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2003.

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Report to Congressional Committees:

August 2003:

Contract Management:

Civilian Agency Compliance with Revised Task and Delivery Order 
Regulations:

GAO-03-983:

GAO Highlights:

Highlights of GAO-03-983, a report to Congressional Committees 

Why GAO Did This Study:

Multiple-award task and delivery order contracts were intended to 
streamline the acquisition of goods and services. Prior GAO reviews 
cited concerns that some agencies using these contracts were not 
attaining the level of competition Congress had initially envisioned. 
In response, Congress required that additional guidance be published 
in the Federal Acquisition Regulation and asked GAO if the guidance 
conformed to the law and agencies were complying with it.

To evaluate compliance, GAO examined how agencies provided vendors 
with a fair opportunity to be considered for orders, clearly described 
the services or supplies needed, and complied with capital planning 
requirements.

What GAO Found:

The revisions to the Federal Acquisition Regulation conform to 
statutory requirements. The revisions provide additional, though 
generally limited, guidance on how agencies should implement the fair 
opportunity process, describe the supplies and services needed, and 
meet capital planning requirements. Agency officials did not view the 
regulatory changes as significant, and made minimal changes in their 
internal policies and procedures.

The agencies GAO reviewed provided eligible contractors a fair 
opportunity to be considered for award of an order in 18 of 26 
selected cases. The remaining eight orders were issued using 
exceptions to the fair opportunity process. Four of those were not 
adequately justified.

The orders GAO reviewed appeared to clearly describe the supplies and 
services required. However, statements of work for four information 
technology (IT) services orders were defined broadly, and required 
subsequent sub-task orders or modifications to completely define the 
work. Although agencies are required to use performance-based 
statements of work as widely as possible, only 3 of 22 orders for 
services met the performance-based criteria.

Regulations on capital planning and investment controls for purchases 
of IT products and services went into effect in August 2002, and 
agencies are still trying to determine how they will comply with them 
and who is to be responsible for them. As part of these efforts, 
several agencies plan to require that their chief information officer 
certify that the capital planning requirements have been met.

What GAO Recommends:

The Departments of Veterans Affairs and Health and Human Services 
should review the guidance and training provided to their acquisition 
personnel on using the fair opportunity process to ensure that 
agencies receive the best value through task and delivery orders. The 
Office of Management and Budget should clarify the responsibilities of 
acquisition and other staff regarding capital planning for information 
technology products and services.

www.gao.gov/cgi-bin/getrpt?GAO-03-983.

To view the full product, including the scope
and methodology, click on the link above.
For more information, contact William Woods at (202) 512-8214 or 
woodsw@gao.gov.

[End of section]

Contents:

Letter:

Results in Brief: 

Background: 

Revised Regulations Conform to Law: 

Most Orders Awarded through Fair Opportunity; Some Exceptions Not 
Adequately Justified: 

Most Orders Clearly Described Requirements, but Few Met 
Performance-Based Criteria: 

Agencies Are Just Beginning to Address Capital Planning Issues: 

Conclusions: 

Recommendations for Executive Action: 

Agency Comments and Our Evaluation: 

Appendixes:

Appendix I: Objectives, Scope, and Methodology: 

Appendix II: Key Multiple-Award Contract Legislation and Administrative 
Actions:  

Appendix III: GAO, Agency Inspector General, and Other Reviews:  

Appendix IV: Information on Selected Orders:  

Appendix V: Comments from the Department of Veterans Affairs:  

Appendix VI: Comments from the Department of Health and Human Services:  

Appendix VII: Comments from the General Services Administration:  

Figure: 

Figure 1: Multiple-award Contract Obligations by Civilian 
Agencies, Fiscal Years 1997 through 2002, (Inflation-adjusted 
dollars):

Abbreviations: 

CIO: chief information officer:

DOE: Department of Energy:

FAI:  Federal Acquisition Institute:

FAR: Federal Acquisition Regulation:

FASA: Federal Acquisition Streamlining Act of 1994:

FDA: Food and Drug Administration:

FPDS: Federal Procurement Data System:

FTS: Federal Technology Service:

GSA: General Services Administration:

HHS: Health and Human Services:

ID/IQ: indefinite delivery/indefinite quantity:

IG: inspector general:

IT: information technology:

NASA:  National Aeronautics and Space Administration:

OFPP: Office of Federal Procurement Policy:

OMB: Office of Management and Budget:

TVA: Tennessee Valley Authority:

VA: Veterans Affairs:

Letter August 29, 2003:

The Honorable John Warner 
Chairman 
The Honorable Carl Levin 
Ranking Minority Member 
Committee on Armed Services 
United States Senate:

The Honorable Susan M. Collins 
Chairman 
The Honorable Joseph I. Lieberman 
Ranking Minority Member 
Committee on Governmental Affairs 
United States Senate:

The Honorable Duncan L. Hunter 
Chairman 
The Honorable Ike Skelton 
Ranking Minority Member 
Committee on Armed Services 
House of Representatives:

The Honorable Tom Davis 
Chairman 
The Honorable Henry A. Waxman 
Ranking Minority Member 
Committee on Government Reform 
House of Representatives:

The Federal Acquisition Streamlining Act of 1994 (FASA)[Footnote 1] 
provided statutory authority for federal agencies to enter into 
multiple-award, task and delivery order contracts. These are contracts 
for indefinite quantities of supplies or services that are awarded to 
multiple firms from a single solicitation. Requests for delivery of 
specific supplies or services are made through individual task or 
delivery orders. This type of contract was one of several innovative 
procurement methods authorized by FASA for streamlining the acquisition 
of goods and services. Since the enactment of:

FASA, however, we have reported that some federal agencies were not 
obtaining the level of competition for orders Congress had 
envisioned.[Footnote 2]

Congress responded to these and other reports by enacting section 804 
of the National Defense Authorization Act for Fiscal Year 
2000.[Footnote 3] Section 804 directed that the Federal Acquisition 
Regulation (FAR) be revised to provide specific guidance to agencies on 
the appropriate use of task and delivery order contracts. Regulations 
implementing the statute were issued in two installments, the first in 
April 2000, and the second in August 2002. The act required that GAO 
evaluate (1) conformance of the regulations with existing law and 
(2) compliance by federal agencies with the regulations. In assessing 
compliance at selected agencies, we focused on whether these agencies 
provided the multiple-award contractors a fair opportunity to be 
considered for orders, clearly described the services or supplies 
needed, and complied with capital planning requirements.

As agreed with staffs of the committees, we focused our review on 
five civilian agencies: the Departments of Energy (DOE), Health and 
Human Services (HHS), and Veterans Affairs (VA); the General Services 
Administration (GSA); and the National Aeronautics and Space 
Administration (NASA). These agencies accounted for two-thirds of the 
total contract dollars obligated in fiscal year 2001 by all civilian 
agencies.[Footnote 4] We used a judgmentally selected sample of large 
orders placed by these five agencies; our findings are not projectable 
to the universe of all orders they awarded. We selected for review the 
two largest orders reported as:

exceeding $1 million for each unique organizational entity[Footnote 5] 
within each of these five agencies.[Footnote 6] In total, we reviewed 
26 task and delivery orders.[Footnote 7] The orders covered a range of 
products and services; nine were for information technology (IT) 
services. Appendix I contains a detailed description of our scope and 
methodology.

Results in Brief:

The revised regulations on the appropriate use of multiple-award task 
and delivery order contracts conform to statutory requirements. The 
revisions provide additional, though generally limited, guidance on how 
agencies should implement the fair opportunity process, describe the 
supplies and services needed, and meet capital planning requirements. 
Agency procurement officials generally did not view the regulatory 
changes to be significant and made only minimal changes in their 
internal policies and procedures.

The agencies included in our review provided eligible contractors a 
fair opportunity to be considered for award for 18 of the 26 selected 
orders. Of the remaining eight orders that were issued using an 
exception to the fair opportunity process, four were not supported by 
adequate justification:

* In two cases, the VA placed orders with pre-selected vendors for 
medical equipment, but provided no documentation in the file to justify 
the sole-source orders.

* In another case, the Centers for Disease Control and Prevention did 
not provide the necessary documentation for an order for vaccine placed 
with the only vendor licensed to produce the vaccine.

* In the fourth case, the Food and Drug Administration (FDA) justified 
a sole-source award as a logical follow-on to an original order, but 
the justification did not meet the criteria for such an award.

In general, the orders we reviewed appeared to clearly describe the 
supplies and services required. The statements of work for four IT 
service orders, however, were defined only in broad terms and required 
subsequent sub-task orders or modifications to completely define the 
work. Although the revised FAR requires agencies to use performance-
based statements of work for task orders to the maximum extent 
practicable, only 3 of 22 orders for services met the requirements for 
performance-based contracting, such as providing measurable outcomes 
for contractor performance.

