Contract Management
Civilian Agency Compliance with Revised Task and Delivery Order Regulations Gao ID: GAO-03-983 August 29, 2003Multiple-award task and delivery order contracts were intended to streamline the acquisition of goods and services. Prior GAO reviews cited concerns that some agencies using these contracts were not attaining the level of competition Congress had initially envisioned. In response, Congress required that additional guidance be published in the Federal Acquisition Regulation and asked GAO if the guidance conformed to the law and agencies were complying with it. To evaluate compliance, GAO examined how agencies provided vendors with a fair opportunity to be considered for orders, clearly described the services or supplies needed, and complied with capital planning requirements.
The revisions to the Federal Acquisition Regulation conform to statutory requirements. The revisions provide additional, though generally limited, guidance on how agencies should implement the fair opportunity process, describe the supplies and services needed, and meet capital planning requirements. Agency officials did not view the regulatory changes as significant, and made minimal changes in their internal policies and procedures. The agencies GAO reviewed provided eligible contractors a fair opportunity to be considered for award of an order in 18 of 26 selected cases. The remaining eight orders were issued using exceptions to the fair opportunity process. Four of those were not adequately justified. The orders GAO reviewed appeared to clearly describe the supplies and services required. However, statements of work for four information technology (IT) services orders were defined broadly, and required subsequent sub-task orders or modifications to completely define the work. Although agencies are required to use performance-based statements of work as widely as possible, only 3 of 22 orders for services met the performance-based criteria. Regulations on capital planning and investment controls for purchases of IT products and services went into effect in August 2002, and agencies are still trying to determine how they will comply with them and who is to be responsible for them. As part of these efforts, several agencies plan to require that their chief information officer certify that the capital planning requirements have been met.
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-03-983, Contract Management: Civilian Agency Compliance with Revised Task and Delivery Order Regulations
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On January 9, 2004, this document was revised to add various
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Report to Congressional Committees:
August 2003:
Contract Management:
Civilian Agency Compliance with Revised Task and Delivery Order
Regulations:
GAO-03-983:
GAO Highlights:
Highlights of GAO-03-983, a report to Congressional Committees
Why GAO Did This Study:
Multiple-award task and delivery order contracts were intended to
streamline the acquisition of goods and services. Prior GAO reviews
cited concerns that some agencies using these contracts were not
attaining the level of competition Congress had initially envisioned.
In response, Congress required that additional guidance be published
in the Federal Acquisition Regulation and asked GAO if the guidance
conformed to the law and agencies were complying with it.
To evaluate compliance, GAO examined how agencies provided vendors
with a fair opportunity to be considered for orders, clearly described
the services or supplies needed, and complied with capital planning
requirements.
What GAO Found:
The revisions to the Federal Acquisition Regulation conform to
statutory requirements. The revisions provide additional, though
generally limited, guidance on how agencies should implement the fair
opportunity process, describe the supplies and services needed, and
meet capital planning requirements. Agency officials did not view the
regulatory changes as significant, and made minimal changes in their
internal policies and procedures.
The agencies GAO reviewed provided eligible contractors a fair
opportunity to be considered for award of an order in 18 of 26
selected cases. The remaining eight orders were issued using
exceptions to the fair opportunity process. Four of those were not
adequately justified.
The orders GAO reviewed appeared to clearly describe the supplies and
services required. However, statements of work for four information
technology (IT) services orders were defined broadly, and required
subsequent sub-task orders or modifications to completely define the
work. Although agencies are required to use performance-based
statements of work as widely as possible, only 3 of 22 orders for
services met the performance-based criteria.
Regulations on capital planning and investment controls for purchases
of IT products and services went into effect in August 2002, and
agencies are still trying to determine how they will comply with them
and who is to be responsible for them. As part of these efforts,
several agencies plan to require that their chief information officer
certify that the capital planning requirements have been met.
What GAO Recommends:
The Departments of Veterans Affairs and Health and Human Services
should review the guidance and training provided to their acquisition
personnel on using the fair opportunity process to ensure that
agencies receive the best value through task and delivery orders. The
Office of Management and Budget should clarify the responsibilities of
acquisition and other staff regarding capital planning for information
technology products and services.
www.gao.gov/cgi-bin/getrpt?GAO-03-983.
To view the full product, including the scope
and methodology, click on the link above.
For more information, contact William Woods at (202) 512-8214 or
woodsw@gao.gov.
[End of section]
Contents:
Letter:
Results in Brief:
Background:
Revised Regulations Conform to Law:
Most Orders Awarded through Fair Opportunity; Some Exceptions Not
Adequately Justified:
Most Orders Clearly Described Requirements, but Few Met
Performance-Based Criteria:
Agencies Are Just Beginning to Address Capital Planning Issues:
Conclusions:
Recommendations for Executive Action:
Agency Comments and Our Evaluation:
Appendixes:
Appendix I: Objectives, Scope, and Methodology:
Appendix II: Key Multiple-Award Contract Legislation and Administrative
Actions:
Appendix III: GAO, Agency Inspector General, and Other Reviews:
Appendix IV: Information on Selected Orders:
Appendix V: Comments from the Department of Veterans Affairs:
Appendix VI: Comments from the Department of Health and Human Services:
Appendix VII: Comments from the General Services Administration:
Figure:
Figure 1: Multiple-award Contract Obligations by Civilian
Agencies, Fiscal Years 1997 through 2002, (Inflation-adjusted
dollars):
Abbreviations:
CIO: chief information officer:
DOE: Department of Energy:
FAI: Federal Acquisition Institute:
FAR: Federal Acquisition Regulation:
FASA: Federal Acquisition Streamlining Act of 1994:
FDA: Food and Drug Administration:
FPDS: Federal Procurement Data System:
FTS: Federal Technology Service:
GSA: General Services Administration:
HHS: Health and Human Services:
ID/IQ: indefinite delivery/indefinite quantity:
IG: inspector general:
IT: information technology:
NASA: National Aeronautics and Space Administration:
OFPP: Office of Federal Procurement Policy:
OMB: Office of Management and Budget:
TVA: Tennessee Valley Authority:
VA: Veterans Affairs:
Letter August 29, 2003:
The Honorable John Warner
Chairman
The Honorable Carl Levin
Ranking Minority Member
Committee on Armed Services
United States Senate:
The Honorable Susan M. Collins
Chairman
The Honorable Joseph I. Lieberman
Ranking Minority Member
Committee on Governmental Affairs
United States Senate:
The Honorable Duncan L. Hunter
Chairman
The Honorable Ike Skelton
Ranking Minority Member
Committee on Armed Services
House of Representatives:
The Honorable Tom Davis
Chairman
The Honorable Henry A. Waxman
Ranking Minority Member
Committee on Government Reform
House of Representatives:
The Federal Acquisition Streamlining Act of 1994 (FASA)[Footnote 1]
provided statutory authority for federal agencies to enter into
multiple-award, task and delivery order contracts. These are contracts
for indefinite quantities of supplies or services that are awarded to
multiple firms from a single solicitation. Requests for delivery of
specific supplies or services are made through individual task or
delivery orders. This type of contract was one of several innovative
procurement methods authorized by FASA for streamlining the acquisition
of goods and services. Since the enactment of:
FASA, however, we have reported that some federal agencies were not
obtaining the level of competition for orders Congress had
envisioned.[Footnote 2]
Congress responded to these and other reports by enacting section 804
of the National Defense Authorization Act for Fiscal Year
2000.[Footnote 3] Section 804 directed that the Federal Acquisition
Regulation (FAR) be revised to provide specific guidance to agencies on
the appropriate use of task and delivery order contracts. Regulations
implementing the statute were issued in two installments, the first in
April 2000, and the second in August 2002. The act required that GAO
evaluate (1) conformance of the regulations with existing law and
(2) compliance by federal agencies with the regulations. In assessing
compliance at selected agencies, we focused on whether these agencies
provided the multiple-award contractors a fair opportunity to be
considered for orders, clearly described the services or supplies
needed, and complied with capital planning requirements.
As agreed with staffs of the committees, we focused our review on
five civilian agencies: the Departments of Energy (DOE), Health and
Human Services (HHS), and Veterans Affairs (VA); the General Services
Administration (GSA); and the National Aeronautics and Space
Administration (NASA). These agencies accounted for two-thirds of the
total contract dollars obligated in fiscal year 2001 by all civilian
agencies.[Footnote 4] We used a judgmentally selected sample of large
orders placed by these five agencies; our findings are not projectable
to the universe of all orders they awarded. We selected for review the
two largest orders reported as:
exceeding $1 million for each unique organizational entity[Footnote 5]
within each of these five agencies.[Footnote 6] In total, we reviewed
26 task and delivery orders.[Footnote 7] The orders covered a range of
products and services; nine were for information technology (IT)
services. Appendix I contains a detailed description of our scope and
methodology.
