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United States Government Accountability Office: 
GAO: 

Report to Congressional Committees: 

February 2014: 

Contingency Contracting: 

State and USAID Made Progress Assessing and Implementing Changes, but 
Further Actions Needed: 

GAO-14-229: 

GAO Highlights: 

Highlights of GAO-14-229, a report to congressional committees. 

Why GAO Did This Study: 

For more than a decade, State and USAID have used contractors 
extensively to help carry out missions in contingency operations, such 
as those in Iraq and Afghanistan. While State and USAID transition to 
more traditional diplomatic and assistance missions in Iraq and 
Afghanistan, contract management and oversight challenges remain 
significant because the agencies are likely to be called upon again to 
operate in future contingencies. Section 850(a) of the Fiscal Year 
2013 NDAA directed State and USAID to assess their organizational 
structures, policies, and workforces related to contract support for 
overseas contingency operations. 

Section 850(c) mandated that GAO report on the progress State and 
USAID have made in identifying and implementing improvements related 
to those areas. GAO analyzed the extent to which State and USAID have 
identified and implemented changes to their (1) organizational 
structures and policies; and (2) workforces, including their use of 
contractors. 

GAO analyzed State and USAID's Section 850 reports to Congress, 
contract policies and procedures, and 2013 acquisition human capital 
plans, and interviewed agency officials. 

What GAO Found: 

The Department of State (State) and U.S. Agency for International 
Development (USAID) identified a number of changes needed to improve 
contract support in overseas contingency operations, but have not 
completed implementation efforts. As required by the Fiscal Year 2013 
National Defense Authorization Act (NDAA), both agencies determined 
that their organizational structures were effective, though State 
created a new regional Contract Management Office to better support 
contracting efforts in Iraq. In October 2013, State approved a number 
of actions to improve policies and procedures, including specific 
initiatives in acquisition planning and risk management, among others, 
and intends to institutionalize these changes in its Foreign Affairs 
Manual in 2014. State generally has not, however, developed plans to 
assess the impact of these initiatives. Federal internal control 
standards highlight the importance of managers comparing actual 
performance to expected results. Accordingly, continued management 
attention is needed to ensure that these efforts achieve their 
intended objectives. USAID focused its efforts on areas such as 
improving contractor performance evaluations and risk management. GAO 
found that some USAID missions and offices that operate in contingency 
environments have developed procedures and practices, but USAID did 
not consider whether these should be institutionalized agency-wide 
because USAID officials interpreted the legislative requirement to 
include only a review of agency-wide policies. As a result, USAID may 
have missed opportunities to leverage its institutional knowledge to 
better support future contingencies. USAID established a new working 
group in October 2013 to develop lessons learned, toolkits, and 
training and is expected to complete its efforts in late 2014. This 
working group could further assess the policies and procedures 
developed by the missions and offices, thus potentially affording 
USAID an opportunity to better leverage its institutional knowledge. 

State and USAID have increased their acquisition workforce by 53 and 
15 percent, respectively, from their 2011 levels and are in various 
stages of assessing their workforce needs for overseas contingency 
operations. Per Office of Management and Budget guidance, both 
agencies identified competency and skill gaps for their acquisition 
workforce in their 2013 acquisition human capital plans. State's 2013 
plan noted that in response to growth in contracting activity in areas 
such as Iraq and Afghanistan, additional acquisition personnel are 
needed. In October 2013, State's Under Secretary for Management 
approved the formation of a multibureau working group that plans to 
further explore workforce needs for current and future contingency 
operations. USAID's 2013 plan cited its greatest challenge as 
providing training for its acquisition workforce, as many personnel 
have 5 years or less of contracting experience. USAID established a 
training division in 2013 for its acquisition workforce. State noted 
in its Section 850 report that it will increase its focus on 
conducting risk assessments on the reliance, use, and oversight of 
contractors through the establishment of risk management staff. USAID'
s Section 850 report did not address reliance on contractors, but in 
October 2013, USAID drafted a revision to its planning policy that 
will require a risk assessment and mitigation plan associated with 
contractor performance of critical functions in overseas contingency 
operations. 

What GAO Recommends: 

GAO recommends that State assess whether identified changes achieve 
intended objectives, and that USAID further assess contingency 
contracting related procedures and practices. State and USAID 
concurred with the recommendations. 

View [hyperlink, http://www.gao.gov/products/GAO-14-229]. For more 
information, contact Timothy J. DiNapoli at (202) 512-4841 or 
dinapolit@gao.gov. 

[End of section] 

Contents: 

Letter: 

Background: 

State and USAID Have Efforts Under Way to Address Challenges, but 
Neither Agency Has Fully Implemented Changes for Contracting in 
Overseas Contingency Operations: 

State and USAID Increased Their Acquisition Workforces and Continue to 
Assess Contingency Acquisition Workforce Needs: 

Conclusions: 

Recommendations for Executive Action: 

Agency Comments and Our Evaluation: 

Appendix I: Objectives, Scope, and Methodology: 

Appendix II: Description of Department of State's (State) Contracting 
Organization for Contingency Operations: 

Appendix III: Description of U.S. Agency for International 
Development's (USAID) Contracting Organization for Contingency 
Operations: 

Appendix IV: Comments from the Department of State: 

Appendix V: Comments from the U.S. Agency for International 
Development: 

Appendix VI: GAO Contact and Staff Acknowledgments: 

Tables: 

Table 1: Status of State's Actions to Improve Contracting in Overseas 
Contingency Operations: 

Table 2: Status of USAID's Actions to Improve Contracting in Overseas 
Contingency Operations: 

Table 3: Comparison of State and USAID Acquisition Personnel, Fiscal 
Years 2011 to 2013: 

Abbreviations: 

M/OAA: Bureau for Management, Office of Acquisition and Assistance: 

CO: contracting officer: 

COR: contracting officer's representative: 

CPARS: Contractor Performance Assessment Reporting System: 

DOD: Department of Defense: 

State: Department of State: 

FAR: Federal Acquisition Regulation: 

NDAA: National Defense Authorization Act: 

OMB: Office of Management and Budget: 

SPOT: Synchronized Predeployment and Operational Tracker: 

USAID: U.S. Agency for International Development: 

[End of section] 

United States Government Accountability Office: 
GAO:
441 G St. N.W. 
Washington, DC 20548: 

February 14, 2014: 

Congressional Committees: 

For more than a decade, the Department of State (State) and U.S. 
Agency for International Development (USAID) have used contractors 
extensively to help carry out their missions in contingency 
operations, such as those in Iraq and Afghanistan. From fiscal years 
2002 through 2013, these agencies reported combined obligations of 
approximately $26 billion for contracts with a principal place of 
performance in either country. GAO and others in the accountability 
community have raised issues related to State and USAID's ability to 
manage and oversee contract support in contingency operations. For 
example, weaknesses have been noted such as limited involvement in 
acquisition planning, collection and reporting of performance 
evaluations, and overreliance on contractors.[Footnote 1] While State 
and USAID are transitioning to more traditional diplomatic and 
assistance missions in Iraq and Afghanistan, the agencies will 
continue to be called upon to operate in challenging overseas 
environments. For example, State and USAID recently responded to 
instability in South Sudan and Libya. In its 2010 Quadrennial 
Diplomacy and Development Review, State noted that an expeditionary 
capacity to address complex conflicts and crises must become part of 
the "new normal" for the department and its personnel.[Footnote 2] 
Within this context, section 850(a) of the National Defense 
Authorization Act (NDAA) for Fiscal Year 2013 directed State and USAID 
to assess the agencies' organizational structures, policies, and 
workforces related to contract support for overseas contingency 
operations.[Footnote 3] 

Section 850(c) of the Fiscal Year 2013 NDAA mandated that we report on 
the progress State and USAID have made in identifying and implementing 
improvements in those areas.[Footnote 4] This report analyzes the 
extent to which State and USAID have identified and implemented 
changes to the agencies' (1) organizational structures and policies, 
and (2) workforces, including their use of contractors, relative to 
contingency operations. 

To determine the extent to which State and USAID identified and 
implemented changes related to their organizational structures, 
policies, and workforces, we reviewed the reports State and USAID 
submitted to Congress in response to Section 850(a) and other agency 
documents, including draft charters of related working groups, and 
agency-wide and mission-specific contracting policies and guidance. We 
also reviewed State and USAID's March 2013 acquisition human capital 
plans, which included data on the composition of State and USAID's 
acquisition workforces from fiscal years 2011 to 2013. We collected 
updated data on State and USAID's acquisition workforces as of 
November 2013. We used this information to describe characteristics of 
each agency's acquisition workforce and, as such, did not assess the 
reliability of the data. Further, we compared the areas identified by 
State and USAID as needing changes with challenges previously 
identified by GAO and others in the accountability community to 
determine the extent to which the agencies are addressing these 
challenges. We also interviewed officials at State and USAID in the 
United States and Afghanistan with related program, acquisition, or 
workforce planning responsibilities to discuss the process for 
identifying changes and the implementation status of identified 
changes. 

We conducted this performance audit from March 2013 to February 2014 
in accordance with generally accepted government auditing standards. 
These standards require that we plan and perform the audit to obtain 
sufficient, appropriate evidence to provide a reasonable basis for our 
findings and conclusions based on our audit objectives. We believe 
that the evidence obtained provides a reasonable basis for our 
findings and conclusions based on our audit objectives. See Appendix I 
for a more complete description of our scope and methodology. 

Background: 

Contingency operations can encompass a number of potentially dangerous 
or uncertain environments, which increase risks to federal agencies 
and personnel, including contractors that support those agencies. The 
U.S. Code defines a contingency operation, in relevant part, as a 
military operation designated by the Secretary of Defense in which 
armed forces are or may become involved in military actions, 
operations, or hostilities against an enemy of the United States or 
results in the call to active duty members of the uniformed services, 
such as in Iraq and Afghanistan.[Footnote 5] However, there are other 
environments that do not fall within this definition but potentially 
pose similar challenges. 

USAID officials noted that its personnel operate in challenging 
environments on a daily basis and that the agency uses various terms 
to describe these environments. For example, USAID's programming 
policy defines high-threat environment as a country, city, area, 
subregion, or region in which USAID is hindered in accomplishing its 
mission due to security risks such as (1) specific targeting of U.S. 
interests, (2) a favorable operating environment for terrorist groups, 
(3) intelligence indicating that a threat is imminent, or (4) other 
significant risk as identified by various security offices.[Footnote 6] 

State operates in similar environments. For example, in its 2010 
Quadrennial Diplomacy and Development Review, State noted that more 
than 25 percent of State and USAID personnel serve in 30 countries 
classified as high risk for conflict and instability, including Yemen, 
Democratic Republic of Congo, Sudan, and Kyrgyzstan. For the purposes 
of this report, we use the term "contingency operations" to encompass 
the range of potentially dangerous or uncertain environments in which 
USAID and State operate. 

