Interagency Contracting
Need for Improved Information and Policy Implementation at the Department of State Gao ID: GAO-08-578 May 8, 2008Interagency contracting--using another agency's contracts or contracting services--can provide agencies with opportunities to streamline the procurement process and achieve savings. However, GAO designated the management of interagency contracting a high-risk area in 2005 due, in part, to a lack of reliable data on its use and of clarity regarding contract management responsibilities. In 2002, the Department of State (State) issued the State First policy, requiring domestic bureaus to obtain approval from State acquisition officials before paying other agencies for contract support services. Under the Comptroller General's authority to conduct evaluations on his own initiative, GAO evaluated State's 1) insight into its use of interagency contracts, 2) policies on deciding when to use assisted interagency contracts, and 3) ability to ensure oversight. GAO's work included reviewing regulations, analyzing interagency contracting data, and conducting 10 case studies of direct and assisted interagency contracts that represented a range of State bureaus and servicing agencies.
State officials have limited insight into the extent to which the department has used both methods of interagency contracting--direct by placing their own orders on another agency's contract and assisted by obtaining contract support services from another agency. State officials cannot rely on the federal government's primary data system for tracking procurements to readily identify instances when State has used interagency contracts. Further, State's central procurement and accounting systems do not reliably and comprehensively identify when interagency contracts have been used. While State officials told GAO the most reliable way to identify interagency contract actions would be to request data on these actions from bureaus and overseas posts, several bureaus and posts had difficulty responding to such a request. State reported to GAO over $800 million in interagency contract actions in fiscal year 2006, but these data were incomplete. For example, State did not report $144 million in assisted contracting performed on its behalf by the Department of Defense. GAO has previously reported that the lack of reliable information on interagency contracts inhibits agencies from making sound contracting decisions and engaging in good management practices. Due to the way the State First policy has been implemented, State cannot ensure that decisions to use assisted interagency contracting are made by the appropriate acquisition officials. These officials often lack awareness of or involvement in decisions to use assisted interagency contracts. First, State acquisition officials have created exemptions limiting the assisted contract actions subject to their review under the policy. For example, State's guidance exempts funds transfers under the Foreign Assistance Act, under which bureaus conducting large amounts of interagency contracting operate. Second, bureaus have varying interpretations of when approvals are needed under the policy. Some bureaus seek approvals for individual contract actions related to specific requirements. Another bureau interprets the policy as only requiring approval for a new overarching interagency acquisition agreement, which can encompass multiple contract actions and fiscal years. Third, State acquisition officials do not monitor State First compliance, so they are not positioned to know whether the five approval requests received in fiscal year 2006 fully reflected the extent of that year's assisted interagency contracting. State's policies do not ensure that responsibilities for overseeing contractor performance on assisted interagency contracts are assigned to appropriately trained individuals. State acquisition regulations do not require trained oversight personnel to be assigned when using assisted interagency contracting. As a result, effective oversight depends on factors outside of State's control, such as the rigor of servicing agencies' oversight requirements, which vary. GAO identified cases where State personnel were given responsibility for overseeing contractor performance but had not received related training. GAO and others have reported that agencies' interests are put at risk when the individuals responsible for overseeing contractor performance are not clearly designated and have not been properly trained.
RecommendationsOur recommendations from this work are listed below with a Contact for more information. Status will change from "In process" to "Open," "Closed - implemented," or "Closed - not implemented" based on our follow up work.
Director: Team: Phone:GAO-08-578, Interagency Contracting: Need for Improved Information and Policy Implementation at the Department of State
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Interagency Contracting:
Need for Improved Information and Policy Implementation at the
Department of State:
Interagency Contracting:
Report to Congressional Committees:
United States Government Accountability Office:
GAO:
May 2008:
GAO-08-578:
GAO Highlights:
Highlights of GAO-08-578, a report to congressional committees.
Why GAO Did This Study:
Interagency contracting”using another agency‘s contracts or contracting
services”can provide agencies with opportunities to streamline the
procurement process and achieve savings. However, GAO designated the
management of interagency contracting a high-risk area in 2005 due, in
part, to a lack of reliable data on its use and of clarity regarding
contract management responsibilities.
In 2002, the Department of State (State) issued the State First policy,
requiring domestic bureaus to obtain approval from State acquisition
officials before paying other agencies for contract support services.
Under the Comptroller General‘s authority to conduct evaluations on his
own initiative, GAO evaluated State‘s 1) insight into its use of
interagency contracts, 2) policies on deciding when to use assisted
interagency contracts, and 3) ability to ensure oversight. GAO‘s work
included reviewing regulations, analyzing interagency contracting data,
and conducting 10 case studies of direct and assisted interagency
contracts that represented a range of State bureaus and servicing
agencies.
What GAO Found:
State officials have limited insight into the extent to which the
department has used both methods of interagency contracting”direct by
placing their own orders on another agency‘s contract and assisted by
obtaining contract support services from another agency. State
officials cannot rely on the federal government‘s primary data system
for tracking procurements to readily identify instances when State has
used interagency contracts. Further, State‘s central procurement and
accounting systems do not reliably and comprehensively identify when
interagency contracts have been used. While State officials told GAO
the most reliable way to identify interagency contract actions would be
to request data on these actions from bureaus and overseas posts,
several bureaus and posts had difficulty responding to such a request.
State reported to GAO over $800 million in interagency contract actions
in fiscal year 2006, but these data were incomplete. For example, State
did not report $144 million in assisted contracting performed on its
behalf by the Department of Defense. GAO has previously reported that
the lack of reliable information on interagency contracts inhibits
agencies from making sound contracting decisions and engaging in good
management practices.
Due to the way the State First policy has been implemented, State
cannot ensure that decisions to use assisted interagency contracting
are made by the appropriate acquisition officials. These officials
often lack awareness of or involvement in decisions to use assisted
interagency contracts. First, State acquisition officials have created
exemptions limiting the assisted contract actions subject to their
review under the policy. For example, State‘s guidance exempts funds
transfers under the Foreign Assistance Act, under which bureaus
conducting large amounts of interagency contracting operate. Second,
bureaus have varying interpretations of when approvals are needed under
the policy. Some bureaus seek approvals for individual contract actions
related to specific requirements. Another bureau interprets the policy
as only requiring approval for a new overarching interagency
acquisition agreement, which can encompass multiple contract actions
and fiscal years. Third, State acquisition officials do not monitor
State First compliance, so they are not positioned to know whether the
five approval requests received in fiscal year 2006 fully reflected the
extent of that year‘s assisted interagency contracting.
State‘s policies do not ensure that responsibilities for overseeing
contractor performance on assisted interagency contracts are assigned
to appropriately trained individuals. State acquisition regulations do
not require trained oversight personnel to be assigned when using
assisted interagency contracting. As a result, effective oversight
depends on factors outside of State‘s control, such as the rigor of
servicing agencies‘ oversight requirements, which vary. GAO identified
cases where State personnel were given responsibility for overseeing
contractor performance but had not received related training. GAO and
others have reported that agencies‘ interests are put at risk when the
individuals responsible for overseeing contractor performance are not
clearly designated and have not been properly trained.
What GAO Recommends:
GAO recommends the Secretary of State take action to improve State‘s
tracking of interagency contracting, clarify its State First policy,
and enhance contract oversight. In written comments on a draft of this
report, State agreed with the recommendations.
To view the full product, including the scope and methodology, click on
[hyperlink, http://www.gao.gov/cgi-bin/getrpt?GAO-08-578]. For more
information, contact John Hutton at (202) 512-4841 or huttonj@gao.gov.
