This is the accessible text file for CG Presentation number GAO-11- 209CG entitled 'Acquisition Reform Challenges Facing Government' which was released on December 1, 2010. This text file was formatted by the U.S. Government Accountability Office (GAO) to be accessible to users with visual impairments, as part of a longer term project to improve GAO products' accessibility. Every attempt has been made to maintain the structural and data integrity of the original printed product. Accessibility features, such as text descriptions of tables, consecutively numbered footnotes placed at the end of the file, and the text of agency comment letters, are provided but may not exactly duplicate the presentation or format of the printed version. The portable document format (PDF) file is an exact electronic replica of the printed version. We welcome your feedback. Please E-mail your comments regarding the contents or accessibility features of this document to Webmaster@gao.gov. This is a work of the U.S. government and is not subject to copyright protection in the United States. It may be reproduced and distributed in its entirety without further permission from GAO. 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. Acquisition Reform Challenges Facing Government: Integrated Program Management 2010 Conference: Bethesda, Maryland: November 8, 2010: By Gene L. Dodaro: Acting Comptroller General: U.S. Government Accountability Office: GAO-11-209CG: Discussion Topics: * Trends Outlined in GAO's Strategic Plan; * Large Scale Acquisitions: Target of Opportunity; * Acquisition Process Breakdowns; * Recent Reform Efforts; * Conclusions. GAO's Strategic Plan: [hyperlink, http://www.gao.govisp.html] Figure: [Refer to PDF for image: Cover of the Strategic Plan: Serving the Congress and the Nation: 2010-2015: United States Government Accountability Office: GAO-10-559SP: [End of figure] GAO's Strategic Plan: Eight Key Trends: * National Security Threats; * Fiscal Sustainability Challenges; * Economic Recovery and Growth; * Global Interdependence; * Science and Technology; * Networks and Virtualization; * Shifting Roles of Government; * Demographic and Societal Change. Large-scale Acquisitions: Target of Opportunity: Figure: Procurement spending trends: [Refer to PDF for image: vertical bar graph] 2001: Government-wide: $266 billion; DOD: $175 billion. 2002: Government-wide: $308 billion; DOD: $203 billion. 2003: Government-wide: $361 billion; DOD: $243 billion. 2004: Government-wide: $381 billion; DOD: $261 billion. 2005: Government-wide: $413 billion; DOD: $291 billion. 2006: Government-wide: $441 billion; DOD: $309 billion. 2007: Government-wide: $466 billion; DOD: $340 billion. 2008: Government-wide: $512 billion; DOD: $379 billion. 2009: Government-wide: $535 billion; DOD: $372 billion. Source: GAO analysis of FPDS-NG data. [End of figure] * Federal procurement spending has climbed to more than $500 billion annually. * But much of the government's major investments have faced persistent cost and schedule growth. Figure: Agencies with High Risk Acquisitions/Contract Management: Refer to PDF for image: 4 photographs with associated information] Department of Defense: * Joint Strike Fighter, * DDG-1000 Destroyer, * Missile warning satellite, * Enterprise Resource Planning systems. Department of Homeland Security: * SBINet, * Passenger Screening System, * Electronic Baggage Screening Program, * Coast Guard Response Boat-Medium. Department of Energy: * National Nuclear Security Administration (NNSA) and the Office of Environmental Management (EM) construction projects. National Aeronautics and Space Administration: * Glory Mission, * Mars Science Lab, * Stratospheric Observatory for Infrared Astronomy. Sources (top to bottom): Lockheed Martin, PEO Ships (PMS 500), Transportation Security Administration, DOE, and NASA/JPL-Caltech. [End of figure] Figure: Approximate percentage of yearly procurements: [Refer to PDF for image: pie-chart and associated table] Approximate percentage of yearly procurements: DOD: 69; DOE: 6%; DHS: 3%; NASA: 3%; GSA: 3%; Other: 16%. DOD: potential for savings due to share of federal procurements and extent of cost growth. Portfolio status: Number of programs; Fiscal year 2003: 77; Fiscal year 2007: 95; Fiscal year 2008: 96. Portfolio status: Total planned commitments; Fiscal year 2003: $1.2 trillion; Fiscal year 2007: $1.6 trillion; Fiscal year 2008: $1.6 trillion. Portfolio status: Commitments