Coast Guard Acquisitions: Formal Criteria Needed to Ensure Project Manager Qualifications

Published by the Government Accountability Office on 1990-06-19.

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

                    United States General, Accounting   Office       ..

                    Report to the Chairman, Subcommittee         i
                    m Transportation and Related
                    Agencies, Committee on
                    Appropriations, House of
                          ___~- -~
,I utw 1990
                    COAST GUARD
                    Formal Criteria
                    Needed to Ensure
                    Project Manager

GAO                Unfted States
                   General Accounting Of’fice
                   Washin@ton, D.C. 20648

                   Resources, Community, and
                   Economic Development Division


                   June 19,199O

                   The Honorable William Lehman
                   Chairman, Subcommitteeon
                     Transportation and Related Agencies
                   Committee on Appropriations
                   Houseof Representatives
                   Dear Mr. Chairman:
                   In responseto your letter dated December6, 1989, and subsequent
                   agreementsreached with your office, we assessedthe Coast Guard’s
                   actions to increase the qualifications and the tour of duty, or tenure, of
                   personnel selectedas managers responsible for acquiring its major sys-
                   tems.’ Currently, nine project managers are each responsible for one or
                   more of these systems. We focused our review on the status and effec-
                   tiveness of Coast Guard actions to addressrecommendations, made in
                   1986 studies by the Coast Guard and the Logistics ManagementInstitute
                   (MI), concerning the managers’ qualifications-acquisition experience
                   and training- and their length of tenure.

                   These two studies (see Background) recommended,among other things,
                   that acquisition experience be a prerequisite for selection as a project
                   manager, acquisition training be required if needed,and the Coast
                   Guard designate the position of project manager as a career specialty for
                   its officers to ensure that acquisition experience acquired as project
                   manager is fully utilized.

Results in Brief   The Coast Guard has increased the experience and training of its project
                   managers by establishing a screeningpanel to select qualified officers to
                   serve as project managers and sending many of the selectedofficers to a
                   20-week acquisition managementtraining course. However, becausethe
                   experience and training criteria used by the screening panel are only
                   “desirable,” officers are not required to possessacquisition experience
                   or certain training to be selected.Further, no formal procedures exist to
                   ensure that officers who have little or no acquisition experience when
                   selected attend the acquisition training course or other specialized
                   training as neededprior to beginning their project manager assignment.

                   ‘A mJor system is defined as one that will exceed $60 million in research and development costs,
                   exceed $160 million in total acquisition costs, or involve the allocation of relatively large amounts of
                   resources and warrant special management attention.

                   Page 1                            GAO/RCED-90-178       Coast Guard Project    Manager   QualUications
                          The Coast Guard did not agree with the 1986 recommendation that pro-
                          ject managementshould be a career specialty. The Coast Guard’s cur-
                          rent guidelines provide that headquarters assignmentsshould be 4 years
                          in duration, including assignmentsfor officers in the grades who cur-
                          rently serve as project managers. However, the average tenure of the
                          current project managers expected to transfer to new assignmentsin
                          fiscal year 1990 is 3 years. Becauseproject management requires an
                          extensive knowledge of procurement practices, retaining these man-
                          agers longer would better enable the Coast Guard to effectively utilize
                          their experience and training.

                          The Coast Guard buys ships, aircraft, and other major systems to carry
Background                out its wide-ranging missions. These missions include enforcing drug,
                          fishery, and other federal laws on the high seasand US. waters; main-
                          taining aids to maritime navigation; protecting the marine environment;
                          icebreaking; search and rescue;and military readiness. The Coast Guard
                          is currently procuring 14 major systems whose combined cost is over $4
                          billion. Someof these projects involve items that are unique to the Coast
                          Guard (such as a proposed polar ice-breaker), use a new design (such as
                          the motor lifeboat, which features a hull of aluminum rather than steel),
                          or incorporate high technology (such as aerostats-helium balloons-
                          supporting a radar system to provide sea and air radar surveillance of
                          approximately 11,000 square miles). These systems are expected to help
                          the Coast Guard support its missions, reduce maintenance costs, and
                          improve working and living conditions for its personnel.