Results in Brief:
The revised regulations on the appropriate use of multiple-award task
and delivery order contracts conform to statutory requirements. The
revisions provide additional, though generally limited, guidance on how
agencies should implement the fair opportunity process, describe the
supplies and services needed, and meet capital planning requirements.
Agency procurement officials generally did not view the regulatory
changes to be significant and made only minimal changes in their
internal policies and procedures.
The agencies included in our review provided eligible contractors a
fair opportunity to be considered for award for 18 of the 26 selected
orders. Of the remaining eight orders that were issued using an
exception to the fair opportunity process, four were not supported by
adequate justification:
* In two cases, the VA placed orders with pre-selected vendors for
medical equipment, but provided no documentation in the file to justify
the sole-source orders.
* In another case, the Centers for Disease Control and Prevention did
not provide the necessary documentation for an order for vaccine placed
with the only vendor licensed to produce the vaccine.
* In the fourth case, the Food and Drug Administration (FDA) justified
a sole-source award as a logical follow-on to an original order, but
the justification did not meet the criteria for such an award.
In general, the orders we reviewed appeared to clearly describe the
supplies and services required. The statements of work for four IT
service orders, however, were defined only in broad terms and required
subsequent sub-task orders or modifications to completely define the
work. Although the revised FAR requires agencies to use performance-
based statements of work for task orders to the maximum extent
practicable, only 3 of 22 orders for services met the requirements for
performance-based contracting, such as providing measurable outcomes
for contractor performance.
Regulations concerning capital planning and investment controls for
purchases of IT products and services did not go into effect until
August 2002, and agencies are still trying to determine how they will
comply with them. Agency officials said they have not yet fully
identified how their acquisition and IT communities will meet capital
planning requirements for IT orders. However, as part of their efforts
to meet the new requirements, several agencies plan to require their
chief information officer (CIO) to certify that capital planning
requirements have been met.
This report contains recommendations to the Secretaries of Veterans
Affairs and Health and Human Services to review the guidance and
training provided to their acquisition personnel and to the Director of
the Office of Management and Budget (OMB) to work with the Federal
Acquisition and CIO Councils to promote enhanced compliance with
FAR requirements concerning capital planning.
Background:
Multiple-award task and delivery contracts are contracts for indefinite
quantities of goods and services that have been awarded to a number
of firms under one solicitation. The purpose of such contracts is to
establish a group of pre-qualified contractors to compete under
streamlined administrative procedures for orders to perform work or
deliver products during the contract period. Orders may be placed by
the agency awarding the contract or, in the case of multi-agency
contracts, by other authorized agencies. These interagency orders can
be an advantageous and cost-effective way to meet an agency's
requirements using another agency's existing contract. Multiple-award
task and delivery order contracts do not specify a firm quantity of
supplies or services, but instead identify minimum quantities for each
contractor and maximum quantities overall. Orders for specific services
or goods must be within the general scope of the contract.
In 1994, Congress enacted FASA[Footnote 8] to establish requirements
for the use of multiple-award task and delivery order contracts to
promote competition and streamline the acquisition process. To ensure
that agencies continued to receive the benefits of competition, FASA
required agencies placing orders against a multiple-award contract to
ensure that--except under specified circumstances--contract-holders
are given a fair opportunity to be considered for the award of task or
delivery orders under the contract. In addition, FASA required that
orders placed under these contracts have statements of work that
clearly specify all tasks to be performed or products to be delivered.
To help contacting officers implement FASA, the Office of Federal
Procurement Policy (OFPP) provided a guidebook on best practices when
using task and delivery order contracts.[Footnote 9]
The Clinger-Cohen Act of 1996[Footnote 10] facilitated the use of
multiple-award contracts by authorizing multi-agency
contracts[Footnote 11] and governmentwide acquisition
contracts[Footnote 12] to acquire IT products and services. These
contract vehicles were intended to reduce the overhead associated with
individual acquisitions while helping the government increase its
leverage to encourage vendors to offer lower prices. In addition, the
Clinger-Cohen Act requires that agencies manage IT multiple-award
contracts by establishing a capital planning process to select,
control, and evaluate IT products and services and requires that the
CIO and procurement officials work together to establish clear lines of
accountability to realize the acquisition's benefits. Appendix II
provides information on FASA, Clinger-Cohen, and other key legislation
and administrative actions governing the use of multiple-award
contracts.
Use of Multiple-award Contracts Increased but Abuses Identified:
Multiple-award contracts can be an expedient way for the government
to acquire goods and services. As can be seen in figure 1, agencies are
increasingly turning to these contract vehicles. For the five agencies
we reviewed, orders placed against multiple-award contracts increased
from over $300 million in 1997 to about $2.1 billion in 2002. Moreover,
task and delivery orders account for an increasing share of procurement
dollars, increasing from 4 percent of dollars obligated in 1997 to over
7 percent in 2002 governmentwide.
Figure 1: Multiple-award Contract Obligations by Civilian
Agencies, Fiscal Years 1997 through 2002, (Inflation-adjusted
dollars):
[See PDF for image]
Notes: Obligations adjusted to constant fiscal year 2002 dollars.
Figures exclude obligations for the Tennessee Valley Authority (TVA)
because TVA discontinued reports to the Federal Procurement Data
Systems on September 30, 2000. TVA's reported obligations for orders
were $2.3 billion, $4.1 billion, and $1.7 billion for fiscal years
1997, 1998, and 2000 respectively. Those figures represented between 40
to 84 percent of the agency's total obligations in the same years.
Also, TVA reported a negative $1.0 billion for its obligations in
fiscal year 1999.
[End of figure]
Although use of multiple-award contracts is increasing, awards have not
always been made in a manner consistent with regulations. Our prior
work, agencies' inspector general (IG) reports, and other internal
agency reviews have shown that agencies are not consistently promoting
competition nor justifying exceptions to competition. These reviews
have also concluded that agencies define the work for many task orders
too broadly. (See app. III for a list of prior GAO and agency
IG reports.):
To address these ongoing problems, Congress enacted section 804 of
the National Defense Authorization Act for Fiscal Year 2000.[Footnote
13] The act directed that the FAR be revised to provide guidance to
agencies on the appropriate use of task and delivery order contracts.
The mandated guidance, at a minimum, was to identify specific steps
that agencies should take to ensure that (1) all contractors are
afforded a fair opportunity to be considered for the award of task and
delivery orders; (2) the statement of work for each order clearly
specifies all tasks to be performed or property to be delivered; and
(3) Clinger-Cohen Act requirements for capital planning and investment
control for IT products and services purchases are met.
The FAR implemented the statutory mandate in two parts. The first,
published in April 2000, was intended to provide improved guidance on
providing a fair opportunity to compete for orders, and preparing
clearer statements of work.[Footnote 14] The second, published in
August 2002, addressed capital planning requirements for IT
acquisitions[Footnote 15] and incorporated certain changes made to
address issues raised by a GAO report on the use of multiple-award
contracts to procure IT services.[Footnote 16]
Revised Regulations Conform to Law:
The revisions to the FAR published in response to section 804 of the
National Defense Authorization Act for Fiscal Year 2000 conform to
statutory requirements. The revisions provide additional, though
generally limited, guidance for each of the areas mentioned in the
statute. Some procurement officials at the agencies we reviewed advised
us that they viewed the revisions to the FAR as minimal, and
consequently made few, if any, changes to their guidance or training.
FAR Revisions Provide Additional Guidance:
Pursuant to the direction of section 804, the FAR was revised to
provide additional guidance concerning the award of task and delivery
orders. With respect to fair opportunity, the guidance added provisions
making the consideration of price mandatory, and specifying a few
additional elements to be considered when developing fair opportunity
procedures. Specifically, the contracting officer should consider
(1) the potential impact on other orders placed with the contractor and
(2) the minimum ordering requirements contained in the
contract.[Footnote 17] In addition, the FAR now requires that
contracting officers document in the contract file any trade-offs among
cost and non-cost considerations. Further, if the agency is using the
logical follow-on exception, the rationale must describe why the
relationship between the initial order and the follow-on is logical in
terms of scope, period of performance, or value. According to OFPP
officials, this additional guidance was inserted to respond to a GAO
recommendation that the FAR discourage agencies from awarding follow-on
orders whose scope or costs significantly exceed those orders for which
contractors were provided an opportunity to be considered.[Footnote 18]
With respect to describing the services or supplies to be provided
under task or delivery orders, the FAR now stresses the importance of
clearly describing the requirements so that the full cost or price for
the performance of the work can be established when the order is
placed.[Footnote 19] The regulation also provides that agencies should
use performance-based statements of work for services to the maximum
extent practicable.
