FROM DOC_DB.DOCUMENT D, DOC_DB.REPORTS R, DOC_DB.BACKGROUND B
*
ERROR at line 2:
ORA-00942: table or view does not exist
-------------------------Indexing Terms-------------------------
REPORTNUM: GAO-06-594
TITLE: NOAA: Next Steps to Strengthen Its Acquisition Function
DATE: 06/07/2006
-----------------------------------------------------------------
******************************************************************
** This file contains an ASCII representation of the text of a **
** GAO Product. **
** **
** No attempt has been made to display graphic images, although **
** figure captions are reproduced. Tables are included, but **
** may not resemble those in the printed version. **
** **
** Please see the PDF (Portable Document Format) file, when **
** available, for a complete electronic file of the printed **
** document's contents. **
** **
******************************************************************
GAO-06-594
* Acquisition Office Reorganization Was Not Comprehensive
* NOAA Relies on Staff Who Have Collateral Contracting Respons
* New NOAA Policies and Processes Intended to Improve Acquisit
* NOAA's Acquisition Process for Development of Complex System
* Order by Mail or Phone
Report to the Chairman, Committee on Finance, U.S. Senate
United States Government Accountability Office
GAO
June 2006
NOAA
Next Steps to Strengthen Its Acquisition Function
NOAA Acquisition Function NOAA Acquisition Function NOAA Acquisition
Function NOAA Acquisition Function NOAA Acquisition Function NOAA
Acquisition Function NOAA Acquisition Function NOAA Acquisition Function
NOAA Acquisition Function NOAA Acquisition Function NOAA Acquisition
Function NOAA Acquisition Function NOAA Acquisition Function NOAA
Acquisition Function NOAA Acquisition Function NOAA Acquisition Function
NOAA Acquisition Function NOAA Acquisition Function NOAA Acquisition
Function NOAA Acquisition Function NOAA Acquisition Function NOAA
Acquisition Function NOAA Acquisition Function NOAA Acquisition Function
NOAA Acquisition Function NOAA Acquisition Function NOAA Acquisition
Function NOAA Acquisition Function
GAO-06-594
Contents
Letter 1
Results in Brief 2
Background 3
NOAA Lacks Oversight of Some Field Acquisition Activities 5
Advances in Day-to-Day Acquisition Policies Not Matched in Policies for
Complex Developmental Systems 9
NOAA Has Taken Limited Actions to Address Contracting Workforce Retirement
Challenges 12
Conclusions 15
Recommendations for Executive Action 15
Agency Comments and Our Evaluation 17
Appendix I Scope and Methodology 18
Appendix II Knowledge-Based Acquisition Framework for Complex
Developmental Systems 20
Appendix III Comments from the Department of Commerce 23
Appendix IV GAO Contact and Staff Acknowledgments 26
Table
Table 1: NOAA's Acquisition Divisions and Locations 4
Figures
Figure 1: Organizational Placement of NOAA Acquisition Function 7
Figure 2: Demographics of the NOAA Contracting Specialists and Procurement
Analysts as of September 2005 13
Figure 3: Knowledge-Based Acquisition Framework 20
Abbreviations
CPDF Central Personnel Data File
GOES-R Geostationary Operational Environmental Satellite
GS general series
NOAA National Oceanic and Atmospheric Administration
OPM Office of Personnel Management
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. 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.
United States Government Accountability Office
Washington, DC 20548
June 7, 2006
The Honorable Charles E. Grassley Chairman Committee on Finance United
States Senate
Dear Mr. Chairman:
The National Oceanic and Atmospheric Administration (NOAA) is one of the
largest agencies within the Department of Commerce (Commerce) and accounts
for 45 percent of the department's dollars spent on acquisition. In fiscal
year 2005 alone, NOAA's acquisition organization contracted for over $851
million in goods and services in support of the agency's mission. NOAA's
mission is to understand and predict changes in the Earth's environment
and conserve and manage coastal and marine resources to meet the nation's
economic, social, and environmental needs. To accomplish this mission,
NOAA acquires goods including ships, satellites, aircraft, and
high-performance computers as well as services such as hydrographic
surveys, fisheries analyses, and buoy maintenance. For the first time,
NOAA is managing an expected $6.2 billion acquisition investment for
developing a complex geostationary environmental satellite.
NOAA relies more and more on contractor support to conduct its
mission-critical work. However, in recent years, NOAA has experienced
instances of poor contract management that prompted the Commerce Inspector
General to designate management of Commerce's acquisition processes as one
of the top 10 departmental management challenges. The Commerce Inspector
General identified a lack of effective oversight and management controls
over acquisition processes as a contributing factor to the poor contract
management.
In response to your request, we examined whether NOAA is positioned to
effectively carry out its acquisition function. Specifically, we assessed
the extent to which NOAA has (1) structured an acquisition organization
that provides appropriate oversight; (2) established clear and consistent
acquisition policies and processes that promote, among other things, a
knowledge-based acquisition process for development and production of
complex systems; and (3) planned and managed its contracting workforce to
address future retirement challenges. See appendix I for additional
details on scope and methodology.
To conduct this work, we assessed information from NOAA headquarters and
acquisition divisions and compared this information against what our
previous work has shown to be best acquisition practices. We reviewed
agency directives, memorandums, and other documentation; interviewed
agency officials; and analyzed agency systems and processes. We conducted
our review from August 2005 to April 2006 in accordance with generally
accepted government auditing standards.