outstanding; Fiscal year 2003: $724 billion; Fiscal year 2007: $875 billion; Fiscal year 2008: $786 billion. Portfolio status: Change to total RDT&E costs from first estimate; Fiscal year 2003: 37 percent; Fiscal year 2007: 40 percent; Fiscal year 2008: 42 percent. Portfolio status: Change in total acquisition cost from first estimate; Fiscal year 2003: 19 percent; Fiscal year 2007: 26 percent; Fiscal year 2008: 25 percent. Portfolio status: Estimated total acquisition cost growth; Fiscal year 2003: $183 billion; Fiscal year 2007: $301 billion; Fiscal year 2008: $296 billion. Portfolio status: Share of programs with 25 percent or more increase in program acquisition unit cost; Fiscal year 2003: 41 percent; Fiscal year 2007: 44 percent; Fiscal year 2008: 42 percent. Portfolio status: Average delay in delivering initial capabilities; Fiscal year 2003: 18 months; Fiscal year 2007: 21 months; Fiscal year 2008: 22 months. Source: GAO analysis of FPDS-NG data and DOD data. [End of figure] Figure: Examples of percentage of cost growth in major projects being tracked by GAO at DHS, NASA, NOAA: [Refer to PDF for image: vertical bar graph] TSA: 35%; 37%; 59%. Coast Guard: 30%; 38%; 29%; 52%; 23%. NASA: 53%; 68%; 18%. Joint NOAA/DOD: 79%. Note: delayed baselining and frequent rebaselining masks actual cost growth for some projects. Source: GAO analysis of official cost data in the exhibit 300 required by OMB (TSA and Coast Guard) and GAO analysis of project data (NASA and NOAA). [End of figure] What Happens When the Acquisition Process Breaks Down? GAO reports have highlighted a number of underlying systemic causes for cost growth and schedule delays at both the program and strategic levels. Figure: [Refer to PDF for image: 4 photograph collage] Strategic Foundation: Business case: Program Execution. Sources (clockwise from upper left): Photodisc, Eyewire, and Dynamic Graphics; Lockheed Martin. [End of figure] Acquisition Issues: * Business Case: Requirements do not always match resources at program start. * Execution: Once they begin, programs are often moved forward with too many unknowns. Figure: [Refer to PDF for image: photograph] Business case: Program Execution. Source: Lockheed Martin. [End of figure] Acquisition Best Practices: Best practices organizations require that knowledge about requirements and resources be in-hand before program start and moving into more difficult phases. Figure: [Refer to PDF for image: stacked line graph] The graph depicts an accumulation of technical knowledge, design knowledge, and production knowledge, as well as unknowns/risks throughout the program, and highlights the following: Requirements setting; Development start: Knowledge point 1; Midpoint: Knowledge point 2; Production: Knowledge point 3. Source: GAO. [End of figure] Common government practice is to push knowledge, and thus risk, to the right, which increases time and money involved in technology, design, production discovery. When problems are examined in more depth, GAO has found agencies are not laying a sound foundation for program execution. Key issues: * Inadequate investment planning; * Gaps in the acquisition workforce; * High risk contracting strategies; * Little accountability; * Weaknesses in cost estimating. Figure: Strategic Foundation: [Refer to PDF for image; 3 photographs] Sources (clockwise from upper left): Photodisc, Eyewire, and Dynamic Graphics. [End of figure] Inadequate Investment Planning: More programs are started than can be funded and too many programs must compete for funding, which, in turn, creates incentives to produce overly optimistic estimates and to over- promise capability. Figure: [Refer to PDF for image: interlocking circle, with one issue leading to the next] Too many programs competing for funding; Costs are underestimated and capability is overpromised; Resulting problems require more money and time, increasing funding competition; bad news is suppressed; Sponsors become more vested as more money and time are spent; customers cannot walk away. Source: GAO (data); Photodisc (image). [End of figure] Acquisition Workforce: Workforce: At DOD, contracting workforce has not kept pace with growth in contract obligations. GAO has also identified gaps in business/technical skills at program level in DOD and deficiencies in workforce planning at DHS. Figure: [Refer to PDF for image: combined vertical bar and line graph; 4 associated photographs] 2001: Changes in DOD Contract Obligations: 175; Contracting Career field: 25. 