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United States Government Accountability Office: 
Washington, DC 20548: 

November 30, 2009: 

The Honorable Mitch McConnell:
Republican Leader:
United States Senate: 

Subject: Recovery Act: Contract Oversight Activities of the Recovery 
Accountability and Transparency Board and Observations on Contract 
Spending in Selected States: 

The American Recovery and Reinvestment Act of 2009 (Recovery Act) was 
enacted on February 17, 2009, to help stimulate the United States 
economy by creating new jobs, as well as saving existing ones, and 
investing in projects that will provide long-term economic benefits. 
[Footnote 1] Estimates show that the Recovery Act's combined spending 
and tax provisions will cost $787 billion over 10 years--about $207 
billion in tax reductions plus about $580 billion in additional federal 
spending. These funds are being provided directly to federal agencies 
and also distributed to states, localities, other entities, and 
individuals through a combination of formula and competitive grants and 
direct assistance. About $280 billion of the funds will be administered 
through state and local governments. The Recovery Act delineates an 
important set of responsibilities for the accountability community. The 
inspectors general across government are expected to audit the 
programs, grants, and projects funded under the Recovery Act, both 
within their particular agency or department and collectively. To 
address the collective oversight at the federal level, the Recovery Act 
established the Recovery Accountability and Transparency Board to help 
prevent waste, fraud, and abuse. In addition, the Recovery Act requires 
GAO to perform bimonthly reviews of the use of funds by selected states 
and localities and to comment on estimates of jobs created or retained 
in the quarterly reports of Recovery Act fund recipients. 

GAO was asked to report on the activities of the Recovery 
Accountability and Transparency Board (the Board), as well as on 
contract-related information collected from the work GAO has completed 
thus far in 16 states and the District of Columbia. This report 
provides our observations to date on the extent to which (1) the Board 
is monitoring federal agency contract spending on Recovery Act-related 
contracts and (2) selected states are using competitive procedures in 
awarding contracts using Recovery Act funds. To determine the actions 
taken by the Board, we met with representatives of the Board to discuss 
the initiatives they have taken to monitor the number and types of 
contracts issued by federal agencies for the Recovery Act and their 
plans to assess the extent to which laws and regulations are being 
complied with or circumvented. We reviewed available documentation 
related to the Board's initiatives. We also reviewed data reported by 
federal agencies and states through the Federal Procurement Data System-
Next Generation and [hyperlink http://www.recovery.gov] (Recovery.gov) 
related to federal contracts awarded using Recovery Act funds. To 
provide observations on selected states' use of competitive procedures 
in awarding contracts for Recovery Act funds, we met with state 
procurement officials to discuss the contract award process for a 
sample of contracts in 16 states and the District of Columbia. The 
contracts we discussed with state officials were selected based on a 
combination of several factors--such as dollar value, program risk, and 
project status--that varied among the states; therefore, information 
reported about contracts cannot be generalized. We conducted this 
performance audit from August 2009 through November 2009 in accordance 
with generally accepted government auditing standards. The 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 the evidence 
obtained provides a reasonable basis for our findings and conclusions 
based on our audit objectives. 

Background: 

The Recovery Act established the Board to coordinate and conduct 
oversight of covered funds to prevent fraud, waste, and abuse.[Footnote 
2] As part of its responsibilities, the Board was charged with 
establishing and maintaining a Web site to foster greater 
accountability and transparency in the use of Recovery Act funds. The 
Board is required to report to the President and Congress any potential 
problems requiring immediate attention, in addition to reporting 
quarterly and annually. 

The Recovery Act details the Board's composition, functions, and powers 
and provides employment and personnel authorities.[Footnote 3] The 
Board is composed of a chairperson and 12 inspectors general. To carry 
out its oversight mission, the Board employs 39 staff, of whom 20 are 
detailed from agencies throughout the federal government. In addition, 
the Board established three committees drawn from the 12 inspectors 
general on the Board: 

* Recovery.gov Committee--focused on creating the technical solution 
for recipient reporting and public reporting via Recovery.gov. 

* Accountability Committee--focused on methods for receiving reports of 
potential fraud, waste, abuse, and mismanagement and referring the 
reports to the appropriate inspector general. 

* Recovery Funds Working Group Committee--focused on initiating 
projects agreed upon by the groups' representatives and coordinating 
oversight activities with federal agencies, inspectors general, and 
state officials. This committee is supported by a larger Working Group 
consisting of representatives of the 29 inspectors general. 

