Army Contracting:

Leadership Lacks Information Needed To Evaluate and Improve Operations

GAO-17-457: Published: Jun 22, 2017. Publicly Released: Jun 22, 2017.

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Marie A. Mak
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MakM@gao.gov

 

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The Army relies extensively on contracting operations to execute its missions—in fiscal year 2016 alone, it obligated over $74 billion through contracts. We reviewed the Army's contracting operations and found that senior leaders haven't consistently evaluated contracting effectiveness and efficiency. Instead, they have primarily focused on efforts to obligate funds before they expire.

We recommended that the Army develop metrics to determine whether its contracts are meeting schedule, cost, and performance goals; and that it assess the impact of its frequent organizational changes (such as centralizing decision-making) on contracting operations.

Number of Major Organizational Changes Affecting Army Contracting Operations, 2008-2016

 Timeline showing an increasing number of organizational changes in the past 5 years.

Timeline showing an increasing number of organizational changes in the past 5 years.

Additional Materials:

Contact:

Marie A. Mak
(202) 512-4841
MakM@gao.gov

 

Office of Public Affairs
(202) 512-4800
youngc1@gao.gov

What GAO Found

Top Army leaders conduct department-wide contracting reviews, but they have not consistently evaluated the efficiency and effectiveness of the department's contracting operations. Instead, they have primarily focused on efforts to obligate funds before they expire, as well as competition rates and small business participation. In 2014, one of the Army's key strategic planning documents established that contracting operations should adhere to schedule, cost, and performance objectives, but Army leaders have not established the timeliness, cost savings, and contractor quality metrics needed to evaluate contracting operations against such objectives. Without adequate metrics, Army leaders will not have the information needed to determine whether Army contracting operations are meeting the department's objectives. Since 2012, Army leaders, including successive Assistant Secretaries of the Army (Acquisition, Logistics and Technology) (ASA(ALT)), have acknowledged a need for improvements in contracting and have taken positive intermittent steps, but GAO found that these leaders did not sustain the efforts or—alternately—provide a rationale for not doing so. GAO has previously found that leadership must provide clear and consistent rationales to effectively drive organizational transformations. If Army leadership does not document its rationale for key decisions, the Army's contracting organizations may be missing critical information to effectively improve operations going forward.

Top Army leaders have not evaluated the effects of major organizational changes on contracting operations despite repeatedly changing reporting relationships across contracting organizations since 2008, when the Secretary of the Army created the Army Contracting Command. The number of changes has increased since 2012, with five major changes in 2016.

Number of Major Organizational Changes Affecting Army Contracting Operations, 2008-2016

Number of Major Organizational Changes Affecting Army Contracting Operations, 2008-2016

Some Army leaders made organizational changes to centralize contracting decision-making, while others made changes intended to improve support to field operations. When Army leaders made these changes, they did not establish measurable objectives in accordance with federal standards for internal control, and officials from eight different Army organizations told GAO that the numerous changes disrupted contracting operations and caused confusion. Further, GAO found that disagreements over the associated risks and benefits have increased tensions among officials in the ASA(ALT) office and at the Army Materiel Command (AMC). In the absence of measurable objectives and authoritative data, it is unclear whether the benefits of the changes outweighed the costs to implement them.

Why GAO Did This Study

In recent years, GAO and other organizations have raised concerns about Army contracting operations, which directly affect a wide range of Army activities. In fiscal year 2016 alone, the Army obligated more than $74 billion through contract actions.

GAO was asked to examine the Army's contracting operations. This report assesses the extent to which Army leaders have evaluated (1) the efficiency and effectiveness of contracting operations and (2) the effects of organizational changes on contracting operations.

GAO reviewed reports on Army contracting commissioned by the Secretary of the Army and an ASA(ALT); ASA(ALT) memos; Army guidance reorganizing AMC; and Army-wide contracting oversight briefings from fiscal years 2015 and 2016. GAO also interviewed personnel in the Office of the ASA(ALT), at AMC, and other contracting organizations.

What GAO Recommends

GAO is making eight recommendations to improve the Army's contracting operations such as: developing metrics to assess contracting operations for timeliness, cost savings, and contractor quality; documenting rationales for key decisions; and establishing measurable objectives to assess the effects of organizational changes on contracting operations. The Army generally concurred with GAO's recommendations, but did not agree to establish a contractor quality metric because contracting organizations cannot control all variables that affect quality. GAO continues to believe this action is needed as discussed in the report.

For more information, contact Marie A. Mak at (202) 512-4841 or MakM@gao.gov.

Recommendations for Executive Action

  1. Status: Open

    Comments: The Army partially concurred with our recommendation. It stated it would develop a metric to evaluate the timeliness of contract awards, but as of July 2018, the Army has not yet established a time frame to do so. The Army also stated it would develop a metric to evaluate cost savings attributable to contracting activities, but in July 2018, DASA(P) officials stated that they no longer intend to do so because the current DASA(P) is primarily focused on establishing timeliness and workforce metrics. We continue to believe that the Army should implement a CER metric to evaluate cost savings attributable to contracting activities. The Army did not concur with our recommendation to establish a metric to evaluate the quality of contractors' products and services. The Army stated that the CER is not an appropriate mechanism to communicate this type of information. We continue to believe the Army should use the CER to evaluate the quality of contractors' products and services.