[End of section]
Contents:
Letter:
Results in Brief:
Background:
State Has Limited Insight into Its Use of Interagency Contracting:
State Cannot Ensure That Decisions to Use Assisted Interagency
Contracting Are Being Made by the Appropriate Acquisition Officials:
State's Policies Do Not Ensure Contract Oversight for Assisted
Interagency Contracts:
Conclusions:
Recommendations for Executive Action:
Agency Comments:
Appendix I: Scope and Methodology:
Appendix II: State's Use of Interagency Contracting in Fiscal Year
2006:
Appendix III: Comments from the Department of State:
Appendix IV: GAO Contacts and Staff Acknowledgements:
Table:
Table 1: Selected Cases of Interagency Contracting at the Department of
State:
Figures:
Figure 1: Organization Chart for Acquisitions within State:
Figure 2: State First Policy Review Process for Proposed Assisted
Interagency Contracting Activities:
Figure 3: Servicing Agencies Used by State for Assisted Actions:
Abbreviations:
AQM: Office of Acquisitions Management:
COR: contracting officer's representative:
DHS: Department of Homeland Security:
DOD: Department of Defense:
DS: Bureau of Diplomatic Security:
DOSAR: Department of State Acquisition Regulations:
FPDS-NG: Federal Procurement Data System-Next Generation:
GSA: General Services Administration:
GSO: general services officer:
IAA: interagency acquisition agreement:
INL: Bureau of International Narcotics and Law Enforcement Affairs:
ITOPII: Information Technology Omnibus Procurement II:
NIH: National Institutes of Health:
OPE: Office of the Procurement Executive:
United States Government Accountability Office:
Washington, DC 20548:
May 8, 2008:
Congressional Committees:
Interagency contracting, when used correctly, can provide agencies with
opportunities to streamline the procurement process and achieve
savings. Agencies can use interagency contracting in two ways--direct
by placing their own orders on another agency's contract or assisted by
obtaining contract support services from another agency. However, we
and several federal inspectors general have identified pervasive
problems associated with the management of interagency contracting.
These include a lack of reliable data and transparency regarding when
and how these contracts are used as well as a lack of clarity in the
definition of roles and responsibilities for managing contracts when
multiple agencies are involved. As a result of these and related
issues, we designated the management of interagency contracting as a
governmentwide high-risk area in 2005.[Footnote 1]
In 2002, before the risks associated with interagency contracting were
widely reported, the Department of State (State) implemented in its
acquisition regulations the State First policy for acquisition that
directs State's domestic bureaus and offices to use State contracting
offices, as opposed to paying another agency for contracting support
services, unless the appropriate State acquisition officials[Footnote
2] grant a waiver. Our prior work on interagency contracting has
included larger procuring agencies--the departments of Defense and
Homeland Security--and agencies that provide contracting services like
the General Services Administration, Department of the Treasury, and
Department of the Interior. We had not examined whether State's policy
has enabled it to minimize the management risks associated with
interagency contracting. While State is a smaller procuring agency than
some of those we have previously focused on, reporting total contract
obligations of over $5 billion in fiscal year 2006, it is increasingly
reliant on contractors to help carry out its mission.
To better understand State's management of interagency contracting, we
evaluated 1) the extent to which State has insight into its use of
interagency contracting, 2) State's policies and procedures for
deciding when to use assisted interagency contracting, and 3) State's
ability to ensure oversight of assisted interagency contracting. We
prepared this report under the Comptroller General's authority to
conduct evaluations on his own initiative and are providing it to you
because of your interest in this high-risk issue.
To address these objectives, we reviewed State acquisition regulations,
policies, and guidance and interviewed agency officials to understand
their implementation. In addition, we requested data from 35 bureaus,
as well as 18 of State's 277 overseas posts with authority to conduct
contracting activities, on fiscal year 2006 purchases of at least
$25,000 made through both direct and assisted interagency contracts. We
compared the data reported by State with similar data from the federal
government's primary procurement data system as well as data from five
agencies that provided contract support services to State. After
conducting extensive work to ensure the consistency of the data, we
determined our final data set to be sufficient for our purposes. To
address the objectives regarding State's policies and ability to ensure
oversight, we conducted 10 case studies that represented direct and
assisted actions as well as a range of State bureaus and servicing
agencies (see table 1 in app. I for details on the selected cases). For
each case study, we reviewed contract documentation from State, the
servicing agency, or both and interviewed relevant officials such as
contracting officers, individuals performing contract oversight, and
program officials. A detailed description of our scope and methodology
is included in appendix I of this report. We conducted this performance
audit from June 2007 through May 2008 in accordance with generally
accepted government auditing standards. Those standards require that we
plan and perform the audit to obtain sufficient, appropriate evidence
to provide a reasonable basis for our findings and conclusions based on
our audit objectives. We believe that the evidence obtained provides a
reasonable basis for our findings and conclusions based on our audit
objectives.
Results in Brief:
State officials have limited insight into the extent to which the
department has used interagency contracting to procure goods and
services. State officials cannot rely on the Federal Procurement Data
System-Next Generation--the federal government's primary data system
for tracking information on procurement actions--to identify instances
when the department has used interagency contracts. Further, State's
central procurement and accounting data systems do not reliably and
comprehensively identify the use of these contracts across the agency.
While State officials told us that the most reliable way to identify
interagency contract actions[Footnote 3] would be to request a list of
these actions from each bureau and overseas post, several bureaus and
posts had difficulty responding to such a request. State reported to us
over $800 million in direct and assisted interagency contract actions
in fiscal year 2006, but these data were incomplete and, in many cases,
reported data were missing basic information such as the contract
number. Most notably, State did not report $144 million in assisted
contracting performed by the Department of Defense (DOD) on State's
behalf for logistics support in Iraq. We have reported in the past that
the lack of reliable information on interagency contracting inhibits
agencies from making sound contracting decisions and engaging in good
management practices. Without access to complete and reliable data on
its use of interagency contracting, State does not have the information
needed to manage its use of such contracts.
Due to the way the State First policy has been implemented, State
cannot ensure that decisions to use assisted interagency contracting
are being made by the appropriate acquisition officials, as called for
under the policy. These acquisition officials often lack awareness of
or involvement in decisions to use assisted interagency contracts for
three main reasons. First, acquisition officials have broadly exempted
many assisted contract actions from the State First waiver process. For
example, State's policy guidance exempts from State First review funds
transfers under the authority of the Foreign Assistance Act, under
which bureaus conducting large amounts of interagency contracting
operate. Second, bureaus have varying interpretations of when they need
to obtain a waiver for proposed assisted interagency contracting
activities. In some instances, bureaus request waivers for individual
contract actions related to specific requirements, such as a new task
order award. Another bureau has interpreted the policy as only
requiring a waiver for a new overarching interagency acquisition
agreement, which can encompass many requirements, multiple contract
actions, and several fiscal years. Third, State's acquisition officials
have not implemented mechanisms to ensure compliance with the policy.
They primarily rely on the bureaus to voluntarily submit requests for
State First waivers, of which acquisition officials received five in
2006. When State acquisition officials do not have the opportunity to
review proposed uses of assisted interagency contracting, they cannot
ensure that decisions to pay another agency for contracting services
are made in State's best interest.
