State Department
State Has Initiated a More Systematic Approach for Managing Its Aviation Fleet Gao ID: GAO-07-264 February 2, 2007The Department of State's (State) Bureau of International Narcotics and Law Enforcement Affairs (INL) owns 357 helicopters and fixed-wing aircraft (valued at over $340 million) primarily to help carry out its counternarcotics efforts, such as aerial eradication of drug crops in Colombia. INL relies on contractor support to help maintain and operate its aircraft. In 2004, GAO analysis showed that INL lagged behind other agencies in implementing Office of Management and Budget (OMB) and General Services Administration (GSA) aviation fleet management principles. GAO was mandated to review INL's management and oversight of this fleet. GAO specifically examined (1) the extent INL has complied with OMB and GSA aviation fleet management guidance and (2) how INL has overseen its aviation support contracts. Since INL has undertaken initiatives to address the weaknesses GAO observed, GAO makes no recommendations. GAO will follow up to ensure that these initiatives are completed, as planned. In comments on this report, State highlighted reforms under way. State also indicated that INL conducted analyses to justify most aviation investments. GAO notes, however, that the documentation provided did not reflect the key analyses called for by OMB guidance.
Despite some improvements since 2004, INL has not yet employed a systematic process for managing its aviation fleet that adheres to OMB and GSA guidance intended to help federal programs ensure that they acquire, manage, and modernize their aircraft in a cost-effective manner. However, in October 2006, INL began a number of initiatives to improve compliance with this guidance. The guidance entails three key principles: (1) assessing a program's long-term fleet requirements, (2) acquiring the most cost-effective fleet of aircraft to meet those requirements, and (3) assessing fleet performance. INL's initiatives are intended to address weaknesses in the following three areas: (1) Long-term planning. Since 2004, INL has prepared a strategic plan and a Critical Flight Safety Program to refurbish certain aircraft and replace others to meet projected mission needs. However, this effort did not address the long-term aircraft needs of all INL aviation programs. (2) Fleet investment justifications. INL has funded multimillion dollar aircraft investments, including the acquisition of new aircraft and major overhauls of older assets, without documenting cost-benefit and life cycle cost analyses of alternatives. (3) Fleet composition assessment. INL has not reviewed the composition of its entire fleet to demonstrate that its aircraft are the most appropriate and cost-effective to meet mission requirements. INL is hampered in assessing the performance of its fleet because it does not have complete and reliable aircraft cost and usage data. INL has undertaken a study to assess the aviation fleet's overall composition, identify investment needs, and assess alternative approaches for meeting those needs. INL expects completion of this and other initiatives in 2007. Regarding contract oversight, INL has met applicable federal, agency, and contract-specific requirements for managing its aviation support contracts. In addition to direct contractor oversight, State has used quantitative measures, primarily aircraft readiness rates, to monitor and assess contractor performance.
GAO-07-264, State Department: State Has Initiated a More Systematic Approach for Managing Its Aviation Fleet
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Report to Congressional Committees:
United States Government Accountability Office:
GAO:
February 2007:
State Department:
State Has Initiated a More Systematic Approach for Managing Its
Aviation Fleet:
GAO-07-264:
GAO Highlights:
Highlights of GAO-07-264, a report to congressional committees
Why GAO Did This Study:
The Department of State‘s (State) Bureau of International Narcotics and
Law Enforcement Affairs (INL) owns 357 helicopters and fixed-wing
aircraft (valued at over $340 million) primarily to help carry out its
counternarcotics efforts, such as aerial eradication of drug crops in
Colombia. INL relies on contractor support to help maintain and operate
its aircraft.
In 2004, GAO analysis showed that INL lagged behind other agencies in
implementing Office of Management and Budget (OMB) and General Services
Administration (GSA) aviation fleet management principles. GAO was
mandated to review INL‘s management and oversight of this fleet. GAO
specifically examined (1) the extent INL has complied with OMB and GSA
aviation fleet management guidance and (2) how INL has overseen its
aviation support contracts.
Since INL has undertaken initiatives to address the weaknesses GAO
observed, GAO makes no recommendations. GAO will follow up to ensure
that these initiatives are completed, as planned. In comments on this
report, State highlighted reforms under way. State also indicated that
INL conducted analyses to justify most aviation investments. GAO notes,
however, that the documentation provided did not reflect the key
analyses called for by OMB guidance.
What GAO Found:
Despite some improvements since 2004, INL has not yet employed a
systematic process for managing its aviation fleet that adheres to OMB
and GSA guidance intended to help federal programs ensure that they
acquire, manage, and modernize their aircraft in a cost-effective
manner. However, in October 2006, INL began a number of initiatives to
improve compliance with this guidance. The guidance entails three key
principles: (1) assessing a program‘s long-term fleet requirements, (2)
acquiring the most cost-effective fleet of aircraft to meet those
requirements, and (3) assessing fleet performance. INL‘s initiatives
are intended to address weaknesses in the following three areas:
* Long-term planning. Since 2004, INL has prepared a strategic plan and
a Critical Flight Safety Program to refurbish certain aircraft and
replace others to meet projected mission needs. However, this effort
did not address the long-term aircraft needs of all INL aviation
programs.
* Fleet investment justifications. INL has funded multimillion dollar
aircraft investments, including the acquisition of new aircraft and
major overhauls of older assets, without documenting cost-benefit and
life cycle cost analyses of alternatives.
* Fleet composition assessment. INL has not reviewed the composition of
its entire fleet to demonstrate that its aircraft are the most
appropriate and cost-effective to meet mission requirements. INL is
hampered in assessing the performance of its fleet because it does not
have complete and reliable aircraft cost and usage data. INL has
undertaken a study to assess the aviation fleet‘s overall composition,
identify investment needs, and assess alternative approaches for
meeting those needs. INL expects completion of this and other
initiatives in 2007.
Regarding contract oversight, INL has met applicable federal, agency,
and contract-specific requirements for managing its aviation support
contracts. In addition to direct contractor oversight, State has used
quantitative measures, primarily aircraft readiness rates, to monitor
and assess contractor performance.
Figure: Examples of INL Aircraft:
[See PDF for Image]
Source: INL.
[End of Figure]
[Hyperlink, http://www.gao.gov/cgi-bin/getrpt?GAO-07-264].
To view the full product, including the scope and methodology, click on
the link above. For more information, contact Jess T. Ford at (202) 512-
4268 or FordJ@gao.gov.
[End of Section]
Contents:
Letter:
Results in Brief:
Background:
State Did Not Employ a Systematic Process for Managing Its Aviation
Fleet in Accordance with OMB and GSA Guidance, but Plans to Do So Are
Under Way:
INL Has Met Contract Oversight and Evaluation Requirements:
Conclusions:
Agency Comments and Our Evaluation:
Appendix I: Scope and Methodology:
Appendix II: Comments from the Department of State:
GAO Comments:
Appendix III: GAO Contact and Staff Acknowledgments:
Table:
Table 1: Funds Allocated for Aviation Activity for Fiscal Years 2002-
2006:
Figures:
Figure 1: Worldwide Distribution of INL Aircraft as of September 1,
2006:
Figure 2: Examples of Aircraft Owned by INL:
Figure 3: Aviation Fleet Management Planning Process:
Abbreviations:
GSA: General Services Administration:
INL: Bureau of International Narcotics and Law Enforcement Affairs:
NAS: Narcotics Affairs Section:
OMB: Office of Management and Budget:
United States Government Accountability Office:
Washington, DC 20548:
February 2, 2007:
The Honorable Patrick J. Leahy:
Chairman:
The Honorable Judd Gregg:
Ranking Minority Member:
Subcommittee on State, Foreign Operations, and Related Programs:
Committee on Appropriations:
United States Senate:
The Honorable Nita M. Lowey:
Chairman:
The Honorable Frank R. Wolf:
Ranking Minority Member:
Subcommittee on State, Foreign Operations, and Related Programs:
Committee on Appropriations:
House of Representatives:
Since fiscal year 2001, Congress has appropriated about $5 billion to
the Department of State's (State) Bureau of International Narcotics and
Law Enforcement Affairs (INL) for counternarcotics, counterterrorism,
and law enforcement programs. State owns an aviation fleet--primarily
to help INL carry out its counternarcotics efforts--that, as of
September 1, 2006, totaled 357 aircraft.[Footnote 1] Valued by State at
over $340 million, the fleet is the second largest among U.S.
government civilian agencies and includes aircraft in the United States
and seven other countries--Afghanistan, Bolivia, Colombia, Ecuador,
Mexico, Pakistan, and Peru. INL has allocated about $2.2 billion for
aviation activities during fiscal years 2002 through 2006. The aircraft
are property of the U.S. government, though some are provided to
countries on a no-cost lease basis. INL uses contractor support to help
operate and maintain the aircraft, which are used in a wide variety of
counternarcotics operations, from spraying herbicides on coca and opium
poppies in Colombia and transporting the Colombian Army in support of
its operations[Footnote 2] to helping to secure the border between
Afghanistan and Pakistan. When called upon, INL aircraft may also be
used to conduct medical evacuations, search and rescue missions, and
other counternarcotics-related operations. INL acquired a significant
portion of its fleet since 2000 to support the implementation of Plan
Colombia, established by the Colombian government in 1999 to reduce the
cultivation, processing, and distribution of illegal narcotics by 50
percent over 6 years, among other goals.
