ADP Acquisitions:

Patent Automation Encountering Major Planning and Procurement Problems

IMTEC-86-19: Published: Jul 17, 1986. Publicly Released: Jul 17, 1986.

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Pursuant to a congressional request, GAO reviewed selected aspects of the Department of Commerce's Patent and Trademark Office (PTO) Automated Patent System.

GAO found that: (1) Commerce did not adequately oversee the program during the planning stage and spent millions of dollars with little assurance that it was implementing the best alternative for operational improvements or that benefits were exceeding costs; (2) since PTO has not completed the required space management study, the final system configuration remains uncertain and PTO cannot reliably estimate the cost, schedule, and ultimate system capabilities; (3) Commerce awarded a cost-plus-fixed-fee contract for the system's design, development, implementation and maintenance, which was inappropriate and inconsistent with federal regulations because it contained few contractor cost-control incentives; (4) since PTO altered the implementation plans without making corresponding changes in the prime contract, it did not have an accurate basis to judge contractor performance; and (5) Commerce and PTO decided not to establish needed agency oversight at the contractor's facility to monitor the contract, despite recent reports of accounting system problems, contract costs escalating from $159 million to $448 million, and actual schedule slippage. GAO believes that the method PTO is using to automate patent activities has serious weaknesses that increase the risk of acquiring a system that will not efficiently achieve automation goals.

Status Legend:

More Info
  • Review Pending-GAO has not yet assessed implementation status.
  • Open-Actions to satisfy the intent of the recommendation have not been taken or are being planned, or actions that partially satisfy the intent of the recommendation have been taken.
  • Closed-implemented-Actions that satisfy the intent of the recommendation have been taken.
  • Closed-not implemented-While the intent of the recommendation has not been satisfied, time or circumstances have rendered the recommendation invalid.
    • Review Pending
    • Open
    • Closed - implemented
    • Closed - not implemented

    Recommendations for Executive Action

    Recommendation: Following the reassessment, the Secretary of Commerce should determine the most appropriate acquisition strategy to mitigate the government's risk. As part of this determination, the Secretary must ensure that contractual arrangements reduce the risk currently imposed on the government, particularly for implementation and maintenance activities. In addition, all future acquisitions should involve competitive procurements with fixed-price contracts to the maximum extent possible.

    Agency Affected: Department of Commerce

    Status: Closed - Implemented

    Comments: Commerce renegotiated the contract terms prior to the reassessment, rather than after. Commerce and the contractor agreed to general contract modifications with regard to length, type, and scope of the contract. Commerce will issue a new request for proposals for operation and maintenance of the system under a fixed-price contract once the current system development contract expires.

    Recommendation: To help ensure that the reassessment is appropriately conducted, the Secretary of Commerce should assign responsibility for the reassessment to the Assistant Secretary for Administration, the designated senior department official for information resources management. Furthermore, this official should use the National Bureau of Standards (NBS) and obtain other independent reviews as necessary to ensure that: (1) the reassessment is properly conducted and that the system includes only components with acceptable risk of cost-effective implementation; and (2) other critical issues, such as a thorough test of all critical components, are appropriately addressed.

    Agency Affected: Department of Commerce

    Status: Closed - Implemented

    Comments: Commerce formed a panel of NBS and industry computer experts to review the Automated Patent System. The Assistant Secretary for Administration was assigned the responsibility for conducting the reassessment. The panel issued a report criticizing the system design and management effort. It recommended changes that could save an estimated $70 million on the project.

    Recommendation: In reassessing this program, the Secretary of Commerce should follow applicable federal guidance, including the Federal Information Resources Management Regulation and, at a minimum, should: (1) establish management controls and quantifiable measures to gauge program effectiveness; (2) identify and develop alternatives for meeting PTO program objectives with a comparative analysis that can be used to select the most cost-effective alternative; (3) thoroughly support and document all appropriate costs and benefits associated with each alternative, as indicated by Federal Information Processing Standards Publication 64; and (4) ensure that an appropriate space management analysis is adequately and expeditiously implemented.

    Agency Affected: Department of Commerce

    Status: Closed - Implemented

    Comments: Commerce formed a panel of NBS and industry computer experts to review the Automated Patent System. The panel issued a report criticizing the system design and management effort. An updated action plan, including a new timetable and preliminary budget for APS, has been submitted to the Office of Management and Budget (OMB).

    Recommendation: The Secretary of Commerce should reassess the direction and scope of the automated patent system to ensure that the best alternative for meeting program objectives is being pursued, automation benefits will exceed costs, and the planned system can be effectively and efficiently installed in PTO facilities to achieve maximum benefits. Furthermore, the Secretary should not allocate additional funds to the automated patent system contract until the reassessment is completed and he has determined the best approach to follow and appropriately reported the reassessment results and planned actions to Congress.

    Agency Affected: Department of Commerce

    Status: Closed - Implemented

    Comments: Commerce formed an Evaluation Review Board to reassess the system.

    Recommendation: Because of Congress' initial mandate for an automation plan and the magnitude of the planned expenditures, the Secretary should report on the results of the reassessment and on planned actions to the House Committee on Government Operations, the Senate Committee on Governmental Affairs, and the House and Senate Committees on the Judiciary and Appropriations before he acts on the reassessment.

    Agency Affected: Department of Commerce

    Status: Closed - Implemented

    Comments: With the release of the industry review panel report, briefings were held with OMB, Appropriation Committees' staff, Judiciary Committees, and the House Government Operations Committee on study results and planned actions.

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