services ._ ._ .” _ ~..-- .._..-..-~__- ~~ 25.5 29.9 26.9 43.4 50.7 176.4 5.1 99.2 Task engineering and technical support services ._ _ _ .-. ___- . 1.8 1.7 -.-.- 5.6 7.6 38.0 54.7 1.6 ____2068.6 Systems engineering, task engineering, and technical ._-.ll”l. support ..“._ services --__----. -.--..------ 51.4 72.2 111.1 110.2 104.0 448.8 13.0 102.5 Subtotal 83.3 109.3 153.2 174.1 208.4 728.3 Total 494.5 551.3 708.0 798.5 891.7 3.443.9 100.0 BFigures may not add due to rounding. bWhile we requested that information be reported separately as either systems engineering, task engi- neering, or technical support services, some Defense components reported this information as some combination of the three categories. Page 13 GAO/IMTEC-91.19 Defense’s Use of Contractors for Automated Systems Appendix IV Types of Support Services Available Flgure IV.l:l’rends in Expenditure8 for Systems Engineering, Task Engineering, and Technical Support Services for Expmdlturoa in Mllllons Fiscal Yesrr 1985 Through 1989 Pmdomlnxnl Typ of servlca cl FY lD85 FY 1988 FY 1997 FY1999 m FY 1999 Page 14 GAO/IMTEGSl-19 Defense’s Use of Contractors for Automated Systems Appendix V For-Profit and Nonprofit Expenditures Table V.1: Engineering and Technical Support Contract Expenditures by For- Dollars in millionsa Profit and Nonprofit Status Fiscal Year Profit Status -1985 1986 1987 1988 1989 Total Percent For-Profit 178.8 197.2 300.4 356.2 420.0 1,452.6 42.2 Nonprofit 315.7 354.2 407.5 442.3 471.6 1,991.3 57.8 Total 494.5 551.3 707.9 790.5 891.7 3,443.g 100.0 aFigures may not add due to rounding. Figure V.l:Trends In Engineering and Technical Support Contract Expenditures by For-Profit and Nonproflt Entities for fl00 Expandltun8 In Mllllans Fiscal Year8 1985 Through 1989 466 400 SW SW 266 200 I60 loo 50 0 Nonprotlt Contractor Protit Status I I FYI985 WI966 FY 1997 FY 1989 FYI989 Page 15 GAO/LMTEG91-19 Defense’s Use of Contractors for Automated Systems ‘. Appendix VI II!lnginwring and Technical Support Contract IExpentitures by Contractor Dollars in millionsa Total Perce;Jt;; Contractor expenditures Top 5 Nonprofit Contractors Mitre Corp. $1,403.9 70.5 Aerospace Corp. 581 .I 29.2 Lincoln Laboratories 2.4 0.1 Oak Ridge National Laboratory 1 .o 0.1 SRI International 0.8 0.0 Others 2.0 0.1 Total $1,991.3 100.0 Top 20 For-Profit Contractors General Electric Co. $191.8 13.2 International Telephone and Telegraph Corp. 183.1 12.6 Analytic Sciences Corp. 53.6 3.7 Planning Research Corp. 50.7 3.5 Harris Corp. 44.4 3.1 Telos Corp. 36.6 2.5 American Telephone and Telegraph Technologies, Inc. 31.8 2.2 Booz, Allen & Hamilton, Inc. 25.2 1.7 Teledyne Brown Engineering 22.8 1.6 lnfotec Development, Inc. 20.2 1.4 General Telephone & Electronics, Inc. 19.8 1.4 Emerson Electric 17.7 1.2 Analvtics. , Inc. 17.5 1.2 RMS Technoloaies 17.3 1.2 ESL, Inc. 16.2 1.1 Horizons Technology, Inc. 15.5 1.1 Comouter ..- ’ Sciences Core. 14.2 1 .o Ford Aerospace and Communications Corp. 11.0 0.8 EG&G Washington Analytical Services Center 10.6 0.7 Atlantic .~ Research Corp. 10.3 0.7 Others --. 642.4 44.2 Total $1.452.6 ’ 100.0 BFigures do not add due to rounding. Page 16 GAO/IMTEC91-19 Defense’s Use of Contractors for Automated Systema ,. .’ Appendix VII Major Contributors to This Report Michael Blair, Assistant Director Information Management and Technology Division, Washington, D.C, Fred Cross, Jr., Regional Management Representative Boston Regional Office Arthur Fine, Evaluator-in-Charge Diana Gilman, Staff Evaluator . (aloall) Page 17 GAO/IMTEC91-19 Defense’s Uee of Contractors for Automated Systems ,-_-._. --_..--- -.-....- -... ---- 113. General Aewunt,ing Offiw Post, Offiw I3ox 6015 Gai t.hersburg, Maryland 20877 The firsL five copies of each report, are free. Acidit ional copies are twoo t!wll.
Command and Control: Defense's Use of Engineering Contractors for Acquiring Automated Systems
Published by the Government Accountability Office on 1990-12-27.
Below is a raw (and likely hideous) rendition of the original report. (PDF)