How agencies bury noncompetitive procurements

I get a daily FedBizOpps feed of widget and gadget procurements and awards, and have spent literally hours the past two days poring through year-end sole source contract awards.

These are taxpayer dollars expended in an end-of-fiscal-year “use it or lose it” frenzy, but eyeballing these sole source awards is a manual process that requires opening multiple windows to divine what agencies bought and how much they spent.

In many cases agencies don’t disclose what they spent on the sole source contracts, which raises my reporter antenna.

The justification for these non-competitive awards all contain standard boiler plate language — only Vendor X can supply the gadget, software or service and if the contract is not extended or the gizmo acquired, vital operations will cease, often with a threat to national security.

Keep reading this article at: http://www.nextgov.com/defense/whats-brewin/2013/09/how-agencies-bury-noncompetitive-contracts/70834

 

USPS didn’t justify $210M in noncompetitive purchases, IG says

The Postal Service likely didn’t justify $210 million in noncompetitive  purchases made over two fiscal years, which puts USPS at risk for not obtaining  the best price when awarding contracts, a Sept. 25 USPS inspector general report  says.

Contracting officials at the USPS did not document a finding of price or cost  reasonableness or write up a necessary justification in 21 of 56  statistically-sampled noncompetitive contract awards worth $37 million that the  inspector general audited.  Based  on those findings, auditors project that at least $210 million worth of Postal  Service purchases in fiscals 2011 and 2012 likewise lacked documentation to show  that the noncompetitive award was necessary and not unnecessarily expensive. The  mail deliverer spent $1.3 billion on contracts those two fiscal years.

Agencies must conduct a price or cost analysis to support that noncompetitive  contract prices were fair and reasonable.  And there must be documentation that  that process took place.

Keep reading this article at: http://www.fiercegovernment.com/story/usps-didnt-justify-nearly-40-million-noncompetitive-purchases-ig-says/2013-09-26

 

Procurement sleight-of-hand gave contractors access to Naval bases

The Navy Installations Command reached outside normal competitive channels to procure a flawed and risky commercial access control system that has allowed 65,000 contractors to routinely access its bases. The procurement process involved purchases on government credit cards 51 cents below the $2,500 maximum allowed, the Defense Department Inspector General said in a report released this week.

The Installations Command used a contract for a Navywide perimeter monitoring system run by the Naval Surface Warfare Center in Panama City, Fla., as the umbrella contract for the Navy commercial access control system, or NCACS, in 49 states and the Mariana Islands.  The command also tapped a contract for sensor systems run by the Naval Surface Warfare Center in Port Hueneme, Calif., to buy $9.9 million worth of handheld barcode scanners to check IDs at bases as part of the NCACS project, the IG reported.

The report also made it clear that the Installations Command outsourced base credentialing and background checks to a private contractor in order to save money.

In July 2010, the Installation Command selected the Rapidgate system developed by Eid Passport of Hillsboro, Ore., to vet contractor employees who needed routine base access for up to a year in place of the more secure Defense Department common access card issued to Aaron Alexis, an employee of a Hewlett-Packard Corp. subcontractor who killed 12 people at the Washington Navy Yard Monday.

The Rapidgate system consists of a registration station that takes a photo of the contractor and scans fingerprints, and a Web interface for submission of personnel information.

Keep reading this article at: http://www.nextgov.com/defense/2013/09/procurement-sleight-hand-gave-contractors-access-naval-bases/70496/?oref=nextgov_today_nl

DoD contractors lobby Congress against competition

As the Army prepares to choose the new builder of its handheld digital radios, the incumbent contractors are tryiing to convince Congress to keep other companies out. The incumbents are General Dynamics, which publicly apologized to the Army over its half of the program last year, and Rockwell Collins. The Army’s own chief of acquisitions, Lt. Gen. William Phillips, told the Senate Armed Services Committee just yesterday that “the industry partners that were not a part of the program of record” — i.e.  the troubled JTRS (Joint Tactical Radio System) program, which had contracted Rockwell and GD — provided “radios that were cheaper, better capability and met almost all of our requirements in most cases”. The service, he said, was committed to “full and open competition.”

