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Report to the Secretary of Defense:

United States Government Accountability Office:

GAO:

March 2005:

Contract Management:

Opportunities to Improve Surveillance on Department of Defense Service 
Contracts:

GAO-05-274:

GAO Highlights:

Highlights of GAO-05-274, a report to the Secretary of Defense: 

Why GAO Did This Study:

The Department of Defense (DOD) is the federal government’s largest 
purchaser of contractor services, spending $118 billion in fiscal year 
2003 alone—an increase of 66 percent since fiscal year 1999. DOD is 
expected to rely increasingly on contractors to carry out its mission.
 
In recent reports, DOD has identified inadequate surveillance on 
service contracts. This report examines how DOD manages service 
contract surveillance. It looks at the extent of DOD’s surveillance on 
a selection of service contracts, reasons why insufficient surveillance 
occurred, and efforts to improve surveillance.

What GAO Found:

Surveillance varied on the 90 contracts we reviewed. Surveillance was 
insufficient on 26 of the contracts we reviewed but was sufficient on 
64 contracts. Fifteen had no surveillance because no personnel were 
assigned such responsibilities; the other 11 had assigned personnel but 
could not provide evidence of surveillance due to incomplete 
documentation. Also, some surveillance personnel did not receive 
required training before beginning their assignments. 

According to DOD officials, insufficient surveillance occurred because 
surveillance is not as important to contracting officials as awarding 
contracts and therefore, does not receive the priority needed to ensure 
that surveillance occurs. The Army, unlike the Air Force and Navy 
organizations we visited, does not require surveillance personnel to be 
assigned responsibility prior to contract award. We also found that 
surveillance personnel involved in our review were not evaluated on how 
well they perform their surveillance duties. Further, surveillance was 
usually a part-time responsibility and some personnel felt that they 
did not have enough time in a normal workday to perform their 
surveillance duties. 

DOD has taken steps to implement provisions in the National Defense 
Authorization Act for Fiscal Year 2002 intended to improve the general 
management and oversight of service contract procurement and, in 
October 2004, DOD issued a policy that emphasized the proper use of 
other agencies’ contracts. However, these efforts did little to improve 
service contract surveillance. On a more specific item, DOD did issue 
guidance that now requires appointment of surveillance personnel during 
the early planning phases of cost-reimbursable and time and materials 
service contracts. At the military service level, in April 2004, the 
Army revised its acquisition instructions and began requiring 
surveillance on some professional support service contracts; but, the 
revision did not apply to those contracts awarded before the enactment 
date that were still in effect.

What GAO Recommends:

GAO recommends that DOD: require properly trained surveillance 
personnel be assigned to service contracts by the date of contract 
award; ensure surveillance personnel are held accountable for their 
duties; ensure DOD’s service contract review process and data 
collection requirements provide more useful information; and revise 
guidance on surveillance for services procured from other agencies’ 
contracts. DOD should also direct the Army to conduct surveillance, as 
appropriate, on ongoing Contract Advisory and Assistance Services 
contracts awarded before April 2004. DOD concurred with four of our 
recommendations and partially concurred with a fifth and identified 
actions it has taken or plans to take to address them. 

www.gao.gov/cgi-bin/getrpt?GAO-05-274.

To view the full product, including the scope and methodology, click on 
the link above. For more information, contact David E. Cooper at (617) 
788-0555 or cooperd@gao.gov.

[End of section]

Contents:

Letter:

Results in Brief:

Background:

Sufficiency of Service Contract Surveillance Varied:

Contract Surveillance Not Always a High Priority:

DOD Initiatives Affecting Surveillance:

Conclusions:

Recommendations for Executive Action:

Agency Comments and Our Evaluation:

Appendix I: Scope and Methodology:

Appendix II: Roles of Contracting Officers and Surveillance Personnel:

Appendix III: Contracts Reviewed:

Appendix IV: Comments from the Department of Defense:

Tables:

Table 1: Summary of Surveillance on DOD Service Contracts:

Table 2: Surveillance Personnel Training:

Figure:

Figure 1: DOD Spending on Services, FY 1999 through FY 2003:

Abbreviations:

ACA-North: Army Contracting Agency-North Region:

AFMC: Air Force Materiel Command:

DFARS: Defense Federal Acquisition Regulation Supplement:

DOD: Department of Defense:

FAR: Federal Acquisition Regulation:

GSA: General Service Administration:

NAVSEA: Naval Sea Systems Command:

OSD: Office of the Secretary of Defense:

United States Government Accountability Office:

Washington, DC 20548:

March 17, 2005:

The Honorable Donald H. Rumsfeld: 
Secretary of Defense: 
Washington, D.C.

Dear Secretary Rumsfeld:

The Department of Defense (DOD) is the federal government's largest 
purchaser of contractor provided services and its spending on those 
services has increased significantly over the past few years. Spending 
for services has increased about 66 percent since fiscal year 1999 and 
this trend is expected to continue as DOD increasingly relies more on 
contractors to carry out aspects of its mission. In fiscal year 2003, 
DOD spent over $118 billion on services-about 57 percent of its 
procurement dollars.

Because of the increasing use of contractors and the large expenditures 
involved, quality assurance surveillance--oversight of the services 
being performed by the contractor--is important to provide assurance 
that contractors are providing timely and quality services and to help 
mitigate any contractor performance problems. Surveillance is not a one-
step process. It begins with properly training personnel for assignment 
of surveillance responsibilities and involves ongoing surveillance 
actions throughout the performance period of the contract to ensure the 
government receives the services it contracted for in a timely manner. 
Surveillance includes creating an official record documenting that the 
contractor's performance was acceptable or unacceptable.

Because of past problems with inadequate surveillance identified by 
DOD,[Footnote 1] GAO reports determining that contract management and 
oversight has not always been adequate,[Footnote 2] and DOD's 
increasing reliance on service contracts, our overall review objective 
was to determine how DOD manages service contract surveillance. To 
address this issue we (1) examined the extent surveillance was 
performed on a selection of service contracts, (2) identified reasons 
for why insufficient surveillance occurred, and (3) identified recent 
efforts to help improve surveillance.

To conduct our work, we met with representatives of the Office of the 
Secretary of Defense (OSD) and the military services to discuss how 
contract surveillance is carried out across DOD and what efforts are 
being made to improve surveillance. We also selected and reviewed 90 
service contracts and their associated surveillance records. The 90 
contracts had a total value of about $385.7 million at the time of 
contract award, but that value has increased significantly over time. 
These contracts were awarded primarily at three military commands 
within the military departments: (1) the Army Contracting Agency-North 
Region (ACA-North) at Fort Monroe, Virginia; (2) the Naval Sea Systems 
Command (NAVSEA) at the Navy Ship Yard, Washington, D.C; and (3) the 
Air Force Materiel Command (AFMC) at Wright-Patterson Air Force Base, 
Ohio.[Footnote 3] Each of these organizations spends significant 
funding for services within their respective military department. 
Although our results are not projectable across all of DOD's service 
contracts, they are illustrative of the challenges involved in 
conducting surveillance for services. We contacted contracting 
officers, surveillance personnel, and procurement management officials 
associated with each of the selected contracts to obtain information 
about surveillance. We did not include research and development 
contracts or construction contracts in the contracts selected because 
the surveillance process typically differs for these types of 
contracts. A more detailed discussion of our scope and methodology is 
in appendix I. We conducted our review from January 2004 to February 
2005 in accordance with generally accepted government auditing 
standards.

Results in Brief:

Surveillance varied on the 90 contracts we reviewed. Surveillance was 
insufficient on 26 of the contracts we reviewed but was sufficient on 
64 contracts. Fifteen of the 26 contracts had no surveillance activity 
because no personnel were assigned surveillance responsibilities. The 
other 11 contracts had surveillance personnel assigned but could not 
provide evidence that surveillance was being conducted because of 
incomplete documentation. Further, some surveillance personnel did not 
receive required training prior to beginning their surveillance 
assignments on contracts. In some instances surveillance was very 
rigorous. For example, a Navy contract for critical submarine hull 
repair involved Navy personnel and an independent specialist using live 
video to observe all the repairs in real-time.

DOD officials attributed insufficient surveillance to a number of 
factors. Contract surveillance is not always a top priority for 
contracting officers and managers who oversee contracting organizations 
told us that surveillance is not given the same importance as getting 
the contract awarded. Also, the Army, unlike the Air Force and Navy 
organizations we visited, does not require that surveillance personnel 
be assigned to service contracts prior to contract award. In addition, 
no organization we visited consistently evaluates surveillance 
personnel on how well they perform their surveillance responsibilities. 
Finally, some surveillance personnel believe they do not have enough 
time in a normal workday to perform surveillance, a factor that may be 
influenced by declining personnel levels in DOD functional offices 
responsible for conducting surveillance.

DOD has begun implementing some initiatives that have the potential to 
improve service contract management and oversight practices on a broad 
basis. DOD has taken steps to implement provisions in the National 
Defense Authorization Act for Fiscal Year 2002[Footnote 4] intended to 
improve the management and oversight of service contract procurement 
and, in October 2004, it issued a policy that emphasized the proper use 
of other agencies' contracts. However, little has been done as part of 
these efforts to specifically improve DOD service contract surveillance 
practices. For specific types of contracts--cost-reimbursement 
[Footnote 5] and time and materials[Footnote 6] service contracts--DOD 
established additional guidance, in September 2004, that requires 
surveillance personnel be appointed to these contracts during the early 
planning phase to provide appropriate oversight. Also, in April 2004, 
the Army began requiring surveillance for the first time on certain 
types of professional support service contracts; however, Army 
officials told us this requirement did not apply to contracts of this 
type awarded prior to April 2004 that are still in effect.

We are making four recommendations to help improve DOD service contract 
surveillance and one recommendation to help ensure that the Army is 
conducting surveillance on certain types of service contracts awarded 
and still in use prior to April 2004. DOD concurred with four of our 
recommendations and partially concurred with a fifth and identified 
actions it has taken or plans to take to address them.