Regulations concerning capital planning and investment controls for 
purchases of IT products and services did not go into effect until 
August 2002, and agencies are still trying to determine how they will 
comply with them. Agency officials said they have not yet fully 
identified how their acquisition and IT communities will meet capital 
planning requirements for IT orders. However, as part of their efforts 
to meet the new requirements, several agencies plan to require their 
chief information officer (CIO) to certify that capital planning 
requirements have been met.

This report contains recommendations to the Secretaries of Veterans 
Affairs and Health and Human Services to review the guidance and 
training provided to their acquisition personnel and to the Director of 
the Office of Management and Budget (OMB) to work with the Federal 
Acquisition and CIO Councils to promote enhanced compliance with 
FAR requirements concerning capital planning.

Background:

Multiple-award task and delivery contracts are contracts for indefinite 
quantities of goods and services that have been awarded to a number 
of firms under one solicitation. The purpose of such contracts is to 
establish a group of pre-qualified contractors to compete under 
streamlined administrative procedures for orders to perform work or 
deliver products during the contract period. Orders may be placed by 
the agency awarding the contract or, in the case of multi-agency 
contracts, by other authorized agencies. These interagency orders can 
be an advantageous and cost-effective way to meet an agency's 
requirements using another agency's existing contract. Multiple-award 
task and delivery order contracts do not specify a firm quantity of 
supplies or services, but instead identify minimum quantities for each 
contractor and maximum quantities overall. Orders for specific services 
or goods must be within the general scope of the contract.

In 1994, Congress enacted FASA[Footnote 8] to establish requirements 
for the use of multiple-award task and delivery order contracts to 
promote competition and streamline the acquisition process. To ensure 
that agencies continued to receive the benefits of competition, FASA 
required agencies placing orders against a multiple-award contract to 
ensure that--except under specified circumstances--contract-holders 
are given a fair opportunity to be considered for the award of task or 
delivery orders under the contract. In addition, FASA required that 
orders placed under these contracts have statements of work that 
clearly specify all tasks to be performed or products to be delivered. 
To help contacting officers implement FASA, the Office of Federal 
Procurement Policy (OFPP) provided a guidebook on best practices when 
using task and delivery order contracts.[Footnote 9]

The Clinger-Cohen Act of 1996[Footnote 10] facilitated the use of 
multiple-award contracts by authorizing multi-agency 
contracts[Footnote 11] and governmentwide acquisition 
contracts[Footnote 12] to acquire IT products and services. These 
contract vehicles were intended to reduce the overhead associated with 
individual acquisitions while helping the government increase its 
leverage to encourage vendors to offer lower prices. In addition, the 
Clinger-Cohen Act requires that agencies manage IT multiple-award 
contracts by establishing a capital planning process to select, 
control, and evaluate IT products and services and requires that the 
CIO and procurement officials work together to establish clear lines of 
accountability to realize the acquisition's benefits. Appendix II 
provides information on FASA, Clinger-Cohen, and other key legislation 
and administrative actions governing the use of multiple-award 
contracts.

Use of Multiple-award Contracts Increased but Abuses Identified:

Multiple-award contracts can be an expedient way for the government 
to acquire goods and services. As can be seen in figure 1, agencies are 
increasingly turning to these contract vehicles. For the five agencies 
we reviewed, orders placed against multiple-award contracts increased 
from over $300 million in 1997 to about $2.1 billion in 2002. Moreover, 
task and delivery orders account for an increasing share of procurement 
dollars, increasing from 4 percent of dollars obligated in 1997 to over 
7 percent in 2002 governmentwide.

Figure 1: Multiple-award Contract Obligations by Civilian 
Agencies, Fiscal Years 1997 through 2002, (Inflation-adjusted 
dollars):

[See PDF for image]

Notes: Obligations adjusted to constant fiscal year 2002 dollars. 
Figures exclude obligations for the Tennessee Valley Authority (TVA) 
because TVA discontinued reports to the Federal Procurement Data 
Systems on September 30, 2000. TVA's reported obligations for orders 
were $2.3 billion, $4.1 billion, and $1.7 billion for fiscal years 
1997, 1998, and 2000 respectively. Those figures represented between 40 
to 84 percent of the agency's total obligations in the same years. 
Also, TVA reported a negative $1.0 billion for its obligations in 
fiscal year 1999.

[End of figure]

Although use of multiple-award contracts is increasing, awards have not 
always been made in a manner consistent with regulations. Our prior 
work, agencies' inspector general (IG) reports, and other internal 
agency reviews have shown that agencies are not consistently promoting 
competition nor justifying exceptions to competition. These reviews 
have also concluded that agencies define the work for many task orders 
too broadly. (See app. III for a list of prior GAO and agency 
IG reports.):

To address these ongoing problems, Congress enacted section 804 of 
the National Defense Authorization Act for Fiscal Year 2000.[Footnote 
13] The act directed that the FAR be revised to provide guidance to 
agencies on the appropriate use of task and delivery order contracts. 
The mandated guidance, at a minimum, was to identify specific steps 
that agencies should take to ensure that (1) all contractors are 
afforded a fair opportunity to be considered for the award of task and 
delivery orders; (2) the statement of work for each order clearly 
specifies all tasks to be performed or property to be delivered; and 
(3) Clinger-Cohen Act requirements for capital planning and investment 
control for IT products and services purchases are met.

The FAR implemented the statutory mandate in two parts. The first, 
published in April 2000, was intended to provide improved guidance on 
providing a fair opportunity to compete for orders, and preparing 
clearer statements of work.[Footnote 14] The second, published in 
August 2002, addressed capital planning requirements for IT 
acquisitions[Footnote 15] and incorporated certain changes made to 
address issues raised by a GAO report on the use of multiple-award 
contracts to procure IT services.[Footnote 16]

Revised Regulations Conform to Law:

The revisions to the FAR published in response to section 804 of the 
National Defense Authorization Act for Fiscal Year 2000 conform to 
statutory requirements. The revisions provide additional, though 
generally limited, guidance for each of the areas mentioned in the 
statute. Some procurement officials at the agencies we reviewed advised 
us that they viewed the revisions to the FAR as minimal, and 
consequently made few, if any, changes to their guidance or training.

FAR Revisions Provide Additional Guidance:

Pursuant to the direction of section 804, the FAR was revised to 
provide additional guidance concerning the award of task and delivery 
orders. With respect to fair opportunity, the guidance added provisions 
making the consideration of price mandatory, and specifying a few 
additional elements to be considered when developing fair opportunity 
procedures. Specifically, the contracting officer should consider 
(1) the potential impact on other orders placed with the contractor and 
(2) the minimum ordering requirements contained in the 
contract.[Footnote 17] In addition, the FAR now requires that 
contracting officers document in the contract file any trade-offs among 
cost and non-cost considerations. Further, if the agency is using the 
logical follow-on exception, the rationale must describe why the 
relationship between the initial order and the follow-on is logical in 
terms of scope, period of performance, or value. According to OFPP 
officials, this additional guidance was inserted to respond to a GAO 
recommendation that the FAR discourage agencies from awarding follow-on 
orders whose scope or costs significantly exceed those orders for which 
contractors were provided an opportunity to be considered.[Footnote 18]

With respect to describing the services or supplies to be provided 
under task or delivery orders, the FAR now stresses the importance of 
clearly describing the requirements so that the full cost or price for 
the performance of the work can be established when the order is 
placed.[Footnote 19] The regulation also provides that agencies should 
use performance-based statements of work for services to the maximum 
extent practicable.

On capital planning, the Clinger-Cohen Act[Footnote 20] requires 
agencies to design a process for maximizing the value of IT purchases 
and for assessing and managing the risks associated with them. The 
revised regulations explicitly identify certain steps that must be 
taken for each order for IT products and services placed against the 
Federal Supply Schedule, or against either another agency's 
governmentwide acquisition contract or multi-agency contract. These 
steps include documenting (1) how the capital planning and investment 
control requirements of the Clinger-Cohen Act will be met[Footnote 21] 
and (2) why placing an order benefits the government.[Footnote 22] Pre-
existing regulations, however, permit agencies to continue using 
previously developed plans rather than revise those plans to include 
the new requirements specified by the section 804 revisions.[Footnote 
23]

Agencies Made Limited Changes to Guidance and Training:

Representatives from the agencies in our review told us they did not 
view the regulatory revisions published in response to the 
authorization act requirement as significantly different from what was 
previously in the FAR and, therefore, generally made minimal, if any, 
changes to their guidance and training. DOE and HHS sent to their 
contracting officials supplemental notices on the use of multiple-award 
contracts and proper statements of work. GSA sent a supplemental notice 
on the requirement that contract-holders be given a fair opportunity to 
be considered for orders. DOE also added a section on fair opportunity 
in its guidance on the use of multiple-award contracts as a result of 
section 804.

