oversight

Contract Management: Civilian Agency Compliance with Revised Task and Delivery Order Regulations

Published by the Government Accountability Office on 2003-08-29.

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

              United States General Accounting Office

GAO           Report to Congressional Committees




August 2003
              CONTRACT
              MANAGEMENT
              Civilian Agency
              Compliance with
              Revised Task and
              Delivery Order
              Regulations




GAO-03-983
              a
                                                August 2003


                                                CONTRACT MANAGEMENT

                                                Civilian Agency Compliance with Revised
Highlights of GAO-03-983, a report to           Task and Delivery Order Regulations
Congressional Committees




Multiple-award task and delivery                The revisions to the Federal Acquisition Regulation conform to statutory
order contracts were intended to                requirements. The revisions provide additional, though generally limited,
streamline the acquisition of goods             guidance on how agencies should implement the fair opportunity process,
and services. Prior GAO reviews                 describe the supplies and services needed, and meet capital planning
cited concerns that some agencies               requirements. Agency officials did not view the regulatory changes as
using these contracts were not
attaining the level of competition
                                                significant, and made minimal changes in their internal policies and
Congress had initially envisioned.              procedures.
In response, Congress required that
additional guidance be published in             The agencies GAO reviewed provided eligible contractors a fair opportunity
the Federal Acquisition Regulation              to be considered for award of an order in 18 of 26 selected cases. The
and asked GAO if the guidance                   remaining eight orders were issued using exceptions to the fair opportunity
conformed to the law and agencies               process. Four of those were not adequately justified.
were complying with it.
                                                The orders GAO reviewed appeared to clearly describe the supplies and
To evaluate compliance, GAO                     services required. However, statements of work for four information
examined how agencies provided                  technology (IT) services orders were defined broadly, and required
vendors with a fair opportunity to
be considered for orders, clearly
                                                subsequent sub-task orders or modifications to completely define the work.
described the services or supplies              Although agencies are required to use performance-based statements of
needed, and complied with capital               work as widely as possible, only 3 of 22 orders for services met the
planning requirements.                          performance-based criteria.

                                                Regulations on capital planning and investment controls for purchases of
                                                IT products and services went into effect in August 2002, and agencies are
The Departments of Veterans                     still trying to determine how they will comply with them and who is to be
Affairs and Health and Human
                                                responsible for them. As part of these efforts, several agencies plan to
Services should review the
guidance and training provided to               require that their chief information officer certify that the capital planning
their acquisition personnel on using            requirements have been met.
the fair opportunity process to
ensure that agencies receive the                Multiple-Award Contracts by Civilian Agencies
best value through task and
delivery orders. The Office of
Management and Budget should
clarify the responsibilities of
acquisition and other staff
regarding capital planning for
information technology products
and services.




www.gao.gov/cgi-bin/getrpt?GAO-03-983.

To view the full product, including the scope
and methodology, click on the link above.
For more information, contact William Woods
at (202) 512-8214 or woodsw@gao.gov.
Contents



Letter                                                                                                1
                             Results in Brief                                                         3
                             Background                                                               4
                             Revised Regulations Conform to Law                                       8
                             Most Orders Awarded through Fair Opportunity; Some Exceptions
                               Not Adequately Justified                                              10
                             Most Orders Clearly Described Requirements, but Few Met
                               Performance-Based Criteria                                            13
                             Agencies Are Just Beginning to Address Capital Planning Issues          14
                             Conclusions                                                             16
                             Recommendations for Executive Action                                    16
                             Agency Comments and Our Evaluation                                      17


Appendixes
               Appendix I:   Objectives, Scope, and Methodology                                      19
              Appendix II:   Key Multiple-Award Contract Legislation and Administrative
                             Actions                                                                 21
             Appendix III:   GAO, Agency Inspector General, and Other Reviews                        22
              Appendix IV:   Information on Selected Orders                                          25
              Appendix V:    Comments from the Department of Veterans Affairs                        28
             Appendix VI:    Comments from the Department of Health and Human
                             Services                                                                30
             Appendix VII:   Comments from the General Services Administration                       33


Figure                       Figure 1: Multiple-award Contract Obligations by Civilian
                                       Agencies, Fiscal Years 1997 through 2002,
                                       (Inflation-adjusted dollars)                                   6




                             Page i                                       GAO-03-983 Contract Management
Contents




Abbreviations

CIO          chief information officer
DOE          Department of Energy
FAI          Federal Acquisition Institute
FAR          Federal Acquisition Regulation
FASA         Federal Acquisition Streamlining Act of 1994
FDA          Food and Drug Administration
FPDS         Federal Procurement Data System
FTS          Federal Technology Service
GSA          General Services Administration
HHS          Health and Human Services
ID/IQ        indefinite delivery/indefinite quantity
IG           inspector general
IT           information technology
NASA         National Aeronautics and Space Administration
OFPP         Office of Federal Procurement Policy
OMB          Office of Management and Budget
TVA          Tennessee Valley Authority
VA           Veterans Affairs


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Page ii                                                 GAO-03-983 Contract Management
A
United States General Accounting Office
Washington, D.C. 20548



                                    August 29, 2003                                                                 Leter




                                    The Honorable John Warner
                                    Chairman
                                    The Honorable Carl Levin
                                    Ranking Minority Member
                                    Committee on Armed Services
                                    United States Senate

                                    The Honorable Susan M. Collins
                                    Chairman
                                    The Honorable Joseph I. Lieberman
                                    Ranking Minority Member
                                    Committee on Governmental Affairs
                                    United States Senate

                                    The Honorable Duncan L. Hunter
                                    Chairman
                                    The Honorable Ike Skelton
                                    Ranking Minority Member
                                    Committee on Armed Services
                                    House of Representatives

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

                                    The Federal Acquisition Streamlining Act of 1994 (FASA)1 provided
                                    statutory authority for federal agencies to enter into multiple-award, task
                                    and delivery order contracts. These are contracts for indefinite quantities
                                    of supplies or services that are awarded to multiple firms from a single
                                    solicitation. Requests for delivery of specific supplies or services are made
                                    through individual task or delivery orders. This type of contract was one
                                    of several innovative procurement methods authorized by FASA for
                                    streamlining the acquisition of goods and services. Since the enactment of



                                    1
                                        P.L. No. 103-355 (Oct. 13, 1994).




                                    Page 1                                          GAO-03-983 Contract Management
FASA, however, we have reported that some federal agencies were not
obtaining the level of competition for orders Congress had envisioned.2

Congress responded to these and other reports by enacting section 804 of
the National Defense Authorization Act for Fiscal Year 2000.3 Section 804
directed that the Federal Acquisition Regulation (FAR) be revised to
provide specific guidance to agencies on the appropriate use of task and
delivery order contracts. Regulations implementing the statute were issued
in two installments, the first in April 2000, and the second in August 2002.
The act required that GAO evaluate (1) conformance of the regulations
with existing law and (2) compliance by federal agencies with the
regulations. In assessing compliance at selected agencies, we focused on
whether these agencies provided the multiple-award contractors a fair
opportunity to be considered for orders, clearly described the services or
supplies needed, and complied with capital planning requirements.

