This is the accessible text file for GAO report number GAO-13-133R
entitled 'Interagency Contracting: Agency Actions Address Key
Management Challenges, but Additional Steps Needed to Ensure
Consistent Implementation of Policy Changes' which was released on
January 29, 2013.
This text file was formatted by the U.S. Government Accountability
Office (GAO) to be accessible to users with visual impairments, as
part of a longer term project to improve GAO products' accessibility.
Every attempt has been made to maintain the structural and data
integrity of the original printed product. Accessibility features,
such as text descriptions of tables, consecutively numbered footnotes
placed at the end of the file, and the text of agency comment letters,
are provided but may not exactly duplicate the presentation or format
of the printed version. The portable document format (PDF) file is an
exact electronic replica of the printed version. We welcome your
feedback. Please E-mail your comments regarding the contents or
accessibility features of this document to Webmaster@gao.gov.
This is a work of the U.S. government and is not subject to copyright
protection in the United States. It may be reproduced and distributed
in its entirety without further permission from GAO. Because this work
may contain copyrighted images or other material, permission from the
copyright holder may be necessary if you wish to reproduce this
material separately.
GAO-13-133R:
United States Government Accountability Office:
Washington, DC 20548:
January 29, 2013:
Congressional Committees:
Subject: Interagency Contracting: Agency Actions Address Key
Management Challenges, but Additional Steps Needed to Ensure
Consistent Implementation of Policy Changes:
Federal agencies collectively spend more than half a trillion dollars
annually through contracts to acquire goods and services in support of
their missions. One method for realizing efficiency in the procurement
process is through the use of interagency contracting, where one
agency either places an order directly against another agency's
contract or uses the contracting services of another agency to obtain
supplies or services. Interagency contracting can provide a number of
benefits to agencies, helping them to streamline the procurement
process, take advantage of unique expertise in a particular type of
procurement, and achieve savings by leveraging the government's
collective buying power. But these acquisitions also pose a variety of
risks. We designated the management of interagency contracting as a
high risk area in 2005, in part because of the need for stronger
internal controls and clear definitions of agency roles and
responsibilities.[Footnote 1] We subsequently reported on interagency
contracting in 2010, and identified the need for governmentwide
policies to govern the creation of interagency contract vehicles and
better data to effectively oversee and manage them.[Footnote 2] Since
then, key policy changes have been made to both guide the creation of
new interagency contracts and strengthen the use of existing contract
vehicles. For example, federal acquisition regulations have been
revised and guidance has been created to require, among other things,
that agencies formally document the roles and responsibilities in an
interagency agreement for certain interagency acquisitions.
We performed this review under the authority of the Comptroller
General as part of our ongoing efforts to support congressional
oversight of GAO's high-risk areas. We evaluated (1) progress made by
the Office of Management and Budget's (OMB) Office of Federal
Procurement Policy (OFPP) and the General Services Administration
(GSA) in addressing issues identified in our 2010 report on
interagency contracting, and (2) progress made by federal agencies in
implementing policy changes related to the use of interagency contracts.
To address our objectives, we reviewed corrective action plans
developed by OFPP and GSA to respond to issues identified in our 2010
report, along with policy memorandums, guidance, and studies on
efforts to address these issues. We also met with OFPP and GSA
officials to discuss these actions. We examined agency progress in
implementing recent policy changes related to the use of interagency
contracts that require agencies to complete a best procurement
approach determination and interagency agreements, at three levels.
First, we reviewed OFPP's analysis of reports from the 24 Chief
Financial Officer (CFO) Act agencies, which included a discussion of
management controls related to these policy changes, to gain a
governmentwide perspective.[Footnote 3] Next, we met with agency
officials from the Department of Defense (DOD), GSA, and the
Department of the Interior and reviewed agency policies, guidance,
templates, ordering guidelines, and training materials implementing
interagency contracting requirements, including regulations
incorporated into subpart 17.5 of the Federal Acquisition Regulation
(FAR) in December 2010. We selected DOD, GSA, and the Department of
the Interior for further review because these agencies are the largest
users and providers of interagency contracting services, as reported
in the Federal Procurement Data System-Next Generation (FPDS-NG).
Finally, to evaluate the implementation of recent policy changes for
specific contract actions, we used FPDS-NG data on new awards in
fiscal year 2011 to select 20 orders DOD placed using another agency's
contract (direct acquisitions) and 20 contracts or orders that another
agency awarded for DOD (assisted acquisitions). DOD is the largest
user of interagency contracts. We selected contracts and orders with
the highest total obligations in fiscal year 2011. For a full
description of our scope and methodology, see enclosure I.
We conducted this performance audit from June 2012 to January 2013 in
accordance with generally accepted government auditing standards.
Those standards require that we plan and perform the audit to obtain
sufficient, appropriate evidence to provide a reasonable basis for our
findings and conclusions based on our audit objectives. We believe the
evidence obtained provides a reasonable basis for our findings and
conclusions based on our audit objectives.
Results in Brief:
Both OFPP and GSA have implemented corrective actions to address the
key interagency contracting issues identified in our 2010 report
regarding the creation, use, and oversight of interagency contracts.
Specifically, OFPP has developed a policy framework for the
establishment and oversight of interagency contract vehicles, which
focuses on ensuring that new interagency contracts demonstrate value
through a sound business case. In response to our concerns regarding
the lack of data to leverage, manage, and oversee these contracts,
OFPP has taken steps to enhance the functionality of a database that
provides information on interagency contracts. These actions are
intended to make it easier for agency buyers to perform market
research and improve the information available to OFPP on the use of
these contracts. GSA also has initiated several efforts to improve the
availability and use of pricing data on its Multiple Award Schedules
program, a key interagency contract vehicle, with the goal of
improving the ability of GSA and its customers to get better prices.