The Board began official meetings on March 27, 2009, and began meeting 
regularly in May 2009. Under the Recovery Act, the Board will terminate 
on September 30, 2013.[Footnote 4] 

Key criteria to help guide oversight of federal agency spending related 
to the Recovery Act are included in various Office of Management and 
Budget (OMB) policy memorandums. For example, OMB's February 18, 2009, 
policy, Initial Implementing Guidance for the American Recovery and 
Reinvestment Act of 2009, and its April 3, 2009, update, encourage 
federal agencies awarding contracts using Recovery Act funds to obtain 
competition and to award fixed-price contracts to the maximum extent 
practicable.[Footnote 5] Competition is the cornerstone of the 
acquisition system, and the benefits of competition are well- 
established. It saves taxpayer money, improves contractor performance, 
helps curb fraud, and promotes accountability for results. 

Recovery Accountability and Transparency Board Oversight of Federal 
Contract Spending: 

Since it began meeting in March 2009, the Board has acted quickly to 
bring a number of resources and initiatives to bear on oversight of 
Recovery Act funds, including contract spending. It has launched a 
number of initiatives that are being executed by the Board's executive 
staff, as well as by the 29 inspectors general responsible for Recovery 
Act oversight. The initiatives include reviewing federal contracts and 
grants to help ensure they meet applicable standards, follow OMB 
guidance, and satisfy applicable competition requirements, as well as 
identifying risk areas for fraud, waste, and abuse. The Board, with the 
help of the inspectors general, is also assessing the capacity of 
federal agency acquisition workforces to determine if they have 
sufficient numbers of trained acquisition and grants personnel to 
manage the Recovery Act workload. Because many of the Board's 
initiatives are in their early stages of implementation, it is too soon 
to evaluate their success or shortcomings for providing sound oversight 
of Recovery Act funds. 

Board Initiatives Aimed at Monitoring Federal Recovery Act Contracts: 

The Board uses several approaches to monitor federal contracts, four of 
which are highlighted in this section. See enclosure I for a complete 
listing. First, each day Board staff manually review contract 
solicitations and awards posted daily on the Federal Business 
Opportunities Web site (FedBizOpps.gov).[Footnote 6] This review 
includes (1) ensuring that Recovery Act-related Federal Acquisition 
Regulation is followed--such as ensuring that relevant information is 
synopsized as required when a contract is awarded noncompetitively or 
on a non-fixed-price basis--and (2) identifying contractors that might 
be on the Excluded Parties List System.[Footnote 7] In addition, Board 
staff review data on Recovery Act-funded contracts from the Federal 
Procurement Data System-Next Generation to identify the reasons for the 
noncompeted contracts.[Footnote 8] Table 1 shows that 25,666, or about 
92 percent, of 27,774 contract actions as of November 2009 were issued 
competitively. 

Table 1: Number of Federal Recovery Act Contract Actions Competed, by 
Federal Agency as of November 2009: 

Federal agency or department: Agency for International Development; 
Competed: 4; 
Not competed: 2. 

Federal agency or department: Corporation for National and Community 
Service; 
Competed: 3; 
Not competed: 2. 

Federal agency or department: Department of Agriculture; 
Competed: 509; 
Not competed: 221. 

Federal agency or department: Department of Commerce; 
Competed: 123; 
Not competed: 51. 

Federal agency or department: Department of Defense; 
Competed: 5,107; 
Not competed: 1,250. 

Federal agency or department: Department of Education; 
Competed: 16; 
Not competed: 1. 

Federal agency or department: Department of Energy; 
Competed: 537; 
Not competed: 89. 

Federal agency or department: Department of Health and Human Services; 
Competed: 296; 
Not competed: 41. 

Federal agency or department: Department of Homeland Security; 
Competed: 33; 
Not competed: 11. 

Federal agency or department: Department of Housing and Urban 
Development; 
Competed: 20; 
Not competed: 11. 

Federal agency or department: Department of the Interior; 
Competed: 894; 
Not competed: 90. 

Federal agency or department: Department of Justice; 
Competed: 11; 
Not competed: 7. 

Federal agency or department: Department of Labor; 
Competed: 213; 
Not competed: 22. 

Federal agency or department: Department of State; 
Competed: 73; 
Not competed: 9. 

Federal agency or department: Department of Transportation; 
Competed: 118; 
Not competed: 33. 

Federal agency or department: Department of the Treasury; 
Competed: 13; 
Not competed: 5. 

Federal agency or department: Department of Veterans Affairs; 
Competed: 566; 
Not competed: 35. 

Federal agency or department: Environmental Protection Agency; 
Competed: 112; 
Not competed: 35. 