Acquiring Major Systems   According to the Coast Guard’s Systems Acquisition Manual, acquiring a
                          major system typically takes 8 to 16 years, from project initiation to
                          receipt of the last product. For each major system, an officer, assigned
                          to the headquarters’ Office of Acquisition, serves as the project man-
                          ager. Since 1987, the Coast Guard has selectedonly captains for project
                          manager positions, Currently, two project managers,selectedbefore
                          1987 and completing their assignmentsin fiscal year 1990, are a lieu-
                          tenant commander and a commander. The project manager is typically
                          assisted by a dedicated headquarters staff, which can include logistics
                          support, planning and control, and other specialists.
                          Currently, 36 professionals are assignedto the 9 project staffs. Ninety-
                          two percent are military personnel, subject to periodic rotations; the
                          other 8 percent are civilians. According to the Coast Guard personnel

                          Page 2                  GAO/WED-90-178   Coast Guard Project   Manager   Quelifications

                            manual, the length of a tour of duty for officers, at the lieutenant grade
                            level and higher, assignedto headquarters positions is 4 years.2

Previous Studies of Coast   In 1986, the Department of Transportation’s Office of the Inspector Gen-
Guard Acquisitions          eral issued a report on Coast Guard acquisition processes.It concluded,
                            among other things, that the Coast Guard neededto begin the processof
                            determining requirements and specifications for major acquisitions
                            sooner, make greater use of available standard and “off-the-shelf”
                            designsfor equipment and systems, and streamline the review and
                            approval processwithin the Coast Guard.
                            In responseto that study and concernsexpressedby the SenateCom-
                            mittee on Appropriations, the Coast Guard Chief of Staff’s Office issued
                            a report, also in 1986, entitled Coast Guard Acquisition ProcessStudy.
                            In the sameyear, LMI issued a report, entitled Improving Acquisition
                            Managementin the Coast Guard.3Both studies’ findings and conclusions
                            were basedon a broad management assessmentof the Coast Guard
                            acquisition program and did not link the program weaknessesidentified
                            to the results of individual acquisition projects. Together, these studies
                            contained 43 recommendations for improving the timeliness and effec-
                            tiveness of the Coast Guard’s acquisition process,The recommendations
                            touched on policy and planning, managementinformation, personnel
                            qualifications, and other areas.
                            In 1986, we reported on the implementation of these recommendations.*
                            We stated that the Coast Guard had taken several actions to improve its
                            management of the acquisition process,such as establishing an Office of
                            Acquisition in January 1986. However, at that time, it had made little
                            progress in improving the experience, training, and tenure of acquisition

                            “The tour of duty for ensigns and lieutenants Cjunior grade) assigned to headquarters positions is 3
                            ‘IThe study was prepared pursuant to a Department of Defense contract

                            *Coast Guard Acquisitions: Status of Reform Actions (GAO/RCED-86-161BR, June 11, 1986).

                            Page 3                            GAO/RCEB90-178      Coast Guard Project    Manager   QuaRfications

More Assurance        Federal managers are responsible for establishing and maintaining
                      internal controls over the resourcesentrusted to them.6These controls
Needed That Project   are intended to provide reasonableassurancethat, among other things,
Managers Have         resourcesare used for proper purposes and are safeguarded against
                      waste, loss, and misuse. In the area of personnel competence,managers
Needed Experience     and employeesare required, among other things, to maintain a level of
And/Or Training       skill necessaryto help ensure effective performance. Having competent
                      personnel is but one of five general standards that define the minimum
                      level of quality acceptablefor internal control systems in operation.
                      Therefore, personnel competencecannot be expected, by itself, to ensure
                      that agency objectives will be accomplished.Rather, together with the
                      other standards, it helps provide reasonableassurancethat these objec-
                      tives will be achieved.

                      The project manager’s role is a challenging one becausethe processof
                      acquiring a major system is technically complex and time consuming. As
                      described by the Coast Guard, the project manager bears ultimate
                      responsibility for meeting project objectives throughout the acquisition
                      process.Therefore, the project manager must understand the relation-
                      ship between the project’s acquisition strategy and the more specific
                      applications of procurement procedures required by federal law in con-
                      tracting for design, development, and testing of new systems. In addi-
                      tion, the project manager will be deeply involved in such diverse
                      activities as forming a contracting team, selecting sourcesfor systems,
                      negotiating contracts, fostering competition, and administering contracts
                      after they are awarded.
                      The Coast Guard recognizesthe project manager’s importance. Its pro-
                      gram description for the Office of Acquisition states,
                      “The quality of project management can ultimately determine the successor failure
                      of an acquisition project.... An increasingly important part of the focus on the acqui-
                      sition process is the concern for the professional competenceof those who direct
                      and operate the process.”

