PubKLaw™

Current News and Other Items of Interest

Learned and other Papers of Interest

Including

The Clause of the Board of Contract Appeals Bar Association

Fraud Facts-Air Force Deputy General Counsel for Contractor Responsibility

News and Other Items of Interest

Defense Acquisitions: A Knowledge-Based Funding Approach Could Improve Major Weapon System Program Outcomes. GAO-08-619, July 2, 2008.
What GAO Found: DOD often does not commit full funding to develop its major weapon systems when they are initiated, despite the department’s policy to do so. For a majority of the weapon system programs GAO reviewed, costs have exceeded the funding levels initially planned for and reflected in the Future Years Defense Program (FYDP)DOD’s investment strategy. To compensate for these shortfalls, DOD makes unplanned and inefficient funding adjustments, like moving money from one program to another, deferring costs into the future, or reducing procurement quantities. Highlights

June 30, 2008, Executive Order 13467: Reforming Processes Related to Suitability for Government Employment, Fitness for Contractor Employees, and Eligibility for Access to Classified National Security Information , June 30, 2008.

ILLINOIS VETERANS AFFAIRS OFFICIAL PLEADS GUILTY TO CONSPIRACY AND ACCEPTING ILLEGAL GRATUITIES WASHINGTON, June 30, 2008.
The director of the Hines, Ill., Department of Veterans Affairs (VA) Consolidated Mail Outpatient Pharmacy (CMOP) has agreed to plead guilty to participating in a conspiracy that allowed a subordinate to make contracting decisions regarding a company owned by the subordinates spouse, the Department of Justice announced today. The director also has agreed to plead guilty to accepting illegal gratuities.

June 06, 2008. MEMORANDUM FOR CHIEF ACQUISITION OFFICERS SENIOR PROCUREMENT EXECUTIVES FROM: Paul A. Denett Administrator SUBJECT: Improving the Management and Use of Interagency Acquisitions
Interagency acquisitions offer important benefits to federal agencies, including economies and efficiencies and the ability to leverage resources. The attached guidance is intended to help agencies achieve the greatest value possible from interagency acquisitions.

Multiple Award Schedule Advisory Panel; Notification of Public Advisory Panel Meetings, Notice, 73 Fed. Reg. 31688, June 02, 2008.
SUMMARY: The U.S. General Services Administration (GSA) Multiple Award Schedule Advisory Panel (MAS Panel), a Federal Advisory Committee, will hold public meetings on the following dates: Monday, June 16, 2008; Tuesday, June 17 2008; Monday, July 21, 2008; and Monday, August 18, 2008. GSA utilizes the Schedules program to establish long-term Governmentwide contracts with responsible firms to provide Federal, State, and local government customers with access to a wide variety of supplies (products) and services.

DOT IG Audit Report:Title: Interim Report: Award-Fee Criteria for the National Airway Systems Contract, May 28, 2008.
Summary: On May 28, 2008, we issued an interim report regarding FAAs National Airway Systems Contract as part of our ongoing audit of the Use of CostPlusAwardFee (CPAF) contracts within the Department. We found that contracting officials did not justify the costeffectiveness of selecting a CPAFtype contract by evaluating administrative costs versus expected benefits to the government. Without this evaluation, the Aeronautical Center had no assurance that a CPAFtype contract was appropriate. Additionally, the performance evaluation plan did not include measurable criteria needed to adequately evaluate contractor performance.
Further, a portion of the awardfee criteria required the contractor to merely comply with basic contractual requirements. The performance evaluation plan allowed awardfee payments up to 72.5 percent of the awardfee pool for average or below results. The problems cited in this report existed, in part, because Aeronautical Center personnel did not have detailed guidance on how to structure awardfee plans to incentivize contractors. FAA officials agreed to select another contract type more suitable for obtaining engineering and technical support, and revise Aeronautical Center guidance.

Air Force Air Combat Command Contracts, DOD IG Report No. D-2008-094, May 20, 2008
Results. Air Combat Command and 99th Contracting Squadron officials violated the Federal Acquisition Regulation for seven of eight contracts reviewed. In two contracts, contracting officers awarded contracts on a sole-source basis without seeking competition. In six contracts,1 a price reasonableness determination was not documented at the time of award. In an additional contract, the contracting officer awarded a contract on a best value basis without adequate documentation to support the best value decision. Also, on one of the contracts, the contracting officer did not include a standard Federal Acquisition Regulation clause limiting subcontracting when awarding a contract to an Alaska Native Corporation, thus allowing the contractor to subcontract 100 percent of the work. See the table on page 5 for a summary of the conditions found. As a result, Air Combat Command and 99th Contracting Squadron officials allowed contracts to be directed to specific contractors without obtaining the benefits of competition.

MEMORANDUM FOR CHIEF ACQUISITION OFFICERS, May 21, 2008. FROM: Paul A. Denett Administrator SUBJECT: Conducting Acquisition Assessments under OMB Circular A-123
The purpose of this memorandum is to provide guidelines for conducting entity level internal control reviews of the acquisition function as required by Office of Management and Budget (OMB) Circular A-123. OMB Circular A-123, Managements Responsibility for Internal Control, requires agency managers to continuously monitor and improve the effectiveness of internal control associated with their programs. The guidelines include a template to provide a standard approach for conducting the entity level acquisition reviews required under the Circular. See section I of the Circular and sections III.B and C of Appendix A. The guidelines also require agencies to integrate their assessment efforts with existing agency internal control processes and practices to ensure the coordinated establishment, assessment and correction of internal controls for acquisition.

Defense Contracting: Post-Government Employment of Former DOD Officials Needs Greater Transparency. GAO-08-485, May 21, 2008.
Why GAO Did This Study Department of Defense (DOD) officials who serve in senior and acquisition positions and then leave for jobs with defense contractors are subject to the restrictions of post-government employment laws, in order to protect against conflicts of interest. Congress required GAO to report on employment of such officials by contractors who received more than $500 million in DODs 2005 contract awards. In response, this report (1) provides information on how many former DOD employees worked for contractors in 2006 and estimates how many worked on contracts that were related to their former agencies or to their direct responsibilities and (2) identifies the practices used to monitor restrictions and information challenges in monitoring post-DOD employment. To do this work, GAO matched data from DOD for all employees who left DOD over a 6 year period with data from the Internal Revenue Service (IRS) and from 52 contractors; conducted surveys; and interviewed DOD and contractor officials. Highlights

DEPARTMENT OF HOMELAND SECURITY Better Planning and Assessment Needed to Improve Outcomes for Complex Service Acquisitions, GAO-08-263, April 22, 2008.
Abstract: The Department of Homeland Security (DHS) has relied on service acquisitions to meet its expansive mission. In fiscal year 2006, DHS spent $12.7 billion to procure services. To improve service acquisition outcomes, federal procurement law establishes a preference for a performance-based approach, which focuses on developing measurable outcomes rather than prescribing how contractors should perform services. GAO was asked to (1) evaluate the implementation of a performance-based approach in the context of service acquisitions for major, complex investments, and (2) identify management challenges that may affect DHS's successful acquisitions for major investments, including those using a performance-based approach. GAO reviewed judgmentally selected contracts for eight major investments at three DHS components totaling $1.53 billion in fiscal years 2005 and 2006; prior GAO and DHS Inspector General reviews; management documents and plans; and related data, including 138 additional contracts for basic services.
All service contracts for the eight major, complex investments GAO reviewed had outcome-oriented requirements; however, four of these contracts did not have well-defined requirements, a complete set of measurable performance standards, or both. These service contracts experienced cost overruns, schedule delays, or did not otherwise meet performance expectations. In contrast, service contracts for the other four investments GAO reviewed had well-defined requirements linked to measurable performance standards. Contractors had begun work on three of these four contracts and performed within budget meeting the standards. This finding is consistent with prior GAO work on service acquisitions, which has highlighted the criticality of sound acquisition planning to develop well-defined requirements and measurable performance standards to achieving desired outcomes. In the four cases that had negative outcomes, program officials identified the contractor performance weaknesses through quality assurance surveillance and took corrective actions. Prior GAO work has found that if acquisitions, including those that are performance-based, are not appropriately planned, structured, and monitored, there is an increased risk that the government may receive products or services that are over budget, delivered late, and of unacceptable quality. In managing its service acquisitions, including those that are performance based, DHS has faced workforce and oversight challenges. Prior GAO work has highlighted the importance of having the right people with the right skills to achieve successful acquisition outcomes. Contracts for two major investments with negative cost and schedule outcomes did not have the staff needed to adequately plan and execute the contracts. Further, while representatives for several of the contracts GAO reviewed indicated that contracting and program staff worked well together, some senior acquisition representatives at the component level indicated that a lack of collaboration between these key stakeholders has been a challenge when developing and managing complex service acquisitions. In terms of oversight, component contracting and program officials said they used a performance-based approach to the maximum extent practicable; however, DHS does not have reliable data to facilitate required reporting, informed decisions, and analyzing acquisition outcomes. GAO's review also found that about half of an additional 138 contracts for basic services identified as performance-based did not have any of the elements intended to foster good outcomes: a performance work statement, measurable performance standards, and a quality assurance surveillance plan. DHS's Chief Procurement Officer (CPO)--who is responsible for departmentwide oversight of acquisitions--has several efforts under way to address some of these workforce and oversight issues. One initiative is an acquisition oversight program that is intended to assess (1) compliance with federal acquisition guidance, (2) contract administration, and (3) business judgment. However, this oversight program has not yet included an evaluation of the outcomes of contracting methods such as performance-based service acquisition. Highlights and Testimony, May 05, 2008.

MEMORANDUM FOR CHIEF ACQUISITION OFFICERS, SENIOR PROCUREMENT EXECUTIVES, AND SMALL AGENCY COUNCIL MEMBERS
FROM: Paul A. Denett Administrator, May 09,2008.
SUBJECT: Improving Acquisition Data Quality  FY 2008 FPDS Data The passage of the Federal Funding Accountability and Transparency Act of 2006 and subsequent activation of the USAspending.gov website have increased public access and interest in Federal acquisition and other Federal spending data. It is therefore more important than ever that we continue to pay careful attention to the accuracy of these data. I am counting on you to assure that your data are accurate.

Interagency Contracting: Need for Improved Information and Policy Implementation at the Department of State. GAO-08-578, May 8, 2008.
What GAO Found: State officials have limited insight into the extent to which the department has used both methods of interagency contractingdirect by placing their own orders on another agencys contract and assisted by obtaining contract support services from another agency. State officials cannot rely on the federal governments primary data system for tracking procurements to readily identify instances when State has used interagency contracts. Further, States central procurement and accounting systems do not reliably and comprehensively identify when interagency contracts have been used. While State officials told GAO the most reliable way to identify interagency contract actions would be to request data on these actions from bureaus and overseas posts, several bureaus and posts had difficulty responding to such a request. State reported to GAO over $800 million in interagency contract actions in fiscal year 2006, but these data were incomplete. For example, State did not report $144 million in assisted contracting performed on its behalf by the Department of Defense. GAO has previously reported that the lack of reliable information on interagency contracts inhibits agencies from making sound contracting decisions and engaging in good management practices. Highlights

March 26, 2008 Memorandum from the Air Force Secretary concerning small business as well as the April 30, 2008 response letter from 13 trade groups.

