    Federal Acquisition: Trends, Reforms, and Challenges (Testimony,
    03/16/2000, GAO/T-OCG-00-7).

    Pursuant to a congressional request, GAO discussed federal acquisition
    issues, focusing on: (1) the changing acquisition environment; (2)
    recent reform efforts; and (3) current and future challenges in this
    area.

    GAO noted that: (1) federal spending for goods and services has changed
    significantly in recent years; (2) although the Department of Defense
    remains the dominant federal buyer, accounting for two-thirds of all
    federal acquisition spending last year, defense acquisition has declined
    from peak Cold War levels; (3) spending by civilian agencies has
    increased moderately; (4) the government as a whole now spends more on
    services--ranging from basic maintenance, to running computer systems,
    to operating the space shuttle--than on supplies and equipment; (5) the
    acquisition process has become more streamlined as new contract vehicles
    and techniques have allowed agencies to buy what they need much faster
    than in the past; (6) Congress and the administration have taken a
    number of steps recently to improve federal acquisition; (7) these
    efforts have focused largely on simplifying the process, particularly
    for buying commercial products and services, and on attempting to
    improve decisionmaking in acquiring information technology; (8) but
    despite recent reforms and the efforts of many dedicated people over the
    years, the government still does not have a world-class purchasing
    system; (9) all too often, many of the products and services the
    government buys cost more than expected, are delivered late, or fail to
    perform as anticipated; (10) no commercial business would remain viable
    for very long with results like these; (11) problems are particularly
    evident in the two areas where most of the dollars are spent: (a)
    weapons; and (b) information technology systems; (12) significant
    improvements in these areas--as well as in the skills of the acquisition
    workforce--are needed in order to produce better outcomes; and (13) GAO
    has made a number of recommendations over the years to improve
    acquisition outcomes, including the use by federal agencies of best
    commercial practices.

    --------------------------- Indexing Terms -----------------------------

     REPORTNUM:  T-OCG-00-7
         TITLE:  Federal Acquisition: Trends, Reforms, and Challenges
          DATE:  03/16/2000
       SUBJECT:  Federal procurement
    	     Federal procurement policy
    	     Cost control
    	     Procurement planning
    	     Defense procurement
    	     Risk management
    	     Private sector practices
    	     Internal controls
    	     Strategic information systems planning
    IDENTIFIER:  B-2 Aircraft
    	     C-17 Aircraft

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    United States General Accounting Office
    GAO

    Testimony

    Before the Subcommittee on Government
    Management, Information, and Technology
    House Committee on Government Reform

    For Release on Delivery
    10:00 a.m. EST
    Thursday
    March 16, 2000
    GAO/T-OCG-00-7

    FEDERAL ACQUISITION
    Trends, Reforms, and Challenges

    Statement of Henry L. Hinton, Jr.
    Assistant Comptroller General
    National Security and International Affairs
    Division

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     (240373)

    Statement
    Federal Acquisition: Trends, Reforms, and
    Challenges
    Page 16                            GAO/T-OCG-00-7
    Mr. Chairman and Members of the Subcommittee:

    I appreciate the opportunity to be here today to
    participate in the Subcommittee's hearing on
    federal acquisition issues.  Federal acquisition
    is an important topic for many reasons, not the
    least of which is the huge amounts of money
    involved.  The federal government spends nearly
    $200 billion annually buying everything from
    office supplies to sophisticated weapons systems.
    But more importantly, agencies' success in
    efficiently acquiring goods and services directly
    affects their ability to improve government
    operations and provide better service to the
    American people.  Uneconomical, inefficient, and
    ineffective acquisition activities undermine the
    public's confidence in government and waste
    taxpayer dollars.

    My statement today will

    �    describe the changing acquisition
    environment,
    �    summarize recent reform efforts, and
    �    explore current and future challenges in this
    area.

    The reports I will refer to, as well as several
    others we have issued on this subject, are listed
    in attachment II.

    Summary
    Federal spending for goods and services has
    changed significantly in recent years.  Although
    the Department of Defense (DOD) remains the
    dominant federal buyer, accounting for two-thirds
    of all federal acquisition spending last year,
    defense acquisition has declined from peak Cold
    War levels.  Spending by civilian agencies has
    increased moderately.  The government as a whole
    now spends more on services-ranging from basic
    maintenance, to running computer systems, to
    operating the space shuttle-than on supplies and
    equipment.  The acquisition process has become
    more streamlined as new contract vehicles and
    techniques have allowed agencies to buy what they
    need much faster than in the past.