                      In a 1986 report on the capabilities of the Department of Defense’s
                      acquisition work force, we noted that experts and other data sources
                      emphasizedthat substantial acquisition experience and training-that

                      “See U.S. General Accounting Office, Standards for Internal Controb in the Federal Government,

                      Page 4                          GAO/RCED-90-178     Coast Guard Project   Manager   Qualiflcation~

                         developed technical, management,and leadership skills-were neces-
                         sary to produce a highly qualified program manager.6Although the
                         Coast Guard has taken steps since 1986 to improve its managers’ experi-
                         ence and training, it still cannot be assuredthat its project managers
                         possessthe necessaryskills to successfully manage a major acquisition.

Selection Criteria for   The 1986 Chief of Staff study concluded that, to capitalize on the
Project Managers Not     training and development of personnel, individuals with acquisition
                         experience should be assignedto the major acquisition program. The
Formalized               study recommendedthat prior acquisition experience be a prerequisite
                         to be selectedas a project manager.
                         In response,in 1986, the Coast Guard established the Major Acquisition
                          Project ManagersScreeningPanel, which meets annually, to select pro-
                         ject managers,According to the Coast Guard, the panel’s goals are to (1)
                         maintain high standards of acquisition professionalism, (2) ensure that
                         top performers receive the challenge of major acquisition project man-
                          agement, and (3) enhancethe prestige of major acquisition project

                         In selecting project managers,the Coast Guard uses a list of experience
                         and educational criteria that are desirable but not required. This list
                         includes acquisition or program managementexperience,prior attend-
                         ance at the DefenseSystemsManagementCollege’s(DSMC)20-week pro-
                         gram managementcourse, attendance at the Industrial Collegeof the
                         Armed Forces,and/or completion of graduate or postgraduate work in a
                         variety of subjects.
                         When asked about the relative importance of the factors, a senior
                         civilian official in the Office of Acquisition, who had participated in a
                         screeningpanel, ranked the factors in the following order: (1) manage-
                         rial/leadership capability, (2) educational background, and (3) acquisi-
                         tion experience. This ranking of the factors was confirmed by the
                         Deputy Chief of the Office of Acquisition.
                         We found that six of the nine current managers had not had acquisition
                         experience when they were selected.The other three possessedfrom 1
                         to 8 years of acquisition experience.(Seeapp. I.) However, acquisition
                         experience is becoming more prevalent. Of the five captains who are

                         sDOD Acquisition: Strengthening Capabilities of Key Personnel in Systems Acquisition (GAO/
                               _86 -45, May1986).

                         Page 5                          GAO/RCED9@178       Coaet Guard Project   Manager   Qudiflcations
                                                                                                   I--        i

                     scheduledto becomeproject managersthis summer, three had had
                     acquisition experience when selected,while two had not. Thus, whereas
                     the proportion of the current managers who had had prior acquisition
                     experience when they were selectedis one in three, by the end of fiscal
                     year 1990, the proportion will increase to one in two.
                     In relation to the desired educational background, none of the nine cur-
                     rent project managers had, prior to selection, attended either DSMC'S pro-
                     gram managementcourse or the Industrial Collegeof the Armed Forces.
                     However, six of the nine current project managers had obtained grad-
                     uate or postgraduate training in subjects that the Coast Guard considers
                     desirable. These include businessadministration, management science,
                     naval engineering, and public administration. (Seeapp. I.)