We saw a similar play already last year, albeit slightly later in the legislative process, when Reps. Dave Loesback and Trent Frank offered an amendment – later withdrawn – that would have required competitors to meet stringent conditions that effectively ruled out radio-builder Harris and other outsiders, thereby protecting General Dynamics. This time it is co-incumbent Rockwell Collins, which splits the current contract with GD, that’s leading the charge.

Keep reading this article at: http://breakingdefense.com/2013/05/09/army-radios-contractors-lobby-congress-against-competition

Focus of IG investigation now oversees GSA’s IT supply schedule program

An ongoing investigation by the Office of Personnel Management’s inspector general into contract steering and wasteful spending raises questions about a former OPM official who left the agency in September 2011 to oversee the General Services Administration’s biggest federal supply schedules program.

The probe found that top OPM officials steered consulting work to prominent human resources expert Stewart Liff, raising broader concerns about the overall procurement practices inside the agency’s human resources services division, according to an interim report by OPM Inspector General Patrick McFarland.

Investigators found that Liff was hired in 2010 and 2011 without competitive bidding through a “pass-through company,” with three task orders paid out on the contract totaling about $450,000.

Keep reading this article at: http://www.federaltimes.com/article/20130416/ACQUISITION01/304160003/Focus-IG-investigation-now-oversees-GSA-8217-s-supply-schedule-program?odyssey=nav%7Chead

DHS reduces noncompetitive contracts, improves oversight

Noncompetitive contracts at the Homeland Security Department totaled about  $389 million in fiscal 2012, down from $3.5 billion in fiscal 2008, the DHS office of inspector general says.

The department’s spending on noncompetitive contracts has dropped each year  since fiscal 2008, and in the meantime, it has improved its internal oversight  of acquisitions, the OIG says in a report dated Feb. 1, 2013 and recently posted online.

For example, out of the 40 noncompetitive awards from 2012 that auditors  examined, all those that required written justification had it complete and on  file. Problems with justification have fallen since 2008, when 27 percent of  justifications in the OIG’s sample were deficient.

Keep reading this article at: http://www.fiercegovernment.com/story/dhs-reduces-noncompetitive-contracts-improves-oversight/2013-02-20 

Download a copy of the DHA IG’s report referred to in this article at: http://www.oig.dhs.gov/assets/Mgmt/2013/OIG_13-36_Feb13.pdf 

Subscribe to FierceGovernment at: http://www.fiercegovernment.com/signup?sourceform=Viral-Tynt-FierceGovernment-FierceGovernment

 

 

 

 

 

 

75 Fifth Street, NW

Suite 300

Atlanta, Georgia 30308   U.S.A.

www.innovate.gatech.edu

 

A Unit of the University System of Georgia     An Equal Education and Employment Opportunity Institution

Two vendors plead guilty to bribing Marine Corps official, overcharging DoD $900K

Two men employed by a machine products vendor in Albany, Ga., have pleaded guilty to bribing a public official working for a military organization at the Marine Corps Logistics Base Albany (MCLB-Albany) to secure contracts for machine products, announced Assistant Attorney General Lanny A. Breuer of the Justice Department’s Criminal Division and U.S. Attorney Michael J. Moore for the Middle District of Georgia.

Thomas J. Cole Jr., 43, and Fredrick W. Simon, 55, both of Albany, each pleaded guilty before U.S. District Judge W. Louis Sands in the Middle District of Georgia to one count of bribery of a public official.

During their guilty pleas, Cole, the general manager of an Albany-based machine products vendor, and Simon, an employee responsible for processing sales orders, admitted to participating in a scheme to secure sales order contracts from the Maintenance Center Albany (MCA) at MCLB-Albany by subverting a competitive bid process.  The MCA is responsible for rebuilding and repairing ground combat and combat support equipment, much of which has been utilized in military missions in Afghanistan and Iraq, as well as other parts of the world.  To accomplish the scheme, Cole and Simon bribed a MCA purchase tech responsible for placing machine product orders.  Cole and Simon admitted to participating in the scheme at the purchase tech’s suggestion, after Simon had spoken with the purchase tech about how his company could obtain business from the MCA.  Cole and Simon admitted that, at the purchase tech’s request, they paid the purchase tech a bribe of at least $75 for each of the more than 1,000 sales orders MCA placed with their company.  According to court documents, the purchase tech would transmit sales bids to Simon and then communicate privately to him exactly how much money the company should bid for each particular order.  Cole and Simon admitted that these orders were extremely profitable, often times exceeding the fair market value of the machine products, sometimes by as much as 1,000 percent.