Federal agencies have taken a variety of steps to implement recent
policy changes related to the use of interagency contracts that
require them to complete a best procurement approach determination and
an interagency agreement. However, DOD's implementation of certain
aspects of these policies was inconsistent on the orders we reviewed.
At the governmentwide level, OFPP's analysis of reports from the 24
CFO Act agencies found that most had issued guidance, developed
templates, and conducted internal reviews to reinforce these policy
changes and strengthen the management of interagency acquisitions. Our
review of efforts at DOD, GSA, and the Department of the Interior--the
largest users and providers of interagency acquisition services--
confirmed that these agencies have taken similar actions. At GSA and
DOD, some actions are still in progress. GSA has not updated the
ordering guides for all its interagency contract vehicles to include
the requirement for its customers to make a best procurement approach
determination despite internal direction to do so; DOD has not updated
its acquisition regulation to reflect this requirement. We also
assessed the implementation of these policy changes on recent contract
actions at DOD. Most of the DOD orders we reviewed were supported by
the required determinations. These determinations, which help ensure
agencies make sound business decisions to support their use of an
interagency contract, varied in the degree to which they addressed the
factors cited in the FAR or OFPP guidance, although most
determinations addressed most of the factors. These variations appear
to be the result of differences between the FAR and OFPP guidance and
DOD's acquisition regulation. In addition, for almost all of the DOD
orders we reviewed, the department substantially complied with the
requirement that agencies document roles and responsibilities in a
written agreement. We are recommending that DOD and GSA take steps to
update policies and guidance to ensure that recent interagency
contracting policy changes are consistently implemented.
Background:
An interagency acquisition takes place when an agency needing supplies
or services (the requesting agency) either places an order using
another agency's contract in a direct acquisition or obtains
acquisition assistance from another agency (the servicing agency) in
an assisted acquisition. Agencies spend tens of billions of dollars
annually through interagency contract vehicles, such as GSA's Multiple
Award Schedules (MAS) program, governmentwide acquisition contracts
(GWAC), and multi-agency contracts (MAC).[Footnote 4] In recent years,
for example, annual spending through governmentwide acquisition
contracts and GSA's MAS program has totaled more than $40 billion.
Citing risks in the use of interagency contracts as well as instances
of agencies awarding out-of-scope work through interagency contracts
and not complying with laws and regulations, GAO designated the
management of interagency contracting as a governmentwide high risk
area in 2005.[Footnote 5] Subsequent to the high risk designation,
Congress[Footnote 6] and GAO continued to highlight interagency
contracting areas that needed attention,[Footnote 7] including the
need for:
* a business case analysis and policy framework to support the
creation of certain new interagency contract vehicles;
* a central source of information on existing interagency contract
vehicles to help agencies effectively leverage these contracts;
* data on use of GSA's MAS program, the largest interagency
contracting program, to help its customers maximize the program's
value; and:
* additional management controls and guidance for interagency
acquisitions.
OFPP, which provides direction on governmentwide procurement policies,
issued comprehensive guidance on interagency contracting in June 2008.
[Footnote 8] The guidance required the requesting agency to ensure
that the use of an interagency acquisition is a sound business
decision and strengthened the management of assisted interagency
acquisitions by requiring formal agreements between requesting and
servicing agencies delineating their respective roles and
responsibilities. Since 2005, DOD has had a similar policy to ensure
that the use of a non-DOD contract is in the department's best
interest.[Footnote 9] We previously have reported that OFPP's guidance
should help address the deficiencies we have identified in the
government's management of interagency contracting.[Footnote 10] Over
the last 2 years, significant changes were also made regarding the
creation and use of interagency contracts. Specifically, FAR subpart
17.5 was amended in 2010 to incorporate additional requirements
related to the use of interagency contracts similar to those in OFPP's
2008 guidance, including the need to make a best procurement approach
determination and put in place an interagency agreement that outlines
roles and responsibilities for assisted acquisitions.[Footnote 11]
Additionally, OFPP issued guidance in September 2011 that established
a process for the development, review, and approval of business cases
for new interagency contracts.[Footnote 12] The business case
requirement is also included in the FAR.
OFPP and GSA Have Implemented Corrective Actions to Address Key
Interagency Contracting Issues:
Both OFPP and GSA have acted to improve the oversight of and data on
interagency contracts. OFPP has developed a policy framework for the
establishment of new interagency contract vehicles, which should lower
the risk of duplication and increase awareness of proposed vehicles
before they are created. In addition, OFPP has improved the
functionality of its interagency contract directory, with the goal of
making it easier for agency buyers to identify existing contracts and
perform market research and for OFPP to gather data on their use. GSA
has initiated several efforts to improve the availability and use of
pricing data on the Multiple Award Schedules program to improve the
ability of the agency and its customers to obtain the best value from
these contracts.
OFPP Has Developed a Policy Framework for Establishing New Interagency
Contracts:
In response to congressional direction and our prior recommendation,
OFPP issued guidance in September 2011 that requires agencies to
develop business cases for creating new governmentwide acquisition
contracts and multi-agency contracts. The business cases must address
three key elements: (1) the scope of the contract vehicle and
potential duplication with existing contracts; (2) the value of the
new contract vehicle, including expected benefits and costs of
establishing a new contract; and (3) the administration and expected
interagency use of the contract vehicle.[Footnote 13] The guidance
also requires senior agency officials to approve the business cases
and post them on an OMB website to provide interested federal
stakeholders an opportunity to review and provide feedback. Feedback
is addressed through various channels, including posting written
comments through the website and sending letters or memos to
stakeholders. According to OFPP, it also conducts follow-up with
sponsoring agencies when significant questions are raised during the
interagency vetting process, including questions related to potential
value or duplication.
