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Contract Management: DOD Needs Measures for Small Business Subcontracting Program and Better Data on Foreign Subcontracts

GAO-04-381 Published: Apr 05, 2004. Publicly Released: May 06, 2004.
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More small businesses are turning to subcontracting as a way to participate in the federal government's $250 billion procurement program. DOD, accounting for about two-thirds of federal procurements, has a critical role in providing opportunities to small businesses through subcontracting programs such as the Test Program for Negotiation of Comprehensive Small Business Subcontracting Plans (Test Program). In addition, Congress raised concerns about the potential for small businesses to lose opportunities to firms performing work outside of the United States. GAO was asked to review (1) DOD's assessment of the Test Program's effectiveness, (2) the performance of contractors participating in the Test Program, (3) the Defense Contract Management Agency's (DCMA) oversight of contractors' small business subcontracting efforts, and (4) the extent and reasons contractors are subcontracting with businesses performing outside the U.S.

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Recommendations for Executive Action

Agency Affected Recommendation Status
Department of Defense In order to evaluate the effectiveness of the Test Program, the Secretary of Defense should direct the Office of the Under Secretary of Defense, Office of Small and Disadvantage Business Utilization, to develop metrics to assess the overall results of its Test Program.
Closed – Not Implemented
The efforts of the Comprehensive Small Business Subcontracting Test Program working council are ongoing. The council meets at regular intervals to discuss the individual and collective Test Program participants, improvements to the Test Program and impediments that might hinder its overall success. The assessment report was used as a baseline for a follow-on effort to further review the Test Program and its participants. DOD continues to review overall subcontracting performance by participants and all DOD prime contractors with subcontracting plans. DOD's actions do not fully address our recommendation; since DOD plans no further action, we are closing the recommendation as not implemented.
Department of Defense To ensure DOD has the information it needs to accurately determine the number and dollar amount of subcontracts to firms performing outside the U.S., the Secretary of Defense should direct DOD's Office of Program Acquisition and International Contracting to establish procedures to improve the quality of the information in its database of subcontracts performed outside the U.S.
Closed – Implemented
DOD has completed actions on the recommendation to establish procedures to improve the quality of the information in its database of subcontracts performed outside the U.S. DOD has established procedures to improve the quality for the information in its database of subcontracts performed outside the U.S. Specifically, starting in October 2003, the following actions were taken: (1) letters were sent to the top 100 parent companies of DOD contractors reminding them of the reporting obligation, and requesting that these companies ensure that all of their subsidiaries also comply with the reporting requirement; (2) a memorandum was sent to the Senior Acquisition Executives of the Military Department and the Defense Agencies requesting that they remind their contracting officers of this reporting requirement,, and requesting that their contracting officers pass this reminder on to DOD defense contractors; and (3) a memorandum was sent to the Defense Contract Management Agency requesting assistance in periodically verifying that contractors are complying with the reporting requirement.

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Contract oversightContract performanceData collectionData integrityDefense procurementDepartment of Defense contractorsPerformance measuresProcurement recordsProgram evaluationSmall business contractorsSubcontractors