Our work over the past 5 years, as well as that of others in the 
accountability community, has found that State and USAID have 
experienced systemic challenges that have hindered their ability to 
manage and oversee contracts in contingency environments. In our 
reports issued annually between 2008 and 2011, we consistently found 
that State and USAID lacked reliable data and systems to report on 
their contracts and contractor personnel in Iraq and 
Afghanistan.[Footnote 7] Having reliable data on contracts and 
contractor personnel is a starting point for informing agency 
decisions and ensuring proper management. In 2012, we reported that 
the agencies had made improvements to their contractor personnel data 
and related systems that could result in more reliable data, but data 
comparability across years and agencies was limited.[Footnote 8] We 
also reported in 2012 that State had not assessed the skills and 
workforce mix needed to meet future contracting requirements in Iraq 
and Afghanistan. Further, we found that State had insufficient 
personnel with the necessary expertise to conduct acquisition planning 
and oversight functions to support the department's mission in Iraq, 
and, as a result, relied on the Department of Defense (DOD) for 
acquisition support.[Footnote 9] We also found weaknesses in USAID's 
oversight and monitoring of project and program performance in 
Afghanistan. Specifically, we reported that USAID did not consistently 
follow its established performance management and evaluation 
procedures for Afghanistan agriculture and water projects.[Footnote 
10] USAID subsequently issued new guidance, approved a new performance 
management plan, and took steps to improve its third-party monitoring 
of projects. 

Similarly, others in the accountability community have reported on the 
acquisition challenges faced by State and USAID in contingency 
environments. For example, Inspectors General at both agencies 
identified aspects of contracting in contingency environments as a 
serious management challenge in the agencies' fiscal year 2012 
financial reports. State's Inspector General found that the department 
continued to face challenges managing contracts and procurements, and 
reported that it has identified instances in Iraq and Pakistan in 
which poor contract monitoring resulted in increased costs and poor 
performance.[Footnote 11] Similarly, USAID's Inspector General 
identified USAID's work in high-threat environments such as 
Afghanistan, Pakistan, Iraq, and South Sudan, as one of the agency's 
most serious management challenges, in part due to audits that 
disclosed weak contract management in these environments.[Footnote 12] 
In addition, the Special Inspector General for Iraq Reconstruction and 
the Special Inspector General for Afghanistan Reconstruction have 
reported on similar contracting issues. Further, the statutorily 
established Commission on Wartime Contracting in Iraq and Afghanistan 
made a number of recommendations directed to State and USAID in its 
final report, issued in 2011.[Footnote 13] Recommendations include 
those related to using risk factors to decide what functions are 
appropriate to contract for in contingency settings, ensuring the 
government can provide sufficient acquisition management and 
contractor oversight, and taking actions to mitigate the threat of 
additional waste due to a lack of sustainment by host governments. 

Section 850(a) of the fiscal year 2013 NDAA mandated that State and 
USAID submit, to the appropriate Congressional committees, assessments 
of agency policies governing contract support in overseas contingency 
operations.[Footnote 14] Section 850(a) required State and USAID to 
submit their reports to Congress by July 2, 2013. Section 850(b) of 
the NDAA provided that the reports: 

1. Describe and assess the roles and responsibilities of officials and 
offices with contract-related responsibilities in overseas contingency 
operations;[Footnote 15] 

2. Include procedures and processes associated with eight elements of 
contracting, including collection, inventory, and reporting of data; 
acquisition planning; solicitation and award of contracts; 
requirements development and management; contract tracking and 
oversight; performance evaluations; risk management; and interagency 
coordination and transition planning; and: 

3. Include strategies and improvements necessary to address workforce 
issues in overseas contingencies, including reliance on contractors. 

State and USAID submitted their reports to Congress on June 25 and 
July 1, 2013, respectively. 

State and USAID Have Efforts Under Way to Address Challenges, but 
Neither Agency Has Fully Implemented Changes for Contracting in 
Overseas Contingency Operations: 

State and USAID identified a number of actions needed to improve 
contracting in contingency environments. Overall, the actions 
identified by State and USAID may help position each agency to better 
support future contingency operations, but many of the identified 
changes are new or have not been fully implemented and the agencies 
generally have not established plans to assess the impact of the 
changes. Federal internal control standards highlight the importance 
of managers comparing actual performance to expected results. For 
example, in October 2013, State's Under Secretary for Management 
approved a series of actions, which included changing the 
organizational structure by establishing a new staff unit to oversee 
elements of contracting in overseas contingency operations, a new 
contract risk mitigation effort, and the creation of specific 
contingency contracting policy in its Foreign Affairs Manual. In some 
instances, such as establishing the new risk mitigation staff, State 
intends to assess the impact of the initiatives. According to State 
officials, they are still developing specific plans and time frames to 
implement several other initiatives. We found that State has not 
indicated whether or how it intends to assess the impact of these 
other initiatives. Continued management attention is needed to ensure 
that these efforts achieve their intended objectives. 

USAID identified several actions needed to improve areas such as the 
collection, inventory, and reporting of data; contractor performance 
evaluations; and risk management. In response to long-standing 
challenges that the agency faces in implementing and monitoring 
activities in high-threat environments, USAID established a 
nonpermissive environment working group in October 2013 to develop 
lessons learned, toolkits, and training, but it is not expected to 
complete this effort until the end of September 2014. We found that 
USAID missions and offices with responsibilities for responding to 
contingencies have established procedures and practices, but USAID did 
not consider whether these procedures should be institutionalized 
agency-wide. USAID officials explained that they took a narrow view of 
the mandate and focused their assessment on agency-wide policies. As a 
result, USAID may have missed opportunities to leverage its 
institutional knowledge to better support future contingencies. 

State Is in the Early Stages of Implementing Changes Needed: 

State's Section 850 report to Congress concluded that its 
organizational structure was generally adequate to support overseas 
contingency operations and identified several actions needed to 
improve areas such as acquisition planning, contract oversight, and 
interagency coordination (see table 1). In addition, our review 
identified other contingency contracting related actions taken by 
State, including those identified after State submitted its report to 
Congress. 

Table 1: Status of State's Actions to Improve Contracting in Overseas 
Contingency Operations: 

Section 850 elements pertaining to organizational structure and policy: 
Organizational structure; 

Action description: Establish a Contract Management Office to support 
efforts in Iraq; 
Status: Ongoing. The office is currently located in Iraq, but will 
move to Kuwait in mid-2014. 

Section 850 elements pertaining to organizational structure and policy: 
Collection, inventory and reporting of data; 
Action description: Additional guidance issued in 2012; 
Status: Completed; 
Action description: New contract management office will be responsible 
for overseeing contractors' input to data system; 
Status: Ongoing. 

Section 850 elements pertaining to organizational structure and policy: 
Solicitation and award; 
Action description: State noted that its current approach to 
soliciting and awarding contingency contracts was sufficient; 
Status: Not applicable. 

Section 850 elements pertaining to organizational structure and policy: 
Requirements development and acquisition planning; 
Action description: Establish support cells for opening or reopening a 
post at the start of a potential contingency; 
Status: Standard operating procedures were issued in May 2013. In 
2013, first support cell was established for a potential contingency 
in Syria. 

Section 850 elements pertaining to organizational structure and policy: 
Contract oversight; 
Action description: Revised Contracting Officer's Representative (COR) 
training; 
Status: Completed; 
Action description: Reinstituted a COR Council to collect COR data and 
improve effectiveness of the COR function; 
Status: Completed March 2013; 
Action description: Proposed revision to the Foreign Affairs Manual 
related to training requirements of the COR; 
Status: Currently under internal review. State expects to finalize the 
update in 2014; 
Action description: Revised training and issued standards of conduct 
for private security contractors; 
Status: Completed; 
Action description: Draft update to the Foreign Affairs Manual 
regarding roles and responsibilities of private security contractors; 
Status: Expected to be approved in 2014. 

Section 850 elements pertaining to organizational structure and policy: 
Performance evaluations; 
Action description: Improve State's use of government-wide contractor 
performance system; 
Status: Ongoing. 

Section 850 elements pertaining to organizational structure and policy: 
Risk management; 
Action description: Establish permanent risk assessment and mitigation 
group; 
Status: Group not yet initiated; 
Action description: Conduct contractor vetting pilot program; 
Status: Ongoing, completion date to be determined. 

Section 850 elements pertaining to organizational structure and policy: 
Interagency coordination and transition planning; 
Action description: Continue coordination for Afghanistan through the 
executive steering group and management transition office; 
Status: Ongoing; 
Action description: State is working with DOD to enhance a database on 
interagency agreements; 
Status: Ongoing. 

Source: GAO analysis of State's Section 850 report to Congress, as well 
as State data. 

[End of table] 

To identify needed changes, State established working groups comprised 
of key officials from offices across the department to assess State's 
organizational structure and contracting procedures in overseas 
contingency operations. In October 2013, State's Under Secretary for 
Management approved a series of recommendations proposed by the 
working groups, which included establishing a new staff unit to 
oversee elements of contracting in overseas contingency operations and 
other critical environments, as well as the creation of a specific 
contingency contracting chapter in the Foreign Affairs Manual, which 
contains the organizational responsibilities and authorities of each 
of the major components of the department. According to State 
officials, they are still developing specific plans and time frames to 
implement many of the changes approved in October, but generally have 
not developed plans to assess the impact of these initiatives. State 
officials subsequently reported that the Critical Environment Contract 
Analytics Staff, which was formally established in December 2013, will 
be responsible for using metrics to assess the effectiveness and 
performance of State's planned initiatives. 

Organizational Structure: 

State determined that its centralized organizational structure was 
generally effective and efficient for contract support in overseas 
contingency operations. To improve management and oversight of 
contract performance of major contracts in Iraq, State established a 
new regional Contract Management Office in August 2013. State plans to 
review the effectiveness of the Contract Management Office after it 
has been operational for 1 year to determine gaps and applicability as 
a department-wide model for contracting in future contingency 
environments. State officials noted that the office, currently located 
in Iraq, will move to Kuwait in mid-2014 to allow for administrative 
support for other contracts in the region as resources are available. 
Appendix II describes the roles and responsibilities of State's 
contracting organization used to support contingency operations. 

