oversight

Federal Contracting: Effort to Consolidate Governmentwide Acquisition Data Systems Should Be Reassessed

Published by the Government Accountability Office on 2012-03-15.

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

             United States Government Accountability Office

GAO          Report to Congressional Committees




March 2012
             FEDERAL
             CONTRACTING
             Effort to Consolidate
             Governmentwide
             Acquisition Data
             Systems Should Be
             Reassessed




GAO-12-429
                                                March 2012

                                                FEDERAL CONTRACTING
                                                Effort to Consolidate Governmentwide Acquisition
                                                Data Systems Should Be Reassessed
Highlights of GAO-12-429, a report to
congressional committees




Why GAO Did This Study                          What GAO Found
The U.S. Government spends more                 The development of IAE has occurred in two stages using different
than $500 billion each year on                  acquisition strategies. In 2001, GSA began establishing a portfolio of
contracts. To ensure contracts are              standardized government-wide data systems through an acquisition strategy
managed effectively, the government             known as “adopt, adapt, acquire.” GSA adopted or adapted existing agency-
has established policies and                    specific systems for government-wide use, or if no viable system met an
procedures for advertising, awarding,           identified need, GSA acquired a new system. These efforts resulted in a
administering, and reporting on them.           portfolio of nine data systems. In 2008, GSA began consolidating its portfolio
Historically, data systems used to
implement these steps have been
                                                of systems into one integrated system called the System for Award
fragmented and duplicative, with                Management (SAM). In developing the system, GSA hoped to eliminate
multiple systems across different               redundancy, reduce costs, and improve efficiency. Unlike the existing
agencies providing similar services.            systems that were each designed, developed, and operated by a single
The Integrated Acquisition                      contractor, IAE relies on multiple vendors to perform these same tasks for
Environment (IAE) was initiated in              SAM. The intent of this approach is to enhance competition and innovation
2001 to bring together different data           and for the government to own the software associated with the system. SAM
systems into a unified system. It is            will be developed in phases. In each phase, capabilities from selected IAE
intended to reduce duplication and              systems will be added to SAM and those legacy systems will be shut down.
information technology costs, and
create a more streamlined and                   GSA has made progress in developing SAM and phase 1, consisting of three
integrated federal acquisition process.         systems, is scheduled to be completed in May 2012. GSA also has
GAO was asked to assess (1) the                 established a computing center to host SAM and a help desk to support
acquisition strategy being used to              users. Since 2009, however, IAE costs have increased by $85 million, from
develop IAE; (2) progress that has              about $96 to $181 million. Most of the cost growth is due to GSA omitting
been made in consolidating IAE                  hardware and other key components in acquiring a hosting infrastructure for
systems; and (3) any challenges that            SAM. External factors, including recent statutory requirements and policy
may affect the completion of IAE. GAO           changes, also have contributed to higher costs by increasing the use of the
analyzed program costs, schedules,              IAE systems beyond what was anticipated. Higher costs led to the need to
contracts, acquisition documents, and           supplement existing funding, but the program did not receive all of the
briefings, and interviewed IAE program
officials and contractors.
                                                additional funding it requested. In response to rising costs and limited
                                                funding, GSA officials have delayed SAM’s development schedule by almost
What GAO Recommends                             2 years, and taken other actions to reduce or defer costs where possible.
GAO recommends that GSA reassess                Higher costs and constrained resources pose a risk to IAE going forward.
the IAE business case to determine              GSA will need to continue operating the legacy IAE systems and contend
whether the current acquisition                 with higher SAM development costs for several more years. While GSA has
strategy is the most cost effective             taken some steps to reduce costs, it has not reevaluated the business case
alternative and if so, reevaluate the
                                                for SAM or determined whether it is the most cost effective alternative. Such
current hosting strategy and align
contract payments with the program
                                                a reevaluation is particularly important in light of the increased infrastructure
schedule. GSA agreed with GAO’s                 costs, which are now a major impediment to completing SAM. In addition,
recommendations and indicated that it           although the SAM development phases have been pushed out several years,
will take appropriate action.                   GSA has not modified its primary development contract to align the payment
                                                schedule with the delays. The program has continued to pay the same fixed
                                                price amount to the contractor for SAM development, operation, and
                                                maintenance even though there was little to operate and maintain for nearly 2
                                                years. Aligning contract payments with schedule milestones will ensure that
View GAO-12-429. For more information,          the government is not paying for work that has not yet been accomplished.
contact William T. Woods at (202) 512-4841 or
WoodsW@gao.gov.

                                                                                       United States Government Accountability Office
Contents


Letter                                                                                    1
               Background                                                                 2
               IAE Has Evolved over Two Stages                                            3
               Progress Made in Developing SAM, but Cost Increases and
                 Schedule Delays Could Jeopardize Program Completion                    10
               Consequences of Higher SAM Development Costs Threaten IAE
                 Going Forward                                                          17
               Conclusions                                                              20
               Recommendations for Executive Action                                     21
               Agency Comments and Our Evaluation                                       21

Appendix I     Scope and Methodology                                                    23



Appendix II    Integrated Acquisition Environment (IAE) Data Systems                    25



Appendix III   Comments from the General Services Administration                        28



Appendix IV    GAO Contact and Staff Acknowledgments                                    29



Tables
               Table 1: Evolution of the IAE Portfolio                                    5
               Table 2: IAE Memorandum of Understanding (MOU) Contributions
                        and Other Funding, Fiscal Years 2002-2011                        6
               Table 3. SAM Contractors and Contracts                                    9
               Table 4: Initial SAM Development Phases (as of June 2010)                10


Figures
               Figure 1: Cost Growth for the SAM Components                             12
               Figure 2: SAM Schedule Delays by Phase                                   16




               Page i                                         GAO-12-429 Federal Contracting
Abbreviations

ACE               Acquisition Committee for E-Gov
CCR               Central Contractor Registration
CFDA              Catalog of Federal Domestic Assistance
CPARS             Contractor Performance Assessment Reporting System
DOD               Department of Defense
DUNS              Data Universal Numbering System
EDS               Electronic Data Systems
EPLS              Excluded Parties List System
eSRS              Electronic Subcontract Reporting System
FAPIIS            Federal Awardee Performance and Integrity Information
                  System
FAR               Federal Acquisition Regulation
FedReg            Federal Agency Registration
FPDS-NG           Federal Procurement Data System – Next Generation
FSD               Federal Service Desk
FSRS              Federal Funding Accountability and Transparency Act
                  Subaward Reporting System
GCE               Global Computer Enterprises
GSA               General Services Administration
HP                Hewlett-Packard
IAE               Integrated Acquisition Environment
IBM               International Business Machines
MOU               memorandum of understanding
OMB               Office of Management and Budget
ORCA              Online Representations and Certifications Application
PPIRS             Past Performance Information Retrieval System
WDOL              Wage Determinations OnLine




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Page ii                                                    GAO-12-429 Federal Contracting
United States Government Accountability Office
Washington, DC 20548




                                   March 15, 2012

                                   The Honorable Claire McCaskill
                                   Chairman
                                   Subcommittee on Contracting Oversight
                                   Committee on Homeland Security and Governmental Affairs
                                   United States Senate

                                   The Honorable Darrell E. Issa
                                   Chairman
                                   The Honorable Elijah E. Cummings
                                   Ranking Member
                                   Committee on Oversight and Government Reform
                                   House of Representatives

                                   The U.S. government spends more than $500 billion each year on
                                   contracts. To ensure they are managed effectively, the government has
                                   established policies and processes for advertising, awarding,
                                   administering, and reporting on contracts. These processes use a number
                                   of data systems to support each of these steps, from collecting key
                                   information from contractors, to evaluating contractor performance, to
                                   tracking contract activity. In the past, these systems were fragmented and
                                   duplicative, with multiple systems across different agencies providing
                                   similar services. In 2001, the Office of Management and Budget (OMB)
                                   established an initiative called the Integrated Acquisition Environment
                                   (IAE) to unify and integrate different acquisition data systems. IAE is
                                   intended to enable agencies to share data and make more informed
                                   decisions, make it easier for contractors to do business with the
                                   government, and result in cost savings to the taxpayer.