As agreed with staffs of the committees, we focused our review on
five civilian agencies: the Departments of Energy (DOE), Health and
Human Services (HHS), and Veterans Affairs (VA); the General Services
Administration (GSA); and the National Aeronautics and Space
Administration (NASA). These agencies accounted for two-thirds of the
total contract dollars obligated in fiscal year 2001 by all civilian agencies.4
We used a judgmentally selected sample of large orders placed by these five
agencies; our findings are not projectable to the universe of all orders they
awarded. We selected for review the two largest orders reported as




2
  See U.S. General Accounting Office, Acquisition Reform: Multiple-award Contracting
at Six Federal Organizations, GAO/NSIAD-98-215 (Washington, D.C.: Sept. 30, 1998)
and Contract Management: Few Competing Proposals for Large DOD Information
Technology Orders, GAO/NSIAD-00-56 (Washington, D.C.: Mar. 20, 2000).
3
    P.L. 106-65 (Oct. 5, 1999).
4
  We limited our review to civilian agencies because Congress subsequently enacted
additional legislation applicable only to defense agencies prescribing procedures to be used
in placing orders against multiple-award contracts. We have initiated a separate review of
the use of such contracts by defense agencies.




Page 2                                                   GAO-03-983 Contract Management
                   exceeding $1 million for each unique organizational entity5 within each of
                   these five agencies.6 In total, we reviewed 26 task and delivery orders.7
                   The orders covered a range of products and services; nine were for
                   information technology (IT) services. Appendix I contains a detailed
                   description of our scope and methodology.



Results in Brief   The revised regulations on the appropriate use of multiple-award task and
                   delivery order contracts conform to statutory requirements. The revisions
                   provide additional, though generally limited, guidance on how agencies
                   should implement the fair opportunity process, describe the supplies
                   and services needed, and meet capital planning requirements. Agency
                   procurement officials generally did not view the regulatory changes to
                   be significant and made only minimal changes in their internal policies
                   and procedures.

                   The agencies included in our review provided eligible contractors a fair
                   opportunity to be considered for award for 18 of the 26 selected orders. Of
                   the remaining eight orders that were issued using an exception to the fair
                   opportunity process, four were not supported by adequate justification:

                   • In two cases, the VA placed orders with pre-selected vendors for
                     medical equipment, but provided no documentation in the file to justify
                     the sole-source orders.

                   • In another case, the Centers for Disease Control and Prevention did not
                     provide the necessary documentation for an order for vaccine placed
                     with the only vendor licensed to produce the vaccine.



                   5
                    The organizational entities included the Federal Technology Service and Public Building
                   Service within GSA; the Centers for Disease Control, National Institutes of Health, and Food
                   and Drug Administration within HHS; Kennedy Space Center, Langley Research Center, and
                   Ames Research Center within NASA; the Central Office, National Acquisition Center, Austin
                   Automation Center, and a medical center within VA; the Procurement Office, an operations
                   office, and a river protection office within DOE.
                   6
                     As reported by the Federal Procurement Data System. Subsequent file reviews showed that
                   some orders included in our review were actually less than $1 million.
                   7
                     We used the Federal Procurement Data System to identify 30 transactions coded as task or
                   delivery orders. Upon review, four were actually single award indefinite delivery/indefinite
                   quantity (ID/IQ) contracts and were excluded from this survey.




                   Page 3                                                   GAO-03-983 Contract Management
             • In the fourth case, the Food and Drug Administration (FDA) justified a
               sole-source award as a logical follow-on to an original order, but the
               justification did not meet the criteria for such an award.

             In general, the orders we reviewed appeared to clearly describe the
             supplies and services required. The statements of work for four IT service
             orders, however, were defined only in broad terms and required subsequent
             sub-task orders or modifications to completely define the work. Although
             the revised FAR requires agencies to use performance-based statements of
             work for task orders to the maximum extent practicable, only 3 of 22
             orders for services met the requirements for performance-based
             contracting, such as providing measurable outcomes for contractor
             performance.

             Regulations concerning capital planning and investment controls for
             purchases of IT products and services did not go into effect until
             August 2002, and agencies are still trying to determine how they will
             comply with them. Agency officials said they have not yet fully identified
             how their acquisition and IT communities will meet capital planning
             requirements for IT orders. However, as part of their efforts to meet the
             new requirements, several agencies plan to require their chief information
             officer (CIO) to certify that capital planning requirements have been met.

             This report contains recommendations to the Secretaries of Veterans
             Affairs and Health and Human Services to review the guidance and training
             provided to their acquisition personnel and to the Director of the Office of
             Management and Budget (OMB) to work with the Federal Acquisition and
             CIO Councils to promote enhanced compliance with FAR requirements
             concerning capital planning.



Background   Multiple-award task and delivery contracts are contracts for indefinite
             quantities of goods and services that have been awarded to a number
             of firms under one solicitation. The purpose of such contracts is to
             establish a group of pre-qualified contractors to compete under
             streamlined administrative procedures for orders to perform work or
             deliver products during the contract period. Orders may be placed by
             the agency awarding the contract or, in the case of multi-agency contracts,
             by other authorized agencies. These interagency orders can be an
             advantageous and cost-effective way to meet an agency’s requirements
             using another agency’s existing contract. Multiple-award task and delivery
             order contracts do not specify a firm quantity of supplies or services, but



             Page 4                                         GAO-03-983 Contract Management
instead identify minimum quantities for each contractor and maximum
quantities overall. Orders for specific services or goods must be within the
general scope of the contract.

In 1994, Congress enacted FASA8 to establish requirements for the
use of multiple-award task and delivery order contracts to promote
competition and streamline the acquisition process. To ensure that
agencies continued to receive the benefits of competition, FASA required
agencies placing orders against a multiple-award contract to ensure that—
except under specified circumstances—contract-holders are given a fair
opportunity to be considered for the award of task or delivery orders under
the contract. In addition, FASA required that orders placed under these
contracts have statements of work that clearly specify all tasks to be
performed or products to be delivered. To help contacting officers
implement FASA, the Office of Federal Procurement Policy (OFPP)
provided a guidebook on best practices when using task and delivery order
contracts.9

The Clinger-Cohen Act of 199610 facilitated the use of multiple-award
contracts by authorizing multi-agency contracts11 and governmentwide
acquisition contracts12 to acquire IT products and services. These contract
vehicles were intended to reduce the overhead associated with individual
acquisitions while helping the government increase its leverage to
encourage vendors to offer lower prices. In addition, the Clinger-Cohen Act
requires that agencies manage IT multiple-award contracts by establishing
a capital planning process to select, control, and evaluate IT products and
services and requires that the CIO and procurement officials work together
to establish clear lines of accountability to realize the acquisition’s benefits.


8
    P.L. No. 103-355 (Oct. 13, 1994).
9
  See Office of Federal Procurement Policy, Best Practices for Multiple Award Task and
Delivery Order Contracting, (Washington, D.C.: July 1997).
10
 The Clinger-Cohen Act was enacted as Divisions D and E of the National Defense
Authorization Act for Fiscal Year 1996 (P.L. No. 104-106, Feb. 10, 1996).
11
  Multi-agency contracts are task and delivery order contracts established by one agency for
use by government agencies to obtain supplies and services, including information
technology.
12
  Governmentwide acquisition contracts are task and delivery order contracts for
information technology established for use governmentwide by an executive agent
designated by OMB.




Page 5                                                   GAO-03-983 Contract Management
                          Appendix II provides information on FASA, Clinger-Cohen, and other key
                          legislation and administrative actions governing the use of multiple-award
                          contracts.



Use of Multiple-award     Multiple-award contracts can be an expedient way for the government
Contracts Increased but   to acquire goods and services. As can be seen in figure 1, agencies are
                          increasingly turning to these contract vehicles. For the five agencies we
Abuses Identified
                          reviewed, orders placed against multiple-award contracts increased from
                          over $300 million in 1997 to about $2.1 billion in 2002. Moreover, task and
                          delivery orders account for an increasing share of procurement dollars,
                          increasing from 4 percent of dollars obligated in 1997 to over 7 percent in
                          2002 governmentwide.