    Congress and the Administration have taken a
    number of steps recently to improve federal
    acquisition.  These efforts have focused largely
    on simplifying the process, particularly for
    buying commercial products and services, and on
    attempting to improve decisionmaking in acquiring
    information technology.  But despite recent
    reforms and the efforts of many dedicated people
    over the years, the government still does not have
    a world-class purchasing system.  All too often,
    many of the products and services the government
    buys cost more than expected, are delivered late,
    or fail to perform as anticipated.  No commercial
    business would remain viable for very long with
    results like these.  Problems are particularly
    evident in the two areas where most of the dollars
    are spent: weapons and information technology
    systems.  Significant improvements in these
    areas-as well as in the skills of the acquisition
    workforce-are needed in order to produce better
    outcomes.  We have made a number of
    recommendations over the years to improve
    acquisition outcomes, including the use by federal
    agencies of best commercial practices.

    The Environment
    Before discussing recent changes in federal
    acquisition in detail, I would like to make a
    point about the overall government environment of
    which acquisition is a part.  That is, despite
    today's budget surpluses, the federal government
    continues to face compelling fiscal pressures.
    These pressures are likely to continue, if not
    intensify, particularly in the long term as we
    address issues such as Social Security and health
    care for an aging population.  Bills also will
    become due for other efforts, such as
    environmental clean up, and the DOD plans to spend
    over $350 billion on three new tactical aircraft.
    After a decade of deficit reduction, there are
    numerous other pent-up demands for using projected
    budget surpluses.  What this means is that
    government acquisition, a major component of
    discretionary spending, will have to compete with
    other funding priorities for scarce federal
    resources.  It is therefore all the more critical
    that we distinguish between wants and needs, focus
    on what we can afford, and obtain maximum value
    and return on taxpayer dollars.

    Let me now provide you with some details on how
    the federal acquisition environment has changed in
    recent years.  Using constant 1999 dollars, figure
    1 shows that overall federal contracting has
    declined from about $280 billion in fiscal year
    1985 to about $200 billion in fiscal year 1999.
    During this period, defense acquisition declined
    nearly $100 billion, and civilian agency
    acquisition increased $14 billion.  As a result,
    the percentage of total contracting dollars spent
    by civilian agencies has increased from about 18
    percent in fiscal year 1985 to about 33 percent in
    fiscal year 1999.

    Figure 1:  Defense and Civilian Agency Contracting
    Dollars Since the Mid-1980s (in Constant 1999
    Dollars)

    Source: All actions reported to the Federal
    Procurement Data System.

    Although defense acquisition has declined, DOD is
    still the dominant purchaser in the federal
    community, accounting for about two-thirds of
    contracting dollars in fiscal year 1999.  Figure 2
    shows the top 10 federal agencies, in terms of
    contracting dollars, in fiscal year 1999.

    Figure 2:  DOD Was the Dominant Purchaser in
    Fiscal Year 1999

    Note:   Some agencies do not report to the Federal
    Procurement Data System.  The largest of these
    agencies, the U.S. Postal Service, spent $9.1
    billion on goods, services, and construction in
    fiscal year 1999.
    Source:  All actions reported to the Federal
    Procurement Data System.

    Since the mid-1980s, there has been a gradual
    shift in what the government buys.  In constant
    1999 dollars, figure 3 shows that, in fiscal year
    1985, supplies and equipment accounted for the
    bulk of contracting dollars-about $145 billion, or
    56 percent-compared to services, construction, and
    research and development.  By fiscal year 1999,
    the largest acquisition category was services at
    $78 billion, or 43 percent of total spending.
    Supplies and equipment expenditures were about $64
    billion, or 35 percent. Construction spending
    remained about $16 billion.  Research and
    development declined in constant dollar terms from
    $36 billion to $25 billion, but declined only
    slightly as a percentage of total acquisition
    spending.

    Figure 3:  The Bulk of Contracting Dollars Have
    Shifted From Supplies and Equipment to Services
    (Constant 1999 Dollars)

    Source:  Federal Procurement Data System.  These
    data reflect actions reported to the Federal
    Procurement Data System, generally excluding those
    less than $25,000.