State's policies do not ensure that responsibilities for overseeing
contractor performance on assisted interagency contracts are assigned
to appropriately trained individuals. State acquisition regulations do
not require the assignment of oversight personnel when using assisted
interagency contracting, even though State program officials may be
best positioned to oversee the delivery of goods and services. As a
result, effective oversight currently depends on factors outside of
State's control, such as the rigor of oversight requirements of
servicing agencies, which vary. Our work and the work of others have
previously noted that agencies' interests are put at risk by not
clearly designating who is responsible for providing ongoing oversight
of contractor performance and ensuring that these individuals are
properly trained to perform their duties.
To enable State to improve its management of interagency contracting,
we are recommending State develop a mechanism to reliably track its use
of interagency contracting, clarify the State First policy, and require
bureaus to identify properly trained oversight personnel when seeking a
State First waiver. In written comments on a draft of this report,
State concurred with these recommendations. State's comments are
reprinted in appendix III.
Background:
Interagency contracting is designed to leverage the government's
aggregate buying power and simplify procurement of commonly used goods
and services. This contracting method has allowed agencies to meet the
demands for goods and services at a time when they face growing
workloads, declines in the acquisition workforce, and the need for new
skill sets. Interagency contracts are awarded under various authorities
and can take many forms. They typically are used to provide agencies
with common goods and services, such as office supplies or information
technology services. In other cases, they may be used to fill
specialized requirements, particularly if the other agency providing
the contract support services has unique expertise in a particular type
of procurement. Agencies that award and administer interagency
contracts usually charge a fee to support their operations.
There are two main methods of interagency contracting: direct and
assisted. For direct acquisitions, rather than going through the
process to award a new contract--soliciting offers, evaluating
proposals, and awarding the contract--contracting officers at agencies
can place orders directly on contracts already established by other
agencies. With assisted acquisitions, customer agencies can obtain
contracting services from other agencies, whose contracting officers
place and administer orders on the customer agencies' behalf. Assisted
acquisitions can use interagency acquisition agreements (IAA) to
document and establish general terms and conditions governing
relationships between the customer agencies, which need the goods or
services, and the servicing agencies, which provide the contracting
services.
Responsibility for acquisition policy and management at State is shared
by two offices within the Bureau of Administration--the Office of the
Procurement Executive (OPE) and the Office of Acquisitions Management
(AQM), as shown in figure 1. OPE is responsible for establishing
acquisition policy at State. This responsibility includes prescribing
and implementing acquisition policies, regulations, and procedures;
managing State's procurement reporting system; appointing contracting
officers; and establishing a system for measuring the performance of
State contracting offices. AQM is responsible for providing a full
range of contracting services to support activities across State,
including acquisition planning, contract negotiations, cost and price
analysis, and contract administration. Acquisition officials in OPE and
AQM stated that they work closely on many acquisition activities, but
there is no direct reporting relationship between the two.
While AQM is by far the largest contracting office within State, other
domestic bureaus and offices have varying degrees of contracting
authority.[Footnote 4] Additionally, 277 of State's overseas posts have
limited authority to conduct contracting activities in support of the
bureaus and program office activities carried out at each location.
Finally, two additional contracting offices, known as Regional
Procurement Support Offices, report to AQM and provide contracting
services to the overseas posts. These offices operate as working
capital funds, charging a fee to the overseas posts and other
organizations in exchange for providing contracting services. In
addition to AQM and its regional support offices, only those bureaus
and posts with contracting authority can conduct direct interagency
contracting. However, all bureaus and posts can use assisted
interagency contracting, relying on contracting officers at other
agencies to conduct procurements.
Figure 1: Organization Chart for Acquisitions within State:
This figure is a flowchart showing organization for acquisitions within
state.
[See PDF for image]
Source: GAO analysis of State Foreign Affairs Manual.
Note: The Assistant Secretary of the Bureau of Administration serves as
the Chief Acquisition Officer for State and directs administrative
oversight and services of the Office of the Procurement Executive.
[End of figure]
In response to an increase in the amount of acquisition dollars going
to contract servicing agencies, the Under Secretary of State for
Management issued a memorandum in May 2002 describing the State First
policy. The policy was incorporated into the Department of State
Acquisition Regulations (DOSAR) and clarified later by implementing
guidance. This policy directs domestic bureaus and offices to first use
the services of AQM or another appropriate State contracting activity
before transferring funds to another agency to conduct an
acquisition.[Footnote 5] The policy states further that domestic
bureaus or offices may only transfer funds to another agency for
contracting services after obtaining a waiver from AQM. Application of
this policy is limited to assisted interagency contracting actions.
Instances in which a State contracting officer directly places an order
on another agency's contract are not subject to the policy.
Additionally, the State First policy does not apply to assisted
interagency contracting activities conducted by overseas posts.
The State First policy instructs requesting bureaus to provide
information about the proposed interagency contract action, including a
description of the requirement and contracting services to be provided
by the other agency, the estimated dollar value, the number of option
years, the reason for using the other agency, and the amount of any
surcharge or fee to be charged by the other agency for its contracting
services. AQM, in consultation with OPE, is to review a bureau's
request and either issue a waiver allowing it to proceed with the
proposed interagency contracting activity or decline the request and
direct the bureau to the appropriate State contracting office for
assistance, as described in figure 2. The State First policy also
provides AQM with the authority to grant blanket waivers for future
acquisitions involving the same item so that bureaus do not need to
request an individual waiver each time they need to procure that item.
For instance, the policy cites the acquisition of ammunition through
DOD as an example of this type of recurring need that could be covered
by a blanket waiver.
Figure 2: State First Policy Review Process for Proposed Assisted
Interagency Contracting Activities:
This figure is a flowchart showing state first review process for
proposed assisted interagency contracting activities.
[See PDF for image]
Source: GAO analysis of State First policy for acquisition.
[End of figure]
State Has Limited Insight into Its Use of Interagency Contracting:
The Department of State has limited insight into the extent to which it
uses interagency contracting. A key governmentwide data system does not
fully capture information on interagency contracting, and State's
internal systems do not comprehensively track its use of these
contracts. While State reported to us over $800 million in direct and
assisted interagency contract actions in fiscal year 2006, these data
were incomplete, and reported data were missing basic information in
many cases. We have previously reported that the lack of reliable
information on interagency contracts inhibits agencies from making
sound contracting decisions and engaging in good management practices.
State Cannot Rely on Governmentwide or Internal Agency Data for a
Comprehensive View of Its Use of Interagency Contracts:
The Federal Procurement Data System-Next Generation (FPDS-NG), the
federal government's primary database for procurement actions, is not a
reliable source of information on interagency contracts. We have
reported in the past on difficulties in obtaining data and generating
reports on interagency contracting using FPDS-NG.[Footnote 6]
Similarly, the State Procurement Executive explained to us that it is
difficult to extract interagency contracting data from FPDS-NG and that
there is no single report that comprehensively identifies uses of
interagency contracting. For assisted interagency actions, the
servicing agency is responsible for entering data into FPDS-NG, but
such entries do not always indicate that actions involve interagency
contracts. If a contracting officer at another agency placed an order
for State, that agency--not State--would be responsible for recording
the order in FPDS-NG, and the fact that the order was done for State
would not necessarily be recorded. While the servicing agency can enter
a funding agency in FPDS-NG, it may identify itself as the funding
agency instead. For example, we identified records in FPDS-NG for
certain contract actions entered into by DOD for State that listed DOD
as the funding agency. A DOD official told us that once funds are
transferred to DOD, they lose their association with the funding
agency. For direct contract actions, in which State contracting
officers placed the orders and recorded the transactions in FPDS-NG,
there is no data field that reliably indicates that these actions
involved an interagency contract.[Footnote 7]
In addition, State cannot rely on the data systems used by its central
procurement and financial offices to provide complete information on
its use of interagency contracting. AQM maintains a procurement data
system; however, bureau officials told us that not all bureaus with
contracting authority use this system and that assisted acquisitions
where the contracting officer is at another agency are not recorded in
this system. For example, a State official noted that a bureau that
reported to us significant use of assisted interagency contracting does
not use this system. The State Procurement Executive acknowledged the
limitations of this system, noting it would be difficult to use it to
identify interagency contracts. Further, State's accounting system
cannot be used to identify many interagency contracting actions. State
officials explained that for direct actions, the accounting system does
not record whether an interagency contract was used. Similarly, the
officials said that for assisted actions, a "miscellaneous" data field
that captures a variety of information may, but does not always,
indicate that the transfer of funds to another agency is for a
contract.