OFPP has continued to monitor the business case process to ensure it
is functioning effectively. For example, OFPP completed an analysis of
the seven business cases that were submitted during fiscal year 2012.
The submissions reviewed included business cases for new interagency
contract vehicles as well as agency-specific contract vehicles that
could create a significant overlap with certain other interagency
vehicles, both of which are subject to OFPP's business case guidance.
The analysis focused on how well agencies complied with the business
case guidance, demonstrated the value of the proposed contract
vehicles, and addressed potential duplication with other contract
vehicles. OFPP officials we met with noted that, overall, the business
cases analyzed complied with the guidance. They plan to use the
results of their analysis to identify best practices to further refine
the business case process.
OFPP and GSA Have Begun to Address the Need for Better Data:
In response to our prior recommendations, OFPP and GSA have taken a
number of steps to address the need for better data on interagency
contract vehicles. We previously have reported that a lack of reliable
information on interagency contracts hampers agencies' ability to do
market research as well as efforts to manage and leverage them
effectively.[Footnote 14] To promote better and easier access to data
on existing interagency contracts, OFPP has worked to improve the
Interagency Contract Directory, a searchable online database of
indefinite delivery vehicles for interagency use created in 2003. OFPP
officials advised us that they conducted focus groups in March 2012
with members of the acquisition community to discuss potential uses of
the database as well as desired content, features, and capabilities.
OFPP officials we met with explained that they have used the feedback
to implement short-term improvements and plan long-term enhancements
to the database. Short-term improvements include enhancing the search
function and simplifying the presentation of search results, which
should aid market research. Potential long-term enhancements include
the ability to access vendor past performance information and upload
contract documents, such as statements of work, to the system. OFPP
officials also noted that this information will be helpful in
providing data on the use of interagency contract vehicles, as the
database provides information on the amount of obligations against the
contracts, and eventually may provide other information such as a
notification when contracts not designated for interagency use are
being used in that manner. The updated version of the database went
live in October 2012.
OFPP also has posted on an OMB website information on governmentwide
acquisition contracts and other agreements available for use under the
Federal Strategic Sourcing Initiative.[Footnote 15] The website is
only accessible by federal agencies. The site includes information on
the vehicle's servicing agency and scope, as well as a link to
additional information. This information will also be posted for new
interagency contract vehicles established under OFPP's business case
guidance. Finally, a new strategic sourcing governance council,
established in December 2012, is expected to address the effective use
of existing interagency contract vehicles to support governmentwide
strategic sourcing efforts, providing another means to use information
on existing vehicles to maximize their value.
In addition, GSA has undertaken efforts to collect and provide its
customers more data on individual transactions involving certain MAS
program contracts, including prices paid. Our prior work found that
GSA's ability to strategically manage the MAS program, and its
customers' ability to get the best prices, was hindered by a lack of
transactional data on the goods and services purchased through MAS
contracts.[Footnote 16] To address these concerns and move toward more
data-driven pricing, GSA's Federal Acquisition Service, which manages
the MAS and other contract programs, established a team in 2011 to
focus on improving access to comprehensive and reliable data across
its programs. GSA officials told us the team is currently working to
identify commonly collected core data fields and is considering
options for how to share the data with internal and external users.
The team also plans to identify additional data elements not currently
collected that would be beneficial to the Federal Acquisition Service,
its customers, and its stakeholders. Further, the team plans to make
recommendations on how to provide access to that information and
develop a strategy for analyzing, using, and distributing it.
Improving the availability of data is also a key facet of GSA's
Schedules Modernization initiative, launched in June 2012. As part of
this initiative, GSA has several projects under way designed to
improve its ability to collect and share MAS program data, with the
goal of improving pricing:
* The Point of Sale/Transactional Data pilot program requires vendors
on three product Schedules to automatically provide the Schedules
price on all purchases made using a GSA SmartPay card, which could
provide cost savings for customer agencies. Customers also receive
transactional data on their purchases.
* The Enterprise Acquisition Solution Formatted Price List pilot
supports the electronic submission, evaluation, negotiation, award,
and publishing of pricing information for vendors on selected services
Schedules. Among other benefits, GSA anticipates that this effort will
eventually enable better price analysis for Schedules contracts and
provide customers easier access to pricing information on Schedules
orders. GSA officials said that they have begun the process to revise
the GSA Acquisition Regulation to allow the agency to implement this
functionality more broadly for the MAS program. GSA anticipates
issuing a final rule in fiscal year 2013.
* GSA's price comparison tool pilot assists MAS contract negotiators
by providing them pricing data from government and commercial
databases for certain products.
* The Market Driven Modification effort provides MAS vendors
information on how their prices compare to other vendors and
encourages pricing modifications, to reduce price variability for top
selling items.
GSA is committed to collecting and providing more transactional data
on its contracting programs for both itself and its customers, but GSA
officials have acknowledged potential challenges in their efforts to
collect more transactional data on the MAS program. These challenges
include securing adequate funding to complete the work, identifying
viable data sources, and ensuring the data they provide are timely,
meaningful, and reflect the circumstances of the acquisition, as well
as developing tools to process this information.
Agencies Have Taken Steps to Implement Interagency Contracting Policy
Changes, but DOD's Implementation Could Be Improved:
Federal agencies have taken a variety of steps to implement policy
changes related to the use of interagency contracts that require
agencies to complete a best procurement approach determination and an
interagency agreement. For example, according to OFPP, most of the 24
Chief Financial Officer Act agencies reported that they have issued
guidance and conducted internal reviews to reinforce the new policies
and strengthen the management of interagency acquisitions. Our review
confirmed that DOD, GSA, and the Department of the Interior--the
largest users and providers of interagency acquisition services--have
taken similar actions. At GSA and DOD, some actions, such as updating
ordering guides and incorporating policy requirements into acquisition
regulation supplements, are still in progress. We also assessed the
implementation of these policy changes on DOD contract actions. The
best procurement approach determinations we reviewed varied in the
degree to which they addressed the factors cited in the FAR or OFPP
guidance, although most determinations addressed most factors. These
variations appear to be the result of differences between the FAR and
OFPP guidance and DOD's acquisition regulation. The interagency
agreements we reviewed substantially complied with requirements for
documenting agencies' roles and responsibilities.