On capital planning, the Clinger-Cohen Act[Footnote 20] requires
agencies to design a process for maximizing the value of IT purchases
and for assessing and managing the risks associated with them. The
revised regulations explicitly identify certain steps that must be
taken for each order for IT products and services placed against the
Federal Supply Schedule, or against either another agency's
governmentwide acquisition contract or multi-agency contract. These
steps include documenting (1) how the capital planning and investment
control requirements of the Clinger-Cohen Act will be met[Footnote 21]
and (2) why placing an order benefits the government.[Footnote 22] Pre-
existing regulations, however, permit agencies to continue using
previously developed plans rather than revise those plans to include
the new requirements specified by the section 804 revisions.[Footnote
23]
Agencies Made Limited Changes to Guidance and Training:
Representatives from the agencies in our review told us they did not
view the regulatory revisions published in response to the
authorization act requirement as significantly different from what was
previously in the FAR and, therefore, generally made minimal, if any,
changes to their guidance and training. DOE and HHS sent to their
contracting officials supplemental notices on the use of multiple-award
contracts and proper statements of work. GSA sent a supplemental notice
on the requirement that contract-holders be given a fair opportunity to
be considered for orders. DOE also added a section on fair opportunity
in its guidance on the use of multiple-award contracts as a result of
section 804.
With respect to training, only DOE acquisition officials saw a need
to revise their training materials to provide additional focus on the
requirements to provide a fair opportunity to be considered for orders,
and to develop clear statements of work. DOE provided specific training
on providing a fair opportunity. Other agency officials explained that
they saw no need for specific training on those issues because problems
that may have been identified earlier had been addressed through
memoranda and other means. None of the agencies we spoke with
incorporated capital planning:
and investment control requirements into their training on multiple-
award contracts or task and delivery orders. An official for the
Federal Acquisition Institute, which, under OFPP's direction, is
charged with supporting and developing the civilian acquisition
workforce, stated that the Institute also does not currently provide
specific training on capital planning and investment
requirements.[Footnote 24] According to a GSA official, the Federal
Acquisition Institute is reviewing all of its courses to validate their
conformance to current laws and regulations and plans to update its
course on acquisition planning to address capital planning and
investment requirements.
Most Orders Awarded through Fair Opportunity; Some Exceptions Not
Adequately Justified:
For 18 of the 26 orders we reviewed, the agencies provided all eligible
vendors a fair opportunity to be considered for the award. For the
remaining eight orders, the agencies used exceptions to the fair
opportunity process. On four of those eight orders, however, the agency
did not comply with the requirements for excluding contract-holders
from an opportunity to be considered for the order. Appendix IV
contains details of all the orders we reviewed.
Most Orders Awarded Through Fair Opportunity Process:
Eighteen of 26 orders were awarded through the fair opportunity
process. In these 18 cases, the agency notified every eligible vendor
of the intent to place an order, provided them a copy of the statement
of work, and gave them an opportunity to submit an offer.[Footnote 25]
In some cases, this notice was provided electronically. The notices of
upcoming orders we reviewed appeared to allow sufficient time--ranging
from 5 to over 30 days--for vendors to prepare their offers. Some
notices allowed contractors to express initial interest, and then
provided additional time for proposal development. In other cases,
contracting officers held question and answer sessions with vendors to
help them prepare their proposals. For construction and renovation
orders, the agencies usually provided drawings and specifications and
conducted tours of the sites.
We noted one case, however, where the contracting officer prematurely
awarded an order before the response period identified in the
opportunity notice had expired. In that instance, the VA awarded a
$1.2 million order for leased satellite bandwidth 9 days prior to the
18-day response period deadline. Agency officials acknowledged that the
action was a breach of their procurement procedures, and said the
mistake resulted from a miscommunication between the two contracting
officers involved. The VA officials also said that only one offer had
been submitted, and no other sources had responded to the solicitation,
either before or after the award. VA officials indicated that they
would include this case in the agency's annual quality control program
to determine if the problem we noted was systemic.
Exceptions to Fair Opportunity Not Always Justified:
Our review of selected orders found problems with four of the eight
orders awarded using exceptions to the fair opportunity process. There
are four authorized exceptions to the requirement that all contract-
holders receive a fair opportunity to be considered for an award of a
task or delivery order:[Footnote 26]
* Urgency: the need for the supplies or services is so urgent that
providing for fair opportunity would result in an unacceptable delay;
* Unique source: only one contract-holder is capable of providing the
supplies and services at the level of quality required because they are
unique or highly specialized;
* Logical follow-on: the order must be issued on a sole-source basis in
the interest of economy and efficiency because it is a logical follow-
on to a previous order under the contract, provided that all contract-
holders were given a fair opportunity to be considered for the original
order; and:
* Minimum guarantee: the order must be placed with a specific
contract-holder in order to satisfy a contractual minimum guarantee.
Three orders awarded using the unique source exception were not
supported by adequate justification in the contract files.
Specifically:
* Two cases--worth $971,029 and $327,259 respectively--involved the
purchase of medical equipment at two VA Medical Centers. The
contracting officers asked that the requesting facilities select one of
the contract-holders on the multiple-award contract to receive the
order. One of the contracting officers explained that having the
facility staff pre-select the contract-holders to be awarded the order
was equivalent to having conducted a technical evaluation, and
therefore saved time. Although contracting officials classified the two
orders as exceptions to fair opportunity, they could not provide
adequate documentation justifying awarding the orders on a sole-source
basis. In discussing these two cases with VA National Acquisition
Center officials, the officials said that the improper use of
exceptions was an ongoing problem and provided a VA directive issued in
January 2003 that addressed use of exceptions to fair opportunity,
among other things. Although the directive discussed the fair
opportunity process, it did not specifically address the type of issue
we found on the orders we reviewed.
* In a third case, involving a Centers for Disease Control and
Prevention order worth $16.8 million, the contracting officer solicited
the only vendor on the multiple-award contract that could supply a
particular polio vaccine. The contracting officer did not provide
necessary justification to support the use of the unique source
exception to fair opportunity. In the contracting officer's view, this
action did not require a justification because he had notified the only
vendor capable of supplying the vaccine. In our view, however, this
order should have been supported by a written justification for using
the unique source exception.
* The fourth problematic order, for IT services worth $2.8 million,
was issued by the FDA using the logical follow-on exception to fair
opportunity. This exception is only available when the original order
had been awarded using the fair opportunity process. Although FDA
sought to justify its sole-source order in the interest of economy and
efficiency, the use of the logical follow-on exception was improper
because the original order had not been awarded through the fair
opportunity process.
Reviews by GSA, NASA, and the VA IG conducted since the implementation
of the new FAR guidelines have also found that contracting officers did
not always adequately document their justifications for the use of
exceptions to the fair opportunity process. Appendix III provides more
information on these reviews.
Most Orders Clearly Described Requirements, but Few Met
Performance-Based Criteria:
The orders we reviewed generally appeared to comply with the
requirement of the revised regulation to clearly describe the supplies
or services needed. Four of the 22 orders for services, however,
contained broadly defined statements of work that required the issuance
of subsequent sub-task orders or modifications to better define the
work. Although the revised FAR encourages agencies to use performance-
based statements of work to the maximum extent practicable, only 5 of
the 22 services task orders reported using performance-based
requirements; and only 3 of those met the performance-based contracting
criteria, such as providing measurable outcomes for contractor
performance.
Some Statements of Work Required Clarifying Sub-Task Orders
or Modifications:
Four of the 22 task orders for services we reviewed, all involving
IT services, contained broadly defined statements of work that needed
to be further clarified through the use of sub-task orders or
modifications. For example,
* NASA's Langley Research Center, using a GSA contract, awarded a
$5.4 million task order to provide IT services to support basic and
applied research in such areas as aeronautics, earth sciences, space
technology, structures and materials. The statement of work identified
general requirements and indicated that the agency would issue task
assignments for specific tasks within the work areas.
* The FDA issued a $500,000 IT service order to develop a decision
support system. The original statement of work was broad, and the
agency modified the order 6 months later to better define the existing
requirements and to add new requirements. A year later, the agency
modified the order further by adding more requirements and increasing
the level of effort required. Each of these modifications increased the
order by $1.5 million, bringing the total cost for the order to about
$3.6 million, or a 7-fold increase.
Revised FAR Encourages the Use of Performance-Based Statements of Work,
but Few Orders Met Criteria:
Both OFPP guidance[Footnote 27] and the revised FAR[Footnote 28]
encourage agencies to use performance-based criteria to develop
statements of work for service contracts and task orders to the maximum
extent practicable. A performance-based statement of work defines the
government's requirements in terms of objectives and measurable
outputs. As such, performance-based contracts and orders clearly spell
out the desired end result expected of the contractor. The precise
manner in which the work is to be performed is left up to the
contractor. Contractors are given as much freedom as possible in
figuring out how best to meet the government's performance objective.
