oversight

PBGC Needs to Strengthen Acquisition Planning for Actuarial Support Services

Published by the Pension Benefit Guaranty Corporation on 2021-06-04.

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

OFFICE OF INSPECTOR GENERAL
EVALUATION REPORT




PBGC Needs to
Strengthen Acquisition
Planning for Actuarial
Support Services




            Report No. EVAL-2021-09
                        June 4, 2021
Evaluation Report                                                                               June 4, 2021
No. EVAL-2021-09
                            PBGC Office of
                            Inspector General   BRIEF SHEET
PBGC Needs to Strengthen Acquisition Planning for Actuarial Support Services

                PBGC Contracting. PBGC relies heavily on contractors and spends a large portion of its
                budget on contracts to meet its mission to protect the retirement income of millions of
                American workers. In Fiscal Year (FY) 2020, PBGC obligated approximately $359 million
                on contracts for goods and services. PBGC’s Procurement Department (PD) is
                responsible for procuring goods and services for PBGC.
                Actuarial Support Services Contracts. The Actuarial Services and Technology
                Department (ASTD) relies on actuarial contractors to help pay timely and accurate
Background      benefits to participants in single-employer pension plans trusteed by PBGC. Historically,
                PBGC awarded separate Labor-Hour (LH) contracts to multiple contractors for actuarial
                support services, in which charges were based on the number of hours worked at fixed
                hourly rates. For the current actuarial support services contracts, PBGC issued one
                solicitation and awarded a multiple award Indefinite Delivery, Indefinite Quantity (IDIQ)
                contract to five contractors. For this IDIQ, PBGC awarded various types of task orders,
                including firm-fixed-price (FFP), time-and-materials (T&M), LH, and hybrid task orders. As
                of March 1, 2021, PBGC obligated a total of $81.9 million on the IDIQ.

               Objective. To evaluate PBGC’s compliance with applicable FAR and PBGC policies
       Key     regarding the acquisition planning, awarding, and oversight of the actuarial support
 Questions     services IDIQ contract vehicle and selected task orders. During this phase of the
               evaluation, we focused on acquisition planning.

               Overall Conclusion. PBGC’s acquisition planning for actuarial support services did not
               meet its needs timely and effectively. Delays in acquisition planning led PBGC to extend the
               previous contracts and award follow-on contracts on a sole-source basis. Furthermore,
               PBGC awarded a contract to assist PBGC with planning for these contracts that had
 Evaluation    duplicative requirements of an existing contract. As a result, we identified $447,780 in
   Results     funds that could have been put to better use from the duplicative procurement support
               contract. Furthermore, the initial FFP IDIQ task orders had poorly defined requirements and
               different amounts of work for the same price. In addition, the new actuarial support
               services multiple award IDIQ contracts each contained different timeliness measures and
               did not have performance measures for the accuracy of contractors’ calculations of
               benefits and related liabilities; this may lead to additional costs from contractors’ time spent
               correcting errors under LH and T&M task orders.



               Our Recommendations. We made five recommendations that included the Office of
               Management and Administration developing and implementing: (1) a tracking process for
 Corrective    existing contracts to determine when to initiate acquisition planning; (2) a mediation or
   Actions     escalation process to resolve disagreements during the acquisition planning process; (3) a
               process for proposed procurement support contracts to assess whether the proposed
               contract is duplicative of PD’s capacity, program office expertise, or existing procurement
               support contracts; (4) a process during acquisition planning to identify performance areas
               in need of measurable performance standards for contractors and any existing processes
               that could be incorporated into the contracts to measure performance; and (5) guidance for
               reviewing and revising QASPs proposed by offerors.
               Management Agreement. Management agreed with the recommendations and to take
               related corrective actions.
                                                                 Office of Inspector General



                                                                                June 4, 2021

                                        MEMORANDUM


TO:             Alice Maroni
                Chief Management Officer

FROM:           Nicholas J. Novak
                Inspector General

SUBJECT:        Issuance of Final Evaluation Report, PBGC Needs to Strengthen
                Acquisition Planning for Actuarial Support Services
                (Report No. EVAL-2021-09)


We are pleased to provide you with the above-referenced final report. We appreciate
the cooperation you and your staff extended to OIG during this project. We thank you
for your receptiveness to our recommendations and your commitment to reducing risk
and improving the effectiveness and efficiency of PBGC programs and operations.

