Summary
The Pension Benefit Guaranty Corporation (PBGC) insures the pensions of more than 44 million workers in over 30,000 employer-sponsored defined benefit pension plans. In response to growing workloads, PBGC has come to rely heavily on contractors to conduct its work. GAO was asked to report on (1) the role that contracting plays in PBGC's efforts to accomplish its mission, (2) the steps PBGC has taken to improve its acquisition infrastructure and develop a strategic approach to guide its contracting activities, and (3) the steps PBGC has taken to improve its contract oversight processes to ensure accountability. To address these issues, we interviewed PBGC officials and selected contractors, reviewed data on PBGC's contracting activities; identified changes PBGC is making to contracting procedures; and identified strategies PBGC uses to monitor contracts.
Contracting plays a central role in helping PBGC achieve its mission and address unpredictable workloads. Since the mid-1980s, PBGC has had contracts covering a wide range of services, including the administration of terminated plans, payment of benefits, customer communication, legal assistance, document management, and information technology. PBGC's workforce currently consists of about 800 federal employees and utilizes the services of about 1,500 contract employees. From fiscal year 2000 through 2007, PBGC's contract spending increased steadily along with its overall budget and workload, and its use of contract employees has outpaced its hiring of federal employees. As its workloads have grown due to a significant number of large pension plan terminations, PBGC has relied on contractors to supplement its workforce, acknowledging that it has difficulty anticipating its workloads due to unpredictable economic conditions. PBGC is taking steps to improve its acquisition infrastructure, but the Procurement Department is not yet part of PBGC's strategic decision-making process. In 2007, PBGC began to take steps to realign its Procurement Department, update contracting policies and processes, upgrade the skills of Procurement Department staff, and better track contracting data. PBGC's efforts begin to provide an improved foundation for the contracting function; however, these efforts are early steps and more remains to be done. PBGC has not fully integrated its contracting function at the corporate level; the Procurement Department is not included in corporate-level strategic planning and does not have a presence on PBGC's relevant strategic teams. PBGC has made improvements to contractor oversight and has begun to implement performance-based contracting that offers the potential for better contract outcomes, but also creates new challenges for contract oversight and monitoring efforts. PBGC has implemented new contract monitoring activities, improved oversight activities for some of its major contracts, and developed comprehensive procedures to direct contracting activities. For its field benefit administration office contracts, PBGC developed performance measures and scorecards, providing feedback about contractor performance in terms of timeliness and accuracy of benefit payments. Despite these improvements, most of PBGC's current contracts still lack performance incentives and methods to hold contractors accountable. PBGC recently began awarding more performance-based contracts, as a means to achieve better outcomes. Although performance-based contracting is recognized as a viable way toward getting better results from contractors, GAO and others have identified common challenges agencies face when implementing this approach--from deciding which contracts are appropriate for a performance-based approach to deciding which outcomes to measure and emphasize. PBGC procurement officials recognize the benefits and challenges of performance-based contracting, and that they must provide additional oversight of contracts and a different approach to contract monitoring that focuses on outcomes rather than processes.
Recommendations
Our recommendations from this work are listed below with a Contact for more information. Status will change from "In process" to "Open," "Closed - implemented," or "Closed - not implemented" based on our follow up work.
Director:
Team:
Phone:
Barbara D. Bovbjerg
Government Accountability Office: Education, Workforce, and Income Security
(202) 512-5491
Recommendations for Executive Action
Recommendation: To improve PBGC's performance in an environment of heavy contractor use, the Director of PBGC should revise its strategic plan and, in drafting the corporation's human capital strategic plan, reflect the importance of contracting and PBGC's use of contractors, project its vision of future contractor use, and better link staffing and contracting decisions at the corporate level. In drafting the plan, the Director of PBGC should include the Procurement Department in agency-wide strategic planning.
Agency Affected: Pension Benefit Guaranty Corporation
Status: Open
Comments: PBGC believes its current strategic plan is sufficiently comprehensive to address the recommendation. In response, GAO stated that the strategic plan only briefly mentions performance-based contracting, flexible staffing and metrics for specific contracts, and therefore it does not reflect the important role contracting is playing in achieving PBGC's mission. On August 7, 2009, PBGC provided an update for this report, but it did not address this particular recommendation.
Recommendation: To improve PBGC's performance in an environment of heavy contractor use, the Director of PBGC should revise its strategic plan and, in drafting the corporation's human capital strategic plan, reflect the importance of contracting and PBGC's use of contractors, project its vision of future contractor use, and better link staffing and contracting decisions at the corporate level. In drafting the plan, the Director of PBGC should ensure that the Procurement Director sits on PBGC's three strategic teams--the Operations Integration Board, the Budget and Planning Integration Team, and the Capital Planning for Information Technology Team.
Agency Affected: Pension Benefit Guaranty Corporation
Status: Open
Comments: According to PBGC, the Chief Management Officer (CMO) sits on PBGC's three strategic teams. The CMO coordinates on contracting issues as part of regular staff meetings. PBGC believes there are greater gains to be realized by continuing to emphasize executive-level awareness of procurement issues in decision-making than by requiring the Director of Procurement Department to sit on specific corporate committees. On August 7, 2009, PBGC provided an update for this report, but it did not address this particular recommendation.
