Detailed Information on the
Western Area Power Administration Assessment

Exercising expanded authority under the Energy Policy Act of 2005 to use non-Federal funding to construct transmission infrastructure to relieve congestion in national interest electric transmission corridors, and accommodate increased demand for transmission capacity to support industry restructuring, cleaner energy generation, particularly wind, and increased consumption predictions.

Pursuing funding alternatives/proposals, such as net zero/receipt financing, to reduce Western's appropriation requirements while creating a stable budgetary resource to provide for annual operating costs.

Adopting consistent performance measures for use and reporting by the power marketing administrations (PMAs) to ensure opportunities to benchmark and identify best practices for Program operations.

Adopt a one-year cost recovery policy, beginning in FY 2008, for emergency purchase power and wheeling (PPW) expenses to assure the Treasury is repaid in a timely manner with minimal deficit impact.

Measure: System Reliability Performance

Explanation:Meet North American Electric Reliability Council (NERC) Control Performance Standards (CPS) of CPS1>100 and CPS2>90 and meet or exceed industry averages. CPS1 measures a generating system's performance at matching supply to changing demand requirements and supporting desired system frequency in one minute increments. CPS2 measures a generating system's performance at limiting the magnitude of generation and demand imbalances in ten minute increments

Measure: Repayment of Investment Performance

Explanation:Ensure unpaid investment (UI) is equal to or less than the allowable unpaid investment (AUI) in accordance with DOE Order RA 6120.2 and Reclamation Law.

Measure: System Reliability Performance - Accountable Transmission Outages

Explanation:Accountable customer and/or transmission element outages will not exceed yearly targets.

Is the program purpose clear?

Explanation: Western's mission is to cover all costs of producing, transmitting marketing and delivering reliable, cost-based hydroelectric power and related services generated at Federal dams within a 15-state marketing area ( MN, IA, NE, KS, CO, UT, WY, ND, SD, MT, TX, NM, AZ, NV, CA, ). Western is to transmit and dispose of power and energy in such manner as to encourage its most widespread use, at the lowest possible rates to consumers consistent with sound business principles. To achieve repayment of Federal power investment, Western establishes cost-based rates to recover costs of providing power service, including principal and interest owed the U. S. Treasury, Various laws require preference be given to cooperatives, municipalities and other public corporations or agencies seeking to purchase Federal power.

Evidence: "Public Law 57-161, ""The Reclamation Act of 1902"" Public Law 66-389, ""Sundry Civil Appropriations Act"" (1922) ""Interior Department Appropriation Act of 1928"" (44 stat. 957) Public Law 76-260, ""The Reclamation Project Act of 1939"" Public Law 78-534, ""Flood Control Act of 1944"" Public Law 80-790, ""Emergency Fund Act of 1948"" Public Law 95-91, ""Department of Energy Organization Act"" (1977); Public Law 102-486, ""Energy Policy Act of 1992"" GAO AIMD-00-114, ""Power Marketing Administrations: Their Ratesetting Practices Compared with Those of Nonfederal Utilities"" GAO AIMD-97-110, ""Federal Electricity Activities: The Federal Government's Net Cost and Potential for Future Losses"""

Does the program address a specific interest, problem or need?

Explanation: Western is responsible for marketing and transmitting power generated at Federal dams in portions of the western half of the United States. This power is generated at dams built for multiple purposes, including navigation, irrigation, flood control, power, fish and wildlife, recreation and municipal and industrial water supply. This responsibility, previously managed by the Bureau of Reclamation and transferred to Western in 1977 under Section 302 of the Department of Energy Organization Act, still exists today.

Evidence: Western markets and delivers about 45 billion kilowatt-hours of Federal hydropower annually to over 600 customers. Combined with power from other suppliers these customers provide retail electric service to millions of consumers. Western's service area covers 1.3 million square miles in 15 western states.

Is the program designed to have a significant impact in addressing the interest, problem or need?

Explanation: Western's program is designed to market power and operate, maintain, upgrade and rehabilitate its extensive, integrated and complex high-voltage power transmission system. This nearly 17,000-circuit-mile system provides reliable power to customers and is an integral part of the Western United States electrical grid. Western enhances its impact pursuant to the Energy Policy Act of 1992 by requiring customers to establish and report integrated resource plans in support of demand-side management and renewable energy programs.