With respect to training, only DOE acquisition officials saw a need 
to revise their training materials to provide additional focus on the 
requirements to provide a fair opportunity to be considered for orders, 
and to develop clear statements of work. DOE provided specific training 
on providing a fair opportunity. Other agency officials explained that 
they saw no need for specific training on those issues because problems 
that may have been identified earlier had been addressed through 
memoranda and other means. None of the agencies we spoke with 
incorporated capital planning:

and investment control requirements into their training on multiple-
award contracts or task and delivery orders. An official for the 
Federal Acquisition Institute, which, under OFPP's direction, is 
charged with supporting and developing the civilian acquisition 
workforce, stated that the Institute also does not currently provide 
specific training on capital planning and investment 
requirements.[Footnote 24] According to a GSA official, the Federal 
Acquisition Institute is reviewing all of its courses to validate their 
conformance to current laws and regulations and plans to update its 
course on acquisition planning to address capital planning and 
investment requirements.

Most Orders Awarded through Fair Opportunity; Some Exceptions Not 
Adequately Justified:

For 18 of the 26 orders we reviewed, the agencies provided all eligible 
vendors a fair opportunity to be considered for the award. For the 
remaining eight orders, the agencies used exceptions to the fair 
opportunity process. On four of those eight orders, however, the agency 
did not comply with the requirements for excluding contract-holders 
from an opportunity to be considered for the order. Appendix IV 
contains details of all the orders we reviewed.

Most Orders Awarded Through Fair Opportunity Process:

Eighteen of 26 orders were awarded through the fair opportunity 
process. In these 18 cases, the agency notified every eligible vendor 
of the intent to place an order, provided them a copy of the statement 
of work, and gave them an opportunity to submit an offer.[Footnote 25] 
In some cases, this notice was provided electronically. The notices of 
upcoming orders we reviewed appeared to allow sufficient time--ranging 
from 5 to over 30 days--for vendors to prepare their offers. Some 
notices allowed contractors to express initial interest, and then 
provided additional time for proposal development. In other cases, 
contracting officers held question and answer sessions with vendors to 
help them prepare their proposals. For construction and renovation 
orders, the agencies usually provided drawings and specifications and 
conducted tours of the sites.

We noted one case, however, where the contracting officer prematurely 
awarded an order before the response period identified in the 
opportunity notice had expired. In that instance, the VA awarded a 
$1.2 million order for leased satellite bandwidth 9 days prior to the 
18-day response period deadline. Agency officials acknowledged that the 
action was a breach of their procurement procedures, and said the 
mistake resulted from a miscommunication between the two contracting 
officers involved. The VA officials also said that only one offer had 
been submitted, and no other sources had responded to the solicitation, 
either before or after the award. VA officials indicated that they 
would include this case in the agency's annual quality control program 
to determine if the problem we noted was systemic.

Exceptions to Fair Opportunity Not Always Justified:

Our review of selected orders found problems with four of the eight 
orders awarded using exceptions to the fair opportunity process. There 
are four authorized exceptions to the requirement that all contract-
holders receive a fair opportunity to be considered for an award of a 
task or delivery order:[Footnote 26]

* Urgency: the need for the supplies or services is so urgent that 
providing for fair opportunity would result in an unacceptable delay;

* Unique source: only one contract-holder is capable of providing the 
supplies and services at the level of quality required because they are 
unique or highly specialized;

* Logical follow-on: the order must be issued on a sole-source basis in 
the interest of economy and efficiency because it is a logical follow-
on to a previous order under the contract, provided that all contract-
holders were given a fair opportunity to be considered for the original 
order; and:

* Minimum guarantee: the order must be placed with a specific 
contract-holder in order to satisfy a contractual minimum guarantee.

Three orders awarded using the unique source exception were not 
supported by adequate justification in the contract files. 
Specifically:

* Two cases--worth $971,029 and $327,259 respectively--involved the 
purchase of medical equipment at two VA Medical Centers. The 
contracting officers asked that the requesting facilities select one of 
the contract-holders on the multiple-award contract to receive the 
order. One of the contracting officers explained that having the 
facility staff pre-select the contract-holders to be awarded the order 
was equivalent to having conducted a technical evaluation, and 
therefore saved time. Although contracting officials classified the two 
orders as exceptions to fair opportunity, they could not provide 
adequate documentation justifying awarding the orders on a sole-source 
basis. In discussing these two cases with VA National Acquisition 
Center officials, the officials said that the improper use of 
exceptions was an ongoing problem and provided a VA directive issued in 
January 2003 that addressed use of exceptions to fair opportunity, 
among other things. Although the directive discussed the fair 
opportunity process, it did not specifically address the type of issue 
we found on the orders we reviewed.

* In a third case, involving a Centers for Disease Control and 
Prevention order worth $16.8 million, the contracting officer solicited 
the only vendor on the multiple-award contract that could supply a 
particular polio vaccine. The contracting officer did not provide 
necessary justification to support the use of the unique source 
exception to fair opportunity. In the contracting officer's view, this 
action did not require a justification because he had notified the only 
vendor capable of supplying the vaccine. In our view, however, this 
order should have been supported by a written justification for using 
the unique source exception.

* The fourth problematic order, for IT services worth $2.8 million, 
was issued by the FDA using the logical follow-on exception to fair 
opportunity. This exception is only available when the original order 
had been awarded using the fair opportunity process. Although FDA 
sought to justify its sole-source order in the interest of economy and 
efficiency, the use of the logical follow-on exception was improper 
because the original order had not been awarded through the fair 
opportunity process.

Reviews by GSA, NASA, and the VA IG conducted since the implementation 
of the new FAR guidelines have also found that contracting officers did 
not always adequately document their justifications for the use of 
exceptions to the fair opportunity process. Appendix III provides more 
information on these reviews.

Most Orders Clearly Described Requirements, but Few Met 
Performance-Based Criteria:

The orders we reviewed generally appeared to comply with the 
requirement of the revised regulation to clearly describe the supplies 
or services needed. Four of the 22 orders for services, however, 
contained broadly defined statements of work that required the issuance 
of subsequent sub-task orders or modifications to better define the 
work. Although the revised FAR encourages agencies to use performance-
based statements of work to the maximum extent practicable, only 5 of 
the 22 services task orders reported using performance-based 
requirements; and only 3 of those met the performance-based contracting 
criteria, such as providing measurable outcomes for contractor 
performance.

Some Statements of Work Required Clarifying Sub-Task Orders 
or Modifications:

Four of the 22 task orders for services we reviewed, all involving 
IT services, contained broadly defined statements of work that needed 
to be further clarified through the use of sub-task orders or 
modifications. For example,

* NASA's Langley Research Center, using a GSA contract, awarded a 
$5.4 million task order to provide IT services to support basic and 
applied research in such areas as aeronautics, earth sciences, space 
technology, structures and materials. The statement of work identified 
general requirements and indicated that the agency would issue task 
assignments for specific tasks within the work areas.

* The FDA issued a $500,000 IT service order to develop a decision 
support system. The original statement of work was broad, and the 
agency modified the order 6 months later to better define the existing 
requirements and to add new requirements. A year later, the agency 
modified the order further by adding more requirements and increasing 
the level of effort required. Each of these modifications increased the 
order by $1.5 million, bringing the total cost for the order to about 
$3.6 million, or a 7-fold increase.

Revised FAR Encourages the Use of Performance-Based Statements of Work, 
but Few Orders Met Criteria:

Both OFPP guidance[Footnote 27] and the revised FAR[Footnote 28] 
encourage agencies to use performance-based criteria to develop 
statements of work for service contracts and task orders to the maximum 
extent practicable. A performance-based statement of work defines the 
government's requirements in terms of objectives and measurable 
outputs. As such, performance-based contracts and orders clearly spell 
out the desired end result expected of the contractor. The precise 
manner in which the work is to be performed is left up to the 
contractor. Contractors are given as much freedom as possible in 
figuring out how best to meet the government's performance objective.

Of the 22 orders for services in our review, only 5 reported using the 
performance-based service contracting approach. Of those, we found 
that three actually met the performance-based criteria. The other two 
did not meet the criterion requiring measurable outcomes to assess 
contractor performance. An earlier GAO review of performance-based 
contracting also found that many contracts agencies characterized as 
performance-based did not meet all the criteria and that more guidance 
and study were needed to understand how effectively agencies are 
applying this technique.[Footnote 29] In July 2003, after the 
completion of our review, OFPP adopted recommendations developed by an 
inter-agency task force to improve agency use of performance-based 
contracting.[Footnote 30]

Agencies Are Just Beginning to Address Capital Planning Issues:

Revised regulations concerning capital planning requirements for 
purchases of IT products and services went into effect August 2002, and 
agencies have only recently begun to determine how they will meet them. 
Agencies are currently revising their capital planning and investment 
control processes, but to date are uncertain about who or what entity 
within each agency will be accountable for enforcing compliance at the 
IT order level. Three of the agencies require certifications from the 
customer agencies' CIO attesting that capital planning has been done 
for the order.

