An estimated 89 percent cost growth in a General Services Administration-led project to consolidate online acquisition-related systems is largely the result of mistakes GSA has made, says the Government Accountability Office.
In a report dated March 15, GAO auditors say that GSA contract cost estimates show that an effort to integrate the back end of acquisition systems into a single database and consolidate the front-end systems into a new website dubbed System for Award Management will cost $181.1 million. GSA estimated in 2008 its modernization effort of the systems, collectively known as the Integrated Acquisition Environment, would require only $95.7 million in contract spending.
GAO attributes most of the growth to higher-than-expected hosting costs. GSA initially thought that hosting–costs of hardware, operating systems, connectivity and a physical facility–would run $2.8 million annually. GAO says it’s more like $8 million or $9 million a year.
In addition, GSA had planned to award a single hosting contract, but instead in 2009 awarded a contract to Qwest (now CenturyLink) for services limited to just a hosting facility and Internet connectivity. GSA then bought itself hosting hardware and software itself for $29 million and then re-negotiated a $74 million IAE modernization system architecture contract with IBM by adding an additional $36 million for the company to install, operate and maintain the hardware and software in the CenturyLink facility.
The increase in hosting costs came just at a time when Congress pared back appropriations funding for the modernization effort. GSA requested $15 million for fiscal 2011, but received just $7 million. It requested $38 million in fiscal 2012, but received $0. The fiscal 2013 budget proposal requests $21 million.
The lack of funding, coupled with the increases in costs, has driven GSA into a corner. It has responded by delaying the integration of systems into a consolidated backend, but that’s also forcing the agency to spend more than anticipated on operating legacy systems. According to the GAO, it’s now reached a point where it cannot afford to purchase hardware and software to complete phase two and three of the three phase project (the number of phases have changed over time), but maintain legacy systems will cause total IAE costs to rise.
Auditors say GSA should now reassess the business case for modernization and consider terminating phases two and three. If it decides not to, then it should reevaluate its hosting contracting strategy, and also renegotiate the IBM contract. GSA, the report says, has been paying IBM hosting costs associated with phases two and three according to a schedule that assumed the company would have additional responsibilities by now–despite the fact that schedule delays have pushed much of that work out to the future.
For more: download the report, GAO-12-429.
— Published on FierceGovernmentIT, March 18, 2012, at http://www.fiercegovernmentit.com/story/sam-corner-says-gao/2012-03-18?utm_medium=nl&utm_source=internal.