This report contains public information and will be posted in its entirety on our website
and provided to the Board and Congress in accordance with the Inspector General Act.




cc:     Kristin Chapman, Chief of Staff
        David Foley, Chief of Benefits Administration
        Russell Dempsey, General Counsel
        Frank Pace, Director, Corporate Controls and Reviews Department
        Latreece Wade, Risk Management Officer
        Juliet Felent, Director, Procurement Department
        Scott Young, Director, Actuarial Services and Technology Department
        Department of Labor Board staff
        Department of Commerce Board staff
        House committee staff (Education and Workforce, Ways and Means, HOGR)
        Senate committee staff (HELP, Finance, HSGAC)




      1200 K Street, NW, Washington, DC 20005-4026   |   (202) 326-4030   |   oig.pbgc.gov
Table of Contents
Background ................................................................................................................... 3

  PBGC Contracting .................................................................................................................. 3

  Actuarial Services and Technology Department ..................................................................... 3

  Actuarial Support Services Contracts ..................................................................................... 4

  Objective ................................................................................................................................ 4

Evaluation Results ........................................................................................................ 5

   Summary ................................................................................................................................ 5

   Finding 1: New Contracts Were Delayed Because of Inefficient Acquisition Planning............. 5

  Acquisition Planning History ................................................................................................... 6

  Late Start Related to Inadequate Guidance for Complex Acquisitions .................................... 7

  Disagreements Between ASTD and PD Not Resolved ........................................................... 8

  Contracting for Duplicative Services ....................................................................................... 9

  Non-Competitive Contracting for 18 Months and Poorly Defined Task Orders .......................10

  Status of Acquisition Planning for Upcoming Actuarial Support Services ...............................10

   Recommendations.................................................................................................................10

   Finding 2: Inefficient Acquisition Planning Led to Contracts Being Awarded Without
   Performance Standards for Quality and Inadequate Standards for Timeliness ......................12

   Recommendations.................................................................................................................13

   Other Matters: Likely Influx of Plans Due to COVID-19 Requires Continued Vigilance ..........14

Appendix I: Objective, Scope, and Methodology ..................................................... 15

Appendix II: Agency Response .................................................................................. 17

Appendix III: Acronyms .............................................................................................. 21

Appendix IV: Summary of Funds Put to Better Use ................................................. 22


                                                                     1
Appendix V: Staff Acknowledgement ........................................................................ 23

Appendix VI: Feedback ............................................................................................... 24




                                                           2
Background
The Pension Benefit Guaranty Corporation (PBGC) guarantees the retirement benefits
of over 34 million workers and retirees in private-sector defined benefit pension plans.
The Corporation is directly responsible for the pension benefits of about 1.5 million
current and future retirees in trusteed pension plans and pays over $6.1 billion a year in
benefits. Because of its vital mission and operating model, one of the three strategic
goals articulated in PBGC’s Strategic Plan is to “maintain high standards of stewardship
and accountability.”

PBGC Contracting

Our office has raised concerns for many years about PBGC management’s oversight of
professional services contracts. PBGC relies heavily on contractors and spends a large
portion of its budget on contracts to meet its mission to protect the retirement income of
millions of American workers. In Fiscal Year (FY) 2020, PBGC obligated approximately
$359 million on contracts for goods and services.

The Procurement Department (PD) within PBGC’s Office of Management and
Administration (OMA) is responsible for the acquisition of all goods and services for
PBGC. PBGC follows the Federal Acquisition Regulations (FAR) for awarding and
administering contracts. PBGC also uses the PBGC FAR Supplement (PBGCFARS) as
guidance on acquisition procedures. The PBGCFARS establishes uniform internal
operating procedures for acquisitions, which implement the FAR, PBGC directives,
laws, and regulations.