Agencies Have Implemented Policy Changes on the Use of Interagency
Contracts:
Agencies have taken steps to implement and reinforce interagency
contracting policies to help ensure that the acquisitions are properly
justified and that roles and responsibilities are clear for all
parties involved. Federal acquisition regulations were revised in
December 2010 to include two new requirements related to the use of
interagency contracts: (1) the requesting agency must determine that a
direct or assisted interagency acquisition is the best procurement
approach, and (2) the servicing agency and requesting agency must sign
a written interagency agreement for assisted acquisitions, which
establishes the general terms and conditions governing the
relationship. In July 2012, OFPP requested information from the 24
Chief Financial Officer Act agencies, which account for almost all
contract spending governmentwide, about their efforts to implement the
new FAR requirements and strengthen the management of interagency
acquisitions. Most of the agencies reported that they had implemented
management controls, such as guidance, templates, internal reviews, or
other methods to reinforce these requirements and strengthen their
management of interagency acquisitions. For example, 20 of the 24
agencies reported using guidance to reinforce the requirement that the
requesting agency make a best procurement approach determination for a
direct acquisition. All 24 agencies also reported having oversight
mechanisms to ensure their internal controls are operating properly.
Thirteen of these agencies reported conducting internal compliance
reviews that included assessments of interagency acquisitions.
We did not independently verify the information that OFPP collected
from the 24 Chief Financial Officer Act agencies, but our own review
of efforts at DOD, GSA, and the Department of the Interior confirmed
that these agencies had taken steps to implement interagency
contracting policy changes, as shown below in table 1.
Table 1: Agency Efforts to Implement Requirements on the Use of
Interagency Contracts.
Agency: DOD;
Issued internal policies and guidance on best procurement approach
determination: In progress;
Issued internal policies and guidance on interagency agreements: Yes;
Incorporated compliance with requirements in internal reviews: Yes;
Agency: GSA;
Issued internal policies and guidance on best procurement approach
determination: In progress;
Issued internal policies and guidance on interagency agreements: Yes;
Incorporated compliance with requirements in internal reviews: Yes.
Agency: Interior;
Issued internal policies and guidance on best procurement approach
determination: Yes;
Issued internal policies and guidance on interagency agreements: Yes;
Incorporated compliance with requirements in internal reviews: Yes.
Source: GAO analysis of agency responses and documentation.
[End of table]
GSA and Interior have issued internal guidance on the requirement to
complete a best procurement approach determination for interagency
acquisitions. DOD, GSA, and Interior have also issued internal
policies and guidance on the requirement to complete an interagency
agreement for assisted acquisitions, and have developed templates or
directed staff to use OFPP's interagency agreement template.
Additionally, key components of GSA and Interior involved in
interagency acquisitions as well as the military services and defense
agencies within DOD have incorporated these or similar requirements
into internal compliance reviews for their acquisition functions.
Some policy and guidance updates at DOD and GSA are still in progress.
For example, DOD has not yet issued internal guidance on the best
procurement approach determination requirement, although it has
convened a working group to review its interagency contracting
policies and update and supplement DOD's federal acquisition
regulation supplement (DFARS) as needed to reflect the new FAR
requirements. Additionally, GSA has updated ordering information for
the MAS program and Alliant GWAC to include the best procurement
approach determination requirement, but it has not updated the
ordering information for some of its other interagency contract
vehicles despite an internal directive to do so. In an April 2011
instructional letter, GSA directed its offices to update ordering
guides for its interagency contract vehicles to reflect the FAR
requirements, including the need for a best procurement approach
determination, but the offices responsible for GSA's Alliant Small
Business, VETS, and 8(a) STARS II GWACs had not yet done so more than
a year later.[Footnote 17] GSA is not responsible for ensuring that
users of its interagency contracts complete the best procurement
approach determination; however, updating ordering guidance in
accordance with its own instructions would help ensure its customers
implement the requirement.
DOD's Interagency Acquisitions Generally Had Required Documentation,
but Some Lacked Specified Elements:
DOD prepared best procurement approach determinations and interagency
agreements, when applicable, for nearly all of the direct and assisted
acquisitions we reviewed. However, we found inconsistencies in how
well DOD addressed the factors related to best procurement approach
determinations. These appear to be the result of differences between
the DFARS and the FAR and OFPP guidance.
Best Procurement Approach Determinations for Direct Acquisitions:
Defense organizations completed best procurement approach or
comparable determinations for 17 of 20 direct acquisitions we
reviewed.[Footnote 18] These determinations varied in the degree to
which they addressed the applicable elements in the FAR or OFPP
guidance:
* Five of the 17 determinations addressed all of the applicable
elements in the FAR or OFPP guidance.
* Twelve of the 17 addressed two of the elements cited in the FAR and
OFPP's prior guidance--the suitability of the contract vehicle and the
value of using it--but did not address the third factor--the expertise
of the requesting agency to place and administer orders. This may be
because the preparer of the determinations followed the DFARS, which
currently does not require the consideration of the requesting
agency's expertise in placing an order under an interagency contract
vehicle. DOD plans to update its policies, but at the time of our
review had not yet issued internal guidance or updated the DFARS to
incorporate the best procurement approach determination requirement in
the FAR, including the factor dealing with agency expertise.
* The three remaining acquisitions did not prepare a determination.
