Procurement:

Opportunities To Use More Preferred Practices for Base Support Contracts

NSIAD-87-7: Published: Feb 13, 1987. Publicly Released: Feb 13, 1987.

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GAO reviewed the types of contracts, source selection evaluation criteria, and work statements that the Department of Defense (DOD) uses to award large multi-function or "umbrella" contracts for base support services to determine whether its contracting practices adhere to law, regulation, and policy.

GAO found that: (1) although most of the work was of a predictable nature, contracting officers often decided to use umbrella contracts, even though they were not the most advantageous method of meeting the government's needs; (2) contracting officers neither followed preferred practices in awarding umbrella contracts nor justified decisions to use umbrella contracts based on less-preferred contracting practices, rather than two or more smaller contracts; (3) significant portions of the routine base support work performed under cost reimbursement and fixed-price incentive contracts appeared suitable for firmer types of contracts; (4) the services awarded most umbrella contracts based on technical, rather than price, competition; and (5) DOD regulations did not require existing umbrella contract work statements to follow the concepts in the Office of Management and Budget (OMB) work statement guidance.

Recommendations for Executive Action

  1. Status: Closed - Not Implemented

    Comments: DOD did not concur with this recommendation, and noted that a decision on contract type should be made by contracting officers on a case-by-case basis. It also noted that evaluation criteria should be structured on a case-by-case basis, with no criteria for weighting of price, as full weighting would be unnecessary and overly restrictive. DOD questioned the emphasis GAO placed upon price.

    Recommendation: The Secretary of Defense should require both initial solicitations and resolicitations to be based on the anticipated use of the three contracting practices, except when: (1) the contracting officer certifies, justifies, and reasonably supports the use of any other contracting practices; and (2) the justification is approved at a level higher than the contracting officer. The three contracting practices are: (1) a firm fixed-price contract or a fixed-price contract with an economic price adjustment clause; (2) source selection evaluation criteria, which assign at least half of the weight to price-related, rather than nonprice, factors; and (3) a solicitation containing work statements with clear, definitive, performance-oriented descriptions of the work that needs to be done, and standards with acceptable quality levels for measuring performance.

    Agency Affected: Department of Defense

  2. Status: Closed - Not Implemented

    Comments: The DOD response acknowledged the need for clear, definitive work statements, but stated that flexibility in tailoring these statements was paramount. It also questioned the emphasis GAO placed upon price, and cited the need for quality as being a more important consideration. This recommendation was included in the GAO Annual Report on Open Recommendations.

    Recommendation: The Secretary of Defense should require the development of umbrella contract work statements to be planned and initiated early enough and effectively carried out, so as to encourage firmly priced contracts to be proposed in response to the solicitation and considered during negotiations, unless the use of another contract type has been properly justified and approved.

    Agency Affected: Department of Defense

  3. Status: Closed - Not Implemented

    Comments: DOD partially concurred with this recommendation and noted that adequate justification/documentation is important. The DOD response explained, however, that existing regulations on this matter were sufficient. This recommendation was included in the GAO Annual Report on Open Recommendations.

    Recommendation: The Secretary of Defense should require, for base support service umbrella contracts, that contract type decisions be documented and justified: (1) in accordance with current requirements, giving proper consideration to the nature of the work involved; and (2) in a manner that describes how the work is so unpredictable that a reasonably definitive statement of work could not be developed, why it is impracticable to satisfy the agency's need without using a cost reimbursement or incentive contract, and how contracting officers know that the use of the contract type is less costly.

    Agency Affected: Department of Defense

  4. Status: Closed - Not Implemented

    Comments: DOD disagreed with the emphasis on price, and cited the need for case-by-case decisions, and quality considerations. This recommendation was included in the GAO Annual Report on Open Recommendations.

    Recommendation: The Secretary of Defense should require, for base support service umbrella contracts, that alternatives to using cost reimbursement and incentive contracts are fully considered, such as switching to firmly priced contracts and splitting contracts into those functions that can be effectively performed on a firmly priced basis and those that should be performed using a less preferred contract type.

    Agency Affected: Department of Defense

  5. Status: Closed - Not Implemented

    Comments: DOD disagreed with this recommendation and questioned the emphasis GAO placed on price and cited the need for quality considerations. This recommendation was included in the GAO Annual Report on Open Recommendations.