                          Figure 1: Multiple-award Contract Obligations by Civilian Agencies, Fiscal Years
                          1997 through 2002, (Inflation-adjusted dollars)

                          Fiscal year

                          1997

                          1998


                          1999

                          2000


                          2001

                          2002

                                 0           500          1,000        1,500          2,000        2,500         3,000   3,500   4,000
                                 Dollars in millions
                                        All other civilian agencies
                                        Sample civilian agencies
                          Source: Federal Procurement Data System "Federal Procurement Reports" for fiscal
                          years 1997 through 2002, the latest data available.


                          Notes: Obligations adjusted to constant fiscal year 2002 dollars. Figures exclude obligations for the
                          Tennessee Valley Authority (TVA) because TVA discontinued reports to the Federal Procurement Data
                          Systems on September 30, 2000. TVA’s reported obligations for orders were $2.3 billion, $4.1 billion,
                          and $1.7 billion for fiscal years 1997, 1998, and 2000 respectively. Those figures represented between
                          40 to 84 percent of the agency’s total obligations in the same years. Also, TVA reported a negative
                          $1.0 billion for its obligations in fiscal year 1999.




                          Page 6                                                                             GAO-03-983 Contract Management
Although use of multiple-award contracts is increasing, awards have not
always been made in a manner consistent with regulations. Our prior
work, agencies’ inspector general (IG) reports, and other internal
agency reviews have shown that agencies are not consistently promoting
competition nor justifying exceptions to competition. These reviews have
also concluded that agencies define the work for many task orders too
broadly. (See app. III for a list of prior GAO and agency IG reports.)

To address these ongoing problems, Congress enacted section 804 of
the National Defense Authorization Act for Fiscal Year 2000.13 The act
directed that the FAR be revised to provide guidance to agencies on the
appropriate use of task and delivery order contracts. The mandated
guidance, at a minimum, was to identify specific steps that agencies should
take to ensure that (1) all contractors are afforded a fair opportunity to be
considered for the award of task and delivery orders; (2) the statement of
work for each order clearly specifies all tasks to be performed or property
to be delivered; and (3) Clinger-Cohen Act requirements for capital
planning and investment control for IT products and services purchases
are met.

The FAR implemented the statutory mandate in two parts. The first,
published in April 2000, was intended to provide improved guidance on
providing a fair opportunity to compete for orders, and preparing clearer
statements of work.14 The second, published in August 2002, addressed
capital planning requirements for IT acquisitions15 and incorporated certain
changes made to address issues raised by a GAO report on the use of
multiple-award contracts to procure IT services.16




13
     P.L. No. 106-65 (Oct. 5, 1999).
14
     FAC 97-17; FAR Case 1999-014; Item I (Apr. 25, 2000).
15
     FAC 2001-09; FAR Case 1999-303, Item I (Aug. 30, 2002).
16
  See U.S. General Accounting Office, Contract Management: Few Competing Proposals
for Large DOD Information Technology Orders, GAO/NSIAD-00-56 (Washington, D.C.:
Mar. 20, 2000). The report raised concerns about (1) large and inadequately defined orders,
(2) misuse of logical follow-on awards, and (3) reliance on cost reimbursable rather than
fixed-price orders.




Page 7                                                       GAO-03-983 Contract Management
Revised Regulations     The revisions to the FAR published in response to section 804 of the
                        National Defense Authorization Act for Fiscal Year 2000 conform to
Conform to Law          statutory requirements. The revisions provide additional, though generally
                        limited, guidance for each of the areas mentioned in the statute. Some
                        procurement officials at the agencies we reviewed advised us that they
                        viewed the revisions to the FAR as minimal, and consequently made few,
                        if any, changes to their guidance or training.



FAR Revisions Provide   Pursuant to the direction of section 804, the FAR was revised to provide
Additional Guidance     additional guidance concerning the award of task and delivery orders.
                        With respect to fair opportunity, the guidance added provisions making
                        the consideration of price mandatory, and specifying a few additional
                        elements to be considered when developing fair opportunity procedures.
                        Specifically, the contracting officer should consider (1) the potential
                        impact on other orders placed with the contractor and (2) the minimum
                        ordering requirements contained in the contract.17 In addition, the FAR
                        now requires that contracting officers document in the contract file any
                        trade-offs among cost and non-cost considerations. Further, if the agency
                        is using the logical follow-on exception, the rationale must describe why
                        the relationship between the initial order and the follow-on is logical in
                        terms of scope, period of performance, or value. According to OFPP
                        officials, this additional guidance was inserted to respond to a GAO
                        recommendation that the FAR discourage agencies from awarding
                        follow-on orders whose scope or costs significantly exceed those orders
                        for which contractors were provided an opportunity to be considered.18

                        With respect to describing the services or supplies to be provided
                        under task or delivery orders, the FAR now stresses the importance of
                        clearly describing the requirements so that the full cost or price for the
                        performance of the work can be established when the order is placed.19
                        The regulation also provides that agencies should use performance-based
                        statements of work for services to the maximum extent practicable.


                        17
                             FAR § 16.505(b)(1)(iii).
                        18
                          See U.S. General Accounting Office, Contract Management: Few Competing Proposals
                        for Large DOD Information Technology Orders, GAO/NSIAD-00-56 (Washington, D.C.:
                        Mar. 20, 2000).
                        19
                             FAR § 16.505(a)(2).




                        Page 8                                              GAO-03-983 Contract Management
                        On capital planning, the Clinger-Cohen Act20 requires agencies to design
                        a process for maximizing the value of IT purchases and for assessing
                        and managing the risks associated with them. The revised regulations
                        explicitly identify certain steps that must be taken for each order for
                        IT products and services placed against the Federal Supply Schedule, or
                        against either another agency’s governmentwide acquisition contract or
                        multi-agency contract. These steps include documenting (1) how the
                        capital planning and investment control requirements of the Clinger-Cohen
                        Act will be met21 and (2) why placing an order benefits the government.22
                        Pre-existing regulations, however, permit agencies to continue using
                        previously developed plans rather than revise those plans to include the
                        new requirements specified by the section 804 revisions.23



Agencies Made Limited   Representatives from the agencies in our review told us they did not view
Changes to Guidance     the regulatory revisions published in response to the authorization act
                        requirement as significantly different from what was previously in the
and Training            FAR and, therefore, generally made minimal, if any, changes to their
                        guidance and training. DOE and HHS sent to their contracting officials
                        supplemental notices on the use of multiple-award contracts and proper
                        statements of work. GSA sent a supplemental notice on the requirement
                        that contract-holders be given a fair opportunity to be considered for
                        orders. DOE also added a section on fair opportunity in its guidance on
                        the use of multiple-award contracts as a result of section 804.

                        With respect to training, only DOE acquisition officials saw a need to revise
                        their training materials to provide additional focus on the requirements to
                        provide a fair opportunity to be considered for orders, and to develop clear
                        statements of work. DOE provided specific training on providing a fair
                        opportunity. Other agency officials explained that they saw no need for
                        specific training on those issues because problems that may have been
                        identified earlier had been addressed through memoranda and other
                        means. None of the agencies we spoke with incorporated capital planning


                        20
                          The capital planning requirements of the Clinger-Cohen Act are now codified at
                        40 U.S.C. § 11312.
                        21
                             FAR § 7.105(b)(4)(ii)(A).
                        22
                             FAR § 7.105(b)(4)(ii)(B).
                        23
                             FAR § 7.102(b).




