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DOCUBENT RESUBE
05382 - (OO65788]
Consistent and Uniform Treatment of Inflation Needed in Program
Cost Estimates Provided to the Congress. PSAD-78-8; B-176873.
march 20, 1978. 27 pp. + 6 appendices (14 pp.).
Report to the Congress; by tlmer B. Staats, Comptroller General.
Issue Area: Federal Procurement of Goods and Services: Notifying
the Congress of Status of Important Procurement Programs
(1905); Program and Budget Information for Congressional Use
(3400).
Contact: Procurement and Systems Acquisition Div.
Budget Function: National Defense (0'0); General Science, Space,
and Technology (250); Natural Resources, Environment, and
Energy (300).
Organization Concerned: Office of tanagesent and Budget;
Department of Defense; Departvnent of Energy; National
Aeronautics and Spice Admint.tration; Department of
Transportation; Deiartme.. of the Army: Corps of Engineers;
Tennessee Valley Authority; Congressional Budget Office.
Congressional Relevance: Congress.
Authority: ORB Circular A-11. DOD Instruction 7000.3.
Inflation is continually cited as a leading cause of
tremendous cost growth in Government programs in rezent years.
The practices followed by selected Government agencies in
providing for inflation in the cost estimates of long-term major
programs were examined because the long-term Programs proposed
by the departments and agencies are not costed on a consistent
and uniform basis, and it is impossible for the Congress to
compare programs. Findings/ConGlusions: Office of management
and Budget (01B) and agency procedures do not result in uniform
treatment of expected inflation or price changes in the budget
and cost estimates provided to the Congress. The use of uniform
inflation criteria would enable Congress to make compariEons of
program budgets. MRB could achieve this by: limiting the number
of inflation indexes used, issuing explicit guidelines for
adjusting estimates to account for inflation during the budget
processing cycle, requiring annually recosted long-term program
estimates consistent with prevailing prices, and requiring
agencies to identify separately the effect of inflation on
future program crsts. An alternative would be to perb.t all
agencies to include inflation in their long-term program cost
estimates as the Department of Defense does. Recomendations:
The Congress should require that OB develop inflatiop policy
and procedures which agencies would uniformly apply to annual
program and budget estimates. (RRS)](ViewImageLocal?handle=hein.gao/gaobaawwy0001&div=1&collection=&method=preview&ext=.png&size=3)