oversight

Contract Management: INS Contracting Weaknesses Need Attention from the Department of Homeland Security

Published by the Government Accountability Office on 2003-07-25.

Below is a raw (and likely hideous) rendition of the original report. (PDF)

             United States General Accounting Office

GAO          Report to the Committee on
             Government Reform, House of
             Representatives


July 2003
             CONTRACT
             MANAGEMENT
             INS Contracting
             Weaknesses Need
             Attention from the
             Department of
             Homeland Security




GAO-03-799
                                                July 2003


                                                CONTRACT MANAGEMENT

                                                INS Contracting Weaknesses Need
Highlights of GAO-03-799, a report to           Attention from the Department of
House Government Reform Committee
                                                Homeland Security



With annual obligations for goods               INS does not have the basic infrastructure—including oversight,
and services totaling $1.7 billion,             information, and an acquisition workforce—in place to ensure that its
the Immigration and Naturalization              contracting activity is effective, principally, as follows:
Service (INS) is one of the largest
of 23 entities coming into the
                                                    •   Oversight of procurement is difficult because procurement managers
Department of Homeland Security
(DHS). INS’s procurement                                are placed at a low level within the organization, and they do not
organization will continue to                           have the leverage to hold employees across the agency accountable
acquire goods and services under                        for compliance with procurement policies. Further, procurement
DHS.                                                    activities are not coordinated well because INS has not made
                                                        effective use of cross-functional teams—consisting of procurement,
GAO was asked to review INS’s                           program, budget, financial, and legal representatives—throughout
contracting processes to assess                         the acquisition process.
whether INS has an adequate
infrastructure to manage its                        •   Procurement managers are unable to make strategic decisions that
acquisitions and to determine
                                                        would allow them to maximize spending power across the agency
whether INS is following sound
contracting policies and                                because INS’s information systems do not provide visibility into
procedures in awarding and                              what is being spent agencywide for goods and services and who the
managing individual contracts.                          major vendors are.

                                                    •   INS’s acquisition workforce is struggling to manage effectively large
                                                        and mission-critical procurements. Despite growth in mission
GAO is recommending that DHS                            requirements and the overall workforce during the past decade, the
take several actions to mitigate
procurement risk as it integrates
                                                        agency has not been able to attract and retain the necessary
INS’s procurement function. DHS                         contracting staff. Further, INS lacks a strategic acquisition
should assess and develop                               workforce plan to help identify the knowledge, skills, and abilities
strategies to improve oversight,                        the agency needs to ensure it can meet current and future
strategic use of information,                           requirements.
workforce planning, and contract
management. In written comments                 In addition, acquisition planning, competition, and contractor monitoring
on a draft of this report, DHS                  have been inadequate on some large contracts. The lack of adequate
agreed with the recommendations                 advanced planning for several detention center contracts and one large
and indicated that it will proceed in           information technology management contract limited opportunities for full
accordance with them.
                                                and open competition. Contractor performance monitoring has, in some
                                                cases, been inadequate to provide assurance that INS received the goods or
                                                services it paid for or that quality standards were met. GAO did not find
                                                significant or widespread compliance problems with other contract criteria
                                                we reviewed.

                                                Because INS has become a significant part of DHS and brings with it a
                                                procurement function that needs attention, it is imperative for DHS
                                                leadership to address these problems early in the development of the new
                                                department.
www.gao.gov/cgi-bin/getrpt?GAO-03-799.

To view the full product, including the scope
and methodology, click on the link above.
For more information, contact David Cooper
at (617) 788-0555 or cooperd@gao.gov.
Contents


Letter                                                                                   1
               Results In Brief                                                          2
               Background                                                                3
               INS Lacks the Infrastructure Needed to Manage Its Procurement
                 Activities Effectively                                                  5
               Acquisition Planning, Competition, and Contractor Monitoring
                 Have Been Inadequate in Some Cases                                     15
               Conclusion                                                               21
               Recommendations for Executive Action                                     22
               Agency Comments                                                          23

Appendix I     Scope and Methodology                                                    25



Appendix II    Comments from the Department of Homeland
               Security                                                                 28



Appendix III   Contract File Review Criteria                                            29



Appendix IV    List of Active Contract Files Reviewed ($100 or
               More), as of April 3, 2002                                               31



Appendix V     Warrant Authority of INS Contracting Officers                            33



Table
               Table 1: Acquisition Workforce Occupation Codes                          26


Figures
               Figure 1: Fiscal Year 2002 Contract Obligations                           4
               Figure 2: Organization of the INS                                         7
               Figure 3: INS Procurement Dollars                                        12




               Page i                                       GAO-03-799 Contract Management
Abbreviations

COTR              Contracting Officer’s Technical Representative
DHS               Department of Homeland Security
FAR               Federal Acquisition Regulation
INS               Immigration and Naturalization Service
IPRO              Intelligent Procurement System
STARS             Service Technology Alliance Resources




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Page ii                                                GAO-03-799 Contract Management
United States General Accounting Office
Washington, DC 20548




                                   July 25, 2003

                                   The Honorable Tom Davis
                                   Chairman
                                   The Honorable Henry A. Waxman
                                   Ranking Minority Member
                                   Committee on Government Reform
                                   House of Representatives

                                   In January 2003, we designated the implementation and transformation of
                                   the Department of Homeland Security (DHS) as high-risk due to the size
                                   and complexity of the effort, the existing challenges faced by the
                                   components being merged into the department, and the potentially serious
                                   consequences should DHS fail to effectively carry out its mission.1 DHS,
                                   which is expected to have some of the most extensive acquisition
                                   requirements in government, is currently in the process of integrating the
                                   mission functions and acquisition practices of 23 incoming entities. The
                                   Immigration and Naturalization Service (INS) is one of the largest agencies
                                   coming under the new department, with a budget of $6.1 billion and
                                   contracts for goods and services valued at $1.7 billion in fiscal year 2002.
                                   INS’s procurement organization will continue to acquire goods and
                                   services under DHS.

                                   Given the heightened importance of INS’s mission due to threats to the
                                   security of our nation, you asked us to review INS’s contracting processes.
                                   Specifically, we assessed whether INS has an adequate infrastructure—
                                   including oversight, information, and workforce—to manage its
                                   acquisitions. In addition, you asked us to determine whether INS is
                                   following sound contracting policies and procedures in awarding and
                                   managing individual contracts.

                                   We conducted our work at INS headquarters and administrative centers.
                                   We also reviewed 42 randomly selected contracts for compliance with key
                                   criteria in several functional areas of contract management. Specific
                                   information on our scope and methodology is in appendix I. We performed




                                   1
                                    U.S. General Accounting Office, Major Management Challenges and Program Risks—
                                   Department of Homeland Security, GAO-03-102 (Washington, D.C.: Jan. 1, 2003).



                                   Page 1                                           GAO-03-799 Contract Management
                   the bulk of our audit work prior to INS’s becoming part of DHS. For
                   readability, we refer to INS in the present tense in this report.


