Rebuilding Iraq
Status of Competition for Iraq Reconstruction Contracts Gao ID: GAO-07-40 October 6, 2006Since 2003, Congress has appropriated more than $20 billion through the Iraq Relief and Reconstruction Fund (IRRF) to support Iraq rebuilding efforts. The majority of these efforts are being carried out through contracts awarded by the Departments of Defense (DOD) and State and the U.S. Agency for International Development (USAID). When awarding IRRF-funded contracts for $5 million or more noncompetitively, agencies are required by statute to provide notification and justification to Congress. In June 2004, GAO found that agencies generally complied with laws and regulations governing competition to award new contracts, but did not always comply with competition requirements when issuing task orders under existing contracts. As mandated by Congress, this report (1) describes the extent of competition in Iraq reconstruction contracts awarded by DOD, USAID, and State since October 1, 2003, based on available data, and (2) assesses whether these agencies followed applicable documentation and congressional notification requirements regarding competition for 51 judgmentally selected Iraq reconstruction contract actions. In written comments, State and USAID concurred with the report findings. DOD provided a technical comment.
While no single, comprehensive system currently tracks governmentwide Iraq reconstruction contract data, available data showed that from October 1, 2003, through March 31, 2006, DOD, USAID, and State collectively awarded the majority of Iraq reconstruction contracts competitively. Based on competition information we obtained on $10 billion of the total $11.6 billion in IRRF obligations by these agencies during the period of our review, we found that about $9.1 billion--or 91 percent--was for competitively awarded contracts. While our ability to obtain complete competition data for all DOD Iraq reconstruction contract actions was limited because not all DOD components consistently tracked or fully reported this information, we obtained information on approximately $7 billion, or 82 percent, of DOD's total Iraq reconstruction contract obligations, and of this, we found that competition occurred for nearly all of the obligations. Additionally, based on complete data for the period of our review we found that USAID competitively awarded contract actions for 99 percent of its obligations, while State awarded contract actions competitively for only 10 percent of its obligations. GAO reviewed the files for 51 contract actions totaling $1.55 billion--22 of which were awarded noncompetitively and 29 of which were awarded competitively--almost all of which contained proper documentation. One contract file--for a noncompetitively awarded task order issued by State--did not contain justifications or other required documentation. DOD was also unable to provide documentation for 4 of the competitively awarded contract actions. Of the 22 noncompeted contract actions in GAO's review, State should have notified Congress of 2 actions awarded using other than full and open competition in accordance with notification requirements but did not. State officials told GAO that they have taken steps to address the problem. GAO did not identify any DOD or USAID contract actions within the sample that required notification.
GAO-07-40, Rebuilding Iraq: Status of Competition for Iraq Reconstruction Contracts
This is the accessible text file for GAO report number GAO-07-40
entitled 'Rebuilding Iraq: Status of Competition for Iraq
Reconstruction Contracts' which was released on October 6, 2006.
This text file was formatted by the U.S. Government Accountability
Office (GAO) to be accessible to users with visual impairments, as part
of a longer term project to improve GAO products' accessibility. Every
attempt has been made to maintain the structural and data integrity of
the original printed product. Accessibility features, such as text
descriptions of tables, consecutively numbered footnotes placed at the
end of the file, and the text of agency comment letters, are provided
but may not exactly duplicate the presentation or format of the printed
version. The portable document format (PDF) file is an exact electronic
replica of the printed version. We welcome your feedback. Please E-mail
your comments regarding the contents or accessibility features of this
document to Webmaster@gao.gov.
This is a work of the U.S. government and is not subject to copyright
protection in the United States. It may be reproduced and distributed
in its entirety without further permission from GAO. Because this work
may contain copyrighted images or other material, permission from the
copyright holder may be necessary if you wish to reproduce this
material separately.
Report to Congressional Committees:
United States Government Accountability Office:
GAO:
October 2006:
Rebuilding Iraq:
Status of Competition for Iraq Reconstruction Contracts:
Competition in Iraq Reconstruction Contracting:
GAO-07-40:
GAO Highlights:
Highlights of GAO-07-40, a report to Congressional Committees
Why GAO Did This Study:
Since 2003, Congress has appropriated more than $20 billion through the
Iraq Relief and Reconstruction Fund (IRRF) to support Iraq rebuilding
efforts. The majority of these efforts are being carried out through
contracts awarded by the Departments of Defense (DOD) and State and the
U.S. Agency for International Development (USAID). When awarding IRRF-
funded contracts for $5 million or more noncompetitively, agencies are
required by statute to provide notification and justification to
Congress.
In June 2004, GAO found that agencies generally complied with laws and
regulations governing competition to award new contracts, but did not
always comply with competition requirements when issuing task orders
under existing contracts.
As mandated by Congress, this report (1) describes the extent of
competition in Iraq reconstruction contracts awarded by DOD, USAID, and
State since October 1, 2003, based on available data, and (2) assesses
whether these agencies followed applicable documentation and
congressional notification requirements regarding competition for 51
judgmentally selected Iraq reconstruction contract actions.
In written comments, State and USAID concurred with the report
findings. DOD provided a technical comment.
What GAO Found:
While no single, comprehensive system currently tracks governmentwide
Iraq reconstruction contract data, available data showed that from
October 1, 2003, through March 31, 2006, DOD, USAID, and State
collectively awarded the majority of Iraq reconstruction contracts
competitively. Based on competition information we obtained on $10
billion of the total $11.6 billion in IRRF obligations by these
agencies during the period of our review, we found that about $9.1
billion”or 91 percent”was for competitively awarded contracts. While
our ability to obtain complete competition data for all DOD Iraq
reconstruction contract actions was limited because not all DOD
components consistently tracked or fully reported this information, we
obtained information on approximately $7 billion, or 82 percent, of
DOD‘s total Iraq reconstruction contract obligations, and of this, we
found that competition occurred for nearly all of the obligations.
Additionally, based on complete data for the period of our review we
found that USAID competitively awarded contract actions for 99 percent
of its obligations, while State awarded contract actions competitively
for only 10 percent of its obligations.
Figure:
[See PDF for Image]
Source: GAO analysis.
[End of Figure]
GAO reviewed the files for 51 contract actions totaling $1.55
billion”22 of which were awarded noncompetitively and 29 of which were
awarded competitively”almost all of which contained proper
documentation. One contract file”for a noncompetitively awarded task
order issued by State”did not contain justifications or other required
documentation. DOD was also unable to provide documentation for 4 of
the competitively awarded contract actions. Of the 22 noncompeted
contract actions in GAO‘s review, State should have notified Congress
of 2 actions awarded using other than full and open competition in
accordance with notification requirements but did not. State officials
told GAO that they have taken steps to address the problem. GAO did not
identify any DOD or USAID contract actions within the sample that
required notification.
[Hyperlink, http://www.gao.gov/cgi-bin/getrpt?GAO-07-40].
To view the full product, including the scope and methodology, click on
the link above. For more information, contact John Hutton at (202) 512-
4841 or huttonj@gao.gov.