    Recommendation: The Secretary of Defense should provide guidance to contracting officers concerning the relative importance to be given to price and nonprice source selection evaluation criteria in awarding umbrella base support service contracts. The guidance should: (1) emphasize the need to normally give at least equal or greater importance to price as opposed to nonprice criteria in solicitations for work that is mostly routine or predictable; and (2) describe acceptable ways to structure source selection evaluations for umbrella contracts under various circumstances, considering the nature of the work involved. This should include describing the two-step evaluation method that: (1) eliminates offerers with inadequate technical proposals on the first step; and (2) awards the contract to the low responsible offerer on the second.

    Agency Affected: Department of Defense

  6. Status: Closed - Not Implemented

    Comments: DOD did not agree that Army, Navy, or Air Force components needed to revise their regulations/instructions. This recommendation was included in the GAO Annual Report on Open Recommendations.

    Recommendation: The Secretaries of the Army, Navy, and Air Force should revise their regulations and instructions to remove provisions which either exempt existing umbrella contracts from following OMB work statement concepts or conflict with those concepts relating to: (1) clear, definitive, performance-oriented descriptions of the work that needs to be done; and (2) standards with acceptable quality levels for measuring performance.

    Agency Affected: Department of Defense: Department of the Air Force

  7. Status: Closed - Not Implemented

    Comments: DOD did not agree that Army, Navy, or Air Force components needed to revise their regulations/instructions.

    Recommendation: The Secretaries of the Army, Navy, and Air Force should revise their regulations and instructions to remove provisions which either exempt existing umbrella contracts from following OMB work statement concepts or conflict with those concepts relating to: (1) clear, definitive, performance-oriented descriptions of the work that needs to be done; and (2) standards with acceptable quality levels for measuring performance.

    Agency Affected: Department of Defense: Department of the Navy

  8. Status: Closed - Not Implemented

    Comments: DOD did not agree that Army, Navy, or Air Force components needed to revise their regulations/instructions.

    Recommendation: The Secretaries of the Army, Navy, and Air Force should revise their regulations and instructions to remove provisions which either exempt existing umbrella contracts from following OMB work statement concepts or conflict with those concepts relating to: (1) clear, definitive, performance-oriented descriptions of the work that needs to be done; and (2) standards with acceptable quality levels for measuring performance.

    Agency Affected: Department of Defense: Department of the Army

  9. Status: Closed - Implemented

    Comments: DOD partially concurred with this recommendation and noted that it had implemented the suggested actions. Its final response explained, however, that flexibility in developing work statements to fit unique circumstances was important.

    Recommendation: The Secretaries of the Army, Navy, and Air Force should promote better planning for base support service contract work statements by such actions as: (1) identifying and disseminating examples of well developed work statements from existing contracts, model work statements, or future OMB guidance; and (2) using personnel highly skilled at work statement preparation to provide technical assistance to contracting officers.

    Agency Affected: Department of Defense: Department of the Air Force

  10. Status: Closed - Implemented

    Comments: DOD partially concurred with this recommendation and noted that it had implemented the suggested actions. Its final response explained, however, that flexibility in developing work statements to fit unique circumstances was important.

    Recommendation: The Secretaries of the Army, Navy, and Air Force should promote better planning for base support service contract work statements by such actions as: (1) identifying and disseminating examples of well developed work statements from existing contracts, model work statements, or future OMB guidance; and (2) using personnel highly skilled at work statement preparation to provide technical assistance to contracting officers.

    Agency Affected: Department of Defense: Department of the Navy

  11. Status: Closed - Implemented

    Comments: DOD partially concurred with this recommendation and noted that it had implemented the suggested actions. Its final response explained, however, that flexibility in developing work statements to fit unique circumstances was important.

    Recommendation: The Secretaries of the Army, Navy, and Air Force should promote better planning for base support service contract work statements by such actions as: (1) identifying and disseminating examples of well developed work statements from existing contracts, model work statements, or future OMB guidance; and (2) using personnel highly skilled at work statement preparation to provide technical assistance to contracting officers.

    Agency Affected: Department of Defense: Department of the Army

 

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