oversight

USDA Procurement: Information on Activities During Fiscal Year 1996

Published by the Government Accountability Office on 1997-02-18.

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

GA O    United States
 GAO^   General Accounting Office
        Washington, D.C. 20548
                                                                                          ~$
                                                                                           l?
        Resources, Community, and                                                 15818
        Economic Development Division

        B-276140


        February 18, 1997


        The Honorable Richard G. Lugar
        Chairman
        The Honorable Tom Harkin
        Ranking Minority Member
        Committee on Agriculture, Nutrition,
         and Forestry
        United States Senate

        The Honorable Bob Smith
        Chairman
        The Honorable Charles W. Stenholm
        Ranking Minority Member
        Committee on Agriculture
        House of Representatives

        As with most federal agencies, the U.S. Department of Agriculture (USDA)
        buys a wide variety of goods and services to carry out its various missions,
        such as food safety, rural development, and others.' These procurements
        range from farm equipment, animals, feed, and construction to support its
        research mission, to aerial photography for its farm service mission, to legal
        services for its rural development mission. The Forest Service, within USDA,
        alone buys an immense array of goods and services for combating forest fires
        as well as for maintaining the national forests and their infrastructure. These
        purchases are accomplished through various procurement organizations-
        known as "contracting activities"-in the mission areas (one mission area has




        1USDA's   seven mission areas are (1) Farm and Foreign Agricultural
        Services; (2) Food, Nutrition, and Consumer Services; (3) Food Safety; (4)
        Marketing and Inspection; (5) Natural Resources and Environment; (6)
        Research, Education, and Economics; and (7) Rural Development.
                                            GAO/IRCED-97-611R, USDA Procurement Inforeation
                                                           on Actvities During eFiscal
                                                                                   Year 1996

                                    (wry
                                       8/1            I1S
B-276140

two contracting activities) and the USDA Office of Operations, which provides
support to the Office of the Secretary and its related offices. 2

During the coming year, both the House and Senate Agriculture Committees
plan to focus attention on overseeing the Department's basic operations. To
facilitate this oversight, we have assembled basic information on the scope of
USDA's procurement activities and how those activities are carried out
Specifically, for each USDA contracting activity, we sought to identify (1) the
number and value of fiscal year 1996 procurement transactions; (2) the
activity's organizational structure; (3) its fiscal year 1996 cost of operation; (4)
the regulations, policies, and procedures used in awarding and administering
procurement actions; and (5) the audits/reviews that have been performed on
their operations.

In summary, we identified the following:

- In fiscal year 1996, USDA obligated about $1.5 billion through various
  procurement instruments. Table 1 shows the number and value of these
  purchases through contracts for amounts over $25,000, purchase orders for
  amounts of $25,000 or less, and purchase card transactions that are usually
  for amounts of $2,500 or less.3




2In fiscal year 1996, USDA purchased $1.4 billion in agricultural
commodities, including grain, livestock, poultry, dairy products, and fruits
and vegetables. Such purchases are made to (1) support U.S. commodity
prices, (2) sell commodities to foreign governments and relief or
rehabilitative agencies worldwide, and (3) remove or dispose of surplus
agricultural commodities. The laws, regulations, and authorities governing
these purchases differ from those that apply to normal procurement and
therefore will not be discussed in this report.
3 Forpurposes of this report, these categories are based on the dollar
categories used by USDA in collecting its procurement data for fiscal year
1996.
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Table 1: USDA Procurement for Fiscal Year 1996

Dollars in millions

    Type of purchase              Number of transactions                   Amount
    Original contractsa                              4,118                   $ 362
    Contract modifications                           7,944                     679
    Purchase orders                                820,065                     457
    Purchase cards                                 380,353                       94
    Total                                        1,212,480                  $1,592
aOriginal contracts include contracts between $25,000 and $100,000 awarded under special,
simplified regulatory requirements.

- USDA's contracting activities mirror the decentralized organization of USDA.
  Generally, one agency in a mission area performs contracting for all of the
  agencies making up that mission area This contracting activity usually
  consists of a headquarters office that is part of the agency's headquarters
  management/administration function and a number of field purchasing
  offices that report to the head of the field program activity, not the
  headquarters procurement office.

- The cost of administering the procurement function within each agency is
  not available. USDA generally does not break down the cost of its
  administrative activities such as procurement in such a way that the costs
  for that function can be identified.

- Each contracting activity is required to follow the requirements of the
  Federal Acquisition Regulation and USDA's own Agriculture Acquisition
  Regulation. These regulations may also be supplemented with mission-
  specific policies and procedures generated by the contracting activity.

- Internal agency oversight within the contracting activities generally occurs
  through periodic reviews conducted at the individual purchasing offices. In
  most cases, these reviews are performed by headquarters procurement
  personnel. However, the agencies often do not formally track findings and
  recommendations to ensure that corrective action takes place. In addition,
  USDA's Office of Inspector General has performed a number of contract-
  related reviews during the past 3 fiscal years. However, these reviews have


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    focused on specific contracts and do not represent broad-based, regular
    oversight of the procurement function in any of the contracting activities.

BACKGROUND

The acquisition 4 of goods and services by USDA is governed by the Federal
Property and Administrative Services Act of 1949, as amended, and
implemented through the Federal Acquisition Regulation (FAR). The FAR is
designed to deliver the best-value product or service to the customer on a
timely basis, while maintaining the public's trust and fulfilling public policy
objectives. USDA has established its own Department of Agriculture
Acquisition Regulations (AGAR) to implement and supplement the FAR. These
regulations cover the same areas as the FAR but have more specific guidelines
on certain topics.

An acquisition or procurement of goods and services may take a variety of
forms, the most common of which are contracts, purchase orders, and
purchase card transactions. According to the FAR, the term "contract" means
a mutually binding legal relationship obligating the seller to furnish the
supplies or services (including construction) and the buyer to pay for them. It
includes all types of commitments that obligate the government to an
expenditure of appropriated funds and that, except as otherwise authorized,
are in writing. A purchase order is a government offer to make a purchase
under specified terms and conditions using simplified acquisition procedures
that may be accepted by a vendor in writing or by delivering the requested
goods or services.

Prior to the time when the Federal Acquisition Streamlining Act of 1994 took
effect, contracts were generally used for purchases exceeding $25,000 and
purchase orders were used for purchases of $25,000 or less. The act
established a simplified acquisition threshold of $100,000, and purchase orders
may now be used for purchases that do not exceed that amount. However,
because the data systems currently used by USDA accumulate data for
contracts and purchase orders using the old definitions, this report combines
all purchases from $25,000 to $100,000 in the contracts category rather than
the purchase order category.




 The terms "acquisition" and "procurement," as used in this report, are
interchangeable and refer to any purchase of goods or services made with
appropriated funds.
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Purchase card transactions involve the use of a government-issued credit card
by authorized personnel.5 Although these transactions usually involve
micropurchases (a purchase of $2,500 or less), certain individuals in USDA
with the appropriate warrants may be authorized to make purchases that
exceed this amount, depending on the need of the organization for which the
purchases are made.

The authority to obligate funds on behalf of USDA is given to an employee
through a formal document, known as a warrant. This authority derives from
the authority vested in the Secretary that is delegated throughout the
Department. The warrant specifies the highest amount the warrant-holder is
allowed to obligate for any given purchase. A person who holds a warrant is
referred to as a contracting officer. The authority to obligate funds of $2,500
or less through purchase cards is conferred without a warrant.