Federal agency or department: Federal Communications Commission; 
Competed: 130; 
Not competed: 2. 

Federal agency or department: General Services Administration[A]; 
Competed: 16,741; 
Not competed: 137. 

Federal agency or department: International Boundary and Water 
Commission: U.S.-Mexico; 
Competed: 38; 
Not competed: 0. 

Federal agency or department: National Aeronautics and Space 
Administration; 
Competed: 62; 
Not competed: 37. 

Federal agency or department: National Science Foundation; 
Competed: 6; 
Not competed: 0. 

Federal agency or department: Small Business Administration; 
Competed: 6; 
Not competed: 13. 

Federal agency or department: Smithsonian Institution; 
Competed: 19; 
Not competed: 1. 

Federal agency or department: Social Security Administration; 
Competed: 16; 
Not competed: 3. 

Federal agency or department: Total; 
Competed: 25,666; 
Not competed: 2,108. 

Source: Federal Procurement Data System-Next Generation. 

Notes: The data are as of November 16, 2009, as reported by the 
Recovery Accountability and Transparency Board. 

[A] The General Services Administration data include 16,194 individual 
vehicle orders. 

[End of table] 

In discussions with GAO, the Board offered an example of the types of 
reviews it performs on federal contracting data. In early September 
2009, the Board reviewed cost-reimbursement contracts because, at that 
time, the number of contracting actions for this type of contract was 
small as a percentage of overall actions, but the dollars were quite 
large as a percentage of overall contract dollars obligated. The Board 
staff informed us that they found the Department of Energy, which was 
the leader in federal agency Recovery Act contract spending at that 
time, had issued modifications to a number of existing cost- 
reimbursement contracts that accounted for over 50 percent of the 
dollars obligated. The Board staff discussed this situation with the 
Department of Energy Inspector General, who informed the Board staff 
that the Inspector General's office was aware of the situation and is 
monitoring it. The Board staff also regularly post a list of 
noncompetitive, non-fixed-price contracts on Recovery.gov. 

The Board began another key initiative on September 28, 2009, when the 
Recovery Board Fraud Hotline--for reporting potential cases of fraud, 
waste, and abuse--became operational. Citizens can submit referrals via 
telephone, facsimile, Recovery.gov, or postal mail. According to Board 
staff, the hotline was set up using a previously established 
cooperative agreement between the Department of Justice and Louisiana 
State University.[Footnote 9] This government-managed hotline service 
maintains a database of all reported incidents to identify recurring 
issues, companies, or participants related to potential cases. The 
Board reviews the complaints and refers potential cases to the 
respective inspector general or agency for further review. As of 
October 31, 2009, the Board had received 245 complaints. According to 
the Board staff, the majority of these complaints did not contain any 
actionable information; for example, some complaints contained a 
generalized comment on the Recovery Act rather than any specific 
allegation of wrongdoing. The Board refers those that are actionable to 
the appropriate inspector general when there is a specific allegation 
of wrongdoing or multiple factors indicate a possible area of risk. As 
of October 31, 2009, the Board has referred 29 cases to various 
inspectors general.[Footnote 10] 

A fourth key initiative of the Board was the establishment of a 
Recovery Operations Center, which became operational the last week of 
October 2009. The Recovery Operations Center provides two core 
functions--predictive analytics and in-depth risk analysis. The 
Recovery Operations Center uses software that allows for in-depth 
analyses of a large volume of publicly available data on entities 
receiving Recovery Act funds. According to Board staff, the results 
provide oversight authorities with information to focus limited 
resources on cities, regions, and high-risk government programs where 
historical data and current trends suggest the likelihood of future 
risk. Initially, the Recovery Operations Center will screen the 
recipients and funds associated with all contracts, grants, and loans 
that report data through FederalReporting.gov.[Footnote 11] Based on 
the initial screening results, along with input from the Fraud Hotline, 
inspectors general, and Board staff, additional in-depth analysis will 
be performed using advanced software tools. The results of the 
predictive analytics and in-depth risk analysis are to provide input 
for the work of the inspectors general in two ways: (1) providing 
information for investigations or audits of federal programs and 
recipients of Recovery Act funds and (2) providing information to 
expand or help focus oversight resources. In early November 2009, about 
two weeks after the center became operational, Board staff told us they 
had two active investigations under way based on the in-depth analysis 
tool. With regard to results of using the predictive analysis tool, 
Board staff expect to start identifying high-risk areas by the end of 
2009. 