    The result of this gradual shift in what the
    government buys is more dramatically displayed in
    figure 4.  The government now spends more for
    services than for any other acquisition category.

    Figure 4:  Comparing Fiscal Year 1985 With Fiscal
    Year 1999 Shows the Bulk of Contracting Activity
    Has Shifted

    Source:  Federal Procurement Data System.  These
    data reflect actions reported to the Federal
    Procurement Data System, generally excluding those
    less than $25,000.  The percentages for 1985 do
    not total to 100 due to rounding.

    One of the top items in the services category is
    professional, administrative, and management
    support.  Such services would include, for
    example, a DOD contract for strategic business
    process reengineering used to acquire contractor
    assistance in improving business practices and to
    obtain support for strategic planning, investment
    analysis, and training.  Another large component
    of services contracting involves managing and
    operating government facilities, such as national
    laboratories.  The top items in the supply and
    equipment category in fiscal year 1999 were
    aircraft and information technology.

    In addition to changes in what the government
    buys, we also are seeing changes in how the
    government buys.  Agencies are making greater use
    of contracts awarded by other agencies, as well as
    federal supply schedule contacts1 awarded by the
    General Services Administration (GSA).  Use of
    these types of vehicles can reduce acquisition
    time significantly.  For example, a recent GSA
    study found that it takes only 15 days, on
    average, to issue an order under a schedule
    contract versus 268 days to award a contract using
    the traditional method.  Use of GSA federal supply
    schedules has grown from $4.5 billion in 1993 to
    $10.5 billion in 1999.  Most of the growth has
    been in the area of information technology.

    So what does all this mean, what are the
    implications of these data, and what can we expect
    in the future?  Taken together, the data tell us
    that the federal acquisition environment is now
    characterized by a greater reliance on services
    and information technology.  In many ways, these
    trends in government procurement merely reflect
    changes in the overall global economy.  Because
    the government is but one of many players in this
    services- and information-driven economy, it will
    have to become a smarter, more commercial-oriented
    buyer.  At the same time, the government continues
    to spend enormous amounts in markets where it
    remains the only-or at least the dominant-buyer,
    such as procurements of unique defense and space
    systems.  It is in these areas where vigorous
    oversight will continue to be needed because
    competition in these markets often is limited and
    the government frequently relies on contractor
    costs in the pricing of contracts.

    As we look to the future, there are several trends
    that bear watching.  Contracting for services
    likely will continue to increase because of
    further downsizing and initiatives such as the
    Federal Activities Inventory Reform Act of 1998
    (FAIR).  This legislation requires agencies to
    identify functions that could be performed by the
    private sector.  Agency spending on information
    technology-related goods and services, currently
    about $40 billion annually, likely will increase
    as agencies seek to modernize their equipment and
    continue to take advantage of the latest
    technologies.  Also, recent budget projections
    indicate that spending on acquisitions of major
    defense equipment will likely increase.

    We should also expect that electronic commerce
    will become the preferred approach for
    accomplishing a variety of procurement tasks,
    ranging from conducting market research, to
    selecting suppliers, to placing orders, to making
    payments online.  The Administration has
    encouraged agencies to use electronic commerce to
    streamline and improve federal buying practices.
    With the proliferation of Internet use throughout
    government, industry, and the public, agencies are
    seeking to capitalize on electronic commerce
    capabilities to improve efficiency and economy.
    At the same time, agencies must understand and
    manage the challenges and risks of using a global,
    public, electronic network.  To avoid loss of
    public trust, agencies must strive for
    reliability, integrity, security, and privacy in
    all electronic commerce transactions.

    Acquisition Reforms
    For decades, the federal government has been
    struggling with an inefficient acquisition system
    and the resulting negative impact on agency
    operations.  There also is a long history of
    attempts to improve the acquisition system.
    Attachment I displays these efforts in a timeline.
    The 1980s, in particular, witnessed a
    proliferation of requirements governing almost
    every aspect of the acquisition process.  Some
    were in response to the stories of excessive
    prices paid for military spare parts, criminal
    activity, the frequency of cost overruns, and
    increasing acquisition delays.

