Federal Contracting
Congressional Action Needed to Address Long-standing Problems with Reporting of Advisory and Assistance Services Gao ID: GAO-08-319 March 31, 2008Since 1994, the Office of Management and Budget (OMB) has been required by law to collect and report obligations for advisory and assistance services (A&AS) in the President's budget. The initial intent for this requirement is not clear, however. The statutory definition of A&AS covers three broad categories of management and professional support services. For many years, GAO and others have reported on inaccuracies in agencies' reporting of A&AS obligations. This report follows up on GAO's past work, pursuant to the fiscal year 2007 Defense Authorization Act. GAO assessed (1) whether reported A&AS obligations are accurate or used for management purposes and (2) the extent to which A&AS contracts are used for recurring services and for longer than 5 years and the contract types and vehicles used. GAO analyzed legislative history and reviewed 334 randomly selected contract files across 10 agencies, the results of which are generalizable to locations visited.
Agencies' reported A&AS obligations are inaccurate to the point of being meaningless and are not used for management purposes. GAO found a range of factors that contribute to significant inaccuracies in these data. Almost 20 percent of the 334 contract actions GAO reviewed were erroneously identified as A&AS, including services such as fitness center maintenance and telecommunications cabling installation. Agency officials frequently cited the broad nature of the A&AS definition as a problem. Agencies GAO reviewed generally encountered challenges in tying reported A&AS obligations to their corresponding contracts because of the lack of integration of procurement and budget data systems. Agency and OMB officials unanimously told GAO they do not use reported A&AS obligations for management or other purposes. Acquisition officials said they oversee their A&AS contracts, as they do their other professional services contracts, with established contract management procedures. Reflecting the lack of a clear distinction between A&AS and general professional services contracts, DOD retracted its A&AS directive and replaced it with general service contracting guidance in 2004. Even as far back as 1996, a code to specifically designate A&AS contracts was removed from the Federal Procurement Data System, the government's procurement information system. Agencies frequently awarded contracts for A&AS on a recurring basis and to the same contractor. Overall 63 percent of the A&AS contract actions were issued on other than a sole-source basis. Most task order contracts reviewed met the A&AS statutory period of performance limit of 5 years; but 2 exceeded and 10 had the potential (if options were exercised) to exceed this limit. Agencies used various contract types and vehicles to procure A&AS. Almost half of the actions GAO reviewed were time-and-materials, and over 40 percent were under interagency vehicles, primarily orders under the General Services Administration's schedule contracts.
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-08-319, Federal Contracting: Congressional Action Needed to Address Long-standing Problems with Reporting of Advisory and Assistance Services
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Report to Congressional Committees:
United States Government Accountability Office:
GAO:
March 2008:
Federal Contracting:
Congressional Action Needed to Address Long-standing Problems with
Reporting of Advisory and Assistance Services:
GAO-08-319:
GAO Highlights:
Highlights of GAO-08-319, a report to congressional committees.
Why GAO Did This Study:
Since 1994, the Office of Management and Budget (OMB) has been required
by law to collect and report obligations for advisory and assistance
services (A&AS) in the President‘s budget. The initial intent for this
requirement is not clear, however. The statutory definition of A&AS
covers three broad categories of management and professional support
services. For many years, GAO and others have reported on inaccuracies
in agencies‘ reporting of A&AS obligations. This report follows up on
GAO‘s past work, pursuant to the fiscal year 2007 Defense Authorization
Act. GAO assessed (1) whether reported A&AS obligations are accurate or
used for management purposes and (2) the extent to which A&AS contracts
are used for recurring services and for longer than 5 years and the
contract types and vehicles used. GAO analyzed legislative history and
reviewed 334 randomly selected contract files across 10 agencies, the
results of which are generalizable to locations visited.
What GAO Found:
Agencies‘ reported A&AS obligations are inaccurate to the point of
being meaningless and are not used for management purposes. GAO found a
range of factors that contribute to significant inaccuracies in these
data.
Factors Contributing to Inaccuracies in Agencies‘ Reported A&AS
Obligations:
Different interpretations of broad A&AS definition: Agency procurement
and budget officials exercise significant judgment when deciding
whether to code contracts as A&AS for budget reporting.
* Varying DOD and civilian exclusions to A&AS reporting further
complicate agencies‘ ability to make accurate interpretations.
Inconsistent reporting methods:
Agencies‘ approaches for reporting obligations to OMB have little
consistency. For example, agencies:
* partially reported obligations under specific A&AS contracts,
* misreported agency-wide obligations using prior year data, and,
* failed to separate A&AS obligations from overall agency total
contract costs.
Insufficient procurement and budget system integration: Agency
information systems used to manage procurement and budget functions are
not sufficiently integrated to identify contracts for A&AS.
Almost 20 percent of the 334 contract actions GAO reviewed were
erroneously identified as A&AS, including services such as fitness
center maintenance and telecommunications cabling installation. Agency
officials frequently cited the broad nature of the A&AS definition as a
problem. Agencies GAO reviewed generally encountered challenges in
tying reported A&AS obligations to their corresponding contracts
because of the lack of integration of procurement and budget data
systems. Agency and OMB officials unanimously told GAO they do not use
reported A&AS obligations for management or other purposes. Acquisition
officials said they oversee their A&AS contracts, as they do their
other professional services contracts, with established contract
management procedures. Reflecting the lack of a clear distinction
between A&AS and general professional services contracts, DOD retracted
its A&AS directive and replaced it with general service contracting
guidance in 2004. Even as far back as 1996, a code to specifically
designate A&AS contracts was removed from the Federal Procurement Data
System, the government‘s procurement information system.
Agencies frequently awarded contracts for A&AS on a recurring basis and
to the same contractor. Overall 63 percent of the A&AS contract actions
were issued on other than a sole-source basis. Most task order
contracts reviewed met the A&AS statutory period of performance limit
of 5 years; but 2 exceeded and 10 had the potential (if options were
exercised) to exceed this limit. Agencies used various contract types
and vehicles to procure A&AS. Almost half of the actions GAO reviewed
were time-and-materials, and over 40 percent were under interagency
vehicles, primarily orders under the General Services Administration‘s
schedule contracts.
What GAO Recommends:
To address long-standing problems with reporting of A&AS obligations,
Congress should consider re-evaluating the need for separate budget
reporting of A&AS. If more insight is desired, Congress should consider
clarifying the statutory definition and requiring OMB‘s Office of
Federal Procurement Policy to reinstate data collection for A&AS in the
Federal Procurement Data System–Next Generation. Several agencies in
GAO‘s review offered technical comments, which GAO incorporated as
appropriate.
To view the full product, including the scope and methodology, click on
[hyperlink, http://www.gao.gov/cgi-bin/getrpt?GAO-08-319]. For more
information, contact John Hutton at (202) 512-4841 or huttonj@gao.gov.
[End of section]
Contents:
Letter:
Results in Brief:
Background:
Agencies' Reported A&AS Obligations Are Not Accurate or Used for
Management Purposes:
Agencies Generally Procured A&AS on a Recurring Basis, Met Period of
Performance Limits, and Used Many Contract Vehicles:
Conclusions:
Matter for Congressional Consideration:
Agency Comments and Our Evaluation:
Appendix I: Scope and Methodology:
Appendix II: Department-Level Reported A&AS Obligations for Agencies in
Our Review:
Appendix III: Exclusions to the Definition of A&AS:
Appendix IV: Comments from the Department of the Treasury:
Tables:
Table 1: Civilian and Defense Agencies We Reviewed:
Table 2: Chronology of Key Events in A&AS History:
Table 3: Misidentified A&AS Contract Actions Found at Agencies We
Reviewed:
Table 4: Percentage of and Services Provided by Recurring A&AS Contract
Actions at Agencies We Reviewed:
Table 5: Civilian and Defense Agencies We Reviewed:
Table 6: Distribution of GAO's Sample of Contract Actions Reviewed:
Table 7: Reported A&AS Obligations for Departments Included in Our
Review:
Figures:
Figure 1: Depiction of Where A&AS Falls in OMB's Budget Structure:
Figure 2: Factors Contributing to Inaccuracies in Agencies' Reported
A&AS Obligations:
Figure 3: Recurring Contract Actions and Same Contractor Follow-on
Awards Across Agencies:
Figure 4: Examples of Contract Vehicles and Types:
Figure 5: Total Agency Distribution of A&AS Contract Types for Contract
Actions We Reviewed:
Figure 6: Frequency of Interagency Contract Actions Found during Our
Contract File Review:
Abbreviations:
A&AS: advisory and assistance services:
DOD: Department of Defense:
FAR: Federal Acquisition Regulation:
FASA: Federal Acquisition Streamlining Act:
FPDS-NG: Federal Procurement Data System-Next Generation:
GAO: Government Accountability Office:
GSA: General Services Administration:
HUD: Housing and Urban Development:
OFPP: Office of Federal Procurement Policy:
OMB: Office of Management and Budget:
R&D: research and development:
VA: Veterans Affairs:
[End of section]
United States Government Accountability Office:
Washington, DC 20548:
March 31, 2008:
Congressional Committees:
Each year, the federal government spends billions of dollars to procure
goods and services from private contractors, with a growing proportion
related to services. Advisory and assistance services (A&AS),
previously referred to as consultant services are contracted services
intended to be used by federal agencies to acquire three broad areas of
services: management and professional support; studies, analyses, and
evaluations; and engineering and technical services. Since 1994, the
Office of Management and Budget (OMB) has been required by law to
collect and report obligations for A&AS in the President's
budget.[Footnote 1] However, Congress's initial intent behind this
requirement is not clear.