Of the 22 orders for services in our review, only 5 reported using the
performance-based service contracting approach. Of those, we found
that three actually met the performance-based criteria. The other two
did not meet the criterion requiring measurable outcomes to assess
contractor performance. An earlier GAO review of performance-based
contracting also found that many contracts agencies characterized as
performance-based did not meet all the criteria and that more guidance
and study were needed to understand how effectively agencies are
applying this technique.[Footnote 29] In July 2003, after the
completion of our review, OFPP adopted recommendations developed by an
inter-agency task force to improve agency use of performance-based
contracting.[Footnote 30]
Agencies Are Just Beginning to Address Capital Planning Issues:
Revised regulations concerning capital planning requirements for
purchases of IT products and services went into effect August 2002, and
agencies have only recently begun to determine how they will meet them.
Agencies are currently revising their capital planning and investment
control processes, but to date are uncertain about who or what entity
within each agency will be accountable for enforcing compliance at the
IT order level. Three of the agencies require certifications from the
customer agencies' CIO attesting that capital planning has been done
for the order.
The August 2002 FAR revisions clarified that the Clinger-Cohen Act
requirements for capital planning and investment control apply to
orders, as well as contracts, for IT products and services. The FAR
requires agency acquisition personnel to state in acquisition
plans[Footnote 31] how capital planning and investment control
requirements will be met for IT orders and how the orders benefit the
government.[Footnote 32] Agencies recently began revising and
implementing their capital planning and investment control acquisition
processes to address these requirements. For example, the CIOs at VA,
DOE, and HHS recently established policies that require CIO
certification for IT acquisitions. These certification requirements are
limited to certain purchases. For example, DOE requires certifications
for all headquarters purchases of IT services in excess of $200,000;
HHS requires approval for IT contracts and orders over $500,000; and
VA's CIO certifies and approves all IT purchases above $250,000. In
addition, VA reviews IT purchases below $250,000 to ensure compliance
with technical and security standards before they are approved by the
CIO's office. All three agencies' acquisition offices are revising
their acquisition policies to reflect the new requirements. NASA and
GSA plan to incorporate capital planning requirements in their program
managers' guidance.
OMB's 1997 guidance on the Clinger-Cohen Act requires agency heads
to ensure that CIO and senior procurement officials work together to
assign responsibilities and establish clear lines of accountability for
orders placed against multi-agency contracts.[Footnote 33] In
addition, OMB officials informed us that its Capital Planning and
Investment Control policy requires that contracting officers be part of
the project team. However, based on our discussions with agency
officials about responsibility for task and delivery orders,
acquisition and capital planning officials are still not clear about
who will be accountable for ensuring compliance with capital planning
requirements.
Conclusions:
The government is increasingly relying on multiple-award task and
delivery order contracts to obtain goods and services because, when
used appropriately, these contracts can streamline the procurement
process while maintaining competition. Some agencies, however, notably
VA and HHS, did not always comply with requirements to provide a fair
opportunity to be considered for orders or adequately justify an
exception. We believe that these problems point to the need for VA and
HHS to ensure that their acquisition personnel receive appropriate
training in the use of task and delivery order contracts.
Capital planning for IT acquisitions helps to ensure that IT products
and services are acquired in an economical and efficient manner
consistent with an overall acquisition strategy. However, we found that
agency policies and procedures do not yet clearly delineate the roles
and responsibilities of IT and acquisition officials to ensure
accountability for capital planning and investment control for IT goods
and services. Consequently, without clear lines of responsibility, the
benefits of capital planning provisions may not be achieved.
Recommendations for Executive Action:
Because of the limited nature of our sample, we do not know the
extent to which the problems identified are systemic or unique to our
review. Nevertheless, these findings are of sufficient concern that
both the Secretaries of Veterans Affairs and Health and Human Services
should review the guidance and training provided to their contracting
officials to ensure that the regulations are properly understood and
applied.
Also, to ensure accountability for capital planning and investment
control requirements for IT goods and services, we recommend that
the Director of the Office of Management and Budget, working with
the Federal Acquisition Council and the CIO council, clarify the roles
and responsibilities of the acquisition and information technology
communities for capital planning for IT products and services.
Agency Comments and Our Evaluation:
We received written comments on a draft of this report from VA, HHS,
and GSA. NASA informed us by e-mail that it concurred with the report.
DOE did not provide comments. OMB provided e-mail comments suggesting a
number of technical changes, which we incorporated where appropriate.
VA concurred with our recommendation, but took exception to our
conclusions on two of the cited cases. Specifically, in the two cases
where VA medical centers pre-selected the multiple-award vendor to
receive delivery orders, VA did not agree with our conclusion that the
orders were issued on a sole-source basis. VA apparently believes that
all of the vendors on the contracts had a fair opportunity to be
considered for the orders. We do not agree. While we recognize that the
FAR provides agencies with flexibility in developing ordering
procedures, the FAR expressly provides that agencies may not use any
method that involves the designation of preferred awardees.[Footnote
34] In addition, agency documents and contracting officials at the VA
National Acquisition Center characterized the two orders as being
awarded through an exception to fair opportunity. Accordingly, there
should have been documentation justifying the use of an exception. In
neither of the two cases could the contracting officers produce the
required documents. We modified the report to make clearer that VA
officials at the National Acquisition Center considered these orders to
be awarded through the use of an exception. On the matter of capital
planning, the VA noted that its CIO not only certifies but also
approves IT purchases above $250,000. We included that information in
our report. VA also provided updated status on some of its IG and
internal audit reviews, which we also reflected in the report. VA's
comments appear in appendix V.
HHS did not concur with our recommendation regarding its training
and guidance. The department noted that it had adequate training for
its contracting officials. In our view, however, HHS needs to review
the adequacy of the training provided its contracting officials, given
the problematic orders noted in the report. HHS also took exception to
two of our cited examples. Specifically, HHS disagreed with our
conclusion that an order it characterized as being awarded through the
fair opportunity process should have, more appropriately, been
characterized as being awarded as an exception to fair opportunity.
Because there was only one supplier of that particular vaccine being
bought, we believe that this order required the use of the unique
source exception along with the documentation justifying this
exception. In the other case, where we determined the logical-follow
exception was used inappropriately, HHS stated that the order was not
awarded using that exception. However, all contract file documentation,
including the sole source justification, referred to this order as a
logical follow-on to previous work. HHS' comments appear in
appendix VI.
GSA agreed in general with our findings, but suggested additional
language concerning efforts by the Federal Acquisition Institute (FAI)
to update its training offerings. We revised our report to acknowledge
FAI's efforts. GSA's comments appear in appendix VII.
We are sending copies to interested congressional committees; the
secretaries of Energy, Health and Human Services, and Veteran's
Affairs; the Administrator of General Services; and the administrators
of the National Aeronautics and Space Administration, and the Office of
Federal Procurement Policy. We will also make copies available to
others upon request. In addition, the report will be available at no
charge on the GAO Web site at [Hyperlink, http://www.gao.gov/] http://
www.gao.gov.
Please contact me at (202) 512-8214, or Hilary Sullivan at (214) 777-
5652, if you have any questions regarding this report. Major
contributors to this report were Thom Barger, John Clary, Judith
Collins, Lester Diamond, Robert Swierczek, and Ralph O. White.
William T. Woods
Director
Acquisition and Sourcing Management:
Signed by William T. Woods:
[End of section]
Appendixes:
[End of section]
Appendix I: Objectives, Scope, and Methodology:
The National Defense Authorization Act for Fiscal Year 2000 required
that the Federal Acquisition Regulation be revised to provide agencies
guidance on the use of task and delivery order contracts and that GAO
evaluate whether (1) the revised regulations conform to the law, and
(2) federal agencies are complying with the regulations.[Footnote 35]
To evaluate whether the regulations conform to the law, we analyzed the
regulations written to implement section 804 to determine if all of the
statutory obligations were addressed in the regulations. In addition,
we compared the regulations as they existed prior to and after the
revisions to determine the extent to which the revised regulations
provided specific additional guidance on the steps agency should follow
in awarding and using multiple-award task and delivery order contracts.
As agreed with staff from the congressional committees to which this
report is addressed, in order to assess agency compliance with the
regulations we focused our review on the five largest agencies,
excluding the Department of Defense, in terms of total annual
procurement expenditures: DOE, HHS, VA, GSA, and NASA. Together, these
agencies account for two-thirds of procurement spending by all civilian
agencies. In addition, these agencies are among the largest in terms of
the number of orders placed against multiple-award contracts. In fiscal
year 2001, these agencies obligated nearly $1 billion through these
vehicles.[Footnote 36] Based on a judgmental sample, we determined
whether these selected agencies (1) provided eligible multiple-award
contractors a fair opportunity to be considered for orders and
adequately justified the use of exceptions for sole source orders,
(2) provided clear and specific statements of work, and (3) complied
with capital planning requirements for contracts and orders for IT
products and services. We reviewed policies and procedures and
interviewed acquisition, procurement, and Chief Information Office
officials at DOE, VA, HHS, GSA, and NASA.