Actuarial Services and Technology Department

The Actuarial Services and Technology Department (ASTD) is part of the Office of
Benefits Administration (OBA). ASTD’s mission includes providing actuarial expertise
and calculating and valuing termination benefits under Title IV of the Employee
Retirement Income Security Act (ERISA).

ASTD relies on actuarial contractors to help pay timely and accurate benefits to
participants in single-employer pension plans trusteed by PBGC. Actuarial contractors’
work is critical to determining participants’ benefits and PBGC’s related liabilities in the
Single-Employer Program, which was responsible for the benefits of about 1.5 million
current and future retirees in pension plans trusteed by PBGC in FY 2020.




                                              3
ASTD’s actuarial contractors work in phases. The first phase consists of calculating
estimated benefits after PBGC trustees a pension plan to put participants in an
estimated pay status. Then other contractors conduct plan asset evaluations and
participant data reviews, generating data that actuarial contractors use in further
calculations. The second and main phase of actuarial contractors’ work produces
Actuarial Case Reports (ACR), including determining final benefits for each participant
in a plan and the total present value of future liabilities for these benefits.

Actuarial Support Services Contracts

Historically, PBGC awarded separate Labor-Hour (LH) contracts to multiple contractors
for actuarial support services, in which charges were based on the number of hours
worked at fixed hourly rates. For the current actuarial support services contracts, PBGC
issued one solicitation and awarded a multiple award Indefinite Delivery, Indefinite
Quantity (IDIQ) contract to five contractors. Generally, the government uses IDIQ
contracts when it cannot determine the exact amounts of supplies or services it will
need. For the actuarial support services IDIQ, PBGC awarded various types of task
orders, including firm-fixed-price (FFP), time-and-materials (T&M), LH, and hybrid task
orders consisting of a combination of these types. FFP task orders have a set price, and
T&M task orders are similar to LH task orders but also include payments for items such
as supplies and travel. As of March 1, 2021, PBGC obligated a total of $81.9 million on
the IDIQ, which has a ceiling of $173 million.

Objective

Our objective was to evaluate PBGC’s compliance with applicable FAR and PBGC
policies regarding the acquisition planning, awarding, and oversight of the actuarial
support services IDIQ contract vehicle and selected task orders. During this phase of
the evaluation, we focused on acquisition planning.




                                            4
Evaluation Results
Summary

PBGC’s acquisition planning for actuarial support services did not meet its needs timely
and effectively. Delays in acquisition planning led PBGC to extend the previous
contracts and award follow-on contracts on a sole-source basis. Furthermore, PBGC
awarded a contract to assist PBGC with planning for these contracts that had
duplicative requirements of an existing contract. As a result, we identified $447,780 in
funds that could have been put to better use from the duplicative procurement support
contract. (See Appendix IV.) Furthermore, the initial FFP IDIQ task orders had poorly
defined requirements and different amounts of work for the same price. In addition, the
new actuarial support services multiple award IDIQ contracts each contained different
timeliness measures and did not have performance measures for the accuracy of
contractors’ calculations of benefits and related liabilities. This may lead to additional
costs from contractors’ time spent correcting errors under LH and T&M task orders.



Finding 1: New Contracts Were Delayed Because of Inefficient
Acquisition Planning

FAR 7.102(b) states that acquisition planning “shall integrate the efforts of all personnel
responsible for significant aspects of the acquisition. The purpose of this planning is to
ensure that the Government meets its needs in the most … timely manner.”
Additionally, FAR 7.104 states, “Acquisition planning should begin as soon as the
agency need is identified, preferably well in advance of the fiscal year in which contract
award or order placement is necessary.” However, acquisition planning for the actuarial
support services contracts was not completed before the previous contracts expired.
This was due to the following:

   •   a late start in acquisition planning related to inadequate guidance,
   •   a lack of communication and disagreements about contract pricing between PD
       and ASTD, and
   •   awarding a new, duplicative contract to assist with the acquisition.

The unnecessary acquisition support contract resulted in $447,780 in funds that could
have been put to better use. (See Appendix IV.) In addition, delays led PBGC to extend
the period of performance for the previous contracts by 6 months and then award
follow-on bridge contracts on a sole-source basis for a total of 18 months of non-


                                             5
competitive contracting. Lastly, after the contracts were finally awarded, the initial FFP
IDIQ task orders awarded to the five contractors had poorly defined requirements and
different volumes of work for the same price.