                        Page 9                                                  GAO-03-983 Contract Management
                       and investment control requirements into their training on multiple-award
                       contracts or task and delivery orders. An official for the Federal
                       Acquisition Institute, which, under OFPP’s direction, is charged with
                       supporting and developing the civilian acquisition workforce, stated that
                       the Institute also does not currently provide specific training on capital
                       planning and investment requirements.24 According to a GSA official, the
                       Federal Acquisition Institute is reviewing all of its courses to validate their
                       conformance to current laws and regulations and plans to update its
                       course on acquisition planning to address capital planning and
                       investment requirements.



Most Orders            For 18 of the 26 orders we reviewed, the agencies provided all eligible
                       vendors a fair opportunity to be considered for the award. For the
Awarded through Fair   remaining eight orders, the agencies used exceptions to the fair
Opportunity; Some      opportunity process. On four of those eight orders, however, the agency did
                       not comply with the requirements for excluding contract-holders from an
Exceptions Not         opportunity to be considered for the order. Appendix IV contains details of
Adequately Justified   all the orders we reviewed.



Most Orders Awarded    Eighteen of 26 orders were awarded through the fair opportunity process.
Through Fair           In these 18 cases, the agency notified every eligible vendor of the intent to
                       place an order, provided them a copy of the statement of work, and gave
Opportunity Process    them an opportunity to submit an offer.25 In some cases, this notice was
                       provided electronically. The notices of upcoming orders we reviewed
                       appeared to allow sufficient time—ranging from 5 to over 30 days—for
                       vendors to prepare their offers. Some notices allowed contractors to
                       express initial interest, and then provided additional time for proposal
                       development. In other cases, contracting officers held question and answer
                       sessions with vendors to help them prepare their proposals.
                       For construction and renovation orders, the agencies usually provided
                       drawings and specifications and conducted tours of the sites.


                       24
                         According to a defense official, the Defense Acquisition University, which sometimes
                       provides training to civilian agencies, addresses Clinger-Cohen capital planning
                       requirements in its general training on preparing acquisition plans.
                       25
                         For one VA order, worth $2.3 million for modular buildings, a contracting officer stated
                       that all vendors were notified, but we were unable to verify the notification from the
                       contract file. Only one bid was received.




                       Page 10                                                   GAO-03-983 Contract Management
                       We noted one case, however, where the contracting officer prematurely
                       awarded an order before the response period identified in the opportunity
                       notice had expired. In that instance, the VA awarded a $1.2 million order
                       for leased satellite bandwidth 9 days prior to the 18-day response period
                       deadline. Agency officials acknowledged that the action was a breach
                       of their procurement procedures, and said the mistake resulted from a
                       miscommunication between the two contracting officers involved. The
                       VA officials also said that only one offer had been submitted, and no
                       other sources had responded to the solicitation, either before or after
                       the award. VA officials indicated that they would include this case in the
                       agency’s annual quality control program to determine if the problem we
                       noted was systemic.



Exceptions to          Our review of selected orders found problems with four of the eight orders
Fair Opportunity       awarded using exceptions to the fair opportunity process. There are
                       four authorized exceptions to the requirement that all contract-holders
Not Always Justified   receive a fair opportunity to be considered for an award of a task or
                       delivery order:26

                       • Urgency: the need for the supplies or services is so urgent that
                         providing for fair opportunity would result in an unacceptable delay;

                       • Unique source: only one contract-holder is capable of providing the
                         supplies and services at the level of quality required because they are
                         unique or highly specialized;

                       • Logical follow-on: the order must be issued on a sole-source basis in
                         the interest of economy and efficiency because it is a logical follow-on
                         to a previous order under the contract, provided that all contract-
                         holders were given a fair opportunity to be considered for the original
                         order; and

                       • Minimum guarantee: the order must be placed with a specific
                         contract-holder in order to satisfy a contractual minimum guarantee.




                       26
                            FAR § 16.505(b)(2).




                       Page 11                                        GAO-03-983 Contract Management
Three orders awarded using the unique source exception were not
supported by adequate justification in the contract files. Specifically:

• Two cases—worth $971,029 and $327,259 respectively—involved the
  purchase of medical equipment at two VA Medical Centers. The
  contracting officers asked that the requesting facilities select one of the
  contract-holders on the multiple-award contract to receive the order.
  One of the contracting officers explained that having the facility staff
  pre-select the contract-holders to be awarded the order was equivalent
  to having conducted a technical evaluation, and therefore saved time.
  Although contracting officials classified the two orders as exceptions
  to fair opportunity, they could not provide adequate documentation
  justifying awarding the orders on a sole-source basis. In discussing these
  two cases with VA National Acquisition Center officials, the officials
  said that the improper use of exceptions was an ongoing problem and
  provided a VA directive issued in January 2003 that addressed use of
  exceptions to fair opportunity, among other things. Although the
  directive discussed the fair opportunity process, it did not specifically
  address the type of issue we found on the orders we reviewed.

• In a third case, involving a Centers for Disease Control and Prevention
  order worth $16.8 million, the contracting officer solicited the only
  vendor on the multiple-award contract that could supply a particular
  polio vaccine. The contracting officer did not provide necessary
  justification to support the use of the unique source exception to fair
  opportunity. In the contracting officer’s view, this action did not
  require a justification because he had notified the only vendor capable
  of supplying the vaccine. In our view, however, this order should have
  been supported by a written justification for using the unique
  source exception.

• The fourth problematic order, for IT services worth $2.8 million,
  was issued by the FDA using the logical follow-on exception to fair
  opportunity. This exception is only available when the original order had
  been awarded using the fair opportunity process. Although FDA sought
  to justify its sole-source order in the interest of economy and efficiency,
  the use of the logical follow-on exception was improper because the
  original order had not been awarded through the fair opportunity
  process.

Reviews by GSA, NASA, and the VA IG conducted since the implementation
of the new FAR guidelines have also found that contracting officers did not



Page 12                                          GAO-03-983 Contract Management
                           always adequately document their justifications for the use of exceptions
                           to the fair opportunity process. Appendix III provides more information on
                           these reviews.



Most Orders                The orders we reviewed generally appeared to comply with the
                           requirement of the revised regulation to clearly describe the supplies or
Clearly Described          services needed. Four of the 22 orders for services, however, contained
Requirements, but          broadly defined statements of work that required the issuance of
                           subsequent sub-task orders or modifications to better define the work.
Few Met                    Although the revised FAR encourages agencies to use performance-based
Performance-Based          statements of work to the maximum extent practicable, only 5 of the
Criteria                   22 services task orders reported using performance-based requirements;
                           and only 3 of those met the performance-based contracting criteria, such as
                           providing measurable outcomes for contractor performance.



Some Statements of         Four of the 22 task orders for services we reviewed, all involving
Work Required Clarifying   IT services, contained broadly defined statements of work that needed to
                           be further clarified through the use of sub-task orders or modifications.
Sub-Task Orders
                           For example,
or Modifications
                           • NASA’s Langley Research Center, using a GSA contract, awarded a
                             $5.4 million task order to provide IT services to support basic and
                             applied research in such areas as aeronautics, earth sciences, space
                             technology, structures and materials. The statement of work identified
                             general requirements and indicated that the agency would issue task
                             assignments for specific tasks within the work areas.

                           • The FDA issued a $500,000 IT service order to develop a decision
                             support system. The original statement of work was broad, and the
                             agency modified the order 6 months later to better define the existing
                             requirements and to add new requirements. A year later, the agency
                             modified the order further by adding more requirements and increasing
                             the level of effort required. Each of these modifications increased the
                             order by $1.5 million, bringing the total cost for the order to about
                             $3.6 million, or a 7-fold increase.