SIGIR-April 30, 2008 Quarterly Report to Congress
Intro: Since April 2003, the United States Congress has appropriated more than $46 billion for the relief and reconstruction of Iraq. This Quarterly Report provides a comprehensive update on how that money has been spent, with information on the top five projects in each construction sector, the top contractors by income, an overview of reconstruction management, and SIGIR's new audits and inspections. In addition, with Iraq's oil revenue income on course to hit $70 billion for 2008 twice what was expected Iraq is in a position to take on more responsibility for its own reconstruction.

The Deputy Inspector General for Auditing, Department of Defense D-2008-079 Management of Incremental Funds on the Air Force Research, Development, Test and Evaluation Contracts, April 8, 2008 (1.6MB) (Project No. D2005-D000FD-0208.000)

Defense Acquisitions: 2009 Review of Future Combat System Is Critical to Program's Direction, by Paul L. Frances, director, acquisition and sourcing management, before the Subcommittee on Air and Land Forces, House Committee on Armed Services. GAO-08-638T, April 10, 2008.
What GAO Found: Today, the FCS program is about halfway through its development phase, yet it is, in many respects, a program closer to the beginning of development. This portends additional cost increases and delays as FCS begins what is traditionally the most expensive and problematic phase of development. In the key areas of defining and developing FCS capabilities, requirements definition is still fluid, critical technologies are immature, software development is in its early stages, the information network is still years from being demonstrated, and complementary programs are at risk for not meeting the FCS schedule. It is not yet clear if or when the information network that is at the heart of the FCS concept can be developed, built, and demonstrated. Yet, the time frame for completing FCS development is ambitious; even if all goes as planned, the program will not test production-representative prototypes or fully demonstrate the system of systems until after low rate production begins Highlights

Governmentwide Purchase Cards: Actions Needed to Strengthen Internal Controls to Reduce Fraudulent, Improper, and Abusive Purchases GAO-08-333, March 14, 2008.
Summary Over the past several years, GAO has issued numerous reports and testimonies on internal control breakdowns in certain individual agencies' purchase card programs. In light of these findings, GAO was asked to analyze purchase card transactions governmentwide to (1) determine whether internal control weaknesses existed in the government purchase card program and (2) if so, identify examples of fraudulent, improper, and abusive activity. GAO used statistical sampling to systematically test internal controls and data mining procedures to identify fraudulent, improper, and abusive activity. GAO's work was not designed to determine the overall extent of fraudulent, improper, or abusive transactions.
     Internal control weaknesses in agency purchase card programs exposed the federal government to fraud, waste, abuse, and loss of assets. When testing internal controls, GAO asked agencies to provide documentation on selected transactions to prove that the purchase of goods or services had been properly authorized and that when the good or service was delivered, an individual other than the cardholder received and signed for it. Using a statistical sample of purchase card transactions from July 1, 2005, through June 30, 2006, GAO estimated that nearly 41 percent of the transactions failed to meet either of these basic internal control standards. Using a second sample of transactions over $2,500, GAO found a similar failure rate--agencies could not demonstrate that 48 percent of these large purchases met the standard of proper authorization, independent receipt and acceptance, or both. Breakdowns in internal controls, including authorization and independent receipt and acceptance, resulted in numerous examples of fraudulent, improper, and abusive purchase card use. These examples included instances where cardholders used purchase cards to subscribe to Internet dating services, buy video iPods for personal use, and pay for lavish dinners that included top-shelf liquor. GAO identified some of the case studies, including one case where a cardholder used the purchase card program to embezzle over $642,000 over a period of 6 years from the Department of Agriculture's Forest Service firefighting fund. This cardholder was sentenced to 21 months in prison and ordered to pay full restitution. In addition, agencies were unable to locate 458 items of 1,058 total accountable and pilferable items totaling over $2.7 million that GAO selected for testing. These missing items, which GAO considered to be lost or stolen, totaled over $1.8 million and included computer servers, laptop computers, iPods, and digital cameras. For example, the Department of the Army could not adequately account for 256 items making up 16 server configurations, each of which cost nearly $100,000.
[See April 09,2008 Washington Post front page article-jaw] Highlights

Defense Acquisitions: DOD's Increased Reliance on Service Contractors Exacerbates Long-standing Challenges, by David M. Walker, then comptroller general of the United States, before the Subcommittee on Defense, House Committee on Appropriations. GAO-08-621T, January 23, 2008.
What GAO Found(in part): DOD has increasingly turned to contractors to fill roles previously held by government employees and to perform many functions that closely support inherently governmental functions, such as contracting support, intelligence analysis, program management, and engineering and technical support for program offices. This trend has raised concerns about what the proper balance is between public and private employees in performing agency missions and the potential risk of contractors influencing the governments control over and accountability for decisions that may be based, in part, on contractor work. Further, when the decision is made to use contractors in roles closely supporting inherently governmental functions, additional risks are present. Contractors are not subject to the same ethics rules as government even when doing the same job, and the government risks entering into an improper personal services contract if an employer/employee relationship exists between the government and the contractor employee. Highlights

Federal Contracting: Congressional Action Needed to Address Long-standing Problems with Reporting of Advisory and Assistance Services. GAO-08-319, March 31, 2008.
What GAO Found: Agencies reported A&AS obligations are inaccurate to the point of being meaningless and are not used for management purposes. GAO found a range of factors that contribute to significant inaccuracies in these data.
Almost 20 percent of the 334 contract actions GAO reviewed were erroneously identified as A&AS, including services such as fitness center maintenance and telecommunications cabling installation. Agency officials frequently cited the broad nature of the A&AS definition as a problem. Agencies GAO reviewed generally encountered challenges in tying reported A&AS obligations to their corresponding contracts because of the lack of integration of procurement and budget data systems. Agency and OMB officials unanimously told GAO they do not use reported A&AS obligations for management or other purposes. Acquisition officials said they oversee their A&AS contracts, as they do their other professional services contracts, with established contract management procedures. Reflecting the lack of a clear distinction between A&AS and general professional services contracts, DOD retracted its A&AS directive and replaced it with general service contracting guidance in 2004. Even as far back as 1996, a code to specifically designate A&AS contracts was removed from the Federal Procurement Data System, the governments procurement information system. Highlights

MEMORANDUM FOR CHIEF ACQUISITION OFFICERS AGENCY SENIOR PROCUREMENT EXECUTIVES FROM: Paul A. DenettFROM: Denett Administrator SUBJECT: Use of Advisory and Assistance Service Contract Waiver Authority, March 26, 2008.

Defense Acquisitions: Assessments of Selected Weapon Programs GAO-08-467SP, March 31, 2008 ,
What GAO Found: Of the 72 programs GAO assessed this year, none of them had proceeded through system development meeting the best practices standards for mature technologies, stable design, or mature production processes by critical junctures of the program, each of which are essential for achieving planned cost, schedule, and performance outcomes. The absence of wide-spread adoption of knowledge-based acquisition processes by DOD continues to be a major contributor to this lack of maturity. Aside from these knowledge-based issues, GAO this year gathered data on four additional factors that have the potential to influence DODs ability to manage programs and improve outcomesperformance requirements changes, program manager tenure, reliance on nongovernmental personnel to help perform program office roles, and software management. GAO found that 63 percent of the programs had changed requirements once system development began, and also experienced significant program cost increases. Average tenure to date for program managers has been less than half of that called for by DOD policy. About 48 percent of DOD program office staff for programs GAO collected data from is composed of personnel outside of the government. Finally, roughly half the programs that provided GAO data experienced more than a 25 percent increase in the expected lines of software code since starting their respective system development programs. Highlights

Defense Contracting: Army Case Study Delineates Concerns with Use of Contractors as Contract Specialists. GAO-08-360, March 26, 2008.
What GAO Recommends: GAO recommends that the Secretary of Defense issue guidance regarding personal services contracts and that the Secretary of the Army direct ACA to work with CCE to develop a plan that addresses the appropriate mix of government and contractors, implement a training program, and ensure that contractors identify themselves as such. GAO also recommends that GSA implement controls to prevent contractors from improperly advertising their services. Highlights

OFPP-Determination of Executive Compensation Benchmark Amount, Notice, 73 Fed. Reg. 15779, March 25, 2008.
SUMMARY: The Office of Management and Budget (OMB) is publishing the attached memorandum to the heads of executive departments and agencies concerning the determination of the maximum benchmark compensation amount that will be allowable under government contracts during contractors fiscal year 2008—$612,196. This determination is required under Section 39 of the Office of Federal Procurement Policy (OFPP) Act (41 U.S.C. 435), as amended. The benchmark compensation amount applies equally to both defense and civilian procurement agencies.

Defense Acquisitions: Termination Costs Are Generally Not a Compelling Reason to Continue Programs or Contracts That Otherwise Warrant Ending. GAO-08-379, March 14, 2008.
What GAO Recommends GAO recommends that DOD review, and as needed amend, guidance on terminations across the military services and DOD agencies to ensure that termination guidance identifies the conditions under which it is appropriate to end programs or contracts, and provides knowledge needed to use terminations as an investment portfolio tool. DOD agreed Highlights

MEMORANDUM FOR SECRETARIES OF THE MILITARY DEPARTMENTS, CHAIRMAN OF THE JOINT CHIEFS OF STAFF, UNDER SECRETARIES OF DEFENSE, COMMANDERS OF THE COMBATANT COMMANDS, From Robert M. Gates, Secretary of Defense, March 10, 2008.
SUBJECT: UCMJ Jurisdiction Over DoD Civilian Employees, DoD Contractor Personnel, and Other Persons Serving With or Accompanying the Armed Forces Overseas During Declared War and in Contingency Operations

Defense Contracting: Additional Personal Conflict of Interest Safeguards Needed for Certain DOD Contractor Employees. GAO-08-169, March 07, 2008.
Why GAO Did This Study: Many defense contractor employees work side-by-side with federal employees in Department of Defense (DOD) facilities performing substantially the same tasks affecting billions in DOD spending. Given concerns with protecting the integrity of DOD operations, GAO was asked to assess (1) how many contractor employees work in DOD offices and what type of mission-critical contracted services they perform, (2) what safeguards there are to prevent personal conflicts of interest for contractor employees when performing DOD’s tasks, and (3) whether government and defense contractor officials believe additional safeguards are necessary. Highlights

Defense Acquisitions: 2009 Is a Critical Juncture for the Army's Future Combat System. GAO-08-408, March 07, 2008.
Why GAO Did This Study: The Future Combat System (FCS) programwhich comprises 14 integrated weapon systems and an advanced information networkis the centerpiece of the Army’s effort to transition to a lighter, more agile, and more capable combat force. The substantial technical challenges, the Army’s acquisition strategy, and the cost of the program are among the reasons why the program is recognized as needing special oversight and review. Section 211 of the National Defense Authorization Act for Fiscal Year 2006 requires GAO to report annually on the FCS program. This report includes an examination of (1) how the definition, development, and demonstration of FCS capabilities are proceeding, particularly in light of the go/no-go decision scheduled for 2009; (2) the Army’s plans for making production commitments for FCS and any risks related to the completion of development; and (3) the estimated costs for developing and producing FCS. Highlights

Defense Acquisitions: Significant Challenges Ahead in Developing and Demonstrating Future Combat System's Network and Software. GAO-08-409, March 07, 2008.
Why GAO Did This Study: The Army’s Future Combat System (FCS) requires a software-based advanced information network to meld people, sensors, and weapons into a cohesive fighting force. As software controls 95 percent of FCS’s functionality, it determines the success or failure of the program. The Army contracted with the Boeing Company as a lead systems integrator (LSI) to define, develop and integrate FCS, including software development. Highlights

March 6, 2008 M-08-12 MEMORANDUM FOR FEDERAL AGENCIES FROM: Robert Shea Associate Director
SUBJECT: Guidance on Future Data Submissions under the Federal Funding Accountability and Transparency Act (Transparency Act)
Attached are the new Operational Guidelines that federal agencies shall use to report to USAspending.gov in compliance with the Federal Funding Accountability and Transparency Act. Agencies must employ these guidelines to submit data in an accurate format and on a timely basis to assure compliance with the Act. These guidelines supersede all previous guidelines. We anticipate within the next quarter, my office will provide guidance on measures of successful compliance with these guidelines and other data not currently being collected.