Data Collection, Inventory, and Reporting: 

With regard to tracking of contractors and contractor personnel, State 
has previously taken steps to improve the collection, inventory, and 
reporting of contractor and contractor personnel data within DOD's 
Synchronized Predeployment and Operational Tracker (SPOT) database for 
overseas contingency operations. In 2008, Congress required DOD, 
State, and USAID to begin tracking use of contractors in Iraq and 
Afghanistan.[Footnote 16] To do so, the agencies agreed to use DOD's 
SPOT database. To implement this requirement, State issued a 
procurement information bulletin in March 2008, which directed State 
contracting officers (CO) to designate the use of SPOT for all 
applicable contracts in Iraq and Afghanistan and include a clause 
requiring contractors to provide certain data within SPOT.[Footnote 
17] However, we consistently found in reports issued annually since 
2008 that State lacked reliable sources and methods to report on its 
contracts and contractor personnel in Iraq and Afghanistan.[Footnote 
18] According to State officials, to improve State's reporting, the 
Office of Acquisitions Management developed additional guidance in 
fall 2012 which outlined the process of inputting contracts, how 
contractors should enter contractor personnel, how to request letters 
of authorization and approvals,[Footnote 19] and how to enter data 
through contract close-out. The new regional Contract Management 
Office will be responsible for overseeing contractors' input of Iraq 
contractors' data into SPOT. 

Solicitation and Award of Contracts: 

State's Section 850 report noted that the use of a centralized 
acquisition office in Washington D.C., and two regional procurement 
support offices help solicit and award contingency contracts. State 
officials noted that approximately 90 percent of its acquisition 
dollars and all major programs are managed by either its Office of 
Acquisitions Management or its two regional procurement support 
offices in Florida and Germany. Further, it noted that contracts for 
contingency operations in Iraq and Afghanistan are managed by its 
Office of Acquisitions Management. At individual missions and posts, 
State's general services officers have contracting authority limited 
to noncomplex transactions below $250,000. State noted that this 
approach provided sufficient support in terms of soliciting and 
awarding contracts. 

Requirements Development and Acquisition Planning: 

State's Section 850 report noted that contract requirements were 
generally developed either at State's in-country posts or its 
functional bureaus, and stated that its requirements development 
process was adequate. To improve acquisition planning, State developed 
a draft update to the Foreign Affairs Manual that explains that 
acquisition planning for contingency operations requires special 
attention and has designated staff to facilitate planning in 
contingency environments. In addition, State issued standard operating 
procedures in May 2013 for support cells that will be coordinated on 
an as-needed basis at the start of a contingency. The support cell 
will assist in the opening or reopening of posts based on lessons 
learned and will be located within the regional bureau. The support 
cell process was incorporated into the Foreign Affairs Manual and 
includes a typical support cell organization chart, a work process map 
documenting the steps that determine a situational plan of action, and 
a checklist document that can be used when creating an operational 
plan to open or reopen a post.[Footnote 20] According to State 
officials, the new procedures were used in 2013 to establish a support 
cell for a potential contingency in Syria. 

Contract Oversight: 

To carry out contract oversight, State generally relies on contracting 
officer's representatives (COR) appointed from programs within the 
department's regional and functional bureaus to help ensure that the 
contractor accomplishes the required work. State's Section 850 report 
noted, however, that State lacks CORs with certain technical subject 
matter expertise for contingency operations, such as medical and 
aviation. Additionally, State officials noted the need to improve 
training for CORs and cited several actions the department has taken 
to do so. For example, according to State officials, the department 
has revised COR training to be more scenario-based and initiated an 
effort to better manage the COR function across the department due to 
the growth in the number of CORs in areas such as Afghanistan and 
Pakistan. In March 2013, State reinstituted a COR council to collect 
agency COR data and to develop plans and actions that improve the 
effectiveness of the COR function. State officials told us that they 
intend to use the Federal Acquisition Institute Training Application 
System to track COR certifications and allow COs and bureaus to 
identify qualified CORs when needed. In October 2013, State proposed a 
revision to the Foreign Affairs Manual that would assign 
responsibility to the individual bureaus to define specialized 
training or experience requirements for CORs to ensure effective 
contract oversight. State reported that staffing the newly established 
regional Contract Management Office in Iraq with specific technical 
skills and identifying individuals with previous COR experience 
represents a continuing challenge that they will try to address 
through training and mentoring, among other things. 

In prior reports, we found that State had taken actions to address the 
challenges it encountered in overseeing private security contractors 
in Iraq.[Footnote 21] In July 2013, the Under Secretary for Management 
testified that private security contractors are critical to State's 
readiness and capability to carry out U.S. foreign policy under 
dangerous and uncertain security conditions. The Under Secretary 
emphasized that maintaining this capability is particularly important 
when the department is taking on expanding missions in contingency 
operations or areas that are transitioning from periods of intense 
conflict, such as in Iraq and Afghanistan. State officials noted that 
the department continues to improve its program for private security 
contractors in contingency operations. For example, the department 
revised its training requirements and issued contractor standards of 
conduct to ensure the professionalism of private security contractors. 
In addition, State's draft update to the Foreign Affairs Manual 
outlines the roles and responsibilities and training standards of 
private security contractors. Officials expect revisions to the 
Foreign Affairs Manual will be approved in 2014. 

Performance Evaluations: 

State's Section 850 report noted that reporting contractor performance 
evaluations in the government-wide Contractor Performance Assessment 
Reporting System (CPARS) needed improvement. The Federal Acquisition 
Regulation (FAR) requires agencies to prepare an evaluation of 
contractor performance for each contract that exceeds the simplified 
acquisition threshold at the time the work is completed and gives 
agencies discretion to include interim evaluations for contracts with 
a performance period exceeding 1 year.[Footnote 22] To do so, State 
has started several initiatives, including more dedicated staff time 
to manage reporting, monthly meetings held by the Office of 
Acquisitions Management and the Office of the Procurement Executive to 
track reporting progress, and increased training on past performance 
reporting and evaluations. Further, the Office of the Procurement 
Executive is working with the human resources division to incorporate 
work elements into CORs' performance appraisals. State officials 
indicated that they have established a goal that contractor past 
performance reporting will be at a 45-percent completion rate by 
December 31, 2013.[Footnote 23] State also intends to incorporate a 
requirement within its Foreign Affairs Manual for State personnel to 
conduct contractor program reviews of contracts over $25 million for 
contingency operations at least semi-annually, and document them in 
the government-wide database. 

Risk Management: 

In December 2013, State established the Critical Environment Contract 
Analytics Staff to centrally coordinate and perform, among other 
things, contract risk assessments and mitigation plans. As outlined in 
the October 2013 action memorandum, this group will be responsible for 
coordinating with other U.S. government agencies and monitoring 
contracting readiness in critical environments. The group also will be 
expected to expand the contract risk assessments in Afghanistan and 
other high-threat, high-risk posts, such as locations with major 
multibureau contracts. According to State officials, the Critical 
Environment Contract Analytics Staff will be comprised of three 
individuals and as of January 2014, staffing and recruitment efforts 
were underway. 

In 2011, we found that State had not developed a process to vet 
contractor firms in Afghanistan and recommended that State assess the 
need to vet non-U.S. vendors to ensure that resources are not diverted 
to insurgent or criminal groups.[Footnote 24] In response, State 
launched a pilot program in October 2012 to vet contractors and 
grantees for links to terrorists or their supporters. The pilot was 
designed to assess risk and test the utility of vetting across the 
range of department operations and risk profiles. The department works 
in tandem with regional posts and USAID on the current pilot program, 
which includes Lebanon, Guatemala, Kenya, Ukraine, and the 
Philippines. In addition to these countries, Afghanistan and Syria 
have been included to reflect vetting in high-risk countries. The 
pilot was scheduled to be completed in October 2013, but State 
officials stated that it will be extended and that the completion date 
has not been determined. State noted that as of August 2013, 
preliminary results suggest that the effectiveness of vetting is 
related to the prevalence of conflict, but that few data are available 
from the five pilot countries due to the limited number of contracts 
and grants in those countries. 

Interagency Coordination and Transition Planning: 

State's Section 850 report noted that interagency coordination was an 
area that needed improvement. In September 2010, DOD and State 
established an Executive Steering Group, co-chaired by the DOD's 
Deputy Assistant Secretary for Program Support and State's Deputy 
Assistant Secretary for Logistics Management, to help State identify 
critical requirements in Iraq for which it had previously relied on 
DOD and address other issues associated with the transition. State 
reported that ad hoc working groups, such as the Executive Steering 
Group, provide timely coordination on specific implementation issues 
in contingency environments. In addition, officials told us in 
September 2013 that the Iraq contract transition working group 
continued to host biweekly meetings between State and DOD to address 
requirements and post-transition activity in Iraq. 

An Executive Steering Group modeled after the group in Iraq was also 
established for Afghanistan in May 2011. In addition, State 
established the Management Transition Office in Kabul in June 2011 to 
help with the transition planning in Afghanistan for a post-2014 
presence. State officials have noted that they are less dependent on 
DOD for services in Afghanistan, but they are taking lessons learned 
from Iraq and implementing them as appropriate. According to State 
officials, no agreements have been finalized on requirements for the 
post-2014 presence as they are waiting for drawdown and security plans 
to be finalized. In addition to the groups already established in Iraq 
and Afghanistan, State reported that it will coordinate with other 
agencies at the outset of future contingencies to define which working 
groups should be initiated. In addition, the newly approved contract 
risk assessment and mitigation staff described above will act as the 
coordinator for interagency acquisition agreements during contingency 
operations. 

The FAR requires, among other things, that agencies carefully consider 
whether an interagency acquisition is based on a sound business 
decision and formally document the terms and conditions in an 
interagency agreement.[Footnote 25] In August 2012, we found that 
State and DOD did not comply with requirements for use and management 
of assisted interagency acquisitions. To respond to recommendations we 
made in this 2012 report, State officials indicated that the 
department is working with DOD to enhance a database used to store 
information on joint interagency agreements. For any existing 
interagency agreements, the department continues to work with DOD to 
identify where any required justifications are not already existent 
and rectify them in accordance with FAR requirements.[Footnote 26] 
Additionally, in response to previous recommendations, State issued a 
procurement information bulletin in January 2013 defining the process 
and requiring the use of interagency agreements.[Footnote 27] We also 
previously found that interagency coordination in Iraq began late, 
which caused State to have limited insights into its use of 
interagency acquisitions and hindered contract oversight.[Footnote 28] 
State officials told us that they want to focus on longer-term 
continuity by institutionalizing interagency agreements before 
determining how they would handle interagency coordination and 
transition planning for future contingencies. 

