FEDERAL MOTOR CARRIER SAFETY 

ADMINISTRATION LACKS CORE 

ELEMENTS FOR A SUCCESSFUL 

ACQUISITION FUNCTION

Federal Motor Carrier Safety Administration

Report Number: ZA-2010-093

Date Issued: August 24, 2010
U.S. Department of

Memorandum

Transportation

Office of the Secretary of Transportation

Office of Inspector General

Subject: ACTION: The Federal Motor Carrier Safety 

Administration Lacks Core Elements For A 

Successful Acquisition Function

Date: August 24, 2010

Report No ZA-2010-093

From: Terrence J. Letko

Acting Assistant Inspector General for Acquisition 

and Procurement Audits

Reply to 

Attn. of: JA-60

To: Administrator 

Federal Motor Carrier Safety Administration 

The Federal Motor Carrier Safety Administration (FMCSA) relies on the 

procurement of goods and services to achieve its primary mission of reducing

crashes, injuries, and fatalities involving large trucks and buses. In fiscal year 

2009, FMCSA received a $234 million budget for its operations and programs to 

support its mission—$80 million or 34 percent of which was for the procurement 

of goods and services.1

 FMCSA also relies heavily on contract arrangements that 

place a high risk on the Agency because they tie the contractor's profit to the 

number of hours worked, thus imposing the risk of cost overruns on the 

Government.2 FMCSA spends about 40 percent of its dollars on such contracts 

compared to about 5 percent Governmentwide. Given the magnitude of FMCSA's 

contracted goods and services to its mission success and its significant use of highrisk contracts, it is critical that its contract practices are effective to protect the 

Government's interest. 

We performed this audit at the request of FMCSA's former Administrator.3

 1 These budgetary amounts exclude grants. FMCSA's total budget for fiscal year 2009 was $541 million.

Our 

audit objectives were to determine whether FMCSA’s contract award and 

2 These include Time and Materials and Labor Hour contracts, as defined in FAR Part 16.

3 In 2008, the former Administrator contracted with Grant Thornton, LLP to perform a review of FMCSA’s acquisition

process; the contractor's findings prompted the former Administrator's request to the Department of Transportation’s 

Office of Inspector General to perform a follow-up audit.
2

administration practices comply with applicable laws and regulations. As a result, 

we reviewed FMCSA’s (1) acquisition planning and competition of contracts, 

(2) contract administration and oversight, and (3) acquisition infrastructure. Our 

audit work included a review of 274 FMCSA contracts valued at $192 million 

from a universe of contract actions reported between fiscal year 2005 and 

January 12, 2009.5

RESULTS IN BRIEF 

 We conducted this audit in accordance with generally accepted 

government auditing standards and believe the evidence we obtained provides a 

reasonable basis for our findings and conclusions based on our audit objectives. 

Exhibit A contains the details of our scope and methodology.

FMCSA does not have adequate contract pre-award processes in place, leaving it 

vulnerable to using ineffective business arrangements and ultimately hindering its 

ability to maximize competition. First, FMCSA's Office of Acquisition 

Management (OAM) does not have internal controls to ensure that required

acquisition plans be used for all procurements over $2 million.6

 Second, FMCSA 

is not properly completing determination and findings (D&F) to justify using 

contract types that subject the Government to a greater degree of risk, such as 

Time and Materials (T&M) and Labor Hour (LH) contracts. Third, FMCSA is not 

documenting required independent government cost estimates (IGCE)7 for its use 

when negotiating prices with contractors.8

 Fourth, 10 contract files we reviewed 

that required legal sufficiency reviews of both the solicitations and contract 

awards lacked proof that such reviews were completed. Fifth, OAM is not 

allowed adequate time to award a contract because FMCSA does not follow its 

recommended procurement lead times for planning and awarding contracts, which 

could greatly limit competition. Finally, FMCSA’s acquisition staff and program 

offices are not performing adequate market research to identify qualified vendors, 

limiting the possibility of achieving more favorable costs for FMCSA. 

FMCSA lacks effective administration and oversight of its contracts to ensure it 

meets the Agency's needs in the most efficient and economical manner. 

Specifically, Contracting Officers (CO) maintained incomplete contract files and

documents with numerous administrative errors, and for four contracts, COs 

provided their signature after the awards' effective date. In addition, FMCSA's 

 4 We selected 28 contracts for review; however, FMCSA was unable to locate 1 of these 28 contracts. Therefore, we 

were able to review a total of only 27 contracts, which we refer to throughout the report. 5

 We selected the contracts from the Federal Procurement Database System-Next Generation (FPDS-NG)—the Federal 

tracking system for contracts with an estimated value of $3,000 or more. There was a universe of 410 contracts 

valued at $334 million, which included contracts awarded from fiscal years 1999 through 2009. However, the 

selected contracts had contract award dates from fiscal years 2002 through 2008. 6 Transportation Acquisition Manual (TAM) Subchapter 1207.1 Acquisition Plans. 7 A documented and supported estimate of the cost of the proposed project based on factors such as prior buying 

history, rates in similar contracts, and inflation indicators. 8 TAM 1215.404-70 Independent Government Estimates.
3

Contracting Officer's Technical Representatives (COTRs) have incomplete 

contract files and do not follow a systematic approach for monitoring contracts, 

such as using structured monitoring plans. Such systematic oversight is especially 

important given FMCSA's high use of T&M/LH contracts. Finally, contract 

oversight is further compromised by COTRs' lack of regular communication with 

OAM, which has led to contrasting viewpoints regarding basic, yet key, contract 

information required to help ensure desired contract outcomes. 

FMCSA lacks the critical components needed for an effective acquisition function, 

namely organizational alignment and leadership, policies and processes, 

acquisition data, and human capital. Weaknesses in these areas contribute to 

FMCSA's poor contracting practices. The Office of Management and Budget

(OMB) Guidelines and Federal internal control standards cite these components as

cornerstones for an effective acquisition function.9

 

 FMCSA's lack of emphasis on 

improving these cornerstones is the primary cause of OAM's and the program 

offices' continued use of high risk business arrangements, such as T&M/LH 

contracts, not maximizing competition when awarding contracts, and inadequate 

contract oversight. 

Our report makes a number of recommendations for improving FMCSA’s 

acquisition workforce deficiencies, policies and processes, and contract oversight 

and therefore, better positioning its acquisition function to fulfill the Agency's 

mission. 

BACKGROUND 

The Federal Acquisition Regulation (FAR) establishes uniform policies and 

procedures for executive agencies to ensure their acquisition of supplies and 

services are conducted with fairness and integrity, minimize administrative 

operating costs, fulfill public policy objectives, and result in quality products and 

services. The FAR also promotes the use of competition and fixed-price 

contracts.10

Recent Federal emphasis has been placed on the importance of sound acquisitions. 

The President’s March 4, 2009, memorandum on government contracting 

underscores agency use of competition and fixed-price contracts since they are the 

The Department of Transportation's (DOT) Transportation 

Acquisition Regulation (TAR) and the Transportation Acquisition Manual (TAM) 

implement and supplement FAR policies. 

 9

 OMB Memorandum Conducting Acquisition Assessments under OMB Circular A-123, May 21, 2008, provides four 

cornerstones: (1) organization alignment and leadership, (2) policies and processes, (3) human capital, and (4) 

information management and stewardship. 10 FAR 6.1 Full and Open Competition promotes competition, and FAR 16.1 Selecting Contract Types promotes fixedprice contracts.
4

least risky contract type to the Government.11 Also, on July 29, 2009, OMB

issued a memorandum to the heads of executive departments and agencies to 

heighten acquisition reform to improve the effectiveness of acquisition practices 

and the results achieved from their contracts. 

FMCSA’s OAM—one of three divisions in its Office of Administration—is 

responsible for the Agency’s contract award and administration. In June 2008, 

FMCSA hired a new Acting OAM Director (made permanent in November 2009) 

to oversee and manage its acquisition function. OAM consists of Contracting 

Officers, authorized to award, administer, and terminate contracts, and Contract 

Specialists, who perform day-to-day contract activities. In addition, program 

offices throughout FMCSA define contract requirements and prepare purchase 

requests to send to OAM to acquire goods and services, which help to meet their 

offices' strategic goals. Once the contract is awarded, a Contracting Officer's 

Technical Representative is appointed as a representative of the program office

and is responsible for monitoring contractor performance. OAM and the program 

offices are laterally aligned in FMCSA's organizational structure. 