In recent years, funding for INL's aviation fleet has been provided
primarily through the Andean Counterdrug Initiative and the
International Narcotics Control and Law Enforcement appropriations.
Most of the aircraft are managed by INL's Office of Aviation (also
called the Air Wing) headquartered at Patrick Air Force Base in
Florida. However, other aircraft are managed by INL offices (often
called a Narcotics Affairs Section or NAS) in the U.S. embassy in the
countries where the aircraft are stationed.
In 2004, we reviewed the management of Air Wing's operations and found
that the Air Wing had not implemented several key principles of fleet
management planning, as outlined in Office of Management and Budget
(OMB) and General Services Administration (GSA) guidance.[Footnote 3]
This guidance is intended to help agencies make sound decisions in
acquiring aircraft and managing their aviation fleets. At that time,
our analysis showed that INL lagged behind other federal programs we
reviewed, particularly in terms of long-term planning and justifying
acquisitions. Also, in its report on State's fiscal years 2004 and 2005
financial statements, State's external financial auditor noted that
State had ineffective controls over its aviation fleet and cited this
shortcoming as a material weakness.[Footnote 4] More recently, State's
Office of Inspector General reported that, due to ineffective controls
in tracking and reporting on its fleet, State underreported the value
of its aircraft and parts by $162 million.[Footnote 5] In 2005, the
Senate Appropriations Committee commented that the lack of central
program management and funding for INL aviation programs has resulted
in contract cost growth, poor execution, and inadequate financial
management. The committee directed the Comptroller General to review
the management and oversight of State's aviation fleet.[Footnote 6]
In response to this mandate, we reviewed INL's overall management of
its aviation programs. We specifically examined (1) the extent to which
INL has managed its aviation fleet in accordance with OMB and GSA
guidance and (2) how INL has overseen aviation support contracts and
whether it did so in accordance with applicable standards.
To address these objectives, we reviewed OMB and GSA guidance and
related federal regulations for managing aircraft and other capital
asset programs, as well as applicable federal financial and contract
management regulations and guidance. We reviewed policy, program,
budget, and financial documentation and interviewed cognizant officials
at INL in Washington, D.C. We also examined applicable documentation
and interviewed INL and contract officials about fleet operations,
financial management, and contract oversight at the Air Wing's main
operating base at Patrick Air Force Base, Florida, and at various sites
in Colombia. We chose Colombia because about two-thirds of INL's active
aviation fleet is in that country and three contractors carry out
aviation programs there. See appendix I for a more detailed description
of our scope and methodology. We conducted our review from February
2006 through January 2007 in accordance with generally accepted
government auditing standards.
Results in Brief:
INL has not employed a systematic process for managing its aviation
fleet that adheres to OMB and GSA guidance. This guidance entails three
key principles: (1) assessing a program's long-term fleet requirements,
(2) acquiring the most cost-effective fleet of aircraft to meet those
requirements, and (3) assessing fleet performance. Since INL offices
have acquired and deployed hundreds of aircraft in response to the
emerging needs of U.S. counternarcotics foreign assistance programs
without fully adhering to federal aviation fleet guidance, INL has
limited assurance that its aircraft investment decisions have been cost-
effective for the government. In October 2006, INL began to take
initiatives to centralize key aspects of aviation fleet management and
address the following three key areas of noncompliance with OMB and GSA
guidance we identified:
* Strategic planning for aviation-related activities was not
comprehensive. According to OMB and GSA guidance, a strategic
assessment of long-term fleet requirements is the basis of sound fleet
management. Beginning in 2004, Air Wing prepared a strategic plan for
its Air Wing operations and developed a Critical Flight Safety Program
to rebuild certain aircraft and replace others to meet projected aerial
eradication needs. This planning effort, however, did not address the
long-term aircraft needs of other types of counternarcotics and
counterterrorism activities not managed by the Air Wing, such as
providing aircraft to support certain programs with the Colombian
National Police and the Colombian Air Force. INL plans to complete an
aviation fleet study in fiscal year 2007, which is intended to analyze
the bureau's overall aircraft needs and form the basis for a long-term
plan.
* Aviation fleet investments were not systematically justified. INL has
funded major, multimillion dollar aircraft investments, including the
acquisition of aircraft and major overhauls of older assets, without
conducting formal analyses to justify them. According to OMB guidance,
agencies should justify major investments in their aviation fleet with
a capital asset plan and business case, which, among other things,
analyzes three viable alternatives and calculates their life cycle
costs. According to OMB and GSA officials we consulted, without such
analyses, State cannot demonstrate that the investments included in the
department's budgets are the most appropriate and economical for its
missions. According to INL officials, however, adherence to federal
guidance was not always practical for INL during the years after Plan
Colombia implementation began in 2000, as program managers needed to
respond rapidly to political exigencies by acquiring readily available
surplus aircraft and procuring new aircraft specifically mandated by
legislation. According to INL officials, INL has tasked a consulting
firm to conduct the formal analyses of alternative approaches needed to
justify future aircraft investments in accordance with OMB guidance.
The analyses are planned to be completed in 2007. Also, INL plans to
issue an aviation program policy guide in 2007 to establish policies
and directives on aircraft investments.
* Aviation fleet cost and performance were not routinely assessed. INL
was not routinely reviewing the composition of its entire fleet, as
called for under OMB guidance, to demonstrate that its aircraft are the
most appropriate and cost-effective to meet mission requirements.
Furthermore, INL is hampered in assessing the performance of its fleet
by a lack of comprehensive and reliable aircraft cost and usage data.
INL's planned aviation fleet study is expected to include an assessment
of the soundness of the composition of INL's aviation fleet and
identification of appropriate performance measures to be included in an
annual performance plan. In 2007, INL also plans to make improvements
in the compilation of cost and usage data for its aircraft.
In managing its aviation support contracts, INL has met both State's
overall requirements and contract-specific oversight and management
requirements. Air Wing and NAS officials interacted frequently with
contract managers, made regular site visits, and reviewed regular
progress reports. Furthermore, INL has established performance metrics
and used them to ensure that contractors are meeting the terms of their
contracts. For example, in 2005, State and DynCorp International
entered into a new contract, whereby INL and DynCorp assess performance
using an extensive set of indicators. Implementation of this
performance measurement system has been challenging for both INL and
the contractor. Metrics have not yet been developed for all aspects of
contractor performance, and reliable data are not yet available for
some indicators. Nonetheless, INL has used other key metrics,
particularly aircraft operational readiness rates, to hold its
contractors accountable for contract performance requirements. To
ensure greater consistency in the implementation of aviation support
contracts, INL plans to assign Air Wing the primary responsibility for
managing and overseeing all aviation support contracts.
Since INL has undertaken a number of initiatives to address the
management weaknesses we observed, we are not making any
recommendations in this report. However, we will follow up with INL to
ensure that these initiatives have been completed in 2007, as planned.
In commenting on a draft of this report, State highlighted the
management initiatives under way at INL to improve the effectiveness
and efficiency of aviation fleet operations, as well as to adhere to
OMB and GSA guidance. State also indicated that, contrary to the
observations in our report, INL conducted analyses to justify most
aviation investments. However, the documentation that INL provided to
us did not reflect the analyses called for by OMB guidance.
Background:
INL manages its aviation fleet in a decentralized manner. The Air Wing
manages about two-thirds of INL's 357 aircraft, while the NAS at four
embassies manages the remainder. Figure 1 shows the distribution of INL
supported aircraft worldwide.
Figure 1: Worldwide Distribution of INL Aircraft as of September 1,
2006:
[See PDF for image]
Source: GAO based on INL (data); Map Resources (map).
Note: The principal locations of the aircraft are indicated; aircraft
may be relocated on a temporary basis as necessary.
[End of figure]
The Air Wing is responsible for assisting host nations eradicate
illicit drug crops and detect, monitor, and interdict drug production
and trafficking operations. In Colombia, it also assists the Colombian
Army with counterterrorism operations. To accomplish these missions,
through its contract with DynCorp International, the Air Wing uses an
active fleet of 179 aircraft, including helicopters and fixed-wing
airplanes, to undertake aerial eradication in Colombia; support manual
eradication of drug crops in Afghanistan, Bolivia, and Peru; and
enhance border security between Afghanistan and Pakistan. Operations
often take place in hostile environments, which can place aircraft and
personnel under small arms fire. These programs are managed by the Air
Wing headquarters office at Patrick Air Force Base in Florida. As the
aircraft program's contractor, DynCorp performs major maintenance and
initial pilot training at Patrick Air Force Base and flies and
maintains U.S. aircraft and trains foreign personnel at various
locations in Afghanistan, Bolivia, Colombia, Peru and Pakistan.