No Formal Training   The 1986 LMI study concluded that, for the most part, project managers
Requirements         had received little or no training in program managementor contracting
                     before their assignment. In addition, they were usually unfamiliar with
                     Coast Guard and Department of Transportation methods of doing busi-
                     ness and lacked a working knowledge of the statutes, regulations, poli-
                     cies, and procedures for government contracting.
                     Similarly, the 1986 Chief of Staff study concluded that project managers
                     were not provided the requisite formal training necessaryto ensure
                     effective project management.It stated that a training program would
                     promote organizational goals by providing standardized and approved
                     methods to reach those goals. The study also recommendedthat the
                     Coast Guard provide a comprehensivetraining program by scheduling
                     DSMGprO@WtI management coursesfor inC0IIk-g project managers      con-
                     sistent with their educational background and experience.
                     In response,the Coast Guard stated that DSMC'S 20-week program man-
                     agement course would be the cornerstone of training for all project man-
                     agers. As a matter of practice, the Coast Guard now attempts to send all
                     project managers to this course before or soon after they begin their
                     assignment. The first project manager completed the course in June
                     1987, and five of the nine current managers have attended the 20-week
                     course. (Seeapp. I.)

                     According to Coast Guard officials, four managers had not attended the
                     program management course becauseobtaining slots had been difficult,
                     the incoming project managers could not be releasedto attend the

                     Page 6                  GAO/RCED-90-178   Coast Guard Project   Manager   Qudfications

                       course, or, in one case,the selecteehad had relevant experience. How-
                       ever, the officials also said that, if these officers were selectedtoday as
                       project managers,they would probably be sent to the course before they
                       began their assignments.
                       The proportion of managerswho have had this training is likely to
                       increase. This will occur becausefour of the five captains who are
                       scheduled to becomeproject managersin fiscal year 1990 are expected
                       to have completed the course either before or soon after reporting to
                       duty. Of these four captains, as of May 1990, two have completed the
                       course; one is currently taking the 20-week course; and the remaining
                       captain has not been scheduled yet to attend the course. The fifth cap-
                       tain will becomethe project manager for an automated data processing
                       acquisition project. As a result, the Coast Guard is trying to determine
                       the most appropriate training for him which, according to the Deputy
                       Chief of the Office of Acquisition, could include a portion of the pro-
                       gram management course,plus additional training related to data
                       processing systems.
                       Although the Coast Guard has generally adopted the practice of sending
                       new project managersto training courseswhen they need the specialized
                       training, it has not established a formal requirement to do so. Coast
                       Guard officials did not know why it was not a written requirement,
                       stating that whether project managers should attend such training was
                       not in dispute.

                       Both the Chief of Staff and LMI studies reported in 1986 that project
Project Managers’      managers were normally subject to rotational assignmentsof 2 to 3
Tenure Does Not Meet   years’ duration. The LMI study further noted that Coast Guard officers
Coast Guard            had no career path in project management and that little incentive
                       existed for them to specialize in contracting becauseit offered limited
Guidelines             possibilities for career advancement.The acquisition-related knowledge,
                       experience, and awarenessthat officers gained in project management
                       positions was often lost to the Coast Guard when they were reassigned.

                       The LMI study further noted several adverse consequencesof rapid turn-
                       over-an atmosphere of constant turmoil existed, previously closed
                       issueswere reopened, and institutional memory was lost. Moreover, new
                       personnel required significant time for training before they could func-
                       tion effectively. All these factors causedcostly delays. As a result, the
                       study recommendedthat the Coast Guard establish a career specialty in
                       project management for its officers. However, the Coast Guard declined

                       Page 7                  GAO/RCED-SO-178   Coast Guard Project   Manager   Qualificationa

              to implement this recommendation. It stated that, while officers with
              requisite experience would be targeted for contracting and program
              management assignments,the Coast Guard’s small size prohibited
              devoting a career specialty to these areas.

              We found that the length of tenure has changed little since 1986,
              although the Coast Guard’s tour length guidelines provide that all head-
              quarters assignments,for officers above the grade level of lieutenant
              (junior grade), be for 4 years. The guidelines do not differentiate
              between project manager and other headquarters assignments.How-
              ever, project managers’ tours are generally considerably less than 4