The total dollar value of FMCSA's contract actions between fiscal year 2005 and 

January 12, 2009, was $334 million, which was distributed as follows: 

• 45 percent were competitive awards, 35 percent were non-competitive awards, 

and the remaining 20 percent of the awards' extent of competition was not 

reported.

• 44 percent were T&M/LH-type contracts, 33 percent were fixed-price 

contracts, and the remaining 23 percent used another contract type.

INADEQUATE PLANNING PROCESSES LEAVE FMCSA 

VULNERABLE TO USING INEFFECTIVE BUSINESS

ARRANGEMENTS AND ACHIEVING LIMITED COMPETITION 

FMCSA awards contracts without adequately performing key pre-award processes 

(see table 1 for FMCSA's specific acquisition pre-award weaknesses). For 

instance, FMCSA does not prepare acquisition plans before awarding a contract. 

Further, OAM does not adequately prepare D&Fs to justify using high risk 

contract types, such as T&M/LH contracts. Contract files do not provide 

documentation that IGCEs are prepared for negotiating fair and reasonable 

contract costs. Also, contract files do not include required legal reviews, and there 

is no process in place to ensure legal review comments are resolved before 

awarding a contract. Additionally, FMCSA does not follow its specified 

procurement lead times for planning and awarding contracts. Finally, FMCSA is 

 11 Presidential Memorandum Government Contracting, dated March 4, 2009. 
5

not performing adequate market research to identify qualified vendors and

appropriate products and services. The lack of these planning processes has 

resulted in FMCSA's inability to promote and provide for full and open 

competition in soliciting offers and awarding contracts. 

Table 1. Summary of Acquisition Pre-award Requirements for Contracts 

Reviewed 

Measure

Pre-Award Requirements

Acquisition 

Plan

D&F IGCE Legal 

Review

Procurement 

Lead Time

Market 

Research

Number of 

contracts 

required to 

comply* 19 21 27 10 27 12

Number and 

percent of 

noncompliant

contracts

16

(84%)

12

(57%)

11

(41%)

10

(100%)

26

(96%)

5

(42%)

Value of 

noncompliant

contracts

(in millions) $150 $55 $71 $75 $182 $69

Percentage of 

noncompliant 

contracts to 

contract universe 

valued at 

$334 million 45% 17% 21% 22% 55% 21%

* Out of 27 contracts reviewed, based upon applicable regulation or guidance.

Source: OIG analysis of sampled OAM contract files, based upon the contract value reported in FPDS as of 

January 12, 2009.

Contracts are Awarded Without Adequate Acquisition Plans

FMCSA's acquisition planning is insufficient at both an agency-wide and 

individual contract level, resulting in contracts being awarded without acquisition 

planning being performed or documented. The FAR requires agencies to perform 

procurement planning in order to promote competition and ensure that agency 

needs are met in the most effective, economical, and timely manner.12 Also, 

FMCSA does not have internal controls nor is it held accountable to ensure

acquisition plans are developed for all procurements over $2 million, as required 

by TAM.13

 12 FAR 7.102 Acquisition Plans. 

In fact, 16 of 19 contracts we reviewed over $2 million, with a total 

value of $150 million, did not contain an acquisition plan. FMCSA's lack of 

13 Transportation Acquisition Manual (TAM) Subchapter 1207.1 Acquisition Plans. 
6

planning has contributed to the use of high risk business arrangements and limited 

competition. 

Additionally, FMCSA's lack of planning is partly responsible for the significant 

amount of contract dollars it obligates in the last month of the fiscal year— 

44 percent of fiscal year 2008 obligated contract dollars were awarded in 

September. Such delay creates a risk that planning will be rushed or not 

performed at all, which could result in OAM awarding contracts to vendors that do 

not represent best value to FMCSA. For example, in fiscal year 2008, OAM 

awarded a $7 million contract for professional services to support the Motor 

Carrier Safety Assistance Program—a major safety program to reduce the 

incidence and severity of commercial motor vehicle crashes. According to OAM 

officials, to ensure the contract was awarded by year-end, they solicited it for only 

5 days, resulting in only one bid from the incumbent. While such short solicitation 

times are not prohibited, had OAM planned more effectively and allowed more 

time, it may have realized increased competition. 

OAM Does Not Adequately Prepare Determinations and Findings To 

Justify Using High Risk Contract Types 

OAM is not consistently completing D&Fs to support its selection of contract 

type. When D&Fs are completed, they do not contain all the elements required by 

the FAR, such as details of the particular circumstances, facts, or reasoning 

essential to support the determination (see table 2). The FAR requires agencies to 

prepare a D&F to justify using contract types that subject the Government to a 

greater degree of risk, such as T&M/LH contracts, any contract that is not firmfixed-price, or any contract for research and development.14 

Table 2. Summary of Non-Compliant Contract Type D&Fs for Contracts 

Reviewed 

 14 FAR 16.103(d) Negotiating Contract Type.

Category Contracts 

Reviewed 

Requiring 

Contract Type 

D&F

Contracts 

with no 

D&F

Value of 

Contracts with 

no D&F 

(in millions)

Percentage of 

Value of 

Contracts with 

no D&F to Total 

Universe 

Valued at 

$334M

For All Contracts in 

our Sample 21 12 $55.5 17%

Breakout by Contract Type and Follow-On Status:

• T&M/LH 

Contracts 15 8 $32.2 10%

• Follow-on 

Contracts 13 7 $32.0 10%
7

Furthermore, OMB's 2009 memorandum on government contracting underscores

the FAR’s requirement that an agency’s decision to use a T&M/LH contract must 

be supported by sufficient analysis, including an explanation of why a firm-fixedprice contract is unsuitable.15 Such analyses are critical in FMCSA, which in 

fiscal year 2008 obligated 37 percent16 of its contract dollars on T&M/LH-type

awards, compared to 5 percent Governmentwide.17 Specifically, only 7 of 15 

T&M/LH contracts we reviewed contained the required D&F, and 2 of these 

simply repeated verbatim the FAR requirement for using these contract types 

without further explanation.18 The remaining D&Fs for all other contracts we 

reviewed contained vague contract detail and did not adequately support the use of 

such a high risk contract type. The FAR also requires agencies to periodically 

assess their T&M/LH contracts to determine whether changing circumstances or 

experience gained throughout the period of performance provide a basis for firmer 

pricing. However, we found no evidence in the 15 T&M/LH contracts we 

reviewed that OAM analyzed the feasibility of changing to a low risk contract 

type, such as a fixed-price contract. 

Also, 39 percent of FMCSA's follow-on contracts we reviewed, valued at 

$78 million, were T&M/LH-type contracts, which required a D&F. To illustrate, 

in September 2008, FMCSA awarded a 5-year follow-on T&M contract for 

approximately $10 million to prepare regulatory plans and provide policy 

development support services. OAM's D&F to justify the use of this contract only 

repeated verbatim the FAR requirement without providing further explanation. 

However, FMCSA did not assess the current contract to determine if firmer 

pricing could be used as it had done in the prior contract. Additionally, OAM 

awarded the two prior contracts to the same vendor to acquire the same support 

services for the Regulatory Division. The first was awarded in fiscal year 2004, 

illustrating at least a 4-year purchase history with this vendor. If OAM exercises 

all option periods for the current contract, FMCSA will have contracted for the 

same service—under a high risk-type contract—for a prolonged period of 9 years. 

Contract Files Lack Independent Government Cost Estimates Needed 

To Negotiate Fair and Reasonable Prices

OAM is not adequately documenting or completing IGCEs to ensure fair and 

reasonable prices for proposed projects.19

 15 OMB Memorandum Increasing Competition and Structuring Contracts for Best Result, October 27, 2009.

 For example, contract files for 11 of the 

16 According to data that FMCSA entered in FPDS-NG for fiscal year 2008. 17 Reported in a March 18, 2009, OMB Letter to the Chairman on the Committee on Homeland Security and 

Governmental Affairs complying with Public Law 110-417. 18 FAR 16.601(c) Time and Materials Contract: Application. A time-and-materials contract may be used only when it 

is not possible at the time of placing the contract to estimate accurately the extent or duration of the work or to 

anticipate costs with any reasonable degree of confidence. 19 A documented and supported estimate of the cost of the proposed project based on factors such as prior buying 

history, rates in similar contracts, and inflation indicators.
8

27 contracts reviewed, valued at $71 million, did not contain required IGCEs. 

When DOT negotiates prices with contractors, the TAM requires the requesting 

program office to provide an IGCE for all proposed acquisitions.