State intends to assess the impact of some initiatives, such as 
establishing the regional Contract Management Office and the 
contractor vetting pilot program. According to State officials, they 
are still developing specific plans and time frames to implement many 
of the changes discussed above. We found that State has not indicated 
whether or how it intends to assess the impact of some initiatives. 
For example, as outlined in the October 2013 action memorandum, State 
plans to establish a new staff to centrally coordinate and assist in 
managing contract risk assessments and mitigation plans but has not 
yet determined how to assess the impact of the office. Federal 
Internal Control Standards highlight the importance of reviews by 
management at the functional level to compare actual performance to 
planned or expected results and analyze significant 
differences.[Footnote 29] Accordingly, without management reviews to 
assess planned and actual performance, State may not be able to 
determine whether these initiatives better enable it to support future 
contingency operations. State officials subsequently reported that the 
Critical Environment Contract Analytics Staff will be responsible for 
assessing the effectiveness and performance of the planned initiatives. 

USAID Has Identified and Implemented Changes, but May Have Missed 
Opportunities to Leverage Its Institutional Knowledge: 

USAID concluded that its organizational structure was adequate to 
support contingency contracting efforts, but identified several 
actions needed to improve areas such as collection, inventory, and 
reporting of data; contractor performance evaluations; and risk 
management (see table 2). Our review also identified other contingency 
contracting-related actions taken by USAID that were not included in 
its report to Congress or were identified after USAID submitted its 
report to Congress. 

Table 2: Status of USAID's Actions to Improve Contracting in Overseas 
Contingency Operations: 

Section 850 elements pertaining to organizational structure and policy: 
Organizational structure; 
Action description: No actions identified; 
Status: Not applicable. 

Section 850 elements pertaining to organizational structure and policy: 
Collection, inventory, and reporting of data; 
Action description: Develop proposal to limit SPOT use solely as a 
tool to track contractor personnel; 
Status: To be determined. 

Section 850 elements pertaining to organizational structure and policy: 
Solicitation and award; 
Action description: Deploy contracting writing system worldwide to 
allow personnel to write, manage, oversee, and report on USAID awards 
from any location; 
Status: Completed fall 2011. 

Section 850 elements pertaining to organizational structure and policy: 
Requirements development and acquisition planning; 
Action description: Finalize acquisition planning policy; 
Status: Completed in April 2013. 

Section 850 elements pertaining to organizational structure and policy: 
Contract oversight; 
Action description: Individual USAID missions establish operational 
procedures as necessary for contracting, such as monitoring programs 
in remote areas of Afghanistan and Pakistan. For example, USAID in 
Afghanistan introduced monitoring methods to verify project 
performance, including third-party monitors, among other methods; 
Status: Establish as needed. 

Section 850 elements pertaining to organizational structure and policy: 
Performance evaluations; 
Action description: Improve reporting of contractor performance 
evaluations in CPARS; 
Status: Ongoing. 

Section 850 elements pertaining to organizational structure and policy: 
Risk management; 
Action description: Revise acquisition planning policy to incorporate 
risk assessment requirement for using contractor support in overseas 
contingency operations; 
Status: Ongoing. Agency officials expect that the policy will be 
finalized in January 2014;
Action description: Complete deployment of Partner Vetting System; 
Status: Completed in April 2013; 
Action description: Individual USAID missions establish operational 
procedures as necessary to address environment-specific risks; 
Status: Establish as needed. 

Section 850 elements pertaining to organizational structure and policy: 
Interagency coordination and transition planning; 
Action description: Office of Afghanistan and Pakistan Affairs detail 
staff to DOD and State; 
Status: Ongoing. 

Source: GAO analysis of USAID's Section 850 report and agency data. 

[End of table] 

To develop its Section 850 report, USAID officials told us that 
USAID's Office of Acquisition and Assistance in the Bureau for 
Management (M/OAA)--the office responsible for developing, issuing, 
and maintaining the agency's acquisition regulations, procedures, and 
standards--was tasked with assessing agency-wide acquisition policies, 
such as its Automated Directives System and the FAR, to determine if 
new policies or changes to existing policies or procedures were needed 
to improve contracting in overseas contingency operations. Section 850 
required USAID to assess its policies and procedures related to 
contract support of contingency operations. USAID officials said that 
they took a narrow view of the mandate and did not include operational 
procedures from missions that have played key roles in contingency 
operations in their assessment because they interpreted the 
legislative requirement to include only agency policy rather than 
operational procedures developed by individual missions. Further, 
according to agency officials, the Office of Foreign Disaster 
Assistance and the Office of Transition Initiatives within USAID's 
Bureau for Democracy Conflict and Humanitarian Assistance did not 
participate in developing USAID's Section 850 report as these offices 
do not create contracting policy. However, officials from these two 
organizations noted that they are often the first to respond to 
disasters or contingencies and play a key role in successfully 
transitioning from short-term, quick-impact interventions to longer-
term traditional development programming. For example, working in-
country the Office of Transition Initiatives designs acquisition 
instruments and develops relationships with implementing partners--
information that could benefit the mission if leveraged. As a result, 
USAID may have missed opportunities to leverage its institutional 
knowledge to better support future contingencies. 

In response to long-standing challenges that the agency faces in 
implementing and monitoring activities in high-threat environments, 
however, USAID established a nonpermissive environment working group 
in October 2013.[Footnote 30] By September 2014, the working group 
plans to develop a compendium of best practices and lessons learned 
for implementing and monitoring projects in nonpermissive 
environments; an operations security toolkit that will include tools 
for enhanced monitoring, and possibly a field information technology 
support package; and a targeted set of training and learning tools 
that focus on how USAID prepares staff for managing risks inherent in 
working in overseas contingency environments. This working group 
affords USAID another opportunity to leverage its institutional 
knowledge, such as that residing at its missions and other offices 
with contingency contracting related responsibilities. 

Organizational Structure: 

USAID described the offices that support contingency contracting in 
its Section 850 report and identified that its decentralized 
organizational structure for contracting activities is an effective 
and efficient model for overseas contingency operations. USAID 
delegates authority to heads of USAID contracting activities to carry 
out the programs and activities for which they are responsible--
including execution of contracts and the establishment of procurement 
policies, procedures, and standards appropriate for their programs and 
activities, subject to government-wide and USAID regulations and 
policy. USAID reported that the agency works on a daily basis in 
countries characterized by many of the same conditions found in 
contingency operations; therefore, USAID concluded that its existing 
organizational structure for contracting activities can be easily 
applied, when necessary, in contingency operations. Further, USAID 
reported that its decentralized model gives staff flexibility in 
addressing issues that arise in contingency operations. Appendix III 
describes the roles and responsibilities of USAID's contracting 
organization used to support contingency operations. 

Data Collection, Inventory, and Reporting: 

USAID is in the early stages of developing a proposal to use SPOT 
solely as a tool to track contractor personnel in contingency 
environments rather than the number and value of contracts. USAID 
officials stated that other data systems, such as the Federal 
Procurement Data System-Next Generation and its Global Acquisition and 
Assistance System, provide more reliable information on the number and 
value of contracts. USAID plans to present this proposal to DOD and 
State for their consideration. 

Solicitation and Award of Contracts: 

With regard to solicitation and award of contracts, USAID reported 
that its contracting writing system, the Global Acquisition and 
Assistance System, has been deployed worldwide and will allow 
personnel to write, manage, oversee, and report on USAID awards from 
any location. According to USAID, 80 percent of USAID-obligated funds 
are now managed through the Global Acquisition and Assistance System. 

Requirements Development and Acquisition Planning: 

USAID did not identify any additional changes needed to its 
requirements development or acquisition planning processes for 
contingency operations in its Section 850 report. USAID's missions and 
bureaus are responsible for establishing requirements prior to 
contract award and preparing a written acquisition plan that defines 
these requirements, if necessary. We previously identified that 
written acquisition plans, requirements development, cost estimating, 
incorporating lessons learned, and allowing sufficient time to conduct 
acquisition planning are several important elements of successful 
acquisition planning. In 2011, GAO found that USAID did not require 
written acquisition plans for individual contracts. We recommended 
that USAID establish requirements for written acquisition plans and 
enhance guidance for lessons learned in acquisition planning, among 
other things.[Footnote 31] In response to our recommendation, in April 
2013 USAID finalized its acquisition planning chapter in the Automated 
Directives System, which provides the agency's policy directives, 
required procedures, and internal guidance for the planning of USAID 
direct acquisition and assistance activities, including requirements 
for preparing written acquisition plans for individual contracts. 
However, we found that the policy does not require a discussion of 
lessons learned, including insights on the performance of the contract 
and any issues the program may have encountered. 

Contract Oversight: 

While USAID did not identify contract oversight as an area needing 
improvement in its Section 850 report, USAID reported that it has 
completed or is taking steps at the mission level to improve contract 
oversight in overseas contingency operations. For example: 

* In Iraq, USAID reported that it made a number of management changes 
to meet mission needs, including modifying contracts to include more 
stringent reporting requirements. USAID also increased the number of 
CORs in-country and provided them with additional guidance on ensuring 
compliance related to reporting. 

* As the U.S. military presence draws down in Afghanistan, USAID 
officials acknowledged that they may be challenged to adequately 
monitor project progress. To address this concern, USAID created on-
site monitors at project sites to devolve project monitoring 
responsibilities to USAID personnel in the five regional commands in 
September 2010. In addition, USAID/Afghanistan provided training for 
on-site monitors on the acquisition process. According to M/OAA 
officials in Kabul, the USAID mission in Afghanistan recently 
established support units for contracting activities. For example, 
mission officials told us that they established a compliance division 
approximately 1 year ago to ensure that implementing partners and 
M/OAA are in compliance with USAID acquisition policy. Further, USAID 
officials told us that the mission in Afghanistan staffed a contract 
management team in 2012 to support COs by tracking audit 
recommendations and ensuring implementation and performing contract 
closeout. 

* In addition, USAID is planning to implement a remote monitoring 
program in Afghanistan that will verify project performance through 
individuals hired by the contractor to verify activities that 
implementing partners have completed at project sites. This initiative 
will be composed of a set of monitoring methods that will be used to 
verify project performance, including third-party monitors, Global 
Positioning System tracking, photography, and data collections with 
mobile devices, among other methods. To implement this initiative, 
USAID issued a draft request for proposals in May 2013 publicizing its 
intent to negotiate up to as many as three contracts. According to 
USAID officials, as of October 2013, the agency is in the process of 
finalizing the request for proposals. 

