United States General Accounting Office

GAO Briefing Report to the Chairman,

Committee on Government Affairs,

U.S. Senate

October 1996 ACQUISITION

REFORM

Implementation of 

Title V of the Federal

Acquisition

Streamlining Act of

1994

G O A

years

1921 - 1996

GAO/NSIAD-97-22BR

GAO United States

General Accounting Office

Washington, D.C. 20548

National Security and

International Affairs Division

B-274241 

October 31, 1996

The Honorable Ted Stevens

Chairman, Committee on Governmental Affairs

United States Senate

Dear Mr. Chairman:

As you requested, we reviewed the Department of Defense’s (DOD) and

civilian agencies’ implementation of the performance-based acquisition

management provisions of title V of the Federal Acquisition Streamlining

Act (FASA) of 1994 (P.L. 103-355). Specifically, we determined (1) the status

of DOD’s and civilian agencies’ implementation of title V requirements,

(2) the agencies’ progress in implementing title V in the required time

frames, and (3) significant obstacles and barriers to effective

implementation.

Background Congress has long been concerned that federal agencies’ acquisition

practices are wasteful and add billions to acquisition costs. For example,

cost overruns of more than 100 percent have been reported in DOD and

Federal Aviation Administration programs. FASA, signed into law on

October 13, 1994, contained more than 200 sections changing the laws that

govern how agencies acquire almost $200 billion of goods and services

annually. Title V of FASA is designed to foster the development of

(1) measurable cost, schedule, and performance goals and (2) incentives

for acquisition personnel to reach these goals. Title V performance-based

management provisions are detailed in subtitle A for DOD and subtitle B for

civilian agencies.

Within 1 year of FASA’s enactment, or by October 13, 1995, major elements

of subtitles A and B require federal agencies to

• establish cost, schedule, and performance goals for acquisition programs

and annually report on the progress in meeting these goals;

• establish personnel performance incentives linked to the achievement of

these goals; and

• submit recommendations for legislative changes necessary to facilitate

and enhance the management of acquisition programs and the acquisition

workforce based on performance.

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B-274241 

Additionally, subtitle A requires DOD to report annually on whether the

time required for incorporating new technology into major weapon

systems has decreased by 50 percent and to review its acquisition program

cycle regulations. Subtitle B requires the administrator of the Office of

Federal Procurement Policy (OFPP) of the Office of Management and

Budget (OMB), in consultation with the heads of civilian agencies, to

develop results-oriented acquisition process guidelines for property and

services.

On September 24, 1996, we briefed your staff on our review. This report

summarizes the information presented in that briefing.

Results in Brief Table 1 summarizes federal agencies’ status progress in complying with

title V timeframes and requirements.

Table 1: Status of DOD’s and Civilian

Agencies’ Title V Implementation Title V provision DOD Civilian agencies

Establish cost, schedule, and

performance goals

Yes In process

Implement personnel performance

incentives

No No

Recommend personnel legislation,

if needed

None None

Assess technology insertion

timeframes

In process N/Aa

Review acquisition program cycle

regulations

Yes N/A

Develop acquisition process

guidelines

N/A In process

Note: Reflects implementation status for fiscal year 1995. Implementation status for fiscal year

1996 will be reported to Congress in the second quarter of fiscal year 1997.

aN/A = not applicable.

A more in-depth discussion of agencies’ compliance in fiscal year 1995

with title V requirements follows.

DOD’s Compliance Status While DOD complied with the majority of title V’s requirements, it did not

establish a personnel system with enhanced incentives within 1 year after

FASA’s enactment. DOD currently plans to use personnel system

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B-274241 

demonstration projects that may last several years before doing so. DOD

did, however, contract with the Logistics Management Institute (LMI) to

benchmark commercial personnel incentive practices and examine those

available to DOD. Based on LMI’s findings, DOD officials concluded that a

significant barrier in establishing this personnel system is the inability to

pay monetary incentives to military personnel. Other barriers reported by

DOD include the inability to retain program savings for reinvestment

purposes; the lack of authority to promote civilians in place for

accomplishing specific acquisition objectives; and the conclusion that

program management does not have the necessary control over cost,

schedule, and performance goals.1

DOD’s plan for demonstration projects includes draft recommendations for

legislative changes to authorize performance payment incentives to all

members of a program team, including government civilians, military

personnel, and contractors. (According to DOD, current demonstration

project authority permits civilians to be promoted in place.) In addition,

DOD would also link program savings and employee efforts by authorizing

the use of program funds to make performance payments.