Richlin Security Service Co. v. Chertoff (06-1717) Oral argument: March 19, 2008, Oral argument previews: Prepared by the Legal Information Institute LLI Bulletin Editorial Board, Appealed from: United States Court of Appeals, Federal Circuit (April 3, 2007)
EQUAL ACCESS TO JUSTICE ACT, PARALEGAL FEES, ATTORNEYS FEES
Richlin Security Service Company entered into two contracts with the Immigration and Naturalization Service, now part of the Department of Homeland Security, to provide security guard services for detainees being held at the Los Angeles International Airport. Due to a mutual mistake, Richlins employees were misclassified as Guard I instead of Guard II in the contracts, which resulted in their underpayment. Richlin litigated this case four times before the Department of Transportation Contract Appeals Board, which awarded Richlin payment for workers compensation premiums, payroll taxes, and wages. Richlin then applied pursuant to the Equal Access to Justice Act for reimbursement of attorney fees, expenses and costs associated with the underlying litigation. Although Richlin was fully compensated for attorneys fees, the Board only awarded Richlin reimbursement of paralegal services at cost rather than the amount billed, resulting in a $40,000 deficiency in recovery. Richlin appealed the decision to the United States Court of Appeals for the Federal Circuit, which affirmed the Boards decision. Richlin argues that paralegal services should be reimbursed under attorneys fees because paralegals perform substantive work which contributes to attorney work product. The United States contends that Congress intended for paralegal services to be considered expenses under the EAJA, which are reimbursed at cost. The outcome of this case will impact citizens and organizations that rely on the EAJA to bring claims against the government for vindication of rights.

Federal Acquisition: Oversight Plan Needed to Help Implement Acquisition Advisory Panel's Recommendations, by John P. Hutton, director, acquisition and sourcing management, before the Subcommittee on Government Management, Organization, and Procurement, House Committee on Oversight and Government Reform. GAO-08-515T, February 27, 2008. Why GAO Did This Study: A growing portion of federal spending is related to buying services such as administrative, management, and information technology support. Services accounted for about 60 percent of total fiscal year 2006 procurement dollars. The Services Acquisition Reform Act (SARA) of 2003 established an Acquisition Advisory Panel to make recommendations for improving acquisition practices. In January 2007, the panel proposed 89 recommendations to improve federal acquisition practices.
      GAO was asked to testify on how the panel recommendations compare to GAOs past work and identify how the Office of Federal Procurement Policy (OFPP) expects the recommendations to be addressed. This statement is based on GAOs analysis of the advisory panels report. GAOs analysis is included in its December 2007 report titled, Federal Acquisition: Oversight Plan Needed to Help Implement Acquisition Advisory Panel Recommendation, Highlights

February 20, 2008 M-08-11 MEMORANDUM FOR HEADS OF EXECUTIVE DEPARTMENTS AND AGENCIES FROM: Paul A. Denett Administrator
SUBJECT: Competitive Sourcing Requirements in Division D of Public Law 110-161 This memorandum provides guidance on certain government-wide provisions related to competitive sourcing in sections 739 and 747 of Division D of the Consolidated Appropriations Act, Fiscal Year (FY) 2008, P.L. 110-161. Specifically, this guidance addresses: (1) health and retirement fringe benefit comparability requirements, (2) the use of competitive sourcing for human resources (HR) activities; (3) application of the conversion differential, and (4) the performance of commercial activities by non-profit agencies under the AbilityOne Program.

Allison Engine Co. v. United States (07-214), Oral argument previews: Prepared by the Legal Information Institute LLI Bulletin Editorial Board: February 26, 2008,
In 1985, the U.S. Navy contracted with two shipyards for the production of a new fleet of destroyers. Each destroyer required an electrical generator set to provide electricity. Several companies became involved in the project to build the generator sets. None of these companies billed the federal government but rather billed the company directly above them in the chain of production. This case began when two whistleblowers sued their former employer and other government subcontractors under the False Claims Act. The U.S. District Court for the Southern District of Ohio dismissed their claim after holding that no FCA violation could occur without one of the defendants having sent a direct bill to the government. On appeal, the U.S. Court of Appeals for the Sixth Circuit held that the case should continue because the False Claims Act does not categorically require proof that the federal government was billed directly. The Supreme Court's ultimate decision could have far-reaching financial implications for taxpayers, government contractors, and any party who seeks to file suit under the False Claims Act.

Defense Acquisitions: DOD's Practices and Processes for Multiyear Procurement Should Be Improved. GAO-08-298, February 7, 2008.
What GAO Found DOD’s process for justifying multiyear programs leaves questions about the appropriateness of some approved MYPs and the cost effectiveness of investments made for the risks assumed, as indicated by recent submissions for the F-22A and V-22. Although the law has clear requirements for stable, low risk programs with realistic cost and savings estimates, lack of guidance and a rigorous process is not achieving this. Highlights

Best Practices: Increased Focus on Requirements and Oversight Needed to Improve DOD's Acquisition Environment and Weapon System Quality. GAO-08-294, February 1, 2008.
What GAO Recommends: GAO recommends that the Secretary of Defense take actions to set achievable requirements for new weapon system development, oversee and expand initiatives that could improve quality, and use data to assess contractor performance and weapon system quality. DOD partially agreed with the recommendations, stating that its current practices or planned actions are appropriate. We believe our recommendations remain valid and can improve weapons systems quality. Highlights

Executive Order 13457-Protecting American Taxpayers From Government Spending on Wasteful Earmarks, January 29, 2008, 73 Fed. Reg. 6417, February 01, 2008.
Policy It is the policy of the Federal Government to be judicious in the expenditure of taxpayer dollars. To ensure the proper use of taxpayer funds that are appropriated for Government programs and purposes, it is necessary that the number and cost of earmarks be reduced, that their origin and purposes be transparent, and that they be included in the text of the bills voted upon by the Congress and presented to the President. For appropriations laws and other legislation enacted after the date of this order, executive agencies should not commit, obligate, or expend funds on the basis of earmarks included in any non-statutory source, including requests in reports of committees of the Congress or other congressional documents, or communications from or on behalf of Members of Congress, or any other non-statutory source, except when required by law or when an agency has itself determined a project, program, activity, grant, or other transaction to have merit under statutory criteria or other merit-based decisionmaking.

Special Inspector General for Iraq Reconstruction , Quarterly Report to Congress, January 30, 2008.

Defense Contracting: Contract Risk a Key Factor in Assessing Excessive Pass-Through Charges. GAO-08-269, January 25, 2008.
Why GAO Did This Study Defense’s (DOD) fiscal year 2006 spending on goods and services was for subcontracts. Concerns have been raised among DOD auditors and Congress about the potential for excessive passthrough charges by contractors that add little or no value when work is subcontracted. To better understand this risk, Congress mandated that GAO assess the extent to which DOD may be vulnerable to these charges. This report examines (1) DOD’s approach to assessing the risk of excessive pass-through charges when work is subcontracted, (2) the strategies selected private sector companies use to minimize risks of excessive pass-through charges when purchasing goods and services, and (3) DOD’s interim rule to prevent excessive passthrough charges Highlights

Statement Of Stuart W. Bowen, Jr. Special Inspector General For Iraq Reconstruction Before The United States Senate, “Improving Contracting And Government Oversight Of Contractors Performing Work In Contingency Operations”, January 24, 2008.

Defense Logistics: The Army Needs to Implement an Effective Management and Oversight Plan for the Equipment Maintenance Contract in Kuwait. GAO-08-316R, January 22, 2008.
From the report: Subject: Defense Logistics: The Army Needs to Implement an Effective Management and Oversight Plan for the Equipment Maintenance Contract in Kuwait
The Department of Defense (DOD) relies on contractors to perform many of the functions needed to support troops in deployed locations. For example, at Camp Arifjan, Kuwait the Army uses contractors to provide logistics support for operations in Iraq and Afghanistan. Contractors at Camp Arifjan refurbish and repair a variety of military vehicles such as the Bradley Fighting Vehicle, armored personnel carriers, and the High-Mobility, Multi-Purpose Wheeled Vehicle (HMMWV). However, while contractors provide valuable support to deployed forces, we have frequently reported that long-standing DOD contract management and oversight problems increase the opportunity for waste and make it more difficult for DOD to ensure that contractors are meeting contract requirements efficiently, effectively, and at a reasonable price.

Federal Acquisition: Oversight Plan Needed to Help Implement Acquisition Advisory Panel Recommendations, GAO-08-160, December 20, 2007.
What GAO Recommends: GAO recommends that OFPP develop an oversight strategy or plan with milestones and reporting requirements to help it ensure the implementation of the SARA Panel recommendations and to gauge how they improve federal acquisition. OFPP agreed with GAO’s recommendation. Highlights

FAR Case 2007-006, Contractor Compliance Program and Integrity Reporting, The Section of Public Contract Law of the American Bar Association provides comments on the proposed rule.

Private Security Contractors at War, Report from Human Rights First.
From the Preface: This report examines the dramatically expanded role of private security contractors (PSCs) in Iraq and Afghanistan. It describes the failure of the U.S. government to effectively control their actions, and in particular the inability or unwillingness of the Department of Justice (DoJ) to hold them criminally responsible for their illegal actions.

OFPP-Acquisition of Green Products and Services, Notice, correction, 73 Fed. Reg. 2557, January 15, 2008.
SUMMARY: The Office of Management and Budget, Office of Federal Procurement Policy (OFPP) published a document in the Federal Register of December 28, 2007, concerning a proposed OFPP policy letter on the acquisition of green products and services. The document erroneously contained an effective date.