                   INS does not have the basic infrastructure—including oversight,
Results In Brief   information, and an acquisition workforce—in place to ensure that its
                   contracting activity is effective. Procurement managers are placed at a low
                   level within the organization, and they do not have the leverage to hold
                   employees across the agency accountable for compliance with
                   procurement policies. INS has not made effective use of cross-functional
                   teams—consisting of procurement, program, budget, financial, and legal
                   representatives—throughout the acquisition process. Procurement
                   managers are unable to make strategic decisions that would allow them to
                   maximize spending power across the agency because INS’s information
                   systems do not provide visibility into what is spent for goods and services
                   agencywide and who the major vendors are. In addition, while INS’s
                   mission requirements and the overall workforce have greatly expanded in
                   the past decade, the agency has not been able to attract and retain the
                   contracting staff needed to effectively manage the increased workload.
                   INS has not consistently ensured that acquisition personnel are adequately
                   trained to do their jobs. Further, INS lacks a strategic acquisition
                   workforce plan to help identify the knowledge, skills, and abilities the
                   agency needs to ensure it can meet current and future requirements.

                   Our review of 42 contracts, randomly selected from a total of 185 active
                   contracts, identified problems in two key areas: acquisition planning and
                   contractor monitoring. The lack of adequate advanced planning for several
                   detention center contracts and one large information technology
                   management contract limited opportunities for competition. In addition,
                   contractor performance monitoring has, in some cases, been inadequate to
                   assure that INS received the goods or services it paid for or that quality
                   standards were met. We did not find significant or widespread compliance
                   problems with other contract criteria we reviewed.

                   The creation of DHS brings an opportunity to address the issues we have
                   identified in this report. We are recommending that the Secretary of DHS
                   direct the Under Secretary for Management to take several actions to
                   mitigate these problems as the INS procurement function is integrated into
                   DHS. In written comments on a draft of this report, DHS agreed with our
                   recommendations and indicated that it will proceed in accordance with
                   them. DHS comments are included in their entirety in appendix II.




                   Page 2                                       GAO-03-799 Contract Management
             As of March 1, 2003, INS ceased to exist as an agency.2 It is now in the
Background   process of being incorporated into DHS. INS’s multi-faceted mission
             includes securing the borders; enforcing immigration laws; and providing
             immigration services, such as work permits, naturalization, and asylum.
             Under DHS, the INS mission has been split between three bureaus within
             the department,3 and the INS procurement organization will continue to
             procure goods and services under the Bureau of Immigration and Customs
             Enforcement.

             In fiscal year 2002, INS contracted for $1.7 billion in goods and services.
             The headquarters procurement office is responsible for procuring
             information technology, as well as goods and services of a general nature
             that are used agencywide. DHS continues to operate the three INS
             administrative centers (Dallas, Texas; Laguna Niguel, California; and
             Burlington, Vermont) that were formerly a part of INS. The administrative
             centers have responsibility for awarding and managing INS’s detention
             center management contracts and contracts for goods and services for INS
             field offices. Figure 1 shows the breakdown of procurement responsibility
             between INS headquarters and the administrative centers in fiscal year
             2002.




             2
              Section 471 of the Homeland Security Act of 2002 (P.L. 107-296, enacted Nov. 25, 2002)
             abolished the INS following the transfer of its functions to DHS. The President’s
             reorganization plan transferred the functions of the INS to the new department on March 1,
             2003.
             3
              The three bureaus are the Bureau of Customs and Border Protection, the Bureau of
             Immigration and Customs Enforcement, and the Bureau of Citizenship and Immigration.




             Page 3                                                GAO-03-799 Contract Management
Figure 1: Fiscal Year 2002 Contract Obligations




Note: These amounts include $600 million in goods and services that were provided by other
government agencies through interagency agreements.


INS also has more than 600 field offices across the United States. The field
offices’ authority to award contracts is generally limited to $25,000 for
open market purchases and $100,000 for delivery orders against existing
contracts. Field office contract obligations totaled $66.5 million in fiscal
year 2002.4

DHS officials are currently working out the details of how to merge the
procurement functions of the incoming agencies, including INS. A Chief
Procurement Officer was recently appointed and will report to the Under
Secretary for Management. In preparing to implement DHS-specific
procurement policies, a working group is drafting a DHS supplement to
the Federal Acquisition Regulation (FAR). DHS officials are currently
assessing the incoming agencies’ (1) major procurements to determine
whether duplication exists and to identify ways of maximizing the DHS’s
purchasing power by consolidating like procurements where feasible; (2)


4
 For the purposes of this report, “field offices” refer to sites receiving administrative
services from INS’s administrative centers. Field offices include INS’s districts, sectors, and
suboffices. The $66.5 million is a component of the $1.7 billion in contract obligations cited
on p. 1.




Page 4                                                     GAO-03-799 Contract Management
                            procurement and financial systems to determine whether any of the
                            existing systems are adequate to meet the department’s future needs; and
                            (3) acquisition workforce to identify gaps and the need for DHS-specific
                            training requirements.


                            INS does not have in place a basic infrastructure to effectively manage its
INS Lacks the               contracts. INS procurement managers lack leverage to ensure that
Infrastructure Needed       employees comply with procurement policies, and managers cannot make
                            strategic procurement decisions due to the absence of comprehensive and
to Manage Its               reliable information about the goods and services being procured across
Procurement                 the agency. Further, INS’s acquisition workforce is not adequate to
                            manage the agency’s increased mission requirements. INS has not
Activities Effectively      developed a strategic acquisition workforce plan to help ensure that
                            acquisition personnel across the agency have the right skills and that gaps
                            in the workforce are addressed proactively.


INS Procurement             INS procurement managers have little oversight and control over
Managers Lack Leverage to   procurement activities throughout the agency, a situation that increases
Oversee Contracting         the risk that taxpayers are not getting the best value for their dollars. Our
                            prior work has identified a number of factors that promote efficient,
Activity Effectively        effective, and accountable procurement.5 We found that successful,
                            leading companies had reengineered their procurement practices to move
                            from a fragmented approach to a more coordinated and strategically
                            oriented approach. By elevating the procurement function in the structure
                            of the organization and establishing strong oversight mechanisms, these
                            companies were able to make and implement strategic decisions to
                            improve companywide outcomes. In addition, the companies ensured that
                            the procurement function was integrated across the organization through
                            the use of cross-functional teams, consisting of procurement, program,
                            and financial personnel.

                            Responsibility for acquiring goods and services is dispersed throughout
                            INS headquarters, administrative centers, and field offices. Headquarters
                            procurement managers have responsibility for some agencywide
                            functions, such as providing policy, overseeing compliance with
                            procurement laws and regulations, and preparing required reports on



                            5
                             U.S. General Accounting Office, Best Practices: Taking a Strategic Approach Could
                            Improve DOD’s Acquisition of Services, GAO-02-230 (Washington, D.C.: Jan. 18, 2002).




                            Page 5                                               GAO-03-799 Contract Management
agencywide procurement activities. These managers also review proposed
administrative center contracts of more than $500,000.6 However, they
have little insight into transactions conducted by INS’s field offices.
Headquarters procurement managers were only able to provide us
summary data for field office transactions, because they do not have
information on the number and dollar amount of individual transactions.

In addition, the headquarters procurement office is placed far down in the
organizational structure, buried under several layers of management. This
placement increases the likelihood that the procurement function will not
receive attention from the highest levels of the organization. As illustrated
in figure 2, the Bureau Procurement Chief reports at a lower
organizational level than Files and Forms Management. At the
administrative centers, the procurement function is combined with
property management.




6
 Of the administrative center contracts active in November 2002, more than half—39 of
68—were valued at more than $500,000.




