Recovery Act: Contracting Approaches and Oversight Used by Selected Federal Agencies and States

GAO-10-809 Published: Jul 15, 2010. Publicly Released: Jul 15, 2010.
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Highlights

The American Recovery and Reinvestment Act of 2009 (Recovery Act), estimated to cost $862 billion over 10 years, is intended to stimulate the economy and create jobs. The Recovery Act provides funds to federal agencies and states, which in turn may award contracts to private companies and other entities to carry out the purposes of the Recovery Act. Contracts using Recovery Act funds are required to be awarded competitively to the maximum extent practicable. GAO was asked to examine the use and oversight of noncompetitive Recovery Act contracts at the federal and state levels. GAO determined (1) the extent that federal contracts were awarded noncompetitively; (2) the reasons five selected federal agencies (the Departments of Defense, Energy, and Health and Human Services; the National Aeronautics and Space Administration; and the Small Business Administration (SBA)) awarded noncompetitive contracts; (3) the oversight these agencies and their inspectors general (IG) provide for Recovery Act contracts; and (4) the level of insight five selected states (California, Colorado, Florida, New York, and Texas) have into the use of noncompetitive Recovery Act contracts.

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Recommendations

Recommendations for Executive Action

Agency Affected Recommendation Status
Small Business Administration As the IGs of the five agencies we reviewed periodically revisit and revise their Recovery Act audit plans, they should assess the need for allocating an appropriate level of audit resources, as determined using their risk-based analyses, to the noncompetitive contracts awarded under SBA's 8(a) program.
Closed – Not Implemented
The SBA Inspector General's audit work under the Recovery Act provided some coverage of 8(a) contracts under their fiscal year 2010 and fiscal year 2011 audit plans, focusing on the highest-dollar awards. The IG has not changed their approach in response to GAO's recommendation, but noted that their existing approach continues to address 8(a) contracts in fiscal year 2012.
National Aeronautics and Space Administration As the IGs of the five agencies we reviewed periodically revisit and revise their Recovery Act audit plans, they should assess the need for allocating an appropriate level of audit resources, as determined using their risk-based analyses, to the noncompetitive contracts awarded under SBA's 8(a) program.
Closed – Implemented
NASA IG considered non-competitive 8(a) contract in creating its fiscal year 2011 Recovery Act audit plan. The IG subsequently issued a report that addressed some of these contracts in September 2011.
Department of Health and Human Services As the IGs of the five agencies we reviewed periodically revisit and revise their Recovery Act audit plans, they should assess the need for allocating an appropriate level of audit resources, as determined using their risk-based analyses, to the noncompetitive contracts awarded under SBA's 8(a) program.
Closed – Not Implemented
According to officials, HHS IG has continued to focus its work on grants, because they represent the majority of HHS Recovery Act funds, this is unlikely to change as they wrap up their audit work in this area.
Department of Defense As the IGs of the five agencies we reviewed periodically revisit and revise their Recovery Act audit plans, they should assess the need for allocating an appropriate level of audit resources, as determined using their risk-based analyses, to the noncompetitive contracts awarded under SBA's 8(a) program.
Closed – Implemented
In planning its Phase 3 Recovery Act audit work, the Department of Defense Inspector General addressed 8(a) projects in formulating its audit plans. Specifically, in audit guides for Phase 3 audit work released beginning in March 2011, the IG noted its agreement with GAO's finding and identified 8(a) contracts as a factor in selecting individual projects for inclusion in their reviews.
Department of Energy As the IGs of the five agencies we reviewed periodically revisit and revise their Recovery Act audit plans, they should assess the need for allocating an appropriate level of audit resources, as determined using their risk-based analyses, to the noncompetitive contracts awarded under SBA's 8(a) program.
Closed – Not Implemented
The DOE Inspector General said that they have not considered 8(a) contracts as a risk factor in their audit plans because new contracts awarded under the Recovery Act represent a very small percentage of Recovery Act funding, and their risk analysis has instead focused on factors such as total funding amount and previous audit coverage.

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