[End of Section]
Contents:
Letter:
Results in Brief:
Background:
Vast Majority of Reported Contract Obligations Were for Competitive
Awards:
Agencies Generally Provided Necessary Documentation but Did Not Always
Comply with Congressional Notification Requirements:
Agency Comments:
Appendix I: Scope and Methodology:
Appendix II: Iraq Reconstruction Contract Actions and Obligations
Reviewed:
Appendix III: Actions Taken in Response to GAO-04-605, Rebuilding Iraq
Fiscal Year 2003 Contract Award Procedures and Management Challenges:
Appendix IV: Comments from the Department of State:
Appendix V: Comments from the U.S. Agency for International
Development:
Appendix VI: GAO Contacts and Acknowledgments:
Figure:
Figure 1: Obligations for Competitive and Noncompetitive Contract
Actions by Agency:
Abbreviations:
AIDAR: Agency for International Development Acquisition Regulation:
CEFMS: Corps of Engineers Financial Management System:
CICA: Competition in Contracting Act:
DCC-W: Defense Contracting Command-Washington:
DFARS: Defense Federal Acquisition Regulation Supplement:
DOD: Department of Defense:
DOSAR: Department of State Acquisition Regulation:
FAR: Federal Acquisition Regulation:
FPDS-NG: Federal Procurement Data Systems-Next Generation:
IDIQ: Indefinite delivery/indefinite quantity:
IRRF: Iraq Relief and Reconstruction Fund:
JCC-I/A: Joint Contracting Command-Iraq/Afghanistan:
LOGCAP: Logistics Civil Augmentation Program:
USAID; U.S. Agency for International Development:
United States Government Accountability Office:
Washington, DC 20548:
October 6, 2006:
The Honorable John Warner:
Chairman:
The Honorable Carl Levin:
Ranking Minority Member:
Committee on Armed Services:
United States Senate:
The Honorable Duncan L. Hunter:
Chairman:
The Honorable Ike Skelton:
Ranking Minority Member:
Committee on Armed Services:
House of Representatives:
Since 2003, Congress has appropriated more than $20 billion through the
Iraq Relief and Reconstruction Fund (IRRF) to support Iraq rebuilding
efforts, such as repairing oil facilities, increasing electricity
capacity, and restoring water treatment plants. The majority of these
efforts are being carried out by the Departments of Defense (DOD) and
State (State) and the U.S. Agency for International Development (USAID)
through contracts with private sector companies. Widespread
congressional interest in ensuring competition when awarding contracts
for Iraq has been evident since the war in Iraq began. Specifically, in
the fiscal year 2004 supplemental appropriation for Iraq, concerns
about competition in Iraq reconstruction contracting led Congress to
require that notification and justification be sent to multiple
congressional committees when other than full and open competition is
used to award contracts for $5 million or more.[Footnote 1]
In June 2004, GAO reported on contract award procedures for contracts
and task orders to help rebuild Iraq in fiscal year 2003.[Footnote 2]
That report found agencies generally complied with applicable laws and
regulations governing competition to award new reconstruction
contracts. However, the report also identified several instances in
which task orders issued under existing contracts did not comply with
applicable competition requirements.[Footnote 3] Appendix III describes
actions taken in response to recommendations made in that report.
The fiscal year 2006 National Defense Authorization Act conference
report required that GAO update its 2004 report on competition in Iraq
reconstruction contracting.[Footnote 4] In response, this report (1)
describes the extent of competition in Iraq reconstruction contracts
awarded by DOD, USAID, and State since October 1, 2003, based on
available data, and (2) assesses whether these agencies followed
applicable documentation and congressional notification requirements
regarding competition for selected Iraq reconstruction contract
actions.
To address these objectives, we focused our review on three agencies,
the Departments of Defense and State and USAID. These three agencies
are responsible for 98 percent of the total obligations made with
IRRF.[Footnote 5] For the first objective, we obtained data from DOD,
USAID, and State on IRRF-funded reconstruction contract actions,
including contracts awarded, task orders issued, and applicable
modifications, from October 1, 2003, through March 31, 2006, with
obligations of $1 million or more.[Footnote 6] For the second
objective, we judgmentally selected 51 contract actions--22 indicated
as noncompeted and 29 indicated as competed--to determine compliance
with competition documentation and congressional notification
requirements as prescribed in statute, regulations, and other guidance.
Our findings regarding documentation and notification are specific to
these selected contract actions and are not projectable to the
agencies' total contract action universe.
We also reviewed statutory requirements, the Federal Acquisition
Regulation (FAR) and applicable agency supplements, and agency policies
and procedures related to competition in contracting. We interviewed
contracting officers and other procurement officials and reviewed
contract files in Washington, D.C; Virginia; and Iraq. We did not
evaluate the acquisition strategy used to award the contract actions,
whether justifications for issuing awards noncompetitively were
adequate, or whether task orders were within the scope of the
underlying contract.[Footnote 7] While GAO and other audit agencies
have identified problems in contract implementation and administration,
we did not address these issues within our review. Appendix I contains
the details of our scope and methodology. We conducted our review from
April 2006 through August 2006 in accordance with generally accepted
government auditing standards.
Results in Brief:
While no single, comprehensive system currently tracks governmentwide
Iraq reconstruction contract data, we obtained competition information
on $10 billion of the total $11.6 billion in obligations for Iraq
reconstruction contracts collectively awarded by DOD, USAID, and State
from October 1, 2003, through March 31, 2006, and found that about $9.1
billion, or 91 percent, of the obligations were for competitive awards.
Several DOD systems track contract or competition data. However, not
all DOD components consistently tracked or reported this information;
therefore we cannot draw any conclusions on the extent of competition
for all DOD Iraq reconstruction contracts. For example, we were not
able to obtain complete competition data on DOD's Joint Contracting
Command-Iraq/Afghanistan (JCC-I/A) and those of its predecessor
organizations for the period of our review. Despite this, we obtained
competition data for approximately 82 percent of DOD's contract
obligations for Iraq reconstruction, the vast majority of which
indicated that competition generally occurred since October 1, 2003.
Additionally, based on complete data provided for the period of our
review, 99 percent of USAID's Iraq reconstruction contract obligations
were for competitive awards, while only 10 percent of State's
obligations were for competitive awards.
For the contract actions we reviewed, the agencies generally followed
the FAR and the applicable agency supplements regarding documentation
requirements when awarding Iraq reconstruction contract actions but did
not always comply with congressional notification requirements. We
reviewed contract files for 51 contract actions totaling $1.55 billion,
22 of which were awarded noncompetitively and 29 of which were awarded
competitively. For the 22 noncompetitively awarded contract actions,
agencies generally provided proper contract file documentation,
including justification for using other than full and open competition.
Only 1 contract file--for a task order issued by the State Department-
-did not contain justifications or other documentation as required in
the FAR or agency supplements. For the 29 competitively awarded
contract actions, agencies generally provided contract file
documentation. However, in 4 cases DOD was unable to provide
documentation that competition occurred, such as evidence of bidders or
price negotiation memos. Additionally, of the 22 noncompeted contract
actions, State should have notified Congress of 2 actions it awarded
using other than full and open competition in accordance with the
notification requirement in section 2202 of Public Law 108-
106.[Footnote 8] While State failed to provide the required
notifications, it has taken steps to address the problem for future
awards. Within our sample, we did not find any additional instances
where DOD, USAID, and State should have notified Congress of a
noncompeted award but did not.
We requested comments from DOD, USAID, and State on a draft of this
report. In written comments, USAID and State agreed with our findings.
State also provided additional information regarding steps taken to
address the section 2202 reporting requirement. DOD provided a
technical comment, which was incorporated into the report. Comments
from State and USAID appear in appendixes IV and V.
Background:
The United States, along with its coalition partners and various
international organizations and donors, has embarked on a significant
effort to rebuild Iraq following multiple wars and years of neglect. In
April 2003, Congress passed the Emergency Wartime Supplemental
Appropriations Act, which created the Iraq Relief and Reconstruction
Fund and appropriated approximately $2.48 billion for reconstruction
activities.[Footnote 9] These funds--referred to as IRRF I--were to be
used by USAID, State, DOD, Treasury, and Health and Human Services for
a broad range of humanitarian and reconstruction efforts. In November
2003, Congress enacted an additional emergency supplemental
appropriations act, which provided approximately $18.4 billion for
reconstruction activities in Iraq.[Footnote 10] This appropriation--
referred to as IRRF II--focused on security and infrastructure, and the
funding was allocated across multiple sectors.[Footnote 11]
Additionally, the November 2003 act required that full and open
competition be used to enter into contracts using IRRF funds unless the
use of an authorized statutory exception was properly documented and
approved, and the specified congressional committees notified.[Footnote
12] As of August 29, 2006, about 94 percent, or approximately $20
billion, of all IRRF funds had been obligated by all agencies.