Evidence: The majority of Western's resources are focused on marketing power and maintaining reliability of its transmission system. As one of the largest provider of bulk electricity in the western United States (about 40 percent of regional hydroelectric generation) and the operator of one of the largest transmission system in the Nation, Western is considered a key presence in the wholesale power market. With that presence comes a responsibility to provide leadership in the electric utility industry, primarily as an advocate for power system reliability and security.

Is the program designed to make a unique contribution in addressing the interest, problem or need (i.e., not needlessly redundant of any other Federal, state, local or private efforts)?

Explanation: The generation and transmision of power is a well developed technology, largely provided by municipalities and independently-owned utilities across the country. The function could be performed under contract or through non-federal ownership of transmissionlines and generation capacity at the dams. However, the Power Marketing Administrations were established to market and deliver Federally generated power. No other entities have this authority. Based on Federal Energy Regulatory Commission (FERC) rules that apply to transmitting utilities, Western opens its available transmission to all wholesale power generators and marketers.

Evidence: Private entities across the country own and operate many hydropower facilities. These facilities are licensed by FERC and provide substantial amounts of dependable hydropower to customers. Western voluntarily participates in regional transmission organization formation efforts consistent with FERC's rules for standard transmission practices. Western is a member of the Mid-Continent Area Power Pool, as well as Western Electricity Coordinating Council and their Reliability Management System. Western plays a key role in assuring reliability of the interconnected transmission system.

Is the program optimally designed to address the interest, problem or need?

Explanation: Western benefits from subsidized loans that place part of the cost of hydropower construction on the Treasury. In addition, the application of preference in the sale of power creates administrative inefficiencies and restricts market activity. Market pricing of power and unrestricted sales would improve opportunities for more efficient operations. Western also conducts a purchase power and wheeling program that, to some degree, duplicates available private sector services. Western believes this program enhances the value of its power though it does not capture that value in its rates. Western's rates are set to recover much of the costs associated with the marketing and transmission of electric power. However, the budgeting of resources does not always allow Western to operate in an efficient manner. Western is often forced to delay replacements or upgrades, thereby requiring more staff to maintain our aging infrastructure.

Evidence: Various reports: GAO/AIMD -97-110, The Governmentr's Net Cost and Potential for Future Losses and GAO/AIMD- 00-114, Power Marketing Administrations - their Rate setting Practices Compared with those of Non-Federal Utilities.

Does the program have a limited number of specific, ambitious long-term performance goals that focus on outcomes and meaningfully reflect the purpose of the program?

Explanation: "Western has extended its short term goals to the long term. Long term goals should be output oriented, i.e., to the service provided or the impact of the service that clientele want on their lives. Western's stated long-term goals are: Maintain system reliability and transmission availability in the evolving electric utility industry; Promote employee awareness and commitment to working safely by providing the necessary training and equipment to assure a safe working environment; Achieve the required repayment on the Federal investment."

Evidence: "Western's Strategic Plan, Sept. 1999 Annual Performance Plan for FY 2002 Annual Performance Report for FY 2001 FY2004 Congressional Budget Request, DOE Energy Resources Strategic Objective ER9-1, ""Ensure Federal hydropower is marketed and delivered while passing the North American Electric Reliability Council's Control Compliance Ratings, meeting planned repayment targets, and achieving a recordable accident frequency at or below our safety performance standard"". Prior to updating Western's Annual Performance Plan, Western's Senior Management Team reviews the results outlined in the latest Annual Performance Report to determine if the objectives of the Strategic Plan are being met."

Does the program have a limited number of annual performance goals that demonstrate progress toward achieving the long-term goals?

Explanation: Western's annual performance goals are: Maintain reliability and transmission availability in the evolving electric utility industry Promote employee awareness and commitment to working safely by providing the necessary training and equipment to assure a safe working environment Establish and meet planned annual repayment for each Federal power system

Evidence: Western's Strategic Plan, Sept. 1999 Annual Performance Plan for FY 2002 Annual Performance Report for FY 2001 FY2004 Congressional Budget Request DOE Energy Resources Strategic Objective ER9-1, FY 2004

Do all partners (grantees, sub-grantees, contractors, etc.) support program planning efforts by committing to the annual and/or long-term goals of the program?

