State Dept. IG issues alert over $6 billion in contracting money unaccounted for

The State Department’s inspector general has warned the department that $6 billion in contracting money over the past six years cannot be properly accounted for and cited “significant financial risk and . . . a lack of internal control.”

The warning was the second “management alert” in State Department history, both issued by new Inspector General Steve Linick. Linick took over the job in late September, after it had been vacant for nearly six years.

oth the alert, dated March 20, and the department’s response a week later, were made public Thursday, April 3, 2014.

The department said it concurred in all recommendations and outlined steps it will take to address what it agreed is a “vulnerability.”

Linick initiated the alert format to report on problems that remain unaddressed despite repeatedly being identified in IG audits and investigations. The first alert, released in January in partly classified form, cited “significant and recurring weaknesses in the Department of State Information System Security Program.”

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The federal outsourcing boom and why it’s failing Americans

Two of the biggest news events of the past year have been the leaks about top-secret snooping by the NSA and the disastrous rollout of Obamacare. But in an important way, they are both manifestations of a story that has been unfolding for decades — that of a federal government that has outsourced too much of what it does to private contractors while allowing the quality of its own workforce to atrophy.

Lots of Americans were disturbed to learn from Edward Snowden that the government is keeping track of their every phone call and text message. But they might have also wondered why a 30-year-old government contractor in Honolulu, with security clearance that was approved by another private contractor, had routine access to some of the government’s most sensitive secrets. Even worse, two years after Pfc. Bradley Manning did the same thing, Snowden managed to download millions of pages of documents from a computer system designed and managed by private contractors without setting off a single alarm. The whole affair was an embarrassment to Washington’s government contracting sector.

So, too, the fiasco with, which despite the bleating of Republicans has almost nothing to do with the wisdom of the new health-care law and everything to do with the way the government and its outside contractors set about implementing it. While several of the contractors failed to perform as promised, in hindsight it appears the government also made a crucial mistake in deciding to rely on the IT staff at the Centers for Medicare and Medicaid Services to manage the contractors and oversee the final integration of the new system. Free-market ideologues will reflexively see in this failure further evidence of the inherent inferiority of public-sector workers. In truth, it is evidence of how outdated civil service rules and ill-conceived caps on the size and pay of the federal workforce have eroded the government’s ability to perform even essential government tasks.

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GAO: DoD fails to fully account for contractors performing inherently governmental functions

The Government Accountability Office says a haphazard Defense Department review of nearly $200  billion of annual contracted services makes it impossible to determine whether  corrective actions were taken in cases where contractors were doing work  government employees should be performing.

To correct the problem, the GAO recommended in its report (.pdf) that the defense secretary direct the  leaders of all military components to include all the required elements in their  letters and certify the methodology and results of their contracted services  inventory review. GAO said those letters also should include how the components  resolved instances in which contractors were performing work that should have  been done by DoD employees.

The Defense Department concurred with the findings but disagreed the  defense secretary needed to be involved. The Pentagon also disagreed that  components should still report how they resolved cases in which contractors  performed governmental or unauthorized personal services, saying they would  rather focus on current and future reviews.

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Outsourcing at the local level: Examining the role of the Chief Procurement Officer in the decision-making process

Outsourcing in the public sector means “contracting out” functions that  historically have been provided by public employees. The belief that there are  functions best performed by the private sector is not new, and moving these  functions from the public to the private sector requires a fair and open process  in the public’s best interest.

The Institute for Public Procurement recognizes that the outsourcing of  particular governmental functions can be a fiscally sound tool of responsible  public administration. However, identifying and assessing the elements of public  performance most appropriate for outsourcing — and ensuring a successfully  executed outsourcing decision – is a substantial challenge for everyone.

Public procurement offers a uniquely qualified and professional resource for  government decision-makers considering outsourcing alternatives. The Chief  Procurement Officer (CPO), Procurement Director or Purchasing Manager serves a  strategic role in a public entity’s decision to outsource. The CPO is central to  a fair, transparent and effective outsourcing process. While the decision is  ultimately reserved for an elected body or senior executive, the CPO is prepared  to provide informed insight on market structure, cost, risk, competitive methods  and contract form as these factors impact the quality and cost of services. The  CPO is uniquely positioned to help design and manage a process to achieve a  successful public outsourcing effort. It is therefore important to engage the  CPO early as a strategic partner to assess and to administer any ensuing  selection and contract formation process.