As required by subtitle A, DOD reviewed its acquisition guidelines and

updated them, including information on how to establish and measure

cost, schedule, and performance goals. It also reported in the Secretary of

Defense’s Annual Report to the President and the Congress for fiscal year

1995 that all but 4 of DOD’s 74 major acquisition programs met these

established goals. In addition, DOD reported that the time required to insert

technology into major weapon systems had decreased from 115 to 

113 months (or roughly from 9.5 to 9.4 years). A DOD process action team

had reviewed acquisition program cycle regulations and DOD updated them

in its acquisition guidelines.

Civilian Agencies’

Compliance Status

Based on its initial assessment, OMB concluded that many civilian agencies

have not been applying performance-based management techniques as

required by subtitle B. OMB lacked sufficient information to evaluate

whether the cost, schedule, and performance goals for fiscal year 1995 had

been met. For example, only 14 agencies provided the requested

information to OFPP and, based on our review of the information, we

1

We have reported that major sources of program instability (i.e., repetitive budget and program

reviews by other participants in the defense acquisition process) tend to limit program management’s

overall control. See Weapons Acquisition: A Rare Opportunity for Lasting Change (GAO/NSIAD-93-15,

Dec. 1992).

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B-274241 

determined that much of it was incomplete, inconsistent, and generally not

useful for establishing goals and measuring their attainment.

However, OMB is coordinating and monitoring civilian agencies’ attempts to

address subtitle B requirements. As its primary effort, OMB issued Circular

A-11, Part 3, “Planning, Budgeting, and Acquisition of Fixed Assets”

(July 16, 1996) that integrates title V requirements with the planning,

budgeting, and fixed assets acquisition requirements of the Information

Technology Management Reform Act of 1996 and the annual performance

plans called for by the Government Performance and Results Act of 1993.

When these requirements are fully implemented in fiscal year 1998,

reporting on cost, schedule, and performance goals for major acquisition

programs is expected to (1) be a formal part of civilian agencies’ planning

and budgeting activities and (2) present a unified picture of agencies’

management activities.

Although OMB’s existing policy, OFPP Policy Letter 92-3, established

workforce requirements for purchasing and contracting officials, OMB has

not issued final guidelines on (1) acquisition workforce management 

(i.e., standards, training and education requirements, etc.) for designated

acquisition positions or (2) a personnel system with enhanced incentives

for acquisition employees.

In December 1995, OFPP distributed draft guidance on acquisition

workforce requirements and on personnel performance incentives.

Civilian agencies raised some significant concerns due to OMB’s use of the

DOD model for its workforce requirements guidance. Civilian agencies also

raised concerns about the draft personnel performance incentives

guidance, which they broadly characterized as “onerous and burdensome.”

Additionally, OMB officials believed that another barrier to implementing a

personnel system with enhanced incentives is that agencies have not

developed a baseline for their acquisition programs, a process that is

expected to be completed by the end of fiscal year 1998. However, a

limited pilot or test of an updated personnel system may be conducted

before the end of fiscal year 1998, when full implementation is expected.

OMB advised us that it had not identified any additional legislation

necessary to facilitate management of acquisition programs and

performance-based management of the acquisition workforce.

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B-274241 

Agency Comments In commenting on a draft of this report, DOD and OFPP generally concurred

with our findings. They also provided some technical corrections, which

we have incorporated where appropriate.

Scope and

Methodology

To determine the status of DOD’s implementation of title V and results to

date, we obtained supporting documentation from officials in the

(1) Office of the Under Secretary of Defense for Acquisition and

Technology (Acquisition Reform) responsible for coordinating its

implementation and (2) Office of the Under Secretary of Defense for

Acquisition and Technology (Program Integration). The documentation

allowed us to assess DOD’s progress in meeting title V time frames and

document barriers to implementation identified by DOD. We also examined

DOD’s methodology used to ensure compliance with title V cost, schedule,

and performance requirements and discussed it with appropriate officials.

