Commerce ADP Procurement: Contracting and Market Share Information

Pursuant to a congressional request, GAO reviewed selected aspects of the Department of Commerce's Patent and Trademark Office (PTO) Automated Patent System. GAO found that: (1) Commerce did not adequately oversee the program during the planning stage and spent millions of dollars with little assurance that it was implementing the best alternative for operational improvements or that benefits were exceeding costs; (2) since PTO has not completed the required space management study, the final system configuration remains uncertain and PTO cannot reliably estimate the cost, schedule, and ultimate system capabilities; (3) Commerce awarded a cost-plus-fixed-fee contract for the system's design, development, implementation and maintenance, which was inappropriate and inconsistent with federal regulations because it contained few contractor cost-control incentives; (4) since PTO altered the implementation plans without making corresponding changes in the prime contract, it did not have an accurate basis to judge contractor performance; and (5) Commerce and PTO decided not to establish needed agency oversight at the contractor's facility to monitor the contract, despite recent reports of accounting system problems, contract costs escalating from $159 million to $448 million, and actual schedule slippage. GAO believes that the method PTO is using to automate patent activities has serious weaknesses that increase the risk of acquiring a system that will not efficiently achieve automation goals.