This is the accessible text file for GAO report number GAO-05-218G 
entitled 'Framework for Assessing the Acquisition Function at Federal 
Agencies' which was released on September 29, 2005. 

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U.S. Government Accountability Office: 

Framework for Assessing the Acquisition Function at Federal Agencies: 

September 2005: 

GAO-05-218G: 

Download this publication from GAO's Web site, www.gao.gov/cgi-
bin/getrpt?GAO-05-218G: 

PREFACE: 

Federal agencies are relying increasingly on contractors to perform 
their missions. With hundreds of billions of tax dollars spent each 
year on goods and services, it is essential that federal acquisition be 
handled in an efficient, effective, and accountable manner. The 
Government Accountability Office (GAO), however-as well as other 
accountability organizations, inspectors general, and the agencies 
themselves-continue to identify systemic weaknesses in key areas of 
acquisition. In fact, the acquisition function at several agencies has 
been on GAO's high-risk list, which identifies areas in the federal 
government with greater vulnerability to fraud, waste, abuse, and 
mismanagement. In January 2005, we added interagency contracting to 
this list. 

Far too often, the result of poor acquisitions has been an inability to 
obtain quality goods and services on time and at a fair price. We can 
no longer afford such outcomes. Given current fiscal demands and the 
fiscal challenges we are likely to face in the 21st century, the 
federal government must improve its ability to acquire goods and 
services in a cost-effective manner. 

GAO developed this framework to enable high-level, qualitative 
assessments of the strengths and weaknesses of the acquisition function 
at federal agencies. Such assessments can: 

* help senior agency executives identify areas needing greater 
management attention, and: 

* enable accountability organizations (including GAO) to identify areas 
requiring more focused follow-up work. 

The framework consists of four interrelated cornerstones that our work 
has shown are essential to an efficient, effective, and accountable 
acquisition process: (1) organizational alignment and leadership, (2) 
policies and processes, (3) human capital, and (4) knowledge and 
information management. The framework supports an integrated evaluation 
approach, but each of these cornerstones can stand alone so users of 
this framework may tailor evaluations to an agency's specific needs. 
The table on page iii provides an overview of the framework. Using the 
table, readers can see at a glance how the framework is structured and 
can quickly identify specific areas that may be of interest. 

In developing the framework, GAO consulted with federal government and 
industry experts in the areas of human capital, information management, 
financial management, and acquisition practices. Additionally, we drew 
upon decades of experience within GAO in reviewing each of these areas. 

We welcome any feedback you might have to enhance the usefulness of 
this framework. Please send comments by e-mail to 
frameworkcomments@gao.gov. I can also be reached at (202) 512-4841. 

The framework was prepared under the direction of Bill Woods. Key 
contributors to this product were Lily Chin, Christina Cromley, Timothy 
DiNapoli, and Shannon Simpson. 

Signed by: 

Katherine V. Schinasi: 
Managing Director: 
Acquisition and Sourcing Management: 

FRAMEWORK FOR ASSESSING THE ACQUISITION FUNCTION: 

[See PDF for image] 

[End of table] 

TABLE OF CONTENTS: 

Preface: 

Framework for Assessing the Acquisition Function: 

Executive Summary: 

Cornerstone 1: Organizational Alignment and Leadership: 

Cornerstone 2: Policies and Processes: 

Cornerstone 3: Human Capital: 

Cornerstone 4: Knowledge and Information Management: 

Appendix I: Scope and Methodology: 

Appendix II: Additional Sources of Information: 

This is a work of the U.S. government and is not subject to copyright 
protection in the United States. It maybe reproduced and distributed in 
its entirety without further permission from GAO. However, because this 
work may contain copyrighted images or other material, permission from 
the copyright holder may be necessary if you wish to reproduce this 
material separately. 

EXECUTIVE SUMMARY: 

What this framework is: 

* General guidance to evaluate an agency's acquisition function and to 
identify areas that need improvement; 

* Consistent with and integrates existing guidance and standards. 

What this framework is not: 

* A tool to evaluate specific acquisition actions, contracts, 
compliance with contracting laws and regulations, or a source of 
detailed assessment questions; 

* A substitute or replacement for existing standards. 

Federal agencies have responsibility for a vast array of missions- 
assuring national defense, building and maintaining the nation's 
infrastructure, assessing and collecting tax revenue, advancing 
scientific knowledge, and promoting the health and well-being of the 
nation's citizens, among many others. To achieve these various 
missions, federal agencies use a variety of approaches and tools, 
including contracts to acquire goods and services needed to fulfill or 
support the agencies' missions. Federal agencies award contracts worth 
over $300 billion annually. Acquiring these goods and services in an 
efficient, effective, and accountable manner is therefore essential. 
However, our work-as well as the work conducted by the inspectors 
general, other accountability organizations, and the agencies 
themselves-continues to identify systemic weaknesses in key areas, 
which often result in cost, schedule, and performance problems on 
individual procurements. 

GAO has developed this framework to provide senior acquisition 
executives, as well as GAO and other accountability organizations, an 
ability to assess at a high level the strengths and weaknesses of 
agencies' acquisition functions. This framework comprises four 
interrelated cornerstones that our work has shown promote an efficient, 
effective, and accountable acquisition function: (1) organizational 
alignment and leadership, (2) policies and processes, (3) human 
capital, and (4) knowledge and information management. These four 
cornerstones are summarized below. 

CORNERSTONE 1: ORGANIZATIONAL ALIGNMENT AND LEADERSHIP: 

Organizational alignment is the appropriate placement of the 
acquisition function in the agency, with stakeholders having clearly 
defined roles and responsibilities. There is no single, optimal way to 
organize an agency's acquisition function. Each agency must assess 
whether the current placement of its acquisition function is meeting 
its organizational needs. Committed leadership enables officials to 
make strategic decisions that achieve agencywide acquisition outcomes 
more effectively and efficiently. 

CORNERSTONE 2: POLICIES AND PROCESSES: 

Implementing strategic decisions to achieve desired agencywide outcomes 
requires clear and transparent policies and processes that are 
implemented consistently. Policies establish expectations about the 
management of the acquisition function. Processes are the means by 
which management functions will be performed and implemented in support 
of agency missions. Effective policies and processes govern the 
planning, award, administration, and oversight of acquisition efforts, 
with a focus on assuring that these efforts achieve intended results. 

CORNERSTONE 3: HUMAN CAPITAL: 

The value of an organization and its ability to satisfy customers 
depends heavily on its people. Successfully acquiring goods and 
services and executing and monitoring contracts to help the agency meet 
its missions requires valuing and investing in the acquisition 
workforce. Agencies must think strategically about attracting, 
developing, and retaining talent, and creating a results-oriented 
culture within the acquisition workforce. 

CORNERSTONE 4: KNOWLEDGE AND INFORMATION MANAGEMENT: 

Effective knowledge and information management provides credible, 
reliable, and timely data to make acquisition decisions. Each 
stakeholder in the acquisition process-program and acquisition 
personnel who decide which goods and services to buy; project managers 
who receive the goods and services from contractors; commodity managers 
who maintain supplier relationships; contract administrators who 
oversee compliance with the contracts; and the finance department, 
which pays for the goods and services-need meaningful data to perform 
their respective roles and responsibilities. 

The framework is built on a foundation of strong internal control. 
Agency management is responsible for establishing and maintaining 
effective internal control, which includes the plans, methods, and 
procedures used to meet missions, goals, and objectives. Internal 
control serves as the first line of defense in safeguarding assets and 
preventing and detecting errors and fraud. The five standards of 
internal control-control environment, risk assessment, control 
activities, information, and communications-support the framework's 
four interrelated cornerstones. 

Using the Framework: 

The main sections in this guide focus on the four interrelated 
cornerstones. To assist the user in applying the framework, each 
cornerstone is broken down into elements and critical success factors. 
Each element is integral to effective stewardship at an organization 
and depends on critical success factors. The presence of critical 
success factors-which focus on program results and mission 
accomplishment-can enhance the likelihood of consistently achieving 
desired acquisition outcomes. Conversely, the absence of these critical 
success factors can point to areas embodying high degrees of risk or 
those needing greater management attention. 

To help users discover whether their organizations are employing 
critical success factors, we offer three indicators: questions to ask, 
situations to look for, and caution signs to be aware of. These 
indicators can be found by looking for the following symbols throughout 
this framework-- 

KEY QUESTIONS: 

What to ask when trying to identify the presence or absence of critical 
success factors. 

LOOK FOR: 

Indicators of practices and activities that facilitate good acquisition 
outcomes. 

CAUTIONS: 

Indicators of practices and activities that hinder good acquisition 
outcomes. 

[End of section] 

Cornerstone 1: 

Organizational Alignment & Leadership: 

In This Chapter: 

We focus on two elements and five critical success factors that can be 
used to assess the placement of an agency's acquisition function and 
the effectiveness of its leadership. 

ELEMENTS: Aligning Acquisition with Agency's Missions and Needs; 
CRITICAL SUCCESS FACTORS: 
* Assuring Appropriate Placement of the Acquisition Function; 
* Organizing the Acquisition Function to Operate Strategically; 
* Clearly Defining and Integrating Roles and Responsibilities. 

ELEMENTS: Commitment from Leadership; 
CRITICAL SUCCESS FACTORS: 
* Clear, Strong, and Ethical Executive Leadership; 
* Effective Communications and Continuous Improvement. 

[End of table] 

ELEMENT: Aligning Acquisition with Agency's Missions and Needs: 

ORGANIZATIONAL ALIGNMENT AND LEADERSHIP: 

Organizational alignment is the appropriate placement of the 
acquisition function in the organization, with stakeholders having 
clearly defined roles and responsibilities. For example, Congress 
requires certain civilian executive agencies to designate a chief 
acquisition officer to take primary responsibility for managing agency 
acquisitions. In establishing chief acquisition officers, Congress 
recognized that the person in charge of the agency's acquisition 
function must have a respected and well-defined role that is consistent 
with the role of acquisition in meeting the agency's missions. 
Executive leadership is key to obtaining and maintaining organizational 
support for executing the acquisition function. Executive leadership 
determines the relationship between the various functional departments 
and is key to strengthening the interaction between the agency's 
management and employees. 

Although there is no single, optimal way to organize an agency's 
acquisition function, officials from leading companies tell us that 
effective organizational alignment enables them to implement a 
coordinated and strategically oriented approach to acquisition 
activities. Similarly, to move toward a more results-oriented 
government, agencies must ask themselves how they can use acquisitions 
strategically to help them achieve their goals. 

ELEMENT: Aligning Acquisition with Agency's Missions and Needs: 

The end goal of organizational alignment is to ensure that the 
acquisition function enables the agency to meet its overall missions 
and needs. The acquisition function needs proper management support and 
visibility within the organization to meet that goal. 

CRITICAL SUCCESS FACTOR: Assuring Appropriate Placement of the 
Acquisition Function: 

In response to market and other pressures, leading companies have 
assessed the current placement of their acquisition function to 
determine if it is meeting organizational needs, including acquiring 
needed goods and services, supporting strategic decision making, and 
ultimately improving overall business performance. In many cases, these 
organizations cut across traditional boundaries that contributed to a 
fragmented approach to buying goods and services by restructuring their 
acquisition function and typically assigning it growing responsibility 
and authority. Similarly, each agency must assess the current placement 
of its acquisition function to determine if it is meeting the agency's 
needs. 

KEY QUESTIONS: 

* What percentage of the discretionary budget does the agency spend on 
the acquisition of goods and services?

* Where is the acquisition function currently placed in the agency? 
What are the roles and responsibilities of the acquisition function and 
acquisition personnel in the agency?

* Do agency leaders, management, and staff view the acquisition 
function as a strategic asset in achieving their missions or supporting 
the agency's operations at lowest possible cost?

* To what extent is the agency's acquisition spending managed or 
influenced by the agency's acquisition office?

LOOK FOR: 

* The acquisition function has been assigned the appropriate degree of 
responsibility and authority for strategic planning, management, and 
oversight of the agency's purchases of goods and services, and this 
responsibility is consistent with the significance of acquisition to 
the agency's missions. 

* Agency leaders view the acquisition function as a strategic asset in 
support of core agency missions and business processes. 

* Agency managers and staff view the acquisition function as a business 
partner rather than a support function. 

* Acquisition of goods and services is viewed from an agencywide 
perspective. 

CAUTIONS: 

* Disconnects exist between where the acquisition function is placed in 
the agency's hierarchy and its role in achieving the agency's missions 
or supporting its operations. 

