Treasury Automation:

Automated Auction System May Not Achieve Benefits or Operate Properly

IMTEC-93-28: Published: Apr 27, 1993. Publicly Released: Apr 27, 1993.

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GAO reviewed the Department of the Treasury's efforts to automate its debt securities auctions, focusing on: (1) how the Treasury Automated Auction Processing System (TAAPS) will automate the auction process for large dealers; (2) whether TAAPS will increase detection of misconduct and reduce auction processing time; and (3) Treasury actions to control the system's operating risks.

GAO found that: (1) Treasury has scheduled TAAPS implementation in phases beginning in April 1993, but it has not documented its plans and expected implementation dates; (2) TAAPS may not substantially enhance violations detection, because it cannot detect collusion or fraud in the manual bids that Treasury will continue to accept; (3) TAAPS may not attain the time savings that are anticipated because Treasury is handling both electronic and paper tenders and continues to manually process auctions; (4) Treasury does not plan to require all large dealers to use TAAPS, so it cannot ensure that they will use the system; and (5) Treasury and the system's developer did not adequately control TAAPS development risks, since they did not conduct cost-benefit analyses, perform an adequate risk analysis, document detailed functional requirements, test the system thoroughly, or resolve important technical operations problems.

Recommendations for Executive Action

  1. Status: Closed - Not Implemented

    Comments: Although Treasury could not be certain that all system functions had been adequately tested, the Department believed that TAAPS system testing had been sufficient to mitigate the risk that the system would not operate as intended when implemented.

    Recommendation: Before the system is implemented, the Secretary of the Treasury should ensure that the system is adequately tested--including determining whether all functions have been tested and that quality assurance testing has been conducted in an independent manner.

    Agency Affected: Department of the Treasury

  2. Status: Closed - Not Implemented

    Comments: While Treasury acknowledged that it could have done a better job documenting functional requirements, the Department believed that the documentation created during TAAPS development was sufficient for implementing, operating, and maintaining the system.

    Recommendation: Before the system is implemented, the Secretary of the Treasury should document the system's detailed functional requirements.

    Agency Affected: Department of the Treasury

  3. Status: Closed - Implemented

    Comments: Treasury recognized that it had done a poor job documenting the TAAPS risk assessment plan that GAO reviewed in April 1993. The Department revised the plan and completed it on September 24, 1993.

    Recommendation: Before the system is implemented, the Secretary of the Treasury should make the TAAPS risk assessment final.

    Agency Affected: Department of the Treasury

  4. Status: Closed - Not Implemented

    Comments: Although system benefits had not been fully demonstrated and system problems remained unresolved, Treasury was confident that TAAPS would operate as intended and realize anticipated benefits once implemented. Consequently, the Department decided to implement the system as planned on April 29, 1993.

    Recommendation: Since anticipated benefits are unsupported and the risk exists that the system may not operate as intended, the Secretary of the Treasury should delay placing TAAPS in operation until the Department demonstrates that intended benefits can be achieved. For example, it should be determined what effect a completely automated auction (where all large dealers submit bids electronically and Treasury's auction process is fully automated) would have on time savings and rule-monitoring. If this analysis proves that desired benefits can only be achieved cost-effectively by completely automating the auction process, then Treasury should reexamine the auction process and use of automation to determine what changes need to be made to ensure benefits will be realized.

    Agency Affected: Department of the Treasury

  5. Status: Closed - Implemented

    Comments: GAO followed up with Treasury and the primary dealers to determine whether the Department had resolved the system disconnect and mainframe synchronization problems identified during the assignment. GAO found that the dealers were only experiencing an occasional disconnect and were not generally concerned about them because they happen so infrequently. In addition, on April 9, 1994, Treasury installed software to automate the synchronization of the TAAPS mainframe clock to the Naval Observatory clock.

    Recommendation: Before the system is implemented, the Secretary of the Treasury should correct unresolved system problems.

    Agency Affected: Department of the Treasury

 

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