USDA accumulates data on its total procurement activity through two separate
data systems. Information on contracts is contained in USDA's "279" data
system which feeds into the governmentwide Federal Procurement Data
System operated by the Office of Federal Procurement Policy. Each
contracting activity enters contract information directly into this system.
Purchase order data for USDA are accumulated by the National Finance Center
(USDA's centralized accounting function) from purchase orders that are
processed for payment. Referred to as the "281" system (from the report title
for quarterly reports on purchase orders), these data are accumulated by
agency-not by contracting activity-and summarized into quarterly USDA
reports that are forwarded to the Office of Federal Procurement Policy for
inclusion in governmentwide reports. In addition, data on purchase card
transactions are collected Department-wide by USDA's Purchase Card
Implementation Teamn

USDA has nine major contracting activities: two in the Natural Resources and
Environment mission area, one in each of the remaining six mission areas, and
one in the Office of Operations. In addition, USDA's Office of Inspector
General and Office of Financial Management have independent procurement
functions, but these account for less than 1 percent of the total USDA funds



5Purchase  cards, issued under a governmentwide contract managed by the
General Services Administration, are to be used only for procurement.
They are not related either to gasoline credit cards or to the credit cards
issued to individuals for government travel expenses.
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obligated. Because of the small number and value of their procurement
actions, we did not include these two activities in this report.

NUMBER AND VALUE OF USDA
PROCUREMENTS IN FISCAL YEAR 1996

USDA obligated about $1.5 billion through contracts, purchase orders, and
purchase card transactions during fiscal year 1996. Table 2 shows how funds
were obligated by mission area and contracting activity. Specific information
on each contracting activity, including statistics on the number, type, and value
of its fiscal year 1996 procurement actions, is provided in enclosure I to this
report.

Table 2: Procurement Obligations, by Mission Area and Agency, Fiscal Year 1996

Dollars in millions

                                                         Transactions        Amount
    Mission area            Contracting activity          (thousands)      obligated
    Farm and foreign        Farm Service Agency                   20.0       $ 201.3
    agricultural services
    Food, nutrition, and    Food and Consumer Service              6.2          34.5
    consumer services
    Food safety             Food Safety and Inspection            19.8          18.7
                            Service
    Marketing and           Anima and lant Health
                            Animal                               114.4          68.3
    inspection              Inspection Service
    Natural resources  Natural Resources                         100.7         130.1
    and environmev     Conseeratvice
                i ronment
                            Forest Service                      624.2          722.1
    Research,               Agricultural Research               237.8          232.1
    education, and          Service
    economics
    Rural development       Operations and management            77.0           93.1
    Departmental offices    Procurement Operations               12.4           91.6
                            Division

    Total                                                      1,212.5      $1,591.8



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ORGANIZATIONAL STRUCTURE OF CONTRACTING ACTIVITIES

Contracting authority in USDA, as with other federal departments, rests with
the Secretary. The Secretary does not exercise this authority directly but
instead delegates it through the Assistant Secretary for Administration to the
Senior Procurement Executive, who is responsible for managing the USDA
acquisition function. The Senior Procurement Executive further delegates
contracting authority to the heads of the agencies where procurement activity
takes place and to the Director of USDA's Office of Operations, although he
retains certain responsibilities, such as prescribing departmental acquisition
policies, regulations, and procedures; approving certain high-value or sensitive
procurements; and certifying to the Secretary that the acquisition system meets
approved standards.

Within the mission areas, contracting authority has been delegated to certain
agency administrators or heads of mission-area management functions. These
individuals are referred to as the "Head of Contracting Activity" (HCA) and are
the highest authority for contracting within each USDA unit. The HCAs have
generally delegated their contracting authority to a "Head of Contracting
Activity Designee" (HCAD), who directs the contracting activity on a day-to-day
basis. The HCA also delegates contracting authority to individual contracting
personnel who may then enter into and sign contracts within the scope of their
delegated authority.

The HCAD and the associated contracting organization is commonly located in
the management and administration function in each USDA mission area
Beyond this general structure, the contracting activities have varied
organizations that may or may not include field offices. Field purchasing
offices generally do not belong organizationally to the contracting activity, but
to the management/administration function of the field offices. The
responsibility for procurement policy, however, is maintained at the
headquarters level.

COST OF CARRYING OUT PROCUREMENT OPERATIONS

Officials of each USDA contracting activity told us that it was not possible to
separately identify the cost of carrying out procurement operations in USDA,
generally because these costs are aggregated at the agency level and are not
tracked separately. At best, these activities were able to provide a listing of
persons with contracting warrants from which the major portion of personnel
costs could be determined. However, these would not include such costs as
overhead, travel, or administrative personnel. In addition, several HCADs

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indicated that some of their contracting personnel worked only part time in
this role; therefore, only a part of their salaries could be considered a cost of
procurement operations. Agency officials also told us that pro-rating salaries
would be difficult-a task we did not attempt for this report.

PROCUREMENT POLICIES AND PROCEDURES

The AGAR requires that all contracting personnel in USDA follow the FAR and
the AGAR in conducting their procurement activities. The AGAR is developed
and maintained by the Procurement Policy Division in USDA's Office of
Procurement and Property Management This regulation implements the FAR
where further implementation is needed and provides Department-wide
procedures for subject matter not covered in the FAR. Similarly, each
contracting activity may have a set of policies and procedures that supplement
the AGAR. Generally, these are administrative instructions for such processes
as submitting procurement or purchase requests, maintaining contract files, or
determining the approvals needed for awarding certain dollar-value contracts.
However, all such instructions must be consistent with both the FAR and
AGAR.

PROCUREMENT REVIEWS FOR USDA'S CONTRACTING ACTIVITIES

Seven of the nine USDA contracting activities have an internal process for
periodically reviewing contracts and small purchases for compliance with the
applicable regulations mand guidance. Often these reviews are scheduled and
conducted by headquarters procurement personnel who normally handle policy
issues, although some may be performed by agency personnel who review all
program and administrative functions. The reviews normally result in written
reports with findings and recommendations. These reviews have identified
such problems as inadequate descriptions of items to be purchased, incomplete
contract files, inadequate justification for sole-source purchases, and the use of
purchase orders to make payments on contracts.

There did not appear to be any systematic process to follow up on the
recommendations in the reports and ensure that corrective action was taken.
Most HCADs told us that reviewers would, at a minimum, check to see that
corrective action was taken when the next review was performed. In addition,
some officials stated that significant recommendations are tracked until the
problems are corrected.

However, two of the seven activities that had a formal review process had
suspended their reviews for a year or more because of personnel shortages or

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travel limitations. Also, two other activities excluded certain elements of their
procurement function from their formal review process. One excluded the
headquarters purchasing office because officials felt that periodic outside
reviews were sufficient. The other excluded architect/engineer contracts from
the regular review process but conducted periodic reviews of these contracts
on an ad hoc basis.

In addition, USDA's Office of Inspector General (OIG) has performed a number
of contract-related reviews over the past 3 fiscal years. Most of these were
audits to assist USDA contracting officers in the negotiation, administration,
and settlement of specific USDA contracts and subcontracts. In addition, OIG
reviewed Small Business Administration 8(a) contracts to ensure that the
program was not being used to reach favored subcontractors.

AGENCY COMMENTS

We provided copies of a draft of this report to USDA for its review and
comment We met with officials of the Department, including USDA's Senior
Procurement Executive. USDA generally agreed with the report's findings and
provided corrected or updated information, which we have incorporated as
appropriate.