The Competition in Contracting Act of 1984 (CICA) generally requires
that federal contracts be awarded on the basis of full and open
competition.[Footnote 13] This process is intended to permit the
government to rely on competitive market forces to obtain needed goods
and services at fair and reasonable prices. However, the law and
implementing regulations recognize that there may be circumstances
under which full and open competition would be impracticable, such as
when contracts need to be awarded quickly to respond to urgent needs or
when there is only one source for the required product or service. In
such cases, agencies are given authority by law to award contracts
without providing for full and open competition (e.g., using limited
competition or on a sole-source basis), provided that the proposed
approach is appropriately justified, approved, and documented.
Additionally, regarding task orders issued under an existing contract,
the competition law does not require competition beyond that obtained
for the initial contract award, provided the task order does not
increase the scope of the work, period of performance, or maximum value
of the contract under which the order is issued.[Footnote 14]
Vast Majority of Reported Contract Obligations Were for Competitive
Awards:
While no single, comprehensive system currently tracks governmentwide
Iraq reconstruction contract data, we obtained competition information
on $10 billion of the total $11.6 billion in obligations for Iraq
reconstruction contracts collectively awarded by DOD, USAID, and State
from October 1, 2003, through March 31, 2006, and found that about $9.1
billion, or 91 percent, of the obligations was for competitive awards.
We obtained information on approximately $7 billion of the $8.55
billion DOD obligated and found that competition occurred for nearly
all of the obligations. Both USAID and State provided information on
all of their IRRF obligations made during the period of our review.
However, where USAID information showed that almost all of its Iraq
reconstruction contract obligations were for competitive awards, State
information showed that few of its contract action obligations were for
competitive awards. Figure 1 shows a breakdown of the three agencies'
competed and noncompeted contract actions based on available data.
Figure 1: Obligations for Competitive and Noncompetitive Contract
Actions by Agency:
[See PDF for image]
Source: GAO analysis.
[End of figure]
Most DOD Obligations Were for Competitively Awarded Contract Actions:
Based on available data, we found that the majority of DOD's IRRF
contract obligations incurred during the period we reviewed were for
competitive awards. Competition information was available for
approximately 82 percent of DOD's total $8.55 billion in Iraq
reconstruction contract obligations. Of this, we found that DOD
competitively awarded about $6.83 billion, and noncompetitively awarded
about $189 million.[Footnote 15] Most of the DOD offices we spoke with
reported that, when possible, contract actions were competed.
JCC-I/A--the office performing the majority of Iraq contracting for the
DOD offices we reviewed--and its predecessor organizations, including
the Project and Contracting Office and Program Management Office,
obligated $3.82 billion, of which $3.81 billion was obligated for
competitive awards. Additionally, the other DOD offices we reviewed,
including the Army Corps of Engineers' Gulf Region Division and
Transatlantic Programs Center; the Army's TACOM Life Cycle Management
Command; and the Air Force Center for Environmental Excellence
obligated approximately $2.25 billion, and of these obligations,
approximately $2.08 billion were for competitive awards and $177
million for noncompetitive awards. Furthermore, the Army Corps of
Engineers' Southwestern Division competitively awarded two contracts to
rebuild Iraqi oil infrastructure with obligations totaling $941
million.
Complete information on DOD's contract actions and competition type for
the period of our review was not available, in part because not all
offices consistently tracked or reported this information. Currently,
DOD is transitioning its contract-writing systems to interface with the
Federal Procurement Data System-Next Generation (FPDS-NG).[Footnote 16]
Until this transition is completed, the majority of DOD components are
expected to use DD Form 350s to report contract actions. However, we
found that while the DD 350 system tracks competition information by
contract, not all offices report their contracts to the system. For
example, the JCC-I/A and its predecessor organizations did not fully
input detailed, individual contract action information into DOD-wide
systems including DD 350, which would provide information on
competition. Furthermore, according to JCC-I/A officials, JCC-I/A did
not track competition information until after May 2005. Consequently,
we relied on multiple sources in order to obtain competition
information for the DOD components within our review.
Almost All USAID Contract Obligations Were for Competitive Awards:
USAID provided competition information for 100 percent of the $2.27
billion in IRRF contract obligations that the agency reported incurring
between October 1, 2003, and March 31, 2006. These data indicated that
USAID competitively awarded contract actions for about $2.25 billion,
or 99 percent, of the approximately $2.27 billion it obligated;
approximately $20.4 million, or about 1 percent, of these obligations
were noncompetitively awarded. Agency contracting staff reported that
USAID has pursued competition with very few exceptions when awarding
contracts and issuing task orders for Iraq reconstruction.
During our contract file review, we identified three instances in which
the competition information provided by USAID was inaccurate. In two
cases, USAID reported contracts as being awarded competitively when
they were actually awarded under limited competition.[Footnote 17] In
the third case, USAID reported a contract as "not competed," when it
was actually awarded competitively. In each of these instances, we used
corrected competition information for our analysis.
Only Small Percentage of State Contract Obligations Were for
Competitive Awards:
State obligated the smallest portion of IRRF funding among the three
agencies, however, it incurred most if its obligations for
noncompetitive awards. State provided competition information for 100
percent of the $762 million in IRRF contract obligations that the
agency reported incurring between October 1, 2003, and March 31, 2006.
These data indicated that State incurred obligations of approximately
$73 million in competitive awards, or approximately 10 percent, of the
approximate $762 million it obligated for IRRF contract actions;
approximately $688 million, or about 90 percent, of these obligations
were incurred under noncompetitive awards. In several of these cases,
State cited urgency as the reason for awarding the contract actions
noncompetitively. Specifically, justifications in two of the contract
files we reviewed cited FAR § 6.302-2, unusual and compelling urgency,
as the basis for using other than full and open competitive procedures.
Additionally, one task order we reviewed was an unauthorized commitment
that had to be ratified by State.[Footnote 18] The ratification
amounted to the issuance of a noncompetitive task order to the
contractor.
During our contract file review, we identified three instances in which
the competition information provided by State was inaccurate. In two of
these cases, we found that contracts that were reported as awarded
competitively were actually awarded noncompetitively. In the third
case, State misclassified the competition type reported for a contract
that was awarded competitively. In each of these instances, we used
corrected competition information for our analysis.
Agencies Generally Provided Necessary Documentation but Did Not Always
Comply with Congressional Notification Requirements:
We reviewed 51 contract actions totaling $1.55 billion--35 at DOD, 11
at USAID, and 5 at State. We found that the agencies generally followed
the FAR and the applicable agency supplements regarding documentation
requirements for contract actions but did not always comply with
congressional notification requirements. Of the 51 contract actions
that we reviewed, 22 were awarded noncompetitively, while 29 were
awarded competitively. Only 1 of the 22 noncompetitive contract action
files did not contain justifications or other documentation as required
in the FAR or agency supplements. Of the 29 competed contract actions,
DOD was unable to provide documentation that competition had occurred,
such as evidence of bidders or price negotiation memos, in 4 cases.
Additionally, of the 22 noncompeted contract actions, State should have
notified Congress of 2 actions it awarded using other than full and
open competition in accordance with the notification requirements.
While State failed to provide the required notifications, State
officials told us that they have taken steps to address the problem for
future awards. Within our sample, we did not find any additional
instances where DOD, USAID, and State should have notified Congress of
a noncompeted award but did not.
Contract Action Files Generally Contained Required Documentation:
Of the 35 DOD IRRF contract actions we reviewed, 15 were indicated as
noncompeted and 20 indicated as competed. The files for the 15
noncompeted contract actions contained documentation required by the
FAR, Defense Federal Acquisition Regulation Supplement and the Army
Federal Acquisition Regulation Supplement. Of the 15 noncompeted
actions, 4 were sole source contract awards; 4 were awarded using
limited competition; 3 were noncompeted task orders under a multiple
award IDIQ contract; 3 were sole source awards under the 8(a)
program[Footnote 19]; and 1 was an out of scope modification. Based on
our review, all of the contract actions that were awarded non-
competitively had justification and approval documentation citing the
reason for either limiting competition or using a sole source award
when required. For example, JCC-I/A partially terminated an IDIQ
contract used to rebuild hospitals in Ira[Footnote 20]q. In order to
complete the remaining work, JCC-I/A awarded a series of sole source
contracts to the remaining Iraqi subcontractors to complete the work.
