NOAA:

Next Steps to Strengthen Its Acquisition Function

GAO-06-594: Published: Jun 7, 2006. Publicly Released: Jul 11, 2006.

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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.

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.

Recommendations for Executive Action

  1. Status: Closed - Implemented

    Comments: In response to GAO's request for documentation related to progress made to provide appropriate oversight of NOAA's field acquisition operations, in June 2008 NOAA's Acquisition and Grants Office (AGO) director wrote to inform GAO that actions were completed to implement this recommendation. Specifically, regarding the collateral duty contracting officers in NOAA field offices, as of June 2008, AGO has completed several steps to increase oversight of the employees with such delegated procurement authority. First, effective September 2007, the agency has adopted new NOAA Delegated Procurement Authority Policy that provides oversight of all delegated acquisition authority, including purchase card delegations. This new policy provides for routine oversight audits, entrance and exit conferences, and corrective action plans if needed. Second, to meet this need for new oversight of field office acquisition operations, starting in fiscal year 2009, NOAA will make program changes that includes an increased budget and staffing request to support a new policy and oversight division established in 2008. This new division will allow AGO to regularly monitor the acquisition of goods and services by collateral duty contracting officers in field offices. AGO's new division is to conduct regular reviews of procurement actions by these personnel as well as NOAA purchase card holders, who similarly exercise delegated procurement authority. According to NOAA, the increased funding provides for dedicated personnel to implement an effective oversight program, compared to previous attempts to provide oversight of these individuals that could not be supported due to insufficient staff. Because NOAA's action is complete and responsive, GAO is closing this recommendation as implemented.

    Recommendation: To provide appropriate oversight of NOAA's field acquisition operations, we recommend the Under Secretary of Commerce for Oceans and Atmosphere should 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.

    Agency Affected: Department of Commerce

  2. Status: Closed - Implemented

    Comments: In response to GAO's request for documentation related to progress made to provide appropriate oversight of NOAA's field acquisition operations, in June 2008 NOAA's Acquisition and Grants Office (AGO) director wrote to inform GAO that actions were completed to implement this recommendation. Specifically, regarding the procurement personnel located in the acquisition office of the National Data Buoy Center (part of the National Weather Service), NOAA has realigned (i.e., reassigned) these procurement personnel to be an integral part of AGO under the direct supervision of AGO's director. Because NOAA's action is complete and responsive, GAO is closing this recommendation as implemented.

    Recommendation: To provide appropriate oversight of NOAA's field acquisition operations, we recommend the Under Secretary of Commerce for Oceans and Atmosphere should 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.

    Agency Affected: Department of Commerce

  3. Status: Closed - Not Implemented

    Comments: The Department concurred with this recommendation and by May 2009 had an action plan for a Departmental Administrative Order (DAO) which would incorporate a knowledge-based process for acquiring high-dollar, complex developmental systems, as well as for an accompanying handbook, with policies and procedures for an Investment Review Process for major programs, including supplies, construction and real property actions undertaken by individual operating units and other offices of the Department of Commerce. However, in August 2010, when GAO inquired about the status of completing these actions, the department's Office of Management and Organization (in the Office of the Chief Financial Officer) informed GAO that its plans changed and these actions are no longer in play. Instead, the department has decided to establish an enterprise-wide risk management strategy that will include, but not be limited to, the acquisition of complex, high-value systems. The department did not provide details or a timeframe for its new plans, other than informing GAO this new strategy is under development. In GAO's professional judgment, because four years have passed and the department has not provided sufficient information demonstrating evidence that current plans for a new strategy are responsive to implementing this recommendation, it appears that this recommendation has been overcome by events and should be closed as not implemented.

    Recommendation: To close the gaps between NOAA's current acquisition process and best practices for the development of complex systems, the Secretary of Commerce should 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: (1) 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; (2) before projects are approved to move from integration to demonstration, the policy should require that the product design is stable and performs as expected; and (3) 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.

    Agency Affected: Department of Commerce

  4. Status: Closed - Implemented

    Comments: In response to GAO's request for documentation related to progress made to provide appropriate oversight of NOAA's field acquisition operations, in June 2008 NOAA's Acquisition and Grants Office (AGO) director wrote to inform GAO that actions were completed to implement this recommendation. Specifically, to address the future retirement challenges of NOAA's contracting workforce, as of June 2008 NOAA has completed a series of steps to conduct a comprehensive workforce assessment and establish strategies to address gaps and new requirements. For example, in April 2007, AGO completed NOAA's contracting workforce human capital plan for the 5-year period ending fiscal year 2010. A review of NOAA's contracting workforce plan indicates that it aligns with practices GAO has identified for effective workforce planning: conduct workforce analysis, identify gaps or needs, develop action plan, implement action plan, and monitor and evaluate results and adjust the plan. Also, relevant stakeholders from across NOAA and the Department of Commerce were involved in developing the plan. In addition, NOAA has several actions completed or underway in 2008 to implement its new contracting workforce human capital plan that include strategies for recruitment, development, and retention, and addressing skills gaps. Similarly, NOAA involved the relevant stakeholders in developing the strategies. For example, a January 2008 Training and Development Plan to improve NOAA's acquisitions functional area includes several training approaches to better equip contracting employees to perform daily acquisition tasks under the varied scenarios they must execute. Also, a March 2008 draft Acquisition Career Program Manual establishes a framework for career planning to provide contracting employees with an innovative combination of learning and professional development experiences to manage their career paths, enhance their core competencies, and enable NOAA to sustain a foundation of qualified contracting professionals to meet the agency's current and future needs. Because NOAA's contracting workforce planning actions are complete, being implemented over the coming years, and responsive, GAO is closing this recommendation as implemented.

    Recommendation: To address the future retirement challenges of NOAA's contracting workforce, the Under Secretary of Commerce for Oceans and Atmosphere should 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 Affected: Department of Commerce

 

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