Training for some of the spray aircraft is also conducted at Kirtland
Air Force Base in New Mexico, a location that helps simulate the
mountainous environment of Colombia.
In addition, the NAS offices within the U.S. embassies in Colombia,
Ecuador, Mexico, and Peru manage a total of 98 aircraft to support a
variety of host government counternarcotics efforts, with the
involvement and oversight of the INL Office of Latin American Programs.
For example, through contracts with ARINC and Lockheed Martin, the NAS
in Colombia provides aircraft to assist the (1) Colombian Air Force in
interdicting suspicious aircraft and (2) Colombian National Police in
conducting aerial eradication and interdiction operations, humanitarian
missions, and other activities. The NAS in Mexico provides both new and
older model U.S. government-owned helicopters to Mexico's Office of
Attorney General for use in counternarcotics operations, including
aerial surveillance, border security, and training. INL also funds
ARINC to assist the Government of Mexico in maintaining these aircraft.
INL supports a wide variety of rotary and fixed-wing aircraft. Some are
excess defense aircraft that have been refurbished, while others were
purchased for use in INL programs. Figure 2 depicts examples of types
of aircraft owned and supported by INL.
Figure 2: Examples of Aircraft Owned by INL:
[See PDF for image]
Source: INL.
[End of figure]
Most of the funds used to support INL's aviation fleet come from two
annual appropriations--the International Narcotics Control and Law
Enforcement and Andean Counterdrug Initiative--and supplemental
appropriations in some years. During fiscal year 2002 through 2006, INL
records indicate that it allocated about $2.2 billion for its aviation
activities. Table 1 shows a breakdown of the total amount allocated for
aviation activities by fiscal year and appropriation.
Table 1: Funds Allocated for Aviation Activity for Fiscal Years 2002-
2006 (dollars in millions):
Fiscal year: 2002;
International Narcotics Control and Law Enforcement: $67.6;
Andean Counterdrug Initiative: $289.0;
Total: $356.6.
Fiscal year: 2003;
International Narcotics Control and Law Enforcement: 76.1;
Andean Counterdrug Initiative: 366.3;
Total: 442.4.
Fiscal year: 2004;
International Narcotics Control and Law Enforcement: 125.3;
Andean Counterdrug Initiative: 316.4;
Total: 441.7.
Fiscal year: 2005;
International Narcotics Control and Law Enforcement: 175.6;
Andean Counterdrug Initiative: 313.7;
Total: 489.3.
Fiscal year: 2006;
International Narcotics Control and Law Enforcement: 168.4;
Andean Counterdrug Initiative: 348.0;
Total: 516.4.
Total;
International Narcotics Control and Law Enforcement: $613.0;
Andean Counterdrug Initiative: $1,633.4;
Total: $2,246.4.
Source: INL "Congressional Notifications" and "Congressional Budget
Justifications."
[End of table]
INL allocates its aircraft funds to a NAS for some country programs and
to the Air Wing. INL aircraft funding is also embedded in various
program budgets, such as the Air Bridge Denial Program in Colombia.
These program funds are primarily used to pay for three aviation
support contractors that repair and maintain the aircraft, train
aircraft crews and mechanics and, in some instances, fly the aircraft.
Federal Guidance for Aircraft Management:
OMB provides the following guidance for State and other agencies to
follow in managing capital acquisitions, including aviation programs:
* Circular No. A-126,[Footnote 7] which is intended to minimize cost
and improve the management and use of governmental aviation resources,
prescribes policies for acquiring, managing, using, accounting for the
costs of, and disposing of aircraft. According to the circular,
agencies should not have more aircraft than they need to fulfill their
mission, and they should periodically review the cost effectiveness of
their entire fleet of owned aircraft.
* Circular No. A-76 establishes policy for the competition and
contracting out of commercial activities, including the use of
aircraft, and provides guidance for conducting cost comparisons to
determine if the private sector could provide aviation services at a
lower cost.[Footnote 8]
* Circular No. A-11, Part 7, establishes policy for planning,
budgeting, acquisition, and management of federal capital assets,
including aircraft, and requires agencies to submit a capital asset
plan and business case summary (an "Exhibit 300") for all major capital
investments, including aircraft acquisitions and overhauls.[Footnote 9]
The exhibit should demonstrate that the agency analyzed three
alternatives and calculated the life cycle costs for each. OMB provides
procedural and analytic guidance, including its "Capital Programming
Guide,"[Footnote 10] for implementing specific aspects of this policy.
OMB Circular No. A-126 also sets out responsibilities for GSA regarding
aircraft management. In implementing this circular, GSA establishes
governmentwide policy on various aspects of aircraft management,
including procurement, operation, safety, and disposal, and publishes
its regulatory policies in the Code of Federal Regulations. GSA,
through the Interagency Committee for Aviation Policy,[Footnote 11]
also published a number of other guides and manuals to help agencies
manage aircraft acquisitions, use, and disposal. Its "Fleet
Modernization Planning Guide," in particular, aids programs in
developing cost-effective fleet replacement plans.
A comprehensive aviation fleet management planning process detailed in
guidance that OMB and GSA have issued can help federal aircraft
programs ensure that they acquire, manage, and modernize their aircraft
in a cost-effective manner. Sound fleet management decisions should be
based on a comprehensive process that relies on three key principles:
(1) assessing a program's long-term fleet requirements, (2) acquiring
the most cost-effective fleet of aircraft to meet those requirements,
and (3) assessing fleet performance to determine if the needs are being
effectively met. Figure 3 illustrates the fleet management planning
process, showing that it is a continuous cycle of planning and
analyses.
Figure 3: Aviation Fleet Management Planning Process:
[See PDF for image]
Sources: GAO analysis of OMB and GSA's fleet management principles.
Aircraft images Art Explosion.
[End of figure]
State Did Not Employ a Systematic Process for Managing Its Aviation
Fleet in Accordance with OMB and GSA Guidance, but Plans to Do So Are
Under Way:
Although INL has made limited progress since we first assessed the Air
Wing's aviation fleet management in 2004 in adhering to OMB and GSA
guidance, the bureau plans to undertake a more systematic management
approach beginning in 2007.[Footnote 12] The bureau has not (1)
conducted a strategic assessment of all long-term fleet requirements,
(2) justified new aircraft investments in a systematic way that
considers the range of alternatives and life cycle costs, or (3)
routinely reviewed the performance of the fleet to ensure that its
composition is the most appropriate and cost-effective to achieve the
bureau's missions. In August 2006, we shared our observations with INL
officials about INL not adhering to OMB guidance, particularly in
justifying new aircraft investments and analyzing the composition of
the aviation fleet. In September 2006, after completing its own review
of aviation program operations, INL officials told us that in October
2006 they would be initiating a number of steps to resolve weaknesses
we observed.
Comprehensive Strategic Assessment of Long-term Fleet Requirements:
According to GSA's guidance and the OMB "Capital Programming Guide," a
strategic assessment of the long-term fleet requirements is the
foundation of fleet management because it identifies future workload
requirements that serve as the basis for aircraft needs. The assessment
process includes specific analyses, such as an assessment of the number
of flight hours needed to meet mission requirements over a multiyear
period and the capability of existing aircraft to meet those
requirements cost effectively. The guidance recommends that, if
shortfalls in the current mix of aircraft are identified, managers
should determine the optimal mix of aircraft to meet anticipated flight
hour and mission requirements and develop a proposed fleet acquisition
or replacement plan to achieve the desired mix of aircraft. This plan
could include an anticipated schedule of time frames for disposing of
inadequate aircraft and procuring replacements.
In 2004, we reported that Air Wing had not engaged in long- term
planning to estimate the future, long-term mission requirements and
what mix of aircraft was best suited for these requirements. Fleet
planning was primarily short-term in nature and focused on identifying
aircraft to meet current and the next year mission requirements.
Since 2004, INL has prepared a strategic plan and a Critical Flight
Safety Program for Air Wing operations. The Air Wing's strategic plan
addresses the goals and long-term needs of its program in terms of
operations, maintenance, logistics, safety, administrative/contract
support, and information technology and communication. While the
strategic plan does not analyze the flight hours needed to meet mission
requirements, it does specify other operational requirements, including
the total area of illicit crops to be sprayed and eradicated over a
number of years. The strategic plan, completed in April 2004, also
indicates the mix of aircraft assets and personnel necessary to meet
these goals. The Air Wing's Critical Flight Safety Program specifies
how the Air Wing plans to achieve the goals in its strategic plan with
the aircraft available--primarily through a combination of aircraft
overhauls and aircraft acquisitions.