Cole and Simon further admitted that, at the purchase tech’s urging, in 2011 they began routing some orders through a second company, owned by Cole, because the volume of orders MCA placed with the first company was so high.  They also admitted that the purchase tech increased the bribe required for orders as the scheme progressed.  Cole and Simon admitted to paying the purchase tech approximately $161,000 in bribes during the nearly two-year scheme.  Cole admitted to personally receiving approximately $209,000 in proceeds from the scheme; Simon admitted to personally receiving approximately $74,500.  Both admitted that the total loss to the Department of Defense from overcharges associated with the machine product orders placed during the scheme was approximately $907,000.

At sentencing, Cole and Simon each face a maximum penalty of 15 years in prison and a fine of not more than twice the pecuniary loss to the government.  As part of their plea agreements with the United States, Cole and Simon both agreed to forfeit the proceeds they received from the scheme, as well as to pay full restitution to the Department of Defense.  Sentencing has not yet been scheduled.

The case is being prosecuted by Trial Attorneys Richard B. Evans and J.P. Cooney of the Criminal Division’s Public Integrity Section and Assistant U.S. Attorney K. Alan Dasher of the Middle District of Georgia.  The case is being investigated by the Naval Criminal Investigative Service, with assistance from the Dougherty County District Attorney’s Office Economic Crime Unit and the Defense Criminal Investigative Service.

from January 10, 2013 news release issued by the U.S, Dept. of Justice at http://www.justice.gov/opa/pr/2013/January/13-crm-044.html.

Daniel Gordon: ‘Progress on Wartime Contracting’

This commentary originally appeared as a blog post on The White House’s Office of Management & Budget web site.
 
When the Administration took office, it was clear to us that for too long there was not adequate oversight of contractors, leading to wasted taxpayer dollars, repeated delivery delays, and unacceptable contractor performance. Nowhere has this been more apparent than in wartime contracting during the last decade. That’s why this Administration has focused on cutting waste in contracting, boosting oversight, and strengthening accountability of contractors. And more broadly, earlier this summer the White House launched the Campaign to Cut Waste, a government-wide drive to crack down on fraud, waste, and abuse.

On August 31, the Commission on Wartime Contracting released a report on these challenges. We welcome the report and commend the Commission for shining a spotlight on waste in contracting, on the need to strengthen the contracting function at agencies, on the value of increasing competition in contracting, and on the importance of holding contractors accountable for their performance.

The Administration already has made significant progress addressing each of the issues raised in the Commission’s report, in many cases reversing more than a decade of problems. Whether it is reducing improper payments to contractors and grantees, closing down redundant data centers, or cracking down on nonperforming contractors, we cannot tolerate the wasting of hard-earned taxpayer dollars.

There is a lot in the report, and I want to highlight the main issues raised in it and how the Administration is working on them.

Cutting Waste and Reducing Overreliance on Contractors:

On March 4, 2009, the President issued the Memorandum on Government Contracting, which called attention to the rapid growth in contracting spending, and raised concerns about contracts awarded without adequate competition. The memorandum also addressed issues with contractors performing functions that should be performed by public-sector employees. Agency efforts to reduce waste and demonstrate fiscal discipline are producing results. We cut contracting spending for the first time in 13 years in fiscal year 2010; agencies spent nearly $80 billion less than they would have if contract spending continued to grow at the same rate it had under the prior Administration.

Expanding Competition and Strengthening Contract Management and Oversight:

Over the past two years, significant progress has been made in reducing the use of high-risk contracting methods – including cutting $5 billion in spending on so-called “no bid contracts” last year. Consistent with the Commission’s recommendations, the Administration is strengthening the acquisition workforce by increasing training and certification requirements for those with a key role in oversight of contractors, including those working in Iraq and Afghanistan. The Department of Defense has made improving the defense acquisition system a top priority, and is tracking metrics on cost overruns, schedule delays, competition, the acquisition workforce, and acquisition employee training certifications.