* Lack of coordination across the acquisition function results in 
redundancy, inconsistency, and an inability to leverage resources to 
meet common or shared requirements. 

* Staff views the acquisition function merely as an administrative 
support function rather than as a business partner. 

CRITICAL SUCCESS FACTOR: Organizing the Acquisition Function to Operate 
Strategically: 

How an agency organizes and manages its acquisition function affects 
its ability to operate strategically. Traditionally, the acquisition 
function has been fragmented among business units, as each was 
responsible for its own acquisition activities. We found that leading 
organizations transformed the acquisition function from one focused on 
supporting various business units to one that is strategically 
important to the bottom line of the whole company. 

ELEMENT: Aligning Acquisition with Agency's Missions and Needs: 

KEY QUESTIONS: 

* Has the agency assessed the current structure of the acquisition 
function and related controls? If so, what were the results of the 
study?

* Has the agency experienced significant changes in its missions, 
budget, workforce, technology, or other internal or external factors? 
What changes, if any, did the agency make in response to such factors?

* Does the agency have mechanisms to anticipate, identify, and react to 
risks presented by changes in conditions that can affect agencywide or 
acquisition-related goals?

* Does the agency have metrics related to acquisition efficiency, 
effectiveness, and results that are included as part of overall 
performance plan and communicated regularly to senior leaders and 
management? Are these metrics linked to agency missions and goals?

* Does the agency use its strategic and annual performance plan to 
document the contribution that agency officials expect the acquisition 
function will make to the agency's missions, strategic goals, and 
annual goals?

LOOK FOR: 

* The acquisition function's mission is well-defined, and its vision 
for the future, core values, goals, and strategies are consistent with 
and support the agency's overall missions. 

* The current structure of the acquisition function has been assessed 
in response to changes, such as in the missions, operating environment, 
budget, workforce, or technology. 

* Outcome-oriented performance measures are used to assess the success 
of the acquisition function. These measures should be designed to gauge 
the contribution that the acquisition function makes to support the 
agency's missions and goals. 

CAUTIONS: 

* The agency lacks a clear definition of the acquisition function's 
mission, vision, core values, goals, or strategies. 

* The agency has not assessed the role of the acquisition function in 
response to significant changes. 

* The agency lacks a mechanism for addressing risks that arise in 
response to changing conditions. 

* Performance measures are not used to evaluate the usefulness of the 
acquisition function to support the agency's missions. 

CRITICAL SUCCESS FACTOR: Clearly Defining and Integrating Roles and 
Responsibilities: 

An acquisition function that is successful at effectively and 
efficiently meeting the agency's missions generally reflects a 
consistent, cross-functional, and multidisciplinary approach. This 
approach requires engagement by all relevant stakeholders, including 
representatives from program offices, contracting officials, financial 
managers, human capital officials, information technology officials, 
and other appropriate participants. An integrated approach helps 
agencies better define their needs and identify, select, and manage 
providers of goods and services. 

KEY QUESTIONS: 

* What are the roles and responsibilities of stakeholders in the 
agency's acquisition process?

* Does the agency empower stakeholders to coordinate, integrate, and 
ensure consistency among acquisition actions?

* How are stakeholders held accountable for their actions?

LOOK FOR: 

* Each stakeholder in the acquisition process has clearly defined roles 
and responsibilities. 

* There is a shared understanding of each participant's role in 
acquisition activities. 

* Key stakeholders are empowered to coordinate, integrate, and 
implement decisions about acquisitions. 

* Acquisition managers support the agency's strategic-planning and 
decision-making needs at field and headquarters levels. 

CAUTIONS: 

* The acquisition function's role is unclear. 

* Acquisition and other agency offices do not clearly communicate and 
cooperate. 

* There is little integration of acquisition planning among the 
different agency entities with a role in acquisitions. 

* Conflicts among stakeholders are left unresolved, thereby resulting 
in inefficient operations. 

* The agency's acquisition office is frequently bypassed. 

ELEMENT: Commitment from Leadership: 

Organizations recognized for their best practices cite leadership as 
the most critical factor in providing direction and vision and, if 
necessary, changing the organization's culture. Leaders have the 
responsibility to set the corporate agenda, define and communicate the 
organization's values and culture, and remove barriers that block 
organizational changes. Research has found that lack of senior 
leadership commitment is the cause of most reengineering failures. 

Congress recognized the critical role leaders play in providing 
direction and vision by requiring certain civilian agencies to 
designate a chief acquisition officer to take primary responsibility 
for managing acquisitions. The officer's responsibilities include 
evaluating the performance of acquisition programs, advising the agency 
head on business strategies, and directing acquisition policy for the 
agency, among others. 

CRITICAL SUCCESS FACTOR: Clear, Strong, and Ethical Executive 
Leadership: 

Powerful, visionary leaders can set the direction, culture, and 
perceptions of the agency. Clear, strong, and ethical executive 
leadership can enable staff across the agency to work in an integrated 
fashion toward common goals. 

KEY QUESTIONS: 

* Does the agency have a chief acquisition officer? Is the officer's 
primary responsibility managing acquisitions?

* Has senior leadership articulated a strategic, integrated, and 
agencywide vision for the acquisition function?

* Is senior leadership actively involved in pursuing changes, if 
appropriate, to how the agency acquires goods and services?

* Are managers at all levels held accountable for their contributions 
to the acquisition process?

* Does agency leadership promote integration and coordination among the 
agency's budgetary processes and human capital, acquisition, and 
financial management functions?

* Does agency leadership and management have a positive and supportive 
attitude toward internal control?

* Has agency management recently reviewed its key acquisition-related 
internal controls? If so, what were the results? Are all aspects of the 
acquisition program covered in the internal control review?

* Does agency management take a proactive stance to correct any 
deficiencies identified in its acquisition-related internal controls?

* Has the agency established policies, such as a code of conduct, 
communicating appropriate ethical standards? How does the agency ensure 
that it interacts with the contractor community in a fair, equitable, 
and ethical fashion?

LOOK FOR: 

* The agency has a chief acquisition officer dedicated to managing 
acquisitions in the agency. 

* Senior leadership provides direction and vision, facilitates the 
development of common processes and approaches, and is involved in 
identifying and assessing risks associated with meeting acquisition 
objectives. 

* Senior leadership promotes a strategic, integrated, and agencywide 
approach to acquisition, as appropriate. 

* Improvement initiatives involve stakeholders from across the agency. 

* Senior leadership and management set a positive and supportive 
attitude toward internal control. 

* Senior leadership and management support monitoring to assess the 
quality of internal control performance and to ensure that issues are 
promptly resolved. 

* Senior leadership and management have assessed risks the agency faces 
from external and internal sources in relation to acquisition 
objectives. 

* Actions taken to address risks are effectively implemented. 

CAUTIONS: 

* There is no chief acquisition officer, or the officer has other 
significant responsibilities and may not have management of acquisition 
as his or her primary responsibility. 

* Senior leadership has not defined a common direction or vision for 
the acquisition function. 

* Senior leadership does not continually support efforts to develop 
common processes and approaches. 

* Senior leadership does not adequately set and maintain the agency's 
ethical tone, provides little guidance for proper behavior, and fails 
to remove temptations for unethical behavior or provide discipline when 
appropriate. 

* Senior leadership has not comprehensively identified risks and 
considered all significant interactions between the agency and other 
parties. 

* Agency management does not have adequate resources and support to 
implement common process and approaches. 

* Agency personnel do not understand the importance of developing and 
implementing good internal controls. 

CRITICAL SUCCESS FACTOR: Effective Communications and Continuous 
Improvement: 

Agency leadership needs to effectively communicate to employees the 
agency's missions, values, and guiding principles. Leaders use 
meaningful metrics to measure the effectiveness of the acquisition 
function and to provide the foundation for continuous improvement. 
Leading organizations use performance measurements to gain insight into 
and make judgments about (1) an organization's current performance 
level, (2) the critical processes that require focused management 
attention, (3) realistic goals for improvement, and (4) results over 
time. 

KEY QUESTIONS: 

* How does agency leadership communicate the agency's missions, values, 
and guiding principles, as well as its vision and expectations for the 
acquisition function, to agency personnel?

* Have agency personnel been asked for their views on the effectiveness 
of this communication?

* Does agency leadership facilitate and support clear lines of 
communication among all parties?

* Have stakeholders been asked for their views on the effectiveness of 
the existing acquisition process and areas needing improvement?

* What metrics does the agency use to demonstrate the impact and value 
of the acquisition function in supporting the agency's missions?

* What process does the agency use to develop these metrics?

* Are control activities an integral part of the agency's planning, 
implementation, review, and accountability activities to ensure results 
and stewardship of government resources?

* Does the agency or an independent organization continuously monitor 
control activities for their effectiveness at ensuring acquisition 
objectives are met?

LOOK FOR: 

* Agency leadership listens to its program units and other affected 
parties' needs and concerns and remains open to revising acquisition 
processes as appropriate. 

* Revisions to processes reflect appropriate incorporation of affected 
parties' needs and concerns. 

* Metrics used by agency leadership are targeted at demonstrating the 
impact and value of the acquisition function and provide useful 
feedback to identify areas for improvement. 

CAUTIONS: 

* There is inadequate communication from agency leadership regarding 
the effectiveness of the acquisition function and how it supports 
agency missions. 

* There is no mechanism in place for stakeholders to provide 
suggestions for improvement to the acquisition process. 

* Little change is made to acquisition processes based on the needs and 
concerns expressed by affected parties. 

* Internal control monitoring does not occur in the course of normal 
operations, is not performed continually, and is not ingrained in the 
agency's operations. 

* The agency has inadequate policies, procedures, techniques, and 
mechanisms in place to ensure effective implementation of management 
directives. 

* The agency has not implemented a program to continuously measure and 
assess the acquisition function's performance in supporting the 
agency's missions or achieving acquisition goals. 

* Performance measures are in place but are not consistently utilized 
or communicated. 

QUICK RECAP: How Organizational Alignment and Leadership Can Enhance 
the Acquisition Function: 

* Where the acquisition function falls in the agency's hierarchy and 
how the function is perceived are in balance with the overall agency 
missions. 

* Agency leadership views the acquisition function as a strategic 
asset. 

* Staff views the acquisition function as a business partner rather 
than merely a support function. 

* An integrated approach to acquisition-involving stakeholders from 
program, contracting, finance, and human capital offices-helps agencies 
better define their needs and identify, select, and manage providers of 
goods and services. 

* Agency leadership enables an integrated and agencywide approach to 
acquisition. 

* Effective communications and use of measurements allow leaders to 
actively assess and continuously improve performance. 

* Agency leadership establishes and maintains an environment that 
fosters a positive and supportive attitude toward internal control and 
conscientious management. 

Learn more about organizational alignment and leadership by reading the 
reports found in appendix II.

[End of section] 

Cornerstone 2: Policies & Processes: 

In This Chapter: We discuss three elements and eight critical success 
factors that can be used to assess how well an agency is implementing 
the acquisition function. 

ELEMENTS: Planning Strategically; 
CRITICAL SUCCESS FACTORS: 
* Partnering with Internal Organizations; 
* Assessing Internal Requirements and the Impact of External Events. 

ELEMENTS: Effectively Managing the Acquisition Process; 
CRITICAL SUCCESS FACTORS: 
* Empowering Cross-Functional Teams; 
* Managing and Engaging Suppliers; 
* Monitoring and Providing Oversight to Achieve Desired Outcomes; 
* Enabling Financial Accountability. 

ELEMENTS: Promoting Successful Outcomes of Major Projects; 
CRITICAL SUCCESS FACTORS: 
* Using Sound Capital Investment Strategies; 
* Employing Knowledge-Based Acquisition Approaches. 

[End of table] 

ELEMENT: Planning Strategically: 

POLICIES AND PROCESSES: 

Policies and processes embody the basic principles that govern the way 
an agency performs the acquisition function. Ideally, policies and 
processes clearly define the roles and responsibilities of agency 
staff, empower people across the agency to work together effectively to 
procure desired goods and services, and establish expectations for 
stakeholders to strategically plan acquisitions and proactively manage 
the acquisition process. To be effective, policies and processes must 
be accompanied by controls and incentives to ensure they are translated 
into practice. Major acquisitions require special attention to promote 
successful outcomes. Policies and processes that fail to address these 
objectives contribute to missed opportunities to achieve savings, 
reduce administrative burdens, and improve acquisition outcomes. 