However, the Air Wing strategic plan and accompanying Critical Flight
Safety Program did not address the aircraft needs of several INL
aviation-related activities. For example, the strategic plan did not
estimate the operational requirements or flight hours needed to
continue supporting the Colombian Army's operations, including
protection of the Caño Limón-Coveñas pipeline.[Footnote 13] Further,
the Critical Flight Safety Program did not address the long- term
aircraft needs of other INL aviation-related programs, such as
assistance to the Colombian National Police or the Colombian Air
Force's Air Bridge Denial Program,[Footnote 14] or assistance to
Mexico's Office of Attorney General. These other programs represent
over a third of INL's active aviation fleet and, in some cases,
aircraft are closely related to Air Wing operations, such as the
aircraft that NAS Colombia provided to the Colombian National Police to
support aerial eradication.
According to INL officials, INL plans to conduct an aviation fleet
study in fiscal year 2007. The study is expected to take 9 months to
complete and include a needs analysis of INL's current aviation fleet.
The resulting report is expected to specify aircraft requirements in
terms of a number of variables, including payload, range, speed,
endurance, availability, and maintainability, among other factors. This
study is intended to form the basis of a long-term plan for all
aviation-related programs in 2007.
Justification of Aviation Fleet Investments Decisions:
Until recently, INL had not taken actions to prepare the analyses
prescribed by OMB and GSA to help justify aviation fleet investment
decisions. Nor had INL established a set of policies and procedures for
aviation acquisitions.
Analyses of Alternatives Were Not Prepared Until Recently:
According to GSA guidance, after identifying potential aircraft and
developing a proposed fleet replacement plan, aviation managers should
develop a series of analyses to identify and acquire the most cost-
effective aircraft to meet mission needs. These analyses should include
preparing a study, as described in OMB Circular No. A- 76, to determine
whether the aviation operations should be performed by the government
or contracted to the private sector. Also, for all major investments,
agencies should prepare a capital asset plan and business case summary
as described in OMB Circular No. A-11, Part 7, Exhibit 300, which
should include the results of an analysis of three alternatives, in
addition to the current arrangement, to help ensure that the most cost-
effective investment is selected. For this comparison of alternatives,
a life cycle cost analysis is needed to provide managers with important
information concerning the total cost of operating and maintaining an
aircraft over its useful life. Such documents should be prepared to
support acquisition of new aircraft, as well as modernization or
enhancements of aircraft already in operation. Once these analyses are
completed, aviation managers should obtain senior management approval
and then acquire needed aircraft or commercial aviation services.
In 2004, we reported that INL used no set criteria for Air Wing
aircraft acquisitions and could not provide any A-76 cost comparison
studies or cost-benefit analyses supporting its aircraft acquisitions.
According to INL officials, the exigent circumstances of its programs
precluded preparation of cost-benefit and other detailed analyses. INL
acquired a large number of aircraft since 2000 to support Plan Colombia
and other counternarcotics and counterterrorism efforts in Colombia,
including 33 UH-1N, 25 UH-II, and 14 UH-60 Black Hawk helicopters. Some
of the aircraft acquired were surplus aircraft that were made available
under a relatively short time frame; other aircraft acquisitions were
congressionally directed.
Since 2004, INL has continued to make multimillion dollar investments
in its aviation fleet, both by acquiring new aircraft or refurbishing
older aircraft it had previously acquired, without conducting the
analyses prescribed by OMB. According to officials we spoke to at OMB,
the Air Wing, NAS Colombia, and the Office of Latin America Programs,
the bureau has never prepared OMB-required justifications, as laid out
in Circulars Nos. A-76 and A-11, for any of its aircraft investments.
For example, in fiscal year 2006, the Air Wing began implementing its
Critical Flight Safety Program, expected to cost a total of $356
million over 6 years, to upgrade and overhaul the aviation fleet used
for Air Wing operations. This investment includes refurbishing several
Vietnam era OV-10 observation airplanes and UH-1N helicopters to extend
their useful life and make them more commercially supportable and
procuring new UH-60 and UH-II helicopters. However, the documentation
Air Wing provided us did not include cost-benefit analyses of
alternatives or a calculation of life cycle costs for each element of
the program. Similarly, in 2004, INL began acquiring 12 new Schweizer
SAC 333 helicopters to support Mexico's Office of Attorney General's
antinarcotics efforts, at a cost of about $15 million, without
conducting the analyses called for in OMB Circular Nos. A-76 and A-11
to justify the acquisitions.
According to OMB and GSA officials we consulted, without the analyses
called for in OMB guidance, State cannot be reasonably certain whether
the aircraft procurements and refurbishments reflected in their budgets
are the most appropriate and economical alternatives. In particular, we
found little evidence that important cost and operational
considerations were formally taken into account when INL decided to
refurbish OV-10 spray aircraft. A NAS Colombia official indicated that
this was not an appropriate investment for Colombia because, among
other reasons, the Colombian government does not have the capacity to
maintain these aircraft after U.S. support for the aerial eradication
program ends. The NAS, therefore, decided to purchase new and
commercially available AT-802 crop dusting aircraft to conduct aerial
eradication in Colombia. Representatives of DynCorp International, the
contractor responsible for maintaining both aircraft, argued that the
AT-802 was more practical and cost-effective to maintain than the OV-
10. Air Wing officials considered the OV-10 refurbishment to be more
appropriate because it kept in service an aircraft with important
safety characteristics, including a dual engine configuration and
ejection seats. A formal analysis of alternatives, including a
calculation of life cycle costs, could have weighed these
considerations on a more objective basis.
INL has recently taken steps to justify its aircraft investment
decisions better. As directed by an appropriations conference
committee,[Footnote 15] INL prepared an analysis of alternatives for
the procurement of new spray aircraft to support its aerial eradication
program in Colombia. In August 2006, we shared our observations with
INL about the lack of supporting analysis for it aircraft investments.
In October 2006, INL tasked a private consulting firm with conducting
analyses in accordance with OMB Circulars Nos. A- 11 and A-76 to
justify an aircraft acquisition intended to replace leased transport
aircraft to support counternarcotics activities in Afghanistan. In
addition, as part of its 2007 fleet study, INL has tasked the same
consulting firm to prepare a capital asset plan and business case, in
accordance with OMB Circular No. A-11, that would identify and analyze
alternatives for filling INL's aircraft needs.
INL Had Not Established Acquisition Policies and Procedures:
OMB Circular No. A-126 requires agencies to issue internal directives
and policies for acquiring and managing aircraft. Responsibility for
implementing these policies should be assigned to a senior management
official who has the agencywide authority and resources to implement
them. INL has not established bureauwide directives and policies
relating to aviation acquisition that incorporate OMB guidance. Program
managers we spoke to at INL and NAS Colombia were unaware of key OMB
acquisition guidance and were unsure about the roles and
responsibilities of the various INL offices in preparing the
justification OMB circulars call for.
INL plans to issue an "Aviation Program Policy Guide" that will set
forth policies, procedures, and responsibilities for managing the
bureau's aviation fleet and serve as a vehicle for planning,
coordination, and dispute resolution. While INL has designated the
director of the Air Wing as the senior aviation management official for
its aviation fleet, this official's authority, roles, and
responsibilities will be defined in the policy guide, according to an
INL official. INL expects that the policy guide will be completed in
2007 and reflect OMB guidance about justifying aviation fleet
investments.
Assessment of Fleet Composition and Performance:
According to OMB Circular No. A-126, agencies are required to review
periodically the continuing need for all of their aircraft and the cost-
effectiveness of their aircraft operations, and then should report any
excess aircraft and release all aircraft that are not fully justified
by this review. A copy of each agency review should be submitted to GSA
and to OMB with the agency's next budget submissions. Federal
regulations call for such studies every 5 years.[Footnote 16] Finally,
managers should incorporate the results of their periodic Circular No.
A-126 reviews into their long-term fleet planning process and make
adjustments to their fleets as needed. We found that INL has neither
assessed the composition of its aviation fleet, nor fully tracked cost
and usage of its aircraft.
Aviation Fleet Composition:
In 2004, we reported that INL had not followed OMB Circular No. A-126
for reviewing the composition of its entire fleet to ensure its cost-
effectiveness.[Footnote 17] According to INL officials we spoke with,
the bureau has still not conducted the type of fleet review that is
called for under OMB Circular No. A-126. Without such a review, INL
cannot demonstrate that the composition of its fleet and planned
additions to it are appropriate and cost-effective.
INL has included in the scope of its fleet study an assessment of the
soundness of the fleet composition and possible alternative aircraft or
approaches to consider. Also, as part of the fleet study, the bureau
plans to identify cost-effective performance measures that can be used
in an annual performance plan.