In selecting a judgmental sample, we first identified 142 Federal
Procurement Data System (FPDS)[Footnote 37] records representing task
and delivery orders for $1 million or more awarded by the five agencies
in fiscal year 2001, the latest data available. We next selected the
two (one if only one was awarded) largest orders awarded by each unique
organizational entity within the five agencies--resulting in the
selection of 25 cases. In addition, we included the five orders over
$1 million that were used to prepare and verify our methodology for
reviewing contract files and preparing our case studies. As a result,
we initially selected 30 orders for review. In reviewing the contract
files, however, we determined that four orders were actually placed
against single award indefinite delivery/indefinite quantity
contracts. We excluded those four orders, leaving us with 26 case
studies. We provided each location with summaries of the orders we had
reviewed and obtained their concurrence on our findings. Appendix IV
contains information on the 26 orders selected for our review.
In addition to the errors noted above, we identified numerous other
FPDS data errors during the course of our review. We, therefore,
limited our use of FPDS data to identifying general multiple-award
contract trends, as shown in figure 1, and to selecting our sample. We
will be providing additional information on FPDS errors in a separate
letter.
We conducted our review between October 2002 and August 2003 in
accordance with generally accepted government auditing standards.
[End of section]
Appendix II: Key Multiple-Award Contract Legislation and Administrative
Actions:
Legislation or administrative action: The Federal Acquisition
Streamlining Act of 1994 (FASA), P.L. No. 103-355; Description and
impact: Established a general preference for use of multiple-award
contracts and required that contractors on multiple-award contracts
have a fair opportunity to be considered for orders in excess of
$2,500. Made multiple-award contracts mandatory for advisory and
assistance services contracts exceeding $10 million and 3 years
duration.
Legislation or administrative action: The Economy Act of 1932, relevant
provision at 31 U.S.C. 1535; Description and impact: Authorized
agencies to enter into mutual agreements to obtain supplies or services
by inter-and intra-agency acquisition. Stipulated the requirements and
limitations for multi-agency task and delivery orders for purchases of
goods and services.
Legislation or administrative action: Federal Property and
Administrative Service Act of 1949, relevant provision at 41 U.S.C.
253j(c); Description and impact: Required a statement of work in each
task or delivery order issued that clearly specifies all tasks to be
performed or property to be delivered under the order.
Legislation or administrative action: Clinger-Cohen Act of 1996, P.L.
No. 104-106, section 5122, relevant provision at 40 U.S.C. 11312;
Description and impact: Established capital planning requirements for
purchasing IT products and services. Required agency heads to establish
a process, integrated with agency budget and financial processes, to
maximize the value and manage the risks related to purchases of IT
services and products.
Legislation or administrative action: Clinger-Cohen Act of 1996, P.L.
No. 104-106, section 5124(a)(2) relevant provision at 40 U.S.C.
11314(a)(2); Description and impact: Formerly known as the Information
Technology Management Reform Act of 1996, this act authorized agencies
to use multi-agency contracts to purchase IT services and products, and
also authorized OMB to designate executive agents for governmentwide
contracts for IT.
Legislation or administrative action: Office of Management and Budget
(OMB) Policy Letter M-97-07; Description and impact: Required agency
heads to ensure that their CIOs and senior procurement executives work
together to assign responsibilities and establish clear lines of
accountability for multiple agency contracts.
Legislation or administrative action: National Defense Authorization
Act for Fiscal Year 2000, P.L. No. 106-65, section 804; Description
and impact: Required at a minimum, the content of the FAR guidance on
use of task and delivery order contracts provide specific guidance on
the appropriate use of multiple-award contracts and steps agencies
should take to ensure compliance with Clinger-Cohen Act, fair
opportunity, and statement of work requirements.
Source: GAO analysis.
[End of table]
[End of section]
Appendix III: GAO, Agency Inspector General, and Other Reviews:
Agency: DOD;
Report title: Department of Defense, DOD Use of
Multiple Award Task Order Contracts, DOD IG 99-116, (Arlington, VA:
Apr. 2, 1999); Reported findings: Unjustified exceptions to fair
opportunity: The DOD IG found 58 of 66 orders were awarded using
unjustified exceptions to the fair opportunity process;
Recommendation: DOD should establish a goal that 90 percent of the
orders for multiple-award contracts have multiple bidders and identify
strategies to monitor and reduce the number of sole source awards over
a 3-year period.
Report title: U.S. General Accounting Office, Contract
Management: Few Competing Proposals for Large DOD Information
Technology Orders, GAO/NSIAD-00-56; (Washington, D.C. Mar. 20, 2000);
Reported findings: Agency: Unclear statements of work and unjustified
exceptions to fair opportunity: GAO found that DOD made use of the
statutory exceptions to the fair opportunity requirement in 10 of 22
orders reviewed and statements of work were generally defined too
broadly; Recommendation: Agencies should not award follow-on orders
whose scope or costs significantly exceed former related orders and
should not award large undefined orders and subsequently issue sole-
source work orders for specific task orders.
Report title: Department of Defense, Contracts for
Professional, Administrative, and Management Support Services,
DOD IG D-2000-100, (Arlington, VA: Mar. 10, 2000); Reported findings:
Agency: Unclear statement of work, award without fair opportunity and
unjustified exceptions to fair opportunity: The DOD IG found that it
was impossible to determine how the scope of work on one task differed
from that of other tasks. In addition, contracting officers did not
provide contractors a fair consideration in 58 of 105 orders reviewed
and used faulty justifications for sole-source exceptions another five
orders; Recommendation: DOD should develop a training course to define
requirements and a time-phased plan with goals and performance measures
to determine improvements in the acquisition of professional,
administrative, and management support services.
Report title: Department of Defense, Multiple Award
Contracts for Services, DOD IG D-2001-189, (Arlington, VA: Sept. 30,
2001); Reported findings: AgencyGSA: Unjustified exception to fair
opportunity: This was a review of 423 orders awarded in fiscal years
2000 and 2001. The DOD IG found that 264 of 304 orders awarded on a
sole-source basis were improperly supported. The report also noted that
82 of 119 orders that were competed received multiple bids;
Recommendation: DOD should establish at least a 75 percent goal to
compete orders and track progress of the use of competition in awarding
orders.
Agency: GSA;
Report title: General Services Administration, Audit of
Federal Technology Service Use of Multiple Award Indefinite Delivery
Indefinite Quantity Contracts, A995288/T/H/Z00008, (Fairfax, VA: Sept.
19, 2000); Reported findings: Unclear statements of work: A sample of
48 orders from Federal Technology Service (FTS) found that less than
15 percent contained performance-based statements of work;
Recommendations: GSA should advance fair opportunity and best value at
FTS by using performance-based orders. Change several operational
processes that inhibit fair opportunity.[A].
Report title: U.S. General Accounting Office,
Telecommunications: GSA Needs to Improve Process for Awarding Task
Orders for Local Service, GAO-03-369, (Washington, D.C. Apr. 4, 2003);
Reported findings: AgencyNASA: Award without fair opportunity: This
report noted that GSA did not establish and follow a consistent process
to ensure that each vendor was accorded a fair opportunity to be
considered for each order; Recommendations: Establish a common process
for GSA to consistently follow when considering fair opportunity for
vendors.[B].
Agency: NASA;
Report title: National Aeronautics and Space
Administration, Multiple Award Contracts, IG-01-040, (Washington,
D.C. Sept. 28, 2001); Reported findings: Award without fair
opportunity: The NASA IG found that two NASA Centers, Langley and
Johnson, awarded 51 sole source orders without fair competition. As a
result, NASA had not received the benefits of competitive bids and may
have paid more for goods and services than necessary; Recommendations:
Center Directors should direct contracting officers to fairly consider
all contractors who submit bids for orders under multiple-award
contracts.[C].
Agency: VA;
Report title: Department of Veterans Affairs, Review of
Management Consultant Contract, VA IG 7R5-E03-014, (Washington, D.C.
Dec. 13, 1996); Reported findings: Unclear statements of work: The VA
IG found that the management consultant contract for IT services failed
to yield requested deliverables due to, among other things, a
nonspecific statement of work; Recommendation: The CIO and the
contracting officer should review statements of work to ensure their
specificity.[D].