The August 2002 FAR revisions clarified that the Clinger-Cohen Act 
requirements for capital planning and investment control apply to 
orders, as well as contracts, for IT products and services. The FAR 
requires agency acquisition personnel to state in acquisition 
plans[Footnote 31] how capital planning and investment control 
requirements will be met for IT orders and how the orders benefit the 
government.[Footnote 32] Agencies recently began revising and 
implementing their capital planning and investment control acquisition 
processes to address these requirements. For example, the CIOs at VA, 
DOE, and HHS recently established policies that require CIO 
certification for IT acquisitions. These certification requirements are 
limited to certain purchases. For example, DOE requires certifications 
for all headquarters purchases of IT services in excess of $200,000; 
HHS requires approval for IT contracts and orders over $500,000; and 
VA's CIO certifies and approves all IT purchases above $250,000. In 
addition, VA reviews IT purchases below $250,000 to ensure compliance 
with technical and security standards before they are approved by the 
CIO's office. All three agencies' acquisition offices are revising 
their acquisition policies to reflect the new requirements. NASA and 
GSA plan to incorporate capital planning requirements in their program 
managers' guidance.

OMB's 1997 guidance on the Clinger-Cohen Act requires agency heads 
to ensure that CIO and senior procurement officials work together to 
assign responsibilities and establish clear lines of accountability for 
orders placed against multi-agency contracts.[Footnote 33] In 
addition, OMB officials informed us that its Capital Planning and 
Investment Control policy requires that contracting officers be part of 
the project team. However, based on our discussions with agency 
officials about responsibility for task and delivery orders, 
acquisition and capital planning officials are still not clear about 
who will be accountable for ensuring compliance with capital planning 
requirements.

Conclusions:

The government is increasingly relying on multiple-award task and 
delivery order contracts to obtain goods and services because, when 
used appropriately, these contracts can streamline the procurement 
process while maintaining competition. Some agencies, however, notably 
VA and HHS, did not always comply with requirements to provide a fair 
opportunity to be considered for orders or adequately justify an 
exception. We believe that these problems point to the need for VA and 
HHS to ensure that their acquisition personnel receive appropriate 
training in the use of task and delivery order contracts.

Capital planning for IT acquisitions helps to ensure that IT products 
and services are acquired in an economical and efficient manner 
consistent with an overall acquisition strategy. However, we found that 
agency policies and procedures do not yet clearly delineate the roles 
and responsibilities of IT and acquisition officials to ensure 
accountability for capital planning and investment control for IT goods 
and services. Consequently, without clear lines of responsibility, the 
benefits of capital planning provisions may not be achieved.

Recommendations for Executive Action:

Because of the limited nature of our sample, we do not know the 
extent to which the problems identified are systemic or unique to our 
review. Nevertheless, these findings are of sufficient concern that 
both the Secretaries of Veterans Affairs and Health and Human Services 
should review the guidance and training provided to their contracting 
officials to ensure that the regulations are properly understood and 
applied.

Also, to ensure accountability for capital planning and investment 
control requirements for IT goods and services, we recommend that 
the Director of the Office of Management and Budget, working with 
the Federal Acquisition Council and the CIO council, clarify the roles 
and responsibilities of the acquisition and information technology 
communities for capital planning for IT products and services.

Agency Comments and Our Evaluation:

We received written comments on a draft of this report from VA, HHS, 
and GSA. NASA informed us by e-mail that it concurred with the report. 
DOE did not provide comments. OMB provided e-mail comments suggesting a 
number of technical changes, which we incorporated where appropriate.

VA concurred with our recommendation, but took exception to our 
conclusions on two of the cited cases. Specifically, in the two cases 
where VA medical centers pre-selected the multiple-award vendor to 
receive delivery orders, VA did not agree with our conclusion that the 
orders were issued on a sole-source basis. VA apparently believes that 
all of the vendors on the contracts had a fair opportunity to be 
considered for the orders. We do not agree. While we recognize that the 
FAR provides agencies with flexibility in developing ordering 
procedures, the FAR expressly provides that agencies may not use any 
method that involves the designation of preferred awardees.[Footnote 
34] In addition, agency documents and contracting officials at the VA 
National Acquisition Center characterized the two orders as being 
awarded through an exception to fair opportunity. Accordingly, there 
should have been documentation justifying the use of an exception. In 
neither of the two cases could the contracting officers produce the 
required documents. We modified the report to make clearer that VA 
officials at the National Acquisition Center considered these orders to 
be awarded through the use of an exception. On the matter of capital 
planning, the VA noted that its CIO not only certifies but also 
approves IT purchases above $250,000. We included that information in 
our report. VA also provided updated status on some of its IG and 
internal audit reviews, which we also reflected in the report. VA's 
comments appear in appendix V.

HHS did not concur with our recommendation regarding its training 
and guidance. The department noted that it had adequate training for 
its contracting officials. In our view, however, HHS needs to review 
the adequacy of the training provided its contracting officials, given 
the problematic orders noted in the report. HHS also took exception to 
two of our cited examples. Specifically, HHS disagreed with our 
conclusion that an order it characterized as being awarded through the 
fair opportunity process should have, more appropriately, been 
characterized as being awarded as an exception to fair opportunity. 
Because there was only one supplier of that particular vaccine being 
bought, we believe that this order required the use of the unique 
source exception along with the documentation justifying this 
exception. In the other case, where we determined the logical-follow 
exception was used inappropriately, HHS stated that the order was not 
awarded using that exception. However, all contract file documentation, 
including the sole source justification, referred to this order as a 
logical follow-on to previous work. HHS' comments appear in 
appendix VI.

GSA agreed in general with our findings, but suggested additional 
language concerning efforts by the Federal Acquisition Institute (FAI) 
to update its training offerings. We revised our report to acknowledge 
FAI's efforts. GSA's comments appear in appendix VII.

We are sending copies to interested congressional committees; the 
secretaries of Energy, Health and Human Services, and Veteran's 
Affairs; the Administrator of General Services; and the administrators 
of the National Aeronautics and Space Administration, and the Office of 
Federal Procurement Policy. We will also make copies available to 
others upon request. In addition, the report will be available at no 
charge on the GAO Web site at [Hyperlink, http://www.gao.gov/] http://
www.gao.gov.

Please contact me at (202) 512-8214, or Hilary Sullivan at (214) 777-
5652, if you have any questions regarding this report. Major 
contributors to this report were Thom Barger, John Clary, Judith 
Collins, Lester Diamond, Robert Swierczek, and Ralph O. White.

William T. Woods 
Director 
Acquisition and Sourcing Management:

Signed by William T. Woods: 

[End of section]

Appendixes: 

[End of section]

Appendix I: Objectives, Scope, and Methodology:

The National Defense Authorization Act for Fiscal Year 2000 required 
that the Federal Acquisition Regulation be revised to provide agencies 
guidance on the use of task and delivery order contracts and that GAO 
evaluate whether (1) the revised regulations conform to the law, and 
(2) federal agencies are complying with the regulations.[Footnote 35] 
To evaluate whether the regulations conform to the law, we analyzed the 
regulations written to implement section 804 to determine if all of the 
statutory obligations were addressed in the regulations. In addition, 
we compared the regulations as they existed prior to and after the 
revisions to determine the extent to which the revised regulations 
provided specific additional guidance on the steps agency should follow 
in awarding and using multiple-award task and delivery order contracts.

As agreed with staff from the congressional committees to which this 
report is addressed, in order to assess agency compliance with the 
regulations we focused our review on the five largest agencies, 
excluding the Department of Defense, in terms of total annual 
procurement expenditures: DOE, HHS, VA, GSA, and NASA. Together, these 
agencies account for two-thirds of procurement spending by all civilian 
agencies. In addition, these agencies are among the largest in terms of 
the number of orders placed against multiple-award contracts. In fiscal 
year 2001, these agencies obligated nearly $1 billion through these 
vehicles.[Footnote 36] Based on a judgmental sample, we determined 
whether these selected agencies (1) provided eligible multiple-award 
contractors a fair opportunity to be considered for orders and 
adequately justified the use of exceptions for sole source orders, 
(2) provided clear and specific statements of work, and (3) complied 
with capital planning requirements for contracts and orders for IT 
products and services. We reviewed policies and procedures and 
interviewed acquisition, procurement, and Chief Information Office 
officials at DOE, VA, HHS, GSA, and NASA.