Background:

DOD and the federal government classify procurements as either the 
purchase of goods or services. DOD procures many types of services 
ranging from research and development efforts on major weapon systems 
to operating military installations.[Footnote 7] Service contracts, 
because they involve the contractor providing a service rather than a 
good, by nature require different approaches in describing requirements 
and overseeing contractor performance than the purchases of goods. DOD 
spends more of its procurement funds on services than it does on goods. 
Moreover, DOD spends significantly more than any other federal agency 
on services. DOD spending on services has been increasing significantly 
over the last several years--about 66 percent since fiscal year 1999-- 
to a level of $118 billion in fiscal year 2003 (see fig. 1).

Figure 1: DOD Spending on Services, FY 1999 through FY 2003:

[See PDF for image]

[End of figure]

Surveillance and documentation that it occurred are required by the 
Federal Acquisition Regulation (FAR)[Footnote 8] and the Defense 
Federal Acquisition Regulation Supplement (DFARS).[Footnote 9] 
Moreover, documentation is necessary to help ensure accountability over 
the surveillance process. Surveillance involves government oversight of 
contractors with the purpose of ensuring that the contractor (the 
service provider) performs the requirements of the contract and the 
government (the service receiver or customer) receives the service as 
intended. Surveillance begins with trained personnel being nominated 
for and assigned surveillance responsibilities, and then conducting 
surveillance actions throughout the performance period of the contract 
to ensure the government receives the services required by the contract.

While surveillance is required by the DFARS, specific methods are not 
prescribed. DOD organizations use various methods to conduct 
surveillance, ranging from formal written assessments (monthly, semi- 
annually, or annually) of contractor performance prepared by DOD 
surveillance personnel to more informal observations or inspections of 
contractor performance by surveillance personnel. The methods used 
generally relate to the dollar value of the contract and the risk 
associated with the service being provided.

Proper documentation of surveillance is required. Proper documentation 
is not only stressed in the DFARS but also in other DOD guidance that 
requires performance-based service contracts,[Footnote 10]--which DOD 
is requiring to be used more often in the acquisition of services--to 
have a surveillance plan. Surveillance of contractor performance should 
be documented as it is conducted. DOD guidance maintains that this 
documentation constitutes an official record and the surveillance 
personnel assessing performance are to use a checklist to record their 
observations of the contractor's performance. The guidance also 
concludes that all performance should be documented whether it is 
acceptable or not.

Surveillance personnel[Footnote 11] are usually not considered part of 
DOD's acquisition workforce. Instead, surveillance personnel represent 
the DOD functional organization receiving the service and are usually 
assigned surveillance as an ancillary responsibility in addition to 
their primary job. For example, if a DOD weapon system program office 
(a functional organization) has a need to contract for professional 
support services, the program office would assist the contracting 
officer by defining contract requirements and methods of contractor 
performance and by nominating an official to serve as the surveillance 
personnel. Surveillance personnel are likely to be full-time employees 
of the DOD organization needing the service and are generally 
knowledgeable about the aspects of the service to be provided by the 
contractor. This knowledge is useful in assessing contractor 
performance. However, it is the contracting officer's responsibility to 
assign surveillance personnel and to ensure that surveillance is 
conducted on the contract. The surveillance personnel act as a liaison 
between the contracting officer and the contractor. If less than 
adequate contractor performance is noted by the surveillance personnel, 
they notify the contracting officer as a first step toward corrective 
action. Appendix II shows in more detail the roles of contracting 
officers and surveillance personnel.

Congressional concern over the management of DOD's growing services 
procurement led Congress to include provisions in section 801 of the 
National Defense Authorization Act for Fiscal Year 2002[Footnote 12] 
designed to improve management and oversight of services procurement 
and reinforce compliance with all applicable statutes, regulations, 
directives, and other requirements, regardless of whether the services 
were procured through DOD contracts or those of another agency. We have 
previously reported on section 801, but at that time DOD had not 
completely determined how to implement specifics of the 
legislation.[Footnote 13] In our prior report, we stated that DOD and 
the military departments had a management structure and a process in 
place for reviewing individual acquisitions valued at $500 million or 
more, but the approach did not provide a departmentwide assessment of 
how spending for services could be more effective.

In October 2004, to help reinforce the requirements of section 801, DOD 
issued a policy designed to emphasize the proper use of other agencies' 
contracts. DOD spends billions of dollars every year using other 
agencies' contracts and is the largest purchaser of services from GSA's 
multiple award schedules program.

Sufficiency of Service Contract Surveillance Varied:

The use of surveillance varied on the 90 contracts we reviewed. While 
26 of the 90 DOD contracts we reviewed had insufficient surveillance, 
64 contracts had sufficient, documented surveillance that in some 
instances was extensive. More specifically, 25 of the 26 contracts with 
insufficient surveillance were contracts for services that DOD obtained 
by using GSA contracts available under its multiple award schedules 
program. In addition, 13 surveillance personnel had not completed 
required training prior to being assigned surveillance 
responsibilities. Our review also found that 64 contracts had 
sufficient, documented surveillance and in some of these instances, 
surveillance was extensive.

Surveillance Personnel Not Always Assigned and Surveillance 
Documentation Insufficient:

For the 90 DOD service contracts we reviewed, 26 of the contracts (29 
percent) had insufficient surveillance in that they lacked assigned 
surveillance personnel or complete documentation of 
surveillance.[Footnote 14] Of these 26 contracts, 15 contracts had no 
surveillance personnel assigned. Additionally, 11 of the 26 contracts 
had insufficient documentation to show if surveillance was occurring. 
Table 1 summarizes our findings for the 90 contracts and shows that 
there were more instances of insufficient surveillance related to the 
Army contracts compared to the Navy. All of the Air Force contracts we 
reviewed had surveillance. (See app. III for a more detailed summary of 
the 90 contracts.)

Table 1: Summary of Surveillance on DOD Service Contracts:

Dollars in millions.

DoD organization: Air Force: AFMC; 
Total contracts reviewed: Number of contracts: 20; 
Total contracts reviewed: Award amount: $39.0; 
Number of contracts with no surveillance personnel assigned: 0; 
Number of contracts with insufficient evidence of surveillance: 0.

DoD organization: Air Force: Other organizations; 
Total contracts reviewed: Number of contracts: 8; 
Total contracts reviewed: Award amount: $2.4; 
Number of contracts with no surveillance personnel assigned: 0; 
Number of contracts with insufficient evidence of surveillance: 0.

DoD organization: Army: ACA-North; 
Total contracts reviewed: Number of contracts: 19; 
Total contracts reviewed: Award amount: $86.2; 
Number of contracts with no surveillance personnel assigned: 7; 
Number of contracts with insufficient evidence of surveillance: 2.

DoD organization: Army: Other organizations; 
Total contracts reviewed: Number of contracts: 11; 
Total contracts reviewed: Award amount: $20.7; 
Number of contracts with no surveillance personnel assigned: 6; 
Number of contracts with insufficient evidence of surveillance: 1.

DoD organization: Navy: NAVSEA; 
Total contracts reviewed: Number of contracts: 20; 
Total contracts reviewed: Award amount: $226.6; 
Number of contracts with no surveillance personnel assigned: 0; 
Number of contracts with insufficient evidence of surveillance: 0.

DoD organization: Navy: Other organizations; 
Total contracts reviewed: Number of contracts: 6; 
Total contracts reviewed: Award amount: $8.7; 
Number of contracts with no surveillance personnel assigned: 1; 
Number of contracts with insufficient evidence of surveillance: 4.

OSD and other DOD agencies; 
Total contracts reviewed: Number of contracts: 6; 
Total contracts reviewed: Award amount: $2.1; 
Number of contracts with no surveillance personnel assigned: 1; 
Number of contracts with insufficient evidence of surveillance: 4.

Total; 
Total contracts reviewed: Number of contracts: 90; 
Total contracts reviewed: Award amount: $385.7; 
Number of contracts with no surveillance personnel assigned: 15; 
Number of contracts with insufficient evidence of surveillance: 11.

Source: GAO analysis of DOD data.

[End of table]

Our further analyses of the 90 contracts found only one common 
characteristic as to whether surveillance was affected by other 
contractual factors. Specifically, we found that of the 45 interagency 
contracts we reviewed where DOD awarded them using GSA's multiple award 
schedules program,[Footnote 15] 25 had insufficient surveillance. GAO 
has recently identified issues with DOD's use of interagency contracts 
in general and reported that they were not being effectively 
managed.[Footnote 16]

We also found that the contract award amount was not always a good 
indication of the total value of the services that needed to be 
surveilled. While the award amount of the 90 contracts we reviewed was 
$385.7 million in fiscal year 2003, the amount of funds obligated on 
about one-half of these contracts had grown to about $1.5 billion as of 
November 2004.[Footnote 17] We found that for some of the 15 contracts 
without surveillance personnel assigned, the contract amounts have more 
than tripled over the course of the contract. For example, one Army 
contract for educational services was awarded for $271,690 but had 
increased to $900,125.

We did not find that the sufficiency of surveillance was related to 
other factors, including type of service contract (fixed price or cost- 
reimbursable), type of services being procured, use of performance- 
based contract methods, or dollar value at award. For some of the 
contracts without sufficient documentation of surveillance, we asked 
the personnel how the government's interests were being protected. They 
told us they were conducting surveillance, but they had not been 
keeping documented records to verify surveillance had taken place.

Surveillance Personnel Training Not Always Completed Prior to 
Surveillance Beginning:

Surveillance training, despite DOD regulations requiring such training, 
was not always completed prior to personnel being assigned surveillance 
responsibilities. Such training explains their responsibilities and 
identifies methods of conducting surveillance. On the contracts we 
reviewed, 13 surveillance personnel had not received the required 
training. Without timely training, surveillance personnel may not know 
how to perform their duties. We found examples of this late training at 
each of the commands we visited including 10 instances at AFMC, 2 
instances at NAVSEA, and 1 instance at ACA-North. In some cases, 
surveillance personnel had not completed training until several months 
after assignment to a contract. See table 2 for a summary of 
surveillance personnel training information.

Table 2: Surveillance Personnel Training:

Military command: Air Force Materiel Command; 
Surveillance personnel assigned to contracts: 60; 
Surveillance personnel not trained before assignment: 10.

Military command: ACA-North; 
Surveillance personnel assigned to contracts: 13; 
Surveillance personnel not trained before assignment: 1.