SCOPE AND METHODOLOGY

To prepare this report, we interviewed the HCADs from the nine contracting
activities and officials from the Procurement Policy Division in USDA's Office
of Procurement and Property Management We collected and analyzed
documents relating to each activity's organization, policies and procedures,
staffing, and procurement reviews. We also obtained data on fiscal year 1996
contract actions, purchase orders, and purchase card transactions on all
activities from the Procurement Policy Division. We did not verify the
accuracy of the data reported. In some cases, however, we found that
information from the contracting activity differed from the USDA-level
information. These differences are noted in enclosure L The categories shown
in the tables reflect the procurement types reported in the data systems from
which the categories are drawn. While some of the category definitions may
overlap, USDA procurement officials told us that these data should reflect total
USDA procurement without duplication.

The data shown in all tables in this report were derived from (1) USDA's "279"
contracts data system, (2) the National Finance Center's "281" purchase order
data, and (3) information provided by USDA's Purchase Card Implementation

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 Team. The data from these sources are grouped by the contracting activity
that processes contracts for each mission area Purchase order and purchase
card data are accumulated in USDA by agency, not by contracting activity. For
these types of purchases, we have combined the agency transactions and
amounts to display them by their respective contracting activity. For example,
under the Office of Operations' Procurement Operations Division, we show
purchase order and purchase card amounts for as many as 15 USDA
organizations. The total transactions and amounts reflect the purchases made
by these organizations, not the number of purchase orders or purchase card
transactions processed by the Procurement Operations Division. Enclosure II
shows detailed information on the organizations that we have summarized by
contracting activity.

We performed our work from October 1996 through February 1997 in
accordance with generally accepted government audit standards.



We are sending copies of this report to the appropriate Senate and House
Committees; interested Members of Congress; the Secretary of Agriculture; the
Director, Office of Management and Budget; and other interested parties. We
will also make copies available to others upon request

Major contributors to this report were Emi Brock, Jackie Cook, and Deborah
Justice. Please call me at (202) 512-5138 if you or your staff have any
questions.




Robert A. Robinson
Director, Food and
 Agriculture Issues

Enclosures - 2




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ENCLOSURE I                                                                              ENCLOSURE I

                               USDA'S CONTRACTING ACTIVTIES

FARM SERVICE AGENCY

The Farm Service Agency (FSA) administers an array of programs to assist farmers and
producers that include domestic commodity price and income support programs; crop
insurance and other risk-management programs; and farm ownership, operating, and
emergency disaster loan programs. FSA conducts its programs through about 2,500
regional, state, and local offices.

In support of these offices, FSA purchases such things as ADP services, architectural and
engineering services for waste and pesticide cleanup; film and aerial photography services
for land use and compliance functions; and auctioneering, land survey, and property
appraisal services related to the repossession and resale of farms where farmers have
defaulted on loans. Table L1 shows USDA'S data on FSA's procurement actions for fiscal
year 1996.

Table 1.1: Fiscal Year 1996 Contract Activity - FSA

Dollars in thousands

  Type of purchase                Number of transactions                      Amount
  Original contractsa                                   71                   $ 13,707
  Contract modifications                               298                     171,377
  Purchase orders                                   16,577                      15,354
  Purchase cards                                     3,025                         891
  Total                                             19,971                    $201,329

aFSA's records show 11 fewer original contracts than the USDA data. However, the agency's records also
show obligations for original contracts as $2,069,498 more than the amount shown in the USDA data.
Officials could not explain why these differences occurred.

Organization

FSA provides procurement support to agencies in the Farm and Foreign Agriculture
mission area, which includes FSA, the Risk Management Agency, and the Foreign
Agriculture Service. FSA's contracting activity is organizationally located in the
Acquisitions Management Branch under the Deputy Administrator for Management in the
headquarters office in Washington, D.C. FSA's procurement activities are currently
carried out by about 150 contracting officers in 61 purchasing offices located in every

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state and Puerto Rico. FSA's state purchasing offices provide procurement support for
2,500 county offices. In fiscal year 1996, FSA had about 175 purchase card holders who
completed about 3,025 transactions.

Budget/Cost Data

FSA could not provide us with the cost of its procurement operations. According to FSA
officials, although salary costs for procurement personnel are available, the administrative
costs-telephones, training, etc.-associated with procurement operations are not available
because these costs are aggregated at the agency level and are not tracked separately.

Procurement Policies and Procedures

FSA contracting officers must comply with the requirements of the Federal Acquisition
Regulation (FAR) and the Agriculture Acquisition Regulation (AGAR). In addition, FSA
uses Procurement Policy Memorandums, which are internal administrative procedures
that provide detailed instructions on processing procurement actions. These procedures
address a number of issues, such as the receipt, handling, opening, and disposition of
bids, proposals, and amendments and the distribution of purchase orders and delivery
orders.

Procurement Reviews

The Planning and Oversight Section within the FSA Acquisition Management Branch has
within the last few years performed formal on-site procurement management audits at
about eight state offices. The reviews included a comprehensive examination of
simplified acquisition awards, including small purchase operations. In general, the audit
results indicated that most purchase orders met the simplified acquisition and small
purchase regulations. However, there were several problems, such as not using
mandatory General Service Administration sources, inadequate purchase descriptions, and
neglecting to use procurement request forms. The reviews resulted in recommendations
to prevent a recurrence of similar situations. State purchasing offices were requested to
develop and implement specific administrative procedures to correct the deficiencies.
These administrative procedures are reviewed by Acquisition Management Branch
personnel, who follow up during the next review to ensure that corrective action has
occurred.




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ENCLOSURE I                                                                                 ENCLOSURE I

FOOD AND CONSUMER SERVICE

The Food, Nutrition, and Consumer Services mission area has only one agency, the Food
and Consumer Service (FCS). This agency carries out federal food assistance programs,
including the Food Stamp Program; the National School Lunch and School Breakfast
programs; the Special Supplemental Nutrition Program for Women, Infants, and Children;
child nutrition programs; and various commodity assistance and food donation programs.
FCS also works to promote good nutrition in the assistance population

FCS' major purchases include program studies and analyses; food stamp coupon
production, storage, and distribution; and federal information processing such as
hardware, software, support services, and maintenance. Table L2 shows USDA's data on
FCS' procurement actions for fiscal year 1996.

Table 1.2: Fiscal Year 1996 Contract Activity - FCS

Dollars in thousands

 Type of purchase                    Number of transactions                     Amount
 Original contractsa                                        12                    $ 8,754
 Contract modifications                                     92                     21,576
  Purchase orders                                        4,880                      3,764
  Purchase cards                                         1,257                        410
 Total                                                   6,241                   $34,504
aThe FCS Contract Management Branch Chief told us that his office maintains a separate database of
headquarters procurement activities. This database shows 17 original contracts totaling $9 million. He said
that two contracts were omitted from the USDA data because they were indefinite delivery, indefinite
quantity contracts with initial obligated amounts of less than $500. The system does not allow amounts of
this size to be entered. However, he does not know why the USDA system did not show the other three
contracts, since the data in both systems are entered by his own staff. Because FCS contracts are
processed only in headquarters, the numbers should be the same as what appears in the USDA system.