In selecting a judgmental sample, we first identified 142 Federal 
Procurement Data System (FPDS)[Footnote 37] records representing task 
and delivery orders for $1 million or more awarded by the five agencies 
in fiscal year 2001, the latest data available. We next selected the 
two (one if only one was awarded) largest orders awarded by each unique 
organizational entity within the five agencies--resulting in the 
selection of 25 cases. In addition, we included the five orders over 
$1 million that were used to prepare and verify our methodology for 
reviewing contract files and preparing our case studies. As a result, 
we initially selected 30 orders for review. In reviewing the contract 
files, however, we determined that four orders were actually placed 
against single award indefinite delivery/indefinite quantity 
contracts. We excluded those four orders, leaving us with 26 case 
studies. We provided each location with summaries of the orders we had 
reviewed and obtained their concurrence on our findings. Appendix IV 
contains information on the 26 orders selected for our review.

In addition to the errors noted above, we identified numerous other 
FPDS data errors during the course of our review. We, therefore, 
limited our use of FPDS data to identifying general multiple-award 
contract trends, as shown in figure 1, and to selecting our sample. We 
will be providing additional information on FPDS errors in a separate 
letter.

We conducted our review between October 2002 and August 2003 in 
accordance with generally accepted government auditing standards.

[End of section]

Appendix II: Key Multiple-Award Contract Legislation and Administrative 
Actions:

Legislation or administrative action: The Federal Acquisition 
Streamlining Act of 1994 (FASA), P.L. No. 103-355; Description and 
impact: Established a general preference for use of multiple-award 
contracts and required that contractors on multiple-award contracts 
have a fair opportunity to be considered for orders in excess of 
$2,500. Made multiple-award contracts mandatory for advisory and 
assistance services contracts exceeding $10 million and 3 years 
duration.

Legislation or administrative action: The Economy Act of 1932, relevant 
provision at 31 U.S.C. 1535; Description and impact: Authorized 
agencies to enter into mutual agreements to obtain supplies or services 
by inter-and intra-agency acquisition. Stipulated the requirements and 
limitations for multi-agency task and delivery orders for purchases of 
goods and services.

Legislation or administrative action: Federal Property and 
Administrative Service Act of 1949, relevant provision at 41 U.S.C. 
253j(c); Description and impact: Required a statement of work in each 
task or delivery order issued that clearly specifies all tasks to be 
performed or property to be delivered under the order.

Legislation or administrative action: Clinger-Cohen Act of 1996, P.L. 
No. 104-106, section 5122, relevant provision at 40 U.S.C. 11312; 
Description and impact: Established capital planning requirements for 
purchasing IT products and services. Required agency heads to establish 
a process, integrated with agency budget and financial processes, to 
maximize the value and manage the risks related to purchases of IT 
services and products.

Legislation or administrative action: Clinger-Cohen Act of 1996, P.L. 
No. 104-106, section 5124(a)(2) relevant provision at 40 U.S.C. 
11314(a)(2); Description and impact: Formerly known as the Information 
Technology Management Reform Act of 1996, this act authorized agencies 
to use multi-agency contracts to purchase IT services and products, and 
also authorized OMB to designate executive agents for governmentwide 
contracts for IT.

Legislation or administrative action: Office of Management and Budget 
(OMB) Policy Letter M-97-07; Description and impact: Required agency 
heads to ensure that their CIOs and senior procurement executives work 
together to assign responsibilities and establish clear lines of 
accountability for multiple agency contracts.

Legislation or administrative action: National Defense Authorization 
Act for Fiscal Year 2000, P.L. No. 106-65, section 804; Description 
and impact: Required at a minimum, the content of the FAR guidance on 
use of task and delivery order contracts provide specific guidance on 
the appropriate use of multiple-award contracts and steps agencies 
should take to ensure compliance with Clinger-Cohen Act, fair 
opportunity, and statement of work requirements.

Source: GAO analysis.

[End of table]

[End of section]

Appendix III: GAO, Agency Inspector General, and Other Reviews:

Agency: DOD; 

Report title: Department of Defense, DOD Use of 
Multiple Award Task Order Contracts, DOD IG 99-116, (Arlington, VA: 
Apr. 2, 1999); Reported findings: Unjustified exceptions to fair 
opportunity: The DOD IG found 58 of 66 orders were awarded using 
unjustified exceptions to the fair opportunity process; 
Recommendation: DOD should establish a goal that 90 percent of the 
orders for multiple-award contracts have multiple bidders and identify 
strategies to monitor and reduce the number of sole source awards over 
a 3-year period.

Report title: U.S. General Accounting Office, Contract 
Management: Few Competing Proposals for Large DOD Information 
Technology Orders, GAO/NSIAD-00-56; (Washington, D.C. Mar. 20, 2000); 
Reported findings: Agency: Unclear statements of work and unjustified 
exceptions to fair opportunity: GAO found that DOD made use of the 
statutory exceptions to the fair opportunity requirement in 10 of 22 
orders reviewed and statements of work were generally defined too 
broadly; Recommendation: Agencies should not award follow-on orders 
whose scope or costs significantly exceed former related orders and 
should not award large undefined orders and subsequently issue sole-
source work orders for specific task orders.

Report title: Department of Defense, Contracts for 
Professional, Administrative, and Management Support Services, 
DOD IG D-2000-100, (Arlington, VA: Mar. 10, 2000); Reported findings: 
Agency: Unclear statement of work, award without fair opportunity and 
unjustified exceptions to fair opportunity: The DOD IG found that it 
was impossible to determine how the scope of work on one task differed 
from that of other tasks. In addition, contracting officers did not 
provide contractors a fair consideration in 58 of 105 orders reviewed 
and used faulty justifications for sole-source exceptions another five 
orders; Recommendation: DOD should develop a training course to define 
requirements and a time-phased plan with goals and performance measures 
to determine improvements in the acquisition of professional, 
administrative, and management support services.

Report title: Department of Defense, Multiple Award 
Contracts for Services, DOD IG D-2001-189, (Arlington, VA: Sept. 30, 
2001); Reported findings: AgencyGSA: Unjustified exception to fair 
opportunity: This was a review of 423 orders awarded in fiscal years 
2000 and 2001. The DOD IG found that 264 of 304 orders awarded on a 
sole-source basis were improperly supported. The report also noted that 
82 of 119 orders that were competed received multiple bids; 
Recommendation: DOD should establish at least a 75 percent goal to 
compete orders and track progress of the use of competition in awarding 
orders.

Agency: GSA; 

Report title: General Services Administration, Audit of 
Federal Technology Service Use of Multiple Award Indefinite Delivery 
Indefinite Quantity Contracts, A995288/T/H/Z00008, (Fairfax, VA: Sept. 
19, 2000); Reported findings: Unclear statements of work: A sample of 
48 orders from Federal Technology Service (FTS) found that less than 
15 percent contained performance-based statements of work; 
Recommendations: GSA should advance fair opportunity and best value at 
FTS by using performance-based orders. Change several operational 
processes that inhibit fair opportunity.[A].

Report title: U.S. General Accounting Office, 
Telecommunications: GSA Needs to Improve Process for Awarding Task 
Orders for Local Service, GAO-03-369, (Washington, D.C. Apr. 4, 2003); 
Reported findings: AgencyNASA: Award without fair opportunity: This 
report noted that GSA did not establish and follow a consistent process 
to ensure that each vendor was accorded a fair opportunity to be 
considered for each order; Recommendations: Establish a common process 
for GSA to consistently follow when considering fair opportunity for 
vendors.[B].

Agency: NASA; 

Report title: National Aeronautics and Space 
Administration, Multiple Award Contracts, IG-01-040, (Washington, 
D.C. Sept. 28, 2001); Reported findings: Award without fair 
opportunity: The NASA IG found that two NASA Centers, Langley and 
Johnson, awarded 51 sole source orders without fair competition. As a 
result, NASA had not received the benefits of competitive bids and may 
have paid more for goods and services than necessary; Recommendations: 
Center Directors should direct contracting officers to fairly consider 
all contractors who submit bids for orders under multiple-award 
contracts.[C].

Agency: VA; 

Report title: Department of Veterans Affairs, Review of 
Management Consultant Contract, VA IG 7R5-E03-014, (Washington, D.C. 
Dec. 13, 1996); Reported findings: Unclear statements of work: The VA 
IG found that the management consultant contract for IT services failed 
to yield requested deliverables due to, among other things, a 
nonspecific statement of work; Recommendation: The CIO and the 
contracting officer should review statements of work to ensure their 
specificity.[D].

Report title: Department of Veterans Affairs, Business Review, 
VAMC Cleveland, OH, (Washington, D.C. Nov. 9, 2001); Reported 
findings: Agency: Award without fair opportunity and full and open 
competition: This business review of the VA Cleveland Medical Center 
found that 54 out of 63 (85 percent) orders and contracts were awarded 
without competition; Recommendations: Contracting officers must 
justify all sole-source procurements.[E].