ELEMENT: Planning Strategically: 

Planning strategically requires attention to the larger context within 
which acquisitions occur. First, it requires identifying and managing 
relationships among the parties involved in the acquisition process. 
Second, sufficient attention should be given to analyzing aggregate 
agency needs and devising strategic acquisition plans to meet those 
needs. Acquisition planning should also take into consideration the 
effects of the appropriations process and other external factors on the 
timing and execution of major contracts. 

CRITICAL SUCCESS FACTOR: Partnering with Internal Organizations: 

Leading organizations have found that an acquisition function that 
successfully supports their missions generally employs a 
multidisciplinary approach. This approach requires engagement by all 
stakeholders, including contracting, finance, legal, and other 
appropriate participants to identify needs, assess alternatives, 
develop cost-effective acquisition approaches, and help ensure 
financial accountability. 

KEY QUESTIONS: 

* Do end-users of the goods and services acquired work with the 
acquisition office to discuss requirements for meeting end-users' 
needs? 

* Do stakeholders work together to develop a joint strategy for 
acquisitions? 

* How receptive are stakeholders to evaluating different acquisition 
approaches and solutions and making trade-off decisions?

* How does the agency promote coordination among the stakeholders as an 
acquisition action moves through the various steps in the process?

* Do stakeholders work together to understand each other's needs?

LOOK FOR: 

* The agency has empowered stakeholders and holds them accountable for 
coordinating, integrating, and implementing effective acquisition 
decisions. 

* Acquisition planning and strategy development support the agency's 
missions rather than focus on the needs of individual units. 

* Stakeholders work on an ongoing basis to define key business and 
acquisition drivers and to understand each other's needs. 

* Lessons learned are identified and shared among stakeholders. 

* The agency has structures in place that require appropriate 
coordination among stakeholders developing and implementing acquisition 
strategies. 

CAUTIONS: 

* There are only limited mechanisms for coordinating acquisitions in 
the agency. 

* Stakeholders do not clearly communicate their needs or work together 
to identify solutions. 

* Lack of integration across the acquisition function results in 
redundancy, inconsistency, and an inability to leverage resources to 
meet shared requirements. 

* Acquisition and financial management executives do not partner to 
develop a shared vision. 

CRITICAL SUCCESS FACTOR: Assessing Internal Requirements and the Impact 
of External Events: 

Successful acquisition strategies require sufficient attention to 
analyzing agencywide needs. Acquisition planning should include market 
research to identify appropriate products and services, determination 
of the extent of competition in the market, assessment of core 
competencies and opportunities to compete commercial-type activities, 
and identification of contract approaches that best meet end-users' 
needs. Additionally, past acquisitions should be reviewed to identify 
trends and opportunities for consolidating similar acquisitions planned 
in the coming year to leverage buying power and reduce administrative 
burdens. 

Acquisition planning should take into consideration the effects of the 
appropriations process on the timing and execution of major contracts. 
Additionally, agencies must be cognizant of congressional mandates, 
administration initiatives, socioeconomic policy objectives, 
governmentwide fiscal imbalances, and other factors external to 
agencies. Additionally, acquisition processes should be sufficiently 
flexible to address unforeseen external events and emergencies. 

KEY QUESTIONS: 

* Does the agency strategically assess its needs and develop 
acquisition approaches to help it meet those needs?

* Does the agency leverage purchasing volume by identifying agencywide 
acquisitions of goods and services?

* Does the agency systematically identify and analyze agencywide 
acquisitions planned in the next 12 to 24 months?

* Are needs identified in the budget request submission consistent with 
planned acquisition strategies?

* Does the agency track the types of acquisition methods used for 
acquiring goods and services to ensure it is employing the most 
appropriate contract type?

* Does the agency have a mechanism to review planned acquisitions and 
identify opportunities for suppliers from the small or disadvantaged 
business community? Has the agency achieved its goals in each of the 
socioeconomic acquisition categories?

* Has the agency determined the type or extent of work that is and 
should be performed in-house and which could be contracted out?

* Has the agency assessed its core competencies and identified 
opportunities to compete commercial-type activities?

* Do agency officials track new or pending legislation that might 
affect acquisition policies and processes, training, and workload?

* Have agency officials assessed whether their acquisition processes 
are capable of responding to unforeseen external events and emergencies?

* Do agency officials carefully consider how to meet competing demands 
on the acquisition system?

LOOK FOR: 

* Strategic acquisition plans are current and reflect anticipated 
budgetary resources. 

* The agency considers recurring purchases and develops acquisition 
plans that best leverage these acquisitions. 

* The agency appropriately selects among contracting tools available, 
including commercial item acquisition, performance-based contracting, 
and government purchase cards to best meet end-user needs in a cost- 
effective manner. 

* Adequate and relevant data are available and used to make strategic 
decisions about what work the agency should perform in- house and to 
identify opportunities to compete work with the private sector. 

* The agency identifies opportunities for small and disadvantaged 
businesses and consistently achieves socioeconomic goals. 

* There is an awareness of current and pending legislation and its 
potential implications on the agency's acquisition policies, processes, 
and practices. 

* The agency has assessed and incorporated changes, as appropriate, to 
enable its acquisition processes to better respond to unforeseen 
external events and emergencies. 

* There is an awareness of the agency's long-term budgetary outlook. 

CAUTIONS: 

The agency lacks a strategic acquisition plan. 

* Acquisition planning is completed on a contract-by-contract basis 
rather than with consideration of agencywide needs. 

* The agency lacks data on the types of contracts used on procurement 
actions. 

* Frequent emergency or sole-source purchases are made to meet routine 
or recurring agency needs. 

* The agency fails to achieve socioeconomic goals. 

* Little knowledge exists of what work is contracted out and what work 
is performed in-house. 

* The agency has not assessed its core competencies or identified 
opportunities to compete commercial-type activities. 

* The agency makes frequent changes to acquisition plans due to 
unforeseen expenses or budgetary shortfalls. 

* The agency is ill-equipped to purchase goods and services needed to 
respond to emergency situations. 

ELEMENT: Effectively Managing the Acquisition Process: 

The role of the acquisition function does not end with the award of 
contracts. Acquisitions that help the agency meet its needs require 
continued involvement throughout contract implementation and close- 
out. In other words, agency processes need to ensure that contracted 
goods and services will be delivered according to the schedule, cost, 
quality, and quantity specified in the contract. Factors that can help 
an agency effectively manage its acquisition process include empowering 
cross-functional teams, managing and engaging external suppliers, 
providing effective monitoring and oversight, and implementing sound 
financial accountability measures. 

CRITICAL SUCCESS FACTOR: Empowering Cross-Functional Teams: 

Leading organizations make extensive use of cross-functional teams to 
make sure they have the right mix of knowledge, technical expertise, 
and credibility. This approach helps organizations better define their 
needs and identify, select, and manage providers of goods and services, 
which in turn helps ensure that users' needs are met at the lowest 
total costs to the organization. Teams may vary in size but generally 
include representatives from the organization's purchasing unit, 
internal users of goods and services, and the budget or finance office. 
Teams are responsible for analyzing spending data, identifying and 
prioritizing potential opportunities for more detailed review, defining 
internal needs and requirements, and conducting market research. 

KEY QUESTIONS: 

* To what extent does the agency use cross-functional teams in 
performing acquisition activities? Are staff from field offices 
involved at any level? How? 

* Do team members feel empowered to make decisions and are they 
invested in the project's outcome?

* Do the teams use a project plan to manage and control project 
implementation? 

* Does the project plan include performance measurement baselines for 
schedule and cost, major milestones, and target dates and risks 
associated with the project?

* Do individuals outside the project team regularly review the status 
of cost, schedule, and performance goals?

* Are incentives in place to encourage teams to meet project goals?

* How are teams held accountable for meeting cost, schedule, and 
performance goals?

* Is there good communication among all stakeholders?

LOOK FOR: 

* The agency uses cross-functional teams to plan for and manage 
projects. These teams develop a project plan to implement projects 
effectively. 

* The agency systematically monitors project performance and 
establishes controls and incentives for accountability. 

* Open, honest, and clear communication is encouraged among all 
parties, including team members, program officials, and contractors. 

CAUTIONS: 

* The agency makes limited use of cross-functional teams. 

* Project team members do not feel empowered to make decisions or 
invested in the project outcome. 

* Teams fail to use key elements of good project management techniques, 
including monitoring project performance and establishing controls and 
incentives to meet project goals. 

CRITICAL SUCCESS FACTOR: Managing and Engaging Suppliers: 

Leading organizations have found that more cooperative business 
relationships with suppliers have improved their ability to respond to 
changing business conditions. Such relationships have led to lower 
costs, higher quality, and shorter product design and delivery times. 
Among the strategies employed by leading organizations are to establish 
commodity managers to oversee key goods and services and to establish 
an effective feedback system between the agency and its suppliers. 

Agencies can develop effective supplier relationships within the 
context of the Federal Acquisition Regulation by: 

* establishing effective supplier relationship management as a core 
business strategy,

* employing rigorous supplier selection to create a strong supplier 
base,

* establishing commodity managers to more effectively manage key goods 
and services, and: 

* establishing and maintaining an effective communication and feedback 
system with suppliers. 

KEY QUESTIONS: 

* Does the agency have a process to identify key suppliers?

* Does the agency use a rigorous supplier selection process to create a 
strong supplier base?

* Has the agency established commodity managers for key goods and 
services?

* What is the role of the commodity manager?

* Has the agency embraced effective supplier relationships as a core 
business strategy?

* Does the agency train its acquisition workforce on how to manage 
supplier relationships?

* Has the agency established an effective communication and feedback 
system with its suppliers to continually assess and improve its own and 
its suppliers' performance?

* Does the agency foster an environment in which suppliers invest their 
intellectual capital-their ideas-into the venture?

LOOK FOR: 

* The agency uses stringent supplier selection criteria while 
maintaining an appropriate level of competition among suppliers. 

The agency has established commodity managers for key goods and 
services. 

* Commodity managers are actively involved in defining requirements 
with internal clients, negotiating with potential providers of goods 
and services, and assisting in resolving performance or other issues 
after the contract is awarded. 

* The agency has established an effective communication and feedback 
system with its suppliers, such as: 
- designating an authoritative person as a single interface with key 
suppliers;
- using integrated teams to facilitate sharing of information;
- establishing an objective basis for providing feedback by setting 
performance measures and expectations in terms of quality, 
responsiveness, timeliness, and cost;
- providing periodic "report cards" and meeting formally with key 
suppliers to discuss issues; and: 
- using surveys, supplier meetings, and formal agency-supplier councils 
or supplier advisory councils to assess existing customer-supplier 
working arrangements, identify problem areas, and report back to 
suppliers. 

CAUTIONS: 

* Knowledge of its key suppliers is not shared across the agency. 

* The agency does not take full advantage of the suppliers' 
intellectual capital, such as design or product ideas. 

* The agency makes limited or no use of commodity managers to manage 
the acquisition of key goods and services. 

* Commodity managers lack expertise, knowledge, or adequate training in 
the goods and services being procured. 

* The agency is dependent on one or two suppliers for key goods or 
services. 

* The agency continues to select the same suppliers without 
periodically assessing whether the goods and services offered are 
competitive in terms of price, quality, and performance. 

* The acquisition workforce lacks the skills, knowledge, and expertise 
to manage supplier relationships effectively. 

CRITICAL SUCCESS FACTOR: Monitoring and Providing Oversight to Achieve 
Desired Outcomes: 

Over the past decade, the federal government has increasingly relied on 
contractors to help carry out its missions. Consequently, agencies 
require effective oversight processes and staff with the right skills 
and training to ensure contractors provide the needed goods and 
services. Earned value management is one method to monitor large 
projects' progress toward cost, schedule, and performance goals. 

KEY QUESTIONS: 

* Does the agency track the types of acquisition methods used for 
acquiring goods and services to assess workload and training 
requirements?

* What tools, processes, and controls does the agency use to ensure 
effective oversight of contractor performance?

* What tools, processes, and controls does the agency use to ensure 
effective oversight of employees making purchases?

* What incentives does the acquisition workforce have to effectively 
monitor contractor performance?

* Does the agency clearly define the roles and responsibilities for 
those who perform contract management and oversight?

* What actions has the agency taken to ensure that it has adequate 
staff with the right skills, knowledge, and training to implement 
policies and processes and to oversee contractors?

* Do agency personnel or external parties with appropriate knowledge, 
skills, and responsibilities monitor internal control over the 
acquisition process on a continuous basis?