OMB is responsible for establishing guidance and coordinating and

assessing civilian agencies’ implementation progress. To determine the

status of civilian agencies’ implementation of title V and results to date, we

obtained supporting documentation from OMB officials in OFPP’s

Procurement Innovation Branch. The documentation allowed us to assess

civilian agencies’ progress in meeting title V time frames. We also

discussed key implementation barriers identified by OFPP.

We did not independently verify the reliability of the agencies’ existing

management information systems that title V required the agencies to use

for data collection.

We performed our review from May 1996 to September 1996 in accordance

with generally accepted government auditing standards.

We are sending copies of this report to the Secretary of Defense, the Office

of Management and Budget, and interested congressional committees.

Copies of this report will also be made available to others upon request.

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B-274241 

Please contact me at (202) 512-4841 if you or your staff have any questions

concerning this briefing report.

Sincerely yours,

Louis J. Rodrigues

Director, Defense Acquisitions Issues

Page 6 GAO/NSIAD-97-22BR Acquisition Reform
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Contents

Letter 1

Briefing Section I 

Title V

Implementation—

DOD

10

Defense Acquisition Program Goals 10

Personnel Performance Incentives 12

Technology Insertion 14

Program Cycle Regulations 16

Briefing Section II 

Title V

Implementation—

Civilian Agencies

18

Civilian Acquisition Program Goals 18

Personnel Performance Incentives 22

Process Guidelines 24

Appendix I 

Illustrative

Explanation of

Earned Value Concept

and Cost and

Schedule Variances

for Fixed Assets

26

Appendix II 

Major Contributors to

This Report

27

Table Table 1: Status of DOD’s and Civilian Agencies’ Title V

Implementation

2

Abbreviations

DOD Department of Defense

FASA Federal Acquisition Streamlining Act

LMI Logistics Management Institute

OFPP Office of Federal Procurement Policy

OMB Office of Management and Budget

Page 8 GAO/NSIAD-97-22BR Acquisition Reform
Page 9 GAO/NSIAD-97-22BR Acquisition Reform
Briefing Section I 

Title V Implementation—DOD

GAO Defense Acquisition Program Goals

Establish cost, schedule, and performance goals 

for major programs and each program phase.

Report annually on whether major and nonmajor 

programs are achieving 90 percent of program 

goals.

Conduct a timely review of programs to identify 

suitable action if specific goals are not achieved. 

Ensure DOD Comptroller evaluation of cost goals.

Page 10 GAO/NSIAD-97-22BR Acquisition Reform
Briefing Section I 

Title V Implementation—DOD

Even before the Federal Acquisition Streamlining Act’s (FASA) enactment,

10 U.S.C. 2435 required the Department of Defense (DOD) to establish cost,

schedule, and performance goals in an acquisition program baseline

document1

 for each major defense acquisition program. DOD has

subsequently updated its acquisition policies to accomplish several

objectives, including the incorporation of new laws such as FASA. DOD

Directive 5000.1 and DOD Regulation 5000.2-R, issued March 1996,

incorporate DOD’s implementation of title V performance-based

management provisions.

The Director of Acquisition Program Integration determines, at the end of

each fiscal year, if each major acquisition program has reached 90 percent

or more of its cost, schedule, and performance parameters when

compared to acquisition program baseline thresholds. The appropriate

decision authority must make a similar determination for nonmajor

acquisition programs. If 10 percent or more of a program’s parameters are

missed, a timely review is required to address whether the breached

program is needed and to recommend suitable action, including

termination. Major acquisition program baselines must be coordinated

with DOD’s Comptroller before approval.

DOD included the results of its annual review of major acquisition programs

in the Secretary of Defense’s Annual Report to the President and the

Congress for fiscal year 1995. DOD reported that, as of September 30, 1995,

all but 42

 of 74 major acquisition programs met more than 90 percent of

their goals. For these four programs, DOD changed the acquisition program

baselines on two, restructured one, and terminated the remaining

program. Although the report excluded information on nonmajor defense

acquisition programs, DOD sent a memorandum to Congress in June 1996

that (1) listed nonmajor programs not meeting the requirements in

accordance with subtitle A and (2) explained the differences in reporting

requirements for major and nonmajor programs.