Page 6                                               GAO-03-799 Contract Management
Figure 2: Organization of the INS




                                    INS headquarters procurement managers lack the leverage to ensure that
                                    administrative center and field office contracting personnel follow INS
                                    procurement directives and policies. While contracting officers in these
                                    offices derive their contracting authority from headquarters, they report
                                    through the administrative center or field office chain of command, not to
                                    headquarters procurement managers. This situation has been especially
                                    problematic in the field offices, which rely heavily on “collateral duty”
                                    contracting officers who perform contracting duties in addition to their
                                    mission-related responsibilities and who are not career contracting
                                    officers. The performance appraisals of the collateral duty contracting
                                    officers reflect only their mission-related duties and do not address their



                                    Page 7                                        GAO-03-799 Contract Management
procurement activities. For example, the performance rating of a Border
Patrol agent, who is a collateral duty contracting officer, is based on
whether he accomplishes the Border Patrol’s mission and does not take
into account whether he follows INS’s procurement procedures.

Further, according to the Assistant Commissioner for Administration, the
procurement office has little leverage to stop employees from entering into
unauthorized commitments.7 In fiscal year 2002, INS had 60 unauthorized
commitments valued at more than $700,000. For example, an employee
arranged for a vendor to conduct a training class without first contacting
the procurement office to award a contract for this service, for which INS
ended up paying $15,800. In another case, an employee asked a
subcontractor to provide $3,181 in computer upgrade services. While these
services may have been necessary, only warranted contracting officers
have authority to enter into and modify contracts with vendors.
Unauthorized commitments are counterproductive in that they require
additional time and effort from procurement personnel to ratify the
commitments and to work with the parties involved to avoid future
occurrences.8 Procurement officials have attempted to educate and train
employees about proper procedures, but the officials expressed
frustration that unauthorized commitments continue to occur.

INS has made limited use of internal controls, such as internal reviews and
performance goals and measures, that could help monitor procurement
activity across the agency. For example, while some officials said that the
Office of Internal Audit’s periodic reviews are helpful in identifying
problem areas, others noted that these reviews are not thorough or
frequent enough (each office is scheduled for review once every 3 years).
In addition, while headquarters and administrative centers established
performance goals and measures to help evaluate the effectiveness of the
procurement function, these efforts have not been effective. A consulting



7
 Under FAR 1.602-3, an unauthorized commitment is an agreement with a vendor that is
not legally binding on the government because the government representative who placed
the order lacked the authority to enter into the agreement on behalf of the government,
such as by lacking a written contracting officer’s warrant or exceeding the specified
authority of a warrant.
8
  Ratification involves a determination by the official authorized to ratify unauthorized
commitments that the resulting contract would have otherwise been proper if made by an
appropriate contracting officer, that the price of the unauthorized commitment is fair and
reasonable, that payment is recommended (with concurrence from legal counsel), and that
funds are available and were available at the time the unauthorized commitment was made.




Page 8                                                GAO-03-799 Contract Management
                           firm helped the INS headquarters procurement office set goals, such as
                           obligating funds in a timely manner; providing clear, consistent customer
                           guidance; maximizing private and public sector resources; and complying
                           with statutory requirements. Similarly, the administrative centers
                           attempted to standardize processes and establish time frames for various
                           procurement services. However, INS headquarters officials told us that
                           they were unable to monitor whether they achieved their goals because
                           the data and analyses necessary to track progress were unavailable.
                           Administrative center procurement managers said that the time frames
                           they were given were not meaningful, as the targets set were very low.

                           Further, INS has not made effective use of cross-functional teams—
                           consisting of procurement, program, legal, budget, and financial
                           representatives—throughout the acquisition process. Stakeholders outside
                           of the procurement offices are often involved only on an ad hoc basis.
                           Personnel across the agency told us that the relationship between program
                           and procurement officials has been particularly problematic and that these
                           offices often have not worked collaboratively to define project
                           requirements and perform other acquisition-related functions. In fact, in
                           some cases, the relationship has been adversarial. One INS procurement
                           official said the program offices sometimes “throw the requirements over
                           the transom,” leaving the procurement office to try to meet the program
                           office’s needs in a vacuum. Procurement managers said that they have
                           difficulty getting program offices to comply with procurement
                           requirements such as planning acquisitions, monitoring contractor
                           performance, and attending required training. Some managers attributed
                           the problem to INS’s culture, where program offices have traditionally
                           been highly independent.

                           On the other hand, program officials stated that procurement personnel
                           are not customer-oriented or proactive in finding ways to meet program
                           needs. Program officials said that they are unsure of their roles and
                           responsibilities in the procurement process and that they lack needed
                           procurement guidance. For example, one program manager said that
                           procurement personnel expect her office to choose a contract type or to
                           complete independently contracting-related paperwork. She believes this
                           responsibility is best left to personnel with procurement expertise.


INS Lacks Information It   INS managers are unable to make strategic procurement decisions
Needs to Make Strategic    because they do not have sufficient information about the goods and
Procurement Decisions      services being procured across the agency and who their major vendors
                           are. In the past, we have reported that when leading companies obtain


                           Page 9                                       GAO-03-799 Contract Management
improved knowledge about the goods and services that are being
procured, these companies can create significant cost savings and service
improvements.9 Agencies need the capability to analyze how much is being
spent on each good and service—through the use of interfaced
procurement and financial systems—so the agencies can identify
opportunities to reduce costs, improve service, and better manage their
suppliers.

INS procurement personnel primarily use two mechanisms to collect
procurement data. The Intelligent Procurement System (IPRO) is an
automated system used to generate solicitation and contract documents
and to track basic procurement data such as requisition numbers,
obligations, date of contract awards, and the amount of time to process
requisitions. Procurement personnel also use a variety of informal data
collection tools—including manual entry logbooks, spreadsheets, and
stand-alone databases—to track administrative information, such as
contract status, and to provide data to the Federal Procurement Data
System.10 However, the data collected through these means are not
comprehensive or reliable. Contract administration information, such as
contract closeout status, is often missing and contract modifications are
often not up to date. In addition, IPRO contains weak internal edit checks
that render the data potentially inaccurate, and it does not automatically
populate forms and fields with existing data. INS internal audits11 have
reported that administrative center officials have not been proactive in
giving feedback to field staff who input the data so that errors can be
corrected.

Because INS cannot aggregate procurement data across the agency, it
cannot gain the strategic visibility into purchasing behavior required to
negotiate vendor discounts or otherwise leverage buying power.
Procurement data are stored in separate regional databases or files on
local networks that are inaccessible to users in other regions.
Procurement managers frequently rely on active contracts lists--manual



9
 U.S. General Accounting Office, Best Practices: Taking a Strategic Approach Could
Improve DOD’s Acquisition of Services, GAO-02-230 (Washington, D.C.: Jan. 18, 2002) and
Best Practices: Improved Knowledge of DOD Service Contracts Could Reveal Significant
Savings, GAO-03-661 (Washington, D.C.: June 9, 2003).
10
  The Federal Procurement Data System is the central repository of statistical information
on federal contracting.
11
     INS refers to these audits as “INSpect reviews.”




Page 10                                                 GAO-03-799 Contract Management
                             spreadsheets separately maintained by the administrative centers and
                             headquarters--for information about ongoing procurement activity. When
                             we requested data on active contracts, INS procurement managers had to
                             separately request this information from each administrative center and
                             headquarters. Further, these lists contain duplicative records and, in some
                             instances, contradictory data about contract expenditures. INS managers
                             stated that they have difficulty developing INS budget submissions
                             because of the absence of useful procurement data.