* Does the agency effectively use and require its contractors to use 
earned value management as an investment planning and control tool?

LOOK FOR: 

* The agency has undertaken a workforce-planning effort to ensure that 
individuals who award, manage, and monitor contracts have clearly 
defined roles and responsibilities and have the appropriate workload, 
skills, and training to perform their jobs effectively. 

* The agency employs contract monitoring plans or risk-based 
strategies, and tracks contractor performance. 

* The agency regularly reviews contract oversight processes, identifies 
areas needing improvement, and establishes and implements corrective 
action plans. 

* The agency monitors the effectiveness of policies and processes, 
completes a cost benefit analysis when considering alternative policies 
and processes, and follows up on findings identified in monitoring 
efforts. 

* The agency's suppliers have established earned value management 
systems, and the agency verifies that it and its suppliers effectively 
implement earned value management processes and procedures on all 
applicable programs. 

CAUTIONS: 

* Personnel responsible for contract management have skills and 
knowledge gaps that inhibit their ability to properly oversee the types 
of contracts used by the agency. 

* The agency does not monitor whether its contracts meet cost, 
schedule, performance, and quality requirements. 

* A significant percentage of contracts fail to meet cost, schedule, 
performance, and quality requirements. 

* The agency does not assign clear roles and responsibilities for 
overseeing contracts. 

* There are material weaknesses and/or reportable conditions related to 
acquisitions in the agency's performance and accountability report. 

* Earned value data are unavailable or unreliable, and earned value 
management principles are not properly implemented. 

CRITICAL SUCCESS FACTOR: Enabling Financial Accountability: 

The need for organizations to deliver goods and services despite 
shrinking budgets requires agencies to spend their resources wisely. 
Throughout the acquisition process, financial information should be 
tracked and communicated in a way that enables effective evaluation and 
assessment of acquisition activities. When financial data are not 
useful, relevant, timely, or reliable, the acquisition function-as well 
as other functions across an organization-are at risk of inefficient or 
wasteful business practices. 

KEY QUESTIONS: 

* Does the acquisition workforce have access to and use timely 
contractual financial information to monitor and oversee individual 
acquisitions?

* Is the agency's financial management system integrated with its 
contract management system?

* Does the financial management system report frequently enough to 
provide reasonable assurance of accountability in acquisitions?

* Are financial data resulting from new contracts, task orders, and 
contract modifications clear and recorded properly?

* Does the agency measure how often erroneous or improper payments are 
made? Is a risk assessment process in place to address improper 
payments?

LOOK FOR: 

* The acquisition workforce has ready access to information on 
obligated and expended funds, with sufficient information to assure 
proper oversight and accounting at the contract level. 

* Entries are made to the financial management system that update the 
contract management and property accountability systems. 

* The agency reports frequently enough-monthly or quarterly-to ensure 
accountability in the acquisition function. 

* Adjustments to contract accounting records are clearly reported and 
accurate; such adjustments represent a low percentage of financial 
transactions. 

* Erroneous and improper payments and cost overruns are tracked and are 
not a significant problem. 

* The agency takes appropriate corrective action when the contractor is 
not meeting expectations for cost, schedule, or performance. 

CAUTIONS: 

* Acquisition and financial management staff lacks access to critical 
information, including fiscal year; appropriation/Treasury fund symbol; 
organization code; cost center; object classification; estimated 
amount; project code; program code; transaction date; action code; 
subject-to-funds-availability indicator; asset identifier code; 
contractor code/name; trading partner; trading partner code; award 
date; and amounts increased and/or decreased. 

* Acquisition and financial management staff independently update the 
same types of data into independent financial and contract management 
systems. 

* Financial management systems fail to provide transaction details to 
support account balances or identify the method of acquisition, lack 
evidence that the contractor's final invoice has been submitted and 
paid, or fail to perform other transaction processing and routine 
accounting activities adequately. 

* Inadequate transaction processing, particularly improper payments, 
occur frequently. 

* Financial management systems fail to include the taxpayer 
identification number for contractor identification and income 
reporting and debt collection purposes. 

* The agency receives a qualified, disclaimed, or adverse audit 
opinion, which may indicate poor accountability. 

* Auditors note weaknesses in the agency's acquisition or financial 
management function in the agency's audit report. 

ELEMENT: Promoting Successful Outcomes of Major Projects: 

The federal government spends billions of dollars each year on major 
physical capital investment projects and to research, develop, and 
produce large custom projects. Capital investments and custom projects 
are generally expensive, span multiple years, and are crucial to the 
agency's strategy. Capital investments therefore usually require more 
analysis, support, and review than projects that cost less, have 
shorter time frames, or have less agencywide impact. Particular 
attention must be given to these long-term, capital-intensive projects. 

CRITICAL SUCCESS FACTOR: Using Sound Capital Investment Strategies: 

Capital investment includes expenditures for water, power, and natural 
resource projects; construction and rehabilitation of Postal Service 
facilities and veterans' hospitals; major equipment; facilities for 
space and science programs; the air traffic control system; and 
information technology for the entire federal government. 

To ensure an effective capital investment strategy, leading 
organizations: 

* integrate organizational goals into the capital decision-making 
process;

* evaluate, select, and control capital assets using an investment 
approach; and 

* balance budgetary control and managerial flexibility when funding 
capital projects. 

Integrating organizational goals into the capital decision-making 
process: 

Leading organizations begin capital decision-making by defining the 
organization's mission in comprehensive terms and results-oriented 
goals and objectives. 

This process enables managers to identify resources needed to satisfy 
program requirements based on program goals. 

KEY QUESTIONS: 

* Are the agency's capital investments linked to and driven by its 
missions and long-term strategic goals?

* Has the agency completed a comprehensive capital investment needs 
assessment?

* Does the agency thoroughly consider alternatives to capital 
investments?

* Does the agency perform an annual needs assessment on large capital 
investment projects lasting more than 1 year?

* Does the agency have an asset inventory? If so, does it contain 
assessments of the condition of the assets?

* Does the agency ensure it has the necessary resources available 
before beginning investments in capital projects?

LOOK FOR: 

* Capital and strategic plans are clearly linked. 

* The agency has completed a comprehensive needs assessment that 
considers the overall missions and identifies the resources needed to 
fulfill immediate requirements and anticipated future needs. 

* Gaps between current and needed capabilities have been identified. 

* The agency tracks the use and performance of existing assets and 
facilities. 

* The agency routinely evaluates alternatives, including noncapital 
options, and repair and renovation of existing assets, before choosing 
to purchase or construct a capital asset or facility. 

* The agency annually assesses capital investment projects lasting more 
than 1 year to assess the continued viability, need, and size of the 
project. 

* The agency has an asset inventory that includes condition 
assessments. 

* The agency ensures it has adequate time, money, technology, and other 
resources in place before beginning major projects. 

CAUTIONS: 

* Capital investment decisions are made without strategic consideration 
of what assets the agency already has and what it needs or the 
resources needed to fulfill its long-term and short-term goals and 
objectives. 

* There is little consideration of alternatives to satisfy agency 
needs. 

Evaluating and selecting capital assets using an investment approach: 

An investment approach builds on an agency's assessment of where it 
should invest its resources for the greatest benefit over the long 
term. Projects that are expensive, span multiple years, and are crucial 
to the agency's strategy usually require more analysis, support, and 
review than projects that cost less, have shorter time frames, or have 
less agencywide impact. 

KEY QUESTIONS: 

* Does the agency develop a decision or investment package, such as a 
business case, to justify capital project requests?

* Does the agency have preestablished criteria and a relative ranking 
of investment proposals?

* Does the agency develop a long-term capital plan that defines capital 
asset decisions?

LOOK FOR: 

* The agency develops an investment package that includes common 
categories of information, such as links to organizational objectives; 
solutions to organizational needs; project resource estimates and 
schedules; and project costs, benefits, and risks. 

* The agency requires appropriate levels of management review and 
approval, supported by proper financial, technical, and risk analyses. 

* Processes for ranking and selecting projects are based on 
preestablished criteria, a relative ranking of investment proposals and 
trade-offs, and an understanding of potential project risks. 

* A long-term capital plan guides implementation of organizational 
goals and objectives and helps decision makers establish priorities in 
the long run. 

CAUTIONS: 

* No framework exists to ensure appropriate levels of management 
review, analysis, and approval for capital investment projects before 
initiating projects. 

* Projects are selected without using preestablished criteria and 
without consideration of project risks. 

* Year-to-year changes are made in the absence of a long-term capital 
plan, without consideration of strategic decisions. 

Balancing budgetary control and managerial flexibility: 

Leading organizations generally require that the total life cycle costs 
of a project be considered when making decisions to provide resources. 
In the federal environment, to mitigate the risks of unplanned changes 
in future budgets, agencies may budget for "useful segments" of capital 
projects. [NOTE] 

NOTE: The Office of Management and Budget has defined a "useful 
segment" as a component that (1) provides information that allows the 
agency to plan the capital project, develop the design, and assess the 
benefits, costs, and risks before proceeding to full acquisition (or 
canceling the acquisition) or (2) results in a useful asset for which 
the benefits exceed the costs even if no further funding is 
appropriated. 

KEY QUESTIONS: 

* Does the agency budget for useful segments of capital projects?

* Do managers have the necessary information to plan for capital 
investment projects? For example, does the agency have systems to 
estimate the full cost of a project?

* Are alternatives to full up-front funding considered when they may be 
in the best economic interest of the government?

LOOK FOR: 

* The agency budgets projects in useful segments. 

* Information and data systems are in place to develop estimates of the 
full cost of a project or segment early in the life of the project. 

* The agency considers innovative approaches to full up-front funding, 
such as outsourcing capital-intensive services and developing public/
private partnerships, when these are in the best economic interest of 
the government. 

CAUTIONS: 

* Capital projects are not funded in useful segments, which leads to 
acquisitions that may not be fully analyzed or justified, cancellation 
of major projects, and loss of associated sunk costs. 

* Agencies lack information to make strategic capital investment 
decisions. 

CRITICAL SUCCESS FACTOR: Employing Knowledge-Based Acquisition 
Approaches: 

The federal government spends billions annually to research, develop, 
and produce large custom projects, such as weapon systems, air traffic 
control systems, information technology, and space projects. 
Undesirable acquisition outcomes often occur, however, because agency 
officials proceed further into development or production without 
obtaining sufficient knowledge that the product will be able to meet 
established cost, schedule, performance, and quality targets. 

The risk of undesirable acquisition outcomes can be significantly 
reduced. All product development efforts, whether for an automobile, 
airplane, missile, or satellite, go through a process of building 
knowledge. Ultimately, this process brings together and integrates the 
technology, components, and subsystems needed for the product to work 
and be reliably manufactured. GAO has identified three discrete points 
in the development process at which obtaining certain levels of 
knowledge promote successful outcomes. The attainment of each 
successive knowledge point builds on the preceding one. These knowledge 
points-technology maturity, design stability, and production process 
maturity-are defined in the following manner. 

Knowledge point 1: A match between resources and needs occurs when the 
customer's requirements and the available resources-which are 
knowledge, time, and funding-correspond. Achieving a high level of 
technology maturity at the start of development is an important 
indicator of whether this match has been made. 

Knowledge point 2: Design stability occurs when a program determines 
that a product's design is stable-that is, it will meet customer 
requirements and cost and schedule targets. 

Knowledge point 3: Production process maturity occurs when it has been 
demonstrated that the product can be manufactured within cost, 
schedule, and quality targets and that the process is repeatable and 
sustainable. 

KEY QUESTIONS: 

* Is a knowledge-based approach used to develop new products?

* What techniques does the agency use to match end-users' requirements 
with the technology resources available and the program's ability to 
meet cost and schedule predictions?

* Does the agency have an established metric or benchmark, such as the 
percentage of engineering drawings complete or similar criteria, to 
demonstrate that the product's design is stable?

* Is there an established metric or benchmark, such as having 100 
percent statistical control over key manufacturing processes, to 
demonstrate that the product can be reliably produced and with high 
quality?

* Do program managers quantify the extent to which development efforts 
fail to achieve established benchmarks and assess whether those 
shortcomings are critical and correctable during the next phase?

* Does the agency measure the extent to which new product development 
activities meet the baseline cost, schedule, or performance 
requirements of the activities?

* Does the agency use lessons learned from programs that did not meet 
their baseline requirements to improve the agency's acquisition 
processes?

