Congress enacted legislation in November 1995 that exempted FAA from  key federal procurement statutes and the FAR, and directed FAA to  develop a new acquisition management system. AMS Is Broader and Less Prescriptive Than the FAR

AMS establishes an acquisition life-cycle management system that  encompasses both contracting and program management, whereas the  FAR is primarily a contracting system that focuses on contract formation  and contract administration. In addition, AMS takes the form of guidance. It is not  regulatory. By contrast, the FAR is a set of published regulations—a legal  foundation that has the force and effect of law for the federal agencies that are required to follow it. AMS Provides Some Discipline but Does Not Ensure a Knowledge-Based Approach to Acquisition

AMS provides some discipline through its various phases, activities, and  decision points for acquiring major ATC systems; however, it does not  ensure the use of a knowledge-based approach found in the best practices  for managing commercial product developments and DOD acquisitions that  we have identified in numerous past reports.Commercial best practices  call for specific knowledge to be captured and used by corporate-level  decision-makers to determine whether a product has reached a level of  development (product maturity) sufficient to demonstrate its readiness to  move forward in the acquisition process. The capture of such knowledge  and its use by executives helps to avoid cost overruns, schedule slips, and  performance shortfalls that can occur if decision-makers commit to a  system design before acquiring critical technology, design, or  manufacturing knowledge. The absence of these key best practices under  AMS puts FAA’s major ATC acquisitions at risk of cost overruns, schedule  slips, and performance shortfalls. As Implemented, AMS Has Not Resolved Long-standing Acquisition Problems, but FAA Is Beginning to Focus More on Results

According to our review of seven major ATC systems and analysis of FAA’s  performance in acquiring major systems, AMS has not resolved the long- standing problems that FAA experienced before implementing AMS, but  the agency is beginning to focus more on the expected results of its major  acquisitions. Moreover, as  FAA has acknowledged, it has never managed its major acquisitions by  focusing on how each would improve the efficiency of ATC operations  while maintaining or improving safety. Much of the cost growth has been due to  FAA requirements creep. Develop explicit written criteria for the key decision points called for  under best practices, including the capture of specific design and  manufacturing knowledge. Objectives, Scope, and Methodology

To compare FAA’s Acquisition Management System (AMS) with the Federal  Acquisition Regulation (FAR), we reviewed AMS and changes in it over  time.
Why GAO Did This Study

The Federal Aviation Administration's (FAA) multibillion-dollar effort to modernize the nation's air traffic control (ATC) system has resulted in cost, schedule, and performance shortfalls for over two decades and has been on GAO's list of high-risk federal programs since 1995. According to FAA, performance shortfalls were due, in part, to restrictions imposed by federal acquisition and personnel regulations. In response, Congress granted FAA exemptions in 1995 and directed it to develop a new acquisition management system. In this report, GAO compared FAA's AMS with (1) the FAR and (2) commercial best practices for major acquisitions, and (3) examined FAA's implementation of AMS and its progress in resolving problems with major acquisitions.

What GAO Found

FAA's Acquisition Management System (AMS) is broader and less prescriptive than the Federal Acquisition Regulation (FAR), but both afford managers flexibility. AMS establishes an acquisition life-cycle management system, including both a contracting and program management system, whereas the FAR is primarily a contracting system. In addition, AMS takes the form of guidance--it is not regulatory, while the FAR is a set of published regulations--a legal foundation that has the force and effect of law that most federal agencies are required to follow. AMS provides some discipline for acquiring major ATC systems; however, it does not ensure a knowledge-based approach to acquisition found in the best commercial practices for managing commercial and DOD product developments that we have identified in numerous past reports. Best practices call for (1) use of explicit written criteria to attain specific knowledge at key decision points and (2) use of this knowledge by executives at the corporate level to determine whether a product is ready to move forward. Attainment and use of such knowledge by executives helps to avoid cost, schedule, and performance shortfalls that can occur if they commit to a system design prematurely. While AMS has some good features, including calling for key decision points, it falls short of best practices. GAO's review of seven major ATC systems and analysis of FAA's performance in acquiring major systems found that AMS has not resolved longstanding problems it experienced prior to its implementation of AMS--including developing requirements and managing software--and is just beginning to focus on how these acquisitions will improve the efficiency of ATC operations. While FAA has made progress by providing guidance for avoiding past weaknesses, it has not applied these improvements consistently. According to FAA officials, reorganization under and improved oversight by FAA's new performance-based Air Traffic Organization should help ensure greater consistency and an increased focus on results. Past GAO reports have demonstrated that the success of an acquisition process depends on good management, whether it be under AMS or the FAR.