* The USAID mission in Pakistan reported that it has developed several 
monitoring and evaluation mechanisms that are especially useful in 
geographically remote areas where USAID staff have limited access due 
to security restrictions. For example, USAID contracts with several 
independent local contractors to monitor implementation in insecure 
areas. In May 2013, the Inspector General recommended that the USAID 
mission in Pakistan implement a mission-wide monitoring and evaluation 
plan to cover all aspects of mission programs. USAID/Pakistan 
concurred with this recommendation. 

Performance Evaluations: 

USAID reported that it has identified increasing the submission of 
contractor performance evaluations in CPARS as one of the agency's 
highest acquisition priorities. To do so, M/OAA has established 
quarterly targets for reporting in the contractor past performance 
database to measure its progress in meeting the agency's 65-percent 
reporting goal for fiscal year 2013 and embarked on a communications 
and training effort for COs and CORs. 

Risk Management: 

USAID has taken actions to address contracting risks in contingency 
environments, including reliance on contractors and the risk of 
terrorist financing. For example, USAID's Bureau for Policy, Planning 
and Learning revised the agency's planning policy to incorporate a 
risk assessment requirement for using contractor support in overseas 
contingency operations as required by the 2013 NDAA.[Footnote 32] 
According to agency officials, they expect the draft revised policy 
will be finalized in January 2014. Further, in 2011, we found that 
USAID's vendor vetting process in Afghanistan faced limitations and 
recommended that USAID consider formalizing a risk-based approach that 
would enable them to identify and vet the highest-risk vendors and 
partners.[Footnote 33] USAID concurred with the recommendation and in 
April 2013 USAID completed deployment of its Partner Vetting System--a 
centralized database used to support the vetting of individuals--to 
decrease the risk of terrorist financing, and is preparing templates 
and implementation guidance for COs. 

In addition, individual USAID missions develop and implement 
operational procedures as necessary to address environment-specific 
risks. For example, USAID reported that, in Afghanistan, USAID 
launched the Accountable Assistance for Afghanistan initiative to 
further protect taxpayer dollars from being diverted from their 
development purpose in the fall of 2010. The initiative consists of 
several components, including limiting the number of layers of 
subcontracts and financial controls such as auditing all locally 
incurred costs and ensuring close review of contractor claims prior to 
payment. 

Interagency Coordination and Transition Planning: 

USAID's Office of Afghanistan and Pakistan Affairs represents USAID in 
interagency discussions related to the contingency operation in 
Afghanistan. Further, the Office of Afghanistan and Pakistan Affairs 
provides support to the USAID mission in Afghanistan so that it may 
provide input to key interagency stakeholders. While USAID did not 
identify interagency coordination as an area needing improvement in 
its Section 850 report, according to USAID officials the Office of 
Afghanistan and Pakistan Affairs details staff on an ongoing basis to 
State and DOD offices to strengthen interagency coordination. Further, 
according to USAID officials, the Office of Afghanistan and Pakistan 
Affairs and the USAID mission in Afghanistan have conducted extensive 
planning regarding management and oversight of procurements in light 
of the upcoming transition from a DOD to a State-led presence in 
Afghanistan. Principal procurement management responsibilities are 
expected to remain with USAID staff based in Kabul, in consultation 
with Washington, D.C.-based staff. 

State and USAID Increased Their Acquisition Workforces and Continue to 
Assess Contingency Acquisition Workforce Needs: 

Since 2011, State and USAID have increased their overall acquisition 
workforces and are in various stages of assessing their workforce 
needs for overseas contingency operations. Per Office of Management 
and Budget (OMB) guidance, both agencies identified competency and 
skill gaps for their acquisition workforces in their 2013 acquisition 
human capital plans. State's 2013 plan noted that, in response to 
growth in contracting activity in areas such as Iraq and Afghanistan, 
additional acquisition personnel were needed. In October 2013, State's 
Under Secretary for Management approved the formation of a multibureau 
working group that plans to further explore workforce needs for 
current and future contingency operations. USAID launched a program in 
2008 that has worked to rebuild a cadre of contracting officers and 
USAID's 2013 plan cited providing training for a young acquisition 
workforce as the agency's greatest challenge. State noted in its 
Section 850 report that it will increase its focus on conducting risk 
assessments on the reliance, use, and oversight of contractors through 
the establishment of risk management staff. USAID's Section 850 report 
did not address reliance on contractors, but in October 2013, USAID 
drafted a revision to its planning policy to require a risk assessment 
and mitigation plan associated with contractor performance of critical 
functions in overseas contingency operations. 

State and USAID Have Increased Their Overall Levels of Acquisition 
Personnel Since 2011: 

Since 2011, both State and USAID have increased the size of their 
acquisition workforces.[Footnote 34] State reported that its workforce 
has grown by 53 percent, while USAID's workforce grew by about 15 
percent (see table 3). 

Table 3: Comparison of State and USAID Acquisition Personnel, Fiscal 
Years 2011 to 2013: 

Category: Contracting specialists: GS-1102; 
State: 
2011: 176; 
2012: 195; 
2013: 213; 
USAID: 
2011: 121; 
2012: 150; 
2013: 143. 

Category: Contracting officers outside of the 1102 series; 
State: 
2011: 458; 
2012: 695; 
2013: 734; 
USAID: 
2011: 226; 
2012: 274; 
2013: 257. 

Category: Program/project managers[A]; 
State: 
2011: 39; 
2012: 80; 
2013: 80; 
USAID: 
2011: 2; 
2012: 2; 
2013: 2. 

Category: Total; 
State: 
2011: 673; 
2012: 970; 
2013: 1,027; 
Total Increase (percent): 5%; 
USAID: 
2011: 349; 
2012: 426; 
2013: 402; 
Total Increase (percent): 15%. 

Source: State and USAID reported data. 

[A] At State, this category indicates Foreign Service positions. 

[B] The majority of USAID's technical personnel are program and/or 
project managers, however the numbers presented here are only those 
that are certified under the Federal Acquisition Institute's Federal 
Acquisition Certification for Program and Project Managers program. 

[End of table] 

State's 2013 acquisition human capital plan noted that, in response to 
growth in contracting activity in areas such as Iraq and Afghanistan, 
additional acquisition personnel were needed. To increase their 
acquisition workforce, State officials told us that they realigned and 
designated existing staff as acquisition personnel and undertook 
limited hiring. Further, State officials noted that the department's 
acquisition workforce growth was in part aided by the use of its 
working capital fund, which is generated through a 1-percent fee on 
all procurements. In 2012, we found that State had not assessed the 
extent to which the working capital fund has helped State surge its 
workforce to meet requirements for Iraq and Afghanistan.[Footnote 35] 

While USAID also reported increasing its overall acquisition workforce 
from fiscal year 2011 to 2013, USAID officials told us that they 
experienced a decrease in 2013 due to a number of factors, including a 
temporary loss in their direct hiring authority for hard-to-fill 
positions and a slowdown in hiring due to budget cuts as a result of 
sequestration. USAID officials stated that they anticipate that the 
number of acquisition personnel will increase in future years as 
personnel are hired to fill vacant positions. USAID officials do not 
anticipate an increase in the total number of authorized positions at 
this time. 

Responsible for ensuring the technical and administrative functions of 
the contract, CORs are an integral part of the acquisition workforce. 
USAID officials reported that their Global Acquisition and Assistance 
System identified 3,629 personnel in fiscal year 2013 who have been 
designated to serve as a COR since 2008. However, USAID officials 
cautioned that they are continuing to improve the reliability of the 
data and that relying on the number of employees who have been 
certified as a COR may overstate the COR workforce at USAID. Further, 
USAID officials explained that the number of CORs reported by Global 
Acquisition and Assistance System who have been designated to serve as 
a COR on a specific award--which totaled about 1,116 as of November 
2013--may be a more accurate representation of USAID's COR workforce. 
State officials told us that 2,367 CORs were certified in fiscal year 
2013. 

State and USAID Are in Various Stages of Assessing Their Workforce 
Needs for Overseas Contingency Operations: 

State and USAID are in various stages of assessing their workforce 
needs for overseas contingency operations and have identified skills 
and competency gaps in their acquisition workforces. OMB's 2009 
memorandum, Acquisition Workforce Development Strategic Plan for 
Civilian Agencies--FY 2010-2014, requires agencies to develop annual 
acquisition workforce human capital plans that identify strategies and 
goals for increasing the capacity and capability of the acquisition 
workforce. For example, the plan is to include recruitment and 
retention strategies for obtaining the acquisition workforce resources 
and skills required to meet future agency mission needs. We also 
identified leading practices agencies should follow when developing 
workforce plans, including determining the occupations, skills, and 
competencies that are critical to achieving their missions and goals, 
as well as identifying any gaps between their current workforce and 
the workforce they will need in the future.[Footnote 36] 

State's March 2013 acquisition human capital plan provided information 
on identified skill and competency gaps in its acquisition workforce, 
as well as agency plans to address them. For example, State's report 
identified that its contracting professionals had strong technical 
skills in contract award and administration, but noted weakness in 
acquisition planning, among other areas. State reported that it is 
focusing on pairing interns and recently hired staff with senior staff 
and mentoring them in the competencies that need additional attention. 
State is also continuing to use internal expertise and resources to 
provide in-house training sessions to supplement external training. 

In October 2013, State's Under Secretary for Management approved the 
formation of a multibureau working group that plans to explore 
workforce needs for current and future contingency operations. 
Specifically, the working group will assess the existing COR 
structure, further analyze skill gaps to meet the department's demands 
for surge personnel, and develop expanded legislative authority for 
hiring personal services contractors in contingencies.[Footnote 37] 
For example, the group plans to review the feasibility of special pay 
incentives for critically needed COR skills and study whether a new 
career track for CORs with specialized training is needed. State did 
not identify when the working group is expected to complete its 
efforts. 

OMB's July 2009 multisector workforce guidance directed agencies to 
determine the best mix of skills of contractors and federal employees 
and the appropriate workforce size for the agency. To do so, agencies 
were directed to conduct a pilot human capital analysis of at least 
one program where the agency has concerns about the extent of reliance 
on contractors and to adopt a framework for planning and managing a 
multisector workforce that is built on strong strategic human capital 
planning. According to State officials, in response to OMB's guidance, 
they created a multisector workforce methodology, conducted two pilot 
programs, and realized efficiencies and cost savings. In August 2012, 
we found that State had not fully assessed whether its effort to 
increase its workforce was sufficient to meet requirements; whether it 
had the proper skills; whether it had the appropriate mix of 
government/contractor personnel; or whether it had sufficient numbers 
of qualified oversight personnel to support its future acquisition 
efforts in Iraq and Afghanistan. We recommended that State assess the 
extent to which the current acquisition workforce, both government and 
contracting personnel, meets its needs for acquiring goods and 
services in complex environments such as Iraq and Afghanistan. 
[Footnote 38] State concurred with this recommendation and, in 
September 2013, State officials noted that they are still considering 
options to address this recommendation, such as relying on the 
resources of an Afghanistan interagency coordination group to 
determine skill sets needed. Further, State noted in its Section 850 
report that it will increase its focus on conducting risk assessments 
on the reliance, use, and oversight of contractors through the 
establishment of risk management staff. In addition, State issued an 
updated workforce policy on October 1, 2013, that directed bureaus on 
a regular basis to consider using federal employees to perform new or 
expanded functions performed by contractors. 