LOOK FOR: 

* The agency embodies a knowledge-based approach to acquisition that is 
reinforced in its policies, implemented in its processes, reflected in 
individual acquisition decisions, and demonstrated through knowledge- 
based deliverables. 

* At knowledge point 1 or an equivalent milestone, the agency regularly 
matches requirements and technology resources before beginning product 
development. 

* At knowledge point 2 or an equivalent milestone, agency policy 
requires the developer to demonstrate that the design is able to meet 
requirements. To do so, the agency uses an established benchmark, such 
as the release of at least 90 percent of its engineering drawings, as 
its criteria. 

* At knowledge point 3 or an equivalent milestone, agency policy 
requires the developer to demonstrate that the production process is 
mature and uses an established benchmark, such as 100 percent 
statistical control of key manufacturing processes, as its criteria. 

CAUTIONS: 

* The agency does not use a knowledge-based process for developing new 
products. 

* The agency does not use the necessary controls, such as demonstrating 
knowledge-based deliverables, to gauge whether adequate knowledge has 
been attained before deciding to move a product to the next phase of 
development. 

QUICK RECAP: How Policies and Processes Can Enhance the Acquisition 
Function: 

* Effective partnering with internal organizations and awareness of 
external factors that could impact acquisitions are two keys to 
strategic acquisition planning. 

* Effectively managing the acquisition process leads to improved 
acquisition outcomes and involves: 
- empowered agencywide teams,
- a strategy for managing external suppliers, 
- monitoring and oversight, and: 
- steps to ensure financial accountability throughout the acquisition 
process. 

* Major acquisition projects, including capital investment and large 
custom projects, require special attention to achieve desired outcomes. 

Learn more about policies and processes by reading the reports found in 
appendix II. 

[End of section] 

Cornerstone 3: Human Capital: 

In This Chapter: 

We present four elements and eight critical success factors to help 
agencies assess their human capital function in relation to 
acquisition. 

ELEMENTS: Valuing and Investing in the Acquisition Workforce; 
CRITICAL SUCCESS FACTORS: 
* Commitment to Human Capital Management; 
* Role of the Human Capital Function. 

ELEMENTS: Strategic Human Capital Planning; 
CRITICAL SUCCESS FACTORS: 
* Integration and Alignment; 
* Data-Driven Human Capital Decisions. 

ELEMENTS: Acquiring, Developing, and Retaining Talent; 
CRITICAL SUCCESS FACTORS: 
* Targeted Investments in People; 
* Human Capital Approaches Tailored to Meet Organizational Needs. 

ELEMENTS: Creating Results-Oriented Organizational Cultures; 
CRITICAL SUCCESS FACTORS: 
* Empowerment and Inclusiveness; 
* Unit and Individual Performance Linked to Organizational Goals. 

[End of table] 

HUMAN CAPITAL: 

People are assets whose value can be enhanced through investment. 
Leading organizations understand that the success of an organization 
and its ability to satisfy customers is dependent on the contributions 
of its people. Human capital policies and practices should support an 
organization's overall missions and performance goals. 

Human capital permeates virtually every effort within an agency, 
including successfully acquiring goods and services and executing and 
monitoring contracts. Effective human capital management ensures that 
an agency has the right staff in the right numbers applying skills 
where needed to accomplish the mission effectively. Creating an 
acquisition workforce with the right skills and capabilities can be a 
challenge, given changes to acquisition processes, the introduction or 
expansion of alternative contracting approaches, and increased reliance 
on services provided by the private sector. In addition, agencies are 
facing a growing number of employees who are eligible for retirement, 
which could create an imbalance with regard to acquisition experience 
and skill sets. 

ELEMENT: Valuing and Investing in the Acquisition Workforce: 

Successful acquisition efforts depend on agency leadership and 
management valuing and investing in the acquisition workforce. 

CRITICAL SUCCESS FACTOR: Commitment to Human Capital Management: 

In leading organizations, senior leadership is committed to developing 
better ways to invest in human capital and are personally committed to 
implementing change. 

KEY QUESTIONS: 

* How does the agency's leadership demonstrate commitment to the 
acquisition workforce?

* What is the role of acquisition officials in developing the agency's 
human capital strategic plans?

* Does the agency have performance expectations for senior leaders and 
managers to foster collaboration within and across organizational 
boundaries and demonstrate a commitment to lead and facilitate change?

* How are senior leaders and managers held accountable for effectively 
managing the acquisition workforce?

LOOK FOR: 

* Acquisition officials play a significant role in developing the 
agency's overall human capital strategy and ensure that it reflects the 
goals of the acquisition function. 

* Acquisition officials develop, implement, and evaluate human capital 
approaches designed to meet customer needs and improve overall business 
performance. 

* Acquisition officials secure the support of managers at all levels 
for human capital approaches. 

* Acquisition officials are held accountable for managing the 
acquisition workforce effectively. 

* Acquisition employees are provided with resources for continuous 
learning efforts, competency-based appraisal systems, and retention and 
reward programs. 

CAUTIONS: 

* Agency leadership views people as costs rather than as assets. 

* Agency leadership makes decisions about the workforce without 
considering how the decisions affect mission accomplishment. 

* Agency leadership and management are not held accountable for 
managing the acquisition workforce. 

* Business decisions proceed without consideration of the human capital 
needs they entail or human capital approaches necessary for success. 

CRITICAL SUCCESS FACTOR: Role of the Human Capital Function: 

The human capital function should incorporate a strategic approach for 
accomplishing the agency's missions and program goals. This requires 
the agency to elevate the role of human capital professionals from 
paperwork processors to trusted advisors and partners of senior leaders 
and acquisition managers. To accomplish this, agency leaders need to 
ensure that human capital professionals have the appropriate authority, 
competencies, and experience. 

KEY QUESTIONS: 

* What are the roles and responsibilities of human capital officials 
with respect to the acquisition workforce?

* How do acquisition managers collaborate with human capital personnel 
to make hiring and staffing decisions?

LOOK FOR: 

* Human capital professionals partner with the agency's leaders and 
managers, including acquisition officials, to develop strategic and 
workforce plans. 

* Human capital professionals use streamlined personnel processes and 
other means to meet customer needs, including hiring and retaining an 
acquisition workforce with the right skills. 

CAUTIONS: 

* Leaders view human capital management as a support or overhead 
function. 

* Human capital management is largely process-oriented and compliance-
focused. 

* Acquisition and human capital officials do not coordinate with each 
other. 

ELEMENT: Strategic Human Capital Planning: 

By focusing on recruiting, hiring, training, and professional 
development, strategic workforce planning outlines ways to help the 
agency fill gaps in knowledge, skills, and abilities. 

CRITICAL SUCCESS FACTOR: Integration and Alignment: 

Leading organizations take human capital into account when developing 
ways to accomplish their missions, program goals, and results. These 
organizations assess the effectiveness of the integration and alignment 
effort by how well human capital approaches help to achieve 
organizational goals. 

KEY QUESTIONS: 

* Does the agency have a strategic human capital plan that incorporates 
the needs of the acquisition function? If not, does the acquisition 
function have its own plan?

* Does the agency's strategic human capital plan address the use of 
contractors that provide commercial-type services to the agency?

* Does the agency's succession planning and management of its 
acquisition workforce: receive active support from top leadership; link 
to strategic planning; identify people with critical skills; emphasize 
development assignments in addition to formal training; and address 
such human capital challenges as diversity, leadership capacity, and 
retention?

* Does the agency ensure that teams developing plans for the 
acquisition workforce consist of all stakeholders, such as customers or 
end-users, contracting officers, representatives from budget and 
finance, legal counsel, and human capital personnel?

* How does the agency track the effectiveness of human capital 
strategies for its acquisition workforce?

LOOK FOR: 

* Comprehensive strategic workforce planning efforts. 

* A strategic workforce plan that reflects the needs of the acquisition 
function, including consideration of which functions to maintain in- 
house. 

* Strategies for recruiting, retaining, and developing acquisition 
staff, including performance measures to evaluate the contribution 
these strategies make in supporting the agency's acquisition function 
and achieving its mission and goals. 

* A knowledge and skills inventory is used to identify current and 
future weaknesses and needs in acquisition skills. 

CAUTIONS: 

* The agency does not fully recognize the link between its human 
capital approaches and organizational performance objectives. 

* The agency adopts human capital approaches without considering how 
well they support organizational and acquisition goals and strategies 
or how these approaches may be interrelated. 

CRITICAL SUCCESS FACTOR: Data-Driven Human Capital Decisions: 

A fact-based, performance-oriented approach to human capital management 
is crucial to maximizing the value of human capital and to managing 
risk. Leading organizations use data to determine key performance 
objectives and goals, enabling them to evaluate the effectiveness of 
their human capital approaches. 

KEY QUESTIONS: 

* Who is included in the acquisition workforce?

* How does the agency track data on the acquisition workforce?

* How does the agency determine the appropriate size of its acquisition 
workforce?

* Is the mix of entry-level, mid-level, and top-level executives 
appropriate given the agency's missions and role of the acquisition 
function?

* What training and professional certifications have current 
acquisition employees attained?

* How does the agency track the workload of the acquisition staff?

* Does the agency have a skills inventory for the acquisition 
workforce? How is it used to make human capital decisions?

* How long does the recruitment process take?

* What has the attrition rate been for the acquisition workforce?

* Does the agency conduct exit interviews with departing acquisition 
workforce employees to determine why people are leaving? If so, how are 
lessons learned used?

* What is the acceptance rate of applicants offered positions?

* How are training and development programs and results evaluated, and 
how does the agency track, report, and use this information?

LOOK FOR: 

* Data on the agency's acquisition workforce are reflected in strategic 
workforce-planning documents. This includes size and shape of the 
workforce; skills inventory; attrition rates; projected retirement 
rates and eligibility; deployment of temporary employee/contract 
workers; dispersion of performance appraisal ratings; average period to 
fill vacancies; data on the use of incentives; employee feedback 
surveys; and feedback from exit interviews, grievances, or acceptance 
rates of job candidates. 

* Data are available on staff development, including the number of 
people receiving training; money spent on training; and measures to 
determine the real impact on the agency's goals and objectives (such as 
increased productivity, enhanced customer satisfaction, increased 
quality, and reduced costs and errors). 

* The agency uses data to evaluate and continuously improve the 
effectiveness of training and development programs. 

CAUTIONS: 

* Agency officials lack critical information with which to create a 
profile of the workforce or to evaluate the effectiveness of human 
capital approaches. 

* Performance measures and goals for the agency's human capital 
programs, especially as they link to programmatic outcomes, have yet to 
be identified. 

* The agency has little knowledge of what work is contracted out and 
what work is performed in-house. 

ELEMENT: Acquiring, Developing, and Retaining Talent: 

Recent trends in hiring and retirements in the federal government will 
leave many agencies with workforce imbalances in terms of skills, 
knowledge, and experience. Without sufficient attention given to 
acquiring, developing, and retaining talent, federal agencies could 
lose a significant portion of their contracting knowledge base. 

CRITICAL SUCCESS FACTOR: Targeted Investments in People: 

Leading organizations realize that investing in and enhancing the value 
of their acquisition staff benefits both employers and employees alike. 
For example, investing in training for the acquisition workforce is 
critical to ensuring adequate oversight of the quality, cost, and 
timeliness of goods and services delivered by third parties. 

Industry and government experts recognize that training is a critical 
tool in successfully introducing and implementing new ways of doing 
business as well as reacting to change. An agency's overall training 
strategy-including planning, developing, implementing, and continuous 
improvement of its programs-is an important factor in ensuring staff 
has the necessary skills, knowledge, and experience to meet agency 
missions. The success of investment in training can be measured with 
balanced indicators that are results-oriented and client-based, 
encompass employee feedback, and incorporate multiple dimensions of 
performance. 

KEY QUESTIONS: 

* What process does the agency follow to determine the appropriate 
level of spending on training, recruiting, and retention efforts?

* Does the agency have individual training plans established for all 
employees? 

* Do employees have opportunities for continuous learning- such as 
attending meetings, seminars, and summits-to hear about best practices 
or otherwise stay up-to-date on issues in their fields?

* What are the training requirements for new and current acquisition 
staff and related positions?

* How is staff trained regarding new practices in acquisition?

* Does the agency have a comprehensive training management system that 
can track the delivery of training? Does it identify and track the 
associated costs of specific training and development programs?

* Do managers consistently provide resources (funds, people, equipment, 
and time) to support training and development priorities for the 
acquisition staff? 