Federal-Aid Highways: Increased Reliance on Contractors Can Pose Oversight Challenges for Federal and State Officials. GAO-08-198, January 8, 2007.
Why GAO Did This Study: Pressure on state and local governments to deliver highway projects and services, and limits on the ability of state departments of transportation (state DOT) to increase staff levels have led those departments to contract out a variety of highway activities to the private sector. As requested, this report addresses (1) recent trends in the contracting of state highway activities, (2) factors that influence state highway departments’ contracting decisions, (3) how state highway departments ensure the protection of the public interest when work is contracted out, and (4) the Federal Highway Administrations’ (FHWA) role in ensuring that states protect the public interest. To complete this work, GAO reviewed federal guidelines, state auditor reports, and other relevant literature; conducted a 50-state survey; and interviewed officials from 10 selected state highway departments, industry officials, and FHWA officials. Highlights

Office of Federal Procurement Policy; Acquisition of Green Products and Services, Proposed policy letter, 72 Fed. Reg. 73904, December 28, 2007.
SUMMARY: OFPP is proposing to issue a policy letter on green procurement policies and strategies. The policy letter would address: (1) General responsibilities of agencies for the procurement of green products and services; (2) the relationship of green products and services to other socioeconomic programs; (3) automatic substitution policies; (4) listing of green products in Federal catalogues and online ordering systems; (5) green requirements for paper and printing; (6) application of green requirements in service contracting; and (7) energy efficiency. The proposed policy letter would implement specific provisions of Executive Order (E.O.) 13423, Strengthening Federal Environmental, Energy, and Transportation Management, Section 6002 of the Resource Conservation and Recovery Act (42 U.S.C. 6962), the Energy Policy Act of 1992 (42 U.S.C. 6903), the Energy Policy Act of 2005 (42 U.S.C. 6361), and Section 9002 of the Farm Security and Rural Investment Act of 2002 (7 U.S.C. 8102). The proposed policy letter, when finalized, would supersede OFPP Policy Letter 92-4, Procurement of Environmentally-Sound and Energy- Efficient Products and Services, dated November 2, 1992.
Comment Date: Comments must be received in writing on or before February 26, 2008 to be considered in the formulation of the final policy letter.

DOD IG-The Army’s Procurement and Conditional Acceptance of Medium Tactical Vehicles, Report No. D-2008-038, December 21, 2007.
Executive Summary(partial) Who Should Read This Report and Why? Contracting officers and contract administrators should read this report because it discusses the Army’s practices for conditional acceptance and first inspection acceptance of the vehicles.
Background. The Family of Medium Tactical Vehicles (FMTV) consists of families of Light-Medium Tactical Vehicles, which are 2-ton trucks, and Medium Tactical Vehicles, which are 5-ton trucks. The FMTV includes complementary trailers that supplement the vehicle fleet. The vehicles have common components and various body styles for special combat, combat support, and combat service support organizational missions. The approved Presidential Budget for FYs 2005 and 2006 provided approximately $956 million to procure 7,071 FMTVs. In addition, Congress provided another $797 million to the program as part of the Emergency Supplemental Appropriations Acts in FYs 2005 and 2006. The supplemental budgets for FYs 2005 and 2006 provided funding to procure an additional 3,970 FMTVs.
Results. The Army was appropriately using supplemental funds that Congress provided to the FMTV program office in support of the Global War on Terrorism. However, the FMTV program office was not adequately protecting the Government’s interest because it conditionally accepted FMTVs. Further, the FMTV contractor, Stewart and Stevenson Tactical Vehicle Systems, Limited Partnership, was not meeting contract requirements for acceptance of vehicles at first Government inspection.

Government Auditing Standards-Implementation Tool: Professional Requirements Tool for Use in Implementing Requirements Identified by "Must" and "Should" in the July 2007 Revision of Government Auditing Standards. GAO-08-210G, December 2007.

Department of Defense Inspector General, D-2008-022 FY 2006 DoD Purchases Made Through the National Institutes of Health, November 15, 2007 (1.59MB) (Project No. D2006-D000CF-0243.000)
Who Should Read This Report and Why? DoD contracting officers, contracting specialists, program managers, and financial managers should read this report. This report discusses problems we found when either DoD organizations made purchases using the National Institutes of Health (NIH) Electronic Commodities Store III (ECS III) contracts or NIH contracting personnel made purchases on behalf of DoD using the NIH Chief Information Officer-Solutions and Partners 2 Innovations (CIO-SP2i) contracts. Furthermore, this report discusses 43 potential Antideficiency Act violations related to the purchases reviewed and internal control deficiencies on interagency acquisitions.

Defense Acquisitions: Overcoming Challenges Key to Capitalizing on Mine Countermeasures Capabilities. GAO-08-13, October 12, 2007.
What GAO Recommends GAO is recommending that the Department of Defense analyze intelligence preparation capabilities, determine if Littoral Combat Ship concepts of operation can be reconciled, examine the need for and feasibility of fielding mine countermeasures systems on other ships, and delay full-rate production of certain systems. The Department of Defense concurred or partially concurred with the first three recommendations. It did not agree to delay full-rate production of systems, citing training needs and production efficiencies. GAO maintains that a delay is warranted as long as the Littoral Combat Ship remains the systems’ main platform. Highlights

Army accepts Gansler Commission report on contracting; commits to action Nov 01, 2007
Secretary of the Army Pete Geren accepted Nov. 1 the report of an independent commission citing structural weaknesses and organizational shortcomings in the U.S. Army's acquisition and contracting system used to support expeditionary operations.
Dr. Jacques Gansler, former undersecretary of defense for acquisition, technology and logistics, presented "The Commission on Army Acquisition and Program Management in Expeditionary Operations" report to Secretary Geren, who earlier this year formed the commission to assess the Army's acquisition system. Geren said the report offered the "blunt and comprehensive assessment we asked for and needed, and a plan for the way ahead."
See Gansler Commission Report and See Statement by Ike Skelton, House Armed Services Committee Chairman

Defense Contracts: Contracting for Military Food Services under the Randolph-Sheppard and Javits-Wagner-O’Day Programs. GAO-08-3, October 30., 2007.
Why GAO Did this Study Randolph-Sheppard and Javits-Wagner-O’Day (JWOD) are two federal programs that provide employment for persons with disabilities through federal contracts. In 2006, participants in the two programs had contracts with the Department of Defense (DOD) worth $465 million annually to provide dining services at military dining facilities. The 2007 National Defense Authorization Act directed GAO to study the two programs. This report examines (1) differences in how the Randolph-Sheppard and JWOD programs provide food services for DOD and (2) differences in how contracts are awarded, prices are set, and program beneficiaries (i.e. persons with disabilities) are compensated. GAO interviewed program officials, conducted a survey of states with Randolph-Sheppard programs, and reviewed eight Randolph-Sheppard and six JWOD contracts. Highlights

Office of the Special Inspector General for Iraq Reconstruction, Quarterly Report to Congress, October 30, 2007.
Highlights Two notable developments provide a backdrop for SIGIRs work this quarter. First, total relief and reconstruction investment for Iraq from all sourcesthe United States, Iraq, and international donorspassed the $100 billion mark. And second, total attacks on Coalition forces and Iraqis dropped to their lowest levels in over a year, primarily because of successes achieved through the surge strategy. SIGIRs oversight team also achieved two noteworthy milestones this quarter. Both the total number of audits produced and the total number of inspections produced by SIGIR since we began our oversight mission passed the 100 mark. This collective body of published reporting, together with the many investigations SIGIR has carried out, stands as a testament to the important benefits that consistent and rigorous oversight can contribute to the important mission in Iraq.

DOD IG Report, D-2008-007 Task Orders on the Air Force Network-Centric Solutions Contract, October 25, 2007.
Who Should Read This Report and Why? People responsible for or involved in the implementation and execution of multiple-award, indefinite-delivery, indefinite-quantity contracts should read this report. The report addresses contracting, information assurance, small business, and oversight issues that require management attention to ensure Government contracts are sufficiently planned and implemented. Specifically, we reviewed the task orders that have been issued from this contract.

Department of Homeland Security: Challenges in Implementing the Improper Payments Information Act and Recovering Improper Payments. GAO-07-913, September 19, 2007.
What GAO Found: DHS has made some progress in implementing IPIA requirements, but much more work remains for the agency to become compliant with IPIA. For example, while DHS has made progress in identifying its programs, for fiscal year 2006, the agency did not perform the required first stepa risk assessmenton approximately $13 billion of its more than $29 billion in disbursements subject to IPIA. Until DHS fully assesses its programs, the potential magnitude of improper payments is unknown. Highlights

Management of DoD Contractors and Contractor Personnel Accompanying U.S. Armed Forces in Contingency Operations Outside the United States September 25, 2007 Memorandum from Gordon England, Deputy Secretary of Defense

DOD-Office of the Inspector General, D-2007-130 Contracting Practices at Air Force Laboratory Facilities (September 28, 2007) (Project D2006-D000AB-0217.000)
This report discusses the need for contracting personnel to improve the award, administration, and monitoring of contracts at Air Force laboratories.

MEMORANDUM FOR SECRETARIES OF THE MILITARY DEPARTMENTS CHAIRMAN OF THE JOINT CHIEFS OF STAFF COMMANDER, U.S. SPECIAL OPERATIONS COMMAND DIRECTORS OF THE DEFENSE AGENCIES
SUBJECT: Prototyping and Competition, September 19, 2007, from John J. Young Jr, Acting Under Secretary of Defense, Acquisition & Technology.
Excerpt: Military Services and Defense Agencies will formulate all pending and future programs with acquisition strategies and funding that provide for two or more competing teams producing prototypes through Milestone (MS) B.

Small Business Contracting: Observations from Reviews of Contracting and Advocacy Activities of Federal Agencies, by William B. Shear, director, financial markets and community investment, before the Subcommittee on Government Management, Organization, and Procurement, House Committee on Oversight and Government Reform. GAO-07-1255T, September 26, 2007.
What GAO Found: Small businesses received 28 percent of the $11 billion in contracts that DHS, GSA, DOD, and the Corps awarded directly for Katrina-related projects. Information on whether DHS and GSA required subcontracting plans was generally not available in the federal governments official procurement database for 70 percent or more of the contracting dollars each agency awarded for activities related to Hurricane Katrina. This database should have contained information on whether or not the agencies required subcontracting plans in these instances. The lack of transparency surrounding much of the agencies subcontracting data may lead to unwarranted perceptions about how the federal procurement system is working, particularly in terms of the governments stated preference for contracting with small businesses. GAO recommended in its March 2007 report that DHS, GSA, and DOD take steps designed to ensure compliance with federal contracting regulations and more transparently disclose the extent to which subcontracting opportunities are available to small businesses. These agencies generally agreed with GAOs recommendations. GSA has implemented them while DOD and DHS indicate they are in the process of doing so. Highlights

Plans for hiring reemployed annuitants to fill acquisition-related positions, OFPP Memo from Paul A. Denett, Administrator, September 04,

Acquisition Advisory Panel Final Report, The final report of the Acquisition Advisory Panel is now available. January 2007, posted September 10, 2007.

DOD-Office of the Inspector General -- Audit Missile Defense Agency Purchases for and from Governmental Sources - Report No. D-2007-117 (PDF) - Project No. D2006-D000FH-0160.000, August 20, 2007.
Results: The Missile Defense Agency did not have adequate internal controls over governmental purchases. Specifically, the Missile Defense Agency did not properly manage the outgoing and incoming MIPR processes. The internal controls were inadequate because the Missile Defense Agency did not follow applicable MIPR regulations. As a result, the Missile Defense Agency personnel could not ensure that all purchases were in the best interest of the Government and complied with Federal, DoD, and the Missile Defense Agency regulations as well as public laws. In addition, the Defense Finance and Accounting Service did not timely respond to audit request for information and documentation for the Missile Defense Agency disbursements.      The Director of the Missile Defense Agency should direct the Business Management Office to develop procedures and controls that ensure required data and supporting documents are completed and reviewed before a MIPR is certified; develop procedures and controls to ensure that MIPR disbursements and reimbursable billings are verified against source documents and all documentation is maintained; and develop procedures and controls to ensure recorded commitments, obligations, and deobligations are valid and timely. The Director of Defense Finance and Accounting Service should develop procedures and controls to ensure that the Defense Finance and Accounting Service centers and field offices make audit information and documentation readily available for timely review.

