NOAA Acquisitions: Fully Aligning Procedures with Best Practices Could Improve the Reliability of Cost Estimates
Fast Facts
The National Oceanic and Atmospheric Administration estimates costs before purchasing acquisitions, such as satellites, ships, computers, and facilities. The reliability of these cost estimates can be improved by using the best practices outlined in GAO's cost estimating guide.
The cost estimating procedures used by 2 NOAA offices that buy satellites and facilities weren't fully aligned with GAO's best practices. And 2 offices that purchase ships and computers didn't document their procedures.
We recommended that NOAA require its offices to have procedures that fully align with our best practices to reduce the risk of unreliable estimates.
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Highlights
What GAO Found
According to National Oceanic and Atmospheric Administration (NOAA) officials, two offices—the National Environmental Satellite, Data, and Information Service for satellite systems and the Office of Marine and Aviation Operations for ships and aircraft—produced cost estimates for seven major acquisitions from fiscal years 2018 through 2022. The estimated costs of the acquisitions totaled $27.4 billion. Two other offices—the National Weather Service and the Office of the Chief Administrative Officer—acquire computer systems and facilities, respectively, but did not produce cost estimates for major acquisitions during this time.
NOAA Produced Cost Estimates for Major Acquisitions, Including Satellite Systems, Ships, and Aircraft, from Fiscal Years 2018 through 2022
NOAA employs a decentralized approach to cost estimating whereby each of the four offices follows different procedures. GAO found that two offices, the National Environmental Satellite, Data, and Information Service and the Office of the Chief Administrative Officer, have documented cost estimating procedures that do not fully align with the 12-step process in GAO's Cost Guide. The National Weather Service and the Office of Marine and Aviation Operations do not have documented cost estimating procedures and, instead, primarily outsource cost estimation to external partners.
NOAA officials told GAO that there is no agency-wide cost estimating policy or guidance because each office is best positioned to develop its own cost estimates based on internal knowledge and experience, and the expertise of external partners. In order to consistently develop reliable cost estimates, it is important for an agency to have defined policies and procedures to govern the process. Cost estimating best practices have been applied to cost estimating for a wide variety of unique programs across government and industry. These best practices allow flexibility for programs or offices to develop procedures that incorporate the practices in a manner that is most suitable for their specialized acquisitions. Furthermore, agency-wide policy and guidance will provide agency officials with a basis for assessing the extent to which cost estimates produced by external partners are reliable and aligned with best practices.
Why GAO Did This Study
NOAA's missions require complex and costly acquisitions, such as satellite systems, ships, aircraft, computer systems, and facilities. GAO has found that to produce reliable cost estimates for such acquisitions, agencies should follow best practices. GAO's Cost Estimating and Assessment Guide (Cost Guide) provides a consistent 12-step cost estimating methodology based on best practices.
The explanatory statement accompanying the Consolidated Appropriations Act, 2021, includes a provision for GAO to review NOAA's cost estimation procedures. This report (1) describes the key characteristics of NOAA's cost estimates for major acquisitions from fiscal years 2018 through 2022 and (2) assesses the extent to which NOAA's cost estimation procedures align with best practices in GAO's Cost Guide.
GAO reviewed acquisition data, interviewed NOAA officials to determine how they produce cost estimates, and compared the agency's procedures for developing cost estimates against the best practices described in GAO's Cost Guide.
Recommendations
GAO recommends that NOAA (1) establish agency-wide policy and guidance that is aligned with best practices in GAO's Cost Guide and (2) require each office within NOAA to have documented cost estimating procedures that are fully aligned with the best practices established in its agency-wide policy and guidance. The Department of Commerce concurred with both recommendations.
Recommendations for Executive Action
| Agency Affected | Recommendation | Status |
|---|---|---|
| National Oceanic and Atmospheric Administration | The Administrator of NOAA should establish agency-wide policy and guidance that is aligned with best practices in GAO's Cost Guide. (Recommendation 1 |
The Department of Commerce's action plan dated October 10, 2023, states that NOAA agrees with this recommendation and will take the following actions for implementation. The plan aims to have a NOAA-wide Working Group, led by the Office of the Financial Officer and the Acquisitions and Grants Office, oversee the development and implementation of internal cost-estimate guidance in NOAA offices using a risk-based approach that incorporates GAO's 12-step procedures for specific programs. As of September 2024, NOAA has made progress in the development of agency-wide cost-estimate guidance and expects to complete and implement the guidance by September 30, 2025.
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| National Oceanic and Atmospheric Administration | The Administrator of NOAA should require each office within NOAA to have documented cost estimating procedures that are fully aligned with the best practices established in its agency-wide policy and guidance. (Recommendation 2) |
The Department of Commerce's action plan dated October 10, 2023, states that NOAA agrees with this recommendation and will take the following actions for implementation. Taking a risk-based approach, NOAA will require that its offices utilize Commerce's newly developed cost- estimate guidance and GAO's Cost Estimating and Assessment guide. This effort will be led by NOAA's Office of the Chief Financial Officer and aims to develop and implement NOAA procedures that strengthen Commerce's released cost-estimate procedures. As of September 2024, NOAA has made significant progress in the development of agency-wide cost-estimate guidance and expects to complete and implement its plan by September 30, 2025.
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