1

An acquisition program baseline document is an agreement between the program management office

and the appropriate decision authority that establishes the cost, schedule, and performance objectives

and thresholds for each major acquisition program. For most major acquisition programs, the Under

Secretary of Defense for Acquisition and Technology is the decision authority. For nonmajor

programs, the military service acquisition executive performs this function.

2

The report noted that the following programs were not meeting the goals: Comanche, Joint Standard

Target Acquisition Radar System Ground Station Module, Maneuver Control System, and Joint

Unmanned Aerial Vehicles.

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Briefing Section I 

Title V Implementation—DOD

GAO Personnel Performance Incentives

Provide for a system of incentives that relate pay, 

evaluations, and promotions based on the 

contribution to program goals.

Review incentives and personnel actions 

available for encouraging excellence in 

acquisition management. 

Submit recommendations to Congress for 

legislative changes needed to improve the 

management of acquisition programs and 

personnel.

DOD did not establish a personnel system with enhanced incentives within

a year of FASA’s enactment, as required by subtitle A, because DOD officials

said that significant barriers prevented them from complying. For

example, while they believed that any effective personnel incentive system

must treat military and civilian personnel equally, 10 U.S.C. 1124 does not

currently allow military personnel to be paid monetary incentives.

Furthermore, DOD officials concluded that program managers and their

staffs did not have the control over the attainment of cost, schedule, and

Page 12 GAO/NSIAD-97-22BR Acquisition Reform
Briefing Section I 

Title V Implementation—DOD

performance goals necessary to make such goals the basis for rewards and

punishments.

DOD contracted with the Logistics Management Institute (LMI) to

benchmark commercial incentive practices and examine the incentives

available to DOD. In its November 1995 report to DOD, LMI did not

recommend substantial changes to military service and defense agency

appraisal systems. However, it did recommend that DOD ask Congress to

authorize a 4-year test period to develop and test a team personnel

incentive system with annual progress reporting at the end of each fiscal

year. Based on the LMI report, DOD concluded that although it could use the

current performance appraisal system to evaluate the extent to which

program management personnel have reached objectives within their

control, it lacked the authority to, among other things, retain program

savings for reinvestment purposes, promote civilians in place, or pay

monetary incentives to military personnel for achieving specific program

goals.

In a draft plan to address subtitle A requirements, DOD officials stated that

a key to any personnel system with enhanced incentives is that the

personnel must be able to directly and substantially influence the progress

toward reaching the goals. DOD officials believed that attaining cost and

schedule goals is heavily influenced by the program, budget, and

appropriations process and that attaining performance goals is heavily

influenced by the requirements set by the military services and the

technological approach used by industry.

DOD officials indicated that they are currently designing demonstration

projects related to program team performance under the authority of

section 4308 of Public Law 104-106 (the National Defense Authorization

Act of 1996). These demonstration projects, which may require several

years to complete, would provide the basis for the new personnel system.

DOD’s plan includes a request that Congress approve legislation expanding

this authority by allowing DOD to provide pay incentives to all the members

of a program team, including government civilians, military personnel, and

contractors. According to DOD, current demonstration project authority

permits civilians to be promoted in place. In addition, DOD would link

program savings and employee efforts by authorizing the use of program

funds to make performance payments.

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Briefing Section I 

Title V Implementation—DOD

GAO Technology Insertion

DOD must report annually on whether the average 

period for converting emerging technology into 

operational capability has decreased by 50 percent 

or more from the average period as of the date of 

FASA's enactment. 

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Briefing Section I 

Title V Implementation—DOD

Subtitle A requires DOD to report annually on whether the average period

for converting emerging technology to operational capability (defined as

the period of time from program initiation date to the initial operating

capability date) has decreased by 50 percent or more since October 13,

1994 (the date of FASA’s enactment). The results for major acquisition

programs are included in the Secretary of Defense’s Annual Report to the

President and the Congress for fiscal year 1995. DOD reported that, as of

October 31, 1994, the average period for converting emerging technology

into operating technology was 115 months (about 9.5 years). By

September 30, 1995, the average period had declined to 113 months. DOD

expects to reduce the time for technology insertion in the future by using

commercially available technologies; encouraging tradeoffs between cost,

schedule, and performance at various development stages; and expanding

the use of advanced concept technology demonstrations.3

Initially, DOD had some difficulty determining all the appropriate dates for

program initiation. There was little consistency on this point because

approval to begin an acquisition program does not necessarily start at

milestone 1,4

 especially in cases of upgrades and nondevelopmental items.