While State officials told us that the most reliable way to identify
interagency contract actions would be to request a list of these
actions from each bureau and overseas post, several bureaus and posts
had difficulty responding to our request for such information. For
example, one bureau, which has used assisted interagency contracts,
noted that the bureau had no reasonable means of obtaining information
on its assisted interagency contract actions. In some cases, bureaus
did not have a central point of contact responsible for tracking
interagency contracts and many bureaus reported reviewing paper files
to assemble the requested information on their assisted actions.
Additionally, a procurement official expressed concern about another
bureau's lack of information on interagency contracts, noting that when
she needed basic information, such as the amounts obligated by the
bureau on these contracts, she was directed to the servicing agencies.
Similar challenges were experienced in 2005 when State's Office of
Inspector General conducted a related review and sought to identify
bureaus' use of interagency contracts. The official who led that review
told us he found that it was generally difficult for bureaus to compile
data on interagency contracts and that a number of bureaus continually
identified new contract actions throughout the course of the review.
State-Reported Data on Interagency Contract Actions Were Incomplete,
and Reported Actions Were Missing Information in Many Cases:
In the absence of a data system that reliably identifies State's
interagency contracts, we requested information on all interagency
contract actions of at least $25,000 conducted in fiscal year 2006 from
53 State bureaus and overseas posts. Fifty-two of these bureaus and
posts reported[Footnote 8] a total of over $800 million in interagency
actions--$577.2 million for direct actions and $234.3 million for
assisted actions (see app. II for more details on the data reported to
us by State). However, we found that at least 13 of these bureaus
provided incomplete data. In these cases, data from a servicing agency
or FPDS-NG indicated that a particular servicing agency assisted a
State bureau with interagency contracting in fiscal year 2006, but that
bureau did not report any actions with that servicing agency. Based on
our comparison of data State reported with data obtained from five
servicing agencies and FPDS-NG, we identified at least $186 million in
assisted interagency contracting that State did not report. Most
notably, DOD reported assisting State's Bureau of Near Eastern Affairs
in performing nearly $144 million in contracting for logistics support
in Iraq that was not included in State's data.
Furthermore, in many cases the interagency actions that were reported
by State were missing basic information that would be needed for
managing contracts and achieving good acquisition outcomes. For
example, bureaus were not always able to identify the contractor for
particular actions, and one bureau that reported over $26 million in
assisted interagency contracting was not able to provide us with the
contract or order numbers for many of the actions. Also, in some cases,
obligation amounts reported by bureaus differed widely from those
reported by servicing agencies or in FPDS-NG. For example, in one case,
a State bureau reported placing over $15 million on an assisted action,
while the servicing agency reported actions totaling $9.8 million on
the same contract and order number. In another case, a State bureau
reported a lower dollar value than the servicing agency, with State
reporting a single action of $25,000 and the servicing agency reporting
multiple actions totaling $471,000 for the same order. Because of such
discrepancies, we were unable to verify the accuracy of a significant
portion of State's reported data, particularly for assisted actions.
A Lack of Comprehensive and Reliable Information Inhibits Agencies from
Making Sound Contracting Decisions and Engaging in Good Management
Practices:
We have previously reported that agencies may not be able to make sound
contracting decisions or engage in good management practices without
comprehensive and reliable data on interagency contracting and the
related costs and fees. Without such data, agencies cannot conduct
analyses to determine if the use of such contracts is in their best
interests or if there are opportunities for savings. For example, we
reported in 2005 that DOD had difficulty making informed decisions
about the use of other agencies' contracting services because its
financial systems did not collect data on interagency
contracting.[Footnote 9] In 2006, we also found that the Department of
Homeland Security (DHS) did not systematically monitor its spending on
interagency contracts. As a result, it did not know what fees it was
paying to other agencies to award contracts on its behalf and whether
it could achieve savings through alternative contracting
methods.[Footnote 10] Similarly, without access to complete and
reliable data on its use of interagency contracting, State does not
have the information needed to manage its use of interagency contracts
to achieve good outcomes and ensure that it is receiving value for fees
it pays to other agencies.
State Cannot Ensure That Decisions to Use Assisted Interagency
Contracting Are Being Made by the Appropriate Acquisition Officials:
Due to the way the State First policy has been implemented, State
cannot ensure that decisions to use assisted interagency contracts are
being made by OPE and AQM officials as called for by the policy. These
acquisition officials often lack awareness of or involvement in
decisions to use assisted interagency contracts for three main reasons.
First, these officials have broadly exempted a number of assisted
interagency contracting actions from the requirement to seek a State
First waiver. Second, State's bureaus have varying interpretations of
when they need to obtain waivers for proposed assisted interagency
contracting activities. Third, State acquisition officials have no
mechanism to ensure that bureaus comply with the State First policy,
relying primarily on the bureaus to voluntarily submit requests for
State First waivers.
Broad Exemptions Limit Ability to Evaluate the Use of Assisted
Interagency Contracts:
State acquisition officials have broadly exempted a number of assisted
interagency contracting actions from the State First waiver process. By
creating these broad exemptions, acquisition officials are not fully
aware of bureaus' use of assisted interagency contracting. The
exemptions apply to bureaus that are among the largest users of
assisted interagency contracting.
OPE issued guidance in 2005 stating that the State First policy does
not apply to proposed funds transfers conducted under the Foreign
Assistance Act. The Procurement Executive explained to us that this
exemption from needing a waiver was intended to apply only to transfers
of funds under the Foreign Assistance Act where another agency was
responsible for carrying out the program.[Footnote 11] He said that
bureaus should still seek State First waivers when transferring funds
under the Foreign Assistance Act if the transfer is so the other agency
can purchase goods or services for State. However, AQM and some bureau
officials have interpreted and applied the guidance in a different way.
The Director of AQM told us that the exemption from needing a waiver
applies to all actions--including assisted interagency contracting--
funded under the Foreign Assistance Act. Officials in the bureaus of
Diplomatic Security (DS) and International Narcotics and Law
Enforcement Affairs (INL)[Footnote 12] informed us that because of this
exemption they do not seek State First waivers for assisted contract
actions conducted under this Act. For example, officials in INL did not
seek a waiver for an order for aviation support, issued in 2006 by DOD
on their behalf and valued at approximately $51 million. Both DS and
INL reported using assisted interagency contracting extensively
compared to other bureaus, and DS and INL officials stated that the
Foreign Assistance Act is one of the chief authorities under which they
transfer funds to another agency for contracting services.
As a result of a series of decisions, acquisition officials have also
exempted a potentially large amount of DS's assisted interagency
contracting activity from review under the State First policy.