Aircraft Cost and Usage Data:
Detailed cost and usage data are critical for assessing the cost-
effectiveness of aircraft, and Circular No. A-126 and related federal
regulations require agencies to collect this data in a standardized
format for their entire aviation fleet. One of the most common measures
used to evaluate the cost-effectiveness of various aspects of an
aircraft program is expressed as the cost per flying hour for certain
types of aircraft costs. Other measures include, but are not limited
to, maintenance costs per flying hour; fuel and other fluids costs per
flying hour; and accident repair costs per flying hour (or per
aircraft). Federal regulation 41 C.F.R. 102.33-425 requires federal
agencies to accumulate and report to GSA aircraft usage data and the
cost of operating each aircraft based on the standard aircraft program
cost elements defined in OMB Circular No. A-126.[Footnote 18] In 2004,
we reported that State's fiscal year 2000 through 2002 aircraft program
costs reported to GSA were significantly understated.[Footnote 19]
However, State's information systems do not capture the data necessary
for INL to fully adhere to OMB guidance and related federal regulation
regarding compiling and reporting data on the cost and usage of its
aviation fleet and individual aircraft. In a September 2006 audit of
State's aircraft, the State Office of Inspector General determined that
State did not have a comprehensive and effective cost management system
to record, maintain, and report timely, reliable data on its
aircraft.[Footnote 20] To provide GSA the required information on
aircraft cost and usage, the Air Wing developed an information system
called the Air Wing Information System that compiles cost and usage
data such as flight hours per aircraft and other related information.
However, although the system captured cost and usage data for the 179
aircraft managed by the Air Wing, it did not do so for the 98 aircraft
managed by the Office of Latin American Programs and the NAS offices in
Colombia, Ecuador, Peru, and Mexico.
Additionally, due to financial management system deficiencies and
weaknesses in key internal controls, INL could not provide us
sufficiently reliable[Footnote 21] data on the status of the funds
allocated for its aviation fleet. We requested from INL the amounts
obligated, expended, and available from fiscal year 2001 through 2005
appropriations used to acquire, operate, and maintain its aviation
fleet. INL could not provide the necessary data because its financial
management systems do not readily identify aviation-related costs, even
though State has taken steps to improve data completeness and
additional improvement efforts are under way. Further, the systems do
not accumulate data on the cost of operating individual aircraft based
on the standard cost elements prescribed by OMB, such as costs related
to crew, maintenance, engine overhaul, and fuel. INL officials told us
that it would have to conduct a manual review of thousands of
transaction documents to identify all aircraft costs. We also noted
weaknesses in key internal controls over the recording of financial
transactions and management of funds.[Footnote 22] Specifically, INL
had limited bureauwide written procedures addressing (1) how its staff
should reconcile the financial records that overseas posts
independently maintain with State's Regional Financial Management
System[Footnote 23] or (2) an effective method of reviewing outstanding
obligations for identifying excess funds. These controls are critical
to ensuring accurate and complete data on the status of funds allocated
for INL aviation fleet.
Although State is implementing two new financial management systems,
neither is designed to generate the detailed data INL needs to analyze
the cost-effectiveness of its aviation fleet. INL is spending about $1
million to implement a new bureauwide financial management system,
called the Local Financial Management System, to standardize how each
NAS records financial activity to provide more visibility over NAS
financial activity to INL headquarters. State's Bureau of Resource
Management is also implementing a new departmentwide financial
management system called the Global Financial Management
System.[Footnote 24] However, like the existing systems, neither the
new INL nor the departmentwide systems incorporate the standard program
cost elements outlined in OMB Circular No. A-126 and the related
federal regulation. Officials in State's Bureau of Resource Management
informed us that they were not familiar with INL's cost data
requirements when designing the Global Financial Management System.
Without the ability to accumulate and summarize aircraft costs by
standard program elements, INL will be limited in determining whether
its aviation fleet is managed in a cost-effective manner.
State has taken steps to improve its ability to compile and report
aircraft cost data, such as establishing appropriate codes in its
accounting system. Further, INL plans to assign responsibility for
reporting cost and usage data for all INL aircraft to the Air Wing,
regardless of which office manages the aircraft. According to an Air
Wing official, the Air Wing plans to modify the Air Wing Information
System to capture fleetwide cost and usage data. The Air Wing,
according to the same official, expects the modification to help INL
meet GSA reporting requirements and greatly improve its ability to
capture selected aircraft cost elements. Furthermore, INL plans to use
OMB Circular No. A-126 standard aircraft program cost elements to
prepare a template to standardize budget line items used for all
aviation-related programs. Finally, State officials responsible for
implementing the Global Financial Management System told us that they
plan to address INL's cost data requirements after the system is
implemented in fiscal year 2007 but were not sure whether the new
system can provide the cost data capabilities needed by INL.[Footnote
25]
INL Has Met Contract Oversight and Evaluation Requirements:
Federal regulations require federal agencies to develop and perform
contract quality assurance procedures to verify that services and
supplies provided conform to contract requirements and to maintain
suitable records enumerating quality assurance actions.[Footnote 26]
Since 2004, State regulations have specified a policy that all new
service contracts be performance-based, with clearly defined
deliverables and performance standards.[Footnote 27] The aviation
support contracts with DynCorp International, Lockheed Martin, and
ARINC comply with these regulations and use performance-based metrics
to assess contractor performance; however, the Lockheed Martin and
ARINC contracts make less intensive use of such metrics.[Footnote 28]
Currently the responsibility for contractor oversight for Lockheed and
ARINC is divided among NAS officials in Colombia, the government task
leaders in Washington, D.C., and the contractors located in Colombia.
INL plans to centralize contractor oversight by assigning Air Wing
staff the responsibility for managing all aviation support contractors.
DynCorp International:
In 2005, State and DynCorp International entered into a new performance-
based contract[Footnote 29] whereby State and DynCorp assess contractor
performance using an extensive set of indicators. The contract
establishes standards for several functional areas across which
performance is measured, including maintenance, logistics, operations,
safety, and training. Within these areas, State and DynCorp track 84
specific performance metrics (such as hectares of illicit crop
eradicated, percentage of total aviation fleet available, and host
nation training hours performed) to help assess DynCorp's performance.
In order to manage the oversight of these performance categories, State
and DynCorp use an online tracking system and database; however, this
system has limitations. The performance categories in this system,
called SeeSOR, correspond to the 84 metrics specified in the contract.
The SeeSOR system provides a quality assurance checklist for each
activity and an inspection schedule, regularly prompting State and
DynCorp managers to enter performance information. In the case of poor
ratings, the system automatically produces corrective action reports,
and DynCorp managers track these corrective actions by time and
inspector. Each corrective action issue requires a response within a
specified time frame. However, INL and DynCorp officials in Colombia
told us that SeeSOR is not a comprehensive quality assurance or
contract management tool because it does not include certain activities
that DynCorp performs. For example, force protection, which DynCorp
does in Colombia, is not incorporated into the system. Also, computer
network difficulties make regular data entry from remote locations in
the field problematic. Between November 2005 and September 2006,
DynCorp conducted over 400 audits of information in the system and
found 104 issues requiring corrective action. State and DynCorp are
still fine tuning the system to improve its ability to measure
contractor performance in an environment such as Colombia.
Consequently, State and DynCorp use means other than the SeeSOR system,
such as personal contact, to help oversee contractor performance.
According to INL officials in Colombia, personal contact between INL
and DynCorp is the most valuable monitoring tool. INL and DynCorp
personnel talk and exchange e-mails throughout the day to identify
issues that need attention. In addition, State program managers conduct
daily "walk through" inspections of facilities in Bogotá and make
unannounced site visits to forward operating locations. The DynCorp
manager in Colombia also relies on daily oral communication with
contractor staff outside of Bogotá to stay aware of issues in the
field. Further, DynCorp provides a detailed briefing to INL every week,
which addresses performance across all functional areas of the
contract. All advisers and managers are expected to attend, and minutes
are kept of these meetings. Also, State conducts monthly reviews of
aircraft and eradication reports and formally evaluates DynCorp's
performance every 4 months.
Lockheed Martin:
State and Lockheed Martin began a 4-year contract in July 2006 that
implements a performance-based method for assessing contractor
performance. In the contract, Lockheed Martin and its
subcontractor[Footnote 30] work closely with the Colombian National
Police to support its illicit drug eradication and interdiction and
humanitarian missions, with responsibility for aircraft maintenance,
logistics, police training, and multiple construction projects at bases
across Colombia. Under the contract, the government task leader must
hold regular status meetings, and Lockheed Martin is required to submit
monthly performance reports containing, among other things,
accomplishments and issues that arose during the reporting period,
projected future activities, and subcontractor performance relative to
agreed upon metrics. Lockheed Martin also must implement and maintain a
quality assurance system to ensure that product and service integrity
meet or exceed contract requirements. In addition, the contract
specifies specific performance standards in program management, quality
control, safety, aircraft maintenance, logistics, support maintenance,
training, and information technology. For example, one maintenance
standard specifies that the contractor sustain a 75 percent aircraft
operational readiness rate.