Our past work and that of other organizations have highlighted long-
standing challenges agencies face in identifying and reporting their
A&AS spending. For example, a 1988 OMB report on the government's use
of consulting services concluded that the definitions were overly broad
and complex and subject to varying interpretations. In 1990, we
reported that agencies had no common understanding of how to interpret
the definition of what is now called A&AS. In 1996, the President's
Council on Integrity and Efficiency reported that, governmentwide,
agency inspectors general found inaccuracies in reporting on their A&AS
contracts because of unclear guidance on what constituted such services
and how they should be reported. Similarly, in 2001, we reported that
the Department of Defense's (DOD) persistent deficiencies in accurately
reporting its obligations under these contracts were due in part to
unclear definitions, lack of consistency in identifying and reporting,
and inadequate accounting systems used to track such
expenditures.[Footnote 2]
The ordering period for A&AS task order contracts[Footnote 3] has been
limited to 5 years, but in the John Warner National Defense
Authorization Act for Fiscal Year 2007,[Footnote 4] Congress authorized
agencies to extend this period up to 10 years if certain determinations
were made. Before agencies could take advantage of the 10-year ordering
period authority, DOD and the Office of Federal Procurement Policy
(OFPP) had to submit a report to certain congressional committees by
April 1, 2007. On March 21, 2008, the Deputy Under Secretary of
Defense, Acquisition and Technology, submitted letters to Congress
stating that the department was unable to comply with the required
submission date for the report because the federal procurement data
system does not identify A&AS, requiring a slow and cumbersome manual
data call across DOD. The letters note that the lack of the waiver
authority has had no impact on DOD's acquisition of services. The
Director, Defense Procurement, Acquisition Policy, and Strategic
Sourcing has also notified DOD components that, because the required
submission date for the report to Congress was not met, no waivers may
be issued to extend task order contracts for A&AS. Similarly, on March
26, 2008, the Administrator of OFPP submitted letters to Congress
stating that it was unable to comply with the required submission date
for the report because it could not identify the requested information
on A&AS contracts from the federal procurement data system and the
federal budget data system. OFPP added that it was unable to collect
the requested information from surveying civilian agencies. OFPP
notified agencies that because the information was not available to
report to Congress, they cannot issue waivers to extend task order
contracts for A&AS. The Act also directed us to report on the federal
government's use of contracts for A&AS.[Footnote 5] We provided
briefings to congressional committees on our work to meet that mandate
in the fall of 2007 and agreed to issue a follow-on report on agencies'
reporting and use of A&AS. For DOD and selected civilian agencies, we
(1) assessed whether reported obligations for A&AS were accurate or
used for management purposes and (2) identified the extent to which
they are used for recurring services and periods greater than 5 years
as well as the contract types and vehicles used.
To perform our work, we reviewed the legislative history of contracted
consulting services and A&AS, analyzed relevant public laws, pertinent
sections of the Federal Acquisition Regulation (FAR), and federal A&AS
budget reporting requirements in OMB's Circular A-11, Preparation,
Submission, and Execution of the Budget. We also examined our related
prior work, inspectors general audit reports, and reports from other
organizations. Because contracts for A&AS are not identified as such in
the Federal Procurement Data System-Next Generation (FPDS-NG), the
federal government's procurement information system, we queried OMB's
MAX A-11 budget data system to determine the scope of agencies for our
review. We identified the seven federal departments with the largest
average reported A&AS obligations for fiscal years 2002 to 2006 (the
departments of Defense, Energy, Health and Human Services, Homeland
Security, Housing and Urban Development (HUD), Treasury, and Veterans
Affairs (VA)). Based on our analysis of the reported obligations and
discussions with agency officials, we narrowed our scope to the
departments that could provide us with a list of the A&AS contracts
that comprised their reported obligations in fiscal year 2006. HUD and
VA were unable to do so, so we excluded them from our detailed contract
file review. Next, we narrowed our scope to the major agencies or
components (within the 5 departments) that had the largest reported
overall obligations on service contracts, based on FPDS-NG data, and
that could provide us with a list of A&AS contracts for fiscal year
2006. This step led to the Department of the Army's dropping out of our
file review sample, as it could not identify A&AS contracts. In all, we
conducted in-depth reviews of 334 randomly selected contract actions
out of the 6,373 contracts that the 10 major agencies within our review
identified as A&AS.[Footnote 6] The results of our agency-specific
contract file reviews are generalizable to the particular agency
location where we reviewed contract files. Table 1 shows the agencies
included in our review.
Table 1: Civilian and Defense Agencies We Reviewed:
Civilian agencies: Department of Energy, National Nuclear Security
Administration, Albuquerque, New Mexico, and Washington, D.C.;
Defense agencies: Department of Air Force, Headquarters Air Force,
Bolling Air Force Base, Washington, D.C.
Civilian agencies: Department of Health and Human Services, National
Institutes of Health, Bethesda, Maryland;
Defense agencies: Department of Air Force Aeronautical Systems Center,
Wright-Patterson Air Force Base, Dayton, Ohio.
Civilian agencies: Department of Homeland Security, Customs and Border
Protection, Indianapolis, Indiana, and Washington, D.C.;
Defense agencies: Department of Navy, Naval Air Systems Command,
Patuxent River, Maryland.
Civilian agencies: Department of Homeland Security, Immigration and
Customs Enforcement, Washington, D.C.;
Defense agencies: Department of Navy, Naval Sea Systems Command,
Washington Navy Yard, Washington, D.C.
Civilian agencies: Department of the Treasury, Internal Revenue
Service, Washington, D.C.;
Defense agencies: Missile Defense Agency, Falls Church, Virginia.
Civilian agencies: Department of Housing and Urban Development,
Washington, D.C.[A];
Defense agencies: Department of Army, Deputy Chief of Staff,
Washington, D.C.[A].
Civilian agencies: Department of Veterans Affairs, Washington, D.C.[A];
Defense agencies: [Empty].
Source: GAO.
[A] Agency visited but excluded from our contract file review because
of inability to provide a contract list specific to A&AS contract
actions with fiscal year 2006 obligations.
[End of table]
We also interviewed agency officials on their management policies for
and use of A&AS and obtained agency-specific service contracting
guidance from agency procurement, program, and budget officials. We
conducted this performance audit from January 2007 to February 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. More information on our
scope and methodology is contained in appendix I.
Results in Brief:
Agencies' reported A&AS obligations are inaccurate to the point of
being meaningless and are not used for management purposes. Reported
department-level A&AS obligations for the agencies we reviewed totaled
about $14 billion for fiscal year 2006, but several factors contribute
to significant data inaccuracies. First, different interpretations of
the broad A&AS definition contribute to errors in identifying
contracts. Almost 20 percent of the 334 contract actions we reviewed
had been erroneously identified as A&AS, including such things as
fitness center maintenance and cabling installation. Second, agencies'
approaches for reporting A&AS obligations to OMB are inconsistent. Some
agencies went through a manually intensive process to collect the data
reported to OMB. Other agencies could not explain to us where their
reported numbers came from. Third, agency procurement and budget
systems generally are not sufficiently integrated to accurately account
for A&AS contracts, which posed challenges for agencies in tying
reported A&AS obligations to their corresponding contracts. Agency and
OMB officials unanimously told us they do not use their reported A&AS
obligations for management or any other purpose. Acquisition officials
said they maintain oversight of their A&AS contracts, as they do for
their other professional services contracts, through established
contract management procedures and practices. In fact, in 1993 OMB
rescinded its directive on A&AS and replaced it with overall guidance
on service contracting.
Agencies frequently awarded contract actions (defined for purposes of
this report as an activity that resulted in the award of a stand-alone
contract, an order under a General Services Administration (GSA)
schedule contract, or a task order issued under an indefinite-delivery
indefinite-quantity contract) for A&AS on a recurring basis and to the
same contractor. About 70 percent of the A&AS contract actions we
reviewed across the 10 agencies were for recurring requirements (that
is, the same services were re-procured after the initial contract or
order ended). Further, over 70 percent of these recurring requirements
went to the same contractor, about half on a sole-source basis. Most
task order contracts we reviewed met the 5-year statutory period of
performance limit, but 2 exceeded and 10 had the potential (if all
options had been exercised) to exceed the statutory limit. The
contracting mechanisms agencies used for their A&AS procurements
varied: the contract type for about half was time-and-materials and
interagency vehicles, primarily orders under the General Services
Administration's schedule contracts, accounted for over 40 percent.
To address the long-standing problems agencies face in reporting A&AS
obligations, Congress should consider re-evaluating the need for
agencies to report A&AS funding separately to OMB, recognizing that
A&AS contracts are not managed any differently than other professional
management support contracts. If insights into A&AS contracts are
desired, Congress should consider clarifying the statutory definition
of A&AS to more explicitly address current congressional concerns
related to these types of contracts and require the Administrator of
OFPP to reinstate data collection on contracts for A&AS in FPDS-NG
using the revised definition. We received written comments on a draft
of this report from the Department of the Treasury, which agreed with
our findings. Treasury's letter is reprinted in appendix IV. In e-
mails, the departments of Homeland Security and Veterans Affairs stated
that they also agreed. We received technical comments from the
departments of Health and Human Services, VA, and OFPP, which we
incorporated as appropriate. The Departments of Defense, Energy, and
HUD had no comment.
Background:
Agencies report their obligations for goods and services annually to
OMB using a format called a budget object class structure, specified in
the OMB Circular A-11. The Circular provides five major budget object
class categories used to classify obligations by the items or services
purchased; each of the five is divided into smaller detailed classes.
As shown in figure 1, A&AS are a subset of the "contractual services
and supplies" category, one of the five major categories.
Figure 1: Depiction of Where A&AS Falls in OMB's Budget Structure:
[See PDF for image]
This figure is a depiction of where A&AS falls in OMB's budget
structure.
Major budget object class categories:
10 - Personnel compensation and benefits.
20 - Contractual services and supplies.
30 - Acquisition of assets.
40 - Grants and fixed charges.
90 - Other.
Major budget object class 20 ’contractual services and supplies“ covers
purchases in detailed object classes 21.0 through 26.0.
Detailed object classes:
21.0 Travel and transportation of persons.
22.0 Transportation of things.
23.0 Rent, Communications, and Utilities.
24.0 Printing and reproduction.
25.0 Other Contractual Services.
26.0 Supplies and materials.
Detailed budget object class 25.0 ’Other Contractual Services“ covers
purchases in object classes 25.1 through 25.8.
