Controls Over Consulting Service Contracts at Federal Agencies Need Tightening

PSAD-80-35: Published: Mar 20, 1980. Publicly Released: Mar 20, 1980.

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Federal agencies spend between $1 billion and $2 billion annually on consulting services contracts to obtain a variety of goods and services. Proper use of consulting services is a normal, legitimate, and economical way to improve Government services and operations, and agencies must continue to have the option to use consulting services where appropriate. Responding to Presidential and congressional concern, the Office of Management and Budget (OMB) issued a bulletin to all executive agencies to better control and report the use of consulting services. In spite of this new guidance, a GAO review of 111 contracts, valued at $19.9 million, in 6 agencies, revealed that little substantive improvement has been made.

The need for many consulting service contracts was questionable because little or no consideration was given to in-house capability prior to the award of the contracts, proposals were frequently unsolicited, a number of contracts were awarded during the last quarter of the fiscal year which cast doubt on agency priorities and mission, and frequently little use was made of the results of the study products. Extensive use of sole source awards precluded effective price competition. Several of these awards were made to former agency employees. A significant number of contract modifications resulted in increased costs and delays in delivery of the end product. Inaccurate reporting of consulting service contracts was caused, in part, by confusion over the OMB definition for such contracts. Agencies often attributed their need for the services to various legislative mandates.

Recommendation for Executive Action

  1. Status: Closed

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

    Recommendation: The Director of OMB should instruct Federal agencies to establish more rigorous procedures for approving consulting services contracts. Such procedures are necessary to assure the proper use of consulting services. One approach might be to establish an independent board within each agency or expand the functions of sole-source boards. The purpose of these boards would be to: assure that in-house capability is adequately considered and assessed prior to the award of contracts; assure that the service is needed in terms of agency mission and established priorities; assure that previous similar efforts have been adequately considered prior to award; evaluate the necessity of using previous employees in performance of the contract tasks; and determine the reasonableness of using cost-plus-fixed-fee contracts in view of the nature of the proposed work. The Director of OMB should work with the Congress to achieve a better and more uniform understanding of the current definition of consulting services in terms of coverage and clarity as well as congressional needs, and intensify oversight on agencies' use of consulting services, including assuring that all agencies are moving as rapidly as possible to report those services to the Federal Procurement Data Center.

    Agency Affected:

 

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