Explanation: Western works closely with the U. S. Bureau of Reclamation and U. S. Corps of Engineers hydropower programs to ensure that their operations impacting Western's mission do not conflict with its program. In addition, Western's customers are involved in the rate setting process and prioritization of work plans to assure that costs are kept to a minimum.

Evidence: "U. S. Bureau of Reclamation U. S. Corps of Engineers Over 600 Power Customers, including DOE labs and military bases"

Does the program collaborate and coordinate effectively with related programs that share similar goals and objectives?

Explanation: The Power Marketing Administrations work closely together on initiatives that impact their agencies, and between DOE and their Washington offices coordinating these efforts. In addition, Western works closely with the generators to ensure that their operations impacting Western's mission do not conflict. Western is actively involved with the North American Electric Reliability Council, Federal Energy Regulatory Commission, Western Electricity Coordinating Council, and other organizations to ensure the reliability of and the nondiscriminatory access to transmission in the western interconnection.

Evidence: "PMA Washington Liaison Office Southwestern Power Administration Southeastern Power Administration Bonneville Power Administration U. S. Bureau of Reclamation U. S. Corps of Engineers"

Are independent and quality evaluations of sufficient scope conducted on a regular basis or as needed to fill gaps in performance information to support program improvements and evaluate effectiveness?

Explanation: Western financial statements, along with the power portion of the Bureau of Reclamation's and Corps of Engineers', are independently reviewed annually by a contract audit firm. These audits are done for each power system. Also, rate proposals are independently reviewed and approved by FERC. In-house Audit and Compliance staff continually review Western's processes and controls, including compliance with the Federal Managers Financial Integrity Act. In collaboration with DOE, the Bonneville Power Administration and Western conducted peer reviews of each other's mission critical computer systems to comply with the Government Information Security Reform Act. Western's control areas are reviewed every three years by the Western Electricity Coordinating Council and Mid-Continent Area Power Pool. Western continues to meet or exceed the NERC standards to measure the ability of control areas to match generation to load.

Evidence: "Independent audit of Western's financial statements Bonneville/Western Peer Review Inspector General Reports General Accounting Office Reports WECC Proprietary Reports Internal review audits by in-house Audit & Compliance Office NERC Annual Control Area Compliance Standards Mid-Continent Area Power Pool"

Is the program budget aligned with the program goals in such a way that the impact of funding, policy, and legislative changes on performance is readily known?

Explanation: Western's budget request supports Western's short- and long-term performance goals. It is based on Western's best estimate of its program needs. Therefore, any funding, policy, and legislative changes would impact Western's ability to meet its performance goals. Western conducts an annual review of rates based on actual expenditures and budget requests.

Evidence: Western's budget structure is composed of four critical activities: program direction (PD) which is a distinct requirement of the appropriations committee, operation and maintenance (O&M), construction and rehabilitation (C&R) and purchase power and wheeling (PP&W). Funding for PD, O&M, and C&R directly impact Western's reliability and safety performance. Funding for PP&W is critical to the continuity of Western's contractual sales agreements with customers.

Has the program taken meaningful steps to address its strategic planning deficiencies?

Explanation: Western annually prepares a performance plan that is developed under the guidelines of the Government Performance and Results Act. It outlines key strategies and results needed for Western to achieve its goals. Following execution, an annual performance report is prepared which compares the planned to the actual and evaluates performance against targets. Western internally publishes monthly updates showing the status of our key performance goals against the target set in the plan. An annual power repayment study is run to ensure revenues are sufficient to recover costs within required timeframes. Western's Maintenance, Design, and Construction Council (MDCC) prepares and annually reviews 5- and 10-year plans for upgrades and replacements of our infrastructure.

Evidence: "FY 2001 Annual Performance Report FY 2002 Annual Performance Plan Power Repayment Studies 5- and 10-year Construction Plans Prior to updating Western's Annual Performance Plan, Western's Senior Management Team reviews the results outlined in the latest Annual Performance Report to determine if the objectives of the Strategic Plan are being met. If Western does not achieve its annual performance goals, then its long-term goals will suffer."

Are acquisition program plans adjusted in response to performance data and changing conditions?

