Army Corps of Engineers:

Improved Monitoring and Clear Guidance Would Contribute to More Effective Use of Continuing Contracts

GAO-06-966: Published: Sep 8, 2006. Publicly Released: Sep 8, 2006.

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The U.S. Army Corps of Engineers (Corps) is authorized under the River and Harbor Act of 1922 to issue contracts with a continuing contracts clause to carry out certain projects. This allows the Corps to award multi-year contracts without having received appropriations to cover the full contract amount. The Corps has used these contracts for decades, but modified their use in 2005, in response to congressional committee concerns that their use may have been ineffective. GAO was asked to determine (1) the number and dollar amount of continuing contracts the Corps awarded during fiscal years 2003?2005; (2) the circumstances in which the Corps used continuing contracts in fiscal years 2003-2005; and (3) how the Corps' process for approving and using continuing contracts changed since 2005, and whether the changes reduced the use of these contracts. For these objectives, GAO reviewed the Corps' contracting data, a random sample of 107 continuing contracts, and districts' requests to use continuing contracts

The Corps does not know how many continuing contracts it awarded in fiscal years 2003-2005 or the dollar value of these contracts, because it does not track information on the contracts awarded with a continuing contracts clause. Although the Corps was directed to provide the appropriations committees with quarterly reports on their use of continuing contracts in fiscal year 2006, GAO found that the information was inaccurate. For example, at least 13 continuing contracts were missing from the reports and 10 continuing contracts had inaccurate values. Because the Corps could not provide information on the number of continuing contracts awarded for fiscal years 2003-2005, GAO analyzed the Corps' contracting data and determined that 1,592 contracts awarded in these 3 years most likely included and used a continuing contracts clause. These contracts were expected to cost more than $3.96 billion when awarded and would generally be funded to cover the full contract amount (fully funded) pursuant to requirements of the Antideficiency Act. However, continuing contracts are exempt from the act. Consequently, the Corps only obligated $655 million when it awarded these contracts, leaving an outstanding commitment of about $3.30 billion to be covered by future years' appropriations. During fiscal years 2003?2005, the Corps' standard operating practice was to include a continuing contracts clause in most contracts. As a result, many continuing contracts were used for short term and low dollar value contracts. The Corps might have been able to fully fund some of these contracts if, at the time of award, the Corps had adequate appropriations to cover the contract amount. For example, for the 107 continuing contracts GAO reviewed, about one-third were valued at less than $1 million. In only 8 of 107 continuing contracts that GAO reviewed, the contract value was more than $10 million and involved work that required more than 12 calendar months to complete. The Corps also used continuing contracts extensively to move funds among projects and help meet its policy of expending all available appropriations in the fiscal year appropriated. For fiscal years 2003-2005, GAO found that over half of the contracts reviewed were awarded during the last quarter of the fiscal year as continuing contracts with little or no associated obligations, thereby shifting the obligations to pay for these contracts into future years. The Corps responded to congressional committee direction in 2005 and again in 2006 to monitor the use of continuing contracts by, among other things, requiring districts to obtain headquarters' approval before using such contracts. The new processes reduced the use of continuing contracts, but have not prevented the approval of continuing contracts for short-term, low dollar value contracts. This occurred because the Corps established criteria on when contracts should be fully funded, but did not establish criteria for when continuing contracts should be used.

Status Legend:

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  • 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 ensure the judicious use of continuing contracts by the Corps districts and to provide better management of projects that use such contracts, the Secretary of Defense should direct the Commanding General and the Chief of Engineers of the U.S. Army Corps of Engineers to eliminate the routine use of continuing contracts by adopting good project planning and management practices rather than relying on continuing contracts.

    Agency Affected: Department of Defense: Department of the Army: Corps of Engineers

    Status: Closed - Implemented

    Comments: As of April 2007, the Corps implemented this recommendation. The Corps revised its program execution guidance for fiscal year 2007 and stated that continuing contracts should only be used as a last resort after concluding that there is no other means available to proceed with the work. Since the guidance was issued, a senior Corps official stated that just one continuing contract has been issued.

    Recommendation: To ensure the judicious use of continuing contracts by the Corps districts and to provide better management of projects that use such contracts, the Secretary of Defense should direct the Commanding General and the Chief of Engineers of the U.S. Army Corps of Engineers to establish meaningful criteria for the use of continuing contracts, including an assessment of dollar value and length of time needed to complete contracted work so that districts have clear guidance on when a continuing contract may be used.

    Agency Affected: Department of Defense: Department of the Army: Corps of Engineers

    Status: Closed - Implemented

    Comments: As of April 2007, the Corps implemented this recommendation. We recommended that the Corps eliminate the routine use of continuing contracts. However, if the Corps did find it necessary to use this type of contracting vehicle, we recommended that the Corps establish meaningful criteria to guide the use of these contracts. The Corps revised its program execution guidance for fiscal year 2007 and established criteria for the use of continuing contracts. Under these criteria, continuing contracts may now only be used in special situations after an assessment determines that no other contracting vehicle is available to proceed with the project.

    Recommendation: To ensure the judicious use of continuing contracts by the Corps districts and to provide better management of projects that use such contracts, the Secretary of Defense should direct the Commanding General and the Chief of Engineers of the U.S. Army Corps of Engineers to develop a tracking system to monitor the use of continuing contracts.

    Agency Affected: Department of Defense: Department of the Army: Corps of Engineers

    Status: Closed - Not Implemented

    Comments: In responding to GAO's 2006 report, the Corps agreed with our recommendation and stated that it planned to develop an automated tracking system to monitor the use of continuing contracts. However, as of September 2010, this automated system has not been developed. Rather, according to Corps officials, the agency keeps and updates an EXCEL spreadsheet (manually) on the use of continuing contracts, the current status of the contracts, outyear costs, etc.--similar to the process GAO identified in its 2006 report that did not systematically track the extent to which the the Corps used continuing contracts. The Corps officials did not indicate any future plans to develop an automated system to monitor it's use of continuing contracts.

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