Military command: NAVSEA; 
Surveillance personnel assigned to contracts: 31; 
Surveillance personnel not trained before assignment: 2.

Military command: Total; 
Surveillance personnel assigned to contracts: 104; 
Surveillance personnel not trained before assignment: 13.

Source: GAO analysis of DOD data.

[End of table]

Surveillance Often Sufficient and Used to Identify Insufficient 
Contractor Performance:

We found that 64 of the 90 contracts we reviewed had surveillance 
personnel who were assigned their surveillance responsibilities and 
were conducting and documenting surveillance. The 64 contracts included 
20 that were awarded using GSA's multiple award schedules program. The 
amount of surveillance varied depending on the type of service being 
provided. In some instances, the surveillance was a very detailed, 
rigorous process. For example, one Navy contract we reviewed involved 
critical submarine hull repair. The surveillance on the services was 
extensive and involved Navy personnel and an independent specialist 
using live video to observe all the repairs in real time. For lower 
risk contracts, such as one involving maintenance of an Army recruiting 
internet site, surveillance was significantly less formal because the 
contractor and surveillance personnel actually shared office space and 
had daily interaction.

If surveillance is done properly, it has the potential to identify poor 
contractor performance and mitigate problems on a contract. For 
example, on one of the contracts we reviewed, AFMC was having problems 
with a custodial contract worth approximately $3 million. The 
surveillance personnel assigned to the job followed the surveillance 
plan and documented observations and customer complaints that the 
contractor was not meeting some of the contract requirements for a few 
consecutive months. In each instance, the contractor was asked to re- 
perform the tasks that were deemed unacceptable and the surveillance 
personnel informed the contracting officer of the issues. As the 
problems continued, the contracting officer involved the contractor's 
corporate headquarters and arranged a meeting to resolve the underlying 
problems. Two main problems were identified. Some tasks the government 
expected to be performed were not in the contract, and the contractor 
was providing poor service on other tasks. Both of these problems were 
remedied and surveillance showed the contractor subsequently received 
high ratings. Another example where surveillance caught insufficient 
performance was on a NAVSEA contract worth approximately $14 million. 
The surveillance on this contract was structured so that the government 
would rate each contractor employee's performance. Two contract 
employees were not performing as required and the corporate 
headquarters subsequently replaced both of them within in a few months.

AFMC and NAVSEA Practices Help Provide Sufficient Surveillance:

NAVSEA and AFMC have policies that help ensure that surveillance begins 
as soon as possible on contracts. Both organizations require 
surveillance personnel to be assigned before or at contract award. 
Based on the contracts reviewed, we found that both organizations 
complied with their respective policies--each contract we reviewed had 
someone assigned to conduct surveillance. In contrast, the Army and ACA-
North have no policy requiring surveillance personnel be assigned at or 
before contract award. Of the 26 contracts we identified as having 
insufficient surveillance, 16 were Army contracts, including 9 ACA-
North contracts. The Air Force requires a team be created prior to the 
award of service contracts. This team is comprised of at least the 
contracting officer, a representative from the buying entity, and the 
surveillance personnel who will be assigned to the contract. This 
policy helps assure that surveillance is given a higher priority 
because the contract cannot be awarded until the team has met.

Contract Surveillance Not Always a High Priority:

Surveillance was not always given high priority by either the 
contracting or functional organizations, according to officials 
responsible for the contracts we reviewed. These officials told us 
getting the contracts awarded, and thus supporting the customer, takes 
priority over assuring trained surveillance personnel are assigned 
prior to contract award. The Army, unlike the Air Force and Navy 
organizations we visited, does not require surveillance personnel to be 
assigned to contracts prior to the contract award date. Officials also 
told us almost all surveillance personnel are not evaluated on their 
surveillance responsibilities in their performance assessments because 
surveillance is considered a part-time or ancillary activity. Also, 
some surveillance personnel feel they do not have sufficient hours 
during their normal workday to get the job done.

Surveillance Secondary to Awarding Contracts:

Federal and DOD acquisition regulations do not require surveillance 
personnel to be assigned prior to contract award. Contracting officials 
from all three service commands as well as OSD and senior military 
acquisition policy officials stated that, in general, the priority of 
contracting offices is awarding contracts, not assuring that trained 
surveillance personnel are assigned early on so that surveillance can 
begin upon contract award. Contracting officials told us that their 
primary objective is to get the necessary contracts awarded in order to 
support the functional office (the service customer) and that delaying 
a contract award because of delays in the assignment or training of 
surveillance personnel does not normally occur. It is the assignment of 
surveillance personnel that is usually delayed until after contract 
award because contracting officers cannot assign them until they are 
nominated by the functional office. NAVSEA and AFMC, however, have 
recognized the importance of timely assignment and require contracting 
officers to assign surveillance personnel by contract award. The Army 
and ACA-North have no such requirement. For all the NAVSEA contracts we 
reviewed, surveillance personnel were timely assigned.

Surveillance Personnel Not Rated on Surveillance Responsibilities:

A further indication that surveillance is not always given a high 
priority is that almost all personnel involved in our review are not 
rated on performance of their surveillance responsibilities. NAVSEA and 
Army policy indicates that surveillance responsibilities should at 
least be considered in performance ratings, and Army training material 
indicates that surveillance performance should be evaluated; however, 
in almost all cases, personnel were not being assessed on these 
responsibilities. Officials at NAVSEA told us they plan to issue a 
policy memo encouraging the functional organizations to include 
surveillance duties in performance ratings. While these efforts 
demonstrate a willingness to hold surveillance personnel accountable 
through ratings, they provide no plans or processes to help accomplish 
this. OSD and senior acquisition policy officials also acknowledge that 
assessing surveillance personnel on their responsibilities could 
improve accountability but told us this could require modifications to 
job descriptions, which could be a difficult task.

Some Air Force and Navy Surveillance Personnel Feel Not Enough Time to 
Perform Surveillance:

Several Air Force and Navy personnel told us they do not always have 
sufficient time to focus on surveillance responsibilities; thus, 
possibly contributing to inadequate surveillance or leaving at risk the 
potential for not detecting contractor performance problems. Five 
NAVSEA surveillance personnel out of 17 we talked to told us they felt 
they did not have enough time, in a normal workday, to fully perform 
their surveillance duties. They told us they are usually assigned 
surveillance as a part-time duty to be done in additional to their 
regular, full-time job responsibilities. NAVSEA contract managers 
agreed that surveillance personnel at times do need to work additional 
hours to ensure surveillance is done. According to OSD and senior 
acquisition policy officials, this situation is occurring, in part, due 
to a reduction in the staffing of functional offices that nominate 
personnel to perform surveillance duties.

DOD Initiatives Affecting Surveillance:

DOD is in the process of implementing some initiatives that may help 
improve contract management and oversight practices. DOD has taken some 
steps to implement provisions in the National Defense Authorization Act 
for Fiscal Year 2002[Footnote 18] designed to help improve the general 
management and oversight of service contract procurement and also 
recently issued a policy emphasizing the proper use of other agencies' 
contracts. DOD also recently established additional guidance on 
contract surveillance for cost-reimbursable and time and materials 
service contracts that states that surveillance personnel should be 
appointed to these types of service contracts during the early contract 
planning phase to help improve oversight. In addition, a recently 
revised Army acquisition instruction clarified surveillance 
requirements for certain types of service contracts for which the Army 
was not previously requiring surveillance.

DOD Efforts to Improve Service Contract Management and Oversight:

DOD has taken some steps to implement provisions in section 801 of the 
National Defense Authorization Act for Fiscal Year 2002,[Footnote 19] 
which was intended to improve DOD management and oversight of services 
procurement and reinforce compliance with all applicable statutes, 
regulations, directives, and other requirements, regardless of whether 
the services are procured through a DOD contract or other agencies' 
contracts. DOD also recently issued a policy placing emphasis on the 
proper use of other agencies' contracts, such as GSA's schedules 
program.

Regarding establishment of a management and review structure for 
service contracts, we reported in September 2003[Footnote 20] that DOD 
and the military departments each had a management structure in place 
for reviewing individual service contracts valued at $500 million or 
more prior to contract award, but that approach did not provide a 
departmentwide assessment of how spending for services could be more 
effective. During our current review, we found that DOD and the 
military departments continue to focus their efforts on activities that 
lead up to contract awards and do not track or assess the sufficiency 
of surveillance on service contracts regardless of their dollar value 
or risk. As a result, little has been done as part of implementing 
section 801 to specifically improve DOD surveillance practices.

Section 801 of the act,[Footnote 21] as well as DOD policy, requires 
that certain data elements on service contracts be collected and 
analyzed to help support management decisions. The requirement applies 
to contracts for services valued at $100,000 or more. While DOD has 
been collecting data to comply with the act, no data related to 
contract surveillance is being collected because neither the act nor 
DOD guidance requires collection of this type of data. As a result, DOD 
is not tracking whether the assignment of surveillance personnel has 
taken place. Without this data, DOD and the military departments will 
likely continue to have limited visibility over the timely assignment 
of surveillance personnel and the results of surveillance.

Further, DOD's October 2004 policy, which placed emphasis on the proper 
use of other agencies' contracts, does not specifically address 
surveillance. The policy focuses on ensuring that DOD's procurement 
processes and procedures are done correctly. As discussed earlier, 
surveillance on contracts awarded using interagency arrangements is an 
area where we found efforts could be improved--25 of the 26 contracts 
we determined to have insufficient surveillance were contracts using 
GSA's schedules program.

Additional DOD Surveillance Guidance for Cost Reimbursable and Time and 
Materials Service Contracts:

In September 2004, OSD issued additional guidance to the military 
services on service contracts called cost-reimbursable and time and 
material contracts. The guidance stresses the need for the assignment 
of surveillance personnel for these contracts because they usually 
require significant government surveillance during contract performance 
to ensure the government receives good value.

The additional DOD guidance was issued in response to a 2003 DOD 
Inspector General report that found surveillance was inadequate for 29 
of 43 cost-reimbursable contract actions.[Footnote 22] The Inspector 
General found that surveillance personnel were designated in writing, 
as required, on only 21 of 43 contract actions. Further, for these 21 
contracts, 13 had insufficient surveillance. DOD's September 2004 
guidance was issued to help correct some of these inadequacies.