Report title: Department of Veterans Affairs, Business Review,
VAMC Cleveland, OH, (Washington, D.C. Nov. 9, 2001); Reported
findings: Agency: Award without fair opportunity and full and open
competition: This business review of the VA Cleveland Medical Center
found that 54 out of 63 (85 percent) orders and contracts were awarded
without competition; Recommendations: Contracting officers must
justify all sole-source procurements.[E].
Report title: Department of Veterans
Affairs, Business Review, VAMC Cleveland, OH, (Washington, D.C. June
13, 2002); Reported findings: AgencyDOD, HHS and others: Award without
fair opportunity and full and open competition: This business review
noted that 59 of 76 sole-source contracts and orders reviewed
(78 percent) were inadequately documented to support the award
decision; Recommendations: Contracting officers ensure that
files contain adequate documentation supporting award decisions.[E].
Agency: DOD, HHS and others;
Report title: U.S. General Accounting
Office, Acquisition Reform: Multiple-award Contracting at Six Federal
Organizations, GAO/NSIAD 98-215, (Washington, D.C. Sept. 30, 1998);
Reported findings: Award without fair opportunity: GAO found that NIH
had placed orders with preferred contractors rather than providing all
contractors a fair opportunity. It also noted that DOD received only
one proposal for about 44 percent of the orders placed on its multiple-
award contracts for information technology services; No recommendation
but OFPP in its response to the report noted a need for regulations to
prohibit the practice of designating preferred contractors when
announcing orders for competition.[F].
Source: GAO analysis.
[A] According to GSA, corrective actions were completed and the audit
was closed on April 9, 2002.
[B] In a March 31, 2003, letter GSA agreed with the reports'
recommendations and stated that it had implemented new guidance to
ensure that each vendor is accorded a fair opportunity to be considered
for each order.
[C] According to NASA, management concurred with the recommendations
and implemented them at the time the report was issued.
[D] According to VA, the OIG closed this report on January 20, 1998,
with the recommendations implemented.
[E] According to VA, an audit conducted after initiating a corrective
action plan found that less than 1 percent of the procurements were
sole source.
[F] According to the Director of Acquisition Policy and Evaluation, NIH
subsequently discontinued this practice.
[End of table]
[End of section]
Appendix IV: Information on Selected Orders:
Dollars in millions.
Department of Energy:
Procurement Office Washington, DC; Order price[A]: $1.7; Cost or fixed
price: Cost; Fair opportunity (yes or no): Yes; Number of vendors: 6;
Number of bids: 1; Incumbent (yes or no): No.
This order provided for IT services to provide operations support for
six existing petroleum marketing survey systems and three new bi-weekly
surveys. This order was reported on FPDS as a performance-based service
contract.
Operations Office Albuquerque, NM; Order price[A]: $0.2; Cost or fixed
price: Cost; Fair opportunity (yes or no): Yes; Number of vendors: 3;
Number of bids: 3; Incumbent (yes or no): No.
This order provided for services to assist in the preparation of an
Environmental Impact Statement.
River Protection Office Richland, WA; Order price[A]: $1.5; Cost or
fixed price: Fixed; Fair opportunity (yes or no): No; Number of
vendors: N/A; Number of bids: N/A; Incumbent (yes or no): N/A.
This order provided for services to assist in the preparation of an
Environmental Impact Statement.
General Services Administration:
Federal Technology Service New York, NY; Order price[A]: $15.3; Cost or
fixed price: Fixed; Fair opportunity (yes or no): Yes; Number of
vendors: 11; Number of bids: 2; Incumbent (yes or no): No.
This order provided for IT services to develop a secure wireless local
area network.
Federal Technology Service Denver, CO; Order price[A]: $17.6; Cost or
fixed price: Cost; Fair opportunity (yes or no): Yes; Number of
vendors: 11; Number of bids: 1; Incumbent (yes or no): No.
This order provided for IT services for the replacement of
unsupportable legacy equipment and provision of interim support for new
equipment.
Federal Technology Service Fort Worth, TX; Order price[A]: $0.3; Cost
or fixed price: Fixed; Fair opportunity (yes or no): No; Number of
vendors: N/A; Number of bids: N/A; Incumbent (yes or no): N/A.
This order provided for IT services for Bureau of Indian Affairs to
administer logistics servers, integrated systems, maintain databases,
operate a help desk, perform system analysis, and develop and enhance
system interfaces.
Public Building Service Washington, DC; Order price[A]: $1.8; Cost or
fixed price: Fixed; Fair opportunity (yes or no): Yes; Number of
vendors: 4; Number of bids: 3; Incumbent (yes or no): No.
This order provided for services to replace perimeter chilled water
piping at the J. W. Powell Building.
Public Building Service Atlanta, GA; Order price[A]: $1.6; Cost or
fixed price: Fixed; Fair opportunity (yes or no): Yes; Number of
vendors: 5; Number of bids: 5; Incumbent (yes or no): No.
This order provided for services to renovate floors 20 through 22 of
the IRS Wage and Investment Headquarters in the Peachtree Summit
Federal Building.
Public Building Service Atlanta, GA; Order price[A]: $1.5; Cost or
fixed price: Fixed; Fair opportunity (yes or no): Yes; Number of
vendors: 5; Number of bids: 5; Incumbent (yes or no): No.
This order provided for services to renovate floors 9, 12, and 15 of
the IRS Wage and Investment Headquarters in the Peachtree Summit
Federal Building.
Public Building Service Fort Worth, TX; Order price[A]: $1.4; Cost or
fixed price: Fixed; Fair opportunity (yes or no): Yes; Number of
vendors: 6; Number of bids: 3; Incumbent (yes or no): No.
This order provided for services to renovate the U.S. District
Courthouse in Oklahoma City, OK.
Department of Health and Human Services:
Centers for Disease Control Atlanta, GA; Order price[A]: $16.8; Cost or
fixed price: Fixed; Fair opportunity (yes or no): No; Number of
vendors: N/A; Number of bids: N/A; Incumbent (yes or no): N/A.
This order provided for 2.2 million doses of E-IPV Vaccine for the
National Vaccine Stockpile.
Centers for Disease Control Atlanta, GA; Order price[A]: $6.2; Cost or
fixed price: Fixed; Fair opportunity (yes or no): [Empty]; Number of
vendors: Yes; Number of bids: 5; Incumbent (yes or no): 4.
This order provided for architectural and engineering services to
design building 21 on the Roybal Campus.
National Institutes of Health Bethesda, MD; Order price[A]: $4.8; Cost
or fixed price: Cost; Fair opportunity (yes or no): Yes; Number of
vendors: 3; Number of bids: 3; Incumbent (yes or no): No.
This order provided for services to safety test seven HIV-1 DNA vaccine
preparations as required for Investigational New Drug submission prior
to initial clinical evaluation. This order was reported on FPDS as a
performance-based service contract.
National Institutes of Health Bethesda, MD; Order price[A]: $7.1; Cost
or fixed price: Cost; Fair opportunity (yes or no): No; Number of
vendors: N/A; Number of bids: N/A; Incumbent (yes or no): N/A.
This order provided for IT services to maintain the Molecular Biology
database.
Food and Drug Administration Rockville, MD; Order price[A]: $2.8; Cost
or fixed price: Cost; Fair opportunity (yes or no): No; Number of
vendors: N/A; Number of bids: N/A; Incumbent (yes or no): N/A.
This order provided for IT services to develop the requirements for a
web-based portal infrastructure including the provision of strategic
planning, system architecture, system and functional requirements, risk
analysis and workforce process for the Operational and Administrative
System for Import Support on one other unspecified application.
Food and Drug Administration Rockville, MD; Order price[A]: $3.6; Cost
or fixed price: Cost; Fair opportunity (yes or no): No; Number of
vendors: N/A; Number of bids: N/A; Incumbent (yes or no): N/A.
This order provided for IT services to develop the Office of Regulatory
Affairs Decision Support System.
National Aeronautics and Space Administration:
Kennedy Space Center Cape Canaveral, FL; Order price[A]: $3.0; Cost or
fixed price: Fixed; Fair opportunity (yes or no): Yes; Number of
vendors: 5; Number of bids: 3; Incumbent (yes or no): [Empty].
This order provided for services to replace electrical equipment at
power sub-stations and a utility annex.
Kennedy Space Center Cape Canaveral, FL; Order price[A]: $2.4; Cost or
fixed price: Fixed; Fair opportunity (yes or no): Yes; Number of
vendors: 4; Number of bids: 3; Incumbent (yes or no): No.
This order provided for services to construct replacement housing.
Langley Research Center Hampton, VA; Order price[A]: $6.0; Cost or
fixed price: Cost; Fair opportunity (yes or no): Yes; Number of
vendors: 11; Number of bids: 4; Incumbent (yes or no): Yes.
This order provided for IT services to operate the Computational
Analysis and Programming Services. This order was reported on FPDS as a
performance-based service contract.