Acquisition Planning History

The previous contracts for actuarial support services were awarded in 2010 and
scheduled to expire on September 25, 2015. These were LH contracts and were
awarded as single award contracts to four contractors.

ASTD submitted an Advance Procurement Plan (APP) for new LH contracts to PD on
January 22, 2015. In a meeting on February 25, 2015, PD recommended that the
contracts should be FFP instead and awarded as multiple-award contracts, which was
the first time ASTD learned that PD was changing this acquisition.

In March 2015, PD and ASTD agreed on a multiple award IDIQ, but not on pricing type.
In order to gather feedback from potential contractors, including on contract pricing type,
PBGC issued a Request for Information (RFI) on April 22, 2015.

To further assist with planning, on August 4, 2015, PD awarded a new acquisition
support contract to include providing recommendations on structuring the actuarial
support services contract and drafting solicitation documents. Therefore, PBGC was not
prepared to award new contracts before the previous contracts expired and extended
the previous contracts for a total of 6 months.

PBGC then awarded bridge follow-on contracts on a sole-source basis on March 11,
2016, to the same contractors to extend their services. PBGC issued the solicitation for
the actuarial support services multiple award IDIQ on July 8, 2016, and initially awarded
four contracts on November 30, 2016 (PBGC01-D17-0002, PBGC01-D17-0003,
PBGC01-D17-0004, PBGC01-D17-0005). An unsuccessful bidder (Company A)
protested, resulting in stop work orders until March 6, 2017, and ultimately PBGC
awarded a fifth contract to Company A under the IDIQ on March 3, 2017 (PBGC01-D17-
0006). Figure 1 provides more details on the acquisition timeline.




                                             6
Figure 1. Acquisition Timeline




Source: OIG Summary Based on Contract Files




Late Start Related to Inadequate Guidance for Complex Acquisitions

PBGC’s acquisition planning timeframe was not long enough to ensure that the new
contracts were awarded before the previous contracts expired. PBGC's Directive FM
15-01 repeated the FAR’s recommendation that acquisition planning preferably should
begin well in advance of the FY when the contract is needed. However, PBGC’s only
specific timeframe for acquisition planning was a PBCGFARS requirement to complete
the APP at least 6 months prior to the date the requirement is needed, which did not
meet the FAR’s recommendation to start acquisition planning well in advance of the FY
when the contract will be required. For the actuarial support services acquisition, the
earliest planning document we could locate was ASTD’s APP submitted to PD on
January 22, 2015, which met PBGC’s 6-month requirement. However, the APP was
approximately 8 months prior to the previous contracts’ expiration, instead of the FAR



                                              7
recommendation to start planning well in advance of the fiscal year the contract is
needed.

In addition, although PD used a spreadsheet called the Expiring Contracts Chart, it was
an insufficient planning tool because it did not identify acquisitions requiring more lead
time for planning or identify when planning should start. A PD official explained that PD
reviewed this spreadsheet to manage the contracts 30 to 90 days out. Additionally,
PBGC placed responsibility for beginning acquisition planning on the program office but
did not have a mechanism for coordinating with PD to ensure that acquisition planning
started on a timely basis.

In this case, PBGC's 6-month timeframe to submit the APP was too short a lead time for
this complex acquisition. Complicating factors for this acquisition included changing the
contract pricing type, moving to a multi-award IDIQ, and awarding a new acquisition
support contract.

Disagreements Between ASTD and PD Not Resolved

In contrast to the FAR requirement regarding integrating efforts in acquisition planning,
ASTD and PD did not effectively communicate prior to the APP being prepared. This led
to a lengthy disagreement on contract pricing type for the actuarial support services
acquisition, which delayed award of the new contracts. ASTD prepared the APP based
on the assumption that nothing had changed and planned to continue these services
with single-award LH contracts to multiple contractors. However, at some point, PD
determined that the new contracts should be changed to FFP and awarded as a
multiple-award contract. Because of a lack of communication, ASTD learned of this
significant change in procurement philosophy only after it sent the APP to PD and seven
months before the LH contracts expired.