We determined that DOD’s Acquisition Program Integration Office has

updated its data collection activities to specifically define program

initiation dates for use in future reporting.

3

An advanced concept technology demonstration is a DOD initiative designed to field advanced

technologies more rapidly.

4

Milestone 1 is a decision point in the defense acquisition process designed to determine if the results

of concept studies warrant the establishment of a new acquisition program.

Page 15 GAO/NSIAD-97-22BR Acquisition Reform
Briefing Section I 

Title V Implementation—DOD

GAO Program Cycle Regulations

DOD must review its regulations to ensure that 

acquisition program cycle procedures focus on 

achieving goals consistent with the program 

baseline description established by 10 U.S.C. 

2435.

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Briefing Section I 

Title V Implementation—DOD

A DOD process action team reviewed acquisition program cycle

regulations. In its December 1994 report, Reengineering the Acquisition

Oversight and Review Process, the team made several recommendations

to facilitate the milestone review process. On April 28, 1995, the Under

Secretary of Defense directed that the following concepts be included in

DOD Regulation 5000.2-R:

• Integrated product teams consisting of the Office of the Secretary of

Defense and service component staffs are to participate early in the

process with the program office teams, resolving issues as they arise,

rather than during the milestone decision final review. The program

managers are to work with the staffs of the Office of the Secretary of

Defense and the service component organizations to develop programs

with the highest opportunity for success.

• The Under Secretary of Defense for Acquisition and Technology is to

determine the number of milestone reviews and the milestone decision

authority for each individual program at program initiation.

• The documents applicable to a specific program milestone are to be

determined individually through the integrated product team process and

approved by the milestone decision authority. Required documents

determined under the concept are not based on any set minimum number

of documents beyond those statutorily required.

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Briefing Section II 

Title V Implementation—Civilian Agencies

GAO Civilian Acquisition Program Goals

Establish cost, schedule, and performance goals 

for major programs.

Report annually on whether major and nonmajor 

programs are achieving 90 percent of program 

goals.

Determine if programs not meeting goals are 

needed and identify suitable actions to take.

Ensure chief financial officer evaluation of cost 

goals.

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Briefing Section II 

Title V Implementation—Civilian Agencies

To help agencies prepare the initial assessment for fiscal year 1995, the

Office of Management and Budget (OMB) issued Bulletin 95-03 “Planning

and Budgeting for the Acquisition of Fixed Assets” on June 27, 1995,

requesting civilian agencies to provide OMB, with their budget submission,

information on all fixed asset acquisitions of $20 million or more. The

information was to include (1) baseline cost, schedule, and performance

goals; (2) status of program progress; (3) comparison of baseline estimates

with current estimates; and (4) descriptions of actions taken to complete

or terminate programs that failed to achieve 90 percent of baseline goals.

According to the Office of Federal Procurement Policy (OFPP), these

requirements were intended to (1) introduce agencies to

performance-based management concepts and benefits and (2) integrate

OMB’s review of acquisition project status into the budget process.

Based on the initial assessment, the OFPP administrator concluded that

many civilian agencies have not been applying performance-based

management techniques as required by subtitle B. According to OFPP, it

lacked sufficient information to evaluate achievement of cost, schedule,

and performance goals for fiscal year 1995. For example, only 14 agencies

provided the requested information to OFPP and, in our view, the

information provided was incomplete, inconsistent, and generally not

useful for establishing goals and measuring their attainment. Three

agencies reported that they used performance-based management systems

to monitor progress. Two of the three agencies used an integrated project

or earned value management1

 system on some larger acquisitions, a

concept OMB considers integral to civilian agencies’ acquisition

management processes. (See app. I.)

OMB recognizes the need to improve the management of large acquisitions.