20 While the 

remaining 16 contracts had IGCEs, 9 of those contracts lacked methodology for 

how they were calculated. Although providing methodology is not a requirement, 

guidance from other Federal agencies states IGCEs should include any 

assumptions, methodology, and reference material used in developing the cost 

estimate.21 FMCSA's lack of controls to ensure IGCEs are adequately developed, 

coupled with OAM staff not inquiring or assessing how program offices prepare 

their IGCEs, heightens FMCSA's risk of relying on poor cost estimates when 

negotiating contract prices. 

Legal Reviews Are Not Performed and Legal Concerns Are Not 

Addressed 

Prior to awarding contracts, FMCSA does not perform required legal reviews or 

address the legal office's review comments. The TAM requires all solicitations 

and contracts not awarded from Federal Supply Schedules22 and expected to 

exceed $500,000 be reviewed for legal sufficiency.23 However, all 10 contract 

files we reviewed that required both a solicitation and an award review were 

missing one of these two reviews (see table 3). 

Table 3. Summary of Non-Compliant Legal Reviews for 10 Contracts

Reviewed 

*These files are for only those 10 contracts in our sample that required legal review.

 20 TAM 1215.404-70 Independent Government Estimates. 21 Federal Aviation Administration Pricing Handbook 2: IGCE October 2007. 22 The Federal Supply Schedules Program establishes a streamlined approach to procuring long-term Government-wide 

contracts for commercial supplies and services. Eleven of the 12 competed contracts we reviewed were awarded off 

the General Services Administration and National Institute of Health supply schedules. FAR 8.405-1(c)(1) Ordering 

procedures for Federal Supply Schedules: Ordering procedures for supplies and services not requiring a statement 

of work requires that the solicitation be sent to three vendors capable of performing the requested services; FAR 

8.405-2(c)(3) Ordering Procedures for Federal Supply Schedules: Ordering procedures for services requiring a 

statement of work requires additional vendors be selected when the contract value is expected to exceed the 

maximum order threshold. 23 TAM 1204.7003(b) Legal Reviews. Legal reviews are also not required for contracts awarded under Simplified 

Acquisition Procedures and Interagency Acquisitions under the Economy Act.

Type of Legal Review Required

Contracts 

Without 

Reviews*

Value of 

Contracts 

Without 

Reviews 

(in millions)

Percentage of 

Value of Contracts 

Without Reviews to 

Total Universe 

Valued at $334M

Solicitation Review 9 $66 20%

Award Review 6 $47 14%

Solicitation or Award Review 10 $75 22%
9

When the legal office's reviews were completed, however, neither OAM nor the 

program office consistently addressed the review comments. This is a result of 

FMCSA not assigning clear roles and responsibilities to OAM and its program 

offices regarding the legal review process. As a result, OAM staff believe it is the 

program offices’ responsibility to address the comments and vice-versa. To 

illustrate, on September 30, 2008, OAM awarded a $3 million contract for 

professional support services to close out undelivered orders from FMCSA's 

Delphi accounting system. The legal office's review of this proposed contract 

expressed concern about inconsistencies between what was stated in the contract 

and the program office's procurement request. The contract stated the period of 

performance was 1 base year plus 2 option years, but the procurement request 

stated the period of performance was 1 base year plus 4 option years. The legal 

office advised OAM to rectify the inconsistency before awarding the contract. 

However, the contract file did not contain documentation to support that this issue 

was resolved. 

Furthermore, for the files we reviewed, COs did not sign documentation asserting 

the resolution of all legal comments prior to awarding a contract, as required by 

TAM.

24 This is partly because the legal office does not have a process in place 

requiring its staff to follow up with OAM about resolving their review comments 

before awarding a contract, and OAM is not held accountable to ensure these 

comments are addressed. The lack of clear roles and responsibilities, as well as a

process for addressing legal office comments and concerns before awarding a 

contract, increases FMCSA's risk of awarding contracts that do not comply with 

applicable statutes and regulations. 

Program Offices Limit Competition by Not Informing OAM of the Need 

for Contracts in a Timely Manner 

FMCSA's program offices do not inform OAM of their need for contracts in a 

timely manner—only 1 of 27 contracts we reviewed met FMCSA's procurement 

lead time guidelines (see table 4). In 2002, FMCSA's Associate Administrator for 

Administration issued a memorandum that recommended using standard 

procurement lead times for planning and awarding a contract to ensure efficient 

and economical procurement practices.25

 24 TAM 1204.7004(a) requires all approval decisions and the resolution of all comments to be written, signed, dated, 

and placed in the contract file; 1204.7004(b) requires the contracting officer to include a signed and dated written 

determination indicating that all of the conditions were satisfied prior to award.

 The standard procurement lead time is 

measured as the period from which the program office requests the procurement to 

the day OAM awards a contract. Despite these recommended procurement lead 

times, however, OAM solicited 8 of 12 competitive contracts we reviewed for 

25 FMCSA’s memorandum Procurement Lead Times, November 22, 2002.
10

10 days or less, which may not have allowed qualified vendors time to become 

aware of the competition and prepare a proposal.

Table 4. Summary of Non-Compliant Lead Times

FMCSA Recommended

Lead Times per Fiscal Year 2002 Memo Contracts We Reviewed

Contracts

That Met 

Recommended 

Contract Lead Time

Categories

Lead Time

(in days)

Number Range of Lead

Times (in days)

SOLE SOURCE

Non 8(a) 26 less than 

$500,000 180 2 17–28 0

Non 8(a) greater than 

$500,000 210 5 33–213 1

8(a) set aside less than 

$3,000,000 90 4 13–49 0

8(a) set aside greater than 

$3,000,000 120 2 14–95 0

COMPETITIVE

Non 8(a) less than 

$500,000 210 1 40 0

Non 8(a) $500,000-$5 

million 270 3 54–112 0

Non 8(a) greater than $5 

million 420 6 61–188 0

8(a) less than $3,000,000 90 1 43 0

8(a) greater than 

$3,000,000 120 1 17 0

UNDETERMINED

Guidance does not specify 90 a 2 47–49 0

Total 27 1

a 90 days was the minimum lead time for any acquisition; therefore since the extent competed was unable to be 

determined for 2 contracts, the minimum lead time was used as the baseline to show that regardless of the extent 

competed, they would not have met the recommended lead time established by FMCSA.

In addition, documentation in contract files revealed FMCSA's legal staff have 

concerns that FMCSA's short lead times for soliciting potential vendors give the 

appearance of favoring the incumbent. For example, OAM solicited a contract for 

about $10 million for regulatory and policy support services to only three 

vendors—one the incumbent—for just 3 days. Ultimately, OAM awarded this 

contract to the incumbent because the other two bidders did not meet all of the 

solicitation’s requirements and did not demonstrate the same level of experience 

and knowledge. However, FMCSA’s legal review expressed concern that the 

short solicitation time gave the appearance of favoring the incumbent, making 

FMCSA vulnerable to bid protest. Insufficient lead times could greatly limit 

 26 A classification of small business as determined by the Small Business Administration, which must be 

unconditionally owned and controlled by one or more socially and economically disadvantaged individuals. 
11

competition and put FMCSA at risk of not achieving the best value for its 

acquisition dollars. 

Market Research is Not Performed or is Inadequate To Identify 

Qualified Vendors 

FMCSA does not sufficiently perform market research or adequately document its 

results. To illustrate, for the 12 competitively awarded contracts we reviewed that 

required market research:

• 5 contracts—valued at over $69 million, or about 21 percent of FMCSA’s 

entire contract universe—had no documented market research, and 

• 7 contracts had limited documented market research, consisting only of a 

list of vendors from the Federal Supply Schedule. 

Six of these 12 contracts received only one bid, essentially not ensuring that 

FMCSA benefitted from competition to obtain goods and services at the best 

value. The FAR27 requires agencies to conduct market research before soliciting 

offers for acquisitions with an estimated value in excess of $100,00028 in order to 

identify qualified vendors and the extent of possible competition in the market, as 

well as the appropriate products and services to be acquired. The FAR also 

requires market research results be documented in a manner appropriate to the size 

and complexity of the acquisition.

OAM's award of a $7 million contract to perform regulatory, financial, and safety 

reviews illustrates its insufficient use of market research to maximize competition. 

