The Navy Needs To Strengthen Facilities Construction and Maintenance Contracting Practices and Management Controls

NSIAD-85-16: Published: Jan 30, 1985. Publicly Released: Jan 30, 1985.

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GAO reported on its review of 61 naval facility maintenance contracts which were awarded by the Naval Facilities Engineering Command (NAVFAC) between fiscal years 1972 and 1982. GAO chose the contracts for this review because it believed that they showed significant opportunities for contract administration improvement.

GAO found a need for improvements when procurements are being planned and contracts are being formed. These included the need for better: (1) financial planning; (2) needs determinations; (3) plans and specifications reviews; and (4) preaward contract reviews. Furthermore, GAO found that the following improvements were needed in contract administration: (1) contract enforcement and project acceptance; (2) pricing adjustments; (3) inspection of contractor performance; (4) documentation; and (5) payment procedures. GAO found several factors that contributed to poor procurement practices, including limited organizational oversight and infrequent and cursory examinations by the contracts procedures review boards. Both GAO and the Navy found that problems tended to be repeated rather than corrected because NAVFAC did not: (1) determine whether prior audit findings were isolated examples or symptomatic of a commandwide condition; or (2) make more than a minimal effort to communicate the problems to other units. GAO also found that yearend spending and an increasing volume of maintenance contracts contributed to poor procurement practices.

Recommendation for Executive Action

  1. Status: Closed - Implemented

    Comments: NAVFAC established a branch within the Contracts Division to perform indepth procurement management reviews of field activities and to develop and implement information transfer and other strategies to minimize procurement problems. The branch is operational and corrective actions recommended are followed up at 30-day intervals until all items are corrected.

    Recommendation: The Secretary of the Navy should direct the Chief of the Naval Materiel Command and the Commander, NAVFAC, to improve their oversight and controls over activities having NAVFAC contracting authority by: (1) increasing the effectiveness of the contract procedures review board teams by having them perform reviews as required, review contract administration activities by testing the effectiveness of contracting activities' key internal controls, and follow up on deficiencies disclosed in these reviews and deficiencies in other internal and external reviews, the follow-up should include recovering funds improperly expended; (2) systematically assessing the results of the contract procedures review boards' work and the findings in other audit reports, to determine whether reported problems are isolated or are indicators of problems that might be occurring NAVFAC-wide; and (3) communicating the results of these assessments throughout NAVFAC to alert field units to conditions that may adversely affect their operations so that corrective or preventive actions can be initiated.

    Agency Affected: Department of Defense: Department of the Navy

 

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