    These requirements were enacted to serve valid
    purposes.  For example, the Competition in
    Contracting Act of 1984, which established the
    current competitive acquisition system, was
    enacted after years of congressional concern that,
    rather than seeking competition, executive
    agencies relied on sole-source contracts to an
    unacceptable extent.  Audit requirements and cost
    principles were established to control what the
    government pays under its contracts.
    Socioeconomic requirements were designed to
    promote desirable social objectives, such as
    enhancing small and minority business
    participation.  In 1988, the Procurement Integrity
    Act was enacted to ensure that procurement
    officials do not engage in employment discussions
    with companies with which they are negotiating
    contracts or give inside information to
    contractors.

    When all these requirements-as well as others
    imposed by regulation-were added together,
    however, some came to believe that the result was
    a complex and unwieldy system that had become
    overwrought with tension between the basic goals
    of efficiency and fairness.  Government
    contracting officials were confronted with
    numerous mandates that left little room for the
    exercise of sound business judgment, initiative,
    and creativity in satisfying the needs of their
    agency customers.  In this environment, there were
    concerns about the government's ability to take
    full advantage of the commercial marketplace.

    In response to these concerns, Congress enacted
    two pieces of reform legislation: the Federal
    Acquisition Streamlining Act (FASA) of 1994 and
    the Clinger-Cohen Act of 1996.  Table 1 summarizes
    the major changes that were implemented under FASA
    and the Clinger-Cohen Act.

    Table 1:  Major Changes under FASA and the Clinger-
    Cohen Act
       Federal Acquisition Streamlining Act of 1994
                          (FASA)
    Exempted commercial items from many unique
    government requirements
    Promoted use of simplified buying procedures for
    low dollar-value purchases
    Encouraged use of electronic commerce
    Established statutory framework for task- and
    delivery-order contracts
                Clinger-Cohen Act of 1996
    Devolved information technology procurement
    authority from GSA to agencies
    Emphasized accountability, performance, and
    results-based IT management
    Allowed contracting officers to select competitive
    contractors more efficiently
    Promoted improved performance of the civilian
    agency acquisition workforce

    Congress also has taken other actions to provide
    agencies more flexibility in acquiring goods and
    services.  For example, Congress has permitted the
    Federal Aviation Administration to devise its own
    procurement system outside the usual statutory
    framework.  It also has allowed some agencies to
    use alternative approaches to contract through so-
    called "other transactions."  These agreements
    generally are not subject to federal laws and
    regulations governing standard procurement
    contracts.  One of the intended benefits of using
    this authority is to attract commercial firms and
    other organizations that otherwise might not
    accept a standard contract because of government
    requirements that they view as unduly burdensome.

    In addition to these legislative changes, there
    have been a number of administrative and
    regulatory reforms.  These include reducing
    government-mandated product specifications,
    increasing the use of government purchase cards,
    and encouraging flexibility and innovation in
    negotiating contracts.

    The United States is not alone in implementing
    reforms.  As you know, Mr. Chairman, we issued a
    report to you and Congressman Tom Davis last July
    that discussed procurement reform in four selected
    countries.  These countries-Canada, the United
    Kingdom, Australia, and New Zealand-have
    reassessed the role of their central procurement
    agencies, empowered civil servants to make
    business decisions, and shifted to greater
    reliance on the private sector.  Although
    officials in these countries generally were
    satisfied with the changes, performance data on
    the effectiveness of the various changes were not
    yet available.

    As with these other countries, it is difficult to
    provide a full assessment of the impact of reforms
    because many of them are still being implemented.
    And, in some cases, there is a lack of reliable
    baseline data.  For example, we reported that it
    was difficult to measure any increase in the
    government's purchases of commercial items since
    the 1994 acquisition streamlining act because
    reliable baseline data were not available.
    Nevertheless, we are seeing some changes.
    Agencies have streamlined their acquisition
    processes, particularly by using governmentwide
    acquisition contracts and schedule contracts, and
    thus can get what they need faster.  There has
    also been an increase in agencies' use of purchase
    cards and electronic commerce as a means of
    quickly accessing goods and services.