In another example, the Project and Contracting Office awarded a series
of contracts using limited competition to pave roads in 13 governorates
in Iraq, citing unusual and compelling urgent circumstances due to
security concerns and limited manpower to evaluate all submissions from
Iraqi firms. For the 20 competed DOD contract actions, 16 files
included documentation that competition occurred, such as evidence of
bidders or price negotiation memos when required. However, DOD was
unable to provide supporting evidence for the remaining 4 contract
actions that were indicated as competed.
Of the 11 USAID contract actions we reviewed, 3 were indicated as
noncompeted and 8 indicated as competed. The files for all 3
noncompeted actions included the documentation required by the FAR and
the Agency for International Development Acquisition Regulation (AIDAR)
regarding competition. Two of these contracts were awarded under
limited competition--one for catering services and one for armored
vehicles--providing an opportunity for multiple vendors to submit bids.
For both of these contracts, USAID used a blanket waiver authority
provided by the USAID Administrator pursuant to section 706.302-
70(b)(3)(ii) of the AIDAR.[Footnote 21] This waiver was originally
signed in January of 2003, later renewed in June 2004, and again in
August 2005, and the agency is currently working on a 2006 version. The
third noncompeted action was a modification extending the performance
period and increasing the total award amount for a contract for
facility security. The files for the 8 competed USAID contract actions
included documentation that competition occurred, such as evidence of
bidders or price negotiation memos.
Finally, of the 5 State contract actions we reviewed, 4 were indicated
as noncompeted and 1 indicated as competed. Of the 4 noncompeted
actions, 2 were single-award contracts for protective services, and 2
were task orders for police and guard services off of 1 IDIQ contract.
The files for the 2 single-award contracts and one of the task orders
included all of the documentation required by the FAR and the
Department of State Acquisition Regulation (DOSAR) regarding
competition. However, the file for one of the task orders for
construction of a police training facility did not include
documentation regarding the basis for using an exception to the fair
opportunity process, as required in FAR § 16.505.[Footnote 22] The file
for the 1 competed contract action included documentation that
competition occurred, such as evidence of bidders or price negotiation
memos.
State Did Not Always Provide Required Congressional Notifications:
Of the 22 noncompeted contract actions in our review, State should have
notified Congress of 2 actions it awarded using other than full and
open competition in accordance with the congressional notification
requirement in section 2202 of Public Law 108-106 but did not.
State failed to notify Congress when awarding 2 letter contracts for
personal protective services noncompetitively.[Footnote 23] State
indicated that the department failed to comply with the notification
requirement in these two cases because the Office of Acquisitions
Management, which is responsible for awarding and administering
contracts at State, was not notified that IRRF funds were applied to
these contracts by the relevant program office. State officials told us
they have coordinated with program office staff to ensure that they
communicate funding types to contracting staff in the future. We did
not identify any USAID or DOD contract actions within our sample that
required congressional notification.[Footnote 24]
Agency Comments:
We requested comments from DOD, USAID, and State on a draft of this
report. DOD provided only one technical comment, which was incorporated
into the report. USAID reviewed the report and found it to be factually
correct. State acknowledged our findings and provided additional
information regarding steps taken to address the section 2202 reporting
requirement. Comments from State and USAID appear in appendixes IV and
V.
We are sending copies of this report to the Secretaries of Defense and
State; the Administrator, U.S. Agency for International Development;
and the Commanding General and Chief of Engineers, U.S. Army Corps of
Engineers. We will make copies available to others on request. In
addition, this report will be available at no charge on GAO's Web site
at [Hyperlink, http://www.gao.gov].
The major contributors to this report are listed in appendix VI.
Contact points for our Offices of Congressional Relations and Public
Affairs may be found on the last page of this report. If you have any
questions about this report, please contact me at (202)-512-4841.
Signed by:
John P. Hutton:
Acting Director, Acquisition and Sourcing Management:
[End of section]
Appendix I: Scope and Methodology:
The fiscal year 2006 National Defense Authorization Act conference
report required that GAO update its 2004 report on the extent of
competition for Iraq reconstruction contracts. In response, we focused
our review on reconstruction contract actions funded solely with the
Iraq Relief and Reconstruction Fund (IRRF). IRRF represents the largest
amount of U.S. appropriated funds for reconstruction purposes. Other
sources of U.S. funding for Iraq military, reconstruction, and
stabilization efforts that are not included in our review are the Iraq
Security Forces Fund, the Commander's Emergency Response Program, and
the Commander's Humanitarian Relief and Reconstruction Program.
Additionally, the congressional notification requirement in section
2202 of Public Law 108-106 that was included in our review applies only
to contract awards funded with IRRF.
We included the Departments of Defense (DOD) and State (State) and the
U.S. Agency for International Development (USAID), as these agencies
are responsible for 98 percent of the total obligations made with IRRF
through June 2006. Additionally, within DOD, we used the Corps of
Engineers Financial Management System (CEFMS) data to select individual
components to include in our review that were responsible for the
majority of IRRF II contracting during the time period of our review.
The components we selected included the Joint Contracting Command-Iraq/
Afghanistan, Army Corps of Engineers' Gulf Region Division and
Transatlantic Programs Center, Army's TACOM Life Cycle Management
Command, and the Air Force Center for Environmental Excellence.
To determine the approximate number of reconstruction contract actions,
the types of actions, the funding sources, and the competition type of
such actions, we found that no single source of information contained
suitable amounts of both contracting actions issued using IRRF monies
and competition information. Therefore, to obtain DOD data, CEFMS was
selected as the basis for DOD's IRRF contract universe due to the fact
that it is the payment system for most of the major offices performing
DOD contracting and presented the most complete contract action list.
Using CEFMS, we identified DOD components based on the Department of
Defense Activity Address Code, and selected offices to include in our
review based on total obligations under IRRF II. Since CEFMS does not
capture competition information, however, we attempted to cross-
reference contracts found in CEFMS with DOD's DD Form 350 Individual
Contracting Action Report database. However, at the time of our review,
we found that DD 350 did not include fiscal year 2006 data and not all
DOD components fully reported contract actions to DD 350. As a result,
we contacted the individual DOD components selected for inclusion in
our review and requested competition information for the offices'
contracting actions funded with IRRF monies.
To obtain IRRF-funded contract actions from USAID and State, we relied
on agency-provided data, since the Federal Procurement Data System-Next
Generation (FPDS-NG) did not contain any of USAID's contracting actions
at the time we began our review. Although State's contracting actions
were contained within FPDS-NG, the system did not indicate which
actions were funded using IRRF money and other criteria needed for our
review.
We judgmentally selected 51 contract actions for further review to
determine compliance with documentation requirements as prescribed in
statutes, regulations, and other guidance, such as justification and
approval documentation for noncompeted actions, and synopses of
proposed contract actions, price negotiation memos, and evidence of
bidder's lists for competed actions. To determine the applicable
documentation requirements and policies governing competition when
awarding contract actions, we reviewed the requirements of the
Competition in Contracting Act of 1984 and the Federal Acquisition
Regulation, and additional agency regulations including the Defense
Federal Acquisition Regulation Supplement, Army Federal Acquisitions
Regulation Supplement, Agency for International Development Acquisition
Regulation, Department of State Acquisition Regulation, and other
guidance. The contract actions were selected based on the following
criteria:
* reconstruction contract actions funded with IRRF monies;
* actions awarded from October 1, 2003, through March 31, 2006;
* current obligations of $1 million or more;
* represented both competed and noncompeted actions;
* selected more actions from DOD than USAID and State based on volume
of contract actions obtained;
* included a variety of contracts, task orders, and modifications; and:
* included a variety of goods and services provided.