* Does the agency actively work with colleges and universities to: (1) 
market the opportunities available for acquisition professionals and 
(2) include a federal acquisition course that will prepare students for 
careers in federal acquisition and help promote federal career 
possibilities?

* Are model career paths charted for acquisition staff?

LOOK FOR: 

* The agency demonstrates that it has prioritized the most important 
training initiatives; secured top-level commitment and provided 
resources; obtained and considered input on training and resource needs 
from management and staff; identified those needing training, and set 
training requirements; tailored training to meet the needs of the 
workforce; tracked training to ensure it reaches the right people at 
the right time; and measured the effectiveness of training. 

* The agency targets investments in human capital to help it attract, 
develop, retain, and deploy talented, high-performing staff to 
accomplish its mission. These investments include training and 
professional development, recruiting bonuses, retention allowances, and 
skill-based pay. 

* Goals, expectations, and criteria for investments in human capital 
development are clearly defined, transparent, consistently applied, and 
based on expected improvement in results. 

* Agency investments are monitored and evaluated for effectiveness. 

CAUTIONS: 

* Training and other human capital expenditures are minimized rather 
than viewed as an investment. 

* Funding decisions are made without clearly defined objectives or 
adequate consideration of how they will impact the workforce. 

* The agency does not establish priorities, provide adequate funding, 
or track investments in human capital. 

CRITICAL SUCCESS FACTOR: Human Capital Approaches Tailored to Meet 
Organizational Needs: 

Existing laws, rules, and regulations provide the agency with 
flexibility to offer competitive incentives to attract skilled 
acquisition employees; to create performance incentives and training 
programs; and to build constructive labor-management relationships 
based on common goals. Such flexibility should enable agency officials 
to tailor their human capital approaches to their agency's specific 
needs and context. 

When making decisions about the most appropriate approaches, the 
agency's acquisition officials should work with human capital 
professionals, managers, employees, and employee unions. Managers must 
be held accountable for applying these approaches in a fair and 
equitable manner across the agency. 

KEY QUESTIONS: 

* What human capital flexibilities have agency officials used over the 
past few years and with what results?

* What laws, regulations, or policies, if any, do agency officials view 
as limiting flexibility in human capital approaches?

LOOK FOR: 

* The agency has a human capital strategy for the acquisition 
workforce, and it is based on the agency's missions. 

* The agency explores opportunities to increase its competitiveness as 
an employer and eliminate barriers to building an effective, skilled 
acquisition workforce and takes appropriate action. 

CAUTIONS: 

* Managers view improvements in the acquisition workforce as 
improbable. 

* Managers fail to fully explore the range of tools and flexibilities 
available under existing laws and regulations. 

ELEMENT: Creating Results-Oriented Organizational Cultures: 

Leading organizations foster a work environment in which people are 
empowered and motivated to contribute to continuous learning and 
mission accomplishment. 

CRITICAL SUCCESS FACTOR: Empowerment and Inclusiveness: 

Getting employees directly involved in the planning process helps to 
develop goals and objectives from a front-line perspective. Leading 
organizations commonly seek employee input on a periodic basis and 
explicitly address and use it to adjust their human capital approaches. 

KEY QUESTIONS: 

* Does the agency seek ideas from the acquisition workforce? Do 
employees feel a sense of ownership about policies and procedures?

* Do managers involve employees when planning and sharing acquisition 
performance information?

* Has the agency established a communication strategy to create shared 
expectations about the acquisition function and to report progress?

LOOK FOR: 

* The agency obtains employees' ideas, involves employees in planning 
and sharing acquisition performance information, and incorporates 
employee feedback into new policies and procedures. 

* Employee unions or councils are involved in major workplace changes, 
such as competitive sourcing or redesigning work processes. 

* The agency has established a communication strategy to create shared 
expectations and report progress. 

* Alternative dispute resolution programs are used effectively to 
resolve workplace disputes. 

CAUTIONS: 

* Managers and staff rigidly adhere to standardized procedures. 

* Relations between management and employees and their representatives 
appear adversarial. 

* Substantial time and resources are consumed by reacting to workplace 
disputes and long-standing sources of conflict. 

CRITICAL SUCCESS FACTOR: Unit and Individual Performance Linked to 
Organizational Goals: 

Leading organizations find that effective performance management 
systems can transform their cultures to be more results-oriented, 
customer-focused, and collaborative in nature. These systems are used 
to achieve results, accelerate change, and facilitate discussions about 
individual and organizational performance throughout the year. An 
effective performance management system links organizational goals to 
individual performance for all acquisition-related employees and 
creates a "line of sight" between individual activities and 
organizational results. 

KEY QUESTIONS: 

* Has the agency recently assessed whether its performance management 
systems for the acquisition workforce adequately meet its needs?

* What efforts, if any, are underway to review or improve existing 
performance management systems?

* Does the agency's performance management system provide: 
- candid and constructive feedback to help individuals understand their 
contributions and help the organization achieve its goals;
- objective information to reward top performers; and: 
- documentation and information to deal with poor performers?

LOOK FOR: 

* Individual performance expectations are aligned with organizational 
and crosscutting goals. 

* Performance information is routinely used to track and plan follow-up 
actions to address organizational priorities. 

* Competencies are used that enable fuller assessments of performance. 

* Pay is linked to individual and organizational performance. 

* Meaningful distinctions in performance are made. 

* Roles and responsibilities are defined and enable staff to maintain a 
consistent focus on programmatic priorities even during organizational 
transitions. 

CAUTIONS: 

* The agency has not aligned performance expectations with 
organizational goals. 

* The agency does not use performance information to track progress at 
meeting organizational priorities. 

A QUICK RECAP: How Human Capital Can Enhance the Acquisition Function: 

* Agency leadership and managers value and invest in the acquisition 
workforce. 

* Human capital professionals partner with acquisition managers to make 
staff development decisions. 

* Acquisition managers take human capital approaches into account when 
developing ways to attain organizational goals. 

* A strategic workforce plan profiles the current staff and projects 
staffing needs for the future. 

* The agency invests in talented, high-performing staff. 

* The agency fosters a work environment in which people are empowered 
and motivated to meet missions and goals. 

Learn more about human capital by reading the reports found in appendix 
II. 

[End of section] 

Cornerstone 4: Knowledge & Information Management: 

In This Chapter: We describe two elements and five critical success 
factors that focus on data essential to making good acquisition 
decisions. 

ELEMENTS: Identifying Data and Technology that Support Acquisition 
Management Decisions; 
CRITICAL SUCCESS FACTORS: 
* Tracking Acquisition Data; 
* Translating Financial Data into Meaningful Formats; 
* Analyzing Goods and Services Spending. 

ELEMENTS: Safeguarding the Integrity of Operations and Data; 
CRITICAL SUCCESS FACTORS: 
* Ensuring Effective General and Application Controls; 
* Data Stewardship. 

[End of table] 

KNOWLEDGE AND INFORMATION MANAGEMENT: 

Knowledge and information management refers to a variety of 
technologies and tools that help managers and staff make well-informed 
acquisition decisions. Such decisions have a direct impact on many 
levels-program and acquisition personnel who decide which goods and 
services to buy; project managers who receive the goods and services 
from contractors; commodity managers who maintain supplier 
relationships; contract administrators who oversee compliance with the 
contracts; and the finance department, which pays for the goods and 
services. They all need meaningful data to perform their respective 
roles and responsibilities. 

ELEMENT: Identifying Data and Technology that Support Acquisition 
Management Decisions: 

Leading organizations gather and analyze data to identify opportunities 
to reduce costs, improve service levels, measure compliance with 
supplier agreements, and provide better management of service 
providers. Information systems help managers learn how much is being 
spent with which service provider and for what supplies or services. 
Additionally, data collected in support of meaningful metrics can 
assist agencies track achievements in comparison with plans, goals, and 
objectives. They can also allow agencies to analyze differences between 
actual performance and planned results. Generating meaningful data, 
however, requires good data stewardship. 

CRITICAL SUCCESS FACTOR: Tracking Acquisition Data: 

When buying goods and services, many leading organizations have 
implemented comprehensive systems that integrate contracting, 
financial, and other data to support management decision making and 
external reporting requirements. These data: 

* track events throughout the life of a contract;

* monitor contractor performance and work progress;

* record and validate the receipt of goods and services; and: 

* link to human capital systems to obtain information that monitors 
workload levels of contracting officers and contract specialists, and 
workforce training and education. 

The agency's financial systems support the preparation of auditable 
financial statements, track financial events, and help to ensure 
correct and timely payments for goods and services acquired. Financial 
data can, in conjunction with contracting and other data, enable 
strategic decision making by supporting an analysis of the agency's 
buying patterns. External data are obtained from commercial sources or 
other federal organizations. Examples include market research 
information and supplier financial status and performance. 

Additionally, metrics, when designed to measure outcomes rather than 
inputs, can be used to: evaluate and understand an organization's 
current performance level; identify critical processes that require 
focused management attention; obtain the knowledge needed to set 
realistic goals for improvement; and document results over time. 

KEY QUESTIONS: 

* What acquisition-related data does the agency collect? Are data kept 
current? 

* Are the agency's financial (including budgetary), acquisition, 
operating, and management information systems integrated? Do the 
systems provide timely, accurate, and relevant information?

* Do stakeholders believe the agency's information systems meet their 
business needs?

* How does the agency make needed data available to stakeholders within 
the acquisition process, such as program officials, commodity managers, 
and contracting officers?

* How does the agency manage institutional knowledge and identify and 
share best practices?

* Has the agency established specific goals and metrics-and collected 
data in support of those metrics-to assess the performance of the 
acquisition function?

LOOK FOR: 

* Stakeholders generally agree that the agency's information systems 
provide credible, reliable, and timely information that they can use to 
make informed decisions. 

* An effective agencywide system integrates financial, acquisition, 
operating, and management information and allows decision makers to 
access relevant information easily and perform ad-hoc data analysis. 

* The agency's contracting management information system tracks events 
throughout the life of a contract, such as: 
- contract award;
- period of performance;
- contract modifications;
- key milestones;
- contractor performance, including cost and schedule status; 
- contract closeout;
- identification of outstanding acquisition requests; 
- expected cost;
- types of goods and services acquired;
- receipt and acceptance of goods and services; and: 
- trouble spots and progress in dealing with them. 

* Financial data-such as budgetary resources and funds availability, 
status of obligations and expenditures on individual contracts, 
outstanding purchase requests, and payments for the receipts of goods 
and services-are readily available to stakeholders. 

* Knowledge and information management systems support strategic 
planning and performance improvement by enabling: 
- real-time benchmarking;
- sourcing and volume discount tracking;
- complete vendor information;
- contractors' past performance; and: 
- "what-if' analysis and planning. 

* Data are available on the agency's overall "health," internal 
capabilities, and the external environment. Useful sources include: 
- agency financial statements;
- customer and employee satisfaction surveys;
- knowledge and skills inventories;
- workforce training and education data;
- retention and recruitment reports; and: 
- internal audit reports. 

* Metrics have been established and are used to assess the 
effectiveness of the acquisition function, and measurements taken are 
credible. 

* Metrics established allow the agency to assess the acquisition 
function's progress in meeting financial, customer satisfaction, and 
business operation objectives, as well as day-to-day activities, such 
as compliance with applicable laws, regulations, and best practices. 

CAUTIONS: 

* The agency has not collected the full set of information or data to 
make effective and fact-based decisions. 

* Incomplete data prevent the agency from maximizing information tools 
for strategic acquisition planning and analysis. 

* Data are not current, reliable, complete, or accurate. 

* The agency does not make needed data accessible to decision makers, 
leading them to rely on informal, ad-hoc systems to make acquisition 
decisions. 

* Decisions are not supported by demonstrable, underlying information. 

* Lack of integration among systems hinders a user's ability to access 
acquisition-related information in a timely manner. 

* Metrics established measure only inputs rather than outputs. 

* Measurements taken in support of metrics are not credible, leading to 
disagreements over numbers and the value of the assessment process. 

CRITICAL SUCCESS FACTOR: Translating Financial Data into Meaningful 
Formats: 

New technology tools can generate volumes of data, but the data are 
meaningless unless they can be translated into relevant, understandable 
formats for acquisition officials. Financial information is meaningful 
for acquisition officials when it is relevant, timely, and reliable, 
and enables them to manage costs, measure performance, and make program 
funding decisions. 

KEY QUESTIONS: 

* Do finance executives work with acquisition executives and managers 
to determine their information needs?

