GAO Report Finds Federal Agencies Must Improve Service Contract Inventories

By NEIL GORDON

The Government Accountability Office (GAO) released a report finding that the civilian agencies are not
doing enough to keep track of their service contractor workforce. The
GAO reviewed 49 executive agencies’ procedures for compiling and
reviewing service contract inventories—data
compilations of service contracting activities most federal
departments and agencies are required to maintain and release to the
public every year—and found numerous problems that limit their
accuracy and utility.

The GAO found similar problems in its review of
the Department of Defense’s (DoD) service contract inventories,
which the Project On Government Oversight blogged about back in April.

POGO has repeatedly called for the government to improve the quality of service contract
inventories. These inventories are crucial for determining the true
size and cost-effectiveness of the federal service
contractor workforce and whether contractors are performing inherently
governmental functions (functions required by law to be performed by federal
government employees).

In fiscal year 2011, civilian agencies spent $126 billion for
services such as professional management and information technology
support. The 49 agencies the GAO reviewed are not fully complying with
statutory requirements for compiling and reviewing FY 2011 service
contract inventories.

Nine of the 49 agencies did not submit a required inventory review
report. One agency, the Court Services and Offender Supervision Agency
for the District of Columbia (CSOSA), did not compile inventories for
two straight years, an inexcusable oversight for an agency that spends
millions of dollars every year on service
contracts.

None of the agencies the GAO examined are collecting such required
data as the role the services play in achieving agency objectives, the
total dollar amount invoiced for services under the contracts, and the
number and work locations of contractor and subcontractor personnel.
Such data gaps diminish the utility of inventories. If the government
does not have a clear picture of the number of its contractor
personnel or their role in supporting agency activities, agencies are
at greater risk of “losing control of their missions and
operations,” according to the GAO.

Another problem is that agencies are using different methodologies
to compile their inventories. “In the absence of a consistent
methodology,” the GAO warns, “OMB [Office of Management
and Budget] and Congress cannot meaningfully compare service contract
obligations among agencies or develop spending trends for
agencies.”

According to the GAO, many agencies compile their inventories from
a review of 50 or fewer service contracts. However, the OMB does not
require agencies to provide the number or percentage of contracts or
contract obligations they reviewed. Therefore, we don’t know
whether, for example, NASA’s inventory, which was compiled from
8 contracts representing more than 70 percent of its service contract
spending that year, is more comprehensive and accurate than the
Department of the Interior’s inventory, which was compiled from
more than 2,000 contracts, because Interior did not report the
percentage of service contract spending covered by those
contracts.

Still another problem is that some agencies did not follow OMB
guidance when compiling their inventories, causing several of those
agencies to significantly underreport service contract fiscal
obligations. The GAO cites the extreme case of the General Services
Administration (GSA), whose inventory excluded an incredible $6.4
billion in service contracts—nearly half of its total contract
spending that year. Perhaps we shouldn’t be surprised by the
GAO’s finding that the GSA does not use its inventories for
department-level decision-making.

Five agencies identified three contracts where contractors could be
performing inherently governmental functions. One of the contracts
identified in the report was a State Department security services
contract. In stark contrast, as the GAO reported in April, the DoD identified more than
2,000 instances of contractors performing inherently governmental
functions. Like the DoD, civilian agencies are not able to take
corrective action—either insourcing the work or redefining the
contractor’s roles and responsibilities—due to resource
limitations.

If service contract inventories contain comprehensive, accurate,
and actionable data, they can be an extremely beneficial management
tool. Consider the example of the Department of Health and Human
Services (HHS), which uses its inventories to help identify and
eliminate contracting redundancies and duplications. In one instance
cited in the GAO report, HHS was able to consolidate 15 service
contracts into 4, resulting in estimated savings of $20 million.

Despite uncovering many problems in civilian agencies’
service contract inventories, the GAO seems optimistic. Service
contract inventories are a relatively new requirement, having been
implemented in 2007 for DoD and in 2009 for the rest of the federal
agencies. Refining the methods of collecting, analyzing, and sharing
service contract data will be an ongoing process.

2012-10-02 14:00:28

Source: http://pogoblog.typepad.com/pogo/2012/10/gao-report-finds-federal-agencies-must-improve-service-contract.html