                           Page 13                                        GAO-03-983 Contract Management
Revised FAR               Both OFPP guidance27 and the revised FAR28 encourage agencies to
Encourages the Use of     use performance-based criteria to develop statements of work for
                          service contracts and task orders to the maximum extent practicable.
Performance-Based         A performance-based statement of work defines the government’s
Statements of Work, but   requirements in terms of objectives and measurable outputs. As such,
Few Orders Met Criteria   performance-based contracts and orders clearly spell out the desired end
                          result expected of the contractor. The precise manner in which the work is
                          to be performed is left up to the contractor. Contractors are given as much
                          freedom as possible in figuring out how best to meet the government’s
                          performance objective.

                          Of the 22 orders for services in our review, only 5 reported using the
                          performance-based service contracting approach. Of those, we found
                          that three actually met the performance-based criteria. The other two did
                          not meet the criterion requiring measurable outcomes to assess contractor
                          performance. An earlier GAO review of performance-based contracting
                          also found that many contracts agencies characterized as performance-
                          based did not meet all the criteria and that more guidance and study
                          were needed to understand how effectively agencies are applying this
                          technique.29 In July 2003, after the completion of our review, OFPP adopted
                          recommendations developed by an inter-agency task force to improve
                          agency use of performance-based contracting.30



Agencies Are              Revised regulations concerning capital planning requirements for
                          purchases of IT products and services went into effect August 2002, and
Just Beginning to         agencies have only recently begun to determine how they will meet them.
Address Capital           Agencies are currently revising their capital planning and investment
                          control processes, but to date are uncertain about who or what entity
Planning Issues           within each agency will be accountable for enforcing compliance at the
                          IT order level. Three of the agencies require certifications from the


                          27
                           See Office of Management and Budget (OMB), Competition Under Multiple Award Task
                          and Delivery Order Contracts, Memorandum (Washington, D.C.: May 21, 1999).
                          28
                               FAR § 16.505(a)(3).
                          29
                            U.S. General Accounting Office, Contract Management: Guidance Needed for Using
                          Performance-Based Service Contracting, GAO-02-1049 (Washington, D.C.: Sept. 23, 2002).
                          30
                            See Office of Federal Procurement Policy, Performance-Based Service Contracting,
                          (Washington, D.C.: July 2003).




                          Page 14                                               GAO-03-983 Contract Management
customer agencies’ CIO attesting that capital planning has been done for
the order.

The August 2002 FAR revisions clarified that the Clinger-Cohen Act
requirements for capital planning and investment control apply to orders,
as well as contracts, for IT products and services. The FAR requires agency
acquisition personnel to state in acquisition plans31 how capital planning
and investment control requirements will be met for IT orders and how the
orders benefit the government.32 Agencies recently began revising and
implementing their capital planning and investment control acquisition
processes to address these requirements. For example, the CIOs at VA,
DOE, and HHS recently established policies that require CIO certification
for IT acquisitions. These certification requirements are limited to certain
purchases. For example, DOE requires certifications for all headquarters
purchases of IT services in excess of $200,000; HHS requires approval for
IT contracts and orders over $500,000; and VA’s CIO certifies and approves
all IT purchases above $250,000. In addition, VA reviews IT purchases
below $250,000 to ensure compliance with technical and security standards
before they are approved by the CIO’s office. All three agencies’ acquisition
offices are revising their acquisition policies to reflect the new
requirements. NASA and GSA plan to incorporate capital planning
requirements in their program managers’ guidance.

OMB’s 1997 guidance on the Clinger-Cohen Act requires agency heads
to ensure that CIO and senior procurement officials work together to
assign responsibilities and establish clear lines of accountability for
orders placed against multi-agency contracts.33 In addition, OMB officials
informed us that its Capital Planning and Investment Control policy
requires that contracting officers be part of the project team. However,
based on our discussions with agency officials about responsibility for task
and delivery orders, acquisition and capital planning officials are still not
clear about who will be accountable for ensuring compliance with capital
planning requirements.

31
  An acquisition plan addresses all technical, business, management and other significant
considerations that control an acquisition. It also summarizes all acquisition planning
deliberations and identifies milestones for decisions in the acquisition process.
32
     FAR § 7.105(b)(4)(ii).
33
  See Office of Management and Budget (OMB), Multiagency contracts under the
Information Technology Management Reform Act of 1996, M-97-07, (Washington, D.C.:
Feb. 26, 1997).




Page 15                                                  GAO-03-983 Contract Management
Conclusions           The government is increasingly relying on multiple-award task and delivery
                      order contracts to obtain goods and services because, when
                      used appropriately, these contracts can streamline the procurement
                      process while maintaining competition. Some agencies, however, notably
                      VA and HHS, did not always comply with requirements to provide a fair
                      opportunity to be considered for orders or adequately justify an exception.
                      We believe that these problems point to the need for VA and HHS to ensure
                      that their acquisition personnel receive appropriate training in the use of
                      task and delivery order contracts.

                      Capital planning for IT acquisitions helps to ensure that IT products and
                      services are acquired in an economical and efficient manner consistent
                      with an overall acquisition strategy. However, we found that agency
                      policies and procedures do not yet clearly delineate the roles and
                      responsibilities of IT and acquisition officials to ensure accountability
                      for capital planning and investment control for IT goods and services.
                      Consequently, without clear lines of responsibility, the benefits of capital
                      planning provisions may not be achieved.



Recommendations for   Because of the limited nature of our sample, we do not know the
                      extent to which the problems identified are systemic or unique to our
Executive Action      review. Nevertheless, these findings are of sufficient concern that both
                      the Secretaries of Veterans Affairs and Health and Human Services should
                      review the guidance and training provided to their contracting officials to
                      ensure that the regulations are properly understood and applied.

                      Also, to ensure accountability for capital planning and investment
                      control requirements for IT goods and services, we recommend that
                      the Director of the Office of Management and Budget, working with
                      the Federal Acquisition Council and the CIO council, clarify the roles
                      and responsibilities of the acquisition and information technology
                      communities for capital planning for IT products and services.




                      Page 16                                          GAO-03-983 Contract Management
Agency Comments and   We received written comments on a draft of this report from VA, HHS, and
                      GSA. NASA informed us by e-mail that it concurred with the report. DOE
Our Evaluation        did not provide comments. OMB provided e-mail comments suggesting a
                      number of technical changes, which we incorporated where appropriate.

                      VA concurred with our recommendation, but took exception to our
                      conclusions on two of the cited cases. Specifically, in the two cases where
                      VA medical centers pre-selected the multiple-award vendor to receive
                      delivery orders, VA did not agree with our conclusion that the orders
                      were issued on a sole-source basis. VA apparently believes that all of the
                      vendors on the contracts had a fair opportunity to be considered for the
                      orders. We do not agree. While we recognize that the FAR provides
                      agencies with flexibility in developing ordering procedures, the FAR
                      expressly provides that agencies may not use any method that involves
                      the designation of preferred awardees.34 In addition, agency documents and
                      contracting officials at the VA National Acquisition Center characterized
                      the two orders as being awarded through an exception to fair opportunity.
                      Accordingly, there should have been documentation justifying the use of an
                      exception. In neither of the two cases could the contracting officers
                      produce the required documents. We modified the report to make clearer
                      that VA officials at the National Acquisition Center considered these orders
                      to be awarded through the use of an exception. On the matter of capital
                      planning, the VA noted that its CIO not only certifies but also approves
                      IT purchases above $250,000. We included that information in our report.
                      VA also provided updated status on some of its IG and internal audit
                      reviews, which we also reflected in the report. VA’s comments appear in
                      appendix V.