In Colombia, we observed that State maintained regular contact with the
contractor and the Colombian National Police to assess compliance with
contract requirements. State's oversight measures included monitoring
performance in functional areas, such as maintenance, logistics,
training, and safety. While the program manager stated that the
principal performance metric was aircraft readiness rates, State
received and reviewed daily and monthly status reports, memos, and trip
reports, and participated in a quarterly program management review
covering the functional areas above. State attends weekly maintenance
meetings between Lockheed and the Colombian Police. In addition, the
contractor also performed random site visits and fuel inspections,
reporting the findings to the NAS program manager. The NAS uses
standards from the U.S. Army Aviation Management System to produce and
issue standard operating procedures in most functional areas.
However, the planned nationalization of this program and its heavy
involvement with and dependence on the Colombian National Police has
presented challenges to implementing an effective performance-based
contract. Personnel problems within the police force have adversely
affected the contractor's ability to meet nationalization or its
aircraft readiness rate goals. For instance, the contractor reported
absentee rates among police trainees in the logistics branch as high as
25 percent. Further, over half of Colombian helicopter mechanics were
not sufficiently skilled to perform more than routine maintenance tasks
and, therefore, required more contractor supervision than planned. The
contractor also has little influence over personnel decisions within
the police force. The Colombian police frequently rotate their trainees
to different positions, which hampers the development of specialized
skills and the ability of the contractor to pass on responsibility and
nationalize the program. For example, the contractor logistics office
reported working with seven different Colombian officers in 4 years. In
another case, a police trainee attended a specialized and lengthy
course for engine oil analysis in the United States, only to be
transferred out of maintenance shortly after returning to Colombia.
Program managers have corrected some of these training issues and now
track the training Colombian police personnel receive to help ensure
that only committed and appropriately skilled trainees receive detailed
instruction.
ARINC:
Under the ARINC contract, which began in June 2004 and could extend to
4 years, State has established a performance-based system to monitor
contractor performance. Our review focused on State's assessment of
ARINC's contract performance in support of the Air Bridge Denial
Program. The objective of this program is to suppress the illicit
aerial trafficking of narcotics in Colombian airspace by tracking and
forcing down suspected traffickers. ARINC is responsible for, among
other things, maintaining seven aircraft and training Colombians to
maintain these aircraft. Reporting requirements include monthly
performance reports containing, among other things, accomplishments and
issues that arose during the reporting period, projected future
activities, and performance relative to the agreed upon metrics. In
addition, the contract specifies performance standards in operations,
logistics, training, and project management, among others.
We found that State was in compliance with contractor oversight
requirements and that, in many cases, ARINC exceeded its reporting
requirements in the contract. State is in daily personal contact with
the Air Bridge Denial Program manager. Although the program manager
told us that he did not have the quality assurance plan required by the
contract, we found that ARINC's reporting to State included many of the
quality assurance plan requirements, such as training standards and
reviews. The NAS program manager also received and reviewed flight
activity reports on a daily, weekly, and monthly basis. In addition,
the program manager participated in regular meetings to discuss the
status of aircraft, training, and operations, and conducted a
semiannual review, as well as an annual program certification. The
program manager made monthly visits to Air Bridge Denial locations and
shared trip reports with cognizant State officials.
INL Plans to Centralize Contractor Oversight:
INL plans to centralize contractor oversight by assigning Air Wing
staff the responsibility for managing all aviation support contractors.
Under this arrangement, INL plans to compile information on aircraft
performance in one central location. This will enable INL managers to
assess performance of the entire fleet more consistently, and more
readily collect the data that INL needs to assess the overall
composition and cost-effectiveness of the aviation fleet.
Conclusions:
INL's aviation fleet has grown at a rapid pace to meet emerging, global
counternarcotics and counterterrorism priorities. However, INL did not
systematically employ federal management principles and guidelines in
acquiring this fleet. As a result, key analyses were not done to help
ensure that INL program managers made cost-effective decisions,
particularly with regard to major investments in the fleet. In October
2006, INL officials began initiating significant changes to the
oversight of aviation fleet operations, placing particular emphasis on
conducting key analyses of its fleet to help guide future investment
decisions and adhere to OMB and GSA guidance. If INL follows through,
these analyses should result in a long-term plan for aircraft
investments and an assessment of the current composition of the fleet
to help ensure that it is the most cost-effective to meet mission
requirements. Current plans call for these to be completed in 2007.
Since INL has undertaken a number of initiatives to address the
management weaknesses we observed, we are not making any
recommendations in this report. However, we will follow up with INL to
ensure that these initiatives have been completed in 2007, as planned.
Agency Comments and Our Evaluation:
State provided comments on a draft of this report (see app. II). In its
comments, State acknowledged that our work, among others, was an
impetus for a comprehensive internal review of aviation management and
expressed appreciation to us for confirming areas needing continued
improvement. State highlighted the management reforms INL has
undertaken to enhance the efficiency and effectiveness of aviation
fleet management, as well as to improve INL's adherence to OMB and GSA
guidance. State also noted operational circumstances that make such
adherence challenging. State disagreed with our observation that INL
did not provide fleet investment justifications using cost-benefit and
life-cycle analyses of alternatives. State indicated that considerable
analysis was done to evaluate economically sound alternatives in most
previous aircraft investments. However, the documentation INL provided
did not include the analyses called for by OMB guidance. Without
documentation of such analyses, we were not able to assess whether
State's investment decisions were appropriately justified in accordance
with this guidance. In addition to these comments, State provided us
technical comments, which we have incorporated throughout the report,
as appropriate.
We are sending copies of this report to interested congressional
committees and the Secretary of State. We also will make copies
available to others upon request. In addition, this report will be
available at no charge on the GAO Web site at [Hyperlink,
http://www/gao.gov].
If you or your staff have any questions concerning this report, please
contact me at (202) 512-4268 or FordJ@gao.gov. Contact points for our
Offices of Congressional Relations and Public Affairs may be found on
the last page of this report. GAO staff who made major contributions to
this report are listed in appendix III.
Jess T. Ford:
Director, International Affairs and Trade:
[End of section]
Appendix I: Scope and Methodology:
To assess the extent to which the Bureau of International Narcotics and
Law Enforcement Affairs (INL) has managed its aviation fleet in
accordance with Office of Management and Budget (OMB) and General
Services Administration (GSA) guidance, we reviewed the applicable
guidance and discussed progress in adhering to this guidance with State
and contractor officials at INL offices in Washington, D.C; Melbourne,
Florida; and Colombia, reviewing relevant documents, where appropriate.
We chose to focus our review primarily on operations in Colombia
because nearly two-thirds of INL's active aviation fleet is in that
country, and three contractors carry out programs there. We obtained
information on the number and distribution of aircraft from INL
officials and determined that this information was sufficiently
reliable for the purposes of this report.
* To assess how INL conducted strategic planning to identify long-term
aircraft needs, we obtained and reviewed planning documents prepared by
the bureau, including Bureau Performance Plans, the Air Wing Strategic
Planning Summary, and the documentation of the Critical Flight Safety
Program. We reviewed the content of the planning documents and
determined the extent to which it reflected information provided about
INL fleet operations we obtained from INL officials. We based our
assessment of the bureau's planning documents on federal guidance
described in a prior report on federal aircraft.[Footnote 31]
* To assess how INL justified investments in its aviation fleet, we
reviewed documentation, where available, and discussed major ongoing
and planned aircraft investments with relevant bureau officials. In
particular, to assess the justification for the Critical Flight Safety
Program, we discussed this program with Air Wing officials and DynCorp
representatives in Melbourne, Florida, and with NAS officials in
Bogotá, Colombia. We discussed justification of aircraft acquisitions
for counternarcotics programs in Mexico with officials from the INL
Office of Latin America Programs. We based our assessment of
justification documentation on federal guidance presented in OMB
Circulars Nos. A-76, A-126, and A-11 Part 7, and OMB's "Capital
Programming Guide." To obtain a better understanding of the
applicability of this guidance, we spoke with officials from OMB and
GSA's Aircraft Management Policy Division, and a representative from
Conklin and DeDecker Company, a GSA contractor that assists federal
agencies with developing cost-benefit analyses for their aviation
programs.