Best Procurement Approach Determinations for Assisted Acquisitions:
Defense organizations completed best procurement approach or
comparable determinations for 19 of 20 assisted acquisitions reviewed.
These determinations varied in the degree to which they addressed the
required elements in the FAR or OFPP guidance:
* Nine orders had determinations that addressed all three of the
required elements specified in the FAR--ability to satisfy the
requesting agency's requirements, cost-effectiveness of using the
services of another agency, and ability to comply with appropriation
limitations and the requesting agency's laws and policies.
* Five orders that were issued prior to or shortly after the FAR was
updated had determinations that addressed some, but not all, of the
four elements cited in OFPP's guidance. Again, this may be because the
preparer of the determinations followed the DFARS, which includes
factors that are similar to the factors listed in OFPP's guidance but
not identical. These differences should not be an issue in the future
because the DFARS includes comparable factors to the FAR for assisted
acquisitions.
* Five orders were supported by determinations that were not in effect
on the date the order was placed or did not reflect the agency that
actually assisted in the acquisition.
* The remaining acquisition did not prepare a determination.
Interagency Agreements for Assisted Acquisitions:
The need to clearly define roles and responsibilities in an assisted
interagency acquisition, via an interagency agreement, is a key
control for mitigating interagency contracting risks. The FAR provides
that in preparing the agreement agencies should review OFPP's 2008
guidance on interagency acquisitions, which identifies 14 elements for
a model agreement.[Footnote 19] These elements include the scope and
period of the agreement, roles and responsibilities, and the legal
authority used to conduct the acquisition. DOD organizations prepared
interagency agreements for each of the 20 assisted acquisitions we
reviewed. Most of these agreements adequately documented the elements
required by the FAR and OFPP guidance:
* Fourteen interagency agreements addressed all of the required
agreement elements.
* Four interagency agreements we reviewed were missing 1 or 2 of the
14 total required elements. These agreements did not address the scope
of organizations covered by the agreement, the period of the
agreement, or both.
The remaining two agreements did not reflect the correct requesting
and servicing agency for the order.
For all 20 assisted orders, DOD was the requesting agency. We also
recently reported on assisted acquisitions between the Department of
State and DOD, where DOD served as the servicing agency. We found that
State and DOD did not fully meet requirements for interagency
agreements supporting State's missions in Iraq and
Afghanistan.[Footnote 20] We identified the need for both agencies to
improve compliance with interagency acquisition requirements and made
a number of specific recommendations toward that end. The agencies
concurred with these recommendations.
Conclusions:
A federal policy framework is now in place that addresses the key
risks associated with interagency contracting. OFPP and GSA have taken
a number of steps to improve practices regarding the creation and use
of interagency contract vehicles. The policy framework, as well as
making more data available, should help agencies more fully realize
the benefits of interagency contracting. Agencies have also begun to
update internal policies and disseminate information on new policy
requirements, although GSA has yet to make such information readily
available to customers using certain contract vehicles to ensure they
implement all applicable requirements, and DOD must complete its
policy review. This is particularly important for DOD, where the
inconsistency we found in how its organizations addressed the best
procurement approach determination appears to be due to the lack of
updated policies and guidance. Now that a new framework for managing
the use of interagency contracts is in place, implementation of these
requirements is important in order for agencies to demonstrate whether
the new policies established to address interagency contracting
deficiencies produce the desired results.
Recommendations for Executive Action:
To ensure that DOD organizations fully comply with interagency
acquisition regulations, we recommend that the Secretary of Defense
direct the Office of Defense Procurement and Acquisition Policy, as
part of its ongoing interagency acquisition policy review, to ensure
that its acquisition regulations, policies, and guidance on
interagency contracting are updated to reflect new FAR rules,
including those related to a best procurement approach determination.
To ensure that users of interagency contracts are aware of interagency
acquisition requirements, we recommend that the Administrator of
General Services direct the Federal Acquisition Service to fully
implement the actions called for in its April 2011 instructional
letter to update ordering guides for its governmentwide and multi-
agency contracts as needed to reflect new FAR rules for interagency
acquisitions.
Agency Comments and Our Evaluation:
We provided a draft of this report to DOD, GSA, Interior, and OMB for
their review and comment. DOD concurred with our recommendation and
confirmed the creation of its Interagency Acquisition Policy Review
working group, which is tasked with ensuring that DOD has a sound
interagency acquisition policy that is consistent with statutory and
regulatory requirements. GSA also concurred with our recommendation.
Written comments provided by DOD and GSA appear in enclosures II and
III, respectively. OMB's Office of Federal Procurement Policy provided
comments via e-mail, in which it noted the actions taken to improve
the management and use of interagency contracts, including
strengthened regulations and internal agency controls. OFPP stated
that these actions have helped to create a more strategic environment
that facilitates smarter buying and increased administrative
efficiencies, and that they will continue to work closely with
agencies to ensure that policies and procedures are operating
effectively. Interior had no comments on the draft report.
We are sending copies of this report to the appropriate congressional
committees; the Secretary of Defense; the Secretary of the Interior;
the Administrator of General Services, and the Director of the Office
of Management and Budget. In addition, this report will be available
at no charge on the GAO website at [hyperlink, http://www.gao.gov].
If you or your staff have any questions about this report, please
contact me at (202) 512-4841 or woodsw@gao.gov. Contact points for our
Offices of Congressional Relations and Public Affairs may be found on
the last page of this report. GAO staff who made key contributions to
this report were Ron Schwenn, Assistant Director; Alexandra Dew Silva;
Kristine Hassinger; Lauren Heft; Katheryn Hubbell; Julia Kennon; Janet
McKelvey; Kenneth Patton; and Robert Swierczek.