25.1 Advisory and assistance services: Services acquired by contract
from nonfederal sources (as well as from other units within the federal
government) to provide management and professional support; studies,
analyses, and evaluations or engineering and technical services.
25.2 Other services: Includes contractual services with nonfederal
sources not otherwise classified as either A&AS or any of the other
service categories included under object class 25.
25.3 Purchases of goods and services from government accounts:
Purchases from other federal government agencies or accounts not
otherwise classified. Includes rental payments to agencies other than
GSA and interagency agreements for contractual services for the
purchase of goods and services. Excludes, among other things, A&AS.
25.4 Operation and maintenance of facilities: Includes operation and
maintenance of facilities by contract with the private sector or
another federal government account.
25.5 Research and development contracts: Includes contracts for
conducting basic and applied research and development (R&D), but
excludes R&D reported as A&AS or operation and maintenance of R&D
facilities.
25.6 Medical care: Payments made to contractors for medical care.
25.7 Operation and maintenance of equipment: Operation, maintenance,
repair, and storage of equipment done by contract with the private
sector or another federal government account. Includes storage and care
of vehicles, storage of household goods, and operation and maintenance
of information technology systems.
25.8 Subsistence and support of persons: Contractual services with the
public or another federal government account for board, lodging, and
care of persons, including prisoners.
Source: GAO analysis of OMB Circular A-11.
[End of figure]
We have reported that, generally, the budget object classification
system, which agencies use to report annual spending to OMB, is not a
reliable mechanism for assessing the performance and cost of government
operations.[Footnote 7] Our concerns included agency discretion
regarding how spending is coded, which may not promote an accurate,
complete, or consistent portrayal of A&AS activities. We also noted
agencies' long-standing problem with classifying activities into the
correct budget object class given that many activities could
conceivably fit into more than one category.
Key Events Regarding A&AS:
Over the past several decades, Congress and agencies have taken certain
actions regarding the use of A&AS. Key events included the Federal
Acquisition Streamlining Act of 1994, which added new sections to the
U.S. Code-one for DOD and an identical one applicable to civilian
agencies and departments-authorizing the use of task order contracts to
procure A&AS.[Footnote 8] These provisions limit the ordering period of
A&AS task order contracts to periods of no more than 5 years, but
authorize the use of a 6-month sole-source extension in certain
circumstances.[Footnote 9] Both provisions also indicate a preference
for multiple awards.[Footnote 10] Also, in 1995, the FAR was amended to
include the broad statutory definition of A&AS and to include certain
examples of A&AS for which agencies may contract when essential to
their mission. These include obtaining outside points of view to avoid
too limited judgment on critical issues and obtaining the opinions,
special knowledge, or skills of noted experts. The FAR also includes
services for which A&AS are not to be used, such as to:
* perform work of a policy, decision-making, or managerial nature that
is the direct responsibility of agency officials;
* bypass or undermine personnel ceilings, pay limitations, or
competitive employment procedures;
* contract on a preferential basis to former government employees; or:
* obtain professional or technical advice that is readily available
within the agency or another federal agency.
An additional limitation pertaining to A&AS is that agencies are not to
hire contractors to conduct evaluations or analyses of any aspect of a
proposal submitted for an initial contract award unless the agency
makes a written determination that government personnel (from the
requesting agency or from any other agency) with adequate training and
capabilities to perform the required proposal evaluation are not
readily available.[Footnote 11]
Table 2 portrays a time line of key events related to A&AS.
Table 2: Chronology of Key Events in A&AS History:
Decade: 1970s;
Year: 1978;
Key events:
* OMB Bulletin No. 78-11 required agencies to apply extra controls to
the procurement of consultant services.
Decade: 1980s;
Year: 1980;
Key events:
* OMB issued Circular A-120, Guidelines for the Use of Consulting
Services;
* The Supplemental Appropriations and Rescission Act of 1980 required
agencies to report on funds requested for consulting services. DOD
focused on four categories: appointed experts and consultants, studies
and analyses, professional and management services, and contract
systems engineering and technical services.
Decade: 1980s;
Year: 1982;
Key events:
* Pub. L. No. 97-258, §1114 required agencies to report their use of
consulting services in budget justification materials. It also required
agency inspectors general to evaluate agencies' annual progress in
establishing management controls over contracted consulting services
and in improving the accuracy and completeness of information reported
in FPDS;
Decade: 1980s;
Year: 1985;
Key events:
* We reported that DOD excluded up to $14 billion in services that
could have been reported if the department had used guidelines in the
Supplemental Appropriations and Rescission Act of 1980;
Decade: 1980s;
Year: 1986;
Key events:
* GSA placed a checkbox in the FPDS to indicate whether contracts were
for A&AS;
Decade: 1980s;
Year: 1988;
Key events:
* OMB used the term "advisory and assistance services" in its revised
and renamed Circular A-120, Guidelines for the Use of Advisory and
Assistance Services, which defined A&AS as "Those services acquired ...
by contract or by personnel appointment to support or improve agency
policy development, decision-making, management, and administration, or
to support or improve the operation of management systems. Such
services may take the form of information, advice, opinions,
alternatives, conclusions, recommendations, training, and direct
assistance";
* OFPP reported that the Circular A-120 definition of A&AS was too
broad and complex and subject to varying interpretations, which
resulted in under-reporting of expenditures among agencies.
Decade: 1990s;
Year: 1992;
Key events:
* DOD issued an A&AS directive Acquiring and Managing Contracted
Advisory and Assistance Services, which provided guidance on A&AS;
Decade: 1990s;
Year: 1993;
Key events:
* OMB rescinded Circular A-120 and issued Policy Letter 93-1,
Management Oversight of Services Contracting;
* The Departments of Labor, Health and Human Services, Education and
Related Agencies Appropriations Act of 1993 defined consulting services
as "(1) management and professional support services; (2) studies,
analyses, and evaluations; (3) engineering and technical services ...
and (4) research and development" and required OMB to establish a
separate budget object class for consulting services";
Decade: 1990s;
Year: 1994;
Key events:
* The Federal Acquisition Streamlining Act of 1994 (FASA) added new
sections to the U.S. Code, authorizing task order contracts for A&AS
for 5 years and incorporating the above definition of A&AS; however,
the definition no longer included the fourth element, "research and
development." FASA directed OMB to establish a new budget object class
for A&AS obligations.[A];
Decade: 1990s;
Year: 1995;
Key events:
* The FAR Council[B] implemented the definition of A&AS in FAR Subpart
37.2. The Council noted that its ability to clearly define A&AS was
constrained by the very broad statutory definition. The FAR provides
examples of the three broad categories of A&AS: "Management and
professional support services" include contractual services that
provide assistance, advice or training for the efficient and effective
management and operation of organizations, activities, or systems.
"Studies, analyses and evaluations" include contracted services that
provide organized, analytical assessments/evaluations in support of
policy development, decision-making, management, or administration.
"Engineering and technical services" include contractual services used
to support the program office during the acquisition cycle by providing
such services as systems engineering and technical direction. (FAR
2.101);
Decade: 1990s;
Year: 1996;
Key events:
* At the direction of OFPP, GSA removed the checkbox agencies used in
FPDS to indicate if contracts were for A&AS;
* The President's Council on Integrity and Efficiency reported that
many inspectors general found inaccuracies governmentwide in reporting
contract actions for A&AS;
Decade: 1990s;
Year: 1999;
Key events:
* The Strom Thurmond National Defense Authorization Act for Fiscal Year
1999 amended the U.S. Code to require DOD to annually review and report
to Congress expected contract services to ensure they were properly
categorized as A&AS.
Decade: Today;
Year: 2004;
Key events:
* DOD rescinded its 1992 directive on acquiring and managing A&AS,
citing redundancy with its other service contracting rules;
Decade: Today;
Year: 2007;
Key events:
* The John Warner National Defense Authorization Act for Fiscal Year
2007 authorized waivers to A&AS ordering period in certain situations
and required that DOD and OFPP report to Congress on the use of A&AS
before the authority can be used.
Source: GAO analysis of legislative history.
[A] Generally, A&AS task order contracts with an ordering period of
more than 3 years and a contract amount in excess of $11.5 million
should provide for multiple awards. 10 U.S.C. § 2304b(e) and 41 U.S.C.
§ 253i(e). See also FAR 16.504(c)(2), which raised the dollar threshold
to $11.5 million pursuant to 41 U.S.C. § 431a.
[B] The FAR Council is a group comprised of senior procurement
officials from DOD, GSA, and the National Aeronautics and Space
Administration that oversees development and maintenance of the FAR.
[End of table]
Other Relevant Service Contracting Policies and Regulations:
The federal government is increasingly relying on private entities to
provide a wide range of services; federal spending on services
represented over 60 percent of total contract spending governmentwide
in 2006.[Footnote 12] To help agencies manage their service contracts,
various federal regulations and policies provide guidance in key areas,
such as organizational and consultant conflicts of interest, inherently
governmental functions, and improper personal services contracts. For
example:
* OMB Policy Letter 93-1, Management Oversight of Service Contracting,
establishes government-wide policy, assigns responsibilities, and
provides guiding principles for executive departments and agencies in
managing the acquisition and use of services.[Footnote 13]
* FAR Subpart 7.5 on inherently governmental functions establishes
Executive Branch policy related to service contracting and inherently
governmental functions to assist agency officials and employees in
avoiding an unacceptable transfer of official responsibility to
government contractors.
* FAR Subpart 9.5 on organizational and consultant conflicts of
interest prescribes responsibilities, general rules, and procedures for
identifying, evaluating, and resolving organizational conflicts of
interest. An organizational conflict of interest occurs under a service
contract when the objectivity of a government contractor is impaired or
the contractor has an unfair advantage over others. The FAR notes that
organizational conflicts of interest are more likely to occur in
contracts involving certain services, such as management support
services and consultant or other professional services.
* FAR Section 37.104 on personal services contracts establishes that
obtaining personal services by contract is prohibited by law unless
Congress has specifically authorized acquisition of the services by
contract. A personal service occurs under a service contract when
contractor personnel are subject to the relatively continuous
supervision and control of a federal employee.