                      HHS did not concur with our recommendation regarding its training
                      and guidance. The department noted that it had adequate training for
                      its contracting officials. In our view, however, HHS needs to review
                      the adequacy of the training provided its contracting officials, given the
                      problematic orders noted in the report. HHS also took exception to two of
                      our cited examples. Specifically, HHS disagreed with our conclusion that
                      an order it characterized as being awarded through the fair opportunity
                      process should have, more appropriately, been characterized as being
                      awarded as an exception to fair opportunity. Because there was only one
                      supplier of that particular vaccine being bought, we believe that this


                      34
                           FAR, section 16.505(b)(ii)(B).




                      Page 17                                        GAO-03-983 Contract Management
order required the use of the unique source exception along with the
documentation justifying this exception. In the other case, where we
determined the logical-follow exception was used inappropriately, HHS
stated that the order was not awarded using that exception. However, all
contract file documentation, including the sole source justification,
referred to this order as a logical follow-on to previous work. HHS’
comments appear in appendix VI.

GSA agreed in general with our findings, but suggested additional language
concerning efforts by the Federal Acquisition Institute (FAI) to update its
training offerings. We revised our report to acknowledge FAI’s efforts.
GSA’s comments appear in appendix VII.


We are sending copies to interested congressional committees; the
secretaries of Energy, Health and Human Services, and Veteran’s Affairs;
the Administrator of General Services; and the administrators of the
National Aeronautics and Space Administration, and the Office of
Federal Procurement Policy. We will also 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.

Please contact me at (202) 512-8214, or Hilary Sullivan at (214) 777-5652,
if you have any questions regarding this report. Major contributors to this
report were Thom Barger, John Clary, Judith Collins, Lester Diamond,
Robert Swierczek, and Ralph O. White.




William T. Woods
Director
Acquisition and Sourcing Management




Page 18                                         GAO-03-983 Contract Management
Appendix I

Objectives, Scope, and Methodology                                                                     AA
                                                                                                        ppp
                                                                                                          ep
                                                                                                           ned
                                                                                                             n
                                                                                                             x
                                                                                                             id
                                                                                                              e
                                                                                                              x
                                                                                                              Iis




              The National Defense Authorization Act for Fiscal Year 2000 required
              that the Federal Acquisition Regulation be revised to provide agencies
              guidance on the use of task and delivery order contracts and that GAO
              evaluate whether (1) the revised regulations conform to the law, and
              (2) federal agencies are complying with the regulations.1 To evaluate
              whether the regulations conform to the law, we analyzed the regulations
              written to implement section 804 to determine if all of the statutory
              obligations were addressed in the regulations. In addition, we compared
              the regulations as they existed prior to and after the revisions to determine
              the extent to which the revised regulations provided specific additional
              guidance on the steps agency should follow in awarding and using multiple-
              award task and delivery order contracts.

              As agreed with staff from the congressional committees to which this
              report is addressed, in order to assess agency compliance with the
              regulations we focused our review on the five largest agencies, excluding
              the Department of Defense, in terms of total annual procurement
              expenditures: DOE, HHS, VA, GSA, and NASA. Together, these agencies
              account for two-thirds of procurement spending by all civilian agencies. In
              addition, these agencies are among the largest in terms of the number of
              orders placed against multiple-award contracts. In fiscal year 2001, these
              agencies obligated nearly $1 billion through these vehicles.2 Based on a
              judgmental sample, we determined whether these selected agencies
              (1) provided eligible multiple-award contractors a fair opportunity to be
              considered for orders and adequately justified the use of exceptions for
              sole source orders, (2) provided clear and specific statements of work, and
              (3) complied with capital planning requirements for contracts and orders
              for IT products and services. We reviewed policies and procedures and
              interviewed acquisition, procurement, and Chief Information Office
              officials at DOE, VA, HHS, GSA, and NASA.

              In selecting a judgmental sample, we first identified 142 Federal
              Procurement Data System (FPDS)3 records representing task and
              delivery orders for $1 million or more awarded by the five agencies in fiscal


              1
                  Section 804, P.L. No. 106-65 (Oct. 5, 1999).
              2
                  As reported by FPDS.
              3
               The FPDS is the government’s central repository of statistical information on federal
              contracting. The system contains detailed information on contract actions over $25,000 and
              summary data on procurements of less than $25,000.




              Page 19                                                 GAO-03-983 Contract Management
Appendix I
Objectives, Scope, and Methodology




year 2001, the latest data available. We next selected the two (one if only
one was awarded) largest orders awarded by each unique organizational
entity within the five agencies—resulting in the selection of 25 cases. In
addition, we included the five orders over $1 million that were used to
prepare and verify our methodology for reviewing contract files and
preparing our case studies. As a result, we initially selected 30 orders for
review. In reviewing the contract files, however, we determined that four
orders were actually placed against single award indefinite
delivery/indefinite quantity contracts. We excluded those four orders,
leaving us with 26 case studies. We provided each location with summaries
of the orders we had reviewed and obtained their concurrence on our
findings. Appendix IV contains information on the 26 orders selected for
our review.

In addition to the errors noted above, we identified numerous other FPDS
data errors during the course of our review. We, therefore, limited our use
of FPDS data to identifying general multiple-award contract trends, as
shown in figure 1, and to selecting our sample. We will be providing
additional information on FPDS errors in a separate letter.

We conducted our review between October 2002 and August 2003 in
accordance with generally accepted government auditing standards.




Page 20                                        GAO-03-983 Contract Management
Appendix II

Key Multiple-Award Contract Legislation and
Administrative Actions                                                                                                                    Appendx
                                                                                                                                                Ii




Legislation or administrative action                                Description and impact
The Federal Acquisition Streamlining Act of 1994 (FASA),            Established a general preference for use of multiple-award
P.L. No. 103-355.                                                   contracts and required that contractors on multiple-award contracts
                                                                    have a fair opportunity to be considered for orders in excess of
                                                                    $2,500. Made multiple-award contracts mandatory for advisory and
                                                                    assistance services contracts exceeding $10 million and 3 years
                                                                    duration.
The Economy Act of 1932, relevant provision at 31 U.S.C. 1535.      Authorized agencies to enter into mutual agreements to obtain
                                                                    supplies or services by inter- and intra-agency acquisition.
                                                                    Stipulated the requirements and limitations for multi-agency task
                                                                    and delivery orders for purchases of goods and services.
Federal Property and Administrative Service Act of 1949, relevant   Required a statement of work in each task or delivery order issued
provision at 41 U.S.C. 253j(c)                                      that clearly specifies all tasks to be performed or property to be
                                                                    delivered under the order.
Clinger-Cohen Act of 1996, P.L. No. 104-106, section 5122, relevant Established capital planning requirements for purchasing IT
provision at 40 U.S.C. 11312.                                       products and services. Required agency heads to establish a
                                                                    process, integrated with agency budget and financial processes, to
                                                                    maximize the value and manage the risks related to purchases of IT
                                                                    services and products.
Clinger-Cohen Act of 1996, P.L. No. 104-106, section                Formerly known as the Information Technology Management
5124(a)(2) relevant provision at 40 U.S.C. 11314(a)(2).             Reform Act of 1996, this act authorized agencies to use multi-
                                                                    agency contracts to purchase IT services and products, and also
                                                                    authorized OMB to designate executive agents for governmentwide
                                                                    contracts for IT.
Office of Management and Budget (OMB) Policy Letter M-97-07.        Required agency heads to ensure that their CIOs and senior
                                                                    procurement executives work together to assign responsibilities
                                                                    and establish clear lines of accountability for multiple agency
                                                                    contracts.
National Defense Authorization Act for Fiscal Year 2000,            Required at a minimum, the content of the FAR guidance on use of
P.L. No. 106-65, section 804.                                       task and delivery order contracts provide specific guidance on the
                                                                    appropriate use of multiple-award contracts and steps agencies
                                                                    should take to ensure compliance with Clinger-Cohen Act, fair
                                                                    opportunity, and statement of work requirements.
Source: GAO analysis.