                             Even if basic information, such as the active contracts lists, were accurate,
                             INS procurement managers would be hindered in their ability to make
                             strategic decisions about agencywide procurements because IPRO does
                             not interface with INS’s financial management system. If the systems were
                             interfaced, procurement managers would have improved access to
                             financial data, such as real-time reports on obligations and payments for
                             goods and services. Managers could then analyze spending patterns to
                             determine what they are buying—and from whom—and use this
                             information to more confidently plan future spending.


INS’s Acquisition            INS’s mission and overall workforce have expanded greatly in the past
Workforce Is Inadequate to   decade, and spending on contracts has also increased significantly.
Manage Increased             However, the size of INS’s contracting workforce has not grown in
                             sufficient numbers to manage this increased workload effectively. Further,
Workload                     INS has not ensured that its acquisition personnel are adequately trained
                             to do their jobs. A strategic acquisition workforce plan could help INS
                             ensure that acquisition personnel across the agency have the right skills
                             and that gaps in the workforce are addressed proactively.

                             From 1997 to 2002, INS’s workload increased greatly and its overall
                             workforce expanded by 38.5 percent, from 25,750 to 35,676. In conjunction
                             with the increased workload, procurements almost doubled, as shown in
                             figure 3.




                             Page 11                                       GAO-03-799 Contract Management
Figure 3: INS Procurement Dollars




Despite this growth, the procurement offices at headquarters and the
administrative centers remain understaffed. While INS’s overall acquisition
workforce has grown, from 101 in 1997 to 148 in 2002, the agency is still
short of critical contracting officer positions. 12 Two outside studies, in
2000 and 2001, concluded that INS’s acquisition workforce was
understaffed. One study determined that the understaffing caused delays
in completing required tasks, and another recommended an additional 17
positions in the administrative center procurement offices. INS
headquarters and administrative center procurement offices have
attempted to address this understaffing by requesting additional positions
and trying to fill the procurement positions they already have in place.
However, neither effort has been successful.

Headquarters officials requested 13 additional contracting officers in 2001;
11 in 2002; and 12 in 2003; and the administrative centers also requested
additional positions. However, procurement officials told us that these



12
  The acquisition workforce encompasses 14 different occupation codes, 2 of which
comprise these contracting officer positions. Appendix I lists the codes we used in this
report to define the acquisition workforce.




Page 12                                                 GAO-03-799 Contract Management
requests were denied.13 Further, the agency has not been able to fill many
of its existing vacancies. As of March 2003, 14 authorized procurement
positions were vacant in headquarters. Several of these vacancies have
remained open for extended periods of time—one up to 2 years.
Procurement officials said that they have trouble recruiting college
graduates and experienced acquisition personnel because of the
perception of INS as a dysfunctional organization and the uncertainty of
the transition to DHS. They indicated that many of the applicants they get
are not qualified. In addition, the procurement office does not use human
capital flexibilities—such as recruitment and retention bonuses—made
available by the Office of Personnel Management. A headquarters
procurement official said that his office considered using a relocation
bonus but determined it was too expensive. He planned to fill six of the
current vacancies with individuals from the outstanding scholar program;
however, as of June 2003, none of the positions had been filled.14 INS
procurement officials stated that 55 contracting positions were filled at the
end of fiscal year 1998, and that as of May 2003 only 56 contracting
positions were filled.

Our prior work has shown that high performing organizations identify
their current and future human capital needs and then create strategies—
such as targeted investments in employees or recruiting and retention
bonuses—in acquisition workforce plans. 15 These plans enable the
organization to determine the critical skills and competencies needed to
achieve future results. A workforce plan could, for example, allow INS to
correct the current imbalance of contracting skills among the
administrative centers. INS has four warrant levels that grant contracting
officers authority to contract on behalf of the agency and that specify the
limits of this authority.16 The Burlington administrative center has five
employees with warrant levels of three or higher, which enable them to



13
  INS budget documents did not provide sufficient detail for us to determine at what level
the requests for additional procurement personnel were denied, because the distinction
between procurement positions and other support positions is not maintained in the
budget documentation. Further, the administrative center requests are combined into one
request and submitted to INS headquarters.
14
  The outstanding scholar program is intended to allow agencies to quickly hire college
graduates with superior academic credentials for entry-level positions.
15
 U.S. General Accounting Office, High Risk Series: Strategic Human Capital
Management, GAO-03-120 (Washington, D.C.: Jan. 1, 2003).
16
     See appendix V for description of individual warrant limits.




Page 13                                                    GAO-03-799 Contract Management
award open-market contracts for at least $1 million and to make unlimited
buys from the Federal Supply Schedule.17 In contrast, for a year, the Dallas
administrative center had only one warrant-level-four officer and one
level-two officer. When the level-four officer was out of the office, no
other employee had the authority to award a contract of more than
$100,000. The center has since hired another specialist with a level-four
warrant.

Another factor affecting INS’s acquisition workforce is the administrative
centers’ use of term appointments.18 Term appointments are intended to
address short-term workforce needs; however, procurement managers
have used these positions to fulfill their long-term needs because of a lack
of funding for permanent positions. As a result, INS has committed
resources and time to train employees who cannot be retained by the
agency. A consulting firm recommended ending the use of short-term
positions because of reduced productivity, high turnover rates, and
constant training of new term employees. Administrative center
procurement officials said that they had requested several times that their
term appointments be converted to permanent positions, but that no
action was taken.

Further, INS procurement managers have not ensured that contracting
officers receive consistent training across the agency. Internal audits in
2000 and 2001 revealed that some contracting officers in the administrative
centers and field offices had not completed the 40 hours of annual training
that INS requires. In response, INS began tracking contracting officers’
training and sending reminders to complete training before the end of the
year. At the end of calendar year 2001, procurement officials rescinded the
warrants of contracting officers who had not met the training requirement,
and additional warrants were rescinded at the end of calendar year 2002.
In addition, inconsistencies in the training budgets for procurement
personnel administrative center and headquarters have resulted in
disparate training for new hires across INS. For example, one


17
  The Federal Supply Schedule offers a large group of commercial products and services,
ranging from office supplies to information technology services.
18
  Term appointments are temporary appointments that are intended to last the length of a
project of more than 1 year, and they can be renewed up to 4 years. At the end of the 4
years, the appointment is terminated. According to an INS official, the employee may not
apply for another term appointment with a similar job description. Term employees receive
the same pay, benefits, and training requirements as permanent employees with the same
job description.




Page 14                                               GAO-03-799 Contract Management
                        administrative center received only enough funding to provide the
                        required 40 hours of annual training for newly hired personnel. However,
                        each of four recent hires at the headquarters procurement office received
                        400 hours or more of training over a 2-year period. If this amount of
                        training is needed for each new hire, agency planning could help ensure
                        that sufficient resources are available to provide needed training to all new
                        staff in a more consistent manner.

                        Finally, we found that contracting officers are not provided consistent
                        training due to a lack of centralized coordination of training materials. For
                        example, each administrative center created and conducted its own
                        training program on IPRO, resulting in duplication of effort. Similarly,
                        although INS created one purchase card procedures manual,
                        administrative center and headquarters procurement offices created their
                        own training presentations and supporting materials. INS officials
                        commented that procurement training within the INS contracting
                        community is affected by the geographic dispersion of the procurement
                        function as well as the placement of the procurement function within
                        three separate agency chains of command. They noted that INS recently
                        began a purchase card refresher training program that has provided
                        training to over 1,000 agency employees since January 2003.