The disagreement centered around assigning the work to contractors on a FFP basis.
While FFP is generally the preferred type of contract to reduce risk to the government, it
requires a defined scope of work and minimal or predictable risk. However, according to
ASTD and vendors’ replies to the RFI, when PBGC initially acquires a pension plan, the
risk involved is unpredictable and revealed only after the contractor begins work and
after the contractors bid on task orders. Therefore, FFP task orders may not be a good
fit for most of ASTD's actuarial support services because the work involves significant
unknowns at the time PBGC trustees a pension plan. In 2011, a consultant to PBGC
recommended improvements to actuarial services contracts but did not recommend
changing directly to FFP contracts. PD and ASTD’s difference of opinion was not
resolved.




                                            8
Additionally, PBGC lacked a process for resolving acquisition planning disagreements.
When PBGC issued the IDIQ solicitation, PD and ASTD had still not fully resolved
contract pricing, almost 18 months after ASTD submitted its initial APP proposing LH
contracts. For example, the solicitation included FFP and LH/T&M task orders, but
during the solicitation period, PBGC did not directly answer potential bidders’ questions
about what types of work would use each pricing type and instead noted that most of
the work would be awarded as FFP.

However, after the multiple award IDIQ contracts were awarded, but not in time for the
acquisition planning phase, the Quality Management Department (QMD) facilitated
meetings between ASTD and PD to mediate the disagreement regarding pricing types
for task orders. In addition, a QMD manager explained that in 2019, QMD became
involved in acquisition planning for the next actuarial contract to ensure it would be
awarded before the current IDIQ expires. PBGC still does not have a formal process in
place to mediate conflicts related to acquisition planning.

Contracting for Duplicative Services

PD awarded a new contract to assist with acquisition planning for the actuarial support
services contract, which further contributed to delays. Although PD had a pre-existing
contract with Company D for procurement support, PD awarded a contract to Company
B (PBGC01D150003) to convert existing LH actuarial services contracts to a
performance-based contract, or FFP. Company C then protested the award, but the
Government Accountability Office (GAO) dismissed their protest because it was late. In
May 2020, court documents revealed that a former PBGC PD official helped Company
C write its proposal and protest to attempt to steer this contract, which he acknowledged
in his guilty plea to conspiracy to bribe a government official. 1 While the protest was
under review, PBGC’s pre-existing contractor, Company D, worked on acquisition
planning for actuarial support services, which negated the need for this requirement.
Once GAO dismissed the protest, Company D stopped work and Company B
proceeded.

After Company B worked for approximately 4 months, PBGC found that its
recommendations were unworkable and terminated the contract. PBGC then assigned
Company D to again work on the planning for actuarial support services. Consequently,
the contract with Company B was duplicative, and we identified $447,780 obligated on
this contract as funds that could have been put to better use. (See Appendix IV.)




1For more information, see PBGC OIG AUD-2021-01, Internal Controls Must be Strengthened to
Promote Procurement Integrity (December 8, 2020).


                                                9
Non-Competitive Contracting for 18 Months and Poorly Defined Task Orders

Delays in planning and resolving disagreements led PBGC to extend the previous
actuarial support services contracts and award these contractors bridge contracts on a
sole-source basis to allow services to continue until work under the new contracts could
begin. PBGC used non-competitive contracts for a total of 18 months, in violation of
FAR 6.301(c), which states that an award based on other than full and open competition
shall not be justified based on a lack of advance planning.

Furthermore, while the first task orders under this IDIQ were FFP, the scope of work
was poorly defined, and contractors received different amounts of work for the same
price of $2 million each. In addition, ASTD officials noted that FFP task orders had not
worked well overall, except for batches of small pension plans.

Status of Acquisition Planning for Upcoming Actuarial Support Services

For the current IDIQ, four of the contracts expire on November 30, 2021, and the fifth
expires on March 2, 2022, due to differences in when they were awarded. As of January
2021, PD and ASTD reached a tentative agreement on the contract pricing type for the
next acquisition for actuarial support services but had not finalized the APP. PD officials
stated they hoped to issue a solicitation in the spring of 2021.