Recommendation: To improve PBGC's performance in an environment of heavy contractor use, the Director of PBGC should revise its strategic plan and, in drafting the corporation's human capital strategic plan, reflect the importance of contracting and PBGC's use of contractors, project its vision of future contractor use, and better link staffing and contracting decisions at the corporate level. In drafting the plan, the Director of PBGC should broaden the Procurement Department's May 2007 staffing study to include as part of PBGC's agency-wide acquisition workforce those positions outside of the Procurement Department that have a significant impact on procurement outcomes (i.e., requirements staff, program managers, financial managers, and individuals involved in contract monitoring). The study should determine appropriate staffing levels for these positions as the May 2007 study did for Procurement Department staff.
Agency Affected: Pension Benefit Guaranty Corporation
Status: Closed - implemented
Comments: As part of PBGC's human capital strategic planning process, PBGC conducted a comprehensive review of necessary staffing levels across the agency relating to procurement functions and future contracting needs. In response to our recommendation, the agency expanded it to include acquisition positions outside of the Procurement Department. They identified the universe of acquisition positions at PBGC; conducted a review of best practices using GAO's Framework for Assessing the Acquisition Workforce; and assessed their acquisition staffing levels using data from the Federal Procurement Data System and the Federal Acquisition Institute, including supplemental analysis of PBGC's Contracting Officer Technical Representative's workload data.
Recommendation: To improve PBGC's performance in an environment of heavy contractor use, the Director of PBGC should revise its strategic plan and, in drafting the corporation's human capital strategic plan, reflect the importance of contracting and PBGC's use of contractors, project its vision of future contractor use, and better link staffing and contracting decisions at the corporate level. In drafting the plan, the Director of PBGC should include in PBGC's human capital plan detailed plans for how contract support will be obtained.
Agency Affected: Pension Benefit Guaranty Corporation
Status: Open
Comments: According to PBGC, PBGC is working with the Office of Personnel Management as it moves forward in the development and implementation of our Human Capital Strategic Plan, which PBGC provided to OPM at the end of 2008. On August 7, 2009, PBGC provided an update for this report, but it did not address this particular recommendation.
Recommendation: To improve PBGC's performance in an environment of heavy contractor use, the Director of PBGC should revise its strategic plan and, in drafting the corporation's human capital strategic plan, reflect the importance of contracting and PBGC's use of contractors, project its vision of future contractor use, and better link staffing and contracting decisions at the corporate level. In drafting the plan, the Director of PBGC should assess PBGC's contract information to determine if additional information is needed to support strategic acquisition management decisions. This could include more complete information on goods and services purchased, as well as suppliers and spending patterns. In addition, contract spending information should be integrated into PBGC's financial system, to allow acquisition staff to obtain real-time information on the availability of funds, status of obligations and expenditures, and payments for the receipt of goods and services.
Agency Affected: Pension Benefit Guaranty Corporation
Status: Open
Comments: PBGC states that it will assess existing contract information to determine whether additional information is needed to support strategic acquisition management decisions. PBGC states that existing financial systems provide extensive information o n contract spending. On August 7, 2009, PBGC provided an update for this report, but it did not address this particular recommendation.
Recommendation: To improve PBGC's performance in an environment of heavy contractor use, the Director of PBGC should revise its strategic plan and, in drafting the corporation's human capital strategic plan, reflect the importance of contracting and PBGC's use of contractors, project its vision of future contractor use, and better link staffing and contracting decisions at the corporate level. In drafting the plan, the Director of PBGC should develop metrics for PBGC's annual performance plan that document how the acquisition function supports PBGC's missions and goals. These could include metrics related to acquisition efficiency and customer satisfaction.
Agency Affected: Pension Benefit Guaranty Corporation
Status: Open
Comments: PBGC states that it currently has metrics relating to contracting performance in individual performance plans of senior executives with major contracting projects, as well as in those of Procurement Department employees. PBGC will review whether these measures can be Incorporated into the annual performance budget to document how the acquisition function supports PBGC's mission and goals. On August 7, 2009, PBGC provided an update for this report, but it did not address this particular recommendation.
Recommendation: To improve PBGC's contract management as it implements a performance-based approach to contracting, the Director of PBGC should provide comprehensive training on performance-based contracting for PBGC's Procurement Department staff, managers, and acquisition-related workforce.
Agency Affected: Pension Benefit Guaranty Corporation
Status: Open
Comments: PBGC has begun training Procurement Department staff of developing performance-based statements of work. On August 7, 2009, PBGC provided an update for this report, but it did not address this particular recommendation.
Recommendation: To improve PBGC's contract management as it implements a performance-based approach to contracting, the Director of PBGC should develop practices to help ensure accountability for the Procurement Department staff carrying out contract monitoring responsibilities.
Agency Affected: Pension Benefit Guaranty Corporation
Status: Open
Comments: PBGC states that Procurement Department staff work closely with departmental representatives to ensure that statements of work and resulting contracts are properly structured to achieve desired outcomes. On August 7, 2009, PBGC provided an update for this report, but it did not address this particular recommendation.
Recommendation: To improve PBGC's contract management as it implements a performance-based approach to contracting, the Director of PBGC should ensure that future contracts measure performance in terms of outcomes, provide incentives for the accomplishment of desired outcomes, and ensure payment of award fees only for excellent performance.
Agency Affected: Pension Benefit Guaranty Corporation
Status: Open
Comments: On August 7, 2009, PBGC provided an update for this report, but it did not address this particular recommendation.