    Questions remain, however, about whether these
    efficiencies have come at the expense of
    competition and good pricing.  For example, we
    have found that DOD receives few competing
    proposals on large information technology orders.
    We also have reported that some contracting
    officials are having difficulty making the
    transition from pricing goods and services based
    on the costs incurred by contractors to a
    commercial model in which factors other than cost
    are the principal means used to establish prices.
    This sometimes resulted in significantly higher
    prices than previously paid.  For example, a
    defense agency paid $453 per unit for wiring
    harnesses for the C-130 aircraft, even though it
    had paid only $91 per unit 2 years earlier.  The
    buyer did not use this price history to try to
    negotiate a lower price.  In addition, our reviews
    of delays and cost overruns at the Department of
    Energy's (DOE) Idaho and Hanford facilities
    suggest that DOE personnel lack expertise in
    administering fixed-price contracts.

    Major Challenges
    Agencies may be acquiring goods and services
    faster, but the federal acquisition system still
    faces a number of significant challenges.  In our
    view, the most significant challenges involve
    three key areas: improving the outcomes of defense
    systems acquisitions, acquiring and using
    information technology, and addressing acquisition
    workforce issues.  In each of these areas, much
    can be gained from reviewing the practices of
    leading commercial companies who have learned to
    use key enablers-process, people, and
    technology-to produce better outcomes.

    Defense Systems
    The acquisition reforms to date have focused
    largely on simplifying the procurement process,
    particularly for commercial and lower dollar-value
    items.  Our work indicates, however, that far too
    often the outcomes of high dollar-value
    acquisitions continue to fall short of
    expectations.  When we compare government
    acquisition practices to those of leading
    commercial companies, it is clear that we still
    have a long way to go.

    For example, we reported in August 1999 that,
    after five program restructurings, the Army's
    Comanche helicopter program contains significant
    risks of cost overruns, schedule delays, and
    degraded performance.  These risks exist because,
    contrary to the practices of successful commercial
    companies, program plans call for proceeding with
    product development before key equipment
    technologies have matured.  In addition, the Army
    plans to begin production of the Comanche before
    even starting critical tests needed to determine
    whether these technologies are mature and will
    work as designed.

    These are not new issues.  Similar approaches were
    used on such troubled programs as the B-2 bomber,
    the C-17 airlifter, and many others, with similar
    results.  Nor are these results limited to highly
    sophisticated weapons systems.  We recently
    reported that the Army has purchased more than
    6,000 chassis and cargo trailers (shown in figure
    5) that, without modifications, cannot be used as
    planned because they pose a safety risk and could
    damage the vehicles towing them.

    Figure 5:  Cargo Trailer

    We have compared the product development practices
    of leading commercial firms with those used to
    acquire defense systems.  The key differences
    include the nature of the business case required
    to support the start of a program, the extent of
    product knowledge at critical decision points, and
    the underlying incentives.  In general, aspiring
    defense programs rely on unproven technological
    advances to successfully compete for limited
    defense funds.  Commercial companies, on the other
    hand, demand much more knowledge about key
    technologies before proceeding with the
    development of new products.

    A number of actions are underway to improve DOD's
    weapons acquisition outcomes, and DOD's leadership
    is genuinely committed to change.  Lasting
    improvements in the outcomes of acquisition
    programs will not be realized, however, until the
    incentives that drive behaviors are changed.
    Specifically, existing incentives to start, fund,
    and continue weapons acquisition programs must be
    realigned with desired outcomes.  DOD's
    traditional practice of approving requested
    programs, and then reducing procurement quantities
    in the face of budget pressures, just increases
    unit costs and exacerbates the problem of aging,
    high-maintenance equipment.  Changing the
    incentives-that is, redefining program
    success-will take the efforts of Congress as well
    as of DOD and the military services.

    Information Technology
    The federal government is increasingly dependent
    on information technology to improve performance
    and meet mission goals.  Agencies depend heavily
    on computer systems and networks to implement a
    vast array of programs supporting, among other
    things, national defense, revenue collections, and
    social benefits.  Consequently, successfully
    acquiring and applying modern technology is
    central to improving government operations and
    generating better service to the American people.
    We have documented over many years, however, that

    �    billions of dollars have been wasted on
    information technology that failed to deliver
    expected results,
    �    poorly defined management processes have
    fostered suboptimal solutions to agency business
    needs, and
    �    unresolved security issues have threatened
    the integrity of agency operations.