In this case, OAM identified eight potential vendors and sent the solicitation to 

three of them—only two vendors responded, one of which stated it did not 

perform the services requested and therefore did not submit a proposal. The other 

vendor was the incumbent and was ultimately awarded the contract. The CO 

stated OAM did not issue the solicitation to the other five vendors because it is not 

required to issue solicitations to more than three vendors. However, in this case, 

OAM did not comply with FAR solicitation procedures requiring contracts over

the maximum order threshold be solicited to more than three vendors.29 

Further, OAM does not always use market research results provided by the 

program office, a best practice in other Federal agencies given the program office's 

 27 FAR Part 10: Market Research. 28 The simplified acquisition threshold includes contracts with an anticipated value exceeding $3,000. 29 Dollar value that identifies when a price reduction should be sought and additional vendors solicited. This dollar 

threshold varies by supply schedule. For this contract, the maximum order threshold was set at $1 million.
12

familiarity with the services being requested.30 For example, the Strategic 

Planning and Program Evaluation Division conducted detailed market research to 

prepare an IGCE for a contract over $9 million to provide technical support for 

Strategic Planning, Performance Management, and Program Evaluations. The 

program office identified four vendors it determined had high quality past 

performance on similar services for FMCSA or other Federal agencies. OAM 

issued the solicitation for this contract to six vendors—only one of which was 

identified by the program office. Ultimately, only one bid was received. OAM 

stated it did not use the program office's market research results because it is not 

required to and instead performed its own market research.

31

FMCSA'S CONTRACT ADMINISTRATION PRACTICES DO NOT 

ENSURE FMCSA MEETS ITS NEEDS EFFECTIVELY AND 

ECONOMICALLY

 

FMCSA’s contract administration and oversight do not provide assurance that its 

contracts meet agency needs in the most efficient and economical manner. For all 

27 contracts reviewed, we found contract documents with errors, contract files 

missing required documents, and contracts signed by the CO after the contract's 

effective date. Additionally, COTRs do not follow a systematic approach for 

monitoring contracts, such as using structured monitoring plans and documenting 

surveillance results when performing contract oversight. Also, COTRs and OAM 

do not regularly communicate with one another, resulting in contrasting 

information regarding basic, key contract information needed to ensure desired 

contract outcomes. 

COs Do Not Ensure Contract Files are Accurate and Complete 

FMCSA’s contract files contained numerous problems, ranging from document

errors to missing documents. The CO is the sole person with the authority to enter 

into a contract on behalf of FMCSA and is required by the FAR to "ensure 

performance of all necessary actions for effective contracting, ensuring 

compliance with contract terms, and for safeguarding the interest of the United 

States in its contractual relationships."32

 30 Defense Procurement and Acquisition Policy Contract Pricing Reference Guide, Conduct Market Research for Price 

Analysis.

 However, we found errors the CO did not 

correct, which made FMCSA vulnerable to potential legal issues. For example, 

one contract we reviewed contained a personal service clause stating, "The on-site 

project manager (PM) will serve as liaison...under the direct supervision of the

31 FMCSA 2009 Succession Plan identified market research as a competency gap for the COs and COTRs. 

Additionally, it states that market research is not a critical aspect of the CO function, and therefore, FMCSA has no 

plans to improve its COs' skills in performing market research. OAM officials later advised us that it is the program 

office's responsibility to perform market research, not the COs. 32 FAR 1.602 Contracting Officers.
13

Chief of the Physical Qualifications Division and the COTR(s) for this 

program."33 Such personal service clauses—whereby contractor personnel are 

supervised by government employees—are prohibited by law, and neither OAM 

nor the COTR were aware the contract contained the clause. 

In addition, we found contract files lacked required documents, such as a complete 

set of contract modifications, acquisition plans, justifications and D&Fs, and 

COTR designation letters. For example, the current OAM staff were unable to 

determine the extent of competition in two contracts we reviewed because the 

contract files lacked documentation to support whether they were competitive or 

sole-source awards. The FAR states that such documentation in contract files

shall be sufficient to constitute a complete history of the transaction for making 

informed decisions at each step of the acquisition process and to support any 

actions taken.34 In addition, the Government Accountability Office’s Standards 

for Internal Control in the Federal Government states agencies should have 

internal control activities, such as the creation and maintenance of records, that 

provide evidence of execution of approvals and authorizations. The need for wellmaintained and complete contract files is not only important for OAM's day-today contract administration, but is also important given OAM staff's high turnover 

rate, and complete contract files help ensure proper transfer of responsibilities 

among staff and continuity of operations.

A contract only becomes a legal document after it is signed by the CO. However, 

we found four contracts, valued at $13.2 million, where COs provided their 

signature after the awards' effective date. Contractors began performing work on 

these four contracts before legally authorized. For example, we found a 4-month 

bridge contract valued at almost $1 million for operation and maintenance of 

commercial driver licenses databases with an effective date of June 1, 2008. 

However, the CO did not sign this contract until September 15, 2008—107 days 

after the effective date and only 9 days before the contract’s performance period 

ended.35

 33 FAR 37.104(a) & (b) Personal Service Contracts: Agencies shall not award personal services contracts unless 

specifically authorized by statute to do so. Obtaining personal services by contract, rather than by direct hire, 

circumvents civil service laws unless specifically authorized by Congress. A personal services contract is 

characterized by the employer-employee relationship where, as a result of the contract’s terms or the manner of its 

administration during performance, the contractor personnel are subject to the relatively continuous supervision and 

control of a Government officer or employee.

 Also, other contract documents, such as task orders and modifications, 

were not signed by the CO. In addition, while the current OAM Director required 

COs to sign-off on a quality review form to ensure accuracy of contract actions, 

we found several unsigned forms, mitigating the effectiveness of this internal 

control. The errors and inconsistencies we found in FMCSA's contract documents 

34 FAR 4.8, Government Contract Files. 35 OAM provided the contractor a notice of authorization to begin work prior to the contract being signed.
14

could result in legal disputes and ultimately put FMCSA at risk of not receiving 

what it paid for. 

COTRs' Lack of a Systematic Approach To Monitoring Contracts and 

Communicating with OAM Hinders Adequate Contract Oversight

FMCSA does not adequately monitor its contracts. FMCSA does not use a 

systematic approach for contract monitoring, and COTR files we reviewed were 

often incomplete or missing. For example, of 21 COTR files we reviewed that 

corresponded to contracts valued at $162 million:

• 18 files—86 percent—valued at $142 million lacked a surveillance plan or 

oversight methodology; and 

• 17 files—81 percent—valued at $129 million lacked documentation of 

completed contractor performance reviews or quality assurance evaluations. 

We reviewed only 21 COTR files because FMCSA was unable to locate the 

COTR files for 7 contracts we audited, further demonstrating weaknesses in 

FMCSA's effort to monitor contractor performance. FMCSA does not ensure 

COTR files contain key documents that are recommended by FMCSA36 and 

DOT37 policy and are essential for successful contract monitoring and oversight. 

In addition, best practices state that documenting contract monitoring and 

surveillance are key practices to the contract administration process.38 Complete 

and orderly contract files are vital to ensuring both the contractor and FMCSA 

meet their contract obligations, particularly when disagreements or questions of 

interpretation arise, and to hold contractors accountable for delivering intended 

results.

39 

Also, COTRs do not regularly document or provide the CO with evidence of their 

efforts to evaluate contractor performance, work progress, and payments made, as 

required by FMCSA's COTR Order.

40

 36 FMCSA Order 4200.2.

 Over half of the COTRs we interviewed do 

not document their surveillance results, and some stated they store such 

information “in their heads.” When COTRs did maintain some sort of 

documentation, it was not formally or consistently prepared to allow the results to 

be easily accessed or utilized. For example, one COTR informally annotated 

evaluation results on meeting agendas. Adequately documenting contract

37 DOT COTR Program, September 2008. 38 Office of Federal Procurement Policy. A Guide to Best Practices for Contract Administration, October 1994. 39 FMCSA Order 4200.2 and FMSCA COTR Handbook Draft, March 2007. 40 FMCSA Order 4200.2 FMCSA COTR Requirements, January 16, 2004. 
15

monitoring is especially important given FMCSA’s high use of T&M/LH 

contracts, which place cost and performance risks on FMCSA. 