Langley Research Center Hampton, VA; Order price[A]: $1.3; Cost or
fixed price: Cost; Fair opportunity (yes or no): Yes; Number of
vendors: 3; Number of bids: 1; Incumbent (yes or no): No.
This order provided for services to design the X-43C Research Vehicle.
This order was reported on FPDS as a performance-based service
contract.
Ames Research Center Moffett Field, CA; Order price[A]: $15.7; Cost or
fixed price: Fixed; Fair opportunity (yes or no): Yes; Number of
vendors: 7; Number of bids: 4; Incumbent (yes or no): No.
This order provided for IT services to outsource the acquisition and
maintenance of desktop computers. This order was reported on FPDS as a
performance-based service contract.
Department of Veterans Affairs:
National Acquisition Center Hines, IL; Order price[A]: $1.0; Cost or
fixed price: Fixed; Fair opportunity (yes or no): No; Number of
vendors: N/A; Number of bids: N/A; Incumbent (yes or no): N/A.
This order provided for the purchase of a Computed Tomography Scanner.
National Acquisition Center Hines, IL; Order price[A]: $0.3; Cost or
fixed price: Fixed; Fair opportunity (yes or no): No; Number of
vendors: N/A; Number of bids: N/A; Incumbent (yes or no): N/A.
This order provided for the purchase of a diagnostic X-ray system and
related equipment.
Central Office Washington, DC:
This order provided for the purchase of IT equipment-Internet servers
and related equipment.
Austin Automation Center Austin, TX; Order price[A]: $1.2; Cost or
fixed price: Fixed; Fair opportunity (yes or no): Yes; Number of
vendors: 3; Number of bids: 1; Incumbent (yes or no): Yes.
This order provided for the provision of satellite bandwidth for
nationwide transmittal of educational courses.
Medical Center-Denver Denver, CO; Order price[A]: $2.3; Cost or fixed
price: Fixed; Fair opportunity (yes or no): Yes; Number of vendors: 4;
Number of bids: 1; Incumbent (yes or no): No.
This order provided for the construction of modular buildings for
medical center complex.
Source: GAO.
[A] Order prices are rounded and represent obligations as of the date
of our review.
[End of table]
[End of section]
Appendix V: Comments from the Department of Veterans Affairs:
THE SECRETARY OF VETERANS AFFAIRS WASHINGTON:
August 19, 2003:
Mr. William T. Woods:
Director, Acquisition and Sourcing Management
U. S. General Accounting Office:
441 G Street, NW Washington, DC 20548:
Dear Mr. Woods:
The Department of Veterans Affairs (VA) has reviewed your draft report,
CONTRACT MANAGEMENT: Civilian Agency Compliance with Revised Task and
Delivery Order Regulations (GAO-03-983). VA concurs with the General
Accounting Office's (GAO) recommendation to provide guidance and
training to contracting officials to ensure that the regulations
governing task and delivery orders are properly applied. Indeed, VA's
Office of Acquisition and Materiel Management is already providing such
training on a regular basis.
VA believes that the examples presented in the draft report largely
focus on conditions that VA officials had already recognized as needing
correction. In fact, prior to GAO's review, VA had already resolved the
problems. The following bullets address instances where VA either
disagrees with GAO's conclusion or where VA has already taken
corrective action.
* On page 12, the draft report refers to two cases at two VA medical
centers. The contracting officers asked that the requesting facilities
select one of the contract-holders on the multiple-award contract to
receive the order. One of the contracting officers explained that having
the facility staff pre-select the contract-holders to be awarded the
order was equivalent to having held a technical evaluation panel, and,
therefore, saved time. GAO asserts that there was no documentation in
the file to support awarding the order on a sole-source basis. The
Department takes exception to this conclusion. VA's Acquisition Policy
Division has issued numerous training messages to VA's acquisition
offices across the country clarifying that the Federal Acquisition
Regulation 16.505 actually requires establishment of procedure to
ensure fair opportunity to "be considered" not to "compete." VA
believes there is an important distinction between the two terms. While
these procedures have been commonly referred to as "the fair
opportunity to compete rule," it should be recognized that fair
opportunity procedures do not expressly require that each task order be
competed, only that contractors have an
opportunity to be considered. How contracting officers accomplish this
is largely dependent upon the type of requirements under the contract
and pool of awarded contractors available.
On page 16 the draft report implies that VA's Chief Information Officer
(CIO) certifies only those Information Technology (IT) acquisitions
over $250,000. In fact, VA's CIO certifies and approves all IT
acquisitions over $250,000. Moreover, IT acquisitions under $250,000
are placed in an on-line IT tracking system where they are reviewed for
technical compliance with the enterprise architecture as well as
telecommunications and cyber security requirements and then approved by
the CIO's office.
* On page 23, the draft report refers to a VA Office Inspector General
(OIG) December 13, 1996, recommendation. You should be aware that VA's
OIG closed that report on January 20, 1998, with the recommendations
implemented. VA's CIO has been and will continue to partner with the
contracting officers in the Office of Management/Office of Acquisition
and Materiel Management to ensure statements of work regarding IT
initiatives address specific tasks and include the appropriate
justifications.
* Also on page 23, there is a reference to two FY 2002 business review
audits. VA's Office of Acquisition and Materiel Management in VA
Central Office conducts semiannual acquisition audits on the Cleveland
Business Center, which supports the Veterans Health Administration's
Office of Information acquisition program. Internal audits conducted in
FY 2002 noted that sole source acquisitions were high, 85 percent and
78 percent respectively. Immediately after the first audit, the Center's
Head of Contracting Activity (HCA) implemented corrective action.
Noting the modest decrease, the HCA launched a more aggressive
corrective action plan and communicated directly to Office of
Information's senior management team. Subsequently, in April 2003, the
Office of Acquisition and Materiel Management's next audit indicated
that sole source was less than 1 percent (only one sole source
acquisition was noted over a period of 9 months). The next audit of the
Cleveland Business Center is anticipated in the fall of 2003.
The Department of Veterans Affairs appreciates the opportunity to
comment you GAO's draft report.
Sincerely yours,
Anthony J. Principi:
Signed by Anthony J. Principi:
[End of section]
Appendix VI: Comments from the Department of Health and Human Services:
DEPARTMENT OF HEALTH & HUMAN SERVICES
Office of Inspector General:
Washington, D.C. 20201:
AUG 20 2003:
Mr. William T. Woods:
Director, Acquisition and Sourcing Management United States General
Accounting Office Washington, D.C. 20548:
Dear Mr. Woods:
Enclosed are the Department's comments on your draft report entitled,
"Contract Management: Civilian Agency Compliance with Revised Task and
Delivery Order Regulations." The comments represent the tentative
position of the Department and are subject to reevaluation when the
final version of this report is received.
The Department appreciates the opportunity to comment on this draft
report before its publication.
Sincerely,
Dara Corrigan:
Acting Principal Deputy Inspector General:
Signed by Dara Corrigan:
Enclosure:
The Office of Inspector General (OIG) is transmitting the Department's
response to this draft report in our capacity as the Department's
designated focal point and coordinator for General Accounting Office
reports. OIG has not conducted an independent assessment of these
comments and therefore expresses no opinion on them.
Comments of the Department of Health and Human Services on the General
Accounting Office's Draft Report, "Contract Management: Civilian Agency
Compliance with Revised Task and Delivery Order Regulations" (GAO-03-
983):
The Department of Health and Human Services (Department) appreciates
the opportunity to review and offer comments on the General Accounting
Office's (GAO) draft report. The report provides a thorough evaluation
of the Department's compliance with the revised task and delivery order
regulations.
Recommendation for Executive Action:
"Because of the limited nature of our sample, we do not know the extent
to which the problems identified are systemic, or are unique to our
review. Nevertheless, these findings are of sufficient concern that
both the Secretaries of Veterans Affairs and Health and Human Services
should provide appropriate guidance and training to their contracting
officials to ensure that the regulations are properly applied.":
Department Response:
In reviewing the report we were disappointed to note that you
recommended that the Department should offer guidance and training to
acquisition personnel on using the exceptions to the fair opportunity
process. It is our opinion that we provide adequate training in that
the Department considers the training of our contracting officials
paramount in promoting the adherence to statutory requirements. In that
regard, the agency has developed an extensive training program for
acquisition professionals and project managers. Shown below are courses
that include training on using the exceptions to the fair opportunity
process:
Course: Introduction to Contracting; Instruction: Chapter 6.
Course: Acquisition Planning I; Instruction: Chapter 10.
Course: Acquisition Planning II; Instruction: Lesson G.
Course: Project Officer's Handbook; Instruction: Chapter 3.
[End of table]
The Department has the following response regarding two task and
delivery order contracts cited by GAO in this draft report.