Results in Brief
NOAA has yet to structure all of its field acquisition activities under
the direct oversight of its acquisition organization, increasing the risk
that taxpayers are not getting the best value for their dollars. To
improve oversight over its acquisition function, NOAA reorganized its
acquisition divisions nationwide under the single authority of a
headquarters office, headed by the Director of Acquisition and Grants. Yet
NOAA's acquisition director still lacks direct line authority to oversee
the National Data Buoy Center, which is responsible for one of the
agency's largest contracts-worth up to half a billion dollars. In
addition, field staff who are not contracting officers but whose
collateral responsibility is to acquire millions of dollars in goods and
services annually manage contract actions without appropriate oversight
from the acquisition organization. Our best practices work has shown that
a well-functioning acquisition organization has direct lines of authority
and oversight between the head of acquisition and various components of
the organization in order to enforce acquisition policies effectively.
Although NOAA has established clear and consistent acquisition policies
and processes in some key areas such as advance acquisition planning, the
agency still lacks a knowledge-based acquisition process for development
and production of complex systems. NOAA acquires a number of high-cost
systems and is in the early acquisition stages of developing a new
multibillion-dollar geostationary environmental satellite. However, it
must adhere to Commerce's policies for development and production of major
systems and does not support a knowledge-based approach to acquiring such
complex developmental systems. Senior Commerce and NOAA officials believe
that NOAA program managers remain uncertain about the information they
must provide to senior leaders for each key decision point. We have found
that a knowledge-based approach enables program managers to be reasonably
certain, at critical junctures, or "knowledge points," in the acquisition
life cycle, that complex developmental systems are likely to meet
established cost, schedule, and performance targets, and therefore they
will be able to provide senior leaders with information needed to make
sound investment decisions.
NOAA has yet to focus on succession planning and management for its
contracting workforce, although recognition of an impending wave of
retirements prompted the agency to obtain approval to use more flexible
direct hire authority to recruit new contracting employees. NOAA is facing
a human capital challenge because of its aging contracting workforce and
could soon lose a significant portion of its contracting knowledge base.
For example, almost 52 percent of its contracting specialists are more
than 49 years old, and 66 percent have served at least 20 years with the
agency. Senior NOAA acquisition managers expressed concern about the
looming retirements and other attrition of a high percentage of the
contracting workforce. However, while NOAA completed a strategic human
capital plan to help ensure it has the expertise necessary to achieve its
mission, the plan does not address potential gaps in the agency's
contracting workforce. Also, while Commerce's acquisition management
office is developing a human capital plan to address challenges facing the
contracting workforce, it is too early to determine if it will address the
gaps in numbers and skills.
We are making a recommendation to the Secretary of Commerce to incorporate
a knowledge-based approach for complex developmental systems in revising
the department's acquisition policies and processes. We are also
recommending that the Under Secretary of Commerce for Oceans and
Atmosphere (1) take the necessary steps to provide oversight authority for
NOAA's acquisition director over field acquisition activities and (2)
conduct an assessment of the contracting workforce needed to help achieve
NOAA's mission-critical work. After reviewing a draft of this report,
Commerce concurred with our findings and recommendations. The full text of
Commerce's comments may be found in appendix III.
Background
The NOAA acquisition function is carried out by the headquarters
acquisition office, headed by the Director of Acquisition and Grants, as
well as 10 divisions, of which 6 are located at NOAA headquarters in
Silver Spring, Maryland, and 4 in regions throughout the country (see
table 1). In 2005, NOAA employed 123 contracting and acquisition support
staff in its acquisition function across headquarters and regional
locations.
Table 1: NOAA's Acquisition Divisions and Locations
Acquisition division Location
National Environmental Satellite, Data, and Information Silver Spring, Md.
Service
National Ocean Service/National Marine Fisheries Silver Spring, Md.
Service/Oceanic and Atmospheric Research
National Weather Service Silver Spring, Md.
Staff Offices and External Clients Silver Spring, Md.
High Performance Computing Silver Spring, Md.
Satellite Program Silver Spring, Md.
Eastern Region Norfolk, Va.
Central Region Kansas City, Mo.
Mountain Region Boulder, Colo.
Western Region Seattle, Wash.
Source: NOAA.
NOAA's acquisition function also provides procurement services to several
other Commerce components, including the International Trade
Administration, the Bureau of Economic Analysis, and the Economic
Development Administration. In fiscal year 2005, NOAA administered over
15,000 contract actions with total awards over $851 million.
In recent years, NOAA has experienced problems in acquiring goods and
services. For example, NOAA's inadequate negotiations and oversight, and
lack of proper review, led the National Weather Service to pay for
defective equipment and execute a contract modification without adequate
negotiation for the transition power source for a high-resolution Doppler
weather radar system jointly designed, acquired, and operated by Commerce,
the Department of Defense, and the Department of Transportation.1 As a
result, contract costs increased by approximately $4.5 million. Similarly,
the Commerce Inspector General reported that NOAA had insufficient
management controls to ensure adequate oversight of the procurement of
over $65 million in new fisheries research vessels.2 For example, NOAA did
not have the information required to effectively monitor the schedule and
cost of the vessels and failed to implement an effective award fee plan on
a timely basis to encourage superior performance by the contractor.
1Department of Commerce Inspector General, National Oceanic and
Atmospheric Administration: Acquisition of NEXRAD Transition Power Source
Marred by Management, Technical, and Contractual Problems, Final
Inspection Report OSE-15676 (Washington, D.C.: September 2003).
NOAA Lacks Oversight of Some Field Acquisition Activities
Although NOAA has taken some actions, the agency has yet to structure all
of its field acquisition activities under the appropriate oversight of its
acquisition organization, increasing the risk that taxpayers are not
getting best value for their dollars. After the Commerce Inspector General
criticized the lack of effective oversight and management controls over
acquisition processes, NOAA changed the structure of its acquisition
organization in 2005 to have acquisition divisions report to the Director
of Acquisition and Grants. Yet the acquisition director lacks direct line
authority over a field acquisition office in Mississippi. In addition,
some NOAA field operations rely on staff who are not career contracting
officers but whose collateral responsibilities are to procure goods and
services without appropriate oversight from the acquisition organization.
