Cost Overruns at the National Archives

February 7, 2011

A new report from the Government Accountability Office finds that the National Archives and Records Administration’s Electronic Records Archive project is headed for major cost overruns. Initiated in 2001, the project was originally projected to cost $745 million but could end up costing $1.4 billion. The project’s development phase was supposed to be completed by September, but the GAO estimates that it won’t be completed until 2017.

The purpose of the Electronic Records Archive project is to create a digital system for gathering and storing government records that would be accessible to the public. In 2005, the National Archives selected Lockheed Martin to develop the system. Unfortunately, the GAO report makes it clear that the National Archives hasn’t been up to the task of properly overseeing the project.

The examples of shoddy management are too numerous to recount. For instance, the National Archives was supposed to follow a system for managing the project’s costs and progress called earned value management (EVM). However, the GAO found “anomalies” in the monthly reports submitted to the National Archives from Lockheed Martin that are crucial to EVM.

From the report:

  • Planned work was removed from the [performance measurement] baseline without also removing its corresponding budget. This is an inappropriate EVM practice and results in the appearance of favorable cost and schedule performance trends.
  • Work was shown as fully completed in one month’s report but, in subsequent reports, the same work was reported as less than 100 percent complete. For example, Increment 3 development work was reported as 100 percent complete in July 2009, but 2 months later, in September 2009, it was reported as 10 percent complete. In another example, program support activities for Increment 3 were reported as 100 percent complete in August 2009, but in the subsequent month as 49 percent complete.
  • Dollars were reported as spent in a given month, but no work was reported as scheduled or completed.

The GAO says that National Archives and Lockheed Martin officials “provided justifications for these anomalies…. However, these justifications were not always valid.”

Cost overruns in government are not anomalies. In fact, as a Cato essay on government cost overruns demonstrates, they occur all too frequently. The reason is simple:

People tend not to spend other people’s money as carefully as they spend their own. In governments, policymakers and administrators deal with large amounts of other people’s money, and so wasteful spending is a big problem…. Cost overruns are illustrative of the persistent failures of federal management and provide one justification to downsize the government.

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