Recommendations

We recommend that the Office of Management and Administration:

   1. Develop and implement a tracking process for existing contracts to determine
      when to initiate acquisition planning, based on factors such as complexity, major
      changes to existing contracts, new requirements, RFIs, and new contracts for
      acquisition planning support.

       PBGC’s Response and OIG’s Evaluation

       Resolved. PBGC concurred with the recommendation. OMA stated that PD
       would review and update guidance on initiating acquisition planning and noted
       that PD has begun improving acquisition planning. PD also plans to evaluate and
       improve tracking processes to support acquisition planning beginning as soon as
       the agency identifies a need. OMA’s goal is to complete the planned actions by
       March 31, 2022.

       Closure of this recommendation will occur when PBGC provides documentation
       of a tracking process for existing contracts to determine when to initiate
       acquisition planning based on factors such as complexity, major changes to


                                            10
   existing contracts, new requirements, RFIs, and new contracts for acquisition
   planning support.

2. Develop and implement a mediation or escalation process to resolve
   disagreements during the acquisition planning process.

   PBGC’s Response and OIG’s Evaluation

   Resolved. PBGC concurred with the recommendation. OMA stated that PD will
   develop and implement a new process for resolving disagreements during the
   acquisition planning process. The new process will include timeframes for
   resolution, involve higher-level review outside of PD to facilitate disagreements,
   and ensure that the Program Office’s needs are met while maintaining
   compliance with the FAR. OMA’s goal is to complete the planned actions by
   March 31, 2022.

   Closure of this recommendation will occur when PBGC provides the OIG with
   documentation of a process to resolve disagreements during the acquisition
   planning process.

3. Develop and implement a process for proposed procurement support contracts to
   assess whether the proposed contract is duplicative of PD’s capacity, program
   office expertise, or existing procurement support contracts.

   PBGC’s Response and OIG’s Evaluation

   Resolved. PBGC concurred with the recommendation. OMA stated that PD will
   further build upon the existing Chief Management Officer review process to
   incorporate additional reviews for procurement support-related requirements. The
   additional reviews will consider potential duplication of effort in terms of program
   office expertise and existing procurement support contract resources. The FAR
   Supplement will be updated to include the revised processes. OMA
   acknowledged the $447,780 in funds that could have been put to better use
   related to this recommendation. OMA’s goal is to complete the planned actions
   by January 31, 2022.

   Closure of this recommendation will occur when PBGC provides documentation
   of the review of proposed procurement support contracts for duplication of
   existing capacity.




                                        11
Finding 2: Inefficient Acquisition Planning Led to Contracts Being
Awarded Without Performance Standards for Quality and Inadequate
Standards for Timeliness

According to FAR 37.603(a), performance “standards shall be measurable and
structured to permit an assessment of the contractor’s performance.” In addition, FAR
46.401(a) states, “Quality assurance surveillance plans [QASP] … should specify-
(1) All work requiring surveillance; and (2) The method of surveillance.” However, we
found that the multiple award IDIQ contracts did not have performance standards for
accuracy and had inadequate performance standards for timeliness. These
performance standards problems were because acquisition planning focused on
contract pricing type and PBGC had insufficient guidance. As a result, PBGC did not
have adequate contractual safeguards over the timeliness or quality of actuarial
contractors’ work, which is critical to paying benefits accurately and timely. Finally,
insufficient safeguards over accuracy may result in additional costs from contractors’
time spent correcting errors under LH and T&M task orders.

The multiple award IDIQ contracts did not have measurable standards for accuracy
although ASTD had a review process for contractors’ main work product, which was the
ACR. The ACR brought together all benefit calculations for a pension plan into an
actuarial valuation of liabilities, and ASTD used a multi-level review process
documented on a checklist to assess ACRs. An ASTD official noted that contractors’
accuracy was a factor in rating their performance for the award of task orders and future
contracts. However, the contracts did not specify expectations for accuracy.