Signed by:
William T. Woods:
Director, Acquisition and Sourcing Management:
Enclosures--3:
List of Committees:
The Honorable Thomas R. Carper:
Chairman:
The Honorable Tom Coburn:
Ranking Member:
Committee on Homeland Security and Governmental Affairs:
United States Senate:
The Honorable Carl Levin:
Chairman:
The Honorable James M. Inhofe:
Ranking Member:
Committee on Armed Services:
United States Senate:
The Honorable Darrell E. Issa:
Chairman:
The Honorable Elijah E. Cummings:
Ranking Member:
Committee on Oversight and Government Reform:
House of Representatives:
The Honorable Howard P. "Buck" McKeon:
Chairman:
The Honorable Adam Smith:
Ranking Member:
Committee on Armed Services:
House of Representatives:
[End of section]
Enclosure I: Objectives, Scope, and Methodology:
Our objectives were to assess: (1) progress made by the Office of
Management and Budget's (OMB) Office of Federal Procurement Policy
(OFPP) and the General Services Administration (GSA) in addressing
interagency contracting issues identified in our 2010 report on
interagency contracting, and (2) progress made by agencies in
implementing policy changes related to the use of interagency contracts.
To address our objectives, we reviewed corrective action plans
developed by OFPP and GSA to respond to issues identified in our 2010
report, along with policy memorandums, guidance, and studies on
efforts to address interagency contracting issues. We also met with
OFPP and GSA officials to discuss their progress in implementing these
actions. To examine agencies' progress in implementing recent
interagency contracting policy changes on a governmentwide basis, we
reviewed OFPP's analysis of reports from the 24 Chief Financial
Officer (CFO) Act agencies on management controls for interagency
acquisitions. We did not independently verify the information that
OFPP collected from the 24 Chief Financial Officer Act agencies.
However, we reviewed OFPP's data collection instrument, discussed the
findings with OFPP officials, and reviewed OFPP's analysis for
completeness and obvious errors. We found the data sufficiently
reliable for the purposes of this report. We also met with agency
officials from the Department of Defense (DOD), GSA, and the
Department of the Interior and reviewed agency policies, guidance,
templates, ordering guidelines, and training materials implementing
new interagency contracting regulations incorporated into subpart 17.5
of the Federal Acquisition Regulation (FAR) in December 2010.[Footnote
21] We selected DOD, GSA, and the Department of the Interior for
further review based on the amount of obligations or support provided
by these agencies through interagency acquisitions, as reported in the
Federal Procurement Data System-Next Generation (FPDS-NG).
To further assess the implementation of recent interagency contracting
policy changes, we used FPDS-NG data on new awards made during fiscal
year 2011 to select 20 direct interagency orders and 20 assisted
interagency contracts and orders from DOD, the largest user of
interagency contracts, with the highest total obligations in fiscal
year 2011.[Footnote 22] For the direct acquisitions, we selected DOD
orders in which the contract instrument used was associated with
another agency, such as GSA. For assisted acquisitions, we selected
contracts and orders in which DOD was the funding agency, while
another agency (such as GSA or Interior) was the contracting agency.
To assess DOD's implementation of OFPP guidance and FAR rules related
to the use of interagency contracts, we reviewed the award document
and best procurement approach determination for each direct order. For
assisted orders, we reviewed documentation of the solicitation date,
the award document, best procurement approach determination, and
interagency agreement between the requesting and servicing agency. For
a select number of orders in which the award date was prior to or
shortly after the December 2010 issuance of interim FAR rules that
required agencies to complete a best procurement approach
determination, we assessed the determination provided against prior
OFPP guidance that required agencies to make a "best interest"
determination before using an interagency contract and the DOD federal
acquisition regulation supplement (DFARS) that also requires DOD
organizations to determine whether use of a non-DOD contract is in the
best interest of DOD.
We conducted this performance audit from June 2012 to January 2013 in
accordance with generally accepted government auditing standards.
Those standards require that we plan and perform the audit to obtain
sufficient, appropriate evidence to provide a reasonable basis for our
findings and conclusions based on our audit objectives. We believe the
evidence obtained provides a reasonable basis for our findings and
conclusions based on our audit objectives.
[End of section]
Enclosure II: Comments from the Department of Defense:
Office of the Under Secretary of Defense:
Acquisition, Technology and Logistics:
3000 Defense Pentagon:
Washington, DC 20301-3000:
Mr. William T. Woods:
Director, Acquisition and Sourcing Management:
U.S. Government Accountability Office:
441 G Street, N.W.
Washington, DC 20548:
Dear Mr. Woods:
This is the Department of Defense (DoD) response to the GAO Draft
Report, GAO-13133R, "Interagency Contracting: Agency Actions Address
Key Management Challenges, but Additional Steps Needed to Ensure
Consistent Implementation of Policy Changes," dated December 3, 2012
(GAO Code 121081). Detailed comments on the report recommendations are
enclosed.
Sincerely,
Signed by:
Richard Ginman:
Director, Defense Procurement and Acquisition Policy:
Enclosure: As stated:
GAO Draft Report Dated December 3, 2012:
GAO-13-133R (GAO Code 121081):
Interagency Contracting: Agency Actions Address Key Management
Challenges, but Additional Steps Needed to Ensure Consistent
Implementation of Policy Changes:
Department Of Defense Comments To The GAO Recommendations:
Recommendation 1: To ensure that DOD Organizations fully comply with
interagency acquisition regulations, we recommend that the Secretary
of Defense direct the Office of Defense Procurement and Acquisition
Policy, as part of its ongoing interagency acquisition policy review,
to ensure that its acquisition regulations, policies, and guidance on
interagency contracting are updated to reflect new FAR rules,
including those related to a best procurement approach determination.
DoD Response: Concur: In order to properly assess the Department's
compliance with recent regulatory changes and to review DoD policy in
this area, I established an Interagency Acquisition Policy Review
working group. See attached letter for their tasking.
