Procurement:

Selected Civilian Agencies' Cost Estimating Processes for Large Projects

GGD-86-137BR: Published: Sep 17, 1986. Publicly Released: Oct 17, 1986.

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In response to a congressional request, GAO reviewed six civilian agencies' cost-estimating processes applicable to large, complex procurement projects to determine: (1) the types of regulations that guide the cost-estimating processes; (2) how civilian agencies develop their cost estimates for large projects; and (3) how agencies decide which cost estimate to select to obtain project funding from Congress.

GAO found that: (1) there were no overall standard instructions or guidance to civilian agencies on cost estimates; (2) although the Office of Management and Budget issued instructions on major acquisition procurements and on preparation and submission of budget estimates, neither provided specific guidance on cost estimate preparation; (3) four of the six agencies had their own formal instructions that they followed in preparing their cost estimates; (4) although the other two agencies had no formal written instructions, they generally included the major items considered desirable for good cost estimating in their estimates; (5) on all nine of the projects studied, the agencies' internal organizations coordinated and communicated on the projects' cost estimates; (6) the agencies generally prepared in-house cost estimates for their projects instead of going to outside contractors but used contractor cost data after award to review and update project costs; and (7) the cost estimates submitted to Congress were basically initial budget estimates which agencies revised periodically as the projects progressed.

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