Similar to State, USAID's 2013 acquisition human capital plan provided 
information on identified skill and competency gaps in its acquisition 
workforce. For example, USAID's report identified that its contracting 
professionals had strong technical skills in contract administration 
and proposal evaluation, but noted weaknesses with acquisition 
planning, among other things. Similarly, USAID reported that its CORs 
had strong skills in project management and contract administration 
and weaknesses in market research and acquisition planning. In 
response, USAID developed training to improve COR technical skills 
through scenario-based learning. In addition, USAID launched an e-
based resource in March 2013 that provides tools to guide personnel 
through the procurement process; the resource includes references for 
CORs at each stage of the contract award process. 

USAID's 2013 acquisition human capital plan cited providing training 
for a young acquisition workforce as the agency's greatest challenge 
and USAID launched a program in 2008 that has worked to rebuild a 
cadre of contracting officers. According to USAID's 2013 acquisition 
human capital plan, the average procurement professional within M/OAA 
has five years or less of experience in federal procurement policy and 
procedures. USAID established a Professional Development and Training 
Division in the fourth quarter of fiscal year 2013 to implement 
acquisition and assistance training. This division is intended to 
develop a formal process for learning across the acquisition 
workforce, but it is not focused specifically on training needs in 
contingency environments. 

USAID's Section 850 report did not address reliance on contractors in 
connection with contingency operations, but in October 2013, USAID 
drafted a revision of its planning policy to require a risk assessment 
and mitigation plan associated with contractor performance of critical 
functions in overseas contingency operations. The draft revision will 
undergo an agency clearance process before becoming policy in 2014. 
According to the draft policy, the risk assessments will consider the 
core capabilities of government personnel and the risk of overreliance 
on contractors to monitor other contractors, among other things. The 
draft policy notes that the mitigation plan will include specific 
actions to mitigate or reduce the risks and impacts noted in the risk 
assessment, including the development of alternative capabilities to 
reduce reliance on contractors for critical functions. 

Conclusions: 

State and USAID have faced numerous contract management and oversight 
challenges while operating in contingency environments such as Iraq 
and Afghanistan. These challenges highlight the importance of 
effectively leveraging knowledge and developing ways to identify, 
mitigate, or avoid contracting pitfalls before new contingencies 
arise. Each agency has to varying degrees assessed, identified, and 
started implementing changes to improve its ability to overcome 
inherent risks of contracting in uncertain environments. State has 
outlined a series of initiatives to address weaknesses in areas such 
as the collection of contractor data, acquisition planning, contract 
oversight, risk management, and interagency coordination, and plans to 
institutionalize many of these changes in the department's Foreign 
Affairs Manual within the next year. Except for a limited number of 
cases, State generally has not developed plans to assess the impact of 
these initiatives. Federal internal control standards highlight the 
importance of reviews by management to compare actual performance to 
planned or expected results and analyze significant differences. As a 
result, continued management attention is needed to ensure that these 
efforts achieve their intended objectives. While USAID has identified 
some needed improvements, such as completing contractor performance 
evaluations, it did not assess whether the procedures and practices 
created by the missions or offices that operate in contingency 
environments should be reflected in agency-wide policy or guidance. As 
a result, USAID may have missed opportunities to leverage its 
institutional knowledge. USAID recently established a nonpermissive 
working group responsible for developing lessons learned, toolkits, 
and training, which affords USAID another opportunity to take better 
advantage of its institutional knowledge. State and USAID have 
increased the size of their acquisition workforces in the past 3 
years, and both have efforts in place to better ensure acquisition 
personnel are equipped with the skills needed to support future 
contingency operations. Both agencies have taken some initial steps to 
address reliance on contractors and to assess the appropriate mix of 
government and contractor personnel, but these efforts are in their 
infancy. 

Recommendations for Executive Action: 

To ensure that State is in a better position to support future 
contingencies, we recommend that the Secretary of State develop plans 
to assess whether planned initiatives are achieving their intended 
objectives. 

To ensure that USAID has the necessary policies and procedures to 
better position itself to address future contingency challenges, we 
recommend that the Administrator of USAID ensure that its 
nonpermissive working group consider procedures and practices 
developed by missions and offices with contingency-related 
responsibilities during the course of its efforts. 

Agency Comments and Our Evaluation: 

We provided a draft of this report to State and USAID. In their 
written comments, the two agencies concurred with our recommendations 
and provided information on actions taken or planned to address them. 
Specifically, State created the Critical Environment Contract 
Analytics Staff on December 19, 2013 to develop and prepare department-
wide contracting risk assessments and risk mitigation plans, 
coordinate efforts with other agencies, and monitor procurement 
readiness for contracting operations in critical environments. 
Additionally, the staff will be responsible for using metrics to 
assess the effectiveness and performance of planned initiatives. USAID 
plans to create a supplementary working group to the nonpermissive 
environment working group that will reach out to missions, offices, 
and contracting personnel with contingency operations experience to 
collect and disseminate a set of best practices for contracting in 
support of contingency operations and other potentially dangerous or 
uncertain environments. State's letter is reprinted in appendix IV and 
USAID's letter is in Appendix V. Both agencies provided technical 
comments which we incorporated into the report as appropriate. 

We are sending copies of this report to interested congressional 
committees, the Secretary of State, and the Administrator of USAID. In 
addition, the report will be available at no charge on GAO's website 
[hyperlink, at http://www.gao.gov]. 

If you or your staff have questions about this report, please contact 
me at (202) 512-4841 or dinapolit@gao.gov. Contact points for our 
Offices of Congressional Relations and Public Affairs may be found on 
the last page of this report. GAO staff who made major contributions 
to this report are listed in appendix VI. 

Signed by: 

Timothy J. DiNapoli: 
Director: 
Acquisition and Sourcing Management: 

List of Committees: 

The Honorable Barbara A. Mikulski: 
Chairman: 
The Honorable Richard C. Shelby: 
Vice Chairman: 
Committee on Appropriations: 
United States Senate: 

The Honorable Carl Levin: 
Chairman: 
The Honorable James M. Inhofe: 
Ranking Member: 
Committee on Armed Services: 
United States Senate: 

The Honorable Robert Menendez: 
Chairman: 
The Honorable Bob Corker: 
Ranking Member: 
Committee on Foreign Relations: 
United States Senate: 

The Honorable Thomas R. Carper: 
Chairman: 
The Honorable Tom Coburn: 
Ranking Member: 
Committee on Homeland Security and Governmental Affairs: 
United States Senate: 

The Honorable Harold Rogers: 
Chairman: 
The Honorable Nita M. Lowey: 
Ranking Member: 
Committee on Appropriations: 
House of Representatives: 

The Honorable Howard P. "Buck" McKeon: 
Chairman: 
The Honorable Adam Smith: 
Ranking Member: 
Committee on Armed Services: 
House of Representatives: 

The Honorable Edward R. Royce: 
Chairman: 
The Honorable Eliot L. Engel: 
Ranking Member: 
Committee on Foreign Affairs: 
House of Representatives: 

The Honorable Darrell E. Issa: 
Chairman: 
The Honorable Elijah Cummings: 
Ranking Member: 
Committee on Oversight and Government Reform: 
House of Representatives: 

[End of section] 

Appendix I: Objectives, Scope, and Methodology: 

Section 850(c) of the National Defense Authorization Act (NDAA) for 
Fiscal Year 2013 mandated that we report on the progress that the 
Department of State (State) and the U.S. Agency for International 
Development (USAID) have made in identifying and implementing 
improvements in a range of areas related to contract support for 
overseas contingency operations.[Footnote 39] The objectives for this 
review were to examine the extent to which State and USAID have 
identified and implemented changes to the agencies' (1) organizational 
structures and policies; and (2) workforces, including their use of 
contractors. For the purposes of our review, we used the definition of 
overseas contingency operations set forth in Title 10 of the U.S. 
Code, as well as other contingency environments with characteristics 
such as unique security and logistical challenges; the need to 
contract quickly; difficulty in conducting oversight; difficulty 
traveling to dangerous or remote locations; events occurring 
unexpectedly; and frequent rotations among personnel.[Footnote 40] 

For all objectives, we reviewed State and USAID's Section 850 reports 
submitted to Congress in June and July, 2013, respectively; 
interviewed officials at State and USAID in the United States and 
Afghanistan with related program, acquisition, or workforce planning 
responsibilities to discuss their role in identifying and implementing 
changes, as appropriate; and reviewed and analyzed GAO and other 
oversight reports, including those from State and USAID's Offices of 
the Inspector General, the Commission on Wartime Contracting, and the 
Special Inspectors General for Iraq and Afghanistan to identify key 
challenges reported by the accountability community. 

To determine the extent to which State and USAID have identified and 
implemented changes related to their organizational structures, we 
reviewed State and USAID's organizational charts and agency policy 
outlining roles and responsibilities in overseas contingency 
operations. To complement this information, we conducted interviews 
with key offices identified in the agencies' Section 850 reports to 
obtain additional information regarding their roles and 
responsibilities in overseas contingency operations. In the case of 
State, these offices included the Office of Management Policy, 
Rightsizing, and Innovation; Office of Acquisitions Management; Deputy 
Assistant Secretary for Logistics Management; Kabul General Services 
Office; and the Afghanistan Transition Office. In the case of USAID, 
these offices included the Bureau for Management/Office of Acquisition 
and Assistance, the Office of Afghanistan and Pakistan Affairs, and 
the Office of Foreign Disaster Assistance and the Office of Transition 
Initiatives within USAID's Bureau for Democracy Conflict and 
Humanitarian Assistance. We did not independently assess the adequacy 
of either State or USAID's organizational structure. 