Following the initial establishment of the State First policy, AQM
exempted much of DS's assisted interagency contracting activity from
the policy. Then in January 2006, acquisition officials met with bureau
officials to clarify application of the State First policy. Acquisition
officials agreed to exempt assisted interagency contracting activities
carried out under existing interagency acquisition agreements from
review under the State First policy but stipulated that new IAAs would
need to be reviewed. A bureau official told us that, at this meeting,
she informed the acquisition officials that many of the bureau's IAAs
with servicing agencies did not have expiration dates. As a result, new
requirements could continue to be fulfilled under existing IAAs without
State First review.[Footnote 13] For example, DS placed a new task
order in 2006 through another agency under an IAA signed in 2001--this
order was not reviewed under State First. While aware of DS's
exemption, State's Procurement Executive noted that the State First
policy was designed to review such task orders to ensure that using
another agency's contracting services was in State's best interest.
Bureaus Differ in When They Seek a State First Waiver:
Bureaus within State have different interpretations of when they should
seek the approval of the appropriate acquisition officials to initiate
assisted interagency contracting activities. Some bureaus request State
First waivers for individual contract actions related to specific
requirements, such as issuing a new task order. In one case study we
reviewed involving the Bureau of Population, Refugees and Migration, a
program official sought a waiver under the State First policy to have
another agency issue a new contract action to continue fulfilling the
program's requirements. Similarly, an INL program official sought a
State First waiver to use DOD's contracting services to fulfill a new
requirement, prior to the 2005 exemption for Foreign Assistance Act
activities.
DS, however, does not typically seek waivers under the State First
policy for individual task orders or requirements initiated under IAAs.
Instead, it is DS officials' understanding that the overarching IAA
with the servicing agency, rather than the individual requirement,
requires approval under the State First policy. DS has used IAAs
broadly to establish relationships with other agencies and these IAAs
can encompass many requirements, multiple contract actions, and several
fiscal years. This practice, compounded by the exemption for DS's IAAs
entered into prior to 2006, has precluded much of DS's interagency
contracting activity from review under State First. Neither bureau
officials nor acquisition officials identified a process to review long-
standing agreements over time to determine whether changes have
occurred or whether it is still appropriate for State to continue
paying another agency for contracting support. For example, an IAA with
one servicing agency was signed in 2001, and the servicing agency
reported that it issued 128 new task orders under this IAA between
December 2001 and February 2008, none of which was reviewed under State
First. Because this IAA was never reassessed, DS officials thought they
were paying a 2.3 percent fee for all actions under this agreement, but
the actual fee charged had been raised since 2001. Based on our
analysis of servicing agency data, since October 2004, the average fee
paid across all contract actions under this IAA was 3.3 percent--
meaning State paid almost $160,000 more in fees than DS officials
thought they were paying.
Acquisition Officials Lack Mechanisms to Monitor Compliance with the
State First Policy:
State acquisition officials do not have mechanisms in place to ensure
that bureaus are complying with the State First policy. According to
the acquisition officials, they do not monitor compliance and are
reliant on bureaus to voluntarily request waivers before using assisted
interagency contracts. In the absence of such requests, they have no
other way to obtain reliable information about bureaus' use of assisted
interagency contracts. For instance, because State does not
comprehensively track its use of interagency contracting, acquisition
officials cannot conduct queries to identify actions that should have
been reviewed under State First. Further, they have no way to determine
the extent to which bureaus have conducted procurements under various
exemptions or whether bureaus have applied the exemptions
appropriately. As a result, acquisition officials cannot independently
determine whether the five waivers requested in fiscal year 2006 were
an accurate reflection of assisted interagency contracting for that
year.
Problems with State First compliance have previously been reported. In
2005, the State Inspector General found that 16 of the 19 domestic
bureaus and offices included in its review did not comply with the
policy.[Footnote 14] The State Inspector General also reported that
budget and financial officers in 9 of the 19 bureaus and offices
indicated that they had no knowledge of the State First policy or its
requirements. The State Inspector General noted that better compliance
with State First could result in lower contract costs and the more
economical utilization of administrative costs associated with the
contracts. The Procurement Executive issued additional guidance on the
State First policy as a result of the Inspector General's findings but
informed us that acquisition officials have not reviewed compliance
since then to determine if compliance has improved. Officials in AQM
said they believe the State Inspector General reviews compliance with
the policy as part of its regular bureau inspections. However, an
official from the State Inspector General's office said that this is
not part of the office's routine monitoring activities.
State's Policies Do Not Ensure Contract Oversight for Assisted
Interagency Contracts:
State's policies do not ensure that responsibilities for overseeing
contractor performance on its assisted interagency contracts are
assigned to appropriately trained individuals. Contracting officers'
representatives (COR) play a key role at State in overseeing contractor
performance, although the decision of whether to appoint a COR is at
the contracting officer's discretion. When CORs are appointed by State
contracting officers, State acquisition regulations require contracting
officers to outline the scope of the COR's authority in an appointment
memorandum to be maintained in the contract file.[Footnote 15] These
regulations further specify that only State employees with adequate
training and experience may serve as CORs on contract actions awarded
by State contracting officers, a stipulation that would include actions
under direct interagency contracting. According to State guidance, a
COR is responsible for several functions related to oversight of
contractor performance, including:
* monitoring technical progress and the expenditures of resources
related to the contract;
* informing the contracting officer, in writing, of any performance or
schedule failure by the contractor or of any needed changes to the
performance work statement or specifications; and:
* performing inspection and accepting work on behalf of the U.S.
government and reviewing and approving the contractor's vouchers or
invoices.
State acquisition regulations, however, do not contain requirements or
guidance regarding the assignment or training of CORs when using
assisted interagency contracting.[Footnote 16] For assisted contracting
actions, State's acquisition officials view it as solely the servicing
agency's duty to ensure contractor oversight, rather than a
responsibility that all involved parties share. Because State does not
have requirements in place to ensure the assignment of appropriately
trained oversight personnel, effective oversight depends on factors
outside of State's direct control. These factors include the rigor of a
particular servicing agency's policies and procedures and the
involvement of State personnel who happen to be experienced and
knowledgeable.
In most of the seven cases of assisted interagency contracting we
reviewed, the State personnel who performed oversight duties had
programmatic knowledge and experience related to the requirements being
fulfilled. However, servicing agency practices differed regarding COR
designation and training. The State personnel assigned by the servicing
agencies to oversee contractor performance had not always received
training related to contract oversight or had their roles clearly
designated. In three cases we reviewed, the servicing agencies took
steps to ensure that oversight personnel were aware of their roles and
responsibilities and had obtained the requisite training. In two other
cases, the servicing agencies did not designate CORs, although State
program officials were assigned some oversight responsibilities. In the
first of these instances, the State program official told us she had
already taken contract-related training. In the other instance,
however, the State official had not received training related to
contract oversight and explained to us that she often did not
understand the documents the servicing agency asked her to sign,
particularly with regard to the contracting terminology. Finally, in
the last two cases, the servicing agencies designated State personnel
as CORs but did not ensure that they received required training
associated with these oversight responsibilities.
In one of the cases we reviewed where the designated COR had not
received required training, the servicing agency also did not keep COR
designations up to date. The contracting officer at the servicing
agency was not aware that the COR and other oversight personnel were no
longer employed at State. In addition, the COR stated that he did not
play a role in monitoring the time sheets or attendance of contract
personnel, or providing performance feedback to the contracting
officer. The official explained that, while he worked with the
contractor to address any deficiencies related to performance, another
official, who told us she had received COR training but who was not
designated as the COR for the order, verified the accuracy of invoices.