Further, COTRs are not regularly communicating with OAM during the pre- or 

post-award phases of the contract, resulting in contrasting viewpoints regarding 

basic, yet key, contract information.41

FMCSA'S INADEQUATE INFRASTRUCTURE INHIBITS THE 

EFFECTIVENESS OF ITS ACQUISITION FUNCTION

 For example, four of six COTRs gave

differing information from OAM on the type of contract they were administering 

and overseeing—OAM responded the contract type was T&M, while the COTR

stated it was fixed-price. OMB Guidelines state the COTR needs to continuously 

communicate with the CO, beginning in the pre-award phase and continuing 

throughout the contract’s performance period. Since knowing the contract type is 

a critical factor in developing the correct oversight methodology, it is particularly 

important for OAM and COTRs to be involved in the pre-award phase to ensure 

both parties clearly understand the post-award contract surveillance tasks needed 

to achieve the desired contract outcomes. 

FMCSA lacks the critical components needed for an effective acquisition function. 

Specifically, weaknesses exist in FMCSA's organizational alignment and 

leadership, policies and processes, acquisition data, and human capital, which 

contributed to the poor contracting practices presented in this report. 

In May 2008, OMB issued Guidelines for Assessing the Acquisition Function42 to 

all Chief Acquisition Officers to provide guidance on performing entity-level 

acquisition function internal control reviews required by OMB Circular A-123.43

 41 We interviewed only the COTRs for the 6 most recent contracts reviewed so we would be able to interview both the 

COTR and the contract specialist for each contract. 

 

These guidelines consist of four interrelated cornerstones essential to an efficient, 

effective, and accountable acquisition process: (1) organization alignment and 

leadership, (2) policies and processes, (3) human capital, and (4) information 

management and stewardship. FMCSA's lack of emphasis on improving these 

cornerstones is the primary cause of OAM's and the program offices' continued 

use of high risk business arrangements, such as T&M/LH contracts; not obtaining 

maximum competition when awarding contracts; and not ensuring that FMCSA is 

meeting its requirements efficiently and economically. 

42 OMB Memorandum Conducting Acquisition Assessments under OMB Circular A-123, May 21, 2008. The template 

in OMB’s Guidelines for Assessing the Acquisition Function is adopted from the U.S. Government Accountability 

Office's (GAO) Framework for Assessing the Acquisition Function at Federal Agencies, GAO-05-218G (2005), 

which provided guidance aimed at enabling high-level, qualitative assessments of the strengths and weaknesses of 

agencies’ acquisition functions. 43 OMB Circular A-123 Management Accountability and Controls, June 21, 1995, defines management’s responsibility 

for internal controls in Federal agencies. 
16

OAM is neither used nor acts as a strategic partner to implement FMCSA's 

mission objectives. OAM plays a critical role in executing the award of multimillion dollar contracts to assist FMCSA in accomplishing its mission. For 

example, FMCSA relies on OAM to award contracts, such as OAM's recent award

for compliance reviews of states' Commercial Driver License compliance 

operational practices,44 However, FMCSA's program offices do not use OAM as a 

strategic partner—that is, they do not use OAM's expertise during the acquisition 

process for help in planning acquisitions to achieve common goals, such as 

receiving goods at fair prices. Rather, OAM is viewed more as an administrative 

support function, and FMCSA's program offices generally direct and dictate 

acquisitions. 

Furthermore, FMCSA's management has not clearly defined the roles and 

responsibilities of its acquisition team to serve as such a strategic partner. OAM's 

2009 acquisition improvement plan identifies FMCSA's culture as not recognizing 

program managers, supervisors, and other Agency leaders as part of the 

acquisition workforce. As a result, cross-functional teams are not used and 

acquisition plans are not always developed when making strategic acquisition 

decisions, such as determining the extent of competition and appropriate contract 

type, which ultimately can lead to not receiving mission critical goods and 

services at the best value. 

Acquisition policies and processes are not fully established. FMCSA has not 

promptly implemented or clearly communicated acquisition policies and processes 

to promote an efficient, cost-effective, and accountable acquisition function.45

OAM identified 15 standard operating procedures (SOP) it needs to develop in 

order to effectively achieve its mission. However, as of January 2010, only 4 of 

these 15 SOPs were completed.46 OAM officials acknowledged it has not met its 

goal of issuing the remaining 11 SOPs, some of which are mission critical,

because they are short staffed and have other competing responsibilities, such as 

reconciling databases and contract closeouts.

Also, FMCSA's management has not implemented internal controls for awarding, 

administering, and overseeing contracts to ensure its staff are held accountable for 

complying with Federal and departmental regulations and guidance. 

Consequently, OAM and program office staff do not always observe these 

regulations, such as preparing justifications for high risk contracts, preparing 

 44 FMCSA's current Strategic Plan for 2006–2011 does not mention OAM or the acquisition function among its 

mission-based goals, objectives, and strategies. 45 While TAR and TAM establish requirements and guidelines, FMCSA lacks standard operating procedures and 

controls to ensure that these requirements and guidelines are implemented consistently throughout the Agency. 46 OAM created a policy team in April 2009 to develop and issue SOPs. The policy team consists of one team lead and 

two supporting contractors. The list has been evolving since August 2008 and is based on OMB A-123 audit 

reviews and the new Director's observations of OAM's processes. 
17

acquisition plans, obtaining legal reviews, and performing market research. 

Communication and awareness of internal controls is also critical. Yet, FMCSA's 

acquisition policies and processes are not clearly communicated to all involved in 

the acquisition function. For example, most of the COTRs we interviewed were 

not aware of FMCSA Order 4200.2—FMCSA COTR Requirements, dated 

January 16, 2004. FMCSA’s lack of acquisition policies and internal controls 

prevents Agency managers from establishing basic expectations for how staff 

should award, administer, and oversee contracts, therefore imposing a barrier to 

establishing an efficient and results-oriented acquisition process. 

FMCSA’s acquisition data is unreliable and incomplete. OAM is unable to 

identify FMCSA’s contract universe, which it is responsible for managing, and 

also lacks controls to reasonably ensure available procurement data is reliable. 

Procurement officials require a range of information and data to effectively 

manage their acquisitions and corresponding internal controls to ensure data 

accuracy, as provided under OMB Guidelines and internal control standards. 

However, discrepancies exist in the three electronic systems FMCSA uses to fund, 

write, and report its procurements. The three systems are: Delphi, the Office of 

the Secretary of Transportation's (OST) financial management system; PRISM, 

OST’s contract writing system; and FPDS-NG, the Federal Procurement Data 

System-Next Generation. The proper documentation and authorization of 

payments in these systems are essential to mitigate the risk of improper or 

fraudulent payments to vendors. However, since these systems do not interface, 

FMCSA staff must manually transfer data among them, increasing the risk of 

errors.47 For example, we identified 25 contracts with obligations over 

$13.7 million for which FMCSA issued a payment through Delphi but did not 

make a corresponding data entry in either PRISM or FPDS-NG. OAM was unable 

to locate the contract file for 10 of these 25 contracts.48

FMCSA has not determined the appropriate size and skills for its acquisition 

workforce to be successful. FMCSA's April 2009 acquisition workforce 

succession plan—intended to be used as a tool to help FMCSA prepare its 

workforce for the future—has several weaknesses that limit its ability to position 

FMCSA's acquisition workforce, both in numbers and required skills. First, even 

though FMCSA did not assess its current and future acquisition workload to 

provide a basis for staffing decisions contained in the succession plan, it still found 

it lacked an adequate number of employees to carry out its duties and 

responsibilities. Given the absence of a workload assessment, OAM’s staffing 

 47 DOT is implementing a phased integrated approach— called ONE DOT PRISM—to improve PRISM 

interoperability with Delphi, which DOT expects to provide, among other things, efficiency, accuracy and quality 

in procurement reporting. 48 The Office of the Chief Financial Officer was able to provide invoices to support FMCSA's payments for 9 of these 

10 contracts but not for the remaining contract. 
18

conclusions may not be accurate. Second, the plan's assessment of OAM's current 

workforce included only government staff. However, OAM relies heavily on 

contracted staff to conduct its procurement functions—55 percent of its contract 

specialists are contractors. 

A successful acquisition function also requires a talented and trained workforce to 

develop, manage, and oversee acquisitions. However, FMCSA's succession plan 

indentified competency gaps for its CO and COTRs, several of which OMB 

Guidelines identify as critical for a successful acquisition function (see exhibit B 

for the list of competency gap results). For example:

• The CO had competency gaps in 11 of 17 contracting function areas included 

in the questionnaire, such as managing competition, market research, and 

awarding contracts. 

• COTRs had competency gaps in all 8 contracting function areas, such as 

acquisition planning, effective contract management, and market research. 

FMCSA has not provided any evidence that it is taking actions to follow through 

and resolve these competency gaps. 