Organization

The contracting activity in FCS is organizationally located in the Contracts Management
Branch, Administrative Services Division, under the Deputy Administrator for
Management, FCS. This headquarters office, located in Alexandria, Virginia, is responsible
for all FCS contracting and most small purchases. There are also purchasing offices
located in the seven FCS regional offices and the Benefit Redemption System Branch in
Minneapolis. A total of 24 contracting officers, 8 in headquarters and 16 in the field

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locations, carry out the agency's purchasing responsibilities. The contract staff in the
field are organizationally part of the regional offices or the Benefit Redemption System
Branch. They are not part of the headquarters procurement organization In addition,
there are about 20 nonprocurement persons with the authority to make purchases with
purchase cards.

Budget/Cost Data

FCS does not have a separate budget for its contracting activity. In headquarters, the
contracting office is one part of the Administrative Services Division's budget According
to the Head of the Contracting Activity Designee (HCAD), segregating costs for this
activity would be quite difficult because several staff who have contracting responsibilities
also process grants and cooperative agreements and/or perform work in the agency's
budget function. Their responsibilities would need to be analyzed and pro-rated to gain a
reasonable estimate of the costs associated with the contracting activity. Such analyses
have never been performed.

Procurement Policies and Procedures

In addition to the FAR and AGAR, FCS has its own set of procurement directives called
"standard operating procedures." These contain policies, procedures, and formats for
various functions that are not specifically covered by the other regulations. They include
procedures for preparing a request for contract, preparing contract and modification files,
and conducting pre-proposal conferences; approvals required for advisory and assistance
contracts; support needed for contract cost or price analyses; and policy stating
appropriate vs. inappropriate actions to modify contracts.

Procurement Reviews

The headquarters contracting office conducts one or two management reviews per year of
purchasing activities in the FCS field offices. According to the Contracts Management
Branch Chief, any problems identified in these reviews can generally be resolved
immediately. They are often corrected through refresher training of the field office staff.
The headquarters office, which processes all FCS contracts, does not undergo regular
internal reviews. In the past, the FCS headquarters office has been included in reviews
by USDA's Office of Inspector General. The most recent of these reviews was completed
more than 2 years ago but FCS officials said they did not receive a copy of the draft or
final report. Other reviews have also been performed from time to time on an ad hoc
basis by USDA-level organizations.




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FOOD SAFETY AND INSPECTION SERVICE

The Food Safety and Inspection Service (FSIS) ensures that all meat and poultry sold in
interstate and foreign commerce, including imported products, is safe, wholesome, and
accurately labeled. This effort is carried out by federal inspectors who visually inspect
animals and carcasses and test for pathogenic organisms and drug and chemical residues.
Three FSIS field laboratories provide analytical support.

FSIS purchases goods and services that support its inspection activities, such as
laboratory equipment, supplies, shipping containers, maintenance, and renovation, as well
as general office supplies and computers. Table 1.3 shows USDA's data on FSIS'
procurement actions for fiscal year 1996.

Table 1.3: Fiscal Year 1996 Contract Activity - FSlS a

Dollars in thousands

  Type of purchase                    Number of transactions                      Amount
  Original contracts                                          9                    $1,489
  Contract modifications                                    546                      9,556
  Purchase orders                                        16,178                      6,977
  Purchase cards                                          3,028                        707
  Total                                                  19,761                    $18,729
"FSIS procurement officials keep track of the agency's procurement obligations in addition to providing
information to the USDA-level data systems on contracts, purchase orders, and purchase card transactions.
However, information from FSIS' records differed from the data shown in table 1.3. For example, FSIS
shows that 1,339 purchase orders for $11.2 million were completed in fiscal year 1996-not 16,178 for $7
million. While officials determined that about 500 orders (totaling about $5 million) against blanket purchase
agreements were not included in the USDA data, neither FSIS nor USDA data system officials could further
explain the differences.

Organ ization

All purchases made by FSIS are processed through a single purchasing office in FSIS
headquarters in Washington, D.C.6 This office is part of the Procurement and Property


6A second   purchasing office in Minneapolis closed as of September 30, 1996. Prior to
closing, it employed five personnel: three contracting officers, a secretary, and a
supervisor.
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Branch, Administrative Services Division, in the FSIS Office of Management. The office
awards all contracts and purchase orders only for FSIS organizations; procurement
services are not provided to any other USDA agencies.

FSIS' contracting is currently carried out by seven contracting officers in the headquarters
office. It also has two vacant positions, one of which will be filled during fiscal year
1997. These people provide all procurement support to the 5 FSIS regional offices, 27
area offices, and 3 laboratories. Purchase requests are forwarded to the headquarters
office from throughout the organization. In addition, FSIS has 91 purchase card holders,
of whom 7 are the headquarters contracting officers. Purchase card obligations were
generally less than $2,000 for each transaction. FSIS is seeking to expand the use of
purchase cards to reduce procurement costs.

Budget/Cost Data

Virtually all costs associated with the contracting activity in FSIS are personnel costs. In
fiscal year 1996, the 14 staff located in the headquarters and Minneapolis offices incurred
salary costs of $657,244-$413,568 and $243,976, respectively. However, according to the
HCAD, these personnel costs do not reflect the full cost of procurement operations.
Overhead and administrative costs for the contracting activity, such as office space and
equipment, supplies, telephones, and travel, are combined with those of the other
functions in the Administrative Services Division and are not separately identifiable.

Procurement Policies and Procedur es

FSIS contracting officers must comply with the requirements of the FAR and the AGAR
In addition, they have an agency directive, FSIS Directive 2100.1: Procurement of
Supplies. Fquipment. Forms. and Services that contains procedures for requesting
purchases and processing these requests. This directive supplements the procedures in
the FAR and AGAR It provides instructions for filling out various forms, local purchase
procedures, dollar thresholds for specialty items (such as computer equipment, advisory
and assistance services, and construction), and rules for using purchase cards.

Procurement Reviews

FSIS has not had a formal procurement review by an outside source since 1988.
According to the HCAD, the activity level is small enough that he and the head of the
Acquisition and Agreements Section can provide oversight to every contract.




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ANIMAL AND PLANT HEALTH INSPECTION SERVICE

The Animal and Plant Health Inspection Service (APHIS) provides contracting support to
the three major agencies within USDA's Marketing and Inspection mission area: APHIS;
the Grain Inspection, Packers, and Stockyards Administration (GIPSA); and the
Agricultural Marketing Service (AMS). These agencies are responsible for, respectively,
(1) protecting the nation's animal and plant resources from diseases and pests in order to
preserve the marketability of U.S. agricultural products; (2) assisting in the marketing of
grain, rice, and other related commodities and ensuring the integrity of the livestock,
meat, and poultry markets; and (3) maintaining the stability of food prices and providing
food assistance to foreign countries through federal purchases of U.S. farm commodities.

APHIS purchases goods and services to keep animal and plant diseases out of the
country, including airplane services for crop spraying, chemicals for pest control,
laboratory equipment, weapons for animal control, and incinerators to destroy diseased
animals. APHIS also purchases information technology, architect and engineering and
construction services for all three agencies. Table 1.4 shows UDSA's data on APHIS'
procurement actions for fiscal year 1996.

Table 1.4: Fiscal Year 1996 Contract Activity - APHIS

Dollars in thousands

 Type of purchase                Number of transactions               Amount
 Original contracts                                     77             $ 7,999
 Contract modifications                             417                 12,722
 Purchase orders                                 66,731                 40,656
 Purchase cards                                  47,175                  6,962
 Total                                          114,400                $68,339

Organization

APHIS' procurement operations and purchases take place in both headquarters and the
field offices throughout the country. APHIS headquarters provides procurement policy
and guidance for all APHIS purchasing offices and is responsible for managing the
process of issuing contract warrants and for establishing internal procedures for using
purchase cards. APHIS headquarters also handles the contracts for purchases of
information technology, construction, and architect/engineering services for APHIS,
GIPSA, and AMS.