                                   Efforts to develop IAE have been under way since 2001, and you asked
                                   that we assess how its implementation is proceeding. In response, we
                                   examined (1) the acquisition strategy being used to develop IAE; (2)
                                   progress that has been made in consolidating the IAE systems; and (3)
                                   challenges that may be affecting the completion of a fully integrated IAE.
                                   In order to address these objectives, we obtained and analyzed program
                                   documents including cost estimates, schedules, contracts, and internal
                                   analyses, and conducted our own analyses of them. We also interviewed
                                   officials from the General Services Administration (GSA), the executive




                                   Page 1                                          GAO-12-429 Federal Contracting
             agency for IAE, OMB, and the Acquisition Committee for E-Gov (ACE),
             which is part of the Chief Acquisition Officer’s Council and has oversight
             responsibilities for IAE. 1 We discussed IAE’s acquisition strategies over
             time, the program’s current status, including its cost, schedule, and
             performance parameters, and technical and management challenges that
             face the program. Finally, we interviewed current IAE contractors to
             discuss their work on IAE systems and industry practices.

             We conducted this performance audit from September 2011 to March
             2012 in accordance with generally accepted government auditing
             standards. Those standards require that we plan and perform the audit to
             obtain sufficient, appropriate evidence to provide a reasonable basis for
             our findings and conclusions based on our audit objectives. We believe
             that the evidence obtained provides a reasonable basis for our findings
             and conclusions based on our audit objectives.


             The federal acquisition process involves a number of steps that are
Background   common to all government agencies such as solicitation, evaluation, and
             contract award. Agencies are increasingly leveraging electronic data
             systems to streamline acquisitions and reduce costs. According to GSA
             officials, as these systems gained greater use within the government,
             some agencies developed their own unique data systems to support
             acquisition activities. These systems served specific roles in the
             acquisition process, such as contractor registration or performance
             tracking. There was little coordination in data systems across the
             government. Agencies created their own systems based on different
             standards which meant that information could not be readily shared.
             These stove-piped systems resulted in higher costs to the government;
             created inefficiencies; and made it confusing for government workers,
             vendors, and the public to use the systems.

             IAE was initiated to integrate, standardize, and streamline some of the
             many different acquisition data systems used throughout the government.
             The program was charged with identifying how information systems could
             be used to integrate the acquisition functions common to different
             agencies and to implement governmentwide data systems. Common



             1
              The Chief Acquisitions Officers Council provides a senior-level forum for monitoring and
             improving the federal acquisition system.




             Page 2                                                     GAO-12-429 Federal Contracting
                       acquisition functions include, for example, posting contract opportunities,
                       registering contractors who are interested in doing business with the
                       government, assessing contractor past performance, and tracking and
                       reporting contract actions. Bringing disparate data systems together and
                       providing a shared services resource to enter and retrieve acquisition
                       information should help to eliminate unnecessary and repetitive steps in
                       the acquisition process and reduce information technology costs.

                       When IAE began, OMB directed GSA to execute and manage the
                       initiative. GSA officials said that they worked with other government
                       agencies that would use IAE’s systems and established a collaborative
                       governance structure that would allow agency users to set the initiative’s
                       priorities and budget. The Acquisition Committee for E-Gov (ACE), a
                       subcommittee of the Chief Acquisition Officer’s Council, provides overall
                       governance for IAE. The ACE has several responsibilities, including
                       providing strategic direction for IAE, approving IAE’s annual budget and
                       work plan, and ensuring IAE investments align with E-Gov business
                       goals. The ACE is currently co-chaired by representatives from the
                       Departments of Defense and Interior.


                       IAE has developed in two stages using different acquisition strategies.
IAE Has Evolved over   Initially, GSA focused on establishing a portfolio of standardized
Two Stages             governmentwide systems through an acquisition strategy known as
                       “adopt, adapt, acquire.” Using this strategy, GSA adopted or adapted
                       existing agency-specific systems for governmentwide use. If there was no
                       viable system that could be adapted or adopted to meet an identified
                       need, GSA acquired a new system. GSA also established an IAE funding
                       strategy that consisted of contributions from agencies that use IAE
                       systems. In 2008, to further eliminate redundancy, reduce costs, and
                       improve efficiency, GSA began consolidating its portfolio of systems into
                       one integrated system called the System for Award Management (SAM).
                       Unlike the existing systems (sometimes called “legacy” systems) in which
                       a single contractor designed, developed, and operated each of them, IAE
                       relies on multiple vendors to perform these same tasks for SAM. The
                       intent of this approach is to enhance competition and innovation and for
                       the government to own the software associated with the system. SAM will
                       be developed in phases. In each phase, capabilities from selected IAE
                       systems will be added to SAM and those legacy systems will then be shut
                       down.




                       Page 3                                           GAO-12-429 Federal Contracting
Initial Strategy Was to   During the first IAE stage, GSA worked to create a portfolio of
Assemble a Portfolio of   governmentwide systems through an acquisition strategy known as
Standardized Systems      “adopt, adapt, acquire.” GSA and OMB officials surveyed various
                          government stakeholders to develop an inventory of existing data
                          systems and to identify additional data-related needs of the government.
                          Using this information, the ACE directed GSA to adopt or adapt existing
                          agency-specific systems for governmentwide use. For example, the
                          Central Contractor Registration (CCR) database, where contractors
                          register certain business information prior to being considered for contract
                          awards, was a Department of Defense (DOD) system that IAE adopted
                          for governmentwide use in 2003. GSA officials believed DOD’s system
                          met the government’s requirements, and adopting it was a better
                          alternative than developing a new system. The Federal Procurement Data
                          System – Next Generation (FPDS-NG) is an example of a system that
                          IAE adapted. 2 FPDS, the FPDS-NG predecessor, was initially
                          implemented in 1978 and in 2003 GSA hired a vendor to modernize the
                          system.

                          When no existing systems could be adopted or adapted for
                          governmentwide use, IAE’s strategy was to acquire new systems from
                          software developers. For example, GSA contracted with IBM in 2004 to
                          develop and operate the Online Representations and Certifications
                          Application (ORCA) database, for firms to submit certifications on matters
                          such as firm size and ownership status. Table 1 identifies the portfolio of
                          systems that were included in the first stage of IAE up through 2008 and
                          whether each system was adopted, adapted, or acquired.




                          2
                           The Federal Procurement Data System-Next Generation (FPDS-NG) is a database that
                          provides information on government contracting actions over $3,000, procurement trends,
                          and reports on socioeconomic goals.




