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October 13, 2011 By AMK

Agencies can improve suspension and debarment process, says GAO

Too many federal agencies are insufficiently protecting against contractor fraud or incompetence by using the suspension and debarment process, the Government Accountability Office reported Thursday. Agencies with records of scant use of the practice should beef up dedicated staff and commit to greater use of the interagency committee designed for this purpose, the auditors said.

“Agencies that fail to devote sufficient attention to suspension and debarment issues likely will continue to have limited levels of activity and risk fostering a perception that they are not serious about holding the entities they deal with accountable,” William Woods, GAO’s director of acquisition and sourcing management, told a hearing of the House Oversight and Government Reform Subcommittee on Technology, Information Policy, Intergovernmental Relations and Procurement Reform. But “we need to keep the process informal to avoid red tape, because agencies need to move quickly to protect the government’s interest,” he added.

GAO examined the number of suspensions and debarments imposed under the Federal Acquisition Regulation of 10 major contracting agencies over five fiscal years. Most active were the Defense Logistics Agency, the Navy, the General Services Administration and Homeland Security Department’s Immigration and Customs Enforcement.

Agencies with little or no use of the procedure were the Commerce, Health and Human Services, Justice, State and Treasury departments, as well as DHS’ Federal Emergency Management Agency.

“The mountains of federal forms are frustrating” for many good contractors, said panel chairman Rep. James Lankford, R-Okla., “but certain contractors try to defraud, or are chronically poor performers. We need to find out why some agencies uncover the abuse and others don’t” so the government can enforce a process that “strengthens the integrity of overall contract system.”

The Defense Department has far and away the highest raw number of suspensions and debarments (1,616 over five years), but when viewed as a percentage of contracting dollars, as ranking member Rep. Gerry Connolly, D-Va. noted, the Environmental Protection Agency has a far higher rate.

HHS, Connolly and Republican members pointed out, did not post a single contractor suspension or debarment in the past five years, despite a 2010 budget that included $368 billion in grants and $19 billion in contracts.

GAO’s Woods said he was surprised by the numbers at HHS. His report does not recommend any new legislation on suspensions (which are temporary) and debarments (which are long term), but calls for the agencies deemed inactive to mimic the organizational approaches of the active ones. That means assigning full-time dedicated staff and resources, developing detailed implementation guidance, and promoting a case referral process.

In addition, GAO recommends that the administrator of the Office of Federal Procurement Policy issue governmentwide guidance to ensure that agencies are aware of the elements of an active suspension and debarment program and the importance of cooperating with the Interagency Suspension and Debarment Committee. Witnesses at the hearing suggested that many agencies lack full commitment to that panel, which was created in 1986.

Under the Federal Acquisition Regulation and a parallel set of rules for nonprocurement contracting, agencies are responsible for examining contractors and uncovering fraud or nonperformance and then posting the companies on the website of the Excluded Parties List System maintained by the General Services Administration. Contractors’ rights are supposed to be protected through established procedures for challenging the listing through a timely meeting with top agency officials and a “mini trial” in which they can present evidence defending their record.

Nearly 84 percent of suspensions and debarments are required by statute — such as past violators of the 1970 Clean Air or 1972 Clean Water acts — according to GAO, which focused its study on the 16 percent that are discretionary.

The agencies deemed inactive generally accepted GAO’s conclusions. Nick Nyack, chief procurement official at Homeland Security Department, said, “We get this. We’re going to get it right and will be a best practices agency in short order.” Under questioning, he said it could be done within three months.

Three months was also the estimate for making changes the members elicited from Nancy Gunderson, suspension and debarment official at HHS. She said the department had terminated numerous grants and contracts for reasons such as questionable scientific integrity. But HHS efforts thus far on the issue have focused on promoting an electronic desk reference, staff training and looking at other agencies’ procedures, she said.

Agencies considered models were represented by Richard Pelletier, a suspension and department official at EPA, who said his agency since 1981 has maintained a “robust” approach that involves two offices with full-time staff.

Steven Shaw, deputy general counsel of the Air Force, stressed the importance protecting contractors’ rights by having officials who aren’t in the procurement chain “examine evidence, not just the fact of an indictment.” He favors a carrot-and-stick approach that includes regular meetings with important contractors and not mandatory debarments. The overall dollar figures, rather than the number of suspensions or debarments, he added, might be a better metric on agency activity than raw numbers.

— by Charles S. Clark – Government Executive – October 6, 2011 – http://www.govexec.com/story_page.cfm?articleid=49011&dcn=e_tma

September 2, 2011 By AMK

Pentagon contracting policy faulted in two reports

Defense Department contractors in war zones wasted more than $30 billion during the past decade through poor planning and management, the chairs of the Commission on Wartime Contracting in Iraq and Afghanistan said on Monday in an op-ed previewing a report due out this week.