CONCLUSION

FMCSA utilizes contracts to fulfill its primary safety-related mission goal of 

reducing crashes, injuries, and fatalities involving large trucks and buses. 

Therefore, sound procurement practices and an effective acquisition structure must 

be in place to ensure Federal funds are appropriately spent and that FMCSA 

maintains integrity in its day-to-day procurement operations while leveraging its 

acquisition function to help further its mission. FMCSA has the opportunity to 

build a model acquisition function by assessing and improving its existing 

strategic partnerships, policies and processes, human capital approaches, and 

contract information systems. Furthermore, FMCSA's inadequate acquisition 

function has contributed to its limited use of competition, leaving it vulnerable to 

awarding contracts that are not at the best value to the Agency. Until FMCSA 

takes action to improve the core elements of its acquisition function, it will 

continue to risk wasting millions of taxpayers' dollars using poor contracting 

practices. 
19

RECOMMENDATIONS 

We recommend that the Administrator, Federal Motor Carrier Safety 

Administration take the following actions to improve its acquisition function:

Maximize competition and strengthen FMCSA’s acquisition infrastructure to:

1. Require program offices to coordinate with the Office of Acquisition 

Management, FMCSA's legal counsel, and the Office of the Chief Financial 

Officer throughout the strategic planning process to develop efficient, 

effective, and economical acquisition strategies.

2. Develop policies that clearly identify roles and responsibilities and 

documentation requirements for (1) market research, (2) independent 

government cost estimates, (3) legal reviews, and (4) contract-type 

selection and justification. 

3. Develop and implement internal controls and performance measures to 

ensure that policies and processes for efficient and effective award, 

administration, and oversight practices are adhered to.

4. Develop and implement verification procedures to ensure data in FPDS-NG 

and PRISM are current, accurate, and complete. 

5. Complete a contract workload analysis and use it as a basis to perform a 

workforce analysis. 

6. Implement strategies identified in FMCSA's April 2009 strategic 

acquisition workforce succession plan to resolve identified competency 

gaps, including plans to attract, retain, and train the workforce.

7. Implement an internal acquisition quality assurance review program to 

ensure Federal and departmental regulations are met throughout the 

contract cycle.

Improve FMCSA’s contract administration and oversight by revising FMCSA 

Order 4200.2, COTR Requirements to:

8. Require the use of a systematic monitoring/contract administration plan. 

9. Require the use of a risk-based approach for monitoring contracts to assist 

in identifying high risk contracts warranting additional oversight.
20

AGENCY COMMENTS AND OFFICE OF INSPECTOR GENERAL 

RESPONSE 

A draft of this report was provided to FMCSA for comment on June 17, 2010. We 

received FMCSA's response on August 4, 2010, which can be found in its entirety 

in the appendix of this report. FMCSA fully concurred with all of our 

recommendations and provided reasonable timeframes for completing the planned 

actions. In addition to addressing our audit recommendations, FMCSA's response 

also cited implemented and ongoing procurement process improvements. We 

appreciate the greater attention that FMCSA is paying to improving its acquisition 

function and its recognition of its positive interactions with OIG staff. 

ACTIONS REQUIRED 

FMCSA’s planned actions and target dates are responsive to our 

recommendations. We consider these recommendations addressed pending 

completion of planned actions. We appreciate the courtesies and cooperation of 

FMCSA representatives during this audit. If you have any questions concerning 

this report, please call me at (202) 366-5225 or Anthony Wysocki, Program 

Director, at (202) 493-0223. 

cc: Martin Gertel, M-1

Karen Lynch, MC-PRS
21

Exhibit A. Scope and Methodology

EXHIBIT A. SCOPE AND METHODOLOGY 

We conducted this audit in accordance with generally accepted government 

auditing standards. Those standards require that we plan and perform the audit to 

obtain sufficient, appropriate evidence to provide a reasonable basis for our 

findings and conclusions based on our audit objectives. We believe that the 

evidence obtained provides a reasonable basis for our findings and conclusions 

based on our audit objectives. 

We conducted this audit between June 2008 and January 2010. To address our 

audit objective, we assessed FMCSA's procurement practices and organization 

against criteria contained in the Federal Acquisition Regulation (FAR), 

Transportation Acquisition Regulation (TAR), Transportation Acquisition Manual 

(TAM), Office of Management and Budget Guidelines for Assessing the 

Acquisition Function (OMB Guidelines), and other applicable departmental and 

Federal regulations and guidance. We interviewed contracting staff and 

management and program office representatives, analyzed contract file documents, 

and reviewed employee performance standards and training records. 

We judgmentally selected a total of 28 contracts from 2 separate universes we 

developed from contract actions reported in FPDS-NG data between fiscal year 

2005 and January 12, 2009, displayed in table 5. We used this two-staged process 

to select our 28 contracts for review to reflect the high turnover in Office of 

Acquisition Management (OAM) staff and because FMCSA hired a new 

Contracting Officer (CO) and Acting OAM Director in May and June 2008, 

respectively. To select our first sample of contracts, we used two sets of criteria: 

(1) the contract's dollar value was over $1 million, or (2) the contractor was 

providing support services to FMCSA's acquisition function. These selected 

contracts are typical of FMCSA's acquisitions during the period of fiscal year 2005 

through January 12, 2009, in terms of contract type and extent competed. Further, 

we placed an emphasis on selecting high risk contract types, such as Time and 

Materials and Labor Hour-type contracts and cost reimbursable contracts. We 

selected our second sample of contracts from a universe of contract actions with 

an effective date recorded in FPDS-NG after September 15, 2008, using the same 

criteria. 
22

Exhibit A. Scope and Methodology

Table 5: FMCSA's Contract Universe and Contracts Selected for Review

Number 

of 

Contracts 

in 

Universe

Value of 

Contracts 

in 

Universe

Range of 

Fiscal 

Years of 

Contracts 

in 

Universe

Number of 

Contracts 

Judgmentally 

Selected

Value of 

Contracts 

Selected

Range of 

Contract 

Award 

Years of 

Contracts 

Selected

Number 

of 

Contracts 

Reviewed

Value of 

Contracts 

Reviewed

Range of 

Contract 

Award 

Years of 

Contracts 

Reviewed

First Sample Selection:

(Universe included contract actions during fiscal year 2005 to June 16, 2008*)

360 $281 

Million

1999–

2008

22 $173 

Million

2002–

2008

21** $160 

Million

2003–

2008

Second Sample Selection:

(Universe included contract actions during June 16, 2008 to January 12, 2009)

115 $53 

Million

2003–

2009

6 $32 

Million

2008 6 $32 

Million

2008

Combined Sample Selection:

(Combines sample selections 1 and 2)

410*** $334 

Million

1999–

2009

28 $205 

Million

2002–

2008

27 $192 

Million

2003–

2008

*Although the data was extracted starting in fiscal year 2005, every contract action performed on a contract 

must be recorded in FPDS-NG; therefore, when we judgmentally selected contracts, actions performed on 

contracts awarded prior to 2005 were in our universe and selected for review.

** OAM was unable to provide one contract.

*** Totals from first and second contract selection do not sum to combined selection because contracts in 

first selection were still ongoing during second selection.

We reviewed a sample of contract files and the associated Contracting Officer's 

Technical Representatives' (COTR) files to assess whether the contract award and 

administrative practices were in compliance with Federal and departmental laws 

and regulations, including contract competition, acquisition planning and market 

research, the use of justifications for high risk contract actions, and whether 

contract award lead times met departmental regulations. In addition, we reviewed 

COTR files for evidence of required contract monitoring and contractor 

performance evaluations. 