    These problems have involved such important
    functions as air traffic control, tax collection,
    Medicare transactions, weather forecasting, and
    national defense.  For example, because the Health
    Care Financing Administration had not adequately
    reviewed, revised, and improved mission-related
    and administrative processes before making a
    significant information technology investment, the
    agency was forced to terminate an important
    project after cost estimates had soared from $151
    million to about $1 billion.  At DOD, we found a
    breakdown in the oversight mechanism for ensuring
    sound management and development practices for
    changing hundreds of inefficient information
    systems.  One result of the lack of strong
    oversight was that a supply management project was
    abandoned after more than $700 million had been
    spent.

    Several recent reforms-including the Clinger-Cohen
    Act of 1996, revisions to the Paperwork Reduction
    Act, the Government Performance and Results Act,
    the Chief Financial Officers Act, and the Federal
    Acquisition Streamlining Act-have helped to
    instill a much-needed results-oriented approach
    toward IT acquisitions and in-house development
    efforts.  For instance, a key goal of the Clinger-
    Cohen Act, which is based on best private-sector
    practices, is that agencies should have processes
    in place to ensure that IT projects are
    implemented at acceptable costs and within
    reasonable time frames, and are contributing to
    tangible, observable improvements in mission
    performance.

    Some agencies, such as the Internal Revenue
    Service, have begun to make significant progress
    in establishing a management framework for making
    information technology investment decisions.  The
    Federal Aviation Administration has established a
    structured approach for selecting and controlling
    its investments, but the approach does not cover
    all its projects and the agency lacks complete and
    reliable project information.  Other agencies have
    yet to make significant inroads into implementing
    the processes and controls needed to manage these
    acquisitions effectively.

    Acquisition Workforce
    Another challenging issue is the capacity of the
    acquisition workforce to perform effectively in
    today's dynamic environment.  Successfully
    implementing acquisition reform and achieving good
    contract management require that agencies have the
    right people with the right skills.  But
    throughout the federal government there is a
    looming human capital crisis.  In more than 10
    years of downsizing, there has been relatively
    little hiring at the entry level compared with
    earlier years.  As a result, the percentage of the
    workforce aged 30 and under-the pipeline of future
    agency talent and leadership-has dropped
    dramatically, while the percentage of the
    workforce aged 50 and above grows ever larger.
    Within the next several years, we can expect to
    see a huge knowledge drain as many of our more
    experienced and valued people leave the federal
    workforce.  Unfortunately, the government's
    hiring, training, and retention practices have not
    been oriented toward maintaining a balanced,
    stable workforce and ensuring adequate emphasis on
    career development, training, and orderly
    succession planning.

    Dealing with this issue throughout the government,
    including in the acquisition area, will not be
    easy.  Agencies are facing ever-growing public
    demands for better and more economical delivery of
    products and services.  At the same time, the
    ongoing technological revolution requires not just
    new hardware and software, but a workforce with
    new knowledge, skills, and abilities.  And, at the
    moment, agencies must address these challenges in
    an economy that makes it difficult to compete for
    people with the competencies needed to achieve and
    maintain high performance.

    Having a high-quality acquisition workforce-the
    right people, with the right skills, and the right
    incentives-will become even more critical in an
    era of increased outsourcing.  Federal agencies
    have been encouraged to conduct public-private
    competitions to determine the best source to
    perform commercial type activities, and perhaps
    realize significant savings.  DOD, for example,
    currently has plans to complete competitive
    sourcing studies involving over 200,000 positions
    by 2005, with the expectation of saving about $11
    billion.  However, DOD faces significant
    challenges in launching and completing this
    magnitude of studies in this timeframe.  Depending
    on the outcomes of these competitions, DOD also
    could face challenges in overseeing an increased
    number of contracts.

    Few competitive sourcing studies have been planned
    by other federal agencies.  That has the potential
    to change, however, as federal agencies implement
    the FAIR Act, which requires federal agencies to
    identify and publish lists of their commercial
    activities annually.  Our preliminary review of
    some of the lists has raised questions about how
    agencies decided which activities to list, and
    about the usefulness of the lists.  While it is
    difficult to forecast the extent to which listed
    activities will be the subject of competitive
    sourcing studies, it is almost certain that any
    increase in outsourcing will only add to the
    already challenging contract management workload.
    Agencies will need to ensure that the acquisition
    workforce is up to the task.

