oversight

Department of Energy: Opportunity for Enhanced Oversight of Major System Acquisitions

Published by the Government Accountability Office on 1997-04-30.

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

     United States
A0
-    General Accounting  Office
     Washington, D.C. 20548

     Resources, Community,   and
     Economic Development    Division


     B-276766


     April 30, 1997


     The Honorable George E. Brown, Jr.
     Ranking Minority Member
     Committee on Science
     House of Representatives

     Subject:    Deuartment of Energv: Onnortunitv for Enhanced Oversight of Major
                 Svstem Acauisitions

     Dear Mr. Brown:

     On March 6, 1997, we testified before the Subcommittee on Energy and
     Environment, Committee on Science, on the Department of Energy’s (DOE)
     performance in completing its largest and most signiscant projects, referred to
     as major systems. The costs of these projects exceed $100 million.’ At that
     hearing, we reported that from 1980 through 1996,31 of DOE’s 80 major
     systems were terminated prior to completion, after expenditures of over $10
     billion; 15 of the projects were completed, but most of them were finished
     behind schedule and with cost overruns;2 and the remaining 34 ongoing projects
     were also experiencing schedule slippages and/or cost overruns.

     As requested, we are providing you with information on how the Federal
     Acquisition Streamlining Act of 1994, the Clinger-Cohen Act of 1996 (formerly
     the Federal Acquisition Reform Act of 1996 and the Information Technology
     Management Reform Act of 1996), and the Office of Management and Budget
     (OMB) circular A-11 can help address DOE’s problems in completing these
     projects within approved budgets and schedules. There are no quick, easy
     solutions to keeping DOE’s major system acquisitions on schedule and within
     budget. However, these initiatives could help. On March 24, 1997, we briefed
     your staff on information contained in this report.


     ‘Denartment of Energy: Imnroving Management of Maior Svstem Acauisitions
     (GAO/T-RCED-97-92, Mar. 6, 1997).
     2Cost overruns are increases in a project’s original cost estimate.
                                         GAO/RCED-9?-146R   Oversight of DOE’s Major Systems
B-276766

In summary, title V of the Federal Acquisition Streamlining Act of 1994 is
designed to foster the development of (1) measurable cost, schedule, and
performance goals and (2) incentives for acquisition personnel to reach these
goals. Subtitle B, which applies to civilian agencies, provides that agency heads
are to establish cost, schedule, and performance goals for acquisition programs
and annually report on the progress in meeting these goals. These goals are to
include achieving, on average, 90 percent of the established cost and schedule
goals without reducing the performance or capabilities of the items being
acquired. Subtitle B also requires that agency heads manage employees in
acquisition positions (including their education, training, and career
development) by relating their evaluations, pay, and promotions to their
performance in helping achieve cost, schedule, and performance goals.

Furthermore, the Clinger-Cohen Act of 1996 provides for the establishment of
policies and procedures for the management, education, and training of the
civilian acquisition workforce. The career development of this workforce is to
include the identiEcation of appropriate career paths, mandatory education and
training in the critical duties and tasks of these career paths, and an enhanced
system of performance incentives to encourage agencies to specify in their
budget justification documents the funding levels requested for educating and
training the acquisition workforce. Under the act, the funds appropriated for
this purpose may not be used for any other purpose.

Finally, OMB, on July 16, 1996, issued circular A-11, which includes new
guidance for agencies to use in the planning, budgeting, and acquisition of fixed
assets, such as land, buildings, and equipment. One purpose of this guidance is
to ensure that agencies’ acquisition plans support the agencies’ mission
statements, long-term goals and objectives, and annual performance plans
developed under the Government Performance and Results Act of 1993.

As we reported in November 1996,3we believe that these changes in
procurement law could help the Department recruit additional contracting staff
and improve the technicaI capabilities of its existing staff. Hence, these
changes could help to address a long-standing department&l problem.

The enclosure provides you with information on the legislation and OMB’s
guidance. We performed our analysis of the Federal Acquisition Streamlining
Act of 1994, the Clinger-Cohen Act of 1996, and the OMB circular during March
1997 in accordance with generally accepted government auditing standards.




3Demu-tment of Eners: O~~ortunitv to Imnrove Manaoement of Maior Svstem
Acauisitions (GAORCED-97-17, Nov. 26, 1996).

2                                  GAOIRCED-97-146R   Oversight   of DOE’s Major Systems
B-276766
We will make copies of this report available to others upon request. If you have
any questions or need additional information, please call me at (202) 512-3841.
Major contributors to this report include Jeffrey E. Heil and Robert M. Antonio.