                        Our review of 42 contracts, randomly selected from a total of 185 active
Acquisition Planning,   contracts awarded by headquarters and each administrative center, found
Competition, and        that INS did not adequately plan for several of its large acquisitions or
                        effectively involve key stakeholders, such as the program and legal offices.
Contractor              In some cases, this lack of advanced planning and collaboration limited
Monitoring Have Been    opportunities for full and open competition. Further, INS did not
                        consistently monitor contractor performance on many of the contracts we
Inadequate in Some      reviewed, meaning that INS could not be assured that it received the goods
Cases                   and services it paid for or that the contractors met the quality standards in
                        the contract. We did not find significant or widespread compliance
                        problems with FAR requirements and INS’s own acquisition policies in the
                        areas of market research, evaluation of contractors’ proposals,
                        documentation of source selection decisions, and contract modifications.19
                        The contracts we reviewed are listed in appendix IV.




                        19
                          Our scope and methodology section, in appendix I, discusses in more detail how we drew
                        the sample of contracts and appendix III lists the criteria we used in our file review.




                        Page 15                                              GAO-03-799 Contract Management
For Several Large         The FAR establishes uniform policies and procedures for the acquisition
Contracts, Acquisition    of supplies and services by all executive agencies, including INS. It
Planning Was Inadequate   requires acquisition planning in order to promote full and open
                          competition and to ensure that the government meets its needs in the most
to Ensure Full and Open   effective, economical, and timely manner.20 During the acquisition planning
Competition               process, the efforts of all personnel responsible for an acquisition are to be
                          coordinated and integrated through a comprehensive plan for fulfilling the
                          agency’s requirement in a timely manner and at a reasonable cost. An
                          overall strategy for managing the acquisition is required to be developed
                          well in advance of the planned contract’s award date. The acquisition
                          planning process requires a close partnership between the program and
                          contracting offices and involvement of other key stakeholders, such as
                          legal and financial personnel. When agencies fail to adequately plan for
                          acquisitions, they risk limiting the opportunity for full and open
                          competition and receiving inadequate goods and services at a higher cost.

                          In three of the five detention facility contracts that we reviewed, INS failed
                          to plan adequately for its acquisitions and to involve key stakeholders
                          effectively. As a result, short-term sole-source contracts were continuously
                          awarded to incumbent contractors until a permanent contract could be
                          competitively awarded. These “bridge” contracts were awarded without
                          the full and open competition normally required for the solicitation and
                          award of government contracts. 21

                          For example, the Dallas administrative center’s original contract for the
                          Houston Detention Facility expired on September 30, 1998. The
                          solicitation for a new contract was not issued until August 5, 1998, which
                          did not allow adequate time for environmental assessments and any new
                          construction. As a result, a bridge contract was awarded and is still in
                          place. The contracting officer justified this sole source contract based on
                          “unusual and compelling urgency” (the incumbent contractor had the only
                          detention facility in the area with the necessary capacity). However, the
                          justification documentation did not explain why planning did not occur
                          earlier in the procurement process. It merely stated that in the future, the
                          program office would be required to ensure that the acquisition process
                          was started 2 to 3 years in advance of the contract’s expiration date. INS


                          20
                               FAR 7.102.
                          21
                            Some of these bridge contracts may have been modifications to the incumbent
                          contractor’s expiring contract in order to continue performance until the competitive
                          award of a successor contract.




                          Page 16                                                GAO-03-799 Contract Management
awarded the sole source contract despite the opinion of the INS General
Counsel’s office that the basis for using other than full and open
competition was not legally sufficient.22

In another example, in May of 1998, the Laguna Niguel administrative
center announced the need for a larger detention facility in San Diego.
Because the existing contract was due to expire shortly, there was
insufficient time to complete routine environmental assessments and
evaluations of proposals for new facility space. As a result, INS awarded a
1-year sole source contract, again citing “unusual and compelling” need as
justification. Only the incumbent contractor was capable of providing the
required space in the necessary timeframe.

Historically, INS has had great difficulty in stimulating competition for
detention center contracts—even when advanced planning was done—
particularly in situations where a contractor has an established facility in
the locale. For example, when the Dallas administrative center issued a
solicitation for its Laredo detention facility contract in March 1997, only
one contractor, the incumbent, submitted a proposal, leading the
procurement office to refer to this contract as “essentially a sole source
acquisition.” Likewise, the incumbent contractor was the only offeror
when the Burlington administrative center awarded its current Newark
Detention Facility contract. A 1998 INS memo stated that, as a result of the
difficulties in stimulating competition, “negotiations and award of
attractively priced [detention facility] contracts has become increasingly




22
  FAR 6.301 states that contracting without providing for full and open competition shall
not be justified on the basis of a lack of advanced acquisition planning by the requiring
activity. This reflects language in the Competition in Contracting Act of 1984, 41 U.S.C.
253(f)(5)(A) that in no case may an executive agency enter into a contract for property or
services using other than competitive procedures on the basis of the lack of advance
planning. In this example, the General Counsel’s office pointed out that the lack of
collaboration between the program and the procurement offices “placed contracting in an
untenable and precarious position” and cited a similar situation with a 1996 Denver
detention center contract, which was also awarded by the Dallas administrative center.




Page 17                                                GAO-03-799 Contract Management
more difficult.” Under the authority of the Attorney General, INS is
developing longer-term contracts for its detention centers.23

Inadequate acquisition planning also limited the opportunity for
competition under a large information technology support contract for
INS’s Entry/Exit program.24 This contract provides program management
and support services to INS for development of its Entry/Exit system, an
automated system for collecting information about foreign nationals
entering and exiting the United States and identifying those that have
overstayed their visits. The Department of Justice contracting officer, who
initially awarded the contract, told us that he was provided with the
program requirements March 8, 2002, only 3 weeks before the contract had
to be awarded. Just 5 months after award, INS modified the contract to
provide additional services, increasing the base-year value of the contract
by over $4 million, to $5.3 million. The INS General Counsel’s office did
not concur with modifying the contract, citing the “dramatic” mission
expansion and inadequate program planning. Nevertheless, INS
implemented the modification. INS procurement officials stated that they
are currently re-competing the contract, based on their continuing need
for technology support for the program.

In contrast, the Service Technology Alliance Resources (STARS) contract,
a multiple award contract designed to provide INS with a full range of
information technology products and services, included the most
extensive acquisition planning documentation of any contract we
reviewed. Headquarters procurement officials indicated this was a high-
visibility procurement and therefore received more upfront planning than
is normally the case. The procurement was also much larger than usual, at
slightly more than $3 billion.

In some cases, the lack of collaboration between procurement and
program officials hindered acquisition planning, resulting in failure to



23
  The 2001 Department of Justice Appropriations Act (P.L. 106-553, app. B, section 119, at
114 Stat. 2762A-69) authorized the Attorney General, notwithstanding any other provision
of law, to enter into contracts and other agreements, of any reasonable duration, for
detention or incarceration space or facilities, including related services, on any reasonable
basis. Because INS is no longer part of the Department of Justice, DHS should determine
whether this authority still applies to its INS procurement function and, if not, whether
similar authority is needed to continue developing long-term detention center contracts.
24
  On April 29, 2003, the Secretary of DHS renamed the Entry/Exit system the U.S. Visitor
and Immigrant Status Indication Technology System (U.S. VISIT).