To determine the extent to which State and USAID have identified and 
implemented changes to the agencies' contract award and management 
policies, we collected and analyzed agency documentation, such as 
descriptions of related working groups, acquisition and quality 
assurance plans, and draft working group charters. We also reviewed 
agency-wide and individual mission contracting policies and guidance, 
such as USAID's Automated Directives System and Acquisition and 
Assistance Policy Directive, and State's Foreign Affairs Manual and 
Procurement Information Bulletins, as well as relevant sections of the 
Federal Acquisition Regulation. We compared changes identified by the 
agencies in their Section 850 reports to challenges and potential 
changes identified in prior GAO and other oversight reports, to 
determine the extent to which the agencies are addressing these 
challenges. 

To determine the extent to which State and USAID have identified and 
implemented changes related to their workforces for contract support 
in overseas contingency operations, we collected and analyzed detailed 
data on the composition of State and USAID's acquisition workforces. 
Specifically, we reviewed and compiled acquisition workforce data for 
fiscal years 2011 to 2013 from each agency's March 2013 acquisition 
human capital plan. We included data from the following categories: 
contracting officers, contracting specialists, contracting officer 
representatives, and program or project managers. We collected updated 
data on State and USAID's acquisition workforces as of November 2013. 
We used this information to describe characteristics of each agency's 
acquisition workforce and, as such, did not assess the reliability of 
the data. We reviewed a March 2013 USAID report on worldwide staffing 
patterns and other USAID data on its acquisition workforce for its 
five critical priority countries. We also reviewed various workforce 
related reports, such State and USAID's 5-year succession plans and 
the Federal Acquisition Institute annual federal acquisition workforce 
reports. We also reviewed acquisition workforce guidance and 
memorandums from the 2009 Office of Management and Budget multisector 
workforce guidance and its acquisition workforce development strategic 
plan. 

We conducted this performance audit from March 2013 to February 2014 
in accordance with generally accepted government auditing standards. 
These standards require that we plan and perform the audit to obtain 
sufficient, appropriate evidence to provide a reasonable basis for our 
findings and conclusions based on our audit objectives. We believe 
that the evidence obtained provides a reasonable basis for our 
findings and conclusions based on our audit objectives. 

[End of section] 

Appendix II: Description of Department of State's (State) Contracting 
Organization for Contingency Operations: 

Contracting organization: Under Secretary for Management; 
Roles and responsibilities: The Under Secretary for Management leads 
several bureaus, such as Administration and Diplomatic Security. As 
the leader of these bureaus, the Under Secretary is responsible for 
major contingency contracting policy decisions. 

Contracting organization: Assistant Secretary for Administration; 
Roles and responsibilities: The Assistant Secretary for Administration 
serves as State's Chief Acquisition Officer and advises the Under 
Secretary for Management on the applicability of relevant policy on 
contracts for overseas operations, including contingency operations, 
and ensuring compliance of the contracts and contracting activities 
with such policies. 

Contracting organization: Office of the Procurement Executive; 
Roles and responsibilities: The Office of the Procurement Executive 
supports the Chief Acquisition Officer and is responsible for 
promulgating acquisition policy, providing oversight, and defining and 
presenting acquisition training. 

Contracting organization: Office of Acquisitions Management; 
Roles and responsibilities: The Office of Acquisitions Management is 
responsible for providing a full range of contracting services to 
support activities across State, including acquisition planning, 
contract negotiations, cost and price analysis, and contract 
administration. The office reports to the Deputy Assistant Secretary 
for Logistics Management. 

Contracting organization: Deputy Assistant Secretary for Logistics 
Management; 
Roles and responsibilities: The Deputy Assistant Secretary for 
Logistics Management oversees the integration of logistics and 
acquisition and ensures complete supply chain accountability. 

Contracting organization: Functional Bureaus; 
Roles and responsibilities: Functional bureaus such as the 
International Narcotics and Law Enforcement Affairs, Overseas 
Buildings Operations, Human Resources, and Diplomatic Security are 
responsible for identifying and defining contracting requirements, 
providing technical contract administration, providing program and 
project management support, and training within their mission. 

Contracting organization: Regional Bureaus; 
Roles and responsibilities: Regional Bureaus are responsible for 
working with overseas posts to identify contracting requirements not 
under the purview of functional bureaus. 

Source: Department of State. 

[End of table] 

[End of section] 

Appendix III: Description of U.S. Agency for International 
Development's (USAID) Contracting Organization for Contingency 
Operations: 

Contracting organization: Bureau for Management, Office of Acquisition 
and Assistance; 
Roles and responsibilities: The Office of Acquisition and Assistance 
within the Bureau for Management is responsible for (1) developing, 
issuing, and maintaining the agency's acquisition regulations, 
procedures, and standards in accordance with established agency 
delegations and requirements; and (2) evaluating the agency's 
procurement system, providing recommendations for selecting and 
appointing contracting officers and terminating their appointments, and 
providing technical support to overseas contracting officers. 
Additionally, in accordance with Section 849 of the 2013 NDAA, the 
Director of the Office of Acquisition and Assistance advises the agency 
on the applicability of relevant policies on contracts for overseas 
contingency operations as defined in 10 U.S.C. Sec. 101(a)(13) and 
ensures the compliance of contracting activities with this policy. 

Contracting organization: Bureau for Democracy, Conflict, and 
Humanitarian Assistance; 
Roles and responsibilities: The Assistant Administrator for the Bureau 
for Democracy, Conflict, and Humanitarian Assistance has authority to 
negotiate, execute, and amend contracts for the purpose of immediately 
responding to disasters overseas. This authority is limited to grants 
and cooperative agreements up to $3 million, and contracts up to 
$500,000. The Office of Foreign Disaster Assistance and Office of 
Transition Initiatives are typically USAID's first responders to a 
contingency situation. The Office of Civilian Response provides 
reconstruction and stabilization support, and provides staff surge 
support for contracting, including those seconded to the Office of 
Acquisition and Assistance for assignment. 

Contracting organization: USAID Overseas Missions; 
Roles and responsibilities: USAID acquisition and assistance staff at 
overseas missions provide advice and support to mission staff that 
design and manage assistance activities; they also have overall 
responsibility for the administration of acquisition instruments at 
overseas missions. Acquisition offices are typically headed by a 
contracting officer, who reports to the mission director, the 
principal USAID officer at post, or deputy mission director. At most 
bilateral missions, contracting officers are co-located with 
acquisition specialists and contracting officer's representatives 
(COR). However, under USAID's regional mission structure, contracting 
officers provide acquisition support to more than one mission and are 
not necessarily co-located with either the CORs or the acquisition 
specialists who assist them. Some missions with no on-site contracting 
officers may instead have on-site acquisition specialists who provide 
support to CORs. 

Source: GAO analysis of USAID data. 

Note: USAID reported that divisions within the Office of Acquisition 
and Assistance that provide support for contingency operations include 
the Foreign Operations Division; Transportation Division; Cost, Audit 
and Support Division; Policy Division; Compliance Division; and 
Operations Division. 

[End of table] 

[End of section] 

Appendix IV: Comments from the Department of State: 

United States Department of State: 
Comptroller: 
P.O. Box 150008: 
Charleston, SC 29415-5008: 

January 30, 2014: 

Dr. Loren Yager: 
Managing Director: 
International Affairs and Trade: 
Government Accountability Office: 
441 G Street, N.W. 
Washington, D.C. 20548-0001: 

Dear Dr. Yager: 

We appreciate the opportunity to review your draft report, 
"Contingency Contracting: State and USAID Made Progress Assessing and 
Implementing Changes, but Further Actions Needed" GAO Job Code 121119. 

The enclosed Department of State comments are provided for 
incorporation with this letter as an appendix to the final report. 

If you have any questions concerning this response, please contact
Ana Larkin, Management Analyst, Office of Management Policy, Rightzing
and Innovation at (202) 647-2554 or Renee Bemish, Special Assistant,
Bureau of Administration at (202) 647-4461. 

Sincerely, 

Signed by: 
James L. Millette: 

cc: 
GAO - Timothy J. DiNapoli: 
A - Joyce A. Barr: 
State/OIG - Norman Brown: 

Department of State Comments to GAO Draft Report: Contingency 
Contracting: State and USAID Made Progress Assessing and Implementing 
Changes, but Further Actions Needed (GAO-14-229, GAO Code 121119): 

The Department of State welcomes the opportunity to comment on the draft
report Contingency Contracting: “State and USAID Made Progress 
Assessing and Implementing Changes, but Further Actions Needed.” 

GAO recommendation: To ensure that State is in a better position to 
support future contingencies, we recommend that the Secretary of State 
develop plans to assess whether planned initiatives are achieving 
their intended objectives. 

On December 19, 2013, the Department of State created the Critical 
Environment Contract Analytics Staff (CECAS) to develop and prepare 
Department-wide contracting comprehensive risk assessments and risk 
mitigation plans, coordinate efforts with other agencies, and monitor 
a steady state of procurement readiness for contracting operations in 
critical environments where there are contracts requiring the presence 
of a large contractor workforce to sustain or manage in-country
mission operations. The staff reports directly to the Deputy Assistant 
Secretary for Logistics Management in the Bureau of Administration, 
and will be responsible for assessing the effectiveness and 
performance of planned Department initiatives through the through the 
use of metrics. 

[End of section] 

Appendix V: Comments from the U.S. Agency for International 
Development: 

Note: GAO received USAID's letter on 2/3/2014: 

USAID: 
From The American People: 

Timothy J. DiNapoli: 
Director, Acquisition and Sourcing Management: 
U.S. Government Accountability Office: 
Washington, DC 20548: 

Dear Mr. DiNapoli: 

I am pleased to provide USAID's formal response to the Government 
Accountability Office (GAO) draft report entitled "Contingency 
Contracting: State and USAID Made Progress Assessing and Implementing 
Changes, but FU11her Actions Needed" (GAO-14-229). 

This letter, together with the enclosed USAID comments, are provided 
for incorporation as an appendix to the final report. 

Thank you for the opportunity to respond to the GAO draft report and 
for the courtesies extended by your staff in the conduct of this audit 
review. 

Sincerely, 

Signed by: 

Angelique M. Crumbly: 
Assistant Administrator: 
Bureau for Management: 
U.S. Agency for International Development: 

Enclosure: a/s. 

USAID Comments on GAO Draft Report No. GAO-14-229: 

Recommendation 1: To ensure that US AID has the necessary policies and 
procedures to better position itself to address future contingency 
challenges, we recommend that the Administrator of USAID ensure that 
its non-permissive working group consider procedures and practices
developed by missions and offices with contingency-related 
responsibilities during the course of its efforts. 