Our work has shown that a well-functioning acquisition organization has
direct lines of oversight between the head of acquisition and various
components of the organization to help enforce acquisition policies that
enable the agency to get the best value on goods and services.3
Acquisition Office Reorganization Was Not Comprehensive
In some respects, NOAA's reorganization has fallen short in providing
comprehensive authority to the NOAA acquisition director to provide
appropriate oversight to field acquisition activities. After the Commerce
Inspector General faulted NOAA's contracting oversight, in an effort to
better ensure oversight and management of acquisition across the agency,
NOAA established an Acquisition and Grants Office in headquarters in 2005.
The reorganization elevated the office, formerly part of the NOAA Office
of Finance and Administration, as a new staff office reporting directly to
the Deputy Under Secretary for Oceans and Atmosphere. Also, the NOAA
regional acquisition divisions-which previously were separate entities
reporting to the directors of the regional service centers in which they
were located-all now report directly to the Director of the Acquisition
and Grants Office as part of the reorganization. By elevating its
acquisition office to a level that reports directly to an Under Secretary
and having the divisions as direct reports to the acquisition director,
NOAA has positioned itself to appropriately oversee agencywide acquisition
activities and enforce acquisition policies.
2Department of Commerce Inspector General, National Oceanic and
Atmospheric Administration: Program for Acquiring Fisheries Research
Vessels Needs Stronger Management Controls, Final Inspection Report
STD-14428-2-0001 (Washington, D.C.: June 2002).
3GAO, Homeland Security: Successes and Challenges in DHS's Efforts to
Create an Effective Acquisition Organization, GAO-05-179 (Washington,
D.C.: Mar. 29, 2005), and Transportation Security Administration:
High-Level Attention Needed to Strengthen Acquisition Function, GAO-04-544
(Washington, D.C.: May 28, 2004).
However, the reorganization was not comprehensive because it did not
include the National Weather Service's National Data Buoy Center
acquisition office at the Stennis Space Center, Mississippi. Specifically,
the Buoy Center does not report to the NOAA acquisition director (see fig.
1), even though this acquisition office is responsible for administering
multiple contracts, including one of NOAA's largest contracts, worth up to
$500 million.4 While contracting officers in the Buoy Center acquisition
office derive their contracting authority from headquarters, they report
through the Buoy Center chain of command, not to NOAA's acquisition
director.
This reporting relationship was first established more than 20 years ago
in a Commerce appropriation act,5 which created the Buoy Center
acquisition office, and was stipulated in each subsequent appropriations
act through 1988, but not since. During the recent reorganization, NOAA
officials believed these laws prohibited NOAA from changing the reporting
relationship to one where the Buoy Center acquisition office would report
directly to the NOAA Acquisition and Grants Office. However, an analysis
by our general counsel found no law requiring the Buoy Center acquisition
office to report to the Director of the Buoy Center or prohibiting NOAA
from making this change. Commerce's General Counsel agreed with our
assessment. Although we did not identify any inefficiencies resulting from
this current reporting relationship, we believe NOAA runs the risk of poor
outcomes of contracts.
4In 2005, the National Data Buoy Center awarded a 10-year (5-year base
with 5 option years) technical services contract to provide life cycle
support for NOAA's Marine Observation Network; other buoy programs,
including the network of Deep Ocean Assessment and Reporting of Tsunami
stations; and its Data Assembly Center.
5Department of Commerce and Related Agencies Appropriation Act, 1984, Pub.
L. No. 98-166, November 28, 1983.
Figure 1: Organizational Placement of NOAA Acquisition Function
NOAA Relies on Staff Who Have Collateral Contracting Responsibilities
Certain NOAA field offices rely on "collateral duty" contracting officers
who perform contracting duties in addition to their mission-related
responsibilities but who are not career contracting officers. In these
locations, collateral duty contracting officers have authority to make
individual purchases of up to $25,000 for such day-to-day needs as
provisions for ships. While NOAA relies on collateral duty contracting
staff for a relatively small share of total agency procurement spending,
these staff administered about 6,400 contract actions worth over $36
million alone in fiscal year 2005.
NOAA's acquisition director as well as senior field division contracting
officers expressed concern about how well they can monitor the actions by
staff with collateral duty contracting responsibilities to ensure that
they follow NOAA acquisition policies. For example, unlike with their own
contracting staff, some NOAA regional acquisition divisions provide only
sporadic oversight over collateral duty contracting officers through
occasional audits, either performed in person or through contract file
samples sent by these staff for review. One regional acquisition division
is only able to audit work by staff with collateral contracting
responsibilities once every 2 to 3 years. NOAA acquisition managers
attributed their inability to provide regular oversight to limited time
and resources, given other responsibilities.
Our review of contracting weaknesses at a Department of Homeland Security
agency found challenges similar to NOAA's with regard to providing
appropriate oversight to collateral duty contracting officers.6 In view of
such situations, we have found that an agency needs to explore ways of
making collateral duty contracting officers in field locations accountable
through the acquisition function for the contracting work.
6GAO, Contract Management: INS Contracting Weaknesses Need Attention from
the Department of Homeland Security, GAO-03-799 (Washington, D.C.: July
25, 2003).
Advances in Day-to-Day Acquisition Policies Not Matched in Policies for Complex
Developmental Systems
Although NOAA has established clear and consistent acquisition policies
and processes for day-to-day acquisitions of goods and services, the
agency lacks a knowledge-based acquisition process for development and
production of complex systems. For example, NOAA has implemented planning
processes intended to improve opportunities to achieve savings and reduce
administrative burden in acquiring goods and services. However, NOAA has
experienced difficulties in acquiring more complex developmental systems
such as lacking sufficient management controls when it acquired its new
fisheries research vessels. NOAA is missing key elements that promote
successful outcomes because it must adhere to Commerce's acquisition
policies that do not promote a knowledge-based approach to acquiring
complex developmental systems. Our work has shown that a knowledge-based
approach would enable decision makers to be reasonably certain, at
critical investment decision junctures in the acquisition life cycle, that
the system is likely to meet cost, schedule, and performance targets.