The GAO draft reports states on pages 12 through 13 that, "In a third
case, involving a Centers for Disease Control and Prevention (CDC)
order worth $16.5 million." The Department takes exception to your
statement that "a contracting officer did not provide necessary
justification to support the use of the unique source exception to fair
opportunity, because he apparently failed to recognize that his actions
required the use of a justification." In fact, this award does not meet
the definition of a unique source exception to fair opportunity. The
solicitation used by CDC to acquire vaccines was competitive. Any
manufacturer could propose to supply any of the 13 vaccines being
acquired, or any combination of vaccines, over the 12-month performance
period of the contract as long as the company had a Food and Drug
Administration (FDA) license to
produce the product, GlaxoSmithKline, Wyeth, Merck, and Aventis-Pasteur
(Aventis) each submitted proposals. Aventis was the only company to
propose on E-IPV. Competition was never restricted. CDC accepted the
Aventis proposal because none of the other competitors submitted a
proposal for E-IPV. For the 12-month contract performance period
starting in April 2002 and ending March 2003, per terms of the
contract, Aventis was the only contractor supplying E-IPV. The E-IPV
was not acquired under the "unique source" exception to fair
opportunity; therefore, no justification was required. No one was
precluded from competition, and the order was properly placed.
Regarding FDA's task and delivery order mentioned on page 13 of the
draft report, it was the decision of the Contracting Officer (CO) to
award the task orders based on the approved sole source justification.
Since the circumstances surrounding the issuance of the original sole-
source orders had not changed, this subsequently led to the CO's
decision to award additional sole-source orders to these firms, even
though the CO did not officially classify such orders as "logical
follow-on" orders. The FDA's Office of Acquisitions and Grants Services
will comply with the procedures required in the Federal Acquisition
Regulations to ensure that the agency receives the best value through
task and delivery orders.
The Department is pleased to be recognized as one of the agencies
currently revising our capital planning and investment control
processes.
The Department provided several technical comments directly to GAO, on
this topic, at the June 24, 2003 exit conference.
[End of section]
Appendix VII: Comments from the General Services Administration:
GSA:
GSA Office of Governmentwide Policy:
AUG 19 2003:
Mr. William T. Woods Director, Acquisition and Sourcing Management
General Accounting Office 441 G. Street, N.W. Washington, DC 20548:
Dear Mr. Woods:
We have reviewed the General Accounting Office's (GAO) draft report
"Civilian Agency Compliance with Revised Task and Delivery Order
Regulations" and we agree in general with the findings presented by the
GAO Report except for the following:
Under the subheading "Revised Regulation provides Little Additional
guidance, and agencies Made Limited Changes to Guidance and Training"
paragraph 2, please add the following after the 4THsentence.
However GSA is currently undertaking changing its acquisition planning
order to highlight capital planning and investment control to agency
program offices. An official for the Federal Acquisition Institute
(FAI), which, under OFPP's direction, is charged with supporting and
developing the civilian acquisition workforce, stated that the
Institute does not presently provide specific training on capital
planning and investment requirements. FAI is in the process of
validatinq and updating on-line course content to conform to current
law and regulations. Among the courses being validated is a course in
acquisition planninq which will address the capital planning and
investment requirement.
As a member of the Federal Acquisition Council, we look forward to
working with the Director of the Office of Management and Budget to
clarify the roles and responsibilities as it pertain to capital
planning and investment control in purchases of information technology
products and services.
If there are any questions, your staff may contact Ms. Laura Auletta,
Director, Acquisition Policy Division at (202) 501-1224 or
laura.auletta@gsa.gov.
Sincerely,
G. Martin Wagner
Associate Administrator:
Signed by G. Martin Wagner:
[End of section]
(120175):
FOOTNOTES
[1] P.L. No. 103-355 (Oct. 13, 1994).
[2] See U.S. General Accounting Office, Acquisition Reform: Multiple-
award Contracting at Six Federal Organizations, GAO/NSIAD-98-215
(Washington, D.C. Sept. 30, 1998) and Contract Management: Few
Competing Proposals for Large DOD Information Technology Orders, GAO/
NSIAD-00-56 (Washington, D.C. Mar. 20, 2000).
[3] P.L. 106-65 (Oct. 5, 1999).
[4] We limited our review to civilian agencies because Congress
subsequently enacted additional legislation applicable only to defense
agencies prescribing procedures to be used in placing orders against
multiple-award contracts. We have initiated a separate review of the
use of such contracts by defense agencies.
[5] The organizational entities included the Federal Technology Service
and Public Building Service within GSA; the Centers for Disease
Control, National Institutes of Health, and Food and Drug
Administration within HHS; Kennedy Space Center, Langley Research
Center, and Ames Research Center within NASA; the Central Office,
National Acquisition Center, Austin Automation Center, and a medical
center within VA; the Procurement Office, an operations office, and a
river protection office within DOE.
[6] As reported by the Federal Procurement Data System. Subsequent file
reviews showed that some orders included in our review were actually
less than $1 million.
[7] We used the Federal Procurement Data System to identify 30
transactions coded as task or delivery orders. Upon review, four were
actually single award indefinite delivery/indefinite quantity (ID/IQ)
contracts and were excluded from this survey.
[8] P.L. No. 103-355 (Oct. 13, 1994).
[9] See Office of Federal Procurement Policy, Best Practices for
Multiple Award Task and Delivery Order Contracting, (Washington, D.C.
July 1997).
[10] The Clinger-Cohen Act was enacted as Divisions D and E of the
National Defense Authorization Act for Fiscal Year 1996 (P.L. No. 104-
106, Feb. 10, 1996).
[11] Multi-agency contracts are task and delivery order contracts
established by one agency for use by government agencies to obtain
supplies and services, including information technology.
[12] Governmentwide acquisition contracts are task and delivery order
contracts for information technology established for use governmentwide
by an executive agent designated by OMB.
[13] P.L. No. 106-65 (Oct. 5, 1999).
[14] FAC 97-17; FAR Case 1999-014; Item I (Apr. 25, 2000).
[15] FAC 2001-09; FAR Case 1999-303, Item I (Aug. 30, 2002).
[16] See U.S. General Accounting Office, Contract Management: Few
Competing Proposals for Large DOD Information Technology Orders, GAO/
NSIAD-00-56 (Washington, D.C. Mar. 20, 2000). The report raised
concerns about (1) large and inadequately defined orders, (2) misuse of
logical follow-on awards, and (3) reliance on cost reimbursable rather
than fixed-price orders.
[17] FAR § 16.505(b)(1)(iii).
[18] See U.S. General Accounting Office, Contract Management: Few
Competing Proposals for Large DOD Information Technology Orders, GAO/
NSIAD-00-56 (Washington, D.C. Mar. 20, 2000).
[19] FAR § 16.505(a)(2).
[20] The capital planning requirements of the Clinger-Cohen Act are now
codified at 40 U.S.C. § 11312.
[21] FAR § 7.105(b)(4)(ii)(A).
[22] FAR § 7.105(b)(4)(ii)(B).
[23] FAR § 7.102(b).
[24] According to a defense official, the Defense Acquisition
University, which sometimes provides training to civilian agencies,
addresses Clinger-Cohen capital planning requirements in its general
training on preparing acquisition plans.
[25] For one VA order, worth $2.3 million for modular buildings, a
contracting officer stated that all vendors were notified, but we were
unable to verify the notification from the contract file. Only one bid
was received.
[26] FAR § 16.505(b)(2).
[27] See Office of Management and Budget (OMB), Competition Under
Multiple Award Task and Delivery Order Contracts, Memorandum
(Washington, D.C. May 21, 1999).
[28] FAR § 16.505(a)(3).
[29] U.S. General Accounting Office, Contract Management: Guidance
Needed for Using Performance-Based Service Contracting, GAO-02-1049
(Washington, D.C. Sept. 23, 2002).
[30] See Office of Federal Procurement Policy, Performance-Based
Service Contracting, (Washington, D.C. July 2003).
[31] An acquisition plan addresses all technical, business, management
and other significant considerations that control an acquisition. It
also summarizes all acquisition planning deliberations and identifies
milestones for decisions in the acquisition process.
[32] FAR § 7.105(b)(4)(ii).
[33] See Office of Management and Budget (OMB), Multiagency contracts
under the Information Technology Management Reform Act of 1996, M-97-
07, (Washington, D.C. Feb. 26, 1997).
[34] FAR, section 16.505(b)(ii)(B).
[35] Section 804, P.L. No. 106-65 (Oct. 5, 1999).
[36] As reported by FPDS.
[37] The FPDS is the government's central repository of statistical
information on federal contracting. The system contains detailed
information on contract actions over $25,000 and summary data on
procurements of less than $25,000.
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