Our findings regarding documentation are specific to these selected
contract actions and are not projectable to the agencies' total
contract action universe. Of the 51 contract actions selected, 22 were
indicated as awarded noncompetitively and 29 were indicated as awarded
competitively. We included competitively awarded actions in our review
to verify the accuracy of reported actions and confirm evidence of
competition. In the few cases noted where actions were incorrectly
reported as competed or noncompeted by USAID and State, we corrected
the errors as appropriate for use in our analysis. Given that our
actions to corroborate the data contained within agency systems or
provided by the agencies identified only a few errors, which we
corrected, we believe the data to be sufficiently reliable for our
purposes.
To determine whether agencies complied with the congressional
notification requirement contained in section 2202 of Public Law 108-
106, we reviewed agency contract data within our selected contract
actions to identify instances where the reporting requirement would
apply and followed up with officials where appropriate.
In order to review and understand the contract files selected, we
interviewed DOD, USAID, and State contracting officers and other
procurement officials in Washington, D.C; Virginia; and Iraq. Where
possible, we obtained electronic documentation from agency officials.
Appendix II lists the Iraq reconstruction contract actions we reviewed.
We conducted our work between April 2006 and August 2006 in accordance
with generally accepted government auditing standards.
[End of section]
Appendix II: Iraq Reconstruction Contract Actions and Obligations
Reviewed:
Contracting agency/ contractor[A]: Department of Defense: U.S. Air
Force Center for Environmental Excellence: Environmental Chemical
Corporation;
Purpose: Convert Iraqi fort to prison;
Contract action type: Task order;
Amount obligated: $6,901,165.00.
Contracting agency/ contractor[A]: Department of Defense: U.S. Air
Force Center for Environmental Excellence: Shaw Environmental, Inc;
Purpose: Army base renovation;
Contract action type: Task order;
Amount obligated: $45,492,214.00.
Contracting agency/ contractor[A]: Department of Defense: U.S. Air
Force Center for Environmental Excellence: Tetra Tech FW, Inc;
Purpose: Facility construction and renovation;
Contract action type: Task order;
Amount obligated: $41,361,224.00.
Contracting agency/ contractor[A]: Department of Defense: U.S. Air
Force Center for Environmental Excellence: Washington Group
International, Inc;
Purpose: School repairs;
Contract action type: Task order;
Amount obligated: $11,409,173.00.
Contracting agency/ contractor[A]: Department of Defense: U.S. Air
Force Center for Environmental Excellence: Weston Solutions, Inc;
Purpose: Airport construction and improvements;
Contract action type: Task order;
Amount obligated: $4,700,826.00.
Contracting agency/ contractor[A]: Department of Defense: U.S. Air
Force Center for Environmental Excellence: Laguna Construction Company,
Inc;
Purpose: Commando satellite construction;
Contract action type: Task order;
Amount obligated: $20,555,941.00.
Contracting agency/ contractor[A]: Department of Defense: U.S. Army
TACOM Life Cycle Management Command: Conley & Associates, Inc;
Purpose: New equipment training;
Contract action type: Contract;
Amount obligated: $2,163,582.54.
Contracting agency/ contractor[A]: Department of Defense: U.S. Army
TACOM Life Cycle Management Command: Conley & Associates, Inc;
Purpose: New equipment training;
Contract action type: Contract;
Amount obligated: $2,417,967.80.
Contracting agency/ contractor[A]: Department of Defense: U.S. Army
TACOM Life Cycle Management Command: MAC International FZE;
Purpose: Police truck;
Contract action type: Contract;
Amount obligated: $67,210,440.00.
Contracting agency/ contractor[A]: Department of Defense: U.S. Army
Transatlantic Programs Center: Odebrecht-Austin (JV);
Purpose: Gas power plant maintenance;
Contract action type: Task order;
Amount obligated: $38,663,252.20.
Contracting agency/ contractor[A]: Department of Defense: U.S. Army
Transatlantic Programs Center: Shaw Centcom Services LLD;
Purpose: Transmission line and substation rehabilitation;
Contract action type: Task order;
Amount obligated: $15,423,515.00.
Contracting agency/ contractor[A]: Department of Defense: U.S. Army
Transatlantic Programs Center: Washington International/Black & Veatch
Joint Venture;
Purpose: Generator Rehabilitation;
Contract action type: Task order;
Amount obligated: $64,296,158.00.
Contracting agency/ contractor[A]: Department of Defense: Joint
Contracting Command - Iraq/ Afghanistan: ASRC Airfield and Range
Services, Inc;
Purpose: Facility construction and training;
Contract action type: Contract;
Amount obligated: $59,522,329.00.
Contracting agency/ contractor[A]: Department of Defense: Joint
Contracting Command - Iraq/ Afghanistan: Eurest Support Services, Inc;
Purpose: Base camp support services;
Contract action type: Contract;
Amount obligated: $48,844,954.00.
Contracting agency/ contractor[A]: Department of Defense: Joint
Contracting Command - Iraq/ Afghanistan: SBIG Technical Services, Ltd;
Purpose: Base support services;
Contract action type: Contract;
Amount obligated: $22,915,216.50.
Contracting agency/ contractor[A]: Department of Defense: Joint
Contracting Command - Iraq/ Afghanistan: FluorAMEC LLC;
Purpose: Electric generation power plant construction;
Contract action type: Task order;
Amount obligated: $4,500,000.00.
Contracting agency/ contractor[A]: Department of Defense: Joint
Contracting Command - Iraq/ Afghanistan: PAE Government Systems, Inc;
Purpose: Firefighter training program;
Contract action type: Contract;
Amount obligated: $15,514,713.00.
Contracting agency/ contractor[A]: Department of Defense: Joint
Contracting Command - Iraq/ Afghanistan: Iraqi Company A;
Purpose: Road construction;
Contract action type: Contract;
Amount obligated: $1,353,700.00.
Contracting agency/ contractor[A]: Department of Defense: Joint
Contracting Command - Iraq/ Afghanistan: Iraqi Company B;
Purpose: Road construction;
Contract action type: Contract;
Amount obligated: $1,185,547.90.
Contracting agency/ contractor[A]: Department of Defense: Joint
Contracting Command - Iraq/ Afghanistan: Iraqi Company B;
Purpose: Road construction;
Contract action type: Contract;
Amount obligated: $1,119,476.00.
Contracting agency/ contractor[A]: Department of Defense: Joint
Contracting Command - Iraq/ Afghanistan: Iraqi Company C;
Purpose: Road construction;
Contract action type: Contract;
Amount obligated: $1,409,515.00.
Contracting agency/ contractor[A]: Department of Defense: Joint
Contracting Command - Iraq/ Afghanistan: Raytheon Systems Development
Company;
Purpose: Purchase and install communication systems;
Contract action type: Contract;
Amount obligated: $1,900,000.00.
Contracting agency/ contractor[A]: Department of Defense: Joint
Contracting Command - Iraq/ Afghanistan: BLP;
Purpose: Civil intervention force class;
Contract action type: Contract;
Amount obligated: $9,340,912.38.
Contracting agency/ contractor[A]: Department of Defense: Joint
Contracting Command - Iraq/ Afghanistan: U.S. Investigative Service;
Purpose: Training, force protection and life support services;
Contract action type: Contract;
Amount obligated: $42,197,992.13.
Contracting agency/ contractor[A]: Department of Defense: Joint
Contracting Command - Iraq/ Afghanistan: Iraqi Company D;
Purpose: Renovate, repair, and upgrade hospital;
Contract action type: Contract;
Amount obligated: $2,919,752.90.