* What types of financial data or reports are regularly provided to 
acquisition officials?

* To what extent do acquisition personnel use financial information to 
support acquisition decisions?

LOOK FOR: 

* Finance executives work with acquisition executives and managers on 
an ongoing basis to determine business and acquisition information 
needed to manage and oversee the agency's missions and objectives. 

* Relevant financial information pertaining to acquisition is presented 
with suitable detail in an understandable format. Multiple levels of 
detail are available to provide complete and consistent obligation and 
expenditure information for an agency's overall contracting activities 
and for individual contracts. 

* Financial management staff and officials receive feedback from 
acquisition staff and officials to ensure the acquisition function's 
data and reporting needs are being met. 

CAUTIONS: 

* Financial information pertaining to acquisition is not of the proper 
scope, level of detail, timing, content, and presentation format to 
provide real value to users. 

* Acquisition information received by financial management staff is not 
clear and understandable, impairing efficient processing of the 
information into management reports. 

CRITICAL SUCCESS FACTOR: Analyzing Goods and Services Spending: 

Leading organizations continually analyze their spending on goods and 
services to answer basic questions about how much is being spent and 
where dollars are going. This approach is called "spend analysis." When 
organizations complete these analyses, they often realize they are 
buying similar goods and services from numerous providers, often at 
greatly varying prices. 

KEY QUESTIONS: 

* Does the agency regularly conduct and make use of spend analyses for 
key goods and services?

* What process does the agency use to conduct a spend analysis?

* Does the agency include purchases made with purchase cards in its 
spend analysis?

* If spend analyses have been conducted, how were the results used?

* Does the agency use a standard taxonomy to uniquely identify the 
products and services being analyzed?

LOOK FOR: 

* The agency makes regular use of spend analysis techniques to support 
strategic planning efforts. 

* The agency knows how much it is spending using purchase cards and has 
considered this information in its spend analysis. 

* The agency uses a variety of information, including financial data, 
to conduct a spend analysis. At a minimum, the agency's spend analysis 
identifies: 
- what types of goods and services are being acquired;
- how many suppliers for a specific good or service the agency is using;
- how much they are spending for that good or service, in total and 
with each supplier;
- which units within the agency are purchasing the goods and services; 
and 
- what goods and services have been or could be purchased to meet 
socioeconomic supplier goals. 

CAUTIONS: 

* The agency does not conduct or make regular use of spend analysis. 

* The agency information and financial management systems are unable to 
provide credible, reliable, and timely data needed to conduct a spend 
analysis. 

* Information is not maintained in a standardized format or is of poor 
quality, thus hampering efforts to use the data to more effectively 
manage goods and services spending. 

ELEMENT: Safeguarding the Integrity of Operations and Data: 

Internal controls-such as structures, policies, and procedures-promote 
efficiency, reduce the risk of asset loss, help ensure that financial 
and acquisition management systems issue reliable reports and that the 
organization is in compliance with laws and regulations. It is 
essential that acquisition management systems contain appropriate, cost-
effective controls to safeguard assets, ensure accurate aggregation and 
reporting of information, and support the accomplishment of 
organizational objectives. Internal control actions and activities 
occur throughout an agency's operations and on an ongoing basis. 
Management must balance safeguards with the need to make accessible, 
timely, and accurate data available to managers and others needing 
acquisition information. 

There are two broad groupings of information systems controls that can 
help safeguard the integrity of operations and data: general controls 
and application controls. Assessing general and application controls is 
a technical analysis and requires the assistance of persons 
knowledgeable in computer systems evaluation. 

CRITICAL SUCCESS FACTOR: Ensuring Effective General and Application 
Controls: 

General control applies to all information systems and includes 
agencywide security program planning, management control over data 
center operations, system software, acquisition and maintenance, access 
security, and application system development and maintenance. 
Application control is designed to help ensure the completeness, 
accuracy, authorization, and validity of all transactions during 
application processing. 

General and application controls over computer systems are 
interrelated. General control supports the functioning of application 
control, and both are needed to ensure complete and accurate 
information processing. 

KEY QUESTIONS: 

* When was the last information systems control review performed?

* What documentation exists of the reviews?

* What issues or problems did the reviews identify?

* How were the issues and problems addressed?

* What are the unresolved issues or problems?

* What is the impact of the unresolved issues and problems?

* What practices and procedures does the agency use to ensure that 
hardware and software are reliable, secure, and user-friendly?

LOOK FOR: 

* Evidence in general controls that the structure, policies, and 
procedures-which apply to all or a large segment of the agency's 
information systems-help to ensure proper operation, data integrity, 
and security. 

* Evidence in application controls that the structure, policies, and 
procedures that apply to individual application systems-such as 
inventory or payroll-produce outputs that are complete, accurate, 
authorized, consistent, timely, relevant, and useful for its intended 
purpose. 

CAUTIONS: 

* The agency has not recently reviewed the internal controls governing 
its major systems. 

* The agency has not addressed all identified major internal control 
issues or established corrective action plans. 

CRITICAL SUCCESS FACTOR: Data Stewardship: 

Data stewardship ensures that data captured and reported are accurate, 
accessible, timely, and usable for acquisition decision making and 
activity monitoring. Effective stewardship provides the structure, 
oversight, and assurance that data can be accurately translated into 
meaningful information about organizational activities. Taking the time 
to manage quality of data ultimately helps support the agency's 
acquisition management needs. 

KEY QUESTION: 

* How does the agency ensure that data reflected in its knowledge and 
information management systems have the following properties: 
- integrity of data; 
- synchronization of data collection; 
- reduced data redundancy; 
- accessibility of data; 
- transferability of data; and: 
- flexibility in the data management process? 

LOOK FOR: 

* The agency's internal controls provide reasonable assurance that data 
are accurate, complete, timely, and reliable. 

* There is consistency among data definitions, sources, controls, and 
edit routines. 

* Managers group data into logical categories and collect data 
according to commonly accepted reporting time frames. 

* Data are redundant only when necessary. Inconsistencies are 
eliminated. 

* Data are accessible to authorized users when needed. 

* Data can be transferred to other systems for operational, analytical, 
and forecasting processes. 

CAUTIONS: 

* Data are unreliable, incomplete, or unsuitable for efficient and 
effective management decisions. 

* Users have little or no confidence in the credibility of the data and 
outputs from information systems. 

* Management does not periodically test the reliability of its data. 

QUICK RECAP: How Knowledge and Information Management Can Enhance the 
Acquisition Function: 

* Acquisition personnel should track data on the contracting, 
financial, and external environment when developing an integrated 
acquisition information system. 

* Data are relevant, timely, reliable, and presented with suitable 
detail in understandable formats. 

* Spend analyses answer basic questions about how much is being spent 
and where the money is going. 

* Hardware and software are safeguarded to ensure the integrity of 
operations and acquisition data. 

Learn more about knowledge and information management by reading the 
reports found in appendix II. 

[End of section] 

APPENDIX I: SCOPE AND METHODOLOGY: 

The purpose of this framework is to provide a systematic method for 
evaluating the acquisition function within federal agencies. The 
framework can be used to identify opportunities for improvements in 
acquisition processes as well as to highlight specific risks faced by 
each agency. 

To develop the evaluation framework, we made use of the experience, 
knowledge, and expertise within GAO, the executive branch, state 
agencies, the private sector, and academia to develop key cornerstones 
that comprise an integrated acquisition function. The outline of the 
evaluation framework was then further refined in discussions with: 

* federal officials from a procurement executive council working group 
set up to assist GAO in assessing the acquisition function;

* individuals with acquisition expertise from the private sector and 
academia; and: 

* senior acquisition executives at a forum held at GAO in March 2004. 

To provide us with a broad understanding of the weaknesses, issues, and 
potential reforms of the acquisition function, we consulted studies and 
reports from organizations such as Rand Corporation, the National 
Academy of Public Administration, the Australian National Audit Office, 
the National Association of State Purchasing Officials, the 
PricewaterhouseCoopers Endowment for the Business of Government, the 
Corporate Executive Board's Procurement Strategy Council, the Center 
for Advanced Purchasing Studies, and audit reports from GAO and various 
federal agency inspector general offices. 

We also consulted guides on acquisition, human capital, financial 
management, and information technology from the Department of Defense, 
Office of Management and Budget, Office of Personnel Management, 
Department of Veterans Affairs, Department of Energy, Department of 
Transportation, Department of Treasury, Joint Financial Management 
Improvement Program, and GAO. Many of these resources are listed in 
appendix II. 

To verify the accuracy of the information provided and improve the 
technical usefulness of the information reported, we asked acquisition, 
human capital, financial management, and information technology experts 
to review a draft of the evaluation framework. We incorporated their 
comments to create an exposure draft, which was distributed to obtain 
comments from interested parties of the federal, state and local 
acquisition community, acquisition experts from associations, academia, 
and professional organizations. We then incorporated these additional 
comments as appropriate in this publication. 

APPENDIX II: ADDITIONAL SOURCES OF INFORMATION: 

To download GAO reports, please visit our Web site at www.gao.gov and 
enter the report numbers specified below. 

CROSS-CUTTING INFORMATION: 

U.S. Department of Energy, Office of Contract Management, Office of 
Procurement & Assistance Management. Acquisition & Financial Assistance 
Self-Assessment Checklist. Revised March 2005. 

GAO. 21st Century Challenges: Reexamining the Base of the Federal 
Government. GAO-05-325SP Washington, D.C.: February 2005. 

GAO. Financial Management: Effective Internal Control Is Key to 
Accountability. GAO-05-321T. Washington, D.C.: February 16, 2005. 

GAO. High-Risk Series: An Update. GAO-05-207. Washington, D.C.: January 
2005. 

U.S. Department of Energy, Office of Procurement and Assistance 
Management. Balanced Scorecard: Performance Measurement and Performance 
Management Program. Revised January 2005. 

U.S. Department of Transportation. Department of Transportation's 
Procurement Performance Management System, Guidance Manual. Revision 3, 
October 2004. 

GAO. Highlights of a GAO Forum: Workforce Challenges and Opportunities 
for the 21st Century: Changing Labor Force Dynamics and the Role of 
Government Policies. GAO-04-845SP Washington, D.C.: June 2004. 

GAO. Transportation Security Administration: High-Level Attention 
Needed to Strengthen Acquisition Function. GAO-04-544. Washington, 
D.C.: May 28, 2004. 

GAO. Highlights of a GAO Forum on High-Performing Organizations: 
Metrics, Means, and Mechanisms for Achieving High Performance in the 21 
st Century Public Management Environment. GAO-04-343SP Washington, 
D.C.: February 13, 2004. 

Rand Corporation. Project AIR FORCE Research Brief Speeding Acquisition 
Reform in the U.S. Air Force. RB-119-AF' Full report: MR-1711-AF' 2004. 

U.S. Department of Energy. Office of Procurement and Assistance 
Management, Balanced Scorecard Performance Measures Information 
Document. Revised April 22, 2005. 

Department of Veterans Affairs. Procurement Reform Task Force Report. 
May 2002. 

GAO. Best Practices: Taking a Strategic Approach Could Improve DOD's 
Acquisition of Services. GAO-02-230. Washington, D.C.: January 18, 
2002. 

GAO. Internal Control Management and Evaluation Tool. GAO-01-1008G. 
Washington, D.C.: August 2001. 

Australian National Audit Office, Commonwealth of Australia. Contract 
Management: Better Practice Guide. February 21, 2001. 

Schooner, Steven L. Fear of Oversight: The Fundamental Failure of 
Business-like Government. Washington, D.C.: American University Law 
Review, Vol. 50, No. 3, 2001. 

GAO. Standards for Internal Control in the Federal Government. GAO/
AIMD-00-21.3.1. Washington, D.C.: November 1999. 

Procurement Executives' Association. Guide to a Balanced Scorecard 
Performance Management Methodology. Chartered 1998. 

ORGANIZATIONAL ALIGNMENT AND LEADERSHIP: 

GAO. Military Transformation: Clear Leadership, Accountability, and 
Management Tools Are Needed to Enhance DOD's Efforts to Transform 
Military Capabilities. GAO-05-70. Washington, D.C.: December 17, 2004. 

GAO. HUD Management: Actions Needed to Improve Acquisition Management. 
GAO-03-157. Washington, D.C.: November 15, 2002. 

GAO. Business Process Reengineering Assessment Guide. GAO/AIMD- 
10.1.15. Washington, D.C.: May 1997, Version 3. 