Revised Army Acquisition Instruction:

Revised Army acquisition instructions, issued in April 2004, now 
require surveillance personnel to be assigned for a certain type of 
service contract called Contract Advisory and Assistance 
Services.[Footnote 23] Senior Army acquisition and other officials at 
the ACA-North told us that, in the past, these contracts required less 
surveillance because they were generally seen as lower risk; in 
addition, the officials noted that shortages of personnel in the 
functional offices also contributed to conducting less surveillance on 
this type of service contract. The Army was unable to provide us 
information on the quantity and dollar amounts associated with these 
contracts that did not have surveillance; as a result, we were unable 
to determine the overall significance of this issue. We are encouraged 
that the Army has now decided to require surveillance for this type of 
contract. However, the new acquisition instructions are not retroactive 
and therefore do not provide a means to require surveillance for 
Contract Advisory and Assistance Services contracts awarded prior to 
April 2004 and still in effect.

Conclusions:

If surveillance is not conducted, not sufficient, or not well 
documented, DOD is at risk of being unable to identify and correct poor 
contractor performance in a timely manner. Ultimately, if surveillance 
is not being done, DOD can be at risk of paying contractors more than 
the value of the services they performed. Key to sufficient 
surveillance are personnel trained in how to conduct surveillance, 
assigned at or prior to contract award, held accountable for their 
surveillance duties, and conducting and documenting surveillance 
throughout the period of the contract. While DOD has taken some actions 
to improve management and oversight of service contracts, more can be 
done to ensure these practices are in place.

Recommendations for Executive Action:

To help improve service contract surveillance and further mitigate 
risk, we recommend that the Secretary of Defense:

* ensure that the proper surveillance training of personnel and their 
assignment to service contracts occurs no later than the date of 
contract award;

* develop practices to help ensure accountability for personnel 
carrying out surveillance responsibilities;

* ensure that DOD's service contract review process and associated data 
collection requirements provide information that will provide more 
management visibility over contract surveillance; and:

* revise the October 2004 policy on proper use of other agencies' 
contracts to include guidance on conducting surveillance of services 
procured from other agencies' contracts.

Further, we recommend that the Secretary of Defense direct the 
Secretary of the Army to assign surveillance personnel to conduct 
surveillance, as appropriate, on ongoing Contract Advisory and 
Assistance Services contracts awarded prior to April 2004.

Agency Comments and Our Evaluation:

DOD provided us with written comments on a draft of this report. DOD 
concurred with four of our recommendations and partially concurred with 
a fifth recommendation and identified actions it has taken or plans to 
take to address them. The comments appear in appendix IV.

DOD partially concurred with our recommendation that the Secretary 
develop practices to help ensure accountability for personnel carrying 
out surveillance responsibilities. DOD stated that it will review the 
feasibility of including a performance goal in a contracting officer 
representative's (surveillance personnel) annual performance evaluation 
which would address the representative's performance of their 
surveillance duties.

We believe DOD's willingness to review and determine the feasibility of 
this issue is a step in the right direction and we believe it could 
lead to a process that holds surveillance personnel accountable for 
their surveillance responsibilities. Whether this is done using annual 
performance evaluations or by other means, we believe it can only lead 
to more sufficient surveillance on DOD service contracts.

We are sending copies of this report to the Secretaries of the Air 
Force, the Army, and the Navy; appropriate congressional committees; 
and other interested parties. We will also provide copies to others on 
request. In addition, the report will be available at no charge on the 
GAO Web site at http://www.gao.gov.

If you or your staff has questions concerning this report, please 
contact me at (202) 512-4841 or by e-mail at cooperd@gao.gov, or James 
Fuquay at:

(937) 258-7963. Key contributors to this report were R. Elizabeth 
DeVan, Johnetta Gatlin-Brown, Arthur James, Victoria Klepacz, John 
Krump, Jean Lee, Don Springman, and Robert Swierczek.

Sincerely yours,

Signed by: 

David E. Cooper, Director: 
Acquisition and Sourcing Management:

[End of section]

Appendix I: Scope and Methodology:

To conduct our work, we selected and reviewed 90 Department of Defense 
(DOD) service contracts, each with a contract action for an amount over 
$100,000 in fiscal year 2003, and their associated surveillance 
records. For each contract, we reviewed surveillance actions for up to 
a 1-year period. Collectively, these contracts had a value of $385.7 
million at the time of contract award. The majority of these contracts 
(59) were awarded primarily at three military commands within the 
military departments: (1) the Army Contracting Agency-North Region (ACA-
North) at Fort Monroe, Virginia; (2) the Naval Sea Systems Command 
(NAVSEA) at the Navy Ship Yard, Washington, D.C; and (3) the Air Force 
Materiel Command (AFMC) at Wright-Patterson Air Force Base, Ohio. Each 
of these organizations spends significant funding for services within 
their respective military department. An additional 31 primarily Army, 
Navy and Air Force contracts that were selected were awarded using the 
General Service Administration's schedules program; these contracts had 
been analyzed in a recent GAO review.[Footnote 24] (See app. III for a 
listing of the contracts we reviewed.)

Our selection of contracts was not large enough to allow projection of 
our findings across DOD. In addition, it did not include research and 
development service contracts for weapon systems and construction 
contracts as the surveillance process typically differs for these types 
of service contracts.

We met with procurement management officials at the three military 
commands as well as senior acquisition policy officials for each of the 
military departments and OSD. We also contacted contracting officials 
or surveillance personnel associated with all 90 contracts selected to 
discuss the surveillance on each contract.

We reviewed the federal and DOD acquisition regulations and policies, 
as well as the instructions and regulations of the military departments 
and the commands we visited, to determine their processes for assigning 
surveillance personnel and performing surveillance on service contracts.

To assess whether DOD's service contract management and oversight 
process developed to comply with section 801 of the National Defense 
Authorization Act for Fiscal Year 2002[Footnote 25] addressed contract 
surveillance, we reviewed the implementation policies of OSD and the 
military departments along with their associated data collection 
efforts. We also discussed DOD's efforts with senior OSD acquisition 
officials.

We conducted our review from January 2004 to February 2005 in 
accordance with generally accepted government auditing standards.

[End of section]

Appendix II: Roles of Contracting Officers and Surveillance Personnel: 

[See PDF for image]

[End of figure]

[End of section]

Appendix III: Contracts Reviewed:

Air Force: AFMC: 1; 
Description of services: Management Support Services; 
Award amount: $27,369,377 ; 
Total obligations as of Nov. 24, 2004: $13,425,866 ; 
Evidence of surveillance: Yes; 
Surveillance personnel assigned: Yes; 
Surveillance personnel trained before duty: Yes; 
Contract/order pricing type[A]: FFP; 
DOD contract/order via GSA schedules: No. 

Air Force: AFMC: 2; 
Description of services: ADP & Telecommunication Services; 
Award amount: $4,466,003; 
Total obligations as of Nov. 24, 2004: --; 
Evidence of surveillance: Yes; 
Surveillance personnel assigned: Yes; 
Surveillance personnel trained before duty: Yes; 
Contract/order pricing type[A]: T&M; 
DOD contract/order via GSA schedules: Yes. 

Air Force: AFMC: 3; 
Description of services: ADP & Telecommunication Services; 
Award amount: $1,300,000; 
Total obligations as of Nov. 24, 2004: $1,300,000; 
Evidence of surveillance: Yes; 
Surveillance personnel assigned: Yes; 
Surveillance personnel trained before duty: Yes; 
Contract/order pricing type[A]: FFP; 
DOD contract/order via GSA schedules: No. 

Air Force: AFMC: 4; 
Description of services: Fueling & Other Petroleum Services; 
Award amount: $1,211,480; 
Total obligations as of Nov. 24, 2004: $5,036,280; 
Evidence of surveillance: Yes; 
Surveillance personnel assigned: Yes; 
Surveillance personnel trained before duty: Yes; 
Contract/order pricing type[A]: FFP; 
DOD contract/order via GSA schedules: No. 

Air Force: AFMC: 5; 
Description of services: Administrative Support Services; 
Award amount: $768,310; 
Total obligations as of Nov. 24, 2004: --; 
Evidence of surveillance: Yes; 
Surveillance personnel assigned: Yes; 
Surveillance personnel trained before duty: --; 
Contract/order pricing type[A]: LH; 
DOD contract/order via GSA schedules: Yes. 

Air Force: AFMC: 6; 
Description of services: Administrative Support Services; 
Award amount: $692,042; 
Total obligations as of Nov. 24, 2004: --; 
Evidence of surveillance: Yes; 
Surveillance personnel assigned: Yes; 
Surveillance personnel trained before duty: Yes; 
Contract/order pricing type[A]: LH; 
DOD contract/order via GSA schedules: Yes. 

Air Force: AFMC: 7; 
Description of services: Trash/Garbage Collection Services; 
Award amount: $438,855; 
Total obligations as of Nov. 24, 2004: $999,831; 
Evidence of surveillance: Yes; 
Surveillance personnel assigned: Yes; 
Surveillance personnel trained before duty: --; 
Contract/order pricing type[A]: FFP; 
DOD contract/order via GSA schedules: No. 

Air Force: AFMC: 8; 
Description of services: ADP & Telecommunication Services; 
Award amount: $343,481; 
Total obligations as of Nov. 24, 2004: $1,336,647; 
Evidence of surveillance: Yes; 
Surveillance personnel assigned: Yes; 
Surveillance personnel trained before duty: Yes; 
Contract/order pricing type[A]: FFP; 
DOD contract/order via GSA schedules: No. 

Air Force: AFMC: 9; 
Description of services: ADP & Telecommunication Services; 
Award amount: $340,749; 
Total obligations as of Nov. 24, 2004: $39,997,549; 
Evidence of surveillance: Yes; 
Surveillance personnel assigned: Yes; 
Surveillance personnel trained before duty: --; 
Contract/order pricing type[A]: T&M; 
DOD contract/order via GSA schedules: No. 

Air Force: AFMC: 10; 
Description of services: Custodial/Janitorial Services; 
Award amount: $294,556; 
Total obligations as of Nov. 24, 2004: $1,817,702; 
Evidence of surveillance: Yes; 
Surveillance personnel assigned: Yes; 
Surveillance personnel trained before duty: No; 
Contract/order pricing type[A]: FFP; 
DOD contract/order via GSA schedules: No. 

