Air Force ADP:

Systems Funded Without Adequate Cost/Benefit Analyses

IMTEC-90-6: Published: Dec 28, 1989. Publicly Released: Jan 30, 1990.

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Samuel W. Bowlin
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Pursuant to a congressional request, GAO reviewed the Air Force Logistics Command's (AFLC) development of four management information systems, focusing on: (1) whether initial project planning weaknesses identified in other system development projects occurred in these projects; and (2) the cost-benefit analyses AFLC prepared in justifying and planning the projects.

GAO found that: (1) AFLC performed inadequate cost-benefit analyses on three of the four projects, while the fourth project, the Air Force Technical Order Management System (AFTOMS) was still in the initial planning stage; (2) the cost-benefit analyses that AFLC performed on the Air Force Equipment Management System (AFEMS), the Automated Technical Order System (ATOS), and the Reliability and Maintainability Information System (REMIS) included only the existing system and one alternative, even though AFLC identified several feasible alternatives for each project; (3) AFLC claimed that the new systems would provide about $8.4 billion in benefits, but could not support any of the claimed benefits; (4) AFLC significantly understated estimated project costs because it did not include data-loading costs in its analyses; (5) although the Air Force stated that AFLC could have done more complete analyses, it believed that the analyses met minimum requirements; and (6) many systems experienced cost increases and schedule slippages, because the Air Force consistently allowed systems to proceed into development with deficient cost-benefit analyses.

Recommendations for Executive Action

  1. Status: Closed - Implemented

    Comments: On March 7, 1990, the Department of Defense (DOD) revised Instruction 7920.2 to strengthen its policy on cost/benefit analyses.

    Recommendation: To help ensure that cost-benefit analyses for all Air Force system projects identify the most cost-effective approach, the Secretary of Defense should strengthen controls so that future analyses include: (1) an economic evaluation of all feasible alternatives; (2) only projected benefits that are fully supported and verified by an independent source, such as the Air Force Audit Agency; and (3) all data conversion costs.

    Agency Affected: Department of Defense

  2. Status: Closed - Implemented

    Comments: AFTOMS was renamed JUSTIS; however, that project was cancelled in favor of a related Army project. This action was the result of DOD efforts to strengthen its CALS initiative and was not directly related to this recommendation. Accomplishment will be prepared for the IMTEC CALS report, rather than for this report.

    Recommendation: To ensure that current management has sufficient information on which to make a decision on the AFTOMS project, the Secretary of Defense should not allow that system to proceed into development until AFLC performs a complete and comprehensive cost-benefit analysis. This analysis should include an evaluation of all feasible alternatives and, for each, all direct and indirect costs including all data-loading costs and all supported benefits. The Department of Defense's (DOD) Major Automated Information Systems Review Council should ensure the adequacy of this analysis before approving the system for development.

    Agency Affected: Department of Defense

  3. Status: Closed - Implemented

    Comments: The Air Force reaffirmed cost/benefit prior to its October 1990 oversight review before the Major Automated Information System Review Council (MAISRC).

    Recommendation: To determine if continued development is justified, the Secretary of the Air Force should reevaluate the cost-effectiveness of AFEMS and REMIS by updating the cost-benefit analyses. The Secretary should ensure the adequacy of these analyses before allowing the projects to proceed.

    Agency Affected: Department of Defense: Department of the Air Force

  4. Status: Closed - Not Implemented

    Comments: The Air Force ATOS project has been put on hold as a result of the Department of Defense's Computer-Aided Acquisition Logistics Support (CALS) initiative. ATOS requirements will be added to the Defense-wide CALS initiative, so the recommendation is no longer applicable.

    Recommendation: In light of the additional data-loading costs for ATOS, the Secretary of the Air Force should reevaluate this system to determine if the projected benefits justify the additional costs.

    Agency Affected: Department of Defense: Department of the Air Force


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