New NOAA Policies and Processes Intended to Improve Acquisition Outcomes
To facilitate effective planning, award, and administration of contracts
that help to ensure the best value on goods and services, NOAA recently
implemented new policies and processes to guide the agency's acquisition
activities. For example, to ensure consistency of the NOAA acquisition
process, a new acquisition handbook establishes standard operating
procedures, which the agency previously lacked, such as required reviews
and approvals, and quality assurance of acquisition activities within the
agency. To ensure that contracting employees are adhering to proper
procedures, NOAA instituted periodic acquisition management reviews. Under
these reviews NOAA's acquisition director (or a senior contracting officer
appointed by the director) personally inspects a sample of completed
contract files from an acquisition division in order to identify and
remedy any systemic problem areas and identify best practices to share
with other divisions. In the last few years, reviews in several divisions
found a lack of proper contract file management, as required in part 4.8
of the Federal Acquisition Regulation. The acquisition director
consequently instructed the division heads to take steps with their staff
to correct this problem.
Recognizing that NOAA lacked effective acquisition planning and that this
lack was hindering effective workload management, the Acquisition and
Grants Office in fiscal year 2005 implemented new advance acquisition
planning requirements. For example, all staff offices and programs must
develop annual acquisition plans that include acquisitions that are over
$100,000 or expected to result in new contracts. To support these new
planning requirements and provide real-time data, the acquisition office
deployed an online strategic acquisition management tool in fall 2005, in
which NOAA staff offices and programs enter their annual acquisition plans
for the upcoming fiscal year. Although the tool is new and still requires
occasional modifications, NOAA officials generally agreed that it provides
considerable benefits for the acquisition process to better plan the
agency's use of resources and reduce the administrative burden previously
experienced with managing unscheduled contracting requirements.
NOAA's Acquisition Process for Development of Complex Systems Lacks a
Knowledge-Based Approach
Because of the high dollar value and risk associated with acquiring
complex developmental systems, Commerce requires that its subordinate
organizations, including NOAA, adhere to departmentwide policy and
processes regarding such acquisitions. However, Commerce policies and
processes do not promote a knowledge-based approach for acquiring these
systems, increasing the risk that Commerce will make decisions to commit
the government to major investments without knowing that NOAA's systems
can be developed at estimated costs, according to planned schedules, and
with expected performance. Commerce officials acknowledged that their
acquisition policy for developing major systems is outdated and said they
are revising it.7 While the current policy identifies key decision points
that a program must complete while acquiring a complex developmental
system, it still lacks key features of a knowledge-based acquisition
framework-specific criteria and metrics-that can be used to measure
whether a program is ready to move through each key decision point.
Our work has shown that leading developers in industry and government
organizations use a knowledge-based approach to deliver high-quality
products on time and within budget. An acquisition policy that requires
such a framework for complex developmental systems enables program
managers to be reasonably certain, at critical junctures, or knowledge
points, in the project's acquisition life cycle, that their products will
meet established cost, schedule, and performance targets. Such an
acquisition policy also enables program managers to provide senior leaders
with the information necessary to make sound project investment decisions
for their agencies. Highlights of an acquisition policy that incorporates
best practices for the development of complex systems include the
equivalent of
7U.S. Department of Commerce, Major Systems Acquisitions for the
Department of Commerce, Department Administrative Order 208-3 (Washington,
D.C.: Dec. 9, 1997).
o Knowledge point 1: Resources and needs match. This point occurs
when a match is made between the customer's requirements and the
product developer's available resources in terms of knowledge,
time, money, and capacity.
o Knowledge point 2: Product design is stable. This point occurs
when a program determines that a product's design will meet
customer requirements, as well as cost, schedule, and reliability
targets.
o Knowledge point 3: Production processes are mature and the
design is reliable. This is demonstrated when the product can be
manufactured within cost, schedule, and quality targets.
(See app. II for additional information on the knowledge-based acquisition
framework for complex developmental systems.)
Having a knowledge-based framework to guide acquisitions of complex
developmental systems is especially critical given that NOAA is in the
early acquisition stages of developing a geostationary environmental
satellite at a projected investment cost of about $6.2 billion.8 According
to a Commerce official, in the past NOAA relied on agencies outside of
Commerce to acquire such systems, but experienced cost and schedule
problems.9 To maintain management control over contractor performance,
NOAA chose to manage the acquisition of its new satellite-the
Geostationary Operational Environmental Satellite (GOES-R), which the
agency plans to launch in 2012.
8NOAA's geostationary satellites analyze data to detect and track severe
weather conditions such as tornadoes, flash floods, hailstorms, and
hurricanes. They orbit the earth at a speed matching the earth's rotation,
allowing them to hover over one position on the surface.
9GAO, Polar Orbiting Operational Environmental Satellites: Technical
Problems, Cost Increases, and Schedule Delays Trigger Need for Difficult
Trade-off Decisions, GAO-06-249T (Washington, D.C.: Nov. 16, 2005); Space
Acquisitions: Stronger Development Practices and Investment Planning
Needed to Address Continuing Problems, GAO-05-891T (Washington, D.C.: July
12, 2005); Polar Orbiting Environmental Satellites: Information on Program
Costs and Schedule Changes, GAO-04-1054 (Washington, D.C.: Sept. 30,
2004); and Military Space Operations: Common Problems and Their Effects on
Satellite and Related Acquisitions, GAO-03-825R (Washington, D.C.: June 2,
2003).
