Acquisition Reform

Congress has long been concerned that acquisition practices at federal agencies are wasteful and add billions to acquisition costs. For example, cost overruns of more than 100 percent have been reported in Defense Department (DOD) and Federal Aviation Administration programs. This report reviews how DOD and civilian agencies have implemented the performance-based acquisition and management provisions of title V of the Federal Acquisition Streamlining Act of 1994. Title V is intended to foster the development of measurable cost, schedule, and performance goals as well as incentives for acquisition personnel to reach these goals. GAO discusses (1) the status of DOD's and civilian agencies' implementation of title V requirements, (2) the agencies' progress in implementing title V in the required time frames, and (3) significant obstacles and barriers to effective implementation.

GAO found that: (1) while DOD complied with the majority of title V's requirements, it did not establish a personnel system with enhanced incentives within 1 year after FASA's enactment; (2) DOD officials concluded that barriers in establishing this personnel system include the inability to pay monetary incentives to military personnel, inability to retain program savings for reinvestment purposes, lack of authority to promote civilians for accomplishing specific acquisition objectives, and conclusion that program management does not have the necessary control over cost, schedule, and performance goals; (3) DOD's plan for personnel system demonstration projects includes recommendations for legislative changes to authorize performance payment incentives, and DOD would also link program savings and employee efforts by authorizing the use of program funds to make performance payments; (4) as required by subtitle A, DOD reviewed and updated its acquisition guidelines, including information on how to establish and measure cost, schedule, and performance goals; (5) based on its initial assessment, the Office of Management and Budget (OMB) concluded that many civilian agencies have not been applying performance-based management techniques as required by subtitle B; (6) OMB lacked sufficient information to evaluate whether the cost, schedule, and performance goals for fiscal year 1995 had been met; (7) OMB is coordinating and monitoring civilian agencies' attempts to address subtitle B requirements, and issued a circular that integrates title V requirements with planning, budgeting, and fixed assets acquisition requirements and annual performance plans; (8) when these requirements are fully implemented, reporting on cost, schedule, and performance goals for major acquisition programs is expected to be a formal part of civilian agencies' planning and budgeting activities and present a unified picture of agencies' management activities; (9) although OMB's existing policy established workforce requirements for purchasing and contracting officials, OMB has not issued final guidelines on acquisition workforce management or a personnel system with enhanced incentives for acquisition employees; (10) civilian agencies raised significant concerns regarding draft guidance on acquisition workforce requirements and personnel performance incentives; (11) OMB officials believed that another barrier to implementing a personnel system with enhanced incentives is that agencies have not developed a baseline for their acquisition programs; and (12) OMB advised GAO that it had not identified any additional legislation necessary to facilitate management of acquisition programs and performance-based management of the acquisition workforce.