                                               Page 21                                                 GAO-03-983 Contract Management
Appendix III

GAO, Agency Inspector General, and Other
Reviews                                                                                                                            Appendx
                                                                                                                                         iI




Agency         Report title                                    Reported findings
DOD            Department of Defense, DOD Use of               Unjustified exceptions to fair opportunity: The DOD
               Multiple Award Task Order Contracts,            IG found 58 of 66 orders were awarded using unjustified
               DOD IG 99-116, (Arlington, VA: Apr. 2, 1999)    exceptions to the fair opportunity process.
                                                               Recommendation: DOD should establish a goal that
                                                               90 percent of the orders for multiple-award contracts have
                                                               multiple bidders and identify strategies to monitor and reduce
                                                               the number of sole source awards over a 3-year period.
               U.S. General Accounting Office, Contract        Unclear statements of work and unjustified exceptions
               Management: Few Competing Proposals for         to fair opportunity: GAO found that DOD made use of the
               Large DOD Information Technology Orders,        statutory exceptions to the fair opportunity requirement in 10 of
               GAO/NSIAD-00-56; (Washington, D.C.:             22 orders reviewed and statements of work were generally
               Mar. 20, 2000)                                  defined too broadly.
                                                               Recommendation: Agencies should not award follow-on
                                                               orders whose scope or costs significantly exceed former
                                                               related orders and should not award large undefined orders
                                                               and subsequently issue sole-source work orders for specific
                                                               task orders.
               Department of Defense, Contracts for            Unclear statement of work, award without fair opportunity
               Professional, Administrative, and               and unjustified exceptions to fair opportunity: The DOD IG
               Management Support Services,                    found that it was impossible to determine how the scope of
               DOD IG D-2000-100, (Arlington, VA: Mar. 10,     work on one task differed from that of other tasks. In addition,
               2000)                                           contracting officers did not provide contractors a fair
                                                               consideration in 58 of 105 orders reviewed and used faulty
                                                               justifications for sole-source exceptions another five orders.
                                                               Recommendation: DOD should develop a training course to
                                                               define requirements and a time-phased plan with goals and
                                                               performance measures to determine improvements in the
                                                               acquisition of professional, administrative, and management
                                                               support services.
               Department of Defense, Multiple Award           Unjustified exception to fair opportunity: This was a review
               Contracts for Services, DOD IG D-2001-189,      of 423 orders awarded in fiscal years 2000 and 2001. The DOD
               (Arlington, VA: Sept. 30, 2001)                 IG found that 264 of 304 orders awarded on a sole-source
                                                               basis were improperly supported. The report also noted that 82
                                                               of 119 orders that were competed received multiple bids.
                                                               Recommendation: DOD should establish at least a 75 percent
                                                               goal to compete orders and track progress of the use of
                                                               competition in awarding orders.
GSA            General Services Administration, Audit of       Unclear statements of work: A sample of 48 orders
               Federal Technology Service Use of Multiple      from Federal Technology Service (FTS) found that less than
               Award Indefinite Delivery Indefinite Quantity   15 percent contained performance-based statements of work.
               Contracts, A995288/T/H/Z00008, (Fairfax, VA:    Recommendations: GSA should advance fair opportunity and
               Sept. 19, 2000)                                 best value at FTS by using performance-based orders. Change
                                                               several operational processes that inhibit fair opportunity.a




                                    Page 22                                                   GAO-03-983 Contract Management
                                            Appendix III
                                            GAO, Agency Inspector General, and Other
                                            Reviews




(Continued From Previous Page)
Agency                 Report title                                 Reported findings
                       U.S. General Accounting Office,              Award without fair opportunity: This report noted that GSA
                       Telecommunications: GSA Needs to Improve     did not establish and follow a consistent process to ensure that
                       Process for Awarding Task Orders for Local   each vendor was accorded a fair opportunity to be considered
                       Service, GAO-03-369, (Washington, D.C.:      for each order.
                       Apr. 4, 2003)                                Recommendations: Establish a common process for
                                                                    GSA to consistently follow when considering fair opportunity for
                                                                    vendors.b
NASA                   National Aeronautics and Space               Award without fair opportunity: The NASA IG found that two
                       Administration, Multiple Award Contracts,    NASA Centers, Langley and Johnson, awarded 51 sole source
                       IG-01-040, (Washington, D.C.:                orders without fair competition. As a result, NASA had not
                       Sept. 28, 2001)                              received the benefits of competitive bids and may have paid
                                                                    more for goods and services than necessary.
                                                                    Recommendations: Center Directors should direct
                                                                    contracting officers to fairly consider all contractors who submit
                                                                    bids for orders under multiple-award contracts.c
VA                     Department of Veterans Affairs, Review of    Unclear statements of work: The VA IG found that the
                       Management Consultant Contract,              management consultant contract for IT services failed to yield
                       VA IG 7R5-E03-014, (Washington, D.C.:        requested deliverables due to, among other things, a
                       Dec. 13, 1996)                               nonspecific statement of work.
                                                                    Recommendation: The CIO and the contracting officer should
                                                                    review statements of work to ensure their specificity.d
                       Department of Veterans Affairs, Business     Award without fair opportunity and full and open
                       Review, VAMC Cleveland, OH,                  competition: This business review of the VA Cleveland
                       (Washington, D.C.: Nov. 9, 2001)             Medical Center found that 54 out of 63 (85 percent) orders and
                                                                    contracts were awarded without competition.
                                                                    Recommendations: Contracting officers must justify all
                                                                    sole-source procurements.e
                       Department of Veterans Affairs, Business     Award without fair opportunity and full and open
                       Review, VAMC Cleveland, OH,                  competition: This business review noted that 59 of
                       (Washington, D.C.: June 13, 2002)            76 sole-source contracts and orders reviewed (78 percent)
                                                                    were inadequately documented to support the award decision.
                                                                    Recommendations: Contracting officers ensure that
                                                                    files contain adequate documentation supporting
                                                                    award decisions.e




                                            Page 23                                                 GAO-03-983 Contract Management
                                            Appendix III
                                            GAO, Agency Inspector General, and Other
                                            Reviews




(Continued From Previous Page)
Agency                  Report title                                        Reported findings
DOD, HHS and others     U.S. General Accounting Office, Acquisition         Award without fair opportunity: GAO found that NIH had
                        Reform: Multiple-award Contracting at Six           placed orders with preferred contractors rather than providing
                        Federal Organizations, GAO/NSIAD 98-215,            all contractors a fair opportunity. It also noted that DOD
                        (Washington, D.C.: Sept. 30, 1998)                  received only one proposal for about 44 percent of the orders
                                                                            placed on its multiple-award contracts for information
                                                                            technology services.
                                                                            No recommendation but OFPP in its response to the report
                                                                            noted a need for regulations to prohibit the practice of
                                                                            designating preferred contractors when announcing orders for
                                                                            competition.f
Source: GAO analysis.
                                            a
                                                According to GSA, corrective actions were completed and the audit was closed on April 9, 2002.
                                            b
                                             In a March 31, 2003, letter GSA agreed with the reports’ recommendations and stated that it had
                                            implemented new guidance to ensure that each vendor is accorded a fair opportunity to be considered
                                            for each order.
                                            c
                                              According to NASA, management concurred with the recommendations and implemented them at the
                                            time the report was issued.
                                            d
                                             According to VA, the OIG closed this report on January 20, 1998, with the recommendations
                                            implemented.
                                            e
                                             According to VA, an audit conducted after initiating a corrective action plan found that less than
                                            1 percent of the procurements were sole source.
                                            f
                                             According to the Director of Acquisition Policy and Evaluation, NIH subsequently discontinued
                                            this practice.