Board Initiatives Carried Out by Inspectors General: 

The Board's Recovery Funds Working Group, which includes 
representatives from the 29 inspectors general, meets monthly to 
discuss issues related to oversight of Recovery Act funds. The Working 
Group representatives also identify specific initiatives that the 
inspectors general are expected to carry out to support the Board's 
oversight of Recovery Act funds. In August 2009, for example, 28 of the 
29 inspectors general on the Working Group administered a survey to 
their respective agencies to assess their overall workforce capacity 
for handling the management and oversight of contracts and grants being 
awarded with Recovery Act funds. Specifically, the agencies were asked 
about the qualifications and the level of training provided to 
individuals overseeing the spending of Recovery Act funds. The 
individual inspectors general were expected to report on their findings 
in October 2009 and then provide a consolidated report to the Board in 
December 2009. 

Beyond its work in overseeing federal contracts, the Board's Working 
Group also began a data quality initiative to assess their respective 
agencies' efforts to review the quality of recipient-reported data. To 
date, 22 of the 29 inspectors general on the Working Group have 
conducted reviews of their agency's processes for looking at Recovery 
Act recipient data. The individual inspectors general are expected to 
report on their findings in November 2009 and prepare a consolidated 
report for the Board in December 2009. In addition, 21 of the 
inspectors general have begun or plan to begin a follow-up review of 
the effectiveness of their respective agencies' review processes. 

In addition, the inspectors general are reporting monthly to the Board 
on the number and status of Recovery Act-related audits and 
investigations they have initiated. As of September 30, 2009, the 
inspectors general reported they had 77 investigations and 391 audits, 
inspections, evaluations, or reviews in process. They also reported 
they have issued 163 reports on Recovery Act-related issues since the 
act was passed--70 reports were issued but not published because they 
contain proprietary information that cannot be made available to the 
public, and 93 reports have been published on Recovery.gov. For 
example, the Department of Energy Inspector General had issued 8 
reports as of September 30, 2009, that addressed aspects of Recovery 
Act issues--two issued in September 2009 addressed the management of 
the ENERGY STAR program and the management of contractor fines, 
penalties, and legal costs.[Footnote 12] These reports identified the 
relevance of their issues to Recovery Act implementation. As another 
example, the General Services Administration Inspector General has 
issued two reports since the Recovery Act was passed. The most recent 
report, issued in September 2009, provided observations on the Public 
Building Service's major construction and modernization projects being 
funded under the Recovery Act. 

Observations on Selected States' Contract Spending: 

Based on GAO's initial bimonthly observations of a relatively small 
sample of contracts awarded by state and local governments, the 
majority of the contracts as described by state and local officials 
were competed and awarded using fixed prices. Only a small portion of 
Recovery Act funding distributed to the state and local governments has 
been expended. While our initial observations provide an early 
indication that competition is being used by state and local 
governments receiving Recovery Act funds, a more definitive assessment 
can be made by each of the state auditors for their respective states. 
As a part of GAO's ongoing oversight of Recovery Act spending, we have 
worked and will continue to work closely with state auditors on their 
oversight of Recovery Act spending and will be reporting on the results 
of their oversight of procurement spending at both the state and local 
level. 

The Recovery Act requires GAO to conduct bimonthly reviews of the use 
of funds by selected states and localities. GAO has selected a core 
group of 16 states and the District of Columbia (District) to follow 
over the next few years to provide periodic analysis of the use of 
funds under the Recovery Act. This core group contains about 65 percent 
of the U.S. population and is expected to receive about two-thirds of 
the intergovernmental grant funds available through the Recovery Act. 
For our two audit cycles that covered the period July through November 
2009, GAO reviewed various federal programs.[Footnote 13] According to 
their self-reported data, the core group GAO is reviewing collectively 
awarded 5,860 contracts valued at approximately $7.1 billion as of 
early November 2009. 

GAO teams selected a sample of contracts from a variety of programs and 
held discussions with state and District officials to gain an 
understanding of the extent to which they believe contracts were 
awarded competitively and chose pricing structures that reduce the 
government's risk.[Footnote 14] The majority of the contracts covered 
by our review--specifically 106, or 87 percent, of the 122 contracts-- 
was considered by state and local officials to have been competed when 
they were awarded. State and local officials cited various reasons 
regarding why some contracts were awarded noncompetitively. For 
example, officials reported that contracts in some areas, such as the 
Workforce Investment Act Youth Program, were not competed in order to 
expedite the delivery of services. In other areas, officials explained 
that, instead of competitively awarding a new contract, an order was 
placed on an existing contract. Table 2 shows the number of contracts 
reported by officials as being competed in the various programs we are 
monitoring across the selected states. 