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APHIS headquarters and its Field Servicing Office in Minneapolis process all types of
procurements, including contracts and purchase orders. In addition, APHIS has a
contracting officer located in Tuxtla, Mexico, who provides all types of procurement
services for the 200-250 APHIS employees in Mexico that investigate and mitigate animal
and plant disease outbreaks. It also has 23 other field offices that make purchases of
only $25,000 or less. Fifty-seven warranted people have the authority to conduct
procurement activities in the APHIS regional, state, and area offices and in the research
facilities. In addition to contracting officers, these people include procurement clerks,
supply service technicians, and administrative officers. Also, APHIS has about 1,800
nonwarranted personnel authorized to use purchase cards for purchases of up to $2,500.

Budget/Cost Data

APHIS officials could not provide an estimate of its budget or costs of procurement
operations. There is no line item in the mission or the APHIS budget for procurement
operations. Procurement activities are grouped together with other functions within the
agency and the various field services offices. In addition, approximately 30 percent of
APFHIS' overall budget is paid through user fees rather than appropriated funds. These
funds are generated from a surcharge for inspection services at ports of arrival into the
customs territory of the United States. Furthermore, GIPSA and AMS reimburse APHIS
for procurement services. The cost associated with providing procurement services is not
broken out.

Procurement Policies and Procedures

APHIS personnel must comply with the FAR and the AGAR when conducting
procurement activities. Currently, APHIS is developing agency directives that will be used
to supplement the FAR and AGAR. These directives will provide guidance to contracting
officers and purchase card users in areas where the FAR and AGAR allow agency
flexibility in the procurement process. In addition, APHIS procurement officials told us
they have a handbook of internal procedures, such as how to use purchase cards. They
said that this handbook, currently being revised, is primarily used by nonwarranted
personnel.

Procurement Reviews

APHIS performs internal procurement management reviews to ensure compliance with
the established APHIS and USDA policies, procedures, and regulations. Four recent
review reports identified a number of problems: taxes were improperly applied to some
purchases made with purchase cards; individuals other than the purchase cardholders
signed receipts; purchase cards were used improperly to purchase telecommunications
equipment and the purchases were made by an individual who was not at that office

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location; purchase orders were processed without the completion of a purchase order
request; and files lacked evidence of competition. The reports recommend corrective
actions that are reviewed by headquarters staff to determine whether follow-up is needed.
However, APHIS does not have a formal tracking system to ensure that corrective action
is taken.

NATURAL RESOURCES CONSERVATION SERVICE

Through local conservation districts, the Natural Resources Conservation Service (NRCS)
provides technical assistance to private land owners and users; communities; watershed
groups; federal, state, and local agencies; and other cooperators to conserve, improve, and
sustain the nation's natural resources. Its work focuses on soil and water erosion
reduction, water quality improvement, wetland restoration and protection, water
management, and other natural resources problems.

In addition to standard office supplies and equipment, NRCS makes the purchases
necessary to conduct soil survey classification and provide technical assistance to
customers concerning land use. NRCS' purchases also include construction projects such
as earthen dams, levees, and recreation areas; the restoration of areas after natural
disasters; and scientific equipment to support the agency's scientific personnel. Table 1.5
shows USDA's data on NRCS' procurement actions for fiscal year 1996.

Table 1.5: Fiscal Year 1996 Contract Activity - NRCS

Dollars in thousands

 Type of purchase               Number of transactions                Amount
 Original contracts                                    868            $ 56,350
 Contract modifications                                652              37,585
 Purchase orders                                 71,624                 31,964
 Purchase cards                                  27,604                  4,228
 Total                                          100,748               $130,126

Organization

The contracting activity in NRCS is distributed throughout the agency in headquarters,
regional, and state offices. The Management Services Division under the NRCS Deputy
Chief for Management and Strategic Planning is responsible for policy, training, and
oversight of the purchasing offices. Another office in headquarters, under the


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Administrative Support Division, does all purchasing for NRCS headquarters offices.
There are also 57 field purchasing offices located in 48 state offices, 6 regional offices,
Puerto Rico, and at the NRCS National Business Center and the Information Technology
Center.

The state purchasing offices support NRCS state offices and the county-level service
center offices that are the primary point of contact between NRCS and its customers.
Most purchases are made at this level. The regional purchasing offices provide assistance
and oversight to a group of state offices. The contracting officers at this level often have
high levels of contracting authority and may process high-value state projects, such as
earthwork construction projects, as needed. They also provide procurement assistance to
the state offices during natural disasters. Regional contracting officers are responsible for
communicating procurement policy to the state-office leveL In addition, they may also
provide assistance to headquarters personnel on procurement policy decisions.

Budget/Cost Data

According to the HCAD, budget and cost information for the NRCS contracting activity is
not readily available because each purchasing office is organizationally part of the
program office it supports. From a budget standpoint, the Chief of NRCS allocates funds
to the six Regional Conservationists, who in turn give budgets to the state offices. Each
regional office decides where the funds will be spent, including how much will be
allocated to the various purchasing activities.

Procurement Policies and Procedures

The Director of the Management Services Division is responsible for making all policy
decisions for the NRCS contracting activity. The Division is responsible for the NRCS
Acquisition Regulation, which supplements the FAR and AGAR. This regulation,
transmitted through a series of circulars, establishes policies and requirements that
include (1) requiring procurement requests to have inspection staffing plans for
overseeing the contract, (2) setting aside certain contracts for small business, and (3)
setting up contract financing as part of the annual acquisition planning process.

Procurement Reviews

According to the Director, Management Services Division, the NRCS regional purchasing
offices were given the responsibility for the oversight and evaluation of all purchasing
functions in the regional and associated state offices when they were created in 1996.
The Management Services Division also is responsible for doing contract reviews.
Although its oversight at one time extended to all purchasing offices, its efforts are now
directed primarily at the regional offices. However, because of staff shortages, there has

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been a moratorium on these reviews for the past 2 to 3 years. As a result, we believe the
findings from the most recent reviews, performed in 1990, may not be relevant to current
practices.

The Management Services Division is now working to train regional office staff to
perform contract reviews. When trained, these staff members will be responsible for
regularly reviewing the activities of the state offices. According to the Director, the
headquarters staff will resume reviews of regional offices on an as-needed basis but will
continue to provide procurement-related training to all contracting staff.

FOREST SERVICE

The Forest Service is responsible for administering 191 million acres of national forest
and grasslands in the National Forest System. It manages the resources on these lands,
including timber, fish and wildlife habitat, range conservation, recreation, and firefighting,
through its headquarters office in Washington, 9 regional offices, 156 national forest
supervisor offices, and 617 ranger districts. The Forest Service also provides leadership
in forest and rangeland research.

The Forest Service awards contracts for a wide variety of goods and services. These
include construction projects, such as building logging roads; service contracts, such as
trail maintenance and tree planting; and support services for wildlife studies, archaeology
studies, mapping, and basic or applied research Fire suppression contracting is a large
part of its annual activity, which may include buying aircraft and helicopter services, fire
retardant, and other supplies and services needed to fight forest fires. Table 1.6 shows
USDA's data on the Forest Service's procurement actions for fiscal year 1996.