Ensuring the designation of appropriately trained CORs was particularly
important for this order because it was a time-and-materials type
contract, as were five of the six other assisted actions we reviewed.
Time-and-materials contracts are considered high risk for the
government because they offer no profit incentive to the contractor for
cost control or labor efficiency. Therefore, it is important for the
government to monitor contractor performance to ensure that the
contractor is efficiently performing the work and effectively
controlling costs.[Footnote 17]
We and others have previously reported on problems with oversight of
interagency contracting, including the risks of not clearly designating
individuals responsible for providing oversight of contractor
performance and of not ensuring that these individuals are properly
trained to perform their duties. For instance, we reported that when
the Army purchased interrogation support services through the
Department of the Interior (Interior), Army personnel in Iraq
responsible for overseeing contractor performance were not adequately
trained to exercise their responsibilities. In this case, an Army
investigative report concluded that the lack of training for the CORs
assigned to monitor contractor performance at Abu Ghraib prison, as
well as an inadequate number of assigned CORs, put the Army at risk of
being unable to control poor performance or become aware of possible
misconduct by contractor personnel.[Footnote 18] In 2007, the DOD
Inspector General reported that DOD organizations were deficient in
contract administration, including the surveillance of contractor
performance and assignment of CORs when they made purchases through the
Department of Veterans Affairs. The DOD Inspector General noted that
interagency contracting requires strong internal controls, clear
definition of roles and responsibilities, and sufficient training of
both servicing and requesting activities personnel.[Footnote 19] In
2005, the State Inspector General identified problems associated with
the oversight of assisted interagency contracts, noting the lack of
documentation of activities to determine whether the contractor
provided the specified deliverables.[Footnote 20]
Conclusions:
Lacking information about the extent to which it uses interagency
contracts, State is not positioned to make informed decisions about
whether and when additional scrutiny, oversight, or other actions are
necessary to ensure State's interests are protected. The State First
policy, put in place before other agencies widely reported the risks of
interagency contracting, provided State with an opportunity to gain
increased insight and control over when and how the department uses and
pays for other agencies' contracts and contracting support. However,
subsequent exemptions, varying interpretations, and a lack of
compliance monitoring of the State First policy have significantly
limited that opportunity and restricted the ability of acquisition
officials to manage State's use of interagency contracts and the
associated risks. Properly trained personnel are best positioned to
oversee the delivery of goods and services, regardless of what agency
placed the order. Yet State has not taken steps to ensure that such
personnel are in place, which has exposed State to the same risks faced
by other agencies. Due to the critical nature of State's mission and
the importance of contract support to fulfilling this mission, State
cannot afford to abdicate responsibility for ensuring good acquisition
outcomes, even when the contracting officer is at another agency.
Recommendations for Executive Action:
To enable State to improve its management of interagency contracting,
we recommend that the Secretary of State direct the Office of the
Procurement Executive to take the following three actions:
* Develop, in consultation with the bureaus, a reliable means for
tracking the use of interagency contracts so that the bureaus and
acquisition officials can readily and reliably access data, such as the
costs and associated fees. Analysis of such data could also be used to
assess whether the State First process provides an accurate reflection
of bureaus' use of assisted interagency contracting.
* Work with the Office of Acquisitions Management, in coordination with
the bureaus that make the most use of assisted interagency contracts,
to clarify and refine the State First policy, including existing
exemptions, and provide additional guidance as needed regarding which
actions need review under the policy.
* Require bureaus seeking a State First waiver to identify in their
request individual(s) who will be responsible for contract oversight
and ensure they are trained to perform this key role.
Agency Comments:
We provided a draft of this report to State for review and comment. In
its written comments, State noted that the report captures the
challenges posed by interagency contracting and agreed to implement the
three recommendations. State's comments are reprinted in their entirety
in appendix III. State officials also provided technical comments that
were incorporated where appropriate.
We are sending copies of this report to interested congressional
committees as well as the Secretary of State and the Director, Office
of Management and Budget. In addition, this report will be made
available at no charge on the GAO Web site at [hyperlink,
http://www.gao.gov].
If you or your staff have any questions about this report or need
additional information, please contact me at (202) 512-4841 or
huttonj@gao.gov. Contact points for our Offices of Congressional
Relations and Public Affairs may be found on the last page of this
report. GAO staff who made major contributions to this report are
listed in appendix IV.
Signed by:
John Hutton:
Director, Acquisition and Sourcing Management:
List of Committees:
The Honorable Joseph R. Biden:
Chairman:
The Honorable Richard G. Lugar:
Ranking Member:
Committee on Foreign Relations:
United States Senate:
The Honorable Joseph I. Lieberman:
Chairman:
The Honorable Susan M. Collins:
Ranking Member:
Committee on Homeland Security and Governmental Affairs:
United States Senate:
The Honorable Henry A. Waxman:
Chairman:
The Honorable Tom Davis:
Ranking Member:
Committee on Oversight and Government Reform:
House of Representatives:
The Honorable Nita M. Lowey:
Chair:
The Honorable Frank R. Wolf:
Ranking Member:
Subcommittee on State, Foreign Operations, and Related Programs:
Committee on Appropriations:
House of Representatives:
[End of section]
Appendix I: Scope and Methodology:
Our objectives were to evaluate (1) the extent to which State has
insight into its use of interagency contracting; (2) State's policies
and procedures for deciding when to use assisted interagency
contracting; and (3) State's ability to ensure oversight of assisted
interagency contracting. For the purposes of this review, we defined
interagency contracting as including both direct actions (orders placed
by one agency's contracting officers on another agency's contracts) and
assisted actions (obtaining contract support services from other
agencies).
To evaluate the extent to which State has insight into its use of
interagency contracting, we initially attempted to identify data
systems that would provide reliable information on State's use of
interagency contracting. In consultation with senior acquisition
officials at State, we determined that such information could not be
obtained from existing data systems. We then requested data from 35
bureaus, as well as 18 of State's 277 overseas posts with authority to
conduct contracting activities, on fiscal year 2006 purchases of at
least $25,000 made through both types of interagency contracts. We
received responses from 34 of the 35 bureaus and all 18 posts.[Footnote
21] Because data submitted by State bureaus and posts were compiled by
staff in various positions, we requested that the executive directors
of the bureaus and the general services officers (GSO) of the overseas
posts confirm that the data submitted on behalf of their bureaus or
posts were complete and accurate. We received confirmations from 46
executive directors and GSOs; the remaining 6 did not respond to our
request for confirmation. To assess the reliability of the assisted
actions reported to us by State, we compared State's data with similar
data we requested and received from five servicing agencies--the
General Services Administration (GSA), Interior, the Department of the
Treasury (Treasury), the National Institutes of Health (NIH), and two
Army commands. These five servicing agencies represented 86 percent of
the dollar value of assisted actions reported to us by State. In
addition, we compared both direct and assisted actions reported by
State with data maintained in FPDS-NG. We considered a State reported
action to be verified if an action with the same contract and order
number, and a dollar value difference within 7 percent, could be found
in either FPDS-NG or in data reported by a servicing agency.[Footnote
22] In addition, actions that were reported by State, but not within
the scope of our work, were removed from the final data. Duplicate
actions--such as those reported by both the Office of Acquisitions
Management and the requiring bureau--were also deleted from the final
data. After conducting extensive work to ensure the consistency of the
data, we determined our final data set to be sufficient for our
purposes. Because this was not an audit of the servicing agencies or
FPDS-NG, we used data from these sources only as a point of comparison
with State-reported data and did not attempt to verify these
data.[Footnote 23]
To evaluate State's policies and procedures for deciding when to use
assisted interagency contracting and State's ability to ensure
oversight of assisted interagency contracting, we conducted 10 case
studies of interagency contracting at State. Using the fiscal year 2006
data reported to us by State and the servicing agencies, as well as our
preliminary research, we selected 10 cases to represent a range of
characteristics, as shown in table 1. Three of the 10 cases were direct
interagency actions, where contracting officers at State's Office of
Acquisitions Management placed orders off of other agencies' contracts
on behalf of State bureaus. The other seven consisted of assisted
interagency actions, where State utilized contracting officers at the
servicing agencies to place and administer orders on State's behalf. In
addition, cases were selected to examine a variety of bureaus within
State as well as a variety of servicing agencies. Our 10 cases
represented 8 State bureaus and 5 servicing agencies. We did not
include interagency contracting at overseas posts because the State
First policy does not apply to overseas posts. For each case, we
reviewed contract documentation from State, the servicing agency, or
both. We also interviewed relevant officials including contracting
officers, individuals performing contract oversight, and other program
officials as necessary. Finally, we reviewed State acquisition
regulations, policies, and guidance and interviewed agency officials to
understand their implementation. We also reviewed relevant GAO and
Inspectors General reports.