We interviewed a range of FMCSA staff, including COs, COTRs, contract 

specialists, legal staff, and other FMCSA management officials to obtain 

information on their contracting process and practices. In addition, to assess the 

adequacy of FMCSA's acquisition workforce, we reviewed FMCSA’s acquisition 

succession plan, staff performance standards, resumes, and training records. To 

determine the reliability of FMCSA's contract-related databases, we compared 

contracts reported and dollars obligated in the following three systems: FPDS-NG 

(contract reporting system), PRISM (contract writing system), and Delphi (the 

accounting system).
23

Exhibit B. FMCSA's Identified Contracting Function Competency 

Gaps

EXHIBIT B. FMCSA'S IDENTIFIED CONTRACTING FUNCTION

COMPETENCY GAPS

(Source: FMCSA Strategic Acquisition Workforce Succession Plan Draft April 2009)

Contracting Officer

Technical

Bid Evaluation

Contract Award

Defining Contractual Relationships

Defining Requirements

Financial Management

Managing Competition

Market Research

Project Management

Proposal Analysis and Evaluation

Small Business and Preference Program

Participation

Solicitation of Orders

Contract Specialist

Technical

Dispute Resolution and Termination

COTR Function

Technical

Acquisition Planning

Defining Government Requirements

in Commercial/Non-Commercial Terms

Effective Contract Management

Effective Pre Award Communication

Market Research (Understanding the 

Marketplace)

Negotiation

Performance Management

Technical Analysis of Proposals
24

Exhibit C. Major Contributors to This Report

EXHIBIT C. MAJOR CONTRIBUTORS TO THIS REPORT

Name Title

Anthony Wysocki Program Director

Kenneth Prather Program Director

Dana Short Project Manager

Aisha Evans Project Manager

Rachel Alderman Senior Auditor

Angela Hailes Analyst

Jill Cottonaro Senior Analyst

Meghann Noon Auditor

Krista Kietrys Writer-Editor

Amy Berks Associate Counsel

Petra Swartzlander Statistician
25

Appendix. Agency Comments 

APPENDIX. AGENCY COMMENTS

 Memorandum

U.S. Department

Of Transportation

Federal Motor Carrier

Safety Administration

Subject: INFORMATION: Response to the OIG Draft 

Report “Federal Motor Carrier Safety 

Administration Lacks Core Elements For A 

Successful Acquisition Function” 

Project No. 08Z3002Z000

Date: August 4, 2010

From Anne S. Ferro

Administrator

Reply to

Attn of:

MC-P

To: Terry Letko

Acting Assistant Inspector General for Acquisition and 

Procurement Audits 

The Federal Motor Carrier Safety Administration (FMCSA), working with the Department’s 

Office of Inspector General (OIG), has achieved great strides over the past year improving 

management, systems and processes in its procurement office. FMCSA identified many of these 

issues during a 2008 internal controls review, prompting the previous FMCSA Administrator to 

request that OIG conduct a study to validate our findings and ensure that they were 

comprehensive. FMCSA has benefitted from its interactions with the OIG staff over the last two 

years as the Agency completed numerous actions identified below that have enabled us to 

achieve significant improvement from the perspective conveyed in the OIG draft report. The 

Agency has additional actions underway with the intent of providing the organization with up-todate policies, practices and procedures in full compliance with all applicable procurement 

requirements. Achieving this goal will take time, but progress is well underway.

FMCSA IMPLEMENTED IMPROVED PROCUREMENT PROCESSES

FMCSA has implemented numerous changes that significantly improved its procurement 

operations. Specifically, FMCSA has revised requirements, improved procurement planning, 

enhanced coordination, standardized procedures, and improved procurement monitoring over the 

past year. For example, with regard to improved planning and revised requirements, FMCSA’s 

initial actions included improving the organizational structure and the information flow. 
26

Appendix. Agency Comments 

Contract Specialists were assigned to specific contracts (vice contract actions) enabling 

individuals to develop a knowledge of the contract and scope of work and in turn provide better 

management and oversight. During the course of the OIG’s audit, FMCSA hired an additional, 

senior-level Contracting Officer (CO) and developed a new organizational structure capable of 

better addressing the contracting work load and separation of duties. The CO also strictly 

enforces the file documentation requirements to ensure adherence to the Federal Acquisition 

Regulation. As part of the planning process, cross-functional teams meet to discuss the 

requirements, scope, and the preliminary acquisition plans. During these planning meetings, 

representatives from the FMCSA Office of Acquisitions Management (OAM) advise the 

program offices on acquisition planning, market research, development of the Independent 

Government Cost Estimate and possible contract strategies and types.

To increase coordination and communication and address issues expeditiously, FMCSA 

implemented cross-functional meetings with key personnel that include the OAM, Office of 

Chief Counsel and the respective program offices. On a weekly basis the OAM and the Office of 

Chief Counsel meet to review contract-related issues, upcoming actions, and develop 

coordinated responses. There are also regular meetings between OAM and the Associate 

Administrators (AA) to review contract status and contract requirements and begin planning 

future activities. The Agency also established an Acquisition Review Panel (ARP) for major 

acquisitions to provide better visibility of the procurement process and ensure applicable 

procedures are appropriately followed. Collectively, these meetings have resulted in increasing 

the visibility of the acquisition function, at all levels, within FMCSA; greater understanding of 

acquisition requirements by the program office; higher quality and better developed contracts. 

During 2010, FMCSA implemented standard operating procedures (SOPs) for Contract 

Closeout, Distribution of Awards Process, and Procurement Request procedures. These SOPs 

will provide comprehensive guidance and clarify expectations throughout the organization. 

FMCSA widely distributed these SOPs within the Agency and they are available on the 

Agency’s SharePoint site. 

In addition, the Agency also improved procurement tracking and staff training. FMCSA initiated 

funding of the electronic requisitioning feature in PRISM, which improves requisition tracking 

and facilitates automated approval of the procurement requests. The Agency also formalized 

invoice tracking and funds monitoring by implementing a modification summary sheet as part of 

the contract file. Finally, FMCSA also implemented internal training on the use of General 

Services Administration Schedule, acquisitions policy, and competition requirements to better 

ensure acquisition staff is fully and appropriately trained.

ADDITIONAL ACTIONS UNDERWAY TO FURTHER IMPROVE PROCUREMENT

Ongoing change process initiatives will offer additional improvements. The timeframe of these 

initiatives varies from near term efforts that will produce additional benefits in the short term, to 

longer term actions that will take some time to achieve full realization. The initiatives include: 
27

Appendix. Agency Comments 

Maximizing Competitive Procurement and Achieving Cost Savings

FMCSA continues to promote a fully competitive procurement environment and is making 

progress eliminating existing sole source contracts. As a prime example, in 2009 FMCSA 

solicited bids for a new regulatory information system used nationwide by more than 10,000 

Federal and State safety investigators. The solicitation garnered several proposals, which 

enabled FMCSA to enter into a Firm-Fixed Price (FFP) contract, saving the Agency more than 

$400K over the life of the contract. In addition to the cost savings, FMCSA successfully 

resolved two protests following the award. The resolution of those protests can be directly 

attributed to FMCSA efforts to ensure that the technical evaluation panel was objective, and that 

the evaluation and award were thoroughly deliberated and documented in the acquisition file. 

Similarly, FMCSA replaced a Time and Materials (T&M) contract that had been used to support 

FMCSA’s Information Technology networks with a FFP contract. FMCSA provided the 

solicitation for this contract to more than 20 small businesses, which resulted in the receipt of 

five proposals. The successful offeror’s proposal was technically superior to the incumbent’s 

and reduced the Agency’s cost by $1 million. 

 

Improving Acquisition Planning

Many of the improvements made by FMCSA were demonstrated in the competition and 

subsequent award for FMCSA’s national training program support contract. Using the 

collaborative planning process the OAM, program office, and Office of Chief Counsel developed 

a comprehensive, well coordinated acquisition plan resulting in an Indefinite Delivery/Indefinite 

Quantity (IDIQ) contract that eliminated three existing Labor Hour (LH) contracts. The 

solicitation resulted in 16 proposals. This acquisition planning model for developing a standard 

acquisition plan and collaborative product and planning development continues to be used 

effectively. For example, as FMCSA prepares for the competition of a major mission critical 

system, regular meetings between OAM, the Office of Chief Counsel and the program office 

have addressed issues and contract strategies early during the planning phase, allowing sufficient 

time to make adjustment and still meet requirement need dates cost effectively. 

In-sourcing Support Functions

FMCSA is reviewing its contract portfolio and eliminating administrative and other support 

contracts. For example, FMCSA decided to in-source its acquisition support and allowed the 

contract to expire in June 2010. Further, there are at least two other administrative and other 

support contracts that will not be renewed in fiscal year (FY) 2011 as FMCSA seeks to build 

capability by developing its in-house talent. 

Improving the Visibility of Acquisitions across FMCSA

To provide senior level management with more visibility and insight into the acquisition 

processes, the OAM participates in key meetings that impact the Agency’s contracting strategy. 

The OAM is included in expenditure planning and regular budget execution meetings with the 

Administrator and senior staff. Participation by the OAM highlights the need to complete proper 

planning for upcoming procurement activities, provides an opportunity to address potential 
28

Appendix. Agency Comments 

issues early in the procurement process, and heightens senior management awareness of issues. 