Strengthening the Suspension and Debarment Process for Bad Actors and Improving Contractor Accountability:

Where there are bad actors in the contracting community, agencies have increased their use of suspension and debarment and other tools to deal with irresponsible contractors, consistent with the Commission’s recommendations. For example, in the last 18 months alone, USAID has taken more than 40 suspension or debarment actions – almost double the number of actions taken in the prior seven years combined. OMB has worked closely with the Interagency Suspension and Debarment Committee (ISDC) to review current agency suspension and debarment practices and to identify opportunities where these practices can be strengthened.

The Commission’s report recommends improving the recording and use of contractor performance data, so that contracting officers have ready access to useful information about vendors’ past performance, and can take this information into account in decisions to award contracts. This Administration has made unprecedented progress in improving the collection of contractor performance data and in making this information publicly available, as part of our commitment to transparency.

For the first time, contractor performance data is posted online to help ensure that the government does business with reputable companies. Data is now available on suspensions and debarments, terminations, and criminal activities of contractors. Data on where contractor dollars are being spent is now posted on http://www.usaspending.gov/ – including down to the sub contract or sub award level for the first time this year. Finally, the Office of Federal Procurement Policy issued guidance to agencies to enter meaningful assessments of contractor performance into a central database to ensure that the government awards to vendors that can perform.

Our agreement with the broad contours of the Commission’s report and with many of the specific recommendations does not, of course, mean that we agree with all details of the Commission’s recommendations, but we welcome the focus the report brings to the need to continue improving contracting. We simply cannot afford to continue to tolerate the waste of taxpayer dollars that we saw in the past. We look forward to continuing to work with Congress and all concerned citizens in addressing the Commission’s legislative recommendations, as we continue to make strides toward boosting accountability and cutting waste in contracting.

Daniel Gordon is Administrator of OMB’s Office of Federal Procurement Policy.

Audit credits DHS with dramatic improvement in acquisition process

A recent audit by the DHS Inspector General found that the department had dramatically improved its oversight of contracts and reduced the number of noncompetitive contracts awarded by 60 percent last year; in 2010 DHS awarded $1.3 billion in no compete contracts compared to $3.4 billion in 2009 and $3.5 billion in 2008; the inspector general reviewed forty noncompetitive contracts worth roughly $100 million dollars and found that the rate of deficiencies was only 7 percent; while the report found marked improvements, it also recognized that there were still gaps in DHS’ acquisition process

A recent audit by the DHS Inspector General found that the department had dramatically improved its oversight of contracts and reduced the number of noncompetitive contracts awarded by 60 percent last year.

In 2010 DHS awarded $1.3 billion in no compete contracts compared to $3.4 billion in 2009 and $3.5 billion in 2008.

The report also stated that procurement officials at DHS had improved their oversight of noncompetitive contracts, maintaining sufficient documentation and research to justify noncompetitive contracts.

The inspector general reviewed forty noncompetitive contracts worth roughly $100 million dollars and found that the rate of deficiencies was only 7 percent. In 2008 similar reviews found that 76 percent of files had deficiencies, while in 2009 that number was 79 percent.

While the report found marked improvements, it also recognized that there were still gaps in DHS’ acquisition process.

Anne Richards, assistant inspector general for audits, wrote, “Acquisition personnel did not always document consideration of contractor past performance when performing background research of eligible vendors. As a result, the department cannot be sure that it received the best possible value on the goods and services acquired through these contracts, or that acquisition personnel awarded government contracts to eligible and qualified vendors.”

The report recommended that DHS improve its documentation of contracts. More than 40 percent of the contracts that were examined lacked proper documentation, while eleven of the forty contracts examined lacked research to show that past performance had been taken into account.

“The department needs to continue its emphasis on better planning and documenting its acquisitions and decision-making processes,” Richards wrote.

To that end, Homeland Security Secretary Janet Napolitano has requested $24.2 million in its 2012 budget to hire an additional 150 people for its acquisitions workforce.

Before the House Homeland Security committee last week, Napolitano testified that improving the acquisition process had contributed to her department’s overall identification of more than $800 million in cost savings.

“We are preserving essential front-line operations and bolstering our operational strength by decreasing administration and overhead,” she said.

– Published March 15, 2011 by Homeland Security Newswire at http://homelandsecuritynewswire.com/audit-finds-dhs-dramatically-improved-its-acquisition-process