Air Traffic Control:

FAA's Modernization Investment Management Approach Could Be Strengthened

RCED/AIMD-99-88: Published: Apr 30, 1999. Publicly Released: Apr 30, 1999.

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Pursuant to a congressional request, GAO reviewed the Federal Aviation Administration's (FAA) modernization investment management approach as carried out through the Acquisition Management System (AMS), focusing on the extent to which FAA, through AMS: (1) has established a structured approach for selecting and controlling its investments; (2) incorporates all investments, including those in operation, in the agency's portfolio; and (3) selects, controls, and evaluates its investments with complete and reliable information.

GAO noted that: (1) AMS is a good first step in establishing a structured investment management approach for selecting and controlling the agency's investments; (2) the system contains a set of policies, procedures, and reporting requirements to analyze mission needs, assess the affordability of proposed projects, and establish life-cycle costs, schedules, benefits, and performance baselines to control the performance of the projects that are selected; (3) under this system, a senior management investment review group makes key decisions about which investments best meet the agency's needs and are to be funded; (4) however, the system is not comprehensive in that it does not incorporate all of FAA's projects into a complete strategic investment portfolio; (5) key decisionmaking processes and requirements of AMS are applied only to proposed projects and those under development but not to projects already in operation; (6) agency officials have not yet developed a sound estimate of the costs to operate projects and these costs are not included in the agency's financial plan for modernization; (7) because FAA does not apply the same scrutiny to all of its projects, senior officials are unable to fully assess and make trade-offs about the relative merits of spending funds to develop new systems, to enhance current systems, or to continue operating and maintaining existing systems; (8) AMS does not provide complete and reliable information for selecting, controlling, and evaluating the agency's investments; (9) the cost data used to select projects are of questionable reliability because of weaknesses in FAA's cost estimating practices and processes and the lack of a cost accounting system; (10) the information used to control projects is incomplete since FAA has not fully implemented an effective process for controlling the baselines for the costs, schedules, benefits, performance, and risks of its investments; (11) FAA has approved the baseline information for only half of the required universe of projects, and the agency's processes for tracking actual performance against estimates frequently has provided incomplete information; and (12) FAA lacks information needed to evaluate its investments since AMS does not have a post-implementation evaluation process for assessing projects' outcomes and feeding lessons learned back into the selection and control phases to help improve its management of future projects.

Recommendations for Executive Action

  1. Status: Closed - Implemented

    Comments: FAA has established an information system, called the Corporate History Inventory, which includes relevant documents from the selection process.

    Recommendation: The Secretary of Transportation should direct the Administrator, FAA, to incorporate key information from the selection process (e.g., mission need statements, cost-benefit analyses, and risk assessments) into FAA's management information system for investments.

    Agency Affected: Department of Transportation

  2. Status: Closed - Not Implemented

    Comments: FAA has not implemented a post-implementation review process. An agency official stated that the agency would revisit the issue after FAA becomes a performance-based organization, but a date for this transition has not yet been established.

    Recommendation: The Secretary of Transportation should direct the Administrator, FAA, to initiate post-implementation evaluations for projects within 3 to 12 months of deployment or cancellation to compare the completed projects' costs, schedule, performance, and mission improvement outcomes with the original estimates.

    Agency Affected: Department of Transportation

  3. Status: Closed - Implemented

    Comments: FAA revised the acquisition program baseline requirements to include systems' risk assessments, and identified milestones for project reviews during the operations phase. Further, FAA enhanced its Acquisition Program Baseline to allow it to track estimated and actual data on cost, schedule, performance and risk. Projects are currently submitting this information on a monthly basis to investment managers.

    Recommendation: The Secretary of Transportation should direct the Administrator, FAA, to strengthen control over investments by: (1) revising the acquisition program baseline requirements to include project risks and to add milestones for project reviews during the operations phase; and (2) ensuring that project officials fully track and document estimated versus actual results on all the elements (i.e., costs, schedule, performance, and risks) contained in the baseline documentation.

    Agency Affected: Department of Transportation

  4. Status: Closed - Implemented

    Comments: FAA officials have established procedures for validating projects' cost, benefits, and risk information, and for documenting these validation efforts. Further, FAA's investment management teams are currently validating this information and documenting their validation efforts on the systems they assess.

    Recommendation: The Secretary of Transportation should direct the Administrator, FAA, to improve the selection process by: (1) establishing clearly defined procedures for validating projects' cost, schedule, benefit, performance, and risk information; and (2) requiring documentation of the results of the validation procedures applied to each project.

    Agency Affected: Department of Transportation

  5. Status: Closed - Implemented

    Comments: FAA has developed a portfolio of investments which includes operational baselines for new systems. Also, FAA officials reported that the JRC reviews investments throughout their lifecycles. However, FAA does not yet have a policy requiring such reviews. The agency expects to implement a life-cycle management policy which will require such reviews after obtaining input from the new chief operations officer. Further, FAA developed a database/reporting tool to automate portfolio cost information and is using this tool to report on budgeting status.

    Recommendation: The Secretary of Transportation should direct the Administrator, FAA, to establish a complete portfolio of investments--including existing systems funded by the operations budget account as well as projects funded by the facilities and equipment account--and to require the Joint Resources Council to periodically review the baseline status and merits of each of these investments throughout their entire life cycles. As part of this portfolio, cost baselines for operating and maintaining all projects should be developed, and this information should be included in the agency's financial plan for its investments and in its annual budget request to Congress.

    Agency Affected: Department of Transportation

 

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