    Past reforms have targeted problems with the
    acquisition workforce.  For example, legislation
    in 1990 and 1996 established education, training,
    and experience requirements for entry and
    advancement in the acquisition career field.  Our
    February 2000 report to this Subcommittee on the
    implementation of the most recent of these
    initiatives found that neither of the agencies we
    reviewed-GSA and the Department of Veterans
    Affairs-had complete information on the extent to
    which their acquisition workforces had received
    required training.  In addition, the Office of
    Federal Procurement Policy had not yet ensured
    that civilian agencies were collecting and
    maintaining standardized workforce information, as
    required by the Clinger-Cohen Act.

    Leading private and public organizations realize
    that their people largely determine their capacity
    to be successful.  They also realize that people
    are assets whose value can be enhanced through
    investments such as training.  They take a
    strategic approach to training their people on new
    practices, and provide customized training
    targeted to specific needs.  Federal agencies need
    to take a similar approach for acquisition reform
    to succeed in producing better outcomes.

    Conclusion
    Far too often, the products and services the
    government buys cost more than projected, are
    untimely, or fail to meet expectations.  In some
    cases, agencies wasted billions of dollars on
    acquisitions that did not improve service to the
    American public and did not contribute to
    accomplishing agency missions.

    Numerous attempts have been made over the years to
    improve federal acquisition outcomes, and some
    progress has been made.  Lasting improvements in
    federal procurement operations offer the potential
    to save billions of dollars, dramatically improve
    services to the American public, and strengthen
    confidence in the accountability and performance
    of our national government.  However, much more
    needs to be done to achieve real and sustained
    improvements.  It will take time to improve agency
    procurement operations because the problems we
    have identified are difficult ones and are deep-
    rooted in very large programs and organizations.
    There is much to be learned from the best
    practices of leading, high-performing private
    sector organizations.  When use of commercial best
    practices is determined to be appropriate,
    government agencies should adopt such practices
    unless there is a compelling reason not to.  To
    ensure that progress continues, sustained
    management attention and congressional
    oversight-particularly involving weapons systems,
    information technology, and human capital
    issues-will be necessary.

    Mr. Chairman, this concludes my prepared
    statement.  I will be happy to respond to any
    questions you or other Members of the Subcommittee
    may have.

    Contact and Acknowledgement
    For further contacts regarding this testimony,
    please contact Henry L. Hinton, Jr., at (202) 512-
    4300.  Individuals making key contributions to
    this testimony included Johana R. Ayers, Jack L.
    Brock, Jr., David E. Cooper, Ralph C. Dawn, Jr.,
    Louis J. Rodrigues, David E. Sausville, Gerald
    Stankosky, Bernard L. Ungar, Adam Vodraska, and
    William T. Woods.

    _______________________________
    1 GSA negotiates contracts with vendors for a wide
    variety of mostly commercial-type products and
    services.  These contracts permit other agencies
    to place orders directly with the vendors.

    Attachment I
    Timeline of Selected Acquisition Reform
    Initiatives
    Page 19                            GAO/T-OCG-00-7
    Figure I.1: Timeline of Selected Acquisition
    Reform Initiatives

    Source:  GAO Analysis of Selected Acquisition
    Reform Initiatives.

    Attachment II
    Related GAO Products
    Page 21                            GAO/T-OCG-00-7
    Human Capital: Strategic Approach Should Guide DOD
    Civilian Workforce Management (GAO/T-GGD/NSIAD-00-
    120, Mar. 9, 2000).

    Acquisition Reform: GSA and VA Efforts to Improve
    Training of Their Acquisition Workforces (GAO/GGD-
    00-66, Feb. 18, 2000).

    Congressional Oversight: Opportunities to Address
    Risks, Reduce Costs, and Improve Performance
    (GAO/T-AIMD-00-96, Feb. 17, 2000).

    Budget Issues: Effective Oversight and Budget
    Discipline Are Essential-Even in a Time of Surplus
    (GAO/T-AIMD-00-73, Feb. 1, 2000).

    Competitive Contracting: Preliminary Issues
    Regarding FAIR Act Implementation (GAO/T-GGD-00-
    34, Oct. 28, 1999).

    Defense Acquisitions: Army Purchased Truck
    Trailers That Cannot Be Used as Planned (GAO/NSIAD-
    00-15, Oct. 27, 1999).

    Defense Acquisitions: Comanche Program Cost,
    Schedule, and Performance Status (GAO/NSIAD-99-
    146, Aug. 24, 1999).