Report title: Department of Veterans 
Affairs, Business Review, VAMC Cleveland, OH, (Washington, D.C. June 
13, 2002); Reported findings: AgencyDOD, HHS and others: Award without 
fair opportunity and full and open competition: This business review 
noted that 59 of 76 sole-source contracts and orders reviewed 
(78 percent) were inadequately documented to support the award 
decision; Recommendations: Contracting officers ensure that 
files contain adequate documentation supporting award decisions.[E].

Agency: DOD, HHS and others; 

Report title: U.S. General Accounting 
Office, Acquisition Reform: Multiple-award Contracting at Six Federal 
Organizations, GAO/NSIAD 98-215, (Washington, D.C. Sept. 30, 1998); 
Reported findings: Award without fair opportunity: GAO found that NIH 
had placed orders with preferred contractors rather than providing all 
contractors a fair opportunity. It also noted that DOD received only 
one proposal for about 44 percent of the orders placed on its multiple-
award contracts for information technology services; No recommendation 
but OFPP in its response to the report noted a need for regulations to 
prohibit the practice of designating preferred contractors when 
announcing orders for competition.[F].

Source: GAO analysis.

[A] According to GSA, corrective actions were completed and the audit 
was closed on April 9, 2002.

[B] In a March 31, 2003, letter GSA agreed with the reports' 
recommendations and stated that it had implemented new guidance to 
ensure that each vendor is accorded a fair opportunity to be considered 
for each order.

[C] According to NASA, management concurred with the recommendations 
and implemented them at the time the report was issued.

[D] According to VA, the OIG closed this report on January 20, 1998, 
with the recommendations implemented.

[E] According to VA, an audit conducted after initiating a corrective 
action plan found that less than 1 percent of the procurements were 
sole source.

[F] According to the Director of Acquisition Policy and Evaluation, NIH 
subsequently discontinued this practice.

[End of table]

[End of section]

Appendix IV: Information on Selected Orders:

Dollars in millions.

Department of Energy:

Procurement Office Washington, DC; Order price[A]: $1.7; Cost or fixed 
price: Cost; Fair opportunity (yes or no): Yes; Number of vendors: 6; 
Number of bids: 1; Incumbent (yes or no): No.

This order provided for IT services to provide operations support for 
six existing petroleum marketing survey systems and three new bi-weekly 
surveys. This order was reported on FPDS as a performance-based service 
contract.

Operations Office Albuquerque, NM; Order price[A]: $0.2; Cost or fixed 
price: Cost; Fair opportunity (yes or no): Yes; Number of vendors: 3; 
Number of bids: 3; Incumbent (yes or no): No.

This order provided for services to assist in the preparation of an 
Environmental Impact Statement.

River Protection Office Richland, WA; Order price[A]: $1.5; Cost or 
fixed price: Fixed; Fair opportunity (yes or no): No; Number of 
vendors: N/A; Number of bids: N/A; Incumbent (yes or no): N/A.

This order provided for services to assist in the preparation of an 
Environmental Impact Statement.

General Services Administration: 

Federal Technology Service New York, NY; Order price[A]: $15.3; Cost or 
fixed price: Fixed; Fair opportunity (yes or no): Yes; Number of 
vendors: 11; Number of bids: 2; Incumbent (yes or no): No.

This order provided for IT services to develop a secure wireless local 
area network.

Federal Technology Service Denver, CO; Order price[A]: $17.6; Cost or 
fixed price: Cost; Fair opportunity (yes or no): Yes; Number of 
vendors: 11; Number of bids: 1; Incumbent (yes or no): No.

This order provided for IT services for the replacement of 
unsupportable legacy equipment and provision of interim support for new 
equipment.

Federal Technology Service Fort Worth, TX; Order price[A]: $0.3; Cost 
or fixed price: Fixed; Fair opportunity (yes or no): No; Number of 
vendors: N/A; Number of bids: N/A; Incumbent (yes or no): N/A.

This order provided for IT services for Bureau of Indian Affairs to 
administer logistics servers, integrated systems, maintain databases, 
operate a help desk, perform system analysis, and develop and enhance 
system interfaces.

Public Building Service Washington, DC; Order price[A]: $1.8; Cost or 
fixed price: Fixed; Fair opportunity (yes or no): Yes; Number of 
vendors: 4; Number of bids: 3; Incumbent (yes or no): No.

This order provided for services to replace perimeter chilled water 
piping at the J. W. Powell Building.

Public Building Service Atlanta, GA; Order price[A]: $1.6; Cost or 
fixed price: Fixed; Fair opportunity (yes or no): Yes; Number of 
vendors: 5; Number of bids: 5; Incumbent (yes or no): No.

This order provided for services to renovate floors 20 through 22 of 
the IRS Wage and Investment Headquarters in the Peachtree Summit 
Federal Building.

Public Building Service Atlanta, GA; Order price[A]: $1.5; Cost or 
fixed price: Fixed; Fair opportunity (yes or no): Yes; Number of 
vendors: 5; Number of bids: 5; Incumbent (yes or no): No.

This order provided for services to renovate floors 9, 12, and 15 of 
the IRS Wage and Investment Headquarters in the Peachtree Summit 
Federal Building.

Public Building Service Fort Worth, TX; Order price[A]: $1.4; Cost or 
fixed price: Fixed; Fair opportunity (yes or no): Yes; Number of 
vendors: 6; Number of bids: 3; Incumbent (yes or no): No.

This order provided for services to renovate the U.S. District 
Courthouse in Oklahoma City, OK.

Department of Health and Human Services: 

Centers for Disease Control Atlanta, GA; Order price[A]: $16.8; Cost or 
fixed price: Fixed; Fair opportunity (yes or no): No; Number of 
vendors: N/A; Number of bids: N/A; Incumbent (yes or no): N/A.

This order provided for 2.2 million doses of E-IPV Vaccine for the 
National Vaccine Stockpile.

Centers for Disease Control Atlanta, GA; Order price[A]: $6.2; Cost or 
fixed price: Fixed; Fair opportunity (yes or no): [Empty]; Number of 
vendors: Yes; Number of bids: 5; Incumbent (yes or no): 4.

This order provided for architectural and engineering services to 
design building 21 on the Roybal Campus.

National Institutes of Health Bethesda, MD; Order price[A]: $4.8; Cost 
or fixed price: Cost; Fair opportunity (yes or no): Yes; Number of 
vendors: 3; Number of bids: 3; Incumbent (yes or no): No.

This order provided for services to safety test seven HIV-1 DNA vaccine 
preparations as required for Investigational New Drug submission prior 
to initial clinical evaluation. This order was reported on FPDS as a 
performance-based service contract.

National Institutes of Health Bethesda, MD; Order price[A]: $7.1; Cost 
or fixed price: Cost; Fair opportunity (yes or no): No; Number of 
vendors: N/A; Number of bids: N/A; Incumbent (yes or no): N/A.

This order provided for IT services to maintain the Molecular Biology 
database.

Food and Drug Administration Rockville, MD; Order price[A]: $2.8; Cost 
or fixed price: Cost; Fair opportunity (yes or no): No; Number of 
vendors: N/A; Number of bids: N/A; Incumbent (yes or no): N/A.

This order provided for IT services to develop the requirements for a 
web-based portal infrastructure including the provision of strategic 
planning, system architecture, system and functional requirements, risk 
analysis and workforce process for the Operational and Administrative 
System for Import Support on one other unspecified application.

Food and Drug Administration Rockville, MD; Order price[A]: $3.6; Cost 
or fixed price: Cost; Fair opportunity (yes or no): No; Number of 
vendors: N/A; Number of bids: N/A; Incumbent (yes or no): N/A.

This order provided for IT services to develop the Office of Regulatory 
Affairs Decision Support System.

National Aeronautics and Space Administration: 

Kennedy Space Center Cape Canaveral, FL; Order price[A]: $3.0; Cost or 
fixed price: Fixed; Fair opportunity (yes or no): Yes; Number of 
vendors: 5; Number of bids: 3; Incumbent (yes or no): [Empty].

This order provided for services to replace electrical equipment at 
power sub-stations and a utility annex.

Kennedy Space Center Cape Canaveral, FL; Order price[A]: $2.4; Cost or 
fixed price: Fixed; Fair opportunity (yes or no): Yes; Number of 
vendors: 4; Number of bids: 3; Incumbent (yes or no): No.

This order provided for services to construct replacement housing.

Langley Research Center Hampton, VA; Order price[A]: $6.0; Cost or 
fixed price: Cost; Fair opportunity (yes or no): Yes; Number of 
vendors: 11; Number of bids: 4; Incumbent (yes or no): Yes.

This order provided for IT services to operate the Computational 
Analysis and Programming Services. This order was reported on FPDS as a 
performance-based service contract.

Langley Research Center Hampton, VA; Order price[A]: $1.3; Cost or 
fixed price: Cost; Fair opportunity (yes or no): Yes; Number of 
vendors: 3; Number of bids: 1; Incumbent (yes or no): No.

This order provided for services to design the X-43C Research Vehicle. 
This order was reported on FPDS as a performance-based service 
contract.