                          Page 4                                                   GAO-12-429 Federal Contracting
Table 1: Evolution of the IAE Portfolio

                                          Year added to IAE
System                                    portfolio                     Method            Description
Federal Business Opportunities            2003                          Adopted/adapted   Single point of entry for solicitations over
(FedBizOpps)                                                                              $25,000, allowing suppliers and government
                                                                                          buyers to post, search, monitor, and retrieve
                                                                                          federal government market opportunities.
Federal Procurement Data System –         2003                          Adopted/adapted   Provides public access to data on all federal
Next Generation (FPDS-NG)                                                                 contract actions over $3,000.
Wage Determinations OnLine (WDOL)         2003                          Acquired          Makes Service Contract Act and Davis-Bacon
                                                                                          wage determinations accessible by the
                                                                                          contracting community.
Past Performance Information Retrieval 2003                             Adopted/adapted   Provides access to past performance
System (PPIRS)                                                                            information.
Excluded Parties List System (EPLS)       2005                          Adopted/adapted   Identifies parties excluded from receiving federal
                                                                                          contracts and certain subcontracts, as well as
                                                                                          certain types of federal financial and nonfinancial
                                                                                          assistance.
Central Contractor Registration (CCR)     2003                          Adopted/adapted   Required point of registration for contractors and
                                                                                          grantees wishing to do business with the
                                                                                          government.
Federal Agency Registration (FedReg)      2003                          Acquired          Single point of information on agency
                                                                                          buyers/sellers for intragovernmental transfers.
Electronic Subcontract Reporting          2005                          Acquired          Facilitates prime contractor reporting of
System (eSRS)                                                                             accomplishments toward subcontracting goals.
Online Representations and                2004                          Acquired          Allows vendors to enter representations and
Certifications Application (ORCA)                                                         certifications for federal contracts.
                                            Source: GAO analysis of GSA information.

                                            Note: This table lists the systems that were associated with IAE up through 2008. Since then, other
                                            systems have been added to the IAE portfolio, including the Federal Awardee Performance and
                                            Integrity Information System (FAPIIS) in 2010, the Federal Funding Accountability and Transparency
                                            Act Subaward Reporting System (FSRS) in 2010, and the Contractor Performance Assessment
                                            Reporting System (CPARS) in 2011. PPIRS was added to the IAE portfolio in 2003, removed in 2005
                                            at the request of the ACE for budgetary reasons, and then added again in 2011.


                                            Shortly after IAE was established, GSA and the ACE created a funding
                                            structure in which agencies contribute to the program based on their level
                                            of contracting activity. GSA negotiated memorandums of understanding
                                            (MOU) with the 24 departments and agencies covered by the Chief
                                            Financial Officers Act to collect funding contributions, which pay for the




                                            Page 5                                                           GAO-12-429 Federal Contracting
                                          development, operations, and maintenance of IAE’s portfolio. 3 When
                                          developing its annual budget, GSA estimates what the cost of operating
                                          IAE will be and then determines each agency’s contribution based on its
                                          contracting activity (number and value of contracts) the prior year. For
                                          example, DOD is the largest agency in terms of the number and value of
                                          contracts awarded and therefore contributes the most, 65 percent of the
                                          total. 4 The Federal Funding Accountability and Transparency Act of 2006
                                          (Transparency Act) created new reporting requirements for federal loan
                                          and grant recipients that increased the use of certain IAE systems. 5 For
                                          example, to comply with the Transparency Act, OMB required grant
                                          recipients to register in CCR. In 2008, GSA negotiated separate MOUs
                                          with 22 departments and agencies for additional contributions to fund the
                                          higher costs associated with providing greater support to grant and loan
                                          recipients. Overall, since 2002, about $396 million has been allocated to
                                          IAE, as shown in table 2.

Table 2: IAE Memorandum of Understanding (MOU) Contributions and Other Funding, Fiscal Years 2002-2011

Dollars in millions
                          2002    2003          2004          2005          2006     2007    2008    2009        2010     2011       Total
Contract MOUs             $7.8    $21.0         $28.6        $34.9         $36.3     $38.7   $39.7   $40.8      $41.3     $42.6    $331.9
Grant & loan MOUs          n/a      n/a            n/a          n/a           n/a      n/a     6.2     6.5         5.2      6.5      24.4
Other funding             16.0     22.7            n/a          n/a           n/a      n/a     1.0     n/a         n/a      n/a      39.7
Total                    $23.8    $43.8         $28.6        $34.9         $36.3     $38.7   $47.0   $47.3      $46.5     $49.1    $396.0
                                          Source: GAO analysis of GSA information.

                                          Note: The “Other funding” amounts in 2002 and 2003 were from GSA’s General Supply Fund plus a
                                          small amount from OMB and the Peace Corps. The 2008 amount was from OMB.




                                          3
                                            The Chief Financial Officers Act of 1990 (Pub. L. No. 101-576) was the beginning of a
                                          series of management reform legislation to improve the general financial management of
                                          the federal government. Among other things, it created the position of chief financial
                                          officer for certain federal departments and agencies; currently, there are 24 federal chief
                                          financial officers.
                                          4
                                           DOD’s contribution is capped at 65 percent of the total contributions. DOD pays 65
                                          percent or its proportional share based on the number and value of its contracts,
                                          whichever is less. GSA officials said that DOD has had more than 65 percent of the
                                          contracting activity each year so it has always paid 65 percent of the contributions.
                                          5
                                              Pub. L. No. 109-282.




                                          Page 6                                                             GAO-12-429 Federal Contracting
                            Another key component that supports the IAE systems is GSA’s contract
                            with Dun & Bradstreet for the use of the Data Universal Numbering
                            System (DUNS) and other services to verify and standardize information
                            on contract, grant, and loan recipients. GSA uses the DUNS numbers as
                            unique identifiers for organizing and tracking these entities, including
                            making linkages between parent and subsidiary businesses, within and
                            across the IAE systems. The federal government has used DUNS
                            numbers since 1978, and the Federal Acquisition Regulation (FAR) has
                            required all prospective government contractors to obtain DUNS numbers
                            since 1998. 6 Since 2003, OMB has also required prospective grant
                            recipients to obtain DUNS numbers. 7 IAE’s contract with Dun &
                            Bradstreet also supports the use of DUNS numbers for other government-
                            wide information systems, such as USASpending.gov. 8 GSA’s current
                            contract with Dun & Bradstreet was awarded in 2010 and is valued at
                            over $135 million for up to 8 years. The Dun & Bradstreet contract is the
                            largest IAE contract.


Since 2008, IAE Has         In December 2008, the ACE approved a proposal to aggregate the IAE
Sought to Consolidate Its   data systems into a new System for Award Management (SAM). GSA
Portfolio                   officials said that while the existing IAE systems had provided benefits,
                            additional efficiencies could be achieved. For example, the systems
                            contained overlapping data, had separate sign-on procedures, and each
                            system had different hardware, software, and helpdesks. Consolidating
                            the IAE portfolio was intended to reduce costs by eliminating redundancy,
                            streamlining acquisition processes, and consolidating infrastructure.