In addition, the contracts’ timeliness standards did not allow PBGC to assess
performance uniformly across the five contractors. Instead, each contractor proposed its
own QASP with varying timelines for completing work products. Although the solicitation
stated that PBGC would use the QASPs submitted by offerors to develop a final QASP,
this did not occur, leaving PBGC with the five different QASPs submitted by the
contractors. FAR 37.604 explains that the government may prepare the QASP or have
offerors submit proposed QASPs for the government to consider in developing its
QASP. In addition, while the contracts included deadlines for various work products,
these deadlines were for submitting draft products for ASTD to review, not for final
products after completing any necessary revisions.

These deficiencies occurred because disagreements about contract pricing type
consumed acquisition planning time and diminished the focus on other areas, such as
performance standards. In addition, PBGC did not have guidance on working with
QASPs proposed by offerors. Instead, the April 2015 PD SOP and the September 2020



                                           12
PBGCFARS stated that the QASP should be included in the solicitation. Furthermore,
PBGC’s APP tool did not include items identifying potential performance standards or
existing quality assurance processes.

As a result, PBGC did not have adequate contractual safeguards over the timeliness or
quality of actuarial contractors’ work, which requires high accuracy to determine benefit
amounts and PBGC’s related liabilities. While ASTD officials stated that the quality of
actuarial contractors’ work was generally good, they also noted that newer contractors
had a significant learning curve. In addition, PBGC assessed the five contractors’
timeliness differently due to differences in their QASPs.

Finally, insufficient safeguards over accuracy may result in additional costs from
contractors’ time spent correcting errors under LH and T&M task orders. As of March 1,
2021, PBGC obligated $57.3 million on LH and T&M task orders, which represents 70%
of the total spending under the IDIQ and indicates the importance of adequate
performance standards to reduce the costs of correcting errors.

Recommendations
We recommend that the Office of Management and Administration:

   4. Develop and implement a process during acquisition planning to identify
      performance areas in need of measurable performance standards for contractors
      and any existing processes that could be incorporated into the contracts to
      measure performance.

      PBGC’s Response and OIG’s Evaluation

      Resolved. PBGC concurred with the recommendation. OMA stated that PD has
      developed and implemented a process to ensure that the performance standards are
      considered early in the acquisition planning process and developed in line with the
      agency’s strategic goals, performance strategies, and the performance objectives
      identified in the Advance Procurement Plan. PD will expand this process to ensure
      that adequate performance standards, specifically addressing accuracy and
      timeliness, are incorporated into the resultant contract. OMA’s goal is to complete
      the planned actions by January 31, 2022.

      Closure of this recommendation will occur when PBGC provides documentation
      of a process during acquisition planning to identify performance areas in need of
      measurable performance standards for contractors and existing processes that
      could be incorporated into contracts to measure performance.

   5. Develop guidance for reviewing and revising QASPs proposed by offerors.


                                           13
       PBGC’s Response and OIG’s Evaluation

       Resolved. PBGC concurred with the recommendation. OMA stated that PD will
       review guidance on QASPs in the PBGCFARS. OMA’s goal is to complete the
       planned actions by March 31, 2022.

       Closure of this recommendation will occur when PBGC provides guidance on
       reviewing and revising QASPs proposed by offerors.



Other Matters: Likely Influx of Plans Due to COVID-19 Requires
Continued Vigilance
PBGC is preparing to trustee an influx of pension plans as plan sponsors’ bankruptcy
risk increases due to the COVID-19 pandemic. PBGC has seen an increase in plan
terminations and bankruptcies. The previous recession increased trusteed plans in FYs
2010-2012 and created a backlog of plans for actuarial and other contractors to
process. To close a recommendation from a 2010 OIG report on preparations for a
workload surge, 2 PBGC noted that OBA would work with other departments to
determine resources needed and whether to use new or existing contracts for an influx
of plans. In addition, PBGC required bidders on the current IDIQ for actuarial support
services to describe how they would respond to a workload surge as part of the
evaluation factors for the award. Finally, an ASTD official reported that ASTD will be
able to use task orders under the current IDIQ if there is a surge. PBGC’s continued
efforts will be vital to effectively handling a workload surge and reducing delays in
processing trusteed plans.