OMB believes this can best be achieved by integrating subtitle B

requirements with other initiatives designed to (1) improve the planning,

budgeting, and management of agency operations and (2) implement the

use of procurement performance goals. For example, the Information

Management Technology Reform Act of 1996 requires the Director, OMB to

encourage the use of performance-based and results-based management

for information systems. Further, the Government Performance and

Results Act of 1993 requires agencies to develop mission statements,

long-range strategic goals and objectives, and annual performance plans.

OMB officials believe that integrating these requirements (1) presents a

1

Earned value is a management technique that determines the variance between planned and actual

work accomplished, costs, expenditures, etc.

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Briefing Section II 

Title V Implementation—Civilian Agencies

unified picture of agencies’ management activities and (2) links acquisition

performance goals to the achievement of program and policy goals.2

To implement this integrated approach to acquisition management, OMB

(1) initiated a major effort that involves the civilian agencies in developing

comprehensive capital programming guidance and (2) issued Circular

A-11, Part 3, “Planning, Budgeting, and Acquisition of Fixed Assets”

(July 16, 1996). OMB Circular A-11, part 3 supersedes previous guidance in

OMB Bulletin 95-03 and revamps civilian agencies’ budget submission

processes for the upcoming budget cycle (i.e., fiscal year 1998). Circular

A-11 also

• reaffirms OMB’s full funding policy, which requires civilian agencies to

identify the full costs of asset acquisitions before decisions are made on

providing resources;

• provides additional guidance on defining fixed assets;

• allows civilian agencies to designate their own major acquisition programs

based on (1) the need for special management attention because of a

program’s importance to the agency’s mission; (2) high development,

operating, or maintenance cost; (3) high risk; (4) high return; or

(5) significant role in the administration of agency programs, finances,

property, or other resources;

• requires agencies to report on established baseline cost, schedule, and

performance goals, any variances from goals, proposed corrective action,

and proposed revisions to baseline goals;

• requires agencies to use performance-based management systems based

on either an earned value management system or some other type of

management system to monitor the achievement of, or deviation from,

baseline goals; and

• requires cost goals to be reviewed by the Chief Financial Officer prior to

inclusion in the budget submission.

2

We reported on the need for agencies to integrate the implementation of laws aimed at creating a

more businesslike environment for management and accountability. See Executive Guide: Effectively

Implementing the Government Performance and Results Act (GAO/GGD-96-118, June 1996).

Page 20 GAO/NSIAD-97-22BR Acquisition Reform
Briefing Section II 

Title V Implementation—Civilian Agencies

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Briefing Section II 

Title V Implementation—Civilian Agencies

GAO Personnel Performance Incentives

Establish policy and procedures for designating 

acquisition positions and managing employees in 

designated positions.

Review incentives and personnel actions for 

acquisition management.

Provide incentives that relate pay, evaluations, and 

promotions to contribution to goal attainment.

Submit recommendations to Congress for 

legislative changes needed to improve the 

management of acquisition programs and 

personnel.

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Briefing Section II 

Title V Implementation—Civilian Agencies

OMB has not yet issued final guidelines on (1) acquisition workforce

requirements (i.e., standards, training, education, etc.) for designated

acquisition positions or (2) a personnel system with enhanced incentives

for acquisition employees. While an existing policy (OFPP Policy Letter

92-3) establishes workforce requirements for purchasing and contracting

officials, OFPP is considering guidelines for more specific capabilities based

on the value and complexity of the acquisition.

In December 1995, OFPP distributed draft guidance on acquisition

workforce requirements and personnel performance incentives. Primarily

because OMB used the DOD model for its workforce requirements guidance,

the civilian agencies raised some significant concerns about the draft

guidance, thereby delaying issuance of final guidance. In the meantime,

Congress enacted new acquisition workforce requirements as a part of the

Federal Acquisition Reform Act of 1996. To implement those provisions,

OFPP developed qualification standards for purchasing and contracting

officials, and the civilian agencies are currently reviewing the guidance.

OMB is still trying to develop qualification standards for program

management officials in civilian agencies.

According to an OMB official, the civilian agencies also had significant

concerns about the draft personnel incentives guidance, which they

broadly characterized as “onerous and burdensome.” OMB officials believe

that another barrier to implementing a personnel system with enhanced

incentives is that agencies have not baselined their acquisition programs, a

process that is expected to be completed by the end of fiscal year 1998.