Table 2: Number of Contracts Selected States and the District of 
Columbia Reported as Competed, by Federal Program Area as of November 
2009: 

Federal program area: Child Care and Development Block Grant Program; 
Competed: 0; 
Not competed: 1. 

Federal program area: Federal-Aid Highway Surface Transportation 
Program; 
Competed: 59; 
Not competed: 3. 

Federal program area: Public Housing Capital Fund; 
Competed: 20; 
Not competed: 2. 

Federal program area: State Fiscal Stabilization Fund; 
Competed: 1; 
Not competed: 0. 

Federal program area: Title I, Part A of the Elementary and Secondary 
Education Act of 1965; 
Competed: 0; 
Not competed: 1. 

Federal program area: Transit Capital Assistance; 
Competed: 5; 
Not competed: 0. 

Federal program area: Weatherization Assistance Program; 
Competed: 7; 
Not competed: 4. 

Federal program area: Workforce Investment Act Youth Program; 
Competed: 14; 
Not competed: 5. 

Federal program area: Total; 
Competed: 106; 
Not competed: 16. 

Source: GAO analysis of information reported by state and local 
officials. 

[End of table] 

Similarly, the majority of the contracts included in our review were 
reported by state officials as being awarded using fixed prices. 
Specifically, state officials reported that 88, or 73 percent, of the 
120 contracts were awarded using fixed prices.[Footnote 15] Generally, 
fixed-price contracting places the maximum amount of risk on the 
contractor because the government pays a fixed price even if actual 
costs of the product or service exceed the contract price. State and 
local officials gave various reasons why some contracts were not 
awarded as fixed-price contracts. For example, in one situation, 
because the amount of work required for highway design work was not 
readily definable, the state awarded a cost-reimbursement contract. In 
another situation involving the Workforce Investment Act Youth Program, 
a program official explained that, because the number of youth that 
would participate in the program was not clear, a cost-reimbursement 
contract was awarded. Table 3 shows the number of contracts reported as 
being awarded with fixed prices by state officials in the various 
programs we are monitoring across the selected states. 

Table 3: Number of Contracts Reported as Fixed Price, by Federal 
Program Area as of November 2009: 

Program area: Child Care and Development Block Grant Program; 
Fixed price: 0; 
Other than fixed price: 1. 

Program area: Federal-Aid Highway Surface Transportation Program; 
Fixed price: 43; 
Other than fixed price: 19. 

Program area: Public Housing Capital Fund; 
Fixed price: 20; 
Other than fixed price: 0. 

Program area: State Fiscal Stabilization Fund; 
Fixed price: 1; 
Other than fixed price: 0. 

Program area: Title I, Part A of the Elementary and Secondary Education 
Act of 1965; 
Fixed price: 1; 
Other than fixed price: 0. 

Program area: Transit Capital Assistance; 
Fixed price: 5; 
Other than fixed price: 0. 

Program area: Weatherization Assistance Program; 
Fixed price: 11; 
Other than fixed price: 0. 

Program area: Workforce Investment Act Youth program; 
Fixed price: 7; 
Other than fixed price: 12. 

Program area: Total; 
Fixed price: 88; 
Other than fixed price: 32. 

Source: GAO analysis of information reported by state and local 
officials. 

[End of table] 

In some instances, state officials further identified these contracts 
as having fixed-unit pricing arrangements, where, according to state 
officials, unit prices for contract items are fixed, but total 
quantities of items may vary, if needed. Some officials characterized 
this type of arrangement as fixed price, while others reported that it 
was other than fixed price. As such, contracts with fixed unit price 
arrangements are included in both the fixed-price and other-than-fixed- 
price totals identified above. 

Overall Observations: 

The Board, both through its staff and through the working group's 
inspectors general, has implemented a number of initiatives since the 
Recovery Act was enacted that are focusing on issues critical to the 
success of Recovery Act contracting at the federal level. These issues 
include monitoring the use of competition and fixed-price contracts, 
targeting high-risk contracting areas and programs, and eliciting the 
help of taxpayers in identifying potential fraud and waste in the use 
of Recovery Act funds. We believe the activities of the Board, and in 
particular the predictive analysis effort, are a positive step in 
coordinating and marshaling the resources of the inspector general 
community to strengthen the oversight of federal spending. While the 
Board initiatives are promising, much work remains to be done and the 
effectiveness of the initiatives is still to be determined. We will 
continue to monitor the Board's efforts--in particular, the results of 
the predictive analysis tool. 