The AAs and other senior leaders frequently participate in the acquisition planning process, 

signaling their commitment to following proper policy and procedures. Additionally, FMCSA’s 

AAs meet regularly to discuss status of acquisitions and indentify future activities. This 

information exchange has facilitated better understanding of the acquisition process and 

improved support by the OAM. For major contract awards, the OAM, in conjunction with the 

program offices and Office of Chief Counsel, have presented to the senior management team, the 

technical review panel results prior to contract award to provide insight in major program 

initiatives in the Agency and the award process. FMCSA’s senior management team continues 

to embrace these initiatives resulting in better planning, improved product quality, better 

adherence to policy and procedures and ultimately an enhanced ability for the Agency to meet its 

safety mission by having the needed resources. 

RECOMMENDATIONS AND RESPONSES

RECOMMENDATION 1. Require program offices to coordinate with the Office of 

Acquisition Management, FMCSA's legal counsel, and the Office of the Chief Financial 

Officer throughout the strategic planning process to develop efficient, effective, and 

economical acquisition strategies. 

Response: CONCUR. In 2009, FMCSA implemented cross-functional meetings with key 

personnel from OAM, the Office of Chief Counsel and the respective program offices. There are 

now regular standing meetings with the OAM and the Office of Chief Counsel to review contract 

related issues and upcoming actions. There are also regular meetings at the AA level to review 

contract status and contract requirements. The draft SOP for Acquisition Planning is in the final 

stage of preparation and the Agency anticipates issuing the SOP in December 2010. This 

process is reinforced by FMCSA’s ARP for major acquisitions. FMCSA is in the process of 

further strengthening coordination and review by instituting an Investment Review Board (IRB) 

that would review all major procurement actions by March 2011.

RECOMMENDATION 2. Develop policies that clearly identify roles and responsibilities 

and documentation requirements for (1) market research, (2) independent government cost 

estimates, (3) legal reviews, and (4) contract-type selection and justification. 

Response: CONCUR. FMCSA will complete SOPs and policies for market research, 

independent government cost estimates, legal review, and contract-type selection and 

justification. The SOPs will define processes, roles and responsibilities, and expected 

documentation for the key components of planning, development, award, and administration of a 

contract. These SOPs will ensure appropriate implementation of the Federal Acquisition 

Regulation requirements and all applicable acquisition regulations, policies, and procedures. 

FMCSA anticipates completing these SOPs by December 2010.

RECOMMENDATION 3. Develop and implement internal controls and performance 

measures to ensure that policies and processes for efficient and effective award, 

administration, and oversight practices are adhered to. 
29

Appendix. Agency Comments 

Response: CONCUR. As described above, FMCSA has actions both completed and underway that 

will contribute to better ensuring Federal, departmental, and FMCSA requirements are fulfilled 

with regard to procurement. FMCSA has already improved its monitoring of contracting activities 

with additional supervisory resources in OAM. The upcoming SOPs will facilitate these efforts by 

layering clear expectations and consistency on these processes. Further controls and oversight of 

the process will be implemented once FMCSA’s new organization structure is put in place that will 

increase separation of duties, and enhance the Agency’s ability to implement some degree of 

independent verification. In addition, new layers of management review, both implemented and to 

be added through mechanisms such as the FMCSA ARP and IRB, will further enable the 

organization to ensure that requirements, policies, and processes are fully and appropriately 

implemented. These actions will be on-going and tested regularly under A-123 and FMFIA to 

ensure effectiveness of new processes. FMCSA anticipates performing final testing within 1-year 

of implementation of the final policies and procedures by March 2012.

RECOMMENDATION 4. Develop and implement verification procedures to ensure data in 

FPDS-NG and PRISM are current, accurate, and complete. 

Response: CONCUR. FMCSA is developing an automated process of reconciling common data 

fields within the financial management system, PRISM and FPDS-NG to ensure accurate 

reporting and recording of financial obligations. The Agency will begin implementing this 

initiative in December 2010 and will reconcile exception errors on a quarterly basis.

RECOMMENDATION 5. Complete a contract workload analysis and use it as a basis to 

perform a workforce analysis. 

Response: CONCUR. The Agency has included funds for the implementation of a contract 

workload analysis in the FY 2012 budget and anticipates completing the analysis by October 

2012.

RECOMMENDATION 6. Implement strategies identified in FMCSA's April 2009 

strategic acquisition workforce succession plan to resolve identified competency gaps, 

including plans to attract, retain, and train the workforce. 

Response: CONCUR. The FMCSA Human Capital Strategic Plan identifies acquisition 

positions as mission critical. As part of this plan, FMCSA has identified strategies to recruit and 

retain acquisition professionals allowing the Agency to narrow skill gaps and establish a robust 

organization. To implement this plan, FMCSA has taken the initial steps to address OAM 

workforce issues. Some of the gaps in skills within the OAM were the result of FMCSA’s 

reliance on contract support. Contractors provided extensive knowledge of the Federal 

Acquisition process and represented over 50 percent of the workforce. To build both capacity 

and capability within the OAM, FMCSA decided to in-source its acquisition support function 

consistent with the draft FY 2010 Human Capital Development Plan. 

FMCSA’s Human Resource Office continues to work closely with the OAM Director in 

advisement of hiring authorities available to attract well qualified candidates to include 
30

Appendix. Agency Comments 

authorities that provide direct hire and rehired-annuitants and establishing entry level positions. 

FMCSA’s Human Capital Development Plan and budgets are focused on resourcing strategies 

related to the recruitment and retention of mission critical skills. These initiatives include 

maximum use of hiring authorities, loan repayment programs, increased funding for tuition 

assistance, managerial/leadership programs and developmental assignments. The Agency’s FY 

2011 budget request includes additional resources for the OAM. The OAM works with 

FMCSA’s National Training Center to provide acquisition training for the full spectrum of the 

acquisition community (e.g., program managers, Contracting Officer’s Technical 

Representatives (COTRs), etc.) to improve all aspects of the acquisition process. The training 

center developed a training guide that implements the training component of the DOT COTR 

Program Policy to meet the COTR certification and recertification training requirements. This 

plan includes a combination of in class-room and web-based courses that complement the full 

range of the acquisition processes. By December 2010, FMCSA will ensure that the training 

program meets the career development training requirements identified by the Office of the 

Secretary of Transportation.

Overall, FMCSA will be making full use of available tools to fill any skill gaps that remain in the 

organization, as we move forward. However, it is important to recognize the competitive nature 

of the marketplace for skilled acquisition professions throughout the Federal government and 

therefore these efforts will require time and persistence. FMCSA intends to conduct actions on a 

continuous basis to address this area.

RECOMMENDATION 7. Implement an internal acquisition quality assurance review 

program to ensure Federal and departmental regulations are met throughout the contract 

cycle. 

Response: CONCUR. The OAM will issue SOPs on Acquisition Quality Assurance by 

December 2010. FMCSA will also utilize the OAM Policy Team, beginning in FY 2011, to 

perform random quality assurance reviews on contract files to ensure that they are in accordance 

with Federal regulations. The OAM has already begun utilizing the Policy Team to review 

procurement actions over the $500K threshold as part of its acquisitions review process.

RECOMMENDATION 8. Improve FMCSA’s contract administration and oversight by 

revising FMCSA Order 4200.2, COTR Requirements to require the use of a systematic 

monitoring/contract administration plan. 

Response: CONCUR. FMCSA will update FMCSA Order 4200.2 by October 2011. The Order 

will be widely distributed throughout the Agency and will be available on FMCSA’s SharePoint 

site.

RECOMMENDATION 9. Improve FMCSA’s contract administration and oversight by 

revising FMCSA Order 4200.2, COTR Requirements to require the use of a risk-based 

approach for monitoring contracts to assist in identifying high risk contracts warranting 

additional oversight.
31

Appendix. Agency Comments 

Response: CONCUR. FMCSA will update FMCSA Order 4200.2 by October 2011. The Order 

will be widely distributed throughout the Agency and will be available on FMCSA’s SharePoint 

site.

-- -- -- --

FMCSA appreciates the opportunity to review the OIG’s draft report and the extensive and 

detailed efforts of the OIG over the past two years. FMCSA has already put these efforts to good 

use and will continue to rely upon the OIG findings as we continue our efforts. Please contact 

Pamela Pelcovits, Director, Office of Policy, Rules and Regulations, at 202-366-4024 or by 

email at Pamela.Pelcovits@dot.gov, if there are any questions or if we may be of further 

assistance.