Air Force: AFMC: 11; 
Description of services: Technical Assistance; 
Award amount: $283,980; 
Total obligations as of Nov. 24, 2004: --; 
Evidence of surveillance: Yes; 
Surveillance personnel assigned: Yes; 
Surveillance personnel trained before duty: Yes; 
Contract/order pricing type[A]: FFP; 
DOD contract/order via GSA schedules: Yes. 

Air Force: AFMC: 12; 
Description of services: Research & Development Facilities; 
Award amount: $240,869; 
Total obligations as of Nov. 24, 2004: --; 
Evidence of surveillance: Yes; 
Surveillance personnel assigned: Yes; 
Surveillance personnel trained before duty: Yes; 
Contract/order pricing type[A]: LH; 
DOD contract/order via GSA schedules: Yes. 

Air Force: AFMC: 13; 
Description of services: Custodial/Janitorial Services; 
Award amount: $214,007; 
Total obligations as of Nov. 24, 2004: $1,841,015; 
Evidence of surveillance: Yes; 
Surveillance personnel assigned: Yes; 
Surveillance personnel trained before duty: --; 
Contract/order pricing type[A]: FFP; 
DOD contract/order via GSA schedules: No. 

Air Force: AFMC: 14; 
Description of services: Architect-Engineering Services; 
Award amount: $198,009; 
Total obligations as of Nov. 24, 2004: $1,179,395; 
Evidence of surveillance: Yes; 
Surveillance personnel assigned: N/A; 
Surveillance personnel trained before duty: N/A; 
Contract/order pricing type[A]: FFP; 
DOD contract/order via GSA schedules: No. 

Air Force: AFMC: 15; 
Description of services: Technical Representative Services/Aircraft; 
Award amount: $170,040; 
Total obligations as of Nov. 24, 2004: $6,114,699; 
Evidence of surveillance: Yes; 
Surveillance personnel assigned: N/A; 
Surveillance personnel trained before duty: N/A; 
Contract/order pricing type[A]: FFP; 
DOD contract/order via GSA schedules: No. 

Air Force: AFMC: 16; 
Description of services: ADP Data Entry Services; 
Award amount: $154,197; 
Total obligations as of Nov. 24, 2004: --; 
Evidence of surveillance: Yes; 
Surveillance personnel assigned: Yes; 
Surveillance personnel trained before duty: Yes; 
Contract/order pricing type[A]: LH; 
DOD contract/order via GSA schedules: Yes. 

Air Force: AFMC: 17; 
Description of services: Architect-Engineering Services; 
Award amount: $134,555; 
Total obligations as of Nov. 24, 2004: $1,002,798; 
Evidence of surveillance: Yes; 
Surveillance personnel assigned: N/A; 
Surveillance personnel trained before duty: N/A; 
Contract/order pricing type[A]: FFP; 
DOD contract/order via GSA schedules: No. 

Air Force: AFMC: 18; 
Description of services: ADP & Telecommunication Services; 
Award amount: $133,962; 
Total obligations as of Nov. 24, 2004: $202,728; 
Evidence of surveillance: Yes; 
Surveillance personnel assigned: Yes; 
Surveillance personnel trained before duty: Yes; 
Contract/order pricing type[A]: COST; 
DOD contract/order via GSA schedules: No. 

Air Force: AFMC: 19; 
Description of services: Technical Representative Services/Aircraft; 
Award amount: $117,764; 
Total obligations as of Nov. 24, 2004: $654,266; 
Evidence of surveillance: Yes; 
Surveillance personnel assigned: N/A; 
Surveillance personnel trained before duty: N/A; 
Contract/order pricing type[A]: FFP; 
DOD contract/order via GSA schedules: No. 

Air Force: AFMC: 20; 
Description of services: ADP & Telecommunication Services; 
Award amount: $111,000; 
Total obligations as of Nov. 24, 2004: $27,203,283; 
Evidence of surveillance: Yes; 
Surveillance personnel assigned: Yes; 
Surveillance personnel trained before duty: --; 
Contract/order pricing type[A]: T&M; 
DOD contract/order via GSA schedules: No. 

Air Force: Other organizations: 21; 
Description of services: ADP System Acquisition Support Services; 
Award amount: $667,554; 
Total obligations as of Nov. 24, 2004: --; 
Evidence of surveillance: Yes; 
Surveillance personnel assigned: Yes; 
Surveillance personnel trained before duty: Yes; 
Contract/order pricing type[A]: FFP; 
DOD contract/order via GSA schedules: Yes. 

Air Force: Other organizations: 22; 
Description of services: ADP System Acquisition Support Services; 
Award amount: $376,708; 
Total obligations as of Nov. 24, 2004: --; 
Evidence of surveillance: Yes; 
Surveillance personnel assigned: Yes; 
Surveillance personnel trained before duty: Yes; 
Contract/order pricing type[A]: FFP; 
DOD contract/order via GSA schedules: Yes. 

Air Force: Other organizations: 23; 
Description of services: Systems Engineering Services; 
Award amount: $323,308; 
Total obligations as of Nov. 24, 2004: --; 
Evidence of surveillance: Yes; 
Surveillance personnel assigned: Yes; 
Surveillance personnel trained before duty: No; 
Contract/order pricing type[A]: T&M; 
DOD contract/order via GSA schedules: Yes. 

Air Force: Other organizations: 24; 
Description of services: Management Support Services; 
Award amount: $320,123; 
Total obligations as of Nov. 24, 2004: --; 
Evidence of surveillance: Yes; 
Surveillance personnel assigned: Yes; 
Surveillance personnel trained before duty: Yes; 
Contract/order pricing type[A]: FFP; 
DOD contract/order via GSA schedules: Yes. 

Air Force: Other organizations: 25; 
Description of services: ADP & Telecommunication Services; 
Award amount: $254,298; 
Total obligations as of Nov. 24, 2004: --; 
Evidence of surveillance: Yes; 
Surveillance personnel assigned: Yes; 
Surveillance personnel trained before duty: Yes; 
Contract/order pricing type[A]: FFP; 
DOD contract/order via GSA schedules: Yes. 

Air Force: Other organizations: 26; 
Description of services: Other ADP & Telecommunication Services; 
Award amount: $210,239; 
Total obligations as of Nov. 24, 2004: --; 
Evidence of surveillance: Yes; 
Surveillance personnel assigned: Yes; 
Surveillance personnel trained before duty: Yes; 
Contract/order pricing type[A]: FFP; 
DOD contract/order via GSA schedules: Yes. 

Air Force: Other organizations: 27; 
Description of services: ADP & Telecommunication Services; 
Award amount: $145,468; 
Total obligations as of Nov. 24, 2004: --; 
Evidence of surveillance: Yes; 
Surveillance personnel assigned: Yes; 
Surveillance personnel trained before duty: Yes; 
Contract/order pricing type[A]: FFP; 
DOD contract/order via GSA schedules: Yes. 

Air Force: Other organizations: 28; 
Description of services: ADP & Telecommunication Services; 
Award amount: $140,655; 
Total obligations as of Nov. 24, 2004: --; 
Evidence of surveillance: Yes; 
Surveillance personnel assigned: Yes; 
Surveillance personnel trained before duty: No; 
Contract/order pricing type[A]: FFP; 
DOD contract/order via GSA schedules: Yes. 

Army: ACA-North: 29; 
Description of services: Logistics Support Services; 
Award amount: $49,402,900; 
Total obligations as of Nov. 24, 2004: $50,058,493; 
Evidence of surveillance: Yes; 
Surveillance personnel assigned: Yes; 
Surveillance personnel trained before duty: Yes; 
Contract/order pricing type[A]: CPAF; 
DOD contract/order via GSA schedules: No. 

Army: ACA-North: 30; 
Description of services: Professional Services; 
Award amount: $21,717,754; 
Total obligations as of Nov. 24, 2004: --; 
Evidence of surveillance: No; 
Surveillance personnel assigned: Yes; 
Surveillance personnel trained before duty: Yes; 
Contract/order pricing type[A]: FFP; 
DOD contract/order via GSA schedules: Yes. 

Army: ACA-North: 31; 
Description of services: Engineering Technical Services; 
Award amount: $5,406,297; 
Total obligations as of Nov. 24, 2004: $10,688,167; 
Evidence of surveillance: Yes; 
Surveillance personnel assigned: No; 
Surveillance personnel trained before duty: N/A; 
Contract/order pricing type[A]: CPAF; 
DOD contract/order via GSA schedules: No. 

Army: ACA-North: 32; 
Description of services: Guard Services; 
Award amount: $3,637,858; 
Total obligations as of Nov. 24, 2004: $38,176,593; 
Evidence of surveillance: Yes; 
Surveillance personnel assigned: Yes; 
Surveillance personnel trained before duty: No; 
Contract/order pricing type[A]: FPAF; 
DOD contract/order via GSA schedules: No. 

Army: ACA-North: 33; 
Description of services: Professional Services; 
Award amount: $1,746,076; 
Total obligations as of Nov. 24, 2004: --; 
Evidence of surveillance: No; 
Surveillance personnel assigned: No; 
Surveillance personnel trained before duty: N/A; 
Contract/order pricing type[A]: FFP; 
DOD contract/order via GSA schedules: Yes. 

Army: ACA-North: 34; 
Description of services: Program Management/Support Services; 
Award amount: $1,107,053; 
Total obligations as of Nov. 24, 2004: $64,850,669; 
Evidence of surveillance: Yes; 
Surveillance personnel assigned: Yes; 
Surveillance personnel trained before duty: Yes; 
Contract/order pricing type[A]: FFP; 
DOD contract/order via GSA schedules: No. 

Army: ACA-North: 35; 
Description of services: Trash/Garbage Collection Services; 
Award amount: $660,735; 
Total obligations as of Nov. 24, 2004: $451,142; 
Evidence of surveillance: Yes; 
Surveillance personnel assigned: Yes; 
Surveillance personnel trained before duty: Yes; 
Contract/order pricing type[A]: FFP; 
DOD contract/order via GSA schedules: No. 

