UNITED STATES GENERAL ACCOUNTING OFFICE WASHINGTON, DC. 20548 ClViL DIVISION a3sw373tl E-16403143) RELEASED Dear Yr Sei0eyling. Your le-ter of June 22, 1971, requested th,t we look into contracts awarded by cne Social and Rehabi3xtatlon Servxe of the Department of Health, EGucatlon, aqd Welfare (HEZ!) on a noncompetitxse bas1.s A news- paper arcxle forwarded to you by a conbtltuent refeyred to an HEW study of tnis matter. This study on the Service's contracting practices was made by the Office of General Services, a unit wathln the Office of the Assls- tant Secretary for Admlnlstratlon and Management, HEW. The newspaper artxcle stated that, during a period of Just over a year, cor,trdzts amounting to more than $18 mllllon had been awarded to private fxrms by the Service and that almost one half of the Service's procurements ball been made on a noncompetltlve basis. S*>rvlce offlclafs advised us, how- ever, that only a small portxon of the contrac& had been awarded to private firms on a noncompetltlve basis. They stated thar: almost all the noncompeti- tjve contracts had been awarded to State and Yocal goverrmcnts or voluntary ncnprofit 3r zdutxtlonzl lnstltutlons under cxxumstances where competition had been impracticable. The contention that' competltlon for such contracts had keen 1mpractLcablc appears reasonable on the basis of the followlpg XI- form&txon curnrshed to us by Service offlclals. r)f the contracts In the amount of about $15 8 mlfllon awarded in fiscal year 1970--for whxh Formal requests for proposals were required, that is, tbose excecdgng $2,5(';--$3.6 mlllron represenred contracts awarded on a com- petxts-'e bas?s, $8.2 mllllon represented contracts with State and local gov- ernmwts, of whxh almost all was spent for demonstrat?ons nf concepts related to tbc proposed family assistance program, and $3 6 mllllon represented renewal \ contr<lcts, of which most were with voluntary nonprofit organlzztions that had been supplyIng resettiement services to Cuban refugees. Of thz contracts awarded in the amount of $12.2 mullion on a noncompctl- t3ve basx, about $370,000 represented contracts awarded to profltmaklng orga- nlzatxons. >ervlce oifxials lr,formed us that these awards had been n;ade because of special clzcumstances such as the avallabllxty of only one contractor t-o ac~onnixn the work in the required txme frar 12 and the xmposslblllty of adequateiy deflnlng nz speclfylng m an xn7ltatlon to bid fh= detailed required services. DEFICIENCIES IN PRO$UREHFNT PRACTICES The HEW report, dated January 27, 1971, pointed out certain deflclencles in the Service's procurement practices a?d lrcluded various recommendations Lo correct the deflclenrres Following are t'le maJor flndlngs contained in the report and, according to officials of the Seivxe, the related actions taken on the fzndlngs 50 1 H A~‘!IVtP’ , v 1921-1971 B-164031(3) i Procurement plannrng FindIngs Therewas no timely, organized, systematx, a? coordinated method of a plan&g for procuremeni-betieen the S&vxce's pro&am offices and the con- tract branch. Although some progress had been mad? m 1970, almost one half of the,Servxe's procurements still were being made on a noncompetltnve basxs and mayy of the sole-source JustLffcatxons were m,ddequate 1 Action taken The Service establLshed a committee chalred bi the Associate Admmxstra- tor for Management to plan and coordinate program procurement needs. The Servxe believed that thrs planning device would enSure sufficient lead tzme for the contract branch to adequately prepare contract spccnflcacions, LO sollc$t and evaluate proposals, and to negotiate contracts and would thereby avoid the condltrons and czcumstances that could result in unJustlflable sole- source procurements. I Competitive practices Findings The Service vlolated Federal Procurement Regtlatlons by failure co (1) publxh proposed procurements In the Commerce Busxxss Dally m 60 percent of the requx-ed cases and ,2) issue formal requests fcr proposals on noncom- pcritlve procurements. Although the Service had solxcxted and received pro- posals from multiple sources on competitive procurements, xt failed to nego- txate with all bidders xn a competltxve range. Actxons taken The Servxe has emphasized to the operating employees its polxy of strxt adherence to Federal Procurement Regulations regarding the publlclzlng of pro- posed procurements and the solicitation of proposals. The Service has also begun to ncgotxate wi& gadders In those cases believed to warrant such action Pioposal evaluation Finding The Service used standard evaluation crlterla for competitive procurements. Evaluation criteria are used to determz.ne the speclflc areas of effort in which competing sources will be rated comparatively The Servxe appl-red the crxtcrxa uniformly to all projects wornout regard to the drfferxrg elements of xtdlvidual. proJects and the relative degree of rmportance of each element. 2 - l- B-164031(3) Actions taken - The Servlce bas revised it@3 evaluation criteria and the forms upon which evaluations of aroposals are documented. Postaward contract --- adminlsrratzon -FUX~UL~S Postaward admznistration of contracts was Inadequate and was limited to the processing and payment of contractor's invoices and vouchers. Fixed-price contracts included a provIsion for automatic progress payments. Payments made to voluntary nonprofit organlzatfons for the settlement of Cuban refugees were not adequately verlfzed. Also payments at maximum consultant rates were made automatically to certain experts. ActIon t&en The Servzce Included a new provision m all contracts requiring progress and flnanclal reports caurlng the contract performance. In addition, progress payments under frxed-price centracts were llmlted to small business concerns experiencing financial hardships. The Service also planned to verify all con- sultant rates before the rates were pald and to audit the payments made to voluntary nonprofit organzzatlons for the settlement of: Cuban refugees. Docuiientatlon --FLndln_g Documentation of contract flies wds inadequate. Nearly all the contract flies lacked evidence to lndlcate that any negotlatlons had been conducted by the contracting officer by telephone, correspondence, or conferences. Contract flies did not contain memozGndums of negotiations, records of the history of the procurement or background data, or documentation of business Judgments lead- ing up to and supporting the award of contracts. Actions taken The Service has developed or improved forms for documenting certain as- pects of the contract-award process For example, the Service has developed a form to document dll negotlatlons with prospective contractors. In addition, as part of ILS efforts to Improve methods for evaluating contract proposals, the Service revised Its forms to document the differing elements of indlvldual proJect proposais and included a narrative section to explain and support the rationale for selectmg contractors. 3 We have rot evaluated the actions taken or planned by the Service on the recommendatzons conta3ned In the HEW report. Offlcxals in the Office of the Assistant Secretary responsible for conducting the study and Issuing t'-.e report, however. expressed satlsfactxon as to the status of this matter. They also plan to perfom a follow-up survey late In October 1971. As part of our ongolng reviews of HEW actlvitles, we Intend to keep abreast of the progress being made by the Service In improving Its procurement practices We trust that the above lnformatlon will! serve the purpose of your Sincerely yours, ~~~~~~ Comptroller General ' of the Unl,ed States The Honorable John F. Selberllng Hour,e of Representatives
Government Transportation Requests Issued to Department of Labor Employees
Published by the Government Accountability Office on 1971-08-30.
Below is a raw (and likely hideous) rendition of the original report. (PDF)