Additionally, the state and local levels of government appear to be 
emphasizing competition and the use of fixed-price contracts in their 
use of Recovery Act funds. This overall observation is based on GAO's 
initial observations of a limited sample of contracts, but, thus far, 
the contract awards at the state and local levels of government appear 
to be consistent with the federal goal of using competition. A more 
definitive assessment can be made by each of the state auditors for 
their respective states. As a part of GAO's ongoing oversight of 
Recovery Act spending, we have worked and will continue to work closely 
with state auditors on their oversight of Recovery Act spending and 
will be reporting on the results of their oversight of procurement 
spending at both the state and local level. We will continue to focus 
on these issues in our future Recovery Act work. 

Board Comments and Our Evaluation: 

In commenting on a draft of this report, the Board concurred with our 
observations on the Board's oversight of federal contract spending. The 
Board also provided technical comments that we incorporated, as 
appropriate. 

As agreed with your office, unless you publicly announce the contents 
of this report earlier, we plan no further distribution until 30 days 
from the report date. At that time, we will send copies to the 
appropriate congressional committees and the Recovery Accountability 
and Transparency Board. The report will also be available at no charge 
on the GAO Web site at [hyperlink, http://www.gao.gov]. 

If you or your staff have any questions about this report, please 
contact me at (202) 512-5500 or John Needham, Director, at (202) 512- 
4841 or needhamjk1@gao.gov. Contact points for our offices of 
Congressional Relations and Public Affairs may be found on the last 
page of this report. GAO staff who made major contributions to this 
report include James E. Fuquay, Assistant Director; Noah Bleicher; Ruth 
"Eli" DeVan; Jean K. Lee; and Teague Lyons. 

Sincerely yours, 

Signed by: 

Gene L. Dodaro:
Acting Comptroller General of the United States: 

[End of section] 

Enclosure: Recovery Accountability and Transparency Board Initiatives: 

The Recovery Accountability and Transparency Board (the Board), through 
its staff and the inspector general representatives that serve on its 
subcommittees, has embarked on a variety of initiatives aimed at 
coordinating and supporting the efforts of the inspectors general to 
enhance this accountability community's oversight of spending of 
Recovery Act funds. Table 4 provides a description of the main 
initiatives being carried out routinely by the Board staff, as well as 
some completed activities. 

Table 4: Board Staff Monitoring Efforts: 

Initiative: Coordinating oversight activities with inspectors general 
and federal agencies' senior procurement executives; 
Goal: Develop and maintain a cooperative working relationship with and 
among the 29 inspectors general and agencies' Senior Procurement 
Executives to maintain a focus on execution and oversight of Recovery 
Act-related contracts; 
Board staff activities (Board comments): 
* Facilitating monthly meetings of the Recovery Funds Working Group-- 
which consists of the 29 inspectors general responsible for Recovery 
Act oversight--to discuss issues impacting oversight, and overseeing 
initiatives performed by Working Group representatives; 
* Conducting meetings with Senior Procurement Executives from all 28 
agencies responsible for awarding Recovery Act funds to discuss the 
importance of oversight of Recovery Act-related contracts; 
* Developed a Recovery Act Contract Checklist for use by all federal 
agencies receiving Recovery Act funds. (Some contracting offices 
require the awarding contracting officer to initial the checklist to 
verify compliance and maintain it as a contracts document in the award 
file); 
* Providing contracting "observations" to Senior Procurement Executives 
that identify Recovery Act-related contracts that do not meet all of 
the requirements of the statute, as needed. (These observations are 
typically administrative in nature, but they serve to reconfirm the 
importance of administrating the Recovery Act-related contracts 
correctly.) 

Initiative: Reviewing FedBizOpps.gov and Central Contractor 
Registration information; 
Goal: Monitor FedBizOpps.gov and Central Contractor Registration data 
to analyze daily postings of contract solicitations and types of 
contracts being awarded with Recovery Act funds to produce reports 
regarding specific contracting issues needing further review; 
Board staff activities (Board comments): 
* Manually reviewing daily postings of contracts in FedBizOpps.gov to 
check compliance with Recovery Act Federal Acquisition Regulations 
requirements, such as ensuring the word "Recovery" is in the title of 
the contract award and ensuring that relevant information is provided 
in the synopsis when the contract is nonfixed price or noncompetitive; 
* Reviewing the Central Contractor Registration system to determine 
whether each Recovery Act contractor is registered in the system and 
has a DUNS number and to identify any contractors that may be in the 
Excluded Parties List System. 

