oversight

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)

                   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