During those same 10 years, the value of Pentagon contracts awarded without competitive bidding tripled, from $50 billion in 2001 to more than $140 billion in 2010, according to a report the nonprofit Center for Public Integrity released Monday.

In a critique titled “Reducing Waste in War Contracts” published in The Washington Post, former Rep. Christopher Shays, R-Conn., and Mark Thibault, former deputy director of the Defense Contract Audit Agency, wrote that all eight members of the wartime commission “agree that major changes in law and policy are needed to avoid confusion and waste in the next contingency, whether it involves armed struggle overseas or response to disasters at home.”

The panel chairmen said taxpayer dollars have been “wasted through poor planning, vague and shifting requirements, inadequate competition, substandard contract management and oversight, lax accountability, weak interagency coordination, and subpar performance or outright misconduct by some contractors and federal employees.”

As solutions, they recommended:

Designating a dual-hatted official to coordinate contracting at the Office of Management and Budget who would participate in meetings of the National Security Council;
Using risk analysis more in deciding whether a function not inherently governmental should be outsourced;
Reviewing current and pending projects for evidence of unsustainability, with an eye toward canceling those that don’t appear promising;
Creating a permanent inspector general for operations during contingencies.

Meanwhile, the Center for Public Integrity’s research findings, which it will unfold daily this week in a series called “Windfalls of War,” include an analysis of federal data concluding that “the Pentagon’s competed contracts, based on dollar figures, fell to 55 percent in the first two quarters of 2011, a number lower than any point in the last 10 years since the terrorist attacks of 9/11.” The center noted that the issue of noncompetitive contracting practices has been examined many times by the Government Accountability Office, the Defense Department’s inspector general and the Commission on Wartime Contracting.

President Obama weighed in on the problem both as a candidate in 2008 and in a presidential memo in 2009. The center also cited a memo promising efforts at greater use of “multisource, continuously competitively bid” contracts issued in 2010 by Defense Undersecretary Ashton B. Carter, the Pentagon’s senior procurement chief.

But “campaign pledges and memos have made little headway in combating the problem,” wrote analyst Sharon Weinberger, whose team studied a dozen government reports and investigations and interviewed eight former government officials and experts.

Coming installments in the series will examine no-bid contracting at the Energy, Homeland Security and State departments, as well as the Federal Emergency Management Agency, all of which, the center says, have better records on the issue than does the Pentagon.

The final report of the wartime commission, chartered by Congress in 2008, is scheduled for release on Wednesday.

— by Charles S. Clark – Government Executive – August 29, 2011 at http://www.govexec.com/story_page.cfm?articleid=48650&dcn=e_tma

November 22, 2010 By AMK

FEMA didn’t award contracts on merit, report says

The Federal Emergency Management Agency may have violated federal law by trying to distribute contract dollars equally among three firms, rather than selecting the most qualified candidate, according to a new report commissioned by the Department of Homeland Security.

In the report dated October but released earlier this month, independent public accounting firm Foxx & Co. found that FEMA may not be complying with the Brooks Act, which requires that the government select engineering and architectural firms based on competency, qualifications and experience. Additionally, the report said that FEMA neither established performance standards for its contractors nor evaluated their performance.

The agency in 2006 awarded contracts to three companies to provide technical assistance, such as engineering services or environmental expertise, to government or nonprofit groups that had received disaster response funding. Irving, Tex.-based Fluor, Arlington-based Emergency Response Program Management Consultants and Gaithersburg-based Nationwide Infrastructure Support Technical Assistance Consultants were all selected to receive future task orders over a five-year period.

Auditors reviewed nine different task orders awarded to the contractors for services provided in response to hurricanes Gustav and Ike in Texas and Louisiana and flooding in Iowa, all in 2008. The contractors received more than $165 million for their work on the disasters, according to the report.

Though the base contract awards complied with the Brooks Act, the audit found no documentation to indicate FEMA had discussions with the three firms before awarding a given task order.

“Without an evaluation of qualifications, questions arise whether FEMA may be using a less qualified contractor to do the work,” the report said. “In addition, a contractor may have already been in place at a disaster location, been more qualified and familiar with the community and issues, and thus could have been a better resource and responded more quickly.”

Auditors recommended the agency seek the Justice Department’s opinion, but FEMA said it is working with the Homeland Security general counsel’s office, which will go to the Justice Department if necessary.

The report also called for FEMA to establish performance expectations and assess contractor performance. FEMA is now developing an evaluation worksheet, a draft of which was distributed to regional divisions in August for their review.

“Without performance expectations or adequate monitoring or evaluations, there is no assurance that the federal government and the state and local entities are receiving the expected . . . contractor services,” auditors added.

Indeed, the report finds that in three task orders it examined, FEMA employees reported having trouble getting the needed technical assistance from the contractor. The report contends that the lack of established expectations and evaluations means the government cannot determine whether it received a fair return on its investment.

– By Marjorie Censer – The Washington Post – Monday, November 22, 2010; page 10

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