Table 1.6: Fiscal Year 1996 Contract Activity - Forest Service

Dollars in thousands

 Type of purchase                   Number of transactions                     Amount
  Original contracts                                    2,530                 $ 218,998
  Contract modifications                                3,945                   223,891
  Purchase orders                                    427,484                    233,679
  Purchase cards                                      190,245                    45,500
 Total a                                              624,204                  $722,068

aForest Service procurement officials stated that these totals do not include an estimated $134 million
obligated through third-party drafts and emergency equipment rental agreements. They said neither of the

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USDA procurement data systems are designed to record this information. The Forest Service is currently
investigating a way to accurately capture information on emergency equipment rental agreement
obligations.

Organization

The Forest Service's contracting is currently carried out by about 250 contracting officers
in 149 purchasing offices. These offices are organizationally aligned with the four-level
Forest Service field structure (headquarters, regional offices, national forests, and ranger
districts). Purchasing offices are also located at some Forest Service research stations.
These stations have a different regional structure from the national forest organization;
three of the eight stations get contracting support from the regional offices, while the
remainder have their own dedicated staff of one or two contracting officers and several
purchasing agents. The Forest Service's contracting activity does not support any other
USDA agencies.

In headquarters, the Procurement and Property Staff, under the Deputy Chief for
Administration, has several functions. It establishes and interprets procurement policy for
the Forest Service overall, conducts reviews of the field contracting activities, handles
extremely large or unique procurements that cannot be done by field offices, and makes
purchases for Forest Service offices at headquarters. Most of the Forest Service's
procurement takes place at the national forest level. Ranger district personnel for the
most part do only micropurchases; larger procurement needs are handled by the national
forest contracting officers. Regional offices also have contracting officers that handle
procurement for the regional organization as well as unusual contracts or those that
exceed the contracting authority of the national forest procurement staff. In addition, the
Forest Service has about 6,000 purchase card holders, most of whom do not have specific
warrant authority.

Budget/Cost Data

Budget and/or cost data for the Forest Service's procurement function are not clearly
identifiable. According to the Director of Procurement and Property Division, the Forest
Service purchasing offices in the field are not uniquely funded; they are part of the
regions' or national forests' budgets for administration and support. The salaries of the
procurement staff may be the only cost that can be identified as unique to the
procurement function. However, Forest Service officials were able only to provide a list
of contracting officers, which did not specify exact salary levels and did not include
benefit costs. The list did not include the 300 to 400 personnel whose warrants are
restricted to simplified acquisition Also, because the Forest Service requires that a
person be at least a GS-11 to be granted a journeyman contracting warrant, the list of
contracting officers does not include about 20 procurement training positions at the GS-5,
-7, and -9 levels, whose warrants are also restricted to simplified acquisition. As result,

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the Forest Service was not able to provide complete information on the budget or
operations costs of the various procurement offices.

Procurement Policies and Procedures

In addition to being required to follow the FAR and the AGAR, the Forest Service has its
own procurement regulations, the Forest Service Acquisition Regulation. This document
provides guidance and procedures for the agency's use in following the FAR and AGAR,
and other material from special laws and regulations that relate only to the Forest
Service. For example, it contains guidance on setting signatory authority for procurement
personnel, personnel training requirements, and review thresholds.

Procurement Reviews

The Procurement and Property Staff from Forest Service headquarters conducts two
formal reviews of the contracting activities at the regional offices and their associated
national forest and ranger station purchasing offices each year. Among other things,
reviewers examine (1) organizational configurations and staffing, (2) the effectiveness and
efficiency of the organization, and (3) compliance with law, regulation, and policy in the
procurement and property functions. These reviews, which result in a written report, also
include analyses of selected contracts, purchase orders, and agreements awarded by
certain national forests and ranger districts associated with the regional office. The
reviews are used not only to identify weaknesses in field procurement operations, but
also to identify and share instances of innovative and successful practices used in the
region. According to the Director of the Procurement and Property Staff, some of the
more significant recommendations are tracked by headquarters officials to ensure that
corrective action takes place. While less significant recommendations are not tracked,
reviewers check on the status of past recommendations when a new review is performed.

Among the contracting-related findings of the two most recent reviews were (1)
incomplete or poor documentation of contract files, (2) using purchase orders to make
payments under contracts, (3) underutilization of simplified purchase procedures, and (4)
unnecessary duplication between local procurement directives and higher level
regulations.

According to the HCAD, the Procurement and Property Staff also conduct informal
"functional assistance trips." These reviews, performed at regions, national forests, or
both, are narrower in scope and are intended to focus on specific problems. They are
documented in an informal report and/or meeting notes and primarily cover areas for
which the unit has asked for help.



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AGRICULTURAL RESEARCH SERVICE

The Agricultural Research Service (ARS) provides contracting support for the four major
agencies within USDA's Research, Education, and Economics mission area: ARS, the
Cooperative State Research, Education, & Extension Service, the Economic Research
Service, and the National Agricultural Statistical Service. These agencies conduct
agricultural research at USDA laboratory locations; distribute research funds to states,
colleges, universities, and other institutions; and provide economic and social science
analyses relating to agriculture, food, natural resources, and rural America.

Most of ARS' contracts and other purchases support the agency's research mission and its
104 research facilities located throughout the country. The goods and services purchased
for this organization include scientific equipment for laboratories, farm equipment and
implements, farm animals, animal feed, fertilizer, support services (maintenance of
facilities, security services), housekeeping services, architect/engineering services, and
construction. Table 1.7 shows UDSA's data on ARS' procurement actions for fiscal year
1996.

Table 1.7: Fiscal Year 1996 Contract Activity - ARS

Dollars in thousands

 Type of purchase                    Number of transactions                     Amount
  Original contracts                                      384                   $ 46,910
  Contract modifications                                  979                     74,952
  Purchase orders                                     137,928                     77,274
  Purchase cards                                       98,482                     32,984
  |Total                                              237,773                   $232,120

aARS officials told us that their records show that total procurement obligations for fiscal year 1996 were
about $215 million-about 7 percent less than the sum of the amounts shown in the data we obtained from
USDA's procurement reporting systems. Officials said that their information also originated from the USDA
reporting systems and could not explain this difference.

Organization

ARS provides contracting support to the mission's four agencies through its headquarters
Procurement and Property Division and Facilities Division and at ARS field offices
throughout the country. The Procurement and Property Division is responsible for
formulating ARS' procurement policy, making purchases for the agencies' headquarters


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offices, awarding and administering contracts that exceed field office purchasing limits,
and conducting reviews of field purchasing activities. The Facilities Division is
responsible for procuring only architect/engineering services and construction for ARS.

The area and other field purchasing offices process purchase orders and contracts but
have limited contracting authority-generally up to $500,000. The area office contracting
officers have the higher authority and process contracts that exceed the limits from the
associated purchasing offices. ARS has 223 warranted personnel (the majority of whom
make purchases as only part of their jobs) that provide procurement support to
headquarters and 104 field offices. In fiscal year 1996, it also had about 1,660 purchase
card holders, who generally did not have contract warrants.

Budget/Cost Data

There is no direct budget for contracting activities in ARS. Each office is funded as part
of the administrative unit to which it belongs. Also, ARS officials stated that it would be
extremely difficult to determine the cost of operations for the ARS contracting activity.
While the headquarters procurement-related divisions are somewhat segregated from
other functions, the contracting personnel in the field are part of each office's
administrative function. The cost of their efforts could not easily be determined. Also, a
number of contracting personnel in the field do procurement as only part of their jobs.
To determine how much of their salaries should be considered a procurement cost, one
would need to know what portion of each person's time is spent annually on contracting
activities and then pro-rate their annual pay.