Army: ACA-North: 36; 
Description of services: Professional Services; 
Award amount: $543,651; 
Total obligations as of Nov. 24, 2004: --; 
Evidence of surveillance: No; 
Surveillance personnel assigned: No; 
Surveillance personnel trained before duty: N/A; 
Contract/order pricing type[A]: LH; 
DOD contract/order via GSA schedules: Yes. 

Army: ACA-North: 37; 
Description of services: Professional Services; 
Award amount: $297,961; 
Total obligations as of Nov. 24, 2004: --; 
Evidence of surveillance: No; 
Surveillance personnel assigned: No; 
Surveillance personnel trained before duty: N/A; 
Contract/order pricing type[A]: LH; 
DOD contract/order via GSA schedules: Yes. 

Army: ACA-North: 38; 
Description of services: Educational Services; 
Award amount: $271,690; 
Total obligations as of Nov. 24, 2004: --; 
Evidence of surveillance: No; 
Surveillance personnel assigned: No; 
Surveillance personnel trained before duty: N/A; 
Contract/order pricing type[A]: FFP; 
DOD contract/order via GSA schedules: Yes. 

Army: ACA-North: 39; 
Description of services: Professional Services; 
Award amount: $253,477; 
Total obligations as of Nov. 24, 2004: --; 
Evidence of surveillance: No; 
Surveillance personnel assigned: No; 
Surveillance personnel trained before duty: N/A; 
Contract/order pricing type[A]: FFP; 
DOD contract/order via GSA schedules: Yes. 

Army: ACA-North: 40; 
Description of services: Education & Training Services; 
Award amount: $175,450; 
Total obligations as of Nov. 24, 2004: $63,576,850; 
Evidence of surveillance: Yes; 
Surveillance personnel assigned: Yes; 
Surveillance personnel trained before duty: Yes; 
Contract/order pricing type[A]: FFP; 
DOD contract/order via GSA schedules: No. 

Army: ACA-North: 41; 
Description of services: Non-nuclear Ship Repair; 
Award amount: $160,720; 
Total obligations as of Nov. 24, 2004: $1,769,422; 
Evidence of surveillance: Yes; 
Surveillance personnel assigned: Yes; 
Surveillance personnel trained before duty: Yes; 
Contract/order pricing type[A]: FFP; 
DOD contract/order via GSA schedules: No. 

Army: ACA-North: 42; 
Description of services: Systems Engineering Services; 
Award amount: $159,111; 
Total obligations as of Nov. 24, 2004: $28,038,198; 
Evidence of surveillance: No; 
Surveillance personnel assigned: No; 
Surveillance personnel trained before duty: N/A; 
Contract/order pricing type[A]: FFP; 
DOD contract/order via GSA schedules: No. 

Army: ACA-North: 43; 
Description of services: ADP & Telecommunication Services; 
Award amount: $157,015; 
Total obligations as of Nov. 24, 2004: --; 
Evidence of surveillance: No; 
Surveillance personnel assigned: No; 
Surveillance personnel trained before duty: N/A; 
Contract/order pricing type[A]: FFP; 
DOD contract/order via GSA schedules: Yes. 

Army: ACA-North: 44; 
Description of services: Non-nuclear Ship Repair; 
Award amount: $152,000; 
Total obligations as of Nov. 24, 2004: $3,446,965; 
Evidence of surveillance: Yes; 
Surveillance personnel assigned: Yes; 
Surveillance personnel trained before duty: Yes; 
Contract/order pricing type[A]: FFP; 
DOD contract/order via GSA schedules: No. 

Army: ACA-North: 45; 
Description of services: Conservation & Development Facilities 
Maintenance; 
Award amount: $144,718; 
Total obligations as of Nov. 24, 2004: --; 
Evidence of surveillance: No; 
Surveillance personnel assigned: Yes; 
Surveillance personnel trained before duty: Yes; 
Contract/order pricing type[A]: FFP; 
DOD contract/order via GSA schedules: Yes. 

Army: ACA-North: 46; 
Description of services: Office Buildings Maintenance; 
Award amount: $129,250; 
Total obligations as of Nov. 24, 2004: $1,175,090; 
Evidence of surveillance: Yes; 
Surveillance personnel assigned: Yes; 
Surveillance personnel trained before duty: N/A; 
Contract/order pricing type[A]: FFP; 
DOD contract/order via GSA schedules: No. 

Army: ACA-North: 47; 
Description of services: Communications Services; 
Award amount: $110,463; 
Total obligations as of Nov. 24, 2004: $110,463; 
Evidence of surveillance: Yes; 
Surveillance personnel assigned: Yes; 
Surveillance personnel trained before duty: No; 
Contract/order pricing type[A]: FFP; 
DOD contract/order via GSA schedules: No. 

Army: Other organizations: 48; 
Description of services: Engineering Technical Services; 
Award amount: $6,722,044; 
Total obligations as of Nov. 24, 2004: --; 
Evidence of surveillance: No; 
Surveillance personnel assigned: No; 
Surveillance personnel trained before duty: N/A; 
Contract/order pricing type[A]: FFP; 
DOD contract/order via GSA schedules: Yes. 

Army: Other organizations: 49; 
Description of services: ADP & Telecommunication Services; 
Award amount: $5,999,724; 
Total obligations as of Nov. 24, 2004: --; 
Evidence of surveillance: Yes; 
Surveillance personnel assigned: No; 
Surveillance personnel trained before duty: N/A; 
Contract/order pricing type[A]: FFP; 
DOD contract/order via GSA schedules: Yes. 

Army: Other organizations: 50; 
Description of services: Medical Services; 
Award amount: $3,791,788; 
Total obligations as of Nov. 24, 2004: --; 
Evidence of surveillance: No; 
Surveillance personnel assigned: Yes; 
Surveillance personnel trained before duty: --; 
Contract/order pricing type[A]: FFP; 
DOD contract/order via GSA schedules: Yes. 

Army: Other organizations: 51; 
Description of services: Special Studies & Analyses; 
Award amount: $1,659,302; 
Total obligations as of Nov. 24, 2004: --; 
Evidence of surveillance: Yes; 
Surveillance personnel assigned: No; 
Surveillance personnel trained before duty: N/A; 
Contract/order pricing type[A]: T&M; 
DOD contract/order via GSA schedules: Yes. 

Army: Other organizations: 52; 
Description of services: Medical Services; 
Award amount: $1,146,743; 
Total obligations as of Nov. 24, 2004: --; 
Evidence of surveillance: Yes; 
Surveillance personnel assigned: Yes; 
Surveillance personnel trained before duty: --; 
Contract/order pricing type[A]: FFP; 
DOD contract/order via GSA schedules: Yes. 

Army: Other organizations: 53; 
Description of services: Programming Services; 
Award amount: $349,932; 
Total obligations as of Nov. 24, 2004: --; 
Evidence of surveillance: Yes; 
Surveillance personnel assigned: Yes; 
Surveillance personnel trained before duty: --; 
Contract/order pricing type[A]: T&M; 
DOD contract/order via GSA schedules: Yes. 

Army: Other organizations: 54; 
Description of services: Patent & Trademark Services; 
Award amount: $288,417; 
Total obligations as of Nov. 24, 2004: --; 
Evidence of surveillance: No; 
Surveillance personnel assigned: No; 
Surveillance personnel trained before duty: N/A; 
Contract/order pricing type[A]: FFP; 
DOD contract/order via GSA schedules: Yes. 

Army: Other organizations: 55; 
Description of services: ADP System Acquisition Support; 
Award amount: $238,992; 
Total obligations as of Nov. 24, 2004: --; 
Evidence of surveillance: No; 
Surveillance personnel assigned: No; 
Surveillance personnel trained before duty: N/A; 
Contract/order pricing type[A]: FFP; 
DOD contract/order via GSA schedules: Yes. 

Army: Other organizations: 56; 
Description of services: Engineering Technical Services; 
Award amount: $192,894; 
Total obligations as of Nov. 24, 2004: --; 
Evidence of surveillance: No; 
Surveillance personnel assigned: No; 
Surveillance personnel trained before duty: N/A; 
Contract/order pricing type[A]: FFP; 
DOD contract/order via GSA schedules: Yes. 

Army: Other organizations: 57; 
Description of services: Management Support Services; 
Award amount: $187,210; 
Total obligations as of Nov. 24, 2004: --; 
Evidence of surveillance: No; 
Surveillance personnel assigned: No; 
Surveillance personnel trained before duty: N/A; 
Contract/order pricing type[A]: FFP; 
DOD contract/order via GSA schedules: Yes. 

Army: Other organizations: 58; 
Description of services: ADP System Acquisition Support; 
Award amount: $123,648; 
Total obligations as of Nov. 24, 2004: --; 
Evidence of surveillance: No; 
Surveillance personnel assigned: No; 
Surveillance personnel trained before duty: N/A; 
Contract/order pricing type[A]: FFP; 
DOD contract/order via GSA schedules: Yes. 

Navy: NAVSEA: 59; 
Description of services: Modification of Equipment/Ships/Docks; 
Award amount: $196,709,927; 
Total obligations as of Nov. 24, 2004: $575,647,323; 
Evidence of surveillance: Yes; 
Surveillance personnel assigned: Yes; 
Surveillance personnel trained before duty: Yes; 
Contract/order pricing type[A]: CPFF; 
DOD contract/order via GSA schedules: No. 

Navy: NAVSEA: 60; 
Description of services: Systems Engineering Services; 
Award amount: $5,616,591; 
Total obligations as of Nov. 24, 2004: $23,609,031; 
Evidence of surveillance: Yes; 
Surveillance personnel assigned: Yes; 
Surveillance personnel trained before duty: Yes; 
Contract/order pricing type[A]: CPFF; 
DOD contract/order via GSA schedules: No. 

Navy: NAVSEA: 61; 
Description of services: Maintenance & Repair of Fire Control 
Equipment; 
Award amount: $4,791,859; 
Total obligations as of Nov. 24, 2004: $75,750,011; 
Evidence of surveillance: Yes; 
Surveillance personnel assigned: Yes; 
Surveillance personnel trained before duty: Yes; 
Contract/order pricing type[A]: CPAF; 
DOD contract/order via GSA schedules: No. 