Contracting agency/ contractor[A]: Department of Defense: Joint
Contracting Command - Iraq/ Afghanistan: iComPort;
Purpose: Install and test underground feeders;
Contract action type: Modification;
Amount obligated: $1,113,690.00.
Contracting agency/ contractor[A]: Department of Defense: Joint
Contracting Command - Iraq/ Afghanistan: Iraqi Company E;
Purpose: Rehabilitate children's hospital;
Contract action type: Contract;
Amount obligated: $1,288,000.00.
Contracting agency/ contractor[A]: Department of Defense: Joint
Contracting Command - Iraq/ Afghanistan: Comet Company LTD;
Purpose: Rehabilitate water pumping station;
Contract action type: Contract;
Amount obligated: $4,222,549.00.
Contracting agency/ contractor[A]: Department of Defense: U.S. Army
Corps of Engineers - Gulf Region Division: Iraqi Company F;
Purpose: Water facility construction;
Contract action type: Contract;
Amount obligated: $3,500,000.00.
Contracting agency/ contractor[A]: Department of Defense: U.S. Army
Corps of Engineers - Gulf Region Division: IAP World Wide Services;
Purpose: Sewer and water networks;
Contract action type: Task order;
Amount obligated: $26,982,350.00.
Contracting agency/ contractor[A]: Department of Defense: U.S. Army
Corps of Engineers - Gulf Region Division: First Kuwaiti Contracting;
Purpose: Emergency response unit bureau dignitary protection training
site construction;
Contract action type: Task order;
Amount obligated: $14,078,995.00.
Contracting agency/ contractor[A]: Department of Defense: U.S. Army
Corps of Engineers - Gulf Region Division: KEC-OZDIL JV;
Purpose: Design and reconstruct transmission line;
Contract action type: Contract;
Amount obligated: $23,865,426.00.
Contracting agency/ contractor[A]: Department of Defense: U.S. Army
Corps of Engineers - Gulf Region Division: Iraqi Company G;
Purpose: MNSTC-I logistical warehouse complex;
Contract action type: Contract;
Amount obligated: $2,099,556.00.
Contracting agency/ contractor[A]: Department of Defense: U.S. Army
Corps of Engineers - Gulf Region Division: Iraqi Company H;
Purpose: Iraqi National Guard battalion garrison;
Contract action type: Task order;
Amount obligated: $7,891,300.00.
Contracting agency/ contractor[A]: Department of Defense: U.S. Army
Corps of Engineers - Gulf Region Division: Iraqi Company I;
Purpose: Electrical complex construction;
Contract action type: Contract;
Amount obligated: $2,837,290.00.
Total, Department of Defense; Purpose:
Amount obligated: $621,198,723.35.
Contracting agency/ contractor[A]: U.S. Agency for International
Development: Al Gosaibi Services;
Purpose: Catering services;
Contract action type: Contract;
Amount obligated: $1,360,094.
Contracting agency/ contractor[A]: U.S. Agency for International
Development: America's Development Foundation;
Purpose: Civil society;
Contract action type: Contract;
Amount obligated: $42,880,157.
Contracting agency/ contractor[A]: U.S. Agency for International
Development: Daimler Chrysler AG;
Purpose: Armored vehicles;
Contract action type: Contract;
Amount obligated: $4,261,182.
Contracting agency/ contractor[A]: U.S. Agency for International
Development: Development Alternatives, Inc;
Purpose: Grant support;
Contract action type: Task order;
Amount obligated: $348,039,843.
Contracting agency/ contractor[A]: U.S. Agency for International
Development: Development Alternatives, Inc;
Purpose: Agriculture;
Contract action type: Contract;
Amount obligated: $101,352,912.
Contracting agency/ contractor[A]: U.S. Agency for International
Development: Gulf Catering Company;
Purpose: Catering services;
Contract action type: Purchase order;
Amount obligated: $1,139,320.
Contracting agency/ contractor[A]: U.S. Agency for International
Development: International Business & Technical Consultants, Inc;
Purpose: Monitoring and evaluation;
Contract action type: Contract;
Amount obligated: $7,938,544.
Contracting agency/ contractor[A]: U.S. Agency for International
Development: Kroll Government Services International, Inc;
Purpose: Facility security;
Contract action type: Modification;
Amount obligated: $3,368,311.
Contracting agency/ contractor[A]: U.S. Agency for International
Development: The Louis Berger Group;
Purpose: Private sector growth and employment generation;
Contract action type: Contract;
Amount obligated: $95,000,000.
Contracting agency/ contractor[A]: U.S. Agency for International
Development: The Partnership for Child Health Care, Inc;
Purpose: Child health;
Contract action type: Task order;
Amount obligated: $2,000,000.
Contracting agency/ contractor[A]: U.S. Agency for International
Development: Research Triangle Institute;
Purpose: Local Governance;
Contract action type: Contract;
Amount obligated: $85,000,000.
Total, U.S. Agency for International Development;
Amount obligated: $692,340,363.
Contracting agency/ contractor[A]: Department of State: Dyncorp
International LLC;
Purpose: Construction and training at police training facility;
Contract action type: Task order;
Amount obligated: $44,817,427.36.
Contracting agency/ contractor[A]: Department of State: Dyncorp
International LLC;
Purpose: Construction of police training facility;
Contract action type: Task order;
Amount obligated: $71,543,529.00.
Contracting agency/ contractor[A]: Department of State: Triple Canopy,
Inc;
Purpose: Local guard services;
Contract action type: Contract;
Amount obligated: $73,344,007.29.
Contracting agency/ contractor[A]: Department of State: Triple Canopy,
Inc;
Purpose: Personal protective services;
Contract action type: Contract;
Amount obligated: $20,800,000.00.
Contracting agency/ contractor[A]: Department of State: Blackwater
Security Consultants, Inc;
Purpose: Personal protective services;
Contract action type: Contract;
Amount obligated: $24,360,000.00.
Total, Department of State;
Amount obligated: $234,864,963.65[B].
Grand Total; Purpose: [Empty];
Amount obligated: $1,548,404,050.00.
Source: GAO.
[A] Names of Iraqi firms not listed.
[B] The two State contracts for personal protective services were only
partially funded with IRRF. Obligations totals listed for these
contracts represent only those obligations made with IRRF funds.
[End of table]
[End of section]
Appendix III: Actions Taken in Response to GAO-04-605, Rebuilding Iraq:
Fiscal Year 2003 Contract Award Procedures and Management Challenges:
GAO recommendations from GAO-04-605 Iraq reconstruction contracting: To
ensure that task orders issued to rebuild Iraq comply with applicable
requirements, and to maximize incentives for the contractors to ensure
effective cost control, the Secretary of the Army should review the out-
of-scope task orders for Iraqi media and subject matter experts issued
by the Defense Contracting Command-Washington (DCC-W) and take any
necessary remedial actions;
Actions taken according to DOD officials: DCC-W agreed with the GAO
findings concerning out-of-scope work for the orders awarded to SAIC
for the Iraqi Media Network and the subject matter experts. Contracting
officers ordering the out-of-scope work have been made aware that their
actions were improper. DCC-W has instituted agencywide training in a
number of topics, including the need to carefully review the scope of
work of a contract to determine what may be legitimately ordered from
that contract. This training will be periodically repeated. In
addition, its postaward reviews will include an assessment of whether
requiring work is within the scope of the basic contract. GAO and DOD
consider this recommendation closed.
GAO recommendations from GAO-04-605 Iraq reconstruction contracting: To
ensure that task orders issued to rebuild Iraq comply with applicable
requirements, and to maximize incentives for the contractors to ensure
effective cost control, the Secretary of the Army should ensure that
any future task orders under the Logistics Civil Augmentation Program
(LOGCAP) contract for Iraq reconstruction activities are within the
scope of that contract;
Actions taken according to DOD officials: According to DOD, the
Procuring Contracting Officer for the LOGCAP contract reviews each
proposed scope of work that will result in a task order and makes a
determination whether the action is within the scope of the contract
and obtains appropriate legal advice as necessary. GAO and DOD consider
this recommendation closed.