Page 18                                                  GAO-03-799 Contract Management
                           obtain competition. For example, INS’s contract for uniforms for the
                           Border Patrol, Detention and Removal, and Inspection and Immigration
                           offices was due to expire in 1999. Procurement officials began to work
                           with these program offices to develop requirements for a new contract.
                           However, due to difficulties in getting the program offices actively
                           involved in developing the requirements and evaluating contractor
                           proposals, the procurement office had to award a sole source bridge
                           contract until a new contract could be competitively awarded in
                           December 2000. The uniform contract is currently valued at $32 million.

                           Another example of the lack of collaboration in acquisition planning
                           occurred when the contract for the Houston detention facility was about
                           to expire. According to the Assistant Commissioner for Administration,
                           because the program office was unresponsive to questions posed by
                           potential bidders, the contracting officer was faced with either issuing a
                           sole source contract or not having a detention facility available in time to
                           meet program needs. Therefore, he awarded a temporary sole source
                           contract until a long-term contract could be competitively awarded.


INS Has Not Sufficiently   It is important that agencies monitor contractors’ performance to ensure
Monitored Contractor       that the government receives the goods and services it contracts for and
Performance                that quality standards in the contract are met. In addition, the FAR calls
                           for quality assurance surveillance plans to be prepared in conjunction with
                           the statement of work, when necessary, to determine that the supplies or
                           services conform to contract requirements. 25 The plans should specify all
                           work requiring surveillance and the method of inspection. Further, the
                           FAR requires that the government inspection be documented.

                           We found inconsistent attention to monitoring contractor performance at
                           INS. Headquarters procurement personnel told us that their focus is
                           primarily on pre-award activities. The Assistant Commissioner for
                           Administration characterized the contracting function as an “obligation
                           machine” that is able to award contracts for goods and services but is not
                           adequately staffed to oversee the contracts once they are awarded.
                           Officials at one administrative center commented that their method of
                           contract administration is reactive versus proactive, citing several
                           examples where they found out about contract problems months after
                           they occurred. We found evidence of inadequate contractor performance


                           25
                                FAR 46.401.




                           Page 19                                        GAO-03-799 Contract Management
monitoring in many of the contract files we reviewed, as in the following
examples:

•   The Houston Detention Facility contract was awarded in 1998. A June
    1999 INS internal audit report noted that the contractor’s performance
    did not meet all the criteria in the contract and that the Contracting
    Officer’s Technical Representative (COTR) was not performing the
    required functions as outlined in the contract. For example, the COTR
    was not conducting quality assurance reviews or maintaining records
    to validate whether services were received. COTR surveillance of the
    contractor is now taking place, but not every month as required under
    the terms of the contract. The contracting office, however, sends the
    COTR e-mail reminders when the monthly reports are not received.

•   Under the Laguna Niguel administrative center’s janitorial services
    contract, the contractor did not clean the facility’s kitchen, as called for
    in the contract, for an entire year. This service was being performed by
    detainees at the program office’s request, but because the COTR failed
    to notify the contracting officer of this change, the contract was not
    modified to reflect the revised requirements. Thus, no mechanism was
    in place to ensure that the government was billed for services actually
    provided. In fact, the invoices and receiving reports had been
    approved, allowing the contractor to be paid $28,000 for services never
    provided. Administrative center officials told us that, because the
    COTR’s primary job was a time-consuming one, the COTR had little
    time to dedicate to his contracting monitoring responsibilities. After
    becoming aware of the change, the contracting officer modified the
    contract and the contractor agreed to reimburse INS the amount it was
    overpaid.

In contrast, appropriate surveillance at the Burlington administrative
center led to identified savings for the government. Burlington is the only
location that has staff dedicated to contract administration, of which
contractor monitoring is a key component; and administrative center
officials said that this increased attention has paid off. Payments were
reduced by $264,861 in fiscal year 2002 because contractors did not
perform to the contracts’ quality standards or did not perform tasks called
for in the contracts.

Procurement officials told us that program offices—which have the
authority to select COTRs—often do not dedicate the personnel required
to monitor contractor performance adequately. For example, the COTR for
the INS Immigration Student Services contract, valued at over $73 million,
has been deployed on military leave since February 2003. The program


Page 20                                         GAO-03-799 Contract Management
             office responded to the INS procurement office’s call for another COTR by
             designating the program manager as the COTR, even though he had not
             attended the requisite training. More than $8 million has been paid to the
             contractor during the original COTR’s absence.

             Further, the files we reviewed suggest that INS is inconsistently
             implementing quality assurance surveillance plans. For example, 2 months
             after INS awarded the Dallas Unarmed Guard Services contract, the
             program office still had not provided the contracting office a plan outlining
             how the COTRs would monitor contractor performance or establishing a
             monthly inspection schedule. The contract file did not contain evidence
             that the monitoring or inspections were ever accomplished.
             Documentation of the government’s quality assurance plan is important
             because it outlines the method and frequency with which contractor
             performance will be monitored.

             The FAR also requires agencies to prepare contractor performance
             evaluations for completed contracts over $100,000 in order to provide
             current information for source selection purposes.26 At INS, the COTRs,
             program office employees, are responsible for completing these reports.
             The reports are designed to formally provide contractors with documented
             evaluation of their performance each year, and the information is entered
             into a database for use by government agencies in evaluating contractors’
             past performance. We found that the required evaluations had not always
             been done. Ten of 29 of the contract files we reviewed that required
             contractor performance reports (e.g., where the value exceeded $100,000)
             did not contain evidence that the reports were completed. By not
             completing contractor performance reports, INS limits its own awareness,
             as well as that of other government agencies, of contractor performance.


             The fact that INS has become a significant part of DHS makes it imperative
Conclusion   for DHS leadership, as it grapples with the challenge of putting in place a
             procurement structure, to take immediate action to address the problems
             we have identified in this report. DHS is expected to spend billions
             annually to acquire a broad range of products, technologies and services,


             26
                FAR 42.1502 requires the completion of contractor performance evaluations at the time
             work under the contract is completed. For contracts with a period of performance lasting
             more than one year, agencies are required to specify when an interim evaluation should be
             prepared. INS requires an interim evaluation at the time an option is exercised for the next
             contract period.




             Page 21                                                 GAO-03-799 Contract Management
                      and these contractor-provided goods and services will be critical to the
                      department’s ability to achieve its mission of protecting the nation from
                      terrorism. INS, one of the largest agencies coming under DHS, brings with
                      it a procurement function that needs attention. Its acquisition workforce is
                      struggling to effectively manage the large and mission-critical
                      procurements for which it is responsible. The creation of DHS brings an
                      opportunity to address these problems.


                      We recommend that the Secretary of DHS direct the Under Secretary for
Recommendations for   Management to take the following actions as part of ongoing efforts to
Executive Action      implement DHS procurement policies.

                      To improve the effectiveness of the procurement function, we recommend
                      that the Under Secretary for Management

                      •   ensure that cross-functional acquisition teams, consisting of program,
                          procurement, legal, budget, and financial officials, effectively
                          collaborate in planning and administering contracts;

                      •   create and review meaningful procurement performance measures and
                          indicators to ensure that management directives are carried out by the
                          large number of field activities in the department; and

                      •   as part of its assessment of existing information systems coming into
                          the department, determine what procurement and financial information
                          must be gathered to obtain strategic knowledge of spending behavior
                          across the department.