                            GSA is relying on an acquisition strategy to develop SAM that is different
                            from what it has used in the past when GSA turned to a single contractor
                            to develop, operate, and support each IAE system. SAM will be split into
                            multiple components with separate contractors responsible for (1) system



                            6
                             FAR Subpart 4.11 generally requires prospective contractors to register in CCR and
                            FAR § 52.204-7 requires a DUNS number to register in CCR.
                            7
                             Office of Management and Budget Memorandum M-03-16, “OMB Issues Grants
                            Management Policies” (July 15, 2003).
                            8
                              The Federal Funding Accountability and Transparency Act of 2006 required OMB to
                            ensure the existence and operation of a single searchable website that included
                            information on contracts, grants, loans, and other types of federal spending.
                            USAspending.gov was launched in December 2007 to fulfill these requirements.




                            Page 7                                                   GAO-12-429 Federal Contracting
design and operations, (2) software development, (3) hosting services,
and (4) help desk support (see table 3). The new approach to developing
SAM is intended to address lessons learned from past IAE systems.
Unlike the legacy systems, the government will own the SAM software as
open-source code, 9 the system architecture, and all supporting hardware.
IAE officials believe that an open-source approach to software and
development will result in lower costs to the government because IAE will
be able to avoid sole-source modifications to the system and
competitively award future enhancement contracts. GSA officials said that
in the past, system enhancements were expensive, in part because the
incumbent contractors knew that GSA’s only alternative to a sole-source
enhancement contract was to develop a new system. Also, GSA officials
said the plan to consolidate help desk services into one single contractor
is an effective way to control cost and service levels.




9
 GSA’s definition of open-source code refers to making any custom developed software
and associated documentation for SAM publicly available and accessible to other
contractors.




Page 8                                                  GAO-12-429 Federal Contracting
Table 3: SAM Contractors and Contracts

Component                 Contractor                    Contract terms                 Description
System Design &           IBM                           Fixed-price, service           This contractor is responsible for developing the
Operations                                              contract awarded in            overall system architecture, migrating legacy
                                                        February 2010 for $74          systems into SAM, and operating and
                                                        million over 8 years—3         maintaining SAM.
                                                        base years and 5 option
                                                        years
Consolidated Hosting      Qwest                         Fixed-price service contract   This contractor will be responsible for providing
Service                                                 awarded in November 2010       the hosting facility for the SAM system and all
                                                        under Networx, a GSA           data, which will be stored on government-owned
                                                        multiagency contract, for      hardware.
                                                        $3.3 million over 5 years.
Software Development      Global Computer               Fixed-price contract           Each phase of SAM development will require
                          Enterprises (GCE)             awarded in July 2011 for       additional software. The software for each phase
                          (Phase 1)                     $1.2 million over 8 months.    will be contracted separately and competitively.
                          (other contracts to be                                       As new system requirements are developed,
                          awarded for later                                            additional contracts will be awarded.
                          phases)
                                                   a
Help Desk (known as       Hewlett- Packard (HP)         Awarded as a fixed- price   SAM users will be supported by a single help
Federal Service Desk)                                   contract in March 2009 for desk, which will assist with tasks such as
                                                        5 years—1 base year and 4 contractor registration and bid submission.
                                                        option years. The estimated
                                                        amount of the contract was
                                                        $2.3 million.
                                         Source: GAO analysis of GSA information.
                                         a
                                          Electronic Data Systems (EDS) initially was awarded the contract but was acquired by Hewlett-
                                         Packard after the contract award.


                                         With SAM, the system design contractor (IBM) will be responsible for
                                         developing the system architecture, defining technical requirements,
                                         specifying data migration procedures for each of the legacy systems, and
                                         operating and maintaining SAM. Once IBM has specified the technical
                                         requirements and data migration procedures for the legacy systems, a
                                         second contractor will be responsible for writing the software code that
                                         will make up SAM. GCE will write the code for the first phase and GSA
                                         will competitively award software contracts for the subsequent phases.
                                         IBM will then test and validate the software, implement the system
                                         migration, and begin operating and maintaining the new SAM system. A
                                         third contractor (Qwest) will provide hosting services, which involves
                                         providing a secure facility to physically house SAM and power and
                                         Internet connectivity. GSA will provide the hardware (hard drives, servers,
                                         and other equipment) and software (operating system, databases, and
                                         other software licenses) for the hosting facility. Finally, a fourth contractor
                                         (HP) will be responsible for providing a consolidated help desk to support
                                         SAM users.


                                         Page 9                                                           GAO-12-429 Federal Contracting
                      GSA initially planned to migrate IAE systems to SAM in four phases
                      based on groups of legacy IAE systems (see table 4).

                      Table 4: Initial SAM Development Phases (as of June 2010)

                       Phases        Systems to be consolidated                    Planned completion date
                       1             CCR, ORCA, EPLS                               December 2011
                       2             FedBizOpps, CFDA, eSRS                        March 2012
                       3             WDOL                                          July 2012
                       4             FPDS-NG                                       February 2014

                      Source: GSA.
                      Note: While not part of the IAE portfolio, the Catalog of Federal Domestic Assistance (CFDA) is a
                      system that will become part of a consolidated IAE data system.


                      GSA and ACE officials viewed a phased approach as having less risk
                      than replacing all the legacy systems at the same time. The timing of
                      each phase was generally established to coincide with expiring legacy
                      system contracts. As each phase is completed, the capabilities of the
                      systems in that phase will be added to SAM and the legacy systems will
                      be shut down. As discussed above, each development phase requires
                      contributions from the four SAM contractors, with GSA managing the
                      various contracts. GSA officials anticipate that additional systems may be
                      added to SAM in the future. For example, the contract with IBM includes
                      an option to migrate the Past Performance Information Retrieval System
                      (PPIRS), which provides access to past performance information on
                      contractors, to SAM. In addition, FedReg has been merged with the
                      Central Contractor Registration (CCR) and will be included in phase 1.


                      GSA and its contractors have made progress in developing SAM and
Progress Made in      phase 1 is scheduled to be completed in May 2012. GSA also has worked
Developing SAM, but   with contractors to establish a hosting center for the system and a help
                      desk to support users. However, since 2009, the costs of developing SAM
Cost Increases and    have grown significantly. The higher development costs were primarily
Schedule Delays       due to the failure to adequately execute the SAM hosting strategy as
Could Jeopardize      initially planned. To a lesser extent, external factors, including recent
                      statutory requirements and policy changes, have contributed to higher
Program Completion    operational costs as well by increasing the demand for help desk
                      services. While IAE costs were increasing, the program also experienced
                      a significant funding shortage in fiscal years 2011 and 2012. In response
                      to rising costs and resource constraints, GSA officials have delayed




                      Page 10                                                           GAO-12-429 Federal Contracting
                           SAM’s development schedule and taken other actions to reduce or defer
                           other costs.


GSA Has Made Progress in   GSA has made progress in consolidating the IAE systems. Specifically,
Developing SAM             phase 1 of SAM is nearly complete and GSA has created a consolidated
                           hosting environment and established a single help desk called the
                           Federal Service Desk (FSD). GSA and its contractor, IBM, have
                           completed the overarching design of SAM as well as the phase 1
                           technical requirements. GSA officials also report that the agency has
                           purchased the hosting hardware and software needed for phase 1 and
                           IBM is preparing to make the hosting facility operational in time to launch
                           phase 1. Phase 1 is scheduled to go live in May 2012 and will replace
                           three IAE systems—CCR, ORCA, and EPLS. Officials report that the
                           phase 1 software developer is currently working closely with IBM to
                           coordinate the testing and validation of the phase 1 software. IBM has
                           begun developing the phase 2 requirements and GSA is in the process of
                           competing the phase 2 software development contract. Phase 3 efforts
                           have not yet begun. GSA officials told us FSD currently provides help
                           desk services for most of the IAE data systems. Help desk responsibility
                           for three systems remains with their legacy vendors. GSA officials expect
                           help desk services for these remaining systems to transition to FSD as
                           they become part of SAM.