Agencies' Reported A&AS Obligations Are Not Accurate or Used for
Management Purposes:
Agencies' reported A&AS obligations to OMB for inclusion in the
President's budget are inaccurate to the point of being meaningless.
Although the five departments where we conducted our file reviews
reported about $14 billion to OMB for their fiscal year 2006 A&AS
obligations, a variety of factors cause inaccuracies in agencies'
reporting. (See app. II for a list of their reported A&AS obligations.)
First, the different interpretations of the broad A&AS definition
contribute to errors in identifying contracts. Second, we found little
consistency in agencies' approaches for reporting these obligations.
Third, the lack of integration of agency procurement and budget systems
thwarts accurate accounting of A&AS contracts. Figure 2 depicts these
factors.
Figure 2: Factors Contributing to Inaccuracies in Agencies' Reported
A&AS Obligations:
[See PDF for image]
Different interpretations of broad A&AS definition: Agency procurement
and budget officials exercise significant judgment when deciding
whether to code contracts as A&AS for budget reporting.
* Varying DOD and civilian exclusions to A&AS reporting further
complicate agencies‘ ability to make accurate interpretations.
Inconsistent reporting methods:
Agencies‘ approaches for reporting obligations to OMB have little
consistency. For example, agencies:
* partially reported obligations under specific A&AS contracts,
* misreported agency-wide obligations using prior year data, and,
* failed to separate A&AS obligations from overall agency total
contract costs.
Insufficient procurement and budget system integration: Agency
information systems used to manage procurement and budget functions are
not sufficiently integrated to identify contracts for A&AS.
Source: GAO.
[End of figure]
Different Interpretations of Broad Definition and Numerous Exclusions
Contribute to Errors in Identifying Contracts as A&AS:
Different interpretations of the broad A&AS definition (as set forth in
budget object class 25.1 in OMB's Circular A-11) by agency officials
contribute to errors in identifying contracts as A&AS. Agency
procurement and budget officials told us they must use a significant
amount of judgment and interpretation when deciding whether to code
contracts as A&AS for budget reporting. Officials added that given the
extensive scope of the definition, making distinctions between what
constitutes having a contractor provide an advisory or consultative-
type service versus directly performing established services to assist
an agency is often difficult. For example, the definitions cover
functions ranging from contracts for consultants to provide very
specific "expert opinions" to more generic contracts for "assistance"
in areas such as management and professional support and engineering
and technical services.
We found misidentified contracts in seven of the 10 agencies where we
performed contract file reviews. Overall, agencies erroneously
identified about 18 percent (59) of the 334 contract actions we
reviewed as A&AS and inappropriately included them in their fiscal year
2006 reported obligations. As shown in table 3, examples of
misidentified contract actions included services for fitness center
operation and maintenance, food and maintenance services at a federal
detention center, and the installation of telecommunications cabling.
Table 3: Misidentified A&AS Contract Actions Found at Agencies We
Reviewed:
Agency: Department of Homeland Security-Customs and Border Protection;
Misidentified contract actions as percentage of agency sample we
reviewed: 54;
Examples of contract actions misidentified as A&AS:
* installation of telecommunications cabling;
* computer hardware and software;
* data entry.
Agency: Department of Homeland Security-Immigration and Customs
Enforcement;
Misidentified contract actions as percentage of agency sample we
reviewed: 21;
Examples of contract actions misidentified as A&AS:
* food and maintenance services for federal detention center;
* employee occupational health services;
* software and maintenance support.
Agency: Missile Defense Agency;
Misidentified contract actions as percentage of agency sample we
reviewed: 21;
Examples of contract actions misidentified as A&AS:
* fitness center operation and maintenance;
* employee identification badges;
* photocopier machine maintenance.
Agency: Energy-National Nuclear Security Administration;
Misidentified contract actions as percentage of agency sample we
reviewed: 19;
Examples of contract actions misidentified as A&AS:
* medical evacuation services;
* building demolition at federal facility;
* software development.
Agency: Treasury-Internal Revenue Service;
Misidentified contract actions as percentage of agency sample we
reviewed: 17;
Examples of contract actions misidentified as A&AS:
* courier and messenger services;
* rental of storage space for files related to tax audits.
Agency: Air Force Aeronautical Systems Center;
Misidentified contract actions as percentage of agency sample we
reviewed: 6;
Examples of contract actions misidentified as A&AS:
* administrative services for weapons system program.
Agency: Navy-Naval Sea Systems Command;
Misidentified contract actions as percentage of agency sample we
reviewed: 3;
Examples of contract actions misidentified as A&AS:
* software application development and support.
Source: GAO analysis of agency contract files and interviews with
agency officials.
Note: We judged a contract to be misidentified if the services to be
provided did not meet the FAR and OMB Circular A-11 definition of A&AS.
We did not find misidentified contracts in our sample at Air Force
Headquarters, National Institutes of Health, and the Naval Air Systems
Command. Numbers rounded to nearest percentage.
[End of table]
In addition to the contract actions that were clearly not A&AS, we also
found examples where the determination of whether the contracted
service constituted A&AS was highly subjective because of its broad
definition. Examples of such contracts included arbitration services
and speakers at training events. As such, we could not definitively
determine whether the agency misidentified the contract actions.
Over the years, certain activities have been excluded from civilian and
defense reporting of A&AS, exclusions that further complicates agency
efforts to identify such contracts for budget reporting. These
exclusions are set forth in the FAR, OMB Circular A-11, and in DOD's
Financial Management Regulation. However, the Circular A-11 exclusions
are more extensive than those in the FAR, and DOD has 14 exclusions,
such as initial training supporting weapons system procurement. See
appendix III for a full list of civilian and defense exclusions to A&AS
reporting. Further, DOD canceled its A&AS directive in 2004, which
listed these 14 exclusions, but did not make conforming changes to its
financial management regulation--which still lists them. According to
DOD procurement policy officials, this discrepancy has likely
contributed to confusion in properly coding contracts as A&AS.
Agencies' Approaches for Reporting Obligations Have Little Consistency
and Sometimes Lack Sound Basis:
We found that agencies used a range of approaches and practices for
reporting their A&AS obligations to OMB. These included misreporting
(such as using prior year data) and partially reporting the
obligations. Also, several agencies could not tell us the source for
their obligations reported to OMB. OMB officials were unaware of these
discrepancies and inconsistencies until we informed them.
For example, HUD budget and procurement officials told us that their
budget staff report all of the department's contract obligations under
budget object class 25.1--without trying to distinguish those for A&AS-
-since they were not aware of the internal contracting database that
contained A&AS information. As such, HUD officials were unable to
understand the basis for HUD's reported obligations of $400 million for
A&AS in fiscal year 2006. According to HUD budget officials, even after
working with OMB on how to properly classify their department's
contracts for A&AS and other service contracts for budget reporting,
they are still unable to make this differentiation. For fiscal year
2007, the agency could not identify any A&AS contracts in its internal
contracting database, but it still reported $205 million in A&AS
obligations to OMB.
VA officials told us the agency did not report departmentwide
obligations for A&AS to OMB in fiscal years 2005 and 2006, even though
amounts for A&AS appeared in the budget for those years ($1 million in
fiscal year 2005 and $8 million in fiscal year 2006). When we
questioned VA officials about these numbers, they could not explain
where these amounts came from and acknowledged that they did not
accurately represent their A&AS obligations. In addition, the VA could
not substantiate its reported fiscal year 2007 estimate of $9 million.
According to the department, in October 2007 it added a code to its
financial management system to help provide the ability to capture A&AS
obligations.
The Air Force misreported its A&AS obligations using prior year data.
It reported its fiscal year 2006 obligations for A&AS based on what it
reported for fiscal year 2005 because officials did not want to conduct
the manually intensive data call to obtain needed information. Air
Force officials said they reduced their reported fiscal year 2005 data
based on broader budget reductions made by the Office of the Secretary
of Defense. They noted that in 2005 and years prior the Air Force had
relied upon the intensive data calls to collect and report A&AS
obligations and said they would use this process again for fiscal year
2007. Even these data calls have demonstrated shortcomings; in 2006 the
Air Force Audit Agency reported[Footnote 14] that Air Force officials
had provided inaccurate and incomplete obligations in fiscal year 2004
as a result of their data calls for A&AS obligations.
Agencies also used inconsistent methodologies for reporting A&AS
obligations. For example, according to officials from Energy and
Treasury's Internal Revenue Service, if "a majority" of a single
contract is for A&AS, then they report the contract's total obligations
as A&AS. On the other hand, Aeronautical Systems Center and Naval Sea
Systems Command procurement and budget officials told us their
agencies' procedure is to report only the labor costs under their A&AS
contracts and to exclude other costs, including travel, materials, and
other direct costs. According to Aeronautical Systems Center officials,
the labor portion of their A&AS contracts averages about 80 percent of
these contract costs.
Lack of Integration of Agency Procurement and Budget Systems Thwarts
Accurate Accounting of A&AS Contracts:
Most agencies we reviewed lack the capability to identify, via their
budget systems, the contracts for A&AS that comprised their reported
obligations. According to procurement and budget staff, the lack of
integration in such management systems poses another challenge to
accurately accounting for their contracts for A&AS because, while
budget and program staff are responsible for reporting the obligations
to OMB, they cannot readily--if at all--identify the specific contracts
that are funded with A&AS dollars. For example, Air Force and National
Institutes of Health officials cited their need to conduct intensive
manual data calls to extract and report on contracts for A&AS from
their procurement and budget systems. Although Army budget staff
perform detailed manual reviews of obligation data in financial
databases to generate an estimate of A&AS costs, they could not provide
us with a list of contracts specifically associated with that data
(contract numbers are not part of the accounting database).
In 1996, as part of its efforts to streamline data collection on
federal contracts, OMB modified FPDS, the federal government's
contracting database, to stop tracking A&AS contracts. Prior to this
action, FPDS contained a field where agency procurement staff could
mark contracts as A&AS as part of their routine data entry of contract
information. Since the field was removed, procurement officials have
been disassociated from the process of identifying contracts as A&AS.