Amplifying the need for clear guidance, NOAA officials told us the agency
is "feeling its way" through the GOES-R acquisition by relying on existing
Commerce and NOAA policies, but also learning from lessons drawn from
previous satellite acquisitions at other agencies. According to senior
officials directly involved, NOAA was forced to prepare for the most
recent key decision point in 2005-authorizing program definition and risk
reduction activities in the GOES-R acquisition-with vague guidance from
Commerce over what specific criteria and metrics were required for the
program to pass through the key decision point.
In order to be ready for the next key decision point, NOAA officials said
that clearer guidance from Commerce is needed on the information required.
The next key decision point is scheduled for fiscal year 2007 and will
commit the agency to development and production of the GOES-R series.
Commerce acquisition management officials told us they are briefing NOAA
officials and developing a plan for necessary documentation on the
requirements for the project's next key decision point. It remains to be
seen whether these steps will provide sufficient clarity not only for what
NOAA is expected to do to prepare for the remaining key decision points
but also sufficient knowledge to make a well-informed decision on
proceeding with the GOES-R acquisition.
NOAA Has Taken Limited Actions to Address Contracting Workforce Retirement
Challenges
NOAA is facing a human capital challenge because of its aging contracting
workforce, and senior acquisition managers are concerned about the loss of
a high percentage of their contracting staff to retirement and other
attrition. However, NOAA has yet to focus on succession planning and
management for its contracting workforce, even though the agency has
approval to use flexible direct hire authority in anticipation of an
impending wave of retirements.
NOAA relies on contract specialists and procurement analysts to carry out
its acquisition function.10 However, NOAA's acquisition director is
worried about the near-term retirements of experienced contracting
employees. Our analysis of Office of Personnel Management's (OPM)
personnel data for NOAA confirms there is cause for this sense of urgency,
given that almost 52 percent of the agency's contract specialists and
procurement analysts are more than 49 years old and that 66 percent had at
least 20 years of service (see fig. 2). Moreover, NOAA reported in January
2006 that about 43 percent of its contracting employees are already
eligible to retire or will become eligible to retire between now and
fiscal year 2009. Given that NOAA has historically found that 50 percent
of employees who are eligible to retire do so within 3 years, it could
lose a significant portion of its contracting workforce within the next
few years.
10Under the Office of Personnel Management's general series (GS) of
federal occupations, GS-1102 (contracting series) employees are contract
specialists and procurement analysts.
In addition to being concerned about retirements, senior acquisition
managers are very concerned about the significant acceleration in
contracting staff turnover as well as what they view as "fierce"
competition for federal contract specialists that prompts many to accept
jobs outside of NOAA. For example, NOAA reported in January 2006 that over
12 percent of headquarters contracting positions are vacant. Moreover,
NOAA's acquisition organization is concerned that the risk of continuing
losses is high, given that governmentwide, Commerce had the highest
reported agency attrition rate of 19 percent for contracting employees as
recently as fiscal year 2004. Our analysis of OPM's fiscal year 2005
personnel data affirms their concern, since about half of the contracting
specialists and procurement analysts that separated that year from NOAA
transferred to jobs in other agencies (6 of the 13 employee separations).
Figure 2: Demographics of the NOAA Contracting Specialists and Procurement
Analysts as of September 2005
Notes: GAO analysis of data from OPM's Central Personnel Data File.
Percentage may not add to 100 because of rounding.
In 2006 NOAA's workforce management office completed a strategic human
capital management plan intended to respond to recognized challenges and
to help ensure the agency has the scientific, technical, and
administrative expertise necessary to accomplish NOAA's mission. However,
the plan does not specifically address the potential gaps in NOAA's
contracting workforce even though NOAA is responsible for executing up to
25 percent of the Department of Commerce's budget on acquiring goods and
services. Furthermore, because contracting expertise was not recognized as
mission-critical, the acquisition director said she was not asked and did
not provide input about the challenges to the workforce management office.
Involving senior management, employees, and other stakeholders in
strategic human capital planning is an important step toward its
successful implementation.
In addition, Commerce has taken some initial steps to address this
retirement challenge in its contracting workforce. The Secretary of
Commerce's Office of Acquisition Management and Financial Assistance hired
a contractor to develop a human capital plan for the department's
contracting workforce. However, it is too early to determine if this
Commerce-wide plan will determine the gaps in numbers and skills in the
contracting workforce to achieve mission-critical work and develop
strategies to address these gaps. Until this assessment of the contracting
workforce is completed at the departmental level, NOAA will be hard
pressed to make its own assessment. Also recognizing a critical staffing
shortage, in January 2006, Commerce approved NOAA's use of flexible direct
hire authority to recruit qualified individuals.11 Civilian agency heads
are authorized to determine if a shortage exists in certain federal
acquisition positions so that persons with high qualifications can be
recruited and directly hired. Direct hire authority allows an agency the
flexibility to appoint individuals to positions without adherence to
certain competitive examination requirements. According to a NOAA
official, to date, NOAA has not implemented this authority.
The prospect of many retirements in experienced staff make NOAA's need for
contracting workforce planning more significant, and NOAA stands to
benefit greatly by planning strategically for its contracting workforce.
Our work has shown that to recruit, develop, and retain the right number
of people with the right skills to support mission needs, leading
organizations go beyond a succession planning approach that focuses on
simply replacing individuals and engage in broad, integrated succession
planning and management efforts that focus on strengthening both current
and future organizational capacity.12 A key part of succession planning
and management is to identify the talent required to achieve
organizational goals. To that end, effective human capital planning
involves (1) identifying the gaps in skills and competencies that need to
be filled to achieve current and future mission-critical work, (2)
developing strategies that are tailored to address these gaps, and (3)
monitoring and evaluating the progress toward closing the gaps, and
adjusting strategies accordingly. Unless the future retirement and
workforce capacity challenges are strategically addressed, NOAA could soon
lose a significant portion of its contracting knowledge base.