IAE Has Experienced Cost   Costs of the various SAM components have increased significantly over
Growth                     the past 3 years. GSA did not develop a formal cost baseline when SAM
                           development was started, so we compared the initial contract value for
                           each of the SAM components to the current contract estimates. 10 GSA
                           currently estimates that the various SAM-related contracts will cost
                           $181.1 million. This represents an increase of $85 million, nearly 90
                           percent, over the initial contract award amounts which totaled about $96
                           million (see fig. 1).


                           10
                             In lieu of a program baseline, IAE program officials referred us to the independent
                           government estimates GSA prepared prior to the solicitation of each contract. After
                           reviewing the initial estimates and discussing them with GSA officials, we believed that
                           comparing the initial contract price award to the current contract cost estimates more
                           accurately reflects the cost growth for each SAM component. Specifically, GSA officials
                           said that they believed the initial estimate for the IBM contract was overstated and the
                           contract was awarded for a much lower price. The initial cost estimate for the contract was
                           about $117 million, but the actual contract award was for $74 million.




                           Page 11                                                    GAO-12-429 Federal Contracting
Figure 1: Cost Growth for the SAM Components




Most of the cost growth, about $65 million, is due to higher than expected
hosting costs. Hosting consists of a secure facility with Internet
connectivity; the hardware on which the system will be installed; the
operating system and other software necessary to operate the code that
will make up SAM; and the operation and maintenance of the hosting
environment. GSA estimated in 2008 that hosting costs for the IAE
systems were $2.8 million and that annual costs would be much less than
that after moving to a single hosting environment. However, we estimate
that SAM hosting costs will average $8 million to $9 million per year. The
higher costs are largely due to GSA omitting key components from its
contracting strategy for acquiring hosting services. GSA’s initial strategy
was to contract with a single company for all of these hosting services.
However, shortly after beginning SAM development, IAE awarded a
contract (to Qwest) for a more limited set of hosting services that only




Page 12                                          GAO-12-429 Federal Contracting
included the hosting facility and Internet connectivity. 11 It is not clear why
GSA did not include the hosting hardware, software, and operation and
maintenance services that were needed. Program officials told us that at
the time they believed that the multiagency telecommunications contract
used to obtain hosting services from Qwest did not offer the
comprehensive services that were needed. Officials also said they
thought IBM was responsible for providing these items, but later realized
that was not the case. GSA decided to purchase the hosting hardware
and software itself under existing GSA schedule contracts at an estimated
cost of $29 million. After negotiations with IBM, GSA modified IBM’s
contract in June 2011, adding $36 million to the $74 million contract price
to have IBM install and operate and maintain the hosting hardware and
software in Qwest’s facility. It took GSA more than a year to finalize its
current hosting approach and program officials said they have purchased
hosting hardware and software through 13 different contracts instead of
just 1 contract as intended under their original hosting strategy.

The help desk function, FSD, also experienced cost growth over its first
years of operation as the expected cost has nearly doubled to $33 million.
Most of this growth appears to have resulted from factors outside of
GSA’s control. GSA officials told us the FSD contract price is driven by
the amount of support activity provided under the contract. The higher
costs reflect a greater than expected demand associated primarily with
one data system, CCR. This system serves as a registry for any
organization that wants to do business with the federal government.
Several events occurred that substantially increased the number of CCR
help desk calls. Both the Federal Funding Accountability and
Transparency Act of 2006 (Transparency Act) and the American
Recovery and Reinvestment Act of 2009 (Recovery Act) included
provisions that increased or had the effect of increasing the number of
CCR registrants. Specifically, the Transparency Act contained
requirements for a single searchable website with data on federal loan,
grant, and contract recipients, which prompted the government to require
grant recipients to register in CCR. 12 The Recovery Act temporarily


11
  Qwest is providing services under a multiagency telecommunications contract available
for governmentwide use, known as Networx, which is managed by GSA and offers federal
agencies an opportunity to acquire telecommunications services by placing orders against
the contract.
12
  In 2003 OMB directed federal agencies to require grantees to get DUNS numbers in
order to apply for federal grants. Grantees were not required to register in CCR at that
time, but were directed to do so by OMB in August 2010.




Page 13                                                     GAO-12-429 Federal Contracting
                            increased the number of loan and grant recipients, which also led to
                            greater numbers of CCR registrants. Also, in late 2008, the CCR login
                            process changed in response to actions taken by DOD to improve
                            password security measures. As a result of these changes, there was a
                            drastic rise in help desk activity from CCR customers.


Cost Growth and Resource    While SAM costs were beginning to increase, the program also did not
Constraints Prompted GSA    receive funding increases it requested. Up through fiscal year 2010, IAE
to Delay the SAM Schedule   was primarily funded through agency contributions. When the ACE
                            approved SAM development in 2008, program officials believed that
and Defer Costs             agency contributions would be sufficient to cover the development costs.
                            However, GSA had underestimated its funding needs and soon after the
                            start of SAM development, GSA officials recognized that the amount of
                            agency contributions was insufficient to pay to operate the existing IAE
                            systems and develop SAM over the next several years. GSA officials told
                            us they consulted with OMB and considered various funding options to
                            pay for the development of SAM, including increased agency
                            contributions, a separate appropriation request, or user fees. Ultimately,
                            with OMB’s support, GSA decided to seek additional funding through an
                            appropriation and requested $15 million for fiscal year 2011. The program
                            received $7 million of the requested amount. 13 GSA also requested a $38
                            million appropriation in fiscal year 2012 for SAM, but did not receive any
                            appropriations from Congress for the year. GSA has made a $21 million
                            appropriation request for fiscal year 2013.

                            GSA officials responded to rising costs and limited resources by
                            modifying and delaying the SAM schedule, and deferring payments or
                            reducing contract requirements where possible. One of the most
                            significant changes was GSA’s decision to not transition FPDS-NG to the
                            SAM contract as an interim step prior to FPDS-NG being fully integrated




                            13
                              IAE does not have its own appropriation account. IAE appropriation requests have come
                            through GSA’s Office of Governmentwide Policy.




                            Page 14                                                 GAO-12-429 Federal Contracting
into SAM. 14 Under the SAM design contract, FPDS-NG was scheduled to
be transitioned in June 2010 from the FPDS-NG legacy contractor to IBM.
IBM then would have been responsible for operating and maintaining
FPDS-NG “as-is” under the SAM contract and GSA could have ended the
FPDS-NG legacy contract. GSA officials said that the transition did not
occur because they had neglected to account for the hardware and
software required to host FPDS-NG in the new SAM hosting facility and
could not afford to buy these components. Instead, GSA awarded a
follow-on contract to the FPDS-NG legacy contractor that cost an
unanticipated $5.4 million in fiscal year 2011 and is expected to cost
another $3.8 million in fiscal year 2012 and a similar amount annually
through 2015. 15

GSA also delayed the schedule for moving the other IAE systems to
SAM. In 2010, GSA expected to complete all of the development phases
of SAM in early 2014, but under the current schedule the final phase will
be completed in 2015, 20 months later than planned (see fig. 2).