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Acquisition workforce unprepared for challenges of sequestration

Most federal acquisition professionals are not prepared to quickly renegotiate contracts or handle other responsibilities if automatic budget cuts take effect next month, according to a survey released Monday, Dec. 17, 2012.  

Sequestration — the automatic spending cuts required if Congress and the White House fail to agree on a deficit reduction plan by Jan. 2 — would require acquisition employees to quickly renegotiate, cancel or change the scope of contracts. Of the 40 federal officials surveyed, including senior acquisition executives, contracting professionals, congressional staff and representatives from the oversight community, 60 percent said those skills were weak or nonexistent in the acquisition workforce.

Sequestration “will present a host of issues, such as contract terminations. There is the potential for millions in broken contracts, so this is a critical area,” one survey respondent said.

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Agencies should file better reports on their service contracts, GAO says

The Obama administration’s effort to better calibrate which functions are inherently governmental and which are better contracted out will require improvements in agency inventories of service contracts, according to a new Government Accountability Office report.

Forty eight of the 49 agencies that GAO reviewed had filed the required lists of their contracts for such services as professional management support, information technology support and medical support, which together totaled $126 billion in fiscal 2011. But due to differing methodologies among agencies, the Office of Management and Budget and Congress could not “meaningfully use these service contract inventories to compare service contract obligations among agencies or develop spending trends,” the report said, adding, “agencies did not have a complete universe of service contracts to consider for review.”

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Senators to DOD: Use more of your own employees

Defense Secretary Leon Panetta received a letter from 26 senators April 25 who urged him to use more civilian employees instead of contractors.

The senators, led by Sherrod Brown (D-Ohio) and Kirsten Gillibrand (D-N.Y.), wrote that they understand the need to cut back on civilian employees because of tightened budgets. However, they raised concerns that the private sector wasn’t given similar constraints.

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GAO reports Defense Department barely moving toward a comprehensive service contracts database

Earlier in April, the Government Accountability Office (GAO) released the second in a series of new, congressionally mandated reports assessing the Department of Defense’s (DOD) efforts to compile an inventory of service contracts. Congress intends for the Pentagon to include these reviews in its yearly budget work and expects “inherently governmental work” currently performed by private contractors to be brought back “in-house.” This review process will help the Pentagon find ways to reduce costs and limit the over-reliance on contractors.

Seventy cents of every contracting dollar spent by the federal government in 2010 was spent by the Pentagon; $371 billion of the $530 billion in federal contract spending was awarded through DOD contracts. Moreover, DOD contracting is continually plagued by stories of $435 hammers, 19 cent washers that cost almost $1 million to ship, and other impossible-to-justify charges.

As a result, Congress has enacted legislation demanding that the Pentagon take steps to improve its acquisition and service contract management systems. In 2008, Congress inserted language into that year’s National Defense Authorization Act requiring the Pentagon to compile and review an annual inventory of service contracts, including the collection of key data, such as:

  • The “function and missions” performed by the contractor
  • The name of the contracting organization
  • The funding source and operating agency paying the contract
  • The number of full-time contractor employees that the contract is paying for

Additionally, Congress required the Pentagon to integrate the information on contractors into its annual strategic workforce plans and budget justification materials.

Congress directed the GAO to assess the progress DOD and its departments were making in cataloging this data over the following three years. The first report in the series, released in January 2011, paints a picture of disorganization and inefficiency.

The Pentagon has no database that officials can use to create a common inventory. In fact, due to the challenges in addressing “the different requirements of the military departments and components,” the Pentagon estimates that it will not be able to field the common database system until 2016, which may be too optimistic since GAO found that “DOD has not established milestones or time frames for the development and implementation of the data system” within its work plan.

Pentagon departments have to rely on the Federal Procurement Data System – Next Generation (FPDS-NG) to compile their inventory reports, but the FPDS-NG dataset does not contain much of the specific data DOD is looking for, including multiple services provided through a single contracting action, services provided through a contract predominantly for supplies, or contractor employment numbers.

Moreover, GAO found that some Navy commands contacted were not even aware that they were supposed to conduct a review, and Navy headquarters did not follow up to ensure that they had conducted the inventories. In fact, the Pentagon was not able to tell Congress that all DOD departments were either collecting or had plans to start collecting the appropriate contractor data, including employment figures, until November 2011. All other federal agencies began collecting this information earlier.