According to OFPP officials, the 2007 Defense Authorization Act
requirement that OFPP report on contracts for A&AS has caused them to
reevaluate whether or not A&AS should be tracked again in FPDS-NG.
However, OFPP's effort is still in the planning stages.
Agencies Do Not Use Reported A&AS Obligations for Management Purposes:
Agency officials told us they see little or no internal value in
tracking A&AS obligations as a separate category of services since they
do not use the information for management purposes. For their part, OMB
officials also said they question the benefit of reporting A&AS as a
separate category of services. OMB budget officials told us that they
do not monitor agencies' reporting of A&AS as a separate category of
services because reported obligations for A&AS represent a very small
percentage of total service contract obligations. They added that OMB
would normally defer to agencies' judgment on the amount and type of
A&AS they procure.
Further, at the agencies we reviewed, officials told us they manage
their A&AS contracts, as they do their other professional support
service contracts, through established acquisition management
procedures. Agency procurement officials said they utilize broader
federal service contracting policies and regulations to manage these
contracts, such as FAR provisions and OFPP policy letters related to
management and oversight of service contracting, inherently
governmental functions, organizational conflicts of interest, and
personal services contracts. They refer to FAR Subpart 37.2, Advisory
and Assistance Services, for governmentwide policy on A&AS and do not
have separate policies or directives exclusive to their contracts for
A&AS.
Reflecting the lack of a clear distinction between A&AS and other
professional management support services, OMB rescinded its Circular
No. A-120, Guidelines for the Use of Advisory and Assistance Services,
in 1993[Footnote 15] and issued Policy Letter 93-1, Management
Oversight of Services Contracting in its place. In 2004, DOD followed
suit, canceling its 1992 directive that contained guidance on acquiring
and managing A&AS, citing redundancy with its other service contracting
rules.
Agencies Generally Procured A&AS on a Recurring Basis, Met Period of
Performance Limits, and Used Many Contract Vehicles:
Agencies we reviewed frequently entered into contract actions for A&AS
on a recurring basis and commonly retained the same contractor to
perform these services, with about half of these actions for recurring
requirements awarded or issued competitively. Relatively few of the
A&AS contract actions exceeded or had the potential to exceed 5 years.
Agencies used many contracting vehicles to acquire A&AS. Time-and-
materials contract actions were the most prevalent contract type, and
there was considerable use of the GSA schedule program.[Footnote 16]
Overall, 63 percent of the A&AS contract actions were issued or awarded
on other than a sole source basis.
All Agencies Reviewed Contracted for A&AS on a Recurring Basis and
Frequently Used the Same Contractor:
We found recurring contract actions--that is, actions for which there
was evidence that a contract action for the same or similar services
existed immediately prior to the present contract action--in all the
agencies we reviewed. Overall, nearly 70 percent of the 275 A&AS
contract actions[Footnote 17] in our sample were recurring to meet
continuing needs. The recurring requirements included such services as
logistics, engineering, acquisition, program management, and legal
support. Table 4 provides the frequency of recurring contract actions
for each agency and examples of the types of recurring services
procured in the A&AS contract files we reviewed.
Table 4: Percentage of and Services Provided by Recurring A&AS Contract
Actions at Agencies We Reviewed:
Agencies: Naval Air Systems Command;
Percent of recurring contract actions[A]: 100;
Examples of recurring support services:
* cost estimating and analysis services;
* flight operations safety and efficiency technical services;
* human systems engineering services.
Agencies: Missile Defense Agency;
Percent of recurring contract actions[A]: 93;
Examples of recurring support services:
* acquisition services;
* modeling and simulation systems services;
* scientific, engineering, and technical assistance for programs.
Agencies: Customs and Border Protection;
Percent of recurring contract actions[A]: 91;
Examples of recurring support services:
* strategic planning coordination and performance measurement;
* internal audit and analysis;
* aviation and customs advisors.
Agencies: National Institutes of Health;
Percent of recurring contract actions[A]: 90;
Examples of recurring support services:
* patent research and patent prosecution;
* legal settlement services;
* legal subject matter expertise.
Agencies: Aeronautical Systems Center;
Percent of recurring contract actions[A]: 70;
Examples of recurring support services:
* logistics and test and evaluation management;
* data and configuration management;
* cost estimating and earned value management analysis.
Agencies: Air Force Headquarters;
Percent of recurring contract actions[A]: 69;
Examples of recurring support services:
* acquisition planning and policy implementation;
* functional and technical engineering support;
* subject matter expertise for communications systems and
infrastructures.
Agencies: Internal Revenue Service;
Percent of recurring contract actions[A]: 55;
Examples of recurring support services:
* information and security systems services;
* appraisal and accounting services;
* expert actuarial services for insurance tax reserves.
Agencies: Naval Sea Systems Command;
Percent of recurring contract actions[A]: 50;
Examples of recurring support services:
* contract services;
* program management and metrics development;
* systems engineering and integration.
Agencies: National Nuclear Security Administration;
Percent of recurring contract actions[A]: 47;
Examples of recurring support services:
* emergency preparedness planning;
* technical liaison and analytical services;
* budget execution.
Agencies: Immigration and Customs Enforcement;
Percent of recurring contract actions[A]: 37;
Examples of recurring support services:
* technical, program management, and acquisition advice for information
technology modernization;
* perform acquisition study;
* develop and support enterprise learning program.
Source: Contract file documentation and agency correspondence (data);
GAO (analysis).
[A] Percentages rounded to nearest percent.
[End of table]
Furthermore, we found that agencies entered into contract actions with
the same contractor as under the prior contract action over 70 percent
of the time, with about half of these awarded or issued competitively.
Figure 3 shows by agency the extent of recurring A&AS contract actions
we identified through our contract file review, as well as the
frequency with which these contract actions were with the same
contractor. For example, almost 37 percent of contract actions we
reviewed at the Department of Homeland Security's Immigration and
Customs Enforcement were recurring, and of those recurring actions,
nearly 64 percent were awarded to the same contractor for the follow-on
requirement.
Figure 3: Recurring Contract Actions and Same Contractor Follow-on
Awards Across Agencies:
[See PDF for image]
All agencies:
Recurring contract actions: 70 percent;
Same contractor used for the recurring contract actions: 71 percent.
Immigration and Customs Enforcement:
Recurring contract actions: 37 percent;
Same contractor used for the recurring contract actions: 64 percent.
National Nuclear Security Administration:
Recurring contract actions: 47 percent;
Same contractor used for the recurring contract actions: 69 percent.
Naval Sea Systems Command:
Recurring contract actions: 50 percent;
Same contractor used for the recurring contract actions: 67 percent.
Internal Revenue Service:
Recurring contract actions: 55 percent;
Same contractor used for the recurring contract actions: 75 percent.
Air Force Headquarters:
Recurring contract actions: 69 percent;
Same contractor used for the recurring contract actions: 78 percent.
Aeronautical Systems Center:
Recurring contract actions: 70 percent;
Same contractor used for the recurring contract actions: 95 percent.
National Institutes of Health:
Recurring contract actions: 90 percent;
Same contractor used for the recurring contract actions: 100 percent.
Customs and Border Protection:
Recurring contract actions: 91 percent;
Same contractor used for the recurring contract actions: 71 percent.
Missile Defense Agency:
Recurring contract actions: 93 percent;
Same contractor used for the recurring contract actions: 46 percent.
Naval Air Systems Command:
Recurring contract actions: 100 percent;
Same contractor used for the recurring contract actions: 53 percent.
Source: Contract file documentation and agency correspondence (data);
GAO (analysis).
Note: Percentages for Recurring Contract Actions are based on the 275
A&AS contract actions we reviewed (this number excludes the 59 actions
that were incorrectly identified as A&AS). Same Contractor percentages
are based on the total number of recurring contract actions we
identified during our review.
[End of figure]
Agencies' A&AS Contract Actions Generally Met Statutory Period of
Performance Limits:
Most contract actions we reviewed had periods of performance (including
all contract options and award terms) that were less than 5 years--the
statutory limit for A&AS task order contracts, but 2 exceeded and 10
had the potential to exceed the limit.[Footnote 18]
* The period of performance of two task order contracts (at Energy's
National Nuclear Security Administration and Homeland Security's
Immigration and Customs Enforcement) exceeded or had the potential to
exceed 5 years. The Energy contract has since expired; Immigration and
Customs Enforcement officials told us they planned to recompete the
requirement before the 5-year period was exceeded.
* The Naval Sea Systems Command, which accounted for 10 of the 12
contracts, failed to accurately identify certain SeaPort and SeaPort-
e[Footnote 19] contracts as A&AS at award, and consequently included
option periods that could have potentially exceeded 5 years, with the
longest period of performance being 15 years. Based on recommendations
from the Naval Audit Service,[Footnote 20] however, the Command
subsequently reviewed these contracts before the 5-year period had
expired to ensure they were accurately classified as A&AS and refrained
from exercising options to prevent the ordering periods from exceeding
5 years. The agency has since increased oversight to prevent A&AS task
orders from exceeding 5 years.
An additional 15 contract actions exceeded or had the potential to
exceed 5 years, but did not breach the A&AS statutory period of
performance limit[Footnote 21] for various reasons.
* Six of the 102 orders under GSA schedule contracts we reviewed
exceeded 5 years, with the longest being for 10 years. GSA administers
its schedule program under the authority of 40 U.S.C. § 501 and 41
U.S.C. § 259(b)(3).[Footnote 22]
* Six contract actions had a period of performance of more than 5 years
but less than 5.5 years. A statutory provision allows for a one-time
sole-source award of up to 6 months for continuation of A&AS services
based on extenuating circumstances, such as delay in award of a new
contract.
* Three additional contract actions exceeded 5 years but were not
subject to the A&AS statutory period of performance limitation on task
order contracts. These actions included a stand-alone contract (i.e.,
not a task order contract), a purchase order, and an agreement between
two federal agencies.