2PBGC OIG EVAL 2011-1/ PA-09-65, Evaluation of PBGC’s Strategic Preparations for a Potential
Workload Influx (November 16, 2010).


                                                14
Appendix I: Objective, Scope, and
Methodology
Objective

Our objective was to evaluate PBGC’s compliance with applicable Federal Acquisition
Regulations and PBGC policies regarding the acquisition planning, awarding, and
oversight of the actuarial support services IDIQ contract vehicle and selected task
orders. During this phase of the evaluation, we focused on acquisition planning.

Scope

Our scope was limited to acquisition planning for the five current multiple award IDIQ
contracts for actuarial support services. We performed fieldwork at PBGC headquarters
in Washington, DC, from December 2019 through March 2020. The COVID-19
pandemic and related telework guidance resulted in remote fieldwork from March 2020
through May 2020. We paused work on this evaluation due to an urgent assignment
and completed fieldwork remotely from January 2021 through February 2021.

Methodology

We selected the five current multiple award IDIQ contracts for evaluation through
analysis to identify high-risk contracts. To answer our objective, we interviewed PD,
ASTD, and QMD personnel involved in acquisition planning. We analyzed criteria
related to acquisition planning, including the FAR, PBGCFARS, PBGC Directives, PD
SOP, and PD Customer Handbook. We analyzed contract documents with respect to
FAR guidance on acquisition planning.

We conducted this engagement in accordance with the Council of the Inspectors
General on Integrity and Efficiency’s Quality Standards for Inspection and
Evaluation. Those standards require that we plan and perform the engagement to
obtain sufficient and appropriate evidence to provide a reasonable basis for our
conclusions and observations based on our objective. We believe that the evidence
obtained provided a reasonable basis for our conclusions and observations based on
our evaluation objective. Accordingly, the evaluation included tests of controls and
compliance with laws and regulations to the extent necessary to satisfy the evaluation
objective. Because our review was limited, it would not necessarily have disclosed all
internal control deficiencies that may have existed at the time of our evaluation. Finally,
we partially relied on computer-processed data to satisfy our evaluation objective. We


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relied on previous audit work regarding the reliability of the computer-processed data
we used and deemed the data to be sufficiently reliable.




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Appendix II: Agency Response




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Appendix III: Acronyms

Acronym    Meaning
ACR        Actuarial Case Report
APP        Advance Procurement Plan
ASTD       Actuarial Services and Technology Department
ERISA      Employee Retirement Income Security Act
FAR        Federal Acquisition Regulations
FFP        Firm-Fixed-Price
FY         Fiscal Year
GAO        General Accountability Office
IDIQ       Indefinite Delivery, Indefinite Quantity
LH         Labor-Hour
OBA        Office of Benefits Administration
OIG        Office of the Inspector General
OMA        Office of Management and Administration
PBGC       Pension Benefit Guaranty Corporation
PBGCFARS   PBGC FAR Supplement
PD         Procurement Department
QASP       Quality Assurance Surveillance Plans
QMD        Quality Management Department
RFI        Request for Information
T&M        Time-and-Materials




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Appendix IV: Summary of Funds Put
to Better Use

                                                            Associated
Funds Put to Better Use                        Amount
                                                          Recommendation
Finding 1 – Payment for Duplicative Services
 [obligated to Company B for requirements      $447,780         3
generation]

Total monetary impact                          $447,780




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Appendix V: Staff Acknowledgement

Staff Acknowledgement   John Seger, AIGA (former Audit Manager); Kara Burt,
                        Audit Manager (former Auditor-In-Charge); and Tiara
                        Grotte, Auditor, made key contributions to this report.




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Appendix VI: Feedback
Please send your comments, suggestions, and feedback to OIGFeedback@pbgc.gov
and include your name, contact information, and the report number. You may also mail
comments to us:

                              Office of Inspector General
                         Pension Benefit Guaranty Corporation
                            1200 K Street, NW, Suite 480
                               Washington, DC 20005

If you want to discuss this report or your comments with a member of the Office of
Inspector General staff, please contact our office at (202) 326-4030.




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