Ames Research Center Moffett Field, CA; Order price[A]: $15.7; Cost or 
fixed price: Fixed; Fair opportunity (yes or no): Yes; Number of 
vendors: 7; Number of bids: 4; Incumbent (yes or no): No.

This order provided for IT services to outsource the acquisition and 
maintenance of desktop computers. This order was reported on FPDS as a 
performance-based service contract.

Department of Veterans Affairs: 

National Acquisition Center Hines, IL; Order price[A]: $1.0; Cost or 
fixed price: Fixed; Fair opportunity (yes or no): No; Number of 
vendors: N/A; Number of bids: N/A; Incumbent (yes or no): N/A.

This order provided for the purchase of a Computed Tomography Scanner.

National Acquisition Center Hines, IL; Order price[A]: $0.3; Cost or 
fixed price: Fixed; Fair opportunity (yes or no): No; Number of 
vendors: N/A; Number of bids: N/A; Incumbent (yes or no): N/A.

This order provided for the purchase of a diagnostic X-ray system and 
related equipment.

Central Office Washington, DC: 

This order provided for the purchase of IT equipment-Internet servers 
and related equipment.

Austin Automation Center Austin, TX; Order price[A]: $1.2; Cost or 
fixed price: Fixed; Fair opportunity (yes or no): Yes; Number of 
vendors: 3; Number of bids: 1; Incumbent (yes or no): Yes.

This order provided for the provision of satellite bandwidth for 
nationwide transmittal of educational courses.

Medical Center-Denver Denver, CO; Order price[A]: $2.3; Cost or fixed 
price: Fixed; Fair opportunity (yes or no): Yes; Number of vendors: 4; 
Number of bids: 1; Incumbent (yes or no): No.

This order provided for the construction of modular buildings for 
medical center complex.

Source: GAO.

[A] Order prices are rounded and represent obligations as of the date 
of our review.

[End of table]

[End of section]

Appendix V: Comments from the Department of Veterans Affairs:

THE SECRETARY OF VETERANS AFFAIRS WASHINGTON:

August 19, 2003:

Mr. William T. Woods:

Director, Acquisition and Sourcing Management 
U. S. General Accounting Office:

441 G Street, NW Washington, DC 20548:

Dear Mr. Woods:

The Department of Veterans Affairs (VA) has reviewed your draft report, 
CONTRACT MANAGEMENT: Civilian Agency Compliance with Revised Task and 
Delivery Order Regulations (GAO-03-983). VA concurs with the General 
Accounting Office's (GAO) recommendation to provide guidance and 
training to contracting officials to ensure that the regulations 
governing task and delivery orders are properly applied. Indeed, VA's 
Office of Acquisition and Materiel Management is already providing such 
training on a regular basis.

VA believes that the examples presented in the draft report largely 
focus on conditions that VA officials had already recognized as needing 
correction. In fact, prior to GAO's review, VA had already resolved the 
problems. The following bullets address instances where VA either 
disagrees with GAO's conclusion or where VA has already taken 
corrective action.

* On page 12, the draft report refers to two cases at two VA medical 
centers. The contracting officers asked that the requesting facilities 
select one of the contract-holders on the multiple-award contract to 
receive the order. One of the contracting officers explained that having 
the facility staff pre-select the contract-holders to be awarded the 
order was equivalent to having held a technical evaluation panel, and, 
therefore, saved time. GAO asserts that there was no documentation in 
the file to support awarding the order on a sole-source basis. The 
Department takes exception to this conclusion. VA's Acquisition Policy 
Division has issued numerous training messages to VA's acquisition 
offices across the country clarifying that the Federal Acquisition 
Regulation 16.505 actually requires establishment of procedure to 
ensure fair opportunity to "be considered" not to "compete." VA 
believes there is an important distinction between the two terms. While 
these procedures have been commonly referred to as "the fair 
opportunity to compete rule," it should be recognized that fair 
opportunity procedures do not expressly require that each task order be 
competed, only that contractors have an 
opportunity to be considered. How contracting officers accomplish this 
is largely dependent upon the type of requirements under the contract 
and pool of awarded contractors available.

On page 16 the draft report implies that VA's Chief Information Officer 
(CIO) certifies only those Information Technology (IT) acquisitions 
over $250,000. In fact, VA's CIO certifies and approves all IT 
acquisitions over $250,000. Moreover, IT acquisitions under $250,000 
are placed in an on-line IT tracking system where they are reviewed for 
technical compliance with the enterprise architecture as well as 
telecommunications and cyber security requirements and then approved by 
the CIO's office.

* On page 23, the draft report refers to a VA Office Inspector General 
(OIG) December 13, 1996, recommendation. You should be aware that VA's 
OIG closed that report on January 20, 1998, with the recommendations 
implemented. VA's CIO has been and will continue to partner with the 
contracting officers in the Office of Management/Office of Acquisition 
and Materiel Management to ensure statements of work regarding IT 
initiatives address specific tasks and include the appropriate 
justifications.

* Also on page 23, there is a reference to two FY 2002 business review 
audits. VA's Office of Acquisition and Materiel Management in VA 
Central Office conducts semiannual acquisition audits on the Cleveland 
Business Center, which supports the Veterans Health Administration's 
Office of Information acquisition program. Internal audits conducted in 
FY 2002 noted that sole source acquisitions were high, 85 percent and 
78 percent respectively. Immediately after the first audit, the Center's 
Head of Contracting Activity (HCA) implemented corrective action. 
Noting the modest decrease, the HCA launched a more aggressive 
corrective action plan and communicated directly to Office of 
Information's senior management team. Subsequently, in April 2003, the 
Office of Acquisition and Materiel Management's next audit indicated 
that sole source was less than 1 percent (only one sole source 
acquisition was noted over a period of 9 months). The next audit of the 
Cleveland Business Center is anticipated in the fall of 2003.

The Department of Veterans Affairs appreciates the opportunity to 
comment you GAO's draft report.

Sincerely yours,

Anthony J. Principi:

Signed by Anthony J. Principi:

[End of section]

Appendix VI: Comments from the Department of Health and Human Services:

DEPARTMENT OF HEALTH & HUMAN SERVICES	
Office of Inspector General:

Washington, D.C. 20201:

AUG 20 2003:

Mr. William T. Woods:

Director, Acquisition and Sourcing Management United States General 
Accounting Office Washington, D.C. 20548:

Dear Mr. Woods:

Enclosed are the Department's comments on your draft report entitled, 
"Contract Management: Civilian Agency Compliance with Revised Task and 
Delivery Order Regulations." The comments represent the tentative 
position of the Department and are subject to reevaluation when the 
final version of this report is received.

The Department appreciates the opportunity to comment on this draft 
report before its publication.

Sincerely,

Dara Corrigan:

Acting Principal Deputy Inspector General:

Signed by Dara Corrigan:

Enclosure:

The Office of Inspector General (OIG) is transmitting the Department's 
response to this draft report in our capacity as the Department's 
designated focal point and coordinator for General Accounting Office 
reports. OIG has not conducted an independent assessment of these 
comments and therefore expresses no opinion on them.

Comments of the Department of Health and Human Services on the General 
Accounting Office's Draft Report, "Contract Management: Civilian Agency 
Compliance with Revised Task and Delivery Order Regulations" (GAO-03-
983):

The Department of Health and Human Services (Department) appreciates 
the opportunity to review and offer comments on the General Accounting 
Office's (GAO) draft report. The report provides a thorough evaluation 
of the Department's compliance with the revised task and delivery order 
regulations.

Recommendation for Executive Action:

"Because of the limited nature of our sample, we do not know the extent 
to which the problems identified are systemic, or are unique to our 
review. Nevertheless, these findings are of sufficient concern that 
both the Secretaries of Veterans Affairs and Health and Human Services 
should provide appropriate guidance and training to their contracting 
officials to ensure that the regulations are properly applied.":

Department Response:

In reviewing the report we were disappointed to note that you 
recommended that the Department should offer guidance and training to 
acquisition personnel on using the exceptions to the fair opportunity 
process. It is our opinion that we provide adequate training in that 
the Department considers the training of our contracting officials 
paramount in promoting the adherence to statutory requirements. In that 
regard, the agency has developed an extensive training program for 
acquisition professionals and project managers. Shown below are courses 
that include training on using the exceptions to the fair opportunity 
process:

Course: Introduction to Contracting; Instruction: Chapter 6.

Course: Acquisition Planning I; Instruction: Chapter 10.

Course: Acquisition Planning II; Instruction: Lesson G.

Course: Project Officer's Handbook; Instruction: Chapter 3.

[End of table]

The Department has the following response regarding two task and 
delivery order contracts cited by GAO in this draft report.