Sincerely yours,




Enclosure




3                                 GAOIRCED-97-146R   Oversight of DOE’s Major Systems
ENCLOSURE I                                                      ENCLOSURE I




                 PRESENTATION SLIDES

WI     Legislation and OMB Circular

       Legislation and circular provide for

         l    the submission of information to the Congress
              on major systems

         l    improvements in the acquisition workforce that
              manages major systems




                                 GAOIRCED-97-146R Oversight of DOE’s Major Systems
ENCLOSURE I                                                    ENCLOSURE I




GAs3 Submission Under Federal Acquisition
     Streamlining Act of 1994
        Requires executive agencies to achieve, on
        average, 90 percent of cost and schedule goals
        without reducing performance or capability of
        major and nonmajor systems

        Requires the heads of executive agencies to act
        on systems that are significantly behind schedule,
        over budget, or not in compliance with
        performance or capability requirements

        Requires the Office of Federal Procurement Policy
        to submit an annual report to the Congress on
        progress made by agencies in implementing this
        policv




5                             GAO/RCED-97-146R Oversight of DOE’s Major Systems
ENCLOSURE I                                                      ENCLOSURE I




GM     Submission Under Clinger-Cohen Act
       of 1996
       Requires OMB to

         l    develop, as part of the budget process, a
              process for analyzing, tracking, and evaluating
              risks and the results of major capital
              investments in executive agencies’ information
              systems

         l    submit a report to the Congress, at the time of
              budget submission, on the net program
              performance benefits of these major capital
              investments and their relationship to agencies’
              goals




                                 GAO/RCED-97-146R Oversight of DOE’s Major Systems
ENCLOSURE I                                                         ENCLOSURE I




GQ      Submission Under Clinger-Cohen Act
        of 1996
       Requires the heads of executive agencies to,
       among other things,

         l    design and implement a process for maximizing
              the value and assessing and managing the risks
              of information technology acquisitions

         l    establish goals for improving their agency’s
              operations through the effective use of
              information technology

         l    prepare a report, to be included with the annual
              budget submission to the Congress, that shows
              the agency’s progress in achieving goals




                                 GAOIRCED-97-146R   Oversight of DOE’s Major Systems
ENCLOSURE I                                                       ENCLOSURE I




GAO Submission Under OMB Circular A-I 1,
    Part 3
       OMB’s purpose is to

         l    coordinate the collection of agency data for
              the OMB reports to the Congress required by
              title V of the Federal Acquisition Streamlining
              Act of 1994 and the Clinger-Cohen Act of
              1996

         l    ensure agencies’ acquisition plans support
              mission statements, long-term goals and
              objectives, and annual performance plans
              developed under the Government
              Performance and Results Act of 1993




                                  GAO/RCED-97-146R Oversight of DOE’s Major Systems
ENCLOSURE I                                                        ENCLOSURE I




w      Submission Under OMB Circular A-1 1,
       Part 3
       Under the circular, fixed assets include

         l    the construction, major rehabilitation, and
              purchase of fixed assets, such as land,
              buildings, or equipment, including information
              technology owned by the government

         l    DOE’s defense and nondefense assets




9                                 GAO/&ED-97-146R   Oversight of DOE’s Major Systems
ENCLOSURE I                                                       ENCLOSURE I




MO     Submission Under OMB Circular A-1 1,
       Part 3
       Agencies are required to

         l    request full funding for fixed assets

         l    just@ fixed assets in accordance with missions,
              long-term strategic goals and objectives, and
              annual performance plan

         l    submit baseline cost, schedule, and
              performance goals for fixed assets




10                                GAOLRCED-97-146R Oversight of DOE’s Major Systems
ENCLOSURE I                                                       ENCLOSURE I




G&-D Improved Management of Acquisition
     Workforce
       The Federal Acquisition Streamlining Act of 1994
       requires OMB, in consultation with other
       departments and agencies, to

         l    establish policies and procedures for agency
              heads to designate acquisition positions and
              manage employees in the designated
              acquisition positions

         l    provide an enhanced system of incentives for
              the encouragement of excellence




11                              GAOLRCED-97-146R Oversight of DOE’s Major Systems
ENCLOSURE I                                                        ENCLOSURE I




QQ         Improved Management of Acquisition
           Workforce
           The Clinger-Cohen    Act of 1996 requires

            l   agency heads, after consultation with the Office
                of Federal Procurement Policy, to establish
                policies and procedures for managing their
                acquisition workforce

            l   the Office of Federal Procurement Policy to
                issue policies to promote uniform
                implementation of these requirements




(141037)




12                                 GAO/RCED-97-146R Oversight of DOE’s Major Systems
                                                      .




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