Explanation: Western's construction and rehabilitation program consists primarily of replacements and upgrades to its existing system. Priorities are placed on those situations that pose the highest risk to safety and system reliability. Western's Maintenance, Design, and Construction Council prepares 1-, 5-, and 10-year plans. An evaluation is made each year to determine if deviations from the plan are based on reliability and/or industry orders. Due to Western's aging infrastructure, program plans are adjusted frequently due to these changing conditions. Facility/Project Data Sheets are prepared. Detailed program plans are prepared for major upgrades to multiple systems (such as wood pole replacement, communication upgrades). Western's Project Management program evaluates all major projects and applies a performance rating to each.

Evidence: "5- and 10-year Construction Plans MDCC Annual Review Plan Facility/Project Data Sheets Project Evaluation Reports"

Has the agency/program conducted a recent, meaningful, credible analysis of alternatives that includes trade-offs between cost, schedule and performance goals?

Explanation: Western's 5- and 10-year construction plans are updated yearly to determine if priorities have changed. Facility/Project Data Sheets are updated annually. These Sheets provide cost estimates, schedules, justifications, alternatives, benefits, etc.

Evidence: "5- and 10-year Construction Plans MDCC Annual Review Plan Facility/Project Data Sheets "

Does the agency regularly collect timely and credible performance information, including information from key program partners, and use it to manage the program and improve performance?

Explanation: Western collects data on a daily, monthly, quarterly, or yearly basis. This data is used for operating and managing Western's program. Examples of this data are: budget execution and other financial reports from Western's business system, water conditions, market conditions, generation, loads, unit maintenance, power schedules, power outages and other data. Annual power repayment studies are run to ensure revenues are sufficient to recover costs within required timeframes. Quarterly progress is published internally to notify employees of progress in meeting our goals. Western's Maximo system is used as the maintenance management data repository and the maintenance work management system. Work Orders are used to provide work management, cost tracking, equipment history and performance reporting. It integrates maintenance activities directly with finance and warehouse functions, is used as a tool to plan and schedule work activities, access all equipment history, cost, material usage, and labor data and provide associated reports to allow management to make timely and meaningful business decisions.

Evidence: Western constantly monitors its data and other resources to control costs and maintain reliability. Western monitors its costs carefully to ensure that low-cost rates will continue. The rate targets for all projects are monitored to assure cost-recovery requirements as well as meet repayment requirements. Western evaluates its reliability goal to make sure it meets or exceeds national and regional operating criteria. Western continuously updates and implements Western's safety action plan to effectively integrate safety throughout the organization.

Are Federal managers and program partners (grantees, subgrantees, contractors, etc.) held accountable for cost, schedule and performance results?

Explanation: Each of Western's Senior Managers has an annual performance contract with the Administrator. Each of these managers are held accountable for the performance standards spelled out in these agreements. These standards are reviewed annually and modified as necessary. In turn, these Senior Managers have Individual Performance Standards for each of their managers who are also held accountable for meeting their annual performance. In addition, Western's strategic goals are used to ensure accountability. For example, Western maintains data by region and power system to place responsibility on specific managers. In addition, Western's Project Management program evaluates all capitalized projects over $500,000 and applies a performance rating to each. Also in FY 2003, Western is initiating performance-based contracts that provide for minimum performance levels and incentives for strong performance.

Evidence: "Individual Performance Agreements Annual Performance Report Quarterly Progress Reports Project Evaluation Reports"

Are all funds (Federal and partners') obligated in a timely manner and spent for the intended purpose?

Explanation: Western manages its obligations by region and power system. Western performs periodic reviews of obligations and outlays. Western aligns the purchase of equipment with the design schedule, if appropriate, to assure timely receipt of the equipment. Automated and manual controls of funds are in place to ensure all funds are spent for their intended purpose. Sometimes equipment replacement planned during budget formulation may have to be delayed due to discovery of a failing piece of critical equipment during budget execution. Western's Maintenance, Design, and Construction Council prepares 1-, 5-, and 10-year plans. An annual review report is evaluated each year to determine if deviations from the plan are based on reliability and/or industry orders.

Evidence: "MDCC Annual Review Plan Periodic obligations and outlay reviews Annual Financial Audits Budget execution (SF133) to DOE/OMB Status of Appropriations Report to Congress"

Does the program have incentives and procedures (e.g., competitive sourcing/cost comparisons, IT improvements) to measure and achieve efficiencies and cost effectiveness in program execution?