Navy: NAVSEA: 62; 
Description of services: Maintenance & Repair of Electrical & Electric 
Equipment; 
Award amount: $4,757,680; 
Total obligations as of Nov. 24, 2004: $3,105,727; 
Evidence of surveillance: Yes; 
Surveillance personnel assigned: Yes; 
Surveillance personnel trained before duty: Yes; 
Contract/order pricing type[A]: CPFF; 
DOD contract/order via GSA schedules: No. 

Navy: NAVSEA: 63; 
Description of services: Professional Services; 
Award amount: $3,180,123; 
Total obligations as of Nov. 24, 2004: $36,978,828; 
Evidence of surveillance: Yes; 
Surveillance personnel assigned: Yes; 
Surveillance personnel trained before duty: Yes; 
Contract/order pricing type[A]: CPFF; 
DOD contract/order via GSA schedules: No. 

Navy: NAVSEA: 64; 
Description of services: Professional Services; 
Award amount: $2,902,171; 
Total obligations as of Nov. 24, 2004: $74,917,520; 
Evidence of surveillance: Yes; 
Surveillance personnel assigned: Yes; 
Surveillance personnel trained before duty: Yes; 
Contract/order pricing type[A]: CPFF; 
DOD contract/order via GSA schedules: No. 

Navy: NAVSEA: 65; 
Description of services: Program Management/Support Services; 
Award amount: $2,083,517; 
Total obligations as of Nov. 24, 2004: $21,189,632; 
Evidence of surveillance: Yes; 
Surveillance personnel assigned: Yes; 
Surveillance personnel trained before duty: Yes; 
Contract/order pricing type[A]: CPFF; 
DOD contract/order via GSA schedules: No. 

Navy: NAVSEA: 66; 
Description of services: Equipment & Mats Testing/Fire Control; 
Award amount: $1,425,096; 
Total obligations as of Nov. 24, 2004: $36,244,138; 
Evidence of surveillance: Yes; 
Surveillance personnel assigned: Yes; 
Surveillance personnel trained before duty: No; 
Contract/order pricing type[A]: CPAF; 
DOD contract/order via GSA schedules: No. 

Navy: NAVSEA: 67; 
Description of services: Professional Services; 
Award amount: $990,787; 
Total obligations as of Nov. 24, 2004: $3,523,667; 
Evidence of surveillance: Yes; 
Surveillance personnel assigned: Yes; 
Surveillance personnel trained before duty: Yes; 
Contract/order pricing type[A]: CPFF; 
DOD contract/order via GSA schedules: No. 

Navy: NAVSEA: 68; 
Description of services: Engineering Technical Services; 
Award amount: $980,000; 
Total obligations as of Nov. 24, 2004: $68,436,790; 
Evidence of surveillance: Yes; 
Surveillance personnel assigned: Yes; 
Surveillance personnel trained before duty: Yes; 
Contract/order pricing type[A]: CPFF; 
DOD contract/order via GSA schedules: No. 

Navy: NAVSEA: 69; 
Description of services: Professional Services; 
Award amount: $733,450; 
Total obligations as of Nov. 24, 2004: $7,252,297; 
Evidence of surveillance: Yes; 
Surveillance personnel assigned: Yes; 
Surveillance personnel trained before duty: No; 
Contract/order pricing type[A]: CPFF; 
DOD contract/order via GSA schedules: No. 

Navy: NAVSEA: 70; 
Description of services: Professional Services; 
Award amount: $470,000; 
Total obligations as of Nov. 24, 2004: $6,314,877; 
Evidence of surveillance: Yes; 
Surveillance personnel assigned: Yes; 
Surveillance personnel trained before duty: Yes; 
Contract/order pricing type[A]: CPFF; 
DOD contract/order via GSA schedules: No. 

Navy: NAVSEA: 71; 
Description of services: Professional Services; 
Award amount: $400,340; 
Total obligations as of Nov. 24, 2004: $12,605,550; 
Evidence of surveillance: Yes; 
Surveillance personnel assigned: Yes; 
Surveillance personnel trained before duty: No; 
Contract/order pricing type[A]: CPFF; 
DOD contract/order via GSA schedules: No. 

Navy: NAVSEA: 72; 
Description of services: Program Management/Support Services; 
Award amount: $329,014; 
Total obligations as of Nov. 24, 2004: $27,694,233; 
Evidence of surveillance: Yes; 
Surveillance personnel assigned: Yes; 
Surveillance personnel trained before duty: No; 
Contract/order pricing type[A]: CPFF; 
DOD contract/order via GSA schedules: No. 

Navy: NAVSEA: 73; 
Description of services: Professional Services; 
Award amount: $274,510; 
Total obligations as of Nov. 24, 2004: $7,146,906; 
Evidence of surveillance: Yes; 
Surveillance personnel assigned: Yes; 
Surveillance personnel trained before duty: Yes; 
Contract/order pricing type[A]: CPFF; 
DOD contract/order via GSA schedules: No. 

Navy: NAVSEA: 74; 
Description of services: Maintenance & Repair of Equipment; 
Award amount: $250,000; 
Total obligations as of Nov. 24, 2004: $33,101,536; 
Evidence of surveillance: Yes; 
Surveillance personnel assigned: N/A; 
Surveillance personnel trained before duty: N/A; 
Contract/order pricing type[A]: FFP; 
DOD contract/order via GSA schedules: No. 

Navy: NAVSEA: 75; 
Description of services: Professional Services; 
Award amount: $225,000; 
Total obligations as of Nov. 24, 2004: $11,272,286; 
Evidence of surveillance: Yes; 
Surveillance personnel assigned: Yes; 
Surveillance personnel trained before duty: Yes; 
Contract/order pricing type[A]: CPFF; 
DOD contract/order via GSA schedules: No. 

Navy: NAVSEA: 76; 
Description of services: Professional Services; 
Award amount: $195,518; 
Total obligations as of Nov. 24, 2004: $26,758,191; 
Evidence of surveillance: Yes; 
Surveillance personnel assigned: Yes; 
Surveillance personnel trained before duty: No; 
Contract/order pricing type[A]: CPFF; 
DOD contract/order via GSA schedules: No. 

Navy: NAVSEA: 77; 
Description of services: Maintenance & Repair of Ship & Marine 
Equipment; 
Award amount: $148,320; 
Total obligations as of Nov. 24, 2004: $1,118,694; 
Evidence of surveillance: Yes; 
Surveillance personnel assigned: Yes; 
Surveillance personnel trained before duty: Yes; 
Contract/order pricing type[A]: CPIF; 
DOD contract/order via GSA schedules: No. 

Navy: NAVSEA: 78; 
Description of services: Salvage Services; 
Award amount: $136,364; 
Total obligations as of Nov. 24, 2004: $38,460,222; 
Evidence of surveillance: Yes; 
Surveillance personnel assigned: N/A; 
Surveillance personnel trained before duty: N/A; 
Contract/order pricing type[A]: CPAF; 
DOD contract/order via GSA schedules: No. 

Navy: Other organizations: 79; 
Description of services: ADP Software, Equipment, and Tele-Training; 
Award amount: $2,794,083; 
Total obligations as of Nov. 24, 2004: --; 
Evidence of surveillance: No; 
Surveillance personnel assigned: Yes; 
Surveillance personnel trained before duty: Yes; 
Contract/order pricing type[A]: LH; 
DOD contract/order via GSA schedules: Yes. 

Navy: Other organizations: 80; 
Description of services: ADP Software, Equipment, and Tele-Training; 
Award amount: $2,586,967; 
Total obligations as of Nov. 24, 2004: --; 
Evidence of surveillance: No; 
Surveillance personnel assigned: Yes; 
Surveillance personnel trained before duty: Yes; 
Contract/order pricing type[A]: LH; 
DOD contract/order via GSA schedules: Yes. 

Navy: Other organizations: 81; 
Description of services: Other ADP & Telecommunication Services; 
Award amount: $1,177,846; 
Total obligations as of Nov. 24, 2004: --; 
Evidence of surveillance: No; 
Surveillance personnel assigned: Yes; 
Surveillance personnel trained before duty: Yes; 
Contract/order pricing type[A]: LH; 
DOD contract/order via GSA schedules: Yes. 

Navy: Other organizations: 82; 
Description of services: ADP & Telecommunication Services; 
Award amount: $841,402; 
Total obligations as of Nov. 24, 2004: --; 
Evidence of surveillance: No; 
Surveillance personnel assigned: Yes; 
Surveillance personnel trained before duty: --; 
Contract/order pricing type[A]: LH; 
DOD contract/order via GSA schedules: Yes. 

Navy: Other organizations: 83; 
Description of services: ADP Facility Operations & Maintenance; 
Award amount: $830,491; 
Total obligations as of Nov. 24, 2004: --; 
Evidence of surveillance: Yes; 
Surveillance personnel assigned: No; 
Surveillance personnel trained before duty: N/A; 
Contract/order pricing type[A]: LH; 
DOD contract/order via GSA schedules: Yes. 

Navy: Other organizations: 84; 
Description of services: ADP & Telecommunication Services; 
Award amount: $492,776; 
Total obligations as of Nov. 24, 2004: --; 
Evidence of surveillance: No; 
Surveillance personnel assigned: No; 
Surveillance personnel trained before duty: N/A; 
Contract/order pricing type[A]: LH; 
DOD contract/order via GSA schedules: Yes. 

OSD & Other Defense Agencies: 85; 
Description of services: ADP Facility Operations & Maintenance; 
Award amount: $132,443; 
Total obligations as of Nov. 24, 2004: --; 
Evidence of surveillance: No; 
Surveillance personnel assigned: Yes; 
Surveillance personnel trained before duty: --; 
Contract/order pricing type[A]: FFP; 
DOD contract/order via GSA schedules: Yes. 

OSD & Other Defense Agencies: 86; 
Description of services: ADP & Telecommunication Services; 
Award amount: $1,033,000; 
Total obligations as of Nov. 24, 2004: --; 
Evidence of surveillance: No; 
Surveillance personnel assigned: No; 
Surveillance personnel trained before duty: N/A; 
Contract/order pricing type[A]: --; 
DOD contract/order via GSA schedules: Yes. 