Although not comprehensive, the 2009 inventory was able to identify more than 2,000 instances of contractors performing inherently governmental functions, as determined by Army and Air Force reviews. When GAO performed a random check to see if these jobs had been converted back to civil service jobs, they found private contractors still in eight out of 12 positions. While GAO found that DOD made some improvements between its 2009 and 2010 service contract inventory reports, providing greater detail and higher levels of accuracy, the Pentagon plan for establishing a department-wide service contract database has yet to incorporate appropriate milestones and timeframes or to hold managers responsible for in-sourcing contracts.

– published Apr. 17, 2012 by OMB Watch at

DOD struggles to limit contractors to appropriate jobs, GAO finds

The challenge of separating inherently governmental work from contractor-appropriate work may still bedevil the Defense department.

Defense officials have allowed contractors to perform work that only a federal employee should do because, in part, military departments have not done well in itemizing their services contracts, according to a new Government Accountability Office report.

Army inventory reviews of fiscal 2009 services contracts found 1,935 instances of contractors conducting inherently government functions, or work only a federal employee is supposed to do. The Air Force found 91 instances, the GAO reported. In its review of 12 cases related to inherently governmental functions, GAO found officials had not rectified the situation in eight cases.

Although the study was from fiscal 2009, GAO said it’s not possible to know yet if the problems are solved. GAO reported that defense officials have made some changes in gathering data in its fiscal 2010 contract inventory reviews that could help. However, officials said they could not get a complete picture for the reviews until at least 2016.

One case detailed in the report involved a $6.1 million IT support contract at Army Training and Doctrine Command’s Defense Language Institute. A contractor held a “project manager” function, which officials said was an inherently governmental function. The contractor continued to perform the work at least through the period of the study.

In two cases, contracting and program officials didn’t know that the inventory review process deemed as inherently governmental a contractor’s work on an engineering support contract at an acquisition support center. The contractor provided technical expertise and coordination with the program office, other military departments, Congress and private companies. The other case involved a $409,000 Air National Guard contract for financial analytical support.

Both contracts had expired, but the work continued under subsequent contracts, GAO reported.

Officials also said a $120,000 task order for advice and advocacy on Air National Guard positions and programs to staff and commands included inherently governmental work.

In four instances, contractors served as systems coordinators at the Army.

Military officials have several ways to address the problem. They include:
•Modifying the statement of work.
•Assigning the work to a government employee.
•Stopping the work altogether.

Getting better at itemizing annual services contracts would also help, according to the report. The inventories are intended to make it plain which jobs should be off limits to contractors. Officials could stay abreast of what’s happening by keeping detailed records about each services contract.

Nevertheless, GAO said military departments’ fiscal year 2009 inventories of contracted services were incomplete. Besides the Army and Air Force, Navy headquarters officials had no assurance that their commands conducted the reviews, and GAO found no evidence at the commands it contacted that officials had conducted the required reviews.

GAO recommended that officials describe in policy who’s in charge in doing the reviews and the authority they have to get them done correctly. DOD agreed with the recommendation.

About the Author: Matthew Weigelt is a senior writer covering acquisition and procurement for Federal Computer Week. This article appeared Apr. 9, 2012 at

DHS requires ‘Hi, I’m a contractor’ introduction

Homeland Security Department officials want to draw a bright and shiny line between the two teams that work inside a federal department: the federal employees and the contractors.

Under DHS’ FirstSource II draft request for proposals, officials are telling contractor employees to announce in all interactions that they are not federal employees but are, instead, contractors.

For example, contractor employees must introduce themselves, in person and in voicemails, as employees of their companies. They cannot try to elide the difference by saying they work for DHS. And if they’re employed by a subcontractor, they have to identify the company, not say they are employees of their prime contractor.

And federal Homeland Security Department officials—not to be confused with contractors—are suggestion that these announcements aren’t something for people to laugh about over lunch.

“Failure to adhere to this requirement may constitute grounds for termination for default of the base FirstSource II contract,” the draft states. Serious stuff.

The Defense Department has a similar rule. Contractors must announce, wherever they go, that they are contractor, not a federal employee. Officials instituted the rule in 2010.

The “Hi, I’m a contractor” rule may show who’s who in a conversation or meeting. But it won’t help in blending the workforce, some readers have said.

Contractors fear that the rule could undermine the teamwork that’s essential in that type of workforce.

“How do you maintain unity of community when segregation is forced?” a reader asked.

– by Matthew Weigelt – Washington Technology – Oct. 31, 2011 at