Attachment:
Office of the Under Secretary of Defense:
Acquisition, Technology and Logistics:
3000 Defense Pentagon:
Washington, DC 20301-3000:
Memorandum for Deputy Assistant Secretary of the Army (Procurement);
Deputy Assistant Secretary of the Navy (Acquisition and Procurement);
Deputy Assistant Secretary of the Air Force (Contracting);
Director of Contracts Management Office (DARPA).
Subject: Interagency Acquisition Policy Review:
Recent changes to the FAR, including those at FAR 17.5 and OMB
initiatives related to Interagency Acquisition make this the perfect
opportunity for the Department to reassess its policies, goals and
objectives for Economy Act and non-Economy Act Interagency Acquisitions.
As part of this assessment I am establishing a formal working group
and am asking for your organization's expert participation.
Specifically, I have tasked my Contract Policy and International
Contracting (CPIC) organization to lead a small team comprised of a
representative from each of the Military Departments and an additional
member representing the Other Defense Agencies. Their task will be to
review the FAR, DFARS, and PG1, as well as DoD acquisition policy
related to Economy Act and non-Economy Act interagency acquisitions to
ensure the Department has a sound, consistent and easy to understand
Interagency Acquisition policy. The policy must be consistent with all
statutory and regulatory requirements, and ensure that good business
decisions are made and sufficiently documented. The group will
commence its efforts in early calendar year 2013. I expect the group
will meet regularly for a nine month period. I've asked Mr. Michael
Canales from the CPIC staff to lead the group and to provide me a
quarterly report on the progress of the group with a final report with
specific recommendations due by September 30, 2013.
Mr. Canales can be reached at 703-695-8571 michael.canales@osd.mil.
Signed by:
Richard Ginman:
Director, Defense Procurement and Acquisition Policy:
[End of section]
Enclosure III: Comments from the General Services Administration:
GSA:
GSA Deputy Administrator:
U.S. General Services Administration:
1275 First Street, NE:
Washington, DC 20417:
Telephone: (202) 501-4300:
Fax: (202) 219-1243:
January 14, 2013:
The Honorable Gene L. Dodaro:
Comptroller General of the United States:
U.S. Government Accountability Office:
Washington, DC 20548:
Dear Mr. Dodaro:
The U.S. General Services Administration (GSA) appreciates the
opportunity to review and comment on the draft report, "Interagency
Contracting: Agency Actions Address Key Management Challenges, but
Additional Steps Needed to Ensure Consistent Implementation of Policy
Changes (GAO-13-133R)."
The U.S. Government Accountability Office (GAO) recommends that "the
Administrator of General Services direct the Federal Acquisition
Service to fully implement the actions called for in its April 2011
instructional letter to update ordering guides for its Government-wide
and multi-agency contracts as needed to reflect new FAR rules for
interagency acquisitions."
GSA concurs that expedient action is necessary to remedy the current
situation, and the agency will make the appropriate updates. GSA's
Federal Acquisition Service will coordinate with stakeholders and
expects that the updates will be completed by March 31, 2013.
If you have any additional questions or concerns, please do not
hesitate to contact me, or Ms. Lisa A. Austin, Acting Associate
Administrator, Office of Congressional and Intergovernmental Affairs,
at (202) 501-0563.
Sincerely,
Signed by:
Dan Tangherlini:
Acting Administrator:
cc:
William T. Woods — Director, Acquisition and Sourcing Management, GAO.
[End of section]
Footnotes:
[1] GAO, High-Risk Series: An Update, [hyperlink,
http://www.gao.gov/products/GAO-05-207] (Washington, D.C.: January
2005).
[2] GAO, Contracting Strategies: Data and Oversight Problems Hamper
Opportunities to Leverage Value of Interagency and Enterprisewide
Contracts, [hyperlink, http://www.gao.gov/products/GAO-10-367]
(Washington, D.C.: Apr. 29, 2010).
[3] The 24 CFO Act agencies are the Departments of Agriculture,
Commerce, Defense, Education, Energy, Health and Human Services,
Homeland Security, Housing and Urban Development, the Interior,
Justice, Labor, State, Transportation, the Treasury, and Veterans
Affairs; the Environmental Protection Agency; the National Aeronautics
and Space Administration; the U.S. Agency for International
Development; the General Services Administration; the National Science
Foundation; the Nuclear Regulatory Commission; the Office of Personnel
Management; the Small Business Administration; and the Social Security
Administration.
[4] The MAS program, also known as the Federal Supply Schedules
program, consists of contracts awarded by GSA or the Department of
Veterans Affairs for similar or comparable goods or services,
established with more than one supplier, at varying prices. Federal
Acquisition Regulation (FAR) § 8.401 and § 8.402. The MAS program
offers a large group of commercial products and services ranging from
office supplies to information technology services. Multi-agency
contracts are task-order or delivery-order contracts established by an
agency that can be used governmentwide to obtain goods and services
consistent with the Economy Act. FAR § 2.101. Governmentwide
acquisition contracts are contracts for information technology
established by one agency for governmentwide use. FAR § 2.101.
[5] [hyperlink, http://www.gao.gov/products/GAO-05-207].
[6] Pub. L. No. 110-417, § 865 (2008).
[7] See [hyperlink, http://www.gao.gov/products/GAO-10-367] and High-
Risk Series: An Update, [hyperlink,
http://www.gao.gov/products/GAO-11-278] (Washington, D.C.: February
2011).
[8] OMB, Office of Federal Procurement Policy, Improving the
Management and Use of Interagency Acquisitions (Washington, D.C.: June
6, 2008).
[9] DOD, Office of the Secretary of Defense, Proper Use of Non-DOD
Contracts (Oct. 29, 2004); DOD Federal Acquisition Regulation
Supplement (DFARS) subpart 217.78. This policy went into effect on
January 1, 2005.