Agencies Use a Broad Range of Contract Types and Vehicles for A&AS:
Agencies can use a broad range of contract types and vehicles to meet
their needs. For example, time-and-materials contracts can be used in
conjunction with stand-alone or indefinite-quantity contracts. We
recently reported that time-and-materials contracts are considered high
risk to the government because they provide no positive profit
incentive to the contractor for cost control or labor
efficiency.[Footnote 23] The choice of contract type is the principal
means agencies have for allocating cost risk between the government and
the contractor. Agencies can also award contracts or issue task orders
themselves, or, through interagency contracting, rely on another
agency's contract, such as a GSA schedule contract. Figure 4 shows some
of the contract vehicles and types.
Figure 4: Examples of Contract Vehicles and Types:
[See PDF for image]
Stand-alone contracts:
Do not allow for individual orders to be placed against the contract.
Indefinite-quantity contracts (also known as task-order contracts):
Provide for an indefinite quantity, within stated limits, of products
or services during a fixed period. Government places orders for
individual requirements under these contracts. GSA schedule contracts
are often indefinite-quantity contracts.
The government‘s basis for payments, contractor‘s obligations, and the
party assuming more risk for cost overruns changes depending on whether
the contract is fixed price, cost reimbursable, or time-and-materials.
Fixed price:
* Government pays fixed price even if actual total cost of product or
service falls short of or exceeds the contract price. May also pay an
award or incentive fee related to performance.
* Contractor provides an acceptable deliverable at the time, place, and
price specified in the contract.
* Who assumes risk of cost overrun? Contractor.
Cost reimbursable:
* Government pays contractor‘s allowable costs. Also may pay a fee,
which may be related to performance.
* Contractor makes good faith effort to meet government‘s needs within
the estimated cost.
* Who assumes risk of cost overrun? Government.
Time-and-materials:
* Government pays fixed per-hour labor rates that include wages,
overhead, general administrative costs, and profit; government might
reimburse contractor for other direct costs, such as travel and
materials costs.
* Contractor makes good faith effort to meet government‘s needs within
the ceiling price.
* Who assumes risk of cost overrun? Government.
Source: FAR, Defense Federal Acquisition Regulation Supplement, DOD
Contract Pricing Guide (data); GAO (presentation and analysis).
[End of figure]
For the files we reviewed, time-and-materials contract actions were
prevalent, representing almost half of all A&AS actions, although the
frequency varied greatly across agencies. For example, 93 percent of
contract actions at the Aeronautical Systems Center were time-and-
materials, whereas we found none at the Naval Sea Systems Command.
Figure 5 illustrates the distribution of A&AS contract types at
agencies we reviewed.
Figure 5: Total Agency Distribution of A&AS Contract Types for Contract
Actions We Reviewed:
[See PDF for image]
This figure is a pie-chart depicting the following data:
Total Agency Distribution of A&AS Contract Types for Contract Actions
We Reviewed:
Time-an-materials: 47%;
Firm-fixed price: 19%;
Cost-plus fixed fee: 16%;
Multiple types: 7%;
Other: 12%.
Source: Contract file documentation and Agency correspondence (data);
GAO (analysis).
Note: ’Other“ includes, for example, cost-plus award fee and
interagency reimbursable agreements. ’Multiple Types“ refers to
contract actions that included more than one contract type for
services. Percentages rounded to nearest percent and do not total 100
percent due to rounding.
[End of figure]
In addition, agencies may use interagency contracting vehicles to
acquire services from other government agencies, such as GSA's schedule
program.[Footnote 24] Interagency contracting vehicles were used for
over 40 percent, or 113 of the 275 A&AS contract actions we reviewed,
with about 90 percent of these under GSA schedule contracts. We found
the highest percentage of interagency contracts used at the Air Force's
Aeronautical Systems Center; 90 percent of the contract actions we
reviewed at that location were issued under GSA schedule contracts.
However, the Center has recently shifted its A&AS contracting away from
schedule contracts to its own Consolidated Acquisition of Professional
Services contract, an indefinite-delivery/indefinite-quantity multiple
award contract initiated in 2006.
Figure 6 shows the distribution of interagency contract actions
identified in our contract file review.
Figure 6: Frequency of Interagency Contract Actions Found during Our
Contract File Review:
[See PDF for image]
This figure is a pie-chart depicting the following data:
Frequency of Interagency Contract Actions Found during Our Contract
File Review:
Non-interagency contract actions: 59%;
GSA schedule contract actions: 37%;
Other interagency contract actions: 4%.
Source: Contract file documentation and Agency correspondence (data);
GAO (analysis).
[End of figure]
Agencies can also procure goods or services using competition or on a
sole-source basis (that is, where agencies solicit and negotiate with
only one source). Generally, the FAR requires agencies to pursue full
and open competition for soliciting offers and awarding contracts for
services unless otherwise authorized. To determine whether or not the
actions we reviewed were issued or awarded using competition, we
assessed whether the agency contracting officials had prepared a
justification and approval for a sole-source action or whether
documentation supporting a competitive process was in the contract
file. While about 37 percent of the actions we reviewed, according to
file documentation, were sole-source procurements; the majority (63
percent) were not. As with contract type, we found substantial
variation in the regularity of competitive contract awards among the
agencies we reviewed. The Naval Sea Systems Command used competition to
award all contract actions we reviewed, whereas over 60 percent of
contract actions at Air Force Headquarters, the Aeronautical Systems
Center, and the National Institutes of Health were not competed.
Moreover, the Air Force and National Institutes of Health sole-source
awards were commonly follow-on contract actions for similar A&AS.
Conclusions:
As the government increasingly turns to contractors to provide a wide
range of professional management support services such as A&AS, these
contracts need to be effectively managed and the contractors properly
overseen. However, the long-standing requirement that agencies report
A&AS budget obligations is not contributing to this management and
oversight. That the reporting has not provided Congress with accurate
or meaningful information has been identified as a problem for over 20
years. From an agency perspective, the broad definition of A&AS serves
little utility for management or accountability purposes, as such
contracts are not clearly distinguishable from other professional
support service contracts either in policy or practice. The broad
definition of A&AS, coupled with the fact that reported obligations are
not being used for management or oversight purposes, calls into
question the need to continue the requirement as it currently stands.
Further, while OMB's consideration of re-implementing a field in FPDS-
NG for A&AS contracts may help provide agency procurement officials and
others with additional insight on their obligations, this action will
be only marginally beneficial without an overarching clarification of
the current broad definition of A&AS.
Matter for Congressional Consideration:
To address the long-standing problems agencies face in reporting A&AS
obligations, Congress should consider re-evaluating the need for
agencies to report A&AS funding separately to OMB, recognizing that
contracts for A&AS are not managed any differently than other contracts
for professional management support. If insights into A&AS contracts
are desired, Congress should consider clarifying the statutory
definition of A&AS to more explicitly address congressional concerns
related to these types of contracts and require the Administrator of
OFPP to reinstate data collection on contracts for A&AS in FPDS-NG
using the revised definition.
Agency Comments and Our Evaluation:
We received written comments on a draft of this report from the
Department of the Treasury, which agreed with our findings. Treasury's
letter is reprinted in appendix IV. In emails, the departments of
Homeland Security and VA stated that they also agreed. We received
technical comments from the Departments of Health and Human Services,
VA, and OFPP, which we incorporated as appropriate. The Departments of
Defense, Energy, and HUD had no comment.
We are sending copies of this report to interested congressional
committees, the Secretaries of Defense, Energy, Health and Human
Services, Homeland Security, HUD, Treasury, and VA; the Director of
OMB; the Administrator of GSA; and Administrator of OFPP. We will also
provide copies to others on request. In addition, the report will be
available at no charge on the GAO Web site at [hyperlink,
http://www.gao.gov].
If you or your staffs have any questions about this report, 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. Key contributors to this report were
Michele Mackin, Assistant Director; Jaime Allentuck; Noah Bleicher;
Lily Chin; Claudia Dickey; Carol Henn; Arthur James, Jr.; Julia Kennon;
Sean Merrill; Angie Nichols-Friedman; Kenneth Patton; Brian Smith; and
Anthony Wysocki.
Signed by:
John Hutton, Director:
Acquisition and Sourcing Management:
List of Committees:
The Honorable Carl Levin:
Chairman:
The Honorable John McCain:
Ranking Member:
Committee on Armed Services:
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 Ike Skelton:
Chairman:
The Honorable Duncan L. Hunter:
Ranking Member:
Committee on Armed Services:
House of Representatives:
The Honorable Henry A. Waxman:
Chairman:
The Honorable Tom Davis:
Ranking Member:
Committee on Oversight and Government Reform:
House of Representatives:
[End of section]
Appendix I: Scope and Methodology:
For the Department of Defense and selected civilian agencies, our
objectives were to (1) assess whether reported obligations for advisory
and assistance services (A&AS) are accurate or used for management
purposes and (2) identify the extent to which A&AS contracts are used
for recurring services and periods greater than 5 years, as well as the
contract types and vehicles used.
To address our overall audit objectives, we conducted a contract file
review at 10 agencies. To establish the agencies to include in the
contract file review, we first obtained lists of the 24 Chief Financial
Officers Act department level obligations reported to the Office of
Management and Budget (OMB)--as reflected in OMB's MAX A-11 data entry
system[Footnote 25]--from fiscal years 2002 through 2006. We identified
the 7 departments that had the highest average reported A&AS
obligations during this 5-year period:
* Department of Defense:
* Department of Energy:
* Department of Health and Human Services:
* Department of Homeland Security:
* Department of Housing and Urban Development:
* Department of the Treasury:
* Department of Veterans Affairs:
From that point, through analysis of department data and discussions
with agency officials, we identified those departments that were able
to provide us with a list of the fiscal year 2006 contracts that
comprised their reported 2006 A&AS obligations to OMB. Two departments-
-Housing and Urban Development and Veterans Affairs-could not provide
us with such a list and therefore were not part of our contract file
review.[Footnote 26] Next, through analysis of agency data on overall
service contracts, as captured in the Federal Procurement Data System-
Next Generation (FPDS-NG) and further discussions with agency
officials, we identified the major agencies or components within the 5
remaining departments that could provide us with a list of contracts
comprising these reported obligations. The Department of the Army
dropped out of our file review sample at this point, as it could not
provide us with a list of A&AS contracts. Table 5 shows the locations
where we did our work, including those where we could not perform a
file review.