Explanation: A primary incentive for efficiencies and cost effectiveness is Western's goal to maintain low rates. One of Western's bonus goal incentives relates to cost savings. Western uses cost comparisons and competitive sourcing whenever applicable. Recent procurement of support services has focused on performance-based contracts. Cost estimates are prepared during project planning and then monitored during execution. Facility/Project Data Sheets are prepared prior to budget formulation. Detailed program plans are prepared for major upgrades to multiple systems (such as wood pole replacement, communication upgrades).

Evidence: Customer evaluation of costs Procurement files Project Evaluation Report Facility/Project Data Sheets Bonus Goal Incentives

Does the agency estimate and budget for the full annual costs of operating the program (including all administrative costs and allocated overhead) so that program performance changes are identified with changes in funding levels?

Explanation: Western's budget request and associated execution includes most of its annual costs for operating its program but assumes some debt subsidies. Separate rates are developed for the estimated administrative costs and the direct overhead costs for all four of Western's Regions plus the Corporate Services Office. These rates are then applied against the total estimated direct labor. During execution, rates are reviewed monthly to determine if all overhead is being recovered through direct charging. Rates are adjusted as necessary so that the overhead is completely accounted for at year-end.

Evidence: "Annual Budgets Budget formulation and execution reports. Monthly clearing reports Annual repayment studies See also GAO/AIMD Reports 96-145 and 97-110"

Does the program use strong financial management practices?

Explanation: Western's financial statements for all of its power systems are independently audited on an annual basis. In the past two years, Western has addressed several weaknesses with its automated accounting system and also has implemented a series of internal controls to increase both the accuracy and reliability of its financial information. While the auditors identified one reportable condition for Western in FY01, Western has taken steps to ameliorate this condition in FY02, and expects its auditors to find no reportable conditions upon the completion of their audit in early FY03. Based on these efforts, Western has had a clean audit for FY 1999 and FY 2000, and expects to have one in both FY 2001 and FY 2002.

Evidence: "Western's audited financial statements for FY 2001 and FY 2000. DOE Internal Control Review In FY02, Western corrected a major cash-matching program deficiency with its automated accounting system. Also, new reconciliations and procedures were adopted to timely analyze the accounts and permit immediate corrective action. Increased management oversight was applied to the accounting function to ensure proper procedures were practiced. Desktop procedures were established and documented to ensure continuity of controls. "

Has the program taken meaningful steps to address its management deficiencies?

Explanation: Western has entered a multiyear effort to recruit and maintain highly qualified employees. Western continuously improves its business systems and follows sound business practices by leveraging the capabilities of business systems to achieve functional efficiencies and process improvements. For instance, Western uses Maximo for maintenance planning, inventory control, and to establish a comprehensive maintenance database for reliability-centered maintenance principles. Oracle Financials are used to ensure that Western's complex business is accurately accounted for. Western rigorously uses project management principles and practices. Western sets annual targets to ensure desired result.

Evidence: Human Capital Management Plan. Process documentation is continuously updated for both Oracle Financials and Maximo by using a complex testing and verification process to assure accuracy and user-friendliness. A comprehensive documentation of performance (cost/time/results) has begun to assure project management principles are followed.

Does the program define the required quality, capability, and performance objectives for deliverables?

Explanation: Western's design staff prepares a statement of work (Specifications of technical requirements) for the installation and procurement of equipment. This statement of work is used to prepare an Information for Bid (IFB) and a Request for Bid (RFB).

Evidence: "Statement of Work IRB/RFB Procurement Package"

Has the program established appropriate, credible, cost and schedule goals?

Explanation: Prior to approval by management, cost estimates and life-cycle cost benefits are prepared to justify a project. Western's 5- and 10-year construction plans are updated yearly to determine if priorities have changed. Approved projects are evaluated and updated annually. These evaluations provide revised cost estimates, schedules, justifications, alternatives, benefits, etc.

Evidence: Proposals for projects 5- and 10-year Construction Plans MDCC Annual Review Plan

Has the program conducted a recent, credible, cost-benefit analysis that shows a net benefit?

Explanation: Prior to approval by management, cost estimates and life-cycle cost benefits are prepared to justify a project. Western's 5- and 10-year construction plans are updated yearly to determine if priorities have changed. Approved projects are evaluated and updated annually. These evaluations provide revised cost estimates, schedules, justifications, alternatives, benefits, etc.

Evidence: Proposals for projects 5- and 10-year Construction Plans MDCC Annual Review Plan

Does the program have a comprehensive strategy for risk management that appropriately shares risk between the government and contractor?