                      To address acquisition workforce issues, we recommend that the Under
                      Secretary for Management do the following:

                      •   Develop a data-driven assessment of the department’s acquisition
                          personnel, resulting in a workforce plan that identifies the number,
                          location, and skills and competencies of the workforce. The plan
                          should also identify key strategies to attract and retain this workforce,
                          including use of available recruiting and retention flexibilities or other
                          targeted approaches. As part of this planning, ensure that term
                          appointments for procurement personnel are used as intended and not
                          to meet long-term needs.




                      Page 22                                         GAO-03-799 Contract Management
                  •    Explore ways of making collateral duty contracting officers in field
                       locations more accountable through the procurement hierarchy for
                       their contracting work.

                  To ensure that the department’s contracts are well-managed, we
                  recommend that the Under Secretary for Management

                  •    develop a system for tracking the status of current detention facility
                       contracts so that contracting officers and program managers are
                       automatically alerted to begin the planning process at least two years
                       before a new contract has to be awarded; and

                  •    implement ways of holding designated COTRs responsible for
                       monitoring, reporting, and documenting contractor performance (e.g.,
                       require them to report on a regular basis to the contracting officer).


                  In written comments on a draft of this report, DHS agreed with our
Agency Comments   recommendations and stated that it plans to proceed in accordance with
                  them. DHS stated that it recognizes the need to formalize the acquisition
                  workforce and plans to model the training and certifications of an
                  Acquisition Corps along the lines of the Defense Acquisition Workforce
                  Improvement Act.27 Further, the department stated that all collateral duty
                  contracting officers will be phased out and that only professional
                  procurement personnel with the requisite training will have warrants.
                  DHS also stated that a 5-year strategic planning process has been
                  established, enabling program offices to plan acquisitions in advance.

                  The department also provided technical comments that we have
                  incorporated as appropriate. In these comments, some concern was
                  expressed about our description of the program offices’ position that they
                  sometimes lack guidance from the procurement office about their roles
                  and responsibilities in the procurement process. Because this description
                  reflects comments made by the program officials with whom we spoke, we
                  have retained it in the report. Further, the department recommended
                  changes to the draft report that would place full responsibility on the




                  27
                    The Defense Acquisition Workforce Improvement Act (P.L. 101-510, Title XII) recognized
                  acquisition as a multi-disciplinary career field for the Department of Defense.




                  Page 23                                              GAO-03-799 Contract Management
program offices for acquisition planning. Because acquisition planning is a
joint responsibility of both the program and procurement offices, we did
not make this change.


We conducted our review from October 2002 through May 2003 in
accordance with generally accepted government auditing standards.

As requested by your offices, unless you publicly announce the contents of
this report earlier, we plan no further distribution of it until 30 days from
the date of this letter. We will then send copies of this report to other
interested congressional committees and the Secretary of Homeland
Security. We will make copies available to others upon request. In
addition, the report will be available at no charge on the GAO Web site at
http://www.gao.gov.

If you have any questions regarding this report, please contact me at (202)
512-4841 or Michele Mackin, Assistant Director, at (202) 512-4309. Other
major contributors to this report were Lara Carreon, Andria Key, Gary
Middleton, Jeff Miller, Susan Tindall, and Adam Vodraska.




David E. Cooper
Director, Acquisition and Sourcing Management




Page 24                                       GAO-03-799 Contract Management
             Appendix I: Scope and Methodology
Appendix I: Scope and Methodology


             To determine the level of oversight and control and stakeholder
             involvement in contracting activities at the Immigration and Naturalization
             Service (INS), we reviewed INS organizational charts to gain insight into
             where the procurement offices fall in the hierarchy and to determine the
             lines of responsibility and authority between the various stakeholders in
             the acquisition process. We reviewed Department of Justice and INS
             policies and procedures governing acquisition and analyzed internal audit
             reports to determine if those policies and procedures were being followed.
             We obtained statistics from INS headquarters on unauthorized
             commitments and viewed a training videotape, which is used agencywide,
             on unauthorized commitments. At headquarters, we interviewed the
             Assistant Commissioner for Administration and two of his branch chiefs.
             We visited each of the administrative centers and interviewed key
             contracting personnel. We also interviewed program managers in several
             INS program offices. Lastly, we reviewed previous GAO work regarding
             best acquisition practices and organizational alignment and oversight for
             leading organizations.

             To assess how effective existing INS information and financial
             management systems are in enabling the tracking and reporting of
             acquisition data and facilitating strategic decisionmaking, we attended
             demonstrations of INS’s Intelligent Procurement (IPRO) and Federal
             Financial Management systems. We analyzed the spreadsheets and reports
             used by the administrative centers to track their procurement activity. We
             interviewed IPRO systems administrators at headquarters and each of the
             administrative centers, as well as officials from Customs Service and the
             Coast Guard to gauge their use of IPRO and to determine if their
             experience with the system was similar to INS’s. We also reviewed our
             previous best practices work dealing with information systems and
             strategic tracking and reporting of acquisition data.

             To assess INS’s effectiveness in recruiting, training, and retaining its
             acquisition workforce, we interviewed contracting and human resource
             officials at headquarters and the three administrative centers. We analyzed
             INS’s processes and procedures for tracking acquisition workforce
             training, reviewed training materials for all acquisition-related training
             courses, and attended two headquarters-sponsored training courses. We
             obtained and analyzed information on procurement vacancies and hiring
             rates at headquarters and the administrative centers. In addition, we
             analyzed INS acquisition workforce information obtained from the Office
             of Personnel Management’s Central Personnel Data File. To define the
             overall acquisition workforce, we used the occupation codes included in



             Page 25                                      GAO-03-799 Contract Management
Appendix I: Scope and Methodology




our report Federal Procurement: Spending and Workforce Trends,
GAO-03-443 (Apr. 30, 2003). These codes are listed in table 1.

Table 1: Acquisition Workforce Occupation Codes

    Occupation code                      Definition
    246                                  Industrial relations
    346                                  Logistics management
    511                                  Auditing
    1101                                 General business and industry
    1102                                 Contracting
    1103                                 Industrial property management
    1104                                 Property disposal
    1105                                 Purchasing
    1106                                 Procurement clerical and technician
    1150                                 Industrial specialist
    1152                                 Production control
    1910                                 Quality assurance
    2003                                 Supply management
    2010                                 Inventory management
Source: OPM.



To determine if INS has followed sound contracting policies and
regulations, we reviewed 42 of 185 contracts on INS’s active contracts list.1
The contracts were selected using random sampling and included 18
headquarters and 24 administrative center contracts. The value of the
contracts ranged from $24,000 to $1.1 billion and represented
procurements for a variety of goods and services, including detention
facility services, information technology support, guard services,
ammunition, program management support, and data entry. Only one of
the 42 contracts fell below the simplified acquisition threshold ($100,000).2
We did not address the effectiveness of the contracts in terms of meeting
organizational requirements, but limited our review to the issues set forth
in appendix III. We held follow-on discussions with headquarters and
administrative center contracting officers to clarify issues and discuss


1
    INS’s active contracts list includes contracts valued at more than $100.
2
 Government contracting personnel are allowed to use certain streamlined procedures to
buy goods and services up to the simplified acquisition threshold of $100,000 (and up to $5
million for commercial items).