Table 5: Civilian and Defense Agencies We Reviewed:
Civilian Agencies: Department of Energy, National Nuclear Security
Administration, Albuquerque, New Mexico, and Washington, D.C.;
Defense Agencies: Department of Air Force, Headquarters Air Force,
Bolling Air Force Base, Washington, D.C.
Civilian Agencies: Department of Health and Human Services, National
Institutes of Health, Bethesda, Maryland;
Defense Agencies: Department of Air Force Aeronautical Systems Center,
Wright-Patterson Air Force Base, Dayton, Ohio.
Civilian Agencies: Department of Homeland Security, Customs and Border
Protection, Indianapolis, Indiana, and Washington, D.C.;
Defense Agencies: Department of Navy, Naval Air Systems Command,
Patuxent River, Maryland.
Civilian Agencies: Department of Homeland Security, Immigration and
Customs Enforcement, Washington, D.C.;
Defense Agencies: Department of Navy, Naval Sea Systems Command,
Washington Navy Yard, Washington, D.C.
Civilian Agencies: Department of the Treasury, Internal Revenue
Service, Washington, D.C.;
Defense Agencies: Missile Defense Agency, Falls Church, Virginia.
Civilian Agencies: Department of Housing and Urban Development,
Washington, D.C.[A];
Defense Agencies: Department of Army, Deputy Chief of Staff,
Washington, D.C.[A].
Civilian Agencies: Department of Veterans Affairs, Washington, D.C.[A];
Defense Agencies: [Empty].
Source: GAO.
[A] Agency visited but excluded from our contract file review because
of inability to provide a contract list specific to A&AS contract
actions with fiscal year 2006 obligations.
[End of table]
For our onsite file review, we generated a statistical random sample of
334 contract actions out of the 6,373 contracts that the 10 major
agencies within our review identified as A&AS. [Footnote 27] We
performed the file reviews using an electronic data collection
instrument and onsite source verification. For instances where the
contract file review results warranted follow-up with the agency, we
requested and received additional information from agency officials,
which we analyzed and incorporated into our final results where
appropriate. The results of our agency-specific contract file reviews
are generalizable to the particular agency location where we reviewed
contract files. Table 6 depicts the number of contract actions we
reviewed at each agency.
Table 6: Distribution of GAO's Sample of Contract Actions Reviewed:
Organizations: Air Force Headquarters;
Number of contract actions: 13.
Organizations: Aeronautical Systems Center;
Number of contract actions: 32.
Organizations: Customs and Border Protection;
Number of contract actions: 50.
Organizations: Immigration and Customs Enforcement;
Number of contract actions: 38.
Organizations: Internal Revenue Service;
Number of contract actions: 35.
Organizations: Missile Defense Agency;
Number of contract actions: 38.
Organizations: National Institutes of Health;
Number of contract actions: 30.
Organizations: National Nuclear Security Administration;
Number of contract actions: 37.
Organizations: Naval Air Systems Command;
Number of contract actions: 30.
Organizations: Naval Sea Systems Command;
Number of contract actions: 31.
Organizations: Total;
Number of contract actions: 334.
Source: Contract file documentation and Agency correspondence (data);
GAO (analysis).
Note: The number of contract actions reviewed varied by agency based on
availability of files and the frequency of contract actions identified
as non-A&AS during contract file review.
[End of table]
To assess whether reported A&AS obligations are accurate or used for
management purposes, we analyzed pertinent sections of the Federal
Acquisition Regulation and OMB Circular No. A-11, Preparation,
Submission, and Execution of the Budget, requirements for contracted
A&AS. We reviewed prior GAO, inspectors general, and other audit agency
reports. We also collected and reviewed existing agency-specific
service contracting guidance, reviewed obligation data from the OMB MAX
A-11 data entry system, and performed our contract file reviews at
selected agencies. We conducted a detailed review of congressional and
other actions regarding consulting services and A&AS over time. We also
interviewed agency procurement and budget officials to discern their
processes and procedures for reporting A&AS obligations to OMB and
discussed the accuracy and usefulness of reported A&AS obligations with
officials from OMB and the Office of Federal Procurement Policy.
Because the focus of this report was the government's budget reporting
of A&AS obligations, we did not address compliance with various A&AS-
related provisions, such as the requirement for multiple awards for
A&AS task order contracts (10 U.S.C. § 2304b(e) and 41 U.S.C. § 253i(e)
and those in 7 U.S.C. § 2207a, 10 U.S.C. § 2399(e), or 41 U.S.C. § 419.
We also did not assess compliance with a requirement under federal
appropriations law that agencies must confirm that their reported
obligations were certified by officials designated by the agency
head.[Footnote 28]
We relied on OMB's MAX database system to analyze A&AS obligations
because FPDS-NG, which is used to collect, develop, and disseminate
procurement data from executive agencies, does not distinguish A&AS
contract actions and their associated obligations. Because there was no
direct denotation for A&AS contract actions within FPDS-NG, we
attempted to identify federal product and service codes[Footnote 29]
that relate to A&AS using the database system, but found, through
outreach with agency officials, a wide range of product and service
codes--from six to over 400--that were identified as having the
potential to include A&AS contract actions (that is, while these
product and service codes may involve A&AS, they also may not). Because
of the wide range of product and service codes that could potentially
include A&AS, we were unable to determine, through an analysis of
contract actions reported in FPDS-NG, the extent to which A&AS contract
actions may have been underreported.
To assess the extent to which agencies use A&AS to meet recurring
requirements and the regularity with which the recurring contract
actions are awarded to the same contractor for the follow-on work, we
analyzed data obtained from our contract file reviews and held
discussions with agency officials. For our review, we considered a
"recurring contract action" to be an action for which there was
evidence that a contract action for similar services existed
immediately prior to the contract action we reviewed. Likewise, we
considered "same contractor" as a contractor that had been issued or
awarded a contract action for the same or similar A&AS immediately
prior to the action we reviewed. Where we could not determine through
our file review the status of prior contract actions or could not
identify the prior contractor, we asked agency officials for additional
information, which we incorporated into our final results where
appropriate.
Similar to our activities related to recurring contract actions, we
reviewed information from agency interviews and contract file review
data to assess the frequency with which task order contracts for A&AS
exceeded or had the potential to exceed a 5-year period of performance.
In particular, our contract file review enabled us to document the
length of contracts and to evaluate the extent to which the statutory
period of performance limitations for A&AS were met. "Period of
performance" is the total potential length of a task order contract
with all options or award terms exercised by the agency. Title 10
U.S.C. § 2304b and 41 U.S.C. § 253i limit the total period of
performance for A&AS task order contracts to 5 years, with the
possibility of an extension of no longer than 6 months for continuation
of services when extenuating circumstances exist. For any contract
actions identified as exceeding or having the potential to exceed the 5-
year period of performance limitation, we requested and received
agencies' explanations for exceeding 5 years and incorporated their
responses into our final results.
To evaluate what contract types and vehicles are used by agencies to
acquire A&AS, we analyzed our contract file review data and information
from our interviews with agency officials. In particular, our contract
file review findings enabled us to analyze the contract types used by
agencies to procure A&AS, the degree of interagency contracting for
A&AS, and the level of competition for A&AS contract actions. To
determine whether or not the action was issued or awarded using
competition, we assessed whether the agency contracting officials had
prepared a justification and approval for a sole-source action or
whether documentation supporting a competitive process was in the
contract file. Our interviews with agency officials provided additional
information concerning agency-specific A&AS contracting practices that
affect the contract type, interagency use, and extent of competition.
We conducted this performance audit from January 2007 to February 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: Department-Level Reported A&AS Obligations for Agencies in
Our Review:
Agency: Department of Defense;
Fiscal year obligations (dollars in millions): 2002: 4,728;
Fiscal year obligations (dollars in millions): 2003: 5,768;
Fiscal year obligations (dollars in millions): 2004: 7,117;
Fiscal year obligations (dollars in millions): 2005: 9,690;
Fiscal year obligations (dollars in millions): 2006: 10,157;
Fiscal year obligations (dollars in millions): 5-year total: $37,460.
Agency: Energy;
Fiscal year obligations (dollars in millions): 2002: 438;
Fiscal year obligations (dollars in millions): 2003: 407;
Fiscal year obligations (dollars in millions): 2004: 324;
Fiscal year obligations (dollars in millions): 2005: 403;
Fiscal year obligations (dollars in millions): 2006: 444;
Fiscal year obligations (dollars in millions): 5-year total: $2,016.
Agency: Health and Human Services;
Fiscal year obligations (dollars in millions): 2002: 534;
Fiscal year obligations (dollars in millions): 2003: 734;
Fiscal year obligations (dollars in millions): 2004: 784;
Fiscal year obligations (dollars in millions): 2005: 1,013;
Fiscal year obligations (dollars in millions): 2006: 1,038;
Fiscal year obligations (dollars in millions): 5-year total: $4,103.
Agency: Homeland Security;
Fiscal year obligations (dollars in millions): 2002: 521;
Fiscal year obligations (dollars in millions): 2003: 860;
Fiscal year obligations (dollars in millions): 2004: 1,567;
Fiscal year obligations (dollars in millions): 2005: 2,000;
Fiscal year obligations (dollars in millions): 2006: 2,000;
Fiscal year obligations (dollars in millions): 5-year total: $6,948.
Agency: Treasury;
Fiscal year obligations (dollars in millions): 2002: 98;
Fiscal year obligations (dollars in millions): 2003: 95;
Fiscal year obligations (dollars in millions): 2004: 346;
Fiscal year obligations (dollars in millions): 2005: 554;
Fiscal year obligations (dollars in millions): 2006: 583;
Fiscal year obligations (dollars in millions): 5-year total: $1,676.
