Department of Energy:

Improving Management of Major System Acquisitions

T-RCED-97-92: Published: Mar 6, 1997. Publicly Released: Mar 6, 1997.

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Victor S. Rezendes
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GAO discussed the Department of Energy's (DOE) performance in completing its largest and most significant projects, referred to as major system acquisitions, focusing on: (1) the key factors that hinder the timely, cost-effective completion of the acquisitions; and (2) what is being done to improve DOE's performance.

GAO noted that: (1) from 1980 through 1996, DOE conducted 80 projects that it designated as major system acquisitions; (2) 31 of those projects were terminated prior to completion, after expenditures of over $10 billion; (3) only 15 of the projects were completed, and most of them were finished behind schedule and with cost overruns; (4) further, 3 of the 15 projects have not yet been used for their intended purpose; (5) the remaining 34 projects are ongoing, many with substantial cost increases and schedule slippage; (6) GAO believes there are four key factors underlying the cost overruns, schedule slippage, and terminations of DOE's most critical projects: (a) unclear or changing missions; (b) the incremental funding of projects; (c) a flawed system of incentives both for DOE's employees and contractors; and (d) a lack of sufficient DOE personnel with the appropriate skills to effectively oversee contractors' operations; (7) on the positive side, DOE is implementing several initiatives that could help improve its overall management as well as the management of individual major system acquisitions; and (8) GAO believes that the implementation of these initiatives offers DOE an excellent opportunity to address the key factors.

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