Cost Effectiveness of Life-Cycle Process in Buying Transit Vehicles Questionable

RCED-83-184: Published: Sep 1, 1983. Publicly Released: Sep 1, 1983.

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GAO discussed the Urban Mass Transportation Administration's (UMTA) procedure that requires federally funded transit systems to use life-cycle costs when buying transit vehicles.

GAO found that major obstacles inhibit this process, resulting largely from: (1) transit systems' failure to prove that such procurement decisions are cost-effective; and (2) a lack of adequate information, resources, or technical expertise for transit systems to effectively use the process. Further, transit systems have not adequately documented performance costs for the vehicles purchased to assess the validity of the cost projections. GAO believes that, if performance projections cannot be effectively confirmed, the continued use of the life-cycle cost process should be questioned because of the additional costs involved.

Recommendations for Executive Action

  1. Status: Closed - Implemented

    Comments: In December 1984, the Department of Transportation (DOT) issued a report analyzing the experiences of 25 transit systems that used life-cycle costs when purchasing buses. The report contains conclusions about the purchases and changes that would improve the process.

    Recommendation: The Secretary of Transportation should direct the Administrator, UMTA, to develop research and demonstration projects with selected transit systems to document the costs associated with using the life-cycle cost process to buy transit vehicles.

    Agency Affected: Department of Transportation

  2. Status: Closed - Implemented

    Comments: DOT has initiated a project to collect maintenance and operating cost records for 30 articulated buses. The project is expected to be completed in February 1988. The report concluded that the status of development of transit operating databases is inadequate to support widespread use of life-cycle costing.

    Recommendation: The Secretary of Transportation should direct the Administrator, UMTA, to develop research and demonstration projects with selected transit systems to keep operating and maintenance cost records for the vehicles bought to determine the validity of the cost projections used in making the contract award.

    Agency Affected: Department of Transportation

  3. Status: Closed - Not Implemented

    Comments: UMTA was not able to develop projects which would identify ways to overcome the obstacles to using the life-cycle cost procurement process.

    Recommendation: The Secretary of Transportation should direct the Administrator, UMTA, to develop research and demonstration projects with selected transit systems to identify ways to overcome the obstacles to using the life-cycle cost procurement process by addressing the problems of the availability of adequate data, selection of verifiable cost factors, failure to consider the present value of the projected costs, development of fair evaluation processes, and expertise needed to adequately evaluate cost projections.

    Agency Affected: Department of Transportation

 

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