Agency: Total obligations;
Fiscal year obligations (dollars in millions): 2002: 6,319;
Fiscal year obligations (dollars in millions): 2003: 7,864;
Fiscal year obligations (dollars in millions): 2004: 10,138;
Fiscal year obligations (dollars in millions): 2005: 13,660;
Fiscal year obligations (dollars in millions): 2006: 14,222;
Fiscal year obligations (dollars in millions): 5-year total: $52,203.
Source: OMB (data); GAO (format).
[End of table]
[End of section]
Appendix III: Exclusions to the Definition of A&AS:
The Federal Acquisition Regulation (FAR), Office of Management and
Budget (OMB) Circular No. A-11, and the Department of Defense's (DOD)
Financial Management Regulation provide exclusions to the definition of
advisory and assistance services (A&AS), shown below.
Table 7: Reported A&AS Obligations for Departments Included in Our
Review:
Civilian exclusions:
FAR:
1. Routine information technology services unless they are an integral
part of a contract for the acquisition of advisory and assistance
services;
2. Architectural and engineering services as defined in the Brooks
Architect-Engineers Act (40 U.S.C. 1102);
3. Research on theoretical mathematics and basic research involving
medical, biological, physical, social, psychological, or other
phenomena.
Civilian exclusions:
OMB Circular A-11:
1. Auditing of financial statements;
2. Information technology consulting services, which have large scale
systems acquisition and integration or large scale software development
as their primary focus;
3. Personnel appointments and advisory committees;
4. Contracts with the private sector for operation and maintenance of
information technology and telecommunication services;
5. Architectural and engineering services as defined in FAR 36.102 (40
U.S.C. 541);
6. Research on theoretical mathematics and basic medical, biological,
physical, social, psychological, or other phenomena.
Defense exclusion:
DOD Financial Management Regulation:
1. Activities that are reviewed and/or acquired in accordance with the
OMB Circular A-76 program;
2. Architectural and engineering services for construction and
construction management services procured in accordance with FAR Part
36;
3. Day-to-day operation of facilities and housekeeping services and
functions;
4. Routine maintenance of systems, equipment, and software; routine
administrative services; printing services; and direct advertising
(media) services;
5. Initial training services acquired as an integral part of the
procurement of weapon systems, automated data processing systems,
equipment or components, and training obtained for individual
professional development;
6. Basic operation and management contracts for government-owned,
contractor-operated facilities;
7. Clinical and medical services for direct health care;
8. Automated date processing and/or telecommunication functions and
related services controlled in accordance with Title 41, Federal
Information Resources Management Regulation (FIRMR), Code of Federal
Regulations, Part 201;
9. Automated data processing and/or telecommunications functions and
related services exempted from FIRMR control pursuant to Sec. 2315 of
Title 10 U.S.C. and reported in Budget Exhibit 43a, "Report on
Information Technology Systems" of DOD 7110.1-M;
10. Services supporting the policy development, management, and
administration of the Foreign Military Sales Program not paid for with
funds appropriated by Congress;
11. Services acquired by or for a program office to increase design
performance capabilities of existing or new systems or where they are
integral to the logistics support and maintenance of a system or major
component and/or end item of equipment essential to the operation of
the system before final government acceptance of a complete hardware
system;
12. Research on theoretical mathematics and basic medical, biological,
physical, social, psychological, or other phenomena;
13. Auctioneers, realty-brokers, appraisers, and surveyors;
14. Services procured with Defense Environmental Restoration Account
funds.
Sources: FAR § 37.202, and OMB Circular No. A-11 Budget Object Class
25.1 (civilian exemptions) and DOD Financial Management Regulation
7000.14-R (defense exemptions).
[End of table]
[End of section]
Appendix IV: Comments from the Department of the Treasury:
Department Of The Treasury:
Assistant Secretary:
Washington, DC:
March 18, 2008:
Mr. John Hutton:
Director, Acquisition and Sourcing Management:
Government Accountability Office:
441 G Street NW:
Washington, DC 20548:
Dear Mr. Hutton:
In response to your February 28, 2008 request for comments, we have
reviewed the draft report Federal Contracting: Congressional Action
Needed to Address Longstanding Problems with Reporting of Advisory and
Assistance Services (GAO-08-319). We have no comments on the draft
report and agree with the findings.
We appreciate the opportunity to review and respond to the draft
report. Please contact Thomas A. Sharpe, Jr., Office of the Procurement
Executive, telephone (202) 622-1039, e-mail address
Thomas.Sharpena@do.treas.gov, for further information or action
associated with review of Treasury contracts for advisory and
assistance services.
Sincerely,
Signed by:
Peter B. McCarthy:
Assistant Secretary for Management, and Chief Financial Officer:
[End of section]
Footnotes:
[1] Pub. L. No. 103-355 § 2454.
[2] GAO, Contract Management: No DOD Proposal to Improve Contract
Service Costs Reporting, [hyperlink, http://www.gao.gov/cgi-bin/getrpt?GAO-01-295]
(Washington, D.C.: Feb. 16, 2001).
[3] A task order contract is a contract for services that does not
procure or specify a firm quantity of services (other than a minimum or
maximum quantity) and that provides for the issuance of orders for the
performance of tasks during the period of the contract.
[4] Pub. L. No. 109-364, § 834 (2006).
[5] The Act directed us to report to Congress on several aspects of
A&AS, including the extent to which agencies require A&AS for periods
greater than 5 years; the extent to which A&AS is provided by the same
contractors under recurring contracts; the rationale for contracting
for A&AS that is needed on a continuous basis, rather than performing
the services with government employees; the contract types and
oversight mechanisms used; and actions taken by the government to
prevent organizational conflicts of interest and improper personal
services contracts for A&AS. We met the requirements of this mandate
with our briefings in the fall of 2007.
[6] The Department of Health and Human Services' National Institutes of
Health identified 4,319 A&AS contract actions of the 6,373 from which
our randomly selected contract files were drawn.
[7] GAO, Budget Object Classification: Origins and Recent Trends,
[hyperlink, http://www.gao.gov/cgi-bin/getrpt?GAO/AIMD-94-147]
(Washington, D.C.: September 1994) and GAO, Budget Function
Classifications: Origins, Trends and Implications for Current Uses,
[hyperlink, http://www.gao.gov/cgi-bin/getrpt?GAO/AIMD-98-67]
(Washington, D.C.: February 1998).
[8] Federal Acquisition Streamlining Act of 1994, Pub. L. No. 103-355,
§ 1004, § 1054 (1994).
[9] 10 U.S.C. § 2304b (2008) and 41 U.S.C. § 253i (2008).
[10] Because the focus of this report is on A&AS budget reporting, we
did not address compliance with the multiple award provisions or the
various other A&AS-specific requirements in the U.S. Code, including,
for example, those in 7 U.S.C. § 2207a, 10 U.S.C. § 2399(e), or 41
U.S.C. § 419.
[11] Exceptions to this limitation are if the contractor is a Federally
Funded Research and Development Center or if such functions are
otherwise authorized. FAR 37.203(d).
[12] Acquisition Advisory Panel, Report of the Acquisition Advisory
Panel of the Office of Federal Procurement Policy and the United States
Congress (January 2007).
[13] FAR Subpart 37.5 establishes responsibilities for implementing
OFPP Policy Letter 93.1.
[14] Air Force Audit Agency, F2006-0001-FC3000, Support Contract Data
Validation (Feb. 7, 2006).
[15] Transmittal Memorandum No. 1, 58 Fed. Reg. 63593-01 (1993), 59
Fed. Reg. 789 (1994).
[16] Under the schedule program, GSA offers contracts that provide
agencies with a simplified process intended to obtain commercial
supplies and services at bulk prices.
[17] This number excludes the 59 actions that were misidentified as
A&AS.
[18] 10 U.S.C § 2304b and 41 U.S.C § 253i authorize the use of task
order contracts for A&AS, but limit ordering periods to 5 years unless
a longer period is provided by law.
[19] Seaport (Naval Sea Systems Command headquarters only) and Seaport-
e (enterprisewide) provide a secure automated, Web-based procurement
process and a single point for acquiring and administering task orders
for professional, engineering, and support services.
[20] Naval Audit Service, N2005-0041, Contracts for Studies and Levels
of Effort at the Naval Sea Systems Command (Apr. 20, 2005).
[21] That is, they were entered into under a different authority than
10 U.S.C. § 2304b or 41 U.S.C. § 253i, which govern the 5-year limit
for A&AS task order contracts.
[22] See also FAR § 16.500(c) noting that nothing in FAR Subpart 16.5
restricts GSA from entering into schedule, multiple award, or task or
delivery order contracts under other provisions of law.
[23] GAO, Defense Contracting: Improved Insight and Controls Needed
over DOD's Time-and-Materials Contracts, [hyperlink,
http://www.gao.gov/cgi-bin/getrpt?GAO-07-273] (Washington, D.C.:
June 29, 2007).
[24] We designated interagency contracting as a high-risk area in 2005,
noting that while governmentwide use of interagency contracts has
increased, management and oversight had not kept pace. GAO, High Risk
Series: An Update, [hyperlink, http://www.gao.gov/cgi-bin/getrpt?GAO-07-310]
(Washington, D.C.: January 2007).
[25] The OMB MAX A-11 data entry system is the tool agencies use to
enter the data required for the President's budget and mid-session
update as specified in the annual OMB Circular No. A-11.
[26] We retained the Air Force in our contract file review even though
its A&AS contract list included fiscal year 2005 contracts. According
to Air Force officials, the agency prepared its fiscal year 2006 A&AS
obligations reported to OMB using fiscal year 2005 obligations with
appropriate reductions. The result was that A&AS contract lists
provided to GAO contained contract actions that were tied to activities
performed in fiscal year 2005 as opposed to the requested fiscal year
2006 contract actions.
[27] The Department of Health and Human Services' National Institutes
of Health identified 4,319 A&AS contract actions of the 6,373 from
which our randomly selected contract files were drawn.
[28] 31 U.S.C. § 1108(c).
[29] Product and service codes are used in FPDS-NG to identify the
predominant product or service procured under a contract action.
[End of section]
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