Table 1: Selected Cases of Interagency Contracting at the Department of
State:
State bureau: Direct interagency contract actions: Consular Affairs;
Description of purchase: Direct interagency contract actions:
Information technology support for adoptions tracking service;
Servicing agency: Direct interagency contract actions: National
Institutes of Health;
Total order amount, fee inclusive[A]: Direct interagency contract
actions: $1,225,090.
State bureau: Direct interagency contract actions: Consular Affairs;
Description of purchase: Direct interagency contract actions: Passport
processing services;
Servicing agency: Direct interagency contract actions: General Services
Administration[B];
Total order amount, fee inclusive[A]: Direct interagency contract
actions: $150,902,493.
State bureau: Direct interagency contract actions: Near Eastern
Affairs;
Description of purchase: Direct interagency contract actions: Staffing
support in Iraq;
Servicing agency: Direct interagency contract actions: General Services
Administration;
Total order amount, fee inclusive[A]: Direct interagency contract
actions: $10,297,921.
State bureau: Assisted interagency contract actions: Diplomatic
Security;
Description of purchase: Assisted interagency contract actions:
Computer security awareness training;
Servicing agency: Assisted interagency contract actions:
General Services Administration;
Total order amount, fee inclusive[A]: Assisted interagency contract
actions:
$1,137,309.
State bureau: Assisted interagency contract actions: Diplomatic
Security;
Description of purchase: Assisted interagency contract actions:
Firearms and technical security trainers;
Servicing agency: Assisted interagency contract actions:
Treasury's FedSource;
Total order amount, fee inclusive[A]: Assisted interagency contract
actions:
$812,468.
State bureau: Assisted interagency contract actions: Population,
Refugees and Migration;
Description of purchase: Assisted interagency contract actions:
Information technology support for refugee processing;
Servicing agency: Assisted interagency contract actions:
General Services Administration;
Total order amount, fee inclusive[A]: Assisted interagency contract
actions:
$44,552,515.
State bureau: Assisted interagency contract actions: International
Narcotics and Law Enforcement Affairs;
Description of purchase: Assisted interagency contract actions:
Automatic fingerprint identification system;
Servicing agency: Assisted interagency contract actions:
Army's CECOM Life Cycle Management Command;
Total order amount, fee inclusive[A]: Assisted interagency contract
actions:
$13,226,624.
State bureau: Assisted interagency contract actions: Information
Resources Management;
Description of purchase: Assisted interagency contract actions:
Information technology infrastructure support in Iraq;
Servicing agency: Assisted interagency contract actions:
Army's CECOM Life Cycle Management Command;
Total order amount, fee inclusive[A]: Assisted interagency contract
actions:
$17,112,565.
State bureau: Assisted interagency contract actions: Overseas Building
Operations;
Description of purchase: Assisted interagency contract actions:
End-user information technology support;
Servicing agency: Assisted interagency contract actions:
National Institutes of Health;
Total order amount, fee inclusive[A]: Assisted interagency contract
actions:
$5,818,579.
State bureau: Assisted interagency contract actions: International
Information Programs;
Description of purchase: Assisted interagency contract actions:
Publishing services for an Arabic language magazine;
Servicing agency: Assisted interagency contract actions:
Interior's GovWorks;
Total order amount, fee inclusive[A]: Assisted interagency contract
actions:
$5,788,612.
Source: GAO Analysis of State and servicing agency contract files.
[A] Some of the cases involve ongoing contract actions. These dollar
values represent the total value at the time of our review.
[B] This order was placed against the Information Technology Omnibus
Procurement II (ITOP II) contract. At the time the original order was
placed, this contract was managed by the Department of Transportation.
ITOP II was transferred to the General Services Administration in 2004,
where it is currently managed.
[End of table]
We conducted this performance audit from June 2007 to May 2008 in
accordance with generally accepted government auditing standards. Those
standards require that we plan and perform the audit to obtain
sufficient, appropriate evidence to provide a reasonable basis for our
findings and conclusions based on our audit objectives. We believe that
the evidence obtained provides a reasonable basis for our findings and
conclusions based on our audit objectives.
[End of section]
Appendix II: State's Use of Interagency Contracting in Fiscal Year
2006:
We requested data on direct and assisted interagency contract actions
of at least $25,000 in fiscal year 2006 from 35 State bureaus and 18
overseas posts. All but one bureau and all 18 posts responded to our
data request. According to data these State bureaus and posts reported
to us, State conducted over $800 million in interagency contracting in
fiscal year 2006--$577.2 million for direct actions and $234.3 million
for assisted actions.
For direct actions, State reported the following:
* 94 percent of the dollar value of these actions was conducted by the
Office of Acquisitions Management on behalf of 35 bureaus and several
overseas posts.
* 98 percent of the reported dollars for direct actions in fiscal year
2006 were placed on GSA contracts, including schedule
contracts.[Footnote 24],[Footnote 25]
* Other actions included orders placed through NIH, National
Aeronautics and Space Administration, and DOD contracts, among others.
For assisted actions, State reported the following:
* Assisted actions were concentrated in less than a third of the
bureaus and overseas posts that responded to our data request--of the
52 bureaus and posts that submitted data, only 16 reported assisted
actions in fiscal year 2006.
* The most extensive users of assisted interagency contracting in
fiscal year 2006 included the bureaus of:
- International Narcotics and Law Enforcement Affairs, which reported
$95.3 million;
- Information Resource Management, which reported $72.6 million;
- Diplomatic Security, which reported $26.5 million; and:
- Consular Affairs, which reported $12 million.
* The 16 bureaus that made use of assisted interagency contracting
conducted these actions through several different servicing agencies,
including GSA, DHS, Interior, Treasury, NIH, and others. Approximately
47 percent of the dollar value of assisted actions reported by these
bureaus was placed by DOD on State's behalf (see fig. 3).
Figure 3: Servicing Agencies Used by State for Assisted Actions:
This figure is a pie chart showing servicing agencies used by state for
assisted actions.
DOD: 47%;
GSA: 34%;
Other: 5%;
DHS: 5%;
Interior: 4%;
NIH: 3%;
Treasury: 2%.
[See PDF for image]
Source: GAO analysis of State reported data.