                                            Page 24                                                           GAO-03-983 Contract Management
Appendix IV

Information on Selected Orders                                                                                                                Appendx
                                                                                                                                                    iIV




Dollars in millions
                                         Order       Cost or fixed    Fair opportunity      Number of                Incumbent (yes
Agency service–location                  pricea              price          (yes or no)       vendors Number of bids         or no)
Department of Energy
Procurement Office                        $1.7               Cost                   Yes                6                1                   No
Washington, DC
This order provided for IT services to provide operations support for six existing petroleum marketing survey systems and three new
bi-weekly surveys. This order was reported on FPDS as a performance-based service contract.
Operations Office                         $0.2               Cost                   Yes                3                3                   No
Albuquerque, NM
This order provided for services to assist in the preparation of an Environmental Impact Statement.
River Protection Office                   $1.5              Fixed                    No             N/A               N/A                   N/A
Richland, WA
This order provided for services to assist in the preparation of an Environmental Impact Statement.
General Services
Administration
Federal Technology Service               $15.3              Fixed                   Yes              11                 2                   No
New York, NY
This order provided for IT services to develop a secure wireless local area network.
Federal Technology Service               $17.6               Cost                   Yes              11                 1                   No
Denver, CO
This order provided for IT services for the replacement of unsupportable legacy equipment and provision of interim support for new
equipment.
Federal Technology Service                $0.3              Fixed                    No             N/A               N/A                   N/A
Fort Worth, TX
This order provided for IT services for Bureau of Indian Affairs to administer logistics servers, integrated systems, maintain databases,
operate a help desk, perform system analysis, and develop and enhance system interfaces.
Public Building Service                   $1.8              Fixed                   Yes                4                3                   No
Washington, DC
This order provided for services to replace perimeter chilled water piping at the J. W. Powell Building.
Public Building Service                   $1.6              Fixed                   Yes                5                5                   No
Atlanta, GA
This order provided for services to renovate floors 20 through 22 of the IRS Wage and Investment Headquarters in the Peachtree Summit
Federal Building.
Public Building Service                   $1.5              Fixed                   Yes                5                5                   No
Atlanta, GA
This order provided for services to renovate floors 9, 12, and 15 of the IRS Wage and Investment Headquarters in the Peachtree Summit
Federal Building.
Public Building Service                   $1.4              Fixed                   Yes                6                3                   No
Fort Worth, TX
This order provided for services to renovate the U.S. District Courthouse in Oklahoma City, OK.




                                                  Page 25                                                  GAO-03-983 Contract Management
                                                 Appendix IV
                                                 Information on Selected Orders




(Continued From Previous Page)
Dollars in millions
                                        Order       Cost or fixed     Fair opportunity     Number of                Incumbent (yes
Agency service–location                 pricea              price           (yes or no)      vendors Number of bids         or no)
Department of Health and
Human Services
Centers for Disease Control              $16.8              Fixed                   No             N/A                N/A                N/A
Atlanta, GA
This order provided for 2.2 million doses of E-IPV Vaccine for the National Vaccine Stockpile.
Centers for Disease Control               $6.2              Fixed                                  Yes                  5                     4
Atlanta, GA
This order provided for architectural and engineering services to design building 21 on the Roybal Campus.
National Institutes of Health             $4.8               Cost                   Yes               3                 3                    No
Bethesda, MD
This order provided for services to safety test seven HIV-1 DNA vaccine preparations as required for Investigational New Drug
submission prior to initial clinical evaluation. This order was reported on FPDS as a performance-based service contract.
National Institutes of Health             $7.1               Cost                   No             N/A                N/A                N/A
Bethesda, MD
This order provided for IT services to maintain the Molecular Biology database.
Food and Drug Administration              $2.8               Cost                   No             N/A                N/A                N/A
Rockville, MD
This order provided for IT services to develop the requirements for a web-based portal infrastructure including the provision of strategic
planning, system architecture, system and functional requirements, risk analysis and workforce process for the Operational and
Administrative System for Import Support on one other unspecified application.
Food and Drug Administration              $3.6               Cost                   No             N/A                N/A                N/A
Rockville, MD
This order provided for IT services to develop the Office of Regulatory Affairs Decision Support System.
National Aeronautics and
Space Administration
Kennedy Space Center                      $3.0              Fixed                   Yes               5                 3
Cape Canaveral, FL
This order provided for services to replace electrical equipment at power sub-stations and a utility annex.
Kennedy Space Center                      $2.4              Fixed                   Yes               4                 3                    No
Cape Canaveral, FL
This order provided for services to construct replacement housing.
Langley Research Center                   $6.0               Cost                   Yes             11                  4                Yes
Hampton, VA
This order provided for IT services to operate the Computational Analysis and Programming Services. This order was reported on FPDS
as a performance-based service contract.
Langley Research Center                   $1.3               Cost                   Yes               3                 1                    No
Hampton, VA
This order provided for services to design the X-43C Research Vehicle. This order was reported on FPDS as a performance-based
service contract.




                                                 Page 26                                                  GAO-03-983 Contract Management
                                                  Appendix IV
                                                  Information on Selected Orders




(Continued From Previous Page)
Dollars in millions
                                         Order        Cost or fixed   Fair opportunity      Number of                Incumbent (yes
Agency service–location                  pricea               price         (yes or no)       vendors Number of bids         or no)
Ames Research Center                     $15.7               Fixed                  Yes               7               4              No
Moffett Field, CA
This order provided for IT services to outsource the acquisition and maintenance of desktop computers. This order was reported on
FPDS as a performance-based service contract.
Department of Veterans
Affairs
National Acquisition Center               $1.0               Fixed                   No             N/A             N/A             N/A
Hines, IL
This order provided for the purchase of a Computed Tomography Scanner.
National Acquisition Center               $0.3               Fixed                   No             N/A             N/A             N/A
Hines, IL
This order provided for the purchase of a diagnostic X-ray system and related equipment.
Central Office                                                $4.8                 Fixed            Yes               2               1
Washington, DC
This order provided for the purchase of IT equipment–Internet servers and related equipment.
Austin Automation Center                  $1.2               Fixed                  Yes               3               1             Yes
Austin, TX
This order provided for the provision of satellite bandwidth for nationwide transmittal of educational courses.
Medical Center–Denver                     $2.3               Fixed                  Yes               4               1              No
Denver, CO
This order provided for the construction of modular buildings for medical center complex.
Source: GAO.


                                                  a
                                                   Order prices are rounded and represent obligations as of the date of
                                                  our review.




                                                  Page 27                                                 GAO-03-983 Contract Management
Appendix V

Comments from the Department of
Veterans Affairs                                           Append
                                                                x
                                                                i
                                                                V




             Page 28          GAO-03-983 Contract Management
Appendix V
Comments from the Department of
Veterans Affairs




Page 29                           GAO-03-983 Contract Management
Appendix VI

Comments from the Department of Health and
Human Services                                              Appendx
                                                                  iVI




              Page 30          GAO-03-983 Contract Management
Appendix VI
Comments from the Department of Health
and Human Services




Page 31                                  GAO-03-983 Contract Management
Appendix VI
Comments from the Department of Health
and Human Services




Page 32                                  GAO-03-983 Contract Management
Appendix VII

Comments from the General Services
Administration                                              Append
                                                                 x
                                                                 iVI




               Page 33         GAO-03-983 Contract Management
           Appendix VII
           Comments from the General Services
           Administration




           ()




(120175)   Page 34                              GAO-03-983 Contract Management
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