Initiative: Reviewing Federal Procurement Data System-Next Generation 
information; 
Goal: Monitor Federal Procurement Data System-Next Generation data 
daily to review contract award factors for contracts using Recovery Act 
funds to identify trends that need further review; 
Board staff activities (Board comments): 
Analyzes Federal Procurement Data System-Next Generation information on 
competition, type of contract, reasons for use of sole-source awards, 
type of set-asides, small business classifications, solicitation 
procedures used, award types, and reasons for modification. 

Initiative: Posting a list of noncompetitive, non-fixed-price 
contracts; 
Goal: Monitor reports of noncompetitive, non-fixed-price contracts and 
post summaries on the public Web site Recovery.gov; 
Board staff activities (Board comments): 
Recovery.gov was upgraded October 30, 2009, to provide search 
capabilities for the list of non-fixed-price and noncompetitive 
contracts. The list is now searchable by agency and state and 
identifies contract types. 

Initiative: Developing procurement leads for further investigation; 
Goal: Refer potential procurement issues identified to the respective 
inspectors general or agencies for further review and resolution; 
Board staff activities (Board comments): 
Potential procurement issues are identified through the data system 
monitoring efforts, citizen complaints received through the Fraud 
Hotline, and results of predictive analyses. Identified issues are 
referred to the appropriate inspectors general or agencies for further 
review and resolution. 

Initiative: Operating the Fraud Hotline; 
Goal: Establish and operate a contact center to receive, track, and 
route reports of potential fraud, waste, and abuse to the respective 
inspectors general or agencies; 
Board staff activities (Board comments): 
* The Fraud Hotline contact center became operational on September 28, 
2009; 
* Citizen complaints can be received via telephone, facsimile, 
Recovery.gov, or postal mail. The center uses a Department of Justice 
database to track complaints, identify recurring issues and names 
involved, and ensure that all relevant inspectors general are notified. 

Initiative: Performing predictive analyses of Recovery Act data; 
Goal: Establish and operate a center to perform predictive analysis on 
all data available on Recovery Act funds and activities; 
Board staff activities (Board comments): 
* The Recovery Operations Center became operational in October 2009; 
* The center uses a risk analysis model to perform in-depth analyses of 
a large volume of publicly available data on entities receiving 
Recovery Act funds. The predictive analysis tool keys on many 
variables--including program risk, dollar values, criminal histories, 
and citizen tips--to identify risk areas that might be susceptible to 
fraud or waste. The data results can also be reviewed based on 
geographic region, program, or federal agency. The variables in the 
model are continuously reviewed to determine their level of usefulness 
and potential predictive nature; 
* The tool also provides in-depth fraud analysis capability to identify 
nonobvious relationships between legal entities based on a vast amount 
of public information about companies receiving Recovery Act funds. 
These relationships might unveil facts that may not have been 
transparent at the time of contract or grant award; 
* The analysis results and relationships that are identified might 
result in identifying leads for investigations or audits that are then 
referred to the respective inspectors general, additional risk factors 
to add to future analyses, or entities that are on the excluded parties 
list that are receiving Recovery Act funds. 

Initiative: High-risk list of federal programs; 
Goal: Develop a high-risk list for each agency of programs that are 
vulnerable to fraud, waste, abuse, and mismanagement; 
Board staff activities (Board comments): 
The high-risk list was updated for fiscal year 2010. Six inspectors 
general reported no high-risk programs, and the remaining inspectors 
general reported 104 programs as high risk. 

Initiative: Inspectors general Recovery Act work plans; 
Goal: Develop and submit for posting on the public Web site plans for 
conducting oversight work for Recovery Act-related actions; 
Board staff activities (Board comments): 
* Fiscal year 2009 inspectors general work plans were posted to 
Recovery.gov in June 2009; 
* Fiscal year 2010 inspectors general work plans were posted to 
Recovery.gov in October 2009.These plans include 464 projects that 
could each result in multiple reports and include plans for 182 
administrative or financial reviews, 152 performance reviews, and 11 
eligibility reviews. 

Initiative: Reviewing recipient-reported information; 
Goal: Review and analyze recipient reporting data, and identify records 
that are later changed by recipients; 
Board staff activities (Board comments): 
* Recipient reports regarding contracts awarded were posted on 
Recovery.gov on October 15, 2009. Recipient reports regarding grants 
and loans were posted on October 30, 2009; 
* On October 30, 2009, reports that identified changes made by 
recipients during the initial reporting process were published on 
Recovery.gov. 

Source: GAO analysis of data obtained from the Board. 