              To determine current tenure trends, we calculated the projected tour
               length for the four captains who are expected to transfer from project
              management to other assignmentsin fiscal year 1990. (For example, one
              will be the commanding officer of an air station, while another will be
              the liaison officer with a Navy training command.) Their tours as pro-
              ject managers will have run an averageof 36 months.7(Seeapp. II.)
              According to Coast Guard officials, the typical headquarters assignment
              for a captain is 24 months, and it is rare for a captain to stay 36 months
              in the sameheadquarters assignment.
              The relatively frequent turnover of project managers could be offset, to
              someextent, if other members of the project team remained longer and
              provided institutional memory. Specifically, the Coast Guard’s civilian
              employees,becausethey are not subject to rotation policies that govern
              the military, might help provide continuity. Currently, however, little
              opportunity exists for this becauseonly 8 percent of the project teams’
              professionals (3 of 36) are civilians. Thus, only one project team
              includes two civilians and most teams include no civilians. However, the
              Deputy Chief of the Office of Acquisition told us that the Coast Guard is
              working to establish civilian deputy project manager positions for two
              ongoing projects.

              Project managers who are qualified-having adequate acquisition and
Conclusions   management experience and/or training-are an important factor in

              7Two other project managers, a lieutenant commander and a commander, are also completing their
              tours in fiscal year 1990. Their tour lengths will be longer than the captains’. Therefore, when all six
              tours are averaged, the result is 40 months. However, because the Coast Guard has been selecting
              only captains as project managers, we believe the captains’ average tour length is a better indicator of

              Page 8                            GAO/RCED-f@178       Coast Guard Project    Manager   Qualiflcationa
ensuring that major systems are acquired on time, within budget, and in
accordancewith procurement regulations. In responseto the two 1986
studies, the Coast Guard has taken someactions to improve the level of
experience and training of its project managers.However, further steps
to formalize selection criteria and establish procedures for training
would help to ensure that the candidates it choosesin the future will be
fully qualified when they begin their tours as project managers.
Formal selection criteria would help ensure that all project managers
selectedhave pertinent education and have past acquisition experience
or attend DSMC'S 20-week acquisition managementcourse. Also, estab-
lishing training procedures would ensure that candidates needing the
acquisition course or other specialized training, such as data processing,
to satisfy the criteria are scheduledprior to their assignment as a pro-
ject manager. These two actions would institutionalize the requirements
so that they are part of the Coast Guard’s operating structure, even
after the officials currently in place have moved on. This is particularly
important becauseall Coast Guard military personnel, including man-
agers, are subject to periodic rotations.
Finally, the Coast Guard’s current reassignment practices do not fully
capitalize on the knowledge acquired by project managersthrough
acquisition experience and training. Although the Coast Guard’s current
guidelines provide a 4-year duration for headquarters assignments,cur-
rent project managers’ average expected tenure is 3 years. Thus, each
year the Coast Guard replaces about one-third of the project managers
and the knowledge and experience they have gained. The longer tenures
provided by the Coast Guard’s current guidelines would increase the
institutional memory and the overall experience level of the project
manager work force and allow the Coast Guard to capitalize on the
formal and on-the-job training invested in them.

Additionally, we believe that the Coast Guard’s current effort to try to
establish two civilian deputy project manager positions is a promising
development. Unlike military project managers,civilian deputies are not
subject to periodic rotations and will have the potential to develop con-
siderable knowledge and experience, both general and project-specific,
about major system acquisitions. If the deputy project managers fulfill
this potential, their institutional memory can complement and
strengthen the tenure of the military managers.

Page 9                  GAO/RCED-90-178   Coast Guard Project   Manager   Qualifications

                      We recommendthat the Secretary of Transportation direct the Comman-
Recommendations       dant of the Coast Guard to

                  l formalize the selection criteria regarding prior experience and education
                    to ensure that, along with managementskills necessaryto ensure effec-
                    tive performance, all future project managersselectedhave acquisition
                    experience or acquisition training and
                  . institute a formal requirement that, once selected,all project managers
                    have relevant training, consistent with their educational background
                    and acquisition experience, before their tours begin.

                      To addressthe issuesdiscussedin this report, we reviewed previous
                      studies on the Coast Guard’s acquisition process.We also interviewed
                      and obtained data from officials in the Coast Guard’s Offices of Acquisi-
                      tion, Chief of Staff, and Personnel and Training.
                      We discussedthe information contained in this report with Coast Guard
                      officials, who generally agreed with the facts presented. However, as
                      requested, we did not obtain agency comments on a draft of this report.
                      Our review was conducted between August 1989 and May 1990 in accor-
                      dance with generally acceptedgovernment auditing standards.
                      As arranged with your office, unless you publicly announceits contents
                      earlier, we plan no further distribution of this report until 30 days from
                      the date of this letter. At that time we will send copies to the Secretary
                      of Transportation, the Commandant of the Coast Guard, and other inter-
                      ested parties. We will also make copies available to others upon request.