GAO. Reengineering Organizations: Results of a GAO Symposium. GAO/
NSIAD-95-34. Washington, D.C.: December 13, 1994. 

POLICIES AND PROCESSES: 

GAO. Defense Acquisitions: Assessments of Selected Major Weapon 
Programs. GAO-05-301. Washington, D.C.: March 31, 2005. 

GAO. Best Practices: Using Spend Analysis to Help Agencies Take a More 
Strategic Approach to Procurement. GAO-04-870. Washington, D.C.: 
September 16, 2004. 

GAO. Contract Management: Guidance Needed to Promote Competition for 
Defense Task Orders. GAO-04-874. Washington, D.C.: July 30, 2004. 

GAO. Information Technology: DOD's Acquisition Policies and Guidance 
Need to Incorporate Additional Best Practices and Controls. GAO-04-722. 
Washington, D.C.: July 30, 2004. 

GAO. The Federal Acquisition Streamlining Act of 1994--Fair opportunity 
procedures under multiple award task order contracts. B-302499. 
Washington, D. C.: July 21, 2004. 

GAO. Acquisition/Financial Systems Interface Requirements: Checklist 
for Reviewing Systems under the Federal Financial Management 
Improvement Act. GAO-04-650G. Washington, D.C.: June 2004. 

GAO. Contract Management: Impact of Strategy to Mitigate Effects of 
Contract Bundling on Small Business Is Uncertain. GAO-04-454. 
Washington, D.C.: May 27, 2004. 

GAO. Federal Acquisition: Increased Attention to Vehicle Fleets Could 
Result in Savings. GAO-04-664. Washington, D.C.: May 25, 2004. 

GAO. Contract Management: Agencies Can Achieve Significant Savings on 
Purchase Card Buys. GAO-04-430. Washington, D.C.: March 12, 2004. 

GAO. Defense Acquisitions: Stronger Management Practices Are Needed to 
Improve DOD's Software-Intensive Weapon Acquisitions. GAO-04-393. 
Washington, D.C.: March 1, 2004. 

GAO. Financial Management: Some DOD Contractors Abuse the Federal Tax 
System with Little Consequence. GAO-04-95. Washington, D.C.: February 
12, 2004. 

GAO. Best Practices: Using a Knowledge-Based Approach to Improve Weapon 
Acquisition. GAO-04-386SP Washington, D.C.: January 2004. 

GAO. Contracting for Information Technology Services. GAO-03-384R. 
Washington, D.C.: February 14, 2003. 

GAO. HUD Management: Actions Needed to Improve Acquisition Management. 
GAO-03-157. Washington, D.C.: November 15, 2002. 

GAO. Contract Management: Guidance Needed for Using Performance-Based 
Service Contracting. GAO-02-1049. Washington, D.C.: September 23, 2002. 

GAO. DOE Contractor Management: Opportunities to Promote Initiatives 
That Could Reduce Support-Related Costs. GAO-02-1000. Washington, D.C.: 
September 20, 2002. 

GAO. Contract Reform: DOE Has Made Progress, but Actions Needed to 
Ensure Initiatives Have Improved Results. GAO-02-798. Washington, D.C.: 
September 13, 2002. 

GAO. Best Practices: Capturing Design and Manufacturing Knowledge Early 
Improves Acquisition Outcomes. GAO-02-701. Washington, D.C.: July 15, 
2002. 

Gansler, Jacques S. A Vision of the Government as a World-Class Buyer: 
Major Procurement Issues for the Coming Decade. The 
PricewaterhouseCoopers Endowment for the Business of Government. 
January 2002. 

GAO. Information Technology: Leading Commercial Practices for 
Outsourcing of Services. GAO-02-214. Washington, D.C.: November 30, 
2001. 

GAO. Strategies to Manage Improper Payments: Learning from Public and 
Private Sector Organizations. GAO-02-69G. Washington, D.C.: October 
2001. 

GAO. Best Practices: DOD Teaming Practices Not Achieving Potential 
Results. GAO-01-510. Washington, D.C.: April 10, 2001. 

GAO. Best Practices: Better Matching of Needs and Resources Will Lead 
to Better Weapon System Outcomes. GAO-01-288. Washington, D.C.: March 
8, 2001. 

GAO. Best Practices: A More Constructive Test Approach Is Key to Better 
Weapon System Outcomes. GAO/NSIAD-00-199. Washington, D.C.: July 31, 
2000. 

GAO. Executive Guide: Creating Value Through World-class Financial 
Management. GAO/AIMD-00-134. Washington, D.C.: April 2000. 

GAO. Defense Acquisition: Best Commercial Practices Can Improve Program 
Outcomes. GAO/T-NSIAD-99-116. Washington, D.C.: March 17, 1999. 

GAO. Executive Guide: Leading Practices in Capital Decision-Making. 
GAO/AIMD-99-32. Washington, D.C.: December 1998. 

GAO. Best Practices: DOD Can Help Suppliers Contribute More to Weapon 
System Programs. GAO/NSIAD-98-87. Washington, D.C.: March 17, 1998. 

GAO. Budget Issues: Budgeting for Capital. GAO/T-AIMD-98-99. 
Washington, D.C.: March 6, 1998: 

GAO. Best Practices: Successful Application to Weapon Acquisitions 
Requires Changes in DOD's Environment. GAO/NSIAD-98-56. Washington, 
D.C.: February 24, 1998. 

Joint Financial Management Improvement Program. Framework for Federal 
Financial Management Systems. FFMSR-0. January 1995. 

HUMAN CAPITAL: 

GAO. Human Capital: Principles, Criteria, and Processes for 
Governmentwide Federal Human Capital Reform. GAO-05-69SP Washington, 
D.C.: December 1, 2004. 

GAO. Posthearing Questions Related to Assessing Progress in Human 
Capital Management. GAO-04-1072R. Washington, D.C.: September 3, 2004. 

GAO. Human Capital: Building on the Current Momentum to Transform the 
Federal Government. GAO-04-976T Washington, D.C.: July 20, 2004. 

GAO. Human Capital: Increasing Agencies' Use of New Hiring 
Flexibilities. GAO-04-959T Washington, D.C.: July 13, 2004. 

GAO. Human Capital: Key Practices to Increasing Federal Telework. GAO- 
04-950T Washington, D.C.: July 8, 2004. 

GAO. Human Capital: Selected Agencies' Use of Alternative Service 
Delivery Options for Human Capital Activities. GAO-04-679. Washington, 
D.C.: June 25, 2004. 

GAO. Posthearing Questions Related to Agencies' Implementation of the 
Chief Human Capital Officers (CHCO) Act. GAO-04-897R. Washington, D.C.: 
June 18, 2004. 

GAO. Human Capital: Additional Collaboration Between OPM and Agencies 
Is Key to Improved Federal Hiring. GAO-04-797. Washington, D.C.: June 
7, 2004. 

GAO. Human Capital: Status of Efforts to Improve Federal Hiring. GAO- 
04-796T. Washington, D.C.: June 7, 2004. 

GAO. Highlights of a GAO Forum: Workforce Challenges and Opportunities 
For the 21st Century: Changing Labor Force Dynamics and the Role of 
Government Polices. GAO-04-845SP Washington, D.C.: June 2004. 

GAO. Human Capital: Senior Executive Performance Management Can Be 
Significantly Strengthened to Achieve Results. GAO-04-614. Washington, 
D.C.: May 26, 2004. 

GAO. Human Capital: Observations on Agencies' Implementation of the 
Chief Human Capital Officers Act. GAO-04-800T Washington, D.C.: May 18, 
2004. 

GAO. Human Capital: A Guide for Assessing Strategic Training and 
Development Efforts in the Federal Government. GAO-04-546G. Washington, 
D.C.: March 2004. 

GAO. Human Capital: Selected Agencies' Experiences and Lessons Learned 
in Designing Training and Development Programs. GAO-04-291. Washington, 
D.C.: January 30, 2004. 

GAO. Human Capital: Implementing Pay for Performance at Selected 
Personnel Demonstration Projects. GAO-04-83. Washington, D.C.: January 
23, 2004. 

GAO. Acquisition Management: Agencies Can Improve Training on New 
Initiatives. GAO-03-281. Washington, D.C.: January 15, 2003. 

GAO. Acquisition Workforce: Status of Agency Efforts to Address Future 
Needs. GAO-03-55. Washington, D.C.: December 18, 2002. 

GAO. Human Capital: Effective Use of Flexibilities Can Assist Agencies 
in Managing Their Workforces. GAO-03-2. Washington, D.C.: December 6, 
2002. 

GAO. Acquisition Workforce: Department of Defense's Plans to Address 
Workforce Size and Structure Challenges. GAO-02-630. Washington, D.C.: 
April 30, 2002. 

GAO. A Model of Strategic Human Capital Management. GAO-02-373SP 
Washington, D.C.: March 15, 2002. 

U.S. Office of Personnel Management. Human Resources Flexibilities and 
Authorities in the Federal Government. Washington, D.C.: July 25, 2001. 

GAO. Managing For Results: Emerging Benefits From Selected Agencies' 
Use of Performance Agreements. GAO-01-115. Washington, D.C.: October 
30, 2000. 

GAO. Best Practices: DOD Training Can Do More to Help Weapon System 
Programs Implement Best Practices. GAO/NSIAD-99-206. Washington, D.C.: 
August 16, 1999. 

KNOWLEDGE AND INFORMATION MANAGEMENT: 

GAO. Defense Acquisitions: Better Information Could Improve Visibility 
over Adjustments to DOD's Research and Development Funds. GAO-04-944. 
Washington, D.C.: September 17, 2004. 

GAO. Best Practices: Using Spend Analysis to Help Agencies Take a More 
Strategic Approach to Procurement. GAO-04-870. Washington, D.C.: 
September 16, 2004. 

GAO. Information Technology: DOD's Acquisition Policies and Guidance 
Need to Incorporate Additional Best Practices and Controls. GAO-04-722. 
Washington, D.C.: July 30, 2004. 

GAO. Acquisition/Financial Systems Interface Requirements: Checklist 
for Reviewing Systems under the Federal Financial Management 
Improvement Act. GAO-04-650G. Washington, D.C.: June 2004. 

GAO. Defense Acquisitions: Knowledge of Software Suppliers Needed to 
Manage Risks. GAO-04-678. Washington, D.C.: May 25, 2004. 

GAO. Information Technology Investment Management: A Framework for 
Assessing and Improving Process Maturity. GAO-04-394G. Washington, 
D.C.: March 2004, Version 1.1. 

GAO. Financial Management: Some DOD Contractors Abuse the Federal Tax 
System with Little Consequence. GAO-04-95. Washington, D.C.: February 
12, 2004. 

GAO. Best Practices: Using a Knowledge-Based Approach to Improve Weapon 
Acquisition. GAO-04-386SP Washington, D.C.: January 2004. 

GAO. Best Practices: Improved Knowledge of DOD Service Contracts Could 
Reveal Significant Savings. GAO-03-661. Washington, D.C.: June 9, 2003. 

GAO. Contracting for Information Technology Services. GAO-03-384R. 
Washington, D.C.: February 14, 2003. 

GAO. Assessing the Reliability of Computer-Processed Data. GAO-03-273G. 
Washington, D.C.: October 2002, External Version 1. 

Joint Financial Management Improvement Program. Acquisition/Financial 
Systems Interface Requirements. JFMIP-SR-02-02. June 2002. 

Joint Financial Management Improvement Program. Core Financial System 
Requirements. JFMIP-SR-02-O1. November 2001. 

GAO. Executive Guide: Creating Value Through World-class Financial 
Management. GAO/AIMD-00-134. Washington, D.C.: April 2000. 

GAO. Federal Information System Controls Audit Manual, Volume I - 
Financial Statement Audits. GAO/AIMD-12.19.6. Washington, D.C.: January 
1999. 

GAO. Assessing Risks and Returns: A Guide for Evaluating Federal 
Agencies' IT Investment Decision-making. GAO/AIMD-10.1.13. Washington, 
D.C.: February 1997. 

GAO. Information Technology Investment: Agencies Can Improve 
Performance, Reduce Costs, and Minimize Risks. GAO/AIMD-96-64. 
Washington, D.C.: September 30, 1996. 

Joint Financial Management Improvement Program. Framework for Federal 
Financial Management Systems. FFMSR-0. January 1995. 

GAO-05-218G: 
Download this publication from GAO's Web site: 
www.gao.gov/cgi-bin/getrpt?GAO-05-218G: 

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