14
  GSA refers to the process of incorporating capabilities of a system into SAM as
“migrating” that system. GSA also envisioned an optional intermediate step which it refers
to as “transitioning.” Transitioning a system would entail continuing to operate the system
“as-is,” except that it would be moved to the SAM hosting facility and operated by IBM
instead of the legacy contractor. All of the IAE systems will be migrated, but GSA gave
IBM discretion as to which systems would be transitioned. When IBM’s contract was
awarded, the company was required to develop a plan for which systems would be
transitioned. FPDS-NG was the only program that IBM initially selected for transition.
15
  GSA also modified the IBM contract to remove responsibility for transitioning FPDS-NG
and reduced the contract price by $2 million.




Page 15                                                    GAO-12-429 Federal Contracting
Figure 2: SAM Schedule Delays by Phase




There was a 5-month delay in implementing phase 1. Delays for phases 2
and 3 are much longer, and GSA officials cited the higher costs for
hosting services as the main reason for delaying the phases. Phase 2 has
also recently been split into subphases. 16 While the systems included in
phase 2a have been delayed for several months, GSA officials said they
can complete this phase with available resources because the systems in
phase 2a will not require a significant investment in hosting hardware and
software. Phase 2b will not be completed until mid-2014, approximately 2
years later than originally planned, in part because GSA cannot afford the
estimated $21 million necessary to complete the phase. Furthermore, the
migration of FPDS-NG is not scheduled to be completed until 20 months
later than planned, in 2015.


16
 Phase 2a includes CFDA and eSRS/FSRS. Phase 2b includes FedBizOpps and WDOL.




Page 16                                           GAO-12-429 Federal Contracting
                     In addition to delaying SAM’s development schedule, GSA officials said
                     they have taken other steps to defer or reduce costs. In 2011, GSA
                     modified the payment schedule for the Dun & Bradstreet DUNS contract
                     to delay payments from fiscal year 2011 to fiscal year 2012. Under the
                     original contract, GSA was scheduled to make an $18 million payment in
                     August 2011. To free up funds in fiscal year 2011, GSA negotiated a
                     modification with Dun & Bradstreet that allowed GSA to pay only $3.8
                     million in 2011 and deferred the remaining payments to later years. In
                     addition, GSA cut FSD costs by reducing the required level of services
                     stated in the contract. For instance, GSA capped the number of calls the
                     contractor needs to respond to every month, which program officials said
                     has reduced costs and made it easier to estimate future costs. However,
                     the cap on calls may reduce the responsiveness of the help desk to
                     users. 17 GSA officials said they also stopped making investments in the
                     legacy systems and stopped making all but the most minor of changes to
                     the systems. For example, GSA officials said they would fix hyperlinks on
                     the system websites and make other small corrections, but would avoid
                     making larger changes to the legacy systems unless absolutely
                     necessary.


                     Schedule delays and other GSA actions taken in response to cost growth
Consequences of      and funding shortages are likely to lead to further cost increases that
Higher SAM           pose a risk to IAE. Delaying the SAM schedule will require GSA to
                     continue operating the legacy IAE systems, in some cases for years
Development Costs    longer than originally expected. At the same time, GSA must contend with
Threaten IAE Going   higher hosting and help desk costs that will extend over several more
Forward              years. While GSA has taken some steps to reduce these costs, it has not
                     reevaluated whether its current acquisition strategy, including its
                     approach to acquire hosting services, is still the most cost-effective
                     approach to implement SAM. In addition, although the SAM development
                     phases have been pushed out several years, GSA has not modified its
                     development contract with IBM to reflect these changes. The program
                     continues to pay the same fixed-price amount to the contractor for system
                     development activities as well as operation and maintenance of SAM,
                     even though there was little to operate and maintain for the first 2 years of
                     development.


                     17
                       GSA officials said that the first 23,000 calls each month must be answered according to
                     the service agreement in the contract. For any calls above that amount, the contractor
                     may answer them, but is not required to.




                     Page 17                                                   GAO-12-429 Federal Contracting
Increased IAE Costs   GSA delayed the SAM development schedule in response to cost growth
Challenge Program     and reduced funding, but those delays will result in additional cost
                      increases as GSA has to extend the life of the legacy systems. For
                      example, the decision to not transition FPDS-NG to the IBM contract as
                      originally planned could increase GSA’s costs by approximately $16
                      million as GSA will have to continue operating FPDS-NG for 5 years
                      longer than expected. 18 Similarly, the 2-year delay in migrating
                      FedBizOpps into SAM means that GSA will have to spend $2.8 million on
                      FedBizOpps in fiscal year 2012. Assuming costs remain the same,
                      continuing to operate FedBizOpps for 2 additional years will increase
                      costs by approximately $5.6 million. Schedule delays may also increase
                      FSD costs. GSA officials said that the majority of the help desk calls are
                      associated with CCR whose migration has been delayed 5 months. In
                      addition to paying the CCR legacy vendor to continue operating CCR for
                      5 additional months, GSA will also have to pay the FSD vendor to
                      continue supporting CCR.

                      GSA is also grappling with higher SAM development costs, but has not
                      assessed whether its current acquisition approach is still cost-effective.
                      For example, GSA abandoned its initial hosting strategy without
                      evaluating the cost or schedule implications of doing so. The initial
                      strategy to use a single contractor to provide consolidated hosting
                      services was intended to achieve cost savings, but the revised approach,
                      which relies on multiple contractors, has proven to be much more costly
                      than expected and led to schedule delays. Hosting costs are now a
                      primary impediment to moving forward because GSA cannot afford to
                      purchase the hardware and software necessary to complete phases 2
                      and 3. In addition, according to program officials, GSA efforts to procure
                      hosting hardware and software have resulted in 13 different contracts, the
                      management of which has required additional program support
                      resources.

                      GSA also continues to pay the SAM development contractor, IBM,
                      essentially the same amount called for in the original contract even



                      18
                        Operating FPDS-NG will cost approximately $20.8 million over 5 years—$5.4 million in
                      2011 and approximately $3.8 million annually for fiscal years 2012 through 2015. This will
                      be partially offset by savings of approximately $5 million that resulted from GSA modifying
                      IBM’s contract to remove responsibility for FPDS-NG. However, the net reduction in the
                      IBM contract was only $2 million because GSA added in $2.9 million in additional services
                      related to EPLS and ORCA.




                      Page 18                                                    GAO-12-429 Federal Contracting
though schedule delays have pushed work out into the future. IBM’s
contract includes responsibility for designing as well as operating and
maintaining SAM. According to the fixed-price contract, SAM will be
developed in phases, yet the payment schedule specified that IBM was to
be paid a set amount each month (approximately 3 percent of the total
contract price) for all activities under the 36-month base contract. This
payment schedule may have been appropriate under GSA’s initial plan,
but the development schedule changed shortly after the contract was
awarded and much of the work to migrate systems into SAM will occur
much later than planned. While the SAM transition and migration
schedules have changed considerably, GSA has not adjusted IBM’s
payment schedule to reflect the current development schedule. 19 For
example, IBM was not responsible for operating any IAE systems until the
Excluded Parties List System (EPLS) was transitioned to the SAM
contract in July 2011—17 months into the contract. By that time, GSA had
already paid IBM $6.3 million of the $20.3 million contract price for SAM
operation and maintenance. GSA and IBM officials noted that payments
to date have been for planning and preparing to migrate the legacy
systems to SAM. However, under the original schedule, IBM would have
performed these services as well as operated FPDS-NG for the same
cost. Similarly, GSA has paid more than half of the contract price for
phase 2 migration activities even though phase 2 is not scheduled to be
completed until May 2014. 20