                      This report was prepared under the direction of Kenneth M. Mead,
                      Director of Transportation Issues.He may be reached at (202) 276-1000.
                      Other major contributors to this report are listed in appendix III.
                      Sincerely yours,

                      J. Dexter Peich
                      Assistant Comptroller General

                      Page 10                 GAO/&cEIMM-178   Coast Guard Project   Manager   QuaJifhtio~
Page 11   GAO/RCED-90-178   Coast Guard Project   Manager   QuaWlcatio~

Appendix I
Experience and
Training Background
of the Coast Guard’s
Current Project
Appendix II                                                                                                     16
Length of Tenure of
the Coast Guard’s
Project Managers Who
Are Completing Their
Assignments in Fiscal
Year 1990
Appendix III                                                                                                    16
Major Contributors to
This Report


                        DSMC      DefenseSystems ManagementCollege
                        GAO       General Accounting Office
                        LMI       Logistics ManagementInstitute

                        Page 12              GAO/RCED-90-178   Coast Guard Project   Manager   Qualifications


        Page 13   GAO/RCED-90-178   Coast Guard Project   Manager   Qualifications
                                                                                                                                        I                1’
Appendix I                                                                                                                                  C’3

Acquisition Experience and Training                                                                                                               .*--
Background of the CoastGuard’s Current
Project Managers
                                                           DSMC’o 20-week program
                                                               management course
                    Year8 of previous                 selection a8      After selection               Graduate/                    lndU8trial
                    acquisition                       project           as project                    postgraduate                 College of the
 Prolect manasaep   experience                        manaaer            manager                      traintnab                    Armed Force8
 1                  0                                 No                Yes                           No                           No
2---                1                                 No                 No                           Yes                          No
 3                  3                                 No                 Yes                          Yes                          No
 4                  0                                 No                 Yes                          Yes                          No
5                   0                                 No                     No                       Yes                          No
6~-.l...“----       0                                 No                     Yes                      Yes                          No
 7                  0                                 No                     Yes                      No                           No
8                   8                                 No                     No                       Yes                          No
9                   0                                 No                     No                       No                           No
                                        aAs of April 30, 1990.
                                        bTraining in one of the following Coast Guard-desired      graduate/postgraduate   areas

                                        (1)   naval engineering
                                        (2)   electrical engineering/information    technology
                                        (3)   operations research
                                        (4)   aviation engineering/administration
                                        (5)   contracting/procurement
                                        (6)   logistics management
                                        (7)   project management
                                        (6)   general management

                                        Page 14                                   GAO/WED-SO-178    Coast Guard Project    Manager      Qualification
Appendix II

Length of Tenure of the CoastGuard’s Project
ManagersWho Are CompletingTheir
Assignmentsin Fiscal Year 1990
                                                                        Expected     length of tenure at completion
                Project manager                                           of tour   a8 project manager (in months)
                28                                                                                                       25
                5a                                                                                                       34
                6a                                                                                                       37
                7a                                                                                                       48

               Qa                                                                                                        52
               aThe project manager is transferring   to a new assignment during fiscal year 1990.

               bThe project manager is retiring from the Coast Guard during fiscal year 1990

               Page 16                            GAO/RCED-SO-178       Coast Guard Project    Manager   Qualitkation~
Appendix III
Major Contributors to This Report

                        John Hill, Associate Director
Resources,              David Marwick, Assistant Director
Community, and          Allen C. Lomax, Evaluator-in-Charge
Economic                M. Jane Hunt, Reports Analyst
Development Division,
Washington, DC.

(844449)                Page 16                GAO/RCED-SO-178   Coast Guard Project   Manager   Qualification
---   -

              i~c~quests for wpicw of (;A() reports   should be sent. to:

              17%. Genwal Awouut~ing      Office
              Post Office Hox 6015
              Gait.hersburg, Maryland    20877

              Orders must, be prepaid by cash or by check or       money    ordw   made
              out. to the Supt~rint,endent. of Docunwnts.