Page 26                                                      GAO-03-799 Contract Management
Appendix I: Scope and Methodology




discrepancies noted in the files. Appendix IV lists the contracts we
reviewed.

We conducted our review from October 2002 through May 2003 in
accordance with generally accepted government auditing standards.




Page 27                                       GAO-03-799 Contract Management
             Appendix II: Comments from the Department
Appendix II: Comments from the Department
             of Homeland Security



of Homeland Security




             Page 28                                     GAO-03-799 Contract Management
                            Appendix III: Contract File Review Criteria
Appendix III: Contract File Review Criteria


Acquisition Planning        Does contract file contain evidence that acquisition planning was
                            accomplished?

                            Does the service or product being acquired fall into categories exempt
                            from acquisition planning?

                            Does planning documentation address the issues required in FAR 7.105?


Market Research             Does contract file contain evidence that market research was conducted?


Competition                 Is the contract a Federal Supply Schedule buy?

                            Is the contract an order placed against an existing contract vehicle?

                            Was this a simplified acquisition?

                            Were sources excluded before competition was conducted?

                            Was full and open competition used?

                            If not competed, was other than full and open competition justified in
                            accordance with FAR 6.302?


Small Business              Were small business requirements addressed? For example, was the
                            contract set aside for small business or was participation in the 8(a)
                            program1 considered?


Contractor                  Does the solicitation state all factors that will affect contract award and
Evaluation/Contract Award   their relative importance?

                            For contracts exceeding $100,000, is past performance a factor for
                            evaluation?



                            1
                             The Small Business Administration’s 8(a) Business Development Program, named for a
                            section of the Small Business Act, is a business development program created to help small
                            disadvantaged businesses compete in the American economy and access the federal
                            procurement market.




                            Page 29                                               GAO-03-799 Contract Management
                          Appendix III: Contract File Review Criteria




                          Does the contract file contain a rationale to support the source selection
                          decision?


Contract Administration   Is the Contracting Officer’s Technical Representative identified in the
                          contract file?

                          Is a quality assurance surveillance plan in the file?

                          Is there evidence that surveillance of the contractor is being performed as
                          stated in the contract?

                          If the contract value exceeds $100,000, is documentation of a contractor
                          performance evaluation contained in the file in accordance with FAR
                          42.1502?


Contract Modifications    How many changes were issued subsequent to contract award? What were
                          the reasons for the changes?




                          Page 30                                         GAO-03-799 Contract Management
                                            Appendix IV: List of Active Contract Files
Appendix IV: List of Active Contract Files  Reviewed ($100 or More), as of April 3, 2002



Reviewed ($100 or More), as of April 3, 2002


Contract #                               Contract title                                                       Total contract value
Headquarters contracts
COW-7-C-0011                             Systemic Alien Verification for Entitlements (SAVE) system                   $82,746,489
COW-O-A-0075                             E-form support                                                                   500,000
COW-O-C-1517                             Access to fingerprint database                                                 2,173,920
COW-9-C-0059                             Computer-aided facility management                                               695,228
COW-2-P-1072                             Extended warranty-uninterruptible power switch                                    24,500
COW-9-C-0013                             Leased parking                                                                   320,256
COW-2-A-002*                             Data entry                                                                    73,781,361
COW-8-C-0051                             STARS Performance-CSC                                                      1,042,012,160
COW-8-C-0049                             STARS Performance-Lockheed Martin                                            935,560,889
COW-8-C-0052                             STARS Performance-EDS                                                      1,136,699,808
COW-O-A-0022                             Acquisition Support-UTA                                                       80,000,000
COW-O-A-0023                             Acquisition Support-Tessada                                                   80,000,000
COW-2-J-0470                             Entry/Exit Program Mgmt. Spt.                                                  3,369,524
COW-O-C-0063                             Tunnel detection system - R&D                                                    299,641
COW-2-D-1267                             Drug testing                                                                     500,000
COW-2-A-0008                             Body Armor-Safariland                                                          5,000,000
COW-2-A-0007                             Body Armor-PACA                                                                5,000,000
COW-2-A-0078                             Restructuring/transition to DHS                                                3,900,000


Burlington administrative center contracts
ACB-OC-0002                              Newark Detention Facility                                                    $73,053,762
ACB-2-C-0005                             Queens Detention Facility                                                     65,007,332
ACB-9-C-0005                             Food service                                                                     619,014
ACB-OC-0013                              Message switch                                                                   543,435
ACB-OC-0006                              Ammunition                                                                    10,404,891
ACB-2-C-0002                             Guard services                                                                 1,422,608
ACB-1-C-0002                             Food services                                                                  2,962,468
ACB-2-P-0759                             Sub-machine guns                                                                258, 249


Dallas administrative center contracts
ACD-8-C-0009                             Laredo Detention Facility                                                    $40,647,128
ACD-9-C-0001                             Houston Detention Facility                                                    52,870,735
ACD-2-C-0009                             Unarmed guard service                                                         46,242,666




                                            Page 31                                               GAO-03-799 Contract Management
                                         Appendix IV: List of Active Contract Files
                                         Reviewed ($100 or More), as of April 3, 2002




Contract #                           Contract title                                                 Total contract value
ACD-O-C-0038                         Janitorial services                                                       $295,439
ACD-2-J-0682                         Mail processing machine                                                    134,615
COW-1-C-0070                         Untrained dogs                                                           1,775,000
ACD-2-J-0386                         Data entry                                                                 190,594
ACD-O-J-0345                         Administrative support                                                     253,112


Laguna administrative center contracts
ACL-9-C-0045                         Design/Build checkpoint                                                   $365,000
ACL-1-C-0005                         Construction 2nd story addition                                            580,588
ACL-9-K-0006                         Janitorial services                                                        274,729
ACL-O-C-0002                         Horseshoeing                                                               193,495
ACL-0-C-0004                         Boxed lunches                                                            1,716,750
ACL-6-C-0003                         Unarmed guard service                                                   45,000,000
ACL-8-K-0011                         Meals                                                                    2,308,605
ACL-O-C-0001                         San Diego Detention Facility                                           134,711,980
Source: INS.




                                         Page 32                                        GAO-03-799 Contract Management
              Appendix V: Warrant Authority of INS
Appendix V: Warrant Authority of INS
              Contracting Officers



Contracting Officers

              The following levels of warrant authority are from the INS Procurement
              Career Management Handbook:

              Level I: Authority not to exceed $25,000 for open market procurements,
              and $100,000 for orders against Federal Supply Schedules, other FAR Part
              8 required sources, and other existing, priced federal contracts.

              Level II: Authority not to exceed $100,000 for open market procurements,
              and unlimited authority for delivery orders against Federal Supply
              Schedules, other FAR Part 8 required sources, and other existing, priced
              federal contracts.

              Level III: Authority not to exceed $1,000,000 for open market
              procurements, and unlimited authority for delivery orders against Federal
              Supply Schedules, other FAR Part 8 required sources, and other existing,
              priced federal contracts.

              Level IV: Unlimited authority for open market procurements and for
              delivery orders from Federal Supply Schedules, other FAR Part 8 required
              sources, and other existing, priced federal contracts.




(120187)
              Page 33                                     GAO-03-799 Contract Management
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