Explanation: Western follows the standard procurement rules in the purchase of capital assets. The Design Specifications clearly outline the requirements; the procurement is usually based on a fixed price, and the contract is written so that the deliverable is clearly defined.

Evidence: "Procurement Packages Design Specifications"

Has the program demonstrated adequate progress in achieving its long-term outcome goal(s)?

Explanation: These are not long tem goals. Western needs to continue its effort to define output oriented long-term. Currently, Western's stated long-term goals are: Maintain system reliability and transmission availability in the evolving electric utility industry Promote employee awareness and commitment to working safely by providing the necessary training and equipment to assure a safe working environment Achieve required repayment on Federal investment

Evidence: "Annual Performance Plan Power Repayment Studies North American Electric Reliability Council Standards Bureau of Labor Statistics Prior to updating Western's Annual Performance Plan, Western's Senior Management Team reviews the results outlined in the latest Annual Performance Report to determine if the objectives of the Strategic Plan are being met."

Does the program (including program partners) achieve its annual performance goals?

Explanation: Western's annual performance goals are: Maintain system reliability and transmission availability in the evolving electric utility industry Promote employee awareness and commitment to working safely by providing the necessary training and equipment to assure a safe working environment Establish and meet planned annual repayment for each Federal power system

Evidence: "Annual Performance Plan Power Repayment Studies North American Electric Reliability Council Standards Bureau of Labor Statistics Prior to updating Western's Annual Performance Plan, Western's Senior Management Team reviews the results outlined in the latest Annual Performance Report to determine if the objectives of the Strategic Plan are being met."

Does the program demonstrate improved efficiencies and cost effectiveness in achieving program goals each year?

Explanation: Western's management continually evaluates its targets and measures to ensure its mission is met; the senior managers keep "raising the bar", making it more challenging to meet targets. Although Western's self-imposed targets are not always met, Western continues to be below the industry average for recordable injuries, lost or restricted workdays, and motor vehicle accidents; and Western exceeds North American Electric Reliability Council's statistical measure for frequency error and large net unscheduled power flows. Western continues to meet its principal repayment to the Treasury. However, annual repayment is affected by hydrological conditions, i.e., wet, dry, or average, which may result in periodic project deficits on its interest and annual expense payment.

Evidence: "Bureau of Labor Statistics North American Electric Reliability Council Standards Annual Performance Plan Prior to updating Western's Annual Performance Plan, Western's Senior Management Team reviews the results outlined in the latest Annual Performance Report to determine if the objectives of the Strategic Plan are being met."

Does the performance of this program compare favorably to other programs with similar purpose and goals?

Explanation: "Western is comparable to the other PMA's in its ability to market and deliver reliable, cost-based hydroelectric power and related services. In addition, Western exceeds reliability standards and industry averages: CPS1: Standard--100; North American Electric Industry-wide average of load-generation control areas--168.57; Western--186.93 CPS2: Standard--90; North American Electric Industry-wide average of load-generation control areas--95.65; Western--98.48 Western accident frequency rates during the past few years are as follows: 1997: Industry 5.7; Western 1.9 1998: Industry 5.1; Western 1.7 1999: Industry 4.9; Western 2.4 2000: Industry 4.8; Western 1.9

Evidence: Bureau of Labor Statistics North American Electric Reliability Council Standards Annual Performance Plan

Do independent and quality evaluations of this program indicate that the program is effective and achieving results?

Explanation: "Western's activities are reviewed annually by an independent audit firm. Western prepares an Annual Performance Plan and follows with an Annual Performance Report which documents results of performance targets. In addition, Western is actively involved with North American Electric Reliability Council, Federal Energy Regulatory Commission, National Energy Policy, Western Electricity Coordinating Council, and other organizations to ensure the reliability of and the non-discriminatory access to transmission in the western interconnection. An annual power repayment study is run to ensure revenues are sufficient to recover costs within required timeframes."

Evidence: Audited Financial Statements Annual Performance Plan Annual Performance Report Reliability Councils Power Repayment Studies

Were program goals achieved within budgeted costs and established schedules?

Explanation: Western follows the standard procurement rules in the purchase of capital assets. The Design Specifications clearly outline the requirements; the procurement is usually based on a fixed price, and the contract is written so that the deliverable is clearly defined.

Evidence: Procurement Packages Design Specifications