11Section 1413 of the Services Acquisition Reform Act of 2003 (Public Law
108-136).
Conclusions
Effectively and efficiently acquiring goods and services will continue to
play a major role in enabling NOAA to accomplish its mission. Therefore,
NOAA's success depends greatly on how well it manages its acquisition
function. While NOAA has taken initial steps intended to put in place an
efficient, effective, and accountable acquisition function, more can be
done. NOAA can improve oversight of its field acquisition operations by
requiring direct reporting of all of its acquisition offices and
developing an oversight process for collateral duty contracting officers;
adopting a knowledge-based acquisition process to help ensure that complex
developmental systems meet cost, schedule, and performance targets; and
addressing the imminent retirements of its contracting workforce to ensure
it has a solid knowledge base to carry out its acquisition function. These
next steps can facilitate achieving successful acquisition outcomes and
enable NOAA to responsibly and prudently manage its investments to help
meet the nation's economic, social, and environmental needs.
Recommendations for Executive Action
To close the gaps between NOAA's current acquisition process and best
practices for the development of complex systems, we recommend that the
Secretary of Commerce take the following actions:
o Incorporate a knowledge-based framework in the revision of
Commerce's policy for acquiring complex developmental systems.
This framework should identify requirements for major system
projects to attain specific product knowledge at significant
stages in the acquisition life cycle. Demonstration of this
knowledge should be used as a basis for decision making by
departmental leadership at the following key points:
o Before projects are approved to move from concept
and technology development to start the acquisition
program, the policy should require that customer
requirements and product developers' resources match,
as indicated by achieving a high level of technology
maturity.
o Before projects are approved to move from
integration to demonstration, the policy should
require that the product design is stable and
performs as expected.
o Before projects are approved to move from
demonstration into production, the policy should
require that its design is reliable and can be
manufactured within cost, schedule, and quality
targets.
12GAO, Human Capital: Selected Agencies Have Opportunities to Enhance
Existing Succession Planning and Management Efforts, GAO-05-585
(Washington, D.C.: June 30, 2005), and Human Capital: Key Principles for
Effective Strategic Workforce Planning, GAO-04-39 (Washington, D.C.: Dec.
11, 2003).
To provide appropriate oversight of NOAA's field acquisition operations,
we recommend that the Under Secretary of Commerce for Oceans and
Atmosphere take the following two actions:
o take steps to ensure that NOAA's Director of Acquisition and
Grants has direct authority over all acquisition entities within
the agency by realigning the National Data Buoy Center's
Acquisition Office to report directly to NOAA's acquisition
director and
o provide for regular monitoring of collateral duty contracting
officers in field offices to help ensure they are accountable to
senior acquisition officials for their contracting work.
To address the future retirement challenges of NOAA's contracting
workforce, we recommend that the Under Secretary of Commerce for Oceans
and Atmosphere take the following action:
o conduct a data-driven assessment of NOAA's contracting
workforce to (1) identify skill gaps, develop strategies to
address these gaps, evaluate progress toward closing these gaps,
and adjust strategies accordingly and (2) involve relevant
stakeholders in the development of this assessment.
Agency Comments and Our Evaluation
In written comments on a draft of this report signed by the Deputy
Secretary of Commerce, the department agreed with our findings and
recommendations. Commerce stated that the report presented an accurate
assessment of the major issues NOAA faces and described current or planned
actions to address the recommendations. The department's comments are
reprinted in appendix III.
As we agreed with your office, unless you publicly announce the contents
of this report earlier, we plan no further distribution of it until 30
days from the date of this letter. We will then send copies to other
interested congressional committees, the Secretary of Commerce, and the
Under Secretary for Oceans and Atmosphere. We will make copies available
to others on request. In addition, the report will be available at no
charge on GAO's Web site at http://www.gao.gov.
If you or your staff have any questions about this report, please contact
me at (202) 512-4841 or [email protected]. 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 IV.
Sincerely yours,
Lisa Shames Acting Director, Acquisition and Sourcing Management
Appendix I: Scope and Methodology Appendix I: Scope and Methodology
To determine if the National Oceanic and Atmospheric Administration (NOAA)
has structured an acquisition organization that provides adequate
oversight, we interviewed NOAA's Director of Acquisition and Grants, the
acquisition division heads, and Commerce acquisition management executives
regarding NOAA's acquisition function. We reviewed pertinent NOAA and
Commerce organizational, management, and policy documents pertaining to
the oversight of its acquisition activities. We also performed a
legislative analysis of the establishment of the National Data Buoy Center
in Mississippi to determine if there was a legal basis for not having its
acquisition office report directly to NOAA's Director of Acquisition and
Grants. In addition, we reviewed reports from Commerce's Office of the
Inspector General to obtain an understanding of relevant Commerce and NOAA
acquisition management challenges.
To determine if NOAA has established clear and consistent acquisition
policies and processes that promote, among other things, a knowledge-based
acquisition approach for development and production of complex systems, we
reviewed acquisition policies, processes, and guidelines. We interviewed
NOAA's acquisition and grants director and acquisition division heads and
reviewed information regarding new acquisition policies, handbook
guidance, quality assurance, and planning processes. To determine if NOAA
has established policies and processes that promote a knowledge-based
review process for complex developmental systems acquisitions, we compared
and discussed with NOAA and Commerce acquisition officials their policies
for major acquisitions to our knowledge-based acquisition approach.
Specifically, we compared and contrasted Commerce and NOAA's major system
acquisition review process with criteria contained in GAO best practices
work on systems acquisition and space system acquisitions.
