Given our findings, we recommended that Defense reconsider the  acquisition approach based on a meaningful analysis of all viable  alternative acquisition approaches. However, in response, we pointed out that DON planned to assess only  the status quo and the current approach in the economic analysis, not  other alternatives such as those that had been included in the AOA, and  we maintained that without a meaningful analysis of alternatives, the  department would be unable to determine the most cost-effective  solution. Additionally, we reported that NGEN acquisition decisions were not  always performance- and risk-based. DON Has Not Reevaluated Alternatives to Ensure It Is Pursuing the Most Cost-Effective NGEN Acquisition Approach

According to cost estimating and acquisition guidance, cost  effectiveness is shown by a comparative analysis of all life-cycle costs  and quantifiable and nonquantifiable benefits among the competing  alternatives. Even after having revised its acquisition approach, DON has not yet  shown that it is pursuing the most cost-effective approach for acquiring  NGEN capabilities because it did not revisit the AOA to address the   nor did it conduct any other  weaknesses we previously identified, analysis that would show that the current approach is the most cost  effective. Without a  meaningful analysis of acquisition alternatives, DON does not know  whether its approach for acquiring NGEN capabilities and meeting NGEN  goals is the most cost effective among other viable alternatives. DON Is Proceeding with the NGEN Acquisition, but Is Experiencing Schedule Delays and Not Adequately Mitigating Risks

Notwithstanding the lack of assurance that it is pursuing the most cost- effective acquisition, DON nonetheless has moved forward with its  revised approach for acquiring NGEN. However, the  program’s schedule for acquiring NGEN capabilities has been delayed,  resulting in a compressed timeline for transitioning to the new network  and increased risks associated with transitioning to the new network  before the end of the continuity of services contract. Compounding this  situation is the fact that identified risks that can further impact schedule  delays are not being adequately mitigated. Execution of the NGEN Program Is Proceeding, but Major Milestones Have Slipped

DON has undertaken activities to support its acquisition and transition to  NGEN, prepared plans and analyses required for program initiation at  milestone C, and conducted oversight reviews to support the release of  the request for proposals for transport and enterprise services. Finally, the revised acquisition strategy,  which was required prior to release of the transport and enterprise  services request for proposals, was approved in April 2012. While DON is working to mitigate seven of the eight program risks, its  mitigation plans did not always include all the elements of an effective  plan (e.g., identification of resources needed, responsible parties, and  period of performance). According to  program officials, weaknesses in these mitigation plans were due, in part,  to the lack of a priority in establishing and maintaining comprehensive  and current plans. Conclusions

Even though DON does not know whether it is pursuing the most cost- effective approach to acquiring NGEN capabilities, it has proceeded to  implement its revised acquisition approach, completed various plans and  analyses including the first official program life-cycle cost estimate, and  held oversight reviews to support the issuance of the request for  proposals for the two primary NGEN segments. Recommendation for Executive Action

To strengthen risk mitigation activities for the NGEN program, we  recommend that the Secretary of Defense direct the Secretary of the  Navy to develop comprehensive mitigation plans and strategies for  program-wide critical risks that identify the mitigation period of  performance, resources needed, and responsible parties, and that fully  reflect the current status of the program. In its comments, the department  agreed with our recommendation and noted that the program office will  continue to build on efforts to improve NGEN’s risk management and  mitigation process. Appendix I: Objectives, Scope, and Methodology

Our objectives were to determine (1) the extent to which the Department  of the Navy’s (DON) selected approach to acquiring the Next Generation  Enterprise Network (NGEN) is the most cost effective and (2) the current  status of and plans for acquiring NGEN.
Why GAO Did This Study

DON, a component of the Department of Defense (Defense), is replacing its existing network system with NGEN. Capabilities for the new system include secure transport of voice and data, data storage, and e-mail, at a cost of about $38 billion through fiscal year 2024. In March 2011, GAO reported that the approach for acquiring NGEN was not grounded in a reliable analysis of alternatives, the execution of NGEN was not based on a reliable schedule, and acquisition decisions were not always performance- and risk-based. GAO recommended that Defense, among other things, reconsider its approach. The department has not yet fully implemented GAOs recommendations but revised its approach to include acquiring certain NGEN services simultaneously instead of staggering their implementation.
GAO was asked to review the revised approach to determine (1) the extent to which DONs selected approach to acquire NGEN is the most cost effective and (2) the current status of and plans for acquiring NGEN. To do this, GAO reviewed analyses supporting the cost effectiveness of the acquisition approach, the programs revised acquisition strategy, integrated master schedule, key milestone decisions, and other relevant documents.

What GAO Found

While the Department of the Navy (DON) has revised its acquisition approach for its new network system, the Next Generation Enterprise Network (NGEN), it still has not shown that it has selected the most cost-effective approach for acquiring NGEN capabilities. Cost effectiveness is shown by comparing life-cycle costs and quantifiable and nonquantifiable benefits among alternatives, which can be accomplished by conducting a thorough analysis of alternatives. GAO previously identified weaknesses with the NGEN analysis of alternatives related to cost estimates and analysis of operational effectiveness and made associated recommendations. However, DON did not revisit the analysis of alternatives to address the weaknesses previously identified, nor did it conduct any other analysis that would show whether its revised approach is the most cost effective. For example, while DON developed a draft economic analysis in February 2012, the analysis assessed only the status quo and revised approach, and not other alternatives. As a result, GAO remains concerned with the analysis measuring NGEN cost effectiveness and DON does not know whether its revised approach for acquiring NGEN is the most cost effective.
Even though DON lacks assurance that it is pursuing the most cost-effective approach to acquiring NGEN capabilities, it has moved forward with implementing its revised approach. For example, the agency has completed activities to support the acquisition and transition to NGEN, prepared plans and analyses required for program initiation, and conducted oversight reviews to support the release of the request for proposals for transport and enterprise services (secure data and e-mail services, among other things). However, the programs schedule for acquiring NGEN capabilities has been delayed, thus making it more likely that DON will not be able to fully transition by the end of the continuity of services contract in April 2014. For example, the release of the request for proposals was delayed, and upcoming milestones, such as contract award and program initiation, have slipped (see table for major delays). Program officials attributed the delays to the need for additional planning and to revisions to the request for proposals. Compounding this situation is that identified risks are not being adequately mitigated. For example, not all mitigation plans are comprehensive because they do not always include all the elements of an effective plan (e.g., identification of resources needed) nor do they always contain the current status of the mitigation actions. According to program officials, weaknesses in these mitigation plans were due, in part, to the lack of a priority in establishing and maintaining comprehensive and current mitigation plans. As a result, the program faces an increased probability that transition from its existing system to NGEN will face further delays and cost overruns.

What GAO Recommends

GAO is recommending that Defense develop comprehensive risk mitigation plans for program-wide risks. In its comments, Defense concurred with GAOs recommendation and noted that it will continue to build on efforts to improve NGEN risk mitigation.