Interagency Contracting:

Need for Improved Information and Policy Implementation at the Department of State

GAO-08-578: Published: May 8, 2008. Publicly Released: May 8, 2008.

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Interagency contracting--using another agency's contracts or contracting services--can provide agencies with opportunities to streamline the procurement process and achieve savings. However, GAO designated the management of interagency contracting a high-risk area in 2005 due, in part, to a lack of reliable data on its use and of clarity regarding contract management responsibilities. In 2002, the Department of State (State) issued the State First policy, requiring domestic bureaus to obtain approval from State acquisition officials before paying other agencies for contract support services. Under the Comptroller General's authority to conduct evaluations on his own initiative, GAO evaluated State's 1) insight into its use of interagency contracts, 2) policies on deciding when to use assisted interagency contracts, and 3) ability to ensure oversight. GAO's work included reviewing regulations, analyzing interagency contracting data, and conducting 10 case studies of direct and assisted interagency contracts that represented a range of State bureaus and servicing agencies.

State officials have limited insight into the extent to which the department has used both methods of interagency contracting--direct by placing their own orders on another agency's contract and assisted by obtaining contract support services from another agency. State officials cannot rely on the federal government's primary data system for tracking procurements to readily identify instances when State has used interagency contracts. Further, State's central procurement and accounting systems do not reliably and comprehensively identify when interagency contracts have been used. While State officials told GAO the most reliable way to identify interagency contract actions would be to request data on these actions from bureaus and overseas posts, several bureaus and posts had difficulty responding to such a request. State reported to GAO over $800 million in interagency contract actions in fiscal year 2006, but these data were incomplete. For example, State did not report $144 million in assisted contracting performed on its behalf by the Department of Defense. GAO has previously reported that the lack of reliable information on interagency contracts inhibits agencies from making sound contracting decisions and engaging in good management practices. Due to the way the State First policy has been implemented, State cannot ensure that decisions to use assisted interagency contracting are made by the appropriate acquisition officials. These officials often lack awareness of or involvement in decisions to use assisted interagency contracts. First, State acquisition officials have created exemptions limiting the assisted contract actions subject to their review under the policy. For example, State's guidance exempts funds transfers under the Foreign Assistance Act, under which bureaus conducting large amounts of interagency contracting operate. Second, bureaus have varying interpretations of when approvals are needed under the policy. Some bureaus seek approvals for individual contract actions related to specific requirements. Another bureau interprets the policy as only requiring approval for a new overarching interagency acquisition agreement, which can encompass multiple contract actions and fiscal years. Third, State acquisition officials do not monitor State First compliance, so they are not positioned to know whether the five approval requests received in fiscal year 2006 fully reflected the extent of that year's assisted interagency contracting. State's policies do not ensure that responsibilities for overseeing contractor performance on assisted interagency contracts are assigned to appropriately trained individuals. State acquisition regulations do not require trained oversight personnel to be assigned when using assisted interagency contracting. As a result, effective oversight depends on factors outside of State's control, such as the rigor of servicing agencies' oversight requirements, which vary. GAO identified cases where State personnel were given responsibility for overseeing contractor performance but had not received related training. GAO and others have reported that agencies' interests are put at risk when the individuals responsible for overseeing contractor performance are not clearly designated and have not been properly trained.

Recommendations for Executive Action

  1. Status: Closed - Implemented

    Comments: In response to this recommendation, State Department acquisition officials created and now maintain a spreadsheet that tracks information about assisted interagency contract actions, including the costs and associated fees. A State Department official told us that this tracking spreadsheet is populated with information submitted by the bureaus.

    Recommendation: To enable State to improve its management of interagency contracting, the Secretary of State should direct the Office of the Procurement Executive to develop, in consultation with the bureaus, a reliable means for tracking the use of interagency contracts so that the bureaus and acquisition officials can readily and reliably access data, such as the costs and associated fees. Analysis of such data could also be used to assess whether the State First process provides an accurate reflection of bureaus' use of assisted interagency contracting.

    Agency Affected: Department of State

  2. Status: Closed - Implemented

    Comments: In response to this recommendation, the State Department has revised the State First policy to include certain types of previously excluded actions. A State Department official told us that the changes were approved by some of the bureaus which most frequently use interagency contracting. In addition, the acquisition office worked with the bureau which we found was implementing State First differently than other bureaus to identify and refine their use of interagency contracts. That bureau issued guidance in September 2009 that establishes uniform use and processes for interagency acquisition agreements.

    Recommendation: To enable State to improve its management of interagency contracting, the Secretary of State should direct the Office of the Procurement Executive to work with the Office of Acquisitions Management, in coordination with the bureaus that make the most use of assisted interagency contracts, to clarify and refine the State First policy, including existing exemptions, and provide additional guidance as needed regarding which actions need review under the policy.

    Agency Affected: Department of State

  3. Status: Closed - Implemented

    Comments: In response to this recommendation, the State Department revised the State First policy to require bureaus to identify a contracting officer's representative (COR) who will be responsible for providing technical oversight of interagency contract actions expected to exceed $100,000, and to include this information in State First waiver requests. Further, in July 2010, the State Department established training and certification requirements for CORs. The State Department has also developed an online database system that maintains a record of all CORs, past and present, as well as their training certifications. This system is available to all State Department personnel and procurement officials stated that verification of COR certification is always part of their review of State First waiver requests.

    Recommendation: To enable State to improve its management of interagency contracting, the Secretary of State should direct the Office of the Procurement Executive to require bureaus seeking a State First waiver to identify in their request individual(s) who will be responsible for contract oversight and ensure they are trained to perform this key role.

    Agency Affected: Department of State

 

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