Finally, to determine the extent to which NOAA has planned and managed its
contracting workforce to address future retirement challenges, we
interviewed NOAA and Commerce officials responsible for contracting
workforce and strategic human capital planning. We also analyzed and
compared NOAA's contracting workforce and strategic human capital planning
efforts with principles of effective human capital management. In addition
to obtaining Commerce and NOAA officials' views and concerns regarding
future human capital challenges, we analyzed data from Office of Personnel
Management's (OPM) Central Personnel Data File (CPDF), which is its
database of federal civilian employees. Specifically, to assess the
potential for retirements in the next few years in NOAA's contracting
workforce, the CPDF data we used reflected information on NOAA
employees-as of September 30, 2005-working in the general series (GS) 1102
contracting series of contract specialists and procurement analysts. We
limited our analysis to focus on contract specialists and procurement
analysts because NOAA's Acquisition and Grants Office workforce mainly
consists of this occupational category. We analyzed CPDF's separations and
demographic data (on the ages and years of service) and NOAA information
for contract specialists and procurement analysts in order to identify the
extent to which NOAA's experienced contracting workforce is eligible for
and thus has the potential for retiring in the near future. We did not
independently verify the CPDF data on NOAA's contracting series employees
for the year we reviewed. However, we previously reported that data from
the CPDF for key variables in another study-occupation, agency/subagency,
birth date, and service computation date-were 99 percent accurate.1
We conducted our review from August 2005 through April 2006 in accordance
with generally accepted government auditing standards.
1See GAO, OPM's Central Personnel Data File: Data Appear Sufficiently
Reliable to Meet Most Customer Needs, GAO/GGD-98-199 (Washington, D.C.:
Sept. 30, 1998).
Appendix II: KFrameworkSystems Appendix II: Knowledge-Based Acquisition
Framework for Complex Developmental Systems
The federal government spends billions annually to research, develop, and
produce large custom projects, such as satellites, space projects, weapon
systems, air traffic control systems, and information technology systems.
However, undesirable acquisition outcomes often occur because agency
officials proceed further into development or production without obtaining
sufficient knowledge that the product will be able to meet established
cost, schedule, performance, and quality targets.
The risk of undesirable acquisition outcomes can be significantly reduced.
All product development acquisition projects, whether for a ship,
airplane, missile, or satellite, go through a complex process of building
knowledge. Ultimately, across the acquisition life cycle, this process
brings together and integrates the technology, components, and subsystems
needed for the product to work and be reliably manufactured. Over the past
decade, we have undertaken a body of best practices work that draws upon
lessons learned from product development practices of leading commercial
firms, which expect their program managers to deliver high-quality
products on time and within budget.
Our work has identified three discrete points in the process for complex
developmental systems at which obtaining certain levels of knowledge
promote successful project outcomes. These knowledge points, depicted in
figure 3, are defined in the following manner.
Figure 3: Knowledge-Based Acquisition Framework
o Knowledge point 1: Resources and needs match. This point occurs
when a sound business case is made for the system-that is, a match
is made between customer requirements and the product developer's
available resources in terms of knowledge, time, money, and
capacity. Achieving a high level of technology maturity at the
start of system development acquisition is an important indicator
of whether this match has been made such that the technologies
needed to meet essential product requirements have been
demonstrated to work in their intended environment.
o Knowledge point 2: Product design is stable. This point occurs
when a program determines that a product's design will meet
customer requirements and cost, schedule, and reliability targets.
A best practice is to achieve design stability at the system-level
critical design review usually held midway through development.
Completion of at least 90 percent of engineering drawings at the
system design review provides tangible evidence that the design is
stable.
o Knowledge point 3: Production processes are mature and the
design is reliable. This is demonstrated when a product can be
manufactured within cost, schedule, and quality targets. A best
practice is to ensure that all key manufacturing processes are in
statistical control-they are repeatable, sustainable, and capable
of consistently producing parts within the product's quality
tolerances and standards-at the start of production.
The attainment of each successive knowledge point builds on the preceding
one. While the knowledge itself builds continuously without clear lines of
demarcation, the attainment of knowledge points is sequential. In other
words, production maturity cannot be attained if the critical technologies
are not mature.
This knowledge-based approach is not just applicable to improving how the
Department of Defense manages the acquisition of weapon systems. As we
have recently reported, utilizing a knowledge-based approach to manage
complex developmental system acquisitions can likewise help civilian
agencies reduce risk by ensuring high levels of knowledge are attained on
individual acquisitions at key decision points, thereby enabling senior
leaders to make informed investment decisions.1 A knowledge-based approach
can also provide inexperienced program managers the necessary guidance to
implement good management practices and ensure that the correct data are
on hand for decision makers. Further, the methodology used by successful
program managers to acquire complex developmental systems does not differ
based upon each individual system being acquired. Notwithstanding the type
of system being acquired, these managers follow a regimented process that
uses common and consistent criteria for decision making.
1GAO, NASA: Implementing a Knowledge-Based Acquisition Framework Could
Lead to Better Investment Decisions and Project Outcomes, GAO-06-218
(Washington, D.C.: Dec. 21, 2005), and Homeland Security: Successes and
Challenges in DHS's Efforts to Create an Effective Acquisition
Organization, GAO-05-179 (Washington, D.C.: Mar. 29, 2005). See also GAO,
Defense Acquisitions: Assessments of Selected Major Weapon Programs,
GAO-06-391 (Washington, D.C.: Mar. 31, 2006) and Defense Acquisitions:
Major Weapon Systems Continue to Experience Cost and Schedule Problems
under DOD's Revised Policy, GAO-06-368 (Washington, D.C.: Apr. 13, 2006).
