The guide outlines three phases of a successful investment management approach—selection, control, and evaluation. This report addresses the extent to which FAA, through AMS, (1) has established a structured approach for selecting and controlling its investments; (2) incorporates all investments, including those in operation, in the agency’s portfolio; and (3) selects, controls, and evaluates its investments with complete and reliable information. Although AMS does not include an explicit screening step, screening activities are part of the agency’s mission analysis process. The project is then incorporated into the agency’s financial plan for projects funded by the facilities and equipment budget account. AMS provides a defined set of policies, procedures, and reporting requirements that are designed to facilitate FAA’s efforts to analyze mission needs, identify alternative solutions to meet those needs, assess the solutions’ affordability, and establish and control a project’s performance once a solution is selected. Lack of Oversight of the Operations Portion of Projects Prevents FAA From Managing Investments as a Complete Portfolio

FAA’s oversight of its investments is confined to new projects and those under development, limiting its ability to fully assess and make trade-offs between new and existing systems and preventing the agency from managing all of its investments as a complete portfolio. Such a portfolio approach allows the organizations to evaluate the relative merits of spending funds to develop new systems, enhance current systems, or continue operating and maintaining existing systems. FAA Does Not Have a Complete and Sound Operations Cost Baseline for Its Investments

While FAA’s policy requires baseline cost estimates for the full life cycles of all projects under AMS, in practice, FAA has not yet developed a sound estimate of the operations costs for each of its projects. FAA officials told us that the agency lacks the information needed to reliably estimate operations costs over a project’s life cycle or to track actual operations costs against estimates because it does not have a cost accounting system. Second, FAA has not fully implemented an effective process for controlling the baselines for the cost, schedule, benefits, performance, and risks of its investments. Third, FAA lacks a post-implementation evaluation process for assessing projects’ outcomes and feeding lessons learned back into the selection and control phases for future projects. However, the cost data used in FAA’s selection process are of questionable reliability. First, AMS does not require the validation of all data used in the selection process. FAA Has Not Fully Implemented Its Process for Establishing and Tracking Key Project Baselines

To control its projects at the agencywide level, FAA relies on periodic reviews of each project’s acquisition program baseline, which, as noted earlier, is a document that establishes a project’s cost, schedule, benefits, and performance boundaries and is intended to be used to monitor a project’s status in achieving those baselines. This, in turn, restricts the ability of FAA’s senior management to make sound decisions about continuing the agency’s investments.
Why GAO Did This Study

Pursuant to a congressional request, GAO reviewed the Federal Aviation Administration's (FAA) modernization investment management approach as carried out through the Acquisition Management System (AMS), focusing on the extent to which FAA, through AMS: (1) has established a structured approach for selecting and controlling its investments; (2) incorporates all investments, including those in operation, in the agency's portfolio; and (3) selects, controls, and evaluates its investments with complete and reliable information.

What GAO Found

GAO noted that: (1) AMS is a good first step in establishing a structured investment management approach for selecting and controlling the agency's investments; (2) the system contains a set of policies, procedures, and reporting requirements to analyze mission needs, assess the affordability of proposed projects, and establish life-cycle costs, schedules, benefits, and performance baselines to control the performance of the projects that are selected; (3) under this system, a senior management investment review group makes key decisions about which investments best meet the agency's needs and are to be funded; (4) however, the system is not comprehensive in that it does not incorporate all of FAA's projects into a complete strategic investment portfolio; (5) key decisionmaking processes and requirements of AMS are applied only to proposed projects and those under development but not to projects already in operation; (6) agency officials have not yet developed a sound estimate of the costs to operate projects and these costs are not included in the agency's financial plan for modernization; (7) because FAA does not apply the same scrutiny to all of its projects, senior officials are unable to fully assess and make trade-offs about the relative merits of spending funds to develop new systems, to enhance current systems, or to continue operating and maintaining existing systems; (8) AMS does not provide complete and reliable information for selecting, controlling, and evaluating the agency's investments; (9) the cost data used to select projects are of questionable reliability because of weaknesses in FAA's cost estimating practices and processes and the lack of a cost accounting system; (10) the information used to control projects is incomplete since FAA has not fully implemented an effective process for controlling the baselines for the costs, schedules, benefits, performance, and risks of its investments; (11) FAA has approved the baseline information for only half of the required universe of projects, and the agency's processes for tracking actual performance against estimates frequently has provided incomplete information; and (12) FAA lacks information needed to evaluate its investments since AMS does not have a post-implementation evaluation process for assessing projects' outcomes and feeding lessons learned back into the selection and control phases to help improve its management of future projects.