We raised issues about the increasing cost with SAM, and the viability of
the hosting approach and the development contract structure with GSA
officials and they recently told us that GSA has initiated an internal
review, called a TechStat, of IAE. 21 A TechStat is intended to be an
evidence-based review of underperforming information technology
investment during which agency leadership reviews a program, examines


19
  Program officials said that during negotiations with IBM to remove the FPDS-NG
transition, GSA did receive consideration for certain work that was scheduled but not
performed during the first 2 years of the contract.
20
  GSA restructured its phases so the systems that were initially in phases 2 and 3 were
combined into phase 2. Subsequently, phase 2 was divided into phases 2a and 2b. For
phase 2a, eSRS and FSRS are scheduled to be migrated to SAM in December 2012 and
CFDA is scheduled for migration in June 2013. Phase 2b (FedBizOpps and WDOL) is
scheduled for completion in May 2014.
21
  In December 2010, OMB called on agency CIOs to implement TechStats in order to turn
around or terminate one-third of poorly performing projects in their portfolio.




Page 19                                                    GAO-12-429 Federal Contracting
              performance, and develops corrective actions as necessary. Program
              officials said their current focus is on completing phase 1 of SAM, but
              they may revisit their hosting strategy once the phase is completed. GSA
              officials also told us that they will begin negotiating with IBM to change
              the contract to reflect current schedule changes and available funding.


              GSA’s effort to consolidate the IAE legacy systems into SAM has the
Conclusions   potential to reduce agency costs, eliminate redundancy, and streamline
              government acquisition processes. Two years into development,
              however, SAM is in trouble due to higher costs that planned funding
              levels do not cover. Most of the cost growth seen to date is largely the
              result of mistakes the program made. Rather than using a consolidated
              hosting strategy as initially proposed, the program adopted a piecemeal
              approach involving multiple sources that will cost about $65 million more
              than expected. The need for additional resources to cover the increase in
              hosting costs, however, coincided with significant funding shortfalls in the
              past 2 years and now the program cannot afford to develop SAM as
              planned.

              Despite dramatically different circumstances marked by higher costs and
              constrained resources, GSA has not reassessed its business case for
              SAM. Specifically, GSA has not assessed whether developing SAM is still
              a better option than maintaining the status quo or whether the current
              development strategy, involving multiple vendors, is more cost-effective
              than using a single vendor. Ensuring there is a sound business case for
              moving forward will be critical before establishing an acquisition strategy
              to address the program’s problems. Also, while GSA has taken steps to
              reduce costs, by delaying development and deferring some costs to the
              future, there may be more that can be done to stretch available
              resources. For example, in light of higher hosting costs than expected,
              GSA has not reevaluated whether its hosting strategy is the most cost-
              effective approach. In addition, GSA has not modified the primary SAM
              development contract to align payments with program schedule delays.
              Although GSA officials recently indicated they will begin negotiating
              changes to the development contract, it continues to pay the contractor
              for operation and maintenance activities even though many of the IAE
              systems will not be migrated into SAM for several years. Tying contract
              payments to the migration of the data systems and schedule milestones
              would ensure that the government is not paying for work that has not yet
              been accomplished.




              Page 20                                          GAO-12-429 Federal Contracting
                      To ensure that GSA has a sound approach for providing IAE services in
Recommendations for   the future, we recommend that the Administrator of GSA take the
Executive Action      following two actions:
                      •    Reassess the SAM business case to compare the costs and benefits
                           of various alternatives such as:
                           •   terminating SAM development and continuing to operate the
                               legacy systems,
                           •   maintaining the current acquisition approach to developing SAM,
                           •   pursuing a different acquisition strategy for SAM, such as using a
                               single contractor to develop and operate the system.

                      •   If the results of this assessment support continuing the current
                          acquisition approach, then:
                          •    reevaluate the hosting strategy to ensure that it is the most cost-
                               effective approach that can be supported with available resources,
                               and
                          •    take steps to ensure that the SAM development contract
                               payments are more closely aligned with the program schedule and
                               delivery of capabilities.

                      We provided a draft of this report to GSA and OMB. In its written
Agency Comments       comments, GSA concurred with our recommendations and indicated that
and Our Evaluation    it will take appropriate action. GSA added that it has established an
                      integrated project team that will reassess and develop a broad plan
                      covering both SAM and the IAE program as a whole. GSA’s written
                      comments appear in appendix III. GSA also provided technical comments
                      that we incorporated, as appropriate. OMB informed us that it did not
                      have comments on the draft.


                      We are sending copies of this report to interested congressional
                      committees, the Administrator of General Services and the Director of the
                      Office of Management and Budget. In addition, this report will be available
                      at no charge on the GAO website at http://www.gao.gov.




                      Page 21                                          GAO-12-429 Federal Contracting
If you or your staff have questions about this report, please call me at
(202) 512-4841. Contact points for our Offices of Congressional Relations
and Public Affairs may be found on the last page of this report. GAO staff
who made major contributions to this report are listed in appendix IV.




William T. Woods
Director
Acquisition and Sourcing Management




Page 22                                         GAO-12-429 Federal Contracting
Appendix I: Scope and Methodology
             Appendix I: Scope and Methodology




             To determine how the General Services Administration (GSA) developed
             the Integrated Acquisition Environment (IAE) initiative, we interviewed IAE
             officials and analyzed relevant documents. Specifically, we interviewed
             former and current IAE officials and the two Acquisition Committee for E-
             Gov (ACE) co-chairs from the Departments of Defense and Interior.
             These individuals described the acquisition strategy and governance
             structure that IAE developed in its early years. We verified these accounts
             with historical documents, such as internal newsletters and minutes from
             the ACE meetings that documented IAE’s development. To learn about
             the acquisition strategy IAE used to develop the System for Award
             Management (SAM), we interviewed IAE officials, reviewed IAE
             presentations, and analyzed SAM contract documents. We interviewed
             officials from IAE and the Office of Management and Budget (OMB) to
             learn about the program’s funding arrangement, obtained historical
             funding documents, and reviewed four of the interagency memorandums
             of understanding (MOU) used to fund IAE.

             To determine the progress IAE has made in implementing SAM, we
             interviewed IAE officials and two of the contractors that are implementing
             SAM—IBM and GCE. We also reviewed IAE presentations, agency
             memorandums and communications, and analyzed SAM-related
             contracts. Due to lack of a formal cost baseline when SAM development
             started, we focused on the growth of the individual contracts of SAM,
             such as the IBM contract and the help desk contract. To determine SAM’s
             schedule growth, we used the original schedule created by IBM shortly
             after the contract was awarded and compared that to the latest schedule
             IAE officials provided us.

             To understand and analyze the challenges IAE is facing in their
             consolidation, we interviewed officials from GSA, IAE, and OMB and
             analyzed SAM-related contracts. We also discussed IAE’s acquisition
             strategy with information technology contractors such as IBM and GCE.
             In order to understand IAE’s budget issues, we analyzed budget
             documents identifying projected funding and expenditures. We also
             analyzed the structure of IBM’s contract and verified our findings with IAE
             officials.