DOD's Lack of Adherence to Key Contracting Principles on Iraq Oil Contract Put Government Interests at Risk, GAO-07-83, July 31, 2007.
What GAO Found: DOD considered DCAAs audit findings on the RIO I contract and performed additional analysis before deciding to pay the contractor nearly all of the $221 million in costs that DCAA questioned. DOD did, however, remove about $112 million of the questioned costs from the amount used to establish the contractors fee pool, which resulted in an effective lowering of the fee received by the contractor by approximately $5.8 million. Lack of timely negotiations contributed significantly to DODs decision on how to address the questioned costsall 10 task orders were negotiated more than 180 days after the work commenced. As a result, the contractor had incurred almost all its costs at the time of negotiations, which influenced DODs decision to pay nearly all of the questioned costs. The negotiation delays were in part caused by changing requirements, funding challenges, and inadequate contractor proposals. In our previous work, we have found that negotiation delays can increase risk to the government. Overall, DCAA considers $26 million of the costs questioned on the RIO I contract to be sustained, which DCAA defines as cost reductions attributable to its audit findings. We compared the sustention rates on DCAAs 11 RIO I contract audits to the sustention rates for 100 DCAA audits of other Iraq contract actions, and found that the sustention rates varied widely for both groups. Highlights

D-2007-115 Army Information Technology Enterprise Solutions-2 Services Contract (August 9, 2007) (2.1MB) (Project D2006-D000AS-0173.000), DOD Office of the Deputy Inspector General for Auditing
Results The Army Information Technology, E-Commerce, and Commercial Contracting Center contracting officials did not justify consolidating contract requirements for the $20 billion ITES-2S contract. Additionally, the officials selected an inappropriate North American Industry Classification System (NAICS) code in the solicitation of the contract. As a result, ITES-2S is a bundled contract that improperly restricted small business competition and was unsuitable for small business award. Bundling a contract without justification violates United States Code and Federal regulations. (See the Finding section of the report for the detailed recommendations.) The Army Contracting Agency internal controls were not adequate. We identified material internal control weaknesses on the adherence of the ITES-2S contract NAICS code to the Federal Acquisition Regulation requirements. Summary

Defense Contract Management: DOD's Lack of Adherence to Key Contracting Principles on Iraq Oil Contract Put Government Interests at Risk, GAO-07-839, July 31, 2007.
What GAO Found: DOD considered DCAA’s audit findings on the RIO I contract and performed additional analysis before deciding to pay the contractor nearly all of the $221 million in costs that DCAA questioned. DOD did, however, remove about $112 million of the questioned costs from the amount used to establish the contractor’s fee pool, which resulted in an effective lowering of the fee received by the contractor by approximately $5.8 million. Lack of timely negotiations contributed significantly to DOD’s decision on how to address the questioned costs—all 10 task orders were negotiated more than 180 days after the work commenced. As a result, the contractor had incurred almost all its costs at the time of negotiations, which influenced DOD’s decision to pay nearly all of the questioned costs. The negotiation delays were in part caused by changing requirements, funding challenges, and inadequate contractor proposals. In our previous work, we have found that negotiation delays can increase risk to the government. Overall, DCAA considers $26 million of the costs questioned on the RIO I contract to be sustained, which DCAA defines as cost reductions attributable to its audit findings. We compared the sustention rates on DCAA’s 11 RIO I contract audits to the sustention rates for 100 DCAA audits of other Iraq contract actions, and found that the sustention rates varied widely for both groups. Highlights

Bureau of Customs and Border Protection Notice of Issuance of Final Determination Concerning Printer Cartridges AGENCY: U.S. Customs and Border Protection, Department of Homeland Security. ACTION: Notice of final determination, 72 Fed. Reg. 44566, August 08, 2007.
SUMMARY: This document provides notice that the Bureau of Customs and Border Protection (CBP) has issued a final determination concerning the country of origin of certain printer cartridges which may be offered to the United States Government under an undesignated government procurement contract. CBP has concluded that, based upon the facts presented, the operations performed at the United States facility do not result in a substantial transformation of the goods. Therefore, the goods will not be considered to be products of the United States.
Dates: The final determination was issued on August 2, 2007. A copy of the final determination is attached. Any party-at-interest, as defined in 19 CFR 177.22(d), may seek judicial review of this final determination within 30 days of August 8, 2007.

Defense Finance And Accounting Service, Memorandum For Integrated Accounts Payable System Contractors, July 12, 2007 Subject: Requirement for Electronic Submission of Payment Requests Defense Federal Acquisition Regulation Supplement (DFARS) Clause 252.232-7003
This memorandum notifies you that beginning October 1,2007, DFAS Columbus and DFAS Limestone will reject any non-electronically received invoice if electronic submission is required in the contract, unless the contractor has provided sufficient documentation/rationale to show they are unable to submit the payment requests in electronic form.

Supplemental Emergency Contracting Cadre, July 30, 2007, MEMORANDUM FOR THE CHIEF ACQUISITION OFFICERS, from Paul A. Denett, OFPP Administrator
Excerpt However, to ensure that additional human resources are available to the government-wide contracting community during an emergency, our supplemental cadre of highly-skilled acquisition professionals must be replenished and increased. This supplemental cadre will be available to support any agency needing additional contracting personnel to support an emergency response and recovery effort. I ask each Chief Acquisition Officer to encourage their agencys contracting professionals, GS-1102s or others performing similar functions, to join this supplemental cadre and increase the number of contracting professionals that will assist DHS and other agencies in responding to national emergencies and disasters.

Congressional Research Service Report-Defense: FY2008 Authorization and Appropriations Updated July 30, 2007

Forest Service Could Improve Efficiency of Field-Level Timber Sales Management by Maintaining More Detailed Data, GAO-07-764, June 27, 2007.
Why GAO Did This Study: For years, GAO has raised concerns about the ability of the Department of Agriculture’s Forest Service (Service) to track the amounts it obligates for and spends on timber sales and to use this information in managing the sales. Timber sales are generally carried out by ranger districts (the lowest level of the Services decentralized organizational structure), which are overseen by national forest offices. The Bureau of Land Management (BLM) within the Department of the Interior also conducts timber sales. This report examines the extent to which (1) the Forest Service tracks timber sales-related obligations and expenditures, including the extent to which the Service uses this information in making management decisions; (2) BLM tracks timber sales-related obligations and expenditures; and (3) both agencies track their timber sales-related revenue. Highlights

JULY 2007 REVISION OF GOVERNMENT AUDITING STANDARDS ISSUED, July 27, 2007. David M. Walker, comptroller general of the United States and head of the U.S. Government Accountability Office, has issued the July 2007 revision of Government Auditing Standards. The standards, which were first published in 1972, and are commonly referred to as the “Yellow Book,” cover federal entities and those organizations receiving federal funds. Various laws require compliance with the comptroller general’s auditing standards in connection with audits of federal entities and funds. Furthermore, many states and local governments and other entities, both domestically and internationally, have voluntarily adopted these standards.
The July 2007 revision of Government Auditing Standards supersedes the 2003 revision and updates the January 2007 revision. This revision contains the January 2007 revision plus updated quality control and peer review sections in chapter 3 which were exposed in January 2007. The July 2007 revision represents the completed 2007 revision of Government Auditing Standards, and is the version that should be used by government auditors until further updates and revisions are made.

Defense Acquisitions: Realistic Business Cases Needed to Execute Navy Shipbuilding Programs, by Paul L. Francis, director, acquisition and sourcing management team, before the Subcommittee on Seapower and Expeditionary Forces, House Committee on Armed Services. GAO-07-943T, July 24, 2007.
Why GAO Did This Study: The Navy is beset with long-standing problems that affect its ability to accomplish ambitious goals for its shipbuilding portfolio. Significant cost growth and long schedule delays are persistent problems. Making headway on these problems is essential in light of the serious budget pressures facing the nation. Highlights

Federal Contracting: Use of Contractor Performance Information, by William T. Woods, director, acquisition and sourcing management, before the Subcommittee on Government Management, Organization, and Procurement, House Committee on Oversight and Government Reform. GAO-07-1111T, July 18, 2007.
Why GAO Did This Study This testimony covers three main areas concerning the use of contractor performance information: (1) the various ways in which a contractor’s performance may be considered in the contracting process; (2) how information on past performance is to be used in selecting contractors, as well as the various mechanisms for how that occurs; and (3) some of the key issues that have arisen in considering past performance in source selection, as seen through the prism of GAO’s bid protest decisions. Highlights

Federal Acquisitions and Contracting: Systemic Challenges Need Attention, by David M. Walker, Comptroller General of the United States, before the Senate Committee on Homeland Security and Governmental Affairs. GAO-07-1098T, July 17., 2007.
Why GAO Did This Study In fiscal year 2006, the federal government spent over $400 billion for a wide variety of goods and services, with the Department of Defense (DOD) being the largest purchaser. Given the large and growing structural deficit, the government must get the best return it can on its investment in goods and services.
     This testimony highlights four key acquisition challenges agencies face: (1) separating wants from needs, (2) establishing and supporting realistic program requirements, (3) using contractors in appropriate circumstances and contracts as a management tool, and (4) creating a capable workforce and holding it accountable Highlights

Environmental Satellite Acquisitions: Progress and Challenges, by David A. Powner, director, information technology management issues, before the Senate Committee on Commerce, Science, and Transportation. GAO-07-1099T, July 11, 2007.
What GAO Found The GOES-R acquisition, originally estimated to cost $6.2 billion and scheduled to have the first satellite ready for launch in 2012, is at a much earlier stage in its life cycle than NPOESS. In September 2006, GAO reported that the National Oceanic and Atmospheric Administration (NOAA) had issued contracts for the preliminary design of the overall GOES-R system to three vendors and expected to award a contract to one of these vendors in August 2007 to develop the satellites. However, analyses of GOES-R cost—which in May 2006 was estimated to reach $11.4 billion—led the agency, in September 2006, to reduce the program’s scope from four to two satellites and to discontinue one of the critical sensors. Program officials now report that they are reevaluating that decision and may further revise the scope and requirements of the program in coming months. GAO also reported that NOAA had taken steps to implement lessons learned from past satellite programs, but more remained to be done to ensure sound cost estimates and adequate system engineering capabilities. GAO currently has work under way to evaluate GOES-R risks and challenges. Highlights

Defense Contracting: Improved Insight and Controls Needed over DOD’s Time-and-Materials Contracts. GAO-07-273, June 29, 007.
What GAO Recommends GAO is recommending that DOD require more diligence in justifying the use of certain types of time-and-materials contracts, analyze the use of time-and-materials on indefinite-quantity contracts to ensure that it does not become the default contract type, and require monitoring plans to reflect the risks inherent in this contract type. In written comments on a draft of this report, DOD concurred with the recommendations. Highlights

Defense Contracting: Use of Undefinitized Contract Actions Understated and Definitization Time Frames Often Not Met. GAO-07-559, June 19, 2007.
What GAO Found: DOD faces a potentially large gap in its data and thus does not know the extent to which it is using UCAs. DOD’s reported obligations for UCAs increased from $5.98 billion in 2001 to $6.53 billion in 2005. However, the government’s procurement system does not identify undefinitized task or delivery orders or undefinitized contract modifications. In light of DOD’s reported increase in its use of task and delivery orders in recent years, the data gap could be large. Because DOD decentralizes oversight of its UCAs, the department would have to manually obtain data from each of its local commands in order to obtain a complete picture. The local commands GAO visited performed oversight of their UCAs to varying degrees. Highlights

Coast Guard: Challenges Affecting Deepwater Asset Deployment and Management and Efforts to Address Them. GAO-07-874, June 18, 2007.
Why GAO Did This Study The U.S. Coast Guard’s Deepwater program was designed to replace aging vessels and aircraft and information capabilities with new and upgraded assets and equipment. GAO’s prior work raised concerns about the Coast Guard’s efforts to upgrade or acquire assets on schedule and manage the Deepwater prime contractor.      This report responds to congressional direction contained in a conference report accompanying the Department of Homeland Security (DHS) fiscal year 2007 appropriations bill. GAO addressed two objectives: (1) What is the status of key Deepwater assets and how is the Coast Guard addressing any asset-related challenges that have been encountered? (2) What is the status of the Coast Guard’s overall management of the Deepwater contract? Highlights

Department of Homeland Security: Progress and Challenges in Implementing the Department's Acquisition Oversight Plan. GAO-07-900, June 13, 2007
What GAO Recommends GAO is recommending that the CPO reevaluate the approach to the acquisition planning reviews and that DHS enhance internal controls to strengthen the oversight plan through periodic external reviews and knowledge sharing. DHS concurred with GAO’s recommendations Highlights

Defense Acquisitions: Role of Lead Systems Integrator on Future Combat Systems Program Poses Oversight Challenges. GAO-07-380, June 6, 2007.
Why GAO Did This Study: The Army’s Future Combat Systems (FCS) program features multiple new systems linked by a first-of-a-kind information network. The Army contracted with a lead systems integrator (LSI) for FCS that could serve in a more expansive role than a typical prime contractor would. In response to a congressional mandate, this report addresses (1) why the Army decided to employ an LSI for the FCS program; (2) the nature of the LSI’s working relationship with the Army; and (3) how FCS contract fees, provisions, and incentives work. Highlights

OMB Guidance
Emergency Acquisitions Guide (May 31, 2007)
Enhancing Competition in Federal Acquisition (May 31, 2007)

Service-Disabled Veteran-Owned Small Business Procurement Program, May 24, 2007 Memorandum from Anthoney Martoccia, Director Office of Small Business Programs, OFFICE OF THE UNDER SECRETARY OF DEFENSE. Memo discusses actions taken and tools available to the acquisition workforce to help the Department of Defense achieve the SDVOSB goal

Air Force Contract Policy Memo 07-C-02, April 17, 2007. Excerpt: In cases where the terms of another agency's schedule or contract prohibit such debriefings, Air Force contracting officers shall not employ those contracting vehicles unless prior authorization is obtained from SAF/AQC.

MEMORANDUM FOR THE PRESIDENT’S MANAGEMENT COUNCIL, Clay Johnson III, Deputy Director for Management,SUBJECT: Validating the Results of Public-Private Competition, April 13, 2007.
The purpose of this memorandum is to provide guidance to help agencies substantiate that savings are achieved and performance is improved through public-private competition. Effective post competition oversight will ensure agencies and taxpayers receive the expected benefits from competition. It also reinforces public trust and confidence in the competitive sourcing initiative.

Defense Acquisitions: Improved Management and Oversight Needed to Better Control DOD's Acquisition of Services, by John P. Hutton, director, acquisition and sourcing management, before the Subcommittee on Defense, House Committee on Appropriations. GAO-07-832T, May 10. 2007.
Why GAO Did This Study: The Department of Defense (DOD) is relying more and more on contractors to provide billions of dollars in services. Congress has pushed DOD to employ sound business practices when using the private sector for services.
   This testimony discusses DOD’s (1) increasing reliance on contractors; (2) efforts to follow sound business practices when acquiring services; and (3) actions to improve its management and oversight of services.
   This testimony is based on GAO’s work spanning several years as well as recent reports issued by the Inspectors General. Highlights

D-2007-079 Performance Based Service Contract for Environmental Services at the Navy Public Works Center, San Diego, California (04/03/2007) D2005-D000CH-0123.001
Who Should Read This Report and Why? Defense officials responsible for the Office of Management and Budget (OMB) Circular No. A-76, “Performance of Commercial Activities (Revised),” May 29, 2003, public-private competition process and DoD acquisition and contracting personnel should read this report. It addresses the management of a performance-based environmental services contract resulting from a public-private competition and also discusses the use of fixed-price, performance-based, indefinite-delivery, indefinite-quantity (IDIQ) task orders.

Defense Acquisitions: Missile Defense Agency’s Flexibility Reduces Transparency of Program Cost, by Paul Francis, director, acquisition and sourcing management, before the Subcommittee on Defense, House Committee on Appropriations, GAO-07-799T, April 30, 2007
What GAO Recommends GAO continues to encourage DOD to act on prior recommendations to implement a knowledge-based acquisition strategy for all BMDS elements and to adopt more transparent criteria for reporting each element’s quantities, cost, and performance. In March 2007, GAO recommended that DOD adopt firm baselines, use procurement funds for operational assets, and adopt other measures to better track cost and outcomes against goals. DOD did not agree to an element-based reporting approach, but is investigating other ways to provide more program transparency. Highlights

Office of the Special Inspector General for Iraq Reconstruction, Quarterly Report to Congress, April 30, 2007.

Letter sent by Senators Kerry and Snowe relating to a provision in HR 1591 (U.S. Troop Readiness, Veterans’ Health, Katrina Recovery and Iraq Accountability Appropriations Act of 2007) that may endanger small business set-asides and preferences. April 16, 2007.

Implementation of OMB Circular No. A-76 at Science Agencies. GAO-07-434R, March 16, 2007.
SUMMARY: In summary, we found that the five science agencies under the Committee’s jurisdiction generally implemented the A-76 process as revised in May 2003. However, we did find one exception and two deviations. The exception involved the Department of Commerce, which had not put out for competition any commercial activity performed by National Institute for Standards and Technology personnel. Additionally, OMB granted deviations to the new A-76 process requirements for two other agencies. OMB allowed NASA to put out for competition new commercial scientific and technological research activities-called NASA Research Announcements-outside the normal A-76 process. Nearly all of NASA’s public-private competitions have been competed under this deviation. OMB also approved the Department of Energy’s pilot program for determining whether use of the General Services Administration’s Multiple Award Schedules would increase competition.

Supplemental Information Regarding Full Committee Hearing on the General Services Administration, March 27, 2007. From the Majority Staff, Committee on Oversight and Government Reform. and the Statement Of Lurita Doan Administrator, U.S. General Services Administration Before The Committee On Oversight And Government Reform, U.S. House Of Representatives MARCH 28, 2007. See also the March 28, 2007, report from the Minority Staff, Allegations of Misconduct at the General Services Administration: A Closer Look.

Special Inspector General for Iraq Reconstruction Iraq Reconstruction: Lessons in Program and Project Management, March 21, 2007. Iraq Reconstruction: Lessons in Program and Project Management The third and final Lessons Learned report, published in March 2007, focuses on the program and project management of the U.S.-led reconstruction mission, and captures the evolution of the key agencies charted to oversee the effort. A forum of experts gathered on April 12, 2006 at the National Defense University to discuss this issue and provide recommendations for improving the U.S. government’s capacity to manage programs and projects in contingency environments. The panel included senior U.S. government officials, academics, and industry executives. The report tracks the evolution of the three organizations responsible for providing the strategic oversight and tactical direction for the reconstruction program: The Office of Reconstruction and Humanitarian Assistance, the Coalition Provisional Authority, and the U.S. Mission-Iraq. The report begins with an overview of the planning environment, which had a direct effect on the capacity of program managers to execute and control reconstruction projects. It then analyzes CPA’s Program Management Office-the entity established to plan and manage the $18.4 billion infrastructure-focused program-and the delays in executing reconstruction projects during the winter and spring of 2004. The final section of the report describes how program managers met the challenge of constant change, particularly the reprogramming that occurred during the summer and fall of 2004.

Defense Acquisitions: Air Force Decision to Include a Passenger and Cargo Capability in Its Replacement Refueling Aircraft Was Made without Required Analyses. GAO-07-367R, March 6, 2007.
Results in Brief Mandatory Air Force policy requires Air Force organizations to use a formal capabilities-based approach to identify, evaluate, develop, field, and sustain capabilities that compete for limited resources. Contrary to mandatory Air Force implementing guidance, however, the Air Force proposal for a replacement refueling aircraft included a passenger and cargo capability without analyses identifying an associated gap, shortfall, or redundant capability. According to mandatory Air Force implementing guidance, analyses supporting the decision-making process should assess a capability based on the effects it seeks to generate and the associated operational risk of not having it. In this case, the supporting analyses determined neither need nor risk with regard to a passenger and cargo capability. Air Force officials could not provide supporting information sufficient to explain this discrepancy between the analyses and their proposal. Without sound analyses, the Air Force may be at risk of spending several billion dollars unnecessarily for a capability that may not be needed to meet a gap or shortfall.

Office of the Inspector General -- Audit Department of the Navy Purchases for and from Governmental Sources - Report No. D-2007-062 (PDF) - Project No. D2006-D000FH-0021.000 Date: February 28, 2007
Results: Specifically, the Navy internal controls did not ensure that it properly administered outgoing and incoming MIPRs. The internal controls were inadequate because the Navy did not follow MIPR guidance. Additionally, the existing guidance from the Under Secretary of Defense (Comptroller)/Chief Financial Officer was unclear. As a result, Navy MIPRs violated public law and did not comply with Federal, DoD, and Navy regulations.

Zoltek filed a petition for certiorari with the Supreme Court on February 20, 2007. (Appendices) The Federal Circuit case is ZOLTEK CORPORATION v. THE UNITED STATES, CAFC Nos. 04-5100,-5012, September 21, 2006. The petition poses the issues as follows:
“Where a government-authorized contractor performed some or all of the steps of a patented process outside the United States, but the products of that process were imported into and used in the United States by and for the United States, the questions presented by this Petition are:
1. Whether conduct by the government through its authorized contractors that would otherwise constitute patent infringement under § 271(g) or 271(a) is a taking of property subject to the Fifth Amendment?
2. Whether a patent-holder can seek compensation in the Court of Federal Claims for such otherwise infringing conduct either: (A) under § 1498, notwithstanding that some or all steps of the process were performed outside the United States; or, if not, (B) as a claim for just compensation under the Fifth Amendment cognizable pursuant to the Tucker Act, 28 U.S.C. § 1491(a)?”

NASA Procurement: Use of Award Fees for Achieving Program Outcomes Should Be Improved. GAO-07-58, January 17, 2007.
Why GAO Did This Study: Cost-plus-award-fee contracts accounted for almost half of the National Aeronautic and Space Administration’s (NASA) obligated contract dollars for fiscal years 2002-2004. Since 1990, we have identified NASA’s contract management as a high-risk areain part because of a lack of emphasis on end results. You asked us to examine (1) the extent NASA’s guidance on award fees addresses problems previously identified with the use of award-fee contracts and (2) whether NASA follows its guidance in using award fees to achieve desired outcomes. We reviewed the top 10 dollar value award-fee contracts active from fiscal years 2002 through 2004. Highlights

District of Columbia: Procurement System Needs Major Reform. GAO-07-159, January 19, 2007.
What GAO Found: The District’s procurement law generally does not apply to all District entities nor does it provide authority to the CPO to effectively carry out and oversee the full scope of procurement responsibilities across all agencies. A lack of uniformity in its procurement law and the CPO’s limited authority not only undermines transparency, accountability, and competition but also increases the risk of preferential treatment for certain vendors and ultimately drives up costs. The current law exempts certain entities and procurements from following the law’s competition and other requirements, and according to current and former District procurement officials, there is a push to expand independent procurement authoritya move that would reverse action taken by the District a decade ago. Other provisions of current law further erode competition. Notably, the law provides broad authority for sole source contracting and establishes high-dollar thresholds for small purchases, which are generally not subject to full and open competition. Also, in implementing the law, sufficient management oversight is lacking to ensure employees do not make unauthorized commitments. Highlights

Government Auditing Standards, January 2007 Revision (GAO-07-162G)
On February 1, 2007, the Comptroller General of the United States issued the 2007 revision of Government Auditing Standards, which supersedes the 2003 revision. The January 2007 version contains the final 2007 revisions to the standards, except for the quality control and peer review sections in chapter 3. Concurrent with the electronic issuance of this revision of Government Auditing Standards, GAO is exposing for comment redrafted sections on quality control and peer review in response to the wide range of comments we received on those sections. The printed version of the complete 2007 revision of Government Auditing Standards will be available after the quality assurance and peer review sections are finalized and incorporated into the standards. (Current anticipated time frame is late spring of 2007.)

The effective date for the 2007 revision of Government Auditing Standards is for financial audits and attestation engagements for periods beginning on or after January 1, 2008, and for performance audits beginning on or after January 1, 2008. Early implementation is permissible and encouraged.

Certain standards issued by the AICPA’s Auditing Standards Board (ASB) have earlier effective dates. For financial statement audits performed under GAGAS, the effective dates of those new ASB standards will apply. Until the 2007 GAGAS revisions become effective, auditors should adopt the terminology and definitions in SAS No. 112 when reporting on internal control deficiencies and include in their reports material weaknesses and other significant deficiencies in order to promote consistency in communicating and reporting on internal control deficiencies.

GAO:High-Risk Series: An Update, GAO-07-310, January 31, 2007.

Special Inspector General for Iraq Reconstruction (SIGIR), January 30, 2007 Quarterly and Semiannual Report to Congress Report

D-2007-047 Air Force Acquisition Executive's Management Oversight and Procurement Authority for Acquisition Category I and II Programs (01/23/2007) (2MB)
Background: This report is the second in a series of audit reports that will discuss the Service Acquisition Executives management oversight and procurement authority for Acquisition Category IC and II programs. This report discusses the management oversight and procurement authority within the Air Force.The two other reports will address the management oversight and procurement authority within the Army and Navy. We initiated this audit because of congressional and DoD interest in whether Service milestone decision authorities and procurement officials were complying with statutory and regulatory requirements for acquisitions.
   The Air Force relies on its acquisition executives (the Air Force Acquisition Executive for Acquisition Category IC programs and Program Executive Officers in most cases for Acquisition Category II programs) to be program milestone decision authorities. Milestone decision authorities oversee the development and procurement of systems to meet Air Force mission requirements. In FY 2006, the Air Force acquisition officials were responsible for overseeing the expenditure of $22.6 billion in research, development, test, and evaluation funding and $32.5 billion in procurement funding.
   To evaluate the adequacy of Air Force milestone decision authority management oversight and procurement authority, we selected for review 17 Acquisition Category IC and II programs with development and production costs totaling $73 billion. Summary

Defense Acquisitions: DOD Needs to Exert Management and Oversight to Better Control Acquisition of Services, by Katherine V. Schinasi, managing director, acquisition and sourcing management, before the Subcommittee on Readiness and Management Support, Senate Committee on Armed Services. GAO-07-359T, January 17, 2007.
What GAO Found: Numerous persistent problems have resulted in reduced efficiencies and effectiveness and have exposed DOD to unnecessary risks when acquiring services. Knowing the defense acquisition landscape helps put the magnitude of these problems in perspective-
• DOD’s obligations on service contracts have jumped from $82.3 billion in fiscal year 1996 to $141.2 billion in fiscal year 2005.
• DOD’s acquisition workforce has been downsized during this time frame without sufficient attention to requisite skills and competencies. Highlights

DOD- Office of the Inspector General -- Audit, D-2007-044 FY 2005 DoD Purchases Made Through the Department of the Interior January 16, 2007. (View summary only)
Results: Purchase card program officials failed to establish effective controls over the accounts of closed purchase cards with credit balances at three Army installations, three Navy installations, and two Air Force installations. For the installations reviewed, two Army, three Navy, and two Air Force agency/organization program coordinators did not monitor closed accounts that had credit balances. Also, Army, Navy, and Air Force purchase card program officials did not retain cardholder documentation for closed accounts. As a result, credit balances on closed accounts of purchase cards may not be properly identified, refunded, and available for Government use (finding A).

Controls over the use of convenience checks were weak and program officials did not establish an effective oversight program at Army, Navy, and Air Force installations visited. Specifically, Army, Navy, and Air Force officials did not issue delegation of authority letters to convenience check writers, review the program, or conduct unannounced audits of convenience check accounts. Further, Army and Air Force approving officials did not retain documentation when checks were used. As a result, convenience checks are vulnerable to unnecessary risk and misuse (finding B).

Controls over the purchase card programs at Air Force installations visited were inadequate, and program oversight was weak. In addition, controls over purchase card program training were weak at two of the three Navy installations visited. Specifically, Navy and Air Force cardholders and approving officials did not receive required initial purchase card training or the refresher purchase card training; Air Force agency/organization program coordinators and approving officials had more than the standard span of control for purchase card accounts; and Air Force agency/organization program coordinators were purchase cardholders and convenience check writers. Unless purchase card program management officials strengthen internal controls and program oversight, the Navy and Air Force cannot ensure continuous program improvement and risk mitigation necessary to prevent fraud, waste, or mismanagement (finding C).

The Director, Army Purchase Card Program Management Office; the Director of the Department of the Navy, Consolidated Card Program Management Division; and the Director, Air Force Purchase Card Program Management Office, must establish controls to ensure proper management and use of the purchase card program in accordance with DoD and Component guidance. See the Findings section of the report for the detailed recommendations.

DOD's High-Risk Areas: Progress Made Implementing Supply Chain Management Recommendations, but Full Extent of Improvement Unknown. GAO-07-234, January 17, 2007.
What GAO Recommends: GAO recommends that DOD complete its logistics strategy and develop and implement outcome-focused performance metrics and cost metrics for supply chain management. DOD concurred with GAO’s recommendations. Highlights

DOD- Office of the Inspector General -- Audit Controls Over the Army, Navy, and Air Force Purchase Card Programs - Report No. D-2007-043 (PDF) - Project No. D2005-D000CK-0202.000, January 10, 2007.
Results Purchase card program officials failed to establish effective controls over the accounts of closed purchase cards with credit balances at three Army installations, three Navy installations, and two Air Force installations. For the installations reviewed, two Army, three Navy, and two Air Force agency/organization program coordinators did not monitor closed accounts that had credit balances. Also, Army, Navy, and Air Force purchase card program officials did not retain cardholder documentation for closed accounts. As a result, credit balances on closed accounts of purchase cards may not be properly identified, refunded, and available for Government use (finding A).

Controls over the use of convenience checks were weak and program officials did not establish an effective oversight program at Army, Navy, and Air Force installations visited. Specifically, Army, Navy, and Air Force officials did not issue delegation of authority letters to convenience check writers, review the program, or conduct unannounced audits of convenience check accounts. Further, Army and Air Force approving officials did not retain documentation when checks were used. As a result, convenience checks are vulnerable to unnecessary risk and misuse (finding B).

Controls over the purchase card programs at Air Force installations visited were inadequate, and program oversight was weak. In addition, controls over purchase card program training were weak at two of the three Navy installations visited. Specifically, Navy and Air Force cardholders and approving officials did not receive required initial purchase card training or the refresher purchase card training; Air Force agency/organization program coordinators and approving officials had more than the standard span of control for purchase card accounts; and Air Force agency/organization program coordinators were purchase cardholders and convenience check writers. Unless purchase card program management officials strengthen internal controls and program oversight, the Navy and Air Force cannot ensure continuous program improvement and risk mitigation necessary to prevent fraud, waste, or mismanagement (finding C).

The Director, Army Purchase Card Program Management Office; the Director of the Department of the Navy, Consolidated Card Program Management Division; and the Director, Air Force Purchase Card Program Management Office, must establish controls to ensure proper management and use of the purchase card program in accordance with DoD and Component guidance. See the Findings section of the report for the detailed recommendations.

Defense Contracting: Questions for the Record. GAO-07-217R, December 21, 2006. Comptroller General David Walker responds to a number of post-hearing questions relating to various issues, including measures that DOD can employ to ensure better contracting outcomes.

Export Controls: Challenges Exist in Enforcement of an Inherently Complex System. GAO-07-265, December 20, 2006.
Why GAO Did This Study Each year, billions of dollars in dual-use itemsitems that have both commercial and military applicationsas well as defense items are exported from the United States. To protect U.S. interests, the U.S. government controls the export of these items. A key function in the U.S. export control system is enforcement, which aims to prevent or deter the illegal export of controlled items. Highlights

Military Operations: High-Level DOD Action Needed to Address Long-standing Problems with Management and Oversight of Contractors Supporting Deployed Forces. GAO-07-145, December 18, 2006.
What GAO Found: DOD continues to face long-standing problems that hinder its management and oversight of contractors at deployed locations. DOD has taken some steps to improve its guidance on the use of contractors to support deployed forces, addressing some of the problems GAO has raised since the mid-1990s. However, while the Office of the Secretary of Defense is responsible for monitoring and managing the implementation of this guidance, it has not allocated the organizational resources and accountability to focus on issues regarding contractor support to deployed forces. Also, while DOD’s new guidance is a noteworthy step, a number of problems we have previously reported on continue to pose difficulties for military personnel in deployed locations. Highlights

Defense Acquisitions: Challenges Remain in Developing Capabilities for Naval Surface Fire Support. GAO-07-115, November 30, 2006.
What GAO Recommends GAO recommends that the Department of Defense clarify requirements for volume of fire, clarify Navy and Marine Corps roles in managing resources, comprehensively review the Extended Range Munition program, and assign responsibility for assessing the gap in command and control. DOD concurred with the first and third recommendations, and partially concurred with the others. Highlights

Commerce Issues Clause for Contract Performance During Pandemic Influenza Outbreak, SARS Outbreak, or Other Biomedical Emergency or Catastrophe, Procurement Memorandum 2007-01, Michael S. Sade - Director for Acquisition Management and Procurement Executive, October 05, 2006.