GAO recommendations from GAO-04-605 Iraq reconstruction contracting: To
ensure that task orders issued to rebuild Iraq comply with applicable
requirements, and to maximize incentives for the contractors to ensure
effective cost control, the Secretary of the Army should address and
resolve all outstanding issues in connection with the pending
Justifications and Approvals for the contracts and related task orders
used by the Army Corps of Engineers to restore Iraq's electricity
infrastructure;
Actions taken according to DOD officials: As of June 2006, the
justifications and approvals were being processed for Assistant
Secretary of the Army for Acquisition, Logistics and Technology,
approval. GAO considers this recommendation open, though Defense
Procurement and Acquisition Policy has indicated that this
recommendation will be closed in the near term.
GAO recommendations from GAO-04-605 Iraq reconstruction contracting: To
ensure that task orders issued to rebuild Iraq comply with applicable
requirements, and to maximize incentives for the contractors to ensure
effective cost control, the Secretary of the Army should direct the
Commanding General, Army Field Support Command, and the Commanding
General and Chief of Engineers, U.S. Army Corps of Engineers, to
definitize outstanding contracts and task orders as soon as possible;
Actions taken according to DOD officials: DOD has definitized, or
reached agreement on key terms and conditions for, all of the six
contract actions identified in our June 2004 report. We noted in our
March 2005 report entitled, High-Level DOD Coordination is Needed to
Further Improve the Management of the Army's LOGCAP Contract (GAO-05-
328), that the Army had made improvements in definitizing task orders
issued under the LOGCAP contract. GAO and DOD consider this
recommendation closed.
GAO recommendations from GAO-04-605 Iraq reconstruction contracting: To
improve the delivery of acquisition support in future operations, the
Secretary of Defense, in consultation with the Administrator, U.S.
Agency for International Development, should evaluate the lessons
learned in Iraq and develop a strategy for ensuring that adequate
acquisition staff and other resources can be made available in a timely
manner;
Actions taken according to DOD officials: In November 2005, DOD issued
directive 3000.05, Military Support for Stability, Security,
Transition, and Reconstruction Operations, which, in part, required
that DOD ensure proper oversight of contracts in stability operations
and ensure U.S. commanders deployed in foreign countries are able to
secure contract support rapidly. DOD is also working on developing
joint contingency contracting policy and doctrine and assessing DOD's
contract administration services capability for theater support
contracts. The estimated completion data of the ongoing actions is fall
2006. GAO considers this recommendation open.
Source: GAO.
[End of table]
[End of section]
Appendix IV: Comments from the Department of State:
United States Department of State:
Assistant Secretary for Resource Management and Chief Financial
Officer:
Washington, D.C. 20520:
Ms. Jacquelyn Williams-Bridgers;
Managing Director:
International Affairs and Trade:
Government Accountability Office:
441 G Street, N.W.
Washington, D.C. 20548-0001:
SEP 29 2006:
Dear Ms. Williams-Bridgers:
We appreciate the opportunity to review your draft report, "Rebuilding
Iraq: Status of Competition for Iraq Reconstruction Contracts," GAO Job
Code 120547.
The enclosed Department of State comments are provided for
incorporation with this letter as an appendix to the final report.
If you have any questions concerning this response, please contact Gary
Cubbage, Policy Analyst, Bureau of Diplomatic Security, at (571) 345-
2743.
Sincerely,
Signed by:
Bradford R. Higgins:
cc: GAO - Katherine France:
DS - Richard J. Griffin:
State/OIG - Mark Duda:
Department of State Comments on GAO Draft Report Rebuilding Iraq:
Status of Competition for Iraq Reconstruction Contracts (GAO-07-40, GAO
Code 120547):
The Department of State appreciates the opportunity to review and
comment on the GAO Draft Report, "Rebuilding Iraq: Status of
Competition for Iraq Reconstruction Contracts." Pursuant to the
findings noted in the GAO draft report, the Department acknowledges
that it had two instances identified in the report where it failed to
carry out the requirement under Section 2202 of Public Law 108-106
requiring Congressional Notifications prior to the award of non-
competitive contracts with a value in excess of $5,000,000 funded from
an IRRF appropriation. This was due to an administrative error and the
Department greatly appreciates the GAO bringing this matter to our
attention.
During the period covered in the GAO report, October 1, 2003, through
March 31, 2006, the Bureau of Diplomatic Security (DS) had four Iraq
contracts, two of which were competed under full and open competition
and two that were not. Of the two that were not, IRRF funds in the
amount of $37,300,000 were inappropriately obligated on these
contracts. In correcting the error, the Bureau discovered that another
supplemental appropriation for Iraq operations, available at the time,
was supposed to have been used to fund these contracts. In August 2006,
the Bureau de-obligated the IRRF funding in each of the two contracts
and replaced them with Diplomatic and Consular Program (D&CP) funding,
which consequently negates the requirement for Congressional
Notification for other than full-and-open competition. The IRRF funds
were then obligated under contracts that were awarded on a competitive
basis. Additionally, DS has implemented procedures to ensure that
everyone in the procurement chain is notified of funding types,
limitations, and reporting requirements in order to advise the
Contracting Officer how to proceed on the solicitation of any contracts
being funded from these sources. Furthermore, the Worldwide Personal
Protective Services (WPPS) II contract has been awarded and all former
and new DS contract efforts in Iraq are now competed under Full and
Open Competition.
Again, the Department acknowledges its error, the assistance GAO
provided in bringing this matter to our attention and its appreciation
for reflecting our corrective actions in the draft report.
[End of section]
Appendix V: Comments from the U.S. Agency for International
Development:
USAID:
From The American People:
OCT - 2 2006:
John P. Hutton:
Director:
Acquisition and Sourcing Management:
U.S. Government Accountability Office:
441 G Street, N.W.
Washington, D.C. 20548:
Dear Mr. Hutton:
I am pleased to provide the U.S. Agency for International Development's
(USAID) formal response on the draft GAO report entitled Rebuilding
Iraq: Status of Competition for Iraq Reconstruction Contracts (GAO-07-
40).
USAID has reviewed the report and finds it to be factually correct. We
have no further comments on the report at this time.
Thank you for the opportunity to respond to the GAO draft report and
for the courtesies extended by your staff in the conduct of this
review.
Sincerely,
Signed by;
Mosina H. Jordan:
Counselor to the Agency:
U.S. Agency for International Development:
1300 Pennsylvania Avenue, NW:
Washington, DC 20523:
www.usaid.gov:
[End of section]
Appendix VI: GAO Contacts and Acknowledgments:
GAO Contacts:
John Hutton, (202) 512-4841:
Acknowledgments:
Major contributors to this report were John Neumann, Daniel Chen, Kate
France, Julia Kennon, John Krump, Art James, Shannon Simpson, Karen
Sloan, Adam Vodraska, and Aaron Young.
FOOTNOTES
[1] Emergency Supplemental Appropriations Act for Defense and for the
Reconstruction of Iraq and Afghanistan, 2004 § 2202 (Pub. L. No. 108-
106, Nov. 6, 2003).
[2] GAO, Rebuilding Iraq: Fiscal Year 2003 Contract Award Procedures
and Management Challenges, GAO-04-605 (Washington, D.C.: June 1, 2004).
[3] A task order means an order for services placed against an
established contract or with Government sources. Task orders are deemed
by law to satisfy competition requirements if they are within the scope
of the work, period of performance, or maximum value of a properly
awarded underlying contract. The scope, period, or maximum value may be
increased only by modification of the contract and competitive
procedures are required to be used for any such increase unless an
authorized exception applies. If more than one contractor was awarded
the same underlying task order contract, this is referred to as a
multiple award indefinite delivery/indefinite quantity (IDIQ) contract.