    Best Practices:  DOD Training Can Do More to Help
    Weapon System Programs Implement Best Practices
    (GAO/NSIAD-99-206, Aug. 16, 1999).

    Best Practices: Better Management of Technology
    Development Can Improve Weapon System Outcomes
    (GAO/NSIAD-99-162, July 30, 1999).

    DOD Competitive Sourcing: Lessions Learned System
    Could Enhance A-76 Study Process (GAO/NSIAD-99-
    152, July 21, 1999).

    IRS Management: Formidable Challenges Confront IRS
    as It Attempts to Modernize (GAO/T-GGD/AIMD-99-
    255, July 22, 1999).

    Procurement Reform:  How Selected Countries
    Perform Certain GSA Activities (GAO/GGD-99-109,
    July 15, 1999).

    Contract Management:  DOD Pricing of Commercial
    Items Needs Continued Emphasis (GAO/NSIAD-99-90,
    June 24, 1999).

    Customs Service Modernization: Actions Initiated
    to Correct ACE Management and Technical Weaknesses
    (GAO/T-AIMD-99-186, May 13, 1999).

    National Laboratories: DOE Needs to Assess the
    Impact of Using Performance-Based Contracts
    (GAO/RCED-99-141, May 7, 1999).

    Air Traffic Control: FAA's Modernization
    Investment Management Approach Could Be
    Strengthened (GAO/RCED/AIMD-99-88, Apr. 30, 1999).

    Defense Acquisition: Best Commercial Practices Can
    Improve Program Outcomes (GAO/T-NSIAD-99-116, Mar.
    17, 1999).

    F-22 Aircraft: Issues in Achieving Engineering and
    Manufacturing Development Goals (GAO/NSIAD-99-55,
    Mar. 15, 1999).

    Customs Service Modernization: Serious Management
    and Technical Weaknesses Must Be Corrected
    (GAO/AIMD-99-41, Feb. 26, 1999).

    High-Risk Series: An Update (GAO/HR-99-1, January
    1999).

    Major Management Challenges and Program Risks: A
    Governmentwide Perspective (GAO/OCG-99-1, January
    1999).

    Major Management Challenges and Program Risks:
    Department of Defense (GAO/OCG-99-4, January
    1999).

    Major Management Challenges and Program Risks:
    Department of Energy (GAO/OCG-99-6, January 1999).

    Major Management Challenges and Program Risks:
    National Aeronautics and Space Administration
    (GAO/OCG-99-18, January 1999).

    OMB Circular A-76: Oversight and Implementation
    Issues (GAO/T-GGD-98-146, June 4, 1998).

    Customs Service Modernization: Architecture Must
    Be Complete and Enforced to Effectively Build and
    Maintain Systems (GAO/AIMD-98-70, May 5, 1998).

    Defense Acquisition: Improved Program Outcomes Are
    Possible (GAO/T-NSIAD-98-123, Mar. 18, 1998).

    Acquisition Reform: Implementation of Key Aspects
    of the Federal Acquisition Streamlining Act of
    1994 (GAO/NSIAD-98-81, Mar. 9, 1998).

    National Weather Service: Budget Events and
    Continuing Risks of Systems Modernization (GAO/T-
    AIMD-98-97, Mar. 4, 1998).

    Best Practices: Successful Application to Weapon
    Acquisitions Requires Changes in DOD's Environment
    (GAO/NSIAD-98-56, Feb. 24, 1998).

    Defense IRM: Poor Implementation of Management
    Controls Has Put Migration Strategy at Risk
    (GAO/AIMD-98-5, Oct. 20, 1997).

    Defense Acquisition Organizations: Linking
    Workforce Reductions With Better Program Outcomes
    (GAO/T-NSIAD-97-140, Apr. 8, 1997).

    High-Risk Series: Information Management and
    Technology (GAO/HR-97-9, February 1997).

    Acquisition Reform: Purchase Card Use Cuts
    Procurement Costs, Improves Efficiency (GAO/NSIAD-
    96-138, Aug. 6, 1996).

    Best Practices Methodology: A New Approach for
    Improving Government Operations (GAO/NSIAD-95-154,
    May 1995).

    High Risk Series: An Overview (GAO/HR-95-1,
    February 1995).

    Weapons Acquisition: A Rare Opportunity for
    Lasting Change (GAO/NSIAD-93-15, Dec. 1992).

    *** End of Document ***