2002: Changes in DOD Contract Obligations: 203; Contracting Career field: 28. 2003: Changes in DOD Contract Obligations: 241; Contracting Career field: 27. 2004: Changes in DOD Contract Obligations: 261; Contracting Career field: 26. 2005: Changes in DOD Contract Obligations: 291; Contracting Career field: 26. 2006: Changes in DOD Contract Obligations: 309; Contracting Career field: 28. 2007: Changes in DOD Contract Obligations: 340; Contracting Career field: 26. 2008: Changes in DOD Contract Obligations: 379; Contracting Career field: 26. 2009: Changes in DOD Contract Obligations: 372; Contracting Career field: 27. Sources: GAO analysis of FPDS-NG data and DOD data; Dynamic Graphics (images). [End of figure] GAO Guide to Help Improve Cost Estimating: Cost Estimating: Estimates often do not reflect best practices. E.g.: * Do not include all program life cycle costs, * Do not reflect historical data and/or risk data, * Are not reconciled with an independent cost estimate, * Are not updated to reflect actual costs and reasons for variances. Figure: GAO Cost Estimating And Assessment Guide: [Refer to PDF for image: Cover of GAO-09-2SP, GAO Cost Estimating And Assessment Guide] [End of figure] Acquisition Accountability: Figure: Who Is Accountable? [Refer to PDF for image: 2 concentric circles with associated data. DOD: Inner circle: Program manager. Next layer: Military service: Includes Secretary, Under Secretary, Comptroller, Acquisition Executive, Operating Command Executive. Next layer: OSD agencies: Includes Defense Contract Audits Agency, Defense Contract Management Agency, Defense Finance and Accounting Service, Defense Information Systems Agency, Defense Intelligence Agency. Next layer: Top OSD officials: Includes Secretary; Deputy Under Secretary; Under Secretary for Acquisition Technology & Logistics; Comptroller; Director, Program Analysis and Evaluation, General Counsel, Operational Test & Evaluation; Inspector General; Joint Chiefs of Staff. Outer layer: External oversight: Includes OMB, Congress, Government Accountability Office. Best practices: Inner circle: Program manager. Next layer: Vice president: Includes CEO, COO, CFO, Chief Engineer, and sometimes project office. Outer layer: Top executive. Source: GAO. [End of figure] Accountability: Program managers cannot be held accountable when the programs they are handed already have a low probability of success and if they are not empowered to say no to changes that affect their business case such as new requirements. Recent Reform Efforts: [Photograph of Capitol Building. Source: GAO] Congressional and Agency Action: * 2009 Weapon System Acquisition Reform Act placed greater emphasis on front-end planning and establishing sound business cases for starting programs. * For example, the provisions strengthen systems engineering and cost estimating, and require early milestone reviews, prototyping, and preliminary designs. * DOD has continued to embed best practices into policy. Recent initiatives announced by the Secretary of Defense focus on increasing efficiencies in acquisition and changing contractor incentives. Conclusions: * In the current fiscal environment, agencies who rely heavily on acquisitions to carry out their missions cannot afford to pass up opportunities to address inefficiencies and free up resources for higher priority needs. * Important steps have been taken but we have seen previous attempts to embrace best practices and reign in cost and schedule overruns fail or result in just marginal improvements because they were not accompanied with a stronger foundation on which program managers can launch programs and more consistent and steadfast support once agencies have committed to programs. * The success of reform efforts will depend in part on how consistently new provisions are implemented; whether underlying obstacles are removed; and whether program managers, contractors, senior leaders can be held accountable for performance. On the Web: Web site: [hyperlink, http://www.gao.gov/cghome/index.html]. Contact: Chuck Young, Managing Director, Public Affairs: YoungC1@gao.gov (202) 512-4800: U.S. Government Accountability Office: 441 G Street NW, Room 7149: Washington, D.C. 20548: Copyright: This is a work of the U.S. government and is not subject to copyright protection in the United States. The published product may be 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. [End of presentation]