             We conducted this performance audit from September 2011 to March
             2012 in accordance with generally accepted government auditing
             standards. Those standards require that we plan and perform the audit to
             obtain sufficient, appropriate evidence to provide a reasonable basis for
             our findings and conclusions based on our audit objectives. We believe



             Page 23                                          GAO-12-429 Federal Contracting
Appendix I: Scope and Methodology




that the evidence obtained provides a reasonable basis for our findings
and conclusions based on our audit objectives.




Page 24                                         GAO-12-429 Federal Contracting
Appendix II: Integrated Acquisition
                     Appendix II: Integrated Acquisition
                     Environment (IAE) Data Systems



Environment (IAE) Data Systems

Data system          Central Contractor Registration (CCR)

Description          CCR originally was a Department of Defense (DOD) data system that
                     was brought into the Integrated Acquisition Environment (IAE) portfolio in
                     2003 and adapted for use across the federal government. CCR is the
                     primary registrant database for the U.S. government. The government
                     uses CCR to collect, validate, store, and disseminate data in support of
                     agency acquisition and award missions. According to the Federal
                     Acquisition Regulation, prospective contractors must register in CCR prior
                     to the award of a contract. Also, to register in CCR, a firm must have a
                     Dun & Bradstreet Data Universal Number System (DUNS) number.

Vendor information   The General Services Administration (GSA) has a contract with Northrop
                     Grumman Information Technology to operate and maintain CCR. This
                     contract ends September 2012.

Data system          Electronic Subcontracting Reporting System (eSRS)

Description          The Electronic Subcontract Reporting System (eSRS) was created in
                     2005 and intended to streamline the small business subcontracting
                     program reporting process and provide the data to agencies in a manner
                     that will enable them to more effectively manage the program. The Small
                     Business Administration partnered with the IAE and other agency
                     partners to develop the eSRS system. The eSRS is an Internet-based
                     reporting tool that eliminates the need for contractors to submit and
                     process Individual Subcontracting Reports (SF 294) and Summary
                     Subcontracting Reports (SF 295) in hard copy. In 2007, the eSRS
                     implemented an interface with FPDS-NG, which permits contractors to
                     enter a contract number into eSRS and have the contract data retrieved
                     from FPDS-NG for use in the subcontracting reports.

Vendor information   IAE has a contract with Symplicity, the original developer of eSRS, to
                     provide operation and maintenance of eSRS. This contract will expire in
                     September 2012, and IAE has plans to enter an interim contract with the
                     same vendor until the system is migrated to SAM.


Data system          Excluded Parties List System (EPLS)

Description          The purpose of EPLS is to provide a single comprehensive list of
                     individuals and firms excluded from receiving federal contracts or
                     federally approved subcontracts and from certain types of federal
                     financial and nonfinancial assistance and benefits. Contracting officers


                     Page 25                                          GAO-12-429 Federal Contracting
                     Appendix II: Integrated Acquisition
                     Environment (IAE) Data Systems




                     use EPLS to determine whether to enter into a transaction with a specific
                     contractor. EPLS is also available to the general public.

Vendor information   In 2011, IBM assumed responsibility to maintain and operate EPLS under
                     the System for Award Management (SAM) contract.

Data system          Federal Business Opportunities (FedBizOpps)

Description          FedBizOpps is the single point of entry for federal buyers to publish and
                     for vendors to find federal business opportunities over $25,000 across
                     departments and agencies. Vendors can conduct ad hoc searches or set
                     up automatic queries to notify them when opportunities meeting their
                     criteria are posted.

Vendor information   IAE has a contract with Symplicity to operate and maintain FedBizOpps.
                     IAE plans to exercise the two option years on the current contract, signed
                     in 2011, and to extend it again until FedBizOpps is migrated to SAM.


Data system          Federal Agency Registration (FedReg)

Description          In response to GAO’s classification of intragovernmental transactions as
                     a governmentwide material weakness, OMB and the IAE collaborated
                     with DOD to create FedReg in 2003. FedReg collects standard data on
                     federal agency buyers and sellers who perform intragovernmental
                     transactions. FedReg sends data on buyers and sellers to the
                     Intragovernmental Transaction Exchange and Intragovernmental
                     Transaction System to assist in tracking all intragovernmental
                     transactions. FedReg also serves as a sort of government “Yellow
                     Pages,” providing information on federal sellers of goods and services. All
                     federal entities engaged in intragovernmental buying or selling must be
                     registered. FedReg is now embedded within CCR.

Vendor information   GSA has a contract with Northrop Grumman Information Technology to
                     operate and maintain FedReg (and CCR). This contract ends September
                     2012.

Data system          Federal Procurement Data System – Next Generation (FPDS-NG)

Description          The Federal Procurement Data System-Next Generation is a database
                     that provides information on government contracting actions over $3,000,
                     procurement trends, and achievement of socioeconomic goals, such as
                     small business participation. In fiscal year 2011, there were nearly


                     Page 26                                         GAO-12-429 Federal Contracting
                     Appendix II: Integrated Acquisition
                     Environment (IAE) Data Systems




                     17,000,000 transactions recorded in FPDS-NG. FPDS-NG has been the
                     primary governmentwide contracting database since 1978, and it serves
                     as the backbone for other government contracting data systems. Since
                     1982, GSA has administered the database on behalf of the Office of
                     Federal Procurement Policy.

Vendor information   GSA awarded the FPDS-NG contract to Global Computer Enterprises,
                     Inc., in 2011, and can exercise option years through 2015.

Data system          Wage Determinations OnLine.Gov (WDOL)

Description          WDOL provides a single location for federal contracting officers to obtain
                     Service Contract Act and Davis-Bacon Act wage determinations. These
                     acts require contractors and subcontractors to pay no less than the locally
                     prevailing wages for services contracts and public works projects. In
                     addition to wage determinations, the site also provides information on
                     labor standards, federal and agency acquisition regulations, agency
                     contracting processes, and other related information.

Vendor information   WDOL is physically maintained by the National Technical Information
                     Service, an agency of the Department of Commerce.


Data system          Online Representations and Certifications Application (ORCA)

Description          This application enables prospective government contractors to
                     electronically submit required certifications and representations for
                     responses to government solicitations for all federal contracts, instead of
                     using hard copies for individual awards. The representations and
                     certifications can be considered current for up to one year. These
                     representations and certifications include certifications of socioeconomic
                     status, affirmative action compliance, and compliance with veterans’
                     employment reporting requirements.

Vendor information   IBM has been the vendor for ORCA since its inception in 2004. In 2011,
                     IBM assumed responsibility to maintain and operate ORCA under the
                     SAM contract.




                     Page 27                                          GAO-12-429 Federal Contracting
Appendix III: Comments from the General
              Appendix III: Comments from the General
              Services Administration



Services Administration




              Page 28                                   GAO-12-429 Federal Contracting
Appendix IV: GAO Contact and Staff
                  Appendix IV: GAO Contact and Staff
                  Acknowledgments



Acknowledgments

                  William T. Woods, (202) 512-4841 or WoodsW@gao.gov
GAO Contact
                  In addition to the contact name above, John Oppenheim (Assistant
Staff             Director); Marie Ahearn; E. Brandon Booth; Jillian Fasching; Madhav
Acknowledgments   Panwar; Jeffrey Sanders; Benjamin Shattuck; Roxanna Sun; Robert
                  Swierczek; and Rebecca Wilson made key contributions to this report.




(121007)
                  Page 29                                       GAO-12-429 Federal Contracting
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