[10] GAO, High-Risk Series: An Update, [hyperlink,
http://www.gao.gov/products/GAO-09-271] (Washington, D.C.: January
2009); and [hyperlink, http://www.gao.gov/products/GAO-11-278].
[11] An interim rule was issued and became effective on December 13,
2010 and the final rule was issued on January 3, 2012 and became
effective on February 2, 2012. 75 Fed. Reg. 77733; 77 Fed. Reg. 183.
More recently, an interim rule was issued and became effective on
November 20, 2012, that requires agencies that perform interagency
acquisitions on behalf of DOD to certify that the agency will comply
with defense procurement requirements. 77 Fed. Reg. 69720.
[12] OMB, Office of Federal Procurement Policy, Development, Review,
and Approval of Business Cases for Certain Interagency and Agency-
Specific Acquisitions (Washington, D.C.: Sept. 29, 2011).
[13] OFPP's guidance also applies the business case requirements to
certain agency-specific contract vehicles and blanket purchase
agreements. The third element of the business case is not required for
multi-agency vehicles where interagency use is not expected to be
significant.
[14] [hyperlink, http://www.gao.gov/products/GAO-10-367] and
[hyperlink, http://www.gao.gov/products/GAO-11-278].
[15] The Federal Strategic Sourcing Initiative was established in 2005
to address governmentwide opportunities to strategically source
commonly purchased products and services. For additional information
on this initiative, see GAO, Strategic Sourcing: Improved and Expanded
Use Could Save Billions in Annual Procurement Costs, [hyperlink,
http://www.gao.gov/products/GAO-12-919] (Washington, D.C.: Sept. 20,
2012).
[16] [hyperlink, http://www.gao.gov/products/GAO-10-367].
[17] GSA's Alliant Small Business, VETS, and 8(a) STARS II GWACs are
governmentwide acquisition contracts for information technology
established by GSA with small businesses; service-disabled, veteran-
owned small businesses; and small, disadvantaged businesses,
respectively.
[18] A recent DOD Inspector General review of purchases made through
the Department of Veterans Affairs found that DOD organizations did
not complete best procurement approach determinations for 4 of 5
direct acquisitions reviewed for which the requirement applied. For
additional information, see Inspector General, Department of Defense,
Contracting Improvements Still Needed in DOD's FY 2011 Purchases Made
Through the Department of Veterans Affairs, DODIG-2013-028
(Alexandria, Va.: Dec. 7, 2012).
[19] FAR § 17.502-1(b).
[20] GAO, Iraq and Afghanistan: State and DOD Should Ensure
Interagency Acquisitions Are Effectively Managed and Comply with
Fiscal Law, [hyperlink, http://www.gao.gov/products/GAO-12-750]
(Washington, D.C.: Aug. 2, 2012).
[21] An interim rule was issued and became effective on December 13,
2010 and the final rule was issued on January 3, 2012, and became
effective on February 2, 2012. 75 Fed. Reg. 77733; 77 Fed. Reg. 183.
[22] Our prior work has found problems with FPDS-NG data reliability;
however, for the purposes of this review we found the data to be
sufficiently reliable for selecting orders to review. For an overview
of prior findings on FPDS-NG, see GAO, Federal Contracting:
Observations on the Government's Contracting Data Systems, [hyperlink,
http://www.gao.gov/products/GAO-09-1032T] (Washington, D.C.: Sept. 29,
2009).
[End of section]
GAO’s Mission:
The Government Accountability Office, the audit, evaluation, and
investigative arm of Congress, exists to support Congress in meeting
its constitutional responsibilities and to help improve the
performance and accountability of the federal government for the
American people. GAO examines the use of public funds; evaluates
federal programs and policies; and provides analyses, recommendations,
and other assistance to help Congress make informed oversight, policy,
and funding decisions. GAO’s commitment to good government is
reflected in its core values of accountability, integrity, and
reliability.
Obtaining Copies of GAO Reports and Testimony:
The fastest and easiest way to obtain copies of GAO documents at no
cost is through GAO’s website [hyperlink, http://www.gao.gov]. Each
weekday afternoon, GAO posts on its website newly released reports,
testimony, and correspondence. To have GAO e-mail you a list of newly
posted products, go to [hyperlink, http://www.gao.gov] and select
“E-mail Updates.”
Order by Phone:
The price of each GAO publication reflects GAO’s actual cost of
production and distribution and depends on the number of pages in the
publication and whether the publication is printed in color or black
and white. Pricing and ordering information is posted on GAO’s
website, [hyperlink, http://www.gao.gov/ordering.htm].
Place orders by calling (202) 512-6000, toll free (866) 801-7077, or
TDD (202) 512-2537.
Orders may be paid for using American Express, Discover Card,
MasterCard, Visa, check, or money order. Call for additional
information.
Connect with GAO:
Connect with GAO on facebook, flickr, twitter, and YouTube.
Subscribe to our RSS Feeds or E mail Updates. Listen to our Podcasts.
Visit GAO on the web at [hyperlink, http://www.gao.gov].
To Report Fraud, Waste, and Abuse in Federal Programs:
Contact:
Website: [hyperlink, http://www.gao.gov/fraudnet/fraudnet.htm];
E-mail: fraudnet@gao.gov;
Automated answering system: (800) 424-5454 or (202) 512-7470.
Congressional Relations:
Katherine Siggerud, Managing Director, siggerudk@gao.gov:
(202) 512-4400:
U.S. Government Accountability Office:
441 G Street NW, Room 7125:
Washington, DC 20548.
Public Affairs:
Chuck Young, Managing Director, youngc1@gao.gov:
(202) 512-4800:
U.S. Government Accountability Office:
441 G Street NW, Room 7149:
Washington, DC 20548.
[End of document]