Controls Over DOD's Management Support Service Contracts Need Strengthening

MASAD-81-19: Published: Mar 31, 1981. Publicly Released: Apr 7, 1981.

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The Department of Defense (DOD) spent over $2.5 billion in fiscal year 1979 on all types of management support service contracts. These services ranged from relatively simple studies to aid in management decisions to contracts involving complex engineering support services for major weapon systems.

In spite of the continuing attention being focused on the use of contract consultants, serious and pervasive problems continue to exist. These problems include: (1) the weakening in-house capabilities of DOD to perform its mission; (2) extensive contract awards resulting from unsolicited proposals; (3) the significant involvement of former DOD officials and employees in contracts; (4) the continuous renewal of contracts; (5) instances of questionable need for and use made of the contract services; (6) the overuse of sole-source awards; and (7) extensive contract modifications. GAO believes that an assessment of the capability of DOD to perform all essential management functions in-house under existing personnel ceiling constraints is needed to achieve effective actions for these problems.

Matter for Congressional Consideration

  1. Status: Closed

    Comments: Please call 202/512-6100 for additional information.

    Matter: Congress should, as an interim measure, consider legislation which would minimize the funding of sole-source contracts for management support services and the funding of such contracts resulting from unsolicited proposals. One way to accomplish this might be to establish quotas for a period of 2 to 4 years. For example, the Congress might provide that not more than 50 percent of the total dollars spent by an agency for management support service contracts may be used to fund sole-source contracts. This figure could be adjusted in future years until a more acceptable balance is achieved.

Recommendations for Executive Action

  1. Status: Closed

    Comments: Please call 202/512-6100 for additional information.

    Recommendation: The Secretary of Defense should identify management support services which are not governmental in nature and which are required on a continuing basis. For each service, an assessment should be made of current in-house capability, the possibility of acquiring such capability, and the relative costs involved in performing the work in-house versus contractor support. Such an analysis would be beneficial in terms of budgetary support as well as providing the basis to make informed decisions on the least costly alternative to accomplishing various DOD missions.

    Agency Affected: Department of Defense

  2. Status: Closed

    Comments: Please call 202/512-6100 for additional information.

    Recommendation: The Secretary of Defense should identify functions being performed by contractors which are governmental in nature, and determine personnel needs and develop ways to meet those needs. DOD should be in a position to bring these functions in-house through better management of their work force and additional personnel should the personnel ceilings be increased.

    Agency Affected: Department of Defense

  3. Status: Closed

    Comments: Please call 202/512-6100 for additional information.

    Recommendation: The Secretary of Defense should require DOD activities to establish an independent review board to assure the highest level review of proposed contract awards and modifications over $100,000 for management support services. Functions this board should perform are: (1) questioning the need for the service, (2) validating the lack of in-house capability, (3) questioning the necessity for sole-source awards, and (4) reviewing contract modifications. This independent assessment is particularly critical for those contracts to be performed by former DOD employees.

    Agency Affected: Department of Defense

  4. Status: Closed

    Comments: Please call 202/512-6100 for additional information.

    Recommendation: The Director of the Office of Management and Budget (OMB) should assure that agencies identify all requested funds to be used for management support services and provide this information to the Congress. Such identification would provide the basis for the Congress to review agencies' use of such services as well as provide a base from which to control funds available for such services. We believe that OMB could satisfy this recommendation by extending the requirements of OMB Bulletin No. 80-13 for the types of management support services identified in this report.

    Agency Affected: Executive Office of the President: Office of Management and Budget

  5. Status: Closed

    Comments: Please call 202/512-6100 for additional information.

    Recommendation: The Director of the Office of Management and Budget should extend the management controls outlined in OMB Circular A-120 to other categories of management support services such as Management and Professional Services and Special Studies and Analyses.

    Agency Affected: Executive Office of the President: Office of Management and Budget

 

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