* To determine how INL assessed the cost and performance of its
aircraft and ensured that the composition of the fleet was cost-
effective, we reviewed documentation and interviewed bureau officials
in Washington, D.C; Air Wing officials in Florida; and Narcotics
Affairs Section (NAS) officials in Colombia. To obtain an understanding
of the systems and procedures INL used to track its aircraft funding
and related obligations and expenditures, we gathered information from
INL accounting and budget officials. We reviewed INL financial
management handbooks as well as automated systems' documents. We
identified and evaluated key internal controls INL uses to ensure the
completeness and accuracy of recorded appropriated funds and the status
of those funds. We assessed INL's reconciliation procedures with
requirements found in the Comptroller General's Standards for Internal
Control in the Federal Government.[Footnote 32] To identify and report
the amount of funds allocated to aviation activities, we obtained and
reviewed Congressional Notifications and Congressional Budget
Justifications for the Andean Counterdrug Initiative and International
Narcotics Control and Law Enforcement appropriations. We identified
aviation related activities and compiled funding data for these
activities by appropriation and fiscal year. Based on our efforts to
determine the reliability of the aviation activity allocations, we
concluded that these data were sufficiently reliable for the purposes
of this report.
We also planned to review a statistical sample of INL aircraft
financial transactions for fiscal years 2001 to 2005 to assess the
reliability of recorded aircraft financial data. For each fiscal year,
we requested the total appropriated funds used for aircraft
acquisition, operation, and maintenance, along with the status of those
funds--amounts obligated, expended, and available. For obligated and
expended funds, we requested separate, detailed transaction-level data
files that supported the obligation and expenditure levels reflected in
the status of the fiscal year funds. State provided data files from NAS
offices, its Office of Aviation, and its Central Financial Management
System. We performed a data reliability analysis of the files provided
to determine whether we could use the data files for the selection of
our planned statistical sample. We noted that the data files were not
complete; for example, NAS offices and the Office of Aviation data
files did not include detail listings of expenditure transactions. We
also noted inconsistencies in the data files State provided us. For
example, the Central Financial Management System data files contained
expenditure records for the Office of Aviation but no related
obligation records. Due to the aircraft financial data files being
incomplete and the inconsistencies we identified, we determined that
the INL aircraft financial data files were not sufficiently reliable
for our planned statistical sampling.
To assess how INL monitors its contract costs and performance, we
gathered and analyzed contract documents and interviewed agency and
contract officials to determine each contract's scope, activities
covered, and oversight requirements. In addition, we interviewed
contract office representatives from the three main contractors
identified in our review: Lockheed Martin Systems Management, LLC;
DynCorp International LLC; and ARINC Engineering, LLC, and analyzed
contract documents and reports to determine performance issues. The
Lockheed and ARINC contracts are not directly between State and the
companies, but are task orders under indefinite quantity, indefinite
delivery contracts between Lockheed and ARINC, respectively, and the
U.S. Army Communications and Electronics Command in Fort Monmouth, New
Jersey. In Colombia, we discussed aircraft operations and maintenance
issues with NAS, Air Wing, and contract staff at various operational
sites in the country. We met officials with primary responsibility for
the Colombian Police's aerial eradication program and the Colombian
Army's aviation program at the Office of Aviation headquarters at El
Dorado Airport in Bogotá. We also met with managers, pilots, and
mechanics and observed flight operations and maintenance at two aerial
eradication operating locations--Barrancabermeja and San Jose--and the
Colombian Army Aviation Brigade headquarters at Tolemaida. In addition,
we met with NAS and contractor staff overseeing Colombia's Air Bridge
Denial Program at Apiay and the Colombian National Police's aviation
program at the Colombian police main operating base at Guaymaral near
Bogotá.
[End of section]
Appendix II: Comments from the Department of State:
Note: GAO comments supplementing those in the report text appear at the
end of this appendix.
United States Department of State:
Assistant Secretary for Resource Management and Chief Financial
Officer:
Washington, D.C. 20520:
Ms. Jacquelyn Williams-Bridgers:
Managing Director:
International Affairs and Trade:
Government Accountability Office:
441 G Street, N.W.
Washington, D.C. 20548-0001:
Dear Ms. Williams-Bridgers:
We appreciate the opportunity to review your draft report, "State
Department: State Has Initiated a More Systematic Approach for Managing
its Aviation Fleet," GAO Job Code 320406.
The enclosed Department of State comments are provided for
incorporation with this letter as an appendix to the final report.
If you have any questions concerning this response, please contact
Patricia Yorkman, Procurement Specialist, Bureau of International
Narcotics and Law Enforcement Affairs at (202) 776-8806.
Sincerely,
Signed by:
Bradford R. Higgins:
cc:
GAO - Al Huntington:
INL - Anne Patterson:
State/OIG - Mark Duda:
Department of State Comments on GAO Draft Report:
State Department: State Has Initiated a More Systematic Approach for
Managing its Aviation Fleet GAO-07-264/GAO Code 320406:
Thank you for the opportunity to comment on the draft report State
Department: State Has Initiated a More Systematic Approach for Managing
its Aviation Fleet.
We appreciate GAO's decision to not make any recommendations in this
report in light of reforms underway. We would like to emphasize that
INL undertook several actions to correct shortcomings in its aviation
management, including an internal aviation management review that began
in July 2006, and other efforts such as an outsourced review that began
in March 2006, which evaluated INL's support activities, including
those of the Office of Aviation Programs prior to the conduct of this
GAO review.
Reforming INL's aviation management is an initiative begun by Assistant
Secretary Patterson upon her arrival to the Bureau as a result of
management concerns raised internally, as well as by GAO, OIG, and
Congress. The Assistant Secretary commissioned a comprehensive internal
review of aviation management in July 2006.
In addition to complying with GSA and OMB aviation fleet guidance, the
INL internal review sought ways to improve the Bureau's overall
aviation management and identify opportunities for efficiency and
effectiveness in our aviation business models. The INL review team
debriefed GAO on the comprehensive review and its interim
recommendations in late September 2006.
INL began implementing major aviation management reforms in October
2006 when it took steps toward hiring an aviation consulting firm to
conduct an analysis in compliance with OMB and GSA guidance concerning
a proposed acquisition of a small number of new aircraft to replace
airplanes currently leased in Afghanistan. That analysis is due to be
completed in late January 2007. The same consulting firm is conducting
a study that will assess INL's entire fleet for compliance with GSA and
OMB planning and acquisition guidance and will include the preparation
of an OMB Exhibit 300. While not yet formally required for submission,
the Exhibit 300 will allow INL to establish a capital asset plan and
improve its long-term strategic planning capability and justification
for fleet investments.
INL disagrees with the GAO assessment that we neglected to provide
fleet investment justifications using cost-benefit and life-cycle
analyses of alternatives prior to these recent initiatives. Although it
was not fully documented in the OMB format, considerable analysis was
done to evaluate economically sound alternatives in most previous
aircraft investments.
INL would like to point out that GSA and OMB guidance is designed for
civilian fleets rather than foreign assistance aviation programs. For
example, INL's aircraft fleet was acquired often as a result of
immediate exigencies, frequently relying on excess DoD aircraft because
funding was not available to purchase ideal, expensive equipment.
Aircraft for which funding was actually available has normally come by
way of legislation that specified the types of aircraft to be purchased
(e.g. Sikorsky Blackhawk and Bell Huey-II helicopters, as well as K-MAX
helicopters never requested by the Administration). These factors
obviated the benefit of conducting formal analyses. Furthermore, INL's
aircraft operate overseas, often in a collaborative effort with foreign
government organizations that share responsibilities and supporting
costs. Finally, INL aircraft often operate under paramilitary
conditions, even though it is considered a civilian fleet by GSA and
OMB standards. Even with these extenuating challenges, INL is fully
committed to bringing its program into compliance in the coming months.
INL would also like to point out that it is bridging the difference
between the GSA cost accounting reporting requirements and the
Department's financial system structure. INL launched a Local Financial
Management System in 2006 that will improve its ability to link
budgetary obligation data to aviation funding for foreign affairs
programs. In addition, INL has determined that the most appropriate
platform to capture GSA cost accounting reporting requirements is
through the Air Wing Inventory System (AWIS). This will improve INL's
ability to track aviation costs and improve our funding transparency in
response to previous program criticisms. In addition, INL has been
heavily involved in working with the Resource Management Bureau to
define requirements for and to implement a flexible Global Financial
Management System data warehouse that will also improve INL's ability
to track and report on INL worldwide costs.
INL has implemented several other aviation reforms, including working
with the Deputy Chief Financial Officer to ensure appropriate
accounting for aviation assets in the Department's inventory control
system and financial statements. While awaiting the results of the
fleet study which will take nine months, INL is taking other specific
measures for compliance with GSA and OMB guidance, including the
consolidation of INL's aviation fleet under one Senior Aviation
Management Official and the reporting of all INL aircraft for FAIRS.
INL expects to make its first complete FAIRS reporting by June 2007.
Beyond the scope of GSA and OMB compliance, INL is moving forward with
other efforts to improve the efficiency and effectiveness of its
aviation management such as consolidating aviation contract
administration and oversight and improving transparency in aviation
budgeting. internal review team found that several management
inefficiencies were attributable to INL's fragmented nature in managing
aviation information and business processes, some of which contributed
to deficiencies in compliance with GSA and OMB guidance.