Appendix III: Comments from the Department of Commerce Appendix III:
Comments from the Department of Commerce
Appendix IV: A Appendix IV: GAO Contact and Staff Acknowledgments
GAO Contact
Lisa Shames, (202) 512-4841 or [email protected] .
Staff Acknowledgments
In addition to the individual named above, Carolyn Kirby, Assistant
Director; Ian Jefferies; Jose Ramos; Sylvia Schatz; Bob Swierczek; and
Greg Wilmoth made key contributions to this report.
(120484)
GAO's Mission
The Government Accountability Office, the audit, evaluation and
investigative arm of Congress, exists to support Congress in meeting its
constitutional responsibilities and to help improve the performance and
accountability of the federal government for the American people. GAO
examines the use of public funds; evaluates federal programs and policies;
and provides analyses, recommendations, and other assistance to help
Congress make informed oversight, policy, and funding decisions. GAO's
commitment to good government is reflected in its core values of
accountability, integrity, and reliability.
Obtaining Copies of GAO Reports and Testimony
The fastest and easiest way to obtain copies of GAO documents at no cost
is through GAO's Web site ( www.gao.gov ). Each weekday, GAO posts newly
released reports, testimony, and correspondence on its Web site. To have
GAO e-mail you a list of newly posted products every afternoon, go to
www.gao.gov and select "Subscribe to Updates."
Order by Mail or Phone
The first copy of each printed report is free. Additional copies are $2
each. A check or money order should be made out to the Superintendent of
Documents. GAO also accepts VISA and Mastercard. Orders for 100 or more
copies mailed to a single address are discounted 25 percent. Orders should
be sent to:
U.S. Government Accountability Office 441 G Street NW, Room LM Washington,
D.C. 20548
To order by Phone: Voice: (202) 512-6000 TDD: (202) 512-2537 Fax: (202)
512-6061
To Report Fraud, Waste, and Abuse in Federal Programs
Contact:
Web site: www.gao.gov/fraudnet/fraudnet.htm E-mail: [email protected]
Automated answering system: (800) 424-5454 or (202) 512-7470
Congressional Relations
Gloria Jarmon, Managing Director, [email protected] (202) 512-4400 U.S.
Government Accountability Office, 441 G Street NW, Room 7125 Washington,
D.C. 20548
Public Affairs
Paul Anderson, Managing Director, [email protected] (202) 512-4800 U.S.
Government Accountability Office, 441 G Street NW, Room 7149 Washington,
D.C. 20548
www.gao.gov/cgi-bin/getrpt? GAO-06-594 .
To view the full product, including the scope
and methodology, click on the link above.
For more information, contact Lisa Shames, 202-512-4841, [email protected].
Highlights of GAO-06-594 , a report to the Chairman, Committee on Finance,
U.S. Senate
June 2006
NOAA
Next Steps to Strengthen Its Acquisition Function
The National Oceanic and Atmospheric Administration (NOAA) accounts for
about half of the Department of Commerce's (Commerce) acquisition
spending, over $851 million in fiscal year 2005 alone. In recent years
however, NOAA has experienced instances of poor contract management.
GAO was asked to determine if NOAA is positioned to effectively carry out
its acquisition function. Specifically, GAO assessed the extent to which
NOAA has structured an acquisition organization that provides appropriate
oversight; established policies and processes that promote, among other
things, a knowledge-based acquisition process for development and
production of complex systems; and planned and managed its contracting
workforce to address future retirement challenges.
What GAO Recommends
GAO recommends establishment of policies for using a knowledge-based
approach for complex developmental acquisitions and other actions to
strengthen oversight of NOAA contracting activities and build capacity of
NOAA's contracting workforce to address the agency's retirement
challenges. After reviewing a draft of this report, Commerce concurred
with our findings and recommendations.
NOAA has yet to structure all of its field acquisition activities under
the direct oversight of its acquisition organization, increasing the risk
that taxpayers are not getting the best value for their dollars. To
improve oversight of its acquisition function, NOAA reorganized in 2005 by
having all acquisition divisions report to the NOAA Director of
Acquisition and Grants. However, NOAA's acquisition director still lacks
direct line authority to oversee a National Weather Service field office
that is responsible for one of the agency's contracts worth up to half a
billion dollars. Also, without appropriate oversight from the acquisition
organization, collateral duty field staff who are not career contracting
officers have bought millions of dollars in goods and services. Our work
has shown that a well-functioning acquisition organization has direct
lines of oversight between the head of acquisition and various components
to help enforce policies that enable efficient and effective contract
spending.
Although NOAA has established clear and consistent policies for some key
areas, such as advance acquisition planning, the agency lacks a
knowledge-based process for developing and producing complex systems-a
situation that can increase the risk of cost increases and schedule
delays. NOAA is missing key elements that promote successful outcomes for
complex developmental systems because it must adhere to Commerce's
acquisition policies that do not support a knowledge-based approach.
Without such an approach, the multibillion-dollar satellite investment
that NOAA is in the early stages of acquiring is at a higher risk of not
meeting program requirements.
NOAA has yet to focus on succession planning and management for its
contracting workforce, although the agency is pursuing hiring
flexibilities to recruit new contracting employees in anticipation of an
impending wave of retirements. NOAA is facing a human capital challenge
because of its aging contracting workforce and has reported that about 43
percent of contracting employees are now eligible to retire or will be
eligible to retire by 2009. While senior acquisition managers are
concerned with the loss of a high percentage of their contracting staff to
retirement and other attrition, NOAA has not specifically addressed such
contracting workforce challenges in its strategic human capital plan.
Also, it is unclear whether human capital planning under way by Commerce
will determine the gaps in numbers and skills in the contracting
workforce. Unless the future retirement and workforce capacity challenges
are strategically addressed, NOAA could soon lose a significant portion of
its contracting knowledge base.
*** End of document. ***