[End of figure]
[End of section]
Appendix III: 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:
April 25, 2008:
Dear Ms. Williams-Bridgers:
We appreciate the opportunity to review your draft report, "Interagency
Contracting: Need for Improved Information and Policy Implementation at
the Department of State," GAO Job Code 120657.
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
Corey Rindner, Procurement Executive, Bureau of Administration, at
(703) 516-1689.
Sincerely,
Signed by:
Bradford R. Miggins:
cc: GAO ” Johana Ayers:
A ” Raj Chellaraj:
State/OIG ” Mark Duda:
Department Of State Comments On Gao Draft Report:
Interagency Contracting: Need for Improved Information And Policy
Implementation at the Department of State (GAO-08-578, GAO Code 120657)
The Department of State appreciates the opportunity to review and
comment on the Government Accountability Office draft report entitled,
"Interagency Contracting: Need for Improved Information and Policy
Implementation at the Department of State."
We believe the report captures the challenges posed by interagency
contracting and agree with the three recommendations. The Department of
State will take action to clarify our State First Policy to provide
additional guidance on which actions must be reviewed and available
exemptions. The revised guidance will also require bureaus seeking the
procurement services of other agencies to identify a Contracting
Officer Representative (COR), trained in accordance with Department of
State requirements, to support significant assisted procurements based
on complexity and/or dollar value.
The Department's Office of Acquisitions will maintain an excel
spreadsheet to track the use of interagency contracts including data
such as costs and associated fees.
[End of section]
Appendix IV: GAO Contacts and Staff Acknowledgments:
GAO Contact:
John Hutton (202) 512-4841 or huttonj@gao.gov:
Staff Acknowledgments:
In addition to the contact named above, Johana R. Ayers, Assistant
Director; Noah Bleicher; Greg Campbell; Theresa Chen; Alexandra Dew;
Timothy DiNapoli; Kathryn Edelman; Arthur James, Jr; Julia Kennon; and
Winnie Tsen made key contributions to this report.
[End of section]
Footnotes:
[1] GAO, High-Risk Series: An Update, GAO-05-207 (Washington, D.C.:
January 2005). Also see GAO, High-Risk Series: An Update, GAO-07-310
(Washington, D.C.: January 2007).
[2] For the purposes of our review, we refer to officials within the
Offices of the Procurement Executive and Acquisitions Management as
State acquisition officials.
[3] For the purposes of this review, we defined contract actions as
including new contracts, orders on existing contracts, or modifications
to existing contracts or orders.
[4] Bureaus and offices with Heads of Contracting Activities other than
AQM, overseas posts and Regional Procurement Support Offices include:
Foreign Service Institute, Office of Foreign Missions within the Bureau
of Diplomatic Security, and U.S. Mission to the United Nations. Bureaus
and offices with limited acquisition authority include: Office of
Language Services; Office of Overseas Schools; Ralph J. Bunche Library;
Office of International Conferences; Bureau of International Narcotics
and Law Enforcement Affairs; Office of Small and Disadvantaged Business
Utilization; Office of Operations within the Bureau of Administration;
Office of the Inspector General; and Bureau of Diplomatic Security.
[5] DOSAR § 607.103-70
[6] See GAO, Improvements Needed to the Federal Procurement Data
System--Next Generation, GAO-05-960R (Washington, D.C.: Sept. 27,
2005).
[7] Recent recommendations made by the Acquisition Advisory Panel
included a recommendation that the Office of Federal Procurement Policy
ensure that FPDS-NG reports data on orders under interagency contracts.
See Acquisition Advisory Panel, Report of the Acquisition Advisory
Panel to the Office of Federal Procurement Policy and the United States
Congress (January 2007).
[8] The Bureau of International Organizations did not submit data.
[9] GAO, Interagency Contracting: Franchise Funds Provide Convenience,
but Value to DOD is not Demonstrated, GAO-05-456 (Washington, D.C.:
July 29, 2005).
[10] GAO, Interagency Contracting: Improved Guidance, Planning, and
Oversight Would Enable the Department of Homeland Security to Address
Risks, GAO-06-996 (Washington, D.C.: Sept. 27, 2006).
[11] The Procurement Executive cited the transfer of funds from State
to another agency for the President's Emergency Plan for AIDS Relief as
one example of when the State First policy would not apply.
[12] DS is the security and law enforcement arm of State. INL advises
the President, Secretary of State, other bureaus within State, and
other departments and agencies within the U.S. government on the
development of policies and programs to combat international narcotics
and crime.
[13] This bureau official also told us that acquisition officials were
invited to conduct a follow-up review of existing IAAs to determine how
to proceed under them. However, she said that this review did not occur
because of limited resources in the acquisition office.
[14] Department of State, Office of Inspector General, Report of Audit:
Review of Department's Compliance with State First Policy for
Acquisitions, Report Number AUD/PP-05-42 (Washington, D.C.: August
2005).
[15] DOSAR § 642.270.
[16] In contrast, DOD's policy requires that a COR be assigned for
contract actions for services awarded by any other federal agency on
behalf of DOD.
[17] For additional information on time-and-materials contracts, please
see GAO, Defense Contracting: Improved Insight and Controls Needed over
DOD's Time-and-Materials Contracts, GAO-07-273 (Washington, D.C.: June
29, 2007).
[18] GAO, Interagency Contracting: Problems with DOD's and Interior's
Orders to Support Military Operations, GAO-05-201 (Washington, D.C.:
Apr. 29, 2005).
[19] Department of Defense, Office of Inspector General, FY2006 DOD
Purchases Made Through the U.S. Department of Veterans Affairs, Report
No. D-2008-036 (Arlington, Va.: Dec. 20, 2007).
[20] Department of State, Office of Inspector General, Report of Audit:
Review of the Department's Compliance with State First Policy for
Acquisitions, Report Number AUD/PP-05-42 (Washington, D.C.: August
2005).
[21] We requested data from all of the bureaus beneath the under
secretaries' offices as well as the Office of Acquisitions Management
and the two Regional Procurement Support Offices. In addition, the
Executive Secretariat/Executive Secretary voluntarily submitted data to
us. The Bureau of International Organizations did not submit data. For
the overseas posts, we selected the three posts with the highest total
procurement dollars reported in FPDS-NG for fiscal year 2006 in each of
the six regions as listed in FPDS-NG--Africa, East Asia and Pacific,
Europe and Eurasia, Middle East and North Africa, Central and South
Asia, and the Americas. Two of these posts had both a general services
officer and a narcotics affairs section that reported data to us.
[22] Seven percent was chosen as the dollar value threshold because any
difference within this range could be attributed to the fee charged by
the servicing agency. Seven percent was the highest fee rate we
encountered for State interagency contracting actions.
[23] We have previously reported on the shortcomings of the Federal
Procurement Data System--both the legacy and the Next Generation
versions. See GAO, Federal Acquisition: Oversight Plan Needed to Help
Implement Acquisition Advisory Panel Recommendations, GAO-08-160
(Washington, D.C.: Dec. 20, 2007) and GAO, Reliability of Federal
Procurement Data, GAO-04-295R (Washington, D.C.: Dec. 30, 2003).
[24] Under the GSA schedules program, GSA negotiates contracts with
vendors for a wide variety of goods and services at varying prices.
These contracts permit other agencies to place orders directly with
vendors, providing agencies with a simplified process of acquiring
goods and services while obtaining volume discounts.
[25] State reported 88 percent of dollars on actions through GSA and
another 10 percent on a Department of Transportation contract that, by
fiscal year 2006, had been transferred to GSA.
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