In a unification session in early November 2006, INL Air Wing and NAS
officials identified methods for implementing review team
recommendations for consolidating business processes, including ways
for (1) improving our aviation strategic planning, (2) consolidating
contract administration and oversight, (3) consolidating and
standardizing cost data collection and reporting methods, and (4)
improving budget communication tools.
INL appreciates GAO's assistance in confirming areas needing continued
improvement and acknowledging INL efforts underway.
The following are GAO's comments on the Department of State letter
dated January 22, 2007.
GAO Comments:
1. We acknowledge INL's efforts to address the shortcomings that GAO
and others have identified in its management of its aviation fleet
throughout the draft report and this final version. However, we note
that we began our review efforts with a formal notification to the
Secretary of State in January 2006 and met with INL and other State
officials to discuss our objectives in February 2006. At the time, INL
did not inform us of any ongoing or planned efforts to evaluate its
Office of Aviation Programs or INL's overall aviation fleet. In August
2006, we briefed INL on our preliminary findings that it had not
complied with OMB and GSA guidance in managing its aviation fleet. The
September briefing that INL presented to us addressed the issues we had
raised and laid out the reforms it would begin in October. As a result,
we concluded that recommendations for further actions were not
necessary, but that we would follow up at a later date to ensure that
INL's initiatives are completed, as planned.
2. We do not report that INL did not conduct any analyses. Rather, we
noted in the draft report and this final version that documentation INL
provided us did not reflect the key analyses called for by OMB
guidance.
3. In the draft report and this final version, we report that INL
officials told us that the exigent circumstances of INL's operations
precluded them from doing the detailed OMB analyses. We also noted
that, in some cases, Congress directed what aircraft to procure.
Nevertheless, once the aircraft are in the inventory, OMB guidance
requires agencies to review periodically the need for and the cost-
effectiveness of the aircraft. INL has not done this, but we noted in
the draft report and this final version that it has efforts under way
to meet this requirement.
4. In the draft report, we noted that INL's aviation operations in
Colombia often take place in hostile environments, which can place
aircraft and personnel under small arms fire. We have modified the
final report to note that aviation operations in other foreign
locations often take place in hostile environments, too.
5. In the draft report and this final version, we point out that INL's
Local Financial Management System does not provide the standard program
cost elements needed to meet OMB requirements. We also note that State
officials responsible for designing the Global Financial Management
System were not aware of INL's cost data requirements and are not sure
the system can provide the data needed. Regarding the Air Wing
Inventory System referred to, we reported in 2004 that the data in this
system were significantly understated. We agree that, if the system's
shortcomings are corrected, it is an appropriate tool to address GSA's
reporting requirements.
6. We agree that consolidating INL's aviation fleet under a senior
aviation management official is one way to address some of the
shortcomings GAO, State's Office of the Inspector General, and INL's
internal studies have identified. However, INL has not defined the
senior aviation management official's authority, roles, and
responsibilities. This is under development and will be part of INL's
aviation program policy guide, which INL expects to complete later this
year.
[End of section]
Appendix III: GAO Contact and Staff Acknowledgments:
GAO Contact:
Jess Ford, (202) 512-4268, FordJ@gao.gov:
Staff Acknowledgments:
In addition to the individual named above, key contributors to this
report were A.H. Huntington, III, Assistant Director; Felicia Brooks;
Joseph Carney; Kay Daly; Mattias Fenton; James Michels; Sylvia Schatz;
Ann Ulrich; and Leonard Zapata.
[End of section]
(320406):
FOOTNOTES
[1] This figure includes 55 fixed-wing airplanes and 222 rotary-wing
helicopters that were operational. Of these aircraft, 41 were operated
and maintained fully by the host government where they were based. An
additional 80 were nonoperational and were in storage.
[2] INL's aviation fleet is primarily used for counternarcotics
programs. However, in 2002 and subsequent years, the Congress provided
expanded authority for the use of U.S. assistance to Colombia. This
authority enables the government of Colombia to use U.S.-provided
helicopters and other counternarcotics assistance to combat groups
designated as terrorist organizations, as well as drug production and
trafficking.
[3] GAO, Federal Aircraft: Inaccurate Cost Data and Weaknesses in Fleet
Management Planning Hamper Cost Effective Operations, GAO-04-645
(Washington, D.C.: June 18, 2004).
[4] Audit of the U.S. Department of State 2005 and 2004 Principal
Financial Statements (AUD/FM-06-12A, December 2005).
[5] See Audit of the Department's Reporting of Aircraft and Aircraft
Parts (AUD/IP-06-35, September 2006).
[6] S. Rept. 109-96 (Senate Committee on Appropriations, Report on
Department of State, Foreign Operations, and Related Programs
Appropriations Bill, 2006, p. 62).
[7] OMB Circular No. A-126, Improving the Management and Use of
Government Aircraft, May 1992.
[8] OMB Circular No. A-76, Performance of Commercial Activities, May
2003.
[9] OMB Circular No. A-11, Part 7, Planning, Budgeting, Acquisition,
and Management of Capital Assets, revised June 2006.
[10] Capital Programming Guide v 2.0, Supplement to Office of
Management and Budget Circular No. A-11, Part 7: Planning, Budgeting,
and Acquisition of Capital Assets, June 2006.
[11] This committee is under the aegis of GSA. It formulates aviation
polices for the various civilian federal departments and agencies that
maintain aircraft. The committee also helps to ensure that agency
aviation fleets are maintained properly and are operationally safe
through on-site reviews.
[12] The 2004 review did not include other INL programs managed by
INL's Office of Latin American Programs and the NAS offices.
[13] For more information about this program, see GAO, Efforts to
Secure Colombia's Caño Limón-Coveñas Oil Pipeline Have Reduced Attacks,
but Challenges Remain, GAO-05-971 (Washington, D.C.: Sept. 6, 2005).
[14] For more information about this program, see GAO, Air Bridge
Denial Program in Colombia Has Implemented New Safeguards, but Its
Effect on Drug Trafficking Is Not Clear, GAO-05-970 (Washington, D.C.:
Sept. 6, 2005).
[15] H. Rept. 109-265 requires that, prior to the obligation of funds
for the procurement of aircraft, State shall provide the Committees on
Appropriations with an analysis of alternatives.
[16] 41 C.F.R. §102-33.200.
[17] In 2004, we found that of the seven aviation programs we examined,
only one program (the Department of Interior's Fish and Wildlife
Service) had completed an A-126 review.
[18] GSA maintains the Federal Aviation Interactive Reporting System to
track aircraft cost and usage data reported by federal agencies.
[19] GAO-04-645.
[20] AUD/IP-06-35 (September 2006).
[21] We planned to review a statistical sample of INL aircraft
financial transactions. However, due to data incompleteness and
inconsistencies, we determined that INL aircraft financial data files
were not sufficiently reliable for our planned statistical sampling.
See appendix I for additional information.
[22] The Comptroller General's Standards for Internal Control in the
Federal Government, GAO/AIMD-00-21.3.1 (Washington, D.C.: November
1999) require that federal agencies document internal control
procedures in their management directives, policies, and manuals and
that such documentation, as well as evidence the control procedures are
actually performed be readily available for review. Furthermore,
transactions and events are to be completely and accurately recorded.
[23] The Regional Financial Management System processes foreign posts'
financial activity and provides information to the Central Financial
Management System--State's primary financial management system.
[24] This system will replace the Central Financial Management System.
[25] We note that one of the key causes of financial management system
projects not meeting their cost, schedule, and performance goals across
the federal government is agencies not following a disciplined process
for defining and managing system requirements. See GAO, Financial
Management Systems: Additional Efforts Needed to Address Key Causes of
Modernization Failures, GAO-06-184 (Washington, D.C.: Mar. 15, 2006).
[26] 48 C.F.R. § 46.104.
[27] 48 C.F.R. § 637.6.
[28] The Lockheed and ARINC contracts are not directly between State
and the companies but are task orders under indefinite quantity,
indefinite delivery contracts between Lockheed and ARINC, respectively,
and the U.S. Army Communications and Electronics Command in Fort
Monmouth, New Jersey. A task order is a contract for services that does
not procure or specify a firm quantity of services (other than minimum
and maximum quantities) and that provides for the issuance of orders
for the performance of tasks during the contract period. For
convenience, we refer to these task orders as contracts throughout this
report.
[29] The contract is primarily a fixed-price contract with an award
fee, incentive fee, and award term, which allows for up to a 10-year
performance period.
[30] Lockheed Martin's subcontractor, Contracting, Consulting,
Engineering LLC, performs most of this work.
[31] GAO-04-645.
[32] GAO, Standards for Internal Control in the Federal Government,
GAO/AIMD-00-21.3.1 (Washington, D.C.: November 1999).
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