Generally, in issuing a task order under such a contract, a contracting
officer is required to provide each awardee a "fair opportunity" to be
considered for each order exceeding $2,500 unless a statutory exception
applies. Special competition requirements apply to certain orders for
services by or on behalf of DOD under section 803 of the National
Defense Authorization Act of Fiscal Year 2002 (Pub. L. No.107-107).
[4] H.R. Conf. Rep. No. 109-360, at page 765 (2005).
[5] This report focuses on reconstruction contract actions awarded
using IRRF funds. Funds from the first IRRF appropriation were
available to the Department of State, the United States Agency for
International Development, the Department of the Treasury, the
Department of Defense, and the Department of Health and Human Services;
funds from the second IRRF appropriation were available to the same
five agencies, as well as the Coalition Provisional Authority. Other
sources of U.S. funding for Iraq military, reconstruction and
stabilization efforts, such as the Iraq Security Forces Fund, were not
included in our review.
[6] For purposes of this report, the terms "contract action" and
"award" refer not only to the award of a new contract, but also to a
modification to an existing contract treated as a non-competitive award
(i.e., increases the contract's scope, period of performance, or
maximum value), as well as to the issuance of a task order under a
multiple-award IDIQ contract.
[7] For purposes of this report, "noncompetitive" procedures shall
include the use of other than full and open competition procedures
authorized under FAR subpart 6.3 (2005), the use of statutory
exceptions to the "fair opportunity" ordering procedures for multiple
award IDIQ contracts under FAR § 16.505(b)(2), and State and USAID use
of other statutory exceptions, specifically 40 U.S.C. § 113(e) (Supp.
III 2003).
[8] Pub. L. No. 108-106, Nov. 6, 2003.
[9] Pub. L. No. 108-11, Apr. 16, 2003.
[10] Pub. L. No. 108-106.
[11] These sectors are Security and Law Enforcement; Electricity; Oil
Infrastructure; Justice, Public Safety and Civil Society; Education,
Refugees, Human Rights, Governance; Roads, Bridges, and Construction;
Health Care; Transportation and Communications; Water Resources and
Sanitation; and Private Sector Development.
[12] The statutory exception had to be properly documented and approved
by the head of the contracting agency and the Administrator of the
Coalition Provisional Authority.
[13] CICA, as enacted in 10 U.S.C. § 2304(a) (1) (2000) (applicable to
DOD) and codified at 41 U.S.C. § 253(a) (1) (2000) (applicable to other
executive agencies discussed in this report); 41 U.S.C. § 403(6) (2000)
(definition of "full and open competition"). CICA's competition
requirements are implemented in the FAR, 48 C.F.R. part 6 and
corresponding agency supplements.
[14] The scope, period of performance, or maximum value may be
increased only by modification of the contract, and competitive
procedures are required to be used for any such increase unless an
authorized exception applies. For multiple award IDIQ contracts, all of
the contractors are required to be provided a fair opportunity to be
considered for the task order. Special competition requirements apply
to certain orders for services by or on behalf of DOD.
[15] On December 5, 2003, the Deputy Secretary of Defense issued a
Determination and Findings limiting competition for 26 construction and
services contracts to firms from the United States, Iraq, Coalition
partners, and force contributing nations. While competition was limited
to firms from these countries, DOD components used competitive
procedures required by the FAR to award these contracts. These contract
award obligations represent approximately $2.69 billion in competitive
actions of the $7.02 billion in DOD IRRF contract obligations included
in our review.
[16] The FPDS was implemented in 1978 to collect information about
federal procurement contracts. Congress, GAO, executive branch
agencies, and the public rely on FPDS data for information on agency
contracting actions, governmentwide procurement trends, and achievement
of small business goals.
[17] USAID is authorized under statute to limit competition when full
and open competition would impair the administration of a foreign aid
program. 40 U.S.C. § 113(e) (Supp. III 2003) (formerly 40 U.S.C. §
474); 48 C.F.R. § 706.302-70 (2005).
[18] Ratification is the act of approving an unauthorized commitment by
an official who has the authority to do so. The unauthorized commitment
is not binding solely because the Government representative who made it
lacked the authority to enter into the agreement on behalf of the
Government.
[19] The 8(a) Business Development program refers to section 8(a) of
the Small Business Act, which establishes a program authorizing the
Small Business Administration to enter into contracts with other
agencies and let subcontracts for performing those contracts to firms
eligible for program participation (small disadvantaged business
concerns). In some cases, such as for DOD, the Small Business
Adminisration has delegated its 8(a) program contract execution
function authority to the agency. Per FAR 6.203, separate justification
or determination and findings are not required to set aside a contract
for small business concerns. FAR 6.203(b) (Jan. 2006).
[20] The termination clause in Government contracts provides for the
complete or partial termination of contracts for the convenience of the
Government or default of the contractor. The authority to terminate
contracts resides in the contracting officer and shall only be used,
whether for default or convenience, when it is in the Government's
interest. FAR Part 49, Termination of Contracts (Jan. 2006).
[21] The Federal Property and Administrative Services Act permitted
waiver of competitive contracting procedures that would impair foreign
aid programs. This authority, previously codified at 40 U.S.C. § 474
(2000), was recently recodified and enacted into positive law, 40
U.S.C. § 113(e) (Supp. III 2003), by Pub. L. No. 107-217, § 1, 116
Stat. 1062, 1066 (2002). This authority is implemented in section
706.302-70 of the AIDAR.
[22] FAR 16.505(b)(1) (Jan. 2006).
[23] A letter contract is a written preliminary contractual instrument
that authorizes the contractor to begin immediately manufacturing
supplies or performing services. It is used when the Government's
interests demand that the contractor be given a binding commitment so
that work can start immediately and negotiating a definitive contract
is not possible in sufficient time to meet the requirement.
[24] We found that DOD, USAID, and State each provided one notification
to Congress for IRRF-funded actions not included in our 51 selected
contract actions.
GAO's Mission:
The Government Accountability Office, the investigative arm of
Congress, exists to support Congress in meeting its constitutional
responsibilities and to help improve the performance and accountability
of the federal government for the American people. GAO examines the use
of public funds; evaluates federal programs and policies; and provides
analyses, recommendations, and other assistance to help Congress make
informed oversight, policy, and funding decisions. GAO's commitment to
good government is reflected in its core values of accountability,
integrity, and reliability.
Obtaining Copies of GAO Reports and Testimony:
The fastest and easiest way to obtain copies of GAO documents at no
cost is through the Internet. GAO's Web site ( www.gao.gov ) contains
abstracts and full-text files of current reports and testimony and an
expanding archive of older products. The Web site features a search
engine to help you locate documents using key words and phrases. You
can print these documents in their entirety, including charts and other
graphics.
Each day, GAO issues a list of newly released reports, testimony, and
correspondence. GAO posts this list, known as "Today's Reports," on its
Web site daily. The list contains links to the full-text document
files. To have GAO e-mail this list to you every afternoon, go to
www.gao.gov and select "Subscribe to e-mail alerts" under the "Order
GAO Products" heading.
Order by Mail or Phone:
The first copy of each printed report is free. Additional copies are $2
each. A check or money order should be made out to the Superintendent
of Documents. GAO also accepts VISA and Mastercard. Orders for 100 or
more copies mailed to a single address are discounted 25 percent.
Orders should be sent to:
U.S. Government Accountability Office
441 G Street NW, Room LM
Washington, D.C. 20548:
To order by Phone:
Voice: (202) 512-6000:
TDD: (202) 512-2537:
Fax: (202) 512-6061:
To Report Fraud, Waste, and Abuse in Federal Programs:
Contact:
Web site: www.gao.gov/fraudnet/fraudnet.htm
E-mail: fraudnet@gao.gov
Automated answering system: (800) 424-5454 or (202) 512-7470:
Public Affairs:
Jeff Nelligan, managing director,
NelliganJ@gao.gov
(202) 512-4800
U.S. Government Accountability Office,
441 G Street NW, Room 7149
Washington, D.C. 20548:
