Contract Management:

Opportunities to Improve Surveillance on Department of Defense Service Contracts

GAO-05-274: Published: Mar 17, 2005. Publicly Released: Mar 17, 2005.

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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.

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.

Status Legend:

More Info
  • Review Pending-GAO has not yet assessed implementation status.
  • Open-Actions to satisfy the intent of the recommendation have not been taken or are being planned, or actions that partially satisfy the intent of the recommendation have been taken.
  • Closed-implemented-Actions that satisfy the intent of the recommendation have been taken.
  • Closed-not implemented-While the intent of the recommendation has not been satisfied, time or circumstances have rendered the recommendation invalid.
    • Review Pending
    • Open
    • Closed - implemented
    • Closed - not implemented

    Recommendations for Executive Action

    Recommendation: To help improve service contract surveillance and further mitigate risk, the Secretary of Defense should 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.

    Agency Affected: Department of Defense

    Status: Closed - Implemented

    Comments: DOD concurred with the recommendation and has completed implementation. The Acting Director, Defense Procurement and Acquisition Policy, OUSD(AT&L), issued a policy memorandum on September 20, 2005, entitled "Interagency Acquisition: A Shared Responsibility" to the Military Departments, Defense Agencies, DOD Field Activities and others. The memo specifically stated "all parties to an interagency acquisition must ensure that the duties and responsibilities of contract administration and oversight are clearly assigned and correctly performed."

    Recommendation: To help improve service contract surveillance and further mitigate risk, the Secretary of Defense should ensure that DOD's service contract review process and associated data collection requirements provide information that will provide more management visibility over contract surveillance.

    Agency Affected: Department of Defense

    Status: Closed - Implemented

    Comments: DOD concurred with the recommendation and implemented it by Under Secretary of Defense for Acquisition, Technology and Logistics issuing new Acquisition of Services Policy on October 2, 2006. The new policy covers DOD management of the acquisition of services and contains a requirement for Senior Officials to review a list of Acquisition Strategy Requirements for all categories of services. The list includes a requirement for contract tracking and oversight by tracking procedures or processes used to monitor contract performance including the existing or planned management approach following contract award and the quality assurance surveillance or written oversight plans and responsibilities.

    Recommendation: To help improve service contract surveillance and further mitigate risk, the Secretary of Defense should develop practices to help ensure accountability for personnel carrying out surveillance responsibilities.

    Agency Affected: Department of Defense

    Status: Closed - Implemented

    Comments: DOD concurred with the recommendation and on December 6, 2006, the Director, Defense Procurement and Acquisition Policy, OUSD (AT&L), issued a memorandum that, among other things, requires DOD components to ensure that the contribution of surveillance personnel (Contracting Officer Representatives, CORs) in assisting in the monitoring or administration of contracts is addressed as appropriate in the performance reviews of these individuals.

    Recommendation: To help improve service contract surveillance and further mitigate risk, the Secretary of Defense should ensure that the proper surveillance training of personnel and their assignment to service contracts occurs no later than the date of contract award.

    Agency Affected: Department of Defense

    Status: Closed - Implemented

    Comments: DOD concurred with the recommendation and completed implementation on January 10, 2006. On December 20, 2005, the Defense Procurement and Acquisition Policy Office, OUSD (AT

    Recommendation: The Secretary of Defense should 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 Affected: Department of Defense

    Status: Closed - Implemented

    Comments: DOD concurred with the recommendation and implemented it as part of a December 6, 2006, memorandum issued by the Director, Defense Procurement and Acquisition Policy, OUSD(AT&L). This memorandum contains a requirement for DOD Components to ensure that properly trained surveillance personnel (Contracting Officer Representatives, CORs) are identified on active contracts for services in support of DoD requirements. This requirement applies DOD-wide and to all active contracts for services in support of DOD requirements.

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