OSD & Other Defense Agencies: 87; 
Description of services: ADP & Telecommunication Services; 
Award amount: $362,160; 
Total obligations as of Nov. 24, 2004: --; 
Evidence of surveillance: No; 
Surveillance personnel assigned: Yes; 
Surveillance personnel trained before duty: --; 
Contract/order pricing type[A]: FFP; 
DOD contract/order via GSA schedules: Yes. 

OSD & Other Defense Agencies: 88; 
Description of services: ADP & Telecom Services; 
Award amount: $237,024; 
Total obligations as of Nov. 24, 2004: --; 
Evidence of surveillance: Yes; 
Surveillance personnel assigned: Yes; 
Surveillance personnel trained before duty: --; 
Contract/order pricing type[A]: FFP; 
DOD contract/order via GSA schedules: Yes. 

OSD & Other Defense Agencies: 89; 
Description of services: ADP & Telecommunication Services; 
Award amount: $185,355; 
Total obligations as of Nov. 24, 2004: --; 
Evidence of surveillance: No; 
Surveillance personnel assigned: Yes; 
Surveillance personnel trained before duty: --; 
Contract/order pricing type[A]: --; 
DOD contract/order via GSA schedules: Yes. 

OSD & Other Defense Agencies: 90; 
Description of services: ADP & Telecommunication Services; 
Award amount: $156,740; 
Total obligations as of Nov. 24, 2004: --; 
Evidence of surveillance: No; 
Surveillance personnel assigned: Yes; 
Surveillance personnel trained before duty: --; 
Contract/order pricing type[A]: --; 
DOD contract/order via GSA schedules: Yes. 

[SOURCE: GAO.]

[A] FFP - Firm Fixed Price; 
T&M - Time and Materials; 
LH - Labor Hour; 
COST - Cost Type; 
CPAF - Cost Plus Award Fee; 
FPAF - Fixed Price Award Fee; 
CPFF - Cost Plus Fixed Fee; 
CDIF - Cost Plus Incentive Fee:

[End of table]

[End of section]

Appendix IV: Comments from the Department of Defense:

OFFICE OF THE UNDER SECRETARY OF DEFENSE:
ACQUISITION TECHNOLOGY AND LOGISTICS:

3000 DEFENSE PENTAGON: 
WASHINGTON, DC 20301-3000:

MAR 11 2005:

Mr. David E. Cooper:
Director, Acquisition and Sourcing Management: 
U.S. Government Accountability Office:
441 G. Street, NW: 
Washington, DC 20548:

Dear Mr. Cooper:

This is the Department of Defense (DoD) response to the GAO draft 
report, "CONTRACT MANAGEMENT: Opportunities to Improve Surveillance on 
Department of Defense Service Contracts," dated February 8, 2005, (GAO 
Code 120313/GAO-05-274).

Please see the enclosed for DoD's comments. If you have any questions 
concerning this matter please contact Mr. William C. Timperley at 703- 
697-8336 or via e-mail at william.timperley@osd.mil.

Signed by: 

Deidre A. Lee:
Director, Defense Procurement and Acquisition Policy:

Enclosure: 
As stated:

GAO Draft Report - Dated February 8, 2005 GAO CODE 120313/GAO-05-274:

"CONTRACT MANAGEMENT: OPPORTUNITIES TO IMPROVE SURVEILLANCE ON DOD 
SERVICE CONTRACTS":

DEPARTMENT OF DEFENSE COMMENTS TO THE GAO RECOMMENDATIONS:

RECOMMENDATION 1: Ensure that the proper surveillance training of 
personnel and their assignment to service contracts occurs no later 
that the date of contract award.

DOD RESPONSE: Concur. DoD will modify DFARS to require that, unless a 
waiver is approved in writing, contracting officers must appoint a 
properly trained contracting officer representative (COR) in writing 
before performance commences on any contract action for services 
awarded by a DoD component or by another federal agency on behalf of 
DoD. The COR performs contract surveillance on behalf of the 
contracting officer.

RECOMMENDATION 2: Develop practices to help ensure accountability for 
personnel carrying out surveillance responsibilities.

DOD RESPONSE: Partially concur. The Department of Defense will review 
the feasibility of including a performance goal in a contracting 
officer's representative (COR) annual performance evaluation which 
addresses the COR's performance of their surveillance duties.

RECOMMENDATION 3: Ensure that DoD's service contract review process and 
associated data collection requirements provide information that will 
provide more management visibility over contract surveillance.

DOD RESPONSE: Concur. DoD will review its contract review process and 
data collection requirements to ensure that adequate visibility is 
provided over contract surveillance personnel and activities.

RECOMMENDATION 4: Revise the October 2004 policy guidance on proper use 
of other agencies contracts to include guidance on conducting 
surveillance of service procured from other agencies' contracts.

DOD RESPONSE: Concur. DoD will clarify its October 2004 policy guidance 
to require that properly trained contracting officer representative 
must be appointed for all contracts for services awarded by other 
federal agencies and for all orders placed against such contracts and 
that all government surveillance activity, or reason for the lack 
thereof, be fully documented by a DoD contracting officer.

RECOMMENDATION 5: That the Secretary of Defense direct the Secretary of 
the Army to assign surveillance personnel to conduct surveillance, as 
appropriate, on on-going Contract Advisory and Assistance Services 
(CAAS) contracts awarded prior to April 2004.

DOD RESPONSE: Concur: DoD will direct the Army to immediately assign a 
contracting officer's representative (COR) to perform surveillance on 
any CAAS contracts awarded prior to April 2004 where a COR is not 
currently assigned.

It should be noted that the Army has already undertaken steps to 
address these concerns. The Deputy Assistant Secretary of the Army 
(Policy and Procurement) signed a memorandum to the Director, Defense 
Procurement and Acquisition, dated April 2, 2004. This memorandum 
indicated that each Army contracting office is providing the 
Contracting Officer's Representatives (CORs) written appointments that 
adequately describe the COR duties and responsibilities, that all CORs 
have the necessary training before they are appointed and that the 
Army's Procurement Management Assessment Program continues to ensure 
that review teams assess service contracting during their reviews. In 
addition, the Army Contracting Agency (ACA) has published the Minimum 
Curriculum Requirements for COR Training, dated December 1, 2004, has 
issued an extensive COR Guide on January 11, 2005, (Both available on 
the ACA web page, http://aca.saalt.army.mil/ACA) and is currently 
preparing a surveillance guide for service contracts. 

[End of section]

FOOTNOTES

[1] DOD Inspector General, Acquisition: Contracts for Professional, 
Administrative, and Management Support Services, D-2004-015 (Oct. 30, 
2003) and D-2000-100 (Mar. 10, 2000).

[2] GAO, Major Management Challenges and Program Risks: Department of 
Defense, GAO-03-98 (Washington, D.C.: January 2003) and GAO, High-Risk 
Series: An Update, Department of Defense Contract Management, GAO-05-
207 (Washington D.C.: January 2005).

[3] We also reviewed a small number of contracts associated with the 
Office of the Secretary of Defense and other defense agencies.

[4] Section 801, National Defense Authorization Act for Fiscal Year 
2002, Public Law 107-107, Dec. 28, 2001.

[5] Cost-reimbursement contracts provides for Government's payment of 
allowable costs incurred by the contractor. Federal Acquisition 
Regulation 16.301-1, Cost-Reimbursement Contracts (hereinafter FAR).

[6] Time-and-materials contracts that provide for acquiring supplies or 
services on the basis of direct contractor labor hours at fixed rates 
and materials at cost. FAR 16.601, Time-and-Materials Contracts.

[7] The DOD and the federal government have 24 different categories of 
service contracts. These categories range from contracts for 
information technology and medical services to base operating support.

[8] FAR 37.602-2, Quality Assurance and FAR 46.104, Contract 
Administration Office Responsibilities.

[9] Defense Federal Acquisition Regulations Supplement 246.102.

[10] Guidebook for Performance-Based Services Acquisition in the 
Department of Defense, December 2000.

[11] The military services, including the contracting offices we 
visited during this review use different terms to describe personnel 
involved in surveillance including: Quality Assurance Personnel (QAP), 
Quality Assurance Evaluator (QAE), Contracting Officer's Representative 
(COR), Contracting Officer's Technical Representative (COTR) and Task 
Order Manager (TOM). For purposes of this report, we will refer to all 
these positions as surveillance personnel.

[12] Public Law 107-107, Dec. 28, 2001.

[13] GAO, Contract Management: High-Level Attention Needed to Transform 
DOD Services Acquisition, GAO-03-935 (Washington, D.C.: Sep. 10, 2003).

[14] The $46.6 million was the total value of the 26 contracts at the 
time they were awarded. Contracts can increase in value for a number of 
reasons after they are awarded. Contracts can increase in value when 
additional contract options are exercised, the scope of the contract 
changes, etc. For example, one NAVSEA contract increased from $225,000 
at contract award, but has the potential to increase to $96 million. 
Many of the contracts we reviewed increased in value since they were 
awarded.

[15] GSA's multiple award schedules program provides federal agencies 
with a simplified process of acquiring commonly used supplies and 
services in varying quantities while obtaining volume discounts. In 
return, agencies utilizing the schedules program provide GSA with a 
user fee to cover GSA's administrative expenses.

[16] GAO, High-Risk Series: An Update, GAO-05-207 (Washington D.C.: 
January 2005).

[17] We did not obtain the total amount of obligations for about one- 
half of the contracts.

[18] Section 801, Public Law 107-107, Dec. 28, 2001.

[19] Section 801, Public Law 107-107, Dec. 28, 2001.

[20] GAO, Contract Management: High-Level Attention Needed to Transform 
DOD Services Acquisition, GAO-03-935 (Washington, D.C.: Sept. 10, 2003).

[21] Public Law 107-107, Dec. 28, 2001.

[22] DOD Inspector General, Acquisition: Contracts for Professional, 
Administrative, and Management Support Services, D-2004-015 (Oct. 30, 
2003).

[23] Contract Advisory and Assistance Services, CAAS, are contracts 
where contractors provide professional consultation and assistance to 
government organizations contracting for services.

[24] GAO, Contract Management: Guidance Needed to Promote Competition 
for Defense Task Orders, GAO-04-874 (Washington, D.C.: July 2004).

[25] Public Law 107-107, Dec. 28, 2001.

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