While NARA’s fiscal year 2011 expenditure plan meets four of the six legislative conditions, the lack of critical capital planning and oversight steps—including documentation demonstrating approval of significant changes to a recent ERA increment, post-implementation reviews of deployed capabilities, and OMB’s approval of the expenditure plan—limits NARA’s ability to ensure that the system is being implemented at an acceptable cost and within expected time frames and contributes to observable improvements in mission performance. These issues are further exacerbated by the agency’s partial implementation of several open GAO recommendations, such as those related to improving investment oversight and earned value processes. With significant weaknesses in many basic oversight and management processes, as well as continued delays in completing Increment 3, NARA’s ability to make significant development progress in the remainder of the fiscal year will be challenged. In addition, without a reliable ERA expenditure plan, NARA has not provided adequate information to assist congressional oversight and informed decision making related to the use of appropriated funds. When these weaknesses are combined with the lack of prioritization of the remaining requirements under negotiation for fiscal year 2011, Congress has little assurance that additional funds allocated to ERA will result in significant benefits to potential users. With OMB’s direction to stop development after 2011, it is unclear whether NARA will be able to effectively address the full range of weaknesses we identified and still have adequate time to complete significant development efforts. The identified deficiencies in NARA’s expenditure plan and management of the ERA acquisition make it unclear whether NARA can make substantial progress in delivering additional ERA system capabilities that justify its planned investment by the end of fiscal year 2011. As such, we suggest that Congress consider employing an accountability mechanism that limits NARA’s ability to use funds appropriated for ERA development until NARA implements an adequate capital planning and investment control process, updates its expenditure plan to clearly describe what system capabilities and benefits are to be delivered in fiscal year 2011, and establishes an associated set of prioritized system requirements and adequate earned value reporting. We are recommending that the Archivist of the United States immediately take the following two actions while the current system development contract is active: Report to Congress on the specific outcomes to be achieved with the balance of any previous multiyear funds in fiscal year 2011. Ensure that the ERA requirements planned for fiscal year 2011 are fully prioritized so that those most critical to NARA’s customers and other stakeholders are addressed. To ensure that any future efforts are completed within reasonable funding and time constraints, we are recommending that the Archivist of the United States take the following four actions: Ensure that significant changes to ERA’s program’s cost, schedule, and scope are approved through NARA’s investment review process. Conduct post-implementation reviews of deployed ERA capabilities to validate estimated benefits and costs. Submit ERA expenditure plans to OMB for review and approval prior to submitting to Congress. Update the ERA Requirements Management Plan and related guidance to mandate requirements prioritization throughout the project’s life-cycle. In written comments on a draft of this report, which are reprinted in appendix II, the Archivist of the United States concurred with our six recommendations. Specifically, he stated that NARA has sufficiently addressed the first two recommendations. He further stated that NARA would be unable to address the final four recommendations in a near-term action plan since those were specific to a future ERA development effort. The Archivist also noted that NARA is developing an addendum to the fiscal year 2011 expenditure plan to provide updated information on ERA requirements, costs, and the schedule of software releases. We are sending copies of this report to the Archivist of the United States. The report will also be available at no charge on the GAO Web site at http://www.gao.gov. If you or your staffs have any questions concerning this report, please contact me at (202) 512-9286 or by e-mail at pownerd@gao.gov. Contact points for our Offices of Congressional Relations and Public Affairs may be found on the last page of this report. GAO staff who made major contributions to this report are listed in appendix III. On October 1, 2010, the agency submitted its fiscal year 2011 expenditure plan to the relevant House and Senate appropriations committees to support its request for $85.5 million in ERA funding. Of this amount, $61.8 million consists of multi-year funds allocated to ERA. In the expenditure plan, NARA also included support for requests at two alternative funding levels—$72.0 million and $61.4 million—based on congressional direction. Subsequently, on October 19, 2010, NARA submitted a summary of its expenditure plan to the appropriations committees that included revised requests at $72 million and $65 million funding levels. According to NARA, both the expenditure plan and the summary reflect fiscal year 2011 as the final year of ERA development. In addition to the individual named above, key contributions to this report were made by James R. Sweetman, Jr., Assistant Director; Monica Perez- Nelson; Eric Costello; Lee McCracken; Tarunkant Mithani; Karl Seifert; Jonathan Ticehurst; and Adam Vodraska.