USAID concurs with the recommendation to consider procedures and 
practices developed by missions and offices with contingency-related 
responsibilities. USAID will reach out to missions, offices and 
contracting personnel with contingency operations experience to collect
and disseminate a set of best practices for contracting in support of 
contingency operations and other potentially dangerous or uncertain 
environments. To accomplish this, USAID intends to create a 
supplementary working group to the Non-Permissive Environment (NPE) 
Working Group that will complement the mission and scope of work of 
the NPE Working Group. Membership in this supplementary working group 
will be tailored to ensure the participation of experienced 
contracting staff with expert knowledge of government contracting laws 
and regulations. This specialized contracting expertise based on 
actual experience is crucial to assess what mission and office-
specific contracting procedures and practices can and should be broadly
applied. 

[End of section] 

Appendix VI: GAO Contact and Staff Acknowledgments: 

GAO Contact: 

Timothy J. DiNapoli, 202-512-4841 or dinapolit@gao.gov: 

Staff Acknowledgments: 

In addition to the contact named above, W. William Russell, Assistant 
Director; Peter Anderson; Lynn Cothern; Leigh Ann Haydon; Amber 
Keyser; John Krump; Anne McDonough-Hughes; Eddie Uyekawa; and Andrea 
Yohe made key contributions to this report. 

[End of section] 

Footnotes: 

[1] See for example, GAO, Iraq and Afghanistan: State and DOD Should 
Ensure Interagency Acquisitions Are Effectively Managed and Comply 
with Fiscal Law, [hyperlink, http://www.gao.gov/products/GAO-12-750] 
(Washington, D.C.: Aug. 2, 2012); Commission on Wartime Contracting in 
Iraq and Afghanistan, Transforming Wartime Contracting: Controlling 
Costs, Reducing Risks (Arlington, Va.: Aug. 2011). 

[2] The Quadrennial Diplomacy and Development Review is an assessment 
by State and the USAID on how those two agencies can become more 
efficient, accountable, and effective in light of new threats and 
opportunities. It provides a blueprint for elevating American 
"civilian power" to better advance U.S. national interests and to be a 
better partner to the U.S. military. U.S. Department of State, Leading 
through Civilian Power, The First Quadrennial Diplomacy and 
Development Review (Washington, D.C.: 2010). 

[3] Pub. L. No. 112-239 § 850(a). 

[4] Pub. L. No. 112-239 § 850(c). 

[5] 10 U.S.C. § 101(a)(13). 

[6] USAID officials have also developed a working definition of 
nonpermissive environment--any environment in which USAID operates 
where security concerns are elevated or its ability to implement or 
monitor programs is limited. In addition, a fiscal year 2012 
memorandum from the USAID Inspector General on the most serious 
management and performance challenges for the agency defines critical 
priority countries as countries in which the agency carries out its 
most challenging assignments. These countries are characterized by 
instability, insecurity, weak governance, and poor control of 
corruption, and according to USAID officials currently include 
Afghanistan, Iraq, Pakistan, South Sudan, and Yemen. 

[7] GAO, Iraq and Afghanistan: DOD, State, and USAID Cannot Fully 
Account for Contracts, Assistance Instruments, and Associated 
Personnel, [hyperlink, http://www.gao.gov/products/GAO-11-886] 
(Washington, D.C.: Sept. 15, 2011); Iraq and Afghanistan: DOD, State, 
and USAID Face Continued Challenges in Tracking Contracts, Assistance 
Instruments, and Associated Personnel, [hyperlink, 
http://www.gao.gov/products/GAO-11-1] (Washington, D.C.: Oct. 1, 
2010); Contingency Contracting: DOD, State, and USAID Continue to Face 
Challenges in Tracking Contractor Personnel and Contracts in Iraq and 
Afghanistan, [hyperlink, http://www.gao.gov/products/GAO-10-1] 
(Washington, D.C.: Oct. 1, 2009); and Contingency Contracting: DOD, 
State, and USAID Contracts and Contractor Personnel in Iraq and 
Afghanistan, [hyperlink, http://www.gao.gov/products/GAO-09-19] 
(Washington, D.C.: Oct. 1, 2008). 

[8] GAO, Iraq and Afghanistan: Agencies Are Taking Steps to Improve 
Data on Contracting but Need to Standardize Reporting, [hyperlink, 
http://www.gao.gov/products/GAO-12-977R] (Washington, D.C.: Sept. 12, 
2012). 

[9] [hyperlink, http://www.gao.gov/products/GAO-12-750]. 

[10] GAO, Afghanistan Development: Enhancements to Performance 
Management and Evaluation Efforts Could Improve USAID's Agricultural 
Programs, [hyperlink, http://www.gao.gov/products/GAO-10-368] 
(Washington, D.C.: July 14, 2010); and Afghanistan Development: U.S. 
Efforts to Support Afghan Water Sector Increasing, but Improvements 
Needed in Planning and Coordination, [hyperlink, 
http://www.gao.gov/products/GAO-11-138] (Washington, D.C.: Nov. 15, 
2010). 

[11] Department of State, Fiscal Year 2012 Agency Financial Report 
(Washington, D.C.: Nov. 2012). 

[12] USAID Office of the Inspector General, Most Serious Management 
and Performance Challenges for the U.S. Agency for International 
Development (Washington, D.C.: Oct. 2012). 

[13] Commission on Wartime Contracting in Iraq and Afghanistan, 
Transforming Wartime Contracting: Controlling Costs, Reducing Risks 
(Arlington, Va.: Aug. 2011). 

[14] State and USAID were required to provide their assessments to the 
Committee on Foreign Relations, the Committee on Armed Services, the 
Committee on Homeland Security and Governmental Affairs, and the 
Committee on Appropriations of the Senate; and the Committee on 
Foreign Affairs, the Committee on Armed Services, the Committee on 
Oversight and Government Reform, and the Committee on Appropriations 
of the House of Representatives. 

[15] For the purposes of this report, we used the term organizational 
structure to capture State and USAID descriptions and assessments of 
officials and offices with contracting responsibilities in contingency 
operations. 

[16] The National Defense Authorization Act for Fiscal Year 2008. Pub. 
L. No. 110-181, § 861 (as amended). 

[17] Department of State, Office of the Procurement Executive, 
Procurement Information Bulletin No. 2008-15. 

[18] [hyperlink, http://www.gao.gov/products/GAO-12-977R]; [hyperlink, 
http://www.gao.gov/products/GAO-11-1]; [hyperlink, 
http://www.gao.gov/products/GAO-10-1]; [hyperlink, 
http://www.gao.gov/products/GAO-09-19]. 

[19] A letter of authorization is a document issued by a government 
contracting officer or designee that authorizes contractor personnel 
to travel to, from, and within a designated area and to identify any 
additional authorizations, privileges, or government support the 
contractor is entitled to under the contract. 

[20] U.S. Department of State Foreign Affairs Manual, Volume 2, Part 
423, Opening or Reopening a Critical Threat or High Risk, High Threat 
Post. 

[21] [hyperlink, http://www.gao.gov/products/GAO-12-750] and GAO, 
Rebuilding Iraq: DOD and State Department Have Improved Oversight and 
Coordination of Private Security Contractors in Iraq, but Further 
Actions Are Needed to Sustain Improvements, [hyperlink, 
http://www.gao.gov/products/GAO-08-966] (Washington, D.C.: July 31, 
2008). 

[22] FAR § 42.1502. The FAR defines the simplified acquisition 
threshold as $150,000, except for acquisitions of supplies or services 
that, as determined by the head of the agency, are to be used to 
support a contingency operation or to facilitate defense against or 
recovery from nuclear, biological, chemical, or radiological attack, 
the term means --(1) $300,000 for any contract to be awarded and 
performed, or purchase to be made, inside the United States; and (2) 
$1 million for any contract to be awarded and performed, or purchase 
to be made, outside the United States. 

[23] This target is consistent with Office of Management and Budget 
(OMB) March 2013 guidance on improving the collection and use of 
information about contractor performance and integrity. 

[24] GAO, Afghanistan: U.S. Efforts to Vet Non-U.S. Vendors Needs 
Improvement, [hyperlink, http://www.gao.gov/products/GAO-11-355] 
(Washington D.C.: June 8, 2011). 

[25] FAR § 17.502 and OMB, Office of Federal Procurement Policy, 
Improving the Management and Use of Interagency Acquisitions 
(Washington, D.C.: June 6, 2008). 

[26] [hyperlink, http://www.gao.gov/products/GAO-12-750]. 

[27] Department of State, Procurement Information Bulletin No. 2013-
03, Subject: Acquisition Agreements. 

[28] [hyperlink, http://www.gao.gov/products/GAO-11-774]; [hyperlink, 
http://www.gao.gov/products/GAO-08-578]. 

[29] GAO, Standards for Internal Control in the Federal Government, 
[hyperlink, http://www.gao.gov/products/GAO/AIMD-00-21.3.1] 
(Washington D.C.: November 1999). 

[30] USAID's limited ability to implement and monitor activities in 
high-threat environments was identified as a significant operational 
deficiency in USAID's fiscal year 2012 financial management report. In 
addition, the USAID Inspector General identified working in critical 
priority countries such as Afghanistan, Pakistan, Iraq, and South 
Sudan as one of the agency's most serious management and performance 
challenges in its annual memorandum to the USAID Administrator for 
fiscal years 2010 through 2012. 

[31] GAO, Acquisition Planning: Opportunities to Build Strong 
Foundations for Better Services Contracts, [hyperlink, 
http://www.gao.gov/products/GAO-11-672] (Washington D.C.: Aug. 9, 
2011). 

[32] Pub. L. No. 112-239 § 846. 

[33] [hyperlink, http://www.gao.gov/products/GAO-11-355]. 

[34] In 2005, OMB issued guidance to civilian agencies which, among 
other things, defined the acquisition workforce to include, as a 
minimum, contracting specialists, COs, program/project managers, and 
CORs. State and USAID are required to use this definition for the 
purposes of defining their acquisition workforces. 

[35] For more information on State's working capital fund, see 
[hyperlink, http://www.gao.gov/products/GAO-12-750]. 

[36] GAO, Human Capital: Key Principles for Effective Strategic 
Workforce Planning, [hyperlink, http://www.gao.gov/products/GAO-04-39] 
(Washington D.C.: Dec. 11, 2003). 

[37] The FAR defines "personal services contracts" as contracts that, 
by their express terms or as administered, make the contractor 
personnel appear to be, in effect, government employees. FAR § 2.101. 

[38] [hyperlink, http://www.gao.gov/products/GAO-12-750]. 

[39] Pub. L. No. 112-239 § 850(c). 

[40] 10 USC § 101(a)(13). 

[End of section] 

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