Telecommunication:

Air Force Cost Estimates for Scope Exchange Telephone Systems

IMTEC-86-22FS: Published: Jul 3, 1986. Publicly Released: Jul 3, 1986.

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Pursuant to a congressional request, GAO examined the cost estimates that the Air Force provided on the Scope Exchange Telephone Systems replacement project.

GAO found that the Air Force: (1) showed that direct purchase of the systems was more costly than lease-with-option-to-purchase; (2) did not use actual vendor purchase and lease prices in all cases, so there was no way to determine whether the estimates showed the most cost-effective alternative; (3) devised a formula for estimating purchase costs for five of six replacement systems instead of requesting actual purchase prices from the vendors; (4) did not consider variables that could complicate system installation and add to costs; (5) calculated the systems' costs using an interest rate that may not have shown the true cost of leasing; and (6) financed the systems as funds became available instead of developing total life-cycle costs for the budget process.

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