Summary: Since 2001, the National Archives and Records Administration (NARA) has been working to develop an Electronic Records Archive (ERA) to preserve and provide access to massive volumes of all types of electronic records. NARA originally planned to complete the system in 2012, but has repeatedly revised the program schedule and estimated cost and is now planning to deploy an ERA system with reduced functionality by the end of fiscal year 2011. As required by the Consolidated Appropriations Act, 2010, and the Continuing Appropriations Act, 2011, NARA submitted an expenditure plan to Congress to support its request for fiscal year 2011 ERA funding. The legislation also requires that this plan meet six conditions, including review by GAO. GAO's objectives in reviewing the fiscal year 2011 plan were to (1) determine whether the plan satisfies legislative conditions, (2) determine the extent to which NARA has implemented prior GAO recommendations, and (3) provide any other observations on the plan or the ERA acquisition. To do this, GAO reviewed the expenditure plan and other agency documents and interviewed NARA officials. NARA's fiscal year 2011 expenditure plan satisfies four of the six legislative conditions and partially satisfies two. Specifically, it partially satisfies the condition that NARA meet requirements for reviewing the progress of capital investments, such as ERA. While NARA has held regular meetings with senior-level agency management to review ERA progress, these groups did not document approval of important schedule and scope changes, and NARA did not validate the estimated benefits and costs of deployed ERA capabilities. Further, NARA partially satisfies the condition that the expenditure plan be approved by NARA and the Office of Management and Budget (OMB). NARA approved the expenditure plan in October 2010, but the plan was not approved by OMB. Without approval from OMB, Congress will have limited assurance of the plan's reliability and accuracy. NARA has fully implemented one of GAO's four prior recommendations and partially implemented three. It implemented a recommendation to ensure that ERA's requirements are managed using a disciplined process by, for example, developing a process to keep requirements current. NARA partially implemented three other recommendations. First, to improve its executive-level oversight, NARA documented meetings to review ERA progress, but did not document approval of important changes to a recent phase, or increment, of the system. Second, NARA added information in its expenditure plan on ERA cost, schedule, and performance as recommended, but the plan lacks other key information, such as the estimated costs of an ongoing increment. Third, NARA documented a plan to strengthen its processes for measuring program progress, but continues to have weaknesses in this area, including not accurately portraying ERA program status. GAO has three observations on the expenditure plan and ERA acquisition: (1) The fiscal year 2011 expenditure plan does not provide a reliable basis for informed investment decision making. For example, NARA's cost estimates do not reliably reflect the work to be completed because of weaknesses in its supporting methodology, and the plan does not clearly show what functionality is planned to be delivered in the final year of development, by when, and at what cost. (2) NARA's expenditure plan does not address how remaining multiyear funds from fiscal year 2010 will be allocated. Specifically, NARA's plans for using the remaining $20.1 million are not discussed in the plan. (3) Although NARA recently updated the ERA requirements, the agency has not yet determined which of the requirements would be addressed before the end of development in fiscal year 2011 and has not fully prioritized the requirements to ensure that critical stakeholder needs will be met. Without a reliable expenditure plan and adequate management of the ERA acquisition, it is unclear whether NARA can make substantial progress in delivering additional system capabilities by the end of fiscal year 2011 to justify its planned investment. Congress should consider limiting funding of further ERA development until NARA addresses weaknesses in its oversight and management of the acquisition. GAO is also recommending actions for NARA to take to address these weaknesses. NARA concurred with GAO's recommendations.