Small Business Innovation Research: Agencies Need to Strengthen Efforts to Improve the Completeness, Consistency, and Accuracy of Awards Data. GAO-07-38, October 19, 2006.
Why GAO Did This Study: The Small Business Innovation Research (SBIR) program was created to increase the use of small businesses to meet federal research needs and commercialize the results of this research. To monitor the program, the Small Business Administration (SBA) requires participating agencies to provide, in a standard format, specific data on all SBIR awards they make. SBA then compiles these data into a database known as Tech-Net. Congress also required SBA to create, by 2001, a restricted and more comprehensive database that would provide information for government agencies to use in evaluating the program. GAO was asked to identify the (1) types of data that agencies report to SBA for inclusion in the Tech-Net database, (2) extent to which these data are provided in a standard format, (3) extent to which SBA has established the government-use database, and (4) extent to which SBIR agencies have developed and implemented techniques to track commercialization of SBIR projects. GAO reviewed 8 of the 11 agencies participating in SBIR. Highlights

Space Acquisitions: DOD Needs to Take More Action to Address Unrealistic Initial Cost Estimates of Space Systems. GAO-07-96, November 17, 2006.
Why GAO Did This Study Estimated costs for the Department of Defense’s (DOD) major space acquisition programs have increased by about $12.2 billion from initial estimates for fiscal years 2006 through 2011. Cost growth for ongoing Air Force programs above initial estimates accounts for a substantial portion of this 44 percent increase. In light of the role that optimistic estimating is believed to have played in exacerbating space acquisition cost growth, you requested that we examine (1) in what areas space system acquisition cost estimates have been unrealistic and (2) what incentives and pressures have contributed to the quality and usefulness of cost estimates for space system acquisitions. Highlights

Defense Acquisitions: Tailored Approach Needed to Improve Service Acquisition Outcomes. GAO-07-20, November 9, 2006.
What GAO Found: Several key factors are necessary to improve DOD’s service acquisition outcomes—that is, obtaining the right service, at the right price, in the right manner. These factors can be found at both the strategic and the transactional levels and should be used together as a comprehensive, but tailored approach to managing service acquisition outcomes. At the strategic level, key success factors include (1) strong leadership that defines a corporate vision and normative goals; (2) sustained, results-oriented communication and metrics; (3) defined responsibilities and associated support structures; and (4) increased knowledge and focus on spending and data trends. The strategic level also sets the context for the transactional level, where the focus is on making sound decisions on individual transactions. Success factors at this level include having (1) valid and well-defined requirements; (2) properly structured business arrangements; and (3) proactively managed outcomes. Highlights

GSA-The Establishment of The Civilian Board of Contract Appeals and the Termination of The Boards of Contract Appeals of the General Services Administration and the Departments of Agriculture, Energy, Housing and Urban Development, Interior, Labor, Transportation, and Veterans Affairs, 71 Fed. Reg. 65825, November 09, 2006.
SUMMARY: In section 847 of the National Defense Authorization Act for Fiscal Year 2006, Pub. L. No. 109-163, Congress established the Civilian Board of Contract Appeals (CBCA) within GSA to hear and decide contract disputes involving executive agencies (other than the Department of Defense, the Department of the Army, the Department of the Navy, the Department of the Air Force, the National Aeronautics and Space Administration, the United States Postal Service, the Postal Rate Commission, and the Tennessee Valley Authority) under the provisions of the Contract Disputes Act of 1978 and regulations and rules issued thereunder. Boards of contract appeals currently exist at the General Services Administration and the departments of Agriculture, Energy, Housing and Urban Development, Interior, Labor, Transportation, and Veterans Affairs. Effective January 6, 2007, all of those boards in existence on that date will terminate, and their cases, Board judges, and other personnel will transfer to the new Civilian Board.

Army Procurement Fraud Advisor’s Newsletter, Update 63, October 2006

Snowe Calls For GSA To Set Aside $500 Million Contract to Small Firms in Distressed Areas Cites Small Business Job Impact, Potential Legal Violations, Letter to GSA Administrator Doan from Senator Snowe, October 25, 2006.

Review of Administrative Task Orders for Iraq Reconstruction Contracts (SDIGR 06-028), October 23, 2006. Special Inspector General for Iraq Reconstruction.[Are administrative task orders commonly used by other agencies?-jaw]

Rebuilding Iraq: Status of Competition for Iraq Reconstruction Contracts. GAO-07-40, October 6, 2006
What GAO Found: While no single, comprehensive system currently tracks governmentwide Iraq reconstruction contract data, available data showed that from October 1, 2003, through March 31, 2006, DOD, USAID, and State collectively awarded the majority of Iraq reconstruction contracts competitively. Based on competition information we obtained on $10 billion of the total $11.6 billion in IRRF obligations by these agencies during the period of our review, we found that about $9.1 billion-or 91 percent-was for competitively awarded contracts. While our ability to obtain complete competition data for all DOD Iraq reconstruction contract actions was limited because not all DOD components consistently tracked or fully reported this information, we obtained information on approximately $7 billion, or 82 percent, of DOD’s total Iraq reconstruction contract obligations, and of this, we found that competition occurred for nearly all of the obligations. Additionally, based on complete data for the period of our review we found that USAID competitively awarded contract actions for 99 percent of its obligations, while State awarded contract actions competitively for only 10 percent of its obligations. Highlights

Highlights of a GAO Forum: Federal Acquisition Challenges and Opportunities in the 21st Century. GAO-07-45SP, October 2006
Why GAO Convened this Forum: Acquisition of products and services from contractors consumes about a quarter of discretionary spending governmentwide and is a key function in many federal agencies. In fiscal year 2005 alone, federal government contracting involved over $388 billion. The work of the government is increasingly being performed by contractors, including in emergency and large-scale logistics operations such as hurricane response and recovery and the war in Iraq. Highlights

Ethics and Working with Contractors-Questions and Answers, A memorandum and Questions and Answers paper by Robert I. Cusick, Director, Office of Government Ethics. Questions and Answer paper.

Purchase Cards: Control Weaknesses Leave DHS Highly Vulnerable to Fraudulent, Improper, and Abusive Activity. GAO-06-1117, September 28, 2006.
What GAO Found: A weak control environment and breakdowns in key controls exposed DHS to fraud and abuse in its use of the purchase card. While DHS’s draft Purchase Card Manual generally contained effective control procedures, it was not finalized due to a lack of leadership by the Chief Financial Officer in resolving disagreements over its implementation. This led to DHS cardholders following different procedures. Inadequate staffing, insufficient training, and ineffective monitoring, along with inconsistent purchase card policies contributed to a weak control environment and breakdowns in specific key controls. GAO and DHS OIG found a lack of documentation that key purchase card internal controls were performed. Based on a statistical sample, GAO and DHS OIG estimated that 45 percent of DHS’s purchase card transactions were not properly authorized, 63 percent did not have evidence that the goods or services were received, and 53 percent did not give priority to designated procurement sources. GAO and DHS OIG also found cardholders who failed to dispute improper charges, which resulted in losses to the federal government. Because of the urgent needs caused by the hurricanes, DHS made a number of noncompetitive purchase card acquisitions. GAO recognizes that DHS had the auth had the authority to make noncompetitive purchases; however, GAO found transactions where DHS cardholders could have exercised greater prudence without jeopardizing relief efforts. Highlights

Interagency Contracting: Improved Guidance, Planning, and Oversight Would Enable the Department of Homeland Security to Address Risks. GAO-06-996, September 27, 2006.
What GAO Recommends GAO recommends that the Secretary of Homeland Security consider the adequacy of the Office of the Chief Procurement Officer’s resources and develop guidance and training; establish criteria to consider in the decision to use an interagency contract; and implement oversight to evaluate the outcomes of interagency contracts. DHS agreed with these recommendations. In addition, Congress should require the Secretary to report on efforts to provide the Chief Procurement Officer with sufficient authority. Highlights

Iraq Contract Costs: DOD Consideration of Defense Contract Audit Agency's Findings. GAO-06-1132, September 25, 2006.
What GAO Found- Defense Contract Audit Agency audit reports issued between February 2003 and February 2006 identified $2.1 billion in questioned costs and $1.4 billion in unsupported costs on Iraq contracts. DCAA defines questioned costs as costs that are unacceptable for negotiating reasonable contract prices, and unsupported costs as costs for which the contractor has not provided sufficient documentation. This information is provided to DOD for its negotiations with contractors. Based on information provided by DCAA, DOD contracting officials have taken actions to address $1.4 billion in questioned costs. As a result, DOD contracting officials negotiated contract cost reductions of $386 million according to DCAA. Based on the information provided by DCAA, as of July 2006, the remaining $700 million in questioned costs is still in process. Because unsupported costs indicate a lack of contractor information that is needed to assess costs, DCAA cannot and does not render an opinion on those costs. Therefore, DCAA does not track the resolution of unsupported costs. Highlights

Federal Funding Accountability Transparency Act, S. 2590, In a surprise move, Congress has passed new legislation, the Federal Funding Accountability Transparency Act, S. 2590, which requires the Office of Management and Budget to publish information on all federal awards and grants over $25,000. The new legislation, passed while the Jack Abramoff scandal continues to pour bad news on Capitol Hill, offers a welcome beam of hope for procurement reform.(Introductory paragraph of an article By Christopher Yukins, associate professor of Government contract law and co-director of the Government Procurement Law Program at The George Washington University Law School in the September 20, 2006 issue of Government Contractor, a Thomson/West publication.)

Defense Acquisitions: Restructured JTRS Program Reduces Risk, but Significant Challenges Remain. GAO-06-955, September 11,. 2006.
What GAO Found The proposed JTRS restructuring-a plan DOD approved in March 2006- appears to address and reduce program risks that GAO and others have documented in recent years. While still meeting key requirements, including those related to DOD’s network centric transformation effort, the revised approach is expected to develop and field capabilities in increments rather than attempting to develop and field the capabilities all at once. Costly and non-transformational requirements will be deferred to later increments. Deferring these requirements will allow more time to mature critical technologies, integrate components, and test the radio system before committing to production. JTRS program management has also been strengthened through the establishment of a Joint Program Executive Office (JPEO). The more centralized management structure should help the program improve oversight and coordination of standards, system engineering, and development of the radios. Highlights

Defense Acquisitions: DOD Needs to Establish an Implementing Directive to Publish Information and Take Actions to Improve DOD Information on Critical Acquisition Positions. GAO-06-987R, September 8, 2006.

DOD Acquisitions: Contracting for Better Outcomes, by David M. Walker, Comptroller General of the United States, before the Subcommittee on Defense, House Committee on Appropriations. GAO-06-800T, September 7, 2006.
SUMMARY: In this testimony, GAO discusses (1) recent trends in DOD contracting activity and the environment in which this activity takes place, and (2) practices which undermine its ability to establish sound business arrangements, particularly those involving the selection and oversight of DOD’s contractors and incentivizing their performance.
This statement is based on work GAO has completed over the past 6 years covering a range of DOD acquisition and contracting issues. Some of these issues are long-standing. GAO has identified DOD contract management as a high-risk area for more than decade. With awards to contractors large and growing, DOD will continue to be vulnerable to contracting fraud, waste or misuse of taxpayer dollars, and abuse. Highlights

OMB Letter to Senator Snowe, August 03, 2006. Letter sets out Administration plans to address contract bundling issues.