The GAO draft reports states on pages 12 through 13 that, "In a third 
case, involving a Centers for Disease Control and Prevention (CDC) 
order worth $16.5 million." The Department takes exception to your 
statement that "a contracting officer did not provide necessary 
justification to support the use of the unique source exception to fair 
opportunity, because he apparently failed to recognize that his actions 
required the use of a justification." In fact, this award does not meet 
the definition of a unique source exception to fair opportunity. The 
solicitation used by CDC to acquire vaccines was competitive. Any 
manufacturer could propose to supply any of the 13 vaccines being 
acquired, or any combination of vaccines, over the 12-month performance 
period of the contract as long as the company had a Food and Drug 
Administration (FDA) license to 
produce the product, GlaxoSmithKline, Wyeth, Merck, and Aventis-Pasteur 
(Aventis) each submitted proposals. Aventis was the only company to 
propose on E-IPV. Competition was never restricted. CDC accepted the 
Aventis proposal because none of the other competitors submitted a 
proposal for E-IPV. For the 12-month contract performance period 
starting in April 2002 and ending March 2003, per terms of the 
contract, Aventis was the only contractor supplying E-IPV. The E-IPV 
was not acquired under the "unique source" exception to fair 
opportunity; therefore, no justification was required. No one was 
precluded from competition, and the order was properly placed.

Regarding FDA's task and delivery order mentioned on page 13 of the 
draft report, it was the decision of the Contracting Officer (CO) to 
award the task orders based on the approved sole source justification. 
Since the circumstances surrounding the issuance of the original sole-
source orders had not changed, this subsequently led to the CO's 
decision to award additional sole-source orders to these firms, even 
though the CO did not officially classify such orders as "logical 
follow-on" orders. The FDA's Office of Acquisitions and Grants Services 
will comply with the procedures required in the Federal Acquisition 
Regulations to ensure that the agency receives the best value through 
task and delivery orders.

The Department is pleased to be recognized as one of the agencies 
currently revising our capital planning and investment control 
processes.

The Department provided several technical comments directly to GAO, on 
this topic, at the June 24, 2003 exit conference.

[End of section]

Appendix VII: Comments from the General Services Administration:

GSA:

GSA Office of Governmentwide Policy:

AUG 19 2003:

Mr. William T. Woods Director, Acquisition and Sourcing Management 
General Accounting Office 441 G. Street, N.W. Washington, DC 20548:

Dear Mr. Woods:

We have reviewed the General Accounting Office's (GAO) draft report 
"Civilian Agency Compliance with Revised Task and Delivery Order 
Regulations" and we agree in general with the findings presented by the 
GAO Report except for the following:

Under the subheading "Revised Regulation provides Little Additional 
guidance, and agencies Made Limited Changes to Guidance and Training" 
paragraph 2, please add the following after the 4THsentence.

However GSA is currently undertaking changing its acquisition planning 
order to highlight capital planning and investment control to agency 
program offices. An official for the Federal Acquisition Institute 
(FAI), which, under OFPP's direction, is charged with supporting and 
developing the civilian acquisition workforce, stated that the 
Institute does not presently provide specific training on capital 
planning and investment requirements. FAI is in the process of 
validatinq and updating on-line course content to conform to current 
law and regulations. Among the courses being validated is a course in 
acquisition planninq which will address the capital planning and 
investment requirement.

As a member of the Federal Acquisition Council, we look forward to 
working with the Director of the Office of Management and Budget to 
clarify the roles and responsibilities as it pertain to capital 
planning and investment control in purchases of information technology 
products and services.

If there are any questions, your staff may contact Ms. Laura Auletta, 
Director, Acquisition Policy Division at (202) 501-1224 or 
laura.auletta@gsa.gov.

Sincerely,

G. Martin Wagner 
Associate Administrator:

Signed by G. Martin Wagner: 

[End of section]

(120175):

FOOTNOTES

[1] P.L. No. 103-355 (Oct. 13, 1994).

[2] See U.S. General Accounting Office, Acquisition Reform: Multiple-
award Contracting at Six Federal Organizations, GAO/NSIAD-98-215 
(Washington, D.C. Sept. 30, 1998) and Contract Management: Few 
Competing Proposals for Large DOD Information Technology Orders, GAO/
NSIAD-00-56 (Washington, D.C. Mar. 20, 2000).

[3] P.L. 106-65 (Oct. 5, 1999).

[4] We limited our review to civilian agencies because Congress 
subsequently enacted additional legislation applicable only to defense 
agencies prescribing procedures to be used in placing orders against 
multiple-award contracts. We have initiated a separate review of the 
use of such contracts by defense agencies.

[5] The organizational entities included the Federal Technology Service 
and Public Building Service within GSA; the Centers for Disease 
Control, National Institutes of Health, and Food and Drug 
Administration within HHS; Kennedy Space Center, Langley Research 
Center, and Ames Research Center within NASA; the Central Office, 
National Acquisition Center, Austin Automation Center, and a medical 
center within VA; the Procurement Office, an operations office, and a 
river protection office within DOE.

[6] As reported by the Federal Procurement Data System. Subsequent file 
reviews showed that some orders included in our review were actually 
less than $1 million.

[7] We used the Federal Procurement Data System to identify 30 
transactions coded as task or delivery orders. Upon review, four were 
actually single award indefinite delivery/indefinite quantity (ID/IQ) 
contracts and were excluded from this survey.

[8] P.L. No. 103-355 (Oct. 13, 1994).

[9] See Office of Federal Procurement Policy, Best Practices for 
Multiple Award Task and Delivery Order Contracting, (Washington, D.C. 
July 1997).

[10] The Clinger-Cohen Act was enacted as Divisions D and E of the 
National Defense Authorization Act for Fiscal Year 1996 (P.L. No. 104-
106, Feb. 10, 1996).

[11] Multi-agency contracts are task and delivery order contracts 
established by one agency for use by government agencies to obtain 
supplies and services, including information technology.

[12] Governmentwide acquisition contracts are task and delivery order 
contracts for information technology established for use governmentwide 
by an executive agent designated by OMB.

[13] P.L. No. 106-65 (Oct. 5, 1999).

[14] FAC 97-17; FAR Case 1999-014; Item I (Apr. 25, 2000).

[15] FAC 2001-09; FAR Case 1999-303, Item I (Aug. 30, 2002).

[16] See U.S. General Accounting Office, Contract Management: Few 
Competing Proposals for Large DOD Information Technology Orders, GAO/
NSIAD-00-56 (Washington, D.C. Mar. 20, 2000). The report raised 
concerns about (1) large and inadequately defined orders, (2) misuse of 
logical follow-on awards, and (3) reliance on cost reimbursable rather 
than fixed-price orders.

[17] FAR  16.505(b)(1)(iii).

[18] See U.S. General Accounting Office, Contract Management: Few 
Competing Proposals for Large DOD Information Technology Orders, GAO/
NSIAD-00-56 (Washington, D.C. Mar. 20, 2000).

[19] FAR  16.505(a)(2).

[20] The capital planning requirements of the Clinger-Cohen Act are now 
codified at 40 U.S.C.  11312.

[21] FAR  7.105(b)(4)(ii)(A).

[22] FAR  7.105(b)(4)(ii)(B).

[23] FAR  7.102(b).

[24] According to a defense official, the Defense Acquisition 
University, which sometimes provides training to civilian agencies, 
addresses Clinger-Cohen capital planning requirements in its general 
training on preparing acquisition plans.

[25] For one VA order, worth $2.3 million for modular buildings, a 
contracting officer stated that all vendors were notified, but we were 
unable to verify the notification from the contract file. Only one bid 
was received.

[26] FAR  16.505(b)(2).

[27] See Office of Management and Budget (OMB), Competition Under 
Multiple Award Task and Delivery Order Contracts, Memorandum 
(Washington, D.C. May 21, 1999).

[28] FAR  16.505(a)(3).

[29] U.S. General Accounting Office, Contract Management: Guidance 
Needed for Using Performance-Based Service Contracting, GAO-02-1049 
(Washington, D.C. Sept. 23, 2002).

[30] See Office of Federal Procurement Policy, Performance-Based 
Service Contracting, (Washington, D.C. July 2003).

[31] An acquisition plan addresses all technical, business, management 
and other significant considerations that control an acquisition. It 
also summarizes all acquisition planning deliberations and identifies 
milestones for decisions in the acquisition process.

[32] FAR  7.105(b)(4)(ii).

[33] See Office of Management and Budget (OMB), Multiagency contracts 
under the Information Technology Management Reform Act of 1996, M-97-
07, (Washington, D.C. Feb. 26, 1997).

[34] FAR, section 16.505(b)(ii)(B).

[35] Section 804, P.L. No. 106-65 (Oct. 5, 1999).

[36] As reported by FPDS.

[37] The FPDS is the government's central repository of statistical 
information on federal contracting. The system contains detailed 
information on contract actions over $25,000 and summary data on 
procurements of less than $25,000.

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