Contract Management:

New Authority for Severable Service Contracts

NSIAD-00-143R: Published: May 2, 2000. Publicly Released: May 2, 2000.

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Pursuant to a legislative requirement, GAO reviewed the Department of Defense's (DOD) authority to award severable service contracts in fiscal years 1998 and 1999 under section 801 of the National Defense Authorization Act for Fiscal Year 1998, focusing on: (1) the extent to which DOD used the authority in the last month of the fiscal year; and (2) whether contracts reportedly valued at about $1 million or more and whose work was performed entirely in the following fiscal year were abuses of section 801.

GAO noted that: (1) DOD reported using its section 801 authority for about 2,000 severable service contracts in fiscal year (FY) 1998 and FY 1999; (2) the total dollar value of these contracts increased from $148 million in FY 1998 to $841 million in FY 1999; (3) these contracts represented less than 1 percent of total DOD service contracts during that 2 year period; (4) about one-third (629) of the 2,0000 contracts were awarded in the last month of the fiscal year (September); (5) DOD awarded 266 of these contracts at year's end in FY 1998, and 363 at year's end in FY 1999; (6) in the seven high-value contracts GAO reviewed, GAO found no abuses of section 801 authority; (7) GAO reviewed contracts reportedly valued at about $1 million or more and whose work started in the following fiscal year to determine whether these contracts were for legitimate needs of the fiscal year in which they were awarded; (8) only one of the seven contracts was properly reported as using section 801 authority; (9) the award of this contract for work performed entirely in the following fiscal year was justified; (10) the other six contract actions should not have been reported by DOD as using section 801 authority; (11) five of the six contracts did not actually rely on section 801 authority and were not actions that needed to be reported to Congress; and (12) the last contract was a section 801 contract but was a FY 2000 action mistakenly reported as a FY 1999 action.

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