[End of table] 

[End of section] 

Footnotes: 

[1] Pub. L. No. 111-5, 123 Stat. 115. 

[2] Pub. L. No. 111-5, Div. A, § 1521, 123 Stat. 289. 

[3] Pub. L. No. 111-5, Div. A, §§ 1522-1525, 123 Stat. 289-93. 

[4] Pub. L. No. 111-5, Div. A, § 1530, 123 Stat. 294. 

[5] Office of Management and Budget, M-09-10, Initial Implementing 
Guidance for the American Recovery and Reinvestment Act of 2009, 
Section 6.1 (Feb. 18, 2009). 

[6] FedBizOpps.gov is the federal government's Web site where 
government business opportunities can be accessed electronically by the 
public. 

[7] The Excluded Parties List System, which is maintained and posted by 
the General Services Administration, is a database listing the parties 
suspended, proposed for debarment, debarred, declared ineligible, or 
excluded or disqualified from government contracting. 

[8] Our previous work, as well as the work of the federal Services 
Acquisition Advisory Panel, has identified limitations in the accuracy 
and timeliness of data in the Federal Procurement Data System-Next 
Generation (FPDS-NG). Both GAO and the Services Acquisition Advisory 
Panel have reported that while FPDS-NG has been the primary 
governmentwide contracting database for capturing and reporting on 
various acquisition topics, such as agency contracting actions and 
procurement trends, it has had data quality issues over a number of 
years. While FPDS-NG data are useful for providing insight, it is not 
always accurate at the detail level. However, no other viable 
alternative currently exists for obtaining governmentwide data on 
federal procurements. See GAO, Federal Contracting: Observations on the 
Government's Contracting Data Systems, [hyperlink, 
http://www.gao.gov/products/GAO-09-1032T] (Washington, D.C.: Sept. 29, 
2009); GAO, Federal Acquisition: Oversight Plan Needed to Help 
Implement Acquisition Advisory Panel Recommendations, [hyperlink, 
http://www.gao.gov/products/GAO-08-160] (Washington, D.C.: Dec. 20, 
2007); and Services Acquisition Advisory Panel, Report of the 
Acquisition Advisory Panel to the Office of Federal Procurement Policy 
and the United States Congress (January 2007), p. 430. 

[9] The Department of Justice and Louisiana State University 
cooperative agreement hotline service is used by several other federal 
entities, including the Federal Bureau of Investigation. 

[10] This hotline is separate from FraudNET, which is GAO's automated 
means for allowing the public to report allegations of fraud, waste, 
abuse, or mismanagement of federal funds. GAO refers allegations to the 
appropriate inspectors general. As of November 12, 2009, GAO's FraudNET 
had received 106 Recovery Act-related allegations that were considered 
credible enough to warrant further review. GAO is actively pursuing 8 
allegations, which include wasteful and improper spending; conflicts of 
interest; and grant, contract, and identity fraud. Another 8 are 
pending further review by GAO, and 13 were referred to other GAO teams 
for consideration in their ongoing audit work. GAO also referred 30 
allegations to the appropriate agency inspectors general for further 
review and investigation, which we will continue to monitor. The 
remaining 47 allegations did not warrant further investigation. 

[11] FederalReporting.gov is the central governmentwide data collection 
system for federal agencies and recipients of federal awards using 
Recovery Act funds. Federal agencies and recipients are required to 
submit data on a quarterly basis regarding Recovery Act grants, loans, 
and contracts. 

[12] Energy Star, a voluntary labeling program established in 1992, 
provides energy-efficiency data for a range of products, so that 
consumers can make informed purchase decisions. 

[13] The federal programs GAO selected for review include increased 
Medicaid Federal Medical Assistance Percentage grant awards; Federal- 
Aid Highway Surface Transportation Program; Transit Capital Assistance 
Program; State Fiscal Stabilization Fund; Title I, Part A of the 
Elementary and Secondary Education Act of 1965; Parts B and C of the 
Individuals with Disabilities Education Act; Workforce Investment Act 
Youth Program; Public Housing Capital Fund; Edward Byrne Memorial 
Justice Assistance Grant Program; and Weatherization Assistance 
Program. 

[14] The states and the District of Columbia have varying legal 
definitions of competitive procedures and contract types. Therefore, we 
relied on state and District officials to verify whether a particular 
contract was awarded competitively and with fixed pricing as defined by 
that state's or the District's contracting procedures. 

[15] GAO did not determine whether fixed prices were used for two of 
the 122 contracts in our sample. 

[End of section] 

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