    Recommendation: To help Army leadership obtain the information needed to evaluate and improve contracting operations, the Secretary of the Army should ensure the ASA(ALT) and Deputy Assistant Secretary of the Army (Procurement) (DASA(P)) establish and implement Contracting Enterprise Review (CER) metrics to evaluate the timeliness of contract awards, cost savings attributable to contracting activities, and the quality of contractors' products and services.

    Agency Affected: Department of Defense: Department of the Army

  2. Status: Open

    Comments: The Army concurred with our recommendation, but as of July 2018, the Army has not yet established a time frame to establish department-wide PALT guidelines. DASA(P) is continuing to collect data to help it evaluate the timeliness of contract awards. The Vice Chief of Staff of the Army and the ASA(ALT) issued a joint memorandum in June 2018 mandating Army-wide use of the Virtual Contracting Enterprise. DASA(P) officials states that the use of this system will allow the Army to collect contracting data to evaluate the timeliness of contract awards. However, the DASA(P) officials stated that they currently do not have enough data in the system to determine PALT guidelines.

    Recommendation: To help Army leadership obtain the information needed to evaluate and improve contracting operations, the Secretary of the Army should ensure the ASA(ALT) and DASA(P) formally establish May 2018 as the required deadline for DASA(P) representatives to establish department-wide Procurement Action Lead Time (PALT) guidelines.

    Agency Affected: Department of Defense: Department of the Army

  3. Status: Open

    Comments: The Army concurred with our recommendation. However, DASA(P) officials stated that they are not currently working to establish metrics for cost savings attributable to contracting because the current DASA(P) is primarily focused on establishing timeliness and workforce metrics. We continue to believe that the Army should implement a CER metric to evaluate cost savings attributable to contracting activities.

    Recommendation: To help Army leadership obtain the information needed to evaluate and improve contracting operations, the Secretary of the Army should ensure the ASA(ALT) and DASA(P) establish a standard methodology for Principal Assistant Responsible for Contracting (PARCs) to calculate the cost savings they report in CER briefings; and ensure PARCs from he Guard Bureau, U.S. Army Medical Command, and U.S. Army Corps of Engineers use the methodology to report their respective cost savings.

    Agency Affected: Department of Defense: Department of the Army

  4. Status: Open

    Comments: The Army concurred with our recommendation. DASA(P) officials noted that there are different tools for monitoring contractor performance. However, in July 2018, DASA(P) officials stated that they are not currently working on a way to collect and report contractor performance data because the current DASA(P) is primarily focused on establishing timeliness and workforce metrics..

    Recommendation: To help Army leadership obtain the information needed to evaluate and improve contracting operations, the Secretary of the Army should ensure the ASA(ALT) and DASA(P) identify an effective means to collect and report contractor performance data.

    Agency Affected: Department of Defense: Department of the Army

  5. Status: Open

    Comments: The Army concurred with our recommendation. DASA(P) officials stated that they plan to use recently established CER metrics focused on workforce issues to help determine the department's contracting workforce requirements. However, DASA(P) officials stated that it will take time to evaluate the workforce information and determine the contracting workforce requirements, and they have not yet established a time frame to do so.

    Recommendation: To help Army leadership obtain the information needed to evaluate and improve contracting operations, the Secretary of the Army should ensure the ASA(ALT) accurately determines the department's contracting workforce requirements in accordance with the Army's needs.

    Agency Affected: Department of Defense: Department of the Army

  6. Status: Open

    Comments: The Army concurred with our recommendation. DASA(P) officials stated they are working on a standard operating procedure establishing how ASA(ALT)s shall address their predecessors' contracting policies when they do not implement them.

    Recommendation: To help Army leadership obtain the information needed to evaluate and improve contracting operations, the Secretary of the Army should ensure the future ASA(ALT)s document their reasons for not implementing their predecessors' contracting policies, as applicable.

    Agency Affected: Department of Defense: Department of the Army

  7. Status: Open

    Comments: The Army concurred with our recommendation. DASA(P) officials stated that the ASA(ALT) is briefed on quarterly CERs and provides feedback as needed. DASA(P) officials stated that they would provide documentation of ASA(ALT) feedback, but they have not yet done so.

    Recommendation: To help Army leadership obtain the information needed to evaluate and improve contracting operations, the Secretary of the Army should ensure the ASA(ALT)s consistently chair or otherwise provide feedback on quarterly CERs in order to demonstrate commitment to improving contracting operations.

    Agency Affected: Department of Defense: Department of the Army

  8. Status: Open

    Comments: The Army concurred with our recommendation. DASA(P) officials stated that they plan to use their new CER metrics to help determine measurable objectives for organizational changes. They also said that because they recently implemented these metrics, it will take time for DASA(P) to evaluate the information and determine how they can use the metrics to assess the effectiveness of organizational changes.

    Recommendation: To help Army leadership obtain the information needed to evaluate and improve contracting operations, the Secretary of the Army should ensure that Army leaders establish measurable objectives for organizational changes, such as (a) the February 2016 Army Materiel Command Operation Order, and (b) the December 2016 Head of Contracting Activity delegations.

    Agency Affected: Department of Defense: Department of the Army

 

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