Federal User Fees:

Improvements Could Be Made to Performance Standards and Penalties in USCIS's Service Center Contracts

GAO-08-1170R: Published: Sep 25, 2008. Publicly Released: Sep 25, 2008.

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The Department of Homeland Security's (DHS) U.S. Citizenship and Immigration Services (USCIS) is responsible for granting or denying applications or petitions of foreign nationals seeking to become citizens of the United States or to study, work, or live in this country. In order to process the millions of applications and petitions that USCIS receives each year, USCIS uses contractors to perform various support services including SI International, Inc. and Stanley Associates for mail operations, fee collection, data collection, and file operations at its four service centers, in California, Nebraska, Vermont, and Texas. The contracts with these two firms are expiring, and USCIS has the option to extend the contracts for one year beginning in December 2008. We understand that USCIS may be planning to propose possible contract changes for the option year. Based on our ongoing work on USCIS user fees, we believe that improvements could be made to these contracts before the options to extend the contracts are exercised. The purpose of this report is to summarize our initial observations on performance standards and financial deductions to assist USCIS in obtaining the most value and highest level of performance from its contracts and contractors. In our forthcoming report we will address contract management issues.

The service center contracts generally require that fees that accompany applications be deposited within 24 hours. The contracts provide for financial deductions for noncompliance. The contractors are expected to maintain the capability to accommodate surges in volume of receipts of up to 20 percent above the daily average receipt volume for the previous 20 business days, known as the rolling daily average; receipts in excess of 120-percent are not held to the 24-hour deposit standard and may be processed on the next business day without financial deduction. The contractor was responsible for meeting the 24-hour deposit standard for 6,098, plus 20 percent (1,220)--7,318 applications in total. The 24-hour timeliness standard did not apply for the additional 1,205 applications above the 120-percent threshold. Our analysis of USCIS's servicewide daily application receipts indicates that application volume regularly and predictably meets or exceeds this threshold. Specifically, application volume met or exceeded the surge threshold an average of nearly 65 percent, and as much as 74 percent of the Mondays or days after a holiday from January 1 through August 6, 2008. These surges were often large--at times more than 170 percent of the rolling daily average. Despite the known pattern of increased receipts on Mondays and the days after a holiday, the application surge threshold remains the same. As a result, the service centers regularly have large numbers--as many as 5,000 a day at a single center--of application fees averaging $438 each that are not deposited within 24 hours of receipt with no financial deduction assessed against the contractor. The 24-hour deposit requirement is consistent with Chapter 8000 of the Treasury Financial Manual. When fees are not deposited in accordance with this standard, additional control processes must be employed to secure inventory, such as tracking mechanisms and a secure and locked storage area for all unprocessed fees. USCIS levies financial deductions on its service center contractors when they do not meet certain performance standards associated with data and fee collection, but the effectiveness of these standards is limited by the lack of a tiered financial deduction system. Four of the five financial deductions are applied at the same rate regardless of the magnitude by which the contractor fails to meet performance standards. Two of the five financial deductions are applied at the same rate regardless of the number of times the contractor fails to meet the standards. USCIS may levy a financial deduction of $15,000 if a contractor fails to meet any of the data collection standards in a given month. However, this deduction is not modified based on the magnitude by which a contractor fails to meet the performance standards. For example, the contracts establish that a $15,000 financial deduction is to be levied if more than six labels are prepared or affixed incorrectly, but the contracts do not provide for any difference in the financial deduction whether the number of incorrectly prepared or affixed labels is a small or large number. This is also true for the two percentage-based data collection standards.

Recommendations for Executive Action

  1. Status: Closed - Implemented

    Comments: In November 2008, USCIS revised the threshold at which service center contractors are held to the timeliness performance standards. In the contracts, which with contractor agreement will go into effect in December 2008, on Mondays and the days after holidays the contractors shall maintain the capability to accommodate surges in volume of up to 50 percent above the daily average receipt volume for the previous 20 business days. In the event the receipt volume exceeds 150 percent of the rolling daily average, the contractor is only responsible for meeting the timeliness performance requirements for 150 percent of the rolling daily average. By requiring the contractor to meet the 24-hour deposit standard on these high-volume days, more fee collections will be processed and deposited into the Treasury, allowing the U.S. government to earn more interest off these collections.

    Recommendation: The Acting Director of the United States Citizenship and Immigration Services should revise the threshold at which the timeliness performance requirement does not apply to better reflect known workload patterns, especially on Mondays and the days after holidays.

    Agency Affected: Department of Homeland Security: United States Citizenship and Immigration Services

  2. Status: Closed - Implemented

    Comments: In November 2008, USCIS developed and implemented a system of graduated financial deductions in its service center contracts for mail operations, date entry, file room management activities. The contracts, which with contractor agreement will go into effect in December 2008, improve USCIS's tools for encouraging high performance by allowing the agency to impose financial penalties that are commensurate with contractor performance.

    Recommendation: The Acting Director of the United States Citizenship and Immigration Services should consider developing and implementing a system of graduated deductions in order to better encourage improved performance.

    Agency Affected: Department of Homeland Security: United States Citizenship and Immigration Services

 

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