Procurement Policies and Procedures

In addition to the FAR and AGAR, ARS issues procurement guidance in the form of policy
bulletins and memorandums. This guidance supplements the FAR and AGAR, providing
guidance on agency-specific procedures relating to procurement issues. For example,
recent memorandums and bulletins included instructions for incorporating energy
efficiency criteria into solicitations, approval levels for sole-source justifications, and
procedures to be followed in ratifying unauthorized commitments. ARS has also
developed a comprehensive "Field Acquisition Manual" for use by both procurement and
program personnel. Updated annually, this manual provides instructions and
requirements for all those who have a role in any phase of the procurement process.

Procurement Reviews

The Procurement and Property Division's Policy Branch conducts formal reviews of ARS'
procurement activities on a regular basis. Two to three reviews are conducted at ARS
area offices each year on a rotating basis, so that each office is reviewed at least once

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every 4 to 5 years. Reviewers use a standard procedure that includes a complete review
of all contracts and a sample of purchase orders awarded during the previous 2 years; a
formal report is issued upon completion. The findings from recently completed reviews
include (1) inadequate documentation of fair and reasonable price, (2) incomplete
documentation of some contract files, (3) inadequate sole-source justifications, and (4)
contract awards made without proper consideration of competing bids or proposals.

However, these reviews do not cover all ARS' procurement activities. Architect/engineer
and construction contracts are specifically excluded. Also, the reviews do not include any
of the smaller purchasing offices below the area-office level. According to the Policy
Branch Chief, the smaller offices should be regularly reviewed by area-office personnel.
In addition, the smaller offices will be reviewed as part of a "Consolidated Assistance
Review and Evaluation" performed by staff under the ARS Associate Administrator for
Administrative and Financial Management This standardized review covers both program
and administrative functions and contains a section devoted exclusively to procurement
activities. The Policy Branch is required to review and comment on any negative findings
identified for procurement activities.

RURAL DEVELOPMENT

The Rural Development (RD) mission area is designed to assist rural areas overcome the
problems of downward spiral of job losses, out-migration, diminishing services, and
declining or stagnant living standards by stimulating new partnerships with rural
communities, funding projects, and providing technical assistance to help create quality
jobs, services, housing, and utilities. RD programs help create and preserve rural jobs
and create or improve more than 60,000 units of quality rural housing. RD encourages
state, local, and tribal governments as well as private and nonprofit organizations and
user-owner cooperatives to engage in rural revitalization efforts.

RD programs are administered through three rural development services: the Rural
Utilities Services, the Rural Business and Cooperative Development Service, and the Rural
Housing and Community Development Service. Also, the RD mission includes the
Alternative Agricultural Research and Commercialization Center, which expedites the
development and market penetration of nonfood, nonfeed, industrial products from
agricultural and forestry materials and animal by-products. RD programs and services are
provided through state, regional, district, county, and local/area offices.

RD's purchasing offices obtain a variety of goods and services in support of its mission
for the three agencies mentioned above and the research corporation. Goods and
services such as (1) legal services for foreclosures; (2) loan services including appraisals,
inspections, analyses, audits, and information services; (3) custodial and inventory
property services, including repairs and improvements, maintenance, and management;

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and (4) ADP software, components, support equipment, data conversion, and other
telecommunications services are purchased throughout the country. Table 1.8 shows
USDA's data on RD's procurement actions for fiscal year 1996.

Table 1.8: Fiscal Year 1996 Contract Activity - RD

Dollars in thousands

 Type of purchase                Number of transactions                Amount
  Original contracts                                    141             $ 4,834
 Contract modifications                                600               52,292
  Purchase orders                                    69,394              34,660
  Purchase cards                                      6,870               1,277
 Total                                               77,005             $93,063

Organization

RD's procurement activities are carried out by the Procurement Management Division
(PMD) under RD's Deputy Administrator for Operations and Management located in
Washington, D.C. PMD provides procurement support for the four RD organizations,
develops mission-related procurement policy to supplement the FAR and AGAR, oversees
field procurement activities, and interacts on procurement issues with other USDA
offices, such as the Office of General Counsel, Office of Small and Disadvantaged
Business Utilization, and Office of Procurement.

RD has 108 contracting officers that handle procurement activity for 1,022 field offices.
Some state offices maintain a centralized procurement operation and may have
contracting officers with warrants up to $100,000. Their associated field offices may
have authority only for micropurchases using a purchase card with a limit of $2,500 or
less, or could have some individuals warranted at relatively low levels. Other state offices
have a decentralized operation, resulting in warranted contracting officers being located
in both the state and field offices. In addition, RD officials said that 337 RD employees
are currently authorized to use purchase cards.

Budget/Cost Data

RD procurement officials stated that they could not provide a cost of procurement
operations because they were not able to break out the costs of procurement for the state
and field offices.


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Procurement Policies and Procedures

RD procurement personnel must comply with the FAR and the AGAR in carrying out their
procurement activities. In addition, RD has its own procurement manual that contains
policies and procedures that apply specifically to the RD procurement process. This
manual, which incorporates new polices and procedures and updates old directives, is in
the process of being approved. The manual does not restate the FAR or AGAR.

Procurement Reviews

RD procurement officials informed us that they have had continuous staff assistance
reviews and internal review studies of procurement operations. The staff assistance
reviews are performed by the Procurement Management Division to provide guidance on
procurement issues and procedures, highlight recent procurement changes, present ways
to improve the procurement process, and ensure that audit recommendations are
implemented. In fiscal year 1996, no staff assistance reviews were done because of a
limited travel budget.

In addition, peer reviews are conducted by one state office on another state office's
administrative functions, of which procurement is one segment. These reviews that look
at the administrative and program operations within a state office were conducted in nine
state offices in fiscal year 1996. The review reports identified a variety of administrative
weaknesses, such as the following: (1) procurement files did not contain records of
payments against contracts or delivery orders, (2) some information was not entered into
the USDA 279 data system, (3) a contract file did not contain documentation to justify a
small business set-aside, (4) sufficient sources were not solicited to ensure adequate
competition, and (5) some files lacked documentation giving authority to obligate funds
for purchases. Recommendations were made to correct these weaknesses.

OFFICE OF OPERATIONS

The Office of Operations is responsible for USDA's Department-level administrative
services functions, including contracting and small purchasing, real and personal property
management, space, vehicles, forms and supplies, internal energy management, and
management of mailing lists. Certain centralized administrative services are also provided
in headquarters, including facilities management; mail processing; acquisition,
warehousing, and distribution of forms, publications, and office supplies; reproduction
and copying services; shipping and receiving; imprest fund; and administrative support to
the Office of the Secretary. The acquisition function is performed by the Procurement
Operations Division (POD) within the Office of Operations.



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POD purchases goods and services such as personal computer equipment and related
maintenance services; voice mail services; air time for pagers; cell phone services;
construction; interior and exterior building maintenance services; architectural and
engineering services; and janitorial services for the four-building complex that makes up
USDA headquarters. Table I.9 shows USDA's data on POD's procurement actions for
fiscal year 1996.