However, a limited pilot or test of an updated personnel system may be

conducted before the end of fiscal year 1998, when full implementation is

expected.

OMB officials did not identify a need for any additional legislation for

facilitating and enhancing the management of acquisition programs and

the management of the acquisition workforce based on performance.

However, they believe that the provisions of the Federal Acquisition

Reform Act of 1996 and the Information Technology Management Reform

Act of 1996 increase contracting officials’ ability to focus on results rather

than process. For example, the Federal Acquisition Reform Act of 1996

increases flexibility in conducting procurements. The Information

Technology Management Reform Act of 1996 requires processes for

analyzing information system risks and results, as well as performance

reports on the benefits achieved from information systems acquisitions.

Page 23 GAO/NSIAD-97-22BR Acquisition Reform
Briefing Section II 

Title V Implementation—Civilian Agencies

GAO Process Guidelines

Develop results-oriented acquisition process 

guidelines for the acquisition of property and 

services. 

Include quantitative measures and standards to 

justify the acquisition of noncommercial items.

To meet the requirements of title V of FASA and Information Technology

Management Reform Act of 1996, OFPP is participating in an interagency

work group to develop a single, integrated program to plan and monitor

acquisitions under the Government Performance and Results Act of 1993.

The issuance of OMB Circular A-11, Part 3 was the first step in the process.

The second step is for the work group to develop a capital programming

guide, which will accompany the 1997 update of Circular A-11. This guide

is intended to provide information on

Page 24 GAO/NSIAD-97-22BR Acquisition Reform
Briefing Section II 

Title V Implementation—Civilian Agencies

• managing the entire capital budgeting process, including planning,

budgeting, procurement, and management of in-use items;

• establishing cost, schedule, and performance goals in the planning and

budgeting phases and the use of performance management systems during

the procurement phase to monitor goal attainment; and

• analyses of cost efficiency and program performance contribution of

in-use items.

When completed, the capital programming guide, in conjunction with the

following initiatives, will complete OMB’s planned development and

implementation of the results-oriented acquisition process guidelines

required by title V.

OFPP is also managing the performance-based service contract initiative.

These contracts define the government’s requirements in terms of

measurable performance standards. Under this initiative, government

oversight is limited to measuring progress based on the performance

standards and contractors’ payments are reduced if they fail to meet

standards. This ensures that the government only pays for the services

actually received.

In addition, the Director of OMB issued a memorandum, dated May 7, 1996,

with (1) a report from the President’s Management Council Procurement

Task Force to agency heads addressing the creation of a “world class

acquisition system” and (2) a guide to assist agency senior managers in

selecting appropriate performance measures. The Procurement Task

Force’s report requires each agency to develop a plan by October 1996 for

implementing performance measures within the agency for fiscal year

1997. The President’s Management Council will oversee the program at

least until the initial round of measurements are completed. Agencies will

be required to include their measurement goals and results in the annual

performance plan required by the Government Performance and Results

Act of 1993 beginning with the fiscal year 1999 budget. This will help

ensure long-term focus on procurement process improvement.

OMB Circular A-11, Part 3 directs agencies to primarily use commercial and

nondevelopmental items to meet their requirements. For example, Circular

A-11 states that “emphasis should be placed on generating innovation and

competition from private industry and on the use of commercial

off-the-shelf and nondevelopmental items . . . .” It further states that each

fixed asset considered should be quantitatively evaluated using a

systematic analysis of expected benefits and costs.

Page 25 GAO/NSIAD-97-22BR Acquisition Reform
Appendix I 

Illustrative Explanation of Earned Value

Concept and Cost and Schedule Variances

for Fixed Assets

Source: OMB Circular A-11, part 3, page 17.

Page 26 GAO/NSIAD-97-22BR Acquisition Reform
Appendix II 

Major Contributors to This Report

National Security and

International Affairs

Division, Washington,

D.C.

David E. Cooper

Clifton E. Spruill

Arnett Sanders

John L. Carter

(707168) Page 27 GAO/NSIAD-97-22BR Acquisition Reform
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