Table 1.9: Fiscal Year 1996 Contract Activity - POD

Dollars in thousands

 Type of purchase                Number of transactions                  Amount
 Original contracts                                     26                $ 2,597
 Contract modifications                                415                 75,041
 Purchase orders                                      9,269                12,836
  Purchase cards                                      2,667                 1,107
 Total                                            12,377                  $91,581

Organization

POD is organizationally located under the Associate Deputy for Procurement and
Facilities Operations. This office, located in Washington, D.C., handles all procurement
for Operations, the Office of the Secretary, and various headquarters USDA functions
such as Office of General Counsel, Office of Personnel, and Office of Finance and
Management In addition, there is one procurement official in the Kansas City
Management Services Division who provides procurement support to POD. This person
processes only purchase orders and purchase card transactions, however. POD also
provides ADP procurement support for the National Finance Center, Rural Development,
and other USDA agencies, as needed. POD's contracting activities are carried out by 19
contracting officers. In fiscal year 1996, the offices covered by POD as a contracting
activity had 95 purchase card holders who processed 2,667 transactions.

Budget/Cost Data

POD officials informed us that they do not know the costs associated with POD's
procurement activities because of organizational changes that occurred during fiscal year
1996. These changes have made it difficult to break down their aggregate costs and
associate them with the appropriate function within the Office of Operations.
Furthermore, in fiscal year 1996, USDA's Rural Development mission area reimbursed


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POD for the salary of one contracting officer because of the large volume of ADP
contracting services it provided to that mission. Other agencies do not reimburse POD
for contracting services because of the small volume.

Procurement Policies and Procedures

POD contracting officers are required to follow the requirements in the FAR and the
AGAR. POD does not use any other procedures.

Procurement Reviews

There have not been any formal evaluations of POD procurement activities within the last
few years. However, informal daily reviews of some procurement activities are performed
by the POD official in charge. Also, the Office of Inspector General, at the request of
POD and USDA's Office of General Counsel, was reviewing one of POD's task order
contracts when we conducted our review.




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PURCHASE ORDER AND PURCHASE CARD TRANSACTIONS BY USDA ORGANIZATION

Table 11.1: Purchase Order Transactions by USDA Organization - Fiscal Year 1996

Dollars in thousands

                                               Number of      Amount        Contracting       Contracting activity totals
 USDA organization'                         transactions    obligated'      activity
                                                                                               Transactions         Amount

 Animal &Plant Health Inspection Service         44,767    $      30,579    APHIS                    66,731        $ 40,656
 Federal Grain Inspection Service                 7,330            2,992

 Packers and Stockyards Administration              341              41

 Agricultural Marketing Service                  14,293            7,044

 Economic Research Service                         1,745           2,828    ARS                     137,928           77,274

 Economics Management Staff                          61              23

 National Agricultural Library                       91              22

 Agricultural Research Service                   64,944           62,693

 Agricultural Research Service'                  67,949            8,715

 Cooperative State Research Service                 931            1,066

 Extension Service                                   52              -10
 National Agricultural Statistics Service         2,155            1,937

 Food and Consumer Service                        4,880            3,764    FCS                       4,880            3,764

 Forest Service                                 283,640        169,868      Forest Service          427,484          233,679

 Forest Service'                                143,844           63,811

 Office of International Cooperation and              9               16    FSA                      16,577           15,354
 Development

 Farm Service Agency                             14,130           10,707

 Foreign Agricultural Service                      1,927           4,544

 Federal Crop Insurance Corporation                        -511      871P




31                                                                                GAO/RCED-97-61R USDA Procurement
     USDA organization                              Number of |     Amount      Contracting           Contracting activity totals
                                                 transactions      obligated    activity
                                                                                                      Transactions          Amount

     Food Safety and Inspection Service                16,178          6,977    FSIS                         16,178            6,977

     Soil Conservation Service                         71,624         31,964    NRCS                         71,624           31,964

  Office of Administrative Law Judge                       73             71    POD                           9,269           12,836

  Office of Advocacy & Enterprise                         269            490

  National Appeals Division                               781            400

  Office of Executive Secretariat                          30             74

  Office of Personnel                                     318            316

  Office of Operations                                   3,047         5,232

  Office of Small & Disadvantaged Business                 17             11
  utilization

  Department of Agriculture                                  3             3

  Office of Energy                                         14              7

  Office of Govemrnmental and Public Affairs             1,559         2,448

  Office of General Counsel                               572            728

  Office of the Secretary                                 815            573

  Office of Budget and Program Analysis                    83            145

  Office of Information Resources                        1,423         2,037

  World Agricultural Outlook                              265            301

  Farmers Home Administration                          67,984         33,652    RD                           69,394           34,660

  Rural Business and Cooperative Service                  153            381

  Rural Electrification Administration                   1,235           583

  Altemrnative Agricultural Research &                     22             44
  Commercialization Center

  Total                                               820,065      $457,164                                 820,065        $457,164

This table does not include purchase orders that were processed by USDA's Office of Financial Management or Office of Inspector
General. These contracting activities were not included in our review.

bNegative numbers represent deobligations.

c'hese entries represent amounts obligated through orders against blanket purchase agreements that are controlled by the General
Services Administration.




32                                                                                   GAO/RCED-97-61R USDA Procurement
ENCLOSURE H                                                                                    ENCLOSURE II
Table 11.2: Purchase Card Transactions by USDA Organization - Fiscal Year 1996

 USDA organization'                              Number of       Amount     Contracting   Contracting activity totals
                                              transactions     obligatedb   activity
                                                                                          Transactions          Amount

 Animal and Plant Health Inspection Service        38,810     $5,596,043    APHIS               47,175      $ 6,961,819

 Federal Grain Inspection Service                    1,589       236,944
 Packers & Stockyards Administration                  337         49,222

 Agricultural Marketing Service                     6,439      1,079,610

 National Agricultural Statistics Service               4            315    ARS                 98,482       32,983,665

 Agricultural Research Service                     98,478     32,983,808

 Economic Research Service                              0           -457

 Food, Nutrition, and Consumer Service               1,257       410,165    FCS                  1,257          410,165

 Forest Service                                   190,245     45,500,278    Forest             190,245       45,500,278
                                                                            Service

 Farm Service Agency                                3,025        890,494    FSA                  3,025          890,494

 Food Safety and Inspection Service                 3,028        706,738    FSIS                 3,028          706,738

 Natural Resources Conservation Service            27,604      4,228,247    NRCS                27,604         4,228,247

 Modernization of Administrative Processes             36         21,654    POD                  2,667         1,106,594

 National Appeals Division                             10          4,102

 Office of General Counsel                            635        113,198

 Office of the Chief Economist                         33          6,192
 Office of the Judicial Officer                         3          1,631
 Office of Communications                              28         20,369

 Office of Information Resources                    1,004        422,328
 Management/Kansas City

 Office of Operations/Procurement                     529        315,132
 Operations Division

 Office of Budget and Program Analysis                108         56,139
 Board of Contract Appeals                             35         23,887

 Office of Personnel                                  246        121,962

 Rural Development                                  6.442      1,139,453    RD                   6,870         1,276,748

 Rural Electrification Administration                 428        137,295

 Total                                            380,353    $94,064,749                      380,353       $94,064,749




33                                                                            GAO/RCED-97-61R USDA Procurement
ENCLOSURE II                                                                                               ENCLOSURE H
aThis table does not include purchase card transactions that were processed by USDAs Office of Financial Management or Office of
Inspector GeneraL These contracting activities were not included in our review.

"Negative numbers represent deobligations.




(150717)

34                                                                                GAO/RCED-97-61R USDA Procurement